Submarines On The Horizon?

Scott R. Bialecki
Patently O has recently reported that there could be over 200 pending patent applications that have filing dates that pre-date June 8, 1995.  See l.  Why should you care? If these patent applications mature into patents, they will have a term of 17 years from issuance.  As Patently O points out, they could be quite valuable because they could be directed at technology dating back over 15 years ago.  Indeed, whole industries might have developed around such technology.  Finding prior art to invalidate these patents could be difficult. There’s no need to believe that the sky is falling. However, if you are licensing technology from someone else, it might be advisable to get strong, uncapped indemnification provisions in case one of these patents emerges.

The Everyone Is Doing It Defense: A Game Of Russian Roulette

Scott R. Bialecki
We hear it all of the time.  How is this illegal if everyone is doing it?  As I tell my children, the “everyone else is doing it” defense rarely works.  Sure, it eventually worked out for those of us old enough to remember the Betamax  home videocassette recorder battle in which consumers came out on top. However, more recent scenarios have not worked out as well for the consumer. Those who illegally downloaded movies or songs can attest to this. Now, comes Pinterest.  Copyright infringement or fair use?  While the company seems to be taking steps to address its own liability, it remains to be seen what will happen to its users.  Read a recent discussion of this issue.  Investigate the issue for yourself and don’t rely on others’ use as your sole defense should you face a claim of copyright infringement.

Intervening Or Disappearing Rights?

Scott R. Bialecki
Last week, the Federal Circuit, sitting en banc, gave a shot in the arm to patentees with regard to the “intervening rights” doctrine in its Marine Polymer Technologies, Inc. decision.  The Court confirmed that “intervening rights” (which limits a patentee’s ability to recover for past damages) only apply when there are new or amended patent claims as a result of reexamination.  Prior thereto, a three judge panel of the Fed Circuit held that the doctrine had been triggered by the patentee’s arguments made during reexamination even though no amendments had been made.   In light of this decision, patentees will sleep easier, knowing that they can make arguments during reexamination without losing their claims for past damages.

Beware Of The IDS Trap

Scott R. Bialecki
Sometimes during the patent process, inventors will perform their own searches of non-patent literature (NPL).  While they are just trying to advance their applications, they may have just incurred a large, unexpected cost.   Most inventors understand that they have a duty to provide all known, material, non-cumulative prior art to the USPTO during the patent process. In the past, inventors would merely provide copies of NPLs that they found in their own searches to their patent counsel, which, in turn, would disclose such information to the USPTO.  Now, it is not that simple. There is a wave of concern over the copying and use of such NPLs.  Many firms have adopted policies requiring inventors to have licenses permitting the copying and distribution of such references before they will submit them to the USPTO.  Indeed, just last week, several law firms were sued over this very issue.  While the USPTO has taken the position that copies submitted to the USPTO fall within the “fair use” exception to copyright infringement, it took no position with regard to copies made for clients or a firm’s internal use. Read a recent discussion of the issue. So, inventors are left with a dilemma. If they conduct a search that inadvertently reveals 100 potentially relevant references, then they might be faced with being charged a license fee for each reference before this prior art may be submitted to the USPTO as part of the patent process. What’s the downside if they decide to save some money and don’t disclose these references? They could be charged with inequitable conduct and have their patent deemed unenforceable if it’s later determined that these references should have been disclosed to the USPTO. Here’s the lesson.  Until these lawsuits get cleared up, inventors should be weary of conducting off-the-cuff searches.  If they do, they should be prepared for the additional cost of potential licensing fees.

Statement Or Stunt: FTC Sites Hacked

Scott R. Bialecki
It’s been reported that several websites owned by the FTC were hacked last Thursday.  Seven domains were alleged taken down, including, business.ftc.gov, consumer.gov, and consumer.ftc.gov.  This is allegedly the second attack on the FTC within a month. The alleged motivation for the attacks was to protest the FTC’s reluctance to prevent a well known search engine from changing its terms of service.  Also, the hackers’ efforts were allegedly in protest of the Anti-counterfeiting Trade Agreement, which has come under recent scrutiny for being overreaching and excessively intrusive.  So, what did this act really accomplish?  The FTC’s consumer protection-related resources were hijacked for a period of time.  Taking someone else’s property without their permission does not promote freedom of expression, which seems to be their point.    

If You Are Marketing Continuity Plans, Let Consumers Know.

Scott R. Bialecki
Yesterday, the FTC reported that it had filed its 11th case involving the promotion of dietary supplements via fake news sites run by affiliate marketers.  Sure, companies need to be concerned about how consumers are driven to their websites.  However, it appears that the driving factor for many of the FTC’s complaints involving fake news sites was not the misleading claims on the affiliates’ websites, but rather the undisclosed negative option continuity plans on the defendants’ websites and the inability of consumers to get refunds. Even though technology has improved, it’s the same old story.  At the end of the day, consumers complain to their state AG’s offices and the FTC because they claim that they were enrolled in undisclosed continuity plans, not that they lost $1.95 for a sample of a product that did not work.  The FTC’s Complaint involving the sale of acai berry/colon cleanse products is yet another example of this common fact pattern.  The fact that these products were pitched through allegedly fake new sites is only icing on the cake.  If companies honored their 100% money back guarantees, not enough people would complain to give the FTC the incentive to bring an action.  The FTC has limited resources so many of its cases are derived from consumers’ complaints.  Make no mistake that if you make claims that are on its top hit list (e.g., claims to children or claims directed at curing diseases), you could see an FTC inquiry. However, if everyone is happy, then it’s less likely that your claims will come under scrutiny. Now, it might not be economically feasible to offer 100% refunds because companies pay out commissions to affiliates to drive consumers to their websites before consumers request refunds. This makes it even more important for companies to make sure that they have defensible positions for using any negative option continuity plans.  Also, companies need to understand how consumers were pitched to arrive at their websites.  If the true “product” is the continuity plan, then companies need to be ready to defend why all of the downstream affiliate marketing as well as the marketing on their own websites focused on the $1.95 product.  While companies like to blur the issue, the question is fairly simple. If at the end of the day, the consumer believed that it was just buying the $1.95 product instead of signing up for the $79.95 plan, you could have an issue. Also, failing to investigate how consumers got to your website (i.e., by failing to monitor downstream affiliate marketing) can only lead to further trouble.  Be clever in your marketing, but make sure that consumers understand what they are buying.

Twenty Years Of Proposed Audits? Learn From Facebook’S Bout With The FTC….

Scott R. Bialecki
The Wall Street Journal reported today that Facebook is close to reaching a settlement with the FTC over its concerns about unilateral, retroactive changes to Facebook’s privacy policies.  Although a final settlement has not been reached, it’s been reported that part of the settlement will require Facebook to submit to 20 years of privacy audits, which greatly exceeds the normal 5 year auditing provisions that you see in most FTC settlements.  The takeaway is simple.  If you have a privacy policy, adhere to it. Consumers don’t like to have their information shared in a manner that is contrary to their original understanding as to how such information would be used unless they’ve received adequate notice.  As the U.S. becomes more wired, consumer online privacy issues will become of even greater concern to the FTC.  Learn from how the FTC is attempting to resolve consumers’ privacy-related complaints against Facebook. Otherwise, you may have the government monitoring your business activities for years (or possibly decades) to come.

The New ACO Guidelines Are Here! The New ACO Guidelines Are Here!

Scott R. Bialecki
Yesterday, the FTC and DOJ announced the release of their Joint Policy Statement regarding the enforcement of U.S. antitrust laws with respect to Accountable Care Organizations (“ACOs”).  This is reminiscent of when the Agencies issued their Joint Healthcare Guidelines in 1994, and capitation, HMOs, PPOs and PHOs were the topics of issue.  It should be interesting to see how the industry reacts in light of these guidelines.

How Will Free Trade With South Korea Impact IP?

Scott R. Bialecki
Yesterday, it was reported that Congress passed free trade agreements with South Korea, Panama and Columbia.  The agreements are suppose to, among other things, significantly remove duties and phase out tariffs on various U.S. exports.  However, it has also been reported that there are provisions affecting intellectual property law, which must be ratified by the Korean National Assembly.  I agree with Professor’s Crouch’s assessment that this appears to be another step toward harmonizing worldwide patent practice.  As there will be more incentives for U.S. companies to send products to South Korea, it will be interesting to see if there will be an increase in South Korean patent filings.