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Developments in Intellectual Property Law

Recent Federal Circuit Decision Applies Alice Test to Invalidate Patent

By Fritz Klantschi
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On November 13 the Federal Circuit Court of Appeals affirmed the district court’s ruling (Gaelco S.A. v. Arachnid 360, LLC, 293 F.Supp.3d 783 (N.D. Ill. 2017) (“Gaelco”)) that patent claims directed to a system and method for remotely refereeing dart games were invalid under the U.S. Supreme Court’s Alice test. The independent claims of U.S. Patent No. 7,361,083 (the “083 patent”) were directed to a remote monitoring or refereeing method for one or more dart machines where at least one refereeing center receives multimedia captured from the dart machines for evaluating whether a player complies with the rule of play and transmitting the results.  That is, the claims were directed to collecting information, analyzing the information and displaying the results.

The Alice test is a two-step process for determining whether claims recite patent-eligible subject matter, and is based upon a 2014 Supreme Court decision that had a dramatic effect on the validity of so-called software patents and business-method patents.  Hundreds of patents have been invalidated under Section 101 of the Patent Act.  The first step requires the court to determine whether the claims at issue are directed to a patent-ineligible concept. Alice Corp. v. CLS Bank Int’l, 134 S.Ct. 2347 at 2355, 189 L.Ed.2d 296 (2014).  “[C]ourts ‘compare claims at issue to those claims already found to be directed to an abstract idea in previous cases.’” Gaelco at *789 (citing Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1334 (Fed. Cir. 2016)). The District Court found that the ’083 patent claims (directed to collecting information, analyzing the information and displaying the results) to be abstract-idea processes under the first step of the Alice test. Gaelco at *790.

The second step of the Alice test requires the court to “examine the elements of the claim to determine whether it contains an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application.” Alice, 134 S.Ct. at 2357.  The District Court found that the ‘083 patent’s claims recited conventional uses of conventional technology (the Internet, cameras, dart machines and a display) and thus do not rise to an inventive concept. Gaelco at *794.  Further the steps of the ‘083 patent claims are recited in an ordinary order which similarly does not rise to an inventive concept. Id. at *795.  Still further, claiming improved speed or efficiency inherent with applying the abstract idea on a computer is not sufficient to provide an inventive concept. Id. at *796.  The District Court found that “the asserted claims do not contain an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application under § 101.” Id.

Trademark Considerations: Nominative Fair Use

By David A. Jones
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Trademark infringement, briefly, is the unauthorized use of a trademark or service mark of another in a manner that is likely to cause consumer confusion. In some cases, affirmative defenses may excuse the otherwise infringing actions of a later user, and permit that later user to continue its use of the protected mark. One of the more common defenses is “fair use.”

In general, fair use can fall into one of two categories. Descriptive fair use, as the name suggests, occurs where a later user makes use of a trademark to describe the user’s products or services, rather than for the purpose of indicating the source or origin of a particular good or service. This is often referred to as “classic” fair use. For a real-world example, SWEETARTS is a registered trademark for candy. The then-owner of the mark sued Ocean Spray for using the term “sweet-tart” to describe the taste of its cranberry juice. The court found Ocean Spray’s use of the term “sweet-tart” to be descriptive fair use and thus not an infringement. See Sunmark, Inc. v. Ocean Spray Cranberries, Inc., 64 F.3d 1055 (7th Cir. 1995).

What is nominative fair use?

The second category is nominative fair use. In the case of nominative fair use, the second user deliberately uses the registered trademark of another, but does so for the purpose of referring to the goods or services of that trademark owner. For instance, it would be odd and cumbersome for every football fan to have to refer to “the football team from New York that wears red, white and blue uniforms” when you can just say the New York Giants. This type of fair use also encompasses things such as comparative advertising, media reporting, commentary and parody.

Nominative fair use generally is permissible as long as (1) the product or service in question is not readily identifiable without use of the trademark, (2) only so much of the mark as is reasonably necessary to identify the product or service is used and (3) use of the mark does not suggest sponsorship or endorsement by the trademark owner. See, e.g. New Kids on the Block v. News Am. Publishing, Inc., 971 F.2d 302 (9th Cir. 1992).

Limitations on nominative fair use

Nominative fair use does have its limitations, however. It is a doctrine that was created through case law. In other words, there is no law or statute that specifically carves out a nominative fair use exception. As a result of being a judicially-driven concept, the doctrine is not universally applied across all federal courts.

For example, disclaimers are often used to state that the party naming another’s trademark is not associated with the trademark owner, i.e., “NEW YORK GIANTS is a registered trademark of New York Football Giants, Inc.” or “XYZ company is not affiliated with the NEW YORK GIANTS football team.” Most courts view the use of disclaimers favorably, but even that is by no means a “Get Out of Jail Free” card. How prominent is the disclaimer? What does it say? Where is it placed? Is it legible? These are all things to consider when analyzing whether any particular use qualifies as a nominative fair use. (Both types of trademark fair use differ from fair use of copyrighted creative works, which we discussed in a prior blog post.)

In our current global-commerce society, it is also important to remember that fair use is not a universal concept that all countries recognize and treat the same. For instance, a comparative advertising campaign being launched in Europe must comply with the European Union directive governing comparative and misleading advertising.

In sum, if you are intending to make use of the trademark of another, you must tread carefully. Do not use any more of the mark than is necessary. If at all possible, try to use the trademark in a narrative form rather than “as a trademark.” This includes things such as making sure that if you are using someone else’s mark, it is not in a different color or font size or style than the surrounding text. As described above, disclaimers can help, but be careful how they are drafted, and remember that a disclaimer alone is not guaranteed to save an otherwise infringing use.

If you have questions regarding a use you intend to make of someone else’s trademark, or if you feel that someone else has made an improper use of your trademark, please feel free to contact our office. We will be happy to review it with you and discuss any relevant issues and potential pitfalls.

New Claim Construction Standard Should Reduce Inconsistency Between PTAB and Courts

By Fritz Klantschi
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On November 13, 2018 the USPTO Patent Trial and Appeal Board (“PTAB”) adopted a narrower standard for interpreting patent claims. This will now make the PTAB claim construction standard the same as that used by federal courts. Since 2012, the PTAB had used the “broadest reasonable interpretation” (“BRI”) claim construction in post-grant proceedings, which are proceedings that provide litigants a more cost-effective forum than the courts to resolve patent validity disputes.

Under the BRI standard, claim terms are given the broadest interpretation consistent with their plain meaning in light of the specification as understood by one of ordinary skill in the art. (In a patent, the claims section defines the matter for which protection is sought, and the specification is a written description of the invention.) Both the district courts and the U.S. International Trade Commission (“ITC”) used the so-called Phillips standard that required a patent claim to be given the “ordinary and customary meaning” to “a person of ordinary skill in the art . . .  at the time of the invention.” The Phillips standard was first articulated in Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) and further developed in subsequent cases.

Under the two-standard system, a party could argue two different claim constructions, one before the PTAB and the other before the district courts, which may cause different outcomes.  With this change, the Phillips standard now will apply to Inter Partes Review (“IPR”), Post Grant Reviews (“PGR”) and Covered Business Method (“CBM”) proceedings before the PTAB.

Currently over 85 percent of the patents that are in IPR are also being litigated in court. With the PTAB adopting the same claim construction standard as the district courts and the ITC, there will likely be fewer inconsistent opinions, and the change should reduce the prospect of parallel litigation over the same patent.

Trademark Considerations: When is a (Sur)Name More than Just a (Sur)Name?

By David Jones
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It is not uncommon for a business owner to name their business or a product after themselves. You can see examples every day nearly everywhere you look: FOLGERS® coffee, FORD® cars, GOODYEAR® tires, DISNEY®. . . everything.  However, registering your name as a trademark can actually be quite difficult.

As a starting point, the United States Patent and Trademark Office (USPTO) will not register a mark that is primarily merely a surname without a showing of acquired distinctiveness. 15 U.S.C. § 1052(e)(4).  This provision in the Trademark Act reflects the common law idea that exclusive rights in a surname cannot be established without evidence of long and exclusive use, with the idea being that such long-standing and recognizable use changes the significance to the public from the term being merely someone’s last name to being a trademark that identifies particular goods or services – hence, “acquired distinctiveness.”  But surnames are not always unique.  Can an individual stop someone else from using “their” surname?

The Schlafly case

The Federal Circuit most recently considered the issue in the matter of Schlafly v. Saint Louis Brewery, LLC, No. 2017-1468, 2018 WL 6168685, at *1 (Fed. Cir. Nov. 26, 2018).  In its opinion, the Court affirmed a ruling by the Trademark Trial and Appeal Board (TTAB) that the Saint Louis Brewery was entitled to register the mark SCHLAFLY for use in connection with beer and other related goods.  In so holding, the Court dismissed consolidated oppositions mounted by the successors of noted conservative political activist Phyllis Schlafly and other members of her family (including a son who used the Schlafly name in connection with his medical practice) in which they argued that allowing the brewery to register the mark would adversely impact their interest in the commercial value of the Schlafly name.

The Court declined to adopt a novel test proposed by the Schlafly camp (which opposers referred to as the “change in significance” test) under which they argued a surname could not be registered without the applicant showing that there was a change in significance to the consuming public that shifted the public’s perception of the proposed mark from a surname to a trademark associated and identified with specific goods and/or services.

The trademark owner’s evidence of acquired distinctiveness

In support of its position, the brewery presented evidence showing its considerable, continuous, wide-ranging use of the SCHLAFLY mark, including the sale of 75 million units of its 60 types of beer using the SCHLAFLY mark in 15 states and the District of Columbia, through 30 wholesalers and some 14,000 retail establishments, including several national restaurant chains between 2009 and 2014 alone. The brewery also presented evidence that these sales were supported by $1.1 million in advertising over the last five years, which featured the SCHLAFLY mark in advertisements and promotions in several media and at events.

Ultimately, both the TTAB and the Federal Circuit found the evidence presented by the brewery sufficient to show that the brewery’s use and promotion of the SCHLAFLY mark supported a finding of acquired distinctiveness. “No law or precedent suggests that surnames cannot be registered as trademarks if they have acquired distinctiveness in trademark use.” Id. at *5.  As you can see, however, obtaining a registration for your name as a trademark can be challenging, and anyone considering doing so should be sure to consult with an attorney before moving forward.

Powley & Gibson hosts event on medical device patenting and marketing

By Fritz Klantschi
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On November 14, 2018 Powley & Gibson, P.C. in partnership with Surgical Design Professionals (“SDP,”, hosted a group of physicians at Powley & Gibson’s offices at 304 Hudson Street, Suite 305, New York, NY for an evening discussion on the design, manufacture, patenting and marketing of surgical devices. Powley & Gibson is a full service IP law firm with extensive experience in all facets of establishing, maintaining and protecting comprehensive patent portfolios. Surgical Design Professionals guides the invention process for medical professionals, from concept to product, all while allowing the inventor to retain control and ownership of their invention. SDP has assembled a carefully vetted design and production team that includes medical professionals, as well as engineering, design and prototyping services. Together with the intellectual property expertise of the attorneys at Powley & Gibson, SDP aims to facilitate the invention process for medical professionals.

Dr. Kenneth McCulloch from SDP and Robert Powley introduced their respective companies to the attendees and provided an overview of the process by which ideas related to medical instruments can be turned into patented products. The introduction was followed by a robust question and answer session wherein the doctors in attendance spoke about their potential ideas for medical instruments that would improve surgical outcomes and minimize complications and SDP and Powley & Gibson advising how to bring such ideas to fruition by creation of a protectable, patentable design.