Author Archives: PSMN®

Supreme Court Upholds Brulotte Rule Preventing Post-Expiration Patent Royalties

Posted on June 22, 2015 | Comments Off on Supreme Court Upholds Brulotte Rule Preventing Post-Expiration Patent Royalties

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

In a 6-3 decision authored by Justice Kagan, the United States Supreme Court in Kimble v. Marvel Entertainment, LLC (No. 13-720) upheld the long-standing rule previously announced in Brulotte v. Thys Co., 379 U. S. 29 (1964), that patentees cannot charge royalties for the use of an invention after the patent covering the invention has expired. Justice Alito, joined by Chief Justice Roberts and Justice Thomas, dissented and would have abolished the rule announced in Brulotte.

We previously discussed the Ninth Circuit’s decision in this case here.

Background

Web BlasterIn 1990, Kimble developed a web-shooting toy that allowed children to shoot foam strings from their hands like Spider-Man. He obtained a patent (U.S. Pat. No. 5,072,856) on his invention and offered it to Marvel Entertainment. Marvel declined, but soon afterwards came out with a similar toy. Kimble sued Marvel for patent infringement, and the parties ultimately settled the case. As part of the settlement, the parties entered into a license agreement that provided an up-front lump sum payment to Kimble along with a perpetual 3% royalty.

Some time later, Marvel discovered the Brulotte decision, which neither side was aware of during the settlement discussions, and moved for a declaration that its obligation to pay royalties expired when the patent expired. The district court, citing Brulotte, sided with Marvel, as did the Ninth Circuit. The Ninth Circuit, however, criticized the rationale of Brulotte, and the Supreme Court took up the case.

Analysis

The patent statute provides that patent owners have exclusive rights to the use and sale of their inventions for a limited period of time. Once that time expires, the invention falls into the public domain and can be used freely by anyone in this country.

The rule in Brulotte was announced as a way of preventing patent owners from extending their exclusive rights beyond the lifetime of the patent. The concern was that patent owners could use license agreements to force others to pay royalties long after the patent expired, which would artificially extent the lifetime of the patent.

Recently, economists have challenged the anti-competitive basis for the Brulotte ruling and noted that in some instances, allowing post-expiration royalties allows the user to obtain lower royalty rates (albeit spread out of a longer time), which can be pro-competitive behavior.

Justice Kagan, writing for the majority, ultimately decided that the principle of stare decisis controlled the outcome of the case. Brulotte was decided back in 1964 and represented the Court’s interpretation of the patent statute. In the case of statutory construction issues, the Court is disinclined to reverse itself without a significant reason for doing so. She noted that in the more than 50 years since the decision, Congress has not chosen to use its legislative powers to overrule this decision. She also noted that the economic concerns were far from conclusive.

The majority also noted that there were several ways that parties can construct license agreements that meet the limitations of Brulotte. For instance, parties can agree to spread out payments after the expiration of the patent, as long as the use/sale giving rise to the royalty occurred before the patent expired. Parties can also create hybrid agreements that include royalties for other intellectual property (such as trade secrets) if the royalty amount decreases after expiration of the patent.

In the end, the majority felt that there was not a sufficient reason to overrule Brulotte. Therefore, it affirmed the lower court’s rulings that the post-expiration royalties were barred.

The Dissent

The dissent took a different view. They felt that the economic rationale behind Brulotte was flawed and did not deserve deference. They also questioned the notion that Brulotte was decided by construing the patent statute. Instead, they felt that the decision was improper policymaking that should be overruled.

With respect to the particulars of the this case, they were concerned that the parties negotiated a resolution being unaware of the Brulotte rule, only to have Marvel come in afterwards and upset the prior agreed arrangement once it learned of Brulotte. Had the parties been aware of Brulotte during negotiations, they might have reached a different arrangement.

Conclusion

The Kimble decision does not change the state of the law. In a rather unusual move for the Supreme Court in the patent arena, they have maintained the bright-line rule that patent royalties based on actions that occur after a patent expires are not enforceable. Practitioners should be aware of this rule when crafting royalty agreements to structure them in a way to avoid this issue.

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No Good Faith Invalidity Defense to Induced Infringement, Supreme Court Holds

Posted on May 26, 2015 | Comments Off on No Good Faith Invalidity Defense to Induced Infringement, Supreme Court Holds

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

SupremeCourtImage_1The Supreme Court issued another patent law opinion today; this time focusing on whether a good-faith belief that a patent is invalid can be a defense to a claim of induced infringement. In Commil USA, LLC v. Cisco Systems, Inc. (No. 13-896), the Court concluded in a 6-2 decision that the answer is no, reversing the Federal Circuit. Justice Kennedy delivered the opinion for the Court, and Justices Scalia and Roberts dissented. (Justice Breyer took no part in the decision.)

Background

Commil holds a patent relating to short-range wireless networks (Patent No. 6,430,395). It sued Cisco under direct and in6430395 Imageduced infringement theories, contending that Cisco directly infringed by making and using network equipment and induced others to infringe by selling them the network equipment that they used in an infringing manner. Eventually, after significant motion practice, a reexamination at the Patent Office, and multiple trials, Commil prevail on both theories. The Federal Circuit reversed on two grounds. First, it found an error in the jury instructions regarding induced infringement that would have allowed a finding in Commil’s favor based on negligence, instead of actual knowledge. And, second, it found that the district court improperly barred Cisco from arguing as a defense that it had a good-faith belief that the patent was invalid.

The first point was not at issue before the Supreme Court. Only the second issue, whether a good-faith (but ultimately incorrect) belief that a patent is invalid is a defense to a claim of induced infringement. The Supreme Court found that it is not a defense.

Holding

The Court first looked at the induced infringement statute, 35 U.S.C. § 271(b), which provides that “[w]hoever actively induces infringement of a patent
shall be liable as an infringer.” Citing its previous decision in Global-Tech Appliances, Inc. v. SEB S. A., 563 U. S. ___ (2011), the Court stated that to be liable for induced infringement, a patentee must show that the defendant knew both of the patent and that the induced acts constituted infringement of the patent.

Before considering the good-faith defense, the Court took time to specifically reject Commil and the government’s position that induced infringement only requires knowledge of the patent. Under Global-Tech, induced infringement requires both the knowledge of the patent and the knowledge that the induced acts infringe the patent. Therefore, a good-faith belief that there was not infringement can be a defense to induced infringement.

Having dispensed with that argument, the Court next turned to the heart of the matter–whether a good-faith belief that the patent is invalid can be a defense. The Court started with the language of the statute, which only is concerned with infringement, and it noted that patent infringement and invalidity are separate issues. It further considered the effect that allowing such a defense might have on patent owners. Under the Patent Act, all issued patents are presumed valid and to allow such a defense would undermine that presumption and its effect. The Court noted that an invalidity defense is not a defense to infringement; it is a defense to liability (although it did note the truism that an invalid patent cannot be infringed). Finally, the Court was concerned that allowing such a defense would only increase the burdens of litigation.

Taken together, it concluded that knowledge or intent regarding invalidity was not relevant to whether someone induced another to infringe.

Dissent

Justice Scalia, joined by Chief Justice Roberts, dissented. First, they agreed with the majority’s opinion relating to the Global-Tech decision and that induced infringement requires proof that the defendant knew of the patent and knew that the induced acts infringed the patent. They disagreed over the central issue in the case and would have found that a good-faith belief that the patent was invalid is a defense to a claim of induced infringement.

The dissent rejected the majority’s analysis based primarily on the truism that only valid patents can be infringed. If a defendant has a good-faith belief that the patent is invalid, then it would have a good-faith belief that the acts were not causing infringement of a valid patent.

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Updated Resources and Link Section

Posted on May 11, 2015 | Comments Off on Updated Resources and Link Section

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

PSMN LogoWe’ve updated our Resources and Links page with more links to helpful intellectual property resources and references for practitioners, inventors, and artists.  If you haven’t looked at this section recently, you should see what we’ve added.

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USPTO and US Copyright Office Offer New Tools for Practitioners

Posted on April 29, 2015 | Comments Off on USPTO and US Copyright Office Offer New Tools for Practitioners

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

ComputerThe US Patent and Trademark Office and the US Copyright Office recently announced that some new tools are available to practitioners and interested individuals and companies to help individuals be better aware of recent patent applications and to help explain the fair use doctrine.

The USPTO, in partnership with Reed Technology and Information Services, created an alert system (the Patent Application Alert Service) that allows individuals to receive email alerts whenever a patent application publishes that contains certain keywords. After signing up for the service, a user can set “alerts” based on keywords found in the title, abstract, description, drawings, claims, CPC classification, applicant, inventor, or assignee fields (or combination of these fields). The system then sends out weekly emails whenever an alert criteria has been satisfied.

This system will enable individuals and companies to be better aware of what their competitors are attempting to patent, as well as to keep abreast of changes in the field. The USPTO also hopes that this service will lead to better patents being issued because interested individuals in the relevant fields can monitor patent applications and help identify prior art for pre-issuance submission to the USPTO.

The US Copyright Office has also been busy, creating a Fair Use Index, which is a searchable database of court opinions indexed by category and type of use. The Index currently has decisions reaching back to 1841 and provides a link to the opinion, the relevant court information, the type of medium (photograph, text, etc.), and the outcome. The US Copyright Office created the Index to help the public understand the contours of the fair use doctrine as applied to copyright law. While useful for the public, the Index will also be a useful resource for practitioners.

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Parties’ Settlement Can’t Stop Inter Partes Reexamination

Posted on April 15, 2015 | Comments Off on Parties’ Settlement Can’t Stop Inter Partes Reexamination

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

USPTOThe Federal Circuit issued an interesting decision in Automated Merchandising Systems, Inc. v. Lee, (No. 2014-1728), regarding the USPTO’s decision not to stop an inter partes reexamination proceeding after the parties settled a parallel patent infringement action in federal court. The Court concluded that the USPTO’s decision to continue was not a final action by the agency, so the Court did not have the authority to overrule the USPTO.

Background

The case involved a dispute between Automated Merchandising Systems, Inc. (AMS) and Crane Co. AMS sued Crane for allegedly infringing four of AMS’s patents. During the court proceedings in the Northern District of West Virginia, Crane instituted an inter partes reexamination of the patent at the USPTO, which the USPTO granted. As often occurs, AMS and Crane settled the dispute and requested that the district court enter and order dismissing the case. In that order, which the court entered, the parties stipulated that the four patents were valid, the case was being dismissed with prejudice, and the judgment was final.

After the court entered the order, AMS asked the USPTO to stop the reexamination proceedings under 35 U.S.C. § 317(b), arguing that there was a final judicial decision that the patents were valid. The USPTO disagreed, finding that there had been no actual decision on the merits and that it had an obligation to continue reviewing the patents once it had determined that there was a substantial question of patentability.

AMS filed suit against USPTO in district court in the Eastern District of Virginia, seeking to have the court overturn the USPTO’s decision under the Administrative Procedure Act (APA), the Declaratory Judgment Act, and the court’s inherent mandamus power. The court entered summary judgment against AMS because it also found that there had been no final decision on the merits. AMS then appealed to the Federal Circuit.

Holding

The APA places limits on what courts can review:

[a]gency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review. A preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review on the review of the final agency action.

5 U.S.C. § 704.

So, the Federal Circuit first considered whether it the USPTO’s decision was a final agency action, sufficient to invoke the APA. The Federal Circuit concluded that it was not. Final agency actions are those that mark the end of the agency’s decision-making process and are such that rights, obligations, or legal consequences flow from the decision.

Here, neither of those elements were found to exist. The USPTO’s decision did not mark the end of its involvement. To the contrary, the USPTO determined that the reexamination should continue. In addition, the USPTO had not made any final determinations on the merits of the reexamination, so no legal consequences flowed from its decision, other than to continue the reexamination. The Court found that the continuation of legal process was not the type of consequence required under the APA, especially because additional appellate remedies existed if the USPTO reached a decision unfavorable to AMS.

Having determined that the APA did not give grounds for the Court to reverse the USPTO’s decision, the Court also concluded, for basically the same reasons, that the Declaratory Judgment Act and the court’s inherent mandamus powers did not provide relief for AMS. The Federal Circuit, therefore, affirmed the district court’s grant of summary judgment against AMS.

Conclusion

This decision highlights a concern that patent owners need to be aware of that once a reexamination has been filed, it can be very difficult for a patent owner to unilaterally end the process. Unlike the court system, the USPTO has a separate obligation to verify the appropriateness of patents it issues when there has been a legitimate challenge to the validity of the patent. Just because the parties wanted to end the dispute does not mean that the USPTO has the same interest. Litigants will need to keep this in mind when determining whether and how to settle a patent infringement lawsuit that also has an ongoing inter partes reexamination.

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Supreme Court Holds That Issue Preclusion Applies to Some TTAB Decisions

Posted on March 24, 2015 | Comments Off on Supreme Court Holds That Issue Preclusion Applies to Some TTAB Decisions

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

SupremeCourtImage_1The Supreme Court handed down a decision today in B&B Hardware, Inc. v. Hargis Industries, Inc. (No. 13-352), in which it reversed an Eighth Circuit ruling regarding whether a decision by the Trademark Trial and Appeal Board (TTAB) during an opposition proceeding that there was a likelihood of confusion between two marks could have a preclusive effect in a subsequent trademark infringement lawsuit in a district court. In a 7-2 decision, authored by Justice Alito, the Supreme Court held that in certain circumstances, final decisions by the TTAB can preclude re-litigation of those issues in later forums. Justices Thomas and Scalia dissented, stating that they did not think that TTAB decisions should have preclusive effects.

Background

B&B Hardware registered its trademark “SEALTIGHT” with the USPTO in 1993, which was used with threaded and unthreaded metal fasteners and other related hardware. In 1996, Hargis sought to register its own mark, “SEALTITE” for self-piercing and self-drilling metal screws. B&B Hardware opposed the registration, contending that the marks were confusingly similar.

Although not described in detail, the Court noted that the parties had been involved in disputes before the USPTO and courts in the Eighth Circuit for the last twenty years, including three trips to the Eighth Circuit and two jury verdicts in infringement actions.

Relevant to this case, the parties were before the TTAB on an opposition proceeding brought by B&B Hardware. B&B Hardware successfully argued to the TTAB that the USPTO should not register the SEALTITE mark because it was confusingly similar to its SEALTIGHT mark. While the Lanham Act provides that a decision of the TTAB can be appealed to either a district court or the Federal Circuit, Hargis declined to seek any judicial review, and the decision of the TTAB to not allow registration of the SEALTITE mark became final.

While the opposition proceeding was occurring, B&B Hardware brought a trademark infringement action against Hargis in district court. Once the TTAB decision became final, B&B Hardware argued before the district court that Hargis could no longer contest the issue of likelihood of confusion based on the doctrine of issue preclusion. The district court disagreed, and a jury ultimately concluded that there was no likelihood of confusion. The Eighth Circuit affirmed.

The Supreme Court ultimately reversed both the Eighth Circuit and the district court.

The Supreme Court’s Decision

Issue preclusion is a doctrine that prohibits the redetermination of issues in a later action that have been finally decided in a prior action. In general, it applies “[w]hen an issue of law or fact is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.”

In deciding whether issue preclusion could apply to a TTAB decision, the Court first concluded that issue preclusion is not limited to proceedings involving two courts. It is possible that agency decisions (such as a TTAB decision) can be given preclusive effects unless Congress clearly indicates otherwise. In this case, the Court found that Congress did not indicate in the Lanham Act that TTAB decisions should not be given preclusive effect, so it concluded that issue preclusion is potentially available.

Next, the Court considered whether the TTAB and the district court were, in fact, deciding the same issue in order for issue preclusion to be available. It reviewed the standards applied by both tribunals and concluded that the same likelihood-of-confusion standard applies to both the registration of marks and the question of infringement.

Hargis argued that issue preclusion should not apply because the TTAB considers whether the marks “resemble” each other, while the district court considers how the marks are used in commerce, and that these are different tests. The Court rejected that argument, stating that while the two tribunals may not consider the same usage of the marks, that did not mean that they applied different standards to the usage. It is at this point that the Court noted some important limitations on whether a TTAB decision could be given preclusive effect:

If a mark owner uses its mark in ways that are materially the same as the usages included in its registration application, then the TTAB is deciding the same likelihood-of-confusion issue as a district court in infringement litigation. By contrast, if a mark owner uses its mark in ways that are materially unlike the usages in its application, then the TTAB is not deciding the same issue. Thus, if the TTAB does not consider the marketplace usage of the parties’ marks, the TTAB’s decision should “have no later preclusive effect in a suit where actual usage in the marketplace is the paramount issue.” 6 McCarthy §32:101, at 32–246.

In addition, the Court reiterated that if the TTAB considers a different mark than is at issue in the litigation or has decided a different issue than is before the district court, there can be no issue preclusion.

Because Hargis decided not to appeal the TTAB decision, it was a final judgment. And, because the likelihood of confusion issue was the same in both tribunals, the Court concluded that issue preclusion applied. Thus, the Court reversed the Eighth Circuit and remanded the case.

Issues not decided by the Supreme court

There were a couple of issues that the Court touched on, but did not rule because either the parties had not preserved the issues or they had not been adequately presented. In both instances, the majority noted that the constitutional issues were not before it, but it seems unlikely from what was said that they would have been successful even if they had been.

For instance, the Court noted that it has never had the occasion to determine whether issue preclusion from an agency decision violates the separation of powers in Article II and III of Constitution. In addition, the Court indicated that Hargis failed to preserve a Seventh Amendment challenge that giving preclusive effect to an non-jury, agency decision denied it a right to a jury.

It will be interesting to see if those challenges are raised with more care in future cases before the Court.

Conclusion

As seems to be typical in intellectual property cases before the Supreme Court, the Court did not set down a bright-line rule. The Court held that in some appropriate circumstances, decisions by the TTAB can be given preclusive effect in subsequent litigation in Article III courts. The Court caveated its determination, though, so litigants in the TTAB will need to carefully consider what the risks might be if they do not seek judicial review of a TTAB decision in either a district court or before the Federal Circuit. This uncertainty will likely give rise to more challenges to TTAB decisions, especially where there is a risk that those decisions have aspects that are similar to issues being raised in court (such as likelihood of confusion).

For further discussion of this case, the Likelihood of Confusion blog has some good coverage.

 

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Jury Returns $7.4 Million Verdict for Marvin Gaye’s Family in “Blurred Lines” Copyright Infringement Suit

Posted on March 12, 2015 | 1 comment

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

Law and MoneyOn Tuesday, a jury in Los Angeles reached a verdict in favor of Marvin Gaye, Jr.’s family against Pharrell Williams and Robin Thicke, finding that Williams and Thicke’s song “Blurred Lines” infringed Marvin Gaye’s copyright in his song “Got to Give It Up.” The jury awarded approximately $7.4 million in damages.

Background

In 1976, Marvin Gaye, Jr. composed the song “Got to Give It Up,” which went on to become a musical hit and reached number one on Billboard’s Hot 100 chart in the United States. Marvin Gaye registered the musical composition “Got to Give It Up (Part 1 and 2)” with the United States Copyright Office in 1977 (Reg. No. EP 366-530), and the registration was subsequently renewed in 2005 (RE 910-939). Marvin Gaye was a Grammy winning performing and is a member of the Rock-and-Roll Hall of Fame. He passed away in 1984.

In 2013, artists Pharrell Williams, Robin Thicke, and Clifford Harris, Jr. composed the hit song “Blurred Lines,” which also went on to become a huge success, selling over six million copies and being viewed over 250 million times on the internet. In various interviews, Robin Thicke indicated that he had been influenced by Marvin Gaye’s work and wanted to make something like that. He further indicated that “Got to Give It Up” was one of his favorite songs of all time.

Shortly after the song was released in March 2013, the Marvin Gaye’s family began to assert that “Blurred Lines” infringed the copyright on “Got to Give It Up” and threatened to bring a lawsuit against Williams and Thicke. In response, Williams and Thicke filed a pre-emptory lawsuit in Los Angeles on August 15, 2013, seeking a declaratory judgment that they did not infringe any of Marvin Gaye’s copyrights (Williams v. Bridgeport Music, Inc., No. 2:13-cv-06004, US. District Court for the Central District of California). Gaye’s family filed a counterclaim for infringement in response.

After discovery, the Williams and Thicke filed a motion for summary judgment, arguing that the case need not go before a jury. (The parties’ summary judgment arguments can be found here–Williams/Thicke and Gaye.) The Judge denied their motion (his opinion is here), and the case proceeded before a jury. After nine days of testimony and presentations, the jury returned its verdict, finding that Pharrell Williams and Robin Thicke infringed the copyright on “Got to Give It Up” and awared approximately $7.4 million in damages to Marvin Gaye’s family. The jury concluded, however, that the infringement was not willful.

Williams and Thicke have subsequently filed a notice of appeal with the United States Court of Appeals for the Ninth Circuit.

Take Aways

Copyright infringement cases are never a sure things, especially when they go to a jury. Williams and Thicke chose to file suit seeking a declaratory judgment that they did not infringe, which was a risky maneuver. While there are no guarantees that Gaye’s family would not have filed a lawsuit anyway, the decision may have escalated the conflict. Individuals who have been accused of infringement need to consider carefully whether a declaratory judgment action is the prudent thing to do. In some cases it will be, because it gives the accused infringer an opportunity to control the forum in which the case is heard and when the lawsuit begins, among other things. It may be worthwhile in some cases to accelerate a decision, even if that means risking getting an unfavorable outcome. This is just one of the many decisions that litigants need to consider carefully before lawsuits are filed and threats are made. There is likely no one right answer that applies to all cases. Instead, litigants and their attorneys need to carefully think through the various risks and benefits before they proceed.

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“Use in Commerce” Requires Actual, Not Intended, Use

Posted on March 4, 2015 | 1 comment

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

Playdom LogoWhen applying to register a trademark or service mark, one of the key requirements is that the applicant has used or intends to use the mark in commerce. The Federal Circuit recently considered what is sufficient “use in commerce” for purposes of obtaining a service mark in Couture v. Playdom, Inc., No. 2014-1480 (March 2, 2015).

Background

Playdom filed an application to register the service mark PLAYDOM on May 30, 2008 and submitted a specimen that purported to demonstrate that the mark had actually been used in commerce. Specifically, Playdom submitted a screen shot of the only page on its website (www.playdominc.com), which stated “[w]elcome to PlaydomInc.com. We are proud to offer writing and production services for motion picture film, television, and new media. Please feel free to contact us if you are interested.” The webpage also indicated that it was still under construction. The USPTO registered the mark on January 13, 2009. However, Playdom did not actually provide any services under the mark until 2010.

On February 9, 2009, Couture filed his own application to register the identical mark—PLAYDOM. Not surprisingly, the examining attorney rejected Couture’s mark based on Playdom’s mark. In response, Couture filed a petition to cancel Playdom’s mark, arguing that Playdom had not actually used the mark in commerce when it said it did.

The Board granted the petition, finding that Playdom had not provided services as of the filing date of the application because it had only indicated that it was willing to provide services then, not that it actually had provided services.

The Federal Circuit affirmed the cancellation on the same grounds.

Analysis

Under the Lanham Act, a service mark is used in commerce when it (1) is used or displayed in the sale or advertising of services and (2) the services are rendered in commerce. 15 U.S.C. § 1051(a)(1). And, when claiming that the mark has been used in commerce, it must have actually been used in commerce as of the application’s filing date.

In analyzing this provision, the Federal Circuit noted that “used in commerce” means actual use, and not preparations. If an applicant submits advertising relating to the services as proof of use, the advertising must relate to existing services that have already been offered to the public, and not services that the applicant intends to perform in the future.

Because there was no evidence in the record that Playdom actually rendered any services before 2010, the Board correctly cancelled Playdom’s 2008 registration.

Conclusion

Small things can make a difference when applying to register trademarks and service marks. Counsel and applicants need to be aware of these requirements and accurately complete the applications. In circumstances like these, applicants can indicate on the application that they have a bona fide intent to use the mark in the future, which allows for the application to proceed.

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

Posted on January 21, 2015 | Comments Off on 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.

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Federal Circuit Again Splits on Willful Infringement

Posted on January 15, 2015 | Comments Off on 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.

 

 

Comments Off on Federal Circuit Again Splits on Willful Infringement

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