Here is an article I wrote which was published by DRI in their IDQ (In-house Defense Quarterly) to promote the DRI Corporate Counsel Round Table meeting in Washington D.C. which was held in January. It highlights the uncertainty in business markets and the role of the courts in same. See the article at this link:http://tinyurl.com/y9mov84l
Blackberry is still in the hunt. I have one. I need the keyboard. Can’t seem to make even my skinny fingers hit the virtual keyboard letters and numbers on an iPhone. I get teased by my kids. People on airplanes pull out their Blackberrys and say “Hey – you’re a dinosaur too.” However, look at Blackberry now flexing their patent muscles and suing Facebook, WhatsApp and Instagram. Take that big boys. Thanks to Steve Brachmann and IPWatchdog for bringing us the story at this link: http://tinyurl.com/y9drr6hk . Blackberry pleads pre-emptory claims that seek to avoid dismissal per §101 “Alice” defenses. This “getting ahead of 101” in pleading is becoming the rage in patent suits. Great article. Thanks IPWatchdog.
Walmart has applied for a Drone Pollinator presented in the recently published application as “Systems and Methods for Pollinating Crops Via Unmanned Vehicles.” Here is Application # US2018/0065749 A1 at this link from FreshPatents.com: http://images2.freshpatents.com/pdf/US20180065749A1.pdf
The PTO App abstract describes essentially the same process used by Bees, and scientists at Walmart, Harvard and many other institutions have been working to create an efficient way to pollinate many of the plants from which we get our food during the last two decades of declining bee populations. Here is a good article from Science Alert detailing and linking to some of the efforts to create a drone pollinator:http://tinyurl.com/y93a7z7y
Here is a photo of the Harvard latest edition drone “RoboBee” which allegedly cannot yet be remotely controlled. The Walmart patent claims such an ability. We will follow.
Posted by Henry M. Sneath, Esq. at HoustonHarbaugh, P.C. in Pittsburgh, Pa.
From our friends at Law.Com: In the growing market for cyber insurance, carriers are trying to compete on price. One carrier, Coalition is offering discounts if your company creates a partnership with a “white hat hacker” and establishes a bug bounty with that hacker. The hacker gets a bounty for finding vulnerabilities. Legal Tech author Rhys Dipshandetails the program in the article at this link: http://tinyurl.com/ydck3nxg
Dipshan reports that “bug bounties” are becoming a popular weapon in combating cyber attacks. “Unsurprisingly” Dipshan reports, “bounty programs are becoming increasingly common in the tech and corporate world, with companies such as Facebook, Microsoft and Uber offering compensation for vulnerability disclosures. They also have caught on in the federal government as well, with the Department of Defense launching its “Hack the Pentagon” and “Hack the Air Force” programs.” Do you need a cyber bounty hunter?
We are pleased to announce that the Pit IP Tech Blog has been named one of the Top 100 IP blogs on the net by Feedspot. The Pittsburgh law firm of Houston Harbaugh looks forward to continuing our coverage of IP and technology news and hope that you will continue to read our blog. Thanks for making us a Top 100 blog!
The US Supreme Court overturned the Federal Circuit’s decision in TC Heartland v. Kraft Foods and its longstanding interpretation of the patent venue statute and has reaffirmed that a corporation is a resident of the state in which it is incorporated. It had decided that question a long time ago, but the Federal Circuit and statutory changes to the general (non-patent) venue statutes had undermined the original decision of the Supreme Court in 1957 in Fourco Glass. The court provided this analysis in TC Heartland:
“The patent venue statute,28 U. S. C. §1400(b), provides that ‘[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.’ In Fourco Glass Co. v. Transmirra Products Corp., 353 U. S. 222, 226 (1957), this Court concluded that for purposes of §1400(b) a domestic corporation “resides” only in its State of incorporation.”
In overturning the Fed. Cir. decision, the Court rejected the argument that 28 U.S.C. §1400 (patent venue statute) incorporates the broader definition of corporate “residence” contained in the general venue statute 28 U.S.C. 1391 as has been allowed by the Federal Circuit for years. This changes the longstanding practice of the Federal Circuit to interpret “residence” as being any state in which a defendant corporation simply conducts business. This interpretation has allowed unfettered forum shopping which generally results in shopping and filing in the Eastern District of Texas.
“We conclude that the amendments to §1391 did not modify the meaning of §1400(b) as interpreted by Fourco. We therefore hold that a domestic corporation “resides” only in its State of incorporation for purposes of the patent venue statute.” Justice Thomas authored the court’s opinion.
The big question is whether this will indeed reduce or eliminate the monopoly held by Texas on patent cases and whether it will simply shift it to Delaware where many corporations are incorporated. The court may take additional action or so too may the US Congress to prevent that simple shifting of venues from Texas to Delaware.
When someone mentions Play-Doh, what is the first thing you think of? Is it those flexible yellow containers? Perhaps it is the smooth and squishy texture of the putty? More likely though, you are probably thinking, nay, smelling, Play-Doh’s unmistakable scent. Play-Doh describes its scent best as “the combination of a sweet, slightly musky, vanilla-like fragrance, with slight overtones of cherry, and the natural smell of salted, wheat-based dough.” If you still can’t imagine its scent, put down your device, go find the closest toy store and pop open a tub of Play-Doh. We’ll wait.
In short, Play-Doh arguably has one of the most recognizable scents and n
ow Hasbro (Play-Doh’s owner), is seeking to trademark its distinct scent. Sound simple? Not quite.
The U.S. Patent and Trademark Office defines a trademark or service mark as “any word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services.” Think Google’s logo or the golden arches of McDonalds. More often than not, trademarks are tangible words or symbols branding a product or service. It gets a bit more complicated when you attempt to protect something intangible, like a scent.
There are two types of registrations: Principal and Supplemental. A Principal Registration is what Play-Doh has applied for and affords the most protection for a mark, including presumption of ownership in the event of litigation and the right to exclusive use of the mark. To qualify for the Principal Register, the mark must have achieved “secondary meaning.” That is, consumers must associate the mark with the particular product or service. So, again, think about the McDonalds arches. However, it is hard to deny that Play-Doh’s scent achieves similar distinctive brand recognition.
A Supplemental Registration, on the other hand, functions more as a holding place for a mark while it gains distinctiveness. Although it does not provide the same security as Principal Registration, the Supplemental Register is helpful in preventing others from registering their mark on either the principal or supplemental registers and is inherently easier to accomplish because, unlike the Principal Register, there is no opposition phase for others to attempt to block the mark.
Only a handful of other scent-based registrations exist. The first scent-based trademark was issued in 1991 for the scent of a line of embroidery thread and yarn. That’s right – yarn. In 2013, Verizon Wireless attempted to trademark the perfume it s
prays in its stores; however, it was unsuccessful in achieving principal registration because many other companies similarly use scents to create a general ambiance in stores. Ultimately, Verizon was able to achieve a downgraded registration onto the Supplemental Register.
Others have attempted to trademark their scents with limited success, largely because it is difficult for scents to pass the “functionality test.” Put simply, a mark must not serve any practical function of the product or service other than to identify and distinguish it. That is why perfumes and air fresheners often fail to receive principal registration because the product is inherently designed for the functional purpose of smelling.
Whether Play-Doh will be successful in achieving its registration is to be determined. Nevertheless, as markets become increasingly more crowded, we will likely see more companies turning to scents as a method of branding and distinguishing their products.
Anna Wintour, the editor-in-chief of Vogue, has said, “You either know fashion or you don’t.” I think it is safe to say that the courts are still struggling to understand fashion—at least the extent to which fashion is afforded potentially 100 years or more of protection under the Copyright Act. Generally, “useful articles,” such as clothing are not eligible for copyright protection. However, Congress affords limited protection for artistic elements in useful articles by providing that “pictorial, graphic, or sculptural features” of the “design of a useful article” are eligible for copyright protection as artistic works if those features “can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.” 17 U.S.C. § 101. Simple right?
Not so simple. The federal courts have struggled to create a uniform standard for applying this provision of the Copyright Act. At least nine different approaches have developed in the courts over the years, and the issue has challenged courts and scholars alike.
Last month, the U.S. Supreme Court tried to provide clarity as to when artistic elements in clothing are deemed to be separable and potentially protected by copyright law. In Star Athletica, L.L.C. v. Varsity Brands, Inc., Varsity Brands obtained or acquired more than 200 U.S. copyright registrations for two-dimensional designs appearing on the surface of their cheerleading uniforms and other garments. These designs are primarily “combinations, positionings, and arrangements of elements” that include “chevrons . . . , lines, curves, stripes, angles, diagonals, inverted [chevrons], coloring, and shapes.” Varsity Brands sued Star Athletica, a competitor, for infringing Varsity Brands’ copyrights for the following designs:
The U.S. Supreme Court granted certiorari to resolve the widespread disagreement over the proper test for implementing Section 101’s separate identification and independent-existence requirements. Justice Thomas, writing for the majority, held that a feature incorporated into the design of a useful article is eligible for copyright protection only if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated.
The court stated that the issue depends solely on statutory interpretation. For the first part of the test, the court need only be able to look at the useful article and spot some two or three-dimensional element that appears to have pictorial, graphic or sculptural qualities. For the second part of the test, the court must determine that the separately identified feature has the capacity to exist apart from the utilitarian aspects of the article. “The ultimate separability question, then, is whether the feature for which copyright protection is claimed would have been eligible for copyright protection as a pictorial, graphic, or sculptural work had it originally been fixed in some tangible medium other than a useful article before being applied to a useful article.”
While the court has set forth a new, national standard for separability, the application of that standard is not necessarily clear. In other words, while we know “The Devil Wears Prada,” it is also clear that “The Devil Is in the Details” when it comes to actually determining if the new standard is met. In this case, the majority of the court found that the arrangements of lines, chevrons, and colorful shapes appearing on the surface of Varsity Brands’ cheerleading uniforms were separable features of the design of those cheerleading uniforms. For the majority, the decorations were features having pictorial, graphic or sculptural qualities. Additionally, the court determined if the arrangement of colors, shapes, stripes, and chevrons on the surface of the cheerleading uniforms were separated from the uniform and applied in another medium—for example, on a painter’s canvas—they would qualify as “two-dimensional . . . works of . . . art.” The court further determined that imaginatively removing the surface decorations from the uniforms and applying them in another medium would not replicate the uniform itself. Accordingly, the court held that the decorations were separable from the uniforms.
However, presented with the same facts, the dissenting justices (Justice Bryer, with Justice Kennedy joining) disagreed, finding that in applying the new standard for separability, the Varsity Brands’ designs could not “be perceived as . . . two- or three-dimensional work[s] of art separate from the useful article.” The dissent found that the design features in the uniforms were not capable of existing independently of the utilitarian aspect of the object to which they relate. “Looking at all five of Varsity’s pictures, I donot see how one could conceptualize the design features in a way that does not picture, not just artistic designs, but dresses as well. . . . Varsity, then, seeks to do indirectly what it cannot do directly: bring along the design and cut of the dresses by seeking to protect surface decorations whose ‘treatment and arrangement’ are coextensive with that design and cut.” By way of contrasting example, Justice Bryer found the cat in each of the lamps below to be both physically and conceptually separate, meeting the test:
Thus, while the standard has been clarified, the lower courts will be tasked with applying the standard with little guidance on how to do so, which is likely to be challenging if the Star Athletica decision is any indication. Moreover, the Supreme Court did not decide if the Varsity Brands’ designs at issue in Star Athletica were copyrightable—just whether they were separable. The court explicitly stated that it expressed no opinion on whether the uniform designs were sufficiently original to qualify for copyright protection or whether any other prerequisite of a valid copyright had been satisfied. Therefore, the lower court, on remand, will have to determine if Varsity Brands’ designs are original enough to warrant copyright protection.
 “The Devil Wears Prada” is a book written by Lauren Weisberger, a former personal assistant to Anna Wintour. The character in the book and later in the successful movie based on the book, Miranda Priestly (played by Meryl Streep in the movie), is believed to be based upon Anna Wintour.
On March 21, 2017, the US Supreme Court, in a 7-1 decision in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, Case No. 15-927, held that the equitable defense of laches no longer can be used as a defense to a claim of patent infringement. Justice Alito delivered the majority opinion, with Justice Breyer dissenting.
Laches is an equitable doctrine that bars a patent owner’s claim for damages in a patent infringement lawsuit if the patent owner waits an unreasonable amount of time before bringing suit against the accused infringer and that delay prejudices the accused infringer’s defense. This defense has existed for decades and its contours were defined by the Federal Circuit in its A.C. Aukerman Co. v. R. L. Chaides Construction Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc) decision.
However, with the Supreme Court’s decision in Petralla v. Metro-Goldwyn-Mayer, Inc., 572 U.S. ___ (2014) decision that held that laches cannot bar a claim for damages for copyright infringement within the 3-year statute of limitations, the Court decided to address whether laches can still be a defense to a claim for damages for patent infringement.
In considering this, the Court looked to the history of laches-type defenses, and concluded that they exist as a judicially-created defense by courts of equity when there were no statutes of limitation. However, “[w]hen Congress enacts a statute of limitations, it speaks directly to the issue of timeliness and provides a rule for determining whether a claim is timely enough to permit relief.” Therefore, because Congress created a 6-year statute of limitations for patent infringement, courts cannot override that statute of limitations with an equitable laches defense. Accordingly, the Court held that the laches defense is no longer applicable in patent infringement lawsuits.
The dissent and appellee pointed out that the patent statute of limitations is unusual and warrants the continuance of the laches defense. The limitations period for a patent infringement claim does not begin to accrue from the point of infringement or the point at which a patent owner has a “complete and present cause of action.” Rather, the limitations period works backwards from the time of the filing of the lawsuit–it only limits a patent owner’s ability to collect damages to the period 6 years before the filing of the lawsuit. In other words, it does not matter if the patent owner knows of the infringement for a period longer than the limitations period (e.g., 10 years ago), but chooses not to file suit until today. Under the patent statute, the patent owner can still bring suit, but it will only be limited to damages occurring in the prior 6 years. This statute of limitations is unlike virtually every other statute of limitations, which would bar such an untimely claim. The majority rejected this distinction out of hand without a clear explanation.
The dissent also pointed out that the majority’s decision creates a significant disincentive for patent owners (especially ones that do not compete with the accused infringer) to act quickly upon learning of infringement. Without the laches defense, a patent owner can sit back and wait until the time at which the most damages have occurred and then file suit. Previously, such a tactic would have run a significant risk that a court might uphold a laches defense and bar any recovery.
The dissent also argued that the majority’s reliance on Petralla is not warranted because of the significant differences between copyright and patent law. With copyrights, the owner must prove copying, whereas patent infringement is a strict liability offense. Therefore, delay will tend to work to the disadvantage of a copyright owner because the evidence of copying may tend to fade with time. On the other hand, a patent owner does not have to prove copying, so the passage of time tends to work in the patent owner’s favor. For example, evidence of prior art or the state of the art at the time of the patent application may become lost with time, which would make it harder for an accused infringer to successfully argue that the patented invention was obvious or anticipated.
As a practical matter, the laches defense was not often successful for accused infringers, but it created an important check against patent owners and encouraged them to timely bring lawsuits when they believed that their patent rights were infringed. It will be interesting to see how patent owners behave now that this check has been eliminated.
In an apparent case of first impression, a divided three-judge panel of the Pennsylvania Superior Court recently held that an employer does not owe a legal duty to its employees to protect the employees’ electronically stored personal and financial information. In Dittman v. UPMC, decided on January 12, 2017 (docket no. 971 WDA 2015), the Superior Court affirmed an opinion of the Court of Common Pleas of Allegheny County, PA (opinion by the Honorable R. Stanton Wettick, Jr.), sustaining defendant University of Pittsburgh Medical Center’s (“UPMC”) preliminary objections to an employee class action suit. The suit arose from a data breach of the employees’ personal information, which was provided to UPMC as a condition of employment.
The employees sued UPMC for negligence and breach of contract after their names, birth dates, social security numbers, tax information, addresses, salaries and bank information were stolen due to the data breach. Specifically, they alleged that UPMC failed to properly encrypt data, establish adequate firewalls and implement adequate authentication protocols to protect the information in its computer network. All of UPMC’s 62,000 employees and former employees were affected by the breach. Appellants consisted of two separate but overlapping classes. One class alleged that the stolen information had already been used to file fraudulent tax returns and steal the tax refunds of certain employees. The other class consisted of those who had not suffered this harm but alleged that they were at increased and imminent risk of becoming victims of identity theft crimes, fraud and abuse.
To determine whether a duty of care exists, the Pennsylvania courts look to five factors, none of which are determinative alone. Seebold v. Prison Health Servs., Inc., 57 A.3d 1232, 1243 (Pa. 2012); Althaus ex. rel. Althaus v. Cohen, 756 A.2d 1166, 1169 (Pa. 2000). The five factors are:
the relationship between the parties;
the social utility of the actor’s conduct;
the nature of the risk imposed and foreseeability of the harm incurred;
the consequences of imposing a duty upon the actor; and
the overall public interest in the proposed solution.
In Dittman, the court found that the first factor weighed in favor of finding a duty because the employer-employee relationship gives rise to duties on the employer. The court next weighed the second factor against the third: the need of employers to collect and store personal information about their employees against the risk of storing information electronically and the foreseeability of data breaches. The court concluded:
While a data breach (and its ensuing harm) is generally foreseeable, we do not believe that this possibility outweighs the social utility of electronically storing employee information. In the modern era, more and more information is stored electronically and the days of keeping documents in file cabinets are long gone. Without doubt,employees and consumers alike derive substantial benefits from efficiencies resulting from the transfer and storage of electronic data. Although breaches of electronically stored data are a potential risk, this generalized risk does not outweigh the social utility of maintaining electronically stored information. We note here that Appellants do not allege that UPMC encountered a specific threat of intrusion into its computer systems.
Analysis of the fourth factor looks to the consequences of imposing a duty. In this situation, the court considered that data breaches are widespread and that there is no safe harbor for entities storing confidential information. It was also the court’s opinion that no judicially created duty of care is needed to incentivize companies to protect confidential employee information because other statutes and safeguards are in place to prevent employers from disclosing confidential information. Thus, the court concluded that “it unnecessary to require employers to incur potentially significant costs to increase security measures when there is no true way to prevent data breaches altogether. Employers strive to run their businesses efficiently and they have an incentive to protect employee information and prevent these types of occurrences.”
Finally, the fifth factor looks to whether there is a public interest in imposing a duty. The Superior Court found persuasive the reasoning of the trial court that imposing a duty here would greatly expend judicial resources and would result in judicial activism. The Superior Court agreed with the trial court that the Pennsylvania legislature has considered the same issues and chose only to impose a duty of notification of a data breach. “It is not for the courts to alter the direction of the General Assembly because public policy is a matter for the legislature.”
Weighing all five factors, the court held that the factors weighed against imposing a duty. Judge Stabile filed a concurring opinion, which Judge Olson, the writer for the majority opinion, joined. Judge Stabile agreed with the ruling but emphasized that the law in this area is quickly changing and that the ruling was based on the facts pled in that particular case. One of the key facts for Judge Stabile was the fact that the employees had not alleged that UPMC was on notice of any specific security threat. In a dissenting opinion, Judge Musmanno concluded that allegations that UPMC failed to properly encrypt data, establish adequate fire walls and implement appropriate authentication protocols was sufficient to allege that UPMC knew or should have known that there was a likelihood data would be stolen. Judge Musmanno also disagreed with the majority’s assumption that employers are sufficiently incentivized to protect employee data without a duty imposed upon them to do so.
The employees filed a motion for reconsideration and reargument on January 26, 2017. Thus, the Superior Court’s January 2017 opinion may not be the final word on the issue.
Dittman is interesting in the world of data breach lawsuits because it does not address standing. Many data breach defendants have relied upon the theory that plaintiffs lack standing to bring claims for data breaches where plaintiffs cannot prove actual harm from the breach. Proof of actual harm can be challenging because evidence regarding the use of the stolen information may be difficult to find. Here, standing was not discussed by the Superior Court. In the trial court below, UPMC had argued that the claims against it should be dismissed on the grounds that the employees lacked standing to assert claims on behalf of employees who had not yet been injured. UPMC also asserted that the employees’ negligence and breach of implied contract claims failed as a matter of law. After oral argument on these issues, the trial court ordered both parties to file supplemental briefs on the issue of whether UPMC owed a duty to its employees with respect to the handling of their personal and financial data. This ultimately proved to be the issue that the trial court and the Superior Court found to be determinative.
Our Law Firm: Houston Harbaugh in Pittsburgh, Pa. Business Litigation. Pittsburgh Strong.® DTSALaw®
Contact our Pittsburgh Intellectual Property, Data Security, Trade Secret, DTSA and Technology Attorneys at Houston Harbaugh, P.C. through IP and Litigation Sections Chair Henry M. Sneath at 412-288-4013 or firstname.lastname@example.org. While focusing first on health care and prevention issues for family, friends and employees, we are also beginning to examine the overall Covid Law related issues in business litigation, contract force majeure, trusts and estates litigation and insurance coverage issues that will naturally follow the economic disruption of the Covid-19 pandemic.
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