December 01, 2020 DECISIONS IN BRIEF

Decisions in Brief

John C. Gatz

©2020. Published in Landslide, Vol. 13, No. 2, November/December 2020, 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

Failing to Meet the Single Unit of Publication Requirement May Be Grounds for Invalidity

Unicolors, Inc. v. H&M Hennes & Mauritz, LP, 959 F.3d 1194, 2020 U.S.P.Q.2d 10599 (9th Cir. 2020). Unicolors sued retailer H&M alleging that a design Unicolors created was substantially similar to a design printed on apparel sold by H&M. The district court found in favor of Unicolors. H&M appealed on the threshold issue of whether Unicolors had a valid copyright registration for the design in question, which is necessary to bring a copyright infringement suit under the Copyright Act. Unicolors applied for registration of the design as part of a single-unit registration that included 31 separate designs. H&M argued that the resulting registration was invalid because the application included known inaccuracies. In particular, H&M alleged that Unicolors used a single copyright application to register 31 separate works; however, to register a collection of works as a single unit, the works must have been first sold or offered for sale together in an integrated manner.

The Ninth Circuit Court of Appeals agreed with H&M and held that a collection of works does not qualify as a single unit of publication unless all individual works of the collection were first published as a singular, bundled unit. The district court determined that the works included in the registration were not initially sold as a single unit and that Unicolors knowingly included inaccurate information in the copyright application. Further, the Ninth Circuit advised that the district court should have requested the Register of Copyrights to recommend to the court whether the inaccurate information, if known, would have caused the Register to refuse the registration.

Thus, the Ninth Circuit reversed the district court’s decision and remanded with instructions to submit an inquiry to the Register of Copyrights asking whether the known inaccuracies in the registration, if known to the Register, would have caused it to refuse registration.

Reasonable Minds Could Differ on Substantial Similarity at the Motion to Dismiss Stage

Zindel v. Fox Searchlight Pictures, Inc., No. 18-56087, 2020 WL 3412252, 2020 U.S.P.Q.2d 10688 (9th Cir. June 22, 2020). Zindel sued for copyright infringement of his father’s play, Let Me Hear You Whisper, against the defendants for the film and book, The Shape of Water. The district court dismissed the complaint on the ground that the film and book were not substantially similar to the play as a matter of law. The Ninth Circuit found that the district court erred and reversed, concluding that reasonable minds could differ as to whether there could be substantial similarity between the works. The Ninth Circuit determined that while the works were properly presented to the district court, additional evidence, such as expert testimony, would aid in deciding whether there are similarities in the protectable elements of the works.

Patents

Attorney Fees

Electronic Communication Technologies, LLC v. ShoppersChoice.com, LLC, 963 F.3d 1371, 2020 U.S.P.Q.2d 10725 (Fed. Cir. 2020). The Federal Circuit Court of Appeals vacated and remanded the district court’s denial of attorney fees following a judgment invalidating the patent claim. The district court failed to address the patent owner’s manner of litigation and to sufficiently address the objective weakness of the assertion. The Federal Circuit found an abusive pattern of the patent owner’s litigation. The Federal Circuit also found that the district court failed to consider other conclusions in relevant cases for the same patent owner.

Claim Preclusion

PersonalWeb Technologies LLC v. Patreon, Inc., 961 F.3d 1365, 2020 U.S.P.Q.2d 10666 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s decision that the current lawsuits against Amazon’s customers were barred by the dismissal of a lawsuit against Amazon. The patentee initially filed suit against Amazon and a single customer. After claim construction, the case was dismissed with prejudice. The patentee subsequently sued Amazon’s customers, alleging infringement of the same patents. The Federal Circuit affirmed the dismissal, finding the requirements for claim preclusion had been met.

Indefiniteness

Pacific Coast Building Products, Inc. v. CertainTeed Gypsum, Inc., No. 2019-1524, 2020 WL 3526401, 2020 U.S.P.Q.2d 10720 (Fed. Cir. June 30, 2020). The Federal Circuit found that the term “scored flexural strength” was indefinite because there were multiple tests for measuring the scored flexural strength of drywall. The specification disclosed using the ASTM standard, but the ASTM standard includes multiple materially different tests, and the specification did not provide any guidance as to which one to use.

Invalidity

Immunex Corp. v. Sandoz Inc., 964 F.3d 1049, 2020 U.S.P.Q.2d 10724 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s holding that Sandoz failed to show that the patents were invalid. First, the Federal Circuit found that the patents were not invalid for obviousness-type double patenting because plaintiff Roche did not transfer all substantial rights in one of the references to a licensee. Second, the Federal Circuit found that the claims were supported by the priority application. Third, the Federal Circuit found that the district court did not err in analyzing motivation to combine or in assessing secondary considerations.

Inventorship

Dana-Farber Cancer Institute, Inc. v. Ono Pharmaceutical Co., 964 F.3d 1365, 2020 U.S.P.Q.2d 10775 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s inventorship conclusion, finding that the alleged joint inventors made numerous significant contributions to the claimed subject matter. The Federal Circuit noted that conception is the touchstone of the joint inventorship inquiry. The Federal Circuit also explained that reduction to practice does not need to occur at the moment of conception for purposes of identifying correct inventors and that joint inventorship does not depend on whether a claimed invention is novel or nonobvious over a particular researcher’s contribution.

ITC General Exclusion Orders

Mayborn Group, Ltd. v. International Trade Commission, 965 F.3d 1350, 2020 U.S.P.Q.2d 10789 (Fed. Cir. 2020). The Federal Circuit affirmed the ITC’s denial of Mayborn’s petition asking the ITC to rescind or modify a general exclusion order (GEO). Mayborn was not a party to the investigation that resulted in the GEO, but the complainants notified Mayborn of the investigation before the ITC entered the GEO. None of the named respondents raised an invalidity defense, and Mayborn took no action during the course of the investigation. The ITC issued the GEO barring importation of infringing products. The complainants then notified Mayborn that it was importing infringing products in violation of the GEO. Mayborn petitioned the ITC to rescind or modify the GEO due to the alleged invalidity of the patent on which the order was based. The ITC denied Mayborn’s petition, finding that Mayborn’s supposed discovery of invalidating prior art after the issuance of the GEO was not a “changed condition” that warrants rescission or modification. The Federal Circuit first found that Mayborn had standing. The Federal Circuit found that the ITC correctly denied Mayborn’s petition for two independent reasons: (1) the ITC does not have authority to adjudicate the issue of patent validity unless it is raised by a respondent in the course of an investigation or an enforcement proceeding; and (2) a previously unaddressed invalidity challenge, alone, does not constitute a changed condition of fact or law sufficient to require that a GEO be modified or set aside.

Obviousness

Adidas AG v. Nike, Inc., 963 F.3d 1355, 2020 U.S.P.Q.2d 10702 (Fed. Cir. 2020). The Federal Circuit affirmed the Patent Trial and Appeal Board’s (PTAB’s) finding that the alleged infringer did not demonstrate that the proposed claims were obvious over prior art references. The Federal Circuit found standing for the alleged infringer. Although the alleged infringer had not been sued, the patentee had asserted its claims against others and refused to grant the alleged infringer a covenant not to sue.

B/E Aerospace, Inc. v. C&D Zodiac, Inc., 962 F.3d 1373, 2020 U.S.P.Q.2d 10706 (Fed. Cir. 2020). The Federal Circuit affirmed the PTAB’s obviousness determination in an inter partes review (IPR). Specifically, the PTAB found that it would have been obvious to modify the applicant’s admitted prior art in view of a secondary reference to include the claimed first recess. While the prior art did not disclose the claimed second recess, the PTAB properly found that this element was obvious for the same reasons as the first recess or, alternatively, as a matter of common sense.

Shoes by Firebug LLC v. Stride Rite Children’s Group, LLC, 962 F.3d 1362, 2020 U.S.P.Q.2d 10701 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s finding that the claims were obvious. The Federal Circuit found that the preamble did not limit the claim because the body recited a structurally complete invention and that the preamble was merely an intended purpose.

Patentability/Right to Appeal

Fitbit, Inc. v. Valencell, Inc., 964 F.3d 1112, 2020 U.S.P.Q.2d 10749 (Fed. Cir. 2020). The Federal Circuit affirmed the PTAB’s conclusion that Fitbit, as a joined party to the IPR, had the right to appeal the PTAB’s decisions, vacated the PTAB’s rulings with respect to patentability of the claims, and remanded. The Federal Circuit found that Fitbit had a statutory right to appeal the PTAB’s decision regarding claims that a different party to the IPR challenged. The Federal Circuit also found that the PTAB erred by not reviewing the claims on the grounds of obviousness after claim construction. The PTAB also erred in declining to accept the uniform position of the parties to correct a claim dependency error.

Presuit Damages/Jury Instructions

Packet Intelligence LLC v. NetScout Systems Inc., 965 F.3d 1299, 2020 U.S.P.Q.2d 10776 (Fed. Cir. 2020). The Federal Circuit reversed and vacated the district court’s presuit damages award and enhancement thereof, finding that the district court’s jury instruction on the marking requirement conflicted with an intervening Federal Circuit case, Arctic Cat Inc. v. Bombardier Recreational Products Inc., 876 F.3d 1350, 1368 (Fed. Cir. 2017). Specifically, Arctic Cat held that the patentee must prove that the products practiced the patent; however, the jury instruction placed the burden on NetScout to show that certain products did not practice the asserted patent. After properly placing the burden on the patentee, the Federal Circuit found that Packet Intelligence failed to present substantial evidence to the jury that the unmarked MeterFlow product practiced any asserted patent claim. The Federal Circuit also rejected Packet Intelligence’s attempt to preserve the damages award through the direct infringement of the related, and also asserted, method patent. The Federal Circuit held that (1) there was no evidence supporting damages from NetScout’s presuit internal use and testing of the patented method; and (2) Packet Intelligence could not circumvent § 287 by arguing that NetScout’s infringement of the related method claims drove accused product sales. The Federal Circuit affirmed the district court’s judgment in all other respects.

Sealed Subject Matter

Uniloc 2017 LLC v. Apple, Inc., 964 F.3d 1351, 2020 U.S.P.Q.2d 10757 (Fed. Cir. 2020). The Federal Circuit affirmed in part, vacated in part, and remanded the district court’s refusal to grant Uniloc’s request to seal records. Uniloc did not meaningfully dispute that its original motion to seal was overbroad. Instead, Uniloc argued that since it agreed to make public more than 90 percent of the materials originally sought to be sealed, the district court abused its discretion in refusing to grant the newer request. The Federal Circuit found that the district court took seriously the presumption of public access and did so in accord with U.S. Supreme Court precedent, and denied Uniloc’s motion to seal and affirmed the district court’s finding. The Federal Circuit held that the district court lacked sufficient findings to allow it to assess the interests of the third parties in shielding information from the public review, and remanded the issue of whether to seal the third parties’ information for the district court to consider.

Timeliness of Ex Parte Appeals

Odyssey Logistics & Technology Corp. v. Iancu, 959 F.3d 1104, 2020 U.S.P.Q.2d 10562 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s dismissal of three actions. In the first two cases, the Federal Circuit agreed with the U.S. Patent and Trademark Office (USPTO) that the cases should be dismissed because the PTAB had not yet issued final decisions. The final action was dismissed because the statute of limitations had run.

Trade Secrets

Danaher Corp. v. Gardner Denver, Inc., No. 19-CV-1794-JPS, 2020 U.S. Dist. LEXIS 89674, 2020 U.S.P.Q.2d 10565 (E.D. Wis. May 20, 2020). Michael Weatherred worked at Danaher for 16 years and served as the vice president. Weatherred then joined Gardner Denver, and Danaher sued Gardener Denver and Weatherred, alleging trade secret misappropriation. Danaher moved for a preliminary injunction. Gardner Denver and Danaher are not commercial competitors. The alleged trade secret involved a slide and video presentation posted online for over nine months before the motion for a preliminary injunction was filed. The district court found that Danaher had not plausibly alleged any actual or imminent harm and thus denied the preliminary injunction.

ExamWorks v. Baldini, No. 2:20-CV-00920, 2020 U.S. Dist. LEXIS 103366 (E.D. Cal. June 11, 2020). ExamWorks manages medical examinations, peer reviews, bill reviews, and Medicare compliance. Four former employees were sued collectively for misappropriating trade secrets. The results of a forensic investigation revealed that about a month before Baldini was terminated by ExamWorks, Baldini sent a computer file to his personal email containing information on over 53,000 cases over the past year and half with detailed contact information for both doctors and customers. Based on this evidence, the district court found that the compiled information identifying customers with particular needs and characteristics contained more than the mere identities and addresses easily identified through publicly available sources. This information would give a competitor a substantial business advantage in seeking to offer services to compete with ExamWorks. Therefore, the motion for the preliminary injunction was granted.

J.S.T. Corp. v. Foxconn Interconnect Technology Ltd., 965 F.3d 571, 2020 U.S.P.Q.2d 10777 (7th Cir. 2020). The knowing acquisition, disclosure, and use of a trade secret are all actions that can be completed long before an offending product ever comes into contact with a consumer. If the defendants knowingly acquired, disclosed, or used J.S.T.’s trade secrets anywhere, it was not in Illinois. They did not receive the stolen designs and drawings in Illinois. They neither designed nor manufactured their knockoffs in Illinois. And if the defendants’ sale of their connectors counted as a use of a trade secret, the defendants only sold their products at their facilities in Texas and China. The district court properly dismissed J.S.T.’s claims for misappropriation of trade secrets and unjust enrichment for lack of personal jurisdiction.

Konica Minolta Business Solutions U.S.A., Inc. v. Lowery Corp., No. 15-11254, 2020 WL 3791601, 2020 U.S. Dist. LEXIS 120082 (E.D. Mich. July 7, 2020). Konica Minolta Business Solutions (KMBS) identified hundreds of specific documents and files that it claimed the defendants misappropriated. The defendants contended that KMBS failed to identify the specific alleged trade secrets with sufficient detail and therefore the defendants were entitled to summary judgment. The district court granted partial summary judgment. The district court found that KMBS’s pricing information was publicly available and not a secret. However, the district court found that the plaintiff’s internal price books contained information it did not disclose to customers and were not public. The price books contained multitiered pricing options for KMBS’s equipment and services that depended on several factors, including internal discounted prices that could be offered to customers based on particular circumstances. There were genuine issues of fact on whether the price books were protectable trade secrets.

Redapt Inc. v. Parker, No. 2:20-cv-00862, 2020 U.S. Dist. LEXIS 102887 (W.D. Wash. June 11, 2020). Redapt specializes in providing resources to build data center infrastructure and implementing cloud computing solutions. Redapt sued Parker, a former employee, for trade secret misappropriation, alleging that Parker copied Redapt’s customer relations management (CRM) database. Redapt moved for a TRO under the Defend Trade Secrets Act. Redapt filed affidavits and other evidence supporting the motion for a TRO, including evidence that Parker was setting up meetings with Redapt’s competitor, which the district court found was strong circumstantial evidence that Parker copied the CRM database intending to offer confidential information to Redapt’s competitors. The district court granted a TRO, noting that irreparable harm would occur once Parker gave the proprietary customer information to a competitor. Parker was ordered not to disclose or use Redapt’s CRM database and ordered to preserve all evidence relevant to the allegations in the complaint.

TLS Management & Marketing Services, LLC v. Rodríguez-Toledo, 966 F.3d 46 (1st Cir. 2020). TLS is a tax planning and consulting firm that provides clients with advice to minimize U.S. and Puerto Rico tax liabilities. TLS generated two internal reports, a capital preservation report (CPR) and a strategy report. These were the two alleged trade secrets at issue that Rodríguez was accused of misappropriating and using in his new business competing against TLS. However, TLS could not identify the alleged trade secrets within the CPR and the strategy report with specificity. Most of the information was public information. The First Circuit Court of Appeals held that the proper inquiry is not whether the documents describing TLS’s tax scheme were readily ascertainable, but rather whether the substance of the tax scheme was readily ascertainable.

Trademarks

Attorney Fees

Munchkin, Inc. v. Luv n’ Care, Ltd., 960 F.3d 1373, 2020 U.S.P.Q.2d 10629 (Fed. Cir. 2020). Munchkin sued Luv n’ Care and Admar (collectively LNC) for trademark infringement and unfair competition based on LNC’s spill-proof drinking containers. The district court granted LNC’s motion for attorney fees based on its finding that the case was exceptional. Munchkin appealed, arguing that the finding lacked a proper foundation because LNC’s motion for fees insufficiently presented the required facts and analysis needed to establish that Munchkin’s patent, trademark, and trade dress infringement claims were so substantively meritless to render the case exceptional. The Federal Circuit agreed.

The Federal Circuit found that the issues relating to determining that Munchkin’s infringement claims were so substantively meritless to warrant attorney fees were not fully adjudicated on the merits. With respect to the patent infringement claim, the Federal Circuit noted that the district court’s decision awarding LNC its attorney fees never adequately explained why Munchkin’s validity position was unreasonable. The Federal Circuit further found that the district court’s finding that the trademark claims were exceptional conflicted with the court’s earlier order granting Munchkin’s motion to amend the complaint to assert a slightly different trademark logo. Put another way, the district court found that Munchkin could not be faulted for litigating a claim it was given permission to pursue. With respect to the trade dress infringement claims, the Federal Circuit found that none of LNC’s “barebones allegations” justified a finding that Munchkin’s position that it owned a protectable, valid trade dress was unreasonable.

The Federal Circuit therefore held that the district court abused its discretion in granting the motion and reversed the exceptional-case determination. As such, the district court’s grant of attorney fees was reversed.

Genericness

U.S. Patent & Trademark Office v. Booking.com B.V., 140 S. Ct. 2298, 2020 U.S.P.Q.2d 10729 (2020). Booking.com sought to register four marks including the term “Booking.com” in connection with travel-related services. The USPTO refused registration of the marks, concluding that “Booking.com” was generic for the applied-for services. Booking.com appealed to the district court, which held that “Booking.com” was descriptive and had acquired secondary meaning and, therefore, met the distinctiveness requirement for registration. The USPTO appealed only the district court’s determination that the “Booking.com” mark was not generic, arguing that when a generic term is combined with a generic Internet domain name suffix like “.com,” the resulting combination is likewise generic. The Fourth Circuit Court of Appeals rejected this proposed per se rule, and the Supreme Court affirmed.

The Court held that a “generic.com” term is only generic for a class of goods or services if consumers perceive the term as the name of the class of goods or services. The Court rejected the USPTO’s argument that, like “Generic Company,” every “generic.com” term is generic, regardless of consumer perception. Instead, the Court held that because “Booking.com” is not a generic name to consumers, it is not generic and therefore qualifies for trademark protection. The Court also rejected the USPTO’s argument that trademark protection for “generic.com” marks would hinder competitors, noting that the registration of “Booking.com” would not give Booking.com a monopoly on the term “booking,” preventing competitors from using the word “booking” to describe their own services.

Thus, the Supreme Court affirmed the judgment that the mark “Booking.com” was eligible for trademark registration.

Ownership/Likelihood of Confusion

Sock It To Me, Inc. v. Aiping Fan, Opposition No. 91230554, 2020 U.S.P.Q.2d 10611 (T.T.A.B. June 3, 2020). Applicant Aiping Fan filed a trademark application for registration of SOCK IT UP in connection with socks in class 25. Opposer Sock It To Me opposed Aiping Fan’s application, alleging that SOCK IT UP was likely to cause confusion under section 2(d) with its registered mark SOCK IT TO ME for socks and stockings. The opposer also claimed that the applicant, an individual residing in China, did not own the mark when the application was filed, and therefore the application was void ab initio. The opposer alleged that a different entity (JY Instyle) used the mark in the U.S. and was the true owner of the mark. The applicant indicated that it had selected the mark for use in the U.S. and had granted JY Instyle an oral license to use the mark on socks. Thus, according to the applicant, use of the mark by JY Instyle was attributable to the applicant, as JY Instyle was a related company and such use inured to the benefit of the applicant.

The Trademark Trial and Appeal Board (TTAB) considered whether the applicant (as licensor) exercised sufficient control over the quality of the goods produced under the SOCK IT UP mark by its licensee (JY Instyle). Based on the evidence, the TTAB found that the applicant had established quality control over the source of manufacturing and type of fabrics used to make the socks, and that JY Instyle had inspected the goods to ensure that they complied with the applicant’s standards. Thus, the TTAB concluded that the applicant owned the SOCK IT UP trademark when it was filed.

On the issue of likelihood of confusion, the TTAB determined that the similarity of the goods and channels of trade, buyer’s care and sophistication, and commercial success of the opposer’s mark weighed in favor of the opposer and a finding of a likelihood of confusion. However, the TTAB further concluded that the applicant’s SOCK IT UP mark was inherently distinctive when taken as a whole. Moreover, when considering the meaning of the marks, the applicant argued that SOCK IT UP was a play on the term “suck it up,” while the opposer argued that SOCK IT TO ME was an expression meaning to “give it to me.” The TTAB found that a multitude of meanings could be ascribed to the two marks, and that the relevant public would not perceive their connotation and commercial impression as similar. Based on this finding, the dissimilarity of the marks outweighed the other factors, and the TTAB dismissed the opposition.

Unlawful Use

In re Stanley Brothers Social Enterprises, LLC, Serial No. 86568478, 2020 U.S.P.Q.2d 10658 (T.T.A.B. June 16, 2020). Stanley Brothers filed a trademark application for registration of the mark CW in connection with “hemp oil extracts sold as an integral component of dietary and nutritional supplements.” These goods contained cannabidiol (CBD), an extract of the cannabis plant. The examining attorney refused registration under sections 1 and 45 of the Trademark Act based on Stanley Brothers’ unlawful use of CBD under (1) the Food, Drug, and Cosmetic Act (FDCA) and (2) the Controlled Substances Act (CSA).

The TTAB noted that registration will not generally be refused based on unlawful use unless a violation of federal law is indicated by the record or other evidence, or when the applicant’s activities relevant to the application involve a per se violation of federal law. The TTAB found that the applied-for goods were a “food” where Stanley Brothers identified the goods as an integral component of its dietary and nutritional supplements. Moreover, the TTAB indicated that the CBD in the goods qualified as a “drug or biological product for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public.” Additionally, there was no evidence that CBD was marketed in food before the clinical investigations of CBD were instituted. Accordingly, the goods were unlawful under the FDCA, and the TTAB affirmed the refusal. The TTAB did not reach the refusal based on unlawful use under the CSA.

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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.