RENNER OTTO UPDATES. By Stephanie Williams and Nick Gingo

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1 2017 No. 2 RENNER OTTO UPDATES TABLE OF CONTENTS Star Athletica, LLC v. 1 Varsity Brands, Inc. and IP Protection for Fashion Designs, Part II Stephanie Williams and Nick Gingo Closing the Door on 4 Inter Partes Review of U.S. State s Patents John Reulbach, Nick Gingo and Luis Carrion Supreme Court Hears 6 Oral Arguments on Intersection of First Amendment and Trademark Law: Seems to Favor the Constitution Nick Gingo IP5 Updates 7 TaeRa Franklin and Bonnie Smith Star Athletica, LLC v. Varsity Brands, Inc. and IP Protection for Fashion Designs, Part II By Stephanie Williams and Nick Gingo The U.S. Supreme Court holding in Star Athletica v. Varsity Brands, Inc. 1 appears to significantly broaden the scope of copyright protection available to fashion designers. In particular, the Supreme Court held that the arrangement of lines, chevrons, and colorful shapes on the surface of cheerleading uniforms is eligible for copyright protection as separable features of those cheerleading uniforms. IP Protection Available for Fashion Design Fashion designs may receive protection across the entire spectrum of intellectual property, including utility patents, design patents, and copyrights. The scope of protection offered varies depending on the type of intellectual property protection used. Design patents protect the way an article looks (i.e., the ornamental design). A design patent may be granted to anyone who invents a new, original, and ornamental design for an article of manufacture. The ornamental appearance for an article includes its shape/configuration or surface ornamentation applied to the article, or both. Examples of fashion design that may be protected by a design patent include a specific arrangement of rectangular cloth on a piece of clothing 4 or the shape of a hat brim. 5 The content of Renner Otto Updates is for general information purposes only. It does not constitute legal advice or create an attorney-client relationship. The views expressed in any given article are those of the author(s) and not of the firm. Copyright 2017 Renner Otto Boisselle & Sklar, LLP. All rights reserved. For more information, contact Luis A. Carrion at lcarrion@ rennerotto.com or (216) Utility patents protect the way an article operates. A utility patent may be granted to anyone who invents or discovers any new and useful process, machine, article of manufacture or composition of matter, or any new and useful improvement thereof. With regard to fashion, a utility patent might be used to cover the function (rather than the appearance) of an article of clothing. Examples of such protection include a four-in-one jacket 2 and a system for smart clothing to incorporate wearable electronic devices. 3 Copyrights protect original works of authorship including pictorial, graphic, and sculptural works that are fixed in a tangible form of expression. Typically, clothing receives very limited copyright protection outside of fabric designs, which are viewed as works of art. The overall shape of clothing (e.g., neckline, sleeves, and pockets) is not copyright eligible because it is considered to be a useful article that serves the utilitarian function of covering or enclosing the body of the wearer. Many have questioned, however, whether the arrangement of shapes and designs on a piece of clothing should be copyright eligible. Section 101 of the Copyright Act makes pictorial, graphic, or sculptural features of the design of a useful article eligible for copyright protection as artistic works if those features can be identified continued on page 2

2 continued from page 1 separately from, and are capable of existing independently of the utilitarian aspects of the article. But the question remained: is the arrangement of shapes on clothing eligible for copyright protection as a separable feature of the design? And it was this question that was answered by the U.S. Supreme Court in Star Athletica with regard to the following designs for cheerleading uniforms: Star Athletica, LLC v. Varsity Brands In its 6-2 decision, the Supreme Court held in Star Athletica that the arrangement of lines, chevrons, and colorful shapes on the surface of cheerleading uniforms was eligible for copyright protection as a separable feature of those cheerleading uniforms. Writing for the majority, Justice Clarence Thomas acknowledged that there is widespread disagreement over the proper test for implementing section 101 s separateidentification and independent existence requirements. There were multiple methods to determine whether an aspect of an article of clothing is useful, with many of them considering how functional the underlying article was as an independent factor. Based on the statute, the Court held that a feature incorporated into the design of a useful article is eligible for copyright protection only if the feature (1) can be perceived as a two- or threedimensional work of art separate from the useful article and (2) would qualify as a protectable pictorial, graphic, or sculptural work either on its own or fixed in some other tangible medium of expression if it were imagined separately from the useful article into which it is incorporated. Applying this test to surface decorations on cheerleading uniforms, the Court found that the decorations are separable from the uniforms and, therefore, eligible for copyright protection. In particular, the Court discussed imaginatively removing the surface decorations from the uniforms and applying them in another medium such as a painter s canvas. 6 In modifying the copyright separability test, the Court held that it is unnecessary to consider the relative utility of the underlying article itself, separate from the decorative elements. In particular, the Court noted that the statute focuses on whether the separated feature qualif[ies] as a nonuseful pictorial, graphic, or sculptural work on its own and does not require the decision maker to imagine a fully functioning useful article without the artistic feature. 7 The Court clarified that the only copyright eligible feature of the cheerleading uniform is the surface decorations fixed on the uniform fabric, not the shape, cut, and dimension of the uniforms. 8 Additionally, the Court pointed out that its holding is that surface decorations are copyright eligible, not that they are copyrightable. 9 The dissent agreed with the majority s analysis of the law, but concluded that the design features on the cheerleading uniforms are not capable of existing independently of the utilitarian aspects of the article. Writing for the dissent, Justice Stephen Breyer argued that when the decorations are conceptually removed from the cheerleading uniform, they still form the shape of a cheerleading uniform (i.e., the useful article of which the designs are inextricable parts ), and were therefore not separable. 10 In responding to the dissent, the majority stated that the canvas upon which artistic works is fixed is irrelevant to the determination of copyright eligibility. 11 Copyright Protection for Fashion Designs Moving Forward With the new test for copyright separability, the Supreme Court has now opened the door for designers to use copyright to protect the decorative aspects of their designs. Compared to design patents, such protection lasts significantly longer and is typically less expensive to obtain. In addition, copyright protection may actually be broader in scope than design patent protection. While the arrangement of decorative elements on clothing may qualify for design patent protection, as noted by the dissent, 12 the test for design patent infringement makes it difficult to protect against competitors that only slightly alter the arrangement. 13 A copyright claim, on the other hand, might extend to such alterations, given that the decorative elements are considered separate and apart from the underlying article. Going forward, fashion designers should seriously consider using both design patents and copyrights to protect the decorative elements of their designs. Endnotes Stephanie s primary practice focuses on patent preparation and prosecution, including infringement, validity, freedom-to-market and patentability studies. She has handled patent matters for domestic and international clients involving a variety of technologies in the chemical and mechanical arts, including small scale reactors, fuel additives, polymers, building materials and imaging devices. Nick is a partner at Renner Otto and has experience in preparing and prosecuting both design and utility patent applications in a wide variety of technical fields, as well as preparing and prosecuting trademark applications. Nick s practice also extends to counseling clients with respect to intellectual property matters including policing, licensing and transferring patents, trademarks, copyrights and trade secrets. Finally, Nick has extensive continued on page 3 2

3 continued from page 2 litigation experience enforcing and defending against all types of intellectual property in state and federal courts and administrative proceedings at the USPTO. 1 No , 2017 WL (U.S. March 22, 2017). 2 See U.S. Patent No. 5,860,164 (filed June 19, 1996). 3 See U.S. Patent No. 6,801,140 (filed January 2, 2001). 4 See U.S. Design Patent No. D664,739 (filed April 20, 2010). 5 See U.S. Design Patent No. D521,211 (filed September 27, 2004). 6 Star Athletica, 1991 WL , at *9. 7 Id. at *11. 8 See id. at *10 ( [Respondents] may prohibit only the reproduction of the surface designs in any tangible medium of expression a uniform or otherwise. ). 9 See id. at *9 n. 1 ( We do not today hold that the surface decorations are copyrightable. We express no opinion on whether these works are sufficiently original to qualify for copyright protection, see Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S (1991), or on whether any other prerequisite of a valid copyright has been satisfied. ). 10 Id. at *21 (Breyer, J., dissenting). 11 Id. at *10 (majority opinion) ( Just as two-dimensional fine art correlates to the shape of the canvas on which it is painted, two-dimensional applied art correlates to the contours of the article on which it is applied. A fresco painted on a wall, ceiling panel, or dome would not lose copyright protection, for example, simply because it was designed to track the dimensions of the surface on which it was painted. ). 12 Id. at *20 (Breyer, J., dissenting) ( Congress decision not to grant full copyright protection to the fashion industry has not left the industry without protection. Patent design protection is available. (citation omitted)). 13 See Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. 2008) (holding that a design patent is infringed if an ordinary observer would think that the accused design is substantially the same as the patented design when the two designs are compared in the context of the prior art.) Therefore, in a crowded field like fashion design, a slight alteration may be enough to differ one design to another. 3

4 Closing the Door on Inter Partes Review of U.S. State s Patents By John Reulbach, Nick Gingo, and Luis Carrion On January 25, 2017, in Covidien LP v. University of Florida Research Foundation Inc., the Patent Trial and Appeal Board ( Board ) dismissed three petitions for inter partes review ( IPR ) based on the doctrine of sovereign immunity. This doctrine derives from the Eleventh Amendment, which protects States from being subjected to unconsented litigation and limits the judicial authority of the federal government over States. As the number of patents held by State universities continues to grow, this decision could make it more difficult to attack the validity of patents held by State universities. An IPR is a trial-like proceeding at the United States Patent and Trademark Office ( USPTO ) conducted by the Board after a patent has been granted and a member of the public (a petitioner ) challenges the patentability of one or more claims of the issued patent. 1 IPRs were created by the America Invents Act ( AIA ) and became available for all patents on September 16, The justification for these proceedings is the theory that the USPTO is more efficient and cost-effective at determining the validity of patents than courts. In such a proceeding, the Board s review is limited to consideration of relevant prior patents or printed publications, and does not involve other grounds for challenging the validity of a patent, such as sales or other public disclosures prior to the filing date of the patent. 2 If a petitioner can show that there is a reasonable likelihood that the petitioner will prevail in demonstrating that at least one claim challenged is invalid, the Board may grant a petition for IPR. 3 After an IPR proceeding has begun, the Board interprets the claim language using the patent specification, ordinary uses of the terms in the relevant field of technology, dictionaries, and other sources. 4 After the claims are interpreted ( construed ), the Board compares the construed claims to the disclosures made in the prior patents and printed publications to determine whether the claims were anticipated or obvious, and thus, invalid. 5 Upon conclusion of the IPR, non-prevailing petitioners are estopped from subsequently asserting not only the arguments made in the IPR, but any arguments that reasonably could have been made as well. 6 In Covidien, the University of Florida Research Foundation Inc. ( UFRF ) held a patent 7 relating to a method of integrating physiologic data from bedside machines and converting it into a readable, user interface, and licensed the patent to Covidien. After a dispute, UFRF filed an action in the Circuit Court of the Eighth Judicial District in Florida against Covidien alleging breach of the license contract. Covidien responded by seeking declaratory judgment that it did not infringe UFRF s patent and that the patent was invalid. After, Covidien successfully removed the suit to the United States District Court for the Northern District of Florida and filed a declaratory judgment action for non-infringement. Covidien then filed three petitions 8 seeking IPR of claims 1-18 of UFRF s patent. UFRF responded by claiming sovereign immunity and seeking to dismiss the IPRs. Amendment did apply to such administrative proceedings. The Board then turned to the Federal Circuit s decision in Vas-Cath, Inc. v. Curators of the University of Missouri. 10 In that decision, the Federal Circuit found that a State university was not entitled to sovereign immunity in an appeal to the district court from an interference decision by the Board. While the district court dismissed the appeal based on sovereign immunity, the Federal Circuit reversed because the State waived its immunity by voluntarily instituting the proceedings in the USPTO. However, in its decision, the Federal Circuit did note that interference proceedings, among other USPTO proceedings, bear strong similarities to civil litigation. Relying upon FMC and Vas-Cath, the Board concluded that sovereign immunity applies to IPR proceedings. Importantly, the Board rejected Covidien s argument that IPR proceedings are directed to the patent itself and are not suits or adjudications against the State by another party. The Board noted that inter partes means between the parties and that an IPR proceeding, although reviewed by the USPTO, is not an action brought by the federal government against a State. An IPR proceeding may only begin once a petitioner demonstrates a reasonable likelihood that he or she will prevail with respect to at least one of the claims challenged in the petition. 11 Essentially, an IPR proceeding is a case between a private third party and a State. In the beginning of its decision, the Board cited the Supreme Court s decision in Federal Maritime Commission v. South Carolina State Ports Authority, 9 ( FMC ), for the proposition that, beyond federal court actions, the Eleventh Amendment also protects States from federal adjudicative proceedings depending on the nature of the proceedings. Particularly, because the Framers of the Constitution could not have anticipated the current, expansive Moreover, the Board extensively administrative state, to determine if compared IPR proceedings and civil sovereign immunity applies, the litigation to determine that the two question is whether the were substantially similar. First, the administrative proceedings are the Board noted that when IPRs replaced type of proceedings from which the inter partes reexaminations, Congress Framers would have thought the intended to convert the States possessed immunity when reexamination into an adjudicative they agreed to enter the Union. In proceeding. Second, the Board found FMC, due to the common features that IPRs were similar adjudicative between administrative adjudications proceedings because they were and judicial hearings and the adversarial contests, were held before similarities between civil litigation impartial administrative patent and the proceedings of the Federal judges, were governed by pleadings, Maritime Commission, the Supreme provide for discovery, and are partially Court found that the Eleventh continued on page 5 4

5 continued from page 4 governed by the Federal Rules of Evidence and Civil Procedure. Ultimately, the Board concluded that considering the nature of inter partes review and civil litigation... the considerable resemblance between the two is sufficient to implicate the immunity afforded to the States by the Eleventh Amendment. Despite this, Covidien argued that finding such State institutions immune from IPR would have harmful consequences. Specifically, Covidien argued that (1) invalid patents would stand simply because they are assigned to a State entity; (2) a patent owned by a monetization foundation affiliated with a State university would be insulated from the IPR process; and (3) determining whether an entity is entitled to sovereign immunity is a fact-intensive inquiry that the USPTO is not designed to adjudicate. While the Board stated that they were cognizant of the fact that applying an Eleventh Amendment immunity to inter partes review, absent waiver by the State entity, precludes the institution of inter partes review against a State entity entitled to Eleventh Amendment immunity, the Board was not persuaded that such a result would do violence to the patent system. Without providing any alternative channels or mechanisms by which a party could challenge a granted patent belonging to a State entity, the Board found that there was no evidence that the harm to patent system will come to pass, let alone exists as a basis to divest States of sovereign immunity. Additionally, the Board found, without much explanation, that the Board could determine when an entity was entitled to sovereign immunity. Based on these decisions, the Board found that UFRF was entitled to sovereign immunity as it was an arm of the State. The Board cited Manders v. Lee 12 for the proposition that, to determine whether an entity is an arm of the State and, thus, entitled to sovereign immunity, courts look to: (1) how State law defines the entity; (2) what degree of control the State maintains over the entity; (3) where the entity derives its funds; and (4) who is responsible for judgments against the entity. In looking to these factors, the Board found that the first three factors weighed heavily toward a finding that UFRF is an arm of the State of Florida. And, although the fourth factor was questionable regarding UFRF, it was not sufficient to trump the three other factors. Thus, UFRF was found to be an arm of the State and, unlike Vas-Cath, UFRF had not previously waived its right by voluntarily engaging in USPTO proceedings. Therefore, UFRF was entitled to sovereign immunity in the IPR proceeding and the Board dismissed all three petitions against UFRF. As a result of this decision, it appears that a petitioner seeking to challenge a patent s validity can no longer instigate an IPR proceeding if the patent holder is an arm of the State, which would include State universities and their related entities. States and, particularly, state universities will likely take advantage of this and seek to dismiss IPR proceedings brought against their patents. However, this could become a larger issue, as public universities and their research departments continue to obtain patents in greater numbers. And the breadth of this issue is uncertain as the scope of what constitutes an arm of the State, in the Board s opinion, has yet to be fully determined something licensees should be mindful of when entering license agreements with State-affiliated entities. Therefore, patent holders and licensees alike will want to consider the implications and possible forums for patent validity challenges when entering into contracts or litigation in which patents are involved. As a further result of this decision, it may be that the only way to challenge a State-held patent through an IPR would be if the State had previously waived its sovereign immunity. Thus, it could be beneficial in licensing agreements with State entities to explicitly require that in the event that a dispute arises as to the validity of the claims of a patent, the patent holder waives its sovereign immunity and agrees that federal fora (e.g., USPTO) will have jurisdiction over invalidity proceedings. Moving forward, it is not clear whether the Board s dismissal of these IPR petitions is appealable to the United States Circuit Court of Appeals for the Federal Circuit (Federal Circuit) or any other court under 35 U.S.C. 314(d). Current law regarding IPR institutions is that such a dismissal is not subject to judicial review. 13 The options available to the petitioner Covidien appear limited to seeking a writ of mandamus from the Federal Circuit or a district court. Endnotes Nick is a partner at Renner Otto and has experience in preparing and prosecuting both design and utility patent applications in a wide variety of technical fields, as well as preparing and prosecuting trademark applications. Nick s practice also extends to counseling clients with respect to intellectual property matters including policing, licensing and transferring patents, trademarks, copyrights and trade secrets. Finally, Nick has extensive litigation experience enforcing and defending against all types of intellectual property in State and federal courts and administrative proceedings at the USPTO. Luis represents clients in patent and trademark application preparation, prosecution, licensing and litigation. Among other technologies, Luis has handled patent matters in the fields of telecommunication systems, uninterruptible (data center and telco) power supplies, fluorescent lighting and ballasts, digital signal processing, audio signal processing, welding equipment, computer programs, software-based control systems, electrical circuits, optical devices, computer hardware, remote monitoring, and mechanical assemblies U.S.C (2012). 2 Id U.S.C. 314 (2012). 4 See SAS Inst., Inc. v. ComplementSoft, LLC., 825 F.3d 1341, 1346 (Fed. Cir. 2016) U.S.C. 311, 316, 318 (2012) U.S.C. 315(e) (2012). 7 U.S. Patent No. 7,062,251 B2 8 IPR (Patent 7,062,251 B2); IPR (Patent 7,062,251 B2); IPR (Patent 7,062,251 B2) U.S. 743 (2002) F.3d 1376 (Fed. Cir. 2007) U.S.C. 314(a) (2012) F.3d 1304, 1309 (11th Cir. 2003) (en banc). 13 Cuozzo Speed Techs. v. Lee (Cuozzo III), 136 S. Ct (2016). 5

6 Supreme Court Hears Oral Arguments on Intersection of First Amendment and Trademark Law: Seems to Favor the Constitution By Nick Gingo The U.S. Supreme Court heard oral arguments in Lee v. Tam regarding a conflict between the 1946 Lanham Trademark Act, which prohibits the registration of trademarks that may disparage persons and the First Amendment s free speech protections. The original lawsuit was filed by Simon Shiao Tam, who attempted to register the trademark THE SLANTS for his Asian-American rock band. The USPTO rejected the application as potentially disparaging to a significant number of Asian Americans. Tam argued that the band s name was an attempt to reclaim the slur and use it as a badge of pride and, importantly, that the disparagement bar violated the First Amendment. The Federal Circuit held for Tam on appeal, and the USPTO has now brought the case to the Supreme Court. The oral argument questions from the Supreme Court indicated that the disparagement bar may be in trouble. In particular, the Justices focused much of the discussion on whether or not the Lanham Act disparagement bar furthered the objectives of trademark law. Justice Breyer, along with Chief Justice Roberts, spent a considerable amount of time cajoling both sides to make their case on this issue and the tone of the conversation suggested that the Justices tended to agree with Mr. Tam s arguments against the bar. Early on, Justice Breyer pressed Deputy Solicitor General Malcolm Stewart, asking him what purpose or objective of trademark protection does this particular disparagement provision help along or further? After some back and forth, Mr. Stewart explained that the reason for the disparagement ban was to prevent distraction from the main sourceidentifying purpose of trademarks. But Justice Breyer was not convinced that this was sufficient justification for the ban, pointing out that there are no limitations on other types of distracting marks and asking what business does Congress have picking out this one, but letting all the other distractions exist? In response, Mr. Stewart seemed to suggest that disparagement was particularly distracting, and therefore the ban was justified, but by that time the Justices had turned to other issues. Similarly, Justice Breyer also queried John C. Connell, counsel for Mr. Tam, on the same issue. In particular, Justice Breyer asked Mr. Connell to specifically respond to the proposition that disparaging messages get in the way of the objective of this program, which is to identify the source. Mr. Connell replied simply that [d]isparaging messages do not interfere with the source. After some additional discussion, Mr. Connell went on to explain that the only purpose of the Lanham Act is the reduction of consumer confusion and the protection of the goodwill of the mark holder and that this distraction theory appears nowhere in the legislation or the legislative history. This seemed to satisfy Justice Breyer, who had himself repeatedly characterized the role of the Lanham Act as such. Although there was some suggestion by Justice Kagan that Mr. Tam s speech was not really being burdened, the Court ultimately seemed more concerned that the disparagement ban was not sufficiently related to the basic purpose of trademarks to justify its continued existence. Depending on its ruling, the Court may open the door for a whole new category of trademark registrations in the near future. Stay tuned for the Supreme Court s decision, expected later this summer. Endnotes Nick is a partner at Renner Otto and has experience in preparing and prosecuting both design and utility patent applications in a wide variety of technical fields, as well as preparing and prosecuting trademark applications. Nick s practice also extends to counseling clients with respect to intellectual property matters including policing, licensing and transferring patents, trademarks, copyrights and trade secrets. Finally, Nick has extensive litigation experience enforcing and defending against all types of intellectual property in state and federal courts and administrative proceedings at the USPTO. 6

7 IP5 Updates By TaeRa Franklin and Bonnie Smith USPTO: Updates on Patent Eligibility for Business Methods On December 15, 2016, the USPTO published additional examples illustrating subject matter eligibility analyses of patent claims directed to business methods. The examples analyze the claims under the 2014 Interim Guidance on Subject Matter Eligibility (the Guidelines ). This effort is meant to assist examiners in evaluating claims for patent subject matter eligibility under 35 U.S.C The following illustrate claims that, although directed to an abstract idea, were still patent eligible because the claims as a whole amount to significantly more than the abstract idea: (1) an internet content filtering system method that includes controlled access network accounts, a local client computer to generate network access requests for the controlled access network accounts, an internet computer network, and a remote ISP server coupled to the client computer and the internet computer network, due to the recitation of unconventional and non-generic combination of known elements; (2) a method of conducting a secure automated teller transaction with a financial institution by authenticating a customer s identity that includes additional steps that describe a process that differs from the routine and conventional sequence of events normally conducted by ATM verification, such as entering a PIN; and (3) a system for managing an inventory record that includes using a high-resolution video camera array with overlapping views to track inventory items, due to the feature being described in the specification as not being well-understood, routine, conventional activity to those in the field of inventory control. The following illustrate claims that are patent ineligible because they are directed to an abstract idea and do not recite significantly more: (1) the method of conducting a secure automated teller transaction with a financial institution by authenticating a customer s identity that includes steps reciting nothing more than mere automation of verification steps that were in years past performed mentally by tellers when engaging with a bank customer; and (2) the inventory tracking method claim that recites the additional limitations of a memory and processor to perform the steps of inventory tracking, due to generic computer components performing generic computer functions, alone, do not amount to significantly more than the abstract idea. In summary, even if directed to an abstract idea, a claim may still patent eligible if the claim as a whole amounts to significantly more than the abstract idea. This significantly more requirement, at least in these examples, appears to amount to unconventional and non-generic combination of known elements. If well-known steps or conventional computer components are recited instead, the claim is likely ineligible. EPO: The 2016 Annual Report and the EPO Ruling on Partial Priorities (Toxic Divisionals) On March 7, 2017, the EPO published its 2016 Annual Report which shows that the EPO published 96,000 granted patents in 2016, which is 40% more than in The report also shows that over 296,000 were filed in 2016, which is a rise of 6.2% from Patent applications from the US reached a high in 2015 (42,597) due to the America Invents Act of 2013, but fell in 2016 (40,076). On November 29, 2016, the Enlarged Board of the EPO issued an order regarding the partial priority (also known as toxic divisional ) issue that occurs when a claim in an application is not identical to the claim in the priority application. In such a situation, some of the claim may not be entitled to the earliest priority date and a divisional application may then be cited against its own parent. In the order, the Board held that a generic claim encompassing alternative subject matter may not be refused partial priority if the alternative subject matter has been disclosed for the first time, directly, or at least implicitly, unambiguously and in an enabling manner in the priority document. The reasoned decision was published on February 2, 2017 and more explicitly states that a broader, later claim cannot be anticipated by an earlier, narrower disclosure in an application to which it claims priority. Thus, applicants filing an EP patent may now be able to broaden the disclosure of the priority application without encountering issues regarding toxic priority. SIPO: New Policy Addressing Counterfeits The State Council of China released a new policy on intellectual property infringement. The policy is targeted at cross-regional and organized illegal businesses. The policy calls for an increased fight against the production, distribution and sale of counterfeit goods. The policy seeks to implement new technologies, including big data and cloud computing, to enhance market supervision and inspection, and improve coordination between legal and administrative agencies. The policy also aims to advance the credit system and facilitate cooperation in IP protection overseas. KIPO: Patent Examination Policy for Medical Drug Licensing and Strategy Shift of Drug Companies In 2015, Korean pharmaceutical laws were amended to allow up to nine months of first right of sales to pharmaceutical companies that first invalidate medical drug patents. Upon the amendment, numerous invalidation proceedings were filed by pharmaceutical companies in 2015 in Do Not Ask manner. However, as the amendment and new policy have settled in, the number of the invalidation filings has decreased from 1,957 cases in 2015 to 311 cases in 2016 and 154 cases as of March It continued on page 8 7

8 continued from page 7 appears the pharmaceutical companies have shifted from simply requesting for invalidation of patents to requesting for determination of the scope of patent rights. This strategy shift may be in response to the difficulty in invalidating the original patents. KIPO has added five more examiners to deal more effectively with these requests under the 2015 amendment of the pharmaceutical laws. JPO: New Patent Classification ZIT for IoT and Cooperation between JPO and ROSPATENT On November 14, 2016, JPO created a new classification ZIT for technologies based on internet of things (IoT). JPO is the first patent office to establish a classification for IoT only. On December 16, 2016, JPO and the Federal Service for Intellectual Property (ROSPATENT) of the Russian Federation signed a memorandum of cooperation in the field of industrial property. Japanese companies have increasingly filed patent applications with ROSPOTENT reaching approximately 1,600 applications in 2014, according to JPO. This memorandum is intended to encourage Japanese companies to further facilitate their global business development through Japan s support in further improving the environment in Russia for protecting IP rights of Japanese companies. A comparative study on examination practices among JPO, KIPO and SIPO has been published on the JPO website. A review of the summary of the study may be helpful in determining which patent office is best for filing a patent application in Asia. A summary of Trial and Appeal Practitioner Study Group Report 2016 has been published by JPO in its website. The study group, including the practitioners, administrative judges, patent attorneys and lawyers, and IP personnel from various companies, deliberated on trial/ appeal and court decisions of actual cases. The summary is helpful in understanding Japanese patent law and the technologies interpreted by the Japanese patent trial and appeal system. Endnotes TaeRa is an associate at Renner Otto and focuses her practice on patent preparation and prosecution, particularly in the electrical, electronics and telecommunications fields. Bonnie is an associate at Renner Otto. Bonnie s practice focuses on patent preparation, prosecution, and counseling, mainly in the mechanical and materials-related arts. Bonnie has experience in domestic and foreign patent prosecution, having worked closely with a variety of clients ranging from international automotive suppliers to startups. Bonnie has handled patent matters in various technical areas including transmissions, engine timing systems, hydraulics, electromechanical devices, aerospace systems, heating and cooling systems, and consumer products. Additionally, Bonnie has experience in preparing and prosecuting trademark applications. 8