Trademark
3M & Congress pursues COVID-19 Price Gouging
As mentioned in last week’s IP news roundup, the 3M Company (3M) has been making efforts to stop companies that have been selling or have attempted to sell its N95 respirator masks at massively inflated priced under federal trademark law.
Specifically, 3M has stated that companies that use its brand in its marketing materials to sell the N95 masks are infringing on the 3M brand by misleading customers to believe that the companies are associated with or otherwise authorized by 3M to sell the respirators at higher prices. Additionally, 3M has stated in many of its complaints that “[t]he mere association of 3M's valuable brand with such shameless price-gouging harms the brand, not to mention its more serious threat to public health agencies that are under strain in the midst of a worldwide pandemic.”
3M has so far has filed lawsuits in four different jurisdictions against actors that have used its brand for selling the N95 masks at inflated prices. As per 3M’s recent press release, it has filed lawsuits in the following jurisdictions:
New York: In a New York federal court, 3M has filed a lawsuit against the alleged price gouger Performance Supply LLC (a New Jersey Based company) for falsely claiming a business affiliation with 3M and offering to sell $45 million in N95 respirators to New York City government officials at inflated prices of roughly 500-600% over 3M stated prices.
California: In a California federal court, 3M filed a lawsuit against Rx2Live, LLC (a Utah Based company) for an alleged deceptive price gouging scheme against Community Medical Centers, Inc., which is a Fresno, California based healthcare provider. The lawsuit asserts that Rx2Live falsely claimed to be a 3M distributor offering millions of N95 respirators at inflated prices.
Florida: In a Florida federal court, 3M filed a lawsuit against Geftico LLC (an Orlando-based company) that allegedly twice attempted to fraudulently sell tens of millions of likely nonexistent 3M N95 respirators at grossly inflated prices to the federal Division of Strategic National Stockpile, all the while falsely affiliating itself with 3M.
Texas: In a Dallas County court, 3M filed a lawsuit against an unidentified (i.e., John Doe) defendant for falsely claiming to be a “3M Company Trust Account” in Irving, Texas and able to sell millions of 3M-brand N95 respirators at inflated prices to New York City government officials.
In all of the cases above, 3M has sought injunctive relief and damages that it plans on donating to COVID-19-related nonprofit organizations.
To further combat price gougers looking to profit off of the pandemic, a group of senior Democrats from the U.S. House of Representatives outlined an approach to pricing coronavirus-related pharmaceuticals.
One of the principles outlined to combat pricing gouging, was to make coronavirus treatments not eligible for exclusivity, i.e., the period when drug makers get a monopoly on selling the medicines they develop without competition from generic offerings. Although this appears to infringe on any potential patent rights that a pharmaceutical may be able to file for, the government theoretically could use emergency powers to seize patents, i.e., the Bayh-Dole Act.
Another principle outlined was the need for "reasonable" pricing. Representatives have pointed to the fact that the federal government has already invested $31 billion in research for coronavirus treatments and vaccines and that as such, the federal government should step in to ensure that any treatment available is also affordable for the general public.
The third principle that was put forward was the need for transparency. Specifically, the representatives would like to see exactly how companies are spending their money on the development of drugs to accurately gauge a fair market value of any potential future drugs.
These provisions have not been finalized and any movement on these measures does not appear to be likely this year.
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Copyright
Posting on Instagram may Lead to the Loss of Copyright Claims
On Monday, a New York federal court ruled that Stephanie Sinclair, a professional photographer who has had her work published in the New York Times and National Geographic, could not sue Mashable, a digital media platform, and its parent company Ziff Davis, LLC for using a photo from her Instagram account as Mashable had obtain a sublicense from Instagram itself.
In this case, Sinclair posted a photo of a mother and child in Guatemala to her public Instagram account. Mashable, which was writing an article about female photographers on its website, reached out to Sinclair in an effort to obtain a license to use her photo in its article. Mashable offered $50 for the photo, but Sinclair declined. Mashable then turned to Instagram to sublicense the photo directly from the platform, which it obtained. Mashable subsequently embedded the photo (i.e., a process that allows photos that are hosted on a third party’s server to be accessed and viewed on another website without storing the photo on the website) into its article.
Instagram’s Terms of Use specifically state that by creating an account with Instagram, the user grants the platform “a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to the Content.” Depending on the privacy setting used, i.e. if the Instagram account is set to public as opposed to private, photos may be searched and subsequently sublicensed to any user by Instagram. Her Sinclair’s profile use public when Mashable licensed the photo from Instagram.
Given Instagram’s Terms of Use, the judge held that Instagram reserves a “fully paid and royalty-free, transferable, sub-licensable” right to photos on its service. If a photo is posted publicly, it also offers embedding as an option — which, in judge’s estimation, effectively grants a sublicense to display the picture. “The user who initially uploaded the content has already granted Instagram the authority to sublicense the use of ‘public’ content to users who share it,” the judge wrote. That makes copyright questions moot.
Although Sinclair put other arguments forward, such as the Terms of Use are incomprehensible and that it is unfair to force professional photographers to chose between keeping their work private or using the most popular photo sharing apps, the judge ultimately held that Instagram is not obligated to update its Terms of Use and that Sinclair had already made the choice to be bounded by Instagram’s agreement, which the court could not invalidate for her.
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Patent
Should PTAB Invalidity Rulings Continue to Trump Federal Court’s Infringement Awards?
Multiple businesses and intellectual property groups have filed amicus briefs supporting a cert petition asking the U.S. Supreme Court to prohibit federal courts from retroactively wiping out previous infringement awards and decisions rendered in patent cases when the Patent Trial and Appeal Board’s (PTAB) later finds that the patent in question to be invalid.
This cert petition surrounds Chrimar Systems’s patent infringement case against ALE USA Inc., where it had won a $400,000 jury verdict in federal court. Specifically, John Austermann (CEO of Chrimar Systems) had patented a technology to send power over ethernet cable in the late 1990s. At that time, sending power over ethernet cables meant that data could not be sent via the same cable, which limited broadband connections. John figured out how to send the power over the same line that was carrying data so there was no need to sacrifice bandwidth and was awarded several patents, including U.S. patent No. 8,942,107 (‘107) for A Piece of Ethernet Terminal Equipment.
Although Chrimar was able to prove that ALE USA Inc infringed upon its patent in a jury trial, the case had been in appeal for multiple different issues. While this case was pending appeal, a different company questioned the ‘107 patent, which the PTAB later ruled to be invalid. Subsequently, the Federal Circuit discarded the district court’s prior decisions and jury award as the patent was ruled to be invalid. This decision was based on a 2013 ruling by the Federal Circuit known as Fresenius v. Baxter, which held that as long as some part of an infringement case remains pending when the PTAB invalidates a patent, the PTAB’s holding takes precedence and infringement findings cannot stand.
Multiple companies have stated that since this ruling has come out, it has “proven unworkable and unbounded in application, and a driving factor that has made district court patent litigation a desperate and wildly expensive horse race against the PTAB, in which infringers try to hamstring the Article III litigation process.” Essentially, when a company has lost in the district courts, it could invalidate those decisions by making a play with the PTAB in hopes of having the patent ruled as invalid, i.e., a trump card.
This case is currently pending cert petition review.
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Other
Law firms and How They’re Coping with COVID-19
Although most attorneys could arguably provide legal services remotely, especially given that courts are switching to teleconferences as oppose to in person hearings, such as the federal courts and the U.S. Supreme Court have announced recently, they still have not been safe from the impact of COVID-19.
Many law firms have begun cutting employee salaries anywhere from 10 to 50% for the next several months to help firms acclimate to the pandemic and downturn in the economy. Firms are also encouraging attorneys to take sabbaticals in an effort to avoid layoffs and/or furloughs. Examples of some firms enacting pay cuts are as follows:
Pryor Cashman LLP;
Cadwalader Wickersham & Taft LLP
Womble Bond Dickinson; and
Reed Smith LLP
Firms that have gone ahead and begun furloughing employees include:
Goldberg Segalla LLP
Womble Bond Dickinson
Additionally, law firms have begun to cancel this year’s summer associate positions for law students after initially deferring its start dates. This is a major blow for second year law students as it will not only undoubtedly leave the students unemployed in an economy that is facing major downturn, but many law students are dependent on receiving full time offers based on their summer program. Thus, the long term affect on how these students will be cope in the job market once they graduate is currently uncertain.
Some firms that have cancelled their summer program for 2020 are:
Cahill Gordon & Reindel: States that would be summer associates would still receive job offers upon graduation.
FordHarrison: has cancelled the summer 2020 program.
Some firms that have delayed the summer 2020 program are:
Cooley LLP;
Vinson & Elkins LLP;
DLA Piper; and
Sidley Austin LLP
Although some states in the United States are planning on easing up on stay at home orders to fight the COVID-19 outbreak, the economic impact for many of these firms is still uncertain.
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Hey Ricky, enjoyed your post.
Look forward for the next roundup.
Cheers