No Likelihood of Confusion From Sales of Music CDs in Another Genre Despite Similar Marks

Case: M2 Software, Inc. v. Madacy Entm't. , No. 03-55957 (9th Cir. 8/31/05).

The One Sentence Summary: The holder of the incontestable registered mark "M2" used for music databases and limited sales of audio CDs did not establish likelihood of confusion based upon junior user's similar mark used for sales of another genre of music CDs.


What They Were Fighting About: Plaintiff M2 Software is the owner of the federally registered mark "M2" which has become incontestable after more than 5 years of use. M2 provides software and services to the music and entertainment industries, and has also sold a limited number (215) of audio CDs. Defendant Madacy began selling low priced collections of music on CD using the name "M2 ENTERTAINMENT" and filed an intent to use application with the trademark office. During licensing negotiations, Madacy ran a full-page advertisement with the M2 ENTERTAINMENT mark, and M2 Software sued, claiming Madacy had committed: (1) trademark infringement in violation of 15 U.S.C. § 1114; (2) false designation and description of origin in violation of 15 U.S.C. § 1125(a); (3) trademark dilution in violation of 15 U.S.C. § 1125(c); (4) state trademark dilution and injury to business reputation in violation of California Business and Professions Code section 14330; (5) state unfair trade practices in violation of California Business and Professions Code section 17200; and (6) common law trademark infringement, passing off, and unfair competition. After summary judgment and motion in limine rulings against M2, a jury ruled in favor of Madacy on the remaining reverse confusion claim, finding that general consumers who were not music industry members would not mistakenly believe that they were purchasing Madacy’s products while in fact they were purchasing M2 Software’s products.

Ninth Circuit Holdings:

• M2 Software was required to demonstrate a likelihood of confusion on both its forward confusion and reverse confusion claims under the 8 factor test in Sleekcraft.
• On the first Sleekcraft factor of the strength of the mark, the court found it to be a "conceptually strong" fanciful mark and that its lack of commercial success did not diminish it.
• The "proximity of goods" Sleekcraft factor weighed slightly in favor of M2 Software because both involved music, but the genres of music were very different.
• The district court properly found that the "similarity of the marks" factor of Sleekcraft weighed slightly in favor of plaintiff after properly considering the context in how the marks are actually used.
• M2 Software could not rely on deposition testimony that it failed to cite to the trial court in attempting to prove actual customer confusion. Moreover, the deposition testimony did not actually establish confusion. Thus, this factor weighed in favor of defendant.
• The "marketing channels used" Sleekcraft factor weighed heavily in defendant's favor where there was little evidence of any overlap in advertising locations or retail areas where the marks were used.
• On the factor of "type of goods and degree of care exercised", the district court properly found that the factor favored defendant Madacy. M2 Software's database customers were very sophisticated and not likely to be confused, and as to its casual customers for audio CDs, M2 failed to convince a jury they would be confused.
• The factor of defendant's intent in selecting the mark favored defendant Madacy when Madacy believed it could "carve out" a different use for its new mark after a trademark search revealed M2 Software's senior mark. There was no evidence that Madacy intended to capitalize on M2 Software's minor CD sales in adopting the name "M2 ENTERTAINMENT."
• The "likelihood of expansion" factor favored Madacy because M2 Software's sales of 215 CDs over 10 years did not indicate expansion was likely.
• M2 Software failed to demonstrate a probability of confusion among an appreciable number of consumers.
• The district court properly denied a motion for reconsideration of the summary judgment ruling that relied upon an unpublished ruling.
• The district court properly entered judgment as a matter of law in favor of a codefendant, SFX, as to which there was no evidence that it participated in use of the allegedly infringing mark.
• The district court properly excluded M2 Software's survey offered to show consumer confusion where the creator did not qualify as an expert in surveys and there was no showing of adherence to generally accepted survey practices.
• The district court properly admitted evidence of third parties' use of M2 in their marks which tended to weaken the strength of plaintiff's mark.
• The court properly bifurcated liability and damages phases.
• The court properly resolved jury instruction issues.
  
  

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Single Use Restrictions on Wrapper for Patented Printer Cartridge Were Enforceable and Not Unfair

Case: Arizona Cartridge v. Lexmark Int'l Inc. , No. 03-16987 (9th Cir. 8/30/05).

The One Sentence Summary: California state law false advertising and unfair competition claims arising out of contractual "prebate" restrictions on patented printer cartridges were properly dismissed on summary judgment because the contractual restrictions were not misleading and were enforceable.

What They Were Fighting About: Lexmark sells patented printer cartridges at a reduced price under a "prebate" program where the package contains contract terms obligating the customer to return the empty cartridge. The cartridges also incorporate a lock-out chip preventing use of an unauthorized cartridge. Arizona Cartridge Remanufacturers' Association ("ACRA") sued Lexmark, claiming unfair business practices and unfair advertising under sections 17200 and 17500 of California's Business and Professions Code. The district court granted summary judgment against ACRA.

Ninth Circuit Holdings:

• A patentee can restrict use of its invention by means including a single-use restriction: "The district court found that Lexmark could condition the use of its patented Prebate cartridges by consumers under the principle articulated by the Federal Circuit in Mallinckrodt, Inc. v. Medipart, Inc., which held that a restriction on a patented good is permissible as long as it is “found to be reasonably within the patent grant, i.e., that it relates to subject matter within the scope of the patent claims.” 976 F.2d at 708. A condition is impermissible where “the patentee has ventured beyond the patent grant and into behavior having an anticompetitive effect not justifiable under the rule of reason.” Id. (remanding for a determination of whether the patentee’s single-use restriction on its medical device was reasonable and within the scope of its patent); see also Monsanto Co. v. McFarling, 302 F.3d 1291, 1298-99 (Fed. Cir. 2002) (upholding infringement injunction against farmer who purchased patented seeds under an agreement that the seeds be used for “planting a commercial crop only in a single season,” and who then replanted the seeds); B. Braun Med., Inc. v. Abbott Laboratories, 124 F.3d 1419, 1426 (Fed. Cir. 1997) (concluding that although typically “an unconditional sale of a patented device exhausts the patentee’s right to control the purchaser’s use of the device thereafter,” this does not hold true where the patentee specifically places restrictions on the sale of the item)."
  
• The printed restrictions on the package formed a valid contract with the customer because the customer had notice and an opportunity to refuse acceptance of the terms by not opening the package: "We hold that the contract on its face appears to be enforceable based on the district court’s findings that consumers (1) have notice of the condition, (2) have a chance to reject the contract on that basis and (3) receive consideration in the form of a reduced price in exchange for the limits placed on reuse of the cartridge. The contract permits Lexmark to restrict the use of its patented item and gives Lexmark a legal basis for asserting its ability to enforce its restriction. Therefore, ACRA has not raised a triable issue of fact that Lexmark’s advertising statements as to its Prebate program are false, mislead or tend to deceive consumers or that they constitute a form of unfair competition. See Day, 63 Cal. Rptr. 2d at 59-60."
• The lock-out chip was not an unfair business practice when it allowed the patent holder to enforce restrictions on the use of the patented invention.

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Fourth Circuit Holds That Gripe Site Does Not Violate Federal Trademark Laws

Case: Lamparello v. Falwell (4th Cir. 8/24/05)

The One Sentence Summary: Plaintiff who operated a so called "gripe site" (http://www.fallwell.com/) to take issue with the Rev. Falwell's positions on homosexuality was not infringing on the Reverend's trademark rights or violating the anti-cybersquatting laws because the website was not operated for profit but rather for political commentary.

What They Were Fighting About: On February 11, 1999, after hearing an interview in which the Reverend Falwell expressed opinions about homosexuality that plaintiff/appellee Lamparello found offensive, he created a website to respond to what he believed were untruths about gay people. The name of the site was http://www.fallwell.com/. Believing that Lamparello's website was confusingly similar to the Rev. Falwell's own website (http://www.falwell.com/), the Rev. sent Lamparello cease and desist letters. Lamparello filed a complaint for declaratory relief in the district court to obtain a declaration that he was not infringing on Falwell's common law marks (i.e., "Jerry Falwell" or "Falwell") or registered trade mark (i.e., "Listen America with Jerry Falwell"). Falwell counterclaimed for trademark infringement, false designation of origin and violations of the anti-cybersquatting act. The district court entered summary judgment in favor of the Rev. Falwell and enjoined Lamparello from using the Reverend's name. The district court also required Lamparello to transfer his domain name ( http://www.fallwell.com/) to the Reverend. The district court denied Falwell's request for statutory damages or attorney fees, however, reasoning that the "primary motive" of Lamparello's website was to put forth opinions that were contrary to Rev. Falwell's positions -- not to take away monies or to profit from the website. This was true even though Lamparello's website contained a link to amazon.com where a book contrary to Rev. Falwell's views could be purchased, however the profit for same would go to Amazon -- not plaintiff/appellee Lamparello. Both sides appealed.

Fourth Circuit Holdings: The Fourth Circuit reversed the order of summary judgment in favor of the Rev. Fallwell on the following grounds:

• First, the website operated by Lamparello was not likely to cause confusion. The Fourth circuit believed it would be highly unlikely for a consumer to visit http://www.fallwell.com/ where Rev. Falwell's views were severely criticized and somehow believe that the Rev. Falwell was affiliated with or sponsored that site. In addition, the anecdotal evidence indicated that Rev. Falwell's followers knew immediately that the site was not sponsored by him, which is why they contacted his office immediately to let him know that the website existed that was critical of his views. In so ruling, the 4th Circuit declined to adopt Lamparello's contention that Sections 32 and 43(a) of the Lanham Act applied only to commercial speech, preferring to rest its position on the analysis that there was no likelihood of confusion. Therefore the court left open the question of whether the 4th Circuit will eventually follow the 9th circuit (in Bosley Med. Ins., Inc. v. Kremer, 403 F. 3d 672, 674 (9th Cir. 2005)) and the 6th Circuit in holding that Lanham Act must be restricted to commercial speech to prevent trademark law from becoming a "tool for unconstitutional censorship."
• Second, the 4th Circuit also declined to adopt Rev. Falwell's analysis that there was a risk of initial interest confusion caused by operation of Lamparello's site. The 4th Circuit found it significant that Lamparello had not attempted to profit from his use of the site. "Profiting financially from initial interest confusion is...a key element for imposition of liability under this theory." The 4th Circuit also declined to expressly endorse the initial interest confusion doctrine, referencing precedent in 1992 and 2004 where it had adopted a different test requiring courts to determine whether a likelihood of confusion exists by "examin[ing] the allegedly infringing use in the context in which it is seen by the ordinary consumer." [citations omitted.]
• Third, the 4th circuit rejected Falwell's claim that Lamparello's use violated that Anti-Cybersquatting Protection Act, because there was no evidence that Lamparello had "a bad faith intent to profit from using [www.fallwell.com] domain name." The court noted that the ACPA 15 USC Section 1125(d)(1)(B)(i)(IV) counsels against finding a bad faith intent to profit in circumstances such as those involved in the case because "use of a domain name for purposes of comment, [and] criticisms..[.constitutes] a bona fide noncommercial or fair use."

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Repair Company Likely to Prevail in Defense of Claims on Copying of Software and Circumvention of Access Codes for Maintenance

Case: Storage Tech. Corp. v. Custom Hardware, No. 04-1462 (Fed Cir. 8/24/05)

The One Sentence Summary: In reversing a district court's grant of a preliminary injunction, the Federal Circuit held that the making of copies of software as part of the process of repairing tape drives was not copyright infringement, the circumvention of access codes as part of the repair did not violate the DMCA, and there was no trade secret violation where the codes had been previously distributed without protection.


What They Were Fighting About: Plaintiff Storage Technology sued defendant Custom Hardware ("CHE") for copyright infringement from the maintenance and repair of Storage Technologies' tape storage units. The repair and maintenace required that CHE make copies of maintenance software in the machines, and to crack an access code. The parties disputed the applicability of section 117(c) of the Copyright Act which provides a safe harbor for copying of software for maintenance or repair:

it is not an infringement for the owner or lessee of a machine to make or authorize the making of a copy of a computer program if such copy is made solely by virtue of activation of a machine that lawfully contains an authorized copy of the computer program, for purpose only of maintenance or repair of that machine, if --
(1) such new copy is used in no other manner and is destroyed immediately after the maintenance or repair is completed; and
(2) with respect to any computer program or part thereof that is not necessary for the machine to be activated, such program or part thereof is not accessed or used other than to make such new copy by virtue of the activation of the machine.

Federal Circuit Holdings:

• The district court erred in holding that section 117(c) did not apply because the copy of the software was not destroyed immediately after the repair. The statutory section allowed the copy to remain until "maintenance" was complete which in this instance was the end of the maintenance contract.
• The maintenance code was "necessary for the machine to be activated" as provided in section 117(c) because it was entangled with the functional code and needed to be booted in order to start the computer.
• Section 117(c) protected CHE's actions to circumvent the protection on the maintenance program in order to run the maintenance software.
• CHE was likely to prevail on the defense afforded by section 117(c).
• CHE's actions in copying the maintenance code for repair were protected because it was acting as the agent of the owner of the tape drive who was given a license to copy the software by operation of the drive.
• The license restricted the customer from using the maintenance code, but this did not create a claim for copyright infringement. At most, it created a claim for breach of the license contract: "Second, StorageTek’s argument conflates a claim based on copyright infringement and an action based on breach of contract. To succeed in a copyright action, "the copying must be beyond the scope of a license possessed by the defendant," Stenograph, 144 F.3d at 99, and the source of the copyright owner’s complaint must be grounded in a right protected by the Copyright Act, such as unlawful reproduction or distribution. See 17 U.S.C. § 106. In contrast, the rights granted by contract can be much broader. As an example, consider a license in which the copyright owner grants a person the right to make one and only one copy of a book with the caveat that the licensee may not read the last ten pages. Obviously, a licensee who made a hundred copies of the book would be liable for copyright infringement because the copying would violate the Copyright Act’s prohibition on reproduction and would exceed the scope of the license. Alternatively, if the licensee made a single copy of the book, but read the last ten pages, the only cause of action would be for breach of contract, because reading a work does not violate any right protected by copyright law. Likewise, in this case, the copying of the maintenance code is permitted by the license. The use of the code may violate the license agreement, but it is not forbidden by copyright law and cannot give rise to an action for copyright infringement. See United States Naval Inst. v. Charter Communications, Inc., 936 F.2d 692, 695 (2d Cir. 1991) ("[a] licensee of any of the rights comprised in the copyright, though it is capable of breaching the contractual obligations imposed on it by the license, cannot be liable for infringing the copyright rights conveyed to it"). "
• Language in the license prohibiting assignment did not bar CHE from protection as the agent of the licensee in booting the machine - the restriction was intended to prevent free-standing assignment of the software license, but did not prohibit operators of the tape library from booting it with permission of the licensee. The court distinguished other cases such as MAI Systems which involved more restrictive licenses that permitted only certain authorized users to boot the software.
• CHE was likely to prevail in showing that it did not violate the DMCA (Digital Millenium Copyright Act) restrictions of 17 U.S.C. § 1201(a)(1) by circumventing the access code feature of the software. The DMCA section must be tied to an infringement of copyright, and does not create an independent right of action for circumvention with copyright infringement. Here, the court had decided that CHE's actions in creating copies of the software for purposes of maintenance and repair were not copyright infringement because they were protected by 17 U.S.C. § 117(c).
• CHE was likely to prevail on the claim that it misappropriated trade secrets in accessing fault symptom codes. The fault symptom codes were in the public domain because before implementation of the "GetKey" access code, the fault symptom codes were freely transmitted by the library components.
• The district court abused its discretion in granting the preliminary injunction for plaintiff.
  
  

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District Court Erred in Defining "Rear End" By Exterior Tube Dimensions

Case: Research Plastics, Inc. v. Federal Packaging Corp., 04-1605 (Fed. Circ., 8/18/05)

The One Sentence Summary: The Federal Circuit vacated a finding of non-infringement on summary judgment, holding that the lower court incorrectly construed the term "rear end" to be defined by the exterior rear edge of a tube, rather than defining it by both the interior and exterior rear edges of the tube.

What They Were Fighting About: The patent provided for use of ribs inside a tube (like those used for caulking) to allow for the release of air through the nozzle along with whatever material was extruded from the tube, with the ribs present from the "rear end" of the tube to the nozzle. The plaintiff claimed infringement when a competitor marketed tubes with ribs in the rear half but which arguably did not extend all the way back to the rear end, depending on how 'rear end' was defined.

Federal Circuit Holdings:

• To obtain the patent and overcome an objection based on obviousness, the inventor had distinguished prior art by including the limitation that the ribs extend to the rear end of the tube, because a prior tube design used ribs near the nozzle as a means of releasing trapped air when the tube was filled.
• The defendant marketed tubes with a bevelled rear end, such that the exterior wall is longer than the interior, and the tube widens towards the back edge. The tapered portion is referred to as the chamfer angle. Ribs extended from the interior rear wall forward, but did not go as far back as the edge of the exterior rear wall.
• At the Markman hearing, the lower court adopted the defendant's construction, holding that 'rear end' means the outermost exterior edge of the tube and 'nozzle end' means the point on the forward edge of the tube body. It further noted that the claim language implied that the rear end was a point on the tube, not an area, and the diagrams pointed to the edge of the tube. It concluded that the chamfer angle was part of the tube body, because it was inside of the rear end -- thus there was no infringement where ribs began at the inside rear wall.
• The Federal Circuit held that rear end should include the entire rear edge of the tube, including the point at the rear end on the interior, and the point at the rear end on the exterior. In short, the chamfer angle was part of the rear end. Thus, while the lower court was right that 'rear end' referred to a point, not an area, it was wrong in locating that point beyond the chamfer angle. The case was remanded to reconsider whether there was infringement, given this new construction of the term
• The Federal Circuit upheld the lower court's finding that the plaintiff's narrowing amendment, in which it specified that the ribs were located all the way back to the rear end of the tube, estopped it from relying on the doctrine of equivalents to show infringement.
  
  

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Technical Support Offered in the United States Plus Knowledge of the Patent Could Allow Jury to Find Inducement of Infringement

Case: MEMC Elec. Materials, Inc. v. Mitsubishi Materials, No. 04-1396, 04-1513 (Fed Cir. 8/22/05)

The Two Sentence Summary: Although there was no direct liability for patent infringement for silicon wafers manufactured and sold in Japan, the Federal Circuit reversed summary judgment and remanded for a trial on claims of inducing infringement where the defendant knew of the patent and had provided technical support in the United States for its allegedly infringing silicon wafers. The Federal Circuit also affirmed rulings excluding a vague claim chart in an expert report and finding that the plaintiff had conducted an adequate pre-filing investigation so that it was not liable for attorneys' fees.


What They Were Fighting About: MEMC is the assignee of record of U.S. Patent No. 5,919,302 (the "’302 patent") for preparing silicon wafers without certain defects. Defendant SUMCO manufactured allegedly infringing wafers in Japan, and the wafers were sold to Samsung Japan which then sold the wafers to Samsung in Austin, Texas. There was evidence of direct email contact between SUMCO and Samsung Austin as well as visits by SUMCO personnel to Samsung Austin. Judge Saundra B. Armstrong of the Northern District of California granted summary judgment for defendants on the claims of direct infringment and inducing infringement, holding that there were no infringing actions in the United States.

Federal Circuit Holdings:

• Post-sale emails providing data on the chips were not offers to sell for purposes of direct liability under 35 U.S.C. § 271.
• The sales took place in Japan, and cannot create direct liability: "MEMC’s reliance on North American Philips and Beverly Hills Fan Co. is misplaced. North American Philips simply noted that in some cases the criterion for determining the location of a "sale" under section 271(a) is not necessarily where legal title passes; the "more familiar places of contracting and performance" may take precedence over the passage of legal title. 35 F.3d at 1579. Thus, simply because an article is delivered "free on board" outside of the forum, a "sale" is not necessarily precluded from occurring in the forum. Significantly, MEMC has not presented evidence that, as far as SUMCO is concerned, "contracting and performance" took place in the United States. Similarly, Beverly Hills Fan Co. held that the situs of an injury is the location, or locations, at which the infringing activity directly impacts on the interests of the patentee, and that "[e]conomic loss occurs to the patent holder at the place where the infringing sale is made because the patent owner loses business there." 21 F.3d at 1571 (emphasis added). However, as noted above, MEMC presents no evidence that SUMCO entered into any negotiations with Samsung Austin in the United States concerning the accused wafers and no evidence that title of the wafers passed directly from SUMCO to Samsung Austin. Mere knowledge that a product sold overseas will ultimately be imported into the United States is insufficient to establish liability under section 271(a). See Rotec Indus., 215 F.3d at 1251 (finding that the only activities that are relevant to direct infringement are those activities that take place within the borders of the United States). In short, MEMC has presented no evidence demonstrating that SUMCO sold the accused wafers to Samsung Austin in the United States. Based upon the foregoing, we see no error in the district court’s grant of summary judgment of no direct infringement under 35 U.S.C. § 271(a)."
• With respect to the claim of active inducement of infringement, an indemnity clause in the contract between SUMCO and Samsung Japan did not constitute inducement: "As a preliminary matter, we do not agree with MEMC that the indemnity provision included on Samsung Japan’s purchase order for the accused wafers establishes SUMCO’s intent to induce infringement on the part of Samsung Japan. The provision states as follows: Supplier herein shall indemnify the buyer for all claims of patent infringement whether direct or contributory and for all costs for defending against such claims resulting from the purchase of the above items. As this court explained in Hewlett-Packard Co. v. Bausch & Lomb Inc., “an indemnification agreement will generally not establish an intent to induce infringement, but . . . such intent can be inferred when the primary purpose is to overcome the deterrent effect that the patent laws have on would-be infringers." 909 F.2d 1464, 1470 (Fed. Cir. 1990) (citation omitted). As in Hewlett-Packard, the indemnity provision in this case may have facilitated the sale of the accused wafers, but there is no evidence that the primary purpose of the agreement was to induce Samsung Japan to infringe the ’302 patent. As noted by SUMCO, given that the sale of the wafers from SUMCO to Samsung Japan occurred in Japan, it is more reasonable to conclude that the indemnity clause relates to claims of patent infringement under Japanese law. In other respects, we do not think that a claim of active inducement of Samsung Japan by SUMCO has been properly preserved in the district court. We therefore need not address whether inducing activity in Japan can give rise to liability under United States patent laws. See Crystal Semiconductor Corp. v. Tritech Microelectronics, Int’l Inc., 246 F.3d 1336, 1351 (Fed. Cir. 2001)."
  
• The Federal Circuit noted a split in authority regarding the knowledge requirement for inducing infringement, but held that it need not resolve the split here where SUMCO knew of the '302 patent:
  "It should be noted that “there is a lack of clarity concerning whether the required intent must be merely to induce the specific acts [of infringement] or additionally to cause an infringement.” MercExchange, L.L.C. v. eBay, Inc., 401 F.3d 1323, 1332 (Fed. Cir. 2005) (citing Insituform Techs., Inc. v. CAT Contracting, Inc., 385 F.3d 1360, 1378 (Fed. Cir. 2004)); see Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 553 (Fed. Cir. 1990) (“The plaintiff has the burden of showing that the alleged infringer’s actions induced infringing acts and that he knew or should have known his actions would induce actual infringements.”); but see Hewlett-Packard Co. v. Bausch & Lomb, Inc., 909 F.2d 1464, 1469 (Fed. Cir. 1990) (“Proof of actual intent to cause the acts which constitute the infringement is a necessary prerequisite to finding active inducement.”). We need not resolve that ambiguity in this case, however, because it is undisputed that SUMCO had knowledge of the ’302 patent. Thus, assuming that MEMC is able to demonstrate that SUMCO had intent to induce the specific acts constituting infringement, intent additionally to cause an infringement can be presumed."


• The district court erred in granting summary judgment on inducing infringement because a reasonable jury could find that SUMCO actively induced infringement: "Evidence of active steps taken to encourage direct infringement, such as advertising an infringing use or instructing how to engage in an infringing use, show an affirmative intent that the product be used to infringe." Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., No. 04-480, slip op. at 18 (U.S. June 27, 2005) (internal citations and alternations omitted). First, a reasonable jury could conclude that the e-mail communications between SUMCO and Samsung Austin in the United States represent product support which enabled Samsung Austin to purchase and use the accused wafers. See Metabolite Labs., Inc. v. Lab. Corp. of Am. Holdings, 370 F.3d 1354 (Fed. Cir. 2004) (finding active inducement of infringement based on defendant’s publications describing and promoting use of patented method). As for the requirement of specific intent to encourage infringement, it is undisputed that SUMCO knew of the existence of the ’302 patent because it received a letter concerning it. This type of evidence is relevant for supporting proof of intent for inducement (though not by itself sufficient). See Fuji Photo Film Co., Ltd. v. Jazz Photo Corp., 394 F.3d 1368, 1378 (Fed. Cir. 2005); Mentor H/S, Inc. v. Med. Device Alliance, Inc., 244 F.3d 1365, 1379 (Fed. Cir. 2001). Moreover, the series of e-mails between SUMCO and Samsung Austin provide sufficient circumstantial evidence for a reasonable jury to conclude that SUMCO was not only aware of the potentially infringing activities in the United States by Samsung Austin, but also that SUMCO intended to encourage those activities. See Fuji Photo Film Co., 394 F.3d at 1378 ("A patentee may prove intent through circumstantial evidence."); Water Techs., 850 F.2d at 669 ("The requisite intent to induce infringement may be inferred from all of the circumstances."). For the foregoing reasons, we reverse the district court’s grant of summary judgment of non-infringement based on inducement of infringement under section 271(b) and remand the case to the district court for further proceedings on that issue. Those proceedings will, of course, involve (i) construing the claims of the ’302 patent; (ii) determining whether Samsung Austin directly infringes; and (iii) determining whether, if there is direct infringement on the part of Samsung Austin, SUMCO induces that infringement."
• The district court did not abuse its discretion in excluding a claim chart in an expert report that consisted of "check marks next to each of the claims of the ’302 patent each tested wafer allegedly infringes" and "vague" narrative.
• The district court properly denied SUMCO's claim for attorneys' fees and expenses. The case was not exceptional under 35 U.S.C. § 285 because MEMC conducted an adequate prefiling investigation. Sanctions under Fed. R. Civ. P. 11 and 28 U.S.C. § 1927 were not justified because MEMC did not multiply the proceedings in recklessness or bad faith.

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Claim Terms Must Be Understood in Context of Invention

Case: TAP Pharm. v. Owl Pharm. (Fed. Cir. 8/18/05 - No. 03-1634, 03-1634).

The One Sentence Summary: In this dispute about patents for a prostate cancer drug, Federal Circuit affirmed claim interpretation, inequitable conduct, and literal and doctrine of equivalents infringement rulings by the district court.

Federal Circuit Holdings:

• The Federal Circuit affirmed the district court's grant of summary judgment of infringement on two patents for a prostate cancer drug. The district court properly construed the claim term "comprising a copolymer . . . of lactic acid and . . . of glycolic acid." The district court found that this term was not limited to direct polymerization from lactic acid or glycolic acid, holding rather that the claimed polymers could be made by a different method such as the "ring-opening" method in which lactic acid and glycolic acid are first converted into cyclic dimers, known as lactide and glycolide. The district court properly interpreted this claim in light of the specification, treatises, expert testimony on the understanding of one skilled in the art and the prosecution history.
• The district court did not err in finding no inequitable conduct in the submission of a reference called the Kent Application. "The district court found that the Kent application was not material to the patentability of the claims of those patents and that TAP did not intend to deceive the PTO by withholding the application until after issuance of the notice of allowance for the ’721 patent."
• On the cross appeal, the district court properly interpreted the phrase “particles containing a water-soluble drug” to require the presence of a drug-retaining substance along with the drug. The non-technical word "containing" must be understood based on its context:

  As the district court correctly pointed out, a word describing patented technology takes its definition from the context in which it was used by the inventor. See Anderson v. Int’l Eng’g & Mfg., Inc., 160 F.3d 1345, 1348-49 (Fed. Cir. 1998). While the term "containing" is not a technical term, the term is essential in helping to describe the patented technology.

• Based upon this claim interpretation, there was no literal infringement, and application of the doctrine of equivalents would vitiate the limitation.
  
  

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Filing Date of PCT International Application Established Priority Date for Later Filed United States Application

Case: Broadcast Innovation v. Charter Communications, Inc. (Fed. Cir. 8/19/05 - No. 05-1008).

The One Sentence Summary: A patent derived from a Patent Cooperation Treaty (PCT) application was entitled to a priority date of the filing of the original PCT application even though the patent mentioned only the United States application on the face of the patent.

Federal Circuit Holdings:

• The patent was entitled to a priority date of the filing of the international PCT application. "As previously mentioned, the applicant filed the ’595 patent on July 18, 1995, as the U.S. national stage application of the original PCT application. However, July 18, 1995 is not the “U.S. filing date” of the ’595 patent. Specifically, under 35 U.S.C. § 363, the international filing date of a PCT application is also the U.S. filing date for the corresponding national stage application. 35 U.S.C. § 363 (1984); see also Manual of Patent Examining Procedure (MPEP) § 1893.03(b) (8th Ed. including May 2004 revisions) ("It should be borne in mind that the filing date of the international application is also the filing date for the national stage application."). Thus, the ’595 patent’s U.S. filing date is November 26, 1993, the filing date of the PCT application. Because the ’094 patent is entitled to priority back to the ’595 patent’s U.S. filing date, the ’094 patent’s priority date under 35 U.S.C. § 120 as well as its term calculation date under 35 U.S.C. § 154(a)(2) is at least November 26, 1993. In other words, the ’094 patent, which specifically references the ’595 patent and thus satisfies the requirements of 35 U.S.C. § 120 and 37 C.F.R. § 1.78(a), is entitled to effectively the same date as the original PCT application."
  
  

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Argument-Based Estoppel From Ambiguous Prosecution History Did Not Bar Application of the Doctrine of Equivalents

Case: Aquatex Indus. v. Techniche Solutions (Fed. Cir. 8/19/05 - No. 05-1088)

The One Sentence Summary: In a dispute about whether "fiberfill" filling for evaporative cooling garments could include natural fibers, the district court erred in holding that argument-based prosecution history estoppel barred application of the doctrine of equivalents.

What They Were Fighting About: Aquatex owns the '977 patent for a method of using an evaporative cooling garment with a water absorbing "fiberfill" filler that is soaked in water and then cools the wearer as the water evaporates. The district court granted summary judgment of noninfringement to Techniche, holding that the term "fiberfill" did not include natural fibers, and that the doctrine of equivalents could not be applied due to prosecution history estoppel.

Federal Circuit Holdings:

• The claim was for contributory rather than direct infringement because the '977 patent was not for the material itself. "Because the ’977 patent claims the use of evaporative cooling garments, rather than the actual multi-layer fabric itself, AquaTex’s cause of action is one for contributory infringement under 35 U.S.C. § 271(c). Although not directly infringing, a party may still liable for inducement or contributory infringement of a method claim if it sells infringing devices to customers who use them in a way that directly infringes the method claim.** R.F. Del., Inc. v. Pac. Keystone Techs., Inc., 326 F.3d 1255, 1267 (Fed. Cir. 2003). "Liability for either active inducement of infringement or for contributory infringement is dependent upon the existence of direct infringement." Joy Techs., Inc. Flakt, Inc., 6 F.3d 770, 774 (Fed. Cir. 1993)."
• The specification supported the limitation of the term "fiberfill" to synthetic fibers because the specification cited three prior patents as reference for fiberfill, all of which referred to synthetic fibers. Slip Opinion at 9.
• The prosecution history was ambiguous as to the meaning of the term "fiberfill" because the applicant did not respond directly to the examiner's argument that a mix of natural and synthetic fibers was a fiberfill.
• The definitions and usage of the term "fiberfill" in dictionaries and industry publications was consistent with a definition limiting it to synthetic fibers such as polyester.
• The district court properly found no literal infringement.
• The doctrine of equivalents should have been considered by a jury. "However, "[t]he doctrine of equivalents allows the patentee to claim those insubstantial alterations that were not captured in drafting the original patent claim but which could be created through trivial changes." Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 733 (2002) ("Festo II"). Infringement under the doctrine of equivalents requires that the accused product contain each limitation of the claim or its equivalent. Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 40 (1997). An element in the accused product is equivalent to a claim limitation if the differences between the two are insubstantial. The analysis focuses on whether the element in the accused device "performs substantially the same function in substantially the same way to obtain the same result" as the claim limitation. Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605, 608 (1950) (internal quotation omitted). "
• Argument-based prosecution history estoppel did not apply here. "Prosecution history estoppel can prevent a patentee from relying on the doctrine of equivalents when the patentee relinquishes subject matter during the prosecution of the patent, either by amendment or argument. Pharmacia & Upjohn Co. v. Mylan Pharm., Inc., 170 F.3d 1373, 1376-77 (Fed. Cir. 1999). "The doctrine of prosecution history estoppel limits the doctrine of equivalents when an applicant makes a narrowing amendment for purposes of patentability, or clearly and unmistakably surrenders subject matter by arguments made to an examiner." Salazar, 2005 U.S. App. LEXIS 13517, at *6; see Festo II, 535 U.S. at 736 (narrowing amendment for purposes of patentability); Eagle Comtronics, Inc. v. Arrow Communication Labs., Inc., 305 F.3d 1303, 1316 (Fed. Cir. 2002) (argument-based estoppel). [¶] While at least one claim limitation was added here to overcome an anticipation rejection during the prosecution of the patent, Techniche does not allege amendment-based estoppel. Instead it asserts argument-based estoppel. To invoke argument-based estoppel, the prosecution history “must evince a clear and unmistakable surrender of subject matter.” Pharmacia, 170 F.3d at 1377 (internal quotation omitted). To determine if subject matter has been relinquished, an objective test is applied, inquiring “whether a competitor would reasonably believe that the applicant had surrendered the relevant subject matter.” Cybor Corp., 138 F.3d at 1457."
  
  

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Appellate Jurisdiction Absent When Invalidity Counterclaim Remained Unresolved in Lower Court

Case: Pause Tech. v. Tivo, Inc. (Fed. Cir. 8/16/05 - No. 04-1263).

The One Sentence Summary: The Federal Circuit lacked jurisdiction to consider an appeal from an order granting summary judgment of noninfringement to Tivo because Tivo's invalidity counterclaim remained unresolved in the district court.

Federal Circuit Holdings:

• The final judgment rule requires that the Federal Circuit consider only appeals from final judgments. "This court’s ‘final judgment rule,’ as applied to patent disputes arising under 28 U.S.C. § 1338, is set forth at 28 U.S.C. § 1295. Section 1295’s final judgment rule mirrors that of its counterpart found at 28 U.S.C. § 1291." Nystrom, 339 F.3d at 1350. Under the rule, parties may only appeal a "final decision of a district court." 28 U.S.C. § 1295(a)(1). In Catlin v. United States, the Supreme Court defined a final judgment as a decision by the district court that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." 324 U.S. 229, 233 (1945); see also Coopers & Lybrand v. Livesay, 437 U.S. 463, 467 (1978). By requiring parties to "raise all claims of error in a single appeal following final judgment on the merits," Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 374 (1981), § 1295, like its counterpart § 1291, "forbid[s] piecemeal disposition on appeal of what for practical purposes is a single controversy . . . ." Cobbledick v. United States, 309 U.S. 323, 325 (1940)."
• The Federal Circuit did not accept Pause Technology's invitation to consider the invalidity counterclaim as "impliedly dismissed" by the district court because it would conflict with Federal Rule of Civil Procedure 54(b)(2).
• The Federal Circuit granted leave for the parties to seek remedial action in the district court finalizing the judgment, in which case the present defective appeal would ripen and the present panel would decide the case on the merits.
  
  

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Description of DNA Sequences Not Required in Specification Where Already Described in Prior Art

Case: Capon v. Eshhar, Case No. 03-1480, -1481 (Fed. Cir. 8/12/05)

The One Sentence Summary: The Federal Circuit vacated and remanded a Board of Patent Appeals ruling in a patent interference proceeding concerning a chimeric gene, wherein the Board cancelled all of the claims of the two competing parties for failing to adequately describe DNA sequences in the specification.


Federal Circuit Holdings:

• In an interference action before the Board of Patent Appeals to determine which of two competing applicants was the first inventor of common subject matter, the Board instead ruled that neither party met the written description requirement of the patent statute.
• The patents at issue describe chimeric genes designed to enhance the immune system. A chimeric gene is an artificial gene that combines segments of DNA in a way that does not occur in nature. The Board found that precedent required that a specification for chimeric genes must fully describe the specific DNA sequences that produce the gene.
• The Federal Circuit vacated and remanded the Board's ruling because it had failed to take into account the state of scientific knowledge regarding chimeric genes and the fact the necessary DNA sequences were disclosed in prior art. The precedent cited by the Board was no longer applicable because the science of chimeric genes had evolved and both the DNA sequences themselves, and the method for linking them, were known. As the Federal Circuit noted, the invention was not "discovering which DNA segments are related to the immune response, for that is in the prior art, but in the novel combination of the DNA segments to achieve a novel result."
• The court also held that the determination of whether a specification adequately describes an invention is done on a case by case basis, and it was error for the Board to rule that section 112 imposes a per se rule requiring recitation in the specification of the claimed DNA sequences where those sequences were already known in the field. Id at 13 ("The descriptive text needed to meet these requirements varies with the nature and scope of the invention at issue, and with the scientific and technologic knowledge already in existence").
• Also at issue was the Board's ruling that the specifications did not adequately support the breadth of all the claims presented. In rejecting all the claims, the Board argued that the claims were too broad because they might have included "inoperative species" and proven unsuccessful. The court noted that in the "unpredictable" fields of science, it is appropriate to recognize the variability in the science when determining the scope of the claims. The court held it was for the Board to reject all of the claims without analyzing them on a claim by claim basis. It also held it was error to automatically reject the claims merely because they might prove unsuccessful.

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Submitting A Declaration To The PTO That Contradicts The Author's Prior Publications Constitutes Inequitable Conduct

Case: Pharmacia Corporation et al. v. PAR Pharmaceutical, Inc., Fed Cir. 04-1478 & 1496 (decided August 10, 2005)

The Two Sentence Summary: The Federal Circuit affirmed a district court's finding that Pharmacia committed inequitable conduct when it submitted a declaration by a scientist that (1) implied he had performed experiments which he had not; and (2) had a conclusion directly contrary to the conclusion in an article he had previously published and which Pharmacia did not disclose to the examiner. The Federal Circuit also held that inequitable conduct in the prosecution of a patent did not automatically invalidate a later-issued related patent.

What they were fighting about: PAR filed an application with the Food and Drug Administration to market a generic version of Xalatan, a drug that threats glaucoma by topical application. The drug works by reducing the pressure of the fluid in the eye, known as intraocular pressure. Pharmacia is the owner of two patents covering Xalatan (the '368 patent and the '504 patent). The two patents are siblings, filed simultaneously on December 8, 1992 as continuations of a prior patent application. Pharmacia filed suit against PAR, alleging infringement of the two patents. PAR admitted infringing both patents, but asserted that inequitable conduct rendered the patents unenforceable. After a bench trial, the district court found the '368 patent unenforceable due to inequitable conduct, but not the '504 patent. The district court entered judgment for Pharmacia on the '504 patent and for PAR on the '368 patent.

Federal Circuit Holdings:

• The district court properly found that Pharmacia committed inequitable conduct when it submitted a declaration containing false statements in support of its application for the '368 patent. Pharmacia submitted the declaration in order to overcome the patent examiner's rejection under 35 U.S.C. § 103(a) of various claims directed at several of the compounds as being obvious in light of a patent which disclosed a group of compounds including the compound at issue in the '368 patent. Pharmacia argued that the prior patent failed to appreciate the benefits of the claimed compound, and supported its argument with a declaration comparing the properties of the two compounds. Paragraph 9 of the declaration asserted that at a certain dosage, the '368 patent's compound showed a statistically significant decrease in intraocular pressure while the compound disclosed in the prior patent did not. Paragraph 10 of the declaration asserted that, even at higher dosages, the prior patent's compound did not cause a statistically significant decrease in intraocular pressure. Paragraph 10 conflicted with a previous article written by the declarant in which the scientist reported that the compound disclosed in the prior patent caused a statistically significant decrease in intraocular pressure at the higher dose. Paragraph 9 was misleading because it implied the scientist had tested the compound at the dosage, when in fact, he had not. Since the declaration was crucial in overcoming the patent examiner's obviousness rejection, it was material.
  
• The inequitable conduct in Pharmacia's prosecution of the '368 patent did not taint the '504 patent, even though Pharmacia had filed a terminal disclaimer to overcome a double-patenting rejection. Although inequitable conduct occurring in relation to one or more claims during prosecution of a patent application renders the entire patent unenforceable, the case law applies only to claims in one patent. The Federal Circuit agreed with Pharmacia's argument that a terminal disclaimer cannot bind two related patents together so that inequitable conduct in procuring the later prosecuted patent will automatically infect an earlier issued patent.

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Translucent Lights Did Not Infringe Patent Claiming a "Clear" Holder for Light Emitting Diodes

Case: Terlep v. Brinkman Corp., No. 04-1337 (Fed Cir. 8/16/05)


The One Sentence Summary: The district court properly interpreted claims for a "clear" cover for a LED (light emitting diode) to exclude translucent covers, and therefore properly granted summary judgment of non-infringement either literally or under the doctrine of equivalents.

Federal Circuit Holdings:

• Claim construction serves to "elaborate" the claims based upon the specification, prosecution history and dictionaries: "The construction of claims is simply a way of elaborating the normally terse claim language in order to understand and explain, but not to change, the scope of the claims." Embrex, Inc., v. Serv. Eng’g Corp., 216 F.3d 1343, 1347 (Fed. Cir. 2000) (internal quotations and citation omitted). Interpreting the asserted claims entails a review of the intrinsic evidence, which consists of the claim language, the written description, and the prosecution history. See id.; Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996). '[T]he specification is always highly relevant to the claim construction analysis. Usually, it is dispositive; it is the single best guide to the meaning of a disputed term.' Phillips v. AWH Corp., No. 03-1269, 03-1286, 2005 U.S. App. LEXIS 13954, at *29 (Fed. Cir. Jul. 12, 2005) (en banc) (internal quotations omitted). “[T]he prosecution history can often inform the meaning of the claim language by demonstrating how the inventor understood the invention and whether the inventor limited the invention in the course of prosecution, making the claim scope narrower than it would otherwise be.” Id. at *36-37. Extrinsic evidence such as dictionaries also “may be considered if the court deems it helpful in determining the true meaning of the language used in the patent claims,” id. at *39 (internal quotations omitted), provided the court “attach[es] the appropriate weight . . . to those sources in light of the statutes and policies that inform patent law,” id. at *58."
• The contrasting of diffusion lenses in the written description supported the district court's interpretation of the word "clear."
• The prosecution history supported the meaning of the term "clear" found by the district court where the applicant had added the limitation for a "clear plastic tubular holder" after a rejection and distinguished the prior art having a rough or sandblasted side. "Because the "clear plastic tubular holder" limitation helped distinguish the prior art from the claimed invention, the prosecution history supports construing the term "clear" to exclude plastic holders that are translucent or otherwise diffuse the light emitted from the LED. See Seachange Int’l, Inc. v. C-Cor Inc., No. 04-1375, 04-1498, 2005 WL 1523382, at *8 (Fed. Cir. June 29, 2005) ("Where an applicant argues that a claim possesses a feature that the prior art does not possess in order to overcome a prior art rejection, the argument may serve to narrow the scope of otherwise broad claim language."). "
• The court properly considered dictionary definitions for "clear" and synonyms in that definition which distinguished translucent as not allowing clear vision. Int’l Rectifier Corp. v. IXYS Corp., 361 F.3d 1363, 1374 (2004) (holding that it was improper for the district court to adopt a definition that was attributed to a synonym of the disputed term while disregarding the distinction set forth in the usage note).
• "The district court correctly construed the term "clear" to mean "transparent or having the property of transmitting light without appreciable scattering so that bodies lying beyond are seen clearly," and nothing in the claims or the written description warranted giving the term "clear" an expansive meaning that would cover "translucent" holders."
• The patentee was barred from asserting the doctrine of equivalents because the amendment adding the clear holder to the claim was not tangential when the non-diffusive aspect of the holder was argued to distinguish the prior art.
  
  

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Inequitable Conduct Found in Knowing Submission of a False Video to PTO

Case: Frazier v. Roessel Cine Photo Tech, Inc. , No. 04-1060, 04-1092 (Fed. Cir. 8/2/05)

The One Sentence Summary: The Federal Circuit upheld findings of inequitable conduct based upon the submission of a false video purporting to show photographs shot by the claimed lens, but reversed findings of inequitable conduct based upon failure to disclose an advertisement that did not disclose the claimed invention.

Federal Circuit Holdings:

• "Inequitable conduct requires a breach of the duty of candor that is both material and undertaken with intent to deceive the Patent and Trademark Office ("PTO"). Li Second Family Ltd. P’ship v. Toshiba Corp., 231 F.3d 1373, 1378 (Fed. Cir. 2000). Breaches of the duty of candor may include submission of false material information or failure to disclose material information. Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 872 (Fed. Cir. 1988)." Slip Opinion at 6.
• The district court properly found materiality of the submission of a false video for the purpose of demonstrating the claimed lens system. Even if the lens could have taken the photographs shown in the video, the false submission was nevertheless material. "Perseptive Biosystems, Inc. v. Pharmacia Biotech, Inc., 225 F.3d 1315, 1322 (Fed. Cir. 2000) ("[T]he materiality of intentional false statements may be independent of the claims of the patent."); Rohm & Haas Co. v. Crystal Chem. Co., 722 F.2d 1556, 1571 (Fed. Cir. 1983) ("In contrast to cases where allegations of fraud are based on the withholding of prior art, there is no room to argue that submission of false affidavits is not material.") ." Slip Opinion at 8.
• Knowing submission of false information allowed a finding of intent to deceive the PTO despite appellant's argument that he lacked subjective intent to deceive. Direct evidence of subjective intent to deceive is not necessary, and intent may be inferred.
• With respect to an advertisement that was not submitted to the PTO, the district court erred in finding that it was material when it did not disclose the invention to one of skill in the art.
• The district court erred in finding that the advertisement triggered a duty to investigate by the applicant because there is no duty to conduct a prior art search before applying for a patent.
• The district court should reconsider its finding of an "exceptional case" justifying the award of attorneys' fees in light of the reversal of the inequitable conduct finding with respect to the advertisement.
  

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It's Too Late - Court Rebuffs Licensee's Intervention Attempt

Case: Ericsson, Inc. v. Interdigital Comm. Corp., 04-1484 (Fed. Cir. 8/4/05)

The One Sentence Summary: The Federal Circuit reversed rulings allowing a licensee to intervene, and reinstating intermediate rulings on claim construction and infringement, in a patent infringement suit between the licensor and a competitor, where intervention was sought after the case settled and was dismissed with prejudice.

Federal Circuit Holdings:

• The would-be intervenor, Nokia Corporation, waited until after the parties to the suit had settled and dismissed their claims with prejudice, to seek leave to intervene pursuant to Rule 24(b)(2). Nokia also moved to have intermediate rulings on claim construction and infringement, which had been vacated (and sealed), reinstated.
  
• The district court granted Nokia's motion, allowing it to intervene, giving it access to the sealed orders, and then, pursuant to Rule 60(b), reinstating its prior orders.
  
• On appeal, the Federal Circuit held it error to allow Nokia to intervene, because there was no longer an existing suit within the court's jurisdiction for Nokia to intervene in, the matter having been already dismissed with prejudice. Applying the four factor test for intervention (specifically: (1) a live suit; (2) standing; (3) timeliness; and (4) a shared question of fact or law with the suit), the court found the first factor was was not met, and did not go on to consider the other factors.
  
• Since Nokia could not intervene, the court also found no basis for reinstating the lower court's prior orders under Rule 60(b), because a district court may only entertain such a motion from a party, and Nokia was not a party.
  
• The court noted, in a footnote, that it did not think its ruling harsh, because Nokia had been aware of the rulings at issue for two years before seeking to intervene.

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James Cameron Fails To Terminate Copyright Infringement Action Against "Terminator II"

Case: Kourtis v. Cameron, Case No. 03-56703 (9th Cir. August 15, 2005)

The One-Sentence Summary: Plaintiffs were not collaterally estopped from bringing the identical copyright infringement claim as a prior action because they were not in privity with the prior plaintiff.

Ninth Circuit Holdings:

• Plaintiffs were copyright holders and screenplay owners of a prospective film entitled The Minotaur which featured a half-man, half-bull that transforms into various forms. Filmmaker James Cameron expressed interest in the film, but ultimately neither he nor anyone else agreed to produce it.
• After the 1991 release of Terminator II, featuring a character that transforms into both human and nonhuman forms, the screenwriter of the The Minotaur filed a copyright action against Cameron and others. The court in that action held that the The Minotaur and Terminator II were not substantially similar. Subsequently, the instant plaintiffs filed suit against the screenwriter and obtained a judgment that they, not the screenwriter, own The Minotaur materials.
• Although the copyright infringement claim in the instant action was identical to that in the prior action, the instant plaintiffs were not in privity with the screenwriter, especially given their conflict of interest. Therefore, the plaintiffs' copyright claim was not collaterally estopped.
• The fact that the instant plaintiffs were aware of the prior action and failed to intervene did not affect the collateral estoppel analysis.
• Although the initial 1991 release of Terminator II fell outside the 3-year statute of limitations, the allegations of continuing infringement, including the DVD release of the film, were sufficient to survive a motion to dismiss.

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"Yellow Cab" May Be Protected By Trademark Law

Case: Yellow Cab Co. of Sacramento v. Yellow Cab of Elk Grove, Inc., Case No. 03-16218 (9th Cir. August 9, 2005).

One-Sentence Summary: There are issues of material fact as to whether the mark "Yellow Cab" is generic and, if descriptive, whether the mark has acquired a secondary meaning in the Sacramento area.

Ninth Circuit Findings:

• Plaintiff Yellow Cab of Sacramento bore burden of proving that "Yellow Cab" mark was not generic because it was not federally registered.
• Nonetheless, district court erred in granting defendant summary judgment because there were genuine issues of fact regarding whether the term was generic. For example, a person asking for a yellow cab company would be referred to a business operating under the name "Yellow Cab" rather than "Checker Cab" or "City Cab."
• Furthermore, plaintiff's direct evidence of customer confusion and advertising data precluded summary judgment against it on the grounds that the mark "Yellow Cab" lacked a secondary meaning.

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Lanham Act Not Applicable to the Foreign Activity Of Foreign Defendants Without Substantial Effect On United States Commerce

Case: McBee v. Delica Co., Case No. 04-2733 (1st Cir. August 2, 2005).

The One-Sentence Summary: The First Circuit announced a new test for extraterritorial application of the Lanham Act, and found no jurisdiction over the use of an American artist's name by a Japanese corporation that did not substantially affect United States commerce.

First Circuit Holdings:

• Affirmed dismissal of claims brought by American jazz musician Cecil McBee against a Japanese corporation that adopted the name "Cecil McBee" for a line of clothing marketed to teenage girls.
• American courts do not have subject matter jurisdiction under the Lanham Act over the foreign activities of foreign defendants unless there is a substantial effect on United States commerce.
• District court lacked jurisdiction over McBee's claim for an injunction barring access in the United States to defendant's internet website, which is written almost entirely in Japanese and does not allow on-line purchases.
• District court lacked jurisdiction over McBee's claim for damages caused by defendant's sales in Japan, the only place the "Cecil McBee" products are sold.
• While the court had jurisdiction over McBee's claim for an injunction barring defendant from selling its goods in the United States, this claims was without merit because the only sales made into the United States were induced by McBee for purposes of the litigation.

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College Application Software Held Infringed Based On Rejection Of Defendant's Narrow Claim Construction

Case: Collegenet, Inc. v. Applyyourself, Inc., Case Nos. 04-1202, -1222, -1251 (Fed. Cir. 8/2/05).

The One Sentence Summary: JMOL reversed and jury verdict of infringement reinstated based on finding that the District Court of Oregon misconstrued the phrase "in a format specified by the institution," and summary judgment upheld, based on finding that the district court correctly construed the claim terms.

Federal Circuit Holdings:

• The two Collegenet patents at issue describe an online service for reducing the work of applicants and institutions in submitting and processing admissions applications. The inventions allow an applicant to fill out one form, customize it for each institution, and in turn allow the institutions to access applicant data online.
  
• The district court had construed "in a format specified by the institution" as meaning an unlimited number of formats. This construction was found to be in error. For example, the Federal Circuit reasoned that the term "format" did not mean "any file format," but merely "the arrangement of data for storage or display," because, inter alia, the specifications described data formatting using an example list of supported data formats. The court reasoned that, though the claims may not be limited to just those formats, nothing in the patent required support for an "unlimited" number of formats.
  
• The court also held that the district court incorrectly carried a limitation from the specification, which had referred to "any format," into the claims which referred to "a format" -- it is well settled precedent that the term "a" usually means "one or more," not "any."
  
• The district court had granted summary judgment in favor of plaintiff on another patent, based on its determination that the term "automatically" as meaning "once initiated, the function is performed by a machine, without the need for manually performing the function." Defendant had argued the term meant a "process that occurs without human intervention, such that a human does not have the option to intercede and alter the flow of that process." The district court's interpretation was found supported by the language of the claims, the specification, and the prosecution history.

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Blackberry System Could Infringe United States Patent Despite Steps Taken in Canada

Case Name: NTP, Inc. v. Research In Motion, Ltd., Fed Cir. Case No. 03-1615 (decided Aug 2, 2005)

The One Sentence Summary: In a ruling that could result in a district court injunction going into effect which would shut down BlackBerry devices across the country, the Federal Circuit held that the mere fact that a necessary component of Research In Motion’s BlackBerry system is located in Canada does not preclude a finding of infringement under 35 U.S.C. § 271(a) which requires a use, offer for sale, or sale of an invention to occur “within the United States” in order to constitute infringement.

What They Were Arguing About: The popular BlackBerry handheld devices are part of a system which allows users to review and send e-mails on a wireless handheld device without having to log onto a computer. Research in Motion (“RIM”) is a Canadian company headquartered in the province of Ontario. RIM makes the BlackBerry handheld devices, sells software that allows the BlackBerry devices to interact with customers’ e-mail systems, and runs computer servers in Canada that function as routers through which all e-mail messages sent to or from BlackBerry handheld devices are directed when being routed to the various wireless networks on which the handheld devices operate. RIM’s system utilizes “push” technology by which e-mail messages are routed to the handheld device without the user having to initiate retrieval of the messages.

NTP owns five related patents covering the integration of electronic mail systems with radio-frequency (“RF”) wireless communications networks. NTP sued RIM alleging patent infringement. After a jury trial, the district court entered judgment that RIM’s BlackBerry system infringed 15 claims of the 5 related patents. The district court judgment awarded NTP $53 million in damages and a permanent injunction, which the court stayed pending RIM’s appeal.

On appeal RIM argued that it did not infringe any of the patent claims because 35 U.S.C. § 271(e) requires that all steps of the allegedly infringing activity take place “within the United States” and the relay component of RIM’s system through which all of the e-mails pass is located in Canada. RIM also challenged the district court’s construction of several terms in the claims at issue.

Federal Circuit Holdings:

• The plain language of 35 U.S.C. Section 271(a) does not preclude infringement where a system such as RIM’s is used within the United States even though a component of that system is physically located outside the United States. When two domestic users communicate via their BlackBerry devices, their use of the BlackBerry system occurs “within the United States,” regardless of whether the messages exchanged between them may be transmitted outside of the United States at some point along their wireless journey. The location of RIM’s customers in the United States and their purchase of the Blackberry devices establishing control and beneficial use of the Blackberry system within the United States satisfactorily establish territoriality under 35 U.S.C. Section 271(a).
  
• In a further clarification of the role of dictionaries in patent claim construction, noted that a word can have several dictionary definitions and that, “the meaning of the words used in the claims must be discerned not merely from relevant dictionaries but from the context of the written description as examined through the viewing glass of a person skilled in the art.”
  
• Affirmed the District Court’s construction of every challenged claim term with the exception of one. In doing so, the Federal Circuit refused to consider RIM’s argument, never presented to the district court and first presented on appeal, that the patent claims at issue did not cover “push” technology.
  
• Rejected the district court’s definition of one claim term, “originating processor,” that appeared in five of the claims in the various patents under dispute. However, the Federal Circuit remanded the case to the district court to determine whether the erroneous construction of the term by the district court had a prejudicial effect on the jury’s verdict. Because the jury verdict did not specify the amount of infringing sales attributed to each individual patent claim, or the specific devices and services determined by the jury to infringe each separately asserted claim, the Federal Circuit ordered the district court to determine the effect of any alteration of the jury verdict on the district court’s damage award and on the scope of the district court’s injunction.

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"Frosty Treats" Denied Trademark Protection

Case Name: Frosty Treats, Inc. v. Sony Computer Entertainment America, Inc. , Case No. 04-2502 (8th Cir., July 25, 2005)

One-Sentence Summary: The mark "Frosty Treats" is not protectible under trademark law because there was insufficient basis for concluding the phrase had acquired a secondary meaning.


8th Circuit Findings:

• Affirmed summary judgment against Plaintiff who had not registered its marks and could not meet burden of establishing the marks are protectible under trademark law.
• The stylized words "Frosty Treats" in pink capital letters with frost on the upper portion of each letter appearing in a decal approximately 9 x 4 inches on the side of Plaintiff's ice cream vans was, at best, descriptive. "Frosty Treats" conveys the immediate idea that frozen desserts are being sold.
• Plaintiff failed to put foward more than a scintilla of evidence that "Frosty Treats" identifies Plaintiffs' goods and distinguishes them from others. According to Plaintiff's survey, only 1% of respondents shown images of the Frosty Treats ice cream van mentioned Frosty Treats by name. Significantly, the "Frosty Treats" mark is not prominently displayed on its ice cream vans - the primary way it advertises the phrase.
• The district court erred in holding that Plaintiff's graphic of a colorful clown which directs children to "watch for cars" was functional and could not qualify for trademark protection. However, the use of a clown on ice cream trucks was hardly novel and the trade dress of Plaintiff's vans resembles that of a generic ice cream truck and therefore lacks distinctiveness within the marketplace.
• Affirmed the district court's holding that Plaintiff failed to present sufficient evidence with regard to likelihood of confusion between the trade dress of its vans or its clown and any depictions of vans or clowns in Defendant's video games. In particular, the Court noted that a survey asking whether an image reminded participants of something else failed to address the relevant inquiry into whether consumers are confused as to the existence of sponsorship or association between the Plaintiff and the video games.

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