by Dennis Crouch The Supreme Court is set to hear arguments in Dewberry Group v. Dewberry Engineers (No. 23-900) in December 2024, addressing the trademark-specific question of whether courts can disgorge profits earned not by the defendant itself, but also by legally separate non-party corporate affiliates.  In many ways, I see this case largely as a corporate “structure of the firm” case.  Does trademark law permit business owners to formally structure their set of closely related businesses to avoid spillover liability?  Most notably, corporate attorneys are regularly looking at ways to divide companies to limit spillover liability. The golden target is to create low-profit (or non-profit) entities that hold all the potential liability; and then shift profits to other corporate affiliates that do not have any liability.  In the trademark sense, you may have a media holding company that does all the infringing advertising; and then a set of franchisees that don’t do any advertising themselves, but do reap the profits. Background: The Dewberry dispute involves two real estate-related companies: Dewberry Group (defendant/petitioner) and Dewberry Engineers (mark-holder/respondent). After finding that Dewberry Group had infringed Dewberry Engineers’ trademarks, the district court ordered Dewberry Group to disgorge nearly $43 million in profits. Continue reading this post on Patently-O.

by Dennis Crouch Miller Mendel, Inc. has petitioned the Supreme Court to review a Federal Circuit decision invalidating its background check software patent in a case that raises questions about both judicial independence and patent eligibility standards. The petition comes after both the district court and Federal Circuit found Miller Mendel’s US Patent No. 10,043,188 ineligible under § 101 as directed to an abstract idea. Petition: PetitionforWrit Prior Post on the Case: Dennis Crouch, Alice Backs Anna: Federal Circuit Finds Miller Mendel’s Background Check Patent Abstract, Patently-O (July 18, 2024) The Patent and Technology at Issue: The ‘188 patent covers a software system for managing pre-employment background investigations. The claimed system automates many aspects of the background check process, including collecting and storing applicant information, managing communications with references via email hyperlinks, and automatically generating suggested lists of law enforcement agencies based on an applicant’s residential address.  Miller Mendel accused the City of Anna police department (northern Texas) of infringement through its use of Guardian Alliance Technologies’ background check platform. The City successfully moved for judgment on the pleadings arguing patent ineligibility under § 101.  Continue reading this post on Patently-O.

by Dennis Crouch Mark your calendars for January 8-11, 2025, as the IP & Ski Conference returns to the slopes of Vail, Colorado. This unique conference combines some of the most engaging intellectual property speakers with world-class skiing — all at the ski-in/ski-out Grand Hyatt Vail. (Although I often stay at the Minturn hostel to save some money).  But, where else can you discuss the latest IP law developments with leaders in the field while riding a chairlift up to 11,500 feet.  [I’ll note that every year a good number of folks spend the day with non-skiing activities.] This year’s program features an extraordinary lineup of speakers, including Judge Kara Stoll from the Federal Circuit, Judge Alan Albright from the Western District of Texas, and top in-house counsel, including from Microsoft, Cisco, and Novartis. I’ll be part of two sessions on Saturday morning, one focusing on AI’s impact on patent practice and a review of 2024’s most significant patent cases.  Prof. Jeanne Fromer of NYU will deliver the trademark review.  (If you have not encountered her, Prof. Fromer is amazing). David Bernstein (Debevoise & Plimpton) and Scott Alter (Michael Best) have structured the conference brilliantly to maximize learning and skiing time. Continue reading this post on Patently-O.

Our guest author today is a very bright high school student, Kavya Gundlapalli, who is considering a career in law. – DC Guest Post by Kavya Gundlapalli* As America heads toward the 2024 presidential election, artificial intelligence (AI) has emerged as a surprising campaign flashpoint. From voter targeting to political advertising, AI is reshaping how candidates connect with voters – and exposing a divide over how this powerful technology should be governed.  A partisan split in this area mirrors broader ideological differences about government regulation, with Republicans championing market freedom and innovation, while Democrats tend to advocate for the same, but with stronger federal oversight and ethical guardrails.  Republican Approach: Prioritizing Innovation and Market Freedom The Republican Party’s general approach to AI reflects wants of limited government intervention in business operations and commercial markets. Although many details have not been provided, former President Donald Trump’s campaign has strongly opposed regulatory constraints, promising to reverse President Biden’s executive order on AI governance. The 2023 executive order seeks to establish federal oversight for the development and use of AI technologies, especially when it comes to guaranteeing civil rights and national security.  Continue reading this post on Patently-O.

by Dennis Crouch The Federal Circuit today issued two related opinions in long-running patent litigation between Cellspin and various technology companies including Fitbit, Nikon, Nike, and others. The decisions highlight important procedural issues in patent litigation while also addressing the timing requirements for judicial recusal motions.  Collectively, they highlight the reality that the outcome of complex civil litigation often turns on procedural issues. Cellspin I (non-infringement) Cellspin II (recusal) The litigation involves three Cellspin patents (U.S. 8,738,794; 8,892,752; and 9,749,847) all related to automatically uploading multimedia content. The patents describe a system where a data capture device (like a camera) connects to a mobile device via Bluetooth, which then automatically publishes the content online. Key claim elements included requirements for: A “user identifier” attached to data A continuously maintained “paired connection” between devices Specific processor configurations for data handling Summary Judgment: Local Rules and Timing Matter In the first decision, the Federal Circuit affirmed summary judgment of non-infringement on multiple grounds, with a key ruling centering on Cellspin’s belated attempt to rely on “OAuth” to satisfy the “user identifier” claim element.  Continue reading this post on Patently-O.

by Dennis Crouch DISH Network is seeking en banc review of a Federal Circuit panel decision that vacated a $3.9 million attorney fee award to the victorious defendant in Realtime Adaptive Streaming L.L.C. v. Sling TV, L.L.C., 113 F.4th 1348 (Fed. Cir. 2024).  The petition challenges the panel’s approach to reviewing district court fee determinations under 35 U.S.C. § 285, arguing that it contradicts Supreme Court precedent of both Octane Fitness and Highmark, which provided district courts with substantial autonomy in determining whether to award attorney fees. The case stems from Realtime’s assertion of patents related to digital data compression against DISH. After protracted litigation including inter partes review proceedings and multiple stays, the District of Colorado ultimately found Realtime’s asserted claims from U.S. Patent No. 8,867,610 patent ineligible under 35 U.S.C. § 101. The district court judge, R. Brooke Jackson, then deemed the case “exceptional” under § 285 and awarded DISH $3.9 million in attorney fees. Petition for En Banc Rehearing Dennis Crouch, Red Flags Waved Off: Federal Circuit Rejects Overzealous Fee Award against Patentee, PATENTLY-O (Aug. Continue reading this post on Patently-O.

Dennis Crouch The Federal Circuit has vacated the E.D.N.C. Judge Boyle’s denial of an anti-suit injunction in a major FRAND licensing dispute between Ericsson and Lenovo. Telefonaktiebolaget LM Ericsson v. Lenovo (United States), Inc., No. 24-1515 (Fed. Cir. Oct. 24, 2024). The decision provides important guidance on when U.S. courts should issue anti-suit injunctions to prevent SEP holders from enforcing foreign injunctions while FRAND obligations are being adjudicated domestically.  Importantly, the Federal Circuit adopted the Ninth Circuit test from Microsoft Corp. v. Motorola, Inc., 696 F.3d 872 (9th Cir. 2012), and added some further refinement making anti-suit injunctions easier to obtain. Background: The Standard Essential Patent Dance The dispute centers on Ericsson’s 5G standard-essential patents (SEPs). Like many SEP holders, Ericsson committed to license these patents on fair, reasonable, and non-discriminatory (FRAND) terms through declarations to ETSI, the European telecommunications standards body. These FRAND commitments are designed to prevent “patent holdup” – where SEP holders leverage their essential patents to extract heightened royalties after the standard is widely adopted. See TCL Commc’n Tech. Holdings v. Telefonaktiebolaget LM Ericsson, 943 F.3d 1360 (Fed. Cir. Continue reading this post on Patently-O.

by Dennis Crouch In Zebra Technologies Corporation v. Intellectual Tech LLC, No. 24-114, IT has filed its brief in opposition to Zebra’s petition for writ of certiorari. The case focuses on patent-owner standing in situations where multiple entities share patent rights — particularly whether a patent owner loses Article III standing when because of a patentee default that provides a third party (here, a security interest holder) the right to license the patent. Petition for a Writ of Certiorari Response to Petition for Writ of Certiorari Dennis Crouch, Zebra’s Stripes: Just So Stories about Patent Standing, Patently-O (Aug. 11, 2024) Dennis Crouch, Post-Default Creditor’s Right to Assign, License and Enforce Patent does not Disturb Patentee’s Separate Right to Sue Infringers, Patently-O (May 1, 2024) This portion of the case stems from a 2011 loan agreement where OnAsset Intelligence (IT’s parent company) pledged the asserted patent (US7233247) as collateral to Main Street Capital. After OnAsset defaulted in 2013, the security agreement gave Main Street significant rights, including the ability to “sell, assign, transfer, pledge, encumber or otherwise dispose of the Patents.” OnAsset later assigned the patent to its subsidiary IT, who then sued Zebra for infringement. Continue reading this post on Patently-O.

by Dennis Crouch In a pending petition for certiorari, the Maltese company Celanese Int’l is poised to ask the Supreme Court to resolve an important question about the scope of the AIA’s on-sale bar: whether sales of products made using a secret process can bar later patent protection for that process. The issue arises from a Federal Circuit decision upholding the ITC’s invalidation of Celanese’s patents covering methods for manufacturing the artificial sweetener Ace-K. Celanese Int’l Corp. v. Int’l Trade Comm’n, 67 F.4th 1361 (Fed. Cir. 2024).  The court recently granted Celanese with an extension of time to file its formal petition for writ of certiorari, due December 10, 2024.  As is typical, the petitioner used its request for extension as a first opportunity to highlight the importance of the case and preview its primary arguments. Application for Extension of Time. I have been following this case for some time: Dennis Crouch, Policy Considerations: The On-Sale Bar for Secret Processes, Patently-O (Aug. 15, 2024). Dennis Crouch, No Sugar-Coating: Post-AIA Patent on Secret Process Barred by Pre-Filing Sale of Product, Patently-O (Aug. Continue reading this post on Patently-O.

by Dennis Crouch The ongoing dispute between Inari Agriculture and Pioneer Hi-Bred over utility plant patents has taken its next step, with Inari seeking Director Review of the PTAB’s denial of institution in PGR2024-00020 — arguing that a patentee’s reliance on its own trade secret information when developing its invention (here a maize variety) is directly relevant to the question of obviousness. The case raises interesting and fundamental questions about the intersection of trade secrets and patent law in the context of plant breeding. Inari Agriculture, Inc. v. Pioneer Hi-Bred International, Inc., PGR2024-00020, Paper 19 (P.T.A.B. Oct. 24, 2024). PTAB Institution Denial Decision. EX3100 – Director Review Email Paper No. 19 – 2024.10.24 Petitioner’s Request for Director Review PGR2024-00020 To continue reading, become a Patently-O member. Already a member? Simply log in to access the full post. Continue reading this post on Patently-O.

On January 30, 2024, the Delaware Chancery Court voided Elon Musk’s $55.8 billion compensation package as CEO of Tesla, ruling it unfair to shareholders. In response, Musk criticized Delaware and announced plans to transfer SpaceX’s incorporation to Texas, with Tesla potentially following. This decision has sparked debate among business owners about incorporating in Delaware. Despite the controversy, Delaware remains a popular state for incorporation due to its established legal framework, specialized courts, and favorable regulations. The post explores the implications of Musk’s actions and the ongoing relevance of Delaware for business incorporations.

Earnouts can bridge valuation gaps in M&A deals, but careful drafting is crucial. Sellers should negotiate clear calculation methodologies, specific covenants for the buyer’s post-closing operation of the business, and robust dispute resolution procedures. Proper structuring of earnout provisions can help manage seller expectations and reduce the likelihood of future disputes.

On January 1, 2024, previously enacted federal legislation called the Corporate Transparency Act (the “CTA”) went into effect. The CTA aims to assist law enforcement in tackling money laundering, tax fraud, terrorism financing, and various other illicit activities facilitated by anonymous shell companies. Here we briefly discuss the basics of the CTA and how certain

The purchase agreement is key in M&A transactions, detailing conditions for closure, business terms, asset delineation, due diligence, post-closing recovery, and transition covenants. Styled based on the transaction (asset, stock, merger), it’s drafted post-due diligence, varying in length. It includes parties involved, assets, liabilities, purchase price details, closing process, representations, warranties, tax matters, other covenants, indemnification, and miscellaneous provisions. Structure is driven by buyer and seller preferences, affecting asset or stock purchase decisions and tax implications.

Selling your business is not just about finding a buyer and agreeing on a price. Once the basic terms of the deal are agreed upon in a letter of intent, the buyer will want to sift through your business and legal records with a fine-tooth comb. This meticulous review of your business from contracts to customer lists is called due diligence. Due diligence allows the buyer to uncover risks when buying a business.

Due diligence is the buyer’s process of discovering and evaluating information about a seller’s business to confirm that acquiring the seller’s equity or assets is a sound investment. However, the process of conducting due diligence differs between transactions for a variety of reasons. Factors such as the deal structure (equity purchase versus asset purchase), cost, the unique qualities of the seller, and time constraints affect how the buyer’s deal team approaches due diligence.

This article discusses the memorialization of purchase offers in a letter of intent (LOI) in M&A transactions. An LOI outlines key terms of the deal but is non-binding. It includes provisions like exclusivity, confidentiality, expenses, and non-solicitation that may be binding. Careful drafting is essential to avoid potential risks. Properly considered, an LOI is a valuable tool for M&A deals, guiding parties through negotiations with caution.

This blog post discusses the importance, elements, and exceptions of non-disclosure agreements (NDAs) when selling a business. Key points include the priority for sellers to sign an NDA before disclosing sensitive information, the necessity for clear definitions of what the NDA covers, guidelines for sharing information, the term length of NDAs, and remedies in case of a breach. Despite its protection, enforcing NDAs can be challenging, advising selective information sharing.

For high-growth startups, these tax benefits are often well worth the time and brainpower spent planning and structuring for the requirements imposed by Section 1202 of the Internal Revenue Code. However, to fully take advantage of these benefits, understanding and navigating the 5-year holding period requirement under Section 1202 is essential. In this article, we’ll explore one common scenario that illustrates a key consideration with respect to the holding period from the founder’s and advisor’s perspective.

Founders and startups need to consider Qualified Small Business Stock (QSBS), which offers extensive tax advantages, for their corporate structure. QSBS awards tax benefits to shareholders of companies that meet specific eligibility requirements, including the company being a C-corporation and having assets below $50 million. These benefits mainly include partial or complete exclusions of capital gains from federal income tax. Early planning and knowledgeable advice are crucial for optimization.