Author: Scott R. Bialecki

Scott Bialecki, a former FTC attorney and IP litigator, is the co-Chair of Sheridan Ross P.C.'s Litigation Group.

Arbitration Does Not Bar Inter Partes Review

Scott R. Bialecki
We continue to get guidance as to when a party can file a request for an inter partes review of a patent.  As I mentioned last Fall, under 35 U.S.C. § 315(b),  a petitioner has 1 year from the date that it is “served with a complaint alleging infringement” to file a request for inter partes review.  Last week, the U.S. Patent and Trademark Office (“Board”) clarified that the filing of an arbitration claim does not start this 1 year clock. Based on a 2009 arbitration, Tessera, Inc. moved to terminate an inter partes review initiated by Amkor Technology, Inc. for being outside the 1 year window.  Thus, the question became whether “served with a complaint alleging infringement” included being served with an arbitration counterclaim of infringement.  The Board noted that arbitration is not “litigation,” but rather  an alternative dispute resolution procedure.  Simply stated, “served with a complaint alleging infringement” only refers to disputes in District Court versus any forum for adjudicating infringement as Tessera had argued.  We now know that complaints and counterclaims alleging infringement (even if dismissed with prejudice) are the two clear-cut ways to start the clock running with regard to the filing of requests for inter partes reviews.

Counterclaims Start the Clock for Inter Partes Requests

Scott R. Bialecki
Most people are now aware of the changes by the American Invents Act to the inter partes process for reviewing patents.  There are no longer inter partes reexaminations. Instead, parties can petition for inter parties reviews.  Generally speaking, a petitioner has 1 year from the date that it is served with “a complaint alleging infringement” to file a request for inter partes review.  35 U.S.C. § 315(b).  Until the recent decision in St. Jude Medical, Cardiology Division, Inc. v. Volcano Corporation, it was unclear as to whether “a complaint” also included a counterclaim of infringement by the patent owner. Earlier this month, the Patent Trial and Appeal Board (“Board”) confirmed that it does. St. Jude Medical sued Volcano for infringement of its own patents. Volcano, in turn, counterclaimed with a charge of infringement of U.S. Patent No. 7,134,994 (“the ‘994 Patent”) in September of 2010.  Two years later, the parties dismissed all claims relating to the ‘994 Patent with prejudice. Nonetheless, in April of 2013, St. Jude Medical petitioned for an inter partes review of the ‘994 Patent.  The Board denied the petition for falling outside the 1 year time limit imposed by 35 U.S.C. § 315(b). The Board recognized Congress’ intent behind inter partes reviews, which is to “‘provid[e] quick and cost effective alternatives to litigation.’”  It found that a counterclaim was tantamount to a complaint.  More importantly, it held that that Section 315(b) applies even when a complaint is later dismissed with prejudice. Now, it is clear. If you want to petition for inter partes review, you need to stay on top of the 1 year deadline. It doesn’t matter if the counterclaim is ultimately dismissed with prejudice. The clock continues.  Companies should make sure to docket such deadlines.

Out of the Fire, But Still in the Frying Pan for Farney Daniels: Judge Grants Preliminary Injunction Against Nebraska AG’s Office

Scott R. Bialecki
Here is the latest in Activision’s quest to use Farney Daniels as its patent litigation counsel.  (For those unfamiliar with the issue, see my prior postings, which discuss various states’ reactions to this firm’s efforts to enforce patent rights for a particular patent troll across the country.)  This past Monday, the Nebraska U.S. District Court Judge granted Activision’s request for a preliminary injunction against the Nebraska AG’s Office.  Specifically, the Court prohibited the AG from:

[T]aking any steps to enforce the cease and desist order issued to Farney Daniels on July 18, 2013, in any manner that would prevent or impede the Farney Daniels firm from representing Activision in connection with licensing and litigation of U.S. patents owned by Activision with respect to companies based in, or having operations in, Nebraska.

However, this injunctive relief has no bearing on the AG’s ability to continue to investigate Farney Daniels for violations of the State’s Consumer Protection Act and the Court reserved the AG’s right to revisit the injunction should its investigation uncover a claim of bad faith by Farney Daniels. Some may tout this as a great victory for Farney Daniels, but it wasn’t a great surprise. The Nebraska AG’s Office conceded that it wouldn’t oppose Farney Daniels attorneys’ requests to appear in the Activision matter because that matter pre-dated its cease and desist order, which only applied to future actions.  Although Farney Daniels can now file new actions on behalf of Activision against Nebraska-based entities, it’s unclear that there is any desire to do so. Further, the Nebraska AG is still free to investigate any new claim asserted by Farney Daniels.  As such, this firm will continue to operate under the watchful eye of the State and is not out of the woods yet.

Get Your Applications In Now: USPTO Still Open

Scott R. Bialecki
As most of you have now realized, there has been a government shutdown.  However, the USPTO reports the following about its continued operations:

USPTO Operation Status

During the general government shutdown that began October 1, 2013, the United States Patent and Trademark Office will remain open, using prior year reserve fee collections to operate as usual for approximately four weeks. We continue to assess our fee collections compared to our operating requirements to determine how long we will be able to operate in this capacity during a general government shutdown. We will provide an update as more definitive information becomes available.

Should we exhaust these reserve funds before the general government shutdown comes to an end, USPTO would shut down at that time, although a very small staff would continue to work to accept new applications and maintain IT infrastructure, among other functions. (Should it become necessary for USPTO to shut down, details of the agency’s plan for an orderly shutdown is [sic] available on page 78 of the United States Department of Commerce’s shutdown plan.) Any new or updated public information related to USPTO operations during the government shutdown will be placed on this page.

As you can see, the USPTO is expending its prior year’s reserves to continue to operate for the next month. Applications are still being accepted and according to the USPTO, it will maintain a skeleton crew to accept new applications even in the event of an actual shutdown. I wouldn’t want to take the chance and would file any contemplated patent applications as soon as possible.  Also, I would try to schedule any desired patent examiner interviews sooner than later.

Where’s The Beef? The Nebraska AG’s Office Argues No Claim Or Controversy With Activision

Scott R. Bialecki
As I previously posted, Activision filed a Complaint in U.S. District Court challenging the Nebraska Attorney General’s Office’s prior cease and desist letter to a law firm called Farney Daniels.  Last week, the Nebraska Attorney General’s Office fought back in its quest to curb troll activity when it filed its Brief in opposition to Activision’s Complaint and Motion for Preliminary Injunction.  The AG’s Office asked the Court to dismiss the Complaint for, among other things, failure to state a claim and/or to deny Activision’s preliminary injunction request. One of its stronger arguments appears to be the Court’s lack of subject matter jurisdiction. The AG’s Office points out that its cease and desist letter was to Farney Daniels and not to Activision. It also noted that its prior prohibition pertained to “new” matters and Activision’s matter was filed 6 days before the AG’s Office even issued its letter to Farney Daniels.  Thus, there is no “case or controversy” between the parties. The AG’s Office also argued that Activision couldn’t meet its preliminary injunction burden of showing that it would likely succeed on the merits. It creatively argued that Activision cannot show that Farney Daniels’ actions didn’t constitute unfair or deceptive trade practices under Nebraska state law.  If this case doesn’t get dismissed for lack of subject matter jurisdiction, it will be interesting to see how the Court analyzes Farney Daniels’ patent enforcement efforts under the Nebraska Consumer Protection Act.

The Patent Troll Debate Continues: Enter Activision

Scott R. Bialecki
As I previously posted, the Nebraska Attorney General’s Office issued a cease and desist letter barring any new patent infringement actions in Nebraska to a law firm that has a history of representing a so-called “patent troll” against Nebraska-based businesses.  Last week, it was reported that Activision TV filed suit in U.S. District Court in Omaha over the AG’s ability to restrict the law firm’s patent enforcement activities within the state.  Activision allegedly wants to retain the law firm to litigate a patent infringement action against Lincoln-based, Pinnacle Bank and claims that the Nebraska AG overstepped its authority. The Nebraska AG previously reported that the law firm was the subject of a prior investigation. Thus, it will be hard pressed to back down from the fight. It will be interesting to see how the Court rules given that the AG’s Office was acting under its authority to investigate and protect its consumers.

Further Trouble For Patent Trolls

Scott R. Bialecki
In what has been described as a “first of its kind” settlement, a so-called patent troll, MPHJ Technology Investments, LLC (“MPHJ”), has allegedly agreed to an “assurance of discontinuance” with the Minnesota Attorney General’s Office regarding its patent enforcement efforts in the State of Minnesota. Pursuant to the agreement, MPHJ has agreed to “cease its patent enforcement campaign” in Minnesota and not resume such activities without the AG’s consent.  Further, MPHJ cannot assign the patents-at-issue to any third party who does not agree to be bound by such terms. The settlement was allegedly the result of investigations stemming from mass mailings threatening patent infringement against several small businesses in Minnesota.  Interestingly, this is the same law firm and patent troll that the Attorney Generals’ Offices in Vermont and Nebraska dealt with over the last year. The states are clearly sending a message to patent trolls and to those law firms that represent them.  When I worked at the Federal Trade Commission many years ago, the state Attorney Generals’ Offices worked hard to coordinate their enforcement efforts. It seems as though they are even more in sync today.  As I have previously suggested, if your client receives what appears to be a baseless, mass-mailed cease and desist letter, it may want to consult the Attorney General’s Office within your state.

Despite Incontestable, Registered Trademark Still Weak

Scott R. Bialecki
After five years of continuous, post-registration use, a trademark registration can become “incontestable” under 15 U.S.C. § 1065.  An “incontestable” trademark registration is immune from challenge on certain grounds, such as that the mark is merely “descriptive” and lacks secondary meaning.  Although the validity of the registration may not be challenged on a “descriptiveness” basis, the mark’s strength (which affects the scope of protection) can be attacked when considering the “likelihood of confusion” prong of a trademark infringement analysis. Earlier this week, the Tenth Circuit examined this very issue when it unanimously affirmed a lower court’s summary judgment of non-infringement.  In Water Pick, Inc. v. Med-Systems, Inc., the Court analyzed the use of similar marks used by competitors in the nasal irrigation market.  The senior user, Med-Systems, owned several incontestable federal registrations for SINUCLEANSE.  After negotiations broke down to buy Med-Systems, Water Pik developed its own nasal-irrigation line under the name SINUSENSE. The Tenth Circuit provided a nice analysis of the problems associated with Med-Systems’ expert’s survey.  However, the more interesting issue (which should serve as a reminder to all litigators) was how the Court analyzed the conceptual strength of the senior SINUCLEANSE mark as part of its evaluation of a “likelihood of confusion.” A particularly strong mark can give rise to a “likelihood of confusion” while a weak or “descriptive” mark suggests that use of a similar, junior mark even on similar goods is unlikely to cause confusion. Determining whether a mark is descriptive and hence, weak, can be difficult. The Tenth Circuit set forth it’s test as “’[d]escriptive terms are those which directly convey to the buyer the ingredients, qualities, or characteristics of the product.’”  In the end, the Tenth Circuit found the mark to be “descriptive” of the product’s characteristics or qualities as “Sinu” is a widely used prefix by third parties, including several sinus-irrigation products, and “cleanse” communicates the “nature and purpose of Med-Systems’ products….” The lesson to be learned is that even if a trademark registration is “incontestable,” in certain Circuits (like the Tenth), it may be possible to defend against a charge of infringement by arguing that the senior mark is “descriptive” as part of the “likelihood of confusion” analysis. Often, this is an overlooked, possible defense.

Patent Troll Update: Law Firm Investigated Over Enforcement Efforts

Scott R. Bialecki
Law firms beware.  I previously posted about the Vermont Attorney General’s Office taking action against a patent troll based on its enforcement efforts against Vermont-based businesses. Now, an Attorney General’s Office has set its sights on a law firm that allegedly represents patent trolls. Last month, the Nebraska Attorney General’s Office reported in a press release that it is investigating a Texas law firm for possible violations of Nebraska’s Consumer Protection Act and the Uniform Deceptive Trade Practices Act based on the firm’s past enforcement efforts on behalf of various non-practicing entity clients. According to the Chief Deputy AG, his office is investigating infringement assertions by the firm that it claims were unsubstantiated and false, misleading or deceptive. In his cease and desist letter, the Chief Deputy AG noted that this was not first time that the Nebraska AG’s Office had investigated the firm or one of its clients.  It’s unclear as to the nature of the prior inquiry. Of interest, the Nebraska AG’s Office has demanded that the firm identify, among other things, all patents that it has asserted on behalf of its clients against Nebraska consumers since January 1, 2010.  It has also asked for all communications related thereto. In addition, the AG’s Office has demanded that the firm cease and desist from any new patent enforcement actions within the State of Nebraska pending the investigation. Between the uptick of pending legislation and the recent Attorney Generals’ enforcement efforts, there appears to be a groundswell of interest in curbing patent troll activity.  The blanket approach to sending out cease and desist letters on behalf of trolls may not bode well if it involves a substantial number of businesses operating in one state.

U.S. Copyright Office Introduces “Single Application” Registration Option

Scott R. Bialecki
On June 28th, the U.S. Copyright Office amended its regulations on an interim basis to provide for a new registration option for applicants called the “single application.” The streamlined registration is aimed toward simplifying the process for individual authors of single works.  It cannot be used for works for hire or collective works, websites or databases.  As such, it will be interesting to see whether the public takes advantage of it.  The Copyright Office has invited public comment until August 28, 2013.