Federal Trade Commission Non-compete Ban

What is the FTC Non-Compete Ban?

Partial Summary of the FTC Ban

The Federal Trade Commission adopted a comprehensive ban on new non-competes with all workers, including senior executives. The final rule provides that it is an unfair method of competition—and therefore a violation of Section 5—for employers to enter into Non-competes with workers.

Unless a court intervenes, the new rule becomes effective 120 days subsequent to April 23, 2024.

Here are some of the legal parameters of the FTC non-compete ban:

Non-Compete Defined (16 CFR Part 910.1)

(1) A term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from:

(i) seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment that includes the term or condition; or

(ii) operating a business in the United States after the conclusion of the employment that includes the term or condition.

(2) For the purposes of this part 910, term or condition of employment includes, but is not limited to, a contractual term or workplace policy, whether written or oral.

Definitions of Persons Affected by the Ban – Abbreviated

Officer: A president, vice president, secretary, treasurer or principal financial officer, comptroller or principal accounting officer, and any natural person routinely performing corresponding functions with respect to any business entity whether incorporated or unincorporated.

Person: Any natural person, partnership, corporation, association, or other legal entity within the Commission’s jurisdiction, including any person acting under color or authority of State law.

Preceding Year: A person’s choice among the following time periods: the most recent 52-week year, the most recent calendar year, the most recent fiscal year, or the most recent anniversary of hire year.

Senior Executive: A worker who:

(1) Was in a policy-making position; and

(2) Received from a person for the employment:

(i) Total annual compensation of at least $151,164 in the preceding year; or

(ii) Total compensation of at least $151,164 when annualized if the worker was employed during only part of the preceding year; or

(iii) Total compensation of at least $151,164 when annualized in the preceding year prior to the worker’s departure if the worker departed from employment prior to the preceding year and the worker is subject to a non-compete clause.

Worker: A natural person who works or who previously worked, whether paid or unpaid, without regard to the worker’s title or the worker’s status under any other State or Federal laws, including, but not limited to, whether the worker is an employee, independent contractor, extern, intern, volunteer, apprentice, or a sole proprietor who provides a service to a person. The term worker includes a natural person who works for a franchisee or franchisor, but does not include a franchisee in the context of a franchisee-franchisor relationship.

Unfair Methods of Competition (16 CFR Part 910.2) – Abbreviated

(a) Unfair methods of competition—(1) Workers other than senior executives. With respect to a worker other than a senior executive, it is an unfair method of competition for a person:

(i) To enter into or attempt to enter into a non-compete clause;

(ii) To enforce or attempt to enforce a non-compete clause; or

(iii) To represent that the worker is subject to a non-compete clause.

Exceptions to the FTC Non-Compete Ban (16 CFR Part 910.3)

(a) Bona fide sales of business. The requirements of this part 910 shall not apply to a non-compete clause that is entered into by a person pursuant to a bona fide sale of a business entity, of the person’s ownership interest in a business entity, or of all or substantially all of a business entity’s operating assets.

(b) Existing causes of action. The requirements of this part 910 do not apply where a cause of action related to a non-compete clause accrued prior to the effective date.

(c) Good faith. It is not an unfair method of competition to enforce or attempt to enforce a non-compete clause or to make representations about a non-compete clause where a person has a good-faith basis to believe that this part 910 is inapplicable.

Ask Us Anything… about Intellectual Property!

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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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Trademark case in Supreme Court

Whiskey vs. Dog Toys – A Supreme Court Case about Trademark Infringement

Jack Daniel’s Whiskey Trademark vs A Dog Toys Trademark

Jack Daniels objects to Bad Spaniels Trademark. The Supreme Court Case – Jack Daniel’s Props. v. VIP Prods. LLC, 143 S. Ct. 1578, 216 L. Ed. 2d 161, 599 U.S. 140 (U.S.).

The Facts

On page 1582 of the Jack Daniel’s Props. Supreme Court case, Justice Kagan wrote, “This case is about dog toys and whiskey, two items seldom appearing in the same sentence. Respondent VIP Products makes a squeaky, chewable dog toy designed to look like a bottle of Jack Daniel’s whiskey. Though not entirely. On the toy, for example, the words “Jack Daniel’s” become “Bad Spaniels.” And the descriptive phrase “Old No. 7 Brand Tennessee Sour Mash Whiskey” turns into “The Old No. 2 On Your Tennessee Carpet.” The jokes did not impress petitioner Jack Daniel’s Properties. It owns trademarks in the distinctive Jack Daniel’s bottle and in many of the words and graphics on the label. And it believed Bad Spaniels had both infringed and diluted those trademarks. Bad Spaniels had infringed the marks, the argument ran, by leading consumers to think that Jack Daniel’s had created, or was otherwise responsible for, the dog toy. And Bad Spaniels had diluted the marks, the argument went on, by associating the famed whiskey with, well, dog excrement.”

The Court of Appeals, in the decision we review [953 F.3d 1170 (2020)], saw things differently. Though the federal trademark statute makes infringement turn on the likelihood of consumer confusion, the Court of Appeals never got to that issue. On the court’s view, the First Amendment compels a stringent threshold test when an infringement suit challenges a so-called expressive work—here (so said the court), the Bad Spaniels toy. And that test knocked out Jack Daniel’s claim, whatever the likelihood of confusion. Likewise, Jack’s dilution claim failed—though on that issue the problem was statutory. The trademark law provides that the “noncommercial” use of a mark cannot count as dilution. 15 U.S.C. §1125(c)(3)(C). The Bad Spaniels marks, the court held, fell within that exemption because the toy communicated a message—a kind of parody—about Jack Daniel’s.

Supreme Court Legal Principles from the Jack Daniel’s Props. Decision

  • A trademark is not a trademark unless it identifies a product’s source and distinguishes that source from others. In other words, a mark tells the public who is responsible for a product.
  • A source-identifying mark enables customers to select “the goods and services that they wish to purchase, as well as those they want to avoid.
  • The mark “quickly and easily assures a potential customer that this item—the item with this mark—is made by the same producer as other similarly marked items that he or she liked or disliked in the past. Because that is so, the producer of a quality product may derive significant value from its marks.
  • The Lanham Act creates a federal cause of action for the plaintiff when the defendant’s actions are “likely to cause confusion, or to cause mistake, or to deceive.”
  • The Lanham Act also creates a cause of action for the defendant’s dilution of famous marks, where the plaintiff does not need to prove “likelihood of confusion.”

 The Supreme Court’s Conclusions

  • A parody must “conjure up” “enough of [an] original to make the object of its critical wit recognizable.” The parody must also create contrasts, so that its message of ridicule or pointed humor comes clear. And once that is done, a parody is not often likely to create confusion.
  • The fair-use exclusion has its own exclusion: It does not apply when the use is “as a designation of source for the person’s own goods or services.” In that event, no parody, criticism, or commentary will rescue the alleged dilutor. It will be subject to liability regardless.
  • On infringement, we hold only that Rogers v. Grimalidi, 875 F. 2d 994, 999 (2nd Second 1989) does not apply when the challenged use of a mark is as a mark.
  • On dilution, we hold only that the noncommercial exclusion does not shield parody or other commentary when its use of a mark is similarly source-identifying.

Ask Us Anything… about Intellectual Property!

If you or your business are located in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a 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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Beneficial Ownership Information Reporting

What is the Beneficial Ownership Information Report?

Beneficial Ownership Information Report

The Beneficial Ownership Information Report, which went into effect on January 1, 2024, is authorized by the 2021 National Defense Authorization (Pub.L. No. 116-283, 134 Stat. 338). It contains anti-money laundering provisions and also includes the Corporate Transparency Act.

It is the United States Department of the Treasury that enforces the Corporate Transparency Act (CTA).

Unless a company has an exemption from the CTA, the company must file a Beneficial Ownership Information Report (BOIR) with the Department of the Treasury.

What Entities Must File The Beneficial Ownership Information Report

As a general rule, reporting companies are corporations, limited liability companies or professional limited liability companies that have filed one or more documents with a State’s Secretary of State or a similar office of an Indian Tribe.

A reporting company can be a domestic or a foreign jurisdiction company and must file a BOIR.

What Entities Are Exempt From Filing The BOIR

There are some business entities who are exempt from filing the Beneficial Ownership Information Report. They include:

1 Securities reporting issuer

2 Governmental authority

3 Bank

4 Credit union

5 Depository institution holding company

6 Money services business

7 Broker or dealer in securities

8 Securities exchange or clearing agency

9 Other Exchange Act registered entity

10 Investment company or investment adviser

11 Venture capital fund adviser

12 Insurance company

13 State-licensed insurance producer

14 Commodity Exchange Act registered entity

15 Accounting firm

16 Public utility

17 Financial market utility

18 Pooled investment vehicle

19 Tax-exempt entity

20 Entity assisting a tax-exempt entity

21 Large operating company

22 Subsidiary of certain exempt entities

23 Inactive entity

When Must File The BOIR Be Filed

For a company created before January 1, 2024, the BOIR must be filed by December 31, 2024. For a company created after January 1, 2024, the BOIR must be filed with 90 days of the company’s creation.

If your company needs assistance with its BOIR, please contact Business Patent Law.

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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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Trade Secrets - What are they and how do you protect them

What Are Trade Secrets?

Trade Secrets

Trade Secrets are a type of intellectual property that can be of great value to the owner over a period of years. For something to be a Trade Secret, it must be kept secret. Public disclosure of a Trade Secret destroys the value of the Trade Secret.

Depending on the circumstances associated with the Trade Secret, federal (18 U.S.C 1831-1839), State or common law may determine the rights of the owner of the Trade Secret. 18 U.S.C 1831-1839, for instance, has both criminal and civil provisions.

Forty-eight of the 50 States have adopted the Uniform Trade Secrets Act (UTSA) which became the law of those States.

Definitions of Trade Secrets

U.S.C. 1939 (3) reads:

“…(3) the term “trade secret” means all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—

          (A)    the owner thereof has taken reasonable measures to keep such information secret; and

          (B)    the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information;…”

The UTSA defines “trade secret” as:

“”Trade secret” means information, including but not limited to, a formula, pattern, compilation, program, device, method, technique, or process, that:

  1. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
  2. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

What is misappropriation?

 18 U.S.C. 1939 (5 & 6) read:

 (5)   the term “misappropriation” means—

          (A)    acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

          (B)    disclosure or use of a trade secret of another without express or implied consent by a person who—

                    (i)     used improper means to acquire knowledge of the trade secret;

                    (ii)    at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was—

                              (I)     derived from or through a person who had used improper means to acquire the trade secret;

                              (II)   acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or

                              (III)  derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret; or

                    (iii)   before a material change of the position of the person, knew or had reason to know that—

                              (I)     the trade secret was a trade secret; and

                              (II)   knowledge of the trade secret had been acquired by accident or mistake;

What are Improper Means?

 (6)    the term “improper means”—

          (A)    includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means; and

          (B)    does not include reverse engineering, independent derivation, or any other lawful means of acquisition;…”

The UTSA Defines “Improper Means” and “Misappropriation”

(1)     “Improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means;

(2)     “Misappropriation” means:

(a)     Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

(b)     Disclosure or use of a trade secret of another without express or implied consent by a person who:

    1. Used improper means to acquire knowledge of the trade secret; or
    2. At the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was:
    3. Derived from or through a person who had utilized improper means to acquire it;
    4. Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
    5. Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
    6. Before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

If your company needs assistance protecting its Trade Secrets, please contact Business Patent Law, PLLC.

Ask Us Anything… about Intellectual Property!

If you or your business are located in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a 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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International Intent to Use Application

Intent to Use Application – Multiclass

What is an Intent to Use Application?

When the goods or services are yet to be used in commerce, clients may opt to file Intent to Use Applications.  The Intent to Use Trademark/Service Mark Application establishes a “constructive” date of first use with the grant of the Registration. Having this date formally established and recorded can benefit the Applicant/Owner of the Mark in situations where there are conflicts between competing Applications for Registration.

Filing a Multi-International Class Intent to Use Application

There are forty-five (45) International Classifications of goods and services. The USPTO requires a filing fee for each International class in which the Applicant intends to use the goods or services. International Classes 1-34 apply to goods and International Classes 35-45 apply to services. Applicants can file a Trademark/Service Mark Application for the same – MARK – in one or more International Classes.

The Scenario: A Case Study

Our company filed a multiclass Application for our – MARK – in International Classes 1 (chemicals), 6 (pharmaceuticals), 10 (medical apparatus), 29 (staple foods) and 44 (medical services).

In due course, the Examiner issued a Notice of Allowance for International Classes 1 (chemicals), 6 (pharmaceuticals), 10 (medical apparatus), 29 (staple foods) and 44 (medical services).

Within six months after the Notice of Allowance, the Applicant must file a Statement of Use for the – MARK – for each International Class before the Registration for that International Class will be granted.

Past The Six-Month Deadline?

For an International Class, if the Applicant has not used the – MARK – in interstate/international commerce before the expiration of the sixth month period, the Applicant can file a Request for an Extension of Time in Which to File a Statement of Use. The Request for an Extension of Time in Which to File a Statement of Use grants the Applicant an additional six-month period to file a Statement of Use for an International Class.

How Many Extensions?

Under Title 15 of the United States Code, an Applicant may file a maximum of five Requests for an Extension of Time in Which to File a Statement of Use.  If a Statement of Use is not filed for an International Class within the maximum statutory time limit, the Application for Registration will go abandoned for that International Class and the Applicant must file a new Application for Registration of the – MARK –.

NOTE: Some International Classes of goods/services require government agency approval before those goods and services can be used in interstate/international commerce.

For the company’s – MARK –, we were able to establish interstate/international use:

  • For International Class 29 (staple foods), the company filed a Statement of Use during the first Request for an Extension of Time to file a Statement of Use and received a Registration.
  • For International Class 44 (medical services), the company filed a Statement of use during the second Request for an Extension of Time and received a Registration.
  • For International Class 1 (chemicals), the company filed a Statement of use during the third Request for an Extension of Time and received a Registration.
  • Due to lack of FDA approval, the company could not establish intrastate/international use of the – MARK – for International Classes 6 (pharmaceuticals) and 10 (medical apparatus) and the Application went abandoned for International Classes 6 and 10.

BPL’s Observations

Although a multiclass Application can be divided after filing, it is usually more cost-efficient for a company to file an Application for each International Class 1 (chemicals), 6 (pharmaceuticals), 10 (medical apparatus), 29 (staple foods) and 44 (medical services), i.e., file five Applications for Registration rather than a single multi-class Application.

The time of filing an Intent to Use Application is critical for most businesses.

Trademark/Service Mark situations can become complicated. If your company needs cost-efficient assistance with filing for Trademarks/Service Marks, please contact BPL.

If you or your business are located in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a 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, we are here to assist you.

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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.

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.

The Law and Contracts in Lexington Kentucky

Questions About Contracts

Contracts Can Seem Contradictory

It’s pretty easy to understand why contracts are often confusing. After all, contracts can include clauses that allow opposing sides to make contrary assertions about the meaning of one or more of the clauses in the contract.

When a contract comes under fire, and the amount in controversy increases, so do opposing counsels’ arguments about such things as the meanings of “a,” “the” and the placement of colons, commas, semicolons and other punctuation.

Politicians and lawmakers (most of whom are lawyers) have argued over the meaning of the word “is.” In a civil trial, both sides have plausible arguments, and the jury decides who is more believable.

With this real-world reality in mind, most companies strive to provide their sales force with the best “boiler plate” contracts. However, those can pose their own challenges.

Boiler Plate Contracts

Although, our company’s “Boiler Plate” contracts have served us well – we now have a new situation…

The New Situation

Our Company’s Region 1 representative executed a contract with a new Lexington, Kentucky company for 1 MM Gizmos. We ordered 1 MM Gizmos from our supplier F.O.B. origin. The new company is refusing to pay an upfront deposit as required by our “boiler plate” contract. In addition, this new company indicated it considered all “boiler plate” contracts “null and void.”

We have an agreement signed by the new company and our Region 1 representative. We gave the Region 1 representative the authority to execute the “boiler plate” contracts for our company. Our attorneys inform us the agreement is “solid.” Our Region 1 representative tells us that he and the other signatory were in the signatory’s office on the premises of the new customer when they both signed the contract.

Is the Contract Enforceable?

For there to be a valid contract, each signatory must have the authority to bind their respective companies to the agreement. Whether the agent of a company has the authority to bind the company is factually dependent.

Corporations

  • As a general rule, the President, CEO or COO has the designated explicit authority to bind the corporation to a contract. If the customer’s signatory was a President, CEO or COO, then the contract is likely valid.
  • Agents such as the CFO and Vice Presidents can be granted actual authority to bind the corporation to a contract. If the customer’s signatory was one of these agents, the contract is likely valid.
  • Agents such as the chief of marketing or chief of engineering may have either actual authority or implicit authority to bind the corporation to a contract. If the customer’s signatory did not have actual authority, but a pattern of behaviors can prove that the customer’s agent had a history of executing contracts for the customer, the contract would likely be held valid at trial.
  • A midlevel marking manager would not likely have explicit or implicit authority to bind the corporation to a contract and the contract with the customer would be invalid.

Limited Liability Companies, Professional Limited Liability Companies, Limited Liability Partnerships

  • As a general rule, the designated Manager or Managing Member has the explicit authority to bind the limited liability company to a contract. If the customer’s signatory was the Manager or Managing Member, then the contract is likely valid.
  • Agents can be granted actual authority to bind the limited liability company to a contract. If the customer’s signatory was one of these designated agents, the contract is likely valid.
  • It is possible to prove an agent’s implicit pattern of behaviors that the customer’s signatory had a history of executing contracts for the customer. With such proof, the contract would likely be held valid at trial.

General Partnerships

  • General partners are jointly and severally liable. Each general partner can bind the partnership to a contract.
  • Agents can be granted actual authority to bind the general partnership to a contract. If the customer’s signatory was one of these designated agents, the contract is likely valid.

Do you have questions about contracts? We can help. Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.

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Lexington Kentucky Trademark Bananas

Lexington Trademarks/Service Marks

Will the United States Patent and Trademark Office (USPTO) grant a federal Trademark/Service Mark Registration for the term “Lexington?” It depends on the goods or services with which the Trademark or Service Mark are associated.

The Statutory Law

15 United States Code (U.S.C.) Section 1052, in part, reads:

No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it—

(e) Consists of a mark which, (1) when used on or in connection with the goods of the applicant is merely descriptive or deceptively misdescriptive of them, (2) when used on or in connection with the goods of the applicant is primarily geographically descriptive of them, except as indications of regional origin may be registrable under section 1054 of this title, (3) when used on or in connection with the goods of the applicant is primarily geographically deceptively misdescriptive of them, (4) is primarily merely a surname, or (5) comprises any matter that, as a whole, is functional.

When certain facts are in evidence, under 15 U.S.C. Section 1052(e), the Trademark Examiner can reject the Applicant’s Application as “primarily geographically descriptive.”

The USPTO Examiner’s Geographically Descriptive Marks – Test

The Examiner is to consider:

  • (1) the primary significance of the mark is a generally known geographic location
  • (2) the goods or services originate in the place identified in the mark; and
  • (3) purchasers would be likely to believe that the goods or services originate in the geographic place identified in the mark. Note: If the mark is remote or obscure, the public is unlikely to make a goods/place or services/place association.

Illustration 1 – Refusal

The Owner of a Lexington, Kentucky restaurant filed an Application for Registration in the USPTO for “The Lexington” for restaurant services

Pursuant to the USPTO test, the Examiner would argue that “The Lexington” for restaurant services is “primarily geographically descriptive” and refuse registration of the Service Mark.

Illustration 2 – Approval

The Owner of a Lexington, Kentucky banana store filed an Application for Registration in the USPTO for “Lexington” for bananas

Pursuant to the USPTO test and the case law, the name of a geographic location that has no significant relation to commercial activities or the production of the relevant goods or services, such as Lexington for bananas, is treated as an arbitrary mark because it is unlikely that consumers would believe that the mark identifies the place from which the goods originate.  The Examiner would likely conclude that the Trademark “Lexington” for bananas sold by the Lexington banana store should be granted.

Illustration 3 – Refusal

The Owner of a Lexington, Kentucky saddlery shop filed an Application for Registration in the USPTO for “Lexington” for saddles, bridles, and other equipment for horses

Pursuant to the USPTO test, the Examiner would argue that “Lexington” for saddles, bridles, and other equipment for horses is “primarily geographically descriptive” and refuse registration of the Trademark because Lexington, Kentucky is world renown for thoroughbred horses.

Conclusion

For Applicants, the federal registration process can be somewhat confusing.  By way of illustration, when a potentially “geographically descriptive” mark overcomes the 15 U.S.C. Section 1052(e) bar to registration, the applicant must still overcome the 15 U.S.C. § 1052 Sec. 2 (d) “likelihood of confusion” bar and other 15 U.S.C. § 1052 bars to registration.

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 and companies.

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Beach Buggy Invention Tires Litigation Intellectual Property

Expert Witnesses and Legal Proceedings

The Situation

Our company is a family owned business and we supply valve stems to motor vehicle rim manufactures.  We are a named party in a class action law suit against the motor vehicle manufactures, the international tire manufacturer and the rim manufacturers that utilized our valve stems.

Allegedly, the defective tires were attached to certain models of passenger cars.  The Plaintiffs aver that the tires “blew out” at maintained speeds of 70 MPH for more than fifteen minutes when the ambient temperature exceeded 85 degrees Fahrenheit.

Expert Witnesses and Adversarial Proceedings

Can our company use expert witnesses to defend against legal claims made against us?  Yes.

Can we use engineers, lay people and others as expert testimony to prove that the class action suit against our company is without merit?  It depends, in the federal system, an expert witness’ testimony is controlled by the federal rules of evidence.

Some Relevant Federal Rules of Evidence:

Rule 701. Opinion Testimony by Lay Witnesses

If a witness is not testifying as an expert, testimony in the form of an opinion is limited to one that is:

    • rationally based on the witness’s perception;
    • helpful to clearly understanding the witness’s testimony or to determining a fact in issue; and
    • not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.

Rule 702. Testimony by Expert Witnesses

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:

    • the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
    • the testimony is based on sufficient facts or data;
    • the testimony is the product of reliable principles and methods; and
    • the expert has reliably applied the principles and methods to the facts of the case.

Rule 703. Bases of an Expert

An expert may base an opinion on facts or data in the case that the expert has been made aware of or personally observed.

Can our Legal Team use the following as Expert Witnesses?

  1. The Director of our engineering department who has twenty years experience of overseeing quality control in the manufacture of our valve stems to prove that our valve stems were not defective. Yes – would qualify as an expert.
  2. The Director of our engineering department who has twenty years of experience of overseeing quality control in the manufacture of our valve stems to prove that the tires were not defective. No – would not qualify as an expert.
  3. Our vice president of sales to prove that 75% of the rims associated with the alleged defective tires did not utilize our valve stems.  Yes – would qualify as an expert, and if challenged should be allowed to give a lay opinion on the issue.
  4. The lead investigator of an insurance company’s automobile accident reconstruction team to prove that the tires were not defective. Yes – would qualify as an expert.
  5. An independent one-man shop seller of new tires with thirty years of experience of removing worn passenger car tires and installing new replacement tires to prove that the tires were not defective. Via news reports, the tire seller observed that seals for the alleged “blow out” tires did not contact their rims in accordance with industry protocol – outward and inward sides of tires were reversed when installed on their rims. Yes – would qualify as an expert.
  6. The above one-man shop seller observes that many “beach buggy” owners asked him how to reverse the tires on their cars. The witness testifies that social media was instructing “beach buggy” owners to reverse the inward and outward sides of the tires for a better “beach experience.” The witness opines that the reversed tires caused the tires to “blow out.” No – would not qualify as an expert to give opinion on the cause of the blow outs. However, the witness could testify as a layman regarding his interaction with “beach buggy” owners and social media.

If your enterprise needs legal assistance procuring/managing/enforcing your intellectual properties, 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.