Decisions in Brief

Decisions in Brief

John C. Gatz

©2015. Published in Landslide, Vol. 7, No. 5, May/June 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

Collateral Estoppel in a Web of Cases

Stan Lee Media, Inc. v. Walt Disney Co., 774 F.3d 1292, 113 U.S.P.Q.2d 1392 (10th Cir. 2014). In 1998, comic-book legend Stan Lee assigned his rights in various characters he created while working at Marvel to Stan Lee Media. Later that year, Stan Lee also entered into an agreement with Marvel assigning his rights to the characters. In 2001, Stan Lee repudiated the first agreement, contending that Stan Lee Media committed material breach. the defendant Disney claims ownership of the characters through their purchase of Marvel, and plaintiff Stan Lee Media claimed ownership of a number of popular comic book characters such as Spider Man and Iron Man.

The Tenth Circuit found that Stan Lee Media was collaterally estopped from claiming ownership, and thus failed to state a claim. The Tenth Circuit noted that the Ninth Circuit had recently ruled, in a separate case involving the same facts, that Stan Lee Media did not own rights in the characters. Since the issues were identical, the prior action was finally adjudicated, the party was the same, and Stan Lee Media had a full and fair opportunity to litigate the ownership issue, the Tenth Circuit dismissed the case.

First Sale Doctrine Enables Domestic Resale of Foreign-Bought Goods

Omega S.S. v. Costco Wholesale Corp., 113 U.S.P.Q.2d 1434 (9th Cir. 2015). Costco bought over 100 Omega watches, which were originally sold outside the U.S. and not intended by Omega for sale in the U.S., and offered the watches for sale to its U.S. members. Omega sued Costco for copyright infringement, arguing that Costco’s actions amounted to importing copyrighted works without Omega’s permission. Following an initial district court decision for Costco, a reversal of that decision by the Ninth Circuit, affirmation and remand by the Supreme Court, and another district court decision in favor of Costco, the Ninth Circuit addressed the case again.

The Ninth Circuit applied the reasoning in the Supreme Court decision of Kirtsaeng v. John Wiley & Sons, Inc. Kirtsaeng explained that copyright distribution and importation rights expire after the first sale, regardless of where the item was manufactured or first sold. Therefore, the Ninth Circuit determined that Omega has no infringement cause of action against Costco. The Ninth Circuit also determined that the district court’s award of attorney fees to Costco was not an abuse of discretion.

“Oh” No You Didn’t Infringe This Copyright

TufAmerica, Inc. v. WB Music Corp., 113 U.S.P.Q.2d 1076 (S.D.N.Y. 2014). TufAmerica owns the copyright to a song called Hook & Sling Part I performed by Eddie Bo and the Soul Finders that featured a single occasion where the word “oh” appeared. This single use of the word “oh” was allegedly sampled 42 times in the song Run This Town performed by Jay-Z, Rihanna, and Kanye West. TufAmerica sued WB Music for infringement, and WB Music moved to dismiss the complaint for failure to state a plausible copyright infringement claim.

The district court granted WB Music’s motion, determining that no protectable element of Hook & Sling Part I had been copied, since the works bore no substantial similarity to each other. The court first determined that “oh” had no quantitative significance to TufAmerica’s copyright, since it only appeared in Hook & Sling Part I once and only for a fraction of a second. Turning to the qualitative importance of “oh” in Hook & Sling Part I, the court determined it was insignificant. The fact that “oh” appeared only once in the composition of Hook & Sling Part I, and the fact that the vocalization of “oh” was not important in the recording of Hook & Sling Part I, and could have been easily replaced with another utterance, led the court to determine that “oh” had no qualitative significance to TufAmerica’s copyright. The court emphasized that the focus of the substantial similarity test in a copyright infringement analysis is the quantitative and qualitative significance of the allegedly copied portion to the original work, not the significance to the allegedly infringing work. The district court determined that “oh” was not significant to the copyright of Hook & Sling Part I, and therefore TufAmerica’s copyright infringement claims were insufficient as a matter of law.

Patents

Assignment

Memorylink Corp. v. Motorola Solutions, Inc., 773 F.3d 1266, 113 U.S.P.Q.2d 1088 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s finding of summary judgment. The district court found the assignment between the parties to be valid with consideration. The Federal Circuit agreed, finding that the consideration was explicitly acknowledged in the agreement and consideration was actually exchanged (the assignment of two Motorola employees of the patents to both Motorola and Memorylink). The Federal Circuit also agreed with the district court’s dismissal of various tort claims, finding the statute of limitations had tolled. The time limit began when Memorylink had all the facts.

Claim Construction

Williamson v. Citrix Online, LLC, 770 F.3d 1371, 112 U.S.P.Q.2d 1793 (Fed. Cir. 2014). The Federal Circuit vacated and remanded the case after determining the district court erroneously construed various claim terms. The Federal Circuit found that the term “graphical display” was improperly construed to require a pictoral map. The Federal Circuit also found that the district court erred in construing the term “distributed learning control module” as being governed by 35 U.S.C. § 112, ¶ 6. The district court failed to give weight to the strong presumption that 35 U.S.C. § 112, ¶ 6, did not apply based on the absence of the term “means.”

Claim Construction/Standard of Review

Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S.Ct. 831, 113 U.S.P.Q.2d 1269 (U.S. 2015). The Supreme Court vacated the Federal Circuit’s judgment and remanded for further proceedings consistent with the opinion. The district court made a factual finding, crediting Teva’s expert, and thereby rejecting the contrary explanation of Sandoz’s expert, about how a skilled artisan would understand the way in which a curve created from a chromatogram data reflects molecular weight. When the Federal Circuit reviewed the district court’s decision, it did not accept the explanation of Teva’s expert, and it failed to accept that explanation without finding that the district court’s contrary determination was clearly erroneous. The Supreme Court held that when reviewing a district court’s resolution of subsidiary factual matters made in the course of its claim construction, the Federal Circuit must apply a clear error, not a de novo, standard of review.

Collateral Estoppel

e.Digital Corp. v. Futurewei Techs., Inc., 772 F.3d 723, 112 U.S.P.Q.2d 1915 (Fed. Cir. 2014). The patent claims were litigated in another district court. The case was dismissed and a subsequent reexamination occurred that cancelled the litigated claims, resulting in the issuance of reexamined claims with the limitations of the cancelled claims. A new suit was then filed based on the issued reexamined claim and claims from a new unrelated patent that incorporated by reference the reexamined patent. The new unrelated patent discloses a separate invention, had a distinct prosecution history, and had a different written description. The Federal Circuit held that collateral estoppel was correctly applied to the reexamined patent, but was incorrectly applied to the unrelated patent despite its incorporation by reference of the reexamined patent.

Damages

Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 113 U.S.P.Q.2d 1001 (Fed. Cir. 2014). The Federal Circuit affirmed-in-part and reversed-in-part the district court’s decision. After upholding the jury’s finding of infringement of the asserted claims of two patents, the Federal Circuit addressed damages. Specifically, the damages focused on whether the district court erred in not instructing the jury that, since the patents covered an electronic standard, the patentee was obligated to adhere to reasonable, and non-discriminatory (RAND) terms. The Federal Circuit found in all cases, a district court must instruct the jury only on factors that are relevant to the specific case. There is no Georgia-Pacific-like list of factors that district courts can parrot for every case involving RAND-encumbered patents. Here, the court instructed the jury on all Georgia-Pacific factors and then included the RAND terms as another factor that may be considered. The Federal Circuit disagreed with this approach finding the court should instruct the jury on the actual RAND instruction and must be cautious not to instruct the jury on any factors that are not relevant to the record.

Damages/Willful Infringement

Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 113 U.S.P.Q.2d 1347 (Fed. Cir. 2014). The Federal Circuit vacated-in-part and remanded the district court’s finding that infringement was not willful and that plaintiff should be awarded a royalty amount. The Federal Circuit found that the district court did not err in considering IPC’s profits for the royalty calculation, but it did err in treating the profits IPC actually earned during the period of infringement as a royalty cap. That treatment incorrectly replaced the hypothetical inquiry into what the parties would have anticipated, looking forward when negotiating, with a backward-looking inquiry into what actually happened. The Federal Circuit vacated the district court’s royalty calculation. The Federal Circuit further found that the district court did not present its willfulness analysis properly, and vacated the non-willfulness finding and denial of enhanced damages and attorney’s fees.

Infringement

Halo Elecs., Inc. v. Pulse Elecs., Inc., 769 F.3d 1371, 112 U.S.P.Q.2d 1739 (Fed. Cir. 2014). The Federal Circuit affirmed summary judgment of non-infringement because no sale or offer to sell occurred within the United States for products manufactured, shipped, and delivered outside the United States. For products that were delivered to the United States or that were ultimately imported into the United States by others, the judgments of infringement or inducement were also affirmed. Also, the finding that the claims were not invalid as obvious was also affirmed along with the finding of no willfulness.

Infringement/Enablement

Promega Corp. v. Life Techs. Corp., 773 F.3d 1338, 113 U.S.P.Q.2d 1181 (Fed. Cir. 2014). The Federal Circuit reversed a district court’s JMOL that no infringement occurred under 35 U.S.C. § 271(f)(1). The accused infringer made one component of the accused genetic testing kit in the United States and shipped that component to its facility in the United Kingdom to be incorporated with the rest of the accused kit. The accused infringer admitted that sales of the kits in the United States infringed, and a jury found that worldwide sales resulted in infringement of the U.S. patent under Section 271(f)(1). The district court overturned the jury verdict because it found that multiple components had to be supplied from the United States and another party had to be involved for inducement under Section 271(f)(1). The Federal Circuit disagreed on both issues and, finding that the component supplied from the United States was a substantial portion of the claimed invention, determined that substantial evidence supported the jury’s verdict of infringement. The Federal Circuit also reversed the district court’s denial of summary judgment for lack of enablement, because the four patents did not enable a skilled artisan to practice the full breadth of this claim scope without undue experimentation.

Inherency

Par Pharm., Inc. v. TWi Pharm., Inc., 773 F.3d 1186, 112 U.S.P.Q.2d 1945 (Fed. Cir. 2014). The Federal Circuit vacated the district court’s judgment that the patent was obvious, and remanded for further analysis consistent with the Federal Circuit’s precedent on inherency. The district court relied on the inherent teaching of the prior art for supplying a missing claim limitation in its obviousness analysis. The mere fact that a certain thing may result from a given set of circumstances is not sufficient to establish inherency. The Federal Circuit therefore vacated the district court’s inherency analysis and remanded to determine if TWi presented clear and convincing evidence that demonstrated the food effect as claimed was necessarily present in the prior art combination.

JMOL Practice

DDR Holdings, LLC v. Hotels.com, LP, 773 F.3d 1245, 113 U.S.P.Q.2d 1097 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s denial of the defendants’ post-jury-trial motion for JMOL on the noninfringement and invalidity of one of the two asserted patents, but, after finding the asserted claims anticipated, reversed the district court’s denial of JMOL as to the second asserted patent and vacated the jury’s damages award. With respect to the first patent, the Federal Circuit agreed with the district court that the jury had substantial evidence to find infringement. With respect to the second patent, the Federal Circuit found that the record allows only one reasonable finding: clear and convincing evidence establishes that a prior art system anticipates the asserted claims. Therefore, the Federal Circuit vacated the jury’s award of damages and prejudgment interest and remanded.

Obviousness

Tyco Healthcare Grp. LP v. Ethicon Endo-Surgery, Inc., 774 F.3d 968, 112 U.S.P.Q.2d 1979 (Fed. Cir. 2014). The Federal Circuit affirmed-in-part, reversed-in-part and vacated-in-part the judgment that asserted claims would not have been obvious and the holding that other claims were invalid as being anticipated under § 102(g). The Federal Circuit held that neither § 102(g) nor § 103 makes prior reduction to practice the only avenue through which § 102(g) prior art can constitute prior art under § 103. Once the district court determined that the prototype was prior art under § 102(g), the Federal Circuit held that the district court should have considered the prototype as prior art for obviousness purposes. As a result, the Federal Circuit affirmed the district court’s § 102(g) finding of invalidity, and reversed the district court’s non-obvious determination under § 103.

Patentable Subject Matter

Content Extraction & Transmission v. Wells Fargo Bank, N.A., 113 U.S.P.Q.2d 1354 (Fed. Cir. 2014). The Federal Circuit affirmed the dismissal of (1) patentee’s infringement action because the asserted claims were invalid as patent-ineligible under § 101; and (2) declaratory plaintiff/counterdefendant’s tortious interference and RICO claims. The Federal Circuit agreed that the claims were drawn to the abstract idea of collecting data, recognizing certain data within the collected data set, and storing that recognized data in a memory and were undisputedly well-known. The asserted patents contain no limitations that transform the claims into a patent-eligible application. The Federal Circuit also found that CET’s infringement suits were not objectively baseless, and therefore affirmed the district court’s dismissal of the tortious interference and RICO violation claims.

Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 112 U.S.P.Q.2d 1750 (Fed. Cir. 2014). On remand from the Supreme Court following the Alice decision, the Federal Circuit once again decided the patent-eligible subject matter issue for claims directed to offering free copyrighted media in exchange for watching advertisements. Applying Alice, a court first determines whether the claims are directed to one of the patent-ineligible concepts of being a law of nature, a natural phenomenon, or an abstract idea. The Federal Circuit deemed that a method of using advertising as an exchange or currency was an abstract idea. Applying the second step of the analysis that developed from Mayo, a court asks if the claims do significantly more than simply describes the abstract method. The claims were deemed to simply instruct a practitioner to implement the abstract idea with routine, conventional activity through the use of a general purpose computer. Furthermore, the preamble recited using a facilitator, which the specification made clear could be a person. The Federal Circuit therefore affirmed the motion to dismiss based on the claims being directed to ineligible subject matter.

Patentable Subject Matter/Preliminary Injunction

Univ. of Utah Research Found. v. Ambry Genetics Corp., 774 F.3d 755, 113 U.S.P.Q.2d 1241 (Fed. Cir. 2014). The patentee appealed the district court’s denial of a permanent injunction, and the Federal Circuit affirmed, finding that the asserted patents—which claimed compositions of matter for DNA primers associated with the BRCA1 and BRCA2 genes and methods for extracting the same—were directed to patent-ineligible subject matter. Citing the Supreme Court decision of Myriad, which involved the same family of patents as those asserted here (but different asserted claims), the Federal Circuit first held that the composition-of-matter claims to the actual DNA primers were directed to patent-ineligible subject matter. Specifically, the Federal Circuit held that DNA primers are analogous to the isolated DNA sequences that were rejected under § 101 in the Myriad decision. The Federal Circuit then addressed the method claims and concluded that they recite abstract ideas and were also well-understood, routine and conventional at the time of the patentee’s patent applications. Therefore, under Alice Corp., the Federal Circuit found the method claims were invalid under § 101.

Reasonable Royalty/Inducing Infringement

VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 113 U.S.P.Q.2d 1112 (Fed. Cir. 2014). The Federal Circuit made several findings following a jury verdict, including vacating a damages award of $368M. The Federal Circuit found a reasonable royalty jury instruction to be improper because it “mistakenly suggests that when the smallest salable unit is used as the royalty base, there is necessarily no further constraint on the selection of the base.” Here, the smallest salable unit included non-infringing features, and the patentee must do more to estimate what portion of the value of that product is attributable to the patented technology. Further, the Federal Circuit rejected the financial expert of the patentee using the Nash Bargaining Solution because it did not establish that the theorem underling the Nash Bargaining Solution applied to the facts of the case. The Federal Circuit also affirmed the district court’s exclusion of the PTO’s initial rejection of patent claims during a reexamination initiated by the accused infringer. The accused infringer sought to introduce the rejection to support its defense to inducing infringement that it had a good faith belief that the asserted claims are invalid.

Reissue

Antares Pharma, Inc. v. Medac Pharma Inc., 771 F.3d 1354, 112 U.S.P.Q.2d 1865 (Fed. Cir. 2014). The Federal Circuit held that the reissue claims were invalid for failing to satisfy the original patent requirement based on the specification only describing one invention, a particular class of jet injectors, and the safety features of the reissue claims never having been described separately from a jet injector. Reissue claims must satisfy the original patent or same invention requirement of 35 USC § 251 that the specification of the original patent clearly and unequivocally discloses the reissue claims as a separate invention. The Federal Circuit stated it is not enough that the invention might have been claimed in the original patent because it was suggested or indicated in the specification.

Standing

Azure Networks, LLC v. CSR PLC, 771 F.3d 1336, 112 U.S.P.Q.2d 1817 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s finding of dismissal for lack of standing, and vacated and remanded the finding of non-infringement. In determining whether an exclusive licensee has standing to sue, courts recognize that a key factor is who has the right to sue for infringement. The Federal Circuit also weighed other factors, including the right to sublicense, and determined that the license was exclusive and therefore, the licensor was properly dismissed from the case. The Federal Circuit then vacated the finding of non-infringement based upon an erroneous claim construction.

Staying a Case

Versata Software, Inc. v. Callidus Software, Inc., 771 F.3d 1368, 112 U.S.P.Q.2d 1838 (Fed. Cir. 2014). The Federal Circuit reversed and remanded the district court’s refusal to stay the hearing pending the PTO’s pending review of the patents. The Federal Circuit considered the following four factors in determining whether to stay an action: ((1) whether a stay, or the denial thereof, will simplify the issues and streamline the trial; (2) whether discovery is complete and whether a trial date has been set; (3) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and (4) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.). The Federal Circuit determined that all factors weighed in favor of granting a stay.

Subject Matter Jurisdiction

Sandoz Inc. v. Amgen Inc., 773 F.3d 1274, 112 U.S.P.Q.2d 2004 (Fed. Cir. 2014). The Federal Circuit affirmed the dismissal of Sandoz’s declaratory judgment action for lack of subject matter jurisdiction. The Federal Circuit found that since the declaratory-judgment plaintiff did not file an application for FDA approval required to engage in the arguably infringing activity, then the case therefore did not meet the requirements of immediacy and reality.

Terminal Disclaimer

Japanese Found. for Cancer Research v. Lee, 773 F.3d 1300, 113 U.S.P.Q.2d 1140 (Fed. Cir. 2014). After unintentionally filing a terminal disclaimer, the patentee requested that the PTO withdraw the disclaimer. The PTO refused to do so, and the patentee subsequently filed suit in district court. The district court granted the patentee’s motion for summary judgment and ordered the PTO to withdraw the disclaimer. The Federal Circuit reversed, finding that: (1) 35 U.S.C. § 255 does not provide a basis for withdrawing the disclaimer; and (2) it owed deference to the PTO’s interpretation of its procedures and regulations.

Willful Infringement

Stryker Corp. v. Zimmer, Inc., 774 F.3d 1349, 113 U.S.P.Q.2d 1232 (Fed. Cir. 2014). The Federal Circuit affirmed the district court’s final judgment of infringement as to three asserted patents, but reversed the district court’s determination that the infringement was willful and consequent award of treble damages. After finding that the evidence supported the district court’s infringement findings, the Federal Circuit found that the district court failed to undertake an objective assessment of Zimmer’s specific defenses to Stryker’s claims and that an objective assessment of the case showed that Zimmer presented reasonable defenses to all of the asserted claims. Because Zimmer’s infringement defenses and, in particular, its proposed—albeit not adopted—claim constructions, were not objectively unreasonable, Zimmer did not act recklessly and, therefore, did not willfully infringe any of the patents. Further, because the district court’s award of attorneys’ fees was based on its willful infringement finding, and because the standard for finding an exceptional case has changed, the Federal Circuit also vacated and remanded the district court’s finding that the case was exceptional and award of attorneys’ fees.

Trade Secrets

ABB Turbo Sys. AG v. TurboUSA, Inc., 774 F.3d 979, 113 U.S.P.Q.2d 1248 (Fed. Cir. 2014). The district court granted defendant’s motion to dismiss plaintiff’s trade secret misappropriation complaint under Federal Rule of Civil Procedure 12(b)(6), and the Federal Circuit reversed. The Federal Circuit rejected the district court’s Rule 12(b)(6) dismissal based on an alleged failure to comply with a controlling statute of limitations for the trade secret misappropriate claim, holding that it is generally improper to dismiss a complaint on statute-of-limitations grounds unless it is apparent from the face of the complaint that the claim is time-barred. Here, the Federal Circuit held that it was not apparent from the complaint itself that the statute-of-limitations defense was applicable. The Federal Circuit also rejected the district court’s analysis, finding instead that the plaintiff alleged enough facts to nudge its claims across the line from conceivable to plausible.

CertainTeed Ceilings Corp. v. Aiken, 2015 WL 410029, 2015 U.S. Dist. LEXIS 10881 (E.D. Pa. 2015). CertainTeed alleged that Aiken was misappropriating its trade secrets. Specifically, CertainTeed alleged that Aiken left CertainTeed to take a job with identical and/or nearly identical job responsibilities at a direct competitor in substantially the same sales territory. It further alleged that, while at CertainTeed, Aiken used CertainTeed’s confidential information and trade secrets in the regular performance of his duties. Given these facts about Aiken’s job duties and activities, and given the nature of CertainTeed’s alleged trade secrets (which include information about customers, projects, products, and pricing), CertainTeed adequately alleged that Aiken is actively using CertainTeed’s trade secrets in the performance of his duties in competition with CertainTeed.

Eagle Harbor Holdings, LLC v. Ford Motor Co., 2015 WL 574911, 2015 U.S. Dist. LEXIS 17478 (W.D. Wash. 2015). Whether specific information is a trade secret is a question of fact. Here, Ford submitted evidence that created a question of fact whether the schematic contains valuable, non-public information. Ford’s engineers submitted declarations attesting to the confidential nature of the disclosures and to the large investment Ford made to develop the information. The engineers also declared that, while the information itself may be in the public domain, the specific compilation that Ford created is not publically available. While Eagle Harbor disputes these contentions, they are matters that must be resolved by the fact finder and are not susceptible to resolution on summary judgment. Therefore, the district court denied Eagle Harbor’s motion on this issue.

Orca Communications Unlimited, LLC. v. Noder, 337 P.3d 545 (Sup. Ct. Ariz. 2014). The Supreme Court of Arizona left open the question of whether Arizona recognizes a common-law claim for unfair competition as alleged in Orca’s complaint. However, assuming the viability of a common-law claim for misappropriation of confidential information that falls outside AUTSA’s definition of trade secret, the Supreme Court of Arizona held that AUTSA does not, as a matter of law, displace Orca’s unfair-competition claim. If such broad displacement were intended, the legislature was required to express that intent clearly.

Orthofix, Inc. v. Hunter, 2014 WL 5422838, 2014 U.S. Dist. LEXIS 151378 (N.D. Ohio 2014). The broad pro forma employee confidentiality agreements are insufficient to preserve trade secret status. That is not to say that employee confidentiality agreements alone are never adequate to establish a trade secret. But, here, where there were no reasonable efforts to enforce the clause or monitor the allegedly protected information gathered by employees, the provisions in the employee agreement, handbook, and Code of Conduct are insufficient.

This court found that the confidential information protected by the non-disclosure provision is coterminous with information protected by achieving trade secret status under Ohio law. During oral argument, counsel for Orthofix could not articulate information that would constitute confidential information but not be classified as a trade secret. Because Orthofix cannot maintain a trade secret misappropriation claim, it cannot maintain a breach of contract claim.

Unitherm Food Sys. v. Hormel Foods Corp., 2015 WL 366442, 2015 U.S. Dist. LEXIS 9107 (D. Minn. 2015). A trade secret is something that “derives independent economic value . . . from not being generally known to, and not being readily ascertainable by proper means by, other persons . . . and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” While the process might have been a trade secret before July 2009, it is axiomatic that a thing patented cannot also remain a secret. The publication of the patent means that Unitherm no longer had a trade secret in the process, and its misappropriation claim fails.

Trademark

Infringement/Likelihood of Confusion

In re St. Helena Hosp., 774 F.3d 747, 113 U.S.P.Q.2d 1082 (Fed. Cir. 2014). The Seventh Circuit reversed the TTAB’s decision refusing registration of St. Helena’s application for the mark TAKETEN for “health care services, namely, evaluating weight and lifestyle health and implementing weight and lifestyle health improvement plans in a hospital-based residential program.” The TTAB found a likelihood of confusion with a registration for the mark TAKE 10! for “printed manuals, posters, stickers, activity cards and educational worksheets dealing with physical activity and physical fitness.”

The TTAB analyzed the first four factors of Application of E.I. DuPont DeNemours & Co. and found that, overall, they weighed in favor of a likelihood of confusion. The Federal Circuit found that (1) the similarity/dissimilarity of the marks did not favor St. Helena as the differences failed to meaningfully distinguish the appearance, sound, connotation, and commercial impression of the marks; (2) there was no showing that St. Helena’s health care services were generally recognized as being related to the printed materials; (3) there was no evidence of something more to establish relatedness; (4) neither party provided a persuasive showing regarding the channels of trade; and (5) St. Helena’s customers exercised a high degree of care.

In balancing the factors, the Federal Circuit found that the PTO’s refusal to register was not supported by substantial evidence. The TTAB’s decision was reversed and remanded for further proceedings.

TMG Kreations, LLC v. Seltzer, 771 F.3d 1006, 112 U.S.P.Q.2d 1938 (7th Cir. 2014). The Seventh Circuit affirmed-in-part the district court’s decision granting summary judgment for TMG for breach of a trademark licensing agreement against Seltzer. Seltzer registered the mark KASHWÉRE for goods such as bathrobes, shawls, other apparel and bedspreads made of chenille. Seltzer sold his company’s assets including the KASHWÉRE mark to two of the company’s officers who formed TMG. Under the agreement, Seltzer received an exclusive license to sell chenille products under the KASHWÉRE mark in Japan only.

TMG claimed that Seltzer violated the terms of the license agreement by transferring his license to a related company (Flat Be) without obtaining TMG’s permission and by allowing Flat Be to use the KASHWÉRE mark in connection with products that were not chenille. TMG also claimed that Seltzer violated a non-compete agreement with TMG by seeking to disparage TMG’s products and damage its business. The Seventh Circuit agreed and granted summary judgment on these claims.

The Seventh Circuit also reviewed Seltzer’s counterclaims that TMG violated the non-compete agreement as it knew that some of its distributors were reselling products in Japan. The Seventh Circuit found that Seltzer’s license did not require TMG to prevent resales in Japan, which could have been negotiated in the agreement, but was not. Also, there was no evidence of bad faith by TMG in providing labels to distributors. The Seventh Circuit reversed the district court’s grant of summary judgment on Seltzer’s counterclaims.

Likelihood of Confusion

In re Covalinski, 113 U.S.P.Q.2d 1166 (T.T.A.B. 2014). The “Redneck Racegirl” and design mark was refused registration on the ground of likelihood of confusion. The TTAB reversed. The applicant sought registration of its REDNECK RACEGIRL and design mark for “athletic apparel, namely, shirts, pants, jackets, footwear, hats and caps, athletic uniforms.” The mark included dominantly displayed letters “RR” with appended elongated horizontal “legs” of gradually increasing thicknesses. The rest of the letters appeared inside the legs. The mark was refused registration based on a likelihood of confusion with the mark RACEGIRL for “caps; jerseys; leather belts; short sets; tops; shirts; shorts; jackets; blouses; caps with visors; crop tops; hat bands; hats; knitted caps; sweat bands; sweat pants; tank tops; visors.”

Because applicant’s athletic apparel items were encompassed by registrant’s identified goods, applicant’s goods were considered in-part legally identical to those in the cited registration. As such, the channels of trade and classes of purchasers for those goods were also considered to be the same. Accordingly, the TTAB found that these du Pont factors favored a finding of likelihood of confusion.

Despite this, the TTAB found that confusion was not likely because of the crucial differences between the marks. It noted that, while it is often true that the words in a composite word and deign mark are considered to be dominant, this is not always the case. The TTAB found that the overall commercial impression of the applicant’s mark was dominated by the large double-letter RR configuration, which weighed heavily against a conclusion that confusion was likely. Thus, the TTAB reversed the refusal of registration.

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.