June 2016

PatentFiler Sponsors Santa Monica Bar Association’s Upcoming “Startup Seminar” on August 11, 2016

2550c328-be56-481d-af1c-24ff5c16e649The Santa Monica Bar Association and Expert DOJO present “Startup Seminar 2016” and PatentFiler is a proud sponsor of this great upcoming event.

Join us for a very IP enlightening evening on the 3rd floor of the Santa Monica Promenade Mall on Thursday, August 11, 2016 from 5:30 PM to 9:00 PM! Our curated panel of experts will share their stories and experiences along with priceless advice for any aspiring entrepreneurs. Our experts range in their expertise but have one thing in common—their undeniable hustle.

Come meet our experts, get inspired, and network with local entrepreneurs, investors, attorneys, and our panelists! This is an event you will not want to miss!

For more information and to purchase tickets, please contact Joanna Chen, Esq., IP Committee Chair of Santa Monica Bar Association [email protected].

Managing Partner Daniel Cislo, Esq. and Bennet Kelley, Esq. of Internet Law Center Presented at an SMBA First Friday Lunch Regarding “Internet Law Developments Relating to IP and Reputation Management”

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Managing Partner, Daniel M. Cislo, Esq. and Bennet Kelley, Esq. made IP presentations at a Santa Monica Bar Association First Friday Lunch, discussing “Internet Law Developments Relating to IP and Reputation Management.”

Dan discussed the IP issues pertaining to the Internet, such as internet jurisdiction in the 9th Circuit along with trademark issues, such as domain names, cybersquatting, copyright issues such as the DMCA, anti-circumvention rules, fair use, as well as take-down notices, ICANN proceedings, software patents regarding to function, and many other interesting IP issues relating to the Internet.

Bennet discussed reputation management pertaining to the Internet, such as issues with RipOffReport.com and using copyright as a shield, consumer gag agreements, burying defamation with positive content, the Streisand effect, anti-SLAPP motions, and setting up alerts for your business name and competitors.

Thank you to everyone who attended up and please check on the Santa Monica Bar Association’s website regarding future events: http://smba.net/

WeHealth, which is a PatentFiler client, is a Finalist at BCLA Entrepreneurship Summit Pitch Challenge

One of our PatentFiler clients, WeHealth, competed as a finalist at the annual BCLA Entrepreneurship Summit Pitch Challenge hosted by the University of California at Los Angeles Campus.  CEO of WeHealth William Raasch cited his provisional patent application filed on PatentFiler.com as a key component of his submission pitch for the BCLA Pitch Challenge.

WeHealth (WeHealth.co) uses a validated crowdsourcing platform to identify patients with rare diseases and connect them with advocacy groups and clinical trials.  The healthcare industry is not built to look for rare diseases, and the average rare disease patient waits 5 years and sees 7 doctors before diagnosis.

WeHealth uses referral-based crowdsourcing, which was developed to successfully find “needle in a haystack” targets, to find rare disease patients based on a specific profile of symptoms – even if they do not yet know that they have the disease.  Partners use the WeHealth platform to recruit these patients to join advocacy communities or enroll in clinical trials.

Standup Paddle Sports, LLC v. Focus Surfboards, Inc., U.S.D.C., Central District of California, Case No. CV 15-8467 JAK-JC Favorably Settled

Standup Paddle Sports, LLC (“SUP”), the standup paddle boarding pioneer, based in Santa Barbara, California, sued Focus Surfboards, Inc. (“Focus”) for various violations of the Lanham Act, unfair competition, fraud, and breach of contract.

The complaint alleged that Focus covered over, or allowed to be covered over, SUP’s trademarks and logos on the standup paddle board used by Mo Freitas in a standup paddle board racing competition in Idaho that he won.  This obscuring of SUP’s trademarks cost SUP valuable publicity.

SUP (represented by Cislo & Thomas and co-counsel David Tappeiner and Mark DePaco of Fell, Marking, Abkin, Montgomery, Granet & Raney LLP) forcefully stated SUP’s claims in the complaint, and aggressively pursued early discovery in the case, resulting in a favorable settlement on behalf of SUP before litigation costs began to dramatically escalate.

What does Brexit Mean for EU IP Law?

Takeaway: With the United Kingdom leaving the European Union, the new Unified Patent Court (“UPC”) and Unitary Patent may be delayed in becoming operative and applying for EU trademarks in the UK will likely change

With respect to the United Kingdom’s (“UK”) vote to leave the European Union (“EU”), known as “Brexit,” it is important to understand the vote’s possible impact on intellectual property (“IP”) rights that may have been secured in the EU under the mindset that IP rights in the EU would cover the UK.

Initially, it should be kept in mind that until the UK actually leaves the EU, and negotiates the terms thereof over the next two (2) years or so, the current procedures and operations are believed to remain in effect.

With respect to European patents, the European patent system is governed by the European Patent Convention, which operates independently of the EU.  The UK is a member of the European Patent Convention, and there is no indication that it will not continue to be a member.  Therefore, the UK can continue to be designated in a European patent application.  There is, however, a new Unified Patent Court in Europe available to handle patent disputes, which was set to come online in 2017.  The exit of the UK from the EU may delay the start date for the United Patent Court.

With respect to EU Trademarks and Designs (also known as Community Trade Marks and Registered Community Designs, respectively) applying in the UK, this is likely to change upon the formal exit of the UK from the EU, and will depend on the negotiated terms of the exit.  It could be that existing EU Trademarks and Designs will need to be “validated” in the UK in order to have effect in the UK.  The exit negotiations may provide for a “validation” procedure that will secure rights in the UK to existing EU rights owners without a loss in priority, filing dates, grant dates, etc.  Another approach that clients may take is to simply register their rights in the UK, which could be tricky for designs if any bar dates apply, or trademarks if there are intervening users.

Ultimately, while there is time to prepare for the transition of the UK out of the EU in terms of IP rights and corresponding licensing or other IP agreements, we recommend that owners of IP rights in the EU audit their IP rights to determine next steps in making sure that they will be covered in the UK once the UK leaves the EU.

Disclaimer – we are not European IP attorneys and base the foregoing on what we have read and studied.  For clients or companies seeking advice in this area, we would, of course, provide such advice in conjunction with our European associates.

Federal Circuit Compares Mark in Their Entireties for Likelihood of Confusion Analysis

Takeaway: When making a likelihood of confusion analysis, for similarity of the marks, the court is to compare the marks without dissecting the letters, but as a single unitary expression.

The Federal Circuit, in Oakville Hills Cellar, Inc. v. Georgallis Holdings, LLC, [2016-1103], agreed with the TTAB and held that there is no likelihood of confusion between Oakville’s registered mark MAYA and Georgallis’s applied-for mark MAYARI.

While Oakville argued that the Board MAYA dominated both marks and the suffix –RI is minor, and therefore causes confusion, Georgallis responded that the Board correctly analyzed that both MAYA and RI are elements without their own meaning and therefore MAYARI should be perceived as a unitary whole.

Further, Georgallis agreed with the Board for considering the marks in their entireties and finding that MAYA is familiar to U.S. consumers as a reference to the Mayan culture and as a popular female given name, whereas MAYARI is unfamiliar to U.S. consumers.

The Federal Circuit held that the determination of similarity or dissimilarity of the marks must be done in their entireties.  The Federal Circuit stated that there was no evidence that a customer would view the mark logically as MAYA plus RI, rather than as a single unitary expression., and therefore no reason to break the term into MAYA-RI than MAY-ARI or MA-YARI.

The Federal Circuit further emphasized that a single DuPont factor, such as the dissimilarity of the mark in the case, may be dispositive in a likelihood of confusion analysis.

Supreme Court Overturns Seagate and Returns More Discretion to District Court Regarding Awarding Enhanced Damages

Takeaway: Supreme Court’s stance on enhanced damages for patent infringement is a win for patent holders, such that their burden of proof to show egregious behavior is lowered and the rigid Seagate test that required a showing of “objective recklessness” was overturned. Enhanced damages up to 3 times actual damages may become more common. 

On June 13, 2016, the Supreme Court unanimously overturned the Federal Circuit’s holding in In re Seagate Technology, LLC, 497 F. 3d 1360, which required the district courts to consider enhanced damages only if there was “objective recklessness,” and returned some discretion back to the district court.  Halo Electronics, Inc. v. Pulse Electronics, Inc., U.S., No. 14-1513, 6/13/2016; Stryker Corp. v. Zimmer, U.S., No. 14-1520, 6/13/2016.

Further, the Supreme Court held that the burden of proving that an egregious circumstance warranting enhanced damages is at a lower standard of a “preponderance of the evidence,” which is standard generally applied to infringement, rather than “clear and convincing evidence,” and that the standard for appellate review for such awards is abuse of discretion. However, in a concurring opinion (joined by Justices Kennedy and Alito), Justice Breyer pointed out the potential danger to innovation if too many enhanced damages were rewarded.

In 2007, the Federal Circuit held in In re Seagate Technology, LLC, that the standard for awarding enhanced damages under 35 U.S.C. §284 follows a two-part test.  The first is an objective prong wherein the patent owner must show that the infringer acted despite an objectively high likelihood that its actions would constitute infringement and the second is a subjective prong wherein the patent owner must show that the infringer either knew or should have known of the risk of infringement. 

The Supreme Court found the Seagate test to be “unduly rigid” and “impermissibly encumbers the statutory grant of discretion to district courts.”  Id. at 8-9.  Chief Justice Roberts pointed out that the use of the word “may” in 35 U.S.C. §284 was evidence that the district court was to be given discretion to increase damages. 

“The Seagate test aggravates the problem by making dispositive the ability of the infringer to muster a reasonable (even though unsuccessful) defense at the infringement trial.  The existence of such a defense insulates the infringer from enhanced damages, even if he did not act on the basis of the defense or was even aware of it.  Under that standard, someone who plunders a patent–infringing it without any reason to suppose his conduct is arguably defensible–can nevertheless escape any comeuppance under §284 solely on the strength of his attorney’s ingenuity.”

The Court further analyzed that using the higher “clear and convincing evidence” to prove enhanced damages was inconsistent with 35 U.S.C. §284 because it imposed no specific evidentiary burden and therefore should not default to a higher standard.

The Court also warned the lower courts that awarding enhanced damages more commonly because of this holding would result in catastrophic and far-reaching results.  Now, under Halo and Styker, undoubtedly, the state of mind of infringers will be examined under the microscope.

Fee-Shifting for Copyright Cases Places “Significant Weight” on “Objective Unreasonableness of a Losing Party’s Position.”

Takeaway: For fee-shifting in copyright cases, courts must place “significant weight” on the “objective unreasonableness of a losing party’s position,” which will affect attorneys fee awards in copyright cases. 

On June 16, 2016, the Supreme Court unanimously held that the district courts must place “substantial weight” on objective reasonableness or lack thereof of a losing party’s position when considering whether or not to award discretionary attorney fees. Kirtsaeng v. John Wiley & Sons, Inc., 579 U.S. __ (2016).

The primary guideline that the Supreme Court set was in Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994), wherein the Court held that for copyright law, under Section 505 of the Copyright Act,  a district court’s broad discretion regarding awarding attorneys’ fees was based on four nonexclusive factors that were to be applied evenhandedly: (1) frivolousness of a claim or defense, (2) motivation in bringing the lawsuit, (3) objective reasonableness of their legal position, and (4) the need surrounding a particular circumstances to advance considerations of compensation and deterrence.

In light of Fogerty, district courts applied various weight to the factors delineated by the Supreme Court.  The 2nd U.S. Circuit Court of Appeals agreed with the district court that placed “significant weight” on the reasonableness of a defendant’s losing position.

The Court reiterated the ultimate goal which should be to further “the purpose of the Copyright Act” and generally encourage litigation of meritorious claims and discourage frivolous claims.  Therefore, the Court held that the proper test was to focus on the objective unreasonableness of the losing party’s position rather than whether or not the case revolves around a close issue.  By taking the focus away from how close or important an issue is, more risk-averse parties would not be discouraged from pursuing their reasonable legal positions.

The Court, however, clarified that “objective reasonableness” is not a dispositive or controlling factor, but carries “significant weight.”  For example, fee-shifting may be ordered due to litigation misconduct or in order to deter repeated infringement as well.

Inherency Cannot be Established by Probabilities When Determining if a Prior Art Reference Invalidates a Patent

Takeaway: Inherency assertions, in terms of finding anticipation based on prior art, cannot be dependent on the contention that a component has the probability or possibility of performing a certain function.

On March 31, 2016 the Patent Trial and Appeal Board (PTAB or Board) restated that inherency assertions must be based on features originating in the related prior art referencesAlarm.com v. Vivint, Inc., Case No. IPR 2015-02204.    Inherency, the Board stated, “may not be established by probabilities or possibilities. The mere fact that a certain thing may result from a given set of circumstances is not sufficient.”

In Alarm.com, the plaintiff sought an inter partes review (IPR) of Vivint’s patent related to a remote monitoring system.    Several functions of the monitoring system were carried out by a ‘server.’  [Notably, an IPR is an abbreviated litigation pathway; a recent implementation under the America Invents Act with the purpose of decreasing the time and cost of extended litigation in open court.]

In Alarm.com, the central prior art reference at issue was a manual for a system called Scadaware that Vivint alleged failed entirely to disclose the claimed “server.”  In addition, Vivint disputed Alarm.com’s reliance on features divided between two separate components of the system.

Alarm.com’s response was that the reprogramming at issue actually occurred in practice, and that it was possible or probable that only one (of the possible two) components could perform both functions.

The Board held that this later reasoning was in error, stating “it is not enough to find that a prior art device is capable of being modified to operate in a manner that would anticipate the claims.”    The Board also rejected the argument that inherency was established because a second component of the system could perform the functions.

In summary, the Board refused to institute the IPR for the above reasons, finding that assertions of inherency must be based on concrete features that arise from the prior art references at issue.