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Our business is to create for our clients valuable property
and contractual rights in their ideas.
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March 2016
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(951) 395-9910
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John J. Connors
Patent Attorney
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EDITORIAL
There are many "hot topics" emerging in intellectual property law as society evolves into a technology dominated culture. In patent law, switching the U. S. patent system to one favoring global corporations that control international trade will have profound unforeseen consequences.
One such unforeseen consequence is the challenge by a short seller of a pharmaceutical patent's validity before the Patent Trial and Appeal Board (PTAB). After shorting the stock of a pharmaceutical company, the short seller filed an interparty review with the PTAB challenging the validity of a patent that granted the exclusive manufacture and sale to one of the company's important new drugs. Obviously, such a PTAB action had an adverse effect on the price of the company's publically traded stock.
In an upcoming series of articles in this newsletter we will be discussing how post-grant proceedings provided by the new patent law are being implemented. We will be also be reporting more on the problems such post-grant proceedings create, both unforeseen, as in the case of short selling, and foreseen, such as the adverse impact such post-grant proceedings have on the ability of startup companies to raise initial funding.
We request our readers to sign below the Petition to Congress to amend the U. S. patent law to deal with the adverse consequences of the new law, both unforeseen and foreseen.
John J. Connors
Patent attorney
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A New Era In Patent Law
The main objective of this newsletter is to alert you to the rapidly changing legal environment in United States patent law.
The 2013 American Invents Act (AIA) made sweeping changes in the United States patent law. In the early 1990's Global Corporations began lobbying Congress to change the United States patent law to conform to the international model based on the 19th Century German patent law. The AIA is the desired result of their lobbying efforts.
Over the course of the next few decades, these changes will affect the way commercially valuable ideas are developed and protected. Will these AIA changes be good for society as a whole? Or will these AIA changes primarily assist the economically powerful? Several of these AIA changes are now being challenged in the courts, and we anticipate that the United States Supreme Court will be making determinations as to the constitutionality of many of these changes.
Those adversely affected by these AIA changes are now lobbying Congress to enact legislation that will alleviate hardships caused by these changes. A major concern of our clients is the negative impact post-grant patent office proceedings have on the ability of startup companies to raise capital to launch a business based on a patented invention. It may be virtually impossible to persuade an investor to risk capital if the patent's validity can be challenged in such proceedings. Especially since a lawsuit seeking to stop a competitor from selling the patented invention can be stayed until the issue of validity is decided, which could be many years. Consequently, the AIA post-grant proceeding in the United States Patent and Trademark Office are a disincentive to invest in startup companies based on a patented invention.
CLICK HERE IF YOU WISH TO SUPPORT LEGISLATION PREVENTING A PATENTED INVENTION OF A SMALL ENTITY FROM BEING CHALLENGED IN POST- GRANT PROCEEDINGS IN THE UNITED STATES PATENT AND TRADEMARK OFFICE.
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Connors and Associates Staff
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Thomas Connors, John J. Connors, Beth Ellison and Brady Connors
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A Rock Group And The Washington Redskins Set The Stage For Trademark Battle Royal In The US Supreme Court!
The Slants
are an Asian-American rock band. Simon Shiao Tam ("Tam") filed an application to register his band's name, The Slants, with USPTO in November 2011. USPTO refused registration of The Slants based on its determination that section (2(a) of the Lanham Act bars "disparaging" trademarks (specifically that the mark was disparaging to people of Asian descent). Unfortunately for Tam, the Trademark Trial and Appeal Board ("TTAB") upheld USPTO's decision.
Tam did not give up and appealed to the US Court of Appeals for the Federal Circuit ("The Federal Circuit") arguing that Section 2(a) of the Lanham Act is unconstitutional in violation of the First Amendment (In re Simon Shiao Tam, No. 2014-1203).
TAM'S PERSISTENCE PAID OFF
For over seven decades USPTO has relied on Section 2(a) to refuse registration of marks it deemed, among other things, disparaging.
In December 2015 Tam accomplished what some may say was impossible. In spite of vigorous arguments by the Government, as discussed below, the Federal Circuit, sitting en banc, not only struck down the refusal to register The Slants trademark but held Section 2(a) of the Lanham Act unconstitutional for discriminating on the basis of the message conveyed, writing that the "First Amendment protects even hurtful speech."
The Government argued that the disparaging trademark ban need only satisfy "intermediate scrutiny". The court disagreed and found the Section 2(a) ban on disparaging marks was subject to the higher "strict scrutiny" standard, finding that seeking to suppress disfavored speech is not even a legitimate, let alone "substantial" or "compelling," government interest and that the Federal Circuit would have found Section 2(a) unconstitutional even under the more relaxed "intermediate scrutiny" standard applied to commercial speech.
The Government also argued that First Amendment rights are not implicated in Section 2(a) because the conduct (of using the mark) is not banned; therefore, no expression is suppressed (i.e. an applicant whose "disparaging" mark is denied registration is free to use that mark in commerce). The Tam court did not find this argument persuasive, for the following reasons:
1. The Federal Circuit found that the absence of a federal registration precludes a "disparaging" trademark's owner from claiming exclusive nationwide use, reaching "incontestable" trademark status, excluding infringing imports and recovering treble damages for willful infringement. Denial of these benefits disincentivizes selection of potentially disparaging trademarks, thereby chilling free speech. Such a burden on speech - even if not an outright ban - still implicates the First Amendment and requires appropriate court scrutiny.
2. The Federal Circuit also found that trademark registration is not government speech; consequently, trademark registration does not connote approval of a mark any more than copyright protection suggests endorsement of a book.
The Government also argued an alternative theory, which is that Section 2(a) is a subsidy that the Spending Clause exempts from First Amendment review. There was extensive discussion at oral argument on this alternative theory, which concluded with the Federal Circuit determining that (1) recognition of legal rights is not the sort of "benefit" that can be withheld, and, (2) the Lanham Act originates in the Commerce Clause, so a Spending Clause-based exemption from review would not apply to trademark registration restrictions.
John Connors and Congresswoman Loretta Sanchez
WILL THE TAM DECISION INFLUENCE THE COURT IN THE WASHINGTON REDSKINS APPEAL OF USPTO CANCELLING ALL OF ITS TRADEMARKS?
The Redskins appeal of USPTO cancelling all of its trademarks is pending in the Fourth Circuit in
Pro-Football Inc. v. Blackhorse ("Blackhorse").
Final briefings in the Blackhorsecase are due for submission to the Fourth Circuit on March 18, 2016.
The Fourth Circuit is not bound by the Federal Circuit decision in TAM; therefore, whether the decision in TAM will persuade the Fourth Circuit to rule in favor of the Redskins cannot be determined. If the Fourth Circuit is not persuaded by the Federal Circuit's decision in Tam and rules against the Redskins a circuit split will be created-paving the way to a battle in the US Supreme Court.
There are both proponents and opponents of the proposition that the Government has the right (if not a duty) to protect various groups of people from what the Government considers to be hurtful or disparaging speech, including speech expressed in a trademark. If the Blackhorse case results in a split with the Federal Circuit, giving rise to US Supreme Court intervention, it will be interesting to see what questions the moving party will certify for determination.
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