Fraud On The Patent And Trademark Office Isn't What It Used To Be: In re Bose Corp.

By Dave Rein

With the stroke of a quill pen pulled from their cap or with the tap of a keyboard, the Federal Circuit may have relegated an intensely litigated and debated line of fraud cases to the ancient history books.  Likewise, it may yet send the stock price of Novartis, makers of Maalox, downward.  More on stock prices and Maalox later . . . .

Starting with the seminal case, Medinol Ltd. v. Neuro Vasx, the Trademark Trial and Appeal Board has held that the trademark applicant or registrant commits fraud by claiming the use of a mark in connection with identified products or services when it actually did not use the mark on all of the claimed products or services.  The standard that the Board applied was whether the applicant or registrant made a material representation of fact that it knew or should have known to be false.  The penalty for such fraud was typically death to the trademark registration or at least to the registration of the offending class of products or services.  From 2003 until as late as June of this year with the Esprit IP Limited v. Mellbeck Ltd decision (visit Christina Frangiosa's Privacy and IP Law Blog for more on the case), this had been the state of the law with a few tweaks here and there as the Board soften the impact of the Medinol cases. 

This line of cases kept many a trademark attorney up at night wondering what would happen to their clients' valuable portfolios of trademarks registrations if subjected to a Medinol challenge.  Trademark attorneys and their clients implemented a number of creative strategies, but the concern that the registrations might be canceled must have caused many to gulp down untold amounts of Maalox that surely sent the stock price soaring.

Perhaps it was this health concern that caused the Federal Circuit in In re Bose to strongly state that the Board was applying the wrong standard to establish fraud and effectively applying a negligence standard.    The Federal Circuit was perhaps a bit harsh in its criticism given that the Board had lifted the "knew or should have known" standard from a prior Federal Circuit decision, but it is true that the standard that the Board applied was different than anyone else's standard for fraud.

Some have argued that after In re Bose, the only penalty for getting caught listing goods or services that are never used with the mark is to correct the registration because: 1) it is difficult to prove fraud and 2) it will be difficult to justify the cost of pursuing fraud claims given the limited relief that  the Board can award.  If the only realistic penalty is to correct the registration, the argument goes, then it will be much more difficult to keep applicants honest.

Even the "reckless disregard" standard that may have been left open is still a high standard to meet in a Board proceeding and although the PTO's rules prohibit an applicant from making a false statement, until the Board loosens its interpretation of this rule, it provides little comfort to those who are concerned that applicants may cheat if not checked.

John Welch of the TTABlog suggests that one way "to focus an applicant's or a registrant's attention on the issue of use would be to . . . require a specimen of use of every item listed in the application or registration."  He suggests that submitting a catalog or pages printed from the Internet could be deemed sufficient.  I am not sure of the extent legal costs might increase if registration required a specimen showing use of each product or service, but the suggestion is worthy of further discussion.

First, having to submit something -- even if the bar of what the PTO will accept is low -- will ensure that the applicant does some investigation before claiming use on a multitude of goods and services.  Second, the "I didn't know" defense to fraud becomes more suspect if the applicant submits a specimen showing use of the mark on a product when the applicant never sold such products or never used the mark on such products.  

For now, however, given that attorneys and their clients have less fear of their trademark registrations being canceled, fewer will be gulping down bottles of Maalox.  Perhaps Novartis should offer to fund an appeal of the Federal Circuit's decision?

Local Con Showcases Creative Talent

By Geoffrey Gerber

This past weekend I made my presentations at Archon 32. As usual creators rights and character copyright generated a great deal of discussion. In addition to my two panels, I was interviewed by the folks at Back Seat Productions and the Podgecast. I’ll post a link when it goes live. This con draws a mostly local crowd, but it showcased some nationally regarded talent on its panels and enthusiastic fan support.

I had the opportunity to briefly meet the Artist/Gaming Guest of Honor John Kovalic. My kids are big fans of Munchkin, a card game he illustrates. A friend directed me to this cartoon he did which has special resonance for character copyright geeks like me. Click on the image to check out the cartoon at Dork Tower.




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Trademark Trial & Appeal Board Says Internet Is Here To Stay

By Pete Salsich III

No, that's not a headline from The Onion.

In a recent precedential opinion, the TTAB held that evidence from the immensely popular online encyclopedia Wikipedia can be admitted even though -- by its very nature -- such evidence may be unreliable.  See In re IP Carrier Consulting Group, TTAB, Serial No. 78542726 (June 18, 2007).   At issue were applications to register two trademarks: "ipPICS" for online image services and "ipPIPE" for communications services.  The PTO rejected both applications on the grounds that they were merely descriptive of the services provided.  In doing so, it relied in part on numerous online and print sources showing that the abbreviation "ip" was commonly used to refer to "Internet Providers" such as the applicant.  On appeal to the Board, the applicant cited Wikipedia's entry on "Internet Service Provider" to show that the most common abbreviation for Internet Provider was "ISP", not "IP."  The Board accepted and considered the Wikipedia evidence, but still affirmed the examiner's descriptiveness finding and refused the applications.

In the process, the Board spent some time discussing the relative merits of evidence from Wikipedia and other user-edited online sources and concluded that the fact that such sources may sometimes be unreliable does not make them automatically inadmissible, provided the non-moving party has an opportunity to introduce rebuttal evidence.

Does this make sense?  John Welch at the TTABlog doesn't think so.

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Settling The IP Litigation Case: A Great New Blog Resource

By Pete Salsich III

As should be pretty obvious from most of the posts on this blog, we like to focus on new cases, new industry developments and new technology and how all those new things fit in with old (or at least older) legal constructs.   Today I want to draw your attention to a new resource that focuses on the old practice of settling cases.

I recently discovered The IP ADR Blog, a new blog hosted by Victoria Pynchon, Michael Young, Les Weinstein and Eric Van Ginkel, a group of well-respected alternative dispute resolution specialists in Los Angeles.  The blog focuses exclusively on IP litigation/ADR-related issues such as licensing structures, negotiation and IP asset valuation, all with an eye on getting litigating parties out of the courtroom and back to business.  Often one of the biggest challenges we face when advising clients involved in IP disputes is not letting the legal issues get in the way of seeing the business realities.  From what I've seen so far, The IP ADR Blog looks like it's going to be a great resource in meeting this challenge.

As Victoria Pynchon says in one of the first posts on the blog:

"Collaboration and reciprocity are the by-words of the blogosphere and the key to the settlement -- or the effective management -- of complex IP litigation."

I agree -- and in that spirit, I look forward to joining the dialogue and learning from these authors.

Copyright Infringement, Digital Devices and Electronic Discovery: Courts Have Random Access Memory Lapses

By Pete Salsich III

Beware the RAM . . .

From Gary's iPhone to my TiVo to your computer, we've begun to take the existence and use of digital devices almost completely for granted.  Most of us never think about the vast amounts of digital data that are being processed through our devices' random access memory (RAM).  On the most basic (non-technical) level, all digital devices create and very briefly store--often for only fractions of seconds--transient data "buffer" copies of digital information in order to ultimately display and/or process that information for the end user. 

Cool, but so what, right?


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Copying the Copyright Infringement Complaint: A Sidebar in the YouTube Litigation

By Pete Salsich III

The tri-frontal attack on YouTube's business model spawned an interesting (probably to lawyers only) side skirmish the other day when a second class action complaint was filed by mandolin player and former Grateful Dead jammer David Grisman.  Grisman, along with his company Dawg Music and his partner Craig Miller, seek to represent a class of other musicians and copyright owners whose works are posted on YouTube without permission or compensation.  This filing falls on the heels of the class action complaint filed earlier this month by the English Premier League charging YouTube with massive copyright infringement.

The allegations in the two complaints are largely the same.  In fact, for the most part they are EXACTLY the same.  And that raises the question, asked by the Wall Street Journal Law Blog, whether wholesale copying of a filed complaint--alleging copyright infringement, no less--is itself copyright infringement.  Copies of both complaints are posted there.

This may be a bit of "inside baseball" to non-lawyers, but the blog post, and in particular the extensive comments thread, expose a heated debate that goes beyond the copyright question and touches on significant questions of legal ethics.  For example, many lawyers use form books or keep form files of different pleadings that they can lift from when preparing a new filing.  This can be very useful and efficient both for the lawyer and the client, and is probably not very controversial when you're talking about a simple appearance form or routine discovery requests.  However, what about a 40-page complaint?  Even if it contains similar factual allegations and legal theories, don't the lawyer's ethical obligations -- to investigate all the facts he or she alleges, for example -- require some modicum of originality?  And what about the bill the lawyer sends to the client? Is it OK to do wholesale copying if you only charge your client for the time it takes you to change the caption and the signature block? 

As to the copyright question, I tend to agree with Keith Henning at the copywrite blog.  He references an article by Professor Davida H. Isaacs applying a fair use analysis to the copyright question (see Davida H. Isaacs, The Highest Form of Flattery? Application of the Fair Use Defense against Copyright Claims for Unauthorized Appropriation of Litigation Documents, 71 Mo. L. Rev. 391 (2006)) as well as Professor Nimmer, but ultimately concludes that the allegations of fact in a complaint typically do not contain the level of originality required for copyright protection.  I don't think wholesale copying of this type is a good (or ethical) practice, but I'm not sure that it is copyright infringement.