Patent Practitioners: Inventions and the Ecosystem of Ideas

Womble Carlyle Law firm

There are some striking parallels between inventions and living organisms, and between technology in a consumer marketplace and an ecosystem.  Insights gained through the comparisons may be beneficial to inventors, companies, consumers and the patent community.  What are the connections?  To review, living organisms exist in an ecosystem, and flourish or perish according to the laws of nature, with survival of the fittest.  Variations among the organisms occur from generation to generation, and are positively or negatively selected over the passage of time and generations, as organisms evolve.  This begets new species, which occupy environmental niches in the ecosystem, and also begets extinction in which species die off.  Ideas, invention and technology exist in a sort of man-made ecosystem, with the consumer marketplace performing a selection process, the whole experiencing a type of guided evolution.

Human beings have ideas.  We brainstorm them, communicate them to each other, and come up with more ideas.  Humans invent, bringing some of these ideas to fruition.  In turn, humans bring some of these ideas to actual products, which are then put up for sale and use in the consumer marketplace.  This is a sort of test in the ecosystem, as to which products will survive.  Consumers then make choices, purchasing the products they like, for various reasons.  Products that are not purchased and used influence manufacturers to stop making those products.  Products that are purchased and used influence manufacturers to continue making those products, and to develop next-generation variations of those products.  New features are added to next-generation products, and some of these new features are popular, and some are not.  The process of selection as to popularity, and sales volume, of products, is made by the consumers.

Next-generation variations of products are rather like offspring with mutations, in the comparison to living organisms in an ecosystem.  A brand-new, never before seen product is rather like a new species that has suddenly emerged.  Entire product types that become obsolete are rather like the dinosaurs that went extinct long ago.  Even the term “dinosaur”, in colloquial usage, is synonymous with outdated technology (and is also sometimes applied to people who still prefer to use such outdated technology).

Ideas, invention, products and technology thus emerge, develop, thrive or perish, beget variations, and evolve over time in the consumer marketplace.  The ever-present interest by, and purchasing power of, consumers drives the selection process that guides the evolution of products and technology.  The ever-present ingenuity of inventors, and desire for companies to succeed in the marketplace, drives the production and mutation (variation) processes that guide the evolution of products and technology.  The history of technology thus parallels the history of living organisms. 

We patent practitioners are privileged to be chroniclers of inventions.  A study through the body of published patent applications and issued patents illuminates the more recent history of invention and key aspects of technology.  A study of the United States Patent Classification System, as developed and used by the United States Patent and Trademark Office, is rather like studying the taxonomy of living organisms.

How might we apply these insights?  Consider a new product without a marketplace.  Is such a product likely to survive?  Perhaps a new marketplace will emerge for the new product, which could then dominate.  How will other products compete with this new product?  How will consumers decide whether to select and use, or deselect the new product?  Consider competition against a product that is well-established in a marketplace.  What new feature or new product could compel consumers to favor it?  If some branch of technology is headed for obsolescence, why is this?  If some new branch of technology is emerging, how might it fare, and why?  And, for the patent practitioners in the audience, how might we best capture the innovative aspects and the inventions in our drawings, descriptions and claims on behalf of the inventors?  This is all part of the art of patenting.

 
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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

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Patent Trial and Appeal Board (PTAB) Issues First Precedential Opinion

Armstrong Teasdale Law firm

In its first precedential opinion, the Patent Trial and Appeal Board has denied  institution of a covered business method review based on a prior-filed civil suit. Except for provisions specifically excluded, the CMB statute incorporates all the statutory standards and procedures of a post-grant review.  These standards include the provision barring review if the petitioner has instituted a civil action before filing its petition for review.  35 USC § 325(a)(1).  In Securebuy, LLC v. Cardinal Commerce Corporation, No. CBM 2014-00035, petitioners filed a declaratory judgment action 2 weeks prior to filing for CBM review.  Relying on the above-cited provision of the AIA, the Board denied SecureBuy’s petition.   Despite the apparent clear language of the statute, several CBM petitions have been filed after institution of civil actions.  In each case, petitioners have argued that this section of the AIA does not apply to CBM petitions.

PTO copy of the order: http://www.uspto.gov/ip/boards/bpai/decisions/prec/cbm2014-00035_4-25-2014_325a.pdf

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Generic Top Level Domains – Current Sunrise Periods Open – August 2014 Update

Sterne Kessler Goldstein Fox

As first reported in our December 2013 newsletter, the first new generic top-level domains (gTLDs, the group of letters after the “dot” in a domain name) have launched their “Sunrise” registration periods.  Please see our December 2013 newsletter for information as to what the Sunrise Period is, and how to become eligible to register a domain name under one of the new gTLDs during this period.

As of the date of this newsletter, Sunrise periods are open for the following new gTLDs:

.dental

.surgery

.hiphop

.audio

.yokohama

.juegos

.fund

.cash

.tax

.investments

.bio

.desi

.furniture

.discount

.fitness

.schule

.gratis

.website

.creditcard

.claims

.press

.host

.global

.okinawa

.xn—io0a7i (网络 – Chinese for “network”)

.xn—55qx5d (公司 – Chinese for “company”)

.reise

.bayern

.durban

.joburg

.capetown

.accountants

.digital

.finance

.insure

.ren

.xn—cg4bki (삼성 – Koreanfor “Samsung/Samseong”)

.republican

.guide

.loans

.church

.life

.surf

.beer

.hamburg

.scot

.place

.direct

.saarland

.hiv

.deals

.BLACK

.soy

.city

.attorney

.lawyer

.melbourne

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ICANN maintains an up-to-date list of all open Sunrise periods here.  This list also provides the closing date  of the Sunrise period.  We will endeavor to provide information regarding new gTLD launches via this monthly newsletter, but please refer to the list on ICANN’s website for the most up-to-date information – as the list of approved/launched domains can change daily.

Because new gTLD options will be coming on the market over the next year, brand owners should review the  list of new gTLDs (a full list can be found here) to identify those that are of interest.  

 

Five Key Takeaways From ICANN 50 in London

Katten Muchin Law Firm

The 50th Meeting of the Internet Corporation for Assigned Names and Numbers (ICANN) took place in London from June 22–26. This marked the first time that an ICANN meeting has been held in London, and also resulted in the largest attendance record for an ICANN meeting, with more than 3,300 individuals registered in attendance. Despite what could be characterized as organized chaos on the ground during the meeting, the following five topics and takeaways began to emerge for brand owners and new generic top-level domain (gTLD) applicants—topics which have only continued to blossom and garner further attention in month following the formal conclusion of the meeting.

1. Geographic Terms Trump Trademarks, According to the Argentina Proposal

In essence, the Argentina proposal seeks to block at all levels of the domain name system, “terms with national, cultural, geographic and religious significance,”; including “regions of countries, regions of continents, sub-regions of countries, rivers [and] mountains, among others …”; subject to registration through relevant national approval. The proposal adopts a highly aggressive posture toward inevitable conflicts between natural, cultural, geographic and religious terms on the one hand and trademarks on the other hand, no doubt in response to ongoing disputes within ICANN over the .AMAZON and .PATAGONIA new gTLD applications.

Contrary to the principle of freedom of use of geographic names, allowing private companies to register geographic names as part of gTLDs [sic] strings creates a high risk for these names to be captured by companies that want to use them to reinforce their brand strategy or profit from the meaning of these names, limiting the possibility of utilizing them in the public interest of the affected communities.

See GAC Meeting: Briefing to ICANN Community – Protection of Geographic Names in gTLDs (June 25, 2014).

Although the national, cultural, geographic and religious terms contemplated are clearly distinct from geographical indications, such as BORDEAUX, FETA or DARJEELING, the two have been conflated and the Argentina proposal has raised similar ire from nations vehemently opposing the .WINE and .VIN new gTLD applications within the Governmental Advisory Committee (GAC). Accordingly, based on serious concerns within the GAC that the Argentina proposal is not rooted in international legal norms, that it hinges upon impractical and ad hoc terminology lists, and that it fails to grasp the purpose or intent of exclusivity pursuant to national trademark legislation, the GAC agreed to take this discussion out from behind closed doors and into a more public forum, via a GAC project team.

Accordingly, it is incumbent upon all stakeholders to question and ultimately oppose the Argentina proposal by weighing in on project team deliberations leading up to ICANN 51 in Los Angeles in October. Indeed, ever-expanding blocks will certainly hamper registry growth and harm contracted parties. Most importantly, myriad companies, and even third-party legitimate users, may ultimately find their famous brands and desired strings wholly excluded from the domain name system.

2. Conflicts Addressed Between Trademark Sunrise Protection and the Domain Name Collision Mitigation Framework

To date, ICANN’s domain name collision mitigation framework has failed to explicitly account for mandatory rights protection mechanisms, such as trademark sunrise and claims periods. Thus, many famous brands experienced frustration leading up to the London meeting, particularly because certain registry operators felt disinclined to allocate names corresponding with famous trademarks during sunrise periods, and instead held them as reserved names on collision block lists—a practice technically permitted within the name collision mitigation framework and Registry Agreement.

In the closing moments of the London meeting, ICANN shocked both the trademark and registry communities when it announced that ICANN would not require collision block list names to be allocated during sunrise periods, and if collision block list names were ever released for registration down the road, then only a 90-day claims period would apply, rather than any sunrise period. Both brand owners and registry operators disagreed with this announcement. Specifically, sunrise allocation stands as the clear preference for brand owners, given the choice between sunrise protection and mere claims notifications. In addition, registry and registrar systems would require substantial and costly retooling in order to ensure adequate claims notices are delivered to registrants beyond original claims periods.

Accordingly, in the wake of ICANN 50, the Registry Stakeholder Group (RySG), Intellectual Property Constituency (IPC) and Business Constituency (BC) all coalesced around a compromise counter proposal, based on the novel set of circumstances created by name collisions and mitigation measures. The compromise proposal prescribed a 30-day period for collision block list names to serve as the functional equivalent to the trademark sunrise period. In addition, the compromise proposal removed the additional 90-day claims period for collision block list names. See Application of Rights Protection Mechanism to Name Collision Block Lists(July 17, 2014). The New gTLD Program Committee (NGPC) within the ICANN Board of Directors stands poised to approve the domain name collision mitigation framework accounting for the compromise counter proposal.

3. The Circumvention of Rights Protection Mechanisms Has Reached a Boiling Point

ICANN leadership has increasingly emphasized its need for specific details in response to complaints from commercial stakeholders regarding the circumvention of intellectual property rights protection mechanisms in new gTLDs. In response, the Business Constituency and the International Trademark Association (INTA) continue to gather specific evidence, screen grabs and industry news coverage expanding upon the ways in which certain registry operators and registrars have skirted the letter and spirit of new gTLD rights protection mechanisms. Some overarching categories of abuse examined to date include inter alia:

  • preregistration offers or allocation of domain names prior to trademark sunrise and devoid claims notifications;
  • extortionate premium names programs or sunrise registration pricing covering famous trademarks;
  • incorrect claims notices integrated with advertisements; and
  • bulk premium name warehousing with registry affiliates.

Indeed, industry news coverage has already flagged a number of these practices in the public arena. See e.g., Domain Incite, GoDaddy Risking Oscars Wrath With .BUZZ Premium Domains (March 7, 2014); Domain Incite, ICANN Smacks New gTLDs For Pre-Sunrise Auctions (June 18, 2014). The goal for commercial stakeholders and INTA will be to educate ICANN on the abusive practices brand owners are encountering in the marketplace, and also demand remedial action, despite the laisse faire approach to pricing taken by ICANN in the past, and also in dealings with mere applicants who have not yet executed a Registry Agreement.

4. Improvements  for a Second Application Round Are Already Under Formation and Consideration

While in London, the Generic Names Supporting Organization (GNSO) Council unanimously passed a motion that: created a discussion group to exchange experiences gained in the 2012 new gTLD application round and identify topics for further study and policy development; solicited subject matter input from the ICANN Board of Directors; and requested a timetable from ICANN staff for the next application round, as well as a status report on pending studies evaluating the 2012 new gTLD application round. Concurrently, the New TLD Applicant Group (NTAG) held a public session in London dedicated to new gTLD program lessons and potential improvements. Commentators generally agreed on the necessity for “a defined and predictable process across the board that works for all applicant categories.”; More pointedly, intellectual property representatives advocated:

  • regulations governing premium names programs and trademark sunrise periods;
  • completely redrafted objection procedures, with the exception of the legal rights objections;
  • affirmations requiring that all domain names be subject to trademark sunrise periods; and
  • protected marks lists, similar to Donuts’ DPML model but less expensive, across all new gTLDs.

Brand owners, prospective applicants in the second round, as well as prospective objectors, are all well-advised to participate in this ongoing discussion, which will no doubt contribute to share guidelines for future new gTLD delegations.

5. ICANN Accountability Has Taken Center Stage in the Internet Assigned Numbers Authority (IANA) Transition

Community discussions to date concerning the IANA transition have concerned the process to transition IANA stewardship, and now increasingly, enhancing accountability to the community. The accountability concerned addresses the absence of the historical contractual relationship between ICANN and the US Department of Commerce (DOC)—more specifically, the theoretical possibility that the DOC could terminate its IANA contract with ICANN to renegotiate terms or engage some other qualified entity. As it stands, accountability generally already exists within ICANN in a multifaceted way, including inter alia:

  • overarching accountability and transparency commitments in the bylaws;
  • well-documented relationships with contracted parties;
  • periodic structural and effectiveness reviews mandated by the Affirmation of Commitments;
  • bylaws-mandated accountability mechanisms, namely the Ombudsman, Reconsideration Requests, and Independent Review Panels;
  • operational information on finances, metrics and performance;
  • rigorous selection processes for ICANN Board members;
  • publication of board resolutions, minutes, and statements of interest; and
  • United States rule of law as a Californian not-for-profit corporation.

In addition to exchanging ideas about improving upon this existing accountability framework, the community in London debated philosophical considerations behind accountability itself. From the debate, one message has been made loud and clear, as recently reaffirmed by U.S. National Telecommunications and Information Administration (NTIA) Assistant Secretary Lawrence E. Strickling, the “important accountability issue will and should be addressed before any transition takes place.”; See U.S. NTIA, Keynote Address By Assistant Secretary Strickling At the American Enterprise Institute (July 22, 2014). In other words, to place the matter in perspective, the IANA transition presents a unique opportunity with unprecedented pressure on ICANN to ensure its accountability framework and mechanisms work for the community—that they are cost effective, expeditious and efficient, while according due process to parties negatively affected by the actions or inactions made by ICANN.

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 (IPR2013-00116IPR2013-00117IPR2013-118; 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, LLCPar 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.

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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.

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[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.

The Redskins Decision: Much Ado About (Probably) Not Much

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I’ve been having fun listening to commentators – most of whom appear to know little or nothing about trademark law – expound on last week’s decision by the Trademark Trial and Appeal Board to cancel six trademark registrations for variations of the wordREDSKINS as the name of Washington, D.C.’s pro football team. One observer described it as a “landmark” decision, and several have prophesied that it marks “the beginning of the end” of the team’s controversial nickname.

The decision may turn out to have significant impact on the team politically and in terms of public relations. But legally…not so much.

Into the Time Machine

Many of the “beginning of the end” analyses treat the TTAB decision as a referendum on current public opinion about the Redskins name issue. A spokesman for the National Congress of American Indians, which supported the plaintiffs, said, “I don’t know how the team doesn’t recognize at this point that it’s not just a small group of Indians anymore. It’s more than that. People and fans and the country itself are saying, ‘Let’s just change the name.’”

Maybe they are – but the TTAB decision has nothing to do with that. As the dissenting judge (it was a 2-1 decision) wrote, “To be clear, this case is not about the controversy, currently playing out in the media, over whether the term “redskins,” as the name of Washington’s professional football team, is disparaging to Native Americans today.” The task before the TTAB was not to render a judgment on the propriety of naming a football team the Redskins. Rather, the task before the TTAB was to conduct a kind of time-machine research project: to determine, as a matter of empirical historical fact, whether the term Redskins was considered offensive by a “substantial composite” (not necessarily a majority) of the Native American population at the time when the first of the REDSKINS registrations was granted – in 1967.

In performing this task, the Board was limited to the evidence placed in the record by the parties. It didn’t do any independent research or fact-finding of its own, and it was not allowed to take “judicial notice” of any information that may have come its way by other means. This procedural limitation is crucial to understanding why the decision may be vulnerable to being overturned on appeal.

“Déjà Vu All Over Again”

It is important to bear in mind that we have passed this way before. In 1999, in a case called Harjo v. Pro Football Inc., the TTAB canceled the very same six trademark registrations for the very same reason: that the word “redskin” was considered disparaging by Native Americans at the time the registrations were granted. Pro Football appealed to the U.S. District Court for the District of Columbia, and won: the court overruled the Board’s decision, holding – bear with me, this is the important part – that the evidence concerning the disparaging nature of the term “redskin” in 1967 was insufficient. The petitioners then appealed to D.C. Circuit Court of Appeals, which affirmed the district court – without disturbing the ruling on insufficient evidence. The six registrations – which had remained intact throughout the appeal process – were thus definitively preserved.

Flash forward. The case decided last week, Blackhorse v. Pro Football, Inc., was essentially a re-run of Harjo, with different plaintiffs but with essentially the same evidence. The parties stipulated that all the testimony, expert reports, affidavits, and other documents from Harjo would be received into evidence in Blackhorse as well, and the new petitioners made a strategic decision not to add any substantial new evidence.

Same Evidence, Same Result?

This appears to have worked well in the TTAB: the same tribunal, asked to decide the same issue by examining the same evidence, came to the same conclusion.

But the same strategic decision may backfire in the appellate courts. Note what happened in Blackhorse: the petitioners went into court armed solely with a body of evidence that a higher court had already ruled was insufficient. As the dissent inBlackhorse wrote, “The consequence of petitioners’ decision to rely on the same evidence [that was] previously found insufficient to support cancellation[,] without substantial augmentation[,] is that the evidence before the Board in this case remains insufficient as well.”

Will the appellate courts agree, and overturn the Board’s decision a second time? The picture is clouded by the fact that, owing to an intervening restructuring of the federal court system, the initial appeal might be heard this time by the U.S. District Court for the District of Eastern Virginia, rather than the District of Columbia. Will the new court agree with the old? Only time will tell. But the petitioners may have a hard time persuading anycourt that a body of evidence already deemed insufficient had somehow grown in stature merely as the result of growing 15 years older.

The initial aftermath of Blackhorse, however, will be much the same as that of Harjo. The TTAB has already stayed execution of the Blackhorse decision on the assumption that Pro Football will appeal. So the six REDSKINS registrations will remain in full force and effect throughout the appeal process, which could take several years (as it did last time).

What Impact?

Let’s suppose that Pro Football’s appeal ultimately fails, and that the six registrations are, finally and definitively, canceled. What then? The fact is that the impact of such an outcome on the Washington Redskins team would likely be far less than many observers have suggested.

For starters, the team would not need to change its name. The TTAB decision does not cancel the REDSKINS trademarks, only the federal registrations for those marks. To be sure, federal registration provides important benefits. But as my trademark law students could tell you, under U.S. trademark law rights ultimately come from use of a mark in commerce, and even unregistered marks can become quite strong by virtue of long-standing and widespread use, substantial investment in advertising and promotion, and strong “name recognition” among the public. By any of those measures, REDSKINS is a very strong mark indeed, and Pro Football would not find it difficult to enforce its common-law trademark rights against infringers.

Purely as a matter of legal and economic reality, the post-cancellation world of the Washington Redskins might not look much different than the current one.

IP Rights and Censorship

All this, of course, addresses only what may happen as a result of what is done in courts of law. The court of public opinion is a different matter. Blackhorse appears to have triggered significantly stronger public reaction than Harjo, which may help bring other forces to bear on the situation.

One thing that has not changed is my conviction that deciding issues of this nature is not a job for the Trademark Office. The judges who decide cases in the TTAB are experts on trademark law. They shouldn’t be expected to be experts on the kinds of social and political issues that drive cases like this one, or even on the kind of historical research questions such cases present. Nor do they have the opportunity to submit fact issues to a jury, which might be better positioned to render a verdict about what is or is not “immoral” or “scandalous.”

The Lanham Act is the only intellectual property statute that includes a censorship provision. Why do we feel it is improper to place a government “stamp of approval” (the ® symbol) on a trademark that is “immoral” or “scandalous,” when we have no qualms about placing another such symbol (the © symbol) on copyrighted pornography or hate speech, which we do all the time?

The Redskins case raises many interesting, and important, issues. But none of them are really trademark issues. That’s why their ultimate resolution will likely have little to do with what happened in the Trademark Office last week.

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Alice v. CLS Bank: Supreme Court Continues to Grope in Dark for Contours of Abstract Idea Exception

Schwegman Lundberg Woessner

In Alice Corp. v. CLS Bank Int’l (2014), the Supreme Court unanimously affirmed the one-paragraph per curium opinion of the en banc Federal Circuit, which found all claims of U.S. Patent Nos. 5,970,479, 6,912,510, 7,149,720, and 7,725,375 invalid under 35 U.S.C. § 101 for being directed to an abstract idea.

The Court based its affirmance on an application of a two-step process outlined in Mayo Collaborative Services v. Prometheus Labs, 566 U.S. ___ (2012). The first step is the determination of whether the claims are directed to a patent-ineligible concept such as a law of nature, natural phenomenon, or abstract idea. This step implicitly includes the identification of the concept at issue. The second step is to determine if the claims recite “an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.”

The Court avoided providing “the precise contours of the ‘abstract ideas’ category” by relying on the similarity between Alice’s claims for intermediated settlement and Bilski’s claims for hedging. The Court characterized the Bilski claims as “a method of organizing human activity.” Accordingly, while only three justices signed Justice Sotomayor’s concurrence, stating that “any claim that merely describes a method of doing business does not qualify as a ‘process’ under §101,” the unanimous decision does implicate business methods as likely directed to abstract ideas.

At the Federal Circuit, the splintered opinion included a four-judge dissent that argued that the system claims should be patent-eligible even though the method claims were not. The Supreme Court disagreed with this view, finding that if the system claims were treated differently under §101, “an applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept” which would “make the determination of patent eligibility depend simply on the draftsman’s art.” To convey patent-eligibility, the claims at issue must be “significantly more than an instruction to apply the abstract idea … using some unspecified, generic computer.”

In my previous post regarding the oral argument before the Supreme Court, I noted that the Court seemed to be looking for reasonable and clear rules regarding the limits of the abstract idea exception to patentable subject matter, but did not get such a rule from any party. Perhaps as a result, this case was decided purely on its similarity to Bilski, and without providing much guidance as to the scope of the exception.

My thanks to Domenico Ippolito for this posting.

© 2014 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

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“REDSKINS” US Trademark Registrations are Canceled for Disparaging Native Americans

MintzLogo2010_Black

A three-judge panel of the US Trademark Trial and Appeal Board (TTAB), for the second time and in a 2-1 decision, has held that the REDSKINS trademark used in connection with professional football and related services by the Washington Redskins National Football League team was disparaging to a substantial composite of Native Americans between 1967-1990, the time during which the registrations issued. It also held that the defense of laches did not apply to a disparagement claim where the disparagement pertains to a group of which the individual plaintiff or plaintiffs comprise one or more members. Accordingly, it ordered the registrations at issue canceled as violations of Section 2(a) of the Trademark Act. The cancellation of the registrations has no effect on the team’s ability to continue to use the REDSKINS marks.

Efforts to cancel the REDSKINS registrations have been ongoing for many years. The first petition to cancel the registrations was filed in 1992 and, after seven years of litigation, the TTAB canceled the registrations on grounds that the marks were disparaging to Native Americans. After several rounds of appeals and remands through the DC federal courts, the case was dismissed on grounds of laches.

While the above proceedings were still pending, six new individual petitioners, all Native Americans, initiated the current case seeking to cancel the same REDSKINS registrations. The matter was suspended pending a final decision in the above proceedings, and resumed in March 2010. After four more years of litigation, the TTAB again cancelled the registrations for disparaging Native Americans.

The Trademark Act prohibits registration of a trademark which may disparage persons or bring them into contempt or disrepute. A two-pronged test was used by the TTAB to decide the issue of disparagement as follows:

  1. What is the meaning of the matter in question, as it appears in the marks and as those marks are used in connection with the goods and services identified in the registrations?
  2. Is the meaning of the marks one that may disparage Native Americans?

Both questions are required to be answered as of the various dates of registration of the marks involved, which was between 1967 and 1990, considering the views during that time of a substantial composite of Native Americans, not the American public as a whole. The questions are not to be determined based on current views on the subject.

The TTAB found that first prong was satisfied by evidence that the term REDSKINS when used by the Washington Redskins football team retained its Native American meaning and imagery inherent in the original definition of the word. It stated that the football team “has made continuous efforts to associate its football services with Native American imagery.”

The second prong of the test required a determination of whether the use of the word was disparaging within the context of its use. “Context of use” can consist of several types:

  1. One which turns an innocuous term into a disparaging one;
  2. One which strips the disparaging meaning from the disparaging term; and
  3. One which has no effect on the disparaging meaning.

The TTAB held that as used by the football team, the word “Redskins” retained its original meaning and the context of the use had no effect on the disparaging nature of the word. It noted that the team’s “alleged honorable intent and manner of use of the term” did not change this finding.

In reaching its decision to cancel the registrations, the TTAB considered expert reports and testimony, dictionary definitions, and reference books. In considering the specific views of Native Americans, it considered the National Congress of American Indians’ (NCAI) 1993 Resolution 93-11, deposition testimony of several Native Americans, and various newspaper articles, reports, official records, and letters of protest filed at the Trademark Office. It concluded that the NCAI Resolution represented the views of a substantial composite of Native Americans who believed the term was disparaging, that the trend in dictionary usage labels corroborated the time frame of objections from Native Americans starting in the late 60s and continuing through the 90s as lexicographers began and finally uniformly labeled the term as “offensive” or  “disparaging,” and that, at a minimum, approximately 30% of Native Americans found the term used in connection with football services to be disparaging at all the times at issue.

In rejecting the laches defense, the TTAB stated that it was difficult “to justify a balancing of equities where a registrant’s financial interest is weighed against human dignity.”  Moreover, both it and the courts have routinely held that when a broader public policy concern is at issue, the laches defense does not apply.

The dissenting judge disagreed with the majority’s decision on the claim of disparagement arguing that the dictionary evidence relied upon was inconclusive and there was no reliable evidence to corroborate the membership of the National Counsel of American Indians. However, he stated that he wanted to make clear that the case was “not about the controversy, currently playing out in the media, over whether the term “redskins,” as the name of Washington’s professional football team, is disparaging to Native Americans today.” He disagreed with the majority that the evidence of record proved that the term was disparaging “at the time each of the challenge registrations issued.”

According to the Washington Post, the Redskins plan to appeal the decision and the team has no plans to discontinue use of the REDSKINS mark. Unlike the last proceeding, any appeal of this decision will not go to the DC federal courts but must now go to the United States District Court for the Eastern District of Virginia. This change was implemented in the America Invents Act which was enacted in September 2011 and it is not clear how a different court will decide these issues. The cancellation of the registrations will be stayed pending any appeal.

©1994-2014 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

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