Author: Eric Waltmire

Eric Waltmire is a registered patent attorney at the Erickson Law Group, PC. He can be contacted at blog@waltmire.com.
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Components of a Trademark Cease and Desist Letter

At its most basic, a trademark cease and desist letter explains the what and why of the wrongful conduct and requests that it stop. Below provides a more detailed explanation of some components that may go into a cease and desist letter, depending on the circumstances.

1.  Who is this?

Simply explain who you are. For example, “I’m the president of Acme, Inc.”

2. Tell them what you want

Provide a brief one or two sentence summary of the issue and what you want. For example, “I am writing regarding Beta Inc.’s use of the word “BOSSES” in connection with the sale of widgets. As this use infringes Acme’s trademark rights, Acme demands that you immediately stop all use of BOSSES in connection with the sale of widgets.”

3. Explain your rights

Provide an explanation of the basis for your trademark rights. Trademark rights can be based on use of a mark in connection with goods or services. A trademark registration is helpful but is not required to obtain trademark rights.

Acme Inc. is the owner of the BOSS trademark. Acme has used the mark continuously and exclusively in connection with widgets since at least [first use date]. Acme has advertised and sold widgets in the U.S. through its [channels of trade, e.g. website, retailers, etc…]. Therefore, Acme has established valuable trademark rights. In addition to its common law trademark rights, Acme is the owner of U.S. Trademark Registration No. __________ for the mark BOSS.

4. Introduce the wrongful conduct

Explain the activities of the recipient that violate your trademark rights.

Beta is engaged in the sale of widgets having the BOSSES mark at [locations of sale, e.g. website, retail, etc]. This activity infringes Acme’s trademark rights.

5. Explain the applicable law

Explain the trademark law that is applicable to your situation.

Trademark law prohibits parties from using a trademark in a manner that is likely to create confusion in the market place as to the source of the goods provided in connection with the trademark. Whether there is a likelihood of confusion depends on several factors including the similarities of the marks and the similarities of the good/services.

6. Explain how the law applies

Explain how the trademark law applies to your situation.

Here, comparing the marks, BOSSES is very similar to BOSS. Each mark contains the common root word BOSS, which provides a similarity of sound, meaning, and appearance. Your mark merely provides a plural of Acme’s BOSS mark. Therefore, the marks are similar.

Turning to the goods, your widgets are ________ type widgets, which are the same type of widget sold by Acme under its BOSS trademark. Further, your widgets are sold to the same type of customers and are useable in the same type of applications as the Acme widgets sold under the BOSS mark.

As a result, your use of BOSSES in connection with the sale of widgets is likely to cause confusion with Acme’s trademark BOSS in the marketplace.

7. Explain the possible consequences

You can also explain the consequences of trademark infringement.

Trademark law and common law provide protection for trademark owners. Some of the remedies available to trademark owners against trademark infringers include enjoining the infringer from using the trademark, impounding and destroying goods bearing the trademark, recovery of the infringer’s profits, and an award of attorney’s fees.

8. State Your Demand(s)

List your demand or demands.

Therefore, Acme demands that Beta take the following steps by [deadline]: (1) stop using the mark BOSSES and any similar mark in the marketing and sale of widgets; (2) recall and destroy all advertising, products, labels, packaging, stationary, and other materials having the BOSSES mark, (3) turnover control of any domain names having the BOSSES mark to us, etc…

9. Reservation

A reservation of rights statement can be included stating that Acme reserves all of its rights, none of which is waived by the letter.

Cautions

The above are possible parts of a cease and desist letter. Lawyers often receive requests for “forms.” However, forms, if they are any good at all, are only a starting place and most often need modification to fit a particular circumstance. Therefore, the example excerpts might not be appropriate for your circumstance.

Further, it might be that you should not send a cease and desist letter at all. Generally, trademark law awards rights based on priority–that is, who was first. If you send a cease and desist letter to someone that started using their mark before you started using your mark, you could be in trouble. If the recipient was first, he/she/it could be a senior user that could turn around and sue you for infringing their mark. And your letter could be used as an admission of infringement. Therefore, it is critical to determine whether you have priority over the target of your letter before any letter is sent. But examining all the details of priority is outside the scope of this post.

Moreover, the recipient of your letter could use it to gain “home court advantage” by filing a declaratory judgement lawsuit against you in their home state or district. Many courts can only decide cases and controversies. And your threatening cease and desist letter will create a controversy that the target of the letter could use to start a lawsuit in their preferred court asking the court to declare that they do not infringe your mark. Therefore, when sending a cease and desist letter, you must consider the risk that the target could file a lawsuit based on the letter in a court that is far from you or otherwise disadvantageous.

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What is a Divisional Patent Application?

A U.S. divisional patent application application can be thought of as a “child” application of an earlier filed “parent” application. The filing of a divisional application often occurs when the parent application contains more than one invention.

If the parent application claims more than one invention, the USPTO may issue a restriction requirement. The restriction requirement requires the applicant to elect among the designated inventions in the application. The election of one of the designated inventions may mean the others will not be considered. Therefore the applicant has the option to file one or more divisional patent applications directed at those other un-elected inventions. The patent office wants to make sure that patent applicants are not trying to claim multiple inventions in one application because they generate fees, at least partially, on a per application basis. Divisional applications can also be filed without a restriction requirement being imposed by the USPTO.

The divisional application, if properly filed, will be recognized as having the filing date of the parent application. Therefore, a divisional application is not disadvantaged by its later filing.

The Manual of Patent Examining Procedure provides that a divisional application is “a later application [e.g., a child application] for an independent or distinct invention, carved out of a [1] nonprovisional application (including a nonprovisional application resulting from an international application or international design application), [2] an international application designating the United States, or [3] an international design application designating the United States [e.g. the parent application] and disclosing and claiming only subject matter disclosed in the earlier or parent application [e.g. no new disclosures]. MPEP 201.06.

Therefore, no new subject matter can be added in a divisional application. Rather, the divisional application merely claims an invention that was already described in the original parent application.

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Fostering Innovation: Lessons from the Golden Age

Have you ever wondered about the profile of innovation and inventors between 1880 and 1940 in the US? A new working paper from the Harvard Business School attempts to draw conclusions about such inventors and innovation in that “Golden Age.” The paper is titled “The of American Ingenuity: Innovation and Inventors of the Golden Age.”

The authors propose in their article introducing the paper that “recent data suggests that innovation is getting harder and the pace of growth is slowing down.” They argue that a review of history might shed light on environments that are most conducive to innovation. Below are some of the conclusions drawn in the paper, many of which are intuitive:

1. More inventive states and sectors grew faster on average.
2. Densely-populated states were more inventive.
3. Financially-developed states were more inventive.
4. Geographically-connected states were more inventive.

…

6. Inventors were more educated on average and were most productive between the
age of 36 and 55.

…
8. The patents of new inventors received more citations on average, and were
more likely to be in the top decile of the citations distribution.
9. Inventors delayed marriage and had fewer children.
10. Inventors were more likely to have migrated from their state of birth. They
moved to states that were more conducive to innovation.

…

16. Innovation was strongly positively correlated with social mobility.

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Should I use Inc or LLC in my Trademark?

Look at the way well-known brands use their company name as a trademark or services mark. They usually do not include an entity descriptor–e.g. Inc., Corp., Ltd., or LLC–in those brand usages. For example, the company behind the Starbucks brand is “Starbucks Corporation.” However, you rarely see the word “corporation” used in connection with Starbucks when Starbucks is used as a trademark. Instead, “Starbucks Corporation” is mostly used in the fine print when referring to the corporation rather than the brand, such as in their copyright notice.

One reason for that is marketers probably do not want unnecessary legal language cluttering up their beautifully crafted names/brands. Another reason is that trademark law somewhat discourages the inclusion of entity descriptors in trademarks.

The Lanham Act provides for the federal registration of trademarks and service marks, but not trade names.  Under the Act, a “trade name” is “any name used by a person to identify his or her business or vocation.” 15 USC 1117.

The name of a business can act both as a trade name and a trademark/service mark. However, the Trademark Trial and Appeals Board has said that the inclusion of an entity descriptor in the mark to be registered “is a factor which frequently leads to a finding solely of trade name use, especially when the name appears in close proximity to a corporate address.” In re Univar Corp., 20 USPQ2d 1865, n.6 (TTAB 1991); TMEP 1202.01. Other factors that can lead to a conclusion that the mark applied for is only a trade name is if the mark is only used in a corporate address and is the same color, size, and font as the remaining or surrounding text. In re Diamond Hill Farms, 32 USPQ2d 1383 (TTAB 1994).

If you search the trademark database at the USPTO, you will find many registered trademarks containing entity descriptors. Therefore, many applicants have been able to show that their business names function as a trademark/service mark. Further, the mark you seek to register must match the mark you actually use in your business.

However, since an entity descriptor is not required in a trademark, and since a trademark might be marginally stronger without a entity descriptor, the entity descriptor is often not used in a trademark.

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The US Patent Application Process Flow Chart

us_patentapplicationprocessflowchart

 

Seeking a patent is not a file it and forget it endeavor. Instead, it involves a process where work is likely required in multiple phases. The process of obtaining a utility patent in the US generally involves novelty searching, application drafting, waiting for the patent office to review the application, and negotiating with the patent office about the scope of patent protection. Each of those phases is shown in the U.S. Patent Application Process flow chart above, which I will describe in more detail below.

Patent Novelty Search

The first question is whether or not to have a patent novelty search performed. A patent novelty search is designed to tell you the likelihood of obtaining a patent on your invention. You are not required to have a search performed in order to file a patent application, but it is often recommended. Without a search, you my spend a lot of money filing an application only to find out from the patent office that your patent application is refused because your invention has already been disclosed in the prior art (so it is not new). Read more about patent novelty searching here.

If, at step 10, you decide to have a patent search performed, a search is performed by a patent attorney or patent searcher. To get the most benefit out of a patent search, it is best to receive an opinion from a patent attorney about the likelihood of obtaining a patent in view of the patent search results. After reviewing the search report and discussing it with your patent attorney, at step 12, you decide whether it is worth pursuing a patent application in light of the patent search results.

Sometimes the patent search results reveal a prior art reference that is identical to the invention and it is clear that a patent is not likely to be obtained on the invention. If so, the answer at step 12 is relatively easy, because there’s no option to pursue a patent application. In other cases, an identical result is not found in the patent search results, but one or more results are relatively close to the your invention. When one or more results are relatively close to your invention, the scope of a patent you might expect to obtain could be narrow. If the scope of protection you might obtain is narrow, then you must make a business decision whether pursuing such patent protection is likely to be valuable in light of the patent application expense you will occur in doing so.

If you decide not to pursue a patent, then at step 14, you can either (1) go to market without filing a patent application and compete in the marketplace or (2) decide it’s not worth pursuing this invention further in light of the prior art and focus your efforts on other inventions. This is a business decision. If you decide to proceed to market without a patent application, you might like to consider non-patent options for protecting your invention.

In other cases, the search results are favorable with no very close results.

Patent Application Drafting

If at step 12, the patent novelty search results are favorable, or if you otherwise decide proceed with filing an application, then you move to step 16 where the patent application is drafted. The patent attorney will take the information you’ve given him or her and draft the patent application. This drafting includes preparing or having prepared drawings as well as drafting the written description of the invention, among other parts of the application. The attorney may request additional information from you during the process of drafting the application.

When a first draft of the patent application is ready for review, at step 18, the draft application is sent to you for review. You then read the application carefully. If you don’t have any changes and the application is accurate, complete, and ready to file, then at step 22, the patent attorney files the patent application at the United States Patent and Trademark Office (USPTO).

If at step 20, you would like to provide comments, changes, or additions to the draft patent application, you provide those in writing or orally to the patent attorney. Then the patent attorney goes back to step 16 to draft and revise the patent application according to your feedback. Next, the newly revised patent application is sent to you for further review at step 18. Again you review the patent application and either approve it for filing or provide further comments, additions, changes, or other feedback. If the application is approved for filing, then the application is filed at step 23.  Otherwise the feedback is taken by the patent attorney and incorporated into a further revised patent application. The review and revision process continues until you are happy with the patent application and approve it for filing.

First Provisional Patent Application or Non-Provisional Patent Application

If the patent application filed is a provisional patent application at step 21, then within one year a non-provisional patent application claiming the benefit of that provisional must be filed. If any content of the provisional needs be revised or added to, that can be done at step 22. However, any new subject matter added to the application will not get the benefit of the provisional filing date, because it was not in the provisional. Therefore, it is best to include all the subject matter in your earliest filing. However, sometimes new developments and inventions occur between the time the provisional is filed and the time for filing the non-provisional. If subject matter is to be revised or added to the content of the provisional before the non-provisional is filed, then the process goes back to step 16, 18, and 20 until the you are happy with the non-provisional application. Then at step 23 the non-provisional patent application is filed.

If the first application is a non-provisional, then you proceed directly to step 24 and wait for the patent office to review it.

As you can see, the USPTO does not substantively review provisional patent applications. A non-provisional must be filed for substantive review. Read more about choosing between first filing a provisional or a non provisional application here.

Negotiating (a.k.a Patent Prosecution)

Once the non-provisional  patent application is filed (or design patent application), at step 24, you and your patent attorney wait for the USPTO to examine the patent application. Once received the results of USPTO’s examination are received, you enter the negotiation phase with the USPTO. Patent attorneys call this negotiation phase “patent prosecution.”

Restriction Requirement / Election

First an examiner at the USPTO will determine whether you tried to claim too many inventions in one patent application. If the Examiner believes you have, he or she will issue a restriction requirement. The restriction requirement can be issued in writing or by phone to your patent attorney. If USPTO did not issue restriction requirements, patent applicants could put multiple different inventions in one application. The restriction requirement practice is designed to ensures that the USPTO need only consider one invention per application.

If you receive a restriction requirement on your patent application, then at step 27, you’ll need to elect among the various inventions and claims groups designated by the patent examiner. At that time, you (through your patent attorney) can also object to the restriction requirement and argue that it is  not a proper restriction requirement.

If the restriction requirement is not withdrawn or overturned following an objection by the applicant, or if the applicant chooses not to object, the examiner will examine only the elected invention and corresponding claims. In some cases, unelected inventions can be rejoined in the same application later in the negotiations. In other cases, you must file one or more divisional applications to cover those unelected inventions. The divisional application(s) are provided priority back to the filing date of the original application(s). Therefore, electing among the designated inventions does not mean that you will lose the unelected inventions, if those inventions are rejoined or pursued in divisional applications.

Substantive Examination

After the election or if no restriction requirement is made, the examiner will substantively examine the patent application to determine whether the claimed subject matter in the patent application is new in relation to the prior art and whether the other requirements for patenting are met. The USPTO will issue an “Office Action” explaining the results of their substantive examination.

Allowance

If the patent application is allowed on the first review by the patent office, then at step 26 a patent is very likely to be granted at step 29 if the issue fee is paid at step 28. This is known as first office action allowance. First office action allowance is not very common.

Also, the USPTO can withdraw allowance of application prior to a patent issuing, if they believe the allowance was a mistake. It is not common for an application to be withdrawn from allowance by the USPTO.

Rejection

A study of 20,000 patent applications in 2010 found that between 73% and 96% of the utility patent applications received a rejection on the first review by the USPTO (the first office action). Therefore, it is common for a patent application to be at least partially rejected upon first review. It is further common for a patent application to be allowed after one or more rounds of negotiation following the first rejection. Therefore, it is very common for patent applicants (through their patent attorney) to negotiate with the USPTO in order to obtain a granted patent. A first rejection is usually not the end of the road, it is the beginning of negotiations with the USPTO.

If the patent application is rejected in whole or in part, then at step 30, your patent attorney will review the content of the office action which explains the rejection(s). The patent attorney will also review the prior art references (e.g. prior public patents and patent applications) cited in the office action. The patent attorney will then assess the office action and provide the you  with the your options at step 32 for responding.

As you can see in the diagram at step 34, there are at least four potential options after an office action rejection: drop the application at step 42, draft and file a written response at step 36, request an interview at step 38, or file an appeal at step 40.

1. Drop and Abandon Patent Application

Sometimes the client will decide to drop the application at step 42 in light of the office action. This may be due to the client’s decision, separate from the patenting process, that the invention no longer warrants pursuing patent protection. This may be due to the lack of commercial success of the invention or other business happenings related to the invention or the applicant.

In other cases, the prior art cited by the examiner may be such that the likelihood of obtaining a valuable patent is not high and the client does not want to spend further resources in an attempt to obtain a patent. This may happen in the case where a patent novelty search was not performed before filing the patent application.

In other cases, the prior art cited by the examiner may narrow the scope of the subject matter that could reasonably be protected by a resulting patent to the extent that such protectable subject matter  is not commercially valuable enough to the client to continue pursue the patent application.

If you decide to drop the patent application, a response will not be filed to the office action. After the time period for response has expired the patent application will be abandoned and no patent will issue from it (unless properly revived based unintentional abandonment by petition).

2. File Written Response

If you decide to have a response drafted and filed, then at step 36 the patent attorney will prepare a written response to the office action. The patent attorney may amend the claims to avoid prior art, provide arguments why the examiner’s interpretation of the prior art or the examiner’s assertions are incorrect, provide a declaration from the inventor regarding aspects of the invention, and/or present other arguments or evidence related to the patentability of the claimed invention. The you may provide feedback regarding the written response to the office action. After the office action is filed, you will wait for a subsequent USPTO office action at step 24.

It is not unusual for the applicant to need to file responses to multiple office actions.  Therefore, the applicant will may through steps 24, 26, 30, 32, 34, 36 and back to step 24 more than once (optionally including one or more rounds of interview at steps 34, 38, 44) .

In some cases, the applicant’s response to the first office action will overcome the prior art references cited by the examiner in the first office action. But the examiner has the option to search for additional prior art references to meet the claim limitations added in the first response. So as long as the applicant is making changes to the claims, the USPTO examiner has the opportunity to search and present new prior art references and arguments addressing those added or changed claim elements.

3. Interview with Patent Examiner

If you decide to proceed with an interview, the patent attorney will contact to the examiner at the USPTO and request an interview on a particular date and time agreeable between the examiner, patent attorney, and sometimes the patent applicant or inventor.

An interview provides the the patent attorney and the applicant/inventor the chance to orally discuss the patent application, the office action, the prior art cited in the office action, possible amendments to the claims to overcome the prior art, and other evidence relevant to the patentability of the invention defined in the claims. Sometimes the patent attorney will send proposed amendments to the patent examiner before the interview occurs. The interview can be held by phone conference or can be held in person at the USPTO’s offices.

At step 44, if the interview is a success, then the examiner will issue a notice of allowance  allowing the patent application to grant into a patent. This process can take a number of forms. In some cases, the examiner will be convinced by the applicant’s argument regarding the allowability of the claims without further amendment. In other cases, the examiner and the applicant may come to an agreement about modifications to the claims  or other actions that would result in an allowance of the application. Sometimes the examiner will put through those amendments directly by way of an examiner’s amendment. Other times the applicant will need to file a written response making the amendments that were agreed to lead to allowance.

In other cases, there is no agreement resulting from the interview, but often the applicant’s attorney learns information from the interview that will help prepare a response or decide whether it is time to appeal. If the interview does not result in an agreement for allowance, then the patent attorney proceeds to step 32 to advise the client about the options in light of the interview. Then at step 34 the client can choose among the options. It is unusual for another interview to immediately follow a prior interview. So after an interview, the options typically are to prepare and file a written response, drop the application, or pursue an appeal.

4. Appeal

Generally, when it appears that no further amendment or argument with the examiner is likely to result in an allowance of claims acceptable to the client, it may be an appropriate time to pursue an appeal. The appeal process is started by filing a notice of appeal at step 40. Then the appeal process proceeds at step 46. A discussion of the appeal process will be provided in a separate post. Obviously, an appeal can result allowance of the patent application, which would then proceed to step 28, although not shown in the flow chart above.

Allowance of Application and Patent Grant

When the USPTO is willing to allow the patent application to issue as a patent, either at step 26 or following a successful interview at step 44, the USPTO will issue a notice of allowance. The notice will indicate the application is allowed and will require the applicant to pay a government issue fee a set time period (usually within three months) of the date of the notice of allowance. At step 28, the issue fee is paid by the applicant (or the applicant’s attorney on behalf of the applicant). Shortly thereafter a patent is granted at step 29. After a utility patent is granted, maintenance fees must be paid at predefined intervals to keep it alive.

While each patent application is different, the flow chart and description above provide a summary of the various steps and decisions that might arise in pursuing a patent application in the US.

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Invention is the Mother of Necessity

Inventions arise when there is an unmet market need. Inventors who perceive a unmet need are motivated to fulfill it due to economic rewards of inventing, such as money or fame. Some inventions fit this path, like the cotton gin and the steam engine. Necessity is the mother of invention–as they say–or is it?

What if the opposite is also true?

When Nikolaus Ott built his first gas engine, in 1866, horses had been supplying peoples land transportation needs for nearly 6,000 years, supplemented increasingly by steam-powered railroads for several decades. There was no crisis in the availability of horses, no dissatisfaction with railroads.

What if “many or most inventions were developed by people driven by curiosity or by a love of tinkering, in the absence of any initial demand for the product they had in mind?” This question is explored in Jared Diamond’s book Guns, Germs, and Steel: the Fates of Human Societies.

When invention is the mother of necessity, the inventor finds an application for the invention after it is invented. And, “only after it had been in use for a considerable time did consumers come to feel that they ‘needed’ it.” Also, a device may be invented for one purpose, but eventually it is adopted in wide use for other,unanticipated purposes. Diamond says:

It may come as a surprise to learn that these invention in search of a use include most of the major technological breakthroughs of modern times, ranging from the airplane and automobile, through the internal combustion engine and electric light bulb, to the phonograph and transistor. Thus, invention is often the mother of necessity, rather than vice versa.

In addition to the Ott engine example above, Diamond provides several other examples, one of which is Edison’s phonograph. When Edison created the phonograph in 1877, he published an article proposing ten uses for the invention, such as preserving the last words of dying people and recording books for blind people to hear. However, the invention was later adopted for playing music, which Edison objected to as a debasement from the serious uses he intended.

Early versions of inventions often are not ready for use. Ott’s first engine was “weak, heavy, and seven feet tall, [and] it did not recommend itself over horses.” As Diamond says, “Inventors often have to persist at their tinkering for a long time in the absence of public demand because early models perform too poorly to be useful.”

The view that invention is the mother of necessity aligns with the examples where significant inventions were develop by hobbyists and English clergy.  And, it fits with Chris Dixon’s assertion that “What the smartest people do on the weekends is what everyone else will do during the week in ten years.”

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Burnt Dough and the Difficulties in Patent Drafting

“[E]ven if, as plaintiff argues, construing the patent to require the dough be heated to 400 degrees to 850 degrees Farenheit [sic] produces a nonsensical result, the court cannot rewrite the claims. Plaintiff’s patent could have easily been written to reflect the construction plaintiff attempts to give it today. It is the job of the patentee, and not the court, to write patents carefully and consistently.” – Colorado United States District Court

Patent claim drafting requires careful attention. The difference between the use of “to” and “at” in a claim directed to a method of producing dough, resulted in the difference between a worthless patent claim and a patent claim that might have had value. This is why going the DIY route with a non provisional utility patent application is very difficult.

Chef America Inc owned US Patent 4,761,290 directed to a process of producing a dough product with certain desirable attributes. Chef lost when it sued  Lamb-Weston for infringement because the patent claim literally required the dough “to be heated to a temperature in the range of about 400° F to 850° F” in Chef America v. Lam-Weston, Inc., 358 F.3d 1371 (Fed. Cir. 2004).  Heating the dough to that temperature would result in dough that was burned to a crisp, resembling a charcoal briquet. Instead, that patent owner really meant that the dough had to be heated at that temperature. In other words, the oven needed to be set at that temperature. But the internal temperature of the dough did not need to reach that temperature.

Chef American argued that one skilled in the art would recognize the claim meant “at” rather than “to” given the nonsensical result that the dough would be completely burnt if the dough was heated to about 400° F to 850° F. But the court refused to change the claim to avoid the burnt dough result. The district court said:

[E]ven if, as plaintiff argues, construing the patent to require the dough be heated to 400 degrees to 850 degrees Farenheit [sic] produces a nonsensical result, the court cannot rewrite the claims. Plaintiff’s patent could have easily been written to reflect the construction plaintiff attempts to give it today. It is the job of the patentee, and not the court, to write patents carefully and consistently

The Appellate court agreed saying that “courts may not redraft claims, whether to make them operable or to sustain their validity.” The court further stated “Even a nonsensical result does not require the court to redraft the claims of a patent.”

The court noted that references to temperatures in the description of the patent used “at” and “to”  in different places. Therefore when the patent owner choose “to” for use in the claims, the court was constrained from finding it meant “at.”

The court concluded that the claim unambiguously requires that the dough be heated to a temperature in range of 400° F. to 850° F–in other words to be completely burnt to a crisp. As a result, Lamb-Weston did not infringe and Chef America’s patent claims at issue were essentially worthless.

Sometimes errors in a patent can be fixed. In this case the patent owner did not request an amendment to the claims. Rather the patent owner wanted the court to read the claim the way most people would have understood it. But the court would not do that. Patent drafting is not easy. And careful attention is required when drafting patent applications.

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Transferring Ownership of a Trademark

“Use of the mark by the [trademark] assignee in connection with a different goodwill and different product would result in a fraud on the purchasing public who reasonably assume that the mark signifies the same thing… Therefore, if consumers are not to be misled from established associations with the mark, [the mark must] continue to be associated with the same or similar products after the assignment.” – Fifth Circuit Court of Appeals

sugarbustersregCo-author and publisher, Sugar Busters LLC, purchased the registered service mark SUGARBUSTERS (Reg. No. U.S. 1,684,769). Then Sugar Busters LLC tried to sue on Ellen Brennan for trademark infringement based on the registration, but lost when it sought a preliminary injunction. Sugar Busters lost because the registered mark was for retail services, which were not related to the Sugar Buster’s book publication/sales activities.

Trademark Rights are Connected to Goods/Services

Trademark rights are connected to the goods and/or services with which they are used. This is why speculating in trademark without use is generally pointless. “A trademark is merely a symbol of goodwill and has not independent significance apart from the goodwill that it symbolizes,” the Fifth Circuit said in Sugar Busters LLC V. Brennan, 177 F. 2d 258 (5th Cir. 1999). Trademarks cannot be sold separate from the goodwill which they represent (the terms  trademark and service mark are used interchangeably in this post).

The sale of a trademark without its associated goodwill is characterized as a sale “in gross” and is invalid. The rule prohibiting the sale of a trademark in gross is “to prevent a consumer from being misled or confused as to the course and nature of the goods or services that he or she acquires.”

Therefore any sale or assignment of trademark right should recite that the goodwill associated with the mark(s) is assigned to the buyer. With respect to registered marks, this requirement is found at 15 USC 1060(a)(1), which provides “A registered mark or a mark for which an application to register has been filed shall be assignable with the goodwill of the business in which the mark is used, or with that part of the goodwill of the business connected with the use of and symbolized by the mark.” The transfer of goodwill does not generally need to be accompanied with the transfer of any physical or tangible assets of the former trademark owner.

However, while reciting the transfer of goodwill in the assignment is important, it is not enough. “Use of the [trademark] by the assignee [purchaser] in connection with a different goodwill and a different product would result in a fraud on the purchasing public who reasonably assumed that the mark signifies the same thing, whether used by one person or another.” Therefore, a trademark assignment needs to recite the transfer of goodwill of the business in which the mark is used and the purchaser of trademark rights needs to continue the use of the mark on the same or similar goods/services as were provided by the prior owner of the mark.

Sugar Busters

In the Sugar Busters case, Sugar Busters LLC co-authored and published a book entitled “SUGAR BUSTERS! Cut Sugar to Trim Fat” in 1995. The book sold over 210,000 copies. In 2007, Sugar Busters LLC granted permission to one of its founders, H. Leighton Steward, to independently create a cookbook based on the principles outlined in the original SUGAR BUSTERS! book. Steward and Sugar Busters LLC employee Ellen Brennan agreed to co-author the cook book. But in December 1997, Sugar Busters LLC withdrew its permission for the cookbook and determined its partners should not engage in independent projects. Ellen Brennan proceeded to co-author the cookbook “SUGAR BUST For LIFE!” without Steward, which was punished in May of 1998.

Between the time that Sugar Busters LLC withdrew its permission and the date the “SUGAR BUST For LIFE!” book was published, Sugar Busters LLC purchased the SUGARBUSTERS service mark, registered as U.S. trademark registration number 1,684,769. It is not clear whether the service mark was purchased with an eye to litigation, but the timing of the purchase indicates it might have been.

The SUGARBUSTERS trademark registration was for “retail store services featuring products and supplies for diabetic people; namely, medical supplies, medical equipment, food products, informational literature and wearing apparel featuring a message regarding diabetes.” Therefore the retail store services of the trademark registration were different from the books sold by Sugar Busters LLC.

The court found that the trademark was in valid because plaintiff’s book and the retail store services were not sufficiently similar to prevent consumer confusion or deception when plaintiff used the mark previously associated with the store as the title of its book. As a result, the preliminary injunction based on the registration was vacated.

Conclusion

The transfer of ownership of a trademark should involve at least: (1) an assignment that recites the transfer of the trademark, (2) the assignment recites the transfer of goodwill of the business in which the trademark is used, and (3) the purchaser of trademark continuing the use of the trademark on the same or similar goods/services as were provided by the prior owner of the trademark.

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How to Control Inventions and Patents Resulting from Joint Development

“…each coowner [of a patent] is ‘at the mercy’ of its other co-owners.” – Federal Circuit Court of Appeals.

STC.UNM (the licensing arm of University of New Mexico) was at the mercy of Sandia Corp. regarding STC’s patent.

STC sued Intel Corporation for infringement of U.S. Patent No. 6,042,998 (the ‘998 patent) in the case of STC.UNM v. Intel Corp., No. 2013-1241 (Fed. Cir. 2014). STC and Sandia co-owned the ‘998 patent.

But, Sandia refused to join the lawsuit against Intel, “prefer[ring] to take a neutral position with respect to this matter.” This led the court to dismiss the infringement suit against Intel.

STC was at the mercy of Sandia’s refusal to join the lawsuit. Maybe this lawsuit against Intel could have resulted a large money judgement for STC. But, Sandia’s neutrality was the end of STC’s enforcement of ‘998 patent was against Intel.

All Patent Co-Owners Must Join A Patent Infringement Suit

“[A]ll coowners must ordinarily consent to join as plaintiffs in an infringement suit,” the Federal Circuit Court of Appeals said. “[O]ne co-owner has the right to impede the other co-owner’s ability to sue infringers by refusing to voluntarily join in such a suit.”

You may say this is not fair. If I’m an owner of a patent, why can’t I sue without the other co-owners?

The court says, “rule requiring in general the participation of all coowners safeguards against the possibility that each coowner would subject an accused infringer to a different infringement suit on the same patent.” In other words, the rule guards against Intel first being sued by STC and then being separately sued by Sandia on the same patent.

Why not just force co-owners to be involuntarily joined to the lawsuit? The court says allowing co-owners to refuse to join a lawsuit “protects, inter alia, a co-owner’s right to not be thrust into costly litigation where its patent is subject to potential invalidation.”

Do you want to be at the mercy of a coowner?

Co-Owners Can Exploit the Patent without Consent or Dividing of Profits

Not only can a co-owner thwart enforcement attempts of a coowner, but a joint owner of a patent can exploit the patented invention in the US without consent or accounting to the other joint owners.

In particular 35 U.S.C. 262 provides, “In the absence of any agreement to the contrary, each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States, without the consent of and without accounting to the other owners.”

The Problems of Prospecting Without All Patent Co-Owners

The practical impact of section 262 is that if there is a falling out or disagreement between the joint owners, it will be very difficult any of the owners of the patent to license or obtain any benefit from the patent.

Let’s say that the joint owners of the patent are Adam and Bob. If the plan is to license the invention and not make and sell it, then Adam will have a difficult time finding a company to license the invention from Adam, when Bob is not a party to the license. The company will know that it will not have exclusive rights in the invention because Bob could license to the company’s competitors. Non-exclusive licenses are generally less valuable than exclusive licenses owing to the licensee’s need to compete with other licensees. Therefore, at the very least, Adam will not be able to obtain as favorable terms as would be the case if Bob was also involved.

Further, a sales approach of one owner without the other co-owner will be more difficult. A patent savvy potential licensee will inquire as to whether joint owner, Bob, will be a party to the license. And if not, the patent savvy potential licensee may inquire why joint owner Bob is not involved and what were the circumstances of the falling out between Adam and Bob. Then Adam may be in a difficult position of explaining the dirty laundry of the situation between Adam and Bob. And if the explanation is not sufficiently satisfactory, the potential licensee may be concerned that the license will get the licensee in the middle of a dispute between Adam and Bob. Coming to the table with less than all of the joint patent owners may be a deterrent to successful licensing of the patent.

The potential licensee will also be concerned over Adam’s inability to stop third party infringers even if Bob does no licensing or selling of the patented invention. This is because of the requirement, discussed above, that all joint owners of a patent are necessary parties to patent infringement litigation and patent litigation can’t proceed without all necessary parties.

Even a cease and desist or license demand letter short of litigation will be less effective if all patent owners are not on board with enforcement. The Federal Circuit recognized this stating, “Admittedly, a license demand may have less bite if STC cannot sue potential licensees if they refuse….”

Problems Going to Market Alone

In the case where either or both Adam and Bob want to be in the business of selling the patented invention themselves and not licensing, if both Adam and Bob are in the market, Adam will have to compete will Bob and vice versa. Even if only Adam is selling in the marketplace, Adam will be unable to stop infringing competitors if Bob refuses to join in any patent lawsuit/enforcement. If Bob refuses to join in the patent enforcement efforts, the patent is essentially worthless for stopping competitors, except as a scarecrow.

Agreement Options

As you can see there are many downsides to joint ownership of a patent under the default rule provided by section 262. So, I’ll list and discuss a number of possible alternative arrangements.

  1. One Sided. One party owns all the jointly developed subject matter, and the other party:
    1. has no rights in it,
    2. has restricted rights, e.g. can only purchase the subject matter from the owning party, or
    3. has permissive rights, e.g. has a license to the jointly develop subject matter and can go to third parties and permit them make or purchase the subject matter;
  2. Joint Ownership. The parties jointly own the jointly developed subject matter and:
    1. Exclusive Marriage – Work together exclusively regarding the protection and exploitation of the subject matter, and the enforcement and licensing of related IP,
    2. Free For All / Hands Off – Each party can do whatever they want with the jointly owned Patent related to subject matter without accounting, agreement, or interference of the other (this is the same effect as Section 262), or
    3. Somewhere in between 2(A) and 2(B); or,
  3. New entity. The parties form a new legal entity for owning and exploiting the IP. Each party controls the new entity according to the new entity’s operating agreement.

1(A) – One Sided, No Rights – If one party owns all the rights and the other party has no rights, this is commonly a consulting situation. One party hires the other party to develop the subject matter. The hiring party pays the other party money. And the hiring party owns all the rights in the subject matter developed by the other. This is common when hiring consultants, such as developers, engineers, and other professional service providers.

This arrangement is not commonly thought of as joint development, but rather a consulting engagement, although in many cases joint development will occur because both the hiring party and the hired party will contribute to the conception and development of the subject matter. The agreement between the parties will have an assignment provision providing that the hiring party will own all the developments of the hired party. Here is a very simple example of assignment statement:

Consultant hereby assigns all right, title, and interest to the Owner in (a) the Work Product and (b) all intellectual property rights in the Work Product.

1(B) – One Sided, Some Rights – The next option is that one party owns all the rights and the other party has certain restricted rights (via a non-exclusive license) in the jointly developed subject matter. Such restricted licensed rights could include the right of the non-owning party to make, sell, and/or use the products/services embodying the jointly developed subject matter. Such rights could also include the right to purchase or use the products/services embodying the jointly developed subject matter from the owning party at a preferred or discounted price. Here is an example:

Party A (Owner) grants Party B an irrevocable, perpetual, worldwide, royalty-free non-exclusive license to [list the rights, such as: use, make, offer for sale, sell, and import ] the Work Product (“Licensed Rights”). Party B has no right to sub-license any of the Licensed Rights.

Generally these restricted rights do not include the right to sublicense, e.g. allow third parties to make, use, or sell the jointly developed subject matter. If the non-owning party has an unrestricted right to sub-license, then the non-owning party can subvert the patent enforcement efforts of the owning party by granting a targeted infringer a license without the owning party’s consent. So while the owning party can sue without the licensee’s consent or participation, if the infringer can discover the licensee’s right to sublicense and convince the licensee to grant a sublicense, the licensee can subvert the owner’s ability to obtain ongoing royalties/damages and a injunction.

1(C) – One Sided, Generous Rights – The next option is that one party owns all of the rights and the other party has generous rights in the jointly developed subject matter. If such generous rights include the ability to sublicense, then you may run into the problems just described in section 1(B). Nonetheless, since one party owns all of the jointly developed, that party does not need permission from the other to sue third parties.

 2(A) – Joint Ownership, Exclusive Marriage – Under the joint ownership, exclusive marriage agreement, each party jointly owns all of the jointly developed subject matter and contractually agrees to work exclusively with each other in the development, commercialization of the jointly developed subject matter as well in the procurement and procurement of intellectual property rights in the jointly developed subject matter. The parties may agree that one of the parties will exclusively manufacture the products and the other party will exclusively purchase the product from the manufacturing party. The parties may agree that they will share equally in the cost of procurement and enforcement of intellectual property rights in the jointly developed property.

In the exclusive marriage arrangement, it will be critical that the agreement provide procedures to deal with circumstances where one party no longer wants to (1) contribute to the costs of procurement or enforcement of the intellectual property rights, (2) purchase the jointly developed product from the party manufacturing it, if any, (3) sell the jointly developed product, or (4) otherwise work with the other party.

In the case of a breakup of the parties, the agreement could provide that the party no longer wanting to contribute to the procurement or enforcement cost must assign all of that parties rights in the IP to the other party. The agreement could provide that assignment must happen without further consideration, or it could provide that the assignment party must be compensated in some manner at the time of assignment. If the assigning party must be compensated, it would be best to define the amount or a formula or determining the compensation upfront, otherwise the split could lead to litigation over the assignment/compensation, such that the IP rights can’t be enforced or properly procured during the pending litigation or dispute.

Another factor that is critical in the joint ownership arrangement, is to define each parties preexisting products and/or intellectual property. This is particularly important were each party will build on their prior products or intellectual property or will otherwise contribute some of their preexisting products or IP to the jointly developed subject matter. Therefore, the agreement should particularly define, the preexisting products or IP of each party, which are anticipated to be used or incorporated into the jointly developed subject matter.

Then the agreement should make clear, unless the parties intend otherwise, that each party retains their ownership rights in their respective preexisting products/IP. Therefore preexisting products/IP should be described or referenced in the agreement. The description of the preexisting products/inventions of the parties may be provided in the form of reference to a publicly available patent(s) or patent application(s), or by attaching technical descriptions and drawings to the agreement. When attaching technical descriptions and drawings, it is important to be clear as to the scope of what is covered. As in a patent application, the parties may want to broadly describe the prior products/inventions so as not to limit their preexisting rights, to the extent possible or desired. The strategy in each individual case will depend on the circumstances.

2(B) – Free For All / Hands Off.  When jointly developed subject matter is developed under an agreement that does not provide what rights each party has in the jointly developed subject matter, then with respect to patented inventions the default rule of 35 U.S.C. 262 will apply, with the attendant down sides discussed above. This might be called the free-for-all or hands-off approach.

However, note that section 262 applies to join owners of a patent. If the subject matter jointly developed is not eligible for patenting, then it would not apply. Further, even if the subject matter jointly developed is patentable, but a patent application is not filed, it may be doubtful that section 262 applies. If section 262 does not apply, then some other law would control the ownership and use of the jointly developed subject matter. Therefore, it is best to define the ownership and exploitation rules in a joint development agreement rather than relying on section 262–if you did prefer its provisions–to account for handling subject matter to which section 262 does not apply.

2(C) – Middle Ground

As is obvious, a jointed development agreement can be crafted somewhere in between an extremes of an exclusive marriage and a free-for-all.

3 – New Entity

Instead of one party or both parties owning the jointly developed subject matter, neither party can directly own the jointly subject matter. The parties can achieve this by forming a new entity (LLC, Corporation, partnership, etc.) and then can assign each of their respective rights in the jointly developed subject matter to the new entity.

Each party can own the new entity and the new entity’s operating documents can define how the parties will contribute to the development and exploitation of the jointly developed subject mater and related intellectual property. The operating agreement will also define how numerous situations will play out, such as how expenses are divided, how and when revenues are dispersed or reinvested, when one party doesn’t want to contribute further, what to do when one party wants out, and other situations typically accounted for when forming and operating an entity with multiple owners.

The benefit of forming a new entity is that (1) neither party can impede IP enforcement (except as provided in the operating document), (2) licensing and enforcement efforts are not hampered by the lack of all owners being involved, (3) each party “feels” good about co-owning the entity as compared to one-sided ownership arrangements. One downside for forming a new entity is the legal and other costs and time associated with forming and operating a legal entity.

Conclusion

The issues surrounding ownership, exploitation, and expenses related to jointly developed inventions should be address before the joint development effort beings. The default rule is that co-owners of a patent can exploit the patent without permission or accounting to the other co-owners, a situation that is often not desired.

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Design Patent Drawings: Surface Shading

DesignPatentCokeBottleDesign patents seek to protect the appearance of an article of manufacture, such as a product or a portion of a product. Therefore, design patents consist mostly of drawings of the invention with a small amount of text. The drawings mostly define the scope of protection that will be provided under the design patent. Therefore, the details of the drawings for design patents are very important.

Surface shading in the drawings may be important to determining whether the patent design covers a particular third party product (e.g. an alleged infringer). The patent rules provide regarding design patent drawings, “Appropriate and adequate surface shading should be used to show the character or contour of the surfaces represented.” MPEP 1503.02. The rules further provide, “Lack of appropriate surface shading in the drawing as filed may render the design nonenabling and indefinite ….” If the patent application is deemed nonenabling or indefinite a patent may not be granted by the patent office or the resulting patent may be invalid. Therefore, drawings showing only perimeter boundaries with a black line may not be sufficient. The drawings may need to show surface shading with the appropriate shading techniques accepted by the office.

There are two principal type of shading: line shading and stippling (the use of dots). The rules provide “Spaced lines for shading are preferred.” 37 C.F.R. 1.84(m).  The rules continue, “These lines must be thin, as few in number as practicable, and they must contrast with the rest of the drawings.”

U.S. Patent D48,160 is a design patent on a classic bottle of The Coca Cola Company, which shows the use of line shading. Closely spaced thin vertical shading lines are provided adjacent the valley of each of the vertical grooves to show that the surface curves toward each valley. Closely spaced thin horizontal lines are provided in three horizontal locations at the top of the bottle to show vertical surface curves at horizontal locations near the top opening.

DesignPatentLineShadingU.S. Patent D526,178 provides another example of shading in a design patent. Line shading is predominately used. As the electric drill illustrated has many different curved surfaces, many shading lines are used to show those curved surfaces.

DesignPatentStipplingU.S. Patent D190,563 shows the use of stippling (dots) as shading in a design patent for a car. Shading is providing by varying the density/spacing of the dots. You can see the dots are more closely spaced to show the horizontal fins above each wheel. The dots are more dispersed in other areas, such as the mid-door areas.

As the details of the drawings are very important for design patents, care should be taken in creating the drawings. The use of a professional patent drawings draftsperson is often appropriate to ensure high quality drawings.