Decisions in Brief

Decisions in Brief

John C. Gatz

©2017. Published in Landslide, Vol. 9, No. 6, July/August 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.

COPYRIGHTS

Adoption As a Standard Does Not Trump Private Copyright Protection

American Society for Testing and Materials, et al. v. Public.Resource.Org., Inc.; American Educational Research Association, Inc. et al. v. Public.Resource.Org, Inc., 121 U.S.P.Q.2d 1513, 2017 WL 473822 (D.D.C. 2017). The plaintiffs include various associations such as the American Society for Testing and Materials, National Fire Protection Association, Inc., American Society of Heating, Refrigerating, and Air-Conditioning Engineers, Educational Research Association, Inc., American Psychological Association, Inc., and National Council on Measurement in Education, Inc. (collectively Standards Associations). The Standards Associations are non-for-profit entities that develop various codes and standards. The defendant Public Resource is a not-for-profit entity devoted to publicly disseminating legal information. Public Resource distributed copies of forms and standards that had been adopted by the government.

Public Resource argued that the plaintiffs’ standards lost their copyright protections when they were incorporated by reference into federal regulations. They argued that the Copyright Act Sections 102(b) (no protection for systems or methods) and 105 (no protection for Government-authored works) should be read together to indicate that Congress intended that there be no copyright protections for the standards because, once incorporated, they are “legal facts”, which cannot be copyrighted.

The district court noted the weighty policy arguments on both sides of this issue, including the need to preserve a vital and complicated public-private partnership between the government and Standards Associations, and the need for an informed citizenry to have a full understanding of how to comply with the nation’s legal requirements. However, the district court also noted Congress’ previous consideration of these issues, and cited to a House Report during adoption of the 1976 Copyright Act, which stated that under § 105 “use by the Government of a private work would not affect its copyright protection in any way.” Related rules and decisions involving the Federal Register also supported this determination. Accordingly, the district court found for the Standards Associations on summary judgment.

D.C. Court Lacks Personal Jurisdiction over Chinese Video Streaming Website

Triple Up Ltd. v. Youku Tudou, Inc., 2017 WL 354093, 2017 U.S. Dist. LEXIS 9225 (D.D.C. 2017). Triple Up owns the copyright to several Taiwanese movies and sued Chinese-based website Youku Tudou for copyright infringement based on users in the U.S. streaming Triple Up’s films from the Youku’s website. Youku moved to dismiss the case for lack of personal jurisdiction, and the court granted the motion to dismiss.

The court began by asking if Youku had enough contacts with Washington, D.C. to satisfy Rule 4(k)(2) of the Federal Rules of Civil Procedure and meet due process requirements for specific jurisdiction. Youku needed to have sufficient contacts with the U.S. to be able to reasonably anticipate being brought into court here. While these contacts do not need to be physical, they must demonstrate that Youku “purposefully directed” activities to residents of the forum, or that Youku “purposely availed” itself to conducting business in the U.S. Triple Up alleged specific jurisdiction. Thus, the cause of action must involve Youku’s contacts with the U.S. Youku’s primary contacts with the U.S. involve people accessing its website from the U.S. The court noted that simply having a website accessible to user in a jurisdiction is not sufficient to establish the required minimum contacts with the jurisdiction.

Triple Up argued that Youku had geographical blocking capabilities on its website to limit people from viewing videos in certain locations, but did not prevent people in the U.S. from viewing videos, therefore Youku had purposefully transmitted broadcasts to the U.S. knowing that the videos could be viewed here. The court rejected this argument, finding that such a standard would require purposeful avoidance, not the purposeful availment necessary for personal jurisdiction.

Gimme a “C” for Copyrightability of Cheerleader Uniform Designs

Star Athletica, LLC v. Varsity Brands, Inc. 137 S.Ct. 1002, 122 U.S.P.Q.2d 1001 (U.S. 2017). The Supreme Court sided with Varsity Brands and other respondents, who were the owners of copyrights in a variety of designs for cheerleader uniforms, over Star Athletica, a uniform manufacturer sued by Varsity for copyright infringement. The district court ruled in favor of Star Athletica under the theory that the designs were utilitarian in that they identified the uniforms “as uniforms.” The Sixth Circuit then reversed that decision and ruled in favor of Varsity, reasoning that the designs on the uniforms were “separately identifiable” as graphic designs separate from the uniforms.

The Supreme Court summarized its task as being “to determine whether the arrangements of lines, chevrons, and colorful shapes appearing on the surface of respondents’ cheerleading uniforms are eligible for copyright protection as separable features of the design of those cheerleading uniforms.” After evaluating the statutory language and earlier opinions regarding copyright protection for designs of useful articles, the Court determined that the designs on the cheerleader uniforms here were worthy of copyright protection. The Court defined the test for copyrightability as asking whether a design, “identified and imagined apart from the useful article […] would qualify as a pictorial, graphic, or sculptural work either on its own or when fixed in some other tangible medium.” Despite the simplicity of some of the designs at issue (which incorporated colored diagonal lines), the Court found that the designs met that requirement.

PATENTS

Claim Construction

MPHJ Tech. Invs., LLC v. Ricoh Ams. Corp., 847 F.3d 1363, 121 U.S.P.Q.2d 1625 (Fed. Cir. 2017). The Federal Circuit affirmed the PTAB’s decision that certain claims were invalid as anticipated. As an initial matter, the court upheld the PTAB’s claim construction, finding that a provisional application can contribute to the understanding of the claims.

Collateral Estoppel/Patent Ineligibility

Intellectual Ventures I LLC v. Capital One Fin. Corp., 850 F.3d 1332, 121 U.S.P.Q.2d 1940 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s grant of summary judgment barring Intellectual Ventures’ (IV’s) infringement claims under collateral estoppel and finding the two asserted patents ineligible under 35 U.S.C. § 101. One of the two patents (the ‘084 patent) had recently been held patent ineligible under § 101 following a partial summary judgment order in a related proceeding in another district (the JPMC Order). The Federal Circuit affirmed the district court’s finding that collateral estoppel attached to IV’s claim based on the ’084 patent. Addressing the finality requirement, the only disputed issue, the Federal Circuit applied Fourth Circuit law, which does not require resolution of an appeal for finality to exist. As a partial summary judgment order, the JPMC Order thus met the finality requirement and collateral estoppel attached. The Federal Circuit affirmed the district court’s § 101 patent ineligibility findings. Although the claims are limited to a particular technological environment (XML computer language), the Federal Circuit found the claims abstract under Alice step one because the claims are still directed to the abstract idea of collecting, displaying, and manipulating data.

Covered Business Method

Secure Axcess, LLC v. PNC Bank N.A., 848 F.3d 1370, 121 U.S.P.Q.2d 1647 (Fed. Cir. 2017). The Federal Circuit reversed the PTAB’s determination that the patent was a covered business method (CBM) patent, and vacated the PTAB’s other determinations, including claim constructions and the obviousness determination itself. The PTAB concluded that the patent was incidental to a financial activity. The Federal Circuit found that this language was not part of the statutory definition of what comprises a CBM patent, and that such a definition of a CBM patent was beyond the scope of the statutory standard and therefore not in accordance with law.

Derivation/Obviousness

Cumberland Pharm., Inc. v. Mylan Institutional LLC, 846 F.3d 1213, 121 U.S.P.Q.2d 1416 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s rejection of the defendant’s obviousness and derivation challenges. The defendant stipulated to infringement but unsuccessfully asserted derivation of the claimed invention by someone at the FDA and that there was a reasonable expectation that the claimed formulations, without any chelating agents, would succeed.

Infringement/Damages/Interest

Comcast IP Holdings I LLC v. Sprint Commc’ns Co., 850 F.3d 1302, 121 U.S.P.Q.2d 1906 (Fed. Cir. 2017). The Federal Circuit affirmed a jury verdict finding infringement of three patents directed to technology for making telephone calls using computer networks. The jury awarded $7.5 million in damages and, after trial, the district court awarded pre-judgment interest. The Federal Circuit found that substantial evidence supported the district court’s infringement, damages, and pre-judgment interest findings.

Laches

SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 137 S.Ct. 954, 121 U.S.P.Q.2d 1873 (U.S. 2017). The Supreme Court found that laches is not a defense against damages in a patent infringement case when the accused infringement occurred within the statute of limitations time period set forth in 35 U.S.C. § 286. This decision follows the Supreme Court’s similar holding in Petralla v. Metro-Goldwyn-Mayer, Inc. that laches cannot preclude a damages claim incurred with the Copyright Act’s statute of limitations time period.

Literal Infringement

Life Techs. Corp. v. Promega Corp., 137 S.Ct. 734, 121 U.S.P.Q.2d 1641 (U.S. 2017). The Supreme Court reversed and remanded the Federal Circuit’s decision that a single component could be a substantial component as the term is used in § 271(f)(1), and therefore could give rise to infringement. The Supreme Court granted certiorari to determine whether a party that supplies a single component of a multicomponent invention for manufacture abroad could be held liable for infringement under § 271(f)(1). The Supreme Court held that a single component does not constitute a substantial portion of the components that can give rise to liability under § 271(f)(1), as the phrase “substantial portion” in the statute has a quantitative, not a qualitative meaning. Therefore, § 271(f)(1) does not cover the supply of a single component in a multicomponent invention.

Markush Claims

Shire Dev., LLC v. Watson Pharm., Inc., 848 F.3d 981,121 U.S.P.Q.2d 1509 (Fed. Cir. 2017). The Federal Circuit reversed the district court’s infringement finding and remanded for entry of a noninfringement judgment. The Federal Circuit found that the determinative claim limitation, which featured a Markush group, required an “outer hydrophilic matrix . . . consist[ing] of compounds selected from the group consisting of polymers or copolymers.” In the accused product, the “outer hydrophilic matrix” included magnesium stearate, which the determinative limitation did not list in its polymer/copolymer group. Thus, the accused product failed to satisfy the closed limitation. Based on expert testimony, however, the district court deemed the magnesium stearate “unrelated” to the invention because the magnesium stearate did not advance the determinative limitation’s inventive elements. The Federal Circuit disagreed, and refused to restrict “related” components to only those that advance or are intended to advance a Markush group’s allegedly inventive elements.

Obviousness

L.A. Biomedical Research Inst. at Harbor-UCLA Medical Ctr. v. Eli Lilly & Co., 849 F.3d 1049, 121 U.S.P.Q.2d 1800 (Fed. Cir. 2017). The Federal Circuit vacated and remanded a PTAB decision holding that all the claims in the patent were obvious. The case was remanded because the PTAB’s decision was predicated on an erroneous claim construction and because the PTAB did not make any factual findings on why to combine prior art references. The Federal Circuit also stated that proof of priority requires written description disclosure in a parent application and not simply information and inferences drawn from unapplied references.

Meiresonne v. Google, Inc., 849 F.3d 1379, 121 U.S.P.Q.2d 1797 (Fed. Cir. 2017). The Federal Circuit affirmed the PTAB’s findings that substantial evidence supported that the claims were obvious over the prior art. The PTAB’s factual finding that the prior art references teach away was not deemed a question subject to de novo review.

Pers. Web Techs., LLC v. Apple, Inc., 848 F.3d 987, 121 U.S.P.Q.2d 1578 (Fed. Cir. 2017). The Federal Circuit affirmed-in-part, vacated, and remanded-in-part the PTAB’s decision that the claims were obvious. The Federal Circuit upheld the claim construction. To determine obviousness, the PTAB must find that all of the claim elements were present in the prior art and that a person of ordinary skill in the art would have been motivated to combine the references and had reasonable expectation of success in doing so. The Federal Circuit found the PTAB did not adequately explain how the prior art met these requirements.

Patent Ineligibility

Thales Visionix Inc. v. United States, 850 F.3d 1343, 121 U.S.P.Q.2d 1898 (Fed. Cir. 2017). The Federal Circuit reversed and remanded the U.S. Court of Federal Claims’ grant of judgment on the pleadings based on finding that the patent is directed to patent-ineligible subject matter under 35 U.S.C. § 101. The patent is directed to a more accurate inertial tracking system for tracking the motion of an object relative to a moving reference frame. Under Alice step one, the Claims Court found the patent ineligible under § 101 because it is purportedly directed to the abstract idea of using laws of nature governing motion to track two objects. The Federal Circuit disagreed, recognizing that while the patent utilized mathematical equations to determine the orientation of the object relative to the moving reference frame, the equations serve only to tabulate the position and orientation information in the claimed configuration, much like the patent eligible claims at issue in the 1981 Diamond v. Diehr Supreme Court decision. In other words, far from claiming the equations themselves, the claims seek to protect only the application of physics to the disclosed configuration of sensors. As a result, the Federal Circuit concluded the patent is not directed to an abstract idea under Alice step one.

Personal Jurisdiction

Xilinx, Inc. v. Papst Licensing GmbH & Co. KG, 848 F.3d 1346, 121 U.S.P.Q.2d 1657 (Fed. Cir. 2017). The Federal Circuit reversed and remanded the district court’s dismissal of Xilinx’s declaratory judgment action against Papst for lack of personal jurisdiction. The Federal Circuit held that Xilinx had established personal jurisdiction over Papst. The Federal Circuit found that specific minimum contacts existed and that there was no compelling case that personal jurisdiction over Papst was unreasonable.

Practice/Procedure

Prism Techs. LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 121 U.S.P.Q.2d 1817 (Fed. Cir. 2017). The Federal Circuit affirmed the denial of the defendant’s post-trial motions and the plaintiff’s motion for additional monetary relief where the jury awarded the plaintiffs reasonable royalty damages. The post-trial motions included evidentiary issues on damages including (1) the admissibility of a prior settlement agreement; (2) the admissibility of leasing costs for estimating cost savings; and (3) whether there was an abuse of discretion to find a jury’s award that included compensation for future and ongoing infringement.

Preliminary Injunction

Metalcraft of Mayville, Inc. v. The Toro Co., 848 F.3d 1358, 121 U.S.P.Q.2d 1664 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s granting of the preliminary injunction precluding Toro from making, using, selling, and offering to sell lawnmowers equipped with the infringing system. The Federal Circuit found that all factors favored the grant of a preliminary injunction.

Tinnus Enters., LLC v. Telebrands Corp., 846 F.3d 1190, 121 U.S.P.Q.2d 1389 (Fed. Cir. 2017). The Federal Circuit affirmed the grant of a preliminary injunction by holding that the district court did not abuse its discretion. Specifically, the Federal Circuit affirmed the finding that the (1) asserted claims were likely infringed; (2) claims were not vulnerable on indefiniteness and obviousness grounds; and (3) the plaintiff made a showing of irreparable harm.

Prosecution Disclaimer

Tech. Props. Ltd. v. Huawei Techs. Co., 849 F.3d 1349, 121 U.S.P.Q.2d 1916 (Fed. Cir. 2017). The Federal Circuit vacated the district court’s noninfringement judgment and remanded the case for further proceedings based on the district court’s incorrect claim construction of the term “entire oscillator.” The district court correctly required the “entire oscillator” to include the limitation “whose frequency is not fixed by any external crystal” based on the prosecution history distinguishing applied prior art. The district court incorrectly required the “entire oscillator” to include the limitation “that does not require a control signal.” The district court overstated the breadth of the patentee’s distinction of the prior art as an effort to “disclaim an entire oscillator receiving a command input for any purpose.” Finding no such broad disclaimer had occurred, the Federal Circuit construed “entire oscillator” as one “that does not require a command input to change the clock frequency.”

Standing

Intellectual Ventures I LLC v. Erie Indem. Co., 850 F.3d 1315, 121 U.S.P.Q.2d 1928 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s decision to dismiss certain claims for lack of standing. Applying California contract law, the Federal Circuit concluded that the assignment agreement in question did not express a clear intent to assign rights to one of the asserted patents, as neither that patent nor the application on which it was based were identified in the assignment agreement. Additionally, because the assignment agreement conferred rights “in and to” a particular patent, but not to a particular “invention,” that the assignment did not cover all continuation applications. Regarding the remaining claims, the Federal Circuit found that step one of the Alice analysis was satisfied because the inventions were drawn to the abstract idea of creating an index to search for and retrieve data. Because the Federal Circuit also agreed with the district court’s Alice step two analysis—i.e., that the claimed invention lacks an “inventive concept”—the Federal Circuit affirmed the district court’s invalidity rulings under 35 U.S.C. § 101.

TRADE SECRETS

AllCells, LLC v. Zhai, 2017 WL 1173940, 2017 U.S. Dist. LEXIS 44808 (N.D. Cal. 2017). Section 1836(d) of the Defend Trade Secret Act (DTSA) sets forth a three-year statute of limitations and states that a continuing misappropriation constitutes a single claim of misappropriation for the three-year statute of limitations. However, under the DTSA, an owner can recover when the misappropriation occurs both before and after the effective date of the DTSA assuming the entire misappropriation is within the three-year limitations period.

Babcock Power, Inc. v. Kapsalis, 2017 U.S. Dist. LEXIS 47315 (W.D. Ky. 2017). The plaintiff in a trade secret misappropriation case does not need to show actual damages to recover under the KUTSA for misappropriation of trade secrets. Where a trade secret has not been destroyed and where the plaintiff cannot prove specific injury, courts measure the value of the secret to the defendant at the time of misappropriation. If the benefit to the defendant in direct profits is not ascertainable, damages may be awarded based on the value (1) to the defendant of the trade secret at the time of misappropriation; (2) derived from savings because of increased productivity; or (3) derived from savings in research and development costs.

BladeRoom Grp. Ltd. v. Facebook, Inc., 2017 WL 1233555, 2017 U.S. Dist. LEXIS 20176 (N.D. Cal. 2017). There can be more than one owner of a trade secret. A party has standing to bring a trade secrets’ claim if it has possession of the trade secret. The proprietary aspect of a trade secret flows, not from the knowledge itself, but from its secrecy. The secret aspect of the knowledge provides value to the person having the knowledge. One owns the trade secret when one knows of it, as long as it remains secret.

Digital Ally, Inc. v. Util. Assocs., 2017 U.S. Dist. LEXIS 49893 (D. Kan. 2017). Federal and state courts have unanimously interpreted the UTSA’s list of damages to be exclusive and courts have required the plaintiff to show evidence of damages in one of the categories of damages. The plaintiff made no claim of actual damages relating to its misappropriation claim, made no argument, and cited no affidavit or other evidence to support a claim for damages incurred because of the defendant’s alleged misappropriation. The entry of summary judgment is therefore appropriate based on the plaintiff’s failure or inability to show damages.

TLS Mgmt. & Mktg. Servs. LLC v. Rodriguez-Toledo, 2017 WL 1277641, 2017 U.S. Dist. LEXIS 49838 (D.P.R. 2017). TLS proffered sufficient evidence to demonstrate that it can likely show that the defendant misappropriated TLS’s trade secrets after leaving TLS in 2015. The defendant’s position that the plaintiff’s motion for an injunction is moot because the defendant no longer has any confidential TLS documents in his possession is not well taken. There is still the likelihood he can recall inside information gained from TLS. Further, if the defendant suggests that the case is moot because the defendant has voluntarily ceased the alleged tortious conduct, the defendant’s voluntary cessation of allegedly unlawful conduct rarely suffices to moot the case.

TRADEMARKS

Non-Registrable Subject Matter

In re Family Emergency Room LLC, 121 U.S.P.Q.2d 1886, 2017 WL 1345063, 2017 TTAB LEXIS 94 (T.T.A.B. 2017). The TTAB affirmed the refusal to register the applicant’s mark based on a finding that design features of the mark too closely resembled the flag of Switzerland and, thus, the mark was not registrable. The applicant sought to register the mark CEDAR PARK FAMILY EMERGENCY ROOM + DESIGN for hospitals. The mark included a design element consisting of a white cross on a red field and red diagonal lines on the left edge of the field. The design element was positioned to the left of the textual part of the mark. The examining attorney refused registration under Section 2(b) of the Trademark Act on the ground that the proposed mark included a simulation of the Swiss flag.

The TTAB noted that the appropriate standard to be applied was whether the relevant consumer (the recipient of hospital services, which is the general public) would perceive the design as a flag, regardless of whether other items appears with or on the flag. The TTAB found that the design of the applicant’s mark was highly similar to the Swiss flag, and that the addition of lines to the left of the design and the slight tilt of the design were insignificant in altering the commercial impression of the design. Likewise, the addition of the wording CEDAR PARK FAMILY EMERGENCY ROOM to the right of the white cross and red background did not change the perception from a simulation of the Swiss flag. As such, the TTAB found that the design was not sufficiently altered, stylized, or merged with other elements in the mark to create a distinct commercial impression, other than a simulation of the Swiss flag. Therefore, an average number of the general public would associate the design feature of the mark with the flag of Switzerland. Thus, the TTAB affirmed the refusal of registration.

Notice of Opposition/Requirements for Paper Filing

DFC Expo LLC, v. Brian Coyle, 121 U.S.P.Q.2d 1903, 2017 TTAB LEXIS 84 (T.T.A.B. 2017). DFC filed a notice of opposition against an application for the mark SODA CITY FIRE DEPT. The notice was filed in paper form and with a cover letter that indicated that DFC had difficulty filing the notice electronically due to a problem with the ESTTA web site. The TTAB determined that the paper filing was not acceptable. The TTAB gave three reasons as to why the notice was not acceptable. First, the notice was not timely filed because a certificate of mailing was not filed with the notice. Thus, the date of receipt of the notice was considered the filing date. As the notice was received after the deadline for filing an opposition, the notice was not timely filed.

Second, the notice was not filed with the fee required for filing the notice. When a notice in paper form is filed by mail, the fee may be paid by check, money order, credit card (using the credit card payment form), or a PTO deposit account. The TTAB noted that the deadline and payment requirements are statutory and cannot be waived. Lastly, the notice was not accompanied by a petition to the director. This petition is required for certain submissions filed in paper form, including a notice of opposition. The petition must be accompanied by the required fee, a proper showing and verification of statements supporting the petition. Even though DFC included a cover letter with its paper submission, the explanation could not be considered since the cover letter was not a petition. The TTAB also noted that information from the USPTO system indicated that DFC had attempted to upload a Microsoft Word document, which was not the proper electronic form for a submission. The TTAB further cautioned that potential opposers should keep filing deadlines in mind and should allow time to resolve possible issues that may arise with electronic filings.

John C. Gatz

John C. Gatz is a member of the firm Nixon Peabody in Chicago, Illinois.

 

Column contributors include the following writers: Copyrights: Zachary J. Smolinski, Smolinski Law PC; Michael N. Spink, Brinks, Hofer, 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.