Letter from AmeriKat: From Sea to Shining Sea

The AmeriKat was travelling again this past week. Irrespective of the past 25 years of frequent flying transatlantic-ally, continentally, transpacific-ally, and more, she is always surprised to find herself in a completely new location after seemingly no time at all. Leaving behind one established life and role and trading it in for a new role, set of contacts and friends has always given the AmeriKat a bit of a thrill. She can discard her "American lawyer in London" role when she steps off the plane in Dallas and just be someone welcomed home by immigration officials. Entering immigration in other ports her role is constantly transformed by a stamp in the passport to tourist, visiting family, attending a conference, here for business, or "living and working here". The only constant in these travels, from country to country and coast to coast, is her trusty Coach luggage, who has seen her across hundreds of thousands of miles, over-head bins and immigration authorities and is the subject of her first story this week.

Jo-Ann Fabrics sued for infringing fabric by Coach

In most isolated strip malls in U.S. cities from sea to shining sea, usually in between a dry-cleaners and a cell-phone retailer, is a Jo-Ann Fabrics where soccer-moms, crafters, and all in between go to purchase a multitude of fabrics, zippers, buttons and threads. Last Monday, Jo-Ann Fabrics was sued for trade mark, trade dress and copyright infringement in Chicago federal court by New York-based high-end leather goods manufacturer and AmeriKat favorite, Coach. Coach is complaining about a fleece fabric being sold by Jo-Ann Fabrics in store and on-line which is infringing Coach's signature "C" trade mark, associated trade dress rights and copyright in the signature "C" trade mark design (picture, right). Coach is asking the court for $2 million per each infringing mark, additional damages, attorney fees, and an injunction restraining future sales of the infringing product.

The "C" trade mark and insignia is on several of Coach's signature lines of bags, wallets, belts, shoes, hats, scarves and the lining therein and was registered as a U.S. trade mark in September 2002. You can even spot the AmeriKat in Holborn by the violet Coach scarf with the trade mark double "C" pattern that she carries on her Coach bag. However, the "C" insignia and pattern is a prime target for counterfeiters and counterfeit Coach bags (see AmeriKat report on previous action taken by Coach in Chicago) and the market is rife with copycats. According to the complaint Coach sells more than $3 billion products annually and has filed more than 500 trade mark infringement suits since 2010.

According to the complaint the fabric (picture, left) was designed and supplied to Jo-Ann Fabric by the named co-defendant, Feldman Co. and together with Jo-Ann Fabric are accused by Coach of trying to benefit from the "incalcuable goodwill" associated with Coach's C trade mark by selling the allegedly infringing fabric. Coach also argue that consumers will be confused as to the source of the fabric - the AmeriKat does not disagree, but there are some differences between the two fabrics. The "C"s on Jo-Ann's Fabric fabric are almost closed, looking more like "O"s than the clearly differentiated "C"s on Coach's fabric. The AmeriKat believes these differences not to be fatal and also believes that although a consumer would be able to recognize the difference after closer study of the fabric, initial interest confusion is nevertheless present.

Had the Amerikat seen the fabric in a Jo-Ann's Fabrics store her immediate reaction would first be "Why is Coach allowing their signature print fabric to be sold in Jo-Ann's Fabrics?"- a reaction that goes first to the pure dilution argument as argued by the complaint. Her next reaction would be one dealing with tarnishment of the mark - "Why is Coach allowing their signature print fabric to be printed on fleece and sold in Jo-Ann fabrics?". As far as the AmeriKat knows from the Coach range, they have never used their signature print on fleece - a fabric that is not associated with the up-market silk and leather ranges produced by Coach. Of note Jo-Ann Fabrics does sell fabrics with trade mark names and logos, namely for major league sports teams such as the New York Yankees and licensed fabrics from Disney. The AmeriKat does not anticipate this case going all that far and expects it to settle quite quickly given the similarity of the designs and strength of reputation in Coach's mark, however it acts as a warning to fabric buyers not to skate so closely to the edge of trade mark infringement.

Organic farmers sue Monsanto over genetically modified seeds

From Illinois to New York now. Two weeks ago, the Public Patent Foundation (PUBPAT), a non-for profit legal services organization based out of the Cardozo School of Law, filed a pre-emptive lawsuit in Manhattan federal court on behalf of 60 plaintiff family farmers, seed businesses and organic agricultural organizations against agricultural biotechnology company Monsanto challenging their patents on genetically modified seed. The lawsuit was pre-emptive in order to protect the class from anticipated patent infringement suits should their crops ever be contaminated by Monsanto's genetically modified seed. The AmeriKat has read about the 60 plaintiffs and noted that they included three farmers and seed producers from her home state of New Mexico, Chispas Farms, in Albuquerque, Jardin del Alma from Monticello and farmer Paul Romero from Espanola - a reminder that patent litigation does not just impact big businesses in Silicon Valley, but your neighbors.

PUBPAT's Executive Director and law lecturer at the Cardozo School of Law, Dan Ravicher, stated that the case

"asks whether Monsanto has the right to sue organic farmers for patent infringement if Monsanto's transgenic seed should land on their property. It seems quite perverse that an organic farmer contaminated by transgenic seed should be accused of patent infringement, but Monsanto has made such accusations before and is notorious for having sued hundreds of farmers for patent infringement, so we had to act to protect the interests of our clients."

For anyone who has seen Food, Inc., you will be aware about such legal issues involving Monsanto (click here for an excerpt of Food, Inc. about Monsanto) and the case of Percy Schmeiser. Genetically modified seed are alleged to contaminate and destroy organic seeds when they enter organic crops. Further, legally speaking, as with what happened with Schmeiser, when genetically modified seed enters a neighbouring crop and grows and/or cross pollinates with a farmer's crop the farmer can be held to be infringing the patent of that seed. PUBPAT is thus asking the court to declare that if organic farmers are contaminated by Monsanto's seed they need not fear of being threatened with patent infringement proceedings.

PUBPAT are also arguing that Monsanto's genetically modified patents for seeds are invalid because they do not meet the "usefulness" criteria under section 101 of the Patent Act. An invention is "useful" under section 101 if it is capable of providing some identifiable benefit. The complaint cites Justice Story's dicta in Lowell v Lewis (1817) which stated that inventions that are "injurious to the well being, good policy, or sound morals of society" are unpatentable. Ravicher's argument is that genetically modified seed has negative economic and health effects, and the promised benefits and usefulness of the seed, namely increased production and decreased herbicide use, are false. (picture, right - alfalfa)

Monsanto stated that the lawsuit was a "publicity stunt" and that Monsanto is committed to never suing farmers over the inadvertent presence of their genetically modified seed in their fields - (the AmeriKat wonders how does one even prove or disprove inadvertent presence of GM seeds?) Monsanto also stated that the validity of their patents was without question and supported by legal precedent. Monsanto stated that:

"The plaintiffs' approach is a publicity stunt designed to confuse the facts about American agriculture. These efforts seek to reduce private and public investment in the development of new higher-yielding seed technologies. This attack comes at a time when the world needs every agricultural tool available to meet the needs of a growing population, expected to reach 9 billion people by 2050. While we respect the views of organic farmers as it relates to the products they choose to grow, we don't believe that American agriculture faces an all-or-nothing approach."

The suit comes soon after the US Department of Agriculture (USDA) fully deregulated genetically modified strains of alfalfa. The USDA has also allowed farmers to plant genetically modified sugar beets without restrictions while it completes its Environmental Impact Statement (EIS) on that crop. The timing of the lawsuit suggests that the plaintiffs groups may feel that the time is right to take action before an increasing number of GM crops are deregulated by the USDA and before the alleged impacts of GM crops on organic crops become more serious.

The AmeriKat will be watching this fight with anticipation. Although it is unlikely that PUBPAT will be able to create much of a dent in such a powerful organization, like Monsanto, she is interested in any attempt to try to address the balance of power created by the patent system in the agricultural industry. But what do readers think - is it a hopeless publicity stunt, or are the invalidity arguments with merit?

The AmeriKat recommends this recent interesting article by Anna Lappe in The Atlantic about the issues surrounding GM, Monsanto and food production.

Byrne settles with Crist over Talking Heads song use

From New York, we fly south to Florida where Florida's former Governor Charlie Crist settled (picture, left) a copyright infringement lawsuit last week brought against him by Talking Heads' David Byrne after Crist used the 1985 Talking Heads's song "Road to Nowhere" in a political attack ad during his Senate campaign last year. Crist's campaign failed to seek permission from Byrne, the Talking Heads or Warner Brothers when they used the song in the Senate campaign video published on YouTube attacking Crist's Republican opposition, Marco Rubio. Byrne sued Crist for $1 million. Byrne said last year that the lawsuit was

"not about politics...It's about copyright and about the fact that it does imply that I would have licensed it and endorsed him and whatever he stands for."

Rubio himself was also on criticized for using The Steve Miller Band's "Take the Money and Run" in an attack ad against Crist. Rubio, however, was not sued. AmeriKat readers may recall past political song problems, such as in 2008 when Jackson Browne sued then presidential candidate John McCain for unauthorized use of his song "Running on Empty". Browne's lawyer, Lawrence Iser, also represented Byrne and stated in the initial complaint that it was "extraordinary" for another Republican campaign to misappropriate another artists's work without permission.

Another lesson that party politics and rock music do not mix.

Letter from AmeriKat: End of January Jolly

Yesterday the AmeriKat was stomping up and down Kings Road on a hunt for a new casual outfit. Her journey had started with an idea of a new cocktail dress needing to be instilled in her wardrobe (the AmeriKat uses the word "needing" very liberally). However after a few frustrating attempts, she realized a perfectly fitting, appropriately priced, and pitch-perfect dress was not going to be found that cold winter's afternoon. With the stubborn ideal of a dress still swimming around her head, she begrudgingly walked into one store which never enjoys much success with the AmeriKat. After a few meaningless paces around the retail floor, she was leaving the store when she decided to change her mind and reframe her objective. She stopped, turned around and decided that she was going to find something here and marched down to the sale rack. Assisted by a trusty advisor, low and behold she found the perfect skirt at an amazing price which assisted her in sparkling later that night. It just goes to show that when you are about to give up on something, a little change in one's attitude can make all the difference. (Picture, top left - the AmeriKat hiding in her shopping bag after a long afternoon browsing)

RIAA lawyer to be next US Solicitor General

Another change was announced last week when President Obama (right) nominated Donald Verrilli as the next United States Solicitor General. Verrilli will be filling the shoes left by Justice Elena Kagan who left the post last year when she was appointed to the Supreme Court. Prior to becoming a White House lawyer, Verrilli’s private practice experience at Jenner & Block LLP included representing the Recording Industry Association of American (RIAA) in their on-going battle (or crusade, depends on who you ask) with copyright infringers. He also has represented Hollywood film studios in similar battles. According to the New York Times Verrilli has argued before the Supreme Court 12 times and before the federal appeals and state supreme courts around 35 times.

The US Solicitor General is responsible for determining the US’s legal position in matters that reach the Supreme Court and arguing on behalf of the US Government in cases in which they are a party (which is a hefty task in itself). The Solicitor General also files amicus curiae briefs in cases of federal government interest, such as the Google Book Settlement case (see report here). Former President William Howard Taft and former Supreme Court Justice Thurgood Marshall (the first African American to serve on the Supreme Court bench) also acted as the US Solicitor General.

If Verrilli’s name sounds familiar to IPKat readers, it is because Verrilli (picture, left) has been one of the lead attorneys in two famous copyright battles: Grokster and Viacom v YouTube. The Supreme Court’s famous MGM v Grokster ruling in 2005, unanimously held that operators of peer-to-peer file sharing websites could be sued for contributory copyright infringement for the illegal sharing of copyrighted content on their website. The Viacom v YouTube case, which has now reached the Court of Appeals for the Second Circuit, also involves a claim by Viacom that YouTube should liable for contributory copyright infringement in failing to remove and to prevent the uploading of Viacom’s copyrighted content (see previous reports here). However, Verrilli is known also for acting in cases which pressed for greater rights for prisoners, including methods by which death-row inmates are executed, as well for pro bono clients.

Verrilli takes over from acting solicitor general, Neal Katyal. Katyal, although a top choice for the nomination was considered to be too challenging a choice to get past the now Republican saturated Senate. In 2006 in Hamden v Rumsfeld, the Supreme Court ruled against the Bush administration in their plans to hold military commission trials for Guantanamo Bay detainees. Katyal was part of this legal team. The AmeriKat is sadly not surprised that a lawyer with specialization in the telecommunications and IP, with multi-billion dollar industry clients would be a more palatable choice for some Senate Republicans than a lawyer who won a case against the Bush administration. Americans love nothing more than mixing a bit of politics with their judiciary!

Despite the Amerikat’s general ideological qualms in relation to the Katyal choice, she is excited that the next (hopefully) Solicitor General will be an IP lawyer. This is a further message of the importance of IP to the Obama Administration and the US's economic recovery.

Verrilli will now have to go through the usual confirmation process by the Congress and Senate before he takes office. The AmeriKat will keep you posted on any developments.

Snap! Kodak’s hope for a picture perfect ITC trial is not to be

Last Monday, Eastman Kodak lost the opening round in an US International Trade Commission (ITC) patent battle. Last year following failed negotiations with Apple and Research in Motion (RIM) – the makers of Blackberry – Kodak filed a complaint with the ITC alleging that Apple and RIM infringed their 2001 patent (see previous AmeriKat mention here). The complaint coincided with Kodak filing patent infringement claims against Apple in New York and Texan federal court.

During Monday’s initial recommendation ruling Administrative Law Judge Paul Luckern ruled that Apple’s iPhones and RIM’s Blackberry models did not violate Kodak’s patent. The ITC’s six commissioners now have 4 months to decide to either amend Judge Luckern’s ruling or let it stand. Laura Quatela, Kodak’s chief IP officer stated that the judge’s recommendation represented

“a preliminary step in a process that we are extremely confident will conclude in Kodak’s favor. This very same Kodak patent was upheld by a different ALJ [administrative law judge] at the ITC in our case against LG and Samsung, whose products use the very same Kodak technology to function in the very same manner as similar products from Apple and RIM. What’s more, the attorneys at the ITC’s Office of Unfair Import Investigations, which separately examined this case, agree with Kodak’s interpretation of the patent. We fully expect the ITC Commission will ultimately rule that the patent claim at issue is valid and infringed by Apple and RIM.”

In recent years, Kodak has been attempting to reinvent itself into a digital photography powerhouse, a move which has seen them licence their technology to several companies including Motorola and Nokia. The AmeriKat does not anticipate that the commissioners will come back with anything other than bad news, but as George Will said “The nice part about being a pessimist is that you are constantly being either proven right or pleasantly surprised.”

Catcher in the Rye suit settles

Two years the AmeriKat wrote about the copyright infringement suit brought by JD Salinger against Fredrik Colting, the Swedish author of the unauthorized sequel to Catcher in the Rye - 60 Years Later: Coming Through the Rye -which was subject to an injunction barring its publication in the US, The case reached the 2nd Circuit Court of Appeals. Last week it was reported that the two parties have settled on terms that the book will continue to not be published in the UK, the title will be changed and it is reported that Colting is forbidden from dedicating the book to Salinger. For more details on the settlement please see here.

Sony Ericsson sues over logo

Two weeks ago mobile phone maker Sony Ericsson sued wireless broadband operator Clearwire for allegedly infringing their trade mark logo to the tune of about $150,000 including costs. Sony Ericsson reportedly became aware of Clearwire's intention to use the offending logo and in 2010 wrote to them demanding them to rethink its branding. In May 2010 Clearwire announced it was to begin selling mobile phones under the logo. Sony Ericsson's trade mark is not as widely recognized as it is in Europe. What do readers think? Is Clearwire's logo infringing?

Letter from AmeriKat: Uggs, The Daily fight, Bayh-Dole turns 30, & more!!

The AmeriKat has managed to survive a week bursting with holiday work parties, lunches, dinners, and dances. Although always eager to socialize and mingle in the festive holiday cheer, by the end of last week - having sustained 6 holiday events in the course of 5 days, the prospect of teetering around another room in high heels while sustaining her hunger on only a handful of hors d'oeuvres was becoming a touch exasperating. Now that her party onslaught is over, she can return to her regularly scheduled program of returning home after a long day's work, kicking off her heels, and plopping on the sofa. (picture, left - the AmeriKat snuggling into her sofa for the night) To keep her paws warm in the evenings she either elects for her ancient red Gap slipper boots or her Uggs. The AmeriKat continues to receive abuse from her friends for the latter choice of footwear and she is the first to admit that she did formerly judge Ugg-wearers. However, she has found that after a day of cold, painful high heels, fluffy warm Uggs are really the footwear equivalent of warm tomato soup during the dark winter evenings.

Ugg chases after Emu: Besides keeping feet warm, the American company Ugg Australia is also keeping the US Courts warm with their trade mark infringement filing last week against their competitor, Emu, for the use of their registered trademark,UGG. (picture, right - examples of Ugg boots). Deckers Outdoor Corporation, who own Ugg Australia, has sued Emu Australia in the District Court for the Central District of California for describing their products on their US website as "ugg boots". Emu is defending Ugg Australia's claim by suggesting that "ugg"is a generic word used in Australia meaning "sheepskin boots". Emu also say that there are more than 70 registrations for UGG in Australia.

Last year Ugg Australia sold over $712 million worth of footwear. With Ugg look-a-likes infiltrating the market at record speeds it is no surprise that they would be keen to stamp out any alleged trade mark infringement as quickly as possible. Angel Martinez, Decker's chairman and CEO stated that:

“The success of Ugg Australia has created an entire industry of companies that market their wares by deliberately confusing consumers. Emu’s trademark infringement is intentionally misleading consumers into believing they are buying a genuine Ugg Australia product when in fact, they are not.”

The AmeriKat constantly sees Ugg rip-offs around and about, but of course the scope of protection for the design of the classic Ugg boot itself is very minimal (if at all existent). The greatest protection for Ugg is therefore in their trade mark and brand names - of which they have a reported more than 100 trade mark registrations in their portfolio.

Despite Emu's claims regarding the use of "ugg" as a generic word in Australia, this is irrelevant. The case is based on the exclusive rights of Ugg Australia in their trade mark UGG in the U.S., and therefore the question is whether the term UGG is generic in this jurisdiction. From experience, the average consumer in the US does not use the word "ugg" generically. When the AmeriKat has asked her American friends if they have a pair of Uggs some have said "No, but I have some fake ones though.". Such evidence, the AmeriKat suggests, will not be difficult for Ugg Australia to obtain if necessary to defend the distinctiveness of the mark. (picture, left - an example of an Emu boot) Further, in 2005 a California court ruled in Decker's favor when the UGG mark's validity was challenged as being generic. The court held that the mark's meaning had been ascribed to that of indicating the brand, rather than a generic term. Given that the reputation of Ugg as a brand has only increased since 2005, it would seem bizarre if the court would hold otherwise. Ugg's case will also have to show a likelihood of confusion, the test for which in the Ninth Circuit follows that of the AMF v Sleekcraft Boats (1979) case. Of the several factors of confusion that will be adduced, it is the evidence of actual confusion that will be most challenging for Ugg Australia, as well as showing the Defendant's intention in using the mark on the website.

Ugg Australia's legal efforts are not without controversy, especially in Australia. For an excellent article on the business and law of Uggs please see this Wall Street Journal article here.

Murdoch set to fight for "Daily": Generic marks seem to be the name of the game in US trade mark litigation at the moment. Last week News Corp owned company, The Daily Holdings Inc (all ultimately owned by Rupert Murdoch) filed a pre-emptive lawsuit against IMG Worldwide asking the court to bar them from claiming ownership of any trade mark rights in the sign THE DAILY. They argue that THE DAILY is a generic phrase in the media - think The Daily Mail, The Daily Mirror, The Daily Hysteric, etc. IMG Worldwide own a fashion title called The Daily Front Row and claim to have common law (unregistered) trademark rights in the words THE DAILY dating back to 2003. As those who have been keeping up with Murdoch's pay-wall and iPad experiment know, News Corporation is planning an iPad and other tablet news, sports and lifestyle media service called "The Daily". IMG Worldwide previously indicated to The Daily Holdings that it would be seeking to enforce its rights against the media conglomeration if their plans for "The Daily" were to go ahead. The Daily Front Row already have their own iPad news application - click here (picture, above).

According to Reuters, the two parties met last week in order to reach an agreement. The talks were unsuccessful so The Daily Holdings rushed to get their filing in before IMG had a chance to file their "imminent" trade mark infringement law suit. The AmeriKat checked the USPTO trade mark register to find that on 6 December 2010 IMG filed a trade mark application for THE DAILY for magazines in the fashion industry. The Daily Holdings filed a trade mark registration for the words and design of their seemingly soon-to-be logo THE DAILY on 22 October 2010. To search for these applications please click here. (picture, left - a mark applied for by The Daily Holdings)

Given that The Daily Holdings is alleging that the sign "The Daily" is generic, is it really wise to be using it to launch a new subscription service and indeed to apply for a trade mark for the words and design which incorporates the "generic" term? Is it not the first rule of branding to come up with a brand that isn't generic in your industry? (picture, left - another mark applied for by The Daily Holdings as found on the USPTO website)

Bayh-Dole Act Turns 30!: Last week the USPTO celebrated the 30th anniversary of the 1980 Bayh-Dole Act - whose birthday is actually today. The Act was created to unite patent policy throughout the many federal agencies that fund scientific research which enabled small businesses and non-profits such as universities the ability to retain ownership in patents made under federally funded research programs. According to the USTPO press statement, Senator Bayh (D-Indiana)(picture, right)stated that:

“Bayh-Dole shows that citizens really can change government. That doesn't mean that the process is easy or quick. A handful of determined men and women made the law a reality and have preserved it for 30 years. Now we need new hands to help carry the message of how valuable Bayh-Dole is to the continued health and wealth of the United States.”

If this Act sounds familiar it is because over a month ago the US Supreme Court granted the writ of certiorari to hear Stanford University's claim against Roche Holding AG in respect of patents for methods of testing the effectiveness of AIDS treatments by measuring the HIV concentration in blood plasma. Scientists at the university created the invention while under contract to the university, but one of the scientists agreed to assign his future rights in the method to Roche. A scuffle between the two entities then ensued. The Supreme Court case will focus on the interpretation Sections 200-212 of the Bahy-Dole Act which the university contends trumps the rights of Roche. The university's question to the Supreme Court reads as follows:

Whether a federal contractor university's statutory right under the Bayh-Dole Act, 35 U.S.C. §§ 200-212, in inventions arising from federally funded research can be terminated unilaterally by an individual inventor through a separate agreement purporting to assign the inventor's rights to a third party.

For more details on this story please see the original IPKat story here.

Viacom v YouTube: Two weeks ago, as expected (so expected, the AmeriKat adds, that she didn't even think it was news), Viacom filed their appeal in the Viacom v YouTube case in the appeals court in New York (see previous AmeriKat posts on the case here). Several amici briefs from the great and the good in the media industry were also filed last Friday, including a filing from Microsoft on behalf of Viacom. The AmeriKat will be taking the 72-page brief from Viacom on her long flight back to the US next week to digest in preparation for a jet-lagged induced AmeriKat post on the appeal next Sunday!

Letter from AmeriKat II: Supreme Court greets Microsoft v i4i

The Circuit Courts’ approach

"Let's see what makes
this darned thing tick ..."

Microsoft cites cases from all 12 circuits in support of the contention that the circuit courts adhered to the Supreme Courts dictum in KSR, and in particular emphasizes the cases of Baumstimler v Rankin (1982) in the Fifth Circuit, Manufacturing Research Corp. v Graybar Electric Co. (1982) for the Eleventh Circuit and Futorian Mfg. Corp. v Dual Mfg. & Eng’g. Inc. (1976) in the First Circuit. Given that KSR and the pre-1982 practice recognized that the heighted standard of proof is weakened in cases where evidence was not before the PTO, Microsoft contends that the Federal Circuits departure from this practice must be examined by the Supreme Court. I4i points out that the decisions upon which Microsoft relies are “all decades old”. They would be, says the AmeriKat, because Microsoft’s argument is that prior to the Federal Circuit assuming jurisdiction in 1982 and subsequently getting it wrong, the courts were uniformly applying KSR; such cases are automatically going to be pre-1982. However, i4i are right to point out that given the age of these cases the rulings will not take into account any congressional acquiescence or the later creation of alternative methods to invalidate patents, i.e., the PTO’s invalidity examination proceedings.

i4i argue that section 282’s higher standard of proof has actually been applied uniformly throughout the regional circuits and for the Court to hold otherwise would go against the ratio that the courts are not at “liberty to repeal a statute or to legislate conditions diminishing its effect.” Such a ruling would also invalidate an almost 30-year old statutory construction which Congress has never acted to change. Such inaction following decades of consistent judicial construction, they say, “strongly suggests that the construction [i.e., that of a clear and convincing standard of proof] is correct.” Just because Congress doesn’t do something (which is often) doesn’t mean that it does not need to be changed, says the AmeriKat. i4i counter that Congress has been proactive in patent law and has “moved quickly to limit the potential fallout” for patenting of business methods, the enactment of the Patent Remedy Act and repeated amendments to the Patent Act. Further, i4i argue that Congress had held hearings where it was urged to lower the standard of proof for validity challenges to that of a preponderance of evidence. They were, i4i argue, made aware of criticisms to the higher threshold, but yet they chose not to act.

Of Policy and Philosophy

The Kat meditates
a philosophical point

Microsoft’s final argument is that of policy and philosophy. They contend, citing KSR, that invalid patents “stifle, rather than promote, the progress of useful arts” in that they confer market power without reciprocal consumer and innovative benefit. Given the increasing strain on the PTO due to the patent backlog (485,500 applications in 2009), the limited length of time an examiner has to examine an application (an average of 18 hours per application), and the lack of “reliable information about the claimed technology” Microsoft state that this “predictably and inevitable results in an increasingly large number of mistakes, some of them glaring.” This statement was supported by Justice Breyer’s re-statement of the Federal Circuit’s quote In re Bilski (2010) (AmeriKat reports here) that

“the granting of patents that ‘ranged from the somewhat ridiculous to the truly absurd’”

Because these factors lead to the PTO’s gate-keeping functions being too far stretched it is vital, Microsoft argues, that patent litigation is able to weed out patents that should not have been granted. The adherence to the clear and convincing evidence standard of proof is a bar to this process and was referred to by the 2003 Federal Trade Commission Report “To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy” as

“creating potential for judicially confirming unnecessary, potentially competition-threatening rights to exclude.”

Such a risk, Microsoft say, is even more so in cases where the evidence of invalidity was not even before the PTO at the time of grant.

I4i counter that a heighted burden of proof in litigation actually promotes innovation because it affords a patent

“robust protection against erroneous invalidation of patents [and] recognizes and protects the enormous resources that go into the innovation process”

i4i also argue that any party at any time can bring validity challenges before the PTO which does not require the heighted burden imposed by section 282. The AmeriKat, however, finds this inadequate. Why should the standard of evidentiary proof for invalidity of a patent be different at the administrative level (PTO) than at the judicial level? I4i say that this divergence is acceptable:

“…there is no reason why the two paths should be identical, and Congress was obviously aware of the differences when it authorized re-examination without changing the standard of proof in litigation. Its policy judgment not to establish an exact parallel to litigation should not be second guessed by the courts…”

Although the AmeriKat is sure that Congress appreciates this massive vote of confidence, the AmeriKat says that one should never underestimate Congress’s inability to recognize inconsistencies in their own legislation.

What’s Next

The Supreme Court has declined i4i’s invitation to allow the court of appeals to undertake a “fuller deliberation” of KSR before taking up the case, and has instead accepted Microsoft’s plea to decide on an issue that “will not benefit from further percolation in the circuits.”

Following the Supreme Court’s grant of certiorari, i4i’s Chariman, Loudon Owen, stated that

"The attack on patent holders and the adverse implications from the standard Microsoft is proposing is unprecedented and would deal a devastating blow to any US patent holder, large or small. Naturally, the proposed standard would be particularly destructive to the value of patents for inventors, technology pioneers and entrepreneurial companies that don't have the resources of Microsoft and other giants."

Microsoft’s deputy general counsel for the litigation, David Howard, stated that:

“We are gratified by the Court’s decision. It’s a clear affirmation that the issues raised in this case are critical to the integrity of our patent system.”

However, the AmeriKat can’t help to wonder whether Microsoft’s arguments for a lower standard of proof may ultimately come to bite them when they find themselves again in a plaintiff’s position in later litigation.

Although the Amerikat does not have a trial date to report on as of yet, she can tell readers that Chief Justice Roberts will not be taking part in the trial – he allegedly owns some valuable shares in Microsoft.

laden ladenfam and AmeriKat are interested to know what readers believe a the standard of proof should be in litigated invalidity proceedings.

Letter from AmeriKat I: Supreme Court greets Microsoft v i4i

Much to give thanks for ...

The AmeriKat is still grazing on her leftovers from last week's Thanksgiving extravaganza. The rosemary lemon chicken and sweet potatoes are all gone, as is the pumpkin and pecan pie courtesy of one of the AmeriKat's colleagues. However, she has been left with the green beans, mashed potatoes and cranberry sauce whose quantities seem to be multiplying, rather than diminishing. Just when she thinks that she has had the final serving of the roasted garlic mashed potatoes, another Lock-n-Lock storage receptacle presents her with another readily prepared meal. In leftovers, as with life, just when you think something is finally over, something else crops up to prolong the inevitable.

US Supreme Court says "Hi!" to Microsoft v i4i

Something else that seems to keep nearing an end only to grasp at one last gasp of air is the i4i v Microsoft litigation (see previous AmeriKat posts here – and there are many). On the same day that the Supreme Court declined to grant Tiffany’s petition for writ of certiorari in the eBay case, the Supreme Court granted Microsoft's writ of certiorari. This follows an epic battle between the two companies which saw Microsoft mostly as the "losing" party as the case journeyed from the Eastern District of Texas's courts to the Court of Appeals for the Federal Circuit. The case, which Microsoft emphasized non-too passively in their petition to the Supreme Court, was the largest patent infringement verdict ever to be affirmed on appeal to the tune of $290 million. Such an award would indicate that even if it wasn't a question of law which made Microsoft petition the Supreme Court, it was surely a question of money. Now that the Supreme Court will be charged with hearing the case, the AmeriKat has set out in brief the parties’ arguments from their petitions which provide a preview of their upcoming oral arguments.

Background

i4i contended at trial that that Microsoft Word infringes their US Patent No 5,787,449 (the “’449 Patent”) which relates to markup languages, specifically Extensible Markup Language (“XML”) used in electronic documents. Markup languages indicate how and where text is displayed in documents. The ‘449 patent covers a method whereby the software can process and store custom XML separately and distinctly from user-imputed content. The separation of the XML is called a “metacode map” which, according to the patent, allows a computer to manipulate the structure of a document without reference to the content entered by the user. Since 2003, Microsoft Word has allowed users to edit documents containing XML.

On 8 March 2007, i4i filed a patent infringement action in the Eastern District of Texas. Microsoft denied infringement and claimed under the “on-sale bar” of section 102(b) that the ‘449 Patent was invalid because i4i previously sold a system, S4, which was alleged to have embodied the claimed invention. Unfortunately for Microsoft, the S4 source code had been “destroyed” over ten years prior to the case so was prohibited from ever-providing “clear and convincing evidence” on this point. The trial jury found in i4i’s favour and awarded the Canadian company $200 million. Microsoft appealed to the Circuit Court of Appeals and in August 2009 Judge Davis upheld the lower court’s finding and increased the damages by $40 million citing the outspoken nature of Microsoft’s trial attorney, Matthew Powers. Microsoft then appealed to the US Court of Appeals whose three-judge panel in December 2009 upheld the lower courts’ rulings. Microsoft then asked for an en banc review (i.e. getting 12 judges on the panel) of the Court of Appeals decision, which was denied in Spring 2010. Microsoft’s remaining options were to either to settle, do nothing, re-apply for an en-banc review based on a revised decision of the federal court, or go straight to the Supreme Court. Microsoft obviously went for the last option.

As the AmeriKat is herself refreshing her memory of over 3 years of litigation, it is interesting to note that Microsoft’s numerous appeals had focused primarily on remittitur of damages following the large jury award, over reliance on the plaintiff’s survey evidence, and the issue of enhanced damages. Microsoft’s petition to the Supreme Court, however, deals with one very finite point about the standard of proof required for patent invalidity arguments, which their initial appeal statement only devoted a handful of its over 100 pages to.

Section 282 and KSR

Microsoft's petition to the Supreme Court was filed on 27 August 2010 after the now-retired Justice Stevens granted them an extension for filing. Their question concerns the standard of proof required by section 282 of 35 USC (the Patent Act section of the United States Code) which states that:

"[a] patent shall be presumed valid" and that "[t]he burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity."

The Federal Circuit for the Court of Appeals held in the i4i case that Microsoft was required to prove its defence of invalidity under section 102(b) of the Patent Act by "clear and convincing evidence", notwithstanding that the prior art on which Microsoft's invalidity defence relied was not before the Patent and Trademark Office (PTO) prior i4i's patent being granted. The basis of section 282 is argued to mean that patents granted by the PTO are presumed to be valid because, in brief, the examiner has the facts and the expertise to properly grant or reject a patent application before it and is therefore “presumed to do its job” (Am. Hoist & Derrick Co. (1984)). Therefore, to rebut the presumption that the PTO has done its job, a party must prove invalidity based on a higher evidential standard of "clear and convincing evidence". This evidential standard is a higher burden than that of a "predominance of evidence", which Microsoft argues should be the standard of proof.

Microsoft argues that the presumption that this higher standard of proof is always automatic is wrong in cases where the PTO did not have the evidence, on which a party relies, before it at the time of granting a patent. Given that the PTO never had an opportunity to see the evidence of prior art, the presumption that they were undoubtedly correct to grant the patent is diminished and thus a lower standard of proof should be allowed, i.e., that of a predominance of evidence.

In finding basis for this argument Microsoft referred to the US Supreme Court decision of KSR International co. v Teleflex (2007) where the Court said that they thought where an invalidity defence relies on evidence never before the PTO, it was

"appropriate to note that the rationale underlying the presumption - that the PTO, in its expertise, has approved the claim, seems much diminished."

In that case, the Court held that claim 4 of the plaintiff’s patent included subject matter that was obvious and therefore not patentable due to an earlier patent not before the PTO during the prosecution of claim 4. Although the Court was not specifically charged with deciding whether the failure to present the earlier patent voided the presumption of validity, the court nevertheless noted that the arguments for requiring a higher evidential standard in such circumstances is diminished – although not destroyed, i4i would point out.


This dictum from the Court was, according to Microsoft, affirmed by all twelve regional circuits prior to the Federal Circuit’s creation in 1982. Ever since the Federal Circuit assumed jurisdiction, Microsoft contends that it has

"repeatedly disregarded KSR's invitation to reconsider its heightened evidential standard. Instead, it has clung to its pre-KSR caselaw and continued to apply the clear-and-convincing-evidence standard even to invalidity defences based on prior-art evidence that the PTO never considered."

More in Part II

Letter from AmeriKat: James Bond's gun, pre-1972 recordings, ITC patent fun, and Walgreens' "Flying W"

For the past couple of week's the AmeriKat has been balancing a pretty hefty schedule of deadlines and late nights. Her early morning starts and late night returns were beginning to grate on her nerves; the processional commute was feeling more and more like a chore than an opportunity to mindlessly follow the stream of commuters. So twice last week, while on her way to work, she stopped her blaring iPod, opened her eyes and scanned the inhabitants of her carriage. Besides the usual set of businesspersons flicking automatically through the pages of the Metro and the tourists straining their eyes at the Tube maps, she spied two distinctive objects out of the usual commuter selection: a spider and a ladybug. The spider was making a webfrom the top of one pole to the other and then casually swinging from its silk between stops. The ladybug was making its way up the arm of a large, burly looking man while he delicately watched its progress. From the otherwise indistinct, one can always find distinctiveness. (picture, left - the AmeriKat playing with the said ladybug)

Bond's gun a hit at the USPTO: Something else that has been held to be distinctive last week, this time by the USPTO, was James Bond's Walther PPKhandgun. The makers of the spy's classic weapon had previously attempted to register the gun as a trade mark, but the USPTO had concerns as to whether the gun had, in the maker's mind, a "definite aura" and "mystique". To convince the USPTO examiners otherwise, the makers commissioned a blind survey of individuals over 18 years old who own or plan to own a handgun. The results of the survey showed that about 54% of those surveyed were able to identify the PPK gun, many of whom also mentionedJames Bond as the reason for their identification. So with this convincing data before the examiner this time, the USPTO held that the mark had acquired distinctiveness and that

"it stands to reason that a party would only attempt to replicate another party's trade dress or product configuration, under license or not, if that trade dress or product configuration is perceived by the consumers as distinctive."

Although not uncommon by any means, the provision and weight of survey evidence afforded by the USPTOin this case may result in future applications for shape marks, or indeed any application that argues acquired distinctiveness, necessarily having such survey evidence in support. For more information see this report from The Hollywood Reporter.

Copyright Office to investigate pre-1972 sound recordings: Where were you in 1971? If you are the AmeriKat's age you weren't even an idea yet, but for those who remember 1971 Led Zeppelin's "Stairway to Heaven" was topping the charts, Jim Morrison was found dead in a Paris bathtub, and the US Supreme Court ruled that the Pentagon Papers could be published. And if you were a sound recording in the US at this time, the federal government didn't even recognize you as a work. However, this may be changing with the US Copyright's announcement last week that it will be investigating the issue of pre-1972 sound recordings.

Before launching into this story, the AmeriKat must give readers a short lesson into this area of US copyright. In 1909, the US Congress held that the US Constitution did not allow copyright to cover sound recordings because sound recordings were not "writings". Therefore, the US Government (i.e., federal government) did not legislate on sound recordings. This left individual US states to legislate this area for themselves which left a patchwork quilt of the length and strength of protection for pre-1972 sound recordings. In 1976, when copyright law was next changed, the US government then legislated for the inclusion of sound recordings, but of course this legislation was not retrospective so therefore pre-1972 recordings were governed by the old system. Obviously, the uncertainty of the protection for these recordings in terms of scope and when the works will enter the public domain is a problem increasingly encountered today.

Recently the US Congress has directed the US Copyright Office to conduct a study to investigate whether it may now be a good idea to bring pre-1972 recordings under federal jurisdiction. The areas of investigation the study is to address include the effect of public access to the recordings and the economic impact such federal jurisdiction would have on the rights-holders of these recordings. The Copyright Office has published a notice of inquiry requesting written comments from all interested parties and has requested input on the effect that such federal protection would have upon these sound recordings. The AmeriKat, in her rose-tinted view, can only think that consistency and predictability of copyright can only be a good thing - although she is sure that rights holders of pre-1972 works may vehemently disagree. Initial comments must be submitted by 20 December 2010, with reply comments due 18 January 2011. For further information on the protection of pre-1972 sound recordings see this paper prepared by the Program on Information Justice and Intellectual Property at the Washington College of Law.

ITC side with Nokia in Apple patent spat - The US International Trade Commission (ITC) staff stated last week in a pre-trial memo that Nokiashould not be found liable for infringing Apple's patents. The statement came at the start of the ITC trial on the issue. Apple had requested the ITC to block imports of Nokia phones using the Symbian operating system as they were allegedly infringing four of Apple's patents. Nokia contends that some of Apple's patent claims are invalid, and the remaining claims were not infringed. ITC staff, who act as an impartial third party in ITC cases on behalf of the US public, declared that the evidence "will not establish a violation", but that if the judge was minded to find for infringement then it followed that the Nokia phones should be blocked. Judge Charles Bullock is expected to issue his findings in February 2011. Any decision by Judge Bullock will be subject to review by the six-member commission. For more info on the Apple/Nokia battle see previousAmeriKat reports here and here. For more information see this report in Bloomberg and Ars Technica.

Walgreens sues Wegmans: In the UK, if you require a medicine or shampoo you go to Boots. In the US you go to Walgreens. Walgreens, unlike Boots, is much larger, equipped with drive-up windows to pick up and drop off prescriptions during your busy day, and has aisles devoted to non-pharmaceutical products, such as school supplies, greeting cards and junk food. It is safe to say that there is probably very few Americans who have not shopped at Walgreens at some point. Now Walgreens is suing the New York-based supermarket chain Wegmans, alleging that Wegman's logo is too similar to Walgreens'. Walgreen's filed their trade mark infringement complaint against Wegman's two weeks ago in Virginia. Walgreen alleges that its "flying W" deserves protection due to its use from 1951. Wegmans contend, however, that the "W" it started using in 2008 was a revival of a logo that it had used in the 1930s. A spokesperson for Wegman's said that there was no confusion between the two logos. According to a reportSouthern Tier of New York, people that the news channel interviewed were apparently more confused about why the lawsuit was filed than about the "W"s alleged similarity at all.

Pratt & Whitney to stop Rolls-Royce?: Pratt & Witney, manufacturers of jet engines, filed an US International Trade Commission (ITC) complaint last week to stop shipments of Rolls-Royce engines to Boeing for the production of the 787 Dreamliner (picture, right). For the past few months the two companies have been engrossed in disputes when in August Rolls-Royce filed a lawsuit alleging that the fan stages on some of Pratt's products infringed Rolls-Royce's swept fan blade. Pratt then issued a separate complaint in September alleging that Rolls-Royce had mislead the USPTO in order to be granted the patent for the fan blade. Next stop for Pratt this past week was filing a complaint for patent infringement against Rolls-Royce at the US ITC as well in the UK's High Court for infringement of their Trent 1000 and 900 engines. Trent 1000 and 900 engines are used in the Boeing 787 and Airbus's A380 respectively. All in all, not a good week for Rolls-Royce following last week's scare on a Quanta's flight to Sydney. The AmeriKat has not seen the complaint from Pratt & Whitney, but given the allegations that a design flaw is to blame for the scare alleged to have been caused by the Rolls-Royce engine on the Quanta's flight, is it a good move to now allege that that the Rolls-Royce engine infringes their engines? For more information click here.