Communications Between Patent Agent and Client Covered Under Attorney-Client Privilege

Texas Supreme Court Rules Representation of Clients Before the USPTO by Patent Agents Equivalent to Legal Representation

The United States Patent and Trademark Office (“USPTO”), the federal agency responsible for granting and issuing patents, 35 U.S.C. §§1(a), 2(a)(1), is a unique animal among administrative bodies.

Given the complex subject matter and procedural intricacies of patent prosecution practice before the USPTO, private parties seeking to patent inventions and designs typically must rely upon legal representatives admitted before the USPTO for the prosecution of their applications.  In order to represent a party in a patent prosecution matter – the proceeding in which the inventor(s) or the inventor(s) assignee seeks to patent the invention or design – the legal representative must be admitted to practice before the USPTO, which has authority to regulate the persons who represent patent applicants. 35 U.S.C. §2(b)(2)(D).

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Among those the USPTO allows to provide such representation are patent attorneys. 37 C.F.R. §11.6(a)Patent attorneys are individuals who are in good standing with the bar of the highest court in any state and meet all the requirements for registration before the USPTO, which includes an examination. 37 C.F.R. §§11.1, 11.6(a), 11.7.  Upon successfully passing the patent bar exam, the attorney is registered to practice before the USPTO as a “patent attorney.”  Patent prosecution practice is the only legal practice area of which I am aware that requires the attorney to pass a second bar exam.

Somewhat ironic is that the USPTO also allows for the legal representation of parties in patent prosecution matters by non-attorneys, provided that they, too, pass the patent bar exam.  When a non-attorney possess the necessary technical expertise – as is also required of attorneys – and successfully passes the same patent bar exam administered to attorneys, the non-attorney is registered to practice before the USPTO as a “patent agent.”  37 C.F.R. §§11.6(b), 11.7(b)(1)(ii).  Patent attorneys and patent agents are on equal footing before the USPTO and may provide identical services. 37 C.F.R. §§11.5(b), 11.6(a)-(b).  The only difference is that when it comes to legal matters outside of the USPTO – for example, the licensing of a patent by a client to third party – the patent agent may not perform such services as that would constitute the unauthorized practice of law.

As such, patent prosecution is not only a legal practice area requiring attorneys to successfully pass a second bar exam in order to represent clients, it is, as far as I am aware, the only legal practice that specifically allows for non-attorneys to represent clients in the same forum and proceedings, provided that they, too, successfully pass the patent bar exam.

Which leads to an interesting question – are communications between a client and a patent agent protected under the attorney-client privilege?  On February 23, 2018, the Supreme Court of Texas answered that question in the affirmative in the matter In re Andrew Silver, No. 16-0682.

The underlying litigation in Silver concerned a patented invention known as the “Ziosk,” a stand-alone tablet designed to allow customers at restaurants to order food and pay their check without having to interact with a waiter or waitress.  The Ziosk was sold by Tabletop Media, LLC (“Tabletop”), which partnered with restaurant chains such as Abuelo’s, Chili’s, and Red Robin to place the device in their restaurants.  Andrew Silver claimed he invented the technology that became the Ziosk and sold the patent to Tabletop.  Silver brought a breach-of-contract action against Tabletop, alleging it failed to pay him for his patent.  Tabletop answered, generally denying Silver’s allegations.

During discovery in the litigation, Tabletop sought production of emails between Silver and Raffi Gostanian, the patent agent who represented Silver before the USPTO.  Silver refused to produce the emails, claiming them to be covered by the attorney-client privilege.  Although Gostanian is a registered patent agent, he is not a licensed attorney.  The issue of whether the email communications between Silver and his patent agent are covered under the attorney-client privilege was eventually appealed to the Texas Supreme Court.

As part of its analysis, the Texas Supreme Court was required to construe the nature and scope of the attorney-client privilege, codified at Texas Rule of Evidence 503.  Since New Jersey and Pennsylvania codify a substantially similar evidence rule – as do the Federal Rules of Evidence and most states – the Court’s decision in Silver, while certainly not binding on other states or the federal judiciary, carries some persuasive authority.

After noting non-binding precedent that “patent agents are not simply engaging in law-like activity, they are engaging in the practice of law itself,” thereby justifying the recognition of a privilege similar to that of the traditional attorney-client privilege, In re Queen’s Univ., 820 F.3d 1287, 1296 (Fed. Cir. 2016), the Court in Silver examined Tex. R. Evid. 503, stating that:

With these principles in mind, we turn to Rule 503’s language to determine whether a registered patent agent is a “lawyer” for purposes of the lawyer-client privilege . . .  As previously noted, the rule defines “lawyer” as “a person authorized . . . to practice law in any state or nation.” TEX. R. EVID. 503(a)(3).  The definition states two requirements for a person to qualify as a lawyer.  First, the person must be engaged in a particular activity—the “practice [of] law.” Id.  Second, the person must be “authorized” to perform the activity in a state or nation. Id.  Thus, understanding what it means to be a “lawyer” for purposes of the rule requires determining (1) what it means to “practice law” and (2) how one is “authorized” to do so.  [Slip opinion at 6-7].

As to this two-prong analysis, the Court in Silver ultimately held that: 1) within the scope of their practice before the USPTO, patent agents practice law, slip opinion at 9, and 2) because “patent agents are authorized to practice law before the USPTO, they fall within Rule 503’s definition of ‘lawyer,’ and, as such, their clients may invoke the lawyer-client privilege to protect communications that fall within the privilege’s scope.” Slip opinion at 13.

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New Jersey Rule of Evidence 504(3)(b) similarly defines “lawyer” as “a person authorized, or reasonably believed by the client to be authorized to practice law in any State or nation the law of which recognizes a privilege against disclosure of confidential communications between client and lawyer.”  Similarly, Pennsylvania Rule of Evidence 502(a)(1) provides that: “‘Attorney’ means a person authorized, or reasonably believed by the client to be authorized, to engage in the practice of law in any State or country.”  Both codifications are similar to that of Texas, which, at Tex. R. Evid. 503(a)(3) defines “lawyer” as “a person authorized, or who the client reasonably believes is authorized, to practice law in any state or nation.”  Most states employ similar evidence rules, which are based upon federal Rule of Evidence 503(a)(2), which states that: “A ‘lawyer’ is a person authorized, or reasonably believed by the client to be authorized, to practice law in any state or nation.”

As to whether New Jersey, Pennsylvania or any other state follows the Texas Supreme Court’s holding in Silver remains to be seen.  However, given that patent agents engage in the same legal representation of clients as do patent attorneys before the USPTO, it is likely that Silver’s rationale would apply in similar fashion.

Lastly, a word of caution: Silver does not stand for the proposition that all communications between the applicant and the patent agent are protected under the attorney-client privilege.  Rather, only those communications within the scope of the patent agent’s representation of the client before the USPTO are protected.  As a patent agent is only acting as a lawyer within the confines of representing the client before the USPTO in a prosecution proceeding, communications falling outside the scope of that narrow representation would not enjoy the benefits of the privilege.  As noted by the Court in Silver: “The client’s communications with a registered patent agent regarding matters outside the agent’s authorized practice area might not be protected because these communications are not necessarily made to facilitate the rendition of professional legal services.” Slip opinion at 14.  Where there are questions as to whether communications are within the scope of the representation, the trial court can review documents in camera if necessary to determine whether the privilege applies.


Post Materials:

In re Silver, NO. 16-0682 Texas Supreme Court (February 23, 2018)

In re Queens University, No. 2015-145 CAFC (March 7,  2016)

Supreme Court to Address Availability of Lost Profit Damages in Willful Patent Infringement Occurring Outside of the U.S.

Section 271(f) Combinations at Issue

The U.S. Supreme Court recently agreed to hear an important patent case concerning the standard for willful infringement and the availability of lost profit damages for combinations occurring outside of the United States.

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The Court granted petitioner WesternGeco LLC’s (“WesternGeco”) writ of certiorari on January 12, 2018 in WesternGeco LLC v. Ion Geophysical Corp., No. 16-1011, to decide the question of whether the Federal Circuit Court of Appeals (the “CAFC”) erred in holding that lost profits arising from prohibited combinations occurring outside of the U.S. are categorically unavailable in cases where patent infringement is proven under 35 U.S.C. §271(f).

By statute, patent owners who prove infringement are entitled to “damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer.” 35 U.S.C. §284.  What damages are “adequate to compensate for the infringement” depends on the application of general tort principles to the facts of each case and can include lost profits in appropriate cases.  Section 284 applies to damages for infringement under 35 U.S.C. §271(f), wherein Congress defined new acts of patent infringement: Whoever, with the requisite mental state, exports components of a patented invention from the United States for combination “outside of the United States in a manner that would infringe the patent if such combination occurred within the United States,” “shall be liable as an infringer.” 35 U.S.C. §271(f) (emphasis added).  In enacting §271(f), Congress treated a specific action within the United States (exporting from the United States with the intent to combine abroad) as sufficient to impose liability, knowing that the combination and ultimate use would occur abroad.

In WesternGeco, the jury found respondent/defendant Ion Geophysical Corp. (“Ion”) liable for infringement, and awarded damages, with a $12.5 million royalty component and a $93.4 million lost profits component.  The jury also concluded that Ion’s infringement was willful.  However, while the district court upheld the verdict, the court did not find “objective” willfulness under the CAFC’s governing standard at that time, which was before the decision by the Supreme Court in Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S. Ct. 1923 (2016), which modified the standard for finding “willful” infringement.  Under the prior standard, a finding of “willful” infringement required satisfaction of both an “objective” and a “subjective” prong of willfulness.  The matter was appealed to the CAFC and a panel majority held that the jury’s award of lost profits – approximately $93 million of the $106 million award – must be reversed. WesternGeco petitioned for certiorari, which the Supreme Court granted and issued a “GVR” order, remanding the matter to the CAFC to reconsider in light of the high court’s ruling in Halo.  On remand, the CAFC panel majority vacated the district court’s judgment solely as to the denial of enhanced damages and remanded that limited issue “for further proceedings consistent with this opinion and with the Supreme Court’s decision in Halo.”  In all other respects, the Federal Circuit “reinstate[d] [its] earlier opinion and judgment,” including as to lost-profit damages.  Petitioner WesternGeco thereafter petitioned the Supreme Court yet again for a writ of certiorari, which the court granted.

While the U.S. Supreme Court essentially eliminated the “objective” prong for determining “willful” infringement – a bar that was virtually impossible to establish – in the Halo matter, the impact of the Court’s prior ruling with respect to extraterritorial infringement will now be considered. As argued by WesternGeco in its petition, with respect to Section 271(f), the CAFC erroneously required that the presumption against extraterritoriality must be applied twice: the presumption must be applied first to determine what conduct subjects a defendant to liability, and then again to limit remedies once liability is established.  As argued by WesternGeco, the plain text of Section 271(f) does not make that requirement and the CAFC imposed an unduly rigid bar to recovery for acts of willful infringement arising under Section 271(f).

The case has yet to be briefed before the Supreme Court. Oral argument has not been scheduled.  A ruling is expected from the Court before it recesses in June of this year.

Software and Reverse Engineering

Claims for Reverse Engineering are Based on Contractual Rights

As digital technologies continue to advance and encompass many aspects of everyday life, the development and use of “software” increases in direct proportion. Whether embedded system software (e.g., in mobile devices, appliances and IoT products), cloud hosted services, platform/infrastructure services, enterprise software or downloadable programs and apps, it is software that runs our computers and devices, allows for worldwide connectivity and communications, and provides for content and entertainment delivery.  Software development is a major component of the global economy, and businesses, large and small, need to undertake significant efforts to protect, enforce and defend their proprietary code.

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Comprising a “literary work,” the source code of a software application is protectable as a copyrightable work. Copyright Office Circular 61 states that:

A computer program is a set of statements or instructions to be used directly or indirectly in a computer to bring about a certain result. Copyright protection for a computer program extends to all of the copyrightable expression embodied in the program.  The copyright law does not protect the functional aspects of a computer program, such as the program’s algorithms, formatting, functions, logic, or system design.

And, software companies have not hesitated to pursue claims of copyright infringement of their code. See, e.g., Antonick v. Electronic Arts, Inc., No. 14-15298, 841 F.3d 1062 (9th Cir. 2016) cert. denied __S. Ct. __ (November 6, 2017); Adobe Sys., Inc. v. Christenson, No. 12-1737, 809 F.3d 1071 (9th Cir 2015); Oracle America, Inc. v. Google, Inc., 750 F.3d 1339 (Fed. Cir. 2014) cert. denied 135 S. Ct. 2887 (2015).

Oracle v. Google is one of the more memorable software copyright infringement cases.  In that litigation, Oracle pursued software copyright and patent infringement claims against Google and its Android operating system. Oracle alleged several distinct claims of infringement: a nine-line rangeCheck function, several test files, the structure, sequence and organization of Oracle’s Java application programing interface (API), and the API documentation.  Oracle’s copyright infringement claims were primarily directed to its Java APIs, of which Oracle alleged 37 separate acts of infringement.  While the jury found that the APIs were infringed, the jury deadlocked on Google’s fair use defense.  The trial judge, however, ultimately ruled that the structure of Oracle’s Java APIs used by Google was not copyrightable. The Federal Circuit partially reversed the district court, ruling in Oracle’s favor on the copyrightability issue, and remanding the issue of fair use to the district court.  After a second trial, the jury sided in favor of Google, ruling its actions to constitute fair use – a defense to infringement.

Although Oracle failed on its copyright infringement claims, could it have nonetheless pursued claims of “reverse engineering” against Google (setting aside the issue of whether Google legitimately acquired the API source code from Oracle predecessor, Sun Microsystems, in the first instance)? In short, the answer is “no.”  While many developers and software companies are of the opinion that software code is protected against “reverse engineering” as a matter of copyright protection, absent an express contractual limitation or prohibition against reverse engineering, there is no right – under copyright law or otherwise.

While the Copyright Act is a powerful statutory tool for pursuing claims of copyright infringement – including the ability to obtain statutory damages provided the statute’s prerequisites are established – not all “copying” of software is tantamount to copyright infringement. Where there has been copying but not infringement under the Copyright Act, contractual prohibitions against reverse engineering may well prove to vindicate the software owner’s rights.

The issue of whether copyright infringement claims – provided for in the Copyright Act – preempt reverse engineering claims has been rejected by the courts. In Bowers v. Baystate Technologies, Inc., 370 F.3d 1317 (Fed. Cir. 2003), plaintiff Harold Bowers (“Bowers”) brought claims of copyright infringement and reverse engineering against Baystate Technologies, Inc. (“Baystate”) under the terms of a “shrink wrap” license agreement.  Baystate defended the reverse engineering claim on the basis that the U.S. Copyright Act preempts the reverse engineering prohibition in the license agreement.  The lower court agreed, finding that Bowers’ contract and copyright claims “coextensive.”  As such, the district court instructed the jury that “reverse engineering violates the license agreement only if Baystate’s product that resulted from reverse engineering infringes Bowers’ copyright because it copies protectable expression.”  The Federal Circuit reversed the district court, ruling that the Copyright Act does not preempt or narrow the scope of a contract claim prohibiting reverse engineering.  370 F.3d at 1327.  As such, the Federal Circuit held that there exists a separate and distinct cause of action for the wrongful “copying” of Bowers’ software under the contractual prohibition of reverse engineering, which the trial jury found breached by Baystate.

So what is reverse engineering? The Federal Circuit’s opinion in Bowers v. Baystate is instructive.  According to the Court:

In this case, the contract unambiguously prohibits “reverse engineering.” That term means ordinarily “to study or analyze (a device, as a microchip for computers) in order to learn details of design, construction, and operation, perhaps to produce a copy or an improved version.”  [Bowers, 370 F3d at 1326, citing Random House Unabridged Dictionary (1993)].

The evidence presented in Bowers v. Baystate in support of the reverse engineering claim is also informative.  For example, Baystate scheduled two weeks in the development schedule of its competing product to specifically analyze Bowers’ software.  In fact, Baystate’s president and CEO testified that Baystate generally analyzed competitor’s products to duplicate their functionality.  In addition, the record also contained evidence of extensive and unusual similarities between the original and accused products – further evidence of reverse engineering to support the jury’s finding.  An expert on behalf of Bowers testified that he examined the relevant software programs to determine the overall structure of the programs, such as how the programs actually executed the task of walking a user through certain processes.  That expert concluded that in the larger process of taking a relevant standard “and breaking it down into its component parts to actually create a step-by-step process for a user using the software,” both the original and accused programs use “almost the identical process of breaking down that task into its individual pieces,” and that the programs are “organized essentially identically.”  Id. at 1326-1327.

In addition, a fact witness – an individual who licensed to Bowers certain software components and features that comprised Bowers’ software program – testified that he had compared the original and accused programs. When asked to describe the accused program’s interface, the witness responded:  “It looked like I was looking at my own program . . .”  As such, both the expert and fact witnesses for Bowers explained in detail the similarities between the original and accused programs – similarities that included the interrelationships between program screens, the manner in which parameter selection causes program branching, and the manner in which licensed symbols are drawn. Id. at 1327.

Even more compelling, both witnesses also testified that those similarities extended beyond structure and design to include many idiosyncratic design choices and inadvertent design flaws. The expert concluded that based on his “summary analysis of how the programs function, their errors from the standard and their similar nomenclatures reflecting nonstandard items,” the accused program is a “derivative copy” of the original program.  Id.

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The court noted that both Bowers’ “copyright and contract claims both rest on Baystate’s copying of Mr. Bowers’ software.” Id. As concluded by the Federal Circuit: “The shrink-wrap license agreement prohibited, inter alia, all reverse engineering of Mr. Bowers’ software, protection encompassing but more extensive than copyright protection, which prohibits only certain copying.” Id.  As such, Bowers’ could pursue both copyright infringement and reverse engineering claims – separate and distinct causes of action that were both premised on the copying of Bowers’ software under the facts and circumstances of the case.

Contracts covering software, such as license agreements, SaaS service agreements, website services agreements, etc., should all include a prohibition against reverse engineering. While the Copyright Act is a powerful statutory tool for pursuing claims of copyright infringement – including the ability to obtain statutory damages provided the statute’s prerequisites are established – not all “copying” of software is tantamount to copyright infringement.  Developers often develop functionality through different code in as much as two persons would likely use different words to tell a story.  In such cases – where there has been copying but not infringement under the Copyright Act – contractual prohibitions against reverse engineering may well prove to vindicate the software owner’s rights.

Federal Circuit: Judicial Review Available for Timeliness Challenges to IPR Proceedings

The CAFC Overrules Prior Ruling in Achates

An en banc decision issued on January 8, 2018 by the Federal Circuit Court of Appeals (the “CAFC”) overruled that court’s prior ruling in Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015) (“Achates”) concerning the appealability of whether a petition for an inter partes review was timely filed under the Leahy-Smith America Invents Act (the “AIA”).  Specifically, in Wi-Fi One, LLC v. Broadcom Corp., No. 2015-1944 (“Wi-Fi One”), the CAFC held that judicial review is indeed available for a patent owner to challenge a determination by the United States Patent and Trademark Office (the “USPTO”) as to whether a petitioner satisfied the timeliness requirement of 35 U.S.C. §315(b) governing the filing of petitions for inter partes review.

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Under the AIA, Congress prohibited the USPTO from instituting inter partes review if the petition requesting that review is filed more than one year after the petitioner, real party in interest, or privy of the petitioner is served with a complaint for patent infringement. 35 U.S.C. §315(b).  However, in another section of the AIA, Congress further provided that the USPTO’s determination “whether to institute an inter partes review under this section shall be final and nonappealable.”  Id. §314(d) (emphasis suppled).  Thus, the question presented to the CAFC in Wi-Fi One was whether the bar on judicial review of institution decisions in §314(d) applies to time-bar determinations made under §315(b).  In Achates, the CAFC answered the question in the affirmative.  In Wi-Fi One, the CAFC overruled itself, answering the question in the negative.

The question presented to the CAFC in Wi-Fi One was whether the bar on judicial review of institution decisions in §314(d) applies to time-bar determinations made under §315(b).  In Achates, the CAFC answered the question in the affirmative.  In Wi-Fi One, the CAFC overruled itself, answering the question in the negative.

By way of historical background, in 2011 Congress passed the AIA, which created inter partes review or “IPR” proceedings. See 35 U.S.C. §§311–319.  IPR and other post-grant proceedings are intended to be quick and cost-effective alternatives to litigation for third parties to challenge the patentability of issued claims.  Under 35 U.S.C. §311, a person who is not the owner of a patent may petition the USPTO to institute IPR of one or more patent claims on permitted grounds, alleging unpatentability on certain prior art bases.  Section 312 provides that the petition must, among other things, identify, “in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each claim.”  35 U.S.C. §312(a)(3).  Section 314, subsection (a) prescribes the threshold determination required for the USPTO to institute: a “reasonable likelihood” that the petitioner will succeed in its patentability challenge to at least one of the challenged patent claims.  Subsections (b) and (c) prescribe the timing of and notice requirements for the institution decision.  And, §314(d) addresses judicial review of the USPTO’s IPR institution determination under §314.  Specifically, §314(d) provides that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” (emphasis added).

Section 315, on the other hand, governs the relationship between IPRs and other proceedings conducted outside of the IPR process and sets forth an additional condition for maintaining an IPR proceeding upon petition by a third party. Specifically, §315(b), provides that “[a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”

The underlying facts of Wi-Fi One show that in 2010, Telefonaktiebolaget LM Ericsson (“Ericsson”) filed a complaint for infringement of U.S. Patent Nos. 6,772,215 (“215 patent”), 6,466,568 (“568 patent”), and 6,424,625 (“625 patent”) in the United States District Court for the Eastern District of Texas against multiple defendants.  The case progressed to a jury trial, where the jury found that the defendants infringed the asserted claims.  Broadcom Corporation (“Broadcom”), the appellee in Wi-Fi One, was not a defendant in that litigation.  Subsequently, in 2013, Broadcom filed three separate petitions for IPR of the 215, 568, and 625 patents.  When Broadcom filed the IPR petitions, Ericsson still owned the patents, but during the pendency of the IPRs, Ericsson transferred ownership of the three patents to Wi-Fi One, LLC (“Wi-Fi”).

In response to Broadcom’s petitions, Wi-Fi argued that the USPTO was prohibited from instituting review on any of the three petitions. Specifically, Wi-Fi argued that the USPTO lacked authority to institute IPR under §315(b) because Broadcom was in privity with defendants that were served with a complaint in the Eastern District of Texas litigation.  Wi-Fi alleged that the IPR petitions were therefore time-barred under §315(b) because Ericsson, the patents’ previous owner, had already asserted infringement in district court against defendants that were in privity with petitioner Broadcom more than a year prior to the filing of the petitions.

Analyzing the two competing sections of the AIA, the CAFC in Wi-Fi One found no clear and convincing indication in the specific statutory language in the AIA, the specific legislative history of the AIA, or the statutory scheme as a whole demonstrated Congress’s intent to bar judicial review of § 315(b) time-bar determinations.  Citing the U.S. Supreme Court in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131, 2140 (2016), the CAFC noted that the parties had not cited, nor was the Court aware of, any specific legislative history that “clearly and convincingly” indicates congressional intent to bar judicial review of §315(b) time-bar determinations.  The Supreme Court in Cuozzo instructed that the “strong presumption” favoring judicial review “may be overcome by ‘“clear and convincing”’ indications, drawn from ‘specific language,’ ‘specific legislative history,’ and ‘inferences of intent drawn from the statutory scheme as a whole,’ that Congress intended to bar review.”  136 S. Ct. at 2140.  Finding no such clear and convincing indications, the CAFC in Wi-Fi One held that the USPTO’s time-bar determinations under §315(b) are not exempt from judicial review, thereby overruling Achates’s contrary conclusion.  Notably, the CAFC did not decide whether all disputes arising from §§311–14 are final and nonappealable; rather, the court’s holding applies only to the appealability of §315(b) time-bar determinations.

While determinations by the USPTO as to whether to grant IPR are final and nonappealable under Section 314 and constitutionally sound under Cuozzo, the CAFC in Wi-Fi One has carved out an exception as to timeliness under §315(b).  Given the legal standard favoring judicial review of agency actions, and the “clearly and convincingly” burden under Cuozzo and Wi-Fi One, one may expect that future judicial pronouncements will similarly find that other provisions of the AIA concerning IPR proceedings may likewise be appealable.

CAFC: USPTO May Not Refuse Registration of Scandalous Marks

Refusal to Register Vulgar or Lewd Marks Violates Applicant’s First Amendment Rights

Taking a cue from the U.S. Supreme Court, on December 15, 2017, the U.S. Court of Appeals for the Federal Circuit (the “CAFC”) issued a precedential ruling in In re: Erik Brunetti, No. 2015-1109 (“Brunetti”), holding that the United States Patent and Trademark Office (the “USPTO”) may not constitutionally refuse to register a scandalous or immoral trademark under Section 2(a) of the Lanham Trademark Act, 15 U.S.C. §1052(a) (“§2(a)”).  Section 2(a) of the Lanham Act provides that the USPTO may refuse to register a trademark that “[c]onsists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute . . . .”

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Previously, on June 19, 2017, in Matal v. Tam, 137 S.Ct. 1744 (2017) (“Tam”), the Supreme Court unanimously held that trademarks are private, not government, speech, and in two separate opinions authored by Justice Alito and Justice Kennedy, the Court concluded that the bar on the registration of disparaging marks under §2(a) discriminated based on viewpoint.  The Court explained in Tam that the disparagement provision of §2(a) “offends a bedrock First Amendment principle: Speech may not be banned on the ground that it expresses ideas that offend.” Id. at 1751 (Alito, J.); accord id. at 1766 (Kennedy, J.).

In Tam, as I reported in an article published on LinkedIn on June 21, 2017, U.S. Supreme Court: Disparagement Clause of Lanham Act Violates First Amendment, a dance-rock band had sought federal trademark registration of the band’s name, “The Slants” – a derogatory term for persons of Asian descent. Simon Tam, the lead singer of “The Slants,” chose the name for the band – of which all of the members are Asian-Americans – on the basis that by taking that slur as the name of their group, the band will help to “reclaim” the term and drain its denigrating force.  Mr. Tam sought federal registration of “THE SLANTS,” on the Principal Register of the USPTO, but his application was rejected by the examining attorney on the basis that “there is . . . a substantial composite of persons who find the term in the applied-for mark offensive.”  The U.S. Supreme Court disagreed with the USPTO and sided with Mr. Tam, holding that the disparagement clause of the Lanham Act, §2(a), violates the Free Speech Clause of the First Amendment and is therefore unconstitutional.

“There are words and images that we do not wish to be confronted with, not as art, nor in the marketplace. The First Amendment, however, protects private expression, even private expression which is offensive to a substantial composite of the general public. The government has offered no substantial government interest for policing offensive speech in the context of a registration program such as the one at issue in this case.”

In Brunetti, the applicant sought to register the mark FUCT, but the examining attorney at USPTO refused registration on the basis that the applied-for mark comprises immoral or scandalous matter under §2(a).  The Trademark Trial and Appeal Board (the “TTAB”) upheld the ruling, holding that the mark is unregistrable.  Mr. Brunetti appealed.

The CAFC concluded that the applied-for mark is indeed vulgar and therefore scandalous (the USPTO “may prove scandalousness by establishing that a mark is ‘vulgar.’ Vulgar marks are ‘lacking in taste, indelicate, [and] morally crude . . . .’”) (citations omitted; see the Court’s opinion for a full analysis). However, under Tam, the CAFC further concluded that §2(a)’s bar on registering immoral or scandalous marks is an unconstitutional restriction of free speech and reversed the TTAB’s holding that Mr. Brunetti’s mark is unregistrable.

The Court’s conclusion is worth noting for its discourse as to the rights protected under the First Amendment:

The trademark at issue is vulgar. And the government included an appendix in its briefing to the court which contains numerous highly offensive, even shocking, images and words for which individuals have sought trademark registration. Many of the marks rejected under §2(a)’s bar on immoral or scandalous marks, including the marks discussed in this opinion, are lewd, crass, or even disturbing. We find the use of such marks in commerce discomforting, and are not eager to see a proliferation of such marks in the marketplace. There are, however, a cadre of similarly offensive images and words that have secured copyright registration by the government. There are countless songs with vulgar lyrics, blasphemous images, scandalous books and paintings, all of which are protected under federal law. No doubt many works registered with the Copyright Office offend a substantial composite of the general public. There are words and images that we do not wish to be confronted with, not as art, nor in the marketplace. The First Amendment, however, protects private expression, even private expression which is offensive to a substantial composite of the general public. The government has offered no substantial government interest for policing offensive speech in the context of a registration program such as the one at issue in this case.

For decades, the USPTO has refused registration of vulgar words and marks under §2(a). One can only imagine the number of applications that will likely flood the USPTO filing system in the weeks and months to come as parties whose applications incorporating vulgar and lewd terms that were previously rejected will seek vindication under the banner of the First Amendment’s sacrosanct protection of freedom of speech.

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