August 05, 2019 Decisions in Brief

Decisions in Brief

John C. Gatz

©2019. Published in Landslide, Vol. 11, No. 6, July/August 2019, 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

Court Can’t Picture Dismissing Copyright Case

Michael Grecco Productions, Inc. v. Alamy, Inc., No. 18-CV-3260, 2019 WL 1284256, 2019 U.S. Dist. LEXIS 46185 (E.D.N.Y. Mar. 12, 2019). Grecco is a photography studio that entered into a licensing agreement where Alamy had the ability to sell some of Grecco’s copyrighted works. The licensing agreement terminated in 2013, and any rights to continue to sell copyrighted works under the licensing agreement terminated in June 2015. Alamy continued to sell copyrighted works in 2016. Grecco sued Alamy for copyright infringement and for violating the Digital Millennium Copyright Act (DMCA).

The district court denied Alamy’s motion to dismiss. Alamy first argued that Grecco had named the wrong defendant and that Alamy’s U.K. parent company was the proper defendant. The court found that this argument was premature as part of a motion to dismiss, but that discovery may show that Alamy was in fact the wrong defendant. However, as the complaint alleged that the Alamy website hosted and sold Grecco’s copyrighted photos, the copyright infringement allegations of the complaint were sufficient to survive a motion to dismiss.

Next, the district court evaluated the DMCA claim. The court found that Grecco had sufficiently alleged a violation of the DMCA based on Alamy providing false copyright management information (CMI) by placing watermarks on the digital copies of the photos. The court noted that the complaint sufficiently alleged that Alamy placed CMI on the photos by providing watermarks on the photos, that Alamy knew that it did not hold the copyright to the photos, and that Alamy tried to cause or conceal copyright infringement. Therefore, the district court denied Alamy’s motion to dismiss the DMCA count.

Registration Required

Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881, 129 U.S.P.Q.2d 1453 (2019). Plaintiff Fourth Estate, a news organization, licensed works to Wall-Street.com, a news website. Fourth Estate sued Wall-Street.com and its owner for copyright infringement of news articles that Wall-Street.com failed to remove from its website after canceling the parties’ license agreement. Fourth Estate had filed applications to register the articles with the Copyright Office, but the Register of Copyrights had not acted on those applications.

Fourth Estate advanced the “application approach” to § 411(a) of the Copyright Act, arguing that registration occurs when a copyright owner submits a proper application for registration. Wall-Street.com advocated the “registration approach,” urging that registration occurs only when the Copyright Office grants registration of a copyright. The U.S. Supreme Court held that the registration approach reflects the only satisfactory reading of § 411(a), which states that “no civil action for infringement of the copyright in any United States work shall be instituted until . . . registration of the copyright claim has been made in accordance with this title.” The Supreme Court thus held that a copyright claimant may commence an infringement suit only after the Copyright Office registers a copyright. The Supreme Court noted that, upon registration of the copyright, the owner can recover for infringement that occurred both before and after registration.

Walking Dead Case Survives Motion to Dismiss

Smith v. AMC Networks, Inc., 129 U.S.P.Q.2d 1366 (N.D. Cal. 2019). In 2007 and 2008, plaintiff Smith authored and coauthored a series of zombie-themed comics called Dead Ahead that was published by Image Comics. He also hired David Alpert as his agent to represent him in contacts with movie and TV studios. AMC started airing the zombie-themed TV show The Walking Dead in 2010, and in 2015 launched a spinoff called Fear the Walking Dead. Alpert was credited as an executive producer on both shows. Smith argued that elements of Season 2 of Fear the Walking Dead has similarities to Dead Ahead. Smith sued for copyright infringement, and the defendants moved to dismiss.

The district court identified 11 alleged plot similarities between Dead Ahead and Fear the Walking Dead in Season 2, including that both works begin on a similarly sized boat located in the Pacific Ocean, off the coast of Southern California, with eight individuals, and that the survivors are initially anxious to evade military ships while developing a plan to head south because of concerted military action against civilians to move humans away from the coast and to herd them inland so that the military can use or kill them. The court also identified five groups of character and dialogue similarities, and three theme similarities.

In addressing the copyright claim, the district court attempted to apply the extrinsic test for substantial similarity. However, the court determined that it could not conduct the analysis to separate the unprotectable elements from the protectable elements in Dead Ahead and thus denied the defendants’ motion to dismiss on the copyright claim. A motion to dismiss a claim of fiduciary duty was also dismissed.

Patents

Attorney Fees

Princeton Digital Image Corp. v. Office Depot Inc., 913 F.3d 1342, 129 U.S.P.Q.2d 1284 (Fed. Cir. 2019). The Federal Circuit dismissed an appeal from the district court ruling on attorney fees under 35 U.S.C. § 285, Federal Rule of Civil Procedure 11 sanctions, and other monetary sanctions for lack of jurisdiction. Specifically, the district court’s judgment was not yet final, as it still needed to make a final disposition of a breach of contract claim between the parties.

Claim Construction

Continental Circuits LLC v. Intel Corp., 915 F.3d 788, 129 U.S.P.Q.2d 1385 (Fed. Cir. 2019). The Federal Circuit vacated the judgment of noninfringement and remanded for further proceedings due to errors in the claim construction. The claim language did not include any recitation of the limiting term. The specification did not identify any support to the limiting term. The Federal Circuit also found no disavowal in the expert’s declaration that the applicants relied on to respond to indefiniteness and written description rejections. The Federal Circuit noted that describing a claim term to overcome such rejections is not the same as clearly disavowing claim scope.

Forest Laboratories, LLC v. Sigmapharm Laboratories, LLC, 918 F.3d 928, 129 U.S.P.Q.2d 1557 (Fed. Cir. 2019). The district court held that selected claims were not invalid and that other selected claims were not infringed. The Federal Circuit vacated and remanded both the district’s court’s validity determinations and the infringement findings based on an incorrect claim construction.

Disqualification/Conflict of Interest

Dr. Falk Pharma GmbH v. GeneriCo, LLC, 916 F.3d 975, 129 U.S.P.Q.2d 1466 (Fed. Cir. 2019). The Federal Circuit granted motions to disqualify Katten Muchin as counsel for Mylan in three appeals because Katten had an ongoing attorney-client relationship with the opposing parties, which constituted a concurrent conflict of interest. Katten initially represented Valeant in trademark matters when Katten signed an engagement letter with Bausch & Lomb, a subsidiary of Valeant, that broadly defined Katten’s client as any Valeant entity. Katten hired two attorneys from Alston & Bird who represented Mylan at various stages of the cases under appeal in patent litigation matters. The Federal Circuit found that Katten had violated Rule 1.7 of the Model Rules of Professional Conduct because of the terms of the engagement letter and because Valeant demonstrated interrelatedness between its affiliates. The Federal Circuit found that the engagement letter in combination with Valeant’s “Outside Counsel Guidelines” and the general and broad language contained therein warranted a finding of a concurrent conflict of interest. Moreover, the Federal Circuit found that absent the engagement letter evidence, Valeant had established that Valeant and Bausch & Lomb share a high degree of operational commonality and are financially interdependent such that Katten had violated Rule 1.7 by representing Mylan in direct opposition to Valeant and its affiliates.

Experimental Exception

Barry v. Medtronic, Inc., 914 F.3d 1310, 129 U.S.P.Q.2d 1248 (Fed. Cir. 2019). The Federal Circuit upheld the jury verdict of induced infringement, finding that the asserted method patents were not invalid under 35 U.S.C. § 102(b) because the invention was not ready for patenting when it was first used in public, and such use fell under the experimental use exception. While the patentee performed surgeries practicing the claimed methods before the critical § 102(b) date, the patentee could not confirm that the methods worked for their intended purpose until follow-up appointments months later.

Inherent Disclosure in Prior Art

PersonalWeb Technologies, LLC v. Apple, Inc., 917 F.3d 1376, 129 U.S.P.Q.2d 1485 (Fed. Cir. 2019). The Federal Circuit reversed the final written decision of the Patent Trial and Appeal Board (PTAB) in an inter partes review (IPR) proceeding concluding that five claims of a patent were obvious in view of two references. The PTAB found that one of the two prior art references inherently taught “comparing a Binary Object Identifier to a plurality of Binary Object Identifiers”—thus meeting a key element of the challenged claims. The Federal Circuit, however, found that this conclusion lacked substantial evidence. Although the Federal Circuit found that this disclosure of the element in question was certainly possible, “mere possibility is not enough” to support a finding of inherency. Therefore, the Federal Circuit reversed the decision.

Inventive Entity/Anticipation

Duncan Parking Technologies, Inc. v. IPS Group, Inc., 914 F.3d 1347, 129 U.S.P.Q.2d 1311 (Fed. Cir. 2019). The Federal Circuit reversed the PTAB’s decision that certain claims were not unpatentable, affirmed the district court’s granting of summary judgment of noninfringement of one patent, and reversed the district court’s granting of summary judgment of noninfringement of the second patent. The Federal Circuit found one patent to be prior art under 35 U.S.C. § 102(e) because it was by an inventive entity different than the other patent (joint inventors vs. single inventor). Regarding infringement for one patent, the Federal Circuit upheld the noninfringement summary judgment finding because the patentee’s doctrine of equivalents argument required vitiation of a claim limitation. Regarding infringement for the second patent, the Federal Circuit reversed the district court’s finding because the claim interpretation would render the preferred embodiment to be outside the claim language.

Inventorship

CODA Development S.R.O. v. Goodyear Tire & Rubber Co., 916 F.3d 1350, 129 U.S.P.Q.2d 1413 (Fed. Cir. 2019). The Federal Circuit vacated and remanded the district court’s dismissal of the complaint under Federal Rule of Civil Procedure 12(b)(6). The Federal Circuit found that the district court improperly took judicial notice of disputed facts. Accepting the complaint’s well-pleaded factual allegations as true and drawing all reasonable inferences in the plaintiffs’ favor, the Federal Circuit concluded that the plaintiffs’ claims for correction of inventorship were plausible. The Federal Circuit was aware of no reason why the plaintiffs could not be permitted to file a proposed amended complaint on remand.

Obviousness

Mylan Pharmaceuticals Inc. v. Research Corp. Technologies, Inc., 914 F.3d 1366, 129 U.S.P.Q.2d 1325 (Fed. Cir. 2019). The Federal Circuit affirmed the PTAB’s finding that the claims were not unpatentable. The Federal Circuit initially found that the appellants had standing to appeal because they were joined as petitioners in the original IPR. The Federal Circuit found that the appellants failed to establish a motivation to modify the compound as done in the patent and, therefore, failed to establish the claims as being obvious.

Patent Term Adjustment (PTA)

Supernus Pharmaceuticals, Inc. v. Iancu, 913 F.3d 1351, 129 U.S.P.Q.2d 1240 (Fed. Cir. 2019). The Federal Circuit held that the U.S. Patent and Trademark Office’s (USPTO’s) PTA determination was contrary to the PTA statute. The USPTO assessed a period of the applicant’s delay between the filing of a request for continued examination and an information disclosure statement disclosing a notice of opposition in a European counterpart application. Because the applicant could not have undertaken any efforts to advance prosecution during this period, the Federal Circuit found that the PTA reduction was contrary to the statute’s requirement that any reduction must be “equal to” the time in which the applicant failed to take reasonable efforts.

Patent Venue

In re Google LLC, 914 F.3d 1377, 129 U.S.P.Q.2d 1307 (Fed. Cir. 2019). Judge Reyna dissented from the Federal Circuit’s decision not to address en banc whether a defendant’s servers in third-party facilities are sufficient to establish a regular and established place of business under the patent venue statute and Cray. Judge Reyna noted the uncertainty surrounding venue post-Cray, and suggested that the servers may satisfy the requirements for venue.

Standing

Momenta Pharmaceuticals, Inc. v. Bristol-Myers Squibb Co., 915 F.3d 764, 129 U.S.P.Q.2d 1335 (Fed. Cir. 2019). The Federal Circuit dismissed the appeal from the PTAB for lack of standing and mootness. The Federal Circuit found that because the appellant had abandoned its development of a potentially infringing product, the appellant no longer had standing to appeal the PTAB’s decision. It did not matter that the appellant had standing when it initiated the IPR.

Subject Matter Eligibility

Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC, 915 F.3d 743, 129 U.S.P.Q.2d 1339 (Fed. Cir. 2019). The Federal Circuit upheld the district court’s finding that the claims were directed to natural law and lacked an inventive concept. The Federal Circuit found that the claimed steps were directed to the naturally occurring relationship between autoantibodies and associated diseases. The additional steps were simply previously known immunoassay techniques. The Federal Circuit further found steps of the claims not drawn to ineligible subject matter, whether viewed individually or as an ordered combination, only required standard techniques to be applied in a standard way.

Natural Alternatives International, Inc. v. Creative Compounds, LLC, 918 F.3d 1338, 129 U.S.P.Q.2d 1571 (Fed. Cir. 2019). The Federal Circuit reversed the district court’s judgment on the pleadings that claims from six separate patents were directed to ineligible subject matter. Applying the plaintiff-appellant’s claim constructions, and considering the same in view of the well-pleaded factual allegations in the complaint together with all reasonable inferences, the Federal Circuit held that the complaint plausibly established that the representative claims were patent eligible. There were three sets of claims at issue: the method claims, the product claims, and the manufacturing claims. Regarding the method claims, the Federal Circuit found that the claims were treatment claims and as such were patent eligible. Because the method claims fit this treatment claim test, they were distinguishable from the U.S. Supreme Court case of Mayo v. Prometheus. Regarding the product claims directed to an undisputed natural product (beta-alanine), the Federal Circuit held that the claims were not directed to the natural product but instead were directed to a specific composition of matter made from the natural product. Thus, the claimed compositions were to specific treatment formulations that incorporate natural products. And regarding the manufacturing claims, the Federal Circuit held that the claims were eligible because they were an application of the natural law and new use of the claimed product.

University of Florida Research Foundation, Inc. v. General Electric Co., 916 F.3d 1363, 129 U.S.P.Q.2d 1409 (Fed. Cir. 2019). The Federal Circuit affirmed the district court’s determination that the claims were directed to an abstract idea and did not recite an inventive concept. The Federal Circuit held that a subject matter eligibility challenge is a defense to a claim of infringement. As such, by bringing its claim of infringement, UFRF waived its sovereign immunity as to GE’s eligibility challenge. The Federal Circuit held that the patent sought to automate pen and paper methodologies and thus was directed to an abstract idea. Finding no specific improvement to the way computers operate in the claims, the Federal Circuit held at Alice step one that the claims were directed to the abstract idea of collecting, analyzing, manipulating, and displaying data. At Alice step two, the Federal Circuit found that the patent proposed using a general purpose computer to carry out the claims, and thus the claims were directed to ineligible subject matter.

Written Description

CenTrak, Inc. v. Sonitor Technologies, Inc., 915 F.3d 1360, 129 U.S.P.Q.2d 1397 (Fed. Cir. 2019). The Federal Circuit reversed the district court’s grant of summary judgment of invalidity and noninfringement, and remanded. The Federal Circuit found that genuine issues of material fact remained as to whether disclosing the implementation details that the district court identified were necessary to satisfy the written description requirement. The Federal Circuit also found that the specification’s primary description of a system with infrared components did not necessarily mean that a system with ultrasonic components was not constructively enabled. Regarding infringement, the Federal Circuit found that a final assembler can be liable for making an infringing combination even if it does not make each individual component element.

Trade Secrets

API Americas Inc. v. Miller, No. 2:17-cv-02617-HLT, 2019 WL 1506955, 2019 U.S.P.Q.2d 122240 (D. Kan. Apr. 5, 2019). On a motion for summary judgment, the district court found the defendant liable for trade secret misappropriation under the Defend Trade Secrets Act and the Kansas Uniform Trade Secrets Act, and granted summary judgment for the plaintiff. The plaintiff argued for an award of attorney fees because the defendant’s misappropriation was willful and malicious. The district court decided that whether the defendant acted willfully and maliciously is a question of fact for the jury and denied the entry of summary judgment for attorney fees and costs.

CH Bus Sales, Inc. v. Geiger, No. 18-cv-2444 (SRN/KMM), 2019 WL 1282110, 2019 U.S. Dist. LEXIS 46093 (D. Minn. Mar. 20, 2019). The district court dismissed the plaintiff’s complaint for trade secret misappropriation because there was no allegation of actual misappropriation. Mere fears that a company’s former employee might have taken (completely undefined) trade secrets with him on his way out the door, and that the employee’s new employer might use these trade secrets to its advantage at some unknown future date, do not give rise to a plausible claim of trade secret misappropriation.

Design Nine, Inc. v. Arch Rail Group, LLC, No. 4:18-CV-428-CDP, 2019 WL 1326677, 2019 U.S.P.Q.2d 102696 (E.D. Mo. Mar. 25, 2019). The plaintiff is an engineering firm that provides a variety of engineering services to railroads. The plaintiff alleged that the defendants misappropriated a proprietary spreadsheet with formulas and a measuring device used to determine the dimensions for replacing railroad bridge ties. The district court rejected the defendants’ argument that these two alleged trade secrets were not pleaded with sufficient particularity. The district court noted that the plaintiff’s complaint described how the bridge survey device works and why these measurements have economic value. The district court denied the motion to dismiss. A trade secret may be alleged broadly during the pleadings stage as there is no specific requirement for particularity of trade secret allegations.

Liion, LLC v. Vertiv Group Corp., No. 18 C 6133, 2019 WL 1281977, 2019 U.S. Dist. LEXIS 45707 (N.D. Ill. Mar. 20, 2019). The defendants’ motion to dismiss the trade secret misappropriation claim was denied. Whether something is a trade secret is one of the most elusive and difficult concepts in the law to define, so the question whether certain information constitutes a trade secret ordinarily is best resolved by a fact finder after full presentation of evidence from each side.

Radiant Global Logistics, Inc. v. Furstenau, No. 18-cv-12783, 2019 WL 697004, 2019 U.S. Dist. LEXIS 26611 (E.D. Mich. Feb. 20, 2019). During discovery, Radiant discovered that Furstenau took highly confidential spreadsheets that showed Radiant’s top customers and other confidential financial data. There were over 300 Radiant e-mails in Furstenau’s personal e-mail account. After finding a complete lack of candor in Furstenau’s testimony, and inherently incredible testimony, the district court granted a preliminary injunction to prevent the threatened misappropriation of trade secrets by Furstenau.

Trademarks

Cancellation Proceedings

Coffee Studio LLC v. Reign LLC, 129 U.S.P.Q.2d 1480 (T.T.A.B. 2019). The petitioner moved to strike the respondent’s motion seeking dismissal of a petition for cancellation for lack of service. The Trademark Trial and Appeal Board (TTAB) granted the motion, finding that the e-mail notice automatically generated and sent to the e-mail addresses of record by the TTAB’s electronic filing system did satisfy the respondent’s service requirement of the Trademark Rules. The petitioner’s motion to reopen its testimony period was granted, since the petitioner showed excusable neglect and there was no evidence of prejudice to the respondent.

The petitioner did not file any evidence or introduce any testimony during the testimony period of the cancellation proceedings. As such, the respondent filed a motion seeking dismissal of the petition to cancel with prejudice. The petitioner opposed the motion and moved (1) to strike the motion because it was improperly served, and (2) to reopen the petitioner’s testimony period because the petitioner’s failure to timely file evidence was excusable.

The TTAB held that, contrary to the respondent’s assertions, the automatically generated ESTTA filing notice did not constitute service and, as such, did not relieve the respondent’s obligation to serve a copy of the filing to the petitioner, pursuant to Trademark Rule 2.119(b). The TTAB found that there was no evidence of prejudice to the respondent and no bad faith by the petitioner. The TTAB also found that that the delay caused by the petitioner’s failure to offer testimony or evidence during the testimony period was minimal and that the petitioner attempted to mitigate the delay by submitting its proposed testimonial affidavits and notices of reliance when it moved to reopen testimony. Finally, the TTAB found that the petitioner’s failure to take action prior to the close of the testimony period constituted excusable delay in view of the petitioner’s attorney’s intermittent hospitalization with a serious medical condition, leaving only an inexperienced first-year associate to take over her duties in her absence. The TTAB noted, however, that it expected the petitioner to make preparations for improved staff coverage in the event of another illness. In view of these findings, the TTAB granted the petitioner’s motion to reopen testimony.

Failure to Function/Informational Matter

In re DePorter, 129 U.S.P.Q.2d 1298 (T.T.A.B. 2019). The applicant, Greg DePorter, sought to register the mark #MAGICNUMBER108 for shirts and T-shirts. The application was refused because the mark failed to function as a trademark. Specifically, the examining attorney asserted that #MAGICNUMBER108 identified information about the Chicago Cubs’ 2016 World Series success. Due to the widespread use of #MAGICNUMBER108 to indicate affiliation with the Chicago Cubs baseball team and its World Series win after 108 years, the mark would not be perceived as a source identifier when used in connection with the applied-for goods. The TTAB agreed that the evidence established that the #MAGICNUMBER108 was perceived by consumers as a widely used message that conveys information about the Chicago Cubs baseball team.

Geographically Descriptive

In re Broken Arrow Beef & Provision, LLC, 129 U.S.P.Q.2d 1431 (T.T.A.B. 2019). Broken Arrow filed an application for BA BEEF for beef and other meats, nuts, and fish. The application was refused under 15 U.S.C. § 1052(e)(2) on the grounds that the mark was primarily geographically descriptive of the applied-for goods. Applying the factors to determine whether a mark is primarily geographically descriptive, the TTAB found that the examining attorney failed to establish that “BA” is the name of a place known generally to the beef-purchasing public.

In particular, despite the evidence of record, which included more than 50 different websites, articles, search results, and social media pages in which “BA” was used to represent Broken Arrow, Oklahoma, the TTAB determined that beef consumers would not likely associate “BA” with any geographic location, including Broken Arrow. The TTAB found that while the evidence indicated that local inhabitants in and around Broken Arrow would understand “BA” as an abbreviation for Broken Arrow, the relevant issue was whether beef consumers throughout the United States would understand that “BA” relates to a geographic place. The TTAB found that the record failed to establish this factor, and thus reversed the refusal to register.

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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 Rosario Law P.C.; Michael N. Spink, Brinks, Hofer, Gilson & Lione; and 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, Harness, Dickey & Pierce; and Angelo Christopher, Nixon Peabody LLP. Trade Secrets: R. Mark Halligan, FisherBroyles LLP. Trademarks: Elizabeth W. Baio, Jenni Wiser, and Alexis Grilli, Nixon Peabody LLP; and Amy L. Sierocki, Blumenfield & Shereff LLP.