Trademarks can be an effective measure to protect a business or brand; they provide greater legal protection by granting ownership and exclusive rights to a mark. Traditionally these have been company names, symbols, designs, slogans and phrases, which are typically key for brand marketing. In recent years intellectual property lawyers have applied for trademarks for colors, shapes, sounds and scents, which are unsurprisingly not always successful. However, this week on October 13, 2017, District Judge Thomas B. Russell ruled that Deere & Co.’s symbolic green and yellow colored tractors are in fact a trademark.
Judge Russel held that FIMCO Inc.’s use of similar colors to Deer & Co.’s emblematic color scheme on their pesticide and other agricultural sprayers, infringed and diluted Deere & Co.’s trademark. Deere & Co.’s colors have three registered trademarks with the United States Patent and Trademark Office and has “expended considerable amounts of money and effort building consumer association between the [green and yellow colors] and its [equipment], while FIMCO has marketed its green and yellow less extensively and for a shorter period of time” (Deere & Co. v. FIMCO Inc. No. 5:15-CV-105-TBR, 2017 WL 4582805, (W.D. Ky. Oct. 13, 2017) para. 119). The Court ordered a permanent injunction barring FIMCO from using the colors. Judge Russel explained that “the relatedness of the goods, the similarity of the marks, evidence of actual confusion, the marketing channels used, and the likelihood of expansion factors all weigh in favor of Deere … [b]earing in mind that a successful Lanham Act plaintiff must only show a sufficient potential of confusion” (Ib. para.69).
Deere & Co.’s win is a rare instance. Defending a color as a trademark has been proven to be quiet difficult and even large companies have had trouble pulling it off. On August 23, 2017, the Trademark Trial and Appeal Board ruled that General Mills Inc. could not register a trademark for their yellow Cheerios boxes. Administrative Law Judge Anthony R. Masiello explained that customers “are more likely to view yellow packaging simply as eye-catching ornamentation customarily used for the packaging of breakfast cereals generally” and not specifically identify the yellow packaging with Cheerios.
Judge Masiello distinguished the yellow Cheerio box with T-Mobile’s distinctive magenta coloring. Where General Mills has a myriad of competitors, many who use yellow packing, T-Mobile has less competition and none who use the same color for branding. There is a more likely chance of potential confusion in regards to T-Mobile. AT&T’s use of a dark plum would confuse consumers as the color has been branded with T-Mobile’s services. In contrast, General Mills’ brand is not yellow, only its box of Cheerios, yet many of its competitors also use yellow to package their cereals. Therefore, it seems to depend on whether a company’s identity or product is associated with a color. For Deere & Co. the company is famously known for its green and yellow, and the same for T-Mobile’s bright magenta.
Can something as simple as a resealable cookie package be protected under U.S. patent law? Unfortunately for Kraft Foods Group, Inc. (“Kraft”) the answer seems to be no. On Wednesday, October 4, 2017, Kraft asked the Federal Circuit to rehear their argument regarding patent infringement of Kraft’s cookie containers. The court has previously held that Kellogg’s use of the resealable cookie packages (used for its popular products such as Chips Ahoy! and Oreos) cannot be infringement since Kraft’s patent is invalid due to its obviousness.
In 2015, U.S. District Judge Matthew F. Kennelly invalidated Kraft Foods Global Brands LLC’s patent for resealable cookie packaging because the “invention” was obvious, and granted Kellogg North America Co. summary judgment. However, Judge Kennelly denied Kellogg’s motion for noninfringement because the company had clearly made changes to its products so that they were not identical to Kraft’s patent (U.S. Patent No.:6,918,532 B2).
The issue was revisited by the Federal Circuit in September 2017 and the court upheld the previous 2015 decision that the patent is invalid due to its obvious nature. The idea of keeping a product sealed for freshness is not new; it has become an industry standard from cookies to wet wipes. Kraft argued that the court failed to look at the big picture and all the evidence before considering objective indicia. Kraft prides itself on its innovative packaging arguing that “it quickly took the market by storm and won the industry’s highest award for packaging innovation.” Judge Jimmie Reyna in his dissent explained that:
For too long, this court has turned a blind eye to what I consider to be a grave concern: the application of a prima facie test that necessarily achieves a legal determination of obviousness prior to fill and fair consideration of evidence of object indicia of non-obviousness.
The court has reiterated and supported Kelloggg’s argument that the resealable cookie packaging is obvious. However, Kraft is insisting the court of appeals to rehear the case and particularly focus on other evidence, such as Kraft’s success in the market due to its packaging. Kraft explains that the objective indicia was an “afterthought” of the court’s opinion, yet the Federal Circuit assured Kraft that the “district court drew its conclusion of obviousness only after, not before, considering objective indicia.” The outcome of Kraft’s third attempt to validate their patent could have important implications for future patent disputes, however, it is unlikely that the court will disagree Kellogg’s obviousness argument due to the growing industry standard of resealable packages.
In an effort to protect a patent for the eye drops Restasis, Allergan PLC found a loophole around the Patent Trial and Appeal Board (PTAB) to safeguard the product from generic production. Allergan discovered that if they transferred the patent to a Native American tribe, who have sovereign immunity, the drug in question could not be reviewed by PTAB as it is outside the body’s jurisdiction. This idea originates from a case before the PTAB involving the University of Florida and Covidien LP regarding computer systems patents that ultimately could not be challenged because the university is a sovereign entity. Allergan adapted this cheeky tactic, which will only be “the tip of the iceberg”.
The company sold its ownership of the patent to the Saint Regis Mohawk Tribe and the tribe in return granted Allergan an exclusive license. In 2016 Restasis brought in roughly $1.5 billion in revenue, which would significantly decrease in following years if their patent was challenged. So how could this deal benefit the Tribe? Allergan agreed to license the patent for $13.75 million in addition to paying an annual $15 million in royalties.
Patents grant an exclusive right to the innovator or owner and due to the lack of direct competition with a new product pharmaceutical companies have a tendency to set high prices. Once the patent expires or if it is challenged under the Hatch-Waxman Act (which permits generic drug manufacturers to expedite approval for products with a biosimilarity to the original drug) the price of the drug falls as competition increases. Allergan’s efforts to avoid their drug patent from being challenged will safeguard the eye drops high price and ultimately bring in greater revenue.
The question remains whether this is permissible? It will create various hurdles for Congress, the PTAB, and generic drug manufacturers. A professor at Washington University, Rachel Sachs, explains that it is unlikely that Congress could have “envisioned that many patent owners would seek to transfer their patents to a tribe only to insulate themselves from IPR [inter parties review] review”. If Allergan wins, it will only be the beginning of pharmaceutical companies taking advantage of sovereign immunity to keep drug prices high, which fundamentally negates legislation that protects access to affordable medicine, such as the Hatch-Waxman Act. It also poses the risk of opening the floodgates of litigation proceedings challenging the decision. If the issue gains significant traction Congress will need to regulate the loophole of sovereign immunity in regards to patents through legislation.
On March 30, 2017 the Supreme Court issued a decision in Impression Products, Inc. v. Lexmark International, Inc., which changed the scope of U.S. patent protection. U.S. patent law is in place to “exclude others from making, using, offering for sale, or selling [its] invention throughout the United States or importing the invention into the United States.” If someone breaches a patentee’s rights, that person will be liable for patent infringement. However, the patent exhaustion doctrine stipulates that once a patentee sells their product to the public, their patent rights are exhausted, regardless of whether the patentee implemented restrictions on reuse. If the patentee makes “an express restriction on reuse or resale [he or she] may not enforce that restriction through an infringement lawsuit, because the U.S. sale exhausts the U.S. patent rights” (Ginsburg Dissent pp.1).
The Lexmark decision deals with this very issue. Lexmark International, Inc. designs, manufactures and sells ink cartridges. There are two types of ink cartridges. The first is sold to consumers at full price without any limitations; the second type is a “Return Program” cartridge that is reusable and sold at a discount. To purchase the reusable cartridge, the consumer signs an agreement with Lexmark stating they will not transfer or sell the cartridge to a third party. Unfortunately for Lexmark, remanufacturers such as Impression Products, Inc. purchase empty cartridges from domestic and foreign consumers, refill them with toner and resell them in the U.S. As a result, Lexmark sued Impression Products, Inc. for patent infringement for (a) refurbishing and reselling the cartridges; and (b) importing cartridges into the U.S. that were initially sold abroad, without their permission. At the outset it seemed that Lexmark had a claim to sue for infringement. The Supreme Court decided otherwise.
While the U.S. Court of Appeals for the Federal Circuit initially ruled in favor of Lexmark, the Supreme Court overturned the Appellate Court’s decision, holding that once Lexmark sold its cartridges, it “exhausted its patent rights” (Roberts Main Opinion pp.2) and the product became private property of the consumer. Once there is a transfer of ownership, “patent laws provide no basis for restraining the use and enjoyment of the product” (Roberts Main Opinion pp.3). Essentially, once a manufacturer sells their product, even with an express and lawful restriction, the patentee relinquishes patent rights to the product and the new owner has the right to use or sell the item.
In regards to Lexmark’s patent protection for cartridges that were sold abroad and imported back into the U.S., the Justices (besides Justice Ginsburg who dissented on this point) held that “[a]n authorized sale outside the United States, just as one within the United States, exhausts all rights under the Patent Act” (Roberts p.4). Although this is not expressed in the Patent Act itself, the Court assumed that if Congress intended to restrict the exhaustion doctrine to domestic sales only, they would have explicitly said so. The reasoning behind this decision was borrowed from the copyright first sale doctrine. The pharmaceutical industry fears the aftermath of this decision, which is why Justice Ginsburg’s dissent on the issue carries particular importance. In Justice Ginsburg’s dissent, she argues that a foreign sale does not exhaust the patentee’s rights since a U.S. patent does not provide protection abroad, and copyrights and patents “are not identical twins” (Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 439 (1984)). Whereas copyright protection is harmonized across the 174 countries that are party to the Berne Convention, patent rights fluctuate from one country to another. The substance of patents are harmonized through the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS), but this does not regulate patent protection in terms of exhaustion.
The outcome of this decision makes it more difficult for patents to protect manufacturers’ products sold both domestically and internationally. Pharmaceutical companies fear that this will have a negative impact on their industry and create illicit competition as it opens the door for resellers to purchase drugs sold at a discount in developing and least-developed countries and resell them below market rate in the United States. Commentators argue that this decision will negatively impact “grey market goods” which includes pharmaceuticals. Regardless of the actual impact, the Supreme Court’s decision may force Congress to take another look at the Patent Act.
Trademarks provide greater legal protection for your business or brand by giving you ownership and exclusive rights to your mark, which traditionally have been company names, symbols, designs, slogans and phrases. However, in recent years intellectual property lawyers have even applied for trademarks for shapes, sounds, colors, and scents, but these types of applications are not always successful. For instance, in a challenge made to England and Wales’ Supreme Court, Nestle, the owners of KitKat, were denied the right to receive a trademark for KitKat’s unique shape. This decision creates a higher standard as to what unconventional things can be trademarked in England and Wales, although Nestle has successfully received trademark approval in other countries for KitKat’s shape (Australia, Canada, Germany, France, and South Africa).
In addition to traditional corporate branding, American politicians have a standing history of applying for trademark protection for their slogans, especially in regards to their campaigns – whether it be President Reagan’s “stay the course” for the 1982 mid-term elections, President Clinton’s “don’t stop thinking about tomorrow” slogan, and President Obama’s “change we believe in” campaign. This is true even on a local level, as Catherine Cloud, who coined the slogan “because this is America” for the New Hanover County Democratic Party in Wilmington, North Carolina, rushed to apply for a trademark. Trademarking slogans has proven to be very effective when appealing to voters. Relatedly, politicians have also taken messages from organizations to turn into policy, such as President George W. Bush’s No Child Left Behind Act, which was taken from the Children’s Defense Fund who coined the phrase “leave no child behind”.
Recently, trademarks for slogans and phrases have become increasingly popular. In 2016, there were just under 400,000 trademark applications filed with the United States Patent and Trademark Office (USPTO). Even celebrities race to trademark their sayings, such as Taylor Swift’s pending trademark on “nice to meet you” from her song Blank Space, and Paris Hilton’s notorious “that’s hot”. Why are people so eager to trademark their sayings? Mostly because it has the potential of generating revenue from bumper stickers to t-shirts, like “Keep Austin Weird”. Or as Catherine Cloud argues, it creates a meaningful message, as “’because this is America’ is a rallying cry that focuses on what we have in common, rather than what divides us.”
The trademark application process can be a lengthy one. It typically takes the USPTO 18 months to approve an application, but in some instances it takes much longer. The New Yorker cartoonist, Robert Mankoff, applied for a trademark for his cartoon of a businessman scheduling a meeting with the caption “How about never – is never good for you?” which the USPTO took 23 years to approve. When filing a trademark it is important to hire an attorney that is familiar with the process so that your application can go as smoothly as possible. As an applicant you will need to identify your mark format, what goods and services the mark applies to, whether anyone already holds the rights to the mark, and your basis for filing. Once the application is submitted it must be monitored until you receive approval or denial. In the event your application is opposed or denied, your attorney can appeal the decision.
Anyone who uses the Facebook app on their phones would have noticed that this week the social media company added a new feature which mimics the easy video sharing concept from Snapchat Stories. Facebook calls this the “new camera” where users can send each other videos, photos, and post them to “your story.” It shares the Snapchat Stories features, such as filters, text, the single media capture (which allows users to take a photo or video by tapping or holding onto the digital button), and most importantly the compilation of all your posts for your friends and followers to see. Facebook, which acquired Instagram for $1 billion in 2012, previously added Instagram Stories on the photo app. Instagram’s story feature is almost identical to Snapchat’s and Instagram has shamelessly acknowledged it received the idea from Snapchat. Brian Barret writing for Wired wrote that “[s]tealing features is nothing new for social networks, but it’s rare to see a ripoff this blatant.”
Now Apple recently announced its launch for Clips, a video app that enables editing with filters, and stringing together content. Sound familiar? Unlike Instagram and Facebook however, Apple’s Clips is not actually a social media network. Social media networks allow individuals to share content with other users through the app’s interface. Clips is merely an app that mimics features of Snapchat Stories, but you have to share your post outside of the app (i.e. via Facebook). Apple asserts that Clips is more of a video-editing app for beginners. The features will be more intricate and advanced than Snap’s, but this still doesn’t explain why these companies can so easily take the ideas of others.
Snapchat Stories have now been duplicated on all the largest social media platforms in addition to Apple. Snap, which went public this month, has the backing of multiple financial institutions. Although it has been struggling over the past few weeks as its share price fell below the IPO, the company has great potential. Mark Mahaney, an RBC analyst, asserts that “Snap has become an innovation leader – for both consumers and advertisers – in arguably the single fastest advertising medium today – mobile”. However, for Snap to take on this leadership role, how can it protect its innovations from being competitive with other social media companies and why is intellectual property law ineffective in this area?
Stealing in the tech industry is far from new. Hashtags are now universally used, but actually originated on Twitter. Facebook attempted to copy Instagram, but was ultimately unsuccessfully and decided to buy the company instead. As we have previously discussed in regards to blockchain technology, it is difficult to get a patent approved for software. Snap has struggled in the past with getting multiple patents filed and approved for features such as facial recognition, its user friendly digital button to take photos and videos, and the technology’s ability to not repeat Snapchat Stories you have already viewed. Facebook and Instagram have fully integrated the last two features. So why can’t Snapchat Stories protect itself through patents? When pharmaceutical companies develop innovative cures for diseases, other pharmaceutical companies are barred from replicating the drug without permission or during the term of the drug’s patent life. So why is technology not protected in the same way? Surely it would be more beneficial for society if pharmaceutical companies could take drug recipes and innovations from each other to cure a disease and tech companies would instead be able to patent social media features.
Simply put, Snap cannot patent “Stories” because it is not an innovative idea and its literal function is in the title. PointSource’s chief digital officer Stephanie Trunzo explains: “The idea of a personal status, at its core, is a common social paradigm, not owned by any one platform. Facebook called it a status, represented initially as text; Snapchat called this function a story, represented as a short video clip.” So what is Snap entitled to protect? Its coding and interface. However “because the implementation / interfaces are slightly different, copyright doesn’t provide any protection. This is an area where IP laws don’t prevent the copying of another’s features or innovations” (Professor R. Polk Wagner from the University of Pennsylvania). The basic concept is that you can steal an idea as long as you tweak it. It is questionable whether these interfaces are actually different, but at least Instagram had the dignity to credit Snap for its innovation. This exemplifies the widening gap between evolving technology and preexisting intellectual property law.
What does this all mean for Snap’s future growth? Facebook is a strong competitor, as the entity owns Instagram and is still the most used social media platform. Nonetheless, financial institutions, such as J.P. Morgan, have backed up their investment in Snap and predict the company to have a high yield. Snap entered the market at an early stage – its potential is tremendous in the social media and tech market, but it will just take time. Snapchat recreated the way in which we share life updates. It did not originate the concept, and it did what IP law requires – it changed the interface. In tech, there is a clear gap in what can and cannot be patented. Unless the coding or interface are identical, there cannot be any patent infringement, regardless if the function is the same. Perhaps it is time for intellectual property law to adjust to our times and a growing social media platforms.
Everyone by now has heard of the cryptocurrency bitcoin. Bitcoin was created in 2007 by Satoshi Nakamoto (a pseudonym), who explains that bitcoin is a “purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution.” Nakamoto transformed the way in which we can receive and make payments by creating a naturally decentralized and anonymous system. However, even a cryptocurrency needs a wallet, which is why Nakamoto created the blockchain. “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value” (Don and Alex Tapscott, (2016) Blockchain Revolution).
Blockchain is decentralized. This means that blockchain is used on a peer-to-peer basis, and therefore does not have a central ‘hub’ of sorts. This enables the information to be shared and updated simultaneously to all users in real time, making this truly public and reliable. Blockchain technology has great potential in countries where there is a lack of government or institutional trust. Its encryption technology makes it secure, reliable, and transparent, making it impossible for individuals or authorities to commit corruption or fraud. Blockchain technology is hosted by its millions of users at all times, making it virtually incorruptible. To understand blockchain technology, think of it like sharing documents via Google Docs. Instead of sending one file back and forth between users, Google Docs permits people to work on the same document while being updated simultaneously. This shared method of blockchain is what makes it so efficient.
Satoshi Nakamoto published the intricacies of bitcoin to the public, therefore it is not patentable. So financial institutions are racing to patent what they can of blockchain technology. Patenting the blockchain was never the intent or purpose. It is meant to be publicly accessible, and not restricted by regulations or user rights. The problem with blockchain patents is that they will “close off access to the technology” (Jeff John Roberts (2016) “Are Blockchain Patents a Bad Idea.” Fortune). Goldman Sachs has filed to patent a distributed ledger in order to easily clear foreign-exchange payments. MasterCard, Morgan Stanley, Bank of America and Craig Wright (who claims he is Nakamoto) have all recently filed patents.
However, the question remains: can blockchain technology can be patented under U.S. patent law? The Supreme Court’s 2014 decision in the case Alice Corporation Pty. Ltd. v. CLS Bank International limited the scope of what could be patented. InAlice, the court held that software patents fall within the ambit of “abstract ideas” (pursuant to 35 U.S.C.A. s.101) and therefore cannot be patented. “A patent claim that recites an abstract idea must include additional features to ensure that the claim is more than a drafting effort designed to monopolize the abstract idea; transformation into a patent-eligible application requires more than simply stating the abstract idea while adding the words ’apply it.’” Therefore, it is debatable as to whether the patents filed for blockchain technology will even pass the Supreme Court’s test. If these patents are successful however, patent owners would extremely limit the public access to blockchain technology since users would have to sign a myriad of licensing agreements. Patents are meant to spur innovation. However, experts believe that blockchain patents will actually be detrimental to the technology.
We are shifting towards a sharing economy where peer-to-peer business is overtaking traditional methods. Companies such as AirBnb, Uber in addition to bitcoin and blockchain have found success through a sharing economy model. Industry leaders are certain this will be the future of not only businesses but financial institutions.
As a source for new antibiotics has been found, the race to patent a new drug will officially begin. Barney Bishop and Monique van Hoek from George Mason University, Virginia, recently published in The Journal of Proteome Research that Komodo dragon blood consists of antimicrobial proteins, which could aid and combat the antimicrobial resistance epidemic.
Komodo dragons can be found in Indonesia, and are the biggest lizards currently living in the world. The pathogenic bacteria in their saliva is deadly, and the proteins in their blood (antimicrobial peptides “AMP”) make them resistant to other animals’ bites. Dr Bishop, who works at the St Augustine Alligator Farm Zoological Park in Florida, found that the blood of Komodo dragons contain 48 AMPs. When tested by Dr Van Hoek, he found these AMPs significantly reduce the growth of bacteria, such as Staphylococcus aureus, which has strains that have become antimicrobial resistant in many areas of the world.
Once scientists are able to extract the proteins and develop new antimicrobial and antibiotic drugs, the big question will be whether the drugs should be patented and who will take the lead. Patents provide the innovator legal protection to preclude others from using the patented innovation. The aim is to encourage greater development. However, when it comes to pharmaceutical patents, it is important to balance the innovator’s rights and access to the public. Antimicrobial and antibiotic resistance has become a serious issue worldwide as it targets diseases such as HIV, tuberculosis, cholera and many more.
Normally, new pharmaceutical products can take up to fifteen years to develop, whereas the patent for the product will last a minimum of twenty years. The technology necessary to develop new drugs has a high cost, so scientists will probably look to find financial sources from large pharmaceutical companies. Companies, such as Bristol-Meyers Squibb, who spend a great deal on research and development for new drugs, will surely enter the race to design an antibiotic that combats resistance. However, whichever company submits a patent application for the proteins in Komodo dragon blood first will make a tremendous breakthrough in medicine.
As patents can be necessary in the development process, pharmaceutical companies must keep in mind that this new drug will have to be accessible, in terms of affordability, in all parts of the world in order to make a significant impact on international public health. As patents increase the cost of new drugs it will be key to implement a balance for the patent holder and society. As a solution, the future patent holder can give permission to generic manufacturers around the world to produce the drug, while maintaining the patent in their home-state. Therefore, the patent holder can reap the benefits of the patent while spurring innovation, and countries who cannot afford to purchase the drug at a high cost will be able to manufacture the drug and distribute it at a lower cost.