[authors: Ricky K. Chun, Melissa Nott Davis, Jeremy T. Elman, Sungyong “David” In, Mandy H. Kim, Christopher M. Koepke, Leigh J. Martinson, Michael A. Messina, Rita Weeks, and Bruce Yen]
IN THIS ISSUE
Patents
Is It Time to Take a New Look at Appellate Review of PTO Claim Construction?
Limits on the Use of the Disclosure-Dedication Rule Under Doctrine of Equivalents
Causal Nexus for P.I. Means the Accused Infringement Drives Consumer Demand
Rehearing of Decision Affirming PTO Invalidity Finding Denied, Even After Upholding District Court Validity Finding
Another Voting Machine Controversy in Florida? (This Time It’s about Patent Infringement)
A Carrier Is Not a Country
What Did You Say? $31 Million Awarded for Infringement of Hearing Aid Patent
Best Mode Defense’s Last Stand
Trademarks
“PARIS” Is Misdescriptive of Goods Designed in Miami and Manufactured in Asia
Copyrights
Supreme Court Hears Oral Arguments in Gray-Market Copyright Case
Alien v. Predator; Who Prevails in Copyright Dispute?
Patents / Claim Construction
Is It Time to Take a New Look at Appellate Review of PTO Claim Construction?
by Leigh J. Martinson
Addressing again the issue of whether to construe a claim term according to 35 U.S.C. § 112, ¶ 6 when that term does not include the magic “means for” language, the U.S. Court of Appeals for the Federal Circuit reversed the U.S. Patent and Trademark Board of Patent Appeals and Interferences (the Board) construction of the term “height adjustment mechanism,” concluding the term was not a means plus function (M+F) claim element. Perhaps more interesting is Judge Plager and Judge Newman’s call for en banc review of what standard of review should be applied to the claims construction by the PTO. Flo Healthcare Solutions v. David J. Kappos, and Rioux Vision, Case No. 11-1476 (Fed. Cir., Oct. 23, 2012) (Plager, J.) (Plager, J., additional views) (Newman, J., additional views).
After Flo Healthcare sued Rioux Vision for infringing its patent directed to a mobile computer workstation intended for medical care environments, Rioux requested inter partes reexamination of the patent and the parties agreed to stay the litigation during the reexamination process. During reexamination, the patent examiner rejected the claims based on prior art. At the center of the patentability dispute was whether the claim element “a height adjustment mechanism for altering the height of the horizontal tray” was a M+F element subject to § 112, ¶ 6 (as urged by Flo Healthcare). The examiner disagreed. At the conclusion of the reexamination proceeding, Flo appealed to the Board.
The Board reversed the patent examiner and agreed with Flo Healthcare that § 112, ¶ 6 should apply to the disputed claim term. The Board reasoned that “height adjustment mechanism” does not recite sufficient structure for performing the recited functions. However, the Board’s determination on that point did not affect the outcome of the reexamination, as the claims remained rejected. Flo appealed to the Federal Circuit.
The Federal Circuit first reviewed the line of cases that discussed the rebuttable presumption regarding when § 112, ¶ 6 applies and when it does not; i.e., use of the word “means” creates a rebuttable presumption that the drafter intended to invoke § 112, ¶ 6 while failure to use the word “means” creates a rebuttable presumption that the drafter did not intend to do so.
In rebutting the presumption, when a claim term recites “means” plus a function but then recites sufficient structure, material, or acts within the claim itself to perform entirely the recited function, the term is not construed as a M+F element even if it uses the word “means.” Conversely, when a claim term does not recite the word “means,” the presumption that it is not subject to § 112, ¶ 6 may be overcome if it is shown that the claim term fails to recite sufficiently definite structure or else recites a function without sufficient structure for performing that function. The Court reiterated that these presumptions are strong and not readily overcome.
In the present case, the claim term in issue did not recite the word “means.” Therefore, the Court explained that the starting presumption is that § 112, ¶ 6 does not apply. The Federal Circuit noted that the written description in the subject patent confirmed that the term “height adjustment mechanism” indicates a structure and that this term “mechanism” was not used as a substitute for the term “means.” Although the Court reversed the Board on this point, it concluded that the Board still reached the correct result on the issues of invalidity.
Both Judge Plager and Judge Newman submitted additional views.
Judge Plager lamented the fact that the opinion failed to settle the question of what standard of review the Court should apply to claim construction decisions of the Board. One line of cases suggests that a “reasonableness” standard should apply thus giving some deference to the Board’s decision. Another line of cases suggests that no deference should be given to the Board’s decision on the issue should be considered de novo. After reviewing the jurisprudence Plager stated “[w]hichever way this court’s review rule should be cast, and for whatever reasons, it is perhaps time that the court definitively decide en banc on an agreed review standard, one that provides clear direction to the PTO and the inventor community.”
Judge Newman, harkening back to the policy reasons for the creation of the Federal Circuit, stressed that the Court’s job was to ensure uniformity in the application of the patent law. Judge Newman, noting that the present case was illustrative of a situation where "the same issue can be finally adjudicated to different appellate outcomes, depending upon the tribunal from which it came," suggested that the “broadest reasonable interpretation” rule required “remedial attention, for the resulting uncertainty is no less pernicious than the intercircuit conflicts of thirty years past.”
Judge Newman explained that no deference ought to be given to the Board’s claim construction analysis because the “broadest reasonable interpretation” is an examination tool used to search the prior art and to expedite prosecution. In her view, it is wrong to turn this examination tool into something entitled to appellate deference.
Patents / Doctrine of Equivalents
Limits on the Use of the Disclosure-Dedication Rule Under Doctrine of Equivalents
by Mandy Kim
Addressing for the first time the issue of whether the disclosure of subject matter in a document incorporated by reference amounts to a dedication of that subject matter to the public under the Johnson & Johnston disclosure-dedication rule, the U.S. Court of Appeals for the Federal Circuit reversed a district court’s summary judgment of non-infringement, holding that the host patent must first sufficiently inform one of ordinary skill that the incorporated document contains subject matter that is an alternative to a claim limitation before the dedication rule can be used to limit equivalents. SanDisk v. Kingston Tech., Case No. 11-1346 (Fed. Cir., Oct. 9, 2012) (Prost, J.) (Reyna, J. concurring-in-part and dissenting-in-part).
SanDisk brought suit against Kingston alleging infringement of patents relating to various methods and systems for managing data in flash memory systems, including methods for reducing the wear and tear on flash memory cells. In its doctrine of equivalents analysis the district court granted summary judgment of non-infringement on two grounds, both of which related to the disclosure-dedication rule set forth in Johnson & Johnston (IP Update, Vol. 5, No. 4): SanDisk’s proposed equivalent was dedicated to the public because one of the patents-in-suit disclosed an equivalent, and disclosure in a patent incorporated by reference in the host patent amounted to dedication of the subject matter to the public. The Federal Circuit disagreed on both accounts.
First, the Federal Circuit held that the disclosures in one of the patents-in-suit did not satisfy the Johnson & Johnston disclosure-dedication rule. Under this rule, “[W]hen a patent drafter discloses but declines to claim subject matter . . . this action dedicates that unclaimed subject matter to the public.” The Federal Circuit clarified, however, that “the disclosure must be of such specificity that one of ordinary skill in the art could identify the subject matter that had been disclosed and not claimed.” The Federal Circuit emphasized that “before unclaimed subject matter is deemed to have been dedicated to the public, that unclaimed subject matter must have been identified by the patentee as an alternative to a claim limitation.”
Turning next to the issue of whether the disclosure of subject matter in a document incorporated by reference amounts to a dedication of that subject matter under Johnson & Johnston, the Federal Circuit held that incorporation by reference does not automatically “convert the invention of the incorporated patent into the invention of the host patent.” Rather, a district court must first look to the teachings of the host patent in determining whether the incorporated subject matter satisfies the Johnson & Johnston disclosure-dedication rule. First “the host patent must sufficiently inform one of ordinary skill that the incorporated document contains subject matter that is an alternative to a claim limitation.” Only then does the inquiry shift to the incorporated document “to assess whether the disclosure of that subject matter is of such specificity that one of ordinary skill in the art could identify the subject matter that had been disclosed and not claimed.”
Practice Note: This ruling will make it harder for defendants to satisfy the Johnson & Johnston disclosure-dedication rule when attempting to restrict application of the doctrine of equivalents.
Preliminary Injunction / Causal Nexus
Causal Nexus for P.I. Means the Accused Infringement Drives Consumer Demand
by Bruce Yen
Addressing the requirement of a “causal nexus” relating the alleged harm to the alleged infringement for a preliminary injunction, the U.S. Court of Appeals for the Federal Circuit overturned the district court, holding that “[t]he casual nexus requirement is not satisfied simply because removing an allegedly infringing component would leave a particular feature, application, or device less valued or inoperable.” Rather, the Court held that the party seeking the preliminary injunction must show that the infringing feature drives consumer demand for the accused product. Apple v. Samsung Electronics, et al., Case No. 12-1507 (Fed. Cir., Oct. 11, 2012) (Prost, J.).
On appeal from one of the less-publicized cases in the Apple v. Samsung (or as some suggest, Apple v. Google) global litigation, the Federal Circuit found that the district court abused its discretion in entering a preliminary injunction enjoining sales of Samsung’s Galaxy Nexus smartphone. At issue was the Quick Search Box (QSB), a feature of Google’s open-source mobile software platform Android, used in the Galaxy Nexus device. Apple alleged that the QSB infringed its patent that is directed to an apparatus for unified search that uses heuristic modules to search multiple data storage locations.
The Court explained that if the accused product includes many features, only one of which (or only a small minority which infringe), the patentee must show that a sufficiently strong causal nexus relates the alleged harm to the alleged infringement. Disagreeing with the lower court’s endorsement that the causal nexus may be established if removing the patented features would diminish the value or substantially interfere with the functionality of the accused device, the Court explained that to establish a sufficiently strong causal nexus, Apple had to show that the infringing feature drives consumer demand for the accused product—i.e., that consumers buy the Galaxy Nexus because it is equipped with the apparatus claimed in the patent in suit and not simply because the device has a search capability in general, or even because it has unified search capability.
Apple presented evidence that consumers of the iPhone 4S liked the Siri application in part because of Siri’s comprehensive search (which Apple asserts practices the subject patent). However, the Federal Circuit considered the analogous extension of consumer attraction to the Galaxy Nexus due to QSB to be too tenuous a causal link between the alleged infringement and consumer demand. The Court likewise found the evidence of consumer praise for the Galaxy Nexus’ QSB feature, cited by the district court in support of a causal nexus, to be insufficient to support an inference that the allegedly infringing features drive consumer demand.
As a result, the Court concluded that regardless of the extent to which Apple may be injured by sales of the Galaxy Nexus, there was not a sufficient showing that the harm flows from Samsung’s alleged infringement to warrant an injunction.
Patents / Reexamination
Rehearing of Decision Affirming PTO Invalidity Finding Denied, Even After Upholding District Court Validity Finding
by Michael A. Messina
Addressing the merits of patent claims it had previously found to be valid, the U.S. Court of Appeals for the Federal Circuit denied a request for an en banc rehearing of its decision affirming a finding (of invalidity) by the U.S. Patent and Trademark Office (PTO) Board of Patent Appeals and Interferences (Board). In re Baxter International, Inc., Case No. 11-1073 (Fed. Cir., Oct. 26, 2012) (per curiam) (O’Malley, J., concurring) (Newman, J., dissenting).
Baxter International (Baxter) owns a patent directed to hemodialysis machines. A competitor of Baxter’s, Fresenius, filed a declaratory judgment action alleging invalidity of certain of claims of Baxter's patent. After a trial, the district court found Fresenius failed as a matter of law to show by clear and convincing evidence that the patent claims were obvious. The ruling was affirmed by the Federal Circuit (using the clear and convincing standard). Fresenius also initiated a reexamination proceeding at the PTO in which the examiner found the same claims obvious in view of a combination of references, some of which were at issue in the declaratory judgment proceeding and others that were not. The Board affirmed the examiner’s rejections of the claims. Baxter appealed.
A panel of the Federal Circuit affirmed the Board, (IP Update, Vol. 15, No. 6) finding that, while the Board should give serious consideration to a court decision, it is permissible for the Board to reach a different conclusion. After noting that the Board expressly considered the Federal Circuit’s prior decision, the Federal Circuit pointed out “the PTO in reexamination proceedings and the court system in patent infringement actions ‘take different approaches in determining validity and on the same evidence could quite correctly come to different conclusions,’” quoting In re Swanson. The difference is that a challenger attacking the validity of patent claims in civil litigation has the burden of proving invalidity by clear and convincing evidence, and, if they fail to meet that burden, the court will not find the patent claims valid, but will hold only that the challenger did not meet their burden. In contrast, the standard of proof in PTO reexaminations is a preponderance of the evidence, which is substantially lower.
The Court pointed out that Congress has provided for a reexamination system that permits challenges to patents by third parties, even those who have lost in prior judicial proceedings. In this case, the director of the PTO found a substantial new question of patentability, the examiner relied on new prior art not raised in the district court proceeding and the examiner properly conducted the reexamination. Thus, the Federal Circuit concluded that “this case is not about the relative primacy of the courts and the PTO, about which there can be no dispute.” Further, the Federal Circuit could not bar the PTO from conducting a reexamination proceeding because of the final judgment in the district court proceeding without overruling its own prior precedents, including Swanson and Ethicon. The Court thus affirmed the Board’s decision.
Judge Newman dissented, contending the majority’s decision “permits administrative nullification of a final judicial decision.” She stated that the majority was simply deferring to the PTO and opined that “the nature of the burden of proof does not overcome the strictures of judicial finality.” She further argued the principle of preclusion should apply to reexamination of the same issues of fact and law and concluded that the reexamination rejection was based “solely” on the same references Fresenius relied on in the district court proceeding.
Baxter then filed a petition for rehearing by the panel or by the Court en banc. The petition was denied without an opinion. However, in concurring with the majority decision, Judge O’Malley agreed that “a prior court decision in which a party has failed to prove a patent invalid does not bar the Patent and Trademark Office (PTO) from subsequently reexamining that same patent. And . . . despite a final court judgment reaching a contrary conclusion as between the patent holder and one alleged infringer, the PTO is free to conclude that the patent is, indeed, invalid.” O’Malley noted that a subsequent reexamination decision that the patent is invalid does not disturb the judgment of the court or alter its binding effect on the parties, and points out “principles of res judicata will govern the continuing relationship between the parties to any court proceeding and will dictate whether the PTO’s reexamination ruling will have any impact on them going forward.”
In her dissent, Judge Newman reiterated her concerns and arguments from her previous dissent, and added “the court has created an additional burden and disincentive to inventors, for reexamination after a patent has been sustained in court is a multiplier of cost, delay, and uncertainty, in direct negation of the principles of res judicata.”
Patent Infringement
Another Voting Machine Controversy in Florida? (This Time It’s about Patent Infringement)
by Jeremy T. Elman
Addressing the issue of publication of prior art references and means plus function infringement, the U.S. Court of Appeals for the Federal Circuit affirmed the district court’s summary judgment findings of invalidity and non-infringement in a dispute about patents for electronic voting machines. Voter Verified v. Premier Election Solutions, Case No. 11-1553, 12-1017 (Fed. Cir., Nov. 5, 2012) (Lourie, J.).
These are consolidated appeals from two patent infringement actions between Voter Verified and defendants Premier Election Solutions, Diebold and Election Systems & Software. Voter Verified’s patents claim systems and methods for voting in an election, including a self-verification procedure to correct errors before a ballot is submitted. In a series of summary judgment orders, the district court found the asserted claims both invalid and not infringed. Voter Verified appealed.
At issue in the appeal were both invalidity and infringement issues. As to invalidity, Voter Verified claimed that the asserted prior art Benson article did not qualify as a printed publication under §102(b) because it was not searchable by pertinent terms or indexed as of the critical date of invention, such that the relevant public would not have been able to locate the article. The Federal Circuit disagreed, concluding that the Benson article was a printed publication and that the relevant inquiry is whether the reference was sufficiently accessible to the public interested in the art. The Court explained that while indexing is a relevant factor in determining accessibility, it is only one of many factors.
The “ultimate question” is whether the reference was available to persons in the art exercising reasonable diligence to locate it. Specifically, the Court found that the database that stored the Benson article (the Risks Digest) publicly on the Internet included a search tool that would have retrieved the Benson article in response to search terms such as “vote,” “voting,” “ballot” and “election.” Persons in the art were aware of the Risks Digest as a prominent forum for discussing such technologies.
As to infringement, the district court had construed the term “ballot scanning means” as a means plus function under §112, ¶ 6, but found on summary judgment that there was no corresponding structure capable of carrying out the claimed function of reading votes on a printed ballot. On appeal, Voter Verified argued that the voter was the corresponding structure for carrying out the claimed ballot scanning function. The Federal Circuit rejected this argument, holding that it is well-established that a human being cannot constitute a means within the scope of §112, ¶ 6.
Practice Note: Prior art is a “printed publication” under §102(b) where it is publicly accessible, and found by searching using well-known and relevant search terms.
Patents / Claim Construction / Infringement
A Carrier Is Not a Country
by Sungyong “David” In
Addressing a lower court’s claim construction and summary judgment of non-infringement, the U.S. Court of Appeals for the Federal Circuit found that more limited claim construction found a lower court was correct and sustained the summary judgment ruling. Technology Patents LLC v. T-Mobile (UK) LTD., Case No. 11-1581 (Fed. Cir., Oct. 17, 2012) (Bryson, J.).
Plaintiff Technology Patents LLC (TPL) filed suit against more than 100 defendants, generally falling into three categories: domestic carriers (and handset companies), software providers, and foreign carriers. TPL asserted that defendants infringed its patent directed to a global paging system utilizing a land-based packet-switched digital data network. The global paging system included a feature for permitting users to remotely designate countries in which they are expected to be located. The district court granted summary judgment of non-infringement in favor of the domestic carriers and the software providers and dismissed the case against the foreign carriers for lack of personal jurisdiction. TPL appealed.
On appeal, the Federal Circuit affirmed the district court’s grant of summary judgment of non-infringement in favor of the domestic carriers, but reversed with regard to the software providers as to certain claims. The Court did not address the merits of the claims against the foreign carriers in view of its decision to affirm the non-infringement finding as to the domestic carriers.
Regarding non-infringement by the domestic carriers, the Federal Circuit found that the accused technology implemented by the domestic carriers did not include all required claim limitations, such as “receiving user” and “designated by the receiving user,” among others. As to the term “receiving user,” the Court concluded that the limitation required a person, not a person-pager combination, and that the designation of a country is done by a person, not by a device. Further, the Court determined that the distinction between “carriers” and “country” in which the receiving user is located is material and that accused products do not infringe in part because the specification and asserted claims required the designation of the country in which the receiving user is located, not the designation of the receiving user’s carrier. Thus, the Court affirmed the district court’s claim construction and its grant of the summary judgment of non-infringement in favor of the domestic carriers.
Regarding the foreign carriers, the Federal Circuit did not address the jurisdictional issues because the infringement case against the foreign carriers depended on the patent owners’ ability to prove infringement by the domestic carriers. With respect to the software providers, the Court disagreed with the district court’s decision that certain patent claims implicated joint or divided infringement requiring actions by multiple actors and vacated the district court's ruling on those claims, remanding the case for further proceedings.
Patents / Damages
What Did You Say? $31 Million Awarded for Infringement of Hearing Aid Patent
by Christopher M. Koepke
In a case involving the alleged infringement of two patents related to hearing aids, one of which was found under judgment as a matter of law (JMOL) to not be infringed. The U.S. Court of Appeals for the Federal Circuit affirmed a judgment awarding $31 million in damages based on infringement of both patents. Energy Transportation Group, Inc. v. William Demant Holdings A/S, Case Nos. 11-1487, -1488, -1489 (Fed. Cir., Oct. 12, 2012) (Rader, C.J.).
A jury found that the defendants had infringed two patents related to technology for reducing acoustic feedback in digital hearing aids and awarded $31 million in damages to Energy Transportation Group (ETG). The district court subsequently granted the defendants’ motion for JMOL of non-infringement of one of the patents. Nonetheless, the district court declined to order a new trial on damages or to grant the defendants any relief from judgment. Defendant William Demant Holdings appealed.
On appeal, the defendants sought a new trial on damages or a reduction of the amount of damages awarded. The jury had found that defendants had infringed both of the asserted patents, and its award of $31 million was presumably calculated using a royalty base including sales made during the terms of both patents. The defendants had made sales of $417 million through the term of both patents, but only $357 million through the expiration of the patent not eliminated on JMOL. The defendants requested that the court recalculate the amount of damages by assuming that the jury had used the larger sales base in its calculations, determining the effective royalty rate used by the jury and multiplying that rate by the smaller sales base.
The Federal Circuit rejected the defendants’ challenge, concluding that defendants had waived their argument by failing to ask the district court to reduce the damage award in the event that it granted JMOL of non-infringement. Moreover, even if the defendants had not waived their argument, the Court indicated that it would be unable to “correct” the jury’s calculations. According to the Court, because the jury was not asked to identify what portion of its award was based on infringement of which patent, any attempt to reduce the damage award would be arbitrary and would deprive the parties of their right to a jury trial under the Constitution.
In addition, the Court rejected the defendants’ argument that a report from the German Federal Cartel Office (the Cartel Report) was unduly prejudicial and should not have been admitted. The defendants had presented evidence related to licensing rates from the Hearing Instrument Manufacturers Patent Partnership (HIMPP), and ETG’s damages expert indicated that the HIMPP rates did not reflect market rates for ETG’s patents, citing the Cartel Report’s determination that the hearing aid market is concentrated and enjoys high profit margins due to a lack of competition. Although a German court overturned the Cartel Report’s ultimate conclusion that an “oligopoly” existed in the hearing aid market, the Federal Circuit noted that the Cartel Report’s underlying findings of fact were not disturbed by the German court and were relevant to the determination of a reasonable royalty rate for ETG’s patents. Further, the district court had reduced the risk of prejudice by prohibiting ETG from using the Cartel Report to engage in hyperbolic or inflammatory statements alleging collusion by defendants.
Patents / Best Mode
Best Mode Defense’s Last Stand
by Ricky Chun
Addressing the best mode defense for possibly the last time in view of the America Invents Act of 2011 (AIA), the U.S. Court of Appeals for the Federal Circuit found that the best mode was not concealed if it was within the scope of knowledge of a person having ordinary skill in the art. Joy Mining Machinery v. Cincinnati Mine Machinery, Case No. 12-1153 (Fed. Cir., Nov. 8, 2012) (Prost, J.) (nonprecedential).
Joy Mining Machinery (Joy MM) alleged that a mining machine used by Cincinnati Mine Machinery (CMM) infringed a patent owned by Joy MM, which claimed a chain and flight assembly that included a drive pin retaining means. The patent only disclosed welding as a mechanism to implement the drive pin retaining means. As a result, CMM asserted in its defense that Joy MM concealed press-fitting as the best mode for implementing the drive pin retaining means. Press-fitting, however, was known to those of skill in the art to be a substitute for welding at the time of the invention, and neither party disagreed on this point.
The Federal Circuit stated that to establish that the claims failed the best mode requirement, CMM must prove by clear and convincing evidence that the inventor of the patent concealed a best mode of practicing his claimed invention from the public. The Federal Circuit noted that concealing a best mode of the invention turns on whether the inventor’s disclosure is adequate to enable one of ordinary skill in the art to practice the best mode of the invention. Since there was no genuine dispute that one of ordinary skill in the art had the requisite knowledge necessary to use press-fitting to implement the drive pin retaining means, the Federal Circuit found that CMM could not prove that omission of press-fitting from the written description of the patent constituted concealment of the best mode. Accordingly, the Federal Circuit reversed district court’s ruling that granted summary judgment to CMM for failure to satisfy the best mode requirement.
Practice Note: Since the new AIA prevents a post grant action that would challenge a patent as invalid or unenforceable based upon failure to disclose the best mode, this decision would have little or no impact on future patent cases.
Trademark / Geographically Misdescriptive
“PARIS” Is Misdescriptive of Goods Designed in Miami and Manufactured in Asia
by Melissa Nott Davis
The U.S. Court of Appeals for the Federal Circuit upheld the ruling of the Trademark Trial and Appeal Board (TTAB) refusing to register the mark “JPK PARIS 75” as being primarily geographically deceptively misdescriptive under the Lanham Act, of goods neither designed or made in Paris. In re Miracle Tuesday, LLC, Case No. 11-1373 (Fed. Cir., Oct. 4, 2012) (O’Malley, J.).
Designer Jean-Pierre Klifa, a French citizen formerly of Paris but currently resident in Miami, filed an intent-to-use application with the PTO seeking to register the mark “JPK PARIS 75.” Klifa intended to use the mark on accessories, luggage and shoes. The PTO issued a final decision refusing to register the mark as “primarily geographically deceptively misdescriptive.” The TTAB affirmed the refusal to register, rejecting Klifa’s argument that JPK was the dominant portion of the mark and finding that consumers would assume products containing “Paris” in the mark had a connection with Paris in manufacture or design.
A mark is primarily geographically deceptively misdescriptive if the primary significance of the mark is a generally known location, consumers are likely to believe the place identified by the mark indicates the origin of the goods bearing the mark and the geographic misrepresentation was a material factor in the buyer’s decision to purchase the good. The Federal Circuit, reviewing the TTAB decision under the substantial evidence standard, explained that whether a mark is primarily geographically deceptively misdescriptive is a question of fact.
Klifa did not challenge the Board’s finding concerning the first element of the analysis, but focused only on the second and third elements of the statute.
Addressing the second element (whether a buyer is likely to believe Paris was the source of the goods at issue) the Federal Circuit considered whether the mark conveyed an association between the goods and Paris and whether the goods actually came from Paris. The Court easily found a goods/place association as it was undisputed that Paris is famous for fashion and buyers were likely to think of Paris as source for fashion products. The Court acknowledged that determining origin of the goods is not dependent on location of manufacture and in appropriate circumstances the place of design can serve as the origin. Here, the Court upheld the TTAB finding that though Klifa considered himself a Parisian, there was no connection between Paris and goods designed in Miami and manufactured in Asia. The Federal Circuit rejected Klifa’s argument that consumers are more interested in the designer’s origin than the origin of the goods, finding the relevant statutory inquiry to be whether there was a connection between the goods and Paris, not the designer and Paris.
With respect to the third element of the inquiry, whether a substantial portion of buyers would be “materially influenced” by the geographic designation in the mark, the Court distinguished the Les Halles de Paris case which involved a service mark, finding that in the case of goods “evidence that a place is famous as a source of those goods is sufficient to raise an inference of materiality.” The Court affirmed the TTAB finding that the fact that Paris is famous for fashion accessories gives rise to an inference that a substantial number of buyers would be decided into thinking the fashion accessories at issue came from Paris.
Copyrights / First Sale Doctrine
Supreme Court Hears Oral Arguments in Gray-Market Copyright Case
by Rita Weeks
Undaunted by an approaching hurricane that had already shut down the federal government, public transportation and nearly all of the rest of Washington, D.C., the U.S. Supreme Court on October 29, 2012, heard oral arguments in a copyright case involving the unauthorized resale in the United States of foreign versions of textbooks originating from U.S. publishers. While significant portions of the East Coast were shut down, the Supreme Court peppered counsel for both parties and the government with a constant stream of difficult questions that did not indicate how the Court will rule. Kirtsaeng dba Bluechristine99 v. John Wiley & Sons Inc., Case No. 11-697 (U.S. Supr. Ct.) (oral arguments held 10/29/12).
U.S. textbook publisher John Wiley & Sons brought a copyright infringement suit against Supap Kirtsaeng, a University of California graduate student from Thailand. Kirtsaeng’s family and friends shipped him foreign editions of textbooks printed abroad by Wiley Asia, which Kirtsaeng then sold in the U.S. on commercial websites such as eBay for substantial profit. Kirtsaeng offered the defense of the first sale doctrine, but the district court prohibited him from raising the defense and rejected its applicability to foreign editions of textbooks. Accordingly, a jury found Kirtsaeng liable for willful copyright infringement and awarded Wiley damages of more than half a million dollars. Kirtsaeng appealed to the U.S. Court of Appeals for the Second Circuit, which affirmed the trial court. In April 2012 the U.S. Supreme Court agreed to hear the case. (See IP Update, Vol. 15, No. 5).
In copyright law, the first sale doctrine permits the owner of a lawfully made copy of a copyrighted work to resell or otherwise dispose of that copy without limitations imposed by the copyright owner. The doctrine is also referred to as exhaustion, providing that once a lawfully made copy of a copyrighted work is distributed by the copyright owner, the owner’s exclusive right of distribution with respect to that copy is exhausted, and the owner of the copy may dispose of it as it sees fit. Kirtsaeng gives the Supreme Court a second chance to answer the question of whether the first sale doctrine provides a defense if a foreign-made work is imported and resold in the United States without the copyright owner’s permission, a question that, when Justice Kagan’s recused herself in that case, resulted in a 4-4 deadlock in the Court’s 2010 Costco Wholesale Corp. v. Omega S.A. case. If upheld, the 2d Circuit’s affirmation of the trial court’s ruling that the first-sale doctrine only provides a defense for copies that are manufactured in the United States would mean that copyright owners need only move their manufacturing abroad to obtain perpetual control over the redistribution of their works.
During oral arguments, the Supreme Court posed tough questions in quick succession to each side, as well as to the U.S. Deputy Solicitor General Malcolm Stewart, who had requested permission to participate in oral arguments as amicus curiae. While the justices’ pointed questions exposed flaws in the positions of each party and the government, the questioning was even-handed, such that there was no clear “winner” or strong indication of how the Supreme will rule.
Almost immediately after Kirtsaeng’s counsel began presenting his argument, Justice Ginsburg criticized Kirtsaeng’s position in that it would drastically reduce the rights of copyright owners more than any other country in the world. Adopting Kirtsaeng’s position would change the United States from a national exhaustion scheme to an international exhaustion scheme, meaning that a first sale anywhere in the world of an article containing U.S. copyrighted material would exhaust the copyright owner’s exclusive right of distribution. The current system provides that a U.S. copyright owner’s exclusive right of distribution is only exhausted after a first sale in the United States. Justice Ginsburg pointed out that the Supreme Court had been informed that no country had adopted such a “universal exhaustion” regime and that most countries adhere to a national exhaustion scheme,” commenting that, “[Kirtsaeng’s] argument is asking for something that runs against the regime that is accepted in most places.”
Although Justice Ginsburg’s questioning of Kirtsaeng’s counsel could hint towards rejection of Kirtsaeng’s position, other justices posed difficult questions to Wiley’s counsel that could indicate the opposite. Justice Breyer pressed the U.S. book publisher’s attorney for answers concerning outcomes to multiple hypotheticals of the “parade of horribles” that could occur if Wiley’s position is adopted. Justice Breyer asked Wiley’s attorney if he would be an infringer if he were to travel abroad, purchase five copies of a book printed overseas for the overseas market, bring them back to the United States and give copies to relatives. Justice Sotomayor and Justice Kennedy also sought answers concerning consequences of the “horribles” posed by petitioner. For example, Justice Sotomayor questioned under Wiley’s position whether a library that acquired a copy of a book overseas could import it and lend it out in the United States.
Copyright / Similarity
Alien v. Predator; Who Prevails in Copyright Dispute?
by Rose Whelan
The U.S. Court of Appeals for the Second Circuit upheld an order granting summary judgment on copyright and breach of contract claims against Alien vs. Predator film (AVP) creators, concluding that the alleged similarities between the plaintiffs’ screenplay and the film in issue were insufficient to create factual issues from which a reasonable juror could find actual copying or improper appropriation. Muller v. Anderson, et al., Case No. 11-1694 (2d Cir., November 8, 2004).
Appellant James Muller brought suit alleging that the defendants—Paul W.S. Anderson, Davis Entertainment and Twentieth Century Fox Film Corporation made illegal use of his script for The Lost Continent (TLC) in their film AVP. Muller alleged that he sent his script for TLC to various persons or entities associated with defendants and that the defendants subsequently copied elements of his script in AVP.
The 2d Circuit, in affirming summary judgment, concluded that the two works are very different—the only real similarity being that they both involved a battle and discovery of a pyramid in the Antarctic. On one hand, TLC tells the tale of a group of scientists, soldiers and government officials who venture via submarine to a hidden space beneath Antarctica where they find a large pyramid that hold a powerful magic crystal. The team is subsequently attacked by various inanimate or frozen creatures that come to life. AVP, on the other hand is the story of the battle between two well-known monsters of science fiction, the Aliens and the Predators, that also happens to take place on an island off Antarctica where a mysterious pyramid is found.
The district court found, and the 2d Circuit agreed, that Muller failed to adduce facts from which a reasonable jury could find actual copying or improper appropriation, the two elements Muller had to prove to prevail on his copyright claim.
The Court also explained that although a claim of implied breach of contract would not be preempted by the copyright claims, Muller nonetheless failed to present triable issues of fact on his breach of contract claims. He offered no evidence of any mutual assent, an element necessary to his claim, and in fact conceded that “[n]o material terms of a contract to pay for ideas were ever communicated, either expressly or by implication between plaintiff and any of the defendants.”