US IP Update

Having recently returned from the ABA Annual Conference it seemed a good time to post an update on the issues that folk are excercised about in the US at the moment.

Cipro and Reverse Payment Settlements

The situation here is that a patent holder faced with a generic challenge may reach a settlement involving payments from the patent holder to the generic house and a delay by the generic house in launching its intended product. Some people, including the Federal Trade Commission, believe such settlements which are sometimes called “pay for delay” are anticompetitive but the courts have largely upheld them so long as the “delay” relates only to matters covered by the patent in dispute. The position is complicated further as courts in different parts of the country are taking slightly different approaches. The FTC with which the Sixth Circuit is sympathetic wants this sort of settlement banned outright as “per se” anticompetitive, the Department of Justice has come round to the idea that they should be presumed to be anti competitive – ie the company wishing to maintain the agreement would have to show in those particular circumstances the agreement was not anticompetitive. The issue is particularly sensitive as the cases have involved pharmaceuticals and there is concern that prices may be kept artificially high as in the absence of a settlement some of these patents may well have been struck down in court proceedings. the FTC has now turned to Congress and various attempts have been made to introduce legislation to ban this type of settlement but so far they have not come to a vote.



There is probably not much more to say about this case. IP lawyers around the world had got very excited about this as we had assumed the US Supreme Court would take the opportunity to clarify what sort of business method could be patented. The US used to be very sympathetic to patenting business methods but had gradually been becoming stricter on this and a test grew up that to be patentable an idea had to be linked to a machine or had to result in some sort of transformation into a different state or thing. Bilski involved a system for hedging risk in commodity transactions. Unsurprisingly the Appeal Court refused to countenance it, and the Supreme Court was not impressed either but interestingly did say that the machine or transformation test was not definitive. The result is that nothing much has changed except there is likely to be even more uncertainty going forward which will be particularly difficult for small companies who cannot risk patent litigation or for those seeking funding for ideas in this area. A further chilling effect is that four of the judges seemed to be pretty unenthusiastic in general about business method patents.

Right of Publicity Claims

There was a lot of debate about “celebrity endorsement” and use of pictures of famous people or people who look or sound like them. Unsurprisingly a release is generally required to use somone’s image in the course of trade or in advertisements and using pictures of people who are the subject of a news article is OK as constitutionally protected free speech. Parody and Art are also generally acceptable which seems strange as artists sell their works but care should be taken that use of real people in works of fiction should only be fleeting. The right to control one’s image after death varies from state to state and can extend for a considerable period with some states providing for up to 100 years protection. Where the matter is covered by common law the situation is less certain. Sound -alikes and Look -alikes may also give rise to claims based on the liklihood of confusion.

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