Category Archives: Regulations

FTC v. Actavis dissent avoids discussing any presumption of illegality

Professor Cotter’s post below on FTC v. Actavis, and his related SSRN paper both argue that the Court’s opinion all but in name adopt the presumptive-illegality approach that the decision purported to reject. Interestingly, the dissenting opinion has no mention of the presumption, favorably or unfavorably.

Chief Justice Robert’s dissent—joined by Justices Scalia and Thomas—does, however, argue that the correct approach should “be to ask whether the settlement gives Solvay monopoly power beyond what the patent already gave it….” Whether the dissent is legally correct, though, reverse payments are different than ordinary settlements in at least one respect.

Usually, a settling plaintiff claiming damages is paid by the defendant an amount equal to or less than the damages claimed. But in reverse-payment settlements, the money flows the opposite direction from traditional settlements: the plaintiff who claims its patent was infringed pays the defendant who allegedly infringed the patent. But simply, the alleged trespasser is paid by the property owner. This is odd. The dissent calls it “a distinction without a difference,” but I am not so sure, especially in light of the Hatch-Waxman Act’s provisions, which form the backdrop for these disputes.

Nonetheless, the clear winner is the FTC—not just in this case, but in the future cases it now can bring. Chairwoman Edith Ramirez issued this statement:

We look forward to moving ahead with the Actavis litigation and showing that the settlements violate antitrust law. We also are studying the Court’s decision and assessing how best to protect consumers’ interests in other pay for delay cases.  Fighting anticompetitive patent settlements has been a priority for the Commission beginning under the Chairmanships of Robert Pitofsky, through Timothy J. Muris, Deborah Platt Majoras, William E. Kovacic, and culminating under the leadership of Chairman Jon Leibowitz.

 

 

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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).

Can Schools Seize Ownership of Students’ Copyrights?

The Washington Post reports that Prince George’s County Board of Education has proposed asserting ownership over student copyrights. The draft policy states:

Works created by employees and/or students specifically for use by the Prince George’s County Public Schools or a specific school or department within PGCPS, are properties of the Board of Education even if created on the employee’s or student’s time and with use of their materials.

Further, works created during school/work hours, with the use of school system materials, and within the scope of an employee’s position or student’s classroom work assignment(s) are the properties of the Board of Education.

Examples of works which the Board hereby takes ownership are:

1. PGCPS Website

2. Individual School Website

3. Curriculum documents

4. Instructional materials for use in PGCPS or a specific school

5. Software and platforms developed for use by PGCPS, a specific school and/or the Board

6. Other works created for classroom use and instruction

The issue of Board ownership over its employees’ copyrightable works is well-settled. Board ownership over student-created work is less settled. bookshelves-with-books-in-library_w482_h725

The Board is a governmental actor, and therefore subject to the Constitution. In a draft outline, co-blogger Professor Cotter explains that the Fifth Amendment’s Takings Clause probably entitles a property owner to “just compensation” when their property—including intellectual property—is appropriated by the government. The Board’s proposal contemplates an condemnation-like power: “…the Board…hereby takes ownership.” Even if the Board has eminent domain or condemnation power under state or local law, its policy may still be ineffective at transferring ownership from student creators to the Board.

Federal law trumps conflicting state and local law. And 17 U.S.C. § 204 sharply limits how copyright ownership may be transferred:

A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.

Some courts and commentators view the phrase “by operation of law” as referring to transfers of copyrights that are limited in number, and depend upon the owner’s express or implied consent. See Taylor Corp. v. Four Seasons Greetings, LLC, 403 F.3d 958, 963 (8th Cir. 2005).

It is unclear from the Board’s draft policy whether they expect students to consent to the Board’s assertions of ownership, or whether the Board is considering a policy to provide “just compensation” to students whose copyrights are taken by the Board.

USPTO Proposed Rules on First-inventor-to-file under the AIA Require Statement regarding Claim to the Benefit of the Filing Date of an Application Filed Prior to March 16, 2013

On July 26, 2012, the United States Patent and Trademark Office issued proposed rules implementing the first-inventor-to-file provisions of the America Invents Act (AIA). These proposed rules will be in effect for any United States Patent Application filed after March 16, 2013. The proposed rules in the Federal Register are available for public comment until October 5, 2012.

Among other things, the Office is proposing additional requirements for nonprovisional applications filed on or after March 16, 2013, that claim the benefit of the filing date of a foreign, provisional, or nonprovisional application filed prior to March 16, 2013. If such a nonprovisional application contains at any time a claim to a claimed invention that has an effective filing date on or after March 16, 2013, the applicant must provide a statement to that effect. A statement is also required if the nonprovisional application does not have a claim to a claimed invention that has an effective filing date on or after March 16, 2003 but discloses subject matter not also disclosed in the foreign, provisional, or nonprovisional application.

The Office stated that examination costs will “significantly increase” if the Office must determine on its own the effective filing date of every claim ever presented in an application filed on or after March 16, 2013, that claims priority to or the benefit of a foreign, provisional, or nonprovisional filed prior to March 16, 2013.

Please see our earlier post on the implications of this portion of the AIA at https://intellectualip.com/2012/07/23/america-invents-act-aia-effective-filing-date-a-trap-for-the-unwary/.

USPTO Implements Third-party Pre-issuance Submissions

On July 17, 2012, the United States Patent and Trademark Office (USPTO) announced the final rules regarding third-party pre-issuance submissions under the Leahy-Smith America Invents Act (AIA), which amends 35 U.S.C. 122 by adding 35 U.S.C. 122(e). The new rules will be effective on September 16, 2012 for any patent application filed before, on, or after that date.  The new rules are implemented in 37 CFR 1.290.

The new rules provide a “mechanism for third parties to contribute to the quality of issued patents by submiiting to the Office, for consideration and inclusion in the record of a patent application, any patents, published patent applications, or other printed publications of potential relevance to the examination of the application.” This provides a way for a third party to potentially block the issuance of a patent that the party feels does not meet the requirements of the Patent Act, instead of or in addition to attempting to challenge an issued patent by a re-examination procedure.

In order to be considered by the office, a third-party submission must pay a fee and provide a copy of each printed item and a statement of relevance. The submission must be filed prior to the earlier of (1) a notice of allowance or (2) the later of (i) six months after the date on which the application is first published under 35 USC 122(b), or (ii) the date of the first rejection of any claim. Extensions of time will not be allowed. The submission may be filed electronically through the Office’s EFS-Web system or by mail.

For further information, the text of the new rule can be found at the following link: http://www.gpo.gov/fdsys/pkg/FR-2012-07-17/pdf/2012-16710.pdf.

Send Lawyers, Guns, and Patents

The New York times brings us a story about patents being used to block state regulation of bullet microstamping. Firearm microstamping imprints an identifying mark onto the bullet casing and the primer. See David Muradyan, Firearm Microstamping: A Bullet with a Name On It, 39 McGeorge L. Rev. 616 (2008).

California has passed a law supporting this technology, but the law is on hold, pending review of whether patent licenses are required to use the technology. The New York Times writes

In California, legislation signed by Gov. Arnold Schwarzenegger in 2007 has been held up while the attorney general’s office makes sure the technology is unencumbered by patents, as the microstamping law requires. A gun rights group, the Calguns Foundation, went so far as to pay a $555 fee to extend a lapsing patent held by the developer to further delay the law from taking effect.

“It was a lot cheaper to keep the patent in force than to litigate over the issues,” said Gene Hoffman, the chairman of the foundation, adding that he believed the law amounted to a gun ban in California.

Todd Lizotte, an engineer who developed the method in the 1990s, said he wanted the patents to lapse and the technology to be in the public domain.

California might be considered an “innocent bystander” in a potential patent dispute over this technology. (With apologies to Warren Zevon.)

Online Exchange for IP Licenses Launched

The Economist reports that IPXI, whose goal is to create markets in IP-related assets, has recently launched an exchange that allows the sale of patent rights:

The idea is to offer a patent or group of patents as “unit licence rights” (ULRs), which can be bought and sold like shares. A ULR grants a one-time right to use a particular technology in a single product: a new type of airbag sensor in a car, say. If a company wants to use the technology in 100,000 cars, it buys 100,000 ULRs at the market price. ULRs are also expected to be traded on secondary markets.

These ULRs (sot to be confused with URLs) allow standard, over-the-counter, licensing of IP rights. IPXI’s ULRs are a publicly focused version of the a la carte IP licensing scheme currently offered to universities by companies like CaSTT, but without CaSTT’s SEO and marketing functions. Time will tell whether these types of markets survive, and whether these markets provide inventors with a more efficient alternative to litigation.

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

Federal Circuit Holds ITC Cannot Limit Judicial Review of Issues

Yesterday, the Federal Circuit reversed an attempt by the ITC to hide certain issues from judicial review in General Electric v. ITC, No. 2010-1223.

After the ITC makes an initial determination, that determination becomes final (and therefore appealable) unless the ITC orders review of initial determination, in whole or part.  When the ITC reviews some or all issues following an initial determination, those issues become appealable after a final determination. But what happens when an issue is selected for review, but then is not actually reviewed?

Before yesterday, the ITC’s position was that issues selected but not reviewed may not be appealed to the Federal Circuit. The ITC reasoned that when the full Commission does not review an issue that it noticed for review, no final determination is made on that issue, and therefore no appeal of that issue can be taken. The Federal Circuit disagreed:

19 C.F.R. §210.42(h)(2) provides that issues decided by Initial Determination and not reviewed by the full Commission become final, and are appealable to the Federal Circuit. This right cannot be negated by taking no position on the issue. The result propounded by the Com-mission is anomalous: if the issue decided by initial determination is “noticed” and then reviewed by the Commission, the decision of that issue is routinely subject to appeal by the losing party; if the issue is not “noticed” by the Commission, the decision is again routinely subject to appeal by the losing party; but if the issue is “noticed” by the Commission and then not reviewed, the decision is not subject to appeal by the losing party.

The rule going forward is clear: If an issue decided in an initial determination is not actually reviewed, that issues may then be appealed (even if it was notice for review). If an issue is reviewed in a final determination, an appeal is properly taken following the final determination.

The question remains whether the application of this rule will be clear. It may be the case that where an issue is noticed for review—but not actually reviewed—some ambiguity may exist as to what the proper time is for taking an appeal.

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