'; January 2017 Newsletter

January 2017 Newsletter

December 28, 2016

Supreme Court to decide if ban on ‘disparaging’ marks violates First Amendment

Does the First Amendment guarantee a right to register even the most offensive trademarks? That is the question the Supreme Court will answer after granting certiorari in a case involving the denial of registration for a rock band’s name because it was disparaging to Asians.

The dispute concerning the band The Slants and the higher-profile case involving the revocation of the Washington Redskins’ trademark implicate fundamental issues about the extent of the federal government’s right to regulate commercial speech under the First Amendment, says Anne E. Naffziger, a member in Leydig’s San Francisco Bay Area office.

“The question is whether the U.S. Patent and Trademark Office (PTO) should have the power to make judgments and deny registrations based on its subjective determinations of offensiveness,” Naffziger says.

The Slants are an Oregon rock band, the members of which are all Asian-American. In 2013, the PTO refused to register “THE SLANTS” as a word mark on the basis that it violated Section 2(a) of the Lanham Act, which provides that registration of a mark may be refused if it “consists of or comprises… matter which may disparage… persons, living or dead, institutions, beliefs, or national symbols.”

The applicant and founding member of The Slants, Simon Shiao Tam, appealed the denial to the Trademark Trial and Appeal Board, which upheld the PTO’s decision. A U.S. Court of Appeals for the Federal Circuit panel affirmed. However, upon rehearing by the Federal Circuit sitting en banc, the court held that Section 2(a)’s prohibition on the registration of “disparaging” marks was an unconstitutional violation of the First Amendment.

The majority opinion in In re Tam, one of five opinions issued by the full court, concluded that, although many marks banned by Section 2(a) indeed “convey hurtful speech that harms members of oft-stigmatized communities, … the First Amendment protects even hurtful speech.” The court concluded that “[t]he government cannot refuse to register disparaging marks because it disapproves of the expressive messages conveyed by the marks.”

In its petition for certiorari, the government argued that it was not infringing on the applicant’s free speech rights at all. Tam was free to continue using the name; the PTO’s denial of registration “simply prevents [Tam] from calling upon the resources of the federal government to assist him in enforcing his rights in THE SLANTS.”

Naffziger says that if the Supreme Court affirms the Federal Circuit’s conclusion that Section 2(a)’s ban on disparaging marks is unconstitutional, it could significantly expand the types of marks that can receive the rights and protections of federal trademark registration.

“It is not just ‘disparaging’ marks that would be able to be registered; other Lanham Act prohibitions, such as the ban on ‘immoral or scandalous’ marks, could ultimately fall as well,” she notes. “It could open the floodgates for a whole range of really noxious marks.”

Naffziger advises applicants to remember, “Just because you could register an offensive mark from a legal perspective doesn’t mean it will be good for business.”

En banc Federal Circuit restores Apple v. Samsung verdict, rebukes panel

The epic patent saga that is Apple Inc. v. Samsung Electronics Co. took another interesting turn on Oct. 7, 2016, when the U.S. Court of Appeals for the Federal Circuit, sitting en banc, overturned a panel decision that had effectively reversed a $120 million jury verdict in Apple’s favor. While the ruling by the court – which heard the matter without the customary briefing by the parties or amici – involved substantive obviousness issues, as well as procedural questions, the bigger effect may be on how Federal Circuit panels approach patent cases in the years ahead.

“Going forward, we can expect more deference to be given to the fact finder and fewer verdicts in patent cases overturned on appeal,” says Robert T. Wittmann, a member in Leydig’s Chicago office.

As an appellate court, the Federal Circuit’s role is generally limited to the review of questions of law, with broad deference given to the determination of fact questions at the trial court level. A central issue at trial was whether Apple’s “slide-to-unlock” patent was invalid on obviousness grounds. A key issue of contention between the Federal Circuit panel and the full court – and one of the reasons the matter was reviewed en banc – was whether the panel overstepped its appellate function in reversing the jury’s obviousness determination.

The full court affirmed that the legal question of obviousness is based on a number of factual considerations, including the motivation to combine and the role of secondary considerations. The panel’s reversal of the decision of the trial court raised the full court’s concern that the panel failed to give proper deference to the factual determinations made during the trial.

“In many ways, the en banc court took great pains to try to short circuit any future attempts to read this case as changing obviousness law,” says Paul J. Filbin, a member in Leydig’s Chicago office. “Rather, by restoring the jury’s verdict, the Federal Circuit sent an internal message to its members to remind them of the scope of their appellate function in patent cases.”

En banc Federal Circuit to address burden of proof for IPR claim amendments

In a closely watched case, the U.S. Court of Appeals for the Federal Circuit will address the Patent Trial and Appeal Board’s (PTAB) approach to claim amendments during inter partes review (IPR). Vacating a panel opinion in the case of In re Aqua Products, Inc., the en banc court will consider whether a patent owner who seeks to amend its claims pursuant to 35 USC 316(d) bears the burden of establishing the patentability of the proposed amended claims.

“Whatever the court decides, In re Aqua will definitively resolve the question of what standard the PTAB should use in allowing or not allowing claim amendments in an IPR proceeding,” says David M. Airan, a member in Leydig’s Chicago office. “If the Federal Circuit reverses its prior decisions and places the burden on the challenger to prove that substitute claims are unpatentable, this case could have a tremendous impact on IPR practice.”

Since IPR proceedings began in 2014, the PTAB has granted only six out of 118 motions to amend under the rules established pursuant to the America Invents Act (AIA).

“The low rate at which amendments are approved by the PTAB has led many patent holders to complain that the deck is stacked against them in IPR proceedings,” says Elias P. Soupos, a member in Leydig’s Chicago office. “For that same reason, IPR challenges have become the preferred way for patent infringement defendants to challenge the validity of an asserted patent. That might change if the full court reverses.”

In re Aqua involves a robotic self-propelled swimming pool cleaner. After the PTAB rejected the patentee’s proposed amendments, a Federal Circuit panel affirmed the U.S. Patent and Trademark Office’s (PTO) strict approach to claim amendment practice during IPR proceedings, including PTO rules that require a patent holder to prove that its proposed amendments would make the claims-at-issue patentable over the known prior art. By agreeing to rehear the matter en banc, the Federal Circuit will likely address the underlying issue of how much deference courts should give to the PTO in issuing and applying its IPR rules.

“The Federal Circuit has been pretty consistent in upholding the PTO’s authority to enact the rules it has been applying in IPR proceedings and trials under the AIA,” Airan says. “The fact that they are now addressing the validity of the PTO’s approach in a relatively rare en banc proceeding is a clear indication that they recognize the importance and impact of resolving this issue.”

Federal Circuit clarifies patent-eligibility of computer-based inventions

A U.S. Court of Appeals for the Federal Circuit panel recently addressed the issue of when computer-related innovations can be patent-eligible under 35 U.S.C. §101.

Reversing a district court decision in McRO, Inc. v. Bandai Namco Games America Inc., the panel held that a computer-implemented 3-D animation method was patent-eligible because the claims were directed to a “specific process” that resulted in a “technological improvement” rather than simply an abstract idea.

This decision brings much-needed clarity as to how courts should determine the patentability of computer programs that automate actions previously done manually, says John K. Winn, a member in Leydig’s Chicago office.

“Before this case, it wasn’t clear that automating a process typically performed by hand could be patent-eligible,” Winn says. “By focusing the patentability analysis on the novel rules of the automated method – not just the mere fact that a computer performs the method – the court has made it clear that such computer programs can be patented under Section 101.”

McRO involved two related patents directed to methods of automatically animating lip synchronization sequences and facial expressions of 3-D animated characters. This was something that animators typically did by hand using their subjective judgment. After McRO filed several infringement claims, the district court granted defendants’ motion for judgment on the pleadings, holding that the claims were not limited to specific rules-based techniques and were therefore too broad, and pre-empted the field of lip synchronization using the application of generalized rules.

Reversing the district court, the Federal Circuit held that the focus of the patent-eligibility analysis should be on whether the claims address “a specific means or method that improves the relevant technology or are instead directed to a result or effect that itself is the abstract idea and merely invoke generic processes and machinery.” The court found that McRO’s claims were directed to a specific improvement in computer animation based on “rules of a particular type” that did not merely result in a computer doing what had been previously done by hand.

That focus on the means rather than the ends of an innovation should guide software developers and others seeing computer-related patents after McRO, says Leonard Z. Hua, a member in Leydig’s Chicago office.

“Inventors seeking to patent computer-related technology should ensure that their claims recite not only a practical result of their innovation, but also rules, algorithms, or other technical details as to how that result is achieved,” Hua says.

Major TTAB rule changes take effect in January

In a self-proclaimed effort to focus “on enhancing the Board’s appeal and trial processes,” the Trademark Trial and Appeal Board (TTAB) announced a number of rule changes that will take effect on Jan. 14, 2017.

These changes mark the first major modifications to TTAB rules since 2007 and were prompted by subsequent case law developments, changes in the Federal Rules of Civil Procedure, and the rollout of the TTAB’s Accelerated Case Resolution process.

The most notable rule changes include:

  • The elimination of paper filings; all submissions must now be filed through the TTAB’s electronic filing system.
  • The TTAB, not the plaintiff, assumes responsibility for serving the complaint that initiates an inter partes proceeding before the Board.
  • Service of all pleadings between the parties, including discovery, can be made through email.
  • Filing a potentially dispositive motion automatically suspends the proceeding.
  • Trial testimony can be submitted by affidavit or declaration (subject to the right to cross-examine orally upon request).

The rule changes apply to all proceedings pending on or filed after Jan. 14, 2017.

News briefs

  • In Unwired Planet, LLC v. Google Inc., the U.S. Court of Appeals for the Federal Circuit vacated a decision invalidating a patent directed to location information for wireless devices. The court ruled that the Patent Trial and Appeal Board’s interpretation of which patents are subject to a Covered Business Method (CBM) review was overly broad. Under the America Invents Act, CBM review is available for patents “used in the practice, administration, or management of a financial product or service.”
  • In Amdocs (Israel) Limited v. Openet Telecom, Inc. and Openet Telecom Ltd., the U.S. Court of Appeals for the Federal Circuit discussed the various standards used to determine patent subject matter eligibility post-Alice Corp. Pty. Ltd. v. CLS Bank Int’l. The court stated that there can be no set definition of what an abstract idea is; whether an invention is abstract will depend on construction of the claims at issue. Additionally, the court reiterated that a patent covering a technological solution that improves the performance of a computer system may be patent-eligible.

Leydig Announces

  • The Leydig, Voit & Mayer newsletter is going digital. Email to make sure you are on the list for the first online issue.

Leydig Awards

  • Leydig was awarded national and metropolitan Tier 1 rankings in the 2017 edition of U.S. News - Best Lawyers® “Best Law Firms.”
  • Leydig has been recommended by LMG Life Sciences in Patent Prosecution and Patent Strategy & Management, and Bruce M. Gagala, Salim A. Hasan and John Kilyk, Jr. were named Life Science Stars.
  • Acquisition International Magazine has named Leydig the Best Trademark Law Firm - Illinois in its 2016 Legal Awards.
  • Thirty Leydig attorneys were named as Leading Lawyers and six Leydig attorneys were named as Emerging Lawyers by Leading Lawyers Network.