Tag: Intellectual property

Trademark Assignments: Keeping it Valid

Lewis Roca Rothgerber

After a trademark achieves federal registration, ownership of the mark may change hands for a variety of reasons. When a trademark owner transfers their ownership in a particular mark to someone else, it is called an assignment. Generally, for an assignment of a trademark to be valid, the assignment must also include the ‘goodwill’ associated with the mark (goodwill is an intangible asset that refers to the reputation and recognition of the mark among consumers). If the assignment of a trademark includes the mark’s goodwill and is otherwise legal, the assignee gains whatever rights the assignor had in the mark. Importantly, this includes the mark’s priority date, which has implications for protecting the mark from potential infringers going forward.

In contrast, if an assignment of a trademark is made without the mark’s accompanying goodwill, then it is considered an assignment “in gross” — and the assignment is invalid under U.S. law. Courts have analyzed whether an assignment was made in gross in a few different ways, but, as is the case with much of trademark law, protecting customers from deception and confusion is the primary motivation behind any analysis for determining the validity of an assignment.

One way courts determine if an assignment was made in gross is through the substantial similarity test. This test essentially examines whether the assignee is making a product or providing a service that is “substantially similar” to that of the assignor, such that consumers would not be deceived by the assignee’s use of the mark. This analysis includes an assessment of the quality and nature of the goods and services provided under the mark post-assignment.  Thus, even if an assignee is using the mark on the same type of goods, but the goods are of lower quality than the goods previously offered by the assignor under the mark, the assignment could be invalid. However, slight or inconsequential changes to goods and services after an assignment are not likely to invalidate the assignment, as such changes are to be expected and would not thwart consumer expectations.

Decisions on the question of substantial similarity are only marginally instructive, as the  test calls for a fact specific inquiry into what the consuming public has come to expect from the goods or services offered under a given mark. For example, courts have noted that despite similarities in services and goods, “even minor differences can be enough to threaten customer deception.”[1] Instances of products or services that were deemed not substantially similar (and thus resulted in invalid assignments) include: an assignee offering phosphate baking powder instead of alum baking powder;[2] an assignee using the mark on a pepper type beverage instead of a cola type beverage;[3] an assignee producing men’s boots as opposed to women’s boots;[4]an assignee using the mark on beer instead of whiskey;[5] and an assignee selling hi-fidelity consoles instead of audio reproduction equipment.[6]

Conversely, case law has also shown that substantial similarity can be found even when products or services do differ in some aspects, if consumers aren’t likely to be confused. For example, the following product changes did not result in a finding of an invalid assignment: an assignee offering dry cleaning detergent made with a different formula;[7]an assignee using thinner cigarette paper;[8] and an assignee selling a different breed of baby chicks.[9]

Whether goods or services are substantially similar may seem like an easy test to apply, but, as case law demonstrates, this fact-intensive analysis can yield results that look strange in the abstract. Disputes involving the validity of a trademark assignment are decided on a case-by-case basis, using the specific facts at hand to determine if consumer expectations are being met under the new use. Thus, while trademarks acquired through assignment can have significant value (and grant the assignee important rights formerly held by the assignor), assignees should be wary of changes to goods or services under an acquired mark that could be seen as deceiving the public.

ARTICLE BY

Rachel A. Nicholas
OF
Lewis Roca Rothgerber LLP

[1] Clark & Freeman Corp. v. Heartland Co. Ltd., 811 F. Supp. 137 (S.D.N.Y. 1993).

[2] Independent Baking Powder Co. v. Boorman, 175 F. 448 (C.C.D.N.J.1910).

[3] Pepsico, Inc. v. Grapette Company, 416 F.2d 285 (8th Cir. 1969).

[4] Clark & Freeman Corp. v. Heartland Co. Ltd., 811 F. Supp. 137 (S.D.N.Y. 1993).

[5] Atlas Beverage Co. v. Minneapolis Brewing Co., 113 F.2d 672 (8 Cir. 1940).

[6] H. H. Scott, Inc. v. Annapolis Electroacoustic Corp., 195 F.Supp. 208 (D.Md.1961).

[7] Glamorene Products Corp. v. Procter & Gamble Co., 538 F.2d 894 (C.C.P.A. 1976).

[8] Bambu Sales, Inc. v. Sultana Crackers, Inc., 683 F. Supp. 899 (1988).

[9] Hy-Cross Hatchery, Inc v. Osborne 303 F.2d 947, 950 (C.C.P.A. 1962)

Timeliness – The Devil Is in the Details (a.k.a. Rules)

Mcdermott Will Emery Law Firm

GEA Process Engineering, Inc. v. Steuben Foods, Inc.

In an order issued by the Patent Trial and Appeal Board (PTAB or Board), the Board expunged exhibits from the records of five related cases on the basis of timeliness. GEA Process Engineering, Inc. v. Steuben Foods, Inc., Case Nos. IPR2014-00041, IPR2014-00043, IPR2014-00051, IPR2014-00054, IPR2014-00055 (PTAB, Sept. 29, 2014) (Elluru, APJ).

In post-grant proceedings, it is important to note that there are two different deadlines for objecting to evidence.  Prior to institution, a patent owner is required to object to evidence submitted to the PTAB with the petition within 10 business days of institution of a trial. Once the trial has begun, i.e., after institution, a party seeking to object to the introduction of evidence or an exhibit must raise its objection within five business days of service of the evidence or exhibit. The objections should be served on the offering party and not filed with the PTAB.

In GEA Process Engineering v. Steuben Foods, following the institution of trial, the petitioner filed what it characterized as exhibits entitled “Petitioner’s Objections” to the patent owner’s evidence. However, the PTAB expunged the exhibits from the records of all five cases. As the Board explained, the applicable rule, 37 C.F.R. § 42.64(b)(1), requires that “[o]nce a trial has been instituted, any objection [to evidence] must be served within five business days of service of evidence to which the objection is directed.” As such, the petitioner’s filingits objections to the patent owner’s evidence, at the Board was improper—a potentially costly mistake.

ARTICLE BY

Ryan Edmond Vachon
OF
McDermott Will & Emery

.bit: Why Brands Need to Pay Attention [VIDEO]

Sterne Kessler Goldstein Fox

Monica Riva Talley, director at the intellectual property law firm Sterne, Kessler, Goldstein & Fox, P.L.L.C., discusses the unregulated domain .bit and why brands need to pay attention to this “Wild West of the Internet.” As Ms. Talley explains, ‘.bit’ is unlike any customary domain and presents several areas of concern for intellectual property owners including cybersquatting, the use of pirated content, and the absence of oversight or control by any regulatory entity.

© 2014 Sterne Kessler
ARTICLE BY

Monica Riva Talley
OF
Sterne, Kessler, Goldstein & Fox P.L.L.C.

They Know It When They See It: Patentable Subject Matter After Alice

VedderPriceLogo

To those with even a casual interest in the preparation and prosecution of patents in the United States, the holding in the Supreme Court’s June 2014 decision in Alice Corp. v. CLS Bank International is well known: claims directed to intermediated settlement encompass an abstract idea, and generic recitation of a computer implementation in such claims fails to transform the abstract idea into patent-eligible subject matter. Predictably, numerous articles have since been published extolling the virtues (or lack thereof, as the case may be) of theAlice decision. While the patent eligibility debate is good and necessary, it leaves open the question of many would-be patentees: may I get a patent on my software-based innovation?

While the Court provided virtually no “bright line” rules in answer to this question, the decision nevertheless suggests various approaches that may be employed going forward to best ensure your patent application embraces patent-eligible subject matter.

Background

Alice Corporation obtained various patents directed to, as the Court put it, “a computerized scheme for mitigating ‘settlement risk’—i.e., the risk that only one party to an agreed-upon financial exchange will satisfy its obligation.” In a highly fractured opinion, the Court of Appeals for the Federal Circuit concluded that all of Alice’s claims were directed to patent-ineligible subject matter.

On further appeal, the Court cited its recent decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., in which the Court laid out its two-step process for separating patents directed to patent ineligible concepts from “those that claim patent-eligible applications of those concepts.” First, one must “determine whether the claims at issue are directed to . . . patent ineligible concepts.” If so, in the second step, one must then ask what else is in the claims that may be sufficient to “transform” the ineligible concept into a patent-eligible application thereof.

Unfortunately, the Court provides no guidance how one goes about determining whether claims are directed to ineligible concepts in the first step. In fact, the Court expressly takes a pass on the issue, stating that it “need not labor to delimit the precise contours” of what constitutes a patent-ineligible concept. Instead, the Court noted that it’s Bilski decision concerned claims directed to “hedging,” which “all members of the Court agreed” constituted an abstract idea. Without further reference to the actual language of the claims, the Court stated that Alice’s “claims . . . are drawn to the concept of intermediated settlement.” With this setup, the Court quickly concluded that “[l]ike the risk hedging in Bilski, the concept of intermediated settlement is a ‘fundamental economic practice long prevalent in our system of commerce.'”

Turning to the second step, the Court had little trouble in determining that various other recitations in the claim beyond the abstract idea failed to “do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.” Looking at “the claim elements separately,” the Court stated that “each step does no more than require a generic computer to perform generic computer functions.” Further, considering the claimed computer elements “as an ordered combination” did not add anything “that is not already present when the steps are considered separately.”

Going Forward

So, you are now considering patent protection for your new, software-implemented invention, but the Court’s “guidance” in Alice has left you unsure whether it makes sense to proceed. Despite the outcome in Alice, patents based on software-implemented innovations have not been knocked out entirely, though they did take a pretty good punch to the gut. Going forward, would-be patentees must take greater care to ensure that they claim and present their inventions in a manner that minimizes the likelihood of being interpreted as an “abstract idea.” The following observations should help you avoid that pitfall.

1. Stay As Far Away From Bilski and Alice As You Can

As noted, the closest the Court came to providing concrete guidance for identifying patent-ineligible abstract ideas was to measure how close the underlying “inventive concept” of an invention comes to the abstract ideas found in Bilski and, in the future, Alice. That is, if the subject matter of your claims is reasonably analogous to the risk hedging claimed in Bilski or the intermediated settlement in Alice, it’s almost certainly going to be viewed as embracing an abstract idea. Instead, try to find a way to describe the subject matter of your invention as something other than a concept that is related to these concepts.

Even more so than before, for software-implemented ideas, application drafting will require a careful balancing of what you say in the specification and in the claims. That is, the difference between whatever abstract idea is arguably discussed in the specification versus the limitations in your claims (∆abst) should be as large as possible.

For example, assume an invention concerns a new technique for completing payments for goods and services via mobile, wireless devices, which method facilitates a more rapid exchange of certain types of data. Having a method claim that begins “A method for completing payments via mobile, wireless devices” strongly suggests that the “inventive concept” is directed to the mere idea of completing financial transactions, which starts to sound awfully similar to the intermediated settlement of Alice. Rather than focusing the claim on the novelty of the financial transaction itself, attempt to focus the claim on the effect the method has on the underlying mobile device, e.g., “A method for communicating transactional data by a mobile, wireless device.”

2. Get “Technical”

Perhaps more importantly, even if you can strongly contrast your claims to the underlying abstract idea, you may still be on shaky grounds if your application doesn’t somehow discuss how it leads to a technological improvement. In Alice, when rejecting the sufficiency of a generic computer implementation to rescue claims otherwise directed to an abstract idea, the Court specifically noted that the claim did not “purport to improve the functioning of the computer itself . . . [or] effect an improvement in any other technology or technical field.” Stated another way, rather than directing your specification and claims as teaching improvements to a traditionally human-implemented field of endeavor (e.g., hedging risk, mediating settlement risk), they should clearly establish how the innovation improves the operation of a machine (i.e., the computer implementing the software-driven method) or an overarching “technology or technical field” in which the computer-implemented method is employed.

The graph below illustrates the apparent “sliding scale” nature of the abstract idea and technology aspects of the Alice decision. As shown, the connection of the claimed subject matter to improvement to a particular technology is shown along one axis, and the distinction of the claims over an encompassed abstract idea (∆abst) is shown along the other. For claimed subject matter that demonstrates little distinction from the alleged abstract idea and that demonstrates a weak connection to a technological improvement, there is little likelihood (“No Chance”) of demonstrating subject-matter eligibility. Oppositely, for claimed subject matter that is strongly distinguished from the alleged abstract idea and that clearly concerns a technological improvement, there is a much greater likelihood (“No Problem”) of demonstrating subject-matter eligibility. It is to be expected, however, that the relative areas of the illustrated outcomes will be different according to the particular realm of abstract ideas at hand, i.e., the “No Chance” area is likely to be much larger when dealing with finance-related inventions versus inventions concerning, say, telecommunications.

 

For example, assume an invention concerns a new process applicable to trading platforms for various financial instruments, e.g., stocks, commodities, etc. Where possible, one should not stress how the claimed process makes trading markets more efficient or enables different types of financial instruments to be traded. Instead, it may be better to acknowledge in the specification that electronic trading is well-known and that the invention leads to better operation of the underlying machines (e.g., where the claimed process enables the machine to complete more trades per unit of time, complete the trades more accurately, in a manner less consuming of resources, etc.) or broadens the capabilities of such machines (e.g., where the process provides a function that was previously unavailable). In drafting the specification, carefully ascribe certain steps to humans versus machines where possible and then make sure the claims don’t include any of the human-performed steps.

3. Get to Know a European Patent Attorney

It has been observed by many commentators that the Alice decision is yet another nudge of U.S. practice in the direction of European practice, i.e., focused on a “technical problem” for which your invention must provide a “technical solution.” European patent attorneys have been dealing with such issues for many years and may be able to offer valuable insights how to best position your invention in an application.

4. Be Prepared to Make Decision Makers Prove “Abstractness”

A concern with the Court’s lack of guidance when assessing whether a claim embraces excluded subject matter is that, not unlike those seeking to obtain patents, the examiners at the U.S. Patent & Trademark Office (USPTO) and federal district court judges will be equally in the dark. Unfettered from concrete guidance, it may be anticipated that examiners and judges will be more apt to make unsubstantiated assertions that claims encompass abstract ideas. Having drafted your claims and specification as noted above, i.e., emphasizing less how the invention helps achieve a business goal or perform human tasks better and instead illustrating how it improves/extends operation of an underlying machine or overarching technology, you will at least have a stronger foundation for arguing against the alleged abstract idea.

ARTICLE BY

Christopher P. Moreno
OF
Vedder Price

Renewal Deadline – 1 Year Trademark Clearinghouse Registrations

Sterne Kessler Goldstein Fox

If your company was an early registrant in the Trademark Clearinghouse, it is likely your registrations had an effective date of November 5, 2014, the date the Clearinghouse went “live.” If so, the deadline to renew one-year registrations is November 5, 2014.

© 2014 Sterne Kessler
ARTICLE BY

Monica Riva Talley
Tracy-Gene G. Durkin
Ivy Clarice Estoesta
Julie D. Shirk
OF
Sterne, Kessler, Goldstein & Fox P.L.L.C.

U.S. Bancorp CBM Results in Cancellation of Retirement Capital Access Management Co.’s Patent Claims

Schwegman Lundberg Woessner

In 2011, U.S. Patent 6,625,582, entitled Method And System For Converting A Designated Portion of Future Social Security And Other Retirement Payments To Current Benefits, was assigned to Retirement Capital Access Management Company LLC.  Benefit Funding Systems LLC asserted the ’582 patent against U.S. Bancorp in June of 2012.  Benefit Funding Systems LLC v. U.S. Bancorp, Case No. 1:12-cv-803-LPS (D. Del. filed June 22, 2012).  In response, U.S. Bancorp filed a CBM petition requesting review of claims 1, 13, 14, 18, 30, and 31 of the ’582 patent on March 29, 2013.  U.S. Bancorp asserted that the ’582 patent qualified for CBM review under 35 U.S.C. § 324 and Sec. 18(a) of the Leahy-Smith America Invents Act, Pub. L. 112-29, 125 Stat. 284, 329 (2011), and that these claims were invalid under 35 U.S.C. § 101.

U.S. Bancorp’s CBM Petition states:

The specification states that “[t]he present invention relates generally to a system and method which provides a mechanism for a [beneficiary] of Social Security payments, or of other retirement payments, to access present value of a designated portion of its future retirement payments . . . . [W]ithout encumbering the beneficiary’s rights to its future retirement benefits.” See U.S. Bancorp Ex.1003 (‘582 patent), Col. 1:10-22.

The ‘582 patent explains that “retirement age individuals” are finding retirement benefits or the anticipated timing of those benefits “to be somewhat inadequate to meet their present and future financial needs, expectations, and objectives.” See U.S. Bancorp Ex.1003, Col. 1: 23-29. The ‘582 patent further states that such retirement benefits “have not generally been seen as an adequate source of current capital, particularly to support financing based upon future receipts” due to “the current legislated proscriptions . . . against assigning or otherwise alienating future retirement benefits.” U.S. Bancorp Ex.1003, Col. 1:35- 43. Therefore, the ‘582 patent purports to provide a financial program that allows a beneficiary to access the present value of future retirement payments while complying with U.S. laws restricting alienation of future retirement benefits. U.S. Bancorp Ex.1003, Col. 1:43-49. Curiously though, the ‘582 specification does not explain – and claims do not recite any limitations regarding – how the patented financial scheme complies with U.S. laws. Instead, each independent claim merely includes the limitation that monetary benefits are provided “without violating legislated proscriptions in the United States against alienation of future retirement funds.” See, e.g., U.S. Bancorp Ex.1003, Col. 9:8-9 (claim 1).

(CBM Petition at pp. 4-5.)

Claim 1, which is representative of the subject matter, recites:

1.  A computerized method for creating a source of funds based on present value of future retirement payments, comprising the steps of:

a. designating an account in a depository for a beneficiary to receive future retirement payments payable to said beneficiary from a source of said retirement payments for a preselected period of time;

b. designating a benefit provider for providing a monetary benefit to said beneficiary;

c. authorizing said depository to periodically disburse a predetermined portion of said retirement payments deposited in said account to said benefit provider during said preselected period of time;

d. providing said monetary benefit to said beneficiary from said benefit provider based at least in part on present value of a designated portion of said future retirement payments without encumbering said beneficiary’s right to said future retirement payments and without violating legislated proscriptions in the United States against alienation of future retirement benefits;

e. causing said future retirement payments to be deposited into said account throughout said preselected period of time;

f. causing said depository to transfer a portion of said retirement payments deposited into said account to said benefit provider during said preselected period of time; and

g. reimbursing said benefit provider from resources other than said future retirement payments if said transfer of a portion of said retirement payments from said depository to said benefit provider are curtailed prior to said end of said preselected period of time, and making said retirement payments available for the exclusive use of said beneficiary.

The CBM Petition concluded:

Importantly, none of the claim steps is limited to performance on, or by, any specific device or computer. Indeed, no device or computer is needed at all, as all of the steps can be performed by a human.

(CBM Petition at p. 9.)

The Patent Owner (Retirement Capital Access Management Co. LLC) filed a Preliminary Response on July 2, 2013, arguing that the Petitioner failed to carry its burden of showing that it is more likely than not that at least one of the challenged claims of the ’582 patent is unpatentable under § 101, at least in part because:

 

  • the Petitioner cannot show “that, in practice, the claims cover the abstract concept itself”; and

  • the use of a computer as part of the specialized electronic funds transfer is not merely convenient, or done for the purpose of expediting calculations.

 

Despite these arguments, the Board granted institution of CBM review on September 20, 2013.  (CBM2013-00014, Paper 12, Sep. 20, 2013.)  A Patent Owner Response dated November 20, 2013 was filed that set forth the arguments from the Preliminary Response and provided an argument that § 101 is not a proper ground upon which a covered business method review may be maintained.  (Patent Owner Retirement Capital Access Management Company LLC’s Response, Paper 19, p. 37, Nov. 20, 2013.)  A Reply was filed by the Petitioner and an Oral Hearing was held on April 1, 2014.  No depositions were taken, based on the record in PRPS.

The Board issued a final written decision, dated Aug. 22, 2014, canceling each of the challenged claims under 35 U.S.C. § 101.  The Board dismissed Patent Owner’s assertion that CBM review cannot be premised on § 101, stating that the AIA allows for CBM reviews to include certain grounds of invalidity based on conditions for patentability, including § 101:

As recognized by the Supreme Court, § 101 is a condition for patentability. In Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 12 (1966), the Supreme Court stated that the 1952 Patent Act “sets out the conditions of patentability in three sections,” citing 35 U.S.C. §§ 101, 102, and 103. The Supreme Court has also addressed invalidity under § 101 when it was raised as a defense to an infringement claim under § 282. See Mayo Collaboration Servs. v. Prometheus Labs, Inc., 132 S.Ct. 1289, 1293 (2012).

(Decision at p. 9.)

What is also notable about this proceeding is that the CBM review didn’t include:

 

  • anticipation or obviousness grounds (and the necessary submissions of prior art),

  • an assertion of indefiniteness,

  • an expert declaration to support the CBM Petition, and

  • depositions of experts by either side.

 

Indeed, at 36 pages in length, the CBM Petition is roughly half the length allotted by the Board’s rules.  Thus, a relatively short record was produced in this CBM.  However, as covered in a previous post, this is not the only Petitioner to take advantage of this approach (See a similar approach in LinkedIn Corporation v. AvMarkets, Inc., CBM2013-00025.)

ARTICLE BY
Timothy Bianchi

OF
Schwegman, Lundberg & Woessner, P.A.

Facebook, Inc. v. Rembrandt Social Media, L.P., Granting Request for Rehearing IPR2014-00415

Drinker Biddle Law Firm

Takeaway: Compliance with Section 42.105(b) regarding service by electronic means or EXPRESS MAIL is not required under Section 42.106(a)(2) in order for a filing date to be accorded to a petition.

In its Decision, the Board granted Patent Owner’s Request for Rehearing, but only to revisit the Board’s earlier statement regarding compliance with the requirements for service of a petition.

In its Decision on Institution, the Board had stated that “mailing via FedEx after the cut-off time on Thursday without electing Saturday delivery failed to comply with 37 C.F.R. § 42.105(b).” Patent Owner contended that the Board “misapprehend[ed] the regulatory nature of an alleged error in service of the Petition in this case,” and that the Board misapprehended “whether a failure to effect service on February 6, 2014, was ‘harmless.’”

The Board found Patent Owner’s arguments not persuasive but granted the Request for Rehearing to address the service of the Petition in this case. The Board determined that service of the Petition in this case complied with 37 C.F.R. § 42.106, which states that a filing date will not be accorded until “service of the petition on the correspondence address of record as provided in [§] 42.105(a).”  The Board stated that “Section 42.106(a)(2) does not require compliance with § 42.105(b) for a filing date to be accorded,” and that the Petition was properly accorded a February 6, 2014 filing date in this case.

Facebook, Inc. v. Rembrandt Social Media, L.P., IPR2014-00415
Paper 14:  Decision on Request for Rehearing
Dated: July 31, 2014
Patent: 6,415,316
Before: Phillip J. Kauffman, Jennifer S. Bisk, and Matthew R. Clements
Written by: Clements

ARTICLE BY

Intellectual Property Litigation Drinker Biddle
OF
Drinker Biddle & Reath LLP

First Written Decision Pertaining to Pharmaceuticals

ArmstrongTeasdale logo

Practitioners monitoring the use of inter partes review (IPR) proceedings to challenge pharmaceutical patents may want to note what appears to be a pair of first-time events.  The Patent Trial and Appeal Board (PTAB) recently issued the first Final Written Decision in an IPR proceeding involving a pharmaceutical-related patent. In addition, the first petition for covered business method review challenging an Orange Book-listed patent for a marketed drug was recently filed.

On June 20, 2014, the PTAB issued Final Written Decisions in four related IPR proceedings (IPR2013-00116; IPR2013-00117; IPR2013-118; and IPR2013-00119)  involving U.S. Patent Nos.  5,997,915; 6,011,040; 6,673,381; and 7,172,778, respectively. The patents generally disclose compositions for supplementing dietary folate and the challenged claims were directed to compositions comprising natural isomers of reduced folates and corresponding methods of using such compositions.  Petitioner Gnosis SpA initiated the IPR proceedings after it was sued for infringement of the patents by a group of plaintiffs including Merck KGaA (licensee of three of the patents) and Merck & Cie (owner of the remaining patent).  The decision to challenge the patents in an IPR proceeding was a successful one for Gnosis as the PTAB found all of the challenged claims to be unpatentable, holding that certain claims were anticipated and the remaining claims were obvious.

Several days later, on June 24, 2014, Amneal Pharmaceuticals, LLC, Par Pharmaceutical, Inc., and Roxane Laboratories, Inc. (Petitioners) filed a petition for covered business method of a patent listed in the Food and Drug Administration’s Orange Book for the prescription drug product Xyrem®, which is marketed by Jazz Pharmaceuticals, Inc. The patent, U.S. Patent No. 7,895,059, generally discloses methods for controlling the distribution of, and access to, hazardous or abuse-prone drugs and the challenged claims are directed to “[a] computerized method of distributing a prescription drug under the exclusive control of an exclusive central pharmacy.”

Each of the Petitioners had previously filed an Abbreviated New Drug Application with the Food and Drug Administration seeking approval of a generic version of Xylem and been sued by Jazz for infringement of several Orange Book-listed patents including U.S. Patent No. 7,895,059. In their petition for covered business method review, the Petitioners asserted that the challenged method claims involve the verification of an insurance payment for the drug and therefore are related to a “financial product or service” (a requirement for covered business method review). Should the PTAB accept this argument and grant the petition, that determination could potentially encourage others to file petitions for covered business method review of additional Orange Book-listed patents containing similar “Risk Evaluation and Mitigation Strategies (REMS)”-type claims.

Article By:

B. Scott Eidson
Of:
Armstrong Teasdale

Laches, Statutes of Limitations and Raging Bull: The Supreme Court Re-Emphasizes The Pitfalls of Delay In Copyright Cases

Sheppard Mullin 2012

In Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. __ (2014), the United States Supreme Court addressed the role that the equitable defense of laches – i.e., a plaintiff’s unreasonable and prejudicial delay in commencing suit – plays in relation to a claim of copyright infringement filed within the Copyright Act’s three-year statute of limitations period.  There is no doubt that Petrella puts to rest a split amongst the Circuits by clarifying that laches cannot bar a claim for legal relief for infringement occurring within the three-year statutory window.  Yet, Petrella should not be seen as a knock-out punch to the use of laches in copyright actions.  To the contrary, Petrella re-emphasizes the important role that laches plays in connection with the equitable remedies available under the Copyright Act, and provides copyright defendants – and plaintiffs – with guidance as to whether, and to what extent, a plaintiff’s delay in filing suit may limit the availability of those equitable remedies.  Additionally, Petrella’sdiscussion of a copyright plaintiff’s evidentiary burden and comments about the Copyright Act’s registration requirements raise interesting questions about the impact that a delay in filing suit may have on a plaintiff’s ability to prove infringement.  Laches, it seems, “don’t go down for nobody.”[1]

Petrella involved a claim of copyright infringement brought against Metro-Goldwyn-Mayer, Inc. and certain related entities (collectively, “MGM”) by the daughter of Frank Petrella, who authored two screenplays (a “1963 Screenplay” and “1973 Screenplay,” respectively) and a book based on the life of boxing champion Jake LaMotta.  Id. at 7-8.  In 1976, Frank Petrella and Lamotta assigned their rights in the three works, including the renewal rights, to Chartoff-Winkler Productions, Inc.  Id. at 7.  The motion picture rights to the three copyrighted works were subsequently acquired by United Artists Corporation, a subsidiary of MGM.  Id.  In 1980, MGM released, and registered a copyright in, the motion picture Raging Bull, directed by Martin Scorcese and starring Robert DeNiro.  Id.  Frank Petrella died in 1981 – during the initial terms of the three copyrighted works.  Id.

In 1990, the United States Supreme Court issued its decision in Stewart v. Abend, 495 U.S. 207 (1990).  In Stewart, the Supreme Court confirmed that the assignment of renewal rights by an author before the time for renewal arrives cannot defeat the right of the author’s statutory successors to the renewal rights if the author dies before the right to renewal accrues.  Id. at 219-20.  In other words, if the author dies before the right to renewal accrues, then the author’s statutory successor is entitled to renew the copyright free and clear from any assignment previously made by the author.  Id.  In such a case, the owner of a derivative work does not retain the right to exploit that work when the death of the author causes the renewal rights in the preexisting work to revert to the statutory successors.  Id. at 220-21.

In 1991, following the Supreme Court’s decision in Stewart, Frank Petrella’s daughter and statutory successor renewed the copyright in the 1963 Screenplay, thereby recapturing the copyright for the renewal term unburdened by her father’s previous assignment.  Id. at 8.  Petrella, however, took no immediate action against MGM to enforce her copyright in the 1963 Screenplay.  In 1998, seven years after Petrella reacquired the copyright in the 1963 Screenplay, her attorney notified MGM that Petrella had obtained the copyright and that MGM’s continued exploitation of any derivative work – including the motion picture Raging Bull – allegedly infringed on Petrella’s copyright.  Id.  However, once again, Petrella chose to not take any immediate action against MGM because, as she put it, “the film was deeply in debt and in the red and would probably never recoup.”  Id. at 16.

Thereafter, in 2009 – eighteen years after Petrella recaptured the copyright in the 1963 Screenplay – Petrella filed a copyright infringement action against MGM, alleging that MGM infringed her copyright in the 1963 Screenplay by using, producing and distributing the motion picture Raging Bull, which Petrella alleged to be a derivative of the 1963 Screenplay.  Id. at 8. Petrella sought monetary damages and injunctive relief for MGM’s acts of alleged infringement occurring within the three-year statute of limitations period prior to the filing of her lawsuit.  Id. at 8-9.

MGM moved for summary judgment on various grounds, including the equitable doctrine of laches.  As to its laches-based defense, MGM argued that Petrella’s eighteen-year delay in filing suit after she reacquired the copyright in the 1963 Screenplay was unreasonable and prejudicial to MGM.  The United States District Court for the Central District of California granted summary judgment on MGM’s laches defense, concluding that the doctrine of laches barred Petrella’s complaint, in its entirety.  Id. at 9.  The Ninth Circuit Court of Appeals affirmed the District Court’s laches-based dismissal, agreeing with the District Court that MGM had established expectations-based prejudice, in that it made a large investment in marketing, advertising, distributing and otherwise promoting the film, including a 25th Anniversary Edition of Raging Bull that was released in 2005, believing that it had complete ownership and control of the film.  Id.

The United States Supreme Court granted certiorari to resolve a conflict among the Circuits on the applicability of the laches defense to claims of copyright infringement brought within the three-year statute of limitations set forth in 17 U.S.C. § 507(b).  Id. at 10.  Examining the Copyright Act, the Court found that the three year statute of limitations applicable to copyright claims “itself takes account of delay” because, under § 507(b) and the Copyright Act’s separate-accrual rule, a “successful plaintiff can gain retrospective relief only three years back from the time of suit.”  Id. at 11.  The Supreme Court concluded that courts are not at liberty to “jettison Congress’ judgment on the timeliness of suit” and, therefore, laches “cannot be invoked to preclude adjudication of a claim for damages brought within the three-year window.”  Id. at 1.

Although Petrella clearly establishes that laches cannot be invoked to knock-out a claim for legal relief for infringement that occurs within the Copyright Act’s three-year statute of limitations period, it does not stop there.  Rather, the Supreme Court goes on to re-emphasize that a plaintiff’s unreasonable and prejudicial delay in commencing suit – the cornerstone of a laches-based defense – still packs a considerable punch in determining the types, and contours, of equitable relief appropriately awardable under the Copyright Act.  Of course, the availability of equitable relief is of particular significance to the parties in an infringement action, as two of the Copyright Act’s more potent remedies – injunctive relief and an accounting of the defendant’s profits – are inherently equitable remedies.

Petrella acknowledges the importance of laches in evaluating claims for equitable relief at both: (1) the outset of the litigation; and (2) the remedial stage when determining the proper relief and assessing an award of profits.  The Supreme Court confirmed that, in “extraordinary circumstances,” the consequences of the plaintiff’s delay in commencing suit may – as a threshold matter – limit the particular type of relief equitably awardable by the Court.  Id. at 20.  The Court cited Chirco v. Crosswinds Communities, Inc., 474 F. 3d 227 (6th Cir. 2007), as an example of a case where such “extraordinary circumstances” were found to be present.  In Chirco, the plaintiff-copyright owner knew that the defendants’ housing development infringed its copyrighted architectural designs prior to the defendant starting construction on the development, but took no steps to halt the development for two-and-one-half years, during which more than 168 of the units were built, 140 units sold, and 109 occupied by residents.  Id. at 234-36.  Although the Sixth Circuit Court of Appeals reversed the District Court’s dismissal of the plaintiff’s entire lawsuit based on laches, it affirmed the District Court’s judgment to the extent that it barred the plaintiff from obtaining an injunction mandating the destruction of the housing project.  Id. at 236.  The Sixth Circuit found that such relief would be inequitable given that: (1) the defendants knew about the development plans before construction began; and (2) the requested relief would work an unjust hardship on the defendants and innocent parties.  Id.  Thus, the plaintiff’s unreasonable and prejudicial delay deprived the plaintiff of an equitable remedy otherwise available under the Copyright Act.

Similarly, in New Era Publications International v. Henry Hold & Co., 873 F. 2d 576, 577 (2nd Cir. 1989), the licensee of the copyrights to certain works by Church of Scientology founder, L. Ron Hubbard, brought an infringement action against the publisher of a Hubbard biography, alleging that the biography contained extensive reproductions of Hubbard’s published and unpublished writings.  On appeal, the Second Circuit affirmed the District Court’s refusal to permanently enjoin publication of the biography based on the doctrine of laches.  Id. at 584.  The Second Circuit noted that the defendant had been aware that the biography would be published in the United States since 1986, but, despite filing lawsuits in 1987 to enjoin publication of the biography abroad, failed to compare the defendant’s biography with the books published abroad, failed to inquire of the defendant as to the planned date of publication in the United States, and failed to take any steps to enjoin publication of the book until it sought a restraining order in 1988.  Id.  Moreover, by the time that the plaintiff took action in 1988, twelve-thousand copies of the book had already been printed, packed and shipped, review copies had been sent out, and a second printing had already been scheduled.  Id.  The Second Circuit found that, had the plaintiff promptly sought an adjudication of its rights, the book might have been changed at minimal cost while there was still an opportunity to do so, but that a “permanent injunction would result in the total destruction of the work since it is not economically feasible to reprint the book after deletion of the infringing material.”  Id.  The court concluded that “[s]uch severe prejudice, coupled with the unconscionable delay already described, mandates denial of an injunction for laches and relegation of [the plaintiff] to its damages remedy.”  Id. at 585.

In addition to limiting at the outset the type of equitable relief available to a plaintiff,  Petrella acknowledged that “a plaintiff’s delay can always be brought to bear at the remedial stage, in determining appropriate injunctive relief, and in assessing the ‘profits of the infringer…attributable to the infringement.’”  Id. at 21.  The Petrella Court instructed that, “[s]hould Petrella ultimately prevail on the merits, the District Court, in determining appropriate injunctive relief and assessing profits, may take account of her delay in commencing suit”  Id.  In considering Petrella’s delay, the Court directed the District Court to “closely examine MGM’s reliance on Petrella’s delay” and consider factors such as: (1) the defendant’s knowledge of the plaintiff’s claims; (2) the protection that the defendant may have achieved through pursuit of a declaratory judgment action; (3) the extent to which the defendant’s investment was protected by the separate-accrual rule; (4) the court’s authority to order injunctive relief “on such terms as it may deem reasonable” under Section 502(a); and (5) any other considerations that would justify adjusting injunctive relief or profits.  Id. at 21-22.

Apart from confirming the significant role that laches plays in determining the equitable relief available to a plaintiff in a copyright action, Petrella hints at potential evidentiary roadblocks that a copyright plaintiff may encounter as a result of the delay associated with a laches-based defense.  Noting that a copyright plaintiff bears the burden of proof, the Petrella Court concluded that any loss of evidence that may result from a plaintiff’s delay in filing suit would likely impact the plaintiff’s ability to establish infringement.  Id. at 18.  The Court further opined that the Copyright Act’s “registration mechanism” reduces the need for extrinsic evidence because, in order for a plaintiff to be able to sue for infringement, both the registration certificate and deposit copy of the original work must be “on file” with the Copyright Office.  Id.  Thus, Petrella seems to implicitly endorse the view that a registration certificate – and not merely a pending application – is required to maintain a copyright action, an issue that is currently the subject of a split amongst the Circuits.  Additionally, the importance that Petrella places on a plaintiff’s deposit of a copy of the original work raises an interesting question; namely, what happens when the plaintiff’s delay in filing suit is such that the Copyright Office no longer has a copy of the original work in its archives?[2] In such a case, the best evidence rule may very well preclude a plaintiff from prevailing on a copyright claim if the plaintiff cannot supply a copy of the original work.  See, e.g., Seiler v. Lucasfilm, Ltd., 808 F.2d 1316 (9th Cir. 1987).  This could present an insurmountable hurdle in suits brought by statutory heirs alleging the infringement of unpublished works.

In short, while Petrella clearly limits the role that the equitable defense of laches has vis-à-vis claims for legal relief for copyright infringement occurring within the Copyright Act’s three-year statute of limitations period, it by no means absolves a plaintiff from the consequences of unreasonable delay.  To the contrary, an unreasonable and prejudicial delay in commencing suit can hit a plaintiff where it matters most – the ability to enjoin infringing conduct, deprive a defendant of profits attributable to its alleged infringement and, indeed, meet its burden of proving infringement.  Thus, laches is still a contender that should be considered when evaluating a claim of copyright infringement.

Article By:

Edwin Komen
Dylan J. Price
Of:
Sheppard, Mullin, Richter & Hampton LLP

[1] Quote attributed to Jake LaMotta character portrayed by Robert DeNiro in “Raging Bull”.

[2] Under the Copyright Office’s retention policies, deposits may be transferred to the Library of Congress, given away to other institutions or discarded, the latter generally after five years.  See, Notice of Policy Decision – Policy Statement on Deposit Retention Schedule, 48 Fed. Reg. 12862, March 28, 1983.  Full term retention requires a government filing fee of $540 in addition to the normal copyright application fee.  See, current fee schedule at www.copyright.gov/docs/fees.html.

Apple Inc. v. Rensselaer Polytechnic Institute and Dynamic Advances, LLC, Decision Denying Institution

DrinkerBiddle

Takeaway: A voluntary dismissal of a litigation without prejudice will not nullify service of a complaint for purposes of 35 U.S.C. § 315(b) if that litigation is immediately continued in a consolidated case.

In its Decision, the Board denied institution of the Inter Partes Review as time-barred under 35 U.S.C. § 315(b) because it was not filed within the statutory period of 35 U.S.C. § 315(b).  The date of service of two different complaints was an issue of primary focus by the Board.

In a first patent litigation, Patent Owner (Dynamic Advances) filed a complaint on October 19, 2012. Dynamic Advances, LLC v. Apple Inc., No. 1:12-cv-01579-DNH-CFH (N.D.N.Y.)(Dynamic I).  The complaint for the first litigation was served on Petitioner (Apple) on October 23, 2012.  In a second patent litigation, Rensselaer Polytechnic Institute and Dynamic Advances jointly filed a complaint on June 3, 2013. Rensselaer Polytechnic Inst. & Dynamic Advances, LLC v. Apple Inc., No. 1:13-cv-00633-DNH-DEP (N.D.N.Y.)(Dynamic II).  The complaint for the second litigation was served on Petitioner (Apple) on June 6, 2013.

The Petition in the instant proceeding was filed on January 3, 2014.  Thus, the service date of October 23, 2012 for the first litigation (Dynamic I) was more than 12 months prior to the filing of the Petition, whereas the service date of June 6, 2013 for the second litigation (Dynamic II) was less than 12 months prior to the filing date of the Petition.  The Board found that service of the first complaint on October 23, 2012, rather than service of the second complaint on June 6, 2013, controlled for purposes of determining whether the requested inter partes review was time-barred under 35 U.S.C. § 315(b).  Because the service date of October 23, 2012 for the first litigation (Dynamic I) was more than 12 months prior to the filing of the Petition, the Board found that the Petition was not filed within the statutory period of 35 U.S.C. § 315(b).

The Board’s rationale in reaching this conclusion related to the fact that on July 22, 2013, the court ordered consolidation of Dynamic I and Dynamic II under Fed. R. Civ. P. 42.  In doing so, the court ordered that pursuant to a joint stipulation of the parties, Dynamic I was “dismissed without prejudice and the parties would proceed to litigate their claims and defenses in [Dynamic II].”

Petitioner argued that under the decision in Macauto U.S.A. v. BOS GmbH & KG, IPR2012-0004 (“holding that a voluntary dismissal without prejudice nullified service of the complaint for purposes of 35 U.S.C. § 315(b)”), service of the first complaint on October 23, 2012 was not effective.  According to Petitioner, as in Macauto, the facts of the present case have the effect of leaving the parties as if the first action had never been brought.

The Board disagreed, finding that “Dynamic I cannot be treated as if that case had never been filed under the rationale of Macauto.”  Instead, the Board found that it was “persuaded that the circumstances in the instant case weigh in favor of close scrutiny of the effect of the dismissal of Dynamic I, because that cause of action, although dismissed, was continued immediately in Dynamic II.”

This proceeding was the third time that Petitioner had petitioned for inter partes review against the ‘798 patent.  In IPR2014-00077, institution was denied.  IPR2014-00320 was filed concurrently with the petition for this proceeding.

Apple Inc. v. Rensselaer Polytechnic Institute and Dynamic Advances, LLC,IPR2014-00319
Paper 12: Decision Denying Institution of Inter Partes Review
Dated: June 12, 2014
Patent 7,177,798 B2
Before: Josiah C. Cocks, Bryan F. Moore, and Miriam L. Quinn
Written by: Moore
Related proceedings: IPR2014-00077; IPR2014-00320; Dynamic Advances, LLC v. Apple Inc., No. 1:12-cv-01579-DNH-CFH (N.D.N.Y.); Rensselaer Polytechnic Inst. & Dynamic Advances, LLC v. Apple Inc., No. 1:13-cv-00633-DNH-DEP (N.D.N.Y.)

Article By:

Christopher Bruenjes
Of:
Drinker Biddle & Reath LLP