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September/October 2024: Food|Drugs

September/October 2024 Decisions in Brief

John C Gatz

Summary

  • The Tenth Circuit ruled that comparative advertisements using a competitor’s copyrighted images were fair use and not false or misleading.
  • The Federal Circuit determined that the framework for recovering damages for foreign activities applies to direct infringement and reasonable royalty damages.
  • The Federal Circuit found that the district court erred in limiting a jury instruction to long-felt need and commercial success, omitting other objective indicia.
  • The Federal Circuit held that a purposeful omission or misrepresentation of key teachings of prior art references may be indicative of a specific intent to deceive the USPTO.
September/October 2024 Decisions in Brief
Nora Carol Photography via Getty Images

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Copyrights

Profit Nexus and Literal Falsity

I Dig Texas, LLC v. Creager, 98 F.4th 998, 2024 U.S.P.Q.2d 685 (10th Cir. 2024). The Tenth Circuit found that using a competitor’s copyrighted images was not closely tied to profits and affirmed such use was not infringement of the images. Plaintiff and appellant Creager sells skid steer attachments called Montana Post Drivers. In an advertisement, Creager’s competitor I Dig Texas used two of Creager’s images of Creager products along with the text “DON’T BUY 110% MADE IN CHINA - MONTANA Post Drivers Driver WHY? - $1 (Marble Falls TX & Dewey Oklahoma)” with two circle-backslash symbols with the text “MADE IN CHINA” inside. Creager asserted that this use of its images constituted copyright infringement and that I Dig Texas misrepresented the origin of I Dig Texas’s products in violation of the Lanham Act.

In district court, I Dig Texas asserted that its use of the images constituted fair use and that Creager failed to show a nexus between I Dig Texas’s use of the images resulting in profits for I Dig Texas. For a claim of copyright infringement, the copyright owner can recover either based on its own damages or on the infringer’s direct or indirect profits. The district court granted I Dig Texas summary judgment on the copyright infringement claim, relying on its affirmative defense, and did not address the nexus between I Dig Texas’s use of the images and any profits gained from that use. The Tenth Circuit first considered the nexus issue, namely, whether I Dig Texas indirectly received profits from its use of Creager’s images. Creager’s only evidence of the required profit nexus was the use of the images themselves; Creager did not provide any evidence that I Dig Texas sold any more of its own skid steer attachments as a result of the advertisements. Thus, Creager failed to show a nexus between the use of the images and any profits gained by the infringer. The Tenth Circuit stated that even if Creager could show that someone had purchased something from I Dig Texas based on the advertisement, it doesn’t automatically imply that the inclusion of the images made the difference to consumers. As such, the Tenth Circuit affirmed the summary judgment in favor of I Dig Texas as to the claim of copyright infringement.

The Tenth Circuit also considered Creger’s claim that I Dig Texas’s advertising statements on its website and elsewhere violate the Lanham Act as false advertising and false designation of origin because some of I Dig Texas’s products include components from other countries, including China and Canada. A claim for false advertising can be shown by establishing that the statement was false in one of two ways: (1) the statement is literally false, or (2) the statement is literally true but “likely to mislead or confuse consumers.” Creager’s claim relied on the literal falsity of the statements in I Dig Texas’s various advertisements, including “100% American Made Skid Steer Attachments” and “American” patriotic symbols like the American flag. The Tenth Circuit held that the statements were ambiguous as to the location of where I Dig Texas’s products are made because they could mean that the products are “100% assembled in America” even if some of the components are made abroad, and a statement can only be literally false if it is unambiguous. As such, Creager’s claims as to false advertising and false designation under the Lanham Act also failed.

Works Made for Hire and Fair Use

Whyte Monkee Productions, LLC v. Netflix, Inc., 97 F.4th 699, 2024 U.S.P.Q.2d 580 (10th Cir. 2024). The Tenth Circuit remanded the copyright infringement case for reconsideration of the transformation required by the fair use factors in light of the Andy Warhol Foundation for the Visual Arts, Inc. decision by the U.S. Supreme Court.

Defendant Netflix released the docuseries Tiger King about a big cat and other exotic animal zoo (the Park) featuring the controversial personality Joseph Maldonado-Passage, also known as “Joe Exotic.” The series included eight video clips filmed by plaintiff Timothy Sepi, seven of which were filmed while Sepi was an employee of the Park, but the eighth had been filmed after his employment ended. Sepi sued Netflix and the Tiger King production company Royal Goode for copyright infringement for including the eight video clips without permission from Sepi. Despite filing for and obtaining copyright registrations in all eight video clips after the release of Tiger King, the district court awarded Netflix summary judgment as to the first seven videos on the grounds that they were works made for hire in the scope of Sepi’s employment as a videographer and photographer for the Park, working to produce the web series Joe Exotic TV, and therefore the Park, not Sepi or Whyte Monkee, was the owner of the copyright in those videos, and further awarded Netflix summary judgment as to the eighth video on the grounds that the inclusion of that clip is fair use.

The Tenth Circuit upheld the decision as to the first seven videos but determined that the district court erred in its assessment of the fair use factors as to the eighth video. Specifically, the Tenth Circuit determined that the district court erred in finding that the first fair use factor, the purpose and character of the use of the video, and the fourth factor, market impact on the owner’s ability to monetize its work, favors Netflix and the defendants. The first fair use factor also assesses whether the unauthorized use of another’s work was transformative. While the district court determined that the use was transformative, the Tenth Circuit disagreed in light of the Supreme Court’s discussion of what constitutes transformative in Warhol. The district court determined that the use of the eighth video was not transformative as it crucially did not include commentary or target the original video; instead, the inclusion was meant to provide context for the subject of the video, Joe Exotic. To be transformative, the inclusion of another’s work must comment on the original or otherwise target the original work. Transformation of format or genre alone is not enough. With regard to the fourth factor, the Tenth Circuit stated that Netflix provided no evidence or affidavits demonstrating that its use of the eighth video did not impact the plaintiffs’ ability to monetize the work and, therefore, did not meet the burden of showing that there was no impact on the market. As such, questions of fact remain as to the use of the eighth video in the Tiger King series, requiring further consideration.

Patents

ANDA Statutory Interpretation

Salix Pharmaceuticals, Ltd. v. Norwich Pharmaceuticals Inc., 98 F.4th 1056, 2024 U.S.P.Q.2d 677 (Fed. Cir. 2024). The Federal Circuit affirmed the district court’s denial of a patentee’s motion to modify the final judgment following an amendment to the patentee’s abbreviated new drug application (ANDA) submission to carve out an infringing use. First, the Federal Circuit considered whether the district court erred in interpreting 35 U.S.C. § 271(e)(4)(A) to set the effective final approval date of an infringing ANDA submission no earlier than the latest date of expiration of the infringed patents. The Federal Circuit affirmed this interpretation, finding that “[t]he statutory scheme makes clear that it is not the potential use . . . that constitutes the relevant infringement here, nor is it the unpatented drug compound itself, but rather it is the submission of the ANDA that included an infringing use.” Second, the Federal Circuit found that the district court did not abuse its discretion when it denied the patentee’s motion to modify the judgment based on filing an amended ANDA submission that removed the infringing use. The Federal Circuit found that the district court reasonably concluded that it would be inequitable to consider an amended ANDA following the final judgment.

Damages/Eligible Subject Matter

Brumfield v. IBG LLC, 97 F.4th 854, 2024 U.S.P.Q.2d 576 (Fed. Cir. 2024). The Federal Circuit affirmed the district court’s finding that two of the asserted patents were directed to abstract ideas, possessed no inventive concept, and were therefore invalid under 35 U.S.C. § 101. With respect to damages, the Federal Circuit held that the WesternGeco framework for recovering damages for foreign activities applies to direct infringement under § 271(a) and is not limited to infringement under § 271(f) and also applies to a reasonable royalty damages model. To increase the reasonable royalty in a damages analysis based on foreign conduct that is not itself infringing, the patentee must at least show why the foreign conduct increases the value of the domestic infringement.

Eligible/Ineligible Subject Matter

AI Visualize, Inc. v. Nuance Communications, Inc., 97 F.4th 1371, 2024 U.S.P.Q.2d 632 (Fed. Cir. 2024). The Federal Circuit affirmed the district court’s finding that the asserted claims directed to a web application for displaying MRI data as virtual views were invalid under 35 U.S.C. § 101. Under Alice step 1, the claims were directed to the abstract idea of converting data and using computers to collect, manipulate, and display the data. Under Alice step 2, the claims were not directed to unconventional technology or a concrete application of the abstract idea.

Chewy, Inc. v. IBM Corp., 94 F.4th 1354, 2024 U.S.P.Q.2d 421 (Fed. Cir. 2024). The Federal Circuit affirmed in part, reversed in part, and remanded the district court’s decision. The Federal Circuit confirmed the district court’s construction of certain terms and concluded that there was no material factual dispute as to whether Chewy performed the limitation. The Federal Circuit affirmed the district court’s summary judgment grant of noninfringement to those claims. The Federal Circuit found that a genuine dispute of material fact existed regarding another claim and reversed the summary judgment grant. The Federal Circuit also found that the remaining claims did not contain an inventive concept sufficient to transform the claimed abstract idea into patent-eligible subject matter and affirmed the district court’s summary judgment grant that those claims were ineligible.

Indefiniteness

Maxwell, Ltd. v. Amperex Technology Ltd., 94 F.4th 1369, 2024 U.S.P.Q.2d 433 (Fed. Cir. 2024). The Federal Circuit reversed the district court’s finding of indefiniteness on the ground that two limitations of the independent claim contradicted each other. The district court based its indefiniteness conclusion on its determination that an element to simultaneously be optional and required was contradictory on its face. The Federal Circuit concluded that the rationale was incorrect, but not because a contradiction in a claim cannot produce indefiniteness. Rather, the Federal Circuit found no contradiction in the claim language at issue.

Jury Instructions

Inline Plastics Corp. v. Lacerta Group, LLC, 97 F.4th 889, 2024 U.S.P.Q.2d 574 (Fed. Cir. 2024). The Federal Circuit affirmed in part, vacated in part, and remanded the district court’s findings on infringement and invalidity. The Federal Circuit found that the district court gave an incorrect jury instruction that only mentioned the long-felt need and commercial success but did not mention other objective indicia and that such omission was prejudicial. The Federal Circuit affirmed the district court’s holdings on infringement.

Obviousness

Janssen Pharmaceuticals, Inc. v. Teva Pharmaceuticals USA, Inc., 97 F.4th 915, 2024 U.S.P.Q.2d 597 (Fed. Cir. 2024). The Federal Circuit vacated and remanded the district court’s nonobviousness findings because the district court erred in requiring Teva to show that it would be obvious to use the recited dosing regimens for the general population, even though the claims were not directed to such a generalized dose. The district court’s obviousness analysis was also too rigid with respect to finding whether there was a motivation to combine. The Federal Circuit also affirmed the district court’s finding that the claims were not indefinite.

Pfizer Inc. v. Sanofi Pasteur Inc., 94 F.4th 1341, 2024 U.S.P.Q.2d 420 (Fed. Cir. 2024). The Federal Circuit affirmed the PTAB’s determination that most of the claims were unpatentable as obvious. The Federal Circuit further affirmed the PTAB’s denials of Pfizer’s motions to amend by adding several proposed claims. The Federal Circuit vacated those denials as to other proposed claims and remanded.

Virtek Vision International ULC v. Assembly Guidance Systems, Inc., 97 F.4th 882, 2024 U.S.P.Q.2d 572 (Fed. Cir. 2024). The Federal Circuit reversed the PTAB’s finding of certain claims as unpatentable. The Federal Circuit found that the mere fact that two alternative methods were both known in the art did not obviate to show a motivation to combine. There was no evidence presented that it would have been common sense to combine the references or that there were a finite number of solutions. No evidence of design need or market pressure was presented.

Safe Harbor

Edwards Lifesciences Corp. v. Meril Life Sciences Pvt. Ltd., 96 F.4th 1347, 2024 U.S.P.Q.2d 545 (Fed. Cir. 2024). The Federal Circuit affirmed the district court’s finding of noninfringement because the importation of two devices was reasonably related to submitting information to the Food and Drug Administration (FDA). 35 U.S.C. § 271(e)(1). The Federal Circuit found that importing two devices into the United States was reasonably related to the purpose of recruiting clinical investigators to conduct an FDA clinical trial. The Federal Circuit stated that the inquiry is not why the devices were imported or how they were used, but whether the act was for a use reasonably related to submitting information to the FDA.

Unenforceability

Luv n’ Care, Ltd. v. Laurain, 98 F.4th 1081, 2024 U.S.P.Q.2d 687 (Fed. Cir. 2024). The Federal Circuit opined on two unenforceability defenses. First, the Federal Circuit affirmed the district court’s judgment that the defense of unclean hands barred the patentee from seeking relief. The Federal Circuit found no error in the district court’s holding that the patentee’s conduct was unconscionable and had an immediate and necessary connection to the relief sought. The Federal Circuit then vacated and remanded the district court’s judgment of no inequitable conduct. On the issue of materiality, the Federal Circuit instructed the district court to determine, on remand, whether the patentee’s misrepresentations to the U.S. Patent and Trademark Office (USPTO) rose to the level of affirmative egregious misconduct, such that materiality is established per se. The Federal Circuit further instructed that a patentee is not shielded from a finding of “but-for materiality” by disclosing a prior art reference to the USPTO when the patentee makes misrepresentations about the characteristics of the reference. On the issue of intent, the Federal Circuit found that the district court abused its discretion by failing to consider the patentee’s misconduct in aggregate, rather than in isolation. The Federal Circuit held that a purposeful omission or misrepresentation of key teachings of prior art references may be indicative of a specific intent to deceive the USPTO.

Trademarks

Corporate Domestication

MyMeta Software, Inc. v. Meta Platforms, Inc., Opposition No. 91286055, 2024 U.S.P.Q.2d 780 (T.T.A.B. Apr. 24, 2024). MyMeta Software, Inc., a Delaware corporation, sought to oppose a trademark application filed by Meta Platforms. MyMeta initially filed an extension of time to oppose the application. Subsequently, MyMeta filed a notice of opposition wherein the Electronic System for Trademark Trials and Appeals (ESTTA) cover sheet identified MyMeta Software, Inc. as the opposer; however, the notice of opposition identified MyMeta Software, SRL as the opposer and owner of a pleaded application that included “myMeta.” The applicant filed a motion to dismiss for lack of subject matter jurisdiction, based on the argument that MyMeta Software, SRL was not the entity that was granted the extension of time to oppose. MyMeta filed an amended notice of opposition that identified the opposer as MyMeta Software, Inc. (the Delaware corporation) and the corporate domestication of MyMeta Software, SRL.

The Trademark Trial and Appeal Board (TTAB) confirmed that the information provided on the ESTTA filing form is used to institute an opposition proceeding, including the name of the opposer. Accordingly, the TTAB instituted the opposition with MyMeta as the opposer, even though MyMeta Software, SRL was identified in the notice of opposition. Additionally, MyMeta was allowed to amend the identity of the opposer in the amended pleading consistent with the information on the original ESTTA form. The motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) was denied.

The applicant also filed a motion to dismiss under Rule 12(b)(6) for failing to state a claim upon which relief can be granted. The applicant argued that MyMeta was not entitled to a statutory cause of action because it relied solely on the registration owned by MyMeta Software, SRL. MyMeta argued that as a corporate domestication, it was the same legal entity as MyMeta Software, SRL.

After reviewing Delaware’s applicable statute, the TTAB determined that a “domesticated corporation shall be deemed to be the same as, and a continuation of the existence of, the foreign entity.” Accordingly, under Delaware law, MyMeta Software, SRL and MyMeta were deemed to be the same continuing entity, and the rights of MyMeta Software, SRL in the pleaded trademark application were vested in MyMeta. Therefore, the claim under Trademark Act Section 2(d) was sufficiently pleaded, and the motion to dismiss under Rule 12(b)(6) was denied.

Grace Period for Renewal

Retrobrands America LLC v. Molson Coors Beverage Co. USA LLC, Cancellation No. 92083267, 2024 U.S.P.Q.2d 769 (T.T.A.B. Apr. 25, 2024). The petitioner filed a petition to cancel the respondent’s mark after the deadline for the respondent to file a Section 8 declaration (a declaration of continued use or excusable nonuse) had passed, but prior to the end of the six-month grace period for filing the Section 8 declaration. The respondent filed a motion to dismiss the petitioner’s petition to cancel based on the respondent’s argument that it did not plan on filing a Section 8 declaration during the six-month grace period and, therefore, the respondent’s registration was effectively canceled. The petitioner requested entry of judgment against the respondent, arguing that the respondent’s motion to dismiss was an attempt to cancel its registration without the petitioner’s consent in an attempt to avoid judgment.

Typically, when a petition to cancel is filed during the six-month grace period, and a respondent ultimately fails to file a Section 8 declaration by the end of the grace period, judgment on the petition to cancel cannot be entered against the respondent because the registration is retroactively canceled by operation of law as of the start of the six-month grace period. In other words, in such a situation, the petition to cancel is mooted because there is no registration to cancel.

The TTAB denied the respondent’s motion to dismiss as premature because it was filed prior to the end of the six-month grace period, so the respondent’s registration was not yet effectively canceled. Thus, the petitioner’s request for entry of judgment based on the respondent’s motion to dismiss was also denied. During the pendency of these motions, the six-month grace period expired. As such, the respondent’s registration was canceled by operation of law prior to the filing of the petition to cancel, causing the petition to cancel to be dismissed without prejudice as moot.

Likelihood of Confusion

Sage Therapeutics, Inc. v. SageForth Psychological Services, LLC, Opposition No. 91270181, 2024 U.S.P.Q.2d 689 (T.T.A.B. Apr. 12, 2024). Applicant SageForth sought to register the mark SAGEFORTH for various psychological services in Class 44. Opposer Sage Therapeutics opposed registration based on alleged priority in, and likelihood of confusion with, six of its registered marks: SAGE CENTRAL for health information services for postpartum depression in Class 44; one mark for SAGE THERAPEUTICS and design for pharmaceutical research services in Class 42; and four marks for SAGE THERAPEUTICS and various designs for pharmaceutical preparations in Class 5. The applicant counterclaimed for partial cancellation of the four registrations in Class 5, seeking to restrict the goods to those “that treat post-partum depression.”

The TTAB determined that the opposer’s registered marks had priority and that there was a likelihood of confusion between the opposer’s SAGE CENTRAL mark and the applicant’s SAGEFORTH mark. Specifically, SAGE was the first and dominant term of both marks. Additionally, the applicant’s services were considered to be inclusive of the opposer’s services and, therefore, identical in part. The TTAB also determined that SAGE CENTRAL is suggestive and that there was no evidence of bad faith enforcement of the opposer’s trademark rights. After considering the relevant DuPont factors, the TTAB concluded that the opposer had proven its likelihood of confusion claim by a preponderance of the evidence.

Regarding the applicant’s counterclaim, the applicant needed to prove two elements to prevail: (1) the proposed amendment avoided a likelihood of confusion finding, and (2) the proposed amendment was supported by the evidence in the record. Because the TTAB had found a likelihood of confusion based on the SAGE CENTRAL mark, any proposed amendment to the opposer’s SAGE THERAPEUTICS registrations would not avoid the likelihood of confusion finding. Thus, the counterclaim was dismissed without prejudice.

Priority

Araujo v. Framboise Holdings, Inc., 99 F.4th 1377, 2024 U.S.P.Q.2d 791 (Fed. Cir. 2024). In an opposition proceeding, Framboise opposed a trademark application for #TODECACHO, filed by Jalmar Araujo for hair combs, based on a likelihood of confusion with Framboise’s mark for #TODECACHO and design. Framboise asserted prior use of its #TODECACHO and design mark in connection with shampoo, conditioner, hair mask treatments, hair cream, curly hair activator, and hair jelly. On the final day of the 30-day trial period, Framboise filed a motion to extend the trial period by seven days. Four days later, Framboise submitted a declaration of its director, Adrian Extrakt, in support of its first use date. Araujo objected to the late submission of the Extrakt declaration. The TTAB found that the delay was minimal and allowed the submission, finding that Framboise had met the good cause standard. Araujo appealed to the Federal Circuit.

The Federal Circuit found that the TTAB applied the correct good cause standard and did not abuse its discretion to grant the extension. The Federal Circuit indicated that although the motion did not provide the particular facts surrounding the need for an extension, the TTAB had determined that most of the evidence had been submitted by Framboise by the close of the testimony period, the extension request was Framboise’s first extension request, the delay was minimal, and there was no evidence of bad faith or negligence.

Accordingly, Framboise was able to rely on its prior use of the #TODECACHO and design mark based on the Extrakt declaration. As Araujo did not offer evidence disputing the prior use by Framboise, the Federal Circuit determined that the decision allowing Framboise to rely on its priority date was supported by substantial evidence and was, therefore, affirmed.

Trade Secrets

Existence of Trade Secrets

Engineering & Software System Solutions, Inc. v. Cusatis, No. 23-cv-676, 2024 WL 1363578, 2024 U.S. Dist. LEXIS 57751 (N.D. Ill. Mar. 29, 2024). The defendant argued that a vague list of technology features is broad enough to attempt to claim that anything and everything at its company is a trade secret. The Defend Trade Secrets Act (DTSA) does not impose a heightened pleading requirement. The plaintiff must simply allege the existence of secret methodologies or processes and must identify them with enough specificity to satisfy the above standards. Trade secrets need not be disclosed in detail in a complaint alleging misappropriation for the simple reason that such a requirement would result in public disclosure of the purported trade secrets.

Interstate Commerce

Aira Jewels, LLC v. Mondrian Collection, LLC, No. 1:23-cv-04510 (JLR), 2024 U.S.P.Q.2d 578, 2024 U.S. Dist. LEXIS 54204 (S.D.N.Y. Mar. 25, 2024). Aira Jewels, a New York LLC, operates a family-run jewelry business in New York City. The DTSA provides a federal cause of action for an owner of a trade secret that is misappropriated if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce. The plaintiff’s DTSA claim failed because the complaint alleged no nexus between interstate or foreign commerce and the alleged trade secrets.

Nextpulse, LLC v. Life Fitness, LLC, No. 22 CV 03239, 2024 WL 1376213, 2024 U.S. Dist. LEXIS 58860 (N.D. Ill. Mar. 31, 2024). A plaintiff bringing a DTSA claim must demonstrate that the trade secrets are “related to a product or service used in, or intended for use in, interstate or foreign commerce.” The parties disputed whether a plaintiff can meet the interstate commerce requirement by showing that either a plaintiff or a defendant uses the trade secret in interstate commerce. The Seventh Circuit concluded that to meet the interstate commerce requirement, a plaintiff may allege that the trade secrets are used in the defendant’s product. The statute does not specify whether the product or service incorporating the trade secrets needs to be the plaintiff’s or the defendant’s.

Reasonable Measures to Protect

Sigma Corp. v. Island Industries, Inc. (In re Island Industries), No. 23-5200, 2024 WL 869858, 2024 U.S. App. LEXIS 5077 (6th Cir. Feb. 29, 2024). Although whether a trade secret holder took reasonable measures to protect its trade secrets is fact-intensive, often rendering dismissal inappropriate, Sigma failed to allege that it took any measures to protect its trade secrets. Thus, Sigma failed to make a trade secret misappropriation claim, and the district court correctly found that Sigma failed to make a trade secret misappropriation claim under applicable law. Sigma’s failure to request leave to amend in the district court rendered dismissal with prejudice.

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

 

©2024. Published in Landslide, Vol. 17, No. 1, September/October 2024, 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.

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