Decisions in Brief

In the plaintiff’s motion for partial summary judgment, she argued there was no dispute of material facts as to the issue of copying because the defendants admitted to copying her tattoo artworks without permission. Because it was undisputed that the plaintiff holds valid copyrights for the tattoos and that the defendants copied her copyrighted works, the district court granted the plaintiff’s motion for partial summary judgment as to the copying element.

As to the Take-Two defendants’ motion for summary judgment, the district court found that factual questions remained with respect to the Take-Two defendants’ affirmative defenses of implied license, fair use, and de minimis use. The Take-Two defendants argued that the plaintiff implicitly licensed Orton to display the tattoos as part of his likeness (which was licensed to WWE for further license), since the plaintiff did not tell Orton that further use would constitute infringement. The district court disagreed, finding that it was unclear whether the plaintiff discussed permissible use of her tattoos with Orton. The Take-Two defendants also argued that use of the tattoos was fair use because they are small and difficult to identify in the game. Likewise, the Take-Two defendants asserted that the tattoos on Orton in the game are too minor to give rise to a legal claim because they are small and constitute a nominal part of the game as a whole. The district court was unconvinced by these arguments and denied the Take-Two defendants’ motion.

Proof of Access or Striking Similarity Required to Establish Factual Copying

Batiste v. Lewis, No. 19-30400, 2020 WL 5640589, 2020 U.S.P.Q.2d 11102 (5th Cir. Sept. 22, 2020). Jazz musician Paul Batiste sued internationally famous hip-hop duo Macklemore & Ryan Lewis for copyright infringement, claiming that the duo copied 11 of his songs, including: “Thrift Shop,” “Can’t Hold Us,” “Same Love,” “Neon Cathedral,” and “Need to Know.” Batiste alleged that the group digitally sampled his songs without permission. Finding no evidence of copying, the district court granted summary judgment for the defendants. Batiste appealed. The Fifth Circuit Court of Appeals affirmed the decision.

The district court held that Batiste failed to show that the defendants had access to his music or that their songs were strikingly similar to his. Batiste disagreed and also argued that he did not need to show that the defendants’ songs sounded like his because any unauthorized sampling of a copyrighted sound recording is infringement. With respect to access, the district court found that no reasonable jury could find more than a bare possibility that the defendants had an opportunity to hear and copy Batiste’s songs. The district court also concluded that Batiste’s argument that infringement was established by the defendants’ sampling of his songs failed. Batiste neither got an admission from the defendants that they sampled his recordings nor presented evidence to create a genuine dispute on that issue.

Because Batiste did not produce evidence that the defendants had access to his music or that there were striking similarities between his songs and the defendants’ songs, the Fifth Circuit found that Batiste did not prove factual copying. Without proof that the defendants copied his works, Batiste’s copyright claims failed, and the district court correctly granted summary judgment for the defendants.

Patents

APA/Substantial Evidence

FanDuel, Inc. v. Interactive Games LLC, 966 F.3d 1334, 2020 U.S.P.Q.2d 10850 (Fed. Cir. 2020). The Federal Circuit Court of Appeals affirmed the Patent Trial and Appeal Board’s (PTAB’s) finding that FanDuel failed to prove the obviousness of a claim in a patent directed to a wireless gaming service, because the PTAB complied with the Administrative Procedure Act (APA) and its factual findings were supported by substantial evidence. The Federal Circuit first rejected FanDuel’s APA violation argument, explaining that the PTAB can find factual deficiencies in its final written decision even if such deficiencies were not raised by the patent owner because the burden of proving invalidity remains on the petitioner throughout the proceeding. The Federal Circuit also rejected FanDuel’s argument that the PTAB’s fact-findings were not supported by substantial evidence, explaining that the PTAB is not required to defer to a petitioner’s unrebutted expert opinion because it is the PTAB’s duty to independently assess the strength of a petitioner’s argument and evidence.

Attorney Fees

FastShip, LLC v. United States, 968 F.3d 1335, 2020 U.S.P.Q.2d 10872 (Fed. Cir. 2020). Following a finding of infringement, the Court of Federal Claims determined that the government’s pre-litigation and litigation conduct was not substantially justified and awarded FastShip attorney fees and other costs pursuant to 28 U.S.C. § 1498(a). On appeal, the Federal Circuit found that the Court of Federal Claims erred in relying on the government’s pre-litigation conduct, finding that the government’s litigation conduct alone must be without substantial justification to award fees and costs.

Case Transfer

In re HP Inc., No. 2020-140, 2020 WL 5523561, 2020 U.S.P.Q.2d 11059 (Fed. Cir. Sept. 15, 2020). The Federal Circuit granted HP’s writ of mandamus to transfer the case from the Eastern District of Texas to the Northern District of California. The Federal Circuit stated that a writ should be granted when the movant clearly shows that the transfer is for the convenience of the parties and witnesses and in the interest of justice. Here, the Federal Circuit found HP met these requirements.

Claim Construction

Baxalta Inc. v. Genentech, Inc., 972 F.3d 1341, 2020 U.S.P.Q.2d 10991 (Fed. Cir. 2020). The Federal Circuit vacated and remanded the district court’s judgment of noninfringement. The Federal Circuit found that the district court’s construction excluded explicitly claimed embodiments and was inconsistent with the plain language of the claims. Thus, the Federal Circuit rejected the district court’s construction that rendered the dependent claims invalid.

Bio-Rad Laboratories, Inc. v. 10X Genomics Inc., 967 F.3d 1353, 2020 U.S.P.Q.2d 10873 (Fed. Cir. 2020). The district court found that Bio-Rad’s three asserted patents were valid and willfully infringed, and granted a permanent injunction. The Federal Circuit affirmed the judgment of infringement and damages for one of the three patents, but reversed and remanded for the other two patents based on an incorrect claim construction involving the preamble and prosecution history estoppel.

Neville v. Foundation Constructors, Inc., 972 F.3d 1350, 2020 U.S.P.Q.2d 10992 (Fed. Cir. 2020). The Federal Circuit affirmed the summary judgment ruling that certain claims were not infringed. The Federal Circuit found that the specification and prosecution history supported the district court’s claim construction.

Contract Interpretation

Phytelligence, Inc. v. Washington State University, 973 F.3d 1354, 2020 U.S.P.Q.2d 10999 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s finding that the clause in the contract in question was an unenforceable agreement to agree. The Federal Circuit found that the plain terms of the agreement required there to be a separate agreement, and thus a further meeting of the minds of the parties. The Federal Circuit also found that extrinsic evidence is only to be used to determine the meaning of specific terms and words, not intent that is independent of the contract.

Fifth Amendment Taking

Christy, Inc. v. United States, 971 F.3d 1332, 2020 U.S.P.Q.2d 10969 (Fed. Cir. 2020). The Federal Circuit affirmed the Court of Federal Claims’ dismissal of the case for failure to state a claim. The Federal Circuit found that the cancellation of a patent in an inter partes review (IPR) did not grant the patentee any compensable claim against the United States. On appeal, Christy argued that the cancellation of its patent claims in an IPR amounted to an admission that the U.S. Patent and Trademark Office erred in allowing the issuance of the claims, which resulted in Christy paying the maintenance and issue fees that it sought to recover. The Federal Circuit found the argument flawed because the law required payment of the issuance and maintenance fees without regard to any later result of post-issuance proceedings.

Indefiniteness

IBSA Institut Biochimique, S.A. v. Teva Pharmaceuticals USA, Inc., 966 F.3d 1374, 2020 U.S.P.Q.2d 10865 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s decision holding invalid as indefinite under 35 U.S.C. § 112 several claims of the asserted patent directed to pharmaceutical compositions of hormones for the treatment of thyroid disorders. The common independent claim recited: “a soft elastic capsule consisting of a shell of gelatin material containing a liquid or half-liquid inner phase.” The parties disputed the meaning and definiteness of “half-liquid.” The intrinsic evidence did not define the term and shed little light on its meaning, instead indicating what it could not mean. The similar term, “semi-liquid,” was used in certain priority applications, but the intrinsic evidence indicated that each term was used intentionally, not that they had the same meaning. The extrinsic evidence, including expert testimony, indicated that “half-liquid” was not a well-known term—in the art or otherwise—and that it would be impossible for persons of ordinary skill in the art to know, with reasonable certainty, what constitutes a “half-liquid” within the meaning of the claim.

IPR

Alacritech, Inc. v. Intel Corp., 966 F.3d 1367, 2020 U.S.P.Q.2d 10866 (Fed. Cir. 2020). The Federal Circuit found that the PTAB did not adequately support its findings that the asserted prior art in an IPR teaches or suggests certain claim limitations in its final written decision. The Federal Circuit rejected an argument that the substantial evidence standard is satisfied so long as there is evidentiary support in the record, even if it is not specifically cited by the PTAB in its decision.

Judicial Estoppel

Egenera, Inc. v. Cisco Systems, Inc., 972 F.3d 1367, 2020 U.S.P.Q.2d 10997 (Fed. Cir. 2020). The Federal Circuit affirmed in part, vacated in part, and remanded in part the district court’s rulings. The Federal Circuit affirmed the district court’s claim construction, finding that the terms were properly construed as means-plus-function limitations as they were defined by their function. The Federal Circuit vacated and remanded the district court’s finding of judicial estoppel as it related to the patentee attempting to add an inventor’s name back onto the patent. The Federal Circuit examined three factors: (1) whether a party’s earlier and later positions are “clearly inconsistent”; (2) whether the party succeeded in persuading a court to accept the earlier position; and (3) whether the party would derive an unfair advantage or impose an unfair detriment on the other side. The Federal Circuit determined that multiple corrections are not “mutually exclusive.” Also, because the initial removal of the inventor included simple statements, it was not a “persuasion” of a court. Finally, there would be no unfair advantage or detriment if the inventorship was corrected.

Patentable Subject Matter

XY, LLC v. Trans Ova Genetics, LC, 968 F.3d 1323, 2020 U.S.P.Q.2d 10867 (Fed. Cir. 2020). The Federal Circuit held that a method of sorting particles was not an abstract idea under § 101. While the claims incorporated a mathematical formula, the Federal Circuit found that the claims described a step-by-step method for accomplishing a physical process representing an improvement over otherwise-known processes.

Uniloc 2017 LLC v. Hulu, LLC, 966 F.3d 1295, 2020 U.S.P.Q.2d 10819 (Fed. Cir. 2020). The Federal Circuit affirmed the PTAB’s denial of Uniloc’s request for rehearing after the PTAB concluded, during the IPR, that Hulu had shown by a preponderance of the evidence that Uniloc’s substitute claims were directed to nonstatutory subject matter under 35 U.S.C. § 101. On appeal, Uniloc challenged the PTAB’s ability to rule on the patent eligibility of its substitute claims under § 101. After reviewing the text, structure, and legislative history of the America Invents Act and its IPR statutes, the Federal Circuit held that the PTAB correctly concluded that it may consider § 101 patent eligibility when considering the patentability of proposed substitute claims in an IPR, because to hold otherwise would be “grossly out of keeping with the statutory regime as a whole.”

Preliminary Injunctions/Contracts

Takeda Pharmaceuticals U.S.A., Inc. v. Mylan Pharmaceuticals Inc., 967 F.3d 1339, 2020 U.S.P.Q.2d 10864 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s denial of a preliminary injunction. The district court found that Takeda was unlikely to succeed on the merits of its infringement claim because a provision in a prior license agreement between the parties effectively allowed Mylan to launch the allegedly infringing product. The Federal Circuit agreed and, in so doing, rejected Takeda’s various contract interpretation arguments asserting that the provision in question had not been triggered. As to irreparable harm, Takeda relied on a clause in the parties’ agreement that stated that if Mylan breached the agreement, the parties agreed Takeda was irreparably harmed. The district court found, however, that Takeda had not demonstrated that it was likely to succeed on its claim for breach, and, therefore, the irreparable harm provision did not suffice, and money damages would suffice. The Federal Circuit agreed and also found that Takeda had no credible arguments beyond its reliance on the irreparable harm provision.

Res Judicata

Sowinski v. California Air Resources Board, 971 F.3d 1371, 2020 U.S.P.Q.2d 10961 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s decision to dismiss the appeal on the ground of res judicata. Sowinski failed to respond to motions to dismiss, after which the district court dismissed the complaint. The Federal Circuit relied on Federal Rule of Civil Procedure 41(b), which states that dismissal for failure to prosecute operates as adjudication on the merits. As a result, the Federal Circuit found that the district court acted within its discretion and in accordance with the law in applying res judicata and therefore affirmed the dismissal.

Standard-Essentiality

Godo Kaisha IP Bridge 1 v. TCL Communication Technology Holdings Ltd., 967 F.3d 1380, 2020 U.S.P.Q.2d 10888 (Fed. Cir. 2020). The Federal Circuit affirmed the jury’s verdict of infringement through the showing that the patent claims were essential to mandatory aspects of the standard and that the accused products practiced that standard. The question on appeal was, Who determines the standard-essentiality of the patent claims—the court as part of claim construction, or the jury as part of its infringement analysis? The Federal Circuit found that standard-essentiality is a question for the fact finder. This is essentially a fact question about whether the claim elements read onto mandatory portions of a standard that standard-compliant devices must incorporate. Accordingly, the Federal Circuit held that the question of essentiality must be resolved by the trier of fact in the context of an infringement trial.

Trade Secrets

Heska Corp. v. Qorvo US, Inc., No. 1:19CV1108, 2020 WL 5821078, 2020 U.S. Dist. LEXIS 180337 (M.D.N.C. Sept. 30, 2020). The plaintiff sued the defendants for trade secret misappropriation in violation of the Defend Trade Secrets Act (DTSA) and the Michigan and Minnesota state Uniform Trade Secrets Act (UTSA) statutes. To state a claim for misappropriation of trade secrets under the DTSA, the complaint must allege: (1) the existence of a trade secret, (2) that the defendant misappropriated the trade secret, and (3) that the trade secret was used or intended for use in interstate commerce. There is no requirement that the plaintiff identify its trade secret with reasonable particularity to state a claim. Instead, to survive a Rule 12(b)(6) motion to dismiss, the plaintiff need only “plausibly plead” that a defendant acquired the trade secrets by improper means. Thus, the motion to dismiss was denied.

Epic Systems Corp. v. Tata Consultancy Services Ltd., 971 F.3d 662, 2020 U.S.P.Q.2d 10963 (7th Cir. 2020). Epic is a leading developer of electronic health record software. Epic sued Tata for misappropriation of its trade secrets, and a jury awarded Epic $140 million in compensatory damages. The basis for the compensatory damages was unjust enrichment. The Seventh Circuit Court of Appeals held that avoided research and development costs could be the basis for unjust enrichment damages when the defendant obtained a “head start” advantage derived from the misappropriation of Epic’s trade secret information in competition with Epic.

Six Dimensions, Inc. v. Perficient, Inc., 969 F.3d 219, 2020 U.S.P.Q.2d 10901 (5th Cir. 2020). A former employee of the plaintiff joined a head-to-head competitor (Perficient), and a lawsuit ensued on various causes of action, including a claim for trade secret misappropriation under the Texas Uniform Trade Secrets Act (TUTSA). A jury returned a verdict for the defendants, and the plaintiff appealed. There was evidence in the record that the former employee kept a thumb drive with the plaintiff’s training materials when he left the plaintiff to join the competitor company. The former employee testified that: (1) he did not provide the training materials to anyone at the new company; (2) no one at the new company ever used the training materials; and (3) he never uploaded the training materials to the new company’s system. The Fifth Circuit could find no precedent for finding the new employer liable as a matter of law because the former employee had the thumb drive in his possession when he became employed by the new company and continued possession of the thumb drive while employed by the new company. Since there was no evidence of using the training materials in the new company, a jury could find no misappropriation under the TUTSA.

LuckyShot LLC v. Runnit CNC Shop, Inc., No. 19-cv-03034, 2020 U.S. Dist. LEXIS 175237, 2020 U.S.P.Q.2d 11111 (D. Colo. Sept. 24, 2020). To establish a trade secret misappropriation claim under the federal DTSA, the plaintiff must allege: (1) the existence of a trade secret, (2) misappropriation of that trade secret, and (3) how the trade secret implicates interstate or foreign commerce. The allegations in the complaint identified the alleged trade secrets as detailed specifications and design drawings for plungers the plaintiff alleged the defendants attempted to sell and to patent in interstate commerce as their own plungers. The plaintiff also alleged violations of an NDA together with other allegations that the defendants used the plaintiff’s trade secrets and confidential information without the plaintiff’s consent. The motion to dismiss was denied.

Trademarks

Acquired Distinctiveness

In re Guaranteed Rate, Inc., 2020 U.S.P.Q.2d 10869 (T.T.A.B. 2020). Applicant Guaranteed Rate sought registration of several marks including the words GUARANTEED RATE on the Principal Register for mortgage lending–related services in class 36. The applicant claimed that the term “guaranteed rate” had become distinctive of its services pursuant to section 2(f) of the Trademark Act. The examining attorney refused registration of the marks in the involved applications under section 2(e)(1) of the Trademark Act, i.e., on the ground that the term GUARANTEED RATE was merely descriptive and must be disclaimed in the composite mark and that the applicant’s claim of acquired distinctiveness was insufficient to support registration. The applicant appealed the decision to the Trademark Trial and Appeal Board (TTAB).

The TTAB noted that, standing alone, the applicant’s use of GUARANTEED RATE since 2000 was not dispositive, even if it were considered to be substantially exclusive. The TTAB found that the record was unclear as to what extent the applicant used the words GUARANTEED RATE standing alone, rather than as part of its stylized mark or design that includes color. The nature and number of third-party descriptive uses in the record were also found to undermine the applicant’s inherent distinctiveness claim. The applicant did not submit survey evidence, which, while not legally necessary, led the TTAB to conclude that the evidence was insufficient to show that the words GUARANTEED RATE alone served as a unique source of mortgage lending services. Furthermore, the TTAB found that because GUARANTEED RATE was so highly descriptive, the fact that the applicant’s prior registrations that included these words did not include a disclaimer was insufficient to demonstrate acquired distinctiveness. Furthermore, since those prior marks had not been registered for five years, they could still be challenged on the grounds of descriptiveness. The TTAB concluded that the public, including the applicant’s competitors, still primarily use and understand the term “guaranteed rate” to describe a feature of mortgage lending services.

The TTAB thus held that the applicant failed to meet its burden of establishing acquired distinctiveness under section 2(f) as to the highly descriptive wording GUARANTEED RATE. Thus, it affirmed the examining attorney’s decision to refuse registration of the GUARANTEED RATE mark in standard characters and to require a disclaimer of those words in the GUARANTEED RATE and design mark.

Bona Fide Intent

Société des Produits Nestlé S.A. v. Cándido Viñuales Taboada, 2020 U.S.P.Q.2d 10893 (T.T.A.B. 2020). Applicant Taboada filed a trademark application for registration of NESPORT in connection with various goods in classes 5, 30, and 32. Nestlé opposed the applicant’s application, alleging a likelihood of confusion, dilution, and a lack of bona fide intent by the applicant to use the NESPORT mark in commerce under section 1(b) of the Trademark Act.

In support of his bona fide intent, the applicant explained that the reason for selecting NESPORT was based on the fusion of “near” and “need” with “sport” in relation to goods for improving the performance of people who play sports, specifically, “Near & Need + Sport = NE+SPORT.” The applicant also undertook trademark and domain name registration activities, even though Nestlé found that the http://www.nesport.com website neither contained functional links nor allowed users to send messages.

Upon reviewing the evidence of record, the TTAB determined that Nestlé met its burden of proof that as of the filing date, the applicant did not have a bona fide intent to use NESPORT in commerce. In particular, the TTAB found that, based on the number and variety of applied-for goods, the applicant did not have proof of capability, expertise, or infrastructure to produce and distribute a wide range of products. Moreover, in the absence of product sales; advertising expenditures or materials; licensees or authorized users of the NESPORT mark; agreements with potential manufacturers, distributors, or suppliers; attempts to obtain regulatory approval; and documentation showing attendance at trade shows and proposed designs for packaging or labeling, the applicant’s activities did not support a bona fide intent to use NESPORT in commerce when the application was filed. Accordingly, the opposition was sustained.

Genericness/Certification Mark

International Dairy Foods Ass’n v. Interprofession du Gruyère, 2020 U.S.P.Q.2d 10892 (T.T.A.B. 2020). Interprofession du Gruyère, a Swiss association, and Syndicat Interprofessionnel du Gruyère, a French union (collectively, applicants), filed an application to register the certification mark GRUYERE in connection with “cheese.” International Dairy and other entities including importers of cheese (collectively, opposers) opposed the applicants’ application, alleging that (1) the applicants failed to exercise control over the proposed certification mark and, thus, the mark was incapable of functioning as a certification mark; and (2) “gruyere” was a generic name for cheese and was, therefore, unregistrable under section 2(e)(1). Gruyere is a cheese that has been made in Switzerland and France for hundreds of years. The application includes the statement that the certification mark “as used by persons authorized by the certifier, certifies that the cheese originates in the Gruyere region of Switzerland and France.”

Regarding genericness, the TTAB applied the two-part test: (1) What is the genus of goods at issue, and (2) does the relevant public understand the designation primarily to refer to that genus of goods? The TTAB determined that the genus of the goods was cheese, and the relevant public consisted of those members of the general public who purchase or consume cheese.

To determine whether the relevant public understands the designation “gruyere” primarily to refer to cheese, the TTAB considered dictionary definitions of “gruyere”; uses of “gruyere” in the press, reference materials, and merchant publications; internet evidence, including use of “gruyere” by cheese producers and sellers; FDA regulations and USDA materials; witness testimony; and the applicants’ publicity/educational efforts and policing efforts to limit retailers’ use of “gruyere.” Based on its analysis, the TTAB found that cheese identified as “gruyere” is made in many locations in addition to Switzerland and France. Moreover, despite the applicants’ letter-writing campaign requesting retailers to cease using the term “gruyere” not sourced in Switzerland and France, not all major retailers abided.

The TTAB concluded that purchasers and consumers of cheese understand the term “gruyere” as a designation that primarily refers to a category within the genus of cheese that can come from anywhere. Thus, the opposition was sustained on the ground of genericness. The TTAB did not consider the claim pertaining to lack of control of the applied-for certification mark.

Standing

Australian Therapeutic Supplies Pty. Ltd. v. Naked TM, LLC, 965 F.3d 1370, 2020 U.S.P.Q.2d 10837 (Fed. Cir. 2020). The TTAB held that Australian lacked standing to petition for cancellation of a trademark registration, finding that Australian could not show an interest in the cancellation proceeding or a reasonable belief of damage because it had contracted away its proprietary rights in its unregistered marks. The Federal Circuit reversed and remanded.

Australian first began selling condoms under the marks NAKED and NAKED CONDOM (collectively, the unregistered mark) in Australia in early 2000, with use in the U.S. dating back to April 2003. In late 2005, Australian learned that Naked TM’s predecessor-in-interest (collectively, Naked) had filed a trademark application for NAKED condoms in July 2003. From July 2006, Australian and Naked engaged in settlement negotiations. Naked asserted that the parties reached an agreement that Australian would discontinue use of its unregistered mark in the U.S. and consent to Naked’s use and registration of the NAKED mark in the U.S. Australian disagreed, arguing that the parties did not reach a settlement.

In 2006, Australian filed a petition to cancel the registration of the NAKED mark, asserting Australian’s prior use and alleging fraud, likelihood of confusion, false suggestion of connection, and lack of bona fide use. Naked responded, alleging Australian’s lack of standing and that Australian was contractually and equitably estopped from pursuing the cancellation. The TTAB concluded that Australian lacked standing and that an informal agreement was reached that Naked—not Australian—would use and register the NAKED mark in the U.S. Australian appealed to the Federal Circuit.

The Federal Circuit noted that entitlement to a cause of action under 15 U.S.C. § 1064 is not contingent on whether a petitioner has proprietary rights in its own mark, nor does contracting away one’s rights to use a trademark preclude a petitioner from challenging a mark before the TTAB. Because Australian was found to have a real interest in the cancellation proceeding and a reasonable belief of damage (e.g., by producing and selling merchandise bearing the registered mark), the Federal Circuit held that Australian satisfied the statutory requirements to seek cancellation of a registered trademark pursuant to § 1064. As such, the Federal Circuit reversed and remanded.