Category Archives: International

ICANN Launches Trademark Clearinghouse

The Internet Corporation for Assigned Names and Numbers (“ICANN”) has launched its Trademark Clearinghouse (“TMCH”) effective March 26, 2013.  ICANN touts the TMCH as an effective tool for combating infringement and other feared abuses relating to ICANN’s new generic top level domain program (“gTLD”).  For an annual fee between $95 and $150 per trademark, brand owners can file their trademarks with the TMCH centralized database before and during the launch of the new gTLDs.  Registration will afford the brand owner two purported benefits: 1) priority registration for gTLDs matching their trademark during the ”sunrise” period (the period before the names are available to the general public); and 2) notification if anyone registers a gTLD matching their trademark.

ICANN’s gTLD program provides companies the opportunity to forego standard domain extensions such as “.com” and “.org” and register domain extensions incorporating their trademark such as “.pepsi” or “.google.”  The program has received heavy criticism, including claims the program is primarily intended to increase revenues (the application fee for a gTLD is $185,000 with an ongoing annual fee of $25,000.)  Others are concerned gTLDs will have an anticompetitive effect by allowing large players such as Google to monopolize descriptive domain extensions such as “.blog.”  The founding chairperson of ICANN, Esther Dyson, is on record as claiming the gTLD system will create jobs for lawyers, marketers, search-engine optimization experts, registries, and registrars but add little actual value or benefit to brand owners or internet users.

The TMCH has received similar criticism.  According to some commentators, the TMCH is less effective than readily available commercial watch services routinely utilized by brand owners.  Such critics note that the TMCH will apparently only screen for exact matches – failing to flag minor variations from the subject mark.  For example, an application for the gTLD “.googled” would apparently not get flagged for the registered trademark “google.”  For an equivalent cost, most commercial watch services catch all minor variations of the subject mark.  Additional information and details concerning ICANN’s TMCH can be found at http://trademark-clearinghouse.com

The Foreign Trademark Scam – Why (Oh Why) do We Tolerate this?

I hate it when this happens – a client comes up with a great trademark for a great product, everyone is really excited and then – the knockout search uncovers one of those stinking foreign based US trademark registrations with a list of goods and services that is the trademark equivalent of a 40 car pileup on the freeway at rush hour.  The identification covers 17 classes and is thousands and thousands of words long, and everyone knows that none of the goods and services have ever been, or will ever be, used in commerce in the US (I actually feel sorry for whoever has to examine these applications).  And, there is basically nothing anyone can do about it.  How does this happen?

Well, let’s go back to 1984. In Crocker Nat’l Bank v. Canadian Imperial Bank of Commerce, 223 U.S.P.Q. 909 (TTAB 1984), the Board went on record stating that a foreign applicant could obtain registration of a mark in the United States based on a foreign registration, even if the trademark has never been used anywhere in the world, and whether or not the applicant had a bona fide intention to use the trademark in the United States.  Wow – that’s a bargain if I ever did see one, especially since US applicants have to prove use before they can get a US registration.

This happens because many countries, including most European countries – unlike the US, do not have use based trademark systems.  This allows a person in those countries to obtain a trademark registration for any mark without any use of the mark.  In the EU, a Community Trademark registration creates property right in a mark without any requirement of a bona fide intention to use, without goodwill, or without any actual use of the mark anywhere, and these rights extend throughout the entire EU (subject to cancellation for non-use after five years).

This foreign trademark registration then can be used under Section 44/66 as the basis of a valid US trademark registration, and there is no requirement that the trademark be used in the US (at least not until the statement of continued use is due 6 years after registration).  That’s a 6-year free ride for foreign applicants, allowing them to put extremely broad registrations on record with the USPTO effectively blocking anyone from registering a confusingly similar trademark.

The Crocker decision, in large part due to the efforts of the predecessor of INTA, led the US to adopt an intent-to-use basis for trademark filing in 1988, which allowed for filing a trademark solely based on an intent-to-use the mark, and includes a requirement that all foreign applicants declare an intent-to-use the mark in the US.  Problem solved, right?  Well – not exactly.

Applicants filing in the US based on a foreign registration are required to state that they have a bone fide intent-to-use the mark in the US, but what does that really mean, and how is that enforced?  Intent-to-use generally only requires a good faith intention to eventually use the mark in a real and legitimate commercial sense.  It is not all that hard to “intend” to do something.  It is certainly nothing like actually doing that something.  I can intend to go to Mars, and without having to actually go to Mars , I don’t have much on the line.  It does not take much to cover your tracks, and show an intent-to-use.

So, what happens if there really was no intention to use the mark?  Keep in mind that when a trademark application filed in a country without a use or intent-to-use requirement is filed in the US with the same colossal list of goods and services that appeared in the foreign registration, it is reasonable to assume that there was no intent-to-use the mark in the US (since there was no intention to use required when the foreign application was filed).  Then, there should be some hope of invalidating the US filing?

In reality, there is not much that can be done.  The client can try and cancel the registration, but that is an awful lot to ask of someone at the name selection stage, and they would need to make the challenge based on the mere existence of a long list of goods and services in a foreign based application (it would be hard to have more evidence than that).  That may be too speculative of a basis for most people to take on the expense and burden of litigation (no matter how reasonable the basis).  Also, since the Federal Circuit’s In re Bose decision, which requires clear and convincing evidence of a material misrepresentation and an intent to deceive to prove fraud, it has become more or less impossible to invalidate an registration based on fraud.

There have been cases that have invalidated registrations based on a lack of a bone fide intent-to-use, however, these have been generally limited to cases against unsophisticated registrants or those that have been unable to produce any documentation at all of an intent-to-use.  As stated above, it is not hard to create some basic documentation of an “intention” to do something thereby clearing the intent-to-use hurdle.

Thus, the available options have serious limitations.  In reality, that vast majority of people in the situation I described at the outset are not in a position to do anything except select another mark, and what is most certainly an invalid trademark registration stays on the register.

The real solution to this problem is to require all applicants for a US trademark to produce evidence of use before obtaining a registration.  Additionally, to deal with the problem of absurdly long identifications maybe there should be requirement to provide a specimen for every distinct good and service rather than just one specimen per class (but don’t get me started on that).

Intellectual Property Under Attack by Secret Chinese Military Unit

Does this sound like a Michael Crichton novel?  We can only hope.  Several news agencies are reporting on a study released by Mandiant, an American computer security firm, that has traced huge volumes of hacking activity to a building in a rundown neighborhood of Shanghai believed to be under the control of a Chinese military unit identified as the “Comment Crew” or “Shanghai Group.”

 

What are they after?  In addition to orchestrating attacks against high level US and Canadian government interests, they are increasingly targeting the intellectual property of companies involved in critical infrastructure such as the electrical power grid, gas lines, and waterworks.  Other industries targeted include information technology, aerospace, military contractors, satellite and telecommunications, financial services, and even legal services.   The group is reportedly draining terabytes of data from these sources.

 

The study details the efforts of the Comment Crew in hacking Coca-Cola during its acquisition of a large Chinese company, presumably in an effort to uncover negotiation strategies and other information critical to the deal.  The attack was traced to a “spearphising” email sent to a Coca-Cola executive.  The email appears to be from a friend and includes a link that initiated the download of malicious code.  The executive clicked on the link.

 

The group is also believed responsible for a similar attack on RSA, the computer security company owned by EMC, a large technology company. It is best known for its SecurID token, carried by employees at United States intelligence agencies, military contractors, and many major companies.

 

Scary stuff indeed!  Cyberwarfare, or government sponsored cyberattacks, are not new and there have been many high profile incidents in the news.  According to former US national security advisor Richard Clark, Israel used cyberwarefare to make their planes invisible to the Syrian air command system during a 2007 bombing raid carried out against a nuclear facility under construction in Syria.  The US and Israel are believed to be responsible for the attack on an Iranian uranium enrichment facility that supposedly destroyed several pieces of key equipment using a highly sophisticated computer virus.  The Chinese are also believed to have gained access to key elements of the F-35 advanced fighter jet when they hacked into the computer systems of BAE Systems, a British defense contractor.

 

In an attempt to head off more of these types of attacks the Obama administration last week issued a cybersecurity executive order designed to promote security through a joint government and industry self monitoring program.  The order puts into place key elements of the cybersecurity legislation that was defeated last term by a Republican filibuster and was opposed by key groups like the US Chamber of Commerce for fears that it would place undue regulatory burdens on business.

 

Government sponsored cyberattacks on business is somewhat of a new phenomena and seriously escalates the risks of business to business dealings.  I suspect we only know the tip of the iceberg when it comes to hacking, and the protection of key business intellectual assets should be at forefront of all business dealings.  It would appear that you cannot really be too cautious these days.

Protecting Intellectual Property Through Cybersecurity: Does an asymmetric threat call for a centralized solution?

It may be generally understood that globalization has resulted, at least in part, in an increase in the dissemination and popularization of technology, information and finance. Smart phones, social media networks, open source technologies, and crowd sourcing (whether for ideas or funding) are some examples of this trend.  But when it comes to protecting your intellectual property and privacy in this sphere (e.g., cybersecurity), all that glitters is not gold.  This proliferation aids state and non-state actors to level the playing field against a target by working as a multiplier for an individual or group’s ability to wreak havoc.

Whether you are a shoe retailer (e.g., Zappos.com) or a cybersecurity firm (e.g., HB Gary), computer hackers may now directly target and disrupt your business operations with relative ease.  See, e.g.,  Cyber Attacks on IP: A Civil Response.  And unfortunately, these threats are not isolated incidents.  McAfee® recently published a white paper that analyzed “Project Blitzkrieg,” and a plan hatched by vorVzakone (Russian for “thief in law”) in which he has urged the “underground to join him in attacking 30 US banks.”

These attacks are not driven merely by an anarchistic or crime syndicate.  For instance, Bloomberg, among others, reported this last summer that a group codenamed “Byzantine Candor” by the U.S. intelligence community is linked to China’s People’s Liberation Army (i.e., the national military) was behind the hacking of the president of the European Union Council, Haliburton Co. and  the Washington D.C. law firm of Wiley Rein LLP.   In that report, Bloomberg quoted Shawn Henry, former executive assistant director of the Federal Bureau of Investigation (FBI) in charge of the agency’s cyber division as saying: “What the general public hears about — stolen credit card numbers, somebody hacked LinkedIn — that’s the tip of the iceberg, the unclassified stuff. I’ve been circling the iceberg in a submarine. This is the biggest vacuuming up of U.S. proprietary data that we’ve ever seen. It’s a machine.” Indeed last month, The New York Times reported that Kaspersky Lab (a Russian cybersecurity firm) had announced that “it had identified a sophisticated cyberespionage campaign that has been in operation since 2007,” which targeted “a range of governmental and diplomatic organizations, mostly in Eastern Europe and Central Asia, but also in Western Europe and North America.” The investigation into this campaign showed that “the attackers engineered their malware to steal files that have been encrypted with a classified software, called Acid Cryptofiler, that is used by several countries in the European Union and NATO to encrypt classified information.” However, the New York Times further reported that Kaspersky Lab “said that the digital clues suggested that the perpetrators were Russian-speaking, but that the campaign did not appear to be the work of a nation state.”

These threats are not only real, but traditional security measures are wholly inadequate.  In its 2013 Technology, Media & Telecommunications Predictions, Deloitte, recognized that passwords alone are not enough, predicting “that in 2013 more than 90 percent of user-generated passwords, even those considered strong by IT department, will be vulnerable to hacking.”  Deloitte thus predicts that “[i]nadequate password protection may result in billions of dollars of losses, declining confidence in Internet transactions and significant damage to the reputations of companies compromised by attacks.”  In support for its predictions Deloitte noted that “[i]n a recent study of six million actual user-generated passwords, the 10,000 most common passwords would have accessed 98.1 percent of all accounts.”  Further Deloitte noted that “[a] dedicated password-cracking machine employing readily available virtualization software and high-powered graphics processing units can breach any eight-character password in 5.5 hours.”  This relative small amount of time will only get shorter as technology continues to improve and tactics leveraging multiple persons and/or pieces of hardware (i.e., “crowd-hacking”) are employed. Read the rest of this entry

IP is SO Exhausting!

An important, and often overlooked, question involving intellectual property rights is, “When are the rights of IP owners exhausted?”  When you buy a book, movie, computer, or software at what point does the IP owner lose the ability to control what you can do with it?  The Supreme Court has taken two important cases this term that may help answer this question.

Whether you are acquiring intellectual property rights, or are a provider of goods and services covered by intellectual property rights, you need to understand exhaustion issues if you want to control and recognize your rights.  In other words, you may not have the rights you think you have, and you may not be able to use your property the way you think you can.

The law of exhaustion is well developed for both patents and copyrights, but the expanding scope of the type of things subject to IP protection and the global nature of our economy challenge existing law.  The law is a mixture of statute and common law, the general goal of which is to limit the ability of intellectual property rights holders from exacting tribute over and over again as goods and services are sold and resold.

The first case before the Court, Bowman v. Monsanto, is a patent case dealing with the question of exhaustion in the context of self replicating plants.  Monsanto owns patents covering its genetically engineered agricultural seeds.  The seeds are modified to include genes that make the plants immune to a Monsanto herbicide (Roundup), allowing broadcast application of the herbicide, which kills everything except plants grown from the patented seeds (although it has been reported that some weeds have now developed natural immunity).  Very clever idea, but the problem is that soybeans are self-fertilizing plants and each generation is genetically identical to the parent and is therefore immune allowing farmers to hold back seed to plant the next year (instead of buying new seed).

Monsanto, like the rest of the industry, solved this problem by providing the seed in accord with very particular restrictions – so called “bag licenses,” which license the seed to farmers to use only to grow plants which can then be harvested and sold as a commodity.  The farmers are forbidden under the license from holding back any harvested seed to grow a second generation of plants.  They must buy new seeds each growing season.  This scheme allows Monsanto to avoid hitting the exhaustion question head on with its direct customers.  Since the seeds are “licensed” not sold, Monsanto maintains control over the use and can enforce the license restriction.  Without the license the right to prevent planting second generation seeds might have been exhausted when the original seeds were purchased.

Bowman, however, did not buy the seeds from Monsanto, but instead bought the seeds on the commodity market from local grain elevators and so had not signed a bag license.  Bowman believed he was free to plant the seed, and then plant the seed from the seed, without restrictions.

Monsanto, of course, took the opposite view.  Monsanto contends it does not matter whether Bowman was under a bag license, because each generation of seed is effectively a new patented invention, and its use without permission is an infringement.  That has been the position the courts have taken as this case made its way up to the Supreme Court.  Presumably, the Court has something interesting to say on the issue because this is the second time they have taken a case like this.  A few years ago the Court took up the same issue but did not reach a decision because one of the justices recused herself.  This case has huge implications for the bio-tech industry as many technologies have the potential to self-replicate, and/or attempt to control use in a manner similar to the techniques used in the agricultural seed field. Read the rest of this entry

PTO’s Notice of Request for Comments on Secrecy—Patents and “National Economic Security”?

The PTO’s recent “Notice of Request for Comments on the Feasibility of Placing Economically Significant Patents Under a Secrecy Order and the Need to Review Criteria Used in Determining Secrecy Orders Related to National Security” defines “economic security.” (See previous post.) The definition of “national security” in the patent context is well understood in light of 35 U.S.C. § 181 and regulations like 37 C.F.R. § 5.5. The notice uses a new term, however—“national economic security.” It is undefined, but it can be thought of as the idea that there is an economic component to defense readiness, i.e. risks that stem from reliance on key economic inputs for the nation’s military that can only be supplied from a foreign countries. For example, this is in part the reason that that the U.S. uses depleted uranium instead of tungsten for armor-piercing weapons.

That definition of “national economic security” can’t be right here, though. The filing or publication of a patent application would not increase the U.S.’s dependence on foreign inputs for national-security uses. The reverse could be true though: publishing a patent application might enable foreign countries to become less dependent on American-made goods for their own national-security needs. If that’s the concern, then, the definition of “national economic security” is at odds with “economic security” as defined by the Subcommittee. “Economic security” means that the U.S. is the first to receive a benefit from innovation (especially during the period between publication and issuance). If “national economic security” means ensuring that the U.S. gets maximum relative benefit from patent applications, it is irrelevant whether the U.S. get the first benefits from those applications.

PTO’s Notice of Request for Comments on Secrecy—Patents and “Economic Security”

The PTO Secrecy Notice and Request for Comments has been issued. It asks whether and how to identify and suppress publication of patent applications that are deemed detrimental to the nation’s economic security.

Recently, Congress has asked whether the currently performed screening of patent applications for national security concerns should be extended to protect economically significant patents from discovery by foreign entities. The Commerce, Justice, Science, and Related Agencies Subcommittee’s report on the 2012 Appropriations Bill stated:

“By statute, patent applications are published no earlier than 18 months after the filing date, but it takes an average of about three years for a patent application to be processed. This period of time between publication and patent award provides worldwide access to the information included in those applications. In some circumstances, this information allows competitors to design around U.S. technologies and seize markets before the U.S. inventor is able to raise financing and secure a market.” H.R. Rpt. 112-169, at page 18 (July 20, 2011)

The Subcommittee instructed the USPTO to proceed to study these issues, stating that the “PTO, in consultation with appropriate agencies, shall develop updated criteria to evaluate the national security applications of patentable technologies [and] to evaluate and update its procedures with respect to its review of applications for foreign filing licenses that could potentially impact economic security.” H.R. Rpt. 112-169, at page 19 (July 20, 2011) In this context, the Subcommittee describes “economic security” as ensuring that the United States receives the first benefits of innovations conceived within this country, so as to promote domestic development, future innovation and continued economic expansion.

There are several interesting aspects to this Notice. Read the rest of this entry

Patent Nightmares

Clients who take an active role in IP risk management ask me from time to time about the “dos and don’ts” of patent prosecution. Here’s an example of what can go wrong.

Suppose a U.S. consumer products company had a U.S. patented product.  The product was designed, tested and manufactured in China.  The patent application was filed in the U.S. about 11 months after U.S. sales began.  Our U.S. law gives patent applicants up to a year in which to file a patent application.  Ten years later the company sought to enforce its patent rights against a competitor only to find its patent was invalid because the company’s Chinese manufacturer immediately filed for a Chinese patent that was swiftly granted and public more than a year before the company’s patent application date.  This made the Chinese patent (the nightmare)  a prior invalidating publication against the company’s patent.

Cyber Attacks on IP: A Civil Response

Attacks by computer hackers on retailers such as the January 2012 attack on Zappos.com[1] remind us that no one’s intellectual property is safe from cyber attacks—not even a shoe shopper’s. Attacks such as the December 2011 attack on Strategic Forecasting, Inc. (Stratfor)[2] and the February 2011 HB Gary attack confirm that not even those with the motivation and means to thwart a cyber attack cannot successfully do so.

The attacks arise for different reasons. An attack’s objective may appear as merely criminal; for example, attempting to steal consumer data electronically stored by Zappos. And, as attack may be driven by ideology—Anonymous’s humiliating attack on HB Gary, following the security firm’s announcement that it would expose the identity of the unknown hackers’ guild.[3] An attack may also have geo-political roots,  supported by a nation state: it was reported in May 2010 that the elements of China’s military hacked the U.S. Chamber of Commerce’s computer network to gain information about the lobbying group’s more than three million members. That information was reportedly used to then infiltrate specific Chamber members involved in Asian policy.[4]  Attacks occur for mixed reasons as well. Stratfor’s CEO  explained, in his apology for failing to prevent its hackers, that while consumer and commercial data was hacked, the attack was motivated by a desire to destroy Stratfor and expose and embarrass its clients.[5] Read the rest of this entry

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