In what some perceive as a major shift from decades of precedent, the United States Supreme Court held last week that laches – unreasonable delay – is no longer a valid defense against a claim for patent infringement so long as the patent owner brings suit  within the 6-year look-back limitation period prescribed in 35 U.S.C. § 286.

In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, SCA, held a patent concerning the manufacture and sale of certain adult incontinence products.  In October 2003, SCA sent a letter to First Quality asserting that First Quality was infringing SCA’s patent rights.  In response, First Quality maintained that the patent at issue was invalid and could not support an infringement claim.  SCA took no further action until July 2004 when, without notifying First Quality, asked the Patent and Trademark Office (PTO) to initiate a reexamination proceeding to determine whether the relevant patent was valid in light of certain pre-existing patents.  Three years later, in March 2007, the PTO issued a certificate confirming the validity of the relevant patent.

Over three years later, in August 2010, SCA filed a lawsuit for patent infringement against First Quality.  First Quality moved for summary judgment based on laches and equitable estoppel, and the District Court granted the motion on both grounds.  SCA appealed to the Federal Circuit, which affirmed the District Court’s holding that laches can be asserted to defeat a claim for damages incurred within the 6-year period set out in the patent statute.

On appeal, the Supreme Court reversed, in part, basing its decision on the plain language of the statute, which it found evinced a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of the claim.  The Court went on to find that it “would be exceedingly unusual, if not unprecedented, if Congress chose to include in the Patent Act both a statute of limitations for damages and a laches provision applicable to a damages claim.”  Thus, the Court held, that the doctrine of laches cannot bar an otherwise timely claim for damages under the patent statute.  The Supreme Court did note, however, that the doctrine of equitable estoppel can still provide protection against some of the problems that may arise when patentees induce potential targets of infringement suits to invest in the production of arguable infringing products.

In view of this decision, parties accused of patent infringement should be cognizant that they are potentially liable for six (6) years from the time of alleged infringement, regardless of how diligent the patent owner is in pursuing its claim.

Arguably one of the “most vexing” questions in all of copyright law will be answered this year.  Or at least that is what many in the furniture and fashion industry are hoping.

The question is what test should be used to determine when a feature of a “useful article” is protectable under the copyright laws.  As of now, ten different tests have been established by the different federal Circuit Courts of Appeals.  In Star Athletica, LLC v. Varsity Brands Inc., the US Supreme Court is expected to decide which of those tests is the right one, or it could choose another test altogether.

“Useful articles” include furnishings, fixtures, clothing, toys, and many other items including cheerleading uniforms, as presented in the Star Athletica case.  A useful article, in so far as its purely utilitarian features go, is not capable of copyright protection.   However, non-utilitarian features of such items can benefit from copyright protection, if that feature can be identified “separately” and exist “independently” from the useful aspect of the item.  How to determine this – whether the feature is separable in this way – is the question being decided by the Supreme Court.

The articles in the Star case are cheerleading uniforms, and the feature at issue is the two dimensional designs on those uniforms.

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Given the size of some of the industries involved, the Court’s decision could have huge consequences.  Spending on apparel was estimated at more than $250 billion annually in the US alone, and the value of the US furniture market has been estimated at nearly $100 billion.  By setting parameters on what features of useful articles can be protected, the decision could result in strategic shifts among industry participants engaged in creating, using or protecting unique designs.  Stay tuned!

Last week I was fortunate to attend the Managing the Trademark Asset Lifecycle Conference, hosted by World Trademark Review.  The topics discussed throughout the day touched on everything from assessing portfolio strength and valuation to leveraging the financial value of a brand.  Although it is impossible to touch on all the points covered during this full-day conference, there were several high-level takeaways worth sharing.

  • The Three F’s of Intellectual Property Audits: Foresight, Fluidity And Flexibility. As with many facets of corporate life, too many companies wait to audit their Intellectual Property (“IP”) until the need arises.  This approach often leads to unnecessary scrambling, stress and lost opportunities.  Rather than taking a defensive or reactive approach to auditing, companies should think proactively, instituting budget-appropriate processes whereby data is routinely collected and maintained in accessible form.
  • Getting Rid Of The “IP Department” Mentality. One of the biggest mistakes a company can make is to limit the involvement of in-house IP counsel or the portfolio management team in the day-to-day management of the company.  IP affects all aspects of the company, from marketing and sales to international tax and finance, and IP counsel should be involved in all meetings where such issues are being discussed.
  • In-House Counsel As Brand Ambassadors and Educators. IP counsel and portfolio managers should be acting as brand ambassadors, not enforcement agents.  Although there may be instances where reactive steps must be taken, every effort should be made to continuously and positively educate company personnel regarding the use and importance of IP which, at the same time, should create additional enthusiasm regarding the brand.
  • The New IP Portfolio: Not Your Grandparents’ IP. Although obvious to some, companies need to recognize that IP is no longer simply about trademark and copyright registrations.  IP touches all aspects of a company’s public persona, from its customer lists and goodwill to its website, internet domains/extensions, and social media handles.  These valuable assets can no longer be ignored.
  • Attorneys As Revenue Generators: Help Me Help You. Attorneys are often brought in when an issue arises (the reactive/defensive approach).  However, IP attorneys are uniquely equipped with the insight and experience to add value and identify potential opportunities that may be overlooked by corporate decision-makers.  IP attorneys cannot identify opportunities if they remain in the dark as to the day-to-day operations and goals of the company.  Taking time to brainstorm with counsel is an investment worth making.
  • Adjusting To The Times: The Evolution of a Brand. Companies that refuse to recognize change or are resistant to evolving their brands will be left behind.  One great example came from Colm Dobby, Associate General Counsel for Mastercard Inc., who discussed the evolution of the “Master” brand in light of the fact that “Cards” are no longer the only or preferred mechanism to purchase goods and services with credit.
  • Beware Of Domain-Driven Branding. The Internet has revolutionized the way companies market and sell their goods and services.  As a result, many companies now consider an Internet domain more important than the overall brand itself.  In some cases, companies will look to the availability of a particular domain when considering a new brand.  Others have initiated a process of buying up all potentially similar domains (and domain extensions) to discourage others from building a brand based solely on the availability of a particular domain.  Although domains are undeniably important, companies should not be blind to other considerations when analyzing the strength of a brand.

Whole Foods recently garnered attention when its trademark application for World’s Healthiest Grocery Store was rejected by the U.S. Patent and Trademark Office.  The trademark examiner focused on the “World’s Healthiest” part of the proposed mark and found the phrase simply described an alleged benefit of Whole Foods’ products, rather than indicating a source of the products.

Descriptive terms, like “healthiest” or “best,” cannot serve as trademarks without some showing that the term has acquired a secondary meaning of being distinctively associated with a particular source.  That is, a term that describes a quality of a product is used on a particular company’s products so much that the term becomes more widely recognized as indicating the source rather than describing the quality.  An example is American Airlines®.  In Whole Foods’ case, the Trademark Office left the door open for the grocery store to try to develop secondary meaning in its proposed mark by registering it on the so-called Supplemental Register.

Some commentary on Whole Foods’ rejection was focused on whether the assertion by Whole Foods – that it was the World’s Healthiest Grocery Store – was true.  The Trademark Office did not analyze the truth of the proposed mark because World’s Healthiest was viewed as a form of “puffery” or a “laudatory” statement.

Sometimes assertions boasting of characteristics like this must be true, other times not.  What is required under the circumstances is largely determined by how consumers are expected to react to it.  A statement will usually not require proof if it is just a broad claim of superiority that can only be interpreted as an opinion.  In contrast, a statement that is deemed “deceptive” will be barred from registration entirely.  The Trademark Office distinguishes between statements that are merely expressions of opinion from, for example, statements that would induce a consumer’s purchasing decision.  Phrases that are viewed as potentially influencing a purchasing decision includes words that indicate a product characteristic like superior quality, better pricing, societal beliefs (an example of which is the term “vegan”) or, as in the case at hand, phrases indicating a health benefit.  One example that falls in a few of these categories is “organik,” which was found to be deceptive when used on clothing made from cotton that was neither organically grown nor free of chemicals.  In re Organik Technologies, Inc., 41 U.S.P.Q.2d 1690 (TTAB 1997).

From the perspective of choosing a mark for use in your business, the characterization of a phrase like “World’s Healthiest Grocery Store” affects more than just whether a trademark can be obtained.  Such phrases can also run afoul of advertising guidelines set industry organizations, or even result in claims by the FTC.  The National Advertising Division of the Better Business Bureaus (NAD) has guidelines for determining whether a statement is acceptable puffery, rather than an improper claim.  In one NAD case, NAD found the claim that a baby food uses “the best ingredients nature has to offer” was acceptable puffery, but claims that implied conventional, non-organic baby food products were less nutritious should stop (such as, “some studies show that organic product contains more antioxidants…”).

With the Whole Foods’ claim to being the “World’s Healthiest,” the Trademark Office apparently was not concerned about what it viewed as general boasting.  Or, as the FTC might say, it’s okay to talk smack, just as long as it is an obvious exaggeration.

One of the overlooked issues of Britain’s decision to leave the European Union is the implications of “Brexit” on the rights afforded to individuals and entities holding European Union trademark and design registrations (a/k/a “EU Community Registrations”).  The EU Community Registration process has become favored by many trademark owners across the globe for a number of reasons, the most obvious being the ability to obtain protection in all EU member states with a single application (and the corresponding reduction in fees and costs).  It is expected that legislation will be passed to protect those who have obtained UK trademark protection by virtue of their EU Community Registration, although the logistics of any transfer from the European Union Intellectual Property Office to the UK Intellectual Property Office is yet to be determined (for example, will the registration automatically transfer, will a streamlined application process be necessary, and how will priority be determined).  With the UK’s formal departure from the EU expected to take some time, there should be no immediate concern, although trademark owners should continue to follow the issue closely to ensure continuity of protection through this transition.