Decisions in Brief

Vol. 6 No. 6

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, Gilson & Lione; Mark R. Anderson, Akerman LLP. Patents: Cynthia K. Barnett, Johnson & Johnson; Peter J. Prommer, Nixon Peabody LLP; R. Trevor Carter and Daniel M. Lechleiter, Faegre Baker Daniels LLP; Robert W. (Bill) Mason, Kinetic Concepts, Inc. Trade Secrets: R. Mark Halligan, Nixon Peabody LLP. Trademarks: Janet M. Garetto and Elizabeth W. Baio, Nixon Peabody LLP; Amy L. Sierocki.

Neri v. Monroe, 2014 WL 793336 (W.D. Wisc. 2014). The plaintiff Neri designed a blown glass sculpture that was installed in the foyer of its client. The client also hired the defendant, an architectural design firm, to redesign the foyer. The defendant’s website featured images of the finished foyer, including the blown glass sculpture, and noted a series of awards the firm had won for the design. The website credited the images only to their photographer.

COPYRIGHTS

Foyer Photos Fair

Neri sued for copyright infringement based on the website’s inclusion of the photographs. In the context of a motion for summary judgment, the district court addressed the defendant’s fair use defense. The district court found that the photograph was a two-dimensional image to document and inform the public of the remodeling work and did not supersede the original work. Although the nature of the work weighed against fair use, the district court noted that the photographs did include the work in a single image, and there was no evidence of any effect on the market for Neri’s works. Accordingly, the district court granted summary judgment of noninfringement.

Lack of Knowledge of Direct Infringement Defeats Contributory Copyright Infringement Complaint

Pryor v. Warner/Chappell Music, Inc., 109 U.S.P.Q.2d 2141 (C.D. Cal. 2014). The heirs of David Pryor, the writer of a song called “Bumpin’ Bus Stop,” sued Warner/Chappell and several other defendants including music publisher TB Music for copyright infringement based on a sample of “Bumpin’ Bus Stop” contained in a song by Everlast called “Get Down.” Pryor’s song was originally registered with the copyright office by music publishing company Caesar’s Music without Pryor’s consent or any other licensing arrangement. Caesar’s Music had later entered into a sampling agreement with the defendant, TB Music. TB Music filed a motion to dismiss. The district court granted the motion to dismiss.

The district court first analyzed the claim for contributory copyright infringement made by Pryor and determined that TB Music lacked knowledge of any direct infringement of the copyright. TB Music was justified in thinking the license from Caesar’s Music was authorized. Thus, TB Music had no reason to suspect that Caesar’s Music lacked authority to license the work. The district court further found that Pryor had not offered any evidence as to how TB Music should have known that Caesar’s Music was not authorized to register the copyright, or how TB Music had any knowledge that a sound recording of “Get Down” would contain a sample of the sound recording from “Bumpin’ Bus Stop.” The district court ruled that the lack of any specific allegation of knowledge by TB Music of direct copyright infringement failed to state a claim on which relief could be granted and dismissed this count without prejudice.

The district court also dismissed Pryor’s claim for breach of contract by TB Music with prejudice, as the agreement between TB Music and Caesar’s Music was for a flat fee and, therefore, TB Music had not breached the agreement by registering “Get Down” with a performing rights organization.

Maddens More Different than Jury Thought

Antonick v. Elec. Arts Inc., 109 U.S.P.Q.2d 1812 (N. D. Cal. 2014). Antonick was hired by Electronic Arts in 1984 to write code for a video game called “Football.” That game evolved into John Madden Football for the Apple II computer. EA’s contract gave Antonick a right to royalties from derivative works of the Apple II game, and Antonick sued EA alleging breach of contract and fraud due to EA’s failure to pay him royalties for later Sega Madden football games published by EA. A jury found the Sega Madden games to be substantially similar to the Apple II Madden games and found that EA breached the contract. EA moved for JMOL involving, among other things, the jury’s determination of substantial similarity.

The district court said that a determination of substantial similarity would require comparing the works as a whole, and not simply comparing individual elements of the works. A determination that the jury had no evidence of Apple II Madden or Sega Madden as a whole led the district court to find in favor of EA on this matter. The jury found substantial similarities in elements of the games, but the games in their entireties were not in evidence. The district court found EA was entitled to JMOL or, alternatively, was entitled to a new trial.

PATENTS

§102(g)(2)

Solvay S.A. v. Honeywell Int’l Inc., 742 F.3d 998, 109 U.S.P.Q.2d 1609 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s finding that claim 1 was invalid. The question addressed was when an invention conceived by a foreign inventor and reduced to practice in the United States qualifies as prior art under §102(g)(2). Section 102(g)(2) allows conception to occur in another country, but in such circumstances requires the work constituting the reduction to practice to be performed in the United States by or on behalf of the inventor. The patentee argued that the reduction to practice did not occur because the party who performed the invention did not do so under the express instructions of the inventor. The Federal Circuit found that there did not need to be express instructions. Instead, inurement exists if the inventor authorizes another to reduce his invention to practice.

Attorney’s Fees

Therasense, Inc. v. Becton, Dickinson & Co., 109 U.S.P.Q.2d 2147 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s denial to award attorney’s fees. Attorney’s fees are authorized in exceptional cases. A finding that a case is exceptional involves underlying factual determinations that are reviewed for clear error. Here, the district court found inequitable conduct and found attorney’s fees, if the finding was upheld on appeal. The Federal Circuit vacated the findings and the district court found inequitable conduct on remand. However, because the Federal Circuit vacated the findings the first time, the ruling was not upheld on appeal. Therefore, the attorney’s fees were not warranted.

Claim Construction

Ancora Techs., Inc. v. Apple, Inc., 744 F.3d 732, 109 U.S.P.Q.2d 2135 (Fed. Cir. 2014). The Federal Circuit affirmed-in-part, reversed-in-part, and remanded the district court’s claim construction. Regarding the term “program,” the Federal Circuit found there was nothing in the specification or prosecution history that altered its ordinary meaning. Regarding “volatile” and “non-volatile memory,” the Federal Circuit found the terms to have meaning to those of ordinary skill in the art.

Frans Nooren Afdichtingssystemen B.V. v. Stopaq Amcorr Inc., 744 F.3d 715, 109 U.S.P.Q.2d 1902 (Fed. Cir. 2014). The Federal Circuit vacated the district court’s grant of summary judgment of noninfringement and remanded. The Federal Circuit disagreed with the district court’s construction, finding no basis for limiting the term “a filler” to one material. The prosecution history did not support the district court’s adoption of its otherwise-unwarranted narrowing of the term’s meaning. The Federal Circuit further found that the district court’s reasoning did not justify a particular construction by addressing the parties’ respective contentions about the term’s meaning through the usual analysis. The Federal Circuit thus vacated the summary judgment of noninfringement and remanded.

Lighting Ballast Control LLC v. Philips Elecs. N. Amer. Corp., 744 F.3d 1272, 109 U.S.P.Q.2d 1969 (Fed. Cir. 2014). The Federal Circuit confirmed its de novo standard of review for claim construction decisions in an en banc decision. Judge Newman, authoring the majority opinion, concluded that no pattern of error, indictment of inferior results, intervening precedent, contrary legislation, shift in public policy, or better alternative has been identified to change the de novo standard. Further, the majority opinion found that no ground was shown to depart from the principles of stare decisis.

Starhome GmbH v. AT&T Mobility LLC, 743 F.3d 849, 109 U.S.P.Q.2d 1885 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s grant of summary judgment of noninfringement. After the district court construed selected terms, the defendants moved for summary judgment of noninfringement. Starhome did not contest the motion, but instead stipulated to a judgment of noninfringement based on the court’s construction. The Federal Circuit found no error in the district court’s construction. Accordingly, because the parties stipulated that the accused systems did not comport with the constructed claim term, the Federal Circuit affirmed the district court’s judgment of noninfringement.

Takeda Pharm. Co. v Zydus Pharm. USA, Inc., 743 F.3d 1359, 109 U.S.P.Q.2d 1825 (Fed. Cir. 2014). The Federal Circuit reversed the district court’s claim construction and finding of infringement, but affirmed the district court’s determination of no invalidity. The district court should have construed the phrase “fine granules having an average particle diameter of 400 micrometers or less” as precisely 400 micrometers or less. The narrower construction was supported by the specification and the prosecution history along with the fact that the phrase was not qualified as “about 400 micrometers” where other claims terms were modified by the term “about”. The Federal Circuit further upheld the district court’s findings of no invalidity for indefiniteness, written description, and enablement issues.

Tempo Lighting, Inc. v. Tivoli, LLC, 742 F.3d 973, 109 U.S.P.Q.2d 1599 (Fed. Cir. 2014). The Federal Circuit vacated-in-part the PTAB’s decision and remanded. Although the Federal Circuit found that intrinsic evidence supported the PTAB’s claim construction, the Federal Circuit found that the PTAB erred by relying on the PTO’s factual findings resting on the incorrect claim construction and remanded to the PTO to make new factual findings under the proper construction. The Federal Circuit also found that Tempo’s conduct did not rise to the level of waiver or invoke judicial estoppel. The Federal Circuit vacated the PTAB’s conclusion because it did not consider Tempo’s arguments.

Claim Construction/Written Description/Enablement

Butamax(TM) Advanced Biofuels LLC v. Gevo, Inc., 109 U.S.P.Q.2d 1701 (Fed. Cir. 2014). The Federal Circuit reversed the district court’s claim construction, finding the evidence in the record (including what would have otherwise appeared to be the inventor’s lexicography in the specification and several extrinsic sources consistent with such lexicography) was insufficient to limit the plain and ordinary meaning to one of ordinary skill in the art. The Federal Circuit held that despite offering a definition in the specification for the disputed claim term, there was no evidence that the patentee “clearly express[ed] an intent” to define the term in a manner narrower than its plain and ordinary meaning. As a result, the Federal Circuit reversed and remanded the district court’s denial of summary judgment of literal infringement, as well as district court’s grant of summary judgment of noninfringement under the doctrine of equivalents. The Federal Circuit also reversed the district court’s grant of summary judgment of invalidity for lack of written description because genuine issues existed. The Federal Circuit also reversed the district court’s grant of summary judgment of invalidity for lack of enablement, finding that the judgment was scrivener’s error.

Declaratory Judgment

Danisco US Inc. v. Novozymes A/S, 744 F.3d 1325, 109 U.S.P.Q.2d 2128 (Fed. Cir. 2014). The Federal Circuit vacated and remanded the district court’s dismissal of the claim seeking declaration of priority of invention under 35 U.S.C. § 291. The district court dismissed the declaratory judgment action stating that there was not a justiciable controversy based on a lack of an affirmative accusation of infringement. The Federal Circuit disagreed, stating that fact alone is not dispositive as to whether a controversy exists. The requirement is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. The Federal Circuit found the district court’s categorical distinction between pre – and post-issuance conduct is therefore irreconcilable with the Supreme Court’s insistence on applying a flexible totality of the circumstances test, its rejection of technical bright line rules in the context of justifiability, and their own precedent.

Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843, 109 U.S.P.Q.2d 1341 (U.S. 2014). The Supreme Court held that the Federal Circuit properly exercised subject matter jurisdiction over a patent licensee’s action against the patent holder because patent law created the cause of action. The licensee sought a declaratory judgment of noninfringement and by ceasing to pay royalties, the patent holder would have been able to terminate the license and bring a suit for infringement. However, the Court reversed the judgment of the Federal Circuit on burden of proof of infringement in declaratory judgment action. Specifically, the Court held that the burden of proof remains with the patent holder to show infringement, even where the licensee brings an action for declaratory judgment that its products do not infringe.

Doctrine of Equivalents

Ring & Pinion Serv. Inc. v. ARB Corp., 743 F.3d 831, 109 U.S.P.Q.2d 1779 (Fed. Cir. 2014). The Federal Circuit reversed and remanded the district court’s grant of summary judgment of noninfringement because the district court erred by improperly applying the doctrine of claim vitiation. After claim construction, the parties stipulated that (1) there were no issues of material fact regarding infringement under the doctrine of equivalents (DOE); (2) the accused product met every claim element except for one; (3) the accused product included an “equivalent” element; and (4) claim element would have been foreseeable to a person having ordinary skill in the art at the time the patent application was filed. However, the parties disagreed on, and asked the district court to decide, whether the admitted foreseeability of the claim element in question precluded a finding of infringement under the DOE. The district court held that, while foreseeability did not preclude the application of the DOE, a finding of infringement under the DOE would vitiate the claim limitation in question. The Federal Circuit held that there is not a foreseeability limitation on the application of the DOE, and that, instead, known interchangeability weighs in favor of finding infringement under the DOE. However, because vitiation is not an exception to the DOE, but instead a legal determination that the evidence is such that no reasonable jury could determine two elements to be equivalent, the Federal Circuit found that the parties’ stipulation on equivalency precluded the district court’s conclusion that the claim limitation in question was vitiated. Thus, the district court erred in failing to find infringement under the DOE.

Means-Plus-Function

EnOcean GmbH v. Face Int’l Corp., 742 F.3d 955, 109 U.S.P.Q.2d 1502 (Fed. Cir. 2014). The Federal Circuit vacated-in-part and remanded the PTAB’s finding of invalidity. The decision focused on: (1) whether the PTAB erred in finding that the receiver claims invoke § 112, ¶ 6; and (2) whether the PTAB erred in finding that both sets of claims are not entitled to claim priority to the German and PCT applications. The Federal Circuit found that the PTAB erred in finding that (1) the term “receiver” did not convey structure and (2) selected claim limitations lack support in the earlier applications. Therefore, the decision was vacated-in-part and remanded.

Patent Term Adjustment (PTA)

Novartis AG v. Lee, 740 F.3d 593, 109 U.S.P.Q.2d 1385 (Fed. Cir. 2014). The Federal Circuit affirmed the dismissal of Novartis’s claims regarding fifteen patents as being untimely under the pre-2013 version of 35 U.S.C. § 154(b)(3) and § 154(b)(4). Regarding three additional patents being reviewed for patent term adjustment, the Federal Circuit partly reversed the district court by holding that time consumed by continued examination should be limited to the time before allowance. Thus, the patentee should have been entitled to PTA for the period between the mailing of the notice of allowance and the issuance of the patents, even though an RCE was filed during prosecution.

Priority

Medtronic CoreValve, LLC v. Edwards Lifesciences Corp., 741 F.3d 1359, 109 U.S.P.Q.2d 1422 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s decision of summary judgment that Medtronic’s claims were invalid. The district court found that Medtronic failed to specifically reference each earlier filed application in the chain of priority for two intervening applications that was relied upon to establish the priority for the asserted patent. Due to the incomplete priority record, the district court properly disallowed the asserted patent from securing the benefit of the filing date of the earliest foreign and international applications. The district court then properly granted summary judgment that the asserted patent was invalid as anticipated by the earlier filed foreign and international applications.

Writs of Mandamus—Transfer Under § 1404(A)

In re Apple Inc., 743 F.3d 1377, 109 U.S.P.Q.2d 2057 (Fed. Cir. 2014). The Federal Circuit denied Apple’s petition for writ of mandamus, which Apple sought after the Eastern District of Texas denied Apple’s motion to transfer venue to the Northern District of California. The Federal Circuit found that there was no clear abuse of discretion by the district court that produced a “patently erroneous result.” More specifically, the district court did not abuse its discretion given Apple’s failure to provide sufficient evidence on the convenience of the witnesses and its failure to identify any third-party witnesses not subject to compulsory process of the district court. Additionally, the Federal Circuit found no abuse of discretion in the district court’s decision that although the local interest factor slightly favored transfer, that the local interest of the Northern District of California is not enough to establish it is a clearly more convenient forum on its own.

In re Barnes & Noble, Inc., 743 F.3d 1381, 109 U.S.P.Q.2d 2054 (Fed. Cir. 2014). The Federal Circuit denied Barnes & Noble’s petition for a writ of mandamus directing the U.S. District Court for the Western District of Tennessee to vacate its order denying Barnes & Noble’s motion to transfer the case to the U.S. District Court for the Northern District of California. The Federal Circuit found no clear abuse of discretion in the district court’s decision to deny transfer, as its order addressed in depth the convenience of the witnesses, the convenience to the parties, and the interest of justice, and, in accordance with Sixth Circuit law—which mandates deference to the plaintiff’s choice of forum unless the transfer factors balance strongly in favor of the defendant—did not find that those factors weighed strongly in favor of Barnes & Noble. Moreover, Barnes & Nobel failed to demonstrate that its employees would be unwilling or unable to testify if the case remained in the Western District of Tennessee.

Written Description

GlaxoSmithKline LLC v. Banner Pharmacaps, Inc., 744 F.3d 725, 109 U.S.P.Q.2d 1853 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s determination that rejected the defendant’s challenge to the sufficiency of the written description. The defendant argued that the term “solvates” of dutasteride was inadequately described. In affirming the district court’s decision, the Federal Court referenced the detailed description that provided a description by structure and process of creation that matched the claim term.

TRADE SECRETS

Brian Lichtenberg, LLC v. Alex & Chloe, Inc., 2014 WL 1457825, 2014 U.S. Dist. LEXIS 18607 (C.D. Cal. 2014). A complaint for trade secret misappropriation was dismissed because the plaintiff did not adequately describe the alleged “secret” manufacturing process. There must be a sufficient disclosure of the manufacturing process, without revealing the alleged trade secret details, so both the court and the defendant have reasonable notice of the alleged scope of the trade secret claims. An allegation that the manufacturing process per se is the trade secret is insufficient.

Info. Strategies, Inc. v. Dumosch, 2014 WL 505360, 2014 U.S. Dist. LEXIS 16174 (D.D.C. 2014). A federal district court has jurisdiction over cases and controversies in which the parties are diverse and the amount in controversy exceeds $75,000. A complaint for breach of a noncompete covenant, injunctive relief, monetary damages and attorney’s fees for trade secret misappropriation can combine and aggregate the claims to satisfy the $75,000 jurisdictional requirement. Courts do not have to ascertain the value of injunctive relief; even the inevitable disclosure doctrine can satisfy the requirement if pled in good faith.

Covenant Aviation Sec., LLC v. Berry, 2014 WL 537446, 2014 U.S. Dist. LEXIS 16535 (N.D. Ill. 2014). Trade secrets cannot be described in detail in the complaint because such a requirement would cause public disclosure of the trade secrets. Whether a plaintiff adequately alleges the existence of a trade secret is a fact intensive analysis, but it is sufficient at the pleading stage to describe the matter of the trade secret generally and to allege the efforts to maintain the confidentiality of the alleged trade secret information to derive economic value from the secrecy of such information.

Integral Dev. Corp. v. Tolat, 2014 WL 721844, 2014 U.S. Dist. LEXIS 23429 (N.D. Cal. 2014). Summary judgment was granted dismissing plaintiff’s trade secret misappropriation claim because plaintiff failed to identify the actual matter of the claimed trade secret after numerous opportunities to do so. Rather, the plaintiff cited just broad categories and subcategories of information. Assuming that plaintiff had adequately identified an alleged trade secret, there is no evidence in the record to establish that the defendant misappropriated any trade secret information.

Storagecraft Technology Corp. v. Kirby, 744 F.3d 1183, 109 U.S.P.Q.2d 2110 (10th Cir. 2014). The Uniform Trade Secrets Act (UTSA) provides three possible measures of damages for misappropriation: (1) the defendant’s unjust enrichment, (2) the plaintiff’s actual loss, or (3) a reasonable royalty. The plaintiff can elect a reasonable royalty measure of damages for the unauthorized disclosure of trade secrets. Nothing in the UTSA restricts the availability of reasonable royalty damages to cases in which the misappropriator used a trade secret commercially rather than disclosed it to others. By misappropriating the trade secret, the defendant “effectively assumed for himself a license to reveal the trade secrets to a competitor thereby diminishing the value of the trade secret and the products depending on it.”

TRADEMARKS

Prudential Standing

Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377, 109 U.S.P.Q.2d 2061 (U.S. 2014). Lexmark sued Static Control for copyright infringement, and Static Control counterclaimed, alleging that Lexmark engaged in false or misleading advertising in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Static Control alleged that Lexmark’s misrepresentations caused Static Control lost sales and damage to its business reputation. The district court held that Static Control lacked prudential standing to bring the Lanham Act claim, thereby dismissing the claim. In reversing, the Sixth Circuit relied on the “reasonable interest” test. Lexmark filed petition for writ of certiorari. The Supreme Court affirmed.

Lexmark sells the only style of toner cartridges that work with its laser printers. Static Control remanufacturers Lexmark’s cartridges by acquiring and refurbishing cartridges to sell in competition with Lexmark’s own new and refurbished ones. The question was whether Static Control falls within the class of plaintiffs that Congress authorized to sue under § 1125(a).

The Court found that the zone-of-interests test (where a statutory cause of action is presumed when a plaintiff’s interests “fall within the zone of interests protected by the law invoked”) and the proximate cause requirement (where a statutory cause of action is presumed to be limited to plaintiffs whose injuries are proximately caused by a violation of the statute) provide relevant guidance under § 1125(a). The Court found that under these principles, Static Control had standing to sue under § 1125(a) because (1) its injuries—lost sales and damage to business reputation—fell within the zone of interests; and (2) it sufficiently alleged that its injuries were proximately caused by (not “too remote from”) Lexmark’s misrepresentations because Static Control’s microchips were both necessary for and had no other use than refurbishing Lexmark’s toner cartridges.

Recitation of Services/Class Headings

In re Fiat Grp. Mktg. & Corporate Commc’ns S.p A., 109 U.S.P.Q.2d 1593 (TTAB 2014). Fiat appealed the refusal of registration of its mark, FIAT 500, for retail store and online retail store services featuring a wide variety of consumer goods of others. The TTAB affirmed the refusal of Fiat’s mark on the grounds that these services were not within the scope of services identified in the original filing. At the time the application was filed, the services were identified as “advertising services; business management; business administration; office functions.” The Examining Attorney refused the registration for failure to provide an acceptable recitation of services because the “retail store and on-line retail store services” were not within the scope of the original filing. Fiat argued that it was not improperly broadening the scope of the original services because retail services were included under “business management services.” The TTAB agreed with the Examining Attorney that the retail store and on-line retail store services impermissibly broadened the original identification of services and that “business management” could not be construed as encompassing retail store services. Therefore, the refusal to register was affirmed.

Specimen of Use/Display

In re U.S. Tsubaki, Inc., 109 U.S.P.Q.2d 2002 (TTAB 2014). Tsubaki appealed the refusal of registration of its mark, TSUBAKI: THE CHOICE FOR CHAIN, to the TTAB. The TTAB affirmed the refusal on the grounds that Tsubaki failed to submit an acceptable specimen of use.

During prosecution, Tsubaki submitted multiple catalogs/brochures offering Tsubaki’s products, namely, chains and sprockets, as specimens of use. The Examining Attorney took the position that the catalogs/brochures did not contain the necessary ordering information for the goods and were merely advertising materials that did not serve the function of a display. The TTAB agreed that the six specimens submitted by Tsubaki were simply promotional materials that indicated how customers could obtain information regarding chains and sprockets. The TTAB noted that the specimens failed to provide a sales form or ordering information, information about minimum quantities, how much the goods cost, or how the orders are shipped. Moreover, the company information provided on the specimens indicated location information, but did not provide a means to order goods by mail, telephone, or internet in the way a catalog provides information to order products.

By simply providing information for customers to contact Tsubaki, including a telephone number and URL address, the catalogs/brochures were not transformed into a point-of-sale display associated with the goods. Additionally, the TTAB noted that upon reviewing Tsubaki’s catalogs/brochures, customers are not yet at the point of purchase and would need to obtain additional information before making a purchasing decision. Thus, the refusal to register was affirmed.

Suggestive Marks

Timex Grp. USA, Inc. v. Focarino, 109 U.S.P.Q.2d 1393 (E.D. Va. 2013). Timex sought judicial review from the TTAB’s denial of registration for the mark INTELLIGENT QUARTZ on the ground that the mark was descriptive. The parties filed cross-motions for summary judgment. Timex’s motion was granted, and the TTAB’s motion was denied. Timex sought to register the mark INTELLIGENT QUARTZ in connection with watches. The Examining Attorney denied registration on the grounds that the mark was descriptive. The TTAB affirmed, stating that “consumers and prospective customers viewing the mark INTELLIGENT QUARTZ as applied to watches will understand the mark to mean that the watch contains a quartz component controlled by a computer chip.”

The district court reviewed the TTAB’s findings differentially pursuant to the substantial evidence test and reviewed the new evidence de novo. The district court found that the TTAB erred in denying registration because INTELLIGENT QUARTZ is suggestive rather than descriptive and, thus, merits trademark protection. Specifically, the district court found that the lynchpin of the TTAB’s descriptiveness finding—that “the watch contains a quartz component controlled by a computer chip”—was erroneous because the quartz component is not so controlled. Thus, INTELLIGENT was not descriptive of QUARTZ in connection with Timex’s INTELLIGENT QUARTZ watches. The new evidence presented did not contradict this finding. Moreover, the court found that INTELLIGENT QUARTZ does not convey an immediate idea of the characteristics of the relevant product, as required by the imagination test for a descriptiveness finding, because consumers must exercise imagination or mature reasoning to ascertain that INTELLIGENT QUARTZ relates to a watch in which a quartz crystal provides the time-base and an embedded microprocessor operates an additional feature. Since the TTAB’s finding of descriptiveness was not supported by substantial evidence and the new evidence supported a finding that the INTELLIGENT QUARTZ mark was suggestive, Timex’s motion for summary judgment was granted, entitling Timex to register the mark INTELLIGENT QUARTZ.

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