Month: December 2013

High-Profile Software Decision Tackles Standard-Essential Patents

Motorola (now owned by Google, Inc.) and Microsoft Corp. are the latest high-tech companies to square off in the so-called “patent wars.” In the lawsuit, Microsoft alleged Motorola tried to excise excessive licensing fees, while Motorola claimed that Microsoft infringed its standard-essential wireless technology patent.

Standard-essential patents are integral to the tablet and smartphone industry because they form the backbone of the basic technology they need to operate. While most owners of these patents have voluntarily pledged to grant licenses to other companies on “reasonable and nondiscriminatory” (RAND) terms, it is often easier said than done.

In a recent decision, U.S. District Judge James Robart established some useful guidelines for determining reasonable royalties for standard essential patents (SEPs). Since his opinion runs over 207 pages, it is impossible to outline all of them here. However, there are a few key takeaways.

To arrive at “reasonable” royalty, Robart conducted a hypothetical, bilateral negotiation between the parties. In doing so, the judge highlighted the need to consider the importance of the SEPs to the standard as well as the importance of the standard and the SEPs to the products at issue. The specific “economic guideposts” he cited included the following:

  • A RAND royalty should be set at a level consistent with the standard setting organization promoting widespread adoption of their standards.
  • In the context of a dispute concerning whether or not a given royalty is RAND, a proper methodology used to determine a RAND royalty should therefore recognize and seek to mitigate the risk of patent hold-up that RAND commitments are intended to avoid.
  • Likewise, a proper methodology for determining a RAND royalty should address the risk of royalty stacking by considering the aggregate royalties that would apply if other SEP holders made royalty demands of the implementer.
  • To induce the creation of valuable standards, the RAND commitment must guarantee that holders of valuable intellectual property will receive reasonable royalties on that property.
  • From an economic perspective, a RAND commitment should be interpreted to limit a patent holder to a reasonable royalty on the economic value of its patented technology itself, apart from the value associated with incorporation of the patented technology into the standard.

In the end, Robart’s RAND calculations more closely matched those urged by Microsoft. However, the methodology employed was that favored by Motorola. Overall, the case highlights that standard essential patent cases continue to raise challenging issues.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

New U.K. Orphan Works Law Causes a Stir

The United Kingdom recently approved the Enterprise and Regulatory Act. Among other provisions, it amends how British copyright law treats “orphan works.”

The Enterprise and Regulatory Act defines an orphan work as a copyrighted work for which the copyright owner cannot be found “after a diligent search made in accordance with the regulations.” If the owner cannot be found, the law allows media publications or others to obtain a license to use the image. The copyright license fee is then held should the rights holder come forward.

As Wired reports, many commentators broadly interpreted the law to mean that pictures from popular social media sites like Facebook and Instagram would qualify as orphan works, as it can be difficult the owners’ real name and contact information. The new law caused such a stir that the Intellectual Property Office stepped in to clarify it.

“Owners of photographs posted online will not lose control of their copyright under changes outlined in the Act,” said a spokesperson. “Nor do the changes mean anyone can use a copyright work without permission or free of charge. If someone copies a photo posted online they still need the permission from the rights holder of the photo to do so. If they don’t have this permission they will have to apply for and buy an orphan works license.”

Despite the Intellectual Property Office’s reassurances, critics of the law still contend that it will hurt photographers and other rights holders. They are specifically concerned with the stringency of the due diligence requirement for locating a work’s owners. The specific details of the licensing process are also still being flushed out with stakeholders. We will continue to monitor this legislation and provide updates as they become available.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

Apple Wins Another “i” Lawsuit

Apple Inc. seems to have the market corned when it comes to trademarks that begin with “i.” The company recently prevailed in a trademark infringement lawsuit over the use of the “iBooks” trademark.

A small New York publishing house, Black Tower Press, filed the lawsuit after Apple announced its new online bookstore. Black Tower alleged that Apple’s use of the term in connection with its e-reader platform violated the publisher’s “iBooks” logo, which was acquired from another publishing house.

U.S. District Court Judge Denise Cote disagreed. She first noted that neither Black Tower nor its predecessor registered the trademark. Meanwhile, Apple has held a trademark registration for the term since 1999, when it was used in connection with laptop computers. It obtained further trademark protection to use the term for its e-reader platform in 2010.

Cote further disagreed that Apple’s use of the “iBooks” trademark would lead to customer confusion. “They have offered no evidence that consumers who use Apple’s iBooks software to download ebooks have come to believe that Apple has also entered the publishing business and is the publisher of all of the downloaded books, despite the fact that each book bears the imprint of its actual publisher,” Cote wrote.

Source: Gigaom.com

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

Supreme Court Rules “First Sale Doctrine” Applies to Goods Made Abroad

The U.S. Supreme Court recently announced its long-anticipated decision inKirtsaeng v. John Wiley & Sons, Inc., No. 11-697 (Mar. 19, 2013). The Court decided that the “first sale doctrine” of the Copyright Act applies to goods made abroad.

As we previously discussed on this IP Law Blog, the case involved a Thai textbook dealer (Kirtsaeng) who purchased textbooks overseas and sold them to fellow students to help finance his education.  Following a copyright infringement lawsuit by publisher John Wiley & Sons, the student was ordered to pay damages in the amount of $600,000.

The case required the justices to address the tension between two important aspects of copyright law. The Copyright Act prohibits the importation of copyrighted goods without the authority of the copyright owner. However, the “first sale doctrine” entitles the owner of a lawfully made work to resell the work without the authorization of the copyright owner.

The Supreme Court ultimately concluded that the “first sale doctrine” applies to copies of a copyrighted work lawfully made abroad. As explained in the Court’s opinion, “Both historical and contemporary statutory context indicate that Congress did not have geography in mind when writing the present version of § 109(a) [the “first sale doctrine”].”

The Supreme Court further noted that the alternative interpretation favored by John Wiley & Sons would cause practical problems for booksellers, libraries, museums and retailers, which have long relied on the “first sale doctrine.” Further, the Court stated that the fact that the Copyright Act does not instantly protect an American copyright holder from unauthorized piracy taking place abroad does not mean the Act is inapplicable to copies made abroad.

Thus, under the Court’s holding, once foreign-made goods have been legally sold, whether domestic or overseas, copyright holders have no right to control further resale of those goods.  This means that publishers and other manufacturers that formerly exploited copyright to charge different prices to overseas and domestic consumers will have more difficulty doing so, as there will be importers who arbitrage by buying cheaper goods abroad and reselling at the US for prices lower than the manufacturer’s prices.  In essence, the decision legalizes the “gray market” in such goods.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

Businesses Reminded That NFL Fiercely Protects Super Bowl Trademark

As California IP attorneys, we will be rooting for the San Francisco 49ers to take home the Vince Lombardi Trophy this year. However, as we approach the “Big Game,” we also want to remind businesses that the National Football League fiercely protects its “Super Bowl” trademark.

Licensing the trademark is big business for the NFL. Sponsors like Pepsi, Verizon, Motorola, and Castrol pay more than $100 million annually to be affiliated with the league. However, those who are not officially licensed by the NFL may receive one of the 80 to 100 cease-and-desist letters the league sends each year to businesses using the brand without permission.

Prior to this year’s game, the NFL took legal action against an Indiana man who had the foresight to predict that Jim Harbaugh, coach of the San Francisco 49ers, and John Harbaugh, coach of the Baltimore Ravens, would one day face off in the Super Bowl. Ron Fox filed trademark applications for the terms “Harbowl” or “The Harbaugh Bowl.”

However, as ESPN reports, the NFL quickly put the brakes on the trademark registration. League attorneys contacted Fox and warned him that they believed that the trademarks could easily be confused with the NFL’s Super Bowl mark.

The argument is tenuous at best; however, we will never now how a court might have ruled on the likelihood of confusion. Unsure of his legal rights and unable to afford a costly legal battle with the NFL, Fox ultimately abandoned the application.

Because neither the NFL nor Fox registered the trademark, some may see it as fair game. However, businesses should still expect a letter from the NFL.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

USPTO Offers New Tool to Determine Patent Term

The U.S. Patent and Trademark Office recently announced a new tool for patent holders. The online calculator enables members of the public to estimate the expiration date of a utility, plant, or design patent.

In general, patents based on applications filed after June 8, 1995 last for 20 years, starting from the application’s filing date. However, the patent termcan be shortened or extended by a number of factors, including:

  • Type of application (utility, design, plant);
  • Filing date of the application;
  • The grant date of the patent;
  • Benefit claims under 35 U.S.C. § 120, 121 or 365(c);
  • Patent term adjustments and extensions under 35 U.S.C. § 154;
  • Patent term extensions under 35 U.S.C. § 156;
  • Terminal disclaimer(s); and
  • Timely payment of maintenance fees.

As detailed by the USPTO, its new calculator tool “provides a best estimate of a patent’s expiration date, based on a comprehensive list of factors than can be found in USPTO records.” The calculator can be downloaded at www.uspto.gov/patents/law/patent_term_calculator.jsp.

While the calculator can provide valuable information, we recommend that individuals and companies still consult with an experienced patent attorney to determine if a patent is still in force. The USPTO also agrees, noting, “Before relying on an expiration date, individuals should always carefully inspect all relevant documents available through the USPTO, court records and elsewhere, and consult with an attorney.”

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.