Patent Docs

Food Marketing Institute v. Argus Leader Media (2019)

July 4, 2019

By Joshua Rich —

Although patentees generally do not have great concerns about the Freedom of Information Act (FOIA) because of the U.S. Patent and Trademark Office's secrecy requirements, they may lose control over their information under FOIA if they submit it to other parts of the government. Prior to the Food Marketing Institute case, companies faced the possibility that they could lose their trade secrets if they sought government contracts if they could not show that disclosure would cause them substantial competitive harm. Now, those companies need only show that they — and the government — intended to keep the information secret in order to prevent disclosure under FOIA.

In the Food Marketing Institute case, a South Dakota newspaper was working on an article on food stamp fraud; to support the article, it submitted a FOIA request to get store-level data for every store in America that accepted Supplemental Nutrition Assistance Program (SNAP) benefits. FOIA generally requires Federal agencies to disclose public records, except as provided by statute. One of the exceptions is Exemption 4, which shields from disclosure "trade secrets and commercial and financial information obtained from a person and privileged or confidential."[1] The Supreme Court was asked to determine the scope of Exemption 4. In a 6-3 decision, it held that information would be exempted from disclosure if it was private or secret and the government had provided some assurance that the information would remain secret — it did not require any showing of competitive harm that would come to the person from whom the information was obtained if the information was disclosed.

In 2011, the Argus Leader newspaper of Sioux Falls, South Dakota learned of concerns of "retailer trafficking" of SNAP benefits, where retailers exchange SNAP benefits for cash. Under SNAP, program participants usually use electronic benefit cards to buy food from eligible retailers and the sales information is electronically transferred to a state electronic benefits processor who approves or denies the transaction. The state processor then reports the information to the U.S. Department of Agriculture (which administers the SNAP program for the federal government). The reporter working on the story therefore filed a FOIA request with the USDA asking for information including store-level information on SNAP benefits for every store in the United States (about 320,000 stores) over a five year period.

The USDA refused to produce the store-level information on grounds including Exemption 4. Eventually, the District Court applied the test required by the U.S. Court of Appeals for the Eighth Circuit, which had adopted the D.C. Circuit's test from National Parks & Conservation Assn. v. Morton, 498 F.2d 765 (D.C. Cir. 1974). Specifically, the District Court required to the USDA to show that the information was not only secret, but also "likely . . . to cause substantial harm to the competitive position of the person from whom the information was obtained."[2] The District Court held a trial where witnesses for the USDA testified that retailers closely guard their store-level data and that disclosure would harm their stores' competitive positions by allowing competitors to model consumer behavior better. While the District Court found that created a prospective risk of harm to the stores, it found the risk was only incremental, not "substantial." Thus, it ordered the information to be turned over.

The USDA alerted the retailers who take part in the SNAP program that it would not appeal, and the Food Marketing Institute stepped in to try to prevent the documents from being disclosed. In the meantime, the USDA assured them (and the District Court) that it would not turn the documents over until the appeals were exhausted. However, the U.S. Court of Appeals for the Eighth Circuit affirmed the District Court's decision finding that the potential harm — while real — would not be substantial, rejecting any argument that confidentiality alone would be sufficient to satisfy Exemption 4, and reaffirming the application of the National Parks test in the Eighth Circuit.

When the case reached the Supreme Court, it first considered whether the National Parks test should apply at all. That is, the question presented was whether "the statutory term 'confidential' in FOIA Exemption 4 [should] bear its ordinary meaning, thus requiring the Government to withhold all 'commercial or financial information' that is confidentially held and not publicly disseminated-regardless of whether a party establishes substantial competitive harm from disclosure." Ultimately, the Supreme Court's answer was yes.

Justice Gorsuch, writing for the six member majority, started his consideration of the scope of Exemption 4 with the language of the statute itself. The meaning of the key statutory term, "confidential," was the same when FOIA was enacted in 1966 as it is today — "private" or "secret." Contemporary dictionaries suggested that confidentiality might therefore require two conditions. First, it must customarily be kept private (or at least closely held) by the person imparting it. Second, the person receiving the information must customarily provide an assurance that it will stay secret. Certainly, the first condition must be satisfied for information to be considered "confidential," it is less clear that the second must also be satisfied.

Here, Justice Gorscuch was untroubled by determining whether confidentiality under Exemption 4 would require both conditions: the requested data unquestionably did. The Food Marketing Institute had intervened specifically because the individual stores wanted to keep the information secret, and customarily did. And the USDA had promised the stores that it would keep the information secret, unless it was ordered not to do so. Thus, the majority found that the information need not be turned over, regardless of what the exact test under Exemption 4 would be.

Despite the clarity of the dictionary definitions, the majority felt the need to address the National Parks test. It found no basis for the requirement that a disclosure result in "substantial competitive harm" in the statutory language, early case law, or any "other usual source." The D.C. Circuit had cited legislative history for FOIA in support of the test, but Justice Gorsuch referred to that as a "selective tour through the legislative history." But the plain language of the statute itself had been sufficient to allow interpretation of Exemption 4. And there was no good reason for applying the National Parks test when the information was required to be provided to the government, but not when the information was provided voluntarily (as the D.C. Circuit had subsequently found in Critical Mass Energy Project v. NRC, 975 F.2d 871 (D.C. Cir. 1992)). Thus, the majority rejected the D.C. Circuit's National Parks decision in favor of the plain language of Exemption 4.

Justice Breyer, joined by Justices Ginsburg and Sotomayor, dissented from the decision based primarily on both the uniformity of decisions below and policy issues. While the courts below had adopted different tests for Exemption 4, they had all required some showing of competitive harm for the exemption to apply. Thus, the majority's decision allowed Exemption 4 to shield far more than any circuit would have otherwise. And that was a substantial concern for the dissenting Justices: that Exemption 4 might swallow FOIA whole. That is, the goal of FOIA has always been disclosure of information to increase the transparency of government (at least as balanced against certain specific, narrow policy exceptions). But if the questions are just whether the parties providing information and the government agency working with those parties — which is often subject to "capture" by the parties — want to keep the information secret, they may be able to shield it from disclosure under FOIA. Thus, the dissenting Justices fear that the decision will substantially narrow the effect of FOIA.

The Food Marketing Institute case reflects a sea change in the application of FOIA to confidential information. Previously, even trade secrets (as defined by the traditional definition under the Uniform Trade Secrets Act or Defend Trade Secrets Act) could be subject to disclosure under FOIA if the trade secret owner cannot prove that the disclosure would cause it substantial competitive harm. Now, Exemption 4 covers not only traditional trade secrets, but also merely confidential business information that has been shared with the government under an expectation of secrecy. Thus, in many cases, information that would have been disclosed under FOIA can now be withheld under Exemption 4.

Food Marketing Institute v. Argus Leader Media (2019)
Opinion by Justice Gorsuch, joined by Chief Justice Roberts and Justices Thomas, Alito, Kagan, and Kavanaugh; opinion concurring in part and dissenting in part by Justice Bryer, joined by Justices Ginsburg and Sotomayor

[1] 5 U.S.C. § 552(b)(4).
[2] See Argus Leader Media v. United States Dept. of Agriculture, 889 F.3d 914, 915 (8th Cir 2018).
USPTO Disables PKI Authentication for EFS-Web and Private PAIR

July 2, 2019

By Donald Zuhn —

In a Patent Alert e-mail distributed today, the U.S. Patent and Trademark Office announced that PKI authentication for EFS-Web and Private PAIR has been permanently disabled. The Office had previously announced in late December that the initial December 31, 2018 deadline for the retirement of PKI certificates was being postponed until February 15, 2019. And then on February 14, 2019, the Office announced that due to technical issues, the retirement of PKI certificates was being postponed until further notice. The end of PKI authentication should not come as a surprise to most practitioners, however, as the Office recently announced an outage of the system from May 30 to May 31 and then another outage beginning on June 5.

In announcing the permanent disablement of PKI authentication, the Office also announced that the deadline for practitioners to migrate a PKI certificate to a USPTO.gov account will be July 16, 2019. Practitioners who fail to migrate their PKI certificates by the July 16 deadline will have to obtain a verified USPTO.gov account using the Office's new verification process (in the same manner that new practitioners will be required to obtain a verified USPTO.gov account). Information regarding the new verification process can be obtained here. Briefly, the new verification process consists of completing a Patent Electronic System Verification Form (PTO-2042a), having the form notarized, and mailing the original, notarized form to the USPTO. Thus, if you have a PKI certificate, but have not yet migrated that certificate to a USPTO.gov account, you will probably want to do so before the July 16 deadline.

As the Office indicated last October, the new authentication system for accessing the EFS-Web and Private PAIR is safer and simpler than the old system, allowing for access to multiple USPTO systems with one consolidated sign-in, eliminating the need to share credentials by providing practitioners and their support staff with their own USPTO.gov accounts, and helping resolve browser compatibility issues (see "USPTO Moving to New Authentication System for EFS-Web and Private PAIR"). The Office has also noted that the new system will provide users with access to the EFS-Web and Private PAIR until the full release of Patent Center, the next generation tool that will replace the EFS-Web and Private PAIR in 2020.

In addition, the Office announced the release of a migration tool last October, which allows existing PKI digital certificate holders to link their USPTO.gov accounts to their current PKI digital certificates. To migrate an existing PKI digital certificate, users must have a USPTO.gov account. Users who need to create a USPTO.gov account can do so by following the steps under the "Create a USPTO.gov Account" tab at the Office's authentication change webpage. Once a USPTO.gov account has been created, users can follow the steps under the "Migrate your PKI Certificate" tab at the Office's authentication change webpage (or refer to the Guide for Migration) to link that account to their PKI certificate. The Office notes that users should allow 1–2 business days after the migration steps are finished for the migration process to be completed. Once the process is completed, users will be able to sign into the EFS-Web or Private PAIR using their USPTO.gov account:

EFS-Web:
https://efs-my.uspto.gov/EFSWebUIRegistered/EFSWebRegistered

Private PAIR:
https://ppair-my.uspto.gov/pair/PrivatePair

Additional information regarding the new authentication process can be found in the Office's Patent Electronic System Access Document. This resource includes information about USPTO.gov accounts; two-step authentication; signing in and signing out from USPTO systems; Patent Electronic Access roles for practitioners, support staff, and inventors; suspension of accounts; authorization; authentication steps; the sponsorship process (by which practitioners can grant or remove sponsorship for support staff individuals to work under their direction and control); and the Office's verification policy and identity proofing of sponsored support staff. With respect to identity proofing, the Office has stated that "[e]ach practitioner will be responsible for verifying the identity of the person using any sponsored support Staff account."

Shortly after announcing the new authentication system last October, the Office also announced the availability of a sponsorship tool for sponsorship of support staff. With respect to sponsorship, the Office emphasized that practitioners no longer have to share their credentials, and in fact, would no longer be permitted to share accounts with support staff, who need to establish their own USPTO.gov accounts in order to access the EFS-Web Registered and Private PAIR. USPTO.gov accounts are now being used as the first step to log into EFS-Web Registered and Private PAIR. The second step of the two-step authentication system requires users to choose to receive an e-mail or phone call which will provide a 6-digit code that is to be entered along with their USPTO.gov password (or use an authenticator app on their mobile phone to provide the additional secure verification). The Office's sponsorship tool, which allows practitioners to grant or remove sponsorship for support staff individuals (under the direction and control of sponsoring practitioners) to work on their behalf, can be accessed here.

Practitioners should familiarize themselves with the identify verification (or proofing) requirements of the new authentication system. Under the identity proofing and enrollment process, the identity evidence and attributes of users of the Office's Patent Electronic System are collected, uniquely resolved to a single identity within a given population or context, then validated and verified. Current PKI certificate holders who migrate their PKI certificates using the migration tool will be considered to have met the identity proofing requirements. However, for support staff being sponsored by practitioners, sponsoring practitioners are "responsible for proofing the identity of the person being sponsored," and "[e]ach sponsoring practitioner will establish a procedure for identity proofing sponsored users and maintain a record of that procedure." Additional details regarding identity verification requirements can be found in the Office's Patent Electronic System Access Document.

Users requiring assistance to create a USPTO.gov account should call the USPTO Contact Center (UCC) at 800-786-9199. Users requiring assistance with migration should contact the Patent Electronic Business Center at ebc@uspto.gov or 866-217-9197. Questions or comments related to the new authentication method may be sent to eMod@uspto.gov. A list of Frequently Asked Questions (FAQs) about the authentication change for EFS-Web and Private PAIR can be found here.

For additional information regarding this topic, please see:

• "USPTO Further Delays PKI Certificate Termination Date," February 14, 2019
• "USPTO Delays PKI Certificate Termination Date," December 23, 2018
• "USPTO Director Issues Notice on New Authentication System for EFS-Web and Private PAIR," December 3, 2018
• "USPTO Moving to New Authentication System for EFS-Web and Private PAIR," October 4, 2018
CRISPR Battle Joined Again

July 1, 2019

By Kevin E. Noonan —

On June 24th, the U.S. Patent and Trademark Office declared an interference between patents (and an application) assigned to the Broad Institute (and other institutions) and applications assigned to the University of California/Berkeley. If this sounds like deja vu all over again it is and it isn't; as will be seen, the strategy employed by Berkeley has induced the Office to address the issues of priority raised in the earlier interference between the parties.

That interference involved these Broad patents (and their involved claims, which constitute all of the granted claims of all of the Broad patents):

• U.S. Patent No. 8,697,359 – claims 1-20
• U.S. Patent No. 8,771,945 – claims 1-29
• U.S. Patent No. 8,795,965 – claims 1-30
• U.S. Patent No. 8,865,406 – claims 1-30
• U.S. Patent No. 8,871,445 – claims 1-30
• U.S. Patent No. 8,889,356 – claims 1-30
• U.S. Patent No. 8,895,308 – claims 1-30
• U.S. Patent No. 8,906,616 – claims 1-30
• U.S. Patent No. 8,932,814 – claims 1-30
• U.S. Patent No. 8,945,839 – claims 1-28
• U.S. Patent No. 8,993,233 – claims 1-43
• U.S. Patent No. 8,999,641 – claims 1-28,

against only one pending (at that time) application from the Berkeley group:

• U.S. Patent Application Publication No. US 2014/0068797 A1 – claims 165, 200, 202-218, 220-222, and 224-247.

The Patent Trial and Appeal Board decided that interference was a nullity, because there was no interference-in-fact between Berkeley's claims (which broadly recited aspects of the CRISPR technology) and those in the Broad patents (which were specifically directed to reagents, systems, and methods for practicing CRISPR in eukaryotic cells. The Federal Circuit affirmed, leaving the Broad's patent estate intact (albeit arguably dominated by Berkeley's broader claims not limited to eukaryotic cells).

Berkeley adopted a strategy of filing several applications last fall specifically directed to eukaryotic cell-directed aspects of CRISPR that would provoke an interference with the Broad claims (although the USPTO declared this interference on the basis that the claims of the Berkeley application were patentable but for the interfering granted claims in the Broad patent).

The Broad patents and applications included in the interference (i.e., having claims considered to fall within the scope of the interference count) are: U.S. Patent Nos. 8,697,359; 8,771,945; 8,795,965; 8,865,406; 8,871,445; 8,889,356; 8,895,308; 8,906,616; 8,932,814; 8,945,839; 8,993, 233; 8,999,641; 89,840,713; and U.S. Application No. 14/704,551. Broad patents not not involved in this interference are U.S. Patent Nos. 8,889,418 and 9,882,372.

University of California/Berkeley patents included in the interference as declared by the USPTO are: U.S. Application Nos. 15/947,680; 15/947,700; 15/947,718; 15/981,807; 15/981,808; 15/981,809; 16/136,159; 16/136,165; 16/136,168; and 16/136,175. Berkeley patents and applications not included in the interference are: U.S. Patent Nos. 10,000,772; 10,113,167; 10,227,611; 10,266,850; 10,301,651; 10,308,961 and U.S. Application Nos. 15/435,233; 15/925,544; 16/201,836; 16/201,848; 16/201,853; and 16/20,855.

A more in depth analysis of this interference with be provided in subsequent posts. One pattern that can be discerned, however, is that Berkeley has taken advantage of the PTAB's decision that there was no interference in fact between its patents directed to CRISPR claims not limited to eukaryotic cells as a shield to protect its patents and applications having such broad claims from the current interference. Its strategy of filing applications having claims directed expressly towards CRISPR embodiments for use in eukaryotic cells enabled Berkeley to target the majority of Broad's patents and applications while putting "at risk" its newly filed applications and not its legacy patents to CRISPR.

The next step will be for the parties to propose preliminary motions to the PTAB, involving patentability issues, the propriety of the claims designated as corresponding (or not corresponding) to the count, and prima facie priority determinations regarding whether the Board properly designated the Broad as senior party (an important strategic consideration involving which party will have the burden of proof). These matters will also be discussed in subsequent posts. For now, it is enough to say that ownership of this technology remains uncertain, a state of affairs that will remain for the next 24-36 months unless these parties decide to settle (an unlikely outcome given the history of their interactions and behavior on the ownership question).
USPTO to Accept New Applications to Ongoing IP5 CS&E Pilot

June 30, 2019

By Donald Zuhn —

In a Patent Alert e-mail distributed last week, the U.S. Patent and Trademark Office announced that beginning July 1, 2019, the Office would once again be accepting new International applications to the IP5 Patent Cooperation Treaty (PCT) Collaboration Search and Examination (CS&E) pilot program. In a notice published in the Federal Register last year (83 Fed. Reg. 30147), the Office announced its first year of participation in the pilot program, which ran from July 1, 2018 until June 30, 2019. The second year of the Office's participation in the program begins tomorrow and runs through June 30, 2020. The pilot program was initiated to assess user interest for a CS&E product (i.e., an International search report and written opinion prepared by collaborating examiners from the IP5 Offices), as well as whether the collaboration results in efficiency gains by the IP5 Offices.

Under the CS&E pilot program, examiners from the U.S. Patent and Trademark Office (USPTO), European Patent Office (EPO), Japan Patent Office (JPO), Korean Intellectual Property Office (KIPO) and National Intellectual Property Administration (CNIPA) (formerly the State Intellectual Property Office of the People's Republic of China, or SIPO), otherwise known as the IP5 Offices, collaborate on one International application for the establishment of an International search report and written opinion under PCT Chapter I. Applicants choosing to participate in the program select one of the five IP5 Offices as the International Searching Authority, and an examiner from that Office (the main examiner) establishes a provisional International search report and written opinion, which is distributed to the other Offices. Examiners in the other Offices (peer examiners) then provide their contribution, and the main examiner establishes a final International search report and written opinion after taking those contributions into account.

Applicants wishing to participate in the pilot program via the USPTO (once the second year begins tomorrow) must meet the following requirements:

(1) Submit a request for participation (form PCT/RCSE) with the International application.

(2) Select one of the IP5 Offices as the International Searching Authority.

(3) File the participation form and International application electronically via the EFS-Web (for the participation form, Applicants should use the document description "Request to Participate in PCT CS&E Pilot").

(4) File the English-language version of the participation form and file the International application in English.

(5) Have not had 10 International applications accepted into the pilot by the same International Searching Authority.

As with the first year of the program, the USPTO will only be accepting 50 applications during the second year of the program (the USPTO reached that limit in the first year of the pilot program as of at least January 2019). In addition, applications that the International Searching Authority determines have a defect which impedes the processing of the application will be denied entry into the pilot program.

Additional information regarding the CS&E pilot program can be found at the USPTO's CS&E webpage or the World Intellectual Property Organization (WIPO) CS&E webpage.
Conference & CLE Calendar

June 30, 2019

July 17-19, 2019 – Patent Fundamentals Bootcamp 2019: An Introduction to Patent Drafting, Prosecution, and Litigation (Practising Law Institute) – San Francisco, CA

July 18, 2019 – "Not So Obvious: Secondary Considerations at the PTAB" (Fitch Even) – 12:00 to 1:00 pm (ET)

July 18, 2019 – "Strategies for IP Protection in China — What Georgia Businesses Need to Know" (U.S. Patent and Trademark Office and Georgia Tech Library) – Scheller College of Business, Georgia Institute of Technology, Atlanta, GA
China IP Road Show

June 29, 2019

As part of its China IP Road Show program, the U.S. Patent and Trademark Office and Georgia Tech Library will be holding a program on "Strategies for IP Protection in China — What Georgia Businesses Need to Know" on July 18, 2019 at the Scheller College of Business at the Georgia Institute of Technology in Atlanta, GA. Topics to be addressed at the program include:

• What you need to know about protecting your patents, copyrights, and trademarks in China
• Where is China going on IP?
• Enforcing IP rights in the United States
• Enforcing IP rights in China
• IP in China — the Georgia experience

Additional information regarding the program can be found here. There is no registration fee for the program. Those interested in registering for the conference can do so here.
Webinar on Secondary Considerations at the PTAB

June 29, 2019

Fitch Even will be offering a webinar entitled "Not So Obvious: Secondary Considerations at the PTAB" on July 18, 2019 from 12:00 to 1:00 pm (ET). David A. Gosse and Evan Kline-Wedeen of Fitch Even will discuss the following:

• Developing trends at the PTAB concerning secondary considerations
• How to insulate your petition from secondary considerations
• Best practices for patent owners developing evidence related to secondary considerations

While there is no cost to participate in the program, advance registration is required. Those interested in attending the webinar can register here.
Supreme Court Strikes Down Ban on “Immoral and Scandalous” Trademarks

June 27, 2019

By Eric R. Moran and Kevin E. Noonan —

On Monday, the U.S. Supreme Court issued an opinion in Iancu v. Brunetti, No. 18-302, finding that the Lanham Act prohibition against registration of scandalous or immoral trademarks violates the First Amendment of the U.S. Constitution. The Brunetti decision follows closely behind the Court's 2017 opinion in Matal v. Tam, which struck down the Lanham Act's prohibition of disparaging marks under similar First Amendment grounds.

At issue in Brunetti (as in Tam) is 15 U.S.C. § 1052 of the Lanham Act, which defines federally registrable trademarks. Section 1052(a) provides a number of prohibitions to registration:

No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it—

(a) Consists 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.

At issue in Tam was the "disparagement" prohibition to registration. Brunetti, however, deals with "immoral" and "scandalous" matter (which the USPTO treats as a unitary provision, instead of treating the two adjectives separately).

In Brunetti, Erik Brunetti sought to register the trademark FUCT for use in connection with a clothing line. Although, according to Brunetti, the mark is pronounced as four separate letters: F, U, C, T, the U.S. Patent and Trademark Office ("USPTO") read it as "the equivalent of [the] past participle form of a well-known word of profanity." As such, to determine whether such a mark is "scandalous or immoral" under section 1052(a), the USPTO needed to determine whether a "substantial composite of the general public" would find the mark scandalous, or "shocking to the sense of truth, decency, or propriety; disgraceful; offensive; disreputable; . . . giving offense to the conscience or moral feelings; . . . or calling out for condemnation." Alternatively, the USPTO could have determined that the mark is scandalous "by establishing that a mark is 'vulgar,'" or "lacking in taste, indelicate, [and] morally crude . . . ." Under this framework, the USPTO determined that the FUCT mark was "vulgar" and had "decidedly negative connotations," and refused registration under 15 U.S.C. § 1052(a).

On appeal to the Trademark Trial and Appeal Board ("TTAB"), the TTAB reviewed evidence of use of the mark. The TTAB "found that Brunetti's website and products contained imagery, near the mark, of 'extreme nihilism' and 'antisocial' behavior," and that "the mark communicated 'misogyny, depravity, [and] violence.'" The TTAB found "no question" that the mark is "extremely offensive," and affirmed the Examining Attorney.

Brunetti appealed the decision of the TTAB to the Court of Appeals for the Federal Circuit ("CAFC"). The CAFC, in turn, found that substantial evidence supported the TTAB's findings that the mark comprises immoral or scandalous material. The CAFC held further, however, that the Lanham Act's immoral and scandalous prohibition "is an unconstitutional restriction of free speech" and reversed the TTAB's holding that the mark is unregistrable, based on the First Amendment issues decided in Tam.

The Supreme Court affirmed in a 6-3 decision. Justice Kagan wrote the Brunetti opinion for the Court, and she referred immediately to the Court's decision in Tam that the disparagement clause of section 1052(a) violates the First Amendment's Free Speech Clause. As a reminder, in Tam, a musician, Simon Tam, applied for federal registration with the USPTO in 2011 for the mark THE SLANTS for use in connection with his Asian-American rock band. The USPTO found that the mark would be disparaging to those of Asian descent and refused to register the mark. The U.S. Supreme Court, however, held that the disparagement clause violated the First Amendment "because it discriminated on the basis of viewpoint."

In particular, in Tam, the eight-Justice Court split between two non-majority opinions. Although the Justices did not agree on the overall framework for deciding the case, they all agreed on two propositions: "First, if a trademark registration bar is viewpoint-based, it is unconstitutional. . . . And second, the disparagement bar was viewpoint-based." As summarized in Brunetti, the Court held in Tam that "[t]he government may not discriminate against speech based on the ideas or opinions it conveys."

In Brunetti, the Court turned to these propositions to analyze the "immoral and scandalous" clause of the same Lanham Action provision. According to the Court, "[i]f the 'immoral or scandalous' bar similarly discriminates on the basis of viewpoint, it must also collide with our First Amendment doctrine." The question becomes, according to the Court, is the "immoral or scandalous" test viewpoint-neutral or viewpoint-based?

The Court held the USPTO's refusal to register Brunetti's mark was viewpoint-based, and moreover that the "immoral or scandalous" clause of the Lanham Act itself "results in viewpoint-discriminatory application." The Court pointed out that the USPTO has used the clause to refuse registration of "marks communicating 'immoral' or 'scandalous' views about (among other things) drug use, religion, and terrorism. But all the while, it has approved registration of marks expressing more accepted views on the same topics." As examples, the Court cited the USPTO's rejection of marks condoning drug use, such as YOU CAN'T SPELL HEALTHCARE WITHOUT THC for pain-relief medication and MARIJUANA COLA and KO KANE for beverages, while registering marks that disapproved of drug use, such as D.A.R.E. TO RESIST DRUGS AND VIOLENCE and SAY NO TO DRUGS—REALITY IS THE BEST TRIP IN LIFE.

The Court further found that the "immoral or scandalous" bar broadly "covers the universe of immoral or scandalous—or . . . offensive or disreputable—material," and was not moved that some applications of the clause, such as for lewd or profane marks, may be permissible. Accordingly, despite the government's arguments that the clause's unconstitutional applications are not "substantial" relative to "the statute's plainly legitimate sweep," the Court held that the bar is "substantially overbroad":

There are a great many immoral and scandalous ideas in the world (even more than there are swearwords), and the Lanham Act covers them all. It therefore violates the First Amendment.

Several Justices wrote opinions at least concurring in part. Justice Alito concurred in the opinion but wrote separately to distance the Court's decision from what he called "moral relativism" and to assert that "a law banning speech deemed by government officials to be 'immoral' or 'scandalous' can easily be exploited for illegitimate ends." He sought comfort in the nostrum that Congress could adopt "a more carefully focused statute" that could restrict registration of marks that contained "vulgar terms that play no real part in the expression of ideas" (which, he indicated, could include the mark at issue before the Court, which he opined "generally signifies nothing except emotion and a severely limited vocabulary").

Chief Justice Roberts concurred in part and dissented in part; the basis for his concurrence is the Court's rejection of the Government's entreaty that the statutory language was "susceptible of a narrowing construction." While the Chief Justice believes (as does Justice Sotomayor, infra) that the term "scandalous" might be so more narrowly construed, he does not believe the term "immoral" can be, and further believes that "the PTO has long read those terms together to constitute a unitary bar on 'immoral or scandalous' marks." The Chief Justice dissented, however, because he further asserts that "refusing registration to obscene, vulgar, or profane marks does not offend the First Amendment."

Similarly, Justice Breyer concurred in part and dissented in part. Like the Chief, Justice Breyer believes that a narrow construction of the term "scandalous" in the statute would save it from constitutional invalidation and cites precedent (United States v. Thirty-seven Photographs, 402 U.S. 363, 369 (1971)) that the Court should do so if it can. He does not support what he terms "a category-based" approach to applying the First Amendment (i.e., deciding whether the issue involves "viewpoint discrimination," "content discrimination," "commercial speech," "government speech," etc.). Rather, the Justice thinks the Court's rulings based on speech issues should not be "outcome-determinative" but instead be treated as "rules of thumb" (a standard he first enunciated in Reed v. Town of Gilbert, 576 U. S. ___, ___ (2015) (opinion concurring in judgment)).

Those "rules of thumb" would then be applied in view of the values the First Amendment was intended to protect; the case at bar represents, for Justice Breyer, a statue that "does not fit easily into any of [the Court's speech] categories." Trademarks are not merely commercial speech nor government speech, in the Justice's view, nor does a trademark implicate the speech concerns related to a "public forum" like a public park or a street. And as for the "viewpoint" distinction the majority bases its decision upon, Justice Breyer thinks "it is hard to see how a statute prohibiting the registration of only highly vulgar or obscene words discriminates based on 'viewpoint'."

Applying his "first principles" analysis in agreeing with Justice Sotomayor, Justice Breyer is persuaded that the "injury" to speech (forgoing a federal registration on a trademark that is protected by use and common law) is not much of an injury. Trademark law already imposes limits, inter alia, on deceptive speech, and for the Justice, the government's right to impose those limits should inform a potential registrant "not [to] expect complete freedom to say what she wishes, but [] instead expect linguistic regulation." The consequences of permitting (and by permitting, encouraging) trademark registration on such marks may, the Justice proposes, be contrary to the government's legitimate interest in disincentivizing the (presumably) negative consequences caused by the words making up such marks.

Justice Sotomayor dissented, joined by Justice Breyer (to the extent her reasoning is consistent with his opinion). Justice Sotomayor sets forth her concerns immediately in her opinion:

The Court's decision today will beget unfortunate results. With the Lanham Act's scandalous-marks provision, 15 U.S.C. § 1052(a), struck down as unconstitutional viewpoint discrimination, the Government will have no statutory basis to refuse (and thus no choice but to begin) registering marks containing the most vulgar, profane, or obscene words and images imaginable.

Justice Sotomayor would square the statutory language with the constitutional imperatives by interpreting the statute as having two types of prohibitions and construing it to exclude scandalous marks that constitute "obscenity, vulgarity, and profanity." This would render the language "a reasonable, viewpoint-neutral restriction on speech that is permissible in the context of a beneficial governmental initiative like the trademark-registration system." The Justice argues for considering the statutory words in context, and uses the occasion to provide a pellucid example of elegant language by Judge Learned Hand: "Words are not pebbles in alien juxtaposition; they have only a communal existence; and not only does the meaning of each interpenetrate the other, but all in their aggregate take their purport from the setting in which they are used.'" NLRB v. Federbush Co., 121 F. 2d 954, 957 (CA2 1941).

In the context of the statutory language here, Justice Sotomayor sees her way clear to distinguish excluding "immoral" marks (which are view-point implicating and thus unconstitutional) with "scandalous" marks (which at least may not be and thus do not render the statute facially unconstitutional as Petitioner Brunetti argued). Finding ample precedent for such distinctions based in construing statutory language, Justice Sotomayor concludes the Court was not compelled to reach its decision, from which she dissented.

Iancu v. Brunetti (2019)
Opinion by Justice Kagan, joined by Justices Thomas, Ginsburg, Alito, Gorsuch, and Kavanaugh; concurring opinion by Justice Alito; opinion concurring in part and dissenting in part by Chief Justice Roberts; opinion concurring in part and dissenting in part by Justice Breyer; opinion concurring in part and dissenting in part by Justice Sotomayor, joined by Justice Breyer
Biotech Prospects for Patent Reform

June 26, 2019

By Kevin E. Noonan —

With great fanfare (and a seeming exercise of appropriate diligence), Senators Thom Tillis (R-NC) and Chris Coons (D-DE), chair and ranking member of the Intellectual Property Subcommittee of the Senate Judiciary committee, over the past few weeks have held a series of public hearings on the subject of legislative intervention to reform patent eligibility law rendered somewhat askew by several recent Supreme Court decisions (and, to be fair, how those decisions have been expansively, if not slavishly, implemented by the U.S. Patent and Trademark Office and the inferior courts, including the Federal Circuit).

On Monday, the Senators posted a synopsis of their recent efforts, entitled "What We Learned at Patent Reform Hearings." This synopsis is generally informative but particularly with regard to the Senators' understanding and commitment (at least for now) to solving the problems caused to the life sciences industry by the Court's decisions in Mayo v. Prometheus (as interpreted by CLS Bank v. Alice) and AMP v. Myriad Genetics.

Their missive begins with the almost requisite encomiums to innovation and entrepreneurship, and the contributions of the patent system to U.S. success in these endeavors. The Senators certainly "get it" with regard to the problem, saying that "[o]ver time, courts have clouded the [patent eligibility] line to exclude critical medical advances like life-saving precision medicine and diagnostics. Recent decisions have also made it difficult to predict whether exciting and important technologies like artificial intelligence make the cut." And they are careful (in these fraught days) to be sure to mention that their efforts have been "thorough, thoughtful, bipartisan and bicameral legislating." But the need is clear: "the U.S. patent system with regard to patent eligibility is broken and desperately needs to be repaired" because "[t]he U.S. Supreme Court has confused and narrowed Section 101 of the Patent Act to the point that investors are reluctant to pursue the innovations that propel our country forward." A more succinct and damning indictment by one branch of government of another is (fortunately) rare and even more significant because (in large part) it is true (although again, to be fair, the Supreme Court undoubtedly did not intend the consequences of its rather Delphic pronouncements on patent subject matter eligibility). These Senators' position that Congress needs to step in is further justified, according to their statement, in that there have been "over 40 [actually, 42]" denials of petitions for certiorari on patent eligibility issues, indicating the Supreme Court's refusal to address the issue and as a result the lower courts and USPTO are and have been unable to ignore this precedent (but, until recently, it is at least arguable whether they have tried particularly hard to do so).

And what of the concerns of the life sciences industry? It is gratifying for those laboring in these particularly patent-infertile fields that the Senators understand how the life sciences have been specifically hard-hit by the current climate. The statement cites the Ariosa v. Sequenom case, not only because of the groundbreaking nature of the technology (and its beneficial effects on women no longer needing to be subjected to invasive procedures to obtain important diagnostic information about their babies), but because those individuals charged with stewarding U.S. patent law, embodied in Judge Richard Linn's "concurring" opinion in Ariosa, have said that there is discernably "no reason, in policy or statute, why this breakthrough invention should be deemed patent ineligible."

The Senators attest that they have considered the testimony of the naysayers, who are concerned that the current system "provides a mechanism to terminate baseless patent infringement lawsuits quickly and efficiently," but while acknowledging them (and the need for taking steps to mitigate these problems), the Senators understand that courts cannot be permitted to "destabilize" the patent system in an effort to correct issues like "deterring nuisance litigation." They are also careful to rebut the allegation that their proposal would "permit patenting of scientific research per se, mere abstract ideas and nontechnical methods of doing business," specifying that "our patent system was never intended to protect artistic creations, methods of investing, or items found in nature" (although the latter category would do with a bit of clarification and limitation as to its scope).

The Senators are also careful to state that by abrogating the "judicial exceptions" in prior case law they do not intend to reverse the individual outcomes of these cases; some, they say, were decided correctly while others excluded inventions that should have been deemed eligible for patenting. But they recognize that the issue is one of proper application of patent law to questions of prosecution, validity, and infringement, and that the Supreme Court's calculus has "collapsed" in error the more nuanced (yet well-defined) requirements for patentability into Section 101. In view of the propensity for many of the "naysayers" to be representatives of the electrical, mechanical, and "high technology" arts, the Senators wisely cite as an example of the errors occasioned by recent precedent invalidation of claims to a "network charging station for electric vehicles," subject matter having much less emotional impact than, for example, gene patenting. And Senators Tillis and Coons characterize as "admissions" concessions from high-tech representatives and legal academics that the law was being improperly applied to life sciences inventions.

Turning to the ACLU and their fellow travellers, the Senators address their concerns (which are to preserve their signal, albeit Pyrrhic, victory over gene patents):

Other witnesses, including the American Civil Liberties Union, expressed concerns about the patenting of human genes. As we stated at the hearing, it is not our intent to allow such patents, and several witnesses, including the Association of American Universities and the Intellectual Property Owners Association, disagreed that our proposal would enable that result.

Testimony at the hearings further clarified that — because the entire human genome has been mapped for many years — these concerns are misplaced. That said, we want to be very clear on this point, and we welcome proposals to clarify our proposed legislation.

So what do the Senators see as the aim of their legislation with regard to life sciences inventions? It includes at least this:

We do want to incentivize research and development into the exciting prospects of individualized diagnostics and precision medicine, which is tied to genetics. We are working hard to ensure the protections that will enable our innovators to bring these products to market while safeguarding research into the next generation of medical advances.

For example, we are considering a provision that would exempt research and experimentation from infringement liability. This type of exception is common around the world. It would allow basic research to continue unimpeded by patents, which are designed to control commercialization, not stifle research. We will be reviewing any additional suggestions we receive that would promote research without discouraging product development.

The latter idea is one that has been suggested before, and has the advantage of taking some of the force from the argument (always more as a possibility than reality; see "Falsehoods, Distortions and Outright Lies in the Gene Patenting Debate") that basic research would be negatively impacted by permitting life sciences inventions to be patented.

Finally in the "lessons we have learned" section, the Senators mention that the alternative to fixing the patent subject matter eligibility pickle recent events have conspired to create will be to cloud inventions important to human health and diagnostics in trade secrecy — a real risk with real consequences.

The Senators then set out the next steps: clarifying in statutory language exclusion of human genes, and identifying the meaning of the "field of technology" requirement, so that "critical advances like artificial intelligence and medical diagnostics qualify, but not economic transactions or social interactions."

How these efforts go forward are important to track, because the Senators state that "[w]e will also consider ideas for reinforcing Section 112 of the Patent Act, which should operate to prevent inventors from claiming all possible solutions to a problem while also serving to protect inventors against those seeking to profit on trivial modifications." There is much possible mischief in that statement, but these Senators are due the benefit of the doubt (and time) to fully flesh out how they intend to use Section 112 to address issues that have arisen (and have been imperfectly addressed) under Section 101.
Senators Tillis and Coons Release Statement on Recent Patent Reform Hearings

June 26, 2019

By Michael Borella —

As we have previously covered, the Senate Subcommittee on Intellectual Property recently held hearings on proposed revisions to 35 U.S.C. § 101 and related sections of the patent statute. Chairman Thom Tillis (a Republican from North Carolina) and Ranking Member Chris Coons (a Democrat from Delaware) heard testimony from 45 individuals earlier this month. These witnesses, including industry executives and groups, inventors, a former Federal Circuit judge, former USPTO officials, and law professors, discussed the pros and cons of the senators' proposal. The purpose of the revisions and the hearings was to address the series of Supreme Court decisions in the last decade (most recently Alice Corp. v. CLS Bank Int'l) that has made it more difficult to obtain patents on certain types of inventions, most notably those related to software, business methods, and life sciences.

The Senators introduced a draft bill that eliminates the current two-part Supreme Court § 101 test, removes judicial exceptions to eligibility, draws a strict line between the inquiries of §§ 101, 102, 103, and 112, and would result in virtually any invention that "provides specific and practical utility in any field of technology through human intervention" being eligible. The draft bill also changes § 112(f) in a fashion that narrows the interpretation of functional claim language.

On June 24, Senators Tillis and Coons released a statement regarding their takeaway from the hearings. If anything, it reflects an understanding that the law needs to change, the Senators are committed to doing so, and that they are still working out some of the details.

The statement unequivocally acknowledges that there is a problem:

The hearings reinforced what we've been hearing for years — the U.S. patent system with regard to patent eligibility is broken and desperately needs to be repaired. The U.S. Supreme Court has confused and narrowed Section 101 of the Patent Act to the point that investors are reluctant to pursue the innovations that propel our country forward. We heard about studies showing that investors familiar with the current lack of clarity invest less in critical research and development in areas like medical diagnostics and artificial intelligence, at least in the United States.

The current director of the USPTO recently noted that inventors and judges alike struggle on a daily basis to determine "what is in and what is out" and wondered whether even Thomas Edison's famous phonograph patent would survive the courts' recent tests for eligible subject matter.

Likewise, two former USPTO directors testified to this disturbing lack of clarity, and the former chief judge of the U.S. Court of Appeals for the Federal Circuit characterized patent eligibility as "the number one problem in our patent system today." He noted that, despite having personally drafted over 800 patent opinions, he struggled to predict the results in any given case. His view is shared by current Federal Circuit judges, one of whom recently wrote that the lack of clarity in the law made it "near impossible to know with any certainty whether the invention is or is not patent eligible."

Given that, the Senators note that the Supreme Court has had ample opportunity to clarify the law, but has denied over 40 petitions for certiorari regarding § 101 since the Alice decision came down. Thus, Senators Tillis and Coons have concluded that the ball is in Congress's court.

But reform will not be easy. The Senators acknowledge that some witnesses like the state of § 101 as it is and the draft bill could open up areas of patenting that some suggest should be verboten. But they are adamant that this will not derail their efforts:

Not everyone agrees that reform is needed. Some witnesses cautioned that the status quo provides a mechanism to terminate baseless patent infringement lawsuits quickly and efficiently. We hear these concerns, and we invite suggestions to mitigate them. We cannot permit the courts, however, to destabilize our patent system for the sake of deterring nuisance litigation. We can consider legislative provisions directly targeting the behavior of bad actors, and we welcome additional feedback on this point.

Several witnesses urged us not to permit patenting of scientific research per se, mere abstract ideas and nontechnical methods of doing business. It is not our intent to do so. To be clear, our patent system was never intended to protect artistic creations, methods of investing, or items found in nature. Our framework attempts to provide a positive definition of eligibility to focus courts on subject matter that is eligible while eliminating the confusing and unreliable judicially created tests that dissect patent claims looking for "abstract ideas" and "inventive concepts."

Notably, the Senators signal that they are looking for ways to address nuisance litigation that does not involve the throwing-out-the-baby-with-the-bathwater approach of Alice, where legitimate technical and scientific advances are as easily invalidated as broad, vague claims with questionable novelty. Furthermore, Senators Tillis and Coons write "we proposed amendments to other portions of the Patent Act to guard against the types of overly broad, functional patent claims frequently cited by those concerned about abuse." This is a reference to the proposed changes to §§ 100 and 112(f), both of which promise to simplify the § 101 inquiry by taking on some of its baggage. But the danger in doing so is that it may be difficult to limit functional claiming without enabling "those seeking to profit on trivial modifications" to a claimed invention.

The Senators also cast the need for § 101 reform as a matter of American competitiveness and national security. Senators Tillis and Coons echo several witnesses when they decry "the uncertainty surrounding patent eligibility is affecting the development of technologies like 5G, quantum computing and artificial intelligence — innovations that not only promise to make life better for Americans, but also to protect our national security." Implicitly referencing studies that some emerging technologies are much easier to patent in other countries, the Senators state that "inventions like these are receiving patents in Europe and China, but not in the United States."

The trick here is where to draw the line on patentability. The dichotomy between inventions directed to "business" or "abstract" concepts and those that are "technical" is often false. If the Senators propose a ban on business methods in the next iteration of the bill, does that include packet processing accelerators for financial transactions or innovative user interfaces for traders? While both of these hypothetical inventions might have a business-oriented goal, they also rely on technological advances for their very existence and may involve groundbreaking ways of solving respective problems. And what about artificial intelligence? Looking from one angle, it is a pile of complex, abstract mathematics. But from another angle, human ingenuity has recognized how to use these inherent mathematical properties in clever combinations to obtain results not otherwise attainable by humans or computers.

Building a wall between what is too abstract / business-oriented and what is patentable will be challenging, and may need to be taken on a case-by-case basis. But the Alice test's attempt to do so resulted in an inquiry so vague and subjective that straight-faced arguments could be made for both the eligibility and the ineligibility of virtually any invention in which software takes a leading role.

Furthermore, any categorical exclusion to patentability needs to be tempered with the understanding that we do not know where the next great scientific and technical advances are coming from or what they will look like. By definition, one cannot put a fence around innovation because inventiveness requires drawing outside the lines.

Clearly, Senators Tillis and Coons have some work to do, and codifying a softer variation of Alice may send reform efforts down a rat-hole.

Thus, while reaffirming the subcommittee's interest in § 101 reform, the statement in and of itself does not move the ball forward in a substantive fashion. We will need to wait for the next version of the bill, which the Senators have previously indicated that they hope to have ready by the end of summer. In the meantime, the statement asks repeatedly for feedback on the current draft and suggestions for its successor. Serious proposals for addressing abusive litigation outside the ambit of § 101, a balanced approach to software patents, and how to define the scope of functional claims will almost certainly be welcome.

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