California case law over the last few years is replete with instances where a new and/or small business has one of their employees take responsibility for various IT activities such as setting up the company website and/or email domains. Disputes arise when that employee leaves for other employment and refuses to give the former employer access to the business domain and/or emails. This is what happened in the recent case, Pneuma International, Inc. v. Cho, which made its way to the California First Appellate District. The Court was required to analyze an old, but largely forgotten, theory of tort liability, trespass to chattels, in connection with a defendant’s “control” over his former employer’s website domain. Continue Reading
When is an Invention Obvious?
Posted in IP, Patent LawTo be patentable, an invention must satisfy two key requirements, as determined by the U.S. Patent and Trademark Office (PTO). First, the invention must be novel. This means that the same invention cannot have been disclosed in a single prior art reference. The prior art is all of the publicly available information that existed before the date the patent application was filed. Second, the invention must not have been obvious to a (hypothetical) person skilled in the art (the field of the invention) based on the prior art. Continue Reading
Supreme Court: Federal Government Cannot Challenge Patents in PTAB
Posted in Intellectual Property Litigation, IP, Patent LawThe validity of a patent can be challenged in four different types of proceedings: ex parte reexamination, inter partes review, post grant review, and covered business method review. An ex parte reexamination is initiated by any person or by the PTO’s director to request that the PTO internally reexamine the claims of the patent based on prior art.
The other three proceedings were established by the America Invents Act. These proceedings are conducted by the Patent Trial and Appeal Board (PTAB) before a panel of three judges. The proceedings are adversarial; Continue Reading
Potential Copyright Owners Beware: Make Sure Your Copyright Registrations Are Accurate!
Posted in Copyright Law, IPNormally, a copyright registration certificate constitutes “prima facie evidence of the validity of a copyright and of the facts stated in the certificate.” 17 U.S.C. §410(c). But what happens if that certificate contains knowingly inaccurate information? The purported copyright owner could face not only invalidation of the copyright, but the inability to pursue copyright infringement claims or risk an award of attorney’s fees against them if they do so. This was the result in a case recently decided by the Ninth Circuit Court of Appeals titled: Gold Value International Textile, Inc. v. Sanctuary Clothing, LLC, et al., decided June 4, 2019.
Gold Value International Textile, Inc., which does business as Fiesta Fabric (“Fiesta”), designs textile patterns which it sells to customers who use the fabric to make clothing. In October 2013, Fiesta registered what it called its Spring/Summer 2014 collection in a single registration with the Copyright Office. As part of this “collection,” Fiesta’s registration included a two-dimensional textile design known as the “1461 Design”. In the copyright registration application, Fiesta’s president certified that none of the works in the collection had been “published” as of the filing of the registration, and thus, the Spring/Summer 2014 collection was registered as a group of “unpublished” works.
However, during the six months prior to the October 2013 registration, Fiesta apparently sold 190 yards of the fabric bearing the 1461 Design to a limited group of existing and potential customers. Fiesta’s president would later testify that he knew about the sample sales prior to certifying the copyright registration in October 2013; although he claimed that he did not consider these sales of samples to be “publication.”
Sanctuary Clothing, LLC (“Sanctuary”) is a clothing manufacturer who Fiesta later sued claiming that its copyright in the 1461 Design had been infringed by Sanctuary’s selling of clothing that featured a design substantially similar to Fiesta’s 1461 Design. Fiesta also named several clothing retailers such as Nordstrom and Amazon as defendants in its lawsuit.
Fiesta and Sanctuary filed cross motions for summary judgment before the district court. The court granted the defendants’ summary judgment motion on the grounds that it found that Fiesta had knowingly put inaccurate information into its copyright registration and therefore the registration was invalid. In reaching this ruling, the district court had inquired to the Copyright Office to determine whether Fiesta’s copyright registration would have been rejected if the Office had known that information had been knowingly included despite it being inaccurate. The Copyright Office responded in the affirmative. After granting summary judgment to the defendants, the court granted their motion for attorney’s fees and awarded them attorney’s fees of more than $120,000 against Fiesta. Fiesta appealed both of these determinations to the Ninth Circuit Court of Appeal.
The Ninth Circuit began by noting that although copyright registration is not necessarily required for copyright protection, it is “a precondition to filing an action for copyright infringement.” In fact, a copyright registration certificate normally constitutes “prima facie evidence of the validity of the copyright and of the facts stated in the certificate.”
Prior to 2008, the Ninth Circuit had held that “inadvertent mistakes on registration certificates do not invalidate a copyright and thus do not bar infringement actions, unless the alleged infringer has relied to its detriment on the mistake, or the claimant intended to defraud the Copyright Office by making the misstatement.” However, in 2008, Congress passed the “PRO IP Act” that supplanted this Ninth Circuit precedence and provided that a registration certificate can satisfy the registration requirement regardless of whether it contains any inaccurate information, unless: (1) “the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate;” and (2) “the inaccuracy of the information if known would have caused the register of copyrights to refuse registration.” 17 U.S.C. §411(b)(1). The Copyright Act also allows works to be registered as part of a group provided that the works in the group are either all published or all unpublished, i.e., there can be no group registration for works that are both published and unpublished. The Ninth Circuit finally recognized that under the Copyright Act, “when copies are distributed `to the public by sale or other transfer of ownership or by rental lease or lending,’” or “offered to be distributed `to a group of persons for purposes of further distribution, public performance, or public display’”; than that particular work is considered ‘published’.
- Inaccurate Information
Fiesta began by arguing that the trial court erred in finding that its registration included inaccurate information. Essentially, Fiesta argued that it made an error by failing to put the publication date as to the 1461 Design in its registration and that this could be corrected by a supplemental registration. However, the Ninth Circuit rejected this argument because, to the extent that 1461 Design had been published, it could not be included in the Spring/Summer 2014 collection group, which contained unpublished works. Fiesta also argued that the Spring/Summary 2014 collection was essentially “unpublished,” including the 1461 Design, because the collection as a whole had never been “published together as a collection.” The Ninth Circuit rejected this argument finding that there was no legal authority for it, nor did Fiesta offer any such authority.
Finally, Fiesta argued that the 1461 Design had not been published because it had only been distributed for the limited purpose of promotional activities. The problem with this argument, however, was that as a precaution, Fiesta later filed a second copyright application for the 1461 Design and stated in that application that the date of first publication of the 1461 Design was in March 2013 when it began selling sample fabrics containing the 1461 Design to its customers. Furthermore, the Ninth Circuit found it significant that Fiesta, in doing this limited distribution of the 1461 Design prior to October 2013, did not prohibit customers from distributing or reselling the fabric to others. Thus, the Ninth Circuit concluded that the 1461 Design had in fact been published prior to the October 2013 copyright registration and therefore the statements in the registration that all of the works were “unpublished” was inaccurate.
- Knowingly Inaccurate
Fiesta next argued that even if the Court was to conclude that the statement regarding publication was inaccurate, Fiesta did not make those statements “knowingly.” In essence, Fiesta argued that it did not know that the limited distribution of the 1461 Design prior to October 2013 would be considered publication for purposes of copyright registration. The Ninth Circuit again rejected this argument, seeming to agree with the district court that “ignorance of the law” is “no excuse.” The Ninth Circuit also concluded that the use of the word “knowingly” in the PRO IP Act did not contain any reference to a culpable state of mind, i.e., knowing that one is doing something illegal, but rather only that the person knows that the statements are inaccurate. Thus, there was no requirement that Fiesta had to be shown to have defrauded the Copyright Office which was the earlier Ninth Circuit standard that had supplanted by the PRO IP Act.
- Likely Registration Rejection
Finally, the Ninth Circuit had no trouble reaching the second prong of the PRO IP Act that the Registrar of Copyrights would have refused the registration had it known that the statements regarding the 1461 Design were inaccurate. Specifically, had the Copyright Office known that the 1461 Design had been “published” prior to the October 2013 registration, it would not have registered the copyright for Fiesta’s Summer/Spring 2014 collection because of the mixture of published and unpublished works. In conclusion, the Ninth Circuit found that because “a valid registration is a precondition to bringing an action for infringement, we affirmed the district court’s grant of summary judgment in favor of defendants” because of the invalidity of Fiesta’s copyright registration.
The Ninth Circuit also concluded that the trial court properly awarded attorney’s fees to the defendants. The Ninth Circuit found that the district court did not error in considering the various factors in favor of a fee award such as: (1) defendants were the prevailing parties; (2) they had obtained success in getting the infringement claims dismissed; (3) the purposes of the Copyright Act would be promoted by encouraging defendants to advance meritorious defenses like the defendants did here; (4) there would be no chilling effect on other plaintiffs bringing copyright infringement claims; and (5) the goal of compensating defendants and deterring plaintiffs from pursuing similar claims based upon invalid registrations.
The Gold Value International Textile case is a reminder that copyright registrants should review their registration applications carefully to make sure that they do not include any inaccurate information. Otherwise, a copyright registrant risks having its copyright invalidated and being unable to pursue any claims for infringement.
Although the Battle of King’s Landing is Over and the Game of Thrones has Ended, the War to Protect HBO’s Intellectual Property Rages on
Posted in IP, Trademark LawIf your heart is beating and your lungs are taking in oxygen, you know that Game of Thrones recently reached its epic conclusion. It’s sad, but true. After eight glorious seasons, the most watched television series in history has ended. Even as I put the words to paper, or rather, this Word document, it doesn’t seem real. For those of you who haven’t watched the series, you probably think I’m being melodramatic. But loyal Thrones supporters know the agony I felt and can mostly likely empathize. Now, at this point you’re probably wondering what this has to do with intellectual property, and I promise, I’m getting there, but without a full comprehension of the Beatlemania-style obsession Game of Thrones has afflicted its fans with, you can never understand the value of the brand and its various marks. And to paraphrase Arya Stark’s mentor Syrio Forel, “[t]here is only one thing we say to [infringement]: Not today.”
As I’ve said in the past, when a company builds value in its trademarks, it’s imperative that the company take the necessary steps to protect its intellectual property. This is true regardless of the industry, but it is especially important in the entertainment industry where the trademarks are likely to be exposed to a substantial number of consumers, and would-be infringers, and more importantly, where the marks are likely to be used in conjunction with highly desirable merchandise. And of course, after producing blockbusters like The Sopranos, Band of Brothers, The Wire, Entourage, and Boardwalk Empire, HBO knows the name of the game, and certainly knows how to protect its intellectual property.
To that end, in 2009, two years after acquiring the rights to George R.R. Martin’s epic fantasy series, A Song of Ice and Fire, HBO filed a trademark application with the United States Patent and Trademark Office to register GAME OF THRONES for “[e]ntertainment services in the nature of an ongoing television series[.]” And that was just the start. Since that time, HBO has registered over 100 applications for different Game of Thrones trademarks, including without limitation WINTER IS COMING, WHITE WALKER, HOUSE TARGARYEN, HOUSE STARK, the THREE-EYED RAVEN, HODOR, and my personal favorite, DRACARYS, which is High Valyrian for “dragonfire.” For you non-Thrones fans, High Valyrian is the language often used by the show’s female lead, Daenerys Targaryen.
In an article on Law 360, Catherine M.C. Farrelly, the co-chair of Frankfurt, Kurnit, Klein & Selz, P.C.’s trademark group recognized, “Fans love to buy merchandise celebrating their favorite shows.” Later, she rhetorically stated, “Can’t you just imagine a die-hard fan buying a replica of the Iron Throne for his man cave, or sporting a recreation of Melisandre’s necklace, made with precious metals and gemstones?” As Ms. Farrelly’s statement implies, you could certainly imagine a fan having such a desire.
With that information in hand, it’s important for companies to get their application to the USPTO sooner rather than later. HBO understands this, and as such, has regularly submitted trademark applications before it began using the respective mark, or just before it anticipated the popularity of a certain mark rising. There are, of course, some exceptions. For example, HBO registered HODOR two days after it aired the iconic episode titled “The Door,” which discussed the character Hodor’s backstory just before he selflessly met his demise. This shows that even the world’s most sophisticated entities can’t always preemptively protect their IP. Things happen, and we can’t always predict what’s worth protecting in advance. And the conservative approach is to protect anything that has even a slight possibility of becoming valuable; that approach isn’t practical, or realistic for that matter.
HBO has vigorously protected its Game of Thrones intellectual property. It has proactively registered various marks, opposed the registration of numerous confusingly similar marks, and issued some strongly worded press releases when its IP was utilized by President Trump on Twitter. But although the show has ended, the IP battle isn’t over. Television series like Game of Thrones, and related intellectual property, don’t lose value overnight. You have to imagine that is especially true for the most popular television show of all time, and even more so when there are already five spinoffs in development.
Although HBO has won many Game of Thrones trademark battles to date, the war is far from over. Game of Thrones will be relevant for the foreseeable future, and as long as there are fans and a demand for merchandise, the potential for infringement will exist. How do I know this? Well, to paraphrase the Hand of the King, Tyrion Lannister, “[t]hat’s what I do … I [write] … and I know things.”
If You Can’t Describe It, You Can’t Patent It!
Posted in IP, Patent LawOne of the requirements for obtaining a patent is the written description requirement – the specification must include a written description of the invention. 35 U.S.C §112(a). This requirement means that the specification must fully disclose what the invention is. The purpose of the written description requirement is to demonstrate to persons skilled in the art of the invention that the inventor had possession of the invention at the time the application was filed, i.e., that the inventor actually invented the invention. In exchange for the limited “monopoly” that a patent provides to its owner, the public is entitled to know the scope of the patent. The public must know what the patent owner can protect with the patent.
Another requirement of a patent is that it must be enabled – the patent must describe to a person skilled in the art of the invention how to make and use the invention.
Patents are not frequently invalidated for failure to satisfy the written description requirement or for lack of enablement. Instead, patents are most commonly invalidated on the grounds that they lack novelty or are obvious over the prior art, and most of the cases deal with these requirements.
The written description requirement is an important one, however, as demonstrated by the Federal Circuit Court of Appeals’ recent invalidation of two pharmaceutical patents on that ground.
In Nuvo Pharmaceuticals Designated Activity Co. v Reddy’s Laboratories Inc., 2019 U.S. App. LEXIS 14345 (May 15, 2019), Nuvo sued several defendants for infringing two patents for a drug called Vimovo. Vimovo was a combination drug which included a non-steroidal anti-inflammatory drug (NSAID) to treat pain, a coating around the NSAID to prevent its release until the pH had increased to about 3.5, and a proton pump inhibitor (PPI) (which was coated to prevent its degradation) to raise the pH and to reduce acid in the stomach. The defendants were pharmaceutical companies who planned to market generic versions of Vimovo.
The defendants stipulated to infringement of the patents, but contended that the patents were invalid for several reasons, including for failure to satisfy the written description requirement. At a bench trial, the district court held that the patents were valid.
On appeal to the Federal Circuit, the defendants argued that the patents’ claims for an effective drug that included an uncoated PPI were invalid because the patents did not describe the efficacy of the drug with the uncoated PPI. Nuvo raised several arguments, primarily contending that the specification did not need to show the effective amount of the uncoated PPI. Nuvo also presented expert testimony that its specification satisfied the written description requirement.
The Federal Circuit rejected all of Nuvo’s arguments. The court explained that the written description requirement is not met by simply including the claim verbatim in the specification. The court noted that the inventor does not need to include experimental data in the specification to show efficacy, or even conduct any testing; does not need to explain why the drug works; and does not need to reduce the invention to practice. However, the specification must include a written description adequate to show that the inventor was in possession of the invention (a constructive reduction to practice). The court stated:
“Patents are not rewarded for mere searches, but are intended to compensate their successful completion…That is why the written description requirement incentivizes ‘actual invention,’…and thus ‘a mere wish or plan for obtaining the claimed invention is not adequate written description’…[citations omitted].”
The court held that Nuvo’s patents were “fatally flawed.” The specifications were nothing more “than a mere wish or hope that uncoated PPI would work…”
The court further rejected Nuvo’s argument that the patents satisfied the enablement requirement and therefore also satisfied the written description requirement. The two requirements are “separate and distinct;” both requirements must be met. The court explained:
“The purpose of the written description requirement is broader than to merely explain how to ‘make and use the invention’…The focus of the written description requirement is instead on whether the specification notifies the public about the boundaries and scope of the claimed invention and shows that the inventor possessed all the aspects of the claimed invention.”
The written description requirement is a key requirement for obtaining a patent. In essence, it is the first requirement: the inventor must be able to state what it is they invented, and be able to describe the invention itself. The requirement should not be assumed, overlooked, or minimized, at the risk of the losing the patent later on.
U.S. Supreme Court Allows App Store Anti-Trust Class Action to Proceed Against Apple
Posted in IP, Web/TechIn APPLE INC. v. PEPPER ET AL., case number 17-204, the United States Supreme Court considered a case alleging Apple has monopolized the retail market for the sale of apps and has unlawfully used its monopolistic power to charge consumers higher-than competitive prices. As an early defense in the case, Apple asserted that the consumer plaintiffs could not sue Apple because they supposedly were not “direct purchasers” from Apple under Illinois Brick Co. v. Illinois, 431 U. S. 720, 745–746 (1977). The Supreme Court disagreed, reasoning the plaintiffs purchased apps directly from Apple and therefore are direct purchasers under Illinois Brick. However, the Court did note that this case was still at the early pleadings stage of the litigation, so the Court did not assess the merits of the plaintiffs’ substantive antitrust claims against Apple, nor did the Court consider any other defenses Apple might have. In other words, the Court’s holding was limited to determining whether the Illinois Brick direct-purchaser rule barred these plaintiffs from suing Apple under the antitrust laws.
As some background on the matter, in 2007, Apple began selling iPhones, and in July 2008, Apple started the App Store. The App Store now contains about 2 million apps that iPhone owners can download. By contract and through technological limitations, the App Store is the only place where iPhone owners may lawfully buy apps. For the most part, Apple does not itself create apps. Rather, independent app developers create apps. Those independent app developers then contract with Apple to make the apps available to iPhone owners in the App Store. Through the App Store, Apple then sells the apps directly to iPhone owners. To sell an app in the App Store, app developers must pay Apple a $99 annual membership fee. Apple requires that the retail sales price end in $0.99, but otherwise allows the app developers to set the retail price. Apple also keeps 30 percent of the sales price, no matter what the sales price might be. In other words, Apple pockets a 30 percent commission on every app sale.
In response, in 2011, four iPhone owners sued Apple, alleging that Apple has unlawfully monopolized “the iPhone apps aftermarket.” The plaintiffs allege that, via the App Store, Apple locks iPhone owners “into buying apps only from Apple and paying Apple’s 30% fee, even if” the iPhone owners wish “to buy apps elsewhere or pay less.” Plaintiffs further allege that the 30 percent commission is “pure profit” for Apple and, in a competitive environment with other retailers, “Apple would be under considerable pressure to substantially lower its 30% profit margin.” The plaintiffs then allege that in a competitive market, they would be able to “choose between Apple’s high-priced App Store and less costly alternatives.” And they allege that they have “paid more for their iPhone apps than they would have paid in a competitive market.”
In response to the plaintiffs’ allegations, Apple moved to dismiss the complaint at the pleading stage, arguing that the iPhone owners were not direct purchasers from Apple and therefore may not sue. Apple cited the Illinois Brick case as authority, which held that direct purchasers may sue antitrust violators, but also ruled that indirect purchasers may not sue. The District Court agreed with Apple and dismissed the complaint. According to the District Court, the iPhone owners were not direct purchasers from Apple because the app developers, not Apple, set the consumers’ purchase price. The Ninth Circuit reversed. The Ninth Circuit concluded that the iPhone owners were direct purchasers under Illinois Brick because the iPhone owners purchased apps directly from Apple. According to the Ninth Circuit, Illinois Brick means that a consumer may not sue an alleged monopolist who is two or more steps removed from the consumer in a vertical distribution chain. Here, however, the consumers purchased directly from Apple, the alleged monopolist. Therefore, the Ninth Circuit held that the iPhone owners could sue Apple for allegedly monopolizing the sale of iPhone apps and charging higher than-competitive prices.
In then analyzing the issue, the U.S. Supreme Court held that under Illinois Brick, the iPhone owners were direct purchasers who may sue Apple for alleged monopolization, thus agreeing with the holding of the Ninth Circuit. The Supreme Court reasoned that Section 4 of the Clayton Act provides that “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue.” That broad text readily covers consumers who purchase goods or services at higher-than-competitive prices from an allegedly monopolistic retailer. The Court also reasoned that it has previously held that “the immediate buyers from the alleged antitrust violators” may maintain a suit against the antitrust violators, but has also ruled that indirect purchasers who are two or more steps removed from the violator in a distribution chain may not sue.
Applying that reasoning here, and unlike the consumer in Illinois Brick, the iPhone owners are not consumers at the bottom of a vertical distribution chain who are attempting to sue manufacturers at the top of the chain. Thus, the Court determined the absence of an intermediary in the distribution chain between Apple and the consumer is dispositive.
Apple argued that Illinois Brick allows consumers to sue only the party who sets the retail price, whether or not the party sells the good or service directly to the complaining party. But the Court found three main problems with Apple’s argument. First, Apple argued it contradicts statutory text and precedent by requiring the Court to rewrite the rationale of Illinois Brick and to gut its longstanding bright-line rule. However, the Court reasoned any ambiguity in Illinois Brick should be resolved in the direction of the statutory text, which states that “any person” injured by an antitrust violation may sue to recover damages. Second, Apple’s theory is not persuasive economically or legally. It would draw an arbitrary and unprincipled line among retailers based on their financial arrangements with their manufacturers or suppliers. And it would permit a consumer to sue a monopolistic retailer when the retailer set the retail price by marking up the price it had paid the manufacturer or supplier for the good or service but not when the manufacturer or supplier set the retail price and the retailer took a commission on each sale. Third, Apple’s theory would provide a roadmap for monopolistic retailers to structure transactions with manufacturers or suppliers so as to evade antitrust claims by consumers and thereby thwart effective antitrust enforcement.
Next, contrary to Apple’s argument, the Court found the three Illinois Brick rationales for adopting the direct-purchaser rule cut strongly in plaintiffs’ favor. First, it promoted the longstanding goal of effective private enforcement and consumer protection in antitrust cases. Second, Illinois Brick should not be treated as a “get-out-of-court-free card” for monopolistic retailers to play any time that a damages calculation might be complicated. Third, this is a case where multiple parties at different levels of a distribution chain are trying to recover the same passed-through overcharge initially levied by the manufacturer at the top of the chain.
Therefore, in sum, the Court found Illinois Brick does not bar the consumers from suing Apple for Apple’s allegedly monopolistic conduct, and affirmed the judgment of the U. S. Court of Appeals for the Ninth Circuit. However, as noted above, this ruling only considered whether plaintiffs could proceed through the pleadings stage, and did not consider the full merits of the substantive antitrust claims against Apple.
Allegiant Airlines Tips its Hand Regarding Las Vegas Stadium Rights
Posted in IP, Trademark LawIf you’re a fan of branding and sports, you may have wondered who will affix their name to the Raiders’ new stadium in Las Vegas. The construction is underway, but the team has yet to announce whose name the stadium will bear. However, we may have discovered a clue based upon a recent filing with the USPTO.
On March 29, 2019, Allegiant Airlines, a Las Vegas-based airline, filed a trademark application for ALLEGIANT STADIUM. This filing has caused significant speculation that Allegiant has either entered into a deal with the Oakland Raiders for the naming rights of the stadium, or is, at the very least, engaged in meaningful negotiations to that end. But despite the coincidental timing, Allegiant claims that it is not tied to the $1.8 billion stadium. In fact, in response to a request for comment, an Allegiant representative stated, “The purpose was to protect the trademark for Allegiant Stadium for any future uses, should we need it.” The representative did confirm that Allegiant has engaged in sponsorship discussions with the Raiders.
Although the representative’s statement may be true, those of us who are familiar with trademark applications and registrations have some reason to question Allegiant’s sincerity. A party cannot simply file a trademark application and obtain the exclusive right to utilize that trademark in commerce without actually putting it to use. While the USPTO permits applicants to file on an intent-to-use (“ITU”) basis, there are temporal limitations. Specifically, even if a party applied for, and obtained, each of five extensions permitted by the USPTO, they would only have 36 months to use the mark before it returned to the public domain. So, although it’s possible that Allegiant is looking to protect its right to use ALLEGIANT STADIUM in conjunction with a professional sports arena, these opportunities don’t frequently arise. With that said, it’s quite possible that Allegiant is simply trying to protect its right to use the mark if and when it is able to reach an agreement with the Raiders. The cost to file a trademark application and obtain a notice of allowance is reasonable enough to warrant a peremptory filing, even if the deal may never come to fruition. This is especially true when we’re talking about a $25 million per year kind of deal.
Allegiant is certainly no stranger to marketing in the sports industry. Its name appears on the ice at T-Mobile Arena, home of the Las Vegas Knights, and it was recently named the official airline of the Las Vegas Aviators, the Triple-A affiliate of the Oakland Athletics. However, those sponsorships are likely significantly less costly than the $25 million per year that the Raiders are seeking for the stadium rights. For that reason, some industry experts have expressed belief in Allegiant’s representation. In short, these individuals expressed that they do not believe that Allegiant would be willing to spend that amount of money to have its name on the stadium. They believe it would impose a financial burden on the airline, but they also noted that companies have often been willing to stretch themselves for unique opportunities like this.
I suppose we won’t know until a deal is complete, or close to it, but we can be certain we won’t have to wait long. The stadium is set for completion on July 31, 2020
Hidden Trademark Landmines in Comparative and Compatibility Advertisements
Posted in Intellectual Property Litigation, IPNespresso has filed a lawsuit against Jones Brothers Coffee Distribution Company alleging trademark and trade dress infringement. In support of its trademark infringement claim, Nespresso alleges that Jones Brothers’ use of the words “Nespresso Compatible” in connection with its coffee capsules will cause consumers to believe that the Jones Brothers product is endorsed and/or sponsored by Nespresso because “Nespresso Compatible” is used prominently and without a disclaimer nearby.
Generally a trademark owner can stop others from using its trademark in order to prevent the public from being confused about the source of the goods or services. However, “fair use” presents a circumstance under which a third party can legally use another’s trademark. There are two types of trademark fair use. The first is the classic fair use situation where the mark itself has a descriptive meaning and the third party uses the term descriptively to describe its products or services.
The other type of trademark fair use is called nominative fair use. Nominative fair use involves the use of a trademark to refer to the actual mark owner’s goods or services. Where a third party’s product or service cannot be readily identified without using another party’s trademarks, this is a good indication that the use may be nominative fair use. In order to rely on nominative fair use as a defense, the user would need to have only used as much of the mark as was necessary and did nothing to suggest an endorsement or approval by the trademark owner.
Nominative fair use comes up in a variety of situations.
One situation involves compatibility advertising; use a third party’s trademark in order to inform the consuming public about a product’s fit with another product. The Supreme Court encourages the use of third party trademarks in compatibility advertising because it “assists consumers and furthers the societal interest in the fullest possible dissemination of information.” Whether compatibility advertising has morphed into an ad that creates the likelihood of consumer confusion is in the detail of the advertisement copy itself and whether it is factually ambiguous. This is why, in the case of comparative or compatibility advertising, courts consider factors such as the following: (1) whether the use of the plaintiff’s mark is necessary to describe both the plaintiff’s product or service and the defendant’s product or service, that is, whether the product or service is not readily identifiable without use of the mark; (2) whether the defendant uses only so much of the plaintiff’s mark as is necessary to identify the product or service; and (3) whether the defendant did anything that would, in conjunction with the mark, suggest sponsorship or endorsement by the plaintiff holder, that is, whether the defendant’s conduct or language reflects the true or accurate relationship between plaintiff’s and defendant’s products or services. (Depending on what Circuit you are in, these factors may be in addition to the factors normally considered when engaging in a likelihood of confusion analysis).
In the case of comparative or compatibility advertising, it seems that the first factor would almost always be answered in the affirmative; how can one describe how a product is compatible with a competitor’s product without mentioning the competitor’s product by name.
It is in analyzing the second nominative fair use factor that the issue of prominence comes into play; how prominently was the competitor’s mark featured on the defendant’s products. If the defendant uses the competitor’s mark too prominently – places too much of an emphasis on the competitor’s mark – the defendant will have stepped over the line into likelihood of confusion. This was the case in Nespresso USA, Inc v. Africa America Coffee Trading Co.; a prior case Nespresso brought (and won by default judgment) based on Africa America’s use of “Nespresso compatible” in connection with the sale of single serving coffee capsules.
It is in connection with the third nominative fair use factor that disclaimers come into play. Disclaimers can weigh against a finding of likelihood of confusion, but not always. This was the case in Weight Watchers Int’l, Inc. v. Stouffer Corp., which dealt with advertisements for Stouffer’s Lean Cuisine product and its compatibility with the Weight Watchers points exchange diet program. In its advertisements, Stouffer mounted a campaign based on the Weight Watchers point exchange compatibility of certain of its Lean Cuisine frozen food products. In particular, the court noted one Stouffer magazine ad which read: “Lean Cuisine Entrees Present 25 Ways To Get More Satisfaction From Your Weight Watchers Program,” and then in smaller letters, “Weight Watchers Exchanges For Lean Cuisine Entrees.” The Stouffer ad contained a disclaimer that the exchanges it lists are based solely on published Weight Watchers information, and that the list of exchanges does not imply approval or endorsement of the Lean Cuisine entrees by Weight Watchers. Disclaimers often can reduce or eliminate consumer confusion; however each disclaimer must be judged by considering the business and its consumers, as well as the proximity of the disclaimer to the infringing statements. Here the court noted that Stouffer’s disclaimer appeared in minuscule print on the very bottom of the ad and because of the location and size of the disclaimer, it does not effectively eliminate the misleading impression conveyed in the ad’s large headline.
A good comparative or compatibility advertisement requires solid legal analysis as well as compelling copy. The lesson here is that brands and advertising agencies should get legal input before using a third party’s trademark in advertisements or otherwise in connection with its products or services.
Some at the PTAB Think Textbooks Are Not Printed Publications
Posted in Intellectual Property Litigation, IPShockingly, some at the Patent Trial and Appeal Board (“PTAB”) think textbook publishers who include dated copyright notices don’t actually publish the textbooks that year! Further, would you have imagined an argument that textbooks aren’t printed publications? Given the amount we paid for textbooks in college and the number stored in my garage that seems like a strange argument, right? Well, the PTAB essentially made just that argument in Hulu, LLC v. Sound View Innovations, LLC. As a result, Hulu requested rehearing of the PTAB decision denying institution of inter partes review of the validity of Sound View’s patent, U.S. Patent No. 5,806,062. Hulu argued the decision was in conflict with other PTAB decisions “involving the public availability of an asserted ‘printed publication.’” In response to the request, the Precedential Opinion Panel (“POP”) ordered a rehearing to address the question: “What is required for a petitioner to establish that an asserted reference qualifies as [a] ‘printed publication’ at the institution stage?”
Specifically, the PTAB denied Hulu’s petition for IPR, arguing the submission of a textbook with the “copyright year of 1990” was insufficient to show the textbook was “publicly available” at that time. In its request for rehearing, Hulu pointed out that the PTAB’s decision conflicts with several prior decisions. For example, in other institution-stage decisions, the PTAB previously found that 1) “a copyright notice is prima facie evidence that a publication is prior art”; 2) ”a copyright notice, alone or combined with other minimal corroborating evidence, is sufficient evidence of public accessibility to meet the ‘reasonable likelihood’ threshold for institution”; 3) “a copyright notice by a well-known publisher in the United States is sufficient evidence of public accessibility”; 4) “a copyright notice should be evidence viewed in the light most favorable to a petitioner when resolving disputes regarding public accessibility at the institution stage”; and 5) “where a patent owner merely points out possible inconsistencies in petitioner’s evidence—without submitting its own evidence of a different public availability date—the petition should be instituted, and any determination as to public availability occur during the trial.”
In its review of the denial of Hulu’s IPR petition, the POP will reconsider not only whether a textbook’s copyright date is sufficient for it to qualify as a printed publication but also the broader question of what is sufficient for any type of reference to qualify as a printed publication. Given that only patents and printed publications can be used as prior art in IPR proceedings, this is an important and frequently recurring issue.
The POP was designed to address the need for rehearings when issues such as the one being raised in Hulu occur. Specifically, after learning from several years of AIA trial proceedings, including IPRs, the PTAB created the POP, which serves two main purposes: 1) to rehear certain matters and 2) to assist the Director of the United States Patent and Trademark Office (“USPTO”) in determining whether a PTAB decision should be designated as a “precedential” or “informative” decision rather than a “routine” decision.
POP review in a pending PTAB trial or appeal can only be obtained by recommendation. Generally, a recommendation for POP review will be submitted by a party to a proceeding. A “Screening Committee” considers all recommendations and then forwards its recommendation to the Director. Whether to institute POP review is within the sole discretion of the Director, and that decision cannot be appealed.
The default members of the POP include the Director, the Commissioner for Patents, and the Chief Judge. The Director, however, selects POP members and has the discretion to replace default members with the Deputy Director, the Deputy Chief Judge, or an Operational Vice Chief Judge.
When a case is sent to the POP for review, the POP will issue a decision resolving the question raised in that case. Each POP decision may be designated as “precedential,” “informative,” or “routine.” A “precedential” decision is binding on future PTAB panels. An “informative” decision is not binding but provides the PTAB’s recommended approach for the issues raised. “Routine” decisions are only binding in the specific case.
The POP provides an additional review mechanism within the USPTO with the goal of addressing certain issues before they reach the Court of Appeals for the Federal Circuit or the U.S. Supreme Court. In addition, the POP’s decisions provide a mechanism for issuing guidance to petitioners and patent owners and for providing predictability of results across different PTAB panels faced with similar issues. It will be interesting to see just how much guidance and clarification the POP provides as to the printed publication issue raised in the Hulu case. Perhaps, we will soon know whether a textbook is a printed publication!
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