©2015. Published in Landslide, Vol. 7, No. 3, January/February 2015, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.
Conan Doyle Estate Ordered to Pay Attorney Fees in Holmes Case
Klinger v. Conan Doyle Estate Ltd., 761 F.3d 789 (7th Cir. 2014). Leslie Klinger anthologized stories written about Sherlock Holmes by modern authors, who used elements of out-of-copyright Holmes stories in their own works. The estate of Arthur Conan Doyle threatened to work with Amazon and other booksellers to block sales of Klinger’s anthology unless a license was obtained. Rather than paying for the license, Klinger sued for declaratory judgment and succeeded in district court and on appeal. Doyle estate’s argued that the anthologized stories used more “rounded” characters found in Doyle works still under copyright. Klinger asked for an order awarding him the $30,000 in attorneys’ fees he spent on the appeal.
Stating that “the estate’s appeal bordered on the quixotic,” the Seventh Circuit awarded attorneys’ fees to Klinger. The opinion was strongly critical of the estate’s approach of using the threat of legal action to encourage payment of a license fee, which it calls “a form of extortion.” The Seventh Circuit also noted that the estate was playing with fire, as its strategy of threatening to employ booksellers to boycott Klinger and his publications could be considered a boycott of a competitor in violation of the antitrust laws.
Ninth Circuit Refuses to Knock Out Copyright Claim on Screenplay
Petrella v. Metro-Goldwyn-Mayer, Inc., 2014 WL 4116957 (9th Cir. 2014). Petrella sued MGM for copyright infringement by the movie Raging Bull of a 1963 screenplay written by her father. Petrella renewed the copyright in the 1963 screenplay based on the life of boxer Jake LaMotta, but not in a book or a 1973 screenplay about the same subject. MGM had originally been granted summary judgment that Petrella’s copyright claim was barred based on laches, but the Supreme Court overturned that decision. MGM sought summary judgment that the license it obtained for the book and 1973 screenplay entitled MGM to a grant of summary judgment of non-infringement.
The Ninth Circuit rejected MGM’s arguments and remanded the case back to the district court. The Ninth Circuit determined that several factual issues precluded granting MGM summary judgment. The first factual issue was whether the book MGM had licensed for Raging Bull was a derivative work of the 1963 screenplay, or vice versa. If the book was the original work, then all of the contents of the book would be protected by the now lapsed copyright in the book. If the book was a derivative work of the still protected 1963 screenplay, only new content of the book would be protected by the book’s copyright. Another factual issue existed as to whether the 1963 screenplay was solely the work of Petrella, as the copyright registration stated, or was a joint work also authored by LaMotta, as the title page of the 1963 screenplay indicated. The Ninth Circuit further directed the district court to determine whether Petrella was estopped from arguing that the book MGM licensed was a derivative work of the 1963 screenplay, as Petrella had indicated to MGM in 1976 that the book was original, and was not adapted from any other works.
Not Sorry For Partying
Kienitz v. Sconnie Nation LLC, 766 F.3d 756, 111 U.S.P.Q.2d 2086 (7th Cir. 2014). The Seventh Circuit upheld the district court’s decision that defendant Sconnie Nation did not infringe the plaintiff Kienitz’s copyright in a photograph of Paul Soglin, the mayor of Madison, Wisconsin. Mayor Soglin attended the first Mifflin Street Block Party in 1969, which according to Soglin was a party themed “taking a sharp stick and poking it in the eye of authority.” Now as mayor, he wanted to shut down the annual event. Sconnie Nation made t-shirts displaying an image of Soglin’s face with the phrase “Sorry for Partying,” and sold 54 shirts. Kienitz is a photographer who owns the copyright in the picture used by Sconnie Nation for the t-shirts.
Sconnie Nation downloaded the photo from the city’s website, posterized the image, removed the background, and turned Soglin’s face lime green and surrounded it with multi-colored writing. Weighing the four factors of fair use, the Seventh Circuit agreed that the amount taken in relation to the copyrighted work, and the effect on the potential market for the original image, both weighed in Sconnie Nation’s favor. While there were some small profits, the t-shirt is a form of political commentary, further supporting the decision.
Certificate of Correction
H-W Tech., L.C. v. Overstock.com, Inc., 758 F.3d 1329, 111 U.S.P.Q.2d 1727 (Fed. Cir. 2014). The Federal Circuit affirmed summary judgment in favor of defendant Overstock.com. The Federal Circuit affirmed the invalidity of claim 17. The Federal Circuit found that the district court did not have authority to correct the error in claim 9, and therefore the district court had correctly declined to do so. A certificate of correction is only effective for causes of action arising after the certificate is issued. Here, H-W sued before the certificate of correction issued. The district court was correct not to consider the certificate of correction when determining whether H-W could assert claim 9. The Federal Circuit struck the portion of the judgment that held claim 9 invalid because corrected claim 9 was not litigated. The Federal Circuit affirmed the district court’s holding that H-W could not assert either the uncorrected or corrected versions of claim 9 in the lawsuit.
Golden Bridge Tech., Inc. v. Apple Inc., 758 F.3d 1362, 111 U.S.P.Q.2d 1812 (Fed. Cir. 2014). The Federal Circuit affirmed summary judgment of non-infringement. A contested issue was the limiting effect of IDS submissions. A reexamination of a stipulated construction of a claim term from a related litigation was submitted. While the disclosure of material prior art does not automatically limit a claimed invention, the submission of a party’s own stipulated construction of a claim term can limit the meaning, particularly where the applicant does not rescind a disclaimer during prosecution.
Hill-Rom Servs., Inc. v. Stryker Corp., 755 F.3d 1367, 111 U.S.P.Q.2d 1501 (Fed. Cir. 2014). The Federal Circuit reversed and remanded the district court’s finding of non-infringement because the district court’s judgment of non-infringement was based on erroneous claim constructions. The Federal Circuit reversed the claim construction of several terms by the district court, finding the district court’s constructions to be too narrow and not supported by a disavowal or special lexicography of the patentee.
X2Y Attenuators, LLC v. Int’l Trade Comm’n., 757 F.3d 1358, 111 U.S.P.Q.2d 1607 (Fed. Cir. 2014). The Federal Circuit narrowly construed the term “electrode” to structures for reducing electromagnetic interference in electrical circuits. The specification discloses that the presence of a common conductive pathway electrode positioned between paired electromagnetically opposite conducts is “universal to all the embodiments” and is “an essential element among all embodiments or connotations of the invention.” This was a clear and unmistakable disavowal of claim scope. Another statement in an asserted patent also supported the conclusion of the disavowal of claim scope. The asserted patents include a related family of applications with some of the narrowing language incorporated by reference with nothing in the host patent being considered inconsistent with the incorporated patent’s disavowal.
Claim Construction/Doctrine of Equivalents
Augme Techs., Inc. v. Yahoo! Inc., 755 F.3d 1326, 111 U.S.P.Q.2d 1409 (Fed. Cir. 2014). The Federal Circuit affirmed summary judgment of non-infringement and indefiniteness for one patent, and infringement and definiteness for another patent. For the meaning of a term leading to the non-infringement finding, the Federal Circuit held that lexicography or disavowal was not necessary because the plain and ordinary meaning of “embedded code” does not include “linked code” and that the specification reinforced this meaning. The Federal Circuit found no doctrine of equivalents infringement because embedded and linked codes are opposites and they cannot possess only insubstantial differences.
Gemalto S.A. v. HTC Corp., 754 F.3d 1364, 111 U.S.P.Q.2d 1487 (Fed. Cir. 2014). The Federal Circuit rejected the plaintiff’s efforts to obtain, through claim construction, claim scope that would encompass the prior art described in the patent’s specification, which is explicitly distinguished as being different than the claimed invention. The Federal Circuit also found the plaintiff’s arguments were inconsistent with the prosecution history, and rejected the claim differentiation arguments. The Federal Circuit also found that the plaintiff’s doctrine of equivalents arguments were general and conclusory in nature, and also would impermissibly ensnare the prior art.
Retractable Techs., Inc. v. Becton Dickinson & Co., 757 F.3d 1366, 111 U.S.P.Q.2d 1551 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s denial of the defendant’s motion to modify the district court’s damages award following the partially successful appeal of the infringement judgment on which the award was based. The Federal Circuit stated the modification of damages should have been raised in the previous appeal (the appeal regarding infringement). Since it was not, the district court cannot now modify the damages award.
Stauffer v. Brooks Bros. Grp., Inc., 758 F.3d 1314, 111 U.S.P.Q.2d 1711 (Fed. Cir. 2014). The Federal Circuit affirmed the dismissal of a qui tam action for false marking of bow ties with expired patents. The case was pending at the time the AIA eliminated the qui tam provision from the false marking statute. The AIA’s false-marking changes applied to all pending cases.
ePlus, Inc. v. Lawson Software, Inc., 760 F.3d 1350, 111 U.S.P.Q.2d 1833 (Fed. Cir. 2014). The Federal Circuit vacated the district court’s injunction and contempt findings because the claim’s invalidity finding from the PTO was affirmed.
Troy v. Samson Mfg. Corp., 758 F.3d 1322, 111 U.S.P.Q.2d 1722 (Fed. Cir. 2014). The Federal Circuit vacated and remanded the district court’s conclusion that the PTAB properly cancelled Troy’s claim in an interference proceeding with Samson. The PTAB concluded that Troy failed to prove actual reduction to practice in February 2004, and rejected Troy’s claims of inurement and derivation because he did not establish prior conception. At the district court, Troy proffered new evidence of prior conception at the various conception dates asserted at the PTAB and actual reduction to practice in February and July 2004. The district court refused to consider the evidence pertaining to the July 2004 reduction to practice as it was not raised at the PTAB. The Federal Circuit concluded that the Supreme Court’s decision in Hyatt permits new evidence to be admitted without regard to whether the issue was raised before the PTAB except those in the Federal Rules of Evidence and the Federal Rules of Civil Procedure.
Align Tech., Inc. v. Int’l Trade Comm’n., _______, 111 U.S.P.Q.2d 1855 (Fed. Cir. 2014). The Federal Circuit found that the Commission’s review of an ALJ order was not procedurally sound. In a proceeding determining whether a consent order was violated, the ALJ found the accused devices were within the scope of the manufactured articles in the consent order. Because the ALJ issued its finding as an order and the accused violators did not request an interlocutory review, the Commission could not review the order.
In re Nokia Inc., 760 F.3d 1348, 111 U.S.P.Q.2d 1914 (Fed. Cir. 2014). The Federal Circuit denied the petition for a writ of mandamus. In a first appeal, the Federal Circuit reversed an order of the ITC finding infringement. On remand, the ITC determined that the petitioners waived certain arguments. The Federal Circuit found that the petitioners could only challenge the merits of this finding after final judgment on appeal.
Medisim Ltd. v. BestMed, LLC, 758 F.3d 1352, 111 U.S.P.Q.2d 1741 (Fed. Cir. 2014). The Federal Circuit vacated the district court’s grant of JMOL on anticipation because the defendant failed to preserve its right under Rule 50(b) by failing to first move for JMOL under Rule 50(a). However, the Federal Circuit did affirm the district court’s grant of JMOL on the plaintiff’s unjust enrichment claim and its conditional grant of a new trial on anticipation.
MadStad Eng’g, Inc. v. USPTO, 756 F.3d 1366, 111 U.S.P.Q.2d 1569 (Fed. Cir. 2014). A challenge to the constitutionality of the first-inventor-to-file provision of the AIA was held properly appealed to the Federal Circuit. However, the plaintiff was deemed to lack standing under Article III. Applying the Supreme Court decision in Clapper v. Amnesty Int’l USA, the Federal Circuit determined that the threats of harm from the first-inventor-to-file provision were considered speculative and that there was an insufficient substantial risk of the plaintiff suffering injury. The plaintiff alleged harms including increased risk of computer hacking, increased time and efforts to file additional applications, competitive disadvantage relative to competitors, and lost business and investment opportunities.
Triton Tech of Tex., LLC v. Nintendo of Am., Inc., 753 F.3d 1375, 111 U.S.P.Q.2d 1396 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s judgment that the means-plus-function term (integrator means) rendered the asserted claims of Triton’s patent invalid for indefiniteness. The Federal Circuit agreed with the district court that the specification does not disclose an algorithm for performing the claimed integrating function of the term. Because the patent did not disclose an algorithm, the term was indefinite.
Mediator’s Duty to Disclose
CEATS, Inc. v. Cont’l Airlines, Inc., 755 F.3d 1356, 111 U.S.P.Q.2d 1479 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s ruling that relief from judgment under Rule 60(b) was not warranted. A jury determined that the plaintiff’s patents were infringed but invalid. Subsequently, the plaintiff learned that the court-appointed mediator for the district court case failed to disclose his prior work relationship with defendants’ counsel and moved for relief under Rule 60(b). The Federal Circuit found the mediator had a duty to disclose all relevant information regarding his prior relationship with counsel. However, after applying the three-factor test from Liljeberg v. Health Services Acquisition Corp., the Federal Circuit determined that the mediator’s failure to disclose his prior relationship did not warrant setting aside the invalidity judgment under Rule 60(b) because the plaintiff was able to fully and fairly present its case before an impartial judge and jury.
Taurus IP, LLC v. DaimlerChrysler Corp., 726 F.3d 1306, 111 U.S.P.Q.2d 1662 (Fed. Cir. 2014). In a case that spawned two distinct sets of claims (a set of patent claims and a set of contract claims), the Federal Circuit affirmed the district court’s findings of non-infringement, invalidity, and exceptional case, and affirmed-in-part and reversed-in-part the district court’s finding of damages related to breach of a prior settlement agreement. The plaintiff alleged that the websites of various car manufacturers and other retailers infringed several claims. Certain defendants asserted license and release defenses based on a prior settlement and license agreement executed with an entity related to the plaintiff. They also counterclaimed and asserted third-party claims for breach of contract and impled several entities related to the plaintiff, as well as all the entities’ common managing member, Erich Spangenberg. With respect to the patent claims, the district court found non-infringement and invalidity on summary judgment, found the case exceptional under § 285, and awarded the defendants attorney fees and costs. With respect to the contract claims, the third parties filed two summary judgment motions. The district court granted one, finding that two provisions of the settlement and license agreement in question did not provide a release as alleged, but denied the second, finding a triable issue of fact with respect to whether the third parties had breached a warranty provision in the agreement. At trial, a jury found the warranty breached, and the court awarded damages to the defendants and denied the third parties’ JMOL as to the breach issue and resulting damages award. The Federal Circuit affirmed the district court in all respects, except it reversed an award against one of the third parties of attorney fees incurred by the defendants in defending against the patent claims whose prosecution was found to constitute a breach of warranty by the third party.
Patentable Subject Matter
Digitech Image Techs. LLC v. Elecs. For Imaging, Inc., 758 F.3d 1344, 111 U.S.P.Q.2d 1717 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s finding that the asserted claims were invalid under 35 USC § 101. The claims are directed to a device profile and a method for creating a device profile within a digital image processing system. The Federal Circuit found that the described device profile was not a tangible or physical thing and thus did not fall within an eligible subject matter category. The process claims were also directed to ineligible subject matter.
VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 111 U.S.P.Q.2d 1763 (Fed. Cir. 2014). The Federal Circuit held that the district court abused its discretion in denying the defendant’s joint motion to stay the case pending the post-grant review of the asserted claims under the business method program. The Federal Circuit held that three of the four factors weighed heavily in favor of a stay, including simplifying/streamlining issues, and reducing the burden of litigation on the parties and the court. The only factor weighing slightly in favor of a stay was the undue prejudice factor.
In re Nintendo of Am., Inc., ______, 111 U.S.P.Q.2d 1557 (Fed. Cir. 2014). The Federal Circuit vacated the district court’s order denying the motion to sever, transfer, and stay, and then directed the district court to grant petitioners’ motion. The Federal Circuit found severance and transfer to be appropriate where the administration of justice would be materially advanced. The benefits of trying the case against Nintendo in the Western District of Washington are indisputable, as that is the location of most of Nintendo’s witnesses and documents. The case against Nintendo takes precedence over the case against its retailers.
AbbVie Deutschland GmbH & Co. v. Janssen Biotech, Inc., 759 F.3d 1285, 111 U.S.P.Q.2d 1780 (Fed. Cir. 2014). In reviewing a consolidated appeal of infringement and interference actions, the Federal Circuit affirmed the district court’s judgments of invalidity in both actions. The Federal Circuit held that the PTAB’s decision in the interference action lacked finality for the purposes of collateral estoppel and, thus, did not preclude the defendant from raising invalidity defenses. The Federal Circuit held that substantial evidence supported the jury’s verdict of invalidity for lack of an adequate description of the claimed genus of antibodies.
Diodato v. Wells Fargo Ins. Servs. USA, 2014 U.S. Dist. LEXIS 125002 (M.D. Pa. 2014). The district court dismissed Wells Fargo’s trade secret misappropriation claim in a summary judgment motion. The district court noted that Wells Fargo devoted only two pages in opposing Diodato’s arguments. Wells Fargo did not direct the court to any evidence tending to establish that Diodato retained any misappropriated proprietary information falling within the definition of trade secrets. Wells Fargo’s claim rested entirely on the allegations set forth in the pleadings. Wells Fargo must cite evidence at the summary judgment stage—beyond its own allegations—identifying each allegedly misappropriated trade secret and the manner in which that secret was misappropriated by Diodato.
EarthCam, Inc. v. OxBlue Corp., 2014 U.S. Dist. LEXIS 132388 (N.D. Ga. 2014). To prove that a defendant misappropriated the trade secret, the plaintiff must show that the defendant (1) disclosed information that enabled a third party to learn the trade secret; or (2) used a substantial portion of the plaintiff’s trade secret to create an improvement or modification that is substantially derived from the plaintiff’s trade secret. EarthCam did not present evidence on either. EarthCam’s reliance on a declaration from its founder was insufficient to survive a motion for summary judgment noting that the founder’s gut feeling that OxBlue misappropriated trade secrets due to the presence of a technical glitch common to both products is not competent evidence of trade secret misappropriation.
Intertek USA Inc. v. Amspec, LLC, 2014 U.S. Dist. LEXIS 127120 (N.D. Ill. 2014). The district court found that the plaintiff Intertek established at least two categories of trade secrets: (1) the financial information in Intertek’s P&L statements and aging and sales reports; and (2) the information in McMahon’s wish list of equipment and testing capabilities for an AmSpec lab that closely resembled Intertek’s lab in Chicago. The district court also found that there was no serious dispute that Intertek took adequate measures to guard the secrecy of the information. However, there was considerable dispute over the extent to which the information is publicly available, the value of the information, the time necessary to develop the information, and how easy or difficult it would be for AmSpec to develop the information independently. The district court concluded there was actual misappropriation and therefore did not have to address the inevitable disclosure doctrine. Balancing the various interests of the parties, the district court granted a preliminary injunction enjoining the former employees from joining the new competitor for three months.
Welsco, Inc. v. Brace, 2014 U.S. Dist. LEXIS 138410 (E.D. Ark. 2014). The defendant (a former employee) moved for summary judgment dismissing the Arkansas Uniform Trade Secret Act claims. The district court found that the plaintiff may rely upon circumstantial evidence and the inevitable disclosure doctrine to defeat a motion for summary judgment. The district court rejected the argument that the inevitable disclosure doctrine should only be applied in granting injunctive relief. The court denied the motion for summary judgment finding the plaintiff has presented sufficient circumstantial evidence from which a juror could conclude that its customer information, including its margins, pricing information, and its related business methods, are considered confidential and would be of value to a competitor if not protected.
McAirlaids, Inc. v. Kimberly-Clark Corp., 756 F.3d 307, 111 U.S.P.Q.2d 1546 (4th Cir. 2014). McAirlaids sued Kimberly-Clark for trade-dress infringement and unfair competition of its pixel pattern for absorbent products. The district court granted summary judgment in favor of Kimberly-Clark, and McAirlaids appealed. Because the Fourth Circuit found that the questions of fact precluded summary judgment, the decision was vacated and remanded.
McAirlaids registered its pixel pattern for absorbent products as trade dress with the PTO. McAirlaids sued Kimberly-Clark after it began using a similar dot pattern on its GoodNites bed mats. The district court found that, because the dot pattern on McAirlaids’s product was functional, it was not protectable as trade dress. The Fourth Circuit distinguished the case from TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23 (2001), because McAirlaids’s pixel pattern was properly registered as trade dress. As such, the registration served as prima facie evidence that the trade dress was valid and, therefore, nonfunctional. Kimberly-Clark, the party challenging the registered mark, had the burden of showing functionality by a preponderance of the evidence. he Fourth Circuit noted that McAirlaids’s utility patents covered a process and a material, but did not mention a particular embossing pattern as a protected element and that the pattern was not the central focus of any utility patent. Although McAirlaids’s officials stated under oath that the pattern was chosen because it looked nice and was likeable, the company arguably touted the pattern’s functional attributes. Because McAirlaids presented sufficient evidence to create a genuine factual issue as to whether its selection of a pattern was purely an aesthetic choice among many alternatives or whether it was functional, the Fourth Circuit vacated the district court’s judgment and remanded for further proceedings.
In re Nordic Naturals, Inc., 755 F.3d 1340, 111 U.S.P.Q.2d 1495 (Fed. Cir. 2014). Nordic appealed the ruling of the TTAB refusing registration of the mark, CHILDREN’S DHA, for nutritional supplements containing DHA. The Federal Circuit affirmed the TTAB’s decision that the mark was generic. The Federal Circuit found that there was substantial evidence supporting this finding, based on dictionary definitions of “child” and “DHA,” multiple third-party web sites using “children’s DHA” in relation to DHA products for children, and online articles/excerpts using “children’s DHA” in a descriptive manner. Accordingly, the Federal Circuit found that such evidence was sufficient to show that the relevant public uses “children’s DHA” to refer to the category of DHA products for children.
Likelihood of Confusion
StonCor Grp., Inc. v. Specialty Coatings, Inc., 759 F.3d 1327, 111 U.S.P.Q.2d 1649 (Fed. Cir. 2014)./ The appellant StonCor, owner of the registered trademark “STONSHIELD,” opposed registration of Specialty Coatings’s competing mark “ARMORSTONE,” asserting a likelihood of confusion between ARMORSTONE and STONSHIELD and that ARMORSTONE was merely descriptive of Specialty Coatings’s products. The Federal Circuit affirmed the Board’s dismissal of the opposition.
StonCor and Specialty Coatings are competitors for epoxy coatings used on concrete floors. In 1992, StonCor registered the mark STONSHIELD with the PTO in connection with floors and flooring systems comprised of epoxy resins for use in industrial and institutional applications and other products. In 2008, Specialty Coatings filed a registration for the mark ARMORSTONE in connection with epoxy coating for use on concrete industrial floors and other products. StonCor raised two grounds on appeal: (1) the PTO should not allow registration of ARMORSTONE because of a likelihood of confusion with STONSHIELD; and (2) that the mark was merely descriptive. StonCor challenged the TTAB’s findings with respect to DuPont factors one and six, namely, (1) the similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation, and commercial expression, and (6) the number and nature of similar marks in use on similar goods.
The Federal Circuit found that, although the TTAB erred in finding that the “o” in STONSHIELD would be pronounced with a short vowel sound, the error was harmless since the DuPont factors weighed against a likelihood of confusion because of (1) differing spelling of the affixes, “STON-” and “-STONE”; (2) differing placements of the two affixes within the marks; (3) different numbers of syllables in the two complete marks; and (4) different commercial impressions conveyed by the complete marks. The Federal Circuit also found that StonCor presented no credible explanation to support its contention that the existence of marks similar to ARMORSTONE demonstrated a likelihood of confusion with its mark STONSHIELD. Finally, the Federal Circuit found that none of StonCor’s evidence demonstrated that the ARMORSTONE mark, as a whole, conveyed an immediate idea of products. As such, the Federal Circuit affirmed the Board’s holding that there was no likelihood of confusion between the STONSHIELD and ARMORSTONE marks and that ARMORSTONE was not merely descriptive.