0Patents and Standardization: How to Avoid 10 Common Pitfalls
If your company is involved in research, design and development of new technology, chances are a standards setting organization (SSO) is discussing the potential standardization of such technology. There are clear benefits to participation in an SSO – keeping abreast of industry developments, targeting product development toward standard compliant products, steering research and intellectual property protection into potential areas of future standardization and directing the standardization efforts toward your strengths. However, participation comes with risks. Here are 10 ways to avoid patent and licensing pitfalls that can catch the unwary off-guard:
1. Do not disclose the invention prior to filing a patent application.
Participation in an SSO, especially technical participation in a working group, may tempt participants to divulge your company’s recent innovations. This disclosure, which may be documented in the working group meeting notes, starts the one-year countdown to placing a patent application on file in the United States. See 35 U.S.C. §102(b). Many other countries’ patent regimes are not so lenient, and disclosure of the innovation prior to filing the patent application may completely bar an inventor from obtaining non-U.S. patent rights.
2. Be aware of when the IPR must be disclosed to a standards body.
While each SSO has its own rules and regulations, virtually all have some form of intellectual property rights (IPR) disclosure obligations. The question thus arises: when must this disclosure of patent-related IPR occur? Must you disclose IPR at the time you make a technical submission or contribution? What are the obligations of a company participating in an SSO but not active in a particular working group? Must IPR be disclosed if the standard is not finalized and thus subject to change?
Unfortunately, this is not a wholly academic exercise, and the timing of disclosure can have both business and legal ramifications. If IPR is disclosed too early in the standardization process, the other members of the SSO may change elements of the standard to avoid your IPR and thus negate a potential source of licensing revenue. Additionally, the standard may develop in a direction away from your product development thereby delaying your ability to bring standards compliant products to market.
On the other hand, disclosing IPR too late in the process can lead to legal problems. There is strong concern about companies manipulating the standard setting process so that the final standard infringes an undisclosed patent. This concern about disclosure to standards bodies is also reflected in litigation where defendants are raising defenses and counterclaiming based on perceived improper activities in association with the belated disclosure of IPR to standards bodies. See, e.g., Rambus Inc. v. Infineon Technologies A.G., 318 F.3d 1081 (Fed. Cir. 2003).
3. Be aware of what IPR must be disclosed to a standards body.
Turning to the IPR itself, what must be disclosed? The easy case would seem to be an already-issued patent. The patent is publicly available and the metes and bounds of the patent are already set by the issued claims. But what about a published patent application, where the invention has already been disclosed to the public, but the claims may have not yet been allowed? What about a patent application that has been filed but not published? What about an idea for which an application is being prepared but has not yet been filed? What, on this sliding scale, needs to be disclosed?
When facing these disclosure decisions, one option is to have an independent expert evaluate every standards organization member’s IPR and determine whether it should be disclosed to the SSO. By utilizing a neutral third party to make all disclosure decisions, you can shield yourself from later accusations of impropriety. This also insures consistency of disclosure among the standards organization members because all members’ IPR is evaluated by the same individual. However, few organizations have taken this route. In fact, most have fairly ambiguous requirements as to what must be disclosed.
4. Be aware of what IPR you may be required to license and under what terms.
Not only must IPR be disclosed to an SSO, but the company owning the IPR often must agree to license it to all parties at Reasonable and Non-Discriminatory (RAND) terms. In some cases, members of a standards organization are required, as part of their membership agreement, to acknowledge that they will license any IPR pertinent to any standard. In other cases, the standards organization requires a specific statement offering to license IPR identified as potentially pertinent to a particular standard. Examples of specific and general IPR statements for the IETF can be found at http://datatracker.ietf.org/public/ipr_disclosure.cgi. The IETF has also published several drafts of “A Template for IETF Patent Disclosures and Licensing Declarations.” See www.ietf.org/rfc/rfc3979.txt. Failure to secure an appropriate statement from the necessary parties may result in the delay or abandonment of the issuance of the particular standard.
Assuming your company has agreed to license its patents related to a particular standard, the question becomes: what are appropriate RAND terms? Are you limited to a paid-up royalty or can you ask for a running royalty? What about a grant-back of a patent from the licensee? Must the grant-back be of a patent related to a standard? Must all potential licensees be licensed on the same exact terms? What if your patent covers an “optional” portion of the standard (i.e., the portion of the standard your patent covers is not required to implement the basic standard)? In that case, do you need to disclose anything at all, much less license? Again, SSO’s historically did not have any specific requirements (or even guidelines). The IETF in RFC 2026 states:
[The IETF] will not make any explicit determination that the assurance of reasonable and non-discriminatory terms for the use of a technology has been fulfilled in practice. It will instead use the normal requirements for the advancement of Internet Standards to verify that the terms for use are reasonable. ... [T]he assumption is that the terms must be reasonable and to some degree, non-discriminatory. This assumption may be challenged during the Last-Call period.
Recognition by the standards organizations that licensing presents issues in this context has led some to try to provide further guidance. See, e.g., Intellectual Property Rights in IETF Technology at www.ietf.org/rfc/rfc3979.txt. Other organizations, such as the World Wide Web Consortium (W3C), have proposed that all members make the IPR that they believe to be essential to a standard available on a Royalty Free (RF) basis.
5. Take care to avoid laches or estoppel.
If you decide against using RAND or RF licenses, you must be aware of the possible consequences if you are unable to negotiate a license with a potential licensee. For example, if you cannot come to an agreement with the potential licensee and delay bringing suit for patent infringement, you may be subject to counterclaims of laches, equitable estoppel or implied license. See, e.g., Wang Labs., Inc. v. Mitsubishi Elecs. Am. Inc., 103 F.3d 1571 (Fed. Cir. 1997); Stambler v. Diebold, Inc., 11 U.S.P.Q.2d 1709 (E.D.N.Y. 1988); Potter Inst. Co. v. Storage Tech. Corp., 207 U.S.P.Q. 763 (E.D.Va. 1980).
6. Take care to avoid an investigation by the government.
Both the disclosure and licensing approach taken with the SSO can lead to potential government investigation for antitrust violations. If you do not disclose all of your IPR in an attempt to capture the market after a standard is set, you could be investigated by the Antitrust Division of the Department of Justice and/or the Bureau of Competition of the Federal Trade Commission. See, e.g., In re Rambus Inc., No. 9302 (F.T.C. filed June 18, 2002); see also In re Dell Computer Corp., 121 F.T.C. 616 (1996).
Additionally, anticompetitive licensing terms can also lead to governmental antitrust investigations. While licensing conduct is less likely to lead to investigation, this is a possibility if the licensing terms unreasonably exclude competitors from access to the standard. Be careful that all prospective entrants into the standard are treated the same in their respective licenses.
7. You are on notice.
Participation in standards organizations provides a further potential pitfall. Assume you participated in an SSO and you launch a product. Suddenly, you receive a complaint stating that your product infringes another of the participant’s patents. They point out that they clearly stated to the standards body that practicing the standard implicates their patent. You failed to secure a license in advance. “Well,” you say, “I’ll take that license.” Not so fast: You were put on notice of the relevant patent, never got an outside opinion of patent counsel and now are potentially liable for willful infringement and enhanced damages. Your best defense will be a good offense; perhaps the plaintiff may have delayed in identifying the patent to the standards organization, may have delayed in bringing suit or you may have an implied license to the technology in question.
8. Patent pools can limit your rights to separately license.
Increasingly, SSO members are turning to patent pools where each SSO member contributes to the pool all IPR necessary to practice the standard. The purpose of a patent pool is to promote the standard by making it easier to license the necessary technology. Your ability to independently license your patents becomes circumvented because the pool will control the licensing of your patents, at least with respect to the practicing of the standard.
9. When licensing from a patent pool, don’t forget about a defensive suspension.
Not all companies participate in existing patent pools. What happens when a third party takes a position inconsistent with the patent pool? Does the patent pool need to license that third party? Say that third party is you. If you have taken a license from the pool be sure to check for a defensive suspension provision. Such a provision allows for the patent pool to revoke the license in the event any group member is sued by your company. So, in taking a license, make sure you know what rights you are giving up.
10. Revenue sharing in patent pools: get your fair share.
Once the licensing terms for the patent pool have been decided, the question then becomes: What will your company receive in royalties? Generally, patent pools license the group’s entire portfolio and split the revenue among the members. Two common revenue sharing models divide revenue on either a per member or per patent basis. Before entering into a standards organization, you should have your IPR valued to insure you maximize your revenue. If your company owns multiple patents covering the core technology of an emerging standard, your company should try to receive a larger share than members whose portfolios are not as strong.
0Protecting Your Intellectual Property Against Infringement on the Internet
Since just about everything is on the Internet today, it is no surprise that trademark and copyright infringement often happen there as well. What follows is a brief summary of the basic trademark and copyright problems that may arise on the Internet, as well as some practical tips for dealing with them when they occur.
How do trademark and copyright infringement occur on the Internet?
As much as people have come up with innovative ways to use the Internet positively, still others have come up with ways to utilize the Internet as a means to impair valuable intellectual property rights. Although it is impossible to identify every type of infringement occurring on the Internet, there are a few that are particularly prevalent. First, trademark infringement often happens through the domain name of a website. The classic instance is cybersquatting, which is said to occur when a third party registers your trademark as a domain name (e.g., www.domain.com) and then attempts to sell it at an inflated price. Other uses may be as a fan site (e.g., www.domainrules.com), as an anti-fan site (e.g., www.domainstinks.com), or as a “typosquatter” (e.g., www.domian.com).
Second, potential trademark and copyright infringement can occur in the content of the website – the website features your product name or logo (or variations on your name or logo) or sections of copyrighted material for which the registrant does not have a license. This can occur, for example, when the owner of a website purports to be an authorized distributor of your product or uses images, sounds or written descriptions for which you own the copyright.
What can I do in advance to protect myself?
One possibility that should be considered at the outset is to file for appropriate trademark or copyright registrations. A well-developed strategy for registering certain types of intellectual property can be useful in establishing ownership down the road if you discover a potential infringer. In addition, use of a watch service is something that may enable you to identify possible infringers.
Also, when registering your domain name, register the possible variations that may result in infringement so as to avoid the costs of recovering them later on. For example, you should consider registering any obvious variations, different top level domains (“TLDs”) (e.g., .com, .org, .biz), nicknames, slogans, obvious typos, and criticism or fan names.
What are my options once I realize someone is potentially infringing my trademark or copyright?
There is always the option of litigation to protect your intellectual property. Traditional infringement and dilution remedies exist under the Lanham Act, the Copyright Act and state law. Additionally, in 1999, Congress enacted the Anti-Cybersquatting Consumer Protection Act to deal with trademark infringement through domain names. The Digital Millennium Copyright Act (“DMCA”) was enacted in 1998 to protect against improper use of copyrighted material through digital media.
Traditional litigation may be attractive in that, in addition to shutting down the offending website or having your protected material removed, there is the potential that you may recover damages from the infringing party and, in some cases, recover your attorneys’ fees. On the other hand, litigation is often a costly and lengthy process. Additionally, except in limited circumstances where the court may be able to exercise “in rem” jurisdiction, litigation requires identification of the infringer, which in cyberspace is not always a straightforward proposition.
Below are several viable alternatives to the litigation process that may be appropriate in certain instances to protect your intellectual property. They are less costly and quicker, but they provide more circumscribed remedies.
ICANN’s Uniform Domain Name Dispute Resolution Policy (“UDRP”) . ICANN is a non-profit governing body that oversees much of the activity on the Internet. As part of its function, ICANN established the UDRP to deal with infringing uses of domain names. As part of the domain name registration process, registrants must agree to submit to the UDRP to resolve disputes concerning competing rights in a domain name. UDRP provides for a convenient form of alternative dispute resolution when you believe that someone has registered in bad faith a domain that is identical or confusingly similar to your mark.
The procedure under the UDRP is fairly straightforward, making it easy to contain costs. Typically, no hearing is granted in these proceedings. Rather, a decision is made on the basis of an opening complaint by the complaining party and a response, if any, by the registrant of the domain name. The proceedings can result in a decision in as little as three to four months. Moreover, in many cases, the registrant will not respond, increasing the likelihood of success.
The UDRP has its limitations. Neither damages nor attorneys’ fees can be recovered. Rather, the only available remedies are the transfer or cancellation of the domain name. Moreover, in the event of a ruling in favor of a complaining trademark owner, the registrant is allowed a 10-day period within which to challenge the ruling in court. Nevertheless, a UDRP proceeding is attractive because it is comparatively quick and inexpensive and statistics show that trademark owners tend to prevail more often than not.
Recourse through the registrar . Many domain name registrars also include in their terms and conditions protective procedures that may help if you believe your copyrights or trademarks are being infringed in the body of a website (for domain name disputes, you will be referred to ICANN’s UDRP). While easy to use, and often effective, the remedies that these provisions offer are fairly easy to challenge.
As an initial note, if you wish to take advantage of the remedies offered by a registrar, you will first have to determine who the registrar is. This information can usually be found in a “WHOIS” database, available on any number of websites (e.g., www.whois.net, www.networksolutions.com, www.register.com).
Copyrights . Copyright dispute resolution procedures can usually be found by clicking on the link to “legal” on the registrar’s website (often located at the very bottom of the website’s homepage). These provisions are fairly standard in light of the “takedown” safe harbor provisions included in the DMCA.
In most instances, the registrar requires that you send them notification, either by e-mail or regular mail, that includes your contact information, an electronic signature of the copyright owner, identification of the work that is being infringed and identification of the infringing material. The notification also should include a statement that you have a good faith belief that the person using the information is not authorized to do so.
If the registrar believes the notification is appropriate, it will remove or disable access to the infringing material. In doing so, however, the registrar must take reasonable steps to notify the accused infringer to afford an opportunity to submit a counter-notification. The counter-notification must include a statement that the registrant has a good faith belief that the material was removed or disabled because of a mistake or misidentification and that it submits to the jurisdiction of the court where the registrar is located. If a proper counter-notification is filed, the registrar must notify you that the material will be restored within ten days. In that case, you are likely faced with the prospect of having to resort to litigation, although there is always the possibility that a registrant will never file a counter-notification.
Trademarks . Not all registrars offer dispute resolution procedures for trademarked material, probably because there is currently no trademark analog to the DMCA’s takedown safe harbor. Nevertheless, because the law is not clear whether a registrar can be found contributorily liable for trademark infringement by its registrants, some do offer them. For those who do, the procedures are similar to those for copyrights. Shutdown is not automatic, however, and the registrar may allow time for investigation. On the other hand, the procedure may allow for remedies other than just shutdown of the site – e.g., suspension from registering additional domains for a period of time.
ConclusionAlthough not surefire ways to retrieve your intellectual property, the registrar’s own policies and ICAAN’s UDRP are valuable tools in an intellectual property owner’s arsenal. They are often a good first start, as they are less costly and time-consuming than traditional litigation and may produce the desired result quickly and efficiently.
0Profile: Ira J. Levy
Ira J. Levy, a partner in Goodwin Procter’s Litigation Department, has a diverse intellectual property practice, working on matters involving patents, copyrights and trademarks. He has extensive experience with disputes involving biotechnology, pharmaceuticals and chemistry; electronics, computers and telecommunications; mechanical devices; industrial and consumer products; and the Internet, new media and e-commerce. Mr. Levy has been an active member of the New York Intellectual Property Law Association, International Trademark Association, American Intellectual Property Law Association, Association of Patent Law Firms, American Bar Association, Pharmaceutical Trademarks Group and the Legal Aid Society.
Q: What got you interested in IP law?
Ira: When I was growing up, a close relative worked for a small intellectual property firm in New York. During school breaks and summers, I had an opportunity to observe the practice close-up by working in the office services department of the firm. Over the years, and through college, I worked my way up from the mailroom, where I ran photocopy machines and served lunch to the partners, to organizing the library and ultimately supporting technical research for an International Trade Commission proceeding. While in college pursuing my degree in molecular biology, the Supreme Court handed down its landmark decision in Diamond v. Chakrabarty, a case that held that a genetically manufactured microorganism was patentable subject matter. While this sparked my interest in intellectual property, it wasn’t until after taking my MCATs, applying for medical school, and changing my mind about pursuing a medical degree, that I decided to revisit intellectual property. It was suggested by family and friends that I consider going to law school and pursue a career in intellectual property law. Working my way through law school at different intellectual property firms, I continued to expand my interests into trademark and copyright law, as well as patent law. By the time I graduated, it was clear that I was going to pursue a practice in intellectual property law. Interestingly, while I expected to move quickly into patent litigation, my earliest opportunities came on the trademark side, and it was not until later in my associate career that I started picking up more patent litigation.
Q: Why do you like IP law?
Ira: I enjoy the creative energy of my clients. I also appreciate the accessibility of the subject matter of the cases. For example, while some people find the science underlying patent cases to be daunting, I enjoy breaking the technology down to a point where it is accessible and understandable to judges and juries. I also enjoy the fact that while most people may find the details of a corporate transaction or a breach of contract lawsuit to be something less than exciting, people tend to have a soft spot for creation and innovation – they can side with inventors, artists, and even marketing/advertising people, and are usually absorbed by the back-story behind innovation.
I also enjoy and appreciate the fact that my kids can understand much of what I do. For example, I once worked on a case for Pepperidge Farm Goldfish brand crackers and cookies. Pepperidge Farm accused Nabisco of diluting the trademark and trade dress rights in the Goldfish brand cracker by launching a new cheese cracker that played off a Nickelodeon television show, Cat Dog. This case moved along quickly, and we were working almost every day over a two-month period. One Saturday, before leaving for the office, I was trying to explain to my daughter, then in nursery school, why Daddy was working so hard. After a couple of minutes, and a few bowls of crackers, I think she got it. In fact, on Monday, when she went back to school she told her teacher and classmates: “Daddy is making the world safe for Goldfish.”
Q: Tell us about your interesting clients and cases.
Ira: In the past, I have tended to work a lot within the food industry. Over my career, I have represented General Goods, now Kraft General Foods. I have also represented Nestle/Stouffer’s, Oscar Mayer, Miller Brewing Company, Campbell Soup, Godiva, Pepperidge Farm, PepsiCo, Tropicana and Quaker Oats. In addition, over the years I have done a fair amount of work for Teva Pharmaceuticals, Tyco, American Home Products (now Wyeth) and Johnson & Johnson. I have also represented a number of luxury goods companies such as Polo/Ralph Lauren, L’Oreal and Giorgio Beverly Hills.
One of the more interesting cases I handled was on behalf of Miller Brewing Company and Molson Breweries. John Labatt Breweries sued Miller and Molson for patent and trademark infringement in connection with their sale and marketing of a beer style known as “ice beer.” In the late 90s, Labatt received a patent for a method of creating ice in a stream of beer as it made its way through a brewery. Since brewing processes are different at each brewery, we had to work with our experts to inspect and document the process conditions and equipment at each of Molson’s Canadian and Miller’s United States breweries, spread across the various countries. As I was standing in my 12th brewery with the head brew-master for Molson, I realized what a great job I had.
Another interesting case was on behalf of Oscar Mayer, which makes Claussen brand pickles. At the time, Claussen was running an advertising campaign centered around whether or not competitor pickles were crunchy or droopy. A competitor charged that the advertisements were misleading, and challenged the advertisements with each of the major broadcast networks. We then had to go to the standards bureaus for each of the networks, white lab coats and jars of pickles in tow, to recreate the droopy versus crunchy claim shown in the challenged advertisement, and substantiate the claim.
I find that almost all of my cases, even the trademark and advertising cases, reside at the interface between law and science. I look forward to expanding the diversity of our IP practice as the Goodwin Procter grows and expands to California.
0Recent Developments at Goodwin Procter
Recent Conferences, Seminars and Speaking Engagements
AIPLA Spring Meeting
Dates: May 3-5, 2006
Location: Chicago Hilton & Towers, Chicago, IL
This was the annual meeting of the American Intellectual Property Law Association. Several IP-related topics were covered, including: patents, licensing, trademarks/copyrights and ethics. Ira Levy was a program coordinator for this event and moderated the “Litigation (Complex Case Management) Multi-District Issues” panel.
NYIPLA Judge’s Dinner
Date: March 24, 2006
Location: Waldorf-Astoria Hotel, New York, NY
The firm was a sponsor of this 84th annual awards dinner honoring the federal judiciary. The event consisted of a CLE program during the day on the interface between the Federal Circuit and the District Court on claim construction, chaired and moderated by Ira Levy, and an awards dinner in the evening featuring keynote speaker, author Scott Turow.
2006 E-Commerce Global Summit
Dates: March 16-17, 2006
Location: Marbella Country Club, San Juan Capistrano, CA
The Internet Business Law Services presents this annual event which provides perspectives on e-commerce regulations, international Internet legal challenges, best practices of their organizations and their clients, case studies with unique insights, and frank discussions as to what direction e-commerce regulation will take over the next 2-5 years. Jackie Klosek was a member of the faculty for this event and offered a global perspective on data security and emerging standards in preventing and responding to data security breaches.
Advanced Licensing Agreements 2006
Dates: March 6-7, 2006; March 16-17, 2006
Locations: PLI Center, New York, NY; PLI Center, San Francisco, CA
This program was designed to address some of the more complex issues that arise in drafting and negotiating intellectual property licenses. Ira Levy was the co-chair for this program as well as a presenter on the “Trademark Licensing from the Inside and Outside” session. Steve Charkoudian presented the “Patent and Technology Licensing” session.
Patent Basics for the Non-Specialist
Date: March 2, 2006
Location: PLI Center, New York, NY
This event helped in-house counsel, general attorneys and business managers identify and understand key patent issues facing their organizations in today’s highly competitive business environment. Kingsley Taft delivered the “Patent Issues in M&A Transactions” presentation.
Citigroup’s Global Healthcare Conference
Date: March 1, 2006
Location: Mayflower Hotel, Washington, DC
Ira Levy participated in the “EPO Patent Litigation: Possible Outcomes for Amgen & Roche” panel which explored the key legal issues surrounding Amgen’s EPO patent infringement case against Roche, including the relevance of prior rulings related to the Amgen patent case against Transkaryotic Therapies (TKT)/Aventis, the potential structure of CERA and implications for infringement and non-infringement, and procedural issues related to the litigation process.
Maximizing Returns of Your Intellectual Property Portfolio
Dates: January 26-27, 2006
Location: The Harvard Club, New York, NY
This event, produced by The Wall Street Transcript, brought together authorities in the intellectual property field to discuss methods for deriving value from intellectual assets, strategies for insulating your patent portfolio from legal challenges, and techniques for valuing an IP portfolio. Ira Levy presented “Due Diligence for Executing Your Licensing Strategy.”
Practical Approaches to Trademark Clearance Issues
Date: January 23, 2006
Location: International Trademark Association Headquarters, New York, NY
Ira Levy served as the host of this two-hour roundtable discussion that covered current trademark issues.
Ira J. Levy published “Licensing Due Diligence” in the March 1, 2006, issue of Metropolitan Corporate Counsel
Jacqueline Klosek published “IP Due Diligence: A Key Component of Corporate Transactions” in the March 1, 2006, IAM magazine supplement From IP to IPO 2006
Kingsley L. Taft published “Reviving Your Life Sciences Deals Through Restructuring,” in the February 20, 2006, issue of Mass High Tech
Ira J. Levy and Anastasia M. Fernands published “Building a Strong Case for the Defence” in the February 1, 2006, IAM magazine supplement IP Value in the Life Sciences Industries
Victories and Related Developments
Goodwin Procter recently filed a trademark infringement and trademark dilution action on behalf of our client Roll Call, Inc. – the publisher of the well-known Capitol Hill newspaper – against Roll Call Strategies, a Kentucky firm that registered to lobby Congress on behalf of several of its clients. The action claimed that Roll Call Strategies, a new consulting and lobbying organization, had chosen its name with the intention of trading on our client’s stellar reputation on Capitol Hill. The infringement was particularly disturbing because the credibility of a newspaper such as Roll Call depends on the perception that it is impartial, which perception the existence of a lobbying firm with a similar name directly threatens. Several days after we filed the lawsuit, the parties entered into a settlement agreement whereby Roll Call Strategies agreed to change its name. The action was brought by Adam Chud, with assistance from Collette Goodman and Kandis Koustenis.