Monday, September 26, 2016

Intellectual Property and the U.S. Economy: 2016 Update - From the USPTO & Economics & Statistics Administration

Intellectual Property and the U.S. Economy: 2016 Update

Executive Summary

Innovation and creative endeavors are indispensable elements that drive economic growth and sustain the competitive edge of the U.S. economy.  The last century recorded unprecedented improvements in the health, economic well-being and overall quality of life for the entire U.S. population. As the world leader in innovation, U.S. companies have relied on intellectual property (IP) as one of the leading tools with which such advances were promoted and realized. Patents, trademarks, and copyrights are the principal means for establishing ownership rights to the creations, inventions, and brands that can be used to generate tangible economic benefits to their owner.

Monday, September 19, 2016

American Invents Act on Its Fifth Anniversary

The current implementation of PTO post issuance proceedings is undermining confidence in our patent system, chilling innovation at its roots, and, in eyes of some, giving the AIA a bad name.”
failure-success-roadTomorrow, September 16, 2016, is the fifth anniversary of the America Invents Act (“AIA”). Passed with overwhelming bipartisan support, President Obama explained at its signing that the AIA would reform the outdated patent process through “a bill that cuts away the red tape that slows down our inventors and entrepreneurs” by “put[ting] a dent in the huge stack of patent applications waiting for review” to “help startups and small business owners turn their ideas into products three times faster than they can today.” The President further stressed that the AIA would ”improve patent quality and help give entrepreneurs the protection and the confidence they need to attract investment, to grow their businesses, and to hire more workers.”
President Obama was certainly right about the first point, so much so that many have forgotten how significantly backlogs have decreased since the America Invents Act became law. In September of 2011, the United States Patent and Trademark Office (“PTO”) had a growing backlog of 700,000 patent applications awaiting examination. As the President observed at the AIA signing ceremony:
These are jobs and businesses of the future just waiting to be created. The CEOs who are represented here today, all of them are running companies that were based on creativity and invention and the ability to commercialize good ideas. And somewhere in that stack of applications could be the next technological breakthrough, the next miracle drug, the next idea that will launch the next Fortune 500 company. And somewhere in this country — maybe in this room — is the next Thomas Edison or Steve Jobs, just waiting for a chance to turn their idea into a new, thriving business.
By eliminating fee diversion and providing the PTO fee setting authority, the AIA gave the PTO the resources and tools it needed to reduce the patent application backlog to about 550,000 by mid-2016, while reducing pendency to first action from 28 months to 16.1 months and the total overall pendency by more than 7 months to 25.7 months. See PPAC Operations Update, August 18, 2016.
It is still too early to assess whether another major objective of the AIA — to improve patent quality by transitioning from a first-to-invent (“FTI”) to a first-inventor-to-file (“FITF”) system — will achieve its promise. By restricting the prior art available against FITF applications to prior filed patents and prior publically accessible information, while retaining the benefit of a one year grace period as to inventors’ own public disclosures and others derived from the inventor, the goal was to enable patent examiners to identify and consider all of the relevant prior art. Under this new system, secret prior art, including the actual (but usually unknown) dates of secret prior uses and prior inventions, would no longer lurk as threats to the validity of issued patents. At the same time, prior user rights were expanded to protect against infringement liability based on later filed FITF patents. It remains to be seen if FITF patents prove to be more reliable than their FTI counterparts, but there is good reason to think that will be the case.
It is also too soon to determine whether the AIA’s substantial step towards harmonization with other countries’ first-to-file systems will yield fruit in the form of prompting our major trading partners to adopt effective grace periods to protect all inventors against the effects of their own pre-filing public disclosures. Although procedural harmonization seems to be making good progress within the IP5, and our IP5 representatives, including PTO Director Lee, continue to constructively encourage others to reach a meaningful compromise, significant hurdles remain to substantive harmonization.
Another aim of the AIA was to bring the public into the original examination process, which it in part accomplished by authorizing members of the public to make pre-issuance submissions of prior art in applications under examination, along with concise explanations of that art’s relevance. Although not yet common, this process has proven to be a fairly effective way of ensuring that patent examiners become aware of, consider and, as appropriate, apply prior art during the original examination process.
The supplemental examination provision of the AIA — which was intended to encourage patent owners to rectify potential issues of inequitable conduct — is one that has not fulfilled its promise. Crafted to address situations where a patent owner later recognizes that incomplete or incorrect information was earlier provided to the PTO, supplemental examination was intended to provide a mechanism for the PTO to determine whether such errors or omissions were material to the issued claims. If so, the patent would be sent to reexamination. By insulating any claims later emerging from such a reexamination from later allegations of inequitable conduct based on that submitted information, innovators would then be encouraged to invest in the development and commercialization of inventions that might otherwise lie dormant due to unpurged blemishes in their prosecution histories. But supplemental examination has not found favor with patent owners. Reasons for this include the difficulty in meeting the PTO’s highly detailed requirements for making such a submission, issues relating to the potential secondary effects of implicating prior actors in wrongdoing (including possible referrals to the Attorney General for prosecution), and rulings from the Federal Circuit substantially tightening the requirements for proving inequitable conduct.
Even more disappointing to patent owners have been the AIA’s newly-created post issuance proceedings. Although the AIA intended to preclude these proceedings from being used to harass patent owners — by providing for high institution thresholds (§§ 314(a) and 324(a)), by having the Director “take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office” (§ 325(d)), and by ensuring that patent owners would be protected from any “improper use of the proceeding” (§§ 316(a)(6) and 326(a)(6)) — this combination of provisions has not proven effective. Moreover, notwithstanding the AIA’s explicit authorization allowing patent owners the right to propose “a reasonable number of substitute claims” (§§ 316(a)(9) and 326(a)(9)), Patent Trial and Appeal Board (“PTAB”) rules and practice effectively make such amendments impossible. Nor have inter partes review (“IPR”) proceedings been limited to grounds based only on the texts of “prior art consisting of prior patents and publications,” as the AIA intends (§ 311(b)) (italics added). Rather, both at the institution and final hearing stage, petitioners present wide ranging expert declarations that are typically accepted (without testing by live cross examination before the panel) that fill in otherwise missing motivations to combine, while patent owners’ evidence of objective indicia of non-obviousness is routinely rejected as insufficiently proven or as lacking a nexus to the claimed invention.
It is no wonder then that would-be patent challengers see post issuance proceedings, particularly IPR proceedings, as so attractive that three times the projected numbers of petitions have been filed – 60-70 percent of which have led to institutions. And once instituted, the prospects for patent owner success are dismal. Final decisions uphold some or all of the challenged claims less than a quarter of the time. Although it was bad enough that a former chief judge of the Federal Circuit called these proceedings a “death squad for killing property rights” (See IP Watchdog March 24, 2014), worse still was the confirmation from then chief judge of the PTAB who said, “If we weren’t, in part, doing some ‘death squadding,’ we would not be doing what the statute calls on us to do.” August 14, 2014 Patent Public Advisory Committee, as reported in Law 360 IP by Ryan Davis. See also “Misleading PTO Statistics Hide a Hopelessly Broken PTAB,” IP Watchdog, Sept. 6, 2016.
Compounding the problem are the abusive practices that have grown up to exploit the perceived anti-patent bias in these proceedings. IPR filings by hedge funds trading in the stock of patent-dependent business have been widely publicized, as have incidents of “reverse trolling,” where persons attempt to extort payments or licenses from patent owners to forego or settle IPR proceedings.
So unfortunately, Mr. President, after five years I cannot report back that the AIA has yet ”improve[d] patent quality and help[ed] give entrepreneurs the protection and the confidence they need to attract investment, to grow their businesses, and to hire more workers.” The current implementation of PTO post issuance proceedings is undermining confidence in our patent system, chilling innovation at its roots, and, in eyes of some, giving the AIA a bad name.
But all hope is not lost. Although the courts gave the PTO a wide berth in early challenges to the PTO’s interpretations and implementation of the AIA, several recent cases suggest that a more critical eye may now be used when reviewing PTO practices. Moreover, change may be afoot within the PTO itself, as a new chief judge of the PTAB with deep practical patent experience has now assumed his position, and the PTAB judges themselves are gaining more experience. Finally, post grant reform provisions approved this year by the Judiciary Committees of both houses, and further improvements still under consideration, strongly suggest that Congress is prepared to step in if the PTO is unwilling or unable to level the PTO post-issuance playing field.
I am still an optimist when it comes to the AIA. I am also a believer in the dedicated personnel at the PTO who understand that reliable, high quality patents are necessary to provide the dependable incentives our country needs to advance science and the useful arts. Our government’s system of checks and balances will take time to exert themselves. But when all is said and done, we will still have the best patent system in the world, and we will continue to work together to make it even better. We owe this to the innovation that otherwise may never occur, and to all those who will need it in the future.

Thursday, September 15, 2016

Upcoming Changes to EFS-Web Payments for Deposit Accounts and EFTs

Here's an update for those using the  EFS-Web Payments for Deposit Accounts and EFTs:

Upcoming Changes to EFS-Web Payments for Deposit Accounts and EFTs

Beginning Oct. 17, EFS-Web customers who use a deposit account or EFT for paying fees must use Financial Manager to store the payment method and to manage user access to the payment method.

Deposit accounts and EFTs that are not stored in Financial Manager as of Oct. 17 will no longer be viable payment options for customers. In addition, customers must have established a account and be set-up with the Fee Payer permission in order to use the payment method. 

Starting Oct. 17, the USPTO will process all EFS-Web payments via the new USPTO payment page only. All deposit accounts and EFTs must be stored in Financial Manager and customers must have Fee Payer permission in order to make a payment.
Customers will see a phased approach to this change beginning Monday, September 19, when deposit account customers who are not assigned the Fee Payer permission on the deposit account being used for payment will no longer see their name on the list of authorized users. Customers impacted by this change should contact their deposit account Administrator to be added as a Fee Payer before Oct. 17, when the ability to pay with old credentials (i.e. deposit account number and access code) will be completely removed as an option in EFS-Web.

EFT users must also store their EFT in Financial Manager and/or be assigned the Fee Payer permission on that EFT before Oct. 17, to avoid losing access to use the EFT as a payment method.

Get Familiar with the New Payment Page

Today, you can select the option to pay with "New USPTO Payment System." Additional information is available in the Introduction to the New USPTO Payment Page.

More information about Financial Manager can be found by visiting  For additional assistance, please send an email to or call 1-800-786-9199 and select option 3, then option 4. 

Friday, September 9, 2016

Great Gov Tweets

Great Gov Tweets - September 09, 2016
This was the 8th most engaging Tweet from U.S. government Twitter accounts on September 8, 2016.

Within its first day, this tweet received
81 favorites
and reached a potential
561,024 people

Tuesday, August 30, 2016
08/29/16 20:29

Colors Need Patterns To Make TMs 'Distinctive': 10th Circ.

Courts may find the use of color in a product’s packaging to be “inherently distinctive” for trademark purposes only if specific colors are combined with a well-defined pattern, shape or design, the Tenth Circuit held Monday in a published opinion involving the packaging for a Colorado company’s metalworking products. A color scheme is not distinctive on its own, held the appellate court panel in its opinion on the packaging for Forney Industries Inc.’s products, basing its determination in part on U.S. Supreme Court precedent that a product’s color is not inherently distinctive and that litigation over the legal question should be kept to a minimum.

The Tenth Circuit upheld a lower court’s determination that the combination of red, yellow, white and black used in Forney’s packaging is neither inherently distinctive nor has acquired a “secondary meaning” that would lead the public to associate it with the company rather than with defendant Daco of Missouri Inc.’s products and packaging, according to the panel.

The Tenth Circuit determined that Forney’s packaging has varied so many times over the years that the company cannot claim to have an inherently distinctive design worthy of trademark protection under the Lanham Act, according to the opinion.

“Forney has used the combination of red, yellow, white and black in such diverse ways that there is no consistent shape, pattern or design we can discern from its description of its mark or from the examples it provides,” the opinion reads. “Particularly in light of the Supreme Court’s instruction to be cautious about applying vague, litigation-friendly tests for inherent distinctiveness, we conclude that Forney has failed to establish an inherently distinctive trade dress.”

Forney filed the infringement suit against Daco in October 2013, alleging that its Missouri-based rival violated the Lanham Act and various Colorado state laws by packaging its “Hot Max” products with a set of colors Forney had long used, according to the May 2015 order by the District of Colorado granting Daco’s motion to dismiss.

Counsel for the parties could not be reached for comment on Monday.

U.S. Circuit Judges Harris L. Hartz, David M. Ebel and Nancy L. Moritz sat on the panel for the Tenth Circuit.

Forney is represented by William W. Cochran of Cochran Freund & Young and Christopher Benson.

Daco is represented by Jack D. Robinson of Spies Powers & Robinson PC.

The case is Forney Industries Inc. v. Daco of Missouri Inc. d/b/a KDAR Co., case number 15-1226, before the U.S. Court of Appeals for the Tenth Circuit.

Wednesday, August 24, 2016

 IPO Daily News  
  IPO08/23/16 09:06


Last Thursday during the U.S. Patent and Trademark Office’s quarterly Patent Public Advisory Committee meeting, Rocky Mountain Regional Office Director MOLLY KOCIALSKI reported that the USPTO’s four regional offices are up and running.

Last Thursday during the U.S. Patent and Trademark Office’s quarterly Patent Public Advisory Committee meeting, Rocky Mountain Regional Office Director MOLLY KOCIALSKI reported that the USPTO’s four regional offices are up and running. Dallas and San Antonio will be fully-staffed by second-quarter of FY2017. Denver is currently fully-staffed. Detroit is in the process of fully staffing the office. Kocialski said the objectives of the regional offices are to recruit and retain patent examiners and Patent Trial and Appeal Board Judges, to act as a hub for IP outreach and education, to provide easy stakeholder access to USPTO resources, to enhance stakeholder relationships, and to spur economic development and innovation.

Wednesday, August 17, 2016

TTAB Refuses Co-Existence Agreement re: Beer Trademark

US courts have long held that consent agreements should be given “great weight” by the US Patent and Trademark Office (USPTO) when determining whether there is a likelihood of confusion between an applied-for mark and an existing registration. Indeed, the USPTO’s Trademark Manual of Examining Procedure (TMEP) specifically states that the USPTO “should not substitute its judgment concerning likelihood of confusion for the judgment of the real parties in interest without good reason, that is, unless the other relevant factors clearly dictate a finding of a likelihood of confusion.” Recently, however, in In re Bay State Brewing Company, Inc, the USPTO’s Trademark Trial and Appeal Board (TTAB) issued a precedential decision in which it decided to affirm a likelihood of confusion refusal, notwithstanding the fact that the parties at issue had entered into a consent agreement.