INTELLECTUAL PROPERTY YEAR IN REVIEW

Transcription

1 INTELLECTUAL PROPERTY YEAR IN REVIEW Presented By: Magdalena Berger, Esq. - Moderator Robert L. Raskopf, Esq. Sapna Palla, Esq. Jane Chuang, Esq.

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3 INTELLECTUAL PROPERTY YEAR IN REVIEW: TRADEMARK LAW Presented By: Robert L. Raskopf, Esq. Quinn Emanuel Urquhart & Sullivan, LLP New York, NY

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5 INTELLECTUAL PROPERTY YEAR IN REVIEW: TRADEMARK LAW Robert Raskopf, Partner, Quinn Emanuel Urquhart & Sullivan, LLP 2016 has been a rich year for trademark law. The Supreme Court is set to rule on whether the provision of the Lanham Act that prevents registration of disparaging trademarks violates the First Amendment; several circuits have lowered the bar for what it means to use a trademark in commerce, including in a foreign country; and the nominative fair use landscape has been further complicated nationwide. Courts have also issued key rulings on recovery of profits for non-willful infringement, upheld parody in consumer products, and come to differing conclusions regarding attorney s fees under Sections 1117(a) and 1071(b)(3) of the Lanham Act. Finally, the impact of the Trans-Pacific Partnership Free Trade Initiative (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) remains an open question, as the prospect of new free trade agreements looks extremely bleak. DISPARAGING TRADEMARKS: THE REDSKINS & THE SLANTS The central issue in both Pro-Football, Inc. v. Blackhorse 1 and In re Tam 2 is whether Section 2(a) of the Lanham Act, which allows the U.S. Patent and Trademark Office ( USPTO ) to refuse to register marks that may disparage... persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute, violates the Free Speech Clause of the First Amendment. The team in Pro-Football (the Redskins ) and the band in In re Tam (the Slants ) were both denied the benefit of trademark registration because their respective marks were found by the USPTO to be disparaging. In separate legal cases, the Redskins and the Slants have since argued that Section 2(a) is unconstitutional because it violates the First Amendment by discriminating against unpopular speech. In the Redskins case, the Trademark Trial and Appeal Board ( TTAB ) of the USPTO voted to cancel six of the team s trademarks, holding that the term redskins was disparaging to a substantial composite of Native Americans. 3 The team subsequently filed an appeal to the U.S. District Court for the Eastern District of Virginia, which denied the team s request to overturn the TTAB. The district court held that the federal trademark program qualified as government F. Supp. 3d 439 (E.D. Va. 2015) F.3d 1321 (Fed. Cir. 2015) (en banc), cert. granted sub nom. Lee v. Tam, 137 S. Ct. 30 (2016). 3. Blackhorse v. Pro-Football, Inc., 111 U.S.P.Q.2d 1080, 2014 WL , at *29 (T.T.A.B. 2014). 1

6 speech under both the Supreme Court s analysis in Walker v. Texas Division, Sons of Confederate Veterans, 135 S. Ct (2015), and the Fourth Circuit s mixed/hybrid speech test. 4 Therefore, under Rust v. Sullivan, 500 U.S. 173 (1991), the program was exempt from First Amendment scrutiny. 5 The district court further held that dictionary evidence, scholarly and media references, and statements from individuals in the referenced group demonstrated that the Redskins Marks consisted of matter that may disparage a substantial composite of Native Americans during the relevant time period. 6 A few months later, in Tam, the Federal Circuit reached the opposite conclusion. Performer Simon Shiao Tam fronts an Asian American rock band known as the Slants. When Tam tried to register the band s name as a trademark in 2011, the USPTO denied his application, stating that the name was likely to disparage a significant number of Asian Americans. 7 Appealing to the Federal Circuit, the Slants argued that, [i]f there is a bedrock principle underlying the First Amendment, it is that the government may not prohibit the expression of an idea simply because society finds the idea itself offensive or disagreeable. 8 The Federal Circuit ultimately agreed with Tam, holding in an en banc opinion that the disparaging provision of the Lanham Act is facially invalid because it permits viewpoint-based discrimination and allows the government to deny trademark protection to a mark based on the message it conveys. 9 As a result, the court held that the USPTO could not deny Tam (or any other applicant) trademark protection under the Lanham Act based on this provision. The U. S. government subsequently petitioned the Supreme Court to take the case. In September, the Supreme Court granted the government s petition and announced that it would consider the case. The case is set for argument on Wednesday, January 17, 2017, with a decision 4. See Pro-Football, 112 F. Supp. 3d at Id. at 463 ( Rust stands for the principle that when the government creates and manages its own program, it may determine the contents and limits of that program without violating the First Amendment. (internal quotation marks omitted)). 6. Id. at Tam disagrees, arguing that the point of the band s name is to reclaim a racial slur and use it as a badge of pride. See Robert Barnes, Supreme Court to Review Case Important to Redskins Trademark Fight, WASH. POST (Sept. 29, 2016), 8. Brief on Behalf of Appellant at 54, In re Tam, 808 F.3d 1321 (Fed. Cir. 2015) (en banc), 2014 WL (quoting Texas v. Johnson, 491 U.S. 397, 414 (1989)). 9. See Tam, 808 F.3d at

7 expected in summer Meanwhile, Pro-Football remains pending before the Fourth Circuit but has been placed in abeyance until the Supreme Court rules in Tam. RELAXING THE MEANING OF IN COMMERCE UNDER THE LANHAM ACT: FOREIGN TRADEMARKS & DE MINIMIS SALES In March, in Belmora LLC v. Bayer Consumer Care AG, 10 the Fourth Circuit decided whether Germany-based corporation Bayer has standing to bring a false advertising/false association claim under Lanham Act 43(a) to stop an unauthorized third party from registering a mark, Flanax, despite the fact that Bayer does not own a U.S. registration for the mark and has not used the mark in U.S. commerce. Instead, Flanax is the brand name under which Bayer sells the painkiller Aleve in Mexico. In 2014, Bayer won a ruling from the TTAB that canceled Belmora LLC s registration for Flanax. In its decision, the TTAB concluded that Belmora purposely [misrepresented the source of its goods] by not only copying petitioner s mark and logo and, for several years, significant aspects of its packaging but also by repeatedly holding itself out as the source in the United States of the product sold for decades under the same mark in the bordering country of Mexico. 11 The TTAB found that Belmora s actions were aimed at deceiving the public and in particular, Mexican immigrants into thinking that its goods actually came from Bayer. 12 In February 2015, Judge Gerald B. Lee of the Eastern District of Virginia reversed the TTAB s decision, holding that because the German company had never used Flanax in U.S. commerce, its interests [did] not fall within the zone of interests Congress intended to protect under Section 43(a) of the Lanham Act, and therefore it had no standing to bring the claim. 13 On appeal, the Fourth Circuit disagreed, holding that Bayer could sue Belmora in the United States for using Bayer s foreign brand name Flanax despite the fact that the Bayer had never used the mark in the United States. 14 The Fourth Circuit noted that the Lanham Act s plain language contains no unstated requirement that a 43(a) plaintiff have used a U.S. trademark in F.3d 697 (4th Cir. 2016). 11. Bayer Consumer Care AG v. Belmora LLC, 110 U.S.P.Q.2d 1623, 2014 WL , at *13 (T.T.A.B. 2014). 12. Id. 13. Belmora LLC v. Bayer Consumer Care AG, 84 F. Supp. 3d 490, 501 (E.D. Va. 2015). 14. Belmora, 819 F.3d

8 U.S. commerce to bring a Lanham Act unfair competition claim, 15 and remanded the case for further proceedings consistent with its opinion. 16 On October 20, 2016, Belmora filed a petition for a writ of certiorari with the Supreme Court. 17 Bayer has until January 20, 2017 to file its response. 18 The Federal Circuit also lowered the bar this year for what it means to use a trademark in commerce, though not in the international arena. In Christian Faith Fellowship Church v. Adidas AG, 19 the Federal Circuit held that even though the Christian Faith Fellowship Church had only sold $38.34 of its ADD A ZERO branded merchandise to an out-of-state consumer, the mark s use was still in commerce under the Lanham Act. Adidas had filed for trademark registration for its mark ADIZERO, but the USPTO denied the request because it was likely to cause consumer confusion with a church s preexisting ADD A ZERO trademark. Though the TTAB overturned the USPTO, finding the sale de minimis, 20 the Federal Circuit disagreed. Relying on decades old Commerce Clause jurisprudence, including the seminal case Wickard v. Filburn, 21 the Federal Circuit held that sales like the church s, when considered in the aggregate, had a sufficient effect on interstate commerce so as to permit congressional regulation, including to protect associated marks because they are used in commerce under the Lanham Act. 22 NOMINATIVE FAIR USE: AN INCREASINGLY DISJOINTED DOCTRINE In May, the Second Circuit decided International Information Systems Security Certification Consortium Inc. v. Security University LLC 23 adopting for the first time a Second Circuit test for 15. Id. at 710. Using the two-prong test established by the Supreme Court in Lexmark International Inc. v. Static Control Components, Inc., 134 S. Ct (2014), the Fourth Circuit analyzed whether Bayer was in a position to properly allege that it had been or would likely be damaged by Belmora s action. 16. Id. at Belmora previously filed a petition for reconsideration en banc with the Fourth Circuit, which the Fourth Circuit denied. 18. In another case dealing with cross-border protection of brands, in Trader Joe s Co. v. Hallatt, 835 F.3d 960 (9th Cir. 2016), the Ninth Circuit permitted U.S. grocer Trader Joe s to bring a claim under the Lanham Act for conduct occurring almost entirely in Canada (a country where Trader Joe s conducts no business), that may nevertheless dilute Trader Joe's brand in the United States F.3d 986 (Fed. Cir. 2016). 20. Adidas AG v. Christian Faith Fellowship Church, 2015 WL , at *7 (Sept. 14, 2015) U.S. 111 (1942) F.3d at F.3d 153 (2d Cir. 2016). 4

9 trademark law s nominative fair use doctrine, and adding to a growing circuit split over how to apply the doctrine in the process. Nominative fair use allows someone to use a protected trademark to refer to, comment upon, or offer a comparison with the mark holder s product or service. 24 However, there has long been uncertainty over whether nominative fair use is an affirmative defense that outright excuses conduct causing consumer confusion, or merely a way to decide whether confusion is likely. Even before the Second Circuit s decision in Security University, many disparate legal rules for addressing nominative fair use already existed across the U.S. Courts of Appeal, with the Third Circuit treating nominative fair use as an affirmative defense, 25 and the Ninth Circuit adopting a three-prong test for determining likelihood of confusion in cases involving nominative fair use. 26 Today, a patchwork of legal standards exist. CIRCUIT COURT RULES PRIOR TO SECURITY UNIVERSITY CIRCUIT RULE CASE First Third Fourth Fifth Nominative fair use to be considered after Plaintiff meets burden of establishing likely confusion, but has not adopted a particular approach to the nominative fair use doctrine (i.e., whether the doctrine should be treated as an affirmative defense). Nominative fair use is an affirmative defense over which defendant bears the burden of proof (triggered after Plaintiff meets its initial burden to show likelihood of confusion). Defendant must then show: (1) the use of plaintiff s mark is necessary to describe both the plaintiff s product or service and the defendant s product or service; (2) the defendant uses only so much of the plaintiff s mark as is necessary to describe plaintiff s product; and (3) defendant s conduct or language reflect the true and accurate relationship between plaintiff and defendant s products or services. Nominative fair use is an affirmative defense, but no specific test adopted for determining whether the defense has been established. Nominative fair use factors considered in conjunction with likelihood of confusion factors, including: (1) defendant may only use so much of the mark as necessary to identify the product or service, and (2) defendant may not do anything that Swarovski Aktiengesellschaft v. Bldg. No. 19, Inc., 704 F.3d 44, 53 (1st Cir. 2013). Century 21 Real Estate Corp. v. Lendingtree, Inc., 425 F.3d 211, 222 (3d Cir. 2005). Radiance Found., Inc. v. NAACP, 786 F.3d 316, (4th Cir. 2015). Bd. of Supervisors for La. State Univ. Agric. & Mech. Coll. v. Smack Apparel Co., 550 F.3d MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION 23:11 (4th ed.). 25. Century 21 Real Estate Corp. v. Lendingtree, Inc., 425 F.3d 211, 222 (3d Cir. 2005). 26. New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302 (9th Cir. 1992) (applying threeprong test for nominative fair use in place of the Ninth Circuit s standard multi-factor test for likelihood of confusion). 5

10 Sixth Ninth suggests affiliation, sponsorship, or endorsement by the mark holder. Rejected the Ninth Circuit approach and declined to recognize the defense. The nominative use fair use test replaces the test for consumer confusion. Courts must consider whether: (1) the trademark holder s product or service was readily identifiable without use of the mark; (2) the defendant used more of the mark than necessary; or (3) the defendant falsely suggested he was sponsored or endorsed by the trademark holder. 465, 489 (5th Cir. 2008). PACCAR Inc. v. Telescan Techs. LLC, 319 F.3d 243, 256 (6th Cir. 2003). New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302, 308 (9th Cir. 1992). In Security University, the Second Circuit charted a new path. First, the Court refused to treat nominative fair use as an affirmative defense (as in the Third Circuit), stating that [i]f Congress had wanted nominative fair use to constitute an additional affirmative defense, it would have provided as such. 27 However, rather than adopting the Ninth Circuit s three-prong approach, the court instead created a new test for district courts within the Second Circuit to apply in conjunction with the existing eight-factor Polaroid test for likelihood of confusion. The Second Circuit held that: When considering a likelihood of confusion in nominative fair use cases, in addition to discussing each of the Polaroid factors, courts are to consider: (1) whether the use of the plaintiff s mark is necessary to describe both the plaintiff s product or service and the defendant s product or service, that is, whether the product or service is not readily identifiable without use of the mark; (2) whether the defendant uses only so much of the plaintiff s mark as is necessary to identify the product or service; and (3) whether the defendant did anything that would, in conjunction with the mark, suggest sponsorship or endorsement by the plaintiff holder, that is, whether the defendant s conduct or language reflects the true or accurate relationship between plaintiff s and defendant s products or services. 28 Thus, the Second Circuit s decision not only created a complex, factor-intensive test that seems difficult for defendants to satisfy at the motion to dismiss or summary judgment stage, but it also added to the growing inconsistency throughout the country over how the nominative fair use doctrine should be applied in trademark cases. On September 15, 2016, defendants filed a petition for a writ of certiorari with the Supreme Court. On December 7, the petition was distributed for the conference of January 6, F.3d at Id. at

11 RECOVERY OF PROFITS FOR WILLFUL INFRINGEMENT Under the Lanham Act, plaintiffs who have established a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, [or] a violation under section 1125(a)... shall be entitled... subject to the principles of equity, to recover (1) defendant s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. 29 The Courts of Appeal are split on whether proof of willfulness is required to recover the infringer s profits under Section 1117(a), and the Supreme Court has never addressed the issue. 30 In 2016, the Federal Circuit added to this split, holding in Romag Fasteners, Inc. v. Fossil, Inc. that, under Second Circuit law, a trademark owner can only recover profits from an infringer for willful infringement. 31 In Romag Fasteners, the plaintiff argued that when Congress amended the Lanham Act in 1999 to provide monetary damages for willful dilution, it chose to make willful infringement a prerequisite to recovery of monetary relief for trademark dilution, but when Congress chose not to insert willful before violation under section [1125(a)], [it] made plain that it did not intend willful infringement to be a prerequisite to recovery of monetary relief for the other types of infringement covered by that section, including the sale of counterfeits. 32 The Federal Circuit disagreed, holding that the 1999 amendment to the Lanham Act left the law where it existed before Accordingly, the Federal Circuit followed Second Circuit precedent, which required willfulness in order to disgorge profits. 34 However, the Federal Circuit s ruling left a conflict among the courts of appeals as to whether willfulness was required for recovery of profits, 35 and on August 12, 2016, Romag Fasteners filed a petition for a writ of certiorari with the Supreme Court. The Supreme Court has yet to rule on the petition U.S.C. 1117(a) (emphasis added). 30. See Romag Fasteners, Inc. v. Fossil, Inc., 817 F.3d 782, 785 (Fed. Cir. 2016) (describing the split among the Circuits). 31. The Federal Circuit applied Second Circuit law to this issue because it did not arise in the context of patent law. Id. at Id. at 788 (quoting Appellant s Br. at 37) (internal quotation marks omitted). 33. Id. at Id. 35. Id. 7

12 PARODY IN CONSUMER PRODUCTS: CAN LOUIS VUITTON TAKE A JOKE? In Louis Vuitton Malletier SA v. My Other Bag Inc., 36 Louis Vuitton brought suit against My Other Bag ( MOB ) for trademark dilution and infringement under the Lanham Act. MOB sells canvas totes with the text My Other Bag... on one side and a drawing meant to evoke a luxury handbag on the other. 37 In his opinion awarding summary judgment to MOB, Judge Jesse M. Furman of the Southern District of New York described the totes as obviously parodic, and remarked that perhaps Louis Vuitton cannot take a joke. 38 Ruling that MOB totes were protected by trademark law s parody defense, Judge Furman found that no triable issue of fact existed on the likelihood of confusion, and called defendant s use of the Louis Vuitton mark an obvious parody or pun, readily so perceived, and unlikely to cause confusion among consumers. 39 With respect to Louis Vuitton s trademark dilution claim, Judge Furman further opined that, [i]f anything, [defendant s use] is likely only to reinforce and enhance the distinctiveness and notoriety of the famous brand, and cautioned Louis Vuitton that sometimes it is better to accept the implied compliment in parody and to smile or laugh than it is to sue. 40 Louis Vuitton, disregarding Judge Furman s advice to smile and move on, appealed the judgment to the Second Circuit. At a hearing on December 7, 2016, Judge Gerard E. Lynch couldn t contain his own laughter when counsel for Louis Vuitton argued that MOB did not intend to parody the Louis Vuitton Brand. This is a joke, Judge Lynch remarked. I understand you don t get the joke. But it s a joke. 41 On December 22, 2016, a three-judge panel upheld Judge Furman s decision and tossed out the lawsuit on the same grounds. ATTORNEY S FEES UNDER LANHAM ACT 1117(a) & 1071(b)(3) The fee-shifting provision in Section 1117(a) of the Lanham Act allows the court in exceptional cases to award reasonable attorney fees to the prevailing party. 42 This year, the Fifth and F. Supp. 3d 425 (S.D.N.Y. 2016). 37. Id. at Id. 39. Id. at Id. at 445 (internal quotation marks omitted). 41. Pete Brush, 2nd Circ. Judge Ready to Laugh Louis Vuitton out of Court, LAW360 (Dec. 7, 2016), U.S.C. 1117(a). 8

13 Ninth Circuits both held that the Supreme Court s totality of the circumstances analysis in Octane Fitness 43 which created a standard for determining the availability of fee-shifting in exceptional cases in the context of patent law should also apply to trademark cases. 44 Several courts have also recently considered the issue of attorney s fees under a different provision of the Lanham Act, Section 1071(b)(3), which requires plaintiffs to pay for the USPTO s expenses. In 2015, the Fourth Circuit answered the question of whether expenses under Section 1071(b)(3) includes payment of the USPTO s attorney s fees in the affirmative, but a year later, the Eastern District of Virginia side-stepped the Fourth Circuit in light of an intervening Supreme Court opinion. The Fourth Circuit Leads... The central issue on appeal in Shammas v. Focarino 45 was whether Section 1071(b)(3) of the Lanham Act, which grants the USPTO the right to recover costs associated with a de novo action in federal district court, included the right for the USPTO to recover attorney s fees. The section provides 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, unless the expenses are unreasonable. 46 In Shammas, the plaintiff appealed a TTAB decision that denied his application for the mark probiotic with respect to fertilizer on the ground that the term was generic and descriptive. 47 After the district court affirmed the TTAB s decision, the USPTO argued that it was entitled to recovery of more than $35,000 in attorney s fees. 48 The plaintiff disagreed, noting that such an interpretation of the statute would fly in the face of the American Rule, which prohibits feeshifting from loser to winner. 49 Basing its decision on Section 1071(b)(3) s language that the party bringing a case shall pay all the expenses of the proceeding, and that the plain meaning 43. Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014). 44. See Baker v. DeShong, 821 F.3d 620, 624 (5th Cir. 2016) ( In light of the Supreme Court s clear guidance under 285 and given the parallel purpose, structure, and language of 1117(a) to 285 we join our sister circuits in their reading of exceptional under Octane Fitness and construe the same meaning here. ); SunEarth Inc. v. Sun Earth Solar Power, 650 Fed. Appx. 473 (9th Cir. 2016) (similar) F.3d 219 (4th Cir. 2015), cert. denied sub nom. Shammas v. Hirshfeld, 136 S. Ct (2016) U.S.C. 1071(b)(3) F.3d at Id. 49. Id. at

14 of the term expenses includes attorney s fees, the district court held that the USPTO was entitled to recovery of its attorney s fees. 50 In a 2-1 decision, a Fourth Circuit panel upheld the District Court s ruling. The panel noted that the Supreme Court has held that a statute that mandates the payment of attorneys fees without regard to a party s success is not a fee-shifting statute that operates against the backdrop of the American Rule. Thus, the Fourth Circuit held that its interpretation of Section 1071(b)(3) did not conflict with the American Rule, because Section 1071(b)(3) applies to the party who brings the action regardless of outcome. 51 Shammas petitioned for a writ of certiorari, but the Supreme Court denied his petition on March 7, but the Eastern District of Virginia Declines to Follow (in Light of Baker Botts) In February 2016, Judge Gerald B. Lee of the Eastern District of Virginia held in Nankwest, Inc. v. Lee 53 that the Shammas court s reading of the American Rule was incorrect, particularly given the Supreme Court s subsequent opinion in Baker Botts v. Asarco. 54 Judge Lee began his analysis by noting the specific and explicit standard articulated in Baker Botts: under this standard, [t]he American Rule requires a statute to expressly indicate a deviation from its bedrock principle that each side pays its own fees. 55 Finding that Section 1071(b)(3) of the Lanham Act neither specifically nor expressly requires plaintiffs to pay their opponent s attorneys fees, Judge Lee held that any deviation from the American Rule under the provision would be unjustified, despite the opposite ruling in Shammas. 56 Judge Lee went on to critique the Shammas court s over-reliance on cases that include the phrase the prevailing party when addressing the American Rule, as though such phrasing was a sufficient basis to conclude that the American Rule applies only in the context of prevailing parties seeking fees from a losing party. 57 Instead, given [that] the Supreme Court s... Baker Botts decision [was issued] after Shammas, [and] specif[ied] a clear standard that directly oppose[d] the exception the Shammas court articulated, Judge Lee wrote that he [wa]s bound 50. Shammas v. Focarino, 990 F. Supp. 2d 587, (E.D. Va. 2014) F.3d at Shammas v. Hirshfeld, 136 S. Ct (2016) F. Supp. 3d 540 (E.D. Va. 2016) S. Ct (2015) F. Supp. 3d at Id. at Id. at

15 to apply Baker Botts to the current case. 58 Judge Lee further held that Section 1071(b)(3) does not specifically and explicitly authoriz[e] attorneys fees, and thus Congress did not speak with [the] heightened clarity to overcome the presumption of the American Rule. 59 As a result, Judge Lee held that a losing party need not pay the USPTO s attorney s fees under Section 1071(b)(3). FREE TRADE AND TRADEMARKS: THE TPP & THE TTIP Roughly one year ago, negotiations were on track, if not completed, toward achieving two major trade agreements containing international trademark provisions the Trans-Pacific Partnership Free Trade Initiative (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). Due to subsequent political changes in prominent negotiating states (mainly the United States), it is now almost certain that neither treaty will be ratified. Lingering IP-related questions regarding these agreements include: Regardless of whether these specific agreements are ratified, which IP provisions will survive or not, and why? What alternative avenues for multilateral adoption of the proposed IP provisions exist, if any? Are broader trade agreements that affect non-ip industries effective and appropriate vehicles for harmonization of IP laws? 58. Id. 59. Id. at

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17 1/10/2017 Intellectual Property Year in Review: Trademark Law Robert Raskopf, Partner Disparaging Trademarks: The Redskins & The Slants The central issue in both Pro-Football, Inc. v. Blackhorse and In re Tam is whether Section 2(a) of the Lanham Act, which allows the U.S. Patent and Trademark Office ( USPTO ) to refuse to register marks that may disparage... persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute, violates the Free Speech Clause of the First Amendment. 1

18 1/10/2017 In Commerce Under the Lanham Act: Foreign Trademarks & De Minimis Sales The Fourth Circuit held in Belmora LLC v. Bayer Consumer Care AG that Bayer could sue Belmora in the United States for using Bayer s foreign brand name Flanax despite the fact that the Bayer had never used the mark in the United States. The court noted that the Lanham Act s plain language contains no unstated requirement that a 43(a) plaintiff have used a U.S. trademark in U.S. commerce to bring a Lanham Act unfair competition claim. In Christian Faith Fellowship Church v. Adidas AG, the Federal Circuit held that even though the Christian Faith Fellowship Church had only sold $38.34 of its ADD A ZERO branded merchandise to an out-of-state consumer, the mark s use was still in commerce under the Lanham Act. Nominative Fair Use The Second Circuit s decision in International Information Systems Security Certification Consortium Inc. v. Security University LLC not only created a complex, factor-intensive test that seems difficult for defendants to satisfy at the motion to dismiss or summary judgment stage, but also added to inconsistency concerning the legal standard throughout the country. 2

19 1/10/2017 Recovery of Profits for Willful Infringement In Romag Fasteners, Inc. v. Fossil, Inc., the Federal Circuit held that, under Second Circuit law, a trademark owner can only recover profits from an infringer for willful infringement. Parody in Consumer Products: Can Louis Vuitton Take a Joke? In his opinion awarding summary judgment to MOB, Judge Jesse M. Furman of the Southern District of New York described the totes as obviously parodic, and remarked that perhaps Louis Vuitton cannot take a joke. As Judge Furman counseled Louis Vuitton, it is better to accept the implied compliment in parody and to smile or laugh than it is to sue. 3

20 1/10/2017 Attorney s Fees Under Lanham Act 1117(a) & 1071(b)(3) The fee-shifting provision in 1117(a) of the Lanham Act allows the court in exceptional cases to award reasonable attorney fees to the prevailing party. Several courts have also considered the issue of attorney s fees under a different provision of the Lanham Act, 1071(b)(3), which requires plaintiffs to pay for the USPTO s expenses. Free Trade & Trademarks: The TPP & The TTIP Regardless of whether these specific agreements are ratified, which IP provisions will survive or not, and why? What alternative avenues for multilateral adoption of the proposed IP provisions exist, if any? Are broader trade agreements that affect non-ip industries effective and appropriate vehicles for harmonization of IP laws? 4

21 INTELLECTUAL PROPERTY YEAR IN REVIEW: PATENTS Presented By: Sapna Palla, Esq. Wiggin and Dana LLP New York, NY

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23 Global IP trends: A guide to recent international considerations for patent rights Sapna Palla and Andrew Bochner, Wiggin and Dana LLP With the rapid progression of technology, companies both large and small are increasingly doing business on a global scale. These companies often consider a global strategy to protect their intellectual property, which is central to their goal of maintaining a large global presence. While treaties such as the Madrid Protocol and Patent Cooperation Treaty offer harmonization of IP standards and certain pan-territorial rights generally, IP procurement and enforcement remains a fragmented system with differing national rights, woven together by a delicate web of international implications. Companies should therefore consider all international implications as part of a global IP strategy. This article discusses the recent trends and provides guidance on navigating the global IP environment. Brexit As a global first-world economy and G-7 stalwart, the United Kingdom represents a vital economy and business market for many multinational companies, from aspirational startups to industrial conglomerates. With IP being vital for companies wishing to maintain their technological edge, the binding vote to leave the European Union (informally referred to as the Brexit) has immediately placed the spotlight on how this impacts global IP portfolios with interests in the UK. European patent applications The European Patent Office (EPO) comprises 38 member states, including the UK. The EPO grants patents, which are then validated in each desired member state. The EPO conducts examination and determines suitability of a patent application for issuance as a patent. The EPO and its parent organization, the European Patent Organisation (EPOrg), are not institutions of the European Union, but instead are governed by a separate agreement, the European Patent Convention. While the EPO represents pan-european interests, it is not bound to the EU, and member status in the EU has no bearing on contracting states of the EPC. Indeed, countries such as Switzerland, Norway and Turkey are EPO member states, but are not members of the European Union. Therefore, the Brexit will not alter the procurement of patent rights in Europe, unless the UK takes the additional step of removing itself as a contracting state of the EPC, which is exceedingly unlikely, as no major political party has even floated such a proposal.

24 The Unitary Patent and Unified Patent Court i. Unitary Patent Unlike the EPO, the proposed Unitary Patent (UP) was legislated by the European Parliament, and extends only to EU member countries. The UP, planned for implementation in early 2017, would confer uniform patent rights in all EU jurisdictions, as opposed to the current EPO regime, which requires costly validation in each EPO country. There would be no post-grant translation requirements, a single renewal fee, and one single enforceable object of property. With the UK being one of the most vital patent jurisdictions in Europe, its exit from the EU presents some difficulties for implementation of the UP. Without alternative agreements, the UK would not benefit from the UP. This would reduce the value and benefit of the UP as the unitary jurisdiction would not include the UK. It remains possible that implementation of the UP will be delayed, in order to determine whether accommodations can or should be made to include the UK under the UP umbrella. Possible negotiations may include whether the UK can somehow remain a party to the UP, or perhaps reciprocity between conferral of UK and UP rights can be arranged. Any modifications at this point, however, are likely to face backlash from at least some EU member states harboring ill will over the Brexit. ii. Unified Patent Court The proposed Unified Patent Court (UPC) would allow enforcement of the UP, in one location, for the entire EU market. The cost benefits of such a system would be tremendous, and the uniformity and predictability of patent rights would drastically increase in Europe. As the enforcement arm of the UP, the UPC would allow more developed patent jurisprudence to spread to less developed EU countries, while reducing overall patent litigation costs and providing uniform EU-wide patent enforcement rights. As it currently stands, the UPC would have seats in three of the biggest EU patent countries: Paris (France), Munich (Germany) and London (UK). As a proxy for their economic prowess, the number of issued patents per annum for these countries emphasizes the relative importance of these countries for European patent rights. With the UPC being an EU institution, the Brexit may force elimination of the London position. Additionally, actions filed in other countries of the EU would no longer be enforceable in the UK, absent a new agreement. Without the UK, with a large commercial and industrial market, as well as strong and developed patent laws, the UPC will certainly lose some of its allure, and the value of a UPC victory in court may be substantially reduced. Since the UK was central to implementation of the UPC, at the very least, the remaining members must renegotiate the terms of this system. Moreover, with the UK s absence, the benefits of the system would be greatly reduced, since any enforcement actions

25 would not cover rights in the UK. Further, English judges, known for their expertise in patent law, would no longer be eligible for judgeship at the UPC, depriving the UPC access to a pipeline of skilled jurists. Time will tell whether the Brexit vote has caused the collapse of the long-awaited and desired European unitary patent system. If the system survives, it will likely not provide all the benefits once-anticipated, since the streamlined costs and predictability will not include UK patent rights. European trademarks EU trademarks and registered designs will remain enforceable in the UK, at least until the Brexit is completed. It remains possible that the UK may offer the option to convert all EU trademarks and designs into UK national rights, so that there is no lapse in coverage. Going forward, once the Brexit has been fully negotiated and completed, it is likely that companies will need to apply for trademarks in the UK, separate from the EU. Domestic implications of international actions The U.S. Supreme Court is currently considering whether U.S. patent rights are infringed as a result of international activities. As part of a global IP strategy, companies must consider what effects, if any, their actions across the globe will have in each jurisdiction. 35 U.S.C. Section 271(f)(1) provides that it is an act of infringement to supply from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States. Thus, the statute prohibits the supply of all or a substantial portion of the components of a patented invention that actively induces the combination of the components abroad. In Promega Corp. v. Life Technologies Corp., 773 F.3d 1338, (Fed.Cir.2014), the Federal Circuit in considering this statute held that a single commodity component can be a substantial portion if it is a sufficiently important part of the invention. The Federal Circuit took the position that substantial means qualitatively important or essential, regardless of the quantitative makeup of the final product, and that nothing in the word portion suggests a need for quantity. On June 27, 2016, the U.S. Supreme Court granted Life Tech s petition for a writ of certiorari on the issue of whether substantial portion must be assessed qualitatively as the Federal Circuit has done or quantitatively as held by the District Court (i.e., substantial portion means multiple components of the patented invention). The Solicitor General, in an amicus brief, argued that substantial must be interpreted quantitatively (i.e., multiple components). The Solicitor General has argued that substantial is a term of quantity, not quality. Therefore, if the Supreme Court interprets the statute in line with the Solicitor General, a small quantity, even if it is the active ingredient, would likely not meet this standard. Alternatively, if the Federal Circuit position is upheld, even an active ingredient forming 1% of the final product would be deemed a substantial portion, and would be sufficient to meet the infringement standard.

26 The Supreme Court will likely not issue a ruling until Companies must be prepared for the possibility that providing a component of a patented invention outside the U.S. may still be enough to be subject to infringement under U.S. law. Patent eligibility: A look at U.S. and European standards Recent developments in U.S. caselaw have warranted a closer look at the differences between the U.S. and European patent-eligibility standards. Historically, software patents have had a much greater degree of success at the U.S. Patent and Trademark Office than at the EPO. Recently, however, it appears that U.S. and European standards may be more closely aligned on this issue than ever before. In comparing the two jurisdictions, the most critical issue may not be the distinction between the differing standards, but instead, the undeveloped state of U.S. patenteligibility jurisprudence as compared to the European standard. The U.S. standard Patentable subject matter is defined in 35 U.S.C. 101 as any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof. Judicially defined exceptions include laws of nature, natural phenomena, and abstract ideas. In Alice the court adopted the two-step test from Mayo for determining patent eligibility. In the first step, the claims are analyzed on whether they are drawn to a law of nature, a natural phenomenon, or an abstract idea. If the claims are drawn to one of these judicially-created exclusions, in the second step it is determined whether the claims add substantially more that is, whether the elements of the claim both individually or as an ordered combination provide an inventive concept sufficient to transform the claimed invention into a patent-eligible one. The resultant test has inherent inconsistencies that, instead of providing clarity as to what constitutes patent-eligible subject matter, have instead only muddied the analysis. First, what constitutes an abstract idea remains elusive, and remains largely undefined by the courts. Instead, courts fall back on the well-known maxim of I know it when I see it, namely an invention is abstract when it has been defined as such. Such a circular definition provides little benefit, and is of minimal use when determining the status of an invention. Additionally, what is substantially more to transform the claim into a patenteligible concept (e.g., what constitutes an inventive concept ) remains a highly subjective test that remains difficult to implement. The European standard Europe has been using the same standard to determine software patent-eligibility for about 30 years. In Europe, claims are analyzed as to their technical character. To grossly oversimplify the concept, European patent law ignores all claimed nontechnical features and determines if the remaining technical features contribute to anything inventive.

27 Article 52(2) of the EPC provides a list of categories excluded from inventions, including computer programs. Article 52(3) limits the exclusions in the categories of 52(2), such that the subject matter in 52(2) is excluded only to the extent that the application relates to the subject matter in 52(2). In the seminal case of T 1173/97 (IBM), it was stated that a computer program product is not excluded from patentability under Article 52(2) and (33) EPC if, when it is run on a computer, it produces a further technical effect which goes beyond the normal physical interactions between program (software) and computer (hardware). 1 The presence of technical character as a result of further technical effect provides the key to this analysis. On its face, European patent eligibility turns on the definition of technical, much like the U.S. now depends on what is the definition of abstract. However, European caselaw is well settled on this term. One definition determines whether a feature provides some effect in the physical world, outside the computer on which it is invented. These same technical features must provide an inventive contribution to the claim. What is clear is that European practice often answers this question by addressing whether there is a technical solution provided to a technical problem. Utilizing this framework, it is highly likely that the proposed technical solution satisfies the technical character requirement. European eligibility discounts normal physical computer actions from determination of technical effect. Thus, any routine programs that run on a computer, such as digital signal transmission, are characterized as normal, and do not play into the technical effect determination. However, where the further effects have a technical character or where they cause the software to solve a technical problem, an invention brings about such an effect may be considered an invention. 2 Examples given by the EPO in IBM include where a piece of software manages... an industrial process or where a computer is the only means, or one of the necessary means, of obtaining a technical effect within the meaning specified above. 3 In applying the standard, the EPO excludes from patent eligibility all those applications which claim an exclusion without any technical effect. Where a mix of technical and nontechnical features are found, the application is not rejected on eligibility grounds, but instead is rejected under inventive step. 4 However, in determining inventive step, the features not contributing to the technical character cannot support a finding of inventive step. 5 Comparing the two The imprecision of the U.S. abstract definition in the step of the Alice test has created a situation where, at a high-enough level, any invention can be boiled down to an abstract concept. Therefore, the patent eligibility of many inventions instead turns on the second test (e.g., the presence of something more ). Not to be outdone, this term too lacks a definition. Instead, the ruling in DDR Holdings v. Hotels.com has become synonymous with what satisfies the second element of the Alice test whether the claimed solution is necessarily rooted in computer technology to overcome a problem specifically arising in the realm of computer networks. 6 Restated, U.S. practice has

28 begun the process of arguing that the second element of the test is satisfied with a technical solution to a technical problem. Disregarding normal physical interactions between program and computer in Europe is akin to U.S. caselaw which argues that the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into patent-eligible invention. 7 In the first step of the test, U.S. eligibility determines whether the claims are directed to an abstract idea, whereas European practice determines whether software-related inventions are nontechnical. In step two, if the U.S. claim recites an abstract concept, there must be something more that transforms the claim into a patent-eligible invention. Likewise, in Europe, it is determined whether the nontechnical invention (i.e., software) provides a further technical effect going beyond the normal physical interaction. It appears that the U.S. and European standards have become more aligned. In keeping with the goal of harmonizing patent rights across the globe, this convergence may serve applicants well in the long term. However, in the short term, the small differences between U.S. and European patent-eligibility, namely, the unsettled definitions of abstract and something more, will have the largest impact. 1 Case T 1173/97, Computer Program Prod./IBM, 1999 O.J. E.P.O IBM at Id. 4 See Case T 641/00, Two Identities/CMVIK, 2003 O.J. E.P.O Id. 6 DDR 773 F.3d at Alice at 2358

29 1/10/2017 Sapna Palla Partner, Wiggin and Dana LLP INTELLECTUAL PROPERTY YEAR IN REVIEW: PATENTS PRESENTED AT NYSBA ANNUAL CONFERENCE JANUARY 24, 2017 September 15, 2015 OT15 TERM IN REVIEW INTELLECTUAL PROPERTY Concept Digital INC iammedia.com Concept Concept - Keynote Presentation Template 1

30 1/10/2017 INTELLECTUAL PROPERTY CUOZZO SPEED TECHNOLOGIES, LLC v. LEE Concept Digital INC The inter parties review provision bars a court from considering whether the PTO was correct in instituting an inter partes review when it did so on 8-0 grounds not specifically mentioned in a third party s review request The PTO has authority to issue a regulation stating that the agency, in inter partes review, shall construe a patent claim according to its broadest reasonable construction in light of the patent disclosure. Concept Concept - Keynote Presentation Template INTELLECTUAL PROPERTY CUOZZO SPEED TECHNOLOGIES, LLC v. LEE Concept Digital INC KEY TAKEAWAYS Decision expected to favor patent challengers Choice of forum important to consider Patentability of claims is expected to differ in Board and Federal Courts because of differing claim construction standards Board as a forum more appealing to patent challengers because of use of the broadest reasonable construction of claims Concept Concept - Keynote Presentation Template 2

31 1/10/2017 INTELLECTUAL PROPERTY HALO ELECTRONICS v. PULSE ELECTRONICS Concept Digital INC Under the Federal Circuit s two-part Seagate test, damages may be increased under Section 284 of the Patent Act only if the patent owner can show, by clear and convincing evidence, both that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent and that the risk of infringement was either known or so obvious that it should have been known... The Supreme Court rejected the Seagate test as unduly rigid and not consistent with the text of Section 284. Concept Concept - Keynote Presentation Template INTELLECTUAL PROPERTY HALO ELECTRONICS v. PULSE ELECTRONICS Concept Digital INC KEY TAKEAWAYS Halo Electronics clarifies the standard for enhanced damages under Section 284 The decision will likely make it easier for plaintiffs to receive enhanced damages, though it remains to be seen how courts will exercise their discretion, particularly in light of the Court s admonishment that enhanced damages should be reversed for egregious cases typified by willful misconduct Regardless, given Halo s lack of clear guidelines about when treble damages are appropriate, the risk posed by patent litigation should be viewed as increased at this time 3

32 1/10/2017 INTELLECTUAL PROPERTY SAMSUNG ELECTRONICS v. APPLE Concept Digital INC ISSUE Whether, where a design patent is applied to only a component of a product, an award of infringer s profits should be limited to those profits attributable to the component Concept Concept - Keynote Presentation Template INTELLECTUAL PROPERTY SAMSUNG ELECTRONICS v. APPLE Concept Digital INC Overturned a $400 Million jury award to Apple for Samsung's infringement of certain Apple design patents relating to smartphones. 8-0 Decision is significant because it addresses the proper measure of damages for infringement of a design patent. Concept Concept - Keynote Presentation Template 4

33 1/10/2017 INTELLECTUAL PROPERTY SAMSUNG ELECTRONICS v. APPLE Concept Digital INC The Supreme Court agreed with Samsung, holding that in the case of a multi-component end product, the relevant "article of manufacture" could only be a component of that end product, whether or not that component is sold separately from the end product. Significantly, however, the Supreme Court declined to give further guidance on what that component would be in the context of the disputed design patents, leaving it to the Federal Circuit to resolve such issues on remand, and assumedly to lower courts to address these issues going forward. Concept Concept - Keynote Presentation Template INTELLECTUAL PROPERTY SAMSUNG ELECTRONICS v. APPLE Concept Digital INC While this decision opens the door to reducing damages awarded for design patent infringement, litigants, damages experts and the lower courts are sure to raise many further questions as to how to apply the Supreme Court's guidance to disputes involving design patents. This decision also shows that both patentees and accused infringers need to carefully consider damage valuation as part of their litigation or licensing strategy, including in the context of design patents. Concept Concept - Keynote Presentation Template 5

34 1/10/2017 OT15 TERM IN REVIEW PATENT CASES TO LOOK OUT FOR IN 2017 Concept Digital INC Concept Concept - Keynote Presentation Template INTELLECTUAL PROPERTY Concept Digital INC SCA HYGIENE PRODUCTS v. FIRST QUALITY BABY PRODUCTS ISSUE Whether and to what extent the defense of laches may bar a claim for patent infringement brought within the Patent Act s six-year statutory limitations period, 35 U.S.C. 286 Zinkwazi.com Concept Concept - Keynote Presentation Template 6

35 1/10/2017 INTELLECTUAL PROPERTY TC Heartland LLC v. Kraft Food Brands Group Concept Digital INC ISSUE Debate over patent venue laws: Whether to impose new limits on where patent lawsuits can be filed. Kenstonlocal.org Concept Concept - Keynote Presentation Template INTELLECTUAL PROPERTY LIFE TECHNOLOGIES CORP. v. PROMEGA CORP Concept Digital INC ISSUE Whether the Federal Circuit erred in holding that supplying a single, commodity component of a multicomponent invention from the United States is an infringing act under 35 U.S.C. 271(f)(1), exposing the manufacturer to liability for all worldwide sales Xcraft.io Concept Concept - Keynote Presentation Template 7

36 1/10/2017 INTELLECTUAL PROPERTY Impression Products Inc. v. Lexmark International Inc Concept Digital INC ISSUE Patent exhaustion: Federal Circuit has decided that foreign sales never exhaust U.S. patent rights, and said that postsale restrictions on patented items are permissible. Impression Products has challenged both those rules. Zinkwazi.com Concept Concept - Keynote Presentation Template OT15 OVERVIEW IMPACT OF JUSTICE SCALIA S DEATH Concept Digital INC Concept Concept - Keynote Presentation Template 8