Don’t View an Infringement as a Lottery Ticket by William Brees, Esq.

 

The United States District Court for the Northern District of California recently granted a Motion for Summary Judgment in case that should remind potential plaintiffs not to sleep on their rights. In Dropbox, Inc. v. Thru Inc., the Court granted Dropbox, Inc. summary judgment on Thru, Inc.’s counterclaims for trademark infringement under the Lanham Act (Federal Law), trademark infringement under California common law, unfair competition under California Law, and cancellation of Dropbox, Inc.’s Federal trademark registration.

In trademark law, if one party used a trademark prior to another party in for similar goods or services and in the same region, the first party will usually be able to stop the second party from using the trademark with those goods or services. Thru Inc. used the trademark DROPBOX for file sharing software in 2004, four years prior to use of the DROPBOX trademark by Dropbox, Inc. Thru Inc. learned about Dropbox and its use of the DROPBOX trademark in 2009. But Thru Inc. didn’t take any action until 2008 when Counsel for Thru Inc. asserted its priority in communications with Dropbox, Inc. Thru failed to file any sort of action until 2014 when it filed a Petition for Cancellation against the Federal Trademark Registration that had by that time issued to Dropbox, Inc. for the DROPBOX trademark. Dropbox, Inc. eventually countered by filing the suit in the Northern District of California.

Through discovery, Dropbox, Inc. learned that Thru Inc. was well aware of its use of the DROPBOX trademark as well as its business dealings from 2009 to 2014, when it eventually filed the Petition for Cancellation. Several Email chains involving Thru Inc. executives referred the perceived infringement of the DROPBOX trademark as a “lottery ticket” to be cashed in by filing a lawsuit at the time when Dropbox, Inc. was attempting to take its business public through an Initial Public Offering. Rather than filing a lawsuit to enforce the rights the facts show it should have had in the trademark, Thru Inc. waited until the most opportune time as it watched Dropbox, Inc. gain in both popularity and users.

Watching Dropbox, Inc. grow wound up costing Thru Inc. the ability to enforce the rights it had in the DROPBOX trademark. Trademark owners need to be mindful that acting in a timely fashion to stop an infringement is usually going to be a more effective approach than counting on a big payday down the road.

Federal Circuit: Institution of a Covered Business Method review requires the claims to be more than “incidental to” or “complementary to” financial activity by Stephen Lewellyn, Esq.

On November 21, 2016, in Unwired Planet, LCC v. Google Inc., the Federal Circuit issued yet another precedential opinion on patent review by the Patent Trial and Appeal Board (PTAB). Unwired’s patent is directed toward a method of allowing users to set privacy policies to restrict access to a wireless device’s location. The PTAB found the claimed method fell within the scope of a business method patent and found the claims invalided under 35 U.S.C. § 101.

Unwired appealed the PTAB’s final written decision arguing the PTAB used an incorrect definition of a covered business method patent and, under the correct definition, the patent is not a covered business method patent. In sum, the Court agreed and overturned the PTAB. This decision is important because it is the first time the Federal Circuit has weighed in on the scope of a business method patent in view of the statutory definition.

The statutory definition of a business method patent is “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.” AIA § 18(d)(1). The Court found that the Patent Office adopted this definition without alteration during its regulatory process in implementing patent review under AIA, but in reaching “its decision in this case, the Board [PTAB] did not apply the statutory definition.

Rather, PTAB looked to whether “the patent claims activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity.” In applying this approach, PTAB relied upon the patent specification explaining the claimed method could be related to services or goods providers whose business is geographically oriented, e.g., hotels, restaurants, etc. The Court plainly rebuked this approach as rendering the statutory definition “superfluous,” because the phrases “incidental to” or “complementary to” extend beyond the definition’s limits. The Court explained: “The patent for a novel lightbulb that is found to work particularly well in bank vaults does not become a CBM patent because of its incidental or complementary use in banks.”

The Court, apparently disturbed by PTAB’s “incidental to” or “complementary to,” further commented that a patent covering a ditch digging machine does not become a CBM patent when dirt is sold from use of the ditch digger. This is so “because the claims of the ditch-digging method or apparatus are not directed to ‘performing data processing or other operations’ or ‘used in the practice, administration, or management of a financial service or product,’ as required by the statute.

This discussion provides much needed and useful guidance for those deciding whether to file a CMB review or for those faced with defending a CMB review.

Concrete Elements Overcome Otherwise Abstract Subject Matter by Kyle Chapin, Esq.

On October 18, 2016, a Federal District Court in Nevada denied a motion to dismiss patent infringement claims that argued the patents-at-issue were ineligible under Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014). See CG Technology Development, LLC, et al. v. BWIN.Party, Inc. et al., (Case No. 2:16-cv-00871-RCJ-VCF, D. Nev. 2016). This decision in CG Technology may have provided patent applicants with a road map to patenting an invention that otherwise would be held as abstract under 35 U.S.C. § 101.

In CG Technology, the patents-at-issue are related to online gambling on a mobile device. Id. In its analysis, the Court acknowledges that the processes claimed in the patents-at-issue “can largely be conducted in the abstract.” Id. at 8. However, in determining that the patents-at-issue do not contain abstract material, the Court relied on various claim elements requiring that the device determine the location of the gaming device to overcome Alice Corp. Id. The Court determined that “physical locating a mobile device via computer to determine the game configuration (monetary versus non-monetary) makes the process sufficiently concrete to survive Alice Corp.” Id. at 11.

For example, claim 19 of U.S. Patent Number 8,771,058 recites the limitation: “determining a first location of a mobile gaming device.” The Court in CG Technology stated that this limitation is “concrete enough to take the claim outside the scope of Alice Corp.’s ‘abstract idea’ exception to patentability under §101.” Id. at 8. The Court reasons that act of locating a mobile device using software cannot be conducted in one’s head, which is enough to not be considered an abstract concept. Id. at 9.

It is unclear whether this decision will be appealed, as the patent infringement aspect of this case is still currently pending in the Nevada District Court. However, the decision in this case certainly provides, at least for now, a guidepost in overcoming an abstract challenge under Alice Corp.

 

Brittany Maxey, Esq. presents at Florida Polytechnic University on “Best Practices in IP for Legal, Ethical and Management Issues in Technology”

Brittany Maxey of Maxey Law Offices, PLLC recently presented “Best Practices in IP for Legal, Ethical and Management Issues in Technology” at Florida Polytechnic University. Florida Polytechnic University is Florida’s only public university for engineering and technology dedicated to science, technology, engineering and mathematics (STEM). The mission of Florida Polytechnic University is to prepare 21st century learners in advanced fields of STEM to become innovative problem-solvers and high-tech professionals through interdisciplinary teaching, leading-edge research and collaborative local, regional and global partnerships.

TTAB Rule Changes Effective January 14, 2017 by Alexandra Taylor, Esq.

Come January 14, 2017, the United States Patent and Trademark Office (USPTO) will implement several new Trademark Trial and Appeal Board (TTAB) rules that will affect all cases pending on January 14, 2017, as well as cases initiated on or after January 14, 2017. The USPTO has not released a major set of rule changes since 2007, and has reasoned that the new rules will benefit the public by providing more efficiency, noting how much technology has evolved since the last overhaul of the TTAB rules. Below is a brief overview of some of the significant rule changes:

  • Discovery Limitations and Timing of Service: Previously, parties could serve discovery requests on the last day of the discovery period, however under the new rules, all discovery must be complete by the close of the six-month discovery period. Additionally, previously uncapped document requests and requests for admissions will now be capped at 75 per party.
  • Service Requirements: In line with the USPTO’s look towards efficiency, the amended rules will eliminate service requirements for parties commencing a proceeding, and place the responsibility on the USPTO to serve notices of opposition and petitions for cancellation. The USPTO will serve the notice or petition to the opposing party via an email link to the TTABVUE database.
  • Testimony: Presently, trial testimony must be obtained through deposition, and testimony by declaration or affidavit is only allowed if both parties stipulate to this. Under the new rules, testimony can be obtained via declaration or affidavit without stipulation. The opposing party will still have the opportunity to cross-examine the deponent via a live deposition.

For a full read of all of the new TTAB rules, visit the USPTO’s Notice of Final Rulemaking.

Getting Too Cute with an Acronym Could Cost You Your Trademark Registration by William Brees, Esq.

Generally the concern with an acronym is that the words the acronym stands for may be merely descriptive or generic and that the meaning of those words will be used as a basis for a finding that the acronym itself is merely descriptive or generic. As explained by the Trademark Manual of Examining Procedure, this can happen if the acronym is “readily understood by relevant purchasers to be ‘substantially synonymous’ with the merely descriptive wording it represents.” TMEP § 1209.03(h).

However, if an acronym itself is a term that is merely descriptive or generic of the Applicant’s goods or services, that in and of itself may be the basis for a refusal by the United States Patent and Trademark Office to register the trademark. Rieker Instrument Company, Inc. recently learned this lesson after it attempted to trademark the acronym “CARS” for computer software used for capturing road data and determining safe curve speeds for automobiles; computer hardware used for capturing telemetry and road data; and software as a service featuring software for capturing road data and determining safe curve speeds for automobiles. Rieker Instrument Company, Inc. stated that the CARS trademark was an acronym for the words “Curve Advisory Reporting System.”

In a non-precedential opinion, the Trademark Trial and Appeal Board upheld the Examining Attorney’s refusal to register the CARS acronym because the goods and services cited in the Federal Trademark Application were related to automobiles, which the Board found to be synonymous with the word “cars.” Rieker Instrument Company, Inc. was not able to show adequate proof that consumers would understand the term CARS to be an acronym. Therefore, the board held that consumers would understand the term CARS instead to hold it’s ordinary and customary meaning of automobiles.

Who Owns Employee Created Inventions? by Stephen Lewellyn, Esq.

The body of law surrounding invention ownership is hypertechnical and unforgiving. Departing from traditional property law principals, ownership of employee created inventions is an unintuitive web of intertwined federal and state law. However, properly prepared employment agreements, well planned policies, and due diligence will help you from becoming snared by the web.

Inventorship is governed by federal law and the default rule gives ownership of inventions to the creator, i.e., the inventor or co-inventors if multiple people collaborated together. Whereas patent and technology agreements, such as, employment agreements with intellectual property clauses, are for the most part, governed by state law and vary from state-to-state.

There is, however, a pretty significant nuance where federal law steps in when an assignment of rights in an invention is made prior to the existence of the invention. Such future interest clauses are routinely found in employment contracts. And, if not properly drafted, the employer could be left without ownership. The law is so hypertechnical that using the phrase “agree to assign,” rather than the phrase “do hereby assign” could cost the employer ownership of valuable technology created by its employees. Unfortunately, employers often find themselves caught by this trap when it’s too late to fix.

Having the ability to enforce patent rights in a lawsuit is one situation where improperly drafted agreements can cause havoc. Under federal law, to bring a patent infringement lawsuit the plaintiff must have legal title to the patent being enforced, and each owner must join the suit as a plaintiff. If these requirements are not satisfied, then there is no legal basis (standing) to bring the suit. Imagine being a company, whose success depends upon controlling certain technology that was developed by its employees, to learn that you don’t own the technology or patent because ownership was never properly transferred from the employee-inventors. And to make matters even worse, the employee-inventors have transferred ownership of the technology to your competitor!

Mergers and acquisitions is another situation where agreements not following the jagged contour of the law cause serious problems. Intellectual property is often an employer’s most valuable asset. And, unfortunately, as in the above-described situation, it’s not until a merger or acquisition deal falls apart that an employer learns it doesn’t have ownership of those valuable assets.

To make it more complicated, some states have enacted laws imposing requirements on employers that if not correctly followed could result in an otherwise well drafted employment agreement being nullified as it relates to invention ownership. As of February 25, 2016, California, Delaware, Illinois, Kansas, Minnesota, Nevada, North Carolina, Utah, and Washington have assignment of employee inventions laws.

And, if this wasn’t enough, we haven’t even touched upon the shop right doctrine, the equitable title doctrine, federally-funded inventions in federal contractors, or government employees. Indeed this area of law is complex and requires, if not out right demands, proactive practices by employers. One of the best ways to be proactive is to have properly drafted agreements signed by all employees whether they are anticipated to develop technology for the company or not.