March 2006


Patenting Old Inventions?

Only New Patents are Patentable

A patent gives an inventor a right to exclude others from making, using, or selling the patented invention for a certain period of time. Patents are a form of property right that is granted by federal patent law, which is administered by the United States Patent and Trademark Office USPTO. The main objective of patent law is not to reward inventors but rather to promote the advancement of science and technology through the disclosure of new ideas. Accordingly, there are several requirements for an invention to be eligible for a patent, and one of the most difficult determinations that is required to be made in assessing a patent application is whether an invention is non-obvious.

The nonobviousness requirement provides that an invention is not patentable if it would have been obvious to a person having ordinary skill in the pertinent prior art as it existed when the invention was made. The “prior art” is simply all of the information available that might reveal that a claimed invention has either already been patented or described in a publication, either of which will render the claimed invention unpatentable. The “pertinent prior art” is the art that pertains to the particular field in which the claimed invention would be classified. For example, if the claimed invention was a tool or a machine or improvement to either, prior art pertaining to chemical compounds would not be pertinent and would not be considered in the non-obviousness determination. In considering what constitutes the hypothetical “person having ordinary skill in the art,” the patent examiner considers the educational background of the inventor; the problems encountered in the art and the solutions the claimed invention is intended to provide; prior solutions to those problems present in the art; the level of sophistication of the particular technology involved; and the educational background of workers in the particular field.

 

Patent Examining Procedure

Determining whether an invention is nonobvious can be exceedingly difficult. As described in the U.S. Patent and Trademark Office’s Manual of Patent Examining Procedure, the examiner must step backward in time to just prior to the existence of the invention to determine whether a person of ordinary skill in the art would find the invention obvious. An invention is presumed to be obvious or nonobvious depending on whether certain factors are found. The two factors necessary to a finding of a presumption of obviousness are: (1) something in the prior art or general knowledge in the field that suggests the invention to a person of ordinary skill and (2) indications that the invention had a reasonable chance of succeeding as an invention. Both the suggestion of the invention and the assessment of the chance of success must be based on the prior art or general knowledge in the field and not on the information in the patent application, and the assessments must be made as of the time of the invention and not with the benefit of hindsight. If these factors are present, the applicant may provide information in order to rebut the presumption.

As part of the analysis, the patent examiner is allowed to analyze several secondary considerations, including the commercial success of the invention, the long-felt need that the invention would fill, and whether there is commercial acquiescence in the invention. Commercial success provides evidence in favor of nonobviousness because if the invention had been obvious, it would have been invented previously, particularly where the success is due to the invention’s utility and not because of intense promotion and publicity. Moreover, commercial success is an indicator that the invention is considered to represent useful progress in solving the problem toward which it is directed.

The rationale is similar with long-felt need. If the invention filled a need that survived for a long time, the invention must not have been obvious or someone else would have filled that need long before the claimed invention was invented. Commercial acquiescence means that competitors have recognized the validity of an invention’s patent and are willing to pay the necessary license to use or sell the invention. Competitors that felt that the invention was not entitled to a patent might use or sell the invention without paying claimed inventor. None of the secondary factors are determinative and simply represent factors that the patent examiner might consider in the difficult process of deciding whether a claimed invention is obvious or not.


Patent Claims — What and Why?

An applicant for a patent must include in the specification accompanying the application for the patent one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his or her invention. Patent claims serve two functions. First, they define the invention for the purpose of applying the conditions of patentability, the statutory bars, and the disclosure requirements. Second, they define the invention for the purpose of determining infringement.

Definiteness

Claims must be particular and distinct. The primary purpose of this requirement of definiteness in claims is to provide clear warning to others as to what constitutes infringement of the patent. Another purpose is to provide a clear measure of the invention in order to facilitate determinations of patentability.

On occasion courts have failed to distinguish the definiteness requirement, which claims must meet, from the enablement requirement, which the specification disclosures must meet. However, the two requirements are distinct. A patent specification may sufficiently teach how to make and use the invention yet fail to claim it with sufficient particularity.

The definiteness standard is one of reasonableness under the circumstances. It is whether, in the light of the teachings of the prior art and of the particular invention, the claims set out and circumscribe a particular area with a reasonable degree of precision and particularity. A clear claim can be rejected as for something other than what the applicant ”regards” as his or her invention only if some material submitted by the applicant, other than the applicant’s specification, shows that the claim does not correspond in scope with what the applicant regards as the invention.


Types of Damages re: to Trademark Infringement

Recovery of Damages in Trademark Infringement

The monetary remedies available in trademark infringement actions are based on the actual damages suffered by a trademark owner. The damages may include profits lost to the infringing activity and may be trebled where the infringement was intentional.

Ways to Measure Monetary Recovery

There are at least five ways of measuring monetary recovery in trademark infringement cases. They include the following:

  1. An award measured by the defendant’s profits, either as a way of measuring the plaintiff’s loss or under an unjust enrichment theory;
  2. An award measured by actual business damages and losses caused by the wrong;
  3. An award measured by the plaintiff’s own loss of profits caused by the wrong;
  4. An award of punitive damages for the purpose of punishing the defendant; and
  5. An award of reasonable attorney’s fees incurred in the prosecution of the action.

Balancing of Factors to Determine Recovery

In any given case, a court may award one or more, or none, of the five types of recovery to the plaintiff. In deciding what type, if any, of monetary damages to award, courts have balanced several factors, such as whether defendant was willful, negligent, or innocent; whether plaintiff suffered losses in any provable amount; whether there is proof of actual confusion of some customers; and whether defendant realized profits from its infringing actions.

Injunctive Relief

In general, injunctive relief is generally granted upon a showing of a likelihood of confusion. To obtain a preliminary injunction, the trademark owner must make the usual showing for such relief: a likelihood of success on the merits and the irreparable injury that the owner would incur absent an injunction. In addition, courts compare the hardships imposed on the parties by or without an injunction as well as any public interest involved.

Lost Profits

To obtain an accounting of profits, the courts usually require that the defendant’s infringement imply “intent” or a knowing act denoting an intent to infringe or reap the harvest of another’s mark and advertising. However, the advice of counsel may sometimes assist the defendant in showing that it acted in good faith. Conversely, the failure to follow the advice of counsel may weigh as evidence of bad faith.

While proof of actual confusion is not needed to obtain an injunction, some courts have said that proof of some actual confusion is required for an accounting of profits. Under the federal Lanham Act, as well as the common law, it is the infringer’s burden to prove any proportion of his or her total profits which may not have been due to use of the infringing mark.

Actual Damages

In some cases a plaintiff may be awarded damages in addition to the defendant’s profits. But damages and profits cannot be awarded simultaneously if it would result in overcompensation. Courts require that recovery of damages requires proof that some consumers were actually confused or deceived, which may be proven with testimony of buyers or customer surveys.

Monetary relief is denied where an injunction will satisfy the equities of the case and where there has been no showing of fraud or palming off.

 

Increased Damages

The Lanham Act gives a court the discretionary power to increase damages up to treble damages and increase or decrease an award of profits by any amount if the court finds the profit recovery is “either inadequate or excessive.”

Punitive Damages

While the Lanham Act does not authorize an additional award of punitive damages for willful infringement of a registered trademark, punitive damages are still available for accompanying state,causes of action for trademark infringement.

 

In most jurisdictions, punitive damages are awarded only where the defendant’s conduct has been egregious. Evidence of the financial status of the defendant is relevant evidence from which the amount of punitive damages may be set. In most jurisdictions, punitive damages cannot be awarded unless there are some actual damages awarded, no matter how small.

Attorney Fees

The Lanham Act allows for an award of reasonable attorney fees to the prevailing party in exceptional cases. Exceptional cases are infringement cases where acts of infringement can be characterized as malicious, fraudulent, deliberate, or willful. Where there is proof of intentional infringement, as in a counterfeiting case, it is an abuse of discretion not to award attorney fees.

Most state jurisdictions do not generally allow for the recovery of attorney fees. Attorney fees may be awarded to prevailing plaintiff under a state law even in the absence of a finding that the case is “exceptional” under the federal Lanham Act. A state law permitting the recovery of attorney fees is not preempted by the Lanham Act.

Costs

Costs are not attorney fees as is usual in countries outside of the United States. Rather, they are for necessary expenses such as filing fees and court reporter fees. Courts must exercise their discretion sparingly in taxing as costs any expenses not specifically allowed in the statute. “Taxable costs” recoverable as of right are only those listed in the Federal Rules of Civil Procedure. Other expenses are allowable only in the discretion of the court where there is “aggravated” conduct such as “fraud.”

Counterfeiting Remedies

The Lanham Act provides for special monetary remedies for counterfeiting cases. Unless the court finds extenuating circumstances, treble damages or profits and a reasonable attorney fee award must be awarded to an infringed trademark owner if the defendant counterfeiter knew that the goods were counterfeit and intended to offer them for sale.


False Advertising Related to Trademarks

Any advertising which is misleading in any material respect is considered false advertising. An advertisement is considered misleading if it fails to disclose facts that are important in light of what is stated in the advertisement or facts that are relevant in the light of the customary use of the product. The Federal Trade Commission (FTC) has the statutory power to cancel trademarks it finds constitute false advertising.

Deceptive in Nature

Advertisements that contain representations that are false, misleading, or deceptive are illegal under state and federal laws. To be found liable for false advertising, it must be shown that the advertisement was deceptive in nature. Proof that the ad actually harmed anyone is not important. Moreover, the intentions of the advertiser are irrelevant, including if the false or deceptive advertisement was a mistake.

Federal Law Protections Against False Advertising

The FTC is the main federal agency that monitors false advertising practices. The FTC relies on consumers and competitors to report unlawful advertising. If FTC investigators find that an ad violates the law, there are several ways in which the agency can act:

  • The FTC may try to bring the violator into voluntary compliance through informal means
    .
  • The FTC can issue a cease-and-desist order and bring a civil lawsuit on behalf of people who have been harmed.
  • The FTC may seek a court injunction to stop a false ad.
  • The FTC may require an advertiser to run corrective ads that state the correct facts and admit that an earlier ad was deceptive.

State Law Protections Against False Advertising

The majority of states have consumer fraud or deceptive practices statutes that regulate advertising. Under these laws, state or local officials can seek injunctions against unlawful advertisers to stop the ads and collect damages for injured consumers or businesses. Additionally, state consumer protection laws usually allow consumers or businesses to directly sue advertisers for any monetary damages stemming from the false advertisements. Some laws even provide for criminal penalties if fraud is involved.

Federal Unfair Competition Laws

Under federal law, a business practice is unfair “when it offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.” The Lanham Act gives parties a private remedy for false advertising claims. To prevail on a false advertising claim under the Lanham Act, the injured party must prove that the advertisement is literally false or is likely to mislead and confuse customers. Evidence of consumer confusion in the marketplace is a prerequisite for recovery under the Act. Parties with successful Lanham Act claims are usually awarded monetary damages and an injunction to stop the advertiser.

Keeping Advertisements Lawful

The following are some of the generally accepted rules for legal advertising:

  • Keep representations accurate.
  • Obtain permission from outside sources used in advertisements.
  • Treat competitors fairly.
  • Keep sufficient quantities of advertised products on hand.
  • Be careful when using the word “free.”
  • Be truthful in all claims about pricing.
  • Do not overextend offers of credit.

Copyright Related to Fine Art

Copyright effects various types of art work such as theater, motion pictures, music and fine art differently. However, regardless of the type of art work, copyright can prevent others from unlawful theft of an artist’s artwork.

Theater

In the theater, the dramatist, the composer, and the lyricist typically retain the copyright in their respective works. This occurs even when the producer has commissioned the work, and even when the commissioned work is to be based on an existing work owned by the producer.

In a typical theatrical work, there usually will be an informal agreement among the collaborators that provides for a majority vote among them to dispose of any subsidiary rights; it will also usually provide that a contributor cannot be required to change his or her work. Sometimes each of the individual collaborators files a separate copyright registration for his or her contributions to the work. Sometimes a single copyright registration is filed covering all or most of the work. The notion of individual control of individual contributions pervades the thinking in the theater. At some point, the various collaborators typically enter into an agreement with the producer.

If a play is based on an existing work, such as a novel or short story, the producer usually obtains the necessary rights to the existing work prior to the commencement of any theatrical writing. The form of such an acquisition agreement may be similar to those utilized in acquiring rights for a motion picture. The producer first seeks to obtain an option to purchase the dramatic rights, thereby deferring full payment for the rights until the producer is sure about proceeding with full production of the dramatic work. Technically, playwrights do not need to register their plays to be protected. Under current copyright law, a work belongs to the author even without a formal copyright.

Motion Pictures

In the motion picture context, a corporate production entity invariably owns the copyright in the entire motion picture and all its constituent elements, and the corporate entity is deemed the ”author” for copyright purposes.

Motion pictures consist of a seamless mixture of the literary, the dramatic, the musical, and the pictorial, incorporating set and costume design, musical works, choreography, and special effects. Every motion picture and television studio, every music publisher, every record label has its own library of forms.

The various creative services rendered in the production of a motion picture or television production usually are rendered on a ”work for hire” basis. Thus, the production company financing the work obtains the copyright in the entire picture and all its constituent elements and is deemed the ”author” of the work for U.S. copyright purposes.

The ”major” studios are responsible for financing, producing, and distributing most of the motion pictures seen in theaters. The individual producer may develop projects to a point. Nonetheless, at some point the producer will become an ”employee” of the studio producing that picture and will assign to the studio his or her rights in the project. Studios generally insist on being the sole copyright owners of the pictures they finance and produce. One possible exception is the occasional deal where, due to the particularities of the tax laws of various countries from time to time, it may be advantageous for a studio to assign the copyright in a completed picture to a foreign entity that, in turn, ”leases back” all distribution rights in perpetuity to the studio.

A producer may also try to finance the motion picture independently in the hope of earning more money if the picture is successful; in that case, the producer usually retains copyright ownership of the picture. Nonetheless, the independent producer, particularly of a high budget motion picture, will usually be obliged to deal with the major studios to seek distribution for the picture in the United States. The independent producer often will retain the copyright through the typical ”negative pick-up” situation, where a studio is acting as the distributor and not the ”producer.” Often the studio will pay to the producer upon delivery of the picture an ”advance” against the producer’s share of the revenues generated by the distribution of the picture. Similarly, if a producer uses the studio or an ”independent” theatrical distributor as only one of several domestic distributors, thereby ”fractionalizing” the distribution rights, the producer usually will remain the copyright owner of the entire picture and merely license the distribution rights.

Music

There are six general categories of agreement forms used in the music industry.

  • Composition agreements regarding the writing of musical compositions and the exploitation of those compositions.
  • Master recording agreements regarding the performance of compositions and the exploitation of those performances.
  • Agreements for the use of music in motion pictures.
  • Agreements for the use of music in television productions.
  • Agreements for the use of music in stage shows.
  • Agreements for use in connection with live performances.

Fine Art

Transactions involving works of visual art raise issues pertaining to both the law of tangible personalty, as it applies to the object itself, and intellectual property law, as it applies to special rights in the work or the work’s creator. Many works of visual art are both portable and extremely valuable so that they are subject to abusive practices in the marketplace. Also, because of their value, works of visual art are frequently pledged as security and are commonly taxed at every transfer, whether by sale, gift, or inheritance. Accordingly, possible security interests of third parties or tax liens raise additional concerns. All of these issues are made more difficult by the lack of a comprehensive system to register title to, or other interests in, works of visual art.

 

This entry was posted in Intellectual Property Newsletter and tagged , , , , , , , , , . Bookmark the permalink.

Comments are closed.