Each month, we review significant intellectual property decisions from the U.S. Court of Appeals for the Sixth Circuit and the U.S. District Courts for the Eastern District and Western District of Michigan. Below is the summary of significant cases for August 2015.

U.S. Court of Appeals for the Sixth Circuit

Copyright – Test for Design Separability

Varsity Brands, Inc. v. Star Athletica, LLC, Case No. 14-5237, 2015 WL 4934282 (6th Cir. Aug. 19, 2015).

This significant copyright case was analyzed in a prior IP Law Tracker post.  [Link to http://www.iplawtracker.com/sixth-circuit-tackles-metaphysical-quandary-of-design-separability-rules-that-cheerleader-uniform-graphics-are-protected-by-copyright/]

U.S. District Court, Eastern District of Michigan

Claim Construction – Limits On Use Of Statements in Prosecution History

Joao Control & Monitoring Systems, LLC v. Chrysler Group LLC, Case No. 13-cv-13957, 2015 WL 5063260 (E.D. Mich. Aug. 26, 2015)

Joao Control & Monitoring Systems, LLC (“JCMS”) asserted four patents relating to vehicle antitheft security systems, including U.S. Patent No. 5,917,405. In some embodiments, the invention allows vehicle owners to respond to a theft by taking deterrent actions remotely via a website, such as interrupting the fuel supply, sounding alarms, or activating the door locks. In a decision by U.S. District Judge Mark A. Goldsmith, the court construed several disputed terms in the asserted claims.

As to one term, “control device,” JCMS argued that it should be construed broadly according to a definition expressly submitted to the USPTO during the prosecution of later-filed applications related to the patents-in-suit. Although the court noted that prosecution statements in the related patents could be considered for claim construction purposes, the statements identified by JCMS occurred after the patents-in-suit had issued. After observing that broadening reissue applications must be filed within two years after patent issuance, 35 U.S.C. § 251, the court ruled that an express definition appearing in a subsequent prosecution cannot support a broader claim construction:

The Court of Appeals for the Federal Circuit has repeatedly instructed that it is important to remember that there is a “public notice” function in patent law. Allowing a patent owner to broaden claim language years after the issuance of the patent would be contrary to the public notice principle in patent law and allow a patent owner to broaden the meaning of claim terms without filing a reissue patent application within two years of the issuance of the patent contrary to the statutory scheme. In this case, the Court finds that the definitions submitted in the related patent applications years after issuance of the ’405, ’130, and ’076 patents would broaden the claims and, therefore, be improper.

Slip op. at *5. In contrast, the court construed another disputed term, “processing device,” based on an explicit definition submitted by the patentee during the prosecution of the last patent in suit to issue. The court ruled that the express definition was controlling, since the applicant acted as his own “lexicographer” and the definition was consistent with the specification.

The court also concluded that several disputed terms, such as “remote,” “located at,” and “signal,” did not require construction because their meaning was clear. The court rejected, however, a suggestion that the jury be informed that the terms have their “usual and customary meaning in the art,” since that statement would be meaningless:

The Court does find that Plaintiff’s proposal of giving these claim terms the meaning understood by a person of ordinary skill in the art to be confusing and not helpful to a jury. One of the purposes of claim construction is to make claim terms that are written for persons of ordinary skill in the particular technology area (e.g., engineers) understandable for a jury. By stating that the disputed claim terms should have their plain and ordinary meaning “to a person of ordinary skill in the art,” Plaintiff is not actually proposing a construction for the jury, because the jury is not a person of ordinary skill in art. Such a proposed claim construction is not helpful for the jury. See, e.g., Power–One, Inc. v. Artesyn Techns., Inc., 599 F.3d 1343, 1348 (Fed. Cir. 2010) (“The terms, as construed by the court, must ensure that the jury fully understands the court’s claim construction rulings and what the patentee covered by the claims.”).

Slip op. at *10.

Claim Construction – Use of Specification and Drawings to Limit Claim

Choon’s Design, LLC v. Idea Village Products Corp., Case No. 2:13-cv-13568, 2015 WL 4935104 (E.D. Mich. Aug. 18, 2015)

Plaintiff Choon’s Design, LLC (“Choon”) owns patents covering its popular “Rainbow Loom” product, which allows users to weave colorful items, including bracelets, using elastic bands. Choon filed suit against Idea Village Products Corp. (“Idea Village”) alleging that its loom toy infringed U.S. Patent Nos. 8,485,565 and 8,684,420.

The parties disputed a number of terms in the asserted claims, including terms in the key phrase “at least one pin bar supported on the base.” Choon argued that “supported on” meant “integral with or attached to the base,” a proposed construction broad enough to cover embodiments with both fixed (or “integral”) and detachable pin bars. That construction would likely cover Idea Village’s accused product, which had only non-detachable bar pins fixed to a base. In contrast, Idea Village argued that the term required that the pin bars be detachable from the base and re-attachable in an arrangement selected by the user.

In a claim construction opinion and order written by U.S. District Judge Laurie J. Michelson, the court adopted the narrower construction of the terms as proposed by Idea Village. Applying the claim construction framework established in Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc), the court noted that the claim language alone did not plainly exclude Choon’s proposed definition. Turning to the patent specification, however, the court concluded that a person skilled in the art would understand that the Choon patents require detachable pin bars based on the disclosure of the invention:

And any doubt in the mind of this person with ordinary skill in the art would have been quelled by the fact that every single embodiment disclosed in the written description, and every single drawing of the pin bars and bases, shows the pin bars and bases as separate pieces that can be attached and detached.

Slip op. at *6 (emphasis in original). The court ruled that the sole statement in the specification identified by Choon as suggesting integral pin bars, when viewed in context, appeared instead to refer to detachable pin bars depicted in the patent drawings.

The district court noted that a court ordinarily should not import structural features from an embodiment described in a patent specification into the claims as limitations. Liebel–Flarsheim Co. v. Medrad, Inc., 358 F.3d 898 (Fed. Cir. 2004). However, the court concluded that this concern was not controlling, since the specification and drawings consistently identified detachable pin bars as an important feature of the invention:

[T]his is not a case of limiting claim language that plainly encompasses an integrated design because the specification discloses only two-piece assemblies. Rather, this is a case of determining what one skilled in the art would understand less-than–entirely-plain claim language to mean after he or she reads the written description.  . . .   Moreover, to the extent that it is improper to restrict a claim’s scope to the specification’s embodiments, it is also improper to interpret a claim in such a way that it does not encompass an important feature of the invention.

Slip op. at *6 (citations omitted). The court also rejected two other arguments raised by Choon in support of a broader claim construction. First, it ruled that Choon’s proposed construction was not supported by the doctrine of claim differentiation, because a dependent claim reciting detachable pin bars containing “mating features” merely suggested that the pin bars may be attached in more than one way, not that they did not have to be detachable at all. The court also rejected Choon’s argument that the claims had been interpreted broadly in a prior proceeding before the International Trade Commission. The court noted that Choon did not cite a single case placing significant weight on a prior ITC claim construction decision, the prior ITC proceeding was not seriously contested by the respondents, and the ITC proceeding did not concern accused looms with non-detachable pin bars.

Trade Secrets – Former Employee, Preliminary Injunction Denied

Apex Tool Group, LLC v. Wessels, Case No. 15-cv-10059, 2015 WL 4642856 (E.D. Mich. Aug. 4, 2015)

Apex Tool Group, LLC (“Apex”) filed suit against Wessels, a former Apex senior-level employee, for breach of confidentiality, noncompetition, and non-solicitation agreements and for trade secret misappropriation under the Michigan Uniform Trade Secrets Act, Mich. Comp. Laws § 445.1901, et seq.

Wessels worked for Apex, a tooling supplier, for over ten years, ultimately being promoted to the account manager for a key Apex account, Fiat Chrysler Automobiles (“FCA”). He signed a number of agreements, including a nondisclosure agreement, a non-solicitation agreement, and a noncompetition agreement. Each agreement restricted Wessels’ activities for 12 months following the end of his employment at Apex. In late 2014, Wessels resigned to join a competing tool supplier, AMT-Alfing Corporation (“Alfing”). Following his resignation, Wessels allegedly had contacts with FCA and other Apex customers and was allegedly involved in suspicious activity involving accessing computer files. As a result, Apex moved for a preliminary injunction to prevent Wessels from violating the agreements or Apex’s trade secrets.

In a decision written by U.S. District Judge George Caram Steeh, the district court denied Apex’s motion for a preliminary injunction. The court considered the requested relief by assessing four equitable factors: “(1) whether the movant has a strong likelihood of success on the merits; (2) whether the movant would suffer irreparable injury without the injunction; (3) whether issuance of the injunction would cause substantial harm to others; and (4) whether the public interest would be served by issuance of the injunction.” Slip op. at *6, quoting Kentucky v. Hagel, 759 F.3d 588 (6th Cir. 2014).

First, the court ruled that Apex failed to demonstrate a likelihood of success on its claims. On the breach of contract counts, although Wessels did not dispute the validity of the restrictive employment agreements, the court ruled that the determination of several issues required further factual development. For example, Apex had not established that customers Wessels contacted on behalf of Alfing were covered by the noncompetition agreement, or that Wessels had used confidential information in contacting any customers. Moreover, the court ruled that Apex failed to prove that it had suffered any damages due to Wessel’s contacts with customers:

The evidence submitted in support of plaintiff’s motion for preliminary injunction does not establish a loss of goodwill or competitive advantage. Plaintiff has not pointed to any lost customers or projects as a result of defendant’s actions. One of the ways plaintiff says defendant has violated the non-solicitation agreement is that he attempted to solicit Comau in February 2015 for the Comau Saltillo Project. However, plaintiff won that project. . . .  Likewise, plaintiff has not pointed to any project defendant was involved in that resulted in an award of the project to Alfing instead of Apex as a result of defendant’s violation of his restrictive covenants. Plaintiff has failed in its proofs at this juncture to establish that any actions taken by defendant in violation of his restrictive covenants has had any negative impact on the company, let alone its good will or competitive advantage.

Slip op. at *8.

As to Apex’s claims for misappropriation of trade secrets, the court noted that conflicting testimony existed concerning whether Wessel had access to trade secret information, including whether he had downloaded files containing proprietary data from his computer to portable storage devices prior to resigning. As a result, the court concluded that Apex had not established a likelihood of success on the merits of its breach of contract claims.

Second, the court ruled that Apex failed to demonstrate that it faced irreparable harm without the requested injunctive relief:

[P]laintiff has failed to establish how any of defendant’s actions harmed its customer goodwill and competitive position in the past, let alone that any such actions are likely to lead to immediate irreparable harm in the future. Although irreparable harm “may be possible at some point in time,” plaintiff “has not established that the injury is likely.” NDSL, Inc. v. Patnoude, 914 F. Supp.2d 885, 899 (W.D. Mich. 2012) (emphasis in original). At best, plaintiff has established past harm. As defendant points out, he is no longer in possession of the storage devices allegedly containing Apex’s pricing information because they have been turned over for forensic examination. Defendant is no longer in possession of his Alfing laptop. Without access to this information, it is unlikely that plaintiff will suffer irreparable harm in the immediate future.

Slip op. at *9. Furthermore, the court noted that since Wessel’s noncompete and non-solicitation covenants expired in four months, and Apex and Afling were not planning to compete for any tooling projects during that period, “it is difficult to surmise that it is likely that plaintiff will suffer immediate irreparable harm in the future. Any alleged wrongful conduct has already occurred in the past, but there is nothing to suggest that it is likely to occur in the future.” Id. Finally, the court noted that Apex failed to show that any potential loss was not fully compensable by money damages.

Thus, the district court denied Apex’s motion for a preliminary injunction.

Trademarks – Priority Based on Intent to Use Application

Kelly Services, Inc. v. Creative Harbor LLC, Case No. 14-CV-11249, 2015 WL 5013873 (E.D. Mich. Aug. 21, 2015)

U.S. District Judge Matthew F. Leitman denied Kelly Services’ motion for summary judgment — seeking a judgment that Kelly had priority for the mark WORKWIRE — because Kelly had not used the WORKWIRE mark in commerce before Creative Harbor had filed its intent to use application for the mark.  The court further held that Creative Harbor was not entitled to a judgment of priority over Kelly based solely on its intent to use application because Creative Harbor first needed to complete its registration process by demonstrating actual use of the WORKWIRE mark.

In early 2013, Kelly Services began developing an iPad application, which would provide users with access to personnel placement services, career information, job searching tools, and a Kelly branch office locator. Kelly called its application WorkWire, for which development was completed by Kelly on February 4, 2014. On that same day, Kelly submitted its WorkWire application to Apple’s iTunes Connect services for approval. However, on February 10, 2014, Apple informed Kelly that the WorkWire application had been rejected because of problems with the application’s metadata.  Kelly corrected the problem and resubmitted the WorkWire application to Apple the following day. On February 17, 2014, Apple informed Kelly that the WorkWire application was approved and was ready for sale. Kelly’s WorkWire application was ultimately released to the public via the Apple App Store on February 19, 2014, and a consumer first downloaded the application on February 20, 2014.

Meanwhile, in September 2013, the founder of Creative Harbor independently developed a mobile application for use by employers and prospective employees, which he named WorkWire. Subsequently, on February 19, 2014, Creative Harbor filed an intent to use application for the mark WORKWIRE at the U.S. Patent and Trademark Office.  Creative Harbor then tried to make its WorkWire application available for download to the public through the Apple App Store. However, Apple rejected Creative Harbor’s application because Kelly’s WorkWire application was already available on the Apple App Store website.

Kelly moved the court for judgment declaring that Kelly’s WORKWIRE mark had priority over Creative Harbor’s WORKWIRE mark because Kelly had used its mark before the February 19, 2014 filing date of Creative Harbor’s intent to use application. To support its priority claim, Kelly argued that its priority date was February 4, 2014 —the day Kelly had submitted its request to Apple to include the WORKWIRE app in the Apple App Store.  However, the court disagreed with Kelly’s analysis. The court focused on whether Kelly had actually used the WORKWIRE mark in commerce before Creative Harbor had filed its intent to use mark.

The court, relying on the Lanham Act definition of “use”, emphasized that the term “use in commerce” means “the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark.” Slip op. at *4.  The court went on to emphasize that “use in commerce” requires a “genuine commercial transaction or an attempt to complete a genuine commercial transaction.”  Id. “The use need not be extensive nor result in deep market penetration or widespread recognition. However, there has to be an open use, that is to say, a use has to be made to the relevant class of purchasers or perspective purchases and eternal use cannot give rise to priority rights to a mark.”  Id.

Kelly argued that its February 4, 2014 submission constituted a use in commerce because it “engaged Apple, an unrelated company, at arms-length in the ordinary course of trade and subject to Apple’s software developers requirements.” Id. But the court disagreed, concluding that Kelly had not established that its submission of the WorkWire application to Apple was sufficiently open or public to identify or distinguish its application in the mind of consumers.  The court emphasized that “the bilateral exchange between Kelly and iTunes Connect provided no notice of the Kelly Workwire app to potential consumers – i.e., persons who might eventually download the Kelly WorkWire app from the Apple App Store.” Id. The court further stated that “by merely submitting the Kelly WorkWire App for Apple’s review, Kelly did not make the Kelly WorkWire App available for download by the public.  At best, Kelly’s submission was a prepatory step to making the Kelly WorkWire App available to consumers.” Id. The court held that because Kelly had not used the WorkWire App in commerce before Creative Harbor had filed its intent to use application, Kelly did not have priority over the Creative Harbor WORKWIRE mark.

Finally, the court held that Creative Harbor was not entitled to a declaration that it had priority over Kelly’s WORKWIRE mark because Creative Harbor had not yet completed its registration by demonstrating use of the WORKWIRE mark.