Recent Developments in IP Law

Vol. 5 No. 1

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, Faegre Baker Daniels; Robert W. (Bill) Mason, Kinetic Concepts, Inc.

COPYRIGHTS

 

Dismissing Plaintiff’s Case Easy as Pi

Erickson v. Blake, ___F.3d___, 102 U.S.P.Q.2d 1466, (D. Or. 2012). Erickson is a composer who created an orchestral work entitled the “Pi Symphony,” inspired by the number pi. Erickson assigned a musical note to each digit between zero and nine, and then arranged the work based on the order of the digits of pi. Erickson registered a copyright in this work in 1992. In 2011, Blake posted a video on YouTube called “What Pi Sounds Like.” Blake also had assigned a note to each digit, and then arranged a work based on the digits of pi. Erickson sued Blake for copyright infringement, and Blake filed a motion to dismiss.

 

The district court granted Blake’s motion to dismiss. To establish copyright infringement, Erickson needed to show that he owned a copyright, and that Blake had copied the constituent elements of the work that are original. Applying the Ninth Circuit’s two-part test of whether the works are both objectively similar and subjectively similar, the court determined that Erickson could not satisfy the objectively similar analysis with respect to Blake’s work. The objectively similar analysis requires the court to dissect a work to evaluate similarities on an element-by-element basis to determine if similarities relate to a protected element or an unprotected element of the copyrighted work. The court determined that Erickson was only entitled to thin copyright protection. The court found that the number pi is a fact, and arranging musical notes based on the digits of pi is an idea. Furthermore, the court ruled that only a finite number of ways exist to arrange music based on the digits of the number pi. The court determined that any similarities between Blake’s work and Erickson’s copyright were based on the pattern formed by the digits of the number pi, something that is not copyrightable. Thus, the court granted Blake’s motion to dismiss.

No Hiding for Real Party in Interest

Righthaven LLC v. Democratic Underground LLC, ___F.3d___, 102 U.S.P.Q.2d 1070, (D. Nev. 2012). The defendant and counterclaimant, Democratic Underground, hosts an online political discussion forum where a nonparty posted five sentences from a 50-sentence news article. The article was owned by Stephens Media, who purportedly transferred its copyright to Righthaven for enforcement purposes. The district court determined that Righthaven had never obtained any of the exclusive rights it purported to hold, and accordingly dismissed Righthaven for lack of standing. However, the district court allowed Democratic Underground to proceed with its counterclaim as to Stevens Media, finding that Stevens Media was the real party in interest. On motion for summary judgment, the district court found no infringement based on both fair use and lack of any volitional act.

 

TRADEMARKS

 

Descriptiveness

In re Chamber of Commerce of the United States of America, 675 F.3d 1297, 102 U.S.P.Q.2d 1217 (Fed. Cir. 2012). The Chamber of Commerce (COC) appealed the TTAB’s decision refusing registration of the mark “NATIONAL CHAMBER” on the ground that the applied-for-mark was merely descriptive. The Federal Circuit affirmed. COC filed two related intent-to-use trademark applications for the NATIONAL CHAMBER mark for, generally, providing online directory information and information and news in the field of business, administration of a discount program, analysis of governmental policy, and business data analysis. The Federal Circuit found that substantial evidence supported the Board’s finding of descriptiveness. COC urged the court to rule that NATIONAL CHAMBER was merely descriptive of any nationwide service that is within a broad genus of “chamber of commerce services” and was, therefore, registrable for the specific enumerated services. The court refused to apply such an expansive general rule.

Likelihood of Confusion

Bridgestone Americas Tire Operations LLC v. Federal Corp., 673 F.3d 1330, 102 U.S.P.Q.2d 1061 (Fed. Cir. 2012). Bridgestone appealed the TTAB’s decision dismissing Bridgestone’s opposition to registration of Federal’s mark MILANZA for use with tires. The Federal Circuit reversed the TTAB’s decision and sustained the opposition because it was likely to cause consumer confusion, deception, or mistake.

Bridgestone registered the marks POTENZA and TURANZA for tires in 1984 and 2004, respectively, stating use in commerce since 1981 and 1991, respectively. Federal filed an intent-to-use application for MILANZA for tires in October 2004. Bridgestone opposed the registration of MILANZA on the ground of likelihood of confusion as to source. The Federal Circuit found that the concurrent use of the BRIDGESTONE mark did not diminish the status of POTENZA and TURANZA as strong marks for tires. Rather, a unique, arbitrary word trademark does not lose its strength when the manufacturer is identified with the branded product. The Federal Circuit noted that there is a heavy burden on a second entrant into a market to avoid consumer confusion as to products and their source.

Trade Dress/Functionality

In re Becton, Dickinson and Co., 675 F.3d 1368, 102 U.S.P.Q.2d 1372 (Fed. Cir. 2012). Becton appealed the TTAB’s decision to uphold the refusal to register Becton’s product configuration for a closure cap for blood collection tubes. The Federal Circuit affirmed the TTAB’s decision on the ground that the applied-for mark was functional. The Federal Circuit reviewed the decision of the TTAB as to each of the factors considered in In re Morton-Norwich Prods., Inc., regarding whether a design is functional. Specifically, the Federal Circuit considered: (1) the existence of a utility patent disclosing the utilitarian advantages of the design, (2) the applicant’s advertising that touts the utilitarian advantages of the design, (3) whether the design results form a comparatively simple or inexpensive method of manufacture, and (4) the availability of alternative designs.

In its analysis, the Federal Circuit noted that when a proposed mark includes both functional and nonfunctional features, the critical question is the degree of utility present in the overall design of the mark, and focused on the de jure functionality of the design. Finding that the TTAB committed no error in its analysis of the functionality of the proposed mark, and that substantial evidence supported the TTAB’s findings under the Morton-Norwich factors, the Federal Circuit affirmed the TTAB’s decision refusing registration.

 

PATENTS

 

Administrative Proceeding

Kappos v. Hyatt, 132 S.Ct. 1690, 102 U.S.P.Q.2d 1337 (2012). The Supreme Court found that an applicant may introduce new evidence in a Section 145 proceeding before a federal district court. The only limitations on introducing new evidence are those present in the Federal Rules of Evidence and the Federal Rules of Civil Procedure. That an applicant had an opportunity to present new evidence before the USPTO does not prevent the evidence from being presented later to the district court, but the district court can consider the applicant’s opportunity to present the evidence earlier before the USPTO in deciding what weight to afford that evidence. For the new evidence, the district court must make de novo factual findings, and thus, cannot apply a deferential standard to USPTO factual findings.

Arbitration Clause

Promega Corp. v. Life Techs. Corp., 674 F.3d 1352, 102 U.S.P.Q.2d 1207 (Fed. Cir. 2012). The Federal Circuit affirmed the district court’s grant of Life Tech’s motion to compel arbitration. A dispute arose regarding royalty payments. The plaintiff and defendant were parties to a license agreement, which contained an arbitration provision. Promega, however, sued Life Tech arguing an improper assignment. The Federal Circuit agreed with the district court in determining that the parties had entered into an agreement to arbitrate and the dispute between the parties fell within the scope of that agreement.

Claim Construction

Digital-Vending Serv. Int’l LLC v. University of Phoenix Inc., 672 F.3d 1270, 101 U.S.P.Q.2d 2037 (Fed. Cir. 2012). The Federal Circuit vacated the summary judgment of noninfringement with respect to some claims, affirmed with respect to others, and remanded. Digital-Vending sued Phoenix. After claim construction, the district court granted summary judgment of noninfringement in favor of Phoenix. On appeal, Digital-Vending proposed substantially different claim constructions, which the Federal Circuit refused to review. The Federal Circuit also found that Digital-Vending waived its right to challenge the previously stipulated claim constructions on appeal, supported by Digital-Vending’s failure to challenge the district court’s denial of its motion for reconsideration. Phoenix sought to limit claims based on prosecution history disclaimer based on inventor statements. The Federal Circuit found that the statements were not clear and unmistakable enough to invoke the doctrine of prosecution history disclaimer. After conducting its own construction, the Federal Circuit vacated the grant of summary of noninfringement of certain claims, and affirmed the grant of summary judgment of noninfringement with respect to the others.

Claim Construction/Means-Plus-Function Claims

Ergo Licensing LLC v. Carefusion 303 Inc., 673 F.3d 1361, 102 U.S.P.Q.2d 1122 (Fed. Cir. 2012). The Federal Circuit affirmed the district court’s construction of certain claim terms as being indefinite since no corresponding structure was disclosed in the specification. The Federal Circuit found that the term “control device” in the specification provided no more structure than the term “control means.” Under § 112, ¶6, the patentee is entitled only to corresponding structure described in the apparatus and equivalents thereof. The patentee is not entitled to any device that performs the function.

 

Noah Sys. Inc. v. Intuit Inc., 675 F.3d 1302, 102 U.S.P.Q.2d 1410 (Fed. Cir. 2012). The Federal Circuit affirmed the district court’s holding that the asserted claims are invalid for indefiniteness. With respect to construing means-plus-function claims, a structure disclosed in the specification qualifies as a corresponding structure if the specification or the prosecution history clearly links or associates that structure to the function recited in the claim. Simply disclosing software without the specific algorithm is not enough.

Claim Construction/Willful Infringement

Advanced Fiber Techs. (AFT) Trust v. J& L Fiber Serv. Inc., 674 F.3d 1365, 102 U.S.P.Q.2d 1361 (Fed. Cir. 2012). The Federal Circuit affirmed the district court’s grant of summary judgment of lack of willful infringement. However, because the district court erred in its claim construction, the Federal Circuit reversed and remanded the district court’s grant of summary judgment of noninfringement. The Federal Circuit found that the district court erroneously construed the claim term “perforated” using extrinsic evidence that contradicted the intrinsic evidence of record. In finding no willfulness, the Federal Circuit agreed that several factors indicated a lack of objective recklessness.

Declaratory Judgment

3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 102 U.S.P.Q.2d 1130 (Fed. Cir. 2012). The Federal Circuit vacated and remanded the district court’s dismissal of declaratory judgment action for lack of justiciable case or controversy. The Federal Circuit found that the case must be remanded to resolve certain issues of facts regarding conversations occurring between the parties. Assuming the facts as alleged by the plaintiff as being true, the Federal Circuit found there to be a case or controversy.

Discoverable Matters

In re MSTG Inc., 675 F.3d 1337, 102 U.S.P.Q.2d 1321 (Fed. Cir. 2012). The Federal Circuit denied the plaintiff’s petition for writ of mandamus directing the district court to vacate its order. The petition arose out of the district court’s order compelling MSTG to produce documents related to license negotiation discussions between MSTG and six other companies. The Federal Circuit considered whether such communications related to reasonable royalties and damages are protected from discovery based on a settlement negotiation privilege and whether the district court abused its discretion in its order. The Federal Circuit declined to create a new settlement negotiation privilege. The Federal Circuit found that as a matter of fairness MSTG could not have its expert rely on information about the settlement negotiations and then also deny discovery as to those same negotiations. Thus, the district court did not clearly abuse its discretion.

Federal Jurisdiction

Landmark Screens, LLC v. Morgan Lewis & Bockius LLP, 676 F.3d 1354, 102 U.S.P.Q.2d 1521 (Fed. Cir. 2012). The Federal Circuit considered whether it had jurisdiction to consider an appeal from a final district court judgment where the underlying action is based on a state law attorney malpractice claim, which involves issues relating to preparing and prosecuting patent applications. The Federal Circuit determined there is a substantive question of patent law that conferred jurisdiction because the underlying question here is whether the plaintiff would have been able to achieve patent protection for its invention absent the alleged malpractice.

Hatch-Waxman Act

Caraco Pharm. Labs. Ltd. v. Novo Nordisk A/S, 132 S.Ct. 1670, 102 U.S.P.Q.2d 1345 (2012). The Supreme Court reversed and remanded the Federal Circuit’s decision that Caraco lacked a statutory basis to assert a counterclaim seeking to have Novo correct the FDA “use code” for Novo’s branded version of its diabetes drug, Repaglinide. The FDA cannot authorize a generic drug that would infringe a patent. Thus, the FDA requires holders of patents on pharmaceutical technology to provide a “use code” indicating the specific types of patented uses. The FDA does not verify the use codes. An applicant after reviewing the Orange Book must: (1) certify to the FDA that there are no applicable patents or that they have expired (or will expire, prior to approval of the application); (2) certify that it will market the drug for uses not covered by the patents; or (3) certify that the patent covering the branded drug is invalid or will not be infringed by the manufacture, use, or sale of the generic drug. Scenario (3) provokes litigation. Moreover, in scenario (3), in the event the patentee files suit, the FDA generally may not approve the generic drug application until 30 months pass or the court finds the patent invalid or not infringed. Caraco applied to the FDA to make and sell Repaglinide for all three uses, certifying invalidity and noninfringement under scenario (3), above, with respect to the one patented use. As a result, Novo sued Caraco. Novo also then changed the applicable use code so that it would encompass not only the one patented use of Repaglinide, but also the two unpatented uses. Caraco responded with a counterclaim seeking an order requiring Novo to correct its use code due to its overbreadth. The district court granted summary judgment to Caraco, enjoining Novo to correct its inaccurate description of the patent. The Federal Circuit reversed, holding that Caraco lacked a statutory basis to assert such a counterclaim. The Supreme Court, however, disagreed, and thus reversed the Federal Circuit. The Supreme Court held that a generic manufacturer may employ a provision of the Hatch-Waxman Act, 21 U.S.C. § 355(j)(5)(C)(ii)(I), to force correction of a use code that inaccurately describes the brand’s patent as covering a particular method of using the drug in question.

Infringement

Bayer Schering Pharma AG v. Lupin Ltd., 676 F.3d 1316, 102 U.S.P.Q.2d 1583 (Fed. Cir. 2012). The Federal Circuit affirmed the two district court judgments dismissing Bayer’s patent infringement claims. Bayer’s method of use patents claimed three effects simultaneously. When Bayer sued the defendants, it argued that its ANDAs related to use of the generic form of Bayer’s pharmaceutical drug only for oral contraception and not for the combination of uses claimed in the patent. The district court granted the defendants’ summary judgment motion because the FDA had not given approval for the claimed use of the drug. The Federal Circuit found that the claimed method of use was not described in the Indications and Usage section of the product label, and that the label, taken in its entirety, failed to recommend or suggest to a physician that Bayer’s drug was safe and effective for the claimed combination of effects in patients. Thus, the Federal Circuit agreed with the district court that the FDA had not approved such use and that the defendants could not be held liable for patent infringement.

Intervening Rights

Marine Polymer Techs., Inc. v. HemCon, Inc., 672 F.3d 1350, 102 U.S.P.Q.2d 1161 (Fed. Cir. 2012). The Federal Circuit, en banc, clarified the instances giving rise to intervening rights incident in a patent reexamination. Marine Polymer sued HemCon, which countered by filing an ex parte reexamination. The district court construed the claim term “biocompatible” to include the characteristic of “no detectable reactivity.” During the reexamination, however, the examiner rejected the claims based on a broad interpretation of that claim term, which the examiner construed to include the characteristics of “little or no detectable reactivity.” The examiner relied on a number of dependent claims that contained limitations requiring slight or mild reactivity. In response, Marine Polymer cancelled these dependent claims and the USPTO issued a reexamination certificate. On appeal, HemCon argued that the asserted claims changed scope during reexamination, and it thereby acquired intervening rights on those claims that include the term “biocompatible.” The Federal Circuit disagreed. Section 307(b) governs intervening rights arising from ex parte reexamination and specifies that only amended or new claims incorporated into a patent during reexamination will be susceptible to intervening rights.

Joinder

In re EMC Corp., 677 F.3d 1351, 102 U.S.P.Q.2d 1539 (Fed. Cir. 2012). The Federal Circuit, in part, granted defendants’ petition for writ of mandamus directing the United States District Court for the Eastern District of Texas to sever claims against multiple defendants and transfer them to a number of district courts. The defendants were are all alleged to offer infringing services that provide online backup and storage for computer users. The Federal Circuit acknowledged that the newly-enacted § 299 did not have retroactive effect, but did state that the joinder in this instance was improper under the old or new rules. Joinder is not appropriate where different products or processes are involved, and joinder of independent defendants is appropriate only where the accused products or processes are the same in respect to the asserted patent. But sameness is not enough; the facts underlying the claim of infringement asserted against each defendant must share an aggregate of operative facts.

Malpractice

Minkin v. Gibbons P.C., ___F.3d___, 102 U.S.P.Q.2d 1573 (Fed. Cir. 2012). The Federal Circuit affirmed the summary judgment in favor of Gibbons, finding that Minkin failed to raise a genuine dispute of material fact regarding causation, a necessary element in New Jersey legal malpractice cases. Minkin sued Gibbons and argued that Gibbons committed legal malpractice in prosecuting a patent application. Minkin offered expert testimony of a patent attorney, which contained broader claims than the issued claims. To show causation, a plaintiff must demonstrate that the invention would have been patentable. Minkin, however, failed to raise a single material fact in dispute as to the nonobviousness of the proposed broader claims. The Federal Circuit refused to conclude that an examiner would have allowed the broader claims just because the narrower patent claims issued.

Obviousness/Inequitable Conduct

Aventis Pharma S.A. v. Hospira Inc., 675 F.3d 1324, 102 U.S.P.Q.2d 1445 (Fed. Cir. 2012). The Federal Circuit upheld the district court’s holding that the asserted patents are invalid for obviousness and unenforceable due to inequitable conduct. The Federal Circuit refused to impose limitations that are not required by the claims or specification and, thus, the claims are obvious. The Federal Circuit also upheld the finding of inequitable conduct based on its reliance on the nondisclosed art in finding obviousness, the evidence presented, and the lack of credibility of the witness who provided evidence for not submitting the reference.

Patentable Subject Matter

Mayo Collaborative Serv. v. Prometheus Labs. Inc., 132 S.Ct. 1289, 101 U.S.P.Q.2d 1961 (2012). The Supreme Court reversed the Federal Circuit’s finding that the processes were patent eligible subject matter. After an initial finding that Prometheus’s patents were patent eligible, the Supreme Court remanded for reconsideration in light of Bilski. The Federal Circuit then reaffirmed its earlier finding of validity. The Supreme Court later found that because the laws of nature recited by Prometheus’s patents were not patentable, the claimed processes were not patentable unless they added features that provided practical assurances that the processes were genuine applications of those laws rather than drafting efforts designed to monopolize the correlations. The Supreme Court found that the three process steps added nothing specific to the laws of nature other than what was well-understood by those in the field. Further precedent supported the view that simply appending conventional steps, specified at a high level of generality, to laws of nature, natural phenomena, and abstract ideas could not make those patentable. The Supreme Court thus found the claims invalid, and reversed the Federal Circuit’s judgment.

Res Judicata

Aspex Eyewear Inc. v. Marchon Eyewear Inc., 672 F.3d 1335, 101 U.S.P.Q.2d 2015 (Fed. Cir. 2012). The Federal Circuit reversed and remanded the grant of summary judgment for defendants that the action was barred by res judicata. After prior litigations between Aspex and the defendants, which resulted in prior judgments and a settlement agreement, Aspex sued based on reexamined claims. Defendants moved to dismiss these claims based on res judicata, and with respect to Marchon, it contended that the action was barred by an earlier settlement agreement. The district court granted summary judgment to all the defendants, holding that for purposes of res judicata, Aspex’s claims for infringement were the same as the claims that either were, or could have been, brought in earlier actions. The Federal Circuit confirmed that the claims on which Aspex relied were not materially different from the original claim, and thus they did not create a new cause of action. The Federal Circuit further held that res judicata did not bar Aspex’s lawsuit with respect to accused products that were not in existence at the time of the earlier actions. After reviewing the settlement agreement, the Federal Circuit concluded that Aspex was not barred from suing Marchon based on new design products because the agreement relied on older design products.

Statute of Limitations

USPPS Ltd. v. Avery Dennison Corp., 676 F.3d 1341, 102 U.S.P.Q.2d 1401 (Fed. Cir. 2012). The Federal Circuit affirmed the district court’s dismissal of the claim for breach of fiduciary duty and fraud. The Federal Circuit affirmed that the claim was untimely because the plaintiff should have known of the triggering act.

U.S. Government Liability

Zoltek Corp. v. United States, 672 F.3d 1309, 102 U.S.P.Q. 2d 1001 (Fed. Cir. 2012). In a partial en banc decision, the Federal Circuit vacated an earlier panel decision regarding United States government liability for patent infringement. The earlier panel decision limited section 1498(a) to infringement under section 271(a). The Federal Circuit found this was error that significantly limited the protection section 1498(a) provides government contractors.

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