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Update on Patent Trolls

By Richard Mescher on May 15th, 2013 Posted in Patents

The America Invents Act (AIA), which became fully implemented March 16, 2013, revised U.S. patent law but included few reforms directed to curbing Non-Practicing Entity (NPE) or “patent troll” activity. Thus, not surprisingly, patent troll activity has continued at an alarming rate during the early months of 2013. Summarized below are the recent activities of the most infamous patent trolls.

Fortunately, the president and the legislature appear to desire additional patent reform to address patent trolls. On Feb. 14, 2013, President Barack Obama addressed patent trolls and the need for more comprehensive patent reform in a “Fireside Hangout” which is a live question and answer session hosted in a Google+ hangout. President Obama acknowledged that the reforms of the AIA “only went about halfway to where we need to go.”

On Feb. 25, 2013, the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act of 2013 (H.R. 845) was reintroduced into the House by Rep. Peter DeFazio, D-Ore. and Rep. Jason Chaffetz, R-Utah. The SHIELD Act mandates a fee award to any party victorious on the issue of non-infringement or invalidity. This means that a company can sue for declaratory relief and recover its costs, even though the patentee never filed suit. The SHIELD Act excludes the inventors or “original assignees”, universities and their technology transfer organizations, and patentees that have a “substantial investment” in the exploitation of a patent via production or sale. The SHIELD Act requires NPEs to post a bond for the fees upon filing an infringement lawsuit. While this legislation raises many questions, at least it keeps the issue on the minds of the legislature and public.

Kirtsaeng v. John Wiley & Sons, Inc. and the Ghost of Quality King

By Martin Miller on April 30th, 2013 Posted in Copyright

Under a recent U.S. Supreme Court ruling, publishers of books and magazines who print and sell their publications in other countries through distributors will no longer be able to rely on U.S. copyright law to prevent others from importing and re-selling those publications in the U.S. In Kirtsaeng v. John Wiley & Sons, Inc.¹, the U.S. Supreme Court fully embraced international copyright exhaustion. Going against the views (admittedly dicta) expressed in its own unanimous decision from 1998, as well as the official position of the United States in international trade negotiations, the court held that the first sale doctrine applies to copyrighted works manufactured and sold abroad under the authority of the copyright owner. Such authorized manufacture and sale, even if done outside of the U.S., exhausts the copyright owner’s right to control the importation and distribution (i.e., sale) of such works.

As a result of Kirtsaeng, copyright owners will find it difficult to prevent the unauthorized importation of their works purchased in other countries (assuming, of course, that those works were made and sold abroad with the approval of the copyright owner). Though Kirtsaeng was limited to copyright, the majority opinion suggests that the Court may be willing to embrace international patent exhaustion as well.

Arbitrator Did Not Exceed His Powers By Awarding Perpetual License In All Intellectual Property Rights For Video Game

By Jay Yurkiw on April 19th, 2013 Posted in Intellectual Property, Trademarks

The Fifth Circuit Court of Appeals recently held that an arbitrator did not exceed his powers when he expanded an eight-year license to use a video game’s trademarks into a perpetual license to use all the intellectual property rights associated with the game. See Timegate Studios, Inc. v. Southpeak Interactive, L.L.C., ___ F.3d ___, 2013 U.S. App. LEXIS 7184, No. 12-20256 (5th Cir. Apr. 9, 2013).

Under the Federal Arbitration Act, an arbitrator does not exceed his powers unless “he has utterly contorted the evident purpose and intent of the parties—the ‘essence’ of the contract.” Timegate Studios, slip op. at 9. The Fifth Circuit found that the arbitrator’s remedy of a perpetual license was “rationally rooted” in the agreement between the parties and therefore reinstated the arbitrator’s award after the district court had vacated it.

The Agreement

In 2007, Timegate Studios, Inc. (“Timegate”) entered into a 46-page video game publishing agreement with Gone Off Deep, L.L.C. d/b/a Gamecock Media Group (“Gamecock”). The agreement obligated Timegate to develop a futuristic military-style video game entitled “Section 8,” and it obligated Gamecock to publish the game. As the publisher, Gamecock agreed to provide most of the investment funding for the game’s development and to manufacture, market, distribute, and sell the game after its development.

Don’t Forget About E-Discovery When Moving To The Cloud

By Jay Yurkiw on April 9th, 2013 Posted in Electronic Discovery, Information Technology

As businesses move more applications and data to cloud services (e.g., Google Apps for Business, Salesforce.com, Amazon S3, etc.), they inevitably are going to find themselves in litigation with the need to retrieve electronically stored information (ESI) from the cloud to comply with their e-discovery obligations. While the risks of e-discovery likely will not keep any businesses away from public cloud services altogether, businesses at least should plan for how they are going to meet the demands of e-discovery in the cloud when litigation arises.

Following are some tips on how businesses can manage their e-discovery risks if they are considering a move to a cloud or if they have already made the move.

New European Unitary Patent and Unified Patent Court are on the Horizon

By Anne Pellot on April 4th, 2013 Posted in Patents

Soon, a new unitary patent system will bring reduced cost and greater uniformity to European patents. The Unified Patent Court Agreement was signed Feb. 19, 2013 at the Council of the European Union meeting in Brussels, Belgium. At the meeting, ministers from 24 contracting EU member states signed on to the agreement establishing a Unified Patent Court (UPC). The Unified Patent Court Agreement represents one of the final major steps in forming a unitary patent system for Europe. The development of a European unitary patent system has been under discussion and development since the 1970s. The signing of the UPC agreement follows the adoption in December 2012 and entry into force of two regulations related to the unitary patent system. These two regulations pertain to unitary patent protection and the translation arrangements associated with the unitary patent, and came about through use of the enhanced cooperation procedure.

The European patent with unitary effect ("unitary patent") will be a European patent granted by the European Patent Office (EPO) under the provisions of the European Patent Convention. The unitary patent will not replace national patents and classical European patents, but will instead offer another option for parties seeking patent protection. The EPO will continue with its existing search, examination and granting procedures. Following patent grant the patentee may request unitary effect for the member states participating in the unitary patent, and will be able to maintain a classical European patent for the European patent convention contracting states that are not participants in the unitary patent.

Facebook Account Deactivation Leads To “Spoliation Instruction”

By Jay Yurkiw on March 29th, 2013 Posted in Electronic Discovery

A federal court has ordered that “an instruction be given at trial to the jury that it may draw an adverse inference against Plaintiff for failing to preserve his Facebook account,” and for destroying evidence. See Gatto v. United Air Lines, Inc., No. 10-cv-1090, 2013 U.S. Dist. LEXIS 41909, slip op. at 11 (D.N.J. Mar. 25, 2013). The plaintiff did not just try to “clean up” his Facebook page; he permanently deleted it. According to the court, the permanent deletion of the plaintiff’s account prejudiced the defendants “because they have lost access to evidence that is potentially relevant to Plaintiff’s damages and credibility.” Id. at 10.

Plaintiff Argued Permanent Deletion of His Facebook Account was “Accidental”
In Gatto, the plaintiff alleged that he sustained permanently disabling injuries while working as a ground operations supervisor at JFK airport after an aircraft caused a set of fueler stairs to crash into him. The defendants sought discovery relating to the plaintiff’s damages and social activities, and the plaintiff provided the defendants with signed authorizations for the release of information from certain social networking sites and other online services like eBay and PayPal. The plaintiff did not include, however, an authorization for his Facebook account.

Top Three Trends From the 2013 IAPP Global Privacy Summit

By Christina Hultsch on March 26th, 2013 Posted in Privacy

I find a certain irony in the current ubiquity of privacy-related topics when the concept was once defined (and not by current European thinking, but more than 120 years ago), as the "right to be let alone," in “The Right to Privacy,” by Warren and Brandeis, 4 Harvard L.R. 193 (Dec. 15, 1890). Nonetheless, I could not wait to attend the IAPP Global Privacy Summit in Washington, D.C., for the first time this year.

The days were filled with snow chaos, certification training and CIPP testing (on Friday afternoon at 2pm-5pm!), an exciting reception and other great networking opportunities — including a group of about 15 brave individuals meeting up at 6:30am on Friday morning to go for a run. In between all these activities were plenty of good programs to attend, and there can be no doubt that privacy in M&A transactions, cloud computing, HIPAA and international data transfers, to name just a few, will all feature prominently in the privacy discussions of 2013. But my personal Top Three privacy trends are:

1. BYOD Is Here to Stay
It is no longer a question of whether companies will permit their employees to use their personal devices for work purposes, the remaining issue is how to implement a BYOD (bring your own device) policy to strike the right balance between convenience for the employees and data security for the company. Employee education, beta testing, accurate recording of work time for non-exempt employees, company access to employees’ personal information and remote wipes are only some of the buzzwords surrounding the implementation of BYOD.

Hong Kong Website Can Continue Selling Alleged Counterfeit Fashion Apparel After Court Declines To Exercise Extraterritorial Jurisdiction Under Lanham Act

By Jay Yurkiw on March 20th, 2013 Posted in Trademarks

A court in the Southern District of New York enjoined the defendants from selling fashion apparel in the United States that allegedly infringed the plaintiff’s trademarks, but it declined to exercise extraterritorial jurisdiction to stop the defendants from using their Hong Kong website to continue selling the same apparel to the rest of the world. See Juicy Couture, Inc. v. Bella Int’l Ltd. , No. 12 Civ. 5801, 2013 U.S. Dist. LEXIS 34846 (S.D.N.Y. Mar. 12, 2013). The court reasoned that it had to “proceed with caution in determining” whether to apply the Lanham Act extraterritorially because the parties were currently litigating in Hong Kong over whether the defendants had valid trademark rights there.

This case illustrates the difficulties U.S. companies can face when trying to stop infringing conduct that is happening abroad. Though trademark owners may use the Lanham Act to enjoin infringing activities outside the United States, U.S. courts will grant this relief only when the trademark owner can show it is necessary to prevent harm to commerce in the United States. Because this can be a tough standard to meet, it is important for U.S. businesses to consider the need for registering their trademarks domestically as well as internationally and for having a strategy to enforce their trademark rights in foreign countries.