IP Law Alert

IP Law Alert

Practical Perspectives on Intellectual Property Legal Developments

Navigating Data Transfer from the EU to the U.S.: Safe Harbor or Danger at Sea?

Posted in FTC, Privacy

In 2014, the FTC stepped up enforcement against companies that either falsely represented that they were Safe Harbor certified or displayed the Safe Harbor Framework (Safe Harbor Program) Certification Mark on their websites at a time when they were not in fact certified. Companies looking to self-certify in the future, and those that have self-certified more than one year ago and failed to re-certify, should take note of this important trend.

The Safe Harbor Program was implemented to bridge the differences between the European Commission (EC) Directive on Data Protection and data privacy laws in the United States. Developed by the U.S. Department of Commerce in consultation with the EC, the program provides a streamlined means for U.S. companies to import data housed in the EU without running afoul of EU member state privacy laws. Participation in the Safe Harbor Program is entirely voluntary and initiated by a company’s self-certification of compliance with seven Safe Harbor “Privacy Principles.” To join the Safe Harbor Program, a company must adhere to the seven Privacy Principles; affirm its adherence in a publicly available privacy policy; and self-certify its compliance to the U.S. Department of Commerce. Once certified, however, a U.S.-based company may transfer personal information from EU member states to the U.S. in a manner that complies with European law.

Critically, certification does not last forever. Instead, companies must annually re-certify to retain their status as a “current participant” in the Safe Harbor Program.

What are some best practices to avoid unwanted attention from the FTC?

  1. If your company self-certified more than one year ago and has not re-certified, delete any and all references to being a “current” Safe Harbor participant from your website and marketing materials;
  2. If your company is currently certified, perform audits according to a written protocol to verify continued compliance with the seven Privacy Principles;
  3. If your company has agreements with vendors, obtain quarterly reports verifying vendor compliance and negotiate the contractual right to independently verify compliance;
  4. Educate marketing people about the danger of falsely representing that the company is a “current” participant in the Safe Harbor Program if in fact certification has lapsed; and
  5. Docket the one-year anniversary of self-certification and implement periodic reminders one and three months beforehand so that recertification is performed in a timely manner.

Companies would be well-advised to consult with outside counsel to ensure that they have not made public misstatements about their Safe Harbor certification status and to evaluate whether they are at risk of an FTC enforcement action.

Luis J. Diaz is a Director in the Gibbons Intellectual Property Department. He regularly advises clients on privacy and data security compliance, responding to data security breach incidents, and preparing written privacy and data security policies. Wendy R. Stein is Counsel in the Gibbons Intellectual Property Department. She has been actively involved in litigation arising out of data security breach incidents.

Washington Redskins Seek Reversal of TTAB Decision Canceling its Trademark Registrations

Posted in Trademark

On August 14, 2014, Pro-Football, Inc. (“Pro-Football”) appealed the Trademark Trial and Appeal Board’s (“TTAB”) June 18, 2014 decision to cancel its registrations for six REDSKIN-formative trademarks. As we previously reported, the TTAB’s 2-1 decision found that those trademarks were not entitled to be registered on the basis that a “substantial composite of Native Americans found the term REDSKINS to be disparaging in connection with [the football team’s] services” during the time period when registration was sought.

Pro-Football filed its appeal with the U.S. District Court for the Eastern District of Virginia, asserting that the TTAB’s decision violates the First and Fifth Amendments to the Constitution, and that its “decision is replete with errors of fact and law, including its failure to restrict its analysis to the relevant time frame of 1967-1990, when the registrations were first issued.”

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The ITC and FTC Take Actions to Address the Toll of NPE Litigation

Posted in ITC, Patent

We have previously posted on proposed federal and state legislation aimed at addressing the toll of “patent troll” litigation by non-practicing entities (“NPEs”) on the U.S. economy. Additionally, a recent Federal Circuit ruling relaxing the standard for finding “an exceptional case” to justify attorneys’ fees in patent infringement actions also appears to have been motivated by need to address NPE litigation. Now the United States trade commissions want to enter the fray. The U.S. International Trade Commission (ITC), through its recent decision  In the matter of Certain Optical Disc Drives, Components Thereof, and Products Containing the Same, limited the ability of licensing entities, whose patent-related activities are purely revenue driven, to bring actions under 19 U.S.C. § 1337(a)(3). Additionally, the U.S. Federal Trade Commission (FTC) has recently been given approval to conduct a study on NPEs to examine how they operate and to what extent they affect competition and innovation.

As an alternative to litigation in federal district courts, patent holders can file a complaint with the ITC under Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337) for unfair methods of competition based on the importation of articles that infringe a valid and enforceable United States Patent. 19 U.S.C. § 1337(a)(1)(B)(i). The filer must show that an industry relating to the articles covered by the filer’s patents exists or is in the process of being established. 19 U.S.C. § 1337(a)(2). To do so, the filer must show that the development of the patented article involved (a) significant investment in plant and equipment, (b) significant employment of labor or capital, or (c) substantial investment in its exploitation, including engineering, research and development, or licensing. 19 U.S.C. § 1337(a)(3)(A)-(C).

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Search Error! Federal Circuit Invalidates Vringo Search Engine Patents

Posted in Patent

On August 15, the Federal Circuit, in a nonprecedential opinion, reversed a lower court ruling, denying I/P Engine, Inc., a subsidiary of Vringo, Inc., a $30 million patent infringement jury verdict by invalidating two of its internet search engine patents.

I/P Engine brought suit against AOL Inc., Google, Inc., and others in the Eastern District of Virginia for allegedly infringing its patents, U.S. Patent Nos. 6,314,420 and 6,775,664, which relate to systems and methods for filtering internet search results, using both content-based and collaborative filtering. In November 2012, the district court found I/P Engine’s patents valid and that defendants infringed those patents. The jury awarded I/P Engine over $30 million in damages and a 3.5% running royalty.

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How to Meet the Inequitable Conduct Standard after Therasense

Posted in Patent

The Court of Appeals for the Federal Circuit recently clarified the standard necessary for holding a patent unenforceable for inequitable conduct relating to intentionally withheld references and misrepresentations of material information. Apotex Inc. v. UCB, Inc., No. 2013-1674 (Aug. 15, 2014). Given the high standard set forth in the Federal Circuit’s prior opinion in Therasense, this decision finding inequitable conduct provides a roadmap for inventors, prosecutors, and litigants alike with regard to potential claims of inequitable conduct.

The patent at issue, U.S. Patent No. 6,767,556, was written by the sole inventor, Dr. Bernard Sherman, who is also the founder and chairman of Apotex Inc. Apotex at 3. The patent is directed to a process for manufacturing moexipril tablets, which are used to treat hypertension as an angiotensin-converting enzyme. Id. Moexipril and its acid addition salts are not stable and tend to degrade quickly. Id. The ’556 patent discloses a process for improving overall stability by reacting moexipril or its acid addition salt with an alkaline magnesium compound. Id.

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The Section 1447(d) Bar – State of Vermont v. MPHJ Technology Investments, LLC

Posted in Patent

In a case of procedural jockeying, the United States Court of Appeals for the Federal Circuit in State of Vermont v. MPHJ Technology Investments, LLC, held that a “district court’s remand order dominate[d] any proceedings on th[e] appeal” and because a remand under 28 U.S.C. 1447(d) “is not reviewable on appeal or otherwise[,]” the Federal Circuit lacked appellate jurisdiction.

The path to the Federal Circuit’s decision began with a state court action brought by the State of Vermont against MPHJ Technology Investment, LLC (“MPHJ”) for unfair and deceptive trade practices under the Vermont Consumer Protection Act. MPHJ argued that what was fundamentally at issue was MPHJ’s right to enforce its patents. MPHJ removed the case to federal district court and the State subsequently moved to remand the case to state court arguing that the federal court lacked subject matter jurisdiction. MPHJ opposed the motion to remand and also moved for dismissal of the action for lack of personal jurisdiction and for Rule 11 sanctions. In addition, after the State amended its complaint, removing a request for a permanent injunction, MPHJ moved for summary judgment. Before the district court were the following motions:

  1. The State’s motion to remand to state court for lack of subject matter jurisdiction;
  2. MPHJ’s motion to dismiss for lack of personal jurisdiction;
  3. MPHJ’s motion for Rule 11 sanctions, which also requested dismissal on the grounds that the State’s unfair and deceptive trade practices claims were preempted by MPHJ’s right to enforce its patents; and
  4. MPHJ’s motion for summary judgment.

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Be Careful Identifying Your Licensed Patents and Products

Posted in Licensing

On Friday, the Federal Circuit issued an opinion in Wi-LAN USA, Inc. v. Ericsson, Inc., which highlights the importance of using care when granting rights to or under patents. The interesting facts in this case resulted in two contradictory opinions from two district courts regarding the scope of an agreement pertaining to rights under certain patents. These opinions illustrate the potential dangers of unintended consequences that may arise from imprecise drafting in patent agreements.

In 2008, Wi-LAN and Ericsson entered into an agreement under which Ericsson was granted certain rights to patents owned by Wi-LAN (the “Agreement”). At the time of the agreement, Wi-LAN had accused Ericsson’s Universal Mobile Telecommunications System (“UMTS”) / High Speed Packet Access (“HSPA”) products of infringing four of Wi-LAN’s patents. These patents ended up being defined as the “WI-LAN PATENTS” under the Agreement.

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New Guidance on How to Calculate Statutory Damages Awards in Counterfeiting Cases

Posted in Trademark

Judge Koeltl of the United States District Court for the Southern District of New York recently adopted a recommended statutory damages award of $6.6 million dollars in a case involving trademark counterfeiting. Richemont Int’l S.A. et. al. v. Montesol Ou, et. al., 2014 WL 3732919, at *1 (S.D.N.Y. July 28, 2014). The plaintiff sellers of luxury goods had initially sought $78 million or $2 million per counterfeit mark per type of good counterfeited in connection with 88 domain names operated by the defendants. Richemont Int’l S.A. et. al. v. Montesol Ou, et. al., 2014 WL 3732887, at *4 (S.D.N.Y. May 13, 2014). But Magistrate Judge Pitman recommended instead an award of $6.6 million, including $6.3 million under the Trademark Act and $300,000 under the Anticybersquatting Consumer Protection Act.

Judge Koeltl found the recommended damages award reasonable. But, he did not approve of an attempt to estimate relevant sales and profits when such information was not in the record. He noted that courts regularly examine the factors discussed in Fitzgerald Pub. Co. v. Baylor Pub. Co., 807 F.2d 1110 (2d Cir. 1986), a case interpreting the Copyright Act’s analogous statutory damages provision, 15 U.S.C. 504(c), and suggested that three important factors in this context are the size of the operation, the willfulness of the infringement, and the need for deterrence.

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McDonald’s Triumphs over BioMcDiesel

Posted in Trademark, USPTO

On July 14, 2014, the United States Trademark Trial and Appeal Board (TTAB) found the trademark “BioMcDiesel” for biodiesel fuel likely to cause confusion with McDonald’s Corporation’s (“McDonald’s”) famous family of MC-formative trademarks. McDonald’s Corporation v. Joel D. Joseph, Opposition No. 91194117 (July 14, 2014) [not precedential]. The applicant, Joel Joseph, appeared pro se to defend his application, which was based on intent to use. McDonald’s challenged the application on three bases under the Lanham Act, namely, likelihood of confusion under Section 2(d), dilution under Sections 13 and 43(c), and on the basis that Mr. Joseph filed the application in bad faith, in that he lacked a bona fide intent to use the mark and solely filed the application for the purpose of selling or licensing the mark to McDonald’s. The TTAB’s decision addressed only the likelihood of confusion claim, and found the “BioMcDiesel” mark was not entitled to registration.

Mr. Joseph argued that he was entitled to registration by asserting, among other things, that McDonald’s permits thousands of third-party uses of trademarks that include the prefix MC-, and that the parties’ goods and services are sufficiently distinct that confusion is not likely. However, Mr. Joseph did not submit evidence in support of his arguments to the TTAB. He also did not explain the reason that he decided to use the MC- prefix in his mark.

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AIA Post Issuance Proceedings – Patent Owner Challenges Standing of United States Entities to Bring PGR Review of CBM Patent

Posted in Patent

The United States Court of Federal Claims recently deferred decision on whether to stay a litigation brought in 2011 by a patent owner against the United States.

In the case, captioned Return Mail, Inc. v. United States, patent owner Return Mail seeks compensation under 28 U.S.C. § 1498(a) for what it alleges to be use and manufacture by or for the U.S. Postal Service (USPS) of its patent related to methods and systems for providing address change services. The government’s stay motion in the Return Mail litigation was filed on the same day that it filed a petition with the Patent Trial and Appeal Board (PTAB) for post-grant review (PGR) of the patent-in-suit, which it claims is a covered business method (CBM) patent under the America Invents Act. The government’s petition and related stay motion come more than three years into the litigation.

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