In This Issue
In the Winter 2017 edition of the Intellectual Property Bulletin,
we reported on IP-related changes expected with the incoming Trump
administration and the new Congress. Here we look at two such changes
currently underway: the nomination of a new director of the U.S. Patent and
Trademark Office, and a restructuring of the Copyright Office. — John Kind and Irene Lopez
The recent decision in General Plastic Industrial Co. v. Canon Kabushiki Kaisha denying
the petitioner’s requests for a rehearing provided a “baseline” of factors
to be considered as to the limited circumstances when second — or
“follow-on” — petitions are likely to be successful in Patent Trial and
Appeal Board trials. —
Jennifer R. Bush
Disney v. VidAngel: Ninth Circuit Bedevils Streamer of Unobjectionable Flicks —
Mitchell Zimmerman
USPTO Issues New Guidelines for Marks Containing a Surname Combined with
Other Wording —
Matthew Slevin
Courts Continue to Deny Patent Eligibility to Scientific Discoveries —
Christopher P. King
DOJ Highlights Criminal Enforcement of Trade Secrets Theft — William Brenc, Vikram Iyengar
and
Patrick E. Premo
Trump’s Impact on IP Law: Two Key Changes to Watch
By John Kind and Irene Lopez
In the Winter 2017 edition of the Intellectual Property Bulletin,
we reported on IP-related changes expected with the incoming Trump
administration and the new Congress. Here we look at two such changes
currently underway: the nomination of a new director of the U.S. Patent and
Trademark Office, and a restructuring of the Copyright Office.
What Do We Know About the Nominee for USPTO Director?
On September 5, 2017, President Trump
formally nominated
Andrei Iancu to become director of the U.S. Patent and Trademark Office.
The Senate Judiciary Committee has yet to schedule a hearing on the
nomination, so it is unclear what his nomination means for patent and
trademark holders. Still, Iancu's background provides clues as to how the
USPTO might evolve under his leadership.
Iancu is the managing partner at a California law firm and teaches patent
law at
UCLA Law. Prior to becoming a lawyer, he was an award-winning aerospace engineer.
Iancu's legal practice focuses on IP litigation, but he is also registered
to prosecute patents in the USPTO and has been active in inter partes review proceedings since their creation by the
America Invents Act in 2012.
Some commentators have questioned Iancu's suitability, citing his lack of
government or in-house experience. However, former Director David Kappos
had no government experience prior to his appointment and his tenure is
widely regarded as having been extremely successful. Furthermore, Iancu's
service as managing partner of a large law firm for the past five years
constitutes significant experience that is comparable to serving in-house.
But while Iancu appears qualified to serve as director of the USPTO, his
résumé alone reveals little about what policy directions the USPTO might
take were he to be confirmed. Some have criticized Iancu's
nomination on the grounds that he will favor patent holders too strongly,
but that is not clear from his history. Although Iancu has had some
high-profile wins against patent infringers, most of his work has been on
the defense side. For example, he successfully invalidated a genetic
testing patent in
Ariosa Diagnostics, Inc. v. Sequenom, Inc. — a result that was not popular among biotechnology companies. His
litigation work says more about his commitment to his clients than about
any particular policy position.
Over the last 10 years, Iancu has produced a steady stream of articles on
patent law matters, although his publications provide only marginally more
insight into the policies he might adopt. For the most part, they present
analysis and guidance on various legislative and judicial developments in
patent law, with a focus on predicting future developments rather than
advocating one position over another.
The most revealing of Iancu’s publications is his 2008 article in the Journal of the Patent and Trademark Office Society,
Code on Disks and Hat Tricks – Is Computer Software on a Medium Really
Patentable?
There he predicted that the courts would soon find Beauregard claims
(claims to computer code stored on a computer-readable medium) to be
invalid. He argued that because the code itself was not patentable as
abstract, and computer-readable mediums were known, merely adding
non-patentable code to a medium was obvious. Although his specific
prediction did not come to pass, the general thrust of his reasoning was
prescient; if courts had adopted his approach, it would essentially align
U.S. obviousness analysis with the European approach of separating out the
technical and non-technical features in a claim. Many commentators have
noted that the recent trend in subject matter eligibility decisions coming
from the Federal Circuit Court of Appeals is bringing U.S. law closer to
the European approach. In other words, although the precise route the
courts have taken differs from Iancu's prediction, the end result is
remarkably similar.
Overall, the available information suggests Iancu would likely be an
objective director who understands the conflicting interests that the
patent system must balance—although again, most of that information has
been gleaned from his work as a practicing attorney with a range of
clients. His apparent neutrality could reflect his own beliefs, or could be
a product of balancing different client interests. Whether he has
particular policy positions or preferences that he would push as director
remains to be seen.
Assuming Iancu is confirmed, he will immediately be faced with several
pressing issues. In
Aqua Products, Inc. v. Matal, for example, the Federal Circuit invalidated the USPTO’s rule requiring a
patent holder to show a proposed amended claim is patentable over known
prior in an IPR proceeding. The decision was en banc but highly
fractured, with five separate opinions issued by the 11 judges. The USPTO
must determine—most likely before confirmation of the new director—whether
to seek review by the Supreme Court, and how to revise its rules should
such an appeal not be taken or fail. The USPTO also faces a broader
challenge to the IPR system as a whole in
Oil State Energy Services, LLC v. Greene’s Energy Group, LLC, and the new director likely will need to deal with changes prompted by
that ruling when it comes down.
On the legislative side, the USPTO’s fee-setting authority expires in
September 2018 absent congressional renewal, which might be difficult given
the current political climate in Washington. The USPTO also faces questions
over its participation in the Department of Commerce's Enterprise Services
initiative, under which various human resources, information technology and
procurement services are centralized across the Department of Commerce.
Several major IP groups have
expressed concern
that the program violates the America Invents Act by using USPTO fees to
fund services for other branches of the Department of Commerce. Iancu’s
experience as a litigator and managing partner might serve him well in
addressing these issues, but the positions he would take remain purely
speculative.
Patent and trademark holders should be cautiously optimistic about Iancu’s
nomination, but should pay close attention to his Senate confirmation
hearing once it is scheduled. With luck, the hearing will provide greater
insight, and interested parties will be better able to plan accordingly.
A Re-Org at the Copyright Office?
Since President Trump assumed office, copyright issues have, for the most
part, taken a back seat in the administration. This is true despite the
urgent push for reforming what some call the “antiquated” structure of the
Copyright Office. With the core copyright industries
adding $1.2 trillion to the U.S. GDP and employing nearly 5.5 million
people in 2015, many in IP are keeping a close eye on what steps the administration will
take in this increasingly vital area.
One significant development has emerged—but from the legislative, rather
than the executive, branch. On April 26, 2017, the House of Representatives
passed
H.R. 1695 - The Register of Copyrights Selection and Accountability Act
of 2017 by an overwhelmingly bipartisan vote (378-48). The bill amends federal
copyright law to allow the president to appoint, with the consent of the
Senate, a Register of Copyrights from a list of individuals recommended by
a panel composed of the Speaker of the House of Representatives, the
President pro tempore of the Senate, the majority and minority leaders of
the House and the Senate, and the Librarian of Congress. (Currently, the
Librarian of Congress is in charge of appointing the Register of
Copyrights.) In addition, the bill seeks to limit the term of office for
the Register of Copyrights to 10 years, although the Register may be
reappointed. Finally, the bill gives the president the power to remove the
Register of Copyrights from office.
Upon introduction of the bill, House Judiciary Committee Chairman Bob
Goodlatte, Ranking Member John Conyers, Jr., Senate Judiciary Committee
Chairman Chuck Grassley, Ranking Member Dianne Feinstein and Senate
Judiciary Committee member Patrick Leahy issued
a joint statement
making clear their commitment to modernizing the Copyright Office, writing:
“Reforms being considered include public advisory committees, improvements
to Copyright Office systems for data inputs and outputs, and the copyright
ownership transparency. However, time is of the essence when it comes to
the selection process for a new Register of Copyrights. … With the current
Register serving only on an acting basis, now is the time to make changes
to ensure that future Registers are transparent and accountable to
Congress.”
To many, this bill is a step in the right direction. Because the copyright
industry has grown exponentially in the past century, some have argued that it has become increasingly important to have an
independent Copyright Office. For example, former Register of Copyrights
Ralph Oman (1985-1993) and Marybeth Peters (1994-2010) cited as a problem
having the Copyright Office in the Library of Congress, stating that the
competing missions and differing priorities of the two institutions have
been an increasing source of tension. They expressed this sentiment in
a letter to the Committee on the Judiciary
following the dismissal of Maria Pallante as the Register of Copyrights,
writing: “Stripped to its basics, the choice is stark: Does Congress want
modernization and independent copyright advice straight and true from the
expert agency, or does it want copyright administration and advice filtered
through the lens—and shaped by the perspective—of the head of the national
library?”
The bill has also gained wide support from property rights groups such as
the
Motion Picture Association of America, the
Copyright Alliance, the
Directors Guild of America and
SAG-AFTRA, which represents more than 160,000 media artists. These and other
advocates believe the law would make Congress more accountable and increase
public transparency. They also contend that it would (1) enable interested
parties to provide input through their elected officials on the selection
of the Register, (2) allow the Copyright Office to more effectively focus
on its modernization and (3) enable the office to fully exercise the
authorities granted to it in the U.S. Copyright Act.
On the other hand, critics such as Rep. Zoe Lofgren (D-Ca.)
see this bill as problematic, considering that President Trump’s list of nominations for federal
positions currently numbers in the hundreds. In a statement, she wrote: “…
this legislation will harm and delay much-needed modernization efforts by
making the Register a presidentially appointed position. Currently, there
is a backlog of 495 Appointee positions that have not even been nominated.
This not only will delay effective administration of the Copyright Office,
but also puts the efficiency gains made by the Library at risk.”
At the same time that proponents of the bill argue that—given the urgency
for modernization — the president appoint the Register, opponents believe the
bill will actually harm modernization efforts. Indeed, current Librarian of
Congress Dr. Carla D. Hayden has already drafted modernization plans for
the Copyright Office that she believes can speed modernization by almost
two years and save significant amounts of money.
If H.R. 1695 does become law, it's anyone's guess as to how long it might
take President Trump to appoint a new Register of Copyrights. Currently,
the bill awaits Senate action, so for now, interested parties not
undertaking lobbying efforts remain in a wait and see position.
General Plastic: Comforting Limits for Patent Owners and Guidance for Petitioners in PTAB
Trial Follow-On Petitions
By
Jennifer R. Bush
The recent decision in
General Plastic Industrial Co. v. Canon Kabushiki Kaisha denying the petitioner’s requests for a rehearing provided
a “baseline” of factors to be considered as to the limited circumstances
when second — or “follow-on” — petitions are likely to be successful in Patent
Trial and Appeal Board trials.
The petitioner in General Plastic filed two inter partes
review petitions, each challenging one patent. The PTAB denied institution
on the merits. The petitioner then sought rehearing, which was denied. The
petitioner filed further petitions several months later with newly
discovered art, challenging the same two patents based in part on the new
references.
The decision, rendered by an “expanded” panel including Chief Judge David
P. Ruschke, is significant both procedurally — because the decision was
rendered by an expanded panel — and substantively — because it provided greater
clarity to all parties in an area of PTAB trials processes that had
previously been somewhat inconsistent.
To date, less than half of follow-on petitions have been instituted,
showing the PTAB’s reservations about them. However, there was great
disparity in the prior PTAB decisions on this topic, including whether all
seven factors laid out in
NVIDIA v. Samsung Electronics were addressed. The varied outcomes led commentators and practitioners
alike to wonder whether initiation of a given follow-on petition was
dependent on the particular panel drawn by petitioner. Thus, the decision
to render the decision via an expanded panel likely represents a
recognition of the inconsistency of the PTAB decisions in follow-on
petitions, and perhaps stands as a statement that — while designated
“informative” rather than “precedential” — the analysis in the General Plastic decision should be followed by the PTAB on a
going-forward basis.
Substantively, the decision by the expanded panel describes how multiple
challenges to the same patent will be evaluated. It made clear that the
seven NVIDIA factors — which the PTAB stated should, at minimum,
serve as a baseline moving forward — likely will limit the number of
challenges that a patent ultimately goes through, which could be
encouraging for patent owners.
The seven NVIDIA factors are:
- the finite resources of the PTAB;
- the requirement to issue a final determination not later than one year
after institution;
- whether the same petitioner previously filed a petition directed to the
same claims of the same patent;
- whether, at the time of the filing of the first petition, the
petitioner knew or should have known of the prior art asserted in the later
petition when it filed its earlier petition;
- whether, at the time of filing of the later petition, the petitioner
already received the patent owner’s preliminary response to the first
petition or received the PTAB’s decision on whether to institute review in
the earlier petition;
- the length of time that elapsed between when the petitioner learned of
the prior art asserted in the second petition and the filing of the second
petition; and
- whether the petitioner provides adequate explanation for the time
elapsed between the filing of multiple petitions directed to the same
claims of the same patent.
The PTAB said, however, that “additional factors may arise” — essentially
leaving open the door for panels to consider other factors outside the
seven NVIDIA factors. In its decision denying the requests for
rehearing, the Board noted that both 35 U.S.C. § 314(a) and § 325(d) made
institution of review “discretionary.” Indeed, the discretionary nature of
the institution decision might be the reason the PTAB opted to designate
the decision as “informative” rather than precedential, despite rendering
the decision via an expanded panel — so that panels rendering future
decisions do not feel compelled to follow the guidance of General Plastic to the letter, maintaining the discretionary
nature of such decisions.
However, the limits of the Board’s discretion is being called to question
in
SAS Institute v. Lee, which the Supreme Court will hear this term, in which SAS argues that the
USPTO cannot partially institute IPR proceedings, since
35 U.S.C. § 318(a) says the PTO “shall issue a final written decision with respect to the
patentability of any patent claim challenged by the petitioner.” In the
past, the Board has taken its interpretation of its discretion to an
extreme, e.g., in
Shaw Industries Group v. Automated Creel Systems, arguing that the statute only articulates the negative of when the trial may not be instituted, but that institution is never compelled. If
SAS prevails, however, the decision could impose new limits on the Board's
discretion.
While the Board stated that the NVIDIA factors would serve as a
“baseline” going forward, a few factors in particular stood out in the General Plastic decision as holding more weight than others.
Factor 1, “PTAB resources,” was articulated in the decision as: “the
Board’s resources would be more fairly expended on initial petitions,
rather than follow-on petitions.” If this is the way the PTAB is
interpreting factor 1, it is likely to always weigh in favor of the patent
owner, i.e., if the PTAB is favoring initial petitions over follow-on ones.
In addition, factors 5 and 7 seemed particularly important, as each
addresses some aspect of the timing of the follow-on petition:
whether a patent owner preliminary response (POPR) and/or institution
decision has been issued in the first petition, i.e., whether two and five
months have elapsed, respectively, from the notice of a filing date (factor
5), and whether the petitioner has provided an adequate explanation of the
time elapsed between petition filings (factor 7). Here, the second
petitions were filed a few months after the institution decisions in the
prior petitions and no adequate rationale was provided — so both of these
weighed against the petitioner.
Factor 6 (time elapsed since knowledge of art in the second petition)
seemed less important than did factor 4, as it was a relatively short
timeframe that the art in the second petition actually was known to the
petitioner, since it came from a prior art search performed after the
institution decision in the first cases. However, there was no clear reason
why the new art could not have been found/applied previously (i.e., it
“should have” been known) — which weighed in the patent owner’s favor for
factor 4.
Takeaways and Implications
On the whole, the decision provides patent owners some comfort that no true
‘second bite at the apple’ — i.e., a new petition challenging the same claims
of the same patent after the PTAB has issued an institution decision — is likely to be allowed unless truly changed circumstances justify the second
petition (factor 5). Considering the seven factors, such attempted ‘second
bites’ of this type likely would mean at least four factors (factors 1, 3,
5 and 6) — and possibly more — weigh in favor of denying institution. The
expanded panel in General Plastic echoed this sentiment in
cautioning against using a first institution decision as a roadmap for
follow-on petitions, noting that second petitions are not a time for
modifying challenges to cure the board-identified deficiencies of the prior
petition.
Many commentators have pointed out that patent owners should be pleased
with the decision. Although the expanded panel indicated that “there is no
per se rule precluding the filing of follow-on petitions” and that “there
may be circumstances where multiple petitions by the same petitioner
against the same claims of a patent should be permitted,” most read this
language as followed by an implied “however”: e.g., however, the
institution of follow-on petitions is reserved for exceptional
circumstances.
For petitioners, the expanded panel decision provides some clarity when
seeking to file follow-on petitions — specifically, as to how to bolster
their chances of success in getting them instituted. In particular,
petitioners should attempt to file any follow-on petition before the
institution decision is rendered in the first petition, and before the POPR
if possible. Furthermore, petitioners need to articulate a strong rationale
justifying any delay in filing the second petition.
What the General Plastic decision makes clear is that petitioners
seeking a true ‘second bite at the apple’ — in which a petitioner tries to
remedy the shortcomings of the earlier petition, especially those noted by
the PTAB in the institution decision in the first petition — are almost
certain to be unsuccessful. This aspect alone should provide some comfort
to patent owners who face challenges to their patent via PTAB trials, who
previously were uncertain as to what limits existed for such challenges.
Although it might seem limiting to petitioners, the General Plastic decision does provide guidance that will help
prevent petitioners wasting time, cost and resources filing second
petitions when they are almost certain to be unsuccessful.
The upcoming SAS case may shed light on whether the Board has been
applying the right amount of discretion to its institution decision,
including the application of the seven NVIDIA factors in General Plastic. By asking the Supreme Court to interpret 35
U.S.C. § 318(a), the SAS case will require the justices to
interpret the language of the AIA to determine what level of discretion the
Board may apply. It seems likely that the absolute discretion that the
Board has argued is not the correct standard, especially without
explanation of the underlying rationale, for precisely the reasons Judge
Moore cautioned against during oral arguments in Shaw, when she
likened the Board’s institution inconsistencies to throwing darts while
blindfolded.
In particular, of the seven NVIDIA factors, the most problematic
may be factor 1 (PTAB resources), since it seems to favor denial of
institution without analysis beyond convenience for the PTAB. The one other
AIA section noted by the Board that provides possible guidance as to second
petitions is
35 U.S.C. § 325(d), which allows the Director to “reject the petition or request because, the
same or substantially the same prior art or arguments previously were
presented to the Office.” This statue seems related to NVIDIA
factors 4, 6 and 7. It seems likely that the SAS decision may
place some limits on the Board's institution discretion, including whether
the NVIDIA factors will continue to serve as a “baseline” going
forward.
The Board recently designated three decisions as informative, underscoring
the difficulty of challenging patents using arguments that were previously
rejected during patent prosecution. All three cases — Unified Patents Inc. v. John L. Berman,
Hospira Inc. v. Genentech Inc., and
Cultec Inc. v. StormTech LLC — were denied institution on the holding that the art and/or the arguments
were the same or similar to those previously presented to the USPTO.
Quick Updates
Disney v. VidAngel: Ninth Circuit Bedevils Streamer of Unobjectionable Flicks
By
Mitchell Zimmerman
In
Disney Enterprises, Inc. v. VidAngel, Inc. — a decision
that includes a narrow interpretation of the Family Movie Act of 2005 and
disturbing dicta on fair use — the U.S. Court of Appeals for the Ninth
Circuit brought low an “angelic” video streaming service that filters
movies to remove objectionable content.
Movie 'sanitizer' VidAngel purchased multiple authorized copies of movies,
decrypted one of the copies, and ripped the decrypted movie to a computer.
The company then created numerous intermediate files comprised of segments
of the film that could be tagged for filtering many categories of
potentially objectionable content.
When a customer wants to watch a movie, he or she “buys” one of VidAngel’s
multiple copies. The customer identifies at least one type of objected-to
content, and VidAngel streams a filtered version to the user’s device or
computer. The “purchased” copy virtually always remains in VidAngel’s
possession and is sold back to VidAngel after streaming.
In its lawsuit, Disney alleged that VidAngel violated its exclusive rights
to copy and publicly perform Disney's films, and violated the Digital
Millennium Copyright Act by circumventing the films’ access controls.
The Family Movie Act allows consumers to watch versions of movies that omit
objectionable scenes or language by skipping such matter — so long as the
filtering starts from an authorized copy and no fixed copy of the filtered
version is created.
VidAngel maintained that the filtered version should be deemed to come from
an authorized copy even though the intermediate, server copy was the
immediate source of the filtered version. The Ninth Circuit, emphasizing
the policy of reading the FMA’s exception to copyright holder rights
narrowly, held that the FMA only protected filtering that proceeded directly from an authorized copy. (Curiously, the court ignored
the fact that the original source was itself not the copy “purchased” by
consumers, but another copy.)
The court’s analysis left open the question of what the FMA is supposed to
accomplish if it does not permit making intermediate copies to facilitate
filtering. If all the filtering technology does is provide automated
instructions for skipping, and no fixed copy is created at the end, the
right to copy would not be infringed in any event. Certainly, film owners’
copyrights do not include any right to require consumers to watch the
entire work.
On fair use, the court held all four factors tilted against VidAngel. On
the key issue of “transformativeness” — which considers whether the
challenged work adds “something new, with a further purpose or different
character” — the court seemed to treat this criterion rather literally,
concluding that omitting content did not “add[] something new.”
The court spurned VidAngel’s “space-shifting” defense without deciding
whether it could be fair use, because VidAngel’s use didn’t fit the
space-shifting cases: it was neither personal nor non-commercial, and
involved altered content. Manifestly skeptical of the defense, the court
erroneously stated: “reported decisions unanimously reject the view that
space-shifting is [copyright] fair use.” Actually, space-shifting was
squarely held to be fair use in
Fox Broadcasting Company v. DISH Networks LLC which we
previously discussed.
On the DMCA circumvention claim, the court rejected VidAngel’s argument
that owners of lawful copies have implied authority to decrypt, since
decryption is necessary to access the works. “Rather, lawful purchasers
have permission only to view their purchased discs with a DVD or Blu-ray
player licensed to decrypt….”
Finally, VidAngel argued that its decryption wasn’t within 17 U.S.C. §
1201(a), which bars circumvention of technical protection measures that
control access to a work. Its decryption went only to use
of the copyrighted works, VidAngel maintained, governed by § 1201(b) of the
DMCA. But that section only bars trafficking in such
technologies — something VidAngel did not engage in. The court held that a
technological protection measure could fall under both sections, and that
VidAngel did circumvent an access control.
Not surprisingly, VidAngel filed for bankruptcy on October 18, 2017.
USPTO Issues New Guidelines for Marks Containing a Surname Combined with
Other Wording
By Matthew Slevin
In August 2017, the U.S. Patent and Trademark Office issued new guidelines
governing registration of marks consisting of a surname and other wording.
The guidelines, released as the “
Examination Guide 3-17,” resolve an inconsistency between the Trademark Manual of Examining
Procedure and controlling Federal Circuit Court of Appeals case law.
Previously, TMEP § 1211.01(b)(vi) provided that when an applied-for mark
contains merely descriptive wording combined with a surname, the mark
should not be refused registration as “primarily merely a surname” under §
2(e)(4) of the Trademark Act, because merely descriptive wording is capable
of functioning as a mark. That directive was at odds with a commonly cited
proposition in
In re Hutchinson Tech. In that case, the Federal Circuit reversed the Trademark Trial and Appeal
Board’s refusal to register the mark HUTCHINSON TECHNOLOGY under § 2(e)(3).
The court reasoned that the TTAB should have considered how the purchasing
public would react to the mark in its entirety, rather than simply to
“Hutchinson” or “Technology” as component parts.
Last May, the TTAB drew attention to the inconsistency between the TMEP
section and relevant case law in Azeka Bldg. Corp. v. Azeka, 122
USPQ2d 1477 (TTAB 2017). It affirmed the refusal of the mark AZEKA’S RIBS
for “barbecue sauce” as primarily merely a surname. It explained that, as
in Hutchinson, the proper inquiry is the meaning of the mark as a
whole and is not limited to the question of whether the additional wording
aside from the surname—the word “ribs” in this instance — is capable of
functioning as a mark.
The Federal Circuit weighed in on this issue in July. In
Earnhardt v. Kerry Earnhardt, Inc., the court reversed the
TTAB's dismissal of the opposer’s claim that the mark EARNHARDT COLLECTION
was primarily merely a surname. The court said the TTAB made an incomplete
assessment by only looking to the term “collection” and finding it was not
generic for the applicant’s furniture goods. The court explained that that
when a mark contains a surname and an additional term, that additional term
should first be evaluated to determine whether it is merely descriptive or
generic—but then the mark should be evaluated in its entirety (consistent
with Hutchinson) to determine whether the additional term alters
the surname significance of the mark. The court remanded to the TTAB to
reevaluate the mark using that two-step test.
The new Examination Guide 3-17 instructs that marks must be examined
consistent with the test as stated in Earnhardt. It also notes
that in most cases, if the additional term(s) are generic or merely
descriptive, they will not alter the character of the mark, and refusal of
the mark under § 2(e)(4) will be appropriate. These new instructions were incorporated into the October 2017 revision to the TMEP.
This directive should make the Trademark Office’s examination of the
surname-based composite marks more consistent in their analysis, which in
turn might help brand owners to better understand the risk and costs for
prosecuting these types of marks.
Courts Continue to Deny Patent Eligibility to Scientific Discoveries
By Christopher P. King
In the recent case of
INO Therapeutics v. Praxair Distribution, a Delaware district court held as patent-ineligible a group of patents
for treatment of neonatal (newborn) patients with inhaled nitric oxide
(iNO). The court’s reasoning hinged upon the principle that patents are not
to be granted to scientific discoveries.
Specifically, the court found that the core of the patent claim was the
discovery of a natural human physiological response: an increased risk of
adverse reaction to treatment with iNO on the part of neonatal patients
with left ventricular dysfunction (LVD). In holding the claim to embody a
law of nature, the court stated that “[w]hile man discovered the adverse
physiological response that occurs when some patients receive iNO, such a
discovery does not amount to innovation.” It further held that the patent
claim’s step of excluding neonatal patents with LVD from INO treatment
failed to confer patent eligibility, citing judicial pronouncements that
“even valuable contributions [to science] can fall short of statutory
patentable subject matter” and that “[g]roundbreaking, innovative, or even
brilliant discovery does not by itself satisfy the § 101 inquiry.”
The blanket exclusion of scientific discoveries from the possibility of
patenting might seem a curious one, given the explicit inclusion of
discoveries in the relevant constitutional and statutory language. Article
1, Section 8 of the
U.S. Constitution
refers to granting exclusive rights to “discoveries.” Similarly, § 101 of
the
Patent Act
states that whoever “invents or discovers any new and useful
process, machine, manufacture, or composition of matter, or any new and
useful improvement thereof, may obtain a patent therefor,” thereby
specifically including discoveries as well as inventions within the scope
of patent eligibility (emphasis added).
Assuming that the discovery in INO Therapeutics of the connection
between LVD and pulmonary edema was indeed useful and novel, why was it
deemed ineligible for patent?
One explanation lies in the U.S. Supreme Court’s articulated exceptions to
both inventions and discoveries based on constitutional aims. In
Le Roy v. Tatham (1852), the Court stated, with reference to sources of power: “the invention is
not in discovering them, but in applying them to useful objects.” In
Gottschalk v. Benson (1972), the Court used an expanded articulation of the exception when barring a
claim to conversions of numeric representations in computers, stating that
“[p]henomena of nature, though just discovered, mental processes,
and abstract intellectual concepts are not patentable, as they are
the basic tools of scientific and technological work” (emphasis added).
Thus, the exception was not limited to inherent natural phenomena, but
rather expanded to additionally cover specific techniques devised by human
inventors. And in
Parker v. Flook (1978),
the Court further held ineligible a patent application involving use of a
formula, even though the claims did not wholly preempt the formula. The
Court’s approach may be characterized as pragmatic rather than
philosophical, attempting to carry out the Article 1, Section 8 goal of
“promot[ing] the progress” of science by denying patents where it feels
that patenting would tend more to impede science than to promote it.
Another possible explanation for the exclusion of discoveries from patent
eligibility could lie in the Patent Act’s use of the word “new.” A new
insight into a phenomenon that had previously been occurring naturally
(e.g., a property or consequence of a natural process) might be deemed not
to constitute a “new” discovery of a process since the process was already
taking place. In contrast, a discovery of a process that does not occur
without human action (e.g., the mixture of two manufactured chemicals),
even if inadvertent, could be deemed to involve a “new” process. Viewed in
this way, the patentee’s invention did not involve a “new” process, since
the invention involved an additional insight into the natural, pre-existing
reaction to a particular treatment of human bodies having a particular
dysfunction, rather than (for example) inducing a new type of reaction.
Unfortunately, the district court's decision in INO v. Praxair,
like many others before it addressing the patent eligibility of
discoveries, does not include detailed explanation for what particular
portion of Section 101 is believed to be unmet by the claimed subject
matter. It would be helpful for future courts to be explicit in providing
such analysis. Without it, decisions can appear to be arbitrary and even
contrary to the statutory provisions.
DOJ Highlights Criminal Enforcement of Trade Secrets Theft
By William Brenc, Vikram Iyengar
and
Patrick E. Premo
At the Cambridge Cyber Summit in October 2017, Deputy Attorney General Rod
Rosenstein discussed ways in which the Department of Justice has increased
its vigilance when it comes to protecting American companies from
cybercrime, noting that the DOJ's emphasis is on protecting “the ideas that make our nation strong and competitive in the
marketplace.” In 2015, leaders from the
G20 nations
highlighted the need to protect trade secrets, and Rosenstein indicated
that the DOJ has honored that commitment by stepping up efforts to
criminally indict trade secret thieves.
Although the DOJ has jurisdiction to prosecute trade secret theft, trade
secret disputes traditionally have been handled by private parties through
civil litigation. The federal
Defend Trade Secrets Act of 2016
and an array of state statutes allow victims of trade secret
misappropriation to seek injunctions and monetary damages. But, under the
Economic Espionage Act, knowingly stealing a trade secret or knowingly receiving a stolen trade
secret is a federal crime.
Prosecution of trade secrets misappropriation appears to be on the rise,
particularly in the area of financial technology (fintech), which broadly
describes the technological backing for financial firms. In April 2017,
Joon Kim, Acting U.S. Attorney for the Southern District of New York,
announced two charges of theft of financial trade secrets.
The DOJ alleged that Zhengquan “Jim” Zhang used his access to the source code of his
employer, a financial services firm, and hacked into other portions of the
firm’s systems to install a program that would send data to a third-party
site. By alerting and cooperating with the FBI, Zhang’s employer was
instrumental in uncovering his alleged theft.
In another fintech case, Dmitry Sazonov was
charged with attempted theft of trade secrets
from his employer, Susquehanna International Group. On the morning of a
meeting discussing his future with the firm, Sazonov allegedly attempted to
smuggle out the firm’s trading code by camouflaging code within seemingly
harmless PDF files, such as tax and immigration documents. Both cases are
pending in the Southern District of New York.
These fintech trade secret prosecutions are among a number of criminal
trade secret investigations in the technology sector. In one
high-profile case, Anthony Levandowski, co-founder of the self-driving truck company Otto,
faces potential
criminal charges for allegedly bringing trade secrets from Google’s self-driving car project
to his startup, which was later acquired by Uber. Although Levandowski has
not been charged, the potential indictment has led him to invoke his Fifth
Amendment privilege against self-incrimination. As a result, he has been
unwilling to cooperate in discovery in the pending civil suit. That suit,
of which Levandowski is not a named party, is set to go to trial in early
December 2017.
In another matter, on May 23, 2017, federal prosecutors filed a
criminal complaint
against seven individuals for allegedly stealing military manufacturing
trade secrets from a U.S. business for a Chinese firm. Although the case is
still in its early stages, the district court granted restraining orders
against two defendants.
These pending cases suggest that the DOJ is, in fact, using criminal
prosecution of trade secret theft as a tool to protect the valuable
intellectual property of American companies.