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Category: News

Is the U.S. Patent and Trademark Office Affected by the 2018 Government Shutdown?

The U.S. Patent and Trademark Office is not affected by the shutdown which has closed many government offices and agencies after Congress failed to pass a funding resolution.  Navigate to www.uspto.gov and you’ll be greeted by the banner announcing the Office is still open.

While other agencies are dependent upon immediate funding for their continuance, the USPTO maintains a reserve account of funds. The funds allow the Office to continue operating at nearly full capacity for at least a few weeks. These are collected, in part, from the applicants that have filed and prosecuted patent and trademark applications in the United States in previous years.

In December 2017, the Commerce Department issued a shutdown plan which noted: “The USPTO anticipates that it will have sufficient funds from other than current year appropriations to continue full operations for a brief period after a general lapse in appropriations commences. Therefore, all employees of the USPTO will be excepted for such period following a lapse in appropriations.” Commerce Secretary Wilbur Ross emailed USPTO employees on Friday, January 19, 2018 directing them to continue reporting for work until they were notified otherwise.

Collections from previous years enable the USPTO to operate despite furloughs at other federal agencies. The USPTO is well-funded; in fact, it generates far more money in fees than it consumes in expenses. However, fee diversion moves much of its revenue to other governmental agencies. The 2011 America Invents Act allows the Office to trap some of those fees into the reserve account before they can be diverted outside the agency.

Should the shutdown continue and the reserve funds be consumed, employees would begin to be furloughed. A small staff would nevertheless remain to accept new applications and to maintain the IT infrastructure. The electronic filing systems through which most patent attorneys and agents correspond with the USPTO would continue to operate, allowing filing dates to be established and deadlines to be met. The shutdown does close down the File Repository Warehouse, where the paper files for older patent applications are maintained. That warehouse is not operated by the USPTO and so is affected by the shutdown. As such, requests for copies of paper files (which normally take 1-4 weeks for production) will likely be delayed. This would not affect electronic files, of course.

In 2013, the government shut down lasted for two and a half weeks. The USPTO stayed open then, too, using the same reserve fund.



Utility and Design Patent Issuances Up in 2017

Nearly every year for the past decade, the Patent Offices have issued more utility and design patents.  2017 was no exception.  While former Director Kappo’s guiding hand has often been praised for increasing patent quality, the patent numbers during his oversight improved as well.  The Office was without an official director during most of Trump’s first year and is now headed by acting Director Joseph Matal.  Despite the uncertainty, in 2017, there were approximately 5% more issued utility patents and roughly 10% more issued design patents than in 2016.  Charts from Patently-O can be seen here.



Intellectual Property Lawsuit Between Google/Waymo and Uber

Trial is moving forward in the Google/Waymo v. Uber intellectual property case. It has been thought that this lawsuit might help crown an early king of the self-driving vehicle industry, which Uber describes as potentially “the most lucrative business in history.”

In February 2017, Google spin-off Waymo sued Uber for misappropriation of trade secrets and patent infringement, stemming from the actions of former Google employee Anthony Levandowski. Levandowski was a high-level engineer in Google’s self-driving car division. He downloaded nearly 10GB of Google’s data – over 14,000 files – a few weeks before leaving Google to start his own company in January 2016. His company, Otto, was focused on autonomous truck technology. Just six months after he started the company, Uber acquired it for $680 million, and Levandowski was named to head Uber’s self-driving car work.

Not long after, one of Uber’s supplies mistakenly emailed information to Waymo about a circuit board Uber had ordered. Waymo looked at the board, thought it was a little too similar to the technology it had been working on while Levandowski was part of its team, and filed suit for a preliminary injunction against Uber.

A preliminary injunction is, essentially, a temporary restraining order. It is an order from a court temporarily preventing an entity from taking certain actions until more evidence can be gathered and a lawsuit filed (or not filed) or settlement reached. Here, Waymo requested that Uber’s work on self-driving cars be halted until Waymo could figure out possible damages and how to proceed next. Waymo won that injunction, showing a likelihood of prevailing in an eventual lawsuit and the danger of irreparable harm.

The case revolves primarily around LiDAR, which is a laser-based radar technology that allows a computer to map or “see” an environment. LiDAR has been used extensively for decades, but has recently come to prominence with autonomous vehicle developments. The trade secrets and patent claims revolve around this technology. The trade secrets claims rest, in part, on things like the designs for the printed circuit boards that Waymo developed, the position and orientation of the diodes and photodetectors on the boards, the selection and placement of optical elements for modifying LiDAR laser beams, and the laser pulse rate in the LiDAR system to create a precise resolution profile of objects in the environment. The patents (U.S. Patent Nos. 8,836,922, 9,368,273, and 9,086,273) also cover LiDAR technology. For instance, the ‘922 patent claims protection in a LiDAR device including a rotatable housing including transmit blocks and receive blocks, with a number of transmitters and detectors in them, such that light is emitted from the device and return light is gathered and collimated, or aligned, and focused back into the detectors. This technology assists in three-dimensional mapping of the environment.

Uber has several different types of LiDAR devices, and the patent claims reflected actions against them. However, in July, most of the patent claims were dropped after the judge encouraged the parties to narrow the issues, and after Uber stopped work on its “so-called” Spider technology on one of the LiDAR devices.

Last week, Waymo’s case grew more tenuous with the release of a due diligence report Uber commissioned before it acquired Otto. Although report includes dark details like Levandowski’s deletion of files and then destruction of the hard drives holding those files. Levandwoski tried to talk with Uber CEO Travis Kalanick about the hard drives, but Kalanick put up a brick wall to the discussion. Together with the report, documents regarding Uber’s designs were released, and even the judge noted that “the product is dissimilar. In many ways, it may be a vast improvement of what was going on at Waymo. So [Waymo has] come up a little short there.” In light of the documents release, trial, set to begin yesterday, has been postponed now to early December.



Firm Quoted in Newspaper Regarding Recycling

A few months ago, the firm was recognized as a Green Business Leader. Now the word is getting out. I was interviewed last week by the Arizona Republic regarding the program and recycling in Phoenix generally. You can see the article here.



Government Trademark Fees To Rise

The United States Patent and Trademark Office will be increasing certain trademark fees on January 14, 2017. The USPTO is unique among government agencies in that it is a profit center for the US; it generates more revenue for the government than it expends in operating costs.

Most, if not all, of the increasing fees are for paper filings. Trademark applications filed by paper are much more time-consuming than those lodged electronically through the Trademark Office’s online filing system. The filing fee for paper applications is nearly doubling to $600. It appears the costs associated with pursuing a registered trademark are not going to change.

Trademark fees are set at levels projected to cover future costs, including operating costs and reserve funds. The number of applications filed, and the number of registered trademark issued, continues to climb this year, as it has for the past six years. The Trademark Office is predicting that this will not change in the near future. Further, the Office desires to not increase the pendency of a trademark application, which currently averages 9.8 months, despite the predicted increase in trademark filings. Further, the Trademark Office is upgrading its IT systems.

The Trademark Office has chosen to fund these changes and improvements by shifting the fee burden to those still filing by paper. I don’t have figures for the number of applications filed electronically versus in paper, but I find it fascinating that there are apparently enough paper filings that these fee increases will bring in enough money to fund its changes. As the Office puts it: “The fees will allow the Office to further USPTO strategic objectives by: Better aligning fees with the full cost of the relevant products and services; protecting the integrity of the register by incentivizing more timely filing or examination of applications and other filings and more efficient resolution of appeals and trials; and promoting the efficiency of the process, in large part through lower-cost electronic filing options. The changes will also continue to recover the aggregate estimated cost of Trademark and Trademark Trial and Appeal Board (TTAB) operations and USPTO administrative services that support Trademark operations.”



Bicycle Saddle Patent Litigation

bicycle-patent-on-saddle-1 bicycle-patent-on-saddle-2Several bicycle manufacturers around the world have found themselves under attack from an Australian company, Icon-IP, that is suing for infringement of two bicycle saddle patents.

Icon IP had previously twice sued Specialized Bicycle Components, Inc. in 2013 in US courts for its use of a split saddle. Specialized, of course, makes many of the components it uses on its own bicycles, the seat included. Split saddles, those with split noses, or with longitudinal central slots, have become much more popular in the last 5-10 years, with many manufacturers now offering such saddles stock with a new bicycle. Specialized successfully dismissed one of those suits and settled another.

Now Icon IP is suing Merida Industry and well-known saddle manufacturer Selle Royal in Germany for infringement, and has given notice to Giant Bicycles that it may also be receiving a legal complaint.

 

 



Patent Examiners Mostly Accurate in Time

The Office of Inspector General, following up on a report from last year about a patent examiner who had received $25,000 by falsely claiming worked hours, has just released a report on two concurrent studies of about 80% of the 10,000 examiners at the United States Patent and Trademark Office. The study found that while most examiners accurately report their hours and time worked, there is still a large amount of waste in salary, overtime, and bonuses paid out.

The OIG conducted a 9-month study as well as an overlapping 15-month study in looking at time spent. It compared timestamp data from several independent sources within the Patent Office with hours reported by the examiners themselves. The OIG notes that its study was “conservative,” excluded significant amounts of unsupported hours, and thus likely underestimates the number of hours falsely reported, perhaps by as much as half.

The short and long studies were generally consistent in their findings. Approximately 180,000 examiner-hours each year are unsupported by any electronic records, timestamp, or method of verification. It appears therefore, that those hours were wasted, in that compensation was paid for them without any work being performed in return. In the 9-month period, $8.8 million dollars was potentially paid out on unsupported hours; in the 15-month period, $18.3 million was paid out.

Much of the waste comes from a few of the examiners. About 3.5-5% of the examiners accounted for 39-43% of the waste; at least 10% of their hours were unsupported. Of those, many had above-average performance ratings, and about 10% essentially took 3 days off every 80 work hours. One-quarter of the wasted compensation was for overtime work. Further, had the compensation been paid out for actual work, the OIG found that the backlog would have been reduced by 7,500 applications in 9 months and by 16,000 applications in 15 months. This is quite troubling when one considers that most applicants wait 1-2 years for an application to receive examination.

The OIG concluded that there were several reasons for the waste. First, some examiners have realized that they can game the system by falsely reporting time. Second, some examiners are very efficient and get their work done faster than the time allotted yet still report the full time. Other examiners complete more work in the allotted time but then claim overtime. The time allowances and production goals have not been updated since 1976. The OIG recommends enhancing the time-tracking systems and updating production goals within the art units.



Patent Stakeholder Training on Examination Practice and Procedure

The Patent Office has begun offering a Stakeholder Training on Examination Practice and Procedure (“STEPP”), part of its Enhanced Patent Quality Initiative in which it improves quality and communication between the Patent Office and the public. The Patent Office states: “Training delivered through STEPP is designed to provide external stakeholders with a better understanding of how and why an examiner makes decisions while examining a patent application. In person courses are led by USPTO trainers and based on material developed for training employees of the USPTO.”

The STEPP program is intended to increase the transparency by educating the public about examination practice and procedure, provide perspective to attorneys and applicants about how an examiner approaches an application and an office action, and aiding patent attorneys in compact prosecution by showing them how an application is examined under the MPEP.

This program is a good program. I recently attended a presentation by the Silicon Valley Patent Office which serves the west coast on Patent Office operations. It was interesting and helpful, but some of the audience tried to use it as a personal gripe fest about examiners they had faced. That same waste is a concern I have with the program. More importantly, however, one issue with this program is that apparently is only available if you are at the Patent Office, or perhaps one of the regional offices. Expansion to WebEx or other online training should be a goal.



Patent Office Power Outage Shutdown

The Patent Office went down hard on December 22, 2015. A subdued Facebook post initially said: “We are currently experiencing some technical difficulties with some of our online systems, but we are hard at work and intent on having services back on line as soon as possible. Thank you for your patience, and stay tuned for details.” However, very quickly it became clear that the incident was major – catastrophic really. For some time, most (if not all) of the pages at upsto.gov were displaying 404 messages, including even the blog directed toward posting updates about the status of the electronic filing systems.

Apparently, the power supply lines at the USPTO incurred a “malfunction,” causing significant damage to two power filtration systems which otherwise provide power in a regulated form to the USPTO. These filtration systems are huge and could not be replaced quickly or easily.

The outage took out all of trademark and patent filing, searching, payment, and examination capabilities, effectively shutting down nearly everything the Patent and Trademark Office, and patent and trademark lawyers, do. For some of us, it was a nice week-long break when many of are taking holiday. For others, however, it was a stressful nightmare of re-learning Priority Mail Express (formerly Express Mail) rules and trying to get the Post Office – sometimes through horrible weather – to make filing deadlines. Filing by mail was still an option – but very few, if any, practitioners file by paper anymore, and I would guess that most who don’t file by paper have no clue how to file by mail. Another good reason to file early! The Office eventually did declare a few of the down days as federal holidays, purportedly giving applicants until the next (operational) business day to file. However, I cautioned colleagues not observe this PTO-granted grace period, as it was not clear that the PTO had the statutory authority to declare a holiday in this manner to toll both domestic and foreign deadlines. Better to mail it in that to find out years from now in litigation that the PTO “holiday” counted for nothing.

The systems are now up, but I have been warning clients this week to get me everything early because I believe the filing system is extremely fragile right now, given that it will probably be more heavily loaded by backed-up filings from the past week.

While the explanation that the Patent Office providfed is not entirely clear – and few details beyond this have been revealed – I am sure the Office did work tirelessly to get the systems back up. And now they are. What we can learn from this how fragile the filing system is. Yes, it apparently took a major power surge to destroy the electronic systems, but when it did, there was no backup. Or, there was a backup, but the backup was tied to a backbone common to the main system – which really isn’t a backup at all.

Practitioners have complained for years that the electronic filing system is antiquated, but the Office has failed to update it. Perhaps this will instigate a technology change at the office that represents innovation leadership in the world.



Trademark Law Ruled Unconstitutional

The Trademark Office’s prohibition phoenix trademark applicationsagainst the registration of disparaging trademarks was struck down as unconstitutional yesterday. Many have questioned for a long time how a statute could legitimately refuse to register some marks because of their moral quality. Nevertheless, for decades, federal statute has stated that a trademark will be refused registration if it “consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.”

The US Court of Appeals for the Federal Circuit has declared that Section 2(a) of the Lanham Act unconstitutional as violating the First Amendment. The majority stated that “”The government regulation at issue amounts to viewpoint discrimination, and under the strict scrutiny review appropriate for government regulation of message or viewpoint, we conclude that the disparagement proscription of § 2(a) is unconstitutional.”

The case arose when a band applied to register the mark THE SLANTS in connection with live music entertainment services. The Trademark Office, however, refused protection of the mark as derogatory of people of Asian descent. The band appealed the case through several layers of administrative and judicial courts. At the Federal Circuit Court of Appeals, the government advanced an academically interesting argument: that the Lanham Act does not actually prohibit speech at all, but rather only prohibits the registration of some types of speech. It reasoned that because the government acts as the gatekeeper for trademark registrations, registered trademarks become government speech and can thus be regulated without implicating the First Amendment at all. The trademark owner remains free to practice the speech, whether registered or not. The Federal Circuit disagreed, finding that the law was impermissibly “created and applied in order to stifle the use of certain disfavored messages.”

A similar question arose most recently in the public eye when the Washington Redskins lost their 60-some year-old trademark registration because it was deemed disparaging of Native Americans. The team has appealed the decision, and it is expected that this newest case will give them some heavy ammunition. However, the REDSKINS case is now in front of the Fourth Circuit Court of Appeals, which is neither above nor below the Federal Circuit. That means that THE SLANTS decision is non-binding on the Fourth Circuit Court, but can still be persuasive. If the Fourth Circuit finds that Section 2(a) of the Lanham Act is not unconstitutional – which it may or may not do depending on the questions presented to the court and the sua sponte aggressiveness of the judges – the question will be ripe for the Supreme Court to settle.