TIPLJ: Volume 16

Issue 1 – Fall 2007


Harmonizing the International Law of Business Method and Software Patents: Following Europe’s Lead

Citation: 16 Tex. Intell. Prop. L.J. 1 (2007)

Author: Robert E. Thomas & Larry A. DiMatteo

About: Robert E. Thomas is an Associate Professor, Huber Hurst Fellow, at the Warrington College of Business Administration, University of Florida. Professor Thomas holds J.D. and Ph.D. degrees from Stanford University. Larry A. DiMatteo is the Huber Hurst Professor of Contract Law at the Warrington College of Business Administration, University of Florida. Professor DiMatteo holds a J.D. from Cornell Law School and an LL.M. from Harvard Law School.

Abstract: The Court of Appeals for the Federal Circuit, in its 1998 State Street Bank decision, recognized business methods as patentable subject matter. Even though business method patents are logical extensions of software patents, they have posed new and unique challenges to the United States Patent and Trademark Office (USPTO). Consequently, the USPTO has been criticized for issuing questionable business method patents.

Highlighting the problems business method patents pose within the U.S. patent system is the dichotomy created by the European and Japanese patent systems. These foreign patent systems expressly restrict patentability of pure business methods. Even though the Europeans and Japanese have sought to reconcile their treatment of business methods with that of the USPTO, it is apparent that neither system will adopt the expansive scope of patentability currently afforded business methods in the United States. Further cementing this gap, the USPTO’s efforts to limit the recognition of business method patents have been thwarted by judicial precedents and lack of policy-shifting legislative support.

These widely differing methodologies create impediments to international business that result in significant economic costs. Additionally, expansive treatment of business methods within the U.S. system is responsible for domestic detrimental social welfare costs and economic inefficiency. Accordingly, there should be abundant motivation for reforming the U.S. system with the concurrent goal of harmonizing the treatment of business methods in international patent law.

An analysis of available approaches indicates that the most effective remedial measure the U.S. system could adopt is the European “inventive step” requirement for patenting business methods. In the alternative, the U.S. system would also benefit from limiting the patent period for business method and software patents. Additionally, the social welfare costs of the U.S. system would be decreased through narrowing the scope of afforded protection, enforcing disclosure requirements more strictly or implementing a post-grant opposition process as used in Europe and Japan as an error-correcting mechanism. Such reforms would significantly promote efficiency within the U.S. system and serve to harmonize the international protection afforded to business methods.


The Contract in the Trade Secret Ballroom—A Forgotten Dance Partner?

Citation: 16 Tex. Intell. Prop. L.J. 47 (2007)

Author: Alan J. Tracey

About: Mr. Alan Tracey received dual B.S. degrees in Production Operations and Procurement from Bowling Green State University. Mr. Tracey received his J.D. from The Ohio State University School of Law in 1994 and has been practicing law in the state of California since 1994.

Abstract: Trade secret business information is a valuable commodity. Companies that fail to protect it and the intellectual capital that it represents quickly lose ground to the competition. One of the most versatile and commonly used documents to protect that information is a nondisclosure agreement or clause covering confidentiality obligations in an employment or business contract. These agreements seek to bar trade secret information from being disclosed, but more than that, these agreements are used as an important—and sometimes the sole—factor a court considers when evaluating whether the information at issue qualifies as trade secret information. They are therefore protected by the laws governing trade secrets or exist as another kind of information that is not protected by such laws. This Article first provides an overview of the evolution of trade secret law. It then follows with a summary of the view taken by many courts that the use of a nondisclosure agreement to protect information meets the requirement under the Uniform Trade Secrets Act (UTSA) that an owner of information must make efforts that are reasonable under the circumstances to maintain its secrecy, even when little or no other efforts are made. This Article further explores the common reasons that plaintiffs in trade secret disputes often ignore the nondisclosure agreement that initially served to establish the information, as a trade secret case will yield more liberal remedies than a breach of contract case brought under the nondisclosure agreement. In such cases it is common that courts may loosely apply contract interpretation principles, and contractual provisions which limit a contracting party’s liability may be ignored. Finally, this Article suggests that the practitioner must account for these unusual risks when drafting agreements that apply to the exchange of trade secret information.


Countering the Unfair Play of DRM Technologies

Citation: 16 Tex. Intell. Prop. L.J. 91 (2007)

Author: Nicola Lucchi

About: Mr. Lucchi is the Global & Engelberg Research Fellow, Hauser Global Law School Program, New York University School of Law (2006–07). He also serves as the Research Associate at the Department of Legal Studies of the University of Ferrara, Italy.

Abstract: In the rapidly expanding information society, intellectual property law plays an increasingly important role in the production, distribution and use of creative material. As a consequence, it faces new possibilities and challenges. One of the most troublesome challenges is connected with the development of the Digital Rights Management Systems and Technological Protection Measures applied to control the distribution and use of electronic works. In this framework, the anti-circumvention provisions enacted at the American, European and international level to safeguard digital content from uncontrolled distribution and unlawful use could have perverse effects and serious implications for the consumer community. When these provisions are applied and embedded to media products, they can erode some fundamental rights of consumers and can restrict traditional usages. This paper analyzes whether and to what extent the consumer rights are negatively affected by “digital terms and conditions” enforced with technology and contract law. To balance this inequity the research speculates on the application of consumer protection law as a possible contributory instrument to reduce imbalance between parties.


Life After Moseley: The Trademark Dilution Revision Act

Citation: 16 Tex. Intell. Prop. L.J. 125 (2007)

Author: Marc L. Delflache, Sarah Silbert, & Christina Hillson

About: Marc L. Delflache is a Partner with Fulbright & Jaworski L.L.P. in Dallas, Texas. Sarah Silbert is a Senior Associate with Fulbright & Jaworski L.L.P. in Dallas, Texas. Christina Hillson is a former Associate at Fulbright & Jaworski L.L.P. in Dallas, Texas.

Abstract: Trademark dilution results when the distinctiveness of a famous mark is lessened, or consumers’ associations with the mark are tarnished, by unauthorized use. Congress first addressed the issue in the Federal Trademark Dilution Act (FTDA). However, the lack of precision in the statutory language led to a split among the circuit courts in their interpretations of the FTDA. Even after the Supreme Court attempted to resolve the conflicting circuit court opinions, uncertainty remained. Congress responded by passing the Trademark Dilution Revision Act (TDRA) to clarify the law in the area of trademark dilution. This Article examines the evolution of federal trademark dilution law and the impact of the TDRA on the ability of owners of famous marks to protect those marks from dilutive uses of similar marks. Part I discusses the origins of dilution theory and the legislative history of the FTDA. Part II reviews the case law that developed after the enactment of the FTDA and the key issues raised regarding the scope of protection available under the statute. Part III examines the impact of the TDRA on the key issues, as well as the legislative history of the TDRA, which included input from major forces in the area of intellectual property.


YouTube or YouLose—Can YouTube Survive a Copyright Infringement Lawsuit?

Citation: 16 Tex. Intell. Prop. L.J. 151 (2007)

Author: Jason C. Breen

About: Jason C. Breen earned his J.D from the UCLA School of Law in 2007 and his B.A. from Harvard University in 2002.

Abstract: This paper looks at YouTube and other video web hosting services which have been targets of copyright infringement lawsuits. The author argues that YouTube’s liability is most likely dependant on whether the service meets the requirements of the DMCA safe harbor for service providers under 17 U.S.C. § 512(c). After examining whether YouTube falls within the safe harbor, the author briefly examines how YouTube would fare under the different theories of copyright infringement. Next, the author discusses whether the DMCA safe harbor would be available to YouTube if the service were to be found liable as an infringer. The limited case law indicates that the DMCA safe harbor would provide some measure of protection for YouTube, though it would still likely be found vicariously liable for copyright infringement.


Issue 2 – Winter 2008


Who Took My IP?—Defending the Availability of Injunctive Relief for Patent Owners

Citation: 16 Tex. Intell. Prop. L.J. 187 (2008)

Author: Paul M. Schoenhard

About: J.D., Harvard Law School (2003); B.A., Dartmouth College (2000). The author is a visiting professor at the University of Utah, S.J. Quinney College of Law, and an associate at Ropes & Gray LLP in Washington, D.C. He may be contacted at schoenhard@gmail.com.

Abstract: In the field of patent law, a widespread fear of so-called “patent trolls” has led to proposed limitations on patentees’ intellectual property rights. Specifically, because the trolls’ greatest weapon is the threat of a permanent injunction, both the courts and Congress are reconsidering the availability of injunctive relief to patentees. This Article defends the availability of injunctive relief for patent owners, arguing that patent rights are properly protected by property rules and suggesting that the Takings Doctrine may provide a legal tool to guard the current intellectual property regime.


Remixing Obviousness

Citation: 16 Tex. Intell. Prop. L.J. 237 (2008)

Author: Joseph Scott Miller

About: Associate Professor, Lewis & Clark Law School. Many thanks to Tim Holbrook, Andy Johnson-Laird, Mike Madison, Greg Mandel, Bob Matthews, Matt Phillips, and Josh Sarnoff for comments on drafts.

Abstract: One prior art patent describes an adjustable gas pedal for a car. Another prior art patent describes a pedal-mounted sensor to link the car pedal to a computer-controlled throttle. Would it have been obvious to a pedal engineer of ordinary skill, in February 1998, to combine the two prior art items into a sensor-bearing adjustable gas pedal? If so, the sensor-bearing pedal was not properly patentable, even if it was new at that time.

On roughly these facts, the Supreme Court granted review in KSR International Co. v. Teleflex Inc. to decide “whether the Federal Circuit had erred in holding that a claimed invention cannot be held ‘obvious,’ and thus unpatentable under 35 U.S.C. § 103(a), in the absence of some proven ‘teaching, suggestion, or motivation’ that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed.” Reversing the U.S. Court of Appeals for the Federal Circuit, and reinstating the District Court’s summary judgment of invalidity of the asserted patent claim, the Supreme Court concluded that “the Court of Appeals analyzed the issue in a narrow, rigid manner inconsistent with § 103 and [the Supreme Court’s] precedents.” The factors the Supreme Court first set out 41 years ago, in Graham v. John Deere Co., “continue to define the inquiry that controls” a nonobviousness determination. The Court’s unanimous opinion did not, however, utterly reject the Federal Circuit’s suggestion test.

In what sense, if at all, does the Federal Circuit’s suggestion test survive? Is it possible to say more than that the inquiry is now more “expansive and flexible”? To answer these questions, we must grasp that the Supreme Court differs with the Federal Circuit not merely over verbal formulae, but rather over a foundational premise for the patent system: Mistakes are inevitable in any patent regime that, like our own, strives to sort the nonobvious wheat from the obvious chaff.


Poaching Profits: An Examination of the Ability of a Trademark Owner to Recover an Infringer’s Profits Under the Lanham Act as Amended in 1999

Citation: 16 Tex. Intell. Prop. L.J. 257 (2008)

Author: Blake R. Bertagna

About: The author is an associate in the intellectual property group of Arent Fox LLP in Washington, D.C.

Abstract: Under § 1117(a) of the Lanham Act, a trademark owner can recover the profits that a third party earned in misappropriating the trademark owner’s mark. Prior to August 1999, the availability of this remedy was triggered by “a violation under § 1125(a) of this title.” Under this form of the statute, many circuits held that a defendant’s violation of § 1125(a) had to be willful to allow the trademark owner to recover a defendant’s profits.

However, in August 1999, Congress amended this provision to read “a violation under section 1125(a) of this title, or a willful violation under section 1125(c) of this title.” The disparate use of the term “willful” by Congress has led many courts to conclude that Congress intended to require a defendant’s conduct to be willful for violations of § 1125(c), but not for § 1125(a), in order to award an accounting of a defendant’s profits.

One circuit in particular that has persistently required a willful violation of § 1125(a), even in the aftermath of the amendment in 1999, is the Second Circuit. In recent years, however, courts within the Second Circuit have begun to depart from or question the firmly established precedent of the Second Circuit in light of Congress’s 1999 amendment to § 1117(a). This trend in the Second Circuit is indicative of a larger trend throughout the federal circuits to cease requiring willful conduct to recover a defendant’s profits under the Lanham Act for violations of § 1125(a).

This Article argues that Congress, with its 1999 amendment, definitively declared that willfulness is no longer required to recover a defendant’s profits for violations of § 1125(a) of the Lanham Act. The trend of the Second Circuit and that occurring more broadly throughout the country is correctly falling in line with congressional intent, as reflected by the text of the 1999 amendment, its legislative history, and the ultimate aim of Congress in enacting the amendment.


Revisiting the Compromise of 35 U.S.C. § 287(c)

Citation: 16 Tex. Intell. Prop. L.J. 299 (2008)

Author: Leisa Talbert Peschel, Ph.D.

About: J.D., The University of Texas School of Law (2007); Ph.D., The University of Texas M.D. Anderson Cancer Center/The University of Texas at Houston Graduate School of Biomedical Sciences (2004); B.S. Biochemistry/B.S. Chemistry, The University of Texas at Austin (2000). The author would like to thank the State Bar of Texas IP Section for its establishment and support of the 1st Annual State Bar of Texas IP Section Writing Competition. The author would also like to thank Sidley Austin L.L.P. for its continued support of the Texas Intellectual Property Law Journal Best Note Competition.

Abstract: Over a decade ago, Congress enacted 35 U.S.C. § 287(c) to protect medical practitioners from liability for infringement of medical or surgical procedure patents. Legislators sought a compromise designed to appease both the medical community, who were advocating for a complete ban on the patentability of medical procedures, and the biotechnology community, who feared judicial interpretation of such a ban would erode their patent rights. Despite the legislature’s best efforts at a statutory solution, these questions remain: What aspects of the practice of medicine are patentable and for those aspects that remain patentable, should they be?


Enough Is Enough: Time to Eliminate Design Patents and Rely on More Appropriate Copyright and Trademark Protection For Product Designs

Citation: 16 Tex. Intell. Prop. L.J. 325 (2008)

Author: Daniel H. Brean

About: University of Pittsburgh School of Law, J.D. expected 2008. Registered Patent Agent of the U.S. Patent and Trademark Office.

Abstract: Design patents originated in the United States at a time when no suitable form of protection existed for product designs. The dual purposes of the design patent system were (1) to promote the decorative arts and (2) to prevent consumers from being misled into buying products from one source while thinking they were getting it from another. The former of these objectives is within the mandate of the copyright law, while the latter is within that of trademark law. However, when the first design patent laws were enacted, copyright and trademark laws were too primitive to allow protection for product designs. These doctrines have since matured substantially, and now cover essentially the same subject matter as design patents. Copyright law now protects designs for useful articles, and trademark law now protects product design trade dress. These statutory schemes can adequately and more appropriately protect the interests that the design patent system was intended to advance, albeit with some important qualifications and limitations. Accordingly, design patents should be phased out of existence to make way for a more suitable system that affords only copyright and trademark protection for designs.


Issue 3 – Spring 2008


Likelihood of Dilution by Blurring: A Circuit Comparison and Empirical Analysis

Citation: 16 Tex. Intell. Prop. L.J. 385 (2008)

Author: Keith C. Rawlins

About: Attorney, Egbert Law Offices, PLLC, krawlins@egbertlawoffices.com. J.D., University of Houston Law Center. Thanks to John S. Egbert, Esq. and Professor Paul M. Janicke.

Abstract: This Article finds that there is a split, or more precisely, a splinter, among the circuits concerning the rule for “likelihood of dilution” under trademark dilution law. The Article shows that courts have three types of rules for proving a likelihood of dilution. The first rule focuses on how consumers perceive marks and finds dilution if consumers are confused. The second rule focuses on the similarity of the marks and finds dilution if consumers mentally associate the marks. The third rule centers on the distinctiveness of the senior mark and only analyzes the similarity between the marks to find a likelihood of dilution. Thus a split, or more precisely, a splinter, among the circuits as to the rule for likelihood of dilution does exist.

Part I is an introduction. Part II discusses state and federal dilution statutes, emphasizing that liability currently requires a finding of a likelihood of dilution. Part III discusses how the circuits disagree as to the appropriate rule for finding a likelihood of dilution under state and federal dilution laws. Part IV, through empirical analysis, shows that each circuit’s application of the various tests for likelihood of dilution does not necessarily follow its espoused dilution rules, and that the analyses are splintered just as are the rules.


Time-Varying Compulsory License: Facilitating License Negotiation for Efficient Post-Verdict Patent Infringement

Citation: 16 Tex. Intell. Prop. L.J. 427 (2008)

Author: Eric Keller

About: Eric Keller is an associate at Fish & Richardson P.C. He received his J.D. from Stanford Law School in 2007 and has bachelors and masters degrees in electrical engineering.

Abstract: Traditionally, courts have had two possible remedies available to address future use of a patent by the patent infringer. First, a court could create a compulsory license to compensate the patent holder for future infringement. Alternatively, a court could issue a permanent injunction preventing the infringer from using the patent. Both approaches have limitations. Creating a compulsory license presents inherent valuation difficulties that may result in an inadequate royalty and leave the patentee undercompensated. On the other hand, a permanent injunction may operate as a windfall to a patentee whose invention makes only a small contribution to a complex product designed by an infringer acting in good faith. This Article evaluates a possible solution to the foregoing problems, the time-varying compulsory license. The time-varying compulsory license increases the royalty rate according to a schedule. The relatively low initial royalty rate allows the infringer time to redesign the product so that it no longer infringes. Over time, the royalty rate increases until it reaches an exclusionary level where continued use by the infringer would be unprofitable.


The Video Game Industry and Video Game Culture Dichotomy: Reconciling Gaming Culture Norms With the Anti-Circumvention Measures of the DMCA

Citation: 16 Tex. Intell. Prop. L.J. 453 (2008)

Author: Corinne L. Miller

About: Ms. Corinne Miller received her B.S. degree in Biology from George Mason University in 2004. Ms. Miller is a 2008 J.D. Candidate at Michigan State University College of Law. Many thanks to Professor Peter Yu for his invaluable insight, guidance, and patience throughout the writing process.

Abstract: This Article considers the cultural clash between the video game culture and the video game industry, taking an in-depth look at social norms, their application towards the video game culture and the DMCA. The Article compares the development of cultural norms, their application to the video game industry and how these norms clash with the implementation of the DMCA and methods used by the video game industry to protect their intellectual property. The Article demonstrates that current notions used by the video game industry are inadequate and that the industry should focus on ways to implement changes within the culture. However, to effectively prevent circumvention of the industry’s technological prevention measures, the Article shows that while not alienating gamers with implementation of the DMCA, the gaming industry must focus on instilling in the culture an anti-circumvention norm, in addition to implementation of technological measures.


Counting the Beans: Unjust Enrichment and Defendant’s Overhead

Citation: 16 Tex. Intell. Prop. L.J. 483 (2008)

Author: George P. Roach

About: George P. Roach is the founder of a Dallas litigation consulting and valuation firm, Multi Discipline Consultants, and is a senior adviser to the litigation consulting firm of Freeman & Mills, Inc. in Los Angeles. His educational background includes an M.B.A., a J.D., and a B.A. in Economics.

Abstract: The remedy of unjust enrichment is the principle remedy for the infringement of intellectual property and it will only get more important as the American economy completes its transformation to a ‘data economy.’ Unjust enrichment is also the remedy of choice now for federal regulatory agencies and breaches of corporate fiduciary duty. This Article re-examines the controversy among the federal circuits about whether the defendant’s overhead expenses should be offset in the measure of unjust enrichment. This is probably the most disputed issue in the actual measurement of unjust enrichment with the potential to deny the plaintiff any significant monetary award or provide multiples of the unjust enrichment admitted by the defendant. Included also is a broad perspective for understanding most claims for offsetting credit.