#CARESAct Passes Congress: See link here to the Act which is meant “To provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 #coronavirus #pandemic.” #Covid #CoronaUpdate

Here is the #CARESAct passed this week by both houses in full for easy reference:

#HoustonHarbaugh will be publishing various opinions and guides to the provisions of the CARES Act in the near future.

#ClassAction Lawsuit Challenges #Pennsylvania #Governor #Wolf’s #COVID-19 #Closure Order

Commonwealth of Pa. Flag

What appears to be the first constitutional challenge to #Pennsylvania Governor #Wolf’s #Covid-19 Closure Orders has been filed in the Pennsylvania Eastern District (Philadelphia) Federal Court. In Schulmerich Bells, LLC et al v. Thomas W. #Wolf (Governor of Pa.) and Rachel Levine, M.D. (Pa. Sect of Health) the Plaintiffs bring class action and declaratory judgment claims challenging the constitutionality of the Governor’s Covid-19 mitigation closure orders which shut down the physical operations of many Pennsylvania businesses deemed not to be “life sustaining”. See the Complaint here:

The Complaint begins with the “takings” quote from the 5th Amendment as cited in Armstrong v. United States, 364 U.S. 40 (1960) that the guarantee that “private property shall not be taken for a public use without just compensation was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Interesting start in this context. The theory appears to be that the Governor has placed the “cost of these closure orders – issued for the benefit of the public – squarely upon the shoulders of private individuals and their families” without just compensation. Schulmerich, from Bucks County, is alleged to be the oldest manufacturer of orchestral quality musical handbells in the US.

Schulmerich repairs handbells and chimes and claims that Spring and Summer are its busiest seasons. Plaintiff’s claim a trickle down effect for their employees, suppliers, performing customers and so on. The company has already laid off 9 workers. The purported class is broad and appears to contemplate inclusion of anyone affected by these orders. Alleged exclusions from the class include inter alia, any persons unemployed at the time of the orders, and any persons working for companies deemed to be “life sustaining”, which were not ordered to be closed. The Plaintiffs claim that the class members could number in the millions. We will monitor this and other similar lawsuits.

Covid 19: Health First, Lawsuits Later?

It would be great if in the midst of the Covid-19 pandemic, that the world could simply focus on health, safety, family and employee issues, but the lawsuits have started. We will monitor them as they will ramp up. Many state and federal courts are shutting down or slowing down so it is unclear when the Covid related suits will actually see a day in court. In New Orleans, an interesting, (albeit somewhat disturbing in the timing), lawsuit has been filed seeking a declaratory judgement against the Governor of Louisiana and global insurer Lloyds of London. Plaintiff Cajun Conti – Oceana Grill Restaurant is seeking property and business interruption insurance from Lloyds, even before they have apparently made a claim. The suit before insurance claim and denial is odd. The suit may be politically motivated. The lawsuit is attached hereto.

Plaintiff restaurant seeks “property damage” for virus contamination of its restaurant, and “business interruption” coverage for the obvious shutdown brought about by government order. If you subscribe to Law360 there is an interesting write-up at: http://tinyurl.com/qscl9m8 “Oceana Grill, which is in New Orleans’ French Quarter, argued that its “all risk” policy with the Lloyd’s underwriters should kick in under the circumstances, noting that the policy doesn’t contain any provisions excluding coverage for losses stemming from viruses or global pandemics.” (Law360) “In its suit, Oceana Grill noted that its policy with the Lloyd’s underwriters requires the existence of a “direct physical loss” to property for coverage to apply. According to the restaurant, that requirement is satisfied by the coronavirus pandemic, given that the virus can remain on surfaces for days. Both Governor Edwards and Mayor Cantrell cited concerns over possible physical damage to properties to support their restrictions.” (Law360)

COVID-19: Latest from Houston Harbaugh, P.C. Pittsburgh, Pennsylvania

High Resolution Covid-19

The latest and best information on Covid-19 should be sought from the CDC. Our law firm Houston Harbaugh, P.C. in Pittsburgh, Pennsylvania www.hh-law.com remains open and fully functional to serve our clients and others seeking legal assistance during this incredibly difficult time. We are complying with the Pa. Commonwealth’s Governor’s Order that all non-life-sustaining businesses remain physically closed and work remotely when possible. We are fully functional in that regard. See the most recent Pennsylvania Covid-19 Mitigation Orders and Guideline. Our law firm’s employment department Chair Craig Brooks issued some important workplace guidelines which should be helpful to businesses and employers as they struggle with the fallout from the Covid disease and related mitigation efforts in this and other states. Click here to see our website and employment guidelines.

Supreme Court Rules That Government is Not a “Person” Under the America Invents Act

ByCarissa T. Howard of Counsel at Houston Harbaugh

Federal law has allowed for third party requests for reexamination of an issued patent on the basis on prior art since the 1980s. Under the America Invents Act of 2011 (AIA), three review processes replaced what was then known as “inter partes reexamination.” These three review proceedings enable a “person” other than the patent owner to challenge the validity of a patent post-issuance: (1) “inter partes review,” §311; (2) “post-grant review,” §321; and (3) “covered-business-method review” (CBM review). As an alternative to or in connection with a patent litigation, an interested third party, an accused infringer, or any “person,” can request one of these types of reviews.

In Return Mail v. Postal Service, the Supreme Court held that “[t]he Government is not a “person” capable of instituting the three AIA review proceedings.” https://www.supremecourt.gov/opinions/18pdf/17-1594_1an2.pdf (June 10, 2019)

Return Mail sued the US Postal Service (part of the US Federal Government) for infringing its mail processing patent and Postal Service petitioned for CBM review under the AIA.  The PTO agreed that the patent claimed ineligible subject matter, and cancelled the claims. On appeal, the Federal Circuit affirmed. Now, the Supreme Court has reversed – holding that the Government is not a person under the statute and therefore cannot petition for AIA review.

Justice Sotomayor led the conservative majority joined by Chief Justice Roberts and Justices Thomas, Alito, Gorsuch and Kavanaugh.  Justice Breyer wrote in a dissent that was joined by Justices Ginsberg and Kagan.

The majority here started with its presumption that congressional statutes are not intended to bind or be directed to U.S. Government activity. Here, the court looked and did not find sufficient textual language to overcome that initial presumption.   In particular, the word “person” is used many times in the Patent Act (at least 18 times) and in several different ways.  There is basically no indication that this particular use of “person” was designed to include the U.S. Government. The majority also noted the awkwardness:

Finally, excluding federal agencies from the AIA review proceedings avoids the awkward situation that might result from forcing a civilian patent owner (such as Return Mail) to defend the patentability of her invention in an adversarial, adjudicatory proceeding initiated by one federal agency (such as the Postal Service) and overseen by a different federal agency (the Patent Office).

The dissent argued that the government-not-a-person presumption is rather weak and was overcome by the Patent Act.  In particular, the majority notes that Federal agencies are authorized to apply for patent protection — even though the statute states that a “person” shall be “entitled to a patent.” See 35 U. S. C. §§ 207(a)(1) and 102(a)(1).

Carissa T. Howard is an intellectual property attorney with over 16 years of experience, Carissa’s practice is focused in federal court intellectual property litigation, patent prosecution, trademark prosecution, intellectual property counseling, and contract drafting. She also has experience in intellectual property licensing and preparing due diligence, infringement and validity opinions. She can be reached at howardct@hh-law.com or 412-288-2213

Hemp And Hemp Derived-CBD Trademarks Will Now Be Accepted By USPTO

ByAmber Reiner Skovdal associate at Houston Harbaugh  

On May 2, 2019, the United States Patent and Trademark Office issued an examination guide in an effort to clarify the procedure for examining marks for cannabis and cannabis-derived goods and related services following the 2018 Farm Bill.

The 2018 Farm Bill, formally known as the Agricultural Improvement Act of 2018, removed industrial hemp from the Controlled Substances Act’s definition of marijuana and permits the cultivation of industrial hemp (with the requisite permits and licenses) so long as such plants contain no more than 0.3% delta-9 tetrahydrocannabinol (“THC”) concentration on a dry weight basis. This means that hemp and hemp-derived cannabidiol (CBD) products are no longer controlled substances under the CSA. However, among other restrictions, the 2018 Farm Bill expressly preserved the Food and Drug Administration’s (“FDA”) authority to regulate and provide guidelines for the use of cannabis and cannabis-derived (i.e., CBD) products in food and dietary supplements under the Food Drug and Cosmetic Act (“FDCA”). Under the FDCA, it remains unlawful to use CBD in foods or dietary supplements without approval from the FDA because CBD is an active ingredient in FDA-approved drugs and is undergoing clinical investigations.

In light of the intersections between the CSA, the Farm Bill (AIA), and the FDCA, the USPTO’s examination guide is a welcomed bit of clarification on how the office will proceed with what we understand to be a backlog of cannabis-related trademark applications.

Historically, the USPTO has rejected applications for registration of cannabis or cannabis derived-CBD goods and services, including both marijuana and hemp. Now that hemp has been removed from the CSA, the USPTO will begin accepting hemp-related marks. For applications filed on or after December 20, 2018, the application must specify that the goods identified contain less than .3% THC on a dry weight basis. Similarly, for service-related marks, the application must specify that services involve hemp containing .3% or less THC. For applications filed before December 20, 2018, applicants will be permitted to either amend the filing date or abandon the application and file a new application.

Given that marijuana and its derivatives are still controlled substances, any applications for marks for marijuana or marijuana derived-CBD goods or services involving marijuana-related activities will continue to be rejected as unlawful under federal law. This includes marks used in commerce in states which have legalized medical and adult-use marijuana. Further, even if your desired mark is hemp-related, it may still be rejected by the USPTO, if the related goods violate the FDCA.

As with many areas related to this industry, protecting your intellectual property continues to be a complex and evolving process.

Amber L. Reiner Skovdal has handled diverse matters involving complex commercial and business litigation, insurance and bad faith, products liability defense, employment disputes, and intellectual property litigation including trade secret disputes as well as patent and trademark infringement litigation. She can be reached at reineral@hh-law.com or 412-288-4016

SCOTUS Landmark Trademark Licensing Decision: Mission Product Holdings, Inc. v. Tempnology, LLC, NKA Old Cold LLC No. 17-1657

Has “the most significant unresolved legal issue in trademark licensing” finally found some closure? Circuit courts have long been split over whether bankrupt trademark owners could revoke a license and on what the effect is, generally, of a rejection of an executory contract. On Monday May 20th, 2019 the U.S. Supreme Court ruled that defunct brand owners (as debtors in Chapter 11) cannot use bankruptcy law to unilaterally revoke (reject) a trademark license agreement. The court held that bankruptcy “rejection” of an executory contract trademark license (a contract that neither party has finished performing) under Section 365 was akin to a breach of contract outside of bankruptcy. Per Justice Kagan: “A rejection (of any executory contract) breaches a contract but does not rescind it.” The licensee should not lose its right to use the debtor’s trademark under license. [Kagan] “Such an act cannot rescind rights that the contract previously granted.” Read here for the entire SCOTUS decision in Mission Product Holdings, Inc. vs. Tempnology, LLC. or here for a quick summary of the decision from Law360. 

Posted by Henry M. Sneath, Esquire Co-Chair Litigation Practice Group and Chair of the IP Practice Group: Houston Harbaugh, P.C.  401 Liberty Avenue, Pittsburgh, Pa. 15222. Sneath is also an Adjunct Professor of  Law teaching two courses; Trade Secret Law and the Law of Trademarks and Unfair Competition at Duquesne University School of Law. Please contact Mr. Sneath at 412-288-4013 or sneathhm@hh-law.com

Was the 2017 “NotPetya” Ransomware Attack an Act of War?

This is the question being litigated in a high-stakes cyber insurance coverage dispute between global snack food giant, Mondelez International, and its insurer, Zurich American Insurance Company, in Illinois state court. “NotPetya” was a 2017 ransomware attack in which infectious code impacted a number of global corporations, including Mondelez, encrypting computer hard drives and demanding payment for access to the data. Mondelez claims that it suffered damage to its hardware and operation software systems valued in excess of $100 million as a result of the attack. In early 2018, the U.S. and its allies publicly attributed the cyberattack to the Russian government. Russia denied the allegations. Modelez submitted an insurance claim to Zurich under an all-risk property insurance policy. Mondelez alleges that Zurich denied the claim based on a policy exclusion that excluded coverage for “loss or damage directly or indirectly caused by or resulting from … [a] hostile or warlike action … by any government or sovereign power … or agent or authority [thereof].” In October 2018, Mondelez filed suit against Zurich in Cook County, Illinois to determine whether the exclusion applies. According to the docket the case is currently pending, and working its way through the discovery process.

This case is being closely watched by corporations and insurers alike as it may have broad implications on cyberattack coverage for both traditional and specialized cyber insurance policies that contain the same or similar exclusions. What evidence will the insurer present to seek to prove that this war exclusion applies?

Pieces by Brian Corcoran on Lawfare (here) and Jeff Sistrunk on Law360 (here) each contain in-depth discussions of the case and its potential implications on the cyber insurance market. The docket for the case can be found here (select the Law Division and enter Case Number 2018-L-011008).

Posted by R. Brandon McCullough attorney at Houston Harbaugh, P.C. 401 Liberty Avenue, Pittsburgh, PA 15222. Brandon concentrates his practice primarily in the areas of insurance coverage and bad faith litigation, complex commercial and business litigation and appellate litigation. Please contact Mr. McCullough at 412-288-4008 or mcculloughb@hh-law.com with any questions pertaining to this article or any other legal matters.

Supreme Court Holds: AIA Does NOT Change Patent “On – Sale Bar” Doctrine

There has been a nagging question regarding the status of the on-sale bar ever since passage of the AIA in 2011. The Supreme Court has unanimously answered the question in the negative in the slip opinion in Helsinn Healthcare v. Teva No. 17–1229. Argued December 4, 2018—Decided January 22, 2019. See opinion here: https://www.supremecourt.gov/opinions/18pdf/17-1229_2co3.pdf

Justice Thomas wrote for the unanimous court to affirm the Federal Circuit ruling and the summary of same is here. Even a “secret sale” can trigger the bar. The Court framed the issue:

“We granted certiorari to determine whether, under the AIA, an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention. 585 U. S. ___ (2018). We conclude that such a sale can qualify as prior art.”
“Held: A commercial sale to a third party who is required to keep the invention confidential may place the invention “on sale” under §102(a). The patent statute in force immediately before the AIA included an on-sale bar. This Court’s precedent interpreting that provision supports the view that a sale or offer of sale need not make an invention available to the public to constitute invalidating prior art. See, e.g., Pfaff v. Wells Electronics, Inc., 525 U. S. 55, 67. The Federal Circuit had made explicit what was implicit in this Court’s pre-AIA precedent, holding that “secret sales” could invalidate a patent. Special Devices, Inc. v. OEA, Inc., 270 F. 3d 1353, 1357. Given this settled pre-AIA precedent, the Court applies the presumption that when Congress reenacted the same “on sale” language in the AIA, it adopted the earlier judicial construction of that phrase. The addition of the catchall phrase “or otherwise available to the public” is not enough of a change for the Court to conclude that Congress intended to alter the meaning of “on sale.” Paroline v. United States, 572 U. S. 434, and Federal Maritime Comm’n v. Seatrain Lines, Inc., 411 U. S. 726, distinguished. Pp. 5–9. 855 F. 3d 1356, affirmed.”

Posted by Henry M. Sneath, Esquire Co-Chair Litigation Practice Group and Chair of the IP Practice Group: Houston Harbaugh, P.C.  401 Liberty Avenue, Pittsburgh, Pa. 15222Sneath is also an Adjunct Professor of  Law teaching two courses; Trade Secret Law and the Law of Trademarks and Unfair Competition at Duquesne University School of Law. Please contact Mr. Sneath at 412-288-4013 or sneathhm@hh-law.com

BLOCKCHAIN: Is it the Next Big Step in Data Security?

From Law.Com and its Legaltech news former Microsoft CTO Adrian Clarke (Evident Proof) reports on the technology of Blockchain and its purported major security benefits for the supply ecosystem. “The blockchain is a transaction ledger that is uneditable and virtually unhackable. New information can be written onto the blockchain, but the previous information (stored in what are known as blocks) can’t be adjusted. Every single block (or piece of data) added to the chain is given an encrypted identity. Cryptography effectively connects the contents of each newly added block with each block that came before it. So any change to the contents of a previous block on a chain would invalidate the data in all blocks after it.” Clarke’s report here is perhaps some comfort for an exponentially growing sector of the world wide economy which relies on supply chain management on a massive scale. See his piece in Law Journal Newsletters at http://tinyurl.com/y7mqfnem 

Attorneys Bill Cheng and John Frank Weaver at McLane Middleton, P.A. in New Hampshire posted this piece in the NH Business Review at: http://tinyurl.com/yblh6nqp regarding the interaction between Blockchain and Bitcoin and how the GDPR for example will struggle to deal with these technologies, given the protections that GDPR attempts to provide to data owners so that they can control their personal information and data. Blockchain, particularly in conjunction with Bitcoin as the currency for a Blockchain secured transaction will prove a challenge to the GDPR rules. CTOs, Industrial Engineers and Supply Chain designers have big decisions to make in the years to come regarding security and whether Blockchain is the answer to some data protection issues. Photo courtesy of Law.Com.

Posted by Henry M. Sneath, Esquire Co-Chair Litigation Practice Group and Chair of the IP Practice Group: Houston Harbaugh, P.C.  401 Liberty Avenue, Pittsburgh, Pa. 15222Sneath is also an Adjunct Professor of  Law teaching two courses; Trade Secret Law and the Law of Trademarks and Unfair Competition at Duquesne University School of Law. Please contact Mr. Sneath at 412-288-4013 or sneathhm@hh-law.com