Blueprint of a gear train.

 Robert J. Yarbrough
Patent Attorney

 Patents - Inventions - Trademarks 

Newsletter Issue 37 - March 2012

In this issue:

Business resources for entrepreneurs
Copyright troll dealt a blow.

Facebook redefines common words.
Healthcare and innovation.

Business Resources for Entrepreneurs image of Sherlock Holmes

Do you have an idea for a great new patentable product and trademark? Of course you do - you're reading this newsletter, after all. But do you know how to commercialize your product and trademark; that is, how to turn your ideas into money?

Before you can make money with your ideas, you must learn how. A great place to start is one of the eighteen Small Business Development Centers ('SBDC') located in Pennsylvania. These are publicly-supported resources for entrepreneurs where you can receive free one-on-one counseling on starting and running your business. The SBDCs also offer a variety of classes covering topics such as preparing a business plan, doing business overseas, doing business with the federal government, marketing on the Internet, managing your time and providing other practical information for persons starting and running a business.

If you are located in Southeastern Pennsylvania, our local SBDC's are the Widener University Small Business Development Center, the Fox School of Business at Temple University, and the Wharton Small Business Development Center located at the University of Pennsylvania. Costs, services and general atmosphere differ among the SBDCs, but with three SBDCs to choose from, you can find local resources with whom you are comfortable and that are a good fit with you and your business.

Other local resources also are available. Delaware County SCORE, funded by the Small Business Administration and private donations, provides free online or in-person counseling with volunteer retired business persons. Other chapters of SCORE as scattered across the country. The Delaware County Commerce Center, an arm of Delaware County government, can help with property acquisition and business location issues in Delaware County, Pennsylvania. The Benjamin Franklin Technology Partners is a sources of venture capital seed funding for new companies and new products. Of course, we at Lipton, Weinberger & Husick are here for all your intellectual property and business law needs.

Ask Dr. CopyrightDr. Copyright logo

Dear Doc:
What ever happened to "RightHaven" that company you called a "copyright troll" and that was suing bloggers for quoting from the Las Vegas newspaper?
Just Curious, With Nothing Better to Do

Dear JC:
It turns out that RightHaven was beaten back by some of the defendants that it sued, with the help of the Electronic Frontier Foundation. In the end, the judge in the case penalized RightHaven because it did not even fully own some of the copyrights under which it brought suit. RightHaven was ordered to pay certain defendants costs and fees amounting to $183,000. To help pay that debt, some of the copyrights that it did own have been seized and even its domain name,, was sold at auction - for $3,300. RightHaven itself has filed for bankruptcy. Along the way, a federal judge ruled that even posting a complete newspaper story on a blog may, in some cases, be considered fair use by the blogger.

If there is a moral to this story, the "Doc" guesses that it may just be, "Those who live in glass houses should not throw stones."

The "Doc"

A Book By Any Other Name

Reafacebook logoders of this newsletter will recall that trademark rights in the United States are established by use, not by registration. There are benefits to registration, of course, but rights arise by the actual use of a mark in commerce in conjunction with a product or service. Often, the assertion of a trademark use is indicated by the placement of the letters TM adjacent the mark. These letters let the public know that the user is claiming trademark rights.

Another generally established principal of trademark law is that one can not, by asserting a trademark right in a word, remove that word from its common language use. In other words, one can not extract from the language the common use of a word by claiming trademark rights in it. However, it is possible to assert a trademark right to a word in the limited context of a particular association or use.

Facebook has been very proactive in trying to establish trademark rights to words it uses in association with its social networking site. For instance as of March 26, 2012, the United State Patent and Trademark Office has granted trademark registrations for FACEBOOK and WALL. Pending applications include: LIKE and FB among others. The use of FACE as a trademark has also been approved by the USPTO. Registration is awaiting proof from Facebook that it actually has used the mark in commerce.

To establish trademark rights to a word, it is useful to demonstrate that the public associates the use of the word with a product or service. Which brings us to the present interesting attempt by Facebook to begin to establish rights to the word "BOOK." The recently proposed Facebook user agreement open for public comment states: "You will not use our copyrights or trademarks (including Facebook, the Faceboo, and F Logos, FB, Face, Poke, Book and Wall) or any confusingly similar marks, except as expressly permitted by our Brand Usage Guidelines or with our prior written permission." So, following these guidelines, use of your Facebook account mandates that you recognize BOOK as a trademark belonging to Facebook. This may be an end run by Facebook to bolster future argument against other users of the word BOOK that Facebook has already established in the public's mind an association between the word BOOK with Facebook. What do you think of this strategy?

Healthcare Reform Affects Intellectual Propertyimage of a doctor

This week the United States Supreme Court heard arguments over the constitutionality of the Patient Protection and Affordable Care Act (PPACA). The ten titles of PPACA, along with amendments to the "Health Care and Education Reconciliation Act of 2010" regulate multiple industries making up approximately one-sixth of the national economy, all of which affect science, technology, and innovation. In 2010, David Applegate and Arthur Gollwitzer III published a short synopsis of how the PPACA affects the intellectual law community. While it is probably not the last word on the subject, in view of the historic Supreme Court arguments of this week, its worth a quick review.

Several parts of the PPACA affect intellectual property issues, either directly or indirectly: Titles II,III, VI, VII, and X. The part of the Act, which directly affects intellectual property rights is Title VII, known as the "Biologics Price Competition and Innovation Act of 2009," which provides an abbreviated approval process for biologic drugs. Although according to Applegate and Gollwitzer, the new law provides an accelerated application process, the authors not that there are those critics that argue that it creates "a regulatory scheme with artificial dates, undefined terms, and paperwork hurdles that will cause inefficiency and litigation, thus imposing additional costs upon, and therefore reducing the productive output of, the companies being regulated." Of course, if this is correct, the law will affect the rate of innovation in this area.

Title VII also expands the number of entities that may purchase drugs at a discount from a federal list (known as the "340B Program"), which will either expand the number of drugs available at discount or decrease the discount price for available drugs, thereby reducing payments to pharmaceutical companies. Those who favor the bill cite to the economic benefits of expanded drug discounts as well as the support of the pharmaceutical industry; distractors argues that that the reduction of revenues will reduce research and development. Yet, according to Applegate and Gollwitzer, "some analysts see the reform bill as a boon for the pharmaceutical industry, asserting that although costs per unit can be expected to go down, overall sales will rise considerably as government-funded programs that underwrite prescription drugs expand. Under this scenario, drug companies would be expected to have more funds available for research and development."

In a similar vein, Title II of the PPACA expands Medicaid rebates for prescription drugs. The arguments are similar, increased discounts mean decreased revenue, which means less research and innovation. Others argue that the pharmaceutical industry has everything to gain from increased sales stimulated by the new law.

Title IX imposes taxes on certain pharmaceutical and medical device manufacturers and importers. Critics contend that the Act will affect the overall profitability and incentives by diverting otherwise productive resources to the "tax avoidance industry".

Title II of the Act establishes a national strategy to "improve the delivery of heath care services patient health care outcomes, and population health." To the extent that the government will become the single largest consumer of health care services, it will have a huge influence over the available supply of treatments and innovations, a power that the critics are suspicious of. According to Applegate and Gollwitzer, "supporters, however, contend that the government-as-consumer scenario will permit economies of scale previously unknown in the industry" thereby driving research and innovation.

One thing is clear that given the clamor on both sides of the aisle on these and other issues, no one has a clear picture of what the affect of the PPACA will have either upon innovation and research or upon the larger economy. The future of the law hangs in the balance and will be dependent upon the the decision of the Supreme Court.

Robert J. Yarbrough was awarded an 'AV' (highest possible) rating by the Martindale 
			Hubbel attorney rating agency.