Search results for: patent troll

— Jessica Gutierrez Alm, Attorney

trolls

We’ve spent time discussing the patent troll phenomenon in the past.  Patent trolls are less pejoratively referred to as non-practicing entities, because they do not make or use the inventions covered by their patents.  Instead, these non-practicing entities operate by purchasing patents on various technologies, accusing companies of infringing those patents, and demanding the companies pay licensing fees.  Faced with the threat of patent litigation, many companies—both large and small—will choose to simply pay the troll’s demand.  The infringement allegations might be thin, and the asserted patent might be invalid.  But the potential cost of litigation gives the patent troll great leverage over the companies they target.  Paying the demanded licensing fee is far more cost-effective than defending an infringement suit.

One company, however, is taking a different approach to what it views as a patent troll.  Cloudflare is an Internet security company and content delivery network.  Cloudflare is facing a patent infringement suit filed by patent owner, Blackbird Technologies.  The Complaint alleges Cloudflare is infringing the ‘335 patent, related to incorporating third-party data into existing Internet connections.  Cloudflare has vowed to fight the litigation, arguing both non-infringement and invalidity of the ‘335 patent.  To help in its efforts, Cloudflare is taking the creative approach of crowdsourcing its defense.   In a recent blog post, Cloudflare’s CEO offered up $20,000, to be divided among individuals who submit relevant prior art to invalidate the ‘335 patent.  In addition, and in an apparent effort to stop Blackbird from asserting any other patents against anyone, Cloudflare is offering another $30,000 for prior art submissions that invalidate Blackbird’s other 37 patents and patent applications.

Blackbird Technologies is . . . a law firm?  Blackbird’s website seems to offer legal services with “top law firm experience.”  But Blackbird is the plaintiff in the suit against Cloudflare.  Based on an assignment recorded with the U.S. Patent and Trademark Office, Blackbird purchased the ‘335 patent from the inventor in October 2016 for $1, and shortly thereafter initiated an infringement action against Cloudflare.  Blackbird is not merely representing a client, but instead appears to be stepping into the client’s shoes by purchasing the asserted patent and bringing suit as the plaintiff.

A little research reveals that this is a regular practice for Blackbird.  Blackbird owns at least 38 patents and published patent applications covering a broad range of technical fields.  Since September 2014, the firm has been named as the plaintiff in 109 federal patent infringement cases (107 in the District of Delaware, and 2 in the Central District of California).  The defendants in many of these cases were large corporations—Amazon, Wal-Mart, Petco, Uber, Lululemon, Target, and Netflix.

So, is Blackbird a patent troll?  Blackbird says its business model helps individual inventors and small companies by providing them with a low-cost solution to monetize their patents.  Blackbird also states that it is different from other companies labeled non-practicing entities, because Blackbird is “ready to litigate cases,” and is not merely looking “to settle cases quickly.”  Though it appears that most, if not all, of Blackbird’s suits have settled.

Cloudflare, however, views Blackbird as a pure patent troll, which led to Cloudflare’s crowdsourced effort to invalidate any and all of Blackbird’s patents.  Cloudflare’s CEO even went as far as a recent scathing blog post about the suit, accusing Blackbird of violating legal ethics rules.

Usually, infringement allegations asserted by non-practicing entities are quietly settled (see Blackbird’s 108 other cases filed since 2014).  Cloudflare’s approach to the infringement claims will be expensive, but also public.  Cloudflare’s response seems to include rallying its supporters and customers in publicly calling out Blackbird.  Cloudflare even invites supporters to “tell Blackbird Technologies what you think of their business practices” on Twitter.  It’s clear Blackbird has struck a nerve with this defendant.

— Jessica Gutierrez Alm, Attorney

Fantasy Live Role Playing Characters, Hardenstein 2014

Live Action Role Playing (LARP or LARPing) usually involves Renaissance Festival worthy costumes, foam medieval weapons, and an intense dedication to not breaking character.  I can’t say I’ve ever had the privilege of participating in a LARP event, but I also can’t say I’d turn down the opportunity.

A different kind of battle—the intellectual property kind—is being fought over the sale of some foam LARPing arrows.  Jordan Gwyther, a church pastor who sells LARPing equipment on the side, is being sued by the proverbial Goliath, Global Archery Products, Inc.  Jordan Gwyther owns LARPing.org and UpshotArrows.com, both of which offer foam tipped arrows for sale to LARPing enthusiasts.  Gwyther doesn’t manufacture the arrows; he imports and sells them.  Global Archery initially sued for patent infringement, trademark infringement, false advertising, and unfair competition.

The patent infringement claims relate to Global Archery’s two U.S. utility patents, each entitled “Non-Lethal Arrow.” The patents were granted in 2013 and 2015.

Here are some images from Global Archery’s patents:

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The scope of a utility patent, however, is defined by it numbered “claims.”  Claim 1 of one of the patents, for example, is directed to:

A non-lethal arrow, comprising:

a shaft; and

a foam tip assembly connected with an end of the shaft, wherein said foam tip assembly comprises a tip connector having a foam tip overmolded to at least a portion of the tip connector such that said foam tip is securely attached to said tip connector.

And here are some of Gwyther’s arrows accused of infringing the Global Archery patents:

IDV-03005_1_IDV-02002

At least upon first glance, there are surely some similarities here.

Gwyther responded to the lawsuit by launching a GoFundMe page with this video, asking the LARP community for help.  In the video, Gwyther claims that if Global Archery succeeds in its lawsuit against him, they will likely succeed in suing other foam arrow distributors and effectively end LARP archery in the U.S.

Global Archery motioned the court for a temporary restraining order and preliminary injunction to remove the video, stating the video led to “hateful phone calls, emails, and [social media] posts.”  Global Archery’s efforts at a so-called “gag order” did not sit well with the LARP community or the more general online community.  As a result, tech company Newegg joined in the fight, calling Global Archery a patent troll, and offering $10,000 and the proceeds from some anti-patent troll t-shirts to Gwyther’s cause.

Newegg_Anti_Troll_Shirt
Newegg states, “Proceeds from the sale of this shirt will be used to support Mr. Gwyther’s legal defense fund.”

But is Global Archery really a patent troll?  There are a few ways to define a patent troll.  Usually, the term is used to refer to a non-practicing entity—a company that owns patents for the purpose of collecting license fees and/or settlement money.  Non-practicing entities do not actually make, use, or sell the things their patents cover.  That definition does not seem to apply to Global Archery, however, since it is a company directly involved in various forms of archery, even if it does not market directly to the LARP community.  Other times, “patent troll” is used to refer to a patent holder using its patents to assert overly broad and even baseless claims against others in order to collect settlement checks.  This definition, too, seems inapplicable given the apparent similarities between the patent claim language and Gwyther’s arrows.  Perhaps a more broad definition of a patent troll is simply a large company that enforces its patent rights against smaller companies?

Patent troll or not, the patent claims were recently dropped.  Gwyther cited a German patent, predating Global Archery’s patents, as invalidating prior art.  Here are a couple images from the German prior art patent:

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After reviewing the German patent, Global Archery voluntarily dismissed the patent infringement claims against Gwyther.  According to the online file histories, neither of Global Archery’s two patents received much push back from the U.S. Patent Office prior to allowance.  Apparently, Global Archery decided it would be safer to drop the patent infringement claims against Gwyther than be forced to defend the novelty and non-obviousness of its patents.

Invalidity is a frequent offensive strategy to combat patent infringement claims, and Gwyther did well to bring in the German patent.  Gwyther won the battle, it seems, but the war rages on.  It will take something stronger than foam arrows to defeat the remaining trademark, false advertising, and unfair competition claims asserted in the suit.

— Jessica Gutierrez Alm, Attorney

 

googleLast week, Google announced its new “Patent Purchase Promotion.”  Under this program, for a two-week period, companies and individuals will have an opportunity to offer their patents to Google for purchase for a price determined by the patent owners themselves.  The program is set to run from May 8th through May 22nd of this year.  After the offer period ends, Google will review the offers and choose whether to accept any by June 26th.  Google promises that they will only accept or reject offers at the prices set by the patent owners.

Google is calling its new program an “experiment” and claims that its goal is to “remove friction from the patent marketplace.”  Allen Lo, Google’s deputy general counsel for patents said in the announcement on Google’s blog:

The usual patent marketplace can sometimes be challenging, especially for smaller participants who sometimes end up working with patent trolls. Then bad things happen, like lawsuits, lots of wasted effort, and generally bad karma. Rarely does this provide any meaningful benefit to the original patent owner. 

And so in an apparent effort to generate good karma, Google is purporting to buy patents in order to keep them out of the hands of patent trolls.  But what then does Google intend to do with all these newly acquired patents that it so gallantly saved from the trolls?

A patent troll, also known as a non-practicing entity, is typically defined as a company that collects patents and uses them to obtain licensing fees, while not actually practicing the invention itself.  In some cases, the licensing fees may be subject to unfair terms, and the troll may demand licensing fees from companies who only practice something tangentially related to the patent, hoping the companies will simply pay up to avoid litigation.

While Google holds itself out as strongly against the traditional patent system, it continues to amass an enormous patent portfolio for itself.  In 2014, Google earned the 8th-highest number of patents from the U.S. Patent and Trademark Office, for a total of 2,566 U.S. patents.  When Google purchased Motorola in 2011, discussions focused on the valuable patent portfolio Google obtained in the deal.  In recent years since the Patent and Trademark Office instituted a “fast track” program by which applicants can pay fees in order to have their patents cut in line and be examined more quickly, Google has utilized the program extensively in order to push its patents through the system.  In 2014 for example, Google obtained 875 patents through the fast track program.

Despite Google’s long history of lobbying for patent reform and even pledging many of its software patents as open-source, it has been accused of patent trolling in the past.  So is this new program just another way to obtain more intellectual property, disguised as good karma and a contribution to patent reform?  Google has not placed any restrictions on the types of patents that may be submitted for consideration, and the patent mogul expressly states that it will retain the right to license out the patents it purchases through the program.  Perhaps Google really is just trying to clear the way for patent reform.  In any event, it will be interesting to see where Google’s “experiment” leads.

2013 was another milestone year for patents.  Here are some highlights:

  • The most significant change in U.S. Patent Law from the America Invents Act (AIA) was implemented on March 16, 2013, changing the system from a “first to invent” system to a “first inventor to file” system
  • Despite the many significant changes to patent law as a result of the AIA, the AIA did relatively little to correct the growing problem of “patent trolls,” which made big news with states like Vermont addressing the issue by passing state legislation and significant discussion of various bills on Capitol Hill.  The Electronic Frontier Foundation does a nice job of summarizing many of those proposals.
  • Several patent exhaustion cases, such as Bowman v. Monsantoand Keurig, Inc. v. Sturm Foods, Inc., further defined this doctrine.  In Bowman, the Supreme Court held that “patent exhaustion does not permit a farmer to reproduce planted seeds through planting and harvesting without the patent holder’s permission.”  Bowman had planted seeds that he purchased from a grain elevator, and then saved some of the harvested seeds to use the following season.  In Keurig, the Federal Circuit found that the unrestricted sale of the patented brewing system that practiced its claimed method exhausted the patentee’s rights to claiming that competing cartridges induced infringement of the patent’s method.
  • In the face of increased scrutiny of gun control laws in the wake of the Newtown tragedy, a record number of patents issued to gun makers in 2013.
  • It was estimated that 1/4 of all U.S. patents issued in 2013 will be in the mobile device industry.
  • The World Intellectual Property Organization (WIPO) this month released its 2013 World Intellectual Property Indicators report, which stated that “global patent filings [saw] fastest growth in 18 years.”  China topped the report for the first time as the largest filer and the most applications received in all four categories of intellectual property (patents, trademarks, utility models and industrial designs).


So what do we expect to see in 2014?

  • I will start with an easy one…there surely will be more patents granted in 2014.
  • The Supreme Court takes on another case that will likely further define the patentability of software, when it hears Alice Corp. v. CLS Bank.  In a fractured decision that may have done more to confuse the issues than it did to clarify them, the Federal Circuit’s en banc decision affirmed that Alice Corp’s patent claims to a computerized method for reducing risk in financial trades, computer-readable medium with computer instructions, and computer system that implements those instructions were all ineligible subject matter and thus unpatentable.
  • Congress will likely pass legislation to pass that limits the ability of “patent trolls” to file frivolous lawsuits.  Hopefully this legislation strictly defines “patent trolls,” which in some cases have also loosely included non-practicing entities.  Under 35 U.S.C. § 154, a patent does not grant the owner a right to practice the claimed invention, rather the patent right is a right to exclude others from making, using or selling the claimed invention for a limited period of time.  Here at DuetsBlog, we are also curious to see how patent troll legislation affects potential legislation against trademark bullies.

What were your patent highlights of 2013?  What are your predictions for 2014?

– Sri Sankaran, Patent Attorney, Winthrop & Weinstine

Recent developments in executive, legislative, and judicial branches present new challenges for patent trolls (or less pejoratively “non-practicing entities” or “assertion entities”).

The White House recently outlined a series of initiatives to address the impact that patent assertion entities have on the economy.  The administration cited a report from the National Economic Council and the Council of Economic Advisers, entitled Patent Assertion and U.S. Innovation.  The report states that patent assertion entities bring 62% of all infringement suits and took in $29 billion in 2011 alone. Patent assertion entities are described in the report as not playing a role in the U.S. “invention ecosystem,” and instead focus on aggressive litigation tactics such as threatening to sue thousands of companies at once without specific evidence of infringement of any of them.  The report suggests that patent assertion entities have a negative impact on innovation and economic growth that far outweighs any benefit to the assertion entities themselves.  Pointing to a study of 14 publicly traded patent assertion entities from 2001 to 2012, the report contends that during that period the assertion entities had revenues of $7.6 billion, while during the same period patent infringement lawsuits they initiated were associated with an $87.6 billion dollar decline in the share price of the defendant companies.

The Obama administration has proposed a number of legislative and executive steps to address the economic impact of this type of litigation.  The proposed steps include: laws requiring disclosure of the real party of interest behind efforts to enforcing patents; giving courts more flexibility in awarding attorney’s fees to the prevailing party; restricting infringement actions against consumers or companies that buy a product off-the-shelf and put it to its intended use; and limiting the circumstances in which the International Trade Commission can ban imports of infringing products. The White House proposals join other initiatives already percolating in Congress.

A key issue underlying any effort in this area is whether the new rules will apply just to “trolls” and, if so, exactly how a troll is defined.  Universities, for example, may own patents but not manufacture and sell patented products.  The same could be true for individual inventors.  If production of patented products is to be the benchmark, how much production is necessary to turn a “troll” into a member in good standing of the “innovation ecosystem.”  Similarly, if the International Trade Commission’s (“ITC”) exclusion remedies are to be limited, is that limitation only for “troll” cases?  What is the justification for such a limitation when a party seeking relief in the ITC must first prove, as part of its claim, that there is a domestic industry in patented products.

Apart from these federal developments, at least one state government has also weighed in.  Spurred by a desire to facilitate “the efficient and prompt resolution of patent infringement claims,” build the local economy, and attract small and medium size internet companies to the area, Vermont recently enacted a statute prohibiting bad faith assertion of patent infringement.  The statute, 9 V.S.A. §§ 4195-99, provides that violators can be sued by the state attorney general or by the targets of the bad faith assertion.  The statute provides for equitable relief, damages, costs, and attorney’s fees.  In addition, the court can award as exemplary damages, the greater of $50,000 or three times the actual damages, costs, and attorney’s fees.

Continue Reading New Challenges for So-Called “Patent Trolls”

In the wake of Jon Stewart and Stephen Colbert leaving their respective shows on Comedy Central for newer pastures, John Oliver has emerged as a new beacon of political humor and satire.  If you haven’t watched his show, and especially if you considered the former two as having an obvious political slant, you should check out Last Week Tonight on HBO.  His shots get fired everywhere.

On this week’s, John Oliver took a shot at the patent system, particularly patent trolls:

I don’t know who looks worse out of Oliver’s segment – trolls or trial lawyers.  Or maybe Mark Cuban since he never seems to ask about patents.  Until this segment, I didn’t take note of how often Shark Tank uses the lack of a patent as a reason for rejecting a business idea, but I digress.

As Oliver’s comments make clear, there certainly is room for improvement to correct the litigation flaws created by so-called “patent trolls” – a hotly discussed topic lately in many business, law offices, blogs, and legislatures.

Much of the discussion of the “patent troll” surrounds how exactly a “patent troll” is defined.  Some refer to patent trolls as “non-practicing entities,” and others to “patent assertion entities.”  These sound in the media like lazy, menacing, evil, money-grubbing corporate shells waiting for their crossing fee from under the bridge – and surely there are some of those.  But that “patent troll” definition can also appear as an independent inventor who doesn’t make, use, or sell his invention.  Maybe that inventor’s idea was stolen by another company that now makes, uses, or sells it.  Before filing a lawsuit, he may set up a corporate entity to hold the asset to help protect him from personal liability or fund the litigation.  Patent litigation is expensive and shouldn’t that right be afforded to everyone?  Otherwise wouldn’t the Apples and the Samsungs be the only ones skating in the rocket docket of Marshall, TX?  We need to think very carefully about how we define “patent troll” before we try to make it unjustly hard for so-called trolls to litigate.

The major “troll” examples identified in Oliver’s segment – a patent that underlies the technology in every Android app and patents for copying – are technology that has become so woven in the fabric of our everyday lives that targeting people for making, using and selling a patented invention seems to the general public as utterly ludicrous.  And I don’t blame them.  In the trademark realm, we don’t allow the enforcement of trademark rights where the mark has become generic and therefore lacking in its ability to identify source.  Aside from defenses of laches or prosecution history estoppel, patent law doesn’t have a similar provision that protects such generally known ways of doing something from being asserted against others for making, using or selling the patented product.  But does it need something like the concept of genericide?

One way of resolving the issue may be to take from the model of trademark law – the Declaration of Use filed at the 6th anniversary of registration and then with the renewal every 10 years after the registration date.   This Declaration of Use requires a statement that use is continuing and providing a specimen showing use (and of course, a fee).  Patent law has maintenance payments that are required only for utility patents at 3.5 years, 7.5 years, and 11.5 years from grant of the patent.  But aside from payment of the fee, nothing else is required.  Maybe instead of a declaration of use, it may need a declaration of relevancy – and maybe that relevancy term is dependent upon the industry.

The patent law currently provides a 20-year term of an exclusive right to make, use, or sell the patented invention, in exchange for an enabling public disclosure of the invention to the public.  The whole purpose behind the system is for the public to gain possession of an inventive idea and replicate it or re-purpose it.  But 20 years in some industries, like the rapidly advancing software industry, may be too long of a term of protection.  Maybe we need shorter terms for software patents, much like we have a shortened term for design patents (14 years from issuance).

We must think very carefully about how we define “patent troll” and how we treat them.  We also need to find a delicate balance in avoiding seemingly frivolous lawsuits and protecting inventors’ rights.

How might Oliver treat the similar subject of trademark bullying?

–Ben Kwan, Attorney

Ok.  I admit.  I’m too young, no, make that way too young to know how the milk man system of delivery worked.  Was it subscription-based?  Or was there an element of public service to it – where the milk man (or maid!) strolled past every house on the block anticipating that just about everyone was going to need or want milk every couple of days?

Today, I dare say the milkman cometh again, with milk and just about everything else under the sun!  This time, he bears the insignia “Amazon” (and whichever common carrier Amazon employs).  And there’s apparently a patentable improvement on this time-old method of delivery because you may not need to leave any hint or signal that it’s time for your next delivery.  It may end up appearing unsolicited.

It is the talk radio and Web fodder of the day: Amazon’s new patent (U.S. Patent No. 8,615,473) for a “method and system for anticipatory package shipping.” The patent issued on Christmas Eve and the mainstream news outlets have picked up on it this morning.  Specifically, the patent claims a method for using computers to ship goods out into geographical areas without final destinations affixed.

For example, if Amazon’s algorithmic wonks know how many cases of Minnesota-made Pearson’s Nut Goodies are purchased in Evanston, Illinois, during a given week by retailers or consumers, Amazon is going to get that many Nut Goodie cases on delivery trucks that travel those tony streets along Lake Michigan’s shores.  Thus, having anticipated the demand, when an order is actually placed, the product is already on the delivery truck ready for an address label.  The patent outlines timing that anyone could call impeccable: “It is noted that in some embodiments, assignment of a late-selected delivery address to a speculatively shipped package need not take place at a hub, but may instead occur during the ‘last mile’ of delivery (e.g., during transit of a package on a local delivery route.)”

Fig. 1 from the new Amazon Patent provides a schematic for the patented method of delivery.

 

Amazon’s patent describes the problem this invention solves as the “substantial disadvantage to the virtual storefront,” that “customers cannot receive their merchandise immediately upon purchase, but must instead wait for product to be shipped to them.”

Even more impressive than merely anticipating demand, the patent also covers predictive shipping.  Yes, in the future, stuff is coming off that UPS or FedEx truck for you that you did not even order!  Amazon will be thinking of it before you do in many cases.  But the science won’t be perfect, according to my reading of the patent.

Amazon’s patent contemplates scenarios where products are shipped out to geographical zones where no one ends up placing an order for that particular product.  In many instances, the patent describes, it would be more costly to re-direct or return the product, so the item “may be delivered to a potentially-interested customer as a gift rather than incurring the cost” to return it.  Conceivably, the patent provides, the gift might go to a customer who has expressed interest but not pulled the trigger yet.  So start adding to your wish lists now, people!

All of this makes me wonder whether Amazon will someday anticipate my needs (and wants!) better than I can.  How often do we return home after a busy day and think, “dang, I meant to stop for this or that?”  This could solve that.  What do you think would be waiting out on your step when you return home today if this anticipatory and predictive shipping method were in full force right now?  And for my U.C.C. Article 2 gurus out there – where might the sale of goods law need to adapt to fit this new method Amazon has now patented?

 

Credit: Federal Circuit (what it looks like to argue there)

One week ago, the Federal Circuit Court of Appeals issued its decision in Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals, Inc., 18-1638 (Fed. Cir. July 20, 2018)–by all accounts, one of this decade’s most important decisions concerning the America Invents Act and the patent system. The primary issue in the case was whether the Saint Regis Mohawk Tribe (or any tribe, for that matter) is immune from the USPTO’s inter partes review (“IPR”) proceeding, which can result in cancellation of a patent. Allergan, a pharmaceutical company, had transferred title to certain patents to the Tribe after its competitor, Mylan, had instituted an IPR of the patents. The Tribe claimed that the USPTO could not review the patents due to sovereign immunity.

The Federal Circuit held that tribal sovereign immunity does not apply to IPR proceedings. It cited the Supreme Court’s recent Oil States decision (I wrote about the case earlier this year), which explained that IPRs arise “between the Government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments.” Thus, IPR is “simply a reconsideration of” the original patent grant by the federal Government. Although initiated by a private party, the Director of the USPTO must decide to institute the proceedings, and the USPTO acts “as the United States in its role as a superior sovereign to reconsider a prior administrative grant and protect the public interest in keeping patent monopolies ‘within their legitimate scope.'” The federal Government being supreme, tribes cannot invoke sovereign immunity.

The Federal Circuit’s final reference to protecting the public interest resonated with me, as well as Judge Dyk’s concurring opinion, which provided insightful context about the importance of reviewing patents post-grant. Certainly no one expects that the USPTO will perfectly examine every patent application and grant patents without error, but striving to achieve perfection is vital–even if impossible under current circumstances. As Judge Dyk illuminated:

[T]he USPTO–then and now–is an agency with finite resources that sometimes issues patents in error. Currently, for instance, the USPTO receives over 600,000 applications a year. Patent examiners receive roughly 22 hours to review each application, an amount of time that 70% of examiners report as insufficient.  And the USPTO struggles to attract and retain examiners with the technical competence required to understand the inventions being reviewed and to perform sufficiently thorough prior art searches.

The USPTO “is under pressure to make speedy determinations on whether or not to grant patents.” As such, “pre-grant patent examination was–and still is–an imperfect way to separate the good patents from the bad. Resource constraints in the initial examination period inevitably result in erroneously granted patents.” A glut of bad patents–or the perception thereof–negatively affects the public’s view of the patent system’s fairness and credibility. Thus, Congress created IPRs to combat pre-grant examination constraints, creating a streamlined procedure to challenge patents, in the hopes of restoring trust in the patent system. As an initial matter, I’m not sure attempting to solve the effect of the USPTO’s constraints was better than solving its cause.

In a recent article, I wrote about similar concerns as those expressed by Judge Dyk:

The USPTO, as the agency tasked with examining patent applications, is the first line of defense against patent fraud. But some point to the USPTO’s examination policies as potentially inviting fraud. By way of background, the USPTO’s patent examiners (those who review applications) are evaluated on a quota system, which encourages them to examine as many applications as possible. Some commentators have questioned whether this policy has turned the USPTO into a rubber-stamp institution. In the meantime, the number of patent applications and grants since 2000 has almost tripled. This has led to an even greater need for the USPTO to quickly accept or reject patents so as not to fall behind. The cycle is further incentivized by the increasing economic and financial value of patents. And it is also enabled by the difficulty, high cost, and/or impossibility of investigating every representation made by patent applicants. The USPTO simply does not have the wherewithal to investigate every claim of inventorship, utility, novelty, and other issues related to patentability. Thus, along with the important interests at stake, the complexities of patent law and the USPTO’s current weaknesses combine to create a situation in which fraud is less likely to be identified and thwarted.

In the context of the Mohawk Tribe appeal, the overwhelming public interests in reviewing potentially-invalid patents were brought to bear against the amorphous concept of sovereign immunity. It was absolutely necessary that tribes be subject to IPRs, lest private parties be enabled to take advantage of the USPTO’s constraints and “rent” the protection of sovereign immunity. Indeed, in a recent article, another commentator argued that the Federal Circuit’s decision had an “inescapable wisdom” because, had the result been any different, “every holder of questionable U.S. patents would have been rushing to one Native American tribe or another seeking deals to shelter possibly bogus rights.”

Going further, though, one can imagine more than just deals between tribes and private parties, but also the emergence of an entirely new form of patent assertion entity, patent troll (which some, but not all, criticize), and perhaps even a hybrid form of “patent privateer.” A tribe could, itself, become a mass aggegator of patents with a huge advantage: that the avenues for challenging its patents are more limited than a traditional patent holder. And one can imagine patent alliances renting tribal sovereign immunity for large market players. Any of these could exacerbate the David-and-Goliath scenario some defendants find themselves in after being sued for infringement. But, if the Federal Circuit’s decision holds–and I predict it will, especially in view of Oil States–such possible negative effects will not come to pass. However, as Judge Dyk implied (and it bears repeating), the patent system is imperfect and still has a way to go.

– Draeke Weseman, Weseman Law Office, PLLC

Intellectual property enforcement continues to make news, and new solutions to curb abusive enforcement – i.e. trademark bullying, patent trolling, and copyright trolling – are being proposed regularly. Central to these solutions is the idea of a “fast-lane” that kicks bad claims to the curb before the bullied or trolled party has incurred significant legal costs.   For example, in copyright infringement cases, a motion for judgment on the pleadings may succeed very early in the process if fair use is obvious. The ability to end frivolous litigation early is critical to a balanced intellectual property system.

Although I haven’t seen it discussed much, one possible means for putting an early end to frivolous trademark litigation is for the bullied party to pursue dismissal on the grounds that the trademark bully has not met the required pleading standard of “plausibility” set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007) and extended in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937 (2009). (For the non-lawyers reading DuetsBlog, “pleading standard” refers to the threshold content that is required in a complaint so that a plaintiff can have access to the court). My opinion is that claims that deserve the trademark bullying label are not likely to meet the Supreme Court’s pleading standard and, therefore, should be dismissible. Early dismissal of bad trademark claims, if more routinely sought and granted, could provide bullied parties with relatively quick and cost-efficient relief and could be another tool in the toolkit for practitioners faced with responding to abusive intellectual property enforcement.

First, a quick summary of the change in pleading standards. From 1957 to 2007, civil litigants followed the “mere notice” pleading standard of Conley v. Gibson, 355 U.S. 41 (1957), wherein the Court held that a complaint need only state a “conceivable” set of facts to support its legal claims. That all changed in 2007, when, in Bell Atlantic Corp. v. Twombly, the Court replaced that standard with a stricter “plausibility” standard: a complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Because the Twombly case involved a specific set of facts involving allegations of anti-competitive behavior, the courts were confused about whether Twombly’s rule should be extended to all civil litigation. So, in 2009, in Ashcroft v. Iqbal, the Supreme Court confirmed that the new, stricter pleading standard of “plausibility” applied to all civil litigation.

According to the Supreme Court, in order to state a claim that is “plausible on its face,” a plaintiff must string together facts that amount to more than “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Legal conclusions can provide the framework for a complaint, but are insufficient on their own because legal conclusions are not entitled to an assumption of truth. Asking for plausible grounds “calls for enough fact to raise a reasonable expectation that discovery will reveal evidence” of unlawful conduct.

So, do trademark bullies bring plausible claims? In my view, no. And I think this view is often echoed in the media coverage of trademark bullying cases, where we see the sentiment expressed time and time again that “there’s no way anybody is confused about X and Y.” Those of us following this issue can all remember Vermont Governor Peter Shumlin’s public message to Chick-fil-A: “If you think that Vermonter’s don’t understand the difference between kale and a chicken sandwich, we invite you to Vermont and we’ll give you a lesson about the difference between kale and a chicken. There are some very distinct features . . . ” This seems to me to be a layman’s way of saying that Chick-fil-A’s claim of trademark infringement was just not plausible on its face.

Like Chick-fil-A in the Eat More Kale dispute, trademark bullies regularly and aggressively claim likelihood of confusion without actually alleging enough factual matter to make that claim plausible, rather than merely conceivable. Trademark bullies often claim a likelihood of confusion based entirely on the similarity of the marks, while ignoring the other elements necessary to establish trademark infringement – strength of the mark, relatedness of the goods, overlapping trade channels, bad faith intent, etc. In doing so, trademark bullies might show a conceivable claim – the marks are the same, so conceivably there could be confusion – but they lack the extra stuff necessary after Twombly to get over the hurdle of plausibility. In other words, the claim isn’t plausible because despite similarities in the marks, the mark is so weak or the goods so unrelated that there is not “a reasonable expectation that discovery will reveal evidence” of trademark infringement. I think if more of the bad trademark claims we see were actually held up to this standard, more of these claims would fail.

Moreover, courts have ample discretion to decide whether a claim is plausible, and thereby to decide whether to subject a bullied party to the burden of discovery. In Iqbal, the Supreme Court held that “[u]ltimately, determining plausibility is a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Courts can look at the success or failure of prior trademark claims and rely on their own common sense about whether there really is any unlawful conduct that will be discovered. This might be a difficult subjective decision, but judges should not shy away from that responsibility.

As a matter of public policy, upholding the plausibility standard is important. Comments from the public, as part of the USPTO’s investigation into trademark litigation tactics in 2011, revealed the following views:

Aggressive tactics used by overreachers presents a problem for the entire intellectual property community by threatening legitimate activities and clogging the legal system with invalid claims.

[D]iscovery and deposition processes were too costly for many small businesses and provided a means for a party to thwart progress in a case and to drain resources from an adversary. . . .

[S]mall companies and individuals are placed in a difficult position where surrender of valid trademarks that are being lawfully used is the only rational financially-feasible option available.

It seems to me that one way to reduce the impact of frivolous trademark litigation is to demand that trademark plaintiffs actually meet the plausibility standard set forth in Twombly. Trademark practitioners should challenge trademark bullies under Twombly and expose the implausibility of claims made by trademark bullies.

What if the Trademark Office took Taylor Swift’s controversial new trademark applications and stalled examination of them, preventing them from getting approved, despite having no legitimate basis to refuse their registration, because of the potential for public scrutiny?

Taking that a step further, what if there was an unregulated government program that in cases like Ferguson and Eric Garner essentially stalled the case, kept it from reaching a decision, and made sure that no charges were brought to avoid public backlash?

And what if that was all being done in secret with administrators denying such a program’s existence?

We’d be outraged, right?

Apparently that is exactly what has been happening to some patent applications at the US Patent Office, which is an agency within the Department of Commerce.  It has come to the attention of some patent attorneys, through examiners within the USPTO, that a program called the Sensitive Application Warning System is doing just that.  This article by Devan Rolf is a compelling look at this program from his own experience. 

Devan’s company, GoFigure, was informed by a patent examiner that he was instructed not to allow a continuation application that claims priority back to 1999, citing apparently no basis for that refusal but that the application had been identified for SAWS.  A journal article cited in Devan’s article states “the SAWS provides the PTO with a mechanism to identify potentially problematic applications and conduct additional internal review, as a means of preparing for, or perhaps even avoiding, negative publicity.”  The application  generally relates to a smartphone for downloading and streaming music and storing the title of a purchased recording into a user’s account – sound like iTunes to anyone?   GoFigure requested information relating to this decision, but their FOIA request was denied.  They spoke to the Ombudsman (a great avenue to use if you’re dealing with problems at the PTO) who  according to the article said that the pending application “reads on iTunes” and that granting the patent could result in a “very, very public case” so caution had to be exercised.  Did someone from “phone a friend” in the Commerce Department to alert them to this?

Now, there are good reasons that a patent application should be made secret (like national security reasons) and any patent applicant can request this, otherwise their application will be published and the file history related to that may be publicly available.  There’s a specific outlined process for that and the ability to make a patent secret is codified at 35 U.S.C. 181.   In SAWS however, the US Patent Office is self-selecting applications for this program, with no notice to the applicant, and no subjective, transparent regulations to explain why some applications are selected and others are not.

The GOP-lead Congress has made strong commitments to pass legislation to correct the problem of patent trolls, but it seems like SAWS, the biggest troller (that’s how kids are using “troll” these days, right?),  needs to be addressed too.

The US patent system originally was supposed to protect inventors, as ownership and the right to file for a patent application was reserved for the inventor, but following the America Invents Act, corporations have much more control over this process.  It appears that they also may have some additional influence within the Patent Office itself.