If you have heard of Penn State, you have probably heard the phrase “Happy Valley.” The school, the students, and the media regularly use “Happy Valley” in reference to the school and the surrounding community. The school considers the association so strong that Penn State recently applied to register HAPPY VALLEY as a trademark for clothing – and received a refusal to register.

The Trademark Office examining attorney assigned to the application refused registration on the ground the phrase “Happy Valley” is geographically descriptive. This means that the examining attorney concluded the public will see the phrase simply as describing the geographic area where the school is located. The school’s own website seems to confirm the examining attorney’s concerns, as it describes “Happy Valley” as an “also known as” name for the town, State College.

But don’t worry Penn State fans. The university has a strong chance to overcome the refusals so long as Penn State can demonstrate the HAPPY VALLEY trademark has acquired distinctiveness in the minds of consumers. Marks that may initially be considered geographically descriptive or may become distinctive after sufficient use of the mark in commerce.

For example, use of a trademark for five years or longer may be sufficient to overcome a refusal on this ground. In fact, the examining attorney expressly references this option in the Office Action. Accordingly, chances are good Penn State can overcome this refusal simply by submitting a declaration that the university has used the mark in commerce for more than five years. However, the Trademark Office will also consider other evidence such as widespread advertising efforts, significant sales numbers, and substantial media attention and publicity.

As a fellow alum of a Big Ten university (which university isn’t important), I wanted to provide some assistance in gathering evidence in support of Penn State’s potential claim of acquired distinctiveness for the HAPPY VALLEY trademark.

If you’ve heard of Penn State, you know they receive a lot of publicity for their college sports teams. For example, this ESPN article prominently uses HAPPY VALLEY to refer to Penn State with its headline “Iowa silences No. 5 Penn State in Happy Valley.”

The Penn State wrestling program is also among the best in the country. Historically, the Happy Valley-based wrestling squad has the third-most successful program in the country, with 8 (!!) NCAA national championships , just slightly trailing Iowa’s 23 national championships.

Last, but certainly not least, Penn State can point to a visit last month from the Big Ten Tournament Champions and presumptive NCAA ’s basketball player of the year Megan Gustafson. Yet again Penn State received some great publicity associating the claimed HAPPY VALLEY mark with the University, as media ran with the headline “Iowa Cruises in Happy Valley.”

With all this evidence, Penn State fans should feel good about the likelihood they’ll soon be able to purchase HAPPY VALLEY t-shirts with a ® symbol adjacent to the phrase (exclusively from a licensed retailer). Of course, if they need more evidence, I’m sure I can find some fellow Big Ten organizations that would be happy to add some new headlines in 2019.

Earlier this year I posted about a trademark dispute regarding the use of the term “Square Donuts” for square-shaped donuts. The case involved proceedings both in federal court and at the Trademark Trial and Appeal Board (TTAB), between the Square Donuts cafe in Indiana (which claimed decades of prior use and a trademark registration); and the Family Express convenience-store chain (which sold square-shaped donuts called “square donuts,” claiming the term is generic). As we discussed, the case raised the interesting question of whether the term Square Donuts is generic for cafe services that feature square-shaped donuts (which still look delicious by the way, see below).

Perhaps fortunately for the parties involved, but unfortunately for our curious readers, it appears there will never be a decision answering this question, as the case is headed to a settlement and dismissal. A docket entry on August 30, 2018 in the federal court proceeding states “Settlement Reached,” following a settlement conference between the parties.

However, the case has not yet been dismissed, as the parties have not yet finalized the settlement and dismissal documents. After the court recently granted a joint motion for extension of time, the deadline to file dismissal papers is by the end of this month. In the meantime, there do not appear to be any public updates or press releases yet, regarding the nature of the settlement, on the parties’ respective websites (here and here). However, I do note that the Family Express sub page, “Our Brands,” no longer features “Square Donuts” as one of their “our proprietary brands,” as it did at the time of my previous post in May.

Therefore, just a guess, but perhaps the parties have reached a licensing agreement, in which Square Donuts will maintain its registration and claim to trademark rights, and Family Express will have a license to continue using the Square Donuts name for its donuts. Alternatively, perhaps Family Express has agreed to entirely give up calling its donuts “Square Donuts.” Based on the deadline for dismissal at the end of this month, I’m sure there will be more significant news soon, regarding the nature of the settlement and any changes to the parties’ branding and websites. What do you think will happen — any predictions? Stay tuned for updates.

Readers of this blog may recall that in the past year, I wrote extensively about the U.S. Supreme Court case of Oil States v. Greene’s Energy. But I paid little attention to another important case decided around the same time: SAS Institute v. IancuOil States centered on whether the USPTO’s inter partes review (“IPR”) process (challenging a patent at the USPTO, rather than in court) was constitutional. SAS followed up with a seemingly less-pressing issue: whether, when the USPTO institutes an IPR to reconsider a patent by accepting an IPR petition, the USPTO must decide the patentability of all of the claims of the patent that the IPR petitioner challenged in the IPR petition. The Supreme Court ruled that IPR is constitutional in Oil States and that the USPTO must decide the patentability of all of the claims which were challenged in the accepted IPR petition in SAS.

Just this week, I was attending a “Supreme Court Preview” event hosted by the Eighth Circuit Bar Association. One of the topics was upcoming patent cases before the Supreme Court. I’ll admit; they’re not as juicy as last term (but perhaps only lawyers would have salivated over last year’s cases). However, one gave me a squirrelly thought: Return Mail v. United States Postal Service. The major issue in Return Mail is whether the federal government is a “person” who may petition to institute review proceedings before the USPTO.

Credit: Channel 3000

Technically, Return Mail doesn’t involve IPR, but rather a different proceeding called covered business method (“CMB”) review. CMB review, as its name implies, is limited to review of business method patents–that is, patents that claim a method or apparatus for performing data processing or similar operations relating to the practice, administration, or management of a financial product or service. But CMB review is very similar to IPR; a person files a petition with the USPTO seeking review, and the USPTO decides whether to institute proceedings. For example, in the Return Mail case itself, Return Mail, Inc. sued the United States Postal Service (“USPS”) for infringement of a business method patent described as: encoding information about the name and address of intended recipients in the form of a barcode, returning undeliverable mail to a processing location, scanning the barcode, obtaining the corrected information, and then providing that information to the sender to choose whether to resend with correct addressee information. (Description in the Federal Circuit opinion.)

Credit: Postal Reporter

Does Return Mail’s patent seem a little…obvious? Sounds like USPS might have a good shot at challenging the patent via CMB review, right? That’s what the USPS thought, so it petitioned for CMB review of certain claims of the patent. There’s just one problem: current patent law says that only a “person” can institute CMB review, and that person must meet certain other requirements, which include being sued or charged with infringement. Is the USPS–an arm of the government–a person? Current patent law does not define the term. In a short opinion, the Federal Circuit held that the federal government is a “person” for the purposes of CMB review. There was a fiery dissent. The Supreme Court granted cert on this specific question.

And here is where the squirrely thought arises. Just like CMB review, IPR review starts with a petition by a “person.” But unlike CMB review, an IPR petitioner need not have been sued or charged with infringement. Indeed, an IPR can be instituted by any person “who is not the owner of a patent.” 35 U.S.C. § 311. The USPTO must review all claims challenged in a petition if the USPTO accepts the petition. But the USPTO might not want to do that in every case–as in SAS. If the government is a person, can it escape SAS‘s mandate by filing its own petition for IPR limited to the claims it actually thinks should be evaluated?

The process would go something like this: (1) the USPTO receives an IPR petition from a third party and reviews the petition, (2) the USPTO determines it would like to institute review on some of the claims of the patent challenged in the petition, but perhaps not the same claims as those listed in the petition, (3) the USPTO works in collaboration with another governmental agency (say, for example, the Attorney General or USPS), (4) the other governmental agency files a petition for IPR of the same patent, but on the claims and grounds desired by the USPTO, and (5) the USPTO accepts the governmental petition, achieving the goal of escaping SAS‘s mandate that it decide the patentability of claims listed in the third party petition that the USPTO thinks need not be considered. And voila! Return the earlier petition for IPR as uninstituted to sender.

Thus, affirming the Federal Circuit could provide the government an escape from SAS, so to speak. While reversal could preclude agencies like the USPS from seeking cost-effective review of patents with the USPTO. What do you think?

Trademark owners should beware of a scam involving the Amazon Brand Registry. There have been several reports of rogue users exploiting the Amazon Brand Registry through the unauthorized modification of trademark registration records at the U.S. Patent and Trademark Office (USPTO). These scammers are submitting fraudulent requests to change the email addresses for trademark registrants, and thereafter, updating the brand ownership records with the Amazon Brand Registry.

Continue Reading Watch Out: Unauthorized Changes in USPTO and Amazon Brand Records

As Steve blogged earlier this week, we’ve had a lot of “zero” on the mind lately—marks related to the word and numeral. It got me thinking about the letter ‘O,’ especially since it has been in recent trademark news.

If you missed it, The Ohio State University and Oklahoma State University are now dueling it out at the USPTO over Oklahoma’s trademark application related to the block ‘O.’ Specifically, Oklahoma is attempting to register a mark of “a drum major marching while leaning back with head tilted back”:

According to Oklahoma, it has been using the singular block ‘O’ since 2001, most notably on the jersey of its band’s drum major (but also on sports memorabelia):

But in an opposition to the mark, Ohio says it has been using the same letter since as early as 1898, and it’s current main athletics logo includes the block ‘O’ in the background:

According to Ohio, Oklahoma’s use of the leaning and tilted ‘O’ is likely to cause confusion. I wonder if any other O-state institutions will weigh in—looking at you, Oregon.

On the one hand, the block styling of the Oklahoma ‘O’ could cause consumers to accidentally purchase sports gear from the wrong institution. On the other hand, the letter ‘O’ is such a fundamental unit of the English language that it’s hard to argue just one institution should be entitled to its exclusive use—even if it’s only in the college sports context. And Oklahoma is only seeking registration of a mark which uses ‘O’ in a minor fashion. However, Oklahoma’s marching ‘O’ mark could run into issues related to the requirement that the mark be used in commerce. After all, it’s a mark representing the band major, who wears an ‘O.’ How does Oklahoma otherwise use the mark or plan to use it commerce?

It turns out that the letter ‘O’ is not widely used as a mark on its own. There are some recognizable uses, though. Perhaps the most distinctive use of the letter ‘O’ is the Oprah Magazine:

In 2001, a German magazine also named ‘O’ sued Oprah’s ‘O’ magazine, but the suit appears to have gone nowhere, and Oprah’s ‘O’ lives on.

The only other major ‘O’ competitor appears to be Cirque du Soleil:

Maybe there’s some potential for confusion between the Oklahoma drum major and the high-flying circus performers. Though, I’m guessing the audiences for both don’t substantially overlap.

I think the few recognizable instances of ‘O’ marks can be explained by the overall minor distinctiveness a single letter can generate when used in connection with a brand. This is the up-hill battle both Ohio and Oklahoma will face in arguing their sides of the trademark dispute. Stronger letter marks are paired with other words, such as O Magazine and O Cirque du Soleil. Another example comes to mind: Toys ‘R Us (also in the news lately).

Procter & Gamble (P&G) has filed federal trademark applications to register several well-known (at least among millennials) acronyms used in text messages, including LOL (laughing out load); NBD (no big deal); WTF (what the f***); and FML (f*** my life). The applications identify cleaning products, including liquid soap, dish detergents, surface cleaners, and air fresheners. P&G’s products include brands such as Febreze air freshener, Dawn dish detergent, and Mr. Clean surface cleaner, so perhaps the applied-for marks would be used in association with those existing products. But that’s just a guess, as the applications were filed with an intent-to-use basis, meaning no specimens of use are provided yet.

Earlier this month, the USPTO issued initial Office Action refusals for all four applications, primarily involving minor clarification issues related to the identifications of the cleaning products. However, one of the applications, for FML, received a likelihood-of-confusion refusal, citing previous “FML” registrations, so we’ll see how that pans out. Additionally, two of the applications, LOL and NBD, received requests for information regarding the meaning of the acronyms. (Perhaps the Examining Attorney is not a text-savvy millennial?) Otherwise, it appears that the majority of these four applications will probably be approved for publication eventually, pending resolution of the clarifications and requests for information.

Nevertheless, even if the marks register, the decision to seek registration for these ubiquitous acronyms might seem questionable from a branding perspective, for a couple reasons. First, these acronyms are so commonly used in a variety of contexts, and have such a well-known informational meaning, that it may be difficult for the marks to become strongly recognized by consumers as distinctive source indicators, pointing to P&G and their cleaning products. Second, it is difficult to discern any logical or beneficial association between the well-known meaning of the acronyms and cleaning products. In particular, two of the acronyms have a relatively negative or vulgar meaning (WTF and FML), so it is questionable why the company would want such meanings associated with their products. Perhaps some tenuous play on the acronyms being “dirty” words that would be cleaned up by P&G’s products? Then again, I’m more a legal than marketing type, so perhaps there is a more creative strategy that I’m not thinking of — and again, it’s hard to guess how the marks will be used at the intent-to-use stage.

What do you think about P&G’s decisions to file these trademark applications for their cleaning products, from either a trademark or branding perspective?

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.

Hawaii seems to be on the mind here at DuetsBlog lately. Last week, I had the pleasure of visiting three Hawaiian islands for the first time. While there, I quickly became acquainted with Hawaiian life and language. It’s a beautiful place; I recommend everyone visit.

When I first landed on Kauai, the “garden island,” I was quickly greeted with “Aloha,” in sound, sight, and mind. Although most understand “Aloha” to be a friendly greeting, the word has much greater meaning. It also means love, affection, peace, compassion, and mercy. In one word, it embodies Hawaii–and, indeed, the State of Hawaii has declared that Aloha is its official spirit. It is “more than a word of greeting or farewell or a salutation. . . . ‘Aloha’ means mutual regard and affection and extends warmth in caring with no obligation in return. ‘Aloha’ is the essence of relationships in which each person is important to every other person for collective existence. ‘Aloha’ means to hear what is not said, to see what cannot be seen and to know the unknowable.” Haw. Rev. Stat. § 5-7.5(a). All government employees are instructed to “contemplate and reside with the life force and give consideration to the ‘Aloha Spirit.'” Haw. Rev. Stat. § 5-7.5(b). I guess they don’t call it the “Aloha State” for nothing!

With such importance to native Hawaiians, citizens of Hawaii, and the state themselves, it is no wonder that “Aloha” has also become a popular company, place, product, and service name on the islands. Throughout my journey there, I began to notice Aloha almost everywhere I went. See, for example, the following:

And the list goes on… In fact, a basic USPTO search revealed almost 500 live Aloha marks, and a search on the Hawaii Department of Commerce and Consumer Affairs revealed over 10,000!

Seeing Aloha used so frequently caused me to ponder the potential risks of choosing a word like ‘Aloha’ for use in a brand. On the one hand, the word used in connection with most goods, services, and places is arbitrary or fanciful. What is, for example, “Aloha Tofu?” And the word may be suggestive or descriptive of Hawaiian roots. But on the other hand, the word “Aloha” is so ubiquitous that it can hardly be said to be inherently distinctive. Its common use, standing alone, does not immediately identify a single source and seemingly undermines the ability to develop secondary meaning in the minds of at least a Hawaiian public constantly bombarded with the word. Tying additional words to Aloha (e.g., “Aloha Fridays” or “Liquid Aloha”) might create more distinctiveness. But there seems to be an overarching risk that the mark’s initial generic non-distinctiveness will never be overcome. This risk is akin to genericide, but not due to expropriation–rather, widespread appropriation.

I enjoy the Aloha spirit and hope it spreads far and wide. But its ubiquitous adoption could turn a word which means quite a bit (see above), into a word which means very little when it comes to trademark law.

In recent USPTO news, Trader Joe’s, the supermarket chain known for its eclectic and unique foodstuffs, recently filed an opposition to registration of the mark “Trader Schmo,” which is described as designating a wide variety of Kosher foods. Understandably, Trader Joe’s took issue with the mark, and particularly its use in the food category. The company instituted an opposition (which I cannot help but note is #999,999), arguing that “Trader Schmo” will confuse consumers because consumers will naturally switch “Joe’s” with “Schmo,” given the popular phrase “Joe Schmo.”

This is not the first time Trader Joe’s has taken legal action to protect its brand. Notably, just a couple years ago the company sued “Pirate Joe’s,” a counterfeiter with a backstory almost too unbelievable to be true. Pirate Joe’s was a “rebel Canadian grocery operation,” which bought Trader Joe’s products in the United States and “smuggle[d] them across the border to Vancouver” to sell them. Pirate Joe’s eventually ran aground under the immense pressure of its legal fees.

Pirate Joe’s Comes Crashing Down, Credit: Georgia Straight

This new dispute reminds me of the famous “Dumb Starbucks” experiment by comedy TV series Nathan For You. Over one weekend in 2014, the show opened a coffee shop that looked just like a real Starbucks, except that its name and every drink it sold was preceded by the word “dumb.” The comedian behind the prank (or “art“) claimed that “Dumb Starbucks” was permissible fair use because both the use of the Starbucks mark, as well as the store itself, was one big parody. One cannot help but notice some parallels to Trader Schmo; the latter word refers to a hypothetical “dumb” person.

Comedian Nathan Fielder, Credit: New Yorker

Dumb Starbucks and Trader Schmo raise difficult questions about permissible comedic use under trademark law. On the one hand, the marks free ride on the notoriety of other marks, bringing attention. On the other, it seems unlikely the marks would cause actual consumer confusion, making them harmless jokes. Whether Trader Schmo runs afoul of the Lanham Act will likely depend on two major inquiries: (1) whether it constitutes infringement or dilution, and (2) whether statutory fair use defenses apply.

InfringementPreviously on this blog, I explained that infringement usually centers on likelihood of confusion, which is evaluated using a variety of factors:

whether the use is related, the strength of the mark, proximity of the use, similarities of the marks, evidence of actual confusion, marketing channels employed, the degree of care likely to be exercised by consumers, the user’s intent in selecting the mark, and the likelihood of expansion of product/service lines.

The factors could support a finding of infringement here. The uses are related (food). The strength of the Trader Joe’s mark rides the line between arbitrary and fanciful to descriptive; who is Trader Joe in the abstract, and what does he sell? Surely the marks are similar…sounding. But on the other hand, would an average Joe really mistake Trader Schmo for Trader Joe’s? As a counter, though, it seems reasonable to infer that Trader Schmo was selected because it is similar to Trader Joe’s.

Dilution: So there might be infringement. How about dilution? This occurs when the similarity between the accused mark and a famous mark is likely to impair the distinctiveness or reputation of the famous mark. Dilution does not require any actual or likely consumer confusion. Depending on how good Trader Schmo’s Baba Ganoush, Gefilte fish, Matzo ball soup, and Borscht taste, Trader Joe’s could have an argument for dilution–especially if Trader Schmo’s grows large enough to undermine the distinctiveness of Trader Joe’s as a famous brand.

Fair Use: Generally speaking, the fair use provisions for infringement and dilution both require: (1) that the accused mark be used in a descriptive sense and not as a mark, and (2) that use of the accused mark be fair and in good faith. However, fair use does not provide a defense to infringement if there is likelihood of confusion–but we’ll gloss over that for now.

First, Trader Schmo could arguably be descriptive, delineating traded products. And the word ‘schmo’ has Jewish roots, which could describe the Kosher foods the mark designates. On the other hand, Trader Schmo isn’t inherently descriptive in that it actually describes a product or a characteristic or quality (e.g., Vision Center, a store for glasses). And it’s being used as a mark. So fair use might not even apply.

Assuming descriptiveness, the second element (the ‘fair’ aspect of the doctrine of fair use) often implicates the kinds of First Amendment interests that protect parody, satire, and criticism. But there’s no indication that Trader Schmo is intended to comment on Trader Joe’s. Moreover, courts have rejected the idea that a use is “fair” or in good faith if its similarity to a protected mark is deliberately concocted to garner attention. Trader Joe’s could have a good case for that here–just as Starbucks likely had against Dumb Starbucks.

A high-level analysis of the Trader Schmo mark suggests it could constitute infringement or dilution and is not fair use. This conclusion underscores trademark law’s general distaste for humor when it comes to commerce, as opposed to actual social commentary and comparison.

Five months ago to the day, I predicted that the U.S. Supreme Court would uphold inter partes review (“IPR”) proceedings at the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (“PTAB”) as constitutional in Oil States v. Greene Energy. On April 24, 2018, the Court so-held.

Back in November, the questions at oral argument in Oil States raised numerous intriguing issues:

  • Whether IPR proceedings are “examinational” rather than “adjudicatory.”
  • Distinctions between “public rights” and “private rights.”
  • The relevance of 19th-century cases on patents, such as McCormick v. Aultman.
  • The interplay of due process, given a patentee’s usually-substantial investment in the patented invention and reliance on the patent grant.
  • Opportunities for subsequent appellate review.

So which of these became the deciding issues in the Court’s opinion? Ironically, Justice Thomas–who has been known to refrain from questions at oral argument and was the only Justice not to ask a question during oral argument in this case–wrote for the 7-Justice majority. Justice Gorsuch wrote a dissenting opinion.

First, the majority held that IPR proceedings do not violate separation of powers by invading the sphere of the Judiciary under Article III of the Constitution:

When determining whether a proceeding involves an exercise of Article III judicial power, this Court’s precedents have distinguished between “public rights” and “private rights.” Those precedents have given Congress significant latitude to assign adjudication of public rights to entities other than Article III courts.

Recognizing that the Court has not been clear on this distinction, the Court provided some clarity:

[T]he public-rights doctrine applies to matters “‘arising between the government and others, which from their nature do not require judicial determination and yet are susceptible of it.’” Inter partes review involves one such matter: reconsideration of the Government’s decision to grant a public franchise.

Inter partes review falls squarely within the public-rights doctrine. This Court has recognized, and the parties do not dispute, that the decision to grant a patent is a matter involving public rights—specifically, the grant of a public franchise. Inter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO’s authority to conduct that reconsideration. Thus, the PTO can do so without violating Article III.

The Court went on to incorporate Article I, Section 8, Clause 8 of the Constitution, which gives Congress the power to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”:

Congress can grant patents itself by statute. And, from the founding to today, Congress has authorized the Executive Branch to grant patents that meet the statutory requirements for patentability. When the PTO “adjudicate[s] the patentability of inventions,” it is “exercising the executive power.”

Inter partes review is “a second look at an earlier administrative grant of a patent.”  The Board considers the same statutory requirements that the PTO considered when granting the patent…. So, like the PTO’s initial review, the Board’s inter partes review protects “the public’s paramount interest in seeing that patent monopolies are kept within their legitimate scope,” Thus, inter partes review involves the same interests as the determination to grant a patent in the first instance.

The primary distinction between inter partes review and the initial grant of a patent is that inter partes review occurs after the patent has issued. But that distinction does not make a difference here. Patent claims are granted subject to the qualification that the PTO has “the authority to reexamine—and perhaps cancel—a patent claim” in an inter partes review. Patents thus remain “subject to [the Board’s] authority” to cancel outside of an Article III court.

This Court has recognized that franchises can be qualified in this manner. For example, Congress can grant a franchise that permits a company to erect a toll bridge, but qualify the grant by reserving its authority to revoke or amend the franchise.

The Court then went on to distinguish 19th-century cases appearing to state that patents are private, not public, rights:
To be sure, two of the cases make broad declarations that “[t]he only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent.” (citing McCormick) But those cases were decided under the Patent Act of 1870. That version of the Patent Act did not include any provision for post-issuance administrative review. Those precedents, then, are best read as a description of the statutory scheme that existed at that time. They do not resolve Congress’ authority under the Constitution to establish a different scheme.

The Court also noted that even the English legal system, from which the U.S. derives many of its principles, contained a similar patent revocation process by petition to the Privy Council:

The Patent Clause in our Constitution “was written against the backdrop” of the English system. Based on the practice of the Privy Council, it was well understood at the founding that a patent system could include a practice of granting patents subject to potential cancellation in the executive proceeding of the Privy Council. The parties have cited nothing in the text or history of the Patent Clause or Article III to suggest that the Framers were not aware of this common practice. Nor is there any reason to think they excluded this practice during their deliberations.

For similar reasons, we disagree with the dissent’s assumption that, because courts have traditionally adjudicated patent validity in this country, courts must forever continue to do so.

The Court also rejected the argument that because IPR “looks like” the exercise of Article III judicial power, it is infringing on that power. And it “emphasize[d] the narrowness of [its] holding,” noting that appellant Oil States had not raised a due process challenge. Finally, the Court held that IPR proceedings do not abridge the “right of trial by jury” under the Seventh Amendment because Congress properly assigned the matter of patent rights to adjudication before the PTAB.

Justices Breyer, Ginsburg, and Sotomayor concurred, stating only that the opinion “should not be read to say that matters involving private rights may never be adjudicated other than by Article III courts, say, sometimes by agencies.”

Justices Gorsuch and Chief Justice Roberts dissented:

Today, the government invites us to retreat from the promise of judicial independence. Until recently, most everyone considered an issued patent a personal right—no less than a home or farm—that the federal government could revoke only with the concurrence of independent judges. But in the statute before us Congress has tapped an executive agency, the Patent Trial and Appeal Board, for the job. Supporters say this is a good thing because the Patent Office issues too many low quality patents; allowing a subdivision of that office to clean up problems after the fact, they assure us, promises an efficient solution. And, no doubt, dispensing with constitutionally prescribed procedures is often expedient. Whether it is the guarantee of a warrant before a search, a jury trial before a conviction—or, yes, a judicial hearing before a property interest is stripped away—the Constitution’s constraints can slow things down. But economy supplies no license for ignoring these—often vitally inefficient—protections. The Constitution “reflects a judgment by the American people that the benefits of its restrictions on the Government outweigh the costs,” and it is not our place to replace that judgment with our own.
This dissent is not at all surprising, given that during oral argument both Justices asked questions that suggested they doubted that patents were public rights. It goes on to say:
Article III, explains that the federal “judicial Power” is vested in independent judges. As originally understood, the judicial power extended to “suit[s] at the common law, or in equity, or admiralty.” From this and as we’ve recently explained, it follows that, “[w]hen a suit is made of the stuff of the traditional actions at common law tried by the courts at Westminster in 1789 … and is brought within the bounds of federal jurisdiction, the responsibility for deciding that suit rests with” Article III judges endowed with the protections for their independence the framers thought so important.
The dissent disputed the relevance and value of the references to the Privy Council, colorfully stating that the cases cited by the majority “represent the Privy Council’s dying gasp in this area.” And Justice Gorsuch embarked on a history lesson about the early years of our Republic. Wrapping up, the dissent expressed concern:
Today’s decision may not represent a rout but it at least signals a retreat from Article III’s guarantees. Ceding to the political branches ground they wish to take in the name of efficient government may seem like an act of judicial restraint. But enforcing Article III isn’t about protecting judicial authority for its own sake. It’s about ensuring the people today and tomorrow enjoy no fewer rights against governmental intrusion than those who came before. And the loss of the right to an independent judge is never a small thing. It’s for that reason Hamilton warned the judiciary to take “all possible care … to defend itself against” intrusions by the other branches. It’s for that reason I respectfully dissent.
As demonstrated by the Court’s opinion and the dissent, the primary issue was whether patents were public or private rights. The majority held they were public, between the government and the grantee, and its other holdings flowed from that decision. The dissent deemed patents private, akin to land grants and other personally-held rights, citing cases such as McCormick. In the end, due process did not play a role in the majority’s decision, but seemed to justify the dissent’s view that IPR proceedings are a form of Executive Branch encroachment. Given the majority’s explicitly-narrow holding and the dissent’s concerns, my guess is that the Court will be revisiting Oil States on a related issue in the near future. As always, stay tuned!