Intellectual Property

Companies have a number of tools available to them to help protect their intellectual property, including trade secret and other proprietary information that give them a competitive advantage. Many employers utilize detailed provisions in their employee handbooks and employment agreements to protect this information. One key provision has been the use of coworker non-solicitation provisions that prevent a departing employee from seeking to “raid” his or her former coworkers to join him or her at their new place employment, usually a business competitor.

Generally, these provisions state that an employee agrees during their employment, and for some period after their employment ends (usually one year), that he or she will not solicit any former coworkers to seek employment with their new employer. Now, some recent case law has brought the use of these non-solicitation provisions into question as possibly violating section 16600 of California’s Business and Professions Code, which prohibits the use of non-compete provisions except in certain limited circumstances.

For years, California courts have recognized the right of employers to use non-solicitation provisions in employment agreements to prevent employees from “soliciting” their coworkers to join them at a new employer.  For instance, in 1985, a California appellate court in Loral Corp v. Moyes, 174 Cal.App.3d 268 (1985), held that a non-solicitation of fellow employees provision in an employment agreement was lawful because the co-workers were free to seek employment with a competitor, they just couldn’t be contacted first by the departing employee. (As opposed to non-solicitation provisions that have been routinely upheld, courts have held that “no-hire” provisions, i.e. that a departing employee could not hire a former co-worker, have been held unenforceable as an invalid non-compete in violation of section 16600.)

The enforcement of non-solicitation of co-worker provisions remained relatively consistent until November 2018 when a court in AMN Healthcare, Inc. v. Aya HealthCare Services, Inc., 28 Cal.App.5th 923, granted judgment against an employer who was attempting to enforce a co-worker non-solicitation provision against former employees. In AMN, the departing employees were recruiters for temporary nurses who left AMN to join a competitor in the industry. AMN sued the competitor and former employees claiming they had violated a contractual provision not to solicit or recruit their former co-workers, i.e. the nurses being hired for temporary nursing assignments.

The Court affirmed summary judgment in favor of the competitor and former employees, holding that the co-worker non-solicitation provision violated section 16600 of the California Business and Professions Code, which provides that agreements that restrain a person’s trade or profession are unenforceable.  The AMN Healthcare Court relied heavily on the California Supreme Court’s ruling in Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (2008), which broadly struck down non-compete agreements preventing employees from competing against their former employers.

It remained an open question following the AMN Healthcare decision whether other courts would follow its holding concerning the unenforceability of an employee non-solicitation provision.  For instance, would other courts limit the AMN holding and decline to follow it because:

(1) The former employees who were being sought to be restrained by AMN were recruiters such that any prohibition on solicitation would necessarily restrain them in their profession as recruiters; or

(2) The former co-workers they were targeting for recruitment were temporary nurses who served short assignments so that enforcing the non-solicitation provision could limit those employees’ ability to obtain new work after their temporary assignments ended.

We did not have to wait long to see what other courts would do. Two months after the AMN decision, another court followed the lead of the AMN Healthcare Court and is allowing a claim to go forward attacking a co-worker non-solicitation provision.  In Barker v. Insight Global, LLC (Jan. 11, 2019 N.D. Cal.), Judge Beth Labson Freeman recently reversed herself and granted the plaintiff-employee’s motion for reconsideration to allow him to state a claim as a class representative against his former employer for the use of co-worker non-solicitation provisions in its employment agreements.

Judge Freeman held that the recent AMN Healthcare decision (her initial order dismissing the claim came three months prior to the AMN Healthcare decision) was likely consistent with the current state of California law regarding these non-solicitation provisions, especially in light of the Edwards v. Arthur Andersendecision. She denied the defendant-employer’s motion to dismiss the former employee’s claim and ruled that plaintiff should be allowed to present a claim that the use of an employee non-solicitation provision in his employment agreement violated section 16600 and was therefore an unfair business practice.

The Barker case is still in the early stages but employers should be concerned that a court has decided to follow the holding of the AMN Healthcare decision. In light of these recent developments, employers should carefully review any non-solicitation provisions in their employment agreements with their attorneys to determine whether they are at risk at facing claims or a result similar to those in the AMN Healthcare and Barker cases.

As we previously wrote on this blog, Alfonso Ribiero, better known as Carlton Banks from the Fresh Prince of Bel Air filed suit against multiple videogame publishers, including the publisher of NBA 2K and Fortnite for featuring avatars that perform his signature “Carlton Dance.” Ribiero’s case, however, may have just encountered a dispositive roadblock.

Last week, a letter from Saskia Florence, a supervisory registration specialist with the US Copyright Office, to Mr. Ribiero’s attorney, was uncovered. There, Ms. Florence refers to the Carlton Dance as a “simple dance routine” that is “not registrable as a choreographic work.” Describing the choreography, Ms. Florence stated:

The dancer sways their hips as they step from side to side, while swinging their arms in an exaggerated manner. In the second dance step, the dancer takes two steps to each side while opening and closing their legs and their arms in unison. In the final step, the dancer’s feet are still and they lower one hand from above their head to the middle of their chest while fluttering their fingers.

Accordingly, Ms. Florence concluded, “The combination of these three dance steps is a simple routine that is not registrable as a choreographic work.”

Based upon this refusal, the defendants have filed motions to dismiss the complaint. Specifically, the defendants argue that the mark is not entitled to copyright protection, as Ms. Florence, whose conclusion on behalf of the Copyright Office is entitled to substantial deference, likewise concluded. Defendants also contend that Mr. Ribiero may not be the true owner of the work, as it was created for the Fresh Prince of Bel Air and again used on Dancing with the Stars, both of which raise questions regarding whether the network owns the copyright as a work made for hire. Accordingly, Defendants requested that the matter be dismissed with prejudice.

We’ll keep an eye on the docket and when Mr. Riberio files his opposition to the motion to dismiss, we’ll provide another update.

In Continental Circuits LLC v. Intel Corp. et al., case number 18-1076, the U.S. Court of Appeals for the Federal Circuit, in a precedential opinion, recently clarified the rules for the incorporation of a limitation from a patent’s specifications into the claims during claim construction.  In the case, Continental sued Intel Corp.; its supplier, Ibiden U.S.A. Corp.; and Ibiden U.S.A. Corp.’s parent company, Ibiden Co. Ltd. (collectively, “Intel”), for patent infringement on four patents in the District of Arizona.

All four patents at issue in the case share a common specification and are directed to a “multilayer electrical device . . .having a tooth structure” and methods for making the same.  According to the patents, multilayer electric devices “suffer from delamination, blistering, and other reliability problems,” especially when “subjected to thermal stress.”  The inventions of the patents purport to solve this problem by “forming a unique surface structure . . . comprised of teeth that are preferably angled or hooked like fangs or canine teeth to enable one layer to mechanically grip a second layer.”  The specification further explains that the increased surface area of the teeth improves the adhesion of the layers to one another.  The patents additionally “theorize[] . . . that the best methods for producing the teeth [are] to use non-homogenous materials and/or techniques . . . such that slowed and/or repeated etching will form teeth instead of a uniform etch.”  The specification then explains that “[o]ne technique for forming the teeth is . . . the swell and etch or desmear process, except that contrary to all known teachings in the prior art . . . a ‘double desmear process’ is utilized.”  It continues by explaining that “the peel strength produced in accordance with the present invention is greater than the peal [sic] strength produced by the desmear process of the prior art, i.e., a single pass desmear process.”  The specification then discloses that “[i]n stark contrast with the etch and swell process of the known prior art . . . a second pass through the process . . . is used” because it “make[s] use of [the] non-homogenaities [sic] in bringing about a formation of the teeth.”

All of the asserted claims include claim limitations regarding the “surface,” “removal,” or “etching” of “a dielectric material” or “epoxy,” and their construction depends on resolving whether they should be limited to a repeated desmear process.  The district court construed the “surface,” “removal,” or “etching” claims of the dielectric material to be “produced by a repeated desmear process.”  The district court concluded that Intel had “met the exacting standard required” to read a limitation into the claims.  Specifically, the district court found that the specification not only “repeatedly distinguishe[d] the process covered by the patent from the prior art and its use of a ‘single desmear process,’” but also characterized “the present invention” as using a repeated desmear process.  Additionally, the district court found that the prosecution history corroborated its construction.

In reviewing the claim construction, the Federal Circuit first noted that claim construction is ultimately a question of law that it reviews de novo.  Any subsidiary factual findings based on extrinsic evidence “must be reviewed for clear error on appeal.”  But “when the district court reviews only evidence intrinsic to the patent (the patent claims and specifications, along with the patent’s prosecution history), the judge’s determination will amount solely to a determination of law,” which the Federal Circuit will review de novo.

The Federal Circuit acknowledged the difficulty in drawing the “fine line between construing the claims in light of the specification and improperly importing a limitation from the specification into the claims.”  To avoid improperly importing limitations into the claims, “it is important to keep in mind that the purposes of the specification are to teach and enable those of skill in the art to make and use the invention and to provide a best mode for doing so.”  In contract, to disavow claim scope (or, in other words, limit the claims via the specification), “the specification must contain ‘expressions of manifest exclusion or restriction, representing a clear disavowal of claim scope.’”

The Federal Circuit then found that the district court erred in limiting the claims to require a repeated desmear process.  Based on its review of the specification, none of the statements relied upon by the district court rises to the level of “a clear and unmistakable disclaimer.”  Thus, absent “clear and unmistakable” language suggesting otherwise, the Federal Circuit concluded that the aforementioned statements do not meet the “exacting” standard required to limit the scope of the claims to a repeated desmear process.

The district court had also found that the prosecution history further supported its claim construction; however, the Federal Circuit disagreed that such a clear disavowal existed in the prosecution history.  Similar to disclaimers in the specification, “[t]o operate as a disclaimer, the statement in the prosecution history must be clear and unambiguous, and constitute a clear disavowal of scope.”  But, according to the Federal Circuit, the cited statements in the prosecution history do not clearly and unmistakably disavow any claim scope.

Next, in order to read a process limitation into a product claim, it must meet one more criterion.  Generally, “[a] novel product that meets the criteria of patentability is not limited to the process by which it was made.”  “However, process steps can be treated as part of a product claim if the patentee has made clear that the process steps are an essential part of the claimed invention.”  Thus, for the same reasons that the statements relied upon by the district court do not show that the patentee clearly and unmistakably disavowed claim scope, they also do not make clear that the repeated desmear process is “an essential part” of the claimed electrical device having a tooth structure.

Finally, in some instances, district courts are authorized “to rely on extrinsic evidence, which ‘consists of all evidence external to the patent and prosecution history, including expert and inventor testimony, dictionaries, and learned treatises.’”  However, “while extrinsic evidence ‘can shed useful light on the relevant art,’” it is “less significant than the intrinsic record in determining the ‘legally operative meaning of disputed claim language.’”  Here, the district court acknowledged that the extrinsic evidence, which consisted of documents authored by the inventors, was “not reliable enough to be dispositive,” but “provide[d] helpful corroboration.”  However, similar to the intrinsic evidence, those statements reflect use of the preferred embodiment but give the public no indication that they have any limiting effect.  Therefore, because the Federal Circuit already determined that the intrinsic evidence does not support reading a repeated desmear process into the claims, the “less reliable” extrinsic evidence, which even the district court acknowledged was “not reliable enough to be dispositive,” does not require otherwise.

Accordingly, the Federal Circuit determined the claim terms should not be limited to requiring a repeated desmear process, and instead, should be given their plain and ordinary meaning.

Generic trademarks are those which, due to their popularity and/or common usage, have become synonymous with the products or services. Such trademarks include Kleenex, Band-Aid, Jeep, Aspirin, and Cellophane. Such marks, generally, cannot be federally registered or protected under the Lanham Act due to the marks direct reference to the class of product or service it belongs to. In other words, it fails to distinguish the good or service from other goods or services in the marketplace.

Breaking ways with this long-standing body of law, the U.S. District Court for the Eastern District of Virginia reversed a Trademark Trial and Appeal Board (“TTAB”) decision denying trademark applications for BOOKING.COM. The plaintiff in that action previously filed a federal trademark application for BOOKING.COM for both travel agency services and for making hotel reservations for others in person and via the internet. Plaintiff already had an international trademark registration for the same services pursuant to the Madrid Protocol.

During the USPTO’s review the plaintiff argued that the marks had acquired distinctiveness, but the USPTO refused to register the mark due to its genericness. The plaintiff appealed the decision to the TTAB, which affirmed the USPTO’s refusal. In doing so, the TTAB stated that “.com” did not impact the genericness.

On appeal, the Eastern District of Virginia first examined whether BOOKING.COM is generic. In doing so, it first analyzed BOOKING and .COM separately before analyzing them in conjunction. The Court found that that BOOKING is generic for the relevant services. When analyzing BOOKING.COM as a whole, however, plaintiff argued that the combination of the generic word BOOKING and .COM created a unique designation of the source of the services.

The Court found that when combined with a second-level domain, top-level domains, such as .com, typically have source identifying significance. The Court further held that second-level domain and top-level domain combinations generally create descriptive marks that are protectable upon acquiring distinctiveness. The reasoning stemmed from the Court finding that a top-level domain plus a second-level domain equals a domain name, which is unique and can only be owned by a single entity.

Next, the Court analyzed whether BOOKING.COM had acquired distinctiveness. Finding that the plaintiff offered sufficient evidence that consumers identify BOOKING.COM with a specific source, not just a reference to services provided, the Court held that BOOKING.COM had acquired distinctiveness, but only as to hotel registration services, not travel agency services. Accordingly, the Court ordered the USPTO to register BOOKING.COM as to those services, and remanded the matter to the USPTO to determine whether the design and color elements in two of the applications, in conjunction with the protectable word mark, were eligible for protection.

So, what does this mean? In short, it means that although a party may be unable to register its generic mark alone, it may be able to combine the generic mark with a top-level domain to create a registrable trademark. But although this undoubtedly provides some benefit, such trademark owners should heed the Eastern District’s warning that such marks will not be according broad protection.

For those of you that watched the red carpet happenings at last year’s Golden Globe Awards, you may have noticed the “Fiji Water Girl”, a model standing ready to keep Hollywood glitterati hydrated with bottles of Fiji water, photobombing numerous shots of celebrities.  Her presence on the red carpet created a social media firestorm and the Fiji Water Girl – a model named Kelly Steinbach – garnered instant and substantial notoriety.  Now this notoriety has evolved into a lawsuit, pitting Steinbach against the very brand of water she was representing.  It appears that Fiji created numerous life-size cardboard cutouts of Steinbach from a photo of her on the red carpet at the Golden Globes holding a tray of Fiji water and placed them at grocery stores and at other retail point-of-sale locations.  In fact, People Magazine published a picture of John Legend leaving a Beverly Hills grocery store with the cardboard cutout of Steinbach in the background next to a display of Fiji water.  Steinbach claims that Fiji never had her permission to use her likeness in such a manner and such use by Fiji violates her right of publicity.

California Civil Code Section 3344 states, in pertinent part:

Any person who knowingly uses another’s name, voice, signature, photograph, or likeness, in any manner, on or in products, merchandise, or goods, or for purposes of advertising or selling, or soliciting purchases of, products, merchandise, goods or services, without such person’s prior consent….shall be liable for any damages sustained by the person or persons injured as a result thereof.

The entire purpose of 3344 is to allow individuals to control any commercial interest they may have in their persona.  That said, every use of a person’s likeness in connection with a commercial product or service is not actionable.  Section 3344(e) states that:

[I]t shall be a question of fact whether or not the use of the person’s name, voice, signature, photograph, or likeness was so directly connected with the commercial sponsorship or with the paid advertising as to constitute a use for which consent is required.

The statute also contains a “safe harbor” for use in any news, public affairs, or sports broadcast or any political campaign.

Most contested right of publicity cases address the fine line between commercial use and a protected First Amendment use.  Although the Supreme Court provided guidance in Comedy III Prods., Inc. v. Gary Saderup, Inc. for determining the difference between protected First Amendment speech and the actionable usurpation of an individual’s right of publicity, balancing tests are never as clear as practitioners would like them to be.

Here however, it seems like a clear case, but like any good Hollywood movie, there’s always a twist.  Fiji claims that the lawsuit is frivolous and without merit.    Fiji claims that “[a]fter the Golden Globes social media moment, [it] negotiated a generous agreement with Ms. [Steinbach].”  Fiji even claims there is a videotape of Ms. Steinbach signing an agreement; Steinbach claims that the agreement was not really an agreement and the signing was a staged event.  Fiji claims that Steinbach “blatantly violated” the agreement between them and stated that it’s confident that it will prevail in Court.

Prior to the Leahy-Smith America Invents Act (“AIA”), the patent statute (35 U.S.C. § 102(b)) prohibited patenting an invention that was “on sale in this country, more than one year prior to the date of the application for patent in the United States.”  This limitation on patentability is often referred to as the “on-sale” bar because it prohibits, or bars, an inventor from obtaining a patent when the invention was on sale more than one year before the patent application was filed.  In fact, all patent statutes since 1836 have included an “on-sale” bar provision.  The motivation behind the bar comes from the U.S. Constitution, which authorizes Congress “[t]o promote the Progress of Science and useful Arts.”  Long ago, the Supreme Court determined it would impede “the Progress of Science and useful Arts” to permit an inventor to sell his or her invention while keeping the secrets of his or her invention from the public and then later get a patent when faced with the danger of a competitor.  This would improperly offer a premium, such as longer protection than the standard patent term, “to those who should be least prompt to communicate their discoveries.”  See Pennock & Sellers v. Dialogue, 27 U.S. 2 Pet. 1 1 (1829).

But what does it mean for an invention to be “on sale”?  Does the sale have to make the invention available to the public?  Does the invention have to actually be sold? Does merely offering the invention for sale trigger the on-sale bar provision?  Interpreting the pre-AIA, “on-sale” bar, the Supreme Court determined that an invention was “on sale” when two conditions are met.  First, the invention is “the subject of a commercial offer for sale,” and second, the invention is “ready for patenting.”  In other words, a mere offer for sale triggers the “on-sale” bar whether or not the sale is made.  Further, the sale or offer for sale does not have to make invention available to the public for the invention to be “on sale” and thus subject to the “on-sale” bar provision.

The AIA, however, modified the language for the “on-sale” bar provision.  Under the AIA’s 35 U.S.C. § 102(a)(1), a person shall be entitled to a patent unless the claimed invention was “… on sale, or otherwise available to the public before the effective filing date of the claimed invention.”  This change raised a question as to whether, under the AIA, a sale has to make the invention available to the public to trigger the AIA version of the “on-sale” bar.  In other words, does the phrase “otherwise available to the public” limit the types of sales that trigger the bar or can “secret sales,” such as sales under a non-disclosure or confidential agreement, still trigger the bar as they did under the pre-AIA, “on-sale” bar.

On January 22, 2019, the Supreme Court answered these questions in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc.  Specifically, in Helsinn, the Court addressed “whether the sale of an invention to a third party who is contractually obligated to keep the invention confidential places the invention ‘on sale’ within the meaning of § 102(a).”  The Court unanimously held that a confidential sale to a third party triggers the “on-sale” bar provision.  Thus the AIA did not alter the meaning of “on sale.”

Looking at the facts in Helsinn and the Court’s reasoning provides further insight.  Specifically, Helsinn owns four patents, which all claim priority to a provisional patent filed in 2003, related to the drug palonosetron used to treat chemotherapy-induced nausea.  One of the patents, the ‘219 patent, is governed by the AIA and the other three are governed by pre-AIA law.  Nearly two years before filing the provisional patent application, Helsinn entered into two agreements with MGI Pharma, Inc. (“MGI”) whereby MGI would purchase the drug from Helsinn and keep all proprietary information received under the agreements confidential.  Helsinn and MGI announced the agreements in a joint press release, and MGI reported the agreements in its Form 8-K filing with the SEC.  However, they did not disclose specific dosage formulations covered by the agreements.

Teva Pharmaceuticals USA, Inc. (“TEVA”) sought FDA approval to market a generic version of the anti-nausea drug.  In response, Helsinn sued TEVA for patent infringement.  TEVA argued the ‘219 patent was invalid because the invention was on sale more than one year before Helsinn filed its provisional patent application.  The District Court agreed with TEVA concluding that “an invention is not ‘on sale’ unless the sale or offer in question made the claimed invention available to the public.”  On appeal, the Federal Circuit reversed finding that “’if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale’ to fall within the AIA’s on-sale bar.”  Therefore, “[b]ecause the sale between Helsinn and MGI was publicly disclosed, it held that the on-sale bar applied.”

The Supreme Court then “granted certiorari to determine whether, under the AIA, an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential” triggers the on-sale bar provision.  The Court pointed out that the AIA “retained the on-sale bar and added the catchall phrase ‘or otherwise available to the public.”  Therefore, the question was whether the altered language changed the meaning of the “on sale” bar.  The Court pointed to the well-settled, pre-AIA precedent that sales and offers for sale did not have to be public to trigger the on-sale bar provision.  In fact, the Court acknowledged that the Federal Circuit had explicitly recognized the implicit precedents of the Supreme Court that secret sales can invalidate a patent under the pre-AIA “on sale” bar.  “In light of this settled pre-AIA precedent on the meaning of ‘on sale,’” the Supreme Court presumed “that when Congress reenacted the same language in the AIA, it adopted the earlier judicial construction of that phrase.”  “The new § 102 retained the exact language used in its predecessor statute (‘on sale’) and, as relevant here, added only a new catchall clause (‘or otherwise available to the public’).”  The Court determined that merely adding “or otherwise available to the public” was “simply not enough of a change” to “conclude that Congress intended to alter the meaning of the reenacted term “on sale.”  Therefore, the Court held that “an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential” can bar patentability under the AIA “on sale” bar provision.

When a new invention is created (if it is worth anything), everyone wants to take credit. Figuring out whose “baby” it is, is a difficult question.

What is an inventor? Who is the inventor? One would think these questions have straightforward answers. They do not. Inventorship is one of the most difficult and gray areas of patent law.

It is easy to say what (or who) an inventor is not. An inventor is not the research technician who carries out the instructions of the lead investigator developing a new drug. An inventor is not the computer programmer who writes the code for software developed by someone else. An inventor is not the machinist who fabricates a device under the direction of the engineer. An inventor is not the CEO of the company, the most important shareholder, the leading investor, or the supportive colleague. An inventor is not a corporation or other business entity.

The inventor is the person (a natural person) who “invents” the invention. Inventing consists of three phases: conception of the invention; steps taken toward reducing the invention to practice; and reduction to practice of the invention. The person, or persons, who perform the first phase, conception, are the inventors. The person(s) who perform the second and third phases can be the inventor(s) or those acting at the direction of the inventor(s).

Conception is the formation of the definite and permanent idea of the complete and operative invention. This means that the structure and function of the invention have been fully thought out. If the inventor can describe how to make and use the invention, such that a person with ordinary skill in the art could make and use it, then there is conception. The inventor may have others help actually make the invention, but this does not make them inventors.

Any person who makes a contribution to the conception of the invention is an inventor. Multiple inventors are called joint inventors. The determination of whether a person is a joint inventor is very fact-specific. Joint inventors must be working together in some sense, although they need not work together physically or at the same time. Joint inventors cannot be working completely independently; if so, they are not joint inventors, but sole inventors of the same invention. The contributions of the joint inventors need not be of the same size or significance. The contribution of a small, minor aspect of the invention is enough to make a person a joint inventor as long as that aspect is contained in at least one claim of the patent.

If there is more than one inventor of an invention, each inventor owns an equal, undivided interest in the invention and in any patent on the invention. This is true regardless of the amount of the inventor’s contribution. Each inventor can make, use, offer to sell, or sell the invention in the United States, or import the invention into the United States, without the consent of the other joint inventors. In order to transfer all the rights to an invention, all of the joint inventors must sign an assignment.

All of the inventors must jointly file a patent application. Each inventor must sign the oath or declaration. All of the true inventors must be named as inventors, and the application cannot name a person who is not an inventor. For example, an inventor cannot be excluded because he or she is no longer employed by the company filing the patent application. Nor can a person who is not an inventor be named as an inventor simply as an acknowledgment or reward for working on the project. Errors in inventorship can be corrected by amending the patent application, or the issued patent, as long as the error was unintentional.

Inventorship problems occur frequently in companies where several employees work together on a project that results in an invention. The existence of joint inventors raises two problems. First, because each joint inventor owns, and has full rights to exploit, the invention, all of the inventors need to sign an assignment to the company if the company is to obtain clear title to the invention. It is easiest to do this before the employees are hired or, if not, before they leave the company. It is often not done until after the employee has left the company, however, and the company decides to file a patent application. Second, a patent that issues with incorrect inventorship (either omitting an inventor or including a non-inventor) is at risk of being invalidated, unless a correction is made. In other words, years after the invention was invented, when the company is in litigation to enforce its patent, the issue of inventorship can be raised as a basis for invalidating the patent. Thus, inventorship issues should be resolved as early as possible, hopefully before the patent application is filed.

The Federal Circuit Court of Appeals has affirmed a jury verdict of $140 million in a patent infringement case.  The damages were based on a reasonable royalty.  The case is Sprint Communications Co., L.P. v. Time Warner Cable, Inc., 2018 U.S. App. LEXIS 33594 (Fed. Cir.  2018).

Sprint sued Time Warner in the District of Kansas for infringement for several of Sprints patents for a telephone communications network.  Sprint alleged that Time Warner’s voice over internet protocol (VoIP) service infringed Sprints telecommunications patents.  The case was tried to a jury.  At trial, the district court admitted Sprints evidence of another jury verdict Sprint had obtained in a different case over the same patents against Vonage Holdings Corporation.  The court found that the evidence was relevant to the jury’s determination of reasonable royalty damages using the hypothetical negotiation theory of determining the royalty.  The jury awarded Sprint reasonable royalty damages of $140 million, calculated as $1.37 for each of Time Warner’s subscribers to its VoIP service.

On appeal, Time Warner argued that the district court should not have admitted evidence of Sprint’s verdict against Vonage because that royalty was based on the total amount of Vonage’s revenues, rather than the amount apportioned to the patented aspects of the product.

The Federal Circuit affirmed the jury’s verdict.  The court held that the district court had properly admitted the evidence of the Vonage verdict.  The court found that an apportionment between the patented and unpatented aspects of a product is not required if the Georgia-Pacific factors are used to determine the royalty.  The Georgia-Pacific case sets for a long list of factors, which the Federal Circuit has approved, that are relevant in determining a reasonable royalty.  Under Georgia-Pacific, the royalty rates for comparable licenses are relevant even if the royalty rate is based on total sales rather than sales of the patented component.

Here, the court found that the jury had considered two other comparable licenses Sprint had granted for the same technology.  Both of those licenses had utilized the same royalty rate as was used in the Vonage verdict.

The court explained the damage theory as follows:  “[T]he hypothetical negotiation seeks to determine ‘what it would have been worth to the defendant, as it saw things at the time, to obtain the authority to use the patented technology, considering the benefits it would expect to receive from using the technology and the alternatives it might have pursued.’”  Id. at *15, quoting Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd., 807 F.3d 1283, 1304 (Fed. Cir. 2005).

Based on the jury’s application of this theory, the court held, at *15, that “[I]n light of all the evidence bearing on the damages award, we conclude that the jury’s verdict was supported by sufficient evidence and did not contravene the principles of apportionment set forth by this court.”

On December 28, 2018, the Court in The California Institute of Technology v. Broadcom Limited et al., Case No. 2:16-cv-03714-GW-(AGRx), issued a Final Ruling on Plaintiff’s Motion for Partial Summary Judgment of Validity under 35 U.S.C. § 103 based on IPR Estoppel under 35 U.S.C. § 315(e)(2).  In the case, Plaintiff The California Institute of Technology alleges patent infringement against Defendants Broadcom Limited, Broadcom Corporation, Avago Technologies Limited, and Apple Inc. based on infringement from fifteen claims from three of its patents: (1) U.S. Patent No. 7,116,710 (“the ’710 Patent”); (2) U.S. Patent No. 7,421,032 (“the ’032 Patent”); and (3) U.S. Patent No. 7,916,781 (“the ’781 Patent”) (collectively, the “Asserted Patents”).

Plaintiff moved for partial summary judgment of no invalidity as to Claims 13 and 22 of the ’781 Patent and Claims 11 and 18 of the ’032 Patent, arguing that IPR estoppel precluded Defendants from raising each invalidity ground that was identified in Defendants’ invalidity contentions as to each of those claims in prior filed IPRs.  Section 315(e)(2) of the Patent Act states: “The petitioner in an inter partes review [IPR] of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not assert . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”  Here, the Court had to consider whether the statutory IPR estoppel provision reaches to invalidity grounds that a petitioner was aware of at the time it filed its IPR petition, but chose not to bring in the IPR proceeding.

The Defendants argued that if a prior art reference is included in an IPR petition and IPR is not instituted as to that prior art reference, the reference could not have been reasonably raised during IPR.  However, the Court reasoned that the “during IPR” language also should not be read in a vacuum.  The full phrase of § 315(e)(2) is whether the ground is one “that the petitioner raised or reasonably could have raised during that inter partes review.”  There is no reasonable basis by which a petitioner could raise a ground that has been explicitly rejected by the PTAB in making an IPR institution determination.  But in the context of non-petitioned grounds, the issue goes back to the choices made by the petitioner itself.  In other words, prior art references that a petitioner reasonably could have raised, but chose not to raise, in an IPR petition are also prior art references that reasonably could have been raised during actual IPR had the PTAB been given the opportunity (based on the petitioner’s raising them) to consider those references.

The choices of the petitioner – and the petitioner alone – in its initial decision regarding what grounds to bring before the PTAB dictate what grounds are raised (or reasonably could have been raised) “during IPR” and thus could result in estoppel if IPR results in a final written decision.  Thus, the Court found that statutory IPR estoppel applies to invalidity grounds that a petitioner “reasonably could have raised” in its IPR petition, which includes prior art that a “‘skilled searcher conducting a diligent search reasonably could have been expected to discover.’”

Next, and aside from their arguments regarding the scope of § 315(e)(2) estoppel, Defendants argue that they are now bringing certain prior art under pre-AIA § 102(a), i.e., not as “patents or printed publications,” but as information that was “known or used by others” before the patented invention.  As Defendants note, in IPR proceedings, the PTAB will only consider patents or printed publications as grounds for invalidity due to anticipation or obviousness.  Because, Defendants argue, they are relying on the “known or used” prong of pre-AIA § 102(a) for all but one of their prior art grounds (i.e., not on prior art patents or printed publications), the prior art could not have been raised during IPR proceedings and IPR estoppel does not apply.

Under pre-AIA, the juxtaposition between § 102(a) and § 102(b) effectively created a one-year grace period for a patent applicant to file a patent application even after the inventor disclosed information about an invention to the public as long as it was not done via a printed publication.  For example, the “known or used” prong of § 102(a) can come into play in the instance where a scientist gives a public presentation and shows slides, but does not distribute his/her slides or immediately publish a copy of them. The presentation itself (as, for instance, recollected through the scientist’s testimony) could still be considered prior art even if the presentation slides were not made “publicly available” at the same time as the presentation.

The Defendants also emphasized an analogy to a circumstance where a petitioner submits a product manual as printed publication prior art before the PTAB, but is not estopped from submitting a prior art product itself in district court litigation.  However, the Court reasoned that whether brought as a “printed publication” or under the “known or used” prong, the core element that forms the basis of Defendants’ prior art includes the same documents.  Although Defendants assert that there will be a “meaningful difference” in the invalidity presentation under the “known or used” prong, Defendants have not presented sufficient evidence to back that assertion.

Thus, after considering the unique facts of this case, including the specific prior art grounds Defendants seek to characterize, the Court was not persuaded by Defendants’ argument that it is shielded from statutory IPR estoppel by its references to the “known or used” prong of § 102(a). Accordingly, the Court found that statutory IPR estoppel applies to most of the obviousness combinations Defendants has raised, and granted Plaintiff’s motion.

This case is a strong reminder to carefully consider whether or not to file an IPR in defense of a patent infringement action, and if so, what the consequences can be if the IPR fails.  In addition, it is a strong reminder to carefully consider which arguments and prior to raise in any IPR.

The Trademark Trial and Appeals Board recently issued an interesting decision regarding standing to oppose the registration of trademark applications. United Trademark Holdings, Inc. filed for registration of the mark RAPUNZEL for use in conjunction with dolls and toy figures. However, after the USPTO’s examining attorney published the mark for opposition, a law professor filed a notice of opposition, alleging that Applicant’s mark failed to function as a trademark on the grounds that it is synonymous with the name of a well-known childhood fairytale character, which has long been in the public domain.

In response to the notice of opposition, the applicant filed a motion to dismiss claiming the opposer lacks standing because she is not a competitor and has not used the mark in connection with the manufacturer or sale of dolls. The TTAB disagreed, stating that “Consumers, like competitors, may have a real interest in keeping merely descriptive or generic words in the public domain.” Apparently, the TTAB was receptive to the opposer’s argument that “she has purchased and continues to purchase said goods and that registration of the applied-for mark by applicant would constrain the marketplace of such goods sold under the name ‘Rapunzel,’ raise prices of ‘Rapunzel’ dolls offered by other manufacturers.” Accepting this argument, the TTAB held the opposer’s allegations sufficient to establish that she has a direct and personal interest in the outcome of the proceeding, in accordance with the “liberal threshold” established in Ritchie v. Simpson, a precedential opinion issued by the U.S. Court of Appeals for the Federal Circuit.

The TTAB reiterated the Federal Circuit’s holding that, “In no case has this court ever held that one must have a specific commercial interest, not shared by the general public, in order to have standing as an opposer.” Instead, “the crux of the matter is not how many others share one’s belief that one will be damaged by the registration, but whether that belief is reasonable and reflects a real interest in the issue.” “Consumers, like competitors, may have a real interest in keeping merely descriptive or generic words in the public domain, (1) to prevent the owner of a mark from inhibiting competition in the sale of particular goods; and (2) to maintain freedom of the public to use the language involved, thus avoiding the possibility of harassing infringement suits by the registrant against others who use the mark when advertising or describing their own products.”

In light of the above, members of the consuming public may have a real interest in preventing exclusive appropriation of merely descriptive or generic terms by trademark owners. As such, consumers are entitled to challenge the registration of trademarks through opposition proceedings before the TTAB.