January 2011 Newsletter
LEYDIG, VOIT & MAYER, LTD. — INTELLECTUAL PROPERTY REPORT
Volume 12 Issue 1
Chippendales® ruling offers rare acknowledgement of disparity between trademarks
A trademark based on inherent distinctiveness may offer stronger protection than one based on acquired distinctiveness under a ruling from the U.S. Court of Appeals for the Federal Circuit in In Re Chippendales USA. The ruling acknowledges a disparity seen in day-to-day practice, but that is not typically explicitly recognized in court decisions.
The Federal Circuit upheld a decision by the Trademark Trial and Appeal Board (TTAB) that the “Cuffs and Collar” costume that Chippendales dancers wear is not inherently distinctive. Chippendales had sought a trademark for its Cuffs and Collar costume, which consists of wrist tuxedo cuffs and a bowtie without a shirt, based on inherent distinctiveness, despite receiving a trademark for the costume in 2003 based on acquired distinctiveness.
Inherently distinctive trademarks identify the source of a product immediately rather than describe the product; think Domino® for sugar or Blistex® for lip balm. In contrast, a trademark based on acquired distinctiveness must be promoted, and be substantially and exclusively used in the marketplace long enough to develop its distinctiveness in consumers’ minds. In Chippendales’ case, the company received a trademark for its Cuffs and Collar costume design on the basis of acquired distinctiveness more than 30 years after the uniform was first used.
Though Chippendales’ current trademark for the Cuffs and Collar costume protects against potential infringers, the company had argued that a trademark based on inherent distinctiveness would likely give the Cuffs and Collar design mark even greater cover. Federal Circuit Judge Timothy Dyk agreed in his written opinion.
“Whether a particular mark is inherently distinctive may affect the scope of protection in an infringement proceeding,” Dyk wrote.
Dyk’s opinion may convince other trademark seekers to strive harder for inherent distinctiveness, despite the fact that the basis for a trademark technically has no bearing on the trademark’s protective powers.
“Technically, a registered trademark is a registered trademark, but this court is recognizing that in practice, not all registered trademarks are in fact equal,” says Tamara Miller, a member in Leydig’s Chicago office. “This is the first time I have seen a court articulate that a mark based on inherent distinctiveness may be considered more deserving of protection than one that is based on acquired distinctiveness.”
“I have had cases where we sought to protect a registered trademark and the courts did not seem to give the trademark’s registration basis much weight,” adds Mark Liss, a member in Leydig’s Chicago office. “While courts do look at ‘strength of mark,’ they seldom focus on the basis of registration in that analysis.”
When applying for a trademark based on acquired distinctiveness, Chippendales pointed to its widespread use of the Cuffs and Collar costume in its advertising and performances over the past three decades as proof that the public associated Chippendales with the outfit.
While the U.S. Patent and Trademark Office (PTO) agreed with that assessment, it later rejected Chippendales’ bid to base the trademark for Cuffs and Collar on inherent distinctiveness. The TTAB upheld the PTO’s decision, applying the test for inherent distinctiveness set forth in Seabrook Foods Inc. v. Bar-Well Foods Ltd.
Based on the Seabrook case, which states that to be inherently distinctive trade dress cannot be a common shape or design, or be similar to another form of dress in the field, the TTAB found that no adult entertainment costume can be trademarked based on inherent distinctiveness.
In his opinion for the Federal Circuit, Dyk disagreed with that view, but ruled that the Cuffs and Collar costume was not inherently distinctive because it was merely a refinement of Playboy’s iconic bunny outfit, which also includes a bowtie and wrist cuffs. The Playboy outfit had been in use for nearly 20 years before Chippendales debuted, and Chippendales had also acknowledged that it drew inspiration from the Playboy costume for Cuffs and Collar.
Chippendales had asked the court to reject the Seabrook test and proposed a different test specifically for determining whether costumes are inherently distinctive. Dyk rejected the test, saying it was too narrow. Intellectual property experts say the decision helps keep the trademark process uniform.
“It would not have been helpful for future decisions if the court adopted Chippendales’ test,” Liss notes. “Trade dress is a tough field already, and courts have been fairly inconsistent about granting trademarks. It would create more uncertainty to add niche tests.”
The Federal Circuit’s ruling also shows a pro-competition stance by the court, according to those in the intellectual property field. If Chippendales had been allowed to trademark Cuffs and Collar as inherently distinctive, the decision may have opened the door for the registration of a wide variety of costumes, putting a chilling effect on competition.
“If you were the only adult entertainer who could have a police uniform, think of the monopoly you would have,” Liss says.
U.S. Supreme Court review planned
The Supreme Court will consider whether the standard of proof for patent invalidity used in a record-breaking patent infringement judgment against Microsoft Corp. should have been the well-established “clear and convincing evidence” standard or a lower standard.
The case is widely thought to be the most important the Supreme Court has reviewed in years.
Companies that are anxious to fend off what they consider frivolous patent infringement suits are keenly interested in the Supreme Court’s decision. After Microsoft appealed to the Supreme Court, a number of high-profile businesses, including Apple, Dell, Facebook and Intel®, asked the court to review the case.
The dispute began in 2007 when Toronto-based i4i Corp. accused Microsoft of infringing on its patent for text manipulation software in two versions of Word, Microsoft’s word processing software. In its defense, Microsoft argued that the patent was invalid because the technology was already in use when i4i applied for its patent; the invalidity information, however, was not before the U.S. Patent and Trademark Office (PTO) when the patent was granted.
A jury in the U.S. District Court for the Eastern District of Texas awarded i4i $290 million after finding Microsoft had infringed on i4i’s patent. The Federal Circuit agreed with the lower court’s ruling, making the $290 million judgment against Microsoft the largest patent infringement verdict upheld on appeal.
The Federal Circuit and the lower court used the “clear and convincing” evidence standard when deciding whether i4i’s patent was valid, but Microsoft argues that standard should be lower, particularly since the PTO did not consider the invalidity information when granting i4i’s patent.
Princo v. ITC ruling takes positive view of patent package licensing
Those who are looking to create patent package licenses with industry competitors can draw helpful guidance on what constitutes patent misuse from the U.S. Court of Appeals for the Federal Circuit’s recent decision in Princo Corp. v. ITC.
The en banc ruling capped a lengthy case that stemmed from a dispute between Princo and U.S. Philips Corp. over a group of patents that Philips had licensed to Princo. The Federal Circuit found that Philips’ actions did not violate the patent misuse doctrine, using the limited interpretation of the doctrine that is typically applied in other patent misuse cases.
“It is a good summary of the law of patent misuse,” says John Kozak, a member in Leydig’s Chicago office. “This is not a decision that is pushing the boundaries.”
In the 1980s and 1990s, Philips had worked with Sony to develop a series of industry standards for recordable and rewritable CDs that were later packaged in a patent license known as the “Orange Book.” During the development, Philips and Sony had each created and patented positioning technology for CDs. While both the Philips and Sony positioning patents were included in the Orange Book, Philips’ patent was considered the industry standard.
Princo later bought a license for the Orange Book package, but soon stopped paying licensing fees to Philips. When Philips sued Princo for patent infringement, Princo accused Philips of patent misuse.
Although Princo gave several reasons for believing Philips engaged in patent misuse, the en banc ruling focused on the issue of whether an alleged agreement between Philips and Sony to not separately license Sony’s positioning patent amounted to patent misuse.
Patent misuse has been defined through previous cases as using a patent to force a licenser to pay for more than what is covered in the patent, either by adding nonpatented items to the agreement or extending the license beyond the term of the patent.
Courts have been reluctant to expand the definition of patent misuse to cover other kinds of actions, as has Congress, which passed a law defining specific actions that are not patent misuse. In the Princo case, the Federal Circuit decided that an alleged collateral agreement between Philips and Sony to suppress licensing of Sony’s patent was not patent misuse.
The Federal Circuit also found that Philips and Sony did not violate antitrust laws when creating the Orange Book patent package because Sony’s patented positioning technology was not a viable competitor to the Philips patented technology. In its ruling, the court recognized the benefits of using patent package licenses to foster new development, an encouraging sign for businesses that want to collaborate on research and development with industry competitors.
“In looking at whether standard bodies and package licensing in the context of collaboration for the purpose of developing new technology are desirable, the answer is yes; otherwise, there are hodgepodges of technology that may not interact with each other,” says Wesley Mueller, a member in Leydig’s Chicago office. “This ruling provides some clarity for how to proceed with those kinds of joint development arrangements.”
Leydig’s Frankfurt office offers a conduit to U.S. practice
Nearly a year after Leydig opened an office in Frankfurt, Germany, to better serve European clients, the location is flourishing. Leydig’s Frankfurt office practices exclusively U.S. intellectual property law for European clients, a specialization that no other law firm in Germany offers. Leydig President H. Michael Hartmann and Frankfurt office attorneys Tom Canty and Erik Swanson spoke recently about the office’s successes to date and plans for its future.
Q: What prompted Leydig to pursue a European presence?
Hartmann: The intellectual property area is not a national field of practice. It’s international in scope, and it will continue to grow. We saw an excellent opportunity there to expand our field of services, and this is a great fit for us in terms of firm culture and practice, as well as strategic goals.
Q: Does the office serve primarily German companies and individuals, or do you also represent clients in other parts of Europe?
Swanson: Primarily German firms and clients, because Germany is a major consumer of U.S. intellectual property. They’re the largest filer of patents worldwide after the United States and Japan. For many German companies, the United States is their largest market. We have clients in other countries, such as Switzerland, and also, of course, Leydig as a whole has multinational clients with a presence in many other countries in Europe.
Q: What advantages do clients find in working with you?
Swanson: Even though the market for intellectual property has become international over the years, there’s still a demand for personalized service. A company in Germany working with a law firm doing international work from the United States may not know the people at the firm, and those attorneys don’t always understand clients’ unique needs.
Q: Have you faced any hurdles in establishing the Frankfurt practice?
Canty: One of the challenges we have is communicating who we are and what we do. German firms thought initially, ‘Oh, they’re coming to compete with us.’ But because we practice U.S. law exclusively, those firms are potential partners.
Q: How have the needs of your European clients evolved?
Hartmann: We have long-established relationships with German colleagues and German companies. What the Frankfurt office brings is a much deeper involvement. We’re seeing many more re-examination proceedings and contested matters involving infringement and validity issues, for example. That clearly relates to clients being comfortable in having Tom and Erik nearby to work on those matters.
In recognition of their contributions to Leydig, Voit & Mayer, the following Chicago attorneys have become members of the firm.
L. Scott Beall focuses his patent law practice in the areas of pharmaceutical, chemical and mechanical technologies.
Peter H. Domer is involved in patent prosecution and litigation with a particular emphasis in biotechnology and pharmaceutical arts.
Aaron R. Feigelson concentrates in patent litigation and prosecution, with a particular emphasis in the computer software arts and business methods.
J. Karl Gross focuses his practice in patent litigation and prosecution, with an emphasis in the mechanical arts.
Leydig, Voit & Mayer is pleased to announce that the following attorneys have become associated with the firm.
Leonard Hua joins the firm’s Chicago office. He received a B.S. in electrical engineering with honors from the University of Illinois at Urbana-Champaign in 2006, and a J.D. from New York University in 2010. He assists with patent prosecution in the fields of electrical and computer technologies.
Frankfurt am Main
James Signor joins the firm’s Frankfurt, Germany, office. He received a B.S. in mechanical engineering, summa cum laude, from Rensselaer Polytechnic Institute in 2005, and a J.D. from St. John’s University School of Law in 2008. At Leydig, he is involved in the practice of intellectual property law with particular emphasis on patent prosecution in mechanical devices. He is registered to practice before the U.S. Patent and Trademark Office.
Xavier Pillai, a member in the firm’s Chicago office, will speak at the American Chemical Society National Meeting in Anaheim, Calif., on March 27. His topic is “Strengthening Your Patent Rights in Light of Recent Federal Court Decisions — A Practitioner’s Perspective.”
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