Obviousness Type Double Patenting Invalidates Claim for Drug Earlier Claimed As Part of a Combination Capsule

Case: In re Metoprolol Succinate Patent Litigation (Fed. Cir. No. 06-1254 7/23/07)

The One Sentence Summary: The panel held that obviousness type double patenting invalidated a patent where the claimed compound was claimed in an earlier patent claiming the compound as part of a delayed release capsule, but summary judgment on inequitable conduct was in error.



Federal Circuit Holdings:

• Over a dissent, the panel held that a patent claiming the compound metoprolol succinate was invalid due to obviousness type double patenting where an earlier patent had claimed a combination of one compound of an enumerated list of eleven compounds (one of which is metoprolol succinate); (ii) an inner layer; and (iii) an outer layer.
• The district court erred in granting summary judgment invalidating the patent on inequitable conduct where issues of fact as to intent to deceive were created by deposition testimony denying intent to deceive.
  
  

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Dismissal of Patent Infringement Claims Coupled With Covenant Not to Sue Leads to Dismissal of Declaratory Judgment Invalidity Claims

Case: Benitec Australia, LTD. v. Nucleonics, Inc. (Fed. Cir. No. 06-1122, July 20, 2007)

The One Sentence Summary: Dismissal of declaratory relief counterclaims for patent invalidity was appropriate where plaintiff had dismissed infringement claims and covenanted not to sue.



Federal Circuit Holdings:

• A party seeking to base jurisdiction on the Declaratory Judgment Act bears the burden of proving that the facts alleged, under all the circumstances, show that there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.
• Dismissal of declaratory judgment counterclaims was appropriate where plaintiff had dismissed its patent infringement claims and covenanted not to sue defendant and defendant was years away from filing an ANDA application.
  

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USPTO Was Allowed to Require Amendment Specifying the Type of Use Within a Trademark Classification

Case: In re Omega SA (Fed. Cir. No. 06-1234, 7/23/07)

The One Sentence Summary: The Trademark Attorney of the USPTO did not abuse its discretion in requiring Omega to amend its application for "chronographs" in Class 14 to specify chronographs for use as watches."


Federal Circuit Holdings:

• The United States classification was not limited by the international classification for chronographs.
• Actual use rather than classification creates trademark rights.
• Applicant's earlier registrations without the limitation would not be adversely affected by this amendment.
  
  

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Patents Arising From Confirmation of Suspected Presence of Stem Cells in Umbilical Cord Blood Were Invalid Due to Obviousness

Case: Pharmastem Therapeutics, Inc. v. Viacell, Inc. (Fed. Cir. No. 05-1490, 05-1551, 7/9/07)

The One Sentence Summary: Patents for the treatment of patients using cryogenically preserved umbilical cord stem cells were not infringed, and were invalid due to obviousness where the inventors merely confirmed the suspected presence of stem cells in umbilical cord blood through routine experiments.


What They Were Fighting About: Plaintiff obtained jury verdicts against defendants for infringement of patents regarding the use of cryogenically preserved umbilical cord stem cells for patients with compromised immune systems. Despite the jury's verdicts for plaintiff, the district court entered judgment as a matter of law ("JMOL") for defendants, holding that there was no infringement.

Federal Circuit Holdings:

• The district court properly granted JMOL against plaintiff when plaintiff failed to produce evidence that defendants' cryogenically preserved umbilical cord blood cells contained enough cells in an "amount sufficient to effect hematopoietic reconstitution of a human adult" as provided in the claims.
• The district court properly ruled on JMOL that a molecular biology expert should not have been allowed to testify when she only drew conclusions from defendants' marketing materials.
• The district court properly granted JMOL for defendants on contributory infringement of the method claims which called for cryogenically preserving blood and using it in transplants. The defendants which stored the blood did not do the transplanting, so there was no direct infringement. Moreover, defendants did not own the preserved blood; rather, they held it as bailees for the families. Thus, in providing the blood to the doctors for transplanting, the defendants did not make a sale of a product used for an infringing process under 35 U.S.C. § 271(c). Sale of a service cannot be the basis of liability under section 271(c).
  
• The patents were invalid due to obviousness. The admissions of the inventors in the specifications were binding as to what was in the prior art before, and their attempts to recharacterize the prior art at trial should have been rejected.
• Citing the Supreme Court's opinion in KSR, the panel held that the routine experiments conducted by the inventors to confirm the suspected presence of stem cells in umbilical cords was valuable, but did not give rise to a patentable invention.
• Deference to the patent examiner's decision to grant the patents on reexamination did not preclude the court's holding on invalidity due to obviousness where the examiner's reasons for granting the patent were incorrect.
  
  

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Seventh Circuit Affirms Award of Fees Against Member of "Hall of Fame" of Hyperactive Trademark Litigators

Case: Central Mfg., Inc. v. Brett, No. 06-2083 (U.S. 7th Circuit Court of Appeals, 7/9/07)

The One Sentence Summary: In an opinion with some interesting baseball trivia thrown in, the Seventh Circuit affirmed summary judgment, cancellation of the mark and attorneys' fees against a serial litigant of warehoused trademarks who could not show actual use of its registered STEALTH mark.


Seventh Circuit Holdings:

• The district court correctly granted summary judgment against plaintiff's trademark infringement claims when plaintiff could not produce credible evidence of actual sales of baseball merchandise bearing the STEALTH mark.
• The district court properly canceled the registration for the trademark due to invalidity under its authority pursuant to 15 U.S.C. § 1119.
• The award of attorneys' fees under 15 U.S.C. § 1117 against plaintiff was affirmed. The court noted the "dead fish" standard: "And we will not reverse a determination for clear error unless it 'strike[s] us as wrong with the force of a 5- week-old, unrefrigerated dead fish.'", citing Parts and Elec. Motors, Inc. v. Sterling Elec., Inc., 866 F.2d 228, 233 (7th Cir. 1988).
  
  

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Heading Meant Bearing In This Aircraft Warning Patent

Case: Honeywell Int'l, Inc. v. Universal Avionics Sys. Corp., No. 2006-1406, 2006-1435 (Fed. Cir. 7/3/07)

The One Sentence Summary: A judgment of infringement was affirmed where the district court correctly construed the claims as adopting terms used in non-standard ways by the patentee.


What They Were Fighting About: A jury had found that defendant's aircraft warning system infringed plaintiff's patent on an aircraft warning system that used proximity to the airport and angle of approach to determine whether an aircraft was on final approach.

Federal Circuit Holdings:

• District court did not err in determining that the patentee acted as his own lexicographer in using the term "heading of the aircraft" to refer to the bearing of the aircraft. The specification was clear that "heading" meant "bearing" as used in the specification and the claims.
• The district court properly rejected defendant's proposed construction of "enabling envelope" as requiring that the system turn on at that point.
  
  

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Home Built With Infringing Architectural Plans Can Be Resold And Need Not Be Destroyed

Case: Christopher Phelps & Assocs. v. Galloway (4th Cir., No. 05-2266, 7/5/07)

The One Sentence Summary: A damages award awarding a $20,000 license fee for a house built with infringing architectural plans is affirmed, as is an order denying plaintiff's request that the home never be resold or that it be torn down.


Fourth Circuit Holdings:

• Plaintiff was entitled to protection for its entire home design as registered, even though the design incorporated aspects from an earlier unregistered design. The district court erred in characterizing the work as a derivative work of the earlier unregistered design, but the error in the jury instructions was harmless.
• A new trial on damages was not necessary. The district court did not err in admitting expense receipts for the home as business records, or admitting an appraisal used for taxes as a government record over objections that it was expert testimony.
• The district court erred in denying an injunction because the jury had awarded damages. Future infringement was possible and could be the basis of damages. However, under eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1839 (2006), an injunction was not automatic and should be considered by the trial court.
• The district court did not err in refusing to grant an injunction preventing sale of the house built with the infringing architectural plans or requiring it to be torn down.
• The district court should consider on remand plaintiff's demand for an injunction requiring that defendant be required to return the infringing plans.
  
  

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Karaoke Discs Were Not Fair Use and An Award of Copyright Statutory Damages of $31K Per Infringed Work Did Not Violate Due Process

Case: Zomba Enters., Inc. v. Panorama Records, Inc., (U.S. 6th Circuit Court of Appeals, June 26, 2007, No. 06-5013, 06-5266)

The One Sentence Summary: A copyright statutory damages award against a seller of karaoke discs was affirmed over fair use and due process objections.

Sixth Circuit Holdings:

• Karaoke discs were not "fair use" under the copyright act. The discs were not transformative, and the claim that they were used for teaching failed. The transformation factor focuses on the nature of the copying, not the nature of the end use, and the commercial purpose in creating the disc favored plaintiff in the fair use analysis.
• Pop songs are at the core of copyright protection, so the "nature of the work"factor of fair use favored plaintiff.
• The "amount of the work" copied factor favored plaintiff.
• As to the fourth fair use factor, effect on the market, Defendant's use would hurt plaintiff''s ability to license into the karaoke market.
• Defendant's infringement was willful because it acted with a reckless disregard of plaintiff's copyrights and its belief in its fair use defense was objectively unreasonable and unfounded after it entered into and then violated a consent order prohibiting it from distributing disks.
• The district court did not err in awarding statutory damages of $31,000 for each of the 27 infringed works.
• The award of statutory damages that exceeded actual damages by a factor of 44:1 did not violate due process.
• An award of attorneys' fees to plaintiff was proper.
  
  

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In Another Round of the Festo Case, the Federal Circuit Holds That Foreseeable Equivalents Are Those Known in the Field of Invention

Case: Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd. (Fed. Cir. No. 05-1492

The One Sentence Summary: Foreseeability for application of prosecution history estoppel applies when the equivalent surrendered by an amendment was known in the field of invention.


Federal Circuit Holdings:

• Prosecution history estoppel prevents application of the doctrine of equivalents to capture equivalents that were surrendered by amendment during prosecution. Amendments to claims surrender scope when they are made for a reason related to patentability. Under the Supreme Court's decision in Festo, amendments are related to patentability unless they fall within one of the following exceptions: (1) the equivalent was “unforeseeable at the time of the application,” (2) “the rationale underlying the amendment [bears] no more than a tangential relation to the equivalent in question,” or (3) that “some other reason suggest[s] that the patentee could not reasonably be expected to have described the insubstantial substitute in question.” Festo VIII, 535 U.S. at 740-41.
• Foreseeability under the first exception does not require that patentee understand how application of the function/way/result test of the doctrine of equivalents will work as to the claimed equivalent. Rather, an equivalent is foreseeable if it was known and disclosed in the pertinent prior art in the field of invention.
  
  

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Structural Similarity of Molecule in the Prior Art Did Not Lead to Obviousness for Anti-Diabetes Drug

Case: Takeda Chem. Indus., Ltd. v. Alphapharm Pty., Ltd., No. 06-1329 (Fed. Cir. 6/28/07)

The One Sentence Summary: An anti-diabetes drug patent was not obvious even though it was structurally similar to a molecule in the prior art.


What They Were Fighting About: Defendant argued that a patented anti-diabetes compound was obvious because it was similar in structure to a compound in the prior art.

Federal Circuit Holdings:

• The district court did not err in finding that there was no reason for a researcher to pick the prior art compound relied upon by defendant as a lead compound for structural changes. The prior art taught away from the proposed lead compound because it associated it with negative side effects. Thus, it was not "obvious to try" homologation and ring walking under the Supreme Court's recent obviousness analysis in KSR.
  
• Ring walking and homologation were not obvious techniques at the time of the patent.
• Prosecution histories of prior art are considered accessible to the public and part of the knowledge of one of skill in the art, but the district court gave proper weight to it.
  
  

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Claim Differentiation Shows that Cylinder Did Not Require Seals Despite Parent Application Where All Cylinders Had Seals

Case: Saunders Group, Inc. v. Comfortrac, Inc., No. 2006-1576 (U.S. Fed. Circuit Court of Appeals, June 27, 2007)


The One Sentence Summary: In a dispute about cervical traction devices, summary judgment of non-infringement is reversed where the district court's claim construction was erroneous because a limitation from the claims of a parent patent should not have been used to limit the descendant patent's claims resulting from the continuation application.

Federal Circuit Holdings:

• The district court erred in claim construction in determining that all claims of the patent should be interpreted to have a "pressure activated seal" as part of a "pneumatic cylinder."
  
• Claim differentiation supported the plaintiff's argument that claim 1 was not limited because dependent claim 6 added a limitation of a pressure activated seal.
• The specification did not limit the claims even though the specification described only pneumatic cylinders with pressure activated seals. Here, the claim language clearly covered cylinders without pressure activated seals even though only a single embodiment (with seals) was described in the specification.
• Language from the parent patent's prosecution history disclaiming cylinders without seals did not limit the scope of the claims in the descendant patent where cylinders without seals were claimed.
• Arguments from the prosecution history of the parent patents about the inability of prior art devices to maintain force did not clearly link that inability to the absence of pressure activated seals in the prior art. Thus, these arguments did not show that the cylinders of the patent always had pressure activated seals.
  
  

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Cat Claw Removal Patent Using the Word "Near" Was Sufficiently Definite

Case: Young v. Lumenis, Inc., (Fed. Cir. No. 06-1455, 6/27/07)

The One Sentence Summary: In a patent dispute about a patent for a technique for removing cat claws, the patent was sufficiently definite when it used the word "near" in describing location of an incision, and there was no inequitable conduct when the materials were ultimately submitted to the PTO in time for consideration in the reexamination.


Federal Circuit Holdings:

• The term "near" was sufficiently definite under 35 U.S.C. § 112 ¶ 2 to distinctly claim the invention. The term would have been understood by one of skill in the art, and it distinguished the invention from the prior art.
• Summary judgment invalidating the patent for inequitable conduct was reversed. In the reexamination proceedings proceeding in parallel with the litigation, there were no misrepresentations in the attorney's arguments interpreting the prior art and arguing against a rejection. Moreover, there was no failure to disclose where the testimony
  allegedly withheld from the PTO (but submitted after the inequitable conduct motion was filed) was provided months before the PTO's final office action so the examiner had an opportunity to consider it.
  

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Copyright and Patent Claims on CPR Device Did Not Stop Competitor's Device

Case: Hutchins v. Zoll Med. Corp. (Fed. Cir. No. 2006-1539, 7/3/07)

The One Sentence Summary: Patent and copyright claims for a CPR assistance device failed where the accused product was not in the scope of the patent, and the copyright could not reach functional and non-original aspects of the defendant's device.


Federal Circuit Holdings:

• Patentee who amended claim to add a "general purpose computer" to his claims for a CPR assistance device to avoid prior art with limited dedicated processors was barred by prosecution history estoppel from recovering scope.
• Summary judgment of non-infringement was properly granted where there was no "interactive display" on the accused product.
• Applying the law of the First Circuit, the court held that copyright claims for the text of the CPR program failed where the accused device performed the functions, but did not copy protected expression. The ideas and function of the program were not protected by the copyright.
  
• A list of CPR instructions was copyrighted as a compilation, but the use of certain of those instructions in defendant's CPR device was not infringement. The instructions themselves (such as "call for help") were functional and not original despite their inclusion in plaintiff's compilation. The court noted that the doctrines of merger and scenes-a-faire protected use of CPR instructions that were necessary for performing CPR.
  
  

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Showing of Extraordinary or Exceptional Circumstances Required To Vacate Consent Judgment

Case: Ford Motor Company v. Mustangs Unlimited, Inc., No. 06-1537 (6th Cir. May 24, 2007)

The One Sentence Summary: Mustangs Unlimited successfully appealed the district court's grant of Ford's motion to set aside a consent judgment entered after the parties voluntarily settled an action brought by Ford alleging that Mustangs Unlimited committed trademark counterfeiting, trademark infringement, trademark dilution, and unfair competition in violation of the Lanham Act and Michigan law.

Sixth Circuit Holdings:

• The district court's grant of Ford's Rule 60(b)(6) motion to set aside a consent judgment was vacated and case was remanded for further proceedings.


• Subsection (b)(6) of Rule 60 applies in "extraordinary or exceptional circumstances" and should only be used by courts "as a means to achieve substantial justice" due to the public policy favoring finality of judgments.


• A breach of a settlement agreement by itself does not warrant relief under Rule 60(b)(6).


• Even though Ford alleged that Mustangs Unlimited breached the terms of the parties' settlement agreement by continuing to sell counterfeited products and merchandise bearing Ford's name or marks, the district court abused its discretion because it did not determine that the circumstances were extraordinary or exceptional.


• On remand, the district court "should expressly determine whether - and if so, how - Ford's evidence establishes extraordinary or exceptional circumstances sufficient to warrant Rule 60(b)(6) relief."
  

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Agreement to Forfeit Revenues Was An Illegal Restraint on Trade Prohibited by Cal. Bus. & Prof. Code § 16600

Case: Alliance Payment Systems v. Walczer (Cal. App. 1st Dist. No. A111425, 6/25/07)

The One Sentence Summary: Provision in settlement agreement for forfeiture of residuals was an illegal restraint on trade in violation of California's Business and Professions Code section 16600.


California Court of Appeal Holdings:

• The Ninth Circuit's interpretation that de minimis or narrow restraints on trade are allowed under Bus. & Prof. Code § 16600 is not consistent with the language of the statute, and was rejected by the court.
• The court rejected the argument that valuable property rights may be protected by restraints on trade. The only exceptions to section 16600 are trade secrets and confidential and proprietary information.
  
• The restraint was not enforceable despite its mutuality, or that it was entered as part of a settlement agreement.
• The court would not "blue pencil" the agreement to add restrictions that would make the agreement enforceable.
• Anti-solicitation clauses are routinely viewed as, and voided as, illegal restraints on trade.
• A clause in the settlement agreement prohibiting solicitation of specific accounts was enforceable because it was an agreement under Business and Professions Code § 16602 in connection with the dissolution of a partnership. It was geographically limited in scope because it referred to specific customers whose locations were known to the former partners.
• There was sufficient evidence of solicitation of customers to justify the trial court's order of a new trial.
  
  

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Lost Profits Award For California Right Of Publicity Violation Requires Showing that Plaintiff's Identity or Persona Contributed to the Profits

Case: Christoff v. Nestle USA, Inc., (Cal. App. 4th Dist., No. B182880, 6/29/07)


The One Sentence Summary: In considering claims under California's statutory right of publicity, Civil Code section 3344, in a case involving Nestle's unauthorized use of plaintiff's photograph on its Taster's Choice labels and advertising, a jury verdict for plaintiff was reversed and remanded where the trial court should have applied the single publication rule, and plaintiff did not establish that defendant's profits were attributable to the taking of his identity and persona.



California 4th Appellate District Holdings:

• The Single Publication Rule ("SPR") applies to actions under California's statutory right of publicity, California Civil Code § 3344. The SPR, codified at Civil Code § 3425.3, provides: No person shall have more than one cause of action for damages for libel or slander or invasion of privacy or any other tort founded upon any single publication or exhibition or utterance, such as any one issue of a newspaper or book or magazine or any one presentation to any audience or any one broadcast over radio or television or any one exhibition of a motion picture. Recovery in any action shall include all damages for any such tort suffered by the plaintiff in all jurisdictions.
• The discovery rule (which only starts the statute of limitations running when plaintiff discovers the tort) is generally inapplicable to claims subject to the SPR, but equitable circumstances that would make it difficult for a reasonable person to discover the tort can allow the discovery rule to apply. Here, this factual record was not developed before the jury because the trial court incorrectly held the SPR did not apply.
• On remand, the trial court should consider whether there was a single publication, or multiple republications by using the plaintiff's photographs in different media. The questions will be whether different audiences were targeted and whether the original publication was altered.
• The right of publicity is a property right to commercial exploitation of one's likeness. Accordingly, the 2 year statute of limitation for torts to property rights applied.
• The court rejected Nestle's arguments that it did not "knowingly" use plaintiff's image, or that there was no liability under section 3344 because he was not a celebrity.
• On remand, plaintiff must show that a portion of Nestle's profits was due to use of his identity or persona. However, if he shows that, then Nestle would bear the burden of disentangling that factor from other factors that contributed to profits.

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Ninth Circuit Rules "Freek" Energy Drinks Do Not Infringe On The Trade Dress of "Monster" Energy Drinks

Case: Hansen Beverage Company v. National Beverage Corp., et al., Case No. 06-56390 (9th Cir. 2007)

The One Sentence Summary: The Ninth Circuit reverses the district court's preliminary injunction restraining National Beverage Corporation, the maker of "Freek" energy drinks, because the district court abused its discretion in concluding that Hansen Beverage Company, the maker of "Monster" energy drinks, is likely to succeed on its trade dress claim.


What They Were Fighting About: Hansen, the maker of "Monster" energy drinks, sought to enjoin National's "Freek" energy drinks. Like the "Monster" drinks, "Freek" line of beverages featured a dark background and a bold accent color.

Ninth Circuit Holdings:

• The District Court's finding of similarity of appearance is clearly erroneous. The two products are distinguishable in appearance: both prominently feature their own trade names on the package ("Monster," with a prominent "M," as compared to "Freek").
• While the two trade dresses may be similar in overall appearance because they feature "aggressive" graphics and bold accent colors against dark backgrounds, these elements are used by other makers of energy drinks. Confusion between any two in a "crowd"of "similar marks on similar goods" is unlikely.
• The Ninth Circuit rejects Hansen's argument that confusion is likely because the terms "monster" and "freek" are confusingly similar in meaning. The word "monster" is too indefinite and generalized.
• The Ninth Circuit rejects Hansen's additional argument that confusion is likely because the depiction of the freek on the "Freek" energy drinks (the "Freek Man") is the picture equivalent of a monster. The word mark "MONSTER" is too broad and ambiguous and consumers are not likely to equate it with any particular image, such as the image of the Freek Man on the competing drink.
• The Ninth Circuit is unpersuaded by the handful of declarations, some by Hansen employees, regarding actual confusion. In the Court's view, the declarations do not constitute reliable evidence that Freek's trade dress is likely to confuse "an appreciable number of people."
  
  

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Credit Card Processors Not Liable for Infringement by Web Sites That Use Credit Cards for Payment

Case: Perfect 10, Inc. v. Visa Int'l Serv. Ass'n, (9th Cir. No. 05-15170, July 3, 2007)

The One Sentence Summary: The court affirmed dismissal of claims brought against Visa and other credit card processing companies that alleged that the companies were secondarily liable for copyright and trademark infringement by web sites that provided infringing copies of Perfect 10's photographs after receiving credit card payment.


Ninth Circuit Holdings:

• The Ninth Circuit summarized the test for contributory infringement as: "one contributorily infringes when he (1) has knowledge of another’s infringement and (2) either (a) materially contributes to or (b) induces that infringement."
  
• Processing payments for web sites that provided infringing materials was not material contribution to infringement for purposes of contributory infringement analysis. The panel majority disagreed with the dissent's argument that credit card companies should be subject to contributory infringement as were search engines were in the case of Perfect 10, Inc. v. Amazon.com, Inc. et.al., ___ F.3d ___, 2007 WL 1428632, (9th Cir. May 16, 2007).
  
• The panel distinguished the swap meet providers of Fonovisa (Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996)); and the file sharing of Napster (A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1019 (9th Cir. 2001)) as instances in which a central site or facility for infringement was provided. Here, the credit card companies did not provide a site or facility for infringement, and the infringing works did not pass over their networks.
  
• Defendants were not liable for contributory infringement under the inducement test of Grokster (Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005)) because there were no affirmative acts such as advertising by defendants to promote and encourage infringement.
• "To state a claim for vicarious copyright infringement, a plaintiff must allege that the defendant has (1) the right and ability to supervise the infringing conduct and (2) a direct financial interest in the infringing activity."
• The credit card companies could not be vicariously liable for copyright infringement because they did not have the right and ability to control the infringing sites. Withdrawing the ability for those site to process credit cards would not have stopped the infringement.
• Establishing secondary liability for trademark infringement is more difficult than for copyright infringement. To be liable for contributory trademark infringement, a defendant must have (1) “intentionally induced” the primary infringer to infringe, or (2) continued to supply an infringing product to an infringer with knowledge that the infringer is mislabeling the particular product supplied.
• The credit card companies did not induce trademark infringement or control the sites, so were not liable for secondary infringement.
• Vicarious liability for trademark infringement requires “a finding that the defendant and the infringer have an apparent or actual partnership, have authority to bind one another in
  transactions with third parties or exercise joint ownership or control over the infringing product.” Plaintiffs failed to allege sufficient facts that the credit card companies met this test.
• Defendants were not liable under California's Unfair Competition Law, Business & Professions Code § 17200, because they did not participate directly in the unlawful infringement.
• Defendants lacked sufficient control to be liable for aiding and abetting a right of publicity violation under California Civil Code § 3344.
• The libel and intentional interference claims alleging blacklisting were barred by the statute of limitations.
  

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California District Court Holds That Google’s Sale of Trademarked Terms In Its AdWords Program is a Use in Commerce for Purposes of the Lanham Act

Case: Google Inc. v. American Blind & Wallpaper Factory, Inc. (N.D. Cal. C.V. 03-5340 JF 4/18/07)

The Short Summary: Google filed for declaratory relief that its “AdWords” advertising program did not infringe on trademarks of American Blind and Wallpaper Factory (“ABWF”). In an opinion, not for citation, Northern District of California District Court Judge Jeremy Fogel held the sale of trademarked items in Google’s AdWorks program is a use in commerce for purposes of the Lanham Act. (The remainder of the Court’s opinion addressed Google’s summary judgment motion arguments as to the enforceability of ABWF’s trademarks, sufficiency of evidence of likelihood of confusion based on the “initial interest confusion” doctrine, lack of sufficient evidence as to trademark dilution and unclean hands.)


California District Court Holdings: The Court’s opinion is divided into five areas: (1) trademark “use” in Google’s AdWords program; (2) enforceability of American Blinds trademark; (3) trademark infringement and confusion; (4) trademark dilution; and (5) unclean hands.

• The Court first considered Google’s defense that as a matter of law its sale of trademarked key words did not constitute a “use in commerce” under the Lanham Act. As support, Google cited two Second Circuit District Court opinions that relied on 1-800-Contacts v. WhenUCom, Inc., 414 F. 3d 400 (2nd Cir. 2005), in which the Second Circuit concluded a company’s internal use of a trademark in a way that does not communicate it to the public is analogous to an individual’s private thoughts about a trademark and not a “use of the mark in a trademark sense.” Judge Fogel reviewed and agreed with contrary decisions from other district courts that use of the key words was a “use” under the Lanham Act. The Court examined Playboy Enterprises, Inc. v. Netscape Communications Corp., 354 F. 3d 1020 (9th Cir. 2004), which it characterized as the leading Ninth Circuit case in the area, and noted that the Ninth Circuit in that case had not questioned whether the practice of keying sponsored banner ads to Playboy’s trademarks involved a use in commerce under the Lanham Act.
• The Court next examined Google’s summary judgment claim that ABWF’s marks were unenforceable. It first found that as to two marks, registration had occurred after the first allegedly infringing use and so the presumption of ownership under 15 U.S.C. §1115(a) did not apply. As to those marks, ABWF had to establish it held an enforceable commercial law trademark. The Court held ABWF did not present sufficient evidence to create a triable issue whether the mark “American Blinds” was “inherently distinctive”, so the Court held it was “descriptive.” The Court further found that under Ninth Circuit cases ABWF’s general declarations did not provide sufficient detailed information regarding the use of the mark.
• As to three remaining marks of ABWF, Google’s summary judgment motion also required the Court to discuss whether ABWF could prove a likelihood of confusion, which ABWF based on the “initial interest” confusion doctrine. To decide this mixed question of law and fact, the Court found that turn to the Sleekcraft factors, AMF v. Sleekcraft Boats, 559 F. 2d 341, 348-49 (9th Cir. 1979). While it discussed each factor, the Court saw “evidence of confusion” as the most significant. In that regard, the Court considered and rejected Google’s attack on ABWF’s reliance on an expert survey report. The Court found the survey relevant admissible and relevant and that Google’s attacks went to the survey: weight. The Court’s opinion is interesting as to its analysis of how the evidence was sufficient to create a triable issue of fact on the likelihood of confusion. The Court noted that the future application of the initial interest confusion doctrine as to identified, sponsored links is an unsettled question in the Ninth Circuit.
• The Court next addressed ABWF’s trademark dilution claim. Here the Court sided with Google that ABWF did not present evidence that its marks were famous. ABWF did not conduct a fame survey, and the Court found that the declarations offered were not sufficient evidence.
• Finally, the Court rejected Google’s argument that all ABWF’s claims were barred by the unclean hands doctrine, as Google argued ABWF purchased trademarks of its competitors as key words under Google’s AdWords program. However, the Court noted ABWF had offered to agree with competing companies to refrain from buying each other’s trademarks as key words under the AdWords program. The Court found that the large number of buyers and users affected by the AdWords program indicated a significant public interest in determining whether the AdWords program violated trademark law an additional reason to reject Google: unclean hands defense.

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