All posts by Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law.

Supreme Court Limits and Questions Preclusion of Defenses in TM Case

Patent

by Dennis Crouch

Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc. (Supreme Court 2020)

This case makes me sad because it reminds me that my walk-able grocery store, Lucky’s Market, has closed down. Colorado based Lucky’s had its own trademark dispute with California based Lucky Supermarket.

The case before the supreme court involved two other uses of LUCKY:

The parties in this case have been fighting in federal court over trademark rights for almost 20 years; and in three separate actions.

The petition before the U.S. Supreme Court involves “defense preclusion” –asking when a defendant in a subsequent action will be precluded from raising a defense that was or could-have been raised in the prior action.  In its decision, the Supreme Court explained that there is no special doctrine of defense preclusion, but rather the courts should apply the general rules of claim preclusion and issue preclusion.

The first litigation ended in a settlement.  During the second litigation, Lucky Brand raised the prior settlement as a reason to dismiss, but the court denied the motion-to-dismiss without prejudice (thus not “on the merits”).  The second litigation was then decided on other grounds.  In the third litigation Lucky Brand again raised the prior settlement as a defense, and Marcel argued that it was precluded.  In its analysis, the Supreme Court focused on whether the third litigation involved the “same claim” as the second; and whether it mattered.

Claim preclusion bars relititgation of an already decided claim between two parties.  Our notice pleading system encourages parties to join together in a single lawsuit all the claims that the parties have against one another.  Once the lawsuit ends, our claim preclusion will step-in to bar any further litigation between the parties relating to that transaction or occurrence.  If, for example, a patentee sues a manufacturer for infringing claim 1 of its patent (and wins).  The patentee will be barred from later filing a lawsuit asserting claim 2 of the same patent against the same manufacturer for the same infringing behavior.

Claim preclusion is thought to also precludes defenses that were raised or that could have been raised in the the first lawsuit.  However, a key limiting factor that the court found today is the “same transaction” or “common nucleus of operative facts” test — and that test is defined by the well pled complaint.

Here, the Supreme Court explained that the two lawsuits did not involve the same claims: “Put simply, the two suits here were grounded on different conduct, involving different marks, occurring at different times.”  Thus, no claim preclusion. [I believe that both cases involved assertion of the “get lucky” mark, and so I don’t know what the court is talking about regarding “different marks.” – DC]

Note here that the court also suggested a possibility of eliminating claim preclusion to defenses altogether: “There may be good reasons to question any application of claim preclusion to defenses.” That issue though is saved for another day.

Issue preclusion bars relitigation of an already decided issue.  However, issue preclusion requires that the issue be actually decided. Although the defense was raised in the original lawsuit, it was not actually decided but rather dismissed without prejudice. Thus, no issue preclusion.

Trademark Law: In his short post on the case, Eric Moran notes:

The Court specifically pointed out the risk in barring such claims in trademark cases, when “liability for trademark infringement turns on marketplace realities that can change dramatically from year to year.”

The court could have allowed more conflation between these various cases, but drew a tight line on the “same claim” element of claim preclusion.  One ongoing debate on this topic in patent law is the extent that a patentee should be required to assert all of its patents related to a defendant’s accused infringing content at the risk of beinig precluded. Or, may a patentee file a first lawsuit with a first patent; then later a second lawsuit with a second patent; etc. Current Federal Circuit rule is that allegations of infringement of two different patents involve the “same claim” only if the claim scopes are “essentially the same.” SimpleAir, Inc. v. Google LLC, 884 F.3d 1160, 1167 (Fed. Cir. 2018); See also Acumed LLC v. Stryker Corp., 525 F.3d 1319 (Fed. Cir. 2008) (same claim also requires infringing activity to be “essentially the same”).

Patent Infringement Claim Preclusion: Only When Accused Device is “Essentially the Same” as Prior Adjudicated Device

 

Big Win for Copycat Products

Patent

by Dennis Crouch

This case is going to end up being a big one for our online marketplace.  Many many producers are finding knock-off versions of their products sold via Amazon — often with Amazon’s direct backing. The decision here support’s Amazon’s approach and is especially important coming from the pro-protection Federal Circuit. Importantly, the court here does not allow IP rights to be improperly extended in order to catch a counterfeit. 

Lanard Toys Limited v. Dolgencorp LLC and Ja-Ru (Fed. Cir. 2020)

Lanard makes the “Lanard Chalk Pencil” and sued the knock-off competitor Ja-Ru Products along with Lanard’s former distributor Dolgencorp and former retailer Toys-R-Us.

The setup begins with the clear statement that Ja-Ru copied the design and then Dolgencorp and TRU stopped buying from Lanard and started buying from Ja-Ru.  The question then is whether this setup is simply fair competition or is it somehow unfair or unlawful.

Here, Lanard made its chalk-pencil product look like a well-known unprotectable product — a pencil with an eraser.  Perhaps it shouldn’t be surprised that its associated exclusive rights are quite thin.

The trial court ended the case on summary judgment holding that (1) Ja-Ru’s product does not infringe the asserted design patent, D671,167; (2) that the asserted copyright over the pencil is invalid and not infringed; (3) Ja-Ur’s product does not infringe Lanard’s trade dress; and (4) there was no unfair competition since no IP rights were violated.

On appeal, the Federal Circuit has affirmed.

Infringing the Design Patent: The design patent is directed toward the “ornamental design for a chalk holder” as shown in the drawings.  35 USC 289 calls out design patent infringer as someone who as “applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale …”  Here, the court did not cite the statute, but went straight to the test in Egyptian Goddess that asks – what is the scope of the patented design? In that case, the court explained that the scope of a design patent will depend upon how it differs from the prior art.  Here:

The district court [] recognized that “the overall appearance of Lanard’s design is distinct from this prior art only in the precise proportions of its various elements in relation to each other, the size and ornamentation of the ferrule, and the particular size and shape of the conical tapered end.” In so doing, the district court fleshed out and rejected Lanard’s attempt to distinguish its patent from the prior art by importing the “the chalk holder function of its design” into the construction of the claim.

The Federal Circuit affirmed this approach as well as the district court’s separate consideration of functional and non-functional features of the design.

We have instructed trial courts that design patents “typically are claimed as shown in drawings,” but that it can be helpful to “distinguish[] between those features of the claimed design that are ornamental and those that are purely functional.” Egyptian Goddess.

In the end, the court compared the accused product with the patented design — keeping in mind the broad scope of prior art — and concluded that the ordinary observer would be drawn more to the differences than the similarities.

In its decision, the Federal Circuit focused some attention on the “points of novelty” that the Federal Circuit previously rejected as a requisite test for design patent infringement.  Here, the court recognized that the doctrine remains a useful approach when considering the scope of design patent claims.

Here, as a matter of claim construction, the district court undoubtedly considered the points of novelty of the patented design over the prior art. And the court placed those points of novelty in context by considering that those points of novelty would draw “the attention of the ordinary observer.” [W]e conclude that the district court correctly balanced the need to consider the points of novelty while remaining focused on how an ordinary observer would view the overall design. See Egyptian Goddess.

Slip Op.

On Copyright infringement, the court here essentially ruled that the pencil is more like a shovel than a cheerleader uniform. See Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S. Ct. 1002 (2017).

In attempting to identify separable features, “the feature cannot itself be a useful article.” Star Athletica. … Here, Lanard’s ’458 copyright is for the chalk holder itself, and Lanard’s arguments in the district court and in this appeal merely confirm that it seeks protection for the dimensions and shape of the useful article itself. Because the chalk holder itself is not copyright protectable, Lanard cannot demonstrate that it holds a valid copyright.

Slip Op.

The appellate panel went on to similarly reject Landards trade dress & unfair competition claims. (“Lanard has not identified evidence with which it could satisfy its burden to prove at trial that, when customers see the Lanard Chalk Pencil, their minds jump to the producer of the product rather than the product itself.”)

Affirmed.

Arthrex applies to: “All agency actions rendered by those [unconstitutionally appointed] APJs”

Patent

Virnetx Inc. v. Cisco Systems and USPTO (intervenor) (Fed. Cir. 2020) (precedential rehearing denial)

In Virnetx, the Federal Circuit issued a non-precedential decision remanding and vacating the PTO decision in light of Arthrex (unconstitutionally appointed PTAB judges cannot cancel a patent).  One difference between this case and artrex is that the Virnetx patents were cancelled via pre-AIA inter partes reexamination rather than inter partes review.  The court found the difference meaningless:

Although this appeal arises out of an inter partes reexamination and not an inter partes review as was at issue in Arthrex, we see no material difference in the relevant analysis. We therefore grant VirnetX’s motion.

Slip Op. (Opinion by Judge O’Malley and joined by Judges Moore and Chen). [VirnetxArthrexI].

The PTO immediately filed a petition for panel rehearing and rehearing en banc.  Those petitions have now been denied. However, the original panel has expanded upon its original opinion in with further justification.

The PTO’s particular contention goes as follows: PTAB judges may be acting as principal officers when ruling over AIA trials, but they are not so high-and-mighty when hearing an inter partes reexamination appeal (or presumably an ex parte appeal from a patent applicant). In response, the Federal Circuit explained that an individual’s Appointment status is associated with the whole person and is related to “all of that appointee’s duties.” See Freytag v. Commissioner of Internal Revenue, 501 U.S. 868 (1991).

The court thus concludes:

[I]f these APJs are unconstitutionally appointed principal officers because of their inter partes review duties in light of Arthrex, it would appear that under Freytag vacatur would be appropriate for all agency actions rendered by those APJs regardless of the specific type of
review proceeding on appeal.

Rehearing Denial. See also Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019) en banc denied in Arthrex, Inc. v. Smith & Nephew, Inc., 953 F.3d 760 (Fed. Cir. 2020).  Multiple petitions for writ of certiorari are likely coming soon in Arthrex.

Of some interest, the PTO requested that the mandate from that case be delayed, but that motion was denied by the panel. Fed. R. App. P. 41(d)(1).  The PTO had hoped to delay holding remand IPR trials in Arthrex and other similarly situated cases.  In its denial of the stay-of-mandate, the Federal Circuit explained its position:

The delay contemplated by the United States could cause harm. All the cases in this court that are in posture similar to that of Arthrex involve patent claims deemed unpatentable by the Board. The delay contemplated by the United States would cause the continuation of stays in those proceedings and in related proceedings in district courts. Those stays have the effect of leaving the patent claims in force and also could cause the continued obligation to pay fees under license agreements that (as is common) require payment until a final adjudication of invalidity. At the same time, the limited remand proceedings required by the Arthrex decision (in no more than 81 cases) do not seem especially burdensome, given the resources of the Board, which has more than 250 members. . . . We conclude that the public interest under these circumstances favors denying the stay.

ArthrexStayDenial (March 30, 2020) Note here that, the PTAB count is “more than 100 decisions” that have been vacated under Arthrex “and more such Orders are expected.” In a General Order, Chief Administrative Patent Judge Scott Boalick has now ordered “all such cases in administrative abeyance until the Supreme Court acts on a petition for certiorari or the time for filing such petitions expires.”  This General Order from the PTAB appears contrary to the spirit of the the above-quoted order from the Federal Circuit. I expect at least one of the 100+ patentees will attempt an emergency appeal of the general suspension of activity by the PTAB.

 

Goats on the Roof at the Supreme Court

Patent

Todd Bank’s effort to save the dignity of goats has reached the U.S. Supreme Court.  The respondent in the case is Al Johnson’s Swedish Restaurant — a Door County Wisconsin mainstay. “Al Johnson’s is an authentic Swedish family owned restaurant where you can find goats grazing the sod roof.” [Goat Cam].

Al Johnson’s registered trade dress “consists of goats on a roof of grass.” When Bank petitioned the USPTO to cancel the mark, the TTAB refused — holding that Bank did not have standing to file the petition.  On appeal, the Federal Circuit affirmed.  Unlike the no-injury-required approach an AIA-review petitioner on the patent-side, the trademark law requires that a cancellation petitioner “believe[] that he is or will be damaged” by the mark’s registration. Here, Bank was not particularly injured, although he does claim to be disparaged by the mark:

The petition asks two questions – one on the merits and the other associated with sanctions from the court:

1. Whether Tam precludes disparagement as the basis of one’s standing under Section 14 of the Lanham Act, 15 U.S.C. § 1064, to challenge the validity of a trademark where the basis of the merits of the challenge, i.e., the challenger’s assertion as to why the mark is invalid, is unrelated to disparagement.

2. Whether a federal appeals court abuses its authority by sanctioning a party for arguing in favor of his position, even though: (i) the arguments and the position are meritorious; and (ii) the court claimed that the party had conceded that his position had been foreclosed by a decision of this Court, whereas the party, rather than having made such a concession, had argued that his position was not foreclosed by that decision.

In its decision, the Federal Circuit sided with the mark holder and then found the appeal frivolous. The court thus awarded cost and attorney fees to Swedish Restaurant.

Even though Mr. Bank appears pro se before us, he is an attorney and bears the commensurate obligations. Accordingly, we grant Swedish Restaurant’s motion for costs and attorney fees, including the costs and fees incurred in relation to the parties’ sanctions motions, and deny Mr. Bank’s motion for sanctions.

Id.

Goats Remain on the Roof

 

Not Just a Hole in One, Court Finds Holes in All the Arguments

Patent

Agarwal v. Topgolf Int’l (Fed. Cir. 2020)

Writing about golf in the midst of a national health crisis it a bit misguided, but the invention at issue is still interesting. Amit Agarwal is a former patent litigator and current assignee of U.S. Patent No. 5,370,389 (1994 patent – expired).

As Agarwal explained in his patent infringement complaint, the invention “revolutionized the boring, slow sport of golf by infusing the golf driving range experience with technology.” The technology here is to individually track the balls hit and award points for distance and alignment.  The infringement lawsuit was filed in 2016.  TopGolf responded with a petition for inter partes review (IPR), which resulted in the claims being cancelled as obvious.  On appeal, the Federal Circuit has affirmed — effectively tagging Agarwal with a double bogie.

Agarwal’s likely best argument – that the invention wasn’t obvious – was hampered by the substantial deference given to the PTAB factual determinations that underlie an obviousness conclusion.  The court explained:

The simple fact that some contradictory evidence exists in the record does not demonstrate that the Board’s findings are unsupported by substantial evidence.

Slip Op.; citing Elbit Sys. of Am., LLC v. Thales Visionix, Inc., 881 F.3d 1354 (Fed. Cir. 2018).

Agarwal also raises the issue of unconstitutional takings, which the Federal Circuit again rejected:

Agarwal argues that a finding of unpatentability of a patent filed before November 29, 1999 in inter partes review is an unconstitutional taking. This court has already held that “the retroactive application of IPR proceedings to pre-AIA patents is not an unconstitutional taking under the Fifth Amendment” because patent owners “had the expectation that the PTO could reconsider the validity of issued patents” in inter partes reexaminations and ex parte reexaminations. Celgene Corp. v. Peter, 931 F.3d 1342, 1362–63 (Fed. Cir. 2019).

Note that Celgene’s petition is on this issue is pending before the U.S. Supreme Court with the following question presented:

Petitioner’s Question: Whether retroactive application of inter partes review to patents issued before passage of the America Invents Act violates the Takings Clause of the Fifth Amendment

US Gov’t Restatement of Question: Whether the cancellation, following inter partes review, of petitioner’s pre-AIA patent violates the Just Compensation Clause.

Petition.

Jury Verdicts and Forward-Looking Royalties

Patent

TCL Communication Technology Holdings Limited, et al., Petitioners v. Telefonaktiebolaget LM Ericsson, et al. (Supreme Court 2020)

Petition for writ of certiorari:

Technical standards created by standard-setting organizations—such as the 2G, 3G, and 4G wireless communication standards—are ubiquitous in the modern economy and enable the interoperability of products made by different manufacturers. To facilitate the implementation of standards and prevent abusive practices, most standard-setting organizations require [participating] companies that believe their patents are essential to practicing a standard to make binding commitments to license their patents on fair, reasonable, and nondiscriminatory (FRAND) terms. When the holder of a standard-essential patent [first makes a commitment, but later] refuses to honor that commitment, prospective licensees may seek a ruling that the FRAND commitment has been breached and an injunction ordering specific performance (i.e., forming a new license with FRAND terms and conditions).

In the decision on review, the Federal Circuit held that the patent owner accused of breaching its FRAND commitment had a Seventh Amendment right to have a jury set the royalty rate in the injunction requiring it to license its worldwide portfolio of patents on FRAND terms, simply because the injunction included a backward-looking royalty payment proposed by the patent owner as part of the consideration that the licensee was required to pay to receive specific performance.

The question presented is:

Whether a patent owner required to license its standard-essential patents on fair, reasonable, and nondiscriminatory terms has a Seventh Amendment right to a jury trial in a proceeding seeking the equitable relief of specific performance.

CAFC: Arthrex Inoculated IPRs that had not yet reached Final Written Decision

Patent

Caterpillar Paving Products Inc. v. Wirtgen America, Inc. (Fed. Cir. 2020)

In 2018, Wirtgen petitioned the USPTO Director to institute an inter partes review (IPR) against Caterpillar’s US9045871 (paving machine).  The PTO initiated the IPR, and eventually concluded that the challenged claims (as well as proposed substitute claims) were all unpatentable.

On appeal, Caterpillar asked the court to vacate and remand the decision for a new-hearing with a new-panel – citing Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019).  However, the court has refused:

Unlike in prior cases in which this court has recently vacated and remanded, Arthrex issued before the Board’s final written decision in this case.

The theory of Arthrex is that the court’s cancellation of PTAB judge job security instantly cured the Constitutional appointments problem (making them inferior officers rather than principal offiers).  Here, the Arthrex cure (Oct 2019) came just before the Caterpillar final judgment (Nov 2019). Caterpillar argued that it suffered under “a year’s worth of constitutional violations.” On appeal, however, the Federal Circuit ruled that the inoculation was complete against any IPR that had not yet reached final judgement.

Caterpillar, coupled with Cienna Corp., look to place a hard limit on the number of cases requiring new paneling following Arthrex.

Now Precedential: IPR Petitioner who Waived Arthrex issue cannot Raise it on Appeal after Losing the IPR

Now Precedential: IPR Petitioner who Waived Arthrex issue cannot Raise it on Appeal after Losing the IPR

Patent

Cienna Corp. v. Oyster Optics, LLC and Andrei Iancu (Fed. Cir. 2020)

In this case, the Federal Circuit held that an IPR petitioner did not have a right to raise the Arthrex appointments issue on appeal unless the issue was first raised before the PTAB. The court’s basic reasoning is actual and equitable waiver.

The problem with Ciena’s request is that, unlike the patent owner in Arthrex, Ciena requested that the Board adjudicate its petition. It, thus, affirmatively sought a ruling from the Board members, regardless of how they were appointed. Ciena was content to have the assigned Board judges adjudicate its invalidity challenges until the Board ruled against it. Under those circumstances, we find that Ciena has forfeited its Appointments Clause challenge. . . .

In this case, Ciena not only consented to adjudication by the Board, but it affirmatively sought to delay any consideration of its patent challenges by seeking a stay of the district court litigation initiated by Oyster. Any constitutional concern regarding the appointment of the Board judges in this case is negated by Ciena’s forfeiture.

This decision was originally released in January 2020 as a non-precedential opinion. However, on petition from the USPTO, the court has now re-designated the decision as precedential.

In its petition for redesignation, the PTO explained that losing petitioners “continue to raise the same argument [on appeal]. A precedential opinion would reduce that motions practice and save the Court time.”  Examples of pending cases:

  • Moderna Therapeutics v. Protiva Biotherapeutics, Nos. 20-1184, -1186, ECF No. 37 (Fed. Cir. motion filed Mar. 6, 2020);
  • Valve Corporation v. Ironburg Inventions, Nos. 20-1315, -1379, ECF No. 24 (Fed. Cir. motion filed Feb. 28, 2020);
  • Valve Corporation v. Ironburg Inventions, No. 20-1316, ECF No. 22 (Fed. Cir. motion filed Feb. 22, 2020);
  • Palo Alto Networks, Inc. v. Finjan, Inc., No. 19-2151, ECF No. 56, at 4, 32, 49 (Fed. Cir. blue brief filed Nov. 27, 2019);
  • United Fire Protection Corp. v. Engineered Corrosion Solutions, No. 20-1272, ECF No. 16 (Fed. Cir. motion filed Jan. 9, 2020);
  • Comcast Cable Comm. v. Promptu Sys. Corp., No. 19-1947, -1948, ECF No. 26, at 66 (Fed. Cir. blue brief filed Nov. 15, 2019);
  • Comcast Cable Comm. v. Promptu Sys. Corp., No. 19-2287, -2288, ECF No. 18, at 66 (Fed. Cir. blue brief filed Nov. 15, 2019);
  • Baby Trend, Inc. v. Wonderland Nurserygoods, No. 19-2309, ECF No. 28, at 65-66 (Fed. Cir. corrected blue brief filed Feb. 24, 2020).

 

 

Q. Todd Dickinson Will be Missed

Patent

Q. Todd Dickinson passed away this week at age 67.  Todd has been a leader of the intellectual property community for many years and certainly had a major impact on my life and career.  Thank you Todd!

He was PTO director when I was a law student back in 2001.  At the time, Prof. Doug Lichtman and I were studying data on patenting and I remember being amazed at the rapid jump in the number of patents being issued per year.

The change reflected Dickinson’s approach to patent applicants — identifying inventors and patentees as the “clients” served by the PTO.  The change also reflected his leadership within the PTO that was apparent following the antagonism under Jim Rogan.  We met in person at the AIPLA midwinter institute in 2005 and enjoyed dozens of meetings, panels, discussions, phone calls and emails.  It was always more enjoyable when you were there!

Great tributes from Gene & Renee Quinn and Joff Wild.

Windy City IPR: Are Joinder Decisions Appealable after Thryv?

Patent

by Dennis Crouch

In Facebook, Inc. v. Windy City Innovations, LLC, 953 F.3d 1313 (Fed. Cir. 2020), the Federal Circuit held that the PTAB had improperly allowed Facebook to self-join to its own already-granted inter partes review (IPR) proceeding.  Prof. Vishnubhakat explained:

The panel held that § 315(c) does not authorize same-party joinder, i.e., does not allow a petitioner who has filed an inter partes review petition to join its own, earlier inter partes review petition. The panel also held that § 315(c) does not authorize issue joinder, i.e., does not allow joinder that would introduce new issues material to patentability, such as new patent claims or new grounds for cancellation.

Saurabh Vishnubhakat, Joinder and the One-Year Time Bar in Inter Partes Review, Patently-O (March 20, 2020).  Facebook had wanted to join its prior case, because its later-filed case would have otherwise been time-barred under § 315(b)(1-year post-service timeline does “not apply to a request for joinder”).

Facebook v. Windy City was decided one month before the Supreme Court issued its opinion in Thryv, Inc v. Click-To-Call Techs., LP, 18-916, 2020 WL 1906544 (U.S. Apr. 20, 2020).  In Thryv, the court held that the USPTO’s interpretation of the § 315(b) one-year time-bar was not reviewable on appeal based upon the “no appeal” provision of § 314(d).

(d) No Appeal.— The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

35 U.S.C. § 314(d). Thryv further found that the no-appeal provision bars a party from using its appeal from a final written decision to overturn an institution-stage decision.

[NOTE – in an upcoming IPO Webinar,
I’ll be addressing the overlay between
Thryv and Windy City on a panel along
with Greg Castanias (Jones Day) and
Scott McKeown (Ropes & Gray).]

Federal Circuit Call for Briefing: Following Thryv, the Federal Circuit has now called for additional briefing in Windy City — asking the parties (as well as the USPTO) to address “the effect, if any, of the Supreme Court’s decision in Thryv on our decision in this case.” (10 day June 10 deadline – extension granted).

In her letter to the court, Facebook’s attorney Heidi Keefe argues that “Thryv confirms that Section 314(d) bars review of the PTO’s Section 315(c) institution and joinder decisions.”

Windy City’s claim that joinder was improper amounts to an argument that the PTO “should have refused ‘to institute an inter partes review’” of Facebook’s follow-on petitions and Thryv makes clear that Section 314(d) precludes review of that claim.

ltr.Keefe.  I expect that Keefe is correct in her conclusions — that the joinder question here was effectively an institution question and thus barred from being appealed.  However, Thryv does not expressly decide the issue — giving the Federal Circuit some amount of textualist wiggle room.  The outcome in this case will likely let us know whether the Federal Circuit will give Thryv its full weight or instead attempt to cabin-in the decision.

Supreme Court on Generic Functionality for Website Designs.

Patent

USPTO v. Booking.com B.V., Docket No. 19-46 (Supreme Court 2020)

Oral arguments are set in this trademark case for May 4, 2020 [Listen Live at 9:00 am EST].  Booking.com is seeking to register rights on their eponymous service BOOKING.COM. The basic question is whether the addition of “dot com” to a generic term can result in a protectable trademark.

The company’s actually uses the word “booking” in its typical generic form: “The World’s #1 Choice for Booking Accommodations.”  However, the company presented factual (survey) evidence that the addition of dot-com transforms the term in the eyes of consumers. Still, the PTO refused to register the trademark — holding that the “.com” addition is never enough.  The PTO’s approach here relates back to the 1888 decision in Goodyear Co. v. Goodyear Rubber Co., 128 U.S. 598 (1888).  At the time “Goodyear rubber” was seen as a generic term for a type of vulcanized rubber, and the Supreme Court held that adding the term “Company” would not change the matter — even if used for 20+ years with public understanding.

[T]he name of “Goodyear Rubber Company” is not one capable of exclusive appropriation. “Goodyear Rubber” are terms descriptive of well-known classes of goods produced by the process known as Goodyear’s invention. Names which are thus descriptive of a class of goods cannot be exclusively appropriated by any one. The addition of the word “Company” only indicates that parties have formed an association or partnership to deal in such goods, either to produce or to sell them. Thus parties united to produce or sell wine, or to raise cotton or grain, might style themselves Wine Company, Cotton Company, or Grain Company; but by such description they would in no respect impair the equal right of others engaged in similar business to use similar designations, for the obvious reason that all persons have a right to deal in such articles, and to publish the fact to the world. Names of such articles cannot be adopted as trade-marks, and be thereby appropriated to the exclusive right of any one; nor will the incorporation of a company in the name of an article of commerce, without other specification, create any exclusive right to the use of the name.

Id.   Goodyear Co. was later followed by dot.com cases.  See, In re Oppedahl & Larson LLP, 373 F.3d 1171 (Fed. Cir. 2004) (patents.com not registrable). However, in Oppedahl, the Federal Circuit noted that there is no “rule that always disregards the use of ‘.com’.” Id. This sets up the question as presented by the U.S. Gov’t seeking to bar registration of the mark:

Whether, when the Lanham Act states generic terms may not be registered as trademarks, the addition by an online business of a generic top-level domain (“.com”) to an otherwise generic term can create a protectable trademark?

My question in the case is whether the operation of the internet has changed so substantially in the past 20 years so as to require a rethinking.  These days, almost no one types “.com” into their browser window but instead that portion is filled-in automatically.  Likewise, many people (like myself) primarily use Booking.Com via an app rather than a web browser (image below).  In the App setup, “.com” is merely a moniker and offers no direct functionality.

I had expected TLD’s to have lost all of their functionality by now — being eclipsed by other technology. They have continued to hold on, but I still expect that their supremacy (if it still exists) will only be for another decade or less.  Hopefully, the Supreme Court will recognize that its decision here need not assume that our current approach is locked-in-stone.

Can you Select England as the Forum for US Patent Litigation?

Patent,

In re Fortinet (Fed. Cir. 2020)

British Telecom (BT) and Fortinet have a written agreement associated with their global commercial relationship that establishes the courts of England as the “exclusive jurisdiction” for resolving both “contractual and/or non-contractual obligations” between the parties.  Despite that agreement, BT sued Fortinet in U.S. Federal Court (D.Del.) alleging infringement of its U.S. patent.

The district court refused to dismiss the case on forum-non-conveniens — holding that it was not clear that BT would have an alternative forum.  In particular, it is not clear that an English court would entertain allegations of infringement of a U.S. patent that occurred U.S. soil.

I need not resolve whether Plaintiffs’ claims are covered by the Frame Agreement because Fortinet has failed to demonstrate that an English court would have jurisdiction over Plaintiffs’ patent claims.

British Telecomm. PLC v. Fortinet Inc., 424 F. Supp. 3d 362, 369 (D. Del. 2019) (District Court Decision).

Denial of a motion-to-dismiss is interlocutory and thus not immediately appealable as a right. Still, Fortinet petitioner for writ of mandamus from the Federal Circuit.  However, that court has now denied the petition.  The court’s basic conclusion is that Fortinet has not the high standard required for mandamus: “it simply is not indisputably clear that Fortinet has established a right to dismissal under the doctrine of forum-non-conveniens.”

The leading precedent in Fortinet’s favor is Atlantic Marine Construction Co. v. United States District Court for Western District of Texas, 571 U.S. 49 (2013). In Atlantic Marine, the Supreme Court explained that “a valid forum-selection clause should be given controlling weight in all but the most exceptional cases.”  A major difference here is that this involves a request to move litigation to a foreign venue while Atlantic Marine involved transfer between U.S. districts courts that both had proper subject matter jurisdiction.  As such, the Supreme Court in Atlantic Marine did not consider “whether courts are precluded from considering the availability of
the alternative forum in the course of conducting its forum non conveniens doctrine analysis.”

USPTO Rejects AI-Invention for Lack of a Human Inventor

Patent, ,

by Dennis Crouch

Sometimes I think of myself as the creativity machine.  A cool part of this system is that I have a right to seek and obtain patent protection for my inventions (if any).  The USPTO is treating Mr. Dabus differently.  When Dabus filed for patent protection in 2019, the examiner refused to examine the patent and the PTO Commissioners Office has confirmed the refusal.

The problem is that Mr. Dabus (DABUS) is not human, but rather is a machine – a creativity machine.  (more…)

Supreme Court Expands Penumbra of Gov’t Edicts Doctrine: Official Annotations to Code Not Copyrightable

Patent,

by Dennis Crouch

Georgia v. Public.Resource.Org, Inc. (Supreme Court 2020)

The State of Georgia claims copyright to its Annotated Official Code (Official Code of Georgia Annotated (OCGA)).  The (e)book includes every Georgia statute and a set of annotations (including summaries of cases and articles discussing the statutes).  The OCGA is created by a state entity – the Code Revision Commission – directed by the state legislature.  LexisNexis actually did the work of writing the annotations, but copyright (if any) originated with Georgia as a work-made-for-hire.

Public.Resource.Org (PRO) is a nonprofit organization facilitates public access to government records. PRO copied the OCGA and began freely distributing it to the public. Georgia then sued for copyright infringement.

After some amount of litigation, Georgia eventually stopped arguing that the statutes themselves were protectable by copyright.  However, the state continued to argue that the annotations were copyrightable since they did not carry the force of law.

The Supreme Court has now sided with PRO and against the state – holding that the government edicts doctrine prohibit copyright on the annotations.

Over a century ago, we recognized a limitation on copyright protection for certain government work product, rooted in the Copyright Act’s “authorship” requirement. Under what has been dubbed the government edicts doctrine, officials empowered to speak with the force of law cannot be the authors of—and therefore cannot copyright—the works they create in the course of their official duties. . . .

[This doctrine] applies to non-binding, explanatory legal materials created by a legislative body vested with the authority to make law. Because Georgia’s annotations are authored by an arm of the legislature in the course of its legislative duties, the government edicts doctrine puts them outside the reach of copyright protection.

Slip Op.  Chief Justice Roberts penned the majority opinion that was joined by Justices Sotomayor, Kagan, Gorsuch, and Kavanaugh.  Two dissenting opinions: Justice Thomas (with Justice Alito, and Justice Breyer except FN6); and Justice Ginsburg (with Justice Breyer).  The split here does not fall along typical liberal-conservative grounds, but does suggest a generational shift — with the five youngest in the majority, and the four eldest siding with the State. (All of the justices are well over the median age of US citizens).

The majority opens with  a controversial statement linking copyright with monopoly: “The Copyright Act grants potent, decades-long monopoly protection for ‘original works of authorship.'”  Often, as here, courts refer to patents & copyrights as “monopolies” when they are ready to invalidate or weaken the rights granted. See also,  Sony Corp. of America v. Universal City Studios, Inc., 464 U. S. 417 (1984).

The majority opinion also disparages fair use as insufficient:

If Georgia were correct, then unless a State took the affirmative step of transferring its copyrights to the public domain, all of its judges’ and legislators’ non-binding legal works would be copyrighted. And citizens, attorneys, nonprofits, and private research companies would have to cease all copying, distribution, and display of those works or risk severe and potentially criminal penalties. §§501–506. Some affected parties might be willing to roll the dice with a potential fair use defense. But that defense, designed to accommodate First Amendment concerns, is notoriously fact sensitive and often cannot be resolved without a trial. Cf. Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U. S. 539, 552, 560–561 (1985). The less bold among us would have to think twice before using official legal works that illuminate the law we are all presumed to know and understand.

Id. According to its new reinvigoration, the government edicts doctrine does have some clear limits — it only applies to works created by those with “authority to make or interpret the law.”

In this case, the folks at Westlaw make their own annotated version that is likely protected by copyright (assuming originality).  As part of his dissent, Justice Thomas notes that Official Code (by LexisNexis) sells for $404 while WestLaw’s version is $2,570.  LexisNexis agreed to sell at its “low” price as part of the deal with the state, and the state argued that copyright is instrumental in facilitating creation of high-quality annotations.  Otherwise, it just won’t happen. Siri, follow up in two years to see whether this prediction turns out to be true.

Upcoming big issues on this front include the various building codes that are typically created by non governmental entities, but then adopted by various municipal governments.

Many an angler has gone fishing and returned empty handed

Patent

by Dennis Crouch

In re Rudy (Fed. Cir. 2020)

Patent attorney Christopher Rudy has been pursuing his fishing hook and fishing method patent application since 1989. The current set of claims have been deemed ineligible under 35 U.S.C. 101. In particular, the court found the claims directed to the “abstract idea of selecting a fishing hook based on observed water conditions.”

The claim at issue has three basic steps:

  1. Observe the water and determine whether it is clear, stained, or muddy;
  2. Measure light transmittance in the water at the depth where the hook will be placed; and
  3. Use above observation and measurement and the lookup table below to choose a fishing hook color:

In the appeal, the Federal Circuit agreed with the PTO that the hook color selection is a “mental process” that relies upon generalized actions of “collecting” and “analyzing” information.

[The claim] requires nothing more than collecting information (water clarity and light transmittance) and analyzing that information (by applying the chart included in the claim), which collectively amount to the abstract idea of selecting a fishing hook based on the observed water conditions.

Id.

The inventor’s brief explains that the fish are able to make the same color selection, and the process here apparently mimics their color selection preferences.  On appeal, the Federal Circuit found that piscatory mental processes tend to suggest that the invention is unpatentable.

While we decline today to adopt a bright-line test that mental processes capable of being performed by fish are not patent eligible, this observation underscores our conclusion that claim 34 is directed to the abstract idea of selecting the color of a fishing hook.

Id. The court does not offer an explanation for its conclusion other than a cite to Elec. Power Grp. (statements regarding human mental processes). Perhaps a cite to Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016).

The court suggested that the claimed method might become patent eligible if the measurement techniques were limited to a particular method or instrumentality. “Because the claims before us are not limited in the way Mr. Rudy suggests, we are not in a position to opine on whether theoretical claims that were so limited would be patent eligible.”

Here, the court repeated its prior statements that the PTO guidance on patent eligibility does not bind or limit the Federal Circuit in any way. “To the extent the Office Guidance contradicts or does not fully accord with our caselaw, it is our caselaw, and the Supreme Court precedent it is based upon, that must control.”

Rudy also envoked the machine-or-transformation test — referring to the fact that the fish was originally free but was then caught.  On appeal, the Federal Circuit confirmed that the test remaines a “useful and important clue” to eligibility.  However, the claim here does not require actually catching a fish.  Rather, as Rudy explained in his own briefing: “Landing a fish is never a sure thing. Many an angler has gone fishing and returned empty handed.”  Perhaps the adage here should replace “angler” with “appellant.”  No Patent for Rudy (Yet).

Disgorgement of Infringer Profits as an Equitable Remedy

Patent

Guest Post by Prof. Pamela Samuelson.

Yesterday, Dennis Crouch provided an overview of the Supreme Court’s recent decision in Romag Fasteners, Inc. v. Fossil, Inc. and the various opinions of the Justices.

Today I consider the implications of Romag for whether juries or only judges can decide about disgorgement of a trademark infringer’s profits in trademark cases. None of the Justices addressed that issue directly. Yet, the majority opinion repeatedly characterized disgorgement of profits as an equitable remedy and emphasized transsubstantive principles of equity as lodestones for the exercise of equitable discretion in granting this remedy. Because of this, I believe the Court implicitly decided that disgorgement is a matter for courts, and not for juries, to decide. This has very important implications for disgorgement awards in intellectual property (IP) cases more generally.

This implicit ruling in Romag is consistent with the Court’s ruling in Petrella
v. Metro-Goldwyn-Mayer, Inc., 572 US. 663 (2014). Although holding that laches was not a complete defense to copyright infringement, the Court in Petrella stated that disgorgement was an equitable remedy. Id. at 668 n.1. It opined that “the District Court, in determining appropriate injunctive relief and assessing profits, may take account of [Petrella’s] delay in commencing suit. In doing so, however, that court should closely examine MGM’s alleged reliance on Petrella’s delay.” Id. at 687. The Court was, moreover, receptive to “any other considerations that would justify adjusting injunctive relief or profits.” Id. at 687-88.

Unfortunately, the Court failed to acknowledge disgorgement as an equitable remedy in Samsung Electronics Co. v. Apple, Inc., 137 S.Ct. 429 (2016) or to invoke equitable principles as relevant considerations in awarding disgorgement in design patent cases. The Solicitor General’s brief in Samsung contemplated that juries would make disgorgement awards and offered a complex (and deeply flawed) multi-factor test for deciding whether the relevant article of manufacture whose profits must be disgorged was the end product (e.g., smartphones) or only some part of it (e.g., rounded corners with bezel).

Who knows what Judge Koh would have ordered had she ruled on how much of Samsung’s profits should be disgorged for infringement of three small Apple design patents? It is, however, unlikely that she would have settled on $533 million, the amount that the jury awarded on remand, given that she had previously reduced a $1.05 billion total-profit-on-end-products jury award to $399 million. This is the amount that the Court vacated in Samsung because the lower courts had wrongly held that all profits on end products must be disgorged.

That disgorgement is an equitable remedy that only judges can order in an IP case was further recognized in Texas Optoelectronic Solutions, Inc. v. Renesas Elecs. Am., Inc., 895 F.3d 1304 (Fed. Cir. 2018). In this state law trade secrecy case, the Federal Circuit vacated a jury’s disgorgement award of $48.8 million on the ground that it was improper for juries to award an equitable remedy. The court reviewed at length the historical record of the disgorgement remedy in IP cases. Id. at 1319-25. It cited the Court’s decision in Sheldon v. Metro-Goldwyn-Mayer Pictures Corp., 309 U.S. 390, 399 (1940) for the proposition that “recovery of profits … had been allowed in equity both in copyright and patent cases as appropriate equitable relief incident to a decree for an injunction.” Id. at 1324. Had the Federal Circuit recognized this principle a few years before, it would have been Judge Koh, not a jury, who would have decided how much of Samsung’s profits should be disgorged.

Petrella notwithstanding, only one copyright decision has thus far ruled that the award of infringer profits is a matter for judicial discretion, not for juries. See
Fair Isaac Corp. v. Fed. Ins. Co., 2019 WL 5057865 (D. Minn. 2019) (disgorgement of profits held an equitable remedy for which a jury award was unavailable in a software copyright infringement case).

Romag is not the only trademark decision to have reserved disgorgement awards to the discretion of judges. A number of trademark cases have ruled that only judges, not juries, can render disgorgement awards. See Hard Candy LLC v. Anastasia Beverly Hills, 921 F.3d 1343, 1355-59 (11th Cir. 2019) (denying trademark plaintiff’s demand for a jury trial on its disgorgement claim); Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc., 778 F.3d 1059, 1074–76 (9th Cir. 2015).

In a forthcoming article, colleagues and I point out that traditional principles of restitution and unjust enrichment support awards of disgorgement of profits insofar as they are (1) levied against conscious wrongdoers, (2) attributable to the wrongful conduct, and (3) subject to equitable discretion. Justice Sotomayor’s concurrence in Romag rightly noted that innocent or good faith infringers should not have to disgorge profits because the goal of this remedy is to ensure that conscious wrongdoers do not profit from their misdeeds. Insofar as the majority opinion in Romag contemplated that profits of innocent trademark infringers could be disgorged, it is at odds with traditional equitable principles. In Romag, both laches and inequitable conduct should preclude profits disgorgement upon remand. For a further elaboration on this point and about equitable discretion in IP disgorgement cases more generally, see Pamela Samuelson, John M. Golden, & Mark P. Gergen, Recalibrating Disgorgement Awards in Intellectual Property Cases, B.U. L. Rev. (forthcoming 2021), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3529750.

Profit Disgorgement Allowed in TM Cases Without Showing Willfulness

Profit Disgorgement Allowed in TM Cases Without Showing Willfulness

Patent

by Dennis Crouch

Romag Fasteners, Inc. v. Fossil Group, Inc. (Supreme Court 2020)

The Lanham Act provides that a trademark owner can elect disgorgement of the defendant’s profits based upon “a violation under §1125(a) or (d) … or a willful violation under section 1125(c).”

  • §1125(a) – TM infringement (likelihood of confusion)
  • §1125(c) Dilution
  • §1125(d) Cybersquatting

15 U.S.C. §1117(a). The statute appears to require willfulness as a prerequisite to profit disgorgement in the dilution context, but not for typical trademark infringement.  However, the award must also conform “to the principles of equity.”

In this case, Romag proved its §1125(a) TM infringement case against Fossil, but the District Court refused to disgorge profits — holding that willfulness is  a prerequisite to profit disgorgement in TM cases based upon a long line of pre-and-post Lanham Act decisions.  The Federal Circuit then affirmed.

The Supreme Court has now reversed course, holding that a district court may award the plaintiff with “the defendant’s ill-gotten profits” even without a showing of willfulness. However, the court does not go so far as to say plainly that a winning plaintiff “is entitled . . . to recover (1) defendant’s profits.”  Rather, the court takes a somewhat middle-road — holding that the principles of equity indicate that an infringer’s mens rea (mental state) is “a highly important consideration in determining whether an award of profits is appropriate.”  However, the mental state consideration does not require an “inflexible precondition” of willfulness.

The majority opinion is authored by Justice Gorsuch and joined by seven (7) other justices. Justice Alito joined the majority but also wrote a concurring opinion joined by Justices Breyer and Kagan. Justice Sotomayor also concurred.

The two concurring opinions appear written to attempt to clarify some internal inconsistencies within the Gorsuch opinion.  The Alito concurrence is only 1 paragraph and appears written to reemphasize the holding that willfulness is a highly important consideration:

The decision below held that willfulness is such a prerequisite. That is incorrect. The relevant authorities, particularly pre-Lanham Act case law, show that willfulness is a highly important consideration in awarding profits under §1117(a), but not an absolute precondition.

Alito concurring.

Justice Sotomayor further explains that the majority “suggests that courts of equity were just as likely to award profits for such ‘willful’ infringement as they were for ‘innocent’ infringement.”   Justice Sotomayor explains that the majority’s statement “does not reflect the weight of authority, which indicates that profits were hardly, if ever, awarded for innocent infringement.”  The concurring opinion also points to a feature of possible confusion – that the willfulness definition was formerly more broadly defined to include a “range of culpable mental states–including the equivalent of recklessness.”

I will note that IP Remedies Professor Thomas Cotter has posted a short note about the opinion with the following to-the-point statement: “To say I am disgusted would be an understatement.”  Prof. Cotter recalls that the Patent Statute also doesn’t say anything about willfulness, but that the Supreme Court recently reaffirmed that willfulness is a requirement for enhanced damages under Section 284 (“the court may increase the damages up to three times the amount found or assessed.”).