Monthly Archives: January 2011

Time for a Checkup?—IP Audits

by: Robert Wagner, an intellectual property lawyer at Picadio Sneath Miller & Norton, P.C.

With the dawn of the new year, it is time to consider getting your annual checkups. IP assets often form the core assets of a company—enabling the company to provide its goods and services and to prevent others from encroaching on its valuable property. Regardless of the size of your company, maintaining the health of these assets should be a key priority, so a company’s IP portfolio should undergo a routine review to make sure the assets are in top shape and no issues have arisen.

Among the many things that can be done in an IP checkup (or audit) is to determine which assets are currently being used. Are their underutilized assets that should be utilized? Or, can these assets be sold or licensed to someone else? An IP audit can verify that you have the proper title or license to the IP assets you do use and that all maintenance fees have been paid to maintain the enforceability of these assets. An IP audit can not only assess the assets you have, it can serve as preventative medicine to help ward off lawsuits. With the recent plague of false patent marking cases that have been filed throughout the country, verifying that the goods you provide are properly marked and any expired patent numbers have been removed can help avoid needless and expensive litigation.

An IP audit provides the mechanism to obtain a current snapshot of the status of a company’s IP assets. Like any other kind of checkup, an IP audit can range from a broad, general review and inventory of the assets to a detailed analysis of some or all of the assets. Often, the audit begins with the broad review to identify potential problems and then prioritizes which problems to focus on.

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Scary Decisis?

Posted by Henry M. Sneath, a principal and shareholder at Picadio Sneath Miller & Norton, P.C. in Pittsburgh, Pa.

Here’s a scary decision by a California Appellate Court reported on Wired.com http://www.wired.com/threatlevel/2011/01/email-attorney-client-privilege/.  An employee who sues her employer for discrimination, and who communicates with her lawyer using her employer’s e-mail system, waives the attorney client privilege by using the company’s e-mail system to seek or receive legal advice from her lawyer.  In other words, if you sue your employer, you may not use that employer’s e-mail server to communicate with your lawyer, or those communications are not privileged. This is an important issue not only to litigants, but to lawyers, who routinely send litigation related e-mails to clients at workplace e-mail addresses. Lawyers must now, perhaps, ask clients a series of questions regarding the process of e-mail communications so that a privileged system of communication can be established. Wired.com quotes the court as holding that “The e-mails sent via company computer under the circumstances of this case were akin to consulting her lawyer in her employer’s conference room, in a loud voice, with the door open, so that any reasonable person would expect that their discussion of her complaints about her employer would be overheard.”  The key to the decision involves the explicit warnings given to plaintiff and her fellow employees about the use of company e-mail. The court’s holding cited the following rationale for its decision to vitiate the privilege: “This is so because Holmes used a computer of defendant company to send the e-mails even though (1) she had been told of the company’s policy that its computers were to be used only for company business and that employees were prohibited from using them to send or receive personal e-mail, (2) she had been warned that the company would monitor its computers for compliance with this company policy and thus might “inspect all files and messages . . . at any time,” and (3) she had been explicitly advised that employees using company computers to create or maintain personal information or messages “have no right of privacy with respect to that information or message.” See the Courts Published Opinion: http://www.courtinfo.ca.gov/opinions/documents/C059133.PDF

Whether the California decision will be followed elsewhere, or copied in other state or federal courts remains to be seen. We at PitIPtechblog will continue to monitor this decision and its fallout.

Patent Litigation 2011

Posted by Henry M. Sneath principal and shareholder at Picadio Sneath Miller & Norton, P.C. in Pittsburgh, Pa.

I was recently interviewed by Levick Strategic Communication in Washington, DC about general patent litigation issues and the current state of patent litigation for businesses. Here is the link to the Bulletproof Blog at Levick Strategic Communications in Washington DC. http://www.bulletproofblog.com/

New Trademark Infringement Action Filed in Western District of Pennsylvania

by: Joseph R. Carnicella, an intellectual property associate at Picadio Sneath Miller & Norton, P.C., jcarnicella@psmn.com

Plaintiff Taza Systems, LLC filed suit against Defendants Taza 21 Co., LLC, et al. in the Western District of Pennsylvania on January 19, 2011.  Plaintiff alleges that it owns various federally-registered service marks, all of which include the term “TAZA,” and has used these marks to identify its restaurant and bar services continuously since 2005.  Plaintiff alleges that Defendants have been on notice of these marks, yet have used the name “TAZA” to identify and advertise their restaurant services without permission from Plaintiff.   Plaintiff has asserted claims of trademark infringement, dilution, unfair competition and cyberpiracy.  Defendants have not filed a response to the Complaint.

We will continue to monitor and update the status of this case.

New Trademark Infringement Action Filed in Western District of Pennsylvania

by: Joseph R. Carnicella, an intellectual property associate at Picadio Sneath Miller & Norton, P.C., jcarnicella@psmn.com

On January 5, 2011, Entrepreneurial Ventures Capital Co., LLC filed an action against V.P. Racing Fuels, Inc. for trademark infringement, dilution of trademark rights and unfair competition.  According to the Complaint, Plaintiff alleges that it owns the mark, “WORK THE MACHINE,” and claims that Defendant has been using “FUEL THE MACHINE” in violation of Plaintiff’s rights.  Plaintiff is seeking, inter alia, injunctive relief and damages.  Defendant has not filed a response to the Complaint. 

We will continue to monitor and update the status of this case.

Top 10 IP Decisions of 2010

by: Robert Wagner, an intellectual property lawyer at Picadio Sneath Miller & Norton, P.C.

2010 gave us a number of important decisions in the intellectual property field. The Bilksi decision regarding the patentability of business methods was eagerly awaited from the Supreme Court. In addition, the Federal Circuit issued a number of key decisions involving false marking, the written description requirement, patent misuse, and patent term extensions.

Bilksi v. Kappos—130 S.Ct. 3218 (2010)

Bilski was one of the most anticipated cases of the year. The Supreme Court considered whether business method patents are patentable subject matter under the Patent Act. As the Court is want to do, it did not substantially clarify the standards. Nonetheless, three key points emerged from this decision.

1.  Business method patents are not per se unpatentable subject matter, although they still might be (or should be) difficult to get.

2.  The Federal Circuit’s machine or transformation test for patentability under § 101 is not the sole test, although it is still a very useful clue for determining whether a process meets the requirements of § 101. Few processes that do not meet this test would be patentable.

3.  The three previous exceptions to the broad standards of patentability under § 101 still exist—laws of nature, physical phenomena, and abstract ideas are not patentable.

American Needle, Inc. v. National Football League—130 S.Ct. 2201 (2010)

American Needle was a non-exclusive National Football League Properties (NFLP) licensee for certain apparel that bore NFL team insignias. In December 2000, the NFL decided to only grant exclusive licenses, and American Needle did not receive one. American Needle sued, claiming that the NFL’s licensing practices violated § 1 of the Sherman Antitrust Act. The Seventh Circuit found no violation, but the Supreme Court reversed.

While not a purely IP case, this case is at the intersection of IP and antitrust laws. The NFL claimed that the NFLP was a joint venture that was formed to develop, license, and market NFL IP rights. Section 1 of the Sherman Act prohibits concerted action that restrains trade. The key inquiry in this case was whether the NFL acts as a single decisionmaker in the IP licensing arena or whether the NFLP brings together independent decisionmakers. The Court concluded that while the NFL may in some areas act like a single decisionmaker (for scheduling, rules, etc.), in the IP arena each team is pursuing its own interests and directly competing against the other teams. Thus, the decision by the NFLP to issue exclusive licenses was concerted action that deprived the marketplace of independent action by each team and thus could state a claim for a violation of § 1 of the Sherman Act. The Court noted that a joint venture could be governed by antitrust laws in some aspects of its business, while not in others. The Court remanded to the lower courts to address the substance of the claims.

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Fed Circuit Nixes 25 Percent Rule of Thumb for Determining Baseline Royalty Rate

  by: Joseph Carnicella, an intellectual property associate at Picadio Sneath Miller & Norton, P.C. jcarnicella@psmn.com

The Federal Circuit in Uniloc USA, Inc. v. Microsoft Corp., Nos. 2010-1035, 2010-1055, 2011 U.S. App. LEXIS 11, at *56 (Fed. Cir. 2011), concluded that the 25 percent rule of thumb should no longer be used as a tool for determining a baseline royalty rate in a hypothetical negotiation.  Furthermore, the Federal Circuit decided that any evidence relying on the 25 percent rule of thumb that does not tie a reasonable royalty base to the facts of the case shall be inadmissible under Daubert and the Federal Rules of Evidence.

35 U.S.C. § 284 provides that damages shall be awarded in an amount no less than a reasonable royalty, together with interest and costs as fixed by the court, to compensate the claimant for the use of the invention by the infringer.  “In litigation, a reasonable royalty is often determined on the basis of a hypothetical negotiation, occurring between the parties at the time that infringement began.”  Uniloc, 2011 U.S. App. LEXIS, at *47 (citing Wang Labs Inc. v. Toshiba Corp., 993 F.2d 858, 869 (Fed. Cir. 1993)).  In the past, the 25 percent rule of thumb served as an approximation for the reasonable royalty rate that a manufacturer of a patented product would be willing to pay to the patent holder.

At the district court level, the jury awarded Uniloc $388 million based on certain testimony provided by Uniloc’s expert, who utilized the 25 percent rule of thumb as part of his damages calculation.  The expert then considered the Georgia Pacific factors and concluded that the factors did not change the royalty rate.  Microsoft challenged the application of the rule prior to trial, and while “the district court noted that ‘the concept of a ‘rule of thumb’ is perplexing in an area of the law where reliability and precision are deemed paramount,’” the district court determined that the use of the rule was reasonable since the rule had been widely accepted.  Uniloc, 2011 U.S. App. LEXIS, at *46.  However, with its first true opportunity to address this specific issue, the Federal Circuit decided to do away with the application of such an abstract theory.  “In short, [the expert’s] starting point of a 25 percent royalty had no relation to the facts of the case, and as such, was arbitrary, unreliable, and irrelevant.  The use of such a rule fails to pass muster under Daubert and taints the jury’s damages calculation.”  Uniloc, 2011 U.S. App. LEXIS, at *65.

This recent decision by the Federal Circuit will surely have a significant impact on future cases.  We intend on monitoring the impact of this decision and discussing these matters as they become relevant so stay tuned for future blogs.

No Growth in Patent Filings in Pittsburgh for 2010

by: Henry M. Sneath, a partner at Picadio Sneath Miller & Norton, P.C. ( hsneath@psmn.com )

Pittsburgh should be a magnet for patent filings given the Federal Local Patent Rules which were promulgated at the request of the Western District Federal bench. These rules give litigants a decent potential for a fairly quick ride through the docket and the judges here are comfortable in presiding over patent litigation and using these rules. Nonetheless, 2010 saw no growth in the number of patent filings in the Western District Court. There were 18 patent cases filed in 2010 and this is right in the range of the number of cases filed in recent years. We seem stuck in the range of 18 – 20 cases per year. There were a few false marking cases filed and some of the 18 cases were disposed of quickly through withdrawal or early settlement. Lucky for someone on those cases that went away quickly. In the days ahead, we will report more on cases filed here in Pittsburgh.