What Does a First-To-File System Mean and What Will This Change to the Patent Process Mean for Inventors and Companies?

The America Invents Act (AIA) is the latest reform in U.S. patent law signed into effect on September 16, 2011. With a set of rolling changes, on of the main modifications takes place on March 16, 2013, which will transition the patent system from a “first-to-invent” system to a “first-to-file” system. This will bring serious change for inventors and companies in their strategies for filing patents.

The United States patent system has operated under a first-to-invent system for the last 200 years. Under this system a patent is granted to the inventor who first effectively invented the patent, regardless if they were the first to file for a patent application on the invention. For example if Inventor A invents a patentable invention but does not yet file an application with the United States Patent and Trademark Office (USPTO), but then Inventor B invents the same patent and does file an application with the USPTO claiming the invention, A would be entitled to the patent if A later filed an application. Even thought A filed after B, A would be granted the patent if he showed documentation of having an earlier invention date and showing he actually or constructively worked to “reduce the invention to practice.” This system is time consuming and difficult as attempting to deduce a date on which a person actually invented something can prove quite difficult.

March 16, 2013 brings about a first-to-file system, which de-emphasizes the actual invention date while focusing on who filed first. This change will further synchronize U.S. patent law with most of the rest of the world who also implement a first-to-file patent law system. The main question this change brings about is not who first conceived an invention (as in under a first-to-invent system), but rather who was the first to file a patent application with the USPTO. Some critics of the system change argue that this first-to-file system will boost patent troll activity, which will a person to be able to file patent applications on inventions that have been released but not yet filed on by smaller companies or underfunded startups. Some argue this will also give larger companies an advantage over smaller companies who do not have equal funds or resources to file patent applications at the same rate large companies do. However something to understand with this change is that while a first-to-file system will go into effect, it is not a true first-to-file system because the one-year grace period on public disclosure will stay in effect. An inventor can publically disclose his invention, through for example a blog post, and is given a one-year grace period from that time of disclosure to file for a patent application. If an inventor publically discloses his invention but does not file with the USPTO right away, he still has one year from that disclosure and will be granted a patent over any other inventor who disclosed later but may have filed earlier. This essentially means that the USPTO will now look to who first filed a patent application or who first publically disclosed the invention, both easier to deduce than which inventor first conceived the invention.

Under this new system well-timed disclosures of inventions by smaller companies will be able to block better funded companies from receiving patents. Disclosure will become of utmost importance as delay of disclosure can allow a competitor to file a patent application on the same technology that they invented later, but filed first. The competitor in that situation would receive the patent under this new system. Companies should begin to create processes that will quickly and effectively identify inventions, as well as whether it is financially beneficial to file a patent application or to publically disclose first.

XV Enterprises: Tim Tebow Trademark

NFL quarterback Tim Tebow, as sole shareholder of XV Enterprises, has trademarked “Tebowing” both the term and the pose. The act of Tebowing, which was popularized by Tebow at the end of every touchdown play, is to get on one bended knee head bowed atop a clenched fist. This act quickly became an Internet meme and some have tried to trademark the act themselves. One such person was Jared Kleinstein, a Denver-born Broncos fan living in New York, who started the website www.tebowing.com for the purposes of submitting photos of people Tebowing, while profiting from their acts. However, the trademark office refused Mr. Kleinstein’s request saying that the material “falsely suggests a connection with Tim Tebow.”

The purpose of the trademarking was to keep it from being abused and misconstrued by others. The religious ritual that Tebow did at every touchdown play was something personal, between him and God, and was taken by society and transformed into something called Tebowing. The main reason for the trademarking was not so he could make some extra cash from lawsuits, but to “make sure it is used in the right way.”

If Tebow can trademark his praying, “can the Catholic church trademark the praying-hands . . . the Muslims trademark[] their traditional poses . . . Buddhists trademark[] the Buddhist belly?" It appears that these religious groups could trademark these acts, but the trademark office would probably not grant these rights for three reasons. The first is that these acts do not originate from an individual or one particular entity; the second being that these acts are not considered “memes;” and finally, society as a whole does not use these terms as frequently as they do with Tebowing. For these reasons, it is very unlikely that other football players’ signature moves, such as Aaron Rodger’s championship belt, Victor Cruz’s salsa dance, or even Arian Foster’s bow could be trademarked unless these acts were religiously motivated such as Tim’s Tebow.

Music to My Ears? - Setting a Precedent for Federal Copyright Infringement

In one of the largest amounts ever awarded in an illegal file sharing proceeding, an Illinois judge has ordered defendant Kywan Fisher to pay $1.5 million to adult entertainment company Flava Works for illegally copying and sharing 10 movies on the file-sharing website BitTorrent. This case highlights a trend in the courts' increasing disapprobation for copyright infringement, and hints at the potential for an increase in the severity of punishments imposed for such crimes. In a world in which illegally downloading a film or audio file is as easy as clicking a button, users may want to think twice before they bypass copyrights or skimp on paying full price for their digital entertainment.

When Napster gained mass popularity in 1999 for allowing users to share files effortlessly and seemingly without consequences, it soon boasted over 25 million users. However, in 2001, only two years after its inception, Napster lost a copyright infringement suit and was subsequently forced to revoke the free access to mp3s that it once afforded its members. Despite indications that the legal system and record companies were attuned to the growing trend of file sharing, other sites such as AudioGalaxy, Morpheus, Kazaa and Limewire sprung up in Napster’s wake, bolstering the trend and creating even more fans of file sharing.

Predictably, however, users of these copycat sites soon saw themselves faced with lawsuits citing illegal downloading and copyright infringement. While no case has been as monumental or landmark in its consequences as Fisher, courts have, since the inception of file-sharing websites, taken seriously and not looked favorably on the activity. In 2010, defendant Joel Tenenbaum, a doctoral student in physics at Boston University, was convicted and slapped with a fine of over $67,000 for downloading and distributing 30 copyrighted songs using file-sharing software. Also in 2010, the case against Jamie Thomas-Rasset went to trial, resulting in a damages award of $2,250 per song, totaling an amount of $675,000.

Not surprisingly, many lawsuits involving illegal file sharing settle out of court, with defendants seeking to avoid costly litigation and potentially astronomical damages amounts. However, the amount of damages awarded in these types of cases has met with some controversy, with some judges deeming excessive amounts “unconstitutional,” overly “oppressive,” and greater than needed to serve the government’s legitimate interests in protecting copyright owners and preventing infringement. In an effort to assuage this controversy, Congress passed the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999 which mandated that damages should not exceed $150,000 per infringement if the violation was committed willfully. In the case at hand, the judge utilized the maximum amount allowed under this statute, charging Fisher $150,000 for each of the 10 videos he copied and illegally shared.

In the thirteen years since Napster gained mass popularity, the Recording Industry Association of America (RIAA) and the U.S. Copyright Group have become increasingly zealous in their monitoring and suing individuals who utilize file-sharing sites. After initiating over 20,000 lawsuits against sharers of indie movies and other forms of digital media, the RIAA and U.S. Copyright Group, coupled with the hefty fines that usually accompany conviction, seem to have had a deterrent effect on internet users contemplating downloading an illegally shared file. Together with user’s ability to purchase individual tracks instead of entire albums on iTunes (often for as low as $.99 per song) and a similar opportunity to find songs on Napster for $.70-$.80 each, it appears as if the rate of illegal file sharing should soon be on the decrease.

The precedent set by Judge John Lee last week in Illinois that violators of federal copyright law could potentially find themselves paying millions of dollars for their transgression is a strong one that speaks loudly. In comparison to the minimal amount that it costs to acquire a legally distributed video or audio recording, the prospect of being fined such an astronomical amount will likely have a huge effect on those contemplating taking the easy way out and utilizing illegally shared files.

Superman’s Heirs v. DC Comics: who owns The Man of Steel?

Heirs of Superman co-creator Joe Shuster will not be able to recapture the rights to the admirable superhero from DC Comics after a recent decision finding that copyright termination was not applicable because of a 1992 agreement which superseded its 1975 agreement between DC Comics and the co-creators Joe Shuster and Jerry Siegel. In the 1975 agreement, DC Comics agreed to provide lump sums of $75,000 to each co-creator, as well as crediting them for new Superman works, in exchange for the Superman copyrights. It is believed that DC Comics was pressured to enter into this 1975 agreement because in the original 1938 agreement, the co-creators were forced to grant Superman to DC Comics for only $130.

After the death of Schuster in 1992, his siblings Frank and Jean agreed to grant DC Comics the copyrights to Superman as long as DC Comics paid for all of Schuster’s debts, as well as paying Jean $25,000 a year for life. In addition to this deal, Jean has asked DC Comics for additional money in consideration for not reclaiming the rights to Superman. However, on eight separate occasions from 1993 to 2001, DC Comics gave Jean bonuses ranging from $10,000 to $25,000 while noting that it had no legal obligation to do so. To this day, Jean has earned more than $600,000 from DC Comics.

In 2003, Jean’s son Mark attempted to terminate the 1992 agreement by arguing that Schuster’s heirs have the rights to Superman because of the 1976 Copyright Act. Under Section 203 of the Act, authors or their heirs have the right “to terminate grants of copyright assignments and licenses that were made on or after January 1, 1978,” as long as they wait for thirty-five years after the agreement. The rationale behind this act is the belief that artists are usually disadvantaged at the negotiation table because of the lack of leverage they have. To provide relief, the act allows artists and their heirs to revoke past deals in which they deem to be unfair, unreasonable, or unsatisfactory.

Although the act seems to support artists, musicians, and other creators in retaining their rights to their respective copyrights, it is unclear as to whether these contracts may be supplemented, and if it is supplemented, does the date carry-on from the original date or from the new date? It would make sense for the original date of the agreement to carry-on if it is supplemented because it encourages both parties to negotiate; promoting fairness. If courts did not allow parties to supplement their contractual terms, it could substantially burden one party over the other.

Here, in the current case, the court looks at the 1992 contract not as a supplement, but as a new and different contract between Schuster’s heirs and DC Comics, and finds the copyright termination date to apply thirty-five years after 1992. Some may agree to the court’s decision because the agreement involves different parties; Schuster’s heirs instead of Schuster and Siegel. But opponents to the court may argue that the 1992 contract is the same contract as the 1975 agreement because it involves similar terms; DC Comics giving money to those who have the granting rights. But even if the court adopted the opponent’s position, giving Schuster’s heirs the benefit of tacking the thirty-five years at the 1975 contract, it would be unfair for Siegel’s heirs because they did not benefit from the 1992 agreement, nor did they attain special bonuses as did Jean.

"If the Price is too Good to be True, it Probably is” - ICE Director John Morton

Photo by: mollyali's 

A coordinated government effort to crackdown on websites selling counterfeit goods is in full force, most recently seizing 150 websites on Cyber Monday 2011. The rationale for the seizures is based on the idea that these websites steal creative ideas, cost our economy jobs and revenue, and can threaten the health and safety of American consumers by selling inferior goods in the market. Opponents argue the seizures are unconstitutional because the government does not afford the site owners adequate due process protection prior to seizing the sites.

Operation in our Sites is the effort of DOJ and DHS/ICE to halt intellectual property crimes at the national level. ICE is leading the charge, and derives its authority from the seizure and forfeiture laws of 18 U.S.C § 981 and 2323. As Margaret A. Esquenet and Justin A. Hendrix explain, (http://www.ecommercetimes.com/story/72344.html) “Under Section 2323, property used to a commit federal crime, such as criminal trademark or copyright infringement, is subject to forfeiture to the U.S. government. Under Section 981, the government can apply to a federal court for a warrant to seize that property. To obtain the warrant, the government must show there is probable cause that the website violates federal criminal law. The owner of the domain name may challenge the seizure warrant in the district court that issued it. During a later forfeiture proceeding, the owner also may challenge the basis for forfeiture.”

To carry out the Operation, ICE agents make undercover purchases of various products covered by trademark, including professional sports jerseys, golf equipment, DVD sets, footwear, handbags, and sunglasses. Once the goods arrive and the trademark holders confirm that the purchased products are counterfeit, seizure orders are obtained. The intent of ICE is to protect the economy and consumers, and ensure that revenue is flowing to the rightful parties instead of to those who steal intellectual property. The objective is a good one, and the websites are property used to commit a federal crime, so the seizures and the process by which they are carried out are legitimate under federal statute.

ICE may need to revisit the effectiveness of some their procedures to reach that end, though. In February 2011, the department rightfully seized 10 sites before the Super Bowl that were accused of offering illegal streaming video of sporting events, and before Valentine’s Day, it seized 18 sites selling counterfeit luxury goods. But somehow along with those, it shut down 84,000 other legitimate sites and posted a notice that the reason was for “advertisement, distribution, transportation, receipt, and possession of child pornography.” Not good. The error may have had to do with linking sites, but the owners of the legitimate sites deserve a more robust due process procedure so as to avoid future errors.

Operation in our Sites is certainly a complicated technological effort without introducing administrative hurdles. But there is likely little harm (expense notwithstanding) in an email notice to domain name owners that their site is subject of investigation and will be shut down in 48 hours without further action on their part.

Will The Real "App Store" Please Stand Up?

On March 18, 2011 Apple commenced a lawsuit against Amazon for Amazon’s use of the word “appstore” (Apple Inc. v. Amazon.com Inc., 11-1327, U.S. District Court, Northern District of California). Bloomberg news broke the story on March 22, 2011. Apple had filed the term “App Store” as a service mark in 2008 in conjunction with its release of the iPhone 3G. A few days before the release of the Amazon Appstore for Android, Apple filed a claim that Amazon’s use of the name “Amazon Appstore” would mislead customers. The question before the court will be whether an “app store” is a generic term commonly used in trade and cannot be trademarked.

Trademarks include symbols that are used in commerce to indicate the source of goods and services,

Back on January 10, 2011 Microsoft filed a motion with the USPTO to refuse registration of the term “app store”. Microsoft argued that the term “app” by itself is a generic term for a product that is in common usage and used in several dictionaries as a short hand way of saying “application”. Further, Microsoft argued that a generic name for a product followed by the word “store” is itself a generic way of describing a store that sells that product. In several previous cases, the USPTO had held that these types of marks were generic, such as “The Computer Store” or the “Shoe Warehouse.” Microsoft notes that CEO of Apple Steve Jobs himself has used the term “app store” generically, such as in Apple’s October 2010 earnings call where Jobs said:

In addition to Google's own app marketplace, Amazon, Verizon, and Vodafone have all announced that they are creating their own app stores for Android -- so there will be at least four app stores on Android, which customers must search among to find the app they want.

Of course, many are puzzled by the fact that Microsoft is arguing that Apple should not be able to trademark “app store”, especially in light of the fact that Microsoft itself has stringently defended its trademark of the term “Windows”.

One thing is certain – regardless of what you call them, a new breed of stores has risen in the marketplace and will continue to flourish as long as people want to buy “apps”.

On March 18, 2011 Apple commenced a lawsuit against Amazon for Amazon’s use of the word “appstore” (Apple Inc. v. Amazon.com Inc., 11-1327, U.S. District Court, Northern District of California). Bloomberg news broke the story on March 22, 2011. Apple had filed the term “App Store” as a service mark in 2008 in conjunction with its release of the iPhone 3G. A few days before the release of the Amazon Appstore for Android, Apple filed a claim that Amazon’s use of the name “Amazon Appstore” would mislead customers. The question before the court will be whether an “app store” is a generic term commonly used in trade and cannot be trademarked.

Trademarks include symbols that are used in commerce to indicate the source of goods and services,

Back on January 10, 2011 Microsoft filed a motion with the USPTO to refuse registration of the term “app store”. Microsoft argued that the term “app” by itself is a generic term for a product that is in common usage and used in several dictionaries as a short hand way of saying “application”. Further, Microsoft argued that a generic name for a product followed by the word “store” is itself a generic way of describing a store that sells that product. In several previous cases, the USPTO had held that these types of marks were generic, such as “The Computer Store” or the “Shoe Warehouse.” Microsoft notes that CEO of Apple Steve Jobs himself has used the term “app store” generically, such as in Apple’s October 2010 earnings call where Jobs said:

In addition to Google's own app marketplace, Amazon, Verizon, and Vodafone have all announced that they are creating their own app stores for Android -- so there will be at least four app stores on Android, which customers must search among to find the app they want.

Of course, many are puzzled by the fact that Microsoft is arguing that Apple should not be able to trademark “app store”, especially in light of the fact that Microsoft itself has stringently defended its trademark of the term “Windows”.

One thing is certain – regardless of what you call them, a new breed of stores has risen in the marketplace and will continue to flourish as long as people want to buy “apps”.