intellectual property: key topics for in-house counsel and business lawyers today

Intellectual Property: Key Topics for In-House Counsel and Business Lawyers

Today

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Katie Rahlin

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Kinney & Lange IP Law Desk References

• Intellectual Property Law for Business Lawyers (2012-2013 edition, West)

• Patents, trademarks, and copyrights• Trade secrets, advertising, the right of publicity, and foreign

intellectual property rights

• Federal Intellectual Property Laws and Regulations (2013 edition, West

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Today

IMPORTANT THINGS TO REMEMBER UNDER THE

AMERICA INVENTS ACT (AIA)

Alan Koenck

Review – Changes Made by the AIA• Priority given to first inventor to file (not first to

invent)• New post-grant review proceedings and supplemental

exam• Best mode defense eliminated• Prioritized examination• Prior user rights• Deceptive intent• Filing by assignee

Further changes after AIA implementation

• Some significant changes in USPTO fee structure• Micro entity discount of 75%• RCE fees increased (additional increase for 2nd and

subsequent RCEs)• Appeal fees lower initially, higher overall once appeal is

taken up by Patent Trial and Appeal Board• Inter Partes Review and Post Grant Review are more

expensive than Inter Partes Reexamination had been• Issue Fee will be reduced beginning 1/1/2014

First Inventor to File – what to remember

• Priority is determined based on the Applicant’s effective filing date (including any priority claim, domestic or foreign)

• Prior art is defined as any public use or document prior to the Applicant’s effective filing date

• A 1-year grace period is still in place for disclosures by the inventor – if the inventor publicly disclosed within one year of the effective filing date, no intervening disclosures are considered prior art

Old 35 U.S.C. 102 vs. New 35 U.S.C. 102

Old 35 U.S.C. 102 New 35 U.S.C. 102

Can overcome prior art if first to file or first to invent (with diligent reduction to practice)

Can overcome prior art if first to file, or first to publicly disclose/sell and then file within 1 year

Patent applications effective as prior art as of earliest effective U.S. filing date (35 U.S.C. 102(e)

Patent applications effective as prior art as of earliest effective filing date anywhere in the world

Statutory bar (with 1-year grace period) based on public use or sale by inventor in United States only

Statutory bar (with 1-year grace period) based on public use or sale by inventor anywhere in the world

First to publicly disclose/publish?• If you inherit a set of facts…

• Start with inventor’s effective filing date• If a prior public use or document exists, look for a public use

or document disclosed by the inventor that pre-dates the prior art, within 1 year of the effective filing date

First to publicly disclose/publish?• If you are making your facts…

• Do not plan to rely on being first to publish• Instead, make a filing as the first step• Why?

• Reliance on a first publication (or a first filing, for that matter) requires that the invention as claimed is supported (i.e., enabled with complete written description) by the earlier disclosure. This is more likely to be satisfied by a patent filing than another type of publication.

Other AIA issues -- declarations• Applications filed after Sept. 16, 2012 need a signed

declaration that complies with the revised language prescribed by the AIA

• This includes continuation and divisional applications, which could otherwise be filed with a copy of the parent declaration

• Keep contact information for inventors that leave your company, you may need new declarations signed for continuing applications

• While it is possible to file without a signed declaration if the inventor cannot be found, it is still more straightforward to file with signatures

Other AIA issues – prioritized exam • Prioritized examination is available for a fee ($4000

large entity, $2000 small entity, $1000 micro entity)• Signed declaration must be submitted with the filing of the

priority examination application…if it is not, priority examination status will not be granted

• For continuations of applications filed before September 16, 2012, filing a copy of the old (pre-AIA) declaration from the parent application is not sufficient, will result in priority examination status being denied

Other AIA issues – prior user rights• 35 U.S.C. 273 was amended by the AIA to provide a

defense to patent infringement based on commercial (non-public) use of a process more than 1 year before the effective filing date of the asserted patent

• Proceed with caution relying on this defense• Transferability is limited• Does not apply if asserted patent was patented by a

university• Risk/reward analysis for maintaining a process as a trade

secret should still be employed in a similar manner as under existing law

Other AIA issues -- recordkeeping• The intuitive view of the new first-to-file regime is that

the importance of recordkeeping has decreased, due to the inability to swear behind prior art based on an earlier date of invention

• By contrast, some provisions of the AIA will place high importance on recordkeeping and on documenting disclosure dates

• 1-year novelty grace period for public disclosure/publication• Derivation• Prior user rights

Other AIA issues – international publication

• Under the AIA, a public disclosure anywhere in the world qualifies as prior art under 35 U.S.C. 102(a)(1)

• Prior-filed U.S. patent applications are prior art under 35 U.S.C. 102(a)(2) as of their effective filing date, which includes any foreign priority filing date

AIA: What to remember• As always, the best strategy for important inventions is

to file a patent application promptly• Consider prioritized examination for inventions that

would benefit from faster issuance of a patent• Continue to keep records of innovative activity, they

are still useful• Be wary of young, polite texters who think AIA means

“appreciated in advance”


Today

Intellectual Property Damages

Jeffrey J. Cordray Christensen Associates

27

Christensen Associates

• Economic consulting firm

• Areas of litigation support include:—Intellectual property—Business disputes—Anything else that requires a damages calculation

28

What damages are recoverable in patent infringement cases?

• Plaintiff’s lost profits on lost sales—Incremental profit margin (no fixed expenses—

higher margin)

• Defendant’s profits (unjust enrichment) only for design patents

• Price erosion lost profits

• Reasonable royalty

29

Lost profits: incremental profits

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

Before the Alleged Infringement After the Alleged Infringement Difference

Sales Costs

Sales

Costs

Costs Sales LostSales

AdditionalCosts

For example, if sales decrease by 50%, costs

may only fall by 20%.

30

Different margins

• Incremental margin

• Gross margin

• Operating margin

• Net margin

31

How does an expert determine the incremental expenses?

• Some categories are obvious—If a good is purchased and resold

• Talk to finance/accounting personnel

• Can run regression to check for a positive correlation of expenses with sales volumes

32

• What does the plaintiff need to prove to obtain lost profits (its incremental margin)?

—That but for the infringement it would have made the accused sales

33

Four prongs of the Panduit test

• According to Panduit, to obtain as damages the lost profits on lost sales, a patent owner must prove:—Demand for the patented product—Absence of acceptable, non-infringing

substitutes—Manufacturing and marketing capability to

exploit demand (i.e., make the sales)—An accurate accounting of lost profits

Panduit Corp v. Stahlin Bros Fibre Works Inc., 575 F. 2d 1152 (6th Cir. 1978).

34

Lost profits (cont.)

• Plaintiff needs to prove the sales and profits it would have made—A reasonable royalty will be paid on the

remaining accused sales

35

Plaintiff’s market share

• State Industries, Inc. v. Mor-Flo Industries, Inc., 883 F.2d 1573 (C.A. Fed. (Tenn.), 1989)—You can use market share as a component of a

lost profits calculation—Market can have more than two players

36

What products are in the market?

• Pricing considerations (Bic surfboard case)• Product features (what is considered by the

consumer?)—Share of larger flat-panel TVs with higher resolution?—All larger flat-panels?

• Geography—Is the accused product only sold in certain areas?

• Distribution channel—Does Plaintiff or Defendant only sell over the internet

or also in stores?

37

Defendant’s design-around options

• Design-around options available at the time of the first accused sale—In Grain Processing v. American Maize-Products (Fed

Cir. 1999), the Court wrote:• “[A] fair and accurate reconstruction of the ‘but for’ market

also must take into account, where relevant, alternative actions the infringer foreseeably would have undertaken had he not infringed. Without the infringing product, a rational would-be infringer is likely to offer an acceptable noninfringing alternative, if available, to compete with the patent owner rather than leave the market altogether. The competitor in the ‘but for’ marketplace is hardly likely to surrender its complete market share when faced with a patent, if it can compete in some other lawful manner.”

38

Lost profits summary

• Plaintiff needs to prove level of lost sales

• Plaintiff has the burden of profit rate calculation—Plaintiff’s incremental margin is applied

• Plaintiff needs to prove the capacity to make sales

39

Intel Corp. - gross margin vs. operating margin

Source: Intel Corp. SEC Form 10-K for the fiscal year ended December 29, 2012.

2012

Net Sales (millions) $53,341

Less: Cost of Sales $20,190Gross Margin $33,151as a % of Net Sales 62%

Less: Operating Expenses $18,513Operating Margin $14,638as a % of Net Sales 27%

40

What products are included in the lost sales and royalty base?

• Entire market value rule—Functional units—Basis of demand

41

Price erosion lost profits

• Lower price needs to be due to accused sales—Take into account other market factors

• Overall economy• Competitors in the marketplace (including other

products being sold by the defendant)

• Need to consider law of demand—Need quantity offset for higher price (unless

good is perfectly inelastic, etc.)

42

How are reasonable royalty rates calculated?

• Georgia-Pacific analysis—Willing licensee and willing licensor—Date of 1st accused sale—Full information—15 Georgia-Pacific factors

• Analytical approach

• Cost savings

43

Details of a royalty rate calculation: 15 Georgia-Pacific factors

• 1. The royalties received by the patentee for the licensing of the patent in suit, proving or tending to prove an established royalty.

• 2. The rates paid by the licensee for the use of other patents comparable to the patent in suit.

• 3. The nature and scope of the license, as exclusive or non-exclusive; or as restricted or non-restricted in terms of territory or with respect to whom the manufactured product may be sold.

• 4. The licensor's established policy and marketing program to maintain his patent monopoly by not licensing others to use the invention or by granting licenses under special conditions designed to preserve that monopoly.

• 5. The commercial, relationship between the licensor and licensee, such as, whether they are competitors in the same territory in the same line of business; or whether they are inventor and promoter.

Georgia-Pacific Corp. v. United States Plywood Corp., 381 F.Supp. 1116, 1120, 166 USPQ 235 (S.D.N.Y. 1970), modified and aff'd, 446 F.2d 295, 170 USPQ 369 (2d Cir. 1971), cert. denied, 404 U.S. 870 (1971).

44

Georgia-Pacific factors (cont.)

• 6. The effect of selling the patented specialty in promoting sales of other products of the licensee; the existing value of the invention to the licensor as a generator of sales of his non-patented items; and the extent of such derivative or convoyed sales.

• 7. The duration of the patent and the term of the license.• 8. The established profitability of the product made under the patent;

its commercial success; and its current popularity.• 9. The utility and advantages of the patent property over the old modes

or devices, if any, that had been used for working out similar results.• 10. The nature of the patented invention; the character of the

commercial embodiment of it as owned and produced by the licensor; and the benefits to those who have used the invention.

45

Georgia-Pacific factors (cont.)

• 11. The extent to which the infringer has made use of the invention; and any evidence probative of the value of that use.

• 12. The portion of the profit or of the selling price that may be customary in the particular business or in comparable businesses to allow for the use of the invention or analogous inventions.

• 13. The portion of the realizable profit that should be credited to the invention as distinguished from nonpatented elements, the manufacturing process, business risks, or significant features or improvements added by the infringer.

• 14. The opinion testimony of qualified experts.• 15. The amount that a licensor (such as the patentee) and a licensee (such as

the infringer) would have agreed upon (at the time the infringer began) if both had been reasonably and voluntarily trying to reach an agreement; that is, the amount which a prudent licensee - who desired, as a business proposition, to obtain a license to manufacture and sell a particular article embodying the patented invention - would have been willing to pay as a royalty and yet be able to make a reasonable profit and which amount would have been acceptable by a prudent patentee who was willing to grant a license.

46

Recent precedent on damages

• Other licenses must be explained in detail if they are used—Lucent Technologies, Inc. v. Gateway, Inc., et al., 580

F.3d 1301 (Fed. Cir., 2009)• “In the present case, the jury had almost no testimony with

which to recalculate in a meaningful way the value of any of the running royalty agreements to arrive at the lump-sum damages award”

—ResQNet.Com, Inc. v. Lansa, Inc., 594 F.3d 860 (Fed. Cir., 2010)

• Plaintiff’s burden to show sufficiency of evidence

47

Recent precedent on damages (cont.)

• Rule of thumb analysis is gone—Uniloc USA, Inc. v. Microsoft Corp. (Fed. Cir.,

2011)• 25% rule of thumb called “a fundamentally flawed tool for

determining a baseline royalty rate in a hypothetical negotiation”

• Determined to be “inadmissible under Daubert and the Federal Rules of Evidence”

—Now more of an incremental focus• Incremental sales analysis and associated profits

• Incremental pricing analysis

• Incremental cost savings

48

Any questions on patent damages before we move on to other IP damages?

49

What damages are recoverable in copyright and trademark infringement cases?

• Plaintiff’s lost profits

• Infringer’s profits (unjust enrichment)—Cannot be duplicative of lost profits

• Statutory damages

• Reasonable royalty

50

• How is the calculation for the defendant’s unjust enrichment (profits) different than the plaintiff’s lost profits calculation—Defendant’s burden to apportion profits—Defendant’s burden to deduct expenses

51

According to 17 USC § 504(b):

• “In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.”

52

• Incremental margin

• Operating margin

• Net margin

What profits are considered damages under

unjust enrichment???

53

Defendant’s margin—incremental to fully loaded—varies by circuit

• 7th, 3rd, and 10th Circuits use the incremental approach; 5th and 11th also have used this method.—Judge Posner’s opinion in Taylor v. Meirick, 712 F.2d

1112 (7th Cir. 1983).

• 2nd and 9th Circuits use full absorption approach; 4th, 6th, and 8th Circuits have also applied this.—Judge Learned Hand’s ruling in Sheldon v. Metro-

Goldwyn Pictures Corp., 106 F.2d 45 (2nd Cir. 1939).

• Make sure your expert knows the legal precedent!

54

Which expenses are generally incremental?

• Manufacturing expenses?

• Factory overhead?—Need a 3rd shift, etc. (step variable expenses)—The amount of sales can change a category

• Sales personnel salaries?

• Sales commissions?

55

Intel Corp. - gross margin vs. operating margin

Source: Intel Corp. SEC Form 10-K for the fiscal year ended December 29, 2012.

2012

Net Sales (millions) $53,341

Less: Cost of Sales $20,190Gross Margin $33,151as a % of Net Sales 62%

Less: Operating Expenses $18,513Operating Margin $14,638as a % of Net Sales 27%

56

Unjust enrichment copyright example

• Hypothetical: a Burger King® Sidney Crosby bobble head doll is alleged to infringe the plaintiff’s copyright

• Plaintiff provided accused revenues for doll and food sales over the period the doll was sold

• What will the defendant look at?

57

Unjust enrichment calculations (cont.)

• How much higher were food (and doll) sales specifically due to the doll being of Sidney Crosby?—Wayne Gretzky —Alex Ovechkin

• Due to the specific design vs. other available options?—Younger likeness—Different stick or skate

• It is the defendant’s burden to apportion, generally• Subtract all relevant expenses

58

If plaintiff is seeking its lost profits

• Plaintiff needs to prove level of lost sales

• Plaintiff has the burden of profit rate calculation (incremental profit margin)

• Plaintiff needs to prove the capacity to make sales—Marketing capacity—Manufacturing capacity

59

Questions?


Today

WILL THE FEDERAL CIRCUIT CHANGE ITS STANDARD OF

REVIEW OF CLAIM CONSTRUCTION?

David Fairbairn

Lighting Ballast Control LLC v.

Philips Electronics North America Corp.

REHEARING EN BANC

Friday, September 13, 2013

Lighting Ballast Control LLC v.

Philips Electronics North America Corp.

• Issues:• Should this court overrule Cybor Corp. v. FAS Technologies,

Inc.?• Should this court afford deference to any aspect of a district

court’s claim construction?• If so, which aspects should be afforded deference?

Cyber Corp. v FAS Technologies138 F.3d 1448 (Fed. Cir.)

en banc

“[C]laim construction, as a purely legal issue, is subject to de novo review on appeal.”

Patent Infringement

“The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention.”

35 U.S.C. § 112(b)

Patent Infringement

Infringement is determined by reference to the claims of a patent, which provide the concise formal definition of the invention.

Autogiro Co. of Am. v. United States, 384 F.2d 391, 396 (Ct. Cl. 1967)

Patent Infringement

Patent Infringement analysis involves two steps:• The first step is determining the meaning and scope of the

patent claims asserted to be infringed.• The second step is comparing the properly construed claims

to the device accused of infringing.

Markman v. Westview Instruments Inc., 52 F.3d 967, 976 (Fed. Cir. 1995) (“Markman I”), aff’d, 517 U.S. 389 (1996) (“Markman II”)

Patent Infringement

In the aftermath of Markman I and II, the first step--Claim construction--is recognized as the most important step in modern patent litigation.

Patent Infringement

Claim construction is now generally conducted by the judge in a claim construction hearing typically referred to as a “Markman Hearing”

Patent Infringement

Claims must be interpreted the same for both validity and infringement analyses.

Smith Kline Diagnostics, Inc. v. Helena Lab Corp., 859 F.2d 878, 882 (Fed. Cir. 1988)

Patent Infringement

To ascertain the meaning of words of a patent’s claims, courts consider three primary sources: the patent’s claims, its specification, and its prosecution history (“intrinsic evidence”).

Extrinsic evidence, such as testimony of how those skilled in the art would interpret the claim language, may also be considered.

Markman I, 52 F.3d at 979

History

Patent claims were an American invention. Robert Fulton, inventor of the steamboat, included a claim in a patent in 1811. They first were mentioned in a statute in the Patent Act of 1836, ch. 357, § 6. Inclusion of a claim in the patent did not become a requirement until the Patent Act of 1870.

History

As early as 1848, the Supreme Court held that construction of a patent claim is a matter of law exclusively for the court.Hogg v. Emerson, 47 U.S. (6 How.) 437, 484.

This principle was repeated in the leading patent treatises of the 19th century, including 2 Robinson, The Law of Patents for Useful Inventions, § 732 at 481-483 (1890); Walker, Patent Laws § 75 at 173 (1895).

History

Beginning at the turn of the 20th century, the trial of patent infringement cases diminished until in 1961, there were no patent infringement cases tried to a jury.

History

In the 1960’s and 1970’s, there was wide divergence in the treatment of patent cases by the district and circuit courts. The most extreme was the 8th Circuit, where 19 consecutive appeals resulted in invalidity of the patents in suit.

History

Since 1980, a dramatic shift has occurred. By 1994, 70% of patent cases tried were to a jury. That level has continued to the present.

What caused the shift?

History

First, forum shopping, inconsistent decisions, and non-uniformity in interpretation of the patent laws by the courts were recognized as problems, and were addressed by Congress with the Federal Court Improvement Act of 1982.

History

The Act created the U.S. Court of Appeals for the Federal Circuit.

• Exclusive jurisdiction over patent-related appeals• Purpose – promote uniformity and consistency

History

Second, jury trials in IP cases found a champion• $19.6 million jury award in a trademark case involving

infringement of the mark “BigFoot”. Big O Tire Dealers v. Goodyear (1977)

• Duane Burton, Big O trial counsel, created BigFoot Press and began publishing Jury Instructions for IP Cases

History

Third, results of jury trials were much more favorable to patent owners

• Less likely to find invalidity• More likely to find infringement• More generous damage awards

Inconsistency at the Federal Circuit

1983 – First opinion deciding a question of claim construction, held that claim construction was a matter of law.

SSIH Equip SA. v. U.S. ITC, 718 F.2d 365, 376 (Fed. Cir. 1983)


1984 – “If…the meaning of a term of art in the claims is disputed and extrinsic evidence is needed to explain the meaning, construction of the claims could be left to a jury.”

Envirotech Corp v. Al George, Inc., 730 F.2d 753 (1984)


Thereafter, cases going both ways, until 1995 – Markman I

Markman I• Trial:

• Judge instructed jury on what to consider in interpreting claims

• Evidence included testimony by inventor and an expert on meaning of disputed claim language

• After jury found infringement of two claims, judge interpreted the disputed claim language and granted JMOL

Markman I• Federal Circuit:

• Claim construction is a question of law solely for the judge• Review of claim construction is subject to the de novo

standard

Markman II• Supreme Court:

• Claim Construction is a question of law solely for the judge• The 7th Amendment right to jury trial is not violated• Silent as to de novo review

Aftermath of Markman I and II• Left to District Courts to determine procedures for

how and when the claim construction would be performed

Aftermath of Markman I and II• Federal Circuit embarked on a multi-year, case-by-case

development of the analytical process to be used by the judges in performing claim construction.

Aftermath of Markman I and II• Claim Construction Cases

• Vitronics Corp. v. Conceptronics, Inc. (1996)• Johnson Worldwide Associates v. Zebco Corp. (1999)• Rexnord Corp. v. Laitram Corp. (2001)• Texas Digital Systems v. Telegenetics, Inc. (2002)• Liebel-Flarsheim Co. v. Medrad, Inc. (2004)• Phillips v. AWH Corp. (2005)

Aftermath of Markman I and II• Federal Circuit panels disagreed on whether the de

novo standard or the “clearly erroneous” standard of review should apply to claim construction

Cybor Corp. v FAS Technologies, Inc. (1998)

• Federal Circuit en banc:• Claim construction is purely a legal issue, is reviewed on a de

novo review• Rader (now Chief Judge) and Newman disserted

Reversal Rates

Much criticism has been leveled at the reversal rates of patent appeals based on claim construction. Rates of reversal of over 40% have been reported.

Reversal Rates

J. Jonas Anderson and Peter S. Menell have recently presented results of a comprehensive empirical analysis of the Federal Circuit’s claim construction jurisprudence from 2000 to 2011.

Informal Deference: An Historical, Emirical, and Normative Analysis of Patent Claim Construction, Northwestern University Law Review, Vol. 108.

Reversal Rates• Reversal rates have dropped significantly since Phillips

(2005)• All time low of 17% in 2011• All judges on Federal Circuit are now more likely to affirm

claim construction than previously• Nearly every technology sector is more likely to be affirmed

on appeal

Revisiting Cybor• In Phillips, Circuit Judge Mayer dissenting, called on

the court to revisit holdings of Markman I and Cybor that claim construction is a pure question of law subject to de novo review.

• Resurfaced in dissents or concurring opinions in 2006, 2008, 2010, and 2011.

Revisiting Cybor• The Supreme Court indicated a willingness to revisit

the standard of review when reviewing a petition for cert in Retractable Techs. Inc. v. Becton Dickinson and Co., and invited the U.S. Solicitor General to file a brief.

• The Solicitor General urged the Supreme Court not to grant cert because the district court had not made factual finding or resolved evidentiary disputes in interpreting the claims.

Lighting Ballast• District court judge resolved claim construction issue

of whether claim elements were “means plus function” elements under 35 U.S.C. § 112(f):“An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.” (emphasis added)

Lighting Ballast

• Defendant argued that the patent claims were invalid because the patent did not disclose any structure corresponding to the “voltage source means providing a constant or variable magnitude DC voltage between the DC input terminals.”

• The judge relied on testimony of the inventor and an expert on that a person of ordinary skill would readily ascertain structures capable of performing recited function.

Lighting Ballast• Federal Circuit reversed:

• Found that patent did not disclose structure to perform the function

• “testimony of one of ordinary skill in the art cannot supplant the total absence of structure in the specification”

Lighting Ballast• Request for Rehearing granted March 15, 2013

• Should this court overrule Cybor?• Should this court afford deference to any aspect of a district

court’s claim construction?• If so, which aspects should be afforded deference?

Lighting Ballast• Lighting Ballast Brief

• overrule Cybor• referred to Solicitor General’s brief in Retractable• avoided the issue of whether the testimony relied upon by

the District Court Judge could cure the lack of any explicit disclosure in the specification of structure for performing to recited function

Lighting Ballast• Universal brief

• Clear error review of rulings that resolve disputed issues of historical facts based on extrinsic evidence

• Urged caution “lest such a change be perceived as opening the door to every claim construction being portrayed as a disputed factual issue that invites a battle of experts on how they read a patent for purposes of litigation”

• De novo review of construction based solely on the intrinsic record

Lighting Ballast• Amicus Briefs

• ABA• Fact finding should be reviewed under Clearly Erroneous standard• 9 questions that should be characterized as findings of fact – listed in

“Agenda for 21st Century Patent Reform”, ABA Section of IP Law (Sept. 2010)

• AIPLA• Review underlying facts arising from intrinsic and extrinsic

evidence for clear error• Review the import of underlying facts de novo


Today

Fair Use and Copyright in Higher Education – An Evolving View from the Ivory Tower

Kinney & Lange IP SeminarJune 14, 2013

A flash mob did what at the union???

Only one thing is impossible for God: To find any sense in any copyright law on the planet.

- Mark Twain’s Notebook, 1902-1903

Whenever a copyright law is to be made or altered, then the

idiots assemble.

- Mark Twain’s Notebook, 1902-1903

Advising Higher Education Clients

• A unique challenge

• Faculty



• Faculty– Work for hire (17 USC § 101)

• By employee and within scope of employment

– Owned by the EMPLOYER (17 USC § 201(b))– Turned on its head in academia

• Not by law; seldom by contract• Instead by policy and custom

– Default to faculty ownership



• Faculty

• Staff– Librarians– IP/Technology Transfer

• Others (indirect)– Students– Community at large


• Delivery of client service– Education– Information– Policies– Procedures

• Checklists

– Legal opinions• Proactive• Reactive

Issues in Higher Education

• Copies for classroom use

• Electronic course management

• Digitization and special collections

• Public performances– Live music– Sporting venues– Common areas in residential halls

• File sharing


• Flash mobs / viral YouTube videos – Harlem Shake (2013)

• Team practices/locker rooms• Sporting venues during games• Dorms / Libraries / Common areas

Courtesy, Paul Daniel Rodriguez, youtube.com/user/iPaulTV


• Flash mobs / viral YouTube videos – Harlem Shake (2013)

• Team practices/locker rooms• Sporting venues during games• Dorms / Libraries / Common areas

– Call Me Maybe (2012)• Improvisational dancing in vans• Harvard baseball team has 17M+ views

Leveling the Playing Field

• Statutory Protection (17 USC)– Fair Use (§ 107)– Libraries (§ 108)– Face to face teaching (§ 110(1))– Distance learning (§ 110(2))– Statutory damages (§ 504(c)(2))

Defenses to Copyright Infringement

• Non-infringing use

• Independent creation

• Invalidity of copyright

• Misuse by copyright owner (e.g., unreasonable conduct; against public policy)

• Abandonment by copyright owner (e.g., explicit grant of work into public domain)

NON-INFRINGING ACTIVTIES

Non-Infringing Activities

• HYPERLINKING

Avoiding Infringement Online

• Hyperlinking is not “copying” for purposes of copyright

• As long as the site or target is itself an authorized copy, a link is permissible– Ordinary due diligence to determine– The “Source” web-site is preferable

• Good alternative to copying content– Need to monitor/maintain the link


• HYPERLINKING

• PUBLIC DOMAIN

Public Domain

• Expiration of Copyright– All works published before 1923– All works published without notice between

1923-1977– All works published without notice and without

subsequent registration within five years between 1978 and March 1989

– All works published with notice but not renewed 1923-1963

Public Domain

• Expiration of Copyright (cont’d)– All unpublished works by authors who died

before 1943– All unpublished anonymous and

pseudonymous works created before 1893– All unpublished works where date of author’s

death is unknown created before 1893

Public Domain

• Invalidated through litigation, court order

• All works published that were prepared by an officer/employee of the US government as part of his/her official duties

• Works dedicated to the Public Domain– Usually by way of express gift– HOWEVER, Courts are reluctant to recognize

such ‘gifts’– Questionable except in extreme cases

Relying on Public Domain

• Trend has been to extend protection

• Term restoration legislation

• Removal of formalities

– Registration

– Renewal

• Liberal adherence to treaties and foreign

law


• HYPERLINKING

• PUBLIC DOMAIN

• TEACHING EXCEPTIONS

Teaching Exceptions

• 17 USC § 110(1)

– Exempts performances “in the course of face-

to-face teaching activities…in a classroom or

similar place devoted to instruction”

– Does not extend to streaming electronically

(i.e., for distance learning purposes)

– May not even extend to places on campus

Teaching Exceptions

• 17 USC § 110(2)

– Exempts certain performances by government

bodies and accredited, non-profit educational

institutions

– Electronic transmission of “nondramatic

literary or musical work[s]” and “reasonable

and limited portions” of any other works (e.g.,

motion pictures)

Teaching Exceptions

• 17 USC § 110(2) (cont’d)

– Must be “directly related and of material

assistance to the teaching content”

– The copy must have been lawfully made or

acquired

– Transmission must be limited to officially

enrolled students

Teaching Exceptions

• 17 USC § 110(2) (cont’d)

– Institution must have adequate policies

• Must describe and promote compliance

• Must provide notice of copyright protection

– Institution must utilize technology

• Prevent retention

• Prevent retransmission or dissemination


• HYPERLINKING

• PUBLIC DOMAIN

• TEACHING EXCEPTIONS

• FAIR USE

Fair Use

CONSIDERATIONS

1)Purpose and character of use (commercial vs. non-profit)

2)Nature of copyrighted work

3)Amount of work used versus work as a whole

4)Effect of use on market value of copyrighted work

Fair Use

• Enumerated purposes (non-exclusive)– Criticism– Comment– News Reporting– Teaching– Scholarship– Research

Fair Use

• “Fair use” of a copyrighted work is allowed

• No liability for infringement and author is

not entitled to a royalty

• No need to obtain permission

• Tends to be a subjective and difficult

determination

Fair Use

• NOT carte blanche; there are restrictions

• Competing interests must be balanced

• Historically – and officially – no

mathematical formula or hard and fast

rules to determine whether use is ‘fair’

• Until recently, very little guidance for

universities, esp. re: new technologies

Cambridge U. Press v. Becker

• Academic and textbook publishers– Cambridge University Press– Oxford University Press, Inc.– SAGE Publications, Inc.

• Backed by Copyright Clearance Center (CCC)– To whom university libraries pay royalties


• Sued Georgia State University over its e-reserve practices

• Named several individuals as defendants– GSU President– Provost– Dean of Libraries– Members of the Board of Regents


• Plaintiffs identified > 100 works

• GSU asserted a fair use defense; had an imperfect policy but followed it

• Court found that fair use applied to e-reserves and specifically to textbooks

• Court ruled in favor of GSU on all but a handful of works


• Believed to be the first case in which a court has analyzed copyright and fair use in light of contemporary higher education practices and current technology

• Attracted a lot of attention from the academy as well as the publishing industry

• Court rendered a thorough, 300+ page decision analyzing each work


• Court refused Plaintiffs’ attempt to remove GSU’s practices from scope of fair use protection

• Court did note that for purposes of the third fair use factor, “decidedly small” portions favor the user

• No “upper range,” but 18.52% found to be “close” to a loss of fair use


• Against the weight of precedent, and the letter and spirit of the statute, the court did establish quantitative guidelines– Up to 10% of pages for books with fewer than

10 chapters– Up to 1 complete chapter of books having 10

or more chapters

• Most courts have declined to adopt such hard limits


• Court awarded GSU attorney fees and

costs

• Case now on appeal

• Helpful guidance

• Limited scope

• Impact to be determined

Authors Guild v. HathiTrust

• HathiTrust engaged in a mass digitization project with Google

• Goal is to have books archived, readily searchable, and accessible to persons having impaired vision

• Authors sued HathiTrust and participating universities

• Alleged copyright infringement


• Defendants asserted fair use as a defense

• Court found that the project goals are primarily transformative uses

• Court recognized that it is sometimes “necessary to copy entire works”

• Court not persuaded that Plaintiffs’ claimed loss of prospective licensing revenue constituted market impact


• “The totality of the fair-use factors [in this case] suggest that copyright law’s ‘goal of promoting the Progress of Science…would be better served by allowing the use than by preventing it.’”

• “The public derives tremendous benefit…and authors stand to gain very little if the public is deprived of this resource”


• “Although I recognize that the facts here may on some levels be without precedent, I am convinced that they fall safely within the protection of fair use”

• “I cannot imagine a definition of fair use that would not encompass …Defendants’ [project]”

• Judgment granted for Defendants


• As with Georgia State, this is only one trial court

opinion

• Also on appeal

• Applies fair use to real-world activities that have

a direct impact on higher education

• Authors and publishers are sure to take note

• Impact on future litigation?

• Google case is ongoing

AIME v. UCLA

• Educational video producers– Ambrose Video Publishing– Ass’n for Information Media and Equipment

• Sued Cal Regents, UCLA Chancellor

• Alleged that licensed DVDs were copied and distributed/streamed online

• Defendants moved to dismiss

AIME v. UCLA

• Court granted motion to dismiss– AIME lacked associational standing– Sovereign immunity as to certain Defendants– Qualified immunity

• Reasonable person would not have known that conduct infringed copyright

• Ambiguity as to whether fair use applied• Terms and conditions in license agreement also

ambiguous (open system vs. closed system)

AIME v. UCLA

• Court granted motion to dismiss (cont’d)– Certain activities were licensed– Copying was incidental fair use

• Copy must be created to upload content for streaming

– Streaming is not distribution– No circumvention in violation of DMCA

• Had lawful access

• Claims dismissed with prejudice

SO…CAN I USE IT?

Can I use it?

• Things are definitely looking up• E-reserves

– GSU case: up to 10% of pages or 1 chapter will almost always be OK, but courts will impose an upper limit

• Digitization– HathiTrust case: transformative uses are OK

• Streaming– UCLA: courts will strictly construe existing

licenses against licensor; fair use can be ambiguous; qualified immunity available

Can I use it?

• Two “safe harbors”

– Get permission

– Don’t do it

• Everything else involves risk

Can I use it?

• Risks must be managed

• Is it worth it?

• Alternatives?

– Public domain material– Material released under a Creative Commons,

GNU, or similar free license

GETTING PERMISSION

Getting Permission

• Usually via a license

• Up-front fees and/or royalties

• Non-profit, educational use MAY bring out the goodness in people, but no guarantee

• Often subject to negotiations

• Failed negotiations DO NOT preclude a later assertion of fair use– Does put you on their radar screen, though

Getting Permission

• You may already have it!

• Institutional licenses– Music publishing rights

• ASCAP• BMI• SESAC

– Existing arrangements• Electronic publishers• Content aggregators

It is easier to beg for forgiveness than to ask

for permission.

PERFORMING A

FAIR USE ASSESSMENT

Fair Use Assessment

• What is the nature of the work to be used?– Commercial– Popular– Mainstream media– Factual– Non-profit– Obscure– Readily available or out-of-print

Fair Use Assessment

• What is the nature of the desired use?– Commercial– Non-profit– Educational– Proportionality– Proper attribution– “Transformative”

• New expression or meaning• New insights and understandings

Building a Good Faith Case

• Put forth a genuine effort to identify the rights holder(s)– Won’t always be easy or even possible

• Buy or use an authorized copy– At least someone is getting paid

• Document, document, document

• Get a legal opinion

Legal Opinions

• Excellent evidence of GOOD faith

• Must be bona fide, prepared by competent legal counsel

• Preferably in writing

• Advice of counsel defense does not excuse infringement but may limit remedies

Legal Opinions

• Avoid increased statutory damages, attorney fees

• BUT BEWARE…

• Jeopardizes the attorney-client privilege

• Client needs to understand that counsel’s words of caution are likely to be used against her

What have we learned?

Flash mob.

Viral video.

Copyright lawyer.

Non-university employee.

Thank you.


Today

PRE-ISSUANCE AND POST-GRANT SUBMISSIONS AND

PROCEEDINGS UNDER THE AIA

Alan Koenck

Review of patents and published applications

• Third party (pre-issuance) submissions• Supplemental examination• Post grant review• Ex parte reexamination• Inter partes review

USPTO Statistics

Third Party Prior Art Submissions• May be filed after publication of a pending application,

within 6 months of publication or before a first office action on the merits

• Submission consists of a listing of prior art and a concise description of relevance, which may be in the form of a claim chart but may not be a proposed rejection of claims

Supplemental Examination• May only be filed by the patent owner• May be filed any time after issuance of patent• May be based on items of information that include

publications and other information that may raise a substantial new question of patentability

• If a substantial new question of patentability is found by the PTO, ex parte reexamination commences

Ex Parte Reexamination• May be filed by patent owner or a third party• Substantial new question of patentability must be

based on a patent or printed publication• 700-800 filed per year• Average pendency: 27.9 months• All claims confirmed: 21%, claims changed: 68%, all

claims canceled: 11%

Inter Partes Review• Similar in many respects to inter partes reexamination

• Available 9 mos. after patent issuance (or after post-grant review, if any, is completed); unavailable >1 year after served with infringement complaint

• 520 inter partes reexamination requests filed in 2012 (374 in 2011); 66% of patents were in litigation; 215 inter partes reviews filed in first 7.5 mos.

• Average pendency (inter partes reexam): 39.5 months• Inter Partes Review will be completed in 1 year – major change

• Inter partes reexam - all claims confirmed: 11%; claims changed: 45%; all claims canceled/disclaimed: 44%

• Estoppel – extends to grounds raised or reasonably could have raised

Post Grant Review• Available for patents filed after March 16, 2013• Must be filed within 9 months of issuance of patent• May challenge based on any grounds (not just 102 and

103)• Final determination will be issued within 1 year

Inter Partes Review – examples• Based on a representative decision on a request for

inter partes review available on the USPTO website, the requirement of showing a reasonable likelihood of prevailing on at least one claim will be more stringent than the substantial new question of patentability standard that was used in inter partes reexamination

• The decision on the request for inter partes review is made ground by ground – that is, inter partes review is granted only for grounds where there is a reasonable likelihood of prevailing


Today

IP Licensing in the Corporate Environment

Kinney & Lange 2013 IP Seminar

Intellectual Property: Key Topics for

In-House Counsel and Business Lawyers Today

Topics

● Business Context● Key terms● Legal issues● Negotiation tips● Questions

Business Context for License Grant

● Exclusive or Nonexclusive?• Competitive space• Minimize risk

- Freedom to operate- Avoid legal expense (opinion, opposition, etc)

● Primary purpose of agreement?• End result of development • Supply agreement – often used as a backup to failure to supply

- Can go “under the radar” – business may not realize the effect of wording• Settlement• Post Acquisition• Intercompany agreements

● The other side?• Customer• Supplier• Competitor

Allocation of IP Rights Between Parties

● Licensed products• Patent license• Product license

● Intellectual Property Rights involved• Patents and patent applications• Know-how• Trademarks• Copyright

● Future developments/grantbacks• Alternate form of consideration for licensor• Avoid unintended or unforeseeable improvements• Blocking patents obtained• Know-how or data generated by licensee

Exclusivity, Field and Territory

● Maximize royalty return• Exclusive license by field• Multiple non-exclusive licenses

● Scope of field definition• Current markets• Adjacent or new markets• Test the definition• Ability to control downstream uses

● Regional or global territory• Sufficient presence regionally/globally to fully exploit

the license throughout the territory licensed• Need to grant sublicenses to third parties

Royalties, Rates and Fees

● Maintenance/Access fees• Fixed• Nonrefundable

● Royalty rates• Paid-up• Running

-Percentage of net sales- Increasing or decreasing by volume- Definition of Net Sales

-Per unit price- Allows pricing flexibility by licensee

● Minimums• Exclusivity• Creditable against running royalties• Conversion to nonexclusive or terminate

Patent Filing/Prosecution

● Background patent applications• Importance to other interests of licensor

● Foreground inventions conceived during agreement• Inventorship disputes • Sharing of draft patent applications between parties

● Outside counsel to file and prosecute patent applications

Right/Responsibility to Enforce Patents

● Enforcement of licensed patent• Importance to other interests of licensor

● Responsibility for costs• Damage recovery should parallel

● Indemnification

● Multi-country enforcement

Term/Termination of Transaction

● How is term defined• By patent life on a country-by-country basis• By a single finite term

● Does licensee obtain IP rights limited in time?• License under know-how become paid-up

● When is a party entitled to terminate the transaction?• Failure to exploit license• Bankruptcy

● Requirements at termination

Dispute Resolution

● Binding Arbitration vs. Litigation• Choice can be outcome determinative

● Governing Law• Laws country-to-country vary significantly

- Strict contract interpretation vs. consideration of equities

● Venue• Home forum advantage• Availability or extent of discovery

● Continued shift to law of the contract• Law of the contract law rather than patent law will determine

economics of exploiting the patent rights

● Patent Exhaustion –(Quanta, Monsanto)• Foreign sales• Conditional sales

● May influence reasonable royalties and the ability to obtain an injunction (E-Bay)

● Invalidity challenge provisions (MedImmune)

● Creative licensing controls and interplay with antitrust• postsale restraints• Tying• Patent Misuse• EU Block exemption

Other Considerations

Possible Strategies

● License the end-user (as far downstream as possible)• More difficult without manufacturing source

● Parse the grant • Make and have made• use • sell

● Field-of-use restrictions (General Talking Pictures Corp v. Western Electric Co., 304 US 175 (1938))• Geographically defined• Defined by channel• Defined by product

Possible Strategies

● Link license and supply where possible• Draft as one contract• Consequences of one with another (e.g., breach) where drafted

separately• Designate third party manufacturer if NPE

● Place burden on the licensee to take action and provide appropriate consequences• Cease selling in addition to notice• Termination• breach of contract damages that encompass consequential

damages?

● Control title of the article that substantially embodies the patented method• Can work well in a consumable/instrument construct

Negotiation Tips

● Negotiation grid• First position• Walk-aways

● Term sheet● Due diligence on third party● P&L

• Margins• Sale price

● Project management• Timelines• Deliverables• Scheduled calls• In person meeting

● Control of the draft● Trust

Questions?

Thank you


Today

Oracle v. Google and Its Impact on Software

Development and Protection

Austen Zuege

Overview• Background

• Issues being litigated

• Impact on copyrightability of software

• The future of licensing and “open source” software

IP Litigation Today• 56% of patent suits filed in 2012 were by patent trolls

• Clashes of the titans continue too

• Copyright suits steady/upward

Java – The Product• Developed by Sun Microsystems

• Released in 1996• Platform-independent programming language

• Windows, Macintosh, Linux

• Pre-made “packages” of software for common functions:• Declaring code• Implementing code

• Oracle bought Sun (including Java) in 2010• $7.4 Billion purchase price

Java – The Product (cont.)

Virtual Machin

e

Application

Computer/Device Package

sVM

Java – A History of Litigation• Sun v. Microsoft

• Antitrust suit commenced in October, 1997• Microsoft documents showed a “Strategic Objective” to “Kill cross-

platform Java by grow[ing] the polluted Java market.”

• Settled in 2001• $20 Million to Sun • Microsoft exited market

• Sun v. Microsoft II• Commenced in 2002 over Java support in Windows XP • Antitrust and patent issues settled in 2004 for around $2

Billion

Oracle v. Google – The Dispute• Licensing negotiations begin in 2005

• Copyright Infringement• Google’s Android products (Dalvik VM)

• 37 package definitions copied verbatim (admitted)

• Patent Infringement• Resolution of data references in code, and static initialization

Oracle v. Google – The Dispute• Java Application Programming Interfaces (APIs) and

packages• Java.package.Class.method()

• Oracle offers three licenses:1)General Public License (“GPL” or “open source”) - free of

charge, but licensees may only use the packages (both declaring code and implementing code), if they “contribute back” the new work publicly.

2)Specification License - licensee can use only the Specification—the declaring code—but must write its own implementing code.

3)Commercial License – licensee can use and customize the full Java code in commercial products and keep its code secret.

Oracle v. Google - District Court• Northern District of California (Case No. 10-cv-3561)

• Oracle sought $6 Billion and injunction

• Patent Infringement• Seven patents asserted: U.S. Patent Nos. 6,125,447;

6,192,476; 5,966,702; 7,426,720; RE38, 104; 6,910,205; and 6,061,520.

• Dismissed all but ‘104 and ‘520

• Copyright Infringement

Oracle v. Google - District Court (cont.)

• Writ of Mandamus to Fed. Cir. (2012)• Google’s assertion of privilege over an email that stated in

part: • “What we’ve actually been asked to do (by Larry and Serge[y]) is to

investigate what technical alternatives exist to Java for Android and Chrome. We’ve been over a bunch of these, and think they all suck. We conclude that we need to negotiate a license for Java under the terms we need.”

• Found non-privileged


• Verdict/Judgment (June 2012)• Patents:

• Google wins declaratory judgment of non-infringement (deadlocked jury)

• Google loses validity challenges

• Copyright:• Oracle wins on copying “rangeCheck code in TimSort.java and

ComparableTimSort.java, and the eight decompiled files (seven ‘Impl.java’ files and one ‘ACL’ file), . . . [damages] of zero dollars (as per the parties’ stipulation).”

• Jury found infringement, but judge said copied material not copyrightable• Google wins on the rest• Google loses on waiver and implied license defenses


• Judge Alsup on copyrightability of declaring code (5/31/12 order)

• Merger doctrine bars copyrightability• The idea/expression dichotomy

• Unprotectable names and short phrases• Structure and organization was unprotectable command

structure for a system or method of operation (17 U.S.C. §102(b))

• Fiest – no sweat of the brow protection

Reactions• Jury Foreman Greg Thompson:

• Oracle’s IP would be against public interest• A feeling that Google had done something wrong

• Google attorneys:• GC Kent Walker: “The case illustrates the cost when the patent

system doesn’t work well.”• Renny Hwang: Oracle was “overstepping copyright law into claiming

ideas.”

• Oracle CEO Larry Ellison:• “It's really a copyright case.” “We won on infringement.”

The Appeal• Both parties appeal (consolidated as Fed. Cir. Case:

13-1021)• Oracle’s main arguments:

• The sky is falling for software• Harry Potter books analogy• Protectable expression:

• Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 (1985) (magazine’s advance publication of portions of ex-President Ford memoir)

• Structure and organization protectable:• Atari Games Corp. v. Nintendo of America, Inc., 975 F.2d 832 (Fed. Cir.

1992) (no merger)• Johnson Controls Inc. v. Phoenix Control Systems, Inc., 886 F.2d 1173 (9th

Cir. 1989)• Lamps Plus, Inc. v. Seattle Lighting Fixture Co., 345 F.3d 1140, 1147 (9th

Cir. 2003)

The Appeal (cont.)• Google’s main arguments:

• Oracle failed to challenge jury instruction on 7000 lines of code• Interoperability not copyrightable under §102(b)

• Apply a “filter”• Sega Enters. Ltd. v. Accolade, Inc., 977 F.2d 1510 (9th Cir. 1993)• Sony Computer Ent’mt, Inc. v. Connectix Corp., 203 F.3d 596 (9th Cir. 2000)• Lotus Dev. Corp. v. Borland Int’l, Inc., 49 F.3d 807 (1st Cir. 1995) aff’d

by an equally divided court 516 U.S. 233 (1996)• Functional elements are patentable but not copyrightable

• Baker v. Selden, 101 U.S. 99 (1879)• Fair use anyway• Cross-appeal: copying was de minimus compared to registered whole

The Appeal (cont.)• Six Amicus briefs supporting Oracle

• Ralph Oman (former U.S. Register of Copyrights)• Microsoft, EMC, Netapp• BSA | The Software Alliance• Picture Archive Council of America, Graphic Artists Guild• Scott McNealy and Brian Sutphin• Eugene Spafford, Zhi Ding, Lee Hollaar

• Five Amicus briefs supporting Google• Intellectual Property Law Professors• Computer & Communications Industry Association• Computer Scientists• Apiary, Inc. et al.• Rackspace, Inc., Application Developers Alliance, et al.

Conclusion


Today

Securing and Protecting Your Brand through your

Domain NameCatherine A. Shultz

Domain Names• Substitute for unique IP address for the source

computer of a website enabling users to access an online resource

• Associated with you and/or your products or services

• Easy for customers to find

• Memorable

• http://www.bettycrocker.com/

• http://www.crocs.com

Domain Names v. Trademarks• Trademarks

• Identify the source of goods or services• Regional registrations and rights

• Domain Names• International• First come, first-serve registration

Domain Names v. Trademarks• 2nd Shift Sewer & Plumbing

• Call Someone Who Gives A Shift• March 2012• Registration No. 4,328,324 • Kokomo, Indiana USA

• Bill’s Second Shift Plumbing• Call Someone Who Gives a Shift• January 2012• Common law rights• Sydney, Australia

Domain Name Dispute Resolution Options

• Litigation • Federal or state courts• Based on any applicable state or federal law for trademarks

• Uniform Domain Name Dispute Resolution Policy• .com, .net and .org domains

• Uniform Rapid Suspension System• new gTLD’s

Uniform Domain Name Dispute Resolution Policy

• Internet Corporation for Assigned Names and Numbers

• “dedicated to preserving the operational stability of the Internet; to promoting competition; to achieving broad representation of global Internet communities; and to developing policy appropriate to its mission through bottom-up, consensus-based processes.”

• coordinates the Domain Name System (DNS), Internet Protocol (IP) addresses, generic (gTLD) and country code (ccTLD) Top-Level Domain name system, and root server system; and

• structure to resolve domain name disputes


• Implemented in 1999• Applicable to all .com, .net and .org domain names• Sets forth terms and conditions that an administrative

resolution service provider will use to govern a dispute• Registration of a domain name includes the registrant:

• confirming that registering the domain name "will not infringe upon or otherwise violate the rights of any third party," and

• agreeing to UDRP terms if a third-party asserts a claim arising from alleged abusive registration


• Disputes are submitted to Service Providers• National Arbitration Forum• World Intellectual Property Organization

• Fees depend on the number of panelists• $1500, one panelist• $4000, three panelists

• Proceedings are all done through written submissions• Typical proceedings are completed in 60 days


• Domain Name Hijacking Claim• Claimant must show:

• Trademark rights in the mark• Respondent’s domain is confusingly similar to the claimant’s trademark• Respondent does not have rights or a legitimate interest in the domain• Domain was registered and is being used in bad faith

• Bad Faith• registration was primarily for the purpose of selling or transferring the domain

name• pattern of conduct to prevent the trademark owner from reflecting the mark in

a domain name• domain name registered primarily for the purpose to disrupt business of the

claimant• intentionally attracting users for commercial gain by creating likelihood of

confusion with claimant’s mark

UDRP Proceeding2nd Shift Sewer & Plumbing

Call Someone Who Gives A ShiftMarch 2012Registration No. 4,328,324 Kokomo, Indiana USA

•2nd Shift registered www.whogivesashift.com July 2012•Bill tries to register same domain August 2012•Bill files UDRP Complaint with WIPO September 2012 seeking transfer of the domain

Bill’s Second Shift PlumbingCall Someone Who Gives a ShiftJanuary 2012Common law rightsSydney, Australia

Trademark Rights in the mark

Domain confusingly similar

Respondent lacks rights Bad Faith registration and use

http://www.whogivesashift.com/

UDRP ProceedingSally Opportunity

•Sally Opportunity registered www.whogivesashift.com July 2012

•Offers to sell Bill the domain for $10,000

•Bill files UDRP Complaint with WIPO September 2012 seeking transfer of the domain






UDRP ProceedingSally Opportunity

•Sally Opportunity registered www.whogivesashift.com July 2012

•Sally sets the domain as a landing page for pay-per-click advertising unrelated to plumbing


•Bill files UDRP Complaint with WIPO September 2012 seeking transfer of the domain




Respondent lacks legitimate interestBad Faith registration and use


Reverse Domain Name Hijacking• "using the UDRP in bad faith to attempt to deprive a registered

domain-name holder of a domain name”

• Paragraph 15(e) UDRP:• "after considering the submissions the panel finds that the complaint was brought

in bad faith, for example in an attempt at Reverse Domain Name Hijacking or was brought primarily to harass the domain-name holder, the panel shall declare in its decision that the complaint was brought in bad faith and constitutes an abuse of the administrative proceeding"

• Can be requested by the respondent or can be brought up by the panelists themselves

• No penalties, beyond the “shaming” of a finding of RDNH

Reverse Domain Name Hijacking• Factors:

• Claimant’s ability to prove the factors

• Actions of the trademark owner before and during UDRP proceedings

• Harassment by trademark owner

• Dishonest with panel

• Long period between learning of the website and bringing the proceeding

• Respondent informed Claimant of circumstances showing it was not domain name hijacking, but chose to bring the complaint anyway

• Whether represented by counsel

Reverse Domain Name Hijacking• Jessica Perkins and James Perkins - Mama May I, LLC. v. Chris

Phillips, NAF Claim No. FA1205001445335 (July 2, 2012)• Phillips purchased the domain name mamamayi.com in Feb. 2009

• The Perkins later wanted the domain name mamamayi.com for an online store

• Phillips backed out of each negotiation for purchase, sometimes at the last minute

• The Perkins applied for and were granted a U.S. trademark registration for MAMAMAYI

• The Perkins filed a UDRP complaint requesting domain name transfer

• Findings:• Reverse Domain Name Hijacking by The Perkins

Reverse Domain Name Hijacking• Jessica Perkins and James Perkins - Mama May I, LLC. v. Chris

Phillips, NAF Claim No. FA1205001445335 (July 2, 2012)• Findings:

• No transfer of the domain name

• Reverse Domain Name Hijacking by The Perkins

• Trademark Registration post-dated the domain name registration

• Perkins were dishonest with the panel

• Perkins tried to buy the domain name first, indicating they knew Phillips had a legitimate claim to the domain name

UDRP – Post Panel Findings

• Either party to a UDRP proceeding unsatisfied with the outcome, can file a suit for judicial relief under the Anticybersquatting Consumer Protection Act (“ACPA”)

• Panel’s finding under UDRP has no preclusive effects• Court does not give any deference to panel’s finding• Can reverse a transfer order• May give monetary sanctions for cases of reverse domain

name hijacking

Uniform Rapid Suspension System• Applicable to the new gTLD’s • ICANN approved service providers• Even cheaper and more efficient system for

suspending domain names• 14 days for respondent to respond to a complain• Speculated cost of around $500

• Suspension of domain only (not transfer)• Teeth for Reverse Domain Name Hijackers• Appeals procedure

URS ProceedingSally Opportunity

•Sally Opportunity registered www.whogivesashift.plumbing for 2 years

•Sally set up a pay per click site directing to plumbing businesses and at one point has a link to Bill’s website, www.whogivesashift.com


•Bill files URS Complaint with NAF seeking suspension of the domain





Sally’s domain name is suspended for the remainder of her two year registration period

http://www.whogivesashift.plumbing/


Trademark Clearinghouse• International database for registering trademarks

• $150 fee for one year• Support both Trademark Claims and Sunrise Services,

required in all new gTLDs• Marks that can be included in the Clearinghouse:

• Nationally or regionally registered word marks• Word marks that have been validated through a court of law or other

judicial proceeding• Word marks protected by a statue or treaty in effect at the time the

mark is submitted to the Clearinghouse• Other marks that constitute intellectual property may be recorded in

the Clearinghouse by arrangement with a registry

Trademark Clearinghouse• Sunrise Services

• Advance opportunity to register domain names corresponding to their marks before available to public

• At least 30 days

• Trademark Claims• Anyone attempting to register a domain name matching a

recorded mark will receive notice of the mark • Clearinghouse sends notice of registration to the trademark holder if

the notified party proceeds to register

• After sunrise services and runs for at least the first 90 days of general operation and registration

Practice Tips• Register your trademarks

• National registration• Trademark Clearinghouse

• Know your options for dealing with cases of domain name hijacking

• UDRP Proceedings• URS Proceedings• Litigation

UDRP Proceeding• Domain Name Hijacking

• Enforce your rights upon learning of violation• Review overview of WIPO panel views on selected UDRP

Questions and/or panel decisions• http://www.wipo.int/amc/en/domains/search/overview

• Appeal options and timeframe

• Reverse Domain Name Hijacking• Inform claimant of the reasons the claim will fail• Select to have 3 panelists and research panelists comfortable

with a RDNH finding• Request and advocate for a reverse domain name hijacking

finding

http://www.wipo.int/amc/en/domains/search/overview


Today

Divided Infringement After Akamai v. Limelight

Michael A. Collins

…and in 1996

Akamai Technologies• 1995 – MIT professors address what they dub the

“world-wide wait” issue.

1. URL (uspto.gov) Domain Name Server (DNS)

2. IP Address70.42.251.42

3. Request

4. HTML Content

Content Provider Site

HTML Content

Akamai Technologies• The Solution:

• HTML document is still provided by the content provider site• Embedded objects served from ghost servers• Requires modifying the URL of embedded objects Ghost Servers

Akamai’s Patent19. A content delivery service, comprising:

•replicating a set of page objects across a wide area network of content servers managed by a domain other than a content provider domain; [Limelight]

•for a given page normally served from the content provider domain, tagging the embedded objects of the page so that requests for the page objects resolve to the domain instead of the content provider domain; [Limelight’s customers]

•responsive to a request for the given page received at the content provider domain, serving the given page from the content provider domain; and [Limelight]

•serving at least one embedded object of the given page from a given content server in the domain instead of from the content provider domain. [Limelight]

Pre-Akamai Theories of Infringement - Direct

• 35 U.S.C. § 271(a) Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

• Single Entity Rule: Requires a single actor to perform ALL steps/elements of the claim.

• UNLESS … an agency-like relationship exists between multiple participants.

Pre-Akamai Theories of Infringement - Indirect

• 35 U.S.C. §271(b) - Whoever actively induces infringement of a patent shall be liable as an infringer.

• Direct infringement under 271(a) is a predicate to a finding of induced infringement. BMC Resources v. Paymentech, LP (Fed. Cir. 2007)

• Accused infringer must have “knowledge” of the patent.• No direct infringement because there is no single actor,

therefore no finding of indirect (induced) infringement is possible.

Absurd Result!• Better for Limelight to perform at least ONE of the

claimed steps, than to perform NONE of the claimed steps.

Federal Circuit Decision in Akamai• Overruled the Fed. Cir’s 2007 decision in BMC Res. V.

Paymentech• Held: Induced infringement does not require a single actor

perform each step.

• Remanded, providing that Limelight could liable for Induced Infringement under 271(b) if:

• (1) Limelight knew of Akamai's patent, • (2) it performed all but one of the steps of the method claimed in the patent,• (3) it induced the content providers to perform the final step of the claimed

method, and • (4) the content providers in fact performed that final step.

Federal Circuit Decision in Akamai• Dissent by Judge Newman

• Agreed that inducement should not be predicated on direct infringement by a single actor;

• Argued that a single-actor rule should not be required for direct infringement either.

• Dissent by Judges Linn, Dyk, Prost, and O’Malley• Would have affirmed the “single-actor” rule of BMC.

Direct vs. Indirect Infringement after Akamai

Supreme Ct. Review?• Petitions have been filed…awaiting decision from the

S. Ct. (should come soon)• Strong disagreement within the Federal Circuit

surrounding the statutory language of § 271(a)-(c) .

Winners post-Akamai• Patent-holders/Non-Practicing Entities (patent trolls)

• Clearly, much easier to enforce method patents on theories of inducement.

• Particular relevant to the software patents of today, where steps may be easily bifurcated among a number of parties.

• Practicing Entities• Creates uncertainty with respect to a number of patents. • May have to re-visit previous patents avoided through

bifurcation of steps.

Tips for Practitioners• Draft single-actor claims!!

• Rule is still unsettled until we hear from the S. Ct.

• Draft claims from the perspective of different participants to a method.

• E-commerce transaction involved a user, a merchant and a bank

• Draft one set of claims that only requires participation from the user, another that only requires participation from a merchant, and another that only requires participation from a bank.

• Make use of apparatus and system claims.


Today

Design Patents: Review &

Developments

Matt DeRuyter

Roadmap• Design patent review• Apple v. Samsung lawsuits• International design protection

• The Hague Agreement

Overview of Design Patents• 35 U.S.C. §171: Whoever invents any new, original and

ornamental design for an article of manufacture may obtain a patent therefor….

• Protect ornamental features of a product• Drawings of critical importance

• Applications are examined by the USPTO• 14-year term (likely to change to a 15-year term soon)

Example Design Patent• D672,543

• Filed August 31, 2012• Granted December 18, 2012• NIKE, Inc.• Claim: The ornamental design

for a shoe outsole, as shown and described

Liability for Infringement• Infringement

• 35 U.S.C. §289: Whoever during the term of a patent for a design, without license of the owner,

• (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or

• (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit….

• Potential for substantial damage awards

Test for Infringement• Claim construction

• Generally pictorial - side-by-side comparison

• “Ordinary observer” test• “[whether] an ordinary observer, familiar with the prior art

designs, would be deceived into believing that the accused product is the same as the patented design”. David A. Richardson v. Stanley Works, Inc., 597 F.3d 1288, 1295 (Fed. Cir. 2010).

• Not conducted in a vacuum, but in view of the prior art. Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. 2008).

Comparison to Other Forms of IPDesign Patents Utility Patents Trade Dress

Subject matter Ornamental designs Useful inventions Visual appearance of product or packaging

Term 14 years from issue 20 years from filing Use requirement

Maintenance fees None 4, 8 and 12 years Renewals for registrations

Infringement Visual evaluation; ordinary observer deceived?

Element-by-element analysis Must show: 1) non-functional;2) distinctive; and3) likely to cause confusion

Damages Infringer’s total profit; not subject to apportionment

Reasonable royalty or lost profits; subject to apportionment

Damages plus infringer’s profit

Who Files For Design Patent Protection?

• Granted design patents (1988-2012)

Apple, Inc. v. Samsung Electronics Co.

• Many interesting facets• Relationship of parties• Proceedings in multiple jurisdictions• Parties not “playing nicely”• Design patents play an important role

• Cases still pending• Demonstrates the power that design patents can hold

Apple Complaint• April 2011: Apple sues Samsung for “slavishly”

copying its “elegant and distinctive” products and designs

• Northern District of California• Trade dress infringement• Trademark infringement• Unfair business practices• Unjust enrichment• Design patent infringement• Patent (utility) infringement

• Apple seeks permanent injunction and damages

D627,790• Graphical user interface for a display

screen or portion thereof• Filed August 20, 2007• Granted November 23, 2010• Icon grid of the iOS homescreen

• Phone, bezel and button design not claimed

D602,016• Electronic Device• Filed June 6, 2008• Granted October 13, 2009• Device shell

• Two embodiments• Face and back surface - black;

sides - silver, grey or chrome• Face and back surface - white;

sides - silver, grey or chrome

• Button and screen not claimed

D618,677• Electronic Device• Filed November 18, 2008• Granted June 29, 2010• Surface of the device

• Tablets• Galaxy Tab

Allegedly Infringing Samsung Products

Samsung Responds• Samsung files patent infringement suits against Apple

• Power reduction, 3G technology, wireless data communication

• Korea• Japan• Germany

• 3G wireless communication elements and user interfaces• United States

• By October 2011, Apple and Samsung are involved in more than 20 legal battles in 10 countries

• 50 by July 2012

Setbacks for Samsung• Preliminary injunctions against Samsung

• EU (except Netherlands): Galaxy Tab 10.1• EU Community design registration

• Apple amends U.S. complaint to include additional claims of infringement

Samsung Rebound• November 2011

• Samsung redesigns Galaxy Tab 10.1 (10.1N) to get around injunction in Germany

• December 2011• Apple’s request for preliminary injunction in U.S. is denied

Preliminary Injunction Denied• Apple was likely to succeed in proving infringement for some

patents• Apple failed to meet its burden of demonstrating irreparable harm

D‘889 Patent Validity

More on the Preliminary Injunction• Apple’s briefs explain ways to work around Apple

patents (i.e. alternate designs)• Used to demonstrate that the features are not

functional/utilitarian• Non-rectangular shape• No rounded corners• Non-horizontal speaker slots• No front bezel

• Apple appeals denial of preliminary injunction

The Battles Continue…• January 2012

• Apple files suit in Germany alleging infringement of design rights

• Redesigned Galaxy Tab 10.1N• Samsung smartphones (Galaxy S Plus, Galaxy S II)

• February 2012• No preliminary injunction against Galaxy Tab 10.1N in

Germany

• May 2012• Allegations of destruction of evidence levied against

Samsung• CAFC affirms and remands preliminary injunction decision• Court-ordered mediation attempt fails

CAFC Preliminary Injunction Ruling

• Denial of preliminary injunction was affirmed for 3 patents (D’087, D’677 and the ‘381 utility patent)

• Determination on the 4th (D’889) remanded to the district court

U.S. Trial Approaches…• June 2012

• Apple wins preliminary injunction against Galaxy Tablet 10.1 in U.S.

• Samsung appeals immediately

• July 2012• UK judge: Galaxy Tab does not infringe Apple’s iPad design

• Models of the Galaxy Tab “do not have the same understated and extreme simplicity which is possessed by the Apple design”

• “[T]hey are not as cool”

• Apple loses suit in Germany against redesigned Galaxy Tab 10.1N

• But wins against Galaxy Tab 7.7

Just Before Trial• July 2012

• U.S. trial parameters set• Each side gets

• 25 hours for arguments • 125 exhibits

• Samsung sanctioned for destroying evidence

U.S. Trial• Four design patents remain part of the case:

U.S. Trial• Almost 40 iPhone and iPad prototypes revealed• Samsung unsuccessfully attempts to use a film and a

UK television program as prior art• Details of licensing attempts revealed

• $30 per phone / $40 per tablet

• Judge Koh frustrated by attorneys for both parties• Samsung sends rejected evidence to media• “…unless you're smoking crack you know these witnesses

aren't going to be called!”

Closing and Verdict• Damages

• Apple• Asks for more than $2.5B in damages

• Samsung• $519M profits from accused devices• Asks for $422M for Apple’s infringement

• Jury verdict• Samsung products infringe 3 utility and 3 design patents

and dilute Apple’s iPhone trade dress• $1,049,343,540

Aftermath• Apple unsuccessfully pursues permanent injunctions• Apple seeks to ban additional smartphones in a later

filed case against Samsung’s Galaxy Nexus• Preliminary injunction against Galaxy Tab 10.1 lifted• No new trial based on juror misconduct• Damages award reduced by $450.5M

More Aftermath• UK court - Apple required to issue public notice stating

that the Galaxy Pad does not infringe the iPad• Apple complies (sort of)

• “So while the U.K. court did not find Samsung guilty of infringement, other courts have recognized that in the course of creating its Galaxy tablet, Samsung willfully copied Apple's far more popular iPad.”

• Apple reprimanded and ordered to pay Samsung’s legal fees

• Cases and appeals still pending• We’ll continue to hear more about Apple v. Samsung

The Hague System• Hague System for the International Registration of

Industrial Designs• Goal: minimize formalities and expense

• One application• One language• One set of fees

• Administered by the International Bureau of WIPO

What is an Industrial Design?• WIPO: An industrial design constitutes the ornamental

or aesthetic aspect of an article. A design may consist of three-dimensional features, such as the shape or surface of an article, or of two-dimensional features, such as patterns, lines or color.

• EU: “Design” means the appearance of the whole or a part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture and/or materials of any industrial or handicraft item itself and/or its ornamentation.

• Language is not quite the same as a U.S. design patent

Filing Particulars• Application

• Filed in English, French or Spanish• Up to 100 different designs can be included in one

application• Typically submitted directly to the IB

• Fees• Basic fee• Publication fee• Fee for each Contracting Party (country to be entered)

Examination• International Bureau of WIPO

• Checks compliance with formal requirements• Records in the International Register

• Office of each Contracting Party• Performs normal examination

• Refusal of protection must be communicated to WIPO within 6-12 months

• Remedies are the same as if the application was directly filed with the office

• Cannot deny rights based on non-compliance of formal requirements

Additional Notes• Different examination standards in different

Contracting States• Substantive examination: Office reviews for novelty & non-

obviousness• Non-examination: validity challenged during litigation or

other proceeding

• Approved registrations• Initial period of 5 years• Renewable for additional 5 year periods

• Hague System is an agreement for international procedure only

The U.S. and the Hague System• Three international treaties

• The Geneva Act of July 2, 1999• The Hague Act of November 28, 1960• The London Act of June 2, 1934

• 13 years in the making• U.S. Senate did not ratify until 2007• Final implementing legislation signed into law on December

12, 2012• Likely to take effect on or shortly after December 12, 2013

What to Expect from the Hague System

• Advantages• Potential cost and time savings

• Up to 100 designs in a single application

• Limitations• Only 60 Contracting Parties as of 01 June 2013

• China, Japan, South Korea, Canada, Mexico, Brazil, Russia not members

• Already a “backdoor” for non-member countries• “a real and effective industrial or commercial establishment,

or a domicile, in at least one of the Contracting Parties”

In Closing• Design patents

• Can be a meaningful part of an intellectual property portfolio• Continued international harmonization will likely allow

owners to obtain international design protection more easily


Today

Supreme Court IP Review

Stephen M. Komarec

Growing relevance of IP• SCOTUS is hearing an increasing % of IP cases

• “Still, the presence of four core IP cases among the 48 grants to date for OT2012 …, 8% of the argument calendar, is remarkable. For comparison, I count 5% IP cases in OT2011 (4/75) and 6% in OT 2010 (5/84). To get a sense for longer trends, ten years ago the Court decided 3 IP cases out of 73 opinions (4%) and twenty years ago only 2 out of 114 (2%).”

• Ronald Mann, Is the new economy driving the Court’s docket?, SCOTUSblog (Oct. 15, 2012, 1:51 PM), http://www.scotusblog.com/2012/10/is-the-new-economy-driving-the-courts-docket/

What’s Recently Passed!• Association for Molecular Pathology v. Myriad

Genetics, Inc.• No. 12-398, June 13, 2013• Patentable Subject Matter

What’s Passed• Bowman v. Monsanto Co. (No. 11-796, May 13, 2013)

• Patent Exhaustion

• Kirtsaeng v. John Wiley & Sons (No.11-697, March 19, 2013)

• Copyright Exhaustion

• Already, LLC v. Nike, Inc. (No. 11-982, January 9, 2013)

• Jurisdiction for Trademark Validity

• Gunn v. Minton (No. 11-1118, February 20, 2013)• Jurisdiction for Patent Malpractice

What’s to Come• Medtronic Inc. v. Boston Scientific Corp. et al.

• 695 F.3d 1266 (Fed. Cir. 2012)• Burden of showing patent infringement under license

agreement

• Federal Trade Commission v. Watson Pharmaceuticals Inc.

• 677 F.3d 1298 (11th Cir. 2012)• Pharmaceutical “pay-for-delay” arrangement in patent

infringement settlement

A new economy or a new politic?• Who is the alleged infringer?

• A competitor?• A consumer?

• What is the IP owner’s strategy?• Protecting what’s rightfully theirs?• Battling with equal competitor/Protecting market share?• Aggressive assertion/Stifle competition?

Patent Exhaustion• Association for Molecular Pathology v. Myriad

Genetics, Inc.• Patentable Subject Matter

• 1) Are naturally occurring segments of human DNA patent eligable by virtue of their isolation from the rest of the human genome?

• 2) Is synthetically created cDNA patent eligible?

Patent Eligibility• Naturally Occurring DNA Segment

• Is a product of nature• Not patentable

• cDNA• Not naturally occurring

• Patentable

Noteworthy Language• “Myriad’s principal contribution was uncovering the

precise location and genetic sequence of the … genes within [the] chromosomes.”

• “Groundbreaking, innovative, or even brilliant discovery does not by itself satisfy the §101 inquiry.”

• “But extensive effort alone is insufficient to satisfy the demands of §101.”

Patent Language• “It is a discovery of the present invention ….”• The Detailed Description describes the “iterative

process” of discovery• The Claims were directed to the genetic sequence in

the gene• Not a specific chemical composition of a particular molecule

Patent Exhaustion• Bowman v. Monsanto Co. et al.

• Question Presented• 1) Does patent exhaustion exist after an authorized sale?• 2) Is there an exception to patent exhaustion for self-replicating

technologies?

Patented & Licensed Seeds• Resistant to herbicides including Monsanto’s Roundup• Patented

• 5,352,605 & RE39,247

• Sold under license• Can be planted in only one season• Can be 1) consumed or 2) sold as a commodity to grain

elevator for later animal or human consumption

Actual Exhaustion• 1st authorized sale of a patented article exhausts

patent rightsFirst Sale

Destroy

Non-Infringing UsesEat

Re-SellExhaustion

The Monsanto Way• Protected Seed

First Sale Authorized ReproductionLicensed Use: “Planting”

Consume:

“Eat”Sell

The Bowman way• Bootleg Seed

First SaleLicensed Use,

Production & SaleDeceptive Purchase &

Unauthorized UseInfringing

Reproduction

8Public

Perception?

Bowman’s Arguments• Patent Exhaustion

• “[T]he initial authorized sale of a patented item terminates all patent rights to that item.”

• Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617, 625 (2008).

• “Blame-the-Bean”

Supreme Court Rule• Patent Exhaustion

• It is “well settled” principle “that the exhaustion doctrine does not extend to the right to ‘make’ a new product.”

• Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 346 (1961).

Decision & Analysis• Patent not Exhausted

• “Because Bowman reproduced Monsanto’s patented invention, the exhaustion doctrine does not protect him.”

• Exception to Doctrine not Created• Self-replication is “Using” and “Making”• There may be self-replicating software issues

Copyright Exhaustion• Kirtsaeng v. John Wiley & Sons, Inc.

• Question Presented• 1) How do the importation provisions and the first sale doctrine of the

Copyright statutes impact copies that are legally made outside the U.S. and later imported without permission?

Manufactured in the U.S.

The Wiley Way• Copyrighted Textbook

Manufactured Abroad First Sale

Abroad$

First Sale in the U.S.

$$

Disclaimers• The Fine Print

• “Exhausted” Textbook

The Kirtsaeng Way

Manufactured Abroad

First Sale Abroad

$

Imported to U.S.

Sold in the U.S.

$$

Public Perception?

The Statutes• § 106(3): Exclusive right to distribute copies• § 109(a): Exclusive rights limited by “First Sale

Doctrine”• Extends to works “made lawfully under this title”

• § 602(a)(1): Importation into the U.S. of works that have been acquired outside the U.S. “is infringement of the exclusive right to distribute copies … under section 106”

Grey Market Goods• It is lawful to “re-import” domestically produced works

that have been exported• Quality King Distributors, Inc. v. L’anza Research Int’l, Inc.,

523 U.S. 135 (1998)

• Can works legally produced abroad be imported?• Kirtsaeng

“Lawfully made under this title”• Kirtsaeng: Non-Geographical Limitation

• First Sale Doctrine applies to all legal sales

• Wiley & Sons: Geographic Limitation• First Sale Doctrine does not apply to copies made abroad

Decision & Analysis• Non-Geographic Interpretation is proper

• Legislative History• Statutory Interpretation• Constitutional Objectives for Copyrights• Practical Concerns• Economic “horribles”

• It is lawful to import into the U.S. for re-sale a copyrighted work legally purchased abroad when the work was legally made abroad (or in the U.S.)

Trademark Jurisdiction• Already, LLC v. Nike, Inc.

• Question Presented• Is a federal court divested of jurisdiction for a federal trademark

validity challenge if the registrant promises not to assert the mark?

Trademark Dispute• Nike “Air Force 1”

• TM Reg. No. 3,451,905

• Already “Sugars”• U.S. Design Pat. No. D594,641

Proceedings• Nike sued Already for TM infringement• Already counterclaimed that TM is invalid• Nike issued “Covenant Not to Sue”

Covenant Not to Sue• Nike admits that Already no longer infringes• Nike promises not to raise a TM claim against Already• Unconditional and Irrevocable

Legal Theory• Both the District Court & the Second Circuit ruled in

favor of Nike• Jurisdiction• Voluntary Cessation Doctrine

Supreme Court• Nike

• Met formidable burden of showing that wrongful behavior (e.g. aggressive TM assertion) would not recur

• Already• Failed to show an injury that would give rise to jurisdiction

Decision & Analysis• Already

• Would have to admit infringement

• Nike’s “wrongful behavior”• Trademark Bullying

Public Perception?

Patent Jurisdiction• Gunn et al. v. Minton

• Question Presented• Do state law legal malpractice claims relating to substantive patent

matters “arise under” jurisdiction of the federal courts?

The Malpractice Claim• State District Court

• Minton argued that failure to raise experimental use defense led to invalidity

• On Appeal• Minton argued that because the error “arose” under patent

law, it “arises under” federal jurisdiction

• Supreme Court of Texas• Decided it was a Federal Court issue

The Legal Standard• Federal jurisdiction over state law claim will lie if the

issue is:• 1) necessarily raised;• 2) actually disputed;• 3) substantial; and• 4) capable of resolution in federal court without disrupting

the federal-state balance approved by Congress

Supreme Court• Minton’s claim fails to meet:

• 3) The federal issue is not substantial “in the relevant sense”• The issue is substantial to the parties• The issue is not substantial to the federal system as a whole

• 4) Malpractice is a state issue• Federal Court jurisdiction over patent case established by Congress is

not intended to displace State interest in regulating the legal profession

Still going …• SCOTUS is not done yet!

• Medtronic Inc. v. Boston Scientific• Must the patentee prove infringement?

or• Must the licensee prove non-infringement?

• Federal Trade Commission v. Watson Pharmaceuticals Inc.• Settlement agreement in a patent dispute

•1) A restriction on generic entry until a future date, and•2) The brand’s payment of money or other value to the generic

• Anti-Trust issue?

Conclusions• IP is at the Frontlines

• Could filter down to being a more visible political issue• Proposed Congressional actions

• Importance of having an IP enforcement plan• Who are you going to license?• Who are you going to sue?• How far are you going to take it?• What will the public perception be?


Today

intellectual property: key topics for in-house counsel and business lawyers today

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