March/April 2024 Decisions in Brief

Prevailing defendants are entitled to a strong presumption in recovering fees in a copyright infringement suit. Courts consider the four nonexclusive factors set forth in Fogerty v. Fantasy, Inc., 114 S. Ct. 1023 (1994), in determining whether to award a prevailing party its fees, including: (1) the frivolousness of the suit, (2) the losing party’s motivation for bringing or defending against a suit, (3) the objective unreasonableness of the claims advanced by the losing party, and (4) the need to advance considerations of compensation and deterrence. The Seventh Circuit determined that the district court’s reasoning was faulty because the defendants did in fact prevail based on their fair use defense, and the review of the Fogerty factors did not outweigh the presumption of the defendants’ entitlement to fees. Moreover, the Seventh Circuit determined that the district court did not meaningfully consider whether Google in fact changed the applicable law. Live Face provided no explanation as to how Google impacted its claims or the defendants’ defenses. The Seventh Circuit remanded the case back to the district court to reconsider the defendants’ motion for fees in view of the appellate court’s reasoning.

VARA Does Not Protect against Concealment of Artwork

► Kerson v. Vermont Law School, Inc., 79 F.4th 257, 2023 U.S.P.Q.2d 974 (2d Cir. 2023). Plaintiff Samuel Kerson painted two large murals on the walls of a building at Vermont Law School commemorating Vermont’s role in the Underground Railroad. The law school community raised concerns that the depictions in the murals were offensive. In response, the law school informed Kerson that it planned to erect a paneled wall around the murals to conceal them from the public. Kerson sued the law school on the grounds that the concealment of the murals violated his rights under the Visual Artists Rights Act of 1990 (VARA). The district court granted summary judgment in favor of Vermont Law School, holding that VARA does not protect against the permanent concealment of an artwork, absent physical change to the work. Kerson appealed.

Kerson argued that the permanent, paneled wall not only modifies the immovable murals but also destroys them for all intents and purposes. He also argued that the panels could cause damage and destruction to the underlying murals over time. VARA recognizes and protects certain moral rights of authors and provides three actionable rights (with exceptions), including: (1) the right of attribution, (2) the right of integrity, and (3) the right to prevent destruction. Kerson alleged that his rights of moral integrity and to prevent destruction had been violated based on the law school’s actions.

VARA protects works of visual art from intentional distortion, mutilation, or other modification prejudicial to an artist’s honor or reputation but protects only works of recognized stature, and any intentional or grossly negligent destruction of the work. The district court relied on the plain meaning of the statute to find that the law school’s concealment of the murals did not amount to modification or destruction of the works. The Second Circuit agreed and concluded that the panels affixed around the murals did not physically alter the works whatsoever and, therefore, the murals were neither destroyed nor modified. Concealment does not change the analysis. The law school did not remove the murals, and they remained intact behind the panels. Additionally, the Second Circuit found Kerson’s argument that the panels may destroy the murals over time unpersuasive because there was no evidence of “intentional” distortion, mutilation, or other modification. Further, the possibility of damage at some unidentifiable time in the future does not give rise to a VARA claim. Based on this reasoning, the Second Circuit affirmed the district court’s decision in favor of Vermont Law School.

Patents

Analogous Art

Netflix, Inc. v. DivX, LLC, 80 F.4th 1352 (Fed. Cir. 2023). The Federal Circuit reversed the Patent Trial and Appeal Board’s (PTAB’s) finding that Netflix failed to identify “a field of endeavor” of the patent and a piece of prior art. The Federal Circuit found that the PTAB erred by imposing a higher burden on Netflix than required. The precedent set by the Federal Circuit does not require the use of magic words. The arguments made by Netflix sufficed without explicitly stating the “field of endeavor.” However, the Federal Circuit affirmed that the PTAB’s application of the reasonably pertinent test for analogous art was supported by substantial evidence.

Analogousness/Scope of Petitioner’s Reply

Corephotonics, Ltd. v. Apple Inc., 84 F.4th 990, 2023 U.S.P.Q.2d 1202 (Fed. Cir. 2023). The Federal Circuit vacated and remanded the PTAB’s determination that Corephotonics’ patent claims were obvious. Corephotonics argued on appeal that the decision suffered both procedurally and substantively. Procedurally, the Federal Circuit disagreed with Corephotonics that the PTAB abused its discretion by allowing Apple to make certain analogousness arguments in its reply, holding that Apple’s reply arguments were both responsive to the patent owner’s response and did not inject new theories. The Federal Circuit also rejected the argument that the PTAB erred by finding analogousness based on conclusions different from those advocated by Apple, noting that the PTAB may resolve issues via any findings supported by the evidence. Substantively, Corephotonics argued that the PTAB’s analogous findings were not supported by substantial evidence. With respect to one reference, the Federal Circuit could not determine whether the PTAB’s opinion included a mere “typographical error” (as advocated by Apple) or a “potentially-impactful error of substance” (as advocated by Corephotonics) and, therefore, remanded to the PTAB for further explanation and, if needed, further fact-finding.

Claim Construction

Apple Inc. v. Corephotonics, Ltd., 81 F.4th 1353 (Fed. Cir. 2023). The Federal Circuit vacated and remanded the PTAB’s decisions relating to patentability based on obviousness. Specifically, the Federal Circuit found that the intrinsic record supported Apple’s claim construction and reversed and remanded back to the PTAB. Another issue was whether an expert declaration showed a reasonable expectation of success of combining two pieces of prior art. Because the PTAB relied on an argument (the declaration was faulty due to typographical errors) that neither side proposed, the Federal Circuit reversed and remanded that issue too.

Sisvel International S.A. v. Sierra Wireless, Inc., 81 F.4th 1231 (Fed. Cir. 2023). The Federal Circuit affirmed the PTAB’s construction of a single claim term. The Federal Circuit agreed with the PTAB on the plain and ordinary meaning of the claim term, as the intrinsic evidence did not limit the terms to a narrower reading.

Collateral Estoppel

Finjan LLC v. SonicWall, Inc., 84 F.4th 963, 2023 U.S.P.Q.2d 1198 (Fed. Cir. 2023). The Federal Circuit affirmed in part, vacated in part, and remanded the district court’s judgment. The Federal Circuit affirmed the district court’s grant of summary judgment of noninfringement and the district court’s decision to exclude Finjan’s expert analysis. The Federal Circuit also found that because the district court based its judgment of invalidity on a collateral estoppel decision that the Federal Circuit had since vacated, the judgment of validity was vacated and remanded.

Damages/Expert Testimony

► Cyntec Co., Ltd. v. Chilisin Electronics Corp., 84 F.4th 979, 2023 U.S.P.Q.2d 1201 (Fed. Cir. 2023). The Federal Circuit vacated a damages award for lost profits after finding that the district court abused its discretion in admitting a damage expert’s opinions. In forming the opinions, the expert relied on SEC filings of customers who purchased the alleged infringing products and third-party data. However, the expert failed to account for irrelevant products and services included in this data or simply assumed that all products contained the allegedly infringing technology. Thus, the Federal Circuit found that the expert’s opinion was derived from unreliable data and built on speculation.

Design Patents

Columbia Sportswear North America, Inc. v. Seirus Innovative Accessories, Inc., 80 F.4th 1363 (Fed. Cir. 2023). The Federal Circuit vacated the district court’s findings of noninfringement of the patentee’s design patent. The Federal Circuit found that to qualify as prior art in design patent cases, the prior art must be applied to the article of manufacture identified in the claim. The jury instructions, therefore, must include the correct standard for determining whether the reference qualified as prior art.

Double Patenting/Patent Term Adjustment

► In re Cellect, LLC, 81 F.4th 1216, 2023 U.S.P.Q.2d 1011 (Fed. Cir. 2023). The Federal Circuit held that in an obviousness-type double patenting analysis, the expiration date for a patent must be based on the expiration date after any patent term adjustment has been added, regardless of whether a terminal disclaimer has been filed. The Federal Circuit also found no error with the PTAB’s finding in an ex parte reexamination that the request raised a substantial new question of patentability.

Enablement

► Baxalta Inc. v. Genentech, Inc., 81 F.4th 1362, 2023 U.S.P.Q.2d 1103 (Fed. Cir. 2023). The Federal Circuit affirmed the district court’s grant of summary judgment of invalidity for lack of enablement. The Federal Circuit found the case materially indistinguishable from the Supreme Court’s recent ruling in Amgen Inc. v. Sanofi, 143 S. Ct. 1243 (2023), wherein the Supreme Court rejected the roadmap-style disclosure. The Federal Circuit found that the patent simply directs skilled artisans to engage in the same iterative, trial-and-error process the inventors followed to discover the antibodies they elected to disclose. The Federal Circuit held that the patent fails to teach skilled artisans how to make and use the full scope of the claimed antibodies without unreasonable experimentation.

Inter Partes Review (IPR)

Axonics, Inc. v. Medtronic, Inc., 75 F.4th 1374, 2023 U.S.P.Q.2d 920 (Fed. Cir. 2023). In an appeal from multiple IPRs, the Federal Circuit held that the PTAB erred in refusing to consider the petitioner’s claim construction arguments in its reply that responded to a construction that the patent owner proposed for the first time in its patent owner’s response.

Rembrandt Diagnostics, LP v. Alere, Inc., 76 F.4th 1376, 2023 U.S.P.Q.2d 938 (Fed. Cir. 2023). The PTAB did not err in finding that an IPR petitioner’s reply arguments were not untimely, in part, because the patent owner forfeited its objection. The Federal Circuit also found that the allegedly new arguments had a nexus to the arguments in the petition and were responsive to the patent owner’s arguments. The PTAB’s obviousness findings were supported by substantial evidence.

IPR/Forfeiture of Arguments

Netflix, Inc. v. DivX, LLC, 84 F.4th 1371, 2023 U.S.P.Q.2d 1259 (Fed. Cir. 2023). The Federal Circuit affirmed the PTAB’s decisions upholding the challenged claims of two patents. The crux of the appeal was whether the PTAB failed to address alternative invalidity arguments that Netflix had purportedly raised in its IPR petitions. The Federal Circuit noted the fine line the PTAB faces when interpreting the scope of a petition and determining what arguments have been fairly presented before determining that Netflix’s alternative arguments were not presented clearly enough in its petitions to result in abuse of discretion by the PTAB. The Federal Circuit noted, “[t]he Board should not have to work as hard as Netflix wants to identify all arguments fairly presented in a petition.” As such, the Federal Circuit found all of Netflix’s arguments on appeal to be forfeited as the arguments were not sufficiently presented below.

Obviousness

Elekta Ltd. v. ZAP Surgical Systems, Inc., 81 F.4th 1368 (Fed. Cir. 2023). The Federal Circuit affirmed the PTAB’s decision of certain claims as obvious. The Federal Circuit found that the PTAB’s finding that a skilled artisan would be motivated to combine the references was supported by ample evidence. The PTAB also did not err in failing to explicitly address the argument regarding reasonable expectation of success; the PTAB’s other findings implicitly addressed these arguments (and such arguments were supported by substantial evidence).

Incept LLC v. Palette Life Sciences, Inc., 77 F.4th 1366, 2023 U.S.P.Q.2d 958 (Fed. Cir. 2023). The Federal Circuit affirmed the PTAB’s anticipation findings, which were supported by substantial evidence from express disclosure in the prior art and expert testimony. The Federal Circuit also affirmed the PTAB’s obviousness findings and concluded that the PTAB’s findings regarding motivation to combine were not merely conclusory.

Schwendimann v. Neenah, Inc., 82 F.4th 1371, 2023 U.S.P.Q.2d 1173 (Fed. Cir. 2023). The Federal Circuit affirmed the PTAB’s finding that the claims were unpatentable as obvious. The Federal Circuit found that the appeal failed to address the substantial evidence supporting the PTAB’s finding that a skilled artisan would be motivated to combine the two references and that the skilled artisan would have had a reasonable expectation of success in making the proposed combination.

Sisvel International S.A. v. Sierra Wireless, Inc., 82 F.4th 1355, 2023 U.S.P.Q.2d 1167 (Fed. Cir. 2023). The Federal Circuit affirmed in part, vacated in part, and remanded the PTAB’s findings. The Federal Circuit found substantial evidence supporting the PTAB’s analysis that the claim limitation “second puncturing pattern” was disclosed in the reference. The Federal Circuit also held that substantial evidence supported the PTAB’s finding of a lack of motivation to combine the references, but that the PTAB erred in analyzing the “means for detecting” limitation.

Volvo Penta of the Americas, LLC v. Brunswick Corp., 81 F.4th 1202, 2023 U.S.P.Q.2d 1000 (Fed. Cir. 2023). The PTAB did not err in finding a motivation to combine the applied references in an IPR and considered all relevant arguments from the patent owner. With respect to secondary considerations, the patent owner failed to establish a presumption of nexus. However, the Federal Circuit reversed the PTAB’s finding that the patent owner did not independently establish a nexus between the claims and secondary considerations notwithstanding the lack of a presumption. The Federal Circuit further found that the PTAB’s analysis of secondary considerations was vague and ambiguous and remanded for further consideration.

PTAB/Claim Construction

ABS Global, Inc. v. Cytonome/St, LLC, 84 F.4th 1034, 2023 U.S.P.Q.2d 1225 (Fed. Cir. 2023). The Federal Circuit reversed, vacated, and remanded the PTAB’s final written decision that ABS had not proved any of the challenged claims to be unpatentable. The PTAB based its decision solely on a prior art reference failing to disclose one claim limitation that was common to all challenged claims. The crux of the dispute was whether “a sample stream” is limited to a singular sample stream or if it could mean one or more sample streams. The Federal Circuit found that at least in an open-ended “comprising” claim the use of “a” or “an” before a noun requires that the phrase be construed to mean “one or more” unless the context sufficiently indicates otherwise. Finding no sufficient basis to reject the plural-allowing meaning of the phrase “a sample stream,” the Federal Circuit determined that the PTAB applied an erroneous claim construction and, thus, reversed the PTAB’s claim construction.

Trade Secrets

Identification of Trade Secrets

Bureau Veritas Commodities & Trade, Inc. v. Cotecna Inspection SA, No. 4:21-CV-00622, 2022 U.S. Dist. LEXIS 57408 (S.D. Tex. Mar. 29, 2022). The argument that the plaintiff must disclose detailed descriptions of trade secrets in a public complaint—including pricing data and specific client names—with no protective order in place would likely defeat the entire purpose of attempting to protect those trade secrets in the first place. Any further delineation of the alleged trade secret can be achieved through discovery.

REXA, Inc. v. Chester, 42 F.4th 652 (7th Cir. 2022). Case law requires a high level of specificity when a plaintiff makes a claim for misappropriation of a trade secret. When a plaintiff presents complex or detailed descriptions of methods and processes but fails to isolate the aspects that are unknown to the trade, no trade secret has been identified.

United Source One, Inc. v. Frank, No. JKB-22-2309, 2023 U.S. Dist. LEXIS 58076 (D. Md. Mar. 31, 2023). When a trade secret complaint offers only labels and conclusions or a formulaic recitation of the elements of a cause, the complaint is insufficient. Naked assertions devoid of further factual enhancement are not well-pleaded. The plaintiff’s motion for a default judgment on the trade secret misappropriation claims was denied, and the case was dismissed.

XpandOrtho, Inc. v. Zimmer Biomet Holdings, Inc., No. 3:21-cv-00105-BEN-KSC, 2022 U.S. Dist. LEXIS 46698 (S.D. Cal. Mar. 15, 2022). Before a defendant is compelled to respond to a complaint based upon claimed misappropriation or misuse of a trade secret, the complainant should describe the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons who are skilled in the trade. This is the appropriate pleading standard for pleading the existence of a trade secret.

Trademarks

Assignment of Intent-to-Use-Based Trademark Application

Thrive Natural Care Inc. v. Nature’s Sunshine Products, Inc., Cancellation No. 92078465, 2023 U.S.P.Q.2d 953 (T.T.A.B. Aug. 15, 2023). Respondent Nature’s Sunshine Products owns a registration for SUBSCRIBE & THRIVE for online ordering featuring nonmedicated skin care preparations. Petitioner Thrive Natural Care brought a cancellation action against the respondent’s mark, alleging a likelihood of confusion with the petitioner’s prior-used and registered mark THRIVE for nonmedicated skin care preparations. The respondent counterclaimed that (1) the petitioner’s assignment of the underlying intent-to-use application violated the “anti-assignment” provision, and (2) the petitioner committed fraud on the U.S. Patent and Trademark Office (USPTO). The petitioner moved to dismiss the counterclaims for failure to state a claim upon which relief may be granted, and the Trademark Trial and Appeal Board (TTAB) granted the petitioner’s motion.

The “anti-assignment” provision prohibits assignment of an intent-to-use application to a third party prior to filing a statement of use unless the application is transferred with part of the business that is related to the mark. However, section 14(3) of the Trademark Act bars anti-assignment claims that are more than five years old. Because the THRIVE mark had been registered for more than five years prior to the filing of the opposition, the TTAB dismissed the anti-assignment counterclaim as time-barred. For the alleged fraud on the USPTO counterclaims, the respondent alleged that the petitioner was not using the THRIVE mark in commerce in connection with all of the goods identified in the registration when it filed its intent-to-use declaration. The TTAB explained that a single product may support use of more than one good identified in an application or registration. Additionally, the TTAB held that the respondent failed to allege facts supporting the conclusion that the petitioner’s officer acted with the requisite deceitful state of mind when signing the declarations of use. As such, the respondent’s counterclaims were dismissed for failing to plead sufficient specific facts supporting the elements of fraud.

Fraudulent Declaration/Incontestability

► Great Concepts, LLC v. Chutter, Inc., 84 F.4th 1014, 2023 U.S.P.Q.2d 1215 (Fed. Cir. 2023). In a prior cancellation proceeding, Chutter was successful in canceling a registration for the mark DANTANNA’S, owned by Great Concepts, due to fraud. In that decision, the TTAB determined that Great Concepts’ attorney had fraudulently submitted a section 15 declaration to the USPTO in an effort to obtain incontestable status for its registered mark. Great Concepts later appealed the TTAB decision, arguing that a section 15 declaration only related to the incontestability of a mark, not its registration, and therefore its registration should not have been canceled.

The issue on appeal was whether section 14 of the Lanham Act authorized cancellation of a registration when the incontestability status of the mark was obtained fraudulently. In reviewing the statute’s text, structure, and legislative history, the Federal Circuit concluded that section 14 does not authorize the TTAB to cancel a registration based on a fraudulent section 15 declaration. Since registration and incontestability are different rights and section 14 only identifies fraud in connection with registration as a basis for cancellation, it follows that fraud in connection with acquiring incontestable status is not a basis for a section 14 cancellation. Moreover, under section 33(b) of the Lanham Act, the Federal Circuit indicated that the proper remedy for fraud in connection with obtaining incontestable status is a loss of incontestable status, not a loss of registration. Accordingly, the Federal Circuit remanded the case for further consideration by the TTAB.

Single Creative Work

► In re Wood, Serial No. 88388841, 2023 U.S.P.Q.2d 975 (T.T.A.B. Aug. 15, 2023). Applicant Douglas Wood sought to register the mark CHURCH BOY TO MILLIONAIRE for various books and printed matter goods. The examining attorney refused registration of the applicant’s proposed mark on the ground that it was the title of a single creative work—the applicant’s book—and, thus, did not function as a trademark. The applicant appealed and requested reconsideration, which was denied. In the appeal, the TTAB affirmed the refusal to register.

The title of a single creative work is not considered a trademark and is unregistrable because (1) a title does not act as an indicator of source, and (2) such a trademark could create obstacles to the entry of copyrighted material into the public domain because trademarks can endure indefinitely. The applicant asserted that his proposed mark was not the title of a single creative work because he also sold a Spanish translation of the book. Of note, the Trademark Manual of Examining Procedure permits trademark registration of significantly different versions of a single work. However, the applicant failed to provide evidence that the two books differed significantly in content. As such, the TTAB analogized selling the same book in different languages to selling the same book in different media formats, which does not preclude a finding that the title names a single work. The TTAB did note that a translation could result in a work that is significantly different in content from the translated work, but the applicant here failed to provide any evidence that the Spanish-language version of Church Boy to Millionaire was such a work. Thus, the refusal to register was affirmed.