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Is Marilyn Monroe Too Generic to Be Registered as a Trademark?

Posted in Trademark Law

I’ve written on numerous occasions in the past about celebrities who registered their own names as trademarks with the United States Patent and Trademark Office. Just the other week, I wrote about how UFC superstar Conor McGregor had filed an application to register his name as a trademark, and in that same article, I mentioned that undefeated Floyd “Money” Mayweather also has his name registered with the USPTO. Other celebrities who have trademarked their monikers include rapper 50 Cent, pop queen Kylie Minogue (whose trademark KYLIE resulted in Kylie Jenner being unable to register the mark herself), and reality television star Kim Kardashian West. It’s hardly uncommon for celebrities to protect their own names as intellectual property these days. With that said, a federal district court judge’s recent order on a motion to dismiss involving the Estate of Marilyn Monroe has sparked some panic in the media.transparent

On Monday, March 13, 2017, Judge Katherine Polk Failla of the United States District Court for the Southern District of New York issued a ruling on the Estate of Marilyn Monroe’s motion to dismiss the counterclaim of AVELA (short for Art & Vintage Entertainment Licensing Agency) which attempts, in part, to cancel the Estate’s trademark rights in MARILYN MONROE. In issuing its ruling and permitting AVELA’s attempt to cancel the MARILYN MONROE trademark on the ground that it is generic, Judge Failla stated “To be clear, the court harbors serious doubts that V. International will be able to establish that the contested marks are generic….Reaching that conclusion at this state, however, would be premature.” Since Judge Failla issued this ruling, the web has been buzzing with articles and posts claiming that Judge Failla has left open the possibility that a celebrity name is too generic to register or enforce as a trademark. Unfortunately, while these articles may make for an interesting read, they fail to adequately explain the significance of the case’s procedural posture.

Judge Failla has issued her ruling in response to a motion to dismiss filed by the Estate of Marilyn Monroe. When such a motion is filed, the court is required to accept all properly pleaded facts as true. Then the court must ask itself, assuming all of the alleged facts are true, does the party state a claim to relief. Here, specifically, Judge Failla must ask herself if AVELA has stated an appropriate ground for cancellation of the Estate’s trademark assuming it can prove the facts it alleged. According to Judge Failla’s ruling, AVELA asserted a few facts to suggest that the Estate’s mark should be cancelled because it has become generic, and generic marks are never entitled to trademark protection. In order to be protectable as a trademark, a mark must have at least some level of distinctiveness. Thus, Judge Failla has permitted AVELA’s claim to go forward.

Now, what does this really mean? Not a lot. Although Judge Failla has stated that the possibility exists that the Estate’s mark has lost its distinctiveness, she was clear that the Court “harbors serious doubts” about AVELA’s ability to prove its claim, but that the law is clear that “whether a mark is, or has become, generic” is a decision for the finder of fact, and premature at this juncture. So, when you give the procedural aspect of this case due consideration, it is clear that Judge Failla’s ruling is not groundbreaking. It is highly unlikely that she will find the Estate’s mark to have lost its distinctiveness and enforceability, but the procedural posture and the fact that AVELA has stated facts that, if true, could result in a trier of fact declaring the mark generic and cancelling its registration, means that AVELA’s claim lives to fight another day. Beyond that, Judge Failla’s ruling does nothing more than refuse to prematurely foreclose AVELA’s claim. So, celebrities and their intellectual property consiglieres should not fear a shift in the law, their intellectual property rights are likely just as safe today as they ever have been.

Tavern on the Green Trademark Battle Round #2

Posted in Trademark Law

The City of New York has reignited the battle over the trademark TAVERN ON THE GREEN. Last month the City of New York filed a lawsuit for trademark infringement against Tavern on the Green International LLC, the successor-in-interest to Tavern on the Green operator, LeRoy Adventures, Inc. LeRoy Adventures operated Tavern on the Green from 1976 until approximately 2009 under a license from New York City.Scott-Hervey-10-web

In 1973 New York City and LeRoy entered into a license agreement for the operation of Tavern on the Green as a “restaurant and cabaret.” The license agreement provided that New York City had various rights over the operation of the facility, including approval of the manager, approval of employee uniforms, approval of use of signs or any other means of soliciting business, and the right to regulate the times and manner of operation. The City maintained the right of inspection at all times, and the City retained the right to terminate the license under numerous conditions, including unsatisfactory operations.

In 2009 when LeRoy and Tavern on the Green, LP lost a bid to renew the restaurant lease, they filed for bankruptcy protection and ceased operations. A fight over trademark rights quickly erupted. In 1978, LeRoy registered TAVERN ON THE GREEN with the United States Patent and Trademark Office for restaurant services. New York City filed suit seeking a declaration of its prior right under New York law to use the mark for its restaurant facility in Central Park, and to cancel LeRoy’s Federal trademark registration due to fraud on the USPTO.

In the lawsuit, the City established its own independent, common law right to the TAVERN ON THE GREEN trademark. Further, the City was able to show that LeRoy’s application to register the mark contained numerous misstatements and omissions of material facts, including the claim that 1973 was the date of first use when the City had used the mark for over three decades prior, and based thereon was able to cancel LeRoy’s registration on the grounds it was obtained fraudulently.

Ultimately, the City of New York, the bankruptcy trustee and Tavern on the Green International, LP entered into various agreements regarding the City’s ownership of the trademark and Federal registration and International’s right to use the mark. Specifically, the City and International entered into a “Use Agreement” in connection with International’s use of the mark for both products and restaurants outside of the City of New York. The Use Agreement restricted International’s use of the mark for restaurants within New York City and certain counties within the State of New Jersey. The Use Agreement included other restrictions on International’s use of the mark for products and services and included the requirement of a disclaimer.

On February 24, 2017 the City of New York sued International claiming that it breached the Use Agreement. Specifically, the City claimed that franchising material and other materials distributed by International failed “to use the disclaimers required by the [Use Agreement] on all products and promotional materials, by improperly trading on the goodwill associated with the City’s Tavern on the Green restaurant in direct violation of the [Use Agreement] and by falsely stating in promotional materials that it was a licensee of the City.” In the complaint, the City alleged trademark infringement and other related causes of action.

If the City can establish that International beached the Use Agreement, that such breach was not de minimis and the City complied with all applicable notice provisions, the City would be entitled to withdraw its consent to use the TAVERN ON THE GREEN trademark and pursue claims against International for infringement.

It is ironic that the impetus of the 2010 litigation is what provides the City with significant leverage in this current case. In the 2011 settlement with the bankruptcy trustee for Tavern on the Green LP, the City was assigned the Federal registration for TAVERN ON THE GREEN which was filed by LeRoy in 1978. With ownership of the Federal registration, the City has presumptive nationwide rights as of the date the application was filed in 1978. Had LeRoy not filed for Federal registration in 1978, the City’s trademark rights would have been based on common law and potentially geographically limited. As such, LeRoy or International’s use of TAVERN ON THE GREEN for a restaurant in Las Vegas might not be infringing.

One Is Not Enough for Patent Infringement Under 35 U.S.C. §271(f)(1)

Posted in Patent Law

Jo-Dale-Carothers-015_webIn Life Technologies v. Promega Corporation, the U.S. Supreme Court addressed whether supplying a single component from the United States of a multicomponent invention assembled abroad constitutes patent infringement under 35 U.S.C. §271(f)(1).    Under §271(f)(1), a party can be liable for patent infringement if it supplies from the United States “all or a substantial portion of the components of a patented invention.”  Interpreting this statute in Promega, the Court determined that supplying one component is not enough to constitute infringement of a multicomponent invention because a single component is not “a substantial portion” within the meaning of this statute.

In this case, Promega was the exclusive licensee of the Tautz patent, which claims a toolkit for genetic testing that can be used in law enforcement as well as in clinical and research work.   Promega sublicensed the Tautz patent to Life Technologies.  Under the sublicense, Life Technologies’ patent rights were limited to manufacturing and selling kits for use in certain law enforcement fields.  Life Technologies was not given a license to manufacture or sell kits for use in clinical or research work.

The patented kit consists of five components.   Life Technologies manufactured four of the five components in the United Kingdom.  It manufactured the fifth component, an enzyme called Taq polymerase, in the United States and shipped it to the United Kingdom where it was combined with the other four components to form the kit.

This dispute arose when Promega alleged that Life Technologies began selling these kits in the clinical and research markets, which was outside the scope of Life Technologies’ license.  As a result, Promega sued Life Technologies alleging patent infringement under §271(f)(1), which prohibits the supply from the United States of “all or a substantial portion of the components of a patented invention” for combination abroad.

The jury found that Life Technologies had infringed the patent, but the district court granted judgment as a matter of law for Life Technologies, holding that §271(f)(1)’s phrase “all or a substantial portion” did not encompass the supply of a single component of a multicomponent invention.  The Federal Circuit reversed finding that a single important component could constitute a “substantial portion” of the components of an invention and that the Taq polymerase met that standard.  The Supreme Court, however, reversed the Federal Circuit holding that the supply of a single component of a multicomponent invention assembled abroad does not constitute patent infringement under §271(f)(1) because a single component of a multicomponent invention cannot be a “substantial portion.”   The Court found that the importance of the single component is irrelevant.

In reaching its conclusion the Supreme Court considered 1) whether the term “substantial portion” refers to a qualitative or quantitative measure, 2) whether a single component can ever constitute a “substantial portion,” and 3) whether the history of §271(f) supports the Court’s conclusion.

The Court first had to determine whether “substantial portion” refers to a qualitative or quantitative measure.  The Court acknowledged that the term “substantial” in isolation is ambiguous because in some instances it “might refer to an important portion” whereas in other instances it might refer “to a large portion.”  Promega argued that a quantitative approach would be too narrow and invited the Court to adopt a “‘case-specific approach’ that would require a factfinder to decipher whether the components at issue are ‘a substantial portion’ under either a qualitative or quantitative test.” The Court, however, declined to adopt Promega’s approach noting that it would compound the ambiguity rather than resolve it.  Instead, the Court looked to the text of the statute, including the language surrounding the word “substantial,” for clarification.  The Court pointed out that the surrounding words “‘all’ and ‘portion’ convey a quantitative meaning” rather than relative importance.  Further, the phrase “substantial portion” is modified by the phrase “of the components of a patented invention,” which according to the Court would be an unnecessary phrase if the intent had been a qualitative rather than quantitative meaning.  Therefore, in the context of this statute, the Court determined that the term “substantial portion” should be interpreted as a quantitative measure.

Applying the quantitative measure, the Court next had to determine, as a matter of law, whether a single component can be “a substantial portion” of a multicomponent invention.  Looking again to the text of the statute, the Court noted that §271(f)(1) “consistently refers to ‘components’ in the plural.”  For example, the Court explained that additional language in §271(f)(1) shows the statute “is targeted toward the supply of all or a substantial portion ‘of the components,’ where ‘such components’ are uncombined, in a manner that actively induces the combination of ‘such components’ outside of the United States.”

The Court further noted that the overall “structure of §271(f) reinforces this reading.”  Section §271(f)(2), the companion provision to §271(f)(1), prohibits supplying from the United States “any component of a patented invention that is especially made or especially adapted for use in the invention.”  The Court noted that the two provisions work in tandem under the Court’s interpretation because a party would be liable under §271(f)(1) for supplying more than one component whereas a party would be liable under §271(f)(2) for providing a single component if it was especially made or adapted for use in the invention.  Therefore, the Court found that only supplying a single component from the United States of a multicomponent invention cannot infringe under §271(f)(1).

Finally, the Court stated that “[t]he history of §271(f) bolsters” its conclusion.  Congress enacted 35 U.S.C. §271(f) in response to the U.S. Supreme Court’s ruling in Deepsouth Packing Co. v. Laitram Corp.  Under the law applicable in Deepsouth, the Court determined that making or using a patented product outside of the United States did not constitute patent infringement.  But with the subsequent enactment of §271(f), Congress expanded patent protection to cover certain instances where components of a patented invention are made in the United States but assembled in another country.  The Court found that its ruling in Promega “comports with Congress’ intent” because “[a] supplier may be liable under §271(f)(1) for supplying from the United States all or a substantial portion of the components (plural) of the invention, even when the components are combined abroad” and liable under §271(f)(2) for supplying even a single component “if it is especially made or especially adapted for use in the invention.”  The Court was persuaded that when “all components but a single commodity [rather than especially made or adapted] article are supplied from abroad, this activity is outside the scope of the statute.”

The Court expressly declined to decide “how close to ‘all’ of the components ‘a substantial portion’ must be” but rather held “only that one component does not constitute ‘all or a substantial portion’ of a multicomponent invention under §271(f)(1).”  Thus the Court left several questions open.  For example, how do you determine how many components are in a claimed invention?  And once you determine the number of components, how many must be supplied from the United States to constitute infringement under §271(f)(1)?   Is it a percentage of the total number of components?  Will courts look to the relative importance of the various components or will it be purely a numbers-based analysis?  What if the invention only has two components?  In that instance, are the terms “all” and “a substantial portion” synonymous?  The only certainty is that these unanswered questions will give rise to future litigation disputes.

Unauthorized Downloading and Copyright Infringement

Posted in Copyright Law, Cyberspace Law, Web/Tech

Liability for copyright infringement can result when one downloads protected software without the copyright owner’s authorization.  The Ninth Circuit was recently tasked with exploring the scope and reach of copyright protection in such cases in Design Data Corp. v. Unigate Enterprise, Inc.

Design Data is the creator of a computer aided design (CAD) software program SDS/2.  SDS/2 is promoted by Design Data as offering a high quality steel in connection design and drawing production for 3D steel detailing. It uses building and engineering codes to produce detailed drawings and models of steel structural components for use in construction.  A user in creating a steel component design on SDS/2 would create what is called a “job file” that would contain all the information and files related to a particular project.

Unigate Enterprise is located in California and offers outsourced steel detailing services by marketing detailed CAD files created by contractors in China.  At least one of its Chinese contractors had used an unauthorized copy of SDS/2 and sent the resulting job files (“output”) to Unigate Enterprise.  Unigate Enterprise then sold those images to clients in the U.S.  Unigate Enterprise advertised on its website that it uses the SDS/2 program “if required;” however, it apparently never purchased a license to use SDS/2 from Design Data.

Unigate Enterprise also claimed that it had downloaded a free demo version of SDS/2.  Design Data does not offer a free demo of its software.  Design Data visited Unigate Enterprise’s California offices after it grew suspicious that Unigate Enterprise was using its SDS/2 software without a license.  Although there was no evidence that Unigate Enterprise had actually installed SDS/2 on the computers that Design Data were allowed to inspect; those computers did contain SDS/2 generated images and job files suggesting that the CAD program had been used in some fashion and that there were installation files for two versions of SDS/2 in addition to patch files that would allow a user to work around the software’s license protection on the Unigate Enterprise computers.

Based on this evidence, Design Data sued Unigate Enterprise for copyright infringement because of its alleged use of the SDS/2 software and its importation and distribution of SDS/2 generated images and files from outside the United States.  The trial court granted summary judgment to Unigate Enterprise on both of these claims and Design Data appealed this decision to the Ninth Circuit.

The Ninth Circuit began by noting that the unauthorized use of copyrighted software does not impose liability unless it is “significant enough to constitute infringement.”  The Ninth Circuit held that the lower court had erred in deciding that no infringement had occurred because the facts surrounding the alleged infringement were disputed.  For instance, Unigate Enterprise claimed that he had downloaded a “free demo” of the SDS/2 software but Design Data had offered evidence that it did not offer any such demos.  Design Gate further argued that the evidence that there had been SDS/2 generated files suggested that Unigate Enterprise had in fact put the SDS/2 software to use.

The Ninth Circuit found that there was a triable issue of fact as to whether infringement had occurred.  For instance, the evidence showed that Unigate Enterprise had intentionally downloaded a complete copy of SDS/2 and three patch files allowing it to circumvent the software’s licensing protection. Unigate Enterprise had also advertised that it would use SDS/2 software on client jobs “if required.”  Finally, there was evidence that Unigate Enterprise’s computers contained SDS/2 generated files and images.  The Ninth Circuit concluded that this evidence “raises a factual question whether [Unigate Enterprise’s] download was more than an ‘insignificant violation’ of Design Data’s copyright.”  Given that there had been numerous cases that have held upheld copyright infringement “under circumstances in which the use of the copyright work is of minimal consequence,” the Ninth Circuit concluded that it was error to grant summary judgment as to Design Data’s claim.

The Ninth Circuit however did affirm the granting of summary judgment as to Design Data’s importation and distribution claim.  The Ninth Circuit focused its inquiry here as to whether the copyright protection of the SDS/2 software program extended to the program’s output of images and job files.  The Ninth Circuit noted that there was a dispute among various courts as to how far the copyright protection should extend but noted that some authorities had suggested “that the copyright protection afforded a computer program may extend to the program’s output if the program `does the lion’s share of the work’ in creating the output and the user’s role is so `marginal’ that the output reflects the program’s contents.”  The Ninth Circuit decided to avoid having to resolve the split among authority because it concluded that, even assuming the most favorable legal authority applied, Design Data had not established that the SDS/2 program did the “lion’s share of the work” in creating the job files and images located on the Unigate Enterprise computers.  Given that, the Ninth Circuit affirmed the summary adjudication as to the importation and distribution claim brought by Design Data.

James Kachmar is a shareholder in Weintraub Tobin Chediak Coleman Grodin’s litigation section.  He represents corporate and individual clients in both state and federal courts in various business litigation matters, including trade secret misappropriation, unfair business competition, stockholder disputes, and intellectual property disputes.  For additional articles on intellectual property issues, please visit Weintraub’s law blog at www.theiplawblog.com

Divided Infringement – Expanding Patent Infringement Liability

Posted in Patent Law, Web/Tech

By Audrey MillemannAudrey-Millemann-03_web

In 2015, the Federal Circuit Court of Appeals cast the net of patent infringement liability even more broadly, to cover direct infringement by “divided” (or “joint”) infringement.  Akamai Technologies, Inc. v. Limelight Networks, Inc., 797 F.3d 1020 (Fed. Cir. 2015) (“Akamai V”).  In that case, the Federal Circuit established that a defendant can be liable for direct infringement of a method claim even when the defendant does not personally perform all of the steps of the method, as long as the steps performed by others are attributable to the defendant.  Id. at 1022.  The court held that the steps performed by another party are attributable to the defendant if: (1) the defendant “directs or controls” the other party’s performance; or (2) the parties form a joint enterprise.  Id.  The court further held that directing or controlling exists if two factors are met.  First, the defendant must “condition” the other party’s participation in an activity or receipt of a benefit on the other party’s performance of a step.  Second, the defendant must “establish the manner or timing” of the other party’s performance of the step.  Id. at 1023.  In Akamai V, the court emphasized that its new rule is flexible and that divided infringement may depend on the particular facts of a case.  Id.

In Eli Lilly & Co. v. Teva Parenteral Medicines, Inc., 845 F.3d 1357 (January 12, 2017), the Federal Circuit put into practice its rule of divided infringement, demonstrating just how broad this theory of liability is.

Eli Lilly owned a patent covering a method of treating cancer patients with a chemotherapy drug after pretreatment with doses of folic acid and vitamin B12.  Teva and several other drug manufacturers prepared to make and market generic versions of the chemotherapy drug.  Eli Lilly sued the drug manufacturers for inducing infringement of the patent.

Inducing infringement is a type of indirect infringement.  In order to be liable for inducing infringement, the defendant must have the intent to cause another party to infringe the patent, and the other party must be a direct infringer.  35 U.S.C. § 271(b).  For example, a party induces infringement if it instructs another how to perform the steps of a patented method.

Eli Lilly contended that the defendant drug manufacturers induced physicians to infringe the patent by instructing them, in their written materials provided with the chemotherapy drug, how to pre-treat cancer patients with the folic acid and vitamin B12, and then treat with the chemotherapy drug.  Eli Lilly further contended that the physicians directly infringed the patent.  Eli Lilly agreed with the defendants that no one person performed all of the steps of the claimed method, but argued that this was a case of divided infringement.  The physicians were the direct infringers because they performed the steps of administering vitamin B12 and the chemotherapy drug, and they directed the performance of the patients in administering the folic acid to themselves.

The case was tried to the district court, who ruled that the defendants had induced infringement of the patent, based upon the physicians’ direct infringement.

The Federal Circuit affirmed the decision.  The court found that the district court had correctly determined that the physicians directed or controlled the patients’ performance in administering the folic acid.  The first prong of the “directed or controlled” test was met.  The physicians conditioned the patients’ participation in the chemotherapy drug treatment on the patients taking the folic acid.  The evidence presented by Eli Lilly showed that the physicians would not go forward with the chemotherapy drug treatment unless the patient had properly taken the folic acid.

The court dismissed the defendants’ arguments that the physicians were merely guiding their patients or that the condition had to be a legal obligation imposed on the patients.  The court emphasized that the analysis of attribution is not so narrow, and is fact-specific.

The court held that the second prong of the “directed or controlled” test was also met.  The physicians specifically instructed the patients on the dose and timing of the folic acid.  The patients carried out the physicians’ instructions in taking the folic acid.

Because the steps performed by the patients were attributable to the physicians, the physicians had directly infringed the patent.  The court then addressed the question of inducement.  The court held that the defendants had the specific intent to induce infringement by the physicians.  The defendants had provided clear directions to the physicians on all of the steps of the claimed method (how the chemotherapy drug should be administered, and the pretreatment with vitamin B12 and folic acid).

This case demonstrates that the doctrine of divided infringement is a very strong tool for patent owners and an unexpected trap for would-be infringers.

Northern District of California Revises Local Patent Rules

Posted in Copyright Law, Legal Info, Patent Law

eric_caliguiri_web_testOn January 17, 2017, the United States District Court for the Northern District of California issued revisions to its Local Patent Rules requiring early disclosure of damages-related discovery and contentions. The revised rules are effective immediately in all patent cases pending in the Northern District.  Local Patent Rules are rules that apply to all civil actions filed in or transferred to the specific District Court which allege infringement of a utility patent or which seek a declaratory judgment that a utility patent is not infringed, is invalid or is unenforceable.  The Local Patent Rules govern the mandatory discovery disclosures that must be given relatively early in a patent case.  Many District Courts across the country have various versions of Local Patent Rules to help govern and streamline often vary complex patent cases.  The Local Patent Rules for the Northern District of California previously had detailed early disclosure requirements for infringement and invalidity positions, but generally not as to damages related issues.

Beginning under new Patent Local Rule 2-1(b)(5), the parties are now to provide the court at the Initial Case Management Conference – in addition to the prior requirements under Rule 2-1 which are still required and in place – with a “non-binding, good faith estimate of the damages range expected for the case along with an explanation for the estimates.”

Under Local Patent Rule 3-1, which relates to a patentee’s initial infringement contentions, patentees are now required to also disclose “the timing of the point of first infringement, the start of claimed damages, and the end of claimed damages,” with their initial contentions and in addition to the prior requirements.  Moreover, under Local Patent Rule 3-2, which governs the document production that must be made concurrent with the initial disclosures under Rule 3-1, the patentee must now also produce:

(1) all licenses and agreements “transferring any interest in any patent-in-suit;”

(2) all license agreements that are “comparable to a license that would result from a hypothetical reasonable royalty negotiation;”

(3) all documents and licenses “comprising or reflecting a F/RAND commitment or agreement with respect to the asserted patent(s);”

(4) documents sufficient to show “sales, revenues, costs and profits” of a patentee’s own products that it asserts practice the assert patent(s) in order “to preserve the right to recover lost profits based on such products;” and

(5) all other agreements that “otherwise may be used to support the party asserting infringement’s damages case.”

The patent’s initial infringement contentions and accompanying document production under Patent Local Rules 3.1 and 3.2 – including the damages related documents and disclosures just mentioned – must all be disclosed, identified, and produced fourteen days after the Initial Case Management Conference.

Local Patent Rule 3-4, governing an accused infringer’s document production accompanying its invalidity contentions, requires an accused infringer, 45 days after receiving the patentee’ initial infringement contentions and production, to now also produce:

  1. “all agreements that the party opposing infringement contends are comparable to a license that would result from a hypothetical reasonable royalty negotiation;
  2. documents sufficient to show the sales, revenue, cost, and profits for accused instrumentalities identified pursuant to Patent L.R. 3-1(b) for any period of alleged infringement; and
  3. all agreements that may be used to support the party denying infringement’s damages case.”

Brand new Local Patent Rule 3-8 requires patentees to then serve “damages contentions” 50 days after the accused infringer’s invalidity contentions and production. The damages contentions must “identify each of the categories of damages it is seeking for the asserted infringement, as well as its theories of recovery, factual support for those theories, and computations of damages within each category.”  The listed damages categories include: lost profits, price erosion, convoyed or collateral sales, reasonable royalty, and any other form of damages.

Under brand new Local Patent Rule 3-9, the accused infringer then must provide responsive damages contentions 30 days after the patentee’s damages contentions. The accused infringers responsive damages contentions must “identify specifically how and why it disagrees with” patentee’s damages contentions and “include the party’s affirmative position on each issue.”

The Northern District’s new Patent Local Rules represent a significant change that could help quicken and streamline litigation by requiring parties to put a definitive dollar figure on disputes early on in the litigation.  The new rules could  also streamline damages related discovery because the rules require parties to self-identify and produce damages documents, theories, and amounts early in the litigation, eliminating the need for later lengthy discussions amongst the parties and their attorneys about what needs to be produced and when it has to be produced.  However, the new rules will also mean more upfront work and cost for parties and their attorneys.  And, it will also require plaintiffs to conduct more damages related investigations before filing suit in ensure they are ready to meet their initial disclosure requirements.

McGregor Files for Trademark for “Conor McGregor” and “The Notorious”

Posted in Copyright Law, Patent Law, Trademark Law

Whether you like him or not, Conor McGregor’s business savvy cannot be disputed. The UFC superstar, in just over year, has become a household name known to people who may not even watch the sport. His quick rise to superstardom is no coincidence. He knows how to market himself and he knows how to sell the events he’s involved in.

In my opinion, McGregor single handedly crippled the UFC’s landmark UFC 200 event when he was removed from the fight card as the result of a contract dispute. Since that time, he’s made amends with the UFC and become the promotion’s first two-weight world champion. So, having risen to such a level of superstardom, I got to transparentwondering what McGregor was doing to protect his intellectual property rights, which undoubtedly have substantial goodwill and value at this point. As such, at the end 2016, I did a search on the USPTO website, but to my surprise, McGregor had not applied to protect his name, or his nickname, the Notorious, in the United States. He already had applications filed abroad, but not in the United States, where he arguably has the bulk of his fans. Having always considered McGregor a business savvy athlete, I was shocked.

But it seems that McGregor recently remedied this problem by filing two trademark with the USPTO through his entity McGregor Sports and Entertainment, Ltd. On January 9, 2017, McGregor filed for registration of THE NOTORIOUS and CONOR MCGREGOR. The marks seek registration for several goods and services, including DVDs, aftershave, books, clothing, footwear, games, health club services, restaurants, and barbershops. It’s a pretty interesting array of goods and services. I would not have expected McGregor to go into the barbershop or aftershave business anytime soon, but then again, with his debonair style and reputation for being a sartorial man, maybe it wouldn’t be such a bad idea.

Before McGregor’s now historic fight at UFC 205 where he became the promotion’s first two-division world champion, there were several articles in legitimate publications comparing McGregor’s level of superstardom to the late Muhammad Ali. Now, it is quite early to start comparing McGregor’s notoriety to one of the most renowned athletes of all time, but the point is, McGregor is already huge star and he should be taking these measures to protect his intellectual property.

Paramount and Star Trek Fan Film Producers Settle

Posted in Copyright Law, Entertainment Law, Patent Law, Trademark Law

Scott Hervey 10 finalParamount and Star Trek Fan Film Producers Settle

The copyright infringement lawsuit between Star Trek fan film producer, Axanar Productions, and Paramount Pictures came to an end less than two weeks before trial.  The settlement was undoubtedly triggered by the court’s early January ruling that the fan fiction film, Prelude to Axanar, is not protected by fair use.

Prelude to Axanar is a documentary style short that tells the story of Garth of Izar, a Starfleet captain and Captain Kirk’s hero, who fought in the Battle of Axanar between the Federation and the Klingons, which took place 21 years before the events of the first episode of the original Star Trek television show.  As a result of it success, Prelude’s producer, Alec Peters, raised over $1 million through Kickstarter and Indegogo in order to produce a full-length, studio quality motion picture about the Garth of Izar and the battle of Axanar.  In addition to releasing Prelude on YouTube, Peters released on YouTube a short clip entitled “Vulcan Scene” (which features Ambassador Soval, a minor character from “Star Trek: Enterprise” and a new Vulcan character) and drafts of the script for the full-length movie.

Paramount sued Axanar Productions and its founder Alec Peters for copyright infringement.  According to the Complaint, Peters and his production company infringed Star Trek’s copyright by utilizing various Star Trek elements, including the concept of the Battle of Axanar, the Klingons, the Starfleet and characters, costumes and props that are unique to Star Trek.  According to Paramount, Prelude and the other Axanar works are substantially similar to Star Trek precisely because they copied characters, settings, plot points, dialogue, themes, pace, mood, races, species, ships, and weapons in order to create an unlicensed, independent Star Trek film.

Peters, on the other hand, argued that Prelude and the other Axanar works were transformative and therefore protected under fair use.

A work is transformative when it adds something new to the work allegedly infringed, with a further purpose or different character, altering the original work with new expression, meaning, or message.  As the Supreme Court noted in Campbell v. Acuff-Rose Music, Inc., “the more transformative the new work, the less will be the significance of other factors, … that may weigh against a finding of fair use.”

Although Prelude features Federation officers, Klingons and Starfleet ships, Peters claimed that the work is transformative because of the way in which it features these elements; in a first-person narrative style, never before used by Paramount, featuring new characters and other elements, with its subject matter being a storyline that was only a footnote in the first episode of the original Star Trek television series.  This, Peters contends, makes Prelude and the other Axanar works transformative.

To the contrary, Paramount argued that Prelude and the other works are not transformative as they “were created to function as another Star Trek work, with a slightly different plot.”  Paramount argues that using copyrighted characters and elements and then placing those elements into a new story or timeline does not create a transformative work but rather an infringing derivative work.

In determining whether Prelude and the other Axanar works are protected by fair use, the court reviewed its four factors: (i) the purpose and character of the infringing use; (ii) the nature of the copyrighted work; (iii) the amount and substantiality of the work used; and (iv) the effect upon the market for the original work.

The first factor explores whether and to what extent the new work is transformative.  Here the court agreed with Paramount, finding Prelude and the other works not transformative.  The court noted that Peters “set out to create a… prequel to The Original [Star Trek] Series” and that they “intentionally use or reference many elements similar to those in [Star Trek] to stay true to Star Trek cannon down to excruciating details.”  The court found that Prelude and the other works do not have a further purpose or different character, and do not alter Star Trek with new expression, meaning or message.  Instead, the court stated, the defendants intended to supplant Star Trek with Prelude and their full-length motion picture.

The court determined that the second factor, the nature of the work, also weighed in favor of Paramount as creative works – such as Star Trek – are given broad copyright protections.

The third factor examines the quantity, quality and importance of the materials used in relation to the copyrighted work in its entirety.  The court did not accept Peters’ argument that, from a quantitative and qualitative standpoint, the elements he used from Star Trek were not significant.  The court remarked that the elements used by Peters “are an indispensable part of what makes Star Trek ‘Star Trek’” and give Prelude the “Star Trek feel.”

The fourth factor examines the effect the infringing work would have on the market and also whether unrestricted and widespread similar conduct would have an adverse impact on the market for derivative works.  In considering the market harm presented by a full-length, professional quality motion picture about the battle of Axanar, the court stated that such a motion picture is the kind of derivative project Paramount would develop.  The court also focused on Peters’ statement that he wanted to create “a whole new way that fans can get the content they want, by funding it themselves.”  If left unrestricted, widespread fan-funded, professional quality motion pictures telling Star Trek stories would have an adverse impact on Paramount’s ability to develop derivative Star Trek properties.

With all four factors weighing in favor of Paramount, the court rejected Peters’ fair use defense, leaving for the jury the determination of whether Prelude is substantially similar to Star Trek and whether Paramount’s copyright in Star Trek was willfully infringed.

However, the key cause for the settlement was undoubtedly the court’s finding that Peters would be personally liable for contributory and vicarious infringement if the jury found substantial similarity between Prelude and the other Axanar works and Star Trek.  The terms of the settlement are unknown with the exception of the fact that “substantial changes” would be made to the Axanar feature film and that any future Star Trek films produced by Peters or his company would follow the Guidelines for Fan Films distributed by CBS and Paramount in June, 2016.

Federal Circuit Requires Standing to Appeal PTAB’s Final Decisions

Posted in Copyright Law, Patent Law, Trademark Law

Although arguably foreshadowed, some may be surprised to learn that a party with the right to challenge the validity of a patent at the United States Patent and Trademark Office (“USPTO”) may not have the right to appeal an unfavorable decision.  In Phigenix v. ImmunoGen, the Federal Circuit clarified that while there is no standing requirement to challenge a patent at the USPTO via an inter partes review (“IPR”), standing is required to appeal the Patent Trial and Appeal Board’s (“PTAB”) final decision to the Federal Circuit.

In 2014 in Consumer Watchdog v. Wis. Alumni Research Fund, the Federal Circuit ruled that there was no standing to appeal the PTAB’s final decision in a re-examination proceeding.  But is standing required to appeal decisions in IPRs and post-grant reviews, which are procedures created by the America Invents Act (“AIA”)?  After all as a result of the AIA, 35 U.S.C. §141(c) states “[a] party to an inter partes review or a post-grant review who is dissatisfied with the final written decision of the Patent Trial and Appeal Board [] may appeal the Board’s decision only to the United States Court of Appeals for the Federal Circuit.”  In Cuozzo Speed Techs., LLC v. Lee, the U.S. Supreme Court noted that a party initiating an IPR “need not have a concrete stake in the outcome,” but it may lack standing to sue in federal court.  Now, erasing any remaining doubt as to whether the standing requirement applies to appeals of PTAB decisions in IPRs, the Federal Circuit in Phigenix found that Jo-Dale-Carothers-015_web35 U.S.C. §141(c)  does not confer standing on IPR petitioners nor does it remove the requirement for standing to appeal final written decisions of the PTAB.

While not manufacturing any of its own products, Phigenix purportedly “has developed, and is developing, an extensive intellectual property portfolio” that it claims includes a patent that covers Genentech’s activities relating to the breast cancer drug Kadcyla.  While refusing to license Phigenix’s patent, Genentech licensed a patent from ImmunoGen, Inc., for use in making Kadcyla.  Phigenix sought redress in various forums.  As part of its strategy, Phigenix challenged the validity of ImmunoGen’s patent in an IPR proceeding.  Apparently, Phigenix felt that invalidating ImmunoGen’s patent would “further [Phigenix’s] commercialization efforts with respect to its patent portfolio” by capturing at least some of the licensing revenue Genentech is paying to ImmunoGen.  However, this challenge failed when the PTAB ruled the Immunogen patent claims were not obvious in light of the prior art.

Phigenix then appealed the PTAB’s decision to the Federal Circuit, but ImmunoGen moved to dismiss the appeal for lack of standing.  The Federal Circuit heard the issue of standing along with the substantive issues of the appeal.

The requirement of standing to sue comes from Article III of the U.S. Constitution, which “confines the judicial power of federal courts to deciding actual ‘Cases’ or Controversies.’” The minimum requirement for standing consists of three elements.  “An appellant ‘must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [appellee], and (3) that is likely to be redressed by a favorable judicial decision.’”  The party seeking judicial review, Phigenix, “bears the burden of establishing that it has standing.”

Interestingly, however, in the nearly thirty-five years since the inception of the Federal Circuit, the Court had “not established the legal standard for demonstrating standing in an appeal from a final agency action,” such as a final written decision of the PTAB.  Such a “standard must identify the burden of production; the evidence an appellant must produce to meet that burden; and when an appellant must produce that evidence.”  Setting the standard in Phigenix, the Federal circuit determined that the summary judgment burden of production applies.  If standing is not self-evident, this means identifying any record evidence that was before the agency, and relying on evidence, such as affidavits and declarations, typically produced at the summary judgment stage.  The Federal Circuit further explained that an appellant must identify the relevant evidence demonstrating its standing at the earliest possible opportunity.

In its attempt to show standing, Phigenix did not contend that it faced the risk of infringing the patent at issue, that it was an actual or prospective licensee of the patent, or that it otherwise planned to take any action related to the patent.  Rather, first Phigenix argued that it suffered economic injury because of the competition between ImmunoGen’s patent and Phigenix’s similar cancer drug patent.  Phigenix asserted that the mere existence of ImmunoGen’s patent hindered Phigenix’s licensing program “while ImmunoGen receives millions of dollars in licensing revenue,” a portion of which Phigenix contended would inure to it if ImmunoGen’s patent were invalidated.  Phigenix, however, did not substantiate its arguments but instead relied on a conclusory declaration and an attorney letter that the Court found insufficient to demonstrate injury in fact.  The Court noted that if had Phigenix licensed its patents to the same parties to which ImmunoGen had licensed the challenged patent, then invalidation of the ImmunoGen patent could have increased Phigenix’s revenues.  But Phigenix produced no evidence that it had ever licensed its patent to anyone must less to the Immunogen licensees.  Thus, the Federal Circuit found that Phigenix did not establish an injury in fact that could confer standing.

Second, Phigenix argued it suffered an injury in fact because 35 U.S.C. §141(c) “provides a statutory basis for appeal.”  The Federal Circuit, however, found that Phigenix could not “base its injury in fact upon a violation of §141(c) because [Phigenix] has been permitted to file its appeal, and the exercise of its right to appeal does not necessarily establish that it possesses Article III standing.”

Finally, Phigenix asserted injury in fact based on the estoppel effect of the PTAB’s final decision, which means Phigenix “may not request or maintain a proceeding before” the USPTO, the U.S. International Trade Commission, or a federal district court with respect to any ground raised or that reasonably could have been raised during the IPR.  But, as in Consumer Watchdog, the Federal Circuit explained that estoppel “do[es] not constitute an injury in fact” when, as here, the appellant “is not engaged in any activity that would give rise to a possible infringement suit.”  Failing to establish standing, Phigenix’s appeal was dismissed.

Standing issues will not arise in the majority of appeals from IPRs because, as previously reported, around 80% of IPRs are brought by parties involved in underlying patent infringement controversies. But the petitioners in the remainder of IPRs face the real likelihood they may have no ability to appeal unfavorable PTAB decisions.  As a result, public interest groups, hedge funds, patent holding companies, and others looking to invalidate patents owned by other entities may be precluded from challenging an unsuccessful IPR in federal court because they will not be able to show that there is an actual case or controversy that would confer standing.

Therefore, before petitioning for review of a patent at the USPTO, a petitioner should consider whether he or she will have standing to appeal an unfavorable decision.  Of course, if the IPR is successful, there is no need for the appeal.

COVERED BUSINESS METHODS PATENTS — NOT SO BROAD!

Posted in Patent Law, Trademark Law

The Federal Circuit Court of Appeals has reminded the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office in no uncertain terms that covered business method review has limits.  In Unwired Planet, LLC v. Google Inc., 841 F.3d 1376, 2016 U.S. App. LEXIS 20764 (November 21, 2016), the court held that the PTAB had improperly instituted covered business method (“CBM”) review of Unwired’s patent.  CBM review is a procedure enacted in the America Invents Act by which a business method patent can be challenged in the PTAB.

Unwired owned U.S. patent no. 7,203,752 for a system and method to limit access to the location information of wireless devices.  The system allows a cell phone user to set their phones privacy preferences to restrict access to the phone’s location information to specific permitted requesters.

In October 2013, Google filed a petition in the PTAB for CBM review of certain claims of Unwired’s patent.  In April 2014, the PTAB instituted CBM review.  The PTAB determined that the ‘752 patent was a CBM patent, applying the following test: “whether the patent claims activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity.”  Unwired, supra, at *4.  The PTAB’s rationale was that the ‘752 patent’s specification stated that the requesters of the location information could include business like hotels and restaurants who could send targeted advertising to nearby cell phone users.  Id.  The PTAB found that this discussion in the ‘752 patent satisfied the requirement that the claims be “incidental or complementary to a financial activity.”  Id.

The PTAB instituted CBM review of the ’752 patent on several grounds, including invalidity for unpatentable subject matter under 35 U.S.C. §101, obviousness under 35 U.S.C. §103, and written description under 35 U.S.C. §112.  In April 2015, the PTAB issued its decision invalidating all of the challenged claims under §101.

Unwired appealed to the Federal Circuit, arguing that the PTAB had erroneously applied its own improper test (“claims incidental or complementary to a financial activity”), rather than the test set forth in the America Invents Act, for whether the ‘752 patent was a CBM patent.  Google responded that, because the PTAB’s interpretation was based on comments made during the rulemaking process when the AIA was enacted, the PTAB had correctly interpreted the statutory definition of a CBM patent.  Google also argued that the PTAB properly relied on the ‘752 patent’s discussion of potential advertising uses for the invention.

The Federal Circuit gave a straightforward answer to a straightforward question.  The court disagreed with the PTAB and Google.  The court held that the PTAB must apply the statutory definition of a CBM patent set forth in the AIA and cannot use commentary from the rulemaking process to create a broader definition.  Id. at *7.

Under the AIA, §18(d)(1), a CBM patent is one that “claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service . . .”.  The court noted that the PTO had adopted this definition without change.  Id. at *7.  However, the PTAB had applied a different definition (“incidental or complimentary to a financial activity”) to the ‘752 patent, one which is broader than the statutory definition.  The court explained that the PTAB relied on a comment made by Senator Schumer during the Senate’s discussion of the AIA, but the comment, like many of the comments made during the Senate hearings, was not included in the statutory definition.  Id. at *8-9.  The comments made by various legislators are irrelevant; the statute is the “operative legal standard” — the PTAB cannot “expand its authority beyond that granted by Congress.”  Id. at *12-13.

The court emphasized its point, at *13:

“The patent for a novel lightbulb that is found to work particularly well in bank vaults does become a CBM patent because of its incidental or complementary use in banks.  Likewise, it cannot be the case that a patent covering a method and corresponding apparatuses becomes a CBM patent because its practice could involve a potential sale of a good or service.  All patents, at some level, relate to potential sale of a good or service. . . . It is not enough that a sale has occurred or may occur, or even that the specification speculates such a potential sale might occur.”

The court did not reach the question of the patentability of the claims of the ‘752 patent under §101.  The court vacated the PTAB’s decision and remanded the case to the PTAB.

This case clearly establishes that there are limits what a CBM patent is.  The statutory definition is not so broad as to encompass any patent that relates to a financial activity.  CBM review can only be used to challenge patents that cover operations used in the practice, administration, or management of a financial product or service.  Any attempt to broaden the application of CBM review is not supported by law.