©2017. Published in Landslide, Vol. 9, No. 3, January/February 2017, 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.
Court Allows Defendant’s Work-for-Hire Challenge to Plaintiff’s Copyright Ownership
Urbont v. Sony Music Entm’t., 831 F.3d 80, 119 U.S.P.Q.2d 1619 (2nd Cir. 2016). In 1966, composer Jack Urbont wrote an Iron Man theme song for a Marvel super heroes TV show. The song was featured on two tracks of Ghostface Killa’s 2000 album Supreme Clientele. No permission was sought for using the song. Urbont sued Sony Entertainment as the producers of the album, along with other defendants, for copyright infringement in 2011. The district court granted Sony’s motion for summary judgment based in large part on Sony’s argument that Urbont did not own the copyright in the Iron Man theme song because it was a work made for hire for Marvel. Urbont appealed, arguing that Sony didn’t have standing to challenge his ownership of the copyright under a work-for-hire theory and that the district court overlooked questions of material fact on his substantive claims.
The Second Circuit decided in favor of Sony on the standing issue in its “work for hire defense,” holding that “third parties to an alleged employer-employee relationship have standing” to use such a defense. The Second Circuit acknowledged a Ninth Circuit case in which an argument against proper ownership under this theory was rejected, but distinguished that case from the present one as both the accused employer and employee were parties to that case. Though Sony could employ the defense, the Second Circuit ruled in favor of Urbont on his arguments that the work-for-hire doctrine did not result in Marvel’s ownership of the copyright here. In particular, Urbont presented evidence that Marvel understood it did not own the copyright in the work.
Lawyer Liable for Copied Legal Brief
Newegg Inc. v. Ezra Sutton, P.A., 120 U.S.P.Q.2d 1111 (C.D. Cal. 2016). The plaintiff Newegg and the company Sakar were both defendants in a patent infringement suit. Sakar’s lawyer, the defendant Sutton, filed a brief in that litigation that copied substantial portions of a draft brief provided to Sutton by Newegg. There was no dispute that (1) Newegg was the owner of a valid and registered copyright for its draft brief, and (2) Sutton copied substantial portions of the draft brief without permission. The issue was whether Sutton’s copying constituted fair use.
The district court found that Sutton did not add a new expression, meaning or message to Newegg’s draft brief. Further, it found that the briefs had the same intrinsic use — to persuade the appellate court. Therefore, the district court found that Sutton’s brief was not a transformative use, and the first and third statutory factors weighed in favor of Newegg. Because the brief was a functional presentation of fact and law, and in accordance with the Supreme Court’s priority in disseminating factual works, the second statutory factor weighed in favor of Sutton. Additionally, since Newegg failed to identify a market for its legal briefs, the fourth statutory factor weighed in favor of Sutton.
Balancing all four factors, the district court gave more weight to the first and third factors and held that Sutton did not meet his burden of establishing a prima facie case that his copying of Newegg’s draft brief was fair use. The district court also noted that Rule 28(i) of the Federal Rules of Appellate Procedure, which permits a party to either join in or adopt by reference a part of a co-party’s brief, could not be used to justify Sutton’s copying, because Sutton’s actions went beyond such permitted activities.
SkyHawke Techs., LLC v. Deca Int’l Corp., 828 F.3d 1373, 119 U.S.P.Q.2d 1418 (Fed. Cir. 2016). The Federal Circuit granted the motion to dismiss this appeal for lack of jurisdiction. As SkyHawke prevailed in an underlying inter partes reexamination that found its claims to not be obvious, it cannot appeal the PTAB’s alleged overly narrow claim construction even though it might lead to some adverse impact.
Verinata Health, Inc. v. Ariosa Diagnostics, Inc., 830 F.3d 1335, 119 U.S.P.Q.2d 1441 (Fed. Cir. 2016). The Federal Circuit affirmed the district court’s decision denying the plaintiff’s motion to compel arbitration. In a supply agreement between the parties, the arbitration claim stated that arbitration shall not resolve “disputes relating to issue of scope, infringement, validity and/or enforceability of any Intellectual Property Rights.” The plaintiff sued the defendants for patent infringement and the defendants counterclaimed for declaratory judgment of non-infringement, breach of contract, and breach of fair dealing. The Federal Circuit found that the counterclaims fell within the exclusions of the arbitration clause and the plaintiff put the scope of licensed patent rights at issue by suing the defendant for patent infringement. The counterclaims are all predicated on the infringement filing.
Amgen Inc. v. Apotex Inc., 827 F.3d 1052, 119 U.S.P.Q.2d 1318 (Fed. Cir. 2016). The Federal Circuit affirmed the district court’s order of a preliminary injunction to ensure the accused infringer provides 180 days’ notice after licensure before marketing biosimilar. The Federal Circuit that found the commercial-marketing provision is mandatory and enforceable by injunction for applicants that (1) had entirely skipped the statutory process of information exchange and patent-litigation channeling; and (2) did launch the statutory process for exchanging patent information and channeling patent litigation.
GPNE Corp. v. Apple Inc., 830 F.3d 1365, 119 U.S.P.Q.2d 1646 (Fed. Cir. 2016). The Federal Circuit affirmed the district court’s non-infringement ruling. The Federal Circuit held that the patent owner’s consistent description of the invention throughout the intrinsic record supported the district court’s claim construction. The Federal Circuit also rejected the patentee’s claim differentiation argument, as there were multiple differences between the asserted claims and the claims on which the patentee based its claim differentiation arguments.
Multilayer Stretch Cling Film Holdings, Inc. v. Berry Plastics Corp., 831 F.3d 1350, 119 U.S.P.Q.2d 1773 (Fed. Cir. 2016). The Federal Circuit affirmed-in-part, reversed-in-part, vacated-in-part and remanded the district court’s determinations. The Federal Circuit agreed with the district court’s construction in certain claims, and reversed the construction of other claims. The Federal Circuit affirmed (1) the district court’s decision (1) that another claim was invalid and (2) not to impose sanctions. Because the summary judgment of noninfringement was based on incorrectly construed claims, the Federal Circuit vacated and remanded.
Wi-LAN USA, Inc. v. Apple, Inc., 830 F.3d 1374, 119 U.S.P.Q.2d 1605 (Fed. Cir. 2016). The Federal Circuit (1) affirmed the district court’s grant of summary judgment of noninfringement by affirming its claim construction of two terms; and (2) rejected Apple’s argument that patentee Wi-LAN waived the right to argue for a claim construction that it raised for the first time on its motion for reconsideration of summary judgment.
Unwired Planet, LLC v. Apple Inc., 829 F.3d 1353, 119 U.S.P.Q.2d 1517 (Fed. Cir. 2016). The Federal Circuit affirmed-in-part, vacated-in-part and remanded the district court’s grant of summary judgment of noninfringement as to three patents and summary judgment of no indirect infringement as to one patent. The Federal Circuit found that the district court erred by basing summary judgment of no indirect infringement on its own estimation of the objective strength of Apple’s non-infringement defense. Rather, the Federal Circuit noted that the proper focus of indirect infringement analysis is on the subjective knowledge of the accused infringer. Therefore, the Federal Circuit vacated the finding of no indirect infringement and remanded.
Advanced Ground Info. Sys., Inc. v. Life360, Inc., 830 F.3d 1341, 119 U.S.P.Q.2d 1526 (Fed. Cir. 2016). The Federal Circuit affirmed the district court’s decision that the claims were indefinite and therefore invalid. The Federal Circuit found that the specifications of the patents did not disclose sufficient structure for the means-plus-function claim term, and that the asserted claims included the term.
Infringement (U.S. Government)
Liberty Ammunition, Inc. v. United States, 119 U.S.P.Q.2d 1830 (Fed. Cir. 2016). The Federal Circuit reversed the decision of the Court of Federal Claims that ammunition rounds used by the U.S. Army are covered by Liberty’s patent directed to lead-free rifle ammunition in violation of 28 U.S.C. § 1498. The Federal Circuit found that two of the district court’s claim constructions were erroneous because they were not supported by the intrinsic record, and that Liberty could not prevail on its infringement claims under the proper constructions.
Infringing Sale/Enhanced Damages
Halo Elecs., Inc. v. Pulse Elecs., Inc., 831 F.3d 1369, 119 U.S.P.Q.2d 1654 (Fed. Cir. 2016). The Federal Circuit affirmed a finding that Pulse did not directly infringe, vacated an unenhanced damages award (payable by Pulse) and remanded that issue for the district court to reassess, and found no reversible error in the district court’s claim constructions. Pulse challenged on cross-appeal. For direct infringement, the Federal Circuit held that Pulse did not sell its accused products under 35 U.S.C. § 271(a) because those products were manufactured, shipped, and delivered to buyers abroad. That some negotiation and contracting activities occurred in the United States could not overcome the fact that the vast majority of activities related to the transaction, manufacturing, and movement of the products occurred outside the U.S. The Federal Circuit also held Pulse did not offer to sell the accused products under § 271(a).
Inter Partes Review
In re Aqua Prods., Inc., ________, 119 U.S.P.Q.2d 1882 (Fed. Cir. 2016). The Federal Circuit granted the petition for rehearing en banc, vacated the prior opinion, and reinstated the appeal from the PTAB’s denial of petitioner’s motion to substitute claims.
In re Magnum Oil Tools Int’l, Ltd., 829 F.3d 1364, 119 U.S.P.Q.2d 1541 (Fed. Cir. 2016). The Federal Circuit reversed the final written decision that cancelled all challenged claims as obvious. The Federal Circuit found that (1) the PTAB erred in shifting the burden of proof of obviousness from the petitioner to the patentee; (2) the PTAB further failed to articulate a sufficient rationale for why a skilled artisan would have sought to combine the asserted prior art to achieve the claimed invention; (3) the PTAB’s decision as premised on a legally incorrect standard for assessing obviousness; and (4) the PTAB’s factual findings regarding the alleged motivation to combine lacked substantial evidence.
Vapor Point, LLC v. Alford, _______, 119 U.S.P.Q.2d 1722 (Fed. Cir. 2016). The Federal Circuit affirmed the district court’s determination on inventorship as it was supported by substantial evidence. The Federal Circuit further concluded that Vapor Point cannot at the appellate stage assert equitable defenses to claims that were voluntarily dismissed. In particular, Vapor Point waived its right to pursue ownership under an obligation to assign theory by representing that resolution of the inventorship issue would resolve the infringement issue.
Arendi S.A.R.L. v. Apple Inc., ________, 119 U.S.P.Q.2d 1822 (Fed. Cir. 2016). The Federal Circuit reversed the PTAB because it did not follow permissible use of common sense in an obviousness analysis. Using common sense, common knowledge, and common wisdom are considered in an obviousness analysis. However, the Federal Circuit noted three caveats: (1) “common sense is typically invoked to provide a known motivation to combine, not to supply a missing claim limitation.”; (2) “where common sense has been used ‘to supply a limitation that was admittedly missing from the prior art, the limitation in question was unusually simple and the technology particularly straightforward.’”; and (3) “common sense cannot be used as a wholesale substitute for reasoned analysis and evidentiary support, especially when dealing with a limitation missing from the prior art references specified.”
Warsaw Orthopedic, Inc., ______, 119 U.S.P.Q.2d 1716 (Fed. Cir. 2016). The Federal Circuit affirmed-in-part, vacated-in-part and remanded the case following an appeal of two decisions of the PTAB in separate inter partes reviews. The Federal Court found that substantial evidence supported some, but not all, of the PTAB’s obviousness findings. The PTAB is obligated to make the necessary findings and provide an administrative record showing the evidence on which the findings are based, accompanied by the reasoning in reaching its conclusions.
WBIP, LLC v. Kohler Co., 829 F.3d 1317, 119 U.S.P.Q.2d 1301 (Fed. Cir. 2016). The Federal Circuit upheld the district court’s holding that the patents were not obvious. The patentee relied on secondary considerations to show nonobviousness. The accused infringer argued that the objective evidence of nonobviousness should not be considered because there was no nexus between the presented evidence and the claimed invention. The Federal Circuit found that there is a presumption of a nexus when the asserted objective evidence is tied to a specific product that is the claimed invention. The Federal Circuit also considered evidence of long-felt need and praise for the product.
The Meds. Co. v. Hospira, Inc., 827 F.3d 1363, 119 U.S.P.Q.2d 1329 (Fed. Cir. 2016). The Federal Circuit affirmed the district court’s finding that the transactions did not trigger the on-sale bar and the asserted claims were not invalid under § 102(b). The issue here is the first prong (whether the invention was a commercial sale) of the Pfaff test. The Federal Circuit found that the sale of manufacturing services by a contract manufacturer to an inventor to create embodiments of a patented product for the inventor does not constitute a commercial sale of the invention. The Federal Circuit is clear that they still do not recognize a blanket supplier exception to what would otherwise constitute a commercial sale as it has characterized it today.
Patent-Eligible Subject Matter
Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 119 U.S.P.Q.2d 1739 (Fed. Cir. 2016). The Federal Circuit affirmed the district court’s grant of summary judgment that the subject matter of the asserted claims fails the tests for patent eligibility. The Federal Circuit stated that the claimed systems and method for performing real-time performance monitoring of an electric power grid by collecting data from multiple data sources, analyzing the data, and displaying the results did not go beyond requiring the collection, analysis, and display of available information in a particular field. Furthermore, the claimed functions were stated in general terms without being limited to technical means for performing the claimed functions that would have been an advance over conventional computer and network technology.
Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 119 U.S.P.Q.2d 1370 (Fed. Cir. 2016). The Federal Circuit vacated and remanded the district court’s grant of summary judgment of invalidity under §101. The Federal Circuit found that the claims met the first prong of determining whether a claim is patent-eligible. The inventors discovered the cells’ ability to survive multiple freeze-thaw cycles. They put this discovery to use in claiming a laboratory technique for preserving the cells. claim meets the first prong of the test.
Polar Electro Oy v. Suunto Oy, 829 F.3d 1343, 119 U.S.P.Q.2d 1422 (U.S. 2016). The Federal Circuit vacated and remanded the case because the district court erred in determining that Suunto lacked sufficient minimum contacts with Delaware to support specific jurisdiction. Suunto actively participated in supplying and shipping accused products to Delaware retailers, which constitutes purposeful availment. On remand, the district court is to determine if exercising jurisdiction over Suunto would be reasonable and fair.
Subject Matter Jurisdiction
Asia Vital Components Co. v. Asetek Danmark A/S, ______, 119 U.S.P.Q.2d 1745 (Fed. Cir. 2016). The Federal Circuit reversed and remanded the district court’s decision dismissing the case for lack of subject matter jurisdiction. The Federal Circuit concluded that AVC alleged sufficient facts that showed that there was a substantial controversy between parties having adverse legal interests, and was of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.
ScriptPro LLC v. Innovation Assocs., ______, 119 U.S.P.Q.2d 1878 (Fed. Cir. 2016). The Federal Circuit reversed and remanded the district court’s decision finding that the asserted patents were invalid for lack of written description. At issue was whether the patent was limited to a system for collating and automatically dispensing prescription containers based on patient-identifying information and slot availability. The Federal Circuit held that the district court erred by focusing its analysis on only one problem solved by the patented invention. Rather, the patent described multiple problems and solutions for the same, and not all of those solutions required collating and sorting as described by the district court.
First Am. Title Ins. Co. v. Northwest Title Ins. Agency, LLC., 2016 WL 5400387, 2016 U.S. Dist. LEXIS 133521 (D. Utah 2016). When the evidence shows that the defendants are engaged in, or about to be engaged in, an act or practices prohibited by a statute that provides for injunctive relief, irreparable harm to the plaintiffs does not need to be shown. But, this does not obviate First American’s burden to show that the defendants are engaged in, or about to be engaged in prohibited activities in violation of the USTA.
Healthbanc Int’l, LLC v. Synergy Worldwide, Inc., 2016 WL 5255163, 2016 U.S. Dist. LEXIS 130400 (D. Utah 2016). Both the Federal and Utah’s Trade Secret Acts require that the plaintiff own the trade secret at the time of the alleged misappropriation. A party may not be liable for misappropriation under either Act unless it takes, discloses, or uses a trade secret belonging to someone else. Here, Synergy held full title to any trade secrets inherent to the green’s formula. Thus, Synergy cannot be liable for trade secret misappropriation of the green’s formula because it did not use or disclose the trade secret of another as required by the Federal and Utah Trade Secret Acts.
Joint Comm’n Res., Inc. v. Siskin Techs., Inc., 2016 WL 5477515, 2016 U.S. Dist. LEXIS 134799 (N.D. Ill. 2016). JCR argued that Siskin cannot prevail on a trade secret misappropriation claim because it cannot show that the parties had a confidential relationship. But, establishing breach of a confidential relationship is merely one avenue of establishing improper means for misappropriation. Misrepresentation is another, and does not require the existence of a confidential relationship.
McDonald Apiary, LLC v. Starrh Bees, Inc., 2016 WL 5921069, 2016 U.S. Dist. LEXIS 140603 (D. Neb. 2016). The district court is not persuaded that the information identified by the parties is “ascertainable” just because beehives are not invisible. There is a difference between information that is readily ascertainable and that which is realistically ascertainable. It might have been possible to reconnoiter every highway, county road, and deer path in western Nebraska looking for every one of the approximately 23,000 beehives that McDonald Apiary placed in the summer of 2014. But, the district court is not convinced that such a theoretical possibility is enough to make the location database ascertainable.
Polymet Corp. v. Newman, 2016 WL 4449641, 2016 U.S. Dist. LEXIS 113000 (S.D. Ohio 2016). While the plaintiff needs to demonstrate actual misappropriation of trade secrets to win at trial, injunctive relief may be granted pursuant to the Ohio USTA upon a showing of threatened misappropriation of trade secrets. The plaintiff argued that a threatened misappropriation of trade secrets is demonstrated here by applying the inevitable disclosure doctrine, which states that “a threat of harm warranting injunctive relief can be shown by facts establishing that an employee with detailed and comprehensive knowledge of an employer’s trade secrets and confidential information has begun employment with a competitor of the former employer in a position that is substantially similar to the position held during the former employment.”
Courts applying the inevitable disclosure doctrine have recognized that when employees have intimate knowledge of their employer’s confidential business information and trade secrets, it is virtually impossible for those employees to leave the company and work for a competitor, while compartmentalizing their knowledge and avoiding using their former employer’s confidential business information and trade secrets at their new job.
Amendment to Identification of Services
In re Jimmy Moore LLC, 119 U.S.P.Q.2d 1764 (TTAB 2016). The applicant applied for a federal trademark registration for the mark “pitchingsmart” for “entertainment in the nature of baseball games.” Subsequently, the applicant made several attempts to amend the identification of services, which the examining attorney refused on the basis that the proposed amendments extended beyond the scope of the original identification. Specifically, the applicant suggested “baseball and softball pitching training system …” and, later, “educational services, namely, providing seminars for baseball and softball pitching.” The examining attorney also found that the specimens submitted by the applicant were unacceptable to show use of the mark for the identified services. The applicant appealed.
The applicant’s argument that the initial proposed amendment to the services should be accepted because it was filed a mere 10 days after filing the initial application was rejected by the director. The TTAB did not revisit this issue because a petition decided by the director may not later be the subject of an appeal to the TTAB. The TTAB found the applicant’s arguments that the proposed descriptions did not exceed the scope of the original description to be creative, but unpersuasive. Because even the applicant did not contend that the submitted specimens supported the original description (but, rather, only supported the proposed amended descriptions), the TTAB maintained the requirement for acceptable specimens. The TTAB affirmed the refusal to register the applicant’s pitchingsmart mark.
In re Loggerhead Tools, LLC, 119 U.S.P.Q.2d 1429 (TTAB 2016). The applicant sought to register a motion mark for a gripping tool. The applicant appealed from final refusal of registration on the ground that the mark was functional and, thus, not registrable. In considering whether the mark was functional, the TTAB considered the four Morton-Norwich factors from the Federal Circuit. First, the TTAB found that the applicant’s utility patent, taken together with the drawings therein, to be on point with the relevant portion of the description and drawing of the tool in the trademark application, strongly evidencing that the mark was functional. The TTAB also found that the non-identical design of the applicant’s design patent failed to overcome the strong conclusion that the disclosure of utilitarian advantages in the utility patent indicates functionality. The second Morton-Norwich factor – advertising materials touting the design’s utilitarian advantages – also was found to support functionality. Because the applicant’s own evidence indicated that its design set it apart from its competition, the TTAB found that the third factor – whether alternative designs existed – suggested functionality of the design. Finally, the TTAB found that the features of the mark were functional because they affected the quality (and, potentially, the cost) of the article.
Thus, in considering the proposed product configuration motion mark as a whole, the TTAB found that the Morton-Norwich factors indicated that the mark was functional and, thus, affirmed the refusal to register the mark.
Likelihood of Confusion
CareFusion 2200, Inc. v. Entrotech Life Sciences, Inc., 119 U.S.P.Q.2d 1492 (TTAB 2016). The TTAB sustained CareFusion’s opposition to a trademark application filed by Entrotech for CHLORADRAPE (“surgical drapes”), CHLORABOND (“topical antimicrobial solutions for dermatologic use”), CHLORABSORB (“medical and surgical dressings”) and CHLORADERM (“medical and surgical dressings”). CareFusion previously used and registered marks for CHLORAPREP for “topical antimicrobial solutions” and “broad-spectrum antiseptic,” and CHLORASHIELD for “antimicrobial catheter patch dressing.” The TTAB analyzed the likelihood of confusion factors, focusing on the similarities between the goods and the marks.
The TTAB determined that Entrotech’s goods were, in part, identical to CareFusion’s goods and that where the goods are identical, there is a presumption that the goods travel in the same channels of trade and are offered to the same class of customers, particularly where Entrotech failed to identify its goods with any restrictions as to the trade channels. Also, some of the goods were closely related in that they were often used by medical professionals and were likely to be sold to the same consumers, namely, purchasers of medical and surgical supplies for hospitals, surgical centers, and doctor’s offices. Moreover, the TTAB found that evidence of third-party marks introduced by Entrotech (to show that “CHLOR” was descriptive and consumers were conditioned to distinguish such marks) was unpersuasive as many of the listed marks were used with unrelated goods and that CHLOR-, CHLORO – or CHLORI-formative marks, rather than CHLORA, were not relevant.
In terms of appearance, sound, connotation and commercial impression, although the marks had different suffixes, when viewing the marks in their entireties, the TTAB found the marks were similar. Moreover, CareFusion’s and Entrotech’s goods were disposable, single-use and inexpensive, and as such there was no evidence that consumers would be immune from confusion as to the origin of the respective goods. Based on these factors, the TTAB found that there was a likelihood of confusion as consumers would be likely to believe that the parties’ goods originated with, were associated with, or were sponsored by the same entity. Therefore, the opposition was sustained and registration of Entrotech’s marks was refused.
Non-Registrable Subject Matter
In re Brown, 119 U.S.P.Q.2d 1350 (TTAB 2016). The applicant, owner of a retail establishment featuring marijuana, appealed the refusal of registration of its application for the mark HERBAL ACCESS for “retail store services featuring herbs.” The examining attorney found that because the identification of services encompassed marijuana, and marijuana was a substance that could not be lawfully distributed or dispensed under federal law, use of the mark in commerce was not lawful and thus the mark could not be registered.
Even though the products for sale may be lawful within a state, the TTAB agreed. The TTAB considered the applicant’s specimen of use and web site and found that they supported the conclusion that the applicant was engaged in the provision of marijuana and that this would be a violation of the Controlled Substances Act. Therefore, the applicant’s services included sales of a good that was illegal under federal law and, thus, encompassed an unlawful use.