Decisions in Brief

Decisions in Brief

John C. Gatz

©2015. Published in Landslide, Vol. 7, No. 6, July/August 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.

COPYRIGHTS

Fox News Channel Fails to Raise the Victory Flag in Summary Judgment Effort

N.J. Media Grp., Inc. v. Pirro, 113 U.S.P.Q.2d 2010 (S.D.N.Y. 2015). North Jersey Media Group, Inc. (North Jersey) owns the copyright to an iconic photograph taken on September 11, 2001, depicting three firemen raising an American flag over the ruins of the World Trade Center. On September 11, 2013, the Facebook page for Jeanine Pirro’s program on Fox News posted an image that juxtaposed the North Jersey photograph with the iconic photograph of four Marines raising an American flag over Iwo Jima during World War II. The image posted on Pirro’s Facebook page was not created by Pirro or anyone at Fox, but was simply located on the internet by a Fox employee who performed a web search for “9/11.” North Jersey sued for copyright infringement, and Fox moved for summary judgment of non-infringement based on the doctrine of fair use.

The district court denied Fox’s motion, determining that Fox failed to show that the use of the North Jersey photo was fair use as a matter of law under the Copyright Act. The district court started its analysis with the purpose and character of Fox’s use of the North Jersey photograph, and determined that the use was not transformative, and that a question of material fact existed as to whether Fox’s use of the photograph was commercial in nature. The district court found that the nature of the North Jersey work weighed in favor of fair use, since North Jersey did not pose the firemen and acknowledged that the photo “just happened.” With respect to the amount and substantiality of the work used by Fox, the district court determined that this factor did not favor either party. Finally, the district court found that the effect of the use upon the market value for the photograph weighed in North Jersey’s favor. The court determined that if Fox could use the photograph without paying a licensing fee, so could all other media outlets, thereby eliminating the licensing revenue generated by North Jersey for editorial uses of the photograph by all media outlets. Therefore, the district court could not determine as a matter of law that Fox’s use of the photograph was a fair use under the Copyright Act.

Got To Give Up $7 Million

Williams v. Bridgeport Music Inc., No. 2:13-cv-06004 (C.D. Cal. 2015). A jury found that the song “Blurred Lines” by defendants Pharell Williams and Robin Thicke infringed the copyright in Marvin Gaye’s “Got to Give It Up”, to the tune of $7.4 million dollars. The jury verdict specifically attributed $4 million dollars to Thicke and related parties, and $3.4 million to Williams and related parties. The jury found that the defendants were not innocent infringers, but also that the infringement was not willful. Evidently the jury did not believe Thicke’s testimony that the song was not influenced by Gaye’s hit record, likely in view of several earlier interviews where Thicke stated “he wanted to make something like that, something with that groove.” While a music style itself is not protectable, Williams and Thicke evidently crossed the line between being influenced, and copying.

Federal Circuit Validates Hypothetical Negotiation for Damages in Infringement Case

Gaylord v. United States, 777 F.3d 1363, 113 U.S.P.Q.2d 1606 (Fed. Cir. 2015). The U.S. Postal Service used an image of The Column, a sculptural work by Frank Gaylord that forms part of the Korean War Veterans Memorial, on a postage stamp commemorating the Korean War armistice. The USPS didn’t seek Mr. Gaylord’s approval to use the image. In earlier litigation, it was determined that the government was liable to Mr. Gaylord for copyright infringement, and that the USPS’s use of the image was not fair use.

The Federal Circuit’s review in this case was narrowed to the question of damages for unused stamps purchased by collectors. To calculate the fair market value of the license that would have been agreed to between Mr. Gaylord and the USPS, the Federal Circuit employed the hypothetical negotiation technique, borrowed from patent law. Here, the Federal Circuit upheld the district court’s determination of a 10% royalty to Mr. Gaylord. First, the court determined that a per-unit royalty would have been a likely outcome of the hypothetical negotiation. The fact that there was only one nationally recognized Korean War memorial weighed in favor of Mr. Gaylord’s ability to hypothetically negotiate a per-unit royalty. The Federal Circuit also looked at practical considerations in determining the value of the royalty, including Mr. Gaylord’s retirement and the fact that he would have focused on a direct monetary royalty as the primary compensation for licensing his work on a stamp.

PATENTS

Appealability

In re Cuozzo Speed Techs., LLC, 778 F.3d 1271, 113 U.S.P.Q.2d 1613 (Fed. Cir. 2015). The Federal Circuit held that it lacked jurisdiction to review the PTO’s decision to institute IPR. The Federal Circuit also affirmed (1) the Board’s final determination, finding no error in the Board’s claim construction under the broadest reasonable interpretation standard; (2) the Board’s obviousness determination; and (3) the Board’s denial of Cuozzo’s motion to amend in view of proposed broadening amendments.

Claim Construction

Fenner Invs., Ltd. v. Cellco P’ship, 778 F.3d 1320, 113 U.S.P.Q.2d 1770 (Fed. Cir. 2015). The Federal Circuit affirmed the district court’s summary judgment of noninfringement. The Federal Circuit’s finding relied solely on its review of, and agreement with, the district court’s claim construction. The Federal Circuit’s analysis relied heavily on the written description and prosecution history. Although the Federal Circuit did not find prosecution disclaimer, per se, the court nonetheless relied on certain limiting statements the patentee made during prosecution.

In re Imes, 778 F.3d 1250, 113 U.S.P.Q.2d 1522 (Fed. Cir. 2015). The Federal Circuit reversed and remanded the Board’s decision upholding the examiner’s rejection of claims as being either anticipated by or obvious over the applied references. A correct claim construction should be the broadest reasonable interpretation in view of the specification. The Federal Circuit found that the examiner’s construction of the term “wireless” to be too narrow.

In re Papst Licensing Digital Camera Patent Litig., 778 F.3d 1255, 113 U.S.P.Q.2d 1533 (Fed. Cir. 2015). The Federal Circuit vacated the district court’s summary judgment of non-infringement. The Federal Circuit rejected all five of the disputed claim constructions, which included the district court’s construction and the alternative constructions by Papst that were rejected by the district court. No alternate constructions were presented on appeal. The Federal Circuit remanded the case suggesting that the district court genuinely clarify the scope of the claims for the finder of fact.

Pacing Techs., LLC v. Garmin Int’l Inc., 778 F.3d 1021, 113 U.S.P.Q.2d 1859 (Fed. Cir. 2015). The Federal Circuit affirmed the district court’s grant of summary judgment of non-infringement. The district court interpreted the term “playback device” based on the context of its usage in the specification and on its interpretation that the preamble of the only asserted independent claim was limiting. One of the limitations in the body of the claim relied upon and derived antecedent basis from the preamble. Furthermore, the specification was determined to have a clear and unmistakable statement of disavowal or disclaimer where a principal object of the present invention provided a feature included in the disputed claim.

Collateral Estoppel

Soverain Software LLC v. Victoria’s Secret Direct Brand Mgmt., LLC, 778 F.3d 1311, 113 U.S.P.Q.2d 1651 (Fed. Cir. 2015). The Federal Circuit reversed the district court’s finding of infringement and that the claims were not invalid. After the district court’s judgment, the Federal Circuit decided Soverain Software LLC v. Newegg Inc. In that matter, the same or similar claims were found to be invalid. The additional limitation at issue in the present case did not materially alter the question of validity. Thus, the Federal Circuit held that the same or similar claims were invalid by collateral estoppel.

United Access Techs., LLC v. CenturyTel Broadband Servs. LLC., 778 F.3d 1327, 113 U.S.P.Q.2d 1852 (Fed. Cir. 2015). The Federal Circuit reversed the district court’s holding that the jury verdict against the patentee in a prior action was entitled to collateral estoppel. Applying Third Circuit law, United Access was not precluded from litigating issues in the present case because the JMOL decision in the earlier case did not establish that the jury necessarily based its verdict on the issue that is the subject of this appeal.

Damages

Warsaw Orthopedic, Inc. v. NuVasive, Inc., 778 F.3d 1365, 113 U.S.P.Q.2d 1873 (Fed. Cir. 2015). The Federal Circuit affirmed-in-part, vacated-in-part, and remanded-in-part the judgment on jury verdict finding infringement of the patents, and from award of damages and ongoing royalty. The Federal Circuit sustained the district court’s determination of infringement, finding that the district court properly construed the claim limitations. The Federal Circuit found that the patentee was not entitled to recover lost profits because one cannot claim lost profits of a related company and that true-up payments did not specify how much was for royalty payments.

Indefiniteness

Eidos Display, LLC v. AU Optronics Corp., 779 F.3d 1360, 113 U.S.P.Q.2d 1975 (Fed. Cir. 2015). The Federal Circuit reversed the district court’s grant of summary judgment of indefiniteness, and remanded to the district court. After reviewing the specification and the originally filed claims , the Federal Circuit found that the disputed claim informed those skilled in the art at the time the patent was filed with reasonable certainty about the scope of the claimed invention.

Legal Malpractice

NeuroRepair, Inc. v. Nath Law Grp., ________, 113 U.S.P.Q.2d 1511 (Fed. Cir. 2015). The Federal Circuit vacated and remanded the district court’s partial summary judgment and issued instructions to remand the case back to state court. The issue was whether a malpractice case from a California state court involving patent law representation was properly removed to a federal court. The Federal Circuit found that the complaint set forth multiple bases in support of its allegation of professional negligence, and a court could find that the plaintiff is entitled to relief based on this allegation without ever reaching a patent law issue. Therefore, it is a case for the state courts.

Oral Testimony on Invalidity

Fleming v. Escort Inc., 774 F.3d 1371, 113 U.S.P.Q.2d 1426 (Fed. Cir. 2014). The Federal Circuit affirmed the jury’s invalidity findings as to five claims of the two asserted patents. The jury found one claim invalid for anticipation, one claim invalid for both anticipation and obviousness, and three claims invalid for obviousness. All of the invalidity grounds involved, at least in part, a prior invention by the defendant’s consultant. The patentee argued that the defendant’s testimony in support of invalidity was merely conclusory and therefore insufficient to suffice as substantial evidence of invalidity. The Federal Circuit disagreed, finding sufficiently specific factual support for the district court’s invalidity determinations in the testimony of defendant’s consultant and an expert witness. The Federal Circuit also found that the testimony of the defendant’s consultant regarding his prior invention was sufficiently corroborated by documentary evidence Moreover, there was no evidence that the defendant’s consultant had abandoned, suppressed or concealed his prior invention.

Patent Exhaustion

Helferich Patent Licensing, LLC v. The N.Y. Times Co., 778 F.3d 1293, 113 U.S.P.Q.2d 1705 (Fed. Cir. 2015). The Federal Circuit reversed summary judgment of non-infringement under the doctrine of patent exhaustion. Helferich owns several patents directed to wireless-communication technologies. Some patents relate to handsets and methods for receiving and requesting content on those handsets, while others relate to storing and updating content on those handsets. Previously, Helferich entered into portfolio license agreements with numerous handset manufacturers; however, in these licenses, Helferich painstaking distinguished the licensed conduct of handset manufacturers and users from the conduct of others (such as content providers). This case involved only Helferich’s content patents—not its handset patents—and Helferich was asserting those patents against content providers (i.e., those who provide content to the handsets and do so in an infringing manner). Defendants argued that when Helferich granted portfolio licenses, it exhausted its rights to exclude others from practicing its content patents because the handset patents are used in conjunction with the content patents. The Federal Circuit rejected this argument, finding that the exhaustion defense has never been used to exhaust patentably distinct inventions unless both were previously licensed, regardless of whether the distinct inventions are used together in practice.

Patent Term Adjustment

Gilead Scis., Inc. v. Lee, 778 F.3d 1341, 113 U.S.P.Q.2d 1837 (Fed. Cir. 2015). The Federal Circuit affirmed the district court’s grant of summary judgment that the PTO properly calculated the patent term adjustment of Gilead’s patent. The Federal Circuit found that Congress did not address the question of whether a failure to engage in reasonable efforts requires conduct that actually causes delay. The question then became whether the PTO’s interpretation and application of 35 U.S.C. § 154(b) was reasonable. The Federal Circuit found that a reasonable interpretation of the statute is that Congress intended to sanction not only applicant conduct that results in actual delay, but also conduct having the potential to result in delay irrespective of whether such delay actually occurred.

Plant Patents/Public Use

Delano Farms Co. v. Cal. Table Grape Comm’n, 778 F.3d 1243, 113 U.S.P.Q.2d 1420 (Fed. Cir. 2015). In a case involving two plant patents for varieties of table grapes, the Federal Circuit affirmed the district court’s finding that no invalidating public use occurred when individuals who obtained samples of the two patented plant varieties in an unauthorized manner planted them in their own fields. Specifically, the Federal Circuit agreed with the district court’s factual findings that the individuals who obtained the plant samples knew that they were not authorized to have the plants, concealed their possession of the plants and kept them secret, and did not sell the fruit of the plants until after the patents’ critical date—although under a different and incorrect varietal name to avoid detection. The Federal Circuit found that these facts, and in particular the steps taken to maintain secrecy and avoid detection, negated any possibility of an invalidating public use under 35 U.S.C. § 102(b).

Standing/Willfullness

Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., 776 F.3d 837, 113 U.S.P.Q.2d 1380 (Fed. Cir. 2015). The Federal Circuit concluded the parties’ decades-old battle by rejecting Gore’s standing arguments and finding that Gore willfully infringed Bard’s patented vascular graft technology. The Federal Circuit concluded that the district court rejected Gore’s JMOL on its standing defenses, and although standing was not explicitly briefed during the prior appeal, according to this panel, the prior panel did in fact address and reject Gore’s standing arguments. Therefore, this panel was bound by that decision. Regarding willfulness, Gore argued that the district court erred in finding Gore’s inventorship defense was objectively unreasonable. The Federal Circuit disagreed and affirmed the district court’s ruling.

TRADE SECRETS

Candy Craft Creations v. Gartner, 2015 WL 1541507, 2015 U.S. Dist. LEXIS 44646 (S.D. Ga. 2015). Defendants argued that Candy Craft does not have standing to sue for the alleged misappropriation of trade secrets that it does not own. Plaintiff, in response, argued that ownership of a trade secret is not required to confer standing under the Georgia Trade Secrets Act (GTSA), and, that whether or not Candy Craft owns the trade secret is an issue of fact. There is no requirement of ownership in the Uniform Trade Secrets Act. The elements of the cause of action in the GTSA requires a plaintiff to prove that (1) it had a trade secret and (2) the opposing party misappropriated the trade secret. There is no mention of ownership anywhere in the GTSA or the UTSA and ownership of a trade secret is not required to confer standing.

Infogroup, Inc. v. DatabaseLLC, 2015 WL 1499066, 2015 U.S. Dist. LEXIS 43585 (D. Neb. 2015). The district court found that obtaining customer information and customer lists by webscraping, a computer software technique of extracting information from websites, without more, cannot constitute misappropriation of trade secrets because webscraping is not illegal and there is no evidence of breach of a confidential relationship.

MODDHA Interactive, Inc. v. Philips Elec. N. Am. Corp., 2015 WL 1064621, 2015 U.S. Dist. LEXIS 29535 (D. Haw. 2015). A statute of limitations may be tolled if the defendant fraudulently concealed the existence of a cause of action in such a way that the plaintiff, acting as a reasonable person, did not know of its existence. However, it is unnecessary that a party should know the details of the evidence by which to establish his cause of action. It is the party’s own fault if he does not avail himself of those means that the law provides for prosecuting or preserving a claim. The record established that the plaintiff knew that the defendant was selling a home-theatre system in 2008, which triggered a duty to investigate. But, the lawsuit was not filed until November 2014. The claim was time-barred and the doctrine of fraudulent concealment provided no affirmative defense under these facts.

Sonoco Prods. Co. v. Güven, 2015 WL 127990, 2015 U.S. Dist. LEXIS 1906 (D.S.C. 2015). A plaintiff may recover damages using a reasonable royalty theory even if the defendant is not using the plaintiff’s trade secrets in direct competition with the plaintiff. A reasonable royalty may be recovered in lieu of damages. A reasonable royalty focuses on the actual value of a trade secret to a misappropriator and asks what the royalty would have been if both parties were reasonably trying to reach an agreement on licensing the trade secret.

Stolle Mach. Co., LLC v. Ram Precision Indus., 2015 U.S. App. LEXIS 4403 (6th Cir. 2015). The discovery rule in the Uniform Trade Secrets Act (UTSA) requires the owner of a trade secret to conduct a timely and reasonable investigation after learning of possible misappropriation. Although Stolle maintains it did not know about the alleged misappropriation, the record contained admissions in emails that plaintiff suspected that the defendant “had stolen our technology” and asserted that it was improbable that defendant could have developed his own line of machinery that we heard is identical to Stolle’s machinery in six months. Stolle did not file suit until 2010. The district court was correct that the trade secret misappropriation claim was time-barred.

The Sixth Circuit weighed in on the scope of preemption under the UTSA and concluded that preemption should be construed broadly to encompass all other causes of action for theft, misuse, or misappropriation of any confidential or secret information whether or not the alleged confidential or secret information rises to the level of a statutory trade secret. The Sixth Circuit then addressed how to analyze whether a cause of action is based on misappropriation of trade secrets. The Sixth Circuit adopted the test whether the cause of action arises out of the same core facts.  If yes, the cause of action is preempted. However, where the state law claim has a factual basis independent from the facts in the UTSA claim, there is no preemption.

TRADEMARKS

Geographically Descriptive Marks

In re Newbridge Cutlery Co., 776 F.3d 854, 113 U.S.P.Q.2d 1445 (Fed. Cir. 2015). The Federal Circuit reversed the decision of the TTAB refusing registration of NEWBRIDGE HOME. Newbridge Cutlery Co. (Newbridge) is an Irish company located in Newbridge, Ireland. Newbridge filed a trademark application for NEWBRIDGE HOME for silverware, jewelry, desk items, and kitchenware. The TTAB affirmed the examiner’s refusal to register on the basis that the mark was primarily geographically descriptive. The rationale behind refusing marks that are deemed to be primarily geographically descriptive is to allow other merchants to use geographical names to identify the origin of their respective goods.

In applying the test to determine whether a mark is primarily geographically descriptive, the TTAB found that (1) Newbridge, Ireland was a generally known geographic place; and (2) the relevant American public would make an association between Newbridge’s goods identified in its application and Newbridge, Ireland. However, upon reviewing the facts as to the first factor, the Federal Circuit noted that the conclusion that Newbridge, a town of less than twenty thousand people, was a generally known geographic location was not supported by substantial evidence.

Thus, the Federal Circuit determined that as the evidence as a whole did not suggest that Newbridge, Ireland was a generally known location to the relevant American public, the mark NEWBRIDGE was not primarily geographically descriptive of the goods. The decision of the TTAB was reversed and remanded for further proceedings.

Likelihood of Confusion

In re Thor Tech, Inc., 113 U.S.P.Q.2d 1546 (TTAB 2015). Applicant Thor Tech appealed the final refusal of registration of its TERRAIN mark on grounds of likelihood of confusion. The TTAB reversed. Thor Tech filed an intent-to-use application to register the mark TERRAIN for “recreational vehicles, namely, towable trailers.” The examiner refused to register the mark under Section 2(d) of the Trademark Act, on the ground that the mark was likely to be confused with the mark TERRAIN for “motor land vehicles, namely, trucks.”

Thor Tech submitted evidence of almost 50 pairs of substantially identical marks for land motor vehicles and for towable recreational vehicle trailers on the federal Trademark Register.  The TTAB found that this “pattern of registrations” suggested that businesses in these two industries believe that their respective goods are distinct enough that confusion between even identical marks is unlikely. As such, it found that the similarity of the goods factor weighed against likelihood of confusion. The TTAB found that, while trucks and recreational towable trailers may be sold by the same retailers, the products are noncompetitive, differ completely in utility, and have nothing in common with respect to their essential characteristics or sales appeal. Accordingly, it found that the channels of trade and circumstances under which trucks and recreational vehicle towable trailers are sold are not so sufficiently similar to lead to a mistaken belief that the trucks and trailers emanate from a single source when sold under the same mark. Furthermore, the goods are expensive special purchases, purchased with a high degree of care and deliberation, which further weighed against a likelihood of confusion.

In view of its analysis of the relevant du Pont factors discussed above, the TTAB concluded that the applicant’s mark TERRAIN for “recreational vehicles, namely, towable trailers” is not likely to cause confusion with the mark TERRAIN for “motor land vehicles, namely, trucks.” Thus, the refusal to register was reversed.

Tacking/Jury Determination

Hana Financial, Inc. v. Hana Bank, 135 S.Ct. 907, 113 U.S.P.Q.2d 1365 (U.S. 2015). The U.S. Supreme Court affirmed the decisions of the lower courts regarding the issue of Hana Bank’s invocation of the tacking doctrine as a defense to Hana Financial, Inc.’s (Hana Financial) trademark infringement claim. Tacking allows a trademark owner to make certain modifications to its mark over time while still retaining a priority position. The issue before the Court involved whether the tacking defense was a question for the jury.

The Court reasoned that because tacking involves the perspective of ordinary consumers, the jury should make such a determination. Rejecting Hana Financial’s four reasons that tacking should be a question of law to be resolved by a judge, the Court noted that (1) while the “legal equivalents” test involves application of a legal standard, the tacking issue is a mixed question of fact and law, which can be resolved by juries; (2) there was no support for Hana Financial’s position that tacking determinations will necessarily create new law; (3) the possible unpredictability of jury decisions is not unlike judgments in other areas of law, including tort, contract, and criminal justice that involve some degree of uncertainty, and Hana Financial offered no reasons why trademark tacking should be treated any differently; and (4) judges may resolve tacking disputes in some contexts, such as in bench trials, summary judgment or JMOL, but when a jury has been requested and these judgments are not warranted, tacking is a question for the jury.

The Supreme Court thus affirmed the holding that whether two marks may be tacked for priority purposes is a question to be decided by the jury.

Use In Commerce

Couture v. Playdom, Inc., 778 F.3d 1379, 113 U.S.P.Q.2d 2042 (Fed. Cir. 2015). The appellant appealed from the grant of a cancellation petition on the ground that the appellant had not used its mark in commerce as of the filing date of its use-based application, and that registration was therefore void ab initio. The Federal Circuit affirmed.

The appellant filed an application to register the service mark PLAYDOM pursuant to Lanham Act § 1(a) in 2008 and submitted a specimen of a “[s]creen capture of [a] website offering Entertainment Services in commerce.” As of the filing date of the application, the website included only a single page, which stated: “[w]elcome to PlaydomInc.com. We are proud to offer writing and production services for motion picture film, television, and new media. Please feel free to contact us if you are interested: playdominc@gmail.com.” No services under the mark were provided until 2010. The PLAYDOM mark was registered on January 13, 2009.

On February 9, 2009, the appellee filed an application to register the identical mark. Appellant’s registered mark was cited by the examining attorney in a likelihood of confusion rejection. The appellee filed a petition to cancel the registration of the appellant’s mark, arguing, inter alia, that the appellant’s registration was void ab initio because the appellant had not used the mark in commerce as of the date of the application. The TTAB granted the cancellation petition. The Federal Circuit held that a mark for services is properly used in commerce only when both (1) it is used or displayed in the sale or advertising of services; and (2) the services are rendered. Since there was no evidence in the record showing that the appellant rendered services to any customer before 2010, the Federal Circuit held that cancellation of the appellant’s registration was appropriate.

The appellant also argued that the TTAB erred in failing to allow him to amend the basis of the application to Lanham Act § 1(b). The Federal Circuit found that 37 C.F.R. § 2.35(b), the provision relied upon by the appellant, provided procedures for substitution of a basis in an application during the pendency of an application, not after registration. Thus, the TTAB did not err in not granting the appellant’s request to amend the basis of the application.

John C. Gatz

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; R. Trevor Carter, Daniel M. Lechleiter, and Andrew M. McCoy, Faegre Baker Daniels LLP; Robert W. (Bill) Mason, CeloNova BioSciences, Inc.; Peter J. Prommer, Nixon Peabody LLP. Trade Secrets: R. Mark Halligan, FisherBroyles LLP. Trademarks: Janet M. Garetto and Elizabeth W. Baio, Nixon Peabody LLP; Amy L. Sierocki.