IP Law Alert

IP Law Alert

Practical Perspectives on Intellectual Property Legal Developments

The New European Unitary Patent and Unified Patent Court: Are You Opting In?

Posted in Patent

The Gibbons Institute of Law, Science & Technology recently hosted a program to explore significant changes underway for the European patent landscape. At this program, Dr. Christoph Cordes, Partner at the German law firm Esche Schümann Commichau, presented an overview of the new European Unitary Patent and Unified Patent Court, and was joined by several panelists in a discussion about the anticipated impact of this new European patent regime.

The Unitary Patent and Unified Patent Court are developments undertaken by the European Commission to achieve a more uniform approach to patent protection in member states within the European Union (EU). In order to take effect, an underlying Agreement on the Unified Patent Court must be ratified by 13 of the 25 member states of the EU (including Germany, France, and Great Britain). Eight member states, including France, have presently ratified the Agreement, which is expected to take effect by early 2017. Implementing Regulations for the Unitary Patent have also been promulgated.

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IRS Takes Aggressive Position in Challenging the Treatment of a License Agreement as a Sale of a Capital Asset

Posted in Patent

Recently, a Memorandum in Support of Motion for Summary Judgment was filed by the Internal Revenue Service (the “IRS”) in the Tax Court case Mylan Inc. & Subsidiaries v. Commissioner of Internal Revenue (Docket Nos. 16145-14 and 27086-14). Mylan’s opposition brief to the IRS’s motion followed shortly thereafter. This case illustrates the importance of exercising care when transferring intellectual property rights if you intend to benefit from capital gains treatment. An improperly structured sale may be recharacterized by the IRS as a license, resulting in a much larger tax liability for the transferor than what was anticipated.

The IRS’s position, simply put, was that Mylan, having granted a license and a sublicense to a drug product to Forest Labs in a contract, cannot subsequently re-characterize the transaction as the sale of a capital asset allowing Mylan to claim treatment of income derived from this transaction as a capital gain. The IRS cites Code Section 1221 and Brown v. Commissioner, 380 U.S. 563, 571-72 (1965), for the proposition that Mylan must show that it sold a capital asset to be entitled to capital gain treatment.

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Safe Harbor 2.0: Still a Work in Process

Posted in E-Commerce, Privacy

Last month, judges from the European Court of Justice, the European Union’s top court, issued a judgment striking down a 15-year old agreement, known as the Safe Harbor framework, which allowed American and European businesses to freely move personal data between the two regions. This ruling impacts nearly 4,000 businesses that currently rely on Safe Harbor framework to transfer data between the U.S. and Europe and requires all businesses to revaluate their compliance with Europeans standards.

The Court’s decision involved a suit brought by Max Schrems, an Austrian citizen, and involved Facebook’s transfer of data from Ireland to the U.S. Mr. Schrems alleged that Facebook data transfer to the U.S., in light of the Edward Snowden disclosure of US government intelligence data in 2013, violated his rights because the laws of the U.S. do not adequately protect personal data. The lower court rejected Mr. Schrems’ complaint holding that the Safe Harbor framework established the adequacy of protection in the U.S. when the EU adopted the Safe Harbor framework. However, the Court reversed and found the Safe Harbor framework invalid. The Court held that the lower court failed to sufficiently examine the data protection standards in the U.S. to ensure that the level of protection of fundamental rights is equivalent to those guaranteed in the EU. Further, the Court noted that this ruling should not prevent national data privacy authorities (DPAs) from examining whether the transfer of personal data to other countries complies with the requirements of EU data protection laws.

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Heightened Pleading Requirement for Direct Patent Infringement Action Effective December 1, 2015

Posted in Patent

On December 1, 2015, revised Federal Rule Civil Procedures went into effect and changed pleading requirements for patent cases. The new rules were adopted by the Supreme Court on April 29, 2015, based on recommendations of the Judicial Conference of the United States and will eliminate Form 18.

Form 18 set for a bare bones requirement for patent infringement complaint and merely required the plaintiff to provide notice of its claims. Form 18 simply required: (1) an allegation of jurisdiction; (2) a statement that plaintiff owns the patents; (3) a statement that defendant has been infringing the patent by making, selling and using the device embodying the patent; (4) a statement that plaintiff has given the defendant notice of its infringement; and (5) a demand for injunction and/or damages.

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Defend Trade Secrets Act of 2015 Would Create a Federal Private Right of Action for the Misappropriation of Trade Secrets

Posted in E-Commerce, Privacy

On July 29, 2015, with bipartisan support, Congressional leaders in both the House and the Senate introduced identical bills, HR 3326 and S. 1890, respectively, entitled, the “Defend Trade Secrets Act of 2015” (“DTSA 2015”). The proposed legislation attempts to authorize a private civil action in federal court for the misappropriation of a trade secret that is related to a product or service used in, or intended for use in, interstate or foreign commerce. Additionally, the proposed legislations seeks to (a) create a uniform standard for trade secret misappropriation; (b) provide parties pathways to injunctive relief and compensatory damages; and (c) create remedies for trade secret misappropriation that are similar to other violations of intellectual property rights, for example, including exemplary damages and attorneys’ fees available in the event of willful and malicious misappropriation of a trade secret. An interesting feature of the DTSA 2015 is the availability of an ex parte seizure order for plaintiffs fearful of the dissemination of their trade secret(s). The proposed ex parte seizure allows for the government to seize property necessary to prevent the propagation or dissemination of the trade secret prior to giving notice of the lawsuit to the defendant. Continue Reading

District Court Issues Opinion on “Fair Use” of Viral Videos

Posted in Copyright

In Equals Three, LLC v. Jukin Media, Inc., the United States District Court for the Central District of California presented an informative “fair use” analysis in a dispute between two media companies over viral videos. The Court’s decision highlights the fact-sensitive nature of the doctrine of fair use. It also clarifies the extent to which a use must be transformative in order to be deemed fair use.

According to the lawsuit, Jukin Media, Inc. (“Jukin”) scours the internet for potential viral videos for use inter alia on its YouTube network or proprietary websites. Subsequently, Jukin enters into licensing agreements with the videos’ creators. Order at 2. Equals Three, LLC (“Equals Three”), the Plaintiff in the lawsuit, also engages in content publishing, which sometimes includes portions of Jukin’s videos. However, Equals Three’s episodes are introduced by a host who provides sarcastic, derisive commentary and facial expressions towards the subjects shown in the videos. Id. at 3. After Equals Three refused to pay Jukin a licensing fee for the use of Jukin’s videos, Jukin filed with YouTube a complaint against Equals Three’s videos, effectively preventing Equals Three from receiving advertising revenue. Id. at 5-6. Equals Three sued, seeking a declaratory judgment and relief under § 512(f) of the Digital Millenium Copyright Act (“DCMA”) for fraudulent takedown notices. Jukin counterclaimed for copyright infringement. Id. at 1-2.

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Illinois Court Refuses to Release Frozen Funds or Enlarge Bond Amount in Trademark Counterfeiting Case

Posted in Trademark, Trademark Counterfeiting

A federal district court in the Northern District of Illinois has refused a request by certain defendants accused of trademark counterfeiting to release funds frozen in PayPal accounts and to increase the amount of a bond posted by the plaintiff in the case. The case highlights an uptick in challenges to financial asset restraints by defendants and nonparties in trademark counterfeiting cases and the discretion courts have in setting an appropriate bond to protect defendants in such cases.

Brand owner Monster Energy Co. (“Monster”) sued hundreds of defendants, alleging that the defendants were offering counterfeit goods for sale on internet stores. A TRO later converted to an injunction required nonparty PayPal, Inc. to locate all accounts and funds connected to the defendants, defendants’ online marketplace accounts or websites, and to restrain and enjoin any such accounts or funds based in China or Hong Kong from transferring or disposing of any money or other assets until further ordered by the court. Id. at par. 8. Accounts were frozen/seized under the ex parte (without prior notice) seizure provisions of the Lanham Act.

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Supreme Court to Review Willful Infringement under 35 U.S.C. § 284

Posted in Patent

Last week, the U.S. Supreme Court granted certiorari to review the standard for willful infringement under 35 U.S.C. § 284. The Court was specifically asked to reject the rigid two-part test set forth by the Federal Circuit in In re Seagate, 497 F.3d 1360 (Fed. Cir. 2007), which requires the court to determine whether an alleged infringer: (1) acted despite an objectively high likelihood that its actions constituted infringement of a valid patent; and (2) this objectively-defined risk was either known or so obvious that it should have been known to the accused infringer.

In the present matter, Halo Electronics Inc. (“Halo”) sued Pulse Electronics Inc. (“Pulse”) alleging that Pulse infringed its patent by shipping infringing product into the U.S. and inducing others to import end products containing the infringing product into the U.S. Halo further alleged that Pulse’s infringement was willful and, thereby, sought enhanced damages under 35 U.S.C. § 284.

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Federal Circuit En Banc Reaffirms Laches as a Defense to Patent Suits

Posted in Patent

Recently, the Federal Circuit, sitting en banc, ruled in SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC that laches remains a viable defense in patent infringement actions. In doing so, the Federal Circuit rejected the extension of the Supreme Court’s 2014 decision in Petrella v. Metro-Goldwyn-Mayer, Inc., which held that the laches defense does not apply in copyright cases because the copyright statute provides a three year statute of limitations for bringing an infringement suit.

Laches, an equitable defense based on the plaintiff’s unreasonable, prejudicial delay in commencing a lawsuit that traditionally precludes pre-suit damages, has long been recognized as a defense to patent infringement.

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State of Vermont v MPHJ Technology Investments: A Case Study in the Timeliness and Basis of Removal

Posted in Patent

In State of Vermont v MPHJ Technology Investments, what appears initially as a factual simple matter, presents a complex procedural lesson in the timeliness and basis for removal of a matter from state court to federal court.

The Simple Facts
In 2012, a number of Vermont businesses began receiving correspondence from MPHJ shell corporations alleging patent infringement. As a pattern, a business would receive an initial letter from the MPHJ corporation saying that the business had been identified as using patented technology. The letter included a survey to determine infringement and offered a licensing arrangement. If there was no response from Letter No. 1, Letter Nos. 2 and 3 would follow from MPHJ’s counsel, stating that the lack of a response was an admission and implying that litigation would follow.

The State of Vermont received a number of complaints from businesses, and in 2013 filed a complaint against MPHJ, alleging unfair trade practices and deceptive trade practices under the Vermont Consumer Protection Act (VCPA). The State sought to permanently enjoin MPHJ from (1) “engaging in any business activity in, into or from Vermont that violates Vermont law” and (2) “threatening Vermont businesses with patent-infringement lawsuits. MPHJ then attempted several procedural moves to remove the case to federal court.

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