Amster Rothstein & Ebenstein, LLP - Intellectual Property Law http://www.arelaw.com/ Amster, Rothstein & Ebenstein is a well-established mid-sized legal firm engaged exclusively in the practice of intellectual property law, including patents, trademarks, copyrights, unfair competition and related matters. Since our inception in 1953, we have earned an impressive record of successes for our clients, from individuals to multinational corporations, both domestic and worldwide. These successes are borne of the vigorous application of legal expertise, innovation and objective analysis. en Sun, 18 Feb 2018 04:58:40 +0000 Floodlight Design CMS Practical Law<br>Appealing Patent Trial and Appeal Board Final Written Decisions http://www.arelaw.com/publications/view/practicallaw020218/ <a href="/images/Appealing Patent Trial and Appeal Board Final Written Decisions 2-2-18(W-006-9741).pdf" target="_blank">Appealing Patent Trial and Appeal Board Final Written Decisions&nbsp;</a> Fri, 02 Feb 2018 00:00:00 +0000 http://www.arelaw.com/publications/view/practicallaw020218/ Practical Law<br>Understanding PTAB Trials: Key Milestones in IPR, PGR, and CBM Proceedings http://www.arelaw.com/publications/view/practicallaw-2020218/ <a href="/images/file/Understanding%20PTAB%20Trials-%20Key%20Milestones%20in%20IPR%20PGR%20and%20CBM%20Proceedings2-2-18%20(3-578-8846).pdf" target="_blank">Understanding PTAB Trials: Key Milestones in IPR, PGR, and CBM Proceedings&nbsp;</a> Fri, 02 Feb 2018 00:00:00 +0000 http://www.arelaw.com/publications/view/practicallaw-2020218/ ARE Trademark Law Alert:<br>BEIJING IP COURT CONFIRMS THAT OEM USE OF A TRADEMARK IS SUFFICIENT TO DEFEND AGAINST NON-USE CANCELLATION<br> http://www.arelaw.com/publications/view/alert012518/ On December 26, 2017, the Beijing Intellectual Property Court (&ldquo;IP Court&rdquo;) issued a decision in <i>Macy&rsquo;s Merchandising Group, Inc. v. Trademark Review and Adjudication Board</i>&mdash;in which Amster, Rothstein &amp; Ebenstein LLP successfully represented plaintiff Macy&rsquo;s&mdash; that addresses the issue of whether original equipment manufacturing (&ldquo;OEM&rdquo;) use of a trademark is sufficient to defend against non-use cancellation of its registration.&nbsp; The court ruled that it was, signaling that this new court will take a flexible approach to the definition of &ldquo;use&rdquo; in order to achieve equitable results for export manufacturers.&nbsp;<br /><br /> This decision is reassuring because some practitioners had feared that a recent landmark trademark case might have given rise to a presumption of &ldquo;no use&rdquo; in all OEM cases.&nbsp; In November 2015, the Supreme People&rsquo;s Court (&ldquo;SPC&rdquo;) issued a landmark decision in <i>Focker Security Products International Ltd. v. Pujiang Ya Huan Locks Co. Ltd.</i>, in which it ruled that the OEM use of a trademark on goods made solely for export was not an act of infringement.&nbsp; Since the trademark had been applied to goods designated solely for export, the SPC reasoned, the trademark was not used as a &ldquo;source identifier&rdquo; for Chinese consumers, could not cause confusion, and its use therefore did not constitute infringement.&nbsp; While the ruling did not specifically address whether OEM use would be sufficient to defend against a non-use cancellation action, the same logic would seem to apply.<br /><br /> In <i>Macy&rsquo;s</i>, however, the IP Court confirmed that the <i>Focker</i> logic does not apply in the context of non-use cancellations.&nbsp; Instead, the court argued from the separate premise that the legislative purpose of the non-use cancellation provision of China&rsquo;s trademark law is to promote commerce by encouraging the use of registered trademarks, and ensuring that they do not lie idle.&nbsp; Given this, the IP Court found that the use of the trademark in the course of manufacturing activities in China was sufficient to satisfy this limited legislative purpose.&nbsp; The <i>Macy&rsquo;s</i> court also cited equitable and policy grounds for its decision, noting that a failure to recognize OEM use as fulfilling the limited purpose of the non-use cancellation provision would &ldquo;lead to the cessation of [export] trade in China.&rdquo;&nbsp;<br /><br /> Nevertheless, the IP Court made it clear that this conclusion can only be reached where the evidence of OEM use is exhaustive.&nbsp; In this case, Macy&rsquo;s submitted complete chains of evidence, including contracts with Chinese manufacturers, commercial invoices, cargo receipts, and customs declarations.&nbsp; This evidence was bolstered by live testimony of Macy&rsquo;s employees before the court.<br /><br /> The <i>Macy&rsquo;s</i> decision follows on the heels of a similar decision in <i>District Seasons S.B. v. Trademark Review and Adjudication Board</i> (2017).&nbsp; Together, these cases have confirmed that the IP Court will take a flexible approach to the definition of &ldquo;use&rdquo; in order to achieve equitable results in OEM cases.&nbsp; That said, exporters should seek to maintain thorough records of their manufacturing and export activity in China in order to meet the fairly high evidentiary burden to prevail in such cases.<br /><br /> *Max Vern is a Partner and David P. Goldberg is an Associate at Amster, Rothstein &amp; Ebenstein LLP. Their practice specializes in intellectual property issues, including international trademark prosecution, enforcement and counseling.&nbsp; In this matter, they represented plaintiff Macy&rsquo;s Merchandising Group, Inc.&nbsp; Messrs. Vern and Goldberg may be reached at <a href="mailto:mvern@arelaw.com">mvern@arelaw.com</a> and <a href="mailto:dgoldberg@arelaw.com">dgoldberg@arelaw.com</a> respectively. Thu, 25 Jan 2018 00:00:00 +0000 http://www.arelaw.com/publications/view/alert012518/ ARE PTAB Alert:<br>FEDERAL CIRCUIT HOLDS TIME-BAR DETERMINATIONS UNDER 35 U.S.C. § 315(b) ARE SUBJECT TO JUDICIAL REVIEW<br> http://www.arelaw.com/publications/view/alert010918/ <p>The Leahy-Smith America Invents Act (&ldquo;AIA&rdquo;), which created <i>inter partes</i> review (&ldquo;IPR&rdquo;) proceedings, prohibits institution of an IPR &ldquo;if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.&rdquo;&nbsp; 35 U.S.C. &sect; 315(b).&nbsp; The AIA also provides that the determination &ldquo;whether to institute an <i>inter partes</i> review under this section shall be final and nonappealable.&rdquo;&nbsp; 35 U.S.C. &sect; 314(d).<br /><br />On January 8, 2018, &nbsp;in <i>Wi-Fi One, LLC </i>v. <i>Broadcom Corp., </i>the full court of the Federal Circuit sitting <i>en banc</i> issued plural opinions addressing the question of &ldquo;whether the bar on judicial review of institution decisions in &sect; 314(d) applies to time-bar determinations made under &sect; 315(b).&rdquo;&nbsp; No. 2015-1944, slip op. at 6 (Fed. Cir. Jan. 8, 2018).&nbsp; The majority opinion of the court answered in negative and held that, with respect to appeals from IPR proceedings before the Patent Trial and Appeal Board (&ldquo;PTAB&rdquo;), &ldquo;time-bar determinations under &sect; 315(b) are not exempt from judicial review . . . .&rdquo; &nbsp;<i>Id</i>. at 21.&nbsp; This decision overturns the court&rsquo;s previous holding in <i>Achates Reference Publishing, Inc. </i>v.<i> Apple Inc. </i>8703 F.3d 652 (Fed. Cir. 2015), where a panel of the court found such determinations not subject to appellate review.<br /><i><br />Wi-Fi One </i>is the most recent determination by the Federal Circuit sitting en banc to draw the lines between what is and is not subject to appellate review from IPR proceedings.&nbsp;&nbsp; The question of appellate review in such proceedings differs from most district court litigation or administrative proceedings because the statute in 35 U.S.C.&nbsp;&sect;&nbsp;314(d), explicitly bars judicial review of &ldquo;determination[s] by the Director [of the U.S. Patent &amp; Trademark Office (&ldquo;PTO&rdquo;) regarding] whether to institute an <i>inter partes</i> review under this section.&rdquo;<br /><br />The majority opinion in <i>Wi-Fi One</i>, authored by Judge Reyna, looked to the Supreme Court&rsquo;s recent decision in <i>Cuozzo Speed Technologies LLC v. Lee</i>, 136 S. Ct. 2131 (2016), to guide its determination.&nbsp; In <i>Cuozzo, </i>the Supreme Courtruled that 35 U.S.C. &sect; 314(d) bars the judicial review of decisions that fall into one of two categories: &nbsp;(1) a determination addressed in 35 U.S.C. &sect; 314(a); or (2) a decision &ldquo;closely related&rdquo; to the determination addressed in 35 U.S.C. &sect; 314(a). &nbsp;<i>Id</i>. at 2142.&nbsp; 35 U.S.C. &sect; 314(a) provides that &ldquo;[t]he Director [of the PTO] may not authorize an <i>inter partes</i> review to be instituted unless the Director determines that the information presented in the petition . . . shows that there is <b><i>a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition</i></b>.&rdquo; &nbsp;(emphasis added).<br /><br />The majority in <i>Wi-Fi One</i>, applied this test to determine whether the decision at issue is, or is closely related to, the reasonable likelihood of unpatentability of at least one claim.&nbsp; In particular, <i>Wi-Fi One</i> found that the time-bar provision of &sect; 315(b) &ldquo;has nothing to do with the patentability merits or discretion not to institute.&rdquo; Slip op. at 19.&nbsp; And, because the time-bar is not &ldquo;closely tied to the Director&rsquo;s determination of a &lsquo;reasonable likelihood&rsquo; of unpatentability of at least one claim,&rdquo; determinations regarding &sect; 315(b) are not barred from judicial review. <i>Id</i>.<br /><br />In a concurring opinion, Judge O&rsquo;Malley wrote that although she agreed with the conclusion of the court&rsquo;s majority, she observed that &sect; 315(b) outlines the authority of the PTO, and the Federal Circuit in this regard has the authority to oversee whether the PTO has exceeded its statutory authority.<br /><br />In a dissent authored by Judge Hughes and joined by Judges Lourie, Bryson and Dyk, the dissenters argued that time-bar determinations under &sect; 315(b) should be exempt from judicial review.&nbsp; The dissent reasoned that the timeliness of a petition for <i>inter partes</i> review is a preliminary decision that is &ldquo;closely related&rdquo; to the reasonable likelihood of unpatentability of at least one claim.<br /><br />While <i>Wi-Fi One</i> will provide some certainty with respect to the role the Federal Circuit will take in these types of appeal, until the Supreme Court weighs in on this question, it is unclear whether this decision may be subject to further refinement.<br /><br />We will continue to monitor this case and will report on further developments as they occur.</p> <p>*Charles R. Macedo is a Partner, Jung S. Hahm is Senior Counsel, and David P. Goldberg and Michael R. Jones are Associates at Amster, Rothstein &amp; Ebenstein LLP.&nbsp; Their practice specializes in intellectual property issues, including practice before the Patent Trial and Appeal Board and the U.S. Court of Appeals for the Federal Circuit.&nbsp; They may be reached at <a href="mailto:cmacedo@arelaw.com">cmacedo@arelaw.com</a>, <a href="mailto:jhahm@arelaw.com">jhahm@arelaw.com</a>, <a href="mailto:dgoldberg@arelaw.com">dgoldberg@arelaw.com</a>, and <a href="mailto:mjones@arelaw.com">mjones@arelaw.com</a>.&nbsp;</p> Tue, 09 Jan 2018 00:00:00 +0000 http://www.arelaw.com/publications/view/alert010918/ Exploring Viability Of 'Diagnose And Treat' Method Claims http://www.arelaw.com/publications/view/article122117/ <a href="https://www.law360.com/ip/articles/996376/exploring-viability-of-diagnose-and-treat-method-claims" target="_blank">Law360's Expert Analysis</a><br /><br /><p><b><span style="font-size: small;">Exploring Viability Of 'Diagnose And Treat' Method Claims</span></b></p> <p>The enforceability of single claims that cover the steps of both diagnosing and treating a patient is discussed in view of&nbsp;<a href="https://www.law360.com/companies/cleveland-clinic-foundation">Cleveland Clinic Foundation</a>v. True Health Diagnostics LLC[1], which held that the claims in U.S. Patent No.&nbsp;<a href="https://www.law360.com/patents/9170260">9,170,260</a>[2] were not infringed under either contributory infringement or induced infringement.<br /><br /><strong>Patentability of Medical Diagnostic Method Claims<br /><br /></strong>The 2012&nbsp;<a href="https://www.law360.com/agencies/u-s-supreme-court">U.S. Supreme Court Mayo</a>&nbsp;decision[3] effectively limited patentable processes in the field of medical diagnostics[4] with a potential impact on the development of personalized medicine in the U.S.[5] While the impact on diagnostic method claims was profound, method of treatment claims were largely unaffected. In May 2016 the U.S.&nbsp;Patent and Trademark Office&nbsp;issued &ldquo;Subject Matter Eligibility Examples: Life Sciences&rdquo; patenting guidelines taking into account the 2012 Mayo decision and other relevant Supreme Court decisions. The guidelines included examples of combination methods that could be considered as still patentable by the&nbsp;<a href="https://www.law360.com/agencies/u-s-patent-and-trademark-office">USPTO</a>. One such example was a method claim directed to separate steps of diagnosing and treating a patient (Example 29, Diagnosing and Treating Julitis, Claims 5 and 6 of the USPTO guidelines)&nbsp;<em>&mdash;</em>&nbsp;what we call herein a &ldquo;diagnose and treat&rdquo; claim.<br /><br />This format has proven to be a successful strategy for obtaining patentable claims[6]. However, at the time the guidelines were released, some of us in the patent prosecution community were concerned that while such claims overcome subject matter rejections, they might be unenforceable where the diagnostic step and treatment step are performed by different actors. This is because of the difficulty of proving direct infringement[7] of a method claim where different actors are performing the method steps. It remains the case that attributing performance of method steps by multiple actors to a single party requires a persuasive case, and is still fraught with uncertainty, although the Federal Circuit recently offered an encouraging decision for patent owners with two actor method claims in&nbsp;<a href="https://www.law360.com/companies/eli-lilly-and-company">Eli Lilly &amp; Co</a>. v. Teva Parenteral Medicines Inc.[8].<br /><br /><strong>Enforceability of &ldquo;Diagnose and Treat&rdquo; Method Claims<br /><br /></strong>In Cleveland Clinic Foundation, a claim consistent with the May 2016 USPTO guidelines, i.e., a diagnosing and treating claim in which there are different actors performing the method steps, was considered by the Federal Circuit.<br /><br />As background, in October 2015, the USPTO issued U.S. Patent No. 9,170,260[2], assigned to The Cleveland Clinic Foundation, with claims directed to performing a diagnosis and subsequently treating a patient. Claim 1 recites:<br />A method for administering a lipid lowering agent to a human patient based on elevated levels of myeloperoxidase (MPO) mass and/or activity comprising:<br /><br />(a) performing an enzyme linked immunosorbent assay (ELISA) comprising contacting a serum or plasma sample with an anti-MPO antibody and a peroxidase activity assay to determine MPO activity in the serum or plasma sample;<br /><br />(b) selecting a patient who has elevated levels of MPO mass and/or activity compared to levels of MPO mass and/or activity in apparently healthy control subjects; and<br /><br />(c) administering a lipid-lowering agent to the selected human patient.<br /><br />The patent owners, namely, Cleveland Clinic Foundation and Cleveland Heartlab Inc. accused a diagnostics company, True Health Diagnostics LLC, of infringement of the &lsquo;260 patent and three other patents that claimed methods for testing for myeloperoxidase. True Health Diagnostics was allegedly detecting MPO in samples, as stated in the claim, and then sending a lab report with the results to doctors who were treating the patients with lipid-lowering agents, as stated in the claim. The U.S.&nbsp; District Court for the Northern District of Ohio found that Cleveland Clinic failed to state a claim of contributory or induced infringement of the &lsquo;260 patent (and also opined that the claims of the three testing patents&nbsp;<em>&mdash;</em>&nbsp;which did not recite method of treatment claims&nbsp;<em>&mdash;</em>&nbsp;were not directed to patent-eligible subject matter). These decisions were affirmed by the Federal Circuit. The contributory and induced infringement positions are discussed below in regard to the &lsquo;260 patent claim.<br /><br /><strong>Contributory Infringement<br /><br /></strong>Contributory infringement occurs when a party &ldquo;offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use ...&rdquo;[9] The district court found, and the Federal Circuit affirmed, that True Health&rsquo;s testing service and laboratory reports were not &ldquo;material and apparatus&rdquo; that could form the basis for contributory infringement. The Federal Circuit further indicated that &ldquo;[a] party that provides a service, but no &lsquo;material or apparatus,&rsquo; cannot be liable for contributory infringement.&rdquo; Thus, even in the &ldquo;information age,&rdquo; where information can underlie a business, and economies, in much the same way physical products dominated in prior times, diagnostic reports are not considered a material by the&nbsp;Federal Circuit, at least in the context of the &lsquo;260 patent claims. With this ruling, it is difficult to see how a patented method claim directed to separate steps of diagnosis and treatment of a patient, where a diagnostic report is provided to the doctor, could be found enforceable against a diagnostic testing company under a theory of contributory infringement.<br /><br /><strong>Induced Infringement<br /><br /></strong>Induced infringement occurs when a party &ldquo;actively induces infringement of a patent ...&rdquo;[10]. In the present case, citing DSMU Med. Corp.[11], the&nbsp;Federal Circuit indicated that &ldquo;[t]he mere knowledge of possible infringement by others does not amount to inducement; specific intent and action to induce infringement must be proven.&rdquo; The district court found, and the&nbsp;Federal Circuit&nbsp;affirmed, that Cleveland Clinic did not allege facts sufficient to show the specific intent to induce a third party to infringe. The&nbsp;Federal Circuit indicated that &ldquo;Cleveland Clinic alleges no facts that suggest any connection between True Health and doctors that may prescribe lipid lowering drugs. Cleveland Clinic thus falls short of showing &lsquo;specific intent and action&rsquo; on behalf of True Health to induce infringement of the &rsquo;260 patent.&rdquo; In other words, to prevail under induced infringement, Cleveland Clinic needed to establish a clear nexus between the diagnostic testing company actions and the subsequent actions of the health care provider. Nevertheless, since the&nbsp;Federal Circuit only stated that the alleged facts were insufficient, the issue of whether &ldquo;diagnose and treat&rdquo; claims can be enforced under a theory of induced infringement has not yet been resolved.<br /><br /><strong>Direct Infringement Requirement of Induced Infringement<br /><br /></strong>The&nbsp;Federal Circuit&nbsp;in Cleveland Clinic did not broach the issue of direct infringement. Notably, as written, claim 1 of the &lsquo;260 patent involves, at least on its face, two actors: (1) the diagnostic lab performing the ELISA test, and (2) the medical professional administering a lipid-lowering agent. Like claims 5 and 6 of Example 29 of the USPTO guidelines, the different steps would be expected to be performed by different parties. The &ldquo;wet&rdquo; steps of the diagnostic procedures would likely be performed by a testing laboratory and the treatment steps would be performed by a physician or health care facility. However, there can be no inducement of infringement without an underlying act of direct infringement,[12] and direct infringement occurs where all steps of a claimed method are performed by or attributable to a single entity.[13]<br /><br />In Eli Lilly &amp; Co.[8], the&nbsp;Federal Circuit&nbsp;upheld a district court decision that found direct infringement of method of treatment claims by physicians, even though the actions of both physicians and patients were required by the claims, and no single actor performed all steps. The&nbsp;Federal Circuit&nbsp;held defendant generic drug companies liable for inducing that infringement. It should be noted, however, that the claims under consideration in Eli Lilly &amp; Co. were treatment claims and not &ldquo;diagnose and treat&rdquo; claims. In Cleveland Clinic the&nbsp;Federal Circuit&nbsp;only stated that the facts were insufficient to show inducement and did not directly speak to the problem of divided infringement invoked by the claim in question.<br /><br /><strong>Practice Considerations<br /><br /></strong>Given the problems of divided infringement, patent practitioners could draft combination &ldquo;diagnose and treat&rdquo; claims such that the steps are attributable to a single entity. An example of such a claim is one having the following format:<br /><br />A method of treating disease X in a subject comprising:<br /><br />a) receiving an identification of the subject as having marker Y in a specific cell type, wherein marker Y has been identified by a method comprising specified steps A and B; and<br /><br />b) administering a specified treatment to the subject identified as having marker Y in a specific cell type.<br />With a single actor, the showing of the required underlying direct infringement is easier than the two-actor scenario. Claims of this type, where one actor performs both the gerund steps (e.g., (a) receiving and (b) administering), but is not required to perform the diagnostic laboratory steps themselves, have been patented. To our knowledge, however, such claims have not yet been subjected to judicial review for infringement.</p> <div align="center"><hr size="1" width="100%" noshade="" align="center" /></div> <p><em><a href="https://www.arelaw.com/professional/bamos" target="_blank">Brian Amos, Ph.D.</a>, is an associate and&nbsp;<a href="http://www.arelaw.com/professional/amiller" target="_blank">Alan D. Miller, Ph.D.</a>, is senior counsel at Amster&nbsp;Rothstein &amp; Ebenstein&nbsp;LLP in New York.</em><i><br /> <br /> <em>The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.</em></i><br /> <br /> [1] Cleveland Clinic Foundation v. True Health Diagnostics LLC 859 F.3d 1352 (Fed. Cir. 2017).<br /> <br /> [2] U.S. Patent No. 9,170,260 B2, Hazen et al., issued Oct. 27, 2015, Myeloperoxidase, a risk indicator for cardiovascular disease.<br /> <br /> [3] Mayo Collaborative Services v.&nbsp;<a href="https://www.law360.com/companies/prometheus-laboratories-inc">Prometheus Laboratories Inc</a>. 132 S. Ct. 1289 (2012).<br /> <br /> [4] See e.g., Amos B. and Miller A.D. (2017) Differing diagnoses for European and U.S. patents. Nature Biotechnology 35(4): 334-335; Noonan, K. (2016) Diagnostic patents at risk after Federal Circuit decisions. Nature Reviews 15: 377; Thomas J.R. (2017) Patentable Subject Matter Reform,&nbsp;<a href="https://www.law360.com/agencies/congressional-research-service">Congressional Research Service</a>, 1-17.<br /> <br /> [5] Ledford, H. (2016) U.S. personalized-medicine industry takes hit from Supreme Court. Nature 536 (Issue 7617): 382.<br /> <br /> [6] Miller A.D. and Amos B (2017) Successful Strategies for Diagnostic Method Patents. Journal of Commercial Biotechnology 23(1): 60&ndash;64.<br /> <br /> [7] 35 U.S.C. &sect;271(a).<br /> <br /> [8] Eli Lilly &amp; Co. v. Teva Parenteral Medicines Inc., Appeal No. 2015-2067 (Fed. Cir. Jan. 12, 2017).<br /> <br /> [9] 35 U.S.C. &sect;271(c).<br /> <br /> [10] 35 U.S.C. &sect;271(b).<br /> <br /> [11] DSU Med. Corp. v. JMS Co., 471 F.3d 1293 (Fed. Cir. 2006) (en banc).<br /> <br /> [12]&nbsp;<a href="https://www.law360.com/companies/limelight-networks-inc">Limelight Networks Inc</a>. v. Akamai Techs. Inc., 134 S. Ct. 2111 (2014).<br /> <br /> [13]&nbsp;<a href="https://www.law360.com/companies/akamai-technologies-inc">Akamai Technologies Inc</a>. v. Limelight Networks Inc., 797 F.3d 1020 (Fed. Cir. 2015) (en banc).</p> Thu, 21 Dec 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/article122117/ ARE Trademark Law Alert: <br>Federal Circuit Panel Holds Lanham Act Prohibition Against Registration of Immoral or Scandalous Trademarks to Be Unconstitutional<br> http://www.arelaw.com/publications/view/lawalert/ <p>On December 15, 2017, a three-judge panel of the U.S. Court of Appeals for the Federal Circuit in the case <i>In re Brunetti </i>(no. 15-1109) held the Lanham Act&rsquo;s prohibition against the federal registration of &ldquo;immoral . . . or scandalous&rdquo; trademarks to be an unconstitutional violation of the First Amendment.&nbsp; This ruling has been widely expected since the Supreme Court&rsquo;s decision earlier this year in <i>Matal v. Tam</i>, 137 S. Ct. 1744 (2017), which struck down a similar prohibition against the registration of &lsquo;disparaging&rsquo; trademarks.<br /><i><br />In re Brunetti</i> involves the appeal of a U.S. Patent and Trademark Office (&ldquo;PTO&rdquo;) Trademark Trial and Appeal Board (&ldquo;TTAB&rdquo;) decision refusing registration of the trademark FUCT for clothing.&nbsp; The refusal was based on Section 2(a) of the Lanham Act which provides, in part, that the PTO may refuse to register a trademark that &ldquo;[c]onsists of or comprises immoral . . . or scandalous matter.&rdquo; 15 U.S.C. &sect; 1052(a).&nbsp; To determine whether a trademark should be refused on this basis, the PTO asks whether a &ldquo;substantial composite of the general public&rdquo; would find the trademark to be &ldquo;shocking to the sense of truth, decency, or propriety; disgraceful; offensive; disreputable; . . . giving offense to the conscience or moral feelings; . . . or calling out for condemnation.&rdquo; <i>In re Fox</i>, 702 F3d 633, 635 (Fed. Cir. 2012) (alterations omitted).&nbsp; Alternatively, &ldquo;the PTO may prove scandalousness by establishing that a mark is &lsquo;vulgar.&rsquo;&rdquo; <i>Id</i>.<br /><br />In its decision, written by Judge Kimberly A. Moore, the Federal Circuit panel found that the TTAB did not err in finding the FUCT trademark to be immoral or scandalous matter.&nbsp; However, since the Section 2(a) bar on registering such trademarks was found to be unconstitutional, the TTAB decision was reversed.<br /><br />In <i>Brunetti</i>, the Federal Circuit flatly dismissed the government&rsquo;s argument that <i>Tam</i> was not dispositive because the disparagement clause test implicated viewpoint discrimination, while the immoral or scandalous clause test is viewpoint neutral. Slip op. at 13.&nbsp; Instead, the court found that the clause violated the First Amendment regardless of whether it was viewpoint neutral. <i>Id</i>.&nbsp; Indeed, the Federal Circuit&rsquo;s reasoning in <i>Brunetti</i> closely followed its reasoning in <i>Tam</i>.&nbsp; <i>Compare In re Brunetti</i>, slip op. at 13-38, <i>with In re Tam</i>, 808 F.3d 1321, 1339-58 (Fed. Cir. 2015) (en banc), <i>aff&rsquo;d sub nom. Matal v. Tam</i>, 137 S. Ct. 1744 (2017).<br /><br />In short, the <i>Brunetti</i> panel recognized that content-based prohibitions are presumptively invalid, and refuted the government&rsquo;s arguments that the federal trademark registration scheme falls under exceptions for government subsidy programs or for limited public forums. Slip op. at 14-28.&nbsp; Finally, the panel determined that even if the scheme were exceptional, and the prohibition was evaluated under the lesser scrutiny afforded to commercial speech under <i>Central Hudson Gas &amp; Electric Corp. v. Public Service Commission</i>, 447 U.S. 557 (1980), because the government asserted no credible substantial interest justifying the clause, it would fail. Slip op. at 28-38.<br /><br />Judge Timothy B. Dyk wrote a concurring opinion in which he agreed that the immoral or scandalous clause raised serious First Amendment concerns.&nbsp; Nevertheless, since courts must, &ldquo;where possible, construe federal statutes so as &lsquo;to avoid serious doubt of their constitutionality,&rsquo;&rdquo; Judge Dyk believed that the panel could, instead of invalidating the clause, simply have &ldquo;limit[ed] the clauses&rsquo;s reach to obscene marks, which are not protected by the First Amendment.&rdquo; Dyk, J., concurring op. at 2 (quoting <i>Stern v. Marshall</i>, 564 U.S. 462, 477 (2011)).<br /><br />This panel decision will no doubt be the subject of further appeals.&nbsp; Nevertheless, given the Supreme Court&rsquo;s ruling in <i>Tam</i>, it is almost certain that the eventual outcome of the process will be the invalidation of the prohibition against the federal registration of &ldquo;immoral . . . or scandalous&rdquo; trademarks.<br /><br />In view of <i>Tam</i> and <i>Brunetti</i>, it is possible that concerns over free speech rights may also affect federal and state trademark dilution laws.&nbsp; These laws allow trademark owners to bring legal actions against those who use a trademark to either:&nbsp; (i) tarnish; or (ii) whittle away the distinctiveness of another trademark owner&rsquo;s mark or reputation.&nbsp; The courts may soon have to address the availability of First Amendment defenses of these uses, especially with regard to tarnishment.&nbsp; We are continuing to monitor developments regarding this and other related issues.<br /><br />Please feel free to contact our attorneys if you have questions regarding this alert.<br /><br />*Anthony F. Lo Cicero, Chester Rothstein, Charles R. Macedo, and Max Vern are partners, and Jessica Capasso and David P. Goldberg are associates, at Amster, Rothstein &amp; Ebenstein LLP.&nbsp; Their practice specializes in intellectual property issues.&nbsp; They may be reached at <a href="mailto:alocicero@arelaw.com">alocicero@arelaw.com</a>, <a href="mailto:crothstein@arelaw.com">crothstein@arelaw.com</a>, <a href="mailto:cmacedo@arelaw.com">cmacedo@arelaw.com</a>, <a href="mailto:mvern@arelaw.com">mvern@arelaw.com</a>, <a href="mailto:jcapasso@arelaw.com">jcapasso@arelaw.com</a>, and <a href="mailto:dgoldberg@arelaw.com">dgoldberg@arelaw.com</a>.<br /><br />Messrs. Macedo and Goldberg represented <i>amicus curiae </i>New York Intellectual Property Law Association at the Supreme Court in <i>Tam</i>.</p> Tue, 19 Dec 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/lawalert/ Amicus Brief Advocating Against Tribal Sovereign Immunity Filed in PTAB Proceedings http://www.arelaw.com/publications/view/120817/ <div>IPWatchdog</div> <div>&nbsp;</div> <div>In response to a hotly contested series of patent litigations and PTAB proceedings involving Restatis<sup>&reg;</sup>,&nbsp; the patent owner Allergan, Inc. (&ldquo;Allergan&rdquo;) made a eleventh hour assignment of its patents (with an accompanying license back) to the St. Regis Mohawk Tribe (&ldquo;the Tribe&rdquo;).&nbsp; As a result of this transaction, the Tribe asserted Tribal Sovereign Immunity before the PTAB and filed a motion to dismiss.</div> <div>Thereafter, in the federal litigation in the Eastern District of Texas, Judge Bryson found the asserted claims of the patents to be invalid.&nbsp; Although the sovereign immunity issue was not at issue in that case, the court considered the validity of the transaction for purposes of joinder, and criticized the transaction as being like &ldquo;sham transactions, such as abusive tax shelters.&rdquo;&nbsp;&nbsp; Nonetheless, the PTAB proceedings continued.</div> <div>On November 3, 2017, the PTAB invited Amicus Curiae to submit briefs to address the novel issue being raised by the Tribe&rsquo;s Motion to Dismiss on the grounds of Tribal Sovereign Immunity.&nbsp;&nbsp; In response,&nbsp;<a href="http://www.patentqualityinitiative.com/-/media/pqi/files/amicus%20briefs/table/askeladden%20amicus%20brief%20%20mylan%20et%20al%20v%20saint%20regis%20mohawk%20tribe.pdf?la=en" target="_blank">Askeladden LLC submitted an amicus brief</a>.&nbsp;</div> <div>&nbsp;</div> <div>For the complete article, please see: <a href="http://www.ipwatchdog.com/2017/12/08/amicus-brief-against-tribal-sovereign-immunity-ptab/id=90580/">http://www.ipwatchdog.com/2017/12/08/amicus-brief-against-tribal-sovereign-immunity-ptab/id=90580/</a></div> Fri, 08 Dec 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/120817/ In The Press:<br>Askeladden Advocates against Tribal Sovereign Immunity in Patent Review Proceedings<br> http://www.arelaw.com/publications/view/inthepress120417/ New York, NY - Askeladden filed an amicus curiae brief on Friday that presents arguments opposing the Saint Regis Mohawk Tribe&rsquo;s motion to dismiss a series of&nbsp;<em>inter partes</em>&nbsp;reviews (IPRs) of Restasis&reg;&nbsp;patents. The Tribe invoked Tribal Sovereign Immunity as a basis for its motion.<br /><br /><a href="http://www.patentqualityinitiative.com/news/press%20releases/news%20items/sovereign%20immunity%20amicus%20brief" onclick="window.open(this.href,'','resizable=no,location=no,menubar=no,scrollbars=no,status=no,toolbar=no,fullscreen=no,dependent=no,status'); return false">Available Here:</a> Mon, 04 Dec 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/inthepress120417/ Brief Of Askeladden LLC As amicus Curiae In Opposition To St. Regis Mohawk Tribe’s Motion To Dismiss http://www.arelaw.com/publications/view/amicus/ <div><i style="color: rgb(51, 51, 51); font-family: Verdana, Helvetica, Arial, sans-serif; font-size: 11px;"><strong style="line-height: 14px;">Click to download PDF:</strong><span style="line-height: 14px;">&nbsp;</span></i><a href="/images/file/Askeladden%20Amicus%20Brief.pdf" target="_blank">Brief Of Askeladden LLC As amicus Curiae In Opposition To St. Regis Mohawk Tribe&rsquo;s Motion To Dismiss</a></div> Fri, 01 Dec 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/amicus/ Patent Law Alert:<br>PTAB ISSUES A GUIDANCE ON MOTIONS TO AMEND IN VIEW OF FEDERAL CIRCUIT’S AQUA PRODUCTS DECISION <br> http://www.arelaw.com/publications/view/alert113017/ <div>On November 22, 2017, the Patent Trial and Appeal Board (&ldquo;PTAB&rdquo;) issued a guidance on motions to amend filed in <i>inter partes</i> review (&ldquo;IPR&rdquo;) and post-grant review (&ldquo;PGR&rdquo;) proceedings following the Federal Circuit&rsquo;s <i>en banc</i> decision in <i>Aqua Products, Inc. v. Matal</i>, 872 F.3d 1290 (Fed. Cir. 2017) (<a href="https://www.uspto.gov/sites/default/files/documents/guidance_on_motions_to_amend_11_2017.pdf?utm_campaign=subscriptioncenter&amp;utm_content=&amp;utm_medium=email&amp;utm_name=&amp;utm_source=govdelivery&amp;utm_term">https://www.uspto.gov/sites/default/files/documents/guidance_on_motions_to_amend_11_2017.pdf?utm_campaign=subscriptioncenter&amp;utm_content=&amp;utm_medium=email&amp;utm_name=&amp;utm_source=govdelivery&amp;utm_term</a>=) (&ldquo;the Guidance&rdquo;).<br /><br />In the Guidance, the PTAB confirmed that in light of the Federal Circuit&rsquo;s <i>Aqua Products</i> decision, the burden of persuasion will no longer be placed on a patent owner with respect to the patentability of substitute claims presented in a motion to amend. &nbsp;In reviewing patent owner&rsquo;s motion to amend, as long as the motion satisfies the statutory requirements under 35 U.S.C. <br /> &sect; 316(d) (<i>i.e</i>., proposing a reasonable number of substitute claims, not enlarging the scope of the claims, and introducing no new matter), the PTAB will &ldquo;determine whether the substitute claims are unpatentable by a preponderance of the evidence based on the entirety of the record, including any opposition made by the petitioner.&rdquo;&nbsp; According to an example provided in the Guidance, &ldquo;if the entirety of the evidence of record before the Board is in equipoise as to the unpatentability of one or more substitute claims, the Board will grant the motion to amend with respect to such claims, and the Office will issue a certificate incorporating those claims into the patent at issue.&rdquo;<br /><br />Beyond this shift in where the burden of persuasion lies, the PTAB advised in the Guidance that the PTAB&rsquo;s practice and procedure relating to motions to amend will not change:&nbsp;</div> <ul><li>&nbsp;&ldquo;[A] patent owner still must meet the requirements for a motion to amend under 37 C.F.R. &sect; 42.121 or &sect; 42.221, as applicable,&rdquo; in that &ldquo;a motion to amend must set forth written description support and support for the benefit of a filing date in relation to each substitute claim, and respond to grounds of patentability involved in the trial.&rdquo;&nbsp;</li></ul> <ul><li>&nbsp;&ldquo;[U]nder 37 C.F.R. &sect; 42.11, all parties have a duty of candor, which includes a patent owner&rsquo;s duty to disclose to the Board information that the patent owner is aware of that is material to the patentability of substitute claims, if such information is not already of record in the case.&rdquo;&nbsp;</li></ul><ul><li>&nbsp;&ldquo;The Board will continue its current briefing practice as to the types, timing, and page-limits of briefs, as set forth in the rules governing trial practice before the Board and the Office Patent Trial Practice Guide. &nbsp;<i>See, e.g</i>., 37 C.F.R. &sect;&sect; 42.22&ndash;42.25; Office Patent Trial Practice Guide, 77 F.R. 48756, 48766-48767 (Aug. 14, 2012).&rdquo;&nbsp;</li></ul> <ul><li>&nbsp;&ldquo;The Board&rsquo;s standard Scheduling Order will remain the same in that a patent owner may file a motion to amend the claims of the challenged patent, in accordance with 37 C.F.R. &sect; 42.121 or &sect; 42.221, on Due Date 1 [<i>i.e</i>., no later than the filing of a patent owner response].&rdquo;&nbsp;</li></ul> <ul><li>&ldquo;A patent owner also must continue to confer with the Board before filing a motion to amend. &nbsp;<i>See</i> 37 C.F.R. &sect;&sect; 42.121(a), 42.221(a).&rdquo;&nbsp;</li></ul> <ul><li>&ldquo;The above guidance notwithstanding, if any party in a matter involving a pending motion to amend believes there is need to discuss the impact of <i>Aqua Products</i> with the Board in a particular case, the party may contact the Board to arrange a conference call. The Board already has contacted, or soon will contact, parties with motions to amend pending at the time that the <i>Aqua Products</i> decision issued to let them know that a request for a conference call is appropriate in this regard. &nbsp;During such a call, any party may request briefing changes or additional briefing. The Board generally will permit supplemental briefing regarding the patentability of substitute claims proposed in a motion to amend, if requested.&rdquo;</li></ul> <div>In view of the shift of burden of persuasion from patent owner to petitioner, the PTAB will entertain requests from petitioners to authorize petitioner&rsquo;s sur-reply brief with respect to any motion to amend.<br /><br /><br />In accordance with the Guidance, a motion to amend filed in an IPR or PGR proceeding:&nbsp;</div> May cancel any challenged claim (35 U.S.C. &sect; 316(d)(1));&nbsp;<br type="_moz" /><ul><li>May only propose a reasonable number of substitute claims for each challenged claim (35 U.S.C. &sect; 316(d)(2)).&nbsp;&nbsp; &ldquo;The presumption is that only one substitute claim would be needed to replace each challenged claim, and it may be rebutted by a demonstration of need.&rdquo;&nbsp; (37 C.F.R. &sect; 42.121(a)(3) or &sect; 42.221(a)(3));&nbsp;</li></ul> <ul><li>May be denied if it &ldquo;does not respond to a ground of unpatentability involved in the trial (37 C.F.R. &sect; 42.121(a)(2)(i) or &sect; 42.221(a)(2)(i));&nbsp;</li></ul> <ul><li>May be denied if it seeks to enlarge the scope of the claims of the patent (37 C.F.R.&sect; 42.121(a)(2)(ii) or &sect; 42.221(a)(2)(ii));&nbsp;</li></ul> <ul><li>May be denied if it introduces new subject matter (37 C.F.R. &sect; 42.121(a)(2)(ii) or &sect; 42.221(a)(2)(ii));&nbsp;</li></ul> <ul><li>Must include a claim listing (<i>e.g</i>., in an appendix to the motion) and set forth written description support and support for the benefit of a filing date in relation to each substitute claim&nbsp; (37 C.F.R. &sect; 42.121(b) or &sect; 42.221(b)).&nbsp;</li></ul> <div>We will continue to monitor the PTAB for the latest developments in the PTAB rules and practice on amendments in IPR proceedings.</div><div><hr size="2" width="100%" noshade="" align="left" /></div> *Charles R. Macedo is a Partner, Jung S. Hahm is Senior Counsel and Christopher Lisiewski is a Legal Intern at Amster, Rothstein and Ebenstein LLP.&nbsp; Their practice specializes in intellectual property issues including practice before the Patent Trial and Appeal Board.&nbsp; They may be reached at <a href="mailto:cmacedo@arelaw.com">cmacedo@arelaw.com</a>, <a href="mailto:jhahm@arelaw.com">jhahm@arelaw.com</a> and <a href="mailto:clisiewski@arelaw.com">clisiewski@arelaw.com</a>.<div>&nbsp;</div> Thu, 30 Nov 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/alert113017/ In The Press:<br>Amici Request SCOTUS Intervention to Protect Against Extra-Statutory Application of Patent Eligibility Challenges in Court<br> http://www.arelaw.com/publications/view/inthepress112717/ On November 21, 2017, amici Network-1 Technologies, Inc. (&ldquo;Network-1&rdquo;), Mirror Worlds Technologies, LLC (&ldquo;MW&rdquo;), Broadband iTV, Inc. (&ldquo;BBiTV&rdquo;), Island Intellectual Property, LLC (&ldquo;IslandIP&rdquo;), Double Rock Corporation (&ldquo;Double Rock&rdquo;), and Access Control Advantage, Inc. (&ldquo;ACA&rdquo;) (collectively &ldquo;Amici Curiae&rdquo;) filed an brief in support of RPost&rsquo;s petition for a writ of certiorari in&nbsp;<em>RPost Communs. Ltd. v. GoDady.com, LLC.</em>&nbsp; The extra-statutory use of challenges to patent-eligibility under 35 U.S.C. &sect;101 is causing harm to patent owners, inventors, and the marketplace.&nbsp; Thus, Amici Curiae each believe it is important for the Court to clarify the availability under 35 U.S.C. &sect; 282 (b)(2) and (3) to raise patent eligibility challenges under 35 U.S.C. &sect; 101 in district courts.&nbsp;&nbsp;<a href="http://www.arelaw.com/professional/cmacedo/" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://www.arelaw.com/professional/cmacedo/&amp;source=gmail&amp;ust=1511636105711000&amp;usg=AFQjCNEQwUpDYat-m5KfPwgSJ5LjiUjnMg">Charles R. Macedo</a>, and&nbsp;<a href="http://www.arelaw.com/professional/dgoldberg/" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://www.arelaw.com/professional/dgoldberg/&amp;source=gmail&amp;ust=1511636105711000&amp;usg=AFQjCNFfs8A9DCoaa5DCfce02UcBBgdj7w">David Goldberg&nbsp;</a>of Amster, Rothstein &amp; Ebenstein LLP along with&nbsp;<a href="http://www.raklaw.com/attorney/marc-fenster/" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://www.raklaw.com/attorney/marc-fenster/&amp;source=gmail&amp;ust=1511636105711000&amp;usg=AFQjCNHSvij-zkIDbXQaxjQvasM1MpIlog">Marc Fenster</a>,&nbsp;<a href="http://www.raklaw.com/attorney/brian-ledahl/" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://www.raklaw.com/attorney/brian-ledahl/&amp;source=gmail&amp;ust=1511636105711000&amp;usg=AFQjCNEXKC3YHmWR1K3y-Vnbfyq3FLMk_Q">Brian Ledahl</a>&nbsp;and&nbsp;<a href="http://www.raklaw.com/attorney/benjamin-wang/" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://www.raklaw.com/attorney/benjamin-wang/&amp;source=gmail&amp;ust=1511636105712000&amp;usg=AFQjCNHtXRqzJCLst6zO1_w4XTyHif_95A">Benjamin Wang</a>&nbsp;of Russ, August &amp; Kabat were authors on the brief.<br /><br />Available at:&nbsp;<a href="http://www.ipwatchdog.com/2017/11/27/amici-request-scotus-intervention-patent-eligibility-challenges/id=90468/" target="_blank">http://www.ipwatchdog.com/2017/11/27/amici-request-scotus-intervention-patent-eligibility-challenges/id=90468/&nbsp;</a> Mon, 27 Nov 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/inthepress112717/ In The Press: <br>Justices Urged To Hear If Courts Can Nix Patents Over Alice<br> http://www.arelaw.com/publications/view/inthepress112217/ <div>Law360, New York (November 22, 2017, 7:17 PM EST) -- Several patent holding companies banded together to urge the&nbsp;<a href="https://www.law360.com/agencies/u-s-supreme-court">U.S. Supreme Court</a>&nbsp;on Tuesday to hear a case that challenges whether lower courts can invalidate patents because they cover an abstract idea or other subject matter that is ineligible for a patent.&nbsp;<br /><br />Available at:&nbsp;<a href="https://www.law360.com/articles/987992/justices-urged-to-hear-if-courts-can-nix-patents-over-alice" target="_blank">https://www.law360.com/articles/987992/justices-urged-to-hear-if-courts-can-nix-patents-over-alice<br /></a>(subscription required)<br />&nbsp;</div> Wed, 22 Nov 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/inthepress112217/ RPOST COMMUNICATIONS LIMITED ET AL v. GODADDY.COM, LLC http://www.arelaw.com/publications/view/amicus112117/ Click to download pdf:&nbsp;<a href="/images/file/17-695_%20RPost%20Communications%20Ltd%20v%20GoDaddy%20com_Amicus%20Brief%20(1).pdf" target="_blank">RPOST COMMUNICATIONS LIMITED ET AL v. GODADDY.COM, LLC</a> Tue, 21 Nov 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/amicus112117/ The Trademark Lawyer, October 2017:<br>Requirement of Use in the USA<br> http://www.arelaw.com/publications/view/101117/ <div><a href="/images/file/ARE%20Law%20-%20Trademark%20Lawyer%20Issue%205.pdf" target="_blank">Max Vern from Amster, Rothstein &amp; Ebenstein LLP explores the&nbsp;practical aspects of Use Requirements in American trademark&nbsp;practice.</a></div> Wed, 11 Oct 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/101117/ The Copyright Lawyer: <br> The interplay between U.S. and International copyright law: Why non-U.S. persons should consider registering in the U.S.A.<br> http://www.arelaw.com/publications/view/10-11-17/ <a href="/images/file/ARE%20Law%20-%20Copyright%20issue%204%202017.pdf" target="_blank">Chester Rothstein and Benjamin Charkow from Amster, Rothstein &amp; Ebenstein, LLP explore some implications that an owner of a non-U.S. work must keep in mind when developing its copyright protection and enforcement strategies.&nbsp;</a> Wed, 11 Oct 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/10-11-17/ The Patent Lawyer, October 2017: <br>The Software Challenge: How International Applicants can still Succeed in Obtaining Software Patents in the U.S.<br> http://www.arelaw.com/publications/view/10112017/ <a href="/images/file/ARE%20Law%20-%20Patent%20Lawyer%20Sept-Oct.pdf" target="_blank">Benjamin Halpern and Brian Comack from Amster, Rothstein &amp; Ebenstein LLP discuss factors that should be considered when drafting software patent applications filed in jurisdictions outside of the U.S., which are intended for subsequent filing in the U.S.</a> Wed, 11 Oct 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/10112017/ Patent Law Alert: <br>En Banc Federal Circuit Clarifies Burden to Challenge Amended Claims in PTAB Proceedings in <i>Aqua Products v. Matal<i><br> http://www.arelaw.com/publications/view/alert101017/ <div>On October 4, 2017, the United States Court of Appeals for the Federal Circuit issued a divided <i>en banc</i> decision in <i>Aqua Products, Inc. v. Matal</i>, No. 15-1177 (Fed. Cir. Oct. 4, 2017).&nbsp; The Court vacated the Patent Trial and Appeal Board&rsquo;s (&ldquo;PTAB&rdquo;) final written decision &ldquo;insofar as it denied the patent owner&rsquo;s motion to amend,&rdquo; and remanded to the PTAB &ldquo;to issue a final decision under [the statute] assessing the patentability of the proposed substitute claims without placing the burden of persuasion on the patent owner.&rdquo; O&rsquo;Malley slip op. at 66.&nbsp; The majority did not come to any agreement as to whether the burden of persuasion should lie with the petitioner or the PTO.<br /><br />The conduct of inter partes review statute, 35 U.S.C. &sect; 316, provides in part:</div><div style="margin-left: 40px;"><br />(a) The&nbsp;Director&nbsp;shall prescribe regulations . . . (9) setting forth standards and procedures for allowing the patent owner to move to amend the patent under subsection (d) to cancel a challenged claim or propose a reasonable number of substitute claims, and ensuring that any information submitted by the patent owner in support of any amendment entered under subsection (d) is made available to the public as part of the prosecution history of the patent; . . .<br /><br />(d)(1) During an inter partes review instituted under this chapter, the patent owner may file 1 motion to amend the patent in 1 or more of the following ways: (A) Cancel any challenged patent claim.&nbsp; (B) For each challenged claim, propose a reasonable number of substitute claims.</div> <div style="margin-left: 40px;">(d)(2) Additional motions to amend may be permitted upon the joint request of the petitioner and the patent owner to materially advance the settlement of a proceeding under section 317, or as permitted by regulations prescribed by the&nbsp;Director.</div> <div style="margin-left: 40px;">(d)(3) An amendment under this subsection may not enlarge the scope of the claims of the patent or introduce new matter.<br /><br />(e) In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.<br /><i><br /></i></div><div><i>Aqua Products</i> addressed two important questions regarding amended claims in PTAB proceedings under 35 U.S.C. &sect; 316:</div><div>&nbsp;</div><div style="margin-left: 40px;">1.&nbsp;&nbsp;&nbsp;&nbsp; Whether the Patent and Trademark Office (&ldquo;PTO&rdquo;) could require the patent owner to bear the burden of persuasion or production under 35 U.S.C. &sect; 316; and<br /><br />2.&nbsp;&nbsp;&nbsp;&nbsp; Whether the PTAB could raise a patentability challenge to proposed amended claims <i>sua sponte</i>, and where the burden of persuasion or production would lie in such a situation.</div><div><br />The fractured Court issued five separate opinions.<br /><br />The leading opinion was issued by Judge O&rsquo;Malley and supported by a seven-member panel. &nbsp;The majority held that, at least under the current PTO regulations, &ldquo;[t]he only legal conclusions that support and define the judgment of the court are: &nbsp;(1) the PTO has not adopted a rule placing the burden of persuasion with respect to the patentability of amended claims on the patent owner that is entitled to [<i>Chevron</i>] deference; and (2) in the absence of anything that might be entitled deference, the PTO may not place that burden on the patentee.&rdquo;&nbsp; O&rsquo;Malley Slip op. at 66.&nbsp; Judge O&rsquo;Malley described the opinion as &ldquo;narrow&rdquo; asserting that &ldquo;[b]ecause the participating judges have different views&mdash;both as to the judgment we should reach and as to the rationale we should employ in support of that judgment, as explained below, today&rsquo;s judgment is narrow.&rdquo; O&rsquo;Malley slip op. at 6.<br /><br />The Court&rsquo;s analysis clearly identified several judges, including Judge O&rsquo;Malley, who would have held that 35 U.S.C. &sect; 316(e) unambiguously requires the petitioner to carry the burden of persuasion on all propositions of unpatentability, and would have concluded that the PTAB&rsquo;s decision to reject Aqua Products&rsquo; amended claims without considering the entirety of the IPR record was an abuse of discretion. O&rsquo;Malley slip op. at 62.&nbsp;&nbsp; &ldquo;Congress made clear that patent owners may propose amendments to their patents as of right at least once in an IPR.&rdquo; O&rsquo;Malley slip op. at 37.&nbsp; Judge O&rsquo;Malley further explained: &ldquo;By reading too much into &sect; 316(d) and too little into &sect; 316(e), the PTO effectively injects illogic into that framework and undermines its function and purpose.&rdquo; O&rsquo;Malley slip op. at 40.&nbsp; Judge O&rsquo;Malley&rsquo;s opinion repeatedly emphasized the importance of patentees&rsquo; ability to amend their claims in the legislative history and in justifying the PTAB&rsquo;s use of the broadest reasonable construction in IPRs, and concludes that the PTAB&rsquo;s <i>Idle Free Systems, Inc. v Bergstrom, Inc.</i>, IPR2012-00027, Paper 26 (PTAB June 11, 2013) and <i>MasterImage 3D, Inc. v. RealD Inc.</i>, IPR2015-00040, Paper 42 (PTAB July 15, 2015) decisions &ldquo;do not reflect a reasonable accommodation of manifestly competing interests where the agency considered the matter in a detailed and reasoned fashion, and the decision involves reconciling conflicting policies,&rdquo; under Chevron step two. O&rsquo;Malley slip op. at 55 (citing <i>Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc</i>., 467 U.S. 837 (1984)).&nbsp;<br /><br />However, the Court ultimately held that 35 U.S.C. &sect; 316(e) is ambiguous as to who bears the burden of persuasion for proposed substitute claims.&nbsp; Since the majority held that the statute is ambiguous, each of the five opinions addressed the Administrative Procedure Act (&ldquo;APA&rdquo;) and deference under <i>Chevron </i>at length.&nbsp; Consequently, the majority found that there was no interpretation of either 35 U.S.C. &sect; 316(d) or &sect; 316(e) to which courts must defer. O&rsquo;Malley slip op. at 56.<br /><br />The Court&rsquo;s inquiry into whether the PTAB may <i>sua sponte</i> raise patentability challenges to the amended claims was &ldquo;reserved for another day,&rdquo; but the court did reiterate the panel decision that the PTAB may base its patentability determinations of amended claims on the entire record before it, and not limit itself solely on the face of the motion to amend. O&rsquo;Malley slip op. at 60-62.&nbsp; The Court noted that the PTAB&rsquo;s decision to reject Aqua Products&rsquo; proposed amended claims without consideration of the entirety of the IPR record as an independent basis for vacating and remanding the matter to the PTAB.<br /><br />The precedent of <i>Aqua Products</i> is extremely narrow, as Judge O&rsquo;Malley explicitly described. &nbsp;The main takeaway is that the PTAB must assess proposed substitute claims without placing the burden of persuasion on the patent owner. &nbsp;Judge O&rsquo;Malley further wrote that &ldquo;[t]he [PTAB] must follow this same practice in all pending IPRs unless and until the Director engages in notice and comment rulemaking. &nbsp;At that point, the court will be tasked with determining whether any practice so adopted is valid.&rdquo; O&rsquo;Malley slip op. at 66.<br /><br />In a footnote, the Court also addressed prior conflicting decisions: &nbsp;&ldquo;To the extent our prior decisions in <i>Microsoft Corp. v. Proxyconn, Inc.</i>, 789 F.3d 1292 (Fed. Cir. 2015); <i>Prolitec, Inc. v. ScentAir Techs.</i>, Inc., 807 F.3d 1353 (Fed. Cir. 2015), petition for reh&rsquo;g pending; <i>Synopsys, Inc. v. Mentor Graphics Corp</i>., 814 F.3d 1309 (Fed. Cir. 2016); and <i>Nike, Inc. v. Adidas AG</i>, 812 F.3d 1326 (Fed. Cir. 2016), are inconsistent with this conclusion, we overrule those decisions.&rdquo; O&rsquo;Malley slip op. at 5 n.1.<br /><br />The voluminous commentary also included two concurring decisions and two dissenting opinions.&nbsp; The first concurrence was authored by Judge Moore who joined Judge O&rsquo;Malley&rsquo;s opinion in its entirety and agreed with Judge Reyna&rsquo;s conclusion that the agency actions at issue are not entitled to <i>Chevron</i> deference.&nbsp; Judge Moore wrote separately to address the problems with the Director&rsquo;s attempt to extend <i>Chevron</i> deference beyond any prior applications of the doctrine and to explain why the PTAB&rsquo;s opinions are not entitled to <i>Chevron</i> deference.&nbsp;<br /><br />Judge Reyna&rsquo;s concurrence argued that the majority and Judge Taranto&rsquo;s dissent incorrectly &ldquo;operate under the premise that whether Chevron deference is warranted is a yes-or-no question.&rdquo; Reyna slip op. at 1-2.&nbsp; Judge Reyna agreed with Judge Taranto&rsquo;s reading of &sect; 316(e) as ambiguous and of &sect; 316(a)(9) as authorizing the PTO to promulgate a regulation on the burden of persuasion. &nbsp;The concurrence argued that the PTO&rsquo;s general discussion finding that the burden of persuasion is &ldquo;borne by the patentee&rdquo; is not an interpretation of the statute that carries the full force of law. Reyna slip op. at 2. &nbsp;Judge Reyna also concluded that &sect; 316(d) and 37 C.F.R. &sect; 42.121 place a default burden of production on the patentee.&nbsp;<br /><br />Judge Taranto&rsquo;s dissent argued that &sect; 316(a), which authorizes the PTO Director to prescribe regulations governing IPRs, also authorizes the Director to address who has the burden of persuasion for amended claims.&nbsp; Judge Taranto claimed that &ldquo;&sect; 316(e) does not&nbsp;unambiguously<i>&nbsp;</i>bar assigning that burden to the patent owner.&rdquo; Taranto slip op. at 1-2. &nbsp;Contrary to the majority opinion, Judge Taranto argued that the PTO prescribed 37 C.F.R. &sect; 42.20(c), &nbsp;a regulation assigning the burden to the patent owner, which states that any movant bears the burden of proof to establish that it is entitled to its requested relief.&nbsp;<br /><br />Judge Hughes&rsquo;s dissent highlighted the fact that the majority agreed that the statute is ambiguous, which mandates deference to the Director&rsquo;s interpretation of the statute.&nbsp; The dissent further argued that the <i>Aqua Products</i> decision contravenes traditional rules of administrative law when faced with an ambiguous statute, which is to determine whether the PTO&rsquo;s interpretation was reasonable.&nbsp;Judge Hughes proposed that even if the PTO&rsquo;s regulation offered by Judge Taranto, 37 C.F.R. &sect; 42.20(c), is ambiguous, the PTO is also entitled to deference for its interpretation of its own regulation under&nbsp;<i>Auer v. Robbins</i>, 519 U.S. 452 (1997).<br /><br />While Judge O&rsquo;Malley admitted that &ldquo;very little said over the course of the many pages that</div> <div>form the five opinions in [<i>Aqua Products</i>] has precedential weight,&rdquo; we can expect some far-reaching effects of this decision. O&rsquo;Malley slip op. at 65-66. &nbsp;The Court&rsquo;s decision effectively invites the PTO to clarify the burden of proof for motions to amend, through notice and comment rulemaking.&nbsp; Judge O&rsquo;Malley observed that the PTAB&rsquo;s existing regulations on the burden of production may create a hole by which the PTAB could reach the same conclusion on the patentability of proposed amended claims as existed under <i>Idle Free </i>and <i>MasterImage</i>.<br /><br />We will continue to monitor developments in the law on amended claims in PTAB proceedings.&nbsp; In the meantime, please feel free to contact one of our attorneys regarding the issues raised by this case.<br /><br />* Charles R. Macedo is a Partner and Christopher Lisiewski is a Legal Intern at Amster, Rothstein &amp; Ebenstein LLP.&nbsp; Their practice focus on all facets of the intellectual property law, including patent, trademark and copyright.&nbsp; They may be contacted at <a href="mailto:cmacedo@arelaw.com">cmacedo@arelaw.com</a> and <a href="mailto:clisiewski@arelaw.com">clisiewski@arelaw.com</a>.</div> Tue, 10 Oct 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/alert101017/ In The Press: <br>2017 New York Metro Super Lawyers Names Nine Attorneys From The Firm For Intellectual Property, Intellectual Property Litigation and Alternative Dispute Resolution and Three Attorneys as Rising Stars <br> http://www.arelaw.com/publications/view/inthepress100317/ Amster, Rothstein &amp; Ebenstein LLP is pleased to announce that 2017 New York Metro <i>Super Lawyer</i>&nbsp;<i>Magazine </i>has named nine of its Attorneys including: <div>&nbsp;</div> <div><strong>Partners:</strong></div> <div>&nbsp;</div> <div><b><a href="http://www.arelaw.com/professional/debenstein/" target="_blank">Daniel S. Ebenstein</a></b>&nbsp;<br /> Intellectual Property&nbsp;<br /> Selected to Super Lawyers 2006, 2013 - 2017</div> <div>&nbsp;</div> <div><b><a href="http://www.arelaw.com/professional/alocicero/" target="_blank">Anthony F. Lo Cicero</a></b>&nbsp;<br /> Intellectual Property&nbsp;<br /> Selected to Super Lawyers 2007 - 2017</div> <div>&nbsp;</div> <div><b><a href="http://www.arelaw.com/professional/cmacedo/" target="_blank">Charles R. Macedo</a></b>&nbsp;<br /> Intellectual Property&nbsp;<br /> Selected to Super Lawyers 2011 - 2017</div> <div>&nbsp;</div> <div><b><a href="http://www.arelaw.com/professional/miro/" title="https://profiles.superlawyers.com/new-york-metro/new-york/lawyer/douglas-a-miro/08f1f4ef-2702-4537-9fc9-802e785143fa.htmlCmd+Click to follow link" target="_blank">Douglas A. Miro</a></b>&nbsp;</div> <div>Intellectual Property, Intellectual Property Litigation&nbsp;</div> <div>Selected to Super Lawyers 2006, 2009 - 2017</div> <div>&nbsp;</div> <div><b><a href="http://www.arelaw.com/professional/nzipkin/" target="_blank">Neil M. Zipkin</a></b>&nbsp;<br /> Intellectual Property, Intellectual Property Litigation, Alternative Dispute Resolution&nbsp;<br /> Selected to Super Lawyers 2006, 2013 - 2017</div> <div>&nbsp;</div> <div><strong>Senior Counsel:<br /><br type="_moz" /></strong></div> <div><b><a href="http://www.arelaw.com/professional/mberkowitz/" target="_blank">Mark Berkowitz</a></b>&nbsp;<br /> Intellectual Property Litigation&nbsp;<br /> Rising Stars 2015 - 2017</div> <div>&nbsp;</div> <div><b><a href="http://www.arelaw.com/professional/rmandaro/" onclick="window.open(this.href,'','resizable=no,location=no,menubar=no,scrollbars=no,status=no,toolbar=no,fullscreen=no,dependent=no,status'); return false">Richard S. Mandaro</a></b>&nbsp;<br /> Intellectual Property&nbsp;<br /> Selected to Super Lawyers 2013 - 2017</div> <div>&nbsp;</div> <div><strong>Associates:<br /><br type="_moz" /></strong></div> <div><b><a href="http://www.arelaw.com/professional/shudak/" target="_blank">Sandra A. Hudak</a></b>&nbsp;<br /> Intellectual Property Litigation, Intellectual Property&nbsp;<br /> Rising Stars 2017</div> <div>&nbsp;</div> <div><b><a href="https://profiles.superlawyers.com/new-york-metro/new-york/lawyer/tuvia-rotberg/90835d63-ca36-4e24-8b58-50dc8ed497a3.html" target="_blank">Tuvia Rotberg</a></b>&nbsp;<br /> Intellectual Property Litigation&nbsp;<br /> Rising Stars 2016 - 2017</div> <div>&nbsp;</div> <div><strong>Congratulations to our Super Lawyers.</strong></div> <div>&nbsp;</div> <div><a href="https://profiles.superlawyers.com/new-york-metro/new-york/lawfirm/amster-rothstein-and-ebenstein-llp/8f061797-a903-4c7a-938f-2e0ce2b082a5.html" target="_blank">https://profiles.superlawyers.com/new-york-metro/new-york/lawfirm/amster-rothstein-and-ebenstein-llp/8f061797-a903-4c7a-938f-2e0ce2b082a5.html</a></div> Tue, 03 Oct 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/inthepress100317/ Supreme Court 2016-2017 IP Case Review http://www.arelaw.com/publications/view/supreme-court-2016-2017-ip-case-review/ In the past term, the Supreme Court continued to show a keen interest in intellectual property issues.&nbsp; The Court issued opinions in five patent cases, one design patent case, one trademark case, one copyright case and even a trade secret case.&nbsp;<a href="http://pub.lucidpress.com/NYIPLA2017AugustSeptember/#Yo9zUdQAn07i" target="_blank">Read more&gt;&gt;</a> Fri, 29 Sep 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/supreme-court-2016-2017-ip-case-review/ Patent Law Alert: <br>Federal Circuit Clarifies “Regular And Established Business” For Venue Purposes in In re Cray Inc.<br> http://www.arelaw.com/publications/view/alert092117/ <div>On September 21, 2017, the United States Court of Appeals for the Federal Circuit issued its decision in <i>In re Cray Inc.</i> The Federal Circuit granted a writ of mandamus and vacated an order of the United States District Court for the Eastern District of Texas (&ldquo;District Court&rdquo;) denying a motion to transfer. In doing so, the court rejected the four-factor test established by Judge Gilstrap to determine what constitutes a &ldquo;regular and established place of business&rdquo; within the meaning of 28 U.S.C. 1400(b).<br /><br />In vacating the District Court's decision, the Federal Circuit set forth a new three-part test to assist courts in defining a &ldquo;regular and established place of business&rdquo; means within the meaning of Section 1400(b).&nbsp; The Federal Circuit listed the following three requirements as relevant to the inquiry:</div> <div>&nbsp;</div> <div style="margin-left: 40px;">(1) there must be a physical place in the district;</div> <div style="margin-left: 40px;">&nbsp;</div> <div style="margin-left: 40px;">(2) it must be a regular and established place of business; and</div> <div style="margin-left: 40px;">&nbsp;</div> <div style="margin-left: 40px;">(3) it must be the place of the defendant.</div> <div>&nbsp;</div> <div>If any of these statutory requirements is not satisfied, venue is improper.<br /><br />In the District Court proceeding, Cray moved to transfer the action and argued that it did not &ldquo;reside&rdquo; in the Eastern District of Texas in light of the Supreme Court's recent decision in <i>TC Heartland LLC v. Kraft Foods Group Brands LLC,</i> 137 S. Ct. 1514 (2017).&nbsp; Cray also argued that venue was improper in the Eastern District of Texas because Cray had neither committed acts of infringement, nor maintained &ldquo;a regular and established place of business&rdquo; within that district. The District Court rejected that argument and found that venue was proper based, among other facts, on a Cray employee&rsquo;s activities within the District.&nbsp;Cray petitioned the Federal Circuit for a writ of mandamus.<br /><br />In vacating the District Court&rsquo;s order, the Federal Circuit found that the District Court misunderstood the scope and effect of its prior decisions, leading it to improperly deny the motion to transfer. As the Federal Circuit stated,&nbsp;&ldquo;although the law was unclear and the error understandable, the district court abused its discretion by applying an incorrect legal standard, which we now clarify in this opinion.&rdquo;&nbsp;<br /><br />In its analysis of whether Cray has a &ldquo;regular and established place of business&rdquo; in the Eastern District of Texas within the meaning of Section 1400(b), the Federal Circuit focused on the language of the statute.&nbsp; It held that Section 1400(b) requires that &ldquo;a defendant has&rdquo; a &ldquo;place of business&rdquo; that is &ldquo;regular&rdquo; and &ldquo;established.&rdquo;&nbsp; &nbsp;It found that the four-factor test used by the lower court was not sufficiently tethered to the statutory language, and thus failed to inform each of the necessary requirements of the statute.&nbsp; Rather, the Federal Circuit stated, &ldquo;the analysis must be closely tied to the language of the statute.&rdquo;&nbsp;<br />With regard to the first requirement that there &ldquo;must be a physical place in the district&rdquo; the court found that the statute cannot be read to refer merely to a virtual space or to electronic communications from one person to another. Rather, there must be a physical, geographical location in the district from which the business of the defendant is carried out.&nbsp;<br /><br />In its analysis of the second factor that the place &ldquo;must be a regular and established place of business&rdquo; the court focused on the word &ldquo;regular.&rdquo;&nbsp; It stated that &ldquo;a business may be&rdquo; regular, &ldquo;for example, if it operates in a steady, uniform, orderly and methodical manner.&rdquo;&nbsp; Neither sporadic business activity, nor a transient business location, can create venue.&nbsp;&nbsp;<br /><br />In its analysis of the third&nbsp;prong that the place of business &ldquo;must be the place of the defendant,&rdquo; the court explains that an employee's residence in a district is not necessarily enough to establish venue.&nbsp; &ldquo;The mere fact that a defendant has advertised that it has a place of business or has even set up an office is not sufficient; the defendant must actually engage in business from that location.&rdquo; This was the crucial factor upon which the court relied in vacating the District Court's decision. The Federal Circuit found that an employee's home was not a regular and established place of business of Cray.&nbsp; Cray did not own, lease or rent any portion of the employee's home in the Eastern District of Texas. Further there was no evidence that indicated that Cray played a part in selecting the employee's location, or stored inventory or conducted demonstrations in the employee's home. Additionally, the employee's employment was not conditioned upon his maintenance of a location in the Eastern District of Texas. The District Court had merely found that there was a physical location within the district where an employee of the defendant carried on certain work for his employer.&nbsp;</div> <div>The Federal Circuit explained that no one factor was controlling.&nbsp; However, taken together the facts did not support a finding that Cray had an established a place of business in the Eastern District of Texas and thus venue was improper under Section 1400(b). The case was remanded back to the District Court to determine the proper transferee district.<br /><br />This decision will help companies and courts more easily determine whether a &ldquo;regular and established place of business&rdquo; exists for the purpose of venue under Section 1400(b).<br /><br />We will continue to monitor developments in the law on patent venue.&nbsp; In the meantime, please feel free to contact one of our attorneys regarding the issues raised by this case.</div> <div>&nbsp;</div> <div>* Anthony F. Lo Cicero is a Partner and Richard Mandaro is Senior Counsel at Amster, Rothstein &amp; Ebenstein LLP.&nbsp; Their practice specializes in intellectual property issues.&nbsp;&nbsp; They can be reached at <a href="mailto:alocicero@arelaw.com">alocicero@arelaw.com</a> and <a href="mailto:rmandaro@arelaw.com">rmandaro@arelaw.com</a>.</div> Thu, 21 Sep 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/alert092117/