8th Circuit: No Subpoenas Under DMCA Where ISP is Mere Conduit

In Re Charter Communications, Inc. Subpoena Enforcement Matter, No. 03-3802 (8th Cir. 2005), The DMCA only authorizes copyright owners to obtain and serve subpoenas on an ISP if the ISP is notified in accordance with the provisions of §512(c)(3)(A). Since Charter was merely acting a conduit §512(a), to which the Notice provisions do not apply, Charter argued that RIAA was not entitled to a subpoena, since there was no provision for the Notice which is a prerequisite for the issuance of a subpoena. The Eighth Circuit agreed with the DC Circuit that the DMCA did not provide for subpoenas of ISP’s who act as mere conduits.

CAFA Affirms that U.S. Patent Rights are Exhausted Only When the Product is Sold in the U.S.

Fuji Photo Film Co., Ltd. v. Jazz Photo Corp., 03-1324, -1331 (Fed. Cir. 2005), the Federal Circuit held that the district court did not err in finding Jazz liable for direct and induced infringement, in awarding damages based upon the jury’s reasonable royalty rate, in refusing to enhance those damages, or in denying Fuji a permanent injunction. The Federal Circuit hold that to qualify for the repair defense under the exhaustion doctrine, the product must have been sold within the U.S., note that because the U.S. patent system does not have extraterritorial effect, foreign sales can never occur under a United States patent. On the issue of inducement, the Federal Circuit said that it had historically required either a general or a specific level of intent to induce infringement. Proof of actual intent to cause the acts which constitute infringement is a necessary perquisite to finding active inducement. The plaintiff has the burden of shown that the alleged infringer’s actions induced infringing acts and that he know or should have also his actions would induce actual infringement.
COMMENT: This is one of those where instances where the trial court got everything right! Kudos to Judge Hochberg from District of New Jersey.

CAFC: The PTO Doesn't Have to Rexamine Patents Allegedly Improperly Issued Because of Patent Office Delays in Examining an Application

Pieczenik v. Dimantis, 04-1477 (Fed. Cir. 2005) NON-PRECEDENTIAL, Dr. Pieczenik, disappointed in the twelve year delay in the issuance of his patents, sued the Patent Office and the FDA, asking that the patent office reexamine more than 1,000 patents that issued between the filing of his applications and the issuance of his patenst, and asking the FDA to reexamine a biologic license granted on a particular judge. In a non-precedential opionion, the Federal Circuit found that mandamus was not appropriate since Dr. Pieczenik had not exhausted his administrative remedies, and in any event neither agency owned him a non-discretionary duty to take the requested actions.
COMMENT: A lot of inventors can sympathize with Dr. Pieczenik's frustration at examination delays in the Patent Office.

Enforcing A Patent Obtained By Fraud On The Pto Is An Exceptional Case Supporting An Award Of Attorneys Fees

Bruno Independent Living Aids, Inc. v. Acorn Mobility Services, Ltd., 04-1114, -1115 (Fed. Cir. 2005), the federal Circuit affirmed an award of attorneys fees to defendant pursuant to 35 USC §285 as an “exceptional case” due to plaintiff’s inequitable conduct in prosecuting the patent in suit. Plaintiff failed to disclose to the Patent Office several invalidating prior art stair lifts that plaintiff submitted to the FDA to get approval of its stair lift. The ultimate determination of inequitable conduct is a matter “committed to the discretion of the trial court, and is reviewed for an abuse of discretion, while the underlying findings of materiality and intent are reviewed for clear error, and will not be disturbed in absence of a definite and firm conviction that a mistake has been made. The Federal Circuit observed that the same person responsible for the FDA filing was involved in the patent prosecution, and rejected the argument that the FDA submission had no relevance on whether the information was material, stating: one who knows of the art or information cannot intentionally avoid learning of its materiality -- it may be found that he should have known of that materiality.

Divorce Court: Ownership of Patents is a Matter of State Law

Weres v. Weres, 04-1233 (Fed. Cir. 2005), the Federal Circuit affirmed the dismissal of a complaint by Oleh Weres against his ex-wife Nancy Weres seeking to collaterally attack a divorce degree giving Nancy Weres joint ownership of patents on inventions made by Oleh. The Federal Circuit held that the federal courts lacked jurisdiction under the Rooker/Feldman doctrine, that U.S. district courts do not have jurisdiction over challenges to state court decisions. The Federal Circuit observed that state courts have the power over the ownership of patents.
COMMENT: The mischievous effects co-ownership of patents under 35 USC §262 are often overlooked by non-patent professionals, and include problems in splitting both the costs of, and benefits of patent ownership.

CAFC Reminds Us What "Teaching Away" Means

Jore Corporation v. Kouvato, Inc. v. Home Depot U.S.A.,Inc., 04-1163.pdf, (Fed. Cir. 2005) Reversing a jury verdict that U.S. Patent No. D419,475 was not invalid, the Federal Circuit clarified that "[s]imply because a piece of prior art contains a feature that is not present in the patent does not mean that the prior art teaches away from the patent. Para-Ordnance Mfg., Inc. v. SGS Imps. Int'l, Inc., 73 F.3d. 1085, 1090 (Fed. Cir. 1995). A reference teaches away only when a person of ordinary skill, upon examining the reference, would be discouraged from following the path set out in the reference or would be led in a direction different from the path that was taken by the applicant. In re Gurley, 27 F. 3d 551, 553 (Fed. Cir. 1994)."
Non-Precedential

Genuine Issues of Material Fact Prevent Summary Judgment That There Was No Contract

Lamle v. Mattel, Inc., 04-1151 (Fed. Cir. 2005). The Federal Circuit reversed summary judgment in favor of Mattel that there was no contract between Mattel and Lamle. The Federal Circuit said that to prove the contract Lamle must prove that the parties objectively intended to be immediately bound by an oral contract, that an email from Mattel contained all of the material terms of the oral contract to satisfy the Statute of Frauds, and that the sender had authority to bind Mattel. The Federal Circuit found that Lamle had presented sufficient evidence to create genuine issues of material fact on these points. In dissent, Judge Newman pointed out that Lamle had twice signed agreements with Mattel that stated that no obligation was assumed by Mattel "until a formal written contract is entered into, and then the obligation shall be only that which is expressed in the formal, written contract." Judge Newman argued that when the parties agree that their relationship shall take a certain form, that form is binding, and thus the undisputed absence of a "formal written contract" was fatal. Judge Newman also noted that an email that the majority said might be a writing memorandum of the agreement satisfying the Statute of Frauds, expressly stated that it "was subject to contract" indicating that it was not evidence that a final agreement had been reached.
COMMENT: This case is another example of the difficulties that businesses encounter when negotiating with individuals over intellectual property rights. Even an express statement that no obligations were created and no terms were enforceable unless there was a formal written agreement did not protect Mattel. The Federal Circuit may have given Mr. Lamle his day in court, but they may have made businesses even more reluctant to negotiate with individuals.

Only Narrowing Amendments Create Prosecution History Estoppel

Business Objects, S.A. v. Microstrategy, Inc., 04-1009 (Fed. Cir. 2005). The Federal Circuit affirmed the claim construction, and determination of no literal infringement or infringement under the doctrine of equivalents of two claims, but reversed the termination of no infringement under the doctrine of equivalents of one claim. The district court found that prosecution history estoppel barred a finding of infringement under the doctrine of equivalents, but the Federal Circuit reversed because the amendment that purportedly gave rise to the prosecution history estopple was not a narrowing amendment. The Federal Circuit found that replacing "translating said user inquiry into a structred query language (SQL) equivalent statement" with "generatign queries in teh predetermiend query language" broadened the scope.

NCR Corpporation v. Palm, Inc., et al., 04-1093 (Fed. Cir. 2005) NON-PRECEDENTIAL. The Federal Circuit affirmed summary judgment of non-infringement. At issues was the claim term “a plurality of discrete switches” which the Federal Circuit agreed meant “two or more distinct and separate manual or mechanically actuated devices for making, breaking, or changing the connections in an electric circuit.”

CAFC Reverses Summary Judgment of Obviousness Because of Lack of Specific Findings on Motivation to Combine References

Teleflex, Inc., et al. v. KSR International Co., 04-1152, (Fed Cir. 2005) NON-PRECEDENTIAL. The Federal Circuit vacated summary judgment of obviousness and remanded. When obviousness is based on the teachings of multiple references, the movant must also establish some ‘suggestion, teaching, or motivation’ that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed.” The Federal Circuit said that the reason, suggestion, or motivate to combined prior art references may be found explicitly or implicitly (1) in the prior art references themselves, (2) in the knowledge of those of ordinary skill in the art that certain references, or disclosures in those references, are of special interest or importance in the field; or (3) from the nature of the problem to be solved, leading inventors to look to references relating to possible solutions to the problem. It is important that there is not just a motivation to combine the references, but to combine them in the particular manner claimed. The Federal Circuit said that the district court found obviousness without making findings as to the specific understanding or principle that would have motivated one with no knowledge of the invention to make the claimed combination, and therefore vacated the reversed.
NOTE: Along the way the Federal Circuit reminded everyone that “Clear and convincing evidence exists when the movant ‘place[s] in the mind of the ultimate fact finder an abiding conviction that the truth of its factual contentions are ‘highly probable.”

CAFC: A Picture is Worth More Than a Thousand Words -- It Supports Means Plus Function Claim

Freeman, et al. v. Gerber Products Company, et al., 04-1203 (Fed. Cir. 2005) NON-PRECEDENTIAL. The Federal reversed summary judgment of indefiniteness of means-plus-function claims, and remanded. Pursuant to 35 U.S.C. §112, ¶6, a structure disclosed in the specification “corresponds” to a means plus function clause if the specification of prosecution history clearly links or associates that structure to the recited function. If the disclosure of the corresponding structure is inadequate, then the claim is indefinite under 35 U.S.C. §112, ¶6. The adequacy of the disclosure is judges from the perspective of one skilled in the art. Disclosure in drawings is sufficient where a person of skill in the art would understand that the structure in the drawings corresponds to the means plus function claims. The Federal Circuit distinguished prior cases where disclosure in drawings was insufficient by pointing out in those cases some corresponding structure was specifically identified in the specification, and it was not clear that other structure in the drawings also corresponding.
NOTE: Showing the corresponding structure in the drawings can be enough, but if some corresponding structure is expressly disclosed and other corresponding structure is merely shown in the drawings, the structure shown only in the drawings may not be covered.

Dismissal of Declaratory Judgment Action Was An Abuse of Discretion

Electronics for Imaging, Inc., v. Coyle, 04-1266 (Fed Cir. 2005). The Federal Circuit reversed the district court's dismissal of EFI's action for declaratory judgment of invalidity and non-infringement. The Federal Circuit said that the decision to stay or dismiss a declaratory judgment action is reviewed for an abuse of discretion, which occurs when (1) the court's decision was clearly unreasonable, arbitrary, or fanciful; (2) the decision was based on an erroneous conclusion of law; (3) the court's findings were clearly erroneous; or (4) the record contains no evidence upon which the court rationally could have based its decision. The district court found that EFI's suit did not serve the purposes of the Declaratory Judgment Act because EFI was not uncertain of its position. The Federal Circuit said that the uncertainty addressed by the Declaratory Judgment Act was the reasonable apprehension created by a patentee's threats and the looming specter of litigation that results from those threats. The Federal Circuit found that such uncertainties were present, and they were caused by defendant. The Federal Circuit concluded that the district court's reason for dismissing the action was erroneous, and thus a abuse of discretion.

NOTE: The Federal Circuit observed that "litigation is rarely 'certain,' even if one is confident in one's position".

CAFC Rejects Challenge to Examiner's Request for Information Under 37 CFR 1.105

Star Fruits S.N.C. v. U.S. Department of Commerce, 04-1160 (Fed. Cir. 2005)Star Fruits refused to respond to the Patent Examiner's request for information pursuant to 37 C.F.R. 1.105, because Star Fruits believed that the information would be used by the Examiner to issue what Star Fruit believed would be an improper rejection. As a result of this refusal the patent application was deemed abandoned, and the Federal Circuit affimed abandonment of the application. Under 37 C.F.R. 1.105, the Examiner can ask for, and the applicant must provide, any information that may be reasonably necessary to properly examine the application. This information is not limited to material information, so it made no difference whether or not the requested information could form the basis for a valid rejection. Star Fruit should have submitted the information, and appealed the improper rejection if and when it was made. The real issue in the case that was not decided is the Patent Office's 2001 decision that foreign sale or use of a plant subject to a foreign breeder's right registration bars a U.S. plant patent. Star Fruit tried to contest this policy by trying to prevent the rejection by challenging the request for information to support the rejection, rather than fighting the rejection.
PRACTICE TIP: Respond to the Examiner's request for information under 37 CFR 1.105 unless it is arbitrary and capricious; you can't use a review of the request for information as an alternative to a review of a substantive rejection.

Patentee Can Aggressively Assert Patent If Acting in Good Faith

Brooks Furniture Manufacturer, Inc. v. Dutailier International, Inc., 03-1379 (Fed Cir. 2005). The Federal Circuit vacated an award of attorneys fees to a prevailing defendant in a design patent infringement and unfair competition case. Absent misconduct in conducting the litigation, sanctions may be imposed only if both (1) the litigation is broad on subjective bad faith, and (2) the litigation is objectively baseless. The district court found bad faith in bringing the action and in sending cease and desist letters. The Federal Circuit examined both actions, and finding no subjective bad faith did not reach the question of whether the litigation was objectively baseless. The underlying improper conduct and the characterization of the case as exceptional must be established by clear and convincing evidence. The Federal Circuit said that there is a presumption that an assertion of infringement is made in good faith. In reviewing the reasonableness of the pre-filing opinions obtained by the patentee, the Federal Circuit noted that "it is not necessary that every aspect of the designs be identical." The Federal Circuit said that the failure to mention "every detail" of the designs does not make the opinion wrong or unreliable, and noting that "infringement is often difficult to determine" found that the patentee's ultimately incorrect view of how a court will find does not establish bad faith. The Federal Circuit said that there was no clear and convincing evidence of bad faith in asserting infringement. The Federal Circuit also reviewed other conduct alleged to indicate bad faith, including the patentee's reliance on an opinion letter from litigation counsel and the "harsh" terms of the patentee's cease and desist letters, and the patentee's size. The Federal Circuit said that the fact that plaintiff was larger that defendant, that sued others, and was unwilling to grant licenses were not indicative of bad faith. "Although the entirety of a patentee's conduct may be considered, enforcement of patent rights that are reasonably believed to be infringed does not entail special penalty when the patentee is unsuccessful." The Federal Circuit reversed the finding of bad faith, and vacated the award of attorney's fees.
NOTE: The Federal Circuit rightly gave patentee the freedom to allege infringement, and did not put larger patent owners or patent owners who want to maintain exclusivity on different footing from other patent owners. The Federal Circuit also recognized the difficulty in determining infringement, and appeared to ease (if only slightly) recent indications that design patents have "almost no scope".

Standard Of Review Makes A Difference: Likelihood Of Confusion Is A Question Of Fact In The Eighth Circuit

Everest Capital Limited v. Everest Funds Management, LLC, 04-1282 (8th Cir. 2005), the Eighth Circuit affirmed the determination that Everest Capital was not confusingly similar to Everest Funds. Everest Capital admitted that the potential market for its funds was a small proportion of the investment community, namely sophisticated and accredited investors such as universities and foundations. Defendant Everest Fund was a small fund (just $3 million), open to all investors, and requiring just a $2,000 initial investment. Despite being open to all investors, 98% of the assets belonged to member of the fund manager’s family, and each of the funds had less then 10 investors from outside the family. The Eighth Circuit considered the six non-exclusive SquirtCo or Luigino factors: (1) strength of the owner’s mark, (2) the similarity of the owner’s mark and the alleged infringer’s mark; (3) the degree of competition between the products; (4) the alleged infringer’s intent to ‘pass off’ its goods as the trademark owners; (5) incients of actual confusion; and (6) the type or product, its cost, and conditions of purchase. The jury found no infringement, and Everest Capital is entitled to a judgment as a matter of law only if there is no legally sufficient evidentiary basis for a reasonable jury to find no infringement. Everest Capital argued that the evidence it submitted on the SquirtCo factors weighed overwhelmingly in its favor. The Eighth Circuit observed that such an argument might be persuasive in the Second Circuit, where likelihood of confusion is a question of law reviewed de novo, but not in the Eighth Circuit where, as in the Fourth Circuit it is a question of fact. The Eighth Circuit said the only issue on appeal is whether the record as a whole, viewed in the light most favorable to the jury’s verdict, contains sufficient evidence supporting the verdict. Under this standard the Eighth Circuit said that it was clear that the district court properly denied Everest Capital’s motion for JMOL. The Eighth Circuit also affirmed the general verdict of no dilution, noting that it must stand if a reasonable jury could find either that EVEREST CAPITAL was not famous, or that defendants did not cause an actual lessening of the marks capacity to distinguish EVEREST CAPITAL’s.

PowerPoint Slide Creates a Confidentiality Agreement

Koresko v. Bleiweis , 2004-0769 (E.D. PA 2005). Judge Kauffman ruled that a trade secret misappropriation claim can be made independently of a breach of contract claim based upon a confidentiality agreement arising from a PowerPoint slide in plaintiff's PowerPoint presentation. This allows plaintiff to continue to pursue a tort claim as well as a contract claim against defendant, who is alleged to have misappropriated confidential information disclosed in the PowerPoint presentation

Koresko's PowerPoint Confidentiality Agreement