Congress is debating the most extensive changes to the American patent system since 1952. The Senate passed the Patent Reform Act of 2011, and the House Judiciary Committee just sent its version to the House floor. While some differences remain, the major terms of both bills are aligned. It appears likely that American innovators soon will operate under markedly different patent laws.
The most controversial change transforms the U.S. from a first-to-invent (FTI) system to a first-to-file (FTF) system. American patents are awarded to the first person to invent, while other countries award patents to the first to file a patent application, regardless of who invented first. Both bills align U.S. patents laws with Europe’s and award the patent to the first inventor to file, with a grace period for disclosures by the inventor within one year of the filing date.
The switch from a FTI to a FTF system is hotly contested. Proponents claim that legal battles over inventorship and ownership will be reduced. Opponents say it disadvantages those without resources to compete in the race to the patent office and encourages disclosure of an invention before full development, resulting in inferior quality patents and potential lost rights in new technology. Large companies hold mixed views of this provision, while individual inventors and small businesses oppose it.
Both bills make it easier to invalidate patents, limit the flood of false patent marking lawsuits, expand opportunities for third party submissions before patent issuance and provide a post-grant opposition window. Descriptions of some of these changes are set out in the table below:
| Provision | Senate Bill (S. 23) | House Committee Bill (H.R. 1249) |
| First-to-File System | First-Inventor-to-File (exception where first filer derived invention from second filer) | First-Inventor-to-File |
| Grace Period | Excludes “disclosures” by inventor made within 1 year before filing | Excludes “disclosures” made by inventor within 1 year before filing |
| Post-Grant Opposition Procedure | 9 month window to oppose following allowance | 12 month window to oppose following allowance + broader based challenges permitted and automatic stay of litigation |
| PTO Funding | PTO sets its own fees; ends fee diversion | PTO sets its own fees with conditions |
| Prior User Defense | Exists only for business method patents | Expanded to all method patents |
| False Marking Suits | Eliminates qui tam suits; allows suits based on competitive injury | Eliminates qui tam suits; allows private suits based on competitive injury; creates and exception for expired patents |
| Tax Strategy Patents | Banned | Banned |
Proponents claim the FTF system harmonizes the U.S. with the world. Opponents contend it disadvantages American inventors against foreign inventors who file in the U.S., claiming priority to a foreign application that pre-dates a U.S. filing, without granting a reciprocal result when the American files first.
For full versions of the House and Senate bills, go to these links:
Text of H.R. 1249:
http://www.gpo.gov/fdsys/pkg/BILLS-112hr1249ih/pdf/BILLS-112hr1249ih.pdf
Text of S. 23:
http://www.gpo.gov/fdsys/pkg/BILLS-112s23es/pdf/BILLS-112s23es.pdf
Last fall, The Smoking Gun website reported that Nicole Polizzi (aka “Snooki” of MTV’s Jersey Shore) had tried and failed to register the trademark SNOOKI for “printed matter, namely books.” Specifically, the United States Patent & Trademark Office refused to permit the registration of the SNOOKI mark on the grounds that it was confusingly similar with the mark ADVENTURES OF SNOOKY for a series of children’s books.
The celebrity press paid some coverage to this story, and generally had fun comparing and contrasting the appearence of “Snooki” the “pickle-loving, one-piece rocking Jersey girl,” with “Snooky” the orange-colored nautical cat that is the subject of the 2003 children’s book. Admittedly, any reasonable comparison between the two characters would appear to make any potential confusion highly unlikely. (compare image of “Snooky” below with images of “Snooki“).
This case highlights an important aspect of trademark practice, namely that an applicant cannot use extrinsic evidence to argue that there is no likelihood of confusion between her mark and the registered mark cited by the Trademark Office. When an examining attorney reviews an application and determines that a likelihood of confusion exists between the applicants mark (SNOOKI) and an existing registration (SNOOKY), the attorney compares the goods and services as they appear on the application and registration respectively. Indeed, the Trademark Manual of Examination Practice (the TMEP) specifically prohibits any attempt by an applicant to restrict “the scope of its goods and/or the scope of the goods covered in the registration by extrinsic argument or evidence, for example, as to the quality or price of the goods.” See TMEP § 1207.01(a)(iii). If extrinsic evidence were allowed, then Snooki’s attorneys could have argued that the children who read The Adventures of Snooky were unlikely to see Snooki on MTV’s Jersey Shore, and therefore there was no possible likelihood of confusion.
However, because extrinsic evidence is not allowed, the only comparison that can be made as to the goods and services associated with the two marks is to compare them as they appear in the application and registration, respectively. Because the goods and services recited in Snooki’s application were broad enough to encompass the children’s books registered under the ADVENTURES OF SNOOKY mark, her attorneys were forced to abandon her claim.
When filing a trademark application, there is often an attempt by the applicant to describe their goods and services very broadly in the hopes that they can exclude others from particular areas of commerce that they have not, but may move into. In this case, Snooki described her goods and services so broad as to include all books. While her particular marketing plans are not public knowledge, based on her persona, it is unlikely that Snooki was planning on using her name in connection with children’s books. Had she described her goods and services more narrowly, (e.g., “self-help books”, “entertainment books” or even “New Jersey travel guides”) she might have had a better chance at registering her mark.
When most people think of a “patent” their focus is usually on some tangible invention, e.g., a new mouse trap or an improved pizza cutter. Over the course of the past decade, however, the patent office has permitted inventors to seek patent protection for “business methods” so long as they “produce a useful, concrete and tangible result.” Examples of business methods patents include:
(1) Amazon’s “1-click” purchasing method;
(2) E-Bay’s “Buy It Now” method;
(3) Netflix’s video queue ranking method.
Business method patents are not just limited to the internet and software industry. Tax professionals have filed applications with the United States Patent and Trademark Office to patent a variety of tax strategies. Indeed, the A
Business Methods have been considered patentable subject matter since 1998. The American Institute of CPA’s reports that since 1998, over 115 patents for tax strategies have been granted and over 150 patent applications for tax planning methods are currently pending before the USPTO.
The ability to patent tax planning methods, however, may be coming to a close. Senators Baucas (D-Mont.) and Grassley (R-Iowa) have recently announced legislation that would essentially prohibit the USPTO from granting patents on tax strategies. In a press release, both Senators indicated that the purpose behind the legislation was to ensure that tax planning strategies are available to everyone, but also to remove any encouragement for “inappropriate tax avoidance.”
The bill is interesting in the mechanism that it uses to address this issue. Rather than simply remove “tax planning strategies” from the field of patentable subject matter, the bill prohibits such strategies from being used to differentiate over the prior art. The substantive portion of the bill states the following:
“For purposes of evaluating an invention under section 102 or 103 of title 35, United States Code, any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, shall be deemed insufficient to differentiate a claimed invention from the prior art.”
In essence, the bill states that all tax planning strategies are “obvious” and thus un-patentable. Indeed, the text of the bill declares that even unknown tax planning strategies should be considered obvious for the purpose of determining the strategies patentability. It is ironic that while their may be a proper rationale for utilizing this legislative mechanism to prohibit the patenting of tax planning strategies, that rationale is not… obvious.
The full text of the bill can be found here.
The progress of the bill can be tracked on Thomas here.
A week ago, the Federal Communications Commission approved a series of rules that are targeted directly at the hot topic de jure, “net neutrality.”
The debate regarding net neutrality has been going on for some time. While the arguments around net neutrality reach into various areas of public policy, the key concern is whether an internet service provider, or “ISP” (e.g., AT&T, Cox, Verizon, etc.), should be allowed to treat your access to given internet sites differently.
The Arguments for Net Neutrality
Proponents of net neutrality argue that ISPs should treat all information the same, regardless of source or content. The argument is that internet bandwidth should be treated as a utility, like electricity, water or gas. Utilities simply provide a service or commodity, and exert very little (if any) influence over how that commodity is utilized. Accordingly, your electric company doesn’t have any say in how you use your electricity, whether you use it to power your electric blender or charge your new hybrid car. Those who argue in favor of net neutrality assert that the same approach should be used for internet bandwidth, and that ISPs should therefore be prohibited from exerting any control over how internet bandwidth is used.
The Arguments against Net Neutrality
Not surprisingly, the ISPs argue that against the basic tenants of net neutrality. In particular, they argue that the recently approved FCC rules, in their current form, pose a threat to their current business model, one that they argue has spurred innovation, investment and is essentially responsible for the current success of the Internet. The detractors of net neutrality often argue that preferential treatment of certain types of internet traffic is not a bad thing, and in some circumstances is necessary. For example, if a particular YouTube video becomes popular and begins to suck up all of an ISPs bandwidth, it could potentially bring the ISP’s entire network down. In such circumstances, the ISP would argue that it should be permitted to ratchet down the bandwidth to YouTube (at least temporarily) so that other services, such as email and voice, are not put in jeopardy.
The Current Net Neutrality Rules
The most recent FCC rules on the Net Neutrality focus on three key issues:
1. Transparency
2. Blocking
3. Discrimination
First, the Transparency rules require that each ISP disclose the “network management practices, performance and commercial terms” its broadband Internet access services. There are exceptions made for competitively sensitive information or information that would compromise network security. in essence, each ISP has to tell you how they are going treat the bandwidth they provide to you.
Second, the Blocking rule states that an ISP “shall not block lawful content, applications, services or non-harmful devices.” The import of this rule is to permit consumers not only to access any “lawful” content, but also to do so with any device they see fit. On its face, the rule appears to prohibit potential actions such as allowing Windows PC’s to connect to the ISP’s network, but not allow Apple Mac’s to connect.
Finally, the Discrimination rule prohibits ISPs from “unreasonably” discriminating in the transmission of lawful network traffic. The Discrimination Rule provides exceptions for “reasonable network management,” a term which may ultimately receive a significant amount of scrutiny as it is used as an exception of many of the prohibitions in the rules.
Importantly, the FCC rules do not fully apply to wireless network access. While ISPs are required to comply with the Transparency rule for their wireless networks, they do not have to fully comply with the Blocking rule, and do not have to comply with the Discrimination rule for the same. The FCC’s decision to exempt wireless networks from the full rules is purported to be based on acknowledgement that mobile broadband offerings are a “earlier-stage platform” that is “rapidly evolving.” Accordingly, the FCC concluded that taking a “measured” approach made more sense for the wireless networks.
The Continued Argument
Neither side of the debate appears to be completely pleased with the new FCC rules. Proponents are upset that the rules don’t cover wireless networks, while the ISPs are concerned that they may not be able to adequately manage their networks. The public policy debate on net neutrality is only beginning, with the new republican majority in the House already promising to repeal the FCC rules. Accordingly, the public policy debate over net neutrality will likely continue over the coming months and years.
With every New Year comes a host of resolutions. You know, realistic stuff like losing 30 pounds and transforming into a super-model, running a marathon and authoring the next great American novel.
While you are busy grappling with those personal goals, here is a professional goal that is a little bit more realistic – lower your company’s exposure to costly lawsuits by keeping up to date on changes to employment law that affect the workplace. This is an area where Crowe & Dunlevy can help.
A good place to start is learning about recent changes being made by the United States Department of Labor (“DOL”). Effective December 13, 2010, employees who have made complaints to the DOL’s Wage and Hour Division, but who are informed by the DOL that the agency will not be pursuing their complaint, will now be given a new alternative.
Rather than just informing the employee that his or her complaint will not be pursued by the DOL, the employee will be given access to a toll-free number to contact a newly created American Bar Association (“ABA”) approved Attorney Referral System. The ABA will provide the employee with the name of a local attorney who is qualified to pursue a claim under the Fair Labor Standards Act (“FLSA”) or the Family and Medical Leave Act (“FMLA”).
According to the DOL, its Wage and Hour Division received over 40,000 complaints in 2010. Approximately 4,000 of those complainants were told that even though the DOL’s investigation found cause to suggest a violation may have taken place, the DOL would not be pursuing the case. The DOL announced that the new attorney referral system will address that problem and, “provide workers a better opportunity to seek redress for FLSA and FMLA violations and help level the playing field for employers who want to do the right thing.”
Providing enhanced opportunities to redress wrongs, and leveling playing fields, all sounds very good. But, it begs the question, what is the bottom line for employers? The easy answer is that you can expect an increased number of FMLA and FLSA lawsuits being filed by private attorneys. This is a natural byproduct of a system that will now funnel would be plaintiffs into the arms of attorneys with expertise in FMLA and FLSA litigation.
The more difficult answer, at least to implement, is that employers need to fortify their defenses before the lawsuits start getting filed. That means conducting a review of your company’s leave policies and practices, as well as the company’s pay policies and practices, to ensure compliance with the FMLA and FLSA.
There are a couple of hot-spots that warrant special attention. First, it would be wise to conduct a review of your company’s “exempt” positions to make sure they truly qualify for “exempt” status under the FLSA (meaning, among other things, that overtime does not have to be paid to the employee),
Second, if you utilize independent contractors, it would be a great idea to make sure they really qualify as an independent contractor under the DOL’s rules. The DOL recently added 350 new investigators who are targeting “fissured industries,” defined as industries relying on sub-contracting, third party management, franchising and independent contracting.
Although it appears that 2011 will bring us more FMLA and FLSA lawsuits, it is not too late to resolve to get ready to defend against them. And that is one resolution worth keeping.
Some of you may recall the presidential election slogan “Nixon. Now More Than Ever.” The same can be said about a critical agency formed during the Nixon administration in 1974: the Legal Services Corporation (“LSC”). Established in 1974 with bipartisan Congressional support and the endorsement of the Nixon Administration, LSC was intended to meet a tremendous need to make effective legal services available to Americans otherwise unable to afford such services. Today, LSC is needed now more than ever as the need for legal services for poor Americans has never been greater. According to recent studies over 80% of the civil legal needs of the poor are not being met. LSC is a fundamentally sound and conservative program, one that facilitates the peaceful resolution of disputes and reinforces respect for the rule of law.
LSC was created to ensure that all Americans have access to a lawyer and the justice system for civil legal issues regardless of their ability to pay. The LSC provides direct grants to independent local legal services programs chosen through a system of competition. LSC currently funds approximately 170 local programs serving every county in each state in the United States and its territories. These local LSC offices provide direct services to more than one million constituents who struggle to get by on incomes below or near the poverty line. LSC clients include the working poor, veterans, family farmers and people with disabilities. Despite the clear benefits of this program, LSC funding comes under repeated, and most often unmerited, attacks in Congress.
In fact, if Congress discontinued funding for LSC then Legal Aid Services of Oklahoma (“LASO”) would lose 52% of its current funding. This would mean:
• Legal Aid Services of Oklahoma Inc. is the only statewide organization in Oklahoma that provides free Legal Aid to poor people. They have 21 offices and cover all 77 counties. It served 17,000 people in 2009.
• LASO would help 22,000 fewer family members and almost 10,000 fewer children based upon 2007 statistics.
• Over 1100 of LASO’s approximately 2100 cases involving housing assistance would potentially receive no legal assistance. These include homeless families, families whose landlords use improper means to evict, and those very low income or disabled clients who may lose housing assistance due to bureaucratic error, among others reasons.
• More likely than not, LASO would be forced to close most if not all of its satellite offices to the point that only Oklahoma City, Tulsa, and the intake hotline would be assured of continuing. Meaningful services to Oklahoma’s rural poor would be jeopardized by such funding cuts.
• Many beneficiaries of LSC funding are formerly middle-class, who have become poor because of age, disaster, unemployment, illness or the breakup of a family. Historically, more than two-thirds of legal aid clients have been women, most of them mothers with young children. Interestingly, mothers with young children is also the single fastest growing population group among America’s homeless.
In these tough economic times, LSC needs our help – now more than ever.
Dealing with metadata is a reality of practicing law in today’s legal environment. Attorneys continually create and receive electronic documents. Each of these documents may contain hidden “metadata.” Metadata, when accessed, can reveal information that was never intended to be disclosed by the author of the document. 1 For example, metadata could identify the date an electronic document was created, authored, as well as disclose previous versions and edits to the electronic document. Notably, metadata may be found in virtually any type of electronic file including pictures, video clips, documents or other types of digital files. The effective use of metadata can give one side a distinct advantage.
Much has been written regarding the role of electronically stored information and metadata in the discovery process; but recently there has been less focus on the role of metadata in an attorney’s everyday correspondence and negotiations.” The Rules of Professional Conduct likewise place ethical restraints on a lawyer’s use of metadata in the normal course of electronic document exchange, such as contract negotiations, advisory opinions, and other electronic communications.
Specific questions not yet addressed by early ethics opinions are whether the receipt of metadata outside the course of discovery is considered an inadvertent disclosure of confidential information, and if so, how may the receiving attorney ethically use such disclosed metadata?
Oklahoma has not made an authoritative ruling regarding the ethical use of metadata and this article will look to other jurisdictions’ rulings for their analyses.
Several authorities have issued written opinions discussing an attorney’s ethical obligation when receiving metadata in an electronic document. Unfortunately, these opinions have not utilized the same analysis or reached the same conclusion. For example, the ABA’s
Standing Committee on Ethics and Professional Responsibility and the Florida Bar Professional Ethics Committee found that an attorney who receives metadata, may use that metadata in some instances, but likely has an obligation to notify the disclosing attorney. The relevant authorities in New York and Alabama, on the other hand, have discussed metadata in conjunction with the general prohibition on “conduct involving dishonesty, fraud, deceit or misrepresentation.
Ultimately, these authorities found that an attorney who receives metadata, may only use such metadata if it does not contain confidential client information. The Maryland State Bar Association’s Committee on Ethics has taken perhaps the most liberal view of the issue, stating that an attorney has no ethical duty or obligation upon receiving inadvertently disclosed metadata.” As the Oklahoma authorities have not explicitly addressed this issue, a more in-depth review of the different authorities’ reasoning is helpful.
The next time you receive an electronic document be cautious. Your treatment of the metadata contained in that document may result in a violation of the Oklahoma Rules of Professional Conduct. In any event, the majority view suggests that any use of metadata be conditioned on your notification to the sending party.
Everybody likes a party, right? It is a great way to socialize, take a break from the daily grind and let down the proverbial hair. But, what happens when it is a work party? As an employment lawyer, I can tell you that too often what happens is that the infusion of alcohol and a more relaxed setting results in bad decisions by employees. Bad decisions that can lead to liability for your company.
I know, I am starting to sound like the Grinch who stole your Holiday Party. After all, having a few drinks, forming a conga line and then taking turns using the copy machine to make holiday images of your respective derrières is just harmless fun, right?
The problem is that holiday work parties are a breeding ground for sexual harassment claims. As illustrated by countless lawsuits centered on holiday parties gone wild, the consumption of alcohol and the general merriment of the season tends to destroy the boundaries of our inhibitions that usually keep everyone in line.
What an example? Imagine the following (this scenario will involve a female harasser, just to change things up some). A company holds a holiday party where food and booze are served. The attendees are limited to two drinks using a drink ticket system. However, a group of employees decides to keep the party going after the formal party ends, and assembles at a nearby bar.
During that portion of the evening, a female employee, who is quite inebriated, informs her co-employees that she has recently undergone a breast augmentation. Not content with merely sharing this personal information, she insists on showing her plastic surgeon’s efforts to her supervisor. When the supervisor declines her invitation to watch her disrobe, the employee hops up on the bar and proceeds to take off her top so everyone in the bar can see her recent enhancements.
The question the next day (in addition to “where is my bottle of aspirin”) is whether or not the employee’s actions need to be addressed. The answer, in my opinion, is yes. Although the party ended at a local bar and on the personal time of the employees, it started at the company holiday party. Moreover, the employee in question made sexual overtures to her supervisor which made him feel uncomfortable, and that could impact their future work environment. The situation can be handled discretely and delicately by management, and hopefully nothing more comes of it. Left alone, though, it could very well be fodder for yet another sexual harassment case.
Bottom line, as you prepare for this season of cheer, don’t forget that even when a holiday party is taking place, the workplace is still right there, all around you. You can have fun, just don’t forget to monitor the activities of your employees and curb any behavior that is out of line. Be sure to follow up and investigate any claims of harassment that are generated by a holiday party. Finally, keep any eye on the beer, wine and liquor. These spirits improve the ambience of a party, but are often the catalyst for poor decision-making and unfortunate lawsuits.
When one thinks about “trade secrets,” the mind inevitably drifts to the heavily guarded formula for Coca-Cola, or the secret as to how in the world those magicians can appear to saw their lovely assistants in half and yet they walk away unscathed. However, in the world of business, trade secrets can be much more mundane, and yet no less important. That includes customer lists, the life-blood of many companies that depend on cultivating customer-based relationships to make money.
Just a few months ago, the Oklahoma Legislature underscored the importance of customer lists when it amended 21 O.S. § 1732. This statute criminalizes the theft of trade secrets, categorizing such conduct as larceny under 21 O.S. § 1704. Traditionally, trades secrets have been defined in Oklahoma as information, “deriving independent economic value from not being generally known to and not readily accessible by proper means by, other persons.” Trade secrets must also be the subject of reasonable efforts to maintain their secrecy.
Whether or not a customer list constitutes a trade secret is oftentimes at the heart of criminal prosecution efforts and/or civil litigation over the misappropriation of trade secrets by departing employees. The reason is that an employee who has departed with a customer list in his or her possession usually argues that the list is not a trade secret because it is “easily ascertainable” by proper means such as just as thumbing through a phone book and searching for potential customers, or that that the employer failed to take reasonable steps to protect the customer list from the public eye.
As part of SB 1013, effective November 1, 2009, the Legislature sought to settle this debate, and to clarify the scope of the definition of trade secrets under 21 O.S. § 1732. The Legislature did so by specifically including, “customer lists” and “business records” as examples of potential trade secrets protected by 21 O.S. § 1732, joining the other existing categories including formulas, patterns, compilations, programs, devices, methods, techniques and processes.
Of course, the inclusion of these new terms does not automatically qualify customers lists for trade secret status. Employers must still meet the other elements of a trade secret before enjoying the protections afforded by this legislative amendment. However, by explicitly adding customer lists to the examples of potential trade secrets, the Legislature is signaling a clear shift towards protecting these lists from theft.
In light of this legislative change, employers would be well advised to take advantage of this policy shift by reviewing their current policies and procedures to ensure that their policies regarding protection of trade secrets and other confidential information are rigorous and strictly enforced. Moreover, it would be a good idea to add customer lists to the categories of information protected as trade secrets of the company.
The bottom line is that while the Legislature has made it easier to prosecute those who abscond with a company’s trade secrets, including customer lists, it is still up to employers to properly protect the customer lists as trade secrets. Doing so safeguards information that can be as vital as a soft drink formula, or the secret to a magician’s trickery.
