IP Happenings – December 2016 – January 2017

27.02.2017

By Lawrence Hoffman – J.D., B Sci. Electrical Engineering and Comp. Sci, U.S. Patent Attorney

PATENTS

More on Patent Eligibility:

There will always be something to say on patent eligibility under U.S. law. A recent case doesn’t involve eligibility directly, but demonstrates that we are a long way from the end of the tunnel with no light, even from an oncoming train, yet apparent.

Garfum.com Corp. v. Reflections by Ruth: This patent infringement action began as many do, with a motion by Reflections to dismiss Garfum’s complaint on the basis of lack of lack of patent eligibility. Garfum opposed the motion, but before it was decided, it gave Reflections a covenant not to sue and had the case dismissed.

Reflections then moved for attorneys’ fees under § 285 of the Patent Act, saying that the case met the exceptionality requirement because Garfum’s opposition had no legitimate basis. Garfum argued that its arguments were reasonable as shown by allowance of a continuation application. The court rejected Garfum’s argument because there was no mention of patent eligibility in the notice of allowance for the continuation, and granted Reflections’ motion.

Garfum then reopened the prosecution of the continuation, and filed an Information Disclosure Statement in which it submitted all the briefs on eligibility from the lawsuit. The continuation was re-allowed.

Garfum was then able to persuade the court not to award attorneys’ fees, essentially on the basis of reallowance of the continuation and the Alice mess, which the court charitably described as “the uncertainty in this area of jurisprudence”.

To this observer, the result was correct, but not because of the reallowance of the continuation. Realistically, except in the simplest case of a claim to a well-known method executed on a general purpose computer, almost any argument for patent eligibility of a software implemented method is reasonable. Cases in this area of the law are simply not exceptional based solely on the arguments.

In re Hiroyukiitagaki: The Patent Trial and Appeal Board (PTAB) delivered a nice gift on 30 December to those who regard the two-part test in Alice v. CLS Bank to be an anathema and those who think the PTAB should be reined in or even abolished altogether. This is an appeal from a final rejection of an application directed to an MRI machine. The Examiner had rejected the claims as obvious over several references. The Board reversed, but entered a new ground of rejection, namely that the claims were directed to an abstract idea. Wow!

Representative claim 1 reads as follows:

A magnetic resonance imaging apparatus comprising:

an image acquisition unit configured to divide an imaging region of an object to be examined into a plurality of stations of respective station positions, and acquire a plurality of stations of respective station positions, and acquire a plurality of images having different image types for each station, while moving a table on which the object is mounted, station by station;

a display unit configured to display the plurality of images in a predetermined display format; and

a classification processing unit configured to classify the plurality of images by image types and station position, based on imaging condition including imaging parameters,

wherein the display control unit displays the plurality of images by image types in spatial order of station positions, based on the classification result by the classification processing unit.

Who would ever have thought that an apparatus claim could be directed to an abstract idea? Does anybody out there know of a single case with a similar result?

It’s a bit difficult to analyze this decision with any degree of logic or even with a straight face because the Board treats it as if the claims are method claim. The board says that the claim is “directed to classification”. But that can’t be right – the claim is unambiguously directed to a machine.

The Board seems to have gone astray because of the functional language in the claim. But apparatus claims often are written in terms of function and don’t give rise to Section 101 rejections.

I don’t think we’ve heard the end of this one.

A District Court Gets One Right on Eligibility – and the CAFC Affirms:

In Trading Techs. Int’l, Inc. v. Cqg, Inc., the CAFC affirmed a holding of eligibility on two patents related to computerized systems to assist securities and commodity traders to make their trades at the desired prices and quantities in a rapidly changing market. The patents teach creation of a user interface that displays bid and asked prices dynamically along a static display, and pairs orders with the static display of prices to prevent order entry at a changed price.

As to the first step of the Alice test, the district court stated:

. . . rather than reciting a mathematical algorithm, a fundamental economic or longstanding commercial practice, or a challenge in business, the challenged patents solve problems. . . in the context of computerized trading relating to speed, accuracy and usability. . . in existing graphical user interface devices that have no pre-electronic trading analog, and recite more than setting, displaying, and selecting data or information that is visible on the [graphical user interface] device. . . [and] do not simply claim displaying information on a graphical user interface. The claims require a specific, structured graphical user interface paired with a prescribed functionality directly related to the graphical user interface’s structure that is addressed to and resolves a specifically identified problem in the prior state of the art.

The CAFC affirmed, stating, “[T]he district court’s rulings are in accord with precedent”. In support, the court noted that “specific technologic modifications to solve a problem or improve the functioning of a known system generally produce patent-eligible subject matter” and that “claimed process[es] us[ing] a combined order of specific rules that improved on existing technological processes were deemed patent-eligible”.

Maybe things will get better eventually.

The Great Water Balloon Fight

For those of you from another planet, a water balloon is normally created by attaching the neck of the balloon to a water faucet and turning on the water. When the balloon is almost full, you turn off the water, remove the balloon and tie a knot at the top of the neck. When you throw it at your adversary, it makes a wonderful wet splash on contact.

Water balloon fights are likely an integral part of college dormitory life – they certainly were where I went to college. The tradition was that the sophomores would start the events the evenings before the periodic freshman quizzes, The frosh naturally defended themselves.

Alas, you can only fill as many balloons at a time as there are sinks in the shower rooms. At least until Joshua Malone invented a device that let you fill a “Bunch O Balloons” (as he called it) from a single faucet. Talk about a WMD!

Malone filed a patent application, and U.S. patent 9,051,066 was granted in due course. Then another kind of water balloon fight began.

Telebrands Corporation had started selling a competitive product it called “Balloon Bonanza”. The day the ‘066 patent issued, Tinnus, the assignee of the patent, brought an infringement action against Telebrands and requested a preliminary injunction against sale of “Balloon Bonanza” during the litigation.

In opposing Tinnus’ motion for the preliminary injunction, Telebrands argued that its product did not infringe the ‘066 patent, and that the patent was invalid for various reasons including lack of an enabling disclosure, indefiniteness of the claims and obviousness over the prior art.

The Magistrate Judge who heard the motion rejected Telebrands’ arguments. He found the required irreparable harm from evidence of price erosion, consumer confusion, reputational harm, and loss of goodwill based on customer calls, emails, and online reviews. He also concluded that the other two requirements for a preliminary injunction, i.e., balance of hardships and public interest factors weighed in Tinnus’ favor and recommended that the injunction be granted. The judge agreed, and granted the injunction

While all this was going on, Telebrands filed a petition for a Post-Grant Review (PGR), one of the administrative proceedings established by the America Invents Act to allow patent validity to be determined without going to court. In its petition, Telebrands made the same invalidity arguments it made in opposing Tinnus’ motion, but here, it got lucky. The Patent Trial and Appeal Board (PTAB) instituted a PGR on the ground that the patent was probably invalid.

Of course, Telebrands appealed the grant of the preliminary injunction to the Federal Circuit but in an opinion issued January 24, 2017, the court affirmed. The opinion may be found here. Analysis of the opinion is beyond the scope of this article, but in brief, the court found that Tinnus was likely to prevail on the question of infringement, and that the other requirements for grant of a preliminary injunction were also met. The court applied an abuse-of-discretion test to the trial judge’s decision, together with its large body of preliminary injunction jurisprudence to support its decision and observed that it was not bound by the PTAB ruling.

A quick search has not revealed a comparable case, so the Federal Circuit decision is noteworthy. Still, there is nothing to prevent Telebrands from requesting reconsideration in light of the PTAB ruling.

PAEs in the News:

Patent Assertion Entities (PAEs) – these are the fellows some people like love to hate, but like most other things, the PAEs don’t all wear black hats. When they do their jobs in respectable ways, they serve a valid purpose.

Sometimes inventors simply don’t have or can’t get access to start-up funds. For example, they have invented something that others mired in the mud of conventional thinking just can’t fathom.

Other times, a company has embarked on a research project that yielded good IP, but internal business factors derailed the project and the IP is languishing. Still, the IP is such that it has value to others in the industry. Nokia’s exit from the mobile phone market still owning a large portfolio of standard essential patents is a good example.

Selling such unused IP, sometimes on a profit-sharing basis, to a PAE can be a  reasonable monetization strategy in many cases.

Sure, the patent trolls and their tactics of filing unfounded law suits to extort below-litigation-cost settlements give the whole PAE industry a bad name. Still, condemning the apple tree because of a few bad apples doesn’t solve the problem. As noted above, there are white hats among the black ones. There are also shades of grey.

From Canada, comes a good example of an almost black hat in the 4 January decision in Mediatube Corp. v. Bell Canada. Here, the court had to deal with what started out as a run-of-the mill infringement action brought by an admitted PAE. In the end, however, the most interesting and cautionary issues related to the court’s reasons for imposing enhanced costs on the plaintiffs due to their litigation tactics.

The details of parties’ respective technologies aren’t important; it’s enough to say that the accused technology related to digital Internet Protocol Television services and the patents in suit related to analog systems. Plaintiffs’ argument that the claims covered digital systems was dismissed by the court as “contorted”.

On claim construction, the defendants got largely what they wanted and the court identified four specific reasons that none of the claims in suit were infringed.

However, in view of the claim construction, all the prior art cited by Bell for its invalidity defense became irrelevant and the patent ultimately involved in the decision was held to be valid.

Most interesting, however, is how the court handled the allocation of legal fees and what behavior of the plaintiffs provoked the court to elevate the costs awarded to the defendants.

Before we go further, a brief discussion of elevation of cost awards in patent cases in Canadian Federal Courts will be useful. In unexceptional situations, so-called “party-and-party costs” for legal fees are generally are awarded to a successful party according to a schedule contained in Federal Courts Rules. Rejected settlement offers that are more generous that what is ultimately awarded by the courts can result in an increase in the compensation awarded from the date of the offer. (There is a similar mechanism called “offer of judgment” under the U.S. Federal Rules of Civil Procedure.)  Party-and-party awards in IP litigation are usually between about 20 and 40 per cent of the party’s actual legal fees. The successful party is also entitled to recover all reasonable disbursements, associated with the litigation other than lawyer’s fees.

“Solicitor-client costs”, are awarded when a party engaged in “reprehensible, scandalous or outrageous conduct”. This can sometimes result in full compensation of the winner’s legal fees. A variation, called “solicitor-and-client costs”, always results in full compensation in especially egregious situations.

Against this background, both parties sought elevated costs, with the plaintiffs’ requests not contingent on the outcome on infringement and validity. Their first ground was that the defendants corrected their disclosure of the details of their technology late in the proceedings, and that if plaintiffs had known earlier what they later learned, they would not have pursued this matter to trial. The court responded that the defendants acted reasonably once plaintiffs’ discovery responses revealed their theories of infringement. It also noted that the corrected information did not change its view on infringement.

The court likewise rejected the plaintiffs’ request based on the number of prior art documents originally cited but reduced greatly as the litigation progressed.

Finally, plaintiffs sought elevated costs because the defendants, in their papers, referred to them as “patent trolls”, and that the defendants allegedly knew this to be false. They assert that this resulted in embarrassment to them and to well-respected members of the business community who are associated with them. The court was not moved.

Perhaps the court was being a bit naïve, but it accepted the defendants’ response that their use the term was as an equivalent to PAE. Acknowledging that the word “troll” is not complimentary, the court stated that:

the plaintiffs are not patent trolls in the sense that this expression is generally used, and its use to characterize them was not warranted. However, whether or not the plaintiffs are patent trolls is more a question of opinion rather than fact. Bell’s use of that term is an expression of its opinion that the plaintiffs’ infringement allegations are meritless, and (ii) the fact that the plaintiffs do not use the invention. As discussed above, I agree with Bell that the plaintiff’s infringement allegations are meritless. I am not convinced that Bell’s use of the term “patent trolls” is an allegation of fraud or dishonesty. The plaintiffs may rightly feel insulted by Bell’s characterization, but there is no objective untruth in it.

The defendants’ requests were met more favorably. One was based on infringement allegations against one of the defendants, Bell Alliant (“Aliant”). These were withdrawn as to 96 percent of Aliant’s customers at the end of discovery and against all the rest 14 days into the trial. As to the first group, the court held that the plaintiffs did not act unreasonably. As to the rest, however, the court held that plaintiffs had the information necessary to withdraw its infringement charge well before trial and could have sought further discovery if it had its doubts.

While it declined to award solicitor-and-client costs as requested, the court agreed that costs should be elevated because “the plaintiffs commenced and pressed forward with their claim against Bell Aliant in the face of information indicating that Bell Aliant was not infringing”, specifically that plaintiffs had early access to information indicating that Aliant’s system was missing all four essential elements referred to above in discussion of infringement. The court observed:

I would be more understanding of the plaintiffs’ perseverance with the case against Bell Aliant if there were not four distinct claim elements missing in Bell Aliant’s system and if the system described in the 477 Patent was not so different from Bell Aliant’s. Based on the contortions of the claims in issue that would be required in order to find infringement, the plaintiffs should have known that Bell Aliant did not infringe.

The elevated costs claim in relation to another defendant, Bell Canada was also accepted. As to this, the court stated:

plaintiffs commenced the present patent infringement action against Bell Canada without a clear theory of infringement, and the theory they did eventually form was weak. Just as with regard to the case against Bell Aliant, the contortions of the claims in issue that would be required in order to find infringement indicate that the plaintiffs should have known that Bell Canada did not infringe.

The complaint also included a punitive damages claim based on an alleged breach of a confidentiality agreement. Here, the defendants were accused of fraud and dishonesty. The court noted the great amount trial preparation and trial time involved in defending against this claim. Citing earlier authority, the court held that defense against charges of fraud or dishonesty don’t always justify the requested solicitor-and-client costs, when, a party makes such allegations with access to information sufficient to conclude that the other party was merely negligent and neither dishonest nor fraudulent solicitor-and-client costs are appropriate.

In conclusion, the costs associated with the punitive damages claim were awarded on a solicitor-and-client basis and the rest elevated above the normal scale by 50% “to reflect the weakness of the plaintiffs’ case for infringement”.

Would the result have been different if the plaintiffs were not PAEs? Perhaps not, but the plaintiffs’ response to the “patent troll” reference certainly shows that, as in the U.S., PAEs are in the cross-hairs in Canada.

PAEs in China:

For a different view, a post on the heavily pro-patent blog IP Watchdog (here) reports an intensive effort in China to grow and strengthen its domestic chip industry. The author, Erick Robinson, an American patent lawyer based in Shanghai is also the author of a 28 December article in The Global Times (here). In the article, he convincingly argues that PAEs (Robinson calls them Non Practicing Entities) can serve a valid purpose in aiding China is in quest for chip independence due to their extensive experience in licensing and patent monetization strategy. He does say that the real patent trolls are largely gone from the U.S., which seems like wishful thinking, but otherwise, the good side of the PAE business comes through loud and clear.

Can a Patent-Owner Control What you Do With a Patented Product After You Buy It?

Big Brother has its eye on the printer cartridge business model. On 2 December, the U.S. Supreme Court agreed to consider if printer manufactures can use their patents to prevent third parties from refilling used printer cartridges.

In Impression Products, Inc. v. Lexmark International, Inc. the Court will review an en banc (full court) decision of the Court of Appeals for the Federal Circuit (CAFC) that affirmed limits on the of patent exhaustion (or first sale) doctrine.

Long ago, the Gillette Safety Razor Company figured out that the best path to continuing profit was to sell the razors cheap and the blades not so cheap. The lesson was not lost on printer manufacturers.

Lexmark, which acquired IBM’s laser printer business some years ago, sells printers and toner cartridges for its printers. As described in the CAFC decision, Lexmark owns patents that cover its cartridges and their use. The cartridges are sold by Lexmark, both in the U.S. and abroad. The cartridges sold in the U.S. and some of those sold abroad are discounted, subject to an express single-use/no-resale restriction. It is not disputed that buyers are aware of the resale/reuse prohibition.

Lexmark implements its after-sale restriction by specifying that the discounted (“Resale Program”) cartridges may not be resold or reused but must either be disposed of or returned to Lexmark. Further, Return Program cartridges also contain a microchip that, by monitoring toner levels, prevent use of a refilled cartridge. Regular cartridges, i.e., those not sold at the discount, do not contain the microchip and therefore can be refilled and reused.

Enterprising third parties have reverse engineered the microchips and created replacement microchips that, when installed in a Return Program cartridge, fool the printer into allowing reuse of that cartridge.

Impression acquires cartridges containing the replacement microchips, refills them and resells them in the United States without authorization from Lexmark. Its conduct unquestionably constitutes infringement under § 271 of the Patent Act unless the initial sale by Lexmark effectively nullifies the resale/reuse restriction. CAFC precedent favors Lexmark. The decision affirmed the continuing validity of this precedent despite two arguably contrary recent Supreme Court decisions.

In its decision, the CAFC addressed two questions—one regarding the single use/no-resale restricted sales (wherever they occur), the other regarding the initial foreign sales of all cartridges, whether restricted or not. Regarding the first issue, the CAFC ruled that the Supreme Court’s decision in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), did not require overruling its precedent that a sale of a patented article, when the sale is made under a restriction that is otherwise lawful and within the scope of the patent grant, does not give rise to patent exhaustion.

As to the second issue, the CAFC ruled that the Supreme Court decision in Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351 (2013), a case involving copyright law, did not require it to overrule its precedent that sale of a patented item outside the United States never gives rise to United States patent exhaustion.

The issues to be considered by the Supreme Court are whether a patentee can use post-sale restrictions on the article’s use or resale to avoid application of the patent-exhaustion doctrine and enforce such post-sale restrictions through the patent law’s infringement remedy; and whether, in light of the Court’s holding in Kirtsaeng v. John Wiley & Sons, Inc., an authorized sale of a patented article that takes place outside the United States exhausts the U.S. patent rights in that article.

Oral argument has not yet been scheduled, but that and the ultimate Court decision will be closely watched as it might significantly enlarge the rights of patent owners.

TRADEMARKS

Second Circuit Nicely tells Louis Vuitton to “Get a Life”:

Back in August, we reported a trademark infringement case brought by Louis Vuitton (LV), a notoriously aggressive enforcer of its trademark rights, against My Other Bag, Inc. (MOB). Briefly, MOB’s products are canvas tote bags. On one side are written the words “My Other Bag”. On the other side is a design that evokes – but does not copy the LV Toile Monogram design. MOB’s concept was inspired by novelty bumper stickers, which can sometimes be seen on inexpensive cars claiming that the driver’s “other car” is an expensive, luxury car, such as a Mercedes.

LV didn’t get the joke, but the courts did. Last January, a judge in the U.S. District Court in New York City granted summary judgment to MOB and dismissed the case. LV appealed and on 22 December, the U.S. Court of Appeals for the Second Circuit affirmed in a non-precedential decision.

LV raised trademark infringement, trademark dilution, and copyright infringement claims, and the court quickly rejected them all. The majority of the opinion focused in the dilution claim.

Essentially, LV argued that MOB’s use of the LV design was not a parody so MOB was not entitled as a matter of law to assert a fair use defense. The court disagreed:

A parody must convey two simultaneous—and contradictory—messages: that it is the original, but also that it is not the original and is instead a parody. MOB’s bags do precisely that. At the same time that they mimic LV’s designs and handbags in a way that is recognizable, they do so as a drawing on a product that is such a conscious departure from LV’s image of luxury—in combination with the slogan “My other bag”—as to convey that MOB’s tote bags are not LV handbags. The fact that the joke on LV’s luxury image is gentle, and possibly even complimentary to LV, does not preclude it from being a parody. (Internal quotes and citations omitted.)

The court applied its justification for MOB’s fair use defense in rejecting LV’s copyright claim as well.

In our August article, we noted that a group of law professors filed a brief with the second circuit in support of MOB in which they argued that LV’s attempt to suppress the activity of MOB would be an unconstitutional interference with the right of free speech. We correctly predicted that the appellate court would not even address this issue.

Will LV pursue this with a petition for certiorari to the Supreme Court? Most likely not. A trademark owner must be vigilant in protecting its marks and LV largely made its point – though a bit heavy-handedly – by suing MOB in the first place and in pursuing the appeal. The Second Circuit commands a pretty high level of respect by the Supreme Court so it would be surprising if it took the case in any event. And even if it did, the likelihood of reversal seems almost nil.

Trademark Protection in China:

There was some interesting news in December regarding trademark protection from China. In its December Report on IP in China, the CCPIT patent and Trademark Law Office reports a trademark opposition by Chrysler Group LLC against a local clothing manufacturer which sought to register the mark BATTLEFIELD JEEP in Chinese for clothing and bags. Chrysler’s opposition was based on its prior registrations of JEEP in English and Chinese for automobiles and of JEEP in English for clothing and bags, etc.

Chrysler’s opposition was unsuccessful in the first instance in the Chinese Trademark Office and on appeal to the Trademark Review and Adjudication Board. Chrysler likewise failed in administrative litigation in the Beijing.

Chrysler finally achieved success in an appeal to the with Beijing Higher People’s Court, In its judgment, the Higher Court explained that the opposed trademark wholly contains JEEP in Chinese which corresponds Chrysler’s English registration of JEEP and thus constitutes a similar trademark used on similar goods. In view of Chrysler’s prior use and high reputation of JEEP (in English) on clothing and bags, there would likely be confusion among the consumers.

The Court further held that BATTLEFIELD JEEP is an imitation of Chrysler’s well-known JEEP trademark in Chinese for automobiles and is liable to mislead the relevant public and weaken and dilute the distinctiveness of Chrysler’s well-known trademarks.

Realistically, the facts here illustrate the importance of registering internationally known marks in their original form and registration and use in Chinese character form as well. Perhaps the opposition would have been sustained initially had that been the case. In any event, the well-known character of its registration in Chinese of JEEP for automobiles was clearly a factor in Chrysler’s ultimate victory.

An excellent comprehensive discussion of selecting and protecting trademarks in China entitled Brand Transliteration-How to Translate and Protect Your Brand for the Chinese Market has just been published by the CCPIT Patent and Trademark Law Office. To this observer, it is recommended – almost required – reading for anyone entering the Chinese market.

The article explains the importance of registering the Latin-alphabet versions of your marks and of creating, registering, and using Chinese character versions of the marks as well. The article explains the ways Chinese character versions can be created and includes a grim example of what can happen if you fail to do so.

Admittedly, creating a Chinese version of a trademark is something that should be done in close collaboration with marketing specialists fluent in the important Chinese (Mandarin and Cantonese) languages and with Chinese trademark counsel. (As an aside, the article repeatedly refers to the term “pinyin”. This is the official system for transliterating Standard Chinese characters into Latin characters. It is used in mainland China, Malaysia, Singapore, and Taiwan.)

Some final thoughts: As in other countries, a trademark application can be filed before actual use commences. This is an absolute must in China because it follows a first to file system for registration. In addition, what might be called “trademark squatting” is widespread. This is the trademark equivalent of cybersquatting. In fact, a lively online marketplace exists for registrations of foreign marks which have been obtained by opportunists whose sole objective is to sell them to the rightful owners of the marks.

Likewise, registration is essential not only if you want to sell in China, but also if you outsource manufacturing or assembly operations in China since the owner of a registered mark that covers your product can prevent export.

This case is important as it is representative of an emerging effort by Chinese authorities to enforce legislation intended to curb trademark abuses for which China’s consumer market are legendary. In fact, the Ministry of Commerce Chinese recently announced that 108,000 piracy and counterfeit cases had been  prosecuted in the first three quarters of 2016.

In the JEEP case, the Court here explicitly recognized that that adoption of the trademark BATTLEFIELD JEEP in Chinese was intended as an imitation of Chrysler’s English language JEEP mark and it showed no sympathy for the would-be registrant’s poaching on Chrysler’s good will despite the fact that Chrysler had not registered JEEP in Chinese for clothing and bags.

Despite this victory, priority is still vital. In the past, Chinese courts have routinely enforced prior rights of actual local users even if the motivation for establishing those rights was to trade on the good will associated with trademarks of foreigners not adequately protected in China. How quickly China’s reputation as a trademark pirates’ heaven will change is anyone’s guess. The only reliable way to protect your rights is still to register the Latin text and the corresponding Chinese character mark well before entry into the Chinese market or if manufacturing there is contemplated.

What’s in a Name – What Did Michael Jordan Really Win:

It’s been widely reported that basketball superstar Michael Jordan came out a winner before the Supreme Peoples’ Court (SPC) of China in his battle with Qiaodan Sports Company over its use of the Mandarin transliteration of his name, the Pinyin version of which is Qiaodan (pronounced ‘chowdahn”). That may be correct, but it doesn’t tell the whole story.

By way of background, basketball is very popular in China and the U.S. National Basketball Association has been described as a national obsession. Jordan himself is extremely well known and enormously popular in China.

Qiaodan was named “Fujian Province Jinjiang Township Chendi Brookside General Supplies Factory Number Two” before it adopted and registered the name “Jordan” in Chinese Characters in 2000 and used it for sporting goods, sportswear and a wide range of other products.  Qiaodan also used a silhouette of a leaping basketball player which is closely similar to that used by Nike on its line of Air Jordan shoes, as a logo. There isn’t any doubt that Qiaodan acted specifically with the intent to trade on Mr. Jordan’s fame and popularity.

In its decision, the SPC explicitly found that Qiaodan acted with “malicious intent” and ruled that Mr. Jordan owns the legal rights to the Chinese character version of his name. The decision reversed previous administrative and lower-court rulings.

While Mr. Jordan expressed satisfaction with the result, the victory was far from complete. For one thing, the court found that Jordan had not established that Chinese consumers associated the Pinyin version with his name, which Qiaodan will still be able to use. Further, while Jordan sought to cancel numerous registrations of his Chinese character name, most of these were more than five years old and were essentially uncontestable under Chinese law. As a result, the decision directly affected only three registrations.

The SPC itself regards the decision as important, and to emphasize this, streamed the announcement of its decision live from its Website. Chinese trademark practitioners, and even government representatives reacted favorably as well, and suggested that foreign companies should be encouraged by the decision. Many cautioned, however, that this decision should not be taken to mean that China’s notorious trademark piracy problem is at an end.

As stated above, the best way to protect ones brand identity in China is still to register in China, as soon as possible after a trademark has been adopted; preferably, at the same time the mark is registered in one’s home country or under regional or international agreements.

 

About the author: Larry Hoffman has a B.S. in Electrical Engineering and Comp. Sci. from Mass. Inst. of Technology and a J.D. from the George Washington University School of Law. He has been a lawyer since 1965 specializing in IP law and product liability defense. He is registered to practice before the U.S. PTO, the U.S. Court of Appeals for the Federal Circuit and the state and federal courts in New York, Maryland, and the District of Columbia. His work includes preparation and prosecution of patents in countries throughout the world, and counseling on IP and product safety matters. He has been involved in the trial of close to 100 lawsuits of various kinds. You can reach him at Lawrence@ipatent.co.il.

 

News & publications:
More Articles and Publications: