Pennsylvania Litigation Blog : Pennsylvania Litigation Lawyer & Attorney : Barley Snyder Law Firm : Serving Lancaster, York, Reading, Hanover, Malvern

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UPDATE: This post will serve as an update to our post from April 21, 2011. The United States Patent & Trademark Office (“USPTO”) recently announced several spending reductions resulting from the Full-Year Continuing Appropriations Act, 2011. In response to the budget crisis, the agency cut back and/or postponed several initiatives it had planned for the year, including the proposed “fast-track” patent examination process, Track I, which was due to be implemented May 4, 2011. Unfortunately, prioritized examination has now been postponed indefinitely.

The week, the United States Patent and Trademark Office (USPTO) announced the first step in implementation of a new patent examination initiative, which they claim will provide applicants greater control over the speed with which their applications are examined.  Pendency has been a major concern with the USPTO, considering that some applications are not being assigned for examination up to five years after filing. The “Three-Track” initiative is intended to promote greater efficiency in patent prosecution, by reducing pendency of some application. 

Under the “Three-Track” initiative, for applications filed first in the United States, an applicant may request:

Track I, prioritized examination, announced by the USPTO this week and will provide a first Office action on the merits within four months and a final disposition within twelve months of the grant of a Track I request.  

Starting May 4, 2011, an applicant may request prioritized examination with payment of a $4,000 request fee and other filing fees. see 76 Fed. Reg. 18399. Prioritization is available only for an original and complete utility or plant non-provisional application that contains or is amended to contain no more than four independent claims, no more than 30 total claims, and no multiple dependent claims. If the prioritization is granted, the application receives special status and placed on the examiner's special docket throughout prosecution until a final disposition is reached in the application. As a result, the applicant may receive final disposition within twelve months of prioritized status being granted, which may include: (1) mailing of a notice of allowance, (2) mailing of a final Office action, (3) filing of a notice of appeal, (4) declaration of an interference by the Board of Patent Appeals and Interferences (BPAI), (5) filing of a request for continued examination, or (6) abandonment of the application.

A continuation application that claims priority to a pending application may be filed along with a Request for Prioritized Examination, however, a Request for Prioritized Examination will not be granted when filed with a new PCT national stage application under 35 U.S.C. 371. 

At first, the USPTO will limit the number of applications filed with a Request for Prioritized Examination to 10,000 applications for the 2011 fiscal year, and then revaluate any future limitations on requests. 

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Earlier this week, a federal judge dealt a significant blow to Google Inc.'s six year effort to make all of the world's books available online.  In a 48 page decision, U.S. District Court Judge Denny Chin, rejected a 2008 proposed settlement agreement between Google and author and publisher groups.  The rejected settlement was an attempt to resolve a class action suit that was brought against Google by The Authors Guild and the Association of American Publishers.  The suit was brought in response to Google's ongoing efforts to scan and digitize millions of books and make them available to users of Google's online search engine.  The suit alleged that such actions were a violation of the publishers' and authors' copyrights in the works. 

Among other things, the rejected settlement agreement would have approved Google's digitizing efforts, and would have required Google to pay $125 million into a fund and to establish a registration system whereby authors and publishers could register their works and receive payment when someone viewed their works.  The settlement also allowed for authors to "opt out" of the program by notifying Google and thus preventing their works from being made available.  Another part of the settlement agreement would have allowed Google to scan and make available thousands of works that were out of print but still subject to a valid copyright.

Parties objecting to the settlement included the Open Book Alliance (a group that includes Google competitors Microsoft, Amazon,com, and Yahoo), and the United States Justice Department.  According to the Justice Department, the settlement agreement would have allowed Google to take unfair advantage of works whose authors have not been identified or where copyright ownership may be in question - so called "orphaned" works.

In rejecting the settlement, Judge Chin acknowledged the potential benefits of a universal digital library.  However, the judge believed that the proposed settlement went too far and would give Google an unfair advantage over competitors by rewarding it for engaging in wholesale copying of works without the authors' permission.  He also raised antri-trust concerns over the possiblity that the settlement agreement would arguably give Google control over the search market for books. 

In his decision, Judge Chin rejected the settlement agreement "without prejudice" meaning the parties can submit a revised agreement.  The judge even suggested that one way to revise the agreement would be to replace the "opt out" provision with an "opt in" system whereby authors had to expressly agree to have their works included in Google's online database.  In court filings last year, Google attorneys had rejected such an "opt in" system as being not workable.

The full text of the court's decision can be found at: http://www.nysd.uscourts.gov/cases/show.php?db=special&id=115

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Even if you are successful in federally registering your mark, misuse of your mark may result in losing your right to enforce the registration. The term misuse is relative and generally does not lead to a removal from the registry. Rather, your use may affect the ability to enforce rights granted by the registration.

The rights established from a federal registration can last indefinitely, as long as the owner continues active use of the mark on or in connection with the goods and/or services in the registration. Therefore, it is important that you actively use your registration.

Furthermore, when used, the trademark mark should be presented as an adjective. Any presentation of your trademark, as a noun or verb, should be avoided. In fact, use as a noun or verb is a common error that an owner uses the mark as a noun or a verb (i.e. correct use = “Drink YOUR MARK Cola”; incorrect use = “Drink YOUR MARK”). You should also avoid any presentation of the mark in plural or modified possessive form (i.e. incorrect use = “YOUR MARK’s Cola”).

A mark should be adequately distinguished in presentation, especially in regards to the surrounding text and symbols. For instance, your mark can be capitalized, underlined, italicized, placed in quotation marks, or even depicted in boldface type; each typography provides an emphasis on the mark, making it more distinguishable. Since trademarks are used to create distinct commercial impressions in regard to the offered goods and services, your trademark should be distinguishable.

Most importantly, your mark should be affixed to the goods and/or services for which the mark is registered. Meaning, if you received a registration of your mark in association with product X, then use of the mark with product Y is not protected under the registration. Rather, use of the mark with product Y only provides common law rights. It would be recommended to register the mark again, but now in association with a new class of goods and/or services. The mark can be placed on the parcel in which the goods are packaged. Tags or labels may be used as well, which are attached to the product, and provide greater identity of the mark.

It is important to know that certain actions must be taken to maintain your registration, especially if in any changes in use have occurred.
 

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The first person to use a trademark in connection with specific goods or services preserves a common law right to prevent any unauthorized use of that mark with similar goods or services. However, federally registering your mark with the United States Patent & Trademark Office provides more protection than established under common law. In fact, an unregistered mark may only protect use of your mark within a specific geographical area, while a federal registration provides exclusive right to use of that mark nationally.

If your mark lacks federal registration, the ability to enforce your rights through legal proceedings may therefore be limited. In fact, a registration not only provides constructive notice of the mark to infringers, but provides right to sue in federal court with a legal presumption as to ownership of the mark. Additionally, federally registering your mark provides more remedies available against infringing parties. For instance, the registrant may recover up to triple damages and attorney's fees for any willful violations.

The rights established from a federal registration can last indefinitely, as long as the owner continues active use of the mark on or in connection with the goods and/or services in the registration. Therefore, registering your trademark provides a bundle of exclusive rights that are otherwise not available through common law use of the mark.

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Employment agreements and assignment provisions may transfer patent rights to the employer. Even in the absence of an express agreement to assign from the employment contract will not preclude the employer as a matter of law from asserting a claim to the employee's invention. See Agawam Co. v. Jordan, 74 U.S. (7 Wall.) 583, 19 L.Ed. 177 (1868).   Even in situations where the employee owns the invention, and a resulting patent, the employer may have a "shop right" to the invention, where the employer will have a license to use the invention without paying the employee any additional compensation as royalties. See, Aetna-Standard Engineering Co. v. Rowland, 343 Pa. Super. 64, 71, 493 A.2d 1375 (1985).  As an implied license, shop rights allow the employer, and its employees, to use the patented invention. This is a limited right, restricted to a proximate use of the patented invention. 

Several factors will be examined in order to determine if a “shop right” exists, including: (1) the extent the employer provided wages, materials, tools, and a work place; (2) the time used (on the clock or off) by the employee for the development of the invention; (3) the existence of contractual relationship (written or unwritten) between the employer and employee; and (4) the employees consent and acceptability that the employer use the invention. In general, the employer will retain a shop right when the employee devises the invention on the employer's time and at the latter's expense, using his materials and facilities, and allows him to use the invention without special compensation. See Dubilier Condenser, supra; Gill v. United States, 160 U.S. 426, 16 S.Ct. 322, 40 L.Ed. 480 (1896).

                In order to clear any uncertainty of patent/invention ownership, employers should require employees to sign written patent assignment agreements.

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Owning a patent protected invention provides the right to exclude others from making, using or selling the invention throughout the United States for life of the patent. However, determining the ownership of those rights may be complicated. Generally, the inventor owns all rights to an invention. But, if the inventor is an employee, an employer may lay claim to the invention under certain circumstances. For instance, if an employee is hired to invent and the employer can demonstrate that this was clearly spelled out for the employee, the employer will be deemed the owner of any invention within the scope of the employee’s employment. In United States v. Dubilier Condenser Corp., 289 U.S. 178, 53 S.Ct. 554, 77 L.Ed. 1114 (1933), however, the Court stated that the mere existence of an employer-employee relationship does not of itself entitle the employer to an assignment of any inventions which the employee devises during the employment.

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Commonly, a defendant during patent litigation will seek to declare a patent unenforceable using the doctrine of inequitable conduct, which stems from 37 CFR 1.56 (commonly referred to as Rule 56). Rule 56 details the duty of candor placed upon the inventors and any individual, substantially involved in the preparation or prosecution of the patent application. They must disclose to the Patent Office all information they are aware of that is material to patentability. Critikon Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1256 (Fed. Cir. 1997).   The party seeking to invalidate the patent, the moving party must demonstrate clear and convincing evidence that such conduct occurred, in the form of: (1) affirmative misrepresentations of a material fact; (2) failure to disclose material information; or (3) submission of false material information. Baxter Int’l v. McGaw, Inc., 149 F.3d 1321, 1327 (Fed. Cir. 1998). If the duty is found to be breached there is said to be “inequitable conduct” and the entire patent is unenforceable.

In a recent decision, Exergen Corp. v. Wal-Mart Stores, Inc., et al., Case Nos. 2006-1491, 2007-1180 (Fed. Cir. 2009), the ability to plead such a defense has become more burdensome. The Federal Circuit, in Exergen, decided that “a pleading that simply avers the substantive elements of inequitable conduct, without setting forth the particularized factual bases for the allegation, does not satisfy Rule 9(b).” (Slip Op. at 21).  More particularly, the Federal Circuit held “that in pleading inequitable conduct cases, Rule 9(b) requires identification of the specific who, what, when, where, and how of the material misrepresentation or omission before the PTO,” (Slip Op. at 22) directing moving parties to motion a factual pleading rather than a notice pleading.

As such, the pleading must include sufficient factual allegations to permit a reasonable inference “that a specific individual (1) knew of the withheld information or of the falsity of the material misrepresentation, and (2) withheld or misrepresented this information with a specific intent to deceive the PTO.” (Slip Op. at 24-25). To comply with this new standard, the pleading must first name the specific individuals who are alleged to have committed inequitable conduct. The pleading should provide pincites to both the patent claim and a withheld reference, and establish that the allegedly material pincite is not to be found in the prior art of record. Finally, it is no longer permissible to allege merely that “on information and belief,” the information was withheld with intent to deceive. The pleading must include factual allegations that a specific person knew of the specific information in a withheld reference.

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After delivering a historical low rate in patent allowances, the U.S. Patent and Trademark Office is now encountering a plunge in revenue. Patent applications have accumulated over the past 5 years, resulting from extended prosecution (i.e. continuations) and appeals. Since there is a tremendous backlog of patent applications, reducing the pendency of a patent application to collect issue and maintenance fees may seem like a viable option. 

While more scrutiny and searches are performed during extended prosecution, a detailed history may develop, which can affect future litigation. Relatively recently though, it seems that the examiners are expediting the prosecution phase, which may result in a favorable advantage for the applicant. Prosecution is advanced and prosecution history is somewhat limited. Although the quality of the examination should not suffer, this limited pendency means less scrutiny by the examiner, which should require more diligence by the patent attorney as to scope of protection. 

Since patent claims are the “metes and bounds” of the invention, which define the extent of the protection, patent attorneys are faced with the task of making sure that original drafted claims and amendments are value added; the appropriate scope of protection should be tailored only narrow enough to overcome prior art. The value of a patent claim depends on the patent’s ability to stand up in court against an accused infringer's right to challenge the validity of those claims. As the prosecution period becomes shorter and more expedited, claim drafting may require a more scrupulous review of patentability.

In general, narrow claims are more limiting, requiring an infringer to practice more limitations recited within the claim language. More limitations make it more difficult to assert patent rights against a known infringer. Additionally, patent claims that are too broad may read on undiscovered prior art, which may compromise the validity of patent. Therefore, it is recommended that prosecuting attorney focus on the value of the claims - as limitations may narrow the coverage an issued patent has over potential infringers. Additionally, it is recommended that patentability opinion work be performed prior to the filing of an application. A thorough review of the invention in light of search results should develop the appropriate scope of protection.

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The United States Court of Appeals for the Federal Circuit, relaxed the once two-prong test for design patent infringement in Egyptian Goddess, Inc. v. Swisa, Inc.,  2006-1562, slip op. (Fed. Cir. Sept. 22, 2008) (en banc). 

Prior to the Egyptian Goddess, Inc holding, design patent infringement was proven through a two-prong test: the “ordinary observer” test and the “points of novelty” test. Bernhardt, L.L.C. v. Collezione Europa USA, Inc., 386 F.3d 1371, 1383 (Fed. Cir. 2004).  The two tests are very different. The “ordinary observer” tests looks at the design as a whole, questioning if an ordinary observer informed by the prior art would believe that the accused design is substantially the same as the patented design. However, the “point of novelty” test examined the individual elements of the design, and the novelty of those individual elements. 

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Since the United States Supreme Court’s ruling in KSR v. Teleflex, 550 U.S. ___, 127 S. Ct. 1727, 82 U.S.P.Q.2d 1385 (2007), enforcing existing patents against infringers has become much more difficult. When cornered into litigation, potential infringers will commonly attack an infringement assertion through patent invalidity. The defendant will attack the validity of the issued patent by claiming the invention is not novel nor non-obvious.

In order for an invention to be patentable it must be new. This novelty requirement is inflexible and is defined in the patent laws. However, the other requirement for patentability, non-obviousness, is not so clear. The history in defining non-obvious has taken many turns in scope and content.

For an invention to be patentable, the invention should not be an obvious improvement over prior art. In the least, the invention should be more than a mere improvement that a "person having ordinary skill in the art" would anticipate. Graham v. John Deere Co., 383 U.S. 1 (1966) provided the specific factors that the courts should use in determining if a claimed invention is non-obvious, requiring a determination of the scope and content of the prior art, the differences between the claimed invention and the prior art, and the level of ordinary skill in the prior art. Further, the court held that secondary considerations could serve as indicia of non-obviousness, but only on a case-by-case basis. These secondary considerations include: commercial success, long-felt but unsolved needs, and failure of others.

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The federal court in the Northern District of Georgia recently held that Wal-Mart’s yellow smiley face is not a protectable trademark.  Smith v. Wal-Mart Stores, Inc., 537 F.Supp.2d 1302, (N.D. Ga. 2008). Specifically, the Court held that trademark protection could not be afforded to Wal-Mart’s yellow smiley face, because Wal-Mart failed to show that the public recognizes the yellow smiley face as a designation of Wal-Mart’s products or services. The Court made this finding even though Wal-Mart has been using the yellow smiley face to promote its good and services for many years and has invested substantial resources and years of effort in marketing it goods and services with the yellow smiley face.        

Because Wal-Mart’s yellow smiley face was held not to be a protectable trademark, Wal-Mart is unable to prevent others from using a yellow smiley face identical to or similar to Wal-Mart’s to promote their goods and services. In other words, Wal-Mart invested substantial resources and years of effort in promoting and developing a trademark in which it basically has no legal rights.

Because the first step in any company’s marketing campaign is to select a trademark that consumers will associate with the company’s reputation and goods and services, this case emphasizes the importance of taking the necessary steps to properly select your trademark at the early stages of your marketing campaign. Legal counsel can play a vital role in advising you on the relative strengths and weaknesses of your trademark. By having a search performed and discussing your trademark selection with legal counsel, you will be able to ascertain the scope of legal rights that may be afforded by your trademark before expending a great deal of time and resources in developing and promoting the trademark.

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If you have never heard of the Business Software Alliance (“BSA”), consider yourself lucky. Then consider yourself uninformed. For those of you who have not had the pleasure of hearing from BSA, the Business Software Alliance was formed in the late 1980’s by software companies, including Microsoft and Apple, in order to watchdog business compliance with software licenses. 

BSA is rumored to get most of its leads from disgruntled employees who are only too happy to turn in their former employers. And let’s face it, while software compliance is typically a priority for companies, managing licensing compliance and achieving licensing compliance is a challenge.

If BSA knocks on your door, hold on to your wallet! From all accounts, BSA is interested in settling issues, but seemingly minor instances of non-compliance can result in significant fines. BSA knows that the threat of litigation and the cost associated with it is often enough to force cooperation from targeted companies.

If your company is targeted by BSA, you will typically receive a letter asking you to conduct an internal audit of your software and software licenses. Before doing so, you should consider contacting competent counsel who will assist you with the audit. Don’t waive or give up opportunities afforded under the attorney client privilege or the work product doctrine by conducting the audit yourself. There are other protections afforded to you that competent counsel can assist you with.

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