text: On June 15, 2022, Governor John Bel Edwards signed into law Act No. 425, S.B. 426, named the “Allen Toussaint Legacy Act.”[1] The Act is named after the late Allen Toussaint, a famous New Orleans musician, songwriter, and producer. Toussaint was known for hits such as “Java,” “Fortune Teller,” “Southern Nights,” “Working in the Coal Mine” and “Mother-in-Law.”
  After seeing drink koozies featuring Toussaint’s image sold by vendors outside of the Jazz Fest months after the artist died, Tim Kappel, an entertainment law professor at the Loyola University New Orleans, began pushing for a bill protecting the right to publicity in Louisiana.[2] Before the Act, despite the clear commercial benefit from products featuring Toussaint and other New Orleans legends like Fats Domino and Professor Longhair, the deceased musicians’ estates received no benefit from the sales nor had any power to stop the commercialization.
  Act No. 425
  The right of publicity is not a new concept in the United States. New York and California are leading examples of the right of publicity, particularly because those states are dense with famous individuals, who are more likely to be affected by right of publicity laws. For example, in the 1990s, the Ninth Circuit U.S. Court of Appeals found Vanna White could seek damages from Samsung for an advertisement involving a futuristic female robot turning the letters on a game show board.[3] Although the advertisement did not mention Vanna White by name, or use her actual image, the court held Samsung may have violated the law by “attempt[ing] to capitalize on White’s fame to enhance their fortune.”[4]
  Act 425 creates a property right in the use of Louisiana residents’ identity for commercial purposes. The Act prohibits third party commercial use of an individual’s identity in Louisiana without written consent from the individual or the individual’s authorized representative or, if the individual is deceased, by more than 50% of the authorized representatives currently holding the right to commercialize. The Act defines an “individual” as “a living natural person domiciled in Louisiana or a deceased natural person who was domiciled in Louisiana at the time of the individual’s death.” “Identity” includes “an individual’s name, voice, signature, photograph, image, likeness, or digital replica.”
  Violations can carry hefty penalties. Successful plaintiffs may recover the greater of $1,000 and the actual damages in compensatory damages, and (to the extent not duplicative of compensatory damages) payment of all profits earned from the violation. Similar to copyright infringement claims, plaintiffs must only prove the gross revenue attributable to the unauthorized use, and the defendant must prove any deductible expenses. A court may also award attorneys’ fees, costs, and expenses to the successful party, as well as equitable relief (e.g., injunctions or temporary restraining orders).
  The Act carves out several exceptions, which include the “fair use” exceptions found in the Copyright Act, first amendment exceptions, and protections for works of creative expression. The Act also provides exceptions for advertisers, publishers, speakers, and others who passively transmit or distribute the commercialized material created by the third party.
  The granted rights are not perpetual. Termination occurs either: (a) after 3 consecutive years of non-use by the authorized representative after the individual’s death; or (b) 50 years after the individual’s death. The Act is retroactive and will apply to individuals who died on or before the effective date of August 1, 2022. However, the Act will not apply to any alleged violations committed before August 1, 2022; also exempt are works created before this time, even if they are republished or distributed after that date. Any claim under the Act must be filed within 2 years of the alleged violation.
  Future Considerations
  Several interesting issues arise in response to this passage. Although Louisiana may not be dense with popstars and movie stars like New York, Louisiana does have its fair share of talented athletes. Considering the NCAA’s recent move toward permitting college athletes to profit off their name, image, and likeness, this Act will be instrumental in restricting commercialization of the Louisiana-domiciled athletes to only those authorized by the athlete themselves.
  But the Act is not limited to persons in the public eye. It applies to any person domiciled in Louisiana or a deceased person that was domiciled in Louisiana at the time of death. Ordinary persons captured in videos that later go viral on social media often find their likeness plastered onto commercial products. The Act could provide some avenue to capture the monies made off of their “15 minutes of fame.” However, the Act does not provide for statutory damages and attorney fees are within the discretion of the court, which may complicate or discourage recovery by persons with limited means against unprofitable violations.
  Legal scholars have expressed concern about defining identity as a property right that is “heritable, licensable, assignable, and transferrable.” Professor Jennifer Rothman at the University of Pennsylvania Carey Law School identified problematic potential for parents’ ability to transfer their children’s identity to third parties, as well as record labels, movie producers, sports leagues, and others who may pressure young, aspiring athletes and performers to assign rights to them in perpetuity.[5] Professor Rothman also questions whether identity being a property right could incur property-based liabilities. The Act specifically prohibits its property rights being subject to a security interest, material property distribution, or debt collection. However, other liabilities could compel commercialization against an individual or heir’s wishes.
  Concluding Remarks
  Commercialization of individual identities presents a compelling new right for Louisiana residents. How the Act operates in practice remains to be seen. The opportunity to “sign your name away” may be profitable in the short term, but could have long-standing implications if an exclusive license omits favorable termination or sunset clauses. Potential commercial licensees should further ensure that they actually have the right to make commercial use of an individual’s likeness—even if that person is an employee, a student, or has signed a general photograph release.
  [1] https://legis.la.gov/legis/ViewDocument.aspx?d=1289308.
  [2] James A. Smith, “An Allen Toussaint law? Attempting to ban koozies, unlicensed merchandise using likeness”, The Advocate (April 30, 2019) (available at https://www.theadvocate.com/baton_rouge/news/politics/legislature/article_5ec7233c-6bab-11e9-8279-fb05c40acaea.html).
  [3] White v. Samsung Elecs. Am., Inc., 971 F.2d 1395 (9th Cir.1992), as amended (Aug. 19, 1992).
  [4] Id. at 1396.
  [5] Jennifer E. Rothman, “Louisiana’s Allen Toussaint Legacy Act Heads to Governor’s Desk”, Rothman’s Roadmap to the Right of Publicity (Jun. 6, 2022) (https://rightofpublicityroadmap.com/news_commentary/louisianas-allen-toussaint-legacy-act-heads-to-governors-desk/).
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  Copyright Office Denies Registration of Computer-Generated Art
  By Sonny Chastain on May 9, 2022
  Posted in Copyrights, Intellectual Property
  Steven Thaler filed an application for copyright registration in a two-dimensional image entitled “Creativity Machine”. In his application, Thaler stated that the work “was autonomously created by a computer algorithm running on a machine”. The Review Board of the United States Copyright Office (“Board”) denied the application stating it lacked human authorship necessary to support a copyright claim. He filed a request for reconsideration arguing the human authorship requirement is unconstitutional.
  In its ruling of February 14, 2022, the Board upheld its prior decision stating that this work lacked the required human authorship necessary to sustain a claim in copyright. The Board noted court decisions limiting copyright protection to creations by human authors. Further it cited the Compendium of U.S. Copyright Office Practices, which has long mandated human authorship for registration. The Board stated, “After reviewing the statutory text, judicial precedent, and longstanding Copyright Office practice, the Board again concludes that human authorship is a prerequisite to copyright protection in the United States and that the Work therefore cannot be registered”. It concluded that Thaler cited no case law or other precedent that would undermine the Office’s construction of the Copyright Act.
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  Court Finds Tweet To Be Fair Use
  By Sonny Chastain on May 3, 2022
  Posted in Copyrights, Intellectual Property
  Dr. Keith Bell published a book in 1982 entitled Winning Isn’t Normal which provides strategies for success in athletics. He markets the books through online retailers and his own website. One of the passages in the book that is well known is entitled the WIN Passage. He offers merchandise, including t-shirts and posters, that display the WIN Passage. The WIN Passage is subject to a separate copyright registration and he offers licenses for its use.
  In December 2017, Chisholm Trail High School’s softball team and color guard posted the WIN Passage to their Twitter accounts. The posts credited Bell as the author but did not include a copyright watermark that Bell imprints on his digital reproductions of the WIN Passage. The school district did not seek his permission before publishing the tweets. Bell discovered the tweets through online searches.
  Bell waited almost a year to notify the school that two of its social media accounts had infringed the copyright. The school district removed both posts and told Bell it was a “teachable moment”. After settlement negotiations broke down, Bell sued for copyright infringement. The school district invoked the fair use defense and moved to dismiss the claim for failure to state a claim. The district court granted the motion to dismiss and awarded attorney’s fees to the school district.
  The Fifth Circuit addressed the fair use defense noting it balances protecting an author’s work and permitting others to reference them in cultural conversation. While the overarching goal of a copyright is to stimulate intellectual activity for public good, courts have recognized a limited privilege of use by others in a reasonable manner without the owner’s consent. Congress codified the fair use doctrine in the Copyright Act of 1976 and listed four factors to be considered in applying the doctrine, namely (1) the purpose and character of the use, including whether such use is commercial in nature or for nonprofit educational purposes: (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the work as a whole; and (4) the effect of the use upon the potential market for or value of the work.
  Analyzing these factors, the Fifth Circuit concluded the school’s use was in good faith. The use was not commercial as nothing indicated that the school district profited from posting a one-page excerpt from the book. These tweets only served to inspire students to strive for success. Bell argued that the tweets could indirectly benefit the school district by bolstering the professional reputation of its athletic department. However, the court found that the tweets did not tout the success of these programs and were not intended to motivate donors to contribute to the programs. Bell did not argue he lost revenue due to the school’s use of the passage but claimed the use could reduce the incentive to purchase Winning Isn’t Normal or related merchandise; however, the Court noted that the tweets did not reproduce a substantial portion of the work so as to make available a substitute for the original work. Bell failed to allege a substantial adverse impact on a legitimate market for his copyrighted work.
  Finally, the Fifth Circuit found that the district court did not abuse its discretion in awarding attorney’s fees to the school district. It noted that Bell has a long history of suing public institutions and non-profit organizations over de minimis uses of his work. Bell was unable to identify any actual financial injury associated with that use and brought suit anyway. The court said that attorney’s fees were an appropriate deterrent to Bell and other copyright holders.
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  The USPTO Takes Steps to Implement the Trademark Modernization Act of 2020
  By Jessica Engler & R. Devin Ricci on December 21, 2021
  Posted in Trademarks
  The Trademark Modernization Act of 2020 (“TMA”) becomes effective on December 27, 2021 and makes several important amendments to federal trademark law (the Lanham Act) intended to modernize trademark application examinations and clean house of trademark registrations for marks not used in commerce. USPTO announced on December 21, 2021, that it has created a new Petition for Expungement or Reexamination form to be used in TMA actions. In preparation for the go-live, we reshare our prior article on the metes and bounds of these actions.
  Ex Parte Challenges to Current Trademark Registrations
  A significant impetus for the TMA was comments during a 2019 hearing before the House Subcommittee on Courts, Intellectual Property, and the Internet concerning “clutter” and “deadwood” on the United States Patent and Trademark Office (“USPTO”) trademark registers. As of July 18, 2019, the USPTO trademark register comprised approximately 2.4 million registrations.[1] As testified by Commissioner for Trademarks Mary Boney Denison, the USPTO had seen an increase in trademark applications or registration maintenance filings that contained false or misleading claims and information, particularly with regard to specimens of use.[2] Trademark applicants are required to submit evidence with their applications that the applied-for trademark is actually being used in commerce in the class of goods or services listed on their respective application. Trademark owners are required to regularly submit similar evidence to maintain their registrations. Commissioner Denison testified that the USPTO has increasingly received fake or digitally altered specimens that do not actually show use of the mark in commerce as required by the Lanham Act.[3] These false submissions, as well as excessive registrations for marks no longer in use, limit the usefulness of Trademark Register and significantly increase trademark clearance costs.
  The TMA seeks to address these issues through two new ex parte proceedings. The first mechanism, an ex parte reexamination, permits third parties to challenge use-based registrations where the trademark owner swore that the marks were used in commerce, either in the application itself or in a statement of use. This mechanism allows the USPTO to reexamine the accuracy of the applicant’s claim of use at the time the averment was made. The second mechanism primarily targets foreign applications that claim use under Lanham Act section 44(e) or 66(a)—which allows foreign applicants to bypass submitting a statement of use in lieu of providing evidence of trademark registration in another country—and allows challenges to marks that have never been used in commerce. These proceedings can each be initiated by submitting testimony or evidence establishing a prima facie case of non-use, or the Director of the USPTO may determine on his or her own initiative that a prima facie case of nonuse exists. The registrant will then have the opportunity to respond to the alleged prima facie case. The registration will then either be cancelled, subject to the registrant’s right of appeal to the Trademark Trial and Appeal Board, or confirmed valid. A validity decision will preclude all further ex parte challenges to the registration.
  These ex parte mechanisms add renewed focus to the Lanham Act’s requirement of “use” for trademark rights. The Lanham Act requires “bona fide use of a trademark in the ordinary course of trade.” For goods, that can include consistently placing the trademark on the product or its packaging, labels, or tags or, if it is impractical to use on the product itself, invoices and documents associated with the sale of the goods. For services, use can include advertising in connection with actual offers for the services.[4] Given these new mechanisms and an increase in fraudulent applications, USPTO trademark examiners may more strictly scrutinize specimens of use for compliance with trademark use requirements. To avoid unnecessary delays in trademark applications, applicants should take care to ensure specimens meet the requirements of the Trademark Manual of Examining Procedure (“TMEP”) and that their use actually qualifies as trademark use. Experience intellectual property counsel can help clients navigate the TMEP and trademark application procedures.
  Changes to Trademark Registration Examination Procedures
  The Lanham Act currently requires trademark applicants to respond to office actions issued during the examination within 6 months. The TMA now allows the USPTO increased flexibility to set shorter response deadlines. Specifically, the USPTO can, through regulations, set shorter response periods between 60 days to 6 months, provided applicants can receive extensions of time to respond up to the standard 6 months. Much like extensions of time granted by the USPTO for patent applications, any such extension requests will incur additional fees.
  Formalization of the Informal Protest Procedure
  Though not a formal process, the USPTO has long allowed third parties to submit evidence regarding registrability of a mark during examination of a trademark application. Section 3 of the TMA now formalizes that process by: (1) expressly allowing third party evidence submissions; (2) setting requirements that the submission include identification of the grounds for refusal to which the submission relates; and (3) authorizing the USPTO to charge a fee for the submission. The USPTO is required to act on that submission within two months of its filing. The decision on the submission is final, but the applicant may raise any issue regarding the grounds for refusal in the application or any other proceeding.
  Presumption of Irreparable Harm for Trademark Infringement Plaintiffs
  The primary goal of most trademark infringement litigation is to stop the infringing behavior, typically through injunctions. Section 6 of the TMA provides that a “plaintiff seeking an injunction shall be entitled to a rebuttable presumption of irreparable harm.” This language codifies a standard that most courts had applied to establish harm before the U.S. Supreme Court’s 2006 decision in eBay v. MercExchange, LLC.[5] In eBay, the Supreme Court held that patent owners were no different than any other litigant seeking equitable relief, so those owners must demonstrate irreparable harm to be entitled to a permanent injunction. Several courts then applied eBay’s holding by extension to trademark owners, finding they also must demonstrate irreparable harm for an injunction to be warranted.[6] Some courts, like the Fifth Circuit, have struggled in their application of eBay to trademark infringement disputes, leading to confusion and disagreement among lower district courts.[7] The eBay decision thus ultimately led to a circuit split on whether the rule presuming irreparable harm remained valid in Lanham Act cases.[8]
  The TMA makes clear that trademark infringement plaintiffs are entitled to the presumption that they will be irreparably harmed if the infringer is allowed to continue use of the infringing trademark. Section 6(b) further confirms the retroactivity of this presumption, stating that Section 6’s amendment “shall not be construed to mean that a plaintiff seeking an injunction was not entitled to a presumption of irreparable harm before the date of enactment of this Act.” This change increases the likelihood that trademark infringement plaintiffs will be awarded preliminary and permanent injunctive relief, decreasing overall litigation costs and evidentiary burdens on plaintiffs.
  The Trademark Modernization Act of 2020 addresses a grab-bag of challenging trademark issues that together provide additional protections for trademark owners and, ultimately, consumers. Trademark owners seeking to register their marks will soon have expedited procedures to tackle fraudulent or “deadwood” registrations that block their trademark applications. The Act further resolves a circuit split for awarding an injunction, easing the burden on trademark owners to show harm. While the ultimate effect of the TMA remains to be seen, these changes should empower trademark holders with additional tools to combat problematic registrations and ease litigation burdens.
  ******************************************************************************************************************************************************************************************************************
  [1] Statement of the Commissioner for Trademarks Mary Boney Denison before the United States House Subcommittee on Courts, Intellectual Property, and the Internet Committee on the Judiciary, Jul. 18, 2019 (available at https://www.uspto.gov/about-us/news-updates/statement-commissioner-trademarks-mary-boney-denison-united-states-house_).
  [2] Id.
  [3] Id.
  [4] Services must actually be offered in connection with the advertisement to qualify as “use.” Couture v. Playdom, Inc., 778 F.3d 1379 (Fed. Cir. 2015).
  [5] 547 U.S. 388 (2006).
  [6] See Peter J. Karol, Trademark’s eBay Problem, 26 Fordham Intell. Prop. Media & Ent. L.J. 625, 636–653 (2016) (available at https://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=1623&context=iplj); Mark A. Lemley, Did eBay Irreparably Injury Trademark Law?, 92 Notre Dame L. Rev. 1795 (2017) . See also Gene Quinn, “Why eBay v. MercExchange Should, But Won’t, Be Overruled”, IPWatchdog.com (Feb. 16, 2020) (https://www.ipwatchdog.com/2020/02/16/ebay-v-mercexchange-wont-overruled/id=118929/).
  [7] See Karol, supra n. 5 at 646–47.
  [8] Testimony of Douglas A. Rettew, “Fraudulent Trademarks: How They Undermine the Trademark System and Harm American Consumers and Businesses” at p. 13, Hearing Before the Senate Committee on the Judiciary, Subcommittee on Intellectual Property (Dec. 3, 2019) (available at https://www.judiciary.senate.gov/imo/media/doc/Rettew%20Testimony.pdf).
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  Registering Your Intellectual Property Rights With Customs: A Proactive Measure to Block The Importation of Infringing Goods Into The U.S.
  By R. Devin Ricci & Stephen Hanemann on April 21, 2021
  Posted in Intellectual Property, International Trade
  Each year, millions of dollars in counterfeit goods enter the U.S. According to the Organization for Economic Co-Operation and Development, the international trade of counterfeit and pirated goods amounted to as much as $509 billion in 2016.[1] From 2003 through 2018, the number of seizures of infringing goods by the U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE) increased from 6,500 to 33,810, while the domestic value of seized merchandise – as measured by manufacturer’s suggested retail price of the legitimate good – increased from $94 million in 2003 to $1.4 billion in 2018.[2]
  A company holding intellectual property rights can take proactive measures to protect itself against the importation of counterfeit and pirated goods into the U.S. Registering intellectual property rights with the CBP is proving to be one of the most efficient and cost-effective measures to protect intellectual property rights and block the importation of infringing goods
  CBP is the primary federal agency responsible for securing America’s borders, and its mandate includes the protection of U.S. intellectual property rights. Per federal regulations, CBP has the authority to detain, seize, forfeit, and ultimately destroy merchandise seeking entry into the United States if the same is in violation to a trademark or copyright that have been registered with the U.S. Patent and Trademark Office (USPTO) or the U.S. Copyright Office (USCOP) as well as subsequentially registered with CBP. CBP also has authority to intercept goods that are covered by an exclusion order issued by the U.S. International Trade Commission.[3]
  The process to register a trademark and/or copyright with CBP’s e-Recordation system is relatively simple and inexpensive. The owner of the rights or its agent submits the application for the “U.S. Customs & Border Protection e-Recordation Program”[4] along with the applicable filing fees. The e-Recordation fee for federally registered trademarks is $190 per International Class of Goods. The recordation must be renewed concurrently with the renewal of the trademark at the USPTO. The fee for e-Recordation of copyright is also $190 per copyright, but the recordation must be renewed every 20 years. The renewal fees are currently $80 per trademark/copyright.
  In addition to registering the trademark and/or copyright, a recordation holder can also partner with CBP to maximize efficiency in identifying and preventing the entry of infringing goods. For example, a recordation holder can develop a product identification guide to aid CBP in identifying genuine merchandise and distinguishing it from infringing goods. Further, a recordation holder can deliver in-person product identification training to CBP personnel in the field and can also deliver live-online training to CBP personnel that introduces the brand and describes their intellectual property rights. Finally, a recordation holder can partner with the Centers of Excellence and Expertise for additional training and enforcement opportunities.
  The registration of trademarks and copyrights through CBP’s e-Recordation system is one of the most proactive measures for a company to protect its intellectual property rights from international competition. For assistance and guidance navigating through the CBP’s e-Registration system, or on how to protect your intellectual property, please contact Devin Ricci and Stephen Hanemann.
  *******************************************************************************************************************************************************************
  [1] Combating Trafficking in Counterfeit and Pirated Goods: Report to the President of the United States, DHS 1, 8 (2020) https://www.dhs.gov/sites/default/files/publications/20_0124_plcy_counterfeit-pirated-goods-report_01.pdf.
  [2] Id.
  [3] Intellectual Property Rights Enforcement: How Businesses Can Partner with CBP to Protect their Rights, CBP 1, 2 (2020), https://www.cbp.gov/sites/default/files/assets/documents/2017-Jan/ipr_guide.pdf; see also Devin Ricci & Mary Gimber, Using the International Trade Commission to Stop the Importation of Infringing Goods, Kean Miller Intell. Prop. Blog (April 19, 2021), https://www.intellectualproperty.law/2021/04/using-the-international-trade-commission-to-stop-the-importation-of-infringing-goods/
  [4] The applications for the e-Recordation Program can currently be found at https://iprr.cbp.gov/.
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  Using the International Trade Commission to Stop the Importation of Infringing Goods
  By Mary Kathryn Gimber & R. Devin Ricci on April 19, 2021
  Posted in Intellectual Property
  The United States International Trade Commission (“ITC”) is a quasi-judicial federal agency with broad investigative responsibilities on matters of international trade. An increasingly popular function of the ITC is serving as an alternate forum to litigate intellectual property disputes arising under Section 337 of the Tariff Act of 1930, as amended (19 U.S.C. § 1337), commonly referred to as a “Section 337 investigation.” Section 337 vests the ITC with authority to investigate and issue decisions involving importation of articles that constitute unfair competition, which includes the importation of articles infringing on a valid patent, trademark, or copyright. While the ITC can institute a Section 337 investigation on its own initiative, the ITC is quickly becoming a popular forum for U.S. companies asserting claims of patent infringement.
  It is easy to see why companies are turning to the ITC over a traditional district court litigation. Section 337 investigations are assigned to an Administrative Law Judge (“ALJ”) that oversees the entirety of the proceeding, beginning once the ITC’s investigation begins. Compared to district court litigation, which can (and often does) drag on for years, a trial-like hearing in ITC proceedings generally occurs within one year from the IP owner’s complaint of unfair competition. In addition to an expedited result, ITC proceedings have a broader reach on infringers as the jurisdiction is in rem, which means jurisdiction is tied to the article, opposed to where the entity conducts business. Therefore, a patent holder does not need to argue personal jurisdiction or be concerned over venue issues. However, the ITC only has the power to grant injunctive relief, generally in the form of an Exclusion Order as discussed below, and the ITC cannot award damages.
  The ITC shares several common characteristics of district court litigation. For example, discovery and motion practice is still subject to the Federal Rules of Civil Procedure. After the parties conduct discovery, evidentiary hearings, and post-hearing briefing, the ALJ issues an Initial Determination, which details all the contested issues and elements of the Section 337 violation. The Initial Determination issued by the ALJ can then be reviewed by the ITC, allowing the ITC to adopt or reject the ALJ’s findings. The ITC’s review is most often prompted by a party petitioning for the Initial Determination to be reviewed, although the ITC can also conduct a review of any Initial Determination as it sees fit. If a party petitions the ITC to review the ALJ’s Initial Determination but the ITC declines to conduct such review, the ALJ’s Initial Determination becomes a Final Determination. During the pendency of the ITC proceeding, the allegedly infringing goods may still be imported into the United States upon the posting of a bond determined by the ITC.
  If the Final Determination includes a finding of infringement, the ITC has the power to issue an Exclusion Order, either Limited (“LEO”) or General (“GEO”). The issuance of an exclusion order can be compared to injunctive relief in district court litigation, although the ITC’s Exclusion Orders are often more powerful and prevent the infringing articles from entering the United States. A LEO excludes the importation of infringing goods by the infringing party named in the Section 337 investigation. A GEO, however, provides for the widespread exclusion of the importation of infringing goods regardless of the importing party’s identity or involvement in the Section 337 investigation. The orders are provided to U.S. Customs and Border Protection (i.e., “Customs”), which is tasked with the enforcement of these Exclusion Orders and preventing the importation of infringing goods into the U.S. Exclusion Orders are prospective in nature, however, and do not impact the use or sale of goods that are already in the United States.
  Due to the ITC’s ability to more swiftly stop infringers than district courts and its ability to proceed in rem, it is no surprise that Section 337 investigations have become increasingly popular over the years among IP owners seeking international relief. For those involved in the international trade business, the increasing popularity of Section 337 may seem daunting and unduly burdensome. But they are less onerous than resorting to the District Courts. Moreover, through strategic planning and proactive measures, the burdens faced by international or foreign traders can be lessened or avoided altogether. Our next article will discuss proactive measures that can be taken with Customs to block the importation of infringing items with and without first obtaining an order from the ITC.
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  Satanic Panic? Trademark Law’s Collision with the First Amendment
  By Jessica Engler on April 9, 2021
  Posted in Trademarks
  This post is also available as a podcast:
  Wearable art or a devilish rip-off? That’s the question posed by a recent collaborative release by art cooperative MSCHF Product Studio and musician Lil Nas X – the limited edition “Satan Shoes.” The Satan Shoes are constructed from Nike Air Max 97 shoes and feature a black and red motif, a pentagram charm on the laces, and the writing “Luke 10:18” which refers to the biblical verse “I saw Satan fall like lightening from heaven.” The shoes also contain red ink in the soles and a drop of human blood, which was provided by MSCHF team members.[1] The shoes, priced at $1,018, sold out in minutes and are individually numbered from 1 to 666, as is common with copies of artistic works. The collaboration came after the release of Lil Nas X’s music video for his song “Montero (Call Me by Your Name)”, which features several biblical motifs and includes the musician gyrating on Satan. Both the music video and the Satan Shoes have generated significant controversy on social media, including Tweets from individuals boycotting Nike over perceived involvement with the shoes, which feature the Nike Swoosh prominently on the side and tongue of the shoe.
  Nike put out a statement confirming it is not involved with the shoes, and filed a lawsuit against MSCHF on claims of trademark infringement and trademark dilution. Pointing to the upheaval on social media about the shoes, Nike claims that there is significant confusion in the marketplace that Nike is involved with or endorsed the Satan Shoes.[2] Nike also petitioned the Eastern District Court in New York for a preliminary injunction and restraining order, halting further sales and shipments of the shoes.[3] The Court granted the restraining order, finding that Nike had shown a sufficient likelihood of success on some of its claims and a likelihood of irreparable harm.[4] MSCHF, which has been described previously by The New York Times, as the “Banksy of the Internet”,[5] does not dispute that it used Nike’s mark. Rather, it believes that its use is excusable because it was used in an artistic context.
  MSCHF defines itself as “a conceptual art collective known for interventions that engage fashion, art, tech, and capitalism in various, often unexpected, mediums.”[6] And indeed, consistent with their mission, MSCHF has previously put out similar art-shoe projects involving “involuntary collaborations” with brands. These projects have included the “Birkinstock”, Birkenstock style sandals that are made using refashioned Hermes Birkin bags and the “Jesus Shoe”, a natural foil to the controversial Satan Shoe. The Jesus Shoe, which sold for $3,000 a pair, were also created from Nike Air Max 97 trainers, and contained holy water from the River Jordan in the soles. The laces featured a gold crucifix charm on the shoe and the verse Matthew 14:25 stitched on the side, which reads: “And in the fourth watch of the night he came to them, walking on the sea.” The Jesus Shoes, created in 2019, were intended by MSCHF to comment on the absurdity of collaboration culture.[7] Specifically, MSCHF states: “As a manifested speculative artwork, Jesus Shoes conflates celebrity collab culture and brand worship with religious worship into a limited edition line of art objects.”[8] And despite the presence of the Nike Swoosh on the Jesus Shoes and Nike’s lack of involvement, as well as public backlash against the shoes, Nike did not take any adverse action against MSCHF or the Jesus Shoes in 2019.
  MSCHF again argues for the Satan Shoes, which also incorporate the Nike Swoosh (albeit more prominently than the Jesus Shoe), that a necessary part of art is to create inside of the real world; “We believe it is better to make art that participates directly in its subject matter. It is stronger to do a thing, than to talk about a thing. MSCHF makes artworks that live directly in the systems they critique, instead of hiding inside white-walled galleries.”[9] Indeed, MSCHF believes itself to be using the Nike Swoosh to make an artistic statement rather than in a consumer context, and that the Nike Swoosh contributes to the overall artistic message.[10] MSCHF is a regular creator of pieces using consumer items, with its first release being “The Persistence of Chaos”, which comprised a 2008 Windows laptop loaded with six malware programs that had purportedly caused millions in damage worldwide. Earlier this year, MSCHF released “Axe No. 5”, a limited run perfume that mixed Axe Body Spray and Chanel No. 5 perfume.[11] While the quality of the artwork may be debatable in certain circles, it is undeniable that these works are seen at least by their creator as art intended to inspire social commentary and discussion, making it unsurprising that it is seeking artistic exemption from infringement in the present dispute. MSCHF specifically argues that its products are not commercial products, but instead a limited run of individually numbered works of art sold to discerning, sophisticated purchasers.[12]
  Regardless of ultimate ideologies and feelings brought about by the Satan Shoes, these shoes present an interesting opportunity to explore the collision between trademark law and the First Amendment. To the chagrin of some trademark holders, the First Amendment does provide leeway for creative use of trademarks in an artistic context, even when that use may result in a likelihood of consumer confusion.
  Trademark Infringement and the First Amendment
  For many years the courts grappled with how to reconcile the First Amendment’s freedom of speech protections with the Lanham Act’s policy of preventing consumer confusion and deception; however, many courts have since settled on some version of the test first introduced by the Second Circuit in Rogers v. Grimaldi.[13] The goal of the Rogers test is to limit the application of the Lanham Act to expressive works where “the public interest in avoiding consumer confusion outweighs the public interest in free expression.”[14] Thus, the First Amendment and Lanham Act tolerate some levels of likelihood of confusion as to not chill protected expressive speech. Under the Rogers test, the use of another’s mark in an expressive work will not be actionable under the Lanham Act unless it “has no artistic relevance to the underlying work whatsoever, or if it has some artistic relevance, unless [it] explicitly misleads as to the source or content of the work.”[15] These factors are not a rigid test to be applied mechanically, but instead a balancing test that recognizes that the trademark rights of the senior user and the public’s right to not be confused must be carefully weighed against the artistic license granted to the junior user.[16]
  The first consideration, “artistic relevance”, is a factual issue that evaluates the relevance of the mark to the overall work as a whole. This degree of relevance is purposefully low—above zero—to avoid forcing judges to make what are essentially subjective judgments about the mark’s intrinsic artistic value in the context of an expressive work.[17] Thus, courts have been extremely liberal in finding artistic relevance, and very few cases have found no artistic relevance.[18] For this reason, it is highly likely the Court would find the Satan Shoes to be using the Nike Swoosh in an artistically relevant way.
  The second factor, “explicitly misleading” requires a plaintiff to prove that the mark’s use expressly and obviously misleads as to the source of the work. “Explicitly mislead” requires more than a finding of a likelihood of confusion. The Second Circuit has emphasized that the “finding of the likelihood of confusion must be particularly compelling to outweigh the First Amendment interest recognized in Rogers.”[19] The Ninth Circuit has cautioned that the “explicitly misleads” requires proof that the content, packaging, or advertising of the accused work clearly conveys the message that the plaintiff is affiliated with the work. This factor would be harder for MSCHF to fight against. The Satan Shoes do alter the Nike Air Max 97 shoes, but they do so in a manner similar to other collaborations Nike has done with other artists and entities.[20] With that said, several courts, including the Second Circuit, have issued decisions implying that “explicitly misleading” may require overt and express misstatements by the alleged infringer and not merely use of the mark.[21] MSCHF has never claimed any involvement or collaboration with Nike, and has consistently stated that its collaboration partner for the Satan Shoes is Lil Nas X and not Nike.
  Since the Rogers factors were introduced over 30 years ago, other courts have also introduced additional considerations when evaluating artistic works in the context of a trademark infringement dispute. These considerations were collected by the US District Court in Colorado in Stouffer v. National Geographic Partners, LLC and include:
  Whether the senior and junior users of the mark identify the same or similar kind of goods and services.
  To what extent the junior user added his or her own expressive content to the work beyond the mark itself.
  Whether the timing of the junior user’s use of the mark suggests a motive to capitalize on the popularity of the senior user’s mark.
  In what way, if any, the mark is artistically related to the underlying work, service or product.
  Statements made by the junior user to the public that suggest a non-artistic purpose.
  Statements made or conduct engaged in in private by the junior user that suggests a non-artistic purpose.[22]
  Each of these factors and others could be considered by the Court in addition to the Rogers test in efforts to balance Nike’s rights in its trademarks against MSCHF’s rights in creative expression.
  Trademark Dilution and the First Amendment
  What is also concerning to Nike is trademark dilution. Under the Trademark Dilution Revision Act, owners of distinctive famous are entitled to injunctions where a junior user’s use of the famous mark causes dilution by blurring or tarnishing the mark, regardless of any actual or likely confusion, of competition, or any actual economic injury.[23] Nike has established in prior cases that the Nike Swoosh is famous,[24] so the larger question is whether the Satan Shoes are likely to tarnish the Nike Swoosh and whether that risk of tarnishment is so great that it outweighs MSCHF’s creative expression rights. Courts have frequently enjoined the tarnishment of a mark through association with unsavory or scandalous goods, persons, or services.[25] Nike argues in its Complaint that the Satan Shoes are causing dilution by tarnishment by associating the Nike Swoosh with satanic symbols and imagery.
  A straightforward application of dilution laws may lead to the conclusion that the Satan Shoes tarnish the Nike Swoosh, despite MSCHF’s claimed noncommercial use (which is exempted from dilution laws). But the First Amendment issues further influence this analysis, particularly after the Supreme Court’s 2017 decision in Matal v. Tam.[26] In Tam, the Court evaluated the constitutionality of the disparagement clause in federal trademark law after an Asian-American musical group named “The Slants” was refused trademark registration because the name was disparaging to those of Asian descent. The eight justices[27] unanimously agreed that the law violated the free speech clause of the First Amendment because the government was discriminating against certain trademarks based upon viewpoint and was targeting offensive expression with the intent of discouraging its use.
  While scholars have long mused that dilution laws may run contrary to the First Amendment, the Tam decision and other recent jurisprudence have raised the question among legal commentators as to whether dilution laws could be overturned or found unconstitutional.[28] Prior to Tam, courts had generally avoided First Amendment scrutiny of trademark laws, arguing that intellectual property laws regulate commercial conduct and not speech.[29] The Federal Circuit en banc decision in In re Tam recognized this hesitation, conceding that “courts have been slow to appreciate the expressive power of trademarks.”[30] For Tam, the Asian-American band specifically picked the name “The Slants” in an act of reclamation of the derogatory term and was expressive speech. Recognizing that modern trademarks operate in socially significant ways, which can often go beyond just the products or services the mark holder offers, ultimately results in the question of how far trademark law will bend to accommodate expressive speech.[31]
  Because famous marks are more likely to be appropriated for an expressive purpose, dilution is brought into sharp focus. As observed by Professor Robert Denicola more than 30 years before Tam, famous marks have particular utility in expressive works:
  Famous trademarks offer a particularly powerful means of conjuring up the image of their owners, and thus become an important, perhaps at times indispensable, part of the public vocabulary. Rules restricting the use of well-known trademarks may therefore restrict the communication of ideas. When this occurs, the confrontation between trademark protection and free speech can no longer be ignored. . . . Since a trademark may frequently be the most effective means of focusing attention on the trademark owner or its product, the recognition of exclusive rights encompassing such use would permit the stifling of unwelcome discussion. Though other means of communication may be available, trademark use often offers opportunities unmatched by more conventional methods of expression.[32]
  MSCHF has not specifically stated why it chose Nike shoes specifically for the Jesus Shoes or Satan Shoes, but given Nike’s immense brand value, topping the Brand Finance “most valuable apparel companies” for 7 years,[33] there is certainly a probability that the choice to use Nike shoes specifically was distinctly related to MSCHF’s artistic message.
  For the time being, it looks like these questions will go unanswered. On April 8, 2021, Nike and MSCHF announced that they had reached a settlement. As part of the settlement, MSCHF has agreed to a voluntary recall and will buy back any Satan Shoes and Jesus Shoes for the original retail price. MSCHF’s attorney indicated that they are pleased with the settlement and feel that the publicity the case brought to MSCHF and its artistic works achieved the artistic purpose of the Satan Shoes and Jesus Shoes.[34] Settling the case will allow MSCHF to focus on new artistic works, the next of which is scheduled to drop on April 12, 2021.[35] Whether any buyers of the Satan Shoes or Jesus Shoes will take MSCHF upon their refund offer remains to be seen.
  ******************************************************************************************************************************************************************************************************************
  [1] Bryan Peitsch, “Nike Sues over Unauthorized ‘Satan Shoes’”, The New York Times (last updated April 9, 2021) (https://www.nytimes.com/2021/03/28/style/nike-satan-shoes-lil-Nas-x.html).
  [2] Id.
  [3] Bill Donahue, “Nike Wins Restraining Order on Lil Nas X ‘Satan Shoes’”, Law360.com (Apr. 1, 2021) (https://www.law360.com/articles/1371374/nike-wins-restraining-order-on-lil-nas-x-satan-shoes-).
  [4] Order, Nike, Case No. 1:12-cv-019679-EK-PK (E.D.N.Y. Apr. 1, 2021).
  [5] Sanam Yar, “The Story of MSCHF, a Very Modern . . . Business?”, The New York Times (updated Mar. 30, 2021) (available at https://www.nytimes.com/2020/01/30/style/MSCHF-sneakers-culture.html).
  [6] Satan Shoe Statement, MSCHF.com (Apr. 1, 2021) (https://mschf.xyz/statement.pdf).
  [7] Stephanie Dube Dwilson, “’Satan Shoes’ with Drops of Blood Announced by Company Behind ‘Jesus Shoes’”, Heavy, Inc. (Mar. 29, 2021) (https://heavy.com/news/nike-satan-shoes/). Heavy.com
  [8] Satan Shoe Statement, MSCHF.com (Apr. 1, 2021) (https://mschf.xyz/statement.pdf).
  [9] Id.
  [10] Id.
  [11] “Axe No. 5”, MSCHF (https://axenumbercensored.com/).
  [12] MSCHF specifically argues that its purchasers could only obtain the shoes through MSCHF’s proprietary app, and who would be already familiar with the nature of MSCHF’s works and approach to art. Letter from MSCHF Counsel (Mar. 31, 2021) (available at https://www.documentcloud.org/documents/20536836-nike_v_mschf_defendant_letter).
  [13] 6 McCarthy on Trademarks and Unfair Competition § 31.1440 (5th ed.).
  [14] Rogers v. Grimaldi, 875 F.2d 994, 999 (2d Cir. 1989).
  [15] Id. at 999.
  [16] 6 McCarthy § 31:144.50
  [17] Id.
  [18] Lynn M. Jordan & David M. Kelly, “Another Decade of Rogers v. Grimaldi: Continuing to Balance the Lanham Act with the First Amendment Rights of Creators of Artistic Works,” 109 TMR 833, 838 (September-October 2019).
  [19] 6 McCarthy § 31:144.50.
  [20] See Nike News – Collaborations (last accessed Apr. 7, 2021) (https://news.nike.com/collaborations).
  [21] Jordan, 109 TMR at 852.
  [22] 400 F.Supp.2d 1161, 1179 (D. Colo. 2019).
  [23] 15 U.S.C. § 1125(c)(1).
  [24] See e.g., Nike, Inc. v. Nikepal Intern., Inc., 2007 WL 2782030 (E.D. Ca. Sept. 18, 2007); Nike Inc. v. Variety Wholesalers, Inc., 274 F.Supp. 2d 1352 (S.D. Ga. 2003).
  [25] Anheuser-Busch, Inc. v. Balducci Publications, 28 F.3d 769, 777 (8th Cir. 1994).
  [26] 137 S. Ct. 1744 (2017).
  [27] Justice Neil Gorsuch did not participate in the consideration or decision.
  [28] Lisa P. Ramsey, “Free Speech Challenges to Trademark Law After Matal v. Tam”, 56 Hous. L. Rev. 401 (2018); Sara Gold, “Does Dilution ‘Dilute’ the First Amendment?: Trademark Dilution and the Right to Free Speech after Tam and Brunetti”, 59 IDEA: L. Rev. Franklin Pierce Center for Intell. Prop. 483, 489 (2019) (student work).
  [29] Alfred C. Yen, “Choosing the Consequences of Tam and Brunetti”, 16 Chi.-Kent J. Intell. Prop. 396,
  [30] 137 S. Ct. 1744 (2017).
  [31] Giulio Ernesto Yaquinto, “The Social Significance of Modern Trademarks: Authorizing the Appropriation of Marks as Source Identifiers for Expressive Works”, 95 Tex. L. Rev. 739 (Feb. 2017) (student work).
  [32] Robert C. Denicola, “Trademarks as Speech: Constitutional Implications of the Emerging Rationales for the Protection of Trade Symbols,” 1982 Wis. L. Rev. 158, 195–197
  [33] “Nike Tops Brand Finance’s Most Valuable Brands List, Rolex Claims ‘Strongest’ Title”, TheFashionLaw.com (Apr. 8, 2021) (https://www.thefashionlaw.com/nike-tops-brand-finances-of-most-valuable-brands-rolex-claims-strongest-title/).
  [34] Hannah Albarazi, “Nike Resolves Bad Blood with Lil Nas X ‘Satan Shoes’ Seller”, Law360.com (Apr. 8, 2021).
  [35] MSCHF (https://mschf.xyz/).
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  Avoiding Additional Fees in Connection with Registration Maintenance
  By Mary Kathryn Gimber & R. Devin Ricci on March 8, 2021
  Posted in Trademarks
  Trademarks are use-based rights, meaning that a trademark is only entitled to be registered if the mark is actually in use. Likewise, the registrant must continue to use the mark in commerce in order to maintain registration and must take action to renew a trademark registration at various milestones (year 5, 10, 20, 30, etc.). In so doing, trademark owners are required to submit specimen materials showing that the mark is still in use in interstate commerce. For years, these renewals were on a quasi-honor system whereby the registrant needed only submit one specimen showing use in commerce per each registered class. But in order to crack down on trademark squatting, the USPTO has started to issue quality checks at random that require the registrants submit additional specimen to show that all goods and/or services in specified classes are still in use. Now, the Trademark Office has instituted a new fee to combat squatting on abandoned rights. The fee appears to act almost like a fine. If the registrant is required to delete goods, services, or classes in response to one of these quality checks, the USPTO will impose a $250 per class fee. The USPTO recently advised that there are two ways to avoid paying this additional fee: (1) delete the goods, services, or classes when filing the Section 8 or 71 Declaration; or, (2) file a Section 7 Request to Amend a registration prior to submitting a Section 8 or 71 Declaration. If the Section 7 Request to Amend a registration is filed prior to filing a Section 8 or 71 Declaration and the only amendment requested is the deletion of goods, services, and/or classes, the Section 7 Request to Amend is free.
  The USPTO has indicated that the goal of imposing a fee for deletions made after a Section 8 or 71 Declaration is filed and before the Declaration is accepted is to heighten the integrity of the trademark register through obtaining more accurate and up to date information from registrants. The USPTO recently issued additional guidance regarding best practices aimed at avoiding this additional fee for certain deletions. These best practices include: (1) creating a checklist for evaluating and confirming the use of the trademark in commerce with registered goods and services; (2) keeping notes regarding the people and records utilized to obtain this information; and, (3) keeping a record of evidence of current use in commerce, such as photos of each good bearing the trademark, printouts or screenshots of supporting webpages with the date and URL, and copies of print advertising or promotional materials. Following these best practices will provide the information necessary to determine whether certain goods, services, or classes should be left off a Section 8 or 71 Declaration, especially if followed when a Section 8 or 71 Declaration deadline is approaching. Following the best practices above is equally helpful when a Section 8 or 71 Declaration deadline is far off, as the Section 7 Request to Amend a registration is free to file when done for the purpose of deleting goods, services, or classes from a registration, which offers protection in the future from having to pay the new $250 filing fee for having to delete certain goods, services, or classes after a Section 8 or 71 Declaration has been filed.
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  Fifth Circuit Rules Use of Vizzy and Brizzy For Seltzer Not Confusing
  By Sonny Chastain on March 5, 2021
  Posted in Trademarks
  Future Proof Brands, L.L.C. (“Future Proof”) filed a trademark infringement action against Molson Coors Beverage Co. (“Coors”) objecting to its use of the mark Vizzy. Future Proof used and registered the mark Brizzy as a brand of hard seltzer containing carbonated water, alcohol and in most cases fruit flavors. When Coors branded its hard seltzer Vizzy, Future Proof objected and sued seeking an injunction. Coors denied infringement claiming that it branded Vizzy by amalgamating its two prominent attributes, namely, vitamin C and fizzy. It noted that numerous other companies have carbonated products with a variant of fizzy, including Fizzy Pink Lemonade, Fizzy Mango, Fizzy Fox, Fizzy Juice, and others. After the district court denied issuing a preliminary injunction, Future Proof appealed.
  The Fifth Circuit analyzed the digits of confusion, including (1) the type of mark infringed, (2) similarity between the marks, (3) similarity of the products, (4) identity of the retail outlets and purchasers, (5) identity of the advertising media used, (6) defendant’s intent, (7) evidence of actual confusion, and (8) the degree of care exercised by the potential purchasers. The district court had concluded that the third, fourth and fifth digits favored granting the injunction. Neither party contested that decision, so the Fifth Circuit did not consider those digits, but focused on the remaining digits.
  The district court had found the mark Brizzy to be descriptive. However, the Fifth Circuit disagreed concluding Brizzy is not descriptive because it does not convey an immediate idea about the characteristics of hard seltzers. The Fifth Circuit found that Brizzy is suggestive because consumers must exercise imagination and infer that Brizzy is a play on fizzy and not on other words. However, the Court also noted that because of the numerous third-party uses, it agreed with the district court that the mark Brizzy is weak.
  As to similarity, the Fifth Circuit focused on the differences in packaging, namely the shapes of the cans, design features and wording. Further, the Fifth Circuit considered the initial consonants and aural similarities. It concluded that the district court did not err in concluding this digit “only marginally in favor of granting the injunction”.
  In analyzing the digit of intent, Future Proof claimed that Coors and its executives were aware of and had notice of Brizzy when they began marketing Vizzy. However, the Fifth Circuit found that mere awareness is not enough to establish intent. Instead, the inquiry must focus on whether the defendant intended to derive benefits from the reputation of the plaintiff and the Court must rely on evidence that a defendant imitated packaging material or adopted similar distribution methods. Future Proof provided no such evidence and thus there was no established bad intent.
  The only instance of actual confusion cited involved a wholesaler, not a consumer. According to the Fifth Circuit, a fleeting mix-up of names is not sufficient to establish actual confusion.
  Finally, the Fifth Circuit concluded that the low price of the product was not sufficient to establish a lack of care in terms of the purchasing decision. Future Proof failed to provide an affidavit or testimony to show a lack of consumer care.
  After conducting the digit analysis, the Fifth Circuit concluded that a finding of likelihood of confusion does not have to be supported by a majority of the digits, and each digit must be weighed differently for each case. Although the district court had found three of the factors supported an injunction, and one other marginally so, the Fifth Circuit found no error in the district court’s reliance on the other four factors, which weighed against an injunction, especially the two digits that have special importance, namely, intent and actual confusion. The Court found that the district court did not commit error in concluding that Future Proof failed to carry its burden of showing the likelihood of confusion and affirmed the district court ruling.
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  $2.175 Billion—With A “B”—Verdict In Patent Infringement Case
  By Lauren Rucinski & R. Devin Ricci on March 4, 2021
  Posted in Patents
  Semiconductor chip giant Intel was hit with a massive, $2.175 billion dollar verdict this week over infringement claims of two patents owned by VLSI Technology LLC.[1] So, the next time your patent counsel warns that “patent infringement damages can be nontrivial,” please take heed.
  In April 2019, VLSI Technology filed three infringement suits against Intel in the U.S. District Court for the Western District of Texas accusing various Intel processors of infringement.[2] The two patents that ultimately won the day covered a method for minimizing operating voltage to avoid failure of memory in a data process system (U.S. Patent No. 7,523,373) and a system and method for managing clock speed in electronic devices (U.S. Patent No. 7,725,759).
  The jury found that Intel (1) literally infringed the data process system patent, which means that the Intel product contained or “practiced” all of the elements of the patented invention[3] and (2) infringed the clock speed patent through the so called “doctrine of equivalents.” A product or process that does not literally infringe a patent claim may still infringe under this doctrine if the differences between the accused product and the patented invention are insubstantial.[4] The jury determined that the system within the Intel processor, although not exactly the same, was similar enough to the VLSI patent to infringe.
  Based on those findings, the jury awarded $1.5B in damages for infringement of the data process system patent and $675M in damages for infringement of the clock speed patent. These are staggering amounts, even for a Silicon Valley staple like Intel.
  So how did Intel wind up in this predicament? The short answer is that the U.S. (and other countries in general) take extreme lengths to protect and encourage innovation. In fact, the creation of patent rights is specifically delineated in the U.S. Constitution:
  Article I Section 8, Clause 8 – Patent and Copyright Clause of the Constitution. [The Congress shall have power] “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”
  To protect those rights, 35 U.S.C. § 284 provides that the minimum statutory compensatory damages award owed to a patent holder by an infringer is a “reasonable royalty.” In litigation, a reasonable royalty is generally determined based on a hypothetical negotiation occurring between the parties.[5] That is, what amount of money would it have taken for a reasonable patent holder to allow the infringer to make, use, sell its patented invention at the time before the litigation began.
  But the reasonable royalty is the minimum. In addition to the hypothetical royalty damages, a patent holder may also seek “lost profits” in certain circumstances. The lost profits damages seek to compensate the patent holder for any lost sales or price erosion that resulted from the infringing product’s presence in the market.
  Multiplying the reasonable royalty and lost profits for expensive tech integrated into near endless amounts of electronic devices can amount to major damages, as it did here. In truth, the damages could have been worse under patent law. Had the jury found the case to be “exceptional”, the jury would have been able to enhance the damages up to three times the amount. One example of an “exceptional case” is willful infringement, such as when an infringer knows about the patent and infringes anyway. The jury here determined that Intel was not “willful” in its infringement; otherwise, Intel may have been liable for over $6B. To put this in perspective, Intel could have been held liable for the equivalent of the entire 2019 GDP of the Maldives, which was 148th of 211 countries ranked by GDP.[6]
  But that is not all. In addition to compensatory damages, a court may award reasonable attorney fees to the prevailing party under 35 U.S.C. § 285. Reasonableness is dependent upon a lot of factors, not the least of which is the amount at stake. Even a relatively low 20% contingency fee on $2.1B is over $425M.
  And like a game show, there really is more. Patent infringement also carries the possibility of injunctive relief. Thus, while the billions in damages is impressive, the real power lie in VLSI’s potential ability to prevent Intel from importing, making, using, selling, offering for sale any of its products that infringe the patents.
  There is no doubt that this award will be appealed and will likely be reduced in some capacity. But the moral of the story is to take patent rights and infringement seriously. First, protect your own rights. By obtaining a patent, the inventor/company may protect their rights in federal court against anyone that makes, sells, or uses the invention for a two-decade period. And, second, but equally as important, do your due diligence on new products. Should you find yourself the recipient of a cease and desists letter, call your patent attorney.
  ****************************************************************************************************************************************************************************************************************
  [1] VLSI is indirectly owned by the Japanese tech firm SoftBank Group.
  [2] This is one of various infringement cases brought by VLSI against Intel. Intel also attempted to invalidate the patents at the Patent Office by filing inter partes review requests on certain asserted claims across six of the patents at issue in WDTX between May and October of 2020. The Patent Trial and Appeals Board denied all of the requests.
  [3] The product or process is said to infringe when it has everything mentioned in the claim. Stiftung v. Renishaw PLC, 945 F.2d 1173, 1178, 20 U.S.P.Q.2d 1094, 1098 (Fed. Cir. 1991). On the other hand, a product or process that does not have each and every element recited in the claim should not be considered a literal infringement. Mas-Hamilton, 156 F.3d at 1211, 48 U.S.P.Q.2d at 1015.
  [4] Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 41 U.S.P.Q.2d 1865 (1997). Digital Biometrics, Inc. v. Indentix, Inc., 149 F.3d 8855, 1349, 47 U.S.P.Q.2d 1418, 1428 (Fed. Cir. 1998). In making a determination under the doctrine of equivalents, the court may consider whether the accused product or process performs substantially the same function, in substantially the same way, to obtain substantially the same result as the claimed invention. Dawn Equip. Co. v. Kentucky Farms Inc., 140 F.3d 1009, 1016, 46 U.S.P.Q.2d 1109, 1113 (Fed. Cir. 1998).
  [5] Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1312 (Fed. Cir. 2011)
  [6] https://worldpopulationreview.com/countries/countries-by-gdp
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  The publisher of this Web Blog is: Alan J. Berteau, Attorney at Law
  R. Devin Ricci, Attorney at Law
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  Kean Miller is counsel to the people and industries that drive the regional economy. From Fortune 1000 companies to local and regional businesses, we provide efficient and effective legal counsel in a cost-efficient manner. In the courtroom and the boardroom, Kean Miller attorneys create unique solutions, provide practical strategies, and deliver unparalleled value that allows our clients to perform at the highest level. Learn more.