As I previously posted, Activision filed a Complaint in U.S. District Court challenging the Nebraska Attorney General’s Office’s prior cease and desist letter to a law firm called Farney Daniels. Last week, the Nebraska Attorney General’s Office fought back in its quest to curb troll activity when it filed its Brief in opposition to Activision’s Complaint and Motion for Preliminary Injunction. The AG’s Office asked the Court to dismiss the Complaint for, among other things, failure to state a claim and/or to deny Activision’s preliminary injunction request.
One of its stronger arguments appears to be the Court’s lack of subject matter jurisdiction. The AG’s Office points out that its cease and desist letter was to Farney Daniels and not to Activision. It also noted that its prior prohibition pertained to “new” matters and Activision’s matter was filed 6 days before the AG’s Office even issued its letter to Farney Daniels. Thus, there is no “case or controversy” between the parties.
The AG’s Office also argued that Activision couldn’t meet its preliminary injunction burden of showing that it would likely succeed on the merits. It creatively argued that Activision cannot show that Farney Daniels’ actions didn’t constitute unfair or deceptive trade practices under Nebraska state law. If this case doesn’t get dismissed for lack of subject matter jurisdiction, it will be interesting to see how the Court analyzes Farney Daniels’ patent enforcement efforts under the Nebraska Consumer Protection Act.
As I previously posted, the Nebraska Attorney General’s Office issued a cease and desist letter barring any new patent infringement actions in Nebraska to a law firm that has a history of representing a so-called “patent troll” against Nebraska-based businesses. Last week, it was reported that Activision TV filed suit in U.S. District Court in Omaha over the AG’s ability to restrict the law firm’s patent enforcement activities within the state. Activision allegedly wants to retain the law firm to litigate a patent infringement action against Lincoln-based, Pinnacle Bank and claims that the Nebraska AG overstepped its authority.
The Nebraska AG previously reported that the law firm was the subject of a prior investigation. Thus, it will be hard pressed to back down from the fight. It will be interesting to see how the Court rules given that the AG’s Office was acting under its authority to investigate and protect its consumers.
In what has been described as a “first of its kind” settlement, a so-called patent troll, MPHJ Technology Investments, LLC (“MPHJ”), has allegedly agreed to an “assurance of discontinuance” with the Minnesota Attorney General’s Office regarding its patent enforcement efforts in the State of Minnesota. Pursuant to the agreement, MPHJ has agreed to “cease its patent enforcement campaign” in Minnesota and not resume such activities without the AG’s consent. Further, MPHJ cannot assign the patents-at-issue to any third party who does not agree to be bound by such terms.
The settlement was allegedly the result of investigations stemming from mass mailings threatening patent infringement against several small businesses in Minnesota. Interestingly, this is the same law firm and patent troll that the Attorney Generals’ Offices in Vermont and Nebraska dealt with over the last year.
The states are clearly sending a message to patent trolls and to those law firms that represent them. When I worked at the Federal Trade Commission many years ago, the state Attorney Generals’ Offices worked hard to coordinate their enforcement efforts. It seems as though they are even more in sync today. As I have previously suggested, if your client receives what appears to be a baseless, mass-mailed cease and desist letter, it may want to consult the Attorney General’s Office within your state.
After five years of continuous, post-registration use, a trademark registration can become “incontestable” under 15 U.S.C. § 1065. An “incontestable” trademark registration is immune from challenge on certain grounds, such as that the mark is merely “descriptive” and lacks secondary meaning. Although the validity of the registration may not be challenged on a “descriptiveness” basis, the mark’s strength (which affects the scope of protection) can be attacked when considering the “likelihood of confusion” prong of a trademark infringement analysis.
Earlier this week, the Tenth Circuit examined this very issue when it unanimously affirmed a lower court’s summary judgment of non-infringement. In Water Pick, Inc. v. Med-Systems, Inc., the Court analyzed the use of similar marks used by competitors in the nasal irrigation market. The senior user, Med-Systems, owned several incontestable federal registrations for SINUCLEANSE. After negotiations broke down to buy Med-Systems, Water Pik developed its own nasal-irrigation line under the name SINUSENSE.
The Tenth Circuit provided a nice analysis of the problems associated with Med-Systems’ expert’s survey. However, the more interesting issue (which should serve as a reminder to all litigators) was how the Court analyzed the conceptual strength of the senior SINUCLEANSE mark as part of its evaluation of a “likelihood of confusion.” A particularly strong mark can give rise to a “likelihood of confusion” while a weak or “descriptive” mark suggests that use of a similar, junior mark even on similar goods is unlikely to cause confusion.
Determining whether a mark is descriptive and hence, weak, can be difficult. The Tenth Circuit set forth it’s test as “’[d]escriptive terms are those which directly convey to the buyer the ingredients, qualities, or characteristics of the product.’” In the end, the Tenth Circuit found the mark to be “descriptive” of the product’s characteristics or qualities as “Sinu” is a widely used prefix by third parties, including several sinus-irrigation products, and “cleanse” communicates the “nature and purpose of Med-Systems’ products….”
The lesson to be learned is that even if a trademark registration is “incontestable,” in certain Circuits (like the Tenth), it may be possible to defend against a charge of infringement by arguing that the senior mark is “descriptive” as part of the “likelihood of confusion” analysis. Often, this is an overlooked, possible defense.
Law firms beware. I previously posted about the Vermont Attorney General’s Office taking action against a patent troll based on its enforcement efforts against Vermont-based businesses. Now, an Attorney General’s Office has set its sights on a law firm that allegedly represents patent trolls. Last month, the Nebraska Attorney General’s Office reported in a press release that it is investigating a Texas law firm for possible violations of Nebraska’s Consumer Protection Act and the Uniform Deceptive Trade Practices Act based on the firm’s past enforcement efforts on behalf of various non-practicing entity clients. According to the Chief Deputy AG, his office is investigating infringement assertions by the firm that it claims were unsubstantiated and false, misleading or deceptive.
In his cease and desist letter, the Chief Deputy AG noted that this was not first time that the Nebraska AG’s Office had investigated the firm or one of its clients. It’s unclear as to the nature of the prior inquiry.
Of interest, the Nebraska AG’s Office has demanded that the firm identify, among other things, all patents that it has asserted on behalf of its clients against Nebraska consumers since January 1, 2010. It has also asked for all communications related thereto. In addition, the AG’s Office has demanded that the firm cease and desist from any new patent enforcement actions within the State of Nebraska pending the investigation.
Between the uptick of pending legislation and the recent Attorney Generals’ enforcement efforts, there appears to be a groundswell of interest in curbing patent troll activity. The blanket approach to sending out cease and desist letters on behalf of trolls may not bode well if it involves a substantial number of businesses operating in one state.
On June 28th, the U.S. Copyright Office amended its regulations on an interim basis to provide for a new registration option for applicants called the “single application.” The streamlined registration is aimed toward simplifying the process for individual authors of single works. It cannot be used for works for hire or collective works, websites or databases. As such, it will be interesting to see whether the public takes advantage of it. The Copyright Office has invited public comment until August 28, 2013.
Often the most important asset of a consulting company is its intellectual property. As such, don’t overlook the potential to protect unique flow diagrams and/or charts that you’ve developed when developing your IP portfolio. In late May of this year, the Tenth Circuit in Enterprise Management Ltd. V. Warrick found that an organizational management diagram was indeed eligible for copyright protection. The diagram-at-issue depicted a listing of variables and possible outcomes. The alleged infringer incorporated a similar diagram into his course materials and consulting business. After later discovering that the diagram had been created by the Plaintiff, he gave her credit for the work at the bottom of his diagram. However, he argued that the Plaintiff’s diagram was not eligible for copyright protection because it consisted only of unprotected ideas and expressions so intertwined with those ideas that they could not be protected under the “merger doctrine.” Although the District Court was persuaded by this argument, the Tenth Circuit disagreed. The Tenth Circuit focused on the expressive choices that the Plaintiff had made to convey her concepts and offered that such information could have been arranged in a myriad of ways. Her selection of symbols and word choices were persuasive factors.
In the end, what appeared to be a fairly mundane flow diagram was found to be eligible for copyright protection. The lesson here is if you incorporate material that you did not create into your business, make sure that you have the legal right to do so. Copyright cases are fact intensive and are not always straight forward.
Technology is becoming more and more integrated into our daily lives and undoubtedly companies are seeking related IP protection. It was recently reported that Coupons.com has released its KitchMe app, which works in conjunction with Google Glass. Now, cooks can be sent shopping lists and recipes with step-by-step instructions by merely looking at available ingredients in their kitchens. Technology is certainly converging with our everyday lives.
Here’s another head spinner. Yesterday, it was reported that during a press conference, David Marcus, President of PayPal, discussed the issues associated with trying to pay for things in space. As companies like Virgin and SpaceX are forging ahead to make space tourism a reality, companies are apparently thinking about how to pay for services rendered in space. Indeed, PayPal is allegedly developing “PayPal Galactic” as a vehicle to buy things while in outer space. It will be interesting to see how it tries to implement and protect this technology as there are no IP addresses in space. These advancements are truly amazing.
You’ve always heard about the carbs in alcoholic drinks, but now, you might just learn more than you want to know. At the end of May, the Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau approved beer, wine and spirits companies’ use of nutrition labels on their products, which can list, among other things, calories, carbohydrates, protein and fat per serving. Since the labeling is voluntary, it will be at the beverage companies’ discretion as to whether to use them.
The labeling regulation is only temporary while the Treasury Department considers final rules on alcohol labels. It has been suggested that the recent labeling regulation is the result of lobbying by hard liquor companies that historically sell products with lower calories and carbohydrates than their beer competitors.
As this is a competitive industry, we will probably start to see entire ad campaigns develop around specific amounts of calories and carbohydrates in various beverages. If there is an edge to be had, companies will be sure to highlight it for consumers. So, an after dinner beer or scotch? We may soon learn which one helps us out more with our diets.
On Wednesday, the Vermont Attorney General’s Office brought suit against an alleged patent troll, MPHJ Technology Investments, LLC, for violation of Vermont’s Consumer Protection Act. The Vermont AG claims that the troll engaged in “unfair and deceptive acts” by sending numerous, threatening letters via a host of shell companies to small businesses and not-for-profit organizations in Vermont. The Defendant claims to have a patent on the process of scanning documents and attaching them to email via a network.
At first glance, the suit complains of, among other things, tactics that are fairly commonplace in this arena:
- threatening litigation when the Defendant was neither prepared or likely to bring a litigation;
- targeting small businesses that were unlikely to have the resources to fight patent-litigation; and
- sending letters threatening infringement without independent evidence of infringement.
However, this is probably not what caught the attention of the Vermont AG’s Office. Rather, the numerous complaints by small, Vermont-based businesses and the pursuit of not-for-profit organizations, such as one providing home care to developmentally disabled Vermonters, probably provided the impetus for the State to take action.
The AG claims that various deceptive statements were made in what appears to have been an aggressive letter writing campaign, including:
- Defendant’s licensing program had received a positive response from the business community;
- Many or most businesses were interested in promptly purchasing a license from Defendant;
- The fair price of a license was $900-$1200 per employee (when the average license fee was under $900 in total);
- The shell companies had exclusive enforcement rights; and
- Defendant would sue the target business if it did not respond within two weeks (when Defendant and/or its shell companies had never sued anyone anywhere in the U.S., much less in Vermont).
Ordinarily, you don’t see a state becoming involved in private patent infringement disputes. However, one can understand Vermont’s involvement because of the numerous complaints by those without adequate resources to respond, especially the local, not-for-profit agencies servicing disabled Vermonters.
In spite of the foregoing, it’s not likely that we’ll see other states take action against patent trolls engaging in aggressive patent infringement campaigns against mainstream companies. The states don’t have the resources or the stake in the fight to get involved. Nonetheless, if one of your clients is a small business that receives a baseless infringement letter, it might be worthwhile to check in with your state’s AG’s Office. If enough companies have received similar threatening suits in your state, the AG’s Office may follow Vermont’s lead and consider taking action.