Michael Cohen of Cohen IP Law Group PC will be lecturing on patent issues on the second day of the seminar “Medical and Recreational Marijuana” hosted by the The Seminar Group on March 30, 2018 in Santa Monica, California. His topic will be Cannabis Patents: What Can You Get And How Can You Get It. How to apply for and secure either a utility or plant patent for cannabis inventions; How to deal with cannabis patent trolls; Analysis of whether any companies are “cornering” the market on cannabis patents and what that means for the future of innovation in the cannabis industry. To sign up or learn more about the event click here.
The LA Times has recently interviewed Michael Cohen regarding Gene Simmons recent trademark filing for the iconic rock hand gesture. http://www.latimes.com/entertainment/la-et-entertainment-news-updates-june-gene-simmons-trademark-horns-1497554772-htmlstory.html
Within the United Stated Patent and Trademark Office, there are two separate trademark “registers” that exist, namely the Principal and the Supplemental. Typically when an applicant files a new trademark application, that application when ultimately approved and issued is defaulted to be on the Principal Register. However, under some circumstances during the prosecution of the application, the examiner may recommend, or the applicant may have to voluntarily amend the application to the Supplemental Register. Generally, “descriptive” marks are not entitled to the Principal register and instead must go on the Supplemental Register.
The question becomes what is the difference between the two registers? The Principal Register is thought to be stronger as it provides several advantages and presumptions, while the Supplemental does not. The chart below sets forth those differences:
|Provides protection for “distinctive” trademarks||Provides protection for only “nondistinctive” trademarks|
|Presumption of validity||No presumption of validity, therefore requiring a litigant to prove the validity of the trademark|
|Presumption of ownership, and provides constructive notice so as to eliminate an infringers good faith defense||No presumption of ownership or constructive notice|
|Can later become “incontestable” by filing a Section 15 affidavit||Cannot be incontestable|
|Can record with the United States Customs Services to prevent the importation of counterfeits||Cannot record with the United States Customs Services|
|Madrid Protocol applications can be based on principal register trademarks||Cannot file Madrid Protocol applications based off of a supplemental register trademark|
|Can initially file an application on an “intent to use” basis||Supplemental application cannot utilize an “intent to use” filing basis, rather it must be used in commerce|
Given the disadvantages with the Supplemental register, why would an applicant amend their application to the Supplemental Register? As stated above, “descriptive” marks must go on the Supplemental Register. What typically occurs is an applicant will initially file a descriptive mark on the Principal Register, and later during the prosecution of the application the examiner will reject it on the grounds that the mark is “merely descriptive”. As such, the applicant in some cases can overcome the rejection by amending the application to the Supplemental Register. In other cases, even if the examiner believes a mark is descriptive, the applicant may argue that it has achieved acquired secondary meaning and therefore entitled to remain on the Principal Register. While there are disadvantages to the Supplemental Register, there are several advantages that it does provide compared to not having any registration, such as:
- Allows for a lawsuit for trademark infringement to be brought in Federal Court, just as a Principal registered mark would;
- 3rd parties cannot register a confusingly similar trademark on the Principal or the Supplemental Register;
- Registrants of Supplemental trademark can still use the ® notice;
- After the trademark has been used and registered on the Supplemental Register for five (5) consecutive years, the registrant can reapply on the Principal Register.
It is not commonly known by many inventors that there are different types of patent searches and opinions depending upon the reason for the search. Namely there are four varieties of patent searches: 1) Novelty (patentability); 2) Freedom to Operate (FTO); 3) Non-infringement; and 4) Validity.
1. Novelty or Patentability Search
Novelty searches tend to be the most common search requested. Simply stated, this type of search and opinion is conducted to determine the likelihood of getting a patent through the United States Patent and Trademark Office (USPTO). The question asked is whether the invention is patentable through the USPTO, but does not ask if the invention infringes any other patent in real life. Typically startups or those with new inventions will request a novelty search to determine if their invention is patentable and worth the time and money to pursue. Further, the search can often yield valuable information to the inventors such as other competitors in the same space.
What steps are involved in a Novelty Search? First, the inventor must clearly identify the invention and list out all the elements and key aspects that they believe are novel. Then a comprehensive search is conducted through the USPTO database for patents and publications, Google, etc., to determine if any of the prior art found discloses the same elements in either one patent, or even in a combination of prior art, if the combination as disclosed would render the invention obvious.
2. Freedom to Operate Search
A Freedom to Operate (FTO) search, or sometimes called a Clearance search, determines whether it would be prudent to commercialize the product in view of existing in-force patents. In other words the FTO search would determine if the inventor is free to operate and commercialize the invention without the fear of getting sued for infringement. The focus of a FTO search and opinion is on the claim portion of the in-force patents found rather than the disclosure portion of the prior art as in a novelty search. For this reason, FTO searches tend to be much more complicated, time intensive, and significantly more expensive typically costing in the thousands.
What are the steps of a FTO search? Just as with a novelty search the inventor must clearly identify the invention and list out all the elements and key aspects that they believe are novel. A searcher will conduct a comprehensive search focusing only on in-force patents and published patent applications in the relevant jurisdiction. The patent attorney must then review and analyze the search results, specifically by scrutinizing the independent claims of the relevant patents, and further researching the prosecution history of those patents. The patent attorney will then assess if there is literal infringement or infringement under the Doctrine of Equivalents.
The goal of the FTO search is to hopefully determine that the inventor’s proposed invention does not infringe upon any of the patents found in the FTO search. If they do, the inventor can decide to abandon the commercialization of the proposed invention, engage in a redesign, or approach the patent holder for possible licensing negotiations.
3. Non-infringement Opinion
Similar to the FTO search, a non-infringement opinion determines if the inventor’s proposed invention will infringe a particular patent. However, non-infringement opinions are directed to a specific patent or patents that have been previously identified. For example, a non-infringement opinion should be obtained when a new product, process, or technology is created but is known to be similar to an existing patented product/process/technology, particularly in the instance when there are known competitors with patents. The steps involved for a non-infringement opinion is similar to the FTO search except that no search is conducted because the patent at issue has already been identified. And just as with the FTO opinion, the independent claims of the relevant patents must be deconstructed and analyzed and compared element by element to the proposed invention.
A significant point about conducting FTO and non-infringement opinions in advance of any allegation of infringement or commencement of a lawsuit is that if the search and opinion (preferably written opinion) is performed by a reputable licensed patent attorney, it can serve an exculpatory purpose in the event that the inventor is actually sued for patent infringement. For example, if the inventor obtains a non-infringement opinion and later in time is sued for patent infringement based upon the same patent that was analyzed in the non-infringement opinion, the court will consider the opinion and may negate a finding of enhanced damages for willful infringement which can often be “treble damages” – tripling the actual damages amount. This has been particularly significant in light of the Supreme Court’s 2016 holding in Halo Electronics, Inc. v. Pulse Electronics, Inc., et al. and Stryker Corporation, et al. v. Zimmer, Inc., et al. which lowered the burden to obtain treble damages in patent infringement cases. As such the importance to obtain such opinions cannot be overstated.
4. Validity Search
Validity searches are usually conducted in a few scenarios. It is primarily requested by a potential defendant or a defendant in an actual patent infringement lawsuit that wishes to invalidate the patentee’s patent as a defense to patent infringement. The goal is to determine whether the identified patent is valid or enforceable. In other cases, a validity search and opinion may be used prior to buying or licensing certain patents to determine the strength of those patents. For example, if it turns out the particular patent at issue is or can be invalidated, then the need to purchase or license the patent can be avoided. A validity opinion can also be used as due diligence prior to a merger or acquisition for purposes of valuating an IP portfolio of a target company.
Hollywoodlife.com recently asked us questions in an interview regarding Blac Chyna’s attempt to utilize the Kardashian name in a trademark. It turns out the Kardashian family is not too keen on soon to be relative, Blac Chyna using the family name for business purposes. Blac Chyna is set to marry Rob Kardashian in 2017, and just recently filed an “intent-to-use” trademark application for “ANGELA RENEE KARDASHIAN” connected to advertising and entertainment services. While the trademark office (United States Patent and Trademark Office) did not have an issue with the application and issued a Notice of Publication, the various Kardashian business enterprises (Khlomoney Inc., 2Die4Kourt, and Kimsaprincess Inc) did and has filed an Notice of Opposition with Trademark Trial and Appeal Board preventing her from getting it.
While Blac Chyna will eventually become a Kardashian legally in her personally life via marriage to Rob (assuming she legally changes her name), her attempts to use the name for business is a different story. The Kardashaian clan essentially does not want her to utilize the Kardashian name in connection with any similar business endeavor that they are involved because they feel it will cause confusion and dilution of the Kardashian name. In fact, the opposition states “[Blac Chyna] is deliberately seeking to profit from the goodwill and popularity of Opposers’ KARDASHIAN Marks.” The have no less then 60 trademarks with the trademark office. In regards to her timing, while filing later after she legally changes her name would provide her with additionally support, however, it is not that significant as it did not make a difference to the trademark office as the trademark office conditionally approved her trademark.
Michael Cohen of Cohen IP Law Group PC has been featured in the November 14th, 2016 edition of the Los Angeles Business Journal’s Intellectual Property & Licensing Law Roundtable, “What Businesses Need to Know”. Mr. Cohen discussed a variety of IP issues impacting business ranging from IP protection strategies to recent Supreme Court cases. The article can be viewed here: IP Roundtable Los Angeles Business Journal
What type of business entity should be formed for a startup company, and which are preferred by investors, angels, or venture capitalists? The common convention is that VCs tend not to like limited liability companies (LLCs) and prefer a C-corp over most other entity types. Some of the reasons for that is because VCs tend to not like pass-through entities, and LLC are for the most part treated as partnership pass-through entities for tax purposes. Further, LLCs do not allow for different classes of stock such as preferred stock (which is what most VCs require), many other instruments of ownership that corporations have.
However, the flip-side of the argument is that it may not really matter during the very early phase of a start-up. Namely, if the start-up is not seeking VC or other substantial money early on, could an LLC be beneficial? LLCs do tend to be easier in the early stages of a company, are flexible, and most smaller angels typically do not have a problem investing in them especially early on in the start-up’s life cycle for some of the following reasons:
- LLCs can beneficial from a tax standpoint considering that LLCs do not have double taxation, namely they do not pay corporate level federal tax, as such they are “pass-through”. (However, the LLC’s operation profits must be distributed each year and cannot be accumulated unlike a corporation, and most VCs favor accumulated profits to fuel growth rather than reaching to new equity.)
- Founders, angels, and/or other investors can offset the tax loss from the LLC against their other income personally which could present a substantial tax advantage.
- Although there are not different classes of stock, it is possible to create different classes of LLC “units” providing different types of rights and preferences attached to those units.
- Given its flexible nature, LLCs could be a good choice if the company has a positive capital flow and will not require additional rounds of investments from others.
So it is not uncommon that the early pre-seed startup will start off as an LLC, and when the time is right, typically in order to close a deal for venturing funding, the company will convert the LLC to a C corporation, usually a Delaware C corporation. For the most part, in regards to the legal formation of converting from the LLC to a corporation is not that difficult. But before determining that LLCs are a good choice for the pre-seed startup, there are some other complications from a practical standpoint:
- The new corporation will have to get a new federal employer identification number (FEIN) and will lose credit history.
- Changes must be made that previously identified the LLC to now identify it as a corporation, such as changes to the bank, web pages, insurance policies, etc. All of which may be extremely time consuming depending upon the history of the LLC.
- If there is existing payables or debt on the balance sheet and those obligations get assumed by the corporation, the owners of the LLC will get attributed income from the LLC’s debt forgiveness and will have to pay income tax at ordinary rates.
So while every scenario is different and while forming an LLC for a preseed start-up has its advantages, if it is clear that the start-up will be seeking additional funding in the near future, careful consideration should be given and a frank discussion with one’s tax advisor to determine if it is more beneficial to start off with a C corporation from the beginning rather than LLC and later converting it.
Cohen IP Law Group, P.C. is proud to announce that it has been named as the winner of the Boutique category – Trademark Infringement Law Firm of the Year in California – 2016 by Global Law Experts (GLE)
www.globallawexperts.com. Over recent months, GLE has conducted its extensive nomination and research process for the 7th Annual Global Law Experts Awards. The shortlisted candidates were judged on client testimonials, key cases, legal rankings, overall reputation, publication contributions, speaking engagements and the performance and standing of teams and individual lawyers.
During the recommendations stage GLE received over 120,000 responses from business directors, in-house legal counsel, independent law firms, high net-worth individuals, bar associations. These recommendations were combined with GLE’s own independent research in order to create a shortlist for each award category.
The Senate and the House of Representatives passed the Defend Trade Secrets Act, a new federal law that governs intellectual property disputes. President Obama previously indicated that he will sign DTSA into law. Previously, trade secret disputes were based only in state law, but the passage of the new federal law creates a uniform trade secret statute over all fifty states. For the first time, civil litigants may bring a claim under the Economic Espionage Act of 1996. The federal courts have the authority under the new law to issue ex parte seizure orders to prevent dissemination of a trade secret. Under the Supremacy clause in the constitution, a federal law that governs the same area as state law would preempt the state law, making it obsolete. While the DTSA expressly states that it shall not preempt any other provision of law; affirming the continuation of state laws like the California Uniform Trade Secrets Act, the DTSA does add additional layers of protection. And by using the DTSA, one can get claims heard in federal court – including not only the trade secret misappropriation claim, but also state law claims that can be lodged with it.
A major implication of the DTSA is that employers may file civil lawsuits in federal court for trade secrets misappropriation against departing employees. Access to federal courts may lead to a streamlined approach to trade secret causes of action as they can rely on the broader discovery tools and nationwide subpoena power granted to federal courts.
On the other hand, the DTSA provides a layer of protection, namely civil and criminal immunity for employees and contractors who (1) disclose trade secrets in confidence to the government or their lawyers solely for the purpose of reporting or investigating a suspected violation of law, (2) disclose the trade secrets to their personal attorneys in connection with a lawsuit alleging retaliation for reporting a suspected violation of law, or (3) disclose or use the trade secret in any complaint or other document filed in a lawsuit, as long as they file the trade secret information under seal.
The Wall Street Journal reported today that trademark applications for hashtags increased exponentially
in 2015. Hashtags are words or phrases that are preceded by the pound symbol (“#”) to classify a topic
of conversation on social media platforms.
Social media platforms like Twitter, Instagram, and Facebook have become essential marketing tools.
Businesses routinely use hashtags as a promotional device on social media to advertise its goods and
services. For example, Nike uses hashtags for its slogans or new products, for example, #justdoit and
The primary purpose of using a trademark is for a business to indicate a source of origin for its goods
and services to the public. Companies that use non-generic and non-descriptive hashtags on social
media would benefit from federal trademark registration in order to limit competitors from using similar
or the same words or phrases as hashtags which could confuse potential consumers.
Businesses have historically filed trademarks for slogans and taglines before the invention of social
media. The trend of filing a trademark for a hashtag is a continuation of the same concept. However, in
most scenarios, a trademarked word slogan would not need a separate registration with a hashtag for
protection. Since “likelihood of confusion” is the test for trademark infringement, Nike’s “Just Do It” is
fully protected from a competitor using “#justdoit” in social media.
Trademark applications that should include the hashtag would be in cases where the hashtag is always
attached to the word or phrase seeking protection, outside social media.