June 2017

Dancing Baby Will Not be Heard Before the Supreme Court

Takeaway: Before a takedown notice can be issued for copyrighted material under the Digital Millennium Copyright Act, fair use must be considered. If the copyright holder has a subjective good faith belief that the alleged infringement is not fair use, they will not be held liable in court for sending the takedown notice.

On June 19, the Supreme Court denied certiorari to Lenz v. Universal Music Corp., better known as the dancing baby case. A case ten years in the making, the dispute first arose in February 2007 when Stephanie Lenz posted a twenty-nine second clip of her 13-month-old son dancing to Prince’s song “Let’s Go Crazy.” The song is not audible for the entirety of the clip and the sound quality is poor. In June 2007, the copyright holder for “Let’s Go Crazy,” Universal, issued a takedown notice to YouTube claiming the video was a copyright violation. YouTube removed the video and informed Lenz of the claims for infringement. Later that month, Lenz sent YouTube a counter-notification arguing that the video was fair use and that it should be reposted. In July 2007, Lenz filed suit against Universal for misrepresentation under the Digital Millennium Copyright Act (DMCA) in an attempt to get a declaration from the court that this was a non-infringing use of the copyrighted song.

Lenz’s case was made possible with support from the Electronic Frontier Foundation (EFF) in an attempt to protect people’s ability to post videos online under the protection of fair use and free speech. EFF and Stanford University are working together to determine the best way to issue takedown notices under the DMCA. Staff attorney Marcia Hofmann said, “Copyright abuse can shut down online artists, political analysts or – as in this case – ordinary families who simply want to share snippets of their day-to-day lives. Universal must stop making groundless infringement claims that trample on fair use and free speech.”

The DMCA, passed in 1996, is currently the subject of criticism right now. There are many who believe that it needs to be updated to reflect the current laws and policies. According to the DMCA, the copyright holder is required to consider if the use of the copyrighted material was allowed by the copyright owner or by law. In September 2007, Prince said that he was planning to “reclaim his art on the internet,” and the following month, Universal released a statement saying that both Prince and Universal intended to take down all user-generated content involving Prince as a matter of principle. Based on those statements, Lenz argued that the takedown notices were being issued in bad faith and that much of the Prince related content were non-infringing examples of fair use.

The District Court held that copyright owners have to consider fair use defenses prior to issuing DMCA takedown notices, denying Universal’s motion to dismiss and Lenz’s misrepresentation claim. The court further stated that Universal’s concerns as to the burden in considering fair use before issuing takedown notices was exaggerated and that good faith consideration of fair use is an adequate defense against misrepresentation.

At the Ninth Circuit Court of Appeals, the District Court was upheld. The court held that while fair use is an affirmative defense, copyright holders have a “duty to consider – in good faith and prior to sending a takedown notification – whether allegedly infringing material constitutes fair use.” There is one caveat though—if the copyright owner subjectively believed in good faith that the video or other content was not an example of fair use, then they would not be held liable for issuing the takedown notice.

Lenz appealed to the Supreme Court on the issues of “Whether the [court] erred in concluding that the affirmation of a good-faith belief that a given use of material is not authorized ‘by the copyright owner, its agent, or the law,’ required under [the DMCA], may be purely subjective and, therefore, that an unreasonable belief — such as a belief formed without consideration of the statutory fair use factors — will not subject the sender of a takedown notice to liability under … the DMCA.”

If the case had been granted certiorari, Universal’s original takedown notice from 2007 would have been questioned under the Ninth Circuit’s holding. As certiorari was not granted, the case will now be remanded to a lower court if EFF decides to do so. EFF’s legal director Corynne McSherry stated, “Sadly, the 9th Circuit’s ruling in this case did not go far enough to ensure that copyright holders will be held accountable if they force content to be taken down based on unreasonable charges of infringement, and we had hoped the Court would remedy that.” Regardless, the strong precedent that a copyright holder must inquire into fair use before sending DMCA takedown notices still stands.

From Covfefe to Mustache Guards

Takeaway: The sky is the limit and creativity is rewarded when it comes to trademarking or patenting your innovation.

Since President Donald Trump’s now famous “covfefe” tweet stating, “Despite the constant negative press covfefe,” the U.S. Patent and Trademark Office (UPSTO) has received over 30 filings with variations of the word “covfefe.” Twenty-five of those filings were just attempted trademarks of the word, two more wanted to claim “Covfefe Coffee,” and two more wanted to claim #covfefe. The filings came from companies and individuals for items such as beer, beach balls, costumes, footwear, sandwiches, maternity outfits, and even clothing for domestic pets.

While covfefe is a not a dictionary defined word, it isn’t the first of its kind. If anything, made-up or coined words actually hold the highest degree of protection as a trademark, as being fanciful and inherently distinctive. Olympic swimmer Ryan Lochte filed a trademark application for the phrase “Jeah” on items such as sunglasses, workout DVDs, jewelry, mugs, water bottles, and T-shirts amongst other items. New York Knicks starter Jeremy Lin trademarked “Linsanity.”

Beyond nonsensical words, celebrities, politicians, and more have trademarked some of the most bizarre phrases, reflecting how widespread they consider their reach to be. Taylor Swift has trademarked song lyrics such as “this sick beat” and “party like it’s 1989.” Beyonce and Jay-Z trademarked their daughter Blue Ivy Carter’s name. Boise State University trademarked not only blue football fields, but any “non-green field.”

What about patents? William Purdy Hellings of Aurora Nebraska patented a mustache guard in 1890 to “enable the [with] a large mustache to eat or drink without being annoyed by his mustache getting into his victuals and mouth.” In 2010, Roy C. Sanchez of Las Vegas patented massage socks designed to relax your feet muscles inside your socks without removing your shoes. And in 2005, Michael E. Berglass of New York patented a jewelry toothbrush designed to remind you to brush your teeth after every meal by having a toothbrush with you at all times.

What does this mean for you? The sky’s the limit and creativity is rewarded in the realm of intellectual property law.

Supreme Court Speeds up Approval of Generic Biotech Drugs

Takeaway: Biosimilar drug producers no longer have to get FDA approval of their generic drugs before giving notice of commercial marketing to competitors, which may mean more choices and cheaper drug prices.

On June 12, the Supreme Court handed down a much-anticipated opinion that is a big win for companies working on biosimilar drugs. Justice Clarence Thomas authored the unanimous opinion, holding that biosimilar companies will be able to launch their generic products as soon as the data exclusivity on the original product lapses. Amgen Inc. v. Sandoz Inc. (2017). There is no longer a requirement for companies who are making biosimilars to wait an extra six months after getting approval from the Food and Drug Administration (FDA) to sell the product. The dispute was between Sandoz, a unit of Swiss drug giant Novartis, and the American multinational biopharmaceutical company Amgen over Amgen’s cancer drug Neupogen.

Neupogen is a biologic, which is a drug that is not made from chemicals, but from living cells. The drugs have helped make major advances in treating diseases, but are extremely costly to produce. Designed to prevent infections in chemotherapy patients, Sandoz created their version of the drug (called Zarxio) to compete with Neupogen. Zarxio is a generic that costs approximately 15% less than Amgen’s product and helps boost red blood cells in cancer patients.

Amgen originally filed a patent infringement suit against Sandoz claiming they violated the 2010 Biologics Price Competition and Innovation Act (BPCIA). The 2010 law gives the original product a 12-year period of exclusivity before allowing cheaper, generic versions to be introduced into the market. The original drug manufacturers (here Amgen) can gain billions of dollars in sales with this market lead-time. The law also requires the manufacturers of biosimilars to give a six-month notice of sales to rivals before engaging in any commercial marketing. Amgen claimed that Sandoz did not disclose details of its application and gave improper notice before commercial marketing. When Sandoz gave notice of commercial marketing, Zarxio had not yet received FDA approval.

In March 2015, Zarxio was the first biosimilar to be approved by the FDA under the BPCIA. Zarxio was approved as a biosimilar, meaning that the drug is not interchangeable and the healthcare provider who prescribed the original drug must approve the product substitute before it can be used. The FDA’s approval of Zarxio was based on a number of factors that showed the drug’s biosimilarity to Neupogen.

In 2015, a federal appeals court found in favor of Amgen, holding that the six-month notice cannot occur until the biosimilar drug gets approval from federal regulators. Sandoz countered this, arguing that this allowed an additional six months of unfair exclusive sales to the original drug maker.

There were two issues before the Supreme Court: (1) if there is a possibility of granting an injunction under Federal Law for alleged violations of the BPCIA and (2) if the applicant’s notice must occur not only six months before commercial marketing, but also after obtaining a license from the FDA.

Sandoz won on both arguments. On the first prong, the Court held that the BPCIA is not enforceable by an injunction granted under Federal Law, but remanded to the Federal Circuit to determine if there is a state-law injunction possibility. On the second prong, the Court held that the generic drug maker is not required to, but may give the six-month notice before obtaining an FDA license.

Redskins Score a Victory After Recent Supreme Court Decision

Takeaway: The Supreme Court’s decision in Lee v. Tam is likely to be a victory for the Washington Redskins and their fight against the U.S. Patent and Trademark Office to maintain registration of their six REDSKINS-related trademarks. This is also a key win for anyone looking to register a trademark that was previously considered disparaging or defamatory. We expect a flood of crass or profane trademark filings.

Image retrieved from: http://www.thedailybeast.com

The Supreme Court’s decision in Lee v. Tam (now Matal v. Tam) was not only a victory for Simon Tam’s band The Slants, but also organizations such as the Washington Redskins. Justice Samuel Alito, writing for the court, held that the Government’s ban on disparaging trademarks was an unconstitutional regulation of private speech that allows the government to silence or muffle disfavored viewpoints under the guise of government speech.

The National Football League team, the Redskins, was pleased with the result, as six of their “redskins” trademarks were cancelled in 2014 when the UPSTO determined that the term “redskin” was disparaging to Native Americans.

Pro Football, Inc. v. Blackhorse currently sits before the United States Court of Appeals for the Fourth Circuit (Virginia) waiting on the decision in Lee v. Tam from the Supreme Court. Although the Redskins organization tried to join its case to Lee v. Tam, it was rejected, as was its petition for certiorari to the Supreme Court. The organization instead settled for filing an amicus brief.

Pro Football, Inc. v. Blackhorse deals with the same provision of the Lanham Act that Lee v. Tam does, making it likely that the Redskins will win their Fourth Circuit appeal and unlikely that there will be a formal attempt to legally pressure the team into changing its name.

The Redskins’ Attorney Lisa Blatt said that the team was “thrilled with [the] unanimous decision as it resolves the Redskins’ longstanding dispute with the government. The Supreme Court vindicated the team’s position that the 1st Amendment blocks the government from denying or canceling a trademark registration based on the government’s opinion.” In 2013, team owner Daniel Snyder told USA Today that he would not change the team’s name, a stance he stood by even when the USPTO canceled a number of the team’s trademarks.

The national Change the Mascot campaign also issued a statement stating, “This is an issue we have always believed will not be solved in a courtroom, and this ruling does not change some very clear facts. Washington’s football team promotes, markets, and profits from the use of a word that is not merely offensive – it is a dictionary-defined racial slur designed from the beginning to promote hatred and bigotry against Native Americans… If the NFL wants to live up to its statements about placing importance on equality, then it shouldn’t hide behind these rulings, but should act to end this hateful and degrading slur.”

The decision in Lee v. Tam represents a strange paradox between allowing marginalized communities to decide how to label themselves and allowing the registration of slanderous terms. While it is a positive outcome for organizations such as the Redskins, it does not mean that the First Amendment will be interpreted to allow the maximum amount of free speech. The Supreme Court made it clear that trademarks for phrases that lie about competitors could be restricted, as purely commercial speech is not strongly protected by the First Amendment. This is reflected in the existence of libel laws and consumer fraud protection.

Some academics such as Florida Coastal School of Law’s Roger Graves predict that the Redskins may be celebrating too soon. Graves predicts that the appeals court may focus on the fact that Snyder has not attempted to reclaim the world “redskin,” that he is not of Native American descent, and that he does not support Native American tribes or minority interests. He emphasizes that First Amendment rights are determined by balancing interests, not absolutes, and that the court may decide that those who want to create a positive meaning that come from a historically negative term may have a greater equity of interest than one who perpetuates historically negative connotations. This may carry over into the imminent influx of trademark filings for words previously restricted based on their inappropriate or defamatory meanings, but only time will tell how the courts ultimately interpret the newfound trademark freedom.

Supreme Court Grants Certiorari to Cases Challenging the Patent Trial and Appeal Board’s Power

Takeaway: The Supreme Court is questioning the power of the U.S. Patent Office to take away patent rights once granted. The court will hear one case on whether the Patent Trial and Appeal Board (PTAB) must address every issue in the final written decision and another on whether or not the PTAB’s inter parte review violates the 7th Amendment against an unlawful taking.

On May 22, the Supreme Court granted certiorari to SAS Institute Inc. v. Lee to determine whether the Patent Trial and Appeal Board (PTAB) has the right to issue a final written decision on the patentability of all patent claims challenged by the petitioner during an inter partes review or if it only has to do so in regards to some patent claims. SAS Institute is arguing that the PTAB has the responsibility to address all the claims challenged by a petitioner in an inter partes review.

The Federal Circuit in both SAS Institute and February 2016 case Synopsys, Inc. v. Mentor Graphics Corp. found that the PTAB did not have to address every claim made as long as the claim did not become a part of the trial instituted by the PTAB later on. In other words, in order for the issue to be heard, the petitioner must have a reasonable likelihood of prevailing; otherwise, the PTAB does not have to hear that particular issue. The brief filed on behalf of then USPTO Director Lee cites Synopsys as precedent and emphasizes that review of the case is unwarranted because the Federal Circuit had heard the case en banc. If the PTAB has to issue a final written decision on every issue that is brought, then every issue becomes appealable. It is predicted that the Supreme Court will favor SAS Institute, as it seems unlikely that they would have granted certiorari otherwise.

On June 12, the Supreme Court granted certiorari to Oil States v. Greene’s Energy, a case involving two oil and gas fracking companies. The U.S. Patent and Trademark Office (USPTO) used inter partes review to analyze the validity of existing patents. The challenge is brought by Oil States Energy Services, LLC on the grounds that inter partes review is unconstitutional in that it extinguishes private property rights through a non-Article III forum without a jury.

Oil States’ argument is that patents create constitutionally protected patent rights that cannot be revoked by the Government without legal process. Under the 7th Amendment, common law suits involving more than twenty dollars (i.e. patents) have a right of trial by jury. In 2011, Congress passed the America Invents Act in an attempt to fix inefficiencies in the patent system. The Act gives the USPTO’s Patent and Trial Board the ability to review and extinguish existing patent rights in its inter partes review. Typically, an alleged patent infringer asks the Board to look into an existing patent and invalidate it if it is anticipated by prior art or is considered to be obvious. If the Board can invalidate the patent based on this process, Oil States argues that the patent holder’s constitutional rights are being violated because they should have a right to trial by jury.

Both grants of certiorari come on the heels of TC Heartland LLC v. Kraft Foods Group Brands LLC, when the Court held in a unanimous decision written by Justice Thomas that 28 U.S.C. 1400(b) is the only applicable patent venue statute. This typically requires patent owners to sue patent infringers in a district court where the infringer is incorporated. It is more of note that the Supreme Court has granted certiorari to Oil States and SAS Institute, both representing additional challenges to the PTAB’s power. We will have to wait and see how the litigation proceeds.
U.S. Patent and Trademark Office Director Michelle Lee Resigns, Joseph Matal Named as Acting Director

Takeaway: It is unclear who will be the next Director of the USPTO, and we await the Trump Administration appointment.
On June 6, Under Secretary of Commerce for Intellectual Property and Director of the USPTO Michelle Lee sent an e-mail to employees of the USPTO resigning from her position. She did not give a reason for her resignation and the only comment comes from Commerce Secretary Wilbur Ross who said, “We thank Michelle Lee for her service to her country and to the Department of Commerce…As the first woman in our country’s history to serve as Director of the [USPTO], Michelle has worked tirelessly to serve our stakeholders and the American public. We wish her well in her next endeavor.” Ross named USPTO Associate Solicitor Joseph Matal to perform the functions and duties of Director of the USPTO during the nomination and confirmation process for a new director.

In his previous position, Matal was responsible for briefing and arguing patent and trademark appeals decisions before the U.S. Court of Appeals for the Federal Circuit and the U.S. District Courts. He helped assist the development of legal positions taken by the U.S. Solicitor General in patent and copyright cases before the U.S. Supreme Court. Matal served as acting Chief of Staff for the USPTO and advised the director on legislative matters. Matal previously served as the General Counsel of the Judiciary Committee for former Senator Jeff Sessions and as a Judiciary Committee Counsel to former Senator Jon Kyl. There, he was the principal staff drafter and negotiator of what eventually became the first patent law overhaul since 1952, the Leahy-Smith America Invents Act. Matal holds a bachelor’s degree from Stanford University and a law degree from the University of California at Berkeley.

Lee’s position as Director of the USPTO was not without controversy. As an appointee of former President Barack Obama, it was uncertain if she would remain as Director once President Donald Trump took office. On inauguration day, January 20, 2017, Lee was listed as the Director on the USPTO’s website, but the position of USPTO Director was listed as vacant on the Department of Commerce’s website. In February, the Department of Commerce and the USPTO both declined to formally speak about Lee’s status and her signature still appeared on issued patents and other official documents issued by the USPTO. Finally, on March 10th, the USPTO confirmed that Lee would remain as Director in a letter responding to a Freedom of Information Act request on Lee’s position at the USPTO. The USPTO, Department of Commerce, or White House did not make a formal statement.

As Lee’s permanency at the USPTO was unknown, over 50 D.C. trade associations and technological companies including Amazon, Facebook, and Google (Lee’s previous employer) signed a letter supporting Lee in her position as Director of USPTO. On March 30, 2017, credible sources released that Commerce Secretary Wilbur Ross was interviewing candidates for the Director position. The Department of Commerce leadership page continued to list the position of Director USPTO as vacant, and Lee continued to act as Director until her resignation on June 6, 2017. Lee’s aspirations to be a federal judge are known, so we may eventually see her behind the bench.


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