Facts: This case concerns whether a party may appeal a decision by the Patent Trial and Appeal Board (“Board”) as to whether institution of inter partes review is permissible under 35 U.S.C. § 315(b)’s “time bar” provision.

Click-to-Call owns a patent claiming technology for anonymous phone calls. In 2001, the exclusive licensee of Click-to-Call’s patent sued a predecessor of Thryv for patent infringement. The suit was voluntarily dismissed without prejudice. Twelve years later, in 2013, Thryv petitioned the Board to institute inter partes review of the patent. In opposing the petition, Click-to-Call argued that the prior 2001 lawsuit triggered § 315(b)’s time bar on the institution of inter partes review, which prohibits review “if the petition requesting the proceeding is filed more than one year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” 35 U.S.C. § 315(b).

The Board rejected Click-to-Call’s argument and instituted inter partes review, holding that § 315(b)’s time bar did not apply when a complaint is dismissed without prejudice. The Board decided the merits of the inter partes review, and Click-to-Call appealed to the Federal Circuit. The Federal Circuit dismissed the appeal for lack of jurisdiction, holding that 35 U.S.C. § 314(d)’s bar on appeal of the Board’s institution decisions precludes judicial review of the Board’s application of § 315(b). After the Supreme Court addressed the scope of § 314(d) in Cuozzo Speed Technologies v. Lee, 136 S. Ct. 2131 (2016), however, the Court granted certiorari, vacated the judgment, and remanded to the Federal Circuit.

The Federal Circuit panel reached the same decision on remand, but after a split court decided en banc in another case that time-bar determinations under § 315(b) are appealable, the Click-to-Call panel granted panel rehearing and held that the Board should have declined to institute the inter partes review because the 2001 patent infringement complaint triggered § 315(b)’s one-year time bar. Thryv then filed a petition for certiorari, and the Supreme Court granted review.

Held: The Board’s decision as to whether institution of inter partes review is time-barred by § 315(b) is final and not appealable.

Reasoning: The Court held that § 315(b)’s time limitation on the filing of a petition for institution of inter partes review provides an integral condition on institution. The Court noted that the language of § 315(b) itself provides a circumstance in which “[a]n inter partes review may not be instituted.” Because § 315(b) merely places a condition on institution, disputes about whether a petition fails to comply with § 315(b) raise an ordinary dispute as to whether the Board should institute inter partes review. Such ordinary disputes fall within the ambit of the Court’s holding in Cuozzo that § 314(d) bars review of matters “closely tied to the application and interpretation” of statutes related to the institution decision.

The Court found that its conclusion was consonant with the purpose and design of the America Invents Act to reform the patent system to efficiently weed out bad patent claims. The Court noted that appeals of § 315(b) decisions would unwind the Board’s merits decision on patentability; since a patentee would only need to appeal on § 315(b) grounds when it lost on the merits of its patent, § 315(b) appeals would only save patents that the Board would have canceled. The Court further noted that because § 315(b) does not bar all review of a patent, merely review by a certain petitioner, it was unsurprising that a statutory scheme so consistently elevating resolution of patentability over a petitioner’s compliance with § 315(b) would preserve the Board’s adjudication of patentability by making § 315(b) decisions unappealable.

Justice Gorsuch dissented, joined in part by Justice Sotomayor. The dissent would have adopted a narrower interpretation of § 314(d), in which the only final and unappealable decision related to institution would be the Board’s finding that a petitioner has or has not shown a “reasonable likelihood” that a challenged patent is unpatentable.

§ 1.1.2 Federal Circuit decisions

Illumina, Inc., v. Ariosa Diagnostics, Inc., 967 F.3d 1319 (Fed. Cir. 2020)

Facts: This case concerns the patent eligibility of patent claims purportedly directed to a natural phenomenon.

Illumina owns patents directed to methods for preparing a fraction of cell-free DNA that is enriched in fetal DNA. Illumina sued Ariosa Diagnostics for infringement of these patents, and Ariosa moved for summary judgment that the asserted claims were invalid under 35 U.S.C. § 101. The district court granted Ariosa’s motion, holding the claims patent-ineligible. On appeal, the Federal Circuit reversed, finding the claims were directed to a patent-eligible “method of preparation.” The panel granted rehearing and issued a modified opinion retaining its original holding.

Held: Patent claims reciting physical steps changing the composition of a naturally occurring mixture of DNA based on human-engineered parameters, rather than merely observing the composition, are not directed to a natural phenomenon, and are thus eligible for patenting under 35 U.S.C. § 101.

Reasoning: The court highlighted two key points of the claims-at-issue that distinguished them from claims merely directed to a patent-ineligible natural phenomenon. First, the claims recited a “method of preparation,” analogous to a method of treatment in that the claims are not directed to a natural phenomenon, but rather to a patent-eligible method using the natural phenomenon. The claims used the natural phenomenon because they required discriminating and removing certain DNA fragments based on human-engineered size thresholds to optimize the sample for genetic testing, not merely observing the size of the DNA fragments. Second, the court found that the discriminating and removing steps not only apply the natural phenomenon, but also do so in concrete, physical process steps changing the composition of the DNA mixture. Both factors distinguished the case from Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015), which found a method of detecting fetal DNA patent-ineligible; the court explained that, in contrast to this case, Ariosa involved a patent directed to merely detecting a natural phenomenon after a sample had been prepared or extracted.

Judge Reyna dissented. In his view, the claims were patent-ineligible because the claimed advance was a natural phenomenon, and the method steps did not transform the nature of the claims into patent-eligible subject matter. He argued that the claimed method steps that the majority found to concretely apply the natural phenomenon were routine and conventional, and that the patent’s written description described the claimed advance forming the basis of the present invention as the discovery of the natural phenomenon. According to Judge Reyna, Ariosa was decided on the same considerations, and thus bound the panel to conclude that the claims-at-issue in this case were patent ineligible.

Am. Axle & Mfg., Inc., v. Neapco Holdings, LLC, 967 F.3d 1285 (Fed. Cir. 2020)

Facts: This case concerns the patent eligibility of patent claims purportedly directed to a natural law.

American Axle owns a patent claiming methods for manufacturing automobile driveline propeller shafts (i.e. shafts that transmit power from the engine to the wheels) with liners to attenuate vibrations transmitted through the shaft assembly. American Axle sued Neapco for patent infringement, and Neapco moved for summary judgment that the claims were patent ineligible under 35 U.S.C. § 101. The district court granted Neapco’s motion, holding the claims patent ineligible. On appeal, the Federal Circuit initially affirmed the district court’s grant of summary judgment in its entirety, but the panel granted rehearing and revised its decision to vacate and remand the district court’s decision as to certain claims.

Held: Patent claims reciting a mere result from applying a natural law, without limiting the claims to particular methods of achieving the result, are not eligible for patenting under 35 U.S.C. § 101.

Reasoning: The court found the claim that it held ineligible to merely claim a desired result from applying a natural law. The court noted that Supreme Court and Federal Circuit precedent have consistently rejected claims that state a goal without a solution as patent ineligible—claims must have the specificity to transform the claim from reciting merely a result, to reciting a specific way of achieving the result. The court explained that, while this concept has typically applied to cases holding claims ineligible as directed to abstract ideas, the principle necessarily applies to other categories of patent-ineligible subject matter. The court rejected the patentee’s arguments that persons of ordinary skill in the art would find applying the natural law difficult in practice, and that the claims were thus not merely directed to claiming a result, and found that the patentee had failed to claim the physical structure or steps needed to achieve the result.

Judge Moore dissented. She would have held that the claims, in fact, contain a specific, concrete solution to a problem, and that any need for trial and error in performing the method raised an enablement problem under 35 U.S.C. § 112, not a § 101 patent ineligibility problem. Judge Moore argued that because the claims, specification, and prosecution history did not mention the name or formula of the asserted natural law, the claims could not properly be considered directed to the natural law.

Biogen MA, Inc., v. EMD Serono, Inc., 976 F.3d 1326 (Fed. Cir. 2020)

Facts: This case concerns whether prior art disclosing the administration of a biological substance when made by one process, anticipates a method of treatment patent claim reciting the administration of the same biological substance when made from another process.

Biogen owns a patent claiming a method for immunomodulating, or treating a viral condition by administering “a recombinant polypeptide produced by a non-human host.” Biogen sued Serono for patent infringement. A jury found Biogen’s patent invalid as anticipated, but the district court granted Biogen’s post-trial motion for judgment as a matter of law that the patent was not anticipated, finding as one ground that the “produced by a non-human host” limitation overcame shortcomings in the prior art. On appeal, the Federal Circuit vacated and remanded.

Held: Under the product-by-process doctrine, method of treatment claims may not be distinguished from the prior art based on the manufacturing process of the administered drug product.

Reasoning: The court noted that the product-by-process doctrine has long held that old products are not patentable, even when made by a new process. The court then rejected Biogen’s arguments that this doctrine is limited to composition claims, and thus not applicable to the method of treatment claims at issue here. The court explained that no logical reason exists for why nesting a product-by-process limitation within a method of treatment claim, rather than a composition claim, should change how the novelty of the limitation is evaluated, especially when neither the composition nor the method of administration of the composition are novel. The court noted that, when the novelty of a method of treatment claim rests entirely on the novelty of the composition administered, which in turn rests on the novelty of a product-by-process limitation, the anticipation analysis for the composition and for the method of treatment will necessarily result in the same conclusion.

GlaxoSmithKline, LLC, v. Teva Pharms. USA, Inc., 976 F.3d 1347 (Fed. Cir. 2020)

Facts: This case concerns whether a generic drug company induces infringement of patents claiming certain methods of administering a drug, when the generic drug’s label does not specify those uses.

GlaxoSmithKline (GSK) owns a patent on a method for using a drug (that was originally approved for treating hypertension) to treat congestive heart failure. GSK sued Teva for patent infringement. The jury found that Teva had induced infringement of GSK’s patent, but the district court granted Teva’s motion for judgment, as a matter of law, that it had not induced infringement. The district court reasoned that GSK had not sufficiently proved that Teva’s actions caused physicians to administer the generic drug to treat congestive heart failure simply because physicians would have known of the possible uses of the generic drug from GSK’s promotion of the branded drug. On appeal, the Federal Circuit reversed the grant of JMOL and reinstated the jury verdict.

Held: Promotion of a generic drug’s therapeutic equivalence to the branded drug can provide sufficient evidence to find that the generic drug company induced infringement of patents claiming uses of the drug that are not present on the generic drug’s label.

Reasoning: Noting that a plaintiff can prove the intent element of induced infringement through circumstantial evidence, the court held that GSK had presented sufficient evidence from which the jury could have reasonably issued its verdict of induced infringement. The court highlighted in particular several Teva press releases and reference documents for physicians that emphasized that Teva’s drug was an AB-rated equivalent of the branded drug, and the testimony of a physician that this equivalence would lead a physician to prescribe the generic drug for all uses of the branded drug, not just the uses on the generic drug’s label. The court held that the district court had applied an incorrect legal standard when it granted JMOL, because when the provider of an identical product knows of and markets the same product for intended direct infringement activity, the criteria of induced infringement are met.

Chief Judge Prost dissented. She would have affirmed the district court’s ruling because, in her view, GSK presented no evidence establishing that Teva actually caused the infringement of the patent method, and because the record established that doctors relied on other sources of information, not Teva, in deciding to prescribe the generic drug for the patented method of treatment. Chief Judge Prost argued that the majority’s holding improperly nullified the practice of “skinny labeling” under 32 U.S.C. § 355(j)(2)(A)(viii), in which a generic drug manufacturer can “carve out” certain patented uses of a drug from its labeling, so that it may sell a drug for unpatented uses without risking liability for still-patented uses.

Personalized Media Commc’ns, LLC, v. Apple Inc., 952 F.3d 1336 (Fed. Cir. 2020)

Facts: Personalized Media Communications (PMC) owns a patent claiming methods for enhancing broadcast communications with user-specific data. Apple petitioned for inter partes review of the patent, and the Patent Trial and Appeal Board found the claims unpatentable. PMC challenged the Board’s claim construction on appeal, and the Federal Circuit reversed the Board’s decision as to the improperly-construed claim.

Held: A patent applicant’s repeated and consistent remarks can define a claim term, even if those statements are not a clear and unmistakable surrender of claim scope sufficient to rise to the level of disclaimer.

Reasoning: The court explained that the Board erred in finding the prosecution history irrelevant because it did not clearly and unmistakably surrender claim scope. The court noted prior holdings that prosecution history is relevant to the meaning of disputed claim terms, even where prosecution history statements do not rise to the level of unmistakable disavowal. The court noted that here, where the claim term had no plain or ordinary meaning, and where the specification provided no clear interpretation of the claim, repeated and consistent remarks in the prosecution history would be especially relevant to the claim’s interpretation, and, in fact, decisive as to the meaning of the claim.

Godo Kaisha IP Bridge 1 v. TCL Commc’n Tech. Holdings, Ltd., 967 F.3d 1380 (Fed. Cir. 2020)

Facts: This case addresses whether proof of compliance with a technical standard can be used to show infringement of a standard-essential patent.

Godo Kaisha IP Bridge 1 (IP Bridge) owns two patents essential to the LTE wireless communication standard. It sued TCL for infringement of these patents. At trial, IP Bridge introduced evidence showing that the asserted claims are essential to mandatory sections of the LTE standard, and that the accused products comply with the LTE standard. The jury found that TCL infringed the patents. On appeal, the Federal Circuit affirmed.

Held: Proof of compliance with a technical standard can be used to show infringement of a mandatory standard-essential patent, and is a question to be resolved by the trier of fact.

Reasoning: The court noted that in, Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321 (Fed. Cir. 2010), the court held that a district court may rely on an industry standard in assessing infringement. The court highlighted Fujitsu’s note that, although a patent’s claims cover an industry standard, the claims might not cover all implementations of the standard, so the accused product’s standard compliance alone might not provide sufficient evidence to establish the accused product’s infringement. The court pointed out that in cases like this one, where a patent covers mandatory aspects of a standard, however, infringement can be proved by merely showing compliance with the standard. The court rejected TCL’s argument that the district court must determine, as a matter of law, and a part of claim construction, whether the scope of the claims includes any device that practices the standard. Instead, the issue of whether the asserted claims are, in fact, essential to all implementations of an industry standard, was a question to be resolved by the trier of fact, in the context of an infringement trial.

Cheetah Omni, LLC v. AT&T Servs., Inc., 949 F.3d 691 (Fed. Cir. 2020)

Facts: This case addresses whether a patent license agreement applies to child patents of the licensed patents.

Cheetah Omni owns patents directed to optical communication networks. Cheetah sued AT&T for patent infringement. AT&T’s supplier of the accused products, Ciena, moved to intervene, and, after the district court granted the motion to intervene, moved for summary judgment that Cheetah’s prior license agreement with Ciena included an implied license to the patents-in-suit, which were a continuation, and a continuation-in-part of an expressly licensed patent. The district court granted the motion for summary judgment. On appeal, the Federal Circuit affirmed.

Held: Granting a license for a parent patent creates an implied license for a child patent.

Reasoning: The court noted that in TransCore, LP v. Electric Transaction Consultants Corp., 563 F.3d 1271 (Fed. Cir. 2009), the doctrine of legal estoppel required that a licensee received an implied license to a related, later-issued patent that was broader than and necessary to practice an expressly licensed patent. The court extended this holding to expressly apply to continuation patents with narrower claims than the parent patent in General Protecht Group, Inc. v. Leviton Manufacturing Co., 651 F.3d 1355 (Fed. Cir. 2011). The court rejected Cheetah’s arguments that General Protecht applied only to licenses executed before the continuation patent was issued; the court explained that the timing of the patent issuance was not essential to General Protecht’s rationale, and, in fact, the policy concerns made General Protecht’s rationale more appropriate for already-issued continuation patents. Finally, the court noted that the naming of certain patents expressly in the license agreement did not evince a clear mutual intent to exclude other unnamed patents from falling within the general definitions in the agreement.

Hologic, Inc. v. Minerva Surgical, Inc., 957 F.3d 1256 (Fed. Cir. 2020)

Facts: This case addresses whether the doctrine of assignor estoppel applies to prevent the assignor from raising as a defense that the patentee is collaterally estopped from asserting claims found unpatentable in an inter partes review.

Hologic owns patents claiming methods for determining the presence of uterine perforations prior to performing endometrial ablation of a uterus. Hologic sued Minerva Surgical for infringement of these patents. The district court granted Hologic’s motion for summary judgment that assignor estoppel barred Minerva Surgical’s invalidity defenses to Hologic’s patent infringement claims because Minerva Surgical’s founder assigned both of the patents-in-suit to Hologic’s predecessor.

In parallel, Minerva Surgical petitioned for inter partes review of one of the patents. The Patent Trial and Appeal Board found those claims unpatentable, and the Federal Circuit affirmed. The district court applied collateral estoppel to give the Board’s decision as to these claims preclusive effect in the district court suit. On appeal, Hologic argued that this decision would allow the America Invents Act (which established inter partes review proceedings) to abrogate the assignor estoppel doctrine in district court patent infringement suits. The Federal Circuit disagreed and affirmed the district court’s decision.

Held: Assignor estoppel does not bar challenges of a patent’s validity in inter partes review proceedings, nor does it bar the application of collateral estoppel in a parallel district court proceeding to foreclose the patentee’s assertion of claims cancelled in inter partes review.

Reasoning: The court noted that the Federal Circuit has repeatedly upheld the applicability of the assignor estoppel doctrine, but noted that the doctrine only bars assignors from challenging the validity of a patent-in-suit. For example, under the Federal Circuit’s precedent, an assignor could argue that the patentee is collaterally estopped from asserting a patent found invalid in a prior proceeding. Because the Federal Circuit had previously held that an assignor who is no longer the owner of a patent may file a petition for inter partes review of the patent, and that an assignor can assert that a prior holding of invalidity collaterally estops the assertion of those claims, the district court did not err here. It affirmed that assignor estoppel did not prevent Minerva Surgical from asserting that Hologic was collaterally estopped from asserting the claims held invalid and cancelled in the inter partes review.

Judge Stoll, who wrote the court’s opinion, wrote in a separate opinion that she believed that the court should reconsider its precedent on the application of assignor estoppel en banc to resolve the contradiction that assignor estoppel bars assignors from challenging the validity of the assigned patent in district court, but not in Patent Office proceedings. However, the en banc court denied rehearing. The Supreme Court recently granted certiorari to further review this decision.

In re PersonalWeb Techs., LLC, 961 F.3d 1365 (Fed. Cir. 2020)

Facts: This case relates to the application of the Kessler doctrine to bar suits against an accused infringer’s customers after the accused infringer prevails in a patent infringement suit.

PersonalWeb owns several patents directed to creating unique identifiers for data stored on a computer to avoid storage of duplicate data with different file names. In 2011, PersonalWeb sued Amazon.com, Inc. and Amazon Web Services, Inc., as well as one of Amazon’s customers, Dropbox, Inc., for patent infringement. After claim construction, PersonalWeb stipulated to the dismissal of all claims against Amazon with prejudice, and the court entered final judgment against PersonalWeb.

Later, beginning in January 2018, PersonalWeb filed dozens of new lawsuits against website operators, many of whom were Amazon’s customers. Amazon intervened in defense of its customers, and the cases were consolidated by the Judicial Panel on Multidistrict Litigation. The district court granted Amazon’s motion for summary judgment, holding that claim preclusion barred PersonalWeb’s infringement claims based on activity occurring prior to the final judgment in the 2011 suit, and that the Kessler doctrine barred PersonalWeb’s infringement claims based on activity occurring after the final judgment in the 2011 suit. On appeal, the Federal Circuit affirmed.

Held: The Kessler doctrine, which gives a “limited trade right” to continue to sell a product adjudged as non-infringing without being subject to additional harassing suits alleging continuing sale of the product infringes, applies even to cases voluntarily dismissed with prejudice by the patentee, and blocks subsequent allegations of infringement against the original defendant and its customers.

Reasoning: The court held that claims of noninfringement or invalidity do not have to be actually litigated before the Kessler doctrine can be invoked. Federal Circuit precedent holds that the Kessler doctrine is a close relative of claim preclusion, without the temporal limitations of claim preclusion, rather than an early version of non-mutual collateral estoppel. PersonalWeb’s stipulation to dismiss its suit against Amazon with prejudice, and the final judgment based on that stipulation, adequately stood as an adjudication on the merits for preclusion purposes that Amazon was not liable for the acts of infringement alleged by PersonalWeb. That final judgment established a right protecting Amazon’s product from subsequent infringement challenges—directed both at Amazon itself and Amazon’s customers. The court explained that holding otherwise would leave the patentee free to engage in the same type of harassment the Supreme Court sought to prevent in Kessler.

In re Google LLC, 949 F.3d 1338 (Fed. Cir. 2020)

Facts: This case addresses whether the mere presence of third-party data centers hosting a company’s servers within a district counts as a “regular and established” place of business within the district to establish patent venue under 28 U.S.C. § 1400(b).

Super Interconnect Technologies LLC (SIT) sued Google for patent infringement in the Eastern District of Texas. SIT asserted that venue was proper in that district under 28 U.S.C. § 1400(b) because Google had committed acts of infringement in the district and had a regular and established place of business in the district. SIT claimed that the regular and established place of business was Google’s servers within the district, which Google used to provide local caches for its data.

The servers were not hosted within data centers owned by Google. Instead, Google contracted with internet service providers (ISPs) to host Google’s servers within the ISP’s data center; Google’s servers were installed in the ISP’s server racks within the data center. The ISPs provided power and network access for the servers, installed the servers on racks of their choice, and maintained the servers; no Google employee installed, maintained, or physically accessed any of the Google servers in the ISP data centers.

Google moved to dismiss the complaint for improper venue. The district court denied the motion, finding that the servers qualified as a regular and established place of business. Google petitioned the Federal Circuit for a writ of mandamus; the court granted the writ.

Held: To have a “regular and established place of business” in a judicial district, a defendant need not own real property or have a leasehold interest in real property; leased server rack space may serve as a place of business. However, an employee or agent of the defendant must be conducting business at the purported “place of business” for it to count as a “place of business” for patent venue. The court determined that the Eastern District of Texas was not a proper venue for this dispute.

Reasoning: The court noted that In re Cray, Inc., 871 F.3d 1355 (Fed. Cir. 2017) held that to establish a “regular and established business” in a district for patent venue purposes, a defendant must have a physical, geographic location in the district, from which the business of the defendant is carried out. The court agreed with prior district court decisions that leased shelf space or server rack space can serve as such a place.

As to the presence of an employee or agent, the court explained that 28 U.S.C. § 1400(b), the patent venue statute, must be read in conjunction with 28 U.S.C. § 1694, the service statute for patent cases, together compelling that a “regular and established place of business” within the meaning of the venue statute only exists if the defendant also has an “agent . . . engaged in conducting such business.” The court further noted that the statute required any agent to be conducting the defendant’s business. Likewise, these statutes compel the conclusion that the agent must be regularly, physically present at the place of business. Thus, a third party taking actions on behalf of the defendant, such as maintenance, that are merely connected to the defendant’s conduct of business—but do not themselves constitute the defendant’s conduct of business in the sense of production, storage, transport, and exchange of goods and services—would not make the third party an agent for purposes of establishing venue. The court left open the question of whether a machine could be an “agent” for purposes of establishing venue.

Judge Wallach concurred to note his view that Google’s end users in the district could count as agents of Google’s business in the district if their voluntary or involuntary sharing of information generated on Google’s servers provides data that Google monetizes as the core aspect of its business model in the district. He encouraged the district court to consider this question.

Valeant Pharms. N. Am. LLC v. Mylan Pharms. Inc., 978 F.3d 1374 (Fed. Cir. 2020)

Facts: Mylan Pharmaceuticals Inc. (“MPI”), a West Virginia-based corporation, sought to market a generic version of a drug sold by Valeant Pharmaceuticals North America LLC, Valeant Pharmaceuticals Ireland Ltd., Dow Pharmaceutical Sciences, Inc. (“Dow”), and Kaken Pharmaceuticals Co., Ltd. (collectively “Valeant”), who reside in a number of locations, including Japan, Ireland, and Delaware. Valeant sued MPI and related companies, Mylan Inc. (a Pennsylvania corporation) and Mylan Laboratories Ltd. (“MLL”) (a corporation based in India) for infringement in the U.S. District Court for the District of New Jersey.

MPI sought dismissal on venue grounds. Valeant’s justification for bringing suit in New Jersey was the planned marketing and sale of MPI’s product in the district if MPI’s product was approved. The District Court found in favor of MPI, dismissing the relevance of planned future acts of infringement to the venue analysis in ANDA cases. Valeant appealed.

Held: Venue in Hatch-Waxman cases is proper only in districts where actions related to the Abbreviated New Drug Application (“ANDA”) submission occur.

Reasoning: The Federal Circuit affirmed the District Court’s decision that venue was not proper in New Jersey for MPI and Mylan Inc., but reversed and remanded as to foreign defendant MLL. The Federal Circuit held that venue under 28 U.S.C. § 1400(b), the venue statute for patent cases, requires a past act of infringement and cannot be premised on future acts of infringement, such as where a product is likely to be distributed. The Federal Circuit held that the Hatch-Waxman Act defines only one act of infringement—an ANDA submission. As a result, venue is proper only where acts related to the ANDA submission took place. Because the District Court found that no act related to MPI’s ANDA submission took place in New Jersey, the Federal Circuit affirmed the District Court’s decision. With respect to MLL, the Federal Circuit held that venue was proper because MLL was subject to venue in any judicial district as a foreign entity. The Federal Circuit remanded for the District Court to address the substance of MLL’s motion to dismiss under Rule 12(b)(6).

Comcast Corp. v. Int’l Trade Comm’n, 951 F.3d 1301 (Fed. Cir. 2020)

Facts: Rovi Corporation and Rovi Guides, Inc. (collectively “Rovi”) filed a complaint with the International Trade Commission (“ITC”) arguing that Comcast, its customers and related companies infringe Rovi’s patents and should be barred from importing its X1 system set-top boxes under Section 337 of the Tariff Act of 1930. Rovi’s patents are directed towards an interactive TV guide system for remote access to television programs similar to that used by Comcast’s X1 system, and the key piece of that system is Comcast’s X1 set-top box.

Comcast imported the X1 set-top box through two other companies, ARRIS and Technicolor, and then distributed them to its customers. The Administrative Law Judge, affirmed by the full commission, found that the set-top boxes violated Section 337 because Comcast’s customers directly infringed Rovi’s patents. The Commission issued a limited exclusion order barring the importation of Comcast’s set-top boxes – including importation by ARRIS and Technicolor on behalf of Comcast.

Comcast appealed the Commission’s order on the grounds that exclusion was improper because the set-top boxes did not infringe Rovi’s patents at the time of importation and only did so later when they were connected to Comcast’s domestic servers and used by customers.

Held: Importation of a good can violate Section 337 of the Tariff Act of 1930 even if the actual infringement is not present at the time of importation.

Reasoning: On appeal, Comcast argued that in order to infringe Rovi’s patents, the X1 set-top boxes must be connected to Comcast’s domestic servers and its users’ mobile devices. Therefore, at the time of importation, Comcast’s set-top boxes were non-infringing. Comcast relied on Suprema, Inc. v. U.S. Int’l Trade Comm’n, 796 F.3d 1338 (Fed. Cir. 2015), which found that the importation of a product could be blocked where that product will infringe after importation. Comcast argued that Suprema should be limited to its facts and that Comcast’s case was distinguishable because its set-top boxes do not necessarily have to infringe after importation.

The Federal Circuit, however, affirmed the decision of the ITC and reasoned that the principle laid out in Suprema included Comcast products because the set-top boxes were specifically designed to be used in conjunction with the X1 system.

The Federal Circuit further declined Comcast’s motion to dismiss the appeal on the grounds that the patent had already expired. The Court agreed with Rovi that, because the Federal Circuit decision on the appeal impacted other pending matters, the Court should decide the appeal.

§ 1.2 Copyright Cases

§ 1.2.1 Supreme Court decisions

Georgia v. Public.Resource.Org, Inc., 140 S.Ct. 1498 (2020)

Facts: The case concerns whether the government edicts doctrine, which states that “officials empowered to speak with the force of law” cannot claim copyright in materials they create in the course of their official duties, renders a state’s official code annotations uncopyrightable.

The Official Code of Georgia Annotated (“OCGA”) comprises every active Georgia statute along with annotations, such as summaries of judicial decisions applying to specific provisions, lists of law review articles, and other reference materials. Under a work-for-hire agreement, the GA Code Revision Commission commissioned Matthew Bender & Co. to prepare the OCGA.

Without permission, Public.Resource.Org (“PRO”) distributed copies of the OCGA and posted the OCGA online, where the public could download copies free of charge. Georgia then sued PRO in district court, and the district court entered a permanent injunction against PRO to cease distribution activities and remove the online copies. The Eleventh Circuit reversed and the Supreme Court granted certiorari.

Held: The Court held that the OCGA annotations are ineligible for copyright protection.

Reasoning: The Court held that “[u]nder the government edicts doctrine, … legislators may not be considered the ‘authors’ of the works they produce in the course of their official duties as … legislators.” This holding was based on precedent, which explained work product generated by judges in the course of their official duties was not copyrightable. This was juxtaposed to precedent in which official reporters had obtained copyrights in explanatory materials for judicial opinions, because the reporters had “no authority to speak with the force of law.” The policy behind the holding here is that “no one can own the law” and “because officials are …empowered to make and interpret law … their ‘whole work’… must be ‘free for publication to all.’”

First, the Court determined that the purported author, the GA Code Revision Commission, was a legislator. The Court determined that, although the Commission was not identical to the Georgia legislature, the Commission functioned “as an arm of [the legislature] for the purpose of producing the annotations.” The Court also noted that the Commission was created by the legislature and consisted largely of legislators, received funding and staff from the legislature, and obtained approval of the annotations from the legislature. The Georgia Constitution stated that the work of the Commission “is within the sphere of legislative authority.”

Additionally, the Court concluded the annotations were created in the scope of the Commission’s official duties. Although the annotations did not purport to provide authoritative explanations of the law, the Commission’s preparations of the annotations were nonetheless drafted under the umbrella of Georgia’s legislative authority, and thus fell under the government edicts doctrine.

§ 1.2.2 Circuit Court decisions

Skidmore v. Led Zeppelin, 952 F.3d 1051 (9^th Cir. 2020) (en banc)

Facts: In the late 1960s, Randy Wolf obtained a copyright on his song “Taurus” which he had written for his band, Spirit. Years later, after Wolf had passed away, the trustee of his estate, Michael Skidmore, brought suit against the famed rock band Led Zeppelin for copyright infringement. Skidmore alleged that Led Zeppelin’s hit song “Stairway to Heaven” infringed the first few bars of “Taurus”.

At the time, the two bands had played at the same venues and knew of each other. Moreover, Led Zeppelin’s members admitted to owning a copy of an album that contained “Taurus”. The copyright obtained for Wolf, however, was for an unpublished version of the song and consisted of a single sheet of transcribed music deposited with the Copyright Office.

At trial the Court limited the scope of the Taurus Copyright to the one page of sheet music deposited with the Copyright Office rather than the full version released on the album. As a result, during trial the District Court declined to allow Skidmore to play a full version of the song. Additionally, the District Court declined to give the “inverse ratio rule” instruction to the jury. This instruction states that when there is a large amount of evidence supporting “access” to the subject work, the burden of proof required for showing that there is “substantial similarity” between the subject work and the alleged copy is reduced. The jury ultimately found in favor of Led Zeppelin. Skidmore appealed, arguing to the Ninth Circuit that the district court’s actions were improper and warranted reversal.

Held: The decision of the district court is affirmed and the Ninth Circuit’s precedential acceptance of the “inverse ratio rule” is overruled.

Reasoning: On the issue of the scope of the copyright, the Ninth Circuit found that the district court did not err in limiting the scope of the copyright to the transcribed sheet deposited at the time of the registration of the copyright. The Copyright Act of 1909 provided no protection for recorded works and thus was limited to either published musical notation or, if the copyrighted material was unpublished, the transcription of the music deposited with the Copyright Office.

Addressing the “inverse ratio rule,” the Ninth Circuit realized it was one of only two circuits still upholding the use of the rule and decided to reexamine whether it should continue to do so. The Ninth Circuit concluded the logic upholding the “inverse ratio rule” was flawed and unfairly favored certain copyright owners. Specifically, the Ninth Circuit reasoned that, logically, while increased access presented more opportunity to copy a work, that does not inherently mean that it is more likely that any one work is a copy or is substantially similar to the copyrighted work. Additionally, the rule inherently favored more notable copyright holders. The “inverse ratio rule” effectively lowered the bar for showing someone had infringed a work that was better known. For these reasons, the Ninth Circuit overruled its prior holdings relying on the inverse ratio rule.

Corbello v. Valli, Case No. 17-16337 (9th Cir. 2020)

Facts: In the late 1980s, Rex Woodward collaborated with a member of the band The Four Seasons and wrote a factual autobiography telling the “whole story” of The Four Seasons. After completing the book and years of attempting to sell it, the pair were unable to sell it to a publisher. In the early 2000s, a musical called Jersey Boys was released on Broadway, which depicted the life and careers of The Four Seasons. Woodward’s widow Donna Corbello learned that the creators of Jersey Boys had access to Woodward’s manuscript while they created Jersey Boys. Corbello brought suit against 14 defendants (including the original members of The Four Seasons) and alleged copyright infringement, among 20 other causes of action in the District Court for the District of Nevada. After a lengthy procedural history, the District Court granted the defendants’ motion for judgment as a matter of law finding no copyright infringement.

Held: The court affirmed the District Court’s judgment as a matter of law.

Reasoning: In analyzing the claim of copyright infringement, the court focused on whether the two works were similar and whether the defendants had copied any protectable aspects of Woodward’s book. In analyzing the similarities between Woodward’s book and Jersey Boys, the court employed the Extrinsic Test analysis, wherein: (1) the plaintiff identifies the similarities between the copyrighted work and the accused work; (2) of those similarities, the court disregards any that are based on unprotectable material or authorized use; and (3) the court must determine the scope of protection to which the remainder is entitled “as a whole.” Of the six similarities that Corbello identified, the court determined that each similarity failed the Extrinsic Test because they were all primarily composed of non-protectable elements of the work, such as historical facts, common phrases, and scenes-a-faire.

Castillo v. G&M Realty L.P., 950 F.3d 155 (2^nd Cir. 2020)

Facts: This case is an appeal from a suit brought by a group of aerosol artists, headed by Jonathan Cohen, against a land owner on whose property they had, for years, been producing aerosol art. The space in question, known as 5Pointz, was owned and operated by G&M Realty, but had been a largely undeveloped collection of old warehouses for many years. Seeking to make some money off the property, the owner rented it to a group of aerosol artists. Over the course of several years, the artists turned 5Pointz into a mecca for the aerosol art form, attracting international recognition and many tourists every year.

The dispute began when the land owner, having an opportunity to develop the property into luxury apartments, declined to renew the artists’ lease and expressed a desire to demolish the structures which the aerosol art now adorned. Not wanting to see their art destroyed, the artists made several efforts to obtain ownership of the property, ultimately filing suit under the Visual Artists Right Act (“VARA”) to prevent the destruction of their work. The act grants artists “moral rights” in their work and allows them to prevent use of the art in a way that would harm their reputation and prevent the art’s destruction if it has achieved “recognized stature.”

The artists were able to obtain a temporary restraining order banning the art’s destruction early on in the case, but when the TRO expired, the district court declined to grant the artists a preliminary injunction barring its destruction. The land owner then whitewashed and demolished the aerosol art of 5Pointz.

At trial, the district court concluded that many pieces of art had in fact achieved recognized stature and that the defendants had acted willfully in their destruction of the art when they did not give the artists an opportunity to remove and preserve their pieces prior to demolishing the structures. The district court granted the artists statutory damages of $6,750,000. The defendants appealed to the Second Circuit.

Held: The district court did not err in finding the aerosol art had achieved “recognized stature” or in awarding statutory damages to the artists.

Reasoning: The Second Circuit reviewed the district court’s determination that the aerosol art had achieved “recognized stature” for clear error. The property owner’s main argument was that the district court failed to take into account the temporary nature of the aerosol art. The Second Circuit, however, concluded that the specificity of the drafting of VARA makes plain that it does not bar temporary works from achieving “recognized stature.” Further, recent examples, such as the temporary sculpture “The Gates” in New York City’s Central Park or the works of Banksy, the critically acclaimed street artist whose works were frequently only meant to be temporary, had nonetheless achieved “recognized stature.” Thus, defendants’ argument that the art was temporary was not enough to show clear error in the district court’s decision.

The Second Circuit further dismissed defendants’ argument that because the artists knew the buildings would be torn down eventually, the artists cannot claim to be wronged by their destruction. The Second Circuit countered by noting that VARA accounts for this eventuality by clearly requiring that, where art is built into the structure of a building, the owner must obtain written understanding from the artist(s) that their art may be destroyed if the building is. Where that is not in place, the owner must provide the artist(s) 90 days to remove the art. Defendants, in this case, did not afford the artists such an opportunity.

The Second Circuit found no issue with the district court’s reliance on expert testimony based on images of the art, rather than the works themselves. Likewise, the Second Circuit found no clear error in the district court’s consideration of the fact that Jonathan Cohen “curated” 5Pointz by pre-selecting artists who painted, even though such curation took place prior to the creation of the actual works. The Second Circuit also dismissed concern over the district court’s focus on the stature of 5Pointz as a whole in addition to the individual works. The Second Circuit reasoned that a work’s stature can certainly be improved by hanging in the Louvre, thus 5Pointz can have a similar effect on aerosol art.

Finally, the Second Circuit reviewed the district court’s damages award for clear error and found none. The district court was justified in finding defendants’ destruction of the art willful, because defendants were well aware of the artists’ VARA claims at the time of destruction and seemed to have needlessly and maliciously whitewashed the art as quickly as possible rather than affording the artists 90 days to remove their art. Moreover, the district court did not err in finding that the artists were entitled to the full statutory damages for each work of art, despite previously finding that the artists’ actual damages were too difficult to calculate. Such a determination did not mean the artists were not likely to get any revenue for their works, it simply meant they were hard to determine.

David Zindel v. Fox Searchlight Pictures Inc. et al., Case No. 18-56087 (9th Cir. 2020)

Facts: This case addresses whether questions of substantial similarity in copyright infringement may be properly decided at the pleadings stage on a motion to dismiss, without additional evidence such as expert testimony.

David Zindel (“Zindel”) alleged copyright infringement of his father Paul Zindel’s play, “Let Me Hear You Whisper,” by Fox Searchlight Pictures’ (“Fox”) film and book, “The Shape of Water.” According to the complaint, Zindel’s play tells the story of a lonely cleaning woman who works the graveyard shift at a scientific laboratory conducting experiments on animals for military purposes during the Cold War. She forms an emotional bond with one of the creatures after discovering that it chooses to communicate exclusively with her. Upon learning that the laboratory plans to vivisect the creature for research, she decides to free the creature into the ocean via a rolling laundry cart.

The complaint alleged that “The Shape of Water” similarly centered on a cleaning woman named Elisa working at a laboratory performing experiments for ominous military purposes in the Cold War era. Elisa discovers an aquatic creature of heightened intelligence stored in a glass tank. Elisa begins a romantic relationship with the creature after discovering it chooses to communicate only with her. As in Zindel’s play, protagonist Elisa hatches a plan to free the creature into the ocean via a laundry cart when she learns the scientists in the lab plan to cut it open for research.”

The district court dismissed Zindel’s complaint, finding that the plot of Zindel’s play was too general for copyright protection, and that the two works were not substantially similar as a matter of law.

Held: The Ninth Circuit reversed and remanded, finding that at the pleadings stage, reasonable minds could differ on the substantial similarity of Zindel’s and Fox’s works.

Reasoning: The Ninth Circuit found that the district court dismissed Zindel’s action prematurely. The court found that “reasonable minds could differ” on whether “Let Me Hear You Whisper” and “The Shape of Water” shared substantial similarities at the pleadings stage. The court found that additional evidence, such as expert testimony, would aid in the necessary literary analysis for determining the “extent and qualitative importance” of the commonalities Zindel alleged the two works shared. Thus, additional evidence could clarify whether the alleged similarities constituted copyright infringement or were unprotectable literary tropes.

Daniels v. Walt Disney Co., Case No. 18-55635 (9th Cir. 2020)

Facts: This case addresses the viability of copyright protection and subsequent infringement claims in connection with “lightly sketched characters.”

Emotional intelligence and child development expert Denise Daniels (“Daniels”) created “The Moodsters,” five color-coded anthropomorphic characters each correlated with a human emotion. Daniels’ entity, The Moodsters Company, published a “bible” for The Moodsters in 2005. The bible serves as a pitchbook for media and entertainment companies. The Moodsters Company went a step further and posted a YouTube pilot episode of “The Moodsters” with the same characters in 2007. Daniels pitched The Moodsters to Disney, among other entertainment companies. Disney did not pick up The Moodsters. In 2015, Disney released the film “Inside Out,” which was about five anthropomorphized characters correlated with human emotions living inside the mind of an 11-year-old girl.

Daniels and her company filed suit against Disney, alleging copyright infringement of the individual Moodsters characters and the ensemble of characters as a whole. The district court granted Disney’s motion to dismiss, finding that Daniels failed to show that The Moodsters met the necessary standard for copyright in a character. In reaching its ruling, the district court applied the Towle test (DC Comics v. Towle, 802 F.3d 1012 (9th Cir. 2015)) for the copyrightability of graphically depicted characters. Daniels appealed to the Ninth Circuit.

Held: The Ninth Circuit affirmed the district court’s ruling, finding that The Moodsters characters did not meet the threshold for copyright protection under the Towle test, and further failed to meet the standard for protection outlined in the Warner Bros. “story being told” test (Warner Bros. v. CBS, 216 F.2d 945 (9th Cir. 1954)).

Reasoning: The Towle test affords a character copyright protection if the character (1) has “‘physical as well as conceptual qualities,’” (2) is “‘sufficiently delineated to be recognizable as the same character whenever it appears’ and ‘display[s] consistent, identifiable character traits and attributes,’” and (3) is “‘especially distinctive’ and ‘contain[s] some unique elements of expression.’” The district court and Ninth Circuit agreed that The Moodsters characters met prong one of the test. The Ninth Circuit found that the second prong was an “insurmountable hurdle” for Daniels. The court explained that characters lacking “a core set of consistent and identifiable character traits and attributes” are not protectable, because they are “not immediately recognizable as the same character[s] whenever [they] appear.” The court further clarified that characters “too lightly sketched” could not be protected by copyright. The court analyzed the consistency in the depiction of The Moodsters’ physical appearance, character traits, and other attributes over time to determine if The Moodsters were sufficiently delineated. The court found that they were not, because the significant changes in the characters’ physical appearances over time made it difficult to conclude that The Moodsters in 2005 versus 2015 were the same set of characters. The Moodsters also did not have consistent character traits and attributes. While the characters represented five consistent emotions, their degree of consistency was insufficient to afford them copyright protection. The Ninth Circuit further found that The Moodsters did not meet the third Towle prong because each Moodster character merely represented a single emotion with generic characteristics that were not “especially distinctive.”

Finally, the Ninth Circuit analyzed The Moodsters using the Warner Bros. “story being told” test. The court explained its choice by noting the Towle test was not the exclusive test for determining the copyrightability of a character. The “story being told” test affords characters copyright protection if they constitute “the story being told” in a work, not as “‘only the chessman in the game of telling the story’ but one that ‘so dominate[s] the story such that it becomes essentially a character study.’” The court found that The Moodsters lacked character development and necessary character study since they were introduced only in a pitchbook, with even less development in the YouTube pilot. The Ninth Circuit determined that The Moodsters were more like “chessmen” telling the story, unqualified for copyright protection themselves. Thus, the Ninth Circuit affirmed the district court’s granting of the motion to dismiss.

Tresóna Multimedia, LLC v. Burbank High School Vocal Music Association, et al., Case No. 17-56006 (9th Cir. 2020)

Facts: This case clarifies (1) whether a licensee of a single copyright co-owner possesses standing to sue for copyright infringement and (2) whether rearrangements of short song segments in a transformative performance piece constitute a fair use.

Burbank High School’s music department includes nationally recognized show choirs, rumored to have inspired the television series “Glee.” The school’s music director, Brett Carroll, hired a music arranger to create custom sheet music for two shows performed by one of the show choirs, “In Sync.” The shows included stanzas from several songs, including “Magic,” “(I’ve Had) The Time of My Life,” “Hotel California,” and “Don’t Phunk With My Heart.” In Sync performed shows with arrangements of these four songs on several occasions.

After In Sync’s performances, licensing company Tresóna Multimedia, LLC (“Tresóna”) sued Carroll, Burbank High School, the Burbank High School Vocal Music Association Boosters Club and several individual Boosters Club parents (collectively, “Burbank High”) for copyright infringement. Tresóna alleged that the Burbank High show choir failed to obtain licenses for their use of segments of the four pieces of copyrighted sheet music. Tresóna claimed it possessed the exclusive right to license sheet music for the four songs. While Tresóna was assigned the rights to “Magic” from the song’s sole owner, Tresóna’s rights to the other three songs were assigned from fewer than all the co-owners of those songs. Both parties moved for summary judgment.

The district court held that Tresóna lacked standing to sue for copyright infringement of the three songs for which it did not possess a license from all co-owners of the copyright interest in the songs. For the “Magic” claim, the district court determined that Carroll was entitled to qualified immunity. It further found that the other named defendants could not be held liable for direct or secondary copyright infringement, but did not grant Burbank High’s request for attorneys’ fees. Both parties appealed.

Held: The Ninth Circuit affirmed the district court’s ruling on summary judgment in favor of Burbank High, but reversed the district court’s denial of attorneys’ fees, remanding for a calculation. The court affirmed that Tresóna lacked standing to sue for copyright infringement on “Magic,” and found that In Sync’s arrangements and performances of all songs constituted a fair use.

Reasoning: The Ninth Circuit affirmed the grant of summary judgment as to “(I’ve Had) The Time of My Life,” “Hotel California,” and “Don’t Phunk With My Heart.” The court cited Ninth Circuit precedent holding that when a single copyright co-owner independently attempts to grant an exclusive license, the licensee does not have standing to sue alleged third-party infringers. The court explained that this rule is intended to prevent one joint owner’s assignment from limiting the rights of joint co-owners without their consent.

With respect to “Magic,” the court focused on fair use rather than qualified immunity, noting the limited applicability of qualified immunity doctrine. Carroll used “Magic” in his capacity as a music teacher and transformed it significantly from its original use in a film. Thus, the educational and transformative nature of the use at a non-profit school weighed in favor of fair use on the factor relating to the purpose and character of the use. On the factor relating to the nature of the copyrighted work, the court weighed this against a finding of fair use given the creative nature of “Magic.” With respect to the third factor, substantiality of portion used, the court found Burbank High’s use of only 22 seconds of the song weighed in favor of fair use. Finally, the court also found the fourth factor, the market effect of the use, weighed in favor of fair use. The Ninth Circuit explained that the small excerpt of the song used was not a substitute for the entire song, and the song’s use in an educational environment served a different function. Therefore, Burbank High’s use of “Magic” was a fair use and did not constitute copyright infringement.

Finally, the Ninth Circuit decided that attorneys’ fees were warranted because Tresóna misrepresented the nature of its copyright interest in three of the songs, made objectively unreasonable arguments, and the fair use determination was sufficient on the merits to qualify Burbank High for an award of attorneys’ fees.

Charles v. Seinfeld, 803 F. App’x 550 (2d Cir. 2020)

Facts: This case clarifies when copyright infringement claims begin accruing if copyright ownership is itself disputed.

Producer and director Christian Charles (“Charles”) allegedly worked with comedian Jerry Seinfeld (“Seinfeld”) to develop the pilot for the television series “Comedians in Cars Getting Coffee” in 2011. In February 2012, Seinfeld rejected Charles’ request for back-end compensation in connection with the series. Seinfeld asserted and clarified that Charles’ involvement with the series was on a work-for-hire basis. “Comedians in Cars Getting Coffee” premiered in July 2012 and did not credit Charles.

In 2018, Charles brought suit against Seinfeld and others associated with the series, alleging copyright infringement based on his claimed authorship of the show. Seinfeld moved to dismiss Charles’ claim, arguing that it was time-barred under the Copyright Act. The district court agreed and granted the motion to dismiss. Charles appealed to the Second Circuit.

Held: The Second Circuit affirmed the district court’s ruling, holding that claims of copyright ownership accrue “when a reasonably diligent plaintiff would have discovered that ownership was disputed.” The court held that if copyright ownership is the central issue in an infringement case and the ownership claim is time-barred, “the infringement claim itself is also time-barred, even if any allegedly infringing activity occurred within the limitations period.”

Reasoning: The Second Circuit held that the dispositive issue in Charles’ claim was copyright ownership. This was evidenced in his own filing, which explained that “[r]esolution of this case depends upon the answer to one simple question: who is the author of the [‘Comedians in Cars Getting Coffee’] Pilot?” Hence, Charles’ copyright infringement claim accrued when he was put on notice that his claim of ownership was disputed. Charles was put on notice as to the dispute in 2012, when Seinfeld (1) rejected Charles’ request for back-end compensation, (2) told Charles that his contributions were made on a work-for-hire basis, and (3) the show premiered without crediting Charles. Thus, Charles’ 2018 copyright infringement claim was time-barred by the Copyright Act’s three-year statute of limitations.

Strike 3 Holdings, LLC v. Doe, 964 F.3d 1203 (D.C. Cir. 2020)

Facts: The case concerns whether the district court abused its discretion when refusing to allow a subpoena of an alleged online copyright infringer’s internet service provider (“ISP”) to discover the identity of the alleged online copyright infringer.

Strike 3 is an adult film producer and distributor that faces “rampant online piracy.” In order to police infringement, Strike 3 uses investigators and forensic software to monitor peer-to-peer file sharing networks and determine IP addresses engaging in acts of infringement. Strike 3 then files lawsuits against “John Doe” defendants based on the IP addresses. However, since ISPs are the only entities that can link an IP address to its subscriber, Strike 3 cannot serve its copyright infringement complaints without first subpoenaing the subscriber’s ISP for information identifying the anonymous defendant. Accordingly, Strike 3 filed a Rule 26(d)(1) motion seeking leave to subpoena Comcast for records identifying the subscriber linked to a particular IP address.

The district court denied Strike 3’s motion after applying a multi-factor balancing test and found that Strike 3’s need for the subpoenaed information was outweighed by a privacy interest in view of the “particularly prurient pornography.” Additionally, the district court characterized Strike 3 as a “copyright troll” and stated it would not indulge Strike 3’s “feigned desire for legal process” by “oversee[ing] a high-tech shakedown.” The district court denied Strike 3’s motion and dismissed the complaint without prejudice. Strike 3 appealed, and the D.C. Circuit reversed the denial of the Rule 26(d)(1) motion and remanded.

Held: The D.C. Circuit found that the district court abused its discretion in denying Strike 3’s Rule 26(d)(1) motion.

While the D.C. Circuit recognized that courts have broad discretion over discovery, the district court abused its discretion in three aspects. First, the D.C. Circuit held that the content of a work is per se irrelevant to a Rule 26(d)(1) motion. The Court stated that a “mere fact that a defendant may be embarrassed to have his name connected to pornographic websites is not a proper basis on which to diminish a copyright holder’s otherwise enforceable property rights.”

The second abuse was the district court’s reasoning that even if the motion was granted, Strike 3 could not “identify a copyright infringer who can be sued” for purposes of stating a plausible claim against the IP subscriber. The D.C. Circuit stated that the “mere possibility that an unnamed defendant may defeat a complaint at a later stage is not a legitimate basis to deny a Rule 26(d)(1) motion,” and that at this stage of discovery, a court need not rule on the claim’s plausibility. Rather, Strike 3 should have the opportunity to name the defendant.

Third, the district court “failed to afford Strike 3 the benefit of all reasonable inferences, and instead relied on extra-record sources to question Strike 3’s motivation in seeking the requested discovery.” Rather than giving reasonable inferences to the facts before it, the district court instead looked outside of the record to determine Strike 3’s “copyright troll” behavior.

Estate of Smith v. Graham, 799 Fed. Appx. 36 (2d. Cir. 2020)

Facts: This case concerns whether defendants’ sampling of “Jimmy Smith Rap” (“JSR”) in “Pound Cake/Paris Morton Music 2” (“Pound Cake”) constitutes fair use.

In 1982, Jimmy Smith recorded an album containing a spoken-word track recording titled “Jimmy Smith Rap” (“JSR”). On September 24, 2013, Cash Money Records and Universal Republic Records released the album Nothing Was the Same (the “Album”) by Aubrey Drake Graham, a/k/a Drake. The last song on the Album is “Pound Cake/Paris Morton Music 2.” The opening to “Pound Cake” samples about 35 seconds of JSR. While some words from JSR were rearranged or deleted, no words were added.

The district court granted defendants’ motion for summary judgment on the grounds that the alleged copyright infringement was fair use. Plaintiffs appealed, and the Second Circuit affirmed.

Held: Drake’s sampling of JSR is fair use since it is a transformative new use of the old material.

Reasoning: The Second Circuit found Drake’s use of JSR was transformative and held that “Pound Cake,” unlike JSR, sends “a counter message—that it is not jazz music that reigns supreme, but rather all ‘real music,’ regardless of genre. …‘Pound Cake’ emphasizes that it is not the genre but the authenticity of the music that matters. In this manner, ‘Pound Cake’ criticizes the jazz-elitism that the ‘Jimmy Smith Rap’ espouses.” By doing so, it uses the copyrighted work for “a purpose, or imbues it with a character, different from that for which it was created.” The Second Circuit also held that Drake’s sampling was reasonable in relation to the transformative purpose of the copying. Lastly, the Second Circuit held there was no evidence that “Pound Cake” usurped demand for JSR or otherwise caused a negative market effect.

§ 1.2.3 Notable district court decisions

Sinclair v. Ziff Davis, LLC, 18-CV-790 (KMW), 2020 WL 3450136 (S.D.N.Y. June 24, 2020)

Facts: Stephanie Sinclair is a photographer who advertises her work on her own website and Instagram. Ziff Davis is a digital media company that owns multiple online brands and print tiles including Mashable, a media and entertainment content platform. Sinclair posted a copyrighted photo on her Instagram account which she set to be publicly viewable. Sinclair was subsequently contacted by Mashable who was interested in using her photo in an article about female photographers. Mashable offered Sinclair $50 for a license to use her photo, but Sinclair declined.

Despite Sinclair’s declination, Mashable used an embedded link to display the photo in its story. The embedded link allowed Mashable to display Sinclair’s Instagram content on its own website using Instagram’s API (application programming interface) without actually having Sinclair’s photo on Mashable’s own servers. Instead, the embedded link allowed Mashable to retrieve content directly from Instagram’s servers and display it in its article.

Sinclair brought suit against Mashable and Ziff Davis for copyright infringement, and the defendants moved to dismiss. In its first pass, the District Court for the Southern District of New York dismissed Sinclair’s complaint. The court found that Sinclair had agreed to Instagram’s terms and conditions, which granted Instagram a partial license and ability to sublicense any content Sinclair publicly posted on Instagram. Instagram’s Platform Policy with users of its API further granted API users a sublicense to “embed” any content that was publicly available on Instagram.

After the decision, Sinclair brought a motion for reconsideration on the grounds that Instagram’s Platform Policy was not sufficiently clear for the court to grant a motion to dismiss.

Held: Instagram’s policies were insufficiently clear for the court to grant a motion to dismiss.

Reasoning: Instagram’s Platform Policy, on which defendants relied to show they had a sublicense to “embed” Instagram’s content, stated that Instagram “provide[s] the Instagram APIs to help broadcasters and publishers discover content, get digital rights to media, and share media using web embeds.” On review, the court concluded that while this statement could be interpreted to grant API users the right to embed Instagram’s publicly available content, there are other interpretations. This ambiguity prevented the court from deciding the issue on a motion to dismiss. The court, therefore, reversed its prior dismissal of Sinclair’s claims against Mashable.

The court, however, maintained its dismissal of claims against Ziff Davis, LLC. The court’s above reasoning did not change its earlier conclusion that Sinclair needed to plead Ziff Davis, LLC had “substantial continuing involvement” in Mashable, rather than mere control.

McGucken v. Newsweek LLC et al., No. 1:19-cv-09617-KPF (S.D.N.Y. 2020)

Facts: This case addresses the viability of a copyright infringement claim arising out of the use of embedded social media content.

Photographer Elliot McGucken (“McGucken”) posted a photograph of a lake in Death Valley, California, to his public Instagram account. Newsweek published an article about the same lake the following day. As part of its article, Newsweek embedded McGucken’s Instagram photograph without obtaining his permission to do so. McGucken registered the photograph with the Copyright Office and sent Newsweek a cease-and-desist letter for its use of his photograph. When the article remained live with McGucken’s embedded Instagram photograph, he filed suit.

Newsweek moved to dismiss the suit, arguing that (1) by posting his photograph on a public Instagram account, McGucken granted Newsweek a sublicense to use the photograph via Instagram’s embedding feature, and (2) use of the embedded photograph constituted a fair use as a matter of law.

Held: The district court denied the motion to dismiss, finding that there was no evidence of a sublicense between Instagram and Newsweek and that Newsweek’s actions did not constitute a fair use of McGucken’s photo.

Reasoning: The court considered its previous decision in Sinclair v. Ziff Davis in reaching a conclusion regarding Newsweek’s sublicense arguments. While the court agreed with the general principle that Instagram possesses the right to sublicense publicly posted photographs to other users, it found no evidence of a sublicense between Instagram and Newsweek in this case. Next, the court determined there was no evidence of an implied license between the parties. Finally, the court looked at terms and policies outlined by Instagram and found no term expressly granting a sublicense to those who embed publicly posted content. Thus, the court held that there was not enough evidence to dismiss the suit at this stage, while acknowledging the possibility that Instagram’s “Terms of Use” may provide a sublicense for embedded photos.

Regarding Newsweek’s fair use argument, the court analyzed the required four factors laid out in 17 U.S.C. § 107: (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used; and (4) the effect of the use upon the potential market for or value of the copyrighted work. On the first factor, the court held that “the mere addition of some token commentary is not enough to transform the use of the photograph when that photograph is not itself the focus of the article.” On the second factor, the court found the nature of the work was neutral. On the third factor, the court also found this factor neutral because while the entire photograph was used, it would be difficult to use less than the full photograph given the nature of embedding content. Finally, the court found in McGucken’s favor on the fourth factor. The court cited to a Supreme Court ruling finding a presumption of market harm “when a commercial use amounts to mere duplication of the entirety of an original.” Thus, Newsweek’s motion to dismiss on fair use grounds was denied.

§ 1.3 Trademark Cases

§ 1.3.1 Supreme Court decisions

Romag Fasteners, Inc. v. Fossil Group, Inc., et al., 140 S. Ct. 1492 (2020)

Facts: This case concerns whether willful infringement is a prerequisite to an award of a trademark infringer’s profits.

Romag Fasteners, Inc. (“Romag”) and Fossil, Inc. (“Fossil”) entered into an agreement whereby Fossil was permitted to use Romag’s fasteners on Fossil’s leather goods. Upon Romag’s discovery that the foreign factories manufacturing Fossil’s products were using counterfeit fasteners that bore Romag’s “ROMAG” trademark, Romag filed a complaint with the U.S. District Court for the District of Connecticut alleging trademark infringement pursuant to 15 U.S.C. § 1125(a) based on Fossil’s alleged use of counterfeit metal fasteners.

At trial, Romag moved for an award of Fossil’s profits. While the jury awarded Romag $6.7 million of Fossil’s profits due to Fossil’s “callous disregard,” the district court declined to award Fossil’s profits to Romag because the jury did not find that Fossil acted willfully, which was a requirement for an infringer’s profits award under Second Circuit precedent. Romag appealed this decision to the Federal Circuit, which affirmed the district court’s ruling.

Held: The Supreme Court reversed the Federal Circuit and resolved a circuit split by holding that “willfulness” is not required as a precondition to an award of a trademark infringer’s profits.

Reasoning: In analyzing whether an award of an infringer’s profits requires a finding of willfulness, the court first examined the textual language of 15 U.S.C. § 1125(a). The relevant provisions covering remedies for trademark violations do not make a showing of willfulness a precondition to a profit award when the plaintiff proceeds under § 1125(c), as Romag did here.

Second, the court addressed Fossil’s reliance on language from the Lanham Act stating that an award of the defendant’s profits is “subject to the principles of equity,” and thus contains an implicit willfulness requirement. Fossil argued that historically, equity courts required a showing of willfulness before authorizing a profits remedy. The court rejected Fossil’s “principles of equity” argument and reasoned that the historical use of this phrase, as well as its use within other parts of the Lanham Act, does not read in a willfulness requirement.

Third, acknowledging the Lanham Act’s text does not have a willfulness requirement, the court reviewed the Lanham Act’s predecessor legislation, the Trademark Act of 1905. Given that many early trademark cases are still interpreted under the Trademark Act of 1905, the court deemed the Act’s textual implications relevant to Fossil’s arguments. Cases interpreted under the Trademark Act of 1905 inconsistently either read in or read out a willfulness requirement. Regardless, the previous Act’s language did not require willfulness for the award of an infringer’s profits.

Finally, the court grappled with both pre- and post-Lanham Act interpretations of “courts of equity” and the appropriate weight to give an infringer’s mens rea in determining whether or not to award an infringer’s profits. Based on this review, the court recognized that an infringer’s mental state is no doubt relevant to the decision whether or not to award profits; however, whether or not the infringement was willful is not an inflexible precondition to recovery of an infringer’s profits.

United States PTO v. Booking.com B.V., 140 S. Ct. 2298 (2020)

Facts: This case concerns whether the addition of “.com” to an otherwise generic term may create a protectable trademark under the Lanham Act.

Since 2006, Booking.com has managed a website where users can make reservations for travel and lodging. In 2012, Booking.com filed four trademark applications using “BOOKING.COM” as a word mark and for stylized versions of the mark.

The USPTO examiner rejected Booking.com’s application on the grounds that BOOKING.COM was generic based on the services for which it registered, namely online travel reservations. While the Lanham Act allows for “descriptive” terms that have a “secondary meaning” or a perceived designation in the minds of prospective customers, the examiner determined the marks were merely descriptive and lacked secondary meaning.

On appeal, the examiner’s decision was upheld by the Trademark Trial and Appeal Board (“TTAB”) and Booking.com appealed the TTAB’s decision to the U.S. District Court for the Eastern District of Virginia. The district court ruled that the addition of the top-level domain (TLD) of “.com,” implying an online internet commerce site, made the mark no longer generic. Specifically, the district court relied on Booking.com’s evidence that 75% of customers surveyed recognized “Booking.com” as a specific brand.

The USPTO appealed the district court decision to the Fourth Circuit, which upheld the district court’s ruling. The Fourth Circuit considered whether the term “booking.com” could be non-generic when it was a composite of two generic terms, “booking” and “.com.” The Court concluded that it could be considered non-generic because the composite was recognized by customers as a unique online service rather than a range of services. The USPTO appealed the Fourth Circuit’s decision to the U.S. Supreme Court.

Held: A term styled “generic.com” is a generic name for a class of goods or services only if the term has that generic meaning to consumers.

Reasoning: The Court concluded BOOKING.COM was not a generic term by laying out three guideposts for its reasoning: 1) a generic term names a class of goods or services, rather than any particular feature; 2) the distinctiveness of a compound term depends on its meaning as a whole, not its individual parts; 3) the relevant meaning of a term is its meaning to its consumers.

Applying these guideposts, the Court reasoned that in order to disallow BOOKING.COM as a trademark, the Court would have to find that the mark identified a class of online hotel reservation services. Because both parties agreed this was not the case, the Court reasoned BOOKING.COM cannot be considered generic.

Instead, the USPTO argued for a general rule that a generic name combined with a top-level domain (such as “.com”) makes the resulting combination generic. The USPTO’s argument equated the addition of “.com” to the addition of “Company” which was rejected by the Supreme Court as a means for making a term non-generic in an 1888 decision, Goodyear’s India Rubber Glove Mfg. Co. v. Goodyear Rubber Co., 9 S. Ct. 166 (1888). The Court rejected this argument because domain names such as “generic.com” can only be possessed by a single entity and therefore often signify a particular brand. The Court, however, stopped short of saying a “generic.com” domain was inherently non-generic. Instead, an applicant seeking a “generic.com” trademark must still show the mark is distinctive in the eyes of consumers.

Finally, the USPTO raised concerns that such a trademark would limit competition in the online hotel and travel reservation business by stifling the use of similar marks and domains using the term “booking”. The Court reasoned that because BOOKING.COM is a descriptive mark, it is harder to show a likelihood of confusion, thus making it easier to use similar marks and domains. Therefore, existing trademark law mitigates this issue. The Court further added that a competitive advantage is not a bar to a trademark registration.

Lucky Brand Dungarees Inc., et al. v. Marcel Fashions Group Inc., 140 S. Ct. 1589 (2020)

Facts: This case addresses whether res judicata encompasses “defense preclusion” when a trademark litigation defendant raises a new defense in litigation that it could have raised in previous trademark litigation between the same parties.

Marcel Fashion Group, Inc., (“Marcel”) sued Lucky Brand Dungarees, Inc., (“Lucky Brand”) for infringing its trademark in 2001. The parties entered into a settlement agreement that released Lucky from specific trademark claims in the future. Marcel sued Lucky Brand for trademark violations again in 2005. During the 2005 lawsuit, Lucky Brand did not raise a defense based on the previously negotiated release, and Marcel prevailed. Marcel sued Lucky a third time for ongoing trademark infringement in 2011. Lucky Brand moved for summary judgment, arguing that Marcel’s claims were precluded by res judicata on the basis of the final judgment in the 2005 lawsuit.

The district court granted Lucky Brand’s summary judgment motion, but the Second Circuit reversed. The Second Circuit held that Marcel’s alleged infringement occurred after the 2005 judgment (and therefore could not have been part of the 2005 judgment).

Held: The Supreme Court reversed and remanded the Second Circuit’s ruling, finding that Marcel’s 2011 lawsuit involved different conduct and claims than its 2005 lawsuit. Thus, Marcel was unable to preclude Lucky Brand from raising new defenses.

Reasoning: The Supreme Court has “never explicitly recognized ‘defense preclusion’ as a standalone category of res judicata,” and issue preclusion could not bar Lucky Brand’s unlitigated defense. Thus, the question before the Court was whether the 2011 suit and the 2005 suit involved the same claim. A unanimous Supreme Court concluded that “the two suits here were grounded on different conduct, involving different marks, occurring at different times. They thus did not share a ‘common nucleus of operative facts.’”

The Court reasoned that while Marcel’s claims in the 2005 and 2011 suits both involved trademark infringement claims by Marcel against Lucky Brand, the 2011 action did not involve alleged use of the “Get Lucky” mark. Additionally, the conduct at issue in the 2011 action occurred after the conclusion of the 2005 action. The Court noted claim preclusion generally “does not bar claims that are predicated on events that postdate the filing of the initial complaint.” The Court found that because Marcel could not be barred from suing Lucky Brand for infringing the same mark based on different infringing conduct, Lucky Brand could not be prevented from raising a similar (yet previously unused) defense to that different conduct.

§ 1.3.2 Circuit Court decisions

In re: Forney Indus., Inc., 955 F.3d 940 (Fed. Cir. 2020)

Facts: This case addresses whether multi-color trademarks and product packaging marks that employ color without a well-defined peripheral shape or border can be inherently distinctive and thus registerable on the Principal Register without need for proof of acquired distinctiveness.

Forney Industries applied for a mark for use on the packaging of the welding and machining tools and accessories that it sells. Forney described the mark as consisting of “the colors red into yellow with a black banner located near the top as applied to packaging for the goods.” The examining attorney refused to register the mark, asserting that it was not inherently distinctive, and the Trademark Trial and Appeal Board affirmed the examining attorney’s decision. The Board held that no legal distinction existed between a mark consisting of a single color, and a mark consisting of multiple colors without additional elements. The Board then held that marks for colors applied to products and colors applied to product packaging are analyzed the same, and that under Supreme Court precedent, a particular color on a product or its packaging can never be inherently distinctive. The Board further held that a color may only be inherently distinctive when used in conjunction with a distinctive peripheral shape or border. On appeal, the Federal Circuit reversed.

Held: Multi-color trademarks on packaging can be inherently distinctive and thus registerable on the Principal Register without being associated with a well-defined peripheral shape or border.

Reasoning: The court explained that the controlling Supreme Court precedent held that trade dress can be inherently distinctive. And contrary to the Board’s interpretation of the precedent, while precedent held that color marks applied to product designs cannot be inherently distinctive because product design almost invariably serves purposes other than source identification, product packaging marks are more like trade dress and most often used to identify the source of a product. The court held that Forney’s multi-color product packaging mark was more akin to trade dress than product design marks, and accordingly could be inherently distinctive. The court noted that the Tenth Circuit had come to the same conclusion.

The court also explained that inherent distinctiveness turns on whether a mark makes such an impression on consumers that they will assume the trade dress is associated with a particular source. Multi-color marks such as Forney’s do not attempt to preempt all use of certain colors, but merely the particular combination of colors arranged in a particular design, which makes the mark not just a color mark, but also a symbol that could be source identifying. The source-identifying nature of the combination of colors in a particular design meant that the mark could therefore be inherently distinctive.

Future Proof Brands, LLC v. Molson Coors Bev. Co., Case No. 20-50323 (5th Cir. 2020)

Facts: This case concerns whether the product names “BRIZZY” and “VIZZY” are confusingly similar in connection with hard seltzer beverages.

Future Proof Brands, LLC (“Future Proof”) and Molson Coors (“Coors”) both sell hard seltzer beverages named after a variation of the word “fizzy.” Future Proof’s product is called “BRIZZY,” while Coors’ product is named “VIZZY,” to amalgamate its attributes of being fizzy and containing Vitamin C. Future Proof sought an injunction against Coors’ VIZZY product and asserted trademark infringement in the District Court for the Western District of Texas. The district court denied Future Proof’s motion for preliminary injunction.

Held: The Fifth Circuit Court of Appeals affirmed and held that Future Proof failed to prove the requisite elements for a preliminary injunction.

Reasoning: In analyzing whether Future Proof was entitled to a preliminary injunction against Coors, the court focused on whether Future Proof had demonstrated a substantial likelihood of success on the merits. The district court reviewed all eight likelihood of confusion factors. Future Proof challenged the district court’s ruling on factors one, two, six, seven, and eight.

Factor One: Type of Infringed Mark: The court affirmed the district court’s finding that this factor weighs against granting an injunction. The court found that Future Proof’s “BRIZZY” mark was suggestive, rather than descriptive; however, the court disagreed with Future Proof’s assertion that “BRIZZY” was strong. After reviewing evidence of third-party uses of other “IZZY” formative marks for beverages, the court determined that the district court’s conclusion that “BRIZZY” is a weak trademark was not clear error.
Factor Two: Similarity Between the Marks: Future Proof argued that the district court incorrectly determined that the second factor “only marginally” weighed in favor of granting an injunction. Future Proof primarily argued that the district court incorrectly weighted the importance of the “aural similarities of ‘brizzy’ and ‘vizzy.’” Future Proof stressed that aural similarities of the marks are important because alcoholic beverages are often ordered via verbal request, such as in a bar. However, Future Proof could not provide any evidence showing that their “BRIZZY” drinks are sold in bars or restaurants, where aural similarities could be an issue. Instead, Future Proof’s products are only available to buy at retail locations, where aural similarities would not cause confusion. The court upheld the district court’s finding that this factor weighed only marginally in favor of granting an injunction.
Factor Six: Defendant’s Intent: Future Proof argued that the district court’s finding that this factor goes against granting an injunction was in error. Future Proof argued that Coors’ executives were aware of Future Proof’s “BRIZZY” product. However, knowledge alone does not establish bad intent. Future Proof bore the burden to produce evidence showing Coors’ bad intent. Without such evidence, the court concluded that this factor did not support granting an injunction.
Factor Seven: Evidence of Actual Confusion: The district court dismissed Future Proof’s one example of consumer confusion and ruled that this factor did not favor an injunction. Future Proof presented evidence of a wholesaler mixing up the names “BRIZZY” and “VIZZY.” The court found that the district court incorrectly excluded this evidence because it ruled a “wholesaler” was not a regular consumer for confusion evidence purposes. Notwithstanding this limited reversal, the court affirmed the district court’s finding that a simple and “fleeting” mix-up of names does not constitute actual confusion; therefore, this factor weighed against granting an injunction.
Factor Eight: Degree of Care Exercised by Potential Purchasers: Future Proof disagreed with the district court’s finding that this factor does not favor an injunction. Future Proof advanced arguments that the goods at issue are relatively low cost (a 12-pack of Brizzy sells for $14.99) and that the consumers often purchase the goods in snap decisions. However, Future Proof did not produce any evidence or affidavits showing that the goods are often purchased in a snap decision, nor that Future Proof’s products were available in bars or restaurants where snap purchasing decisions are common.

The court found that the district court did not commit clear error in concluding Future Proof failed to show a likelihood of success on the merits.

VIP Products LLC v. Jack Daniel’s Properties, Inc., Case No. 18-16012 (9th Cir. 2020)

Facts: VIP Products LLC (“VIP Products”) produces and sells a novelty dog toy modeled after Jack Daniel’s Properties, Inc.’s (“Jack Daniels”) trademarked trade dress and bottle design. VIP Products’ toy was called “Bad Spaniel’s” instead of “Jack Daniel’s.” Jack Daniels sent VIP Products a cease and desist letter demanding VIP Products stop making the Bad Spaniel’s toy. In response, VIP Products filed a declaratory judgment action in the District Court for the District of Arizona requesting: (1) a finding of non-infringement, or in the alternative, (2) a finding that Jack Daniel’s trademark and trade dress were not entitled to protection. After a bench trial, the District Court found in favor of Jack Daniels and issued an injunction against VIP Products.

Held: While affirming the rulings regarding Jack Daniel’s trademarks and trade dress validity, the court reversed the district court’s finding against VIP Products for trademark dilution and infringement. The court reversed on grounds that VIP Products’ “Bad Spaniel’s” product is an expressive work entitled to First Amendment protection.

Reasoning: First, in addressing the validity of Jack Daniel’s trade dress and trademarks, the court focused on whether the designs were distinctive and non-functional. Considering the Jack Daniel’s trade dress as a whole, the court affirmed the district court’s finding that the designs were non-functional and distinctive.

Second, the court addressed VIP Products’ assertion of a nominative fair use defense. The court dismissed this defense because nominative fair use only applies in situations where the marks at issue are identical.

Third, the court addressed VIP Products’ First Amendment defense to trademark infringement and dilution. While the likelihood of confusion test usually applies for trademark infringement inquiries, the test may be inappropriate when works containing artistic expression are involved. In determining whether VIP Products’ “Bad Spaniel’s” toy was an expressive work, the court ruled that, while the toy was “not the equivalent of the Mona Lisa,” it was an expressive work nonetheless. In coming to their decision, the court likened this expressiveness inquiry to a similar case of Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC. In Louis Vuitton, the defendants created novelty dog toys in the shape of purses bearing the name “Chewy Vuitton.” The Fourth Circuit held that the “Chewy Vuitton” toys were expressive, and this court found that a similar outcome for VIP Products’ “Bad Spaniel’s” toy was required. Given the expressive nature of VIP Products’ toy, the district court erred in not requiring Jack Daniels to satisfy the Rogers test. The Rogers test (derived from Rogers v. Grimaldi) involves showing that the defendant’s use of the mark is either (1) not artistically relevant to the underlying work, or (2) explicitly misleads consumers as to the source or content of the work, before trademark infringement can be found.

Accordingly, the court reversed and remanded the district court’s finding of trademark infringement pending resolution of the Rogers test inquiry.

Ezaki Glico Kabushiki Kaisha v. Lotte International America Corp., 977 F.3d 261 (3d. Cir. 2020)

Facts: This case concerns whether Ezaki Glico’s (“EG”) trade dress registration for its chocolate-dipped cookie sticks is functional.

EG, a Japanese confectionary company, is the creator of the famous Pocky stick cookies. The stick-shaped cookies are partially dipped in chocolate and have an uncoated end, which serves as a handle. In order to protect itself from competitors, EG filed for and received trademark and trade dress registrations and a method patent. As early as 1993, EG demanded that Lotte cease selling Lotte’s Peperro sticks, which were similar to EG’s Pocky product. In 2015, EG brought trade dress infringement and unfair competition claims against Lotte in New Jersey District Court. The district court granted summary judgment for Lotte, holding that the Pocky product trade dress was functional and not protectable. The Third Circuit affirmed.

Held: The Third Circuit held that the Pocky design trade dress registrations were invalid because the design was functional.

Reasoning: The Third Circuit emphasized that patent law, not trademark law, protects useful designs, and the functionality doctrine prevents trademark law from usurping patent law. EG argued that functional features needed to be essential before the functionality doctrine applies. However, the Third Circuit held that precedent defined functional as merely useful, not essential, and looked to evidence of functionality.

Although EG’s trade dress registrations were presumed valid, evidence showed that EG designed the Pocky product so that people could consume an easy-to-hold cookie without getting chocolate on their hands. The design also allowed EG to package multiple cookies in a box in order to promote sharing. Evidence also showed that EG promoted the Pocky sticks’ “convenient design.” Even though EG pointed to evidence of alternative designs, this was not dispositive to show the Pocky design was non-functional. Although immaterial to the outcome, the Third Circuit also held that the district court erroneously considered Lotte’s argument that EG’s method patent was evidence of functionality. EG’s “central advance” of the method patent did not overlap with the trade dress.

Tiffany and Company v. Costco Wholesale Corporation, 971 F.3d 74 (2d. Cir. 2020)

Facts: This case concerns whether the district court improperly granted summary judgment of trademark infringement to Tiffany in connection with Costco’s use of the term “Tiffany” in describing its engagement rings.

Tiffany, a producer of fine jewelry, owns numerous trademark registrations for “TIFFANY” and other related marks for jewelry-related goods. Tiffany raised, inter alia, trademark infringement claims against Costco when it learned that Costco began displaying engagement rings next to signs stating the rings had a Tiffany-style ring setting. Costco argued that its use of the term “Tiffany” was not infringing, and raised a fair use defense because the term was used “otherwise than as a mark … [and] in good faith only to describe” its ring setting. Costco pointed out that Charles Tiffany, the founder of Tiffany, created the Tiffany-style ring settings in the late 19th century. Costco’s rings were also unbranded, and the ring displays at issue resembled Costco’s other point-of-sale signs which listed ring-setting information.

The district court granted summary judgment to Tiffany because Costco’s fair use defense failed as a matter of law, and Costco failed to raise a genuine issue of material fact under any of the relevant Polaroid factors of actual confusion, good faith, and consumer sophistication. Costco appealed, and the Second Circuit vacated and remanded.

Held: Costco raised triable issues of material facts with regard to the Polaroid factors and, by extension, the ultimate issue of whether Costco’s actions generated a likelihood of customer confusion. Costco also raised triable questions as to the other factors pertinent to the fair use defense.

Reasoning: With regard to the Polaroid factor of actual confusion, the district court had found the testimony of six Costco customers and Tiffany’s survey expert on customer confusion to be unrebutted. However, the Second Circuit held that Costco had rebutted Tiffany’s evidence. Costco argued the testimony of the six customers out of the 3,349 customers who purchased Tiffany-style set rings was only de minimis evidence of confusion, and Costco’s own expert criticized the survey methodology and results of Tiffany’s expert. The Second Circuit held that the district court, in concluding otherwise, observed that these criticisms went to the weight of Tiffany’s evidence rather than its admissibility and that Costco’s expert did not perform his own survey to demonstrate affirmatively that Costco’s customers were not confused. However, the Second Circuit held the weight to be given to a particular piece of evidence could be determinative of whether a jury could find a genuine issue of material fact. Similarly, with regard to the Polaroid factor of consumer sophistication, the Second Circuit also held that the district court’s attribution of Costco’s competing expert report to “the weight that Tiffany’s evidence should be accorded” and its conclusion that Costco failed to provide competing affirmative evidence” was improper.

With regard to the Polaroid factor of good faith, the Second Circuit disagreed with the district court’s holding that no reasonable jury could have found Costco acted with good faith. Costco provided contrary evidence that it never attempted to adopt the TIFFANY mark, that its signs used the term “Tiffany” as a brand-independent description of a type of ring setting and merely reflected information provided by vendors.

The district court resolved Costco’s fair use defense on the basis of good faith alone for the same reasons that underpinned its analysis of the Polaroid good faith factor. Thus, the district court did not consider the other factors in Costco’s fair use defense. The Second Circuit held that Costco’s proffered evidence of its signs could allow a reasonable jury to conclude that Costco did not use the term “Tiffany” as a trademark. Rather, a reasonable jury could conclude that Costco used the term “Tiffany” to describe a ring setting.

§ 1.3.3 Other notable decisions

In re Stanley Brothers Social Enterprises, LLC, 2020 USPQ2d 10658 (TTAB 2020)

Facts: The United States Patent and Trademark Office (“USPTO”) denied Stanley Brothers’ trademark application for “CW” covering “hemp oil extracts sold as an integral component of dietary and nutritional supplements.” The USPTO reasoned that Stanley Brothers’ goods were per se unlawful under the Food, Drug, and Cosmetics Act (“FDCA”) and Controlled Substances Act (“CSA”). The FDCA prohibits “[t]he introduction or delivery for introduction into interstate commerce of any food to which has been added . . . a drug or biological product for which substantial clinical investigations has been made public . . .” The USPTO’s position was that Stanley Brothers’ “hemp oil extracts” are food to which CBD has been added, and that CBD was the subject of clinical investigations during prosecution of its trademark application. Stanley Brothers appealed this refusal to the Trademark Trial and Appeal Board (“TTAB”) arguing that its goods were permissible under the FDCA and CSA; therefore, refusal of its trademark application should be withdrawn. Stanley Brothers relied on three arguments: (1) the Industrial Hemp Provision of the 2014 and 2018 Farm Bills excludes industrial hemp from the FDCA sections at issue; (2) its goods are dietary supplements, not food, and are not subject to regulation by the FDCA; and (3) its goods fall under an FDCA exception that allows their use because they were incorporated into food products before any substantial clinical investigations involving the drug began.

Held: The TTAB rejected Stanley Brothers’ arguments and affirmed the USPTO’s refusal of Stanley Brothers’ trademark application.

Reasoning: First, the TTAB recognized that the Industrial Hemp Provisions of the Farm Bills permits authorized entities to grow and/or cultivate industrial hemp. However, there are no explicit allowances for entities to distribute or sell CBD or food products with CBD, such as Stanley Brothers’ oils. The TTAB thus rejected Stanley Brothers’ first argument.

Second, the TTAB addressed whether Stanley Brothers’ goods were correctly considered food products. Under the FDCA, “food” means “articles used for food or drink for man or other animals . . . and articles used for components of any such article.” Citing evidence that Stanley Brothers’ oils are marketed to be used in consumer beverages, the TTAB ruled that they are considered food products. Therefore, the TTAB rejected Stanley Brothers’ second argument that the products were dietary supplements rather than food.

Third, the TTAB addressed whether Stanley Brothers’ goods were marketed in food before any substantial clinical investigations began involving CBD. After finding that Stanley Brothers did not introduce any persuasive or probative evidence to support this last argument, the TTAB rejected it.

The TTAB affirmed that Stanley Brothers’ goods are per se unlawful under the FDCA. Because of this ruling, the TTAB did not reach whether or not the goods are also illegal under the CSA.

AM General LLC v. Activision Blizzard, et al., No. 17 Civ. 8644 (GBD) (S.D.N.Y. 2020)

Facts: This case addresses the balance between (1) First Amendment expression in artistic works (video games) using registered trademarks and (2) registered mark-holder rights granted by the Lanham Act.

AM General designs and manufactures military-grade vehicles branded as “Humvee.” The United States Armed Forces, as well as the militaries of numerous countries, routinely use Humvee vehicles as part of their operations. AM General holds a trademark registration for the HUMVEE word mark and asserts trade dress rights in design elements of the Humvee vehicle itself.

Activision Blizzard (“Activision”) makes Call of Duty, a highly successful and well-known first-person shooter video game franchise. Call of Duty comprises cinematic depictions of warfare intended to simulate military combat. Activision uses the Humvee vehicle as part of its video game design. Call of Duty players can even drive a Humvee. Activision also uses the Humvee as part of its advertising campaigns for Call of Duty games.

AM General brought suit against Activision for trademark infringement and trade dress infringement (among several other claims) in connection with Activision’s use of the Humvee vehicles. Activision filed a motion for summary judgment on all claims.

Held: The district court granted Activision’s motion for summary judgment on all claims, applying the Rogers v. Grimaldi test and finding that Activision’s use of the Humvee (1) had artistic expression related to the underlying work and (2) did not expressly mislead as to the source or content of the work.

Reasoning: The court applied the two-prong test in Rogers v. Grimaldi (875 F.2d 994 (2d Cir. 1989)) to analyze whether the Lanham Act should be interpreted narrowly in light of protected expression under the First Amendment. Under the two-prong Rogers test, courts in the Second Circuit must determine whether the use of the trademark (1) has any “artistic relevance to the underlying work whatsoever,” and (2) “explicitly misleads as to the source or the content of the work.” On the first prong, the court found that “[f]eaturing actual vehicles used by military operations around the world in video games about simulated modern warfare surely evokes a sense of realism and lifelikeness to the player who ‘assumes control of a military soldier and fights against a computer-controlled or human-controlled opponent across a variety of computer-generated battlefields.’” The court determined such depiction constituted artistic relevance.

In analyzing the second prong, the court applied the “Polaroid factors” (Polaroid Corp. v. Polaroid Electronics Corp., 287 F.2d 492, 495 (2d Cir. 1961)) for a likelihood of confusion determination. It found that six out of the eight factors weighed in Activision’s favor, or against a likelihood of confusion. The “evidence of actual confusion” factor weighed only “slightly” in favor of AM General. AM General’s consumer survey “found that 16% of consumers shown actual video game play from Activision’s games were confused as to AM General’s association with Call of Duty.” The court determined this survey was evidence of “some” confusion “at most.” Overall, the court found that the countervailing First Amendment consideration weighed against heavily considering the actual confusion evidence. AM General failed to show Activision’s uses of Humvee vehicles misled Call of Duty players as to the source of the Humvee mark and design. Thus, the court ruled in Activision’s favor.

By: Business and Corporate Litigation Committee, Business Law Section, American Bar Association May 3, 2021

§ 1.1 Patent Case

§ 1.1.1 Supreme Court decisions

§ 1.1.2 Federal Circuit decisions

§ 1.2 Copyright Cases

§ 1.2.1 Supreme Court decisions

§ 1.2.2 Circuit Court decisions

§ 1.2.3 Notable district court decisions

§ 1.3 Trademark Cases

§ 1.3.1 Supreme Court decisions

§ 1.3.2 Circuit Court decisions

§ 1.3.3 Other notable decisions

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