Patent News

Nov. 6, 2013

Bloomberg: Patent reform, Apple, Barnes: Intellectual property

This article originally appeared in Bloomberg on November 6, 2013.

U.S. lawmakers, influenced by companies including Cisco Systems Inc., Eli Lilly & Co. and Qualcomm Inc. , are considering the second set of patent-law changes in three years as the courts try to race ahead of Congress.


The goal is to rein in entities that buy patents and demand royalties from as many companies as possible. Often derided as “trolls,” such firms filed 19 percent of all patent lawsuits from 2007 to 2011, the Government Accountability Office found.

Finding a balance among protecting products from knockoff competition, rewarding inventors for making their ideas public and limiting nuisance suits has been debated for more than 200 years, even more so now that some lawsuits are targeting users of ubiquitous technology like e-mail and Wi-Fi.

The U.S. Supreme Court is considering when to penalize patent owners for filing questionable claims, while the federal courts’ administrator has proposed disclosure rules that may lessen litigation costs.

The legislation Congress is considering would do some of the same things — make patent companies pay the other side’s legal fees if they lose and tell the courts to change their discovery rules.

“You do not need Congress to mandate things courts are already willing to consider,” Circuit Judge Kathleen O’Malley of the U.S. Court of Appeals for the Federal Circuit, which handles all patent appeals, said in a Sept. 17 speech to the Intellectual Property Owners Association.

The struggle between the courts and Congress has divided companies along the lines of who gets sued more often.

Google Inc., Cisco and other technology companies in the Coalition for Patent Fairness back legislation introduced Oct. 23 by Representative Bob Goodlatte, a Virginia Republican who heads the House Judiciary Committee. It would allow collection of legal fees from licensing companies that lose at trial and require they provide more details about patents and how they were infringed.

Companies like Qualcomm that own many patents and make money from licensing them say weakening patents would hurt their business. The Qualcomm-backed Innovation Alliance seeks limited congressional action, and is pushing lawmakers to stop diverting money from the U.S. Patent and Trademark Office, which is funded entirely by user fees.

The Coalition for 21st Century Patent Reform — made up of General Electric Co., Johnson & Johnson, Eli Lilly and other patent holders — says the Goodlatte bill takes some power from courts.

Apple Gets Patent on Proximity-Related Home Automation System

Apple Inc., maker of the iPhone and iPod, received a patent on a technology that would enable control of a variety of devices based on the proximity of a mobile device.

Patent 8,577,293 was issued yesterday, according to the database of the U.S. Patent and Trademark Office. It covers a system and method of determining the location of wireless communication devices and persons and adjusting the operation of devices based on that location.

Cupertino, California-based Apple said in the patent that this technology could be used to control such things as lighting and security systems, garage-door openers, climate controllers and music systems, and could even pre-heat an oven.

Although presently technology exists for remote control of all of these devices, Apple said that sometimes events — such as being stuck in traffic — may affect a person’s return home. Through the use of relay servers, the person’s proximity can be determined and the desired operations can be initiated when the person is close to home.

Apple applied for the patent in June 2012 with help from Kilpatrick Townsend & Stockton LLP of Atlanta.


Fila’s Acushnet Unit Sues Over Infringement of Titleist Marks

Fila Korea Ltd.’s Acushnet unit filed a trademark lawsuit against two San Diego residents and 10 unnamed defendants.

The sporting-goods company claims they infringe the Acushnet “Titleist” and “Foot-Joy” trademarks used with golf shoes and clothing, including belts, rainwear, gloves and visors.

According to the complaint filed Nov. 1 in federal court in San Diego, even though the goods the defendants sell are “substantially different” from legitimate Acushnet goods, they use marks that are similar to the company’s trademarks.

Acushnet claims that the infringing goods are of a lesser quality and are being sold to trade on the fame acquired by the legitimate Titleist and Foot-Joy goods.

The public is confused as to the source of the counterfeit goods, and Acushnet claims the reputation of its products and marks suffers as a result, according to the complaint.

The sporting-goods company seeks a court order barring further infringement, together with awards of attorney fees, litigation costs, money damages of $2 million for each counterfeit Acushnet trademark used, profits derived from the alleged infringement, and surrender of the money-transfer systems used by the defendants.

The case is Acushnet Co. v. Yoo, 13-cv-02632, U.S. District Court, Southern District of California (San Diego).

‘Smilin’ Buddha’ Subject of Dispute Between Museum, Bar Owner

A Canadian museum and the owner of a bar that once was the center of Vancouver’s punk scene are battling over the rights to the “Smilin’ Buddha” neon sign, the Vancouver 24 Hrs. website reported.

Robert Jir, who owns the Smilin’ Buddha Cabaret, registered the trademark in 1997, and objects to the Museum of Vancouver’s use of the sign’s design on merchandise, according to the website.

The sign, which depicts a chubby Buddha with a flashing belly, is on display in the museum, Vancouver 24 Hrs. reported.

Museum officials are challenging Jir’s trademark, saying the sign was only rented to the club by its maker, and that although Jir registered the trademark, he failed to use it for many years, according to Vancouver 24 Hrs.


Barnes & Noble Seeks Dismissal of E-Book Sample Case

Barnes & Noble Inc., the New York-based book-sales chain, asked a federal court to dismiss a copyright case brought by an author.

Louis K. Smith sued Barnes & Noble in federal court in New York in June 2012. He claimed that by allowing the public to download samples of his e-book “Hardscrabble Zone” after any relationship with Barnes & Noble ended, the bookseller infringed his copyrights.

Smith had a contract with a distributor to sell his E-books. The distributor made an arrangement with Barnes & Noble to sell the book, according to court papers.

In response, Barnes & Noble said in an Oct. 31 filing that after the distributor provided the book to Barnes & Noble to sell to retail customers, it never sold a single copy. Although Smith terminated his relationship with the distributor in October 2011, no one ever informed Barnes & Noble of this fact, the company said in court filings.

Barnes & Noble said that the only people who could look at a sample of Smith’s book after the end of the relationship would be a user who had previously stored that sample in a “digital locker” during the period in which the book was available.

The bookseller said only one user ever acquired a sample of the book through Barnes & Noble, and that user downloaded the sample seven times. Enabling someone to access content that the user previously accessed legally isn’t infringement, Barnes & Noble said.

The company also said the same sample is presently available for free on both Google Inc.’s Google Books and Inc. (AMZN) It told the court that the company is entitled to have the infringement case dismissed.

The case is Smith v. LLC, 12-cv-04374, U.S. District Court, Southern District of New York (Manhattan).

Trade Secrets/Industrial Espionage

EMC Claims Pure Storage Hired Ex-Employees to Get Secrets

EMC Corp., the world’s largest maker of storage computers, filed a trade-secrets misappropriation case against rival Pure Storage Inc. of Mountain View, California.

The complaint, filed Nov. 4 in federal court in Boston, claims that since August 2011 at least 44 of its technical engineers and sales professionals have decamped for Pure Storeage “under suspicious circumstances.”

The ex-employees, who “apparently now comprise over 50 percent of Pure Storage’s entire sales force,” possessed confidential knowledge about EMC products and their implementation at some of the company’s “most strategically valuable customers,” according to the complaint.

The departing employees all had contractual obligations to Hopkinton, Massachusetts-based EMC, the company said in its pleadings. These included a requirement they not divulge the company’s confidential information and not solicit EMC’s customers or employees for a proscribed period, according to the complaint.

EMC said although it has has sent at least 27 letters to Pure Storage’s chief executive officer, the California company continues to hire former EMC employees and induced them to solicit EMC’s customers and employees. The company said that it successfully sued at least six of its former employees and obtained court orders requiring the return of confidential and proprietary company property.

The Massachusetts company says it’s been harmed by Pure Storage’s actions, and cited several examples of press coverage of the California company’s targeting of EMC.

EMC asked the court to order Pure Storage to quit using the confidential information, inducing EMC employees to leave and soliciting EMC’s customers. The company also seeks money damages and extra damages to punish Pure Storage, as well as awards of attorney fees and litigation costs.

The complaint is without merit and Pure Storage will fight the allegations, Hope Nicora, a spokeswoman for the company, said in an e-mail.

“All employees — both our own and those of our competitors — should be free to follow their dreams and support their families as they see fit, provided they honor their lawful commitments and safeguard the IP of past employer,” Scott Dietzen, Pure Storage’s chief executive officer, said in a statement. Pure Storage “will not be deterred” from hiring “great people,” he said.’

The case is EMC Corp. v. Pure Storage Inc., 13-cv-12789, U.S. District Court, District of Massachusetts (Boston).