Mere Foreseeability Enough For Personal Jurisdiction in Fifth Circuit

Case: Luv N' Care, Ltd. v. Insta-Mix, Inc., No. 04-31171 (5th Cir. 1/25/06)

The One Sentence Summary: Selling products in Colorado to Wal-Mart, which transported the products into Louisiana, was sufficient to establish personal jurisdiction there in a copyright infringement, trademark dilution and unfair competition action.


What They Were Fighting About: Plaintiff international corporation based in Louisiana alleged that the straw cap of defendant's two-chambered plastic bottle with a freezable core resembled a bottle cap produced by plaintiff.

Fifth Circuit Holdings:

• Despite the fact that defendant's only contact with Louisiana was its sale in Colorado of products to Wal-Mart, which transported the products to Louisiana, the court reversed dismissal for lack of personal jurisdiction.
• Placing a product into the stream of commerce, knowing the product will ultimately reach the forum state, rises to the level of "purposeful availment" in the Fifth Circuit because mere foreseeability is sufficient for personal jurisdiction. The Fifth Circuit does not follow the suggestion of the Supreme Court plurality in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987) that some additional action by defendant, beyond foreseeability, is necessary.
• The court rejected defendant's argument that it had no knowledge of the destination of the products because the purchase order system was automated. Businesses that electronically process orders cannot claim ignorance when those products reach their intended market.
• The fact that ownership of the products transferred to Wal-Mart in Colorado did not prevent jurisdiction, given the quantity and regularity of the shipments (65 shipments, almost 5% of total distribution).
• Due process was also satisfied because plaintiff claimed infringement from the same bottle that traveled through the stream of commerce from Colorado to Louisiana. Thus, the cause of action arose out of defendant's contact with the forum state.
• Circuit Judge DeMoss wrote a concurrence, recognizing that Fifth Circuit precedent required the result but arguing for the "stream-of-commerce-plus" approach of Asahi.
  
  

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Motivation to Combine Arose from Prior Art References in the Same Field of Endeavor and Related Subject Matter

Case: In re: Johnston, No. 05-1321 (Fed Cir. 1/30/06)

The One Sentence Summary: Claims for large diameter spiral pipe were anticipated or obvious in light of prior art involving cylindrical structures such as silos, and there was motivation to combine references in the same field of endeavor.


What They Were Fighting About: The applicant appealed the patent examiner's finding that his claims for spiral pipe were anticipated or obvious.

Federal Circuit Holdings:

• The patent examiner correctly looked to prior art involving silos in rejecting claims for pipes where the dictionary definition and the specification supported a broad interpretation of the word "pipe" to include cylindrical structures such as silos.
• A dependent claim introduced by the word "may" did not further narrow the claim because optional elements may be omitted.
• The examiner properly combined two references regarding large diameter pipe. "[M]any factors are relevant to the motivation-to-combine aspect of the obviousness inquiry, such as the field of the specific invention, the subject matter of the references, the extent to which they are in the same or related fields of technology, the nature of the advance made by the applicant, and the maturity and congestion of the field. Objective indicia are also relevant, see Graham v. John Deere Co., 383 U.S. 1 (1966), for the commercial response to an invention is a useful control upon hindsight evaluation of obviousness." Here, the references were in the same field of endeavor and deal with related subject matter.
  
  

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Jury Finding of Reverse Confusion Affirmed for ATTREZZI Mark on Kitchen Tools

Case: Attrezzi, LLC v. Maytag Corp. (1st Cir. 1/27/06 - No. 05-2098, 05-218)

The One Sentence Summary: Maytag's adoption of "Jenn-Air Attrezzi" infringed the trademark of plaintiff's ATTREZZI mark for kitchen tools.


First Circuit Holdings:

• A jury trial on a trademark infringement claim was appropriate where plaintiff sought as damages the cost in opposing the trademark registration of defendant.
• Attrezzi was suggestive of kitchen tools because it is translated from Italian as tools.
• In reverse confusion claim that junior user Maytag could swamp the senior user name recognition, the use of the combined phrase "Jenn Air Attrezzi" could make confusion worse.
• The jury's decision of likelihood of confusion was not irrational and could not be overturned.
• Lanham Act provision for attorneys' fees did not preempt more plaintiff-friendly provisions of New Hampshire unfair competition statute.
• The district court acted within its discretion in allowing defendant 12 months as a sell-off period of infringing merchandise.

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Lack of Antecedent Basis Did Not Render Claim Invalid When Scope Was Ascertainable

Case: Energizer Holdings, Inc. v. International Trade Commission (Fed. Cir. No. 05-1018 1/25/06)


The One Sentence Summary: A patent claim reciting "said zinc anode" without earlier reference to a zinc anode was not invalid due to indefiniteness under 35 U.S.C. § 112 ¶ 2 where one of skill in the art could reasonably ascertain the scope of the claim.

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Failure to Renew Motion for Judgment After Verdict Precludes Challenge on Appeal According to Supreme Court

Case: Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., No. 04–597 (U.S. Supreme Court, 1/23/06)


The One Sentence Summary: The Federal Circuit could not grant a new trial based upon insufficiency of evidence where the respondent failed to renew its motion for judgment as a matter of law or move for a new trial after the jury's verdict.


What They Were Fighting About: A jury verdict of liability on a Walker Process claim for attempting to enforce a patent obtained by fraud on the Patent and Trademark Office could not be overturned on appeal where respondent failed to comply with Fed. R. Civ. Proc. 50(b).

Supreme Court Holdings:

• Rule 50(b) of the Federal Rules of Civil Procedure requires that a motion for judgment as a matter of law must be renewed after trial, or a motion for new trial must be made. Failure to request after a verdict that the district court enter judgment as a matter of law or grant a new trial deprives the appellate court of power to grant the relief.
  
  

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Reasonable Royalty Should Be Determined Anew in Trial Against New Infringing Product

Case: Applied Medical Resources Corp. v. United States Surgical Corp., No. 05-1149 (Fed Cir. 1/24/06)


The One Sentence Summary: Collateral estoppel did not apply to a jury's determination of a reasonable royalty where the two infringing products were sold at different times, making the hypothetical royalty negotiations different.

Vocabulary Words You Can Learn From This Decision: Trocar and Sufflation


What They Were Fighting About: After losing an earlier patent infringement suit concerning a floating seal trocar (an access port to the abdomen for laparoscopic surgery), defendant US Surgical began marketing a redesigned product. Plaintiff Applied Medical sued again, alleging infringement by the new trocar. After summary judgment of infringement and entry of an injunction, a jury trial on damages found willful infringement and damages of $43.6 million. Plaintiff's motion for enhanced damages and attorneys' fees were granted.

Federal Circuit Holdings:

• There was no collateral estoppel from the jury's determination of royalties in the earlier infringement action. The issue of a reasonable royalty rate from a hypothetical negotiation was not identical as required for application of collateral estoppel. The hypothetical negotiations would have been held before the start of infringement which differed for each trocar.


• The hypothetical negotiation is used to determine a reasonable royalty. "A reasonable royalty is the amount that ‘a person, desiring to manufacture [,use, or] sell a patented article, as a business proposition, would be willing to pay as a royalty and yet be able to make [, use, or] sell the patented article, in the market, at a reasonable profit.’” Trans-World Mfg. Corp. v. Al Nyman & Sons, Inc., 750 F.2d 1552, 1568 (Fed. Cir. 1984) (citations omitted). “The objective of [a] reasonable royalty calculation is to determine the amount necessary to adequately compensate for an infringement.” Maxwell v. J. Baker, Inc., 86 F.3d 1098, 1109 (Fed. Cir. 1996)."


• Each infringing product could be the basis of its own reasonable royalty damages determination because each was a separate and distinct infringement.


• The trial court properly denied the defendant's motion for judgment of a matter of law on willful infringement because there was substantial evidence supporting the jury verdict. The jury had evidence allowing it to find willful infringement where defendant rushed development of its new product after the previous product was found to be infringing, where it began redesign under threat of an injunction, and where it did not rely on opinions of patent counsel but merely sought opinions for their evidentiary value.


• The trial court properly allowed the jury to hear evidence of the earlier infringement verdict where it was necessary to establish the factual background for the hypothetical reasonable royalty negotiations.
  

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California Court Cannot Prevent Out-of-State Enforcement of Non-Competition Agreements

Case: Biosense Webster, Inc. v. Superior Court of Los Angeles County, No. B184852 (Cal. 2d App. Dist. 1/17/06)

The One Sentence Summary: A California court could not enjoin an employer from taking action outside of California to enforce its non-competition agreements against former employees.


What They Were Fighting About: Petitioner Biosense appealed a temporary restraining order (TRO) prohibiting it from enforcing non-competition agreements against its former California employees in any court outside of California.

California Court of Appeal Holdings:

• The writ petition was not moot because the grounds for issuing the TRO were challenged.


• Under the California Supreme Court decision in Advanced Bionics Corp. v. Medtronic, Inc., 29 Cal. 4th 697 (2002), a TRO enjoining sister state actions was improper under principles of judicial restraint and comity. The fact that an action in another court had not yet been filed did not distinguish the Advanced Bionics decision.


• There were no "exceptional circumstances" allowing issuance of the injunction. The possibility that another state may enforce the non-competition clauses despite California's law prohibiting restraints on competition was too speculative at this point to allow issuance of a TRO.


• The injunction against suing in federal courts was improper because a state court lacks power to enjoin federal court action.

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CareFirst Trademark Was Not Infringed Or Diluted By First Care

Case: CareFirst of Maryland, Inc. v. First Care, P.C., No. 04-2493 (4th Cir. 1/11/06)

The One Sentence Summary: Affirms summary judgment in favor of professional corporation of family care physicians, finding defendant did not infringe or dilute the trademark of one of the largest HMOs in the nation.

What They Were Fighting About: CareFirst, an HMO affiliated with Blue Cross Blue Shield contended that consumers were likely to be confused by defendant's "First Care" trademark.

Fourth Circuit Holdings:

• Umbrella organization of Blue Cross Blue Shield affiliates operating jointly and collectively under the CareFirst mark had spent millions of dollars advertising its mark, denominating itself "CareFirst Blue Cross Blue Shield." At least 80% of its members reside in CareFirst's direct service area, consisting of Maryland, Delaware, the District of Columbia and Northern Virginia.
• First Care is a professional corporation of less than a dozen physicians operating close to but outside of CareFirst's direct service area.
• CareFirst had notice of First Care's name and services since 1996, but took no action until 2004, when First Care submitted a deposition in a separate lawsuit CareFirst was pursuing against a third party.
• The protectability of CareFirst's mark was incontestable because more than five years had passed since registration.
• CareFirst's only evidence of actual confusion was a survey that showed only a de minimis level of confusion at best. Only two of the 130 respondents had both heard of First Care and thought that it was related to or affiliated with CareFirst.
• The CareFirst mark lacked conceptual strength because the record showed substantial third-party use of the words "Care," "CareFirst," "First," and "First Care" in the health care industry. This also demonstrated a lack of commercial strength in many parts of the country.
• Although millions of dollars were spent on advertising CareFirst, in accord with company policy, the "CareFirst" mark always appeared with "Blue Cross Blue Shield" and usually with a distinctive corporate logo. Thus, this evidence did not show that the "CareFirst" mark, standing alone, had commercial or conceptual strength.
• The two marks at issue were very different in appearance because the CareFirst mark was almost always paired with the Blue Cross Blue Shield language, while the First Care mark was always by itself or with the suffix "P.C."
• The services offered by the parties were dissimilar because First Care only provides direct medical services to individuals and CareFirst does not. Rather, CareFirst contracts with participating providers to treat its members.
• District Court did not err in granting defendant summary judgment on plaintiff's trademark infringement and dilution claims.
  
  

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Co-Inventorship Claim Fails Due to Insufficient Evidence

Case: Stern v. Trustees of Columbia Univ., No. 05-1291 (Fed Cir. 1/17/06)

The One Sentence Summary: The Federal Circuit panel affirmed a grant of summary judgment against a plaintiff claiming to have been a co-inventor on a patent.


Federal Circuit Holdings:

• In order to prevail in a claim seeking to be added to a patent as an inventor, a plaintiff must prove its case by clear and convincing evidence because the patent is presumed to be valid.
• The performance of experiments conceived of and directed by the patentee did not entitle plaintiff to be named as a co-inventor.
• The claim that destroyed laboratory notebooks would support co-inventorship did not have merit because unwitnessed laboratory notebooks on their own would not support co-inventorship.
  
  

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Chase Freedom Credit Card Does Not Infringe Freedom Card Trademark

Case: Freedom Card, Inc. v. JPMorgan Chase & Co., No. 04-3874 (3rd Cir. 12/22/05)

The One Sentence Summary: The court affirmed summary judgment in favor of Chase, which sought a declaratory judgment that its "Chase Freedom" credit card had not infringed the "Freedom Card" trademark.

What They Were Fighting About: Defendants owned and licensed a trademark for "Freedom Card" credit card, which was offered to the "sub-prime" credit market. The majority of "Freedom Card" customers had credit lines of $300 and were charged fees and interest amounting to 140% over the principal. The "Freedom Card" peaked at 28,913 accounts. Marketing and issuance of the "Freedom Card" ended in December 2001.

In January 2003, Chase issued a "Chase Freedom" credit card to replace a card Chase had co-branded with Shell Oil Company. Approximately 1.5 million accounts were converted and fewer than 10,000 accounts were subsequently acquired. Chase claimed that the majority of "Chase Freedom" cardholders had credit lines of $5,000-10,000 with no annual fee and interest rates between 12.4 and 14.4%.

Chase ran one advertisement for the "Chase Freedom" card, that was seen by Defendant's CEO. After he objected, Chase immediately halted its advertising and marketing efforts for "Chase Freedom" and refrained from acquiring new customers.

Third Circuit Holdings:

• There are two types of "likelihood of confusion" claims - "direct confusion" and "reverse confusion." Although they have developed as two separate doctrines, they are related analytically. Furthermore, instances of direct confusion may occur in a reverse confusion case and vice-versa.
• Direct confusion occurs when a junior user of a mark free-rides on the reputation and goodwill of the senior user by adopting a similar mark.
• Reverse confusion occurs when a more powerful company uses the trademark of a less powerful senior owner and thereby causes confusion as to the source of the smaller senior user's goods or services.
• The powerful Chase did not overwhelm Defendants' trademark because the "Freedom Card" was out of the market for more than a year before the "Chase Freedom" card was launched.
• The inquiry into similarity of the marks is the same in case of direct and reverse confusion. In this case, Defendants' attempt to establish likelihood of confusion was undermined by submissions made to the Trademark Office. In seeking the "Freedom Card" trademark, the trademark owner had argued that there was no likelihood of confusion between the trademark it sought and the prior registration for the mark "Fuel Freedom Card" and had submitted numerous other "freedom" marks.
• Whereas a strong mark supports a direct confusion claim, in theory, the weakness of a senior user's mark can advance a claim of reverse confusion. Nonetheless, the strength of the senior user's mark is relevant and Defendants could not justify the failure to produce any evidence of the commercial strength of the "Freedom Card" mark.
• Defendants waived the argument that the standard of consumer care to be considered should be based on the least sophisticated consumer involved by not raising it with the district court.
• District court correctly concluded that testimony by a witness that one employee of Defendant was confused was de minimis evidence of actual confusion.
• Intent is relevant to both reverse and direct confusion claims. However, in direct confusion, the question is whether the junior user intended to palm off or exploit the senior user's mark. In reverse confusion, the question is whether the junior user intended to push the senior user out of the market. As Defendants left the market prior to Chase's issuance of its "Chase Freedom" card, a reasonable fact finder could not find that Chase intended to push the "Freedom Card" out of the market.
  

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Withholding of Information from Opinion Counsel Allows Finding of Willful Infringement

Case: nCube Corp. v. Seachange Int'l, Inc., No. 03-1341, 03-1366 (Fed Cir. 1/9/06)

The One Sentence Summary: A jury verdict of willful infringement was affirmed in light of evidence that defendant withheld information from opinion counsel that had rendered post-suit non-infringement opinion.

What They Were Fighting About: The Federal Circuit panel affirmed claim construction rulings and jury findings of infringement in a patent infringement action involving network communications.

Federal Circuit Holdings:

• The district court properly construed the patent term “upstream manager” by refusing to import limitations from other claims as proposed by defendant. The term was not so amorphous as to require recourse to the specification for interpretation.


• The jury’s infringement verdict was adequately supported by Plaintiff’s presentation of uncontradicted expert witness testimony that defendant’s system included an infringing “upstream manager”


• Jury had adequate evidence to find willful infringement despite post-suit non-infringement opinion when there was evidence that information was withheld from opinion counsel in rendering opinion.


• Jury’s finding of indirect infringement was supported by evidence that defendant knew that its customer would use defendant’s product in an infringing combination.


• Award of attorneys’ fees against defendant was proper where defendant deliberately copied the invention without investigating the scope of the patent.


• Plaintiff failed to establish infringement by the doctrine of equivalents because it failed to proffer evidence and argument regarding the doctrine.

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Exclusive Sublicense With Fixed Termination Date Was Not Assignment of All Rights Necessary for Standing

Case: Aspex Eyewear, Inc. v. Miracle Optics, Inc., No. 04-1265 (Fed Cir. 1/10/06)


The One Sentence Summary: The licensor retained standing to sue due to a license provision providing for reversion of the patent rights on a date certain.

What They Were Fighting About: Plaintiff Contour had licensed its patent for attaching eye-glass frames with specialized lenses to non-party Chic which in turn assigned its rights to plaintiff Aspex. Defendant challenged Contour's standing, claiming that it had assigned all rights under the patent to Chic.

Federal Circuit Holdings:

• Contour had standing to sue. Contour had retained the right to sue for infringement of the patent because its retention of a reversion was not an assignment of all rights under the patent. Chic did not have all rights in the patent because the assignment expired on a date certain (after the expiration of a fixed time period).


• The district court should consider whether non-party Chic was a necessary party.

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No Infringing Offer to Sell Found In Light of Intent to Provide Non-Infringing System in Response to RFP Calling for Patented Features

Case: FieldTurf International, Inc. v. Sprinturf, Inc., No. 04-1553 (Fed Cir. 1/6/06)


The One Sentence Summary: Seeking the inclusion of patented features in a school district’s RFP was not unfair competition, and winning the RFP without an intent to provide an infringing system did not constitute patent infringement.

What They Were Fighting About: Defendant Springturf won a bidding contest where the original school district RFP (which was later modified) had specified features of plaintiff Fieldturf’s patented synthetic turf. Springturf’s original winning bid did not establish patent infringement because it did not intend to deliver an infringing system.

Federal Circuit Holdings:

• The district court correctly granted summary judgment of non-infringement after considering evidence that defendant intended to deliver a non-infringing product in response to RFP that specified patented features.


• Plaintiff did not compete unfairly by seeking to have the school district specify patented features of its product in RFP.


• An award of attorneys’ fees to defendant was not warranted because there was no “egregious action” by plaintiff in asserting patent infringement.

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