Decisions in Brief

Counsel for EC Design sent a letter to Craft Smith in November 2016 alleging copyright and trade dress infringement. Craft Smith sued for declaratory judgment of no copyright or trade dress infringement. The district court found there to be no protectable expression in EC Design’s asserted compilation, and stated that while the LifePlanner could feasibly be conceptualized as a creative process for organizing one’s life, these processes are also outside the scope of § 102 and thus unprotectable. Applying a detailed comparison of the works, the district court found Craft Smith and Michaels to be entitled to summary judgment of no copyright infringement. The district court found similarly on the trade dress claim.

Cropping Photo Not Transformative Fair Use

Brammer v. Violent Hues Productions, LLC, 922 F.3d 255, 2019 U.S.P.Q.2d 149755 (4th Cir. 2019). Brammer is a photographer who took a photograph of the Adams Morgan neighborhood of Washington, D.C., at night. Brammer published a version of this photo on his website and on Flickr. Violent Hues is a film production company that organized a film and music festival in Virginia and created a website to provide information to potential attendees. The Violent Hues website included a cropped version of Brammer’s photo to show various tourist attractions in Virginia and Washington, D.C. Brammer sued Violent Hues for copyright infringement. The district court granted summary judgment in favor of Violent Hues, finding that the use of the photo constituted fair use. Brammer appealed.

The Fourth Circuit reversed. The court evaluated the four fair use factors found in 17 U.S.C. § 107. It found that Violent Hues had not altered the purpose and character of the work. Violent Hues simply cropped the photo so that it matched the size of other photos used on the website, and captioned the photo. Violent Hues argued that the change in context transformed the work, but the Fourth Circuit disagreed. The court concluded that the use was commercial, and that any good faith use of the photo by Violent Hues was not relevant to a fair use analysis. The court further found that Brammer was entitled to “thick” copyright protection based on the artistic content of the photo. It determined that Violent Hues used the heart of the work, and therefore this factor weighed against fair use. Finally, the court ruled that the effect of the use by Violent Hues would harm the market for the photo. Finding that none of the factors weighed in favor of Violent Hues, the Fourth Circuit reversed the judgment.

Home Photo Usage by Zillow Clarified

VHT, Inc. v. Zillow Group, Inc., 918 F.3d 723, 2019 U.S.P.Q.2d 88604 (9th Cir. 2019). Defendant Zillow allows a user to see photographs of a wide range of properties for sale or rent. Thousands of those copyrighted photos come from plaintiff VHT, the largest professional real estate photography studio in the country. Zillow uses the photos on two parts of its website: the “Listing Platform” (the core of the website) and the “Digs” (select artfully designed rooms). In 2015, VHT sued Zillow for copyright infringement, alleging that Zillow’s use of photos on the Listing Platform and Digs exceeded the scope of VHT’s licenses to brokers, agents, and listing services who provided those photos to Zillow. The district court granted partial summary judgment in favor of Zillow on direct infringement for lack of volitional conduct because it used moderators to employ a copyright protective rubric, but later a jury found in favor of VHT on most remaining claims.

On appeal, the Ninth Circuit affirmed the district court’s summary judgment in favor of Zillow on direct infringement of the Listing Platform photos, noting that VHT failed to provide evidence showing Zillow exercised control (other than by general operation of its website); selected any material for upload, download, transmission, or storage; or instigated any copying, storage, or distribution of these photos. With respect to direct liability on the Digs photos, the Ninth Circuit affirmed the district court’s grant of judgment notwithstanding the verdict on 22,109 nondisplayed photos and 2,093 displayed but not searchable photos. However, the Ninth Circuit upheld summary judgment in favor of VHT on 3,921 displayed, searchable photos, and rejected Zillow’s fair use defense. The court noted that making the photos searchable did not change their primary purpose or sufficiently transform them, and that the works were highly creative and Zillow’s use volitionally exceeded the license rights. The ruling on willfulness was vacated and remanded to the district court.

Patents

Antedating a Reference

ATI Technologies ULC v. Iancu, 920 F.3d 1362, 2019 U.S.P.Q.2d 129188 (Fed. Cir. 2019). The Federal Circuit reversed the U.S. Patent and Trademark Office’s (USPTO’s) decisions of unpatentability. The USPTO found the patents invalid based on three prior art references despite the patentee’s evidence of prior conception, reduction to practice, and diligence. The legal standard for diligence is “reasonably continuous diligence,” not “continuous reasonable diligence.” The Federal Circuit found the evidence supported a finding that “reasonably continuous diligence” was met.

Attorney Fees

ThermoLife International LLC v. GNC Corp., 922 F.3d 1347, 2019 U.S.P.Q.2d 155708 (Fed. Cir. 2019). The Federal Circuit affirmed the district court’s determination that the cases were exceptional with an award of fees. The Federal Circuit found no abuse of discretion in the district court’s determination of exceptionality based on the plaintiffs’ inadequate presuit investigation of infringement in this and related cases.

Claim Construction

Amgen Inc. v. Sandoz Inc., 923 F.3d 1023, 2019 U.S.P.Q.2d 165565 (Fed. Cir. 2019). The Federal Circuit affirmed the district court’s claim construction and summary judgment of noninfringement. The Federal Circuit found that the claimed washing and eluting steps require discrete solutions. It was undisputed that Sandoz’s process only used one step and one solution, so it could not literally infringe the claim. Thus, the Federal Circuit agreed with Sandoz and concluded that the district court correctly held that Sandoz’s process did not function in the same way as the claimed process and therefore did not infringe.

BTG International Ltd. v. Amneal Pharmaceuticals LLC, 923 F.3d 1063, 2019 U.S.P.Q.2d 173742 (Fed. Cir. 2019). The Federal Circuit affirmed the Patent Trial and Appeal Board’s (PTAB’s) obviousness determination in light of its claim construction. The Federal Circuit found that substantial evidence supported the PTAB’s finding that a skilled person would have a reasonable expectation of success in combining the prior art references to read on the asserted claims. Thus, the claims are unpatentable as obvious.

E.I. du Pont de Nemours & Co. v. Unifrax I LLC, 921 F.3d 1060, 2019 U.S.P.Q.2d 136370 (Fed. Cir. 2019). The Federal Circuit upheld the district court’s finding that the patent was infringed and not invalid. The Federal Circuit agreed with the district court’s claim construction, which came directly from language in the parent patent. The Federal Circuit found that when familial patents inform the construction of a claim term, they are appropriately treated as intrinsic evidence.

Covered Business Method (CBM) Patent

Trading Technologies International, Inc. v. IBG LLC, 921 F.3d 1378, 2019 U.S.P.Q.2d 153376 (Fed. Cir. 2019). The Federal Circuit affirmed the PTAB’s holding that the patent claims were both eligible for CBM review and ineligible under 35 U.S.C. § 101. The claims are directed to providing information to traders using a generic computer, which the Federal Circuit found to be an abstract idea. The Federal Circuit found nothing in the claim elements that supplies an inventive concept.

Inter Partes Review (IPR)

Arctic Cat Inc. v. GEP Power Products, Inc., 919 F.3d 1320, 2019 U.S.P.Q.2d 104060 (Fed. Cir. 2019). The Federal Circuit affirmed the PTAB’s determination that the claim preambles were not limiting because the claims were structurally complete and the preambles merely recited an intended use. The PTAB erred, however, in finding that a reference was prior art under § 102(e) where the inventor introduced evidence that the invention antedated the reference.

Invalidity

Endo Pharmaceuticals Inc. v. Actavis LLC, 922 F.3d 1365, 2019 U.S.P.Q.2d 160129 (Fed. Cir. 2019). The Federal Circuit affirmed the district court’s judgment of infringement. The Federal Circuit found that intrinsic and extrinsic evidence supported the district court’s construction. The Federal Circuit also found no clear error in the district court’s finding that a skilled person lacked a reasonable expectation of success, such that the asserted claims would not have been obvious.

Omega Patents, LLC v. CalAmp Corp., 920 F.3d 1337, 2019 U.S.P.Q.2d 123680 (Fed. Cir. 2019). The Federal Circuit affirmed the judgment of no invalidity and affirmed in part, reversed in part, vacated in part, and remanded the judgment as to direct infringement. Regarding invalidity, the Federal Circuit found that the accused infringer did not admit evidence of or specifically identify relevant prior art based on the Markman hearing.

Obviousness

In re Conrad, 759 F. App’x 982, 2019 U.S.P.Q.2d 99703 (Fed. Cir. 2019). Affirming the PTAB’s determination of obviousness, the Federal Circuit reaffirmed the principle that the motivation for a person of ordinary skill in the art to combine prior art references need not be the same motivation as the inventor’s.

Neptune Generics, LLC v. Eli Lilly & Co., 921 F.3d 1372, 2019 U.S.P.Q.2d 149305 (Fed. Cir. 2019). The Federal Circuit affirmed the PTAB’s decisions in IPR proceedings holding that the petitioners failed to establish that the claims are unpatentable for obviousness. The patent is directed to methods of administering folic acid and, for example, vitamin B12, before administering a chemotherapy agent to reduce the toxic, potentially life-threatening effects of the agent. Although the prior art disclosed pretreatment with folic acid, it did not disclose pretreatment with both folic acid and vitamin B12. The applied art discloses no reason to add vitamin B12 to the pretreatment regiment, and those skilled in the art, particularly FDA personnel, were skeptical of the need and effectiveness of such a pretreatment combination. Therefore, the Federal Circuit found that the PTAB correctly determined that the proffered evidence failed to demonstrate obviousness and, instead, supported a conclusion of nonobviousness.

Novartis Pharmaceuticals Corp. v. West-Ward Pharmaceuticals International Ltd., 923 F.3d 1051, 2019 U.S.P.Q.2d 171676 (Fed. Cir. 2019). The Federal Circuit affirmed the district court’s nonobviousness determination. The Federal Circuit held that the district court erred in its analysis of whether there was a motivation to combine, but found no clear error that a person of ordinary skill would not have reasonably expected success. The Federal Circuit found the district court’s motivation to combine analysis harmless error in view of the reasonably expected success analysis.

Patentable Subject Matter

ChargePoint, Inc. v. SemaConnect, Inc., 920 F.3d 759, 2019 U.S.P.Q.2d 108512 (Fed. Cir. 2019). The Federal Circuit affirmed the district court’s finding that all eight asserted patents directed to networked electric vehicle charging stations were invalid under § 101. Under Alice step one, the Federal Circuit found that all claims are directed to the abstract idea of communicating over a network. Under Alice step two, the Federal Circuit reasoned that the alleged inventive concept (network control) was the abstract idea itself and could not supply the required additional feature for eligibility.

Endo Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc., 919 F.3d 1347, 2019 U.S.P.Q.2d 108545 (Fed. Cir. 2019). The claims directed to a method of pain treatment were upheld as patent-eligible subject matter because the method is directed to more than a natural relationship. Specifically, the Federal Circuit reasoned that the claimed steps involve a dosage regimen based on kidney function testing that requires specific treatment steps by the doctor. The Federal Circuit also noted that the specific treatment required by the claims did not implicate preemption concerns.

Trading Technologies International, Inc. v. IBG LLC, 921 F.3d 1084, 2019 U.S.P.Q.2d 138290 (Fed. Cir. 2019). The Federal Circuit upheld the district court’s finding that the claims are ineligible subject matter under § 101. The Federal Circuit found that the claims are directed to a CBM and, therefore, review was appropriate. The claims do not solve a technical problem with a technical solution.

Patentable Subject Matter/Willful Infringement

SRI International, Inc. v. Cisco Systems, Inc., 918 F.3d 1368, 2019 U.S.P.Q.2d 94789 (Fed. Cir. 2019). The Federal Circuit upheld the validity of a patent under § 101, finding that the claims are not directed to an abstract idea because the claims are directed to a specific technique utilizing network monitors to solve the technical problem of identifying network hackers or intruders. The Federal Circuit vacated the jury’s finding of willful infringement because the period of willfulness stretched back years before the accused infringer knew of the asserted patents.

Standing

AVX Corp. v. Presidio Components, Inc., 923 F.3d 1357, 2019 U.S.P.Q.2d 171683 (Fed. Cir. 2019). The Federal Circuit dismissed the appeal because AVX lacked standing. AVX had petitioned the PTAB for an IPR of Presidio’s patent. The PTAB found some claims unpatentable, but others patentable. AVX appealed the PTAB’s decision on the upheld claims. The Federal Circuit rejected AVX’s argument for standing on the estoppel provision, and AVX’s argument that it had competitor standing.

Validity/Infringement

Quest Integrity USA, LLC v. Cokebusters USA Inc., 924 F.3d 1220 (Fed. Cir. 2019). The Federal Circuit affirmed the district court’s ruling on invalidity for all asserted claims and its ruling on infringement for a first group of claims. However, the Federal Circuit reversed the district court’s infringement finding for a second group of claims because the district court improperly disregarded two declarations under the sham affidavit rule.

TEK Global, S.R.L. v. Sealant Systems International, Inc., 920 F.3d 777, 2019 U.S.P.Q.2d 110841 (Fed. Cir. 2019). The Federal Circuit reversed and remanded for a partial new trial on validity because the district court incorrectly barred the accused infringer from presenting any invalidity theories at trial. Turning to claim construction, the Federal Circuit held that the term “conduit” was not a means-plus-function term. The Federal Circuit also upheld the jury’s lost profits award and the permanent injunction issued by the district court.

Written Description

Nuvo Pharmaceuticals (Ireland) Designated Activity Co. v. Dr. Reddy’s Laboratories, Inc., 923 F.3d 1368, 2019 U.S.P.Q.2d 175681 (Fed. Cir. 2019). The Federal Circuit reversed the district court’s determination that the claims are not invalid for lack of adequate written description and found the claims invalid. The Federal Circuit found that the specification fails to provide efficacy data and lacks purported efficacy data to support the claims. As such, a person of ordinary skill would not have understood that the inventor had possession of the invention at the time of filing.

Trade Secrets

Keystone Transportation Solutions, LLC v. Northwest Hardwoods, Inc., No. 5:18-cv-00039, 2019 WL 1756293, 2019 U.S. Dist. LEXIS 67102 (W.D. Va. Apr. 19, 2019). Keystone was a logistics company that specialized in the export of forest products. Northwest Hardwoods (NWH) is a supplier and manufacturer of hardwood. In July 2016, NWH and Keystone began discussing a joint venture. The parties signed an NDA. A few months later, the president of Keystone announced that he was resigning from Keystone to go to work for NWH. Joint venture discussions were terminated. Keystone sued NWH for trade secret misappropriation. NWH moved for summary judgment, and the district court rejected NWH’s argument that the plaintiff had failed to establish the existence of a trade secret. Keystone argued that NWH was now using a similar Keystone business model and that the material similarities resulted from NWH’s access to Keystone’s business model under the NDA. Based on this record, the district court concluded there is a dispute of material fact on whether misappropriation has occurred.

Oros, Inc. v. Dajani, No. 1:19-cv-351, 2019 WL 2361047, 2019 U.S. Dist. LEXIS 93652 (E.D. Va. June 4, 2019). Defendant Jamal Dajani moved to dismiss the plaintiff’s trade secret misappropriation claim. Dajani had been the president of Oros and a member of the board of directors since 1998. Dajani argued that the complaint failed to allege sufficient facts plausibly indicating that Dajani is liable for trade secret misappropriation. The district court disagreed. Dajani was terminated in January 2019 but refused to cede his role as president and refused to give up control of Oros’s computer server, equipment, financial records, and bank accounts. The district court observed that the complaint does not deal with an isolated set of documents but instead involves the entire contents of a company’s office. Drawing all reasonable inferences in favor of the plaintiff, the contents of the office of the president are subject to trade secret protection under the Uniform Trade Secrets Act (UTSA) and Defend Trade Secrets Act.

Pelican Bay Forest Products, Inc. v. Western Timber Products, Inc., 297 Or. App. 417 (2019). As Doug Kelley neared the end of his 14-year career as a lumber sales trader for Pelican Bay, he gave his son-in-law, Andrew Hotmer, a portion of his customer list and other information about those customers. Hotmer parlayed this information into a timber sales job with one of Pelican Bay’s competitors, Western Timber. The district court granted summary judgment for the defendants, finding there was insufficient evidence to permit a reasonable factfinder to find in Pelican Bay’s favor. The Oregon Court of Appeals reversed. There was evidence that Hotmer had no prior experience in the industry; the defendants ignored cease and desist letters; and Western Timber and Hotmer admitted that they used the plaintiff’s confidential proprietary information to generate nearly $4 million in sales. The defendants could be liable for trade secret misappropriation because they used the information supplied by Kelley when they “knew or had reason to know” that the information was Pelican Bay’s confidential and proprietary information.

Summit Fire Protection Co. v. Reich, No. 8:19CV188, 2019 WL 2106547, 2019 U.S. Dist. LEXIS 80756 (D. Neb. May 13, 2019). Summit is a provider of fire life safety devices including fire sprinkler systems, fire extinguishers, and fire alarm systems. Summit hired Ted Reich as a service manager in 2015. His job duties included managing field staffing, scheduling, and completing inspections of fire sprinkler systems. Reich eventually became a foreman for Summit with access to Summit’s network drive and electronically stored customer information. Reich resigned to join a competitor (Total Fire) in 2019. Reich then solicited Summit’s customers on behalf of Total Fire. Summit filed a complaint against Reich seeking a temporary restraining order (TRO) under the Nebraska UTSA. The trial court denied the TRO after concluding that customer lists may be protected as trade secrets, but Summit had not shown that Reich improperly used Summit’s confidential customer information. The court noted that Reich is free to compete using publicly available information.

Trademarks

Claim Preclusion

Maksimuk v. Connor Sport Court International, LLC, No. 2019-1156, 2019 U.S.P.Q.2d 171796, 2019 WL 2079180 (Fed. Cir. May 13, 2019). Connor Sport Court sued Maksimuk’s company, CWF Flooring, in district court alleging infringement of its SPORT COURT trademarks by one of CWF’s domain names. Eventually, the district court entered a default judgment against CWF and enjoined CWF from using the domain name because it was confusingly similar to Connor’s SPORT COURT mark. CWF appealed, but because it failed to hire counsel by the deadline, the appeal was dismissed. While the district court proceedings were pending, Maksimuk petitioned the Trademark Trial and Appeal Board (TTAB) to cancel the SPORT COURT registration, arguing that the mark was generic. After the district court entered its judgment, Connor moved for summary judgment, arguing that the district court judgment precluded Maksimuk from raising genericness in the TTAB proceeding. The TTAB agreed, and Maksimuk appealed to the Federal Circuit. The Federal Circuit held that the TTAB did not err in determining that claim preclusion barred Maksimuk’s cancellation petition. Thus, the Federal Circuit affirmed the TTAB’s decision to dismiss Maksimuk’s cancellation proceeding.

“Point of Sale” Use Specimens

In re Siny Corp., 920 F.3d 1331, 2019 U.S.P.Q.2d 11362 (Fed. Cir. 2019). Siny filed an application to register its CASALANA trademark for “knit pile fabric made with wool for use as a textile in the manufacture of outerwear, gloves, apparel, and accessories.” The examining attorney initially refused registration because the specimen submitted to show use in commerce was improper. Specifically, the specimen was found to be “mere advertising material” and did not include a means to order the goods. Siny responded by submitting a substitute webpage specimen, which included the text “For sales information:” followed by a phone number and e-mail address. The examining attorney issued a final refusal, and the TTAB affirmed, finding that the webpage specimen lacked much of the information the TTAB considered essential to a purchasing decision, such as a price, minimum quantities one may order, accepted methods of payment, and how the goods would be shipped. Siny appealed.

The Federal Circuit disagreed with Siny, finding that the TTAB carefully considered the webpage specimen’s contents in determining that the specimen did not cross the line from mere advertising to an acceptable display associated with the goods. Therefore, the Federal Circuit affirmed the district court’s decision.

Trademark License/Bankruptcy Proceedings

Mission Product Holdings, Inc. v. Tempnology, LLC, 139 S. Ct. 1652, 2019 U.S.P.Q.2d 378338 (2019). Mission Product and Tempnology entered into a contract that gave Mission Product a license to use Tempnology’s trademarks. Tempnology rejected its agreement with Mission Product and sought to terminate Mission Product’s right to use its trademarks under the Bankruptcy Code. Under § 365 of the Bankruptcy Code, a debtor can reject an executory contract, which constitutes a breach of the contract. The issue before the U.S. Supreme Court was whether Tempnology’s rejection of the contract deprived Mission Product of its right to use Tempnology’s marks under the contract.

Tempnology relied in part on § 365, which sets out rules for certain types of intellectual property that allow a licensee to continue to use property as long as payments are made under the terms of the contract. However, as these provisions do not explicitly cover trademark licenses, Tempnology argued that a different rule must apply, namely, that a debtor’s rejection must extinguish the rights that the contract provided to the licensee. The First Circuit reasoned that to hold otherwise would jeopardize the validity of the trademark rights where the licensor is required to carry out its monitoring activities. This would frustrate Congress’s aim of releasing the debtor from burdensome obligations.

The Supreme Court granted certiorari to resolve the split between the First and Seventh Circuits on this issue and held that rejection of a contract under § 365 had the same consequences as a breach outside bankruptcy. In particular, the Supreme Court determined that a rejection under § 365 did not terminate the license and thus Tempnology could stop performing its obligations under the license, but it could not rescind the license already conveyed. While the Supreme Court acknowledged that the reorganization of certain parties, including trademark owners, may be impeded, Congress had struck a balance between the competing interests and expectations of the debtors and their counterparties. Accordingly, the decision of the First Circuit was reversed and remanded for further proceedings.

Use in Commerce

VersaTop Support Systems, LLC v. Georgia Expo, Inc., 921 F.3d 1364, 2019 U.S.P.Q.2d 139974 (Fed. Cir. 2019). VersaTop sued for patent, trademark, and copyright infringement relating to its drape and rod system for forming sectional spaces for trade shows and drape-related structures. The only issue before the Federal Circuit related to Georgia Expo’s use of VersaTop’s trademarks and pictures on flyers and brochures distributed by Georgia Expo. The district court ruled that because Georgia Expo had not affixed VersaTop’s trademarks to goods sold or transported in commerce, those activities did not meet the requirements for use in commerce under the Lanham Act.

On reviewing the trademark statute and legislative record, the Federal Circuit indicated that the legislative reports explicitly recognized that “use in commerce” applied to the use of a trademark for registration purposes, and that infringing use may be use of any type. The Federal Circuit determined that the district court incorrectly applied the definition of “use in commerce” for trademark registration purposes to an action for trademark infringement. Finding that the marks and goods were identical and that the parties operated in the same marketing channels, the Federal Circuit determined that the evidence tilted heavily in favor of a likelihood of confusion and reversed the district court’s judgment in favor of Georgia Expo and entered judgment in favor of VersaTop.