An Ounce Of Prevention….

Clients often inquire about whether they need to purchase every variation (e.g., misspellings) of their domain names used for their websites in order to prevent others from infringing their trademarks. The short answer is no.   Indeed, there is no requirement to purchase any domain names at all.  Generally speaking, in the U.S., trademark rights are acquired through use.  As long as you have superior trademark rights, you can approach owners of confusingly similar domain names about trademark infringement.  However, this is not the most cost effective approach. It will surely cost a company much more to hire outside counsel to pursue any infringers than paying the annual fees for the most obvious variations of the domain name used for its primary website. Read a discussion on the issue. While it may not be feasible for a company to register a multitude of variations for all of the domain names that it owns, it should consider adopting this approach with regard to the primary domain names (e.g., the domain name used for its primary website) used in connection with its business.  An ounce of prevention in this regard goes a long way toward minimizing future business distractions and keeping a company’s legal bills down.

Update: Software Developers Sued In Texas

As previously discussed, Apple developers allegedly received cease and desist letters from Lodsys based on the use of in-app applications.  Now, Lodsys appears to have taken it to the next level by allegedly suing several developers for patent infringement in the ever popular Eastern District of Texas.  Read what appears to be a copy of the Complaint. It will be interesting to see Apple’s reaction and/or next steps.

Inequitable Conduct Standard Clarified

Yesterday, the Federal Circuit clarified the standard for proving inequitable conduct in patent infringement cases in its Therasense, Inc. decision. Similar to how it addressed the burden of proof for fraud on the USPTO in the trademark context, the Court adopted a heightened standard for proving inequitable conduct. Here are several points to consider:
  • it was a split decision so the Supreme Court may ultimately decide the issue;
  • the Court noted that inequitable conduct allegations are a “common litigation tactic” and as such, adopted a more stringent approach in an apparent attempt to discourage this practice;
  • the Court clarified the two requisite elements for proving inequitable conduct: materiality and intent;
  • with regard to materiality, the Court rejected the USPTO’s broader view of materiality under its Rules as well as the previously used sliding scale approach in favor of a “but for” test– the USPTO would not have allowed a claim of the patent-at-issue had it been aware of the undisclosed prior art;
  • the Court provided a carve out to the “but for” rule for “affirmative egregious misconduct” (which should be a ripe area for future litigation);
  • with regard to intent, it must be shown that “the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it[;]”
  • it is not enough to show that the applicant “should have known” about the materiality of the reference;
  • inferring intent will become difficult as “the evidence ‘must be sufficient to require a finding of deceitful intent in light of all the circumstances'” and when there are multiple reasonable inferences, intent cannot be found; and
  • absence of a good faith explanation for withholding a material reference will not, in and of itself, be sufficient to prove an intent to deceive.
Read the full decision.

Software Developers Beware

It has been interesting to follow Lodsys’ (a patent holding company) pursuit of Apple app developers for patent infringement.  It has been reported that Apple took a license to the patent-at-issue from Lodsys and now, Lodsys is sending cease and desist letters to various Apple app developers.   According to various sources, Apple allegedly required use of the allegedly infringing technology by the developers so certain groups are calling on Apple to indemnify the developers.  Read the Electronic Frontier Foundation’s take on the issue. What is the take away from this scenario? If you are developer and are required to incorporate some sort of technology into your software app, it would be smart to try to negotiate some sort of indemnity provisions to avoid the situation described above.  While this may be difficult as the developers are not often in a position of power to negotiate such terms, they need to be aware of what may transpire without such protections in place.

FTC Tip For The Day….

Besides telling the truth, what’s the one thing that a company can do to minimize its chances of getting an inquiry from the FTC?  Provide a no questions asked, 100% money back guarantee and honor it.  Here’s why.  Generally speaking, the FTC brings most of its cases with the goal of getting restitution for consumers. If there are no damages (i.e., everyone has been refunded), then it reduces the incentive for the FTC to bring a case.  Further, if everyone is happy, there won’t be any complaints to the FTC. Thus, unless you are making outrageous health claims to children, for example, it is less likely that you will wind up on the FTC’s radar screen.  Responding to a FTC investigation will surely cost more than the $39.95 refunded to a consumer. So to sum it up, always tell the truth and provide full refunds. You should have less worries.

But You Didn’t Know About It So You Shouldn’t Disclose It….

An issue that we have dealt with over the years is whether information disclosed in a published patent application can be claimed as a trade secret. The argument is that although the information is in the public domain, the receiving party would never have found it. The Fifth Circuit recently addressed this issue. Read a good discussion of the case.  It is not surprising that the Court concluded that information contained in a published patent application was not protectable as a trade secret under Texas law. However, there is a lesson here. Companies should make sure that their NDAs contain carve outs for any information that is ultimately disclosed to the public by the disclosing party. This way, it will make it harder for the disclosing party to claim that something that it disclosed to the world in its patent application is somehow a trade secret.  Further, they should conduct their own investigation by searching the USPTO’s website for any relevant, published patent applications/patents owned by the disclosing party and should get representations from the disclosing party that the information, which is being disclosed, has not already been publicly disseminated and is not the subject of a patent application.  

Your Competitors Are Making Outrageous Claims So Why Can’t You?

As I tell my kids, it doesn’t matter what everyone else on the playground is doing, if you get caught, there may be serious consequences for you. The FTC takes the same approach when reviewing substantiation for companies’ claims. It doesn’t matter what anyone else is advertising in the industry. The FTC will want to see what substantiation you have for your claims.  Here are six issues that I commonly saw with studies relied upon by companies:
  • The study is on animals and not humans. It is difficult to convince regulators that results shown for mice necessarily translate to humans. 
  • The study is on humans, but does not involve the audience that the advertising targets. For example, the claims in the advertising pertain to ordinary people gaining muscle and the study shows an increase of muscle mass for burn victims, who inherently recover faster and achieve quicker results than ordinary individuals due to their pre-existing condition.
  • The study is on the correct audience. However, the product-at-issue does not have anywhere close to the amount of the active ingredient in it as was used in the study.  Sometimes the differences can be orders of magnitude.
  • The study is not on your product, but just on an ingredient in your product. As many products also have other ingredients, it will not be uncommon for regulators to inquire about whether any beneficial results may be offset by any potentially negative effects of the other ingredients.
  • The advertising promises instant results and the study involved weeks of use before any results were achieved.  For example, the study is based on six weeks of use and the advertising promises “immediate” or “instant” results.
  • The study does not follow generally accepted scientific protocols. For example, no control group or placebo was used in the study, thereby making the results inherently suspect.
What is the upshot? As it’s often costly and time consuming to perform a study on your actual product, it is important that you understand the strength of any studies that you rely upon to support your advertising claims. Just because others may be citing the same studies shouldn’t be the end of the discussion for you as it will unlikely make a difference to any inquiring local, state or federal regulator.

Five Common IP Misconceptions

In my practice over the last decade, I have seen companies fall victim time and time again to the same IP pitfalls.  Here are a five things to keep in mind when trying to build and protect your brand or technology: 1)  Just because a domain name is available with a registrar does not mean that you can use it without consequence.  2) Owning a patent does not guarantee that you can practice the invention covered by the patent. 3) Just because you paid an independent artist to create your logo doesn’t mean you necessarily own it. 4) Sending a simple cease and desist letter is not without risk. 5) Patents may not always cover what they appear to state as they sometimes contain significant printing errors. I will explore each of these topics in more detail in upcoming posts. Stay tuned.