Archive for the ‘Business Law’ Category


Assuming a Patent Application’s Effective Filing Date Is Always Equal to Its Claimed Priority Date – A Trap for the Unwary


Many of the recent decisions concerning patent claim validity have focused on whether or not the claims cover inventions meeting the requirements for subject matter eligibility under § 101 since the infamous Alice decision. This commentator has blogged on that very topic and her blog on the Enfish decision appeared at in 2016.    This blog will focus on some of the other points of patent application preparation that may crop up during an infringement proceeding and prevent the patentee from prevailing.  These points apply to all patent applications no matter what the subject area.

A May 2017 opinion granting the defendants’ motion for summary judgment resulting in claims invalidation is a good reminder that the specification is a critical aspect of a patent application to establish that the inventor had possession of the invention at the time the application was filed.  The patentee’s specified claim of priority to an earlier filed application may not necessarily be the effective filing date if the earlier application’s specification is found to be “invention disclosure” deficient.   Losing a priority date for reasons discussed below may well result in a situation where previously unconsidered intervening prior art is fair game during a claim invalidation proceeding.

In D Three Enterprises, LLC  v. Rillito River Solar, LLC and Sunmodo Corp., case no. 15-cv-1148 (D. Colo. 2017), the district court invalidated several of D Three’s claims in two patents at the summary judgment stage of the lawsuit because the claims were not supported by the application’s original provisional application disclosure.  Although D Three had filed two separate lawsuits, the defendants filed joint motions for summary judgment.  It is not clear why the cases were not consolidated.

The D Three court went to great lengths to point out that the written description requirement under § 112(a) is distinct from the enablement requirement.  Under § 112(a), “]t]he application’s specification shall contain a written description of the invention and of the manner and process of making and using it, in such full, clear, concise and exact terms as to enable any person skilled in the art to which pertains . . . to make and use the same.”  The written description is intended to establish that the inventor was in possession of the invention as of the filing date sought.   D Three Court citing Ariad Phar., Inc. v. Eli Lily & Co., 598 F.3d 1336, 1340 (Fed. Cir. 2010). This requirement is achieved through descriptive means as words, structures, figures, diagrams, formulas, etc. that set forth the claimed invention.”  D Three opinion citing Moba, B.V. v. Diamond Automation, Inc., 325 F.3d 1306, 1319 (Fed. Cir. 2003).

Furthermore, all limitations expressed in actual claims must appear in the specification.  The Federal Circuit has interpreted this requirement to mean that the written description must actually or inherently disclose the claim element according to the jurisprudence of the Federal Circuit on which the D Three court relied.  Where, for example, a provisional patent application is involved, this jurisprudence requires that “one skilled in the art, reading the provisional patent application must reasonably discern the limitation at issue in the challenged claims within the original disclosure.   “If the asserted claims describe an invention that ‘is an obvious variant of that which is disclosed in the [earlier] specification,’ or ‘renders obvious the invention for which an earlier filing date is sought,’ that is insufficient.”  D Three opinion citing Lockwood v. Am. Airlines, Inc., 107 F.3d 1565, 1572 (Fed. Cir. 1007).

The D Three case was complicated by the fact that the chain of applications starting with a 2009 provisional patent application included a continuation-in-part application (“CIP”).  A CIP application may include subject matter that appears for the first time in the CIP application.  Any claims derived from this additional subject matter are not entitled to any earlier application.  Any patent resulting from a CIP application may have claims with two different effective filing dates – a date for a previously filed application and the filing date of the CIP.

This blog will review the many issues addressed in the opinion and the court’s responses.  The district court’s opinion itself is worth a read because it provides a “real world” scenario of how “text book” procedures can become important considerations in a patent infringement case.   Moreover, these issues and the court’s detailed analysis provide a good reminder of patent law principles and just how difficult it can be to write an application that will withstand future challenges to validity.  It is noted that the court emphasized claim invalidation must be based on clear and convincing evidence or, as the court put it, the court must be convinced that invalidation of the suspect claims is appropriate.

Three D appealed the decision to the Federal Circuit.   The Federal Circuit affirmed the district court’s opinion in May 2018.

Take home points are presented at the end of the blog.


Issue:  Is claim validity assumed if the USPTO did not question the validity of a claimed earlier effective filing date?

Plaintiff’s argument:  The claims at issue were allowed by the USPTO and awarded an effective filing date corresponding to the filing of a provisional application in a long chain of applications.  As such the challenged claims were entitled to a presumption of validity.

Court’s Response:  There is no presumption that a patent is entitled to an earlier filing date.  The presumption that claims are valid rests on the merit of claims based on their novelty and non-obviousness according to the prior art and meet the requirements for subject matter eligibility. Here, the plaintiff could not present evidence showing a decision by the PTO or the Board of Patent Appeals and Interferences regarding whether the specified effective filing date are to be presumed valid.

Issue:  Can select limitations from the specification’s preferred embodiments be imported during a patent invalidation proceeding to render previously approved claims invalid? 

Plaintiff’s and Defendants’ Positions:  The defendant argued that the suspect claims were broader than the original provisional patent application’s disclosure.  The plaintiff argued that the defendants were trying to import select limitations from the disclosed preferred embodiments described in the specification.

Court’s Response:  The plaintiff was misreading sections 120 and 112.  The question is not whether the broad scope of plaintiff’s claims should be limited to its disclosed preferred embodiments.  The question under well-settled patent law is whether the Plaintiff’s applications (particularly the very first 2009 application) describe inventions at least equal in breadth to the asserted claims.  If not, then the asserted claims were not entitled to the earlier effective filing date.   That is, the inventor cannot claim what was not disclosed.

Issue:  Do “comprising” claims mean that the claims are not actually excluding unidentified elements (i.e., elements not actually in the claim)?  Do such claims nevertheless include an element, in this case a washer, that was not mentioned in the claim?

Court’s Response:  The court opined that the at-issue claims were broad enough to include a soft washer or not.  However, even with “comprising” claims, the inventor must be able to locate within the written description the information which support the full scope of the “comprising” claim.  That is, comprising claims are not exempt from the written description requirement according to the case law of the Federal Circuit which was cited by the D Three court.

Issue:  Are an application’s figures sufficient to disclose an invention when the narrative description itself if incompleteHere the original 2009 application disclosed an assembly for roof mounts with and without soft washer.   However, the 2009 application only disclosed one invention that lacked a washer.  Most of the disclosed embodiments included a soft washer.

Court’s Response.  The court found that the 2009 application’s narrative description did not suggest that the figures were incomplete or that a soft washer was included in each and every Figure.  The court found that certain Figures in the 2009 application did not include a washer.   The application therefore had disclosed an assembly both with and without a washer.

Issue:  Is the “phrase incorporated by reference” sufficient for establishing that a later filed application is entitled to the earlier application’s filing date?

Court’s Response.  Here is where things became tricky.  The answer is yes, this phrase will generally include all that was previously disclosed as long as the instant specification is itself consistent with what was previously disclosed.  The court found that a later filed 2011 application properly incorporated 2009 and 2010 applications by reference and that the incorporation included both the washerless and washer-including assemblies.  The beginning with the 2012 application, the specification suggested that the washer was “in all embodiments” and “regards only the embodiments in the subset of figures under discussion.  The commentator notes that the referred-to Figures were 10-14- 21-22, 25a-b and 27 a-c.  The washerless assembly had been depicted in Figures 27-33 and 41 in the 2009 application.  The court found that the plaintiffs’ application ambiguous as to whether the plaintiff intended to abandon the washerless assembly disclosed in 2009 in its 2012 application.

Issue:  Is an application depending from an earlier filed application entitled to its asserted claims if these claims are broader than what was originally disclosed?

Court’s Response. The inventor had disclosed one type of attachment bracket for the washerless assembly.  The asserted claims were not limited to this type of attachment bracket –  a W-shaped prong and face seat.   The 2009 application and each intervening application disclosed three types of attachment bracket: support post, W-pronged, and T slide.  The W-pronged bracket was the only attachment bracket that the application disclosed as being bolted through the flashing either with or without a washer.  Therefore the asserted claims were broader than what was disclosed and were not entitled to the effective 2009 filing date because the inventors did not possess a washerless assembly other than the one requiring the W-pronged attachment bracket.  Here, the disclosure of one species (the W-pronged bracket) was not found to support the asserted claim of three brackets (i.e., a genus claim).

IssueWhat if the positioning of a component as claimed in the original application differs from the disclosed positioning of the component as claimed in a later application claiming priority to the original application?  Here the original 2009 disclosure disclosed a washer positioned above the sheet member. In the intervening applications, the assemblies had a washer placed either above the sheet member or both above and below the sheet member.

Court’s Response.   Switching the location of the soft washer would eliminate the lack of support in the original 2009 application with one exception – one skilled in the art would discern from the 2009 application that the plaintiff had invented an assembly where the disclosed soft washer could be positioned in other locations of the assembly. Here, the plaintiff could offer no evidence to meet the exception.   As such, the filing dates for the two patents in suit were actually the filing dates of the applications directly preceding the two issued patent documents and not the 2009 application.

Issue:  Do the effective filing dates of Sept. 4, 2013 and Oct. 2, 2014 (and not Feb. 8, 2009) render the “problematic” claims invalid?

Court’s Response: It is axiomatic that “[t]hat which infringers if later, anticipates if earlier.” Three D court quoting SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1321 (Fed. Cir. 2006).  Here, the the first public sale dates [by both defendants] were earlier than the effective filing dates of the challenged patents.   The defendants’ alleged infringing products were first sold in 2009 and 2010, or several years before the actual effective filing dates of the patents in suit.

The court concluded that the defendants had meet the burden of providing by clear and convincing evidence that the asserted claims were not entitled to the 2009 filing date.

Take Home Points

  1. Adequate disclosure of the invention in the written description and drawings is essential to ensure that a later filed application’s claimed priority date is also the later filed application’s effective filing date.
  2. Adequate disclosure in the specification is required to support claim validity. A too broad of claim not supported by the specification’s disclosure either in an instant application or one relying on incorporation by reference of an earlier filed application may be subject to invalidation in a patent infringement lawsuit.
  3. When relying on “incorporation by reference to an earlier application,” be careful to not inadvertently abandon the earlier invention.
  4. Develop a strategy for filing multiple applications. Although not discussed in this blog, the D Three case briefly discussed how published patent publications under § 122 may serve as invalidating prior art if they are published before the “true” effective filing date of a later-filed application by the same applicant.
  5. Consider developing a patent application filing strategy to minimize the types of situations D Three faced and ultimately could not overcome.

© 2018 by Troy & Schwartz, LLC





Don’t Lose Out on Getting a Registered Trademark or Service Mark by Filing an Unacceptable Specimen!


The scenario:  An applicant files an application for a registered trademark with the USPTO and the proposed mark meets the following requirements for obtaining a registered trademark: no likelihood of confusion with existing registered marks plus the mark is not merely descriptive or generic.   So far so good.  But what if the applicant does not provide an appropriate specimen to the USPTO demonstrating how the otherwise acceptable mark is used in interstate commerce?  The registered mark will not be granted even though the mark itself was found to meet the other criteria for registration.

Although relatively uncommon, a “wrong” specimen situation that involves appeal to the Trademark Trial and Appeal Board (“TTAB” or “Board”)  does occasionally arise as the TTAB’s precedential decisions in In re Kohr Brothers, Inc.  (decided Feb. 9, 2017) and In re Pitney Bowes (decided Jan. 10, 2018) remind us. In the former case, the TTAB sided with the examining attorney and found that the provided specimen for a trademark application was inadequate for showing usage of the mark in interstate commerce.  In the latter case, the TTAB found that the Applicant’s substitute specimen for a service mark would allow the consumer to identify the mark with the offered services.

Specimens for goods and services have different requirements.  For service marks, business cards, website screen shots, brochures, etc. are generally accepted as specimens providing the specimens indicate the types of services being offered, show the mark itself, and designate the source of the services (i.e., the person or business entity providing the services under the mark).   These days, screen shots of websites are often submitted as specimens for service marks.

For trademarks, the specimen must have an association with the actual goods specified in the trademark application.   Section 45 of the Trademark Act states:

A mark is deemed to be in use in commerce on goods when (A) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on the documents associated with the goods or their sale; and (B) the goods are sold or transported in commerce. 

An example of an appropriate “specimen” document is a package insert included with a clinical assay kit consisting of small vials of reagents.

The In Re Kohr Brothers, Inc. Decision

In In re Kohr Brothers the Applicant’s word mark for CONEY ISLAND BOARDWALK CUSTARD had received provisional approval as an intent-to-use application.  However, the examining attorney subsequently refused to register the mark because the proffered specimen appeared to be mere advertising material.

The Applicant had submitted as its specimen a photograph of a sign posted within its small shop (basically a boardwalk stand) which it asserted was an appropriate “display” specimen.  The examining attorney disagreed and the appeal ensued.  The Board first noted that “[s]ection 45 of the Trademark Act does not define the term “displays associated therewith, and . . . the Board must make a case-by-case determination of whether a particular use asserted to be a ‘display’ is adequate to demonstrate use in commerce.”  Slip opinion at 3.

The Board concluded that the display specimen did not demonstrate use in commerce for several reasons.  First, the submitted specimen included a picture of the goods (a cone with presumably custard).  The specimen also included a stylized ferris wheel on the right.  Yet, the application had been for the word mark CONEY ISLAND BOARDWALK CUSTARD.  The Board found that the depiction of the cone is more likely to be perceived as part and parcel of a composite word and design mark than as an unmistakable indication of the Applicant’s goods.  Slip opinion at 6.  That is, the specimen did not truly reflect the mark actually specified in the application.

Second, the specimen photograph was of a small sign that was posted on a wall opposite the counter where customers placed their orders and adjacent to governmental issued licenses for the business.    The Board opined that the placement of the specimen was “hardly a place where the merchant would place material intended “ ‘to catch the attention of purchasers and prospective purchasers as an inducement to make a sale.’ ” Slip opinion at 7 quoting TMEP § 904.03(g).  As such the Board held that the specimen cannot be considered as a display establishing a ready connection between the mark and the goods and affirmed the examining attorney’s refusal to register the mark.  Slip opinion at 8.

The In Re Pitney Bowes Decision

In In re Pitney Bowes, the mark was a logo for various services involving mail services.  The Applicant submitted screen shots of a website as its specimen.  The examining attorney refused registration on the ground that the specimen did not show the Applicant’s mark in use in connection of any of the recited services in the application.  The situation was complicated by the fact that the webpage described a self-service kiosk that consumers could visit to mail and ship items.  Although the kiosk was provided by Pitney Bowes, the examining attorney contended that Pitney Bowes itself was not performing the mail-related services itself.   The screen shot did show the name of the service provider, Pitney Bowes next to the logo mark thereby establishing a “linkage” between the mark owner and the mark readily ascertainable by the consumer.

The situation was further complicated by the fact that the webpage referenced third-party services such as those of the United States Postal Service.  The examining attorney understood this fact to mean that the only services provided through Pitney Bowes’ kiosk were not services actually being performed by Pitney Bowes.

Pitney Bowes then offered a substitute specimen showing a webpage referring to automated shipping software. i.e., a good.  The examining attorney again found that the specimen failed to demonstrate that the Applicant was providing the services listed in the application.  Slip opinion at 5.  Instead, the Applicant was providing a good that assisted consumers in mailing and shipping and ship letters and packages.  Slip opinion at 7.

Pitney Bowes appealed the matter to the Board and won.  In siding with Pitney Bowes, the Board emphasized the fact that the company’s attorney had sent a letter to the examining attorney during the prosecution process that Pitney Bowes does provide some of the application’s referenced mailing services in that its employees pick up letters and packages left by users in the kiosk receptacle and deliver them “into the mail stream.”

Precedent caused the Board to find that consideration must be given to explanations offered by the Applicant which clarify the nature, content, or context of use of the specimen that are consistent with what the specimen itself shows.  Slip opinion at 8.  Here, even though the examining attorney had reasonably found the first submitted specimen unclear as to whether the Applicant itself provided the mailing services listing in the application, the Applicant’s attorney had adequately clarified the services performed by the Applicant to establish that there was a direct association between the mark and at least some of the services in the class.  The first specimen was deemed acceptable by the Board because it demonstrated the use of the logo mark in a manner that “creates in the minds of potential consumers a direct association between the mark and at least some of the services in the class.”  Slip opinion at 9.


  1. An improper specimen can prevent registration of a mark even though the mark meets all of the other criteria for registration.
  2. Specimens must clearly show an association between the mark actually presented in the application and the associated goods/services. Any major deviation in the way the mark is presented in a specimen from its presentation in the application may prevent registration of the mark as the In re Kohr Brothers decision demonstrates.
  3. The mark needs to be readily ascertainable by the consumer to allow the consumer to associate the mark with the goods or services. In In re Kohr Brothers, placement of a sign with the actual mark right on or right next to counter frequented by consumers such that consumers could readily see the mark may have been acceptable.  So would some type of cone wrap or disposable cup for holding a scoop of the custard which included the mark and reference the business providing the product.
  4. With website specimens, it is important that the mark be present on the webpages as well as the name of the business/individual providing the service. Additionally, any service mark specimen must include the mark as presented in the application and specify the services being provided under the mark.
  5. Webpage screen shots may be provided as specimens for the goods listed in a trademark application but certain criteria must be met.
  6. It is a good idea to assess the reasonableness of a specimen before submitting it to the USPTO to ensure that it will meet specimen requirements.   If the application is for an intent-to-use application and not filed by a trademark attorney, the applicant may nevertheless wish to consult with a trademark attorney concerning future specimen requirements if and when a Statement of Use is to be filed to secure registration of the applied-for mark should a Notice of Allowance issue.   Most intent-to-use applicants will be “developing” specimens after the application is submitted to the USPTO and have the time to do it right.



© 2018 by Troy & Schwartz, LLC







An Employer’s Referral Sources May Be a Protected Legitimate Business Interest Under Fla. Stat. 542.335 According to Florida’s Supreme Court


This blog discusses the September 14, 2017 Florida Supreme Court’s holding in the consolidated cases of White v. Mederi Caretenders Visiting Services of SE Florida, LLC, et al. and Americare Home Therapy, Inc. v. Hiles.

A previous blog discussed Florida’s restrictive covenant statute which, when compared to similar statutes in other states, is generally quite favorable to businesses when it comes to the enforcement of non-compete agreements.  Many lawsuits involving Fla. Stat. 542.335 involve a former employee who has left the employment of the business and either started a competing business or has gone to work for a competitor.  Generally, the employee has signed a non-compete agreement as a condition for employment with his former employer.  The former employer may commence a lawsuit to prevent the former employee and his new employer from using information associated with the former employer’s  legitimate business interests.  Where the former employee goes to work for a competitor of the former employer, both the former employee and new employer are often named as co-defendants.

Under the Florida statute, a contract providing restrictions on competition must involve a legitimate business interest as defined by statute to be enforceable.  Fla. Stat. 542.335(1)(b).  Both of the above referenced cases involved employees who had worked for businesses that relied on home health referral sources cultivated through extensive personal marketing and relationship building with potential referral sources, primarily physician’s offices.  Section 542.335 does not specify home health referral sources as a legitimate business interest but does provide a non-exhaustive list preceded by the words “legitimate business interest includes but is not limited to:

  1. Trade secretes as defined in s. 688.002(4);
  2. Valuable, confidential business or professional information that does not otherwise qualify as trade secrets;
  3. Substantial relationships with specific, prospective, or existing customers, patients, or clients;
  4. Customer, patient, or client goodwill associated with:  a) An on-going business or professional practice, by way of trade name, trademark, service mark, or trade dress; b) A specific geographic location; or c) Specific marketing or trade area;
  5. Extraordinary or specialized training.”

The Florida Supreme Court’s Analysis

In White/Americare the Florida Supreme Court engaged in statutory interpretation to conclude home health referral sources were indeed legitimate business interests for several reasons.  First, the legislature’s stated examples were meant to be just that – examples.  The list was never intended to be exhaustive as clearly indicated by the words “includes but is not limited too.”

Second, the Court refused to interpret the statute in such a way so as to exclude a claimed legitimate business interest in non-identifiable prospective patients.  The Court tellingly stated “[g]enerally, it is improper to apply espressio unius to a statute in which the Legislature used the word include.  This follows the conventional rule in Florida that the Legislature uses the word “including” in a statute as a word of expansion, not one of limitation.” Slip opinion at 13.

Third, the Court noted that for home health care companies (HHCs), there is an “indispensable relationship between referral sources and their undisputed legitimate business interests in relationships with patients protected by the statute”  Furthermore, the Court noted that referral sources are somewhat analogous to customer goodwill which is expressly protected by the statute.  Slip opinion at 20.  It is important to understand the home health referral sources generally do not involve identifiable patients although the home health referral sources will hopefully result in referred patients who then of course become identifiable.

In reaching its conclusion, the Court was careful to point out that the statute does not protect covenants whose “sole purpose is to prevent competition per se because such contracts are void against public policy.  Even under Florida law with its pro-business stance, the courts have held that “[f]or an employer to be entitled to protection,   ‘there must be special facts present over and above ordinary competition such that, absent a non-competition agreement, the employee would gain an unfair advantage in future competition with the employer.’ ”  White/Americare citing Passal v. Naviant, Inc., 844 So. 2d 792, 795 (Fla. 4th DCA 2003).   Slip opinion at 21.

The statute also allows the courts to ameliorate any concern regarding overly restrictive covenants by commanding the courts to modify any non-competition agreement that is not reasonably necessary to protect the legitimate business interest and to grant only the relief necessary to protect such interests.  Fla. Stat. s. 542.115.  Here both non-competition agreements were limited to certain geographical areas – to the counties where the HHCs actually operated for a period of one year.

Conclusively, by finding for the HHCs, the Court was not expanding the reach of restrictive covenants to limit competition.  It was merely finding that the nature of an HHC-based business necessitates the classification of its referral sources as legitimate business interests.

Take-Home Points

After White/Americare, businesses may be able to more easily establish legitimate business interests to protect their interests in non-compete agreements where the alleged business interest is not specifically articulated by the statute.   The decision shows, however, that the analysis will be fact-specific, and that the agreement must still be reasonably tailored to cover a reasonable geographic area and time-frame.  The plaintiff will also need to be able to adequately explain why the subject matter is a legitimate business interest based on the nature of the business.

This commentator notes that the conduct of the employee in Hiles was particularly egregious with respect to her transferring of Americare’s confidential information, including patient information, to her personal e-mail account both before she even gave notice of her resignation and after she was let go a few days after giving notice to Americare prior to her notice’s specified “last day.”

Clearly the technology age has made the wrongful usage/theft of a business’s intellectual property and/or confidential information (intangible assets) easy.  It is up to businesses, no matter how small, to be proactive in protecting their intellectual property and confidential information from this wrongful usage.  As the White/Americare holding demonstrates for cases involving employees, a non-compete agreement does not always prevent problems after an employee resigns or is terminated.   Contact us to obtain a complimentary checklist of suggested steps to take to help protect your business’s intangible assets and thereby try to eliminate the need of future costly litigation to protect your business’s interests.


© 2017 by Troy & Schwartz, LLC








This blog addresses the Oct. 30, 2017 non-precedential decision by the Trademark Trial and Appeal Board (“Board”) in In re 8-Brewing, LLC where the Board determined that a consent agreement between a registered trademark applicant and a registered trademark owner was insufficient for overcoming a rejection of the applicant’s mark on likelihood of confusion grounds.

The blog is divided into three parts: A) Background on Consent Agreements; B) Discussion of the Board’s Opinion; and C) Take Home Points.

A.  Background on Consent Agreements

A consent agreement is an agreement between the applicant and an existing registered trademark owner that it is OK from their perspective for the marks to co-exist in the marketplace.  That is, the registered mark owner has no “problem” if the USPTO should go ahead and allow registration of the applicant’s mark despite an initial finding of likelihood of confusion by the USPTO.

It is important to understand that such agreements on their face will not always overcome the USPTO’s rejection of an applicant’s mark on likelihood of confusion grounds.  Trademark law is intended to protect the consumer from confusion over the source of the associated goods and services.  From the USPTO’s perspective, the greater the similarity between the goods and services between the applicant’s and the registrant’s mark, the greater the likelihood of confusion over the sources supplying the goods/services.   A consent agreement that is vague as to how the parties are going to limit the likelihood of confusion will generally not pass muster with the USPTO.

B.   Discussion of the Board’s Opinion

During the prosecution of a trademark application, the USPTO determines the likelihood of confusion of an applied-for mark with existing registered marks according to what are commonly known as the Dupont factors as set forth in In re E.I. du Pont de Nemours & Co., 476 F.2d 1357, 1377 USPQ 563 (CCPA 1973).    Here, the applied-for mark was 8-Bit Aleworks in standard letters form.  The examining attorney had found that there was likelihood of confusion with two existing registered marks – 8 bit Brewing Company in standard characters and a design mark including the words 8 Bit Brewing Company.   The application and the two registrations identified the same goods – beer.   The associated international classification is 032.

Having found that the specified goods were identical, the Board emphasized that when marks appearing on goods are identical, “the degree of similarity necessary to support a conclusion of likelihood of confusion declines.”  Slip opinion at 5.  Here, the terms 8 BIT and 8-BIT were identical,  constituted the literal or source-identifying portion of the marks, and preceded disclaimed or highly descriptive or generic terms (Ales and Brewing Company).  The examining attorney had concluded that the commercial impressions of the applicant’s and registrant’s marks were identical.  The Board took the analysis one step further and stated that the “literal portion [8 Bit] of each mark appears first in each mark and thus is more likely to be remembered by consumers.”  Slip opinion at 7.  Furthermore the words “Aleworks” and “Brewing Company” do nothing to distinguish the marks because consumers are accustomed to seeing these terms in others’ marks and are thus unlikely to view this additional wording in either the Applicant’s or Registrant’s marks as distinctive.

Once it found found that the Applicant’s mark and the Registrant’s marks were basically identical,  the Board next determined whether the proffered consent agreement was sufficient to protect consumers who may encounter the marks from confusion.  The Board considered the following factors:

  • Whether the consent shows an agreement between both parties;
  • Whether the agreement includes a clear indication that the goods and/or services travel in separate trade channels so as to minimize confusion as to source;
  • Whether the parties agree to restrict their field of use;
  • Whether the parties will make efforts to prevent confusion and cooperate and take steps to avoid any confusion that may arise in the future; and
  • Whether the marks have been used for a period of time without evidence of actual confusion. Slip opinion at 8.

This commentator finds it inexplicable that the consent agreement did not even refer to the correct applied for mark – 8-Bit Aleworks in standard character form which was the subject of the appeal.  Instead, the consent agreement specified a design mark with the words 8-Bit Aleworks.  A review of the USPTO records shows that the Applicant applied for the design mark in 2017 or after the standard character mark had been rejected.  The USPTO has recently rejected the Applicant’s later applied-for design mark.

The Board thus rightly noted that the consent agreement was ambiguous as to what the Registrant was actually consenting to – the coexistence of the design mark depicted in the consent agreement or the use and registration of the Applicant’s standard character mark with or without the design element.  Slip opinion at 12.

The consent agreement also stated that the parties were unaware of any actual confusion.  However, both the Applicant’s and the Registrant’s marks had only been in use June 2016 and the agreement had been executed in Nov. 2016 or less than 6 months after the start of the claimed usage period   The Board found that this short period of time was insufficient for establishing any actual confusion by consumers.

Furthermore, the consent agreement did little to show how the parties would limit their respective goods to different channels of trade.  For example, the agreement was as to the actual price ranges of the parties’ beer.  Furthermore, the beer purchaser is often an ordinary consumer who will exercise only ordinary care in choosing a brand of beer.  This is not a situation where the consumer will expend considerable time and effort (i.e., a high level of care) in making a purchase decision, e.g., as in purchasing a motor vehicle or a computer.   The agreement also lacked specificity in stating how the Applicant’s and Registrant’s products were going to be distinctively packaged so as help avoid confusion especially where the marks are basically identical.

Finally, the Board addressed the issue of interstate commerce in trademark law. Although the agreement appeared to limit the use of the parties’ marks within their own states, namely California and Arizona respectively, the registration of a proposed mark requires that the proposed mark is being used in interstate commerce.  This does not mean that the goods have to be sold in every state but at least outside of the source’s own state of business or residence.  All trademark applicants must allege that their proposed marks are being used in interstate commerce at the time the specimens are submitted as part of the trademark prosecution application process.  Furthermore, renewal of registered marks also requires that the registrant allege that the mark is still being used in interstate commerce.  The USPTO cannot verify every statement and is relying on the “honest” statements of the applicant.   This consent agreement is thus vague and unclear as to interstate commerce issues.  Registration does not limit the usage of a registrant’s mark to any geographical location but protects the mark in all U.S. states and territories.

The Board noted that an applicant’s right to geographically restrict registration may only be considered in the context of a separate concurrent use proceedingAny geographical restrictions that an applicant and registrant agree to in a consent agreement are irrelevant and are not reflected in any registrations issuing from the involved application(s). 

Based on the equivalency of the Applicant’s proposed mark and the Registrant’s marks and the many deficiencies in the consent agreement, the Board affirmed the examining attorney that the Applicant’s mark cannot be registered.

C.   Take Home Points

       1.   Take the Time to Determine Potential Problems with a Proposed Trademark Before Ever Filing an Application.

First and foremost, the Applicant in this case took a huge risk in applying for the mark at issue.  Now the Applicant has spent considerable legal fees in trying to get the mark registered when trademark law case law clearly indicated that the Applicant would encounter major problems.  Selecting a mark that will not encounter issues from likelihood of confusion to merely descriptive issues is a very difficult endeavor.  Taking the time to do it right by, for example, conducting proper trademark searches at both the federal and common law levels is worth any associated costs with taking such upfront steps.

  1.    If a Consent Agreement Is to be Presented to the the USPTO, Make Sure It Details the Steps to be Taken by the Parties to Minimize Consumer Confusion Given the Nature of the Goods/Services.

Here the consent agreement appeared to have been written by someone who did not understand the principles governing trademark law from interstate commerce issues to establishing to the satisfaction of the USPTO that the parties were taking clearly defined steps to minimize confusion and/or that the goods/services would not involve the same channels of trade.

By way of example, this commentator has worked with attorneys representing the registrant or applicant to draft unambiguous, detailed consent agreements that have been accepted.    It is, however, emphasized, that the “involved” goods in the commentator’s agreements did not encompass precisely the same channels of trade even though the goods/services fell into the same classification of goods and services.   Alternatively, the goods/services were of the nature that the consumer would exercise considerable time and caution beyond ordinary care in the decision-making process because of the cost involved.

The bottom line – each consent agreement submitted to the USPTO will be evaluated on its own merits for compliance with the USPTO’s requirements for trademark registration to prevent consumer confusion.

Copyrighted 2017 by Troy & Schwartz, LLC

The following is not legal advice and is presented for information only.  If you are considering an action that could have legal consequences, you should consider consulting with an attorney of your choosing.  



 Part I. Introduction

Social media has become a game changer in the way we communicate and the courts are attempting to deal with such technology-based communications in the context of existing laws. Although it has had a huge impact in the area of intellectual property law, the impact of social media on other areas of the law may be less well-known.  Technology allows anyone to send of negative missives about anybody by the mere press of a button into cyberspace.  What if the sender is an employee who complains about an employer, boss, supervisor, etc.?  Can an employer fire such an employee?  It depends on the purpose behind the derogatory missives and whether existing law prevents the employer from firing such an employee.

Part II. Discussion of the April 27, 2017 Decision by the Second Circuit Court of Appeals in the Matter of the National Labor Relations Board v. Pier Sixty, LLC.   Take-home points are provided in Part III.   

The National Labor Relations Act (NLRA) prohibits employers from firing an employee engaged in concerted or union-related activity. Section 7 of the Act guarantees employees the right to “engage in . . . concerted activities for the purpose of collective bargaining or other mutual aid or protection.”  29 U.S.C. 157.

The National Labor Relations Board (NLRB) is charged with the task of determining whether an activity falls within the meaning of Section 7. An order issued by the NLRB may include directives to pay a fine, cease and desist from such unfair labor practices, and to take such affirmative action including reinstatement of employees with or without back pay and other necessary steps that will effectuate the policies of the subchapter.  29 U.S.C. §§ 160(a)-(c).  See also footnote 14 of the decision.

Sections 8(a)(1) and 8(a)(3) of the NLRA prohibits employers from firing employees in retaliation for participation in protected union-related activity. The protected activity includes the right of employees to discuss unionization and participate in meetings and communication with other employees.  In today’s technological world, this communication may well encompass social media as a conduit to communicate with other employees.   Yet, under the NLRA, the employee cannot act in such an abusive manner that he loses the protection of the NLRA.

In Pier Sixty, employee Hernan Perez (“Perez”), had posted a profanity-laced four sentence tirade on Facebook.  The first three sentences included vulgarity directed to his supervisor and the supervisor’s family.  The last sentence stated, “Vote YES for the UNION!!!!!!!” Perez testified that he did not realize the tirade would appear publicly and that he thought his Facebook page was private.  His Facebook page included ten fellow employees as friends.  As it turned out, Perez removed the posting three days later but by then the post had come to the attention of the management.  He was fired about two weeks later.

On the same day as his firing, Perez filed a charge with the NLRB that he had been terminated in retaliation for “protected concerted activities.” A second charge was filed by the employee who had led union organizing efforts at Pier Sixty.   The administrative board found that Perez had been fired in retaliation for protected activity (his Facebook post) under the NLRA.  The NLRB filed an application for enforcement with the Second Circuit Court of Appeals and Pier Sixty filed a cross-petition for review.  The Court concluded that Perez’s conduct was not so “opprobrious” as to the lose the protection of the NLRA.  It is clear from the opinion that the Court was not “happy” with Perez’s conduct but rested its conclusion heavily on the deference afforded the NLRB’s interpretation of the NLRA.  The decision’s final sentence states: “We note, however, that Perez’s conduct sits at the outerbounds of protected, union-related comments.”  Our emphasis.

A different outcome might have been reached if the employer itself had not exhibited questionable conduct towards its employees. Specifically, this conduct was as follows:

The employer had:

  • Demonstrated hostility towards employees’ union organization activities just prior to the election;
  • Threatened to rescind and/or fire employees who voted for unionization;
  • Enforced a “no talk” rule on groups of employees, including Perez, from discussing unionization;
  • Consistent tolerating profanity among the employees and managers and seldom disciplined any employee from using the type of vulgar language that appeared in Perez’s Facebook post; and
  • Fired Perez just two days before the vote when he had never been disciplined for his use of similar language during his thirteen years of employment. The work environment was apparently one laced with “bad” language from the top down.

The outcome might also have been different had Perez not actually referred to unionization in his Facebook post or had his outburst been in the immediate presence of customers or had he disrupted a catering event for which the employer had been hired. The fact that he had quickly removed his post once he realized it was not private was also in his favor.  In siding with Perez, the Court noted that his comments were on an online forum that “is a key medium of communication among coworkers and a tool for organization in the modern era. . .Nor was his Facebook post equivalent to a “public outburst” in the presence of customers and can thus be distinguished from other cases of “opprobrious conduct.”  In this case, the NLRB’s conclusions were ratified but the Court noted that any test for evaluating “opprobrious conduct” must be sufficiently sensitive to the employers’ legitimate disciplinary interests. Pier Sixty, LLC Court citing NLRB v. Starbucks Corp., 679 F.3d 70, 79 (2d Cir. 2012)

Part III. What is an Employer to Do?

Social media is here to stay. How can an employer protect its legitimate disciplinary interests in the age of Facebook, Twitter, etc. but not run afoul of Section 7?  Should an employer have a social media policy spelling out what an employee can and cannot communicate about in social media?  A policy may be very useful – but it must be emphasized that the NLRA vigorously defends employees’ rights to communicate on matters related to the terms and conditions of their employment in a concerted fashion.  Several cases handled by the NLRB show that any ambiguity as to what the employer’s social media policy does or does not allow may well be construed in favor of the employee.

For example, generalizations such as “be respectful in your social media communications” may even be unlawful under Section 7 of the NLRA if it could be deemed by employees to include complaints about terms and conditions of employment.  Also, as the Pier Sixty decision demonstrates, protected employee social media communications under the terms and conditions of employment do not need to be couched in sugary terms.  Perez’s profane speech was found to be protected, albeit “borderline protectable” speech under the NLRA.  Additionally, ambiguity about whether a provision of a social media policy is restricting protected Section 7 rights will likely cause that provision to be unlawful.

In conclusion, a well-written social media policy for employees that is commensurate with the requirements of Section 7 may be extremely helpful for both the employer and the employee. Such a policy will also be useful for all levels of managers who may have no idea of employees’ rights under Section 7. It is quite possible that Pier One had no idea that its actions by and through its managers to curtail union-related discussions were unlawful even before Perez’s Facebook post.

We hope the post was instructive. If you are an employee and have concerns about your current social media policy or would like to have an appropriate social media policy in place, contact the office for a complimentary consultation to discuss your matter.

© 2017 by Troy & Schwartz, LLC