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As generative AI systems become increasingly sophisticated and widespread, concerns around the use of copyrighted works in their training data continue to intensify. The proposed Generative AI Copyright Disclosure Act of 2024 attempts to address this unease by introducing new transparency requirements for AI developers.

The Bill’s Purpose and Requirements

The primary goal of the bill is to ensure that copyright owners have visibility into whether their intellectual property is being used to train generative AI models. If enacted, the law would require companies to submit notices to the U.S. Copyright Office detailing the copyrighted works used in their AI training datasets. These notices would need to be filed within 30 days before or after the public release of a generative AI system.

The Copyright Office would then maintain a public database of these notices, allowing creators to search and see if their works have been included. The hope is that this transparency will help copyright holders make more informed decisions about licensing their IP and seeking compensation where appropriate.

Potential Benefits for Copyright Owners

The bill’s notice requirements and public database could be a significant step forward for creators looking to protect their IP in the age of AI. By providing a way to track the usage of their works in generative AI systems, the law would empower copyright owners to take action against unauthorized use and potentially negotiate licenses or royalties. This could be particularly valuable for individual artists, writers, and other creators who may lack the resources to monitor the vast landscape of AI applications on their own.

Challenges and Obstacles for AI Developers

While the bill’s intentions are laudable, it raises several practical challenges for AI companies. The 30-day window to file notices could be difficult to meet, particularly for startups or smaller organizations with limited resources. The vague requirement for a “sufficiently detailed summary” of copyrighted works used also leaves much room for interpretation and potential non-compliance.

Moreover, many AI training datasets are compiled by crawling the open web, which could make identifying and isolating every single copyrighted work extremely burdensome. The technical challenges of building and maintaining a comprehensive, searchable database of notices could be substantial.

Impact on AI Innovation

The additional administrative overhead and legal liabilities introduced by the bill could have a chilling effect on the pace of AI innovation. Smaller players may struggle to keep up with the compliance burdens, while larger tech giants with more resources may be able to adapt more easily. This could further entrench incumbent advantages and raise barriers to entry for new startups.

Some companies might choose to move their AI development efforts outside the U.S. to avoid these regulations altogether. This could put the U.S. at a competitive disadvantage in the global race for AI leadership.

If more copyright owners start denying the use of their works for AI training, it could also limit the data available and hinder progress in certain domains. AI systems rely on large, diverse datasets to learn and improve, so restrictions on training data could have far-reaching effects.

The Way Forward

Balancing the rights of copyright owners with the need for continued AI innovation will be a critical challenge in the years ahead. While the Generative AI Copyright Disclosure Act is a well-intentioned effort to strike that balance in the U.S., its current form raises significant practical and policy questions.

Policymakers will need to engage in extensive dialogue with stakeholders from the AI industry and creative communities to refine the bill’s requirements and avoid undue burdens or unintended consequences. Developing clear, workable standards for responsible AI development and training data sourcing will be essential. Ultimately, fostering a thriving and ethical AI ecosystem will require ongoing collaboration and adaptation as the technology continues to evolve. The Generative AI Copyright Disclosure Act of 2024 is at least a conversation starter around the intersection of AI and intellectual property rights.

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On May 9, 2024, the Supreme Court released its decision in Warner Chappell Music v. Nealy, a case with significant implications for damages available to plaintiffs in copyright infringement claims. The Court assumed, without deciding, that the discovery rule applies to copyright infringement claims. Operating under this assumption, the Court held that a copyright plaintiff can recover damages for acts that occurred more than three years before the filing of a lawsuit — as long as the claim is timely under the discovery rule. The decision resolves a narrow damages question, leaving the broader issue of the discovery rule’s validity for another day.

Licensing While Incarcerated

The case centers around Sherman Nealy, the founder of Music Specialist, Inc. (MSI), who alleged that Warner Chappell Music and other defendants infringed on copyrights owned by MSI. Nealy claimed that Tony Butler, an employee hired to create music for MSI, unlawfully licensed MSI’s works to Warner Chappell and others while Nealy was incarcerated. Nealy asserted that he was unaware of these licenses until after his release from prison.

In granting partial summary judgment for Warner Chappell, the district court held that the Copyright Act’s statute of limitations precludes recovery of damages for acts that occurred more than three years before the filing of the lawsuit, even though Nealy did not discover the infringement until more than three years after the infringing acts took place. The district court then certified that order for interlocutory appeal to the Eleventh Circuit, which held “when a copyright plaintiff has a timely claim under the discovery accrual rule for infringement that occurred more than three years before the lawsuit was filed, the plaintiff may recover damages for that infringement.”

The decision deepened a circuit split between the Ninth and the Second circuits (with the Eleventh Circuit joining the Ninth), traceable to a line in the Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer, Inc.: “A successful plaintiff can gain retrospective relief only three years back from the time of suit.” The Second Circuit, in Sohm v. Scholastic Inc., read the line as imposing a separate damages bar, limiting damages to the three-year period preceding the filing of a lawsuit, even for claims that are timely under the discovery rule.

The Court’s Decision

In a 6-3 decision authored by Justice Elena Kagan, the Court expressly rejected the Second Circuit’s view, stating it has “no textual support” and is “self-defeating.” The Court assumed, without deciding, that the discovery rule applies to copyright infringement claims and held — under this assumption — the Copyright Act imposes no separate time limit on the recovery of damages for timely infringement claims. If a claim is timely under the discovery rule (i.e., brought within three years of discovery), the plaintiff can recover damages for infringing acts no matter when they occurred.

The Court reasoned that the Copyright Act’s statute of limitations provision establishes a three-year period for filing suit that begins when the claim accrues (here assumed to be upon discovery). But the act contains no separate three-year time limit on recovering damages measured from the date of infringement. The Court found no support for a separate damages limit in the act’s remedial provisions.

However, the Court expressly avoided deciding whether the discovery rule actually governs the timeliness of copyright claims in the first place, since that issue was not properly presented. It simply assumed the rule’s applicability to answer the narrow damages question before it.

In a dissenting opinion, Justice Neil Gorsuch argued that the Court should have first addressed the logically antecedent question of whether the Copyright Act even allows for a discovery rule at all before opining on the rule’s operational details. He suggested the act likely does not permit the rule except in cases of fraud or concealment.

Implications for Copyright Plaintiffs

The Court’s decision in Warner Chappell Music v. Nealy is a qualified victory for copyright plaintiffs, albeit an important one for cases in the Second Circuit because it overturns the holding in Sohm. By allowing the recovery of damages for acts that occurred more than three years before the filing of a lawsuit, the decision significantly increases the potential recovery for plaintiffs in the circuit. The decision will be especially beneficial for plaintiffs like Nealy who, due to incarceration or other circumstances, are unable to closely monitor their copyrights.

However, the decision leaves open the crucial question of whether the discovery rule actually applies to copyright infringement claims under the Copyright Act. If the Court later holds that it does not, the impact of this decision will be significantly diminished.

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There have been only a few precedential decisions from the Federal Circuit related to obviousness since spring sprung. While these decisions have produced mixed results for the lower courts, clinical study protocols have held up to appellate scrutiny both in the context of motivation to combine and reasonable expectation of success.

Reversed and Remanded to the Bench

At the beginning of the month, in Janssen Pharmaceuticals, Inc. v. Teva Pharmaceuticals USA, Inc. (No. 22-1258), a Federal Circuit panel told U.S. District Judge Claire C. Cecchi (New Jersey) that she erred in finding claims to a schizophrenia drug nonobvious.

Janssen markets and sells Invega Sustenna®, which, according to the website, is an extended-release injectable suspension of paliperidone palmitate used to treat schizophrenia in adults. Prior to Invega Sustenna, the conventional approach for dosing of antipsychotic drugs was to “start low and go slow.” The dosing regimens for Invega Sustenna® and claimed in U.S. Patent No. 9,439,906 are contrary to this conventional approach in that injections of high, rather than low, loading doses are used to begin treatment. 

When Janssen sued Teva for allegedly infringing claims of the ʼ906 patent, Teva tried to convince Judge Cecchi in a bench trial that the claims of the ʼ906 patent are invalid as obvious based on a clinical study protocol describing an interventional Phase III clinical trial, which hypothesized that three fixed doses of paliperidone palmitate would be more efficacious than a placebo in treating subjects with schizophrenia, U.S. Patent No. 6,555,544, which describes the composition used in the claim of the ’906 patent, and International Publication No. WO 2006/114384, which describes preparation of aseptic crystalline paliperidone palmitate. 

On appeal, the Federal Circuit first took issue with the lower court’s finding that Teva failed to show that it would be obvious to use the claimed dosing regimen for the general population of patients because the clinical study protocol did not show that the drug had generalized safety and efficacy. In this regard, the panel explained that, since the ʼ906 patent describes a dosing regimen for “a psychiatric patient” being treated for schizophrenia, and “nothing in the claims requires that the [dosing] regimen be used for — let alone be ideal for — the patient population generally,” an analysis based on a general population of patients was improperly framed. The lower court was told that it instead should have focused its reasonable expectation of success analysis on a single schizophrenia patent.

In addition, the Federal Circuit found fault with the lower court’s failure to give adequate weight to the perspective and creativity of a person of ordinary skill in the art when deciding whether the dosing regimen claimed in the ʼ906 patent would have been obvious based on the prior art combination. In this regard, the panel explained that the lower court erred by focusing on the clinical study protocol’s lack of results rather than considering what the protocol would fairly suggest to a person of ordinary skill in the art. In fact, the panel concluded that a person of ordinary skill in the art would still have ascribed “significance … to the Phase III status of the protocol” and the knowledge that paliperidone palmitate was already marketed for schizophrenia.  In this regard, the appellate panel deemed the lower court to have taken a “seemingly siloed and inflexible approach.” 

Moreover, the panel explained that, while identifying a recognized problem or need in the prior art is one way to demonstrate motivation, there was no requirement for Teva to show that the clinical study protocol was flawed for a person of ordinary skill in the art to be motivated to modify it. Rather, the opinion reminds us that:

[a] motivation ‘may be found explicitly or implicitly in market forces; design incentives; the interrelated teachings of multiple patents; any need or problem known in the field of endeavor at the time of invention and addressed by the patent; and the background knowledge, creativity, and common sense of the person of ordinary skill.’

Suffice it to say, the Federal Circuit found that the lower court’s obviousness analysis “ran afoul of KSR’s basic mandate in a number of ways.” In any event, Teva now has the renewed opportunity to prove that the ʼ906 patent is invalid. With almost $3 billion in sales in 2023 and the ʼ906 patent being the last remaining Orange Book patent for Invega Sustenna, Janssen has a lot at stake. 

Applause to the Bench

In mid-April in Salix Pharmaceuticals, LTD. et al v. Norwich Pharmaceuticals, Inc.(22-2153), a divided panel of the Federal Circuit affirmed a District of Delaware ruling invalidating certain claims of Salix’s U.S. Patent Nos. 8,309,569 (claim 2), 10,765,667 (claim 3), 7,612,199 (claim 4), and 7,902,206 (claim 36) invalid as obvious. This family of patents protected the composition and use of Xifaxan®, which is used to treat IBS-D.  

After a bench trial, Judge Richard G. Andrews held that the claims were invalid as obvious based on a clinical study protocol published on the clinicaltrials.gov website describing a Phase II study and a journal article. The protocol does not include any efficacy or safety data or the claimed dose of 1,650 mg/day or thrice-daily dosing (550 mg/dose), but does provide an outline of a planned Phase II clinical trial evaluating twice-daily doses (1,100 mg/day and 2,200 mg/day) for the treatment of IBS-D. The journal article teaches a 400mg dose administered three times a day for the treatment of IBS, but also mentioned that optimal dosing may be higher.  Based on these separate teachings, the lower court found that the protocol and journal article disclose each and every limitation of the claims-at-issue, and then concluded that a person of ordinary skill in the art would have been motivated to combine the protocol and journal article to arrive at the claims with a reasonable expectation of success.

On appeal, Salix argued that, even if the protocol and journal article in combination discloses the claimed dosage, there was insufficient evidence to support a finding of a reasonable expectation of success in using that particular dosage amount. In this vein, amici argued in support of Salix that disclosure of clinical trials are not sufficient to inform a skilled artisan about the reasonable likelihood of success in the future and that there is a very low success rate of clinical trials. However, the majority found no error in the district court’s holding that a person of ordinary skill in the art would have considered the combination of the two references (not just the protocol) and possessed a reasonable expectation of success in using the 550mg/dose from the protocol (after noting from the journal article that the optimal dosage for IBS may be higher than 400mg TID) since “certainty and absolute predictability are not required to establish a reasonable expectation of success.” 

What Says the High Court on Clinical Study Protocols?

If the recent denial of cert in Vanda Pharmaceuticals Inc., Petitioner v. Teva Pharmaceuticals USA, Inc. is any indication, it does not seem like the justices are particularly interested in reviewing the Federal Circuit’s obviousness test (at least when clinical study protocols are in the mix). Vanda had argued that the “reasonable expectation of success” test when combining prior art in the obviousness review used by the Federal Circuit was wrong and counter to Supreme Court precedent from 2007 requiring “predictable results.”

The Vanda appeal stemmed from a 2022 bench trial in the District of Delaware where U.S. District Judge Colm Connolly found Vanda’s patents covering Hetlioz®, which is used to treat certain sleep disorders, invalid as obvious. Briefly, two different combinations of prior art, both of which include references discussing Phase II or Phase II clinical trials, were determined to render the claims obvious. The Federal Circuit affirmed the lower court’s finding of obviousness and noted that the use of ongoing clinical trials as one piece of evidence, combined with other prior art references, to support a finding of reasonable expectation of success is not error.

Vanda argued to the high court that the Federal Circuit’s test would make “the mere existence of a clinical trial” part of a reasonable expectation of success in the obviousness analysis, which would make “experimentation unpatentable, no matter how innovative or unpredictable the results.” Vanda’s petition was denied cert without further explanation. 

So, What’s the Takeaway?

We know that generally, when the obviousness test involves combining references, a person of ordinary skill in the art (1) must have been motivated to make such a combination, and (2) have had a reasonable expectation of success in arriving at the claimed invention. In the context of clinical study protocols, we also know that the lack of safety and efficacy data does justify discounting a protocol in either (1) or (2). Rather, with respect to reasonable expectation of success, the Salix majority did caution that:

[a]lthough we have rejected the idea that ‘efficacy data [are] always required for a reasonable expectation of success,’ OSI Pharms., LLC v. Apotex Inc., 939 F.3d 1375, 1385 (Fed. Cir. 2019), we are hesitant to conclude as a general matter that the disclosure of a Phase II clinical trial plan, standing alone, provides an expectation of success sufficient to render obvious a dosage that was not included within the planned clinical trial.

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In a case that pitted two sellers of construction equipment against each other — I Dig Texas, LLC v. Creager — the U.S. Court of Appeals for the Tenth Circuit was tasked with excavating the truth behind claims of false advertising and copyright infringement. The court had to dig deep to determine whether there was a solid foundation for the allegations that I Dig Texas had built its profits on the back of Creager’s copyrighted photographs and whether I Dig Texas’s “Made in the USA” claims were as sturdy as the skid steer attachments they sold.

I Dig Texas used copyrighted photographs of Creager’s products — which were made in China — in its advertisements. These advertisements stated I Dig Texas’s products were made in the United States and encouraged consumers to purchase its skid steer attachments rather than Creager’s foreign-made attachments.

I Dig Texas filed a lawsuit against Creager Services in state court, asserting several state-law claims. In response, Creager filed counterclaims, including federal claims for copyright infringement under the Copyright Act and false advertising and false designation of origin under the Lanham Act, as well as state-law claims. The case was removed to federal court.

Creager argued that I Dig Texas infringed on its copyrights by using photographs of Creager’s products and sought only actual damages. To recover profits from the alleged infringement, Creager needed to prove a connection between I Dig Texas’s use of the copyrighted images and any profits earned. The court found that Creager failed to provide evidence linking I Dig Texas’s use of the photographs to any increase in profits. Consequently, the court affirmed summary judgment in favor of I Dig Texas on the copyright infringement claim.

Regarding the Lanham Act claims, Creager contended that I Dig Texas’s advertisements misrepresented the origin of its products by stating they were made in the United States. However, the court determined that the advertisements were ambiguous because they could refer to either the origin of the components or the assembly location of the final product. Since some of I Dig Texas’s products were assembled in the United States, even if they contained foreign components, the court found that the advertisements were not literally false. Likewise, the court ruled that the use of patriotic symbols in the advertisements was ambiguous and could not render them literally false.

The Key Takeaways

  • To prove copyright infringement and recover the infringer’s profits in the Tenth Circuit, a plaintiff must establish a clear connection between the defendant’s use of the copyrighted material and any profits earned.
  • Under the Lanham Act, advertisements claiming a product is “made in the USA” or “American-made” — or using patriotic symbols — cannot be considered literally false if they are determined to be ambiguous. If a product is assembled in the United States but contains foreign components, the Tenth Circuit considers the claim ambiguous because it could refer to either the origin of the components or the assembly location.

This decision highlights a somewhat counterintuitive result in the application of the Lanham Act to false advertising claims. While businesses are generally advised to craft clear and unambiguous advertising language to avoid potential legal issues, in this case, the ambiguity in I Dig Texas’s advertisements actually worked in its favor. By using language that could be interpreted in multiple ways, I Dig Texas avoided a finding of literal falsity under the Lanham Act.

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Last week in Luv n’ Care, Ltd. v. Laurain, the Federal Circuit put the lower court in time out and probably made Eazy-PZ, LLC (EZPZ) cry just a little bit harder. In this precedential decision involving U.S. Patent No. 9.462,903, the appellate panel vacated a Western District of Louisiana judgment of no inequitable conduct and affirmed the lower court’s judgment of unclean hands. However, the panel also vacated the lower court’s grant of partial summary judgment of invalidity. The parties will now have to get back to the table (or bench) to find out whether the ʼ903 patent is unenforceable and/or valid, and whether EZPZ’s behavior will result in further punishment.

The Invention

903-Patent-Self-Sealing-Integrated-Tableware-and-Dining-Mat

The ʼ903 patent describes and claims a surface contact self-sealing integrated tableware and dining mat. As shown in FIG. 5 of the ʼ903 patent, the self-sealing integrated tableware and dining mat includes a rubber-like planar portion 20 surrounded by an outer edge 22. A receptable 32 lies on the upper surface 26 and has a raised perimeter 28 defining at least one concavity 30 (e.g., in FIG. 5, the receptable 32 includes an oval portion 32B and a pair of bowls 34). The mat has an undersurface 24 disposed for sealable contact with an underlying surface to prevent lateral displacement of the mat. In other words, a toddler can’t move or flip the mat over without peeling the undersurface 24 from the underlying surface starting first at the outer edge 22.

The Back Story

Almost eight years ago, Luv n’ care, Ltd. and Nouri E. Hakim (LNC) sued Lindsey Laurain and EZPZ in the District Court of the Western District of Louisiana under the Lanham Act (and Louisiana’s Unfair Trade Practices and Consumer Protection Law) based on what LNC alleged to be “acts of unfair competition” by EZPZ. LNC also sought declaratory judgment that U.S. Design Patent No. D745,327 is invalid, unenforceable, and not infringed. A few months later, when the ʼ903 patent was issued and assigned to EZPZ, LNC added the newly issued patent to its declaratory judgment claim. EZPZ counterclaimed against LNC for infringement of the ʼ327 and ʼ903 patents and also alleged copyright, trademark, and trade dress infringement, violation of LUTPA, and unjust enrichment. 

LNC moved for partial summary judgment of invalidity of the ʼ903 patent, which the district court granted. In a bench trial, which involved only LNC’s allegations of inequitable conduct of the ʼ903 patent and unclean hands by EZPZ, the court found that LNC did not meet its burden with respect to unenforceability of the ʼ903 patent, but that EZPZ was barred from obtaining relief on any counterclaims remaining in the suit due to unclean hands based on litigation misconduct. Ouch. 

The Appeal

The issues on appeal were numerous:

  1. Whether the district court erred in finding that the doctrine of unclean hands bars EZPZ from obtaining relief on its claims;
  2. Whether LNC failed to prove the ’903 patent is unenforceable due to inequitable conduct;
  3. Whether the claims of the ’903 patent are invalid as obvious; and
  4. Whether the district court erred in denying LNC attorney fees and costs.

To dispose of the most straightforward issue first (with respect to this specific appeal only), the lower court’s obviousness finding was vacated and remanded because, according to the appellate panel, genuine disputes of material fact are evident from the record. In other words, obviousness was not ripe for summary judgment.

Turning back to the first issue, the appellate panel found no error in the district court’s holding and affirmed. More specifically, the panel rejected EZPZ’s argument that that EZPZ’s litigation misconduct did not rise to the level of “unconscionable acts” or have the requisite nexus to the ’903 patent infringement claims. In this vein, EZPZ’s misconduct, which included, for example, (a) lack of disclosure of patent applications related to the ’903 patent (at least one of which involved claim construction relevant to a disputed claim term in the ʼ903 patent) until well after the close of fact discovery and dispositive motion practice, (b) attempts to block LNC’s efforts to discover the inventor’s prior art searches, and (c) repeated evasive testimony, was deemed by the panel to be directly relevant to the development of LNC’s litigation strategy.

On the second issue, LNC gets a second bite at the apple now that the appellate panel vacated the district court’s holding that LNC failed to meet its burden with respect to inequitable conduct and remanded for further proceedings. To set the stage for the reprimand from the panel, the opinion first reminded the lower court that 1) to prove inequitable conduct, a party must show by clear and convincing evidence that the patentee a) withheld material information from the PTO, and b) did so with the specific intent to deceive the PTO, and that a) and b) are separate requirements. The lower court was then instructed to determine whether the acts by the patentee during prosecution amounted to affirmative egregious misconduct and were, therefore, per se material (without need to prove its impact on the PTO’s patentability determination). If the lower court determines that the acts by the patentee do not amount to affirmative egregious misconduct, then it must evaluate whether the PTO’s patentability decision may have differed if the patentee had accurately described the prior art and disclosed the video showing certain features of the prior art. In addition, since the panel vacated the lower court’s finding that other prior art was cumulative and, thus, non-material, the lower court has to revisit that issue. Moreover, the lower court must reevaluate EZPZ’s deceptive intent based on misconduct in the aggregate. In this aspect, the panel explained that,

[w]hen a person having a duty of candor and good faith has engaged in serial misconduct during the prosecution of the same or related patents, it is not enough for a court to consider each individual act of misconduct without also considering the collective whole.

Here, the district court did not apply this legal standard and, thereby, abused its discretion. The district court considered each of Ms. Laurain’s and Mr. Williams’ individual acts of misconduct in isolation and failed to address the collective weight of the evidence regarding each person’s misconduct as a whole.

The lower court was also scolded for its finding that EZPZ’s misrepresentations during prosecution amounted only to gross negligence. Rather, as the panel chastised, “[s]uch purposeful omission or misrepresentation of key teachings of prior art references may, instead, be indicative of a specific intent to deceive the PTO.”  

With respect to the final issue on appeal, the panel agreed with LNC that the court erred by not naming LNC as the prevailing party. This is highly relevant because, if a court deems a case exceptional, it may award attorneys’ fees to the prevailing party. As to LNC’s prevailing party status, the panel explained that LNC brought the case against EZPZ seeking a declaratory judgment of non-infringement, invalidity, and unenforceability of the ’903 patent. Since EZPZ came to the table without washing its hands, it became unable to enforce its’903 patent against LNC. As such, even though some of LNC’s claims were not successful (including its LUTPA claims) or dismissed without prejudice, and the unenforceability of the ʼ903 may change on remand, the inability for EZPZ to obtain relief from LNC for any alleged infringement of the ʼ903 patent, the ’327 design patent, and trade dress still puts LNC in the winning spot for the purposes of the prevailing party portion of the attorneys’ fees analysis. Since this prong is met, the attorneys’ fee award now hinges on whether the lower court on remand finds the case to be exceptional (at its conclusion and based on the totality of the circumstances).

Key Takeaways

The lower court has a lot of clean up to do on remand. On the other hand, EZPZ can do nothing to erase its acts and omissions during prosecution of the ʼ903 patent or during the litigation itself.  Indeed, with respect to the inequitable conduct allegation, the panel seems to be strongly suggesting to the lower court that the bevy of acts and/or omissions during prosecution do constitute inequitable conduct. 

And, with respect to attempting to predict the lower court’s ultimate finding on exceptionality, we can consult a few previous decisions from the Federal Circuit where exceptionality was found to be lacking. In this vein, an earlier post on OneSubsea, IP v. FMC Technologies, Inc., No. 22-1099 (Fed. Cir. May 23, 2023) teaches us that zealous advocacy alone is insufficient to make a case exceptional. In other words, an aggressive litigation strategy does not equate to the type of litigation misconduct typically required for a finding of exceptionality under 35 U.S.C. § 285.  Litigation misconduct rising to the level of a finding of unclean hands as we have here feels quite different than an aggressive litigation strategy. In addition, unlike in United Cannabis, Corp. v. Pure Hemp Collective Inc., No. 22-1363 (Fed. Cir. May 8, 2023), where Pure Hemp argued exceptionality based on an inequitable conduct allegation that was eventually voluntarily dismissed by Pure Hemp, LNC’s arguments do not seem to be “extremely weak” or “unsupported” such that they will not be found to satisfy 35 U.S.C. § 285. Indeed, from these two cases (and providing that the lower court on remand finds inequitable conduct), it seems that EZPZ’s bad behavior may result in LNC getting its legal bills paid.

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Earlier this week, the Federal Circuit granted Meril Life Sciences safe passage out of the infringement storm — otherwise known as Edwards Lifesciences — continuing to chase it (at least for now). More specifically, a divided panel of the Federal Circuit issued an opinion affirming the Northern District of California’s grant of summary judgment to Meril Life Sciences based on the finding that the importation of two heart valve systems fell within the safe harbor provision of 35 U.S.C. § 271(e).   

The Back Story

The dispute between Indian-based Meril Life Sciences and Edwards Lifesciences Corporation and Edwards Lifesciences, LLC (collectively Edwards) started almost five years ago in late fall 2019. The case involved patents owned by Edwards relating to artificial heart valves using in treating patients with aortic stenosis. While we focus here on only the patent infringement aspect of the parties’ dispute, Edwards also accused its competitor Meril Life Sciences of falsely advertising the safety and efficacy of the Myval transcatheter heart valve and misrepresenting clinical trial results.

Meril imported heart valves into the United States on two separate occasions. The first importation occurred in January 2017 to allow the University of Washington to conduct pre-clinical investigations using the heart valve. The second importation occurred in September 2019 when a Meril employee brought two heart valves with him on a flight to the U.S. for an industry conference held in San Francisco. The two samples were kept in a bag with the following declaration:

This is to inform you that the demo samples carried by Mr. Nilay Lad is for the demonstration purpose only. It is consist [sic] of Demo samples of Medical devices. They have no commercial value & hence it is not used for any sales purpose. The demo samples are NON-STERILE. NOT FOR HUMAN USE. NOT FOR SALE. NOT APPROVED FOR SALE IN UNITED STATES. FOR DEMO PURPOSE ONLY AT TCT 2019, SAN FRANCISCO.

The heart valves never left the bag once arriving in San Francisco and left the U.S. shortly thereafter to visit Europe with a second Meril employee. 

When Edwards brought suit about a month after the second importation, Meril took the position that the importations were covered by the safe harbor provision of 35 U.S.C. § 271(e)(1), which provides:

It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention . . . solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.

More specifically, Meril argued that it never displayed the heart valve at the San Francisco conference, and that both importations were reasonably related to the development of eventual Food and Drug Administration submissions.

The district court granted summary judgment of non-infringement in favor of Meril finding that Meril’s importations fell within the safe harbor provision § 271(e)(1) and thus were not infringing acts. In doing so, the district court rejected Edwards’ arguments that Meril’s activities were for a commercial purpose. It instead determined that Meril’s activities (including preclinical studies) were all reasonably related to developing information for eventual submission to the U.S. Food and Drug Administration (FDA) and, as such, fell within the safe harbor regardless of the alleged purpose of those activities.

The Appeal

Edwards appealed, but only with respect to the second importation. The question before the panel was:

whether 35 U.S.C. § 271(e)(1)’s safe harbor applies when undisputed evidence shows Meril’s importation of two demonstration samples of its transcatheter heart valves to a medical conference was reasonably related to recruiting investigators for a clinical trial to support FDA approval.

The Federal Circuit panel held that safe harbor does apply. The majority explained that if Meril had displayed the valve at the conference, such demonstration would have been covered by the safe harbor. Likewise, even though Meril ultimately did not display the valve at the conference, any importation of the valve for such demonstration would fall within the safe harbor. In addition, since at the time of the conference Meril had taken noteworthy steps towards obtaining FDA approval, Meril’s importation of the valve to the conference was reasonably related to the submission of information to the FDA (including educating investigators at the conference about the valve). 

The Key Takeaways

Section 271(e)(1) is intended to allow competitors, before the expiration of a patent, to engage in what might otherwise be considered an infringing activity if the use is reasonably related to obtaining regulatory approval. In this aspect, determining whether alleged infringing acts fall under 35 U.S.C. § 271(e)(1)’s safe harbor focuses on acts or uses and not on purposes, intent, or motive. In fact, safe harbor shields conduct regardless of the phase of research, and even if the information is never ultimately submitted to the FDA as part of an approval application. Moreover, intent is irrelevant in determining whether an alleged infringing act is protected by the safe harbor. In other words, the why or how is not important. Rather, the relevant inquiry under 35 U.S.C. § 271(e)(1)’s safe harbor is whether the act or use was reasonably related to submitting information to the FDA. In short, if an otherwise infringing act is reasonably related to FDA approval, the safe harbor applies (regardless of the purpose behind the use). 

Meril may have won this round, but Edwards’ pulse is still strong. Indeed, the dispute between Edwards Lifesciences and Meril Life Sciences spans numerous jurisdictions and numerous patents. Moreover, in his dissent, U.S. Circuit Judge Alan D. Lourie agreed that the majority followed Federal Circuit precedent in reaching its decision but opined that the full circuit court should overturn that precedent.

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A new federal bill aims to put golf courses on “par” with other architectural designs by expanding federal copyright protection to golf courses. Copyright law in the United States, rooted in the U.S. Constitution, ensures protection for “original works of authorship fixed in any tangible medium of expression” (17 U.S.C. § 102(a)). This broad definition covers everything from literature to music to photographs, and — since a 1990 amendment to the Copyright Act — the design of buildings. This inclusion marked an acknowledgment of the creative and intellectual effort involved in architectural design, extending copyright’s reach to protect the fruits of architects’ labors.

Building on this tradition of evolving copyright protection to reflect the changing landscape of creative works, a new bill introduced in the 118th Congress seeks to further expand the ambit of copyright law. Known as the Bolstering Intellectual Rights against Digital Infringement Enhancement Act, or the “BIRDIE Act” (H.R. 7228), this proposed legislation aims to bring golf course designs under the umbrella of architectural works, with a focus on the ease of digital recreations. One rationale behind the bill is to offer protections for golf course designs, particularly in response to the expanding industry of golf simulators.

Introduced by U.S. Reps. Brian Fitzpatrick (R-PA) and Jimmy Panetta (D-CA), the bipartisan bill seeks to align the intellectual property rights of golf course architects with those afforded to other creative professions. Golf courses, with their intricate designs that blend functionality with aesthetic appeal, embody a form of artistic expression and architectural ingenuity. However, these designs are not expressly covered under the Copyright Act. The BIRDIE Act seeks to rectify this oversight by explicitly including golf course designs within the definition of “architectural works.”

Specifically, the bill proposes to amend Section 101 of Title 17 of the U.S. Code to cover not only the overall layout and design of a golf course but also its components, such as landscaping, irrigation systems, paths, greens, tees, practice facilities, bunkers, lakes, and topographic features. The BIRDIE Act’s provisions would be applicable to works created on or after December 1, 1990, as well as to unconstructed works embodied in unpublished plans or drawings as of that date. While some of the most renowned golf courses in the United States, like Augusta National and Pebble Beach, were established well before 1990, numerous courses have undergone updates or redesigns that could now qualify for copyright protection under the BIRDIE Act if enacted. Thus, a wide array of existing and future golf course designs would benefit from copyright protection, safeguarding the interests of creators against unauthorized use or replication.

Although the bill is limited to golf course designs, extending copyright protection in this manner may have broader implications. In 2011, the Seventh Circuit held in Kelley v. Chicago Park District that a “living garden,” even if arranged in an aesthetically pleasing manner, was not entitled to copyright protection. Like a garden, golf course design is not limited to inanimate objects or things, but instead involves both the changing landscape and the living flora that make courses memorable. If the BIRDIE Act became law, would that change the decision in Kelley, meaning a gardener could receive copyright for his garden? But that’s not all — Kelley has been relied upon by the Copyright Board more recently in decisions restricting copyright protection for works with “nonhuman authorship,” including works prepared by generative artificial intelligence. If passage of the BIRDIE Act undercuts Kelley, does it also undercut these recent decisions about AI authorship?

We leave those questions for the reader to ponder. For now, should this bill become law, it would open new avenues for protecting and leveraging intellectual property in golf course design, offering enhanced control over the use of these designs, and potentially unlocking new revenue streams through licensing. It also raises broader doctrinal questions about just who or what qualifies as the “author” of a work. Maybe one day soon, golf balls will no longer just be lodged in an ordinary bunker; instead, golfers may declare that the ball is ensnared in an original work of authorship, fixed in a tangible medium of expression. While this may not alleviate the frustrations of hitting an approach shot from a sand trap, it would empower golf course designers and architects to prevent unauthorized and unfettered recreations of their designs.

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The Federal Circuit just “re-issued” its precedential decision in Great Concepts, LLC v. Chutter, Inc. (No. 2022-1212), where it had previously reversed the USPTO’s cancellation of a registered trademark. There was no substantive change in this modified version of the prior opinion where the majority held that the Trademark Trial and Appeal Board lacked the power to cancel a trademark registration based on fraud in a declaration of incontestability. However, the reappearance of this decision, the operative facts, and potential action taken by the TTAB on remand invites a bit more discussion.

A Somewhat Quick Recap of the Backstory and Appeal

A more detailed version of the back story and discussion of the appeal can be found in our last post. In short, Great Concepts beat Dan Tana (by a few years) to the trademark office to register its DANTANNA’S mark (Registration No. 2929764) for restaurant services. As a result, the USPTO refused registration of DAN TANA for restaurant services and Dan Tana filed a cancellation petition of DANTANNA’S based on its common law DAN TANA mark, which for the reasons explained in our previous post, was dismissed with prejudice.

About five years later, Dan Tana’s successor, Chutter, Inc., picked the fight back up and filed a new petition to cancel the DANTANNA’S registration, alleging that Great Concepts’ 2010 Section 15 declaration constituted fraud warranting cancellation of its registration under Section 14 of the Lanham Act. Briefly, the fraud angle related to the portion of the Section 15 affidavit explicitly stating that no proceedings involving the DANTANNA’S mark were pending, which was inaccurate based on Civil Action No. 1:08-CV-975-TWT. When the TTAB agreed with Chutter and issued a cancellation order, Great Concepts appealed to the Federal Circuit.

The Federal Circuit reversed and remanded to the TTAB because the alleged fraudulent statement was not made while obtaining the registration, but rather when attempting to establish incontestability, and the TTAB lacked the power to cancel the registration. In this vein, the majority did not reach the issue of whether Great Concepts’ former attorney acted fraudulently.

A Little More on the Next Phase at the TTAB

The TTAB just received the Federal Circuit’s judgment, so there is nothing final to report yet. However, it is clear that, while the registration cannot be cancelled by the TTAB (at least for fraud), the TTAB now must determine the impact of the fraudulent Section 15 declaration on the incontestability status of Great Concepts’ mark. Reading the tea leaves (and going off of the majority’s “encouraging” comments set forth below), it is likely that Great Concepts will no longer enjoy incontestable status:

we further agree that some significant sanction is ‘necessary to deter the further development of such a cavalier attitude toward statements in affidavits under section 15.’

. . .

We do not, however, think our opinion means that committing fraud in connection with obtaining incontestability becomes a costless offense.

. . .

Loss of incontestable status is not nothing…

As a reminder, when a trademark has incontestable status, the registration itself is conclusive evidence of the validity of the mark, the ownership of the mark, and the owner’s exclusive right to use the registered mark in commerce. Put another way, incontestable status means something.  In fact, if a third party is sued for trademark infringement of an incontestable mark, it is limited in its defenses since it cannot challenge the mark on the grounds that it is merely descriptive or that the infringing brand is more recognizable. 

In addition, the TTAB has a fresh opportunity to consider whether other sanctions should be imposed on Great Concepts (or its former attorney). In this aspect, the majority appears to be advocating for some further action by the TTAB on remand:

More importantly, nothing in this opinion should be read to mean that the Board is powerless to address fraud, including fraud committed solely in conjunction with the filing of a Section 15 declaration… [including that] the Board may sanction any attorney who commits fraud before it.

While not directly on point, the PTO’s Office of Enrollment and Discipline has, in the past, brought the hammer down on attorneys for not adequately understanding the USPTO trademark signature requirements and failing to take reasonable steps to ensure filings were signed in accordance with USPTO trademark signature rules. In one such case, this type of violation of USPTO Rules of Professional Conduct, resulted in the following sanction:

  • Public reprimand;
  • Probationary period of 12 months; and
  • Potential 12-month suspension if any provision of the Agreement, Final Order, or the USPTO Rules of Professional Conduct is violated during the probationary period.

Under the facts of this case, Great Concepts’ former attorney could receive disciplinary action at least on par with — if not worse than – that sanction, considering the lingering bad taste that the TTAB might have right now. We’ll keep you posted on the TTAB’s next steps.

In the meantime, it is worthwhile to reiterate that affidavits should be undertaken only after appropriate investigation and due diligence and with a clear appreciation that the statements made have serious consequences both from a potential loss of rights for the mark holder and sanctions and penalties for the declarant. Indeed, since the majority’s decision did not disturb the TTAB’s holding that “reckless disregard satisfies the requisite intent for fraud on the USPTO in trademark matters,” we may see more fraud claims in the future based on reckless disregard for the truth of the statements being made. 

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Is Travis Kelce’s newfound status as Taylor Swift’s boyfriend enough to meet the United States Patent and Trademark Office’s (USPTO) “acquired distinctiveness” standard? He plans to find out with the help of Time Person of the Year, Taylor Swift. Swift is no stranger to using intellectual property to effectively protect her brand and music. In fact, the Eras Tour and “Taylor’s Version” are a seemingly successful attempt at reclaiming the rights to her music. Not only does she own the copyrights to her music, but she has also filed multiple trademark applications for phrases such as 1989 TAYLOR’S VERSION and LOVER, among others.

Rumor has it that Swift advised Travis Kelce to file trademark applications to protect his name in addition to other phrases. True or not, Kelce has filed five trademark applications for: (1) TRAVIS KELCE, his own name; (2) “FLIGHT 87”, in reference to his football jersey number; (3) “ALRIGHT NAH”, his signature catch phrase; (4) “KILLA TRAV” his Instagram name; and (5) “KELCE’S KRUNCH,” which could be used to build on a cereal collaboration Kelce had with Hy-vee. These applications span various classes to include items such as “printed posters,” “hoodies,” “bobblehead dolls,” and “entertainment services,” among other things. The USPTO has not yet rendered its response to any of Kelce’s applications.

Kelce will likely face several issues in prosecuting these applications. First, a person can register their whole name, nickname, or insignia that clearly references a real person’s identity where the person referred to expressly consents to the registration. The name or likeness of a living person cannot be used as a trademark without express consent because the right of publicity prevents commercial exploitation of a person’s identity.  It can be expected the USPTO will require Kelce to submit a consent statement for at least TRAVIS KELCE and KILLA TRAV.

Second, where a mark is “primarily merely a surname,” the USPTO will reject the application unless the applicant can show acquired distinctiveness. In registering KELCE’S KRUNCH, the USPTO will likely require Kelce to demonstrate that “Kelce” has become distinct enough to signify the source of the goods or services. Adding “Krunch” may enable Kelce to overcome a rejection that his applied for mark is “primarily merely a surname” if he can show that the mark is not perceived by the public as “primarily merely a surname.” Certainly, a celebrity can become a distinctive and recognizable brand through attention and fame, however, Kelce may face an additional hurdle since his brother, Jason Kelce, is also a well-known football player in the NFL.  While Kelce was famous on his own accord before his Swiftie Era, his relationship status with Swift has elevated the distinctiveness of his brand. In fact, almost every television broadcast of Kansas City Chiefs games features shots of Swift enthusiastically cheering on Kelce. Notably, Kelce would not be the first professional athlete to attempt to trademark their name. Tom Brady has filed multiple trademark applications for his own name, TOM BRADY, for various goods and services, one of which was recently granted by the USPTO.

However, not only will Kelce have to demonstrate distinctiveness of the marks, but he will have to show that the applied for mark refers to the source of a product or service, along with the fact that the goods or services applied for have been commercialized. Kelce has currently submitted Section 1(b) “intent to use” applications. Ultimately, assuming the USPTO agrees that the applied for marks are distinctive and adequately refer to the source of the goods or services, he will need to show that the applied for mark has been used in commerce before the USPTO will allow the mark to register. An intent to use application allows him time to begin the trademark review process while he works towards putting the marks to use in commerce.

While most of us won’t have the chance to skyrocket to fame as Taylor Swift’s current plus one, it is important to consider the distinctiveness of a proposed mark and the appropriate goods or services for registration in evaluating potential branding for a business. It can be helpful and have the potential to be a huge cost savings to evaluate potential trademarks before committing dollars to branding your business. We will have to wait and see if Kelce’s applications pass USPTO muster.

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With the U.S. Supreme Court beginning a new session, many are wondering what new issues the Court will address this term. One case the Court is scheduled to hear involves the relationship between the Lanham Act and First Amendment. Specifically, the Court will determine whether Section 1052(c) of the Lanham Act, which prohibits individuals from registering for a trademark that includes the name of a living person without their consent, violates the free speech clause of the First Amendment.

A Little Background

In 2018, California attorney Steve Elster applied for a trademark for the slogan “TRUMP TOO SMALL.” The U.S. Patent and Trademark Office (PTO) rejected Elster’s application, citing Section 1052(c) of the Lanham Act. In response, Elster argued that refusing his trademark application violated his free speech right to criticize public officials. The PTO was not persuaded by Elster’s First Amendment claim, deeming it irrelevant whether the trademark was intended to be an exercise of free speech rights or political commentary, because there is “no statutory or case law carve out for political commentary.” Elster appealed to the PTO’s Trademark Trial and Appeal Board (TTAB), again arguing that the Lanham Act’s prohibition was an unconstitutional restriction on free speech. The board denied Elster’s appeal.

The Appeal

Elster then appealed the board’s decision to the U.S. Court of Appeals for the Federal Circuit. In February 2022, a three-judge panel reversed the TTAB’s decision and found that applying Section 1052(c) of the Lanham Act to prohibit Elster’s trademark application was unconstitutional content-based discrimination. Because trademarks are considered a form of private speech, the Federal Circuit’s decision focused on “whether the government has an interest in limiting speech… if that speech involves criticism of government officials.” According to the panel, Section 1052(c) must be subject to some form of heightened constitutional scrutiny. In this regard, the panel found that statute would fail to satisfy both strict and intermediate scrutiny “because the government does not have a privacy or publicity interest in restricting speech critical of government officials or public figures in the trademark context…” Therefore, while the Court held that the application of Section 1052(c) to Elster’s trademark was unconstitutional, the Court did not decide whether the statute itself was unconstitutional. However, the Court did suggest as much. Specifically, the panel commented that the statute “raises concerns regarding overbreadth… [and] a substantial number of [it’s] applications would be unconstitutional.”

The PTO appealed the Federal Circuit’s decision, and on June 5, 2023, the Supreme Court granted the government’s petition for a writ of certiorari. The Court is scheduled to hear oral arguments November 1, though how the Court will rule remains to be seen. This case highlights the juxtaposition of protecting free speech while ensuring that individuals retain their privacy and publicity rights. Whatever the Court decides, the decision will have consequences for both First Amendment and intellectual property law. Follow Bradley’s IP IQ blog for updates after oral arguments in November.