Category: Intellectual Property

Worried About Fake News? You Should Really Worry About Fake Drugs

While the concept of “fake news” continues to trigger Twitter followers and grab headlines, the trade in counterfeit drugs is a worldwide problem of significant scale.  This article discusses the problem and talks about some things trademark owners are doing to address the public safety issues posed by fake drugs.

The Problem.

Trademark counterfeiting?  Most think of fake Rolex watches sold on city street corners or faux designer purses sold in suburban kitchens.  While knock-off luxury goods may seem harmless, the economic harm inflicted on legitimate businesses—and the workers they employ—is enormous.  The Federal Bureau of Investigation estimates that the dollar value of counterfeit goods sold in the U.S. at $200-250 billion annually.  Many of North Carolina’s leading industries, including tobacco, furniture, apparel and pharmaceuticals, are among the most frequent targets of trademark counterfeiting. Also, according to Interpol, trademark counterfeiting often provides for a source of income and reliable import channel for those with other nefarious purposes, such as illegal drug or human trafficking and potentially even terror activities.

In addition to these very negative economic consequences, there is a particular level of harm associated with certain kinds of trademark counterfeiting.  Counterfeit goods aren’t subject to the same regulatory standards and safety inspections as items produced by legitimate manufacturers. So, in areas of manufacture where quality control is important, counterfeit products fall short.  Consider, for example, the potential harm that could be caused by substandard, bogus automobile tires or airplane parts.

Counterfeit pharmaceutical drugs are clearly an area where public safety concerns are paramount.  Counterfeit medicines have been found in all areas of the globe, including the highly regulated U.S. market, and extend to medicines, vaccines, testing and diagnostic equipment, and other medical devices.  Both branded and generic pharmaceutical products can be falsified.  And sales are not just limited to the black market—such products make their way to hospitals and pharmacies, often through internet sales trade channels.

Lifestyle or “popular” drugs are often counterfeited, and there have been recent increases in cosmetic, weight loss and opioid drugs.  However, such drugs are not limited to such trends—counterfeit malaria vaccines, cholesterol medications and cancer treatments can also be found in the U.S.  The World Health Organization (WHO) estimates that an average of up to 10% of medicines are counterfeit, and in developing countries, that percentage is considerably higher.

The Center for Medicine in the Public Interest estimates the annual worldwide dollar value of counterfeit pharmaceuticals at $200 billion annually and rising. Sadly, the damage is far greater than lost sales. WHO estimates that approximately 200,000 people die each year as the result of ineffective counterfeit anti-malarial drugs.

Counterfeit medicines also may cause adverse affects or allergic reactions, and they may not effectively treat the ailment for which prescribed.  They may promote drug resistant disease strains or contain no active ingredient, the wrong active ingredient, or the incorrect strength (too much or too little) or dosage of the intended ingredient.  According to a WHO investigation, approximately 1/3 of such drugs contain no effective ingredient.  Given the lack of inspection of counterfeit manufacturing facilities, such products are often produced under non-sterile circumstances, resulting in bacterial or other contamination.  Clearly, the ways in which counterfeit drugs can cause serious negative patient outcomes are extensive and extreme.

Combating the Problem.

Drug companies, and their attorneys and security departments, take a multi-pronged approach to combating counterfeiting.  Many of these efforts are used to combat counterfeiting generally, but some have been developed with particular focus toward the nuances of the counterfeit pharmaceutical market.

The counterfeiting problem can appear daunting, given an array of unknown manufacturing sources, the breadth of possible sales outlets, and the strong consumer preference for the “cheap but name brand” combination. Successful anti-counterfeiting practices do not generally follow a reactive “Whack-A-Mole” approach, attempting to squelch every low-level advertisement or email blast that comes out. Rather, systematic and strategic prosecution, akin to practices used in the intelligence community, is preferred. Investigations of networks and relationships, rather than merely products and sellers, can help identify high-payoff targets, the disruption of which can have positive effects across several echelons of the counterfeit trade. Focusing limited enforcement resources on valuable choke points which contribute to an ecosystem response can often be the most fruitful and strategic approach.

Counterfeit pharmaceuticals in particular, given their specific methods of typical advertisement and sale, are prone to certain forms of interdiction over others. It is well known that counterfeit pharmaceuticals are advertised heavily on both internet ads and email “spam” messages, all of which attempt to direct a prospective purchaser to a product-ordering website. Attempting to interdict the advertising messages, which are often sent by botnets or third-parties through a referral-affiliate relationship, or to shut down specific websites, is a losing proposition. This is the case because there are hundreds of thousands or more of each, and the costs to re-establish a confiscated website are negligible compared to the significant enforcement costs. However, academic researchers working with industry and enforcement contacts identified several potential chokepoints on which these sorts of pharmaceutical sales pathways rely. See Dharmdasani et al., “Priceless: The Role of Payments in Abuse-advertised Goods,” CCS ’12, October 16–18, 2012, Raleigh, N.C.  One key chokepoint relationship for online transactions is a seller’s host bank, nearly always non-U.S. and non-EU, that is willing to accept abusive credit card transactions related to these unlawful goods from card processors such as Visa and MasterCard.

Pharmaceutical

Nearly all online counterfeit pharmaceutical revenue can flow through these concentrated banking relationships, and researchers discovered that intercepting just one or two of these banking relationships, and seizing related funds, could have ripple effects disrupting thousands of drug transaction websites and referral affiliates. For example, a 2011 study determined that across 95% of spam e-mail for pharmaceuticals and similar goods, only three acquiring bank institutions were used. Id. This research demonstrates a guiding principal of anti-counterfeiting efforts: enforcement is most successful where the “termination cost [to the counterfeiter] is inevitably far higher— in fines, in lost holdback, in time and in opportunity cost—than the cost of the intervention itself [by the rights holder]. … [R]elatively concentrated actions with key . . .  institutions can have outsized impacts.” Id.

Targeted investigations and enforcement are only one aspect of a comprehensive anti-counterfeiting approach. Successful rights holders employ a broad-based strategy, involving secured supply chain management, thorough technology and distribution agreements with market partners, and high-tech security solutions such as secure packaging, microchips, holograms, and the like. The combination of many of these controls can make enforcement actions easier and more productive, and thus reduce the prevalence and success of counterfeit competitors. In addition, it is important to inform consumers and retailers about both the dangers of counterfeits and the value of accessing authentic products. Pharmaceutical companies should engage in advertising to alert the marketplace to the dangers of counterfeit pharmaceuticals and to also assist others in identifying counterfeit drugs – including examination of packaging and medicines for quality, condition, spelling and grammar; and checking manufacturing and expiration dates and batch numbers on both exterior and interior packaging.

The problem of fake drugs is in fact very real news and companies here in North Carolina and around the world are taking steps to defend their brands and protect their customers in the marketplace.

Authentic Vial                Counterfeit Vial

Botox Authentic    Fake Botox Vial

This article originally was published in the August 2017 edition of the Newsletter of the Board of Legal Specialization, a publication of the North Carolina State Bar.

This post was written by Sarah Anne Keefe & Stephen Shaw of Womble Carlyle Sandridge & Rice, PLLC. Copyright © 2017. All Rights Reserved.

Trump Administration Issues New Guidance for Automated Driving Systems

The National Highway Traffic Safety Administration (NHTSA) announced yesterday the Trump administration’s first significant guidance concerning autonomous vehicles and Automated Driving Systems (ADS).

The new voluntary guidelines, titled Automated Driving Systems: A Vision for Safety, are intended to encourage innovation in the industry and are being touted as the administration’s “new, non-regulatory approach to promoting the safe testing and development of automated vehicles.” One of the most important aspects of these guidelines is the NHTSA’s clarification of its view of the delineation between the roles of the states and the federal government with respect to ADS technology.

The new guidelines replace the Federal Automated Vehicle Policy (FAVP), which was released by the Obama administration in 2016. A Vision for Safety comprises voluntary guidance for vehicle manufacturers, best practices for state legislatures when drafting ADS legislation, and a request for further comment.

Autonomous-vehicle manufacturers are asked to undertake a voluntary self-assessment addressing 12 safety elements discussed in the new guidance. That is a slight departure from the FAVP, which detailed a 15-point safety assessment. The safety self-assessment remains voluntary, and NHTSA emphasizes that there is no mechanism to compel manufacturers to participate. The agency also stated that the testing or deployment of new ADS technologies need not be delayed to complete a self-assessment.

In what may be the most significant component of the guidance, NHTSA made clear its role as the primary regulator of ADS technology by “strongly encourage[ing] States not to codify th[e] Voluntary Guidance . . . as a legal requirement for any phases of development, testing, or deployment of ADSs.”

Further acknowledging the potential problems associated with a patchwork of state laws, the agency expressed its belief that “[a]llowing NHTSA alone to regulate the safety design and performance aspects of ADS technology will help avoid conflicting Federal and State laws and regulations that could impede deployment.” States are instead tasked by A Vision for Safety with regulating licensing of human drivers, motor vehicle registration, traffic laws, safety inspections, and insurance.

The new guidance comes just one week after the House of Representatives passed the SELF-DRIVE Act designed to eliminate legal obstacles that could interfere with the deployment of autonomous vehicles. However, as NHTSA and Congress are seeking to speed up ADS development by removing regulatory and legal impediments, it is noteworthy that on the same day NHTSA announced A Vision for Safety, the National Transportation Safety Board (NTSB) called for NHTSA to require automakers to install “system safeguards to limit the use of automated vehicle systems to those conditions for which they were designed.”

In an abstract of its forthcoming final report on the 2016 fatal crash involving a Tesla Model S operating in semi-autonomous mode, the NTSB concluded that “operational limitations” in the Tesla’s system played a major role in the fatal crash and that the vehicle’s semi-autonomous system lacked the safeguards necessary to ensure that the system was not misused. These recent developments only underscore the uncertainty facing the industry as regulators attempt to keep pace with fast-developing technology.

This post was written by Neal Walters and Casey G. Watkins of  Ballard Spahr LLP Copyright ©
For more legal analysis go to The National Law Review

Brewers & Blades: Avoiding Exhaustion in Products with Consumable Parts

A product with consumable or replaceable parts can be complicated to patent. These kinds of products have a reusable base component and replaceable widgets that work with it. Think razor handles with disposable razor blades, coffee brewers with coffee pods, or table saws with replaceable blades. Sales of the widgets may create a substantial revenue stream, but what’s to stop an interloper from copying the widgets and undercutting these continuing sales? Patents! Right? Maybe; as long as you’ve been careful to patent the right aspects of your products and to avoid running afoul of the patent exhaustion doctrine. This doctrine “exhausts” a patentee’s patent rights in a product after it has been sold. The exhaustion is expansive. Courts have held a method claim automatically exhausted by the exhaustion of an apparatus claim in the same patent.[1] Very recently, the Supreme Court may have expanded the doctrine about as far as it can go: now all patent rights are exhausted regardless of any attempt at post-sale restriction, and regardless of the location of the sale.[2] In other words any sale, anywhere, exhausts all patent rights in the sold product.

Suppose you run a prolific company that makes coffee brewers that use single-serve disposable pods and also makes table saws with replaceable blades. For each product your business model might depend on controlling the pods or blades used with your product. For instance, if you take a loss on your coffee brewer intending to make up for it in sales of coffee pods, a patent covering the pods may be more valuable than one covering the brewer. If you intend to develop a licensing program for third-party saw blades, a patent covering a saw blade’s interface with your table saw may be crucial. So how might one breathe more easily despite the patent exhaustion doctrine to keep infringement claims viable? Here are some suggestions.

Patent your widgets separately. If patented together with the base component you may not be able to escape exhaustion of your patent claim, since your sale of the base component may “exhaust” your rights in the claim with respect to that sale. By patenting the widget separately—and in a separate patent—there is less chance of its claims being exhausted by sale of the base component. Keeping your widgets separate also minimizes your exposure to other pitfalls, such as being limited to contributory infringement claims.

Patent with your design strategy in mind. A robust design patent strategy can be a great tool to prevent knock-off widgets from cutting into market share. Strategic claim drafting in a design patent can in many cases provide claim scope broad enough to cover unauthorized widgets of varying configurations that may work with the base component. This is accomplished through the creative use of solid and broken lines in the drawings to claim particular aspects of the widget design, so long as the design of these aspects is not dictated by their function. This strategy can be especially helpful where it may be difficult or time-consuming to get a utility patent claim broad enough to stop knockoff widgets. And because your design patents will be directed to the widgets themselves, they are unlikely to fall victim to exhaustion due to sale of the base component.

Design with your patent strategy in mind. Designers may find it useful to over-design the parts of the base component and the widget that interact, with two additional goals in mind: (1) at least the widget side of the interaction should include a standalone novel feature, whether functional, ornamental, or both; (2) the interaction should only properly work with a widget including the novel feature. This may provide the opportunity for strong and specific utility or design patent claims directed to the widget that can be used to prevent unauthorized knockoff widgets.

Make your widgets disappear. Now that the Supreme Court has in some ways sanctioned unauthorized re-use of spent widgets, patents may not stop a competitor from re-filling and re-selling them. But what if there’s nothing left to re-fill? If possible, consider making your entire widget consumable by the base component or making it only survive a single use intact, so that it is not re-fillable and a customer will be left to simply recycle the remainder.

These suggestions can augment a careful patenting strategy to help combat crafty interlopers and circumvent courts’ hostile stance toward downstream control of products after their sale. A strategic combination of product design and intellectual property law can be a key tool in protecting investments in developing such products. A bold, full-bodied patent prosecution strategy can help cut through the unique difficulties in protecting investment in products that use consumable parts. Involving your patent counsel in the early stages of product design can be the difference between a sale that exhausts your patent rights, and one that leaves the company buzzing with viable patent protection that rips through the competition.

[1] See Keurig Inc. v. Sturm Foods, Inc., 732 F.3d 1370 (Fed. Cir. 2013).

[2] See Impression Products, Inc. v. Lexmark International, Inc., 15-1189 (May 30, 2017).

This post was written by Daniel A. Gajewski and Mark W. Rygiel of Sterne, Kessler, Goldstein & Fox P.L.L.C.

More legal analysis is available at The National Law Review.

Stanford University’s Loss in Interferences of Three Patents Covering Testing Methods for Fetal Aneuploidies for Lack of Written Description is Vacated

The Board of Trustees of the Leland Stanford Junior University v. The Chinese University of Hong Kong, Jun. 27, 2017, Before O’Malley, Reyna, and Chen.

Takeaway:

  • The Federal Circuit declined to reconsider its decision in Biogen MA, Inc. v. Japanese Found. for Cancer Research, 785 F.3d 648 (Fed. Cir. 2015) that parties cannot bring civil actions in district court under 35 U.S.C. § 146 for review of the PTAB’s decisions in interferences declared on or after September 16, 2012.

  • In evaluating whether a claim satisfies the written description requirement, the fact finder may consider what a person of ordinary skill in the art would understand from a description of a product or technique in the specification as of the filing date of the application. Post-filing date publications may only be used as evidence of the state of the art existing on the filing date.

Procedural Posture:

Stanford University (“Stanford”) appealed from orders of the PTAB in three interference proceedings between Stanford and Chinese University of Hong Kong (“CUHK”), which found the claims of three Stanford patents directed to testing methods for fetal aneuploidies unpatenable for lack of written description.  The appeal was initially filed pursuant to 35 U.S.C. § 146 in the District Court for the Northern District of California, and the parties engaged in discovery there.  On May 7, 2015, the Federal Circuit affirmed the lower court’s decision in Biogen MA, Inc. v. Japanese Found. for Cancer Research, 785 F.3d 648 (Fed. Cir. 2015), holding that under the AIA, for interferences declared after September 15, 2012, an appeal from an interference decision has to be made to the Federal Circuit.  The parties then jointly requested transfer from the Northern District of California to the Federal Circuit, which was granted.  The Federal Circuit considered the case on the merits, vacated and remanded.

Interference:

  • The Federal Circuit declined to revisit its holding in Biogen, noting that although Stanford briefed this issue in its opening brief, Stanford did not raise this issue again in its reply brief or in oral argument. Rehearing en banc and a petition for certiorari in the Biogen case were denied; thus, in the Federal Circuit’s view, “Biogen is the law in this circuit and we, as a panel, will not revisit it.”

  • The Federal Circuit declined to consider the record developed during discovery in the district court. Because the district court lacked subject matter jurisdiction to review the interference decisions, the Federal Circuit agreed with CUHK’s position that the activities in the district court were a nullity and should not be considered by the Federal Circuit or remanded to the Board for consideration.

Written Description:

  • Sufficiency of written description is evaluated from the perspective of one of ordinary skill in the art at the time of the invention, “by examining the record evidence as to pre-filing date art-related facts.” The post-filing date publications may be considered to the extent they “contain art-related facts … existing on the filing date,” but may not be used as a source for the knowledge about art-related facts that did not exist on the filing date.

  • The Board awarded patents in interferences to CUHK because it found that the Stanford patents’ specification disclosed “targeted” rather than “random” sequencing, and the specification would not have indicated to one of ordinary skill in the art that Stanford’s inventor Dr. Quake was in possession of the claimed random massively parallel sequencing (“MPS”) method. The Federal Circuit held that the PTAB erred because it did not adequately explain why the Illumina platform for sequencing DNA, referenced and described in Stanford’s original application, did not provide sufficient written description support for random sequencing.  The Board improperly relied on the testimony of CUHK’s expert, who only described that an earlier sequencing technique, Roche 454, was used for targeted sequencing, and “failed to cite to the Roche 454 references with specificity.”  The Board also erred in finding that, because Stanford’s application did not preclude targeted MPS sequencing, it did not disclose to a person of ordinary skill in the art random MPS sequencing.

This post was written by Georg C. Reitboeck  Ksenia Takhistova Christopher Gresalfi of Andrews Kurth Kenyon.

Bring on the Bad Word Brands? What Supreme Court’s Decision in Matal v. Tam Means for Trademark Owners

The Supreme Court’s June 19, 2017 decision in the Matal v. Tam case has been burning-up the news wires all week. The decision struck down a 70-year-old ban on federally registering disparaging trademarks, finding that the disparagement clause of Section 2(a) of the Trademark Act violates the First Amendment principal against banning speech that expresses ideas that offend. The decision was joined by all 8 participating justices. The case was heralded as not just a win for the Asian-American dance-rock band The Slants, but also for the Washington Redskins whose trademark registrations were challenged based on the same disparagement clause.

The USPTO was quick to act, issuing Examination Guide No. 1-17 on June 26, providing a framework for how the PTO will examine applications following the Supreme Court’s decision. Opportunistic brand owners were also quick to act; World Trademark Review reports that at least 11 trademark applications for marks that could possibly be deemed disparaging were filed the day of the ruling.

In light of Tam, two other provisions of Section 2(a) — those that preclude registration of immoral and scandalous marks — also seem likely to fall, as both could be interpreted as banning speech likely to offend. In fact, the constitutionality of the scandalousness provision of 2(a) is currently pending before the Federal Circuit (In re Brunetti), and it seems likely the Fed. Cir. will move forward with Brunetti in the aftermath of Tam.

What does Tam mean to brand owners? It seems unlikely that the ability to now federally register offending marks will herald a seismic shift in branding strategies. The ability to use a trademark was never at issue in Tam, simply the ability to protect a mark by federal registration. Similarly, the public’s appetite for offensive brands will likely also not be enhanced by the new ability to obtain federal registration for such source indicia. Just as it is unlikely that the Court’s decision in Tam will persuade my son’s middle school principal that a T-shirt bearing the phrase HOMEWORK.SUCKS (INTA swag courtesy of the folks at dotSucks) is appropriate classroom attire. As always, the strength of a brand goes not to its novelty, but to its long-term ability to communicate the positive attributes of the associated products and services to consumers.

This post was written by Monica Riva Talley of Sterne, Kessler, Goldstein & Fox P.L.L.C.

Widespread Use of GOOGLE Trademark as a Verb Does Not Render the Mark Generic

On May 16, 2017, the United States Court of Appeals for the Ninth Circuit held that widespread use of the word “google” as a verb for “searching the internet” – as opposed to use as an adjective for a brand of internet search engine – was insufficient to establish that GOOGLE ceased to function as a trademark. Elliott v. Google, Inc., No 15-15809, slip op. (9th Cir. May 16, 2017). As a result, the Ninth Circuit affirmed the district court’s granting of summary judgment in favor of defendant Google, Inc. on the plaintiffs’ Lanham Act claim seeking cancellation of the GOOGLE trademark on the ground that it had become generic.

Generic terms are words that are the commonly accepted identification of a type of goods or services. By way of example, “automobile” and “chair” are generic terms when used in connection with their dictionary meanings. Under federal law, generic terms are not protectable as trademarks. Trademarks can become generic over time if they are used as the name for a category of goods or services instead of as a brand name or source identifier. This is commonly known in trademark law as “genericide.” Examples of terms that have lost federal trademark protection due to genericide include “aspirin,” “escalator,” and “thermos,” each of which was once a protectable trademark. A registered trademark may be cancelled if it loses its source-identifying significance by becoming the generic name of a particular type of good or service. 15 U.S.C. §1064(3); Elliott, slip op. at 6.

The question before the Ninth Circuit was “whether the primary significance of the word ‘google’ to the relevant public is as a generic name for internet search engines or as a mark identifying the GOOGLE search engine in particular.” Elliott, slip op. at 12. The plaintiffs argued that the word “google” is primarily understood as “a generic term universally used to describe the act of internet searching.” In support, the plaintiffs presented consumer survey evidence showing that a majority of consumers used the term “google” as a verb for the act of searching the internet.

The Ninth Circuit rejected plaintiffs’ claim as a matter of law for two reasons. First, the court clarified that “a claim of genericide or genericness must be made with regard to a particular type of good or service.” Elliott, slip op. at 8 (emphasis added). Thus, surviving summary judgment would have required plaintiffs to present evidence that the term “google” is generic specifically with regard to internet search engines. Second, the court concluded that “verb use does not automatically constitute generic use,” thus rejecting plaintiffs’ grammatical argument that a word can only be protectable as a trademark when used as an adjective. Elliott, slip op. at 10. The court noted that the part of speech is not dispositive of the genericide issue, as it is well-established that “a speaker might use a trademark as a noun and still use the term in a source-identifying trademark sense.” Elliott, slip op. at 10-11. For example, a restaurant customer might order “a coke,” using the mark as a noun, while still having a particular source of cola beverages – the Coca-Cola Company – in mind. Id. at 11. As a result, plaintiffs’ consumer survey evidence that the public uses the term “google” as a verb was insufficient as a matter of law, because such evidence did not reveal consumers’ thoughts regarding use of the term with respect to internet search engines. Without more evidence, it was not possible to ascertain whether the survey respondents were using the verb “google” in an indiscriminate sense, with no particular internet search engine in mind; or in a discriminate sense, with the Google search engine in mind.

In light of Elliott, a party claiming that a mark has become generic would be wise to present consumer surveys in which respondents indicate whether they believe a term is a brand name or a common name for a particular good or service, regardless of grammatical function. Any consumer survey submitted should be conducted by qualified experts according to accepted principles. As an example, in Elliott, Google offered a survey in support of its position that the GOOGLE mark is not generic, which began by providing a brief overview of the difference between brand names and common names, then asked respondents to classify various words – such as “Coke,” “Jello,” “Amazon,” “Refrigerator,” “Browser,” and “Website” – as either brand names or common names. Id. at 16. Approximately 93% of respondents described “Google” as a brand name. Unlike plaintiffs’ survey, the Ninth Circuit viewed the results of Google’s survey as evidencing consumers’ primary understanding of the word “google” as it related to search engines.

This case contravenes the conventional guidance to always use trademarks as adjectives that modify a descriptive or generic term. Although the Elliott court acknowledged that using a trademark as an adjective makes it easier to prove the source-identifying function of the mark, this holding makes clear that widespread use of trademarks as nouns and verbs does not make them generic, absent significant evidence of indiscriminate consumer use of the mark to refer to any brand of a particular good or service.

This post was written byThomas A. Agnello and Luke W. DeMarte of Michael Best & Friedrich LLP.

In re Google: Co-Pending Litigation Is Not Sufficient Basis to Deny Transfer Motion

Google patent infringementAddressing jurisdictional transfer issues in a divided opinion, the US Court of Appeals for the Federal Circuit granted the extraordinary relief of issuing a mandamus order to transfer a patent infringement case, finding that the district court effectively failed to consider the merits of the defendant’s transfer motion even though the district court weighed all relevant transfer factors. In re: Google, Inc., Case No. 17-107 (Fed. Cir., Feb. 23, 2017) (Prost, CJ) (Linn, J, dissenting) (non-precedential).

This case was initiated when Eolas Technologies sued Google in the Eastern District of Texas for patent infringement. Eolas and Google had litigated against each other prior to this suit. Eolas had previously sued Google in the Eastern District of Texas for patent infringement involving related technology. In the prior case, Google’s motions to transfer and for mandamus were both denied. Google also filed a separate declaratory judgment action relating to other Eolas technology in the Northern District of California.

On the same day that it sued Google, Eolas also sued Amazon and Walmart entities for infringement of the same patent in the same court. Those defendants separately filed motions to transfer venue for convenience to the Northern District of California, each within the same week. The district court denied Walmart’s motion, then Google’s, then Amazon’s. The court issued each decision weeks apart from the preceding decision. In deciding Google’s transfer motion, pursuant to 28 USC § 1404(a), the district court weighed each of the four public-interest factors and four private-interest factors mandatorily considered for a motion to transfer for convenience in the Fifth Circuit. See TS Tech (IP Update, Vol. 12, No. 2).

The district court found that the co-pending litigation with Walmart and Amazon in the same district involving the same patent, as well as the Eastern District’s institutional knowledge relevant to the case obtained from prior litigation between the parties, weighted against transfer. Each of these elements was considered as part of the “other practical considerations” private-interest factor. With respect to the factor requiring balancing the location of witnesses and documentary evidence, the district court found that the location of witnesses and documents at Google’s Northern California headquarters only slightly favored transfer when compared to Eolas’s single employee in the Eastern District of Texas. On balance, the district court found that transfer was not warranted. Google sought mandamus from the Federal Circuit.

The Federal Circuit concluded that the district court improperly overemphasized the “other practical considerations” factor and underemphasized the disparity between Google’s geographic ties to sources of proof as compared to Eolas. According to the Court, the mere co-pendency of related suits in a particular district could not serve as the basis for denying a motion to transfer because such co-pendency would automatically tip the balance in the non-movant’s favor regardless of the existence of co-pending transfer motions and their underlying merits. The Court further found that the Eastern District’s prior experience with the litigants was untenable because the judge presiding over the previous case had retired. The Court also found that the district court did not afford the “relative ease of access to sources of proof” private-interest factor enough weight. The Federal Circuit parted ways with the district court on this factor, noting that it was perhaps the most important of the eight and that it significantly favored Google. In view of these considerations, the Federal Circuit issued a mandamus order transferring the case to the Northern District of California.

The dissent would have denied mandamus relief because it was undisputed that the district court considered all relevant factors, and the heightened mandamus standard of review did not permit the Court to reweigh those factors. Specifically, Judge Linn opined that the majority went beyond its limited role in the mandamus context of assessing whether the district court fully considered each of the eight transfer considerations. According to Linn, the Court rebalanced the considerations and substituted its own judgment, thereby usurping the district court’s role in weighing the factors and making the final determination. The dissent also argued that Google did not show a clear abuse of the district court’s considerable discretion or that the ruling produced the patently erroneous result necessary for the relief sought.

ARTICLE BY John C. Low, Ph.D. of McDermott Will & Emery
© 2017 McDermott Will & Emery

U.S. Supreme Court Holds That Patent Act Does Not Provide Laches Remedy for Limiting Damages

supreme court patent act lachesThe U.S. Supreme Court took on the analysis of laches in a March 2017 decision in SCA Hygiene Products Aktiebolag, et al., v. First Quality Baby Products, LLC, et. al. The Supreme Court held that the equitable doctrine of laches cannot be invoked as a defense against a claim for damages brought within the six-year limitations period of 35 U.S.C. § 286 – and further held that such a remedy is not codified in 35 U.S.C. § 282.

Effectively, this holding eliminates the potential for a defendant to argue under the doctrine of laches that a plaintiff in a patent infringement action unreasonably delayed bringing the patent infringement action and allows the plaintiff to recover damages over the previous six-year period, regardless of when the plaintiff became aware of the infringement or the length of time the infringement has occurred.

Before SCA, the analysis of the remedy of laches in limiting patent damages was controlled by the holding in A.C. Auckerman Co. v. R.L. Chaides Constr. Co., 990 F.2d 1020, 1030 (Fed.Cir. 1992). In Auckerman, the Federal Circuit held that § 282 recognized a laches defense in harmony with § 286 as the laches defense “invokes the discretionary power of the court to limit the defendant’s liability for infringement by reason of the equities between the particular parties.” In this recent case, First Quality argued that Congress had implicitly ratified the proposition that § 282 includes a laches defense by leaving the language of § 282 untouched after this interpretation of § 282 had been applied by lower courts. The Supreme Court rejected the premise that the remedy of laches was codified by § 282, holding that the period of limitation codified in § 286 by Congress “reflects a congressional decision that the timeliness of covered claims is better judged on the basis of a generally hard and fast rule rather than the sort of case-specific judicial determination that occurs when a laches defense is asserted.” The Supreme Court found that Congress’ clear establishment of the period of reasonableness for bringing a patent infringement claim is reflected in the language of § 286, which reads, in part:

Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.

The Supreme Court’s holding was not unexpected and the reasoning followed the court’s holding in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014), which addressed similar language in the Copyright Act and confirmed that laches was not available as a defense during the codified limitation period of three years. In SCA, the Supreme Court found no reason to disregard the general rule that laches does not apply to damages suffered within the period of a statute of limitations in the specific context of a patent infringement suit.

The ruling in SCA will now allow a patent owner to wait to bring an infringement suit without concern for it being found that it waited an unreasonably long. For example, a patent owner may wait until the accumulated damages by a putative infringer have grown to an amount that makes filing a suit more attractive financially. It should be noted that the § 286 period of limitation is on the recovery of damages and does not bar bringing suit at any time during the period of enforceability of the patent. The patent owner, absent some other limitation on damages available to the putative infringer, may wait for any amount of time during the period of enforceability of the patent and bring suit.

Notably, this decision does not address the equitable principle of estoppel, which was also at issue in the case, but not part of the appeal. The ruling also does not change the effect of the various limitations on damages codified in 35 U.S.C. § 287.

ARTICLE BY Intellectual Property Department Barnes Thornburg
© 2017 Barnes & Thornburg LLP

“Knock-Offs” Beware: SCOTUS Makes a Fashion-Forward Decision

SCOTUS knock-offs copyrightThe U.S. Supreme Court has settled the closely watched Varsity Brands Inc. et al. v. Star Athletica LLC copyright dispute, holding that cheerleading outfits contain distinct design elements that allow for copyright ownership. The ruling has wide implications for both the fashion apparel and home furnishings industry, both of which rely on distinctive, eye-catching designs to sell products.

On Wednesday, the Supreme Court sided with Varsity Brands in a 6-2 vote. Varsity Brands Inc., the world’s largest maker of cheerleading apparel, alleged copyright infringement claims against rival manufacturer Star Athletica LLC. In particular, Varsity Brands claimed that the stripes, chevrons and other visual design elements on their uniforms are eligible for copyright protection.

Uniforms

Writing for the majority, Justice Clarence Thomas agreed with that contention if such designs “can be perceived as a two- or three-dimensional work of art separate from the useful article” and “would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated.” The Varsity Brands uniform designs satisfied that test and, thus, are eligible for copyright protection, he wrote.

Justice Thomas also was careful to note that the ruling only limits competitors from copying Varsity Brands’ “surface designs” and not the underlying clothing shape. “Respondents have no right to prevent anyone from manufacturing a cheerleading uniform that is identical in shape, cut, or dimensions to the uniforms at issue here,” he wrote.

The dispute began in 2010. Star Athletica’s attorneys contended that clothing, as a “useful item,” is not eligible for copyright protection. Furthermore, Star Athletica claimed that the asserted design elements were simply a component of the cheerleading uniforms, and without them, each garment no longer would be a cheerleading outfit. A federal district court initially sided with defendant Star Athletica in 2014, but a Sixth Circuit panel reversed that decision the following year.

This decision confirms long-standing principles of copyright protection which have been found to include three-dimensional sculptural works and ornamentation applied to other “useful items” such as furniture pieces. A 2010 Court of Appeals decision from the Fourth Circuit set forth this principle in Universal Furniture Int’l, Inc. v. Collezione Europa USA, Inc., 618 F. 3d 417, and copyright remains an important tool in the furniture and home furnishings industry.

With yesterday’s Supreme Court decision, manufacturers of other fashion-guided products, including specifically apparel and clothing accessories, can take advantage of this new standard of copyright protection to combat increasing threats of counterfeits and other “knock-offs.” In particular, fashion brands should review their product lines to ensure that copyright-eligible products are protected under this new standard, as well through more traditional trademark mechanisms.

Click here to read our previous article on this case.

Copyright © 2017 Womble Carlyle Sandridge & Rice, PLLC. All Rights Reserved.

USPTO Freedom Of Information Act Inquiry

Whats Next, Question Marks, Freedom of Information Act, FOIAThe Freedom of Information Act (“FOIA”) can be a very powerful tool. It provides unqualified right to access certain public records. Patent attorney Gary Shuster used it to file a FOIA request (Request No. F-17-00099) with the USPTO on January 26, 2017, seeking the following:

1. Any document written by or on behalf of Michelle Lee constituting a resignation from office, a request to withdraw a resignation from office, or a request to refrain from her position.

2. The most current document identifying the Director of the USPTO or, if there is no director, the acting director of the USPTO.

3. Any written instructions received between January 20, 2017 and the date of this request regarding deletion of any data from web sites operated by or on behalf of the USPTO, including USPTO.com.

To spare the USPTO having to compile and produce all documents responsive to this request, Shuster offered: “In the alternative, you may satisfy this request by simply answering the following question: Who is the current director or acting director of the USPTO?”

On February 24, 2017, USPTO FOIA specialist Karon Seldon sent Shuster a letter stating that the agency was extending the time limit, citing FOIA provisions allowing extensions in “unusual circumstances.” This is a FOIA provision which provides an extension may be claimed in usual circumstances where there is a “need for consultation … with another Federal Agency having a substantial interest in the determination of the request.” This is likely to give a bit of breathing room to determine how the Trump administration will affect the decision.

The new deadline for response is March 10, 2017. Although it’s currently a bit of a mystery, we’ll see tomorrow who will be named to the Director role.

ARTICLE BY Annie Dike of IMS ExpertServices

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