WARNING – BEWARE OF FRAUDULENT INVOICES

Beware of fraudulent invoices regarding your international patent application or

your international trademark registration!

This is an example of a fraudulent invoice received by applicants who have filed an international patent application under the Patent Cooperation Treaty (PCT). The authors of this fakery even had the gall to include a bogus warning about other requests for payment, to give them an air of legitimacy! Many more examples of such patent-related invitations can be found here: http://www.wipo.int/pct/en/warning/pct_warning.html

DO NOT BE MISLED!

If you receive a notice like this or one which raises any doubts in your mind:

• do not pay it!
• contact us (we do not charge for questions regarding invoices);
• send a copy of the notification to us if you are unsure;
• be assured that our foreign associates contact us directly and do not contact our clients for payment of invoices; all invoices will always come from us;
• alert all colleagues who might receive such notices; and
• make a complaint to competent government authorities and/or consumer protection groups.

These invoices—which are designed intentionally to look like real invoices from an official source—have nothing to do with the processing of your patent applications or trademark registrations, and the services they purport to provide have no value beyond the services already provided by WIPO or your national or regional office. They are created by unscrupulous companies and individuals who are trying to defraud you into paying fees to them.

WIPO continues to raise awareness about these fraudulent schemes and work with governments to take action against those responsible.

CLIENT ALERT – NEW USPTO 2014 Interim Guidance on Patent Subject Matter Eligibility

CLIENT ALERT

USPTO 2014 Interim Guidance on Patent Subject Matter Eligibility Update, Alice Corp. and In re BRCA Litigation

Last month the U.S. Patent and Trademark Office (“PTO”) released its 2014 Interim Guidance on Patent Subject Matter Eligibility (“Interim Eligibility Guidance”). The stated purpose of the Interim Eligibility Guidance is to set out the PTO’s interpretation of the subject matter eligibility requirements in view of the Mayo[1], Myriad[2] and Alice Corp.[3] decisions by the U.S. Supreme Court. Also discussed in this Client Alert is the latest opinion in the In re BRCA1- and BRCA2-Based Hereditary Cancer Test Patent Litigation[4] by the U.S. Court of Appeals for the Federal Circuit (CAFC).

Background

In the last two years, the Supreme Court ruled on three cases (Mayo, Myriad and Alice Corp.) that addressed the scope of the judicial exceptions to patentability (inventions that do not qualify for a patent under U.S. patent law).  In 2012, the Supreme Court held in Mayo that a claim directed to a medical diagnostic method (giving a drug to a patient, measuring metabolites of that drug, and deciding to increase or decrease the dosage of the drugs) was a law of nature and not patent eligible subject matter. In mid-2013, the Supreme Court held in Myriad that naturally occurring DNA sequences, even when isolated from the body, were a product of nature and not patent eligible subject matter. And most recently in June of 2014, the Supreme Court held in Alice Corp. that merely implementing an abstract idea using a computer was not enough to transform that abstract idea into patent eligible subject matter. Furthermore, on December 17, 2014, the CAFC held in In re BRCA1 that Myriad did not confer patent eligibility on composition of matter claims directed to naturally occurring DNA strands, and that a DNA structure with a function similar to that found in nature can only be patent eligible as a composition of matter if it has a unique structure, different from anything found in nature.

The New Interim Eligibility Guidance

The Interim Eligibility Guidance for PTO Examiners supplements the “Preliminary Examination Instructions” published in June 2014 in view of Alice Corp., and supersedes the “Procedure for Subject Matter Eligibility Analysis of Claims Reciting or Involving Laws of Nature/Natural Principles, Natural Phenomena, and/or Natural Products” published in March 2014.

The Interim Eligibility Guidance provides a revised, two-step framework for determining patent subject matter eligibility for patent claims. Step 1 inquires whether the claim, given its broadest reasonable interpretation, is directed to a statutory patentable subject matter (process, machine, manufacture or composition of matter). Step 2 inquires: (A) whether the claim is directed to a judicially recognized exception to patentability; and (B) whether the claim recites elements that amount to significantly more than the judicial exception itself.

A notable change from previous guidance includes the fact that all claims with a judicial exception are now subject to Step 2, which features the two-part analysis from Alice Corp (also called the Mayo test). The two parts of Step 2 of the Interim Eligibility Guidance determine whether a claim is “directed to” a judicially recognized exception (Step 2A), and if so, does it recite “elements that amount to significantly more.” (Step 2B). This is a change from previous guidelines which instead asked whether a claim “recites or involves” an exception, and whether it “recites something significantly different than” a judicial exception.

For claims found to be directed to a judicial exception under Step 2A, an additional analysis under Step 2B is required to determine whether the claim as a whole is directed to something that is “significantly more” than the exception itself. To be patent eligible, a claim that is directed to a judicial exception must “include additional features to ensure that the claim describes a process or product that applies the exception in a meaningful way, such that it is more than a drafting effort designed to monopolize the exception.”[5] The Interim Eligibility Guidance also reinforces the importance of considering the claim as a whole, even when individual elements viewed on their own may not appear to add significantly more to the claim.

For nature-based products, in Step 2A, the PTO continues to extend Myriad’s “markedly different characteristics” standard to determine whether the limitation recites a “product of nature” judicial exception. Upon the determination that a claim contains a limitation to a nature-based product, an inquiry must be made as to whether the claim recites subject matter that is “markedly different” based on structure, function, and/or properties when compared to the naturally occurring counterpart. If so, the claim is not directed to a judicial exception, and no further subject matter eligibility analysis is required. Examples of characteristics considered when determining whether there is a “markedly different characteristic” include: biological or pharmacological functions, chemical and physical properties, and chemical, genetic, or physical structures and forms. This is a considerable change from previous guidance that required the analysis and consideration of twelve different factors with six factors weighing towards eligibility and six factors weighing against eligibility.

With respect to computer or software related inventions, the Interim Eligibility Guidance requires that the invention involve “significantly more” than simply implementing an abstract idea with a computer. The Interim Eligibility Guidance lists some useful examples of limitations that may be enough to satisfy this requirement. These examples include improvements to another technology or technical field, improvements to the functioning of the computer itself, and effecting a transformation or reduction of a particular article to a different state or thing. If the claim as a whole does recite significantly more than the exception itself, the claim is patent eligible and the analysis is complete.

Following the subject matter eligibility analysis, a complete examination of the patent claims should be made regardless of whether a rejection based on subject matter eligibility is made (e.g., novelty, obviousness, etc.).

In re BRCA1- and BRCA2-Based Hereditary Cancer Test

In addition to the Interim Eligibility Guidance, the CAFC released its opinion in In re BRCA1- and BRCA2-Based Hereditary Cancer Test Patent Litigation. Together, the Interim Eligibility Guidance and In re BRCA-1 change the landscape for all software and biotechnology patent cases. In In re BRCA-1, the Court further limited patent eligible claims following the Supreme Court’s decisions in Myriad and Mayo. Specifically, the Court found invalid the broad claims to methods directed to detecting all BRCA-1 and 2 mutations using known methods. Essentially, the Court stated that the known methods (hybridizing a gene probe, detecting presence of hybridization product, amplification of the gene, and sequence of the amplified nucleic acids) did not add “enough” to “transform the nature of the claim” into a patent-eligible application.[6] The Court, however, did find claims directed to very specific mutations to be valid.

Initial Recommendations

In view of the Interim Eligibility Guidance and In re BRCA1 decision, the availability of protection for biotech and software-related inventions are now further limited. Applicants seeking protection for these types of inventions will most likely have to give up broad protection and focus claims on specific embodiments of the invention. Actions applicants can take to seek broader protection include:

• Filing Continuation-in-Part (CIP) applications of existing pending applications as improvements and additional discoveries are made.
• Providing more examples, variants, and details in the specification of the earliest filings.
• Focusing on new and improved methods of detection and/or modifications in diagnostics and treatments.
• Drafting claims of varying scope, with a combination of broad, intermediate and narrow claims that include very specific examples of, e.g., variants and mutations or novel implementations.

[1] Mayo Collaborative Serv. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012).

[2] Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013).

[3] Alice Corp. Pty. Ltd. v. CLS Bank Int’l., 134 S. Ct. 2347 (2014).

[4] In re BRCA1- and BRCA2-Based Hereditary Cancer Test Patent Litig. Univ. of Utah Research Found. v. Ambry Genetics Corp., 2014 U.S. App. LEXIS 23692 (Fed. Cir. 2014).

[5] 2014 Interim Guidance on Patent Subject Matter Eligibility, 79 Fed. Reg. 74618, 74624 (Dec. 16, 2014) (37 C.F.R. Part 1).

[6] In re BRCA1- and BRCA2, 2014 U.S. App. LEXIS 23692 at 19, 20.

Supreme Court Grants Cert. on Standard of Review for Patent Claim Terms

On March 31, 2014, the Supreme Court granted Teva Pharmaceutical’s petition for writ of certiorari in the case Teva Pharmaceuticals USA, Inc. v. Sandoz Inc., 723 F.3d 1363 (Fed. Cir. 2013). The issue on appeal for the Supreme Court is whether a district court’s factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) of the Federal Rules of Civil Procedure requires.

This case was a patent dispute involving the infringement of Teva’s multi-billion dollar drug Copaxone. The drug was arguably covered by a set of nine different patents owned by Teva which the district court held were all infringed. However, on appeal, the Federal Circuit on de novo review overturned the district court’s claim construction and indefiniteness determination which invalidated several of the patents. The Federal Circuit affirmed in part, and reversed in part upholding only four patents which are due to expire May 2014. One of the patents invalidated by the Federal Circuit would have blocked generic competition until September 2015. Teva subsequently petitioned for writ of certiorari to clarify the correct standard of review.

The Use of the Laches Defense in 5th Circuit Trademark Litigation

Good Things Do Not Always Come to Those Who Wait:

The Use of the Laches Defense in 5^th Circuit Trademark Litigation

The time-tested adage, “good things come to those who wait,” extols the virtue of patience and has been used throughout pop culture to explain phenomena ranging from love to job prospects.  But in the context of trademark protections, the concept of “waiting” can be fatal to a plaintiff’s claim for relief when a defendant asserts the affirmative defense of “laches.”

Basic Tenets

“Laches” is defined as an inexcusable delay that results in prejudice to a defendant. Abraham v. Alpha Chi Omega, 796 F. Supp. 2d 837, 846 (N.D. Tex. 2011).  The claim can be raised as an equitable defense available for those alleged infringers who lack the requisite “bad faith intent to capitalize on the markholder’s [goodwill].” Bd. of Supervisors for La. State Univ. Agric. &  Mech. Coll. v. Smack Apparel Co., 550 F.3d 465, 490 (5th Cir. 2008).  Thus, to establish a “laches” defense, the defendant has the burden to show: “(1) [plaintiff’s] delay in asserting one’s trademark rights; (2) [plaintiff’s] lack of excuse for the delay, and (3) undue prejudice to the alleged infringer caused by the delay.” Id. at 489-90.  In so analyzing the defense, courts in the Fifth Circuit take a “totality of the circumstances” approach by making factual inquiries regarding “the combined effect of the [p]laintiff’s delay and the prejudice resulting to the [d]efendant[ ].” New Century Fin., Inc. v. New Century Fin. Corp., No. C-04-437, 2005 WL 2453204, at *10 (S.D.Tex. Oct. 4, 2005).  Factual insufficiencies in any one of the three prongs will prove fatal to the defendant’s assertion of the affirmative defense.

The Fifth Circuit has simplified the inquiry by utilizing the more rigid equation of “LACHES = DELAY x PREJUDICE” as a quantitative or mathematical tool to assist the trial court in deciding, as a matter of considerable discretion, whether estoppel by laches is appropriate equitable relief. See Armco, Inc. v. Armco Burglar Alarm Co., 693 F.2d 1155, 1161 (5th Cir. 1982).  Courts will typically combine the Smack Apparel inquiries with regard to elements (1) and (2), and simply bifurcate the analysis so that a plaintiff’s failure to satisfy either element—delay or prejudice—will bar that particular claim.

Delay and Excuse

The first judicial inquiry begins with an analysis regarding the length of time, or delay, in assertion of the plaintiff’s claim for relief.  In the Fifth Circuit, the period of delay for measuring “laches” begins at the time when the plaintiff knew or should have known of the infringement. Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 334 (5th Cir. 2008).  The delay period ends when the plaintiff informs the defendant of its objections, for example by filing suit or sending a cease and desist letter.  See Studiengesellshaft Kohle v. Eastman Kodak Co., 616 F.2d 1315, 1328 (5th Cir. 1980).

But, the “[m]ere passage of time[,] even a considerable amount of time[,] will not automatically perfect a claim for such an equitable bar.” New Century Fin., Inc., 2005 WL 2453204, at *10.  While the Fifth Circuit has yet to adopt a bright-line rule, generally the courts will look to analogous state statutes of limitation to aid in determining what length of delay is excusable for purposes of defense of “laches” to a claim of trademark infringement under the Lanham Act. Mary Kay, Inc. v. Weber, 601 F. Supp. 2d 839, 859 (N.D. Tex. 2009) (looking at analogous four-year statute of limitations under Texas state law for period of excusable delay).  Accordingly, periods of inexcusable delay range all over the board, from just a few years to several decades. See Exxon Corp. v. Oxxford Clothes, Inc., 109 F.3d 1070, 1082-83 (5th Cir. 1997) (period of twenty years was unreasonable under Texas standard); Abraham, 796 F. Supp. 2d at 856 (period of four years to formally assert claim was unreasonable where plaintiffs were aware of possible infringement for several decades).

While not formally adopted by the Fifth Circuit, some plaintiffs have attempted to counter questions concerning the period of delay in various district courts by asserting the doctrine of “progressive encroachment” as reason for the delay. See Abraham, 796 F. Supp. 2d at 852-53.  Under this doctrine, delay is justifiable if the infringer began its infringing use in a market outside the trademark owner’s, but later on “directs its marketing . . . efforts such that it is placed more squarely in competition with the [owner].” Id. at 853.  The basis for this doctrine is that “a plaintiff is justified in delaying suit until its legal right has clearly ripened.” H.G. Shopping Ctrs., L.P. v. Birney, No. H-99-0622, 2000 WL 33538621, at *7 (S.D. Tex. Nov. 29, 2000).  In other words, a claim may not ripen until likelihood of confusion is clear, which in turn, might not occur until the infringer increases or expands its use. See id.

The doctrine of progressive encroachment “goes hand-in-hand” with excuse for delay. Abraham, 796 F. Supp. 2d at 852.  In Abraham,the trademark owners, various student campus Greek organizations, argued progressive encroachment as an excuse for their delay. Id..  They argued that the recent placement of infringing products on the infringer’s website was progressive encroachment, and that this expansion of the infringing vendor’s business was “markedly more impermissible” than selling locally through catalogs. Id.  The court said that although “‘normal business growth’” does not alone establish progressive encroachment, some actions, such as purchasing internet keywords on search engines or continuing to expand after the owner objected to the infringer’s use, created a material fact issue. Id. at 853.  But because the doctrine of progressive encroachment has yet to be formally adopted by the Fifth Circuit, plaintiffs must still overcome the  heavy burden to prove valid excuse for unreasonable delays in prosecuting their claim. See Exxon Corp., 109 F.3d at 1082-83 (plaintiff’s delay unreasonable where plaintiff delayed assertion of claim until suffering “reputational injury” based upon Exxon Valdez verdict) .

One final point to note, in situations concerning the possibility of “progressive encroachment,” although the court may be able to enjoin the alleged infringer in current and future endeavors, if the defendant can show established use at a local level, the court may limit the scope of its injunction to permit the defendant to continue use of the mark in that particular local market. See Conan Props., Inc. v. Conans Pizza, Inc., 752 F.2d 145, 154-55 (5th Cir. 1985).

Prejudice

The final element of a “laches” defense is proof of prejudicial harm to the defendant.   To show prejudice, the defendant must show that it “has done something it otherwise would not have done absent the plaintiff’s conduct.” Conan Props., 752 F.2d at 153. It is not enough that one merely “loses what otherwise he would have kept.” Baylor Univ. Med. Ctr. v. Heckler, 758 F.2d 1052, 1058 (5th Cir. 1985).  Notably, because the Fifth Circuit has not formally adopted a minimum period of delay to absolutely bar a plaintiff’s claim, even a short delay can constitute “laches” if the resulting prejudice is overwhelmingly great.  See 6 McCarthy on Trademarks and Unfair Competition § 31:12.

Prejudice can be shown in a number of ways but one of the best ways is by showing that the delay caused the alleged infringer to rely on the holder’s inaction when it “buil[t] up a valuable business around its trademark.” Abraham, 796 F. Supp. 2d at 854.  The Northern District of Texas has said, however, that “‘prejudice’ must constitute more than expenditures in promoting a business.” SeeMarshall v. Fulton, No. 3:08-CV-1921-L, 2011 WL 1630661, at *6 (N.D. Tex. Apr. 29, 2011).  For example, in Exxon Corp., the plaintiff’s claim against Exxon was barred by laches because Exxon, acting in reliance upon the federal registration of its marks and its strict policing of similar marks, had accrued tremendous investment costs and resultant goodwill in the challenged marks while the plaintiff remained quiescent to Exxon’s actions. Exxon Corp., 109 F.3d at 1082-83.  Defendant’s prejudice is limited “to the period prior to notice of another party’s objection” because after receiving such notice, all acts are at the defendant’s own risk. Conan Props., 752 F.2d at 152.

Conclusion

Because trademarks today have become safeguards of business reputations, litigation concerning the rights to those marks will continually remain necessary to the viability of many trademark owners.  While the jurisprudence surrounding the defense of “laches” in the Fifth Circuit provides little in the way of hard deadlines for periods of delay or minimum damage amounts for prejudice, what remains clear is that the case law disfavors those plaintiffs who fail to take a proactive approach in guarding their marks.  As such, defendants who can successfully substantiate a prolonged and established use of the mark and a resulting goodwill from the mark’s use will find the “laches” defense a helpful jurisprudential safeguard.

Tom Jacks is a partner with Chalker Flores, LLP in Dallas, Texas. He concentrates his practice on patent, trademark, copyright and general commercial litigation.  

John Sokatch is a 3L law student at Southern Methodist University and a law clerk with Chalker Flores, LLP in Dallas, Texas. 

 

 

WHAT IS A RETAINER AGREEMENT?

A retainer agreement is a legal contract between a law firm (or attorney) and the client by which the client agrees to hire the law firm for particular legal services.  The retainer agreement provides a detailed description of the parties to the agreement, the scope of legal services to be performed, the rules and manner in which those services will be performed, and a recitation of the agreed-upon fee arrangement between the parties.  Generally speaking, the law firm will require the client to review the agreement, sign the agreement if there are no changes to be made, and return the executed agreement along with a retainer fee (or deposit) to the law firm before any legal services are performed on a particular matter.

Authored by: Scott A. Meyer and John Sokatch

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Chalker Flores, LLP provides business, corporate, litigation and intellectual property legal services to individuals, inventors, entrepreneurs, start-ups, spin-offs, universities, research institutes, and small to large public and private companies and businesses.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us 214-445-4040 or info@chalkerflores.com.  Please follow us on Twitter at @chalkerflores.

Rep. Paul Seeks Assistance from United Nations in Acquiring RonPaul.com from Loyal Supporters

In a seemingly ironic series of events, former U.S. Congressman and three-time presidential candidate, Rep. Ron Paul, has turned to, of all places, the United Nations, an international organization repeatedly criticized by Rep. Paul throughout his political campaigns, for assistance in acquiring the domain name rights of two websites bearing his own namesake: <RonPaul.com> and <RonPaul.org>.  Even more surprising may be the fact that the Respondents in this case appear to be ardent grassroots supporters of Rep. Paul who initially created the websites during Rep. Paul’s 2008 presidential campaign.

The World Intellectual Property Organization (“WIPO”), one of the seventeen specialized agencies of the United Nations, permits trademark owners to file complaints against domain-name registrants for purposes of obtaining relief or resolving disputes in matters concerning the registration and ownership of domain names.  For example, oftentimes, the Uniform Domain-Name Dispute-Resolution Policy (“UDRP”) procedures will be used to combat cybersquatting or situations where an individual will register a domain name with the bad faith intent to profiteer from the goodwill associated with another’s trademark by selling the rights to the mark owner at an inflated price.

On February 7, 2013, Rep. Paul filed his complaint against several unknown Respondents generally alleging in accordance with UDRP requirements that:

1)      The domain names are identical or confusingly similar to Ron Paul’s RON PAUL trademark;

2)      The registrants have no rights or legitimate interests in the domain names; and

3)      The registrants have registered and are using the domain names in “bad faith.”

The complaint further requests that the two domain names be transferred to Rep. Paul without any form of compensation to the current registrants.

While the complaint fails to allege any federal registrations of the RON PAUL mark, Rep. Paul’s complaint, instead, claims common-law rights to the RON PAUL mark by virtue of its use in the United States and in association with Rep. Paul’s “books, articles, public appearances, and political commentary.”  Even though UDRP procedures do not require successful claimants to obtain federal registrations of their marks, such evidence can be helpful in establishing the complainant’s ownership of the mark.  Notably, a search on the Trademark Electronic Search System (“TESS”) reveals that the rights to a RON PAUL mark once held by the Ron Paul Consulting Company were abandoned in November of 2009 due to a failure to file a Statement of Use of the mark.

Additionally, the complaint alleges a lack of any evidence that the Respondents have actually used the two domain names “in connection with a bona fide offering of goods and services,” that the Respondents only registered the two domain names for the purposes of “selling them to [Rep. Paul] for more than [Respondents’] out-of-pocket costs,” and that “the domain names are being used to sell Ron Paul merchandise by third party vendors which competes directly with [Rep. Paul].”

Many reports indicate that the domain owners initially made an offer to sell the domain name <RonPaul.com> to Rep. Paul prior to his filing of the complaint for $848,000.  The owners subsequently reduced their offer to only $250,000 and were even willing to throw in the rights to <RonPaul.org>.

To date, it does not appear that the Respondents have answered the Complaint or made any further efforts to settle or resolve the matter outside of the UDRP process.

Authored by: Scott A. Meyer and John Sokatch, March 9, 2013.

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Chalker Flores, LLP provides business, corporate, litigation and intellectual property legal services to individuals, inventors, entrepreneurs, start-ups, spin-offs, universities, research institutes, and small to large public and private companies and businesses.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us 214-445-4040 or info@chalkerflores.com.  Please follow us on Twitter at @chalkerflores.

Unilaterally-Issued “Covenant Not to Sue” May Divest Trademark Claimants of Article III Standing

According to the recent Supreme Court ruling in Already, LLC v. Nike, Inc., __U.S.__, 133 S. Ct. 721 (2013), a broadly-drafted, unilaterally-issued “Covenant Not to Sue” may now provide defendants with alternative measures to combat cancellations of their federally-registered trademarks.

In July of 2009, Nike, Inc. (“Nike”) filed a complaint against Already, LLC d/b/a Yums (“Yums”) generally alleging claims of trademark infringement of the design of Nike’s Air Force 1 shoe product line.  Known for its distinctive stitching and numerous color combinations, Nike had originally obtained the registration for the Air Force 1’s shoe design in June of 2008 (U.S. Reg. No. 3,451,905).  In response, Yums filed a counter-claim by challenging the validity of the mark’s registration and seeking cancellation.

Four months later, Nike delivered to Yums a comprehensive “Covenant Not to Sue,” whereby Nike “unconditionally and irrevocably covenant[ed] to refrain from making any claim(s) or demand(s) . . . against [Yums] . . . on account of any possible cause of action based on or involving trademark infringement, unfair competition, or dilution, under state or federal law . . . relating to the [Air Force 1 mark] based on appearance of any of [Yums’] current and/or previous footwear product designs, and any colorable imitations thereof . . ..”  Nike also dropped the remainder of its claims against Yums.

Amid investors’ prospective concerns for potential lawsuits from Nike and fear of tarnishment of its reputation in the shoe industry, Yums ignored Nike’s efforts to dismiss the matter in its entirety and continued to maintain its counter-claims to cancel Nike’s design mark.

But according to Nike’s attorneys, Yums’ federal claims had been rendered moot vis-à-vis Nike’s unilateral “Covenant Not to Sue”—i.e., Yums no longer possessed Article III standing as there was no longer a “case” or “controversy” between Nike and Yums.  Yums countered with evidence of investor concerns and statements that Nike had intimidated other retailers into refusing to carry Yums’ products, but to no avail.  The district court dismissed Yums’ counter-claims and the issue was appealed up to the Supreme Court.

Reviewing the issue in light of the “voluntary cessation” doctrine, the Court determined that the breadth of Nike’s unconditional and irrevocable Covenant sufficiently demonstrated that it “could not reasonably be expected” to resume its enforcement efforts again Yums.  In other words, once Nike asserted that it would permit Yums to produce all of its existing footwear designs, or any “colorable imitations” of the Air Force 1’s design, such assurances made it “absolutely clear” that Nike would no longer seek to enforce its mark against Yums.

As a result, the Court held that Yums lacked any “legally cognizable interest in the outcome” of the litigation and that the district court had been divested of subject-matter jurisdiction over Yums’ cancellation proceedings.  The Court additionally noted, however, that in any future trademark proceedings Nike would be bound by the Covenant’s broad language; therefore, Nike was precluded from initiating any suit against Yums for alleged infringement unless the shoe was “an exact copy or counterfeit version of the Air Force 1 shoe.”

Authored by: John C. Sokatch and Scott A. Meyer

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Chalker Flores, LLP provides intellectual property, business, corporate and litigation legal services to individuals, inventors, entrepreneurs, start-ups, spin-offs, universities, research institutes, and small to large public and private companies and businesses.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us 214-445-4021 or by email at info@chalkerflores.com.  Please follow us on Twitter at @chalkerflores.

Second Circuit Finds No Copyright Infringement of Sit-Com Modern Family

In July of 2010, Martin Alexander filed suit for copyright infringement against several defendants in U.S. District Court (S.D.N.Y.) based upon allegations that defendants’ creation, distribution, production, and broadcasting of the nationally-acclaimed tv show, Modern Family, violated his rights under the Copyright Act, 17 U.S.C. § 101 et seq., and other state law claims.

Alexander alleged that the characters and plots from Modern Family were largely copied from the pilot episode (“Treatment”) of Alexander’s proposed television series entitled Loony Bin.  Specifically, Alexander focused upon alleged similarities from scenes depicting children’s birthday parties where things go wrong, coping with odd family issues and therapy sessions, as well as distinct character and physical traits between the two shows’ main characters.

Although the defendants conceded that Alexander held a valid copyright for Looney Bin and they had access to “Treatment,” the District Court dismissed Alexander’s Complaint upon the grounds that no “substantial similarity” existed between Modern Family and the protectable elements of Loony Bin.

On appeal to the Second Circuit, the Court of Appeals noted that “the appropriate inquiry is whether the copying of protectable elements ‘is quantitatively and qualitatively sufficient to support a finding of infringement.’”  Alexander v. Murdoch, No. 11-4291, slip op. at 3 (2d Cir. Nov. 14, 2012).  The Court of Appeals further acknowledged that application of the test, as applied to television shows, requires an examination of “the similarities in such aspects as the total concept and feel, theme, characters, plot, sequence, pace and setting.”  Id.

The Court of Appeals ultimately affirmed the District Court’s dismissal of Alexander’s claims by determining that Loony Bin and Modern Family only shared concepts “at the most general level,” as the “specific overlapping character traits and plot aspects identified by Alexander reflect superficial and de minimus details . . .; involve general abstractions insufficiently developed to merit protection . . .; or are ‘standard[ ] in the treatment of [the] given topic’ of modern family life, and are therefore unprotectable scènes à faire.”  Id. at 3-4.

Authored by: Scott A. Meyer and John Sokatch.

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Chalker Flores, LLP provides intellectual property, business, corporate and litigation legal services to individuals, inventors, entrepreneurs, start-ups, spin-offs, universities, research institutes, and small to large public and private companies and businesses.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us at 214-445-4040.  Please follow us on Twitter at @chalkerflores.

Websites’ Terms of Use Agreement Traps

In response to the steady increase in online shopping and cyber-transactions, several website owners have resorted to implementing more precarious measures to increase website activity while still protecting the website’s legal interests.  Generally, “Terms and Conditions” of use for the website are accepted by forcing the user to manually click an “I Agree” or “Accept” button—a method termed in the industry as “Clickwrap” agreements.  This method of acceptance has been highly criticized for the manner in which it seemingly misleads consumers into accepting terms of which they are not fully aware.

More recently, however, many online shoppers have been forced to deal with a newer form of terms acceptance known as “Browsewrap” agreements.  Unlike the more readily-apparent “Clickwrap” agreements, “Browsewrap” agreements allow website owners to indiscreetly cache the content of such agreements somewhere on the website, which then become accessible only by clicking on the hidden hyperlink.

These “Browsewrap” agreements recently came under heavy judicial scrutiny when the online shopping website Zappos.com attempted to compel arbitration in a lawsuit with several customers whose online accounts had been hacked.  See In re Zappos.com, Inc., Customer Data Security Breach Litigation, Civ. No. 3:12-cv-00352-RCJ-VPC (D. Nev. Sept. 27, 2012).  Zappos.com’s “Disputes” section, which was buried within the site’s “Browsewrap” agreement, permitted Zappos to compel arbitration in the event a dispute arose between the website and the purchaser.

Despite the broad and liberal federal policy favoring arbitration, the District Court of Nevada maintained that “arbitration is a ‘matter of contract,’ and no party may be required to submit to arbitration [in] ‘any dispute which he has not agreed so to submit.’”  Id. (quoting Howsam v. Dean Witter Reynolders, Inc., 537 U.S. 79, 79 (2002).

In finding for the plaintiffs, the court struck down the arbitration provision because (1) the purchasers were never prompted to accept those terms and conditions, and (2) the provision permitted Zappos to unilaterally change the terms, thereby rendering the contract illusory.  The court’s ruling reinforced the notion that, notwithstanding the increased popularity of buying and selling on the Internet, such paradigmatic shift may not overcome even the basic principles of contractual formation (i.e., offer, acceptance, meeting of the minds, and consideration).  As such, the Zappos.com opinion appears to have essentially negated the enforceability of “Browsewrap” agreements, barring evidence that the user actually possessed constructive knowledge of their existence and terms of use.

Authored by: Scott A. Meyer and John Sokatch.

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Chalker Flores, LLP provides intellectual property, business, corporate and litigation legal services of the highest quality.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.  Clients include individual inventors, start-ups, spin-offs, major national universities, research institutes and medium to large corporations.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us 214-866-0001.  Please follow us on Twitter at @chalkerflores.

New Rule Proposals for Expedited Lawsuits in Texas

In 2011, the Texas Legislature passed HB 274 which, in part, mandated that the Texas Supreme Court promulgate rules for expedited actions.  The intent behind HB 274’s mandate was to facilitate more efficient and speedier resolutions of lawsuits involving disputed amounts of $100,000 or less.

The following highlights of the proposed rules regarding expedited actions will be available for comment through February 1, 2013, and will take final effect on March 1, 2013:

Tex. R. Civ. P. 169 (new)

• Would mandate the “expedited actions process” to apply in all causes of action where the claimant seeks monetary relief of $100,000 or less (excludes lawsuits seeking non-monetary relief).
• Would cap the amount recoverable under the expedited actions process to $100,000.
• Would allow removal from the expedited actions process only with “good cause” or upon filing of an amended or supplemental pleading seeking relief (i) other than monetary relief or (ii) in excess of the $100,000 limit.
• Would limit the entire trial process (i.e., jury selection, opening statements, presentation of evidence, direct and cross-examination of witnesses, and closing arguments) to a total of 5 hours.
• Would preclude the court from ordering parties to engage in alternative dispute resolution (such as mediation), unless the parties previously consented to such a process by agreement or contract.
• Would prohibit challenges to expert testimony unless requested by the party sponsoring the expert.

Tex. R. Civ. P. 190.2 (amended)

• Discovery period would run from time the suit was filed until 180 days after the first discovery request is served on a party.
• Would restrict the total time for examination and cross-examination of witnesses in oral depositions to 6 hours.  Time could be increased to 10 hours on agreement by the parties.
• Would limit written discovery to 15 requests for interrogatories, 15 requests for production, and 15 requests for admissions.
• Would permit a party to submit additional disclosure requests of all documents, electronic information, and tangible items that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses.  Such additional requests would not count against a party’s requests for production.

Authored by: Scott A. Meyer and John Sokatch.

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Chalker Flores, LLP provides intellectual property, business, corporate and litigation legal services of the highest quality.  Founded by Dr. Edwin Flores and Daniel Chalker, additional partners include Scott Meyer, Chainey Singleton and Tom Jacks.  The lawyers of Chalker Flores, LLP provide big-firm expertise with boutique service and pricing.  Clients include individual inventors, start-ups, spin-offs, major national universities, research institutes and medium to large corporations.

If you would like more information about Chalker Flores, LLP, or to schedule an appointment please contact us 214-445-4021.  Please follow us on Twitter at @chalkerflores.