Intellectual Property Bulletin - Summer 2015

by Fenwick & West LLP
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28 U.S.C. § 1782: A Powerful Tool in Global Disputes

U.S. Supreme Court Upholds Ban on Post-Patent Expiration Royalties

Quick Updates

The United States Patent & Trademark Office Issues Second Round of Proposed Rule Changes for Patent Trial and Appeal Board Trials

What if the Defend Trade Secrets Act of 2015 Becomes Law?

Garcia v. Google En Banc

Potential Confusion Is No Substitute for Actually Anticipated Harm—A Second Whiffed Attempt at a Preliminary Injunction in Pom Wonderful v. Pur Beverages

28 U.S.C. § 1782: A Powerful Tool in Global Disputes

by Charlene M. Morrow and Guinevere Jobson

As the number and complexity of cross-border and multi-jurisdictional disputes increase, companies can use 28 U.S.C. § 1782 to obtain evidence from U.S.-based entities for use in those foreign proceedings. Specifically, § 1782 allows entities “interested in” a foreign proceeding to obtain discovery from a U.S. entity using the United States District Courts. It permits the District Court in the district in which an entity resides to direct that entity to produce documents or give testimony. Originally enacted by Congress to provide assistance to foreign tribunals, § 1782 is also a powerful tool for obtaining documents and testimony relevant to the foreign proceeding that is otherwise outside the jurisdiction of the foreign tribunal. See Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004); Lo Ka Chun v. Lo To, 858 F.2d 1564 (11th Cir.1988). Section 1782 may be of particular interest in intellectual property disputes, since these often have the cross-border aspects that bring this statute into play.

To take advantage of § 1782, the party seeking discovery need only show that: (1) the request has been made either “by a foreign or international tribunal,” or by “any interested person”; (2) that the request seeks evidence, whether an individual’s “testimony or statement” or the production of “a document or other thing”; (3) that the evidence is “for use in a proceeding in a foreign or international tribunal”; and (4) the person from whom discovery is sought resides or is found in the district of the United States District Court ruling on the application for assistance.

Though powerful, § 1782 is not limitless. The law is not settled on whether § 1782 can reach documents within a U.S. target’s “possession, custody, or control” if those documents or things are physically located overseas. On the one hand, U.S. courts have noted in dicta that § 1782 only reaches documents located inside the United States. See, e.g., Four Pillars Enters. Co. v. Avery Dennison Corp., 308 F.3d 1075, 1079 (9th Cir. 2002) (suggesting there is “some support” for the view that § 1782 does not authorize discovery of material located in foreign countries, resolving on other grounds); Norex Petroleum Ltd. v. Chubb Ins. Co. of Canada, 384 F. Supp. 2d 45, 55 (D.D.C. 2005) (finding that the available “caselaw suggests that §1782 is not properly used to seek documents held outside the United States” but finding documents in question “are not discoverable for another reason”).

On the other hand, other courts have reached a contrary conclusion: the plain language of the statute poses no such restriction and “requires only that the party from whom discovery is sought be ‘found’ here; not that the documents be found here.” See In re Gemeinshcaftspraxis Dr. Med. Schottdorf, No. Civ. M19-88 (BSJ), 2006 WL 3844464 (S.D.N.Y. Dec. 28, 2006) (emphasis in original). In that case, the court ordered production of the documents sought under § 1782, including those in the control of the U.S.-based entity but located abroad. See also In re Application of Republic of Kazakhstan, 15 Misc. 0081 (SHS) (S.D.N.Y. June 22, 2015) (upholding order permitting discovery sought from New York office where documents were located in the firm’s London branch).

Threshold Requirements

Party Status Is Not Required
An entity seeking discovery under § 1782 does not need be a party to the foreign action and instead need only have “significant procedural rights” and “participation rights” in the foreign proceeding. For example, in Intel, Advanced Micro Devices (AMD) filed an antitrust complaint against Intel with the European Commission’s Directorate-General for Competition (DG). Though AMD was not a party to the DG’s investigation, it filed a petition in the United States District Court in Northern California seeking potentially relevant documents from Intel, a resident of the Northern District of California. The United States Supreme Court held that while AMD was not technically a party to the investigation, AMD nevertheless had standing because it had participation rights in the DG’s proceedings: it could submit information in support of its allegations and could seek judicial review of the DG’s disposition of its complaint.

Proceedings Need Not Be Ongoing
Even absent a pending adjudicative proceeding, a party may be able to obtain discovery under § 1782 as long as one is within “reasonable contemplation.” Application of Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 747 F.3d 1262 (11th Cir. 2014); Intel. Courts require showing that a future proceeding is more than speculative and demand “reliable indications” such as an internal audit; investigation; or internal correspondence suggesting that judicial action was imminent. See also Lazaridis v. Int’l Centre for Missing and Exploited Children, Inc., 760 F. Supp. 2d 109 (D.D.C. 2011) (a proceeding was within “reasonable contemplation” where the petitioner submitted two summonses for appearance before a Greek magistrate judge in connection with a “pre-accusatory proceeding.”). Accordingly, an entity need not wait until suit is filed or an investigation initiated before proceeding under §1782.

Discoverability in the Foreign Tribunal Not Required
Section 1782 does not require that the documents sought be discoverable in the foreign jurisdiction. Instead, if a district court deems production is appropriate, the scope of discovery is within the court’s discretion, subject to the limitations found in Federal Rule of Civil Procedure 26. See Weber v. Finker, 554 F.3d 1379, 1385 (11th Cir. 2009). Rule 26 permits the discovery of “any nonprivileged matter that is relevant to any party’s claim or defense,” and permits the discovery of information not itself admissible at trial, but “reasonably calculated to lead to the discovery of admissible evidence.”

The scope of discovery can also extend to documents within the target U.S. entity’s “custody or control.” That can include documents held by agents and third-party contractors. Fed. R. Civ. Proc. 34; Columbia Pictures, Inc. v. Bunnell, 245 F.R.D. 443 (C.D. Cal. 2007).

Discovery May Be Available for Arbitral Proceedings
Where arbitration has been required by or involves a governmental entity, courts have held that the foreign arbitral body is a “foreign tribunal” for purposes of §1782. For example, in In re Application of Mesa Power Group, LLC, a district court found discovery available for a foreign arbitration proceeding under the North American Free Trade Agreement (NAFTA). 878 F. Supp. 2d 1296 (S.D. Fla. 2012). Mesa sought, and successfully obtained, the court’s assistance in obtaining evidence from a third-party, NextEra, for use in a pending arbitration under NAFTA, which involved Mesa Power and the government of Canada. See also In re Republic of Ecuador, No. C-10-80225 MISC CRB (EMC), 2010 WL 4973492 (N.D. Cal. Dec. 1, 2010) (allowing discovery under § 1782 for use in foreign arbitration taking place pursuant to a bilateral investment treaty).

In contrast, some courts have concluded that private arbitral proceedings are not conducted by “foreign tribunals” and thus discovery under §1782 is not available. See, e.g., El Paso Corp. v. La Comision Ejecutiva Hidroelectrica Del Rio Lempa, 341 Fed. Appx. 31 (5th Cir. 2009) (private Swiss arbitral tribunal not a “tribunal” under §1782); Nat’l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999) (private commercial arbitration proceedings under the auspices of International Chamber of Commerce not a “tribunal”); In re Dubey , 949 F. Supp. 2d 990, (C.D. Cal. 2013); In re Arbitration Between Norfolk S. Corp., Norfolk S. Ry. Co., and Gen. Sec. Ins. Co. and Ace Bermuda Ltd., 626 F. Supp. 2d 882 (N.D. Ill. 2009); In re Oxus Gold PLC, No. MISC. 06-82, 2006 WL 2927615 (D.N.J. Oct. 11, 2006). However, a number of district court decisions in other circuits have held that private arbitral tribunals are indeed “tribunals” for purposes of the statute, under the logic that an arbitral body is a “first-instance decision maker” whose decision leads to a dispositive ruling. See, e.g., In re Application of Babcock Borsig AG, 583 F. Supp. 2d 233, 238 (D. Mass. 2008) (denying the request on other grounds, but finding that an arbitration in the International Chamber of Commerce was a “tribunal”); Comision Ejecutiva Hidroelectrica del Rio Lempa v. Nejapa Power Co., 2008 WL 4809035 (D. Del. Oct. 14, 2008), vacated as moot, 341 Fed. Appx. 821 (3d Cir. 2009); In re Hallmark Capital Corp., 534 F. Supp. 2d 951 (D. Minn. 2007); In re Roz Trading Ltd., 469 F. Supp. 2d 1221 (N.D. Ga. 2006).

Discretionary Factors

Though the potential scope of discovery under § 1782 is extensive, a court has discretion whether to order discovery in a specific matter and, if so ordered, what the breadth of the order shall be. Once an applicant establishes that the statutory requirements recited above have been met, the court must also weigh the factors enunciated by the Supreme Court in Intel: (1) whether “the person from whom discovery is sought is a participant in the foreign proceeding,” because “the need for §1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant”; (2) “the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance”; (3) “whether the §1782(a) request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States”; and (4) whether the request is otherwise “unduly intrusive or burdensome.” The Supreme Court in Intel added that “unduly intrusive or burdensome requests may be rejected or trimmed.”

Thus, even if a party meets the basic statutory requirements, the District Court can deny discovery if it determines that the foreign tribunal “is not receptive to [U.S.] judicial assistance.” In the Intel-AMD dispute, on remand from the Supreme Court, the District Court denied AMD’s discovery requests in their entirety after the foreign tribunal submitted amicus curiae briefs stating that it did not “need or want” the Court’s assistance and indicated that it would not even review the documents if they were produced to it. Advanced Micro Devices v. Intel Corp., No. C 01-7033, 2004 WL 2282320 (N.D., Cal. Oct. 4, 2004).

A district court might also, in its discretion, refuse to grant discovery if the same discovery could otherwise be obtained in the foreign proceeding. To force an opponent to proceed in two separate court systems would be considered an abuse, with the inference being that “the party seeking U.S. discovery was trying to harass his opponent.” See Heraeus Kulzer GmbH v. Biomet, Inc., 633 F. 3d 591, 594 (7th Cir. 2011).

The § 1782 discretionary factors may extend to discovery questions involving foreign entities even when the statute itself is not invoked. In a recent decision by the Court of Appeals for the Federal Circuit, the court held that these factors should be applied when considering whether to amend a protective order in a patent suit in the U.S. to permit use of the discovery materials in a foreign proceeding. In re Posco, No. 2015-112 (Fed. Cir. July 21, 2015). Nippon Steel had sued Korean company POSCO for patent infringement in the District Court in New Jersey. In parallel, Nippon sued POSCO in Japan for trade secret infringement, and POSCO filed a request for declaratory judgment of non-infringement in Korea. In the U.S. lawsuit, the court had entered a protective order limiting use of confidential materials disclosed in that suit to “solely for purposes of the prosecution or defense of this action.” Nippon later sought to amend the protective order so it could use some of those documents in the foreign proceedings. POSCO petitioned for a writ of mandamus to stop the disclosure directed by the District Court. The Federal Circuit instructed the District Court to consider on remand § 1782 and Intel’s discretionary factors. Although the Federal Circuit acknowledged that § 1782 and Intel may not directly govern requests to modify a protective order to make materials available in a foreign proceeding, it noted that at least three district courts have acknowledged that § 1782 and the Intel factors were relevant. As a result, where discovery questions implicate disclosure of documents in foreign proceedings, parties should consider and frame their arguments with these factors in mind.

Intellectual Property Ramifications

As companies are faced with disputes abroad, including intellectual property disputes where relevant evidence is located in the United States, they should be prepared to use § 1782, or have it used against them, to obtain documents and testimony. Section 1782 can be effective in intellectual property disputes, where a party’s product allegedly infringing a foreign patent is manufactured, at least in part, in the United States; or if a dispute involves families of patents spanning across jurisdictions. See Cryolife, Inc. v. Tenaxis Medical, Inc., No. C08-05124 HRL, 2009 WL 88348 (N.D. Cal. Jan. 13, 2009) (granting request for documents and testimony concerning starting materials for respondent’s sealant product, which was the subject of a patent infringement action in Germany); In re Iwasaki Electric Co., No. M19-82, 2005 WL 1251787 (S.D.N.Y. May 26, 2005) (petitioner involved in patent litigation in Germany, U.S. and Japan sought documents and deposition transcripts from related U.S. litigation for use in related disputes abroad); In re Procter & Gamble Co., 334 F. Supp. 2d 1112 (E.D. Wis. 2004) (defendant in underlying litigation sought discovery relevant to its defenses that it was immune from suit for patent infringement based on settlement of prior litigation or that the patent at issue was invalid).

U.S. Supreme Court Upholds Ban on Post-Patent Expiration Royalties

by Melanie L. Mayer, Ph.D. and David K. Tellekson

Fifty years ago, in Brulotte v. Thys Co., the U.S. Supreme Court held that “a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se.” 379 U.S. 29, 32 (1964). On June 22, 2015, in Kimble v. Marvel Entertainment, LLC (a 6-3 decision), the U.S. Supreme Court upheld the Brulotte rule.

Factual Background in Kimble v. Marvel Entertainment, LLC

Around 1990, Kimble invented a Spider-Man toy that allowed a user to mimic Spider-Man’s web-shooting abilities with foam string. Kimble v. Marvel Enters. Inc., 727 F.3d 856, 857-58 (9th Cir. 2013). After filing a patent application on this invention, Kimble met with Marvel’s predecessor company to discuss the idea covered by Kimble's pending patent application and other ideas and know-how. According to Kimble, Marvel’s predecessor verbally agreed to compensate him if the company used any of his ideas. The company subsequently told Kimble that it was not interested in developing his idea, but later began manufacturing a similar Spider-Man role-playing toy.

In 1997, Kimble sued Marvel for patent infringement and breach of contract. The parties ultimately settled that litigation. The settlement agreement had no expiration date and did not include any specific time limit on Marvel’s obligation to pay Kimble three percent of net product sales.

Subsequently, the parties had a number of disagreements about royalty payments. Kimble filed suit for breach of contract, and Marvel counterclaimed seeking a declaration that it was no longer obligated to pay Kimble under the settlement agreement based on sales of products after the expiration of the patent. Applying the Brulotte rule, the district court held that the royalties had to end when the patent expired. Kimble v. Marvel Enters., Inc., 692 F.Supp.2d 1156, 1159-1161 (D. Ariz. 2009).

The Ninth Circuit Court of Appeals affirmed. Kimble, 727 F.3d 856. Because the settlement agreement was limited to a royalty for patent rights alone (it did not, for example, include a discounted rate for the non-patent rights) or otherwise indicate that the royalty was in no way subject to patent leverage, the Ninth Circuit held that no royalties were due under the settlement agreement after the patent expired. Although the Ninth Circuit characterized the Brulotte rule as “counterintuitive” and “its rationale… arguably unconvincing,” the court recognized that it was bound by Supreme Court authority.

Supreme Court’s Opinion in Kimble v. Marvel Entertainment, LLC

In its June 22, 2015 opinion in Kimble, the U.S. Supreme Court acknowledged that “[a] broad scholarly consensus supports Kimble’s view of the competitive effects of post-expiration royalties, and we see no error in that shared analysis.” For example, “[a] more extended payment period coupled (as it presumably would be) with a lower rate, may bring the price the patent holder seeks within the range of a cash-strapped licensee.” However, the Court indicated that it was bound to adhere to the principles of stare decisis and declined to overrule Brulotte. In doing so, the Court stated that “[r]especting stare decisis means sticking to some wrong decisions.” In fact, the Court noted that stare decisis only has consequences when it is used to sustain incorrect decisions; “correct judgments have no need for that principle to prop them up.”

According to the majority, stare decisis in this case was “superpowered.” First, the majority believed that Brulotte interpreted a statute, 35 U.S.C. § 154. Despite amending patent law several times since Brulotte, Congress has declined to amend that law to reverse Brulotte’s effect. In addition, there was a “reasonable possibility” that parties have structured their business transactions based on Brulotte, which lies at the intersection of property and contract rights.

In view of this “superpowered” case of stare decisis, the Court needed a “superspecial justification” to warrant reversing Brulotte, but found none. First, the Court determined that Brulotte’s statutory and doctrinal underpinnings remained intact. Section 154 continues to cut off patent rights after a set number of years. And Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S. 249 (1945), which the Court characterized as the decision on which Brulotte primarily relied, remains good law. Second, the Court found that nothing about Brulotte was unworkable. Indeed, the decision “is simplicity itself to apply,” since a court need only ask whether the contract requires post-patent expiration royalties.

Although the Court recognized the possibility that the Brulotte rule may hamper competition or technologic innovation, it determined that “[c]ritics of the Brulotte rule must seek relief not from this Court but from Congress.”

Writing in dissent, Justice Alito (joined by Chief Justice Roberts and Justice Thomas) countered that Brulotte “was not based on anything that can plausibly be regarded as an interpretation of the terms of the Patent Act. It was based instead on economic theory — and one that has been debunked.” According to the dissent, Brulotte also “poses economic barriers that stifle innovation” since deferred royalty agreements can be economically efficient. In addition, Brulotte unsettles contractual expectations where the parties are completely unaware of the ban on post-patent expiration royalties, as Kimble and Marvel were. The dissent characterized Brulotte as an “obvious mistake” that the Court should have corrected.

The dissent also said that Brulotte “does not represent a serious attempt to interpret the Patent Act. The dissent noted that:

“A licensing agreement that provides for the payment of royalties after a patent’s term expires does not enlarge the patentee’s monopoly or extend the term of the patent. It simply gives the licensor a contractual right. Thus, nothing in the text of the Act even arguably forbids licensing agreements that provide for post-expiration royalties.”

From this the dissent concluded that “ Brulotte was thus a bald act of policy making.”

The Brulotte Rule Going Forward

In the Kimble opinion, the U.S. Supreme Court provided some guidance regarding licensing arrangements that would be enforceable under Brulotte. As a threshold matter, the Court made clear that “all the decision bars are royalties for using an invention after it has moved into the public domain.” In accord with this, the Court confirmed that Brulotte “allows a licensee to defer payments for pre-expiration use of a patent into the post-expiration period….” Thus, “[a] licensee could agree, for example, to pay the licensor a sum equal to 10 percent of sales during the 20-year patent term, but to amortize that amount over 40 years.”

The Court also confirmed that a hybrid license covering patent and non-patent rights is enforceable under Brulotte, for example, where that license provides a step-down royalty rate that applies upon patent expiration. As the Court explained, “a license involving both a patent and a trade secret can set a 5 percent royalty during the patent period (as compensation for the two combined) and a 4 percent royalty afterward (as payment for the trade secret alone).” Such post-expiration royalties for a non-patent right are acceptable even where the non-patent right is “closely related to a patent.” While using this as an example, the Court did not discuss whether a portion of a royalty that is based explicitly on both patent and non-patent rights ( e.g. know-how) could be enforced at a lower rate based on evidence presented of the value of the non-patent rights relative to the patent rights.

Courts will likely continue to require evidence, such as in the contract itself, that any post-patent expiration royalties are not for use of expired patents, but are instead, for example, for use of non-patent rights ( e.g., know how, trade secrets) or are amortized payments for use of the patented technology during the patent term. Courts will also likely limit the holding of Kimble to its narrow facts, which were that a royalty based exclusively on a patent cannot be extended beyond the expiration of that patent.

Quick Updates

The United States Patent & Trademark Office Issues Second Round of Proposed Rule Changes for Patent Trial and Appeal Board Trials

The United States Patent & Trademark Office (USPTO) has made good on its commitment to solicit and consider public comments regarding the Patent Trial and Appeal Board (PTAB) post-patent issuance proceedings created by the Leahy-Smith America Invents Act of 2011 (AIA). After issuing a first round of changes earlier in the year, on August 19 the USPTO issued a second set of proposed rule changes including allowing patent owner use of testimonial evidence, revising claim construction standards, and adding a Rule 11 requirement for all papers filed with the PTAB. According to USPTO Director Michelle Lee, these changes are intended to reflect improvements that can be made to the PTAB post-patent issuance proceedings based on the experience of the public with the proceedings. The USPTO will consider public comments on the proposed changes if they are received before October 19, 2015.

Here is a brief summary of the most significant proposed rule changes:

  • New testimonial evidence in its preliminary response. Currently petitioners may include testimonial evidence in the form of an expert declaration but the patent owner is not permitted to include any testimonial evidence. The proposed rule would enable patent owners to provide a more robust challenge to the petition by answering the petitioner’s evidence, potentially leading to a decrease in the rate of institution of trial at the PTAB.
  • Claim construction standards. The PTAB confirms that it will continue to use the broadest reasonable interpretation standard for unexpired patents, but will apply the Phillips-type claim construction for claims in patents that will expire during the pendency of the proceedings. Because the claims of those patents cannot be amended, the petitioner can determine, with guidance from the USPTO, which claim construction will be applied. The USPTO has requested additional comments regarding how and when to determine that the patent will expire before the proceedings are complete.
  • Rule 11 standard. Under the proposed rule, practitioners before the PTAB would have to provide a Rule 11-type certification for all papers filed with the PTAB. The proposed rule includes a provision for sanctions for noncompliance, providing the PTAB with a method to better police practitioner misconduct.

The USPTO declined to change its current practice of considering requests for an oral hearing on a case-by-case basis or to consider requests for additional discovery of secondary considerations on a case-by-case basis. The proposed rule change would allow a patent owner to raise a challenge regarding a real party-in-interest and privity at any time during the proceeding. While the USPTO prefers that the issue be addressed as early as possible during the proceeding, it also recognized that limiting the challenge to the preliminary stages would value efficiency over fairness.

The changes proposed by the USPTO and the responses to comments received by the public show that the USPTO is listening. Whether the proposed rule changes go far enough, or will ultimately create more challenges, such as the claim construction standard, remains to be seen.

What if the Defend Trade Secrets Act of 2015 Becomes Law?

The recently introduced Defend Trade Secrets Act of 2015 (H.R. 3326 and S. 1890) seems no more likely to become law than the handful of previous bills that attempted to federalize civil trade secret law. The identical bills H.R. 3326 and S. 1890 were introduced and referred to committee on July 29, 2015. H.R. 3326 is sponsored by Rep. Collins (R-GA) and co-sponsored by 12 Republican and six Democratic representatives. S. 1890 is sponsored by Sen. Hatch (R-UT) and co-sponsored by two Republican and three Democratic senators. The website govtrack.us gives H.R. 3326 a 4 percent chance of enactment and S. 1890 a mere 1 percent chance.

In the event the Defend Trade Secrets Act (DTSA) does become law, it would create a private right of action to bring trade secret misappropriation claims in federal court. It would also provide for specific procedures for obtaining an ex parte seizure order, including a requirement that seized materials be held by the court. The DTSA’s remedies provision mostly tracks the Uniform Trade Secrets Act (UTSA). But there are several ways in which the proposed federal legislation departs from the UTSA (and from the statutes in place in the 48 states that have adopted the UTSA).

One difference is the proposed standing requirement, which also acts to make the DSTA authorized under the Constitution’s Commerce Clause. The DSTA is limited to a trade secret “that is related to a product or service used, or intended for use in, interstate or foreign commerce.” It is not clear how attenuated a relationship may be between a trade secret and a particular product or service before the jurisdictional hook fails. Trade secrets concerning human resources, accounting practices, or other administrative areas of corporate life that do not relate directly to any one particular product or service may be left out of the federal right of action.

Another difference is the civil seizure provision in the proposed bills. The provision would authorize a court to issue an ex parte order seizing property if the seizure was necessary to prevent the propagation or dissemination of a trade secret. This provision borrows heavily from 15 U.S.C. § 1116(d), concerning seizure of counterfeit goods. It is not clear why the sponsors of the bills believe that the perpetrators of trade secret misappropriation share significant similarities with counterfeiters. Most trade secret misappropriation is done by insiders—former employees, whose names and identifying information are known to the trade secret owner and are, as a result, lower flight risks than counterfeiters. Critics of the bills argue that this provision is ripe for abuse, allowing companies to disrupt competitor’s operations by seizing company computers and servers. If the DTSA passes, companies in highly competitive markets should consider implementing response plans in the event that a court orders seizure of company computers or servers. Such response plans would include ways to isolate and remove specific data from particular systems without disrupting the company’s entire IT infrastructure.

Garcia v. Google En Banc

In May, the United States Court of Appeals for the Ninth Circuit issued its long-awaited en banc opinion in Garcia v. Google, 743 F.3d 1258 (9th Cir. 2014), reversing a broad secret injunction issued by the three-judge panel. The case, stemming from an actress, Cindy Lee Garcia, who claimed she had been tricked into performing in a controversial anti-Muslim movie, had drawn widespread industry and media attention as evidenced by the 13 amicus briefs on appeal. A three-judge panel of the Ninth Circuit had issued a mandatory injunction to Google to take down all versions of the film and to keep monitoring to take down any more that were uploaded. It had also issued a gag order prohibiting Google from telling anyone about the secret injunction for nearly a week.

The en banc panel reinstated the district court’s denial of a preliminary injunction, finding that Garcia was unlikely to meet all the requirements for the injunction she wanted. It looked to the factors the Supreme Court set out in Winter v. NRDC, 555 U.S. 7 (2008): Garcia had to show that: (1) she was likely to succeed on the merits; (2) she was likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tipped in her favor; and (4) an injunction was in the public interest. The en banc opinion also emphasized that Garcia wanted Google to remove and keep removing the film from YouTube, in essence a mandatory injunction requiring Google to take action rather than simply refrain from action. A mandatory injunction required her to show that the law and facts clearly weighed in her favor.

Garcia could not clearly establish that she held a copyright in her brief performance in the film at issue for a number of reasons: (1) deferring to the expertise of the Copyright Office which denied her registration, she did not fall under the Copyright Act’s definition of an author of the film; (2) Garcia’s theory would splinter copyright in works involving many actors or contributors, creating logistical and financial nightmares; and (3) in order for copyright to attach, an author must “fix” the work, and the director, not Garcia, “fixed” her performance by recording it.

Garcia also had failed to show irreparable harm to her copyright interests. Instead, all the harms she claimed, and on which the three-judge panel had relied, were threats of violence based on her association with a negative portrayal of Muslims, not damage to any economic copyright interest, such as the marketability of her performance.

The en banc panel vacated the injunction that had been in place for over a year, but Judge Reinhardt criticized the delay caused by the court’s refusal to hear the case immediately. In dissent of the order that had refused to hear en banc the panel’s denial of an emergency stay of the injunction, Judge Reinhardt called the injunction “unconscionable” and labeled the court an “architect” of “the infringement of fundamental First Amendment rights” which caused “irreparable damage to free speech rights in the lengthy intervening period.”

The case formally closed in late June, with Garcia stipulating to dismissal.

Potential Confusion Is No Substitute for Actually Anticipated Harm—A Second Whiffed Attempt at a Preliminary Injunction in Pom Wonderful v. Pur Beverages

Litigants seeking a preliminary injunction are well aware of the Winter factors: likelihood of success on the merits, likelihood of irreparable harm, the balance of equities, and the public interest. Winter v. NRDC, Inc., 555 U.S. 7 (2008). The interrelation between these factors is often less clear. Pom Wonderful, producer of premium pomegranate beverages, ran into a snag when attempting to prevent Pur Beverages’ use of “pom” in its “pur pom” energy drink. Pom Wonderful LLC v. Pur Beverages LLC, No. 2:13-cv-06917, Dkt. No. 68 (C.D. Cal. Aug. 6, 2015). The Ninth Circuit had already determined that there was a likelihood of consumer confusion for use of the exact same word mark “pom” in the similar product space of pomegranate-related drinks. Pom Wonderful LLC v. Hubbard, 775 F.3d 1118 (9th Cir. 2014). But while actual confusion may show that future irreparable harm is likely, Pom Wonderful only had evidence of potential confusion. Pom Wonderful’s speculation regarding harm was insufficient. This showcases the value of developing survey evidence or other concrete data early in litigation when seeking a preliminary injunction. And if the parties do not directly compete, it will be valuable to also develop evidence that customers use both products to nudge potential harm into likely harm.

Even without such concrete evidence, there are other tactics to convert a seemingly potential harm into a likely one. Pom Wonderful argued that its brand message of “purity and healthfulness” would be damaged by the cheaper “pur pom”, which has no pomegranate juice, only pomegranate flavoring. The court dismissed this argument as supported by no evidence that harm to reputation or goodwill would follow an association with “pur pom”. Pom Wonderful’s declaration represented that its customers value taste and health. But Pom Wonderful had no evidence that “pur pom” was unhealthy or that energy drinks were not associated with good taste or health. Pom Wonderful had no evidence that its customers had even heard of “pur pom”, let alone evidence that Pom Wonderful had suffered brand damage. Having evidence of brand damage would require actual damage at the preliminary injunction stage. But Pom Wonderful had other choices. It could have developed evidence that consumers do not think of energy drinks as healthy or tasty. It could have developed evidence that its consumers have received “pur pom” advertising. Pom Wonderful could likely have found some support for either of these through basic searches. Alternatively, Pom Wonderful could have reframed the damage to its messaging. Pom Wonderful could have argued that rebranding “pom” to focus on the flavor rather than the substance of the beverage damages Pom’s goodwill. This would have eliminated Pom Wonderful’s need for evidence regarding what consumers think of “pur pom”. It could be worth spending time at the outset to develop a theory of brand damage that relies more on the nature of the competing product itself than on consumer reaction to that product. Your shortened declaration will thank you.​

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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