Decisions in Brief

Vol. 6 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, Akerman LLP. Patents: Cynthia K. Barnett, Johnson & Johnson; Timothy M. Kowalski, Google Inc.; 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.

COPYRIGHTS

Basic Elements of Sherlock Holmes Stories in Public Domain

Klinger v. Conan Doyle Estate, Ltd., 2013 WL 6824923 (N.D. Ill. 2013). Leslie Klinger, a Sherlock Holmes expert, had previously co-edited a collection of new Sherlock Holmes stories by a variety of authors. During the development of that collection, the Conan Doyle estate approached the publisher and said that a license would be necessary. Klinger did not think the license was necessary because most of the Sherlock Holmes stories were in the public domain. The publisher accepted the terms anyway. While Klinger was working on a sequel to the new story collection, the publisher of the sequel was approached by the Conan Doyle estate about licensing terms. While Klinger still thought such a license was unnecessary, the publisher, concerned about potential litigation, backed out of the project.

Klinger sought declaratory judgment to prevent the estate from seeking license fees. The district court agreed with Klinger, issuing summary judgment largely in his favor. The court determined that the Holmes stories are separated into two groups: pre-1923 stories and 10 later-published stories. The latter 10 stories are still under copyright protection, but the bulk of the original Holmes stories are not. Because the characters and other elements of the Sherlock Holmes universe were well-established in the pre-1923 stories, those elements were deemed to be in the public domain. Under the ruling, the Conan Doyle estate may still seek license arrangements for anyone using particular story elements from the last 10 original Holmes stories, until they too enter the public domain. The court did not issue a permanent injunction against the estate barring it from seeking license arrangements on all Holmes story elements, because the court determined only that Klinger was likely to win on the merits of his case, not that he had succeeded on the merits.

Journal Articles Used Fairly During Patent Prosecution

Am. Inst. Of Physics v. Winstead PC, 109 U.S.P.Q.2d 1661 (N.D. Tex. 2013).Winstead is a law firm with a department that drafts and prosecutes patent applications. AIP is a publisher of a number of scientific and technical journals. Winstead had submitted certain journal articles to the PTO during the prosecution of several patent applications. AIP sued Winstead for copyright infringement. Winstead moved to dismiss, and the court granted summary judgment of non-infringement to Winstead based upon the fair use doctrine.

The district court used the fair use factors provided in 17 U.S.C. §107. The court found that the purpose and character of the use favored Winstead because the use was transformative. The court found that submitting the AIP articles to the PTO transformed the use of the articles from informing a reader about a current development in a technical field, to informing the PTO of the state of an industry at a given point in time. The court also rejected AIP’s claim that the copying was for profit because Winstead charged some clients copying fees or billed clients for attorney time spent reviewing the articles. The court found that the copying itself was not a commercial enterprise because Winstead did not profit from making copies of the articles. The court also found that the public benefited from the copying since providing the PTO copies of the articles improves the efficiency of the patent process.

The court concluded that the copying of the entire article favored AIP, but discounted this factor since the PTO requires patent applicants and attorneys to submit information relevant to the patentability of a pending patent application to the PTO. Therefore, the court ruled that the factors relevant to a fair use doctrine defense favored Winstead.

Hookah Infringement Up In Smoke

Inhale, Inc. v. Starbuzz Tobacco, Inc., 739 F.3d 446, 109 U.S.P.Q.2d 1337 (9th Cir. 2014).Plaintiff Inhale claimed copyright protection in the shape of a hookah water container that was registered with the Copyright Office in 2011. The hookah included skull-and-crossbones images on the outer surface. Inhale sued Starbuzz over its hookah water containers, which were identical in shape to the Inhale hookah, but did not contain skull-and-crossbones images. The Ninth Circuit upheld the district court’s finding that Starbuzz was entitled to summary judgment of no infringement. The Ninth Circuit held that the shape of the container was not copyrightable since it did not incorporate sculptural features that could be identified separately from, and were capable of existing independently of, the container’s utilitarian aspects. The reasoning of the Copyright Office was adopted in finding that the shape of the container was not independent of the container’s utilitarian function (to hold the contents within its shape), because the shape accomplishes the function. The question of whether an item’s shape is distinctive was deemed not to affect conceptual separability.

PATENTS

Attorney Fees

CBT Flint Partners, LLC v. Return Path, Inc., 737 F.3d 1320, 108 U.S.P.Q.2d 1969 (Fed. Cir. 2013). The Federal Circuit reversed-in-part the district court’s award of fees to defendant after deciding the merits of the case in favor of plaintiff. The Federal Circuit held that 19 U.S.C. § 1920(4) permits recovery of costs for making duplicate electronic documents to the extent that party is obligated to produce, or to accept, electronic documents in a particular format or with particular characteristics intact (e.g., metadata). But, this recovery only covers the creating of the produced duplicates, and not preparatory costs.

Kilopass Tech., Inc. v. Sidense Corp., 738 F.3d 1302, 109 U.S.P.Q.2d 1085 (Fed. Cir. 2013).The defendant, Sidense, moved for attorneys’ fees after obtaining summary judgment of non-infringement. The district court denied the motion, and the Federal Circuit reversed and remanded. The Federal Circuit first noted that a defendant seeking attorneys’ fees does not need to prove that the patentee had actual knowledge that its infringement claims were objectively baseless. To prove subjective bad faith by the patentee, a defendant must satisfy the same objective recklessness standard that a patentee must satisfy to recover attorneys’ fees on the grounds of willful infringement. The Federal Circuit held that the district court erred by focusing only on evidence that tended to show subjective good faith by the patentee (i.e., patent opinions) and not properly analyzing the totality of the circumstances.

Claim Construction

Nazomi Commc’ns, Inc. v. Nokia Corp., 739 F.3d 1339, 109 U.S.P.Q.2d 1258 (Fed. Cir. 2014).The Federal Circuit affirmed the claim construction and the district court’s grant of summary judgment of non-infringement. The Federal Circuit found that the claims required a hardware-software combination that must perform the described functions. There was no suggestion that the accused devices were designed to be used with the software.

Collateral Estoppel/Inequitable Conduct

Ohio Willow Wood Co. v. Alps South, LLC, 735 F.3d 1333, 108 U.S.P.Q.2d 1745 (Fed. Cir. 2013). The Federal Circuit affirmed the district court’s grant of summary judgment that patentee Ohio Willow was collaterally estopped from challenging the invalidity of the asserted claims, but reversed the district court’s grant of summary judgment that Alps failed to raise a genuine issue of material fact with respect to inequitable conduct. The collateral-estoppel issue arose from a prior litigation that involved a continuation of the asserted patent. The Federal Circuit held that collateral-estoppel applied because the differences between the present claims and the continuation claims do not materially alter the question of invalidity. The inequitable-conduct issue arose in an ex parte reexamination that Alps filed during the litigation. In support of its reexamination, Alps relied on testimony from an individual who had been affiliated with the company that produced the prior art product that Alps relied upon. At the Board, Ohio Willow sought to discredit this individual’s testimony as a highly-interested party and argued it should not be considered in the absence of corroborating evidence. At the district court, Alps argued that there was corroborating evidence that Ohio Willow became aware of during the litigation and should have disclosed to the PTO. The Federal Circuit agreed that there was a genuine issue of fact regarding whether Ohio Willow withheld evidence from the PTO that was sufficient to corroborate the testimony.

Declaratory Judgments

Futurewei Techs., Inc. v. Acacia Research Corp., 737 F.3d 704, 108 U.S.P.Q.2d 1916 (Fed. Cir. 2013).The Federal Circuit affirmed the district court’s (1) application of the first-to-file rule in dismissing Futurewei’s third-party beneficiary and alter-ego claims; (2) denial of Futurewei’s request for discovery to help establish jurisdiction; and (3) denial of its request for leave to file an amended complaint. Acacia had previously sued Futurewei in a different district court involving substantially similar issues.

Exhaustion

LifeScan Scotland, Ltd. v. Shasta Techs., LLC, 734 F.3d 1361, 108 U.S.P.Q.2d 1757 (Fed. Cir. 2013). The Federal Circuit reversed the district court’s decision granting a preliminary injunction in favor of plaintiff LifeScan because defendant Shasta had established a patent exhaustion defense. The technology is directed to blood-glucose monitoring systems, which include an electrochemical meter and disposable test strips. LifeScan manufactures such a system, and its business model relied on the sale of test strips, rather than the sale of the meters, which were sold at below cost or gave away. Shasta sold test strips that could be used with the LifeScan meter. LifeScan sued Shasta for infringing its method claim. Shasta argued that LifeScan’s sale and distribution of the meters exhausted LifeScan’s rights under its method claim because the meters substantially embodied the invention. The Federal Circuit, siding with Shasta, pointed to both the patent’s specification and LifeScan’s arguments in prosecution to support its conclusion that meters substantially embody the invention. Moreover, LifeScan sought separate patent protection for the test strips themselves, but those claims were rejected. Because the LifeScan meters substantially embodied the claimed method, the Federal Circuit reversed the district court’s grant of a preliminary injunction. The Federal Circuit, as a matter of first impression, also considered whether patent exhaustion applied to meters distributed for free. The Federal Circuit concluded that in the case of an authorized and unconditional transfer of title, the absence of consideration is no barrier to applying patent-exhaustion principles.

Final Judgment

Fresenius USA, Inc. v. Baxter Int’l, Inc., 733 F.3d 1369, 108 U.S.P.Q.2d 1773 (Fed. Cir. 2013). The Federal Circuit denied the appellant’s petitions for a panel rehearing and for a rehearing en banc. The Federal Circuit previously ruled that the PTO’s invalidity determination, in the context of a reexamination proceeding, mooted a district court’s validity and infringement finding because final judgment had not been entered.

Injunction

Apple Inc. v. Samsung Elecs. Co., 735 F.3d 1352, 108 U.S.P.Q.2d 1833 (Fed. Cir. 2013).The Federal Circuit affirmed-in-part, vacated-in-part and remanded the district court’s denial of Apple’s motion for permanent injunction. With respect to Apple’s design patents and trade dress, the Federal Circuit affirmed the denial of injunctive relief. With respect to Apple’s utility patents, the Federal Circuit vacated the denial of injunctive relief and remanded. The Federal Circuit found that the district court incorrectly treated Apple’s expert survey evidence. The Federal Circuit also found that the district court erred in determining that the inadequacy of legal remedies factor weighed in favor of Samsung, because the district court failed to properly analyze whether damages would adequately compensate Apple for Samsung’s infringement of the asserted patents.

Proveris Scientific Corp. v. Innovasystems, Inc., 739 F.3d 1367, 109 U.S.P.Q.2d 1314 (Fed. Cir. 2014). The Federal Circuit vacated and remanded the district court’s contempt order and sanctions award. The Federal Circuit, in evaluating whether an injunction against continued infringement has been violated by a newly accused product, must first determine whether the newly accused product is more than colorably different from the infringing product. If the court concludes that the differences are not more than colorable, the court must then proceed to the second step and determine whether the newly accused product in fact infringes the relevant claims. Here, the Federal Circuit agreed that the new product was not more than colorably different than the infringing product. The Federal Circuit then reviewed whether the newly accused product infringes. The Federal Circuit found they did not have enough information to determine whether infringement occurred.

Invalidity/Section 337 Economic Prong

Motorola Mobility, LLC v. Int’l Trade Comm’n, 737 F.3d 1345, 109 U.S.P.Q.2d 1001 (Fed. Cir. 2013). This appeal stemmed from the ITC’s exclusion order barring Motorola Mobility from importing certain mobile devices that were found to infringe a Microsoft patent. The Federal Circuit affirmed, finding that Motorola failed to put forth sufficient evidence to satisfy its burden on invalidity. With respect to Motorola’s anticipation by inherency arguments, the Federal Circuit held that a conclusory statement by an expert witness as to a possible interpretation of a reference did not rise to the level of clear and convincing evidence. The Federal Circuit also rejected Motorola’s arguments that Microsoft had not satisfied the economic prong in § 337, finding that it is permissible to rely on investments or employment directed to various components of a particular device as long as those components are tailored for use in an article protected by a patent.

ITC/Induced Infringement

Suprema, Inc. v. ITC, 109 U.S.P.Q.2d 1006 (Fed. Cir. 2013). The Federal Circuit vacated an exclusion order because the ITC’s authority is limited to banning import of articles that infringe at the time of import. Based on this limitation, an ITC order predicated on inducing infringement cannot ban import of an article when the direct infringement occurs after importation. Here, the accused infringement combined an imported scanner and domestically provided software. Until the software was combined with the scanner after importation, there was no direct infringement.

Non-Patent Injunctions

Allergan, Inc. v. Athena Cosmetics, Inc., 738 F.3d 1350, 109 U.S.P.Q.2d 1154 (Fed. Cir. 2013). The Federal Circuit affirmed summary judgment that Athena violated California’s unfair competition law (CUCL) by marketing, distributing and selling, without regulatory approval, products that qualify as drugs, but vacated and remanded the district court’s injunction as overboard. Allergan sued Athena for patent infringement and violating the CUCL by marketing, selling, and distributing its hair and/ eyelash growth products without a new drug application approved by the FDA or California State Department of Health Services. Allergan moved for summary judgment on the CUCL issue, and the district court granted summary judgment and entered a permanent injunction. The Federal Circuit held that there is no genuine dispute that Athena objectively intended for the products to be used to affect the structure of eyelashes by imparting physical changes and enhancing growth. However, the Federal Circuit disagreed with the district court’s remedy of a permanent injunction barring Athena from manufacturing, marketing, selling, and/or offering for sale any and all eyelash growth product(s) anywhere within the United States. Thus, the Federal Circuit remanded with instructions to limit the scope of the injunction to California.

Obviousness

Galderma Labs., LP v. Tolmar, Inc., 737 F.3d 731, 108 U.S.P.Q.2d 1929 (Fed. Cir. 2013). The Federal Circuit reversed the district court’s judgment that the asserted patent claims were not obvious. The asserted patents are generally directed to methods of treating acne using pharmaceutical compositions. All of the claim elements were disclosed by the prior art and there was no dispute over the motivation to combine the references. The only issue was whether there was motivation to select the claimed percentage of an ingredient in a prior art composition. The Federal Circuit advised that where there is a range disclosed in the prior art, and the claimed invention falls within that range, the burden of production falls upon the patentee to provide evidence that (1) the prior art taught away from the claimed invention; (2) there were new and unexpected results; or (3) there are other pertinent secondary considerations. The patentee was unable to do so, and the Federal Circuit found the asserted claims invalid. The Federal Circuit advised that a teaching in a reference that a certain composition may be optimal or standard does not, by itself, criticize, discredit, or otherwise discourage investigation into other compositions. The Federal Circuit noted that the mere fact that a generic pharmaceutical company seeks approval to market a generic version of a drug, without more, is not evidence of commercial success that speaks to the non-obviousness of patent claims.

In re Enhanced Sec. Research, LLC, 739 F.3d 1347, 109 U.S.P.Q.2d 1265 (Fed. Cir. 2014). The Federal Circuit affirmed the rejection of selected claims as being obvious. The Examiner relied on two references that combined to teach each element of the claims. The patentee argued neither reference taught the level of sophistication in assigning weights as claimed. However, the Federal Circuit found nothing in the amended claims suggested the patentee’s method of assigning weights was any more sophisticated than that taught by the references.

In re Giannelli, 739 F.3d 1375, 109 U.S.P.Q.2d 1333 (Fed. Cir. 2014). The Federal Circuit reversed the Board’s obviousness rejection of the claims. The prior art reference was an exercise machine that included handles to be pushed, not pulled. Therefore, it would not have been obvious to use the machine with handles that could be pulled. The Board’s decision lacked an explanation as to how or why one of ordinary skill in the art would modify the prior art handles.

Institut Pasteur & Universite Pierre et Marie Curie v. Focarino, 738 F.3d 1337, 109 U.S.P.Q.2d 1134 (Fed. Cir. 2013). Pasteur appealed the PTAB’s rejections for obviousness of selected claims in three patents during inter partes reexamination. The Federal Circuit dismissed the appeal as to one of the patents, which had by then expired, because Pasteur presented only substantively amended claims to the PTAB and Federal Circuit, and amended claims cannot be entered once a patent expires. With respect to the second patent, the Federal Circuit reversed the PTAB’s obviousness determination because it was based on factual findings unsupported by substantial evidence and an erroneous obviousness analysis, including an improper discounting of Pasteur’s objective indicia of non-obviousness. With respect to the third patent, the Federal Circuit reversed the PTAB’s decision and remanded for the PTAB to consider what motivation, if any, a skilled artisan would have had to pursue the claimed invention.

Randall Mfg. v. Rea, 733 F.3d 1355, 108 U.S.P.Q.2d 1727 (Fed. Cir. 2013). The Federal Circuit vacated the Board’s decision reversing the Examiner’s rejection of obviousness in an inter partes reexamination. The Federal Circuit found that the Board’s analysis narrowly focused on the four references applied by the Examiner and ignored the evidence the requesting party submitted to demonstrate the knowledge and perspective of one of ordinary skill in the art. In obviousness-type cases, the Federal Circuit has emphasized the importance of a factual foundation to support a party’s claim about what one of ordinary skill in the relevant art would have known.

Priority

Sanofi-Aventis v. Pfizer Inc., 733 F.3d 1364, 108 U.S.P.Q.2d 1741 (Fed. Cir. 2013). The Federal Circuit affirmed the Board’s ruling of priority of invention to the junior party. Sanofi argued that Pfizer did not have a complete conception until Pfizer had the full correct nucleotide sequence. When the subject matter is a DNA segment, conception requires possession and appreciation of the claimed DNA segment. Even though the flawed sequence was not corrected until after Sanofi’s filing date, the Federal Circuit agreed with the Board’s finding that a sequence is the only way to identify the composition precisely.

Prosecution History Estoppel

Integrated Tech. Corp. v. Rudolph Techs., Inc., 734 F.3d 1352, 108 U.S.P.Q.2d 1734 (Fed. Cir. 2013). The Federal Circuit affirmed the award of damages for literal infringement; vacated the award of attorneys’ fees and costs and remanded because the court’s exceptional case analysis relied in part on the willfulness finding; and held that the district court did not abuse its discretion in finding no laches. Once a court has determined that prosecution history estoppel presumptively applies, it must then review whether the patentee met its burden of proving an exception to prosecution history estoppel. Here, the Federal Circuit found that the patentee did not meet its burden of proving one of the exceptions and because the finding of willfulness was predicated on that finding of infringement, the Federal Circuit also reversed the finding of willfulness and vacated the corresponding award of treble damages.

Prosecution History Estoppel/Design Patents

Pacific Coast Marine Windshields Ltd. v. Malibu Boats, LLC, 739 F.3d 694, 109 U.S.P.Q.2d 1225 (Fed. Cir. 2014). The Federal Circuit reversed and remanded the district court’s entry of summary judgment of non-infringement. The district court granted Malibu Boats’ motion for summary judgment of non-infringement, finding that prosecution history estoppel barred Pacific Coast’s infringement claim. The Federal Circuit recognized that the issue of whether prosecution history estoppel applied to design patents was one of first impression. The Federal Circuit held that the principles of prosecution history estoppel apply to design patents, but that the district court incorrectly found that the accused infringing design was within the scope of the subject matter surrendered during prosecution, and therefore remanded for further proceedings.

Written Description

Synthes USA, LLC v. Spinal Kinetics, Inc., 734 F.3d 1332, 108 U.S.P.Q.2d 1661 (Fed. Cir. 2013). The Federal Circuit affirmed the jury verdict that the asserted claims were invalid and not infringed, and denied the defendant’s request for attorneys’ fees. The Federal Circuit found substantial evidence supported the jury’s conclusion that the patent was invalid under §112, paragraph 1. The jury was entitled to rely on the presented testimony and evidence to conclude that the patent’s written description did not support the disputed limitation in the claims. The Federal Circuit also independently reviewed the record and agreed with the district court that the defendant failed to demonstrate with clear and convincing evidence that it was entitled to attorney fees.

TRADE SECRETS

Am. Registry, LLC v. Yonah, 2013 U.S. Dist. LEXIS 171889 (M.D. Fla. 2013). It is uncommon for a trade secret misappropriation plaintiff to know, prior to discovery, the details surrounding the purported misappropriation. The plaintiff, however, is still required to provide “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Here, plaintiff’s list of trade secrets did not adequately inform defendants what they supposedly misappropriated, and the allegations regarding the misappropriation are without adequate factual support. Thus, the complaint was dismissed.

BioD, LLC v. Amnio Tech., LLC, 2014 U.S. Dist. LEXIS 9042 (D. Ariz. 2014). The motion to dismiss trade secret misappropriation claim is denied. There is no heightened pleading standard for trade secret claims. A plaintiff is not expected to plead its trade secrets in detail because such disclosure would amount to an effective surrender of the trade secret.

Emerson Elec. Co. v. Khuti, 2014 U.S. Dist. LEXIS 12867 (E.D. Missouri 2014). The district court found plaintiff’s claims for injunctive relief moot after the new employer rescinded the employment agreement after entry of TRO. However, the district court found that the claims for monetary damages still present a live controversy because nominal damages are recoverable under contract law for defendant’s breach of the noncompetition and confidentiality covenants, and punitive damages are recoverable under the Missouri Uniform Trade Secret Act.

Indus. Control Repair v. McBroom Elec. Co., 2013 Mich. App. LEXIS 1581 (2013). A list of customers compiled by a former employee from personal and public sources available to that employee is not protectable as a trade secret.

Jobscience, Inc. v. CVPartners, Inc., 2014 U.S. Dist. LEXIS 2741 (N.D. Calif. 2014). Plaintiff’s claims for misappropriation of trade secrets, unfair competition, and conversion are preempted by the Copyright Act. Accordingly, these claims were dismissed. Plaintiff did not plead the existence of a trade secret. Simply referring to “proprietary software applications” and vague “source code, methods, and other trade secrets” cannot suffice. Plaintiff cannot show any secrecy for its software applications because plaintiff received copyrights for its software programs.

Lands’ End, Inc. v. Genesys Software Systems, Inc., 2014 U.S. Dist. LEXIS 9047 (W.D. Wisc. 2014). The motion for summary judgment dismissing the trade secret misappropriation claim was granted. The trade secrets were not identified with specificity as required by law. Vague references to “unlicensed use of the software, including the source code and reporting capabilities” did not satisfy the requirement to identify the trade secret with specificity.

TRADEMARKS

Abandonment

Health & Sun Research, Inc. v. Australian Gold, LLC, 108 U.S.P.Q.2d 1904 (M.D. Fla. 2013).Health and Sun sued Australian Gold, asserting violation of the Lanham Act, common law trademark infringement, and common law unfair competition. Australian Gold sought summary judgment on the basis that Health & Sun abandoned its Royal Flush and Purple Rain marks. The district court denied the motion.

Health and Sun’s president, Santo Carollo, testified that Health and Sun sold its tanning lotions under the mark Purple Rain since 2001 and under the mark Royal Flush since 2005. Australian Gold also sold indoor tanning lotions, including two products known as Royal Flush and Purple Reign. Both of Australian Gold’s marks were first used in 2011 and federally registered in 2012. In late 2012, Health and Sun filed a complaint asserting that Australian Gold’s products infringed its trademarks. Australian Gold sought summary judgment on the basis that Health and Sun abandoned its Royal Flush and Purple Rain marks.

On the issue of abandonment, the court found that Australian Gold did not establish that (1) Health and Sun ceased using the marks; and (2) Health and Sun had done so with an intent not to resume their use. Health and Sun resumed sale of its Royal Flush product after a three-year lapse and continued doing so during the time in which Australian Gold offered a competing product under the same name. Carollo’s declaration that it intended to resume use was supported by the long shelf-life of the product combined with the fact that tanning salons purchased many bottles of the Royal Flush product at a time, which demonstrated how Health and Sun could sustain a three-year period of inactivity. Furthermore, with respect to both marks, when it learned that Australian Gold was producing competing products under the names Royal Flush and Purple Reign, Health and Sun diligently protected its rights by demanding that Australian Gold cease and desist and by filing the instant trademark action. Accordingly, the district court denied Australian Gold’s motion for summary judgment.

Cancellation/Entry of Judgment

Multisorb Tech. v. Pactiv Corp., 109 U.S.P.Q.2d 1170 (T.T.A.B. 2013). The TTAB granted Pactiv’s motion for entry of judgment for cancellation of its ACTIVETECH mark on the basis of abandonment of the mark. The TTAB declined to consider a fraud claim, brought by Multisorb. The TTAB determined that by granting cancellation of the mark on the basis of abandonment, it saw no point in engaging in further proceedings when the only remedy for fraud had already been granted and that a decision on the fraud claim would have only a limited effect on Multisorb’s ability to challenge future attempts by Pactiv to register the mark. The TTAB indicated that it was the Board’s discretion to look at the individual circumstances of each case. Here, because Pactiv consented to entry of judgment, Multisorb was not deprived of judgment and the Board saw no reason to engage in further litigation.

Infringement/Likelihood of Confusion

Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150, 109 U.S.P.Q.2d 1291 (4th Cir. 2014). Swatch filed claims for trademark infringement, trademark dilution, unfair competition and cancellation of Beehive’s registration of the mark SWAP in connection with watch components. The Fourth Circuit affirmed the district court’s decision that Beehive’s SWAP mark was registrable and that there was no likelihood of confusion between Beehive’s SWAP mark and Swatch’s SWATCH mark. The Fourth Circuit first agreed that the SWAP mark was not merely descriptive of watch components, but instead was suggestive because merely showing the SWAP mark and the products together would be insufficient to convey its attributes (i.e., interchangeable watch components).

The Fourth Circuit also found that the district court’s analysis of the nine likelihood-of-confusion factors was supported by substantial evidence. In particular, the Fourth Circuit determined that while some of the factors favored Swatch, more factors favored Beehive, including (1) the marks themselves were dissimilar in sight, sound, and meaning; (2) there were differences between Swatch’s and Beehive’s modes of distributing their products; (3) there was little similarity between Beehive’s advertising that was directed to wholesale customers through catalogues and appearances at trade shows and Swatch’s advertising through television, magazines, social media, and a billboard in Times Square; (4) Beehive’s actions did not show an intent to mislead consumers; and (5) there was no evidence of actual confusion between the SWATCH and SWAP marks.

On the trademark dilution claim, the Fourth Circuit found no clear error in the district court’s finding that Swatch had failed to prove that the distinctiveness of the famous SWATCH mark was impaired based on association of the marks, as the two marks were not confusingly similar and there was no evidence that Beehive intended to confuse consumers. The related trademark claims for federal, state, and common law trademark infringement and unfair competition were also dismissed.

Tacking

Hana Fin., Inc. v. Hana Bank, 735 F3d 1158, 108 U.S.P.Q.2d 1825 (9th Cir. 2013). Hana Financial, Inc. (HFI) appealed the judgment for Hana Bank (Bank) in which the jury found that the doctrine of tacking applied to establish Bank’s priority of use and, thus, ownership of the mark at issue. The Ninth Circuit affirmed.

In May 1994, the Bank established the “Hana Overseas Korean Club” (Club) to provide financial services to Korean expatriates in the United States. Advertisements included the Club name in English next to “Hana Bank” in Korean and its dancing man logo. HFI came into existence one month later. In 1996, HFI obtained a federal trademark registration for the “Hana Financial” and design mark for use in connection with factoring and other financial services. In 2000, the Bank changed the Club’s name to “Hana World Center.” In 2001, the Bank sought to register its trademark but was unable to do so, at least in part due to HFI’s mark. In 2007, HFI filed a complaint alleging trademark infringement. In response, the Bank sought cancellation of HFI’s trademark. The district court granted Bank’s motion for summary judgment on trademark priority and granted HFI’s motion for summary judgment on the Bank’s cancellation counterclaim. Both parties appealed. On remand, HFI filed a motion seeking to exclude the Club advertisements, arguing that the evidence was irrelevant because (a) tacking for the purposes of establishing trademark priority was improper, and (b) the Bank had abandoned the mark in 1999 or 2000. The court denied the motion.

The Ninth Circuit noted that tacking applies only in exceptionally narrow circumstances where the previously-used mark is the legal equivalent of the mark in question or indistinguishable therefrom and the consumer should consider both as the same mark. Here, the Club name appeared next to the “Hana Bank” mark in Korean, and its dancing man logo, which had not changed, appeared on all its advertisements, and “Hana” was arguably the most significant portion of the trade name. Viewing the marks in context in their entireties, ordinary purchasers could perceive them as conveying the same idea or meaning or evoking the same mental reaction. Consequently, there was sufficient evidence to support the jury’s verdict on trademark priority. The Ninth Circuit also rejected HFI’s argument that the Bank “abandoned” the Club’s mark in 1999 or 2000. Accordingly, the Ninth Circuit affirmed the district court’s decision denying HFI’s motion for JMOL on trademark priority and upheld the jury’s verdict.

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