Source: http://www.mondaq.com/unitedstates/x/204212/Trademark/Intellectual+Property+An+Introductory+Primer
Timestamp: 2017-02-22 06:08:10
Document Index: 4079439

Matched Legal Cases: ['Art. 1', '§ 8', '§ 284', '§284', '§285', '§ 101', '§ 101', '§ 2314', '§ 107']

Intellectual Property - An Introductory Primer - Intellectual Property - United States
Home > USA > Intellectual Property	United States: Intellectual Property - An Introductory Primer
Article by Robert A. McTarmaneyCarter Ledyard & Milburn
A product of the mind with commercial value
"The Congress shall have Power . . .To promote the
Writings and Discoveries." U.S. Const., Art. 1. § 8.
cl. 8.
Patents protect the concept of an invention and
give the owner the right to exclude others from
practicing the invention for a specified time within the
jurisdiction of the issuing government. Patents are "a license
to sue to exclude."
Patentability requires (1) Approved Subject Matter; (2) Utility;
(3) Novelty; and (4) Nonobviousness.
Abstract– Brief Description on
Specification– Manner and
process of making and using the invention.
(Disclosed when patent issues).
Claims– Statements that
distinctly and particularly point out the subject matter of the
invention, legally defining the boundaries of the patent rights.
Claims are protected by the patent, not any
Drawings– which illustrate the
"Provisional" Application can set Priority Date, but
prepare with care, and be careful if abandoning.
Used when Utility or Provisional Patent is filed with
A "heads up" to potential infringers.
No assurance that Patent will issue.
Assigned to "Art Unit" and Examiner.
Patentability Search; Office Action Rejection.
2-3 Years at least, but USPTO is trying to improve.
Often several Office Action rejections, often minor, sometimes
Then Notice of Allowance and Fees.
Approved Subject Matter
"Original" processes, machines, products,
compositions, or new and useful improvements.
Software, Plants, Biotech, Some Business Methods.
But not theories, abstract ideas, laws of nature or science, or
pure mathematical equations or algorithms.
The machine must actually operate to perform its intended
Classic example = perpetual motion machines do not satisfy
Utility, since they cannot possibly work.
Invention must be new.
Not in "Prior Art."
Not previously publicly used, sold, or described in printed
Subject to Grace Period = one year.
But foreign countries = no grace period.
Nonobviousness Requirement
A "flash of genius"? Or obvious to a "person of
ordinary skill in the art"?
If A and B are known, then combining them to make C might be
"novel," but could not be patented since
U.S. Federal Circuit Court 1982.
Uniformity and stop forum-shopping.
Ornamental aspects
Processes, Machines, Compilations. Most patents are Utility.
Plant – New
Varieties of Asexually reproduced plants.
14-Year Term. Increasing popularity. Low rejection rate vs.
"Hidden Lines" not part of Design, and irrelevant to
Is an "ordinary observer" confused?
"Egyptian Goddess" case – focus on
Design, not written claims.
Infringement easier to prove.
Design Infringement Defenses
Anticipation (Prior Art)
Article of Manufacture*
* = not defenses for Utility Patents
Functionality and Drawings
Functionality = Utility Patent
Ornamental = Design Patent; Invalid if more
"functional" than "design."
Design must be sufficient to enable one to make it, and know
Reasonably definite, but not blueprints.
Written design claims were not useful in court.
Sliding scale – Prior – Patented -- Accused
Term of Patents and Challenges
Extended to 20 years from 17 years in 1995.
Design Patents 14 years.
Universities and Inventors given rights to inventions developed
with Federal funds 1980.
Generic drug manufacturers testing time 1984.
Remedies import/export patent products 1988.
"First use" defense to infringement, inter
partes reexamination, and publication of pending patents
"Derivation" versus "Interference"
post-AIA.
"AIA" 2011 – "First to File" versus
"First to Invent" effective in 2013. Prior Art = >1
year < to Filing Date.
Venue U.S. Court for Eastern District of Virginia.
"Patent Trial and Appeal Board" replaces BPAI.
Reduces Fees for filings by small and micro entities.
USPTO must adjust fees. Expedited Fees available.
Tax "strategies" now deemed within prior art.
"Best Mode" Requirement no longer invalidates
Virtual Marking now permitted. E-Filing encouraged.
False marking cases now require competitive injury.
New Procedures to challenge and correct patents.
Patent Bars
One-Year in U.S.
No Grace Period Elsewhere.
Pre-Patent Commercial Marketing.
Licensee Estoppel to Sue
Public Policy encourages identifying invalid patents. No
"Licensee Estoppel." Licensees can still sue to
invalidate Licensed Patent. Lear v. Adkins
Can Pre-Litigation Settlement Agreements have Covenants Not to
Sue and No Challenge Clauses?
Now in legal limbo until Supreme Court resolves.
In the meantime, sue first and then settle only after
discovery, and secure judgment or court decree.
That should have res judicata effect. No more suits by that
"Damages ...in no event less than a reasonable royalty,
together with interest and costs." 35 USC § 284. Legal
fees in "exceptional" cases.
Stricter "Entire Market Value Rule;" apportionment
Eliminating 25% Rule of Thumb.
Lost profits more difficult to prove than reasonable royalty.
Punitive Damages as well.
Test: Demand, Absence of substitute, Manufacturing/marketing
capacity, Profit patentee would have made.
If patentee cannot prove entitled to lost profits, then
If no established royalty rate, then "hypothetical
negotiation" at the time infringement began.
15-Factor Georgia-Pacific approach.
35 USC §284, up to 3X actual damages + 35 USC §285
attorney fees in "exceptional cases."
Seagate tests: (1) clear and convincing evidence
infringer acted despite objectively high likelihood of infringement
of valid patent, and (2) risk known or should have been known.
2012 Federal Circuit Bard Peripheral test: high
likelihood is matter of law for the judge.
Follows Supreme Court's 1996 decision in Markman
interpretation of patent claim is for judge not jury.
Establish Earliest Invention Date. (But NB pending change to
"First to File")
Document Possible Disclosure Bars.
Help Establish Nonobviousness.
Formal. Bound. Dated. Numbered.
Objective; Past Attempts; New Solution.
Other Contributors; Prior Art; Possible Bars; When
"Reduced to Practice."
Possible Third-Party Rights.
Patents and Antitrust
Tension between Patent Law granting monopoly vs. Antitrust Law
barring it.
1995, DOJ/FTC "Antitrust Guidelines"
2007, DOJ/FTC "Antitrust Enforcement and Intellectual
Hot topics: Patent Portfolio Acquisitions; Pooling Agreements;
Reverse Payments to Delay Generics
Generally reasonable Agency approach
Mostly code, with some physical result.
Apple patented "slide to unlock"
US more lenient than Europe.
The implementationof something via
software is the subject of the patent.
"1-click" patent combines code + user data + user
control to equal easy order.
Essentially it's a business method patent.
In Europe, the software has to cause some physical
So "1-click" is not patentable there.
But "slide to unlock" is.
Distinction? "slide" has physical effect of allowing
user interaction with rest of screen.
Yes, that is not clear!
If you implement something using patented software,
then is when you get sued by software patent owner.
Apple sued HTC and Motorola,for implementing
Apple's patented concept, but not Google, since they
only wrote it.
The "infringing" is the duplicated concept,
"slide to unlock," not the specific code.
"Pull the lock" (Android) does not infringe.
Standards Essential Patents
E.g., the WiFi "Standard" relies on hundreds of
software elements. Frequencies, Data Codes, Frame Rates, etc. etc.
If you comply, your WiFi works.
So patent owners must license their "SEP" patents on
FRAND (RAND) terms, to anyone.
Otherwise they would block that standard, and multiple
standards would cause chaos.
Overcharging for a SEP = Antitrust.
Protects any secret information used for
For only so long as kept secret.
Which can be forever.
The Coca-Cola Formula.
Theft of trade secrets often alleged in Covenant Not to Compete
Does not protect against reverse engineering absent
Keep them secret. Protect yours and do not
misappropriate others. "Need to Know."
Principal risk = the faithless employee.
Protect what is really confidential.
CDA at entrance interview. Restrict Access.
Electronic data needs unique passwords and clear policies on
Computer Fraud & Abuse Act.
Trade secrets have lacked nationwide protection awarded other
IP -- Patents by 35 U.S.C. §§ 101-05, Copyrights by 17
U.S.C. §§ 101-22, and Trademarks under the Lanham
UTSA and state-by-state adaptations -- overcome lack of federal
protection and limit forum shopping.
46 States have adopted some form of UTSA.
National Stolen Property Act, 18 U.S.C. 30 § 2314 -- crime
to "transfer in interstate or foreign commerce any goods . . .
of the value of $5,000 or more, knowing the same to have been
stolen, converted or taken by fraud."
2012 Goldman Sachs Case – source code not
"Whoever, with intent to convert a trade secret . . .
downloads, uploads, . . . transmits, . . . or conveys such
information" is guilty of a federal offense, and may be
imprisoned for up 6 to 10 years.
Goldman's internal trading system neither "produced
for" nor "placed in" interstate or foreign commerce.
Enormous profits the system yielded for Goldman depended on no one
else having it. Because system was not designed to enter or pass in
commerce, theft of source code relating to that system was also not
an offense under the EEA. A very doubtful case.
Protect names, symbols, colors, sounds, or other identifier for
Trademark " or Service Mark SM Symbol.
"Trade Dress" – color (Tiffany Blue), or shape
(old Coca Cola Bottle).
Common law rights merely by using. When
registered, ® symbol = statutory rights that permit suit,
treble damages, attorneys fees.
Filing = priority; protects mark throughout U.S.
Fanciful or Arbitrary. PEPSI, APPLE, Swoosh
design. Highly distinctive.
Suggestive. JAGUAR, Distinctive.
Descriptive. APPLE PIE for potpourri. Lacks
distinctiveness. Needs evidence of "secondary meaning" to
establish acquired distinctiveness.
Generic. COMPUTER, LAWYERS.COM, LINOLEUM. No
Distinctive domain names are registrable.
Federal and State Systems. www.uspto.gov
Actual use, or intent, then use in 6 mos or option to
No scandalous names, no mere surnames, no generics, no
confusingly similars.
Section 15 Affidavit (5 yrs. Without challenge =
"incontestable.") Rights can be lost if abandoned (3
years) or become generic. BROOKLYN DODGERS brought back from dead
by LA Dodgers organization.
Registration takes 9-18 months.
Always use " if unregistered or ® if
Use a brand plus a generic word to help prevent abandonment:
"Buy Xerox® copiers"
Use different font, color, size or logo.
Use "look for" Advertising. "Look for the
Kleenex® brand of tissues."
Sue violators to prevent dilution or
Enforce marking and quality in licenses.
Counterfeits and Pirates
From drugs to movies to iPads. $250 billion per year.
Lost jobs, lost good will, awful quality.
Survey the Market to search for pirates.
National IPR Center.
Trademark Counterfeiting Act of 1984.
Lanham Act statutory damages.
Counterfeit -- spurious mark identical with, or substantially
indistinguishable from, registered mark.
Direct or Secondary – infringing or encouraging or
enabling infringement.
Issues are strength of mark, proximity of goods, fame,
similarity, actual evidence of confusion, marketing, caution
exercised, and defendant's intent.
Contributory (induces or facilitates) or Vicarious liability
(respondeat superior).
Dilution: "Adults-R-Us," "Xerox"
Injunctions against further infringing or diluting. Lanham Act,
(1) defendant's profits, (2) damages sustained by
plaintiff, and (3) costs. 15 U.S.C. 1117(a).
Damages trebled if bad faith.
In dilution, damages only if defendant willfully traded on
plaintiff's goodwill. Otherwise, only injunctive relief. 15
U.S.C. 1125(c).
Legal fees in "exceptional" cases.
Trademark "Fair Use"
"Nominative" Use – "The
Beatles."
Parodies – First Amendment rights and no real
"Spa'am" in Muppet Movie OK
"Gucchie Goo" Diapers not OK
Protects "Original works of authorship."
Literary, Music, Drama, Pantomimes, Pictures and Sculptures,
Movies, Recordings, Architecture.
©2012 John Doe. All Rights Reserved.
"Works-made-for-hire" owned by employer.
Cannot enforce without registration.
The tangible expression is protected, not the
idea or secret disclosed.
No tangible form.
Titles, names, slogans, familiar symbols, listings of
ingredients, ideas, systems, processes, anything not an original
authorship. "Idea" vs. "Expression."
But perhaps patent or TM protection.
Copyrights can lapse into public domain for various
Domain Names, but look to Trademark protection. Internet
Corporation for Assigned Names (ICANN).
Notice/Registration of Copyright
Recommended but not required >1989.
Avoids innocent infringement claims.
Must be registered before lawsuit.
Statutory damages if registered prior to infringement or within
3 mos of publication.
Presumed validity if registered within 5 yrs of publication of
Deposit (2 copies) becomes property of Library of
Copyright "Fair Use"
17 USC § 107. Use of limited portions of copyrighted work
without written authorization for commentary, criticism, news,
scholarly reports, parody, etc.
Whether fair or too much depends on facts and circumstances.
"Transformative"? New value?
Purpose and character; nature of the work, amount and
substantiality; and effect of use on the market.
No right to change another's work and re-copyright it. Only
owner can make a new version.
"Surfin' USA" vs. "Sweet Little
When in doubt, get written permission.
Fair Use and Digitization
October 10, 2012 Judge Harold Baer Jr. -- Authors Guild v.
Massive digitization project -- Google and 60 university
Defendants' reproduction of millions of works provides
"invaluable contribution to the progress of science"
shielded from authors' copyright claims. Only 31% in public
10 million volumes with 3.7 billion pages.
Actual Damages + Infringer's Profits, or
Statutory damages up to $150,000, and potentially
attorneys' fee award.
Since 1978, copyright lasts for 70 years plus life of author
(last to die for joint authors), or for works-made-for-hire, 95
years from date of publication or 120 years from creation,
DMCA and OCILLA
Online Copyright Infringement Liability Limitation Act; Digital
Millennium Copyright Act of 1998
Safe harbor from copyright infringement liability for posting
unauthorized content on websites.
Mere "data conduits," "system catchers,"
connectors and uploaders such as blogs and YouTube, if all
conditions strictly met. Viacom v. YouTube ("willful
blindness"); A&M v. Napster (no financial benefit)
Conditions including takedown notices to registered Designated
Agent and counter-notices.
"First Sale" or "Patent Exhaustion" --
first unrestricted sale by patent owner of
patented product exhausts owner's control over that
particular item. Resales are then all OK, subject to
contract limits, but not multiple copies.
Compare Droit de suite – artists resale
Doctrine also analyzed as implied license to purchaser of a
particular product of rights to use and resell
that product. Offshore sales now on appeal.
Initial authorized sale of a patented item terminates the
patent owner's rights with respect to that
First Sale and Licenses
First Sale Doctrine also applies to patent owner's
Sale by authorized licensee who manufactures a product within
the scope of the license gives purchaser an implied license of the
rights to use and resell the product.
Therefore, resale of the patented product is not an
infringement of the patent.
Modifications, copies, OEMs raise other issues.
Three-dimensional computer chip, integrated circuit designs.
Exclusive rights to reproduce and import or distribute chip product
in which embodied.
Registered with U.S. Copyright Office.
Trade Secret protection available.
File within 2 years of first commercial use. Terminates 10th
"Mask Work," Symbol *M* John Smith
Semiconductor Chip Protection Act of 1984 and TRIPS
Often part of infringement suits
Unfair Competition & Covenants
Computer Fraud & Abuse Act (Nosal)
Should be secured from all Presenters
Confirm that they actually have all required rights
And assign all such rights for your use
Copyright Notices then are applied to all formats
IP LICENSES "TOP 10 LIST"
Do Due Diligence. List Your Goals. Acquire All
Rights Required (Patents; Trade Secrets; Know-How; Trademarks;
Copyrights) and adequate Breadth of License and Existence of Other
or Conflicting Right.
Are the Rights Adequately Protected? If Not,
Who is Liable? Inventor Assignments; Works for Hire; Non- Competes;
Naked Licenses.
Consider Alternatives Constantly if you
can't make this deal.
Core Provisions: License Grant; Field of Use;
Exclusivity; Rights Retained; Sublicense/Assignment Rights;
Ownership; Confidentiality; Reps and Warranties; Indemnification;
Limitations of Liability; Termination and Cancellation;
Assignment/Change of Control; Governing Law; Venue. Plain, Simple
Definitions. "Net Sales" means net
net net. Expenses, Returns, Rebates, Marketing, Double Counting.
Definitions are Key.
Milestones –Exploitation Should be
Reasonable and Attainable, with Fair Cure Periods.
Who has Control Over and Who Pays
Cost Of Patent Prosecution and Regulatory
What Happens Next? Rights to Future
Developments and "Improvements" (as defined). Automatic
or Negotiated? Effect on Future Royalties? Technology will not stop
Payments -- Royalties Based on Projected Uses
and Deduct for Other Required Royalties ("Stacking");
Combination of Products Issue -- Allocations?; Do Pro Forma Royalty
Calculations Based on Various Assumptions. Royalty Ranges should be
based on this Asset, not on possibly relevant
comps. And don't pay more than your subcontractor can or will
Distrust Sample Contracts; Every Deal is
Unique. Resolve Differences Now.
ContributorRobert A. McTarmaneyCarter Ledyard & Milburn
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