Tag Archives: lanham act

Merger Grows Pittsburgh Business and Litigation Law Firm Houston Harbaugh, P.C.: Expands Litigation Practice

 

Pittsburgh based law firm Houston Harbaugh, P.C. has announced its merger with the former and preeminent litigation boutique Picadio Sneath Miller & Norton, P.C. (PSMN®) effective January 1, 2018. The merger creates a 43 lawyer firm with particular strengths in Business Law and Business Litigation, Employment, Employee Benefits/ERISA, Environmental and Energy Law, Estates and Trusts, Health Care, Insurance Coverage and Bad Faith Defense, Immigration, Intellectual Property, Oil and Gas, Products Liability and Catastrophic Injury Defense, Public Finance and Real Estate. This blog will feature posts on the law and litigation of Patent, Trademark, Copyright, Trade Secrets, Defend Trade Secrets Act (DTSA), Cyber-Security, Technology matters and updates on the tremendous growth of the technology sector in Pittsburgh. Houston Harbaugh is proud to be among the regional law firms which are poised to provide high level, efficient, cost effective legal services for the new Eds, Meds, Energy and Technology economy in Pittsburgh, Ohio and West Virginia.

For more information on the merged firm please contact Marketing Director Anna Marks at 412-281-5060. See News Release regarding the merger here at: https://www.hh-law.com/houston-harbaugh-grows-litigation-practice/

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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.

 

Third Circuit Rules that Octane Fitness’s Standard for Awarding Patent Attorneys’ Fees Applies in Lanham Act Cases

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

Attorneys' FeesOn September 4, 2014, the Third Circuit held that the revised, or “slightly altered standard” for awarding attorneys’ fees to a prevailing party in a patent case, as set forth in Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014), also applies to cases brought under the Lanham Act. Fair Wind Sailing, Inc. v. Dempster, Nos. 13-3305 & 14-1572, 2014 U.S. App. LEXIS 17118 (Sept. 4, 2014). In Octane Fitness, the Court held that “an ‘exceptional’ case [which merits attorneys’ fees] is simply one that stands out from others with respect to the substantive strength of a party’s litigation position (considering both the governing law and the facts of the case) or the unreasonable manner in which it was litigated.” Consequently, the previous standard in the Third Circuit, which required a finding of culpable behavior before awarding fees, is no longer a prerequisite.

Like § 285 of the Patent Act, Section 35(a) of the Lanham Act (15 U.S.C. § 1117(a)) permits the recovery of reasonable attorneys’ fees only “in exceptional cases.” In fact, the Octane Fitness Court noted that the Lanham Act fee provision is “identical” to § 285 of the Patent Act. The Third Circuit interpreted this as a clear message from the U.S. Supreme Court that it “was defining ‘exceptional’ not just for the fee provision in the Patent Act, but for the fee provision in the Lanham Act as well.”

Based on Octane Fitness and Fair Wind Sailing, a prevailing party under the Lanham Act (either plaintiff or a defendant) in the Third Circuit, must show the following to be awarded attorneys’ fees: (a) an unusual discrepancy in the merits of the positions taken by the parties; or (b) the losing party has litigated the case in an “unreasonable manner.” Whether litigation positions or litigation tactics are “exceptional” enough to warrant attorneys’ fees is to be determined on a case-by-case basis by the district courts based on the totality of the circumstances.

By removing a threshold finding of culpable behavior, the Courts are making it easier to award attorneys’ fees if there is a finding that the litigation was brought or conducted in an abusive manner. Time will tell if Octane Fitness and Fair Wind Sailing have this impact.

Busy IP Docket for US Supreme Court Upcoming

Sneath, Henry 2012 headshotBy: Henry Sneath, Chair of the Intellectual Property practice at Picadio Sneath Miller & Norton, P.C.  hsneath@psmn.com or 412-288-4013

The US Supreme Court has a very busy IP docket in the next few months. Close watchers of the court predict a continuing focus on IP cases. Our friends at AIPLA provide a nice summary of the oral argument schedule of IP cases through April. We will follow these cases and post any important decisions. See AIPLA link below: http://www.aipla.org/resources2/reports/2014/Pages/140214AIPLA-Direct.aspx

Supreme Court Announces It Will Hear Four New Intellectual Property Cases

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C. ()

SupremeCourtImage_1The Supreme Court announced on Friday that it will hear four additional intellectual property cases this term, which makes nine total intellectual property cases this term so far. Brief summaries of the issues presented are provided below, along with links to more information about each of these cases from our friends at SCOTUSblog.

New Cases

Limelight Networks, Inc. v. Akamai Technologies, Inc. (No. 12-786)

The issue in this case is whether a party may be liable for infringement under either 35 U.S.C. § 271(a) or § 271(b) where two or more entities join together to perform all of the steps of a process claim.

Nautilus, Inc. v. Biosig Instruments, Inc. (No. 13-369)

Two issues are raised in this case. Does the Federal Circuit’s acceptance of ambiguous patent claims with multiple reasonable interpretations—so long as the ambiguity is not “insoluble” by a court—defeat the statutory requirement of particular and distinct patent claiming? And, does the presumption of validity dilute the requirement of particular and distinct patent claiming?

POM Wonderful v. Coca-Cola (No. 12-761)

The issue in this case is whether the court of appeals erred in holding that a private party cannot bring a Lanham Act claim challenging a product label regulated under the Food, Drug, and Cosmetic Act.

ABC, Inc. v. Aereo, Inc. (No. 13-461)

The issue in this case is whether a company “publicly performs” a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet.

Previous Cases

Medtronic v. Boston Scientific Corp. (No. 12-1128)

The issue in this case is is whether, in a declaratory judgment action brought by a licensee under MedImmune, the licensee has the burden to prove that its products do not infringe the patent, or whether (as is the case in all other patent litigation, including other declaratory judgment actions), the patentee must prove infringement.

This case was argued on November 5, 2013.

Lexmark International v. Static Control Components (No. 12-873)

The issue in this case is whether the appropriate analytic framework for determining a party’s standing to maintain an action for false advertising under the Lanham Act is (1) the factors set forth in Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters (“AGC”), 459 U.S. 519, 537-45 (1983), as adopted by the Third, Fifth, Eighth, and Eleventh Circuits; (2) the categorical test, permitting suits only by an actual competitor, employed by the Seventh, Ninth, and Tenth Circuits; or (3) a version of the more expansive “reasonable interest” test, either as applied by the Sixth Circuit in this case or as applied by the Second Circuit in prior cases.

This case was argued on December 3, 2013.

Highmark Inc. v. Allcare Management Systems (No. 12-1163)

The issue in this case is whether a district court’s exceptional-case finding under 35 U.S.C. § 285 (in a patent infringement lawsuit), based on its judgment that a suit is objectively baseless, is entitled to deference.

This case will be argued on February 26, 2014.

Octane Fitness v. Icon Health and Fitness (No. 12-1184)

The issue in this case is whether the Federal Circuit’s promulgation of a rigid and exclusive two-part test for determining whether a case is “exceptional” under 35 U.S.C. § 285 improperly appropriate a district court’s discretionary authority to award attorney fees to prevailing accused infringers in contravention of statutory intent and this Court’s precedent, thereby raising the standard for accused infringers (but not patentees) to recoup fees and encouraging patent plaintiffs to bring spurious patent cases to cause competitive harm or coerce unwarranted settlements from defendants?

This case will be argued on February 26, 2014.

Alice Corporation Pty. Ltd. v. CLS Bank International (No. 13-298)

The issue in this case is whether claims to computer-implemented inventions—including claims to systems and machine, processes, and items of manufacture—are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court.

This case will be argued on March 31, 2014.

Western District Analyzes Trademark Issues: Use in Commerce; Abandonment; and Doctrine of Foreign Equivalents

By: Joe Carnicella, an intellectual property attorney with Picadio Sneath Miller & Norton, P.C.

On September 13, 2013, Judge Cercone of the Western District of Pennsylvania issued an opinion in Taza Systems, LLC v. Taza 21 Co., LLC, et al., No. 2:11-cv-073, 2013 U.S. Dist. LEXIS 130974 (W.D. Pa. September 13, 2013), covering various fundamental trademark topics.

Relevant Facts

Taza Systems is the owner of three service mark registrations on the Principal Register of the USPTO: (1) the word mark TAZA; (2) the word mark TAZA A LEBANESE GRILL; and (3) the design mark TAZA A LEBANESE GRILL.  These marks cover restaurant and bar services in International Class 43.  Taza Systems operates two restaurants in Woodmere, Ohio and Cleveland, Ohio.  In July 2008, Taza 21 opened a restaurant in Pittsburgh, Pennsylvania, under the names TAZA21, TAZA21 FRESH, and TAZA21 FRESH SHAWARMA CAFE.

Use in Commerce

Taza 21 asserted that Taza Systems’ registered marks were invalid and subject to cancellation because Taza Systems did not provide services in interstate commerce as required to justify registration under the Lanham Act.

According to the Lanham Act, 15 U.S.C. § 1051 et seq., a mark is used “in commerce” on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce.  Commerce is defined to mean “all commerce which may lawfully be regulated by Congress.”  Because Congress’ authority under the Commerce Clause extends even to purely intrastate activity if that activity substantially affects interstate commerce, the Lanham Act’s authority includes the same.  The court discussed the term “in commerce” as it applies to restaurants located in a single state.  Some factors that have been deemed to satisfy the interstate commerce requirement include location near interstate highways, servicing customers from other states, advertisements in out-of-state publications and purchasing ingredients from out-of-state vendors.

The court determined that Taza 21 would have the burden of proving at trial that Taza Systems did not use the registered service marks “in commerce”, and in doing so, Taza 21 would have to produce evidence to contradict and overcome the rebuttable presumption of validity and ownership of the marks afforded to Taza Systems because it holds registration certificates for all three service marks.  The court concluded that Taza 21 failed to adduce sufficient evidence that could establish at trial that the service marks are not used in commerce.

Abandonment

Taza 21 asserted that Taza Systems’ marks were invalid and subject to cancellation because Taza Systems failed to police third-party uses of confusingly similar marks.

Under 15 U.S.C. § 1127, if a trademark or service mark becomes generic, or otherwise loses its significance as an indicator of source due to the conduct of the owner, it can be deemed legally abandoned.  A mark can also be deemed legally abandoned if the owner discontinues use, with an intent not to resume it.  However, a party arguing for abandonment has a high burden of proof because abandonment, being in the nature of a forfeiture, must be strictly proved.  A “failure to police” a mark is one type of owner conduct that is commonly assumed to result in abandonment.  However, in order to prove this type of abandonment, the challenger must establish that the presence of third-party users in the marketplace resulted in what is described as a “loss of trade significance,” which is another way of saying that a mark is no longer distinctive because it fails to identify and distinguish the services of one person from the services of others and to indicate the source of the services.  As a reminder, the distinctiveness of a mark is evaluated by four categories: (1) arbitrary or fanciful; (2) suggestive; (3) descriptive; and (4) generic.  The first two categories are inherently distinctive and are afforded protection under the Lanham Act automatically; the third type of mark must acquire distinctiveness as an identifier of the source of goods or services before it can be eligible for protection; the fourth category of marks is never protected as a mark.

The court analyzed Taza 21’s evidence, which consisted of only a list compiled by counsel of 51 businesses that included TAZA in their name and an excerpt from a Thomson CompuMark Trademark Research Report issued to Taza Systems’ attorney seven years prior, and determined that such evidence did nothing to establish that Taza Systems’ marks lost their significance as an indicator of the source of its restaurant and bar services.  According to the court, the evidence did nothing more than establish that, at one point in time, various businesses across the United States may have used the word TAZA in their names and that those businesses ranged from coffee shops and restaurants to blown glass manufacturers and residential building contractors.  Moreover, the court applied the Dawn Donut Rule (see Dawn Donut Comp. v. Hart’s Food Stores, Inc., 267 F.2d 358 (2d Cir. 1959)) and concluded that, because these third parties use their marks in geographically “separate trading areas” and there was no evidence that Taza Systems had imminent plans to expand into the third-party user’s territory, no public confusion was likely.  The court ruled that Taza 21 failed to submit evidence sufficient to establish that the moniker TAZA had become generically descriptive of restaurant services as a result of Taza Systems’ failure to police the market.

Descriptiveness – Doctrine of Foreign Equivalents

Taza 21 asserted that Taza Systems’ marks were invalid and subject to cancellation because the marks were merely descriptive upon application of the doctrine of foreign equivalents.

Registration of a mark on the Principal Register constitutes prima facie evidence of the validity of a trademark and of the owner’s exclusive right to use it in commerce.  However, if a challenger comes forward with evidence to establish that the mark was erroneously registered, the registration can be cancelled or otherwise invalidated.  Under the doctrine of foreign equivalents, foreign words from common languages are translated into English to determine whether they are generic or descriptive.  However, this doctrine applies only if the ordinary American purchaser would stop and translate the mark into English.  When it it unlikely that an American buyer would translate the foreign mark, either because of unfamiliarity with the foreign word or association of the word with its foreign language through decor, the doctrine does not apply.

During prosecution of its marks, Taza Systems disclosed that the word “taza” translates from the Lebanese dialect of Arabic to English as “fresh,” and each of the registration certificates explicitly reflects this translation.  Taza 21 submitted as evidence printouts from various on-line dictionaries reflecting that “taza” translated from Hindi to English as “fresh” and “green,” that “taze” translated from Turkish to English as “fresh” and “youthful,” and “taza” translated from Persian to English as “fresh, young, new.”

The court analyzed this limited evidence and determined that Taza 21 failed to adduce any evidence that would allow a reasonable juror to overcome the presumption of validity afforded to Taza Systems by its federal registrations and to conclude that the ordinary American purchaser would deem the mark TAZA to be descriptive of “restaurant and bar services.”  The court opined that, because the mark TAZA appeared in the context of a restaurant that serves Lebanese food, plays Lebanese music and is decorated with Lebanese decor, a reasonable juror could find that the ordinary American purchaser would not be prompted to translate the mark TAZA, thereby making the doctrine of foreign equivalents inapplicable.  Moreover, even assuming that the doctrine of foreign equivalents might apply, the court determined that Taza 21 failed to produce evidence that the doctrine would invalidate the marks.  In making this decision, the court considered certain statistics, which demonstrated that only a very low percentage of the U.S. population speaks Arabic, and concluded that the ordinary American purchaser would not stop and translate the term TAZA into English.  The court also considered the pages from the various dictionaries submitted by Taza 21 and determined that such evidence would not invoke the doctrine because there are multiple translations and varying foreign spellings and pronunciations.  Finally, assuming arguendo that Taza 21 could establish that the ordinary American purchase would stop and translate “taza,” the court held that no reasonable juror could conclude that “fresh” is a word used to describe restaurant and bar services.  Although “fresh” could be suggestive of the type of products or ingredients used at a particular restaurant, as opposed to another, suggestive marks are inherently distinctive and entitled to trademark protection.  The court held that the Taza Systems’ registrations for “fresh” do not remove an inevitably descriptive or generic word for restaurant or bar services in a foreign language from public use in the United States.

The Dangers of Misleading Press Releases

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C. ()

When a patent holder sues a potential infringer, the question often comes up about what the patent holder can publicly say about the lawsuit, either to its customers or in press releases. A recent blog post by Scott Daniels in the Reexamination Alert Blog and cross-posted at IPWatchdog shows the problems one company found itself in when it issued press releases that the other side felt went too far.

Background

TASER International (which makes numerous products, such as the famous TASER stun gun) sued Stinger Systems for infringing some of TASER’s patents and for false advertising. While the false advertising claims were resolved by a joint stipulation, the court ultimately found that Stinger infringed one of TASER’s patents.

In response, Stinger filed its own lawsuit against TASER the week before TASER issued its quarterly earnings report, claiming that TASER engaged in false advertising, unfair competition, and injurious falsehood arising out of a study by the National Institute of Justice (“NIJ”) that TASER circulated. Stinger waited until the day of the earnings report to announce the lawsuit in a press release, but never actually served TASER. Later, Stinger voluntarily dismissed the lawsuit after receiving an order to show cause.

Contending that the press release and lawsuit were shams designed to harm TASER’s stock and business, TASER brought another lawsuit against Stinger—Taser International, Inc. v. Stinger Systems, Case No. 2:09-cv-289, in the United States District Court for the District of Nevada—alleging a number of claims, including violations of the Lanham Act. Judge Miranda Du issued an opinion on August 3, 2012 deciding the parties’ partial summary judgment motions on the Lanham Act claims (among other things).

In it, the Court refused to grant summary judgment in favor of Stinger on the claims related to Stinger’s press releases. The Court found that TASER had presented sufficient evidence that the allegations that the press releases were false and misleading could go to the jury.

In particular, the Court noted four issues of fact that prevented granting Stinger’s motion. First, Stinger claimed in its press release that it had served TASER with the lawsuit when it had not. Second, the press release did not adequately explain what the NIJ is and what its report contained. Third, there was evidence that suggested that Stinger “wanted to pursue misleading press releases as an avenue for devaluing TASER.” And, fourth, there were telephone recordings suggesting that the litigation was designed to be vexatious and to drive down TASER’s stock.

Take Aways

While this case is more extreme that most cases, it still serves as an important reminder that the filing of a lawsuit does not give a party a license to say anything it wants. Press releases need to foremost be truthful and provide sufficient context for the statements contained in them, especially those statements that might be viewed as impugning another.

As this case shows, courts will look sometimes look behind the statements to the motivations of the speakers in determining whether the statements are actionable or were intended to mislead others.

As tempting and satisfying as it may be to issue strong press releases, companies and individuals need to take care that the press releases do not themselves become the subject of additional litigation or distract from the legitimate claims an individual is trying to make.

New Trademark Infringement Action Filed in Western District of Pennsylvania

by: Joseph R. Carnicella, an intellectual property associate at Picadio Sneath Miller & Norton, P.C., jcarnicella@psmn.com

On January 5, 2011, Entrepreneurial Ventures Capital Co., LLC filed an action against V.P. Racing Fuels, Inc. for trademark infringement, dilution of trademark rights and unfair competition.  According to the Complaint, Plaintiff alleges that it owns the mark, “WORK THE MACHINE,” and claims that Defendant has been using “FUEL THE MACHINE” in violation of Plaintiff’s rights.  Plaintiff is seeking, inter alia, injunctive relief and damages.  Defendant has not filed a response to the Complaint. 

We will continue to monitor and update the status of this case.

Top 10 IP Decisions of 2010

by: Robert Wagner, an intellectual property lawyer at Picadio Sneath Miller & Norton, P.C.

2010 gave us a number of important decisions in the intellectual property field. The Bilksi decision regarding the patentability of business methods was eagerly awaited from the Supreme Court. In addition, the Federal Circuit issued a number of key decisions involving false marking, the written description requirement, patent misuse, and patent term extensions.

Bilksi v. Kappos—130 S.Ct. 3218 (2010)

Bilski was one of the most anticipated cases of the year. The Supreme Court considered whether business method patents are patentable subject matter under the Patent Act. As the Court is want to do, it did not substantially clarify the standards. Nonetheless, three key points emerged from this decision.

1.  Business method patents are not per se unpatentable subject matter, although they still might be (or should be) difficult to get.

2.  The Federal Circuit’s machine or transformation test for patentability under § 101 is not the sole test, although it is still a very useful clue for determining whether a process meets the requirements of § 101. Few processes that do not meet this test would be patentable.

3.  The three previous exceptions to the broad standards of patentability under § 101 still exist—laws of nature, physical phenomena, and abstract ideas are not patentable.

American Needle, Inc. v. National Football League—130 S.Ct. 2201 (2010)

American Needle was a non-exclusive National Football League Properties (NFLP) licensee for certain apparel that bore NFL team insignias. In December 2000, the NFL decided to only grant exclusive licenses, and American Needle did not receive one. American Needle sued, claiming that the NFL’s licensing practices violated § 1 of the Sherman Antitrust Act. The Seventh Circuit found no violation, but the Supreme Court reversed.

While not a purely IP case, this case is at the intersection of IP and antitrust laws. The NFL claimed that the NFLP was a joint venture that was formed to develop, license, and market NFL IP rights. Section 1 of the Sherman Act prohibits concerted action that restrains trade. The key inquiry in this case was whether the NFL acts as a single decisionmaker in the IP licensing arena or whether the NFLP brings together independent decisionmakers. The Court concluded that while the NFL may in some areas act like a single decisionmaker (for scheduling, rules, etc.), in the IP arena each team is pursuing its own interests and directly competing against the other teams. Thus, the decision by the NFLP to issue exclusive licenses was concerted action that deprived the marketplace of independent action by each team and thus could state a claim for a violation of § 1 of the Sherman Act. The Court noted that a joint venture could be governed by antitrust laws in some aspects of its business, while not in others. The Court remanded to the lower courts to address the substance of the claims.

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