Author: Austen Zuege

When Should a Provisional Patent Application Be Considered?

Post author By Austen Zuege

A provisional patent application — sometimes called a “provisional application”, “provisional” or “PPA” for short — is a type of patent application that can be filed in the United States. They were intended to provide lower-cost first patent filings for new inventions. A provisional acts kind of like a placeholder for up to one year. It is never substantively examined for patentability. And a provisional can never directly be granted as an enforceable patent. But you can file a further non-provisional application that claims “priority” back to the provisional application filing date. A provisional filing lets you put a stake in the ground to preserve patent rights, so-to-speak.

The question at hand is really what factors weigh in favor or against filing a provisional. In short, what are the pros and cons of filing a provisional?

provisional application for patent cover sheet form PTO/SB/16 — USPTO Provisional Application Cover Sheet Form (PTO/SB/16)

Advantages and Benefits

Some of the most common advantages and benefits of a provisional patent application are the following:

Extends patent expiration date (patent term benefit)
Allows products to be marked “patent pending”
Establishes filing date (priority) to cut-off potential later-arising “prior art”
- Allows commercial potential of invention to be explored for up to a year without losing patent rights
- Helps win race to the patent office if others are working on similar inventions
No need to comply with formalities for drawings, etc.
- Might be filed quickly in the face of an impending loss of patent rights associated with a public disclosure/use or sales activity
Kept confidential (at least until cited in a later-published application or granted patent, such as through a priority claim)
Evidence of inventorship as of filing date
Lower initial official filing fees than a non-provisional application
Can later claim priority to multiple provisional applications

One of the biggest benefits of a U.S. provisional application is that the time period between the provisional filing date and the filing date of a non-provisional application claiming priority back to the provisional is not counted against patent term. This means that a provisional can push out the patent expiration date by up to a year (but this happens partly by delaying the grant of any patent by roughly the same amount of time). It can effectively extend the patent term to 21 years from filing. For some inventions, the most valuable period of patent protection may be later in the term, making such an extension valuable.

A pending provisional application also allows products to be marked as “patent pending.” That serves as a warning to potential copyists. It may also provide marketing and business development benefits.

Filing a provisional application establishes an official “filing date” for the disclosed invention. This is significant because patent rights generally go to the first inventor to file a patent application. So provisionals help win the race to the patent office. If there is some public disclosure that occurs after the provisional filing date it will not count as “prior art” against a later claim with “priority” to the provisional filing date. Prior art can potentially bar patentability. It can stem from your own disclosures and activities or someone else’s. Either way, a provisional can potentially exclude later-arising disclosures from being used as prior art against you. It is this aspect that allows you to disclose the invention to potential customers, etc. during the year after the provisional filing without loss of rights.

Another advantage is that provisionals do not require formal drawings, claims, etc. Here we can loosely distinguish between “informal” and “formal”/”full” provisionals. A “formal” or “full” provisional is one that could be filed as a non-provisional because it is written up in full detail to comply with all the requirements of a regular non-provisional utility patent application. An “informal” provisional is one that would not be sufficient or compliant as a non-provisional utility patent application.

A formal/full provisional generally offers no savings on preparation costs and effort compared to a non-provisional application. But the official filing fee is less and an eventual patent expiration date can be extended. The main advantage is that you reduce the risks of having inadequate disclosure of the invention. Not all provisional applications are equal. A provisional is really only as good as the disclosure it contains. If a provisional application omit details that are essential to patentability of an invention the provisional may be ineffective or even worthless. Putting in the effort to prepare a full disclosure of the invention reduces such risk.

An informal provisional departs from the format of non-provisional applications and granted patents somehow. It might have drawings with shading or lacking reference characters (labels), pages pulled from presentation slides with text in different orientations, figures (graphical illustrations, diagrammatic views, flowcharts, and/or diagrams) inserted into the middle of pages of descriptive text, etc. They sometimes repurpose existing documentation. Such informality may allow for quick filing. For example, if disclosure of the invention at a trade show or customer meeting is immanent, an informal provisional can be filed on an urgent basis to preserve patent rights.

Any type of provisional allows exploration of the commercial possibilities of the disclosed invention before deciding if a non-provisional application is worthwhile. The USPTO keeps provisional applications secret initially. If you abandon the provisional without claiming priority to it or disclosing it in some other way, its contents will never be made public by the USPTO. That means you might be able to still pursue patent protection later (despite loss of priority) if there was no intervening public disclosure or commercialization of the invention by you or anyone else. But if you claim priority to a provisional in a non-provisional application the contents are made public (upon publication or grant).

When seeking to generate interest in an invention or make sales, do keep in mind the scope of protection a provisional will and will not offer. A provisional is generally effective if it includes as much or more disclosure as what is publicly disclosed, publicly used, sold, or offered for sale (or what has already been publicly disclosed, publicly used, sold, or offered for sale within the prior year). The limits of protection are discussed in the disadvantages and risks section below.

Provisionals are also occasionally useful in providing evidence of inventorship. For instance, a provisional might provide some evidence of independent invention as of the provisional filing date (as part of self-authenticating official U.S. government records), although this is not always sufficient by itself.

Additionally, if research and development is ongoing, it is possible to file multiple provisional applications. A later non-provisional application can claim priority to any or all of those provisionals — assuming they are all filed within a year and have at least one common inventor. And one (or more) of those provisionals could be abandoned and kept confidential if unnecessary to later patenting strategies. In other words, with up to a year of hindsight, you could pick and chose some but not all of the provisionals for priority claims. And new matter can still be added to a later non-provisional application too. That new matter just won’t receive priority to an earlier provisional filing date.

Disadvantages and Risks

Some of disadvantages and risks associated with filing a provisional patent application are the following:

Adds to total cost of obtaining a patent
Delays the (potential) grant of a patent
Risk of inadequate disclosure in an “informal” provisional
- If foreign patent protection is eventually sought, the disclosure requirements may differ from U.S. law
Patentability might already be barred before filing (that is, the provisional is already too late)
Not available for designs
Foreign law may necessitate first filing in a foreign country or obtaining a foreign filing license before filing the provisional for inventions made wholly or partly outside the United States

Filing a provisional adds to the total cost of obtaining a patent. If you simply file a non-provisional application from the start you avoid the provisional filing fees entirely, plus any attorney fees associated with the provisional.

A provisional also delays the grant of a patent (assuming the invention is patentable). Though, in exchange, the expiration date of the patent is pushed out the same amount of time. Sometimes that trade-off is acceptable. But if the invention is likely to be copied, delays in obtaining a patent might delay enforcement action against infringers.

The main risk of a provisional filing stems from it containing an inadequate disclosure. From one perspective, filing a patent application (provisional or non-provisional) is better than not filing when it comes to helping protect an invention. But not all provisional applications are equal. put another way, the question is not merely about filing or not filing a provisional but about filing an adequate and sufficient provisional or not. A poorly-prepared provisional application may inadequately or unfavorably disclose the invention. In that sense, it may create a false sense of security. Never forget that a provisional is only as good as the disclosure it contains. Whether a given provisional is good enough comes down to what public disclosure and commercialization takes place, the scope of the prior art, and your overall patenting strategy and expectations.

If you file a provisional application to avoid a patentability analysis or even just to avoid hard thought about what is really the invention and how to claim it, you can’t know if the provisional application contains sufficient disclosure of a patentable invention. This might be risky if you rely on an “informal” provisional that cuts corners compared to a “full” or “formal” provisional (see definitions above). That is a particular concern if you sell or publicly use a product but important technical details about that product were omitted from the provisional.

Legally, the provisional application disclosure (written description) must enable one of ordinary skill in the art to practice the entire invention claimed in a later non-provisional application. There have been many cases where omission of some detail in a provisional application (that turns out to be important to patentability of a later-filed claim) resulted in a loss of priority to the provisional filing date for one or more claims. So you have to understand what will be later claimed in order to know if a provisional’s disclosure is sufficient. Complex or highly abstract technologies raise this issue. For example, an invention related to signal processing is probably not directly observable, meaning a provisional write-up must sufficiently capture the unobservable.

An important legal concern is that you cannot preempt a future invention before it has arrived. So you need a disclosure in the provisional that corroborates conception of the invention you will later claim. If you later try to claim an entire “genus”, this often turns into a question of whether the provisional disclosure was limited to a particular “species” (i.e., specific embodiment) within that genus or made clear that an entire genus was invented and enabled — usually by disclosing either a representative number of species in that genus or structural features common to the genus sufficient for member species to be recognized. Another potential issue involves claiming ranges of particular values. If you later claim a narrow numerical range, perhaps to avoid prior art falling in a different range, previously disclosing only a broader range might not be sufficient. These are fact-intensive inquiries.

Legal requirements in other countries vary. For instance, other countries may have stricter requirements about claims using nearly the identical language as the preceding description of the invention. And other countries may not permit reliance on disclosures contained only in drawings. They may instead look for textual descriptions of what is in a drawing. If foreign patent protection is (or might be) contemplated, differences in disclosure requirements should also be considered when preparing the provisional.

A provisional application also won’t save you when patentability is already barred. For instance, if the invention was already sold or publicly disclosed by the inventor more than a year before, then patentability is already barred in the United States. Any pre-filing public disclosure by the inventor may bar patenting in some other countries too. And an invention that lacks utility, is anticipated, or is obvious won’t be patentable either, regardless of whether a provisional was filed.

Additionally, provisional applications cannot be used in connection with designs. If your invention pertains to an ornamental design of a useful article, a regular (non-provisional) design patent application is the only option.

Lastly, some countries have laws that require patent applications to be filed in that country first if the invention was made or conceived in that country, or that a license be obtained to file abroad first. If any inventor resides in a foreign country or performed inventive activity while temporarily outside the United States, any applicable foreign laws should be considered. Those laws may impose penalties for making a provisional filing in the United States rather than in the foreign country. Foreign priority cannot be claimed in a U.S. provisional application.

Concluding Thoughts

Provisional patent applications are routinely used by applicants ranging from individual inventors to large corporations. There are many excellent reasons to file a provisional, including extending the expiration date of any resultant patent. It is always worthwhile to consider filing a provisional application. But a hastily- or poorly-prepared provisional may be insufficient to preserve a priority claim. Cutting corners to file a provisional cheaply or quickly imposes some limits on the scope of protection obtained. Always remember that a provisional is only as good as the disclosure it contains — that point is worth repeating.

A common mistake in applications self-prepared by inventors is to focus on the prior art or problem to be solved but omit the crucial disclosure of the substance and structure of the new invention — or do so only with general, vague, and conclusory statements that fail to establish anything more than a hope that an invention will be discovered later. A provisional also won’t be effective if key enabling aspects of the invention are purposefully withheld from the application. For instance, a disclosed algorithm cannot obscure key steps of the purported invention within a “black box”. Another common mistake is to characterize the invention in a way that limits the ability to claim the invention more broadly (or narrowly) later on.

Whether a provisional patent application is worthwhile will ultimately depend on circumstances such as the subject matter of the invention(s), the state of the art, any looming bars to patentability, the business goals and objectives of the applicant, the realistic commercial value of the invention, and the applicant’s worldwide patent strategy.

Austen Zuege is an attorney at law and registered U.S. patent attorney in Minneapolis whose practice encompasses patents, trademarks, copyrights, domain name cybersquatting, IP agreements and licensing, freedom-to-operate studies, client counseling, and IP litigation. If you have patent, trademark, or other IP issues, he can help.

Contact Austen

Tags Patent Prosecution, Patents, Provisional Patent Applications

Articles

Considerations for Patent Assignments After Minerva Ruling

Post author By Austen Zuege

By Austen Zuege & Benjamin Edlavitch

A version of this article about patent assignments and assignor estoppel appeared in an online magazine on August 4, 2021 as intellectual property “expert analysis”.

Introduction

For many decades, the terms and content of patent assignments have been relatively uncontroversial. However, the Supreme Court’s recent ruling in Minerva Surgical, Inc. v. Hologic, Inc. established that assignor estoppel will apply to some assignments but not others.[i] Consequently, the execution of an assignment of patent rights is now potentially more contentious than before. Parties to an assignment may now wish to scrutinize the terms of an assignment document as well as the factual context around the execution of an assignment that may give rise to implied terms. What follows is an analysis of practical considerations for a patent assignment, including sample assignment clauses that might be negotiated, in light of Minerva.

Minerva reaffirmed the doctrine of assignor estoppel but limited its scope to what an assignor represents in assigning patent rights. The assignor is estopped from challenging the validity of the patent when the “assignor’s claim of invalidity contradicts explicit or implicit representations” the assignor made.[ii] A key aspect of the Court’s holding involved determining the scope of “implicit representations” that result in assignor estoppel.

The Minerva Decision

Inventor Truckai had assigned patent applications to Novacept, Inc., which was later acquired by Hologic, Inc.[iii] Afterwards, Truckai founded Minerva Surgical, Inc., and Hologic sued Minerva for patent infringement on resulting patents.[iv] Hologic argued that assignor estoppel barred Minerva from arguing the patents were invalid and the district court and the Federal Circuit both found that assignor estoppel barred the defendant from pursuing invalidity defenses.[v] The Court vacated and remanded the case in a 5-4 ruling and explained that “the limits of the assignor’s estoppel go only so far as, and not beyond, what he represented in assigning the patent application.”[vi] Therefore, “if Hologic’s new claim is materially broader than the ones Truckai assigned, then Truckai could not have warranted its validity in making the assignment” and, thus, “there is no basis for estoppel.”[vii]

The Court outlined a total of three examples where assignor estoppel does not apply. “One example . . . is when the assignment occurs before an inventor can possibly make a warranty of validity as to specific patent claims. Consider a common employment arrangement. An employee assigns to his employer patent rights in any future inventions he develops during his employment; the employer then decides which, if any, of those inventions to patent. In that scenario, the assignment contains no representation that a patent is valid. How could it? The invention itself has not come into being.”[viii] “A second example is when a later legal development renders irrelevant the warranty given at the time of assignment.”[ix] Thirdly, a post-assignment change in patent claim scope in which the “new claims are materially broader than the old claims” does not trigger assignor estoppel.[x] This last example was the situation alleged in Minerva: materially broader continuation claims filed after execution of the assignment were not subject to assignor estoppel because the Court held there was no implied warranty of validity.[xi] While the majority opinion helpfully gave a few examples of circumstances that would or would not give rise to an implied warranty, they are hardly exhaustive and do not reach some fairly common assignment scenarios, leaving some ambiguity.[xii]

Practical Considerations and Possible Assignment Clauses

Almost all of the factors that determine whether assignor estoppel will apply may be within the control of the parties to an assignment. It may be possible to include explicit terms in the assignment document in order to avoid later dispute about what was or was not implied by circumstances of execution. The question becomes, what are the sorts of terms that assignors and assignees may now wish to consider? The following are simply examples; particular parties will have different interests and their relative bargaining power will of course vary from one situation to the next. Though as discussed below the enforceability of certain terms should not be assumed in all scenarios.

Assignees will now have motivations to try to add clauses to employment and services agreements establishing assignment obligations with some or all of the following additional terms: assignment timing requirements (i.e., after assignor estoppel attaches), requirements for non-quitclaim assignment or warranty of validity requirements, and express no-challenge clauses. For example, if an assignee’s claims are materially broadened, then the assignor could not have warranted the claims’ validity at the time of the assignment and there is no basis for assignor estoppel, as the Court held in Minerva.[xiii] Assignees seeking to acquire patent rights on a stand-alone basis will now have reasons to do one or more of the following: add an express warranty of validity or a no-challenge clause to an assignment, obtain a further post-grant warranty of validity (especially if any claim is materially broader), obtain a new assignment with each continuation or divisional application having materially different claims (especially any broader claims), and include a choice of law provision. The following are sample clauses that might be used to pursue assignee objectives:

I hereby waive all my rights to challenge validity of said invention in the United States and its territorial possessions and in all foreign countries and of all Letters Patent or similar legal protection in the United States and its territorial possessions and in any and all foreign countries to be obtained for said invention by said application or any continuation, continuation-in-part, divisional, renewal, substitute, or reissue thereof or any legal equivalent thereof in a foreign country for the full term or terms for which the same may be granted.
[No-challenge clause for stand-alone assignment]

I hereby waive all my rights to challenge validity of any and all inventions which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of time I am in the employ of the Company in the United States and its territorial possessions and in all foreign countries (collectively, “the Invention(s)”) and of all Letters Patent or similar legal protection in the United States and its territorial possessions and in any and all foreign countries to be obtained for the Invention(s) by any application or any continuation, continuation-in-part, divisional, renewal, substitute, or reissue thereof or any legal equivalent thereof in a foreign country for the full term or terms for which the same may be granted.
[No-challenge clause for employment agreement]

Assignors (including employee-inventors[xiv]) will now have greater reasons to question and push back against terms present in—or missing from—assignee-supplied assignment forms. As the Supreme Court put it, assignor estoppel “raises the price of patent assignments.”[xv] For example, assignors will have reasons to demand one or more of the following: insist upon only a quitclaim assignment[xvi] or language expressly denying any warranty of validity, inserting a clause that assignor estoppel shall not apply, sign an assignment only with regard to a patent application lacking claims,[xvii] refuse to sign any “confirmatory” assignment that gives rise to a new warranty, and negotiate additional consideration (e.g., larger payment, bonus(es), a raise in base compensation, promotion in job title, etc.) if an assignee expects any express or implied warranty. The following are sample clauses that might be used to pursue some of those assignor objectives:

I hereby make this assignment without representation or warranty as to patentability or validity of said invention.
[No Warranty of Validity]

It is possible that an assignor could unilaterally write-in additional terms into an assignment form prepared by the assignee, given that only the assignor conventionally signs an assignment under U.S. law.[xviii] Assignees might be faced with scenarios where further consideration is required to subsequently “undo” terms unilaterally written-in by the assignor if consideration was already paid—giving rise to assignees withholding payment until the executed assignment (free from unilateral modifications) is delivered.

Given that assignors and assignees may have widely divergent interests, with each seeking to receive more in exchange for less, there may be a need to reach a compromise with regard to assignment terms. For example, one or more of the following terms might be agreed to: explicitly spell out what due diligence has or has not been performed and expressly include a partial warranty of validity limited to actual knowledge and due diligence activities and/or include express language that assignor estoppel is limited only to validity challenges based on the law as it exists at the time and/or only to prior art of which the assignor was actually aware at the time (putting the obligation on the assignee to inform the assignor of all material prior art).[xix] The following are sample clauses that might be used to pursue some of those compromise objectives:

After performing due diligence, I hereby warrant and represent my belief in the validity of the specific claims presented to me as of the Effective Date of this Assignment to define said invention only with regard to prior art actually known to me as of the Effective Date and only with regard to patent statues, regulations, case law, and any other controlling authorities in effect as of the Effective Date, but this warranty does not extend to any other patent claims that are materially broader than the specific claims presented to me as of the Effective Date, and I hereby accept no liability for any finding of unpatentability or invalidity by any competent authority; and
[Partial Warranty of Validity]

I agree, upon payment of a reasonable fee, to conduct further due diligence with respect to any materially broader claim and to make a similar warranty and representation of my belief in validity of that materially broader claim if, in my discretion, such a warranty and representation is justified by all of the facts and information available to me at that time.
[Promise to Make Future Warranties for a Reasonable Fee]

Enforceability Considerations

The enforceability and effectiveness of warranties of validity and related contractual clauses present a number of other issues. Among those is the need for consideration in order for an assignment to constitute a valid contract.[xx] This is where an inventor bonus program could be useful—a bonus could be provided as consideration for an assignment and an explicit warranty, or even just for the warranty alone.

Obligations to assign, such as in employment agreements, are subject to state (or foreign) law.[xxi] But obligations to assign do not necessarily also create an obligationto warrant as to validity. A party under an obligation to assign might therefore refuse to provide a warranty of validity absent receipt of further consideration. And the enforceability of an employment agreement or master services agreement that purports to impose a prospective obligation to warrant validity of an invention not yet conceived is a question distinct from the enforceability of prospective obligations to assign, and may need to be sorted out by courts.

To even further complicate things, it has been suggested that a confirmatory assignment could create a warranty of validity that did not attach to an earlier assignment.[xxii] That position seems doubtful, though it turns on the particular language used. A true “confirmatory” assignment merely acknowledges (confirms) a prior assignment, perhaps curing technical defects such as to fix a typo, add missing information needed to accommodate recordation requirements in particular jurisdictions, or to omit sensitive price information in a publicly recorded version. If the prior assignment contained no warranty of validity, express or implied, then merely confirming that prior (warranty-less) assignment creates no new warranty. That would be especially true for nunc pro tunc assignments that relate back to the effective date of an earlier warranty-less assignment. Many assignments include boilerplate language about further writings to effectuate the transfer in the event of a technical defect or barrier to recordability. But if a new warranty is expressly (or implicitly) added to a purportedly “confirmatory” assignment, then the assignment is not really (or not merely) a confirmatory assignment and there must be consideration for the new warranty term—continued employment alone would not be sufficient consideration in some states.[xxiii]

Conclusion

The execution of an assignment of patent rights is now potentially more contentious than before. However, it seems that amending an assignment in light of Minerva may reduce disputes subsequent to its execution.

Have an invention you would like to patent? Have a brand you would like to register as a trademark? Concerned about infringing someone else’s intellectual property? Is someone else infringing your IP? Need representation in an IP dispute? Austen is a patent attorney / trademark attorney who can help. These and other IP issues are his area of expertise. Contact Austen today to discuss.

Endnotes:

[i] U.S. No. 20–440 (June 29, 2021).

[ii] Id. Slip Op. at 1.

[iii] Id. at 2-3.

[iv] Id. at 3.

[v] Id. at 3-4.

[vi] Id. at 16.

[vii] Id.

[viii] Id. at 15.

[ix] Id.

[x] Id. at 15-16.

[xi] Id. at 16-17.

[xii] There are also ambiguities in the Court’s decision that stem from shifting terminology. For instance, are (granted) “patent claim(s)” = (pending) patent application claim(s) “presented” to the USPTO = (unfiled) claims prepared by assignee’s attorney = (unfiled) claims prepared by assignor or assignor’s attorney? A “patent claim” is not necessarily synonymous with a “patent application claim”. An assignment knowingly executed while a pending patent application claim stands rejected might arguably carry no warranty, though Minerva does not explicitly address such a scenario.

[xiii] Id.

[xiv] See Bd. of Trs. of Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc., 563 U.S. 776, 786 (2011) (“In most circumstances, an inventor must expressly grant his rights in an invention to his employer if the employer is to obtain those rights.”); Banks v. Unisys Corp., 228 F.3d 1357, 1359 (Fed. Cir. 2000) (“The general rule is that an individual owns the patent rights to the subject matter of which he is an inventor, even though he conceived it or reduced it to practice in the course of his employment.”).

[xv] Minerva, Slip Op. at 14,n.4.

[xvi] See, e.g., Van Renesselaer v. Kearney, 52 U.S. 297, 322 (1851); Black’s Law Dictionary 503 (10th ed. 2014) (quitclaim deed is one that “conveys a grantor’s complete interest or claim in certain real property but that neither warrants nor professes that the title is valid.”). Assignor estoppel for patents is derived from real property law. Minerva, slip op. at 5-6. A patent quitclaim assignment could include language such as “hereby conveys and quitclaims” or “hereby transfers by quitclaim”, and the document title could explicitly use the word “quitclaim” (or “quit-claim”).

[xvii] A U.S. utility patent application (but not a design patent application) can receive a filing date even if lacking a claim. 37 C.F.R. § 1.53.

[xviii] However, handwritten changes to an assignment are normally initialed and dated by each of the assignor(s) to avoid disputes about post-execution changes not agreed to by the assignor(s). See MPEP § 323.

[xix] See Mast, Foos, & Co. v. Stover Mfg. Co., 177 U.S. 485, 493 (1900) (“we must presume the patentee was fully informed of everything which preceded him, whether such were the actual fact or not”); In re Wood, 599 F.2d 1032, 1036 (CCPA 1979) (“we presume full knowledge by the inventor of all the prior art in the field of his endeavor. However, with regard to prior art outside the field of his endeavor, we only presume knowledge from those arts reasonably pertinent to the particular problem with which the inventor was involved.”) accord Airbus SAS v. Firepass Corp., 941 F.3d 1374, 1380 (Fed. Cir. 2019).

[xx] See Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1370 (Fed. Cir. 2008) (“Construction of patent assignment agreements is a matter of state contract law.”) and Jim Arnold Corp. v. Hydrotech Sys., Inc., 109 F.3d 1567, 1572 (Fed. Cir. 1997) (“the question of who owns the patent rights and on what terms typically is a question exclusively for state courts”; collecting cases); but contrast, e.g., Hewett v. Samsonite Corp., 507 P.2d 1119, 1121 (Colo. App. 1973) (continued employment insufficient consideration for patent assignment, which was found invalid for lack of consideration) and Jostens, Inc. v. Nat’l Computer Sys., 318 N.W.2d 691, 703-04 (Minn. 1982) (mere continued employment provided insufficient consideration under Minnesota law for coercive intellectual property agreement) with, e.g., Preston v. Marathon Oil Co., 684 F.3d 1276, 1284-85 (Fed. Cir. 2012) (under Wyoming law, no additional consideration is required to support an employee’s post-employment execution of an agreement to assign intellectual property to his employer). A state-by-state or country-by-country survey is beyond the scope of this article.

[xxi] See Allen v. Riley, 203 U.S. 347, 355-57 (1906); Akazawa v. Link New Tech., 520 F.3d 1354, 1356-58 (Fed. Cir. 2008); see also 35 U.S.C. § 261; but see DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284, 1290 (Fed. Cir. 2008) (whether patent assignment clause creates automatic assignment or mere obligation to assign treated under Federal Circuit law).

[xxii] Dennis Crouch, “Assignor Estoppel Persists — But Only for Claims Specifically Assigned,” Patently-O (June 29, 2021).

[xxiii] See, e.g., Jostens, 318 N.W.2d at 703-04.

Tags Assignments, Assignor Estoppel, Patents

Patents Q&A

When is an Opinion of Counsel Worthwhile?

Post author By Austen Zuege

Obtaining an opinion of counsel is a way to help defend yourself in a later patent infringement dispute. In the most general sense, opinions help demonstrate that you acted in good faith at the time. In court, an opinion can be used for an advice of counsel defense against charges of active inducement of infringement or willful infringement, and to rebut demands to pay the other side’s attorney fees because the case is “exceptional”. A finding that infringement was willful can lead to enhanced damages (up to 3x). And the patentee’s attorneys fees can be considerable. So an opinion can help limit exposure.

Opinions are not required. By statute, failure to obtain an opinion of counsel, or to rely on one at trial, cannot be used against the accused infringer to prove willfulness or inducement. It is up to an accused infringer to decide if the burden of obtaining an opinion is worthwhile or not. So the real question become: what circumstances make an opinion worthwhile? Below is a summary of some factors to consider when deciding if you should get an opinion. There are grouped into three categories, though the categories do overlap.

In the end, many of these factors are about whether your conduct might be seen (after-the-fact) as having been reckless and therefore unreasonably risky, with an opinion representing the best way to show that your intent was reasonable at the time. More generally, obtaining an opinion can be a key component of overall efforts to develop and implement strategically beneficial legal positions going forward.

Elevated Exposure Risk Factors

Certain circumstances present elevated exposure risks when it comes to patent infringement. In other words, some circumstances make a patent lawsuit more likely or more costly if you lose. These factors include:

You received a cease & desist or licensing letter from the patentee
The potential amount of (enhanced) damages is high, such as from high-volume sales
The potential amount of attorney’s fee award is high, such as if both sides are inclined to fight to the end rather than settle
There is a particularly high chance of a lawsuit; for instance:
- the patent owner is a direct competitor in a highly competitive industry
- the patent owner is litigious or has been suing many others in your industry for infringement
- you have a history of disputes with the patent owner, even if not necessarily about patents
- the patent owner sued you for infringement in another jurisdiction
- the patent owner is a former vendor you broke ties with to make a similar product yourself
- you hired away an inventor-employee from the patent owner to work on a competing product
- you recently won over a customer, contract, or bid from the patentee
You believe there is a high probability the patentee will sue and seek a preliminary injunction

Factors Relating to Particular Defenses

Various patent infringement defenses depend on the accused infringer’s state of mind. But many legal questions surrounding patent infringement are complicated. A written opinion by competent legal counsel documents a defense so that it is clear later on that the investigation and legal analysis were sufficient to reasonably rely on. In other words, it makes clear that your defense was not conclusory, superficial, based on inaccurate information, biased, exaggerated, conjured up after-the-fact, or unreasonable. These factors include:

You want to completely avoid liability for inducement of infringement based on non-infringement (lack of scienter); this often applies when another entity such as a customer or end-user performs steps of a method claim using your product
You want to rely on an invalidity or unenforceability defense; it is almost never reasonable to rely on the invalidity or unenforceability of an asserted patent without an opinion of counsel because those defenses usually involve complex legal and factual issues, and because patents are presumed valid and overcoming that presumption carries a high burden of proof in court
Your non-infringement position relies on a particular claim interpretation (rather than the unambiguous and uncontroversial absence of a claim element under its plain and ordinary meaning); for instance:
- non-infringement rests on the interpretation of a “means-plus-function” claim limitation
- non-infringement relies upon a claim interpretation citing dictionaries, technical treatises, or other extrinsic evidence
- you want to rely on something in the prosecution history to inform claim interpretation, such as a prosecution disclaimer or disavowal of claim scope
- you believe the patent owner disclaimed or disavowed something in the patent or acted as his or her “own lexicographer” to define a claim term in a particular way
- differences between products within the claimed technology area are extremely complex, nuanced, or counter-intuitive in general, making proper interpretation prone to error
- the claims would be difficult for an ordinary juror to understand on their face
Your non-infringement position relies on complex indirect (contributory) infringement, extraterritoriality, or permissible repair issues; for instance, your position implicates the repair/reconstruction doctrine for non-staple-of-commerce goods, implicates manufacturing processes performed abroad on goods later imported, or implicates split or divided infringement issues for method/process claims
The doctrine of equivalents is a concern; that is, you want to rule out a plausible infringement theory under the doctrine of equivalents where there is no prosecution history estoppel, or you want to confirm that prosecution history estoppel applies to a crucial claim element

Business and Reputational Factors

Other relevant factors are less about the legal basis for defenses but instead have to do with business relationships, company policies, practicalities of technology, and marketplace considerations. These factors include:

An opinion can evaluate the effectiveness of a “design-around” that changed your planned product configuration to avoid infringement; in other words, the opinion is the culmination of more wide-ranging efforts to avoid infringement
You want to document your position so that you can better stick to it despite changes in company personnel, corporate mergers, etc.; this also includes documenting your position to avoid unwittingly undoing efforts to “design-around” a patent with subsequent product changes (possibly years later when the reasons for the design-around are nearly forgotten)
An opinion can help convey technical and legal issues to corporate leaders and decision-makers who lack a deep understanding of the technology or patent law
Having obtained an opinion of counsel can help provide comfort and a confidence boost to executives and employees who would likely be called to testify in an infringement lawsuit
You signed a contract that requires you to obtain an opinion of counsel
You offer an indemnity to a customer, distributor, etc. and want to limit exposure for those others’ activities (which may not be entirely within your control)
You want to tell customers, distributors, business partners, or investors that you obtained an opinion, in order to reassure them (while withholding the substantive opinion to preserve privilege)
Establishing a regular policy of obtaining opinions when aware of infringement risks as concrete evidence of a general good faith posture regarding competitor and other 3^rd party patents; it may even be what you would expect others to do if your own patent was at issue
Obtaining an opinion can allow for risk mitigation without limiting action to the most conservative legal position; that is, an opinion can help legal counsel or a legal department devise an acceptable path forward and avoid a reputation for saying “no” to too many business proposals
You want to limit liability of individual corporate executives or directors in their personal capacity, including for inducing infringement by the corporation or in piercing the corporate veil scenarios

Parting Remarks About Opinions

Opinions of counsel may not be legally required but obtaining them is often still worthwhile. They can provide great evidence to present to a judge or jury in defense against infringement allegations. That is especially the case when relying on an invalidity argument or a particular claim interpretation. Having an opinion provides a fall-back position so that if you are found to infringe you (hopefully) don’t have to also pay punitive damages or the patentee’s attorney’s fees. A non-infringement opinion can also potentially avoid any and all liability for inducement of infringement (if applicable). But any opinion really needs to be in writing and be prepared by competent outside counsel in order to have the best chance of being effective in those respects. Seriously consider obtaining an opinion whenever a potentially problematic patent comes to your attention.

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Tags Freedom-to-Operate (FTO) & Clearance, Inducement, Opinions of Counsel, Patents, Willfulness

Patents Q&A

When Should a Patentability Search Be Performed?

Post author By Austen Zuege

A full assessment of patentability requires identifying the closest prior art and then performing a legal analysis of the invention you want to patent in light of that prior art. Doing this meaningfully requires a patentability search. You need to conduct a patentability search at the right time to get the most value from it. An example timeline for a patentability search is shown below. This example timeline is meant to illustrate best practices for timing a patentability search in relation to filing a new patent application.

graphic of timeline for patentability search

You start with an initial idea or business case. That is the point at which there is a commitment to spend time and resources to try to come up with an invention. But it may be no more than a wish or plan. Sometime after that research & development (R&D) and product development begins. And at some point one or more inventions are conceived. That might occur at the same time as the initial idea or closely following it. Or there might be considerable R&D and development work needed before it appears that an actual invention has been conceived.

The invention is ready for patenting when it is possible to document how to make and use it. This might happen at the same time as conception. Or an invention might start as a loose collection of thoughts in the inventor’s and require extensive experimental testing before before the details can be meaningfully documented. Building a working prototype is sufficient but not required. Sometimes you might just want to test different embodiments to determine which is most viable. What matters most is that an invention must be sufficiently developed beyond a mere wish or plan to invent before a patent application can be prepared. But the applicant also has to subjectively feel ready to move forward with patenting a particular invention too.

Ideally, a patent application should be filed before any public disclosure, public use, or commercialization of the invention. This is required in many countries. Though there is a one-year grace period for patent filings in the United States after a public disclosure or sale by the inventor.

The patentability search should ideally be conducted before patent application drafting begins. This allows the results of the patentability search to be fully taken into account while preparing the application. It is often possible to write a better patent application when the closest prior art is known. Differences and improvements over the prior art can be described more thoroughly. Also, if the patentability search is unfavorable then you can avoid the expense of preparing and filing a patent application. That is one of the best reasons to perform a search.

It is possible to perform a patentability search while a patent application is being prepared. But once application drafting has begun it gets progressively harder to incorporate search results. And once a non-provisional application is filed the benefits of a patentability search drop close to zero. Though searches are still beneficial when done between the filing of a provisional patent application and the preparation of a non-provisional application.

But a particular invention must already be conceived before the patentability search is performed. If you don’t have any idea what the invention actually is, you cannot perform a meaningful patentability search. Otherwise you wouldn’t know what to search for. These searches are directly tied to the invention you want to patent after all. If you haven’t actually conceived an invention yet and just want to evaluate business opportunities (rather than patentability) then a landscape search is more appropriate.

In some circumstances, you may wish to delay a patentability search. That can help avoid wasted search effort if other inventions might take precedence in business plans. But, on the other hand, a patentability search might help you determine if an invention is ready and worthy of patenting. Applicants have wide latitude to define their inventions however they want. Sometimes you start with a broad view of an invention but a patentability search reveals that some aspects were actually already known. You might then have to do further development in order for the most promising “new” aspects to be ready for patenting. Or you might find that the patentable aspects are simply not commercially valuable enough to pursue.

You might also combine a patentability search with a freedom-to-operate (FTO) search. FTO searches assess risks of infringement for a planned product or service. The timing has to be right for both types of searches for a combined study to make sense. The parameters and legal considerations for patentability and FTO studies also differ significantly. So a combined search always involves more effort than one search individually. But sometimes there is enough overlap in the searching effort for a combined search to make sense.

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Tags Patents, Searching

Q&A Trademarks

What is an Acceptable Trademark Specimen?

Post author By Austen Zuege

Federal trademark rights in the United States are based on use in commerce. A specimen is evidence of actual, real-world use of a trademark (or service mark), such as a photo of a product bearing the mark. It is evidence of what consumers encounter when considering whether to purchase the branded goods or services. The U.S. Patent & Trademark Office (USPTO) generally requires specimens both to initially obtain a registration and to maintain an existing registration to keep it active. The Trademark Office will scrutinize a specimen to ensure that it is acceptable under current guidelines. So you need the right specimen(s). A knowledgeable trademark attorney can help identify suitable specimens.

General Requirements for Specimens

There are some general requirements that apply to all specimens. What all the requirements have in common is that they look at the branding a U.S. consumer is presented with when considering purchasing the goods or services. These considerations take into account industry norms.

First, an acceptable specimen must show the mark used in a way that consumers would perceive it as a source indicator—something that allows consumers to identify and distinguish goods or services emanating from different manufacturers, sellers, or producers. In that sense it must function as a mark.

One consideration is whether usage of the mark is prominent enough. If the mark is used only in passing or is difficult to identify amidst other things then the specimen is probably not acceptable. There must also be a direct association between the mark and the identified goods or services. A label or tag unattached to anything that shows only the mark but no other information fails to make that association.

Another consideration is proper usage. A term used generically or merely to provide information about the goods or services, or a graphic used merely for ornamentation or decoration, is not functioning as a mark.

graphic of example acceptable and unacceptable specimens on shirts — Examples of acceptable (left) and unacceptable (right) mark usage for shirts

In the graphic above, the specimen on the left represents a hypothetical photo of a shirt with an attached tag bearing the EXAMPLE mark. This would be an acceptable specimen of use of the EXAMPLE mark because the goods (a shirt) is visible, and a tag bearing the mark is attached inside the shirt at the collar in a customary way. This same specimen would not be acceptable to show use of “large” or “100% Cotton” as marks, however, because those are merely pieces of information about the size and materials of the shirt itself, in a generic sense. The specimen on the right is usually unacceptable because it shows ornamental (or aesthetically functional) use of the word “Example” rather than use as a mark. Acceptability depends on context.

It is necessary for a specimen to show a real use. A specimen cannot be a mock-up, printer’s proof, digitally altered/fabricated image, rendering of intended packaging, or draft of a website that shows how a mark might appear. Similarly, a copy or reproduction of a drawing of the mark in isolation (for instance, a logo alone), and not actually applied to commercial goods or service advertisements, is insufficient. A specimen must provide enough context for someone to understand how it specifically shows usage with the relevant goods/services. In general, you can think of a specimen as representative evidence of actual use that is already occurring. But anything that only portrays planned, hypothetical, or theoretical use is not acceptable as a specimen.

photo of pill bottle with digitally altered label text — Unacceptable digitally altered specimen

The example above shows a photo of a pill bottle with a label that has been digitally altered to add the EXAMPLE mark. The digital alternation of the photo is clear because the text does not wrap around the bottle like the rest of the label. There is also no other information or decoration on the label that would normally appear on a commercial product like this, such as to convey the number of pills contained or the net weight of the contents. The digitally altered image above would not be acceptable as a specimen of use.

Specimens must also correspond to usage with the particular goods and services identified in an application or registration. Usage with one good or service will not suffice to show usage with an entirely different good or service. If there are multiple classes of goods or services at issue, then multiple specimens are usually required.

The date a specimen was captured matters. For new trademark applications, a specimen should be recent. Specimens used to maintain existing registrations must be current, meaning the specimen must be from the window of time in which proof of current use can be submitted. Whenever a web page screenshot or printout is used as a specimen, the date and URL must be included. Ideally screenshots and printouts should be captured in a way that automatically includes that information.

A specimen must also show the same mark identified in the application or registration. Sometimes marks change over time. Such changes, if material, can mean the old mark is no longer being used. A common problem involves redesigning or refreshing a graphical logo to look more modern, which may affect the ability to maintain an existing registration. Changes to colors and graphical elements of a logo may mean you are using a new and different mark, even if the same words appear in both versions. Inconsistent spelling or wording of a mark may also make a specimen unacceptable.

But the particular sorts of evidence acceptable as specimens will depend on whether it is for a trademark (for goods) or a service mark (for services). Those different goods/services requirements are taken up below.

If a specimen is defective, there may be opportunities to submit a substitute. But failure to submit a proper specimen from the start might lead to loss of priority if a suitable substitute specimen (gathered on or before the date the trademark application was filed) is not available.

Specimen for Goods (Trademarks)

A typical form of an acceptable trademark specimen for goods is a photograph of a product bearing the trademark on an attached label or tag. A photo of the trademark stamped or imprinted on products themselves or on their packaging or container is also common and acceptable. But a package insert bearing the mark that is not visible to customers (unlike a conventional label or tag) is generally not acceptable.

Acceptable as Specimen for Goods	Unacceptable as Specimen for Goods
Photo of mark on product itself or attached tag/label	Mock-ups/digital renderings/altered images
Photo of mark on product packaging/container	Package insert not visible at time of purchase
Printout or screenshot of an e-commerce web page where the product can be purchased (for example, showing “Add to cart” or cart/bag icon)	Web page, brochure, or catalog with no way to purchase product
Copy from catalog page where ordering information is provided (for example, “Call this number to place an order”)	Copy of magazine advertisement
Screen shot of web page for downloading installable software	Receipt or invoice confirming prior purchase
Installable software in-app screen capture	Business card

Table of examples of acceptable and unacceptable trademark specimens for goods

A display associated with the goods might be acceptable. Examples of displays include in-store displays, catalogs, and web pages. But to be acceptable a display specimen must show use of the mark (a) directly associated with the goods and (b) that display usage must be at the point-of-sale.

Display specimens often raise acceptability problems. The USPTO looks at “point-of-sale” rather strictly by analyzing whether and how ordering information is provided. Web pages, in particular, sometimes fail to meet all the requirements. Acceptability can sometimes hinge on web page layout.

Typical e-commerce “shopping cart” and “shopping bag” buttons and icons shown near the goods meet point-of-sale requirements. But “contact us for more information” or “where to buy” links are insufficient because they put an extra step between the online display and the ability to purchase the goods. Telephone numbers and email addresses may be sufficient if accompanied by special instructions for placing or accepting orders, such as “call now to buy” or “e-mail your order.” But the mere presence of a phone number or email address is often not sufficient.

For downloadable or installable computer software, an acceptable specimen can be an in-app screen shot showing the trademark. Alternatively, a web page screen shot can be used but only if (a) it creates an association between the trademark and the software and (b) provides sufficient information to enable the user to download or purchase the software from the website—like the point-of-sale display requirements discussed above. Another important distinction here is that cloud computing systems (SaaS, PaaS) used on a temporary basis but not downloaded or installed by a consumer are treated as services rather than goods for trademark purposes.

Various non-traditional trademarks (sounds, scents, etc.) have different specimen requirements. But those sorts of trademarks are rather uncommon.

When it comes to goods, however, mere advertising is generally not acceptable as a specimen. This is probably the most frequent area of misunderstanding. Mere advertising typically does not occur at the point-of-sale for goods. Though there are exceptions, such as an ad that includes purchase instructions, like a TV infomercial. But usually a copy of something in a magazine or online that merely merely tells prospective purchasers about the goods or promotes the goods won’t be accepted as a specimen of use for goods—even though advertising is accepted as specimens for services.

The USPTO provides some examples of acceptable and unacceptable specimens for goods.

Specimen for Services (Service Marks)

A service mark specimen must show the mark as actually used in the sale of the services. But a wider range of specimens are accepted for services than for goods. Acceptable specimens show use in the performance or rendering of the services or in the advertising of the services. A typical form of an acceptable service mark specimen is a web site printout or screen capture that shows the mark in direct association with a description of the services as part of an online advertisement.

Acceptable as Specimen for Services	Unacceptable as Specimen for Services
Screen shot of web page mentioning services	Screen shot of web page that does not mention the services
Copy of magazine ad or brochure mentioning services	Copy of magazine ad or brochure that does not mention the services
Sign-in screen capture for online, cloud-based software platform (SaaS/PaaS)	Screen capture of online software not showing the mark
In-app screen capture showing use of non-downloadable software	Screen shot of web page to download installable software
Copy of business card or letterhead referencing services	Copy of business card that does not mention the services
Photo of service vehicle bearing the mark	Photo of service vehicle not showing the mark
Invoice with service details	Blank form for invoice or receipt that does not describe the services

Table of examples of acceptable and unacceptable service mark specimens for services

Even though a broader range of specimens can be used for service marks for services than for trademarks on goods, not anything will suffice. The USPTO provides a number of helpful examples of acceptable and unacceptable service mark specimens.

Common reasons a service mark specimen might be insufficient include a failure to function as mark or an insufficient identification of the applied-for or registered services (in direct association with the mark). For instance, if an application identifies services that are not clearly identified in the specimen it will not be accepted—even if that same specimen might be acceptable for different (but not applied-for) services. And web site screenshots showing vague descriptions of services might not support an application for services identified in a more specific way. For example, a web site saying “we deliver a variety of customer solutions” would not be sufficient for an application identifying “computer programming services.”

annotated web site screenshot specimen — Example service mark specimen for web site

In the example above, a web page screenshot of blueovergray.com would be an acceptable specimen for services identified as “providing a web site featuring legal information.”

Another important requirement is that the URL and date of capture must be provided for web site printout and screenshot specimens. The USPTO’s “TEAS” online system allows the URL and date of capture to be manually entered for a specimen. But ideally a web site specimen should be captured in such a way that the URL and date are directly embedded in the capture or printout. The example above shows the URL and date of capture embedded in the specimen.

State Trademark Specimens

Individual U.S. states also permit trademark registrations. The specific requirements vary by state. Though specimens are usually required. The criteria for determining what is an acceptable will depend on state law. But the guidelines discussed above for federal trademark registration still represent a good starting point when thinking about such things. Though, as you might expect, specimens for a state registration typically must show usage of a mark in that particular state.

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Tags Specimens, Trademark Prosecution, Trademark Renewal, Trademarks

Q&A Trademarks

Why Are There Trademarks?

Post author By Austen Zuege

Trademark Law Is Directed Against Forms of Unfair Competition

Trademark law is part of unfair competition law. It generally prohibits uses of trademarks (or service marks), trade names, and trade dress that are likely to cause confusion about the source of a product or service. Trademark infringement law traditionally protects consumers from being misled by the use of infringing marks. It is the source-distinguishing ability of a mark that permits it to serve that basic purpose.

We say that marks must be sufficiently “distinctive” to be able to serve as a protectable mark. Generic, merely descriptive, and functional things do not serve a source-identifying function and therefore are not protected by trademark law. For instance, trademark law does not allow someone to obtain a complete monopoly on use of a descriptive term simply by grabbing it first. Terms that are or that become generic are also not protectable. And functional features of goods are distinguished from things that identify their source.

In the U.S., trademark registration is optional—though it provides many benefits for the owner. Trademark laws generally apply even to use of unregistered marks. Rights in unregistered marks are referred to as “common law” rights.

There are both federal and state trademark laws in the United States. Federal or state trademark laws, or both, can apply in a given situation. Though usually federal law is the most important to consider; state laws tend to be similar but are geographically limited. Also, most countries have some form of trademark law, though these laws can differ considerably.

Long ago trademark rights were more limited to counterfeiting and palming-off situations. There has since been an expansion of trademark rights and unfair competition law through modern history. Things like “dilution” are are now addressed too. But these expansions have raised concerns, as have even the pre-modern policy foundations. Like a lot of things, judgments about what is fair or unfair competition tend to be subject to political disagreement. Of course, whether competition should be encouraged or discouraged is itself a normative policy position too.

Justification for trademark law on consumer protection grounds sometimes seems like a “Trojan horse”. Consistent with observations about early Twentieth Century U.S. law concerning business activity in general, trademark law seems to persist because of its ability to shield established firms from new-entrant rivals. In this sense, it fosters a polarization between a small number of highly-profitable firms and a large number of lower-profit firms. The ability of some firms to reap exclusive financial rewards that arise only because trademark laws exist has been partly acknowledged by courts. That those aspects can overshadow purported consumer protection benefits is not as frequently acknowledged, however.

Additionally, trademarks are sometimes said to protect “goodwill”. But is this goodwill held by the consumers in whose minds it arises, or is it some kind of customer loyalty built-up and cultivated around a mark that is the property of the business asserting trademark ownership? In other words, is it customers’ goodwill or the producer’s/supplier’s goodwill? U.S. courts have tended to adopt the latter view through the Twentieth Century. But such a policy has a character of colonization or propertization of the beliefs and views of the public. So this is yet another area where the policies behind trademark law are sometimes criticized.

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Tags Policy, Trademarks

Q&A Trademarks

What is the Source of Federal Authority for Trademark Law?

Post author By Austen Zuege

U.S. federal trademark laws are enacted under the “Commerce Clause” of the Constitution. This is different from patent and copyright laws, which are expressly constitutionally authorized. Trademark law doesn’t have any special constitutional authorization. And the Tenth Amendment says that powers not delegated to the federal government by the Constitution are reserved to the States (or to the people). So, in order to be constitutional, federal trademark law has to be tied to certain types of commerce that the federal government has authority to regulate under the Commerce Clause. Lawyers learn about the Commerce Clause in law school. But it isn’t something that comes up in typical history courses in schools.

In brief, the U.S. federal government didn’t do a whole lot before the Civil War. It focused mostly on foreign policy. But during the post-Civil War “reconstruction” period it started to take on new and expanded roles that hadn’t been meaningfully considered before. Reconstruction provoked deep political debates that were not fully settled by the war. President Lincoln’s assassination added to this post-war tumult. Some constitutional amendments were passed but various proposals failed. Supporters of “lost cause of the confederacy” mythology advocated for “states rights” to try to block federal initiatives and undo advancements of the Civil War.

As time went on, court rulings limited federal powers—and even reconstruction era constitutional amendments—culminating in the so-called Lochner Era. Nearly any regulation of business was struck down. But then the Great Depression and the New Deal Era changed political alignments and an expansive view of the Commerce Clause took hold—for a time at least. Courts started to uphold new and unprecedented federal government laws and initiatives.

The federal trademark laws still in effect today were originally set forth in the Lanham Act. Congress passed the Lanham Act in 1946, during the New Deal Era. Aside from trademark provisions, it also addressed things like public funding of child day care (if only for a short period of time). But the Lanham Act still rests on the Commerce Clause, meaning it can only extend to commerce that may lawfully be regulated by Congress. Such constitutional limits to trademarks are not exactly by design. But in the absence of a constitutional amendment, any federal trademark laws must be limited to what the Commerce Clause permits.

Courts have not sustained any constitutional challenges to federal trademark authority under the Lanham Act as a whole, to date, having struck down only isolated aspects. Though courts have offered shifting justifications for aspects of trademark law. And interpretations of the law have altered and expanded its scope in ways that generally reflect post-New Deal political alignments. The Lanham Act has also been amended in various ways by Congress since its original enactment.

Tags History, Trademarks

Q&A Trademarks

What Is Use in Commerce?

Post author By Austen Zuege

Use in commerce in U.S. trademark law boils down to two distinct requirements: (a) bona fide use in (b) federally-regulated commerce. Both must be satisfied to have federal rights in a trademark (or service mark).

Bona Fide Use

The first requirement pertains to what sort of use makes a mark eligible for federal trademark protection. The U.S. Patent & Trademark Office (USPTO) scrutinizes evidence of use by requiring “specimens”. U.S. trademark laws—which were amended in 1988 to be stricter about this point—say there must be “use in commerce”, which is a term given a special legal meaning.

“Use in commerce” means the “bona fide [that is, good faith] use of a mark in the ordinary course of trade and not made merely to reserve a right in a mark.” The way this applies to marks on goods versus services varies somewhat. And what is considered the “ordinary course of trade” will vary by industry. But the main point is that federal trademark rights require a connection to actual real-world use. Token uses, sham uses, or purely internal uses are not bona fide uses. So what sorts of uses are sufficient?

Use in commerce on goods occurs when two conditions are met. First, a mark must be placed on the goods or their containers, or on attached tags or labels, or displays associated with the goods. If the nature of the goods makes those kinds of placements impracticable, then use of the mark on documents associated with the goods or their sale qualify. Second, use in commerce on goods requires that the goods (bearing the mark) be sold or transported in “commerce”.

Use in commerce for services occurs when a mark is used or displayed in the sale or advertising of services and the services are rendered in “commerce”, or the services are rendered in more than one state or in the United States and a foreign country.

Note that these definitions for the first requirement are explicitly tied to the second requirement about federally-regulated “commerce”. But otherwise this first requirement can be summarized by saying that you have to actually be using a given mark directly in connection with meaningful commercial offerings of goods or services.

Federally-Regulated Commerce

The second requirement ensures that trademark rights fall with a type of commerce that can be federally regulated. In other words, federal trademark law is limited to certain types of commerce that the federal government is able to regulate as opposed to individual states (find out about the historical background of that requirement here). So in federal trademark law, “commerce” means only commerce that is interstate, territorial (in or with a U.S. territory), or between the United States and a foreign country or tribe. Activities that occur only within a single state on a localized basis often don’t meet that requirement.

Offering services via the Internet is considered use in “commerce”, because the Internet utilizes interstate communications networks. Services such as restaurant and hotel services are considered to be rendered in “commerce”—though courts have been inconsistent on this point historically. Also, intrastate use of a mark may qualify if of a type that would, taken in the aggregate, have a direct effect on interstate commerce. But goods or services offered only locally, entirely within one state, without a significant effect on interstate commerce, would not qualify for federal trademark protection.

Foreign trademark applicants can obtain a U.S. registration without first establishing use. This gives foreign trademark applicants more leeway than domestic U.S. applicants. This is partly because of international treaties the U.S. federal government has signed. But it is also because the federal government has special authority over foreign commerce. However, even foreign registrants must eventually establish use in commerce in or with the U.S. to maintain a federal registration.

The USPTO does not scrutinize the type of commerce when examining trademark applications. Instead, the USPTO presumes that use of a mark is of a type that is federally regulated unless there happens to be evidence to the contrary. It is the responsibility of the applicant and the applicant’s attorney to determine whether an assertion of use in commerce is supported by the relevant facts. So a failure of a use to be in federally-regulated “commerce” generally only comes up if a registration or application is later challenged on those grounds by someone in an opposition, cancellation, or court proceeding.

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Tags Trademark Prosecution, Trademark Renewal, Trademarks

Q&A Trademarks

What is Likelihood of Confusion?

Post author By Austen Zuege

Overview

Under U.S. federal trademark law, a trademark registration can be refused or trademark infringement found if there is a likelihood of confusion. The “likelihood of confusion” standard covers more than identical uses, intentional copying, counterfeiting, and knock-offs. It is ultimately a question of determining what ordinary consumers understand and what would confuse them. Trademarks (and service marks) are intended to avoid consumer confusion about the source of commercially available goods and services. So these issues go to heart of trademark law.

Likelihood of confusion is a multi-factor analysis. There are a number of different facts that are taken into account in order to draw a legal conclusion about the likelihood an appreciable number of consumers would be confused. Each individual factor can point toward or away from confusion, or be neutral. Different factors can carry different weight in the overall analysis depending on the circumstances.

Keep in mind, however, that the likelihood of confusion analysis is about whether an appreciable number of ordinary consumers is likely to be confused. That a few undiscerning or careless prospective purchasers might occasionally be confused is not enough. There is generally no obligation under trademark laws to protect negligent, indifferent, inattentive, or careless purchasers from confusion or to make the market foolproof. The owner of a trademark is not entitled to a guarantee against confusion in the minds of careless and indifferent buyers. Even evidence of actual confusion among a few customers may be de minimis and not conclusive of likelihood of confusion.

A reliable consumer opinion survey is highly informative about likelihood of confusion. Actually, it is usually the best kind of evidence. But surveys are complicated and costly. The practical difficulty is to make a judgment about the likelihood of confusion without having survey results available.

A useful exercise is to try to envision a hypothetical consumer survey. This can help you be more objective and avoid looking at likelihood of confusion in too self-serving a way. Splitting hairs about insignificant differences is a common mistake. Thinking that established rights extend to any and all goods and services (that is, thinking that similar marks can never coexist) is also a common mistake. But turning to the idea of a hypothetical survey of ordinary consumers might help avoid those biases. Because, in the end, the likelihood of confusion question is about ordinary consumers’ perspectives not your own.

The specific list of factors considered is phrased in different ways by various courts and the U.S. Patent & Trademark Office (USPTO)—as discussed further below. But under the any formulation of likelihood of confusion factors, the overall analysis is similar. The marks do not have to be identical. Similarly, the respective goods/services do not have to be identical. It is sufficient that they are related in such a manner that an appreciable number of ordinary purchasers are likely to assume—mistakenly—that they originate from a common source.

Registrations at the USPTO

In the USPTO, six so-called DuPont factors are used for the likelihood of confusion analysis. These DuPont factors can be used to refuse registration because there is a prior conflicting registration. They can also be used in deciding oppositions to applications and attempts to cancel an existing registration based on prior use of a mark. Two DuPont factors are always considered:

similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation, and commercial impression
relatedness of the goods or services as described in the application and prior application(s)/registration(s)

Four additional DuPont factors might also be considered, though there may not be any evidence available to allow consideration of these other factors:

similarity or dissimilarity of established, likely-to-continue trade channels (that is, actual sales methods used)
conditions under which and buyers to whom sales are made (for instance, “impulse” vs. careful, sophisticated purchasing)
number and nature of similar marks in use on similar goods or services
existence of a valid consent agreement between the applicant and the owner of the previously registered mark

The six factors listed above are actually a condensed list of the ones that are most commonly relevant in the examination of new applications. The DuPont case actually set forth a total of thirteen factors. Though the other factors omitted from the condensed list above rarely come up except for certain contentious cancellation or opposition proceedings where an opposing party is involved, and even then may not be as significant as other factors.

The weight given to any of these individual factors can vary. There is no precise mathematical formula for how they are applied to reach a conclusion. Though the comparison always involves the specific mark and the specific goods or services identified in the application or registration in question. Actual uses of the mark in the marketplace that are not identified in the application or registration at hand are generally irrelevant—the USPTO only decides what can or cannot be registered. Questions about infringement are dealt with by courts instead.

The USPTO provides some useful hypothetical examples of likelihood of confusion comparisons.

Disputes in Court

Courts decide infringement allegations as well as issues about the validity of trademark rights. But there are slightly different formulations of the likelihood of confusion factors applied in courts from different parts of the country. So the applicable factors will depend on which “circuit” handles a given case.

For instance, in the 8th Circuit—whose jurisdiction covers the states of Minnesota, Iowa, Missouri, Arkansas, Nebraska, South Dakota, and North Dakota—six so-called SquirtCo factors are used to assess likelihood of confusion:

the strength of the owner’s mark
the similarity between the owner’s mark and the alleged infringer’s mark, based on an examination of the marks as a whole
competitive proximity (the degree to which the products compete with each other, though infringement may be found in the absence of direct competition)
the alleged infringer’s intent to “pass off” its goods as those of the trademark owner raises an inference of likelihood of confusion, but intent is not an element of a claim for trademark infringement
incidents of actual confusion (if any; not required to establish likelihood of confusion; requires more than isolated incidents of inattentiveness; its presence is also not conclusive of likelihood of confusion)
the type of product, its costs and conditions of purchase

The weight given to any of the factors for likelihood of confusion can vary. And there is no mathematical formula for applying them. Depending on the evidence available, some factors may be more important than others.

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Tags Litigation, Trademark Infringement, Trademark Prosecution, Trademarks

Articles

Copyright Pitfalls: Ways to Avoid Copyright Infringement and Ownership Disputes

Post author By Austen Zuege

A version of this article appeared in AIPLA’s Innovate Magazine in October 2021.

Introduction — Avoiding Copyright Infringement and Ownership Disputes

Mark Twain observed that “[o]nly one thing is impossible for God: to find any sense in any copyright law on the planet.”[i] From the standpoint of individuals and small businesses, Twain’s observation might ring true. Not only do some people have difficulty distinguishing between what they feel copyright law ought to entail and what it actually does entail, there are many genuinely ambiguous and confusing copyright issues that arise from everyday practices. What follows is a collection of observations about a few common copyright infringement pitfalls, meant as a practical reference for those who wish to avoid finding themselves embroiled in an avoidable copyright dispute.

“Free” Materials

“Free” photo and clipart websites and similar archives are used at your own risk. Unless provided with full indemnity, which usually is not provided, ordinary users are liable for infringement if the “free” image website did not actually have permission to use and distribute the image(s) in question. Put another way, just because a web site claims to grant free use of images that appear on the site does not mean that the site operators actually have the authority to grant such permission for a given image—the site operator or whoever uploaded an image to the site might be an infringer. In some instances, there may even be reason to suspect that the alleged owner is aware of the presence of materials in a “free” repository—or was even responsible for placing the materials there—and seeks settlements in bad faith or through outright fraud.[ii]

Will an “innocent infringer” defense help in these situations? Not against liability. Though it potentially limits statutory damages.[iii] How much it might limit statutory damages is discretionary, it may not limit actual damages,[iv] and it will not prevent an injunction. In pragmatic terms, innocent infringement defenses do very little in the face of nuisance settlement demands from copyright owners engaged in troll-like enforcement activities.

“Creative Commons” (CC) licenses are another area where materials turn out to be less usable than believed. There are different types of CC licenses and a given work subject to one kind of CC license may not permit your intended use, especially if your use is “commercial” in nature. And, as discussed below, removal of copyright management information (CMI) from CC works is still a potential source of liability.

Moreover, even where a copyright owner freely grants use of a particular image, if it is an image of a person or derivative of another work—like a photo of a sculpture, painting/mural, clothing design, etc.—then separate authorization or release of a right of publicity/privacy (a so-called model release) for the depicted person or copyright authorization for the depicted work may still be required. Very likely any such additional authorization(s) must be sought from a different person or entity.

Licensing Stock Images

Many stock image providers offer what seem like intentionally confusing licenses. “Royalty free” images (and music) are not actually free but rather are usually subject to lump sum license payments—advertisements about the provider’s license terms may be confusing if not outright misleading. Many stock image providers also offer different types of licenses that are difficult to differentiate. For instance, the least expensive types of stock image licenses often do not cover use for “merchandising”, use on more than a specified number of hard copies, use with video production budgets over a certain threshold, etc. Understanding which type of license addresses your particular intended use may not be simple. Yet, if you purchase an incorrect license you may find yourself in the position of having made an unlicensed use.

Lastly, stock image providers may not offer indemnity or, if they do, it might be provided at levels well below statutory damage maximums.[v] Therefore, if you license an image only to later discover that the image provider was not authorized to license that image you could find yourself in a lawsuit with a monetary exposure that may exceed your apparent culpability.

Outside Contractors and Ownership

You need a written assignment to own copyright in outside contractors’ work. This holds even when an outside contractor was specifically hired to create copyrightable works, such as advertising copy, software code, photos, videos, etc. While “works made for hire” are initially owned by the employer, absent a written agreement to the contrary,[vi] that ownership provision only applies when the work is created by an employee within the scope of his or her job duties or if there is a written work-made-for-hire agreement and the work falls within nine statutory categories of works (and, chances are, it probably does not fall in one of those categories).[vii] In single-member LLCs and similar small businesses where the owner’s status as an “employee” may be in doubt under agency law, and there is no employment or other applicable agreement in place to clarify, then the ownership of copyrights created by such a person may be subject to dispute at some point.

Outside vendors, like marketing companies, will sometimes have service agreements with their customers stating that the customer will own all of the work product, but such language may be phrased in the future tense, which is generally not sufficient to constitute an assignment of copyright—in such cases only a contractual obligation to assign has been established and an additional written assignment is required for the customer to actually obtain ownership of particular copyrights, though this may vary under state law.[viii]

Failure to own a copyright prevents enforcement against infringers. So, if a business hires an outside photographer to take photos for the business’ web site, if a competitor copies any of them the business may find that it does not own the copyrights in the photos and therefore cannot assert infringement until ownership is secured.

DMCA Takedowns

The Digital Millennium Copyright Act (DMCA) includes a “safe harbor” notice-and-takedown provision in 17 U.S.C. § 512.[ix] Takedowns can be powerful tools against online piracy but can also be abused or misused. There are also known scams involving infringers of a copyright using takedown notices to seek nuisance settlements from third parties (who may be protected by fair use) and allegations of usage to silence critics.

CMI, Circumvention, and Repair Issues

Liability for knowing removal or alteration of copyright management information (CMI) is set forth under 17 U.S.C. § 1202. CMI includes the title, author or copyright owner names, and terms and conditions for use. While the law requires removal to be knowing, rather than unwitting or unintentional, and further requires knowing or having reasonable grounds to know that doing so will induce, enable, facilitate, or conceal an infringement, copyright owners sometimes broadly assert CMI removal to seek additional damages or as a fallback position when substantive infringement claims are unavailable.[x]

Section § 1201 limits “circumvention” of a technological measure that effectively controls access to a copyrighted work, unless the Library of Congress grants an exception. Product/repair manuals, error code outputs generated by diagnostic tools, and/or diagnostic tools themselves may be subject to anti-circumvention restrictions stemming from copyright, which can impact the ability to repair a purchased item. Aside from Section 1201 anti-circumvention exemptions, state right to repair law may provide some counterbalance.

End user license agreements (EULAs) also bridge copyright law and contract law and attempt to circumvent the first sale doctrine (more generally, exhaustion of rights). They may limit or prevent the use of unauthorized repair sources or transfer/resale, even if the enforceability of such EULA terms might be questioned in some jurisdictions.

Predatory Contracts

Finally, buyers sometimes request products from vendors while specifying product requirements (e.g., a fabric pattern or decorative image, included text or video) for which the buyer may not have rights. That is, the buyer may be requesting an infringing knock-off product without explicitly saying so—and possibly without realizing that copyright infringement is being requested. All liability for copyright infringement may nonetheless be placed on the vendor by a purchase agreement, including a buyer indemnification that overrides the Uniform Commercial Code (UCC).[xi] Such agreements might be called predatory contracts where they give the appearance of an opportunity for the vendor when, at bottom, they are really vendor liabilities and the buyer is shifting a greater risk to the vendor than the value of the contract.

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Endnotes:

[i] Mark Twain, Mark Twain’s Notebook (A.B. Paine, ed., 1935) quote reprinted at <http://www.twainquotes.com/Copyright.html>.

[ii] See also U.S. v. Hansmeier, No. 19-2386 (8th Cir., Feb. 10, 2021); Jason Mazzone, “Copyfraud,” 81 N.Y.U.L.R. 1026 (2006).

[iii] 17 U.S.C. § 504(c)(2).

[iv] Actual damages may be low or difficult to establish. See, e.g., On Davis v. The Gap, Inc., 246 F.3d 152, 165 (2d Cir. 2001); Gregerson v. Vilana Fin., Inc., No. 0:06-cv-01164, 2008 U.S. Dist. LEXIS 11727, *14-15 (D. Minn., Feb. 15, 2008).

[v] General business insurance polices may cover non-willful copyright infringement, such as under “advertising injury” provisions. See, generally, David A Gauntlett, IP Attorney’s Handbook for Insurance Coverage in Intellectual Property Disputes (2^nd ed., ABA 2014).

[vi] 17 U.S.C. § 201(b).

[vii] 17 U.S.C. § 101; see also Z. Peter Sawicki et al., “Copyright Ownership: A Mere Handshake Isn’t Good Enough” AIPLA Innovate (Sept. 24, 2018).

[viii] E.g., TD Bank N.A. v. Hill, 928 F.3d 259, 274 (3d Cir. 2019); cf. IpVenture, Inc. v. Prostar Computer, Inc., 503 F.3d 1324, 1327 (Fed. Cir. 2007) (interpreting “agree to assign” as requiring subsequent written instrument to effectuate assignment of patent rights).

[ix] See also U.S. Copyright Office, “Section 512 of Title 17: A Report of the Register of Copyrights” (May 2020).

[x] See, e.g., Philpot v. WOS, Inc., No. 1:18-cv-00339, 2019 WL 1767208 (W.D. Tex. April 22, 2019); Mango v. BuzzFe e d, Inc., 970 F. 3d 167, 171 (2d Cir. 2020) (A plaintiff must prove the following: (1) the existence of CMI in connection with a copyrighted work; and (2) that a defendant distributed works or copies of works; (3) while knowing that CMI has been removed or altered without authority of the copyright owner or the law; and (4) while knowing, or having reasonable grounds to know that such distribution will induce, enable, facilitate, or conceal an infringement.); Stevens v. Corelogic, Inc., 899 F.3d 666, 673-75 (9th Cir. 2018) (there are two scienter requirements and for the second the copyright owner “must provide evidence from which one can infer that future infringement is likely, albeit not certain, to occur as a result of the removal or alteration of CMI” “such as by demonstrating a past ‘pattern of conduct’ or ‘modus operandi’, that the defendant was aware or had reasonable grounds to be aware of the probable future impact of its actions.”).

[xi] UCC § 2-312(3) (2002) (“a buyer who furnishes specifications to the seller must hold the seller harmless against any such [infringement] claim which arises out of compliance with the specifications”).

Tags Copyrights, Freedom-to-Operate (FTO) & Clearance, Infringement, Work Made for Hire