Lawful Use in Commerce for Wine

By Matthew J. Booth

As I was thinking about celebrating Texas Independence Day (March 2), I saw a story about Trademarks and Texas Wines that caught my eye.

This case was a Concurrent Use proceeding at the U.S. Trademark Trial and Appeal Board for the concurrent use of a trademark between a Texas vineyard and a California vineyard. What intrigued me about this case was that it was both a concurrent use application and the case turned on the concept of “lawful use in commerce.” However, as you read on, you will see that I end up somewhere different.

I am throwing around a lot of trademark terms so first a little trademark background information. A concurrent use trademark registration is a type of registered trademark that splits the country into different geographic areas; one company has rights to the trademark in one area and another company has rights in a different geographic area. In today’s system of commerce, I think it is going to become harder and harder to make a case for a concurrent use trademark where there is no likelihood of confusion between the different owners in the different geographic areas but that is a topic for another time. The term “lawful use in commerce” comes about because the language for use for concurrent use trademarks is slightly different than for a regular federal trademark registration. In the case of a regular federal trademark, the term is “use in commerce”. See 15 USC 1051 (Application for registration), 15 USC 1052 (Trademarks registrable on principal register; concurrent registration), and 15 USC 1127 (Definitions).

To legally sell wine in this country, you need to have a Certificate of Label Approval (“COLA”) so that a label can be applied to the wine bottle. A COLA is obtained from the U.S. Department of the Treasury Alcohol and Tobacco Tax and Trade Bureau. The Texas vineyard failed to obtain a COLA in a timely fashion and the U.S. Trademark Trial and Appeal Board (TTAB) held that that failure meant its use of the mark did not satisfy the “lawful use in commerce” requirement for a concurrent trademark registration. Therefore, the Texas vineyard did not obtain a trademark registration. See Scott Stawski v. John Gregory Lawson, Proceeding No. 94002621 (TTAB 12/21/2018).

From the records in the case it looks like the Texas vineyard had pre-sales activity that actually predated the use date of the California vineyard, but the Texas vineyard did not successfully take the next step in achieving use in commerce to properly establish its trademark rights. In the interim, the California Vineyard applied for and received a federal trademark registration. Instead of adopting a different trademark in light of the prior registration, the Texas Vineyard attempted to perfect a flawed trademark application through the concurrent use trademark process. Unfortunately, the use criteria for concurrent use is slightly different and this is when “lawful use in commerce” rears its ugly head. Because the Texas vineyard did not receive its COLA until after the California vineyard received its federal registration, the TTAB discounted all of the Texas vineyard’s pre-sale activity because all of that activity occurred before the issuance of a COLA so it was not lawful use in commerce.

I started out thinking this was a case about wine and concurrent use, however, what really hit home with me was something I hadn’t expected. To me this case is really a cautionary tale about the importance of trademark professionals and their role in branding and marketing. The Texas vineyard did not engage trademark counsel at any point through this process. Trademark counsel could have sat down with the vineyard at the beginning of the process and devised a strategy for pursuing trademark protection. I think a solid strategy would have been for the vineyard to file an Intent to Use (ITU) trademark application as soon as they picked a trademark so as to preserve their trademark rights. After receiving a Notice of Allowance on the ITU application, an Applicant has up to 36 months to begin using the trademark in commerce (there are caveats here so consult your trademark counsel). This would have given them time to work on a “use in commerce” strategy. This is especially critical for vineyards because the actual production and sale of wine make take up to or even more than 3 years. Options could have included entering into an agreement to sell products made by a contract manufacturer so as to establish sales under the trademark such as using the private label option. The private label option has another vineyard produce the wine and then the applicant company puts its own label on the bottle (which by the way, still needs a COLA so that the wine is now “lawfully in commerce”). Had the Texas vineyard followed the above steps, they could have filed a trademark application before the California vineyard, and received the registration first. If that had happened there would have been no need for the concurrent use proceeding.

Being a business owner myself, I know the necessity of keeping an eye on the bottom line. However, in this case, I think the dollars would have been well spent on a trademark professional because at the end of the day, the Texas vineyard would have had a registered trademark. They could have avoided the lengthy and ultimately unsuccessful legal proceedings and concentrated on their passion, producing wine. The vineyard’s job is wine. A trademark professional’s job is trademarks. No offense to my friends that practice trademark law, but when my wife sends me out for a good bottle of wine to celebrate Texas Independence Day, I am going to rely on a vineyard to have produced that bottle, not a trademark attorney.

When can you sue for copyright infringement?

By Matthew J. Booth

Yet again, we have the dreaded, “it depends,” answer.  In this case, it depends on where you can bring the lawsuit because there have been different decisions in various Federal Circuit Courts of Appeal about the proper timing of filing a copyright infringement lawsuit.

Let’s go back to the beginning of this process.  When someone comes to me and asks me to sue another party for infringement of a copyright, my first question is, “Do you have a copyright registration?” Why? Because the Copyright Act seems to require you to have a registration to file the lawsuit. The relevant statute provides, “… no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title. In any case, however, where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute a civil action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights…” See 17 USC 411(a).

So, we know that we have to file an application for a copyright registration. After the application is filed, we go back to the original question, “When can we file that lawsuit for copyright infringement?” Sadly, the answer is still, “it depends.” At this point the language is slightly confusing about the mechanics and the timing of filing which has lead to the differing court decisions I mentioned earlier. So, unfortunately, the answer to this question depends on what court is going to hear the case. There have been different decisions in the various Federal Circuit Courts of Appeal on whether a plaintiff must have received a copyright registration before filing the lawsuit (the “registration approach”) or rather must only have filed a copyright application (the “application approach”) with the Copyright Office before filing the lawsuit.

The “registration approach” seems to follow a plain language reading of the first part of section 411(a) (“…no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title”). I think the second part of this section muddies that take (“In any case, however, where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute a civil action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights…”).

The “application approach,” on the other hand, views the actual copyright registration as a formality since an application with the Copyright Office results in a registration or a rejection of the application. Either of these decisions allows an applicant to proceed with filing a lawsuit. I personally think a couple of other factors weigh in on the application approach. First, an application for a copyright registration takes months before it’s issued or rejected (with the current time frame running about 6 to 9 months). Second, when a registration issues, the date of registration is the date that the application was filed. And finally (and unlike TV where things are fast and drama filled), a lawsuit for copyright infringement goes to trial at least 1 or 2 years after the lawsuit is filed, which is plenty of time for the Copyright Office to issue the registration or rejection.

The Copyright Office favors the registration approach though I think that has more to do with economics because they offer an expedited registration process for a higher fee ($800 per work versus $55 per work for normal processing).

The good news amidst all this confusion is that the US Supreme Court will finally get to weigh in and, hopefully, resolve this issue in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, No. 17-571. Link. The oral arguments were on 01/08/2019 (yes, Elvis Presley’s birthday!) so the decision should come soon.

If you have hung with me through this entire article, kudos to you for hanging in there through a complicated albeit important issue. Clarification of the timing on these filings will help everyone have a clear checklist for preparing to file copyright infringement lawsuits. As for me, I typically represent the copyright owners in these instances, so I hope the Supreme Court goes with the application approach. This approach will allow the copyright owners to start enforcing their Intellectual Property rights sooner and much closer to when the infringement actually occurred.

Drumroll…..the Supreme Court said an emphatic No! The American Invents Act (AIA) did not change the Patent On-Sale Bar

By Matthew J. Booth

A couple of weeks ago I wrote about whether the America Invents Act (AIA) changed the Patent On-Sale bar. The US Supreme Court answered this question in a short, unanimous opinion by Justice Thomas, with the answer being, no, the AIA did not change the Patent On-Sale bar.

In its review of the case, the Court said that since the term “on sale” was both in the earlier version of the statute and the current version of the statute, Congress intended for the term to have the same construction used by the Supreme Court. The Court further found that the addition of the term “or otherwise available to the public” was not enough of a change to the meaning of “on sale” for the Court to conclude that Congress wanted to alter its meaning.

Seeing such a strong judicial takedown by the Supreme Court on anything is always a bit of a jaw dropper. Clearly, the Court was not impressed with the appeal.

I think an interesting tidbit in this opinion is that the Court looked favorably on the Federal Court’s (the lower court for patent appeals) case law on “secret sales” invalidating patents. While not an express holding, this language seems to indicate that all “secret sales” occurring more than one year prior to the date of the application will invalidate a patent.

The practical tip coming from this case is to always file patent applications before selling or licensing technology.

The case is Helsinn Healthcare SA v. Teva Pharmaceuticals USA Inc., US, No. 17-1229 (01/22/2019).

Link to case.

USPTO issues new Examiner Guidance for Subject-Matter eligibility for software patents

By Matthew J. Booth

The US Patent & Trademark Office (USPTO) recently published an updated Examiner Guidance that applies to the examination of software patent applications (See 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50).  The hope is that these new Guidelines will speed up the application review process and provide more predictability for the patenting of existing and new software inventions.

First a little background, in 2014 the US Supreme Court decided the Alice case.  Alice redefined how software patents were analyzed by asking whether software patents were eligible for patent protection under 35 U.S.C 101. (See Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 217-18 (2014) (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012)). The aftermath of Alice has been, in my opinion, chaos because courts invalidated scores of issued software patents.  Additionally, the USPTO started refusing to grant scores of patents on software related inventions. Since Congress never fixed “the Alice problem,” the courts began determining on a case-by-case basis (really a patent-by-patent basis) whether claims were eligible for patent protection. The USPTO tried to keep current with these cases by issuing guidance to the Examiners for how to examine software patent applications in light of the fallout from Alice but that offered little relief.  I have seen articles over the past couple of years showing the statistics for the rejection rate of software patent applications post-Alice to be over 90% in some USPTO examination groups. This type of technological shutdown in the USPTO was completely unprecedented.

As I have worked on patent applications over the years, the challenge is to write claims for a software invention that will be patentable and enforceable.  I have often relied on the technique of reviewing case law to look for cases with claims that met that criteria and then mimicking them in writing a new application. This was the first and foremost step in drafting the application and then the question of whether the invention was novel or nonobvious over prior patents actually came later.  This often felt like putting the cart before the horse but it is where we found ourselves in the aftermath of Alice.

This is one of the reasons that Patent Owners and Applicants have been calling on the USPTO to address these examination problems and to come up with a process that will get software patent applications granted while maintaining enforceability. The new Director of the USPTO recognized the problem and promised a fix. That fix has finally come to pass with the issuance of new examination Guidelines.

Breaking the new Guidelines down, they are like a check list for Examiners to go through as they are analyzing software claims. For example, if the claims are written in a certain fashion, then they are subject-matter eligible and the analysis proceeds on to whether the claims are novel and nonobvious. The Examiner continues down the checklist looking at the next set of requirements. If the Examiner reaches the conclusion that the claims are not patent eligible, then a second review and approval by the Director of that particular Technology Group is required prior to issuing a rejection.

I have high hopes that this is at last the light at the end  of the long dark post-Alice tunnel.