Monthly Archives: January 2015

SCOTUS Decides That the Issue of Trademark “Tacking” Is One for a Jury

by: Kelly A. Williams, a shareholder at Picadio Sneath Miller & Norton, P.C.

This week the United States Supreme Court determined that a jury should decide the issue of whether “tacking” can be used by a trademark holder to assert a priority position.

Hana Bank LogoIn Hana Financial, Inc. v. Hana Bank, No. 13-1211 (decided January 21, 2015), Hana Financial sued Hana Bank for trademark infringement. Hana Bank asserted the doctrine of tacking as a defense, claiming that its mark came first. This argument is relevant because under trademark law, rights in a trademark are determined by the date of the mark’s first use in commerce. In other words, the party who uses a mark in commerce first is given priority over other users. The doctrine of tacking arose from courts’ recognition that trademark users ought to be able to modify their marks over time without losing priority (for instance, think of the Aunt Jemima mark: The mark dates to 1893 but Aunt Jemima has changed her appearance over the years. Thanks to the tacking doctrine, the owner of the mark, currently Quaker Oats Company, keeps that 1893 priority date. Fun Fact: The Aunt Jemima mark actually changed trademark law in the United States. (See this article for details.)   A trademark holder may use “tacking” when the original and revised trademarks are “legal equivalents” in that they create the same, continuing commercial impression. In short, tacking applies when a consumer considers both marks to be the same despite a modification.

The Supreme Court, in an opinion delivered by Justice Sotomayor, concluded that because the tacking inquiry operates from the perspective of an ordinary purchaser or consumer, a jury should make the determination of whether the modified mark creates the same, continuing commercial impression. Prior to this ruling, there had been a split in the federal circuit courts as to whether tacking was a question for the jury or the court. The Supreme Court has now decided the issue. Note, that the Supreme Court did acknowledge that the issue of tacking could still be decided by a judge on a motion for judgment as a matter of law or on a motion summary judgment under the right set of facts.

So which bank won? Hana Bank. Hana Bank convinced a jury that the doctrine of tacking applied to its mark such that it had priority over Hana Financial. Based on the Supreme Court’s ruling, the jury verdict will stand.

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Teva Pharmaceuticals v. Sandoz–Supreme Court Changes Appellate Review of Claim Constructions

by: Robert Wagner, intellectual property attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

SupremeCourtImage_1Yesterday, the Supreme Court issued another opinion in the patent arena in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. (No. 13-854). In this decision, the Court  considered what deference, if any, that appellate courts should have when reviewing a district court’s claim construction. In a 7–2 opinion authored by Justice Breyer (Justices Thomas and Alito dissenting), the Court reaffirmed that appellate courts review claim constructions de novo, but held that underlying factual determinations made by a district court should be reviewed under a clear error standard. Thus, this is somewhat of a mixed bag decision whose practical importance is unclear.

Reasoning of the Court

The Court started off by reaffirming its determination in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996) that claim construction is a question of law for the courts, even when it may require evidentiary determinations. The Court then noted that Federal Rule of Civil Procedure 52(a) sets the framework for an appellate court’s review of findings of fact made by a district court. Under Rule 52(a)(6), a court of appeals must not set aside a district court’s findings of fact unless they are clearly erroneous. Under the Court’s precedent, this standard applies to all types of factual findings made by a district court, including findings relating to subsidiary and ultimate facts. The Court then found that there was no exception to Rule 52(a) for patent cases, either by statute or based on its case law. Based on this determination, the Court concluded that appellate courts must review factual findings made by a district court during the claim construction process under a clear error standard of review, and not a de novo standard.

Unlike many Supreme Court decisions, the Court then went on and attempted to clarify how appellate courts should review claim constructions from district courts. When a court considers intrinsic evidence to the patent (the patent claims, specification, drawings, and prosecution history) when determining its construction, appellate courts are to review those determinations using a de novo standard of review. However, when a district court considers extrinsic evidence (such as expert testimony), any factual findings related to that extrinsic evidence must be reviewed on a clear error basis. Finally, the ultimate construction is still to be reviewed on a de novo basis, even if it contains issues of fact.

Consequences of the Decision

As with any decision, it is sometimes hard to predict the consequences immediately after the decision issues. But, there are some take-aways from this decision. First, district courts will likely have to do some more work, especially when they are making factual determinations relating to claim construction. District courts will now have to make those findings explicit if they expect the Federal Circuit to give the findings deference.

Second, parties will have to consider whether introducing more extrinsic types of evidence will be beneficial or harmful to their cases. It may be that in certain circumstances a party will feel so confident of its position before a district court that it will want as many factual determinations as possible to support its hoped-for ruling by the district court. On the other hand, if it ultimately loses on construction, those factual findings will make it harder for to argue for reversal. So, parties will need to be careful in thinking about what makes the most sense in their particular circumstance.

Third, it will be interesting to see what the Federal Circuit does. The Supreme Court confirmed that the ultimate decision is still made on a de novo basis. This means that the Federal Circuit may simply accentuate or minimize the factual findings as needed to affirm or reverse based on its own interpretation, which may make little practical difference in the outcomes of cases.

Many claim constructions do not turn on factual findings relating to extrinsic evidence, so this decision is unlikely to radically change how patents are litigated. In the margins, where factual determinations and understandings are truly important, it likely makes sense to give deference to the district court, especially when it had the chance to hear live testimony by experts on disputed issues and to weigh issues of credibility.

For some further initial impressions of the Court’s decision, check on this article on the Patently-O blog, in which Professor Crouch talked with a number of patent law experts for their impressions.

Beer Drinkers Bring Down Trademark Litigation

by: Kelly A. Williams, a shareholder at Picadio Sneath Miller & Norton, P.C.

You might wonder what could cause people to take to social media to rail against a trademark suit. It turns out one thing is beer: IPAs to be more exact.

 

Law360 and CNBC reported this week about the social media backlash that occurred when Lagunitas Brewing Co. brought a trademark suit against Sierra Nevada Brewing Co. over the use of “IPA” on labels for India Pale Ale. The backlash was so great that Lagunitas moved to dismiss its lawsuit just two days after it filed the suit.

For those of you who practice in the area of trademark law, you might quickly jump to the conclusion that the suit was a weak one given that the term IPA sounds very “descriptive” or “generic” at first glance. However, the suit wasn’t that simple. Lagunitas didn’t just oppose the use of “IPA” on the label, and in fact there are a lot of beers out there with “IPA” on the label (yes, I’ll admit I’m pretty well aware of these other beers having tried a few myself). Lagunitas’ objection was the way in which Sierra Nevada designed its logo, which allegedly looked very similar to Lagunitas’.

Whether Lagunitas would have ultimately prevailed in a court of law is up for debate. However, Lagunitas appeared to be losing in the court of public opinion and that was enough to push it to withdraw the suit. This is an interesting issue for IP practitioners to keep in mind in those cases where a client’s business is dependent upon favorable public opinion.

Other sources for this article: Law360.

Federal Circuit Again Splits on Willful Infringement

by: Robert Wagner, intellectual property attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

6436135 ImageThe Federal Circuit issued another contentious decision on the subject of willful infringement on Tuesday in Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., (No. 2014-1114), splitting 2-1 and with another judge calling for the Circuit to revisit the law in this area.

The Bard-Gore case has had a long and tortured past, beginning more than 40 years ago. Gore, which makes an ePTFE polymer under the brand name Gore-Tex®, invited Dr. David Goldfarb to its facilities in 1973 to participate in a study of Gore’s product for use as a vascular prosthesis. Gore was trying to find new uses for its product, including in the medical fields. Based on the materials that Gore provided to Dr. Goldfarb, Dr. Goldfarb filed a patent application on the structure of the most effective of the samples he tested back in 1974. Peter Cooper from Gore had previously filed a patent application, and the USPTO conducted an interference proceeding.

In the interference proceeding, the USPTO concluded that Cooper was the first to conceive of the subject matter of the invention, but Dr. Goldfarb was the first to reduce it to practice. Therefore, the USPTO awarded the patent to Dr. Goldfarb. The Federal Circuit affirmed, and the patent ultimately issued in 2002. During the pendency of this dispute, Gore continued to develop and sell ePTFE grafts and medical devices.

In 2003, Dr. Goldfarb and Bard sued Gore for infringement (previously, Dr. Goldfarb licensed the patent to Bard). The jury returned a verdict of willful infringement and awarded over $185 million in damages, which the district court doubled. The district court also awarded attorneys’ fees and costs. The Federal Circuit affirmed in a split panel, but the full Circuit vacated the decision in a rehearing en banc, ordering the district court to reconsider the willful infringement finding de novo. The district court reconsidered the evidence and reinstated its prior judgment. The Federal Circuit, in this decision, affirmed in a 2-1 decision with three separate opinions.

Judge Prost, writing the opinion of the Court, reviewed the evidence de novo and concluded that Gore’s defenses were not reasonable. In particular, the Court rejected the notion that the fact that a prior member of the panel at the Federal Circuit dissented does not mean that Gore’s position was reasonable. The Court did not want to create the precedent that a single dissenting view would preclude a finding of willful infringement as a matter of law.

Judge Hughes wrote a concurring opinion in which he called into question the Federal Circuit’s jurisprudence on willful infringement—in particular, the two-part objective-subjective test and the de novo standard of review. He believes that the full panel should reconsider the law in this area and should apply a deferential standard of review.

Finally, Judge Newman wrote a strong dissent in which she would have reversed the district court’s decision on willfulness. She was troubled by the majority’s failure to discuss what she believed to be relevant evidence supporting Gore’s position. She was also troubled by the fact that the district court refused to enjoin Gore from selling its products but then enhanced the damages.

This decision is another in which the judges on the Federal Circuit are openly questioning the current state of the law on willful infringement. It will be interesting to see if the Federal Circuit rehears one of these cases en banc to settle the disagreements that are brewing internally.

 

 

The “Dip & Squeeze®” Battle Continues

by: Kelly A. Williams, a shareholder at Picadio Sneath Miller & Norton, P.C.

On January 7, 2015, the District Court for the Western District of Pennsylvania denied H.J. Heinz Company’s latest motion for summary judgment in Wawrzynski v. H.J. Heinz Company, 2015 U.S. Dist. LEXIS 1682 (W.D. Pa. Jan. 7, 2015). This suit is centered on whether Heinz used Mr. Wawrzynski’s ideas for condiment packaging in developing its “Dip & Squeeze®” package. In a somewhat unusual intellectual property case, Mr. Wawrzynski did not sue for patent infringement, although he had a patent for similar packaging. Instead, he sued for breach of implied contract and unjust enrichment.

HeinzThe facts giving rise to the suit are these. Mr. Wawrzynski asserts that he met with Heinz to discuss his patented ideas for condiment packaging called “The Little Dipper,” which would allow users to squeeze the condiment out or allow a user to dip food into the condiment. Mr. Wawrzynski alleged that he “intended that if someone used his design and/or his marketing materials that he would be paid for his efforts.” Mr. Wawrzynski also alleged that he was asked to develop 100 samples incorporating his design and marketing ideas for some focus groups.   Mr. Wawrzynski alleges that Heinz suddenly and mysteriously stopped communicating with him, and he later received a letter from Heinz stating that it was no longer interested in his ideas. A few months later, Heinz started selling ketchup in the “Dip and Squeeze” package.

Mr. Wawrzynski sued Heinz for breach of implied contract and unjust enrichment based on Heinz’s alleged use of his ideas for the new package and/or for marketing the new package, without compensating him. The complaint also mentioned Mr. Wawrzynski’s patent for his condiment packaging. Heinz counterclaimed claiming that it did not infringe Mr. Wawrzynski’s patent and that his patent was invalid. Mr. Wawrzynski admitted that Heinz was not infringing upon his patent and agreed not to sue based upon the patent. Thereafter, Mr. Wawrzynski moved to dismiss the counterclaim(s), and Heinz simultaneously moved for summary judgment on the grounds that Mr. Wawrzynski’s state law claims were preempted by federal patent law. The district court denied the motion to dismiss the counterclaim, ruling that the complaint made allegations based on his patent. However, the district court granted summary judgment to Heinz, finding that Mr. Wawrzynski’s state law claims were preempted. The district court also granted Heinz summary judgment on its counterclaim.

Mr. Wawrzynski appealed and the case went to the Federal Circuit, which has jurisdiction over patent actions. It does not have jurisdiction over pure state causes of action. Heinz argued that Mr. Wawrzynski’s suit was based on patent infringement. The Federal Circuit disagreed given that the complaint only had the two state law claims and lacked allegations of infringement. Consequently, the Federal Circuit transferred the case to the Third Circuit.

The Third Circuit vacated the district court’s summary judgment ruling. The Third Circuit ruled that the district court erred in considering Mr. Wawrzynski’s patent as grounds for dismissal. The case then went back to the district court.

Heinz moved for summary judgment again on the grounds that Mr. Wawrzynski could not prove his common law theories of breach of implied contract and unjust enrichment.

The district court denied Heinz’s motion based upon Pennsylvania law, which recognizes an implied relationship or implied contract where a defendant “has used for its benefit any property of the plaintiff in such manner and under such circumstances that the law will impose a duty of compensation therefor.” Thomas v. R. J. Reynolds Tobacco Co., 350 Pa. 262, 38 A.2d 61, 63 (Pa. 1944). Based on the facts of Thomas, the district court concluded that the Pennsylvania Supreme Court in Thomas held that “[a] relationship between two parties can be inferred when a plaintiff has property rights in an advertising idea which a defendant appropriates.”   However, to have a property right to an idea, the idea must be concrete, as well as “novel and new.” Thus, in Wawrzynski, the issue is whether Mr. Wawrzynski provided Heinz with novel, or original ideas, which Heinz did not already envision: 1) a condiment container with dual functionality; and 2) a successful advertisement and/or marketing method for a dual-functional container. This issue, whether Mr. Wawrzynski provided Heinz with novel ideas, created an issue of fact based upon the record in the case, which precluded entering summary judgment on either implied contract or unjust enrichment, as the issue was the same for Mr. Wawrzynski’s unjust enrichment claim.

The case is currently scheduled for a jury trial beginning on March 30, 2015.

In addition to the court’s opinion, the following sources were used in this blog:

http://www.naturalnews.com/042558_Heinz_patents_condiment_packaging.html

http://www.bizjournals.com/pittsburgh/news/2014/07/23/inventors-lawsuit-against-heinz-over-dip-squeeze.html?page=all

http://patentlyo.com/patent/2013/09/wawrzynski-v-hj-heinz-company.html

http://www.thelegalintelligencer.com/home/id=1202714255637?cn=20150107&pt=PM%20Legal%20Alert&src=EMC-Email&et=editorial&bu=The%20Legal%20Intelligencer&slreturn=20150011222335