capital gains on patents

Capital Gains – Intellectual Properties  

Capital Gains May Be Available For The Transfer Of Intellectual Property Rights

A capital gains tax rate for the transfer of Intellectual Property is available if the transfer of Intellectual Property rights is carefully planned.

Patent Rights are not Accorded Capital Gains Status – Unless…

26 I.R.C. 1221 – Capital Asset, in part, reads:

(a)    In General

For purposes of this subtitle, the term “capital asset” means property held by the taxpayer (whether or not connected with his trade or business), but does not include –

(3) a patent, invention, model or design (whether or not patented), a secret formula or process, a copyright, a literary, a musical/artistic composition, a letter or memorandum, or similar property, held by—

                    (A)    a taxpayer whose personal efforts created such property,

                    (B)    in the case of a letter, memorandum, or similar property, a taxpayer for whom such property was prepared or produced, or

                    (C)    a taxpayer in whose hands the basis of such property is determined, for purposes of determining gain from a sale or exchange, in whole or part by reference to the basis of such property in the hands of a taxpayer described in subparagraph (A) or (B)

Situation 1 – Patent Capital Asset

Joe was the founder of his company JoeCo. Over the years, Joe was the inventor of several Patents for the products sold by JoeCo. After 40 years in business, Joe was seeking buyers for JoeCo. AcquireCo purchased JoeCo and all assets and liabilities.

Joe can treat this transfer of Patent rights as a capital asset because the U.S. Internal Revenue code also includes 26 I.R.C. 1235. When specific facts exist, the inventor’s Patents are capital assets taxed as capital gains.

26 I.R.C. 1235 – Sale or Exchange of Patent, in part, reads:

(a)    General    A transfer (other than by gift, inheritance, or devise) of property consisting of all substantial rights to a patent, or an undivided interest therein which includes a part of all such rights, by any holder shall be considered the sale or exchange of a capital asset held for more than 1 year, regardless of whether or not payments in consideration of such transfer are—

                     (1)     payable periodically over a period generally coterminous with the transferee’s use of the patent, or

                     (2)    contingent on the productivity, use, or disposition of the property transferred.

(b)    “Holder” defined For purposes of this section, the term “holder” means—

                    (1)     any individual whose efforts created such property, or

                    (2)    any other individual who has acquired his interest in such property in exchange for consideration in money or money’s worth paid to such creator prior to actual reduction to practice of the invention covered by the patent, if such individual is neither—

                    (A)    the employer of such creator, nor

                    (B)    related to such creator (within the meaning of subsection (c)).

Situation 2 – Intellectual Property Gains

Jill was a seamstress with talent for making and selling clothing designs that generated a comfortable living for her family. Jill was a sole proprietor and over the years received two Trademark Registrations for Jill’sThings®. After 40 years, Jill sold her business to AcquiringJack, LLC with a knack for scaling small businesses. 26 I.R.C. 1221 does not prevent Jill’sThings® from being classified as capital assets. Therefore, the sale of Jill’sThings® would be treated as capital gains.

Situation 3 – Patent Capital Asset

AcquiringJack, LLC purchased all rights associated with two JoeCo Patents previously sold to a third party. AcquiringJack LLC held the JoeCo Patents for 18 months and sold the JoeCo Patents to LastMinuteCharlie, Inc. AcquiringJack, LLC’s sale of the JoeCo Patents will be treated as capital gains.

Situation 4 – No Capital Gains

Second Fiddle was an individual who was a skilled guitarist and sufficiently talented to write original music. Over the years, Second Fiddle had received Copyright Registrations for some of his musical compositions. While on a regional tour with his band, the Fiddlers, a vice president of Big Break Inc. made Second Fiddle an offer he could not turn down for his Copyright Registrations.  Second Fiddle sold his Copyright Registrations to Big Break Inc. According to 26 I.R.C. 1221, a Copyright or musical score held by the creator is not a capital asset. Second Fiddle’s sale was taxed as ordinary income.

Situation 5 – Intellectual Property Capital Gains

Philharmonic Violin was an individual who played third violin with the orchestra. Although not as musically skilled as some other violinists in the orchestra, Philharmonic Violin wrote a few concertos and was granted some Copyrights for her efforts. Philharmonic Violin assigned her Copyrights to her company, Concertos LLC. On her lucky day, Philharmonic Violin arrived early for practice and was playing some of the supporting violin portions of her concertos. Big Director, the CEO of his production company, heard the portions of Philharmonic Violin’s concertos and told Philharmonic Violin that they were perfect for the score of one of his films. On that day, Big Director wrote a check payable to Concertos LLC. Because Concertos LLC rather than Philharmonic Violin received the payment, the payment will be taxed as a capital asset.

Business Patent Law, PLLC does not provide tax counsel. The above situations are only illustrative. Changes in the facts of a taxable situation can generate different applications of Title 26 Internal Revenue Code. Advance planning for taxable situations can reduce the amount of taxes paid. For tax advice, please contact your tax advisor.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Do a Claims Check on Your Patent

Claims Checks Are Important  

Claims Checks

Doing claims checks of  your Patents are essential because they define the scope and boundaries of the Patent.

Claims are Legal Boundaries

As previously indicated in this Blog on Patent Infringement: “A deed for real property determines the real property’s boundary and what constitutes a trespass. In a similar vein, Patent claims define the intellectual property boundary of the Patent and what establishes an infringement.”

The Situation

Approximately five years ago, our company filed three Patent Applications for three separate products that our company continues to market and sell to our national and international customers.

Our attorneys and the USPTO examiners had several rounds of arguments regarding the patentability of claims of our three Patent Applications. Over this timespan, some of the as-filed claims of the three Patent Applications were amended, canceled and/or re-amended by our attorneys. Before the end of the patenting process, our attorneys also added some new claims not previously set forth in the as-filed claims. Even the examiners made some examiners’ amendments to the claims.

After all the arguments, the USPTO issued Notice of Allowances. We paid the Issue Fees and we eventually received the three granted Patents.

The claims of two of the Patent we received were perfect. However, the claims checks revealed that about half of the claims of the third Patent were incorrect.

What should we do?

Actions: When a Claims Check Reveals Errors

  • Although not recommended, a few Patent owners do not attempt to correct the incorrect claims.
  • Review the USPTO file wrapper and your files to determine where and when the claims errors occurred. If the errors were caused by the USPTO, the USPTO requires no additional fees to correct the incorrect claims. If the errors were caused by the Applicant(s), the USPTO requires the payment of a government fee to correct the errors.
  • Sometimes, other parts of a Patent contain errors that need correction.
  • Submit a Certificate of Correction (PDF) to the USPTO.

Claims can be considered the heart and soul of the Patent, so it’s essential that yours be correct.

Need More Information?

If you have a question about Claims checks, please get in touch with Business Patent Law, PLLC.

Have another topic or question you would like Business Patent Law, PLLC to address in the blog? Please send us an email!

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

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Legal licenses and licensing agreements

Licenses: What You Need to Know

Licenses Defined

We can define licenses as, “an owner giving permission to a legal entity or a real person to make, produce, or use an owner’s tangible and/or intangible property.” Almost anything can be the subject of a License. It is best to have a written document for any License agreement.

Types of Licenses

There are exclusive and nonexclusive Licenses.

When the owner grants an exclusive License, it means that the owner will not grant another License to a third party.

Whether an exclusive or a nonexclusive License is granted can impact the bargaining power of the Licensor or the bargaining power of the Licensee. For example, a multinational franchisor may not grant exclusive Licenses while a start-up may be happy to grant an exclusive License.

What to Include in a License Agreement

  • As long as it is legal, a License may contain any type of clause or section related to the owner’s tangible and/or intangible property as well as the duties of each party
  • Definitions regarding the meanings of specific words used in the License
  • Grant of permission to make, produce, or use an owner’s tangible and/or intangible property
  • Specific description(s) of the licensed tangible and/or intangible property
  • Description of each geographic territory covered by the License and the term of the License
  • Obligations to commercialize the licensed tangible and/or intangible property and milestones payments
  • License fees and running royalties
  • Licensee’s progress reports, records and audits
  • Banks and currency used for payments and timing of payments
  • Ownership of jointly created tangible and/or intangible property related to the licensed tangible and/or intangible property
  • Confidentiality and trade secrets
  • Licensee’s guarantees to comply with governmental regulations in all jurisdictions where Licensee is using or selling the licensed tangible and/or intangible property
  • Dispute resolution
  • Termination and wrap-ups
  • Continuing obligations after termination

The above are just some sections and clauses that can be included in Licenses.

License Agreements can be complicated contracts. If your company needs assistance to prepare its Licenses or your company needs help to determine if it is advantageous to execute a License, please contact Business Patent Law, PLLC.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

foreign patent protection

How Much Does a Foreign Patent Cost?

Contemplating Patent Protection in Foreign Jurisdictions

During management’s last meeting, it was clear that our international sales have tripled over the last few years. Some of us expressed concern about potential “knock-offs” in other countries. Some of our suppliers are in Asia and the Pacific. We talked to other friendly companies about the costs of foreign Patents. The information provided by our friendly contacts about costs varied. Their common denominator was conjunctive – but the foreign Patent costs!

Should Our Company File Foreign Patent Applications?

It depends. As a general rule, Business Patent Law advises clients:  If a foreign Patent will not make money for the Company or prevent the Company from losing money, there is no business reason for filing one.

Patent rights create a limited monopoly in the foreign jurisdiction granting the Patent.

General Observations on the Costs of Foreign Patents.

  • Applications that can be filed in the English language tend to cost the least
  • Applications that must be transliterated from English into a non-Roman alphabet language tend to be the cost the most
  • Applications that can be translated into a foreign language using the Roman alphabet tend to cost somewhere between an English language Application and a transliterated language foreign Patent Application
  • Usually, the Parent Patent Application is a United States Patent Application prepared by Business Patent Law. When Business Patent Law’s foreign associates opt to utilize most of Business Patent Law’s United States Parent Patent Application, costs to our clients tend to be less than when foreign associates do not use BPL’s Parent Patent Application

Rankings of Costs of Procuring and Maintaining Foreign Patents in Select Foreign Jurisdictions*

  1. European Patent Office                                            14-17 x USPTO costs
  2. Japan Patent Office                                                   2.5-3 x USPTO costs
  3. Korean Intellectual Property Office                       2-3 x USPTO costs
  4. China National Intellectual Property Admin.      2-2.5 x USPTO costs
  5. Mexican Patent Office                                              1.5-2 x USPTO costs
  6. Brazilian National Institute of Industrial Prop.  1-2 x USPTO costs
  7. Australian Patent Office                                           1.0-2 x USPTO costs
  8. Russian Patent Office                                                1.0-1.5 x USPTO costs
  9. Philippines Patent Office                                          1.0-1.5 x USPTO costs
  10. Canadian Intellectual Property Office                   1.0-1.5 x USPTO costs
  11. Indian Patent Office                                                   1.o-1.5 x USPTO costs

* Estimates are based on Business Patent Law’s experience, and due to other countries’ Patent Office and foreign associates activities, fees can be outside of the above estimated ranges. Ranges are based on everything proceeding smoothly in the other Patent Offices.

If we can assist your Company with developing a foreign strategy, please contact Business Patent Law, PLLC.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Office Action Made Final Patent Law

Office Action Made Final

What is an “Office Action Made Final” from the Patent Office?

Our Company received an Office Action Made Final from the Examiner, what does it mean and what do we do now?

In the Office Action Made Final, some of the Patent claims were allowed and some the Patent claims were rejected.

How Can We Respond to an Office Action Made Final?

In responding to the Office Action Made Final, some of the options for your business are:

  • Cancel the rejected claims and have your Patent Issue on the allowed claims
  • Cancel the rejected claims; have your Patent issue on the allowed claims; and file a Continuation-Type Application directed to the previously rejected claims before the Patent is granted
  • If circumstances permit, cancel the rejected claims; have your Patent issue on the allowed claims; and file a Divisional Application
  • File a Request for Continued Examination
  • Initiate an Appeal directed toward the rejected claims
  • Allow the Application to go abandoned

Another Option: The Pilot Program

37 Code of Federal Regulations (C.F.R.) §1.116 provides for the filing of a Request for Consideration under the After Final Consideration Pilot Program.

If the required conditions of 37 C.F.R. §1.116 are met, it provides a potentially less expensive route for responding to an Office Action Made Final than the above options.  Some of the conditions for using the Pilot Program are:

  • There must be an Office Action Made Final
  • Applicant must amend at least one independent claim that narrows the scope of the claim
  • A USPTO Certification and Request for Consideration under the After Final Consideration Pilot Program 2.0 Form must be filed with Applicant’s Response
  • Applicant’s Response must be filed using EFS-Web
  • There is no USPTO fee to request consideration under AFCP 2.0, but any other USPTO fee that is due must be paid at the time of the request consideration under AFCP 2.0
  • Applicant must to participate in any interview requested by the Examiner

The Law – 37 Code of Federal Regulations 

37 C.F.R. 1.116 reads:

Amendments and affidavits or other evidence after final action and prior to appeal.

 

(a) An amendment after final action must comply with §1.114 or this section.

 

(b) After a final rejection or other final action (§ 1.113) in an application or in an ex parte reexamination filed under § 1.510, or an action closing prosecution (§ 1.949) in an inter partes reexamination filed under § 1.913, but before or on the same date of filing an appeal (§ 41.31 or § 41.31 of this title):

 

(1) An amendment may be made canceling claims or complying with any requirement of form expressly set forth in a previous Office action;

 

(2) An amendment presenting rejected claims in better form for consideration on appeal may be admitted; or

 

(3) An amendment touching the merits of the application or patent under reexamination may be admitted upon a showing of good and sufficient reasons why the amendment is necessary and was not earlier presented.

 

(c) The admission of, or refusal to admit, any amendment after a final rejection, a final action, an action closing prosecution, or any related proceedings will not operate to relieve the application or reexamination proceeding from its condition as subject to appeal or to save the application from abandonment under § 1.135, or the reexamination prosecution from termination under § 1.550(d) or § 1.957(b) or limitation of further prosecution under § 1.957(c).

(d)

 

(1) Notwithstanding the provisions of paragraph (b) of this section, no amendment other than canceling claims, where such cancellation does not affect the scope of any other pending claim in the proceeding, can be made in an inter partes reexamination proceeding after the right of appeal notice under § 1.953 except as provided in § 1.981 or as permitted by § 41.77(b)(1) of this title.

 

(2) Notwithstanding the provisions of paragraph (b) of this section, an amendment made after a final rejection or other final action (§ 1.113) in an ex parte reexamination filed under § 1.510, or an action closing prosecution (§ 1.949) in an inter partes reexamination filed under § 1.913 may not cancel claims where such cancellation affects the scope of any other pending claim in the reexamination proceeding except as provided in § 1.981 or as permitted by § 41.77(b)(1) of this title.

 

(e) An affidavit or other evidence submitted after a final rejection or other final action (§ 1.113) in an application or in an ex parte reexamination filed under § 1.510, or an action closing prosecution (§ 1.949) in an inter partes reexamination filed under § 1.913 but before or on the same date of filing an appeal (§ 41.31 or § 41.61 of this title), may be admitted upon a showing of good and sufficient reasons why the affidavit or other evidence is necessary and was not earlier presented.

 

(f) Notwithstanding the provisions of paragraph (e) of this section, no affidavit or other evidence can be made in an inter partes reexamination proceeding after the right of appeal notice under § 1.953 except as provided in § 1.981 or as permitted by § 41.77(b)(1) of this title.

 

(g) After decision on appeal, amendments, affidavits and other evidence can only be made as provided in §§ 1.198 and 1.981, or to carry into effect a recommendation under § 41.50 (c) of this title.

If the law excerpt above seems confusing, we can help. We can assist your Company to understand what the notice you received says and what your options are under the law. Together we can develop a Response to the Office Action Made Final, for your best outcome.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Patent Law

Notice of Allowance – Patents

The Question

Our Company received a Notice of Allowance on our Nonprovisional Patent Application. What are our next steps?

Consider: If the invention claimed by the Nonprovisional Patent Application is a “core” technology or a money maker for your company, it is wise to keep an Application pending.

More information you need: 35 United States Code 151 gives the Applicant a maximum of three months from the date of mailing of the Notice of Allowance for the Applicant to pay the Issue Fee. (Note: If the Issue Fee is not paid, the Patent Application will be abandoned.)

Tech Sufficiently Different

If the newer technology is sufficiently different from the structures of the pending Nonprovisional Patent Application, a Provisional Patent Application can be filed. (Inventions can consist of biological, chemical, electrical or mechanical structures or combinations thereof.)

Tech Sufficiently Similar

If your newer technology is sufficiently similar (or incorporates many of the structures of the pending Nonprovisional Patent Application) and certain conditions are met, a Continuation-Type Application (claiming priority to your pending Nonprovisional Patent Application) can be filed with the United States Patent and Trademark Office.

The Law

35 U.S.C. 151, in part, reads:

(a)     In General.—

If it appears that an applicant is entitled to a patent under the law, a written notice of allowance of the application shall be given or mailed to the applicant. The notice shall specify a sum, constituting the issue fee and any required publication fee, which shall be paid within 3 months thereafter.

There are Two Continuation-Type Applications (in USA)

  • A Continuation Application – this claims priority to the pending Nonprovisional Application, utilizes the Specification of the Nonprovisional Patent Application, and includes new claims.
  • A Continuation-in-Part Application – claims priority to the pending Nonprovisional Application, adds “new matter” (structures) to the Specification of the Nonprovisional Patent Application, and includes new claims.

Child Patents Used to Broaden a Parent Patent

Seasoned Applicants frequently file a Child Patent Application claiming priority to the Parent Application. If you opt to use this procedure, make sure you file the Child Patent Application before the Patent flowing from the Parent Application is granted. If the Patent is granted before the Child Patent Application is filed, Patent Examiners may be able to use the Parent Patent to prevent the Child Patent Application from succeeding.

The Law

35 U.S.C. 102, in part, reads:

“(a)Novelty; Prior Art.—A person shall be entitled to a patent unless—

(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention…”

Terminal Disclaimers and Your Patent Application

Use of Continuation-Type Patent Applications may require that any future Patent granted be limited by a Terminal Disclaimer. As a general rule, a Terminal Disclaimer causes the term of the Children Patents to expire on the same day as the Parent Patent.

The Law

35 U.S.C. 120 reads:

“An application for patent for an invention disclosed in the manner provided by section 112(a) (other than the requirement to disclose the best mode) in an application previously filed in the United States, or as provided by section 363 or 385, which names an inventor or joint inventor in the previously filed application shall have the same effect, as to such invention, as though filed on the date of the prior application, if filed before the patenting or abandonment of or termination of proceedings on the first application or on an application similarly entitled to the benefit of the filing date of the first application and if it contains or is amended to contain a specific reference to the earlier filed application. No application shall be entitled to the benefit of an earlier filed application under this section unless an amendment containing the specific reference to the earlier filed application is submitted at such time during the pendency of the application as required by the Director. The Director may consider the failure to submit such an amendment within that time period as a waiver of any benefit under this section. The Director may establish procedures, including the requirement for payment of the fee specified in section 41(a)(7), to accept an unintentionally delayed submission of an amendment under this section.”

Don’t Delay Your Response to a Notice of Allowance!

You should not delay initiating your company’s strategy, since a Notice of Allowance requires your action, as an applicant.

  • Issue Fee must be paid within three month of the Notice of Allowance – There are no time extensions
  • Grant of Patent can be delayed as much as 4 months from date of Notice of Allowance
  • It can be quite time-consuming for your Attorney to prepare the Continuation-Type Application or the Provisional Patent Application, so don’t delay
  • Assembling the required inventor’s declarations and assignments can also be time-consuming (even more so when when inventors in different time zones and multiple jurisdictions are involved
  • Preparing the required USPTO documents that accompany the Continuation-Type Application can be tedious
  • A Continuation-Type strategy can often be used for several years before it is no longer cost-effective for the Company

Questions? We Can Help!

If your company is developing a post Notice of Allowance strategy, we can help. Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies. If you need assistance, please contact us.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Likelihood of Confusion trademarks service marks

Likelihood of Confusion – Trademarks

“Likelihood of confusion” is a legal test. It is applied by the courts and administrative agencies to contested Trademark/Service Mark proceedings and by United States Patent and Trademark Office (USPTO) Examiners during the registration process for Trademark/Service Mark Applications.

Likelihood of Confusion – What Law Applies?

Before a federal Trademark is granted, an Applicant must prove to the USPTO that the Trademark was used on goods and/or services in commerce that the U.S. Congress may lawfully regulate. The geographical limit for a federal Trademark registration is the geographical boundary of the United States and its territories.

Federal Jurisdiction

Federal jurisdiction of Trademarks/Service Marks (hereinafter Trademarks) can be controlled by the precedent of the US Supreme Court or one of the thirteen federal circuit courts sitting beneath the US Supreme Court.

Each of the thirteen federal circuits has its own case law precedent for adjudicating “likelihood of confusion” for contested Trademarks.  Although the case law precedent of the federal circuits is similar, it is not identical.

State Jurisdiction

When a Trademark is granted at the State level, the law of that State controls court and agency proceedings. The laws of the several States are variable on the standards for “likelihood of confusion.” The geographical limit for a State Trademark is the border of the State.

Likelihood of Confusion – USPTO Trademark Applications

For the USPTO, the “likelihood of confusion” precedent for Trademark Examiners is set forth in the case of In re E. I. du Pont de Nemours & Co., 177 U.S.P.Q. 563 (C.C.P.A. 1973). Today, the Court of Appeals for the Federal Circuit has jurisdiction over appeals from USPTO agencies and adopted the du Pont case as precedent.

On page 567 of the du Pont case, the court stated:

“In testing for the likelihood of confusion under 15 U.S.C. § 1052 Sec. 2 (d), the following, when of record, must be considered:

  1. The similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation and commercial impression.
  2. The similarity of dissimilarity and nature of the goods or services as described in an application or registration or in connection with which a prior mark is in use.
  3. The similarity or dissimilarity of established, likely-to-continue trade channels.
  4. The conditions under which and buyers to whom sales are made, i.e., “impulse” vs. care, sophisticated purchasing.
  5. The fame of the prior mark (sales, advertising, length of use.)
  6. The number and nature of similar marks in use on similar goods.
  7. The nature and extent of any actual confusion. The length of time during and conditions under which there has been concurrent use without evidence of actual confusion.
  8. The variety of goods on which a mark is or is not used (house mark, “family” mark, product mark).
  9. The market interface between applicant and the owner of a prior mark… (e.g., have the interested parties executed a contract to proclaim there is no confusion?).
  10. The extent to which the applicant has a right to exclude others from use of its mark on its goods.
  11. The extent of potential confusion, i.e., whether de minimis or substantial.
  12. Any other established fact probative of the effect of use.”

If the Examiner or the USPTO determines there is a “likelihood of confusion” between Applicant’s Trademark and a prior Registration or pending Application, the USPTO will refuse to register the junior Applicant’s Trademark.

Observations

With regard to the “likelihood of confusion” test, each of the federal circuit courts have adopted precedent similar to the test set forth in the case of In re E. I. du Pont de Nemours & Co., 177 U.S.P.Q. 563 (C.C.P.A. 1973). When possible, parties to an infringement will attempt to try the case in a venue most favorable a party’s evidence and arguments.

Have Questions on Your Trademark?

Business Patent Law, PLLC assists companies and individuals with the procurement and management of their Intellectual Property portfolios.

If your enterprise needs legal assistance procuring/managing/enforcing your Patent Applications, Patents, Copyrights or Trademarks/Service Marks, please contact Business Patent Law, PLLC.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses of all sizes.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

suspended trademark next steps

Trademark Suspension Notice: How to Handle

The Trademark Suspension Situation

Our Company has been using our Trademark for Years. Our General Counsel filed an In-Use Federal Trademark Application. We just received a Suspension Notice from the Trademark Examiner.

  • During the Application phase, regardless of your Company’s alleged prior use, the Examiner can suspend your Company’s Trademark Application
  • With regard to Trademark Applications filed in the USPTO, until the subsequent Applicant proves otherwise, the first Applicant to file has superior procedural rights, and potentially, superior substantive rights
  • When a Trademark Application is suspended, the Examiner takes no further action on the suspended Application until proof of certain evidentiary conditions cause the Examiner to resume examination of the suspended Application
  • In some situations, multiple Applicants’ Applications can be suspended for a period of years

Receiving a Trademark Suspension Notice

A United States Patent and Trademark Office (USPTO) Suspension Notice of a pending Trademark Application looks something like the following:

SUSPENSION NOTICE

No Response Required

Issue date:  December 15, 2020

The application is suspended for the reason(s) specified below.  See 37 C.F.R. §2.67; TMEP §§716 et seq.

USPTO database searched; prior-filed potentially conflicting pending application(s) found.  The trademark examining attorney searched the USPTO database of registered and pending marks and found no conflicting registered marks that would bar registration under Trademark Act Section 2(d).  15 U.S.C. §1052(d); TMEP §704.02.  However, a mark(s) in a prior-filed pending application(s) may bar registration of applicant’s mark.

The pending application(s) below has an earlier filing date or effective filing date than applicant’s application.  If the mark in the application(s) below registers, the USPTO may refuse registration of applicant’s mark under Section 2(d) because of a likelihood of confusion with the registered mark(s).  15 U.S.C. §1052(d); see 37 C.F.R. §2.83; TMEP §1208.02(c).  Action on this application is suspended until the prior-filed application(s) below either registers or abandons.  37 C.F.R. §2.83(c).  Information relevant to the application(s) below is provided in this letter.

– U.S. Application Serial No(s). ????????

Suspension process.  The USPTO will periodically check this application to determine if it should remain suspended.  See TMEP §716.04.  As needed, the trademark examining attorney will issue a letter to applicant to inquire about the status of the reason for the suspension.  TMEP §716.05.

What can our Company do to Advance our Application?

  • Accumulate evidence about the Applications involved with the suspension
  • Seek competent intellectual property counsel
  • Determine best options for success in advancing the Company’s Application toward a Federal Registration
  • In the United States, before the USPTO grants a Registration, the Applicant must provide evidence of either interstate or international use of the Mark
  • Trademark Suspension Notices can create a convoluted path to federal Registration

Need More Help?

Business Patent Law, PLLC represents and has represented clients owning suspended Trademark Applications before the USPTO. If you need legal assistance in preparing and prosecuting and Patent and Trademark Applications, please contact Business Patent Law, PLLC.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses, companies and individuals.

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Questions about Provisional Patent Application

Provisional Patent Application

The following is a case study example to help companies with questions about Provisional Patent Applications.

The Situation

Five Months Ago our Company’s Engineer filed a Provisional Patent Application – What can we do?

First, the facts: A Provisional Patent Application does not generate a Patent.  Patents are always granted from Nonprovisional Applications.

Your company has several options  – provided the Provisional Application is directed to:

  1. The patentable subject matter required by 35 United States Code (U.S.C.) 101 in view of the judicial exceptions thereto; and
  2. Is enabled and the best mode is disclosed as required by 35 U.S.C. 112.

Options for the Company’s Pending Provisional Patent Application

If the Provisional Application meets the requirements of 35 U.S.C. 112:

  • Allow the Provisional Application to expire at one year from the filing date of the Application
  • File a US Nonprovisional Application claiming the benefit of the Provisional Application
  • File an International Application claiming the benefit of the Provisional Application

If your Provisional Application does not meet the requirements of 35 U.S.C. 112:

Provisional Patent Application: Next Steps

Actions that can be implemented subsequent to the filing of Provisional Patent Applications

  • Contact a seasoned patent attorney in a timely fashion. (Do not wait until three weeks before the Provisional Applications will expire to contact a  patent attorney.)
    • If an international-type of Patent Application claiming the benefit of the Provisional Application is to be filed, engage the patent attorney at approximately six months subsequent to the filing date of the Provisional Application
    • If only a US Nonprovisional Application is to be filed claiming the benefit of the Provisional Application is to be filed, engage the patent attorney at approximately nine months subsequent to the filing date of the Provisional Application
  • If formal Drawings were not filed with the Provisional Applications, drawings in accordance with USPTO requirements should be prepared
  • If time permits, conduct a Patentably Search and utilize a patent attorney to prepare a Patentability Report

Save Yourself Some Money

Although not required to file Nonprovisional Applications in the USPTO, it appears that clients utilizing the combination of a Patentability Search and Patentability Report incur less total expenses in procurement of a Patent than clients who opt to not utilize a Patentability Search and Report prior to filing the Nonprovisional Application.

Need Additional Help?

If you need legal assistance in preparing Patent Applications, please contact Business Patent Law, PLLC.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Color as Trademark

Can Color Be A Trademark?

Can You Trademark Based on Color?

Are you wondering if a particular use of color can be the subject of a Federal Trademark Registration?

  • The short answer: Yes, color can be a Trademark — when certain evidentiary facts are present.
  • The longer answer follows…

What is a Trademark?

A “Trademark,” according to 15 U.S.C. § 1027,  is “any word, name, symbol, or device, or any combination thereof — (1) used by a person, or (2) which a person has a bona fide intention to use in commerce and applies to register on the principal register established by this chapter, to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.”

Exclusions to obtaining a federal Trademark registration are covered in https://www.law.cornell.edu/uscode/text/15/1052.

The Doctrine of Trademark Functionality

In Kellogg Co. v. National Biscuit Co., 305 U.S. 111 (1938), the Supreme Court held that the “pillow” shape of a shredded wheat biscuit was functional and not the subject of a Trademark Registration.

In the US Supreme Court case of Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982) the Supreme Court held that the colors of the brand name pharmaceutical capsules were functional and not the subject of a Trademark Registration.

In short, if the aspect is functional, it cannot be the subject of a federal Trademark Registration. However, in a footnote to Inwood Laboratories, Inc. case, on page 850, the Court wrote:

“Although sometimes color plays an important role (unrelated to source identification) in making a product more desirable, sometimes it does not. And, this latter fact—the fact that sometimes color is not essential to a product’s use or purpose and does not affect cost or quality—indicates that the doctrine of “functionality” does not create an absolute bar to the use of color alone as a mark.”

The Case of Colored Dry Cleaning Pads

Can green-gold color pads for dry cleaning presses be the subject of a federal trademark registration? Yep!

The US Trademark Office granted US Registration No. 1,633,711 for a “particular shade of green-gold applied to the top and side surfaces of the goods [pads]” to the Qualitex Company.  Another company, Jacobson, later began to sell its own green-gold pads. Among other causes of action, Qualitex sued Jacobson for Trademark infringement. Eventually, the case made its way to the US Supreme Court.

On page 166 of Qualitex Co. v. Jacobson Products Co., Inc., 514 U.S. 159, Mr. Justice Breyer wrote:

“It would seem, then, that color alone, at least sometimes, can meet the basic legal requirements for use as a trademark. It can act as a symbol that distinguishes a firm’s goods and identifies their source, without serving any other significant function…the District Court, in this case, entered findings (accepted by the Ninth Circuit) that show Qualitex’s green-gold press pad color has met these requirements. The green-gold color acts as a symbol. Having developed secondary meaning (for customers identified the green-gold color as Qualitex’s), it identifies the press pads’ source. And, the green-gold color serves no other function. (Although it is important to use some color on press pads to avoid noticeable stains, the court found “no competitive need in the press pad industry for the green-gold color, since other colors are equally usable.”)…Accordingly, unless there is some special reason that convincingly militates against the use of color alone as a trademark, trademark law would protect Qualitex’s use of the green-gold color on its press pads.”

Conclusion on Color

To answer the initial question, according to the Supreme Court of the United States:

  • A green-gold color for a dry cleaner’s press pad is the subject of a federal Trademark Registration.
  • The blue and white or the blue and red colors of pharmaceutical capsules are not the subject of a federal Trademark Registration.

Trademark issues are complex, if you need legal assistance preparing or managing your Trademark/Service Mark or Patent Applications, please contact Business Patent Law, PLLC.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.