Eolas Patent, Fig. 2

On February 8, 2012, an eight-member federal jury, comprised of laypersons from the Eastern District of Texas, invalidated two internet patents.  In the suit filed by co-plaintiffs Eolas Technologies (“Eolas”) and the University of California (“UC”), the plaintiffs alleged that co-defendants, including some of the world’s largest internet-based companies, infringed the two patents in question.  This decision has many parties that operate over internet-based technologies and public-domain advocates breathing a sigh of relief.   The invalidation of the two patents mitigates potential future liability of infringement for parties that operate interactive websites.

Eolas, which biologist and company founder Michael Doyle named after the Gaelic term for knowledge,  is a patent holding and licensing company that has successfully obtained royalty payments from large parties operating over the internet, including Microsoft in a famous 2007 case (for an undisclosed settlement amount reported to be in excess of $100 M USD).  In recent years, Eolas relocated its headquarters from Chicago to the small town of Tyler, Texas, which houses the federal courthouse where many patent infringement cases are tried.  Many plaintiffs choose the Eastern District of Texas for patent infringement cases because patent holders believe that the jury pool found in and around Tyler is extremely patentee friendly.  Because of these actions, many commentators and parties participating in internet-based business transactions have characterized Eolas as a “Patent Troll.”

In 2009, Eolas filed a patent infringement suit naming more than 20 large internet and e-commerce companies as defendants, seeking damages in excess of $600M USD.  According to Eolas, as broadly construed, the two patents grant exclusive rights over interactive websites.  Essentially, Eolas contends that any party owning or operating an interactive website, which is any website containing hypermedia elements such as pictures or streaming audio/video, owes royalty payments to it.  Many commentators argue that this assertion has potentially crippling consequences in the e-commerce sector.

Rather than allocating the significant resources required to litigate infringement suits, many of the co-defendants made a business decision to settle with Eolas.  Parties that settled include Apple, Blockbuster, Citigroup, eBay, JP Morgan Chase, Sun Microsystems, and Texas Instruments.  Alternatively, eight parties opted to defend their alleged infringing activities in court.  These eight co-defendants include some of the largest internet companies in the world, including Google, Amazon, Yahoo, and YouTube.

The two patents that were ultimately invalidated are U.S. Patent Numbers 5,838,906 (’906 patent) and 7,599,985 (’985 patent).  Both patents list Mr. Doyle as a co-inventor (along with two other inventors) and UC as the assignee.  The ‘985 patent is a continuation from the ‘906 patent and was issued on the very day in 2009 on which Eolas filed its infringement suit against the 20+ co-defendants.  The ‘906 patent was filed in 1994 and issued in 1998.  The patents were a result of Mr. Doyle’s work as a biologist at UC San Francisco.  At the time, Mr. Doyle and his team of co-inventors were working on methods and systems that allowed doctors to interact with images of embryos over the then emerging World Wide Web.

During the trial, the defendants asserted the defense that the two patents were invalid because the claimed subject matter did not meet the U.S. patent requirement of novelty codified in 35 U.S.C. § 102.  The defendants asserted that the claims in the patents were not novel and that other parties had demonstrated and disclosed the underlying invention before the patent applications were on file at the United States Patent and Trademark Office (“USPTO”).  To meet its burden of proof, the defense put several early web pioneers including Tim Berners-Lee, Pei-Yuan Wei, Scott Silvey, Dave Raggett (creator of the tag), and Netscape cofounder Eric Bina, on the witness stand.  These witnesses testified that as early as 1991, they had conceived of, implemented, and publicly demonstrated early versions of web browsers, such as the collaborative Viola and Mosaic browsers.  The defense also demonstrated that these early web browsers, which pre-dated the work of Mr. Doyle’s team, enabled users to interact with hypermedia over the web.  The defense was also able to demonstrate Doyle’s team heavily relied upon previous contributions from other web pioneers, by introducing source code into evidence.  The source code evidence demonstrated that Doyle’s team contributed only 334 new lines of code and that the other 18,000 lines of code were obtained from other from other sources, such as the early browsers that the defense’s witness had already designed and written.

The jury found that both patents were invalid because the inventions claimed in the patents were not novel.  This finding effectively invalidated all property rights associated with the patents.  Given the large amount of money involved, it is likely that Eolas will appeal the decision to the Federal Circuit, so stay tuned.

Source: Wikipedia

Last month, the European Commission proposed a new directive to enhance Internet privacy rights by regulating the access, collection, and use of personal data online. The proposed regulation would require Internet-based companies to obtain consumers’ express consent before using their personal data, and would also require those companies to delete user data upon request. The new directive would protect information ranging from e-mail and IP addresses to bank records and posts on social networking sites.

Notably, the proposed directive will not exempt American-based companies doing business in the European Union. Rather, the new regulation would require companies that offer services to EU citizens to provide the same protections for personal data handled outside the EU. This could be a potential blow – or at least an administrative hurdle – for global companies like Facebook, which has already been subject to multiple lawsuits involving users’ privacy rights in the United States.

While U.S. legislators may eventually follow the EU’s lead and enact statutes to broaden the right to online privacy, the United States has historically lagged behind Europe when it comes to privacy protection. In fact, the EU Charter of Fundamental Rights expressly guarantees the right to “protection of personal data.” Still, if the new EU regulation passes parliament this year, American Internet giants like Amazon and Facebook may have to revise their privacy policies for European Union consumers. This should at least prompt Congress to consider whether American Internet users deserve the same protections.

Source: http://flavorwire.com/253808/

On January 26, Twitter announced that it will remove Tweets on a country-by-country basis.  Recognizing that freedom of expression is a “human right,” Twitter also acknowledged the “responsibilities” and “limits” that accompany such a right, especially in countries such as France or Germany, where pro-Nazi content is banned by law.  Previously, Twitter could only implement global bans – no matter where the Tweet was posted, no one in the world could see the Tweet if it was taken down.  Now, only persons from the originating country will be blocked, while the rest of the world can still see an offending Tweet.  This country-by-country policy would help Twitter comply with laws that vary by country.  The New York Times observed that the majority of Twitter’s 100 million users live overseas, and that Twitter was confronting the complexities of being both a free speech tool and commercial venture.

Unsurprisingly, the revised policy has sparked considerable controversy, resulting in an immediate “Twitter Blackout” on January 28.  But others have remarked that Twitter is balancing the values behind free speech with necessary compliance with foreign and local laws.  One commentator remarked how Twitter was the only company to fight the United States government over the Wikileaks case, and Twitter informed users when it lost.  The policy has also been praised for its transparency, as users are notified when infringing Tweets are removed, and Twitter will post updates relating to notices on the “Chilling Effects” website, http://chillingeffects.org/twitter.

Questions linger, however, over what circumstances will dictate removal of a Tweet.  In his blog, Professor Eric Goldman focused on how Twitter will remove illegal messages “only if the authorities there make a valid request.”  What is a valid request?  The Times of India theorized that if there is a clear, specific law (such as laws against pro-Nazi propaganda), then Twitter can block Tweets proactively.  But if the laws were general, then Twitter would likely respond to a foreign court order.

There may also be ways to circumvent the policy, such as manually overriding the country code for your IP address.  But ultimately, only time will tell how many Tweets are removed, either proactively or retroactively, and what laws those Tweets have violated.  In this sense, Twitter’s transparency will be essential to analyzing whether the revised policy actually has a deterrent effect on free speech around the world.

On Monday, the Supreme Court released its highly anticipated decision in the Fourth Amendment case Unites States v. Jones. The decision, unanimous in favor of respondent Jones, upheld the D.C. Circuit’s reversal of his drug-related convictions.

Jones came under suspicion of trafficking in narcotics in 2004. He was made a target of an investigation that included attaching a GPS tracking device to the car he frequently used. As implemented by law enforcement, the use of this tracking device fell outside the scope of any warrant police had obtained. The device was used to track the vehicle’s location for 28 days and collected more than 2,000 pages of data.

The Supreme Court agreed with the D.C. Circuit that this investigative behavior, outside the scope of a search warrant, was a violation of Jones’ Fourth Amendment right to be secure in his effects against unreasonable searches. The majority position, written by Justice Antonin Scalia, stated that the Court had “no doubt that such a physical intrusion would have been considered a ‘search’ within the meaning of the Fourth Amendment when it was adopted,” citing to, among other authorities, an English case from 1765.

Justice Samuel Alito concurred, agreeing that use of the GPS device was unconstitutional, but for a different reason. He challenged Justice Scalia’s reasoning, stating: “Ironically, the Court has chosen to decide this case based on 18th-century tort law.” Justice Alito chose instead to focus on whether the investigative methods violated Jones’ reasonable expectation of privacy, a test first enunciated in Justice Harlan’s concurrence in Katz v. United States.

While the Court’s division regarding the proper line of reasoning is interesting in and of itself, something bigger appears to be at work in this decision. For some time, it has been accepted that advances in technology have served to decrease expectations of privacy, and thus Fourth Amendment protections. A recent article from this Journal discussed expectations of privacy in unsecured wireless networks. See also California v. Ciraolo, a Supreme Court case discussing aerial observation of a person’s backyard, and an article by Chief Judge Alex Kozinski of the Ninth Circuit, in which he and his law clerk argue that society’s willingness to allow their behavior to be tracked by private companies has killed the Fourth Amendment.

The Court’s decision in Jones seems to reject this trend. Despite the increasing ease with which law enforcement can track people, and despite the fact that Jones may not have expected privacy in his travels on public roadways, the court nonetheless held that his Fourth Amendment rights had been violated. While some note that the majority decision may have adopted the narrowest possible ruling, it is nonetheless a strong indicator that the High Court may be changing the course of the Fourth Amendment’s protections in an increasingly technological world. In particular, Justice Sotomayor, who joined the majority opinion but wrote a separate concurrence, provided a powerful description of the issue:

More fundamentally, it may be necessary to reconsider the premise that an individual has no reasonable expecta­tion of privacy in information voluntarily disclosed to third parties. This approach is ill suited to the digital age, in which people reveal a great deal of information about themselves to third parties in the course of carrying out mundane tasks. People disclose the phone numbers that they dial or text to their cellular providers; the URLs that they visit and the e-mail addresses with which they correspond to their Internet service providers; and the books, groceries, and medications they purchase to online retailers. Perhaps, as Justice Alito notes, some people may find the “tradeoff” of privacy for convenience “worthwhile,” or come to accept this “diminution of privacy” as “inevitable,” and perhaps not. I for one doubt that people would accept without complaint the warrantless disclosure to the Gov­ernment of a list of every Web site they had visited in the last week, or month, or year. But whatever the societal expectations, they can attain constitutionally protected status only if our Fourth Amendment jurisprudence ceases to treat secrecy as a prerequisite for privacy. I would not assume that all information voluntarily disclosed to some member of the public for a limited purpose is, for that reason alone, disentitled to Fourth Amendment protection. (Internal citations omitted)

It will be interesting to see whether this case becomes a turning point in Fourth Amendment jurisprudence or a mere outlier in a continuing reduction in Americans’ right to privacy.

In December, the U.S. District Court for the District of Oregon declined blogger Crystal Cox the protection of an Oregon reporter shield law and First Amendment case law, holding that both applied only to institutional media. See Obsidian Finance Group v. Cox, 2011 WL 5999334, CV-11-57-HZ (D. Or. Nov. 30, 2011).  Now she might get a second chance to challenge the defamation claim against her. Cox filed a motion for a new trial Jan. 4, this time with the aid of two attorneys, one of them First Amendment scholar Eugene Volokh – a stark contrast to her previous pro se representation.

The Seattle Weekly provides a concise background of the case, but the gist is that Cox was sued for defamation by investment firm Obsidian Finance Group after writing several blog posts that were critical of the firm and its co-founder. Allegations regarding all but one post were dismissed. Cox admitted that the final post at issue was factual in nature, declining her ability to argue it was protected opinion. But she refused to name the source of the information, claiming Oregon’s Shield Law, Or. Rev. Stat. §44.510 et seq., offered her protection. Cox further asserted that the plaintiff failed to prove negligence or actual malice under the Gertz standard for defamation. See Obsidian Finance, 2011 WL 5999334 at *5 (citing Gertz v. Robert Welch, Inc., 418 U.S. 323, 347 (1974)). While Cox claimed to be an investigative journalist, U.S. District Judge Marco A. Hernandez found her not to be a “journalist” within the parameters of the statute, declining to offer her its protection. He also deemed that Gertz, which requires a showing of negligence when a private speaker is defamed, only applied to journalists, not bloggers. Without these defenses, a jury imposed a $2.5 million verdict against her.

The court’s determination that Cox does not fit within the shield law could have significant repercussions for bloggers in Oregon, but Bruce Johnson of Davis Wright Tremaine points out that the specificity in the wording of the Oregon statute was significant in the court’s decision. Johnson, who drafted Washington’s law prior to its legislative approval, notes that Washington’s reporter’s privilege statute would more likely apply to bloggers as well.

The focus of her motion for a new trial, however, is not the application of the Oregon statute, but rather the misapplication of Gertz—Volokh argues that Gertz, and all First Amendment protections, apply equally to everyone, not just institutional media.

Perhaps the most interesting point in the case is Judge Hernandez’s reasoning for determining that Cox failed to establish her status as a journalist. He listed off seven problematic areas, including a lack of evidence of  “(1) any education in journalism; (2) any credentials or proof of any affiliation with any recognized news entity; (3) proof of adherence to journalistic standards such as editing, fact-checking, or disclosures of conflicts of interests; (4) keeping notes of conversations and interviews conducted; (5) mutual understanding of agreement of confidentiality between the defendant and his/her sources; (6) creation of an independent product rather than assembling writings and postings of others; or (7) contacting ‘the other side’ to get both sides of a story. According to this standard, without evidence of this nature, a defendant will not be characterized as ‘media.’” Obsidian Finance, 2011 WL 5999334 at *5.

A new trial might bring further clarification to Gertz, but also to how we define “journalist” in a digital age when nearly everyone might be able to stake a claim to this profession. The Oregon district court might add to the increasing judicial dialogue on legal protections for bloggers.

Last September, the LTA blog discussed a line of Tax Court cases in which taxpayers unsuccessfully attempted to defend themselves from I.R.S. penalties by arguing that their reliance on tax preparation software amounted to reasonable cause and good faith.  After this line of consistent taxpayer defeats, the Tax Court recently ruled in favor of a taxpayer who used tax preparation software to self-prepare his tax return and mistakenly omitted a large amount of trust fund income from his taxable income. See Olsen v. Commissioner. T.C. Summ. Op. 2011-131.  While Olsen is notable because a taxpayer who relied on a tax return preparation program was able to assert a successful defense against I.R.S. penalties, it is especially interesting because the successful taxpayer argument in this case was more nuanced than those in previous cases.

Generally, when a taxpayer substantially understates his tax liability by more than $5,000, the I.R.S. asserts a substantial omission penalty against the taxpayer. I.R.C. §6662(b)(2), I.R.C. §6662(d).  When faced with this substantial omission penalty, a taxpayer may argue that he qualifies for an exception to the penalty because he had a reasonable cause for the understatement and he acted with good faith.  I.R.C. §6664(c).  In determining whether a taxpayer acted with reasonable cause and good faith, a court will look at all the pertinent facts and circumstances. Treas. Reg. § 1.6664-1(b)(1).

In the past, taxpayers who relied on software programs to help them prepare their tax returns had a hard time proving reasonable cause and good faith and the Tax Court upheld the penalty, reasoning that tax return preparation software is only as good as the information a taxpayer puts into it. See e.g. Bunney v. Commissioner, 114 T.C. 259, 267 (2000), Lam v. Commissioner, T.C. Memo 2010-82, Anyika v. Commissioner, T.C. Memo 2011-69.

In Olsen, the taxpayer made a more nuanced argument to explain why he should not be liable for penalties. The regulations establishing the reasonable cause and good faith exception to the substantial omission penalty state, “An isolated computational or transcriptional error generally is not inconsistent with reasonable cause and good faith.” Treas. Reg. §1.6664-4(b). The taxpayer used this regulation to argue that he had exercised reasonable care when he entered his tax information into the software program, but he made an isolated transcriptional error in the process. See Olsen v. Commissioner, Summ. Op. 2011-131.

The court found this argument convincing. The court noted that the most important factor in deciding whether a taxpayer has acted with reasonable cause an in good faith is the extent of the taxpayer’s effort to assess the proper tax liability. See id. Because the taxpayer had correctly reported that he had received a Schedule K-1, but failed in input the amount of income from the Schedule K-1, the court found that the taxpayer’s error was an isolated transcriptional error. Id.

While Olsen seems to open the door for isolated transcriptional error arguments, taxpayers should understand that the Tax Court heard this case under ‘S’ case rules. This means that the published opinion in Olsen v. Commissioner does not have precedential effect. I.R.C. § 7463(b). While the case does not have precedential effect, it does indicate that the isolated transcriptional error argument may be successfully used in future penalty cases addressing the use of tax preparation software.

Recently, Carrier IQ has come under scrutiny for the vast amounts of data it gathers from cell phone users.  A cell phone analytics company, Carrier IQ claims it’s software is installed on over 141 million devices. Apparently, the software is mostly on phones from AT&T, Sprint, and T-Mobile. This software has the ability to gather vast amounts of data from users, including logging keystrokes, user location, and telephone calls. For example, the software can track what websites a person visits, as well as the usernames and passwords used on those sites. Since this information is tracked directly from the phone or mobile device, it does not matter if the device is used over wi-fi networks or cellular networks, or if the website itself is encrypted. The potential for invasion of privacy is enormous.

Carrier IQ has responded, saying “While we look at many aspects of a device’s performance, we are counting and summarizing performance, not recording keystrokes or providing tracking tools.”

As you can imagine, this scrutiny has sparked litigation. Several class-action suits have been filed against Carrier IQ, the cell phone carriers, and the manufactures of the various devices that were sold with the Carrier IQ software. The suits allege violations of the federal Wiretap Act, 18 U.S.C. § 2511. The Wiretap Act prohibits interception of wireless communications without consent of the parties communicating. The Act also authorizes the recovery of civil damages, 18 U.S.C. § 2520. These damages have the potential to be very expensive for Carrier IQ and the other defendants because the act authorizes damages in the amount of $100 per day or $10,000, whichever is greater (Remember this program is installed on 141 million devices!) Alternatively, the statute authorizes the plaintiffs to recover “any profits made by the violator [of the Act] as a result of the violation.” If the plaintiffs’ allegations hold true, this could include all profits Carrier IQ made by selling the software.

This saga is ongoing, and given the potentially large class size, may take years to resolve. Regardless of the conclusion, a costly legal battle is in store for Carrier IQ and the users of it’s software.

The University of Washington School of Law on Monday published the Fall 2011 issue of the Washington Journal of Law, Technology & Arts, the nation’s first student-run electronic law journal focusing on technology, commerce, and artistic innovation. The Washington Journal of Law, Technology & Arts publishes concise legal analysis aimed at practicing attorneys on a quarterly basis. This quarter’s edition includes four articles by current students of the Law School and two articles authored by external contributors.

This issue’s lead article, “Ninth Circuit Unmasks Anonymous Internet Users and Lowers the Bar for Disclosure of Online Speakers,” is written by Articles Editor Mallory Allen. The article surveys the prevalent online defamation cases, summarizing the three primary judicial tests applied by state courts in determining whether a plaintiff may compel disclosure of an online commentator. The article posits that the federal circuit courts likely will adopt the reasoning set forth in the July 2010 Ninth Circuit decision In re Anonymous Online Speakers.

Blog Editor Duncan Stark wrote the second article, “Juror Investigation: Is In-Courtroom Internet Research Going Too Far?” The article discusses the trend toward increased online monitoring of potential jurors and the policy concerns raised by lawyers who conduct online research in the courtroom and in the presence of the potential jurors.

Managing Operations Editor Jeff Patterson wrote the third article, “End User Liability for Software Developed with Trade Secrets.” The article discusses the Uniform Trade Secrets Act (UTSA) and its potential application to violations by end users. The article concludes that the California Appellate Court decision in Silvaco Data Systems v. Intel Corp., holding that an end user was not liable under the act for executing compiled object code, is a proper reading of the Act’s scope.

Managing Articles Editor Aurora Wilson wrote the fourth and final student article, “Discovery of Breathalyzer Source Code in DUI Prosecutions.” The article discusses the routine denial of DUI defendant requests for discovery of breathalyzer source code in state court cases. The majority of courts limit discovery orders to information within the “possession, custody or control” of the prosecution, indicating that absent a contractual agreement granting the state rights to the relevant source code, it is not discoverable.

The Fall 2011 issue includes two Law, Technology & Arts Group Feature articles, a recent addition to the Journal. These pieces, which will be featured at least twice a year, are written by students or others affiliated with the University of Washington School of Law’s Law, Technology & Arts Group, of which this Journal is a part.

German Patent Attorney Prof. Dr. Heinz Goddar authored the first external contribution, “Cross-Border Contributory Patent Infringement in Germany.” This article examines recent German court decisions analyzing Section 10 of the German Patent Act (“PatG”), which governs cases of contributory patent infringement, focusing in particular on the implications of recent decisions on potential cross-border infringement. The article offers recommendations on how judicial scrutiny of contributory infringement in Germany may be streamlined in light of potential evidentiary problems and concludes with a case study of how German courts might analyze a situation like that faced by the United States Court of Appeals for the Federal Circuit in AT&T v. Microsoft.

Japanese intellectual property Attorney Naoya Isoda wrote the final article of the issue, “Copyright Infringement Liability of Placeshifting Services in the United States and Japan.” The article discusses placeshifting, a service that enables customers to enjoy television programs from their home countries even if they are in foreign countries. Placeshifting works by receiving/recording a television program in one country and then transmitting the digital data to customers everywhere in the world via the Internet upon each customer’s request. Because placeshifting may be involved with recording and/or transmitting copyrighted content, service providers must face the question whether they may be liable for copyright infringement. In the United States, the Second Circuit in Cartoon Network v. CSC Holdings decided the legality of placeshifting by requiring a “volition element” for direct infringement. In Japan, however, court decisions have varied. Most of the courts have applied an overall consideration standard such as the “Karaoke rule.” As a result, there remains large uncertainty about the state of the law in Japan. The article introduces the legal basis and judicial decisions for placeshifting both in the United States and Japan and suggests introducing the volition requirement as one possible solution for the uncertainty in Japan.

The Journal accepts outside submissions from students, law professors, and practicing attorneys. For more information about the Washington Journal of Law, Technology & Arts please download the entire Fall 2011 issue of the Washington Journal of Law, Technology & Arts or visit www.law.washington.edu/wjlta for individual articles.

Perhaps you have seen the TV commercials for fast-food restaurant chain Chick-fil-A during Saturday college football games: apparently semi-illiterate cows unveil banners urging consumers to “Eat Mor Chikin”[®].  A Vermont artist’s spoof of the restaurant’s trademarked phrase instructs people to munch on more of a leafier substance—kale. Bo Muller-Moore has printed the phrase “Eat More Kale” on merchandise such as apparel and bumper stickers (which have found their way onto Washington State cars), reportedly since 2000. He claims the phrase is meant to promote local agriculture (kale is a type of cabbage). His recent attempt to register “Eat More Kale” with the United States Patent & Trademark Office (USPTO), however, irked Georgia-based Chick-fil-A, which sent him a cease-and-desist letter claiming the marks are confusingly similar, according to press accounts.

Chick-fil-A appears to have an aggressive trademark-enforcement strategy. The letter reportedly alludes to the company’s many successful efforts to rebuff cooptation of the phrase (evidenced by the company’s activity before the Trademark Trial & Appeal Board (TTAB)). Muller-Moore apparently has enlisted the assistance of an IP professor to resist Chick-fil-A’s pressure to cease use of the similar mark. But is the law on Muller-Moore’s side? His case raises two interesting questions: (1) whether Muller-Moore can register the mark, and (2) whether Chick-fil-A can prevent him from using the phrase in commerce on products. Much of the resulting legal analysis probably turns on the likelihood that consumers would confuse the source of goods bearing the respective phrases. This kale conundrum also implicates the broader issue of parodies on products vis-à-vis trademark law.

Registration

Parodies of trademarked phrases are nothing new. Look no further than the countless variations on the California Milk Processor Board’s registered mark “Got Milk?” (e.g., “Got Red?,” “Got Nerve?”, “Got Snore?”, “Got Popcorn?”) to see that it is possible to register marks that appear to capitalize on recognition of another’s trademark. Chick-fil-A first registered the “Eat Mor Chikin’” mark in 1996, several years before Muller-Moore reportedly began printing T-shirts. Assuming an examining attorney approves publication of “Eat More Kale,” Chick-fil-A could oppose registration based on § 2(d) of the Lanham Act, 15 U.S.C. § 1052(d), which prohibits registration of marks likely, “when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive.” To decide whether a mark is too confusing to allow registration, the USPTO takes into account the factors from In re E. I. DuPont DeNemours & Co., 476 F.2d 1357 (Fed. Cir. 1973), which include: the similarity of the marks in appearance, sound, and connotation; the nature of the goods or services with which the marks are used; the fame of the prior mark; and the extent of potential confusion. Muller-Moore would, of course, argue the potential for consumers attributing “Eat More Kale” merchandise to Chick-fil-A is small.

Suit to Enjoin Use

Even absent attempts by Muller-Moore to register the mark, Chick-fil-A could seek to enjoin use of the “Eat More Kale” phrase by arguing a likelihood of confusion. (The company also could claim dilution under 15 U.S.C. § 1125(c), if it can prove that the mark is “famous.”) In response, Muller-Moore might argue that the First Amendment protects his expression through parody. Which test a court would employ to judge the merits of Chick-fil-A’s consumer-confusion claims and Muller-Moore’s First Amendment arguments depends on the jurisdiction.

Note that Chick-fil-A, if claiming federal-question jurisdiction, could potentially file suit in a variety of district courts where a “substantial part” of the events giving rise to the claim (i.e. consumer confusion) occurred for purposes of venue. See 28 U.S.C. § 1391; Cottman Transmission Sys., Inc. v. Martino, 36 F.3d 291, 295 (3d Cir. 1994) (the focus of venue inquiry in a Lanham Act infringement case is ‘the location where the unauthorized passing off takes place-whether that occurs solely within one district or in many”). See generally 6 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 32:63 (4th ed.). Thus, Chick-fil-A might have the ability to choose a more favorable jurisdiction, as discussed below.

Federal courts apply a variety of multi-factor tests, including or similar to the test in In re E. I. DuPont DeNemours, supra, to assess likelihood of confusion. The strength of the earlier-registered mark generally plays a key role in whether courts hold that people would likely be confused about the source of the products bearing the marks. However, in the parody context, some federal courts “reason against very strong marks, especially famous ones; they reason that the public is likely to notice minor differences because the public knows the famous mark well; the humorous or parodic nature of the junior mark supports the inference that the public will recognize the differences.” 3A Louis Altman and Malla Pollack, Callmann on Unfair Competition, Trademarks & Monopolies§ 21:78 (4th ed.). According to one court, “when unauthorized use of another’s mark is part of a communicative message and not a source identifier, the First Amendment is implicated in opposition to the trademark right.” Yankee Pub. Inc. v. News Am. Pub. Inc., 809 F. Supp. 267, 276 (S.D.N.Y. 1992).

The “Eat More Kale” merchandise, rather than identifying Muller-Moore’s brand, seems to serve up such a “communicative message” about food choices, even though it is a product. See Ayres v. City of Chicago, 125 F.3d 1010, 1014 (7th Cir. 1997) (T-shirts “that the plaintiff sells carry an extensive written message of social advocacy” and “there is no question that the T-shirts are a medium of expression prima facie protected by the free-speech clause of the First Amendment and they do not lose their protection by being sold rather than given away.”). See also 6 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 31:152 (4th ed.).

However, even assuming the “Eat More Kale” merchandise, such as T-shirts, may be entitled to First Amendment protection, which test a federal court would apply to Muller-Moore’s potential First Amendment defense to trademark infringement would depend on the jurisdiction. Courts have applied at least three tests to expressive works in the trademark context: “(1) the ‘likelihood of confusion’ test [Tenth Circuit]; (b) the ‘alternative avenues’ test [Eighth Circuit]; and (c) the Rogers v. Grimaldi test [Second, Third, Fifth, Sixth, and Ninth circuits].” Parks v. LaFace Records, 329 F.3d 437, 447 (2003). The likelihood of confusion test assesses the First Amendment claim under the normal multi-factor test, whereas the alternative avenues test used by the Eighth Circuit (in which Chick-fil-A is headquartered) puts a heavier burden on defendants by requiring a showing that alternative means of expressing the artist’s message were not available. Under the Second Circuit’s test in Rogers v. Grimaldi, 875 F.2d 994, 999 (1989), the court has:

construed the Lanham [Trademark] Act narrowly when the unauthorized use of the trademark is for the purpose of a communicative message, rather than identification of product origin. Thus, where the unauthorized use of a trademark is for expressive purposes of comedy, parody, allusion, criticism, news reporting, and commentary, the law requires a balancing of the rights of the trademark owner against the interests of free speech.

809 F. Supp. at 276 (citing Rogers v. Grimaldi, 875 F.2d at 998) (emphasis added). According to the Rogers court, “the balance will normally not support application of the [Lanham] Act unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work.” 875 F.2d at 999.

Muller-Moore could argue (probably persuasively) that there is “artistic relevance” to a parody of Chick-fil-A’s message because the restaurant chain represents a national, as opposed to local, food operation. As for the second prong of the Rogers test, confusion again enters the equation. The “finding of likelihood of confusion must be particularly compelling to outweigh the First Amendment interest recognized in Rogers.” Twin Peaks Productions, Inc. v. Publications Intern., Ltd., 996 F.2d 1366, 1370 (2d Cir. 1993). In this case, few people familiar with the Chick-fil-A brand (think fried chicken) are likely to mistake a bumper sticker telling them to “Eat More Kale” to be a message from Chick-fil-A promoting this leafy vegetable. The likelihood of confusion seems low. The ease of making out a free-speech defense clearly depends on the test employed; it would probably be more difficult for Muller-Moore to prevail in the Eighth Circuit than in the Second Circuit.

A Note on Parodies

A parody has been defined as “a ‘simple form of entertainment conveyed by juxtaposing the irreverent representation of the trademark with the idealized image created by the mark’s owner.’” Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 464 F. Supp. 2d 495, 499 (E.D. Va. 2006), aff’d on other grounds, 507 F.3d 252 (4th Cir. 2007) (citing People for Ethical Treatment of Animals, 263 F.3d 359, 366 (4th Cir. 2001)). To be a parody, a mark “must ‘convey two simultaneous—and contradictory—messages: that it is the original, but also that it is not the original and is instead a parody.’” People for Ethical Treatment of Animals, 263 F.3d at 366 (citing Cliffs Notes, Inc. v. Bantam Doubleday Dell Publ. Group, Inc., 886 F.2d 490, 494 (2d Cir.1989)).

In People for Ethical Treatment of Animals, for example, the animal-rights organization sued to stop the defendant’s use of the domain name “peta.org.” The court stated that there was “no suggestion of a parody” because the “domain name peta.org simply copies PETA’s Mark, conveying the message that it is related to PETA” without conveying the “second, contradictory message needed to establish a parody—a message that the domain name is not related to PETA, but that it is a parody of PETA.” 263 F.3d at 366. Here, in contrast, the “Eat More Kale” phrase arguably does have some expressive connotation.

Conclusion

Regardless of the merits of Chick-fil-A’s claim, it could be a costly legal fight for Muller-Moore to register and/or stave off any court challenges to use of the “Eat More Kale” phrase. Chick-fil-A’s enforcement strategy has worked in the past. For example, Chick-fil-A opposed registration of the mark “Eat More Chocolate!” After proceedings before the TTAB, the applicant withdrew its registration. In that case, Chick-fil-A pointed out that it sells desserts containing chocolate—perhaps a stronger case for barring registration than exists here (even though the company sells salads). Unless Chick-fil-A adds some kale to the menu, that is.

For the second time in less than two years, the Supreme Court will decide on the patent eligibility of method claims.  In June of this year, the Court granted Mayo’s petition for certiorari in Prometheus Laboratories, Inc. v. Mayo Collaborative Services.  Oral arguments before the Court are scheduled for December 7, 2011.  The case involves the patent eligibility of personalized medicine (PM) technologies.  PM refers to the customization of health care for an individual patient.  PM can take into account a patient’s genetics and other individualized information to optimize therapeutic and preventive care in accordance with the patient’s specific biology and medical conditions.  Examples of PM include genetic screening, engineering of a drug’s molecular structure, or dosage as a function of patient biomarkers.  Given the significant current and future potential benefits of PM, as well as the large capital requirements for medical research, the Court’s ultimate holding will have far-reaching consequences.

The case involves method claims in two issued patents: U.S. Patent No. 6,355,623 and U.S. Patent No. 6,680,302.  Prometheus holds exclusive licenses for both patents.  The patents cover methods for determining optimal dosage, individualized to a particular patient, of a drug used to treat stomach disease.  Claim 1 in the ‘623 patent recites a method for optimizing therapeutic efficacy for treatment comprising (a) administering a drug to a subject and (b) determining levels of metabolites present in the subject.  The determined levels of metabolites correlate with the drug’s toxicity to the subject.  The claim further recites, using a wherein clause, to either increase or decrease the amount of administered drug as a function of the determined levels of metabolites.  Other claims in the patent cover similar, albeit different, methods.   

In 2008, a federal district court found that the claims covered ineligible subject matter under 35 U.S.C. §101.  In 2010, the Court of Appeals for the Federal Circuit (CAFC) reversed the lower court’s findings and reinstated the method claims.  Mayo successfully petitioned the Supreme Court after the CAFC ruling.

Mayo argues that the method claims extend protection to natural phenomena.  Although not prohibited by statute, federal courts have consistently denied patent protection to natural phenomena and laws of nature.  Mayo claims that the correlation between metabolite level and toxicity is a natural phenomenon, and that the issued method claims grant protection to this correlation.

Specific applications of natural phenomena or laws of nature are proper patent subject matter.  Thus, one who invents a useful, novel, and non-obvious application of a natural phenomenon may be entitled to a patent.  However, federal courts have placed limits on the patentability of an application of natural phenomena.  For instance, one is not entitled to a patent if the claimed application of natural phenomenon preempts all other uses of the natural phenomenon.  In addition, one is not entitled to a patent if the claimed application of natural phenomenon involves merely mental steps.

Mayo argues that the “administering” and “determining” steps of the method claims are merely necessary data-gathering steps and that the claims, as recited, preempt all uses of the naturally occurring correlation.  In support of this argument, Mayo claims that doctors will not be able to employ their patient’s unique biological information when giving care without risking patent infringement.  Mayo also argues that the wherein clauses in the methods are purely mental steps.

The CAFC did not agree with Mayo’s arguments.  Instead, the court found the claims to cover only a specific application of the correlation through the recitation of the “administering” and “determining” steps.  The court held that the claims do not preempt all uses of the correlation.  While applying Bilski’s “machine or transformation” test, the court stated that the “administering” and “determining” steps were not merely data gathering steps, but were “transformative” in nature because the steps were part of a treatment regime.  The CAFC did acknowledge that the wherein clauses were mental steps, but found that other limitations of the claims were not mental steps.  The court’s analysis indicated that the existence of mental steps in conjunction with steps that are not merely mental is not a per se bar to patentability.

The Supreme Court’s ultimate ruling will have far-reaching consequences beyond genetic testing technologies and other applications of PM.  Many health care providers, medical researchers, technologists, investors, and patent practitioners are closely monitoring developments in the case.  Most hope that the Court will provide further guidance on issues of patentable subject matter and further clarification of the “machine or transformation” test.