This week in IP: Xiaomi-ETSI suit doomed, Senate IP chair changes, Peloton in a spin

In-house: Xiaomi stalling for time with ETSI suit

Counsel from automotive and telecoms companies told Managing IP this week that they believed Xiaomi was stalling for time with its bid at the Paris Court of First Instance to force standards-setting organisation ETSI to throw out Philips’ 3G and 4G patents.

They said that the case was a long-shot, at best, and that it was in all likelihood doomed.

“The case is very interesting, but there is no hope here for Xiaomi to get Philips excluded from ETSI,” says the head of IP and standards for an international telecoms company. “It’s a very long-winded process and Xiaomi is just playing games here from what I can tell.”

The Chinese handset manufacturer filed a suit at the Paris court earlier this month, in which it demanded that ETSI help conclude the Chinese company’s licensing row with Philips.

According to an email from ETSI to its members that was leaked to Managing IP, Xiaomi asked the organisation to exclude Philips’ patents from being essential to the LTE (4G) and UMTS (3G) standards if no licensing agreement could be made.

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Other Managing IP stories published this week include:

‘Don’t give up’: EU breaks with tradition on slogans

In-house reveal how they recover attorney fees in patent cases

Opinion: Are some European patent attorneys resistant to change?

Why Chicago is the top forum for counterfeit fights

In-house fear EPO guidelines could increase patenting cost

MIP EMEA Awards 2021: shortlists revealed

Tiffany case could shake up summary judgment and enforcement

‘File 10, hope for one’: counsel on pharma trademarks

Senate shake-up: Leahy, not Coons, to lead IP subcommittee

In a shake-up of the intellectual property ranks in the US Senate this week, Senators Dick Durbin and Chuck Grassley announced on Sunday, February 14, that Patrick Leahy would chair the legislative body’s IP subcommittee, rather than former subcommittee ranking member Chris Coons.

The shift in leadership reportedly came about because of a rule proposed by Democratic senator Christopher Murphy to distribute subcommittee chairmanships more equally.

The change likely comes as a surprise to many IP attorneys who might have expected Coons to become the subcommittee’s chair after the Democratic Party won its Senate majority in January.

Coons had served as ranking member of the committee since its reformation in 2019, a year in which he introduced the STRONGER Patents Act and was one of the primary drivers, if not the main force, behind Section 101 reform efforts.

Coons will instead chair the Senate subcommittee on privacy, technology and the law. Coons is also chair of the senate appropriations subcommittee on state and foreign operations, on which Leahy previously served as ranking member.

Tillis, who is now ranking member of the IP subcommittee, told Managing IP in a 2020 interview that he was reviving efforts to reform Section 101.

While it is not certain how Leahy will view Section 101 reform, his history suggests that he is more open to policies that might favour tech companies.

The Leahy–Smith America Invents Act, which led to the creation of the Patent Trial and Appeal Board, was sponsored by and named after the new subcommittee chair.

Peloton in a spin over rival’s trademark

Exercise bike manufacturer Peloton filed a petition at the Trademark Trial and Appeal Board on Tuesday, February 16, to cancel a trademark owned by a fitness rival for the term ‘spinning’.

In the petition, Peloton argued that the terms ‘spinning’ and ‘spin’ had become generic and were widely used in the exercise industry.

The US-based owner of the trademark, Mad Dogg Athletics, was “abusively enforcing” its rights to the term, according to Peloton.

The company, Peloton alleged, spent years “engaged in a bullying campaign of demand letters and litigation to force people and companies to stop using the very terms they have every right to use”.

Peloton, represented by international firm Latham & Watkins, added: “With five minutes of simple Google searching, it is easy to see that everyone in the world, other than Mad Dogg, believes that ‘spin’ and ‘spinning’ are generic terms to describe a type of exercise bike and associated in-studio class.”

In a separate matter, Peloton is facing a patent infringement lawsuit filed by Mad Dogg. In December, Mad Dogg claimed Peloton had infringed two patents related to connected exercise bikes.

Constellation Brands sued over Corona hard seltzer

Grupo Modelo, the Mexican branch of AB InBev, sued alcoholic beverage company Constellation Brands in the District Court for the Southern District of New York on Monday, February 15, for the unauthorised use of the name Corona.

Modelo argued that Constellation Brands had violated a licence agreement when it used the name for its hard seltzer brand. The group claimed that while the defendant was licensed to use the Corona brand for beer, that licence did not cover hard seltzer.

Constellation acquired Modelo’s US beer portfolio in 2013, which included the rights to sell the Corona brand under a sub-licence agreement. Constellation Brands launched its Corona Hard Seltzer product in February 2020.

This case isn’t the only recent example of brewing trouble at the Corona brand.

Federico Bueno Icaza, global IP director at AB InBev, told Managing IP in an August interview that because of the pandemic, the company had taken action against 100 trademarks containing the term ‘Corona’ since February 2020.

USAA and Wells Fargo to settle seminal $300m fintech fight

Financial services companies USAA and Wells Fargo are finalising a settlement in a series of seminal bank-on-bank patent disputes in the US over mobile deposit technologies, it was revealed last Friday, February 12.

The settlement comes after jurors at the District Court for the Eastern District of Texas found Wells Fargo liable for patent infringement in two cases in November 2019 and January 2020, awarding USAA (United States Automobile Association) a total of $302.8 million.

Documents filed at the Texas court reveal that both US-based banks have agreed to settle both cases, although the terms of the agreement have not been disposed. The parties have asked the court to stay the case for two months to allow them to complete the settlement.

Peter Gilchrist, a Wells Fargo spokesman, said the bank was “pleased to put this legal matter behind us”.

The suits, which were the first of their kind between two banks in the US, had caught the attention of IP counsel at other financial services companies who were concerned that patent disputes might become more common in their industry as a result.

Speaking on USAA’s first win in November 2019, the senior IP counsel at a consumer financial services company in the US said: “The verdict demonstrates that financial institutions are not immune from patent claims by competitors.

“Although somewhat rare in the financial services industry, patent claims by competitors must be taken seriously and institutions should consider appropriate measures to mitigate the risk of infringement.”

The technology at issue in these suits was used by 6,500 other institutions and was developed by software firm Mitek. Mitek had launched its own legal battle against USAA, seeking a declaratory judgment that its automatic-check image capture product does not infringe certain patents owned by the bank.

USAA sued Mitek in 2012 on the basis that the software business misappropriated USAA’s proprietary and confidential information while working under contract for USAA, and then took numerous steps to claim it as its own.

That matter was settled in 2014, but USAA sent letters to 100 banks in 2017 telling them they were in violation of its mobile deposit patents. It sued Wells Fargo on that basis in 2018.

New bill proposes closing India’s IP Appellate Board

The Indian legislature introduced a bill last Friday, February 12, to close the country’s Intellectual Property Appellate Board and move proceedings back to the commercial and high courts.

The IPAB was created in 2003 in an effort to move highly technical cases out of the commercial court system and place them in specialised courts with expert judges where parties could get speedy and high-quality rulings.

But the experiment had the opposite effect, leading to more expensive litigation with longer delays, because the Indian government had difficulty recruiting judges with the right amount of expertise.

The new bill reads: “Analysis of data of the last three years has shown that tribunals in several sectors have not necessarily led to faster justice delivery and they are also at a considerable expense to the exchequer.

“The chairman and members of such tribunals shall cease to hold office and they shall be entitled to claim compensation not exceeding three months' pay and allowances for the premature termination of term of their office or of any contract of service.”

Former IPAB chairperson, Justice Prabha Sridevan, publicly advocated for the IPAB’s closure and to have its cases moved back to the high courts. She wrote on the SpicyIP blog that the news of the IPAB’s potential closure “filled her with joy”.

Included in the draft bill was a proposition to close other tribunals, including the Airport Appellate Tribunal, the Plant Varieties Appellate Tribunal and the Authority for Advance Rulings.

Between 2016 and 2020, the IPAB did not have technical members to hear patent cases. Since its creation, the board has had a total of 1,130 days without a chairperson. Due to a lack of key members, the IPAB has accumulated a backlog of 4,000 cases.

European Commission puts emphasis on IP in updated trade laws

On Friday, February 12, the European Commission released its international trade rules and included amendments that placed a greater emphasis on IP rights.

The revised EU Trade Enforcement Regulation pertains to the union’s right to enforce international trade agreements.

Under the new regulation, the scope of Articles 1, 5, 6 and 9 were expanded to include counter-measure protection for IP rights. Before this change, the regulation only included protection for the trade of goods.

The new regulation reads: “Services and intellectual property rights account for a large and growing share of world trade and are covered by international trade agreements, including regional or bilateral union agreements.

“Measures in the fields of trade in services and trade-related aspects of intellectual property rights should therefore be included in the scope of the trade policy measures available to the union.”

The EU will also be able to protect its trade interests at the World Trade Organization (WTO) under the new rules when a trade dispute is blocked by a non-EU member state despite the bloc’s effort to act in good faith to adhere to dispute settlement procedures.

Executive vice president and commissioner for trade, Valdis Dombrovskis, said: “The European Union must be able to defend itself against unfair trading practices. These new rules will help protect us from those trying to take advantage of our openness.”

The new rules are seen as a response to a backlog of matters at the WTO Appellate Body, which is currently not able to hear appeals due to a staff shortage.

The old regulations required that trade disputes follow all WTO procedures, including holding hearings before the non-functioning Appellate Body. The EU will now be allowed to avoid these obligations by simply appealing a panel report.

The trade regulation went into force on February 13 and will be reviewed in one year’s time.

EPO Boards of Appeal considers legal basis of COVID-19 extensions

The EPO’s Boards of Appeal has considered the legal basis for extensions to deadlines granted by the office at the height of the COVID-19 pandemic, it emerged this week.

In March 2020, the EPO announced an extension of all deadlines. The extension lasted until June 2.

The basis for these extensions was discussed in a case concerning a European patent application directed to processing soybean oil. The applicant involved missed three deadlines dating back to 2018. The final missed deadline fell within the period during which extensions were granted.

The BoA was strict on the deadlines pre-dating the pandemic, but accepted the COVID-19 extension period as a reason for missing the third deadline.

However, after assessing the circumstances, the BoA noted a discrepancy between the wording of the EPO’s announcement on extensions and the relevant portion of the European Patent Convention (EPC).

The EPO’s notice, announced in the Official Journal of the EPO, cited ‘general dislocation’ as mitigating circumstances. But Rule 134(2) of the EPC provides for the extension of deadlines as a result of “a general dislocation in the delivery or transmission of mail” in a contracting state.

The BoA concluded that, regardless of how the extensions were legally justified, a user of the EPO should not be penalised without good reason for relying on notices published by the EPO itself. 

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