Official-Looking Trademark Solicitations Meant to Confuse Applicants

Several owners of federally-registered trademarks have recently received “official-looking” trademark solicitations from the non-federally affiliated United States Trademark Registration Office (“USTRO”).  The USTRO, along with several other like-minded private, for-profit companies, are not associated with, or approved agents of, the United States Patent and Trademark Office (“USPTO”)—the federal agency officially responsible for issuing patents and trademark registrations in the United States.

Nevertheless, letters from these private, for-profit companies, like the USTRO, are often strategically designed to mimic the appearance of correspondence from an official U.S. governing body.  These letters include highly specific information regarding the registered trademark, including serial number, filing date, international classes, and citations to various sections of the Lanham (Trademark) Act.

Specifically, the USTRO letter demands an immediate payment “NOW DUE” of $375, which upon receipt will purportedly entitle the payor to (1) recordation of the U.S. Trademark Registration with the U.S. Customs & Border Protection, (2) monitoring of the trademark using the USTRO’s proprietary search engine and notifications of potential third-party trademark infringements, and (3) reminder notices of certain future filing requirements.  The letter also provides an inconspicuously-placed notice providing “THIS IS NOT A BILL. THIS IS A SOLICITATION.  YOU ARE UNDER NO OBLIGATION TO PAY THE AMOUNT STATED ABOVE UNLESS YOU ACCEPT THIS OFFER.”

The USPTO’s official website, http://www.uspto.gov, acknowledges awareness of these mailers and warns that these private companies are not affiliated with the USPTO.  The USPTO advises recipients to “read trademark-related communications carefully before making a decision about whether to respond.”  Likewise, all mail correspondence from the USPTO will either be sent from the office in Alexandria, VA, or, if by e-mail, from the domain @uspto.gov.

It is highly advisable that owners of federally-registered trademarks, instead, seek legal advice from an attorney knowledgeable in this particular field before responding to these types of mailers.

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.

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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.

11th Circuit Finds No Fraud on the USPTO where Declarant had No Personal Knowledge of Use of Similar Marks

The United States District Court for the 11th Circuit surprised several legal commentators with its recent ruling of a trademark infringement case by holding that fraud upon the USPTO was not present if the declarant was personally unaware of other organizations using an identical or near-identical form mark.  Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and Malta v. Florida Priory of the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem, Case No. 11-15101 (11th Cir. Sept. 11, 2012).  At issue was the standard for cancellation on the basis of fraudulent procurement of a trademark.

The Lanham Act, § 14(3), 15 U.S.C. § 1064(3), permits cancellation of a registered trademark on the grounds that the mark was procured by fraud.  Proving this type of fraud is difficult as there is generally a heavy burden upon the challenger to show that the applicant knowingly made false material representations of fact in connection with an application for a registered trademark.

The 11th Circuit, however, interpreted the declarations to the USPTO made by the applicant’s representative to be a “subjective” good-faith belief of the applicant’s superior rights to use the mark, notwithstanding the possibility the declarant’s belief was mistaken or the cause of “willful blindness.”  Consequently, the court held that that no fraud was present where the declarant lacked any actual, personal knowledge of another’s use of the same or similar mark.  Likewise, proving that the declarant “should have known” was also not enough to cancel the trademark registration on the basis of fraud.

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.

Unlocking Your Mobile Device Without Permission From Your Carrier Is Now Illegal

The Digital Millennium Copyright Act was enacted in 1998 to address unauthorized digital dissemination of copyrighted works.  In October of 2012, the Library of Congress and the U.S. Copyright Office determined that, under the DMCA, it is illegal for mobile device owners to unlock their device without the permission of their carrier.  (https://s3.amazonaws.com/public-inspection.federalregister.gov/2012-26308.pdf). The ruling was based on the determination, among other things, that device owners do not own the software (i.e., copyrighted works) in the device.  The October determination allowed for a 90-day grace period before the enforcement went into effect.  It also held that it only applies to locked devices purchased after the grace period ends.  The grace period ends today.  Therefore, starting January 26, 2013, make sure you obtain permission from your carrier before unlocking your mobile device.

Authored by: Tom Jacks

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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.

How to Lose Your Trademark Through “Naked” Licensing

Initially utilized as a source or origin indicator, today trademarks further assure consumers about the quality and nature of a product or service.  In other words, consumers may justifiably assume and rely upon the fact that any product or service carrying a specific mark is necessarily of equal quality to that of other products or services carrying the same mark.

Implicit with any trademark, therefore, is a communication to consumers that the owner maintains control over the quality and nature of any sales or distributions of similarly-marked products or services made by third-parties.  Since the mid-1900’s, courts have repeatedly affirmed this implication by imposing an affirmative duty upon registered trademark owners to “take reasonable measures to detect and prevent misleading uses of [their] mark by [third-parties],” or, otherwise, “suffer cancellation of [its] federal registration.”  See Dawn Donut Co. v. Hart’s Food Stores, Inc., 267 F.2d 358, 366 (2d Cir. 1959).

One manner in which a trademark owner polices uses of its mark is by granting a license to a third-party.  The trademark licensing agreement contractually permits the licensee to sell a product or service carrying the owner-licensor’s mark.  A licensing agreement will be enforceable, however, only where the owner-licensor maintains a certain level of “control” over the quality and nature of those products or services that are sold and/or distributed by the licensee.

Because trademark licensing is generally governed by the laws of contracts, one way licensors can maintain control over a licensee’s uses is by inserting quality-control requirements into the their licensing agreements.  If the licensee then fails to abide by the licensor’s quality specifications per the agreement, the licensor may then assert claims against the licensee for breach of contract and trademark infringement.

“Naked” licensing, however, occurs when a trademark licensor enters into a licensing agreement, but fails to include or fails to enforce any quality control provisions.  For example, the Ninth Circuit held an agreement between the owner-licensor of the “Leonardo Da Vinci” mark and a wine vineyard to be a “naked” license because the owner-licensor: (1) failed to include quality control provisions in the licensing agreement; (2) made only sporadic wine tastings of the vineyard’s products; and (3) merely relied upon the vineyard’s reputation for quality control.  See Barcamerica Int’l USA Trust v. Tyfield Importers, Inc., 289 F.3d 589, 596-97 (9th Cir. 2002).  Consequently, the licensor was prevented “from asserting any rights in the mark.”  See id. at 597.

Additionally, “naked” licensing presents potentially dire consequences for the licensor and licensee, as well as the general consumer-public.  First, the general consumer-public will be deceived by misrepresentations about the quality of or the owner-licensor’s connection to the products or services.  Second, the owner-licensor and licensee may lose their abilities not only enforce their respective rights against each other, but also may lose their abilities to assert rights against any other unauthorized third-party uses.  And, finally, a court may determine that the owner-licensor has forfeited or abandoned its registration which, in turn, may ultimately lead to cancellation of the mark with the United States Patent and Trademark Office.

Authored by: Scott A. Meyer and John Sokatch.

Leahy-Smith America Invents Act Imposes Changes to U.S. Patent Process

Signed into existing law by President Barack Obama on September 16, 2011, the Leahy-Smith America Invents Act (“AIA”) presents the greatest change to the patent statute in over half a century.  Most notably, the AIA aligns our patent system most other developed countries by shifting our patenting system to the “First-to-Invent” system, as well as creates several new post-grant patent review processes among other changes.  The following provides a brief summary of the changes soon to be or already in effect under the new patent regime.

Sweeping Changes to the Patent Examination Process

New First-Inventor-to-File System—Starting early next year for those patent applications filed on or after March 16, 2013, the AIA will transition to the “First-Inventor-to-File” system (or “FITF”)—a major shift from the old regime which previously awarded patents to the “First-to-Invent” (or “FTI”) the claimed subject matter.

Under the new FITF system, the first inventor to file an application will receive a one-year grace period for prior art disclosures made publicly available for one year or less before the effective filing date.  These early disclosures may also serve to inoculate the patent from third-party prior art during the period from the disclosure to the patent’s effective filing date (up to one full year).

The new definition of prior art consists of patents and printed publications that describe the claimed invention or instances where the claimed invention was in public use, on sale, “or otherwise available to the public before the effective filing date.”  Therefore, public availability is now a prerequisite for all prior art.  But the AIA removes previously incorporated geographic limitations, as it is no longer a requirement that knowledge, use, or sales occur within the United States.

Moreover, patent applicants are now permitted to rely on common ownership or joint research agreement provisions to overcome rejections under 35 U.S.C. § 102.

Supplemental Examination—Section 35 U.S.C. § 257 provides for a new post-issuance, supplemental examination procedure for patentees beginning on September 16, 2012, that can be used to “consider, reconsider, or correct information believed to be relevant to the patent.”  Within three months after the receipt of request, the USPTO will make a determination by issuing a certificate indicating whether or not a substantial new question of patentability is present.  If so, then the USPTO will institute an ex parte reexamination proceeding.  This new process is already in effect as of September 16, 2012, and applies to any patent issued on, before, or after the effective date.

Prioritized Examination—A patent applicant may now opt for prioritized examination, which will accord special status during prosecution before the USPTO, with the specific goal of providing a final determination of patentability within twelve months after receiving prioritized status.  Requests for prioritized examination will be limited to 10,000 requests per year, subject to adjustments by the USPTO.

Creation of New Interpartes Proceedings

New Inter Partes” Review—The AIA introduces the new inter partes review” process as a replacement for the previously implemented inter partes patent reexamination.  This new process will be conducted by the Board to review the patentability of one or more claims in a patent upon the grounds permitted by §§ 102 and 103.  Unlike the former inter partes reexamination, a petition for inter partes review begins with a third-party filing of a petition after the later of the termination of a post-grant review or nine months following issuance of the patent.  The USPTO will grant a petition for inter partes review upon a determination that there is a “reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition”—a new standard which replaces the previous “substantial question of patentability” standard previously employed for inter partes reexaminations.

Post-Grant ReviewThe AIA creates new a process that allows for any person, including third parties, to petition for review of a patent upon any invalidity theory under § 282(b)(2) and (3) within nine months of the grant or issuance of a reissue of a patent.  Under this post-grant review process, a party challenging the validity of a patent must overcome a rebuttable presumption of patentability by demonstrating that it is more likely than not that at least one of the claims challenged is unpatentable.  In response to any challenge for review, the patent owner will then have one opportunity to amend the claims, as well as additional opportunities to amend allowed claims with the consent of the petitioning party.  This process is now in effect as of September 16, 2012.

Transitional Program for Business Method Patent ReviewThe AIA creates a special transitional program for business method patent review which reviews the patentability of one or more claims in a covered business patent.  This program will last for eight years following its recent date of effectiveness starting on September 16, 2012, and is limited to “covered business method patents,” which the AIA defines as those certain patents that claim a method or apparatus for performing operations “used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.”

Derivation Proceeding—The newly implemented derivation proceeding allows the USPTO to make a determination as to whether “(i) an inventor named in an earlier application derived the claimed invention from an inventor named in the petitioner’s application, and (ii) the earlier application claiming such invention was filed without authorization.”  Derivation proceedings will take effect on March 16, 2013.

Impact on Fees and Practices before the USPTO

Inclusion of Oath and Declarations—35 U.S.C. § 115 now requires the inventor or joint inventor to include with its application an oath or declaration that (i) the application was made or was authorized to be made by the affiant or declarant, and (ii) that such individual believes himself or herself to be the original inventor or an original joint inventor of the claimed invention in the application.  Likewise, the AIA permits those persons to whom the inventor has assigned, or is under an obligation to assign the invention, or who otherwise shows sufficient proprietary interest in the matter, to include in his or her application for a patent an executed agreement  in lieu of filing these statements in a separate oath or declaration.

USPTO Fees—As of September 26, 2011 and in conjunction with the creation of a new Fee Setting Authority, the AIA will increase many USPTO fees by as much as 15%.  The entire list of updated fees is available at http://www.uspto.gov/main/faq/index_feefaq_p.html.

Micro Entities—The AIA establishes a new “micro entity” status for certain patent applicants, which will be distinct from the “small entity” definition found under 35 U.S.C. § 41(h)(1).  The micro entity status, which was made available as of September 16, 2011, will entitle such applicants to a 75% discount on USPTO fees under § 10(a).

Electronic Filing Incentive—The AIA will now essentially penalize applicants by imposing an additional fee of $400 ($200 for small entities) for each original patent that is not filed electronically.

Satellite USPTO Offices—The AIA authorizes the USPTO to open three satellite offices within the first three years of its enactment.  The USPTO states that the purpose of this authorization is to “increase outreach activities, enhance employee retention, improve recruiting, decrease application backlog, and improve examination quality.”

Amendments to Litigation Matters

Misjoinder of Defendants—Under the amendments to the AIA, merely infringing the same patent will no longer be proper grounds to join potential defendants.  Instead, a patent owner may join multiple parties in a single patent infringement lawsuit only if: (i) a cause of action arises out of the same transaction, occurrence, or series of transactions or occurrences, and (ii) there exists questions of fact common to all defendants or counterclaim defendants.

False Marking Claims—The AIA removes the qui tam provision from the false marking statute and now limits standing and damages for filing false marking lawsuits to only those parties that suffer a competitive injury as a result of the alleged false marking.  Damages may now only be collected from the time the alleged infringer was put on notice of another’s patent, which includes marking a product or service with the corresponding patent number.

New “Prior Commercial Use” DefenseFor those patents issued on or after September 16, 2011, the new “Prior Commercial Use” defense now exempts certain subject matter from a finding of patent infringement if the claimed subject matter is “a process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process.”  To qualify for the defense, the party asserting the defense must establish, by clear and convincing evidence, that the prior commercial use occurred at least one year before the earlier of the effective filing date or an inventor’s disclosure that establishes a prior art grace period.

Repeal of the “Best Mode” DefenseThe AIA removes the previously recognized defense to patent infringement claims for failure of a patent to disclose the best mode to practice the claimed invention.  Instead, an examiner may simply reject an application for an inventor who fails to disclose the best mode during prosecution of the application.

Further Studies Regarding AIA Changes to be Conducted by the USPTO

The AIA further directs the USPTO to conduct on-going studies regarding how these changes are being implemented, as well as other patent policies and practices.  The studies will focus primarily on innovation, competitiveness in the United States, and access to capital for small business investment.  The USPTO will then report back to Congress within four years from the date of enactment of the AIA and include any further recommendations for changing patent laws and regulations.

Source: USPTO.gov, “Leahy-Smith America Invents Act Implementation,” available at http://www.uspto.gov/aia_implementation/index.jsp (last visited November 23, 2012).

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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.

Chalker Flores, LLP Obtains Japanese Pharmaceutical Nutrition Patent for Client

Chalker Flores, LLP, an intellectual property, business, corporate and litigation law firm in Dallas, Texas, recently successfully prosecuted a pharmaceutical nutrition patent in Japan on behalf of one of its clients titled “Nutritional Supplement or Pharmaceutical Preparation Comprising Triglycerides with Seven-Carbon Fatty Acid”.  The patent issued January 13, 2012, Japan Patent Reg. No. 4902906.

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 Cynthia Minchillo at cminchillo@chalkerflores.com or 214-445-4060.