In Patent Law, a "Group of Three Blades" Can Mean Four Blades

The four-bladed QUATTRO® razor may infringe Gillette's patent on a razor with "a group of first, second, and third blades" according to a decision issued today by a Federal Circuit panel. Gillette Co. v. Energizer, (Fed. Cir. 4/29/05, No. 04-1220).

Gillette has a patent (U.S. Patent No. 6,212,777) on an improved safety razor in which more than two blades are arranged at varying distances from the skin so that a close shave is obtained while reducing friction. Gillette sued Energizer Holdings, Inc. (Energizer) in the United States District Court for the District of Massachusetts alleging Energizer’s QUATTRO®, a four-bladed wet-shave safety razor, infringed the '777 patent. Gillette moved for a preliminary injunction to enjoin Energizer from making and selling the QUATTRO®. The district court denied Gillette’s motion, finding that Gillette had not shown a reasonable likelihood of success on its claim of literal infringement. The trial court primarily based its decision on the conclusion that the terms “first,” “second,” and “third” of claim 1 limited the scope of that claim to a razor having solely three blades. Gillette appealed the ruling denying the preliminary injunction.

The Federal Circuit panel ruled that the district court erred in construing the claims of the ’777 patent to cover only three-bladed safety razors, and therefore vacated the district court ruling denying Gillette's motion for preliminary injunction and remanded for further proceedings

The panel relied on several principles of patent law in reaching its decision that the claim language "safety razor blade unit comprising a guard, a cap, and a group of first, second, and third blades" could encompass a four-bladed razor:

• The patent claim used the open-ended terms "comprising" and "a group of" -- in patent claim construction, these terms allow the addition of other elements of the group;


• The specification included language indicating that the arrangement of the blades and not the number of blades was the invention;


• Certain claims referred to "a span" between the first and second blades rather than "the span" - this indicated to the panel that more than one span could exist;


• When discussing the "first", "second" and "third" blades, the claim did not discuss them in order, indicating there was no numerical limitation implied;


• The first sentence of the written description of the invention teaches that “the invention . . . relates in particular to safety razors having blade units with a plurality of blades";


• Although the specification referred repeatedly to three blades, this was only a preferred embodiment of the invention that could not be used to limit the claims.

In a persuasive dissenting opinion, Senior Circuit Judge Archer disagreed with the majority. Judge Archer argued that the multiple references to three blades was more than a preferred embodiment, but was the invention.

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Genuine "Gray Market" Circuit Breakers Did Not Create Likelihood of Confusion Necessary for Trademark Infringement Claim

In a gray market importation case involving circuit breakers with the mark STAB-LOK, the Ninth Circuit affirmed the dismissal of Lanham Act trademark infringement, unfair competition, and trademark dilution claims. American Circuit Breaker Corporation v. Oregon Breakers, Inc., (9th Cir., 4/25/05, No. 03-35375). The court found that there could be no consumer confusion necessary for an infringement claim in light of the parties' stipulation below that the allegedly infringing products were genuine.

The case arose because the STAB-LOK mark is owned by different companies in the United States and Canada. The plaintiff, American Circuit Breaker Corporation (ACBC), owns an uncontestable United States registration for the mark, and Schneider Canada holds the STAB-LOK trademark in Canada. Both companies received their rights to the marks from a common predecessor company. Federal Pioneer Limited (“Pioneer”), a subsidiary of Schneider Canada, manufactures circuit breakers for itself and ACBC. The circuit breakers sold by the companies are identical except for the casing color. ACBC sells black circuit breakers in the United States, and Pioneer sells gray circuit breakers in Canada.

The defendant, Oregon Breakers, bought the gray circuit breakers in Canada and resold them in the United States. ACBC filed suit in the District of Oregon asserting claims for trademark infringement, unfair competition, and trademark dilution against Oregon Breakers. ACBC initially sought partial summary judgment on its claim for trademark infringement under § 32(1) of the Lanham Act, 15 U.S.C. § 1114, and the related claim of unfair competition under § 43(a) of the Lanham Act, 15 U.S.C. § 1125.

After the district court refused to grant ACBC's motion for summary judgment, the parties stipulated to entry of final judgment, with ACBC reserving its right to appeal the dismissal of the trademark and unfair competition claims. In the stipulation, the parties agreed that:

There are no material differences between ACBC’s black STAB-LOK circuit breakers and the gray STAB-LOK circuit breakers offered for sale and sold by Oregon Breakers. The gray STAB-LOK circuit breakers accordingly are “genuine products” as that term is defined by the Court at p. 6 of the Opinion and Order.

After reviewing the history of gray market importation trademark infringment cases, the Ninth Circuit panel turned to the question of trademark infringment or unfair competition under the Lanham Act. The court observed that these claims both required a showing of likelihood of consumer confusion, citing Brookfield Communications, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1053 (9th Cir. 1999) (“The core element of trademark infringement is the likelihood of confusion, i.e., whether the similarity of the marks is likely to confuse customers about the source of the products.”)

The court held that the parties' stipulation meant that likelihood of confusion could not be established. The court held that because the parties had stipulated that the imported circuit breakers were "genuine," consumers received exactly what they expected and were not confused:

Because of this stipulation and the related court order, this case is governed by the rule we set out in NEC Elecs. v. Cal Circuit ABCO, 810 F.2d 1506, 1510 (9th Cir. 1987) (citations omitted): “Trademark law generally does not reach the sale of genuine goods bearing a true mark even though such sale is without the mark owner’s consent.” . . .

The upshot of the stipulation between ACBC and Oregon Breakers is that consumers purchasing circuit breakers from Oregon Breakers are getting exactly the same circuit breaker, both in specification and quality, as they would purchase from ACBC. In other words, the goods are genuine. Rather than being confused, customers who purchase the gray STAB-LOK circuit breakers from Oregon Breakers get exactly what they expect. See Iberia Foods Corp. v. Romeo, 150 F.3d 298, 303 (3d Cir. 1998) (“[W]hen the differences between the products prove so minimal that consumers who purchase the alleged infringer’s goods ‘get precisely what they believed that they were purchasing,’ consumers’ perceptions of the trademarked goods are not likely to be affected by the alleged infringer’s sales.”) (internal citation omitted). In short, because there is no material fact as to infringement, ACBC’s claims of trademark infringement and unfair competition must fail.

In a footnote, the court observed in dicta that ACBC could have received relief under section 526 of the 1930 Tariff Act, 19 U.S.C. § 1526, prohibits importation of foreign-manufactured goods bearing a registered trademark owned by a U.S. citizen or corporation. Unlike a trademark infringement action under § 32 of the Lanham Act, the remedy under § 526 is prohibition of importation of the goods.

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Florida's Right of Publicity Law Is No Shelter From "The Perfect Storm"

The Supreme Court of Florida held last week that the state's commercial misappropriation right of publicity law (Florida Statute section 540.08) applies only to publications that directly promote a product or service. Tyne v. Time Warner Entertainment Company (Fla. 4/21/05, No. SC03-1251). Thus, the statute did not provide protection to the families of the people depicted in the 2000 film "The Perfect Storm." Warner Bros.' had not provided any compensation to the plaintiffs nor sought their permission for the film.

The case was filed in the federal Middle District Court of Florida. The district court granted Warner Bros.' motion for summary judgment, relying on a decision from Florida's Fourth District Court of Appeal which narrowly construed Section 540.08 . Plaintiffs appealed to the Eleventh Circuit, which sought guidance from the Florida Supreme Court.

The Florida Supreme Court approved the narrow construction of the lower court which limited the purpose of Section 540.08 to preventing the use of a person's name or likeness to "directly promote a product or service because of the way that the use associates the person's name or personality with something else." The court also expressed concern that applying Section 540.08 to movies could violate the First Amendment. The opinion did not address plaintiffs' common law claim for false light invasion of privacy.

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Patent Claim's "Whereby" Clause Limits Scope of Invention

A Federal Circuit panel held last week that a "whereby" clause in a patent claim limited the scope of the claim when the clause did more than introduce a goal of the invention. Hoffer v. Microsoft, International Business Machines and Ariba (No. 04-1103, 4/22/05).

The patent claim at issue described a network of computers "whereby" users could communicate about economic topics interactively. Defendants argued that their accused system did not infringe because it did not allow interactive communication between users. Plaintiff countered that interactivity was not required by the claim because the "whereby" clause regarding interactivity was only a goal, not a limitation.

The district court had granted defendants' motion for summary judgment of non-infringement, finding that the claim required interactivity.

The Federal Circuit panel affirmed the district court's claim construction and grant of summary judgment. The court observed:

"It is correct that a "whereby" clause generally states the result of the patented process. However, when the "whereby" clause states a condition that is material to patentability, it cannot be ignored in order to change the substance of the invention."

The court went on to find that the interactivity condition introduced by the whereby clause was a necessary component of the invention and not just a result of a process. The court noted that the specification and the prosecution history both stated the importance of interactivity.

The panel also agreed with the district court's ruling that there was no infringement under the doctrine of equivalents because a non-interactive system was not equivalent to an interactive system.

The Hoffer court also affirmed the district court's denial of additional discovery sought by plaintiff under Rule 56(f) of the Federal Rules of Civil Procedure. The panel agreed with the district court that additional discovery would not have changed the undisputed fact that the accused system was not interactive.

In a small victory for plaintiff, the panel reversed the district court's ruling that the patent office's administrative error in renumbering claims rendered a claim indefinite. The panel stated that the court had the authority to correct this clear error:

"Absent evidence of culpability or intent to deceive by delaying formal correction, a patent should not be invalidated based on an obvious administrative error."

However, the correction of this claim did not help the plaintiff because the corrected claim still required interactivity, so the summary judgment of non-infringement remained.

After construing the whereby clause, the panel declined to consider other claims construed by the district court because they were unnecessary to the conclusion affirming summary judgment. The panel's failure to construe the remaining claims in the patent was criticized by Judge Newman in a concurrence. Judge Newman argued that the court had an obligation to rule on the remaining claim construction issues because the issues could arise in future appeals or in litigation of the same patent.

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Family Entertainment and Copyright Act of 2005 Passes House and Senate

Both Houses of the 109th Congress have now passed the Family Entertainment and Copyright Act of 2005, Senate Bill 167. Title I is the Artists' Rights and Theft Prevention Act of 2005 (or ART Act). The Act subjects people who attempt to copy movies to up to 3 years in prison plus fines for a first offense and allows employees of movie theaters to reasonably detain people suspected of copying without liabilty. Furthermore, willful copyright infringers who prepare work for commercial distribution and personal financial gain can be fined and imprisoned for up to 5 years for a first offense and up to 10 years for subsequent offenses.

Title II, the Family Movie Act of 2005, excludes from the definition of copyright infringement the skipping of movie scenes by a person at home. The Act also provides protection for manufacturers of techonology that enables such skipping.

Title III is the National Film Preservation Act of 2005 and directs the Librarian of Congress to make films in the National Film Registry more accessible and update the technology used to preserve films.

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Highlights Of The Proposed Patent Act of 2005

The House Subcommittee on Courts, the Internet, and Intellectual Property has released a draft of the “Patent Act of 2005,” which seeks to improve patent quality and to reduce the time required to grant or deny patents through a variety of reforms suggested by the PTO and a broad cross-section of industry and trade associations. The first hearing on the Act was held April 20th. (Click here for links to testimony.) Another hearing is set for April 28th.

Highlights of the proposed reforms include:

• Establishment of new post-grant opposition procedures, allowing a party to request reconsideration within 9 months after a patent is granted, with the opposition procedure to be completed within 1 year.

• Clarifying and limiting awards of treble damages for willful infringement. An inference of willful infringement could no longer be based on the absence of an opinion of counsel, and situations where treble damages could be awarded would be much more limited.

• Awarding patents to the first-inventor-to-file, a marked change from the traditional U.S. first-to-invent procedure. Currently, the U.S. is the only country to use the first-to-invent procedure.

• Reducing the availability of permanent injunctions to stop infringement, a change likely to make U.S. patent rights subject to compulsory licensing.

• Codification of a duty of candor owed to the PTO.

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Federal Circuit Finds Written Description Sufficient in Satellite Control Patent, Reversing Summary Judgment

A Federal Circuit panel ruled today that a patent for controlling a space satellite in a fuel efficient manner satisfies the written description requirement, reversing the district court's summary judgment ruling that had found the description deficient. Space Sys. v. Lockheed Martin Corp., No. 04-1501 (Fed Cir. April 20, 2005).

The case involved Loral's patent infringement claims against Lockheed concerning a fuel efficient way to control a satellite with first and second rocket thrusts. Judge Susan Illston of the Northern District of California had granted Lockheed's motion for summary judgment, ruling that Loral's patent No. 4,537,375 was invalid due to failure to describe how a second rocket thrust was calculated.

The written description is required by 35 U.S.C. §112 ¶1 which states:

The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.

In reviewing the patent specification and expert deposition testimony, the Federal Circuit held that the second thruster control step was adequately described. In particular, the Federal Circuit noted that defendant Lockheed's expert had pointed out the second thrust in a diagram in the patent when asked in deposition. Thus, both experts agreed that the patent disclosed how to calculate the second thrust. This established that the patent described the technology adequately, fulfilling the "fundamental patent purpose of making known what has been invented."

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Compilation of Yoga Positions Can Be Protected by Copyright

On April 1, 2005, the district court for the Northern District of California found that a selection and arrangement of yoga positions (known as “asanas” ) can be the subject of a valid copyright. Open Source Yoga Unity v. Bikram Choudhury, (N. D. Cal., 4/1/05, No. C 03-3182 PGH).

Bikram Choudhury, is the founder of the popular brand of yoga known as Bikram Yoga®. Open Source Yoga Unity, Inc. (“OSYU”) is an organization comprised of yoga instructors who seek to cancel Bikram's trademarks and copyrights in Bikram Yoga®.

Judge Phyllis Hamilton denied OSYU’s motion for summary judgment that the Bikram yoga sequence constituted uncopyrightable functional physical movements, not creative expression. The Court acknowledged the uniqueness of the case, noting:

"On first impression, it thus seems inappropriate, and almost unbelievable, that a sequence of yoga positions could be any one person's intellectual property."

The court went on to find, however, that "OSYU has provided no persuasive authority that a compilation of yoga asanas cannot be protected under the copyright laws in the same manner as other compilations." Citing Satava v. Lowry, 323 F.3d 805, 811 (9th Cir. 2003), the court found that the Bikram yoga asanas could be protected as “a combination of unprotectable elements . . . if those elements are numerous enough and their selection and arrangement are original enough that their combination constitutes an original work of authorship." The Choudhury court observed:

“while functional and public domain material remains free for all to use, a compilation of that material may nonetheless qualify for copyright protection if the compiler can demonstrate a sufficient level of creativity in the selection and arrangement of the elements in the compilation.”

The court also rejected the OSYU’s claims for declaratory judgment of non-infringement. Noting that while the copyright in the Bikram Yoga sequence must necessarily be considered “thin", the court nevertheless held that Choudhury “could properly enjoin exact or near-exact duplication of his yoga sequence, if the routines taught by OSYU were 'substantially similar' to Choudhury’s and thus infringing.”

The court also rejected OSYU’s claim that the Bikram Yoga® sequence, originally copyrighted under the 1909 Act, was subject to cancellation for failure to comply with that Act’s requirements of a copyright notice at the time of publication. OSYU argued that such a publication occurred when Bikram performed the sequence in his yoga classes in the 1970’s and demonstrated the sequence in Japan. The court denied summary judgment finding a triable issue of fact in Choudhury’s claim that he merely performed his sequence in these venues, since “mere performance of or exhibition of a work does not constitute a publication of that work," citing American Vitagraph, Inc. v. Levy, 650 F.2d 1023, 1027 (9th Cir. 1981).

The court next rejected OSYU's motion for summary judgment that Choudhury’s copyright was unenforceable based on alleged copyright misuse. Construing the evidence in Choudhury's favor for purpose of the motion for summary judgment, the court found the evidence could allow a finding that Choudhury had asserted only valid copyright claims.

Finally, the court found numerous questions of fact prevented summary judgment of OSYU’s claim that the Choudhury’s trademark Bikram Yoga® was invalid because it is generic.

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Federal Circuit Reinstates Patent Infringement Complaint Dismissed Without Adequate Warning to Plaintiff

The Federal Circuit gave a dilatory plaintiff another chance this week in a patent infringement case, reversing a district court order that had dismissed the complaint with prejudice for failing to timely serve the defendant and failing to respond to an OSC. Bowling v. Hasbro, Inc., (4/11/05, No. 04-1364).

After a delay in serving the complaint, the District Court for the District of Arizona had issued an order to show cause stating “Plaintiff has 30 days from the date of this Order is filed to show written “good cause’ why this lawsuit should not be dismissed, pursuant to Rule 4(m), Fed. R. Civ. P.” The plaintiff failed to respond to the order, and the district court dismissed the complaint with prejudice “pursuant to Rules 4(m) and 41(b).”

The Federal Circuit, applying Ninth Circuit law, held that the District Court had abused its discretion when it dismissed the complaint with prejudice. The Federal Circuit deferred to Ninth Circuit law because the case was “limited to procedural matters not unique to patent law.” The Court applied the Ninth Circuit’s five-factor test in reviewing the District Court’s dismissal of a claim for failure to comply with a court order: (1) the public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its docket; (3) the risk of prejudice to defendants/respondents; (4) the availability of less drastic alternatives; and (5) the public policy favoring disposition of cases on their merits.

The Federal Circuit first noted that Federal Rule of Civil Procedure 4(m) states that a dismissal for failure to serve the summons and complaint shall be “without prejudice.” Therefore, dismissal with prejudice under Rule 4(m) was improper.

The Federal Circuit next examined whether, under Federal Rule of Civil Procedure 41 governing dismissal for failure to prosecute, the district court acted properly given the Ninth Circuit’s five-factor test. The Federal Circuit held that the, “[b]ecause the district court’s initial order in this case only warned of dismissal pursuant to Rule 4(m) – a dismissal without prejudice – we are compelled to conclude that Bowling was not on notice of the threat of dismissal with prejudice. Thus, the less drastic alternatives factor weighs against dismissal with prejudice.” The Federal Circuit also noted that the public interest and court’s need to manage its docket factors did not warrant dismissal given that the case had been pending less than six months and the District of Arizona’s local rule 41.1 instructed judges to wait until there had been no activity in a case for six months before dismissing under Federal Rule of Civil Procedure 41.

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Patent Claim Construction Ruling Remanded Due to Terse District Court Analysis

In Nazomi Communications, Inc. v. ARM Holdings (04/11/05 - No. 04-1101), a Federal Circuit panel vacated and remanded the Northern District of California’s claim construction ruling and finding of non-infringement, concluding that the district court’s opinion did not have enough detail to permit meaningful review. In its opinion, the CAFC listed factors that should have been discussed as part of claim construction.

At issue was the definition of the term “instruction,” used in a patent for a Java hardware accelerator, which is computer hardware used to translate Java bytecodes from stack-based format to the register-based format more commonly used in modern processors.

The district court construed the claims as covering a hardware processor that converts stack-based to register-based instructions before the instructions are processed by the hardware in the “decoder” stage. The district court relied entirely on the fact that the specification and prosecution history revealed prior art that implemented a hardware solution for processing Java bytecodes. Therefore, it reasoned, of necessity the present patent must claim a different type of hardware solution.

The CAFC rejected this focus on patent validity, because claims must be understood before validity can be tested. The panel cautioned that "practicing the prior art" is not an infringement defense. To construe the term “instruction,” a court must first decide what it would mean to one of ordinary skill in the art, and then determine whether the specification indicates that the patentee intended a different definition.

The CAFC listed factors that should have been considered, and discussed, by the district court. For example, while the closest the patentee came to a definition of “instruction” was a reference to “generic instructions, such as bytecodes, [] indicate the operation of a virtual machine,” that definition should have been addressed in the district court’s opinion. The district court also should have considered references in the prior art. Different embodiments should have been reviewed, because a consistent definition should be used in all the claims. Here, some claims described the instruction conversion unit as existing within, not before, the CPU. The construction must also be consistent with (and therefore discuss) functions the examiner focused on in finding the invention patentable in the first instance. Finally, here the district court did not analyze how “instruction” would have been understood by one of ordinary skill in the art.

In short, the CAFC found little to review without some discussion of all these points. The CAFC panel rejected the argument that its de novo review of claim construction meant that the district court's analysis "did not matter." Although the issue of claim construction is rarely remanded, here it held that the findings and reasoning were insufficient to permit meaningful scrutiny.

For the same reasons, the district court's ruling that there had been no infringement was also vacated.

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Eighth Circuit Opts for Clear Error Review of Substantial Similarity Finding in Greeting Card Copyright Dispute

In a case decided last Friday, Taylor Corp. v. Four Seasons Greetings, LLC, (04/11/05 - No. 04-1088), the Eighth Circuit rejected the Second Circuit's reasoning for applying de novo review to a trial court's finding of substantial similarity. Instead, the court adopted the clear error standard used by a "majority of circuit courts," including the Ninth Circuit.

The trial court had determined that six of defendant's greeting cards infringed copyrights owned by plaintiff Taylor corporation. Taylor had acquired the rights by purchasing the assets of the previous owner in bankruptcy. The opinion held that the bankruptcy court's order approving the sale constituted a valid transfer of copyrights "by operation of law" under Section 204(a) of the Copyright Act.

Finding support in the record for the district court's finding of substantial similarity, the Eighth Circuit upheld the permanent injunction prohibiting defendant from future use of the infringing greeting cards. The court rejected defendant's argument that injunctive relief was not warranted because plaintiff could have accepted uncontested damages. Furthermore, as plaintiff sought only injunctive relief, defendant did not have a Seventh Amendment right to a jury trial.

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No advertising injury insurance coverage for trade secret misappropriation claims arising from business meeting

A breakfast meeting with clients held to announce the opening of a competing business did not constitute "advertising." Thus, trade secret misappropriation claims arising from that meeting were not covered by an advertising injury CGL policy. That was the conclusion of the Fourth District California Court of Appeal in a decision issued on April 15, 2005, Rombe Corporation v. Allied Insurance Company,. Cal. App. 4th Dist., 4/15/05, 05 C.D.O.S. 3195.

In holding that there was no insurance coverage, the Rombe court followed the California Supreme Court's decision in Hameid v. National Fire Ins. of Hartford, 31 Cal. 4th 16 (2003). The Rombe court held that under Hameid, "advertising" does not include in-person solicitations like the breakfast business meeting at issue in this case. This outcome was not changed, the court held, by a definition in the insurance policy at issue stating that language in the policy defining advertisement as "a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters." The court held:

"Contrary to appellant's argument, this definition, while not considered by the court in Hameid, did not expand the scope of the policy's advertising coverage to include personal promotion or solicitation of business." . . .

As we interpret the AMCO policy, the reference to "specific market segments," is only a means of relieving an insured of the burden of showing that its advertising was directed to the general public, as opposed to some defined market, such as medical professionals, racing car enthusiasts, or horse breeders. The term "specific market segments" does not relieve an insured of the burden of demonstrating that it was engaged in relatively wide dissemination of its advertisements even if the distribution was focused on recipients with particular characteristics or interests.

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Ambiguous claim language is limited to specific embodiment that was referred to as the invention

In Rhodia Chimie v. PPG Indus. Inc. (04/11/05 - No. 04-1246), a panel of the Federal Circuit ruled in a patent infringement dispute on claim construction, evidence exclusion, and prosecution history estoppel issues. The patent at issue involved silicon powders described in the claim as "dust-free and non-dusting".

The court first affirmed the district court's claim construction of the term "dust-free and non-dusting." The panel held that the district court had properly ruled that "dust-free" did not mean no dust at all because that would have excluded the preferred embodiment described in the specification. The district court then intepreted "dust-free" by reference to a DIN test referenced in an example in the specification. The panel agreed with this approach in order to resolve the otherwise ambiguous claim language:

We agree with the district court that the reference to the DIN test results for Example 5, as provided in the written description, reconciles the ambiguous claim language with the inventor's disclosure. Comark Communications, Inc. v. Harris Corp., 156 F.3d 1182, 1187 (Fed. Cir. 1998) (indicating that interpreting claim language in light of the specification is proper when a term is "so amorphous that one of skill in the art can only reconcile the claim language with the inventor's disclosure by recourse to the specification"). As such, the court's construction of the term "dust-free and non-dusting" does not contravene the basic teaching that limitations from the specification should not be imported to the claims. . . . Furthermore, this construction is consistent with the proposition that "when the preferred embodiment is described in the specification as the invention itself, the claims are not necessarily entitled to a scope broader than that embodiment." Modine Mfg., 75 F.3d at 1551.

The Rhodia court also refused to allow plaintiff to rely on the doctrine of equivalents with respect to the "dust-free" limitation. The court noted the limitation was a narrowing amendment made during prosecution, and application of the doctrine of equivalents was therefore barred by Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 344 F.3d 1359, 1365 (Fed. Cir. 2003) (en banc)). The patentee's surrender of claim scope as to non-dust free powders was not tangential, even though the accused product was not part of the prior art at the time of the narrowing amendment. Contrary to plaintiff's argument, the amendment to include the "dust-free" limitation was not tangential.

The panel also affirmed a district court ruling preventing the plaintiff from introducing late-produced DIN dust tests. The plaintiff had argued that it did not know to do these tests until after the court's claim construction ruling. The Federal Circuit disagreed, holding that plaintiff was unreasonable in waiting to perform these tests until late in the discovery period.

The panel reversed the district court's grant of summary judgment on one product. Plaintiff had sought to introduce evidence showing dust measurements on an allegedly infringing product, but the dust measurements had been taken before the patent issued. The panel held that the district court erred in excluding this evidence and granting summary judgment. The pre-issuance evidence was relevant in attempting to prove that the accused product infringed after the patent issued, creating a disputed issue of material fact.

Finally, the court affirmed another claim construction ruling, rejecting plaintiff's argument that disclaimers made during the prosecution history were limited to its process claims and did not affect its product claims. The court stated:

"There is no indication that Rhodia attempted to limit these disclaimers to its process claims. Rhodia was required to distinguish both its product and process claims from the inventions of Biegler and Brandt and it did so by focusing on the necessity of using liquid pressure nozzle sprayers and pulverized slurries to obtain its claimed product."

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Architect Fails in Linking Infringer's Profits to Taking of Copyrighted Design

In Bonner v. Dawson (4th Cir., 04/14/05 - No. 04-1440), the United States Court of Appeals for the Fourth Circuit addressed what evidence can be used to establish an infringer's profits as a measure of copyright damages.

In Bonner, an architect was paid to design a building that was constructed by the owner. The owner then used the architect's copyrighted plans to build a second similar building next to the first building. The architect then registered the copyright and sued the owner, alleging copyright infringement in violation of the Architectural Works Protection Act of 1990 ("AWCPA"), 17 U.S.C. § 102(a). The architect requested that he be deemed the rightful copyright owner of the design of the second building and that
the owner be required to pay actual damages and lost "infringer’s profits" under 17 U.S.C. § 504(b).

The trial court granted summary judgment on liability for the architect and held a trial on damages. At trial, the jury awarded the architect actual damages of $10,707 in actual damages but no infringer’s profits. The architect unsuccessfully sought the infringer's profits through a motion for judgment as a matter of law (JMOL). The trial court denied the JMOL, and the architect appealed.

The Fourth Circuit discussed what evidence must be shown of infringer's profits. Section 504(b) of the Copyright Act entitles a successful copyright plaintiff to recover any "actual damages" suffered by him and "any profits of the infringer that are attributable to the infringement." 17 U.S.C. § 504(b). The statute creates a burden-shifting provision, stating: "[i]n establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work."

The Fourth Circuit noted that the plaintiff must do more than show all of plaintiff's revenues. Citing Bouchat v. Balt. Ravens Football Club, Inc., 346 F.3d 514, 520-22 (4th Cir. 2003), the court noted that

"gross revenue" refers only to revenue reasonably related to the infringement. The copyright owner thus has the burden of demonstrating some causal link between the infringement and the particular profit stream before the burden-shifting provisions of § 504(b) apply.

The architect had met this burden of showing revenue "reasonably related" to the infringement, the Bonner court held, by presenting evidence of the lease revenues from the second building. In so ruling, the Fourth Circuit held that the district court had erred in requiring the architect to show evidence that the revenues were causally connected to the infringed design.

However, the architect nonetheless lost his appeal because the owner presented evidence of alternate causes for the revenues that the jury could have relied upon. In particular, the owner presented evidence that the second building would have been built anyway even if the exterior design had been non-infringing, and that the tenants were more interested in the interior space than the building design. The Fourth Circuit held that this was substantial evidence that supported the jury's verdict refusing to award infringer's profits. Thus, denial of the JMOL was affirmed.

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Common-Law Copyright Protection for Sound Recordings Lives In New York (At Least Until 2067)

State common law copyright can protect sound recordings even though the recordings are not protected under federal copyright law. The high court of New York ruled in Capitol Records, Inc. v. Naxos of America, Inc. (Apr. 5, 2005) that sound recordings created before February 15, 1972 can be protected by New York common law copyright protection until 2067, when the common law protection will be federally preempted.

The dispute involved performances by Yehudi Menuhin, Pablo Casals and Edwin Fischer recorded in the 1930s in the United Kingdom. Under British statute, the recordings had 50 years of copyright protection before entering the public domain. Defendant Naxos undertook a multistep restoration process of the original recordings and distributed remastered CD versions in the United States beginning in 1999. Plaintiff Capitol Records owns a license to exploit the recordings in the United States and sued Naxos for common law copyright infringement in the federal court for the Southern District of New York.

The district court granted summary judgment to Naxos, concluding that Capitol did not have intellectual property rights in the original recordings because the copyrights had expired in the 1980s. On appeal, the Second Circuit found the case raised several unsettled issues of state law and certified three questions, including whether the recordings had copyright protection from New York common law.

To determine the issue, the high court of New York traced the roots of copyright protection back to 16th century England and surveyed the history of copyright protection for sound recordings in the United States. In White-Smith Music Publ. Co. v. Apollo Co., 209 U.S. 1 (1908), the Supreme Court held that perforated rolls of music used in player pianos were not protected by federal copyright law because the music rolls were incapable of being read by a person and thus could not be “published.” Subsequently, Congress did not include audio musical works within the scope of the Copyright Act of 1909 but made clear that states could provide common law copyright protection. In 1971, the Copyright Act was finally amended to include sound recordings – but only those created after February 15, 1972. Congress made clear that states could provide common law copyright protection to earlier recordings until 2047 (later 2067).

Thus, the court concluded that New York common law protected the 1930s recordings at issue. Also key to the court’s decision was the finding that, in the absence of federal statutory protection for a sound recording, its public sale does not constitute publication which would have destroyed common law copyright protection. The court also held that no law or treaty prohibited New York from providing common-law protection to recordings that were in the public domain in the U.K.

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CAFC Rejects Patent Claim Construction That Excludes All Embodiments of Invention

The CAFC relied on a technical dictionary and the patent specification to conclude that the Central District of California erred in adopting a claim construction which effectively excluded all of the described embodiments. The CAFC also rejected the district court’s addition of a limitation that was not present in the claim, specification, or prosecution history. As a result, the CAFC vacated the district court’s grant of summary judgment which had found no infringement of Nellcor’s patent for pulse oximeters by Masimo’s competing product. See Nellcor Puritan Bennett, Inc. v. Masimo Corp., No. 04-1247 (Fed Cir. April 08, 2005).

A pulse oximeter measures blood oxygen and pulse rate. A familiar form is a device clipped to a patient’s fingertip which beams both red and infrared light through the fingertip, and measures the difference in the absorption of the two beams. The absorption rates of red and infrared light are dependent on the amount of oxygen in the blood, and the amount of blood in the fingertip. Thus, differences in the amount of light measured at the red and infrared wavelength can be used to calculate blood oxygen and pulse rate.

The CAFC first considered whether the phrase “attenuated and filtered” meant “reduced and removed,” as held by the district court, or whether it meant simply reducing in comparison to the desired periodic signals.

To decide, the CAFC used a standard technical dictionary, which had 8 definitions for “filter.” The definitions included a device that “separates” data or signals, and a device that “eliminates” certain portions of a signal, both of which were consistent with Nellcor’s argued claim construction. The court then looked to the specification to determine the meaning intended by the patentee. The specification described a method for collecting data and then effectively filtering out the aperiodic signal waveforms through a relative reduction of aperiodic data (not its total elimination). This was consistent with the most detailed description of the invention, provided in the Summary of the Invention portion of the specification. In fact, the disclosed process did not actually remove data, but suppressed aperiodic noise relative to the periodic signal. Based on this, the CAFC concluded that “attenuate and filter” meant effective removal, not absolute removal, of unwanted data.

A further factor in Nellcor’s favor was that a construction that defined “filter” to mean the absolute rather than relative removal of aperiodic noise would eliminate all of the embodiments described in the specifications, because none of them actually removed the aperiodic noise. As found in Vitronics Corp. v. Conceptronics, Inc., 90 F.3d 1576, 1583 (Fed. Cir. 1996), a construction that excludes all the embodiments is “rarely, if ever, correct.”

The district court had relied heavily on the prosecution history, in which Nellcor had distinguished its method from prior art by describing it as one in which “aperiodic data was removed.” That language led the district court to conclude that Nellcor’s method completely removed the aperiodic noise. In contrast, the CAFC took that language in context, and concluded that it did not support the district court’s interpretation.

The CAFC also found the district court erred in holding that the phrase “calculating . . . from the relative maximum and minimum” required that any calculation using the relative minimum must be made only after formation of a composite signal (accomplished through use of a Fourier transformation). The relative minimum components of the signal, or zero frequency components, of the signal were used to normalize the relative maximum values of the infrared and red signals – that calculation produced the same result regardless of whether performed before or after the Fourier transformation was applied to the data. In effect, the district court improperly added a limitation that was not in the claim language, nor supported by the specification or prosecution history.

While expressing no opinion on the ultimate issue of infringement, on remand the CAFC ordered the district court to adopt its construction with respect to the critical claim terms “attenuated and filtered” and “relative minimum” value.

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A Costly Blunder in Losing Mailing Receipts Runs Afoul of Copyright Office Regulations on Mailing Royalty Claims

MGM and Universal Studio are out millions of dollars for waiting to the last minute to mail royalty claims to the Copyright Office and then failing to keep mailing receipts proving timely mailing. Universal City Studios v. Peters (D.C. Cir. 04/08/05 - No. 04-5138).

The Copyright Act requires that claims for royalties under compulsory broadcast licenses must be mailed in July of each year. 17 U.S.C. §§ 111, 119. The Copyright Office regulations implementing the Act set out that the claims must either be received in July, be postmarked in July, or if business-metered in July, accompanied by a mailing receipt. 37 C.F.R. § 252.4.

The royalty claims for MGM and Universal Studios for the year 2000 were rejected by the Copyright Office because they were received on August 2 and August 3, 2001 respectively. When MGM and Universal Studios could not produce mailing receipts, their attorneys tried to prove factually that the claims had to have been mailed in July. When the Copyright Office refused to consider their evidence, the studios sued, trying every argument available to excuse the failure, including Administrative Procedure Act and due process violations.

The D.C. Circuit Court agreed with the district court and held that the regulations are clear, and they were not complied with, and the Copyright Office was allowed to reject the claims. Summing up, the court stated:

"Under the regulations, the studios are not entitled to royalties on a claim that arrives in August without a July U.S. postmark or a stamped postal receipt, regardless of how compelling the proof may be that the claim was mailed in July. The regulations themselves — all of them — define what constitutes proper filing, under the express terms of the statute. See United States v. Locke, 471 U.S. 84, 103 (1985). And under those regulations, the studios are out of luck."

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Inherent Anticipation Invalidates Patent On Compound Formed When Unstable Prior Art Compound Degrades

The same day that the en-banc Federal Circuit vacated a panel decision finding SmithKline Beecham Corp.’s patent on the active ingredient of the popular antidepressant Paxil invalid under the public use doctrine of 35 U.S.C. § 102(b), the panel issued a new opinion on April 8, 2005 invalidating SmithKline Beecham’s patent, but with different reasoning. The Panel’s original opinion had held that SmithKline’s public clinical trials of Paxil did not fall within the “experimental use” exception to 35 U.S.C. § 102(b) since the purpose of the testing was not to reduce the invention to practice. The revised panel opinion, Smithkline Beecham Corp. v. Apotex Corp. Inc. (04/08/05 - No. 03-1285, 03-1313), holds that SmithKline’s patent on the active ingredient of Paxil is invalid under 35 U.S.C. § 102(b) because the active ingredient is inevitably produced when making a related compound claimed in an earlier patent, and thus Paxil’s active ingredient was “inherently anticipated” by the disclosure in the earlier patent of how to make the related compound.

The litigation stems from SmithKline’s attempts to use the patent for Paxil’s active ingredient to block a generic drug manufacturer from producing a competing drug with an active ingredient that is not claimed in the Paxil patent. In the late 1970s a British company invented and patented a new class of compounds that became known as paroxetine. The patent (U.S. Patent No. 4,007,196) claimed paroxetine and its salts and disclosed their antidepressant properties. In 1980, SmithKline licensed the ‘196 Patent from the British company, as well as the technology for producing the crystalline hydrochloride salt of paroxetine, PHC anhydrate. In 1985, a SmithKline chemist discovered a new crystalline form of PHC, PHC hemihydrate, while attempting to produce PHC anhydrate according to the ‘196 patent. SmithKline filed a British patent application in October 1985, and subsequently obtained a United States patent (the ‘723 Patent”) that claimed the new compound. Claim 1 of the application reads, in its entirety, “Crystalline paroxetine hydrochloride hemihydrate”. PHC hemihydrate became the active ingredient in SmithKline’s wildly successful antidepressant Paxil, which SmithKline placed on the market in 1993.

In 1998, an affiliate of the defendant, Apotek, filed an Abbreviated New drug Application (ANDA) with the FDA, seeking approval to market its own PHC antidepressant, and identifying the active ingredient as PHC anhydrate. Apotek’s ANDA indicated Apotek’s intent to market the drug before the expiration of SmithKline’s ‘723 Patent on PHC hemihydrate and stated that it would not infringe the ‘723 Patent. Despite the fact that the ‘723 Patent does not cover Apotek’s active ingredient, PHC anhydrate, SmithKline sued Apotek for infringement of the ‘723 Patent’s claim for PHC hemihydrate.

SmithKline itself presented the evidence that the Federal Circuit used to invalidate SmithKline’s patent. SmithKline’s experts presented evidence to the district court that PHC anhydrate is an unstable compound, and that small quantities of PHC anhydrate originally produced by the method disclosed in the ‘196 patent at some point morphed into PHC hemihydrate. With this new form or polymorph in existence, the general environment became “seeded” with crystals of PHC hemihydrate, and in this seeded environment, PHC anhydrate converts to PHC hemihydrate upon its inevitable contact with seeds of PHC hemihydrate. Thus, according to SmithKline’s experts, creation of pure PHC anhydrate has now become extremely difficult, if not impossible, because of this phenomenon, which they dubbed the “seeding” or “disappearing polymorph” theory. Whenever PHC anhydrate is produced, a small quantity of PHC hemihydrate is also produced, and thus, SmithKline argued, production of PHC anhydrate according to the teachings of the ‘196 patent inevitable results in infringement of SmithKline’s ‘723 patent for PHC hemihydrate. The district court did not make findings of fact regarding precisely how or when PHC hemihydrate first came into existence, and on appeal, Apotek did not dispute that it was unable to prove precisely when PHC hemihydrate came into existence.

Both the majority and the concurring judge on the Federal Circuit panel were troubled by the prospect of SmithKline being able to use its patent on PHC hemihydrate to prevent a competitor from practicing the prior art to create PHC anhydrate, a compound that SmithKline’s patent did not claim. Judge Rader, writing for the panel majority, invalidated SmithKline’s patent on PHC hemihydrate, reasoning that the ‘196 patent for making PHC anhydrate inherently anticipated claim 1 of the ‘723 patent for PHC hemihydrate because of the evidence that producing PHC anhydrate now inevitably results in the production of at least trace amounts of PHC hemihydrate. The majority reiterated prior Federal Circuit authority holding that inherent anticipation does not require a person of ordinary skill in the art to recognize the inherent disclosure in the prior art at the time the prior art is created.

The district court had reasoned that Apotek failed to meet its burden of proving inherent anticipation because Apotek had been unable to prove by clear and convincing evidence that it was impossible to make pure PHC anhydrate in the United States before the critical date of the ‘723 patent. The Federal Circuit rejected the district court’s reasoning as contrary to precedent. Whether it was actually possible to make pure PHC anhydrate before the critical date of the ‘723 patent was irrelevant. Because the ‘196 patent disclosed a method of manufacturing PHC anhydrate that now naturally results in the production of PHC hemihydrate, the ‘196 patent is anticipating prior art that invalidates the ‘723 patent’s claim for PHC hemihydrate.

Judge Gajarsa, concurring in the result, reasoned that Claim 1 of the ‘723 Patent was unpatentable under 35 U.S.C. § 101. He seized on the evidence that PHC anhydrate could, under normal climactic conditions and with no human intervention, bond with water molecules and convert itself into PHC hemihydrate. He reasoned that thus, although PHC hemihydrate is a synthetic compound, created by humans in a laboratory, never before existing in nature, it is nevertheless capable of “reproducing” itself through a natural process and items reproduced by a natural process, whether an inorganic structure or a life form, “must ipso facto be ineligible for patent protection under section 101.” Since the ‘723 Patent claimed PHC hemihydrate, and not “synthetic PHC hemihydrate,” Judge Gajarsa reasoned that it claimed unpatentable subject matter under section 101.

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Privacy of Consumer Complaints Must Be Affirmatively Waived by Consumer According to California Appellate Court

In an important privacy decision, a California appellate court held that in responding to a discovery request, a company may withhold the names of its consumers who have complained about the company's products unless the consumer affirmatively consents to release of his or her name. Pioneer Electronics v. Superior Court (Olmstead), Calif. 2nd Appellate Distr., 3/30/05, No. B174826. The Pioneer court based its decision on the right to privacy in the California Constitution.

Pioneer had appealed a trial court ruling allowing the plaintiffs to learn the names of the consumers unless they responded to a letter objecting to disclosure of their identities. The appellate court reversed the trial court's order, holding that consent could not be presumed from a consumer's failure to respond:

Waiver of the fundamental right of privacy (Cal. Const., art. I, § 1) cannot depend on what would amount, in effect, to a conclusive presumption that a letter from Pioneer, essentially a stranger, was received, opened and read, rather than disregarded as junk mail. (Cf. Evid. Code, §§ 630, 641 [presumption letter properly addressed and mailed is received in ordinary course of mail affects burden of providing evidence, not burden of proof].)

The April 2004 order is deficient because it infers waiver of the consumers’ right of privacy without providing reasonable assurance that the consumers actually intended to waive that right, without any positive act by the consumer. Requiring an express consent from the consumer, rather than inferring waiver from passive conduct alone is appropriate in this case. This is so not only because of the importance of the rights but also because anything less would place a burden on consumers that they never agreed to bear. This deficiency was not, but could have been, remedied through other measures which would reasonably ensure the consumers receive actual notice and consent to disclosure of personal identifying information.

The decision will be disappointing to class action plaintiffs because it could significantly limit their access to a company's communications with unhappy consumers. Under the Pioneer decision, those consumers must now affirmatively choose to have their contact information released to the plaintiff's attorneys.

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Domain Name Used For Non-Commercial Criticism Did Not Infringe Trademark, But Could Violate Anti-Cybersquatting Law

The Ninth Circuit held this week that using a trademark as a domain name for non-commercial criticism of a business does not constitute infringement under the Lanham Act. However, the court remanded the case to allow the plaintiff to pursue claims under the federal Anticybersquatting Consumer Protection Act because that act is not limited to commercial uses. Bosley Med. Inst. v. Kremer, No. 04-55962 (9th Cir. April 04, 2005).

The Bosley case concerned the website bosleymedical.com. That site was set up by Michael Kremer, a disgruntled customer of Bosley Medical Institute, a hair replacement clinic, and contains criticism of Bosley Medical. Bosley Medical has a federal registered trademark for the mark BOSLEY MEDICAL. Bosley Medical sued Kremer for trademark infringement and dilution under the Lanham Act, violation of the Anticybersquatting Consumer Protection Act, unfair competition, and state law claims. The district court granted summary judgment for Kremer and dismissed Bosley Medical’s state law claims under California’s anti-SLAPP statute.

With respect to Bosley Medical’s trademark infringement and dilution claims under the Lanham Act (15 U.S.C. §§ 1114, 1125(a) and 1125(c)), the Ninth Circuit held that

"the noncommercial use of a trademark as the domain name of a website — the subject of which is consumer commentary about the products and services represented by the mark — does not constitute infringement under the Lanham Act."

In reaching its conclusion, the court looked to statutory language limiting infringement and dilution claims to commercial uses, and the purpose of the Lanham Act “to secure to the owner of the mark the goodwill of his business and to protect the ability of consumers to distinguish among competing producers.” The court also noted that broader application of the Lanham Act would interfere with free speech rights protected by the First Amendment.

Applying these tests, the court found that the bosleymedical.com site did not infringe plaintiff's trademark because it did not use the mark in connection with the sales of goods or services. The court noted that the site did not contain any direct links to commercial sites. Further, the court rejected plaintiff's argument that by using the domain name, defendant interfered with the sale of plaintiff's services. In rejecting this argument, the Bosley court declined to follow the Fourth Circuit's decision in People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359 (4th Cir. 2001), noting that the PETA approach raised First Amendment concerns.

However, the court sided with the plaintiff on the Anticybersquatting Consumer Protection Act (ACPA), holding that the Act reached non-commercial uses. In reaching its conclusion, the court noted that the act prohibits registering or trafficking in a domain name with bad faith intent to profit from the trademark. The court also observed that one of nine statutory factors for a court to consider was registrant’s “bona fide noncommercial or fair use of the mark in a site accessible under the domain name.” 15 U.S.C. § 1125(d)(1)(B)(i)(IV). This factor would be meaningless if the statute exempted all noncommercial uses of a trademark within a domain name. The court directed that the plaintiff be allowed to pursue discovery on whether Kremer registered the domain name with a bad faith intent to profit.

Finally, the court also reversed the dismissal of plaintiff's state law claims. These claims had been dismissed under California's Anti-Strategic Lawsuit Against Public Participation (“anti-SLAPP”) statute, Cal. Civ. Proc. Code § 425.16(a). The court held that dismissal under the anti-SLAPP statute was improper because the state law trademark claims could have merit and whether the First Amendment was implicated should be decided upon the particular circumstances presented with respect to each domain name.

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Catalog Numbers and Illustrations Not Protected by Copyright According to Sixth Circuit

A transmission parts company suing its former employees for copyright infringement of an auto parts catalog had a rough ride before the Sixth Circuit of the United States Court of Appeals in ATC Distrib. Group, Inc. v. Whatever It Takes (6th Circuit, 03/30/05 - No. 03-6505). The plaintiff, ATC, had sued former employees for copyright infringement for use of ATC's auto parts catalog. The Sixth Circuit held that plaintiff's numbering scheme, illustrations and manual were not sufficiently original for copyright protection.

With respect to the parts numbering scheme, the court noted that the numbering scheme could have reflected originality in how many numbers were reserved for future parts. However, the court found that the expression of the idea could not be protected because it merged with the idea of how many numbers should be reserved:

The expression of ATC’s ideas about part classification and the future of the transmission parts market is not barred from copyright protection by the idea-expression distinction. It is barred, however, in part by the “merger doctrine,” and in part by the originality requirement. For almost all of the types of creativity claimed by ATC, there is only one reasonable way to express the underlying idea. For example, the only way to express the prediction that a maximum of four additional types of sealing ring might be developed is to leave four numbers unallocated, and the only way to express the idea that a novel part should
be placed with the sealing rings rather than with the gaskets is to place that part with the sealing rings. Under the merger doctrine, “when there is essentially only one way to express an idea, the idea and its expression are inseparable [i.e., they merge,] and copyright is no bar to copying that expression.”

The plaintiff fared no better on its claim that illustrations of transmissions from its catalog had been illegally copied. The Sixth Circuit noted that the illustrations were "slavishly" copied from photographs, and were not original even though they required skill to draw. The court further held that the arrangement of showing parts in order of assembly or disassembly was not original and not protected by copyright.

Finally, on its copyright claim regarding its parts manual, the Sixth Circuit agreed with the district court that the manual was not protected because it was no more than a quick reference guide to the part numbers.

Plaintiff ATC fared no better on its other claims against its competing former employees. On preemption, the Sixth Circuit agreed with the district court that "ATC’s state law claims alleging the appropriation by Appellees of ATC’s intellectual property rights in its catalog, part numbers, or illustrations are preempted by federal copyright law." Preemption occurred despite the holding that federal copyright law did not give protection to the catalog. Without preemption, state law could expand protection to areas that federal law has determined should not be protected because it is in the public domain.

The Sixth Circuit also upheld summary judgment against ATC's trade secret misappropriation, breach of fiduciary duty, and interference with business relations claims.

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Senior Common Law Rights In Trademark Prevail Over An Incontestable Federal Registration

This week, a panel of the Ninth Circuit upheld a jury's trademark infringement verdict against the holder of an incontestable federal registration in the marks due to a senior user's state common law rights in the marks. Watec v. Liu.

The Watec case arose from a distribution contract for cameras with the WATEC and WAT marks. The plaintiff, Watec Japan, had manufactured and marketed the cameras in the United States before entering into an oral exclusive distribution contract with the defendants, Watec America and Watec America's president. Watec America then registered the WATEC and WAT marks with the United States Patent and Trademark Office, and the registration later became incontestable under 15 U.S.C. § 1065. Watec America later began to use the marks on cameras manufactured by others, and Watec Japan sued for trademark infringement and breach of contract.

Watec America asserted that it could not be liable for trademark infringement because it held an incontestable federal registration for the marks, and Watec Japan did not have rights as a senior user.

Under 15 U.S.C. § 1065, a federally registered trademark that is used continuously for five years becomes “incontestable,” entitling the holder to an exclusive right to use the mark that can only be defeated on specifically enumerated grounds. The introductory clause of section 1065 provides one of these exceptions to incontestability: that a senior user can assert its rights in the mark acquired under state law by a use continuing from a date prior to the federal registration of the mark. 15 U.S.C. § 1065.

The Ninth Circuit affirmed the jury's finding that Watec Japan had senior rights in the marks that were infringed by Watec America. Watec Japan had acquired nationwide rights under state common law by its marketing efforts before the exclusive distribution agreement. It maintained those rights by continuous use of the marks using Watec America as its licensee.

In other issues in the case, the Ninth Circuit held that the district court's use of remittitur properly cured an excessive trademark infringement award so that a new trial was not required. On defendants' challenge to the attorneys' fees award, the Ninth Circuit remanded for a finding by the district court as to whether this was an "exceptional" case justifying the award of attorneys' fees. In awarding fees, the district court had mentioned the jury's finding that Watec America had intentionally infringed the mark. The Ninth Circuit held that this statement was not sufficient because the district court had the obligation to make its own finding as to whether the conduct was malicious, fraudulent, deliberate or willful conduct.

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