February 2017

Alternative IP-related Strategic Step to Prevent Counterfeiting Sales Online

Takeaway: Because there is copyright protection for the photographs taken of the products by the brand owner, if the online sellers for their counterfeit products use those images, the brand owner can request the Internet Service Provider (ISP) to take down the post.

Some well-known tactics for combating the selling of counterfeits online include using domain name dispute procedures, takedown notices, and automated monitoring software in terms of trademarks, trade dress, and copyright policing.

Another way brand owners may prevent counterfeit sales online relates to the copyright protection of the images that the brand owners own that show the products they are selling online.

If the counterfeiters use the brand owners’ own photos of their products to sell the counterfeit goods, the brand owners can rely on copyright law to request the Internet Service Provider (“ISP”) to take down the post under the Digital Millennium Copyright Act (“DMCA”) because the brand owner owns the copyright to the image.

For example, one can also utilize Google’s Trusted Copyright Removal Program by submitting the DMCA notices regarding the copyrighted images to request that the post for selling the counterfeit be removed from Google’s search results.

Because copyright protection is automatic and the brand owner does not need to register the rights to the image in order to submit a DMCA takedown notice, this is an efficient and cost-effective way to combat counterfeiters.

Supreme Court Rules Regarding Export of Single Component of Patented Invention

Takeaway: In the recent case Life Technologies Corp. v. Promega Corp., the Supreme Court clarified that for a 35 U.S.C. § 271(f)(1) liability, which is based on exporting parts of a patented invention, more than one component is required to constitute a “substantial portion” of the patented invention for there to be liability.

Many viewed Life Technologies Corp. v. Promega Corp. as one of the cases in the series of Supreme Court cases regarding the presumption against extraterritoriality. However, the  Life Technologies holding did not use the term extraterritoriality.  Rather, in the first line of the decision, Justice Sotomayor describes the case as “concern[ing] the intersection of international supply chains and federal patent law.”

The Chief Justice’s comments at oral argument suggested that he believed the presumption had no role in this case.  He noted:

I’m not sure I agree with your understanding of the extraterritorial principle. I don’t – I mean, do you really take that down into the minutiae of every little clause? It seems to me it’s once the law applies, then you apply normal principles of statutory interpretation. I think we have cases about that in other – in other areas, which is sort of what is the reach, I think, may be the presumption against infringement in sovereign immunity, is – a case I can’t recall right away that said, well, once you get over it, you know, it’s over, and then you apply normal principles.  The case clarifies that “substantial portion” means to comprise more than one component of the patented invention.  

The text of 35 U.S.C. § 271(f)(1) at issue, which is directed to U.S. activity that leads to a combination of a patented invention abroad, states:

“Whoever without authority supplies or causes to be supplied in or 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 in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.” [35 U.S.C. § 271(f)(1)].

In interpreting the phrase “substantial portion of the components of a patented invention,” the Court adopted a quantitative rather than a qualitative approach in terms of the importance of each component.  The Court asked, “How are courts—or, for that matter, market participants attempting to avoid liability—to  determine the relative importance of the components of an invention?”  The Court factored in how its holding would be difficult for those trying to interpret what would be considered liability when the importance of a component would require much more analysis and would be somewhat subjective.

Ultimately, the holding of the case is rather straightforward and interprets “substantial portion” to require more than one component of a patented invention in terms of being liable as an infringer for supplying a component of a patented invention from the United States.

Perfect 10 Loses Again in Another Copyright Infringement Suit, Sets More Valuable Copyright Infringement Precedent

Takeaway: In Perfect 10, Inc. v. Giganews Inc. and Livewire Services, Inc., the Ninth Circuit reaffirmed that, for direct copyright infringement, proximate causation is a requirement, and a mere operation of a service or system like Giganews is not sufficient proximate causation.

The well-known copyright troll Perfect 10, Inc. sued Giganews for billions of dollars of alleged damages for copyright infringement and the Ninth Circuit recently affirmed Giganews in a 3-0 decision.  Perfect 10, Inc. v. Giganews Inc. and Livewire Services, Inc., No. 15-55500 (9th Cir. 2017).

Prior to this lawsuit, Perfect 10 had sued numerous other companies such as Google, Amazon, Tumblr, Microsoft, and Visa, lost in all of them, and consequently set a handful of useful and landmark precedents relating to the Digital Millennium Copyright Act (DMCA), and this case is no different.

Giganews works with copyright holders to remove claimed infringing messages from its servers and the only way for Giganews to process the millions of notifications every year is to rely on copyright holders to provide machine-readable message-IDs.  Perfect 10 refused to comply with providing the message-IDs and demanded that Giganews search the messages using certain search terms.  However, that would impose burdensome processing power and would also introduce risk of error during the process.  When Giganews refused to comply, Perfect 10 sued for billions of dollars of statutory damages for copyright infringement.

The following are some of the takeaway legal principles that the Ninth Circuit reaffirmed:

  • Giganews was not contributorily infringing because Giganews’ provision of service did not constitute a “material contribution” to infringement.
  • Giganews was not contributorily infringing because Giganews did not fail to take simple measures to curb infringement; rather, they were actively working with copyright holders to remove claimed infringement.
  • Perfect 10 failed to show that Giganews obtained any direct financial benefit from the infringement of Perfect 10’s copyrights and therefore is not able to prove vicarious liability.

Awarding attorneys’ fees was appropriate because victory for Giganews would likely advance the purposes and policies of the Copyright Act.

USPTO To Randomly Audit Registered Trademarks With More Than One Good or Service Per Class

Takeaway: Starting February 17, 2017, the United States Patent and Trademark Office (“USPTO”) will be implementing a random trademark audit program that would require trademark owners to show proof of the use of the trademark for the listed goods and services.

The USPTO randomly selected 500 trademark registrations and required the owners to submit proof of use of those marks in the additional goods or services per class.

In this 2-year pilot program, 51 percent of the registrations failed to supply proof of use, 35 percent selected to have the unused additional goods or services deleted, and 16 percent failed to respond, which resulted in the cancellation of the entire registration.

In an effort to clear “deadwood” from the Register, which currently has more than 5 million active trademarks, the USPTO will now select 10 percent of the trademarks that have been renewed to be selected for audit.

If selected for audit, trademark owners will have up to six months to respond and will be given the option either to submit the required proof of use or to delete those goods and services for which the mark is not being used. If the trademark owner fails to respond, the entire registration will be cancelled.

In order to avoid cancellation of your trademarks, we recommend that you take the proactive approach and choose to file a Post-Registration Amendment now, and delete any unused goods or services you have previously selected during registration.  This will save you time and money in the case that your trademark does get chosen for audit.

Provisional Patent Applications Must Provide Written Description Support to Afford Provisional Filing Date

Takeaway: The Patent Trial and Appeal Board (“PTAB”) denied instituting an inter  partes review based on the patent owner’s challenge that the prior art used for asserting obviousness could not afford the provisional filing date because there was insufficient written description support and therefore should not qualify as prior art.

In Forty Seven, Inc. v. Stichting Sanquin Bloedvoorziening, IPR2016-01529, Paper 13 (P.TA.B., Feb. 9, 2017), the PTAB agreed with the patent owner that the prior art reference used for an obviousness challenge should not be afforded the provisional patent application filing date because there was not enough written description support.

The petitioner of the inter partes review (“IPR”) of U.S. Patent No. 9,352,037 (“the ’037 patent”) asserted the IPR based on obviousness grounds, relying on WO 2009/091547 to Majetti (“Majetti”) as a primary reference. However in order for Majetti to be considered prior art, its effective filing date must be based on its priority application, U.S. Provisional Application No. 61/011,324, which predated the ’037 patent.

However, the patent owner argued that claim 10 of the provisional application did not provide sufficient written description to support claim 10 of Majetti.  The patent owner contended that claim 10 of Majetti is directed to a broad genus of agents for treating acute myeloid leukemia cancer stem cells and the provisional application failed to provide a representative number of species to adequately describe the genus.  Therefore, under 35 U.S.C. § 112, the claims of Majetti were not fully supported by the disclosure of the provisional application.

The PTAB applied Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1350 (Fed. Cir. 2010), which states that a “sufficient description of a genus . . . requires the disclosure of either a representative number of species falling within the scope of the genus or structural features common to the genus so that one of skill in the art can visualize or recognize the members of the genus.”  Therefore, Majetti was not entitled to the filing date of its provisional patent application and thus the PTAB denied the institution of the IPR.

Understanding How to Combat Cybersquatting and Typosquatting Under Federal Law

Takeaway: Under the Anti-Cybersquatting Consumer Protection Act (“ACPA”), a trademark owner can bring a federal suit against cybersquatters and if applicable, submit a Uniform Domain-Name Dispute-resolution Policy (“UDRP”) for a proceeding established by the Internet Corporation for Assigned Names and Numbers (ICANN) for the resolution of disputes regarding the registration of internet domain names.

Cybersquatting is a term used for a bad faith registration of another’s trademark in a domain name with the intent either to sell the domain back to the owner for a profit or to divert consumers to a competing or different website/company.

Typosquatting is a specific form of cybersquatting that exploits human typing errors wherein the bad faith registration is for domains very similar to well-known marks/domains. See, e.g., Verizon Cal. Inc. v. Navigation Catalyst Sys., 568 F. Supp. 2d 1088, 1094 (C.D. Cal. 2008) (“The ACPA has also been interpreted as prohibiting ‘typosquatting’—that is, registering intentional misspellings of famous trademarks or names”).

Under the “Anti-Cybersquatting Consumer Protection Act” (ACPA), bad faith domain registrants may be liable up to $100,000 per domain in statutory damages. The ACPA states  that a “person shall be liable in a civil action by the owner of a mark . . . if, without regard to the goods or services of the parties, that person . . . has a bad faith intent to profit from that mark . . . and . . . registers, traffics in, or uses a domain name that . . . is identical or confusingly similar to that mark.”

In terms of determining “bad faith intent,” courts look at a person’s “intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark . . . for commercial gain . . . by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site.” 15 U.S.C. 1125(d)(1)(B)(i)(V). The court can also find bad faith when the registrant acquired “multiple domain names which the person knows are identical or confusingly similar to marks of others.” 15 U.S.C. § 1125(d)(1)(B)(i)(VIII).

If there were actual damages and profits, the owner of the mark can recover those but may alternatively choose to pursue statutory damages of up to $100,000 per domain.

In addition, a trademark owner can also file for a Domain-Name Dispute-resolution Policy (“UDRP”) proceeding which would require a cybersquatter to transfer the domain if the trademark owner can show that (1) the domain in question is identical or confusing similar to its mark, (2) the registrant does not have a legitimate interest in the domain, and (3) obtained it and is using it in bad faith.

For example, in January 2017, FIFA, the international association for soccer, won the rights to FIFA.net with a UDRP proceeding.

It is recommended that trademark owners enforce their online brands by using the ACPA and UDRP legal processes to combat cybersquatters and typosquatters.

Federal Circuit Reversed PTAB For Failure to Adequately Explain Basis for Combining Prior Art References for Obviousness Analysis

Takeaway: The Patent Trial and Appeal Board (“PTAB”) must explain where an element is taught in the prior art and adequately explain the motivation to combine multiple prior art references. To merely state that “a person of ordinary skill in the art would have understood to combine” is insufficient.

In Personal Web Technologies, LLC v. Apple, Inc. (Fed. Cir. 2017), the Federal Circuit held that, once again, the PTAB failed to adequately explain the reasoning for an obviousness rejection based on the combination of multiple prior art references.  This is not the first time the Federal Circuit remanded a PTAB decision based on this issue.

In this particular case, the Federal Circuit stated that “[w]hen referring to a determination ‘as to whether the content-based identifier for the particular data item corresponds to an entry in a database,’ the Board’s opinion does not explicitly say, let alone explain, how Woodhill shows that determination to involve a comparison between the content-based identifier and a plurality of values.”

The Federal Circuit also stated that the PTAB’s reasoning was “deficient in its finding that a relevant skilled artisan would have had a motivation to combine Woodhill and Stefik in the way claimed in the ’310 patent claims at issue and would have had a reasonable expectation of success in doing so. … But that reasoning seems to say no more than that a skilled artisan, once presented with the two references, would have understood that they could be combined. And that is not enough: it does not imply a motivation to pick out those two references and combine them to arrive at the claimed invention.” See Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1073 (Fed. Cir. 2015) (‘[O]bviousness concerns whether a skilled artisan not only could have made but would have been motivated to make the combinations or modifications of prior art to arrive at the claimed invention.’)

This is not the first time that the Federal Circuit has reversed and remanded a PTAB decision for the same reason. See Cutsforth, Inc. v. Motivepower, Inc. (Fed. Cir. 2016). However, after Cutsforth was remanded, the PTAB issued a new final decision after additional briefing by both parties.  The PTAB still found that all claims except two were still unpatentable for obviousness in the subsequent final written decision, allowing two claims that were previously found as unpatentable for obviousness.

Join Cislo & Thomas in the Fight Against Human Trafficking

Cislo & Thomas is supporting Malibu Presbyterian Church on March 10th at 7:00 pm in the fight against human trafficking, and we invite you to join us in this important, international cause. For more information, check out:
http://www.malibupres.org/events/event/423/mpc-lenten-talks-every-day-in-cambodia-screening-discussion/2017-03-10