Category Archives: History

The Crossclaim Loophole Left Open by the America Invents Act, Inter-circuit Patent-law Splits

Congress established the United States Court of Appeals for the Federal Circuit over 30 years ago to bring uniformity to patent law. But the Federal Circuit is not truly a national patent court.

The Federal Circuit has never had jurisdiction over all appeals involving patents. The jurisdictional statute that Congress wrote for the Federal Circuit gave that court appellate jurisdiction over any civil action “arising under” the patent laws. OLYMPUS DIGITAL CAMERA

For many years, it was an open question whether the Federal Circuit had appellate jurisdiction over an action where there was no patent claim in the complaint but there was a patent claim in the answer or counterclaim. Read the rest of this entry

Apple v. Samsung and awards of defendant’s profits: the potential for overcompensatory damages in design patent infringement cases

One aspect of the Apple v. Samsung litigation that has not received much coverage in the press is the basis of the jury’s $1.05 billion damages award.  According to an interview with the jury foreman, the jury award was based on the $8.16 billion in revenue Samsung earned from the sales of allegedly infringing devices, multiplied by the jury’s estimate of Samsung’s profit margin on those devices (somewhere between 12 and 13%).  See Dan Levine, Velvin Hogan, Foreman in Apple Samsung Case, Says Jury Didn’t Want $1 Billion Verdict To Be Just a Slap on the Wrist, Aug. 25, 2012.  Assuming that the numbers are supported by the evidence, this sort of award is permissible under design patent law.  (Three of the patents Samsung was found to have infringed were design patents.)  In this respect, however, U.S. design patent law is something of an oddity compared with other types of infringement cases, both in the U.S. and elsewhere.

In a case involving the infringement of a utility (invention) patent, the prevailing plaintiff has the option under section 284 of the U.S. Patent Act to recover its own lost profit resulting from the defendant’s infringing sales, or a reasonable royalty.  At one time, a third option—the recovery of the profit the infringer made from sales of infringing products, which depending on the circumstances could be higher than the plaintiff’s own lost profits or a reasonable royalty—also was available, but in 1946 Congress eliminated this option for utility patents on the ground that the calculation of the defendant’s profits was often too complex and time-consuming.  Congress did not eliminate this third option in design patent cases, however, where it remains today in section 289.  So this explains why Apple could request, and the jury could award, Samsung’s profits from sales of allegedly infringing products. Read the rest of this entry

Intellectual Property and Crimes

This week we kick off a series of posts related to criminal laws and intellectual property. We’re going to examine the current state of IP-related criminal laws–both state and federal.

A good place to start is a working paper, The Puzzle of Criminal Sanctions for Intellectual Property Infringement, by Irina D. Manta. Sections II and III of the paper are an effective primer on the history and current state of criminal sanctions in IP laws. For more on federal prosecution efforts, check out the DOJ’s Computer Crime & Intellectual Property Section.

Public Domain, Vampires, and Werewolves

A recognized part of society’s IP bargain is that after enough time has passed, a work or invention will become public domain. Others are then free to modify the original work, build upon it, and add value.

The public domain also includes works for defiling, too, as “one man’s trash is another man’s treasure.” Echols v. CIR, 935 F. 2d 703, 707 (5th Cir. 1991).

The recent rise of “mashup” books reflect the broad scope that the public domain affords to later creators. These books often combine the story, characters, and setting of literary classics with elements from supernatural genres—vampires, werewolves, etc.

Examples are remarkable: Pride and Prejudice and Zombies, by Seth Grahame-Smith and Jane Austen. Sense and Sensibility and Sea Monsters, by Ben H. Winters and Jane Austen. Little Women and Werewolves, by Louisa May Alcott and Porter Grand.

These new old works are not limited to print, either. This year will see the release of the full-length feature film Abraham Lincoln: Vampire Hunter:

President Lincoln’s mother is killed by a supernatural creature, which fuels his passion to crush vampires and their slave-owning helpers.

We have the limited copyright duration required by the Constitution to thank for these works. This limited duration is a balance of competing public claims: Creative work should be rewarded, but private motivation must promote public availability artistic works in the long run. One wonders if the Founders would have struck a different balance had they known of Abraham Lincoln: Vampire Hunter. No doubt Jane Austen’s heirs could have prevented zombies from invading her work, if they owned eternal copyrights.

Preempted State IP Laws and Their Constitutionality

ConstitutionThe Constitution’s Supremacy Clause gives Congress the power to preempt state laws through legislation. Preemption is a perennial issue in IP cases because patents and copyrights have traditionally been matters of federal law, but trademarks and trade secrets have traditionally been matters of state law. The Supreme Court has analyzed the preemptive effect of federal intellectual property laws in cases like Bonito Boats, Inc. v. Thunder Craft Boats, Inc. (1989) and  Sears, Roebuck & Co. v. Stiffel Co. (1964).

Because Congress’s power to preempt state law flows from the Supremacy Clause, some opinions seem to state that preemption is a type of unconstitutionality. See Biotech. Indus. v. District of Columbia, 496 F.3d 1362, 1366 (Fed. Cir. 2007) (discussing district court determination than an act was “preempted and therefore facially unconstitutional”). This view is common but incorrect.

Preemption and unconstitutionality are distinct legal concepts. Fla. Lime & Avocado Growers, Inc. v. Jacobsen, 362 U.S. 73, 82 (1960) (discussing difference between “conflict with the United States Constitution” and “conflict with the Federal Agricultural Marketing Agreement Act” as examples of distinct constitutional and preemption-based challenges to a state statute); In re Buder, 271 U.S. 461, 466 (1926) (holding that a claim of conflict between a state statute and a federal statute is not a constitutional challenge); see also Lemke v. Farmers’ Grain Co. of Embden, N.D., 258 U.S. 50, 51, 62 (1922) (separately analyzing attacks on a state statute on (1) grounds that it was unconstitutional and (2) that it conflicted with a federal statute).

When examining whether a state law is preempted, courts will compare that law with a federal law—not with the Constitution itself. The Supremacy Clause tells us nothing about whether federal copyright law preempts state trade regulations. Federal copyright law, however, does control whether a given state law is preempted. In the absence of federal IP statutes, states would be free (or more free) to enact their own IP laws. Until then, many state IP laws may be preempted, but those laws are not—strictly speaking—unconstitutional.

A Candyman and His Marks

I heard on the radio recently that Nello Ferrara, the creator of Lemonheads and Atomic Fire Balls candy, died earlier this year at the age of 93.  The mention of Lemonheads brought back childhood memories of my sisters and I riding our bikes to the local convenience store to buy Ferrara’s candy, which came in little boxes and – if I remember right – put us back a whopping 10 cents per box.

The news of Mr. Ferrara’s passing and the sudden surge of childhood memories encouraged me to do a little research on Ferrara’s company.  According to the New York Times, the Illinois-based Ferrara Pan company was started in 1908, and Nello took it over from his father decades ago.  Nello’s son, Salvatore Ferrara, is the company’s current president and CEO.  Salvatore claims that his head was shaped like a lemon when he was born, inspiring his father to invent the Lemonhead candy.  The full New York Times article can be found here.

Regardless of the inspiration, a quick search reveals that the Ferrara Pan company has a track record of protecting the names the company has given its products over the years.  The company has filed over 250 trademark applications, one of the first being filed in December of 1954 for the “ATOMIC FIRE BALL” mark.  The mark for “LEMONHEAD” came in April of 1963.  One registration that I was particularly excited to see was the November 1975 registration for “ALEXANDER THE GRAPE,” which is associated with my favorite Ferrara candy (although it appears this candy may now go by the name “GRAPEHEAD,” registration for which was filed in 1996).

Over the years, the company has expanded the reach of its marks beyond candy, filing applications for marks associated with everying from body lotion and lip balm, to clothing, to alcoholic beverages.  Many of these marks have since been abandoned, but the company does sell clothing bearing the company’s marks on its website.  It is clear, though, that candy is still the company’s main focus: it reportedly produces 135 million pounds of candy per year (using 200,000 pounds of sugar per day).

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