Evidence of Non-Obviousness Should Have Been Considered In Board Rejection of Snake Antivenom Patent Claims

Case: In re Sullivan (Fed. Cir. No. 2006-1507, 8/29/07)


The One Sentence Summary: In rejecting patent claims, the PTO Board of Patent Appeals and Interferences should have considered rebuttal evidence that the antivenom composition was not obvious.

Federal Circuit Holdings:

• In rejecting patent claims for obviousness, the PTO Board of Patent Appeals and Interferences should have considered rebuttal declarations tending to prove that the properties of the antivenom were unexpected, the prior art taught away from use of the compound, and the antivenom met a long-felt need.
  
• The panel disagreed with the Board's conclusion that the claims only stated a new use of a previously known compound.
  
  

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Design Patent for Nail Buffer Not Infringed Where Only Non-Trivial Advance from Prior Art Was Absent in Defendant's Design

Case: Egyptian Goddess, Inc. v. Swisa, Inc., Fed. Cir. No. 2006-1562 (8/29/07)


The One Sentence Summary: The district court properly determined on summary judgment that a design patent for a nail buffer was not infringed where the only non-obvious point of novelty was not present in defendant's buffer.


Federal Circuit Holdings:

• Infringement of a design patent can be established by the ordinary observer or the point of novelty tests.
• For a combination of individually known design elements to constitute a point of novelty, the combination must be a non-trivial advance over the prior art.
• The district court correctly determined that the only possible non-trivial point of novelty was not present in defendant's design.
• The dissent argued that the majority created a new test in this case.
  
  

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Failure to Develop a Working Commercial Product Demonstrated Patent's Failure of Enablement

Case: Ormco Corp. v. Align Tech., Inc. (Fed. Cir. No. 2006-1240, 2006-1274 8/24/07)

The One Sentence Summary: The specification and prosecution history limited claims for the manufacture of orthodontic appliances, and claims for automatic determination of tooth position were not enabled where a commercial product could not be developed using the specification.



Federal Circuit Holdings:

• The district court properly interpreted the Ormco patent claims at issue to require automatic determination of tooth position by computer without human judgment even though the claims did not expressly state that the tooth position was determined by computer. The specification repeatedly emphasized the computerized nature of the invention. Moreover, in the prosecution of a parent application, the applicant had disavowed human settings for tooth positions by distinguishing prior art on this basis. In addition, in the prosecution history, the inventors described their invention as "fully automated."
• As to certain patent claims, the district court properly granted summary judgment of invalidity due to failure to enable the invention. Ormco's failure to create commercial products that would automatically determine tooth position without human decision making was clear and convincing evidence that the specification did not allow a person of ordinary skill in the art to practice the invention.
• The trial court correctly found that the law of the case doctrine required a finding that Align's patent claims were obvious where there were only small differences from claims that had been held to be obvious in a prior opinion in the case.
  
  

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Jury Trial on Fraud Claims Should Have Preceded Bench Trial on Correction of Inventorship

Case: Shum v. Intel Corp., (Fed. Cir. No. 2006-1249, 8/24/07)

The One Sentence Summary: The district court erred in conducting a bench trial on claims for correction of inventorship on a patent under 35 U.S.C. § 256 when common factual issues existed on fraud claims that should have been determined by a jury.


What They Were Fighting About: Plaintiff appealed after the trial court's judgment after a bench trial rejecting his claims for correction of inventorship.

Federal Circuit Holdings:

• Plaintiff claimed that defendant had fraudulently filed for a patent on an invention created by plaintiff. Plaintiff's claims for fraud and correction of inventorship presented common factual issues, and plaintiff's right to a jury trial on its fraud claim required that the jury trial precede the bench trial. Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (1959).
• The trial court should not have dismissed plaintiff's unjust enrichment claim as "merely duplicative" of its fraud claim because the elements of the claims differ.
  
  

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Source Code Was Not a Trade Secret When Plaintiff Failed to Establish Its Value

Case: Yield Dynamics, Inc. v. TEA Sys. Corp. (Cal. 6th App. Dist. No. H029604 8/23/07)

The One Sentence Summary: A trial court's judgment in favor of defendants on a trade secret dispute was affirmed where plaintiff failed to establish that the sections of source code taken had independent economic value.


What They Were Fighting About: Defendant had sold plaintiff computer programs for making silicon chips. After a falling out, defendant left plaintiff's company and created a new computer program that incorporated parts of the program sold to plaintiff. After a bench trial, the trial court entered judgment for defendant, finding that plaintiff had failed to establish that its source code was a trade secret and failed to show damages from defendant's alleged breaches of contract.

California Court of Appeal Holdings:

• Argumentative and improper objections to the trial court's proposed statement of decision after a bench trial were not sufficient to modify the standard of review on appeal.
• The trial court properly concluded that plaintiff had failed to prove that the source code taken by defendants was a trade secret because plaintiffs did not prove that the code had independent economic value. Plaintiff did not prove the quality or value of the code taken by defendants. The vague testimony presented by plaintiff that some programmers would find the code to be helpful was not sufficient. Plaintiff failed to prove the percentage of code taken by defendants which would have been useful in determining value.
• The trial court properly rejected plaintiff's unjust enrichment claim when plaintiff failed to present evidence of the value of the code taken.
• Plaintiff's claim for breach of the asset transfer agreement under which defendant sold the code was not established where plaintiff failed to show damages.
• Plaintiff's claim for breach of defendant's non-compete contract failed where plaintiff failed to show that defendant's new program competed with plaintiff's products.
• Plaintiff failed to show breach of a contract for assignment of inventions in the absence of any showing that plaintiff made a timely demand for assignment.
• Defendant did not breach a confidentiality agreement by using code that defendant had originally written.
• Plaintiff failed to prove fraud because it failed to show that defendant never intended to perform its promises to transfer the code.
• Plaintiff failed to prove unfair competition by failing to present evidence of any consumer confusion from defendant's product.
• The trial court properly awarded attorneys' fees to defendant under the contract.
  
• In assessing the presence of "bad faith" for a claim for attorneys' fees under the trade secret statute, the trial court should not have excluded a declaration of plaintiff's motive for bringing trade secret claims. However, the contract gave the court the authority to make its award of attorneys' fees.
• Plaintiff failed to request a hearing on its motion for terminating sanctions and thus could not complain on appeal.
  
  

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Ninth Circuit Finds Reversible Error in Considering Only Dissimilarity of the Marks When Judging Likelihood of Confusion

Case: Jada Toys, Inc. v. Mattel, Inc. (9th Cir. No. 05-55627, 8/2/2007)

The One Sentence Summary: Trademark infringement, dilution and copyright claims should be allowed to proceed because issues of fact prevent summary judgment - in evaluating likelihood of confusion, the court may not rely upon dissimilarity of the marks alone, but must weigh all of the Sleekcraft factors.


What They Were Fighting About: Plaintiff-Appellee Jada Toys, Inc. (“Jada”) specializes in miniature cars and trucks. In 2002, Jada trademarked “HOT RIGZ” for a line of toy trucks. Defendant-Appellant Mattel, Inc. (“Mattel”) produces, among other toys, HOT WHEELS miniature vehicles. Mattel has trademarked two HOT WHEELS logos.

On April 20, 2004, Jada sued Mattel for trademark infringement, false designation or origin, and unfair competition. Its claims, however, were not based on HOT RIGZ (that mark comes into play later), but on Mattel’s OLD SCHOOL and NEW SCHOOL products, which Jada alleged infringed its registered OLD SKOOL trademark.

Mattel counterclaimed for trademark infringement, dilution, and copyright infringement based on Jada’s HOT RIGZ mark. Both parties filed motions for summary judgment.

As to Jada’s OLD SKOOL claims, the district court granted summary judgment in Mattel’s favor. As to Mattels’ HOT RIGZ counterclaims for trademark infringement, dilution, and copyright infringement, the court granted summary judgment in Jada’s favor. In granting summary judgment in Jada’s favor as to Mattel’s claims, the district court relied on the dissimilarity of the marks alone to find no likelihood of confusion and therefore no trademark infringement.

Mattel appealed the grant of summary judgment as to its HOT RIGZ counterclaims, and the Ninth Circuit reversed.

Ninth Circuit Holdings:

• The eight-factor Sleekcraft test is the proper test for evaluating likelihood of confusion. The lower court erred in considering only one factor: the dissimilarity of the marks. The Ninth Circuit acknowledged that the Sleekcraft test is flexible, and that some factors are more important than others, but it firmly rejected reliance on any single factor. To hold otherwise would allow the possibility that persuasive evidence of a single factor could trump other relevant factors. For instance, it might lead a judge to elevate his impressions of the dissimilarity of the marks over evidence of, for example, actual confusion. Previous cases suggesting that dissimilarity alone is enough to judge likelihood of confusion have done so only in dicta.
• As to Mattel’s dilution claim, the court found that the district court’s entry of summary judgment was improper because genuine issues of material fact exist. The court affirmed that dilution should be found if (1) the mark is famous, (2) the defendant uses it for a commercial use, (3) the use began after the mark became famous, and (4) actual dilution is shown. In order meet the "commercial use" requirement, the mark used by the alleged diluter must be identical or nearly identical to the protected mark. Mattel had produced a survey showing that a number of respondents believed "HOT RIGZ" were associated with Mattel. While the district court found that the marks were not sufficiently identical to fulfill factor (2), the Ninth Circuit concluded that a reasonable trier of fact could find that the marks are nearly identical because they both use “HOT,” both use flames, both use similar colors, and both have similar connotations. The Ninth Circuit also found that (i) Mattel's mark was famous (used for 37+ years, $350 million spent on advertising, sale of 3 billion units, and sales throughout the world), (ii) Mattel's mark was employed before Jada's mark, and (iii) a reasonable trier of fact could find actual dilution.
• As to Mattel’s copyright claim, the court found that the district court’s entry of summary judgment was improper because genuine issues of material fact exist. The district court had found that the marks were not substantially similar because they had no similarity of ideas and no reasonable person could believe they conveyed a similar expression. The Ninth Circuit stated conclusively that a reasonable trier of fact could find that the marks were objectively similar, and that the HOT RIGZ mark could express that “the product sold under that mark is, essentially, a HOT WHEELS product.”
  
  

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PTO Not Collaterally Estopped in a Reexamination by Prior District Court Claim Constructions

Case: In re Trans Texas Holdings Corp., (Fed. Cir. No. 2006-1599, 2006-1600 8/22/07)

The One Sentence Summary: The panel affirmed a decision of the Board of Patent Appeals and Interferences rejecting patent claims for a system of inflation-adjusted bank accounts as obvious - the Board was not collaterally estopped by claim constructions in prior district court litigation to which the PTO was not a party.


What They Were Fighting About: The Board of Patent Appeals and Interferences (the "Board") had affirmed the examiner's rejection on reexamination of patents claiming the matching of inflation adjustments in deposit and savings accounts as obvious. Trans Texas appealed.

Federal Circuit Holdings:

• The PTO was not bound by claim constructions from earlier district court litigation to which it was not a party. Issue preclusion and collateral estoppel were not appropriate where the PTO was not a party and did not participate in the earlier litigation.
• The claim construction requiring continuous one-to-one inflation adjustments was rejected as inconsistent with the specification and the dictionary definition of "direct."
• The Board correctly found that the claims were obvious in light of the prior art.
  

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Experiments Protected From Patent Infringement Finding by FDA Exemption

Case: Integra Lifesciences I, Ltd. v. Merck KGaA (Fed. Cir. No. 02-1052 7/27/07)

The One Sentence Summary: After remand from the Supreme Court, the panel reversed a district court judgment of patent infringement, holding that the FDA safe harbor exemption of 35 U.S.C. § 271(e)(1) protected the defendants' medical experiments because the experiments "meet the criteria of being reasonably related to research that, if successful, would be appropriate to include in a submission to the FDA."

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Claim Interpretation Rejected as Inconsistent With Disavowals in Specification

Case: SafeTCare Mfg., Inc. v. Tele-Made, Inc., (Fed. Cir. No. 06-1535 8/3/07)

The One Sentence Summary: In a patent infringement suit involving hospital beds for obese patients, summary judgment of non-infringement was appropriate where patentee had disavowed the asserted claim construction in the specification.

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Patent Licensing Demands Provided Basis for V-Chip Declaratory Judgment Action

Case: Sony Elecs., Inc. v. Guardian Media Techs, Ltd., No. 06-1363 (Fed. Cir. 8/3/07)

The One Sentence Summary: The district court's dismissal of an action seeking a declaration of patent invalidity was reversed in light of the Supreme Court's decision in MedImmune, Inc. v. Genentech, Inc. where there was a lengthy exchange of correspondence and assertions of patent infringement which posed an actual controversy between the parties.

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A New Battle Begins in Google's Trademark Search Wars

American Airlines is the latest plaintiff to challenge Google for selling trademarks as sponsored search terms.

In a complaint filed on August 16, 2007 in the Northern District of Texas in Fort Worth, American Airlines claims that Google infringes and dilutes the AMERICAN AIRLINES marks by allowing companies to bid for advertisements that will appear as sponsored links next to results for searches using the marks.

The legality of sponsored links has been the subject of many other challenges, and the courts have reached differing results. See, for example, these earlier postings in this blog:

• NJ Court Allows Trademark Claims Based on Purchasing a Competitor's Unregistered Trademark as a Keyword for Internet Advertising (Buying for the Home v. Humble Abode, D.N.J. 3:03-cv-02783-JAP-TJB (10/20/06))



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

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Federal Circuit Clarifies Rules for Punitive Damages for Willful Patent Infringement and Protects Trial Counsel from Scope of Advice of Counsel Waiver

Case: In Re Seagate Technology (Fed. Cir. Misc. No. 830, 8/20/07)

The One Sentence Summary: An en banc panel of the Federal Circuit (1) overruled a prior decision requiring an affirmative duty of care to avoid patent infringement, holding that a showing of objective recklessness is required; and (2) held that assertion of an advice of counsel defense by production of an opinion of pre-litigation counsel would not "as a general proposition" waive attorney-client privilege or work product protection for trial counsel.


What They Were Fighting About: After defendant's assertion of an advice of counsel defense by production of opinion letters from pre-litigation opinion counsel, the trial court had ordered discovery of communications with trial counsel on the same subject matter. On a petition for mandamus, an en banc panel of the Federal Circuit reversed.

Federal Circuit Holdings:

• The en banc panel overruled the Federal Circuit's prior decision in Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (1983), which had allowed punitive damages for willful patent infringement upon a negligence-like standard of failure to exercise due care to avoid infringement. The court held that willful infringement allowing enhanced damages requires at least a showing of objective recklessness. There is no affirmative duty of due care, and no affirmative obligation to obtain an opinion of counsel as to non-infringement or invalidity.
• The court set out the test for recklessness leading to enhanced damages as follows:

  Accordingly, to establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. See [Safeco Ins. Co. of Am. v. Burr, 551 U.S. ___, Nos. 06-84, -100, slip op. at 19 (June 4, 2007)] (“It is [a] high risk of harm, objectively assessed, that is the essence of recklessness at common law.”). The state of mind of the accused infringer is not relevant to this objective inquiry. If this threshold objective standard is satisfied, the patentee must also demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer.

  
  
• The en banc panel stated its holding as follows:

  We hold, as a general proposition, that asserting the advice of counsel defense and disclosing opinions of opinion counsel do not constitute waiver of the attorney-client privilege for communications with trial counsel. We do not purport to set out an absolute rule. Instead, trial courts remain free to exercise their discretion in unique circumstances to extend waiver to trial counsel, such as if a party or counsel engages in chicanery.

  
  
• If an accused infringer continues to infringe after filing of the complaint, the patentee plaintiff can seek a preliminary injunction to stop the infringement. Enhanced damages for willful infringement should not be available due to post-filing conduct of the accused infringer if the plaintiff does not seek a preliminary injunction. If the preliminary injunction is not granted due to a failure to show a likelihood of prevailing on the merits, it is likely that the accused infringer should not be subject to enhanced damages for post-filing conduct. If the injunction is denied on other factors, the facts should be weighed case by case as to recklessness and enhanced damages based on post-filing conduct.
• As to attorney work product protection for trial's counsel's work, the en banc panel held that it would not be waived by assertion of an advice of counsel defense absent exceptional circumstances. The court stated:

  Accordingly, we hold that, as a general proposition, relying on opinion counsel’s work product does not waive work product immunity with respect to trial counsel. Again, we leave open the possibility that situations may arise in which waiver may be extended to trial counsel, such as if a patentee or his counsel engages in chicanery. And, of course, the general principles of work product protection remain in force, so that a party may obtain discovery of work product absent waiver upon a sufficient showing of need and hardship, bearing in mind that a higher burden must be met to obtain that pertaining to mental processes. See Fed. R. Civ. Pro. 26(b)(3).

  
  

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Significant Revisions to Patent Office Rules Have Been Published

Today the USPTO published its long-awaited revisions to the patent office rules. The rules, which have an effective date of November 21, 2007, impose significant limitations on the number of claims and on continuation patent applications. The official summary of the rules states:

SUMMARY: The United States Patent and Trademark Office (Office) is revising the rules of practice in patent cases relating to continuing applications and requests for continued examination practices, and for the examination of claims in patent applications. The Office is revising the rules of practice to require that any third or subsequent continuing application that is a continuation application or a continuation-in-part application, and any second or subsequent request for continued examination in an application family, be filed to obtain consideration of an amendment, argument, or evidence, and be supported by a showing as to why the amendment, argument, or evidence sought to be entered could not have been previously submitted. The Office is also revising the rules of practice to provide that an applicant must provide an examination support document that covers all of the claims in an application if the application contains more than five independent claims or more than twenty-five total claims. The Office is also revising the rules of practice with respect to multiple applications that have the same claimed filing or priority date, substantial overlapping disclosure, a common inventor, and common ownership. These changes will allow the Office to conduct a better and more thorough and reliable examination of patent applications.

The full Federal Register publication of the amendments can be found at this link.

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Hogs on the High Seas May Infringe Harley Davidson's "Hogs" Trademark

Case: H-D Michigan, Inc. v. Top Quality Service, Inc., Case No. 06-3618 (7th Cr. 8/2/07)

The One Sentence Summary: Although the word "hog" is generic as applied to motorcycles, it is descriptive as applied to motorcyclists and protectable by trademark law.

What They Were Fighting About: Defendant advertised its cruises for motorcycle enthusiasts using the name "Hogs on the High Seas." Plaintiff Harley Davidson sued for infringement of its trademarks on "HOG" and "H.O.G.", used for its motorcyclist travel club, the Harley Owners Group.

Federal Circuit Holdings:

• Reverses district court's grant of summary judgment in Defendant's favor based on a Second Circuit opinion holding that the word "hog" was generic as applied to motocycles.


• Finds that the Second Circuit opinion did not resolve the issue of whether "hog" is a generic word as applied to motorcyclists.


• Harley Davidson's use of the word "hog" is not generic as applied to its motorcyclist club. It is descriptive because it describes the club's members - motorcyclists.


• Plaintiff's use of the word "hog" is not generic because motorcyclists, not motorcycles, are being invited to cruise.


• As Harley Davidson's trademark is protectable and it submitted evidence of consumer confusion, whether infringement occurred must be decided by a jury.
  
  

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