Decisions in Brief

Decisions in Brief

By John C. Gatz

©2017. Published in Landslide, Vol. 10, No. 2, November/December 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

Home Design Copyright Not Infringed

Design Basics, LLC v. Lexington Homes, Inc., 858 F.3d 1093, 123 U.S.P.Q.2d 1128 (7th Cir. 2017). Design Basics produces designs for single-family homes for the mass market. Lexington is a home builder that Design Basics accused of infringing four copyrighted home designs. The district court granted summary judgment to Lexington, finding that Design Basics had not shown that Lexington had access its four designs. Design Basics appealed.

The Seventh Circuit affirmed. The Seventh Circuit initially noted that the copyright for an architectural work does not include standard features found in buildings. The Seventh Circuit noted that both the doctrine of scenes a faire and the doctrine of merger may limit the copyright protectable elements of an architectural work. The Seventh Circuit found that to the extent Lexington’s designs resembled Design Basics’ plans, it was because they both resemble common home designs in the public domain. The home plans at issue here were based on functional requirements for a home and industry standards. Therefore, any similarities between Lexington’s designs and Design Basics plans did not involve protectable elements of Design Basics’ copyrights, but simply involved common features found in homes. The Seventh Circuit further found that the Design Basics did not show that Lexington had access to its designs. Design Basics posted the designs on their website, but offered no evidence that Lexington had ever accessed the website. The Seventh Circuit found that simply having a copyrighted home design on a website is not sufficient to allow an inference to be made that an alleged infringer accessed the materials.

No Royalties Due from Radio Stations Playing Oldies in Illinois

Sheridan v. iHeartMedia, Inc., 2017 WL 2424217 (N.D. Ill. 2017). This case touched on state-based protection for sound recordings made before February 15, 1972. Arthur and Barbara Sheridan, the owner of rights in oldies song recordings, sued iHeartMedia, the owner of hundreds of radio stations. The Sheridans argued that a variety of causes of action under Illinois state law entitled them to collect from iHeartMedia based on the stations’ playing of songs by oldies acts. The Sheridans sued under the theories of common law copyright infringement, unfair competition, conversion, and unjust enrichment. They lost on all fronts. On the common law copyright claim, the district court determined that the Sheridans “lost their common law right to control the public performance of those recordings in Illinois” when they voluntarily sold those recordings. The district court stated that “No broadcaster has ever been held liable under any cause of action available under Illinois law for broadcasting a pre-1972 sound recording without authorization,” and found nothing in the Sheridans’ arguments to change that pattern.

Rastafarian Smoking a Joint Photo Usage Doesn’t Amount to Fair Use

Graham v. Prince, 2017 WL 3037535 (S.D.N.Y. 2017). Plaintiff Donald Graham brought a copyright infringement action against defendant Richard Prince and related parties, arising out of Prince’s failure to seek Graham’s permission to use one of his photographs in creating the “appropriation art” for which Prince is well known. Prince used Graham’s photograph, Rastafarian Smoking a Joint, to create an artwork known as Untitled (Portrait), which was featured by the defendants (1) in an exhibition called New Portraits, (2) in the catalog for that exhibition, (3) on a billboard displayed in New York, and (4) in a post by Prince on the social media platform Twitter. Prince’s Untitled is a 4 ft. by 5 ft. inkjet print of a screenshot taken by Prince that captures a “post” made by a user on Instagram and contains a slightly cropped copy of Rastafarian Smoking a Joint, and to which Prince added his own comment: “Canal Zinian da lam jam [emoji of a raised fist].”

The defendants sought to dismiss the complaint, arguing that Untitled was fair use as a matter of law. Their argument was largely based on the defendants’ prior lawsuit (Cariou v. Prince, 714 F.3d 694 (2d Cir. 2013)), where the majority found 25 of Prince’s works to be so thoroughly transformative that their use was fair, even though Prince had gone so far as to make use of the “entire source photograph[s]” in some of those 25 works.

The district court distinguished the prior decision of the Second Circuit from the facts of this case. The district court found that a reasonable observer must conclude that Prince’s Untitled does not so “heavily obscure” and “alter” Graham’s Rastafarian Smoking a Joint that it renders the original photograph “barely recognizable,” unlike the prior case. The alterations Prince made in this case were found to be materially less significant than in the prior images, where Prince extensively cropped, collaged, and tinted the originals, as well as superimposed new and incongruous elements. In view of all the factors, the district court held that the defendants did not establish that the affirmative defense of fair use insulates them from liability for copyright infringement, and indicated that further development of the factual record was needed.

PATENTS

Appealability

Preston v. Nagel, 857 F.3d 1382, 122 U.S.P.Q.2d 1774 (Fed. Cir. 2017). The Federal Circuit was barred from considering an appeal of the district court’s remand order. The plaintiff brought various state law claims, and the defendant sought removal to federal court by counterclaiming under the Declaratory Judgment Act seeking a declaration of non-infringement of the plaintiff’s patents. The district court held that it lacked subject matter jurisdiction and 28 U.S.C. § 1447(d) barred the Federal Circuit from considering an appeal of that decision.

Arbitration

Evans v. Bldg. Materials Corp. of Am., 858 F.3d 1377, 122 U.S.P.Q.2d 1781 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s denial of a motion to dismiss or stay pending arbitration in a design-patent infringement case. A promotional agreement between the parties contained an arbitration clause covering claims “arising [there]under”. The district court found that the clause related only to the performance of the agreement, and not the making and selling of patented products.

Attorney Fees

Checkpoint Sys., Inc. v. All-Tag Sec. S.A., 858 F.3d 1371, 122 U.S.P.Q.2d 1786 (Fed. Cir. 2017). The Federal Circuit reversed the district court’s award of attorney fees, finding that the plaintiff’s infringement claims were reasonable and the suit was not brought in bad faith despite the plaintiff’s experts not evaluating the exact accused products.

Nantkwest, Inc. v. Matal, 860 F.3d 1352, 123 U.S.P.Q.2d 1257 (Fed. Cir. 2017). The Federal Circuit found that 35 U.S.C. § 145 permits the USPTO to recover attorney fees, whether the patentee chooses to appeal to the Eastern District of Virginia or the Federal Circuit.

Rothschild Connected Devices Innovations, LLC v. Guardian Prot. Servs., Inc., 858 F.3d 1383, 122 U.S.P.Q.2d 1801 (Fed. Cir. 2017). The Federal Circuit reversed and remanded the district court’s denial of the defendant’s motion for attorney fees. While the plaintiff withdrew its complaint under Rule 11’s safe harbor provision, the Federal Circuit found that the district court erred in failing to consider: (1) the plaintiff’s willful ignorance of anticipatory prior art; and (2) the plaintiff’s vexatious pattern of litigation involving the same patent.

Business Method Patent

Secure Axcess, LLC v. PNC Bank N.A., 859 F.3d 998, 123 U.S.P.Q.2d 1007 (U.S. 2017). The Federal Circuit denied the petitions for panel rehearing and for rehearing en banc. The Federal Circuit had ruled that the statutory definition of a covered business method patent required the patent to have a claim containing a financial activity element.

Declarations

EmeraChem Holdings, LLC v. Volkswagen Grp. of Am., Inc., 859 F.3d 1341, 123 U.S.P.Q.2d 1146 (Fed. Cir. 2017). The Federal Circuit affirmed-in-part, vacated-in-part, and remanded the case to the PTAB regarding its findings that certain claims were obvious. The patentee submitted an inventor’s declaration regarding a piece of prior art in an effort to be removed as 102(e) prior art. The Federal Circuit found that the inventor’s declaration did not include any context, explanation, or evidence to lend credence to the inventor’s bare assertion of inventorship.

Doctrine of Equivalents

Mylan Institutional LLC v. Aurobindo Pharma Ltd., 857 F.3d 858, 122 U.S.P.Q.2d 1621 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s grant of a preliminary injunction against Aurobindo and its Lymphazurin® product, which Mylan identified as infringing three patents. The Federal Circuit reached this conclusion by agreeing with the district court’s analysis of one patent, but found error in the district court’s analysis using the doctrine of equivalents in the other two patents.

Enablement

Storer v. Clark, 860 F.3d 1340, 123 U.S.P.Q.2d 1237 (Fed. Cir. 2017). The Federal Circuit found that substantial evidence supported the PTAB’s finding that the claimed chemical compounds were not enabled by the provisional application and the prior art.

Exceptional Case

AdjustaCam, LLC v. Newegg, Inc., 861 F.3d 1353, 123 U.S.P.Q.2d 1362 (Fed. Cir. 2017). The Federal Circuit reversed the district court’s denial of the defendant’s motion for attorneys’ fees. The district court abused its discretion by failing to follow the Federal Circuit’s mandate to evaluate the totality of the circumstances under Octane. The district court’s conclusion that AdjustaCam reasonably litigated the case was clearly erroneous.

NOVA Chems. Corp. v. Dow Chem. Co., 856 F.3d 1012, 122 U.S.P.Q.2d 1665 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s finding of exceptionality under 35 U.S.C. § 285. The Federal Circuit agreed that NOVA filing a separate equity action to set aside an earlier judgment could not form the sole basis for exceptionality. But, the Federal Circuit noted that the district court had also relied on NOVA’s questionable litigating position in finding the case exceptional under § 285.

Indefiniteness

One-E-Way’s, Inc. v. Int’l Trade Comm’n, 859 F.3d 1059, 123 U.S.P.Q.2d 1090 (Fed. Cir. 2017). The Federal Circuit reversed an ITC’s invalidity finding due to indefiniteness of the claim phrase “virtually free from interference.” The Federal Circuit found that a person of skill viewing the term in light of the intrinsic evidence would understand the term with reasonable certainty.

Initial Hearing En Banc

Cascades Projection LLC v. Epson Am., Inc., 122 U.S.P.Q.2d 1633 (Fed. Cir. 2017). The Federal Circuit declined to grant a petition seeking an initial en banc hearing on the issues of whether a patent is a public or a private right and whether the United States Constitution prohibits the PTAB from canceling patents using the inter partes review process established by the AIA.

Injunction

Sandoz Inc. v. Amgen Inc., 137 S.Ct. 1664, 122 U.S.P.Q.2d 1685 (Fed. Cir. 2017). The Supreme Court vacated-in-part, and reversed-in-part the Federal Circuit decision and remanded. The Supreme Court held that § 262(l)(2)(A) of the Biologics Price Competition and Innovation Act was not enforceable by injunction under federal law. On remand, the Supreme Court instructed the Federal Circuit to determine whether a state-law injunction was available.

Jurisdiction

Halo Elecs., Inc. v. Pulse Elecs., 857 F.3d 1347, 122 U.S.P.Q.2d 1715 (Fed. Cir. 2017). The Federal Circuit dismissed the appeal for lack of jurisdiction. There was no final decision because the district court had not determined or specified the means for determining the amount of prejudgment interest. And regardless of whether prejudgment interest is part of an accounting or not, the award of prejudgment interest itself in the present case was not final.

Means-Plus-Function/Obviousness

IPCom GmbH & Co. v. HTC Corp., 861 F.3d 1362, 123 U.S.P.Q.2d 1245 (Fed. Cir. 2017). The Federal Circuit vacated the PTAB’s claim construction of a means-plus-function claim limitation, but found that substantial evidence supported PTAB’s reasoning that a person skilled in the art would be motivated to combine four prior art references to render the claims obvious.

Obviousness

Millennium Pharm., Inc. v. Sandoz Inc., 862 F.3d 1356, 123 U.S.P.Q.2d 1329 (Fed. Cir. 2017). The Federal Circuit reversed the district court’s judgment of invalidity. The Federal Circuit found that the prior art contained no teaching or suggestion of the new compound, nor did Sandoz identify a reference or combination of references that showed or suggested a reason to make the claimed compound.

Outdry Techs. Corp. v. Geox S.P.A., 859 F.3d 1364, 123 U.S.P.Q.2d 1141 (Fed. Cir. 2017). The Federal Circuit affirmed the PTAB’s finding that claims would have been obvious. The Federal Circuit found that the PTAB clearly articulated the arguments on why a person of ordinary skill in the art would have been motivated to combine the references.

Rovalma, S.A. v. Bohler-Edelstahl GmbH & Co., 856 F.3d 1019, 122 U.S.P.Q.2d 1575 (Fed. Cir. 2017). The Federal Circuit vacated and remanded the PTAB’s decision finding the claims obvious. The Federal Circuit found the PTAB did not adequately explain the bases for its obviousness determinations. Specifically, the PTAB did not provide evidentiary basis for its determinations on why a person of ordinary skill in the art would have made certain changes.

Skky, Inc. v. MindGeek, S.A.R.L., 859 F.3d 1014, 123 U.S.P.Q.2d 1001 (U.S. 2017). The Federal Circuit affirmed the PTAB’s decision that the claims were obvious over the prior art.

On-Sale Bar

Helsinn Healthcare S.A. v. Teva Pharm. USA, Inc., 855 F.3d 1356, 123 U.S.P.Q.2d 1045 (Fed. Cir. 2017). The Federal Circuit reversed the district court’s decision that the asserted claims were not subject to the on-sale bar. The Federal Circuit noted that the AIA did not change the statutory meaning of on sale in the circumstances of the present case. Because the asserted claims were subject to an invalidating contract for sale prior to the critical date, the asserted claims were ready for patenting and therefore invalid under the on-sale bar.

Patent-Eligibility under § 101

Credit Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 123 U.S.P.Q.2d 1100 (Fed. Cir. 2017). The Federal Circuit affirmed the PTAB’s determination, in a Covered Business Method (CBM) review proceeding, that all challenged claims of the patent were directed to a patent-ineligible abstract idea under § 101. The patent includes both system and method claims directed to providing financing for allowing a customer to purchase a product selected from an inventory of products maintained by a dealer. The Federal Circuit determined that the PTAB’s decisions related to estoppel under § 325(e)(1) are appealable but that no such estoppel applies in a subsequent CBM proceeding to claims on which the PTAB declined to institute review in a prior CBM proceeding.

The Cleveland Clinic Found. v. True Health Diagnostics LLC, 859 F.3d 1352, 123 U.S.P.Q.2d 1081 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s dismissal of the patentee’s amended complaint for failure to state a claim on which relief could be granted, because three of the four patents were directed to patent-ineligible laws of nature under § 101, and the patentee failed to state a claim of contributory or induced infringement of the fourth patent. The patents disclose methods for detecting the enzyme myeloperoxidase (MPO) and correlating the results to a risk of cardiovascular disease. The body produces MPO in response to an artery being damaged or inflamed.

Patent Exhaustion

Impression Products, Inc. v. Lexmark Int’l, Inc., 137 S.Ct. 1523, 122 U.S.P.Q.2d 1605 (U.S. 2017). The Supreme Court reversed and remanded the Federal Circuit’s en banc opinion. The Supreme Court held that the patentee exhausted its patent rights in the cartridges it sold in the US. Therefore, even if the limitations in the contracts the patentee had with its customers were clear and enforceable under contract law, such limitations could not entitle the patentee to retain patent rights in items they chose to sell. The Supreme Court also held that a sale outside of the US also exhausts all patent rights.

Permanent Injunction

Genband US LLC v. Metaswitch Networks Corp., 861 F.3d 1378, 123 U.S.P.Q.2d 1290 (Fed. Cir. 2017). The Federal Circuit vacated and remanded the district court’s denial of a permanent injunction. While the patentee showed irreparable harm in lost sales, the district court held that the plaintiff did not demonstrate a “causal nexus” between the lost sales and infringing features. The Federal Circuit found that the district court’s analysis was too stringent.

Personal Jurisdiction

New World Int’l, Inc. v. Ford Glob. Techs., LLC, 859 F.3d 1032, 123 U.S.P.Q.2d 1154 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s dismissal of the action due to a lack of personal jurisdiction. For personal jurisdiction, a nonresident defendant must have certain minimum contacts with the forum state. The Federal Circuit found sending cease and desist letters is insufficient by itself to trigger a finding of personal jurisdiction. The accused infringer has not pointed to any additional activities by the patentee in the forum outside the license to give rise to personal jurisdiction.

NexLearn, LLC v. Allen Interactions, Inc., 859 F.3d 1371, 123 U.S.P.Q.2d 1275 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s dismissal for lack of personal jurisdiction. The Federal Circuit found that the defendant’s various contacts with Kansas prior to the patent issuing did not support specific jurisdiction. As to the defendant’s post-issuance contacts, the Federal Circuit found that the defendant’s interactive website, which listed Kansas in a drop-down menu for shipping, and mass email advertisements offering free trials was only an “attenuated affiliation” with the forum.

Prosecution Disclaimer

Aylus 2 Networks, Inc. v. Apple Inc., 856 F.3d 1353, 122 U.S.P.Q.2d 1672 (Fed. Cir. 2017). The Federal Circuit held that statements made by a patentee during inter partes review (IPR), including in a preliminary response, can result in disclaimer. During claim construction, the district court relied on the patent owner’s statements in a preliminary response in an earlier IPR. The Federal Circuit held that: (1) as a general rule of claim construction, courts are entitled to rely on a patentee’s statements in IPR proceedings, even statements made before institution; and (2) here, the patent owner’s statements amounted to clear and unmistakable disavowal of claim scope.

Subject Matter Jurisdiction

ArcelorMittal v. AK Steel Corp., 856 F.3d 1365, 122 U.S.P.Q.2d 1653 (Fed. Cir. 2017). The Federal Circuit affirmed the district court’s denial of ArcelorMittal’s motion to dismiss for lack of subject matter jurisdiction when the district court addressed the validity of two claims of one of its patents. ArcelorMittal argued it had not asserted the claims. The Federal Circuit pointed out, however, that ArcelorMittal had not disputed AK Steel’s argument that these claims remained available for assertion, and that ArcelorMittal had represented in an earlier Federal Circuit appeal that AK Steel might have infringed those claims. These claims were also not moot based on a covenant between the parties because ArcelorMittal had qualified its assurances leading up to the covenant, and had qualified language in the covenant itself, both actions of which suggested ArcelorMittal had failed to unconditionally assure AK Steel that ArcelorMittal would not assert these claims.

Venue

TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514, 122 U.S.P.Q.2d 1553 (U.S. 2017). The Supreme Court reversed and remanded the Federal Circuit’s decision refusing the petitioner’s writ of mandamus. The respondent sued the petitioner for patent infringement in the District Court of Delaware. The petitioner is organized and headquartered in Indiana, but ships product into Delaware. The Supreme Court found that the petitioner did not “reside” in Delaware as required by 28 U.S.C. § 1400(b). As applied to domestic corporations, residence in § 1400(b) refers only to the State of incorporation.

Written Description

Bd. of Trs. of Leland Stanford Junior Univ. v. Chinese Univ. of Hong Kong, 860 F.3d 1367, 123 U.S.P.Q.2d 1395 (Fed. Cir. 2017). The Federal Circuit vacated and remanded the orders finding the patentee’s claims unpatentable for lack of written description. The Federal Circuit found that the PTAB failed to consider whether a person of ordinary skill would have understood that the patent’s specification disclosed the subject matter, as opposed to whether the specification did not preclude the subject matter.

Cisco Sys., Inc. v. Cirrex Sys., LLC, 856 F.3d 997, 122 U.S.P.Q.2d 1595 (Fed. Cir. 2017). The Federal Circuit affirmed-in-part and reversed-in-part the PTAB’s finding that certain claims were patentable and that other claims lacked written description. The Federal Circuit corrected the PTAB’s construction of certain claim terms. The Federal Circuit then found the PTAB erred in finding written support in the specification for certain claims. The claims were added as part of re-examination and, therefore, could not be relied upon for support.

Rivera v. Int’l Trade Comm’n, 857 F.3d 1315, 123 U.S.P.Q.2d 1059 (Fed. Cir. 2017). The Federal Circuit affirmed the ITC’s decision of invalidity of selected claims for lack of written description. The specification did not provide support for the container in the claims.

TRADE SECRETS

Deluxe Fin. Servs., LLC v. Shaw, 2017 U.S. Dist. LEXIS 122795 (D. Minn. 2017). Deluxe and Harland Clarke are the two largest check printers in the United States. Shaw worked for Deluxe as a business development executive. In May 2014, Deluxe eliminated Shaw’s position. After the expiration of his 18-month non-competition agreement, Shaw joined Harland Clarke. Deluxe then sued Shaw and Harland Clarke for trade secret misappropriation. The issue before the Ohio Court was whether Harland Clarke could be sued under a theory of vicarious liability for Shaws’s alleged acts of trade secret misappropriation under the respondeat superior doctrine in the course and scope of his employment at Harland Clarke. In a case of first impression in Ohio, the district court affirmatively noted that the preemption provisions found in the UTSA do not displace vicarious liability because the respondeat superior doctrine is not an independent tort, civil claim or remedy.

Jouria v. CE Res., Inc., 123 U.S.P.Q.2d 1434, 2017 U.S. Dist. LEXIS 111698 (S.D. Fla. 2017). A tortious interference claim premised upon violating an NDA is preempted under the UTSA. The district court rejected the argument that a preemption determination is premature because there has been no determination of the trade secret misappropriation claim yet. Instead, the district court held that the trade secret claim is based on the confidential information protected by the NDA. The issue is whether the allegations of trade secret misappropriation alone comprise the underlying wrong. Here, the trade secret misappropriation alone comprises the underlying wrong and, thus, the tortious interference claim is preempted under the UTSA.

Space Data Corp. v. X, 123 U.S.P.Q.2d 1514, 2017 U.S. Dist. LEXIS 109842 (N.D. Cal. 2017). The district court addressed whether Space Data can bring a claim for trade secret misappropriation against Google under the Defend Trade Secrets Act of 2016 (DTSA) if the acts of misappropriation occurred prior to the enactment of the DTSA on May 11, 2016. Even assuming an allegation of continuing misuse, the district court dismissed Space Data’s DTSA claims because there are no facts of post-enactment use.

Wang v. Golf Tailor, LLC, 2017 U.S. Dist. LEXIS 103654 (N.D. Cal. 2017). The contours of Golf Tailor’s trade secrets, if any, were before the district court under a motion to dismiss a DTSA trade secret misappropriation claim. The record showed that any trade secrets that Golf Tailor had in their golf products were extinguished upon the public release of the products. It is axiomatic that information, systems, or methods disclosed or revealed by publicly-marketed products are not trade secrets. Since no trade secrets existed after the enactment of the DTSA on May 11, 2016, the DTSA claim was dismissed.

Waymo, LLC v. Uber Techs., Inc., 2017 U.S. Dist. LEXIS 89174 (N.D. Cal. 2017). Section 17200 of the California Code broadly proscribes acts of unfair competition. The issue is whether there is a cause of action for unfair competition for the misuse of information that does not rise to the level of a trade secret under the UTSA. The answer in California is no. The California UTSA supersedes claims based on the alleged misappropriation of non-trade secret information. Thus, Waymo’s Section 17200 claim against Uber was dismissed.

Wells Lamont Indus. Grp. LLC v. Mendoza, 2017 U.S. Dist. LEXIS 119854 (N.D. Ill. 2017). The issue before the court on a motion to dismiss is whether the plaintiff sufficiently identified enough information alleged to be a trade secret in the complaint. The district court noted that in alleging a violation of the Defend Trade Secrets Act of 2016 (DTSA), the plaintiff can plead the purported trade secret generally to avoid publicly disclosing the information in its court filings. The plaintiff alleged that the defendant was exposed to confidential information such as customer account information, product summaries, pricing sheets, product prototypes, product designs, and detailed sales reports. The district court found that these general trade secret allegations are sufficient for a DTSA public complaint.

TRADEMARKS

Disparaging Trademarks

Matal v. Tam, 137 S.Ct. 1744, 122 U.S.P.Q.2d 1757 (U.S. 2017). Simon Tam, the lead singer of the rock group “The Slants,” sought a federal trademark registration for the mark THE SLANTS for performance by a musical band. His intent in filing the application was to “reclaim” the term and drain its denigrating force as a derogatory term for Asian persons. The USPTO refused to register the mark on the ground that the mark was disparaging because a substantial composite of people would find the mark offensive. The decision was upheld by the TTAB. The en banc Federal Circuit vacated and remanded the TTAB’s holding, finding that the disparagement clause was facially unconstitutional.

The Supreme Court affirmed the Federal Circuit’s decision, holding that a prohibition on registration of disparaging trademarks in Lanham Act’s Section 2(a), 15 U.S.C. § 1052(a), violates the Free Speech Clause of the First Amendment. Specifically, the Court found that speech may not be banned on the ground that it expresses ideas that may offend. The Court rejected the government’s argument that the content of a registered trademark is government speech or that registered trademarks are a form of government subsidy. The Court also found that the disparagement clause’s restriction on speech did not serve a substantial interest and was not narrowly drawn and, thus, could not withstand constitutional muster. Thus, the Supreme Court affirmed the Federal Circuit’s finding that the disparagement clause violated the Free Speech Clause of the First Amendment and is, thus, unconstitutional.

Likelihood of Confusion/Fame of the Mark

Joseph Phelps Vineyards, LLC v. Fairmont Holdings, LLC, 857 F.3d 1323, 122 U.S.P.Q.2d 1733 (Fed. Cir. 2017). The Federal Circuit vacated the TTAB’s decision denying Joseph Phelps’s petition for cancellation of the mark ALEC BRADLEY STAR INSIGNIA, owned by Fairmont for cigars and cigar products. Joseph Phelps owns the mark INSIGNIA for wine, which the TTAB determined was not a famous mark. Thus, the TTAB did not give this factor any weight in its likelihood of confusion analysis.

The Federal Circuit determined that the TTAB erred by discounting the fame of the mark entirely in reaching a conclusion of no likelihood of confusion and that the TTAB had not properly applied the totality of the circumstances standard. The Federal Circuit commented that an all-or-nothing analysis was more appropriate for dilution, but in a likelihood of confusion analysis, fame is analyzed along a spectrum in the relevant market. Joseph Phelps provided evidence that in the wine market, particularly consumers of fine wine, its INSIGNIA mark was extensively recognized and had received numerous accolades. The Federal Circuit agreed that the evidence of fame of Joseph Phelps’ mark should have been considered and remanded the case.

Likelihood of Confusion/Prior Registration

In re USA Warriors Ice Hockey Program, Inc., 122 U.S.P.Q.2d 1790 (TTAB 2017). USA Warriors appealed the refusal of registration of its mark USA WARRIORS ICE HOCKEY NONE TOUGHER and design for “arranging and conducting ice hockey programs for injured and disabled members and veterans.” The TTAB affirmed the refusal of USA Warriors mark due to a likelihood of confusion with two prior registrations that included the mark USA HOCKEY and design for hockey-related entertainment services. The USA Warriors also owned a prior registration for a mark similar to its USA WARRIORS ICE HOCKEY NONE TOUGHER and design mark, which displayed a different design of a hockey player and which included a color claim.

According to USA Warriors, the refusal was improper, as prior TTAB precedent had reversed a likelihood of confusion refusal where a prior registration for a substantially similar mark (by the same owner) was used to overcome a likelihood of confusion refusal. In that case, the TTAB had determined that the coexistence of the applicant’s applied-for mark was substantially similar to the applicant’s prior registration, which had coexisted with the cited registration for over five years.

The TTAB, however, noted a key factual distinction from its earlier decision. Here, USA Warrior’s existing registration had been coexisting with the cited registrations for less than five years, and this was significant as USA Warrior’s existing registration was still subject to a cancellation action by the registrant of the cited marks based on a likelihood of confusion. USA Warriors indicated that the owner of the cited registrations was aware of USA Warrior’s use of the mark and had displayed USA Warrior’s prior registration on its web site. However, the evidence presented by USA Warrior was not sufficient without an actual written consent from the owner of the cited registrations.

The other factors, including the similarity of the marks and the nature of the services, weighed in favor of the registrant where the marks were similar in terms of appearance, sound, connotation and commercial impression, and USA Warrior’s more limited services were subsumed within the registrant’s broader services. Thus, the TTAB affirmed the refusal to register the USA WARRIORS ICE HOCKEY NONE TOUGHER mark.

Trademark Ownership

Lyons v. Am. College of Veterinary Sports Med. & Rehab., 859 F.3d 1023, 123 U.S.P.Q.2d 1024 (Fed. Cir. 2017). The Federal Circuit affirmed the TTAB decision to cancel the registration for Lyons’s mark THE AMERICAN COLLEGE OF VETERINARY SPORTS MEDICINE AND REHABILITATION (the “Mark”) on the grounds that she did not own the mark. Between 1999 and 2002, Lyons and five other veterinarians used the Mark as the intended name of their veterinary specialist organization (VSO). In 2004, Lyons was dismissed from the organizing committee of the VSO. Later, Lyons sought registration of the Mark for veterinary education services based on an assertion of a bona fide intent to use the Mark in commerce. After amending the application to the Supplemental Register, the Mark was registered in 2006. In 2011, the American College of Veterinary Sports Medicine and Rehabilitation (the College)—formerly the VSO—petitioned to cancel Lyons’s registration on grounds of priority of use, likelihood of confusion, misrepresentation of source, and fraud. The TTAB concluded that all “indicia of ownership” pointed to the College, rather than to Lyons and, as such, the registration of the Mark was void ab initio.

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.