Archives for February 2009

Supreme Court Denies Review of In re Volkswagen Appeal, Dashes any Hope of Overturning In re TS Tech

Today the Supreme Court denied a writ of certiorari seeking review of the Fifth Circuit’s grant of mandamus in In re Volkswagen transferring the case from the Eastern District of Texas to the Northern District of Texas.  The Fifth Circuit held that the district court had abused its discretion in refusing to grant a motion to transfer venue of the case to Dallas where most of the evidence and witnesses were located.

We previously reported on the In re TS Tech case in which the Federal Circuit followed In re Volkswagen and ordered the transfer of a patent infringement case from the Eastern District of Texas to the Southern District of Ohio.  As a result of that case, several patent infringement cases have since been transferred out of the Eastern District. 

A number of transfer motions have been denied as well where no one district was clearly more convenient to try the case or where a more substantial connection with the Eastern District was shown.  See Michael Smith’s recent blog posts for information about a recent transfer of a case and a case of “Fraternal Twins” in which one case was transferred and another case between the same parties but a different patent was denied.

Some practitioners have suggested that the TS Tech decision will be good for patent litigation in the Eastern District because it will reduce the backlog of cases, helping return the courts to the quick trial settings for which they were once known.  There is no question that, after TS Tech, the filing of patent infringement cases in the Eastern District has fallen off dramatically as many plaintiffs have decided they would rather not waste resources fighting venue battles.  While a decrease in the number of filings is certain, patent litigation in the Eastern District is still alive and well.

Permanent Patent Prosecution Highway between US and Korea

After a one year pilot program, a permanent Patent Prosecution Highway (“PPH”) between the U.S. and Korea was implemented on January 29, 2009.

Under the PPH, an applicant receiving a ruling of patentability from either the U.S. patent office or the Korean patent office may request that the other office fast-track the examination of the corresponding application pending there.  The prosecution in the second office is then based on the patentable results obtained from the first office, reducing the workload for the second office.

John Doll, Acting Director of the USPTO said, “The pilot project has demonstrated that the Patent Prosecution Highway provides real benefits to both the USPTO and KIPO by eliminating redundant work, expediting processing and ensuring high quality of patents.”

While Japan and Korea are the only countries that have permanently implemented the PPH, pilot programs are in place with a number of other countries.  The foreign offices with which the U.S. has pilot PPH programs in place are United Kingdom Intellectual Property Office, Canada Intellectual Property Office, IP Australia, European Patent Office, Danish Patent and Trademark Office, and Intellectual Property Office of Singapore.

For companies with international patent portfolios, the PPH has the potential to reduce the cost of obtaining patent protection internationally. This is in addition to the benefit of obtaining patent protection more quickly in a number of countries.

By Vincent J. Allen

World of Warcraft Meets the Digital Millenium Copyright Act

The Digital Millennium Copyright Act (DMCA) was enacted by Congress in 1998 in part to prevent the circumvention of technological measures designed to prevent either access to or copying of a copyrighted work.  With certain exceptions, the DMCA made it a crime to circumvent such measures and outlawed the manufacture, sale, or distribution of devices used to illegally copy software.

Examples of such anti-piracy prevention measures include technology that prevents an unauthorized copy of a DVD from being played and software that limits the number of times a computer program can be installed.  Because the law is relatively new and because technology is constantly changing, the scope and application of the DMCA remains an evolving frontier.

On January 28, the DMCA was applied to circumvention software used in connection with the largest and most successful multi-player online game in the world, the World of Warcraft computer game (WoW).  WoW players control their characters in a virtual universe.  The players can explore the landscape, fight monsters, perform quests, build skills, and interact with other players and computer-generated characters.  While playing, the players may acquire in-game assets, experience, and power.

Blizzard created and now operates WoW and owns all copyrights related to the game.  Introduced in late 2004, WoW currently has approximately 11,500,000 players, generating over $1.5 billion in annual revenues.

To play WoW, a user obtains the game client software and loads it onto his or her computer hard drive.  When the game is played, the client software accesses Blizzard’s game server software through an online account for which the user pays a monthly fee.

In June 2005, MDY began selling Glider to WoW users, generating revenues of over $3.5 million to date.  Glider is a type of computer program known as a “bot” that plays WoW while a user is away from his or her computer.  This enables the user to advance more quickly within WoW.

To an outsider, the use of Glider may not appear to have a significant effect on WoW.  However, because WoW is a carefully balanced competitive environment in which players compete against each other to advance, the use of Glider upsets this balance by enabling its users to obtain more than their fair share of game assets.  This diminishes the value of the assets acquired fairly by other users.  As a result, Blizzard received numerous complaints about the use of bots from customers.

To combat bots, Blizzard developed a technical measure known as Warden to prevent the use of bots by WoW players.  Initially, the software prevented the use of Glider to play WoW.  However, MDY made changes to Glider designed to avoid detection by Warden.  Thus, Blizzard filed claims, among others, of violation of the DMCA.

In MDY Industries, LLC v. Blizzard Entertainment, Inc., the Arizona District Court held that the DMCA applied to Glider.  In reaching this decision, the court examined the aspects of the WoW software that Warden was designed to protect.  The literal code could be freely copied without connecting to the server where Warden resided.

Likewise, the non-literal elements which constituted the majority of the game client software–multimedia content such as environmental graphics, sound effects, music, player avatars, etc.–are stored on the user’s hard drive and can be accessed without connecting to the server.  Consequently, the court found that the DMCA did not apply to the literal code and the individual non-literal elements because Warden did not prevent access to these features of the program.

However, the court’s analysis did not end there.  Although the individual non-literal illustrations and sounds created by the game client software can be viewed in isolation and even in limited combinations, they cannot be viewed dynamically in the WoW game unless the user connects to the Blizzard server.  Upon connecting to the server, the user can experience the dynamic components–real-time travel through different worlds, hearing the sounds of those worlds, encountering their inhabitants and monsters, and encountering other players.

None of these dynamic features can be accessed on a user’s hard drive.  To connect to a server and access the dynamic features, Glider must bypass the circumvention protections provided by Warden.  Consequently, the court found that the DMCA applied with respect to the dynamic nonliteral elements of the game.

MDY argued that the dynamic nonliteral elements cannot be copyrighted because 1) they are not “fixed” in a tangible medium as is required by the Copyright Act and 2) the users control the dynamic elements of the game, not Blizzard.  The Court rejected these argument citing a number of cases for the proposition that audio-visual displays of computer games are subject to copyright protection even though a player’s actions determine, in part, what is diplayed on the computer screen.  Atari Games Corp. v. Oman, 888 F.2d 878, 884-85 (D.C. Cir. 1989); Midway Mfg. Co. v. Arctic Int’l, Inc., 704 F.2d 1009, 1011-12 (7th Cir. 1983); Williams Elec., Inc. v. Arctic Int’l, Inc., 685 F.2d 870, 874 (3d Cir. 1982); Stern Elecs., Inc. v. Kaufman, 669 F.2d 852, 855-56 (2d Cir. 1982).

Another of MDY’s arguments that was rejected by the court in a previous decision is that copying software into the RAM memory of a computer is not a violation of any copyright owned by Blizzard because that is a use that is permitted by the Copyright Act.  An amicus brief was also filed in the case by Public Knowledge supporting MDY’s position in this regard.  Under 17 USC § 117, it is not a copyright infringement to make a new copy or adaptation of a computer program where making that copy is “an essential step in the utilization of the computer program in conjunction with a machine and that is used in no other manner.”  The court rejected MDY’s argument based on the Ninth Circuit’s previous decision in MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993), holding that copying to RAM memory of a computer is a copyright infringement.

MDY has expressed its intent to appeal the trial court’s decision and ask the Ninth Circuit to overturn the MAI Systems decision.  It will be interesting to see how the Ninth Circuit deals with the MAI Systems precedent in this case.  This could be an important appeal as evidenced by the varied opinions regarding the effect of the trial court’s decision.  As an example of the varied opinions, see the Broken Toys blog on this case.

Remember the Alamo: Federal Trademark Dilution v. Texas Trademark Dilution

Trademark infringement occurs when a third party uses the same mark or a mark similar to a trademark owned by a trademark owner in such a manner that consumers of the products are likely to be confused as to the source of the products.  Generally speaking, a claim of trademark infringement does not exist when the competing products are not the same and are so unrelated that consumers will not be confused as to the source of each product.  That is, unless the mark is famous.

If the mark is famous, then the trademark owner may bring a federal trademark dilution claim against any party using the mark regardless of whether the trademark is being used for similar goods or services.  The rationale behind this theory of recovery is that the use of a famous mark, even if on differnt goods or services, weakens the commercial value of the mark. 

In 2006, Congress passed the Trademark Dilution Revision Act (TDRA) in response to Moseley v. V Secret Catalogue, Inc. in which the Supreme Court held that the plaintiff must prove “actual dilution” rather than “likelihood of dilution.”  Among other things, the TDRA amended the Federal Trademark Dilution Act to change the standard from “actual dilution” to “likelihood of dilution.”  Thus, proof of actual dilution is no longer required to prevail on a federal dilution claim.

To prove a federal dilution claim, a trademark owner must show (1) that the mark is famous, (2) that the mark is distinctive, (3) that the defendant began using a mark after it became famous, and (4) that defendant’s mark is likely to cause blurring or tarnishment of the mark.  Typically, the most difficult element of proof is showing that the mark is truly famous.  Under the TDRA, a mark is famous “if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark’s owner.” 

Most Texans, and indeed many people outside of Texas would recognize the longhorn silhouette used by the University of Texas in connection with the university’s athletic programs.  In Board of Regents v. KST Electric, Ltd., the university filed suit against the defendant for using the longhorn silhouette in connection with the logo for its business. 

In response to a motion for summary judgment by the defendant on the university’s federal dilution claim, the university presented evidence of how its football and other sports programs had acquired fame.  The court held that the university had only shown evidence of “niche fame” because evidence of fame among sports fans is not evidence of fame among the general consuming public.  The TDRA was enacted, in part, to get rid of “niche fame” by requiring a mark be “widely recognized by the general consuming public of the United States.”  “One of the major purposes of the TDRA was to restrict dilution causes of action to those few truly famous marks like Budweiser beer.”  Therefore, the court held that the university had not created a genuine issue of material fact as to whether the longhorn silhouette logo is “a household name.”

It is interesting to note that in KST Electric, the defendant did not move for summary judgment on the state dilution claim.  Why the defendant only moved for summary judgment on the federal dilution claim and not the state dilution claim in all likelihood relates to the broader scope of a Texas dilution claim. 

To prove a claim of dilution under Texas law, the trademark owner must show (1) that the mark is distinctive and (2) that defendant is making significant use of a very similar mark in a manner that is likely to cause dilution of the trademark owner’s mark by blurring or tarnishment.  Whether a mark is distinctive is determined by considering  (1) whether the mark is arbitrary, (2) the length of time a user has employed the mark, (3) the scope of the user’s advertising and promotions, (4) the nature and extent of the first user’s business, and (5) the scope of the first user’s reputation. 

Thus, there is no requirement that the mark be famous, and while it may be necessary to show that the mark is a strong mark, it is not necessary to prove that a mark is a household name to prevail on a Texas dilution claim.

By Vincent J. Allen

Design Patents after Egyptian Goddess: The Comeback Kid

In 1871, the Supreme Court established the standard for proving design patent infringement in Gorham Manufacturing Company v. White.The design patent in Gorham covered the ornamental features of forks and tablespoons. The Supreme Court explained that the appearance of an article may increase its “salable value.”  The test of identity of design “must be sameness of appearance, and mere differences of lines in the drawing or sketch . . . or slight variances in configuration . . . will not destroy the substantial identity.”  Based on this rationale, the Court outlined the “ordinary observer” test that is still used by courts today in design patent infringement cases:

[I]f in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other.

In 1984, the Federal Circuit added an additional requirement to the ordinary observer test in Litton Systems Inc. v. Whirlpool Corporation.  In Litton, the Federal Circuit held that to prove design patent infringement, the accused design must not only be substantially similar under the ordinary observer test but it must also contain the novelty of the claimed design.  In other words, the accused design must contain substantially the same points of novelty that distinguished the patented design from the prior art.  This test came to be known as the “point of novelty” test.

The combination of the point of novelty test along with the extensive verbalization of the drawings of design patents in construing the claim led to an environment in which few design patents were found to be infringed. The pendulum has now begun to swing the other way with a recent en banc decision by the Federal Circuit.

After over twenty-four years of applying and refining the point of novelty test in addition to the ordinary observer test in design patent cases, the Federal Circuit rejected the test last year in Egyptian Goddess, Inc. v. Swisa, Inc.   The court held that only the ordinary observer test should be applied to a claim of design patent infringement.  The Federal Circuit also criticized the practice of providing excessive details in the construction of a design patent claim.

In rejecting the point of novelty test, the court pointed to the problems with the jury focusing on a single specified feature of the claimed design. The court found it significant that the more novel the design, the more opportunities there are for a defendant to argue its product does not infringe because it does not appropriate all of the points of novelty.

After rejecting the point of novelty test as being inconsistent with the Supreme Court’s ordinary observer test, the court then discussed the use of prior art in connection with the application of the ordinary observer test.  The court noted that in some instances the claimed design and the accused design will be sufficiently different that it is clear that the two designs would not appear substantially the same to the ordinary observer.  Thus, there is no need to compare the accused design and the patented design to the prior art.

However, where the accused design and the claimed design are not plainly dissimilar, the ordinary observer test will require a comparison of the claimed and accused designs with the prior art.  The court noted that the differences that may not have previously been noticed in the abstract may become important to the ordinary observer familiar with the prior art.

In the case at hand, the Egyptian Goddess patent claimed a fingernail buffer consisting of a rectangular hollow tube having a generally square cross-section. The buffer had buffer surfaces on three of its four sides. Swisa’s accused fingernail buffer was similar but had a buffer surface on all four sides.

swisa-design

Accused Design

 
Patented Design

Patented Design

 

The court compared the accused design, the patented design, and two of the closest prior art references-the Nailco patent and a product called the Falley Buffer Block.  The Falley Buffer Block is a rectangular block similar in shape to the accused design and the patented design, but the body is solid, not hollow as are the accused and patented designs.  The Falley Buffer Block also has four raised buffing surfaces similar to the accused design.  The Nailco patent disclosed a three sided hollow buffer with a triangular cross section and buffer pads on all three sides.

Prior Art--Top Nailco Buffer, Bottom Falley Buffer Block

Prior Art: Top--Nailco Buffer, Bottom--Falley Buffer Block

The court then considered the question whether an ordinary observer familiar with the prior art would be deceived into believing that the accused Swisa design is the same as the patented design.  After examining the expert testimony presented by each side concerning the appearances of the accused and patented designs and the prior art, the Federal Circuit held that an ordinary observer would not be deceived, thus affirming the district court’s grant of summary judgment in favor of Swisa.

Although the claim construction of the district court was stipulated by the parties in Egyptian Goddess, in its order granting en banc review the Federal Circuit raised the issue of whether trial courts should conduct claim construction in design patent cases.  The court noted that while it has held that trial courts should conduct claim construction in design patent cases, it has not prescribed any particular guidance as to the form claim construction must take.  The court provided guidance as discussed below in regard to claim construction, but found that there was no inaccuracy in the district court’s description and that neither party pointed to any prejudice resulting from the court’s interpretation.

Recognizing that a design is better represented by an illustration and that “a description would probably not be intelligible without the illustration,” the court stated that “the preferable course ordinarily will be for a district court not to attempt to ‘construe’ a design patent claim by providing a detailed verbal description of the claimed design.”  Nevertheless, the court held that the “level of detail to be used in describing the claimed design is a matter within the court’s discretion, and absent a showing of prejudice, the court’s decision to issue a relatively detailed claim construction will not be reversible error.”

Although allowing trial courts the discretion to provide a detailed claim construction, the Federal Circuit discourages the practice.  The court cautioned trial courts to recognize the risks of a detailed claim construction, such as a fact finder placing undue emphasis on particular features or focusing on each individual feature described rather than on the design as a whole.

As a practical matter, it is probable that most district courts will elect not to spend the time and effort to develop a detailed description of the drawings in a design patent.  Rather than issue a claim construction that might introduce reversible error into the case, the trial court could instead opt to construe the claim in the following simple form: A _____ as shown in Figures ______.  This is the manner in which the district court construed the claims in Dexas International, LTD v. Office Max Inc. even though it had previously adopted detailed claim constructions in another case regarding two of the same patents but different defendants.

While the Egyptian Goddess court held that the Swisa design did not infringe the patented design, the decision is a victory for owners of design patents because of the Federal Circuit’s rejection of the “point of novelty” test.  The new standard is arguably not as broad as intended by the Supreme Court in Gorham in that the ordinary observer is presumed to have considered the prior art in determining whether infringement exists. Nevertheless, the new standard will likely result in a finding of infringement in a higher percentage of cases than what was seen under the former standard.

Moreover, the Federal Circuit’s criticism of providing a detailed description of the drawings in claim construction will result in the fact finder relying on the drawings in most cases to determine infringement rather than focusing on specific elements in a detailed claim construction.  This will make it more difficult for defendants in most cases to get out on summary judgment by arguing that specific elements of the patented design are not present in the accused design.

BPAI Limits Patent Eligibility for Software Patent Claims after Bilski

In Bilski, the Federal Circuit held late last year that the machine-or-transformation test should be used for determining patent eligibility of a process. This test can be satisfied 1) by showing that the claim is tied to a particular machine or 2) by showing that the claim transforms an article.

Although the Federal Circuit did not decide in Bilski whether the recitation of a computer is enough to tie a process claim to a particular machine, the BPAI in Ex Parte Gutta found that a recitation in the preamble of the claim to a “computerized method performed by a data processor” adds nothing more than a general purpose computer that is associated with the steps of the process in an unspecified manner. The BPAI held that such a field of use limitation is insufficient to render an otherwise ineligible process claim patent eligible.

The BPAI also found that because the claim did not require any particular structure for the step of “displaying,” this was also insufficient to satisfy the machine prong of the test. The BPAI reasoned that a conclusion that such post-solution activity is sufficient to impart patentability to a claim involving solving a mathematical algorithm would exalt form over substance.

Finally, in finding the transformation prong was also not satisfied, the BPAI held that the data being manipulated did not represent a physical or tangible object. The data at issue represented information about user selection histories, which the BPAI found was an intangible.

In conclusion, the BPAI is not suggesting that software method claims are unpatentable. However, to avoid a 101 rejection, special attention should be paid to process claims to ensure that the claims satisfy one of the two prongs of the machine-or-transformation test. A general purpose computer recitation will no longer satisfy the patent eligibility requirement. Rather, the claim should be tied to a particular machine.

By Vincent J. Allen