Business Method Man

It was not a very happy St. Paddy’s Day for tech giant Apple.  Qualcomm, on the other hand, saw plenty of green – to the tune of 31 million dollars, according to CNET.com.

Qualcomm filed a patent infringement suit against Apple in July 2017.  According to the New York Times the subsequent trial lasted eight days in the United States District Court for the Southern District of California.  After nearly two full years of litigation a jury decided in favor of Qualcomm, finding that Apple had violated three patents when developing some versions of the iPhone.

Adding fuel to Apple’s fire was a potential import ban on some of its iPhones as a result of the infringement verdict.  According to the Washington Post the import ban would take place in the fall, if at all.  Prior to the implementation of a ban a review would take place in front of a full ITC panel – and then a 60-day presidential review period would occur.

Most recently AppleInsider has reported that Qualcomm wanted to cooperate with Apple on a 5G iPhone.  Despite rulings against both parties in recent weeks the two companies may churn out a state-of-the-art smartphone.  Apple, however, is “reportedly working on its own 5G chip” and may not accept Qualcomm’s 5G modems as a result of the legal battle.

Often trademark disputes can turn on the meaning and significance of one word.  This past week the word was “bula.”  To the average American consumer it may not mean much – in fact it could sound like a random, fanciful term.  But below the surface lies a dispute that spans oceans across the globe.

An archipelago of over 300 islands constitute the South Pacific country of Fiji.  One visit to a Fijian travel guide webpage yields a litany of statements concerning the meaning and significance of the term “Bula” – a word signifying life, unity, customer service, a greeting, a wish for good health, a blessing, a song of welcome, and a feeling of affection.  (https://www.go-fiji.com/bula.html).  No matter the setting it is evident that the term carries significant weight and meaning – especially to Fijians.

But not everyone has treated the term Bula with this sort of deep cultural reverence.  The USPTO database lists 43 trademark records – live and dead – containing the word Bula.  According to ABC news, registrations for Bula exist in Australia as well.  The USPTO list contains five live records of Bula as a solo word, pertaining to stuffed toys, wines, knitted winter accessories, and health care compliance consulting, and bar services.   It’s that last one which has generated the most recent controversy.

Registrant Ross Jacob Kashtan began using the mark Bula in 2009.  A Florida-based bar owner, Mr. Kashtan filed for the Bula mark on April 18, 2017.  The USPTO published the mark for opposition on June 19, 2018 and eventually granted the trademark registration to Mr. Kashtan on September 4, 2018.  The Bula mark now covers, in addition to bar services, wine, beer, sake, juice, KAVA, cafes, coffee, and juice bar services.   The registration record itself specifies that the meaning of the word Bula is life.

Can the government of Fiji succeed in forcing Mr. Kashtan to kill his trademark registration?  It will undoubtedly seek justice by way of the World Intellectual Property Organization (WIPO).  But how successful will the challenge be?  For inspiration perhaps the Fijian government can look to a recent case concerning the Aloha Poke mark.  (https://chicago.eater.com/2018/7/30/17631154/aloha-poke-response-boycott-leis-poke-stop-anchorage-alaska).  In 2016-17 a Chicago-based restaurant registered a pair of “Aloha Poke” marks for its business.  Protests and boycotts ensued – and the restaurant eventually decided to re-brand.  The gravity of the emotional response from native Hawaiians outweighed the business value of protected trademarks.

It’s fair to predict that Mr. Kashtan will endure backlash from the Fijian government: both with a cancellation petition and with a feverish response from the Fijian community.  Much like the restaurateurs in Chicago Mr. Kashtan will have to make a decision that is best for his business – but also one that is best for Fijians and the world at large.

Recently the USPTO published a patent application filed by Bank of America this past April.  The application, titled “Block Chain Encryption Tags,” contains claims directed to network nodes “configured to maintain a block chain.” It it is one of nearly fifty blockchain-based patent applications filed by Bank of America as of June 2018. And the biggest surprise of all would be if that number fails to increase.

A blockchain operates as a peer-to-peer (P2P) network with computers consisting as nodes.  The network is decentralized so each node administers the blockchain.  One of the most popular uses of blockchain technology is for cryptocurrency, like Bitcoin and Ethereum, which is a virtual currency.

What’s the danger?  Hacking, for one.  But at this point the SEC doesn’t seem to be angling to label cryptocurrencies as securities.  William Hinman, head of the SEC’s division of corporate finance, recently opined that neither Bitcoin nor Ethererum would constitute a security if “purchasers no longer [had] expectation of managerial stewardship from a third party.”  So a cryptocurrency user may not necessarily have the long arm of SEC law on their side at all times.

As for patenting?  Expect blockchain patent applications to grow.  According to ccn.com blockchain inventions are booming: an astonishing 406 blockchain patents were issued worldwide in 2017.  Most came from China yet the US still leads in terms of the overall number of blockchain patents filed.  Chinese president Xi Jinping recently described blockchain technology as “substantially reshaping the global economic structure.”  This is despite China’s ban on all crypto trading and ICO (initial coin offering) fundraising.

As the US strives to maintain an edge over China in the world IP market blockchain technology will continue to grow and improve.  It’s therefore no surprise that blockchain patent applications and grants are on the rise.

In 2010 Oracle sued Google for copyright infringement, alleging that Google had stolen Oracle’s intellectual property by adopting Java naming protocols.   In its most recent decision on the matter the Court of Appeals for the Federal Circuit (the “Federal Circuit”) ruled in favor of Oracle, sending the case back down for a third jury trial.  Is any end in sight?

Sun Microsystems developed the Java computer programming platform in 1990.  Twenty years later Oracle bought Sun.  Java is a free programming language and, as the Federal Circuit recognized, “anyone using [Java] can write their own library of [pre-written] programs to carry out various functions.”  However, Oracle has charged license fees to those who wish to use its Java APIs (application programming interfaces) “in a competing platform” or when “embed[ding] them in an electronic device.”

Google, in 2005, after acquiring Android, Inc., wanted to use Oracle’s APIs “for free with no limits on modifying the code.”  Oracle did not agree to this as it would have contradicted its “write once, run anywhere” philosophy.  Google, upon its ability to reach an agreement with Oracle, decided to “[d]o Java anyway and defend [its] decision, perhaps making enemies along the way.”

Previously the Federal Circuit had held that the code and single sign-on (SSO) of Oracle were entitled to copyright protection.  But the Federal Circuit also remanded the case back to the United States District Court for the Northern District of California (the “district court”) to resolve a Fair Use issue – that Google was entitled to Fair Use of the copyrighted Java material.   The district court considered the four Fair Use factors (purpose and character of use, nature of the copyrighted work, amount and substantiality of the portion used, and market harm) in concluding that the jury was “reasonably within the record in finding fair use.”

The unstoppable force has finally met its immovable object.  Apple and Samsung, engaged in years of patent infringement disputes, finally agreed on a settlement this past Wednesday.

The case commenced in 2011 when Apple accused Samsung of infringement.  In 2016 the matter reached the Supreme Court, which sent the case back to the Federal Circuit for the purpose of determining an appropriate legal standard.  But Samsung had lost many of the disputes and – despite some reduction of damages owed to Apple over the years – finally agreed to settlement terms.

The parties have not disclosed exact figures.

 

Happy  new year everyone.

After sparring in federal courtrooms at the circuit and district levels for years the Supreme Court has finally set the stage for war between tech giants Samsung and Apple.  Both companies have been sparring over a series of design and utility patents.  After the Court of Appeals for the Federal Circuit (“Federal Circuit”) ruled against Samsung in May of 2015 Samsung’s attorneys filed a petition for a writ of certiorari, asking the U.S. Supreme Court (“Supreme Court”) to take up its appeal of the Federal Circuit decision.  The Supreme Court agreed, limiting the inquiry to “whether, where a design patent is applied to only a component of a product, an award of infringer’s profits should be limited to those profits attributable to the component.”

At issue are a trio of Apple’s design patents, a trio of Apple’s utility patents, and a registered trade dress.  As a matter of background Apple first sued Samsung in April 2011.  Sixteen months later a jury issued a verdict finding Samsung guilty of infringing and diluting Apple’s patents and trade dresses, awarding Apple over $1 billion in damages.  Samsung appealed the case to the Federal Circuit.

First, the Federal Circuit found that Apple failed to show non-functionality for its unregistered trade dress, therefore finding that Apple’s unregistered trade dress could not be protectable.  The unregistered trade dress included “a rectangular product with four evenly rounded corners; a flat, clear surface covering the front of the product; a display screen under the clear surface; substantial black borders above and below the display screen and narrower black borders on either side of the screen; and when the device is on, a row of small dots on the display screen, a matrix of colorful square icons with evenly rounded corners within the display screen, and an unchanging bottom dock of colorful square icons with evenly rounded corners set off from the display’s other icons.”

Analyzing the unregistered trade dress as per the Disc Golf factors the Federal Circuit found that Apple had failed to disprove functionality.  Apple admitted that the unregistered trade dress improved the quality of its iPhone in some respects, thereby providing a utilitarian advantage.  Apple failed to demonstrate the existence of alternative designs that offered the exact same features present in the unregistered trade dress.  Apple failed to win the argument that its advertisements refrained from touting utilitarian advantages.  In addition Apple failed to produce evidence demonstrating that the design elements of its unregistered trade dress were inexpensive to manufacture.

Next the Federal Circuit tackled the registered trade dress issue, once more finding functionality as a result of the “easy to use” design theme of the sixteen icons present on the screen. The Federal Circuit ruled that Apple had failed to disprove functionality on behalf of its registered trade dress.

Samsung raised three points of contention in arguing that it was not guilty of infringement of Apple’s three design patents.  The points of contention included the presence of functionality, the absence of actual deception, and the need for comparison to prior art.  But the Federal Circuit found that the design patent claims pertained to “the ornamental design,” not any functional elements.  In addition, noting that “a design patent is infringed if an ordinary observer would have been deceived,” the Federal Circuit ruled that actual deception was not a requirement for infringement and that the jury instruction was proper on that matter.  Moreover, the Federal Circuit concluded that the jury instruction properly included a requirement that the jury had to consider the prior art admitted at trial.

In a similar light the Federal Circuit rejected Samsung’s contention that substantial evidence failed to support the infringement verdict.  Nor did the district court abuse its discretion in precluding Samsung’s witness testimony with regard to an allegation of copying.

With regard to damages the Federal Circuit ruled that the district court jury was correct in awarding lost profits to Apple after finding that Samsung did not provide non-infringing substitutes.  In addition the Federal Circuit held that Apple’s experts sufficiently provided evidence to support the jury’s reasonable royalty awards for Apple.

Samsung filed a petition for a writ of certiorari.  On March 21 the Supreme Court granted the petition.  Apple’s brief to the Supreme Court included analysis regarding reasons for denying the petition.  Apple contended that the district court’s jury charge properly explained the issue of design patent protection.  Apple also argued that Samsung’s claim of Apple’s design patents claiming “conceptual or functional attributes like rounded corners and rectangular form” was wrong.  Apple also argued against the incorporation of the filtration doctrine of copyright law.  In addition Apple contended that the Federal Circuit’s ruling on design patent damages did not warrant review, and that the question of the case was not important enough for Supreme Court review.

Samsung posed three key contentions.  First, Samsung contended that the district court neglected to explain the meaning of “ornamental” in the term “ornamental design.”  Second, Samsung contended that Apple failed to mention the infringement instruction in its brief.  Third, in suggesting that the invalidity contention rescued the infringement instruction, Apple only highlighted the need for review, as Apple offered no reason why its features should be functional for trade dress purposes but not for design patent purposes.  In addition Samsung contended that Apple’s features were not merely ornamental but indeed functional for trade dress purposes.  Samsung also contended that courts, not juries, must construe patent claims.  Samsung’s second main point of contention argued that certiorari was warranted on whether a design patent holder was entitled to an infringer’s entire profits.  Moreover Samsung supported review of the case as it presented a question of “enormous national importance.”

While the word “enormous” may be a bit out of place there is no denying the importance of this case.  A ruling from the Supreme Court would indeed speak volumes as to the methods of analysis used in design patent cases.  Apparently the Supreme Court agreed in granting the petition.  And so this long-ranging war between Samsung and Apple will reach a new high (or low) in the coming months as the Supreme Court puts its stamp down on issues of infringement and damages.