Amazon and IP disputes

Amazon IP - Amazon acting like its own court
The court of Amazon

Amazon.com is enough of an 800-pound-gorilla that its IP policies can impact trademark, copyright, and patent strategy. Amazon is not kind to descriptive (supplemental register) trademarks.

Amazon.com markets products from millions of manufacturers and vendors, resulting in a large number of IP (trademark, copyright, and patent) disputes.

Unfortunately, the US court system is designed to administer slow, careful (and thus expensive) justice to a small number of IP litigants. It can’t scale to Amazon volumes. So Amazon decided to make its own IP dispute process.

Trademarks:

The Amazon Band Registry offers a number of methods to help trademark owners protect their rights and promote their products. However, at least for the US, just any trademark won’t work. The Amazon Brand Registry is presently only available for USPTO trademarks on the principal register. USPTO supplemental registry trademarks are out of luck.

The USPTO supplemental register is where otherwise OK, but “descriptive” trademarks are put to “age” for 5 years until the mark is considered to have “acquired distinctiveness”. So, the moral is that if you are planning to sell on Amazon, it is good to avoid the supplemental register. This can be done by registering a less descriptive product name.  There are trade-offs here, however, since descriptive names help customers understand the purpose of new products.

Copyrights:

Be careful about the text and images that you upload. It should either be your own material, or material that you have clear rights to (e.g. license, resale of previously purchased physical items). Amazon operates a Digital Millennium Copyright (DMCA) infringement reporting system that you (and others) can use to report issues. If you hold copyrights that you feel are important, consider registering them with the US copyright office, as this can make enforcement easier. Note, however, that under their terms of service, Amazon acquires a license to use your uploaded material.

Patents:

Amazon has recently announced a pilot patent dispute program.  The process is fast and (for patent law) inexpensive. The plaintiff provides the US patent number and the Amazon listing of the allegedly infringing product. Both parties can argue this (e.g. one submits written arguments for infringement, and the other submits written arguments in defense).  Both can pay $4,000 to submit their arguments to an Amazon selected neutral patent evaluator. The neutral evaluator evaluates the patent and product in question.

The winner gets their $4,000 fee back. The loser loses its fee. If the allegedly infringing product loses, Amazon will take down the listing. The neutral evaluator’s decisions are apparently final, but you can still go to the court system if you want.

Disclaimer: I have no affiliation with Amazon. Amazon IP policy can change at any time. However, Amazon is enough of an 800-pound-gorilla that their IP policies are having an impact on the IP ecosystem.

USPTO office actions

USPTO office actions
USPTO office actions

USPTO office actions are used to reject most patent applications by using “done before”, “obvious”, “vague”, or “not patent-eligible” type arguments.

Although we all hope that a patent application will sail through the USPTO patent examination process and be allowed “as is”, this usually doesn’t occur.  As a practical matter, examiners work on a quota system. The net effect of this quota or “count” system is that the average successful patent is usually rejected several times before it is allowed.

Typically an examiner will first read the patent claims and search for various citations (often earlier-filed patent applications) that match certain claim key-words.  The examiner will then write a 20-40+ page “office action” document that rejects your various claims for various reasons, and send it to the correspondence contact of record.  The examiner expects you to respond within three months by submitting a written “office action response” that rebuts these various rejections.

The most “popular” USPTO rejections are:

Done before – 35 USC 102: The examiner thinks he has found another single citation that teaches everything in your particular claim. However absent actual copying, no two patents are usually totally alike. This type of rejection can often be rebutted by explaining where the citation is different or amending the claims to add additional detail that differs from the citation.

Note that filing a patent application more than one year after the invention was first published or sold also results in 35 USC 102 rejections. Under the law, the invention is instead considered to be public domain.

Obvious – 35 USC 103:  The examiner (sometimes impermissibly guided by your disclosure) is attempting to reject your claim by combining features from multiple citations. The examiner may often create a Frankenstein concept that may or may not be plausible. Fortunately, there are examination rules here. Often this type of rejection can be rebutted by any of 1) showing that the examiner is misquoting the citations, 2) amending your claims, 3) showing which “103” examination rules were broken.

Vague – 35 USC 112:  This “vagueness” or “indefinite” type rejection is used for different things. Sometimes it is harmless and easily corrected, such as when the claim’s grammar is off. Sometimes it is deadly, such as when your underlying patent application doesn’t teach how your invention works in adequate detail.  This is more likely to happen if the original application lacks specific examples.  Although this can often be rebutted or fixed by changing the claims, sometimes the only way to attempt to fix this is to file a “continuation in part” application that adds the missing detail.

Not eligible – 35 USC 101:  In the old days (i.e. before 2015), this was a rarely used rejection because the 35 USC 101 law was written to be very expansive. However, recent court decisions have made this area quite a swamp, and this is still being sorted out. In the meantime, realize that business methods and financial methods have a higher than average rejection risk.

RCE: request for continued examination

Request for continuing examination
“Final” rejections are how the USPTO gets RCE fees

Did your patent examiner send you a “Final Rejection?” Relax, it’s not actually final. It’s how the USPTO gets “request for continued examination” (RCE) money!

The economics of patent examination: The USPTO gives examiners between 14 to 30 hours to examine patents. The exact amount of time differs according to the patent’s complexity and the examiner’s seniority. This is the total time: time to understand the application, research prior-art, write a critique, and respond to applicant rebuttals.

This official time quota is unrealistically low. The USPTO lists the examination time quotas for various types of inventions as:

  • Fishing lure: 16.6 hours
  • Immunotherapy: 25.9 hours
  • Satellite communication: 27.7 hours

So, the official examination time difference between trivial and mind-numbingly complex patents is about 10 hours! Is there any wonder why office actions tend to be formulaic?

Examiners also have quality goals as well. The USPTO evaluates examiners on a “count” system. This gives examiners financial incentives to meet their quality goals within these time objectives.

Resetting the time clock

To keep the system from breaking down, the USPTO allows examiners to “reset the clock.” Under this “reset” system, your initial filing fee buys you the first round of examination. It also gets you an analysis of your initial rebuttal, and one “final” decision. After this, if you want to keep playing, you have to put more money in the slot.

The “deposit coins to play again” process is simple. You must write an adequate “RCE-response” to the previous “final rejection.” Then, when you file this RCE-response, you also file a “request for continued examination” (RCE) form and pay an RCE fee. The RCE fee is slightly less than the initial filing fee, but you get the idea. Essentially you are purchasing another block of examination time.

The count system is structured to give examiners some mild incentives when it comes to RCE. Specifically, the examiner comes out a bit ahead if they decide to accept the applicant’s RCE-response. So, the next office action response after the “final rejection” is often an excellent time to try to make a deal. A good way to do that is to schedule a telephone interview. Then send the examiner an informal draft RCE-response, and discuss. Examiners can’t tell you what to do, but you can often get hints about what sort of changes might be helpful.

Image: Coin Acceptor by Arthur Shlain from the Noun Project

Hague international design patents

Hague countries international design patents
Hague international design patent countries. By L.tak, CC BY-SA 4.0

The Hague system allows you to use one application to file design patents in many countries simultaneously, but it is quirky and doesn’t work everywhere.

Are you thinking of filing your US design patent application outside the US?  For some countries like China and India, you will have to register locally. For other countries, such as Canada, Europe (EU), Japan, and Korea, consider using the Hague system.  In either case, think fast, because the deadline is often just six months after your initial filing.

What is the Hague system?  The Hague system (Hague Agreement Concerning the International Registration of Industrial Designs) is a series of international treaties. These treaties allow applicants from participating countries to register design patents in other participating countries directly.  If you or your company is not a resident of a participating country, you are out of luck.  You must get international coverage the hard way by finding a local representative and filing with the local patent office.

The US signed up in 2015.  Other countries are also in the process of joining but are not in yet. There are presently 66 countries participating.  So as the map shows, coverage is still somewhat uneven.

The rules are not uniform.

The drawing requirements and extent of post-filing examination can vary between countries.  The EU, for example, limits design drawings to a maximum of seven views, but otherwise, acts as a registration system that doesn’t require much subsequent effort.  By contrast, like the US, Japan also requires examination as well. So in Japan, as well as the US, the applicant must thus do additional activities and pay additional fees.

Unlike US design patents, the Hague system allows you to register multiple related designs in one application.  However, for those thinking of gaming the system for US design patents, realize that the USPTO will require you to select just one design. The US will require you to pay extra to examine any other versions.  Still, if you have a large number of variations, this is an option to consider.  However, note that the Hague system also publishes all design applications within six months of filing, while the US does not. So the Hague system offers less confidentiality.

Maintenance fees

You must pay maintenance fees on your Hague system registrations every five years. These last for up to a total of 15 years of total coverage. By contrast, after a US design patent has issued, the USPTO will give you 15 years of coverage with no maintenance fees.

How to file

Like other patents, the USPTO will accept Hague system patent applications and forward them on to the international office in Switzerland.  If your design patent has not yet previously passed a security review and obtained clearance, then you should (must) file via the USPTO first.  However, if you have clearance (e.g., you have previously filed in the US and received international filing approval), then use the Hague’s E-filing system. It is both quicker and easier.

Beware the “on-sale bar”

killed by the on-sale bar
Victim of the on-sale bar

A patent is invalid if the invention was sold more than a year before filing (on-sale bar), and the recent “Helsinn v Teva” case shows that the courts can be harsh.  

A patent applicant can accidentally ruin their own patent in various ways.  In the US, one error is to first sell an invention (presumably in the form of a product with the same claims), and then wait more than a year to file the patent. This error violates the 35 USC 102 on-sale bar of classic (pre-2012) patent law. This error also violates the latest 2012 AIA version of patent law, which phrases this as “on sale, or otherwise available to the public”.

However, the relationship between an “invention” and a “product” isn’t always clear, and it also isn’t always clear if a “sale” has taken place.  Is the product identical to the invention’s claims?  If I privately show you a cardboard box and say “I have an invention inside, want to buy it sometime if it works?”, and you say “Maybe”, is this a sale that invalidates a later patent?  In the event of doubt, how will the courts rule?  Will they err on the side of protecting the patent, or invalidating the patent?

In their May 1, 2017 “Helsinn Healthcare via Teva Pharmaceuticals” decision, the Federal Circuit took a harsh and patent unfriendly approach. Indeed, this ruling was so harsh that Lamar Smith, the Congressional sponsor of the 2012 AIA law, stated that the court was ignoring the intent of Congress.

To greatly simplify the Helsinn case: back in 2001, Helsinn was doing FDA clinical trials on the efficacy of various palonosetron drug formulations to reduce nausea during chemotherapy. During these trials, they signed a supply agreement with MGI (another company) stating that if the FDA approved some of Helsinn’s various drug formulations, and if MGI subsequently made purchase orders for these drug formulations, and if Helsinn subsequently accepted these purchase orders, then Helsinn would sell the drug to MGI. In 2003, after the clinical trials were successful, but before FDA approval, and before any actual product changed hands, Helsinn began filing for various patents.

Teva, a competitor, decided to challenge these patents as being invalid due to the “on-sale bar”. But was there really a sale? Was there an invention yet? Was it disclosed to the public? A lower court ruled in favor of Helsinn, but the Federal Circuit reversed.

The Federal Circuit used the Uniform Commercial Code (UCC – a set of laws intended to “save” ambiguous contracts by automatically supplying missing terms) to argue that there was a “sale” despite all the “ifs” and ambiguity. They then argued that the invention was in the (undelivered) product and that the invention existed before clinical proof that it actually worked.  Strangely, they even argued that the AIA “on sale, or otherwise available to the public” language didn’t apply because… this would change past practice. Apparently Congress, (despite good reasons and clear intent) somehow doesn’t have enough authority to make these changes?

The case was appealed, and unfortunately, in 2018, the Supreme Court affirmed the Federal Circuit. Specifically, the Supreme Court decided: “...Because we determine that Congress did not alter the meaning of “on sale” when it enacted the AIA, we hold that an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential can qualify as prior art under §102(a). We therefore affirm the judgment of the Federal Circuit.”

So modern US patent law is quite harsh in this area.  Be careful.

Sovereign Immunity, Tribes, & IPR

tribal lands sovereign immunity
Tribal lands in the US

A strange way to help immunize US patents from IPR attack recently emerged – the “sovereign immunity defense”.

IPR attacks: Since the America Invents Act (ACA) went into effect in 2013, a popular way to invalidate patents has been to challenge them in Inter Partes Review (IPR) proceedings. IPR proceedings are a USPTO (Federal) Patent Trial and Appeal Board (PTAB) proceeding where challengers can argue that a given patent is not novel, or is obvious, in view of various published prior art.

Sovereign Immunity: The Eleventh Amendment to the US Constitution reads: “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”

Background: The University of Maryland (UMD) owned patent 7,635,386, covering a method of repairing cardiac valves. In May 2017, UMD successfully overcame an IPR challenge by arguing that UMD, as part of the State of Maryland, was therefore immune from the PTAB and IPR under the Eleventh Amendment (Sovereign Immunity).

OK… maybe so. Certainly, UMD was able to cite various cases supporting their view. PTAB agreed and dismissed the challenge.

They did what? Allergan PLC, a multinational pharmaceutical company with its own patents to protect, decided to push this concept to the limit.  Allergan sold some of their patents to the St. Regis Mohawk Tribe (located in New York) and then immediately licensed the patents back again. In September 2017 Allergan then argued that since this tribe is also a sovereign government, “the tribe’s” patents also had sovereign immunity to IPR challenges!

Well, points for creativity! I don’t think anyone has ever thought of this angle before. Certainly, the tribe would have been very happy to supplement its Casino business.

In terms of sovereignty, the tribes’ legal status, “domestic dependent nations”, is best described as “it’s complicated”. Did Allergan invent a new form of “patent laundering“? Patent law could have taken an interesting turn.

Sadly, for fans of twisty patent strategy, in 2018 the Federal Circuit shut this down in Saint Regis Mohawk Tribe, Allergan Inc. v. Mylan Pharmaceuticals et al. A subsequent appeal to the Supreme Court was denied.

But to contemplate an alternative reality, enjoy the enclosed map of the continental US, showing the larger tribal lands in color. They could have been the new frontier in creative patent law strategy! Perhaps they still could be, since the Federal Circuit ruling was narrowly focused on IPR. Other areas of patent, trademark, and copyright immunity remain to be explored.