August 19, 2010
The Passing of a Great Inventor
This is a departure from my typical article, but very important to the Intellectual Property Community nonetheless. I received some news late last night that deeply saddened me. A great inventor, Dr. Shalaby W. Shalaby, who happens to be my Godfather, passed away on Wednesday August 18, 2010. Dr. Shalaby was a great man, and you would be hard pressed to find someone who could possibly say otherwise. In fact, you would be hard pressed to find someone who can remember a time when he was not smiling.
Dr. Shalaby W. Shalaby
In the early 90’s, Dr. Shalaby founded Poly-Med, a privately owned company, in Anderson County, South Carolina. Thereafter, a new research and development laboratory facility was opened in April, 1995 at the Center for Applied Technology in Pendleton, SC. Poly-Med describes their core mission as “applying scientific and engineering principles toward developing proprietary polymers analytical testing and fiber spinning services.”
Dr. Shalaby is the named inventor on more patents than you can imagine, and built a business based on research, development, and licensing of Poly-Med’s intellectual property. Take a look at the number of patents that are listed on Poly-Med’s website. As indicated, Poly-Med holds many US and Foreign patents. Poly-Med did not stop at the patent phase. They developed their products, gave them names, and secured trademarks on those names. Take a look at the number of trademarks that are listed on Poly-Med’s website.
Dr. Shalaby and Poly-Med are a great example of the value of intellectual property and the need for patent reform, a reduction in the backlog of patent applications, and the economic impact that intellectual property can have on the economy. When viewing the intellectual property that Poly-Med was responsible for, I begin to ask myself some economic type of questions. How many people did Poly-Med employ? What was the economic trickledown effect of the intellectual property that was developed by Poly-Med? How many technologies were developed using Poly-Med technologies as a springboard?
We can go on and on about the success of Poly-Med and how intellectual property played a big role, but the real point of this short article is to pay tribute to a great man, a great friend, and a great inventor. Dr. Shalaby has left quite a legacy and will be missed by many. He is survived by his wife, Dr. Joanne Shalaby, his four sons, and ten grandchildren.
August 12, 2010
The Naked Cowboy Drags The Naked Cowgirl To Court
Although this happened a few weeks back, I still get a kick out of this story, and I’ve been hearing more and more about it. The Naked Cowboy (Robert Burck) has sued The Naked Cowgirl (Sandy Kane) for allegedly infringing on his trademark. I am not too sure what his trademark is, but I suppose it is a nearly naked person strumming a guitar in the middle of a major metropolitan area and generating revenue by getting television coverage on the likes of The Today Show. Before you ask, the answer is no. I don’t get it! A lot of you ladies out there might get it, but not me.
It sure is cold out here....shrinkage???
The Naked Cowboy earned his fame by walking around New York City in nothing but his cowboy boots, cowboy hat and a pair of draws while strumming his guitar and, in the process, entertaining New Yorkers. He’s not a bad looking man, and he has a body that is ever so slightly nicer than mine (insert fat joke here) so naturally, he was able to make some money off of his bit. As the saying goes, if you’ve got it, flaunt it. I’ll stick to writing these articles. I’ll leave the naked lawyering to someone else.
I don't see why they can't co-exist!
I did a quick bit of research and I did not find a registered trademark for “The Naked Cowboy.” I am truly wondering what the cause of action is here. Mr. Naked Cowboy is likely asserting common law trademark causes of action, and it attempting to stop someone else from profiting from his unique act. At this point, it will be up to a court to decide whether or not trademark protection can be afforded for his act.
July 23, 2010
OZZY OSBOURNE AND TONY IOMMI SETTLE THEIR TRADEMARK DISPUTE OVER THE BLACK SABBATH NAME
The lawsuit between Ozzy Osbourne and Tony Iommi over the Black Sabbath trademark has been “amicably resolved” (source). Ozzy filed a lawsuit in May of 2009 after finding out that Iommi filed a trademark application for “Black Sabbath” with the U.S. Patent and Trademark Office. The lawsuit claimed that Iommi illegally took sole ownership of the trademark when he filed the application with the USPTO. The relief sought in the complaint for a 50 percent interest in the trademark, along with a portion of the profits that Iommi may have realized from use of the trademark. Ozzy claimed that it was his vocals that gave the band it’s extraordinary success. I’d bet that’s the same case for “The Osbournes,” the MTV reality show.
Black Sabbath is an English band formed by Ozzy, Iommi, Geezer Butler and Bill Ward in 1968. The band went through many iterations, but the one constant throughout the years was Iommi. Ozzy left the band in 1979. The original lineup reunited in 1997 and released one album.
Don't we all own the trademark???
This case was kind of interesting to me because it seemed to be a trademark dispute between two guys (Iommi and Ozzy) over a trademark that many people could probably claim an ownership interest in. From what I can see, there were more than 20 members of Black Sabbath over the years. It seems to me that many of those members, or their estates, could be entitled to some of the profits that are derived from the “Black Sabbath” trademark. Without question, Iommi and Ozzy are the most popular members of that band, and probably did lead to most of its success, but this case had every potential to get ugly quick. I am sure that this came up in the settlement discussions, i.e., some attorneys probably sat around a table and advised the two that if the case got dragged out, they should not be surprised if several other members of the Band came out of the woodwork to claim their piece of the pie.
Iommi is welcome to join our family anytime!
Appraently, the possiblity of yet another reunion has not been ruled out. It is a crying shame that “The Osbournes” reality show is not still around. Theycould have had entire episodes based solely on this lawsuit. The ratings would have been through the roof. Wishful thinking!
July 20, 2010
THE ROADMAP TO THE SUPREME COURT FOR BERNARD BILSKI
Many of my clients have been following the Bilski case. As our readers know, the case of whether or not a method for hedging risks in commodities trading was recently decided by the U.S. Supreme Court (see our updates here, here and here). The Supreme Court decided that Mr. Bilski’s “invention” was not directed to patentable subject matter. But how, you ask, did the question of whether or not Mr. Bilski’s invention was patentable get all the way to the United States Supreme Court? Shouldn’t these matters normally be decided by the U.S. Patent Office? Allow me to step you through the road map on how a patent applicant can find themselves before the United States Supreme Court arguing that the Patent Office, and everyone up to that point, is wrong about their invention.
The patent process begins with a spark of genius, i.e., coming up with your invention. The prudent inventor writes their invention down in an inventor’s log (try using a notebook that cannot have pages torn out of it). After the inventor gets their invention down on paper (or otherwise reduces the invention to practice), a search is in order. A great place to start your search is at www.google.com/patents. If you hit a brick wall, i.e., you cannot find anything close to your invention out there, then talk to a patent attorney and have a search done. It is highly unlikely that there is absolutely nothing out there like your invention. There is normally at least something related out there. After you have found the closest prior art, read it in detail, and point out the differences between the prior art and your invention. These are points of novelty that will form the basis of your patent protection.
At this point, it seems as though you are ready to file a patent application. Go to a patent attorney and see which patent application is right for you (see my previous posts on the right patent application for you here). Let’s assume that you have filed a utility patent application including claims directed to your invention. The claims of a patent application are the most important thing. Claims can equate to a property description. They lay out the boundaries of your protection and serve as the club with which you will later beat infringers or command a high licensing fee.
We are the gatekeepers of all invention!
Patentability is initially determined by the Patent Office through an initial opinion issued by a Patent Examiner in the form of an Office Action. It is not uncommon for an initial Office Action to be in the form of a rejection of all the claims that you have filed. The rejection is not the end of the world. When filing your application, you should have drafted some broad claims in an attempt to seek as much protection as possible. Similarly, the Examiner will likely read prior art references broadly and use them to reject your claims.
After receiving an Office Action, you will engage in a “negotiation” process with the Examiner. You will attempt to either amend your claims to narrow the scope somewhat, or argue that the prior art cited by the Examiner does not read on the invention as recited in the claims. In Mr. Bilski’s case, those arguments were futile, and the Examiner issued a Final Office Action. Your option at this point is to file a response to the Final Office Action, file a Request for Continued Examination (RCE) or appeal. An RCE starts the examination process over again and, in short, gives you another bite at the apple.
Mr. Bilski filed an appeal of the Examiner’s decision. An appeal of an Examiner’s decision is heard at the Board of Patent Appeals and Interferences (BPAI). The initial step is to file a notice of appeal and an appeal brief. The Examiner, in turn, files a response brief. The briefs are reviewed by a group of Examiners prior to going to the BPAI. Often times, issues are resolved at that level, but not in Mr. Bilski’s case. If you do not like the decision of the BPAI, then your option is to appeal to the United States Court of Appeals for the Federal Circuit (CAFC). This is the first step that the inventor has taken outside of the Patent Office.
This is truly a legal proceeding. At the CAFC, the inventor will file an appeal brief, and the Patent Office will file an answer brief. The case will initially be heard by a panel of three judges who will hear the inventor’s arguments and the Examiner’s arguments. The CAFC will issue a decision either upholding the Examiner’s decision, overturning the Examiner’s decision, or sending it back to the Patent Office with some instructions on how to further examine the case. In Mr. Bilski’s case, the CAFC upheld the Examiner’s decision and noted that Mr. Bilski’s invention was not patentable. The game did not end there, however. Off we go into extra innings (as I’m typing this I’m watching the Phillies/Cubs game).
Since Mr. Bilski was obviously dissatisfied with the decision of the three judge panel at the CAFC, he then requested a rehearing before the CAFC en banc, meaning that all the judges of the CAFC should hear the case. It was the decision of the en banc CAFC that gave us the “machine or transformation” test. As noted in my previous post, the en banc CAFC held that Mr. Bilski’s invention was not patentable because it did not meet the machine or transformation test.
The case didn’t end there, however. Mr. Bilski, and much of the patent community, was not satisfied with the en banc CAFC test as it had ramifications in many industries, and essentially did away with business method patents. The next step was to appeal this decision to the United States Supreme Court. The parties filed their respective briefs were filed, and several third parties filed amicus briefs (as was also the case at the CAFC) putting forth various points and opinions for both sides. After the Court took into consideration the briefs filed by both sides, as well as amicus briefs, they eventually handed down the decision that is before us today.
Clearly it was a long road for Mr. Bilski, and quite the dissatisfying one, but as a patent practitioner, I sure am glad he stuck with it. His decision to take this case to the High Court brought to the forefront the issues that have been plagued the Patent Office for years, i.e., are business methods patentable and are software inventions patentable. The answer to both is yes, but that came along with some more questions. I’ll be back soon with some more analysis about these issues.
July 12, 2010
BILSKI IS FINALLY DECIDED AND NOW WE HAVE SOME REAL QUESTIONS
As many of you already know, the United States Supreme Court has finally handed down its decision in the case of In re Bilski (Decision). For some background on the Bilski case, please see my previous posts here and here. The Court of Appeals for the Federal Circuit held that Mr. Bilski’s invention was not patentable. In doing so, the Federal Circuit essentially did away with business method patents and pronounced the “machine or transformation” test for patentability.
The Bilski Patent Application has Died
The Supreme Court affirmed the Federal Circuit’s decision with respect to Mr. Bilski’s patent application, i.e., his invention is not patentable. Mr. Bilski’s invention relates to a system for hedging risks in commodities trading. Although the Supreme Court noted that the Federal Circuit’s decision was too restrictive, the Court still held Mr. Bilski’s invention to be unpatentable. More specifically, the Court held that Mr. Bilski’s claimed invention fell into one of the three specific exceptions to §101 of the patent statute, finding that it was an abstract idea. The other two exceptions are laws of nature and physical phenomena.
In holding that the “machine of transformation” test is not the only test of patentability, the Supreme Court noted that the Federal Circuit erred by violating two principles of statutory interpretation: Courts should not read into the patent laws limitations and conditions which the legislature has not expressed and that unless otherwise defined, words will be interpreted as taking their ordinary meaning. Since Mr. Bilski’s invention was defined as a “process” the Court held that there is no meaning of process that would require Mr. Bilski’s invention to be tied to machine or to transform an article.
Finally, the Supreme Court held that the term “process” does not exclude business methods as being patentable. The Court specifically noted that it is not clear whether a business method exception would exclude technologies for conducting a business more efficiently. Of course, that raises many questions for inventors and patent practitioners across the board. It seems to me that it would be impossible to write a patent application that was not tied to machine or apparatus without it being an abstract idea. After all, is that not what Mr. Bilski was trying to do? The court does note that while §273 of the patent statute appears to leave open the possibility of some business method patents, it does not suggest broad patentability of such claimed inventions. Therefore, the Court just let us all know that if you can somehow get a business method through the PTO, it had better be very narrow. I suppose you have to question the value of such a patent, i.e., is a patent that can be very easily designed around very valuable? In many cases, the answer can certainly be yes, but it is something that needs to be analyzed during the patent prosecution process.
Probably the toughest part to swallow about this decision is that the debate over business method patents and, more than likely, software patents, is far from over. This is evident in the last paragraph of the syllabus when the Court invites the Federal Circuit to develop other limiting criteria that further the Patent Act’s purposes and are not inconsistent with its text. At the end of the day, this decision likely created more questions than answers, but at least we know that patent litigators will still be busy over the next few years trying to flush out that which is still patentable. Stay tuned for some follow up articles on how the Patent Office is handling this decision.
June 24, 2010
David Ortiz and Jay-Z Settle Trademark Dispute Over the 40/40 Club
If you read this blog at all, you have figured out that I am a sports fan of sorts. I think we all know that I have a slight interest in intellectual property (I had better for the sake of my clients). You could only imagine my excitement when the riveting intellectual property news that I normally follow crossed over into my sports news. Many of you may have heard of the trademark dispute between David Ortiz of the Boston Red Sox and music sensation Jay-Z. I’m not particularly a fan of either one of them, but I certainly found the story to be interesting. Jay-Z and Juan Perez own the 40/40 Club, with locations in New York, Atlantic City, Las Vegas, Chicago, Tokyo and Macau.
Apparently, Ortiz thought it would be a great idea to open a club in his home country of the Dominican Republic called the 40/40 club. It would be nice to attempt to say that he did it without knowing about Jay-Z’s club, but that does not seem to be the case. 40/40 is a term used in baseball to refer to achieving the milestone of hitting 40 home runs and stealing 40 bases. Reports indicate that Ortiz had frequented Jay-Z’s club in the past. It probably doesn’t help that Jay-Z is a Yankee fan and Ortiz plays for the Red Sox…not that there’s any bad blood between those two teams…
Jay-Z filed his lawsuit for trademark infringement in April, demanding $5 Million in damages. Unfortunately, Ortiz apparently decided not to answer the complaint. (Source.) When a judge threatened to enter a default judgment against Ortiz, an attorney representing him informed the judge of Ortiz’s intention to settle the dispute by changing the name of his Dominican Republic club.
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Although none of this was ground breaking IP news, it peaked my interest nonetheless.
May 25, 2010
My Bilski Prediction
The United States Supreme Court recently heard the case of In re Bilski in which the court was asked to make a determination of what is and what is not patentable subject matter. For more information on the original holding by the Federal Circuit, please check out our previous post. For some information on the oral arguments at the U.S. Supreme Court, please check out our Bilski Part Duex post. The Bilski patent application was rejected by the PTO for failing to meet the requirements of 35 U.S.C. § 101, i.e., the PTO held that the invention was not directed to patentable subject matter.
Me at the Supreme Court. (I'm the shorter one.)
The opinion might come out here in the next week or two, so I just want to get my prediction on the record. In short, the court will hold that the subject matter of Bilski’s patent application is not patentable. The reasons why they find it unpatentable, of course, is what the patent world will be waiting for. The implications for many different industries can be huge. Although I realize that this has some implications in the pharmaceutical industry, my main focus is software. When the Supreme Court gets through with this case, will software still be patentable? Will they uphold the rule of law set forth by the Federal Circuit (machine or transformation test)? Will there be a new test that the Supreme Court enters that will have an effect on the way we have drafted our claims for the past couple of years?
May 10, 2010
Collecting Royalties under a Patent License
Professor Dennis Crouch of Patently-O recently posted an article about the difficulties in collecting royalties pursuant to a patent licensing agreement. In his post, Professor Crouch referenced a report by Invotex, which noted that 86% of licensees misreported their royalties to their licensor. This, unfortunately, is not surprising, and is part of the reason why the process of entering into a patent (or any IP) licensing agreement can be so time consuming.
The Invotex report sets forth some of the very issues that a patent licensing attorney tries to avoid when entering into a licensing agreement on behalf of a client that is the licensor. Often times, however, the negotiation process does not allow for the “tight” agreement that the licensor’s attorney wants. Instead, licensing agreements can often be open to interpretation.
Some of the royalty reporting errors indicated in the Invotex report include questionable license interpretation, underreported sales, disallowed deductions, underreported sublicenses, and math errors. There are, of course, ways to avoid these various debacles in the contracts.
May 6, 2010
IP Holding Companies, Part III
In parts I and II of this series, we discussed the importance of setting up an IP holding company where all of your IP is held. We also provided some pretty good examples of the kinds of things that could happen if your IP is not properly titled in your IP holding company, or if you comingle your IP holding company with other assets. That leads us to this post – a brief overview of the requirements that MUST be followed in order to properly protect your IP and shield it from other liabilities.
As we recommended in our previous post, you should set up an LLC that has the purpose of holding your IP and licensing the IP for use by others. This can actually be a rather simple process here in Florida. The website for the Florida Department of State Division of Corporations is sunbiz.org. The filing forms for setting up your LLC are available for printing or, if you have an account set up already, you can simply electronically file the forms. As noted, this can be a simple process, but one that is somewhat easy to do improperly as well. When all else fails, seek the advice of an attorney.
April 26, 2010
IP Holding Companies, Part II
In a previous post, we discussed the importance of forming an intellectual property holding company to own your IP. That previous post established that starting an IP holding company is necessary. This post will focus on the details.
Talk to any lawyer, and one of their primary goals for their clients is managing their liabilities. This generally includes separating assets so that liabilities do not cross over. For example, suppose you own your IP personally, i.e., it is titled in your name personally. Now imagine that a thief breaks into your house, slips on your floor, sues you for having a slippery floor, and somehow gets a judgment against you (here is a story about a burglar that sued the homeowner that shot him). What happens if your homeowner’s insurance does not cover the judgment? (more…)
