©2018. Published in Landslide, Vol. 10, No. 5, May/June 2018, 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.
BMI License May Include Fractional Rights
United States v. Broadcast Music, Inc., 125 U.S.P.Q.2d 1186 (2d Cir. 2017). BMI is a performance rights organization that holds the performance rights to millions of musical works and acts as the agent for songwriters and publishers to set rates, issue licenses, and collect licensing fees from entities seeking to perform the musical works. The U.S. Department of Justice (DOJ) challenged the BMI blanket license as an illegal restraint of trade, and BMI and the DOJ entered into a consent decree in 1966 that was amended in 1994. The DOJ alleged that BMI violated the consent decree by including works in the blanket license where BMI only had a fractional interest in the work. BMI argued that the consent decree did not prohibit fractional licensing or require only full-work licensing. The district court agreed with BMI and the DOJ appealed.
The Second Circuit upheld the ruling. The Second Circuit noted that the language of a consent decree “must dictate what a party is required to do and what it must refrain from doing.” The BMI consent decree is silent on fractional licensing, so BMI may license works fractionally. The Second Circuit rejected the DOJ argument that “right of public performance” found in the consent decree must mean an “immediate right to actually perform” the work without risk of infringement, something that a fractional license could not provide. The Second Circuit found that fractional licensing was common when the consent decree was modified in 1994, and that the consent decree could have been amended at that time to add the prohibition the DOJ sought in this case. Alternatively, the DOJ may file an action under the Sherman Act in the future to address any competitive concerns with the consent decree.
Pastime LLC v. Schreiber, 125 U.S.P.Q.2d 1025 (S.D.N.Y. 2017). The play titled Once Upon a Pastime was subject to an ownership dispute. Defendant Lee Schreiber holds a registration from the U.S. Copyright Office listing him as the play’s sole author, but the plaintiffs Pastime LLC, Dennis M. Minogue (personally known as Terry Cashman), PKM Music, and Metrostar Music (collectively Pastime) claim that Schreiber’s employment contract divested him of any copyright in the work, and that he transferred his copyrights to Pastime.
Pastime acquired rights to a musical titled Passin’ It On, for which Cashman and PKM Music had written the music. The first producers had commissioned an author to write the book for the project, but after some underwhelming performances hired Schreiber and Cashman to rewrite the book under the new title Once Upon a Pastime. Still dissatisfied with the project, the producers transferred their rights to the plaintiffs. PKM Music and Metrostar Music began presenting readings of the musical during which Schreiber made some revisions. Still not having success, Cashman decided to contract with experienced author James Glossman, who made further revisions until the musical was picked up for production.
Despite Schreiber holding the copyright registration, his original employment agreement with the producers stated: “You acknowledge and agree . . . that the Book . . . was specifically commissioned by [the producers] and shall be considered for copyright . . . purposes a contribution to a collective work and a work for hire for [the producers]. . . . [The producers] are, therefore the owner[s] of all rights in and to the Book and all copyrights therein . . . .” Pastime argued that, in light of Schreiber’s employment agreement, Schreiber intentionally falsified the writing and ownership information in his copyright registration application.
The district court denied Pastime’s request for granting “cancellation and nullification” of the copyright registration, noting that nothing in the Copyright Act, nor any other federal statute, grants federal courts the power to cancel or nullify a copyright registration. However, the district court did conclude that Pastime had stated a cognizable claim for a declaratory judgment as to ownership rights in Once Upon a Pastime. Therefore, the district court held that Pastime’s complaint would at least partially survive the motion to dismiss, and ordered Schreiber to answer the complaint.
Reward to Oracle Decreased in Litigation with Rimini Street
Oracle USA, Inc. v. Rimini Street, Inc., 879 F.3d 948, 125 U.S.P.Q.2d 1380 (9th Cir. 2018). Rimini Street, a company that provided software maintenance and support services for Oracle software products, was sued by Oracle under the theories of copyright law and California and Nevada state computer criminal law statutes. Oracle argued that Rimini’s acquisition of Oracle support materials through the use of automated downloaders violated those statutes, and the district court ruled in favor of Oracle on that point.
The Ninth Circuit evaluated the statutes at issue and determined that the district court improperly construed the statutes to mean that any downloading of information from a website by a means not allowed by the website’s user agreement was a violation of the statutes. Here, the user agreement prohibited the use of automated downloaders, but Rimini was in fact authorized to make the downloads. Damages of over $14 million to Oracle subsidiaries awarded under these state statutes were eliminated by the Ninth Circuit, as were amounts awarded under other theories of recovery.
Appeal of IPR Institution Denials
Wi-Fi One, LLC v. Broadcom Corp., 878 F.3d 1364, 125 U.S.P.Q.2d 1269 (Fed. Cir. 2018). A split en banc court addressed whether the PTAB’s decision to deny institution as time-barred pursuant to 35 U.S.C. § 315(b) is appealable, or whether any such appeal is precluded under 35 U.S.C. § 314(d). The Federal Circuit majority, in reversing the previous panel decision in Achates Reference Publishing, Inc. v. Apple Inc., found that such time-bar decisions are indeed appealable. The majority reached this holding by relying heavily on the Supreme Court’s analysis in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016), including Cuozzo’s explanation of the “strong presumption” that favors judicial review of agency actions. Specifically, the Federal Circuit found no clear and convincing indication in the statutory language in the AIA, the legislative history of the AIA, or the statutory scheme as a whole that demonstrates Congress’s intent to bar judicial review of § 315(b) time-bar determinations.
Inventor Holdings, LLC v. Bed Bath & Beyond, Inc., 876 F.3d 1372, 125 U.S.P.Q.2d 1019 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s decision to grant attorney fees. After the Supreme Court issued its decision in Alice, the accused infringer moved for judgment on the pleadings, arguing that the claims were invalid. After the motion was granted, the accused infringer asked for attorney fees, stating the patentee should have reevaluated its case after Alice. The district court determined this case was exceptional based on the weakness of the post-Alice arguments. The Federal Circuit agreed, stating: (1) the case was already dubious based on other pre-Alice § 101 decisions; (2) Alice was a significant change to patents dealing with economic arrangements as with this patent; and (3) there is no difficulty in applying Alice to these claims.
Promega Corp. v. Life Technologies Corp., 875 F.3d 651, 124 U.S.P.Q.2d 1755 (Fed. Cir. 2017). On remand from the Supreme Court, the Federal Circuit affirmed the district court’s grant of the accused infringer’s JMOL that the patentee failed to prove infringement. The issue on remand from the Supreme Court was whether the patentee waived an alternative damages argument. The patentee pursued an all-or-nothing damages strategy throughout litigation. The patentee’s deliberate strategy to adhere to a single damages theory had the effect of eliminating any damages except worldwide sales. The Federal Circuit also found the patentee failed to show that all of the accused infringing products that did not infringe under § 271(f) do infringe under § 271(a). The Federal Circuit also found the district court properly exercised its discretion by relying on its waiver finding from its JMOL ruling to support its decision to deny Promega’s motion for a new trial.
BASF Corp. v. Johnson Matthey Inc., 875 F.3d 1360, 124 U.S.P.Q.2d 1738 (Fed. Cir. 2017). The Federal Circuit reversed the judgment of invalidity for indefiniteness and remanded for further proceedings. The Federal Circuit found no intrinsic or extrinsic evidence that would support a judgment of indefiniteness.
Regeneron Pharmaceuticals, Inc. v. Merus N.V., 878 F.3d 1041, 125 U.S.P.Q.2d 1266 (Fed. Cir. 2017). The Federal Circuit denied petitions for panel rehearing and rehearing en banc. The dissent disagreed that inequitable conduct in patent prosecution can be retrospectively imposed by adverse inference arising from later misconduct in litigation, without a showing of deceptive intent before the USPTO.
Travel Sentry, Inc. v. Tropp, 877 F.3d 1370, 125 U.S.P.Q.2d 1093 (Fed. Cir. 2017). The Federal Circuit vacated the district court’s summary judgment of noninfringement, determining that a reasonable jury could conclude that Travel Sentry directed or controlled steps of several claimed methods. The claims are directed to improving airline luggage inspection, and Travel Sentry provided TSA master keys for unlocking Travel Sentry luggage locks for inspection. Applying the first prong of Akamai Technologies, Inc. v. Limelight Networks, Inc., the Federal Circuit found that a reasonable jury could conclude that TSA receives a benefit from being able to identify Travel Sentry–marked luggage and open the locks using its Sentry keys. Under the second prong in Akamai, the Federal Circuit determined that a reasonable jury could find that Travel Sentry had established the manner or timing of TSA’s performance.
Inter Partes Review (IPR)
Bosch Automotive Service Solutions, LLC v. Matal, 878 F.3d 1027, 125 U.S.P.Q.2d 1130 (Fed. Cir. 2017). The Federal Circuit affirmed the PTAB’s finding of unpatentability of certain claims, but vacated and remanded the PTAB’s denial of the patentee’s motion to amend as to proposed substitute claims. Specifically, the Federal Circuit found that the PTAB did not err in its obviousness determination or its consideration of objective indicia of nonobviousness. However, the Federal Circuit held that the PTAB impermissibly assigned the burden of proof to the patentee on the issue of whether its proposed amended claims—which included a mean-plus-function limitation—were definite.
CRFD Research, Inc. v. Matal, 876 F.3d 1330, 124 U.S.P.Q.2d 1898 (Fed. Cir. 2017). The Federal Circuit affirmed the PTAB’s decision on two of the IPRs, but reversed the decision in the third IPR.
HTC Corp. v. Cellular Communications Equipment, LLC, 877 F.3d 1361, 125 U.S.P.Q.2d 1065 (Fed. Cir. 2017). The Federal Circuit affirmed the PTAB’s claim construction and patentability determination. Regarding anticipation, the Federal Circuit agreed with the PTAB that HTC did not identify any disclosure in the prior art reference for one claim limitation. Regarding obviousness, the Federal Circuit found the PTAB’s findings were supported by substantial evidence.
Microsoft Corp. v. Biscotti, Inc., 878 F.3d 1052, 125 U.S.P.Q.2d 1144 (Fed. Cir. 2017). The Federal Circuit affirmed the PTAB’s decision that the petitioner, Microsoft, failed to show that the challenged claims of a patent were anticipated or obvious in three separate IPRs. The Federal Circuit reiterated that anticipation is a question of fact and subject to the substantial evidence standard of review, and also found that the PTAB did not misapply the legal standard for anticipation in its analysis. The Federal Circuit also rejected Microsoft’s argument that the PTAB erred due to an incorrect claim construction, finding that even if Microsoft’s construction were correct, any error would not be prejudicial.
Presidio Components, Inc. v. American Technical Ceramics Corp., 875 F.3d 1369, 124 U.S.P.Q.2d 1745 (Fed. Cir. 2017). The Federal Circuit affirmed in part, reversed in part, vacated in part, and remanded the decision of the district court. The district court held that the asserted claims were infringed and not invalid, and granted a permanent injunction. The district court limited damages due to intervening rights. The Federal Circuit found sufficient support that the claims were definite. The Federal Circuit found a substantive change in claim scope during reexamination. Accordingly, the Federal Circuit found the district court properly granted the affirmative defense of absolute intervening rights. Presidio failed to show the absence of an acceptable, noninfringing substitute, so the Federal Circuit reversed the award of lost profits. The Federal Circuit vacated the grant of permanent injunction, and remanded to consider the evidence and whether Presidio had established irreparable injury.
Arctic Cat Inc. v. Bombardier Recreational Products Inc., 876 F.3d 1350, 124 U.S.P.Q.2d 1885 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s denial of JMOL as to obviousness, the jury’s royalty rate, and willfulness. The Federal Circuit also affirmed the decision to treble damages and award an ongoing royalty to Arctic Cat. The Federal Circuit vacated the court’s denial of JMOL as to marking and remanded for further consideration limited to that issue. The Federal Circuit found that the district court committed legal error by determining that BRP bore the burden of proving the defense of marking. Rather, the burden of proving compliance with marking is and always remains on the patentee. The accused infringer bears an initial burden of production to articulate products it believes are unmarked patented articles, but this is a low bar. Arctic Cat was therefore not properly alerted of its burden, so the Federal Circuit vacated the judgment as to marking and remanded.
Finjan, Inc. v. Blue Coat Systems, Inc., 879 F.3d 1299, 125 U.S.P.Q.2d 1282 (Fed. Cir. 2018). In an appeal from Blue Coat related to four Finjan patents directed to identifying and protecting against malware, the Federal Circuit addressed several issues. The Federal Circuit agreed with the district court, finding, at step one of Alice, that the “behavior-based virus scan” claims of one of the patents enabled a computer security system to do things it could not do before and was, therefore, patent eligible. The Federal Circuit found that substantial evidence supported some, but not all, of the infringement verdicts. The Federal Circuit found error in the damages of one of the patents, but affirmed the damages on the other patents.
Monsanto Technology LLC v. E.I. DuPont de Nemours & Co., 878 F.3d 1336, 125 U.S.P.Q.2d 1242 (Fed. Cir. 2018). The Federal Circuit affirmed the PTAB’s decision in an ex parte reexamination that affirmed a USPTO examiner’s rejection of multiple claims of Monsanto’s patent due to anticipation and obviousness. The PTAB did not err in construing the term “about 3% or less” to include a linolenic acid content of 4 percent, because the patent’s specification was supported by express reference to a publication that specified a range of linolenic acid contents from 2.3–4.1 percent. The PTAB properly relied on an expert declaration to find that a reference anticipated the claims because it supported what is “necessarily present” in the reference.
In re Micron Technology, Inc., 875 F.3d 1091, 124 U.S.P.Q.2d 1661 (Fed. Cir. 2017). The Federal Circuit granted Micron’s writ of mandamus, vacated the district court’s order denying Micron’s Rule 12(b)(3) motion, and remanded for further proceedings. The Federal Circuit determined that contrary to the district court’s conclusion that Rule 12(h)(1)(A)’s waiver rule was inapplicable due to the intervening Supreme Court ruling in TC Heartland LLC v. Kraft Foods Group Brands LLC. The district court considered whether to excuse what it found to be a Rule 12(h)(1)(A) waiver, but did not consider whether Micron lost its right to assert the absence of venue on grounds separate therefrom. Thus, the Federal Circuit vacated the order and remanded.
A&P Technology, Inc. v. Lariviere, No. 1:17-cv-534, 2017 U.S. Dist. LEXIS 211822, 2017 WL 6606961 (S.D. Ohio Dec. 27, 2017). The district court found it appropriate to require the plaintiff to specifically identify those trade secrets that have allegedly been misappropriated prior to requiring the defendants to divulge their own trade secrets through discovery. Like the plaintiff’s motion for preliminary injunction, the lack of circumstantial evidence of misappropriation, or any form of deceit on the part of either defendant, is a significant factor in the district court’s determination that the factors in favor of the early identification of trade secrets outweigh the factors against such a requirement. It is too early to tell whether the defendants are hiding their misappropriation of the plaintiff’s trade secrets or whether the plaintiff’s lawsuit is an attempt to use litigation as a means of discovering the trade secrets of a competitor. However, given that the district court has already found no strong case for requiring preliminary injunctive relief against the defendants, it follows that the district court should therefore err on the side of caution in protecting the defendants’ trade secrets against unnecessary disclosure.
BladeRoom Group Ltd. v. Facebook, Inc., No. 5:15-cv-01370, 2018 U.S. Dist. LEXIS 10905, 2018 WL 514923 (N.D. Cal. Jan. 23, 2018). The broad definition of “use” applicable to trade secret claims means that the method of defending against patent infringement by comparing claim limitations to elements, and showing that one does not read on the other, is not suitable for showing the absence of a triable fact of trade secret misappropriation. Rather, trade secret misappropriation through use can occur under the California Uniform Trade Secrets Act in a wide variety of ways, including employing the confidential information in manufacturing, production, research or development, marketing goods that embody the trade secret, or soliciting customers through the use of trade secret information.
Openwave Messaging, Inc. v. Open-Xchange, Inc., No. 16-cv-00253, 2018 U.S. Dist. LEXIS 17776, 2018 WL 692022 (N.D. Cal. Feb. 2, 2018). Openwave relied on cases that have found similar information to be trade secrets to demonstrate that its customer information qualifies as a trade secret. While customer information can include legally protectable trade secrets, Openwave failed to provide any evidence that its customer information should be considered legally protectable trade secrets. Openwave merely pointed to case law and its trade secret disclosure to support its claim. The trade secret disclosure is not admissible evidence and therefore cannot be considered for purposes of summary judgment. Its disclosure is not accompanied by any declarations or affidavits from a person with personal knowledge authenticating it under penalties of perjury. It was instead signed by Openwave’s counsel and submitted on information and belief. This does not create a genuine issue of material fact. The nonmovant must point to some evidence in the record that creates a genuine dispute as to a material fact, which Openwave failed to do. Accordingly, it cannot satisfy its summary judgment burden.
Quintel Technology Ltd. v. Huawei Technologies, Inc., No. 4:15-cv-00307, 2017 U.S. Dist. LEXIS 216186 (E.D. Tex. Apr. 12, 2017). It is not possible to state precise criteria for determining the existence of a trade secret. The status of information claimed as a trade secret must be ascertained through a comparative evaluation of all the relevant factors, including the value, secrecy, and definiteness of the information as well as the nature of the defendant’s misconduct. Courts consider the Restatement’s six factors to determine whether a trade secret exists, weighed in the context of the surrounding circumstances: (1) the extent to which the information is known outside of the business, (2) the extent to which it is known by employees and others involved in the business, (3) the extent of the measures taken to guard the secrecy of the information, (4) the value of the information, (5) the amount of effort or money expended in developing the information, and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.
TMRJ Holdings, Inc. v. Inhance Technologies, LLC, No. 01-16-00849-CV, 2018 Tex. App. LEXIS 202, 2018 WL 326421 (Jan. 9, 2018). The district court acted within its discretion in awarding injunctive relief in addition to the actual damages awarded by the jury. The parties do not dispute the availability of reasonable royalty damages or the amount that the jury awarded as the value of the misappropriated trade secrets. Rather, TMRJ contended that the district court’s permanent injunction impermissibly overlaps with the reasonable royalty damages. Although the royalty determination conceivably included future revenue that licensing the trade secrets might have produced, the district court reasonably could have concluded that this measure of actual damages did not fully compensate Inhance absent an injunction because Inhance never intended that the trade secrets be available in the marketplace.
Immoral or Scandalous Marks
In re Brunetti, 877 F.3d 1330, 125 U.S.P.Q.2d 1072 (Fed. Cir. 2017). Erik Brunetti appealed the decision from the TTAB upholding the refusal to register Brunetti’s mark for FUCT on the basis that it comprised immoral or scandalous matter under Section 2(a) of the Lanham Act. The Federal Circuit reversed the TTAB’s decision on the ground that Section 2(a)’s bar on immoral or scandalous matter was an unconstitutional restriction on free speech. The TTAB confirmed the examining attorney’s finding that FUCT is the past tense of the verb “fuck,” a vulgar word, and therefore the mark was scandalous. Brunetti argued that even if the mark was vulgar, Section 2(a) did not expressly prohibit the registration of vulgar marks. Alternatively, Brunetti challenged the constitutionality of Section 2(a) to prohibit registration of immoral or scandalous marks.
The Federal Circuit found that substantial evidence supported the TTAB’s finding that the mark FUCT was vulgar and thus the TTAB did not err in finding that the mark was not registrable under Section 2(a). The Federal Circuit then reviewed the Supreme Court’s decision in Tam Metal v. Tam, which found the disparagement provision of Section 2(a) unconstitutional under the First Amendment. Finding that the trademark registration was not a government subsidy program, nor that trademark registration was a limited public form, such prohibition on the registration of immoral or scandalous trademarks should be analyzed under the strict scrutiny standard. As for the immoral or scandalous provision, the Federal Circuit concluded that the provision impermissibly discriminated based on content in violation of the First Amendment. As such, the decision of the TTAB was reversed.
Likelihood of Confusion
Bell’s Brewery, Inc. v. Innovation Brewing, 125 U.S.P.Q.2d 1340 (T.T.A.B. 2017). The applicant Innovation Brewery sought to register the mark INNOVATION BREWING (with BREWING disclaimed) for “beer.” The opposer Bell’s Brewery opposed registration under Section 2(d) of the Trademark Act, asserting priority and a likelihood of confusion with its registered mark INSPIRED BREWING and its common law mark BOTTLING INNOVATION SINCE 1985. The PTAB dismissed the opposition.
In assessing a likelihood of confusion, the PTAB considered the DuPont factors. The PTAB found that the parties’ goods, customers, and channels of trade were identical, that beer was inexpensive and subject to impulse purchases, and that the opposer’s marks should be afforded the normal scope of protection to which inherently distinctive marks are entitled. Nevertheless, the PTAB found that the dissimilarity of the marks INSPIRED BREWING and INNOVATION BREWING in appearance, sound, connotation, and overall commercial impression outweighed the other DuPont factors. As such, the first factor was outcome-determinative, and thus the opposer did not satisfy its burden of establishing that INNOVATION BREWING was likely to cause consumer confusion with its INSPIRED BREWING mark in association with beer.
The opposer argued that confusion with respect to its BOTTLING INNOVATION SINCE 1985 mark, which was used together with INSPIRED BREWING, was likely under a conjoint use theory. However, the PTAB found that the opposer failed to plead a conjoint use theory and that a conjoint use claim was not tried by implied consent through the applicant’s failure to object to evidence of conjoint use introduced in the trial testimony of the opposer’s witness and exhibits. Furthermore, although the PTAB found that the opposer satisfied the first element of the conjoint use test by submitting marketing and promotional materials displaying both marks, it did not satisfy the second element by establishing that the marks were advertised conjointly in such a manner and to such an extent that they have come to be associated together, in the mind of the purchasing public, as indications of origin for the opposer’s product. Thus, the PTAB dismissed the opposition to register the INNOVATION BREWING mark.
Use in Commerce/Likelihood of Confusion
Tao Licensing, LLC v. Bender Consulting Ltd., 125 U.S.P.Q.2d 1043 (T.T.A.B. 2017). Tao Licensing petitioned to cancel a registration for TAO VODKA for “alcoholic beverages except beer,” owned by Bender. Tao Licensing owns federal trademark registrations for TAO for “restaurant services” and “night clubs, special events and party planning; and coordinating and providing facilities for entertainment events in the nature of parties and special events featuring music, singing, dancing, lectures, and celebrity or professional entertainment.” Tao Licensing stated claims for likelihood of confusion under Section 2(d), likelihood of dilution under Sections 14 and 43(c), lack of a bona fide intent to use the mark under Section 1(b), and nonuse as of the statement of use under Section 1(a).
Tao Licensing owned and operated several top-grossing restaurants and night clubs named TAO (TAO venues). After trying unsuccessfully to sell Kai Vodka to the TAO venues, Bender filed the TAO VODKA application. To establish use of the mark, Bender filed a specimen showing the mark on a bottle of vodka and asserted use based on the distribution of samples to different third parties; however, no sales were made. The TTAB noted that depending on the particular facts and industry practices, certain types of promotional activities, such as distributing samples, may qualify as use in commerce. The TTAB found that none of the facts surrounding the distribution of samples supported use of the mark in commerce. As a whole, the TTAB determined that the evidence indicated that Bender was exploring use at some point in the future in preparation for offering the goods for sale. In making this determination, the TTAB considered the practices of the alcoholic beverage industry with regard to the distribution of samples and found that Bender’s activities failed to make the requisite use of the TAO VODKA mark in commerce.
On the issue of likelihood of confusion, the TTAB found several factors weighed in favor of Tao Licensing, including the fame of the TAO mark, the strength of the TAO mark, the similarity of the parties’ marks, the relatedness of the goods and services, the similar trade channels, and that the evidence indicated that Bender had acted in bad faith in adopting the TAO VODKA mark. In view of the lack of use of the mark in commerce, as well as the likelihood of confusion with Tao Licensing’s TAO mark, the TTAB granted the petition for cancellation of the TAO VODKA mark.