The America Invents Act provided several procedures for challenging the validity of patent claims, including inter partes review (“IPR”), post-grant review (“PGR”) and covered business method patent challenges (“CBM”).  An IPR, PGR, or CBM challenge begins with a petition filed by the challenging party that identifies each claim challenged and the grounds for each challenge.   Based on the petition and the patent owner’s optional preliminary response, the Patent Trial and Appeal Board (“PTAB”) determines whether to institute review of one or more of the challenged patent claims.  Under the America Invents Act, this determination whether to institute review is final and nonappealable, but the PTAB’s final decision on patentability of the claims is appealable.  Recently, decisions by the PTAB have raised questions as to where the line is between appealable and nonappealable decisions.Jo-Dale-Carothers-015_web

In its decision to institute review, the PTAB can choose to review all or some of the patent claims challenged in a petition and on all or some of the grounds of unpatentability asserted for each claim.  The statute states that those decisions are not appealable.  But, if the PTAB chooses to review claims on grounds not specifically raised in a petition, are those decisions appealable?  The Court of Appeals for the Federal Circuit has determined it lacks jurisdiction to review such cases because they are part of the determination to institute review and thus are not appealable.  Earlier this year, in Cuozzo Speed Technologies, LLC v. Lee, the U.S. Supreme Court also weighed in on this issue holding that the America Invents Act precludes appeal of decisions by the PTAB to institute review of challenged patent claims.  Arguably, however, the Court left the door open for potential exceptions, such as in cases that raise constitutional issues of due process or where the PTAB has exceeded its statutory authority.

In Cuozzo, the patent related to a speedometer that will show a driver when his or her car is exceeding the speed limit.  In 2012, Garmin filed a petition seeking inter partes review of the validity of the Cuozzo patent.  Garmin’s petition included an argument that claim 17 was invalid as obvious in light of three prior art patents, and the PTAB instituted review of claim 17.  While noting that Garmin had not expressly challenged claims 10 and 14 as obvious in light of these references, the PTAB also instituted review of those claims on the same obviousness grounds.  The PTAB explained that because claim 17 depends on claim 14 which depends on claim 10, Garmin had implicitly challenged claims 10 and 14.  Ultimately, the PTAB invalidated all three claims as obvious.

The owner of the Cuozzo patent appealed to the Federal Circuit arguing that the PTAB erred in instituting review of the two claims not expressly identified in the petition because the relevant statute requires that petitions must be pled with particularity.  But the Federal Circuit held that 35 U.S.C. §314(d) rendered the decision to institute inter partes review nonappealable.  The U.S. Supreme Court agreed holding that §314(d) precluded judicial review because it says that the “determination by the [Patent Office] whether to institute an inter partes review under this section shall be final and nonappealable.”  Further, the Court stated that the logical linking of claims 10 and 14 to claim 17 precluded the need for the petition to “repeat the same argument expressly when it is so obviously implied.”  Therefore, the Court found that the “No Appeal” provision’s language must at least forbid an appeal in such circumstances.

The Supreme Court, however, emphasized that its interpretation only  applies to appeals where “the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.”  The Court went on to explain that it was not deciding the precise effect of §314(d) on appeals that “implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach … beyond ‘this section.’”  The Court also noted that it did “not categorically preclude review of a final decision where a petition fails to give ‘sufficient notice’ such that there is a due process problem with the entire proceeding, nor does the interpretation enable the agency to act outside its statutory limits ….”

When does a petition fail to give sufficient notice thus causing a due process problem? What constitutes the PTAB acting outside its statutory limits? Those are the questions SightSound Technologies is asking the U.S. Supreme Court to address and clarify in SightSound’s recently-filed petition for a writ of certiorari.

In 2011, SightSound sued Apple for allegedly infringing three SightSound patents related to the electronic sale and distribution of digital audio and video signals.  Apple challenged claims of two of the patents in petitions for CBM review asserting that the challenged claims were anticipated under 35 U.S.C. §102 by a CompuSonics system.  Apple submitted numerous references and a declaration in support of its §102 argument.  Apple did not challenge the claims as obvious under 35 U.S.C. §103.  The PTAB, however, decided to institute review of the claims under both §102 and §103 explaining that while Apple’s petitions did not assert obviousness explicitly, the petitions nevertheless supported such a ground based on the detailed explanation of the various CompuSonics references.

SightSound objected that the PTAB lacked authority to raise a ground of unpatentability (obviousness) that Apple had never asserted.  The PTAB granted SightSound additional time for argument and authorized it to file sur-replies and new declarations on the issue of obviousness “to ensure that Patent Owner has a full and fair opportunity to be heard on the issue of obviousness.”  Ultimately, the PTAB rejected Apple’s anticipation argument but instead invalidated the challenged claims as obvious under §103.

SightSound appealed to the Federal Circuit, which held that decisions relating to the institution of CBM review are not appealable under 35 USC §324(e), which mirrors the language in §314(d) for inter partes review.  In its petition to the U.S. Supreme Court, citing Cuozzo, SightSound argues that the PTAB’s decision to institute review based on obviousness is appealable because the PTAB exceeded the its statutory authority and deprived SightSound of due process protection.

First, SightSound argues the PTAB lacked statutory authority to conduct an obviousness review because Apple did not challenge the claims as obvious in its petition.  Second, SightSound explains that because a patent is a vested property right, it confers due process protection and patent owners are entitled to “notice and an opportunity to be heard by a disinterested decisionmaker” when the validity of their patent claims is challenged.  SightSound argues that it was not provided this notice because the PTAB did not articulate the specific combinations of the twelve “CompuSonics publications” or the motivation for combining those references until the PTAB’s final written decision.  SightSound alleges this “forced [SightSound] to shoot in the dark” as to which combination of references formed the basis for the PTAB’s obviousness arguments and prejudiced its ability to locate and submit contrary evidence.  Thus, according to SightSound, it was deprived of its due process protection because it was never given sufficient notice of the specific obviousness arguments so that it could fairly defend the validity of its patent claims.

We will have to wait to see whether the Supreme Court weighs in on whether the PTAB has exceeded its authority or deprived a patent owner of due process rights in granting review of patent claims on grounds not raised in a challenger’s petition.  For now, patent owners should assume that the PTAB may take a broad interpretation of a challenger’s petition when determining the scope of review.

For more information about Weintraub Tobin, visit the firm’s page at http://www.weintraub.com/

The Communications Decency Act (“CDA”) provides broad immunity for “providers of interactive computer services.” In essence, if an internet service provider falls within certain parameters, it is entitled to immunity against certain claims of liability brought under state law. Last month, the Ninth Circuit again considered the breadth of such immunity in the case, Kimzey v. Yelp!.

As many readers may know, Yelp is a website that allows customers to “rate” their experience with a particular store, restaurant or service provider. The reviewing customer can also leave a detailed review in connection with their 1-5 star rating. Yelp then aggregates all customer reviews into a single rating and this information may be found not only on Yelp’s website, but also on other James Kachmar 08_websearch engine websites like Google.

The plaintiff, Douglas Kimzey, operated a locksmith shop in the Washington area. The Ninth Circuit’s opinion relates that he was subject to a one-star review by a purported customer, “Sarah K,” whose review began, “THIS WAS BY FAR THE WORST EXPERIENCE I HAVE EVER ENCOUNTERED WITH A LOCKSMITH.” It did not get much better from there.

Rather than suing the customer for posting the offending review, Kimzey sued Yelp instead. In an attempt to get around the immunity provisions set forth in the CDA, Kimzey alleged two novel theories: (1) that Yelp, by creating its review and star-rating system in effect “created the content” to subject it to liability; and (2) by allegedly “republishing” the negative review through advertisements and/or search engines, Yelp was liable as the publisher of the negative review. The District Court granted Yelp’s motion to dismiss on the ground that it was immune from such liability under the CDA.

The Ninth Circuit began by reviewing the immunity provision in the CDA, Section 230(c)(1), which provides protection from liability only to “(1) a provider or user of an interactive computer service; (2) whom a plaintiff seeks to treat under a state law cause of action as a publisher or speaker; (3) of information provided by another information content provider.” The Ninth Circuit said that it was easy to conclude that Yelp was a provider of “an interactive computer service” given that such term should be interpreted “expansively” under the CDA. In fact, the Ninth Circuit recognized that in today’s cyberworld, “the most common interactive computer services are websites,” such as Yelp. The Ninth Circuit continued by finding that it was clear that Kimzey’s claims against Yelp were “premised on Yelp’s publication of Sarah K’s statements and start rating.”

In turning to the gist of Kimzey’s complaint, the Ninth Circuit reasoned that, “a careful reading of the complaint reveals that Kimzey never specifically alleged that Yelp authorized or created the content of the statements posted under the aegis of Sarah K, but rather that Yelp adopted them from another website and transformed them into its own stylized promotions on Yelp and Google.” The Ninth Circuit found, without any difficulty, that such “threadbare allegations of fabrication of statements are implausible on their face and are insufficient to avoid immunity under the CDA.” In essence, the Ninth Circuit found that such artful pleading as that engaged in by Kimzey would allow other plaintiffs to avoid the broad immunity protections provided by the CDA.

The Ninth Circuit reasoned that Congress in enabling immunity from liability wanted to protect the purpose of the internet which was to further the “free exchange of information and ideas.” Further, allowing a plaintiff to plead around the immunity statute would eviscerate Congress’ purpose in furthering this purpose.

Turning to the next part of Kimzey’s complaint, the Ninth Circuit noted that Kimzey alleged that Yelp designed and created the signature star-rating system and thereby served as the “author” of the one-star rating given by Sarah K. He also alleged that Yelp had “republished” the allegedly offending statements on Google by way of advertisements. The Ninth Circuit recognized that there was no immunity under the CDA if the service provider “created” or “developed” the offending materials. However, the service provider had to make “a material contribution to the creation of development of content” in order to lose immunity under the CDA.

The Ninth Circuit concluded that neither prong was satisfied by Kimzey. The court ruled that “the rating system does absolutely nothing to enhance the defamatory sting of the message beyond the words offered by the user.” Further, the Ninth Circuit had previously found in Carafano v. Metrosplash.com, Inc., 339 F.3d 1119 (9th Cir. 2003), that the mere collection of responses to a particular question “does not transform [the service provider] into a developer of the underlying misinformation.” Likewise, a California appellate court had previously rejected a claim based on eBay’s rating system and found that the system was “simply a representation of the amount of such positive information received by other users of eBay’s website.” Gentry v. eBay, Inc., 121 Cal. Rptr.2d 703 (2002).

The Ninth Circuit, in relying on this precedence, reasoned that it was difficult “to see how Yelp’s rating system, which is based on rating inputs from third parties in which reduces this information into a single aggregate metric, is anything other than user generated data.” Furthermore, the Ninth Circuit rejected Kimzey’s argument that Yelp’s use of the user-generated information in advertisements subjected it to liability as a “republisher.” The Ninth Circuit concluded that there was “[n]othing in the text of the CDA [that] indicated that immunity turns on how many times an interactive computer service publishes `information provided by another information content provider.’” The Ninth Circuit ruled that “just as Yelp is immune from liability under the CDA for posting user generated content on its own website, Yelp is not liable for disseminating the same content in essentially the same format to a search engine as this action does not change the origin of the third party content.” The Ninth Circuit affirmed the lower court’s dismissal of Kimzey’s complaint against Yelp.

The Kimzey case is a reminder of the broad protections provided to interactive computer service providers under the CDA when faced with state law lawsuits regarding the publication of information provided by a user. Defendants in such cases should explore the possibility of immunity under the CDA in order to cut short such lawsuits by having them dismissed early, often prior to the expense of discovery.

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 information about James and his practice, visit his attorney bio at http://www.weintraub.com/attorneys/james-kachmar

Can the owner of renowned tequila brand Patrón prevent a former marketing and PR firm from listing it as a client on its website and discussing the services it provided?  Patrón believes it can and has sued its former marketing firm, The Reindeer Group, for trademark infringement in Federal court in Texas.

In 2009 Patrón engaged Reindeer to provide advertising agency services.  Patrón claims that under the terms of Reindeer’s engagement, Reindeer agreed that it would not display any work regarding the Patrón brands, nor display the Patrón marks, without Patrón’s prior written approval.  Reindeer’s engagement ended in December, 2011.

Patrón claims that despite the termination of its services, Reindeer was using the Patrón marks on its website and was claiming that Patrón was a current client.Scott Hervey Article

Patrón claims that Reindeer failed to respond to letters from its counsel requesting that it cease the unauthorized use of the Patrón marks, thus necessitating the filing of a complaint.

In reading the complaint, it appears that this dispute is more about Reindeer’s billings than its use of the Patrón marks.  That said, Patrón makes a claim which, if upheld by the court, could impact how advertising agencies and other service professionals reference work performed for clients for marketing purposes.  Most advertising agencies get advance permission – usually within a written service agreement – to display the work as part of the firm’s portfolio.  Some firms, however, do not seek a client’s approval.  The outcome of Patrón’s claim could bring an end to that practice.

In its complaint for trademark infringement, Patrón claims that Reindeer’s listing of it on the Reindeer website and using the Patrón marks to refer to the work performed for Patrón as having

……harmed and continues to harm Patrón.  Such use deprives Patrón of the right to control its intellectual property, and to exclude unauthorized users — the core right of such property.  Moreover, Reindeer’s use of Patrón’s marks falsely suggests a connection between the two brands, which allows Reindeer to reap the benefits of the highly valuable Patrón name and all of the associated goodwill, but without Patrón’s permission.  This unauthorized use of Patrón’s marks diminishes the exclusivity of the marks, and threatens the marks’ source-identifying significance, and this damage is exceedingly difficult to quantify in monetary terms.

The Lanham Act provides that the holder of a registered trademark can file a trademark infringement claim against any person who, without the registered trademark holder’s consent, uses any reproduction, counterfeit, copy, or colorable imitation of a registered mark, in commerce, in connection with the sale, offering for sale, distribution, or advertising of any goods or services, where such use is likely to cause confusion, or to cause mistake, or to deceive.  Pursuant to 15 U.S.C. § 1125(a), “Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which . . .  is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person . . . shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.”

Patrón claims that Reindeer’s conduct  “has caused and is likely to continue to cause purchasers or others to mistakenly believe that Reindeer is legitimately connected, affiliated or associated with Patrón, or that Patrón approves Reindeer’s services, which is not the case.  Consumers who encounter Reindeer’s website are likely to incorrectly believe that Reindeer currently is the exclusive provider of advertising services for Patrón.” So seemingly, Patrón has a strong claim against Reindeer…but maybe not.

Trademark law recognizes a defense where the mark is used only “to describe the goods or services of [a] party, or their geographic origin.” Courts have found that nominative trademark fair use exists where the defendant used the plaintiff’s mark simply to describe the plaintiff’s own product.  In the case of nominative trademark fair use, the original producer is deemed as a matter of law not to sponsor or endorse the third-party product or service that uses its mark in a descriptive manner.  The test for nominative trademark fair use requires the court to ask whether (1) the product was “readily identifiable” without use of the mark; (2) defendant used more of the mark than necessary; or (3) defendant falsely suggested he was sponsored or endorsed by the trademark holder.

In Volkswagenwerk Aktiengesellschaft v. Church, 411 F.2d 350, 352 (9th Cir., 1969), the Ninth Circuit applied nominative trademark fair use and found that in “advertising [the repair of Volkswagens, it] would be difficult, if not impossible, for [Church] to avoid altogether the use of the word ‘Volkswagen’ or its abbreviation ‘VW,’ which are the normal terms which, to the public at large, signify appellant’s cars.”   Church did not suggest to customers that he was part of the Volkswagen organization or that his repair shop was sponsored or authorized by VW; he merely used the words “Volkswagen” and “VW” to convey information about the types of cars he repaired.  Therefore, his use of the Volkswagen trademark was not an infringing use.

In applying nominative trademark fair use to Reindeer’s use of the Patrón marks, a court would ask whether (1) Reindeer could describe the work it performed for Patrón without using the Patrón marks; (2) in describing the past work it performed for Patrón, did Reindeer use more of the Patrón marks than necessary to convey the information; or (3) whether Reindeer’s use of the Patrón marks in describing the services it provided for Patrón falsely suggested it was sponsored or endorsed by Patrón.  In a general sense, it would be difficult, if not impossible for Reindeer, or any other service provider who provides services to Patrón, to describe the services without using the Patrón marks.  Assuming Reindeer can get past the claim that it was contractually prohibited from using the Patrón marks without Patrón’s approval, Reindeer might have a good shot at putting Patrón’s trademark claim back in the bottle.

On September 26, 2016, the U.S. Court of Appeals for the Federal Circuit declined to review in a unanimous en banc decision a panel Federal Circuit decision affirming that the Patent Trial and Appeal Board (the “Board”) at the Patent and Trademark Office (“USPTO”) could hear new evidence during a trial, evidence that was not cited by the Board in its decision to institute review under the America Invents Act (“AIA”).  In so doing, the Federal Circuit reasoned “[t]he introduction of new evidence in the course of the trial is to be expected in inter partes review trial proceedings and, as long as the opposing party is given notice of the evidence and an opportunity to respond to it, the introduction of such evidence is perfectly permissible.”01-Caliguri-Er-15EX-web

The patents at issue in the case are U.S. Patent Nos. 7,351,410 (“the ’410 patent”) and 7,655,226 (“the ’226 patent”), both entitled “Treatment of Pompe’s Disease,” and are directed to treating Pompe’s disease with injections of human acid α-glucosidase.  Pompe’s disease is a genetic disease caused by a complete or partial lack of the lysosomal enzyme acid α-glucosidase (“GAA”).  In a healthy individual, GAA breaks down glycogen, a larger molecule, into glucose.  A person with Pompe’s disease has reduced levels of GAA, or no GAA at all, and is unable to break down glycogen into glucose.  This inability results in glycogen accumulating in the muscles of affected patients in excessive amounts.  There are two forms of Pompe’s disease: early-onset and late onset.  Early onset occurs in infants shortly after birth and is usually fatal before one year because excess glycogen accumulates in the muscles and causes cardiac or respiratory failure.  Those with late onset develop the disease after infancy and have progressive muscle weakness and respiratory issues caused by the glycogen buildup in the muscles, but do not typically develop the severe cardiac symptoms associated with early onset.

In 2013, Biomarin, the petitioner, filed petitions requesting inter partes review of the ’410 and ’226 patents.  The Board granted review on two different obviousness grounds for each challenged claim in each patent.  In its final written decisions, the Board found by a preponderance of the evidence that the challenged claims of the ’410 and ’226 patents would have been obvious.  In so doing, he Board cited references in its final written decisions that were not specifically included in the combinations of prior art on which the Board instituted review.

On appeal, Genzyme, the patent owner, argued that the Board violated the requirements of notice and an opportunity to respond found in the Administrative Procedure Act (“APA”).  Genzyme argued that in finding that the claims at issue were unpatentable, the Board relied on “facts and legal arguments” that were not set forth in the institution decisions.  Therefore, according to Genzyme, it was denied notice “of the issues to be considered by the Board and an opportunity to address the facts and legal arguments on which the Board’s patentability determination [would] rest.”

The Federal Circuit rejected this argument because the Board’s decision to institute review does not need to refer to every bit of evidence that is relied on by the Board in its final written decision.  The Federal Circuit reasoned “there is no requirement, either in the Board’s regulations, in the APA, or as a matter of due process, for the institution decision to anticipate and set forth every legal or factual issue that might arise in the course of the trial.”

Moreover, the Federal Circuit found “Genzyme has not shown that the Board’s decisions rested on any factual or legal issues as to which Genzyme was denied notice or an opportunity to be heard at a meaningful point in the proceedings.”  Indeed, the Federal Circuit noted that Genzyme itself referred to the disputed prior art in its patent owner responses to the petitions.  Therefore, the Federal Circuit found “Genzyme had ample notice that the references were in play as potentially relevant evidence and that the Board might well address the parties’ arguments regarding those references in its final written decisions.”  The Federal Circuit also noted that despite having notice of the prior art, Genzyme failed to take advantage of its procedural options to seek to exclude that evidence or further respond before the Board.

Finally, the Federal Circuit also noted the relatively limited use to which the Board put the disputed references.  Specifically, the Board used the references merely to describe the state of the art; and they were not among the prior art references that the Board relied upon to establish any claim limitations.  Thus, the Federal Circuit reasoned it has previously “made clear that the Board may consider a prior art reference to show the state of the art at the time of the invention, regardless of whether that reference was cited in the Board’s institution decision.”

This case serves as a warning to both petitioners and patent owners alike when faced with patent review under the AIA.  For patent owners, do not expect to able to exclude evidence or arguments raised at trial after the fact simply because the exact contours of the evidence or arguments were not raised in the petitions or the Board decision to institute review.  Instead, take advantage of all pro-active measures along the way, such as motions to exclude, motions seeking additional briefing, and so on.  For petitioners, be careful relying too heavily on evidence or arguments not raised in the petitions or cited in the Board’s decision to institute review.  Although successful here, one could argue the results may be different if patent owner had no notice of the references, did not have any opportunity to previously object, or the references had a significant substantive role in the Board’s decision, such as to establish claim limitations.

transparentIt is no secret; the Disney Corporation is a marketing and merchandising powerhouse. It has achieved that reputation by capitalizing on almost every marketing and merchandising opportunity that comes its way. If you have kids, the odds are you have been subjected to the Disney Corporation’s influence on more than one occasion. In fact, even if you do not have children, I’m willing to bet, at some point, you have been influenced by Disney’s masterful marketing.

Now, many of you already know that the Disney Corporation owns Pixar Animation Studios; the studio that has brought us family classics like Finding Nemo, Toy Story, The Incredibles, WALL-E, Monsters, Inc., and Cars.  And if you’re familiar with these movies, then you know that there is no shortage of related merchandise. But have you ever wondered why you never see merchandise related to Pixar’s most iconic character and beloved mascot, Luxo Jr.? You may not know Luxo Jr. by name, but he is the desk lamp character that appears on the production logo of every Pixar Film where he hops on the screen bouncing on the letter “I” in Pixar. With such a prominent role in one of Disney’s largest subsidiary companies, it was baffling to me that Disney had not capitalized on this merchandising opportunity. After some brief research, I learned that Disney tried to exploit this opportunity in 2009, but was immediately met with a lawsuit.

It turns out that Luxo Jr. is actually based on the award-winning lamps produced by the Norwegian company Luxo. Since Pixar’s creation of Luxo Jr.’s in 1986, Pixar has maintained a mostly positive relationship with Luxo, and Luxo was seemingly happy to allow Pixar to utilize its lamp’s likeness. But all of that changed in 2009 when Pixar had the idea to package its Up Blu-rays with its own Luxo Jr. merchandise that was not manufactured by Luxo. This obviously didn’t sit well with Luxo because they immediately filed a lawsuit for trademark infringement because the Pixar lamps bore the LUXO mark. In the complaint, Luxo contended that Pixar and Disney had not used the Luxo name on the products until this point, and that the sale of these Pixar lamps would cause “devastating damage to Luxo and dilute the goodwill which Luxo has built up.” This claim resulted from the fact that although the lamps were not made by Luxo, they bore their likeness, and gave the impression that they were a Luxo lamp. These claims, if proven, constitute the epitome of trademark infringement. Frankly, if the Disney Corporation and Pixar acted without Luxo’s permission when they moved forward with this merchandising idea, it is highly likely that the Court would have found in Luxo’s favor through summary judgment if the litigation had reached that stage.

However, the case never made it that far. Luxo and Disney quickly reached a settlement agreement where Disney and Pixar agreed that they would no longer sell Luxo Jr. lamps as long as Pixar was allowed to continue utilizing Luxo Jr. as its corporate mascot. Moreover, although Disney has never offered an official explanation, the six-foot tall animatronic Luxo Jr. that once stood in Walt Disney World near the Toy Story Midway Mania attraction was removed in 2010. Several people believe that this removal was related to the Luxo Jr. litigation, but because of the confidential nature of the settlement, no one knows for certain.