February 2016

Cislo & Thomas’ PatentFiler® Implements Automatic Assignment of Provisional Patent Rights 

Cislo & Thomas LLP has been diligently perfecting its PatentFiler Provisional Patent Portal to provide the most efficient and effective online provisional patent filing service.  PatentFiler now allows inventors to assign and record at the United States Patent and Trademark Office (“USPTO”) their provisional patent application automatically to an assignor through PatentFiler’s seamless process of filing a provisional patent application with no additional cost to the filer.

For more information, please visit Patentfiler.com and/or speak to an IP attorney at Cislo & Thomas LLP.

World Intellectual Property Organization Scandal Finishes Investigation

Deputy Director General Francis Gurry of the United Nations’ World Intellectual Property Organization (“WIPO”) has been investigated for ordering illegal break-ins of the offices of his own staffers, whom he suspected had written anonymous letters against him.  The long and secretive investigation has finished, but whether or not the report will be public is yet to be known.

According to Miranda Brown, Special Advisor to Gurry, Moncef Kateb, the President of the Staff Union, and James Pooley, the Deputy Director General, Gurry had:

  • Ordered break-ins at his staff’s offices to collect DNA that might help identify suspects he believed had written letters critical of him to WIPO Member States’ delegations;
  • Secretly authorized WIPO shipments of sophisticated U.S.-made computers and servers to North Korea and Iran, both under UN and US sanctions; Authorized the opening of new patent offices for WIPO in Russia and China;
  • Failed to enforce adequate oversight practices; and

Interfered in a procurement process to benefit an acquaintance.

Among its regulations, WIPO features a policy that prohibits retaliation against whistleblowers, however, the policy left discretion for the conclusions about allegations of retaliation to the Director General, making him both the accused and the judge.

Consequently, one WIPO whistleblower experienced such harassment that she resigned, another was marginalized until his term expired, and the third was simply sacked. Not one of the three remains employed at WIPO, while Gurry was re-elected as WIPO Director General in 2014.

In 2015, the UN Secretariat in New York took over the investigation of Gurry, and the Office of Internal Oversight Services (OIOS), now under new leadership, finalized its report about the incidents alleged, and delivered it to the Chair of the WIPO General Assembly.

There were “adverse findings.” However, so far, no one is willing to divulge the conclusions of the OIOS report.  Not even one of the whistleblowers – who, under the regulations, is entitled to at least a summary and conclusions – has been able to extract it from WIPO.

Ideally, the WIPO Chair will release the report about the actions of Francis Gurry to the WIPO Member States and take steps required to compensate the whistleblowers who risked their careers to bring their allegations to the governing bodies.

Liability for Pre-Issuance Damages May Only Provide For Damages Before A Patent Issues If The Infringer Has Actual Notice of the Published Patent Application

The U.S. Court of Appeals for the Federal Circuit affirmed the district court’s summary judgment in Rosebud LMS Inc. v. Adobe Sys. Inc. that Adobe Systems Inc. was not liable for pre-issuance damages under 35 U.S.C. § 154(d) because it had no actual notice of the published patent application that led to the asserted patent.

The Federal Circuit stated that “[g]enerally, patent owners may only collect damages for patent infringement that takes place during the term of the patent.”  The narrow exception to Section 154(d) is that it only provides for damages that take place before a patent issues if the infringer “had actual notice of the published patent application … [and] unless the invention as claimed in the patent is substantially identical to the invention as claimed in the published patent application.”

The nature of § 154(d)’s “actual notice” requirement is an issue of first impression for the Federal Circuit, which stated that it “agree[d] with Adobe and the district court that constructive knowledge would not satisfy the actual notice requirement.”

The Federal Circuit did not agree with Adobe that § 154(d)’s requirement of actual notice requires an affirmative act by the applicant giving notice of the published patent application to the infringer. “Certainly, ‘actual notice’ includes a party affirmatively acting to provide notice. But the ordinary meaning of ‘actual notice’ also includes knowledge obtained without an affirmative act of notification.” Correspondingly, the Federal Circuit equates ‘actual notice’ with knowledge.

The Court also corrected Adobe by stating that “the legislative history [maintains] that the applicant must not only affirmatively give notice of the published application to the accused infringer, but must also “explain what acts are regarded as giving rise to provisional rights”—an additional requirement that was not mentioned in the text of § 154(d).

The Court compares Section 287(a), which explicitly requires an act of notification, unlike § 154(d), which merely requires “actual notice” and offers that the difference suggests that the two statutes are to be interpreted differently.

The Court further acknowledges that if Congress wishes, it can amend the statute to require an affirmative act by the patentee and that the Court cannot, and thus interprets the actual notice requirement of § 154(d) as it is clearly written to convey ordinary meaning.

Justice Scalia and His Impact On Patent Law

With the recent passing of Supreme Court Justice Scalia, we now take the time to consider his contributions to the field of patent law.  Scalia served for just shy of 30 years having been confirmed to the Court on September 17, 1986.  During his tenure, Scalia developed a well-earned reputation as a renowned jurist who made important contributions to many fields of law.

Patent law however, as Scalia himself often indicated, was simply not one of his interests.  Patent cases he said, bored him.  During his tenure, Scalia authored few of the major decisions on patent law considered by the Court, but rather tended to join with the majority in most cases.

It should be said however, that patent law is an area of little ideological contention on the Court.  5-4 split decisions breaking down along ideological lines are rare in patent cases and, in fact, the majority of the Court’s patent decisions over the last decade have been unanimous or nearly unanimous.
The Court’s major precedential decisions in the last ten years included the following:

  • Alice Corporation v. CLS Bank (2014) (holding that claims directed to an online financial trading system were directed to abstract ideas and thus were not patent eligible subject matter);
  • Octane Fitness, LLC v. ICON Health & Fitness, Inc. (2014) (giving district courts broad discretion to award attorney’s fees in patent cases);
  • Association for Molecular Pathology v. Myriad Genetics (2013) (holding that isolated strands of naturally occurring DNA were not patent eligible subject matter);
  • Mayo Collaborative Services v. Prometheus Laboratories, Inc. (2012) (holding that claims directed to methods for optimizing the efficacy of a drug were directed to laws of nature and were therefore not patent-eligible);
  • Microsoft Corp. v. i4i Limited Partnership (2011) (affirming that patent invalidity must be proved by clear and convincing evidence);
  • KSR International v. Teleflex, Inc. (2007) (fundamentally changing the obviousness inquiry); and
  • eBay, Inc. v. MercExchange, LLC (2006) (holding that victorious patent owners do not have an automatic right to permanent injunctions).

Interestingly, the cases were all unanimous or near unanimous decisions of the Court, in which Scalia either joined or concurred with the majority. In following the lead of the majority, Scalia once said that he often followed the lead of Justice Ruth Bader Ginsburg whom he considered to be more knowledgeable on patent issues.

Although Scalia authored few of the major patent decisions during his tenue on the Court, this is not to say that he authored no decisions on the subject.  In MedImuune, Inc. v. Genentech, Inc. (2007), Scalia authored the majority opinion which held that patent licensees need not stop paying royalties on a license, and thus open themselves to infringement liability, in order to have standing to bring a suit for declaratory judgement of invalidity of the licensed patent.  Scalia also authored the majority opinion in Eli Lilly Co. v. Medtronic, Inc. (1990) and Merck KgA v. Integra Lifesciences, Ltd. (2005), both of which broadened the safe harbor from infringement provision provided in patent law for generic drug companies engaged in premarket activities.

During his tenue on the Court, Scalia became famous for his dissents in a variety of cases involving hotly contested issues.  The field of patent law, perhaps fortunately, was graced by only a single Scalia dissent in Commil USA, LLC v. Cisco, Systems, Inc. (2015) where the majority held that a good faith belief in a patent’s invalidity is not a defense to induced infringement.  Scalia’s disagreed writing: “It follows as night the day, that only valid patents can be infringed.  To talk of infringing an invalid patent is to talk nonsense.”

In sum, it would be fair to say that Scalia, a lion of modern Supreme Court jurisprudence, had a modest but meaningful impact on patent law.  It would not appear that Scalia had any particular guiding philosophy when it came to patent law.  Rather, his opinions suggest that, as in all his cases, he was interested in clear reasoning and in establishing a readily determinable precedent that could provide guidance to the lower courts.

The Shifting Balance Between Copyright Owner Rights and Digital Millennium Copyright Act Safe Harbor Provisions Rights

In BMG Rights Management (US) LLC, et al. v. Cox Communications, Inc., et al., the Court held that the Digital Millennium Copyright Act (“DMCA”) does not automatically grant ISP defendants protection under the DMCA safe harbor and that “soft terminations” are not a sufficient response from internet service provider (ISP) to repeat infringers.

When an online user violates copyright law by posting infringing material on an Internet Service Provider’s site, a third-party, the copyright owner who is infringed will frequently rely on the user’s ISP for relief.  The Digital Millennium Copyright Act (DMCA) includes a safe harbor provision that provides ISPs with protection from a potential flood of copyright infringement claims for customer actions, so long as the ISP complies with certain conditions, such as adopting and reasonably implementing “a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers…” 17 U.S.C. §512(i).

The court in the BMG case first separated the issue into two main questions: 1) whether the BMG defendant had a reasonable policy to deal with repeat infringers and 2) whether the BMG defendant had implemented that policy.

The court found that a policy is reasonable when a repeat infringer’s account is terminated in appropriate circumstances, and “appropriate circumstances clearly cover account holders who repeatedly or flagrantly infringe copyright, particularly infringement of a willful and commercial nature.”

Applying these rules to the facts of the case, the court found that the BMG defendant had actual knowledge that multiple individual customers were repeat infringers and, despite this knowledge, the BMG defendant refused to implement its termination policy.

This case reaffirms that courts will not automatically grant ISP defendants protection under the DMCA safe harbor and will thoroughly review ISP responses to takedown notices.

YouTube Community Reacts Negatively To The Fine Brothers New Licensing Scheme

The Fine Brothers are one of the biggest YouTube content creators and have more than 13 million followers.  In 2015, the brothers applied to trademark terms, including “Kids React”, “Adults React” and “Celebrities React”, as well as the word “react” itself, which could be used to form new variations of the format.

In early February, they announced a licensing scheme called React World, which they said would let other video-makers use the “react” title and assets such as their graphics and music.

However, the YouTube community reacted negatively since many people have already been making similar reaction videos and found that The Fine Brothers have gone too far past just protecting their own content from being stolen.

The Fine Brothers have clarified that they are planning to license only a complete package of “structural elements” and assets, and that they were “in no way claiming [that] reaction content, in general, is [their] intellectual property.” “We are not going after/shutting down/suing anyone who makes reaction-based content,” they wrote.

Ryan Morrison, a video gamer turned lawyer, is vocalizing his opposition of the Fine Brothers’ trademark filings and has now offered to help video-makers fight the Fine Brothers’ trademark applications.  “The public has 30 days to file an opposition,” he said. “Had the Fine Bros kept quiet for another month, they almost certainly would have gotten this trademark, as no-one seemed to notice it.  Instead, they announced their ridiculous licensing program and turned all eyes on them.”

Since their announcement on Tuesday, the Fine Brothers have lost more than 170,000 followers from their YouTube channel.  Depending on how The Fine Brothers react to this public outrage, their future in the YouTube space may be very different from what they had imagined when filing for their trademarks and announcing their licensing scheme.

Supreme Court Hints Favoring Discretion For Boosting Penalties for Patent Infringement 

The U.S. Supreme Court recently heard arguments from Halo Electronics Inc. v. Pulse Electronics, No. 14-1513 and Stryker Corp. v. Zimmer Inc. et al, No. 14-1520 and indicated their inclination to give federal judges more discretion to boost penalties for patent infringement.

During oral arguments before the high court, Stryker, a medical device maker, and Halo, which makes circuit board transformers, argued for enhanced damages up to triple the original damages because the infringement of their patents was willful.

The U.S. Court of Appeals for the Federal Circuit denied enhanced damages stating that a patent owner must prove a defendant acted despite a high likelihood of infringement and had no reasonable explanation for doing so.

From the oral argument at the Supreme Court, several of the justices indicated they might be willing to relax that standard, giving federal judges increased discretion. Chief Justice John Roberts called the elaborate test at the Federal Circuit “surprising” and said “courts have been used to dealing with discretionary standards for a long time.”

In addition, Justice Elena Kagan said the existing elaborate standard might serve as an incentive for patent infringement because it gives willful violators a way to escape liability.

This was the first intellectual property case heard by the eight Supreme Court justices following the Feb. 13 death of Justice Antonin Scalia.

Duaing Conic ConsSalt Lake Comic Con v. San Diego Comic-Con

The San Diego Comic-Con started in 1970 and has grown to be one of the iconic convention for enthusiasts of the comic world while the Salt Lake Comic Con, not associated with the San Diego Comic-Con, started in September 2013 with an estimated 72,000 people showing up and then more than 120,000 people attended the following year.

Consequently, Salt Lake Comic Con and San Diego Comic-Con have been in court battling over trademark rights after San Diego Comic-Con filed a trademark infringement suit against the rapidly growing Salt Lake convention in August 2014.

The San Diego Comic-Con organizers say they have legal ownership of the term “comic con” in all its forms, and that the name of the Salt Lake event is so similar that people will think they are affiliated.

The United States Patent and Trademark Office (“USPTO”) is withholding judgment and has suspended its own ruling in November until the federal case could be resolved. Interestingly, in July, the USPTO awarded Salt Lake Comic Con a trademark for its name, stating that “comic con” was too generic to trademark but “Salt Lake Comic Con” was specific enough to qualify.

The two parties have agreed to come to a settlement agreement by March and will hopefully result in a distinction between the two organizations that will not only help the public recognize the non-affiliation, but also allows both organizations to still promote their respective objectives.