Monthly Archives: May 2012

Who is a Small Entity to the U.S. Patent Office?

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MPEP 509.02 refers to 37 CFR 1.21(a), which in turn defines a small entity under 13 CFR 121.801 through 121.805 for purposes of paying reduced fees at the USPTO. Under MPEP 509.02(a)(2), a “small business concern” is one that:

(i) Has not assigned, granted, conveyed, or licensed, and is under no obligation under contract or law to assign, grant, convey, or license, any rights in the invention to any person, concern, or organization which would not qualify for small entity status as a person, small business concern, or nonprofit organization; and

(ii) Meets the size standards set forth in 13 CFR 121.801 through 121.805 to be eligible for reduced patent fees.

13 CFR § 121.802 gives further guidance on the size determination for purposes of paying reduced patent fees. A “concern” eligible for reduced patent fees is one:

(a) Whose number of employees, including affiliates, does not exceed 500 persons; and

(b) Which has not assigned, granted, conveyed, or licensed (and is under no obligation to do so) any rights in the invention to any person who made it and could not be classified as an independent inventor, or to any concern which would not qualify as a non-profit organization or a small business concern under this section.

Under 13 CFR § 121.103(e) and (f), the SBA determines affiliation as follows:

(e) Affiliation based on common management. Affiliation arises where one or more officers, directors, managing members, or partners who control the board of directors and/or management of one concern also control the board of directors or management of one or more other concerns.

(f) Affiliation based on identity of interest. Affiliation may arise among two or more persons with an identity of interest. Individuals or firms that have identical or substantially identical business or economic interests (such as family members, individuals or firms with common investments, or firms that are economically dependent through contractual or other relationships) may be treated as one party with such interests aggregated. Where SBA determines that such interests should be aggregated, an individual or firm may rebut that determination with evidence showing that the interests deemed to be one are in fact separate.

Texas and Washington Attorney Demographics

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Some interesting numbers appeared in the May 2012 issue of the Texas Bar Journal. According to an audit, there are about 89,987 attorneys in Texas. Given that Texas has about 25.7 million people, that equates to about 286 people per attorney. In contrast, Spokane, Washington (according to a recent Washington Bar publication) has about 1780 attorneys. That equates to about 265 people per attorney. I had a feeling that Spokane has an abundance of attorneys, and these numbers prove it!  With about 40,000 new attorneys leaving law school each year in the U.S., and only about 25,000 new jobs for attorneys, the U.S. needs to cut back on the graduation rate, or find new ways for recent graduates to use their law degrees.

Returning to Texas, about 33% of attorneys are women, 17% are minorities. These percentages under represent minorities as compared with the Texas population in general. I do not have these percentages for Washington. Out of the private practitioners, Texas attorneys reported that about 36% of them are solo practitioners. For women, about 26% are solo practitioners. With so many solo practitioners in Texas and across the nation, law schools should consider teaching law students some rudimentary skills in operating a small business.

Word-based Trademarks Do Not Lose Strength when Identified with Manufacturer Name

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On 16 March 2012, the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) reversed a decision of the Trademark Trial and Appeal Board (TTAB) dismissing tire manufacturer Bridgestone’s opposition to the registration of the mark MILANZA for use with tires. The Federal Circuit found that the mark MILANZA did not lose its strength as a trademark simply because the BRIDGESTONE mark was used concurrent with MILANZA on the articles in commerce. Bridgestone Americas Tire Operations v. Federal Corp., Case No. 10-1376 (as PDF) (Fed. Cir., Mar. 16, 2012) (Newman, J.).

Looking at the procedure of this case, Applicant filed an intent-to-use application to register the mark MILANZA for tires. Bridgestone opposed applicant’s registration of MILANZA on the ground of likelihood of confusion with Bridgestone’s marks POTENZA and TURANZA for tires. The TTAB concluded that confusion as to source of tires was not likely because it determined that there was no commercial strength or fame of the POTENZA and TURANZA marks independent of the mark BRIDGESTONE. Specifically, the TTAB found that the POTENZA and TURANZA marks were not strong or famous marks because they were usually accompanied in advertising by the mark BRIDGESTONE or Bridgestone’s “B” logo. Thus, the TTAB found that while Bridgestone’s marks were inherently distinctive, any market strength was tied to the BRIDGESTONE mark. Bridgestone appealed.

Reversing the TTAB, the Federal Circuit explained that concurrent use of the BRIDGESTONE mark did not diminish the status of POTENZA and TURANZA as strong marks for tires. The Federal Circuit found that Bridgestone’s marks had commercial strength independent of its BRIDGESTONE mark based on the prolonged exclusive use of the marks, extensive promotion and marketing and billions of dollars of sales of tires bearing the marks. The Federal Circuit reasoned that a unique arbitrary word mark does not lose its strength as a trademark when the manufacture is identified along with the branded product, as each identification may have trade significance.

The Federal Circuit noted that prior users of marks are entitled to the traditional protections of its marks of trade against newcomers choosing a confusingly similar mark for the same goods. In this case, based on the identity of the goods, the lengthy prior use of POTENZA and TURANZA, the market strength of the marks, and the similarities of words, sounds, and connotation with MILANZA, the Federal Circuit found sufficient similarly was shown that the mark would cause consumer confusion, deception or mistake. Thus, the Federal Circuit reversed the Board’s decision.

Cautionary Tale of Using Patents to Extend Protection of One Cholesterol-lowering Drug, Tricor

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The Washington Post recently (20 April 2012) published an article titled, “Want to cut health care costs, start here.”  A small change in prescribing cholesterol-lowering drugs would save Americans $700 million a year. The story is heavily excerpted below, and has been the subject of many blog posts.

Every year, Americans pay $700 million more for cholesterol-lowering drugs than they need to. The reason? Abbott Laboratories. Abbott Labs is a pharmaceutical company based in Illinois. In 2000, it faced a problem. The company had recently acquired exclusive rights to sell Tricor-1, a cholesterol-fighting drug. It was profitable, a name-brand drug and Abbott was the only company with rights to sell it.

Drug (i.e., patent) exclusivity does not, however, last forever. After a name-brand drug has five years on the U.S. market, generics are allowed to come in and compete. That’s what a generic pharmaceutical company wanted to do with Tricor-1. Novopharm submitted an application to the Food and Drug Administration to produce a generic version of the drug.

In theory, that was bad news for Abbott Labs. With generics tending to sell at about 80 percent less than brand-name drugs, the generic medication had the potential to seriously undercut its Tricor-1 business.

Abbott Labs was able to delay Novopharm by a bit, a story that health-care researchers recount in a recent Annals of Internal Medicine article. The company filed a patent infringement lawsuit that ate up some months, and in the meantime, they came up with Tricor-2. It looked a lot like Tricor-1 — same active ingredients, same uses, nearly the same name. But there was one hugely important difference: Dosage. Where Tricor-1 came in 67 and 134-milligram formulations, Tricor-2 would come in 54 and 160-milligram dosages. However, little or no research supported the change for the new dosages.

By the time Novopharm’s generic came onto the market, Abbott Labs had already rolled out Tricor-2 and made it doctors’ prescription of choice. Six months after its introduction onto the U.S. market, Tricor-2 accounted for 97 percent of all prescriptions for this type of medication, known as fenofibrates.

Over the past decade, this has happened two more times for Abbott. Tricor-3 replaced Tricor-2. Abbott did get a little creative with the name this last time, replacing Tricor-3 with a different dosage branded Tripilix. “As soon as direct, generic competition seemed likely at the new dose level, where substitution would be allowed, Abbot would launch another reformulation, and the cycle would repeat,” Yale University’s Nicholas Downing and his co-authors write.

The cost implications of Abbott’s strategy are pretty big: The Annals of Internal Medicine estimates that, if the health-care system had come to rely on Novopharm’s generic medication, our health-care system would be saving $700 million every year. Overall, the use of generic drugs is estimated to save the country $158 billion annually, which breaks down to $3 billion a week.

Part of the blame, the researchers say, goes to doctors, who have predominantly stuck with Abbott’s brand-name drugs as their prescription of choice. They call their findings “a cautionary tale for physicians, who must accept some responsibility for the continued use of branded [drugs].”

“Despite the availability of many generics during the past nine years, physicians have continued to prescribe Abbott’s more expensive formulations,” they write. “Which in December 2009 accounted for more than 75 percent of all prescriptions.”

Some of the issue has to do with the regulatory system, too. Each time Abbott Labs faced a new generic, it would launch a patent infringement lawsuit. Each time it did that, it would create a huge delay for the generic pharmaceutical company, as the FDA requires all applicants to have resolved any outstanding patent disputes before seeking approval. Looks like abuse of the legal system to protect a patent monopoly.

The more fundamental question, though, is about whether the new dosages of brand-name drugs ought to get new exclusivity periods in the first place. The new Tricor dosages, after all, never showed improved outcomes for patients over previous formulations. Most of them didn’t require financing for new patient trials or testing. Without the new Tricors, we’d have the same outcomes – and $700 million less each year in additional health-care spending.