LICENSING PATENTS, TRADE SECRETS AND TRADEMARKS

FINAL EXAMINATION

Professor Jorda December 15, 1998

Instructions:

This is a three-hour, open-book exam (four and one-half hours for certain foreign students). You may consult the course materials as well as any other materials. Yet, your examination must be your own work. Do not discuss it with other students.

Write your answers in the blue books supplied, but please use only one side of the page and observe the margins. Please write or print as legibly as possible.

Grading will be anonymous; please do not put your name on anything you turn in. BE SURE YOUR EXAM NUMBER IS ON EACH BLUE BOOK YOU TURN IN.

 

PROBLEM I

A. Facts

In 1972 David Hatfield developed several agricultural products, including a fiberglass heating pad for newborn hogs. Osgood Products, Inc. (OPI) was later created to manufacture Hatfield’s products, and Hatfield became an employee.

In April 1974, Hatfield learned that OPI planned to develop a trademark, and he insisted that OPI use the name "Hatfield" in the mark. OPI agreed, and in 1975 the parties entered into a license providing in part that OPI could use the name Hatfield for 15 years as a "distinctive mark on all or part of the products" manufactured by OPI, whether or not they were invented by Hatfield. The agreement did not give Hatfield an express contractual right to inspect or supervise OPI’s operations in any way.

Hatfield later resigned from OPI, and had no further involvement or relationship with the company. Meanwhile, in March 1977, OPI applied to register the marks "Hatfield" and a circle design incorporating the name Hatfield. The marks were registered in January 1978.

In 1991, Hatfield sued OPI in the district court, based on his understanding that the parties’ 1975 license agreement had expired and that OPI’s use of the Hatfield marks constituted trademark infringement. Hatfield argued that the parties’ 1975 agreement was a limited license permitting OPI to use the "Hatfield" marks for only 15 years. OPI countered, and the district court agreed, that the agreement was a "naked" license, and therefore, Hatfield had abandoned any rights in the trademarks.

 

B. Question

On appeal, how should the Circuit Court rule and why? [15 Points]

 

PROBLEM II

A. Facts

As an employee, Mr. Jones had assigned his patent to Total Service Inc. under his employment contract. According to the terms of this contract, Mr. Jones received compensation, expenses and bonuses for his assignment of the patent. Mr. Jones is now the CEO of the competitor and infringer, Acme Products, Inc. and alleges in the pending infringement suit that Total failed to make certain payments under his severance contract. But Total points out that the payments were withheld only after it became apparent that Mr. Jones had violated the restrictive covenant in both his employment and severance contracts which precluded his competing with Total directly or indirectly until a date certain.

B. Questions

What should the court’s decision be and why? [15 Points]

PROBLEM III

A. Facts

When ABC Corp. brought suit against XYZ Co. for infringement of its patent, the jury found infringement and awarded ABC over $1.2 million in damages. However, XYZ argued in defense that ABC had misused its patents. The jury agreed with this and the District court set aside the patent infringement damages it had earlier awarded.

There were four basic allegations of patent misuse: (1) ABC sent infringement notices including requests to cease and desist infringing activities to government contractors without informing those contractors of the available affirmative defense provided to them by 28 USC 1498 (see Appendix): (2) ABC threatened to void its warranties on its patented products that were used with non-ABC components; (3) ABC proposed to a third party, Ascor, a license agreement (which was never entered into) conditioned on Ascor’s purchase of unpatented products; and (4) ABC explicitly threatened to enforce its patent against Ascor and another company, even though those companies were government contractors also protected by Section 1498.

B. Question

On appeal to the CAFC, how should the court rule and why? [20 Points]?

PROBLEM IV

Miscellaneous

Please write brief essays on the following topics:

1. How to neutralize the so-called "Blackbox dilemma". [5 Points]

  1. Better alternatives for the common "best efforts" clause. [5 Points]
  2. Ways to protect licensees from third-party dominant patent risks. [5 Points]
  3. Lessons to be learned from the masterful clock calculator and Gould laser patent licensing schemes. [5 Points]

— END OF EXAMINATION —

KFJ/Ruh/12.8.98

 

APPENDIX

 

 

28 USC § 1498

(a) Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.