Recent Developments in IP Law

Vol. 4 No. 5

By

John C. Gatz is a member of the firm Nixon Peabody LLP in Chicago. Column contributors include the following writers. Copyrights: Zachary J. Smolinski, Panduit Corporation; Michael N. Spink, Brinks, Hofer, Gilson & Lione; Mark R. Anderson, Ulmer & Berne LLP. Trademarks: Janet M. Garetto and Elizabeth W. Baio, Nixon Peabody LLP; Amy L. Sierocki. Patents: Cynthia K. Barnett, Johnson & Johnson; Timothy M. Kowalski, Motorola Mobility, Inc.; R. Trevor Carter and Daniel M. Lechleiter, Baker & Daniels, Indianapolis; Robert W. (Bill) Mason, Kinetic Concepts, Inc.

Copyrights

 

Plaintiff’s Case Not Picture Perfect

Wolk v. Kodak Imaging Network, Inc., 2012 WL 11270 (S.D.N.Y 2012). Wolk is an artist with a number of copyrighted creations. Kodak runs an online photography service called the Kodak Gallery, which allows users to create and store photo albums online, and allows users to create items that include photos uploaded to the website. Kodak also had an agreement with Photobucket, another user-uploaded online photo storage site, to allow Photobucket users to print or create items using images from the users’ Photobucket account. Wolk sued Kodak and Photobucket for copyright infringement. All parties moved for summary judgment on copyright infringement. The court granted Kodak’s and Photobucket’s motion for summary judgment, while denying Wolk’s motion. The court found that Kodak lacked the level of “volition” required to infringe Wolk’s copyrights because all of the acts Kodak performed were done electronically and without any human intervention. Therefore, the court concluded that Kodak had not directly infringed the copyrights and secondary liability was not alleged.

With respect to Photobucket, the court found that the DMCA’s “Safe Harbor” provisions applied, and granted Photobucket’s motion for summary judgment. The court held that Photobucket qualified as a service provider, as it is a website that hosts and allows sharing of user-submitted material. Further, Photobucket had implemented a policy for terminating users that are repeat copyright infringers. Photobucket removed alleged infringing works when Wolk provided sufficient notice. The court found that Photobucket was not liable for instances where Wolk failed to provide proper notice, such as by not providing the URL, rejecting Wolk’s argument that a single notice for one copyright should require Photobucket to remove all copies of that work from its website, not just the identified copy. The court ruled that Photobucket did not have a duty to police its website for infringing works. The court ruled that Photobucket was not liable for contributory or vicarious liability, as it did not encourage direct infringement or have the ability to control the alleged infringing activity and profit from the infringement.

Strong Fair Use Defense Leads to Award of Attorney’s Fees

Brownmark Films LLC v. Comedy Partners, 101 U.S.P.Q.2d 1241 (E.D. Wis. 2011). Plaintiff Brownmark Films is a small company that created a music video, which went viral on YouTube. The video features a male vocalist repeatedly singing the title of the video and several derivations thereof accompanied by a series of surreal images. Defendant Comedy Partners produces the television show South Park, an animated series for adults that lampoons various social topics. In one episode, one of the characters creates a video similar to the Brownmark video, in which the South Park character sings many of the same lyrics with similar surreal imagery. In the episode, the South Park characters learn that is difficult to convert viral Internet fame into real money.

The district court had previously granted a motion to dismiss the infringement suit based on Comedy Partners’ strong fair use defense. The district court found that the South Park replica was both a parody and transformative of the original. The episode used relatively little of the original copyrighted work, and was unlikely to usurp any market demand for the original. Comedy Partners moved for an award of attorneys’ fees and costs. The district court evaluated the pertinent factors, noting a strong presumption in favor of awarding fees to a prevailing defendant. Not only was the fair use defense strong, but the district court also found Brownmark’s legal position objectively unreasonable. Comedy Partners made many changes and used only enough to conjure up the original video; rather than usurping the market, they likely increased exposure and spread of the original. While the district court hoped to deter future frivolous actions, it also noted that Brownmark could hardly bear the same costs as the sophisticated Comedy Partners. Balancing these factors, the district court held that an award of attorneys’ fees was appropriate, but requested financial data from Brownmark so that it could impose a fee tied to its size and ability to pay.

 

Trademarks

 

Preliminary Injunction/Infringement and Dilution

Apple Inc. v. Amazon.com Inc.,100 U.S.P.Q.2d 1835 (N.D. Cal. 2011). The district court found that Apple had not established a likelihood of success as to its claims of infringement and dilution of its APP STORE mark by Amazon.com Inc. (Amazon) and, thus, denied Apple’s motion for preliminary injunction. Amazon uses “Amazon AppStore for Android” in connection with mobile software applications. Apple sought a preliminary injunction enjoining Amazon from using the APP STORE mark. The district court found that Apple was unlikely to prevail on the merits of its claims of infringement and dilution. Apple sought to establish that the APP STORE mark was suggestive, or had at least acquired secondary meaning. Amazon contended that the APP STORE mark was generic. Without deciding whether the APP STORE mark was a protectable mark, the district court determined that the Sleekcraft factors did not weigh in favor of Apple, as only two of eight factors somewhat favored Apple. Thus, Apple had not established a likelihood of prevailing on the “confusion” element of its infringement claim. On the dilution claim, the district court found that Apple had not established that the APP STORE mark was famous or that there was sufficient evidence to support a likelihood of success regarding the “blurring” and “tarnishing” elements of its dilution claim. Thus, Apple’s motion for preliminary injunction was denied.

 

Res Judicata

Zachry Infrastructure LLC v. American Infrastructure Inc., 101 U.S.P.Q.2d 1249 (TTAB 2011). Zachry Infrastructure brought motion for entry of judgment in certain opposition proceedings against American Infrastructure on grounds of res judicata based on a district court’s decision granting summary judgment in favor of Zachry. The TTAB granted Zachry’s motion for claims that American’s mark has not acquired distinctiveness and denied Zachry’s motion as to genericness of claims. American filed various trademark applications for the mark AMERICAN INFRASTRUCTURE (and variations thereof) for construction-related services. Zachry opposed the applications, alleging that the marks were, e.g., merely descriptive, primarily geographically descriptive, generic, and that they lacked acquired distinctiveness. The opposition proceedings were suspended pending final determination of a civil action in which the district court granted summary judgment in Zachry’s favor. Zachry filed a motion for entry of judgment in the TTAB proceedings in view of the district court’s decision.

The TTAB found that the doctrine of claim preclusion did not apply because the transactional facts at issue were different. Namely, the civil action focused on whether American’s marks were distinctive and protectable while the TTAB proceedings focused on American’s right to register its marks. Thus, the TTAB declined to apply the doctrine of issue preclusion on the issue of genericness. The TTAB also found that the default judgment entered in three of the TTAB proceedings as a result of abandoning those applications did not result in claim preclusion on the issue of genericness. The TTAB reasoned that a trademark owner is entitled to choose which opposition to defend, so long as the proceedings are not an attempt to evade the effect of a previous adverse judgment on the merits. Regarding issue preclusion, the TTAB found that the claims in the civil action and the opposition were identical: whether American’s marks had acquired distinctiveness. Thus, the TTAB found that the district court’s determination that the marks were not distinctive to be binding on the Board.

 

Patents

 

Assignment

Abbott Point of Care Inc. v. Epocal Inc., ___ F.3d ___, 101 U.S.P.Q.2d 1273 (Fed. Cir. 2012). The Federal Circuit upheld the district court’s determination that Abbott did not own the asserted patent as the inventor’s employment agreement requiring him to assign inventions had ended when the employee resigned. Therefore, Abbott lacked standing to sue and the case was dismissed.

 

Attorney’s Fees/Exceptional Case

MarcTec, LLC v. Johnson & Johnson, 664 F.3d 907, 101 U.S.P.Q.2d 1177 (Fed. Cir. 2012). The Federal Circuit affirmed the district court’s finding that this case was exceptional under § 285 as well as its award of attorney’s fees, expenses, and expert witness fees. This case was found to be exceptional for several reasons. For example, the plaintiff asserted its patent against the defendant’s stents that did not use heat bonding even though: (1) a heat binding limitation was disclosed in the specification and used to distinguish the claims over the applied prior art, and (2) coverage of stents has been disclaimed during prosecution.

 

Claim Construction

Absolute Software Inc. v. Stealth Signal Inc., 659 F.3d 1121, 100 U.S.P.Q.2d 1641 (Fed. Cir. 2011). The Federal Circuit addressed several noninfringement summary judgment determinations. The Federal Circuit found that use of “in the present invention” in the specification did not result in a limitation being read into the claims. However, the Federal Circuit did define a claim term based on strong suggestions in the claim and repeated references of an issue in the specification.

Celsis In Vitro, Inc. v. CellzDirect, Inc., 664 F.3d 922, 101 U.S.P.Q.2d 1153 (Fed. Cir. 2012). The Federal Circuit affirmed the district court’s grant of a preliminary injunction. The patent is directed to preparing multi-cryopreserved hepatocytes (a type of liver cell). The motion for the preliminary injunction used the traditional four-part test. In the context of the likelihood of success on the merits prong, the claim language “without requiring a density gradient step” was disputed. The accused infringer argued this phrase should mean prohibiting a process that performs a density gradient step. The Federal Circuit disagreed, finding the phrase means only that the claim does not require the density gradient step. Thus, performance of that step does not preclude a finding of infringement.

 

Claim Construction/Indefiniteness

Typhoon Touch Techs. Inc. v. Bell Inc., 659 F3.d 1376, 100 U.S.P.Q.2d 1690 (Fed. Cir. 2011). The Federal Circuit addressed several claim construction issues and reversed a summary judgment of invalidity based on indefiniteness. Several of the claim construction issues addressed whether a “use” limitation should be required in apparatus claims. For some terms, the Federal Circuit found that recited functions must be performed based on prosecution history and statements in the specification. For the indefiniteness issue, the Federal Circuit found that adequate structure was disclosed for a means-plus-function software limitation. Even though a mathematical algorithm for the function was not disclosed, the specification recited the algorithm “in prose” to be implemented by a programmer.

 

Costs

In re Ricoh Co. Patent Litig., 661 F.3d 1361, 100 U.S.P.Q.2d 1793 (Fed. Cir. 2011). The Federal Circuit affirmed in part, reversed in part, vacated in part, and remanded the district court’s award of costs to prevailing parties. After the district court granted the defendant’s motion for summary judgment of noninfringement, the district court awarded costs for electronic database creation, copying costs, and all deposition costs. On appeal, Ricoh argued that the parties had entered a cost-sharing contract for the database creation, which the Federal Circuit found controlling and therefore reversed the award. With respect to disputed copying costs, the Federal Circuit found inadequate documentation supporting the award, and therefore vacated the award and remanded the case for further proceedings to clarify the documentation. With respect to the deposition costs, the Federal Circuit affirmed the award.

 

Date of Invention

Teva Pharm. Indus. Ltd. v. AstraZeneca Pharms. LP, 661 F.3d 1378, 100 U.S.P.Q.2d 1852 (Fed. Cir. 2011). The Federal Circuit affirmed the summary judgment holding selected claims invalid over defendants’ prior invention. Before the district court, AstraZeneca moved for summary judgment of invalidity alleging that it had conceived and reduced its drug to practice prior to Teva’s first conception of the claimed subject matter. This was based on undisputed facts that AstraZeneca manufactured its drug formulation in mid-1999 containing the same ingredients in the same amounts as its commercial drug. Teva conceived and reduced to practice its claimed invention in December 1999. The district court granted AstraZeneca’s summary judgment motion. On appeal, Teva argued that the district court failed to require AstraZeneca to prove that it appreciated its invention and that the overbroad construction of the asserted claims effectively relieved AstraZeneca of its burden of proving that it created the claimed subject matter and appreciated the same. The Federal Circuit disagreed. To establish prior invention, the party asserting it must prove that it appreciated what it had made. The prior inventor does not need to know everything about how or why its invention worked, nor must it conceive of its invention using the same words as the patentee would later use to claim it. The Federal Circuit therefore affirmed the district court’s entry of summary judgment of invalidity.

 

Inequitable Conduct

Powell v. Home Depot U.S.A., Inc., 663 F.3d 1221, 100 U.S.P.Q.2d 1742 (Fed. Cir. 2011). The Federal Circuit affirmed the district court’s denial of the defendant’s motion for JMOL, in part, on the issue of inequitable conduct. Powell had a business relationship with Home Depot as its point of contact for installing and servicing in-store radial arm saws. After Home Depot switched to a different provider, Powell sued Home Depot on its patent relating to radial arm saw guard safety technology. Home Depot argued, in part, that the patent was unenforceable due to Powell’s alleged inequitable conduct. While prosecuting the patent, Powell filed a Petition to Make Special, seeking expedited review on grounds that he was obligated to manufacture and supply devices embodying the claims sought based on his business relationship with Home Depot. Before the petition was granted, however, it became clear that Home Depot was switching to a different provider. Nevertheless, Powell failed to update his petition to reflect the changed circumstances. Eventually, the USPTO granted the petition and Powell’s patent application received expedited review. Relying on Therasense, the Federal Circuit found that Powell’s failure to update the petition did not constitute inequitable conduct because Powell’s conduct obviously failed the but-for materiality standard and is not the type of unequivocal act, “such as the filing of an unmistakably false affidavit,” that would rise to the level of affirmative egregious misconduct.

 

Infringement

Streck Inc. v. Research & Diagnostic Sys. Inc., 665 F.3d 1269, 101 U.S.P.Q.2d 1225 (Fed. Cir. 2012). The Federal Circuit affirmed the district court’s finding of infringement. The Federal Circuit determined that the accused infringer could not attack the validity of claims that were not at issue. The accused infringer has the burden to prove the existence of an actual case or controversy and that was not met in this instance. The Federal Circuit further found that the patent met the written description and enablement requirements. The accused infringer also appealed the district court’s issuance of a permanent injunction as being overly broad. The Federal Circuit disagreed, finding the injunction to be adequately specific.

 

Prejudgment Interest

Sanofi-Aventis v. Apotex Inc., 659 F.3d 1171, 100 U.S.P.Q.2d 1756 (Fed. Cir. 2011). The Federal Circuit reversed the district court’s award of prejudgment interest. This case was the third appeal to the Federal Circuit in connection with the parties’ protracted ANDA litigation relating to Sanofi’s Plavix® drug. In 2006, the parties entered into a settlement agreement that limited the damages that Sanofi could recover from Apotex for future sales of generic drugs: “Sanofi agrees that its actual damage for any past infringement by Apotex [] will be 50% of Apotex’s net sales of clopidogrel products.” Following that settlement agreement, Apotex launched its generic equivalent of Plavix, and prior to the issuance of a preliminary injunction barring the sale, Apotex had net sales of nearly $900 million. Based on the 2006 settlement agreement, the district court awarded “actual damages” of nearly $443 million and also awarded prejudgment interest of nearly $108 million. Apotex disputed the award of prejudgment interest on appeal because the settlement agreement limited Sanofi’s recovery to 50 percent of net sales. The Federal Circuit agreed with Apotex, interpreting the actual damages language in the settlement agreement to be the full measure of all compensatory damages.

 

Reexamination

In re Construction Equip. Co., 665 F.3d 1254, 100 U.S.P.Q.2d 1922 (Fed. Cir. 2011). The Federal Circuit upheld the Board’s finding of invalidity during reexamination. Every claim limitation could be found in various prior art references and the references were found to be combinable. The Federal Circuit dismissed the dissent’s argument that the case should not have been heard because of a prior litigation that found the claims valid. The reexamination included claims, references, and combinations of references that were not at issue in the prior litigation.

 

Writ of Mandamus

In re Link_A_Media Devices Corp., 662 F.3d 1221, 100 U.S.P.Q.2d 1865 (Fed. Cir. 2011). The Federal Circuit granted the petition for a writ of mandamus. The Federal Circuit directed the district court to vacate the order denying the petitioner’s motion to transfer to the Northern District of California. The Federal Circuit found that the district court incorrectly weighed the factors in favor of the plaintiff over other considerations.

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