EU Court Ruling Keeps Shoe Designers On Their Toes

Last month, on the heels of the ruling from the District Court of The Hague, the Court of Justice of the European Union (CJEU) ruled that Christian Louboutin’s red high-heeled soles are protectable as a trademark.

As previously discussed, Louboutin decided to sue to protect its hue.  Louboutin has owned a registered Benelux trademark for the red sole since 2010, and in 2013, Louboutin sued Van Haren Schoenen BV (Van Haren), alleging that Van Haren’s blue high heels with red soles infringed Louboutin’s trademark.  In rebuttal, Van Haren argued that Louboutin’s trademark is invalid because the red color is part of the “shape” of the shoe, and shapes are not protectable as trademarks under the EU equivalent of the US “functionality doctrine.”  The functionality doctrine does not protect aspects of trade dress that serve a utilitarian purpose.  If a product feature is essential to the use or purpose of the article, or affects the cost or quality of the article, then the product feature is deemed functional and cannot be trademarked. Continue Reading

ALJ Cheney Grants Motion To Terminate Based On Arbitration Agreement

Just a few days after denying a motion to terminate in Certain Color Intraoral Scanners and Related Hardware and Software, Inv. No. 337-TA-1091, Order No. 23 (May 18, 2018) that was based on a forum selection clause in a prior agreement between private parties (see our prior post), Administrative Law Judge Cheney granted a motion to terminate in another investigation based on an arbitration clause contained in a license agreement.  Certain Wafer-Level Packaging, Semiconductor Devices And Products Containing Same (Including Cellular Phones, Tablets, Laptops, And Notebooks) And Components Thereof, Inv. No. 337-TA-1080, Order 26, (May 21, 2018).

As highlighted in our prior post, Judge Cheney had explained some distinctions between forum selection and arbitration clauses in Intraoral Scanners, including that arbitration is a policy expressly favored by law.  Now, Judge Cheney has made the distinction between the two types of clauses even more explicit by expressly distinguishing his decision in Intraoral Scanners as involving “different facts.”  According to Judge Cheney, “a prior agreement between private parties selecting a court in another country [Denmark] to resolve contractual disputes presents different considerations than a prior agreement to arbitrate.”

Takeaway:  Section 337(c)’s authority to terminate an investigation “on the basis of an agreement between the private parties” is discretionary.  Judge Cheney’s recent decisions on motions to terminate illustrate that the issue is fact-specific and may require a detailed look at both the agreement in question and the policy behind the discretionary authority to terminate.

 

The Federal Circuit Shuts the Door on Use of Tribal Immunity in IPRs

The Federal Circuit has rejected Allergan’s ploy to shield its Restasis patents from the scrutiny of inter partes review by assigning them to the St. Regis Mohawk Tribe, finding that tribal immunity does not apply in such proceedings.  The case is Saint Regis Mohawk Tribe, Allergan, Inc., v. Mylan Pharmaceuticals Inc., et al., Case No. 18-1638, July 20, 2018.

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Subsidiary’s Facility Qualifies as a Regular and Established Place of Business of the Parent for Patent Venue Purposes

A recent decision from the US District Court for the Western District of Texas suggests that district courts are taking a more expansive view of what constitutes a “regular and established place of business” for purposes of establishing venue in patent infringement cases.  Board of Regents, The Univ. of Texas Sys. v. Medtronic PLC, Case No. 17-942 (W.D. Tex.)

In November 2017, the Board of Regents of the University of Texas System (the “Board’) sued Medtronic, Inc. for patent infringement in the US District Court for the Western District of Texas (the “Western District”).  Medtronic responded to the Complaint by challenging venue as improper. Continue Reading

The China Rules of Evidence Series – Online Purchase of Infringing Products and Forum Shopping in Trademark Infringement Cases

In China, to succeed in an intellectual property (IP) infringement lawsuit, it is beneficial to have the case heard in a court that specializes in IP disputes (e.g., the IP courts in Beijing, Shanghai and Guangzhou). Securing a court that is away from the domicile of the infringer may also be beneficial, as it will reduce the risk of the court being influenced by local factors, and and the unknown legal environment will force the defendant to increase its defensive efforts. Continue Reading

USITC Issues Important Opinion Concerning Section 337’s Domestic Industry Requirement

The U.S. International Trade Commission issued an important opinion on Friday concerning Section 337’s “domestic industry” requirement, holding that investments in non-manufacturing activities, such as engineering and research and development, can be used to satisfy the required “significant investment in U.S. plant and equipment” or “significant employment of U.S. labor or capital.”

The Commission’s opinion (in Certain Solid State Storage Drives, Stacked Electronics Components, and Products Containing Same, Inv. No. 337-TA-1097) is noteworthy because it directly addresses, for the first time, a difference of opinion among the Commission’s administrative law judges (ALJs) concerning the proper treatment of engineering and research and development investment under the statutory scheme.  The issue arises because the statute provides three, seemingly distinct, options for satisfying the domestic industry requirement in cases involving alleged infringement of statutory intellectual property rights: Continue Reading

A Forum Selection Clause Provides No Basis For Terminating A Section 337 Investigation

Does a forum selection clause in a pre-existing agreement between opposing parties in a Section 337 investigation provide grounds for terminating the investigation?  A recent decision of Administrative Law Judge Cheney in Certain Color Intraoral Scanners and Related Hardware and Software, Inv. No. 337-TA-1091, Order No. 23 (May 18, 2018) concludes that the answer is no. Continue Reading

U.S. Supreme Court Opens the Door to Allow Patent Owners to Recover Foreign Lost Profits

The United States Supreme Court ruled on Friday that a patent owner can, at least in some situations, recover lost profits for the unauthorized use of its patented technology abroad.  The 7-2 decision in WesternGeco LLC v. ION Geophysical Corp. overturned the Federal Circuit’s opinion, which relied on the presumption against extraterritorial application of U.S. law to vacate a jury’s award of $93.4 million in profits that the patent owner would have earned on overseas contracts.

In the opinion, the Supreme Court soundly rejected the Federal Circuit’s view that profits lost outside the United States are categorically unavailable as a matter of United States patent law.   But the Court declined to go as far as the patent owner requested and find that the “presumption against extraterritoriality should never apply to statutes, like 35 USC § 284 [the patent damages statute], that merely provide a general damages remedy for conduct Congress has declared unlawful.”  (For more details on the Federal Circuit decision and briefing, see our prior posts here and here.)   The Court instead focused on the narrower question of “whether the case involves a domestic application of the statute.” Continue Reading

Seeking Attorneys’ Fees Under the Patent Act? Early and Clear Notice of an Opposing Party’s Deficient Litigation Conduct Is a Prerequisite for a Successful Motion

The Federal Circuit recently issued a precedential decision in Stone Basket Innovations, LLC v. Cook Medical LLC, No. 2017-2330 that has important ramifications for litigants seeking attorneys’ fees under Section 285 of the Patent Act.

Section 285 authorizes a court to award reasonable attorneys’ fees to the prevailing party in “exceptional cases.”  In Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014), the Supreme Court defined an “exceptional case” as one that “stands out from others with respect to the substantive strength of a party’s litigating position . . . or the unreasonable manner in which the case was litigated.”  Under Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744 (2014), district courts are to apply a “totality of the circumstances” test to determine whether a case is exceptional.

Stone Basket’s case started life as a run-of-the-mill patent infringement suit filed in the US District Court for the Eastern District of Texas in April 2015.  Defendant Cook Medical served its invalidity contentions in October 2015 and subsequently deposed the inventor in January 2016. The inventor testified that he “realize[d] there [wa]s nothing novel about” the “sheath movement element” added to the claim to overcome an examiner rejection.  Cook Medical then petitioned the US Patent and Trademark Office for inter partes review in March 2016.  Shortly thereafter, the court transferred the case to the US District Court for the Southern District of Indiana.  The parties filed a joint motion to stay the proceedings in April 2016, which the district court granted.

The PTO instituted an IPR on all claims of the asserted patent in September 2016, which prompted one of Stone Basket’s managing members to offer Cook Medical a license in exchange for $150,000.  Negotiations broke down and in December 2016, Stone Basket filed a motion requesting adverse judgment in the IPR proceeding.  The PTO granted the adverse judgment and cancelled all claims.

Following cancellation, the district court granted Stone Basket’s motion to dismiss the infringement suit with prejudice.  Cook Medical subsequently sought attorneys’ fees.  The district court denied the fee application because it determined the case was not “exceptional” under 35 USC § 285.

Addressing the issue of the substantive strength of Stone Basket’s non-prevailing litigation position, the Federal Circuit found that the district court did not abuse its discretion in finding that the evidence Cook Medical submitted—invalidity contentions and inventor testimony—did not, taken alone or in combination, warrant a finding of exceptionality.

Describing Cook Medical’s invalidity contentions as “inconsistent and unilluminating,” the Federal Circuit observed that the invalidity contentions failed to provide “clear notice” of invalidity.  While Cook Medical focused on the obviousness of the asserted patent over a prior art reference (the “Leslie reference”), the Federal Circuit explained that the contentions fell short of notifying Stone Basket how the Leslie reference renders the asserted patent obvious or even that Stone Basket should conduct a focused investigation on whether the Leslie reference, in particular, renders the asserted patent obvious.  The Leslie reference Stone Basket championed, moreover, was listed on the face of the patent and Stone Basket failed to overcome the presumption that the examiner considered the reference.  As such, the Federal Circuit explained that Stone Basket, having been issued a valid patent, was entitled to a presumption of good faith in asserting its patent rights against Cook Medical.

The Federal Circuit found equally unavailing Cook Medical’s reliance on the inventor testimony concerning the novelty of a particular claim element.  Citing its precedent, the Federal Circuit reiterated that a post-issuance statement regarding a single element of a claimed invention does not establish invalidity because the court must consider the subject matter sought to be patented taken as a whole.  Again noting that a duly issued patent is presumed valid, the Federal Circuit explained that it was not “necessarily unreasonable” for Stone Basket to continue relying on the presumptive validity despite the inventor’s testimony.

Cook Medical further faulted the district court for considering its litigation conduct when declining to find the case exceptional, arguing that the district court cited no authority for the proposition that the tactical decisions made by the prevailing party are relevant to assessing the substantive strength of the non-prevailing party’s litigation positions.  The Federal Circuit rejected the argument, noting post-Octane precedent that the conduct of all parties—including the movant—is a relevant factor for district courts to consider under Octane’s totality of the circumstances inquiry.  Accordingly, the Federal Circuit concluded it was appropriate for the district court to consider Cook Medical’s failure to send any communication to Stone Basket that highlighted and set out with precision the specific invalidity argument that rendered the lawsuit frivolous or unfounded.

Ultimately, Cook Medical’s failure to provide “early, focused, and supported notice [to Stone Basket] of its belief that it was being subjected to exceptional litigation behavior” proved dispositive to the Federal Circuit’s opinion that the district court had not abused its discretion.  Reviewing the chronology, the Federal Circuit noted that Cook Medical waited nearly a year after service of its invalidity contentions and nine months after the inventor’s deposition before informing Stone Basket that Cook Medical intended to seek fees if Stone Basket refused to drop its case.  According to the Federal Circuit, a “party cannot simply hide under a rock, quietly documenting all the ways it’s been wronged, so that it can march out its ‘parade of horribles’ after all is said and done.”

The key takeaway: Although Section 285 does not expressly require notice, providing interim notice during the litigation of exceptionally weak arguments or bad behavior is an important factor in the determination of an exceptional case.  Like Rule 11, such a notice serves the salutary role of avoiding undue expenses by providing the noticed party with the opportunity to correct its approach and by providing the court the ability to take corrective action at an early stage.

Limiting Exposure Under the UK Trade Secrets Regulations

The UK Trade Secrets Regulations which came into effect earlier this month for the first time provide a statutory definition of a “trade secret.”  The definition is narrower than the existing standard and focuses more on whether the information has been kept secret rather than its inherently secret nature.  This new requirement puts the onus on businesses to take reasonable steps to secure their trade secrets. Our paper prepared by Carlton Daniel highlights a few steps UK businesses may take to limit their exposure under this new legislation.

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