Modest Recent Changes in UPTO Patent Examination Practices.

            As everyone well knows, the USPTO faces a gigantic backlog of patent applications (around three quarters of a million applications) that leads to significant wait time for inventors.  In view of this, USPTO director David Kappos announced some encouraging news last week in the form of changes to the examination system. 

            First, examiners are allotted an additional hour to read and review the application.  The hope being that this time will be used not in examination but in conducting substantive interviews with the inventor’s counsel early in the process.

            Second, the new guidelines make slight changes to the “count” system.  Patent examiners are required to bank a certain number of “counts” per two week period.  This quota system is a measure of productivity similar to the billable hour amongst attorneys.  The examiner receives one count for issuing the first office action and another for disposing of the case (therefore, two counts per distinct case).  However, Examiners can bank more counts for the same case if they reject and cause the inventor to seek an RCE, which is treated as if it is a new application.  This has led some to accuse the USPTO of “forcing” RCEs at the cost of time and money to inventors.   To solve this, the USPTO has decreased the value given to RCEs- to 1.75 for the first RCE and 1.5 for subsequent RCEs.  Also, the proposed change the point distribution in the counts to decrease the value of rejections.     

            Are these changes going to be effective?  Is this too little or at least a step in the right direction?    

Trademarks get quacky…..

There is a business dispute with IP ramifications currently ongoing in the San Francisco area.  This dispute centers on duck tours.  Everyone here in Boston is probably familiar with the duck tours that use WWII-era amphibious vehicles (or replicas) to tour the city both on land and water.  This is a pretty lucrative business that is common in large cities across the U.S.  One of the leading companies in this field is Ride the Ducks, which operates these tours in many cities (for those wondering, Ride the Ducks does not own Boston Duck Tours but does partner with it).  It seems that Ride the Ducks has recently come in the San Francisco market where it is looking to displace a local duck tour company, Bay Quackers.  For all of the juicy, “business is war” details see: http://www.sfweekly.com/2008-11-12/news/clash-of-the-quackers/1.

Ride the Ducks has filed a trademark infringement suit against Bay Quackers regarding a sound mark it registered for the quacking sound its duck kazoos make (!).  For those not familiar, tourists can obtain kazoos that make ducks sounds to use while on one of these tours.  Sound marks are a type a trademark that work in roughly the same manner as normal trademarks.  For example, NBC has received a trademark for not only its visual logo (the peacock) but also its auditory logo (the chimes). Similarly, AOL has sound marked “You’ve Got Mail”; the Harlem Globetrotters have a sound mark on the whistled version of “Sweet Georgia Brown”; and even the Pillsbury Doughboy’s giggle is protected.  To obtain protection of sound marks, the USPTO requires first, that the mark be a source identifier, i.e. when a person hears the sound, she associates it with a company.  Secondly, the sound must be distinct, a property that can be either inherent to the sound or acquired through usage.  Lastly, the sound must not be functional.  Sound marks are very rare, with the USPTO database showing only about one hundred and fifty live marks.

While a lawsuit over quacking kazoos seems inherently ridiculous, it has major business ramifications, especially for the alleged infringer, Bay Quackers.  Should Ride the Ducks receive the injunction it has sought, it would receive a commercial advantage in a very competitive market.  Such an advantage, regardless of how small it may be, could be enough to tip the scales.

Looking to make a difference out of law school?

This woman did: Barbara A. Ringer, who joined the Copyright Office at the Library of Congress straight out of Columbia Law School, and 21 years later oversaw the passage of the revolutionary Copyright Act of 1976. At the time Ms. Ringer joined the Copyright Office, the 1909 law in place provided for 28 years of copyright from date of publication, after which works could pass into the public domain; the ’76 Act extended the term to life of the creator plus 50 years, and also created the statutory fair use exception. While some may disagree about the merits of copyright term extension, Ms. Ringer’s objective was always to protect the rights of authors and content creators.

Ms. Ringer also won a gender discrimination suit to become the first woman Register of Copyrights in 1973. She died on April 9th.

Wyeth v. Levine – Are we in for a world of ubiquitous black box warnings?

The Supreme Court’s recent decision in Wyeth v. Levine held that FDA approval of a drug’s labeling does not preempt a state law tort claim for inadequate labeling.  So what do you do if you’re counsel to a pharmaceutical company making physician-administered drugs?  Put the biggest, scariest black box warning you can on every prescription drug you sell.  There’s no downside!  Physicians frequently don’t read labeling, relying instead on prior experience with the drug, or what they learn from pharmaceutical reps and colleagues.  Patients rarely even see these labels, and instead hear only the doctor’s summary of risks.  This course of action would provide a complete defense for the drug manufacturer so that tort liability will stop with the administering physician.

This seems absurd and counterintuitive; shouldn’t drug warning labels communicate actual dangers and not just be a proxy for a tort defense?  FDA needs to step in and address this before physicians and patients have no way of knowing the actual dangers of these drugs.

Pfizer Buys Wyeth, Industry Consolidates, IP Lawyers Rejoice

Pfizer’s purchase of Wyeth is big news for the pharmaceutical industry, and for big business in general.  Because its blockbuster cholesterol drug Lipitor comes off patent in 2010, probably ceding much of its $12.6 billion market to generics, Pfizer went looking to boost its pipeline in search of the next blockbuster drug.

Despite the generally gloomy outlook on Pfizer’s own pipeline, it still has a number of blockbuster drugs that remain on patent (based on rough projected global sales for 2008): rheumatoid arthritis drug Celebrex ($2.5 billion, on patent until 2014), Xalatan for glaucoma ($1.8 billion, on patent until 2011), Detrol for overactive bladder ($1.2 billion, on patent until 2012), antibacterial drug Zyvox ($1.1 billion, on patent until 2021) and schizophrenia drug Geodon ($1.0 billion, on patent until 2012).  The company still makes money from off-patent drugs, such as erectile dysfunction treatment Viagra ($2 billion, off patent since 2000), but sales generally drop off dramatically as patents expire and exclusivity ends.  See high blood pressure medication Norvasc ($2.2 billion, but down from $4.9 billion in 2006 since it came off patent in 2007), antidepressant Zoloft ($142 million, but down from $3.3 billion in 2005, off patent since 2006) and antibacterial Zithromax ($121 million, but down from $2 billion in its patent expiration year of 2005).

Pfizer acquires a major player in Wyeth, with blockbuster drugs including antidepressant Effexor ($3.9 billion, off patent in 2010), children’s vaccine Prevnar ($2.7 billion , off patent in 2007 in the US, but extended to 2012 in Europe), arthritis drug Enbrel ($3.8 billion, off patent in 2009), antibiotic Zosyn ($1.3 billion, off patent in 2007) and sales from nutritionals, vitamins and Advil totaling $3.0 billion in 2008.

This represents a trend in the pharmaceutical industry towards consolidation, in the hope of producing the next Lipitor, a drug which can net a company tens of billions of dollars each year.  Of course, monopoly profits only come with exclusivity, so I’m guessing patent lawyers and IP litigators will continue to find themselves very busy, even in the down economy.

A win for end users: Apple (finally) goes DRM-free

On January 6th, Apple announced that it will offer music from all four major music labels (Universal, BMG, Warner Bros. and EMI) for the first time as DRM-free downloads.  This is a huge step for iTunes, finally catching up with the method Amazon MP3 has used since its inception.  This represents a policy shift towards allowing users to freely transfer songs between their computers and mp3 players, something previously made extremely difficult and awkward by Apple’s DRM scheme.  Though iTunes allowed authorization of up to 5 computers to play content purchased from its iTunes Store, this always seemed like an artificial and arbitrary restriction to place on its users (not to mention the fact that DRM protected content couldn’t be played on other mp3 players).  Apple of course was well within their legal rights to negotiate licensing however they pleased and to implement their DRM scheme, but this decision marks a clear statement that it was a failed policy as a business decision.

Even though iTunes clearly maintains the content advantage over Amazon MP3 (10 million songs versus only 6 million), I will continue to use Amazon MP3 exclusively, and recommend my friends do the same, both because of the universality of the mp3 format, and my general disdain for Apple products (don’t get me started on the pathetic quality of iTunes as a music player/manager).

More generally, this marks a business trend towards a new method of dissuading piracy: Give users the autonomy to view and use content in the way they please, and they will be more likely to legitimately purchase copyrighted material, and less likely to resort to illegal copying and dissemination.  This move by Apple, along with the free streaming video content offered by Hulu (a collaboration between NBC, Fox, MGM, Sony, Warner Bros. and more), and most other major networks making their shows available streaming for free on their websites, represents a win for end users, freed from arbitrary and cumbersome restrictions on the use and enjoyment of the growing variety of digital content becoming available on the web.

A Shoveler’s Manifesto: Can I Lay Claim To That Parking Space?

Should I have a property right in the parking space I laboriously shoveled out after yet another New England winter storm?  Can I lay any legal claim to that space when I leave it, such as by placing a marker of some kind in it?  Should I be entitled to slash the tires or break the windows of a car that takes the space I shoveled out?

I’m sure these thoughts seem absurd (especially to those outside of urban areas in New England), but I can’t help but ponder them when I spend hours trying to find, clear out and keep a parking spot on my street in Somerville, MA (New England’s most densely populated city).  It doesn’t help matters when the city declares a snow emergency, towing cars parked on the even side of the street and cutting the number of available parking spaces in half.

The visceral notion that “I shoveled it, I should get to keep it,” rings true in a classic Lockean way: the labor of your body and the work of your hands is properly yours.  See John Locke, Second Treatise of Civil Government, Chapter 5, §27.  But from a modern legal standpoint, it would seem impossible for a private citizen to obtain any kind of property right in what is certainly government property.  It’s not the wild west, you can’t stake a claim to a piece of pavement simply because you surveyed it, dusted it off and tied your horse up there.  Methods other than simply staking your claim don’t look promising.  Generally, adverse possession is not an option, as most States explicitly exempt public roadways from adverse possession by statute.  See, e.g., Colo. Rev. Stat. § 38-41-101(2) (2008).  Notably, Massachusetts is an exception to this rule, only disallowing adverse possession against the commonwealth and its political subdivisions except in connection with land used for certain environmental purposes.  See Mass. Gen. L. Ch. 260, §31; Lawrence v. Concord, 439 Mass. 416 (2003).  Still, because of the unlikelihood of occupying a city parking space for 20 years in any urban area of the Commonwealth without someone breaking the continuity, adverse possession isn’t a realistic option, even in Massachusetts.

Nonetheless, a longstanding snowstorm practice, especially in South Boston, is to put lawn furniture, traffic cones, trash cans, cinderblocks and any other large object in resident-cleared parking spaces in order to reserve them.  These rights are vigorously defended in that neighborhood, resulting in the aforementioned slashed tires, broken windows, and even the occasional assault.  This is a place where you simply do NOT want to take someone’s clearly marked space.

Despite the questionable legality of this process, it has been sanctioned by Boston mayor Thomas M. Menino, to a limited extent.  In 2003, in response to some South Boston residents reserving spaces for three weeks after a two-inch snowfall, Menino put in place a 48-hour cap on the reservation of shoveled out spaces, implicitly endorsing the practice.  A long battle between Menino’s garbage crews (who pick up the milk crates, barrels and shopping carts used to save spaces) and South Boston residents have ensued, epitomized by South Boston city councilor James M. Kelly’s declaration to Menino that “I’ve got more barrels than he’s got trucks.”

It’s questionable whether Menino even has the authority to allow the private reservation of public property, even for a limited time, but only in the most academic sense.  The fact is that parking spaces will continue to be reserved in South Boston and other urban areas of Massachusetts, whether legally or not, and municipalities will implement their own policies to prevent, curtail or begrudgingly accept the practice for practicality’s sake.  So as I continue to battle the relentlessly falling snow, increasingly discolored by salt, sand and cat litter, I will consider the prospect of defending the product of my labor as John Locke would say I should… and probably just look for another parking space.

District Court Blocks PTO New Continuation & Claim Rules

The Eastern District of Virginia court hearing the case of Tafas v. Dudas issued a preliminary injunction on Oct. 31 blocking the PTO’s implementation of its new continuation and claim rules that were to go into effect on Nov. 1.  In that case, a number of plaintiffs, including Glaxo Smithkline, had joined together to block the rules.

The court examined the traditional factors in issuing a preliminary injunction: 1) likelihood of success on the merits; 2) irreparable harm in the absence of an injunction; 3) balance of hardships between plaintiffs and defendant; 4) public interest in the injunction. 

The court believed that the plaintiffs could suceed on the merits of the case.  The court noted that 35 U.S.C. 120 may prohibit limiting the number continuing applications that can be filed, and that the new rules could create retroactive effects on settled rights.  More specifically, the court found that plaintiffs had a vested right in the opportunity to file continuations and claims under the old rules, and an agency is not permitted to make retroactive rules.  The PTO’s guidelines for preparing an examination support document were also declared vague.

On the upside for the PTO, the court did rule that the PTO’s new rules were not arbitrary and capricious.

Further, the court agreed that the uncertainty of the new rules would cause plaintiffs irreparable harm.  The balance of hardships weighed in favor of the plaintiffs because they would face immediate harm once the rules were implemented, while any harm experienced by the PTO under a preliminary injunction would be gradual.  Because the public interest requires a stable patent system, an injunction would be appropriate.

Thus, the PTO was enjoined from implementing its new rules.  It was also enjoined from making any other new rules “restricting the number of continuing applications, the number of requests for continued examination, and the number of claims that may be filed with the PTO.”

The PTO posted a notice on its website of the decision, and noted that its examiners and staff would continue examining and processing applications under the old rules until further notice. 

Complaint filed to enjoin USPTO from implementing new rules

Glaxosmith-Kline has filed a federal complaint in ED Virginia’s “rocket docket” seeking to enjoin the USPTO from implementing the new patent rules.  The new rules address continuing applications, requests for continued examination, and examination of claims in patent applications.  They amend 37 C.F.R. sec. 1.75, 1.78, and 1.114, and add 37 C.F.R. 1.267.  GSK alleges that the Rules were promulgated without proper legal authority, and are also “vague, arbitrary and capricious.”  Further, they “prevent GSK from fully prosecuting patent applications and obtaining patents on one or more of its inventions.” 

GSK alleges that Congress has not empowered the PTO to promulgate such regulations.  As a federal governmental agency, the PTO obtains its power soley from Congress, under 35 U.S.C. sec 2 (and Congress, in turn, derives its authority regarding patents from the U.S. Constitution art. 1 sec 8 cl 8.)  Congress has not yet granted the PTO to make these rules, so GSK says that the PTO engaged in ultra vires rulemaking.

Further, GSK alleges, the new rules regarding continuing applications, requests for continued examination, and examination of claims in patent applications are inconsistent with current patent law passed by Congress.  This action violates 35 U.S.C. sec. 2, which gives the PTO power to promulgate rules and establish regulations to govern conduct of proceedings in the PTO, as long as they are not inconsistent with the law.  The extent of the PTO’s authority to promulgate rules is currently being debated in Congress.

Lastly, GSK argues that the Rules “pose an unconstitutional arbitrary and capricious regulatory taking of GSK’s patent and patent application property rights.”

These claims are much more serious than the complaint already filed on this issue.  It will be interesting to watch this debate flush out in parallel to current Congressional action regarding patent law. 

The Pirate Bay Files Criminal Complaint Against MediaDefender Clients for Hacking

Update on The MediaDefender Debacle:

The Pirate Bay (“TPB”) announce on its blog that it filed a criminal complaint against MediaDefender’s clients, including Universal Music Group, Sony, Paramount, and Twentieth Century Fox. The charges are “infrastructural sabotage, denial of service attacks, hacking and spamming, all of these on a commercial level.”

TPB tracked back IPs from fake torrents to IPs in the Gmail account they hacked earlier. They also found MediaDefender’s software that creates fake accounts and seeds fake torrents on sites like TPB. Sounds like TPB might actually have some valid claims, at least against MediaDefender.

This could really turn into an extremely interesting case. More to come…