IP Implications of the Consolidated Appropriations Act, 2021

McDermott Will & Emery
Contact

McDermott Will & Emery

On December 27, 2020, Congress signed the Consolidated Appropriations Act, 2021, into law. The omnibus act includes new legislation affecting patent, copyright and trademark law. A brief summary of key provisions is provided below.

Patents – Section 325 Biological Product Patent Transparency

42 USC § 262(k) was amended to require that the US Food and Drug Administration (FDA) provide the public with more information about patented biological products. Within six months, the FDA must make the following information available to the public on its Database of Licensed Biological Products or “Purple Book,” and it must update the list every 30 days:

  • A list of each biological product, by nonproprietary name, for which a biologics license is in effect
  • The license date and application number
  • The license and marketing status (as available)
  • Exclusivity periods

The amendment requires that the holders of a license to market a biologic drug now disclose all patents believed to be covering that drug. The new law is designed to prevent errors that could delay biosimilars from coming to the market.

Copyrights – The CASE Act of 2020

The Consolidated Appropriations Act incorporates the Copyright Alternative in Small-Claims Enforcement (CASE) Act of 2020, as well as legislation designed to increase criminal penalties for the unauthorized digital streaming of copyright-protected content. The CASE Act includes revisions to the Copyright Act, 17 USC §§ 101 et seq., with the goal of creating a new venue for copyright owners to enforce their rights instead of having to file an action in federal court.

The Copyright Claims Board

The CASE Act established the Copyright Claims Board (a small claims court), which is designed to serve as an alternative forum where parties may voluntarily seek to resolve certain copyright claims regarding any category of copyrighted work. A party may opt out upon being served with a claim, choosing instead to resolve the dispute in federal court. A party to a proceeding before the Board may, but is not required to, be represented by a lawyer. A party may also be represented by a law student who is qualified under applicable law, and who provides such representation on a pro bono basis. The Board consists of three copyright claims officers who may conduct individualized proceedings to resolve disputes and must issue written decisions setting forth their factual findings and legal conclusions.

Procedural Matters

The Board must follow the law in the federal jurisdiction in which the action could have been brought if filed in federal court. Because jurisdictional conflicts may arise where a dispute may have been brought in multiple jurisdictions, the CASE Act provides that the Board may apply the law of the jurisdiction that the Board determines has the most significant ties to the parties and the conduct at issue.

Although formal motion practice is not permitted, discovery is allowed on a limited basis, including requests for documents, written interrogatories and written requests for admission. The Board may consider evidence, documentary and (non-expert) testimony, without the application of formal rules of evidence.

The CASE Act provides that Board decisions may not be cited or relied upon as legal precedent in any action before any tribunal, including the Board. Board decisions have preclusive effect solely with respect to the parties and the claims asserted and resolved in the proceeding.

Appellate Review

Written requests for reconsideration of a final determination are permitted if a party identifies a clear error of law or fact material to the outcome or a technical mistake. After providing the other parties with an opportunity to address such request, the Board will either deny the request or issue an amended final determination. If the Board denies the request, a party may request a reconsideration of final determination by the Register of Copyrights. The review by the Register is limited to consideration of whether the Board abused its discretion in denying reconsideration of the determination. After providing the other parties with an opportunity to address the request, the Register shall either deny the request for review or remand the proceeding to the Board for reconsideration of issues specified in the remand and for issuance of an amended final determination. A final determination by the Board precludes relitigation before any court or tribunal, or before the Board, of the claims and counterclaims asserted and finally determined by the Board.

Permissible Claims and Counterclaims

The Board may adjudicate:

  • Claims for infringement of an exclusive right in a copyrighted work provided under 106 by the legal or beneficial owner at the time of the infringement for which the claimant seeks damages
  • Claims for declaration of noninfringement
  • Claims under 512(f) for misrepresentation in connection with a notification of claimed infringement or a counter-notification seeking to replace removed or disabled material, except remedies related to these claims are limited to those available under the CASE Act
  • Counterclaims asserted solely against the claimant that arise under 106 or § 512(f) and out of the same transaction or occurrence that is the subject of the claim of infringement, claims of noninfringement or claims of misrepresentation under § 512(f).

The Board does not have jurisdiction to adjudicate:

  • Claims or counterclaims that are not permissible claims or counterclaims (as discussed above)
  • Claims or counterclaims that have been finally adjudicated by a court of competent jurisdiction or that are pending before a court of competent jurisdiction, unless that court has granted a stay to permit those claims or counterclaims to proceed before the Board
  • Claims or counterclaims by or against a federal or state government entity
  • Claims or counterclaims asserted against a person residing outside the United States, except where that person or entity initiated the proceeding.

Remedies

In terms of monetary recovery for copyright infringement, the Board may award either actual damages and profits determined in accordance with § 504(b) or statutory damages determined in accordance with § 504(c). For works that are timely registered under § 412, the statutory damages may not exceed $15,000 for each work infringed. For works that are not timely registered, the statutory damages may not exceed $7,500 per work infringed or a total of $15,000 in any one proceeding. The Board may not make a determination on willfulness but may consider whether the infringer agreed to cease or mitigate the infringing activity. Claims brought under § 512(f) are more limited and may not exceed $30,000, exclusive of any lawyers’ fees and costs.

Unauthorized Digital Streaming

A separate amendment to the Copyright Act was added to address a loophole under current law regarding digital content streaming. The amendment allows the US Department of Justice to bring felony charges against a digital transmission service that (1) is primarily designed or provided for the purpose of streaming copyrighted works without the authority of the copyright owner or the law, (2) has no commercially significant purpose or use other than to stream copyrighted works without the authority of the copyright owner or the law, or (3) is intentionally marketed or directed to promote its use in streaming copyrighted works without the authority of the copyright owner or the law.

Trademarks – The Trademark Modernization Act of 2020

The Consolidated Appropriations Act incorporates the Trademark Modernization (TM) Act of 2020, which includes many notable revisions to the Lanham Act. The changes were designed to modernize the trademark examination procedures, clarify the standard to obtain injunctive relief in trademark infringement litigation, constrain trademark registrations covering trademarks not used in commerce and preclude challenges to the administrative law judges of the Trademark Trial and Appeal Board (TTAB).

Third-Party Submissions of Evidence and Flexible Response Times

The TM Act amends 15 USC § 1051 to allow third parties to formally submit evidence into the record of an application if the evidence is tied to a particular ground for refusal. This amendment codifies the informal procedure currently in place and requires the director of the US Patent and Trademark Office (USPTO) to determine within two months whether the evidence should be included in the record.

The TM Act amends 15 USC § 1062(b) to allow the USPTO greater flexibility in setting response times to office actions. Currently, the Lanham Act requires a trademark applicant to respond to an office action issued during an examination within six months. The new law allows the USPTO to shorten the response periods, by regulation, for a time between 60 days and six months, provided, however, that the applicant can obtain extensions to reply or amend aggregating up to six months.

Ex Parte Expungement of a Trademark Registration

The TM Act adds two new ex parte cancellation procedures to the Lanham Act. Currently, a third party can only request cancellation of a trademark registration through an inter partes procedure before the TTAB or by filing an action in district court. The new procedures allow for an expedited process whereby a third party can request cancellation when the registrant never made proper use of a trademark in commerce.

Specifically, the TM Act amends (1) 15 USC §§ 1066, under § 16A, by creating a procedure for any person to allege that a trademark has never been used in commerce on or in connection with some or all of the goods or services recited in the registration, by submitting a petition with evidence of a “reasonable investigation.” The petition can be filed three years after registration. Upon finding a prima facie case, the director will initiate expungement proceedings. The TM Act, under Section 16B, also creates a procedure to challenge registrations on the basis that the trademark was not used in commerce prior to the relevant registration date. As with § 16A, any person can bring an allegation provided the petition is submitted with evidence of a reasonable investigation, and upon finding a prima facie case, the director will initiate proceedings. The petition must be filed within five years of the issuance of trademark registration based on use in commerce.

The TM Act also amends 15 USC §§ 1070, 1071, allowing a registrant to an ex parte expungement reexamination to appeal the decision to the TTAB and then to the US Court of Appeals for the Federal Circuit.

Injunctive Relief – the Presumption of Irreparable Harm

The TM Act amends 15 USC § 1116(a), providing trademark owners seeking an injunction in infringement cases with a rebuttable presumption of irreparable harm upon establishing infringement at the proof stage or showing a likelihood of success on the merits at the preliminary injunction or temporary restraining order stage. The new law abrogates eBay Inc. v MercExchange LLC and resolves the circuit split where some courts maintained and others dispensed with the presumption of harm following eBay.

Decluttering Initiative

The TM Act requires the director of the USPTO to conduct a study to address inaccurate and false claims of use in trademark applications and registrations, including declarations of use by applicants and registrants that cannot be supported by use in commerce as defined under §§ 1 and 45 of the Lanham Act. The director has three years to report the results of the study to Congress.

The Director’s Authority

The TM Act amends 15 USC §§ 1068, 1070 and 1092, giving the director of the USPTO more power over the administrative judges of the TTAB. The new law clarifies that the director has the authority to reconsider, and modify or set aside, a decision of the TTAB. The new provision addresses the potential application of the Federal Circuit’s decision in Arthrex v. Smith & Nephew in the TTAB. In that case, the Federal Circuit held that Patent Trial and Appeal Board judges were not subject to sufficient oversight and supervision by the director to be considered inferior officers under the Constitution’s Appointments Clause, and therefore were unlawfully appointed since they had not been nominated by the president and confirmed by the Senate. The TM Act amendments confirm that TTAB judges are inferior officers and fall outside the scope of the Arthrex holding.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McDermott Will & Emery | Attorney Advertising

Written by:

McDermott Will & Emery
Contact
more
less

McDermott Will & Emery on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.