UK Regulators Step up the Pressure on Influencer Marketing: Principles for Platforms, Brands and Content Creators

Over the past few years the UK’s Competition and Markets Authority (CMA) has been actively taking steps to address consumer protection concerns with sponsorships and endorsements within social media posts that have not been clearly disclosed.

Indeed, the scale of the issue was highlighted in the Influencer Monitoring Report, published in March 2021 by another regulator, the Advertising Standards Authority (ASA), which found that a staggering 65% of the advertisements it monitored in September 2020 were not properly disclosed as ‘paid for’ content.

The CMA, ASA, and a third regulator, Ofcom, recently published a joint note outlining the regulatory framework to combat “hidden advertising” on social media platforms.

Against this background, in November 2022 the CMA issued new guidance on hidden ads with the aim of enhancing the transparency of online advertising. The regulator makes clear that hidden advertising is both harmful and illegal, and that it will not tolerate non-compliance with the rules.

The guidance sets out the regulator’s expectations for social media platforms, brands and content creators – as to how to ensure ads are compliant with the law. The guidance emphasises the need for each party to be proactive in ensuring the rules are followed, whilst recognising that there are also individual responsibilities to tackle these issues.

Ninth Circuit Holds Foreign Trademark Defendants Can Be Served through USPTO

By Joseph Grasser on November 25, 2022 Posted in China, Trade Mark, Trademark Infringement, Trademarks, US

Suing an overseas defendant often forces plaintiffs to go through the expensive and time-consuming process of serving the defendant through the Hague Convention. This requires translating the complaint and related documents, delivering them to the foreign country’s designated “Central Authority,” and then waiting for that Central Authority to actually deliver the documents and confirm delivery to the plaintiff. These costs and delays often dissuade plaintiffs from ever bringing well-based claims.

In San Antonio Winery, Inc. v. Jiaxing Micarose Trade Co., a case of first impression in the circuit courts of appeals, the Ninth Circuit held that if a lawsuit will affect a trademark, then a foreign-based defendant may be served either through its designated agent or the Director of the United States Patent and Trademark Office. The decision will thus allow companies to short-circuit the Hague Convention requirements and better assert their right against overseas trademark trolls.

ITC Denies Competing Motions for Sanctions For Failure to Comply with the Rules

By Adam Hess and Alex Wolcott on November 16, 2022 Posted in International Trade Commission, IP Litigation, ITC Section 337, Technology, Uncategorized

The U.S. International Trade Commission (“ITC”) continues to be a popular venue for patent litigation under Section 337 of the Tariff Act of 1930. The speed at which Section 337 investigations proceed and the significance of an adverse decision can create circumstances that may lead to allegations of improper conduct. Similar to patent litigation in U.S. District Court, the presiding judge in a Section 337 investigation has the power to sanction the parties for improper behavior. However, a party must act quickly and follow the ITC’s rules to have any chance to have sanctions imposed on another party.

The framework for seeking sanctions in an ITC Section 337 investigation is provided by 19 CFR § 210.25. Subsection (a)(1) states that a motion for sanctions must be filed “promptly after the allegedly sanctionable conduct is discovered.” Subsection (a)(1) also requires that before filing a motion for sanctions, the party seeking to file the motion must serve a copy of the motion on the allegedly offending party in accordance with 19 CFR § 210.4 (d)(1) and provide that party at least seven days to correct the offending conduct before filing the motion. This so-called “safe harbor” provision is similar to the safe harbor provision found in Rule 11 of the Federal Rules of Civil Procedure.

The Alice Test for Patent Ineligibility in Practice, Part Two: The Federal Circuit Affirms a Dismissal

By Nicholas Zalany on November 2, 2022 Posted in IP Litigation, Patent Litigation, Patents, Technology, US

In a recent post, I discussed a September Federal Circuit decision (Cooperative Entertainment v. Kollective Technology) that reversed a lower court dismissal of a patent infringement case on Section 101 eligibility grounds under the Supreme Court’s 2014 Alice Corp. v. CLS Bank test. Just weeks after that ruling, the Federal Circuit in IBM v. Zillow ruled on another appeal from a dismissal on eligibility grounds in a case also involving IT patents. This time, however, the Court affirmed the dismissal. Can these decisions be reconciled? In this blog, I will dissect the majority opinion and address the dissent which, relying on Cooperative Entertainment,would have allowed some of the disputed claims to survive dismissal.

In the end, I conclude that the Federal Circuit had valid grounds for affirming dismissal in this latest decision given the breadth of the claim language as compared to the prior art. And despite affirming the dismissal in this case, some of the lessons from Cooperative Entertainment have been reinforced and should continue to guide litigants.

What Gives You the Right to Be in This IPR? A Question OpenSky Should Have Answered

By Xiaomei Cai and Frank Bernstein on November 1, 2022 Posted in IP Litigation, Patents, Technology, Uncategorized

On October 4, 2022, in a 52-page Director review decision in an inter partes review (IPR) proceeding involving recently-formed entity OpenSky Industries LLC, USPTO Director Katherine Vidal sanctioned OpenSky “to the fullest extent of [her] power” because of OpenSky’s abuse of the IPR process, including flaunting of the Director’s discovery orders. The Director applied negative inferences to find facts against OpenSky; demoted OpenSky to a subordinate role in the IPR; and ordered OpenSky to show cause why OpenSky should not be required to pay compensatory damages.

These actions, plus subsequent pronouncements in the past couple of weeks, signal the Director’s commitment to addressing allegations about systemic IPR abuse. Patent owners and patent challengers can expect more as the Director considers overhauling the Director review procedure, as well as the Patent Trial and Appeal Board’s (PTAB) processes for determining whether an IPR proceeding should go forward.

God Save the Queen’s Royal Warrant Holders

By Carlton Daniel on October 31, 2022 Posted in Advertising, Brand Protection, Europe, Trademarks, UK

With gratitude to Heloise Morle for her contributions to this post.

In a modern world of celebrity and influencer endorsements, there is arguably one endorsement that still trumps others: the Royal Warrant.

The granting of an English monarch’s royal seals of approval dates back to 1155 – when King Henry II granted the Weavers’ Company (makers of clothes and castle hangings) a royal charter. The endorsement was formalised in 1476 when Edward IV granted the first royal warrant to printer, William Caxton; and subsequent monarchs have continued to award warrants to their favoured suppliers.

To prevent fraudulent claims of royal patronage, the Royal Warrant Holders Association was established in 1840. Today, having a royal warrant is no longer a guarantee that the holder is an exclusive supplier to the crown, merely that they are a preferred supplier.

The prestige that comes with providing goods and services to the sovereign has boosted business for centuries. A warrant is seen as a guarantee that a supplier has the highest standards of service, quality and excellence, the products are quite literally ‘Fit for a King’ no less.

However, following the death of the late Queen Elizabeth II, questions have been asked as to what happens to the warrants she granted during her lifetime?

The Alice Test for Patent Ineligibility in Practice: The Federal Circuit Reverses District Court’s Dismissal of an Infringement Case

By Nicholas Zalany on October 13, 2022 Posted in IP Litigation, Patent Litigation, Patents, Technology, US

One of the threshold requirements for obtaining a patent under U.S. law is that the invention is a “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof…” In other words, the subject matter of the invention must be eligible for patenting. Many courts have used this requirement as a threshold test in litigation, with early dismissal of cases that fail the test. A recent Federal Circuit decision suggests such decisions may not withstand scrutiny.

Background

In 2014, the Supreme Court held in Alice Corp. v. CLS Bank that “[l]aws of nature, natural phenomena, and abstract ideas” are not eligible for patent protection. The patentability analysis thus turns on whether one is seeking to patent the “building blocks of human ingenuity” versus “integrat[ing] the building blocks into something more.” The Court translated this concept into a two-step test whereby at step one, it is determined whether the claim is directed to a “patent-ineligible concept” (e.g., an abstract idea) and, at step two, the elements of the claim are analyzed to determine if it contains an “inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application.”

The Recent Decision

China: Design Patents and the Metaverse

By Paolo Beconcini and Elisa Li on August 22, 2022 Posted in Advertising, Brand Protection, China, Designs, Internet, Metaverse, Trade Mark, Trademarks, Uncategorized

The concept of Metaverse as an online framework for economic interoperability was born in and around 2020. Since then, giant companies all over the world ― especially in the IT, entertainment and fashion businesses ― have begun to launch products and solutions related to the ever developing Metaverse. Fashion brands, artists and entertainers, among others, have started focusing on producing digital work that is revolutionizing the way we perceive art, through the creation of NFTs and commodities. The latter, in particular, are assuming the form of non-physical goods that can be transacted and used in this totally immersive internet through Virtual Reality and Augmented Reality tools and devices, and many consumer brands are entering the Metaverse through gaming, social networks and virtual commerce.

In order to safely and effectively enjoy the economic benefits deriving from the use of their brands’ goodwill and product reputation in the Metaverse, businesses need to secure the appropriate IP rights. Fashion brands, for example, are filing trademark applications in the US, Japan and the EU to secure protection for the use of their brands on digital projections of their apparel, shoes and accessories that are transacted in the Metaverse. Other countries are lagging behind. China in particular, struggles in adapting and coping with the ever increasing need of both foreign and Chinese brands to obtain suitable trademark protection. The Chinese trademark system is in fact characterized by first-to-file and strict formalism in the selection and classification of goods and services. Without a formal update of the Chinese classification of goods and services that incorporates goods and service standards specifically aimed at the Metaverse, it is difficult for right holders to be able to create a trademark portfolio consistent with their global filings in the other major jurisdictions, where changes have already occurred to accommodate the needs surrounding the Metaverse. We have specifically covered this topic in a previous blog.

While trademarks protect the brands used in the metaverse and copyright protects NFTs as intellectual works, what about the protection of the shape, patterns and colors characterizing the non-physical commodities in the metaverse? Are they protectable by design patents? In this post we will analyze the availability of design patents for digital commodities and how it compares with other Asian countries like Japan, South Korea and Singapore.

China: Recycled Packaging and Trademark Infringement, a Questionable Decision in the Tsingtao Beer Case

By Paolo Beconcini on August 17, 2022 Posted in Advertising, Brand Protection, China, Competition and Markets Authority, Designs, Trade Mark, Trade Secrets, Trademark Infringement, Trademarks, Uncategorized

Back in 2020, the famous Chinese brew company Tsingtao Beer filed an administrative complaint for trademark infringement against a smaller Chinese competitor for the use of recycled Tsingtao beer bottles. The smaller brewery was filling legitimately recycled Tsingtao bottles with their own beer. The recycled bottles did not bear the Tsingtao labels and marks, which had been replaced by the label and trademarks of the smaller brewery. However, the words Tsingtao Beer, embossed on the bottlers’ neck, was still visible when the recycled bottles were commercialized. The case was adjudicated in 2022 by the Weihai Market Supervision and Administration Bureau of Shandong Province in favor of Tsingtao Brewery and has been selected as a model trademark enforcement case by the State Administration for Market Regulation.

Is this however a case of trademark infringement? Is the use and function of the words Tsingtao Beer on the bottles’ neck a “trademark use”? Or should this be rather a case of trade dress infringement under the Unfair Competition Law? And, why is this important?

Trademark or Unfair Competition?

Let’s begin with answering the question of why it is important for a right holder in China to determine whether this is a case of trademark rather than trade dress infringement.

UK regulators crack down on ‘greenwashing’

By Carlton Daniel and Danielle Jones on August 15, 2022 Posted in Advertising, UK, US

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Within seven months[1] of the UK regulator, the Competition and Markets Authority (“CMA“), announcing its review of green claims in the fashion retail sector, it has opened an investigation into such environmental claims made by various fashion businesses, including ASOS and George at Asda. This comes less than a year after all businesses were put on notice by the CMA to ensure their green claims were legally compliant.

The investigation will analyse each businesses’ environmental claims in light of the CMA’s Green Claims Code (for further discussion see our previous post here) and UK consumer protection law. Notably, the CMA has not yet reached a conclusion as to whether the retailers are in breach of the law.