U.S. Supreme Court Holds Section 411(a)'s Copyright Registration Requirement Non-Jurisdictional

On March 2, 2010, the Supreme Court issued its decision in Reed Elsevier, Inc. v Muchnick, holding that Section 411(a) of the United States Copyright Act, which mandates registration as a prerequisite to suing for copyright infringement, is not a jurisdictional requirement, meaning a copyright owner's failure to register its work does not restrict a federal court's subject-matter jurisdiction over claims involving the unregistered work. While the decision is meaningful for class-action suits and claims for declaratory or equitable relief, the impact of the decision, if any, on the standard copyright-infringement claim for damages remains to be seen.

The case follows the Court's decision in New York Times Co. v Tasini, 533 U.S. 483 (2001), in which the Court affirmed the Second Circuit ruling that several online databases and publishers, including Google Books, infringed the rights of six freelance authors by electronically publishing their works without permission. The case was consolidated with several other suits by other freelance authors in the United States District Court for the Southern District of New York, which due to the complexity of the case ultimately referred the parties to mediation. Three years later, the freelance authors, databases and publishers reached a settlement agreement, dubbed the "Google Books Settlement" and moved the District Court to certify a class and approve the settlement. Over the objections of several freelance authors, including Irvin Muchnick, the District Court approved the Class, consisting of authors owning both registered and unregistered copyrights in their works, and approved the settlement.

Muchnick respondents appealed the decision on both procedural and substantive grounds. The Court of Appeals for the Second Circuit sua sponte ordered a briefing on the question of whether Section 411(a) of the Copyright Act deprives federal courts of subject-matter jurisdiction over infringement claims involving unregistered works.

Section 411(a) provides:

"Except for an action brought for a violation of the rights of the author under section 106(A), and subject to the provisions of subsection (b), no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made…The Register may, at his or her option, become a party to the action with respect to the issue of registrability of the copyright claim by entering an appearance within sixty days after such service, but the Register's failure to become a party shall not deprive the court of jurisdiction to determine that issue."

Although all parties asserted in their briefs that the District Court did have subject-matter jurisdiction to approve the Class, the Court of Appeals held that it lacked subject-matter jurisdiction to approve both the Class and the Settlement. Judge Walker dissented, arguing that Section 411(a) is more like a non-jurisdictional claim-processing rule.

The Supreme Court granted the copyright owners and publishers' petition for writ of certiorari to answer whether Section 411(a) restricts the subject matter jurisdiction of federal courts, appointing amicus curiae to defend the Court of Appeal's judgment, since neither party supported its holding.

The Supreme Court began its analysis by looking to the general approach to distinguishing jurisdictional conditions from claim-processing rules or elements of a claim as laid out in Arbaugh v Y & H Corp., 546 US 500 (2006), which states that if the legislature does not "clearly state" that a statutory limitation is jurisdictional, and does not rank it as such, then the courts should treat it as non-jurisdictional in character.

Applying this test to Section 411(a), the Court found that the provision does not "clearly state" that its registration requirement is jurisdictional. The Court rejected the argument from amicus, that the use of the word "jurisdiction" in the last sentence of the provision indicates that the first sentence of the provision is meant to be read with a jurisdictional cast as well. Rather, the Court explained that the last sentence in 411(a) was added to the Act in 1976 to clarify that federal courts can decide an issue of registrability even if the Register does not appear in the relevant infringement suit, and that as used, it says nothing with regard to the federal court's subject-matter jurisdiction over claims involving unregistered works.

Further, the Court found that the provision also does not rank the registration requirement as jurisdictional. Section 411(a)'s registration requirement is located in a provision wholly separate from those provisions in the Act covering jurisdiction, namely Sections 1331 and 1338, and neither of these provisions conditions jurisdiction on whether the relevant copyright owners have registered their works. The Court pointed to the fact that Section 411(a) expressly grants courts jurisdiction to adjudicate claims involving unregistered works in three instances: 1) where the work is not a U.S. work, 2) where the claim also concerns moral rights under 106A, or 3) where the author attempted to register his work but registration was refused. The Court reasoned that if Section 411(a) was meant to be read in a jurisdictional light, it would be odd for the provision to contain these exceptions.

The Court then considered the amicus argument, relying on Bowles v Russell, 551 US 205 (2007), that it is improper to characterize a statutory condition as non-jurisdictional if doing so would override a "century's worth of precedent." Amicus argued that Bowles stands for the proposition that if a provision is silent as to whether its condition is to be considered jurisdictional, then a court should treat it as jurisdictional if that is how the condition has been consistently interpreted over the years. The Court rejected this interpretation of Bowles, concluding that it instead stands for the proposition that context is relevant, albeit not dispositive, of the question. The Court further rejected the amicus argument that the Court should nonetheless affirm the Court of Appeals decision on estoppel grounds because the circumstances required for application of the doctrine simply did not exist in this case.

Ultimately, the Court held that Section 411(a)'s registration requirement is simply a precondition to filing a copyright infringement claim, and nothing more. A copyright owner's failure to register his or her work does not restrict a federal court's subject-matter jurisdiction over infringement claims involving unregistered works.

The decision clarifies that class actions for copyright infringement can be filed on behalf of owners of both registered and unregistered works. The Google Books Settlement, however, was amended following the Second Circuit's now reversed 2007 Muchnick decision to specifically exclude owners of unregistered works to avoid this issue. While it is unlikely that they will be added back as a result of the decision, it now raises the question of whether the settlement will be approved as it stands. The Court could ask the litigants to renegotiate the settlement again, to include authors of unregistered works, or the authors themselves could request reconsideration of the settlement along these terms.

Although it is clear that a claim for damages based on an unregistered work will fail, the Court left unanswered whether a district court should sua sponte dismiss copyright cases where the Plaintiff is asserting rights based on an unregistered copyright. As a result of the decision, courts may become more lenient in allowing actions to proceed even if filed while an application for registration of the involved work is still pending. Courts are currently divided on this issue, with some taking the "registration approach" and dismissing those claims where the application is still pending, and others following the "application approach."

Now, it will likely be easier for an alleged infringer to bring a declaratory-judgment action against a claim involving an unregistered work. In addition, it could be less risky for an author to file suit for immediate equitable relief, rather than for damages, based on an unregistered work.

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Trademark Customs Recordal Back on the Menu in the United Kingdom

As of March 10, 2010, British Customs will be able to treat as abandoned for seizure and destruction purposes items where the owner has either consented to destruction or failed to oppose destruction of the goods within 10 days from notice or any extensions granted to that period. The new procedure is set out in the Goods Infringing Intellectual Property Rights (Customs) (Amendment) Regulations 2010.

Historically, Customs measures in the United Kingdom were very favorable to rights owners in that once an objection was received by Customs and upheld, it fell to the owners of the products in issue to bring an appeal against the action of Customs in confiscating the goods. The practice was changed in 2009 as a result of a court action. The amended rules brought British practice into line with that of most other European countries whereby it fell to the objecting rights holder to either obtain consent to forfeiture from the owners of the goods or else to bring a formalized proceeding to have the goods declared counterfeit and seized, something which is onerous and expensive.

Under the latest revision, which became effective on March 10, consent to forfeiture will be presumed if the owner of the goods does not affirmatively object to forfeiture within the specified period of 10 days plus any extensions. While this still puts most of the burden on the rights holder to make sure that the counterfeit goods do not enter the market, it does mean that the owner of the offending goods has to take some sort of action in order to secure release and it cannot just sit back and take a wait-and-see approach. Another problem under the prior regimen was that consignee contact information provided with shipping documents was often bogus and unreliable. The amended rules mean that owners of the goods will have to step forward and potentially expose themselves to direct legal liability for dealing in counterfeits. The new approach makes Customs recordation once more an attractive option insofar as the UK is concerned.

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Federal Circuit Decision Highlights Importance of Full Disclosure between Inventor and Patent Attorney When Conducting Prior Rights Analyses

A recent decision from the Federal Circuit Court of Appeals demonstrates the importance of full disclosure between an inventor and patent attorney hired to conduct a prior rights analysis, such as a freedom-to-operate opinion. Under Section 271(b) of the U.S. Patent Act, "whoever actively induces infringement of a patent shall be liable as an infringer." The "inducer" must have actual or constructive knowledge of the patent-in-suit and must have "specific intent to encourage another's infringement," where specific intent is not defined so narrowly as to allow an accused wrongdoer to actively disregard a known risk. In SEB S.A. and T-Fal Corp. v Montgomery Ward & Co., Inc. et al. the Federal Circuit Court of Appeals established that deliberate indifference of a patent can satisfy the "knowledge of patent" element in an inducement claim and determined that the district court record demonstrated adequate deliberate indifference by co-defendant Pentalpha Enterprises, Ltd. as to the existence of the patent-in-suit. In SEB, the record demonstrated that: (1) Pentalpha had copied SEB's product, (2) Pentalpha had hired a patent attorney to conduct a patent prior-art search, but did not advise the attorney that it had copied the SEB device, and (3) Pentalpha's president was knowledgeable of U.S. patent law. The Federal Circuit concluded that this was "adequate evidence to support a conclusion that [Pentalpha] deliberately disregarded a known risk that SEB had a protective patent."

On appeal from the district court decision of inducement to infringe, as well as willful infringement, Pentalpha argued that SEB had not presented any direct evidence that Pentalpha had actual knowledge of the patent-in-suit before the lawsuit was filed. Pentalpha argued that the Federal Circuit's decision in DSU Medical v JMS supported its position by holding that the "requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent."

The SEB Court embarked in a detailed analysis of the "knowledge" requirement as it pertains to inducement-to-infringe claims, including discounting the cited language from the DSU Medical decision as dicta. While the DSU Medical language certainly appeared to support Pentalpha's position, the DSU Medical decision did not hinge on the "knowledge" requirement as the accused infringer had actual knowledge of the patent-in-suit. The court held that "deliberate indifference" to potential patent rights is sufficient to satisfy the "knowledge" requirement of inducement charges. While the district court record did not include direct evidence that Pentalpha was aware of the patent-in-suit, the record did provide adequate details of Pentalpha's deliberate indifference to SEB's patent rights.

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U.S. Trademark Trial and Appeal Board Vacates 2008 Fraud Ruling in Herbaceuticals, Inc. v Xel Herbaceuticals, Inc., Cancellation No. 92045172

On February 25, 2010, the United States Trademark Trial and Appeal Board vacated its ruling in Herbaceuticals, Inc. v Xel Herbaceuticals, Inc., where a partial summary judgment had been entered on the ground of fraud. Though the finding of fraud was vacated due to procedural reasons, the Board did, sua sponte, review the original fraud pleadings in light of the 2009 Bose Corp. v Hexwave decision that revised the test for fraud on the USPTO. Based on its review, the Board found Petitioner Herbaceuticals, Inc.'s fraud claim legally insufficient.

In the original March 7, 2008 order, the Board granted summary judgment to Petitioner Herbaceuticals, Inc. (HCI) on its pleaded fraud claim, ordering cancellation of four registrations in the name of Respondent, Xel Herbaceuticals, Inc. (Xel). The Board concluded that Xel filed knowingly false Statements of Use, signed by the representing attorney. The XEL HERBACEUTICALS marks were not being used on all goods in the identifications as claimed.

On January 7, 2010, Xel filed a motion to vacate the Board's partial summary judgment on HCI's fraud claim, relying on the Bose decision which set forth, "a trademark is obtained fraudulently under the Lanham Act only if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the PTO." Bose, 91 USPQ2d at 1941.

The Board granted Xel's motion to vacate, as conceded, because HCI failed to respond, in any manner, to Xel's motion. However, the Board also sua sponte reviewed HCI's pleaded fraud claim in the original petition to cancel, finding it legally insufficient under the Bose decision.

HCI's pleaded fraud claim alleged that Xel "knew or should have known that it was not using" the marks on all goods identified in each application when the relevant Statements of Use were filed. However, HCI's claim did not allege that Xel possessed the requisite "intent to deceive" the United States Patent and Trademark Office through its actions. Under Bose, the Board noted that each petitioner must specifically plead "intent to deceive" in raising a claim of fraud. See Bose, 91 USPQ2d at 1941. An allegation of "knew or should have known" will not rise to the level of fraud under the Bose standard. In addition, HCI based its fraud claim on "information and belief" but failed to specify facts to support its belief, which also rendered the claim insufficient.

Thus, while the Board has vacated its partial summary judgment based on fraud, the Board has also allowed HCI thirty days from the mailing date of this decision (February 25, 2010) by which to replead its fraud claim under the Bose standard. As of March 10, 2010, HCI has not yet filed an amended petition to cancel.

In addition to articulating the Bose standard in the present order, the Board also discussed the standard for "intent to deceive" in a footnote, stating, "[t]he standard for finding intent to deceive is stricter than the standard for negligence or gross negligence. Still open is the question whether a submission to the PTO with reckless disregard of its truth or falsity would satisfy the intent to deceive requirement. Bose, 91 USPQ2d at 1942, fn. 2."

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eBay France Faces Sanctions for Misspellings

On February 18, eBay France was unsuccessful in the face of charges that it has enabled the sale of counterfeit goods and harmed Louis Vuitton's reputation, receiving a fine of €200,000 in damages, including an award of €30,000 in costs, and a fine of €1,000 for each future violation.

When we last discussed the online auction giant's French site in 2007, it was facing an objection from the regulatory authority for auction houses in France, the Council of Sales, which sought to hold eBay to the same standards as those that apply to France's traditional auction houses. The latest objection, brought by the owner of the Louis Vuitton brand, LVMH Moët Hennessy Louis Vuitton SA (LVMH) has resulted in a judgment against eBay France.

The basis of the objection stemmed from eBay's payments for certain keywords to generate links to eBay's site in search engines such as Yahoo and Google. The practice of paying for keywords in itself was not the issue. Rather, it was the fact that eBay was paying for misspellings of "Louis Vuitton" (such as "Vitton"), that LVMH asserted are often used to advertise the sale of counterfeits, to generate results pointing to eBay.

The argument for using such misspellings is that potential buyers may simply be unaware of the correct spelling, or inadvertently type the name incorrectly. Rather than have a bad customer experience, eBay sought to ensure that such misspellings still direct the potential buyer to some listings. By the same token, some frequent users of eBay often intentionally misspell designer names in their searches as a deliberate strategy for good bargains, under the theory that the results will be viewed by fewer buyers and they will have less competition in the bidding.

Brand owners, however, object to this practice under the theory that the sellers who utilize misspellings do not have poor spelling skills, but use them intentionally when dealing in counterfeit goods. Consequently, allowing third parties to pay for misspellings associated with counterfeit goods enables the counterfeit marketplace.

In the end, the balance weighed in favor of LVMH. So far, this decision in France is an outlier. In the US, the use of another's trademark as a keyword in Google AdWords has generally not been found to be a violation of trademark law, even when it involves competitor's trademarks. However, this decision in France may very well have turned on the fact that the keywords in question were closely tied with dealing in counterfeits, even though they actually were not protected trademarks of another party.

In its response to the decision, eBay stated that the decision did that very thing which it sought to protect against—it harmed consumers by preventing them from buying and selling authentic items online.

Perhaps the final word on the issue is yet to come in the EU. A decision from the Court of Justice due to issue in late March is expected to provide more clarity as to whether this use of Adwords interferes with the rights of trademark owners.

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What to Make of the Recent Wave of False-Patent-Marking Lawsuits

District courts have seen a recent increase in the number of false-patent-marking lawsuits that could result in recovery of significant windfall monetary awards to plaintiffs. While the current landscape of patent-marking jurisprudence leaves many unanswered questions, careful review of patent-marking policies should be an issue to consider for companies manufacturing products under their own or licensed patents to avoid an adverse false-marking judgment. Section 292 of the U.S. Patent Act covers the improper marking of an unpatented article with the word "patented," or any word or number having the same meaning, for purposes of deceiving the public and provides for fines to be assessed in an amount not to exceed $500 for each offense. Individuals may file suit in federal court pursuant to Section 292 and attempt to recover damages that will be split 50/50 with the government.

The Federal Circuit Court of Appeals decision in The Forest Group, Inc. v Bon Tool Co. outlined the following elements of a Section 292 claim: (1) marking of an unpatented article; and (2) intent to deceive the public. The primary question unsettled before Forest Group was what constituted an offense—a decision to mark a product line, or each marked article put into the stream of commerce. The monetary implications of the answer to this question were significant. In Forest Group, the Federal Circuit held that "the plain language of 35 USC Section 292 requires courts to impose penalties for false marking on a per article basis." The court reasoned that allowing a range of penalties provided district courts with necessary flexibility and discretion to strike a balance between the public policy behind the patent-marking statute, namely, to give the public notice of patent rights, and imposing disproportionately large penalties for small, inexpensive items produced in large quantities. In a case involving inexpensive, mass-produced articles, the district court would have the discretion to determine that a fraction of a penny per improperly marked article is a proper penalty.

With the Forest Group decision, particularly its guidance on determination of damages, courts have experienced a significant increase in the number of lawsuits being filed on false-patent-marking grounds. In the month of February 2010 alone, nearly 60 separate lawsuits were filed in district courts around the country. The next emerging controversy in these cases, the resolution of which is likely to either promote the filing or stem the tide of false-marking lawsuits, will likely focus on what plaintiffs must prove to support the allegation that the defendant marked products "for purpose of deceiving the public." Under the current rule of law, "a party asserting false marking must show by a preponderance of the evidence that the accused party did not have a reasonable belief that the articles were properly marked." An assertion by a party that it did not intend to deceive, standing alone, "is worthless as proof of no intent to deceive where there is knowledge of falsehood."

Another issue that is likely to receive significant attention is the misuse of Section 292 lawsuits by individuals, coming to be known as "patent-marking trolls," seeking a windfall judgment by filing lawsuits against products marked with an expired patent. Some clarity on this issue is likely forthcoming in Pequinot v Solo Cup Co., which is on appeal to the Federal Circuit and has been fully briefed.

The increased occurrence of "patent-marking troll" suits could be curtailed or brought to a halt by Federal Circuit in the Pequinot decision or by Congress (the Senate Judiciary Committee has recently proposed legislation that would require patent false-marking plaintiffs to show actual competitive injury). Until the landscape of Section 292 becomes clearer, the effect of the Forest Group decision mandates that companies have a firm grasp on their patent-marking policies.

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.CO Domain Names Launching at Second Level; Global Sunrise to begin April 26

The ccTLD for Columbia, .CO, is going to be made available for registration on a global basis at second level (e.g., YOURCOMPANY.CO), rather than under previously restrictive terms that limited registrations to third level beneath various second-level domains such as .COM.CO. The Global Sunrise period for trademark holders with exact-match domain names registered prior to July 30, 2008 will run from April 26 to June 10, 2010. There will be subsequent Landrush and General Availability registration periods. In addition to general registrations, the .CO has also created a "Founders Program" for those individuals or companies that meet certain requirements, and pledge to be early adopters and to proactively develop and maintain domains with the .CO extension prior to the public launch in July. There is also a Grandfather Process, available through March 31, 2010, for applicants whose existing third-level domains in the .CO namespace were registered and active on or before July 30, 2008.

The .CO registry was previously run by the University of The Andes in Bogotá, Columbia, with registration mostly limited to Columbian companies who could register their trade name or company as an exact match at the third level. As a result, there were only about 28,000 .CO domains registered. The registry will now be run by a new partnership formed by a Colombian company, and Neustar, Inc., which has been involved in providing expertise for .BIZ, .US, .TRAVEL and .TEL. In addition to continuing to be a country-code TLD for Colombia, the .CO domains are being promoted for use as a mainstream extension to represent a number of CO-formatives, including "COmpany," "COrporation," "COmmerce," "COntent," "COmmunity," "COnsumer," and "COllaborate."

Of potential concern for trademark holders is the use and registration of these domain names as a typo for .COM domain names. An IP Clearinghouse and Trademark Validation process for registered trademarks are being established to assist brand owners in securing their brands in .CO during the Sunrise period. There will also be post-registration procedures available to trademark holders against abusive registrations, including a Rapid Takedown Policy and the UDRP.

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USPTO Will Recalculate Patent Term Adjustments, Fee-Free

In our January 2010 newsletter, we reported on the Federal Circuit's recent holding that the USPTO erroneously calculated patent term adjustments (PTAs) under the "overlap" provision of 35 U.S.C. 154(b)(2)(A). See also Wyeth v. Kappos, No. 2009-1120 (Fed. Cir., Jan. 7, 2010).

The USPTO is now allowing patent holders to request a fee-free recalculation of a patent's PTA, if the request meets the following criteria:

1. The request must state that the sole basis for requesting the recalculation is the USPTO's pre-Wyeth interpretation of 35 U.S.C. 154(b)(2)(A).

2. The patent must issue before March 2, 2010, and the request must be submitted no later than 180 days after issue.

Notably, patents issued before August 2009 and after March 2, 2010 are not eligible for fee-free PTA recalculation. The USPTO has not yet provided a fee-free mechanism to request PTA recalculation under Wyeth for patents issued before August 2009. Also, the USPTO indicates that as of March 2, 2010, a new computer program will calculate PTAs in compliance with the Wyeth holding, so that recalculations of pre-Wyeth PTAs will no longer be necessary.

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Geo Domain Names Transferred to Trademark Owner in Controversial Decision

In a recent Domain Name UDRP decision, Complainant, Hayward Industries, Inc. of Elizabeth, New Jersey, was successful in obtaining a transfer of the domain names HAYWARD.COM and WWWHAYWARD.COM from Respondent, domain investor Chad Wright, aka WebQuest.com, Inc. In the controversial decision, the three-member panel from WIPO included commentary that the value paid for one of the domain names was a factor in determining the third element of a UDRP, namely, registration and use in bad faith.

Complainant sells a variety of swimming pool products under HAYWARD trademark, which has been registered in the United States since 1977. Respondent had purchased the domain names in 2006, paying $20,000 for HAYWARD.COM, allegedly for its value as a geographic domain related to the location of Hayward, California. Hayward is a city of approximately 150,000 located in Northern California. Respondent is the owner of a number of other geographic domain names that provide pay-per-click (PPC) search engines related to the locale. The subject domain name resolved to a parking page with PPC links unrelated to the geographic location and containing links to Complainant's competitors.

Three years after receipt of a demand letter from Complainant in 2006, requesting the transfer of the domain names, Respondent offered the domain name HAYWARD.COM for sale via an online auction in 2009, with an opening minimum bid of $100,000. Respondent claimed that he had rights or legitimate interests in the domain names because "Hayward" is a geographic mark, which also has a number of other meanings and uses, and that PPC sites constitute a bona fide offering of services. Respondent further claimed that he never knew of Complainant, and that Complainant needed to show that it had famous rights or reputation in the name as being associated with Complainant's trade name and trademarks. Respondent also claimed that is was not significant that the parking page was not yet developed in relation to the geographic location.

In the decision, there was no dispute regarding the first element of a UDRP, namely, that the domain names were identical or confusingly similar to the HAYWARD trademark.

In the analysis of the "Rights or Legitimate Interests" element of a UDRP, the Panel agreed with Respondent that "Hayward" is the name of a city in California and that PPC websites are not in and of themselves unlawful or illegitimate. It noted, however, that the websites had yet to be developed in accordance with the claim of Respondent's counsel more than three years earlier that the disputed domain names were related to the geographic location. Because the websites contained links to Complainant's competitors, rather than being used for links solely in connection with the geographic locale, the Panel found that Respondent had no rights or legitimate interests.

The most controversial part of the decision is in regards to whether domain names were registered and used in bad faith. Complainant had specifically alleged that bad faith existed because Respondent acquired the domain names primarily for the purpose of disrupting the business of a competitor. The Panel determined that Respondent was not a "competitor" as contemplated by the UDRP policy, since there was no direct competition. The Panel determined that there was bad faith, however, noting that PPC parking pages built around a trademark that contain or lead to pages with links to trademark owner's competitors (as contrasted with PPC pages built around a dictionary word and used only in connection with the generic or merely descriptive meaning of the word) do not constitute a bona fide offering of goods or services, or a legitimate non-commercial or fair use. The Panel also rejected Respondent's claim regarding the fame of Complainant's mark, stating that "Respondent bears complete responsibility for how the disputed domain names were used and could have taken, but failed to take, steps to ensure that they were not used in connection with goods or services competitive with those offered under the HAYWARD trademark."

In its final analysis, the Panel found it informative, though not decisive, that the Respondent had purchased the domain name HAYWARD.COM for $20,000 and was attempting to sell it for at least $100,000. The Panel claimed that these figures would seem to indicate that Respondent saw some value in that domain name beyond its existence as the name of the city of Hayward, California, and for purposes other than as a PPC parking page which typically would not be expected to earn a return to justify the large investment.

This controversial finding would seem to be adding an additional subjective factor of value paid for a domain name into the determination of whether there is registration and use of a domain name in bad faith for UDRP analysis and decisions. It would appear, however, that the UDRP outcome may have been different if Respondent had developed the domain names into sites that contained PPC links related to the geographic location, within the interim three years after registration, rather than allowing the parking-page sites to remain with links to competitors of Complainant.

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Who Owns WHO DAT?

Super Bowl XLIV has come and gone, with the underdog New Orleans Saints snatching a surprise 31 to 17 victory over the Indianapolis Colts. With the Super Bowl over, there is no more NFL football until the next pre-season opener in July. So what is a die-hard fan to do now? Why not analyze one play of the National Football League's trademark defense leading up to the Big Game?

Licensing of professional sports trademarks is a multi-billion-dollar industry. The NFL oversees both the sport of professional football and the business of same, including management of the Intellectual Property of the league and its 32 teams. As clearinghouse for and protector of league trademarks, the NFL has taken the middle linebacker position and been very aggressive over the years, going to significant lengths to protect professional-football-related marks from infringement.

WHO DAT is a cheer New Orleans Saints fans cry at football games. Saints fans refer to themselves as "The Who Dat Nation." WHO DAT itself derives from the chant "Who dat say dey gonna beat dem Saints," which—with its Southern edge and New Orleans flavor—Saints fans have used to cheer on their team since its inception in the 1960s. WHO DAT, as shorthand for the cheer, has appeared on various apparel and other items over the years. With the success the Saints enjoyed during this most recent football season and leading up to the Super Bowl, WHO DAT items saturated the market.

With WHO DAT, the NFL brought a full-on blitz against a number of sellers of merchandise bearing that mark. Because of the association between WHO DAT and the NEW ORLEANS SAINTS trademark, which the NFL owns and licenses, the league asserted trademark rights in the WHO DAT term, claiming that any use, outside an official license, was an infringement. During the week before the Super Bowl, the NFL dispatched numerous cease-and-desist letters to businesses like souvenir and T-shirt shops as well as sporting-goods stores from Bourbon Street to Miami, alleging infringement of the WHO DAT mark.

Though its defense is usually quite successful, some very powerful players read the NFL's blitz and moved swiftly to stop it. WHO DAT is a term rooted in a team cheer which, in turn, has deep roots in Louisiana and New Orleans culture, with references to WHO DAT going back to the early 1900s. As such, according to NFL detractors, the league cannot claim sole ownership of WHO DAT. Response to the NFL came from Louisiana Senator David Vitter and Representative Charlie Melancon. WHO DAT, they asserted, is a piece of New Orleans culture and belongs to the people. Even Louisiana Governor Bobby Jindal instructed the Louisiana Attorney General to investigate potential litigation against the NFL for trying to usurp rights to WHO DAT.

With its attack thwarted, the NFL quickly huddled and only days before the Super Bowl clarified its position on WHO DAT, retracting most of its cease and desist demands. Rather than seeking to stop any use of WHO DAT, the NFL agreed it would only seek to cease use of that term when it appeared in connection with any other unlicensed NFL trademarks. In other words, the NFL would only seek to prevent sales of unlicensed merchandise and only where another NFL mark appeared in connection with WHO DAT.

In the end, New Orleans walked away with two victories in the Super Bowl. The Saints won the Lombardi Trophy and the people of New Orleans stopped a formidable defense. Though this may just have to tide football-trademark fans over until the NFL preseason next summer, pitchers and catchers report to Spring Training in only a few days. The return of baseball will certainly mark a welcome return of sports trademark and licensing activity to follow.

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IpHorgan Attorney Named 2010 "Super Lawyer"

We are proud to announce that our Director of Patents, Michael L. Kenaga, was named an Illinois Super Lawyer for 2010. Super Lawyers magazine names the highest-ranking attorneys in each state, as chosen by their peers and through the independent research of Law & Politics. This is the third year Michael has received this honor.

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IpHorgan Named "Go-To" Firm for Intellectual Property

IpHorgan is pleased to announce that it has once again been named a "Go-To" Firm by Corporate Counsel magazine. The annual survey polls in-house counsel at the top 500 U.S. companies for preferred law firms. This year, IpHorgan has been nominated by two of its top clients as a go-to law firm for Intellectual Property.

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Federal Circuit Court of Appeals Completely Removes "Point of Novelty" from Design Patent Analysis

In 2008, the Federal Circuit's decision in Egyptian Goddess, Inc. v. Swisa, Inc. significantly altered the infringement analysis in design patent cases by determining that the "ordinary observer test" was the sole test that should be applied by the finder of fact. In reaching this decision, the "points of novelty" test, which had previously been applied in conjunction with the "ordinary observer" test, became a thing of the past. The "ordinary observer" test is a plain comparison of the patented design with the accused design. The "points of novelty" test focused on identifying the points of novelty in the patented design and determining if the accused product appropriated those points of novelty. The Egyptian Goddess decision did not mandate a similar change in analysis of "anticipation" issues, i.e., all elements of the applied-for design found in the prior art, during prosecution of design patent applications or challenges to validity of issued design patents. In International Seaway Trading Corp. v. Walgreens Corp. and Touchsport Footwear USA, Inc., the Federal Circuit addressed the issues left open in Egyptian Goddess.

At the heart of the Seaway dispute were the plaintiff's patents covering designs for casual, lightweight footwear, typically referred to as "clogs." During examination of the patents-in-suit, the patent examiner considered prior art consisting of various models of Crocs clogs from the Crocs website and determined the applied-for designs to be patentable over this prior art. In February, 2008, Seaway filed a complaint alleging infringement of its design patents by Walgreens and Touchsport, where Touchsport imported the accused product and Walgreens sold the accused product in its stores. Walgreens and Touchsport filed a motion for summary judgment of invalidity of the patents-in-suit in view of the Crocs prior art, which was granted by the district court upon application of the "ordinary observer" test. In granting the summary judgment motion and finding that the patents-in-suit were "anticipated" by the prior art, the district court compared the exterior portions of the prior art clogs to the exterior of the patented designs, but did not compare the insoles of the prior art clogs and the patented designs. Seaway appealed the district court decision, contending that district court failed to properly apply the "points of novelty" test to the invalidity analysis and failed to properly consider both the interior and exterior design elements of the prior art and patented clog designs.

After addressing the history of application of the "ordinary observer" and "points of novelty" tests, the Seaway court continued its analysis by recognizing the longstanding general rule that the same test be used in both the infringement and anticipation contexts. This general rule is derived from the Supreme Court's 120-year-old proclamation in the context of utility patents "[t]hat which infringes, if later, would anticipate, if earlier." In light of Supreme Court precedent, Federal Circuit precedent holding that the same tests must be applied for infringement and anticipation, and the Egyptian Goddess decision dismissing the "points of novelty" test from infringement consideration, the Seaway court determined that the "ordinary observer" test was the logical, sole test for anticipation analysis. Relying solely on the "ordinary observer" test would prevent inconsistency from developing between infringement and anticipation analyses and continues the established practice of maintaining identical tests for infringement and anticipation.

In supporting its decision, the court noted the problems inherent in the "points of novelty" test in the infringement context were present in the anticipation context. The test was difficult to apply as it encouraged focus on minor differences between the prior art reference and the patented design and created the need to canvass the entire body of prior art to identify points of novelty. Eliminating the "points of novelty" test for anticipation also "has the advantage of avoiding the debate over the extent to which a combination of old design features can serve as a point of novelty under the ‘points of novelty' test."

In Seaway the Federal Circuit finished what it had started in Egyptian Goddess by dismissing the "points of novelty" analysis from all design patent analysis. The case was remanded to the district court for further consideration of the interior design features of the prior art Crocs clogs as they compared with the interiors of the patented designs.

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Big Problem, Small Package: A Summary of the Opel/Autec Decision Regarding Use of an Auto Manufacturer's Trademark on Third-party Toy Cars

On January 14, 2010, the German Federal Supreme Court (Bundesgerichtshof) ruled that Autec's toy cars did not infringe auto manufacturer Adam Opel GmbH's trademark rights, despite the appearance of Opel's trademark on Autec's toy car's grill.

The claimant, Adam Opel GmbH (Opel), a German automobile company which is now a wholly-owned subsidiary of General Motors, was the proprietor of the device mark referred to as the "Opel-Blitz" (pictured below) which covered both motor vehicles and toys.

AUTEC AG (Autec), a German toy-car company, produces and manufactures toy cars under the trademark CARTRONIC. Autec had allegedly produced and distributed miniature toy copies of Opel's Astra V8 Coupé (pictured below) all of which featured the Opel-Blitz mark on the miniature's grill.

Both Opel's automobile and Autec's toy car miniature displayed the Opel-Blitz mark in the same location on the respective car and toy.

Opel objected to Autec's manufacture and distribution of the Opel Astra V8 Coupé miniature, based on its existing trademark rights in the Opel-Blitz mark which covered both motor vehicles and toys, fearing confusion would arise among consumers.

Before ruling on the matter, the court of first instance, the Regional Court Nürnberg-Fürth, requested a preliminary ruling from the European Court of Justice (ECJ) on the matter. In decision C-48/05, the ECJ ruled that "affixing by a third party of a sign identical to a trade mark registered for toys to scale models of vehicles cannot be prohibited under Article (5)(1)(a) of the directive unless it affects or is liable to affect the functions of that trade mark." The ECJ also determined that it was the responsibility of the Regional Court Nürnberg-Fürth to determine how the average consumer of toys in Germany would respond to the issue. Namely, would this average consumer view the logo affixed to the toy model car's grill and assume that the toy was either 1) manufactured by Opel, or 2) that Opel and Autec were linked economically by license or other legal design? The Regional Court Nürnberg-Fürth in its May 2007 decision concluded, "No," holding that the average consumer would believe the logo featured on the toy car was simply part of the model, and thus would not assume that this logo signified a link between the toy car company and the automobile company and car upon which the model was based.

In its January 14, 2010 decision, the Bundesgerichtshof affirmed the Regional Court's ruling denying that the Opel-Blitz trademark had been infringed. Even though Bundesgerichtshof noted that the Defendant had affixed an identical mark, Opel's logo, on identical goods, namely, toys, this particular use did not rise to trademark infringement.

The Bundesgerichtshof reasoned that the use did not affect the main function of the logo, namely, to indicate the "trade origin" of the goods (toy cars). The use also failed to garner a negative consumer reaction, as the German toy consumer would only understand the display of Opel's logo on the toy car as an attempt to mirror the original Astra V8 in miniature version as much as possible. The consumer would not see the logo and assume that the toy car was manufactured by Opel.

Finally, Autec's use of the logo on its model Astra V8 toys did not rise to infringement of a mark with a reputation, as the use did not have detrimental effect on the reputation acquired under Opel's mark for motor vehicles. Thus, the Bundesgerichtshof dismissed the case, denying any trademark infringement relief to Opel.

A comment on the ECJ's initial ruling at the outset of the matter with respect to Article 5(1)(a) of the Trade marks Directive: The ECJ's decision is consistent with earlier case law which notes that infringement exists under Article 5(1)(a) only when the use by a third party harms a function of the trade mark, the guarantee of origin function being the most prominent of functions. The ECJ also appears to have widened this exception, insisting that the public must see a commercial link between plaintiff and defendant. Thus, the ECJ may have introduced, albeit indirectly, a "risk of confusion element" under Article 5(1)(a) of the Directive. Additional discussion on this point may be viewed at http://jiplp.oxfordjournals.org/cgi/content/abstract/3/8/507.

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Come and Get It! Extra PTA Days, Courtesy of the Federal Circuit

Patent holders Wyeth and Elan Pharma successfully challenged the USPTO's method for calculating patent term adjustments (PTAs) this month, adding about 8-9 months each to the terms of 2 patents covering treatments for Alzheimer's disease. Wyeth and Elan Pharma International Limited v. Kappos, No. 2009-1120 (Fed. Cir. 2010).

The Federal Circuit held that USPTO rules applied 35 U.S.C. §154(b) "overlap" provisions too broadly. Under 35 U.S.C. §154(b)(1) and (2), a patent term may be extended by the number of days lost due to (i) USPTO delays during prosecution, or (ii) prosecution occurring more than 3 years after filing. However, where only one day was lost, a patentee cannot recoup two days, even if the lost day falls under ("overlaps") both criteria. The decade-old USPTO rules started the "overlap" clock 3 years too early, said the Federal Circuit, resulting in calculations according fewer PTA days than allowed under 35 U.S.C. §154(b).

We expect that the term of many issued patents will be extended as a result of this ruling. The USPTO has advised that it is changing its method for calculating PTAs and that it will issue guidance for expediting recalculation requests in the near future.

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Undue Pressure or Undue Blame – Foreign Countries React to the Prospects of US-like Copyright Legislation

Reports surfaced this month taking a somewhat accusatory tone against the United States and its alleged tactics for getting other countries to enact copyright legislation similar to its own. Tico Times, a leading weekly paper in Costa Rica reported on January 15, 2010 that the United States is delaying market access to Costa Rican sugar producers until the country's legislators approve the 14th Amendment to the Central America Free Trade Agreement ("CAFTA"), which covers copyright law.

Initially, Costa Rica was the only signatory that did not ratify CAFTA due to strong opposition in the country from various groups, including farmers, students, and trade unions. The legislation was partially pushed through in October 2007, with the section covering several provisions related to intellectual property, Amendment 14, left out and never officially signed into law. Similar to other TRIPS-plus agreements, the provisions go beyond what is required under International agreements. For example, the Agreement requires that member countries develop a uniform domain name dispute resolution policy to assist in settling domain disputes, provide copyright protection for the life of the author plus 70 years, enact provisions on anti-circumvention, under which member countries must prohibit tampering with technology used to protect copyrighted works, and provide for civil and criminal liability.

The country originally faced a December 31, 2009 deadline to approve the controversial portion, but discussions have been delayed, sources cite, due to the Costa Rica's extensive government process and political disagreement. Sources in Costa Rica note that there are currently 121 motions related to the law that need approval. For each motion, there must be a vote in the Commission and up to 45 minutes of debate on the floor of the assembly must be allowed. Moreover, Costa Rica is currently in the middle of a presidential election and Parliament is unlikely to convene before its completion.

Adding to the administrative barriers is the lack of support for the provisions within the region. Costa Rican papers are reporting that the prospect of the copyright provisions being passed is setting off protests by students who are concerned about the effect of proposed changes on their education by way of altering current study and research practices. Health officials in the region are also expressing disdain for the proposed provisions, claiming that they will "bankrupt the public health system" by making it impossible to develop generic low-cost versions of pharmaceuticals without being in contravention of the trademark and patent provisions in the Act.

Currently, a reported 11,880 metric tons of sugar which were ready for export to the United States are on hold, unable to be sold. While this plays well into a powerful-country-threatens-small-lesser-developed-country story, the US Embassy has denied that failure to enact copyright reform is a cause for the delay. Rather, the US indicated that the delay is simply a matter of the fact that the country has already met its allocated sugar export quotas, which were set back in September. The quotas are designed to protect local producers, and to allow countries to export a specified quantity of a product to the US at a low tariff, while subjecting all imports above the pre-determined threshold to a higher tariff.

Costa Rica isn't the only region which the US is accused of bullying into copyright reform. The United States has also received some heat from the Bahamas. According to local reports, the country recently proposed IP enforcement reforms after alleged pressure from the United States Trade Representative, who was reported to have accused the Bahamas of being "lax" in enforcing intellectual property laws. The Chamber of Commerce President has since taken steps to strengthen the country's enforcement regime, but has also placed some of the blame back on the US, arguing that 90-95% of the counterfeit products sold in the Bahamas come from the United States.

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WIPO to Discuss Protection of Pharmaceutical Test Data

On February 8, 2010, the World Intellectual Property Organization is holding a Symposium on test data protection in Geneva.

Under Article 39.3 of the WTO TRIPS Agreement, undisclosed test data submitted to gain marketing approval for a new drug is generally considered to be protected information. The US FDA and other nations' drug regulatory bodies keep such data secret for several years. However, generic pharmaceutical companies would like access to such data as early as possible, to facilitate generic drug entry into the marketplace.

The WIPO Symposium is meant to provide a forum for further discussion of this unique form of intellectual property protection.

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Federal Circuit Clarifies Standards for Using Internet Materials as Specimens of Use

On December 23, 2009, the Federal Circuit Court of Appeals gave trademark applicant Michael Sones an early Christmas gift in reversing a Trademark Trial and Appeal Board decision maintaining a refusal to accept Mr. Sones's specimen of use submitted for his application to register the mark ONE NATION UNDER GOD for "charity bracelets." In the Federal Circuit decision In re Michael Sones, the court held that a picture of goods is not a mandatory requirement for a website-based specimen of use. The proper test for an acceptable website-based specimen is "just as any other specimen, …it must in some way evince that the [applied-for] mark is 'associated' with the goods and services as an indicator of source."

The specimen of use of the applied-for mark submitted with a statement of use consisted of pages from the applicant's website including a product listing consisting of the wording "ONE NATION UNDER GOD™ CHARITY BRACELET for $2.00" and under this listing the wording "ONE NATION UNDER GOD™ CHARITY BRACELET, CHOICE OF BLUE OR RED $2.00 EACH. No photograph of the product was displayed on the submitted website materials. The web page also displayed a "shopping cart" function for online ordering, including a "View Cart" and "Add to Cart" function.

During prosecution, the trademark examiner treated Sones's specimen of use as a 'web catalog' and strictly adhered to a rule from the Trademark Manual of Examining Procedures (TMEP) requiring a picture of the relevant goods as part of an acceptable catalog or similar specimen of use. In following this rule, the trademark examiner noted that the submitted specimen did not show a picture of the goods in close proximity to the mark— which, as described above, is entirely correct. In the Final Office Action, the trademark examiner took a more entrenched position, emphasizing that "a display is acceptable 'only if' it includes 'a picture of the relevant goods.'" (emphasis in original quote) The Board's decision followed the bright line rule applied by the trademark examiner and concluded that Sones failed to satisfy "the criteria …that the specimen (1) include a picture of the relevant goods and (2) show the mark sufficiently near the picture of the goods to associate the mark with the goods." The Board also noted what it believed to be an inadequacy of Sones's description of the goods on the submitted materials.

In reaching its decision, the Federal Circuit reviewed and commented on the origins of the rule applied by the trademark examiner and the Board. This rule originated in a federal district court decision Land's End, Inc. v. Manbeck, addressing a specimen of use from a mail order catalog. While the Land's End decision made reference to the catalog page showing a picture of the goods and corresponding description—thus constituting "a display associated with the goods"— the decision hinged on the catalog page's "point of sale" characteristics through the inclusion of order forms as part of the catalog. The USPTO interpreted and adopted the Land's End decision and created a new section in the TMEP specifically for "catalogs as specimens." Trademark examiners routinely apply this rule to electronic specimens of use, regardless of whether they are catalog pages, and the Board has regularly applied this standard on review.

In the Sones decision, the Federal Circuit clearly states that it does not believe the Land's End decision established a clear rule requiring that specimens of use from the Internet always include a picture of the goods. The Federal Circuit pointed to the Land's End decision's reliance on the "point of sale" nature of the specimen, and less on the fact that the catalog page included a picture. The Federal Circuit also indicated that Internet specimens should be viewed in the same manner as actual goods sold in a brick-and-mortar store. Product labels and product packaging displaying the mark are readily accepted without a picture of the goods. Likewise, product displays such as tradeshow booths, have been found to be acceptable, even though goods were not present or visible at the tradeshow booth. The TMEP recognizes that a website is akin to an electronic retail store and that a web page is a "shelf-talker" or "banner" encouraging consumers to buy a product. The TMEP also recognizes that ordering from a website is the "equivalent" to picking up a box in a store, and boxes as product packaging do not need a photograph of the goods per se to link a trademark to the goods inside. Accordingly, the Federal Circuit questioned the need for a photograph in the context of Internet specimens. The Federal Circuit further pointed out that the TMEP also includes a section concerning specimens of use entitled "Electronic Displays" which makes reference to websites, but does not recite the elements of the test from Land's End.

The Federal Circuit acknowledged that a "visual depiction" of a product is an important consideration in determining the sufficiency of an Internet specimen and the absence of a picture could certainly support a lack of association between a mark with the source of the goods. Nevertheless, a picture is not the only means for establishing an association between a mark and the goods, and a bright-line rule as applied by the trademark examiner and maintained by the Board was not correct. The Federal Circuit identified factors, as examples, to be considered in examining an Internet specimen of use, and possibly offsetting the lack of picture, as the "point of sale" nature of the specimen and whether the actual features or inherent characteristics of the goods are recognizable from the textual description.

The Federal Circuit vacated the decision of the Board and remanded the case for further proceeding consistent with the Federal Circuit's decision.

This decision raises interesting issues that could shape future USPTO analysis of specimens of use and TMEP sections. The Federal Circuit is clearly looking to substance over form in specimens of use. Will this ease review of non-traditional or "new media" specimens of use? The Federal Circuit has made a distinction between a catalog as a specimen of use and an Internet reference as a specimen of use, but did not offer guidance on Internet-based catalogs. Whereas the TMEP section pertaining to catalogs as specimens of use includes factors that do not fully reflect the Land's End decision, might an amendment to this TMEP section be forthcoming? These issues are likely to be addressed as the Board and USPTO digest the Federal Circuit's decision.

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Complications Under the Physician's Immunity Statute: Still Rare, Potentially Costly

Attorneys practicing in the medical-patent field routinely submit method-of-treatment claims for prosecution before the U.S. Patent and Trademark Office, as such are considered patentable subject matter under U.S. law. When drafting and enforcing such claims, however, patent practitioners should be aware of the "physician's immunity" statute in force in the U.S. since 1996, as the statute may prevent the enforcement of remedies for infringement of certain method-of-treatment claims against physicians and hospitals.

Under 35 U.S.C. 287(c), a medical practitioner who infringes a patent by performing a medical or surgical procedure on a human body (the Section also provides immunity for procedures performed on a nonhuman animal used in medical research or instruction directly relating to the treatment of humans) is immune from liability for that infringement, including freedom from injunctions, damages and attorneys fees. The immunity does not apply if the performance included the use of a patented product (machine, manufacture, composition of matter) in violation of patented claims to the product. While nicknamed to indicate physician's immunity, this statute provides immunity to non-physician medical treatment providers as well as health care entities related to the performance (e.g. hospitals). Section 287(c) also provides that immunity does not apply to certain device manufacturers, pharmacy or clinical lab services, or to US patents having effective filing dates prior to September 30, 1996.

U.S. law provides little guidance as to the metes and bounds of 35 U.S.C. 287(c). The legislative history of the statute provides some examples of intended application of the statute, for instance stating that a physician that transplanted a healthy heart into a cardiac patient using a conventional anesthetic would likely enjoy Section 287(c) immunity and not be liable for infringing a method claim covering the transplant procedure. The legislative history also states that if the method claim were directed to the use of a novel and non-obvious anesthetic, immunity under 35 U.S.C. 287(c) may not apply, and patent holders could receive traditional remedies for infringement.

The Supreme Court was given the opportunity to comment on subject matter that might fall under Section 287(c) in Laboratory Corporation of America Holdings v. Metabolite Laboratories, Inc., et al., 548 U.S. 124, 126 S.Ct. 2921 (US S.Ct. 2006). At issue was the validity of claim 13 of U.S. Patent No. 4,940,658, which reads as follows:

A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:

assaying a body fluid for an elevated level of total homocysteine; and

correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

Commentators hoped the Supreme Court would consider whether this diagnostic method claim would be considered protected medical activity under 35 U.S.C. 287(c), and whether physicians and hospitals may enjoy immunity from liability after infringing this claim. However, the Supreme Court dismissed the case on procedural grounds and did not consider 35 U.S.C. 287(c). Dissenting Supreme Court Justices commented that this claim should have been considered by the Court to make the public aware whether such a claim falls under 35 U.S.C. 287(c).

In Emtel, Inc. v. Lipidlabs, Inc., 2008 U.S. Dist. LEXIS 77597 (S. Dist. Tex. 2008), a district court discussed 35 U.S.C. 287(c) in some detail. In Emtel, the holder of U.S. Patent No. 7,129,970 alleged infringement of claims including a method claim self-categorized as a business method, directed in part to delivering medical services by having a physician diagnose medical problems from a distance. The alleged infringer filed a motion for summary judgment, requesting dismissal of the suit in part due to immunity as a provider of health services under 35 U.S.C. 287(c). The district court denied the motion for summary judgment under 35 U.S.C. 287(c), stating that the claims at issue were not infringed and therefore section 287(c) immunity did not apply.

Also, in response to the patent holder's assertion that the physician's immunity statute does not apply because "a Diagnosis is not a 'medical or surgical procedure,'" the Emtel Court noted that a procedure can refer to diagnosis in the medical field, citing medical dictionary definitions and reviewing legislative history records to rebut the patent holder's arguments. The Court also construed the phrase "the performance of a medical or surgical procedure on a body," suggesting that a diagnosing physician need not physically interact with a patient to deliver medical or surgical treatment under 287(c), and that a company providing communication links between physician and patient may qualify for 287(c) immunity.

General Recommendations

When drafting medical method claims for filing in the United States, we recommend considering whether the claims may fall under Section 287(c) (for instance, if they are directed to a medical or surgical method, or even a diagnostic method), and whether a potential infringer might be a physician or a hospital. Where Section 287(c) may be a later issue, we recommend that a claim set include claims having patented products and non-treatment steps where possible. Also, claims should be included in the application that will be geared toward manufacturers and others in the medical industry that do not qualify for 287(c) immunity.

We also recommend that patent litigators seeking immunity under Section 287(c) remember that the immunity likely only applies if infringement has been found. The statute does not prevent patent hol¬ders from alleging infringement or allow alleged infringers to avoid suit altogether. Rather, the statute provides immunity from the enforcement of remedies for infringement against medical practitioners and related health care entities.

Multiple forms of patent protection should be considered, including utility, design and plant patents. It may be that a design patent provides the only means of patenting the product, in contrast to patenting the use of the product during a medical or surgical procedure.

Further, global marketing of a new invention should be considered during the initial claim drafting of the US utility application. In particular, patent protection and enforcement of such claims are treated differently in various countries. For example, most foreign patent offices do not allow method-of-treatment claims, but rather require "use" style claims instead. Therefore, certain claims may be composed in the US application in anticipation of the subsequent examination in specific foreign patent offices.

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U.S. Design Patent— the New Patent King

A case may be made that recent court decisions have made obtaining and enforcing a utility patent more difficult. Conversely, recent court decisions have been largely favorable as to design patents. Although design patents protect ornamental features while utility patents cover functional aspects of an invention, this article suggests that design patent protection deserves greater consideration.

Design patents are on the rise. This is largely due to the fact that the burden on design patent owners to prove infringement has been reduced, courtesy of the Federal Circuit's 2008 decision in Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. 2008) (en banc), cert. denied 129 S.Ct. 1917 (2009) that changed the test for design patent infringement, by dropping one of two previously required infringement tests. In particular, the Federal Circuit's point-of-novelty test was dropped in favor of the Court's ordinary-observer test. (Although the Federal Circuit also suggests that a test similar to the point-of-novelty test should be taken into consideration during the ordinary-observer test.) The patent in Egyptian Goddess was directed to the ornamental features of a nail buffer. While not a typical product for a design patent, the district court held that the infringer did not demonstrate the patent to be invalid. The Federal Circuit affirmed the finding of non-infringement.

In contrast, ongoing developments in patent law have been less favorable to owners of utility patents. The 2007 U.S. Supreme Court decision in KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 127 S. Ct. 1727 (2007) has changed the tests applied by the USPTO when deciding to grant a patent, and by the US courts when deciding whether to invalidate a patent. The ruling has created great consternation within the patent community, raising concerns that it would be very difficult to obtain a patent, and that issued patents en masse could be held invalid. The KSR decision considered a claim directed to a combination of an electronic sensor with an adjustable automobile pedal so that pedal's position can be transmitted to a computer that controls the throttle in the vehicle's engine. The Court held that the claim was invalid as a combination of familiar elements according to known methods which does no more than yield predictable results.

It remains unresolved whether the US Supreme Court intended KSR's patentability analysis to apply to design patents. The Federal Circuit declined to address this issue in its 2009 decision in Titan Tire Corp. v. Case New Holland, Inc., 556 F.3d 1372, 1384 (Fed. Cir. 2009). That case was directed to a design patent covering the ornamental features of a tractor tire. The Federal Circuit indicated that the issue of whether it was necessary to consider the KSR analysis was not relevant. Instead, the issue of obviousness, in the context of a preliminary injunction, was affirmed as to the district court's Durling analysis (Durling v. Spectrum Furniture Co., 101 F.3d 100 (Fed. Cir. 1996)). The Titan Tire Corporation decision suggests that perhaps the analysis of KSR, which was directed to a utility patent, may not be applied to design patents.

Make no mistake. Design patents are a potent tool and should be given serious consideration as a means of intellectual property protection for a vast array of products, provided there is an ornamental aspect of the invention which is not dictated by function.

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