Fintech IP William Fisher 2024/04/17
  Business Strategy
    Fintech Business Models
      Focus on niche businesses, not comprehensive sets of services
        Cautionary tale of Libra
      Maximize interoperability
        Upstream interoperability, to enable consumers to engage with legacy businesses
        Downstream interoperability, to facilitate emergence of complements
          Cautionary tale of Apple
            Apple_Error.pptx
      Attend to Direct Network Effects
        E.g., scale up fast
        Instructive tale of fax machines
      Seek opportunities for Differential Pricing
        As yet, rarely employed by fintech innovators
          e.g., fintech insurance companies focused on reduction of costs and customization, not differentiation of groups of potential consumers
    IP Strategy
      IP Strategies in General
        Tfisher.org: Strategy
      Fintech IP
        If possible, incorporate technical innovations in business model
          Maximize potential for patentability in all major jurisdictions
          Examples
            Amazon’s palm-print payment system
              Amazon_One.pptx
            Paypal’s patent on a payment system using augmented-reality glasses
              Paypal_AR.pptx
            Bank of America’s application for advanced security system
        Aggressive TM protection to reinforce branding
          Select fanciful mark (with positive connotations)
            Avoid need to establish secondary meaning to secure protection
          Coordinate with “brand experience” strategy (see below)
          Register in all plausible jurisdictions as soon as possible
            Cautionary tale of Telegram Messenger Inc. v. Lantah, LLC (ND Cal 2018)
              Use of “GRAM” for a cryptocurrency
              Neither party registered the TM before making substantial investments; Lantah lost & both parties paid large legal fees
            By registering in multiple countries, minimize hazard of being unable to establish personal jurisdiction over competitors
            For Europe, use Community Trademark System
            Madrid Protocol facilitates global protection
              After filing domestic application, applicant may file international TM application in home office
–if int’l application is filed within 6 months of basic application, get date of priority
              Application forwarded to WIPO, which:
–issues international registration
–publishes in Les Marques Internationales
–forwards application to designated member countries
              National offices examine application for conformity with national laws
–if no action within 1 year, deemed registered
              Currently 124 countries, including US
          In US, genuine use in commerce as soon as possible is imperative
            Advance purchase agreements deemed sufficient in Lantah
          Careful use of publicity to avoid genericity
        Minimize reliance on copyright, trade-secret, and database protection
        If the heart of the innovation is technological, consider assignment to a major player, in whose hands it will likely be more valuable
        If you acquire a patent, but its validity is doubtful, consider widespread licensing
          Postpone or prevent challenges by competitors
          Invoke the “secondary factor” of industry acceptance
    Branding
      The “Brand Experience” Framework
        Brand_Experience.pptx
      Positional Goods
        Veblen_Snob.pptx
      Applications to Fintech
        Utility
          Defined nationally or regionally
          e.g., importance in Europe of seamless integration with banks
        Security
        Privacy
          e.g., especially strong concern for privacy in Europe in general and Germany in particular
        Prestige?
          See Veblen or Snob effects?
          Alternative: democratization; sincerity
          Avoid association with criminal activity
  Law Reform
    IP Theory in General
      Tfisher.org: Theory
    Welfare Theory
      welfare objectives for fintech
        Provide adequate incentives for innovation -- but no more than necessary
          Consider whether alternative motivations for fintech advances already exist
        Minimize distortions: biases in favor of fields where rewards for innovation are disproportionate to social value
        Limit the pernicious effects of market power
          Limit its acquisition, or
          Limit its exercise
            cf. SSOs and treatment of SEPs
        Facilitate interoperability
      possible reforms
        Consider expansion of patentable subject matter
          Reduce distortions caused by requirement of technical effect/industrial application
          But may not be appropriate in light of the intensity of innovation despite limited patent protection
        Heighten Inventive-step requirement across the board
          Fintech_Inventive_Step.pptx
        Limit trademark infringement to consumer confusion
          Curtail or eliminate dilution doctrine
            USA
              Before 1925, courts are unreceptive to such claims
                Borden (CA7 1912)
              1925-1935: State and Federal courts begin to reach dilution
                Rolls-Royce (CA3 1925)
                Dunhill (SDNY 1929)
                Tiffany (NY 1933)
              State Anti-Dilution Statutes largely displaced the common law
                e.g., Mead (CA2 1989)
              Federal Anti-Dilution Statute of 1995
              Nabisco (CA2 1999)
                Facts
                Holding
              Victoria’s Secret (SCOTUS 2003)
                Facts
                Tarnishment and Sexuality
              Trademark Dilution Revision Act (2006)
                resolves debate concerning proof of injury
                adjusts factors relevant to proof of blurring
              Requirements
                P's mark is famous
                  e.g., Top Tobacco
                P's mark is distinctive
                D uses its mark in commerce
                D's usage began after P's mark became famous
                D's use is likely to cause dilution
                  Blurring
                    (1) Degree of similarity between the marks
                    (2) Degree of distinctiveness of P’s mark
                    (3) Extent to which P’s use is exclusive
                    (4) Degree of recognition of P’s mark
                    (5) Whether D intended to create association
                    (6) Any actual association
                  Tarnishing
                    harm to the reputation of P’s mark
            EU
              EU TM Directive (1988 & 2008), Art. 5(2)
                Any member state may also provide that the proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade mark [in relation to goods or services which are not similar to those for which the trade mark is registered], where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.
              Davidoff v. Gofkid (ECJ 2003)
                tacitly delete the restrictive phrase: "in relation to goods or services which are not similar to those for which the trade mark is registered"
        FRAND licensing for patents pertaining to dominant fintech platforms when they emerge
          Mathew Heim and Igor Nikolic
        Privileges for interoperability
          e.g., withdraw copyright protection for software features necessary for interoperability
          Contrast EU and US approaches
    Cultural Theory
      cultural objectives for fintech
        Augment or protect relevant aspects of the good life
          Competence
          Privacy
        Distributive justice
      Possible reforms
        Enforce disclosure requirements for financial services and investment opportunities
          Private cause of action
        Strict enforcement of privacy rules
        Facilitate differential pricing
          e.g., geographic price discrimination for services
  IP Protection
    Patents
      Requirements
        1. Eligible Subject Matter
          General Principles
            Potential Reasons for Limiting Subject Matter
              1. Necessary Evil
                Patents have socially undesirable side effects; they should be used only when essential to stimulate innovative activity that otherwise would not occur
                e.g., Senator Frist, justifying 35 USC 287(c)
                  “[I]nnovations in surgical and medical procedures do not require the midwifery of patent law."
              2. Excessive Scope
                Patents should not reach unduly large territories
              3. Proportionality
                The rights conferred by a patent should be proportional to the effort that went into it and/or to the benefit it confers on society
                e.g., DDR Holdings (CAFC 2014) (Mayer dissenting)
                  “ The potential scope of DDR's patents is staggering, arguably covering vast swaths of Internet commerce. DDR has already brought infringement actions against ten defendants, including Digital River, Inc., Expedia, Inc., Travelocity.com, L.P., and Orbitz Worldwide, LLC. See J.A. 255-63; ante at 1250. DDR's claims are patent ineligible because their broad and sweeping reach is vastly disproportionate to their minimal technological disclosure. See Mayo, 132 S.Ct. at 1303 (In assessing patent eligibility, "the underlying functional concern ... is a relative one: how much future innovation is foreclosed relative to the contribution of the inventor.”).”
              4. Protect Opportunities for Downstream Innovation
                e.g., Myriad/Mayo
                  “We have “long held that this provision contains an important implicit exception[:] Laws of nature, natural phenomena, and abstract ideas are not patentable.” Mayo, (slip op., at 1) Rather, “‘they are the basic tools of scientific and technological work’” that lie beyond the domain of patent protection. As the Court has explained, without this exception, there would be considerable danger that the grant of patents would “tie up” the use of such tools and thereby “inhibit future innovation premised upon them.” This would be at odds with the very point of patents, which exist to promote creation.”
              5. Nationalism/Mercantilism
                If lawmakers in country A think that firms in country A lead in technological development with respect to field X, then they should advocate extension of subject-matter coverage to inventions in field X, both domestically and internationally
                If lawmakers in country A think that firms in country A do (and will) lag firms in other countries with respect to field X, then they should advocate elimination of subject-matter coverage to inventions in field X, both domestically and internationally
              6. Hubris
                Humans should not assert rights to the work of the gods
              7. Pandora’s Box
                Unconstrained curiosity will release uncontrollable evils into the world
                Patent law should not encourage inventive activity in sectors that will plague humanity
              8. Sector-Specific Opposition to Privatization
                e.g., Hippocratic Oath with respect to medical procedures
                  Louis Lasagna version (1964)
                    I swear to fulfill, to the best of my ability and judgment, this covenant:
                    I will respect the hard-won scientific gains of those physicians in whose steps I walk, and gladly share such knowledge as is mine with those who are to follow.
                    I will apply, for the benefit of the sick, all measures [that] are required, avoiding those twin traps of overtreatment and therapeutic nihilism.
                    I will remember that there is art to medicine as well as science, and that warmth, sympathy, and understanding may outweigh the surgeon's knife or the chemist's drug.
                    I will not be ashamed to say "I know not," nor will I fail to call in my colleagues when the skills of another are needed for a patient's recovery.
                    I will respect the privacy of my patients, for their problems are not disclosed to me that the world may know. Most especially must I tread with care in matters of life and death. If it is given me to save a life, all thanks. But it may also be within my power to take a life; this awesome responsibility must be faced with great humbleness and awareness of my own frailty. Above all, I must not play at God.
                    I will remember that I do not treat a fever chart, a cancerous growth, but a sick human being, whose illness may affect the person's family and economic stability. My responsibility includes these related problems, if I am to care adequately for the sick.
                    I will prevent disease whenever I can, for prevention is preferable to cure.
                    I will remember that I remain a member of society, with special obligations to all my fellow human beings, those sound of mind and body as well as the infirm.
                    If I do not violate this oath, may I enjoy life and art, respected while I live and remembered with affection thereafter. May I always act so as to preserve the finest traditions of my calling and may I long experience the joy of healing those who seek my help.
                e.g., Free Software Movement
                  Ricard Stallman’s manifesto
                    Users' control over the program requires four essential freedoms.
                    (0) The freedom to run the program as you wish, for whatever purpose.
                    (1) The freedom to study the program's “source code”, and change it, so the program does your computing as you wish. Programs are written by programmers in a programming language—like English combined with algebra—and that form of the program is the “source code”. Anyone who knows programming, and has the program in source code form, can read the source code, understand its functioning, and change it too. When all you get is the executable form, a series of numbers that are efficient for the computer to run but extremely hard for a human being to understand, understanding and changing the program in that form are forbiddingly hard.
                    (2) The freedom to make and distribute exact copies when you wish. (It is not an obligation; doing this is your choice. If the program is free, that doesn't mean someone has an obligation to offer you a copy, or that you have an obligation to offer him a copy. Distributing a program to users without freedom mistreats them; however, choosing not to distribute the program—using it privately—does not mistreat anyone.)
                    (3) The freedom to make and distribute copies of your modified versions, when you wish.
                  e.g., Eben Moglen, “dotCommunist Manifesto”
          For details, see the Map on Patent Law
        2. Utility
          General Principles
            Weak version: prevent the patent system from fostering the development of socially pernicious innovations
            Strong version: channel innovation toward areas of greatest social need
          For details, see the Map on Patent Law
        3. Disclosure
          General Principles
            Purposes of disclosure requirement
              a. Compell patentee to reveal information that will facilitate further technical progress
                “Quid pro quo” of the patent system
                Accelerate, instead of impede, cumulative innovation
              b. Provide competitors guidance in what they may and may not do
                Application of the fundamental principles of the rule of law
              c. Provide courts guidance in understanding the invention and construing the claims
                cf. evidentiary function of formalities
              d. Prevent patentee from locking up a disproportionate territory
              e. Reinforce priority principles by denying priority dates to persons who have not yet fully achieved the invention
            Critique: assuming these goals are desirable, the present disclosure rules do not advance them effectively
              Benjamin Roin (2005)
                Reasons why disclosure rules don’t work
                  1. Patents are most heavily used for products that can easily be reverse engineered; in those contexts, disclosure in patents is unnecessary
                  2. Patent applicants commonly omit know-how essential to practicing and invention -- and use language designed to claim as much territory as possible and to obscure technological advances
                  3. Threat of enhanced damages awards for willful infringement [see Remedies section] prompt firms to discourage their employees from reading patents
                Data confirm these problems
                  US and European firms rarely report reliance on patents as a source of information concerning technological advances in their fields
                  Japanese firms may rely on patents somewhat more
              Coleen Chien (2016)
                Effective disclosure would require revelation of contextual information:
                  Whether the patent is commercially important
                  Whether the patent is subject to licensing commitments
                  Whether the patent is held for defensive or offensive purposes
                Chemistry and drug patents work better than patents in other fields, because they are effectively searchable, are bound into databases of practice, and are often published long before products are commercially available
          For details, see the Map on Patent Law
        4. Novelty
          For details, see the Map on Patent Law
        5. Inventive Step
          History
            United States
              Early 19th century
                Novelty rules established through adjudication
                  Evans v. Eaton (SCOTUS 1818)
                    Independent creation is insufficient; novelty is necessary
                  Pennock v. Dialogue (SCOTUS 1829)
                    lopng-standing public use of an invention by a third party will bar patenting
                Before 1850, no nonobviousness requirement
              Hotchkiss (SCOTUS 1850): no patents for creations that are “destitute of ingenuity or invention”
                To be patentable, an invention must require “more ingenuity and skill” than that held by “an ordinary mechanic acquainted with the business”
                Doorknob made of clay or porcelain (rather than wood or metal) deemed to fail this requirement
              1850-1950: Vague and Shifting Doctrine
                Cuno Corp. (SCOTUS 1941): need “flash of creative genius”
              1952: Congress adds section 103
              1952-1966: Confusion re impact of 103
              Graham (SCt 1966)
                “Under §103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented.”
              1966-1982: Circuit courts diverge
                2nd Circuit upholds only 4.8% of challenged patents
                8th Circuit: 6%
                1st, 3rd, 6th, 7th, 9th, 10th Circuits: around 19%
                4th and 5th Circuits: around 40%
              1982-2007: Federal Circuit relaxes the standard
                increased reliance on secondary factors
                TSM test
                  challenger must identify some teaching, suggestion, or motivation to combine prior-art references
                  E.g., Al-site Corp. (CAFC 1999)
              1973-2004: Changing scope of prior art
                courts gradually expand scope of 103 prior art to match 102
                partially offsetting series of statutes, excluding prior art developed by patentee or affiliates
              KSR (SCt 2007)
                reject "rigid application" of TSM test
                  “ We begin by rejecting the rigid approach of the Court of Appeals. Throughout this Court’s engagement with the question of obviousness, our cases have set forth an expansive and flexible approach inconsistent with the way the Court of Appeals applied its TSM test here....”
                  “ Helpful insights, however, need not become rigid and mandatory formulas; and when it is so applied, the TSMtest is incompatible with our precedents. The obviousness analysis cannot be confined by a formalistic conception ofthe words teaching, suggestion, and motivation, or by overemphasis on the importance of published articles and the explicit content of issued patents.”
                Suggest revival of “obvious to try” as one way of establishing obviousness
                  “ The same constricted analysis led the Court of Appeals to conclude, in error, that a patent claim cannot be proved obvious merely by showing that the combination of elements was “obvious to try.” ... When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense. In that instance the fact that a combination was obvious to try might show that it was obvious under §103.”
                Express skepticism concerning non-obviousness of combination patents
                  “The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. “
                  “ When a work is available in one field of endeavor, design incentives and other market forces can prompt variations of it, either in the same field or a different one. If a person of ordinary skill can implement a predictable variation, §103 likely bars its patentability. For the same reason, if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill.”
                increase somewhat the creativity attributed to a PHOSITA
                  “The second error of the Court of Appeals lay in its assumption that a person of ordinary skill attempting to solve a problem will be led only to those elements of prior art designed to solve the same problem. ... Common sense teaches, however, that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit theteachings of multiple patents together like pieces of a puzzle.”
                Don’t overstate the hazard of hindsight bias
                  “ A factfinder should be aware, of course, of the distortion caused by hindsight bias and must be cautious of arguments reliant upon ex post reasoning. ... Rigid preventative rules that deny factfinders recourse to common sense, however, are neither necessary under our case law nor consistent with it.”
              AIA
                Relevant date for assessing obviousness is date of filing, not date of invention
                Simplify mechanism for identifying relevant prior art
                  Incorporate by reference definition of prior art under 102
                  Limited (as before) by requirement that the art be “analogous”
              Empirical studies of the Impact of the Changing Standard
                John R. Allison & Mark A. Lemley, Empirical Evidence on the Validity of Litigated Patents, 26 AIPLA Q.J. 185 (1998)
                Sean M. McEldowney, New Insights on the “Death” of Obviousness: An Empirical Study of District Court Obviousness Opinions, 2006 Stanford Technology Law Review 4
                Lee Petherbridge & R. Polk Wagner, The Federal Circuit and Patentability: An Empirical Assessment of the Law of Obviousness, 85 Texas Law Review 2051 (2007)
                Christopher A. Cotropia, Nonobviousness and the Federal Circuit: An Empirical Analysis of Recent Case Law, 82 Notre Dame Law Review 911 (2007)
                Ali Mojibi, An Empirical Study of the Effect of KSR v. Teleflex on the Federal Circuit’s Patent
Validity Jurisprudence, 20 Albany Law Journal of Science and Technology 559 (2010)
                Jason Rantanen, The Federal Circuit’s New Obviousness Jurisprudence: An Empirical Study, 16 Stanford Technology Law Review 709 (2013)
                Gregory Mandel, “ A Nonobvious Comparison: Nonobviousness Decisions at the PTAB and in the Federal Courts” 24 Texas Intellectual Property Law Review (2017)
            Other jurisdictions
            Fintech_Inventive_Step
          For details, see the Map on Patent Law
      Impediments to patent protection for Fintech
        Subject Matter
          Software
            U.S.
              Background: Software_US.pptx
              1960s: CCPA forces PTO to increase availability of patent protection for software
                Prater (1969)
                Bernhart (1969)
                  software for depicting three dimensional objects in two dimensions
                  Held: A machine programmed in a new and nonobvious way is patentable
                Musgrave (1970)
              1970s: Supreme Court
applies the brakes
                Gottshalk v. Benson (1972)
                  computerized process for converting binary-coded numerals to pure binary form
                  Held: unpatentable because the invention claimed consists of no more than a mathematical algorithm; a patent would preempt its use
                Parker v. Flook (1978)
                  computerized method for continuously recalculating the "alarm limit" during a chemical conversion process
                  Held: unpatentable, because if one ignores the algorithm on which the process is based, the claimed invention contains nothing new or inventive
                  Door left open a crack: "We do not hold that no process patent could ever qualify if it did not meet the requirements of our prior precedents. It is said that the decision precludes a patent for any program servicing a computer. We do not so hold."
              1980-2010:
Gradual Relaxation of
impediments
                CCPA
                  "Freeman-Walker-Abele test"
                    If the claimed invention (a) directly or indirectly recites a mathematical algorithm, but (b) applies that algorithm in an otherwise statutory appparatus or process claim, it's patentable
                  In re Freeman (1977)
                  In re Walter (1980)
                  In re Abele (1982)
                Supreme Court
                  Diamond v. Diehr
(US 1981)
                    a process for continuously monitoring the temperature inside a synthetic rubber mold, using a computer and the well-known Arrhenius equation for measuring cure time as a function of temperature and other variables
                    Held: patentable, because this is an ordinary industrial process that happens to incorporate a computer program
                CAFC
                  Iwahashi (1989)
                    voice pattern recognition software
                      incorporating improved technique for calculating autocorrelation coefficients
                      i.e., compaing short snippets of speech
                    held: fact that it was embedded in a read-only device made it a patentable machine or manufacture
                  Arrhythmia (1992)
                    computerized method of analyzing electrocardiograph ("ECG") patterns to detect persons at risk for certain heart diseases
                    "These claimed steps of 'converting,' 'applying,' 'determining,' and "comparing' are physical process steps that transform one physical, electrical signal into another."
                  Allappat (1994)
                    software for controlling the illumination of pixels on an oscilliscope to minimize discontinuity and jaggedness
                    Held: an algorithm embedded in general purpose computer is patentable
                  State Street Bank (1998)
                    computerized hub & spoke accounting method
                    Transformation of data by a machine into a final share price constitutes a practical application of an algorithm and is therefore patentable subject matter
                    Repudiate "business methods" exception to patentability
                  AT&T (1999)
                PTO
                  1996 Guidelines
                    will accept applications for patents on software on disks
                Data
              2014 to present: Supreme Court applies the brakes again
                Alice (2014)
                  facts
                    The claims at issue relate to a computerized scheme for mitigating “settlement risk”—i.e., the risk that only one party to an agreed-upon financial exchange will satisfy its obligation. In particular, the claims are designed to facilitate the exchange of financial obligations between two parties by using a computer system as a third-party intermediary.
                    The intermediary creates “shadow” credit and debit records (i.e., account ledgers) that mirror the balances in the parties’ real-world accounts at “exchange institutions” (e.g., banks). The intermediary updates the shadow records in real time as transactions are entered, allowing “only those transactions for which the parties’ updated shadow records indicate sufficient resources to satisfy their mutual obligations.”
                    At the end of the day, the intermediary instructs the relevant financial institutions to carry out the “permitted” transactions in accordance with the updated shadow records, thus mitigating the risk that only one party will perform the agreed-upon exchange.
                  Holding
                    [A] framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts:
                      Step 1: First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts.
                      Step 2: If so, we then ask, “[w]hat else is there in the claims before us?” To answer that question, we consider the elements of each claim both individually and “as an ordered combination” to determine whether the additional elements “transform the nature of the claim” into a patent-eligible application.
                        We have described step two of this analysis as a search for an “ ‘inventive concept’”—i.e., an element or combination of elements that is “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.”
                  Applied
                    Step 1: “On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk.
                      Like the risk hedging in Bilski, the concept of intermediated settlement is “ ‘a fundamental economic practice long prevalent in our system of commerce.’” ... Thus, intermediated settlement, like hedging, is an“abstract idea” beyond the scope of §101.”
                    Step 2: “We conclude that the method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent eligible invention. ...
                      Taking the claim elements separately, the function performed by the computer at each step of the process is “[p]urely conventional.” ... Petitioner’s claims to a computer system and a computer readable medium fail for substantially the same reasons. ... Put another way, the system claims are no different from the method claims in substance. The method claims recite the abstract idea implemented on a generic computer; the system claims recite a handful of generic computer components configured to implement the same idea.”
                CAFC caselaw since Alice
                  Claims that pass step 1
                    DDR Holdings (2014)
                    Enfish (2016)
                    McRO (2016)
                      patent
                      opinion
                    Visual Memory (2017)
                      patent
                      opinion
                  Claims that fail step 1, but pass step 2
                    Bascom (2016)
                  Claims that fail step 1 and fail step 2
                    Digitech (2014)
                    buySafe (2014)
                    Ultramerical (2014)
                    Content Extraction (2014)
                    OP Technologies (2015)
                    IV v. Capital One (2015)
                    Mortgage Grader (2016)
                    Affinity Labs (2016)
                      patent
                      opinion
                    FairWarning (2016)
                      patent
                      opinion
                    Automation Middleware (2018)
                  Procedure
                    Contested issues of fact with respect to step 2 will prevent summary judgment against patentee
                      Berkheimer (CAFC 2018)
                    But where no such contested issues exist, summary judgment is appropriate
                      BSG Tech (CAFC 2018)
            EPC
              Software_Europe.pptx
          Business Methods
            USA
              Examples of BMPs
              History of Legal Treatment
                Before 1980: Business Methods were assumed to be outside patent protection
                  Hotel Security (1908)
                  Sterling (1934)
                  Wait (1934)
                  Patton (1942)
                  Loew's Drive-in (1949)
                  Murray (1988)
                1980-2000: Increased Receptivity to BMPs
                  1980s and 1990s: PTO grants growing number of BMPs
                    many under auspices of loosening rules concerning software patents
                  1996: PTO guidelines instruct examiners to treat BMPs like any other process patent applications
                  State Street Bank (CAFC 1998)
                    facts
                      innovation
                      the patent
                    holding
                      applications for BMPs should be treated like any other process patent applications
                      a process is patent-eligible if it produces “a useful, concrete, and tangible result” — such as the transformation of financial data from one form to another form.
                1996-2010: Backlash
                  Prior User right (1998)
                    Section 273: Defense to a suit for infringement of a BMP: defendant had in good faith both:
                      (a) reduced the invention to practice more than 1 year before filing date and
                      (b) commercially used the invention prior to filing date
                  Nonobviousness challenges
                    e.g., Amazon "one click"
                  SPER (March 2000)
                    more examiners for Class 705 hired
                    duty to consult more prior-art references
                    each allowed application is reviewed by second examiner
                  eBay (SCOTUS 2006)
                    Justice Kennedy concurrence
                  Comiskey (CAFC 2007)
                    a claim reciting an algorithm or abstract idea can state statutory subject matter only if, as employed in the process, it is embodied in, operates on, transforms, or otherwise involves another class of statutory subject matter, i.e., a machine, manufacture, or composition of matter
                    the present statute does not allow patents to be issued on particular business systems—such as a particular type of arbitration—that depend entirely on the use of mental processes
                  Net Impact
                    BMPs applied for and issued
                    Impact of SPER
                      large increase in prior-art references
                        roughly correlated with increase in patent quality
                          probability that patent will be found valid if challenged
                          i.e., strength in terms of novelty, nonobviousness, and enablement
                        Allison & Hunter 2005
                      Strategic drafting to avoid SPER
                Bilski (2010)
                  facts
                    method of trading weather risks
                    claim 1:
                      1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:
                      (a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;
                      (b) identifying market participants for said commodity having a counter-risk position to said consumers; and
                      (c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.
                    no reference to computer
software or apparatus
                  procedural history
                    examiner rejects
                    BPAI affirms
                    CAFC orders en banc review
                      (1) Whether claim 1 of the 08/833,892 patent application claims patent-eligible subject matter under Section 101?
                      (2) What standard should govern in determining whether a process is patent-eligible subject matter under Section 101?
                      (3) Whether the claimed subject matter is not patent-eligible because it constitutes an abstract idea or mental process; when does a claim that constitutes both mental and physical steps create patent-eligible subject matter?
                      (4) Whether a method or process must result in a physical transformation of an article or be tied to a machine to be patent-eligible subject matter under Section 101?
                      (5) Whether it is appropriate to reconsider State Street Bank & Trust Co. v Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), in this case and, if so, whether those cases should be overruled in any respect?
                    oral arguments heard
on May 8, 2008
                      PTO position
                        "process" limited to:
                          process limited to a particular apparatus (i.e., machine implemented)
                          process that operates to change materials to a different state or thing
                    CAFC decision
(en banc October 30, 2008)
                      Majority opinion
                        distance itself from State Street Bank
                        holding: "machine or transformation" test
                          For a claimed process to be patent-eligible under § 101, it is both necessary and sufficient that either:
                            (1) it is tied to a particular machine or apparatus, or
                            (2) it transforms a physical article or object into a different state or thing.
                        ambiguities
                          unclear whether recitation of implementation in a general-purpose computer will suffice
                            PTO takes the position: No
                              Ex parte Langemyr and Ex parte Wasynczuk
                      dissents
                        Mayer
                          would expressly overrule State Street and declare all BMPs unpatentable
                        Rader
                          would adhere to State Street test
                          Bilski patent should be rejected as an "abstract idea"
                        Newman
                          would adhere to State Street test
                          Bilski patent should be granted
                  options presented to SCt
                    (1) Variations on Chakrabarty test
                      (a) reinstate Chakrabarty (1980)
                        patentable
                          anything under the sun made by man
                        unpatentable:
                          laws of nature
                          physical phenomena
                          abstract ideas
                      (b) Chakrabarty + exclusion for tax patents
                      (c) Chakrabarty + for business-method patents
                      (d) Chakrabarty + exclusion of algorithms not tied to physical elements or steps
                        Freeman-Walter-Abele test
                    (2) Variations on "Technical Aspect" Test
                      EU approach
                      cf. IBM amicus brief
                    (3) Variations on "Useful, Tangible, Result" Test
                      (a) reinstate State Street test
                      (b) State Street + requirement of physical steps
                        cf. Microsoft brief
                      (c) State Street + requirement of specific series of steps
                        cf. Yahoo! brief
                    (4) Variations on "machine or transformation" test
                      (a) CAFC decision in Bilski
                      (b) reject option of satisfying "machine" through recitation of general-purpose computer
                  Result
                    reject blanket exclusion of business methods
                    reject "machine or transformation" test as the exclusive test, but approve it as one among many
                    reinstate, roughly, prior open-ended definitions of "process"
                    encourage CAFC to continue to look for ways of limiting BMPs to ensure they advance the purposes of the patent system
                2010-2014: Continued Controversy and Uncertainty
                  2011 patent reform
                    defendants accused of infringing BMPs in financial services field can initiate post-grant PTO review of the patents
                    this option expires in 2020
                  Cybersource (CAFC 2011)
                  Ultramercial v. Hulu (2011)
                    [Overturned in the wake of Alice: Ultramercial (2014)]
                  Dealertrack (2012)
                  Fort Properties (2012)
                Now governed by Alice (see Software, above)
            EPC
              Express exclusion of BMPs
              Software_Europe.pptx
            China
              Until 2017, China was strongly hostile to BMPs
              SIPO, Revised Guidelines for Patent Examination, Section 4.2, Chapter 1, Part II (2017): “For claims involving business models, if they contain both the content of business rules and methods and technical characteristics, the possibility of obtaining patent rights shall not be excluded under Article 25 of the Patent Law”.
            Japan
              JPO is also retreating from strong hostility to BMPs
              Lerner et al.: “Rejection rate for
BMPs, of which finance constitutes a considerable number, fell from 92% in 2000 to 34% in 2012 through 2014 (Japanese Patent Office, 2019).”
        Procedure
          Fintech_IPRs
        Extraterritoriality
          “ For a claimed method, an infringing use requires all recited steps to be performed in the U.S. However, for a claimed system, an infringing use is the place where “control” of the system is exercised and its “benefits” are obtained, which may be in the U.S. even if some of the claimed components are located outside of the U.S.“
      Effect: fintech innovators continue to pursue patents aggressively, but with limited success
        Fintech_Patents.pptx
      Bottom line: patent protection for fintech innovations is now difficult to obtain, but highly valuable to innovators
    Copyright
      Copyright Protection for Software
        Activities Software Owners Seek to Control
          Consumer reproduction of object code
          Commercial reproduction of object code
          Incorporation of parts of source code in new programs [a.k.a. "follow-on copying"]
            modestly improved versions of original program
              see, e.g., Unix history
            substantially different programs that incorporate parts of original
              e.g., SCO litigation
          "Nonliteral copying"
            Production and distribution of programs that have the same "structure, sequence, or organization," even though they have none of the original source or object code
        Copyright protection for software available in all WTO countries
        Limitations on Scope of Protection
          Copying Nonliteral features
            Altai test
          Menu hierarchies
            Lous v. Paperback (DMass 1990)
            Lotus v. Borland (CA1 1995)
          Application Programming Interfaces
            Oracle v. Google (CAFC 2014)
              Oracle_2021.pptx
            Oracle v. Google (SCOTUS 2021)
          Reverse Engineering for Interoperability
            U.S. Cases finding copying for this purpose to be fair use
              CAFC (Atari 1992 [dictum]; Bowers 2003 [dictum])
              CA5 (DSC Communications 1996)
              CA 9 (Sega 1992; Sony 2000)
              CA11 (Bateman 1996)
            EC Directive 91/250, Art. 6
      Bottom line: copyright protection for fintech innovations is now easy to obtain, but not valuable to innovators
        The underlying structure of most fintech applications is built using open source software
          Fintech_Open_Source.pptx
        Protection against verbatim reproduction of object code (by either consumers or competitors) does little good
          The code provides access to a service, not an entertainment experience; consumer “piracy” is thus not a threat
          Competitors have little incentive to copy consumer interfaces, etc., which can easily be invented around
        Shields against similarity of “structure, sequence, or organization” are weak
        Protection against replication of APIs is now very limited -- and would be a minimal value anyway
          Shielding APIs is inconsistent with business models in fintech, which depend on interoperability
    Trademark
      Requirements
        What May be Protected?
          Distinctiveness Hierarchy
            Arbitrary/Fanciful
              arbitrary = existing word applied arbitrarily to a product or service
              fanciful = newly created word, image, etc.
            Suggestive
              suggest a quality of the good or service
              examples
                Citibank
                Q-tips
            Descriptive
              Describes an ingredient, quality, or characteristic of the product
              factors used to determine
whether a mark is descriptive or suggestive
                Dictionary definition of the term
                Does it require consumers to use
their imaginations to reach a conclusion
as to the nature of the goods?
                Do competitors “need” the term to
describe their products – or would
it be “useful” to them?
                To what extent has the term
been used by competitors?
              protectable only with secondary meaning
              examples
                Fish Fri -- for frying batter
                Coca-Cola
                Alo -- for aloe cream
                Vision Center -- for optical services
                Tender Vittles -- for cat food
                Arthriticare -- for arthritis treatment
                Investacorp -- for investment services
                Custom-Blended -- for gasoline blended at the pump
            Generic
              the term is commonly used to denote the goods or services at issue
              unprotectable
              examples
                Bermuda -- for shorts
                Safari — for hats and jackets
                Kleenex
                Thermos
                Duck Tours
          Secondary Meaning
            consumers have come to recognize the mark as a source indicator
              a.k.a "acquired distinctiveness"
              the primary significance of the mark in consumers' minds is not the product, but the producer
              not essential that consumers know who the producer is
              define "consumers"
                most cases treat the the public in general as the relevant group
                but some acknowledge that the relevant group consist of buyers of the type of product or service at issue
                  Harlequin Enterprises (CA2 1981)
                    readers of romance novels
                  Louboutin (CA2 2012)
            proving secondary meaning
              direct evidence
                *consumer surveys
                consumer testimony
                retailers/dealers testimony
              circumstantial evidence
                exclusivity, duration, and manner of use
                sales volume
                amount and manner of advertising
                unsolicited press coverage
                proof of intentional copying
                  in CA4, gives rise to a rebuttable presumption of SM
                  includes intentional "knockoffs" by 3rd parties, not just defendant
                    Louboutin (CA2 2012)
          Permissible Forms
            Words
              e.g., Nike
              includes numbers
                e.g., 501 jeans
              words in other languages subject to the "doctrine of foreign equivalents"
                if the other language is common in the United States, the English translation will be employed in categorizing the mark
            Symbols
              e.g., Nike swoosh
            Slogans
            Names
              Personal Names
                surnames, first names, and combinations
                must be used in commerce as source indicator
                Common Law
                  Majority rule: can be protected only upon a showing of SM
                    Policy basis
                      1. protection of a name without SM may prevent other persons with same name from using it
                      2. May also deprive public of useful information: identity of provider
                      3. consumers aware that some names are common will not be confused if two different persons with the same name both use it in their businesses
                  Minority: if the policies underlying the traditional rule are not implicated, a name can be inherently distinctive
                    Peaceable Planet (CA7 2004)
                Lanham Act
                  while surnames are registrable only with SM, two-part personal names are registrable without SM
                  examples of registered personal names
                    Billy Joel
                    Johnny Carson
                    Madonna
                    The artist formerly known as Prince
                    DKNY
                    Dan Marino’s American Sports Bar & Grill
                    O.J. Simpson/ O.J./ Team O.J. Justice for All
              Names of other
living persons
                cannot be registered without their consent-- LA 2(c)
            Celebrity Likenesses
              iff consistently used as a source indicator
                Estate of Presley (DNJ 1981)
              protected features: face, voice, pose
                e.g., ETW (CA6 2003)
              cousin of state-law right of publicity
            Sounds
              examples
                light saber
                Law & Order
                MGM lion
                NBC
                Intel
                LucasFilm THX Deep Note
            Smells
            Colors
              color combinations
                Smack Apparel (2008)
              single colors
                in US, can serve as TMs if claimant can show secondary meaning
                  Qualitex
                In EU, recognized as source indicators only in exceptional circumstances
            Tastes
            Invented Ingredients
            Location of Labels
              Examples
            Fictional characters
              protectable provided they have come to designate a source
                examples
                  Mutt & Jeff
                  Tarzan
                  Mickey Mouse
                  James Bond
              in rare circumstances, treated as inherently distinctive
                example
                  Arthur the Aardvark
                    Brown (EDNY 1999)
            Trade Dress
              Definitions
                Blue Bell (CA5 1989): trade dress of a product is essentially its total image and overall appearance
                  may include such features as size, shape, color or color combinations, texture, graphics, or even particular sales techniques
                Two Pesos: includes the shape and general appearance of the exterior of the restaurant, the identifying sign, the interior kitchen floor plan, the decor, the menu, the equipment used to serve the food, the servers’ uniforms, and other features reflecting on the total image of the restaurant
                McNeil (2007):“It is "the total image or overall appearance of a product, and includes, but is not limited to, such features as size, shape, color or color combinations, texture, graphics, or even a particular sales technique." Rose Art Indus., Inc. v. Swanson, 235 F.3d 165, 171 (3d Cir. 2000).”
              Types
                product packaging
                product configuration
                  evolution of legal treatment
            Buildings
              White Castle (CA6 1937)
            Geographic Terms
              Used as Ordinary TMs
                Identify a particular supplier of a good or service
                Standard distinctiveness hierarchy applies
                Standard grounds for exclusion apply (see below)
              Geographical Indications
                Geographic term used to indicate a region from which products supplied by various firms derive
                US System: Certification Marks
                  example: California Milk
                French System: AOC
                  example: Roquefort cheese
                    images
                    AOC regulations
                    WIPO Registration
                International Regime
                  Lisbon Agreement
                    see "International Framework" above
                    example: Pisco
                  TRIPS Arts. 22-24
                    see "International Framework" above
          Grounds for Exclusion
            Functionality
              Marks are unprotectable if functional
                LA 2(e)
              Tests
                Qualitex (US 1995)
                  This Court consequently has explained that, "[i]n general terms, a product feature is functional," and cannot serve as a trademark, "if it is essential to the use or purpose of the article or if it affects the cost or quality of the article," that is, if exclusive use of the feature would put competitors at a significant non-reputation related disadvantage. [Inwood]
                Disc Golf (CA9 1998)
                  Consider 4 factors (none of which is decisive):
                    (1) whether the design yields a utilitarian advantage,
                    (2) whether alternative designs are available,
                    (3) whether advertising touts the utilitarian advantages of the design, and
                    (4) whether the particular design results from a comparatively simple or inexpensive method of manufacture.
                TrafFix (US 2001)
                  Essential to use or purpose, or
                  Affects cost or quality, or
                  Exclusive use of it would put
competitors at non-reputation
related disadvantage
              Branches
                utilitarian functionality
                  expired utility patent (whose claims cover the design feature at issue) is “strong evidence” of functionality — TrafFix (2001)
                aesthetic functionality
                  Automotive Gold v. VW (CA9 2006)
                    Mere fact that the mark is the benefit consumers want to purchase does not make it functional
                  Louboutin (CA2 2012)
            Conflicts with Existing Marks
              Mark cannot be registered if likely to cause confusion with existing mark
                LA 2(d)
              Mark cannot be registered if it is likely to cause dilution of an existing famous mark
                essential that the existing mark became famous prior to first use of the mark in question
            Fraud
              applicant knowingly makes a false, material representation of fact in connection with application
                Hornby (2008)
            Deception
              deceptive marks cannot be registered
                LA 2(a)
                definition
                  Mark misdescribes the goods to which it is attached
                  Consumers are likely to believe the description is accurate
                  The misdescription is likely to affect consumers’ decisions to purchase the goods
              deceptively misdescriptive marks may be registered iff have acquired SM
                LA 2(e), (f)
                definition
                  Mark misdescribes the goods
to which it is attached
                  Consumers are likely to believe
the description is accurate
              primarily geographically deceptively misdescriptive marks
                now cannot be registered even
if they have acquired SM
                  permissible before 12/9/93 (NAFTA),
but with different definition
                current definition
(California Innovations --
CAFC 2003)
                  (1) mark has as its primary significance a generally known geographic place
                  (2) mark identifies products that consumers are likely to believe mistakenly are connected with that place
                  (3) misdescription will likely be a significant factor in consumers' decisions
                so construed, this rule is superfluous
                  because a mark that meets this definition would be considered "deceptive" in any case
              special rule for geographical indications
                LA 2(a): 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—(a) Consists of or comprises ... a geographical indication which, when used on or in connection with wines or spirits, identifies a place other than the origin of the goods and is first used on or in connection with wines or spirits by the applicant on or after one year after the date on which the WTO Agreement enters into force with respect to the United States.
            False Suggestion of a Connection
              Hornby (TTAB 2008)
            Disparaging, Immoral or Scandalous
              Old regime
                Disparaging
                  LA 2(a)
                    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— (a) Consists of or comprises … matter which may disparage ... persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute
                  Lebanese Arak (2010)
                  Blackhorse (2013)
                  Treatment of ethnic mascots (Clarkson)
                Immoral or Scandalous
                  LA 2(a): 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— (a) Consists of or comprises immoral … or scandalous matter….
                  Tests
                    McGinley (1981): Does the mark give
offense to the conscience or moral feelings of a substantial portion of the public?
                    Old Glory (1993): consider “seriousness of purpose”
                    Mavety (CAFC 1994): “the PTO must demonstrate that the mark is "shocking to the sense of truth, decency, or propriety; disgraceful; offensive; disreputable; . . . giving offense to the conscience or moral feelings; . . . [or] calling out [for] condemnation.”
                    Wilcher (TTAB 1996): Would the mark be "offensive to the conscience or moral feelings of a substantial composite of the general public"?
                    Boulevard Entertainment (CAFC 2003): Consider changing social mores and sensitivities
                  examples
                    may not be registered
                      Mark depicting a nude heterosexual couple embracing in a fashion that appeared to expose male genitals
                      “Dick Heads’” for Richard Heads' Bar & Restaurant
                      "Bubby Trap" for brassieres
                      image of defecating dog
                      "Jack-Off"
                      "Madonna" for wine
                    may be registered
                      “Moonies” for dolls that drop their pants
                      Pictorial representation of a condom decorated with Stars and Stripes
                      “Black Tail” for adult entertainment magazine featuring African-American women
              Matal v. Tam (SCOTUS 2017)
        Acquiring Protection
          Registration
            Not essential for TM protection
              unregistered marks get common-law protection
              unregistered marks are protected by LA 43(a)
            Benefits of Registration
              (a) provides others constructive notice of registrant’s claim
              (b) nationwide constructive use as of date of application
              (c) prima facie evidence of exclusive right to use the mark in connection with the goods or services named in the application
                some courts hold that this merely shifts burden to D to challenge validity
                CA2, CA4, and CA9 hold that registration creates "strong presumption of validity"
              (d) right to bring suit in federal court without regard to diversity of citizenship
              (e) right to invoke aid of Customs Service -- e.g., grey market goods
              (f) more generous remedies -- e.g., treble damages and attorneys fees
              (g) access to incontestability doctrine
            Paths to Registration
              1. Current Use in Commerce (LA 1(a))
                Registration Procedures
              2. Intent-to-Use (ITU) Applications (LA 1(b))
                applicant may secure priority date by filing ITU application, then engaging in use in commerce within 6 months, then filing certificate
                  can get extensions for up to 3 years for good cause
                option available since 11/16/1989
                has led to many speculative filings
                  e.g., "Seal Team 6"
              3. Foreign Applications (LA 44(d))
                nationals of treaty partners or countries providing reciprocity may file US TM application within 6 months of foreign application + intent-to-use statement
                US registration granted upon either:
                  use in commerce in US, or
                  foreign registration granted
                    may maintain US registration for up to 6 years, even without any use in the US or elsewhere
                priority date = date of foreign application
              4. Foreign Registrations (LA 44(e))
                nationals of treaty partners or countries providing reciprocity may file US TM application based upon registration of the mark in applicant's country of origin
              5. Madrid Protocol (LA 66(a))
                see International Framework (above)
                available since Nov. 2, 2003
          In some jurisdictions, Use
            General principle of US TM law: one must use a mark in the US to acquire rights to it
              Common Law
                "Use in Trade"
                  Blue Bell (CA5 1975)
                bona fide use of the mark in connection with offering goods or services to the public
                publicity or solicitation may be sufficient if combined with intent to use
              Lanham Act
                "Use in Commerce"
                  interstate commerce
                  intrastate commerce that affects interstate commerce
                    e.g., restaurants with interstate clientele
                  commerce with other countries
                  commerce with "Indian Tribes"
                Unregistered Marks (43(a))
                  Common-law standards apply
                  advertising and promotion is sufficient if (a) occurs within a commercially reasonable time prior to sales or service and (b) is sufficient to create an association among mark, goods/service, and user
                Requirements for Registration
                  pre-1989
                    "token use" was deemed sufficient for registration
                      but exactly how much use was necessary was contested
                    TM Registration Maintenance Programs
                      division among the circuit courts concerning validity
                      Influential opinion in Proctor & Gamble (SDNY 1979) adopts intermediate position
                  post-1989
                    The availability of the ITU option (see above) has prompted courts to tighten "actual use" requirements
                    Goods
                      mark must be placed on goods themselves, containers, displays, tags, or (if infeasible) documents
                      goods must be sold (to customers) or transported (visibly) in commerce
                        e.g., interstate shipments of drugs to clinicians for use in clinical trials is sufficient, even though drugs are not yet approved for sale to public
                      For-profit use is not necessary
                        Nonprofit sales of goods or services sufficient
                    Services
                      mark must be used or displayed in the advertising of services, and the services themselves rendered in commerce
                      advertising for service that has not yet begun is not sufficient
                        Aycock (CAFC 2009) (interpreting both pre-1989 and post-1989 standards)
            Foreign Use
              ordinarily, use of a mark outside the US does not count, even if advertising of the goods or services spills into US
                e.g., Mother's Restaurant (CA2 1998)
              But a few courts define "use in commerce" broadly enough to encompass foreign services provided to US residents
                e.g., International Bancorp. (CA4 2003)
                  sufficient if the foreign company both provides services to visitors from US and advertises in the US
              And some courts will recognize foreign use if it causes the mark to become "famous" or "well known" to US customers
                at common law
                  Maison Prunier (1936)
                  Vaudable (1959)
                  Punchgini (NY 2007)
                under Lanham Act -- circuit split
                  Grupo Gigante (CA9 2004)
                  Punchgini (CA2 2008)
                unclear whether this equivocal recognition of famous marks is sufficient to comply with TRIPS article 16.2
        Losing Protection
          Abandonment
            Nonuse
              Traditional Rule:
                Abandonment requires both nonuse and intent to abandon
                  See Gold Seal Associates (SDNY 1932)
                  Parallels CL doctrine of abandonment for personal property
                    need both deliberately leaving the object behind and intent to abandon
                  lapse of time without use may be evidence from which intent to abandon may be inferred, the strength of the inference being dependent upon the period of discontinuance, the cause of it, and other factors
                  But intent to relinquish must be shown
                Applied: As long as P is making efforts to keep the business going, no intent to abandon
              Current Rule:
                LA 45
                  A mark shall be deemed to be "abandoned" if either of the following occurs:
(1) When its use has been discontinued with intent not to resume such use. Intent not to resume may be inferred from circumstances. Nonuse for 3 consecutive years shall be prima facie evidence of abandonment. "Use" of a mark means the bona fide use of such mark made in the ordinary course of trade, and not made merely to reserve a right in a mark….
                Abandonment requires two things:
                  Nonuse
                  Intent not to resume
                3 years of nonuse (increased from 2 years per TRIPS) of federally registered mark constitutes prima facie abandonment
                  but it can be rebutted by proof of intent to resume use
                Cases
                  Silverman (CA2 1989)
                  Exxon (CA5 1983)
                  California Cedar (CA2 1984)
            Changes in Product or Service
              transferring TM to different product or service is permissible if the old and new versions are "closely related"
                test: would consumers think that the new product is coming from the same source
              sudden and substantial change in quality or composition may result in abandonment
              but gradual and incremental changes in quality or composition are acceptable
                rationale: consumers expect them
                e.g., Marilyn Neutraceuticals (CA9 2009)
          Genericide
            Test: If the principal significance of a mark to the public is to indicate the nature or class of an article, rather than its source (i.e., the person or organization that produces it), then it’s generic
              it had lost its distinctiveness
              other producers must be allowed to use it
              test refined by §1064, reversing the AntiMonopoly decision (CA9 1982)
                “A petition to cancel a registration of a mark, stating the grounds relied upon, may, upon payment of the prescribed fee, be filed as follows by any person who believes that he is or will be damaged, … (3) At any time if the registered mark becomes the generic name for the goods or services, or a portion thereof, for which it is registered, …. If the registered mark becomes the generic name for less than all of the goods or services for which it is registered, a petition to cancel the registration for only those goods or services may be filed. A registered mark shall not be deemed to be the generic name of goods or services solely because such mark is also used as a name of or to identify a unique product or service. The primary significance of the registered mark to the relevant public rather than purchaser motivation shall be the test for determining whether the registered mark has become the generic name of goods or services on or in connection with which it has been used.”
                obscure language, but the gist is that, to be distinctive, a mark need not be attractive to consumers because they know and trust the manufacturer
            Circumstances that affect likelihood of genericide
              Things to avoid:
                TM owner uses the mark in denominative sense
                TM owner uses the mark as noun or verb, rather than as an adjective, attached to some generic term
              Names of patented goods, when the patent expires
                Kellogg (US 1938) (Shredded Wheat) seems to stand for the general proposition that they become generic automatically
                But courts do not generally so hold
                  e.g., Bayer: it’s a factor, but not decisive
              Efforts of the TM owner
                trial court in the Thermos case chastises King-Seeley for not exercising “due diligence” in the period between 1923 and early 1950s to prevent generic use of Thermos in the nontrade publications
                Moore, however, suggests that it’s irrelevant
            Options for a TM holder whose mark have become generic
              no protection under §32 or §43(a)
              courts retain and frequently exercise power to craft tailored remedies
                e.g., to require Aladdin (for a while) to insert various disclaimers, to only use thermos in lower case, etc.
                see also Learned Hand’s detailed injunction in the aspirin case
              Some courts permit the TM holder to rely on unfair competition
                Intentional passing off
          Assignments
            TMs may be assigned
              cf. prior appropriation in water law
            Limitations
              to be assignable, TMs must be associated with an ongoing use in commerce
                abandoned marks may not be assigned
                ITU applications may not be assigned
                  attempt to do so voids the application
              No assignments in gross
                in most countries, TMs can be assigned in gross
                in USA, transfers in gross are commonly held to constitute abandonment
              but TMs may be assigned along with other assets
                Some courts stick to older US rule: must be accompanied by transfer of physical assets -- like machines, customer lists, etc.
                Others permit assignment of the mark if accompanies transfer of "goodwill"
                  goodwill = "favorable consideration shown by purchasing public to goods known to emanate from a particular source" (Rogers 1914)
                    reasonable expectation of future patronage
                  A few courts are satisfied by mere recitation of transfer of good will
                  others construe to require maintenance of quality controls during transfer -- and reasonable time thereafter
                    Platt, "Good Will Enduring" (2009)
                  Some say that no “goodwill” is transferred if the assignee plans to use the mark on a new and different product
                    goodwill consists of the public’s faith that the product will remain good; n.a., where the product is changed
          Licenses
            Licensing of the mark to others without controlling the quality of their products results in abandonment
              rationale: otherwise the licensees will be able to reduce the quality, and the public will be deceived
            But licensing accompanied by effective controls over quality does not result in abandonment
              Range of views concerning the necessary quality controls
                Sufficient if there’s evidence that licensor was familiar with and relied upon licensee’s quality controls
                Close working relationship is also sufficient
                Judge Hand would impose more stringent requirements re effective policing than the rest of the CA2
      Applications for Fintech Trademarks are rising rapidly
        Fintech_Trademarks.pptx
      Selected TM Controversies
        Alibaba v. Alibabacoin (SDNY 2018)
        Telegram Messenger Inc. v. Lantah, LLC (ND Cal 2018)
          Use of “GRAM” for a cryptocurrency
      Bottom line: trademark protection for fintech innovations is now easy to obtain, and highly valuable to innovators
        Success of fintech businesses is highly dependent on lead time and branding, which TM shields can help supply
        In light of common vocabulary, fintech businesses are unusually vulnerable to consumer confusion with respect to the source of services
    Trade Secrets
      History of Trade Secret Protection for Software
        Companies sell copies of object code, keep source code secret
        Courts rule that public distribution of object code does not forfeit TS protection, so long as source code is hard to reverse engineer
          Data General v. DCI (Del. 1971)
          Telex v. IBM (CA10 1975)
          Q-Co Industries (SDNY 1985)
        Appropriate to an era in which software is custom-made by vertically integrated hardware suppliers for large commercial customers
          Limitations of this Approach
            Gradual improvement of decompilers makes possible reverse engineering
            No protection against “piracy” of object code
            Limited protection against “downstream” consumers
            Consumers’ demand for access to source code
      Factors limiting usage
        Increased regulatory disclosure
        Vertically integrated financial firms displaced by independent IT firms
          See Lerner et al.
      Only modestly helpful to fintech innovators
        TS protection can supply shields for customer lists
        TS can be used to curtail employee defections
          But divergence of software industries in Boston and Silicon Valley suggests that, in the aggregate, this is a hazardous strategy
  Fintech
    Definition
      Technology used to support financial services
    History
      Before 1850
        Needs of emerging national financial systems spur new technologies
        Major Technological Innovations
          Written records
          Currency
          Abacus
          Telegraph (1833)
      1850-1967
        Sporadic financial globalization
        Major Technological Innovations
          Transatlantic cable (1866)
          Credit cards (1950s)
          Fax machine (1964)
        Fintech_Stage2.pptx
      1967-2008
        Digitization of traditional financial functions
        Major Technological Innovations
          ATM (1967)
          Financial calculators (1967)
          Society of Interbank Financial Telecommunications (1973)
          Spreadsheet apps (1977)
            Spreadsheets.pptx
          Bloomberg terminals (1980s)
            Provides access to real-time data on financial markets and ability to trade securities online
            Bloomberg.pptx
          Computer-driven trading of securities (1980s)
            Contributed to the crash of 1987
            Computer_Trading.pptx
          Online account checking (1995)
      2008-2022
        Democratization of financial functions
          Precipitating factors
            Global financial crisis (2008)
              Led to decline in faith in traditional financial institutions
            Tightening of regulations on traditional financial institutions
              Dodd-Frank in US
              Basel 3
        Major Technological Innovations
          Blockchain
            Blockchain.pptx
            Applications outside of fintech
              Title assurance
              Combating substandard and falsified drugs
          Artificial Intelligence
    Scale
      Fintech_Scale.pptx
      Geography
        Pioneers = USA and China
          In China, fintech is dominated by large companies (Alibaba, JD, Tencent)
          In USA, fintech is more dependent on startups and VC funding
        Europe is the slowest region to develop or adopt initiatives, but is now accelerating
          Within Europe, UK leads
        In several respects, developing countries are ahead of Europe
        Fintech_Geography.pptx
    Fields
      1. Banking
        Mobile banking
          Mobile_Banking.pptx
        P2P Lending
          P2P_Lending.pptx
        Payment systems
          Paypal
          ApplePay
          Venmo
          Affirm
          Payment_Systems.pptx
      2. Investing
        Crowdfunding
        Initial Coin Offerings
          ICOs.pptx
      3. Insurance
        Common features
          Fully online businesses result in lower costs
          AI + more diverse sources of information results in more precise estimates of risk -- and thus more tailored policies
        Examples
          Ethos
            (AI underwriting for life insurance)
          Hippo Insurance
            Alternative information sources for homeowners’ insurance
            Monitoring systems to reduce risks
          Lemonade
            Renters’ insurance
            Homeowners’ insurance
          Next Insurance
            Liability insurance for small businesses
        Illustrations
          finech_insurance.pptx
      4. Currencies
        Currencies.pptx
      5. Smart Contracts
        Self-executing agreement in digital form
        Whereas traditional contracts create legal obligations, which require state intervention to enforce, “smart contracts” enforce obligations automatically
          (Potential state involvement through rescission)
        Applications
          Bets
          Securities Trading
          Mortgages
          Taxes on Transactions
      6. Financial security
        Fraud detection services
          Fraugsters
      7. RegTech
        Provocations
          Increased regulatory burdens in wake of global financial crisis of 2008
          Increased penalties for breaches
          Decreasing costs of monitoring digital financial transactions
        Examples
          Compliance with “Know Your Customers” (KYC) regulations, designed to curb money laundering and terrorism
          Compliance with rules governing capital requirements, risk management, liquidity
        Paradigm shift?
          RegTech.pptx
      8. Art
        NFTs.pptx
    Social Welfare
      Benefits
        1. Reduced Transaction Costs
        2. Increased Access to Credit
          P2P_Lending.pptx
        3. Increased Security
        4. Increase competitiveness
          Facilitate disaggregation of business
            Coase, “Theory of the Firm”; Robert Clark
            OECD: “The standard theory of the firm suggests that in order to carry out a transaction in a market it is necessary to discover who it is that you wish to deal with, to conduct negotiations leading up to a bargain, to draw up the contract, to undertake the inspection needed to make sure that the terms of the contract are being observed, and so on (Coase). The development of the digital platform business model has reduced search and information costs, and while the costs of incomplete contracting are likely to remain significant (Grossman, Hart & Moore), blockchain technology might be expected to reduce the costs of contract enforcement. This might lead firms to outsource more, and to outsource new, previously core functions to specialised, and perhaps smaller, firms (even individuals). This could therefore create new and potentially highly competitive markets in a similar way to the disruption cause by the digital platform business model.”
          Reduce barriers to entry
            Cong 2018
          Provoke innovation by incumbents
        5. Health Benefits
          Minimize person-to-person contacts in financial transactions
            Arner 2020
          Augment databases that can sustain sophisticated diagnostic systems
        6. Benefits to Artists
          Enable digital artists to monetize creations
      Costs
        1. Network effects can produce dominant platforms
          Direct Network Effects: value of product is tied to the number of other people (or institutions) who have and use it
            telephone
            Fax machine
            windsurfer
            Digital currency
              e.g., Libra
          Indirect Network Effects: value of product rises if third parties emerge to supply ancillary products or services
            some happen at the level of technology – affect the industry as a whole
              e.g., generic charging stations for electric cars
            some happen through good management and therefore benefit a firm
              e.g., proprietary charging stations (Tesla)
              e.g., “friends and family” plan
        2. Facilitate fraud and exploitation
          Concealed risks
            Lerner et al. (2020): “ Reflecting these doubts, recent academic studies have focused on the development and diffusion
of what Krugman (2007) terms the “alphabet soup of C.D.O.’s and S.I.V.’s, R.M.B.S. and A.B.C.P.”
              “A rich empirical literature has examined the frequently deleterious consequences of the
innovative financial securities in the run-up to the GFC.
              “Similarly, theoretical work has highlighted concerns about financial innovation and its impact:
                important papers include Biais, Rochet, and Woolley (2015), Caballero and Simsek (2013), and Thakor (2012), as well as the prescient arguments of Rajan (2006).
                In one such paper, Gennaioli, Shleifer, and Vishny (2012) adapt the standard depiction of financial innovators catering to investors’ desire for certain cash flow patterns (Allen and Gale, 1994; Ross, 1976). In their variant, financial intermediaries meet investor tastes by engineering securities perceived to be safe but actually riven with hidden risks. When these weaknesses subsequently become apparent, the valuations of the novel securities drop sharply and social welfare suffers.”
          Unregulated ICOs
            ICO_Regulation.pptx
          Fraud in COVID loan programs in US
            Paycheck Protection Program distributed $793B in loans to small businesses, 2020-2021
            Early rounds dominated by banks; gradually displaced by Fintech lenders
            Griffin et al. (2022) estimate that 1.4M loans ($64.2B in value) are “questionable”
              Large and long-standing Fintech lenders have lower rates of presumptive fraud than new entrants
        3. Facilitate criminal activity
          Money laundering
          Drug sales
          Bitcoin_Crimes.pptx
        4. Threats to Privacy
          Byproduct of the widespread distribution of information necessary to achieve decentralized consensus
            Cong 2018
          No limits on the data that can be used to assess credit-worthiness
        5. Causes environmental damage
          Cryptocurrency mining consumes large amounts of electricity and thus contributes to climate change
            Bitcoin_Climate.pptx
          Impending transition from “proof of work” authentication to “proof of stake,” if it occurs, will radically reduce environmental costs