USPTO Practice Change Increases Fees for Multiple Reissue Patents and Allows for Refund of Surcharge Fees

By on June 6, 2018
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Author: Kimberley Chen Nobles

Managing a patent portfolio often includes payment of maintenance fees to keep patent rights in force. While patent owners are accustomed to the fee based system, the new practice can result in a significant increase in fees to maintain multiple reissue patents. In addition, patent owners may have an opportunity to recoup fees paid to the US Patent and Trademark Office (USPTO). Recognizing certain fees can assist with planning and portfolio management.

The USPTO recently issued a new practice and guidance for maintenance fees with respect to multiple reissue patents.1 2 Maintenance fees are costs associated with maintaining a patent after the patent is granted and are due for the 3rd, 7th, and 11th anniversaries of the patent grant. Failure to pay the requisite maintenance fee can lead to loss of patent rights. Managing the timing of maintenance fee payments can avoid surcharges associated with the maintenance fees.

The following is an outline of how to identify which matters the new practice applies to, how to comply with the new practice, and an exemplary scenario.

USPTO Practice for Maintenance Fee Payments (and Possible Refund!)

Effective January 16, 2018, each utility reissued patent requires its own maintenance fees. This new practice replaces the former practice of only requiring payment of one maintenance fee in the latest reissue patent. Patent owners may have to budget additional funds for maintaining any multiple reissue patents.

What is a multiple-reissue patent?

A reissue patent is a patent grant that is issued to correct an error in an earlier patent grant. In some cases, multiple reissue patents are granted. Prior to the new practice, patent owners were only required to pay maintenance fees in the latest reissue patent for a multiple reissue patent family. The USPTO may reissue a single original patent as multiple reissued patents (35 USC 251(b), 37 CFR 1.77).

Example: Original patent is issued → Patent Owner initiates a Reissue proceeding to correct a defect in the patent → Multiple reissue patents issued (e.g., Reissue Pat 1 and Reissue Pat 2)

When are the fees due?

Maintenance fees are paid in windows, either 6 months before a due date, or six months following the due date. Payments in the 6-month window following a dude date require payment of a surcharge. The due dates for each window are three years and six months (3 ½ years), seven years and six months (7 ½ years), and eleven years and six months (11 ½ years), with the due dates calculated from the original patent date.

In the current fee schedule, the 3rd, 7th, and 11th anniversary fees are $1,600, $3,600 and $7,400, respectively.

 

Maintenance Fee Guidance

  • Identify Multiple Reissue Patents, Pending Reissue Applications, and Original Patents
  • Identify Maintenance Fee Payment Dates/Payments
  • Flag/Set fee payments for Multiple Reissue Patents
  • Determine if fee payments are due/have been paid within the period of January 16, 2018 to July 16, 2018
  • Determine if refunds should be requested for surcharge payments

What about payments made prior to January 16, 2018?

The new practice applies to payments made for maintenance fees on or after January 16, 2018 even if prepaid. For reissue matters that may have already been paid, check payments made from July 17, 2017 to January 15, 2018 (for multiple reissue matters). If a payment has been made, a separate maintenance fee may be required in any earlier reissued patent(s) and original patent if there is a pending reissue application.

Payments Made in Original Patent?

The new practice changes the procedure for original patents that are the basis for reissue patents and the basis for reissued applications. Maintenance fees remain due in the original patent whenever an application for reissue of the original patent is pending on the maintenance fee due date.

Payments Made for Reissue Application about to Issue?

Maintenance fee must be paid for the original patent to maintain the last reissued patent even when the reissue patent is expected to issue within the grace period.

Example Scenario – Pending Reissue Patent

For a 7 ½ year maintenance fee due date is Feb. 27, 2018, the new practice applies. In the scenario below, two reissue patents and one pending reissue application exist due to a previous reissue application. As a result, Maintenance fees for the 7 ½ year payment (e.g., $3,600 per reissue/pending reissue) must be made in both reissue patents and the original patent.

 

Requesting Surcharge Refund

While the surcharge fee of $160 based on the current fee scale is a fraction of some of the maintenance fees, Patent owners can request a refund of the surcharge under 37 CFR 1.20(h) for payments made from January 17, 2018 to July 16, 2018. As mentioned above, the surcharge cannot be waived at the time of payment. Refund requests must be made by January 16, 2019.

1 Link to Official Notice: https://www.uspto.gov/sites/default/files/documents/reissue-mf-pay.pdf?utm_campaign=subscriptioncenter&utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term

2 Link to FAQs: https://www.uspto.gov/sites/default/files/documents/faqs-reissue-mf-pay.pdf?utm_campaign=subscriptioncenter&utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term

About the author: Kimberley Chen Nobles is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property practice group. She focuses her practice on representation of technology companies worldwide in transactional and litigation matters involving patents, trademarks, copyrights, and trade secrets.  Ms. Nobles’ biography can be found here.

Filed under Patent, USPTO

Craft Beer and Trademarks – 10 Takeaways from the 2017 College Football Season

By on February 1, 2018
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Author: Michael Kanach

Nothing pairs quite like beer and football. As we approach Super Bowl LII, there is no shortage of articles informing businesses how to avoid a trademark dispute with the National Football League (NFL), particularly regarding the registered trademark “Super Bowl.”1 2 3 4 5

With advertisers paying millions of dollars for a 30 second advertisement spot during the “Big Game,” there are millions of reasons for the NFL to ask companies to cease and desist using its trademarks when used without authorization. AdAge estimates that marketers will have spent about $5.4 billion total in advertising over these 52 years of Super Bowls.6 An example of one brewery planning to make a big spend on Super Bowl Sunday is Gambrinus’ Spoetzl Brewery of San Antonio, Texas, one of the largest craft breweries in the nation.7 They are prepared to spend $1.2 million for a 30-second advertisement for its Shiner Bock beer brand to air across the State of Texas during the Super Bowl.8

According to The Brewers Association, there were more than 6,000 breweries operating in the United States in 2017.9 But, of course, not all breweries have the budget to spend on a television advertising spot during the Super Bowl, so craft breweries often have to come up with creative ways to get noticed. One way breweries have worked to obtain a local following is to support their local teams, professional and collegiate, especially during the football season. Sometimes, in this fandom, breweries (inadvertently) cross over the line into using their favorite team’s intellectual property without approval.

The following four stories from the 2017 college football season provide trademark and branding lessons for craft breweries who want to use trending themes, viral stories, names, and images from their local institutions – to sell beer.

As the images and stories below demonstrate, trademarks are not simply names, logos, and slogans. A trademark can be anything that indicates the source of a product or service. As these packages show, a trademark can be a color scheme, distinctive font, single letter, image (e.g., a train or a famous building on campus), trending hashtag, viral event, and even the design of a special necklace. The main lesson you can learn from these stories about craft breweries using others’ trademarks is to obtain prior written approval from the trademark owner.

Purdue University wins injunction over Boilermakers Beer:

In June 2016, an individual in Naples, Florida, obtained a trademark in the State of Indiana for the marks “Purdue Boilermakers Brewing” and “Boilermakers Beer” claiming first use in 2016.10 According to the defendant’s website, “Sports Beer Brewing Company™ is an intellectual property holding company consisting of a portfolio of sports trademarks, registrations and service marks for sports teams through out (sic) the United States.”11 It’s not clear whether Sports Beer Brewing Company actually brews beer themselves, since their website says they “will contract with a local micro-brewery in your area for a tasting to decide what type of beer you want to brew.”12

The Trustees of Purdue University own several federally registered trademarks, including “Purdue,” “Boilermakers,”13 and various images of trains or locomotives.14 One such registered trademark for BOILERMAKERS claims a first use in commerce at least as early as in 1959, decades before Sports Beer Brewing Company filed an application to register the trademark with the state of Indiana in 2016.15 The Trustees of Purdue University filed a lawsuit in Tippecanoe County, Indiana, to enforce their trademarks.

Purdue licenses its logos and trademarks to Peoples Brewing Company, located in Lafayette, Indiana, for labeling on a beer named “Boiler Gold.” Below left, is an image of the Boiler Gold beer can’s label,16 which contains authorized references to Purdue, a train, and the distinctive letter “P” and the school’s color scheme of “campus gold” and black.17 The infringer’s logo is shown below right, with the University’s name on a black background and underneath a gold and white-colored train.

On November 9, 2017, Purdue University obtained an injunction against Sports Beer Brewing Company and its owner Paul Parshall. The court found the defendant’s trademarks were confusingly similar to Purdue’s trademarks. The injunction read, in part, that Paul Parshall was:

… enjoined to immediately discontinue using or offering or licensing the terms “Purdue”, “Boilermakers”, “Boilermakers Beer” and “Purdue Boilermakers Brewing” or any other marks which feature the words “Boilermakers” and/or “Purdue” for any commercial purpose.

Sports Beer Brewing Company’s ownership of a state trademark did not prevent the university from obtaining an order enjoining it from selling products with the school’s names, logo, and color scheme. According to the defendant’s website, http://www.sportsbeerbrewing.com/, defendant still owns numerous other trademarks for beer names under a “claim your brand” link. These names include the following schools: Pitt (Pitt Panthers Brewing Co • Pitt Panthers Beer) and the University of Miami (Miami Hurricanes Brewing • Canes Beer), which are discussed below for other reasons.18

“Hail to Pitt” (University of Pittsburgh) – #H2P Beer Labels Removed:

In a separate dispute related to the University of Pittsburg (a.k.a. Pitt), a Pennsylvania craft brewery’s use of Pitt’s trademarks is a lesson for brewers to make sure to get written approval from the university before making any substantial investments in labels, bottles, and cans. Voodoo Brewery, located in Meadville, Pennsylvania, began selling a beer under the name “#H2P” with cans designed in Pitts’ colors and script and an image of a cathedral.19 This name “H2P” is short for “Hail to Pitt” and was a trending hashtag for the university during the college football season.20 Pitt owns a registered trademark for “H2P,” which was registered in 2011 and claimed a first use in commerce in 2010. In addition, Pitt owns at least two registered trademarks for “Pitt” with stylized font, and with a distinctive letter “P,” claiming a first use in commerce at least as early as 1990.21 22 Pitt’s colors are royal blue and yellow (or alternatively navy blue and gold).23 The Cathedral is focused throughout the University’s advertising, as shown in the school’s official “Graphic Standards.”24 The letter “P” in the brewery’s “H2P” logo appears to be the same “P” in the University’s registered “Pitt” logo, which has been used for decades.25

According to an October 2017 article in the Pittsburgh Post-Gazette, Voodoo Brewery’s brewmaster was a former Pitt student and involved in athletics, and the brewery believed it had the University’s approval because the brewery had previously sold these beers on campus.26 However, there was nothing in writing from the University approving the packaging, so the brewery was forced to cease and desist using the schools trademarked hashtag, distinctive name, images, and color scheme.

University of Miami Hurricanes – Turnover Chain IPA Changes Name to “Chains”:

Like a viral hashtag, craft breweries tend to follow trending stories relating to their local teams and try to incorporate them into their beer names, labels, and designs. In 2017, J. Wakefield Brewing, in Miami, Florida, announced that it would brew a beer called “TURNOVER CHAIN” IPA.27 The “Turnover Chain” was a reference to the 2017 Miami Hurricanes’ football team’s over-sized, Cuban-linked, gold chain with a large “U” (for Miami University) in the school’s colors: orange and green. This chain is ceremoniously placed around a defensive player’s neck to wear on the sideline after forcing a turnover.

On November 16, 2017, the University of Miami filed a trademark application for TURNOVER CHAIN for various goods (although not including beer) claiming a date of first use in commerce in September 2017. (U.S. Trademark Serial No. 87688132). In addition, the University of Miami’s “Visual Identity Manual” explains that the University’s colors are orange and green and shows examples of the “U” logo, with orange on the left and green on the right.28

 

 

 

 

 

 

 

J. Wakefield Brewing in Miami, Florida filed a Certificate of Label Approval (COLA) with the Alcohol and Tobacco Tax and Trade Bureau (TTB), which was approved on November 19, 2017.29

An article on SouthFlorida.com’s website said that a former Miami Hurricane’s football player was on board and promoting the Miami-themed beer.30 In a separate Press Release in Brewbound, the brewery discussed how the founder and brewmaster Johnathan Wakefield was a big Miami Hurricane’s fan and met with a former player. But the brewer’s status as a true fan was not enough. Neither was label approval from the government or concept approval from a former football player. The brewery did not have approval from the University.

Shortly after initial announcements of the “TURNOVER CHAIN” beer, J. Wakefield Brewing began selling a product named “Chains” which no longer included the word “TURNOVER” and no longer included a green/orange color scheme. In an article in Brewbound, a disclaimer was included and the following explanation was provided related to the beer name: “Chains, formerly known as Turnover, is not affiliated with any educational institution and is not being marketed to college students.”31

Iowa University – “Iowa City Wave” Milkshake IPA:

Ending on a high note, the 2017 college football season had a true feel-good-story based in Iowa. At the end of the first quarter, at each of the University of Iowa home football games, the entire stadium full of more than 60,000 fans would turn towards the new UI Stead Family Children’s Hospital that overlooked the field.32 The fans inside Kinnick Stadium would wave to the children and their families inside the hospital, who would wave back. If you have not seen it yet, watch a video.33 It’s powerful.

Taking this trending, season-long, feel-good, local story and imagining a way to support their local team and local children, Backpocket Brewing in Iowa decided to brew a beer and donate the proceeds to the Children’s Hospital.34 After selling the “Iowa City Wave” milkshake IPA for a limited time, the brewery delivered a check of over $600 to the hospital, posting on Twitter the following message on November 20, 2017: “Thank you everyone who came out to the taproom & enjoyed our milkshake IPA to help us raise over $600 for the @UIchildrens #IowaCraftBeer.”35

While it may not be authorized by,36 sponsored by, or affiliated with the university,37 it is nice to see the donation being put to good use. It is not clear whether the brewery and the University or the hospital have been in contact regarding this beer name. This is a unique situation – but not because the brewery is making donations to the Children’s Hospital. For example, the outcome of the trademark disputes related to Purdue, Pitt, and Miami-branded craft beer would not have been different even if proceeds of sales were donated. Rather, it is a unique situation because it is not clear who owns “The Wave.” At this time, the University has not filed an application to register a trademark containing the word “Wave” for any goods and services. However, this new tradition of the “Wave” is likely to continue into next football season and it may become a clear indication of source for the University and/or the Children’s Hospital.

Conclusion:

The following do NOT automatically authorize you to use your favorite college’s trademarks:

  1. You are “local.”
  2. You are the #1 fan of the #1 team.
  3. You registered a trademark with the State.
  4. You obtained a COLA label approval for your label.
  5. You have been using a name in your advertising for years.
  6. You donate money to the school.
  7. You got approval from alumni (not even from famous alumni).
  8. You have sold that beer at the school before.
  9. You filed an application to register a trademark with the USPTO.
  10. You are donating all proceeds of all sales.

In conclusion, get approval from the owner of the trademark. Get it in writing. And then make sure you comply with the university’s branding requirements.If you do not have approval, check the branding requirements to familiarize yourself with the school’s brand so you can make sure you do not step over the line.

While each of the examples discussed above relate to universities, these lessons apply to the major leagues as well. For example, Boulevard Brewing was one of the first breweries to work with a Major League Baseball team when it became the official craft beer sponsor of the Kansas City Royals.38 39 In the San Francisco Bay Area, San Francisco’s Anchor Brewing partnered with both MLB’s San Francisco Giants (“Los Gigantes” Mexican Style Lager) and the NBA’s Golden State Warriors – using team logos and color schemes in their packaging.40 41 In addition, San Jose’s Gordon Biersch partnered with the NHL’s San Jose Sharks by creating a special “Chum” red dry hopped ale in team colors and including the team logo.42 These examples of official sponsorships and authorized uses of trademarks include official announcements and press releases.

 

 

 

 

 

 

Michael Kanach is a Partner in the firm’s Intellectual Property and Food & Beverage practice groups, and a frequent speaker and writer on craft beer trademark law. For more information about Gordon Rees Scully Mansukhani LLP’s Intellectual Property Practice Group, including the firm’s specialization in the craft beer industry, please visit www.grsm.com/practices/food-beverage/craft-breweries and https://www.gordonrees.com/practices/intellectual-property.

Mr. Kanach is also a member of the firm’s Entertainment, Fashion, Media & Sports practice group. For more information, please visit https://www.gordonrees.com/practices/entertainment-media-sports.
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1 “How to Use the Super Bowl to Promote Your Business – Not!” Small Business Trends, Joshua Sophy, January 28, 2018. https://smallbiztrends.com/2018/01/super-bowl-trademark-rules.html
2 “Super Bowl or the Game That Shall Not Be Named!” Hop Law, Garner & Ginsburg, P.A., December 20, 2017. http://www.hoppylawyers.com/super-bowl-game-shall-not-named/
3 “The NFL Pretending Trademark Law Says Something It Doesn’t Leads To Hilariously Amateurish Ads For ‘The Big Game’ – from the the-game-that-shan’t-be-named dept” Tech Dirt, Timothy Geigner, January 29, 2018. https://www.techdirt.com/articles/20180126/09444139092/nfl-pretending-trademark-law-says-something-it-doesnt-leads-to-hilariously-amateurish-ads-big-game.shtml
4 “Making Fair Use of the Super Bowl Trademark” Duets Blog, Steve Baird, September 25, 2017. https://www.duetsblog.com/2017/09/articles/advertising/making-fair-use-of-the-super-bowl-trademark/
5 “Securing necessary copyright and trademark rights for broadcasts and promotions related to the NFL championship games and Super Bowl 52” Lerman Senter PLLC (Lexology), January 11, 2018. https://www.lexology.com/library/detail.aspx?g=92ce3502-82e6-4768-8721-d279df297589 http://www.lermansenter.com/assets/attachments/758.htm
6 “Big Game Punting: Super Bowl Scores $5.4 Billion In Ad Spending Over 52 Years” AdAge, Bradley Johnson, January 11, 2018. http://adage.com/article/special-report-super-bowl/super-bowl-ad-spending-history-charts-52-years/311881/
7 “Brewers Association Releases 2017 Top 50 Brewing Companies By Sales Volume” Brewers Association, March 14, 2018, https://www.brewersassociation.org/press-releases/brewers-association-releases-2017-top-50-brewing-companies-by-sales-volume/
8 “Craft Brewing and Distilling News for January 24, 2018” Shanken News Daily, January 24, 2018 http://www.shankennewsdaily.com/index.php/2018/01/24/20038/craft-brewing-distilling-news-january-24-2018/
9 “2017 Craft Beer In Review” Press Release, The Brewers Association, December 13, 2017. https://www.brewersassociation.org/press-releases/2017-craft-beer-review/
10 Indiana Government website trademark search page: http://www.in.gov/apps/sos/trademarks/
11 http://www.sportsbeerbrewing.com/claim-your-brand-.html
12 http://www.sportsbeerbrewing.com/about-us.html
13 U.S. Trademark Registration No. 4497301.
14 U.S. Trademark Registration Nos. 2023046 and 2023047.
15 https://www.whois.com/whois/sportsbeerbrewing.com
16 TTB ID 17283001000314 https://www.ttbonline.gov/colasonline/viewColaDetails.do?action=publicFormDisplay&ttbid=17283001000314
17 https://www.purdue.edu/brand/downloads/508_Quick-Brand-Guide-PDF-300.pdf
18 http://www.sportsbeerbrewing.com/claim-your-brand-.html (last viewed on January 29, 2018).
19 “Pitt drops trademark hammer on Voodoo Brewery’s Pitt-themed beer” Pittsburgh Post-Gazette, Adam Bittner, October 19, 2017. http://www.post-gazette.com/sports/Pitt/2017/10/19/h2p-beer-pitt-trademark-voodoo-brewery-pittsburgh-panthers-homecoming/stories/201710190025
20 H2P (standard character mark) for magnets and label pins owned by the Registrant University of Pittsburgh-Of the Commonwealth System of Higher Education (“Pitt”) (U.S. Trademark Registration No. 4014150)
21 PITT (in script lettering) for football helmets (U.S. Trademark Registration No. 4960354).
22 PITT (in script lettering) for numerous goods, including shot glasses, drinking glasses, and miniature toy helmets (U.S. Trademark Registration No. 4960171).
23 http://www.post-gazette.com/sports/Pitt/2017/06/27/Pitt-colors-change-royal-blue-and-yellow/stories/201706270143 “Will Pitt change its colors back to royal blue and yellow?” Pittsburgh Post-Gazette Kevin Stankiewicz, June 27, 2017.
24 http://www.communications.pitt.edu/Graphic-Standards.pdf
25 PITT (in script lettering) for football helmets claims to have a first use in commerce at least as early as 1973 (U.S. Trademark Registration No. 4960354).
26 http://www.post-gazette.com/sports/Pitt/2017/10/19/h2p-beer-pitt-trademark-voodoo-brewery-pittsburgh-panthers-homecoming/stories/201710190025
27 “Miami Hurricanes’ Turnover Chain becomes a beer” SouthFlorida.com, Talia J. Medina, November 15, 2017. http://www.southflorida.com/restaurants-and-bars/drinking/sf-j-wakefield-turnover-chain-miami-canes-beer-20171115-story.html
28 The University of Miami’s “Visual Identity Manual” https://ucomm.miami.edu/_assets/pdf/tools-and-resources/UMiami_IDguide_March_2015.pdf (Updated March 2015)
29 Alcohol and Tobacco Tax and Trade Bureau (“TTB”) of the U.S. Department of the Treasury’s Certificate of Label Approval (“COLA”) TTB ID: 17320001000412, approved on November 19, 2017. https://www.ttbonline.gov/colasonline/viewColaDetails.do?action=publicDisplaySearchBasic&ttbid=17320001000412
30 See footnote 27: “The IPA will be brewed in partnership with former Miami Hurricanes linebacker D.J. Williams, who was a member of the 2001-2002 national championship team.”
31 “J. Wakefield Brewing to Release Chains New England-Style IPA” Brewbound, Press Release, Dec. 11, 2017. https://www.brewbound.com/news/j-wakefield-brewing-release-chains-ipa
32 “The Iowa Wave through a child’s eyes” USAToday, George Schroeder, November 2, 2017. https://www.usatoday.com/story/sports/ncaaf/2017/11/02/iowa-wave-through-childs-eyes/826378001/
33 “Iowa Hawkeyes’ new tradition is more than just a wave” ESPN, Published on Sep 30, 2017. https://www.youtube.com/watch?v=w7UqYD_owgY
34 “Iowa City Wave, Backpocket’s newest beer, will benefit the UI Children’s Hospital” Little Village Magazine, Emma McClatchey, November 2, 2017. http://littlevillagemag.com/iowa-city-wave-backpockets-newest-beer-will-benefit-the-ui-childrens-hospital/
35 https://twitter.com/BackpocketBrew/status/932722791710937088
36 See footnote 34. “Overton said he and other Iowa City natives on staff had been meaning to make a beer that pays homage to Hawkeye football. With Iowa City Wave, they not only nabbed a trademark-free title, but a way to both honor and contribute to the growing awareness of children’s hospital patients and their families by Hawk fans.”
37 According to a search of the University’s  searchable website portal, there do not appear to be any breweries listed as licensed: http://portal.uilicensing.com/index.cfm/licensee/search
38 “The Kansas City Royals have named an official craft beer. Will other teams follow?” The Washington Post, Fritz Hahn, March 10, 2017. https://www.washingtonpost.com/news/food/wp/2017/03/10/the-kansas-city-royals-have-named-an-official-craft-beer-will-other-teams-follow/ (“The Kansas City Royals have named Boulevard Brewing their official craft beer partner. According to Major League Baseball, it’s the first time a team has had an official craft beer.”)
39 https://www.boulevard.com/partner/royals/
40 “Anchor Brewing’s Golden Warriors beer for the Dub Nation” The Mercury News, Jay R. Brooks, March 27, 2017, updated March 30, 2017. https://www.mercurynews.com/2017/03/27/anchor-brewings-golden-warriors-beer-for-the-dub-nation/
41 http://www.nba.com/warriors/anchor?mpweb=1009-2132-44620
42 “Gordon Biersch’s new San Jose Sharks beer is called ‘Chum’” The Mercury News, Sal Pizarro, September 8, 2016, updated September 9, 2016. https://www.mercurynews.com/2016/09/08/gordon-bierschs-new-san-jose-sharks-beer-is-called-chum/

Filed under Trademark

The Five Ws of Intellectual Property Assets in Healthcare Business Transactions

By on January 24, 2018
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Author: Justin Puleo

Introduction

Intellectual Property (“IP”) assets are important in several types of business transactions, including healthcare business transactions. This article provides an overview of how one can best protect, transfer, and preserve IP rights pursuant to such a transaction.

Who has Healthcare IP?

Healthcare IP is a broad area. Among other things, it includes the IP of large institutions such as university medical centers conducting clinical trials, and pharmaceutical and biotechnology companies conducting drug research. It also includes the IP of smaller entities, such as physician practices making discoveries or creating new clinical devices or developing novel procedures and techniques.

What is Healthcare IP?

Healthcare IP can come in the form of patents, trademarks, copyrights, and even trade secrets. A research medical school may possess a process or method patent on a new procedure, while a pharmaceutical company may possess a product or formulation patent on a new drug. Hospitals, large ambulatory surgery centers, and even many solo physician practices may have registered trademarks on their logos, marks, and advertising. Healthcare providers and entities also may have copyright protections on their publications, protocols, and policies and procedures. Some jurisdictions have also extended IP rights to items such as patient lists under the umbrella of trade secrets. Other assets that share similarities with healthcare IP include “doing business as” (“DBA”) or assumed name filings, web domains, and even business insider knowledge and relationships.

When do you start the process of evaluating Healthcare IP?

When engaging a target healthcare company for merger or acquisition, healthcare IP should be a topic in early business negotiations and be an item in the first due diligence checklist submitted to the seller. From the buyer’s perspective, it is important to have an early handle on what IP is involved in a transaction so that the proper steps are taken to make sure it is adequately preserved and protected in the transaction. From the seller’s perspective, it is important to disclose IP and the actual rights to it so that it is clear what the buyer is buying, and also that the seller indeed possesses the rights to it in order to sell. If the buyer utilizes IP in good faith that the seller in fact did not possess, the seller could ultimately be liable via indemnification if this was not properly disclosed.

Where do you describe and list Healthcare IP?

Healthcare IP should be listed in a comprehensive and straightforward manner in the disclosure schedules to the purchase agreement. Care should also be taken to describe the IP fully and properly in any necessary assignment agreements, registration updates, and in any other required places.

Why is Healthcare IP important?

Healthcare IP is important for numerous reasons. For several entities, such as universities or pharmaceutical companies, it can represent millions, if not billions, of dollars in investment and research and development. For other smaller entities, in the instance of a trade secret, it may not necessarily represent the same kind of capital investment but it may very well still be critical to the survival of that business. Regardless of scale, it is important to maintain and also to transfer IP properly. If not secured properly, IP may be lost. For example, if a buyer does not know about acquired IP, it will not know to file regular maintenance fees and could risk cancellation of the IP. Conversely, if a buyer thinks it owns IP that it actually does not, it may end up violating another entity’s IP rights through use without knowing it. A cease and desist letter accompanied by a demand for unpaid royalties may quickly follow.

How do you secure Healthcare IP?

The best way to secure healthcare IP is to first identify the IP. As mentioned above, care should be taken to comprehensively list IP in an asset purchase agreement. In the case of a stock purchase, it is critical to ensure that the corporate entity selling its stock actually is the invention owner or assignee of record, etc., that possesses the right to transfer the IP. Then, proper steps should be taken to commemorate and transfer the IP through the deal documents and any necessary assignment agreements. Concurrently, proper notices and updates should be made to the various relevant governmental entities such as the U.S. Patent and Trademark Office, the U.S. Copyright Office, and state-level agencies such as the secretaries of state, and trademark offices, as required.

Conclusion

Healthcare IP is an important piece of healthcare transactions. For some businesses, it may represent the raison d’être for the business; for example, a big pharma spinoff whose one product is a therapeutic HIV drug. For other companies, healthcare IP could be less mission-critical. In both circumstances, however, IP is likely a valuable component of a company’s assets and should therefore be given due thought and consideration in a transaction.

About the Author

Justin Puleo is an associate attorney in the Raleigh office of Gordon Rees Scully Mansukhani, and a member of the firm’s Intellectual Property and Healthcare practice groups. He has an interdisciplinary background, which he has leveraged into a full and diverse practice. He is an experienced healthcare transactional attorney and a member of the patent bar who appreciates finding creative and regulatory compliant solutions to business concerns and initiatives. He can be reached at (984) 242-1790 or jpuleo@grsm.com.

Filed under Healthcare IP

The State of Design Patent Infringement Damages Calculations Following the Battle Between Apple and Samsung

By on November 30, 2017
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Author: Mike Khoury

Many people have heard of the patent dispute between Apple and Samsung dating back to a 2011 Northern District of California lawsuit. In a legal battle that has lasted over 6 years, gone through two jury trials, and endured appeals to the Federal Circuit and U.S. Supreme Court, one issue remains uncertain: the measure by which to calculate damages in a design patent infringement case.

In 2011, Apple sued Samsung for infringing upon iPhone design patents. The following year, a jury awarded Apple $399 million in design patent infringement damages—Samsung’s entire profit from sales of the infringing phones. Samsung appealed, arguing that the jury’s damage award should have been limited to only part of the profit (as only part of the phone’s design was copied from Apple). After the Federal Circuit affirmed the jury’s award, Apple Inc. v. Samsung Electronics Co., 786 F.3d 983 (Fed. Cir. 2015), the Supreme Court granted certiorari and reversed. Samsung Elecs. Co. v. Apple, Inc., 137 S. Ct. 429, 434 (2016).

At the center of the Supreme Court’s decision is the damages provision specific to design patents under 35 U.S.C. § 289. In relevant part, section 289 reads: “Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit[.]” (emphasis added).

In interpreting section 289 for the first time, the Supreme Court explained that “[a]rriving at a damages award under § 289 . . . involves two steps. First, identify the ‘article of manufacture’ to which the infringed design has been applied. Second, calculate the infringer’s total profit made on that article of manufacture.” Samsung Electronics, 137 S. Ct. at 434. As used in section 289, the term “article of manufacture,” the Supreme Court continued, “encompasses both a product sold to a consumer and a component of that product.” Id. In other words, “reading ‘article of manufacture’ in § 289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase.” Id. at 436 (emphasis added). However, not surprisingly, the Supreme Court stopped short of establishing a test for identifying the article of manufacture under section 289 and remanded to the Federal Circuit for reassessing damages. The Federal Circuit, in turn, remanded the case to the district court for further proceedings. Apple Inc. v. Samsung Elecs. Co., 678 Fed. Appx. 1012 (Fed. Cir. Feb. 7, 2017).

The case is now back before Judge Lucy Koh of the Northern District of California. On October 22, 2017, after Apple and Samsung briefed the issue, Judge Koh ordered a new trial. In her order, Judge Koh adopted a test proposed by the Department of Justice (“DOJ”) in an amicus brief filed in the Supreme Court appeal in this case. “The test for determining the article of manufacture for the purpose of § 289 shall be the following four factors: [1] The scope of the design claimed in the plaintiff’s patent, including the drawing and written description; [2] The relative prominence of the design within the product as a whole; [3] Whether the design is conceptually distinct from the product as a whole; and [4] The physical relationship between the patented design and the rest of the product, including whether the design pertains to a component that a user or seller can physically separate from the product as a whole, and whether the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately.” Apple Inc. v. Samsung Elecs. Co., No. 11-CV-01846-LHK, 2017 U.S. Dist. LEXIS 177199, at *111 (N.D. Cal. Oct. 22, 2017)

This test is short of a victory for either side. As Judge Koh notes, and as expected, the plaintiff bears the burden of persuasion on identifying both the relevant article of manufacture as well as the amount of total profit on the sale of that article. Id. If plaintiff succeeds in meeting both, only then does the burden shift to defendant to present evidence of an alternative article of manufacture and any deductible expenses. Id. at *111-12.

To date, it remains unclear whether this test will withstand scrutiny. That said, given that both Apple and Samsung suggested in their briefs at least some level of acceptance of the test, it is unlikely either party will challenge it. It is likely, however, that Apple and Samsung will settle their dispute short of another trial. A settlement means that, at least for now, the test will not be challenged. Since Judge Koh’s order is not binding on any court, it will be interesting to see whether other courts in the Northern District and within the Ninth Circuit will adopt the same test. But even then, short of an appeal to the Federal Circuit, the issue remains unresolved. For now, though, Judge Koh’s order provides some much-needed guidance.

A more promising appeal, however, comes from Columbia Sportswear North America, Inc. v. Seirus Innovative Accessories, Inc., Case No. 3:17-cv-1781-HZ (S.D. Cal. 2017), a Southern District of California design patent infringement case and the first case involving a jury verdict awarding damages after the Supreme Court’s Samsung decision. Like Judge Koh, Judge Marco Hernandez in Columbia Sportswear also adopted the DOJ’s test, and on September 29, 2017, the jury awarded Columbia $3 million in damages.

Judgement in Columbia Sportswear was entered on November 22, 2017. The parties have 30 days to appeal.

Stay tuned.

Filed under Patent, Patent Infringement

Craft Beer Attorneys Can Describe Their Services As Craft Beer Attorneys

By on November 30, 2017
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Author: Michael Kanach

In an interesting case for intellectual property lawyers specializing in craft beer, distilled spirits, and wine, the trademark dispute between a dozen law firms over the use of the phrase “CRAFT BEER ATTORNEY” is now over.

Craft beer attorneys everywhere are relieved. They can go back to describing themselves as CRAFT BEER ATTORNEYS without the threat of a lawsuit due to a pending application to federally register the trademark for the phrase that describes their legal services.

Like other descriptive terms in the craft brewing industry, such as BREWING COMPANY, BREWERY, ALE, or NE IPA, and descriptive terms in the legal industry, such as ATTORNEY, ESQ. or LAW FIRM, these terms may be used without the apprehension of suit for trademark infringement when used to accurately describe one’s goods or services. Typically, an attempt to register as a trademark a generic and merely descriptive word or phrase will be refused by the United States Patent and Trademark Office (“USPTO”). The public policy behind refusing registration of these words and phrases – or disclaiming them – is to permit individuals and companies to describe their goods and services in fair competition.  In addition, such words and phrases do not indicate a single source of those goods and services, so they do not function as a trademark.

Here, the applicant, the law firm of The Craft Beer Attorney, APC, filed an application to register the trademark CRAFT BEER ATTORNEY in connection with legal services. The application was filed almost three years ago, on January 15, 2015 (Serial No. 86504533). The USPTO sent an office action refusing the mark as (1) generic, and, alternatively, (2) merely descriptive, and (3) lacking sufficient evidence of acquired distinctiveness. This was followed by the Applicant’s response, which overcame the refusals, and a notification of publication was issued on December 16, 2015. On January 5, 2016, the mark was published in the Official Gazette for the purpose of opposition “by any person who believes he will be damaged by the registration of the mark.”

Who would file an opposition? It turns out that eleven law firms filed oppositions in the allotted time: (1) Funkhouser Vegosen Liebman & Dunn Ltd.; (2) Nossaman LLP; (3) GrayRobinson, PA; (4) Tannenbaum Helpern Syracuse & Hirschtritt LLP; (5) Lehrman Beverage Law, PLLC; (6) Davis Wright Tremaine LLP; (7) Ward and Smith PA; (8) Strike & Techel LLP; (9) Martin Frost & Hill PC; (10) Spaulding Mccullough & Tansil LLP; and (11) Wendel Rosen Black & Dean LLP (See USPTO Trademark Trial and Appeal Board (“TTAB”) Opposition No. 91227647 (parent)).

In their Oppositions, the other law firms argued that the trademark CRAFT BEER ATTORNEY was generic and/or descriptive, among other things. A generic name is entitled to no trademark protection, as it is part of the common language that we need to identify such services or goods. A generic name refers to the services or goods, rather than to the mark owner’s brand for the services or goods. A descriptive name is a word or phrase that identifies or describes some aspect, characteristic, or quality of the services or goods to which the mark is affixed in a straightforward way that requires no exercise of imagination to be understood. Descriptive words must acquire distinctiveness or secondary meaning to be protectable as a trademark. In other words, the consumers must come to recognize the mark as designating a single source.

As the Ninth Circuit’s jury instructions state: “Descriptive marks are entitled to protection only as broad as the secondary meaning they have acquired, if any. If they have acquired no secondary meaning, they are entitled to no protection and cannot be considered a valid mark.” Ninth Circuit Manual of Model Civil Jury Instructions, 15.11(last modified September 2017).

These twelve parties litigated before the TTAB for more than a year and a half, and participated in discovery.

On October 31, 2017, the Applicant’s representative, Candace L. Moon, filed an Express Abandonment of Application Serial No. 86504533, seeking to withdraw the application and end the dispute over the name. As a result of the Applicant’s abandonment, judgment was entered against applicant. In a November 7, 2017 Board decision sustaining the oppositions filed by the eleven law firms, the TTAB held that oppositions were sustained and registration to applicant was refused.

Now, all of these attorneys can get back to work representing their craft beer clients and describing themselves as CRAFT BEER ATTORNEYS without the potential threat of a lawsuit.

For more information about Gordon Rees Scully Mansukhani LLP’s Intellectual Property Practice Group, including the firm’s specialization in the craft beer industry, please visit www.grsm.com/practices/food-beverage/craft-breweries intellectual property law. Mr. Kanach is a Partner in the firm’s Intellectual Property and Food & Beverage practice groups, and a frequent speaker and writer on craft beer trademark law.

Filed under Trademark, Trademark Infringement

Further Venue Guidance for Patent Infringement Suits

By on October 6, 2017
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Author: Conor McElroy

As anticipated, the Supreme Court’s May 22, 2017 TC Heartland LLC v. Kraft Foods Group Brands LLC, 581 U.S. ____ (2017) ruling, which recognized 28 U.S.C. §1400(b) as the exclusive statute governing venue in patent infringement actions, has presented district and circuit courts with the opportunity to provide further guidance on §1400(b). Section 1400(b) states, “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” Before TC Heartland, the vast majority of cases only addressed the first prong (“where the defendant resides”) due to the fact that the first prong’s standard was relatively easy to meet. Essentially, venue was proper anywhere a defendant was subject to personal jurisdiction. TC Heartland changed the analysis by determining that “resides” for purposes of §1400(b) only includes the state of incorporation. As a result, more litigants increasingly rely on the second prong (“where the defendant has committed acts of infringement and has a regular and established place of business”), which is therefore, being addressed and analyzed more by the courts.

On September 11, 2017, the U.S. District Court for the District of Delaware issued two decisions regarding venue challenges in patent cases. In Boston Sci. Corp. v. Cook Grp., Inc., No. 15-980-LPS-CJB, 2017 U.S. Dist. LEXIS 146126 (D. Del. Sept. 11, 2017) and Bristol-Myers Squibb Co. v. Mylan Pharms., Inc., No. 17-379-LPS, 2017 U.S. Dist. LEXIS 146372 (D. Del. Sept. 11, 2017), the District Court gave instructions on various aspects of post-TC Heartland §1400(b), including the burden of proof for a venue challenge, and whether TC Heartland effected an intervening change of law for waiver purposes. As for its analysis of the second prong of §1400(b), the court looked to the words of the statute, as well as some of the few decisions that applied the second prong, and determined that a permanent and continuous physical presence is required. In further elaborating, the Court noted circumstances that did not amount to a permanent and continuous presence. Specifically, simply doing business in a district or being registered to do business in a district, merely demonstrating that a business entity has sufficient “minimum contacts” with a district for purposes of personal jurisdiction, maintaining a website that allows consumers to purchase a defendant’s goods within the district, and simply shipping goods into a district are all insufficient to demonstrate that a defendant has a regular and established place of business in the district. In Boston Scientific, the court granted the defendants’ motion to transfer the case because there was not a regular and established place of business in Delaware, while in Bristol-Myers Squibb, the court ordered further discovery into how the defendant operated its business.

On September 21, 2017, the Federal Circuit also issued post-TC Heartland guidance. In In re Cray Inc., No. 2017-129, 2017 U.S. App. LEXIS 18398 (Fed. Cir. Sept. 21, 2017), the court reversed the District Court for the Eastern District of Texas’s denial of motion to transfer. In doing so, the court identified three general requirements relevant to the §1400(b) “regular and established place of business” venue inquiry. First, there must be a physical place in the district. This “place” need not be a formal office or store, but there must still be a physical, geographical location in the district from which the business of the defendant is carried out.” Therefore, mere virtual spaces or electronic communications do not meet the definition of “place.”

Second, the place must be a regular and established place of business. “Regular” means the business operates in a “steady, uniform, orderly, and methodical manner,” while “established” requires that the place in question must be “settled certainly, or fixed permanently.” Finally, the business must be “the place of the defendant.” In other words, “the defendant must establish or ratify the place of business.” Relevant considerations for this factor include whether the defendant owns or leases the place and whether the defendant conditioned employment on the employee’s continued residence in the place of business. In applying these venue requirements to the specifics of the case, the Federal Circuit found that the facts involving an employee’s home being located in the Eastern District of Texas “do not show that [the defendant] maintains a regular and established place of business in the Eastern District of Texas; they merely show that there exists within the district a physical location where an employee of the defendant carries on certain work for his employer.” Thus, the court ruled that case should have been transferred.

While the foregoing cases help to clarify how venue challenges in patent infringement cases may be evaluated, the question of proper venue is often a fact-specific inquiry. Nevertheless, as case law after TC Heartland grows, and as more and more §1400(b) challenges are litigated, the contours and confines of what the “regular and established place of business” prong requires will be clarified. But for now, TC Heartland and cases following it continue to adopt a more restrictive view on venue and the requirements for proper venue.

Filed under Patent, Patent Infringement

Protecting “The Thought That We Hate”

By on July 25, 2017
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Author: Patrick Mulkern

The Supreme Court’s recent decision in Matal v. Tam, 582 U.S. ___ (2017) changes the trademark landscape by striking down the Lanham Act’s “disparagement clause” and rejecting the notion that trademarks are themselves “government speech.”

The Slants and Re-Appropriation of Derogatory Terms

The case stems from a trademark application filed by Simon Tam, the lead singer of the rock band “The Slants.” Although “slants” is often viewed as a derogatory term for persons of Asian descent, and despite suffering years of bullying growing up, Tam and his fellow band members (all of whom are Asian-American) sought to “reclaim” the term and turn the previously-negative stereotype into a point of pride.

Trademark registration is not required for a person or entity to use a word or phrase in commerce, but the protections afforded by the registration are often crucial in helping avoid or prevent consumer confusion regarding source or affiliation. See Matal, 582 U.S. at ___ (quoting Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 198 (1985)) (“The Lanham Act provides national protection of trademarks in order to secure to the owner of the mark the goodwill of his business and to protect the ability of consumers to distinguish among competing producers.”).

Here, The Slants ran into that exact problem when other bands started to use the same name. So, in 2010, Tam and the band sought to trademark the name but their application was rejected. The U.S. Patent and Trademark Office (“PTO”) denied the application on the basis that the registration would violate the Lanham Act’s “disparagement clause”—specifically, a concern that the trademark may “disparage . . . or bring . . . into contemp[t] or disrepute” any “persons, living or dead.” See 15 U.S.C. § 1052(a).

Tam appealed at the PTO, but was denied.  He then took his case to federal court, where the en banc Court of Appeals for the Federal Circuit held the disparagement clause to be unconstitutional as an impermissible violation of the First Amendment.  See In re Tam, 808 F.3d 1321 (Fed. Cir. 2015) (en banc).  The Supreme Court affirmed.

Supreme Court Decision

The Supreme Court began by rejecting Tam’s argument that the disparagement clause did not even actually apply to his application because it allegedly only concerned “persons” (that is, individuals and juristic entities) and not racial or ethnic groups. With the scope of the clause decided, the Court then addressed the Government’s claims that (a) trademarks are government speech, and not private speech; (b) trademarks are a government subsidy; and (c) the disparagement clause should be evaluated under a new “government-program” doctrine.

The distinction between “government” speech and “private” speech was the crux of the Government’s case because Supreme Court precedent clearly established that “[t]he Free Speech Clause . . . does not regulate government speech.” Matal, 582 U.S. at ___ (quoting Pleasant Grove City v. Summum, 555 U.S. 460, 467 (2009)). With that broad exception, the Court noted how the doctrine “is susceptible to danger misuse” and for that reason “must exercise great caution before extending” the scope of government speech.

To that end, the Court reasoned trademarks are not “government speech”—despite being registered by the PTO, an arm of the Federal Government—because the government “does not dream up” the content of the marks, “does not edit” the marks, and (normally) will not reject a registration based on the viewpoint it expresses. Additionally, registration “does not constitute approval” of a mark and “it is unlikely that more than a tiny fraction of the public” knows what trademark registration even means. For these reasons, the Court determined, “it is far-fetched to suggest that the content of a registered mark is government speech.”1

The remainder of the opinion resulted in limited precedent as the Court was split 4-4 in approving differing rationales for the ultimate outcome.2 Justices Alito, Roberts, Thomas, and Breyer rejected the Government’s “subsidy” argument, namely because the PTO is not providing cash or its equivalent to trademark applicants—“quite the contrary[,] an applicant for registration must pay the PTO[.]” These Justices also declined the Government’s invitation to apply a newly suggested “government-program” doctrine to save the disparagement clause, by simply merging the “government speech” line of cases with the “government subsidy” line of cases, because the rights conferred by a trademark registration were not valuable enough to warrant protection.

In any event, Justices Alito, Roberts, Thomas, and Breyer determined viewpoint discrimination has always been forbidden when the government creates a limited public forum for private speech (which trademarks were determined to be, earlier in the opinion). The Justices reminded how “[the Supreme Court has] said time and again that ‘the public expression of ideas may not be prohibited merely because the ideas are themselves offensive to some of their hearers.’” Matal, 582 U.S. at ___ (quoting Street v. New York, 394 U.S. 576, 592 (1969)). Justices Kennedy, Ginsburg, Sotomayor, and Kagan expanded on the application of viewpoint discrimination to trademarks and agreed that the First Amendment’s prohibition of such discrimination was fatal to the disparagement clause.

Finally, Justices Alito, Roberts, Thomas, and Breyer declined to determine whether trademarks are “commercial speech”—thus making the disparagement clause subject to the relaxed scrutiny of Central Hudson—because the disparagement clause could not withstand even that lower standard of review. The clause, these Justices determined, serves no “substantial interest” and is not “narrowly drawn.” Most specifically, the argument that the Government has an interest in preventing offensive speech is completely unavailing because “the broadest boast of our free speech jurisprudence is that we protect the freedom to express ‘the thought that we hate.’” Matal, 582 U.S. at ___ (quoting United States v. Schwimmer, 279 U.S. 644, 655 (1929) (Holmes, J., dissenting)).3

Impact

This decision will likely have wide-reaching impact as individuals (i) attempt to follow in The Slants’ footsteps of reclaiming once-derogatory terms, or, conversely, (ii) attempt to capitalize on the ability to sequester certain offensive words and phrases for commercial gain through trademark registration. The effects of the disparagement clause’s demise cannot accurately be forecasted to affect any one industry and, instead, will most likely impact all commercial streams.

A notable circumstance the decision is sure to impact is the current fight between the Washington, DC NFL team (the “Washington Redskins”) and the PTO, over the “Redskins” moniker. See Pro-Football, Inc. v. Blackhorse et al., Case No. 15-1874 (4th Cir. 2015). Six of the team’s trademarks had been cancelled by the PTO after several Native Americans petitioned that they disparaged Native Americans and had been registered in violation of the Lanham Act’s disparagement clause. Given the Matal v. Tam decision and its attendant striking down of the disparagement clause, however, it is likely the Court of Appeals for the Fourth Circuit will side with the team and reinstate the trademark registrations.

In coming to that conclusion, one must question the import of how Simon Tam chose “The Slants” in an effort to “reclaim” the term whereas the NFL team can make no such claim to its selection of “Redskins.” Given the protections afforded by the First Amendment—and the prohibition on viewpoint discrimination—such a calculus is also likely obsolete.

A copy of the Court’s slip opinion can be found here.

_______________________________________________________________________

1 The Court made quick work to distinguish the Government’s central case, Walker v. Texas Div., Sons of Confederate Veterans, Inc., 576 U.S. __ (2015). Walker, which held Texas’ specialty license plates were government speech, was different for three reasons: (i) license plates have long been used to convey state messages; (ii) license plates are often closely identified with the State, since they are manufactured and owned by the State, designed by the state, and serve as a form of government ID; and (iii) Texas maintained direct control over the messages conveyed on its specialty plates. None of those factors are present in trademark registration.
2 Justice Neil Gorsuch was not on the Court when oral argument was heard and took no part in the consideration or decision of the case.
3 Justices Kennedy, Ginsburg, Sotomayor, and Kagan took the position that, regardless of how the private-commercial speech issue is resolved, the evident viewpoint discrimination of the disparagement clause warrants heightened scrutiny—scrutiny it cannot survive.  These Justices did go on to discuss how trademarks likely are not government speech, however, and provided examples of how trademark registration was different from other “government speech” cases. See Matal, 582 U.S. at ___ (citing Legal Services Corp. v. Valazquez, 531 U.S. 533, 540-42 (2001)) (noting viewpoint discrimination exception “where the government itself is speaking or recruiting others to communicate a message on its behalf).

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Impression Products v. Lexmark: The Patent Exhaustion Doctrine both at Home and Abroad

By on June 2, 2017
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Author: Conor McElroy

On May 30, 2017, the U.S. Supreme Court held that patent rights in a product are exhausted by the sale of that product, regardless of any restrictions imposed by the patent holder or where the sale occurred. The case, Impression Products, Inc. v. Lexmark International, Inc., 581 U.S. ___ (2017), involved the domestic and international refurbishing and resale of patented toner cartridges in violation of contractual restrictions agreed upon by initial purchasers. Chief Justice John Roberts authored the opinion and was joined by all of the Justices besides Justice Ginsburg (concurring in part and dissenting in part) and Justice Gorsuch (who took no part in the consideration or decision of the case).

According to 35 U.S.C. § 154(a), a patent holder has a twenty year period to “exclude others from making, using, offering for sale, or selling [its] invention throughout the United States or importing the invention into the United States.” Anyone who violates these rights “without authority” may be liable for patent infringement under 35 U.S.C. § 271(a). Yet, this liability does not apply when a patent holder’s rights “exhaust” through a sale of the patented product. The new owner of the product and all subsequent owners are no longer potentially liable for patent infringement.

In this case, Lexmark, a seller of printer toner cartridges, incorporated explicit restrictions in the sales contracts for cartridges as part of its Return Program that limited buyers of the cartridges to using the cartridges once and then transferring the empty cartridge back to Lexmark. Impression Products, a remanufacturer of empty toner cartridges, bought empty Lexmark Return Program cartridges from U.S. and non-U.S. purchasers in order to refill them with toner and then resell them. As an owner of several patents in these cartridges, Lexmark argued that Impression Products infringed their patents by refurbishing and reselling the cartridges despite the unambiguous prohibition of reuse and resale. Furthermore, Lexmark claimed that Impression Products’ importation of cartridges sold abroad into the U.S. also constituted patent infringement. The two issues before the Court were: (1) whether a patent holder’s sale of a patented product under the express restriction that the product not be reused or resold may enforce the restriction through a patent infringement lawsuit; and (2) whether a patent holder’s rights are exhausted when its product is sold abroad, where U.S. patent laws do not apply.

The Court began by analyzing the Return Program cartridges that Lexmark sold in the U.S. After citing a string of Supreme Court cases dealing with patent holder (“patentee”) rights being exhausted after an authorized sale, the Court recognized that it “has long held that, even when a patentee sells an item under an express restriction, the patentee does not retain patent rights in that product.” For instance, in a recent case, Quanta Computer, Inc. v. LG Electronics, Inc. 553 U.S. 617 (2008), the Court found that a patentee’s use restrictions included in sales of microprocessors could not be invoked to allege patent infringement. With the well-settled line of precedent, the Court had no problem concluding that “[o]nce sold, the Return Program cartridges passed outside of the patent monopoly, and whatever rights Lexmark retained are a matter of the contracts with is purchasers, not the patent law.” The Court also rejected the Federal Circuit’s holding that patent exhaustion is a default rule but a patentee can withhold the authority to use and sell an item, which then allows enforcement of the restriction through patent infringement lawsuits. The Court explained that “the exhaustion doctrine is not a presumption about the authority that comes along with a sale; it is a limit on the scope of the patentee’s rights.” When customers purchase products, they purchase the rights associated with ownership (the right to use, sell, or import the product) not the patentee’s authority to exercise those rights.

As for Lexmark’s other claim that Impression Products’ importation of Lexmark’s patented cartridges into the United States made it liable for patent infringement, the Court determined that there was no reason not to apply patent exhaustion to foreign sales. Lexmark argued that the Patent Act specifically limits patent holders’ monopoly on the making, using, selling, and importing of its products to acts that occur in the United States. Since the U.S. Patent Act does not apply to acts that occur outside the United States, Lexmark argued that there could not be patent exhaustion from its sales since there were no patent rights abroad to exhaust. The Court disagreed. First, the Court noted that the “first sale doctrine” of copyright law, which cuts off copyright owners’ power to restrict the ability of a purchaser of a copy of the copyrighted work from selling or otherwise disposing of that particular copy, applied equally to copies made and sold in the U.S. and those made and sold internationally. See Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013) (holding that the first sale doctrine applied equally to domestic and international sales of copies of textbooks). Since copyright law and patent law share a strong similarity and purpose, “differentiating the patent exhaustion and copyright first sale doctrines would make little theoretical or practical sense.” Furthermore, nothing in the history of the Patent Act indicated that there should be a deviation from the borderless common law principal that restraints on alienation are to be avoided. Thus, the Court ruled that “restrictions and location are irrelevant; what matters is the patentee’s decision to make a sale.”

A copy of the Court’s slip opinion is available here.

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TC Heartland v. Kraft Foods: “Residency” in Patent Infringement Suits

By on May 23, 2017
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Author: Conor McElroy

On May 22, 2017, the U.S. Supreme Court ruled that residency for domestic corporations is determined by its state of incorporation for venue purposes in patent infringement suits. The unanimous decision (from which Justice Neil Gorsuch abstained) reversed the Federal Circuit’s finding that the general venue statute, 28 U.S.C. § 1391(c), and its requirements for residency, applied to patent infringement suits. Instead, the Court ruled that the patent venue statute, 28 U.S.C. §1400(b), is the exclusive statute governing venue in patent infringement actions.

The case, TC Heartland LLC v. Kraft Foods Group Brands LLC, 581 U.S. ____ (2017) involved Kraft Foods (“Respondent”), organized under Delaware law with a principal place of business in Illinois, filing a patent infringement suit against TC Heartland (“Petitioner”), which is headquartered in Indiana and organized under Indiana Law, in the District Court for the District of Delaware. Petitioner argued venue was improper in Delaware since it did not meet the definition of “resid[e]” as set forth in §1400(b) and interpreted in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957).  The Federal Circuit upheld the District Court’s rejection of Petitioner’s argument based on amendments to 28 U.S.C. §1391 which deem a defendant to have “residency” if it is subject to personal jurisdiction, a test which was met here based on Petitioner’s shipments of allegedly infringing products into Delaware.

In reversing, the Supreme Court analyzed §1400(b), past and present versions of §1391, and case law interpreting the statutes.  According to § 1400(b), “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” For the definition of “resides,” the Court looked to Fourco, which determined “resides” for purposes of §1400(b) only includes the state of incorporation. The inquiry could not end there however. According to the Federal Circuit, subsequent amendments to §1391 have made it applicable to patent infringement cases. Section 1391(c) now provides that, “[f]or all venue purposes,” entities, “whether or not incorporated, shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.” Therefore, as concluded by the Federal Circuit, §1391(c), not Fourco, provides the definition of “resides” in §1400(b). To bolster this conclusion, the Federal Circuit cited VE Holding Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (1990), which ruled that similar earlier amendments to §1391 affected the meaning of §1400(b).

The Supreme Court held that the Fourco interpretation of §1400(b) is still the authority. “The current version of §1391 does not contain any indication that Congress intended to alter the meaning of §1400(b) as interpreted in Fourco,” Justice Clarence Thomas wrote in the opinion of the unanimous Court. According to the Court, Congress customarily provides a clear indication that it intends to make a change of that kind in the text of the amended provision. With no such indication present here, it was clear to the Court that §1400(b) was not altered by changes to §1391. Furthermore, the Court also noted that the 2011 change to §1391 includes a savings clause stating that it does not apply when “otherwise provided by law.” As a result, the Court held that §1391 “expressly contemplates that certain venue statutes may retain definitions of ‘resides’ that conflict with its default definition.” Therefore, the venue provision found in §1400(b), and the definition of “resides” found in Fourco, apply to patent infringement suits.

A copy of the Court’s slip opinion can be found here.

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The Federal Circuit Interprets the On-Sale Bar Under the America Invents Act

By on May 12, 2017
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Author: Robert Andris

On May 1, 2017, the Federal Circuit Court of Appeals took its first opportunity to interpret the on-sale bar provision of 35 U.S.C. Section 102 under the Leahy-Smith America Invents Act (“AIA”). In Helsinn Healthcare v. Teva Pharmaceuticals, Nos. 2016-1284, 2016-1787, 2017 US App Lexis 7650 (Fed. Cir. May 1, 2016), the court held that the AIA did not change the meeting of the on-sale bar and there was overwhelming evidence that, before the critical date, the patented invention at issue in that case was reduced to practice and ready for patenting.

The case at bar involved four patents covering the pharmaceutical product known as Aloxi. This composition contains the active ingredient palonosetron. Aloxi was sold by plaintiffs as approved for the prevention and treatment of cancer chemotherapy- induced nausea and vomiting (“CINV”). Three of the patents-in-suit were governed by the patentability requirements of the pre-AIA version of Section 102, while one patent was governed by the new language of Section 102 as provided in the AIA. Plaintiff filed suit against various generic drug manufacturers. After an 11-day bench trial, the district court in New Jersey issued a one-page Memorandum of Decision. The court held that the patents were infringed, not invalid as obvious, and that the requirements for the on-sale bar under either version of the statute were not met. The Federal Circuit Court of Appeals reversed and entered judgment in favor of defendants.

The appellate panel focused its opinion entirely on the pre- and post-AIA versions of the on-sale bar. In cases involving patents with effective filing dates before March of 2013, the old version of the on-sale bar applies. Interpretation of the pre-AIA version of the on-sale bar is governed by the two-step frame-work enunciated by the Supreme Court in Pfaff v. Wells Electronics, 525 U.S. 55 (1998). There, the Court held that: (1) there must be a sale or offer for sale; and, (2) that the claimed invention must also be ready for patenting at least one year before the critical in order for the on-sale bar to apply.

More recently, in Medicines Co. v. Hospira, 827 F.3d 1363 (Fed. Cir. 2016), an en banc panel of the Federal Circuit interpreted when there was “a sale or offer for sale” for purposes of the bar. In order to qualify, the exchange in question must be “analyzed under the law of contracts as generally understood” and “must focus on those activities that would be understood to be commercial sales and offers for sale . . .” According to the Uniform Commercial Code (“UCC”), a sale occurs when there is a “contract between parties to give and to pass rights of property for consideration which the buyer pays or promises to pay the seller for the thing bought or sold.” Because the plaintiff in Helsinn admitted that it entered into a Supply and Purchase Agreement with a third party many years before the first application was filed, and despite the fact that the Agreement was conditioned on FDA approval, the court found an offer for sale had been made and, therefore, the first element of Pfaff was met. Likewise, the court found that the three pre-AIA patents met the ”ready for patenting” element because the Supply and Purchase contract disclosed all of the relevant limitations of the patents themselves, including the precise compounds involved as well as dosages.

Turning to the revised version of the on-sale bar, the court noted that, before the AIA, Section 102(b) barred the patentability of an invention that was “ . . . in public use or on sale in this country, more than one year prior to the date of the application for patent.” Under the AIA, however, new Section 102(a)(1) bars patentability if the invention was “ . . . in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.” Plaintiff argued that Congress’ addition of this “available to the public” language added the requirement that the invention be disclosed to the public in order for the bar to apply. The Federal Circuit disagreed, stating: “Requiring such disclosure as a condition of the on-sale bar would work a foundational change in the theory of the statutory on-sale bar.” Instead, the same requirements of a commercial offer and readiness for patentability apply. Accordingly, for the same reasons, the Federal Circuit held that in Helsinn, the first three patents were barred and the fourth patent was likewise invalid.

For a copy of the slip opinion, click here.

Filed under Patent

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