Mission Product: SCOTUS Appears Skeptical That Bankrupt Licensor’s Rejection of Trademark License Means Licensee Can’t Use the Mark
On Wednesday, February 20, the U.S. Supreme Court heard oral arguments in Mission Product Holdings, Inc. v. Tempnology, LLC, where the Court was asked to address one of the most important issues at the intersection of trademark law and bankruptcy law: whether a debtor-licensor’s rejection of a trademark license terminates the rights of the licensee to use that trademark. Taking seriously the language of the question presented, and generally acknowledging that 11 U.S.C. § 365(g) provides that rejection constitutes a “breach” of the contract, the justices focused on the remedies for breach outside of bankruptcy law and whether, because trademarks (and quality control issues) are involved, deviation from ordinary, contract law principles is warranted. Both the advocates and the justices returned to whether analogies, including with respect to breaches of apartment and photocopier leases, are apposite. The question of whether the case was moot also received some attention, though it seems unlikely that the case will be dismissed on that ground.
It seemed like a trade secret trifecta when Congress in 2011 passed the America Invents Act (AIA). Although the statute was aimed at patent reform, it made three helpful changes in how trade secrets are treated. First, companies could hold onto secret information about an invention without risking invalidation of their patents for failing to disclose the “best mode” of implementing it. Second, the “prior user right” that guarantees continuing use of a secret invention, even if someone else later patents it, was extended to cover all technologies. And third, the law would no longer deny a patent simply because the inventor had already commercialized the invention in a way that didn’t reveal it to the public. Or so we thought. That last change depended on how you read the legislation. The long-standing requirement that an invention could not be “on sale” or “in public use” more than a year before filing a patent application was still there. But Congress added a qualifier to 35 U.S.C. §102: there would be no patent if the invention had been “in public use, on sale, or otherwise available to the public . . . .”
The Federal Circuit recently elected not to decide en banc “whether servers are a regular and established place of business, such that venue is proper under 35 U.S.C. § 1400(b). In re: Google LLC, No. 2018-152 (Fed. Cir. Feb. 5, 2019) (Before Prost, Chief Judge, Newman, Lourie, Dyk, Moore, O’Malley, Reyna, Wallach, Taranto, Chen, Hughes, and Stoll, Circuit Judges) (Dissent by Reyna, Circuit Judge, joined by Newman and Lourie, Circuit Judges). SEVEN Networks, LLC’s (SEVEN) patent infringement suit against Google arose in the Eastern District of Texas. SEVEN alleged Google’s servers, stored in a third-party ISP’s facility, where the allegedly infringing activities occurred, were a regular and established place of business, such that venue is proper under 35 U.S.C. § 1400(b). The district court denied Google’s motion to dismiss for improper venue. As a result, Google petitioned the Federal Circuit for a writ of mandamus directing the district court to dismiss or transfer the case for improper venue. On appeal, the panel majority found mandamus relief inappropriate because “it is not known if the district court’s ruling involves the kind of broad and fundamental legal questions relevant to § 1400(b),” and “it would be appropriate to allow the issue to percolate in the district courts so as to more clearly define the importance, scope, and nature of the issue for us to review.”
Qualcomm, Google, Verizon and Industry Reps Gather for Women’s High-Tech Coalition Women of Wireless Dialogue
On February 13, global policymakers and technology company representatives gathered in Washington, D.C. at Google’s offices for the Women’s High-Tech Coalition (WHTC) Third Annual “Women of Wireless” dialogue. The speakers represented companies including Google, Verizon, and Qualcomm, as well as major industry organizations such as the Cellular Telecommunications and Internet Association (CTIA) and the Consumer Technology Association (CTA), and discussed the various infrastructure, policy, and privacy challenges facing the industry in the race to 5G-implementation. With a record number of women elected to the 116th Session of the U.S. Congress and recent White House Executive Orders on technology issues— including this month’s “Maintaining American Leadership in Artificial Intelligence (AI),” an expected executive order on 5G technology, and likely Congressional briefings and hearings focused on wireless innovation—the WHTC is an integral network of stakeholders to discuss these issues and to develop opportunities for strategic partnerships and shared initiatives.
In 2014, Elon Musk made Tesla’s patents available for anyone to use for free, stating that “technology leadership is not defined by patents.” Earlier this month, Musk announced again that he had released all of Tesla’s patents, promising the company “will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.” Musk believes patents only serve “to stifle progress” and that by releasing his patents he can help get progress moving again—and that progress will somehow win the fight against climate change. But do patents stifle progress, and will releasing patents really have this result? Patents are a trade with a government. The inventor agrees to disclose the invention to the public in exchange for a limited exclusive right to the invention. No one else can make, use, sell or import the invention without the inventor’s permission. The public interest is served because the invention is publicly disclosed, so anyone can improve the invention and patent that advancement. And anyone can design around it and patent that invention. If the invention has commercial value, no doubt many people will jump in and do one or both.
I recently delivered a keynote address at a special session of the AUTM Annual Meeting, where the Advanced Medical Technology Association (AdvaMed) released its new University Technology Transfer Best Practices Guide. Following is a transcript of that speech.
Marshall, Texas has been, and will likely continue to be, one of the major patent litigation cities in the United States. But, Waco, Texas is quickly becoming the new mecca for patent infringement lawsuits due to recent case law and the arrival of a patent-savvy district judge. In the world of patent litigation, we all know Marshall, Texas. The Eastern District of Texas—which includes the Marshall Division—is known to be one of the largest as far as numbers of patent litigation lawsuit filings in the U.S. The economic impact on the region has been significant, as service industries such as hotels, temporary offices, restaurants and catering companies grew to serve the regular flow of litigators and their clients coming to Marshall for hearings and trials from around the country. Several national and regional law firms specializing in patent litigation opened satellite offices in and around Marshall to serve their frequent needs for access to the busy courthouse.
Federal Circuit Affirms Athena’s Diagnostic Method Claims Are Patent Ineligible as Directed to a Law of Nature
The Federal Circuit recently issued an opinion affirming the decision of the United States District Court for the District of Massachusetts, which held that Athena’s medical diagnostic methods were directed toward laws of nature and patent ineligible under 35 U.S.C. § 101. Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, No. 17-2508, 2019 U.S. App. LEXIS 3645 (Fed Cir. Feb. 6, 2019) (Before Newman, Lourie, and Stoll, Circuit Judges) (Opinion for the Court, Lourie, Circuit Judge) (Dissenting Opinion, Newman, Circuit Judge).
The inventors of U.S. Patent 7,267,820 (the 820 Patent) discovered that about 20% of patients with the neurological disorder myasthenia gravis (MG) generate autoantibodies to a membrane protein called MuSK. Until their discovery, no disease had ever been associated with the protein. The ‘820 patent disclosed and claimed methods for diagnosing neurological disorders by detecting antibodies that bind to MuSK. Athena Diagnostics (Athena), the ‘820 Patent’s exclusive licensee, sued Mayo Collaborative Services (Mayo) for infringement. Mayo moved to dismiss, and the district court granted Mayo’s motion, concluding that the patent claimed ineligible subject matter and was invalid under 35 U.S.C. § 101. Athena appealed, and the Federal Circuit affirmed.
Since having been sworn in as the new director of the U.S. Patent and Trademark Office (USPTO) in February 2018, Andrei Iancu has led the charge to improve predictability of patent-eligible subject matter. In his speech at the Intellectual Property Owners’ (IPO) Association’s annual meeting in Chicago in late September 2018, the director told IPO’s membership that the USPTO is “contemplating revised guidance to help categorize the exceptions [to patent eligibility]—and indeed to name them—and instruct examiners on how to apply them.” Moreover, Director Iancu had created a new post that coordinates between the Patent Trial and Appeal Board (PTAB) of the USPTO and the examining corps, and he installed former PTAB Chief Judge David Ruschke to that post in August 2018. True to his word, on January 7, 2019, Director Iancu issued “2019 Revised Patent Subject Matter Eligibility Guidance,” which explains how U.S. Patent Examiners should analyze patent-eligibility questions under the judicial exception to 35 U.S.C. § 101. See 84 Fed. Reg. 50-57 (Revised Guidance). In less than two weeks since the Revised Guidance, the PTAB issued two decisions reversing examiners’ 35 USC § 101 rejections based on the Revised Guidance—ex parte Rockwell, Appeal No. 2018-004973, Jan. 16, 2019; and ex parte Fanaru, Appeal No. 2017-002898, Jan. 22, 2019.
Is an invention arrived at by multiple inventors within a short space of time necessarily obvious? If not, how far may the evidence of simultaneous or contemporaneous invention go toward proving obviousness? Simultaneous invention is not common, but evidence of such invention, when present, can be important for reaching a conclusion of obviousness. Simultaneous invention can sometimes occur in the aftermath of the introduction of an enabling or foundational technology, when multiple groups working independently solve a problem, which, but for the foundational technology, would not have been possible. A recent example of this scenario can be found in the litigation related to the CRISPR-Cas9 technology, which culminated in a decision by the Federal Circuit in September 2018. University of California v. Broad Institute, Inc. (Fed. Cir. 2018) (UC v. Broad).
SCOTUS to Hear ‘The Most Significant Unresolved Legal Issue in Trademark Licensing’ in Mission Product Holdings Inc. v. Tempnology, LLC
On February 20, the Supreme Court will hear oral argument in Mission Product Holdings Inc. v. Tempnology, LLC on appeal from the Court of Appeals for the First Circuit. The case presents the question of whether a debtor-licensor’s rejection of an executory trademark license agreement in bankruptcy, pursuant to 11 U.S.C. § 365, results in the agreement’s complete termination, including loss of the licensee’s right to use the licensed trademark. Given that trademarks are the most widely used form of registered intellectual property, and trademark rights often are among a debtor’s key assets, the treatment of the debtor’s licenses of those rights is an issue that arises frequently in the bankruptcy context. For this reason, among others, the issue presented by this case has been hailed by the International Trademark Association (INTA) as “the most significant unresolved legal issue in trademark licensing.”
Federal Circuit Holds Parties Joined to an IPR have Right to Appeal PTAB Decision—Even if Original Petitioner Lacks Article III Standing
The Federal Circuit on February 1 affirmed the Patent Trial and Appeal Board’s final written decision in an inter partes review concluding that the claims of a patent directed to a composition for treating epilepsy are not unpatentable. The Federal Circuit first visited the issue of whether three petitioners—Mylan Pharmaceuticals, Breckenridge Pharmaceuticals, and Alembic Pharmaceuticals, all of whom were sued for infringement of the patent more than one year prior to the institution of the IPR, and all of whom were joined in the IPR under 35 U.S.C. § 315(c)—had standing to appeal the Board’s final decision. The Court held that the petitioners had a statutory right, under 35 U.S.C. § 319 to appeal.
Patent professionals encounter many different personality types working with their colleagues and inventors. On one end, there are those who do great work but lack confidence in their abilities, and on the other there are those who overestimate their abilities and lack the skills to do an efficient job. Those who are competent, but lack confidence, often believe others are smarter and more capable then they are. This can be particularly problematic when that individual is an engineer or scientist hired by a company to invent, or even an independent inventor who toils for years thinking that what they are doing just isn’t good enough. Building confidence in those who have creative abilities seems like a difficult task, but it can be even more challenging to work with someone who believes they are great at what they do when they clearly lack abilities, or what they do create is a modest improvement, or even trivial advance that the law is unlikely to recognize as a patentable invention. These individuals typically are completely unaware that they lack the necessary skills, they overestimate their contributions, and often become extremely defensive or even angry when others do not seem to appreciate what they consider to be their own brilliance. This phenomenon is not uncommon and has even been given a name by two psychologists who studied how individuals at different ends of the spectrum see themselves and the value of their contributions—the Dunning-Kruger Effect. The Dunning–Kruger Effect is based on the principle that, in order to know you are bad at something you must have at least a moderate understanding of it. Thus, when an individual lacks ability in a certain area, they cannot recognize that they are lacking. That is, in order to recognize their deficiencies, they must have at least a moderate understanding of the subject.
According to the World Blind Union, of the millions of books published each year, approximately only 1-7 percent are made available to those who are visually impaired. On January 28, President Donald J. Trump signed the documents for the United States to ratify the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired, or Otherwise Print Disabled. The treaty was adopted in Marrakesh, Morocco in 2013. The goal of the copyright treaty is to increase access to printed materials for those with visual or other disabilities. The treaty is administered by the World Intellectual Property Organization (WIPO).
5G, or 5th generation wireless communication, has reached the point of determining which core technologies will be used. Suddenly, decisions about which companies will be picked are upon us. And the stakes could hardly be higher — for the companies and for our national (and American citizens’) security. The two businesses in the ring, Qualcomm and Huawei, each find themselves in a tough fight to dominate the IP-based 5G technology on which countless devices—from automobiles to mobile phones to who-knows-what—will interoperate. The 5G platform will empower the Internet of Things, artificial intelligence writ large and more—a technological advance with tremendous potential as well as tremendous risk exposure to spies, hackers and such. Both companies face hurdles from the U.S. government. One makes sense. The other makes no sense.