IP WATCHDOG
DECEMBER 30, 2024, 02:15 PM
The past year has included some monumental developments in the world of IP – and adjacent to IP – that will affect law and practice for years to come. From the Supreme Court’s decision to abrograte the Chevron decision, thereby changing the standard for agency deference by the courts, to movement on some of the most potentially game-changing patent legislation to be introduced since the America Invents Act, there is a lot to choose from when it comes to what mattered in 2024. As we do each year, we reached out to readers for their input on what mattered most to them, and here is what they had to say.
Megan Bannigan, Debevoise
Among the most impactful developments in IP law were decisions reconsidering the intersection of trademark and First Amendment law. Following the Supreme Court’s 2023 Jack Daniel’s v. VIP Products decision, courts have restricted First Amendment defenses to trademark claims. VIP Products made it easier for courts to rein in overreaching First Amendment defenses to Lanham Act claims. But, in an effort to carve out “source-identifying” uses of trademarks from the First Amendment, these decisions following VIP create uncertainty that could chill legitimate artistic expression and upend a carefully-struck balance between expression and trademark rights.
In one of the most high-profile cases on this issue, in September, a jury awarded girl group OMG Girlz $71 million on a trade dress infringement claim against toy maker MGA and its “L.O.L. Surprise! O.M.G.” dolls. The jury in a previous trial found that the dolls were protected by the First Amendment. OMG Girlz successfully moved for a new trial in light of VIP, arguing that their images were used to indicate the source of the dolls. On retrial, MGA was prohibited from raising the First Amendment defense, and OMG Girlz successfully argued that the dolls were likely to cause consumer confusion, resulting in the massive verdict.
These “O.M.G.” dolls might or might not be worthy of First Amendment protection—but it is clear that the playing field has certainly changed.
Sara Bauer, Womble Bond Dickinson (US) LLP
First, the Supreme Court upheld the “names clause” of the Lanham Act as constitutional by denying registration of the mark “TRUMP TOO SMALL” on shirts and hats without Donald Trump’s consent. This decision reinforces the principle that individuals have the right to control the commercial use of their names. Additionally, Vintage brands unsuccessful argument that its use of Penn State’s logos was “ornamental” upheld important trademark rights for universities, sports teams and other trademark owners who use their marks on merchandise. Finally, we saw the cancellation of the U.S. registrations for the marks SUPER HERO and SUPER HEROS. Registrations held by competitors (Marvel and DC) for terms that many were likely surprised were registered trademarks. SUPER HERO and SUPER HEROES are now back in the public domain as generic terms free to be used by anyone living among other giant former brands like aspirin, elevator and zipper.
Trevor Giampaoli, KXT Law, LLP
One of the biggest developments that affects IP is the Supreme Court overruling forty years of Chevron v. Natural Resources Def. Councilprecedence in its Loper Bright Enterprises v. Raimondo opinion. At a high level, Chevron required that courts defer to agency interpretations of a statute if (1) Congress had not provided guidance or spoken on the issue and (2) the agency had provided a “permissible construction of the statute.” With Chevron overruled, courts may no longer be required to defer to agency interpretations of a statute and may instead exercise their judgment to interpret statutory provisions and to determine whether an agency interpretation should be relied upon at all under Skidmore v. Swift & Co.
Although Loper does not automatically nullify agency interpretations, it opens the door for challenges. In the IP sector, ITC and USPTO interpretations may be impacted. For example, Suprema v. ITC gives Chevron deference to the ITC’s interpretation of 19 U.S.C. § 1337. Here, the express reliance on Chevon may lead to direct challenges. As another example at the USPTO, the Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation provides interpretations of patent statutes and case law. Even absent express reliance on Chevron, the USPTO’s interpretation may face Loper challenges. In light of Loper, 2025 may start to see challenges to various agency interpretations of IP law.
Julie Goldemberg, Morgan Lewis
It has been six years since the Federal Circuit last granted a petition for en banc rehearing in a patent case, but in 2024 the Federal Circuit considered two patent-related issues en banc.
In LKQ v. GM Global Technology Operations LLC, No. 2021-2348 (Fed. Cir. May 21, 2024), the Federal Circuit granted en banc rehearing to reject as “improperly rigid” the previous standard for evaluating whether a design patent is obvious in view of the prior art, clarifying that the Supreme Court’s 2007 decision in KSR International Co. v. Teleflex overruled that standard. Instead, the Federal Circuit held that the test must be consistent with Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966), which is the standard used for obviousness for utility patents.
The Federal Circuit granted Google’s en banc rehearing petition in EcoFactor, Inc. v. Google LLC, No. 2023-1101 (Fed. Cir. Sept. 25, 2024), where the Court will reconsider the admissibility of expert testimony regarding patent damages. The particular issue before the Court is whether plaintiff’s damages expert adequately demonstrated the economic comparability of prior license agreements with varied scopes to a hypothetical negotiation between the parties. Briefing is underway, and many amici have come forward. A decision is expected in 2025.
The Federal Circuit’s increased willingness to consider patent issues en banc is a promising development for those hoping for greater clarity in patent law. The Court’s recent actions also give new hope to those who file en banc rehearing petitions that the Court may be more open to revisit its precedent and reconsider panel decisions.
Patrick Kilbride, Kilbride Public Affairs
In 2024, the line was tested… and it held. And perhaps. just perhaps, the tide turned back in favor of robust and reliable intellectual property rights. Entering 2024, the world’s trade ministers were actively considering expansion of a World Trade Organization TRIPS waiver on Covid vaccines to include diagnostics and therapeutics. In the United States, a federal inter-agency working group had moved to disregard the legacy of recently deceased Senators Birch Bayh and Bob Dole by gutting the patent-ownership commitments of their innovation-stimulating namesake legislation. And from the U.S. Patent & Trademark Office, long the world’s gold standard in intellectual property protection, a veritable flood of politically-motivated IP-weakening proposed rule-makings were issuing forth.
By December, this anti-IP agenda was firmly in retreat, its proposals failing almost across the board to advance further. Leaders like Senators Chris Coons and Thom Tillis successfully moved their PREVAIL legislation out of committee. Most telling of all, the bogus patent litigation narratives that had prevailed for years began to meet with appropriate skepticism and scrutiny, as some of the worst of them were outright debunked by the light of empirical analysis.
Daniel Klein, Groombridge, Wu, Baughman & Stone
The Federal Circuit’s decision to review en banc the damages issues presented in EcoFactor v. Google was significant. In recent years, the court has granted very few petitions for en banc review in patent cases, and historically en banc decisions on patent-damages issues have been exceedingly rare. The reasonable-royalty analysis, with its attendant consideration of various hypotheticals and Georgia-Pacific’s non-exhaustive list of 15 potentially relevant factors, can take up enormous resources for litigants across industries and technologies. Coupled with uncertainty surrounding whether a given damages theory will ultimately be deemed sufficiently reliable to go to the jury, the result is often sprawling fact and expert discovery and trial presentations as litigants diligently seek to preserve all available avenues. At the heart of the court’s en banc review of EcoFactor will be the district courts’ role as gatekeeper of the types of damages theories experts may advance to the jury. If bright lines are drawn (a big if), litigants could see this sprawl—and perhaps damages themselves—significantly curtailed.
Scott McKeown, Wolf Greenfield
The most noteworthy developments of 2024 related to double patenting (imagine the crowds that will gather around you when you announce that at a cocktail party). On the heels of In re Cellect, the CAFC provided further guidance on double patenting scenarios in Allergan v. MSN Labs. In Allergan the Federal Circuit held that claims in a first-filed, first-issued, later-expiring patent cannot be invalidated for double patenting by claims in a later-filed, later-issued, earlier-expiring patent having a common priority date. Or, as stated more simply by the Court, the first patent that issues on an invention “sets the maximum period of exclusivity of the claimed subject matter.” An en banc rehearing request remains pending.
And of course, we had the USPTO joining in the mix of double patenting fun with its proposal of aggressive changes to terminal disclaimer fees such that they would drastically escalate for later filings, and months later, proposing linking indistinct claims together for invalidity purposes. Given the intense backlash from stakeholders — and more likely the discontinuity brought about by the November election— those proposals were dropped….for now. The intense interest in double patenting remains politically driven in the name of taming drug prices (rightly or wrongly). Given the reset in political philosophies in Washington D.C., it remains to be seen if this bipartisan assault will continue.
Brad Pedersen, EnQuanta
The collective push-back against the proposed rules on Terminal Disclaimers (now withdrawn) and the USPTO guidance on AI-related inventions.
Bryce Persichetti, Holland & Hart
In the design patent realm, an en banc Federal Circuit overruled the longstanding obviousness test in LKQ Corporation, which may increase the difficulty of obtaining and enforcing design patents. Additionally, while the effects on the USPTO and the Copyright office are still to be determined, the Supreme Court overruled the Chevron doctrine in Loper Bright Enterprises, which could have far-reaching effects on the deference given to decisions by the USPTO, including the PTAB, and the Copyright Office.
This year also saw the increasing influence of AI on IP. There has been a proliferation of IP-focused AI tools and startups offering such products, including applications assisting in prior art searching, trademark searching, brief drafting, patent drafting, patent analysis, and patent prosecution. Many lawyers are already experimenting with and implementing these AI tools to supplement their practices. And the USPTO issued updated § 101 important guidance in July focused on the patentability of AI and other software-related emerging technologies.
Additionally, the USPTO adopted several changes related to increased fees effective in 2025, most notably new fees for continuation applications filed six years after the priority date, doubled excess claim fees, and significantly increased Rrequest for Continued Examination (RCE) fees, which are all likely to meaningfully influence applicant filing and prosecution behavior.
Wendy Verlander, Verlander LLP
Many things mattered in 2024.
While this is likely at the top of many commentators’ lists, it’s hard to overstate the potential gravity of the significant legislative developments in some of the most concerning aspects of protecting innovation. The PREVAIL Act, aimed at correcting a serious imbalance in the PTAB process, advanced out of committee and will hopefully be taken up by the full Senate. And, a new bill was introduced, the RESTORE Act, intended to fulfill a patent owner’s statutory “right to exclude others” by making injunctions more accessible.
There were also marked venue shifts. Because of litigation funding disclosure requirements imposed in Delaware, both funding and patent case filings dramatically decreased in that district. The Western District of Texas, that had previously seen a large percentage of patent cases, continued to see far fewer cases. But, the Eastern District of Texas picked up the slack from both as we saw a considerable increase in the number of cases filed there (mostly against foreign companies).
Finally, the long-standing Chevron case was overturned by the Supreme Court, opening up the possibility of challenging most agency regulations. We have not yet seen the impact of this monumental decision, but both ITC and PTO regulations are in jeopardy of being challenged and overturned.
Raffi Zerounian, Hanson Bridgett LLP
Any decision by the Supreme Court of the United States involving trademarks tends to make a big impact in the IP world. This year, in Vidal v. Elster, the Supreme Court ruled that Section 2(c) of the Lanham Act (15 U.S.C. §1052(c)), which prohibits registration of a mark that “[c]onsists of or comprises a name . . . identifying a particular living individual except by his written consent,” is constitutional. The impact of the case, however, may not be terribly significant as a practical matter given the relatively modest number of trademark application refusals issued by the USPTO under Section 2(c).
There are a number of changes at the USPTO that have made a big impact for trademark application filers. The USPTO’s former online trademark search system, TESS, was retired in 2023, and trademark practitioners have spent 2024 getting accustomed to the USPTO’s new and improved Trademark Search system. Also, the USPTO is increasing various trademark-related fees beginning on January 18, 2025. Some cost increases are relatively modest, such as the increase from $300 to $325 for the per-class fee for a Section 9 filing. Trademark Electronic Application System (TEAS) Plus and TEAS Standard applications will be replaced with one base application fee for non-Madrid applications. Additionally, trademark applications that use the free-form text box rather than the Trademark ID Manual will have a $200/class fee, with an additional $200/class fee for each group of 1,000 characters after the first 1,000 characters in the identification.