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Long Live the Kingpin: No Abandonment Based on Nonuse During Drug Sanctions Period

by Amol Parikh | Oct 13, 2022 | Trademarks

In a precedential decision, the Trademark Trial & Appeal Board (Board) dismissed an opposition, finding that the trademark applicant’s long period of nonuse due to government sanctions was excusable nonuse and not abandonment. ARSA Distributing, Inc. v. Salud Natural Mexicana S.A. de C.V., Opposition No. 91240240, 91243700 (TTAB Sept. 28, 2022) (Taylor, Greenbaum, English, ATJ)

Salud sought a trademark registration of the standard character mark EUCALIN for “pharmaceutical products, namely, vitamin supplements, nutritional supplement made with a syrup with jelly base, honey base, and with a mixture of plants with propolis base, and herbal remedies in the nature of herbal supplements,” and the composite mark set forth below for “herbal supplements; nutritional supplements; vitamin supplements.”

ARSA opposed the registration, alleging prior common law use of the mark EUCALIN for “dietary and nutritional supplements.” ARSA argued that its sales and advertising of its EUCALIN product from 2008 to October 6, 2015, and October 9, 2017, established that ARSA had used its EUCALIN mark long before the constructive use filing dates of Salud’s application. Thus, ARSA had priority of use of the EUCALIN mark on nutritional and dietary supplements.

In response, Salud asserted it had priority in the EUCALIN mark based on use since 1999. Salud argued that between 1999 and October 2008, ARSA was Salud’s US distributor and, therefore, all goodwill for any EUCALIN-labeled product went to Salud as the supplier of the goods and products.

ARSA asserted that there was no distribution agreement between the parties, but even if Salud “could have reasonably claimed rights based on some alleged distribution agreement before 2008,” Salud “has long since abandoned any rights it would have had.” ARSA asserted that Salud was legally banned from conducting business in the United States between October 2, 2008, and May 2015 because it was declared a Specially Designated Narcotics Trafficker (SDNT). ARSA argued that Salud failed to produce any evidence establishing that it had concrete plans or intent to resume use between 2008 and 2015.

The Board found that there was no clear manufacturing-distribution agreement between the parties, and therefore there was a rebuttable presumption that the manufacturer (Salud) owned the mark. The Board explained that the following six factors are considered in determining which party has superior rights:

Which party created and first affixed the mark to the product
Which party’s name appeared with the trademark on packaging and promotional materials
Which party maintained the quality and uniformity of the product, including technical changes
Which party the consuming public believes stands behind the product (g., the party to which customers direct complaints and contact for correction of defective products)
Which party paid for advertising
What a party represents to others about the source or origin of the product.

The Board concluded that, on the balance, the factors favor Salud. The Board explained that the first, second, third and sixth factors favored Salud because it created the mark and product, maintained quality control over [...]

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Remote Employees Support Patent Venue

by Katherine Pappas | Oct 13, 2022 | Patents

In a per curiam opinion, the US Court of Appeals for the Federal Circuit denied a petition for a writ of mandamus seeking to direct the district court to dismiss or transfer the underlying case based on improper venue. In doing so, the Court pointed to remote workers residing in the district to find satisfaction in the venue statute. In re Monolithic Power Systems, Inc., Case No. 22-153 (Fed. Cir. Sept. 30, 2022) (Lourie, Chen, Stark, JJ.) (per curiam) (Lourie, J., dissenting)

Bel Power brought suit in the Western District of Texas alleging that Monolithic infringed Bel Power’s patents by selling power modules used in electronic devices. Monolithic had four remote employees working from home in the district. Monolithic moved to dismiss or transfer to the Northern District of California, arguing that because it was a Delaware corporation without property in the district, venue was not proper under § 1400(b). The district court denied both requests, finding that Monolithic maintained a business presence in the district as contemplated by § 1400(b) by soliciting employment in the district and providing employees with equipment used at or distributed from their homes as part of their employment responsibilities.

In denying the motion to transfer, the district court found that Monolithic had not established that the Northern District of California was clearly more convenient. Monolithic filed for mandamus seeking to overturn either ruling.

The Federal Circuit denied relief. With regard to venue, the Court reasoned that “the district court’s ruling does not involve the type of broad, fundamental, and recurring legal question or usurpation of judicial power that might warrant immediate mandamus review.” Instead, the Court credited the factual findings regarding the amount of equipment Monolithic provided to one of its employees in the district for “the sole purpose” of allowing him “to conduct testing and validation as part of his job,” and ruled that post-judgment appeal would be an adequate alternative means for attaining relief. On the issue of transfer (reviewed under regional circuit law), the Court denied for failure to establish a clear abuse of discretion, noting that this “is not a case in which there is only one correct outcome.”

Judge Lourie dissented, arguing that “[m]ost basically, Monolithic lacks a regular and established place of business in the Western District of Texas, as the statute requires in order for it to be sued there.” In his view, “we should not stand back and let the requirements of the statute be eroded by the details of what an employee stores in his or her home.” He noted that judicial efficiency counsels against allowing cases to be tried in venues not permitted by the statute only to be retried in a proper venue. Judge Lourie reasoned that the circumstances relied on by the district court, including job advertisement and storage of product and equipment in the venue, were not meaningfully different from those of Celgene v. Mylan Pharms (Fed. Cir, 2021), where venue was deemed improper. He noted that “[t]he [...]

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For Inherent Anticipation, How Many Is Too Many?

by Alexandra Cavazos, PhD | Oct 13, 2022 | Patents

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) decision that prior art disclosing a class of 957 salts could not inherently anticipate claims to a salt within the class because a skilled artisan could not “at once envisage” every class member. Mylan Pharms. Inc. v. Merck Sharp & Dohme Corp., Case No. 21-2121 (Fed. Cir. Sept. 29, 2022) (Lourie, Reyna, Stoll, JJ.)

In the underlying inter partes review, Mylan alleged that Merck’s patent claims to sitagliptin dihydrogen phosphate (DHP) with 1:1 stoichiometry were anticipated by two similar Merck publications (collectively, Edmondson). Edmondson listed 33 enzyme inhibitors (including sitagliptin) and eight preferred acids for forming salts with the inhibitors. Mylan argued that the 1:1 stoichiometry between sitagliptin and DHP (which was required by the claims) was the only possible result when sitagliptin and phosphate were reacted.

In response, Merck experts declared that Edmondson did not expressly disclose any 1:1 sitagliptin DHP salts. They also declared that non-1:1 sitagliptin phosphate salts existed and had been created using conventional protocols, and that Edmondson encompassed approximately 957 predicted salts of DP-IV inhibitors.

The Board held that Edmondson did not expressly anticipate because it did not literally disclose the 1:1 sitagliptin DHP salt and Mylan could not attempt to fill in the missing claim limitation by arguing that a person of ordinary skill in the art (POSA) could “at once envisage” the “950+” salts. Merck’s evidence convinced the Board that non-1:1 sitagliptin phosphate salts “do exist and can form.”

Mylan tried to circumvent Merck’s antedation of Edmondson by asserting that it disclosed hydrates of 1:1 sitagliptin DHP, which Merck had not synthesized until months after Edmondson was published. The Board rejected this argument, noting that Edmondson only generically referred to hydrates. Since Mylan had not contested Merck’s common ownership of Edmondson’s subject matter, § 103(c)(1) applied and Edmondson became unavailable as an obviousness reference. The remaining claims to specific enantiomers and hydrates of sitagliptin DHP were deemed nonobvious because Mylan had not presented sufficient evidence to show motivation to make or reasonable expectation of success.

On appeal, the Federal Circuit found that substantial evidence supported the Board’s determinations with respect to explicit and inherent anticipation and obviousness. Mylan’s own expert had admitted that nothing in Edmondson directed a POSA to sitagliptin or to any phosphate salt. Edmondson’s disclosure of 957 potential salts was “a far cry” from the facts in the 1962 Court of Customs and Patents Appeals case In re Peterson, where a reference disclosing only 20 compounds was deemed inherently anticipatory. The Federal Circuit rejected Mylan’s antedation argument, noting that if Edmondson did not explicitly disclose 1:1 sitagliptin DHP, it could not disclose any hydrates of that compound either.

Finally, the Federal Circuit agreed with the Board that the claims to specific enantiomers or hydrates of sitagliptin DHP were nonobvious because Mylan had not shown any expected benefit to making the specific enantiomers claimed, the literature and experts for both sides reported many downsides [...]

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Cloudy Skies: PTO Director Finds Abuse and Sanctionable Conduct

by Alexander Piala, PhD | Oct 13, 2022 | Patents

The US Patent & Trademark Office (PTO) Director issued a precedential opinion finding that filing an inter partes review (IPR) solely to extract payment in a settlement—without the intent to prosecute the IPR to completion—is a sanctionable abuse of process. OpenSky Indus., LLC v. VLSI Tech. LLC, IPR2021-01064 (Oct. 4, 2022) (Vidal, Dir.)

In 2019, VLSI asserted two patents against Intel. In response, Intel filed two IPRs against the allegedly infringed patents, but both IPRs were discretionally denied by the Patent Trial & Appeal Board (Board) based on the advanced stage of the underlying litigation and overlapping issues. The suit proceeded, and a jury awarded VLSI more than $600 million in damages in 2021.

OpenSky Industries was founded two months after the judgment. OpenSky filed a “copycat” IPR petition based on Intel’s previous petitions (including refiling the declarations of Intel’s expert without his knowledge) targeting VLSI’s two allegedly infringed patents. The Board instituted over VLSI’s argument, noting that patentability issues were raised that had not been resolved in the district court case. Initially, OpenSky attempted to settle the IPRs with VLSI, but VLSI refused. OpenSky then reached out to Intel, offering to let Intel collaborate if it agreed to pay a success fee. Intel refused and later filed its own IPR petition and joinder motion. After Intel’s refusal, OpenSky pivoted back to VLSI, offering to “refuse[] to pay [the] expert for time at deposition so [the] expert does not appear at deposition” in return for payment. VLSI reported the scheme to the Board.

Intel was joined as a party to the OpenSky IPR proceeding in June 2022 based on its later-filed petition. Once Intel joined, OpenSky threatened to forego both deposing VLSI’s expert and filing its reply brief unless Intel paid it for its “prior work in the IPR” plus “additional remuneration.” Intel refused. While OpenSky did notice VLSI’s expert, it declined to file a Petitioner Reply brief, forcing Intel to draft the reply. Later, at VLSI’s request (OpenSky missed the request date), oral argument in the proceeding took place before the Board. OpenSky did not meaningfully participate.

While all this was unfolding, the Director sua sponte initiated an investigation to determine “[w]hat actions the Director . . . should take when faced with evidence of an abuse of process or conduct that otherwise thwarts . . . the goals of the Office and/or the AIA.” To begin the investigation, the Director sent discovery requests to each of the three parties. VLSI and Intel complied. OpenSky, by comparison, either incompletely complied with or directly refused each request. Based on those evasions, the Director sanctioned OpenSky for discovery misconduct, applying adverse inferences against OpenSky on each request.

Discovery sanctions in place, the Director moved to the central question: Did OpenSky abuse the IPR process? The Director answered yes.

First, the Director found that OpenSky’s conduct violated its duty of candor and good faith to the Board. In its negotiations with VLSI, OpenSky offered to deliberately sabotage its own petition to hinder Intel. In its negotiations with Intel, OpenSky did [...]

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PTO Requests Comments on Initiatives to Ensure Patent Robustness, Reliability

by Amol Parikh | Oct 13, 2022 | Patents

The US Patent & Trademark Office (PTO) is seeking public input and guidance on proposed initiatives directed at bolstering the robustness and reliability of patents. The request for comments was spurred in part by US President Joe Biden’s July 9, 2021, executive order on Promoting Competition in the American Economy, and a June 8, 2022, letter from Senators Leahy, Blumenthal, Klobuchar, Cornyn, Collins and Braun raising concerns about patent thickets.

The PTO identified four broad topics and initiatives that it is considering:

Prior Art Searching
Support for Patent Claims
Request for Continued Examination (RCE) Practice
Restriction, Divisional, Rejoinder and Non-Statutory Double Patenting Practice.

The PTO seeks comments on 11 main questions and several sub-questions. The first five questions are directed to the PTO initiatives while questions six through 11 address concerns raised by the senators.

PTO Initiatives

How should the PTO facilitate an applicant’s submission of prior art that is not accessible in the Patents End-to-End Search system (e.g., “on sale” or prior public use)?

How, if at all, should the PTO change claim support requirements and/or continuation practice?

How, if at all, should the PTO change RCE practice?

How, if at all, should the PTO limit or change restriction, divisional, rejoinder and/or non-statutory double patenting practice?

Provide any other input on any of the proposals listed under the PTO initiatives.

Senator Inquiries

How would eliminating terminal disclaimers, thus prohibiting patents that are obvious variants of one another, affect patent prosecution strategies and overall patent quality?

Should patents that are tied together by a terminal disclaimer because of an obviousness-type double patenting rejection stand or fall together if their validity is subsequently challenged?

Should the PTO require a second look by a team of patent quality specialists before issuing a continuation patent on a first office action?

Should there be heightened examination requirements for continuation patents?

Should the PTO implement a rule change that requires any continuation application to be filed within a set timeframe of the ultimate parent application?

If filing fees were increased to cover the actual cost of obtaining a patent, would this increase patent quality? And if the fees for continuation applications were increased, would applicants be less likely to file continuations for obvious variants?

Among the proposals under consideration are whether to require applicants to identify corresponding support in the original disclosure for each claim in a continuation application, whether applications should be reassigned to a different examiner after a set number of RCEs are filed, whether the PTO should adopt the unity of invention standard, and whether divisionals should be filed within a set time period.

Click here for further details on the PTO initiatives.

Comments must be received by January 3, 2023, to ensure consideration.

Webinar Series | McDermott IP Focus

by McDermott Will & Emery | Oct 11, 2022 | Uncategorized

McDermott Will & Emery is committed to providing insightful commentary on IP developments from around the world to our Japanese clients. In light of that effort, we launched a monthly webinar series: McDermott IP Focus. During these sessions, we will explore global developments in the IP space, including disputes, transactions and procurement, with a significant focus on what Japanese companies need to know during this post-pandemic era.

Over the course of the series, we will feature a variety of speakers from McDermott’s offices around the world. We hope you can join us!

Click here for session details and to register.

The Saddest Hour? Closing Time for Trademark Cancellation Petition

by Tim Dunker | Oct 6, 2022 | Trademarks

In a precedential decision, the Trademark Trial & Appeal Board (Board) denied a petition to cancel a trademark registration based on priority. The Board explained that the petitioner bears a higher burden of proof to show prior use when it has amended its trademark application during prosecution to allege an earlier use date. JNF LLC v. Harwood Int’l Inc., Cancellation No. 92070634 (TTAB Sept. 21, 2022) (Wellington, Greenbaum, Heasley, ATJ)

On October 6, 2014, Harwood International applied to register the standard character mark HAPPIEST HOUR on the Principal Register for “bar and restaurant services.” The application matured into a registration on July 26, 2016. Almost two years later, on May 1, 2018, JNF applied to register the mark THE HAPPIEST HOUR in standard characters on the Principal Register for “restaurant and bar services.” In its application, JNF claimed to have first used the mark anywhere and in commerce “at least as early as 10/00/2014.” The examining attorney assigned to JNF’s application issued an office action citing Harwood’s HAPPIEST HOUR registration as a bar to registration. JNF then amended its claimed date of first use to September 7, 2014. JNF subsequently filed a petition to cancel Harwood’s registration and further requested suspension of its application pending disposition of the cancellation proceeding. Harwood answered the petition and admitted that its registered mark HAPPIEST HOUR was cited as confusingly similar to JNF’s THE HAPPIEST HOUR application but denied that JNF had established prior rights to the mark.

The Board explained that for priority purposes, Harwood may rely on the filing date of the underlying application that matured into its involved registration. The Board further explained that JNF bears the burden of proving that its mark was “previously used in the United States,” before Harwood’s constructive filing date of October 6, 2014. The Board also noted that while a petitioner must ordinarily prove its priority entitlement by a preponderance of the evidence, in the circumstances of this case, the burden was heavier. Because JNF alleged a first use date of “at least as early as 10/00/2014” when it filed its application to register THE HAPPIEST HOUR, the date presumed for purposes of examination was the last day of the month, October 31, 2014—several weeks after Harwood’s constructive use date of October 6, 2014.

As the Board explained, although JNF subsequently amended its date of earliest use, that amendment came with a cost. The Board explained that where an applicant has stated an earliest use date under oath but then amends the oath and attempts to show an earlier date, the applicant is under a heavier burden of proof: clear and convincing evidence. Citing to Federal Circuit precedent, the Board further explained that the original allegation of first use date may be considered to have been made against interest at the time of filing. The Board found that this rationale applied with even greater force in the current situation because the alleged dates were very close to Harwood’s constructive use date and because JNF only [...]

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Hold That Generic, Please: Supreme Court Grants Emergency Request to Stay Federal Circuit’s Mandate

by Mandy H. Kim | Oct 6, 2022 | Patents

In a rare action by the Supreme Court of the United States, Chief Justice Roberts granted Novartis’s emergency request for a stay of a mandate from the US Court of Appeals for the Federal Circuit, which had found a Novartis patent invalid for lack of adequate written description and would have permitted generic versions of Novartis’s multibillion-dollar blockbuster drug Gilenya to enter the market. For more information on the Federal Circuit’s prior decisions, click here and here. Novartis Pharms. v. HEC Pharm. Co., Misc. Docket 21A272 (Supr. Ct. Sept. 29, 2022) (Roberts, Chief Justice).

Novartis sued HEC and several other generic companies for infringement of a patent directed to methods of treating remitting multiple sclerosis with fingolimod or a fingolimod salt at a daily dose of 0.5 mg without an immediately preceding loading dose. In a split panel decision issued in January 2022 and authored by former Judge O’Malley with current Chief Judge Moore dissenting, the Federal Circuit affirmed the district court’s ruling that the patent was not invalid for insufficient written description of the claimed 0.5 mg daily dose or the no-loading dose negative limitation. HEC petitioned for panel rehearing. Judge O’Malley retired in March 2022, and a new panel granted HEC’s petition. The new panel now included Judge Hughes, who joined with Chief Judge Moore in the majority opinion. Judge Linn (who had joined with now retired Judge O’Malley in the original panel majority) was now the dissenter. The split panel vacated its prior decision and reversed the district court’s judgment. The new majority held that silence cannot support a later-added claim limitation that precludes loading doses. In dissent, Judge Linn argued that the majority applied a heightened written description standard requiring, not only a “reason to exclude,” but also a showing that the negative limitation was “necessarily excluded.”

On September 27, 2022, the Federal Circuit denied Novartis’s motion to stay the mandate pending a forthcoming decision on a petition for certiorari. Novartis filed an emergency application directed to Chief Justice Roberts, and two days later Justice Roberts issued an Order staying issuance of the Federal Circuit mandate (which would have issued on October 4, 2022) and ordered HEC to respond to Novartis’s emergency application.

Practice Note: The Supreme Court is currently considering another petition for certiorari resulting from a divided Federal Circuit decision on the question of whether a patent specification must expressly disclose a claim limitation to satisfy the written description requirement. Juno Therapeutics, Inc. v. Kite Pharma., Inc., Case No. 21-1566.

Don’t Throw in the Towel: Retroactive Copyright Protects Fight Live Stream

by Jayita Guhaniyogi, PhD | Oct 6, 2022 | Copyrights

The US Court of Appeals for the Sixth Circuit reversed a district court’s summary judgment of noninfringement in a copyright dispute, finding that the transfer of ownership prior to the display of the copyrighted work conferred standing to sue for any alleged infringement. Joe Hand Promotions, Inc. v. Griffith, Case No. 21-6088 (6th Cir. Sept. 21, 2022) (Clay, Rogers, Stranch, JJ.)

On August 26, 2017, world-famous boxer Floyd Mayweather Jr. and famous mixed martial arts fighter Conor McGregor engaged in what became one of the most legendary fights of all time (Fight). Showtime produced the Fight, charging a $99.99 personal use license and more expensive commercial streaming licenses for public viewing in a commercial setting. Two months prior to the event, on June 20, 2017, Showtime entered into a distribution agreement with Mayweather Promotions granting an exclusive license “to exhibit and distribute, and authorize the exhibition and distribution” of the Fight in a defined territory via the internet. On August 1, 2017, Mayweather in turn entered into a Commercial Licensing Agreement with Joe Hand Promotions (JHP), a smaller distributor. The agreement granted “the sole and exclusive third party license … to distribute … and authorize the public exhibition of the [Fight]” in a designated area. JHP then promoted the event and sold commercial licenses authorizing live broadcast at bars and restaurants.

There was no copyright registration at the time the Fight aired. However, the Copyright Act allows registration of live events within three months, and Showtime applied for a copyright within two months. On November 21, 2017, Showtime signed a Copyright Agreement with JHP, granting JHP “the exclusive right to distribute and publicly perform the [Fight] live on August 26, 2017,” “the exclusive right … to take enforcement actions,” and “the right and standing, as exclusive assignee, to assert independent claims, solely in the name of [JHP], for copyright infringement.” Mayweather Promotions, although a nonparty, also signed.

JHP then sued several restaurants, including Griffith, which livestreamed the Fight in a public setting without paying the commercial license fee. Griffith had paid for a personal use license, but then used an HDMI cable to connect a personal device to a TV and broadcast the live show in the restaurant. Griffith also promoted the Fight on the restaurant’s Facebook page and charged a $6 entry fee for patrons to watch the Fight. Both parties filed cross-motions for summary judgment. The district court granted Griffith’s motion, finding no evidence of copyright ownership on the day of the Fight. The court found that because the Copyright Agreement granted rights retroactively, JHP was granted a mere right to sue, which was insufficient for ownership. JHP appealed.

Griffith argued on appeal that because there was no copyright registration at the time of the event, any exclusive rights granted by the Copyright Agreement were illusory and insufficient to establish ownership. In response, JHP argued that Showtime intended such retroactive grant of rights, as evidenced by the Commercial Licensing Agreement with Mayweather Promotions. The Sixth Circuit agreed with [...]

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Sliced and Diced: PTAB Decision Remanded for Further Analysis

by Thomas DaMario | Oct 6, 2022 | Patents

In an appeal from a Patent Trial & Appeal Board final written decision, the US Court of Appeals for the Federal Circuit affirmed the Board’s decision to include certain evidence first presented in the petitioner’s Reply but vacated the Board’s obviousness decision for a failure to fully and particularly set out the bases for its decision. Provisur Technologies, Inc. v. Weber, Inc., Case Nos. 21-1942; -1975 (Fed. Cir. Sept. 27, 2022) (Prost, Reyna, Stark, JJ.)

Provisur Technologies owns a patent directed to classifying slices or portions cut from a food product according to an optical image of the slice. The patent explains that certain meat products, such as bacon or cold cuts, are sold in groups of slices according to particular weight requirements. The specification also teaches that the arrangement of the slices according to quality is desirable. The independent claims are directed to an image processing system arranged above a weigh conveyor that is capable of categorizing slices by determining the surface area and fat-to-lean ratios of the slices based on pixel-by-pixel image data.

Weber petitioned for inter partes review of the patent, alleging that the claims were obvious over various prior art references. Provisur, in its Patent Owner Response, disputed Weber’s assertion that the prior art references disclosed the claimed digital imaging receiving device capable of determining a surface area from pixel-by-pixel image data. During deposition of Weber’s expert, Provisur probed the expert’s knowledge of various camera models available as of the priority date. This prompted Weber to introduce a data sheet on redirect showing various models of cameras, including a comparison between those disclosed in the prior art references and those disclosed as exemplary in the patent. Provisur moved to exclude the datasheet, but the Board concluded that the evidence was highly probative and allowable because it was submitted in response to an argument that Provisur advanced in its Patent Owner Response. The Board also found that the independent claims and various dependent claims were invalid as obvious over the references cited by Weber.

Provisur appealed the admission of the datasheet and the Board’s determination on obviousness. Regarding the evidentiary issue, the Federal Circuit found that the Board did not abuse its discretion by considering the datasheet, noting that it was reply evidence responsive to Provisur’s arguments that the prior art did not disclose a digital camera: “Importantly, Weber’s invalidity theories did not change, nor did the reply fill any holes in Weber’s petition.” Furthermore, the Court observed that Provisur had an opportunity to respond both by cross-examining Weber’s expert and in a sur-reply to the Board.

Regarding the Board’s obviousness determination, Provisur argued that the Board erred by failing to explain its rationale for how the prior art combinations specifically taught the claim element of “determining a surface area of the top slice from the [pixel-by-pixel image] data [of a top slice of the stack].” Under the Administrative Procedure Act (APA), the Board must fully and particularly set out the basis upon which it reached its [...]

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