Tag: Intellectual property

U.S.-China Trade Deal Shows Potential for Improved U.S. Intellectual Property Rights in China

A result of negotiating techniques from Donald Trump’s book “The Art of the Deal” or a result of strategies from the ancient Chinese military strategy treatise “The Art of War”?

Who knows, but on January 15, 2020, the United States (“U.S.”) and China signed Phase One of the Economic and Trade Agreement between the U.S. and China (the “Agreement”).  The Agreement, which is set to go into force on February 14, 2020, attempts to end or at least ease the trade war tensions between the world’s two economic behemoths.  The Agreement, amongst other issues, addresses protection and enforcement of U.S. intellectual Property (“IP”) rights in China.  While the Agreement does not resolve all IP protection and enforcement concerns faced by U.S. businesses in China, it is certainly a step in the right direction.

The importance of IP in establishing a fair and balanced bilateral economic and trade relationship is evident in the fact that the entire first two chapters of the Agreement are dedicated to IP protection and enforcement in China.  The Agreement addresses numerous areas of IP, including trade secrets, pharmaceutical related IP, patents, piracy and counterfeiting, trademarks, technology transfer, and other related topics.

The Agreement puts much of the responsibility on China to revamp its laws and develop new policies and procedures to implement the provisions of the Agreement and to address the long-standing concerns that have existed with regard to protection and enforcement of U.S. IP in China.

Discussed below are some of the areas under the Agreement where China has agreed to implement new laws and procedures to protect U.S. intellectual property.  In return, the U.S. has agreed to affirm that it already has equivalent or similar protection and enforcement mechanisms in place.

Trade Secrets

  • The definition of trade secret is expanded to include confidential business information.
  • The scope of acts that constitutes trade secret misappropriation is broadened to include electronic intrusions, breaches or inducement of a breach of duty not to disclose, and other unauthorized disclosures or uses.
  • Implements burden-shifting in civil proceedings, shifting to the accused party where the holder of a trade secret has produced evidence of a reasonable indication of trade secret misappropriation by the accused party.
  • Adopts provisional measures to prevent the use of misappropriated trade secrets.
  • Eliminates the requirement that the holder of a trade secret establishes actual losses prior to initiation of a criminal investigation for misappropriation.
  • Provides for the application of criminal procedures and penalties to address willful trade secret misappropriation through theft, fraud, physical or electronic intrusion for an unlawful purpose.
  • Prohibits the unauthorized disclosure of undisclosed information, trade secrets, or confidential business information by government personnel involved in government proceedings in which such information is submitted and provides criminal, civil, and administrative penalties for such unauthorized disclosure.

Pharmaceutical-Related Intellectual Property

  • Permits pharmaceutical patent applicants to rely on supplemental data to satisfy relevant requirements for patentability, during patent examination proceedings, patent review proceedings, and judicial proceedings.
  • Provides (a) a system to provide notice to a patent holder, licensee, or holder of marketing approval, that a person is seeking to market that product during the term of an applicable patent claiming the approved product or its approved method of use; (b) adequate time and opportunity for such a patent holder to timely seek available remedies; and (c) procedures for judicial or administrative proceedings and expeditious remedies, for resolution of disputes concerning the validity or infringement of an applicable patent claiming an approved pharmaceutical product.
  • With regard to pharmaceutical-related patents on new products and methods of use, provides an extension of the patent term, due to unreasonable curtailment of the patent term as a result of the marketing approval process, of up to five years, and may limit the resulting effective patent term to no more than 14 years from the date of marketing approval in China.

Patents

  • Provides patent term extensions to compensate for unreasonable delays that occur in granting the patent or during pharmaceutical product marketing approvals. For this provision, an unreasonable delay shall at least include a delay in the issuance of the patent of more than four years from the date of filing, or three years after a request for examination of the application, whichever is later.

Piracy and Counterfeiting on E-Commerce Platforms

  • Provides enforcement procedures that permit effective and expeditious action by right holders against infringement that occurs in the online environment, including an effective notice and takedown system to address infringement.
  • Provides that e-commerce platforms may have their operating licenses revoked for repeated failures to curb the sale of counterfeit or pirated goods.

Geographical Indications

  • Provides that when determining whether a term is generic in China, how consumers understand the term in China will be taken in to account.

Manufacture and Export of Pirated and Counterfeit Goods

  • Provides effective and expeditious enforcement action against the related products of counterfeit medicines and biologics, including active pharmaceutical ingredients, bulk chemicals, and biological substances.
  • Sharing with the U.S. the registration information of pharmaceutical raw material sites that have been inspected and that comply with the requirements of Chinese laws and regulations; and publishing data on enforcement measures, including seizures, revocations of business licenses, fines, and other actions taken by the National Medical Products Administration, Ministry of Industry and Information Technology, or any successor entity.
  • Significantly increasing the number of enforcement actions and publishing data online on the measurable impact of these actions each quarter.
  • Seizing and destroying counterfeit or pirated goods, including the materials and implements used in the manufacture or creation of such pirated or counterfeit goods.
  • Requiring a counterfeiter to pay right holders the profits from infringement or damages adequate to compensate for the injury from the infringement.
  • Increase the number of trained personnel to inspect for counterfeit and pirated goods.
  • Ensure that all government agencies and all entities that the government owns or controls install and use only licensed software.

Trademarks

  • Provide for criminal enforcement if there is “reasonable suspicion” based on articulable facts that a criminal violation of an intellectual property right has occurred.
  • Provide civil and criminal penalties sufficient to deter future intellectual property theft or infringements. 

Implementation

  • Within 30 working days after the date of entry into force of this Agreement, China will present an action plan to strengthen intellectual property protection and shall include measures that China will take to implement its obligations and the date by which each measure will go into effect.

Technology Transfer

  • Provides that U.S. businesses are able to operate openly and freely in China without any force or pressure to transfer key technology as a requirement for operating in China.

What does this all mean?  Well it’s hard to tell really at this point as the Agreement does not actually implement any new laws or regulations, but rather is a bunch of promises between China and the U.S.  Until China implements new laws or regulations to fulfill its promises we can really only speculate on its true impact.  Of course, implementation of new laws or regulations is only effective if there is suitable enforcement to back it up.  However, most would agree that if China does fulfill its obligations we can expect to see stronger economic and trade relations between the U.S. and China, in particular giving U.S. businesses greater confidence and predictability in protecting and enforcing their IP rights in China.

© 2020 Ward and Smith, P.A.. All Rights Reserved.

For more on international trade negotiations, see the National Law Review Antitrust & Trade Regulation law section.

Patent Trial and Appeal Board Provides Guidance on Timing of Requests for Certificates of Correction During PTAB Proceedings

The Patent Trial and Appeal Board (“Board”) recently issued a decision in Emerson Electric Co. v. Sipco, LLC (IPR2016-00984) (Jan. 24, 2020) that illustrates some important points for patent practitioners to consider when requesting a certificate of correction for a patent subject to a Petition for Inter Partes Review before the United States Patent and Trademark Office (USPTO).

The Board’s recent decision was the result of numerous proceedings before both the Board and the Federal Circuit, which began with Emerson Electric Co. filing a Petition for Inter Partes Review against Sipco, LLC (Patent Owner) on April 29, 2016.  The Board issued a final written decision that found all challenged claims unpatentable under at least one ground on October 25, 2017.  This decision was appealed by the Patent Owner to the Federal Circuit, and on appeal the Patent Owner requested that the Federal Circuit remand the case back to the Board based on a certificate of correction that had issued for the patent in question (8,754,780; “’780 patent”) after the date of the Board’s final written decision.  (Id.)  The Federal Circuit granted this request, and remanded the matter with an Order requesting the Board to address the issue of “what, if any, impact the certificate of correction had” on the Board’s final written decision.

On remand, the Board found that the earliest priority date to which the challenged claims of the ’780 patent were entitled was April 2, 2013, and refused to recognize the belatedly issued certificate of correction that would have changed the earliest priority to an earlier date in favor of the Patent Owner.  This was because the certificate of correction did not issue until March 27, 2018, which was five months after the Board’s final written decision and three months after the Patent Owner appealed to the Federal Circuit.  (Id. at 5.)

A patent owner is permitted to request a certificate of correction in accordance with 37 C.F.R. § 1.323, which allows patent owners to ask the Director to make corrections to “mistakes” in a patent.  See 35 U.S.C. § 255.  In this case, the Board noted a series of mistakes and oversights by the Patent Owner in seeking a proper certificate of correction.  Although the Patent Owner filed a certificate of correction with the USPTO Petitions Branch about one month after the filing date of the Petition for Inter Partes Review, the Patent Owner failed to seek permission from the Board to do so, either before or after this filing.  The USPTO dismissed the Patent Owner’s first request for correction, and although the Patent Owner’s second request was thereafter granted, the second request had no chain of priority to the first, and so the USPTO Petitions Branch treated it as a new request for correction.  (Id. at 7-8.)

The Patent Owner then made a third request for a certificate of correction, and this time made its request to the Board, but this request was ultimately denied.  (Id. at 8.)  The Board later permitted the Patent Owner to submit a request for a certificate of correction to the USPTO Petitions Branch, and the Patent Owner did so.  However, the USPTO Petitions Branch found there was no chain of priority to the first certificate of correction request, because the Patent Owner had again failed to “make a reference to the first (earliest) application and every intermediate application.”  (Id. at 9.)  Finally, and without any motion to the Board, the Patent Owner submitted a final request for a certificate of correction to the USPTO Petitions Branch, and this request was granted – leading to a certificate of correction issuing on March 27, 2018 that set forth a priority claim material to the final written decision of October 25, 2017.

The Board determined that the belatedly issued certificate of correction was well after its initial final written decision and should not be given retroactive effect so as to alter its initial decision.  In considering both sides’ arguments, the Board turned to analyzing the language of 35 U.S.C. § 255, and whether or not it permits retroactive effect of a certificate of correction in an Inter Partes Review proceeding.  The Board ultimately found that section 255 does not authorize such a retroactive effect.  In other words, under the facts presented, the Patent Owner’s corrections of its mistakes in priority claims through a certificate of correction issued after the date of the Board’s final written decision did not apply back to the time when the Petition for Inter Partes Review was filed.  Further, the Board made clear that “once a petition for inter partes review of a patent has been filed, the Board may exercise jurisdiction over a request for a certificate of correction, and may stay the request,” citing to 35 U.S.C. § 315(d), 37 C.F.R. §§ 42.3 and 42.122.  (Id. 22.)  The Board noted that its decision that the finally issued certificate of correction had no impact on its earlier final written decision was consistent with the Board’s exercise of exclusive USPTO jurisdiction over a patent once Inter Partes Review is instituted.  (Id. at 22-23.)

Key Takeaway

Although non-precedential, the Board’s decision illustrates that it is best to file a request for a certificate of correction of a patent before Inter Partes Review is instituted.  After institution, the Board has discretion to stay, and effectively deny, a patent owner’s ability to request a certificate of correction that can determine the outcome of the Inter Partes Review proceeding before the USPTO.

© 2020 Brinks Gilson Lione. All Rights Reserved.

For more PTAB decisions, see the National Law Review Intellectual Property law section.

CNIPA Announces Registration of Beijing 2022 Winter Olympics Mascots and Logos

The China National Intellectual Property Administration (CNIPA) announced seven Beijing 2022 Winter Olympics and Paralympics symbols including mascots and names on January 15, 2020.  Per the Regulations on the Protection of the Olympic Symbols, the term of protection is 10 years subject to renewal terms of 10 years each.  Fines for unlicensed commercial of the symbols are up to 250,000 RMB (about $36,000 USD) or up to 5 times illegal revenue.

The 7 symbols are:

Beijing 2022 Winter Olympics Mascot

1. A000020 The Olympic Mascot

2. A000021 The Chinese characters 冰墩墩 (Bing dun dun; meaning approximately ice pier)

3. A000022 A Romanization of A000021: Bing Dwen Dwen.

Beijing 2022 Paralympic Mascot

4. A000023 The Paralympic Mascot

5. A000024 The Chinese characters 雪容融 (Xue Rongrong)

6. A000025 A Romanization of A000024: Shuey Rhon Rhon

Beijing 2022 Winter Olympics Volunteer logo

7. A000026 The 2022 Olympic and Paralympic Volunteer Logo

The 2022 Winter Olympics will take place from February 4 to February 20, 2022 in Beijing, China and Zhangjiakou, China. Beijing will be the first city to host both winter and summer Olympics.

© 2020 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

For more on trademark registration, see the National Law Review Intellectual Property Law page.

The U.S. Patent and Trademark Office Takes on Artificial Intelligence

If the hallmark of intelligence is problem solving, then it should be no surprise that artificial intelligence is being called on to solve complex problems that human intelligence alone cannot. Intellectual property laws exist to reward intelligence, creativity and problem solving; yet, as society adapts to a world immersed in artificial intelligence, the nation’s intellectual property laws have yet to do the same. The Constitution seems to only contemplate human inventors when it says, in Article I, Section 8, Clause 8,

“The Congress shall have Power … To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

The Patent Act similarly seems to limit patents to humans when it says, at 35 U.S.C. § 100(f),

“The term ‘inventor’ means the individual or, if a joint invention, the individuals collectively who invented or discovered the subject matter of the invention.”

In fact, as far back as 1956, the U.S. Copyright Office refused registration for a musical composition created by a computer on the basis that copyright laws only applied to human authors.

Recognizing the need to adapt, the U.S. Patent and Trademark Office (PTO) recently issued notices seeking public comments on intellectual property protection related to artificial intelligence. In August 2019, the PTO issued a Federal Register Notice, 84 Fed. Reg. 166 (Aug. 27, 2019) entitled, “Request for Comments on Patenting Artificial Intelligence Inventions.” On October 30, the PTO broadened its inquiry by issuing another Notice, 84 Fed. Reg. 210 (Oct. 30, 2019) entitled, “Request for Comments on Intellectual Property Protection for Artificial Intelligence Innovation.” Finally, on December 3, 2019, the PTO issued a third notice, extending the comment period on the earlier notices to January 10, 2020. All of the notices can be downloaded from the PTO’s web site.

The January 10, 2020 deadline for public comments on the issues raised in the notices is fast approaching. This is an important topic for the future of technology and intellectual property, and the government is plainly looking at these important issues with a clean slate.

© 2020 Vedder Price

For more on patentable inventions, see the Intellectual Property law section of the National Law Review.

Bruce Lee Enterprises, LLC Sues Chinese Fast Food Chain for IP Infringement

Earlier this month, Bruce Lee Enterprises, LLC sued Shanghai Zhengongfu Fast Food Management Co., Ltd., Guangzhou Zhengongfu Catering Management Co., Ltd., and Guangzhou Zhengongfu Fast Food Chain Management Co., Ltd. (collectively referred to as Zhengongfu (真功夫)) in the Shanghai Second Intermediate People’s Court, asking Zhengongfu to cease using a Bruce Lee image (in marketing materials and signage), issue a public clarification in the media for 90 consecutive days that it has nothing to do with Bruce Lee, and requested the court to order Zhengongfu to pay 210 million yuan in economic losses and 88,000 yuan in reasonable expenses (about $30 million USD).

Zhengongfu was founded in 1990 and now has over 600 restaurants throughout China and is in the only Chinese brand in the top 5 of fast food chains in China.  Zhengongfu has been using a drawn image in store signage and marketing of a martial artist in a yellow top that is reminiscent of Bruce Lee dressed in a yellow-and-black one-piece tracksuit from the movie Game of Death.  Zhengongfu has also registered several trademarks incorporating the martial artist that Bruce Lee Enterprises, LLC alleges is Bruce Lee.  For example, in 2004, Zhengongfu filed for mark 3999537 reproduced below and registered in 2008.  There are at least eleven other Chinese trademarks bearing a similar image registered to Zhengongfu.

CN Trademark No. 3999537
This mark is regularly used in store signage as shown in the photo below of a Shanghai branch of the chain.
By WhisperToMe – Own work, CC0.

In the following screen shot from Game of Death, Bruce Lee, in a yellow-and-black tracksuit, strikes a pose similar to that in the trademark.

Still from Game of Death

The cause of action will most likely be portrait right violation, which is similar to California’s right of publicity and right of publicity for the deceased.  Portrait rights in China are protected in the General Principles of Civil Law, with relevant articles reproduced below:

Article 100 Citizens shall enjoy the right of portrait. The use of a citizen’s portrait for profits without his consent shall be prohibited.

Article 120 If a citizen’s right of personal name, portrait, reputation or honor is infringed upon, he shall have the right to demand that the infringement be stopped, his reputation be rehabilitated, the ill effects be eliminated and an apology be made; he may also demand compensation for losses.

The above paragraph shall also apply to infringements upon a legal person’s right of name, reputation or honor.

Although not explicit in the law, portrait rights in China apply to the deceased as the Supreme Court made clear in Zhou Haiying v. Shaoxing Yuewang Jewellery and Gold Co., Ltd. for violating Lu Xun’s portrait right.  The Court ruled that portrait rights continue after death and a close relative has the right sue on behalf of the deceased.  Accordingly, Bruce Lee’s daughter, Shannon Lee, may need to be a named plaintiff in the current lawsuit.

Further, other cases indicate that drawn or cartoon images of persons are also protected by portrait right.  As long as the person is identifiable in the image, portrait rights are infringed regardless of the medium (painting, sculpture, etc.).  For example, in Beijing Huariling Automobile Trading Co., Ltd. and Zhang Zhensuo (stage name: Zhang Liang), the First Intermediate People’s Court of Beijing held that a cartoon reproduction of the plaintiff violated his portrait rights.

On the other hand, Michael Jordan was less successful in the Supreme Court based on a silhouette of a basketball player not showing any facial characteristics.  The Supreme Court explained “the “portrait” protected by the right of portrait should be identifiable, which should contain enough information to enable the public to identify the corresponding right’s subject, that is, the personal characteristics of a specific natural person, so that it can clearly refer to the corresponding right’s subject…the facial features of natural persons are the most important personal characteristics of their physical features.”

Michael Jordan silhouette

In contrast, in the instant case, multiple characteristics potentially identifiable as belonging to Bruce Lee, including his facial characteristics, are present.  Accordingly, Bruce Lee Enterprises, LLC  and Bruce Lee’s daughter could prevail if the Shanghai Second Intermediate People’s Court rules that the Zhengongfu image is identifiable as Bruce Lee.

© 2019 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

For more IP infringement cases, see the National Law Review Intellectual Property law page.

U.S./China Trade “Deal” Short on IP/Trade Secret Specifics

With the announcement last week of a tentative partial trade agreement with China, the U.S. appears to be headed to a somewhat easing of tensions between the two superpowers.  Terms of the agreement are vague, with references to a reduction in tariffs, increase in agricultural purchases by China, and agreements to return to the bargaining table.

What is missing, though, are references to increases in protection of U.S. intellectual property: trade secrets, patents, copyrights, and trademarks, long espoused by the U.S.  This silence is in stark contrast to the stated goal of the U.S. that protection of U.S. intellectual property in China is among the key components to a successful and permanent trade deal.

The importance of such protection has been made manifest in several recent events.  The National Association of Manufacturers was hacked over the summer and blame was placed by investigators on Chinese nationals.  Earlier in the year, a former employee of a U.S. cast iron plant was sentenced to one year in prison after being arrested at the airport, en route to China with files of confidential information of his former employer.  Furthermore, China’s trademark register is full of foreign trademarks registered in China by its citizens.

China apparently has verbally committed as a part of an overall trade package to tighten up enforcement efforts in the IP arena.  But how does China quantify that commitment?  Such requires a change in the Chinese government’s mindset, its enforcement policies, and its recognition of the protectability of foreign trade secrets and other IP rights.  None of these can be reduced to tariff percentages, bushels or other common trade terms.  What can China offer in the way of a concrete plan to bolster protection of foreign confidential information?  Indeed, the silence of the parties as to this important issue is probably an indication of the difficulty the parties are having in reaching a verifiable agreement on IP.  With trust levels between the nations at their nadir, one can easily see how resolution of the IP protection issue may be a major stumbling block to a lasting trade agreement.  Will it become prohibitive?  Time will tell.

© 2019 Jones Walker LLP

More on IP agreements on the National Law Review Intellectual Property law page.

Virtual Marking: Guidance on Doing It Right

Despite the fact that virtual patent marking was introduced nearly a decade ago, jurisprudence addressing virtual marking issues has been quite limited. Recent guidance from U.S. district courts, however, paints a clearer picture of the patent marking statute’s requirements to (a) associate the patented article with the number of the patent; (b) place either “patent” or “pat.” together with a website address on the product; and (c) ensure the marking is “substantially consistent and continuous.”

Since 1952, the patent marking statute (“Marking Statute”) has encouraged patentees to give public notice of a patented article through physical application of the patent number to the article, which assists the public and helps mitigate innocent infringement. 35 U.S.C. § 287; Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1443 (Fed. Cir. 1998). Giving effect to this goal, the marking statute provides a financial disincentive for patent owners who do not mark their products (i.e., a patentee is precluded from recovering damages for infringement of unmarked articles prior to notice of infringement). Once marked, a patent owner’s marking must be “substantially consistent and continuous.” Id. at 1446.

Since the AIA’s passage in 2011, however, patentees have been able to inform the public that an article is patented through “virtual marking” (i.e., use of the word “patent” or the abbreviation “pat.” together with the URL of a website address where the actual patent number may be found). 35 U.S.C. § 287. As opposed to physically marking a patent number on a product, virtual marking allows a patent owner to quickly update its patent data website page without the costs of modifying product tooling or packaging (e.g., for newly issued, expired, or invalidated patents). In relevant part, the Marking Statute provides:

“Patentees . . . may give notice to the public that the same is patented . . . by fixing thereon the word ‘patent’ or the abbreviation ‘pat’ together with an address of a posting on the Internet, . . . that associates the patented article with the number of the patent.” 35 U.S.C. § 287(a) (emphasis added).

The Delaware District Court recently clarified what does, and does not, constitute adequate association, concluding that a “website itself must do more than simply list the patentee’s patents.” Mfg. Res. Int’l v. Civiq Smartscapes, LLC, Case No. 17-269, 2019 U.S. Dist. LEXIS 146060, at *3 (D. Del. Aug. 28, 2019)(emphasis added). Citing the statute’s “plain language,” the court reasoned that “[s]imply listing all patents that could possibly apply to a product or all patents owned by the patentee” “merely creates a research project for the public,” as opposed to giving public notice. Id. at *30-31. The court described why this would be the case by pointing to two examples lacking the association necessary “as a matter of law to meet the requirements of virtual marking”:


View larger image

Id.

The Court concluded that Plaintiff’s examples did “nothing to ‘associate’ any specific product it has marked with the patents which cover it.” Id. at 31. The Court was not persuaded by Plaintiff’s arguments that proper association was met in view of (1) Plaintiff’s statement that “[o]ne or more of the above listed MRI patents may be used by LG-MRI products under license from MRI, Inc.”, and (2) Plaintiff’s clarification of “the patent category (LCD Display Patents)”. Id. Accordingly, Plaintiff’s website failed to “provide ‘a ready means of discerning the status of the intellectual property embodied in an article of manufacture or design,” and no damages were awarded for infringement that occurred prior to the notice that was provided by the filing of the suit. Id., citing Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 162 (1989).

Beyond the association requirement, courts also have found that a website address lacking the words “patent” or “pat.” does not provide constructive notice, A to Z Machining Serv., LLC v. Nat’l Storm Shelter, LLC, 2011 U.S. Dist. LEXIS 149387 (W.D. Okla. 2011), and that evidence supporting consistent marking of substantially all products may include (a) documentary evidence concerning the timeframe in which the website has operated; (b) engineering and assembly drawings or the actual product depicting virtual mark placement; and (c) testamentary evidence concerning the frequency of the virtual mark’s use on products. See Asia Vital Components Co. v. Asetek Danmark A/S, 377 F. Supp. 3d 990, 1024-25 (N.D. Cal. 2019), citing SEB S.A. v. Montgomery Ward & Co., 594 F.3d 1360, 1378 (Fed. Cir. 2010).

Notably, the burden remains on the patentee to demonstrate that its patent marking practices are effective and appropriate. In view of recent court guidance, consider the following points for creating an effective virtual marking strategy:

  • Include either “pat.” or “patent” together with the website address where the actual patent number may be found.
  • Place the patent owner’s website address on all patented products and clearly correlate each product that is covered by at least one claim of a specific patent on that website address for a patented product.
  • Periodically review the patent website page to ensure that it is current, accurate, and complete (e.g. reflecting new products; updating issued, expired, or invalidated patents).
  • Create and preserve records that demonstrate that the virtual marking was consistent and continuous. This may entail keeping a written log of updates to the patent website address, and preserving evidence that it was continually maintained

© 2019 Brinks Gilson Lione. All Rights Reserved.

Of Passion, Prejudice And Punitive Damages

Addressing an issue of damages, the US Court of Appeals for the Ninth Circuit vacated the district court’s grant of punitive damages in favor of the plaintiff, finding “passion and prejudice” mitigated finding of “malice”. Waverly Scott Kaffaga, as Executrix of the Estate of Elaine Anderson Steinbeck v. The Estate of Thomas Steinbeck et al., Case No. 18-55336 (9th Cir. Sept. 9, 2019) (Tallman, J).

The lawsuit related to decades of litigation among the heirs to John Steinbeck’s registered copyrights to his works, including The Grapes of Wrath, Of Mice and Men, East of Eden and The Pearl. When Steinbeck died in 1968, he left interest in his works to his third wife, Elaine. Steinbeck’s two sons by a previous marriage each received $50,000. In the 1970s, the sons obtained rights in their father’s works when interests in works were renewed pursuant to US Copyright law.

In 1983, changes in the law prompted Elaine and the sons to enter into an agreement that provided each of them with an equal share of the royalties and gave Elaine “complete power and authority to negotiate, authorize and take action with respect to the exploitation and/or termination of rights” in the works. In 2003, Elaine passed away, and her daughter, Waverly Kaffaga, assumed the role of successor under the 1983 agreement. The sons challenged the validity of the 1983 agreement, and the US Court of Appeals for the Second Circuit determined that the agreement was valid and enforceable. Despite losing in court, one of the sons, Thomas Steinbeck, along with his wife Gail and Gail’s media company, filed a lawsuit in California asserting rights to the works that the courts had already told them they did not have. The district court held, and the Ninth Circuit affirmed, that the Steinbecks’ claims were barred by collateral estoppel.

Kaffaga countersued Thomas and Gail for their attempts to assert various rights in the works despite having no rights. Those attempts led to multiple Hollywood producers abandoning negotiations with Kaffaga to develop screenplays for the works. The district court granted Kaffaga summary judgment on her breach of contract and slander of title claims, citing many detailed facts it believed supported those claims. The district court let the jury decide on her claim of tortious interference. The jury unanimously found for Kaffaga and awarded $5.25 million in compensatory damages and $7.9 million in punitive damages, including $6 million against Gail individually.

On appeal, the Ninth Circuit found clear support in the record for the lower court’s decisions, save for one—punitive damages. There, the appellate court noted that although Kaffaga had the better argument, and although there was ample evidence of defendants’ malice in the record to support the jury’s verdict, triggering punitive damages, Kaffaga missed one key piece of evidence.

Under California law, there is a “passion and prejudice” standard that measures the amount of punitive damages against the ratio between damages and the defendant’s net worth. It is the plaintiff’s burden to place into the record “meaningful evidence of the defendant’s financial condition” to support a defendant’s ability to pay.” Thus, for the punitive damage award to stand, the record needed to contain sufficient evidence of Gail’s assets, income, liabilities and expenses. Here, Kaffaga failed. Although Gail testified that she received approximately $120,000 to $200,000 per year from domestic book royalties, Kaffaga introduced no estimate of Gail’s potential income from the four television series and six feature films in development, nor did she introduce an estimate of the total value of Gail’s other intellectual property assets. The Ninth Circuit found that Kaffaga failed to meet her burden of placing into the record “meaningful evidence” of Gail’s financial condition showing that she had the ability to pay any punitive damages award as required by California law. The Ninth Circuit therefore vacated the almost $6 million punitive damages award.

Practice Note: When seeking punitive damages in California, the moving party must place “meaningful evidence” of the non-moving party’s financial condition and ability to pay any punitive damages awarded, including their assets, income, liabilities and expenses. If there are problems obtaining such evidence during discovery, procedures such as a motion to compel or proposing an appropriate adverse inference instruction at trial are in order.

© 2019 McDermott Will & Emery

For more copyright inheritance, see the National Law Review Estates & Trusts or Intellectual Property law pages.

In The Weeds: Key Intellectual Property Takeaways For The Cannabis Industry

1. Patent Filings Are Rapidly Increasing

The number of patent filings at the United States Patent and Trademark Office (“PTO”) directly correlates to the rise of cannabis legalization. According to Magic Number, a data analytics company, between 2017 and 2018 the PTO issued almost 250 cannabis-related patents—more than in the previous seven years combined. These filings cover a range of inventions, including medical treatments and pharmaceutical compositions, cultivation techniques, vaporizers, and cannabis-infused products like toothpaste, coffee beans, and alcoholic drinks. With this uptick in patent filings, the volume of cannabis-specific prior art is on the rise as well. Those interested in obtaining patent protection in the cannabis industry should not fall behind their peers nor wait until the prior art field has fully developed. Early filing is critical.

2. Cannabis is Still Illegal Under Federal Law

Despite the growing number of patent filings, it is important to recognize that processing and distributing cannabis is still illegal under the federal Controlled Substance Act. Recent scholarly articles have argued that federal courts should not entertain most cannabis patent infringement suits due to illegality. Nonetheless, some courts have allowed these cases to proceed on the merits. United Cannabis Corporation v. Pure Hemp Collective Inc. is the first trial involving a cannabis patent in federal court. Specifically, the patent in dispute relates to the extraction of pharmaceutically active components from plant materials (e.g., liquid cannabinoid formula including THC). The plaintiff filed a patent infringement suit against a competitor maker of CBD products. In April 2019, a judge ruled in favor of United Cannabis Corporation by rejecting the argument that the plaintiff’s formulations are not patent eligible. Although the legal status of cannabis is not an issue in the case, it is important to remember that cannabis is not legalized at the federal level and that federal case law is still developing.

3. Design Patents can be a Valuable Component of an IP Portfolio

Design patents are a valuable form of protection in the cannabis space and are often a good alternative to utility protection. While 10 percent of patents issued overall are design patents, less than one percent of cannabis-related filings are designated as design patents. Design patents are quicker and cheaper to obtain; this may be desirable for fast-developing and/or cost-conscious companies and particularly for products having short life cycles. Design patents are particularly valuable for covering the ornamental aspects of well-known cannabis-related products, such as vaporizers, to deter wholesale copying. Business owners should consider the role design patents may play in protecting their products.

4. Trademark Filings are Similarly Increasing

Roughly 110 new cannabis-related federal trademark applications are filed each month since Congress approved the 2018 Farm Bill 11 months ago. Among other things, the Farm Bill removed “hemp” from the list of controlled substances under the Controlled Substances Act. This removal created an avenue for federal trademark registrations covering certain goods and services derived from hemp that contain no more than 0.3 percent THC. However, all other cannabis related products are currently ineligible for trademark protection due to its illegality. Namely, trademark law requires that the goods in connection with a particular trademark must be lawfully sold or transferred in commerce. To provide some flexibility given the tension between state and federal law for cannabis, trademark applicants should file applications using broad wording for the goods and services, which can allow applicants to narrow as needed to obtain a trademark registration. To register a cannabis-related trademark at the federal level, the cannabis-related business should be prepared to argue that the goods or services associated with the mark are not illegal under the Controlled Substances Act. Additionally, trademark registrations may be available in certain states for cannabis-related products and services. Although state registrations do not offer nation-wide protection, a company should consider filing for state trademark protection in conjunction with federal trademark flings. Companies should consider filing applications in states where cannabis is legalized.

5. IP Protection Strategy Beyond the United States

As of 2018, more than thirty countries have legalized cannabis, in one form or another, according to Marijuana Business Daily. The World Intellectual Property Organization notes that approximately 10,246 cannabis-related applications have been filed since 1978 under the Patent Cooperation Treaty, with 6,137 applications coming after 2008. Thus, the trends and recommendations above regarding domestic protection of cannabis are, likewise, relevant on the international stage. Likewise, companies should also consider foreign trademark filings in countries that have legalized cannabis. In particular, most foreign countries follow a first-to-file rule when it comes to trademarks. As a result, it is important to consider foreign trademark filings as early as possible.

Closing

With the drastic increase of cannabis-related patent and trademark applications, companies need to act quickly to protect their innovations in this rapidly growing industry. With cannabis-related patents, despite the uncertain legal landscape, early filings may be unexpectedly successful, given the infancy of the prior art field. With cannabis-related trademarks, companies should ensure that the goods or services associated with that trademark are not illegal under the Controlled Substances Act. Companies should also continue to monitor developments on a state-by-state and nation-by-nation basis. Given trends, it is expected that legalization will continue to expand to additional jurisdictions.

 

Copyright 2019 K & L Gates

ARTICLE BY Matthew S. Dicke, Sana Hakim, Kevin T. McCormick and Brittany Kaplan of K&L Gates.
For more in cannabis industry news, see the National Law Review Biotech, Food & Drug law page.

No Copyright Case Too Small: Content Creators Rejoice or Casual Infringers Beware?

An office jokester emails a funny meme she copied off Google to a colleague. A tourist snaps a picture of a painting in an art gallery and posts it to his travel blog. A teacher prints copies of a recently published Internet article and distributes to his class. A teen reposts his friend’s Instagram picture on his own social media page. To these casual infringers, no harm has been done and there’s certainly no reason to “make a federal case out of it.” But to the copyright owners, these small acts of infringement mean something. Perhaps not enough to justify the expense and time required for a federal claim, but action may be worth pursuing on a smaller scale.

Enter the pending CASE Act, intended to protect the “creative middle class,” and a potential boon to small businesses and individual content creators, while simultaneously presenting a threat to the “micro-infringements” committed by the ordinary person throughout the day. Last week, the US House of Representatives approved the Copyright Alternative in Small-Claims Enforcement Act of 2019 (CASE Act) by a landslide 410-6 vote. The bill is intended to create a Copyright Claims Board within the US Copyright Office that would hear copyright claims of up to $15,000 per work infringed, with statutory damages capped at a total of $30,000.

If passed by the Senate, the CASE Act is likely to be a welcome avenue for graphic designers, bloggers, photographers, authors, vloggers, and other individual and small business copyright owners to protect their works. Currently, pursuing copyright infringement litigation is limited to filing suit in federal courts, the cost of which can be prohibitive for many small businesses. The proposed Copyright Claims Board provides a more affordable avenue—effectively, a copyright small claims court—to enforce copyright ownership.

Supporters say that small businesses have long needed a more efficient and affordable means to enforce their copyrights. To this point, much of the unauthorized exchange and use of Internet-based works or smaller-scale copyrighted works has been difficult to police. In fact, June Besek, the executive director of the Kernochan Center for Law, Media and the Arts at Columbia Law School, recently told the ABA Journal that many infringers knowingly exploit copyrighted material because they are confident they will never be challenged. (Anyone remember the flagrant use of Napster and LimeWire by teens in the late 1990s and early 2000s to illegally download music—excuse me, “file share”—with little fear of repercussions for their “small-scale” acts of infringement?). A number of organizations, including the American Bar Association, have expressed support for the CASE Act.

But that support, while widespread, is not universal. The American Civil Liberties Union opposes the proposed CASE Act on the grounds that it will stifle free speech and the open sharing of information. Other critics say that by lowering the threshold for infringement claims, lawmakers also are opening the door for “copyright trolls” to file nuisance infringement claims with the Copyright Claims Board. And many are less than keen on the idea that inadvertently unanswered copyright infringement complaints could cost ordinary Americans up to $30,000 in default judgments per proceeding—perhaps a small sum to a business, but potentially life-changing to many individuals—with very limited ability to appeal, under the currently proposed language of the Act.

Notably, as currently written, the small-claims tribunal established under CASE will be entirely voluntary, meaning the complaining party can elect to use the Copyright Claims Board, and the defending party may choose to opt out. But critics point out that the opt-out window is only 60 days long, and easily could be missed by an unwitting defendant.

Next, the Senate will consider the CASE Act, but observers believe it will pass with bipartisan support. The final language of the Act may be somewhat different from its current form, so stay tuned for more updates as the CASE Act makes its way through the legislature.

What the proposed CASE Act could mean for you:

Would-be plaintiffs (or defendants) appearing before the proposed Copyright Claims Board are encouraged to do so with licensed legal representation. Some have suggested that this small claims court format will allow parties to represent themselves without needing to incur the fees of legal representation. However, it is important to remember that, though the monetary stakes may be lower than in federal court, the complex legal nuances of copyright law, not to mention jurisdiction, service, discovery, evidence, joinder of parties, and expert testimony, remain the same and are best addressed by experienced legal counsel.

Owners of large copyright portfolios may find the CASE Act to allow greater leeway in defending their works against smaller-player infringers. Businesses with larger portfolios may wish to take stock of their protected works and develop an enforcement strategy, taking into account this more accessible avenue for enforcement.

Smaller companies or individual content creators, too, may find the proposed CASE Act to provide the freedom to assert their copyrights more aggressively than they have done previously. These companies and individuals also are encouraged to take stock of their copyright portfolios, and consider setting up infringement alerts through their legal representatives or third party vendors in order to take a more offensive stance.

On the opposite side of the court room, copyrighted work users are cautioned to think carefully about their use of protected works. Businesses and schools may want to consider updating policies on use and distribution of protected works, with a more conservative mindset. The relative ease of filing suit with the Copyright Claims Board may give rise to a more litigious “creative middle class.” And while the damages may be smaller-scale, the attendant legal costs may not be, and damages from multiple suits may add up quickly.

 

Copyright © 2019 Womble Bond Dickinson (US) LLP All Rights Reserved.

ARTICLE BY Kristin Lamb of  Womble Bond Dickinson (US) LLP.
For more copyright infringement regulation, see the National Law Review Intellectual Property law page.