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Laches not available to defeat patent infringement damages claim: SCA Hygiene Products v First Quality Baby Products

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Mahogany wooden gavel on glossy wooden table, USA flag in the background.In a 7-1 decision on March 21, 2017, in the case of SCA Hygiene Products AB v. First Quality Baby Products LLC, the United States Supreme Court reversed an en banc decision of the Court of Appeals for the Federal Circuit and held that the equitable defense of laches was not available to defeat a claim for damages for patent infringement when the claim was brought within six years of the acts complained of.

Law in the United States recognizes three main ways in which a defendant may be protected against claims brought by a plaintiff who has delayed too long before asserting its rights: 1) statutes of limitations; 2) the equitable doctrine of laches; and 3) the doctrine of equitable estoppel.

In SCA Hygiene v First Quality, the Supreme Court addressed the relationship of the first two of these in the context of the patent law’s statute of limitations as set out in 35 USC 286, the first paragraph of which reads as follows:

  • Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.

As explained by the Supreme Court, the doctrine of laches is a defense developed by courts of equity to protect defendants against unreasonable, prejudicial delay in commencing suit.

The question before the Court was whether this doctrine could preclude a claim for recovery of damages for patent infringement in a case where the action was commenced within six years of acts complained of. In its decision, authored by Justice Alito, the Court held that it could not.

In reaching this conclusion, the Court relied on its 2014 decision in Petrella v. Metro-Goldwyn-Mayer, Inc., where the Court had held that the statute of limitations provisions of the Copyright Law (17 USC 507(b)) had precluded the use of a laches defense to an allegation of copyright infringement.

The Federal Circuit Court of Appeals had distinguished Petrella on the ground that, unlike the copyright statute, 35 USC 286 expressly stated that the patent statute of limitations did not apply when “otherwise provided by law” and that at the time of enactment of the current Patents Act in 1952, the doctrine of laches had been held in many decisions to be applicable in patent cases even though a statute of limitations on recovery of damages for patent infringement had been enacted in 1897. The Federal Circuit determined that since the legislative history indicated that, when enacting the present language in 1952, Congress had intended to codify the then existing law, it could not be concluded that any change in the applicability of the laches defense had been intended. The majority of the Supreme Court dismissed this argument stating that the cases referred to by the Federal Circuit were few in number and that by 1952, the overwhelming view in cases outside patent law was that once Congress had enacted a statute of limitations for any particular violation of the law, this precluded the use of an equitable defense. Laches was a defense that could be used only to “fill in the gaps’ here Congress had made no specific provision.


SCOTUS in SCA Hygiene stated that laches was a defense only to fill in the gaps where Congress had…
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The Supreme Court also looked at the difference in language between the statutes of limitations in copyright law and patent law, the former barring any civil action more than three years after the act of copyright infringement complained of, but the latter simply precluding recovery for any damages incurred more than six years prior to the start of the suit.  After considering the “ways in which statutes of limitations generally work”, the court concluded that “Petrella cannot reasonably be distinguished on this ground”.

Justice Breyer dissented seeing copyright law and patent law as being sufficiently different that Petrella should not be seen as a controlling precedent and raising concerns about the policy impact of denying defendants a laches defense in patent cases, noting:

  • the passage of time may well harm patent defendants who wish to show a patent invalid by raising defenses of anticipation, obviousness, or insufficiency. These kinds of defenses can depend upon contemporaneous evidence that may be lost over time, and they arise far more frequently in patent cases than any of their counterparts do in copyright cases, and
  • there is a “lock-in” problem that is likely to be more serious where patents are at issue. Once a business chooses to rely on a particular technology, it can become expensive to switch, even if it would have been cheap to do so earlier…As a result, a patentee has considerable incentive to delay suit until the costs of switching—and accordingly the settlement value of a claim—are high. The practical consequences of such delay can be significant

Justice Alito noted that there might be some force in such policy arguments but took the view that to consider them would be to substitute the court’s policy judgment for that of Congress and this was contrary to a basic understanding of the separation of powers in the United States. He did, however, point out that:

  • the   doctrine   of   equitable estoppel provides protection against some of the problems…namely, unscrupulous patentees inducing potential targets of infringement suits to invest in the production of arguably infringing products, and
  • that issues of equitable estoppel had yet to be decided in the present case since that aspect of the case had been remanded to the district court for further findings of fact.

As an aside, on the question of equitable estoppel as applied to patent cases, the Federal circuit has previously held in its 1992 decision in A.C. Aukerman Co. v. R. L. Chides Construction Co. that three elements are necessary, each to be proved by a preponderance of the evidence : (1) a “communication” from the patentee to the alleged infringer whereby the alleged infringer reasonably infers that the patentee does not intend to enforce its patent, (2) a reliance by the alleged infringer on that “communication”, and (3) resultant harm.

It therefore seems likely that we will see increasing attempts to use the doctrine of equitable estoppel as a defense in patent infringement cases. However, this will not deal with all of the possible concerns raised by Justice Breyer and amici in the SCA Hygiene case and the risks to the patentee in sending letters before action and so potentially opening themselves to an equitable estoppel defense may accelerate a trend that is already noticeable of starting a law suit with no prior communication to the defendant in order to reduce the risk that the putative defendant will commence an inter partes review of the patent in question prior to the law suit being initiated.

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Copyright protection available to surface ornamentation of cheerleader’s uniforms: Star Athletica v Varsity Brands

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bigstock-Cheerleaders-Team-3_22_2017-105200570 smflt72dpiOn March 22, 2017, the United States Supreme Court in the case of Star Athletica LLC v Varsity Brands LLC affirmed a decision of the Sixth Circuit Court of Appeals that copyright protection could exist in surface ornamentation of cheerleader’s uniforms.

The case therefore addressed the long-stated conundrum of why is it that one can obtain copyright protection for the design of a fabric used in clothing but not for the design of the clothing itself.

Under U.S. law, copyright protection for useful articles is limited by 17 USC 101 as follows:

the design of a useful article, as defined in this section, shall be considered a pictorial, graphic, or sculptural work only if, and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article. (Emphasis added)

Useful articles are defined as:

an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information. An article that is normally a part of a useful article is considered a “useful article”.

The requirement that design incorporates pictorial, graphic, or sculptural features that can be identified separately and can exist independently of the utilitarian aspects of the article is referred to as the separability doctrine.

In Star Athletica, the Supreme Court considered the applicability of the separability doctrine to surface ornamentation of cheerleader’s uniforms.

As noted by the Court, the copyrights in question were for two-dimensional designs appearing on the surface of cheerleader’s uniforms and other garments. These designs are primarily “combinations, positionings, and arrangements of elements” that include “chevrons . . . , lines, curves, stripes, angles, diagonals, inverted [chevrons], coloring, and shapes.”   Because the case had arisen from an appeal from a summary judgment that the copyright claim was for an unprotectable useful article, the underlying question of whether the designs were sufficiently ‘original” to qualify for copyright protection has not yet been addressed and the case has proceeded on the as-yet untried assumption that the features noted above have sufficient originality to qualify for protection.

Justice Thomas, with whom Chief Justice Roberts and Justices Alito, Sotomayor and Kagan agreed, gave the judgment of the Court.

Before engaging in a separability analysis, Justice Thomas first considered whether such analysis was required in view of the copyright owner’s argument that the designs for which they claimed protection were surface decorations that were “two-dimensional graphic designs that appear on useful articles,” but are not themselves designs of useful articles” and that, this being the case, no separability analysis was required.  Justice Thomas rejected this argument as being inconsistent with the language of the statute which requires separability analysis for any “pictorial, graphic, or sculptural features” incorporated into the “design of a useful article” because the statute provides  that  the  “design  of  a  useful  article”  can  include two-dimensional  “pictorial”  and  “graphic”  features.

Once the necessity for a separability analysis had been established, Justice Thomas went on consider the two elements of the separability requirement set out in the statute.

The first requirement (that pictorial, graphic, or sculptural features can be identified separately) was, in his view, not onerous. “The decisionmaker need only be able to look at the useful article and spot some two- or three-dimensional element that appears to have pictorial, graphic, or sculptural qualities. Such features could be identified here.

The second requirement (that the pictorial, graphic, or sculptural features are capable of existing independently of, the utilitarian aspects of the article) is, Justice Thomas noted, ordinarily more difficult to satisfy because the “feature must be able to exist as its own pictorial, graphic, or sculptural work … once it is imagined apart from the useful article” and such imagining must not itself be as or part of a useful article.  Therefore,

The ultimate separability  question… is  whether  the  feature  for  which  copyright  protection  is  claimed  would  have  been  eligible  for  copyright  protection as  a  pictorial,  graphic,  or  sculptural work had it originally been fixed in some tangible  medium  other  than  a  useful  article  before being applied to a useful article.


Star Athletica: ultimate question is whether the feature would have been copyright-eligible had it…
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 In this case,

Applying this test to the surface decorations on the cheerleading uniforms is straightforward… if the arrangement of colors, shapes, stripes, and chevrons on the surface of the cheerleading uniforms were separated from the uniform and applied in another medium—for example, on a painter’s canvas—they would qualify as “two-dimensional…works of…art,” §101. And imaginatively removing the surface decorations from the uniforms and applying them in another medium would not replicate the uniform itself. Indeed, respondents have applied the designs in this case to other media of expression—different types of clothing—without replicating the uniform…The decorations are therefore separable from the uniforms and eligible for copyright protection.

He concluded:

To be clear, the only feature of the cheerleading uniform eligible for a copyright in this case is the two-dimensional work of art fixed in the tangible medium of the uniform fabric. Even if respondents ultimately succeed in establishing a valid copyright in the surface decorations at issue here, respondents have no right to prohibit any person from manufacturing a cheerleading uniform of identical shape, cut, and dimensions to the ones on which the decorations in this case appear. They may prohibit only the reproduction of the surface designs in any tangible medium of expression—a uniform or otherwise.

Justice Ginsburg concurred in the outcome but not the reasoning.  She noted that the copyright registration certificates for the works in question stated that they were two dimensional artwork. In her view, the designs in question were “standalone pictorial and graphical works first created in two dimensional graphic designs and later applied to various items of clothing  As such, the designs were not for useful articles and so there was no need to address the separability issue.

In dissent, Justice Breyer (with whom Justice Kennedy agreed) pointed out that repeated attempts to persuade Congress to provide “full copyright protection to the fashion industry” had failed, but this had not prevented the fashion industry from thriving.  In his view, the majority opinion looked at the claimed design “as if it were no more than a design for a bit of cloth”  which lost sight of the principle that one may not claim a copyright in a useful article merely by creating a replica of that article in some other medium”, because one cannot obtain a copyright that would give the holder any rights  in the useful article that inspired it.

 

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A Multi-Layered Approach to Packaging Protection

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The way in which a product looks or how it is packaged and sold can often be a driving force in the consumer’s purchasing decision. Yet, the intellectual property rights available for product designs and packaging are anything but straightforward in view of the multiple means of protection within the United States as well as the differences from rights available in other countries. New and unique designs for product packaging may be protectable under a number of intellectual property regimes. In the United States, trade dress protection may be available under trademark law, while copyright and design patent protection may also be available. Trade dress protects the ability of the design to assist consumers in identifying or recognizing the source of the product and associating it with the consumer’s perspectives about the quality of the product. Copyright recognizes the original expressive aspects of the design. Design patent protects the new and different ornamental aspects of the design from what came before it. Layering these levels of protection, as well as giving consideration to whether and how these rights should be protected in multiple jurisdictions, may be prudent. At the same time, courts are somewhat reluctant to allow cross-regime protection in all cases, as shown by the recent EU decisions holding the KitKat candy bar design is not protectable as a trademark 1 , and the LEGO company’s ongoing efforts to protect the design of their building bricks as a trademark have been unsuccessful 2 , but the design of the LEGO man is protectable3 .

Trade dress protections can be available if packaging is distinctive, not functional, and recognized by consumers as a source-identifier of the goods. This recognition can take time to develop, or sometimes can be earned quickly through intensive marketing. Even if the trade dress is not sufficiently distinctive, some of the benefits of registration can be obtained in the United States, in some cases, through the Supplemental Register, where marks can acquired distinctiveness over time. However, the design cannot be functional because other companies need to have the ability to use functional elements in their own packaging, for example. In addition to packaging, other examples of trade dress include color, and the look and feel of a restaurant, as was recognized in Two Pesos v. Taco Cabana 4 . If available, trade dress protection can last so long as the product continues to be sold. Customs registration can be useful to block the import of infringing products.

The U.S. Supreme Court’s 2017 decision in Star Athletica v. Varsity Brands has highlighted the copyright protections available for designs which can be separable from a useful object, in this case, the patterns on cheerleader uniforms. The design can be protectable under copyright if:

  1. it can be perceived as a two- or three-dimensional work of art separate from the useful article, and
  2. the design would qualify as a protectable pictorial, graphic or sculptural work — either on its own or fixed in some other tangible medium of expression.

In this case, the designs were patterns made as part of the uniforms, but the designs could be sketched separate and apart from the uniforms themselves. We expect this ruling to have broader impact to other non-functional aspects of designs, including products and packaging, perhaps more of which may be protected by copyright than previously. Having a copyright registration, if available, can be useful due to the different standards required to obtain an injunction against an infringer, as well as the ability to obtain statutory damages under U.S. law as opposed to actual damages. Among other benefits are the ease of obtaining the removal of infringing matter from a website under the Digital Millennium Copyright Act (a so-called DMCA takedown), and as with registered trade dress, the availability to register with U.S. Customs to block imports. Generally, U.S. copyrights last for 70 years beyond the life of the author, 95 years from first publication, or 120 years from creation, and their ownership by a business requires either that the author was an employee whose creation of the design was within the scope of employment (i.e., a work for hire) or a written assignment of the rights.

If the design is embodied in, or applied to, an article of manufacture, then design patent protection may be available. A design patent may be available even if the product has not been offered or sold in the marketplace. However, under U.S. law, it must be a new design, non-functional, ornamental, and not obvious when compared to existing designs (i.e., prior art). Design patents are currently limited in term to 15 years, and can be infringed even if there was no copying, unlike copyright. Even if the design is arrived at by another party independently, it would infringe the design patent. A design patent can also aid in obtaining trade dress protection because it serves as evidence that the trade dress is not functional. Business ownership of a design patent usually requires a written assignment or agreement with the creators of the work.

A product or packaging design can be highly important to the purchasing decision because the consumer may rely on its appearance to make judgments about its quality, and appreciate its aesthetic originality both independently of the product’s commercial purpose and as an article of manufacture. Intellectual property regimes both inside and outside of the United States allow proprietors to take advantage of these various aspects in securing multiple forms of exclusive rights.

  1. http://curia.europa.eu/juris/document/document.jsf?text=&docid=186272&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=136896.
  2. http://curia.europa.eu/juris/document/document.jsf?text=&docid=74742&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=992063.
  3. http://curia.europa.eu/juris/document/document.jsf?text=&docid=165051&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=407012.
  4. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992).

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TC HEARTLAND LLC v. KRAFT FOODS GROUP BRANDS LLC

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Introduction

In its decision of May 22, 2017 in Heartland v. Kraft, the United States Supreme Court held that the specific venue provisions applicable to Patent infringement (28 U.S.C. 1400 (b)) limited the courts in which a domestic corporation could be sued for patent infringement to those in the state in which the corporation was incorporated or those where it committed an act of infringement and there was also personal jurisdiction. Prior decisions of the Federal Circuit based on the general venue statute (28 USC 1391) that had allowed a broader group of courts to try patent cases in which a domestic corporation was a defendant had been a misreading of the law. The consequence of the decision is likely to be a reduction of the number of cases brought, for example in the Eastern District of Texas, against out-of-state corporations and an increase in the number of cases in either states such as Delaware where many corporations are incorporated, or those states where places of business are located.

Venue and Jurisdiction in General

When considering where a lawsuit is to be brought in the United States, two issues need to be considered: first whether a particular court has the power to try a case brought before it (that it has jurisdiction over the subject matter and the parties); and second, whether it is the most appropriate court to try the case (whether the venue is proper). In patent infringement cases, subject matter jurisdiction is not normally an issue since it is clear that such cases are to be tried by the federal district courts. The question of whether a particular court has personal jurisdiction is sometimes an issue. A federal district court has personal jurisdiction not only over parties present in the state in which it sits, but also outside these limits if a statute so provides. Most states have enacted so-called “long arm” statutes, which subject to a constitutional requirement that the party in question must have some minimum contact with the state in question to meet the Constitutional requirement of providing for “due process” for those brought before a court, provide a basis for federal courts bringing parties that are physically located outside their states when the action complained of has caused harm within the state. The Federal Rules of Civil Procedure provide a basis for the federal courts to apply state long arm statutes and thus obtained personal jurisdiction over parties outside the states in which they sit.
However, in addition to considering whether the court has the power to try a case, consideration must also be given to the question of whether it is appropriate to do so taking into account the convenience of the parties.

For cases arising under the federal laws, 28 USC 1391(b) provides a general rule relating to venue that, subject to a few exceptions, an action may be brought only in:

  1. a judicial district where any defendant resides, if all defendants reside in the same state,
  2. a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or
  3. a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.

However, 28 USC 1391(c) provides a broad definition of “deemed residency” that provides that venue is proper in any court having personal jurisdiction over a defendant and, as noted above, this can cover much more than the home states of the parties.

The Special Patent Venue Provision

A special provision for venue in patent infringement cases states:

  • Any 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 business1.

The Court of Appeals for the Federal Circuit has consistently read the “deemed residency” provisions of the general federal venue statute as applying to the special patent venue statute, despite a 1957 Supreme Court decision that the predecessor of the current definition of “deemed residency” did not apply to the patent venue provisions. The Federal Circuit read amendments to the definition of deemed residency as overruling the 1957 Supreme Court decision, with the consequence that certain district courts, such as that for the Eastern District of Texas, have become favored locations for trying patent infringement actions with defendants from other states having been deemed to be resident in Texas under these provisions.

The Case in Suit

Concern about the concentration of patent litigation in a few courts led to some questioning of whether the Federal Circuit’s broad interpretation of the patent venue provision was correct and on December 14, 2016, the Supreme Court granted certiorari in TC Heartland, LLC v. Kraft Foods Group Brands LLC., to consider the question:

  • Whether 28 U.S.C. § 1400(b) is the sole and exclusive provision governing venue in patent infringement actions and is not to be supplemented by 28 U.S.C. § 1391(c).

That is to say, whether the deemed residency provision of 28 USC 1381(c) did in fact apply to the patent venue statute or whether the word “residency” in that provision meant actual residency.

On May 22, 2017 in a unanimous decision authored by Justice Thomas, the Supreme Court held that “residency” under the patent venue statute for persons resident in the United States meant actual residency and that the “deemed residency” of the general venue statute did not apply to patent infringement cases.

Justice Thomas noted that in 1957 in Fourco Glass Co. v. Transmirra Products Corp.2, the Supreme Court reviewed the history of the patent venue statute and concluded that for purposes of §1400(b) a domestic corporation “resides” only in its state of incorporation, rejecting the argument that §1400(b) incorporates the broader definition of corporate “residence” contained in the general venue statute. Congress had not amended §1400(b) since Fourco, but it had twice amended §1391. The only question before the Court therefore was to decide whether Congress changed the meaning of §1400(b) when it amended §1391. Justice Thomas noted that “When Congress intends to effect a change of that kind, it ordinarily provides a relatively clear indication of its intent in the text of the amended provision.” In the present case, it had not done so.

In Fourco, the Supreme Court had held that the patent venue provision that had been present in the statutes since 1897, when Congress had resolved a conflict between district courts by limiting venue in patent infringement cases to states in which the defendant resides or commits an act of infringement, and was now codified as 28 USC 400(b). It retained a meaning distinct from the default definition contained in §1391(c), even though the latter, by its terms, included no exceptions. And even though the deeming provisions of the general venue statute had been amended since then, including addition and later removal of the word “all” in the statute, the Supreme Court did not see that there had been any material difference in meaning and thus the Fourco decision should be followed and domestic corporations be subject to suit for patent infringement in their states of incorporation or where they commit acts of infringement.

Conclusion

The outcome is likely to be a shift of the situs of patent litigation away from some of those that have achieved prominence recently to a wider number of courts, and possibly more pressure for some specialized training in patent matters for judges in those courts that will see an increase in patent litigation.

  1. 28 USC 1400(b).
  2. 353 U. S. 222.

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Resistance is Futile: Axanar Productions settles with CBS and Paramount to end copyright infringement suit over fan film

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Axanar will finally beam down to YouTube after CBS and Paramount Pictures (“Paramount”) reached a settlement with Axanar Productions to end all ongoing litigation regarding the Star Trek fan film.

After the success of their 21-minute fan film entitled Prelude to Axanar, which had debuted at San Diego Comic-Con in 2014, the company raised $1.13 million via crowdfunding to fund the creation and release of the Star Trek: Axanar film, a feature-length production. The planned film was developed as a prequel to the original Star Trek series, covering the story of Garth of Izar and his battle against the Klingon Empire during the Four Years War. The character of Garth had appeared in an episode of the original Star Trek series in its final season in 1969.

On December 29, 2015, however, CBS and Paramount filed their lawsuit, claiming Prelude to Axanar and Star Trek: Axanar (“the Axanar Works”) infringed their rights in the Klingon language and “innumerable copyright elements of Star Trek, including its settings, characters, species, and themes” (“the Star Trek Copyright Works”)1. The suit also sought monetary damages and an injunction restraining the producers from distributing, marketing, and selling the film.

CBS and Paramount had traditionally refrained from taking action against fan films based on the Star Trek franchise, however, no fans had undertaken such efforts to create a full-length feature film or a fan film on the scale of Star Trek: Axanar. The Guidelines for Fan Films2 appears to address many of the aspects of the production of Star Trek: Axanar that set it apart from earlier fan works, including limitations on duration, crowdfunding, costumes and props, distribution, advertising, and merchandising. The Guidelines also prevent the use of professional actors and film crews and the compensation of participants.

On January 4, 2017, Judge R. Gary Klausner of the U.S. District Court in Los Angeles ruled that the Axanar Works have objective substantial similarity to the Star Trek Copyright Works, including the Klingon and Vulcan species, the Klingon Officer’s uniform, and settings from planets such as Axanar, Qo’noS, and Vulcan 3 . However, Judge Klausner denied CBS and Paramount’s summary judgment motion, as the determination as to whether an ordinary, reasonable person would find the total concept and feel of the works to be substantially similar would be best made by a jury 4. It is important to note that the substantial similarity test is not an element of a copyright infringement claim, but instead a doctrine that helps courts adjudicate whether copying essential elements of the work that are original actually occurred when elements of the work are allegedly appropriated, rather than a total reproduction.

While the jury trial was scheduled for January 31st, the parties finalized a settlement eleven days prior to the commencement of the trial. As part of the settlement, Axanar Productions and its owner, Alec Peters, publicly acknowledged the Axanar works “were not approved by Paramount or CBS, and that both works crossed boundaries acceptable to CBS and Paramount relating to copyright law.” Under the terms of the settlement, the filmmakers will be permitted to release two 15-minute movies on YouTube, instead of their planned 90-minute film, and cannot be shown with ads.

This case has engendered a fair amount of interest and discussion amongst fans and fan-filmakers. One prolific Star Trek fan-filmmaker and actor, James Cawley, was supportive of the Guidelines, noting that fans in the past had “a few unwritten ground rules” that they abided by. He also stated that not only did he “fully respect CBS/PARAMOUNT”, but “if [he] owned [Star Trek], [he] would feel the same way”5.

However, the executive producer of the Star Trek reboot films, J.J. Abrams, was critical of the lawsuit, asserting “this wasn’t an appropriate way to deal with the fans6.” Abrams also indicated that Justin Lin, director of 2016’s Star Trek Beyond, was “outraged by this as a longtime fan” and instrumental in pushing for the settlement agreement.

Now that the stardust has settled, Trekkies may continue to produce fan films, provided they adhere to the cosmic rules of the Star Trek Guidelines for Fan Films and respect the Intellectual Property rights of CBS and Paramount Pictures.

  1. https://www.documentcloud.org/documents/2660454-Startreklawsuit.html.
  2. www.StarTrek.com/fan-films.
  3. Paramount Pictures Corporation et al v. Axanar Productions, Inc. et al (C.D. Cal. 2017).
  4. Range RdMusicIncv. E. Coast Foods, Inc., 668 F.3d 1148, 1154 (9th Cir.2012).
  5. http://www.stnv.de/en/news-guidelines.php.
  6. http://deadline.com/2016/05/star-trek-axanar-lawsuit-ending-jj-abrams-paramount-1201760721/.

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SPEEDY JUSTICE: TTAB REVERSES REFUSAL TO REGISTER CROSBY QUIC-TAG

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In a non-precedential decision in In re The Crosby Group LLC, Serial 86780353 (April 17 2017), the Trademark Trial and Appeal Board (TTAB) held that there was no likelihood of confusion between the applicant’s CROSBY QUIC-TAG mark for, among other things, radio frequency identification (RFID) tags for material lifting equipment in Class 9 and the registered mark QUICK TAG and design (disclaiming TAG) for metal identification tags in Class 6. It therefore reversed the refusal to register under Section 2(d) of the Trademark Act. The decision turned on the weakness of the marks, the sophistication of the purchasers and the addition of a house mark.

The TTAB noted that CROSBY was the dominant portion of the applicant’s mark because it was the most prominently displayed element and most likely to be remembered by purchasers. Although ‘Crosby’ is a surname, which is generally considered inherently weak under US trademark law, the applicant had two prior registrations for CROSBY, both for various forms of material lifting equipment, as well as the substantially exclusive use of the mark for over five years on material lifting equipment. The TTAB therefore attributed the acquired distinctiveness of the CROSBY element to the subject application.

The TTAB noted that the addition of a distinctive mark to another mark can help to render marks distinguishable, if the other mark is highly suggestive or descriptive. In this case, the TTAB found the registrant’s mark to be highly suggestive because the term ‘Quick’ and the lightning bolt element, which stylised the ‘Q’, reinforced the suggestion that the registrant’s goods were dispensed quickly.

Turning to the relatedness of the goods, the TTAB was unpersuaded by the applicant’s argument that the goods were different in kind because they fell into different classes. The TTAB found the goods to be somewhat related, based on the examining attorney’s evidence that metal identification tags and RFID tags are sometimes offered under the same mark. Further, the TTAB determined that while one good was not an essential element of the other and there was no assumption that they would be used together, the goods could nonetheless emanate from the same source and overlap at times.

Despite the potential relatedness of the goods, the TTAB found that the only point of overlap with regard to channels of trade would be businesses that purchase and use material lifting equipment, and those businesses exercise greater care than the general public when making purchases. Therefore, the TTAB concluded that such purchasers would not be confused.

The addition of a distinctive or house mark to another mark may not eliminate the likelihood of confusion. However, as this case illustrates, it is possible to overcome a likelihood of confusion refusal when a distinctive or house mark is combined with a term that is highly suggestive or descriptive. This is especially true when there are clearly defined channels of trade and customers are conditioned to exercise great care when making purchases.

The article was originally published on May 16th, 2017 in the World Trademark Review (WTR).

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IT STARTED WITH A MOUSE: TTAB REVERSES REFUSAL OF APPLICATION BY ME AND THE MOUSE TRAVEL

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In a non-precedential decision in In re Me and the Mouse Travel LLC, Serial 76717725 (April 21 2017), the Trademark Trial and Appeal Board (TTAB) held that a mark combining the word ‘Mouse’ with the depiction of a narrow arm with a white-gloved hand was not a close enough approximation of the iconic Mickey Mouse figure to suggest an association with Disney Enterprises Inc. The TTAB therefore reversed the examining attorney’s refusal to register the application.

The applicant, Me and the Mouse Travel, LLC, sought to register the mark, later described as “the wording ‘Me and The Mouse Travel’ inside a concentric oval carrier with the design of arm with a glove holding a suitcase to the right of the wording and two eight point stars in the background of the oval carrier” (see figure below).

The fact that the glove had three fingers and certain characteristic wrinkles was not mentioned in the description. After the examining attorney initially refused the application and subsequently maintained the refusal in the face of evidence that Disney had no objection to the applicant’s use of the mark, the applicant later amended the drawing to remove the wrinkles on the glove and add an additional finger (see figure below).

The examining attorney agreed that the amendment did not constitute a material alteration that would change the commercial impression of the mark, but maintained her refusal. The applicant appealed.

The TTAB considered the factors relevant to a refusal on the grounds of a false suggestion of association from In re Pedersen, 109 USPQ 2d 1185, 1188-89 (TTAB 2013) ‒ namely, whether:

  • the mark is the same as, or a close approximation of, the name or identity previously used by another person or institution;
  • the mark would be recognised as such, in that it points uniquely and unmistakably to that person or institution;
  • the person or institution named by the mark is not connected with the activities performed by the applicant under the mark; and
  • the fame or reputation of the person or institution is such that, when the mark is used with the applicant’s goods or services, a connection with that person or institution would be presumed.

While the factors appear to address the mark as a whole, the analysis seemed to focus on component parts. Also, in contrast to a refusal based on a likelihood of confusion, the factors notably do not evaluate whether the person or institution consented or otherwise did not object to the applicant’s adoption of the mark.

The examining attorney contended that the design element of the mark not only was a close approximation of a feature of the famous Mickey Mouse character, but also contained the term ‘Mouse’; consumers were therefore likely to falsely associate the mark with Mickey Mouse and Disney. Her evidence included:

  • articles discussing the history of the Mickey Mouse character;
  • images from webpages featuring the character;
  • public comments and statements made about the character; and
  • an online Disney Store product listing for the “Mickey Mouse Made With Magic Mickey Mitt Plush Glove”, depicting a three-fingered glove.

The TTAB rejected the examining attorney’s arguments, noting that the use of white gloves was influential in the design of other Disney and non-Disney cartoon characters, including Bugs Bunny, Woody Woodpecker and Mario. Notably, the TTAB did not discuss whether the white gloves worn by those characters had a similar wrinkle pattern or consider that those characters were not cartoon mice. The TTAB noted that the applicant’s mark included a four-fingered hand in contrast to Mickey Mouse’s three fingers and used the term ‘The Mouse’, rather than ‘Mickey Mouse’.

Therefore, the TTAB held that the mark did not suggest a connection between Me and the Mouse Travel, LLC and Disney Enterprises Inc.

It is interesting to note that the TTAB was not asked to consider whether the original form of the mark with the three-fingered hand would have falsely suggested a connection or whether the amendment of the mark was a material alteration, impermissibly changing the commercial impression of the mark. However, the TTAB opinion suggests that perhaps it would have upheld the refusal if the mark had shown a three-fingered glove. Therefore, the TTAB’s recognition of the differences in the gloves implies the view that the removal of the wrinkles and addition of a finger made a difference in the commercial impression of the mark. The outcome of the case appears to have been greatly affected by the examining attorney’s recognition of the amendment as a permissible non-material alteration.

In contrast to the trademark laws of most other jurisdictions, US law – specifically, Section 7(e) of the Trademark Act – allows changes to a mark that do not materially alter its character. If a design integrated into a mark is a distinctive feature which is necessary for the recognition of a mark, then a change in the design would be considered an impermissible material alteration (In re Dillard Dept Stores Inc, 33 USPQ2d 1052 (Comm’r Pats 1993)). In the present case, it was within the discretion of the examining attorney to determine whether the number of fingers and wrinkles on a glove were distinctive features necessary for recognition of the mark as a whole.

However, the fingers and wrinkles could suggest a connection with Mickey Mouse because a consumer seeing the recognisable glove and the words ‘the Mouse’ could easily determine that this referred to Mickey Mouse. It would seem, in hindsight, that had the examining attorney refused the amendment, the debate in this case would have centred on whether it is an impermissible material alteration to change a design feature not necessary for overall recognition of the mark, but still important in suggesting the intended meaning of the words.

While Me and the Mouse Travel, LLC succeeded in its appeal to the TTAB, its website continues to show the original mark which featured the three-fingered glove and the modified mark does not currently appear on any page. As the application was filed on an intent-to-use basis, the owner must commence use of the mark as amended in order to obtain and maintain its registration.

While it started with a mouse, how it ends appears to be all about the glove for this particular applicant.

The article was originally published on June 1st, 2017 in the World Trademark Review (WTR).

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UNITED STATES SUPREME COURT DECISION IN IMPRESSION PRODUCTS INC. V LEXMARK INTERNATIONAL INC.

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In 1628, Lord Coke in his “Institutes of the laws of England” summarized the common law on restraints on the alienation of chattels stating that any attempt by a seller to restrict resale or use of the chattel after selling it was “voide, because … it is against Trade and Traffique, and bargaining and contracting between man and man” (17th century spelling).

On May 31, 2017, in Impression Products Inc. v. Lexmark International Inc., the United States Supreme Court held that this principle precluded a patent from being used to control subsequent sales of a patented product originating from the patent owner even if such subsequent sales were in breach of the original contract of sale between the patent owner or the first purchaser of the product or if that first sale occurred outside the United States.

Lexmark held patents on components of toner cartridges and the way in which they were used. It sold such cartridges in the United States and abroad giving purchasers the choice between two options, either to make the purchase subject to an agreement to return the used cartridges to Lexmark for refilling after they become empty at one price or to make the purchase without such an agreement at a higher price. The cartridges that were sold subject to the agreement that they should be returned were installed with a microchip designed to prevent reuse once the toner had run out. Impression bought used cartridges originally sold both in the United States and abroad and where necessary disabled the microchip preventing reuse. It then refilled the cartridges and resold them.

Lexmark sued Impression for infringement of its patents. The Court of Appeals for the Federal Circuit hearing the case en banc held that refilling and selling cartridges that had originally been sold by Lexmark in the United states subject to an agreement that they should be recycled to Lexmark after use constituted patent infringement because the statute gave the patent owner the right to control any unauthorized use of the patented product and the nature of the original restriction made such use and sale by Impression an “unauthorized” use and sale (see our article on this decision). Although there is a presumption that a purchaser can resell something it owns freely, this right can be limited by a clearly indicated restriction communicated at the time of sale as long as that restriction is itself lawful. On the question of sales made by Lexmark outside the United States, the Federal Circuit concluded that since sales outside the United States were not protected by the US patent and so such sales did not provide the rewards available from selling in the US market, importation into the United States would constitute infringement. The situation was different from copyright law where the Supreme court had held in Kirstaeng v. Wiley that a copyright holder could not enforce copyright in the United States to prevent import of books it had sold in Thailand (see our article on this decision). The Federal Circuit saw patents as being clearly limited to national rights whereas copyright was of a more international nature.

As noted above, the United States Supreme Court disagreed with both conclusions of the Federal Circuit.

In an opinion by Chief Justice Roberts, the Court held on the question of domestic sales made subject to a restriction, that restriction was a matter of contract law that only applied between the seller and the buyer. The restriction did not attach to the goods themselves. The law against restraints on alienation of chattels had been in existence from before the first patent act and Congress had never made any exception for patented goods. Moreover, the Supreme Court had never indicated that any such exception should exist to the long-standing first sale doctrine that first sale of a patented product by the patent owner or with its license exhausts the patent owner’s rights. The situation was the same where sale was by a licensee. The patentee’s remedy for breach was against the licensee, not the down-stream purchaser. Allowing a restriction to remain applicable after the first sale would create inconvenience and annoyance to the public and so Lexmark’s rights were confined to those provided by contract law not patent law. On the question of domestic sales, the court concluded:

    In sum, patent exhaustion is uniform and automatic. Once a patentee decides to sell—whether on its own or through a licensee—that sale exhausts its patent rights, regardless of any post-sale restrictions the patentee purports to impose, either directly or through a license.

The Court took a similar approach on imports into the United States of patented products first sold outside the United States. Unlike the Court of Appeals for the Federal Circuit, the Supreme Court saw no difference in principle to the application of the concept of international exhaustion between copyright and patent law. The Supreme Court noted:

    Patent exhaustion, [like copyright exhaustion], has its roots in the antipathy toward restraints on alienation … and nothing in the text or history of the Patent Act shows that Congress intended to confine that borderless common law principle to domestic sales. In fact, Congress has not altered patent exhaustion at all; it remains an unwritten limit on the scope of the patentee’s monopoly.

Lexmark’s arguments as to the differences between the territorial effects of copyright and patent law were of no avail:

    Exhaustion is a separate limit on the patent grant, and does not depend on the patentee receiving some undefined premium for selling the right to access the American market. A purchaser buys an item, not patent rights. And exhaustion is triggered by the patentee’s decision to give that item up and receive whatever fee it decides is appropriate for the article and the invention which it embodies. The patentee may not be able to command the same amount for its products abroad as it does in the United States. But the Patent Act does not guarantee a particular price, much less the price from selling to American consumers. Instead, the right to exclude just ensures that the patentee receives one reward—of whatever amount the patentee deems to be “satisfactory compensation,” for every item that passes outside the scope of the patent monopoly.

The decision as to domestic sales was not unexpected and is consistent with prior, but less clearly expressed Supreme Court decisions. One possible outcome of the decision would be an increase in the use of leasing agreements rather than sales where there is an issue of possible reuse that the patent owner would like to control. In the case of reusable ink cartridges, the manufacturer might sell the ink, but lease the cartridge. The packing should then include instructions for using the original packing to return the spent cartridge to the manufacturer. Another possibility is the incorporation in sales contracts of requirements for the purchaser to impose limitations on its purchaser in any resale agreement and an obligation to sue such a downstream purchaser if it breaches the resale agreement. How well this will work in practice remains to be seen.

As to international sales, it is likely that more steps may be taken to distinguish goods intended for the use in the domestic market from those intended for sale abroad by use of different trademarks, packaging, etc., and where possible and appropriate even physical differences in the products sold abroad from that sold in the United States.

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UNDER THE 2EA: TTAB HOLDS LITTLE MERMAID MERELY DESCRIPTIVE FOR DOLLS

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In a precedential decision in In re United Trademark Holdings, Inc, Serial 86836082 (June 13 2017), the Trademark Trial and Appeal Board (TTAB) has held that LITTLE MERMAID used in connection with “dolls” in Class 28 is merely descriptive under Section 2(e)(1) of the Trademark Act because it is understood by consumers to be a fictional public domain character and describes the appearance of the dolls, rather than identifying a commercial source for the goods.

The Little Mermaid is the title of a fairy tale written by Hans Christian Andersen in 1837. The story was adapted by Walt Disney Pictures and made into a film in 1989 and a Broadway musical in 2008. Many dolls and other licensed merchandise use the image of the well-known Disney version of the ‘Little Mermaid’ character, Princess Ariel. Those versions not specifically licensed sometimes appear as a princess mermaid but without the same distinguishing features of the Disney version.

The examining attorney refused registration of the application filed by United Trademark Holdings on the grounds that the LITTLE MERMAID mark was merely descriptive of a feature or characteristic of the dolls which were represented as a young girl which is part human and part sea creature.

United appealed the refusal to the TTAB on the basis that ‘Little Mermaid’ had a clear significance beyond the literal meanings of its individual components. It argued that ‘Little Mermaid’ did not refer to any young mermaid, but the specific character from the Hans Christian Andersen story. Moreover, the US Patent and Trademark Office has a history of granting registrations for names of characters in the public domain in connection with dolls, action figures and figurines. United cited 26 other marks for fairy tale characters in support of its contention, including Registration 3775134 for SLEEPING BEAUTY and 3636910 for TINKER BELL, both in the name of Disney Enterprises, and Registration 3224000 for RAPUNZEL in the name of Mattel, Inc. It also noted that 20 of these marks refer to character names without any modifying terms and, of the 10 marks with modifying terms, none included disclaimers or claims of acquired distinctiveness. They were all registered on the Principal Register.

The TTAB rejected United’s arguments and upheld the examining attorney’s decision, drawing a distinction between where a character is in the public domain and where an applicant owns IP rights in the work from which the character originated, such as ‘Superman’. A character like ‘Superman’ is a proprietary creation, promoted by an entity that markets all manner of products. Consumers expect goods and services bearing that name (or image) to emanate from, or be produced or licensed by, DC Comics which created the character and therefore has the right to profit from its commercialisation.

The TTAB emphasised that a fictional public domain character such as Andersen’s ‘Little Mermaid’ is not necessarily linked to a specific entity. Moreover, other doll makers seeking to market a doll depicting the character have a competitive need to use that name to describe their products.

The TTAB further ruled that the registration of other public domain characters did not have any bearing on the outcome of United’s case, as each case must be decided on its own merits. Additionally, the TTAB has not reviewed or issued a decision regarding any of those third-party registrations.

The TTAB upheld the examining attorney’s refusal to register the mark, ensuring United’s LITTLE MERMAID mark was not “a part of their world”, or at least not on the Principal Register without a successful claim of acquired distinctiveness.

Interestingly, United did not attempt to argue acquired distinctiveness in the mark based on their prior incontestable Registration 3838651 for LITTLE MERMAID in relation to “greeting cards” in Class 16. Greeting cards and dolls may be considered related goods as they are often purchased concurrently as gifts. Many toy shops offer greeting cards near points of sale as a method of upselling so that customers purchasing gifts may also choose to buy cards. Hallmark and Papyrus are well known for their greeting cards, but they also sell dolls and figurines. Had such arguments and evidence been presented to the TTAB, United may have obtained a registration on the Principal Register with a claim of acquired distinctiveness arising from its earlier registration, without having commenced use of the mark for dolls.

The article was originally published on July 18th, 2017 in the World Trademark Review (WTR).

 

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SKIPPING THE PATENT DANCE: U.S. SUPREME COURT IN AMGEN v SANDOZ MAKES IT MORE DIFFICULT FOR PATENT OWNERS TO DELAY MARKETING OF BIOSIMILARS

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On June 12, 2017, in a unanimous decision authored by Justice Thomas in Amgen Inc. v. Sandoz Inc., the United States Supreme Court considered the complex statutory scheme that attempts to expedite resolution of patent disputes that might affect the marketing of generic versions of biological drugs (so-called “biosimilars” that are made by living organisms rather than by conventional chemical synthesis).  In doing so, the court interpreted the statute in a way that appears to assist the producers of such generic products. Two issues were before the court:

 

 

 

  1. whether failure to follow the scheme referred to as “the patent dance” which was intended to secure early resolution of passible patent issues relating to a biosimilar could be the subject of an injunction; and
  2. the point in time when the proposed marketer of a biosimilar had to advise the originator of the product of its intention to market the biosimilar.

Any marketing of biological products requires a biologics license from the Food and Drug Administration (FDA) issued under the Public Health Service Act rather than under the Food, Drug and Cosmetic Act as is the case for the products of conventional chemical synthesis. The different requirements stem from the differences between the chemistry of small molecules and biological materials and the relative difficulty in accurately reproducing small molecule drugs that are normally made by chemical synthesis and biological products typically produced in cells and so subject to greater variability.

The Public Health Services Act was amended by part of the 2010 health care reform legislation (the Biologics Price Competition and Innovation Act 1) to provide for provisions analogous to, but different from those provided for small molecules under the Hatch-Waxman Act.

These provisions made it easier for the manufacturer of a biological product that is a “biosimilar” of a reference biological product (i.e. one that has already been approved) while at the same time providing a means for suing someone seeking such approval for patent infringement prior to actual marketing of the biosimilar if the request is for approval to commence marketing before the relevant patents expire 2.

For these provisions to apply, a biosimilar must inter alia be shown to be “highly similar to the reference product”, use the same mechanism of action as the reference product for the conditions that are “prescribed, recommended or suggested” in the labeling of the biosimilar. If this requirement is not met, the applicant for marketing approval of a biological product has to comply with the full set of FDA requirements for approval of a new product.

The first person to market a biological product is given a period of marketing exclusivity. Applications for marketing approval of biosimilars are subject to the requirements of 42 USC 262(k)3 and are subject to a twelve year exclusivity period for the reference product from the date of first authorization of the reference product, thereby in effect giving that product a twelve year exclusivity period independent of any patent protection.

The first issue addressed by the Supreme Court in Amgen v. Sandoz was the applicability of the scheme the statute sets out aimed at achieving early resolution of patent issues that may arise. Agreeing with the Court of Appeals for the Federal Circuit, the Supreme Court effectively found use of the scheme to be optional under federal law.

Under the scheme, 42 USC 262(l)(2)(A) provides that within 20 days after the FDA notifies the applicant for approval of a biosimilar product that its application has been accepted for review, the applicant is to give notice to the reference product sponsor by providing the application (which contains information about the product) as well as information describing the manufacturing process on a strictly confidential basis4. The statute provides for the grant of immediate injunctive relief should the sponsor of the reference product misuse the information given to it.

Once the sponsor of the reference product has received such information about the application for approval of a biosimilar, it has sixty days within which to provide the applicant for the biosimilar with a list of patents which the sponsor of the reference product believes could reasonably be asserted to be infringed by the making, using, selling, offering to sell or importing the biosimilar in question. And indicating any patents it would be willing to license5. Within sixty days of receipt of this list, the applicant for approval of the biosimilar may provide its own list of patents that it believes might be infringed and “shall” provide the sponsor of the reference product with a detailed statement on a claim-by-claim basis of the reasons why each claim is invalid, unenforceable or not infringed or a statement that it does not intend to begin commercial marketing until the patent expires. The response should also address any offer of a license made by the sponsor of the reference product 6.

The sponsor of the reference product has sixty days within which to respond to the allegations made by the applicant for marketing approval of the biosimilar7. The protagonists are then required to engage in good faith negotiations to agree which if any patents may be infringed by the biosimilar8. If there is a failure to agree, each side will supply a list of patents, which, unless the applicant lists no patents, shall not exceed the number of patents listed by the biosimilar applicant9.

Within thirty days of the agreement as to relevant patents or the exchange of patent lists, the sponsor of the reference product must institute a patent infringement action10. The applicant for approval of the biosimilar must notify the FDA 11.  Any such immediate litigation is limited to a single patent if the applicant lists no patents, no matter how many patents the reference product sponsor designated as reasonably assertable against the making, selling, etc., of the proposed biosimilar product12.  Failure to bring such an action within thirty days will result in the remedy for any subsequently filed infringement action being limited to the payment of a reasonable royalty. Failure of the owner of a patent that should have been included in a patent list to include it in such a list will result in the patent owner being unable to bring an action for infringement under this provision.

When read together, these requirements have been referred to as “the patent dance”13.

In Amgen Inc. v. Sandoz Inc.,14 Sandoz, the applicant for approval of the biosimilar product, declined to provide the sponsor of the reference product with all of the information noted above. The case turned on conflicting language in 42 USC 262(l) which at one point states that the applicant for a biosimilar application “shall” provide information and at another point states that if such information is not provided, the sponsor of the reference product can bring suit. Additionally, 35 USC 271(e)(2)(C)(ii) provides that it is a patent infringement if the applicant for the biosimilar fails to provide required information.

The Federal Circuit found that because the statute provided remedies where the applicant for marketing approval of the biosimilar failed to provide information, Sandoz was within its rights to refuse to do so until litigation was commenced, when it would in any case need to provide the information to comply with discovery requests.

The Supreme Court agreed that failure of the party seeking to market the biosimilar to provide the information about its application and manufacturing method was not remediable by an injunction 15. The effect of this decision may well be to make most steps of the “patent dance” optional under federal law, to the disadvantage of the sponsor of the reference product. Intriguingly, the Supreme Court left open and remanded for further consideration the question of whether failure to provide the information set out in the statute was “unlawful” under and so actionable under state law.

The second issue before the Supreme Court was the notice provision of the statute.

If the biosimilar applicant determines to commence commercial marketing of a product, the statute states it shall provide the producer of the reference product with 180 days advance notice 16 and the sponsor of the reference product shall be entitled to seek a preliminary injunction enjoining such marketing with respect to any patent noted in its original “patent dance’ list unless subsequently excluded.

The Federal Circuit had held, that the 180 day notice period that the applicant to market a biosimilar was required to give to the sponsor of the reference product to allow adequate time to commence litigation if appropriate could not commence any earlier than the date on which the FDA granted approval for marketing of the biosimilar product.

The Supreme Court disagreed. The requirement of the statute was that the applicant:

“shall provide notice to the reference product sponsor no later than 180 days before the date of the first commercial marketing of the biological product licensed” by the FDA.

The Supreme Court held that, as a matter of grammar, all that this meant was that the product had to be licensed at the time of commercial marketing, not that the product had to be licensed at the time of the notice. The effect of this is that the applicant for the biosimilar license could give notice long before approval has been received. Since if the patent dance has not been followed, the patent owner would need to wait until receipt of this notice or actual marketing has occurred before it can sue for infringement, the effect of the second part of the Supreme Court’s decision in Amgen v. Sandoz therefore is to complicate the litigation strategy for the patent owner since it will have a less clear idea of when infringement proceedings can be commenced.

  1. Incorporated into the Patient Protection and Affordable Care Act (Public Law 111-148) signed by President Obama on March 23, 2010 as Sections 7001 – 7003 thereof. These provisions are codified at 42 USC 262
  2. 35 USC 271 (e)(2)(C). The FDA will publish a “purple book” listing licensed biological products and their reference products.
  3. Hence such applications are referred to as “subsection (k) applications” or “aBLA applications”
  4. 42 USC 262(l)
  5. 42 USC 262(l)(3)(A)
  6. 42 USC 262(l)(3)(B)(ii), (iii).
  7. 42 USC 262(l)(3)(C).
  8. 42 USC 262(l)(4)(A).
  9. 42 USC 262(l)(5)
  10. 42 USC 262(l)(6)(B)
  11. 1142 USC 262(l)(6)(C).
  12. 42 US 262(l)(5)(B)(ii)(II).
  13. As noted by J. Newman in Amgen Inc. v. Sandoz Inc. 794 F,3d 1347 (Fed. Cir. 2015), the purpose of “the dance” is to reduce uncertainty by early consideration of the validity of key patents, a reason used in Janssen Biotech Inc. v. Celltrion Healthcare Co. 120 USPQ2d 1786 (D. Mass 2016) to decline a stay of proceedings under the BPCIA pending completion of re-examination in the Patent Office.
  14. 794 F.3d 1347 (Fed. Cir. 2015) petition for rehearing en banc denied October 16, 2015.
  15. Sandoz Inc. v. Amgen Inc. 122 USPQ2d 1685 (S. Ct 2017)
  16. 42 USC 262(l)(8)(A).

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GOOGLE INC. v. EQUUSTEK & THE SUPREME COURT OF CANADA

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In the case of Google Inc. v. Equustek, the Supreme Court of Canada has upheld the grant of a preliminary injunction by the Court of Appeals of British Columbia ordering Google to de-index on a global basis websites of a party accused of passing off the plaintiff’s goods and misusing its trade secrets.

The question of the liability of intermediaries for trademark infringements by others using their facilities is becoming an issue of increasing concern. See for example, our article: https://ladas.com/education-center/4694-2/ on the situation in Europe. In the present case, Equustek, a small Canadian technology company, had brought suit in British Columbia against its former distributor (Datalink) for passing off and misuse of its trade secrets. Datalink had initially contested the action but subsequently left British Columbia for an unknown destination, while continuing to maintain web pages that were indexed by Google. The British Columbia courts had issued an injunction against Datalink ordering it to cease operating or carrying on business through any website. Following this and a request by Equustek, Google had de-indexed some but not all of Datalink’s webpages so that they would not be found if they were being searched for on Google’s Canadian site, google.ca.  However, they could still be found by a search for example on google.com or other country-specific Google search sites. These measures had proved ineffective to stop Datalink’s activities.

Equustek then sought an interlocutory (preliminary) injunction to enjoin Google from displaying any part of Datalink’s websites on any of its search results worldwide.

Agreeing with the lower courts, in a 7-2 decision delivered by Justice Abella on June 28, 2017, the Supreme Court of Canada upheld the grant of an injunction.

The Court noted that, under Canadian law, the grant of an interlocutory injunction was an equitable remedy requiring:

  1. that the party seeking the injunction had to show that there was a serious issue to be tried;
  2. that the party seeking the injunction would suffer irreparable harm if the injunction were not granted; and
  3. that the balance of convenience favored the grant of the injunction.

There was no dispute on the first or second issues, Google accepting that there was a serious issue to be tried and that Equustrek was suffering irreparable harm as a result of Datalink’s continuing sales. Google did, however, argue that the balance of convenience motivated against the grant of the injunction requested. Google’s arguments were three-fold:

  1. that it was immune from an injunction since it was not a party to the main dispute;
  2. that the injunction was improperly extraterritorial; and
  3. that the injunction would be a violation of the right to freedom of expression and Google’s commitment to content neutrality.

On the question of whether a non-party to the underlying law suit could be subject to an injunction, the Canadian Supreme Court referred to numerous Canadian and English decisions, including the English Cartier case (noted above in our previous article) where the courts held that injunctions could be issued against parties who were not themselves guilty of wrongdoing but who were facilitating harm. This was just such a situation. Google was aware that by failing to de-index all of Datalink’s web-sites, it was facilitating Datalink’s ongoing breach of the British Columbia courts’ orders against Datalink.

The court noted:

  • The interlocutory injunction in this case flows from the necessity of Google’s assistance in order to prevent facilitation of Datalink’s ability to defy court orders and do irreparable harm to Equustek. Without injunctive relief it was clear that Google would continue to facilitate ongoing harm.

On the question of extraterritoriality, Justice Abella noted that since the Internet has no borders, the only way to ensure that the interlocutory injunction attained its objective was to have it apply where Google operates – globally. Google had argued that such an order violates international comity, but had provided no evidence that compliance with the injunction would breach the laws of any country. If such evidence came to light, Google could apply to the courts for variation of the injunction to enable it to comply with such foreign law.

On the question of freedom of expression, the Court noted: “We have not, to date, accepted that freedom of expression requires the facilitation of the unlawful sale of goods.” and “even if it could be said that the injunction engages freedom of expression issues, this is far outweighed by the need to prevent the irreparable harm that would result from Google’s facilitating Datalink’s breach of court orders.”

Google would have no difficulty in complying with the injunction and so the balance of convenience lay against it.

Justice Abella concluded:

  • On balance, therefore, since the interlocutory injunction is the only effective way to mitigate harm to Equustek pending resolution of the underlying litigation, the only way, in fact, to preserve Equustek itself … and since any countervailing harm to Google is minimal to non-existent, the interlocutory injunction should be upheld.

Justices Côe and Rowe dissented largely on the basis that the injunction went beyond what was needed in the situation.  From their perspective, the injunction should only have required Google to provide more information to Equustek but it should not have effectively acted as a final disposition of the case without satisfying the requirements for the grant of a permanent injunction, including full consideration of the merits. The dissenters were also concerned that the injunction might not be effective for its stated purpose and that an alternative course of action was available by proceedings in France where Datalink was known to have assets.

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CHEERIOS YELLOW BOX REJECTED FOR TRADEMARK REGISTRATION

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In a precedential decision on August 22 2017, the Trademark Trial and Appeal Board (TTAB) in In re General Mills IP Holdings II, LLC (Serial 86757390) held that the applicant did not provide sufficient evidence to support the claim that its iconic yellow box in which Cheerios cereal is packaged had acquired sufficient distinctiveness to allow registration. The TTAB ruled that consumers do not perceive the colour yellow to be a source indicator due to the substantial number of other cereal products in the marketplace which use yellow packaging.

Pursuant to Qualitex Co v Jacobson Prods Co (514 US 159, 34 USPQ2d 1161 (1995)), a single colour may be entitled to trademark protection but it can never be inherently distinctive as a source indicator. To be eligible for trademark registration, a colour must have acquired secondary meaning and must not be functional. Examples of colours that have registered trademark protection in the United States are brown for UPS and pink for Owens-Corning’s fibreglass insulation.

General Mills has sold oat-based breakfast cereal under the brand ‘Cheerios’ since 1945, and as early as 1941 under the name ‘Cheerioats’. From 1944 ‘Cheerios’ boxes have contained yellow features on the back and other panels. Despite changes to the artwork over the years and the availability of multiple varieties of the cereal in slightly different packaging, the overall trade dress of the standard ‘Cheerios’ box, particularly in relation to its use of the yellow background, has been relatively consistent since the 1940s.

General Mills requested registration for its yellow trade dress in relation to “toroidal-shaped, oat-based breakfast cereal” in International Class 30 with a claim of acquired distinctiveness, stating that “consumers have come to identify the color yellow, when used in connection with the goods, comes [sic] from not only a single source, but specifically the Cheerios brand”. In addition to its longstanding history, General Mills submitted evidence including so-called ‘look-for’ advertising directing consumers to identify the cereal based on its yellow box, and a survey in which consumers were shown an image of a yellow cereal box, informed that all text and graphics had been removed and asked to identify the brand of cereal in the box.

The examining attorney refused registration of the application for the yellow box due to a lack of exclusive use of the colour yellow in the marketplace. She determined that in the absence of General Mills’ exclusive use, its evidence did not establish that it had acquired distinctiveness.

On appeal, the TTAB noted the longstanding use of the colour yellow and the extensive advertising efforts to train consumers to associate the colour with General Mills as the source of the cereal, but held that these efforts had not succeeded because of the use of the colour yellow in many other cereal boxes in the marketplace. The TTAB stated that the extensive use of yellow on other cereal boxes made it more likely that consumers would view those boxes as “eye-catching ornamentation customarily used for the packaging of breakfast cereals generally” rather than as a source indicator of Cheerios. The TTAB emphasised that competitors’ use of yellow on similarly shaped packages reduced the impact of General Mills’ claims of consumer perception and therefore the likelihood that consumers would perceive the colour as indicating General Mills as the single source. The TTAB also questioned General Mills’ survey evidence, which did not take into account the possibility that consumers may associate the yellow box with more than one brand of  cereal, including those of competitors.

The TTAB distinguished General Mills’ application for the yellow box from single colour trademarks that have been successfully registered. For example, in Qualitex the goods at issue were normally not given an artificial colour, and so the competition for such colours was relatively low. By contrast, the TTAB stated that it is commonplace to use bright colours, notably yellow, on cereal boxes.

It is interesting to note, considering the longstanding and continuous use by General Mills of its yellow trade dress in association with the ‘Cheerios’ brand, that it apparently never sought to register the yellow colour in combination with other elements, such as the ‘Cheerios’ logo. The TTAB decision suggests that inclusion of another element beyond the yellow box might have fared better. However, efforts to enforce such a  registration against other parties not using a name similar to ‘Cheerios’ may still be challenging, especially in light of this decision.

The article was originally published on September 22nd, 2017 in the World Trademark Review (WTR).

 

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IT’S A BIRD, IT’S A PLANE, IT’S DILUTION BY BLURRING: TTAB SUSTAINS DC COMICS’ OPPOSITION AGAINST APPLICATION FOR SUPER WOMAN OF REAL ESTATE

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In a non-precedential decision in DC Comics v Deanna Rivetti (Opposition 91219851, August 17 2017), the Trademark Trial and Appeal Board (TTAB) sustained an opposition to the registration of Application Number 86240703 for SUPER WOMAN OF REAL ESTATE for “real estate procurement for others” in Class 36 and held that the mark was likely to dilute DC Comics’ famous marks, including SUPERMAN (US Regs 1181536, 1216976, and 1218552), SUPERWOMAN (US Reg 3784483) and the Superman body suit.

Facts

The applicant, Deanna Rivetti, is a real estate agent licensed in the state of California and sought to register the mark in standard characters based on first use of the mark on August 2 2011. While the application was filed on December 19 2014 and Rivetti agreed to disclaim the term REAL ESTATE via an examiner’s amendment eight months later, the examiner did not issue a formal office action at any time during prosecution. Although the miscellaneous statement filed with her application asserted that “DC Entertainment, owner of the ‘Superwoman’ [mark]… has approved the ownership and use” of the mark, such a statement should not have been accepted as evidence of DC Entertainment/DC Comics’ consent to her use and registration of the mark in lieu of a formal letter of consent.

Despite her contention, DC Comics filed a notice of opposition on December 19 2014 based on an alleged likelihood of confusion with, and dilution of, its US registrations and common law rights. These rights include its famous family of SUPER-formative marks, such as SUPERMAN, SUPERGIRL, SUPERWOMAN, SUPER DOG AND SUPER FRIENDS, and the appearance of Superman in his blue bodysuit (and the appearance of Supergirl in her blue top) with the letter ‘S’ inside a five-sided shield on the chest and red cape, in connection with “literary and entertainment works” and “various goods and services”.

Before analysing the basis of opposition, the TTAB noted that Rivetti’s original and second specimens of use were insufficient as they did not display the SUPER WOMAN OF REAL ESTATE word mark sought to be registered (see above). Rather, they were filed with the specimen descriptions of “S for Super Woman” and “S= Super[,] W= Woman[, and t]he picture of the house = Real Estate,” respectively. The submission of the substitute specimen with the letters SW inside a five-sided shield occurred before the examination of the application; however, it is not clear what prompted the amendment. Nevertheless, the TTAB recommended the application be remanded back to the examining attorney for reexamination in the event Rivetti ultimately prevailed in the case.

Dilution by blurring

Dilution by blurring is an “association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of a famous mark”. Dilution may be likely, “regardless of the presence or absence of actual or likely confusion, of competition, or economic injury” (Section 43(c) of the Lanham Act, 15 USC Section 1125(c)).

The TTAB considered the elements that a plaintiff must prove in a board proceeding in order to prevail in a claim of dilution by blurring (Coach (101 USPQ 2d, 1723-24)) – namely, whether:

  • the plaintiff owns a famous mark that is distinctive;
  • the defendant is using a mark in commerce that allegedly dilutes the plaintiff’s famous mark;
  • the defendant’s use of its mark began after the plaintiff’s mark became famous; and
  • the defendant’s use of its mark is likely to cause dilution by blurring.

Rivetti conceded that DC Comics’ marks are famous and became so before her first use of the SUPER WOMAN OF REAL ESTATE mark of August 2 2011, as stated in her application. This admission and use of the mark in commerce satisfied the first, second and third elements of the claim as listed above.

With the first three elements satisfied, DC Comics was required to prove that Rivetti’s use of the SUPER WOMAN OF REAL ESTATE mark was likely to cause dilution by blurring.

The board observed that:

dilution by blurring occurs when a substantial percentage of consumers, on seeing the junior party’s use of a mark in connection with her services, are immediately reminded of the famous mark and associate the junior party’s use with the owner of the famous mark, even if they do not believe that the services emanate from the famous mark’s owner.” (NY Yankees P’ship v IET Prods & Servs Inc, 114 USPQ2d 1497, 1506 (TTAB 2015)). (Citations omitted).

The TTAB considered the following six non-exhaustive factors that it must consider to determine whether a mark is likely to cause dilution by blurring (Section 43(c)(B)(i)-(vi) of the Lanham Act, 15 USC Section 1125(c)(B)(i)-(vi)):

  • the degree of similarity between the mark or trade name and the famous mark;
  • the degree of inherent or acquired distinctiveness of the famous mark;
  • the extent to which the owner of the famous mark engaged in substantially exclusive use of the mark;
  • the degree of recognition of the famous mark;
  • whether the user of the mark or trade name intended to create an association with the famous mark; and
  • any actual association between the mark or trade name and the famous mark.

With regard to the first element and Rivetti’s use of the mark, the board determined that the overall similarity of the marks was “immediately apparent”. While the board does not ordinarily examine an applicant’s trade dress when evaluating a word mark, the trade dress may provide evidence as to the commercial impression created by the mark. The applicant’s above use of the mark as shown on her Facebook page was found to “trigger consumers to conjure up” DC Comics’ famous marks, specifically the famous SUPERMAN mark and the appearance of Superman in his blue bodysuit with the letter ‘S’ inside a five-sided shield on the chest and red cape.

At the time of the decision, Rivetti had begun to use the image bearing the letters ‘SW’; however, the above image of the applicant wearing the famous Supergirl bodysuit and ‘S’ shield appeared on her website when DC Comics filed its notice of opposition. Interestingly, the applicant’s past and existing uses more closely resemble the appearance of Supergirl, in her blue top with the same letter ‘S’ inside a five-sided shield with a red skirt and cape, although the TTAB did not mention this in their decision.

The TTAB also found that DC Comics’ marks are inherently distinctive and Rivetti further admitted its marks are famous, which satisfied the second element.

As there was no evidence of third-party uses of marks similar to the SUPERMAN mark or the appearance of the Superman character, both of which are widely recognised, the board determined both the third and fourth elements were also satisfied.

Rivetti’s use of a blue bodysuit with the letters ‘SW’ inside a five-sided shield on the chest and a red cape were found by the board to prove the applicant’s intention to create an association with DC Comics’ SUPERMAN character and marks, thereby satisfying the fifth element of dilution by blurring. Notably, the TTAB again did not acknowledge the striking similarity of Rivetti’s use of a blue bodysuit and ‘SW’ shield to Supergirl’s bodysuit and shield.

Lastly, as the applicant acknowledged in her response to DC Comics’ interrogatories that “‘clients, other agents, brokers, and prospective clients’ have ‘referred directly or indirectly’” to DC Comics, DC Comics’ marks in connection with the Superman, Supergirl or Superwoman characters, and DC Comics’ marks in connection with her mark, the board found there had been actual association between Rivetti’s and DC Comics’ marks, thereby fulfilling the sixth element.

Decision

Having weighed all six factors in favour of DC Comics, the TTAB sustained the opposition and determined that DC Comics was entitled to judgment based on its claim of dilution by blurring and therefore did not need to additionally examine the likelihood of confusion claim. Rivetti’s Application 86240703 for SUPER WOMAN OF REAL ESTATE for “real estate procurement of others” in Class 36 was therefore refused.

Although Rivetti’s website and Facebook page (Deanna Rivetti Super Woman of Real Estate) continue to resolve and use the applied-for mark, she has not yet filed an appeal of the board’s decision. The deadline to appeal expires on October 19 2017.

It is difficult to evaluate whether DC Comics would have been successful on a claim of likelihood of confusion alone, as Rivetti’s use of the mark in relation to real estate services may have been sufficiently distinct from DC Comics’ use of its family of marks in relation to literary and entertainment works and their licensees’ use of the marks in connection with various goods and services, not including real estate, such that there is no likelihood of confusion as to the source of the respective goods and services.

While Superman can famously leap tall buildings in a single bound, it looks like he may now have the exclusive right to use his name to sell them too.

The article was originally published on October 4th, 2017 in the World Trademark Review (WTR).

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Technology Evolution in the Media Industry Supported by Pilot Program Allowing U.S. Trademark Registrations to be Updated

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Film Video Cassette, Memory CardMedia companies have changed the way they provide their goods and services to consumers as a result of ongoing evolutions in technology. A magazine that once distributed print copies may now provide access to its articles and advertisements online.

Record labels went from reel-to-reel, vinyl and 8-track to audio cassettes and optical discs to MP3 files and streaming audio. Film companies that may once have provided celluloid to theaters, later moved to video cassettes, optical discs, and ultimately MP4 files and online streaming content. Established media companies provide their goods/services under various brands that they protect in the United States through U.S. trademark registrations. Such registrations must be periodically renewed in order to maintain the benefits they provide.

Part of the renewal process includes the requirement to submit acceptable evidence of use to the United States Patent and Trademark Office (USPTO).

Also, there is a risk that another party may have adopted and registered the same or similar trademark for the updated goods/services, which could potentially block the new application from proceeding to registration.

Apart from potential issues with a new application, the lapse of the original registration is the loss of an asset, which may impact the company’s valuation and which may have been specifically referenced in important transactions, including licenses, mergers and acquisitions.

In order to address this issue, the USPTO launched the Technology Evolution Pilot Program (Program) in September 2015.

The Program allows amendments to a registration’s identification of goods/services under limited circumstances where due to evolving technology, the manner or medium by which the content or subject matter of products or services are provided to customers has changed.

Notably through this Program, Time Inc. was able to amend its 1932 registration for the mark THE MARCH OF TIME, which was originally used in relation to film newsreels.

In view of changes in how news was/is consumed, Time ultimately licensed the mark and the corresponding content for online download and streaming use. It was able to renew the registration in relation to those updated goods and services.

Amendments under the Program may be sought through a petition and must include a fee paid to the USPTO in the amount of $100.

A petitioner must declare that it is not possible to show use of the mark on the original goods/services due to evolution in technology, that the mark is still in use on the goods/services in their evolved form, and without the amendment, the petitioner would be forced to delete the original goods/services and lose protection afforded by the registration.

Following a registrant’s petition, the USPTO conducts a search for prior registrations and applications for the same or a highly similar mark in relation to the goods/services in their evolved form.

Proposed amendments that are likely to be accepted are published for a period of thirty days to allow interested third parties to raise objections. In the absence of objections, the petition is granted and the registration, renewed. Unlike applications, which are published in the Trademark Official Gazette, proposed amendments are published on a separate page of the USPTO website, which is also available to the public.

To date, approximately 150 petitions have been filed for the purposes of updating the goods and services in registrations due to evolved technology. Of these, approximately 60 have been granted and 20 have been published without issuance of a decision as yet.

The number of petitions that have been granted or published illustrates that trademark owners who seek to update their registrations in view of changes in technology are moderately likely to succeed.

However, the number of petitions filed seems low considering that the Program has been in operation for over two years, suggesting that the Program is not widely known among trademark owners and practitioners.

The Program allows businesses to maintain their valuable registrations with minimal additional effort instead of prosecuting a new application, which may require significant time and effort. Moreover, a trademark owner is able to retain the original priority date of the registration, which could prove beneficial in later disputes against third parties.

The registration record maintains both the original claimed dates of first use and the claimed dates of first use with regard to the evolved goods/services. However, the Program does not allow for a registration to maintain its incontestability status for the goods/services in their evolved form.

A petitioner must declare that it will not file, or refile, for incontestability for a period of at least five years from the date of acceptance of the amendment. Of course, sometimes changes in technology can be anticipated.

An applicant that looks prospectively may prevent the need to utilize the Program. Businesses should look ahead to new technologies that may feasibly be available for their goods/services at the time of filing in order to prepare applications that will anticipate potential technology evolutions they expect to adopt.

Specifically, businesses may elect to file U.S. trademark applications based on their bona fide intent to use the mark in relation to goods/services that it plans to adopt in future months or years. Of course, some evolutions in technology are not so easily predicted.

While the Program is a useful way for trademark owners to update their registrations, it has not yet been adopted as a permanent practice. While the Program currently does not have an end date, the results of the Program will aid in the determination of whether the USPTO will continue to allow such amendments in the future. However, those who utilize the Program need not worry as regardless of the Program’s outcome, amendments to registrations are permanent.

Lastly, although the Program has proven advantageous for some trademark owners, the process is not as quick as some might hope.

Evaluation of applicant petitions can take a significant amount of time, sometimes several months, to reach a decision and petitioners must often prompt the USPTO to take action.

However, those familiar with the Program should strongly consider making use of its benefits when evolving technology has changed the way goods/services are provided to consumers.

The article was originally published in the September/October issue of the Media Law International E-Zine.

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GENERIC TOP LEVEL DOMAINS MAY NOT BE GENERIC

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In a ruling that could have implications for applicants seeking trademark registration for domain names comprised primarily of descriptive or generic wording, the US District Court for the Eastern District of Virginia has overturned a finding by the Trademark Trial and Appeal Board (TTAB) that the mark BOOKING.COM was generic for travel agency services in Class 39 and hotel reservation services in Class 43.

Facts

The court’s decision in Booking.com BV v Matal (16-425, ED Va August 9 2017) has marked the latest chapter in the applicant’s decade-long effort to register BOOKING.COM trademarks in the United States. This decision concerned three US extensions of international registrations and one national application, all dating back to 2011 and 2012, after a prior US extension sought in 2007 was abandoned in 2009. The applications, which featured the wording ‘booking.com’, were as follows:

   
85485097 79114998
   
79122365 79122366

The examining attorney refused registration of the applicant’s four marks on the basis of genericness and, in the alternative, lack of acquired distinctiveness. In February 2016 the TTAB affirmed the examining attorney’s refusal to register marks on the grounds of genericness. The TTAB also pointed out that the marks, even if not generic, were at best highly descriptive and lacked acquired distinctiveness.

The applicant then filed a civil action pursuant to 15 USC Section 1071(b), seeking a review of the board’s decision on a new record before a US district court, rather than a traditional appeal to the Court of Appeals for the Federal Circuit. In the proceedings before the district court, the evidence was largely similar to the record below, with one notable exception – the applicant offered a survey in which consumers were asked to differentiate between brands and generic wording.

Genericness

In making a determination of genericness, a court first identifies the goods or services at issue and then considers whether consumers would primarily perceive the mark as referring to those goods or services. Here, the court examined the public perception of the marks by first looking at the individual components, finding ‘booking’ to be generic for the applicant’s services based on dictionary definitions and third-party use of the term.

Domain names

The court then turned to the ‘.com’ element. It began by reviewing the treatment of legacy generic top level domains (gTLDs) such as ‘.com’ or ‘.org’ by the Federal Circuit, which has generally held that such gTLDs do not serve any source-indicating function and do not substantially change the commercial impression of an otherwise unregistrable mark. The Eastern District emphasised that the Federal Circuit cautioned against applying a bright-line rule that gTLDs never affect the registrability of a mark, while the usual practice of the US Patent and Trademark Office (USPTO) actually functioned as a per se rule.

The court analogised domain names to phone numbers, as in a 2001 Federal Circuit case involving the mark 1-888-M-A-T-R-E-S-S (In re Dial-A-Mattress, 240 F3d 1341 (Fed Cir 2001)). The Federal Circuit noted that the phone number mark had a mnemonic function that created a source-identifying quality when viewed in its entirety. The USPTO resisted this characterisation, comparing gTLDs to business name identifiers such as ‘Inc’. The court disagreed, writing that domains create a unique name that can be owned by only one entity. The court also noted that the USPTO has registered numerous domain name trademarks that feature descriptive wording with apparently no adverse effects on the ability of others to use that same descriptive wording. The court emphasised that its opinion should not create an unfettered right to register domain name trademarks featuring generic or descriptive wording – it was simply holding that such marks as a whole may be descriptive rather than generic and are protectable with a showing of secondary meaning.

Decision

In light of that opinion, the court considered the evidence of public perception of the overall mark. While the court gave little weight to the USPTO’s evidence of descriptive use of phrases and domains including the term ‘booking’, it found the applicant’s evidence showing that consumers recognised BOOKING.COM as a brand to be persuasive. In particular, the applicant introduced a Teflon survey, in which experts screen consumers by asking questions about their abilities to differentiate generic wording from brand names. Consumers who are able to do so are then asked about the subject terms. In the survey taken by the applicant’s expert, nearly 75% of respondents identified BOOKING.COM as a brand name. After weighing the evidence, the court concluded that the USPTO had not met its burden of showing that BOOKING.COM was generic and that the mark was instead merely descriptive.

The court then reviewed the evidence of secondary meaning. Although the court concluded that on the survey evidence the applicant met its burden of showing acquired distinctiveness for hotel reservation services, the same was not true for travel agency services. Accordingly, the court reversed the TTAB’s finding of genericness and ordered the USPTO to register two of the applicant’s marks in Class 43 for hotel reservation services, but denied the applications for travel agency services in Class 39. The court further remanded the remaining two applications for consideration of whether the design elements also merited protection in Class 43 for hotel reservation services.

Comment

Although the court’s order could open the door to applicants seeking to register their domain names as trademarks, applicants should still think twice about the trademark capability of a domain name that consists of a generic or descriptive term with a gTLD. When an applicant’s trademark is comprised of a merely descriptive or generic word and a gTLD, the addition of the gTLD could help an applicant obtain the benefits of registration – assuming the applicant is able to show acquired distinctiveness. When the mark is not considered generic because of the inclusion of the gTLD component, it may be considered so highly descriptive that the burden of showing acquired distinctiveness may be substantial or, in some circumstances, nearly impossible. At the same time, the inclusion of a gTLD in a trademark registration may also affect the scope and benefits of protection afforded by the registration. For example, even after the marks are registered, the owner’s submission to the Internet Corporation for Assigned Names and Numbers’ (ICANN’s) Trademark Clearinghouse will be refused under ICANN’s rules because of the inclusion of the gTLD element. Because of those limitations, applicants seeking strong trademark protection should still aim for marks that are protectable without the aid of any additional components.

Although the government has not appealed the court’s decision, the matter remains open as the parties resolve outstanding issues related to costs and the specific language of the court’s remand.

“The dispute has not ended with the court’s August decision. The USPTO subsequently moved the court to amend its order, asking to remand the applications for “further administrative proceedings” consistent with the court’s findings, rather than ordering the marks to be registered. The USPTO also moved for the court to order Booking.com to pay its expenses in litigating the appeal pursuant to 15 U.S.C. § 1071(b)(3), which states that “all the expenses of the proceeding shall be paid by the party bringing the case, whether the final decision is in favor of such party or not.” On October 26, 2017, the court issued an opinion regarding the pending motions. The court denied the motion to amend its judgment, finding that its order left no factual questions unresolved and therefore no need for “further administrative proceedings.” Furthermore, the court ordered Booking.com to pay the USPTO’s full expenses in litigating the appeal, including the expenses of the government lawyers who handled the case. Time will tell if this latest order marks the end of the case, or if the matter continues to the Court of Appeals for the Fourth Circuit.”

 The article was originally published on October 13th, 2017 in the World Trademark Review (WTR).

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“So, Your U.S. Trademark Registration is Being Audited”

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Frequently Asked Questions about the USPTO Trademark Registration Use Audit

What does it mean that my U.S. trademark registration has been audited?

The USPTO has issued an Office Action for the purpose of verifying that the registered mark is actually in use in relation to specifically selected goods and/or services identified in the registration beyond those for which an Affidavit of Use (Section 8) was recently filed. The issues raised in the audit are independent of whether the evidence of use submitted in connection with a recently filed Affidavit of Use was acceptable.

Why did my U.S. trademark registration get audited?

The USPTO randomly selected your registration from the pool of registrations in which maintenance or renewal filings were recently submitted.

The USPTO implemented a program in March 2017 to audit trademark maintenance and renewal filings for the purpose of ensuring that trademark registrations were not being maintained in connection with goods and services for which the marks are no longer in use or for which use never commenced. Under the audit program, the USPTO selects approximately 10% of maintenance and renewal filings and issues Office Actions requiring additional proof of use of two goods or services specifically selected by the USPTO .

Why did the USPTO implement an audit program?

In the United States, trademark rights are tied to actual use of the trademark in U.S. commerce. The USPTO’s audit program was instituted in response to growing concerns that the trademark register is cluttered with registrations that cover goods and services for which the registrant has not used or is no longer using the mark and is therefore not entitled to registration. These registrations may serve as obstacles to trademark owners with legitimate interests in registering their trademarks. For more on these concerns, see our article.  For more on the USPTO’s efforts to clean up the trademark register, see our article.

Is a response to the audit Office Action mandatory?

Yes. Failure to respond to the Office Action will result in cancellation of the registration in its entirety, even if the originally submitted specimen(s) was/were considered acceptable for other goods and services. For information on the consequences of filing a response admitting to non-use of the selected goods or services or providing specimens of use that are deemed unacceptable, see further below.

How do I respond to the Office Action?

Owners of registrations that have been selected for the audit must submit proof of use for two specifically identified goods or services in the trademark registration, listed in the Office Action, along with a declaration that the mark was actually used in U.S. commerce in connection with those and all remaining goods or services when the relevant maintenance or renewal documents were filed.  The requirements for the proof of use to be acceptable are more stringent than those needed to support a pending application or to maintain or renew an existing registration in the normal manner.

In response to the Office Action, the registrant should submit evidence clearly demonstrating that the trademark is used in connection with those two goods or services. If the registrant is unable to submit acceptable proof of use for either or both of those two items, the registrant should delete those items and any other goods or services identified in the registration for which the registrant cannot provide sufficient proof of use. Deletion of either of the specifically selected goods or services may result in a second Office Action requiring proof of use for all remaining goods and/or services for which proof of use is not of record.

What are the costs of responding to the audit?

There are no official fees to respond to the Office Action. Ladas & Parry has set a fixed service fee [PD1] for reporting and responding to each Office Action [PD2] resulting from the audit.

What constitutes acceptable evidence of use for the audit?

The requirements for acceptable specimens are more stringent during the audit process.

Acceptable proof of use for goods includes photographs that show the mark on the actual goods or packaging, or photographs of displays associated with the actual goods at their point of sale. While the normal requirements permit submission of a mere tag or label, tags or labels not shown affixed to the goods are unacceptable proof of use in response to an audit.  Similarly, packaging that does not show or identify the goods therein is not acceptable proof of use in this context.

Acceptable proof of use for services includes signs, photographs, brochures, website printouts or advertisements that show the mark used in the actual sale or advertising of the services.

What are the consequences of deleting the selected goods or services from my registration?

If the response includes a request to delete the goods or services subject to the audit, the Examining Attorney will issue a second Office Action requiring proof of use for all remaining goods or services.

A request to delete either or both of the specifically selected goods is effectively treated as an admission that the mark was not actually in use in U.S. commerce at the time the registrant filed its maintenance and renewal declarations in connection with the remaining goods or services identified in the registration.

What happens if the evidence of use I submit in response is not acceptable?

If the proof of use submitted does not meet the requirements of the audit, the Examining Attorney may issue a second Office Action requiring proof of use for all remaining goods or services. Therefore, registrants should be thorough when reviewing their registrations and making any changes to the identified goods or services.

What are my options for challenging the USPTO’s decision?

If the USPTO does not accept the evidence of use submitted in response to the audit, there may be options to challenge the refusal. For example, the registrant may be able to submit substantive arguments against the refusal, submit additional evidence, or appeal the decision to the Trademark Trial and Appeal Board or to a U.S. court.  Of course, any such actions are likely to involve substantial costs.

What can I do to prevent my registrations from getting audited?

Trademark owners can take steps to minimize the chances of an audit or the impact of an audit on their own portfolios.

First, trademark owners should be sure to only file trademark applications that identify goods and services for which they actually use or intend to use the mark. Second, trademark owners should have document retention practices to preserve evidence of actual use of their mark in connection with covered goods and services during the life of the registration. Such practices may also be useful to preserve evidence of the bona fide intent to use a trademark for applications filed on the basis of intent to use, or for defense purposes in the event of a challenge to the validity of a registration. Because evidence of use before the USPTO must be current, trademark owners should be sure to update this evidence periodically, and consider providing updated evidence to their outside counsel.

Trademark owners may also wish to consider providing the USPTO with additional specimens of use during the initial filing of maintenance and renewal documents in order to proactively address the issues that would potentially be raised by an audit.

Finally, trademark owners should be sure to carefully review the identifications of goods and services in trademark registrations subject to maintenance filings and delete items for which use has either ceased or never commenced.

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The European Union General Data Protection Regulation (GDRP): An Introduction

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The European Union (EU) General Data Protection Regulation (GDPR 2016/679) will take effect on May 25, 2018. This regulation provides general guidance on what is needed for compliance, however many policies and procedures are still being written.

The main purpose of the regulation is to protect the personal data of EU citizens and will apply to the processing of this data by data controllers and data processors regardless of whether the processing takes place in the EU.

The regulation provides individuals with the following rights:

  • Rights on the collection, use and disclosure of their personal data
  • Right to obtain information about whether their personal data is being processed and if so, where and for what purpose
  • Individuals shall be provided with opt-in rights for the use of their data and in addition, entities are required to document their opt-in procedures

Entities are required to:

  • Give prompt notice of data breaches
  • In situations where notification of a data breach is mandatory, notification must be made within 72 hours of first becoming aware of the breach
  • Data controllers and processors must document their standard practices for processing data and their system for receiving and managing individuals’ requests about their personal data

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DATA PRIVACY LAWS: WHAT CAN BE PROTECTED?

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Data Protection, Data PrivacyData privacy laws throughout the world are directed to protecting information that can be used to identify an individual. How this information is defined varies based on the jurisdiction and different laws but terms commonly used are:

  • Personally identifiable information (PII)
  • Sensitive personal information (SPI)
  • Sensitive information
  • Personal data
  • Sensitive personal data or personal information

The definition of these terms may be found in the legislation or regulations themselves, other legislation and regulations, national and local standards and case law.

Information that is or may be protected under data privacy laws either alone or in combination with other information include:

  • Full name
  • Birth date and birth place
  • Social security number or other state or national identification number
  • Home address
  • Email address(es)
  • Telephone number(s)
  • Passport number
  • Fingerprints & facial recognition
  • Retina and iris scans
  • Voice patterns, and other biometric information
  • Genetic and health information
  • Racial or ethnic origin
  • Religious & political beliefs
  • Sexual orientation
  • IP address
  • Driver’s license number
  • Login credentials and passwords
  • Financial information
  • Memberships
  • Criminal records
  • Economic status
  • Educational institutions attended

Safeguarding personal information that can be combined to identify an individual requires strategic planning. Certain information that is publicly available such as full name and address may be sufficient to identify an individual but this information although publicly available may still be protected under data privacy laws depending on what type of private company or organization has this information in its records.

The post DATA PRIVACY LAWS: WHAT CAN BE PROTECTED? appeared first on Ladas & Parry LLP.

Allegations of Use in U.S. Trademark Applications Based on Intent to Use

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“Intent to use” (“ITU”) trademark applications must be successfully amended to allege use in U.S. Commerce before proceeding to registration. The applicant has six months from the issuance of a Notice of Allowance (“NOA”) or any extension thereof to commence use in U.S. Commerce and submit a Statement of Use (“SOU”) or file a request for an extension of time to commence use (“RFE”).1

The appropriate step depends on whether the applicant (or its licensee(s)):

  • has commenced use on all of the applied-for goods/services;
  • has not commenced use on any of the applied-for goods/services; or
  • has commenced use on only some of the applied-for goods/services.

The sections below address each of these circumstances separately.

  1. * An alternative, if applicable, is to complete the process of amending to a foreign application or registration basis, thereby circumventing the pre-registration use requirement.

The post Allegations of Use in U.S. Trademark Applications Based on Intent to Use appeared first on Ladas & Parry LLP.

What qualifies as acceptable Use in U.S. Commerce?

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The mark must be used “in Commerce” and in good faith in the ordinary course of trade. While the USPTO will generally not conduct an inquiry, the applicant must claim use that qualifies as “Use in U.S. Commerce”.  What qualifies as acceptable Use in Commerce is explained below:

The post What qualifies as acceptable Use in U.S. Commerce? appeared first on Ladas & Parry LLP.

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