Are Questions of Novelty and Nonobviousness Relevant to the Test for Whether a Patent Qualifies as a Covered Business Method Patent Under the AIA?

Michael GannonBy Michael Gannon on Posted in Patent

A covered business method (CBM) patent “does not include patents for technological inventions.” AIA § 18(d)(1). The United States Patent and Trademark Office (USPTO) promulgated a regulation that defines “a technological invention” as one in which (1) “the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art” and (2) “solves a technical problem using a technical solution.” 37 C.F.R. § 42.301(b). Both prongs have to be satisfied in order for an invention to be deemed a technological invention.

The first Federal Circuit case to address this regulation was Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1326-27 (Fed. Cir. 2015), which clarified that ultimate questions of novelty and nonobviousness should not be a part of the threshold question of CBM jurisdiction. Continue Reading

A Punctuation Mark: Off-White Files Trademark Application for “PRODUCT BAG”

Savannah MerceusBy Savannah Merceus on Posted in Trademark

Last summer, streetwear brand Off-White filed an application with the United States Patent and Trademark Office (USPTO) to register the mark “PRODUCT BAG.” With other Off-White goods bearing logos such as “MAKE UP,” “GOODS,” and “SCULPTURE,” those familiar with the brand know that founder Virgil Abloh is no stranger to the use of quotation marks. Despite their prevalence in the brand, this seems to be the first time the fashion house has filed an application for a quotation-specific mark. It begs the question: Can someone register a mark containing quotation marks? What about other punctuation?

Generally, a trademark may consist of any “word, name, symbol, or device, or any combination thereof.” 15 U.S.C. §1127. While punctuation can be included as an element of a mark, it generally creates no additional indicating function. Section 807.14(c) of The Trademark Manual of Examining Procedure states, “Punctuation, such as quotation marks, hyphens, periods, commas, and exclamation marks, generally does not significantly alter the commercial impression of the mark.” In other words, the addition or subtraction of punctuation does not seriously change how the mark resonates with consumers. Continue Reading

Standing Necessary To Appeal an Inter Partes Review Decision

Kevin FlynnBy Kevin Flynn on Posted in Patent

Article III of the Constitution grants the federal judiciary the power to decide “cases and controversies.”[1] “Standing,” the legal concept ensuring that federal courts review only cases and controversies, focuses on the party bringing suit to analyze the appropriateness and constitutionality of judicial review. The court-limiting effects of standing help ensure that the separation of powers is maintained and that the courts refrain from issuing advisory opinions. In turn, this ensures that well-defined law develops from well-defined and thoroughly argued issues.

Standing is the determination of “whether a litigant is entitled to have the court decide the merits of a dispute or of particular issues,”[2] and the inquiry analyzes the sufficiency of a party’s concern regarding the issues to be litigated, rather than whether the legal issues are fit for litigation.[3] The standing doctrine helps conserve judicial resources, ensure zealous litigation, guard against unconstitutional advisory opinions, and promote fairness by ensuring that parties raise only their own rights in court.[4] To have constitutional standing, a plaintiff must have suffered a concrete injury-in-fact that is traceable to or caused by the defendant and is of such a nature that the courts are able to properly redress the issue.[5] Other so-called prudential considerations, which need not be satisfied but which courts often follow to help ensure the constitutionality of a court decision, are that (1) the plaintiff should generally assert his own legal rights rather than the rights of third parties, (2) the political branches – not federal courts – should adjudicate abstract questions that amount to generalized grievances, and (3) the plaintiff’s complaint should fall within the zone of interests to be protected or regulated by the statute or constitutional provision at issue.[6] The requirements of standing “must be met by persons seeking appellate review, just as [they] must be met by persons appearing in courts of first instance.”[7] Continue Reading

Oh! Mega Liability for Landlords Under Second Circuit’s Recent Trademark Infringement Ruling in Omega SA v. 375 Canal LLC

Heather McDonaldBy Heather McDonald on Posted in Trademark

In March 2019, after a seven-year-long legal battle, a Manhattan jury found defendant landlord 375 Canal LLC contributorily liable for trademark counterfeiting and infringement and awarded Omega SA statutory damages of $1.1 million ($275,000 for each mark infringed).[1] In the suit, plaintiff Omega claimed that the Canal Street landlords knew about, had reason to know about or acted with “willful blindness” toward the illegal activities of its tenants. Further, Omega contended that 375 Canal possessed the power and authority to exercise control over the use of its premises for the infringing sales and, upon notice of infringing activity, failed to properly exercise such control. Omega sought statutory damages against 375 Canal as a “willful infringer” under 15 U.S.C. §1117(c)(2). Omega’s claims survived both a motion to dismiss and a motion for summary judgment.

The outcome in Omega SA v. 375 Canal LLC[2] is notable for two reasons. First, it evidences a rare instance in which a trademark infringement claim progressed to trial and received adjudication by a jury; most infringement cases settle. Second and more importantly, it provides a road map for plaintiffs in counterfeiting cases to successfully recover damages under the theory of contributory liability. Rather than simply pursue traditional recovery from the sellers of counterfeit goods – many of whom are often judgment-proof[3] – Omega suggests how a plaintiff can pursue monetary damages (not just injunctive relief) from additional deep-pocketed sources, such as a landlord who rents to someone selling counterfeits. Continue Reading

Federal Circuit Holds Lack of Efficacy Data Defeats ‘Substantial Evidence’ Showing of a Reasonable Expectation of Success Needed To Support PTAB’S Finding of Obviousness

Scott FeldmannBy Scott Feldmann on Posted in Patent

In a precedential opinion, the Federal Circuit reversed a Patent Trial and Appeal Board (PTAB) finding of obviousness invalidating a patent’s method claims for administering a drug for treating non-small cell lung (NSCLC) cancer.[1] The PTAB found that it would have been obvious to combine pharmaceutical references. The Federal Circuit, however, noted that the “asserted references do not disclose any data or other information about the drug’s efficacy in treating NSCLC [the cancer].” (Emphasis in original.)[2] Without any preclinical animal data, human clinical data or even in vitro [test tube] results, success could not reasonably have been expected. To the contrary, the Federal Circuit noted that 99.5% of Stage II clinical trials for treating that particular type of cancer failed. Only “failure, not success,” could be expected.

The first prior art reference cited never discussed treating NSCLC, the particular type of cancer in issue.[3] The second prior art reference did not disclose any “data regarding the use of [the compound] to treat NSCLC.”[4] Neither did any of the references cited by the second reference. Similarly, the alternative combination reference, the patent holder’s Form 10-K, did not disclose any data regarding the compound’s effect upon NSCLC.[5] Without a factual substrate, the PTAB’s holding could not be supported. Continue Reading

Proving That a Negative Claim Limitation Is Disclosed by the Prior Art: Takeaways From Two Recent Federal Circuit Opinions

Mark EinsiedelBy Mark Einsiedel on Posted in Patent

Occasionally, a patentee will seek to define its invention with claims that recite a negative claim limitation – a specialized category of claim element that recites an element that is expressly and deliberately excluded.[1]

By way of example, a claim directed to a stool with the limitation that the stool is “devoid of a backrest member” presents a negative claim limitation that is easy to understand. One seeking to challenge the patentability of such a claim would be expected to search for prior art that disclosed a backless stool. However, this raises a crucial question: What exactly must the challenger prove to show that the negative claim limitation is disclosed by the prior art? After all, the challenger bears the burden of proof with respect to each element of every challenged claim, and the patentee bears no burden of proving the opposite.[2] Conceptually, proving that the prior art discloses a positively recited limitation is easy to do; but how does a challenger prove the existence of something that is, by its very nature, expressly nonexistent? This year, the Federal Circuit has considered this issue in two nonprecedential[3] decisions, which provide some valuable guidance.

Earlier this year, in IBM v. Iancu,[4] the Federal Circuit considered whether the Patent Trial and Appeal Board (PTAB) erred in finding that silence in the prior art was adequate proof of disclosure of a negative claim limitation. In relevant part, the claim at issue recited a method for managing user authentication by “triggering a single-sign-on operation.” During the inter partes review proceeding, the PTAB found that the use of the word “single” was a negative claim limitation that excluded two or more operations, and that a prior art reference that disclosed “associating a meCard with an accessCard” met the claim’s negative claim limitation because the reference was “silent as to what information is included in the access card,” such that it was not clear whether a single or multiple “sign-on operations” occurred.[5]  Continue Reading

Director of PTO Requests Chevron Deference for Precedential Opinion Panel

Bill DeVinneyBy Bill DeVinney on Posted in Patent

The Federal Circuit recently asked the government to submit an amicus brief to address “what, if any, deference should be afforded to decisions of a Patent Trial and Appeal Board Precedential Opinion Panel (‘POP’), and specifically to the POP opinion in Proppant Express Investments, LLC v. Oren Technologies, LLC, No. IPR2018-00914, Paper 38 (P.T.A.B. Mar. 13, 2019).” Order, Facebook, Inc. v. Windy City Innovations, LLC., No. 2018-1400 (Fed. Cir. Aug. 12, 2019).

In 2018, the Director of the Patent and Trademark Office created the Precedential Opinion Panel, which typically comprises the Director, the Commissioner for Patents, and the Chief Judge of the PTAB. The POP may be convened to rehear matters that are of exceptional importance, or to assist the Director in deciding whether a PTAB decision should be designated as precedential or informative.

The specific POP decision the Federal Circuit cited, Proppant Express, addressed “whether 35 U.S.C. § 315(c) permits a petition to be joined to [an IPR] proceeding in which it is already a party.” If an alleged infringer intends to seek IPR of the patent, it must file its petition within one year of being served with the complaint. After filing, Section 315(c) permits “the Director, in his or her discretion, [to] join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314.” 35 U.S.C. § 315(c).

In Proppant Express, the PTAB POP held that Section 315(c) allowed the Director to join the petitioner itself as a party beyond the one-year deadline. In practice, that interpretation of 315(c) allows a petitioner to join issues that would otherwise be time-barred. Different PTAB panels had previously split on whether the petitioner could use “same party” joinder to add additional issues to the IPR. Also, the Federal Circuit had expressed doubt that “Congress intended that petitioners could employ the joinder provision to circumvent the time bar by adding time-barred issues to an otherwise timely proceeding.” Nidec Motor Corp. v. Zhongshan Broad Ocean Motor, 868 F.3d 1013, 1017 (Fed. Cir. 2017).

The government filed its amicus brief with the Federal Circuit on September 17, 2019, arguing that any POP decisions interpreting the America Invents Act (“AIA”) are entitled to Chevron deference. In United States v. Mead Corp., 533 U.S. 218, 227-29 (2011), the Supreme Court held that an agency is usually afforded Chevron deference when Congress delegates the authority for “rulemaking or adjudication.” According to the government, the AIA delegated authority to engage in both rulemaking and adjudication. First, the AIA authorized rulemaking by permitting the Director to enact regulations to establish and govern the IPR process. Second, the AIA authorized adjudication by enabling the Director to adjudicate the IPRs. Thus, according to the government, the Director is entitled to Chevron deference when interpreting statutory provisions of the AIA, including Section 315. The government further argued that the PTAB POP’s decision in Proppant Express should not be reversed under a Chevron deference review.

The Federal Circuit invited the parties to file a response to the government’s amicus brief, which are due October 1, 2019. The Federal Circuit’s resolution of the issue could have a profound effect on future review of all PTAB POP decisions.

Session not Season

Christina MoserBy Christina Moser on Posted in Trademark

When the Supreme Court opens its new session on Oct. 7, one of the cases it will determine, Romag Fasteners, Inc. v. Fossil, Inc., et al. Case No. 2018-2417, is expected to resolve a stark difference among circuits over when a trademark owner is entitled to disgorgement of an infringer’s profits due to an infringing use of a mark.

As a quasi property right, trademarks have long held the status of a distant relation in the intellectual property family. Litigants have the right to claim disgorgement of profits for violations of copyright, patent and trade secret rights, but the availability of the same remedy to trademark litigants has been curtailed by many courts based on the equitable nature of the Lanham Act.

Section 35(a) of the Lanham Act authorizes monetary relief in the form of awards of infringers’ profits, damages and costs “[w]hen a violation of any right of the registrant of a mark [under section 1114], … , a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established.” 15 U.S.C. § 1117(a) (emphasis added). However, such awards are “subject to the principles of equity.”

The First, Eighth, Ninth, Tenth, and District of Columbia Circuit courts have interpreted the statute’s “subject to the principles of equity” language to require that a litigant prove infringement under Section 1125(a) was willful prior to allowing disgorgement of profits. Awards of actual damages, because such damages are difficult to prove, are not subject to the willfulness requirement. By contrast, the Third, Fourth, Fifth, Seventh, and Eleventh circuits treat an infringer’s intent as merely one factor in an equitable decision to award disgorgement of profits.

The arguments center on the plain statutory language of Section 1117 and related Lanham Act provisions, which set forth circumstances under which willfulness is required to find certain violations or award relief. The absence of such language in Section 1117(a), petitioners (and amicus curiae American Bar Association) argue, demonstrates congressional intent not to condition disgorgement on a finding of willfulness. The Supreme Court’s preference for deciding questions based on statutory construction will likely make this argument appealing to the Court.

The Supreme Court’s decision will likely have a trickle-down effect in other areas. Some courts, including in the Ninth Circuit, have held that disgorgement of profits is not available at all in reverse confusion cases where the senior user of the mark is less known than the infringer’s mark, because there is no intent to exploit the goodwill of the senior user. In such cases, where actual damages are already difficult to prove, a trademark owner is left with the prospect of expensive litigation that will lead to injunctive relief at best, offering little deterrence to infringement under a reverse confusion scenario. If the willfulness requirement is removed, claimants relying on a reverse confusion theory will have an opportunity to argue that disgorgement of profits should be available in such circumstances.

Precedential Opinion Stressing That Design Patents Cover Articles of Manufacture

Tayan PatelBy Tayan Patel on Posted in Patent

 

Curver Luxembourg, SARL v. Home Expressions Inc., No. 2018-2214 (Fed. Cir. Sept. 12, 2019)

In a case of first impression, the Federal Circuit held that “claim language can limit the scope of a design patent where the claim language supplies the only instance of an article of manufacture that appears nowhere in the figures.” Curver Luxembourg, SARL v. Home Expressions Inc., No. 2018-2214 (Fed. Cir. Sept. 12, 2019).

In the particular case, Curver Luxembourg, SARL (Curver), filed suit against Home Expressions Inc. (Home Expressions) in U.S. District Court for the District of New Jersey alleging infringement of U.S. design patent no. D677,946 (the ’946 patent) for making and selling baskets incorporating Carver’s claimed “Y” pattern. Defendant Home Expressions filed a Rule 12(b)(6) motion arguing noninfringement in view of the ’946 patent being limited to chairs. The district court agreed with the defendant and granted the motion to dismiss the complaint for failure to state a plausible claim of design patent infringement. Curver appealed to the Federal Circuit.

The ’946 patent is titled “Pattern for a Chair,” and the sole claim was amended during prosecution to recite an “ornamental design for a pattern for a chair.” Interestingly, however, none of the ’946 patent’s figures depict a pattern applied to a chair. On appeal, Curver argued the scope of the ’946 patent should be broadly construed based on what is illustrated in the drawings. And since the figures of the ’946 patent are devoid of any chair illustrations, Curver pressed the court to broadly construe the ’946 patent to cover any article of manufacture with its “Y” pattern.

The Federal Circuit rejected Curver’s arguments, relying on “long-standing precedent, unchallenged regulation and agency practice all consistently support[ing] the view that design patents are granted only for a design applied to an article of manufacture, and not a design per se.” Emphasis added. The court further explained that “tying the design pattern to a particular article provides more accurate and predictable notice about what is and is not protected by the design patent.” In view thereof, the court affirmed the district court’s decision.

This case offers up a good lesson to applicants seeking to secure design patent protection and enforce their rights against third parties. BakerHostetler routinely helps clients develop and execute effective strategies involving design patents along with other forms of intellectual property.

 

USPTO Proposes New Fee Schedule

John MuellerBy John Mueller on Posted in Trademark

On August 29, 2019, the Director of the USPTO notified the Trademark Public Advisory Committee (TPAC) of the Office’s intent to set or adjust trademark related fees and submitted a preliminary trademark fee proposal for comment. There are multiple timelines for public debate and comment on the proposed new fees, with a tentative implementation date of August 2020. While most proposed fee changes are relatively modest ($25 – $75 for new electronic filings, per class; $125 for Section 8&15 declarations, per class), many remain unchanged (such as Section 8&9 renewals). Nonetheless, the additional costs could be significant for companies with large portfolios. We will continue to keep you apprised of developments in this area including the exact date for implementation of the new fee schedule if/when the new fees are approved.

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