Letter from Amerikat: Happy Bunny Day!

The AmeriKat has been enjoying the warmth of the sunbeams that have danced across her numerous files, spreadsheets and bundles this past week. The warmer weather brings out the summer clothes and English smiles, but also insects. Almost this time last year the AmeriKat was in the throws of a biblical scale warfare with swarms, floods, and drought inflicting her house. She had hoped that the spring and summer of 2010 was a blip in the calendar of insect infestations she would have to deal with, but alas, with the warmer weather the ants are back. She has now found the gap in her floorboards were the pesky insects have been arriving from, but like plugging a hole in a leaky boat, the water will always find somewhere else to spill in from. So instead of lounging out in the sun, dying eggs, eating chocolate and drinking lemonade on Easter Sunday, she is instead attacking any small six-legged body racing across her floor. (picture, left- the AmeriKat inspecting an alleged Easter bunny) Happy Easter from the AmeriKat!

Bratz Beats Barbie with $89 million jury-award

From pesky six-legged insects, to perky two-legged dolls. Last week a Californian federal jury issued their verdict in favor of Bratz (picture, right) in the now-famous copyright and trade secret battle between Barbie and Bratz (see previous reports here). Barbie's maker, Mattel, had alleged that the maker of the Bratz doll - MGA Entertainment- stole the idea for the Bratz doll by entering into a deal with the designer of the doll, Carter Bryant, who had previously worked for Mattel. Mattel subsequently filed a lawsuit for copyright infringement and trade secret violations, while MGA alleged unfair competition and also trade secret theft. This case was heard by first by Judge Larson who ruled in favor of Mattel, but that $100 million verdict was overturned on appeal. The Court of Appeals for the Ninth Circuit held that the federal court judge had erred in ruling that Mattel automatically owned the designer's sketch of the doll under the terms of the 'Employee Confidential and Inventions Agreement' between Mattel and the designer and remanded the case back to the federal court.

Bryant's employment agreement had assigned all rights, titles and interests in any such inventions, patents and copyrights to Mattel. The contract defined "inventions" as including, but not limited to, discoveries, improvements, processes, designs and know-how. The district court had held that this agreement assigned Bryant's ideas to Mattel despite 'ideas" not being included on the list or mentioned anywhere else. Mattel argued that the list of examples in the contract were illustrative not exclusive, but the Court held that "ideas" are "markedly different from the list of examples including discoveries, improvements and designs" (People ex rel Lungren v superior Court (1996)). (picture, left - no amount of law school could prepare Lawyer Barbie for the cruelty of a jury verdict) The Court of Appeals stated that the contract was arguable capable of either including or not including ideas, but that the trial court did not recognize this ambiguity and thus did not examine the extrinsic evidence before it on this issue.The Appeals Court concluded that the agreement could be interpreted to cover ideas, but that the text of the agreement did not compel that reading and thus remanded the issue back to the district court. They stated that:

"Designs, processes, computer programs and formulae are concrete, unlike ideas which are ephemeral and often reflect bursts of inspiration that exist only in the mind."

At the end of last year, Mattel and MGA applied for summary judgment on the issue of copyright infringement for the first and second generation Bratz dolls. Judge Carter granted summary judgment in MGA's favor in respect of the second generation Bratz dolls, but the remaining issues, including breach of copyright for the first generation of Bratz dolls and the breach of confidence/trade secret claims, remained for trial. The court was tasked with determining whether the Inventions Agreement entitled Mattel to Bryant's ideas for names like "Bratz" together with sketches that he created outside working hours. Also, ripe for ruling was MGA's trade secret claim against Mattel through a campaign of corporate espionage, whereby MGA alleged that Mattel's employees gained access to regulated private MGA toy showrooms by deceptive means.

On Thursday, a federal court jury in Santa Anna, California, found in favor of MGA and following the Court of Appeals opinion held that Mattel did not own the sketches or ideas for the Bratz dolls. The jury verdict also held in favor of MGA's counterclaim that Mattel had willfully misappropriated trade secrets and slammed Mattel with a $88.5 million damages price tag. A slight saving grace, albeit an insulting one, was that the federal jury also found that MGA had interfered with Bryant's contract with Mattel and issued Mattel a $10,000 award for the interference.

Although the battle may not be over with reports that Mattel will file a motion for a retrial within two weeks and will reserve the right to appeal, the case does remind everyone of the importance of carefully drafted employee contracts, as well as taking the business decision to litigate over seven or so years even if it costs your shareholders $400 million (see MSN money report here). However, if Mattel's intention was to quash the rival dollmaker, the litigation may have just done that. MGA's CEO, Isaac Larian is reported as saying that the Bratz brand "will never be the same level it was before."

tytoc collie will keep you posted on any further developments in the case.

Tony Duquette seeing Spots with J.Crew sweater

Tony Duquette, Inc, the proprietor of the various IP rights associated from the late namesake artist and designer filed a trade mark infringement suit against clothing retailer and AmeriKat favorite, J.Crew in a New York federal court last week. For those not in the know, the late Tony Duquette was a Tony award-winning designer and artist who counted Elizabeth Arden and the Duke and Duchess of Windsor as clients. Tony Duquette allege that J.Crew has infringed the DUQUETTE name and trade mark by producing and selling a sweater with the style name the "J.Crew Duquette Factory Leopard Print". The complaint alleges that J.Crew knowingly and willfully used the DUQUETTE trade mark in connection with their leopard print sweater because of Duquette's alleged unique association with leopard prints, in particular with woven and printed textiles including carpets and tapestries. (picture, left - a fabric design by Duquette) The AmeriKat is seeing more and more product descriptions that use trade marked words become the subject of trade mark disputes. In the UK, one can always invoke the fun game of whether the product description is being used as a function (of many, many functions) of a trade mark. In the U.S., the case is arguably little more straightforward.

Albeit having not read the complaint, the AmeriKat's gut instinct is that there is not enough here to satisfy the test of trade mark infringement. i.e., namely where is the confusion and whether Duquette has enough reputation in his name associated with leopard print textiles to claim dilution? Further live trade mark registration for DUQUETTE the AmeriKat found on USPTO is for tapestries of textiles, carpets and rugs - not apparel (Reg No. 3863326). The AmeriKat perused J.Crew's website today and found one leopard print sweater which is called the "Wild spots cardigan" - a very un-J.Crew product name - so her guess is that J.Crew has already taken steps to change the name of the contentious product. The Amerikat predicts this lawsuit to die a quickish death, just like the animal print trend of last season.

Apple v Samsung v Apple v Samsung v Apple....

Last year the AmeriKat was constantly up-to-date reporting on the latest of the patent mobile phone wars. She has now officially lost track, except for the latest of the battles now between Samsung and Apple. Apple sued Samsung two weeks ago in California federal court for trade dress, design patent, trade mark and patent infringement against Samsung's Galaxy line of smartphones and tablets. Apple allege that Samsung's products are copies of the iPhone and iPad designs including the "icons with the rounded corners."

The incestuous ties of the smartphone and tablet manufacturers and retailers are felt in this case. In 2010 Samsung earned a reported $5.7 billion revenue from Apple by way of their purchase of Samsung semidconductors. Tim Cook, Apple's CEO, told the Wall Street Journal that Apple is

"Samsung's largest customer, and Samsung is a very valued component supplier to us, and I expect the strong relationship will continue. Separately from this, we felt the mobile communication division of Samsung had crossed the line, and after trying for some time to work the issue, we decided we needed to rely on the courts."

The litigator in the AmeriKat sensed a nice little bargaining chip for Apple in this suit, however not to be uncharacteristic in this type of litigation Samsung then "countersued" Apple last week, but not in the U.S. Samsung filed patent infringement lawsuits against Apple in Korea, Japan and Germany alleging violations of patents filed in each of those jurisdictions. The allegedly infringed patents involve "transmission optimization and reduction of power usage during data transmission, 3G technology for reducing data-transmission errors and a method of tethering a mobile phone to a PC to enable the PC to utilize the phone's wireless data connection." The speed in which these lawsuits were filed indicate that Samsung may have been preparing itself for this counter-attack for sometime.

This latest chapter in the mobile patent war saga again demonstrates that when it comes to litigation surrounding smartphone technology, the best defence that is repeatedly being employed by parties is that of pursuing offensive litigation strategies on a global level. Whether or not that will prompt the parties to settle sooner is not a certainty, but the more complicated and more jurisdictions in which a company has to battle, the more attractive it becomes to resolve the dispute before litigation costs rocket and stated commercial relationships are massively affected.

Letter from AmeriKat: From Sea to Shining Sea

The AmeriKat was travelling again this past week. Irrespective of the past 25 years of frequent flying transatlantic-ally, continentally, transpacific-ally, and more, she is always surprised to find herself in a completely new location after seemingly no time at all. Leaving behind one established life and role and trading it in for a new role, set of contacts and friends has always given the AmeriKat a bit of a thrill. She can discard her "American lawyer in London" role when she steps off the plane in Dallas and just be someone welcomed home by immigration officials. Entering immigration in other ports her role is constantly transformed by a stamp in the passport to tourist, visiting family, attending a conference, here for business, or "living and working here". The only constant in these travels, from country to country and coast to coast, is her trusty Coach luggage, who has seen her across hundreds of thousands of miles, over-head bins and immigration authorities and is the subject of her first story this week.

Jo-Ann Fabrics sued for infringing fabric by Coach

In most isolated strip malls in U.S. cities from sea to shining sea, usually in between a dry-cleaners and a cell-phone retailer, is a Jo-Ann Fabrics where soccer-moms, crafters, and all in between go to purchase a multitude of fabrics, zippers, buttons and threads. Last Monday, Jo-Ann Fabrics was sued for trade mark, trade dress and copyright infringement in Chicago federal court by New York-based high-end leather goods manufacturer and AmeriKat favorite, Coach. Coach is complaining about a fleece fabric being sold by Jo-Ann Fabrics in store and on-line which is infringing Coach's signature "C" trade mark, associated trade dress rights and copyright in the signature "C" trade mark design (picture, right). Coach is asking the court for $2 million per each infringing mark, additional damages, attorney fees, and an injunction restraining future sales of the infringing product.

The "C" trade mark and insignia is on several of Coach's signature lines of bags, wallets, belts, shoes, hats, scarves and the lining therein and was registered as a U.S. trade mark in September 2002. You can even spot the AmeriKat in Holborn by the violet Coach scarf with the trade mark double "C" pattern that she carries on her Coach bag. However, the "C" insignia and pattern is a prime target for counterfeiters and counterfeit Coach bags (see AmeriKat report on previous action taken by Coach in Chicago) and the market is rife with copycats. According to the complaint Coach sells more than $3 billion products annually and has filed more than 500 trade mark infringement suits since 2010.

According to the complaint the fabric (picture, left) was designed and supplied to Jo-Ann Fabric by the named co-defendant, Feldman Co. and together with Jo-Ann Fabric are accused by Coach of trying to benefit from the "incalcuable goodwill" associated with Coach's C trade mark by selling the allegedly infringing fabric. Coach also argue that consumers will be confused as to the source of the fabric - the AmeriKat does not disagree, but there are some differences between the two fabrics. The "C"s on Jo-Ann's Fabric fabric are almost closed, looking more like "O"s than the clearly differentiated "C"s on Coach's fabric. The AmeriKat believes these differences not to be fatal and also believes that although a consumer would be able to recognize the difference after closer study of the fabric, initial interest confusion is nevertheless present.

Had the Amerikat seen the fabric in a Jo-Ann's Fabrics store her immediate reaction would first be "Why is Coach allowing their signature print fabric to be sold in Jo-Ann's Fabrics?"- a reaction that goes first to the pure dilution argument as argued by the complaint. Her next reaction would be one dealing with tarnishment of the mark - "Why is Coach allowing their signature print fabric to be printed on fleece and sold in Jo-Ann fabrics?". As far as the AmeriKat knows from the Coach range, they have never used their signature print on fleece - a fabric that is not associated with the up-market silk and leather ranges produced by Coach. Of note Jo-Ann Fabrics does sell fabrics with trade mark names and logos, namely for major league sports teams such as the New York Yankees and licensed fabrics from Disney. The AmeriKat does not anticipate this case going all that far and expects it to settle quite quickly given the similarity of the designs and strength of reputation in Coach's mark, however it acts as a warning to fabric buyers not to skate so closely to the edge of trade mark infringement.

Organic farmers sue Monsanto over genetically modified seeds

From Illinois to New York now. Two weeks ago, the Public Patent Foundation (PUBPAT), a non-for profit legal services organization based out of the Cardozo School of Law, filed a pre-emptive lawsuit in Manhattan federal court on behalf of 60 plaintiff family farmers, seed businesses and organic agricultural organizations against agricultural biotechnology company Monsanto challenging their patents on genetically modified seed. The lawsuit was pre-emptive in order to protect the class from anticipated patent infringement suits should their crops ever be contaminated by Monsanto's genetically modified seed. The AmeriKat has read about the 60 plaintiffs and noted that they included three farmers and seed producers from her home state of New Mexico, Chispas Farms, in Albuquerque, Jardin del Alma from Monticello and farmer Paul Romero from Espanola - a reminder that patent litigation does not just impact big businesses in Silicon Valley, but your neighbors.

PUBPAT's Executive Director and law lecturer at the Cardozo School of Law, Dan Ravicher, stated that the case

"asks whether Monsanto has the right to sue organic farmers for patent infringement if Monsanto's transgenic seed should land on their property. It seems quite perverse that an organic farmer contaminated by transgenic seed should be accused of patent infringement, but Monsanto has made such accusations before and is notorious for having sued hundreds of farmers for patent infringement, so we had to act to protect the interests of our clients."

For anyone who has seen Food, Inc., you will be aware about such legal issues involving Monsanto (click here for an excerpt of Food, Inc. about Monsanto) and the case of Percy Schmeiser. Genetically modified seed are alleged to contaminate and destroy organic seeds when they enter organic crops. Further, legally speaking, as with what happened with Schmeiser, when genetically modified seed enters a neighbouring crop and grows and/or cross pollinates with a farmer's crop the farmer can be held to be infringing the patent of that seed. PUBPAT is thus asking the court to declare that if organic farmers are contaminated by Monsanto's seed they need not fear of being threatened with patent infringement proceedings.

PUBPAT are also arguing that Monsanto's genetically modified patents for seeds are invalid because they do not meet the "usefulness" criteria under section 101 of the Patent Act. An invention is "useful" under section 101 if it is capable of providing some identifiable benefit. The complaint cites Justice Story's dicta in Lowell v Lewis (1817) which stated that inventions that are "injurious to the well being, good policy, or sound morals of society" are unpatentable. Ravicher's argument is that genetically modified seed has negative economic and health effects, and the promised benefits and usefulness of the seed, namely increased production and decreased herbicide use, are false. (picture, right - alfalfa)

Monsanto stated that the lawsuit was a "publicity stunt" and that Monsanto is committed to never suing farmers over the inadvertent presence of their genetically modified seed in their fields - (the AmeriKat wonders how does one even prove or disprove inadvertent presence of GM seeds?) Monsanto also stated that the validity of their patents was without question and supported by legal precedent. Monsanto stated that:

"The plaintiffs' approach is a publicity stunt designed to confuse the facts about American agriculture. These efforts seek to reduce private and public investment in the development of new higher-yielding seed technologies. This attack comes at a time when the world needs every agricultural tool available to meet the needs of a growing population, expected to reach 9 billion people by 2050. While we respect the views of organic farmers as it relates to the products they choose to grow, we don't believe that American agriculture faces an all-or-nothing approach."

The suit comes soon after the US Department of Agriculture (USDA) fully deregulated genetically modified strains of alfalfa. The USDA has also allowed farmers to plant genetically modified sugar beets without restrictions while it completes its Environmental Impact Statement (EIS) on that crop. The timing of the lawsuit suggests that the plaintiffs groups may feel that the time is right to take action before an increasing number of GM crops are deregulated by the USDA and before the alleged impacts of GM crops on organic crops become more serious.

The AmeriKat will be watching this fight with anticipation. Although it is unlikely that PUBPAT will be able to create much of a dent in such a powerful organization, like Monsanto, she is interested in any attempt to try to address the balance of power created by the patent system in the agricultural industry. But what do readers think - is it a hopeless publicity stunt, or are the invalidity arguments with merit?

The AmeriKat recommends this recent interesting article by Anna Lappe in The Atlantic about the issues surrounding GM, Monsanto and food production.

Byrne settles with Crist over Talking Heads song use

From New York, we fly south to Florida where Florida's former Governor Charlie Crist settled (picture, left) a copyright infringement lawsuit last week brought against him by Talking Heads' David Byrne after Crist used the 1985 Talking Heads's song "Road to Nowhere" in a political attack ad during his Senate campaign last year. Crist's campaign failed to seek permission from Byrne, the Talking Heads or Warner Brothers when they used the song in the Senate campaign video published on YouTube attacking Crist's Republican opposition, Marco Rubio. Byrne sued Crist for $1 million. Byrne said last year that the lawsuit was

"not about politics...It's about copyright and about the fact that it does imply that I would have licensed it and endorsed him and whatever he stands for."

Rubio himself was also on criticized for using The Steve Miller Band's "Take the Money and Run" in an attack ad against Crist. Rubio, however, was not sued. AmeriKat readers may recall past political song problems, such as in 2008 when Jackson Browne sued then presidential candidate John McCain for unauthorized use of his song "Running on Empty". Browne's lawyer, Lawrence Iser, also represented Byrne and stated in the initial complaint that it was "extraordinary" for another Republican campaign to misappropriate another artists's work without permission.

Another lesson that party politics and rock music do not mix.

Letter from AmeriKat II: Good Day Sunshine (patents)

Google's $900 million bid for Nortel's patents

Last Monday Google announced a bid to buy almost 6000 patents and patent applications from Nortel, the bankrupt Canadian telecoms equipment manufacturer, for $900 million. The patents include patents for wireless, internet and social platform technologies. The bid comes as part of Google's strategy to shield itself from patent litigation. The thinking is that if you buy enough patents that cover a wide and diverse range of technologies and industries, you may have a patent in your legal arsenal that may have otherwise been used against you. Google currently possess a comparatively weak patent portfolio in comparison to their market share and expansion into mobile operating systems, especially in relation to android-related technology. Readers may recall that Oracle sued Google last fall for patent infringement of its Java patents by Google's open-source android operating system. (District Judge Alsup, who is presiding over the case, last week received a tutorial in Java. Also, for a fun trade secret case involving HP and Oracle see this recent news here)

Although it was reported that other tech companies were expected to make bids for Nortel's patents, there may be few that can beat Google's incredibly high bid. On Monday, Google's general counsel and Senior VP Kent Walker(picture, left) wrote on Google's blog that

"... one of a company’s best defenses against this kind of litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services. Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories.

So after a lot of thought, we’ve decided to bid for Nortel’s patent portfolio in the company’s bankruptcy auction. Today, Nortel selected our bid as the “stalking-horse bid," which is the starting point against which others will bid prior to the auction. If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community—which is integrally involved in projects like Android and Chrome—continue to innovate. In the absence of meaningful reform, we believe it's the best long-term solution for Google, our users and our partners."

The planned sale of Nortel's patent portfolio must first beapproved by judges overseeing Nortel's bankruptcy cases in the US and in Canada. As reported by Bloomberg, anyone planning to beat Google's offer has to beat it by at least $25 million more than Google's initial offer, or at last count, $5 million more than the last offer. Anyone have $905 million to spare? The AmeriKat wonders what the return on investment is on purchasing a patent portfolio which with patents and/or applications that will have only about 20 or so years of life in them? Will Google ever make back theri $905 million on savings to legal fees or from patent damages? Or does that even matter as long as Google is sending a message to would-be plaintiffs that their patent portfolio is now robust, so sue at your peril? What do readers think?

US and UK unite for some more sweet patent harmony

David Kappos's UK harmonization tour last week not only yielded a Monday morning breakfast at UCL, but progress on the UK and US's joint action plan to combat the problem of patent backlogs and their effects. The joint announcement was made by Kappos and Baroness Wilcox, (compare the IP experience) Kappos stated that:

“The joint action plan highlights that while 21st century patent challenges are global in scope, so too are their solutions. Work sharing is a powerful tool that equips examiners to extract value from our skilled colleagues in other patent offices. By reducing redundant workloads and chipping away at the backlog, we can collaborate to unleash millions of jobs lying in wait and breathe life into our economies.”

The action plan is designed to allow an examiner in one office the ability to reuse work already done by an examiner in the other office on a corresponding applications, as much as possible to avoid duplication of work.

Kappos was also interviewed by The American Lawyer recently regarding the recent patent reforms (read interview here) and the America Invents Act (see recent AmeriKat posts here). When asked whether he thought it was that the House would pass a similar bill, Kappos replied:

I am off-the-charts optimistic.

The AmeriKat loves the enthusiasm.

Letter from AmeriKat I: Good Day Sunshine (TMs and ©)

The AmeriKat has been watching the English public embrace the change of the season this week. On Friday she slinked outside for her midday patrol and perched on a bench in Gray's Inn, with the new Vogue in paw. (picture, left - the AmeriKat taking a much needed lunchtime Kat nap) Like spring flowers, once the temperature rises above a certain level the English bloom onto any stretch of grass available to them. A sea of students, solicitors, lawyers and miscellaneous office workers were scattered about in the sections of Gray's Inn grass that was unspoilt by any appearance of shade. Once modest workwear suits, worn by males and females alike, were stripped of any sweaters, cufflinks and buttons to expose as much square footage of skin as possible, laughter was echoing off the Inn's buildings, people were chatting with their neighbors, and a general feeling of calm settled throughout. The AmeriKat even spied some IP barristers from 11 South Square joining in on the emergence of spring. There is something about warmer weather in England that makes the general public a little less guarded than normal, in both physical appearance and mentality, which can only ever be welcome.

Louboutin sees red with Yves Saint Laurent

Someone who has seemed to let their guard down, in least where trade mark infringement claims are concerned, is Yves Saint Laurent who last Thursday was sued in Manhattan federal court by the one and only Christian Louboutin. Louboutin is famous for his footwear recognizable by the casual observer by its trade mark red sole. The story goes that one of Louboutin's customers was wearing an amazing red nail polish on her nails which Louboutin adored. She had the coveted nail color in her bag, took it out and Louboutin painted his first sole with the red nail polish. The violent red-lacquered sole would later become his signature maker's mark and would be granted a US trade mark in 2008 (picture, right - Louboutin's famous heel).

Louboutin is now alleging that since January Yves Saint Laurent America, a subsidiary of the Gucci Group, is selling their shoes with the same red sole in store throughout Manhattan. Louboutin's complaint argues that Yves Saint Laurent's use of the red sole is "likely to cause and is causing confusion, mistake and deception among the relevant purchasing public." Louboutin is claiming for $1 million in damages and an injunction to stop Yves Saint Laurent (picture, left) from manufacturing the shoes. Interestingly, Louboutin apprenticed with Yves Saint Laurent in the late 1980s before setting up his own brand.

The AmeriKat is curious, as any Kat should be, to know what evidence of actual confusion (as stated by the complaint to be occurring) Louboutin has. Unlike in the UK, under section 1114 of the Lanham Act US trade mark owners have to prove that the defendant's use of their mark confused consumers. In the Second Circuit, which includes New York, the factors for the test for confusion is that as laid down in the Polaroid Corp v Polarad Elecs. Corp (1961) case. The AmeriKat sets out these factors below with some comments in tytoc collie's signature comment red:

1. The strength of the mark, i.e. the red soles - It is somewhat undeniable that Louboutin's red soles have indeed become well-recognized as a trade mark for his shoes in the market.
2. The degree of similarity between the two marks - Identical - in so far as they are both red outersoles
3. The proximity of the products and services - Identical - they are both shoes, being sold in the same stores, probably right next to or near each other
4. The likelihood that the senior user will "bridge the gap" into the junior user's product service line - if there even is a 'gap' it is very likely because they are competitors
5. Evidence of actual confusion between the marks - Always hard to come by, but perhaps Louboutin has some faithful customers who will be able to attest to some initial interest confusion?
6. Whether the Yves Saint Laurent adopted the mark in good faith
7. The quality of the Yves Saint Laurent's products - the AmeriKat would love to see Louboutin allege that YSL's products are of a lesser quality, but the fact that they are not and are side-by-side competitors actually makes it more difficult for YSL to squirm out of this one because there is more chance of there being actual, likely or initial-interest confusion.
8. The sophistication of the parties customers -If someone is in the market for $400-$4,000 shoes, one would think you would pay particular attention in knowing what shoe and from whom you were buying, however again, initial interest confusion may be the savior in this confusion battle.

Confusion, as any trade mark lawyer knows in the US and the UK, is notoriously difficult to prove. However, in the US and now thanks to Arnold J in the UK, initial interest confusion is probably the saving grace for Louboutin. Given that the price points of parties' products are so high and the sophistication of the intended consumers is so developed, any confusion present regarding the origin of the shoes on behalf of the consumer is likely to be remedied prior to purchase. What do readers think? Is this an easy fight for Louboutin or does Yves Saint Laurent have it in the (Neiman Marcus) bag?

Need for Congress to address issues with Google Books lawsuit, Pallante says

The AmeriKat has been quiet about the Google Books Settlement, which some may find unusual considering how much she followed and wrote about the litigation (see previous reports here). In fact she even predicted when District Judge Denny Chin (picture, left) was going to issue his damning judgment (just ask @garethdickson). There is little she wishes to say right now about Judge Chin's judgment other than, in her opinion, it was the correct determination given that the revised settlement seemed even worse than the first and again did not adequately address the issue of orphan works, and Google could have saved itself a lot of bother had it been an "opt-in" class than an "opt-out" (albeit probably not as profitable). However, the issue spotlighted how important the issue of digitization of works is in copyright, be it literary or artistic.

Maria Pallante (picture, right), acting Register of Copyrights, feels the same. Last week she told an event hosted by the US Chamber of Commerce that lawmakers need to address the issue of whether the digitization of literary works should be a benefit for the public or become a profit-making endeavour. As reported by the Dow Jones Newswire, Pallante stated that

"The first issue is really, is mass digitization a national goal that Congress feels legislation is warranted for, and if so, for what beneficiaries."

She also stated that

"It isn't that universal libraries aren't important, but there's a difference between universal libraries and universal bookstores."

With orphan works are back where we started, says the AmeriKat, why can't the US government just once and for all pass a bill like the Shawn Bentley Bill? It would allow for digitization of orphan works, but if and when the owner came forward a reasonable royalty would be payable under statute provided the user undertook a reasonable search. Does it need to be more complicated than this? Of course, the problem encountered is that once that copy is digitized the person who digitized it can arguably exclude other digitized copies of the same book being made - thus some of the arguments against Google in the Google Books case. As long as it is clear that the mere digitization of a literary or artistic orphan work does not mean that the digitizer can exclude others from making their own digitized versions of the work, then such problems should not be encountered. But then again, how can this be done but by legislation?

More in Part II.

USPTO/AIPLA Roundtable Report: Chinese utility models and design patents

While the AmeriKat had her whiskers in a pile of papers (picture, left) last Monday, the United States Patent & Trademark Office (USPTO) and the American Intellectual Property Law Association (AIPLA) was busy hosting a travelling roundtable discussion on China’s system for the procurement and enforcement of utility model and design patents. The aim of the roundtable was to afford US lawyers, companies and the public understanding about how China’s utility model and design patent system. The AmeriKat and IPKat's good friend, Michael Lin, of Marks & Clerk (Hong Kong) was there reporting on the key issues discussed at the event:

The USPTO's Elaine Wu started off the roundtable, and key note speeches by the USPTO's Dave Kappos and AIPLA's President, David Hill, (picture right) emphasized the growing importance of understanding IP in China via actual discussion with on-the-ground experts vs. the reliance on hearsay. To this end, the AIPLA and USPTO are jointly sponsoring this traveling roundtable discussion program with subsequent events being planned in the US and China.

Microsoft's Director of International IP Policy Mark Cohen laid out the background and framework of Utility Models ("UMs") and Design Patents in China and their alternative as a cheap and fast form of IP protection. Mark also showed some interesting statistics that it is overwhelmingly Chinese entities who are filing and using UMs and Designs Patents. Discussion followed as to the root causes of this, and why relatively few foreign entities apply for Chinese Designs, and particularly UMs. US practitioners are typically unfamiliar with UMs because they are not available in the US, although some other countries (Germany, Japan, etc.) do have them. While many countries have Designs Patents, few foreigners file their Designs Patents in China, as their scope is generally regarded as being quite narrow as dotted-lines (i.e., partial designs) are not allowed.

Elaine chaired the first panel discussion with Thomas Moga (Shook, Hardy & Bacon) (picture, right) explaining his interesting uses for Design Patents in China beyond what is typically allowed in the US. Meanwhile, Toby Mak (Tee & Howe) explained that the subject matter of UMs in China is limited to physical objects whose novel element is related to the shape or construction thereof. Thus, protection of chemical compositions, methods of use, etc. are not allowed via UMs. Toby also discussed the procedure for concurrently filing for both Invention Patents (i.e., US-style Utility Patents) and UMs in China. Toby also explained that by filing for both a UM and an invention patent in China, you can obtain both short-term protection as well as long-term protection; once the invention patent is ready to grant, then the Examiner may ask you to elect to keep either the UM or the Invention patent and abandon the other one in order to avoid double-patenting. IBM's Associate General Counsel for IP, Manny Schecter explained that IBM does not file for such IP in China (or elsewhere) as they are not subject to substantive examination and therefore their enforceability is highly suspect, even when granted. It seems that IBM, for one, simply wishes to have greater assurance that any of its granted patents are actually ultimately enforceable.

Skip Fisher (Perkins Coie) (picture, left) then chaired the panel discussion about enforceability of UMs and Design Patents. Michael Lin (Marks&Clerk, Hong Kong) led off the discussion about enforcement via China-specific administrative routes such as at Customs, local raids, seizures, and at trade shows. Ultimately, Michael believes that UM and Design Patent enforcement is possible in trade fairs, especially for exact copies. However, enforcement via customs and other administrative routes are more difficult than, for example, trade mark enforcement. Ping Gu (Unitalen) discussed the many complicated issues involved with legal enforcement of IP via the Chinese court system. Geoffrey Lin (Hogan Lovells) described his personal involvement with the Chint v. Schneider case which resulted in the largest ever IP judgment in China of 330 Million CNY ( about US $44 Million). Although IP litigation in the courts is increasing and the judges are getting better, evidence collection, forum shopping, local court regulations, political factors, etc. may all greatly affect the result of first-instance litigation. However, the availability of appeals to a higher court may in some ways mitigate these effects. As China has virtually no "discovery" available to plaintiffs, all panelists agreed that the collection of court-acceptable evidence prior to initiating litigation is essential and remains a serious problem in China.

The roundtable concluded with USPTO's Albert Tramposch heading an open discussion with all participants identifying issues (e.g., susceptibility of UMs and Designs Patents for abuse by NPEs, lack of a duty of disclosure, lack of substantive examination before grant, etc.) and discussing potential future actions, law changes, administrative, changes, etc. to address some of the issues. Participants hope that China will pay special attention to legal and administrative transparency and further improve equal treatment under the law.

Overall, it was a highly informative roundtable with excellent questions and observations from both the audience, presenters and panellists.

The AmeriKat thanks Michael for reporting and AIPLA and USPTO for organizing this roundtable. She is often surprised daily about how many UK IP lawyers do not take action in China or are unaware of what is available to them and their clients in China. Does anyone know if the UK IPO has planned or will be planning something similar for the UK audience?

AIPLA-USPTO roundtable here.
Round pool table here.
A famous Round Table here.

A round robin here.

Letter from AmeriKat: The Rite of Spring

Gone are the evenings when the AmeriKat had to activate her whiskers and night vision to illuminate the darkened journey from her office home. The days are getting longer, the afternoon sun is gliding through her Venetian blinds, and her outer garment of choice is a mere raincoat to guard against the unexpected shower. It is true, Spring may have finally graced London with her presence. However, with Spring has come the formidable western wind - Favonius (or Zephyrus)- that last week wreaked havoc on many a groomed fur coat (picture, left) and once-casually floating skirts -the winds of change have come. The winds of patent reform, first reported by the AmeriKat two years ago, have been the biggest news of the past few weeks, but the winds have also blown off the dust of some old issues and revealed some new issues.

i4i files Supreme Court argument, US Government agrees

The i4i v Microsoft battle is definitely an old IP story dating back to 2007, but only three weeks ago i4i filed their reply to Microsoft's appeal in the U.S. Supreme Court. The filing signals one of the final steps in the litigation before the Supreme Court rule on the issue of what evidential standard is required to prove patent invalidity– that of a higher “clear and convincing” standard or a “preponderance of evidence” standard. The “clear and convincing” standard has been part of US patent law for almost 30 years and supports the presumption that patents, when granted by the USPTO, are assumed to be valid; therefore a higher standard of proof is required to invalidate the patent.

Readers will recall that this case involves an epic battle between the two companies involving i4i’s US Patent No 5.787, 449 (“449 Patent”) which related to markup languages and Extensible Markup Language (“XML”) used in electronic documents. In 2007, i4i filed a patent infringement action against Microsoft in the Eastern District of Texas. Microsoft claimed that the '449 patent was invalid because an earlier version of i4i’s software had anticipated the claim. However, this earlier software, S4, had been destroyed ten years prior to the case so the USPTO Patent Examiners never had the opportunity to examine the i4i’s patent application in light of this alleged prior art. Because the S4 data had been destroyed, Microsoft argued that they never had an opportunity to provide “clear and convincing evidence” of invalidity. The trial jury found in i4i’s favor, Microsoft appealed to the Circuit Court of Appeals who upheld the lower court’s finding and then appealed to the US Court of Appeals for the Federal Circuit. The US Court of Appeals upheld the Circuit Court’s ruling and so Microsoft appealed to the Supreme Court. The Supreme Court granted certiorari in the case November 2010.

As reported by the Amerikat, Microsoft is arguing that the evidential standard to invalidate a patent should be one of a “preponderance” and not of a “clear and convincing” standard (see previous posts here for Microsoft’s argument). The AmeriKat has worked her way through the i4i’s brief for a full two-parter AmeriKat post out this week, but i4i's main argument boils down to the suggestion that Section 282, the section that deals with the burden of establishing invalidity, is not silent on the burden of proof requirement. It uses language that has a settled meaning of a “clear and convincing” standard which is itself settled by Federal Circuit and Supreme Court case law history, i.e., section 282 codified the existing evidential standard. In addition, this heightened standard of proof has specifically been used in cases dealing with prior-use claims of invalidity, such as the case here. Most of i4i's argument is devoted to the stronger underlying public policy argument of maintaining the heighted evidential standard, i.e., promoting strong and stable patent rights to protect the incentives for innovation and investment. A weaker standard, such as the preponderance standard, would arguably have the counter-effect as well as weakening the powers and judgment of the USPTO.

Appealing to the USPTO's powers definitely had the right effect and the US Government came galloping to i4i's defence. A week after i4i's filing, the US government joined 21 other amici curiae briefs in support of i4i, including General Electric, Procter & Gamble, and Johnson & Johnson. The main thrust of their support can boil down to that of the USTPO's judgment:

"By allowing a law jury to second-guess the PTO's judgment even in close cases, the preponderance standard would diminish the expected value of patents and would reduce future inventors' incentives to innovate and to disclose their inventions to the public."

In particular, the US Government contended that when invalidity is challenged in infringement proceedings where the prior art was not and could not be before the USPTO during examination, although the standard of proof is arguably more difficult to determine, it should nevertheless be the clear-and-convincing evidence standard. This is because this standard should be applied uniformly and because it

"reflects the better reading of Section 282 in light of that provision’s text, history, and purposes. Most importantly, the text of Section 282 does not suggest that the standard of proof governing questions of patent validity varies depending on the nature of the evidence that a challenger introduces. Such a variable-proof regime, moreover, would reflect a substantial departure from the way in which evidentiary burdens typically operate. Although juries routinely give different weight to different types of evidence, petitioner identifies no statute under which the standard of proof governing a particular determination depends on the type of evidence that the parties introduce. The Federal Circuit’s longstanding approach to the question presented here, under which evidence that was not before the PTO “may carry more weight and go further toward sustaining the attacker’s unchanging burden” ..."

However, if the worry from the USPTO is that a lower-evidential standard may threaten the value of granted patents, then the AmeriKat wonders what they have to say about the concerns about post-grant reviews that is set out in the America Invents Act (reported last week here). Post-grant reviews are argued by some to increase costs to patent holders and would enable a higher frequency of repeated merit-less challenges, which would decrease the certainty of valid and enforceable patents, and thus the value of the patents. Interestingly, Microsoft's deputy general counsel, Horacio Gutierrez, stated two years ago that post-grant reviews are "essential to maintaining high-quality patents because it allows the validity of questionable patents to be tested."

The AmeriKat will be back later this week with a more detailed report of i4i’s brief.

More Unrest in US Patent Reform and AIA

The winds of change are not shifting the AmeriKat's post from patent issues today. Last week the AmeriKat reported on the America Invents Act (AIA) and the controversy surrounding some of the House's version of the Senate bill S.23. Last week, American Innovators for Patent Reform (AIPR) along with eight other national organizations including the Institute for Electrical and Electronic Engineers (IEEE) and National Association of Patent Practitioners (NAPP) sent a letter to the members of the House of Representatives and the staff of the House Judiciary Committee detailing their many objections to the AIA, including the increasing cost in securing and defending a patent (see post-grant review above), reducing access to the patent system for inventors and small businesses (see post-grant review above), and increase the current 700,000 patent application backlog (see first-to-file scare last week).

A more nuanced objection has also been raised - that of grace periods (picture, right - the AmeriKat's favorite painter, Botticelli's Primavera picturing the Three Graces). There is an arguable tension in switching to a first-to-file system and the issue of grace periods. The letter argues that that with the introduction of the first-to-file standard, the current year "grace period" currently afforded to inventors before filing an application will be shortened. The AIA provides that the grace period will only apply in circumstances where the inventor publishes a disclosure (unhelpfully undefined in the AIA) of the invention, however it is argued that small businesses and startups do not routinely publicly disclose their invention soon after it is made. The worry is that the AIA will return patent law to a system that effectively does not provide for a grace period where there is non-disclosing public-use and on-sale activity, not just disclosure. The Bill's proposed section 102(a)

"includes public-use and on-sale bars which have no counterpart exception for grace in proposed 102(b). This is a bad system part of which has been tried in the U.S. and was abandoned in the Patent Act of 1839, which established a grace period of such activity."

Although, adversaries of the Bill abound, the House promptly picked up the AIA this week where the Senate left off. USPTO Director David Kappos, who will be visiting the AmeriKat's alma mater tomorrow appeared before a subcommittee hearing on the bill on last week saying that AIA's measures would "reduce legal costs, improve fairness, objectivity and transparency, and support US innovators." Director Kappos's written statement can be read here. Broad language like this, says the AmeriKat, is exactly what has inflicted the AIA and created such discord with a section of the US inventor community. The AmeriKat has another - if the purpose of AIA is to reduce backlog, surely the new post-grant review procedures are going to create more strain on the USPTO's staff and resources and further increase the backlog?

Proenza Schouler target Target's Mossimo bag

Now something a bit closer to the AmeriKat's heart - and she realizes she now has a reputation about writing about fashion and shopping so she does not wish to disappoint. Proenza Schouler, the New York based luxury womenswear line headed by designers Jack McCollough and Lazaro Hernandez have spoken out about the similarity between their PS1 bag and Target's Mossimo Messanger bag. The PS1 bag (picture, left) retails for $1,595 and is made of genuine leather. The Mossimo bag retails for $34.99, is currently out of stock on-line (the AmeriKat just checked) and is made of fake leather. Although the placement of the straps and closure are different, the other design features including the shape and weight of the bag are quite similar, suggests Hernandez. As reported by the New York Times he stated that

"Our whole aesthetical idea with this bag was to take the hardware off. And the attitude, the slouch of the bag - they got the weight really right."

The numerous fashion blogs that look out for cheaper versions of the more desirable luxury products heralded Target's bag (picture, right - from the New York Times article) as the perfect affordable version of the much-coveted item. McCollough stated that although he can understand this thinking, such products are detrimental for small companies like Proenza. He stated "Yeah, why save up and buy ours when you can buy theirs right away?"

However, the biggest issue is what the AmeriKat originally thought this piece was about. Target has collaborated with several famous luxury fashion labels and desingers, including Mulberry, Liberty and Isaac Mizrahi. Proenza also previously collaborated with Target a few years ago, designing 65 garments for sale in Target stores and has recently reissued some of those pieces in Target this spring. The Massimo bag is thus appearing in the same store that Proenza's authorized designs are also appearing.

The AmeriKat's day-to-day work focuses on the fashion industry and in recent years she has seen how many luxury brands create bespoke lines and license some of their designs and IP out to hight street and mass retailers such as to H&M and Target (picture, left - 2010's Jimmy Choo and H&M collaboration). Although, arguably, these collaborations represent a new revenue stream to luxury brands and notionally act as getting into the stores before the knock-offs and infringement start there are dangers that can often be ignored. Not only can these types of licensing agreements, if used too often and too frequently, be in danger of diluting the attractive power of a luxury brand (products, prices and exclusivity) but it can also potentially dilute the power of any later infringement actions they wish to take. Knock-offs are usually of poorer quality than the originals, but often so are the designs located on the racks at H&M and Target which are authorized by the luxury designer. What happens to the brand and legal reputation of a luxury brand in these circumstances? Also, when brands licence their IP for lines in high-street and mass retail shops, what are the assurances that the hand that feeds these retailers won't be bitten by the appearances of a later knock-off or infringing item, such as what has allegedly happened in the Proenza case? Is this a matter to be dealt with in the contract between the two? What do readers think?