11-99 Intellectual Property law section newsletter

By Daniel L. Kegan, Chicago

DOJ antitrust guidelines for competitor collaboration. The Justice Department and the Federal Trade Commission October 1, 1999 released and sought comment on proposed guidelines for lawful and illegal collaboration among competitors. Globalization and technology are seen as increasing complex collaborations for corporate goals including expanding into foreign markets, funding expensive innovation, and lowering production costs.

The guidelines define a competitor collaboration as "a set of one or more agreements, other than merger agreements between or among competitors, to engage in economic activity, and the economic activity resulting therefrom." Competitors include actual and potential competitors in a defined market.

As instructed by the US Supreme Court, per se illegality and rule of reason analyses will be used. Agreements which usually tend to raise prices or reduce output are treated as per se illegal. These include price fixing, bid rigging, market and customer allocation.

A collaborative agreement among competitors may be analyzed under the rule of reason if it is reasonably related to and reasonably necessary to achieve procompetitive benefits from an efficiency-enhancing integration of economic activity. A central question is whether the relevant agreement likely harms competition by increasing the ability or incentive profitably to raise price above, or reduce output, quality, service, or innovation below what likely would prevail in the absence of the agreement.

Two "safety zones" are also proposed, to encourage procompetitive competitor collaborations: a general safety zone and a research and development safety zone, for collaborations whose competitive effects are analyzed within an innovative market.

The draft antitrust guidelines are available on the Internet's Web at <http://www.ftc.gov>.

Appropriate competition. After signing an employment agreement with confidentiality and non-compete provisions and working for plaintiff six years, defendant quit, started his own competitive temporary industrial labor staffing company, hired former employees from plaintiff, and within weeks after starting his own business acquired twelve former customers of plaintiff. After reviewing the near-permanent customer relationship test and the confidential information test, the court found the speed with which defendant erected his business set it up as likely to have used confidential cost and price data. Breach of the confidentiality provision permitted enforcing the non-compete covenant. Judge Posner dissented from Judges Bauer and Kanne, agreeing that substantive justice would find for plaintiff but asserting that an Illinois court would not enforce the noncompete covenant.

WIPO--famous and discounted. At its annual governing body meeting, the 171 member countries of the World Intellectual Property Organization (WIPO) agreed to reduce Patent Cooperation Treaty (PCT) fees and approved a non-binding recommendation establishing criteria for determining well-known trademarks.

Effective January 1, 2000, average PCT fees will be reduced about 13%; fees when more than seven countries are designated will decrease by 17%. These reductions will bring the total reduction in PCT fees since 1998 to nearly 30%. Increased PCT activity enables the fee decreases.

The non-binding recommendation for national trademark authorities to use when evaluating whether a trademark is well-known include the degree of recognition, duration and extend of registration, use and promotion of the mark, record of successful enforcement of rights in the mark.

Laches wax and wane. Although a Turtle Wax carwash product contained no "wax," as that term has traditionally been defined, the product satisfied consumer expectations, and no false advertising was found. The meaning of the term "wax" was found to have grown to encompass a variety of substances. A presumption of laches exists when a Lanham Act claim is not brought within the analogous state statute of limitations. Plaintiff's sparse demand letters were not a serious attempt to resolve claims without litigation. Hot Wax Inc. v Turtle Wax Inc., 52 USPQ2d 1065 (7th Cir. 1999).

Has the eagle tacked? Plaintiff Navistar makes EAGLE trucks, defendant makes AMERICAN LAFRANCE & Design (Bird) fire trucks. Defendant sought to tack its newer AMERICAN LAFRANCE EAGLE to its earlier composite, bird design mark. The court held that one may tack and continue to use the earlier mark; abandonment is unnecessary. The two marks to be tacked must make the same commercial impression, so trademark rights are not expanded. Navistar International v Freightliner Corp., 52 USPQ2d 1074 (7th Cir. 1998).

Internet content regulation. The Tampa Florida City Council found a home with more than 30 Internet cameras was an adult business, required an adult business license, and was not permitted in its single-family residential neighborhood. The home broadcast on the Internet as Voyeur Dorm, with subscribers paying to observe young women showering, sunbathing, and otherwise living.

Voyeur Dorm L.C. v Tampa Florida (MD FL, 99-2180-Civ-T-24F, filed 24 Sept 99) raised several constitutional challenges, including that the city's action failed to advance a legitimate government interest, constituted prior restraint, was a regulatory taking, denied equal protection, and that the zoning laws were vague and overly broad.

Internet holds may release. The Internet Corporation for Assigned Names and Numbers (ICANN) posted September 29 a draft revised policy on Internet domain disputes. Under the proposed new policy, Internet registrars would no longer place challenged domain names on hold (deactivate Internet access) based on their own evaluation, but would await a court or arbitration panel order.

The proposed policy would also define "mutual jurisdiction" as either the location of the domain name holder's address as listed in Whois, the database of domain names and registrants, or the location of the principal office of a registrar, provided the domain holder consented, generally in the registration agreement, to the jurisdiction of the registrar's office.

Amazing Internet copying not Whitewash infringement. Defendant Kidsoft admitted scanning several maze puzzles from Phillips' books, then changed them some, added artwork, texture, perspective, color, and a Kidsoft copyright notice. The design of the mazes themselves (placement of walls, openings, objects) and the directions for playing were unaltered by Kidsoft. Although Kidsoft may have a copyright in the derivative work, posting the revised mazes on Kidsoft's Internet Web site infringed plaintiff's copyright. Phillips v Kidsoft Llc, 52 USPQ2d 1102 (D MD, 1999).

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IP Q&A

John Augustyn offers these questions to sharpen our patent analyses. We welcome your suggestions of interesting intellectual property questions--with your suggested answers, for publication in following issues.

Facts

Ivana inventor invents a new product and a new method for making the product. Ivana has been selling the product for five years. However, Ivana has kept the method a trade secret since the method was conceived. Donald developed the same product and the same method a few days ago.

Questions

1. Can Ivana file a patent application for the product at the US Patent and Trademark Office (PTO)?

2. Can Ivana file a patent application for the method at the PTO?

3. Can Donald file a patent application for the product at the PTO?

4. Can Donald file a patent application for the method at the PTO?

5. Is the method practiced by Ivana, which was done in secrecy, prior art to a patent application on the method filed by Donald?

6. Anything different for a United Kingdom patent application?

Safe IP: derivative infringement

By Daniel Kegan, Chicago

Obtaining a patent, copyright, or trademark is no guarantee that you do not infringe. Your patented invention may be an improvement on an earlier patented invention, and read on the earlier patent's claims. If so, you may not make, use, or sell your patented invention during the life of the earlier patent without authorization from the earlier patent owner. The earlier patent owner may not make, use, or sell your patented improvement without your authorization; thus there may be a basis for cross-licensing. A patentability (novelty) opinion is not a non-infringement opinion.

Simply changing a prior copyrighted work does not insulate you from infringement. The question, "how much do I have to change this work to avoid infringement," is often a virtual admission of infringement. Although the author of a derivative or collective work may obtain a copyright on the derivation, or collective work, unauthorized reproduction, further derivations, distribution, public performance, and public display of the newer work will likely infringe the copyright of the earlier work.

Trademark rights are acquired in relation to specific goods, services, and territories. Even with a trademark registration, if you expand your use of a trademark go new goods, services, or territories, you may have junior rights to the owner of a similar trademark. Moreover, since many foreign countries grant trademark rights to the "first to file," rather than to the "first to use," without the right registration, you may not have foreign trademark rights.

Intellectual property encompasses several rights. Many IP rights may be divided and separately licensed; some IP rights may not be practiced without authorization of senior right owners.

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Intellectual Property Newsletter November 1999, Vol. 39, No. 1 Trademark Law Treaty Implementation Act of 1998: changes to the rules of practice By Joseph T. Nabor, Chicago, Illinois Introduction As a result of the enactment of the Trademark Law Treaty Implementation Act of 1988, the Trademark Branch of the PTO has undertaken a rather extensive review of its Rules of Practice. The Trademark Law Treaty Implementation Act became effective on October 30, 1999. On that day, there will also be some rather significant changes to trademark practice before the PTO. The purpose of the Trademark Law Treaty is not to dramatically change the substance of Trademark Law. Rather, the purpose is intended to simplify the quagmire of procedural rules and, to a lesser degree, create some international procedural harmonization. In the spirit of simplifying procedures the PTO rules changes sometimes address issues that probably were not required to be addressed by the new Act. Therefore, these rule changes can come with the sub-heading of "Welcome to the new, friendlier PTO." Application filing date In order for any application submitted to the PTO to be entitled to a filing date, the application must contain certain minimum requirements. For any application filed after October 30, 1999, the minimum requirements are: 1) The name of the applicant 2) A name and address of correspondence 3) A clear drawing of the mark 4) A listing of the goods and/or services 5) The filing fee for at least one class of goods or services. This changes the present practice which, in addition to those minimum requirements also required things such as a certified copy of foreign registrations in section 44(e) applications, an allegation of use or bona fide intention of use, specimens and dates of use in section 1(a) applications. Bulky specimens Bulky specimens are those which are larger than 8 by 11 inches and which lay flat. Previously, bulky specimens were given special handling at the PTO because of the inability of those specimens to fit in the PTO file. The days of such special handling are over. Now, any bulky specimens that are submitted will be photographed or photocopied and destroyed. Only the photograph will remain with the file. Number of specimens As of October 30, 1999, it will not be necessary to submit three specimens. As of that date, only one specimen will be required. If more than one specimen is submitted, then they will all be retained in the file. However, the PTO will no longer allow the public to remove any specimens. As most of you know, when you order an application file wrapper, if there are extra original specimens, they can be removed. That will no longer be permitted. Specification of type of commerce It is no longer necessary to specify the "type of commerce" because "commerce that may be regulated by Congress" is presumed. Method of Use clause The Method of Use clause will be a thing of the past after October 30, 1999. This is no longer a feature of the application and the Rules of Practice have been amended to omit any such requirements. Persons who may sign Previously sections 1(a) and (b) of the Lanham Act required that all applications contain a verification ". . .by the Applicant, or by a member of the firm or an officer of the corporation or association. . ." It's the last part of the phrase that has been particularly difficult on attorneys as well as our clients. When the Trademark Law Revision Act of 1988 went into effect, the PTO interpreted that phrase as requiring that all applications, as well as Statements of Use and Amendments to Allege Use, filed on behalf of corporations must be signed by an officer of the corporation with almost no room for leeway. That section has now been amended to specify that those documents filed by a "juristic" applicant must be signed by "A person who is properly authorized to sign on behalf of the Applicant." Such a "properly authorized" person is either: 1) A person with legal authority to bind the applicant; 2) A person with first-hand knowledge of the facts and actual or implied authority to act on behalf of the applicant (which was the old "color of authority" standard); or 3) An attorney who has actual or implied written or verbal power of attorney from the applicant. Under these broadened rules, the PTO has stated that it will not question the authority of the signatory unless there is an inconsistency in the record. Ownership The rules of practice and section 8 of the Act have been amended to clarify that applications for registrations and section 8 affidavits must be filed by the "owner" of the mark rather than by the "registrant." Color drawings The color lining chart in the Rules of Practice has been deleted. At present, the PTO will accept marks lined for color; however, such acceptance will be stopped at some future (presently unspecified) date. Applications can now be filed showing the mark in color; however, the mark will be put in the PTO system in black and white. It is anticipated that at some time in the future (present date unknown), the PTO will publish and issue registrations in color. To clarify in applications where color is a feature of the mark, the PTO expects that to be specified in the description of the mark. In addition, the PTO will accept color photographs into the record to describe color and it will accept commercial color identification systems such as those of Pantome or Color Communications. Material alteration The Rules of Practice are being amended to clarify that once an application is on file, the mark may not be changed if it constitutes a "material alteration." This has historically been the applied principal. However, in 1996 the Federal Circuit in In re ECCS, 94 F.3d 1578, 39 USPQ2d 2001 (Fed. Cir.1996) held that the mark in a section 1(a) application can be amended to conform the mark to the specimens. This rule change attempts to circumvent the hold of In re ECCS. Revival of abandoned applications In one of the more controversial changes, as of October 30, 1999, the PTO will allow applications to be revived if the failure to respond to an Office Action or a Notice of Allowance was "unintentional" rather than under the older, much more stringent standard of "unavoidable." This will apply to all Petitions to Revive filed on or after October 30 as well as any that are pending at that time. Because of the leniency in granting these Petitions, the PTO will strictly adhere to its time requirements. That requirement is that the Petition must be filed: 1) within two months of the mailing date of the Notice of Abandonment; or 2) within two months of actual knowledge of the abandonment if the Notice of Abandonment wasn't received. Furthermore, the Petition must be signed by someone with first-hand knowledge of the facts but it no longer needs to be verified or supported with a section 2.20 declaration. Due diligence The burden is still on practitioners to diligently check the status of their pending applications. The Rules of Practice are amended to require such due diligence status checks within one year after the last filing with the PTO or notice from the PTO. Amendment of basis after publication In its initial Notice of Proposed Rulemaking, the PTO had proposed a prohibition against amendment of the basis of application once the mark has been published. Because of the opposition to this proposed prohibition that change has not been made. The Rules of Practice have been amended to clarify current practice that requires such an amendment to add a basis after publication only by Petition to the Commissioner and that re-publication will be required. Post registration Two of the more dramatic changes to the Rules of Practice involve post registration. First, renewal applications must now be accompanied by Section 8 Affidavits. That is that a Section 8 Affidavit is due between the fifth and sixth year of the initial term of the registration as well as at the time of filing each renewal application. The second change is the grace period. Previously, there had been no grace period for Section 8 Affidavits and three months for renewal applications. Under the amended rules there is a six month grace period following the initial Section 8 deadline as well as for renewal. (However, please note that the filing fee surcharge of $100 per class for late filing is doubled in renewal where the renewal application and the renewal Section 8 Affidavit are filed during the grace period.) These amendments apply to Section 8 Affidavits and renewal applications filed on or after October 30, 1999. If the Section 8 Affidavit or renewal application is filed before that date, then the current (prior) rules apply. Assignments and changes of name The PTO will now record assignments or change of name documents which are not the original or a "true copy." Furthermore, to correct an oversight, the Rules of Practice have been amended to permit assignment of a section 1(b) application after either an Amendment to Allege Use or a Statement of Use is filed. Previously, the Rules only allowed assignment after a Statement of Use was filed. Powers of attorney The Rules of Practice concerning Powers of Attorney have been significantly modified. Under the amended Rules, a single Power of Attorney can apply to all existing and future applications and registrations. In order to rely on such a Global Power, the attorney must either: 1) include a copy of the previously filed Global Power; or 2) refer to the previously filed Global Power by specifying: a) the filing date; b) the application serial number; registration number or inter parties proceeding number; and c) the name of the party who signed the Power. The times, they are a-changin': time changes in the Trademark Law Treaty Implementation Act of 1998 By Marc E. Fineman, Chicago Come gather 'round lawyers From Clay to DuPage And admit that the statute Soon will be changed And remember your calendar May be rearranged. If your practice to you Is worth savin' Then you better start readin' Else your clients may rage For the times they are a-changin'. On September 28, 1999, the United States Patent and Trademark Office published a Final Rule implementing the Trademark Law Treaty Implementation Act of 1998 (TLTIA), Pub. L. No. 105-330, 112 Stat. 3064 (15 U.S.C. 1051). The TLTIA attempts to streamline and clarify federal trademark practice while harmonizing United States trademark law with that of many other countries. Title I of the TLTIA, containing the provisions implementing the treaty, became effective October 30, 1999. Federal trademark practitioners and those with clients that own federal trademark applications or registrations should note the following deadlines. Items in bold indicate changes resulting from the TLTIA:

Intellectual Property Newsletter
November 1999, Vol. 39, No. 1

Trademark Law Treaty Implementation Act of 1998: changes to the rules of practice

By Joseph T. Nabor, Chicago, Illinois

Introduction

As a result of the enactment of the Trademark Law Treaty Implementation Act of 1988, the Trademark Branch of the PTO has undertaken a rather extensive review of its Rules of Practice. The Trademark Law Treaty Implementation Act became effective on October 30, 1999. On that day, there will also be some rather significant changes to trademark practice before the PTO. The purpose of the Trademark Law Treaty is not to dramatically change the substance of Trademark Law. Rather, the purpose is intended to simplify the quagmire of procedural rules and, to a lesser degree, create some international procedural harmonization. In the spirit of simplifying procedures the PTO rules changes sometimes address issues that probably were not required to be addressed by the new Act. Therefore, these rule changes can come with the sub-heading of "Welcome to the new, friendlier PTO."

Application filing date

In order for any application submitted to the PTO to be entitled to a filing date, the application must contain certain minimum requirements. For any application filed after October 30, 1999, the minimum requirements are:

1) The name of the applicant

2) A name and address of correspondence

3) A clear drawing of the mark

4) A listing of the goods and/or services

5) The filing fee for at least one class of goods or services.

This changes the present practice which, in addition to those minimum requirements also required things such as a certified copy of foreign registrations in section 44(e) applications, an allegation of use or bona fide intention of use, specimens and dates of use in section 1(a) applications.

Bulky specimens

Bulky specimens are those which are larger than 8 by 11 inches and which lay flat. Previously, bulky specimens were given special handling at the PTO because of the inability of those specimens to fit in the PTO file. The days of such special handling are over. Now, any bulky specimens that are submitted will be photographed or photocopied and destroyed. Only the photograph will remain with the file.

Number of specimens

As of October 30, 1999, it will not be necessary to submit three specimens. As of that date, only one specimen will be required. If more than one specimen is submitted, then they will all be retained in the file. However, the PTO will no longer allow the public to remove any specimens. As most of you know, when you order an application file wrapper, if there are extra original specimens, they can be removed. That will no longer be permitted.

Specification of type of commerce

It is no longer necessary to specify the "type of commerce" because "commerce that may be regulated by Congress" is presumed.

Method of Use clause

The Method of Use clause will be a thing of the past after October 30, 1999. This is no longer a feature of the application and the Rules of Practice have been amended to omit any such requirements.

Persons who may sign

Previously sections 1(a) and (b) of the Lanham Act required that all applications contain a verification ". . .by the Applicant, or by a member of the firm or an officer of the corporation or association. . ." It's the last part of the phrase that has been particularly difficult on attorneys as well as our clients. When the Trademark Law Revision Act of 1988 went into effect, the PTO interpreted that phrase as requiring that all applications, as well as Statements of Use and Amendments to Allege Use, filed on behalf of corporations must be signed by an officer of the corporation with almost no room for leeway. That section has now been amended to specify that those documents filed by a "juristic" applicant must be signed by "A person who is properly authorized to sign on behalf of the Applicant." Such a "properly authorized" person is either: 1) A person with legal authority to bind the applicant; 2) A person with first-hand knowledge of the facts and actual or implied authority to act on behalf of the applicant (which was the old "color of authority" standard); or 3) An attorney who has actual or implied written or verbal power of attorney from the applicant.

Under these broadened rules, the PTO has stated that it will not question the authority of the signatory unless there is an inconsistency in the record.

Ownership

The rules of practice and section 8 of the Act have been amended to clarify that applications for registrations and section 8 affidavits must be filed by the "owner" of the mark rather than by the "registrant."

Color drawings

The color lining chart in the Rules of Practice has been deleted. At present, the PTO will accept marks lined for color; however, such acceptance will be stopped at some future (presently unspecified) date. Applications can now be filed showing the mark in color; however, the mark will be put in the PTO system in black and white. It is anticipated that at some time in the future (present date unknown), the PTO will publish and issue registrations in color. To clarify in applications where color is a feature of the mark, the PTO expects that to be specified in the description of the mark. In addition, the PTO will accept color photographs into the record to describe color and it will accept commercial color identification systems such as those of Pantome or Color Communications.

Material alteration

The Rules of Practice are being amended to clarify that once an application is on file, the mark may not be changed if it constitutes a "material alteration." This has historically been the applied principal. However, in 1996 the Federal Circuit in In re ECCS, 94 F.3d 1578, 39 USPQ2d 2001 (Fed. Cir.1996) held that the mark in a section 1(a) application can be amended to conform the mark to the specimens. This rule change attempts to circumvent the hold of In re ECCS.

Revival of abandoned applications

In one of the more controversial changes, as of October 30, 1999, the PTO will allow applications to be revived if the failure to respond to an Office Action or a Notice of Allowance was "unintentional" rather than under the older, much more stringent standard of "unavoidable." This will apply to all Petitions to Revive filed on or after October 30 as well as any that are pending at that time. Because of the leniency in granting these Petitions, the PTO will strictly adhere to its time requirements. That requirement is that the Petition must be filed: 1) within two months of the mailing date of the Notice of Abandonment; or 2) within two months of actual knowledge of the abandonment if the Notice of Abandonment wasn't received. Furthermore, the Petition must be signed by someone with first-hand knowledge of the facts but it no longer needs to be verified or supported with a section 2.20 declaration.

Due diligence

The burden is still on practitioners to diligently check the status of their pending applications. The Rules of Practice are amended to require such due diligence status checks within one year after the last filing with the PTO or notice from the PTO.

Amendment of basis after publication

In its initial Notice of Proposed Rulemaking, the PTO had proposed a prohibition against amendment of the basis of application once the mark has been published. Because of the opposition to this proposed prohibition that change has not been made. The Rules of Practice have been amended to clarify current practice that requires such an amendment to add a basis after publication only by Petition to the Commissioner and that re-publication will be required.

Post registration

Two of the more dramatic changes to the Rules of Practice involve post registration. First, renewal applications must now be accompanied by Section 8 Affidavits. That is that a Section 8 Affidavit is due between the fifth and sixth year of the initial term of the registration as well as at the time of filing each renewal application. The second change is the grace period. Previously, there had been no grace period for Section 8 Affidavits and three months for renewal applications. Under the amended rules there is a six month grace period following the initial Section 8 deadline as well as for renewal. (However, please note that the filing fee surcharge of $100 per class for late filing is doubled in renewal where the renewal application and the renewal Section 8 Affidavit are filed during the grace period.) These amendments apply to Section 8 Affidavits and renewal applications filed on or after October 30, 1999. If the Section 8 Affidavit or renewal application is filed before that date, then the current (prior) rules apply.

Assignments and changes of name

The PTO will now record assignments or change of name documents which are not the original or a "true copy." Furthermore, to correct an oversight, the Rules of Practice have been amended to permit assignment of a section 1(b) application after either an Amendment to Allege Use or a Statement of Use is filed. Previously, the Rules only allowed assignment after a Statement of Use was filed.

Powers of attorney

The Rules of Practice concerning Powers of Attorney have been significantly modified. Under the amended Rules, a single Power of Attorney can apply to all existing and future applications and registrations. In order to rely on such a Global Power, the attorney must either: 1) include a copy of the previously filed Global Power; or 2) refer to the previously filed Global Power by specifying: a) the filing date; b) the application serial number; registration number or inter parties proceeding number; and c) the name of the party who signed the Power.

The times, they are a-changin': time changes in the Trademark Law Treaty Implementation Act of 1998

By Marc E. Fineman, Chicago

Come gather 'round lawyers

From Clay to DuPage

And admit that the statute

Soon will be changed

And remember your calendar

May be rearranged.

If your practice to you

Is worth savin'

Then you better start readin'

Else your clients may rage

For the times they are a-changin'.

On September 28, 1999, the United States Patent and Trademark Office published a Final Rule implementing the Trademark Law Treaty Implementation Act of 1998 (TLTIA), Pub. L. No. 105-330, 112 Stat. 3064 (15 U.S.C. 1051). The TLTIA attempts to streamline and clarify federal trademark practice while harmonizing United States trademark law with that of many other countries. Title I of the TLTIA, containing the provisions implementing the treaty, became effective October 30, 1999.

Federal trademark practitioners and those with clients that own federal trademark applications or registrations should note the following deadlines. Items in bold indicate changes resulting from the TLTIA:

Intellectual Property Newsletter November 1999, Vol. 39, No. 1

Intellectual Property Newsletter
November 1999, Vol. 39, No. 1