Intellectual Property News
WINTER 2022
Published by the Ohio State Bar Association
Intellectual Property Law Section
1
INSIDE
Trademarks and Crowd Psychology:
Can a Water Bottle Shape Our Personality? ���������������������������������1
Trademarks and Unfair Competition ��������������������������������������������3
In Re Surgisil: Limiting Prior Art in
Design Patent Applications �����������������������������������������������������������7
Are Warhol’s Prince Prints Fair? ���������������������������������������������������9
Tag Me In Coach: All Means All When Assigning Rights
and Substituting Parties in Pending Patent Reexamination
Proceedings ����������������������������������������������������������������������������������11
Arthrex: USPTO Death Panels Dodge a Bullet �������������������������12
e Next Meeting ������������������������������������������������������������������������17
Have Your Article Published Her ������������������������������������������������17
From mid 2019 to early 2020, Hydro Flask, a water bottle,
took over consumers’ minds. If you are a Gen X parent, you
have certainly spent at least $30-$60 for your child’s Hydro
Flask water bottle (if you were lucky enough not to have
bought a limited edition).
1
e water bottle that dominated
the world started modestly in a farmer's market before
exploding into a globally recognized brand. Now, it is a
multimillion dollar company that has donated $1.9 million
in its program to save the environment and conserve green
spaces.
3
We all know the importance of trademarks – they allow
consumers to instantly recognize a brand, and because of
this, the trademark itself holds signicant value. But how
can a simple water bottle inuence 6th graders to put it on
top of their Christmas wish list? Are water bottles really
that important in our lives? Does buying a Hydro Flask
really save the polar bears from climate change? We wish.
Identity is especially uid in adolescents. In this confusing
period of being a teenager, there is a constant battle between
two opposite needs: the need to t into a group where they
can nd acceptance through a common belief, and the need
to be unique and special in what they think and believe.
6
Parents, you know what I mean.
Hydro Flask has managed to solve this identity conict.
ey are not merely selling a water bottle, they are selling
Trademarks and Crowd Psychology:
Can a Water Bottle Shape Our Personality?
By Clare Keonha Shin, Adjunct Professor
IESEG School of Management, Paris, France and
Dr. Emanuele Ruggeri, Psychiatrist, Florence, Italy
an identity with an option to showcase your one-of-a-kind
personality through personalization.
7
e trademark of
Hydro Flask stands hand-in-hand with the personalization
and stickers that are meant to show the owner’s
individuality. Simultaneously, it allows the owner to become
part of a group, standing together with other “Hydro Flask-
ians.”
A trademark is not tangible - it is a word, symbol, phrase,
color. And yet, it has the power to unite teens, give millions
of dollars for environmental conservation, and transform
Intellectual Property News
2
a farmer’s market water bottle into a social status. Hydro
Flask owners do not throw their bottle into their backpacks,
they carry it separately in their hands, like wearing a
uniform, and proudly show the world that they are part of
the Hydro Flask army on a mission to live clean, healthy
and plastic free.
Meanwhile, non-Hydro Flask-ians carry the weight and
guilt of not buying the water bottle and potentially killing
polar bears while they're at it. e Hydro Flask trademark,
like thousands of other famous brands, clearly shows the
concept of stigma in crowd psychology.
9
Companies are
fully aware of this, and it is a fundamental concept in their
marketing. e psychology behind trademarks can unify
people, but it can also create severe fractures in our society.
Unfortunately, there is no escape from this rule. We all must
choose - to buy or not to buy a Hydro Flask.
We must choose carefully how to manage all the dierent
uniforms we wear and create an ecosystem of trademarks
that displays the ideal image of ourselves. is can prove
to be dicult as we try to live our lives in this ideal image
without becoming a hypocrite and betraying our ideology.
Trademarks allow the consumer to possess a status symbol
that can be recognized by others. But they also create a
burden through responsibility in our choices and their
consequences.
Trademarks are a reection of our needs as human beings.
ey are a diversion, a simple way to cover up our internal
conicts about our personalities and place in society. Yes,
our needs to both conform and be unique don't really go
away after our teenage years. We confess, we have purchased
two Hydro Flasks - one in mint, and one in navy blue.
Endnotes
1
Hydro Flask, hydroask.com (last visited Oct. 25, 2021).
Priscella Vega, Hydro Flask started out at farmers markets.
Here’s how it got so huge, L.A. TIMES (Feb. 23, 2020),
https://www.latimes.com/business/story/2020-02-23/
hydro-ask-water-bottle-why-is-it-special.
Supra note 1.
Supra note 2.
Eugenio Gaburri, Laura Ambrosiano, Ululare con i Lupi.
Conformismo e Revêrie 49-61 (2014).
Id.
Supra note 2.
Id.
Supra note 5.
Intellectual Property News
3
Summary
In 1-800 Contacts, Inc. v. FTC, the 2nd Circuit considered
whether restrictions on keyword bidding for online
search advertising violated Section 5 of the Federal Trade
Commission (FTC) Act and whether that determination
could be made using the FTC’s “inherently suspect”
framework. is case is interesting because it shows how
trademark policy factors into the unfair competition
analysis, and thereby inuences what is or is not considered
anticompetitive.
How Search Advertising Works
Search advertising is a method of online advertising in
which advertisers pay search engines (such as Google or
Bing) to place ads next to search results. ese ads appear
as “sponsored results” on a search results webpage and
function as links to various other webpages. e reason why
advertisers nd search advertising compelling is because
it can place ads in front of consumers at a time when
consumers are more likely to buy (because the fact you
bothered to search for something is evidence of conrmed
interest).
Search engines host auctions wherein advertisers can
bid “keywords.” Keywords are the words and phrases
entered into a search engine to dene a search (i.e. query).
e highest bidders’ ads are typically displayed most
prominently on the search results webpage. Since search
engines typically do not limit the keywords available to
advertisers at auction, competitors will often bid on each
other’s brand names (which are often trademarked) so that
their ad runs when a consumer searches for a competitor.
In addition to bidding on keywords, advertisers can also bid
on “negative keywords.” Negative keywords are keywords
that can prevent an ad from being displayed even when
the search engine independently determines that the ad
would be relevant to a search. For example, a retailer of
prescription eyeglasses who bid on the keyword “glasses”
might also bid on the negative keyword “wine glasses” to
ensure their ad appears pursuant to the appropriate search.
1-800 Contacts
1-800 Contacts, Inc. (1-800) is an online retailer of
prescription contact lenses. Established in 1995, 1-800 has
since grown into one of the largest retailers of contact lenses
today and now accounts for the majority of all contact
lenses sold online. 1-800 does not own any physical stores
so all retail activity is transacted through their website.
1-800 generally charges higher prices than their rival online
retailers. So given that contact lenses are not unique to any
particular retailer, and that consumers can purchase the
exact same contacts from several dierent sources, 1-800’s
sales tend to decrease when its competitors’ ads appear in
By Ken Pung
1
Standley Law Group LLP
Trademarks and Unfair Competition
Intellectual Property News
4
response to a search for 1-800’s trademark terms (because
consumers realize that they can just buy them cheaper
elsewhere).
Case and Controversy
In 2002, 1-800 began ling complaints and sending
cease-and-desist letters to its competitors alleging
trademark infringement related to its competitors’ online
advertisements. Between 2004 and 2013, 1-800 entered into
13 settlement agreements to resolve most of these disputes.
Each of these agreements included language that prohibited
the parties from using each other’s trademarks, URLs and
variations of trademarks as search advertising keywords.
e agreements also required the parties to employ negative
keywords so that a search including one party’s trademarks
will not trigger a display of the other party’s ads. 1-800
enforced the agreements when it perceived them to be
breached.
In addition, 1-800 also entered into a “sourcing and
services agreement” with Luxottica, a company that sells
and distributes contacts. at agreement also contained
reciprocal online search advertising restrictions prohibiting
the use of trademark keywords and required both parties to
employ negative keywords.
None of these agreements (collectively, the “challenged
agreements”) prohibited the parties from bidding on generic
keywords such as “contacts” or “contact lenses.”
is article’s author takes a moment here to oer a
consideration of his own that is not discussed in this
opinion: What is the practical eect of allowing business
competitors to bid on trademarked keywords within the
context of trademark policy? Most, if not all, trademark
practitioners know that one of the fundamental goals of
trademark policy is to prevent the illegitimate diversion
of trade. Trademark law achieves this goal by recognizing
trademark rights and by prohibiting others from
misappropriating associated goodwill, earned over time,
through use of a confusingly similar mark. But the situation
created here by search engines – i.e., allowing anyone to bid
on any keyword, regardless of whether it’s been trademarked
– arguably enables misappropriation without even needing
to use a confusingly similar mark.
2
A business competitor
can simply place an ad in the search results generated when
consumers search for a more reputable company and siphon
o their business. It’s no wonder then that 1 800 felt the
need to rein in this practice.
FTC Action
e FTC issued an administrative complaint against
1-800 alleging that the challenged agreements, along with
subsequent actions to enforce them, violated Section 5
of the FTC Act on the grounds that they unreasonably
restrained truthful, non-misleading advertising as well
as price competition in search advertising auctions. e
theory was that the challenged agreements prevented
1-800’s competitors from disseminating ads informing
consumers that the same contact lenses were available at a
cheaper price from other online retailers, thereby reducing
competition and making it more dicult for consumers to
compare prices.
An administrative law judge tried the case and concluded
that a violation had occurred, leading the judge to issue
an order barring 1-800 from entering into agreements
with any marketer or seller of contact lenses to limit or
prohibit participation in search advertising auctions. 1-800
appealed the order to the commission, who agreed with
the administrative law judge in a split decision. is appeal
followed.
Intellectual Property News
5
Sherman Act Framework
Restraint on trade jurisprudence has established three
dierent methods for evaluating the reasonableness of
a restraint. To determine which one to use, courts rst
consider how unreasonable the restraint is on its face and
then select one based on how obviously unreasonable it is.
If the unreasonableness of a restraint is unclear or not easily
ascertained, Sherman Act Section 1 case law provides the
“rule-of-reason” analysis for evaluating these restraints. e
rule-of-reason analysis goes as follows:
(1) Plainti rst makes a showing that the challenged
action had an actual adverse eect on competition as a
whole in the relevant market.
(2) After a prima facie case of anticompetitive conduct
has been established, the burden shifts to the defendant
to proer procompetitive justications for the
agreement.
(3) Assuming defendants can provide such proof, the
burden shifts back to the plaintis to prove that any
legitimate competitive benets oered by defendants
could have been achieved through less restrictive means.
Sometimes, however, restraints are so obviously
anticompetitive and damaging to the market that they
can be conclusively deemed per se illegal. is designation
removes the requirement to perform an elaborate inquiry
into the precise harm caused by the restraint or the
business excuse for its use (i.e. rule-of-reason factors 1
and 2). Restraints of this nature typically involve classic
monopolistic activities such as geographic divisions of
markets or horizontal price xing.
e third method exists somewhere between these two
extremes. Referred to as the “quick look” approach for
“inherently suspect” restraints (also referred to as the
“inherently suspect framework”), this method enables the
FTC to shortcut factor 1 of the rule-of-reason analysis by
eliminating the need to show direct evidence of harm or
proof of market power.
4
A restraint is “inherently suspect”
if there is a likely tendency that it suppresses competition.
5
However, if the restraint “might plausibly be thought to
have a net procompetitive eect, or possibly no eect at
all on competition,” then the full rule-of-reason analysis is
required.
6
Second Circuit Review
e 2nd Circuit rejected the FTC’s reliance on the inherently
suspect framework in its decision. First, they acknowledged
that even if restraints on truthful advertising have a tendency
to raise prices, as the government argues, that is not sucient
to depart from the full rule-of-reason analysis.
7
Second, they
further acknowledged that courts simply don’t have enough
experience evaluating keyword bidding restraints to allow
application of the inherently suspect framework.
8
And lastly,
but most crucially, the court recognized that the restraints
at issue could plausibly have a procompetitive eect because
they were derived from trademark settlement agreements.
e reasoning here is that since trademarks are inherently
non-exclusionary, it stands to reason that agreements to
protect trademarks should not immediately be assumed
anticompetitive. If anything, they should be assumed to be
procompetitive.
9
Application of the Rule-of-Reason
Having dismissed the FTC’s evaluation of the challenged
agreements, the 2nd Circuit set out to perform its own using
the full rule-of-reason analysis.
Pursuant to factor 1, the government contended that it had
established direct evidence of the challenged agreements’
anticompetitive eects in the form of increased prices. Direct
evidence of anticompetitive eect would have established a
prima facie Sherman Act Section 1 violation and obviated the
need for a detailed market analysis or a showing of market
power.
10
However, the 2nd Circuit rejected this argument
because the FTC failed to show an actual anticompetitive
change in prices after the restraint was implemented. ey
just never performed an empirical analysis of the challenged
agreements’ eect on prices. erefore, the FTC’s assertion
was theoretical and anecdotal, not direct.
Pursuant to factor 2, 1-800 argued that the challenged
agreements were justied by two procompetitive eects:
reduced litigation costs and protecting their trademark rights.
e 2nd Circuit agreed with these arguments but found
1-800’s trademark policy argument particularly persuasive,
noting that trademark agreements that “only marginally
advance ... trademark policies” can be found procompetitive,
and that “[e]orts to protect trademarks, even aggressive
ones, serve the competitive purpose of furthering trademark
policies.”
11
Intellectual Property News
6
e 2nd Circuit is careful to note, however, that its current
stance on trademark agreements does not mean that every
trademark agreement has a legitimate procompetitive
justication. For example, “provisions relating to trademark
protection [that] are auxiliary to an underlying illegal
agreement between competitors” or the existence of other
exceptional circumstances could possibly warrant a nding
of anti-competitiveness.
12
But the government made no
such showing here.
Pursuant to factor 3, the government tried to argue that a
less restrictive alternative to restricting keyword bidding
could have been a requirement that the parties provide
clear disclosure in each search advertisement of the rival
seller’s identity. e FTC thought that this was enforceable
because they had ordered similar agreements in the past.
e 2nd Circuit, however, rejected this alternative because
the FTC did not consider the practical reasons for why the
parties agreed to keyword bidding restrictions in the rst
place, nor the burden that would have been shouldered by
the parties to enforce the FTC’s alternative. e 2nd Circuit
noted that the possibility that an alternative could be crafted
is not enough. Rather, the alternative must be “substantially
less restrictive.”
13
And in the absence of a showing that the
FTC’s alternative is substantially less restrictive, the 2nd
Circuit decided to give deference to the arm’s length use
agreements negotiated by 1-800 and its competitors.
For the reasons presented above, the 2nd Circuit ruled in
favor of 1-800 for all three factors of the rule-of-reason
analysis and vacated the nal order of the FTC. e case
was remanded with instruction to dismiss the administrative
complaint.
Takeaways
is case seems to demonstrate that protecting trademarks
can be a compelling procompetitive justication in unfair
competition cases and begs the question whether or not
a market restriction that implicates trademark policy
can ever be found per se illegal. Further, it also seems to
suggest that keyword bidding restraints, especially if they
are derived from trademark settlement agreements, are
relatively safe from FTC scrutiny given that the FTC has a
signicantly heavy burden to meet if they wish to deem one
anticompetitive.
Endnotes
1
is article expresses the personal views of the author and
does not reect the position or view of Standley Law Group
LLP or any of its clients.
2
https://support.google.com/adspolicy/answer/6118?hl=en
(Google still does not investigate or restrict trademarks as
keywords).
See U.S. v. Socony-Vacuum Oil Co., 310 U.S 150 (1940);
United States v. Sealy, Inc., 388 U.S. 350 (1967); United
States v. Topco Associates, Inc., 405 U.S. 596 (1972); Craftsmen
Limousine, Inc. v. Ford Motor Co., 363 F.3d 761 (8th Cir.
2004); Northern Pacic Ry. Co. v. United States, 356 U.S. 1,
5 (1958); Major League Baseball Props., Inc. v. Salvino, Inc.
(MLB), 542 F.3d 290, 315-16 (2d Cir. 2008).
Polygram Holding, Inc., 136 F.T.C. 310, 344-45 (2003),
a'd, 416 F.3d 29 (D.C. Cir. 2005).
See California Dental Ass'n v. FTC, 526 U.S. 756, 770 n.
3 (1999) (a restraint is inherently suspect if “an observer
with even a rudimentary understanding of economics could
conclude that the arrangements in question would have an
anticompetitive eect on customers and markets”); see also
Polygram, 416 F.3d at 37 (the inherently suspect framework
is applicable when “close family resemblance [exists]
between the suspect practice and another practice that
already stands convicted in the court of consumer welfare”).
See Cal. Dental, 526 U.S. at 771; see also Clorox Co. v.
Sterling Winthrop, Inc., 117 F.3d 50, 55-59 (2d Cir. 1997)
(since trademarks are by their nature non-exclusionary, and
agreements to protect trademark interests are “common,
and favored, under the law … it is dicult to show that an
unfavorable trademark agreement creates antitrust concerns
… [even if it prevents competitors from] from competing as
eectively as [they] otherwise might”).
See Major League Baseball Props., Inc. v. Salvino, Inc, 542
F.3d 290, 315-17 (2d Cir. 2008).
See Cal. Dental, 526 U.S. at 781 (explaining that the quick-
look approach may be applicable if rule-of-reason analyses
in case after case reach identical conclusions); Polygram,
416 F.3d at 36-37 (accepting the Commission's denition
of "inherently suspect" as describing restraints previously
condemned by both "judicial experience and economic
learning").
See Clorox at 60.
10
See FTC v. Ind. Fed’n of Dentists, 476 U.S. 447, 460
(1986).
11
See Clorox at 57 and 61.
12
See Clorox at 60.
13
Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law:
An Analysis of Antitrust Principles and eir Application
¶ 1502 (3rd & 4th eds., 2019 Cum. Supp. 2010-2018).
Intellectual Property News
7
A recent case from the Federal Circuit highlights that not
just any prior art reference is available for making novelty
rejections in design patent applications. In In re: SurgiSil,
L.L.P. et al. (2021 U.S. App. LEXIS 29809 (Fed Cir. Oct.
4, 2021)), the Federal Circuit found that a claimed design is
limited to the particular article of manufacture identied in
the claim.
2
e appellant in that case, SurgiSil, appealed a
Patent Trial and Appeal Board (PTAB) decision arming a
rejection of SurgiSil’s design patent application claiming an
“ornamental design for a lip implant.”
2
e only gure from
that application is shown below:
SurgiSil’s claim to the above design was rejected as
anticipated by an art tool called a stump, which is made
of “tightly spiral-wound, soft gray paper” and is used “for
smoothing and blending large areas of pastel or charcoal.”
3
e stump is shown below:
e PTAB decision stated that “it is appropriate to ignore
the identication of the article of manufacture in the claim
language,” and quoted an earlier Federal Circuit opinion in
stating “whether a reference is analogous art is irrelevant to
whether that reference anticipates.”
4
In the In re Schreiber case cited by the PTAB, the patent
applicant claimed a conical “open-ended container” for
dispensing “popped popcorn.”
5
According to the examiner,
the applicant’s claim was anticipated by a Swiss patent to a
conical, open-ended container.
6
e applicant argued that
the container from the Swiss patent was designed to dispense
liquids rather than solid items such as popcorn, thus it
could not anticipate a device for dispensing popcorn.
7
Judge
Newman (who also authored the SurgiSil opinion) agreed
with the applicant’s proposition, stating in her dissent that
the claim limitations to popcorn “can not be ignored.”
8
But
the majority concluded that the ability to dispense solid items
such as popcorn was inherent with the container from the
Swiss patent, thus the Swiss patent anticipated the claimed
container.
9
In her dissent, Judge Newman countered that “[i]
nherency is not a matter of hindsight based on the applicant’s
disclosure: the missing claim elements must necessarily be
present in the prior art” and “would be so recognized by a
person of ordinary skill in the art.”
10
By Bryan Finneran
Associate Attorney, Standley Law Group LLP
In Re Surgisil: Limiting Prior Art in Design Patent Applications
Intellectual Property News
8
In In re SurigSil, the Federal Circuit did not overturn the In
re Schreiber holding or expressly challenge the proposition
that “whether a reference is analogous art is irrelevant to
whether that reference anticipates,” but the Federal Circuit
did disagree with the PTAB on the PTAB’s conclusion that
“it is appropriate to ignore the identication of the article of
manufacture in the claim language.”
11
In her opinion, Judge Newman reasoned that a design claim
must be limited to the article of manufacture identied in
the claim because patent laws contemplate “not an abstract
impression, or picture, but an aspect given to those objects
mentioned in the acts.”
12
Judge Newman stated that based
on Gorham, the Federal Circuit has held that a claim at issue
is limited to the particular article of manufacture identied
in the claim.
13
In Curver, the plainti, the owner of a design
patent claiming an “ornamental design for a pattern for a
chair,” sued the defendant for patent infringement, alleging
that the defendant’s baskets incorporated the claimed design
and thus infringed the plainti ’s patent.
14
e Federal Circuit
found that the claim language “ornamental design for a
pattern for a chair” limited the scope of the claimed design
to chairs, thus baskets that incorporated the claimed design
pattern did not infringe.
15
Judge Newman pointed out in the
In re SurgiSil opinion that the Gorham and Curver cases
support Section 1502 of the Manual of Patent Examining
Procedure, which states that a “[d]esign is inseparable from
the article to which it is applied and cannot exist alone…”
16
e Federal Circuit concluded that the claim at issue in In re
SurgiSil recites a lip implant, the gure depicts a lip implant,
and thus the claim “is limited to lip implants and does not
cover other articles of manufacture.”
17
us, the PTAB’s
decision arming the examiner’s rejection under 35 U.S.C. §
102 was reversed.
18
Eects
e In re SurgiSil case should provide strict guidance to
examiners to not make anticipation rejections under 35
U.S.C. § 102 unless the particular article of manufacture
identied in the claim is the same as the particular article of
manufacture disclosed in the anticipation reference. It stands
to reason that in most cases, a design patent application is
very unlikely to be anticipated. Particularly, it is unlikely that
the exact same design would exist for the same particular
article of manufacture identied in a claimed design. ere
are likely to be minor dierences in a claimed design and
any prior art designs for the same article of manufacture that
would render the prior art designs unavailable for making
novelty rejections.
Endnotes
1
In re: SurgiSil, LEXIS 29809 at *3 (citing Curver
Luxembourg, SARL v. Home Expressions Inc., 938 F.3d 1334,
1336 (Fed. Cir. 2019)).
2
Id. at *2.
Id.
In re: SurgiSil, L.L.P. et al., No. 29/491,550, J.A. 7
(P.T.A.B. 2021) (quoting In re Schreiber, 128 F.3d 1473,
1478 (Fed. Cir. 1997)).
128 F. 3d at 1475-76.
Id.
Id. at 1475-79.
Id. at 1481.
Id. at 1476-79.
10
Id. at 1481 (citing Continental Can Co. USA, Inc. v.
Monsanto Co., 948 F.2d 1264, 1268-69 (Fed. Cir. 1991)).
11
In re: SurgiSil, LEXIS 29809 at *2-4.
12
Id. at *3 (quoting Gorham Co. v. White, 81 U.S. 511, 524-
25 (1871)).
13
Id. (citing Curver Luxembourg, SARL v. Home Expressions
Inc., 938 F.3d 1334, 1336 (Fed. Cir. 2019) (citing Gorham,
81 U.S. at 524-25)).
14
Curver, 938 F.3d at 1336.
15
Id.
16
In re: SurgiSil, LEXIS 29809 at *3.
17
Id. at *3-4.
18
Id. at *4.
Intellectual Property News
9
This case, while fought in the coastal art centers, is a battle of
middle Americans. It is also exemplary of what happens when
artists do their art and let “their people” do their agreements.
Beyond that, it gives an opportunity to look at “fair use” in
two quite different settings, as the decision of the 2nd Circuit
issued shortly before the U.S. Supreme Court opinion in
Google LLC v. Oracle America, Inc., 141 S.Ct. 1183 (2021).
Upon a petition by the Andy Warhol Foundation, the 2nd
Circuit reconsidered its March 26, 2021 opinion in light of the
Google decision, withdrew the original opinion
2
and issued an
amended opinion on Aug. 24, 2021. We report here on that
latter opinion, and especially on a concurrence from Judge
Dennis Jacobs.
Lynn Goldsmith, a native of Detroit, started a career as a
musician, but that soon morphed into visual arts, where she has
achieved renown as a film director, photographer and designer
of album covers. She founded LGL as the first photo agency
focused on celebrity portraits. Of the main personalities in this
matter, she is the only one still alive.
Like Goldsmith, Andy Warhol, a native of Pittsburgh, had
a career that was heavily into the visual arts, but was often
intertwined with the pop music scene. In 1968, he nearly died
after being shot by a radical feminist who claimed Warhol had
too much control over her life. His abdominal injuries are often
cited as a factor in his death 19 years later, in 1987, after a gall
bladder surgery that was considered routine. The surgery had
been postponed by Warhol’s fear of doctors and hospitals.
Prince Rogers Nelson, born in Minneapolis, is primarily
known for his music, but he was also an icon of visual art,
especially film. He adopted a visual symbol as an ineffable
name, and sued a guitar manufacturer who incorporated the
symbol into a guitar design. In fact, Prince was often engaged
in copyright litigation, as a plaintiff and as a defendant. Like
Warhol, he died prematurely,
3
at the age of 57. His death in
2016 was attributed to an accidental drug overdose.
In a setting vaguely reminiscent of the Oscar Wilde
photograph case,
4
the subject of the present lawsuit is one
photo from a set of photographs of Prince taken by Goldsmith
in a 1981 session in her studio.
In 1984, Goldsmith’s agency licensed one of the photographs
to Vanity Fair magazine, to be used as an “artist reference”
for an image, once for a full page and once for a quarter
page in the November 1984, issue. Goldsmith was to receive
an attribution for the photo used.
5
Goldsmith’s personal
involvement in the license was nonexistent. Also, Vanity Fair
did not identify the artist to Goldsmith’s agency.
Are Warhol’s Prince
Prints Fair?
By Stephen L. Grant
1
Sr. Atty., Standley Law Group LLP
Intellectual Property News
10
On the other side of the transaction, it is not clear that Warhol
understood the extent of the license. After providing the work
for Vanity Fair, Warhol proceded to create 15 additional works.
Together, and it may be argued that the works need to be
considered together, the works are generally referred to as the
“Prince Series.”
6
Goldsmith became aware of the Prince Series when she read
an article about Prince after his death. She contacted the Andy
Warhol Foundation (AWF) about her belief that the Prince
Series violated the copyright in her licensed photo. When no
agreement could be reached, the Warhol Foundation, as holder
of Warhol’s intellectual property rights, filed a declaratory
judgment action that the Prince Series works were non-
infringing or, alternatively, an exercise of fair use. Goldsmith
made the obligatory counterclaim of infringement. The United
States District Court for the Southern District of New York
granted summary judgment to AWF on the issue of fair use
and dismissed Goldsmith’s counterclaim with prejudice.
On appeal, Goldsmith contends that the district court
erred in assessing the four “fair use” factors codified at 17
U.S.C. 107. The district court found the Prince Series to
be transformative, based on a subjective evaluation of the
underlying artistic message and not on an objective assessment
of the purpose and character of the use, which amounted to
significant commercial licensing income from reproductions.
The 2nd Circuit agreed and further found that this error was
compounded by error in analyzing the first factor. The 2nd
Circuit also held that the Prince Series works are substantially
similar to the Goldsmith photograph as a matter of law, a
determination that will be very important on the remand
ordered.
Looking strictly at the majority opinion of Judge Gerald
Lynch, one might conclude, as AWF argued, that denying
fair use protection to a visual artist like Warhol could have a
very chilling effect and be detrimental to the public interest.
On this point, we turn to the concurrence by Judge Jacobs
mentioned above. He points out that the issue of whether the
original works in the Prince Series infringe the Goldsmith
copyright is an issue that was not even considered in the
majority opinion, as Goldsmith never sought to encumber
them. These originals, owned by galleries, art dealers and the
Andy Warhol Museum are not encumbered. They may be
used, displayed and sold by their owners. The 2nd Circuit did
not address whether original works of art that borrow from
protected material are likely to infringe.
Goldsmith asks for damages and royalties for reproductions
of the Prince Series works. Her reasoning is quite easy
to understand: the commercial availability of Warhol’s
substantially identical copies of the image captured in her
photo has significantly damaged her ability to license the
photo.
The photo and the original Prince Series exist in distinctly
different markets. But the gift shop reproductions lose
“the mystique” of the signed originals, to use the words
of Judge Jacobs. Likewise, when licensed to a magazine, a
reproduction of one of the original Prince Series works is
as much a portrait of the artist once known as Prince as is
the Goldsmith photo. The Warhol Foundation was unable
to refute that reproductions of the original Prince Series
and the photo compete directly.
The Warhol Foundation has significant income from
commercial licensing. To the extent that its licensing
is based on Warhol works that do not appropriate the
protected works of others, or alternatively, is based on
protected works that have been licensed from the copyright
owner, the foundation may profit going forward.
Endnotes
1
Any opinions expressed in this article are those of the
author individually and not those of the Standley Law
Group, LLP or the Ohio State Bar Association.
2
Andy Warhol Foundation for the Visual Arts, Inc. v.
Goldsmith, 992 F.3d 99 (2021).
3
Warhol died at the age of 58.
4
Burrow-Giles Lithographic Co. v Sarony, 111 US 53 (1884).
Napoleon Sarony was a pioneer in the field of celebrity
photography.
5
The attribution was properly made in the article.
Warhol is renowned for such series paintings, which
include paintings of Marilyn Monroe, Mao Tse Tung, a
Campbell Soup can, Botticelli’s Venus and himself.
Intellectual Property News
11
Crocs shoe brand are extremely popular with kids and even
adults. They are lightweight and easy to put on and take off.
Due to its popularity, the iconic clog has been subjected to
patent infringement,
1
including in August 2012 when Crocs
sued U.S.A. Dawgs.
2
During the ongoing patent infringement case, U.S.A. Dawgs
filed bankruptcy, selling all their assets, including the rights,
titles and interests in all “[a]ssets, properties and rights of every
kind and nature, whether real, personal or mixed, tangible
or intangible” related to the operation of [U.S.A. Dawgs’s]
business as of the Closing Date.” But, as a caveat “the Sale
[was] not free and clear of any Claims Crocs, Inc. ... may
hold for patent infringement occurring post-Closing Date.”
Therefore, although U.S.A. Dogs no longer existed, the claims
against it survived.
U.S.A. Dawgs later assigned all its rights, including the rights
in the patent reexamination to the company Mojave.
5
Mojave filed a petition with the Patent Trial and Appeal
Board (PTAB) requesting to change the real party-in-interest
from U.S.A. Dawgs to Mojave in the case with Crocs. This
petition was denied due to the PTAB view that “Mojave
was ‘not a party to the instant inter partes reexamination
proceeding’ and did ‘not have standing to update the real
party-in-interest in the proceeding.’”
6
After the board reversed
the patent examiner's rejection of Crocs patent infringement
claim, U.S.A. Dawgs appealed to the Federal Circuit Court
of Appeals and, together with Mojave, filed a motion to
substitute.
7
The Federal Circuit Court of Appeals found that when
U.S.A. Dawgs transferred its interests to Mojave, all meant
all, including the rights in the board proceeding, and therefore
Mojave had standing to defend against Crocs claims as a
successor-in-interest.
8
As companies file bankruptcy and restructure while also
dealing with patent infringement cases, we can expect to see
an increase of motions to substitute based on assignments of
rights. All means all when assigning rights therefore, although
your company may end, the right to defend in patent litigation
may not and may pass on to your assignee.
Endnotes
Christopher Yasiejko, Todd Shields, As Crocs cements its
status as the hottest brand in footwear, knockoffs begin
to circulate, FORTUNE, July 22, 2021 https://fortune.
com/2021/07/22/as-crocs-cements-its-status-as-the-hottest-
brand-in-footwear-knockoffs-begin-to-circulate/.
Mojave Desert Holdings, LLC v. Crocs, Inc., 987 F.3d 1070,
1072 (Fed. Cir. 2021).
Id. at 1073.
Id. at 1074.
Id.
Id.
Id.
8
Id. at 1077.
Tag Me In Coach:
All Means All When Assigning Rights and Substituting
Parties in Pending Patent Reexamination Proceedings
By Lauryn Burley Durham, JD
Case Western Reserve University School of Law
Intellectual Property News
12
In United States v. Arthrex, Inc. a fault line in the AIA inter
partes review scheme, which had stalled Federal Circuit
merit review of Patent Trial and Appeal Board (PTAB)
“nal written decisions” was exposed then, after two appeals,
disappeared by judicial at. e Appointments Clause of
the Constitution, as applied to 200 administrative patent
judges (APJ), who could be chosen by the U.S. Patent and
Trademark Oce (USPTO) director to serve on PTAB
panels and issue nal, unreviewable patent validity decisions
was addressed by the justices of the U.S. Supreme Court.
A majority opinion by Chief Justice John Roberts is
hereinafter, reproduced in part. e slip opinion is reordered
and all internal citations were removed.
UNITED STATES, Petitioner
v.
ARTHREX, INC., et al.;
Smith & Nephew, Inc., et al., Petitioners
v.
Arthrex, Inc., et al.;
Arthrex, Inc., Petitioner
v.
Smith & Nephew, Inc., et al.
Nos. 19-1434, 19-1452 and 19-1458
Decided: June 21, 2021
Arthrex, Inc. develops medical devices and procedures
for orthopedic surgery. In 2015, it secured a patent
on a surgical device for reattaching soft tissue to bone
without tying a knot, U.S. Patent No. 9,179,907 (’907
patent). Arthrex soon claimed that Smith & Nephew,
Inc. and ArthroCare Corp. (collectively, Smith &
Nephew) had infringed the ’907 patent, and the
dispute eventually made its way to inter partes review
in the PTO. ree APJs formed the PTAB panel that
conducted the proceeding and ultimately concluded
that a prior patent application “anticipated” the
invention claimed by the ’907 patent, so that Arthrex’s
patent was invalid. See App. to Pet. for Cert. in No.
19–1434, p. 128a.
On appeal to the Federal Circuit, Arthrex raised for the
rst time an argument premised on the Appointments
Clause of the Constitution. at Clause species how
the President may appoint ocers who assist him
in carrying out his responsibilities. Principal ocers
must be appointed by the President with the advice
and consent of the Senate, while inferior ocers may
be appointed by the President alone, the head of an
executive department, or a court. Art. II, § 2, cl. 2.
Arthrex argued that the APJs were principal ocers
and therefore that their appointment by the Secretary
of Commerce was unconstitutional. e Government
intervened to defend the appointment procedure.
By Bruce Wilson, Patent Attorney
Arthrex: USPTO Death Panels Dodge a Bullet
Intellectual Property News
13
e Federal Circuit agreed with Arthrex that APJs were
principal ocers. Neither the Secretary nor Director
had the authority to review their decisions or to remove
them at will. e Federal Circuit held that these
restrictions meant that APJs were themselves principal
ocers, not inferior ocers under the direction of the
Secretary or Director.
To x this constitutional violation, the Federal Circuit
invalidated the tenure protections for APJs. Making
APJs removable at will by the Secretary, the panel
held, prospectively “renders them inferior rather than
principal ocers.” e Federal Circuit vacated the
PTAB’s decision and remanded for a fresh hearing
before a new panel of APJs, who would no longer enjoy
protection against removal.
is satised no one. e Government, Smith &
Nephew, and Arthrex each requested rehearing en
banc, which the Court of Appeals denied. e parties
then requested review of dierent aspects of the panel’s
decision in three petitions for certiorari.
We granted those petitions to consider whether the
PTAB’s structure is consistent with the Appointments
Clause, and the appropriate remedy if it is not.
is suit centers on the Patent Trial and Appeal Board
(PTAB), an executive adjudicatory body within the
PTO established by the Leahy-Smith America Invents
Act of 2011. 125 Stat. 313. e PTAB sits in panels of
at least three members drawn from the Director, the
Deputy Director, the Commissioner for Patents, the
Commissioner for Trademarks, and more than 200
Administrative Patent Judges (APJs). 35 U.S.C. §§ 6(a),
(c). e Secretary of Commerce appoints the members
of the PTAB (except for the Director), including the
APJs at issue in this dispute. §§ 3(b)(1), (b)(2)(A),
6(a). Like the 1790 Patent Board, the modern Board
decides whether an invention satises the standards
for patentability on review of decisions by primary
examiners. §§ 6(b)(1), 134(a).
rough a variety of procedures, the PTAB can also
take a second look at patents previously issued by the
PTO. §§ 6(b)(2)–(4). One such procedure is inter
partes review. Established in 2011, inter partes review is
an adversarial process by which members of the PTAB
reconsider whether existing patents satisfy the novelty
and nonobviousness requirements for inventions. See
§ 6(a) of the America Invents Act, 125 Stat. 299. Any
person—other than the patent owner himself—can le
a petition to institute inter partes review of a patent.
35 U.S.C. § 311(a). e Director can institute review
only if, among other requirements, he determines that
the petitioner is reasonably likely to prevail on at least
one challenged patent claim. § 314(a). Congress has
committed the decision to institute inter partes review
to the Director’s unreviewable discretion. See ryv,
Inc. v. Click-To-Call Technologies, LP. By regulation,
the Director has delegated this authority to the PTAB
itself. 37 CFR § 42.4(a) (2020).
e Director designates at least three members of the
PTAB (typically three APJs) to conduct an inter partes
proceeding. 35 U.S.C. § 6(c). e PTAB then assumes
control of the process, which resembles civil litigation
in many respects. § 316(c). e PTAB must issue a nal
written decision on all of the challenged patent claims
within 12 to 18 months of institution. § 316(a)(11);
see SAS Institute Inc. v. Iancu. A party who disagrees
with a decision may request rehearing by the PTAB. 35
U.S.C. § 6(c); 37 CFR § 42.71(d).
e PTAB is the last stop for review within the
Executive Branch. A party dissatised with the nal
decision may seek judicial review in the Court of
Appeals for the Federal Circuit. 35 U.S.C. § 319. At
this stage, the Director can intervene before the court
to defend or disavow the Board’s decision. § 143. e
Federal Circuit reviews the PTAB’s application of
patentability standards de novo and its underlying
factual determinations for substantial evidence. See
Oil States Energy Services, LLC v. Greene’s Energy
Group, LLC. Upon expiration of the time to appeal or
termination of any appeal, “the Director shall issue and
publish a certicate canceling any claim of the patent
nally determined to be unpatentable, conrming
any claim of the patent determined to be patentable,
and incorporating in the patent by operation of the
certicate any new or amended claim determined to be
patentable.” § 318(b).
We hold that the unreviewable authority wielded by
APJs during inter partes review is incompatible with
their appointment by the Secretary to an inferior oce.
e principal dissent repeatedly charges that we never
say whether APJs are principal ocers who were not
appointed in the manner required by the Appointments
Clause, or instead inferior ocers exceeding the
permissible scope of their duties under that Clause.
See post, at 1998 – 1999, 2003, 2006 (opinion of
Intellectual Property News
14
THOMAS, J.). But both formulations describe the
same constitutional violation: Only an ocer properly
appointed to a principal oce may issue a nal decision
binding the Executive Branch in the proceeding before
us.
We turn now to the appropriate way to resolve this
dispute given this violation of the Appointments
Clause. In general, “when confronting a constitutional
aw in a statute, we try to limit the solution to the
problem” by disregarding the “problematic portions
while leaving the remainder intact.” Ayotte v. Planned
Parenthood of Northern New Eng. is approach
derives from the Judiciary’s “negative power to disregard
an unconstitutional enactment” in resolving a legal
dispute. Massachusetts v. Mellon. In a case that presents
a conict between the Constitution and a statute, we
give “full eect” to the Constitution and to whatever
portions of the statute are “not repugnant” to the
Constitution, eectively severing the unconstitutional
portion of the statute. Bank of Hamilton v. Lessee of
Dudley, 2 Pet. 492, 526, 7 L.Ed. 496 (1829) (Marshall,
C. J.). is principle explains our “normal rule that
partial, rather than facial, invalidation is the required
course.” Brockett v. Spokane Arcades, Inc.
Arthrex asks us to hold the entire regime of inter partes
review unconstitutional. In its view, any more tailored
declaration of unconstitutionality would necessitate a
policy decision best left to Congress in the rst instance.
Because the good cannot be separated from the bad,
Arthrex continues, the appropriate remedy is to order
outright dismissal of the proceeding below. e partial
dissent, similarly forswearing the need to do anything
beyond “identifying the constitutional violation,”
would grant full relief to Arthrex. Post, at 1990 – 1991
(GORSUCH, J., concurring in part and dissenting in
part).
In our view, however, the structure of the PTO and
the governing constitutional principles chart a clear
course: Decisions by APJs must be subject to review
by the Director. Congress vested the Director with
the “powers and duties” of the PTO, 35 U.S.C. § 3(a)
(1), tasked him with supervising APJs, § 3(a)(2)(A),
and placed the PTAB “in” the PTO, § 6(a). A single
ocer has superintended the activities of the PTO
since the Commissioner of Patents assumed the role of
“chief ocer” of the Patent Oce in 1836. § 1, 5 Stat.
117–118. e Commissioner long oversaw examiners-
in-chief, see 12 Stat. 246–247, just as the Director
today has the responsibility to oversee APJs. While
shielding the ultimate decisions of the 200-plus APJs
from review, Congress also provided the Director means
of control over the institution and conduct of inter partes
review. 35 U.S.C. §§ 314(a), 316(a). In every respect save
the insulation of their decisions from review within the
Executive Branch, APJs appear to be inferior ocers—an
understanding consistent with their appointment in a
manner permissible for inferior but not principal ocers.
We conclude that a tailored approach is the appropriate
one: Section 6(c) cannot constitutionally be enforced
to the extent that its requirements prevent the Director
from reviewing nal decisions rendered by APJs. Because
Congress has vested the Director with the “power and
duties” of the PTO, § 3(a)(1), the Director has the
authority to provide for a means of reviewing PTAB
decisions. e Director accordingly may review nal
PTAB decisions and, upon review, may issue decisions
himself on behalf of the Board. Section 6(c) otherwise
remains operative as to the other members of the PTAB.
In sum, we hold that 35 U.S.C. § 6(c) is unenforceable as
applied to the Director insofar as it prevents the Director
from reviewing the decisions of the PTAB on his own.
e Director may engage in such review and reach his
own decision. When reviewing such a decision by the
Director, a court must decide the case “conformably to the
constitution, disregarding the law” placing restrictions on
his review authority in violation of Article II. Marbury
v. Madison. We add that this suit concerns only the
Director’s ability to supervise APJs in adjudicating
petitions for inter partes review. We do not address the
Director’s supervision over other types of adjudications
conducted by the PTAB, such as the examination process
for which the Director has claimed unilateral authority to
issue a patent. See Reply Brief for Arthrex, Inc. 6.
Intellectual Property News
15
We also conclude that the appropriate remedy is a
remand to the Acting Director for him to decide
whether to rehear the petition led by Smith &
Nephew. Although the APJs’ appointment by the
Secretary allowed them to lawfully adjudicate
the petition in the rst instance, they lacked the
power under the Constitution to nally resolve the
matter within the Executive Branch. Under these
circumstances, a limited remand to the Director
provides an adequate opportunity for review
by a principal ocer. Because the source of the
constitutional violation is the restraint on the review
authority of the Director, rather than the appointment
of APJs by the Secretary, Arthrex is not entitled to a
hearing before a new panel of APJs. Cf. Lucia.
Today, we rearm and apply the rule from Edmond
that the exercise of executive power by inferior ocers
must at some level be subject to the direction and
supervision of an ocer nominated by the President
and conrmed by the Senate. e Constitution
therefore forbids the enforcement of statutory
restrictions on the Director that insulate the decisions
of APJs from his direction and supervision. To be
clear, the Director need not review every decision of
the PTAB. What matters is that the Director have the
discretion to review decisions rendered by APJs. In this
way, the President remains responsible for the exercise
of executive power—and through him, the exercise of
executive power remains accountable to the people.
e judgment of the United States Court of Appeals
for the Federal Circuit is vacated, and the cases are
remanded for further proceedings consistent with this
opinion.
A recent Federal Circuit decision in Snyders Heart Valve,
LLC v. St. Jude Medical, LLC. shows us, in the absence of a
duly appointed director (principal ocer), how the Arthrex
case can be applied provided the Appointments Clause
faults have been waived. Andrew Hirshfeld is currently
performing the functions and duties of the under secretary
of commerce for Intellectual Property and director of the
USPTO.
Intellectual Property News
16
NOTE: is disposition is nonprecedential.
SNYDERS HEART VALVE LLC, Appellant
v.
ST. JUDE MEDICAL, LLC, Appellee
United States, Intervenor
2019-2111
Decided: Oct. 5, 2021
O'Malley, Circuit Judge.
is is the second time we have considered this appeal.
We previously vacated and remanded the inter partes
review (“IPR”) at issue in this appeal for rehearing by
the Patent Trial and Appeal Board (“Board”) pursuant
to our opinion in Arthrex, Inc. In that opinion, we
reached only Snyders Heart Valve LLC's (“Snyders”)
arguments under the Appointments Clause. We did
not address the merits of the Board's decision. e
United States of America, which intervened in the
appeal, sought certiorari to challenge our remand.
After its decision in United States v. Arthrex, Inc.,
141 S. Ct. 1970 (2021), the Supreme Court vacated
and remanded the matter to us for reconsideration in
light of its decision. Iancu. On remand, Snyders waives
its Appointments Clause challenge and asks that we
address its appeal on the merits. We do so and reverse
the board's determination that the challenged claims are
unpatentable because that nding rests on an erroneous
claim construction.
But how will the director signify that he has exercised
his discretion to supervise his APJs and review their nal
written decisions in cases where there has been no such
waiver?
MOBILITY WORKX, LLC, Appellant
v.
UNIFIED PATENTS, LLC, Appellee
2020-1441
Decided: Oct. 13, 2021
Dyk, Circuit Judge
Mobility Workx (“Mobility”) appeals a decision of the
Patent Trial and Appeal Board (“Board”) determining
that claims 1, 2, 4, 5, and 7 of U.S. Patent No. 8,213,417
(the “ ’417 patent”) were unpatentable as obvious. In
addition to requesting a remand under United States v.
Arthrex, Inc., and challenging the merits of the Board's
decision, Mobility raises for the rst time on appeal
several additional constitutional challenges, including
a challenge to the structure of the Board. We rst
address these other constitutional challenges because
a determination that the Board is unconstitutionally
structured or that the proceedings are otherwise
unconstitutional would dispose of the case and make
consideration of the Arthrex issue or the merits
unnecessary.
We conclude that Mobility's constitutional arguments
are without merit. Without reaching the merits of
the Board's decision, in light of Arthrex, we remand
to the Acting Director to determine whether to grant
rehearing.
e Arthrex case will eventually disappear in importance.
Intellectual Property News
17
Every Section member is welcome to participate in the
next meeting of the OSBA Intellectual Property Law
Section, which will be held on Saturday, May 7, 2022 at
10 a.m.
Visit the OSBA Intellectual Property Law Section
website for more details regarding the upcoming meeting
and developments in IP news.
The Next Meeting
Have Your Article
Published Here
If you would like to contribute a case review or an article
to the newsletter, contact Patricia Walker or Ralph Jocke at
Walker & Jocke Co., LPA, 231 South Broadway, Medina,
Ohio 44256, by e-mail at [email protected], or by
phone at (330) 721-0000. Check out past newsletters on the
OSBA website for a guideline.
It will be great to see your contribution published in the next
newsletter.
Patricia A. Walker
Ralph Jocke
Co-Editors, OSBA IP Section Newsletter
