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November 2017

Google Awarded Attorney’s Fees in Patent Case Due to Standing Issue

Takeaway: Make sure that you have been transferred “all substantial rights” in a patent before you initiate a lawsuit. Receiving a license on the patent from a parent company is not enough, you must have rights to the patent directly from the entity that owns the patent itself.

In an action that has been pending since October 1, 2014, Max Sound attempted to sue Google for infringement of United States Patent No. 7,974,339 (the “’339 Patent”).

Alexander Krichevsky and Constance Nash are the named inventors of the ’339 Patent. Subsequently, the two of them assigned their rights to an entity called Cornerstone who eventually assigned their rights to an entity called Vedanti who is the current owner of the ’339 Patent.

Vedanti happened to be a subsidiary of a company named VSL. Before this action, Max Sound entered a license agreement with VSL that allowed them to sue based upon VSL’s patent rights.

When the Defendants filed a motion to dismiss under FRCP 12(b)(1) challenging standing to sue the court found that the “essential issue regarding the right to sue on a patent is who owns the patent.” Here, Max Sound did not own the patent but they asserted that they had the right to sue because they had made an agreement with VSL to license the right to sue on their patent rights. With that said, the court pointed out two things that were determinative in this action: (1) that VSL technically did not own the ’339 Patent, but rather their subsidiary Vedanti did; and (2) the agreement allowing to sue on VSL’s patent rights did not reference the ’339 Patent anywhere in the document. For these reasons, Max Sound had no rights in the ’339 Patent because Vedanti did not assign them any rights in the patent.

The court found that because Max Sound had no rights in the ’339 Patent they, therefore, had no standing to sue and the Defendants were awarded attorneys fees.

Prohibition against prohibitions in agreements preventing online complaints

Takeaway: Congress has created a Consumer Review Fairness Act that protects consumers from unfair clauses that prevent negative reviews of products or services. As a business, it is important to monitor your public reviews because you are not allowed to contractually prevent consumers from publically commenting on your products or services.

Last year Congress passed the Consumer Review Fairness Act, which outlaws the use of gag clauses to prevent consumers from posting negative reviews about a product or company. The new act gives consumers some sort recourse against companies that use bullying tactics to discourage negative reviews.

The act came from an action before the FTC. There, the FTC shut down a company called Roca Labs who offered a weight loss solution to consumers. The problem with the solution was that the company blatantly lied about the success rate and its “scientifically” tested product. Under the impression that this product was a groundbreaking alternative to gastric bypass surgery, consumers flocked to the product and Roca Labs earned about $20,000,000 off of trusting purchasers.

The problem became trickier when consumers found out they could not warn others about the deceptive nature of the product. In the purchase agreement, there was a gag clause that prevented negative reviews of the product or there would be consequences. The consequences came in the form of a revocation of a “discounted price,” which jacked up the original cost of their product from $480.00 to $1,580.00. This price increase would come due upon violation of the gag clause and the company sought to enforce the terms through threats to sue.

Fortunately, the FTC stepped in and made a decision under their “unfairness authority” that prevented companies from enforcing such a clause in their contracts. After the FTC made this decision, Congress created the Consumer Review Fairness Act to prevent further harm of this type to consumers. Moving forward consumers will be protected from unfair clauses that prevent negative reviews of products and services.

With that said, this may be something to keep in mind as it is not always the company that is acting in bad faith. It is important to address consumers concerns quickly because negative reviews of legitimate businesses happen all the time. It may be a good policy to monitor social media and other outlets that allow reviews and comments to make sure you can address the concerns of your customers before your reputation as a company is damaged.

Overview of how IP may change due to Brexit

Takeaway: Design Patents and Trademarks will likely see the most change in light of Brexit because the United Kingdom will likely no longer be a part of the EU Community Design System.
Image: morningsideip.com

Brexit was unpredictable in itself, but deciphering all of the ways it may affect our lives is even more difficult to piece together. In the world of intellectual property, experts have begun to try and paint a picture for us as to what may happen in the future. Here, our foreign associates have summarized some of the more important aspects of intellectual property that may or may not change in light of Brexit.

Fortunately, in the context of Utility Patents, there will not be a substantial change in the way the system operates. The United Kingdom will remain a part of the European Patent Organization even after the effects of Brexit have taken hold. But with that said, the status of the Unified Patents Court and the EU Unitary Patent are unknown to even the experts in the field.

As far as Design Patents go we will likely see some change. The United Kingdom will likely not be a part of the EU Community Design System. This change would take place on Brexit Day, which is March 29, 2019. Any applications that are filed before that date will most likely be enforceable in the United Kingdom.

Trademarks will also likely change in light of Brexit. At this point, like the issue in the context of Design Patents, it is likely that the United Kingdom will no longer be a part of the EU Community Design System as of Brexit Day and applications filed before Brexit Day will also likely remain enforceable. But there may be a difference between pre and post-Brexit in the context of use of Trademarks. Use of the Trademark in the United Kingdom may not be relied upon to prevent EU Trademark registration from being revoked for non-use. Additionally, use in the EU outside of the United Kingdom will likely no longer be relied upon to keep a United Kingdom portion of a pre-Brexit EU Trademark registration.

Litigation financing for plaintiffs in IP is sometimes available
Takeaway: Litigation financing may be an avenue to consider if you cannot afford to enforce your intellectual property through litigation.

It is commonly known that patent and intellectual property litigation is among the most expensive areas to litigate in today’s competitive marketplace. This may cause issues for independent inventors or small entities that cannot afford to take on the Apple and Microsoft’s of the world because they simply cannot afford to litigate to enforce their rights. The barrier to entry for litigation is a reality even if large company stole that small entity’s designs and began reproducing their invention without permission.

With that said, recently there seems to be a trend that has opened the door to litigation for these small or micro entities. That trend we speak of is litigation financing. The concept is fairly simple; a third party makes an investment in your litigation because they think you have a winning case. The goal is to allow more access to litigation and take the element of cost out of the strategy for smaller entities. Eileen Bransten, a New York Supreme Court Justice, stated: “litigation funding allows lawsuits to be decided on their merits, and not based on which party has deeper pockets or stronger appetite for protracted litigation.”

This avenue of litigation may be something to consider if you are contemplating bringing a lawsuit as a smaller entity. For more advice on any IP litigation matters consult with one of our attorneys at Cislo & Thomas LLP.

California employers can no longer ask job applicants about their prior salary

Takeaway: When hiring new employees you are no longer allowed to ask for their salary history as a factor in your decision on what to pay the new employee. Be prepared to give a pay range for the position no matter who applies for the job.

On Thursday, October 12, 2017, Governor Jerry Brown signed bill AB168 into effect as of January 1, 2018, that says California employers will no longer be able to ask job applicants about their salary history. Additionally, if the applicants ask about the salary the employer has to provide a pay range for the job the applicant is currently seeking. It is okay if the applicant volunteers this information without any questioning about it but you cannot directly ask applicants for their salary history.

The goal of this bill is to attempt to close the gender wage gap. The law applies to everyone that lives in the state including both men and women but the main point is to prevent discrimination resulting in a lower salary for applicants in our state.

Apple v. Samsung denied Cert by Supreme Court

In a long standing battle between tech giants Apple and Samsung the United States Supreme Court has denied Samsung’s latest petition for certiorari.

This appeal to the Supreme Court was based upon a jury award of $120,000,000, which was later dismissed by a Federal Circuit panel. The Federal Circuit threw out the award because they found two of the patents at issue to be invalid and that the third was not infringed by Samsung.

With that said, in 2016 the Federal Circuit revisited the decision en banc and determined that the Federal Circuit panel decided the case incorrectly. This is where the most recent petition for certiorari came from and with the denial of certiorari, Apple’s jury award of $120,000,000 will stand.

The Ninth Circuit Heightens Its Personal Jurisdiction Standard for Copyright Infringement Cases

For years, the Ninth Circuit had held that a copyright holder could show personal jurisdiction over an out-of-state actor alleging the actor infringed (1) willfully, knowing of (2) the existence of the copyright and (3) the forum of the copyright holder.

In Axiom Foods, Inc. v. Acerchem International, Inc., the Ninth Circuit held that a recent U.S. Supreme Court decision effectively rejected this previous standard since the standard had focused too much on the alleged infringer’s contacts with the copyright owner, rather than the alleged infringer’s contacts with the forum.

If you have a copyright that is being infringed by an out-of-state actor, you may nonetheless be able to enforce your copyrights in this state, provided you can show that the actor has significant contacts in this state, such as significant sales of the infringing product, or affecting a significant number of residents in this state. or otherwise, significant sales or marketing targeting this state of any products, infringing or otherwise.

Cislo & Thomas Sponsors U.S.- China IP Summit at Loyola Law School

On October 13, 2017, Cislo & Thomas LLP sponsored the U.S. – China Summit at Loyola Law School. The event hosted Judge Chen of the Federal Circuit who delivered the keynote speech at the summit. In his keynote speech, Judge Chen addressed his thoughts on post-Alice rulings by the Federal Circuit.

Initially, after the Alice ruling by the Supreme Court of the United States, Judge Chen had concerns about the ruling being too vague. But once he became a Judge on the Federal Circuit, as opposed to working at the United States Patent and Trademark Office, he has realized how important it is to only decide what is necessary to be decided in a case. He stated that a court “builds its jurisprudence incrementally over time through precedential decisions based on the facts presented in each case and the specific issues raised by the litigants.” This incremental process of building jurisprudence around the abstract idea concept should bring clarity to the area of law.

The U.S. – China IP Summit draws experts from the United States and China every year to discuss issues in intellectual property. This year’s topics included recent developments in patent laws, legal issues in new media and content industries, legal issues in video game industries, trends in IP litigation, and the legal implications of artificial intelligence.

Sponsorship by Cislo & Thomas LLP to Help Combat Poverty

Cislo & Thomas LLP proudly sponsors two children, Jeffry Isaac Rodriguez Perez and Genesis Yusneyli Gonzalez Martinez, in Nicaragua in an effort to combat extreme child poverty. For the past year, our firm has been supporting these children through letter exchanges to build close relationships with them, and to provide them with hope and strength. Through Compassion International, we had the humbling opportunity to travel to Nicaragua with a group from Malibu Presbyterian Church to meet our sponsored children in their communities.

We witnessed the daily lives of these communities in poverty and discovered how the families, specifically the mothers and children, learn to support themselves through survival, sponsorship and leadership programs. The photo below shows the whole team with their sponsored children.