OASIS

                        ORGANIZATION OF ADVOCATES SPECIALISING IN INTERNATIONAL SERVICES

 

 

U.S.A. - Recent Intellectual Property Cases of Interest

Mario Aieta, Satterlee Stephens Burke & Burke

A.   Constitutional Law

Arizona SB1070 – Immigration

On April 23, 2010, the State of Arizona passed the “Support Our Law Enforcement and Safe Neighborhoods Act,” SB1070, which has received enormous public attention as the “toughest anti-immigration state law in the United States.”   The new Arizona law requires state officials to inquire into the immigration status of any person “where reasonable suspicion exists that the person is an alien who is unlawfully present in the United States” whenever a law enforcement official or agency of the State of Arizona or any political subdivision of the State (county, city, town etc.) makes “any lawful contact” with that person. The statute prohibits those same officials and political subdivisions from adopting any policy that limits or restricts the enforcement of federal immigration laws in any way.  The law also provides that a person is guilty of the crime of trespassing if the person is both “present on any public or private land” in Arizona and in violation of federal immigration statutes (which, for example, require legal aliens to carry registration documents with them while traveling in the United States), thereby making all undocumented or illegal aliens in Arizona guilty of the crime of trespassing (for this reason some commentators have derided the law for criminalizing “breathing while brown” in Arizona). To ensure that local officials enforce the law, the law creates a private right of action allowing anyone to commence a law suit against any public official “that adopts or implements a policy that limits or restricts the enforcement of federal immigration laws to less than the full extent permitted by federal law” and provides that the plaintiff in such an action, if he succeeds in showing that the official enforced federal immigration laws “to less than the full extent permitted by federal law,” shall recover court costs and attorney fees. The Orwellian possibilities of the new law are certainly evident in those sections that prohibit the solicitation of day labor by undocumented or illegal aliens.  The law provides that “it is unlawful for a person who is unlawfully present in the United States and who is an unauthorized alien to knowingly apply for work, solicit work in a public place or perform work as an employee or independent contractor in this state. . . . "Solicit" means verbal or nonverbal communication by a gesture or a nod that would indicate to a reasonable person that a person is willing to be employed.” (ARS 13-2928)  The statute does not attempt to define what is a “gesture or a nod that would indicate to a reasonable person that a person is willing to be employed.” Anti-solicitation provisions of this type have been held unconstitutional under the First Amendment in the past. Town of Herndon v. Thomas, MI-2007-644 (Va. Cir. Ct. Aug. 29, 2007); Comite de Jornaleros de Redondo Beach v. City of Redondo Beach, 475 F. Supp. 2d 952, 962 (C.D. Cal. 2006).

Three cases have already been filed in Arizona courts seeking to have the new law declared unconstitutional.  Generally, immigration law is the exclusive provenance of the federal government.  The federal Immigration Reform and Control Act of 1986, for example, expressly preempts “any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ, or recruit . . . unauthorized aliens.” Arizona’s new law appears to be in conflict with the federal government’s exclusive power to regulate immigration.  The law also may violate the First Amendment, the Fourteenth Amendment, and the Supremacy Clause. 

 

B.   Patents

Patentability

Are isolated human genes and the comparison of their sequences patentable? In Association for Molecular Pathology v United States Patent and Trademark Office,  1:09-cv-04515-RWS (S.D.N.Y. March 29, 2010), the United States District Court for the Southern District of New York held that fifteen claims contained in seven patents relating to certain human genes (Breast Cancer Susceptibility Genes 1 and 2) were invalid because the claims covered products of nature, laws of nature and/or natural phenomena, and abstract ideas or basic human knowledge or thought.  The patent claims at issues were directed to (1) isolated DNA containing all or portions of the gene sequences for Breast Cancer Susceptibility Genes 1 and 2 and (2) methods for "comparing" or "analyzing" those gene sequences to identify the presence of mutations correlating with a predisposition to breast or ovarian cancer.  The plaintiffs included persons with breast cancer who had received inconclusive diagnostic results from the laboratory that held the patents at issue; because of the laboratory’s exclusive right to isolate Breast Cancer Susceptibility Genes 1 and 2 and to compare or analyze those gene sequences, plaintiffs could not obtain diagnostic services or second opinions from any other laboratory.  The district court, relying on “long recognized principles of molecular biology and genetics,” recoginzed that “DNA represents the physical embodiment of biological information, distinct in its essential characteristics from any other chemical found in nature.”  The court concluded that “DNA's existence in an "isolated" form alters neither this fundamental quality of DNA as it exists in the body nor the information it encodes. Therefore, the patents at issue directed to "isolated DNA" containing sequences found in nature are unsustainable as a matter of law and are deemed unpatentable subject matter under 35 U.S.C. § 101. Similarly, because the claimed comparisons of DNA sequences are abstract mental processes, they also constitute unpatentable subject matter under § 101.”

Patent Marking

In Forest Group, Inc. v Bon Tool Company (Fed. Cir., December 28, 2009), the Federal Circuit (which hears all appeals on patent issues decided by the federal trial courts), interpreted the false marking provision of the U.S. patent law to require a fine “per article” that is falsely marked, rather than one fine for each “decision” to mark articles that are not covered by the referenced patent.  In Forest, a seller of spring-loaded parallelogram stilts of the type commonly used in construction had marked its own products with the patent number for the patent it believed applied to those products.  The seller, who owned the patent at issue, brought an infringement claim based on that patent and the district court ultimately construed the patent in a manner that did not cover the seller’s own product.  After the district court’s determination that the product sold by the seller was not covered by its own patent, the seller placed an order with its manufacturer for additional stilts marked with the patent number.  The district court imposed a single fine on the seller for falsely marking each of the stilts in that order.  The Federal Circuit reversed, holding that the statute required imposition of the fine for each article falsely marked.  The seller argued “that interpreting the fine of § 292 to apply on a per article basis would encourage “a new cottage industry” of false marking litigation by plaintiffs who have not suffered any direct harm.”  The court agreed, but noted that this “is what the clear language of the statute allows.” 

 

C.   Trademarks

Tiffany v eBay

Retail store Tiffany sued eBay in 2004, claiming that over 73% of the purported Tiffany jewelry products sold on eBay were counterfeit.  Tiffany claimed that eBay was liable for trademark infringement because eBay used Tiffany’s trademark, TIFFANY. Tiffany claimed that eBay was liable for trademark dilution because the use of the TIFFANY mark in connection with such a large number of products that were not, in fact, Tiffany products, diluted the distinctiveness of the TIFFANY mark.  And Tiffany claimed that because eBay advertised the sale of Tiffany goods on its website, and because many of those goods were in fact counterfeit, eBay should be liable for false advertising.  The trial court found in favor of eBay on all counts after a full trial in 2008.  Last month the Second Circuit Court of Appeals affirmed on the trademark infringement and trademark dilution claims, and reversed on the false advertising claim, sending the case back to the trial court to determine whether or not eBay’s advertisements were “likely to mislead or confuse consumers.”  Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93 (2nd Cir. 2010).  The court rejected Tiffany’s claim of direct trademark infringement because eBay used Tiffany's mark “to describe accurately the genuine Tiffany goods offered for sale on its website. And none of eBay's uses of the mark suggested that Tiffany affiliated itself with eBay or endorsed the sale of its products through eBay's website” and noted that eBay’s knowledge that counterfeit goods bearing the TIFFANY mark were sold on its website was not a basis for a claim of direct infringement against eBay because “eBay promptly removed all listings that Tiffany challenged as counterfeit and took affirmative steps to identify and remove illegitimate Tiffany goods.”  Tiffany argued that eBay was liable for contributory trademark infringement because eBay “continued to supply its services to the sellers of counterfeit Tiffany goods while knowing or having reason to know that such sellers were infringing Tiffany's mark.”  The Second Circuit rejected this claim, holding that to be liable for contributory trademark infringement a service provider like eBay “must have more than a general knowledge or reason to know that its service is being used to sell counterfeit goods. Some contemporary knowledge of which particular listings are infringing or will infringe in the future is necessary.”  The Second Circuit rejected Tiffany’s claim for trademark dilution because claims for dilution under both federal and state law, either by blurring or by tarnishment, require an association between the famous mark and another mark or trade name.  Since eBay never used the TIFFANY mark to create an association between its own products or services and those of Tiffany, “there is no second mark or product at issue here to blur with or to tarnish” TIFFANY.  Finally, while the Second Circuit agreed with the trial court’s determination that advertisements by eBay stating that Tiffany products were available on eBay’s website were not literally false, it reversed and remanded to the trail court for determination of whether or not eBay’s advertisements tend to mislead or confuse consumers, noting that “the law prohibits an advertisement that implies that all of the goods offered on a defendant's website are genuine when in fact, as here, a sizeable proportion of them are not.”

 

D.   Copyright

The Google Book Settlement

Last year we reported on the Google Book Settlement, which at that time was scheduled for a final “fairness hearing” on Oct. 7, 2009.  The final fairness hearing was delayed until February 18, 2010 and the parties amended the settlement agreement in November 2009 to limit the scope of the settlement agreement to books that are registered with the U.S. Copyright Office or that are published in the U.K., Canada or Australia.  The trial court judge in charge of the case has not yet issued his decision on the settlement.

 

E.   Internet

“Click through” agreements continue to receive wider acceptance in U.S. courts.  In Appliance Zone, LLC v. Nextag, Inc., 4:09-cv-00089-SEB-WGH (S.D. Ind. 2009), a district court in Indiana dismissed a claim brought by an Indiana company against a California website provider based on a forum selection clause contained in an online website user agreement because a 19 year old employee of the Indiana company clicked on the “I accept the terms of service” box on the website before using the website provider’s services.  In Scherillo v Dun & Bradstreet, 2:10-cv-00829-KSH-PS (E.D.N.Y. Feb. 17, 2010), the district court enforced a forum selection clause contained in a click through agreement even though plaintiff claimed that he never clicked on the “I accept the terms of service” box on the defendant’s website and would have had to scroll through the text of the agreement to get to the provision containing the forum selection clause. The court found plaintiff’s claim that he did not click on the acceptance box to be less than credible.  “To accept plaintiff’s theory, the Court would have to find that plaintiff hit two keys accidentally—the space bar and the return key—and that he was then involuntarily and unexpectedly sent to the next screen where he nonetheless proceeded to enter his credit card information and complete the purchase of the report.” The court also held that the forum selection clause was “reasonably communicated” to plaintiff via the click through agreement even though it was not visible unless plaintiff scrolled through the terms of the agreement, which was not required before clicking on the acceptance box.

 

F.   Health Care

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act, which provides for many substantial changes to business of health care in the United States, including:

Expands health insurance coverage to 32 million individuals who are currently uninsured;

Expands Medicaid coverage to anyone with an income up to 133 percent of the federal poverty level (or about $29,327 for a family of four (4));

Establishes state-based insurance exchanges;

Imposes financial penalties for employers (with 50 or more employees) who do not offer insurance and for those individuals who do not acquire insurance coverage (with exemptions for low-income individuals);

Prohibits insurance companies from denying coverage to anyone with preexisting conditions by 2014;

Allows for dependents to stay on their parents’ health-care plans through the age of 26;

Increases Medicare payroll taxes by 0.9 percent (total tax to 2.35 percent) and imposes a 3.8 percent tax on interest, dividends, capital gains and other investment income for individuals making more than $200,000 a year and families making more than $250,000;

Taxes high-end healthcare plans (“Cadillac Plans”) by 40 percent by 2018;

Increases Medicaid payments to primary care physicians in 2013 to be equal to Medicare payments;

Places restrictions on physician ownership of hospitals;

Requires disclosure of physician ownership or investment interest in a pharmaceutical or device manufacturer or nursing home;

Increases enforcement activities on healthcare fraud and abuse; and

Creates a series of projects designed to test the efficacy of certain quality improvement measures by large health care organizations.

 

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