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Last month, the United States Patent and Trademark Office released its 2018 Performance and Accountability Report, which furnishes a public update on the USPTO’s programmatic and financial performance for the 2018 Fiscal Year.

Following an opening note from Director Iancu highlighting the issuance of the 10 millionth patent and the USPTO’s focus on providing further guidance on subject matter eligibility and improving the availability, strength, and consistency of automatic tools and electronic processing, the Report is broken into five principal sections, which are discussed in turn.

1) Management’s Discussion and Analysis Section

In this first section, the Report summarizes the USPTO’s constitutional and statutory responsibilities and its organizational and user-fee dependent structure, including an overview of the regional offices and workforce and a further discussion of the issuance of the 10 millionth patent and relating patent cover design.

This first section also briefly summarizes significant case law developments for the 2018 Fiscal Year, including:

U.S. Supreme Court:

Oil States Energy Services v. Greene’s Energy Group — Agreeing with the USPTO’s position, the Court held that “inter partes review before the USPTO’s PTAB [does not] violate[] the Seventh Amendment of the U.S. Constitution by extinguishing a private property right through a non-Article II forum without a jury.”

SAS Institute, Inc. v. Iancu — Disagreeing with the USPTO’s position, the Court held “that the PTAB must issue a final written decision addressing every patent claim challenged in an inter partes review petition.”

U.S. Court of Appeals for the Federal Circuit:

NantKwest v. Matal — Sitting en banc, the Federal Circuit held “that the USPTO would be entitled to full compensation for resources spent in the defense of Section 145 appeals.”

Most notably, the Management’s Discussion and Analysis Section outlines the USPTO’s performance‑planning results and compliance with the 2014–2018 Strategic Plan (est. 2014), as determined by 10 key performance metrics, and details the expected challenges in the years to come. As an overview, Table 3 copied below highlights actual performance results for the past four fiscal years.

Potential challenges include maintaining proper funding despite continued governmental instability that may jeopardize the USPTO’s ability to access its fees, while also minimizing costs and optimizing investment returns — in particular, with regard to investments in IT. Other challenges revolve around continued legal challenges arising from the USPTO’s interpretation of various sections of the Leahy-Smith America Invents Act (“AIA”).

The remainder of the Management’s Discussion and Analysis Section summarizes the USPTO’s 2018 financial statements, including a composition of its assets and liabilities; surveys of deferred revenue, net position, earned revenue, program costs, patent and trademark costs, and enforcement costs; and a review of funding sources.

2) Performance Information Section

In this second section, a Balanced Scorecard method is used to provide a detailed discussion of the USPTO’s compliance with the 2014–2018 Strategic Plan, as highlighted above. Takeaways from the USPTO’s analysis are provided below.

Goal 1Optimize Patent Quality and Timeliness:

In the last fiscal year, the average first action pendency—the time between when an application is filed and when it receives an initial determination of patentability by the patent examiner—decreased by 0.5 months, and the total pendency—the time between when an application is filed and when the application is either issued or abandoned—decreased by 0.4 months.

Making further strides toward improving its effectiveness and efficiency, the USPTO will continue to invest in Examiner training and career monitoring and will expand its patent application initiatives (such as, the Track One for prioritized examination, First Action Interview, Quick Path Information Disclosure Statement (“QPIDS”), the After Final Consideration Program 2.0 (“AFCP 2.0”), etc.), as well as the Post Grant Outcomes program, which seeks to provide examiners with the useful information from a variety of sources. The USPTO will also continue to bolster its Pro Se Art Unit and take steps to increase international cooperation and work sharing. For example, the USPTO continues to expand its Patent Prosecution Highway (“PPH”) programs. Further still, the USPTO also will continue to invest in information technology services that are designed to streamline the filing and review processes and will continue to expand its public outreach.

Goal 2Optimize Trademark Quality and Timeliness:

Since 2008, trademarks have been registered in less than 12 months on average, and since 2007, an indication of registrability, by a first action, has been provided in less than 3.5 months on average. The optimum target range for first action pendency is 2.5–3.5 months, and the optimum total pendency is less than 12 months. In 2018, the first action pendency was 3.4 months and the average total pendency averaged 9.6 months.

To maintain continued compliance with these optimum conditions, the USPTO will continue to invest in efficient electronic processing of trademark applications and examiner training and support.

Goal 3Provide Domestic and Global Leadership to Improve Intellectual Property Policy, Protection, and Enforcement Worldwide

The USPTO offers a plethora of educational events and programs, including congressional briefing and public meetings and events globally, regionally, in‑person, and online. The USPTO also offers a variety of on-demand online training and educational modules. For example, the following table summarizes the number of persons trained nationally and internationally on best practices to protect and enforce intellectual property.

The second section concludes by summarizing Managements Goals and compliance therewith.

Several Management Goals are directed to the evolution and improvement of the USPTO’s IT infrastructure and services by delivering cost-effective and seamless next-generation IT solutions. In pursuit of this goal, the USPTO has developed and implemented various prosecution tools for patent examiners, patent applicants, and international partners. For example, following the initial pilot in December 2016, as of the end of 2018, more than half of the Patent Corps were using the Office Correspondence (“OC”) to create office actions. The legacy system (OACS) is expected to be retired this year. The USPTO also continues to update the Trademark Next Generation (“TMNG”) tool to combat the significant challenges experienced in 2018.

Other Management Goals are directed to building and maintaining a diverse and engaged workforce. In pursuit of this goal, the USPTO continues to improve teleworking availability and management systems relating thereto; and continues to provide pathways for additional education and internal advancement.

3) Financial Section

This third section, begins with an introductory letter by Sean M. Mildrew, acting Chief Financial Officer for the USPTO. Mr. Mildrew highlights the overall financial stability of the USPTO and the continued efforts to replace the legacy refund approval/dismissal system with the Fee Processing Next Generation System. The legacy fee collection system is expected to be retired in its entirety this year.

Following the opening letter, various financial spreadsheets are provided, including consolidated balance sheets, consolidated statement of net cost, consolidated statement of changes in net position, combined statements of budgetary resources, and consolidated statements of cash flows (indirect method), and summarizes of relating calculations.

4) Independent Auditor’s Report

KPMG LLP, an independent public accounting firm, performed an audit in accordance with generally accepted auditing standards and determined that the above financial statements were fairly presented and identified no instances of reportable noncompliance. However, KPMG did identify a significant deficiency in the internal control over financial reporting relating to information technology general controls in the areas of access administration control and configuration management change controls. A copy of KPMG’s entire report is attached to the fourth section. This report, however, excludes specific information regarding the above noted control deficiencies, as such information was provided to USPTO management in a separate limited use report.

5) Other Information Section

The final section of the 2018 Performance and Accountability Report includes a summary of financial statement audit and management assurances, a copy of the inspector general’s top management challenges facing the USPTO, and various other administrative updates—such as, a note about the USPTO’s steps toward meeting its environmental impact and energy efficiency goals; an overview of the USPTO’s workspace renovation and safety programs; and an overview of updates concerning the USPTO’s Franconia File Repository. The final section also provides an overview of steps the USPTO is taking to monitor and maintain payment integrity and an overview of Examiner training programs.

In SUM, the Performance and Accountability Report for the 2018 Fiscal Year contains a wealth of current and historical data that can be used to benchmark the USPTO overall performance and progress towards specifically enumerated goals.

Looking Forward: The USPTO is currently finalizing a new five-year strategic plan and expects to release the final 2018–2022 Strategic Plan in November 2018.

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Today the Supreme Court clarified two small but significant copyright issues, relying on the express words of the copyright statute in one, but deviating slightly in the other.

In Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, [17–571] the Supreme Court held that §411 explicitly requires that a plaintiff actually have a copyright registration before bringing a copyright suit.

In Rimini Street, Inc., v. Oracle USA, Inc., [17–1625] on the other hand, the Supreme Court held that the term “full costs” in §505 of the Copyright Act simply means the “costs” specified in the general costs statute codified at 28 U.S.C. §§1821 and 1920, and does not include a party’s other costs, in effect giving no weight to “full” in the statute.

Fourth Estate Public Benefit Corp. v. Wall-Street.com

In Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, Fourth Estate sued for infringement of its news articles after Wall-Street failed to remove them from its website following the cancellation of the parties’ license agreement. Fourth Estate had filed applications to register the articles in question with the Copyright Office, but the Register of Copyrights had not acted on those applications. The District Court dismissed the complaint because 17 U.S.C. §411(a) provides that “no civil action for infringement of the copyright in any United States work shall be instituted until … registration of the copyright claim has been made in accordance with this title.” The Eleventh Circuit affirmed, holding that registration has not been made under §411(a) until the Copyright Office actually registers the copyright.

The Supreme Court affirmed, agreeing that registration occurs, and a copyright claimant may commence an infringement suit, when the Copyright Office registers the copyright. This resolves a split in the circuits, as the Fifth, Seventh, and Ninth Circuits and a smattering of district courts held that merely filing a complete application was sufficient, while the Tenth and Eleventh Circuits, and other district courts maintained that “registration” in 17 U.S.C. §411 meant actual registration.

Today’s decision does not leave copyright owners in too difficult position: the Copyright Office has a process for expedited copyright registration, and the Supreme Court reiterated that the copyright owner can still recover pre-registration damages. At most, this ruling should slow a copyright plaintiff by only a week or two and cost a few hundred dollars more — barely a blip for a plaintiff heading to federal court to enforce its rights.

Rimini Street, Inc., v. Oracle USA, Inc.

In Rimini Street, Inc., v. Oracle USA, Inc., after a jury awarded Oracle damages for copyright infringement, the district court added Oracle’s fees and costs, including $12.8 million for litigation expenses such as expert witnesses, e-discovery and jury consulting. The Ninth Circuit affirmed the award, acknowledging that it covered expenses beyond the six categories of costs enumerated in general federal statutes authorizing district courts to award costs (28 U.S.C. §§1821 and 1920). The Ninth Circuit explained that the additional award was appropriate because 17 U.S.C. §505 gives federal district courts discretion to award “full costs” to a party in copyright litigation. The Supreme Court reversed, holding that Sections 1821 and 1920 define what the term “costs” encompasses in subject-specific federal statutes such as §505. The Supreme Court said that while Congress may authorize awards of expenses beyond the six categories specified in the general costs statutes, the courts may not award litigation expenses that are not specified in §§1821 and 1920 absent explicit authority.

The Court said that its precedents have consistently adhered to that approach, and the Court rejected Oracle’s arguments that this ignored Congress’s use of “full” to modify costs in §505. By rejecting Oracle’s argument regarding “full costs” in the statute, the Supreme Court told Oracle that there is no special rule for costs in copyright cases – they are treated like all other cases.

Takeaway

Businesses, individuals and organizations can benefit greatly from registering copyrights promptly. Not only does it preserve important remedies (statutory damages, attorneys’ fees), registration is a prerequisite to filing suit.

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It’s Presidents Day, and while the USPTO is closed for the occasion, here is a look a few instances where presidents were honored in the records of the USPTO.

U.S. Patent No. D537666 covered a toy bank that celebrated the apocryphal story of George Washington and the cherry tree:

U.S. Patent No. D537666

The Presidents have been remembered in a chart puzzle, shown in U.S. Patent No. 1148885:

U.S. Patent No. 1148885

Americans are big fans of George Washington, and in U.S. Patent No. D9138, George Washington was a big fan for the people:

U.S. Patent No. D9138

Commemorative medals and badges were apparently a “thing” and several were protected by design patents, including D8000 and D51046:

U.S. Patent No. D8000

U.S. Patent No. D51046

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Happy Valentine’s Day! Here is a tribute to the inventors who make Valentine’s Day, and every day, better for society.

U.S. Patent No. 5,160,087 protected a drinking straw for couples.

U.s. Patent No. 7,339,449 protects a Magnetic Woven Heart.

U.S. Patent No. 1,603,592 protected a greeting card perfect for the holiday.

U.S. Patent No. 4,194,629 protected a “Love Box.”

U.S. Patent No. D85,341, protected the name plate for a Love Tester.

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On February 6, 2019, Eat’n Park Hospitality Group, Inc. sued Eleni’s NYC, Inc., in the Western District of Pennsylvania for infringing Eat’n Park’s registered smiley face trademark.

Eleni had previously licensed the smiley face from Eat’n Park, and the cookies on its website carry the registered design seen in the photo below.

According to Wikipedia and the Smithsonian Institution, the smiley face was created in 1963 by graphic artist Harvey Ross Ball as a morale booster for the employees of State Mutual Life Assurance Company of Worcester, Massachusetts. The smiley, with a bright yellow background, dark oval eyes, full smile, and creases at the sides of the mouth, was imprinted on more than fifty million buttons and became familiar around the world.

While Eleni’s cookies appear to bear the registered mark, the question is whether consumers are likely to be confused. Eat’n Park has a federal trademark registration — several in fact — but they still have to prove a likelihood of confusion. Even though Eleni’s cookies use that design, the answer may not be so clear.

Considering the ubiquity of the smiley as a decoration, and the fact that many cookies are decorated, would consumers perceive the smiley as trademark identifying the source or will they simply think it is a pretty cookie?

Given the popularity of the smiley, one would expect that Eat’n Park’s mark is very valuable, but, like all trademark owners, Eat’n Park needs to make sure that its mark is perceived as a mark and not merely a decoration.

takeaway

For this reason, it is good idea for trademark owners to advertise their trademarks in addition to advertising their trademarked products.

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Five years ago the internet quickly became obsessed over whether a particular dress was blue and black or white and gold.

Today’s color test is for trademark aficionados who are probably already familiar with Tiffany’s self-described robin’s egg blue used on its packaging and catalog covers. The color is also registered with the USPTO:

The question for trademark experts is: What color is 7cs Fashion House’s JC logo:

More simply, is it an infringing or non-infringing shade of blue?

While 7Cs Fashion House calls the color “teal,” Tiffany & CO. is seeing red, believing it to be an infringing shade of their robin’s egg blue color, and on February 6, 2019, filed Opposition 91246260 to block its registration.

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In Momenta Pharmaceuticals, Inc. v. Bristol-Myers Squibb Co., [2017-1694] (February 7, 2019), the Federal Circuit dismissed the appeal of the PTAB’s Final Written Decision sustaining patentability of claims 1 through 15 (all the claims) of U.S. Patent No. 8,476,239 for lack of standing/jurisdiction and for mootness.

The ‘239 patent covered compounds under the generic name “abatacept” and the Bristol-Myers Squibb (BMS) brand name Orencia® used in treatment of immune system disorders such as rheumatoid arthritis. Momenta’s proposed product failed its Phase 1 clinical trials and had been withdrawn, so BMS moved to dismiss the appeal because Momenta no longer had standing. Momenta responded that it had not abandoned its intent to produce a counterpart and that the ’239 Patent is an obstacle to these activities, and that it is injured by the estoppel provision of 35 U.S.C. § 315(e). Momenta cited the “relaxed” standard for Article III compliance when the right of appeal is established by statute.

The Federal Circuit said that Congress cannot erase Article III’s standing requirements by statute. Noting that Momenta had initially stressed that it had spent millions of dollars in its development of a biosimilar, upon Momenta’s termination of all potentially infringing activity, Momenta has not shown “an invasion of a legally protected interest” that is “actual or imminent, not conjectural or hypothetical.” The Federal Circuit concluded that upon abandoning development of this product, Momenta has no legally protected interest in the validity of the ’239 Patent, and there is no real need to exercise the power of judicial review.

The Federal Circuit rejected Momenta’s argument that the estoppel effect of the decision created standing, noting that estoppel cannot constitute an injury-in-fact when Momenta “is not engaged in any activity that would give rise to a possible infringement suit.”

The Federal Circuit further found that Momenta’s abandonment of the development of a biosimilar made the appeal moot: the cessation of potential infringement means that Momenta no longer has the potential for injury, thereby mooting the inquiry.

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Saturday is Groundhog Day, but despite having their own day, it seems that groundhogs have been largely ignored by inventors. Groundhogs are referenced in the claims of only four patents, and mentioned in only 106 U.S. patents since 1976.

There is one prominent piece of technology associated with Groundhog Day, however, that should be very familiar to horopalettologists (look it up):


This iconic flip clock — the Panasonic RC-6025 clock radio — restarts every day for Phil Connors in the classic movie Groundhog Day. Split-flap flip clock displays (or the much easier to say “leaf-type digital displays”) were first patented in 1965:

U.S. Patent No. 3,220,174

While briefly popular, these displays were soon supplanted by LCD and then LED displays. They still have a small but dedicated following, however, and vintage flip clocks like the RC-6025 are now selling for hundreds of dollars on eBay:

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With temperatures in parts of the U.S. lower than we have seen in decades, it seems appropriate to recognize the inventors who devoted their time and energy to helping us brave the cold winter weather.

First and foremost is Chester Greenwood, inventor of ear muffs, whose U.S. Patent No. 188,292, issued March 13, 1877:

Chester Greenwood’s patent for “ear-mufflers.”

Our thanks also go to Joel Craddick, whose U.S. Patent No. 1,394,810 issued October 1921 on an “Electrothermal Garment” — perhaps the earliest rendition of electrically heated clothing.

Joel Craddick’s patent on an electrothermal garment.

Inventors’ work on protecting us from the cold continues to this day, and John Elson, Kerrie Gath, Clay Maranville, and Victoria Schein, were issued U.S. Patent No. 10,143,043 on a “Heated Seat Belt.” While I prefer to wear a very thick jacket when I am backing out of my driveway at 1° F, and won’t be able to tell whether or not the seat belt is warm, I can still appreciate their thinking of us.

John Elson, Kerrie Gath, Clay Maranville, and Victoria Schein’s U.S. Patent on a Heated Seat Belt.

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In Supernus Pharmaceuticals, Inc., v. Iancu, [2017-1357] (January 23, 2019), the Federal Circuit reversed summary judgment for the USPTO because the denial of patent term adjustment (“PTA”) in this case went beyond the period during which the applicant failed to undertake reasonable efforts and thereby exceeded the limitations set by the patent term adjustment statute.

On February 22, 2011, Supernus filed a request for continued examination (“RCE”) in response to a final rejection. On September 11, 2012, Supernus received a letter from its European patent counsel disclosing the EPO notification of an opposition against a European counterpart application on August 21, 2012. Seventy-nine days later, or 100 days from the EPO notification of the Opposition, on November 29, 2012, Supernus submitted a supplemental IDS.

On September 10, 2013, the USPTO issued a first Office Action responding to Supernus’s RCE. On January 10, 2014, Supernus filed a response. On February 4, 2014, the USPTO issued a Notice of Allowance. On June 10, 2014, U.S. Patent No. 8,747,897 issued, reflecting a PTA of 1,260 days (2146 PTO delay days less 886 applicant delay days). 646 of the applicant delay days were for the period between the filing of the RCE and the filing of the supplemental IDS, although as Supernus pointed out, it could not file the supplemental IDS until the filing of the Opposition.

The USPTO stood by its interpretation of the PTA statute and corresponding regulations, bolstered by Gilead Sciences, Inc. v. Lee, denying Supernus a request for consideration, and the district court affirmed the USPTO granting summary judgment. However, the Federal Circuit found Gilead was distinguishable because it involved a period of time where Gilead could have filed an IDS but did not. In the instant case, Supernus could not have disclosed the Opposition that was the subject matter of the supplemental IDS until the opposition had actually occurred.

The Federal Circuit said that any reduction to PTA shall be “equal to the period of time during which the applicant fail[s] to engage in reasonable efforts to conclude prosecution of the application” citing 35 U.S.C. § 154(b)(2)(C)(i). The Federal Circuit said that the USPTO would exceed its statutory authority if it reduced PTA for longer than the time period during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application.

Supernus had conceded the 100 day delay in filing the supplemental IDS, but as to the remaining 546 days, these could not properly be attributed to applicant delay because they were before the event that precipitated the need to file the supplemental IDS.

Because Gilead involved different facts and a different legal question, Gilead was not controlling, and the district court erred in granting summary judgment, and because the proper framework for determining PTA was clear from the statute, the Federal Circuit reversed the grant of summary judgment.

While applicants must act diligently to preserve PTA, the statute does not permit the USPTO to take away PTA for periods of time where applicant could not take action. Gilead Sciences, Inc. v. Lee allows the USPTO to reduce PTA without having to prove that applicant inaction cause a delay, but there still has to be applicant inaction for a reduction in PTA.

It is disheartening that the USPTO always seems to be on the opposite side of applicants in PTA disputes, never seeming to give applicants (its customers) a break.

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