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Ninth Circuit Denies Copyright Protection to Monkeys

Posted in IP Law Blog Lawyers In The News

Does anyone think that a monkey has standing to bring a copyright infringement lawsuit? In Naruto v. Slater, 888 F.3d 418 (9th Cir. 2018), the Ninth Circuit Court of Appeals said no, but not without carefully considering the issue.

Animals have many legal rights based on federal and state laws. Most of those rights are enforceable by humans or legal entities suing under the statutes on behalf of the animals. However, should animals have the right to sue under their own names in court?

The Ninth Circuit Court of Appeals has addressed this question in The Cetacean Community v. George W. Bush and Donald H. Rumsfeld, 386 F.3d 1169 (9th Cir. 2004). In that case, the court had to decide whether cetaceans (whales, porpoises, and dolphins) had standing to sue in their own names under several federal statues, including the Endangered Species Act and the Marine Mammal Protection Act. The world’s cetaceans, identified as The Cetacean Community, represented by an attorney in Hawaii, sued the United States Government to stop the Navy’s use of a type of sonar that causes injury to cetaceans. This sonar emits low frequency pings that are heard underwater over hundreds of miles.  The pings cause the cetaceans tissue damage and hearing loss, and disrupt their feeding and mating behavior by masking the sounds of other cetaceans and the environment. The damage caused by this type of sonar was undisputed. The use of the sonar during peacetime had been successfully challenged in a separate case filed by the Natural Resource Defense Council. In this case, the cetaceans sued to cause the President and the Secretary of Defense to conduct a regulatory review and to prepare an environmental impact report on the use of this sonar during threat situations and wartime.

The district court for Hawaii granted the defendants’ motion to dismiss the case on the grounds that the cetaceans did not have standing under the federal statutes to bring suit.

The Ninth Circuit affirmed. The court explained that standing to sue under federal statues requires both Article III standing and specific standing under the statute. Article III standing exists if there is a “case or controversy,” meaning that the plaintiff must have suffered an injury traceable to the defendant for which a court can provide a remedy.

According to the court, nothing in Article III prohibits animals from having a “case or controversy.” Cetacean Community, 386 F.3d 1175. Congress can grant animals the right to sue in their own names by statute, just as Congress has enacted statutes that provide for suits in the names of entities such as corporations or trusts, cities, ships, and incompetent persons such as infants or mentally incapacitated individuals. Id. at 1176.

The court then analyzed whether The Environmental Protection Act, The Marine Mammal Protection Act, and the other statutes under which the cetaceans sued provided standing to the cetaceans. The court held that these statutes did not provide standing to any animals, but rather provided standing to persons or entities to sue to protect the animals. Id. at 1179.

In Naruto v. Slater, supra, 888 F.3d 418, the Ninth Circuit was faced with a copyright infringement claim brought by an animal. The animal was a Crested Macaque, a type of monkey, named Naruto. Naruto lived in a wildlife reserve in Indonesia. In 2011, Naruto found a camera that had been left in the reserve by a photographer, defendant David Slater. Naruto took photos of himself. In 2014, presumably after finding the camera with Naruto’s selfies, Slater and the other defendants published a book containing the selfies. The defendants listed themselves as the copyright owner of the selfies, although they admitted that Naruto had taken the pictures.

In 2005, People for the Ethical Treatment of Animals (PETA) and a scientist who had studied Naruto sued the defendants for copyright infringement, as “Next Friends” on behalf of Naruto. The defendants moved to dismiss. The district court for the Northern District of California granted the motion on the grounds that the Copyright Act did not provide statutory standing to animals.

The Ninth Circuit affirmed. The court held that it was bound by the holding of Cetacean Community, supra, that animals could show Article III standing. Naruto, supra, 888 F.3d at 421. The court found that PETA was not a proper Next Friend to sue on behalf of Naruto, but held that this was not determinative because a Next Friend was not necessary to establish Article III standing. The court held that because the “case or controversy” requirement was met, Naruto had Article III standing. Id. at 424. However, the court held that the Copyright Act did not provide statutory standing to animals other than humans.

So, at least for now, animals who take pictures don’t own the copyrights to those pictures. You can leave your camera somewhere and claim ownership of any photos taken by an animal without the risk of liability for copyright infringement! In the future, however, it’s possible that the animals just might win.

SAS Institute, Inc. v. Iancu Has Affected Cases in Federal Courts in Addition to Those at the PTAB

Posted in IP Law Blog Lawyers In The News, Patent Law

On April 24, 2018, the Supreme Court issued its ruling in SAS Institute, Inc. v. Iancu, which held that the Patent Trial and Appeal Board (“PTAB”) arm of the United States Patent and Trademark Office (“USPTO”) must issue a final written decision addressing each and every patent claim challenged in an Inter Partes Review (“IPR”) petition if review is granted.  In other words, if the PTAB is going to institute a review, it must address all the claims that are being challenged by the petition.  In the six weeks or so since the SAS Institute decision, the ruling has had repercussions not only for the PTAB, but also for federal courts.

For example, in Wi-LAN, Inc. et al v. LG Electronics, Inc. et al, the Southern District of California recently decided to issue a stay in a patent infringement case brought by WiLan, Inc. against LG Electronics, Inc. pending a decision on whether to institute an IPR proceeding against the at-issue patents.  While not dispositive, the Court did consider the SAS Insitute ruling in making its decision, reasoning “[w]hile review is not guaranteed … in light of the Supreme Court’s mandate to review all contested claims upon grant of [an IPR] and the complexity of this case, the court finds [the simplification of issues] weighs in favor of a limited stay of proceedings until the [PTAB] issues its decisions on whether to institute IPR.”

Next, in DermaFocus LLC v. Ulthera, Inc., the District of Delaware had to decide whether to lift an already issued stay when some but not all challenged claims had already been ruled on by the PTAB.  The Delaware District Court decided not to lift the stay because the circumstances warranting the entry of a stay in the first instance still persisted in light of SAS Institute.  Specifically, the Court reasoned that the “parties stipulated to stay the litigation ‘pending resolution by the PTAB of the patentability of all challenged claims in the pending IPR.’”  Although the PTAB denied institution of IPR proceedings with respect to some claims, and issued a final written decision on all remaining claims, the Supreme Court recently ruled that the PTAB must issue a final written decision “with respect to the patentability of any patent claim challenged,” and “in this context, as in so many others, ‘any’ means ‘every.’”  For this reason, the Federal Circuit remanded Ulthera’s appeal to the PTAB for issuance of a final decision regarding the patentability of all claims.  Consequently, the PTAB has yet to resolve the patentability of all challenged claims in the pending IPR proceeding, and the terms of the parties’ stipulation have not been satisfied.

Finally, in PGS Geophysical AS v. Iancu, the Federal Circuit held that it has jurisdiction to address appeals without first requiring the PTAB address the claims and grounds included in petitions for review but not previously included in final written decisions, i.e. the “non-instituted” claims and grounds.  In other words, the Federal Circuit held “that the existence of non-instituted claims and grounds does not deprive [it] of jurisdiction to decide appeals from final written decisions.”  The Federal Circuit reasoned that while the PTAB having only partially instituted review is now improper under SAS Institute, the PTAB’s final decisions on the validity of individual claims are nonetheless still final because the PTAB made a patentability determination.

Although there are still numerous issues and questions the PTAB and federal courts need to decide in implementing the SAS Institute ruling, the answers to some of these issues and questions are slowly taking shape.  However, there are many more that will require resolution in both the short and long term.

The Process: Who Does it Really Belong to?

Posted in IP Law Blog Lawyers In The News, Trademark Law

A few years ago, before the 76ers returned to playoff glory, the NBA’s Philadelphia 76ers’ ownership and front office began utilizing the phrase “Trust the Process” to represent their journey back to the top. Finally, after years of absolutely horrendous basketball, which enabled the 76ers to draft stars such as Joel Embiid and Ben Simmons, the 76ers finished third in their conference and returned to the playoffs for the first time in years. Evidently, the Process paid off.

Now, switching sports, after a season that ended with the Buffalo Bills being eliminated in the first round of the NFL playoffs and trading their once–prized quarterback Tyrod Taylor to the Cleveland Browns, the Bills have drafted rookie quarterback Josh Allen from the University of Wyoming. For some reason, despite making the playoffs and presumably being a trade or two away from going further into the playoffs, the Bills have opted to rebuild. In furtherance of that process, the Buffalo Bills recently filed a trademark application with the United States Patent and Trademark Office, seeking to register “Respect the Process.” The Bills intend to use the mark on cellphone cases, magnets, flags, towels, water bottles, door mats, and other similar goods. They do not, however, plan to print t-shirts reflecting the mark, as a company known as Made Me Tees registered that mark in early 2017 with respect to such clothing. In any event, it seems the Bills may have a larger problem looming.

Although the 76ers never registered “Trust the Process” or “The Process,” superstar Joel Embiid did. In 2016, Embiid, whose Twitter wallpaper features “The Process” in all caps, filed an application to register the mark, which is still, no pun intended, going through the trademark registration process, but seemingly on track for registration. So, this raises an issue: Can Embiid block the Buffalo Bills’ attempt to register “Respect the Process”? And better yet, if he can, will he?

The answer to the first question will depend greatly upon whether the USPTO’s examining attorney believes the marks are confusingly similar. Frankly, I’m not sure I think consumers are likely to confuse the two marks, but I haven’t researched similar cases and even if I had, the examining attorney could view the comparison differently than I do. As for the second question, it remains to be seen if Embiid would oppose the mark. He may not care in light of the different sports, or he may not find the marks all that similar. We won’t know until he acts, or fails to do so. In any event, given the parties involved, we will keep an eye on the situation and report subsequent developments.

Three-Stripes and the Burden of Irreparable Injury

Posted in IP Law Blog Lawyers In The News, Trademark Law

adidas and Skechers are athletic shoe and apparel manufacturers who have a long history of litigation between them arising out of claims that Skechers has repeatedly infringed upon adidas’ trademarks.  In Adidas America, Inc. v. Skechers USA, Inc. (decided May 10, 2018), the Ninth Circuit once again had to weigh in on Skechers’ alleged infringement of adidas’ trademarks.

 

adidas is well known for its “three-stripe” mark, which it has featured on its shoes and clothes for decades as part of its branding strategy and for which it owns a federal trademark.  adidas claims that the mark is worth millions of dollars in sales and that it invests heavily to advertise the three-stripe mark in various media.  In past lawsuits with Skechers, Skechers has had to admit that adidas is “the exclusive owner” of the three-stripe mark and has agreed not to use it or any other protected mark, which may be “confusingly similar thereto.” 

 

In September 2015, adidas sued Skechers once again for trademark infringement, among other claims, arising out of the adidas Stan Smith shoe and the competing Skechers Onyx shoe (which this article will not discuss) as well as Skechers Relaxed Fit Cross Court TR shoe, which utilized a three-stripe mark similar to adidas trademark.  adidas successfully moved for a preliminary injunction in the trial court barring Skechers from manufacturing, distributing, advertising, selling or offering for sale the Cross Court shoe.  Skechers appealed that decision to the Ninth Circuit.

 

The Ninth Circuit began by recognizing that it reviews the issuance of a preliminary injunction for abuse of discretion which means that the Court’s “decision is based on either an erroneous legal standard or clearly erroneous factual findings ….”  To obtain an injunction, a plaintiff usually has to establish: (1) the likelihood of success on the merits of its claim(s); and (2) that it is likely to suffer irreparable harm in the absence of an injunction.

 

The Ninth Circuit, in reviewing the lower court’s issuance of the injunction as to Skechers’ Cross Court shoe, found that the trial court had properly determined that adidas had established a  likelihood of success on the merits of its claims.  To meet its burden of establishing trademark infringement, adidas had to show “among other things, ownership of its trademark and a likelihood of confusion between its and the defendant’s [Skechers] marks.”  Given that Skechers had essentially conceded adidas ownership of the three strip mark, the only issue was whether adidas had met its confusion element.

 

The Ninth Circuit found that the district court had properly applied the Sleekcraft factors to find that they favored adidas in finding a likelihood of trademark infringement. The Court found the following significant in reaching this determination: (1) both the cross court and adidas designs have three-stripes; (2) although there may have been slight differences in the three-stripes marks, they were attached to closely related products and the court could overlook any minor differences between them; (3) there was significant strength in adidas three-stripe mark given that it was “more likely … to be remembered and associated in the public mind with the marks’ owners”; and (4) Skechers having previously admitted the three-stripe mark belonged to adidas, could be construed as having adapted the mark similar to adidas’ to deceive the public.  Taken together, these factors weighed heavily in adidas favor and the Ninth Circuit found that the trial court had properly concluded that adidas had established the likelihood of success on the merits as to its trademark infringement claim.

 

Next, the Ninth Circuit turned to adidas’ trademark dilution claim.  Trademark dilution is “the lessening of the capacity of a famous mark to identify and distinguish goods or services regardless of the presence of or absence of: (1) competition between the owner of the famous mark and other parties; or (2) likelihood of confusion, mistake or deception.”  In order to establish dilution, a plaintiff must show several factors which are similar to the Sleekcraft factors.  In opposing adidas’ trademark dilution claim, Skechers relied on many of the same objections regarding the trademark infringement claim which the Ninth Circuit concluded had properly been overruled.  Skechers further argued that adidas failed to produce evidence of the degree of recognition of the three-stripe market, but the Court rejected this finding and concluded that there was significant evidence that “the three-stripe mark enjoyed a high degree of recognition.”  Like the trademark infringement claim, the Ninth Circuit affirmed the trial court’s finding as to adidas’ trademark dilution claim in support of the granting of the motion for preliminary injunction.

 

However, the Court found that the trial court had erred in finding that there was a likelihood of irreparable harm.  adidas had argued that Skechers, by selling the Cross Court shoe, had “harmed adidas’ ability to control its brand image because consumers who see others wearing Cross Court shoes, would associate the allegedly lesser quality Cross Courts with adidas and its three-stripes mark.”   The Ninth Circuit concluded that there was no evidence in the record to support this loss of control theory.

 

First, the Ninth Circuit recognized that this claim relied on the assumption that adidas is viewed by consumers as a premium brand while Skechers is viewed as a lower quality discount brand.  However, the only evidence offered by adidas in support of this position were statements made by adidas personnel.  The Ninth Circuit concluded that “Skechers’ reputation among the ranks of adidas employees does not indicate how the general consumer views it.”

 

Second, the Ninth Circuit rejected this loss of control theory on the ground that this theory of harm was contradictory to adidas’ theory of consumer confusion to establish its likelihood of success on the merits.  Essentially, adidas was arguing not that a Cross Court purchaser would believe that he or she was buying an adidas product, but that someone else seeing the wearer of a Cross Court shoe would somehow mistake it for an adidas.  The Court found it inconsistent as to how a supposed consumer viewing the Cross Court shoe from afar would somehow (1) mistake it for an Adidas; and (2) somehow be able to determine that it was in fact a lower quality shoe.  Drilling down a bit further, the Ninth Circuit said that if an observer was not close enough to be able to see the Skechers logos on the shoes that would distinguish from an adidas shoe, how could that observer reasonably assess the quality of the shoes?  Further, how could that observer determine that the shoe was a “discount” brand without knowing the price of the shoe or being able to determine it  was a Skecher shoe to begin with.  The Court found that this failure of proof on the part of adidas meant that the trial court should have denied the motion for preliminary injunction as to the cross Court shoe.

 

Circuit Judge Clifton dissented from the opinion and found that the Court should have upheld the preliminary injunction in its entirety.  Judge Clifton found that the Ninth Circuit should have been more deferential to the trial court’s factual findings and believed that there had been sufficient evidence under prior case law to establish irreparable injury.

 

Litigants in trademark infringement/dilution cases seeking injunctive relief need to remember that they bear the burden of establishing with admissible evidence both the likelihood of success on the merits and the danger of irreparable injury.  Merely relying on internal employee statements may not be sufficient to meet this burden.

 

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

 

New ITC Rules for Patent Infringement Cases: Adding Fuel to the Ultimate Rocket Docket

Posted in IP Law Blog Lawyers In The News, Patent Law

The United States International Trade Commission (“ITC”) is a Federal agency that deals with matters involving trade.  Among its many responsibilities, the ITC investigates a variety of issues related to trade including investigating and adjudicating cases involving imported products that allegedly infringe intellectual property rights.  These infringement investigations, called Section 337 investigations, may include allegations that imported goods infringe patents or trademarks.  For example, the ITC may investigate allegations by a complainant (plaintiff) that certain imported goods infringe utility or design patents or infringe registered or common law trademarks.  “Other forms of unfair competition involving imported products, such as infringement of registered copyrights, mask works or boat hull designs, misappropriation of trade secrets or trade dress, passing off, and false advertising, may also be asserted.” See https://www.usitc.gov/intellectual_property.htm for more details.

The ITC offers certain advantages over Federal district courts for patent owners seeking to enforce their patents against alleged infringers.  For example, some would say the ITC is the ultimate rocket docket.  Most investigations are completed within 12 to 15 months of institution whereas district courts may take several years.  Scheduled to take effect for investigations instituted after June 7, 2018, new rules announced by the ITC are intended to further “increase the efficiency of its section 337 investigations and reduce the burdens and costs on the parties and the agency.”  These new rules are part of a process that began in 2015 with the proposal of amendments to the Commission’s Rules of Practice and Procedure.

The new rules will allow the ITC to institute multiple investigations based on one complaint and will allow Administrative Law Judges (“ALJs”) to use their discretion to sever an investigation into two or more investigations within 30 days of institution.  Severing large investigations will ensure they proceed to completion according the Section 337 timelines and help ALJs better manage their dockets.  ALJs may be more likely to sever cases with multiple parties and/or multiple patents.  For example, where one party is only involved in a subset of the issues, the ALJ may server the investigation for efficiency.

The new ITC rules also formalize procedures of a previous, rarely-used pilot program for resolution of potentially dispositive issues within the first 100 days of an investigation.  The following rules apply to such 100-day proceedings:

  • an ALJ may hold expedited hearings on designated issues;
  • an ALJ may stay discovery on the remaining issues pending resolution of the 100-day proceeding;
  • within 100 days of institution of the investigation, an ALJ’s initial determination in a 100-day proceeding is due;
  • absent review, the initial determination on these issues becomes final within 30 days; and
  • a petition to review an initial determination in a 100-day proceeding is due within five business days after service of the initial determination, and the time for filing a response to a petition for review is five business days.

Additional rule changes will impact other aspect of Section 337 investigations. Specifically, a party may now serve objections to a subpoena or move to quash, which is more consistent with the Federal Rules of Civil Procedure.  Drafts of expert reports will be privileged.  More documents will be able to be filed online and electronically served.  Further, the ITC’s notice of investigation “will define the scope of the investigation in plain language so as to make explicit” the products that are at issue.  In general, these new rules are likely to ensure the ITC continues to provide a forum for quickly resolving patent infringement disputes involving imported goods.

In addition to the advantages already discussed, the ITC offers patent owners several other benefits over district courts when enforcing patent rights.  For example, the ITC does not stay proceedings pending inter partes review (“IPR”) of the validity of an asserted patent at the United States Patent and Trademark Office whereas district courts often stay cases while IPRs are pending.  Stays further lengthen district court cases relative to ITC investigations.  In addition, the Supreme Court in TC Heartland v. Kraft Foods greatly limited the proper venues for patent cases, but there are no venue restrictions in Section 337 investigations.  Further, the remedy in a Section 337 investigation is an exclusion order that prevents the importation of infringing products into the United States.  In contrast, the Supreme Court’s decision in eBay v. MercExchange has made it difficult to get an injunction, which some would consider a similar remedy to an ITC exclusion order.  If these advantages were not enough, patent owners should also know that ITC success rates for patent owners have been steadily increasing over the last few years for cases decided on the merits.  In fact, some have reported the success rate for patent owners was just short of 90% in 2017.

Given the advantages of adjudicating patent infringement matters at the ITC, why not always use that forum instead of district courts?  The answer, in part, is that for an investigation to be launched at the ITC, the complainant must be able to allege more than just patent infringement.  The complainant must be able to allege a domestic industry exists or is being established and be able to allege infringement by the importation, sale for importation, or sale after importation of the accused products.  In district court, a plaintiff need not make these additional allegations.  Further, due to the speed at which ITC investigations proceed, the cost of litigation must be absorbed over a shorter time period and can be higher.

In sum, patent owners should consider whether the ITC is the appropriate forum for litigating their patent infringement claims given that 1) the new ITC rules for patent cases are likely to further boost the speed and efficiency of this rocket docket; 2) the remedy of prohibiting importation of infringing products can lead to early, favorable settlements; and 3) patent owners have an enviable record of success in cases decided on the merits at the ITC.

USPTO Proposes Change in Claim Construction Standard for PTAB Proceedings Under the AIA

Posted in IP Law Blog Lawyers In The News, Patent Law

Currently, the standard for claim construction is different in AIA reviews before the United States Patent and Trademark Office’s (“USPTO”) Patent Trial and Appeal Board (“PTAB) than in proceedings in federal district courts and the International Trade Commission (“ITC”).  The USPTO construes claims to have their broadest reasonable interpretation (“BRI”) while district courts and the ITC apply the Phillips standard.

Under the BRI standard, a claim term is given its broadest reasonable construction “in light of the specification as it would be interpreted by one of ordinary skill in the art.”  Under the Phillips standard, a claim term is given the “ordinary and customary meaning” it would have to “a person of ordinary skill in the art … at the time of the invention.”  The Federal Circuit has explained that the “broadest reasonable interpretation of a claim term may be the same as or broader than the construction of a term under the Phillips standard.  But it cannot be narrower.”  Thus the Phillips standard is generally considered narrower than the BRI standard.

Currently, the USPTO applies the BRI standard during prosecution of patents, in ex parte reexaminations, and in AIA reviews including inter partes reviews (“IPR”), post grant reviews (“PGR”), or covered business method (“CBM”) proceedings before the PTAB involving unexpired patents.  The PTAB applies the Phillips standard when interpreting expired patent claims.  Further, either side in an AIA review may request application of the Phillips standard for patents that will expire within 18 months of the petition’s filing date.  In contrast, district courts and the ITC always apply the Phillips standard for claim construction.

Many patent owners feel that alleged infringers have an unfair advantage under the current system that applies different claim construction standards for the different forums.  An alleged infringer can argue for a narrow claim construction under Phillips in district court to avoid a finding of infringement and simultaneously argue for a broad construction under the BRI standard before the PTAB in an attempt to invalidate the asserted patent claims.  Therefore, patent owners have repeatedly argued the PTAB should use the same claim construction standard as district courts.

On May 9, 2018, the USPTO issued a notice of proposed rulemaking in which it proposed to adopt the narrower Phillips standard for construing unexpired patent claims and proposed amended patent claims in PTAB trials under the AIA.  The proposal also would amend the rules to add that the PTAB will consider prior claim constructions in civil actions and ITC proceedings that are made of record in a timely manner in IPRs, PGRs, or CBMs.

The USPTO stated “[t]he goal is to implement a fair and balanced approach, providing greater predictability and certainty in the patent system” and increased judicial efficiency.  The USPTO acknowledged that one of the primary concerns of patent owners is that under the PTAB’s current BRI standard, a patent claim could theoretically be found invalid in an IPR, PGR, or CBM review based on a claim interpretation that the patent owner would not be able to apply in asserting infringement in a district court case.  Therefore, the proposed rule change will also alleviate this concern by harmonizing the standards across forums.

Most patent owners will see this proposed rule change as a sign more patent claims will be upheld by the PTAB in AIA reviews conducted under the narrower claim construction standard.  In most cases, however, those patent owners will likely be disappointed.  While the difference in claim construction standards has critically impacted a few decisions, in most instances, the BRI standard and the Phillips standard lead to the same result.  There may also be a downside for patent owners who are anxious for patent infringement litigation to quickly move forward against alleged infringers.  Given the Supreme Court’s recent ruling in SAS Institute v. Iancu requiring the PTAB to review all claims challenged in a petition if review is instituted and the proposed harmonization of the claim construction standard between district courts and the PTAB, district courts will be even more likely to grant stays of infringement cases pending IPRs, PGRs, and CBMs.  In sum, while patent owners were hoping the change in claim construction standards would make it harder to invalidate patent claims, that may not be the result and instead district courts are likely to decide it is judicially more efficient to let the PTAB conclude its AIA reviews before proceeding with infringement actions.

If the USPTO’s proposed rule change is implemented, there will also be a stronger basis for reliance on claim construction rulings across the forums.  But will PTAB claim construction rulings be binding on district courts?  It has been noted that in B&B Hardware v. Hargis Industries, the Supreme Court held that decisions of the Trademark Trial and Appeal Board can be considered binding in subsequent matters before federal courts considering the same questions.  One could argue that claim construction rulings by the PTAB could be similarly binding in subsequent district court infringement cases.

The USPTO has indicated that, if adopted, the proposed rule changes will apply to all IPR, PGR, and CBM proceedings, including those pending at the time the rule change takes effect.  This proposed change will not apply to claims during prosecution at the USPTO.  Further, it does not appear the change will apply to ex parte reexaminations, which could make that option more intriguing for those instances where the BRI standard is more likely to lead to invalidating claims than the narrower Phillips standard.

The USPTO is accepting comments on the proposed rule change for 60 days from its date of publication.  Therefore, the proposed change could go into effect as early as summer of 2018.

No More Monkey Business: The Ninth Circuit Finds Monkeys Cannot Sue for Copyright Infringement

Posted in Copyright Law, IP Law Blog Lawyers In The News

The Ninth Circuit was recently faced with a novel issue: Does a crested macaque, or generally speaking, a monkey, have the right to sue humans, corporations, and companies for damages and injunctive relief arising from claims of copyright infringement? Unless you’re familiar with this case, you’re probably wondering what occurred to give rise to Naruto, the monkey, bringing suit for copyright infringement. In fact, you probably have several other questions, such as how did Naruto obtain a copyright? Who infringed Naruto’s copyright? Who brought suit on Naruto’s behalf? And last, but not least, can Naruto sue someone for copyright infringement? Well, if you’re interested in at least one of these questions, you’re in the right place.

In 2011, a wildlife photographer named David Slater was visiting a reserve on the island of Sulawesi, Indonesia, where Naruto lived, and may still live. While visiting the site, Mr. Slater left his camera sitting unattended and Naruto simply could not help himself. Naruto ventured over to the camera and began taking various photographs, including multiple selfies, which have now become known as the “Monkey Selfies.” Slater and Wildlife Personalities, Ltd. subsequently published the Monkey Selfies in a book that Slater created through Blurb, Inc.’s website in December 2014. The book identifies Slater and Wildlife Personalities as the copyright owners, but admits several times throughout the text that Naruto took the photographs himself.

In response to the publication, in 2015, People for the Ethical Treatment of Animals (“PETA”) and Dr. Antje Engelhardt, an individual who studied the crested macaques in Sulawesi, Indonesia for over a decade, and who has been familiar with Naruto since his birth, brought suit on Naruto’s behalf. Specifically, the complaint alleged that because Naruto took the photographs, he is the owner of the photographs and the relevant copyrights, rendering the use by Slater and Wildlife Personalities infringement.

In response to the complaint, Slater, Wildlife, and Blurb moved to dismiss the lawsuit for lack of standing and for failure to state a claim. The district court granted the motions to dismiss, finding that the complaint did not state facts sufficient to establish statutory standing under the Copyright Act. In response, PETA and Dr. Engelhardt appealed on Naruto’s behalf.

On appeal, the Ninth Circuit first addressed whether PETA had standing to bring the claim on Naruto’s behalf as his “next friend.” In short, the Ninth Circuit found that PETA could not bring the claim on Naruto’s behalf for two reasons: (1) because PETA failed to allege facts to establish the required significant relationship between the “next friend” and the real party in interest and (2) because an animal cannot be represented, under U.S. law, by a “next friend.” Although Dr. Engelhardt had a significant relationship with Naruto, he withdrew from the case shortly after the appeal was filed. As for PETA, there were no allegations supporting a significant relationship, and in fact, the Court discussed at length how PETA had failed to live up to the title of “friend” as it abandoned the appeal before the hearing after it reached a settlement, which did not include Naruto as a party, that resulted in a payment to PETA, which led Judge Bea to contemplate if Naruto would have sued PETA for breach of a confidential relationship if he could recognize the abandonment.

In any event, the Court found that even if PETA had a significant relationship with Naruto, “next friend” standing has a narrow scope, which is no broader than what is permitted by statute. Unfortunately for animals, the statutes do not expressly authorize “next friend” standing on their behalf. Accordingly, the Ninth Circuit found that absent express authorization from Congress, there is no right of “next friends” to bring suit on behalf of animals.

But rather than ending its analysis there, the Court found that it must address the merits of Naruto’s case because lack of a “next friend” does not destroy his standing to sue, as having a “case or controversy” under Article III of the Constitution. Federal Rule of Civil Procedure 17 obligates the court to “consider whether [incompetent parties] are adequately protected,” even where they have no “next friend” or “guardian.” Accordingly, a “next friend” or a guardian is not necessary for an incompetent person to be protected. A court may find that the person’s interests would be adequately protected by the appointment of a lawyer. In fact, a prior action was brought by the “Cetacean Community,” through a self-appointed lawyer, against the United States Navy for its use of sonar systems without any purported “next friend.”

Addressing the Article III standing issue, the Court found that because the complaint alleges that Naruto is the author and owner of the Monkey Selfies, and that he suffered concrete and particularized economic harms as a result of the infringing conduct by the Appellees, Naruto had Article III standing to bring his claim.

Next, the Court addressed whether Naruto has statutory standing under the Copyright Act to sue for infringement. Following the Cetacean Court, the Court held that the rule is simple: “if an Act of Congress plainly states that animals have statutory standing, then animals have statutory standing. If the statute does not so plainly state, then animals do not have statutory standing.” Accordingly, because the Copyright Act does not expressly authorize animals to file copyright infringement suits, the Court held Naruto lacks statutory standing to sue under the Copyright Act. As a result, the Ninth Circuit affirmed the decision of the district court.

May the Lawsuit Be With You

Posted in IP Law Blog Lawyers In The News

Unless you have been living under a rock (and not a rock on Tatooine), then you have heard of a little film called Star Wars, things called lightsabers, the Millennium Falcon, and even droids. But do you know how to play Sabbac?

 

For those of you who are not Star Wars aficionados, Sabacc is a card game rooted in unexplored mythology of Star Wars.   Sabacc was first referenced in a draft screenplay for the 1980 motion picture Star Wars V: The Empire Strikes Back, and later in a volume from the trilogy of novels about Lando Calrissian, published in 1983.  This 1983 reference explained the rules of Sabacc, a betting game, in which the goal is to finish with a hand as close as possible to positive or negative 23 without going over. 

 

What else is Sabacc?  It’s the axis of a lawsuit between Lucasfilm and UK gamemaker, Ren Ventures. Why?  It may have something to do with Han Solo.  See,  he won the Millennium Falcon from Lando Calrissian in a game of Sabacc and Lucasfilm will soon be releasing the next film in the Star Wars anthology called Solo which is about a young Han Solo.

 

Ren Ventures – The Phantom Menace or Opportunistic Gamemaker?

 

In 2015, Ren Ventures created a mobile game titled “Sabacc – The High Stakes Card Game”.  The game follows the rules as described in the 1983 Lando Calrissian novel and, during game play,  makes a handful of Star Wars references, including: (a) “From a Cantina far, far away to your mobile device, welcome to the world’s largest Sabacc site.”; (b) “[B]ecome a Cloud City legend!”; (c) “Go bust? Don’t worry, we won’t take your ship!”  The game also includes elements of various space figures that, one could argue, are stylistically similar to certain characters appearing in one or more Star Wars properties.

 

On August 23, 2016,  Ren Ventures secured a federal registration for the mark SABACC covering, primarily, on line computer games.  Its application claimed a November 20, 2015 priority date.  In May, 2017 Lucasfilm filed a petition with the Trademark Trial and Appeals Board to cancel the SABACC registration.  Ren Ventures answered the petition and then filed a motion for summary judgment.  Less than 20 days later, Lucasfilm suspended the cancellation at the TTAB and sued Ren Ventures for copyright and trademark infringement.

 

In its complaint, Lucasfilm argued that it used  SABACC as the name of an element of Star Wars entertainment products and that “dozens of Star Wars products created or licensed by [Lucasfilm] have used [SABACC]” including “card games, mobile games, video games, magazines, comic books, novels, television episodes, a live theme park experience, and a major motion picture.”  Lucasfilm argued that the timing of Ren Ventures’ use of SABACC reflects its intent to infringe.  Prior to Ren Ventures claimed first use, Lucasfilm had publicly announced the development of a motion picture focused on Han Solo as a young man and that any Star Wars fan would expect Solo’s acquisition of the Millennium Falcon from Lando Calrissian to be part of this picture.

 

In February, Ren Ventures filed a motion to dismiss Lucasfilm’s trademark infringement claim.  Ren Ventures argued that Lucasfilm had no protectable common law trademark rights in SABACC because Lucasfilm failed to use SABACC in a trademark manner.  Ren Ventures argued that; Lucasfilm can not claim trademark rights to goods or services that are only featured in a work of fiction.  Ren Ventures argued that it has superior trademark rights due to its use and registration of SABACC.

 

Since Lucasfilm had not registered SABACC as a trademark, the question before the district court on Ren Ventures’ motion to dismiss was whether Lucasfilm had common law trademark rights in SABACC.  While Ren Ventures argued that it didn’t because Lucasfilm failed to use SABACC in a trademark manner – use on or in connection with goods or services.  Lucasfilm argued that Sabacc’s role as an element of the star Wars universe is sufficient to establish trademark rights with regard to the Star Wars franchise itself.   Does its use of SABACC as a fictional card game in movies and books create protectable trademark rights? To be certain, Lucasfilm appears to have distributed a Sabacc card game in 1989, but that game appears to have been short lived (like the planet Alderaan).

 

In the end, Ren Ventures’ claim that the lack of traditional trademark use by Lucasfilm means it has no trademark rights was not enough to escape the complaint’s forcefield.  In ruling on the motion to dismiss, the court noted that fictional elements of expressive works (like a movie) can function as trademarks because those elements can symbolize the creator of the expressive work (i.e., the movie maker) or its products to the general public.  The court noted that  trademark protection had been extended to the “General Lee” car from the TV series, “The Dukes of Hazzard,” to the fictional restaurant “The Krusty Krab” from the SpongBob SquarePants animated series, to the fictional element “Kryptionite” from the Superman comics, and to the physical appearance of the E.T. character from the movie of the same name.

 

The Southern District of New York, in granting trademark protection to Kryptonite, summed up the policy reason why trademark protection may be granted to a fictional element fo an entertainment property, not yet used in a traditional trademark manner:

 

[W]here the  the product sold by plaintiff is “entertainment” in one form or another, then not only the advertising of the product but also an ingredient of the product itself can amount to a trademark protectable under § 43(a) because the ingredient can come to symbolize the plaintiff or its product in the public mind

 

DC Comics, Inc. v. Filmation Assocs., 486 F. Supp. 1273, 1277 (S.D.N.Y. 1980).

 

Although the Court elected to allow Lucasfilm’s trademark claims to go forward, it will be interesting to see how the court will rule at the summary judgment phase (if this case gets that far) when it is able to consider evidence.  Without question, SABACC is not is not as well known as the General Lee or Kryptonite and, who knows if consumers encountering Ren Venture’s online video game would believe that Lucasfilm is the source of or the sponsor or endorser said game.  All that may change after Solo premiers at the Cannes Film Festival on May 15, 2018.

U.S. Supreme Court Rules America Invents Acts Reviews by the Patent Trial and Appeal Board arm of the Patent and Trademark Office are Constitutional

Posted in IP Law Blog Lawyers In The News, Patent Law

In a 7-2 opinion, the U.S. Supreme Court ruled in OIL STATES ENERGY SERVICES, LLC v. GREENE’S ENERGY GROUP, LLC that inter partes review does not violate Article III or the Seventh Amendment of the Constitution.  Thus, the Supreme Court rejected an argument that only federal courts, and not executive branch tribunals or administrative courts like the Patent Trial and Appeal Board (“PTAB”), can invalidate patent claims once issued by the US Patent and Trademark Office (“USPTO”).  In so doing, the Supreme Court left intact a system created by Congress in 2011 that has been used by potential patent infringers to challenge and invalidate thousands of patents.

Inter partes review allows private parties to challenge previously issued patent claims in an adversarial process before the PTAB, which is the trial arm of the USPTO.  A party that wishes to challenge one or more issued patent claims must file a petition to institute review that identifies the challenged claims and the grounds for challenge with particularity.  The patent owner, in turn, may file a response.  If the USPTO determines “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition” a review is instituted in front of the PTAB.  At the end of the review process, which operates similarly to a litigation proceeding in a court, the PTAB “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.”

In the underlying proceedings in this matter, a PTAB inter partes review and a District Court litigation were running in parallel.  The PTAB issued a final written decision concluding that the challenged claims were unpatentable even after the District Court had issued a claim-construction ruling that construed the challenged claims in a way that foreclosed some of the arguments about the prior art.  The PTAB acknowledged the District Court’s contrary decision, but nonetheless concluded that the claims were anticipated by the prior art.  On appeal, the patent owner challenged the constitutionality of inter partes review.  Specifically, it argued that actions to revoke a patent must be tried in an Article III court before a jury.  After the Federal Circuit summarily affirmed the PTAB’s decision, the Supreme Court granted certiorari to determine whether inter partes review violates Article III or the Seventh Amendment.

First, the Supreme Court reasoned that inter partes review falls squarely within the public rights doctrine.  The Court continued that the decision to grant a patent is a matter involving public rights—specifically, the grant of a public franchise.  Inter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the USPTO’s authority to conduct that reconsideration.  Thus, the USPTO can do so without violating Article III.  Additionally, granting patents is one of “the constitutional functions” that can be carried out by “the executive or legislative departments” without “judicial determination.”  Accordingly, the determination to grant a patent is a “matte[r] involving public rights.”  It need not be adjudicated in Article III court.

The Court further reasoned that inter partes review involves the same basic matter as the grant of a patent.  So it, too, falls on the public-rights side of the line.  The primary distinction between inter partes review and the initial grant of a patent is that inter partes review occurs after the patent has issued.  But, the Court held, that distinction does not make a difference. Patent claims are granted subject to the qualification that the USPTO has “the authority to reexamine—and perhaps cancel—a patent claim” in an inter partes review.  Patents thus remain subject to the USPTO’s authority to cancel outside of an Article III court.

Next, the Court considered the patent owner’s argument that prior holdings recognize patent rights as the “private property of the patentee.”  In rejecting this argument, the Court reasoned that patents convey only a specific form of property right—a public franchise.  And patents are “entitled to protection as any other property, consisting of a franchise.”  As a public franchise, a patent can confer only the rights that “the statute prescribes.”  Thus, the patentee’s rights are “derived altogether” from statutes, and “are to be regulated and measured by these laws, and cannot go beyond them.”  One such regulation, the Court held, is inter partes review.  The Court also distinguished decisions from the 1800’s that held the patent office has no authority to revoke patents, reasoning this was before Congress enacted inter partes review.  It further pointed out that the Patent Clause in our Constitution “was written against the backdrop” of the English system. Therefore, based on the practice of the Privy Council in existence at that time, it was well understood at the founding that a patent system could include a practice of granting patents subject to potential cancellation in the executive proceeding of the Privy Council.

The patent owner also argued that inter partes review violates Article III because it shares “every salient characteristic associated with the exercise of the judicial power.”  But the Court quickly rejected that argument, holding it has never adopted a “looks like” test to determine if adjudication has improperly occurred outside of an Article III court.  The fact that an agency uses court-like procedures does not necessarily mean it is exercising the judicial power.

Lastly, the Court quickly rejected the challenge to inter partes review under the Seventh Amendment.  The Seventh Amendment preserves the “right of trial by jury” in “suits at common law, where the value in controversy shall exceed twenty dollars.”  However, the Courted noted its precedent establishes that, when Congress properly assigns a matter to adjudication in a non-Article III tribunal, “the Seventh Amendment poses no independent bar to the adjudication of that action by a nonjury factfinder.” Thus, the Court held, because inter partes review is a matter that Congress can properly assign to the USPTO, a jury is not necessary in these proceedings.

In conclusion, the Court emphasized that its holding is limited to the constitutional challenges raised in the case.  In fact, the Court held in a separate opinion issued on the same day that the PTAB must decide the validity of every challenged patent claim when it agrees to institute an AIA review.  Previously, the PTAB could review some challenged claims and deny review of others.  However, the Court found that PTAB should not be able to select a subset of challenged claims to rule on; the PTAB’s final decisions must address all of the claims in a petition.  The Court reasoned “everything in the statute before us confirms that SAS is entitled to a final written decision addressing all of the claims it has challenged and nothing suggests we lack the power to say so,….whatever its virtues or vices, Congress’s prescribed policy here is clear: the petitioner in an inter partes review is entitled to a decision on all the claims it has challenged.”

In short, although AIA reviews are here to stay for the time being as the US Supreme Court has upheld their constitutionality, their exact nature is still in flux.

The DMCA’s Safe Harbor Provision and Policing Repeat Infringers

Posted in Copyright Law, IP Law Blog Lawyers In The News, Privacy

The Ninth Circuit recently revisited the issue of the applicability of the safe harbor provision of the Digital Millenium Copyright Act (“DMCA”) in the case Ventura Content, Ltd., v. Motherless, Inc., et al. (decided March 14, 2018).  The issue before the Court was whether the defendants had presented undisputed evidence that they fell within the protections of the DMCA’s safe harbor provision to allow for summary judgment in their favor.

 

Motherless is a website that allows users to upload photos and videos of a mainly pornographic nature.  It has over 12.6 million pictures and video clips and in 2011, had approximately 750,000 active users.  No one pays Motherless to view the content, but a “premium subscription” is available for users who want to avoid advertisements on the site.  Motherless does not pay for content nor does it license any of the content that appears on its site.  Approximately 85% of its revenue is derived from advertising. 

 

In its early years, users who updated a large amount of content were awarded with “credits” that could be used to purchase items such as coffee mugs or t-shirts.  Later, the credits could be exchanged for money of nominal value.  The most prolific user who had uploaded over 300,000 videos received approximately $200 in exchange for his credits.

 

When users uploaded content to the site, they received a notice warning them against uploading illegal images or videos, as well as copyright infringing material.  In addition to posting a procedure for receiving the DMCA take down notices, Motherless also made available to copyright owners, software that would allow them to directly remove their copyrighted content from the site.  The owner of Motherless testified that he personally reviewed all uploaded content before allowing it to appear on the site, although he used an independent contractor to assist in this work.  They were to delete any material that they found to be illegal or which apparently violated copyrights.  After material is removed pursuant to a takedown notice, Motherless employs software to prevent users from reposting the offending material.  Over the last decade, Motherless deleted more than 4.5 million pictures and videos for violating its terms of use of which approximately 4-6% of the deleted files were for copyright infringement.

 

Although Motherless warns users that repeat infringers will have their access terminated, Motherless did not employ a written policy for determining when and how repeat infringers were to lose their access.  The owner of Motherless testified, however, that he was solely responsible for determining whether to terminate a repeat infringer’s access and considered a number of factors in doing so. Between 2008 and 2011, he testified that he had terminated more than 33,000 user accounts of which approximately 1,300-2,000 were for repeat copyright infringement.

 

Ventura Content creates and distributes pornographic movies and alleged that 33 video clips on Motherless contained its copyrighted materials.  None of the offending clips identified Ventura Content as the owner of the material although a few had watermarks referring to other aggregator websites.

 

Ventura Content did not provide a takedown notice to Motherless regarding the 33 clips nor did it avail itself of the software provided by Motherless to directly remove these video clips.  Rather, the first notice it gave to Motherless of the offending materials was when it served it with its complaint for copyright infringement.

 

After being served with the complaint, the owner of Motherless requested that Ventura provide him with the URLs of the offending clips so that he could remove them.  After his first request was ignored, he made a second request and then immediately took down the video clips after receiving the identifying URLs from Ventura.

 

Because Motherless had removed the offending clips, it rendered Ventura’s claim for an injunction moot.  Nevertheless, Ventura continued to seek damages based on its claim of copyright infringement.  Motherless (and its owner) moved for summary judgment arguing that the evidence demonstrated that they were covered by the DMCA’s safe harbor provision and thus, Ventura’s copyright infringement claim failed as a matter of law.  The trial court agreed and granted summary judgment to Motherless.  Ventura appealed to the Ninth Circuit.

 

The Ninth Circuit began its analysis by examining the DMCA’s safe harbor provisions.  It recognized that the DMCA places the burden on the copyright owner of policing its copyrights.  Essentially, to take advantage of the DMCA’s safe harbor provision, a service provider must (1) establish that it did not know of the infringement nor was the infringement apparent; (2) it must also take down or prevent access to infringing material as soon as it is put on notice; and (3) it cannot financially benefit directly from the infringing activity.  Finally, the DMCA also requires that service providers had a policy to terminate users who repeatedly engaged in copyright infringement.

 

Before turning to these factors, the Ninth Circuit examined Ventura’s claim that Motherless (and not its users) had uploaded the offending clips and therefore was not able to take advantage of the safe harbor provision.  Ventura argued that Motherless’s owner had initially uploaded 700,000 files from an old site and that the site’s website categorizes clips into the “most popular” and “most viewed” for its users.

 

The Ninth Circuit rejected these arguments finding that although the owner had done an initial upload, none of these files contained Ventura’s copyright material.  The Ninth Circuit turned to its prior decision in UMG Recordings, Inc. v. Shelter Capital Partners, LLC (2013) to hold that the mere fact that Motherless performed some access facilitating processes to enhance the site for its users, this did not amount to having some control over what was uploaded.  Rather, Motherless’s stated policy was “Anything legal stays.”  Given that the users decided what to upload and not Motherless, the Court concluded that Motherless was still eligible for the DMCA’s safe harbor provision.  The Ninth Circuit also noticed that this conclusion was consistent with similar rulings out of the Second, Fourth and Tenth Circuit Courts of Appeal.

 

Turning to the knowledge factor, Ventura argued that Motherless knew or should have known that its video clips were copyrighted and that the posting of them on Motherless constituted infringement.  The Court rejected this argument by recognizing that only 4 of 33 clips had watermarks and that none of these identified Ventura as the copyright owner.  Furthermore, the fact that these video clips may have been of a “high quality” would not necessarily have put Motherless on notice since many amateur content providers also produced “high quality” content.

 

The Ninth Circuit then turned to the issue of whether Motherless engaged in an expeditious take down of the offending materials.  The Court found it significant that Ventura had not marked its material as having been copyrighted nor did it take advantage of the DMCA’s take down notice procedure.  Rather, it chose to file a lawsuit and that upon the second request by Motherless, provided it with the URLs containing the offending materials.  The Court found it also significant that once Motherless received the URL information, it took down the offending clips that same day.  The Court found that this evidence demonstrated that Motherless had “respond[ed] expeditiously to remove” the offending material.

 

Ventura also argued that Motherless had the right and ability to control the materials because it received a direct financial benefit from the posting of this material.  While the Court noted that theoretically Motherless had some right of control in that it could have taken down all of its content and shut down the website, this factor of the DMCA requires something more, i.e., “a service provider must be able to exert `substantial influence’ on its users activities.”  The Ninth Circuit found it significant that Motherless did not tell its users what type of content to upload nor did it curate the uploaded content in any meaningful way.  Further, it offered users that had the most popular or most viewed material credits of a nominal value, which would not incentivize the uploading of any copyright protected information.  The Court also noted that Motherless did not advertise itself as a place to get pirated content and thus concluded that it did not financially benefit from its users infringing activity.

 

Finally, Ventura argued that Motherless was not entitled to safe harbor protection because it did not have a written policy detailing how it would identify and terminate the accounts of repeat infringers.  The Ninth Circuit rejected this argument, finding that given its size, i.e., the owner and a part-time independent contractor, there was no need for more formal policies.  Thus, the Ninth Circuit concluded that Motherless had established that it could avail itself of the safe harbor provision and affirmed summary judgment in its favor.

 

Circuit Judge Rawlinson disagreed with the majority and would have reversed the granting of summary judgment to Motherless. She found it significant that Motherless did not have a formal written policy as to how to identify and terminate the accounts of repeat infringers and thought that Ventura should have been allowed to proceed on its theory.

 

The Ventura/Motherless case is a reminder to those service providers that allow users to upload photographs and/or video clips to take affirmative steps and institute appropriate policies to police against infringing material.  Otherwise, they may not be able to take advantage of the DMCA’s safe harbor provision when sued for copyright infringement.

 

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