April 05, 2021 DECISIONS IN BRIEF

Decisions in Brief

John C. Gatz

©2021. Published in Landslide, Vol. 13, No. 4, March/April 2021, 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

Facts Are Unprotectable and Can Be Freely Copied

Vallejo v. Narcos Productions LLC, No. 19-14894, 2020 WL 6281501, 2020 U.S.P.Q.2d 11278 (11th Cir. Oct. 27, 2020). Virginia Vallejo appealed the district court’s grant of summary judgment in favor of the defendants, Narcos, Netflix, and Gaumont Television, contending that the district court erred when it concluded that two scenes from the television series Narcos were not substantially similar to two chapters in her memoir. The Eleventh Circuit Court of Appeals affirmed the district court’s decision.

Vallejo is a well-known Colombian journalist and anchorwoman who had a romantic affair with Pablo Escobar, the notorious Colombian drug trafficker. She wrote a memoir based on her affair titled Amando a Pablo, Odiando a Escobar, which translates to Loving Pablo, Hating Escobar. Narcos is a television series available for streaming on Netflix that chronicles the life of Pablo Escobar and the Colombian drug cartel. Vallejo brought a copyright infringement claim against the defendants, alleging that certain scenes from episodes 103 and 104 of the series were copied from her memoir.

The Eleventh Circuit opined that before determining whether a substantial similarity exists, the unprotected facts must be separated from the protected expression of those facts. Throughout the case, Vallejo repeatedly admitted that the facts incorporated in her memoir were true, including facts present in the Narcos episodes at issue. Because copyright protection extends only to the expression of facts and not to the facts themselves, the Eleventh Circuit reasoned that the facts alone did not enjoy copyright protection and could have been freely copied by the defendants in writing the Narcos series.

Next, the Eleventh Circuit compared the protectable portions of the memoir to the Narcos scenes; however, the Eleventh Circuit found no substantial similarities. The Eleventh Circuit concluded that the defendants used unprotectable facts from Vallejo’s memoir and did not copy her expression of those facts because the plot, setting, mood, and characters’ interplay were not substantially similar. Thus, the Eleventh Circuit affirmed the district court’s summary judgment decision in favor of the defendants.

Patents

Analogous Art

Donner Technology, LLC v. Pro Stage Gear, LLC, 979 F.3d 1353, 2020 U.S.P.Q.2d 11335 (Fed. Cir. 2020). The Federal Circuit Court of Appeals vacated and remanded the Patent Trial and Appeal Board’s (PTAB’s) final decision in an inter partes review (IPR) directed to guitar effects pedalboards. In rejecting each of Donner’s obviousness grounds, the PTAB concluded that Donner had not demonstrated that a prior art reference used in each ground was analogous art. The analysis turned on the analogous art test inquiring whether the reference is reasonably pertinent to the particular problem the inventor was addressing. The Federal Circuit explained that, under this theory of analogous art, the problems to which both the reference and the asserted patent relate must be identified and compared. The Federal Circuit then determined that the PTAB failed to consider Donner’s evidence on this issue and did not apply the proper standard for analogous art.

Anticipation

Biogen MA Inc. v. EMD Serono, Inc., 976 F.3d 1326, 2020 U.S.P.Q.2d 11129 (Fed. Cir. 2020). After a jury found the asserted claims anticipated, the district court granted judgment as a matter of law, finding no anticipation. The claim was directed to a method of treating with a nested product-by-process limitation. The district court failed to apply the rule that an old product is not patentable, even if it is made by a new process. The Federal Circuit found that the administered composition, which was claimed in terms of the manufacturing process, was disclosed in the prior art.

Claim Construction

St. Jude Medical, LLC v. Snyders Heart Valve LLC, 977 F.3d 1232, 2020 U.S.P.Q.2d 11225 (Fed. Cir. 2020). The Federal Circuit affirmed in part and reversed in part the PTAB’s findings. The Federal Circuit affirmed the PTAB’s claim construction of the term “band” having a width (or length) limitation and differentiating it from a sleeve. The Federal Circuit rejected the PTAB’s claim construction on other limitations.

Infringement

GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc., 976 F.3d 1347, 2020 U.S.P.Q.2d 11170 (Fed. Cir. 2020). Following a jury finding of infringement, the district court granted Teva’s motion for judgment of noninfringement as a matter of law because there was insufficient evidence that Teva caused doctors to prescribe the patented medication. However, the Federal Circuit reversed and remanded, finding that substantial evidence supported the jury’s inducement finding. The Federal Circuit noted that when the provider of an identical product knows of and markets the same product for intended direct infringing activity, the criteria of induced infringement is met.

Interference

Chevron U.S.A. Inc. v. University of Wyoming Research Corp., 978 F.3d 1361, 2020 U.S.P.Q.2d 11323 (Fed. Cir. 2020). The Federal Circuit affirmed the PTAB’s determination in an interference proceeding that the University of Wyoming Research Corp. (Wyoming) was the senior party over Chevron because Chevron’s earliest corroborated conception and reduction to practice was in 2009, while Wyoming had filed two provisional applications in 2005 and 2006. The decision hinged on whether the Federal Circuit would agree with the PTAB’s construction of the term “gradually.” The parties agreed that under that construction, the claims of Wyoming’s patent would have written description support, but under Chevron’s proposed construction, the parties agreed Wyoming’s patent would not have written description support. The Federal Circuit sided with the PTAB and Wyoming.

Mandamus

In re Apple Inc., 979 F.3d 1332, 2020 U.S.P.Q.2d 11338 (Fed. Cir. 2020). The Federal Circuit granted Apple’s petition for a writ of mandamus and ordered the patent infringement suit moved from the U.S. District Court for the Western District of Texas to the U.S. District Court for the Northern District of California. The Federal Circuit found that Apple demonstrated that the district court clearly abused its discretion in denying transfer.

Mandamus/First-to-File Rule

In re Nitro Fluids LLC, 978 F.3d 1308, 2020 U.S.P.Q.2d 11284 (Fed. Cir. 2020). The Federal Circuit partially granted Nitro’s petition for a writ of mandamus directing the U.S. District Court for the Western District of Texas to either dismiss the case or transfer it to the Houston Division of the U.S. District Court for the Southern District of Texas. Cameron International sued Nitro for patent infringement in the Southern District of Texas. While that case was still pending, Cameron subsequently accused the same products of infringing additional patents in a new lawsuit filed in the Western District of Texas. Nitro, citing the first-to-file rule, moved to dismiss the new case or transfer it to the Southern District of Texas. The district court denied Nitro’s motion. On mandamus, the Federal Circuit found that a balance of the transfer factors can support a finding of compelling circumstances sufficient to prevent transfer under the first-to-file rule. Here, however, the district court erred in concluding that those factors established compelling circumstances because it improperly determined that the first-to-file rule is only applicable when the balance of factors favors the first-filed court. To the contrary, the district court “had matters backwards: Unless the balance of transfer factors favors keeping the case in the second-filed court, there are no compelling circumstances to justify such an exception.” Therefore, since the district court did not address whether a balance of the factors favored the second-filed court, the Federal Circuit vacated the district court’s order denying transfer and directed it to conduct further proceedings to reassess the propriety of transfer.

Motion in Limine

TecSec, Inc. v. Adobe Inc., 978 F.3d 1278, 2020 U.S.P.Q.2d 11263 (Fed. Cir. 2020). The Federal Circuit reversed in part and remanded to the district court. The Federal Circuit reversed the district court’s grant of a motion in limine to prevent any evidence of induced infringement. The district court concluded after claim construction that the accused infringer was allowed to rely on the ruling that it was not infringing and, thus, could not be found to induce infringement after that claim construction ruling. The Federal Circuit, however, found that this ruling did not address the subjective intent of the infringing party.

Obviousness

Apple Inc. v. Voip-Pal.com, Inc., 976 F.3d 1316, 2020 U.S.P.Q.2d 11131 (Fed. Cir. 2020). The Federal Circuit vacated the PTAB’s obviousness finding as moot for certain claims that overlapped with claims deemed patent ineligible in a district court decision (which was affirmed by the Federal Circuit). As to the nonoverlapping claims, the PTAB did not err in finding that Apple failed to meet its burden to establish a motivation to combine the references in its obviousness determination. The Federal Circuit also found that the PTAB did not abuse its discretion by declining to order a sanction of judgment in Apple’s favor based on improper ex parte communications from Voip-Pal’s former CEO to the PTAB and others.

SIPCO, LLC v. Emerson Electric Co., 980 F.3d 865, 2020 U.S.P.Q.2d 11368 (Fed. Cir. 2020). The Federal Circuit affirmed the PTAB’s determination that the challenged claims would have been obvious. SIPCO argued that the PTAB’s obviousness ruling focused on erroneous claim construction. The Federal Circuit found that substantial evidence supported the PTAB’s claim construction and determination.

Reexamination/Claim Construction

Network-1 Technologies, Inc. v. Hewlett-Packard Co., 976 F.3d 1301, 2020 U.S.P.Q.2d 11133 (Fed. Cir. 2020). The Federal Circuit affirmed in part and reversed in part the district court’s claim construction ruling and granted a new trial. The district court erred in claim construction. The district court also found that HP was barred by the IPR estoppel statute from asserting invalidity because HP joined a third party’s IPR. The Federal Circuit, however, reversed, concluding that HP could not have raised the district court references during the IPR because a joining party cannot do so. The Federal Circuit also affirmed a finding that asserted claims were not impermissibly broadened during a reexamination proceeding.

Standard of Review

Immunex Corp. v. Sanofi-Aventis U.S. LLC, 977 F.3d 1212, 2020 U.S.P.Q.2d 11208 (Fed. Cir. 2020). The Federal Circuit affirmed the invalidity decision of the PTAB, thereby rendering the inventorship issue moot. The patentee filed a terminal disclaimer after the briefing was complete. The Federal Circuit determined the broadest reasonable interpretation standard was proper. Although the Phillips standard normally applies to expired patents, since this patent was still pending during briefing, the Federal Circuit kept this standard and upheld the PTAB’s decisions.

Warsaw Orthopedic, Inc. v. Sasso, 977 F.3d 1224, 2020 U.S.P.Q.2d 11231 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s dismissal of the declaratory judgment action without prejudice. The standard to be applied in determining the issue was whether the district court abused its discretion. The Federal Circuit found that the district court exercised “common-sense accommodation.”

Summary Judgment/Equitable Estoppel

Ferring B.V. v. Allergan, Inc., 980 F.3d 841, 2020 U.S.P.Q.2d 11339 (Fed. Cir. 2020). The Federal Circuit vacated and remanded the district court’s grant of summary judgment. The Federal Circuit determined that the district court had improperly resolved issues of fact in favor of the defendant and abused its discretion in granting summary judgment of equitable estoppel. The district court failed to address material differences in the scope of the issued patent claims as compared to the invention described in correspondence and separate application claims. The Federal Circuit also found that the district court’s interpretation of the correspondence was not the only reasonable one. The Federal Circuit also found that the district court abused its discretion in granting summary judgment of equitable estoppel because the district court failed to consider all relevant evidence regarding the equities of the parties.

Venue

Valeant Pharmaceuticals North America LLC v. Mylan Pharmaceuticals Inc., 978 F.3d 1374, 2020 U.S.P.Q.2d 11321 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s order dismissing for improper venue the infringement claims against two of three defendants pursuant to Rule 12(b)(3). Valeant sued all three defendants, including one foreign entity, in the U.S. District Court for the District of New Jersey. Of the two U.S.-based defendants, one was formed and headquartered in West Virginia, and the other was formed and headquartered in Pennsylvania. Addressing the novel issue of where “acts of infringement” under the patent venue statute, 28 U.S.C. § 1400(b), occur with respect to infringement claims brought pursuant to the Hatch-Waxman Act, the Federal Circuit held that, for venue purposes, infringement occurs only in districts where actions related to the submission of an abbreviated new drug application (ANDA) occur, not in all locations where future distribution of the generic products specified in the ANDA is contemplated. Since no act involved in submitting the ANDA occurred in New Jersey, the district court correctly dismissed the two U.S.-based defendants.

Trade Secrets

Adler v. Loyd, No. 1:20-cv-00048, 2020 WL 6060302, 2020 U.S. Dist. LEXIS 189971 (D.D.C. Oct. 14, 2020). The plaintiffs filed a federal trade secret misappropriation claim under the Defend Trade Secrets Act (DTSA). The defendants moved to dismiss because the plaintiffs had failed to allege reasonable measures to establish a trade secret, including the lack of nondisclosure or confidentiality agreements to protect their business information. These agreements are not required by the DTSA, and the lack of a confidentiality or nondisclosure agreement does not necessarily doom the plaintiffs’ trade secret misappropriation claim. However, there must be affirmative steps to preserve the secrecy of the information involving third parties. “No matter the sophistication of the lock, a bank vault is useless if bankers freely distribute keys to robbers.” The plaintiffs’ business information is not a trade secret if shared with others without an obligation of confidentiality. The DTSA claim was dismissed.

Data Device Corp. v. W.G. Holt, Inc., No. 19-CV-4105, 2020 WL 7024312, 2020 U.S. Dist. LEXIS 223438 (E.D.N.Y. Nov. 30, 2020). One of the defendants (Sleicher) worked at Data Device from 2002 to 2014. In 2016, the plaintiff filed a complaint alleging trade secret misappropriation under the DTSA against Sleicher and his employer. The defendants moved to dismiss the DTSA claim. The district court denied the motion to dismiss because, at the pleading stage, a district court may reasonably infer that the defendants used extensive knowledge of the plaintiff’s trade secrets to design and launch a competing product shortly thereafter. This is especially true where the plaintiff alleged that the lead time to develop a competing product is three to four years.

Herley Industries, Inc. v. R Cubed Engineering, LLC, No. 5:20-cv-02888, 2020 U.S. Dist. LEXIS 206880, 2020 U.S.P.Q.2d 11327 (E.D. Pa. Nov. 5, 2020). The plaintiff moved for injunctive relief under the DTSA and the Pennsylvania Uniform Trade Secrets Act alleging irreparable harm. The district court found that the plaintiff had failed to establish how it would be irreparably harmed. The plaintiff’s assertion of irreparable harm was neither clear nor immediate, and the plaintiff failed to present any facts that would establish that its harm was irreparable. A preliminary injunction cannot be found when irreparable harm has not been established.

Netcracker Technology Corp. v. Laliberté, No. 20-11054, 2020 WL 6384312, 2020 U.S. Dist. LEXIS 202610 (D. Mass. Oct. 30, 2020). To survive a motion to dismiss, a complaint must allege a plausible entitlement to relief. For pleading purposes, the district court found that the plaintiff’s trade secret allegations involving diagrams and software architecture could be fairly construed as trade secrets. The district court also found that there were sufficient allegations of affirmative measures to protect the plaintiff’s proprietary information. The district court rejected the argument that protective measures are only sufficiently pleaded if they are tailored to the specific trade secrets.

RECO Equipment, Inc. v. Wilson, No. 2:20-cv-3556, 2020 U.S. Dist. LEXIS 218410, 2020 U.S.P.Q.2d 11391 (S.D. Ohio Nov. 20, 2020). Plaintiff RECO filed a complaint for trade secret misappropriation seeking injunctive relief under the Ohio Uniform Trade Secrets Act (OUTSA). RECO had spent years developing technical expertise in the maintenance, servicing, and rebuilding of large-scale industrial, construction, and mining equipment. The district court found that RECO’s operations and procedures met the definition of trade secrets under the OUTSA and that RECO took active steps to maintain secrecy. There was evidence of actual or threatened misappropriation, including installing Dropbox to sync and back up all the files and documents downloaded from RECO’s network computer. Based on this evidence, the district court entered a preliminary injunction enjoining the defendant from accessing, using, disseminating, or disclosing RECO’s trade secrets.

Trademarks

Failure to Function

In re Mayweather Promotions, LLC, Serial No. 86753084, 2020 U.S.P.Q.2d 11298 (T.T.A.B. Oct. 29, 2020). Mayweather Promotions sought to register the mark PAST PRESENT FUTURE for “T-shirts.” The application was refused under sections 1, 2, and 45 of the Trademark Act on the grounds that the mark would be perceived as “a commonplace term, message, or expression widely used by a variety of sources” and, therefore, failed to function as a trademark. According to Mayweather Promotions, the mark was known in the boxing industry in connection with the career of Floyd Mayweather Jr. and the goods and services provided by his company.

In support of the refusal, the examining attorney provided evidence of third-party websites showing use of “Past, Present, Future,” particularly web pages showing use of this phrase on T-shirts. The examining attorney argued that the phrase would not be perceived as identifying the source of the goods, as consumers were accustomed to seeing this phrase displayed in a non-source-identifying manner on T-shirts. The Trademark Trial and Appeal Board (TTAB) found that there was no evidence in the record of Floyd Mayweather Jr.’s career or the connection to Mayweather Promotions. Additionally, there was no evidence of what fans had seen to support the association with Floyd Mayweather Jr. or that Mayweather Promotions had expended significant resources to promote its goods and services featuring PAST PRESENT FUTURE on websites or social media. Moreover, the ownership of a prior registration for PAST, PRESENT & FUTURE OF SPORTS & ENTERTAINMENT for online retail store services was not probative where that mark included additional wording and covered services not at issue in this matter. Accordingly, the refusal to register was affirmed.

Specimen/Descriptiveness

In re Fallon, Serial No. 86882668, 2020 U.S.P.Q.2d 11249 (T.T.A.B. Oct. 21, 2020). James Fallon filed a trademark application for registration of THERMAL MATRIX in connection with a “[h]eat responsive and malleable liner that is an integral component of an oral dental appliance used in the mouth and worn over the teeth of an individual while sleeping to reduce the effects of snoring and sleep apnea.” The examining attorney issued three refusals under sections 1 and 45 of the Trademark Act based on an insufficient specimen of use. The examining attorney later added a refusal on descriptiveness grounds.

The three specimen refusals were as follows: (1) the specimen did not show the mark in use with the applied-for goods, namely, a liner as an integral component of a dental appliance; (2) the use of the mark as shown on the specimen failed to function as a trademark; and (3) the specimen did not show the applied-for mark as reflected in the drawing because the specimen displayed the mark as “NEW THERMAL MATRIX.”

The TTAB agreed with the examining attorney on the first specimen refusal. The specimen, which was a photograph of packaging for the dental appliance, did not show use of the mark because the dental appliance pictured on the packaging did not identify the liner component either visually or verbally. Thus, prospective customers viewing the packaging would not associate THERMAL MATRIX with the liner component, as there was no direct association between the mark and the liner.

On the other specimen refusals, the TTAB reversed the third specimen refusal based on use of the mark as NEW THERMAL MATRIX. The TTAB found that “THERMAL MATRIX” comprised a “separate and distinct” trademark by itself, and that the addition of “NEW,” which was descriptive and non-source identifying, was in all capital letters and set apart visually from “THERMAL MATRIX.” The TTAB did not reach the second specimen refusal that the mark shown on the specimen failed to function as a trademark.

On the descriptiveness issue, the TTAB rejected Fallon’s arguments that even if “THERMAL” and “MATRIX” were descriptive as individual terms, the compound mark THERMAL MATRIX created a new and different commercial impression. Fallon’s own promotional materials and website touted the product’s “Thermal Matrix Design” that featured “a thermal matrix material that enables each user to personalize their device with a custom impression.” The TTAB agreed with the examining attorney that the mark merely described a feature of Fallon’s goods. Accordingly, the refusal to register was affirmed.

Standing

Corcamore, LLC v. SFM, LLC, 978 F.3d 1298, 2020 U.S.P.Q.2d 11277 (Fed. Cir. 2020). Corcamore appealed an order that canceled its SPROUT federal trademark registration from the TTAB. The Federal Circuit affirmed. SFM owned federal trademark registrations for several SPROUTS and related marks in connection with grocery store services. Corcamore owned a federal trademark registration for SPROUT in connection with vending machine services. SFM petitioned the TTAB to cancel Corcamore’s registration for SPROUT. Corcamore moved to dismiss the petition for lack of standing, which the TTAB denied. Corcamore then sent a letter to SFM’s counsel indicating that it would bring procedural maneuvers against SFM and delay discovery. Such maneuvers included failure to participate in depositions and filing procedurally impermissible motions. The TTAB found these acts to be willful, in bad faith, and taxing on TTAB resources and issued sanctions in response thereto, including entering a default judgment in favor of SFM.

Corcamore appealed, arguing that SFM lacked standing to bring a petition for cancellation of a registered trademark. The Federal Circuit agreed with the TTAB that SFM pleaded allegations sufficient to demonstrate a right to challenge Corcamore’s registered mark under 15 U.S.C. § 1064 and that SFM demonstrated a reasonable belief of damage by the registration of Corcamore’s SPROUT registration, which fell within the scope of interests protected by § 1064. The Federal Circuit thus held that the TTAB correctly determined that SFM was entitled to petition to cancel the SPROUT federal registration. The Federal Circuit was also unpersuaded by Corcamore’s contention that the TTAB abused its discretion by entering default judgment as a sanction. Because SFM was found to satisfy the statutory requirements to challenge Corcamore’s registered trademark, and because the TTAB did not abuse its discretion in imposing sanctions, the Federal Circuit affirmed.

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John C. Gatz

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John C. Gatz is a member of the firm Nixon Peabody in Chicago, Illinois.

 

Column contributors include the following writers: Copyrights: Jenni Psihoules, Nixon Peabody LLP; and Mark R. Anderson, Actuate Law LLC. Patents: Cynthia K. Barnett, Johnson & Johnson; R. Trevor Carter, Daniel M. Lechleiter, and Andrew M. McCoy, Faegre Drinker Biddle & Reath LLP; Robert W. (Bill) Mason, Southwest Research Institute; and Angelo Christopher, Nixon Peabody LLP. Trade Secrets: R. Mark Halligan, FisherBroyles LLP. Trademarks: Elizabeth W. Baio, Nixon Peabody LLP; and Amy L. Sierocki, Blumenfield & Shereff LLP.