Intellectual Property
Posted: Wednesday, January 26, 2011
Copyright claimant is presumed to own a valid copyright need not establish validity of its copyright for defendant's burden to set forth facts rebutting this presumption to arise; presumption of validity of a copyright applies when standing is at issue. Plaintiff's collection of fabric designs satisfied requirements set forth in 37 C.F.R. Sec. 202.3(b)(4) to be registered as an "unpublished collection."
United Fabrics International, Inc. v. C&J Wear, Inc.
filed January 26, 2011
Cite as 09-56499
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Intellectual Property
Posted: Tuesday, January 4, 2011
Copyright owner's unsolicited mailing of compact discs containing copyrighted sound recordings for marketing purposes effected a sale of the discs to the recipients for purposes of the first sale doctrine. Recipients were free to dispose of the discs as they saw fit under the Unordered Merchandise Statute.
UMG Recordings, Inc. v. Augusto
filed January 4, 2011
Cite as 08-55998
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Intellectual Property
Posted: Tuesday, December 14, 2010
Plaintiff that sold software program--which automatically played the early levels of a popular multiplayer online role-playing game in which players interact in a virtual world while advancing through 70 levels--was not liable for secondary contract infringement, even though plaintiff was not entitled to an essential step defense. Players were licensees rather than owners of game software, where the game owner's prohibitions against bots and unauthorized third-party software were covenants rather than copyright-enforceable conditions absent a nexus between the provisions and the licensor's exclusive rights of copyright. Plaintiff's programming of its software to avoid detection did not violate Sec. 1201(a)(2) of the Digital Millennium Copyright Act--which prohibits the circumvention of any technological measure that effectively controls access to a protected work and grants copyright owners the right to enforce that prohibition--with respect to the game's literal elements and individual non-literal elements--such as source code and visual and audible components--where the game's detection software did not effectively control access to those elements. Modification violated Sec. 1201(a)(2) as to the game's dynamic non-literal elements, which included travel through the virtual world. Plaintiff's programming of its software to avoid detection did not violate Sec. 1201(b)(1) of the Digital Millennium Copyright Act--which prohibits trafficking in technologies that circumvent technological measures that effectively protect "a right of a copyright owner"--because game's detection software, designed to reduce cheats and bots, did not protect its reproduction right against unauthorized copying. Game owner was not entitled to summary judgment on its tortious interference claim against plaintiff where there was a material question of fact as to whether plaintiff's actions were improper, even though claim was not preempted by the Copyright Act.
MDY Industries, LLC v. Blizzard Entertainment, Inc.
filed December 14, 2010
Cite as 09-15932
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Intellectual Property
Posted: Monday, December 13, 2010
Judgment was affirmed by an equally divided court.
Costco Wholesale Corporation v. Omega, S.A.
filed December 13, 2010
Cite as 08-1423
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Intellectual Property
Posted: Wednesday, November 24, 2010
Defendant The Freecycle Network--an organization devoted to facilitating the recycling of goods--engaged in naked licensing and thereby abandoned its trademarks where it allowed plaintiff FreecycleSunnyvale--a member group--the ability to use the trademark but did not retain express contractual control over member's quality control measures, did not have actual controls over member's quality control measures, and unreasonably relied on member's quality control measures.
FreecycleSunnyvale v. The Freecycle Network
filed November 24, 2010
Cite as 08-16382
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Recent Patent Cases of Note
In Research Corp. Technologies, Inc. v. Microsoft Corp., Case No. 2010-1037, the Federal Circuit reversed the district court's finding that certain claims of two asserted patents were invalid under 35 U.S.C. § 101 because they claimed patent ineligible subject matter. The Federal Circuit emphasized the broad language of § 101 and discussed the Bilski decision's emphasis on the importance of interpreting § 101 broadly. In this case, the patents claimed a process for rendering a halftone image, which is a functional application that addresses a need in the art, and the process requires film, printers, memory, and display devices. Thus, the claimed subject matter falls under the broad category of § 101, which states that any new and useful process or any improvement thereof qualifies as patentable subject matter under § 101. Additionally, the claims are still patentable under § 101 even though some of the claims incorporate well-known algorithms and formulas, because these algorithms and formulas are only part of each claim, and none of the claims as a whole seeks to patent the algorithms and formulas.
The Federal Circuit affirmed the district court's finding that certain asserted claims of a third patent are broader than the invention disclosed in the applications to which the third patent claims priority. Thus, the asserted claims are not entitled to the earlier filing date of the priority applications. The priority applications repeatedly discussed the "present invention" as a blue noise mask and recited a blue noise mask in their claims. The figures in the priority applications only illustrated various aspects of a blue noise mask. Furthermore, the inventors' testimony confirmed that the applicants were only in possession of a blue noise mask when the priority applications were filed. Therefore, the district court was correct in finding that the asserted claims of the third patent, which claimed inventions that only substantially included blue noise masks, are broader than the invention disclosed in the priority applications and are not entitled to the earlier filing dates.

In ERBE Elektromedizin GMBH v. Canady Technology LLC., Case No. 2008-1425, the Federal Circuit affirmed the Eastern District of Pennsylvania's grant of summary judgment of non-infringement of ERBE's trademark of the color blue for an endoscopic surgery probe, because the mark was functional. The Federal Circuit also affirmed the district court's application of prosecution disclaimer, which overrode ERBE's claim differentiation arguments.
ERBE only sought to register the color blue for probes used in endoscopic surgery on the supplemental register. Therefore, ERBE did not have a presumption of validity in the mark and had the burden of proving it owned a valid mark. Canady sold a similar endoscopic surgery device with a blue probe and ERBE sued Canady for trademark infringement. The district court granted summary judgment for non-infringement to Canady holding the mark functional and therefore invalid (and also lacking secondary meaning).
On appeal, ERBE argued a genuine issue of material fact existed regarding whether the mark is functional. Specifically, ERBE asserted that the evidence demonstrated that many other colors are equally visible against human tissue and are available for selection. For support, ERBE offered the declaration of the Managing Director Christian Erbe stating that "[b]lue is one of the many colors available for APC probes. Any color, other than beige or red, would be clearly visible during endoscopic procedures."
The Federal Circuit affirmed the finding that no genuine issue of material fact existed regarding whether the mark was functional. The Federal Circuit noted that color may not be granted trademark protection if the color performs a utilitarian function in connection with the goods it identifies or there are specific competitive advantages for use. The Federal Circuit further noted that the evidence in the record demonstrated that the color blue is prevalent in the medical field, the color enhances identification of the endoscopic tip, and several companies use blue endoscope probes. Finding no genuine issue of material fact, the Federal Circuit explained that "there is no evidentiary support that other colors are as visible through an endoscopic camera as the color blue other than a conclusory, self-serving statement by Mr. Erbe." Also, ERBE failed to establish a genuine issue of fact with respect to secondary meaning.

In In Re Vistaprint Limited, Case No. 2010-M954, the Federal Circuit denied defendant Vistaprint's petition for a writ of mandamus. Vistaprint was seeking to vacate a decision by the U.S. District Court for the Eastern District of Texas denying transfer.
Pursuant to 28 U.S.C. § 1404(a), a trial court has broad discretion to transfer a case to a more convenient venue. To determine whether Vistaprint's proposed venue was more convenient, the trial court applied the public and private factors used in a forum non conveniens analysis. The district court weighed the considerations of convenience in favor of transfer, but concluded that judicial economy outweighed these factors.
The Federal Circuit assessed the district court's decision to determine if there was abuse of discretion and determined that the trial court had properly balanced judicial economy against the factors of convenience.
In Vistaprint's proposed venue, Massachusetts, there were employees who may serve as witnesses and documents that may be used as evidence. But the trial court had become familiar with the patent at issue and the underlying technology. There was also co-pending litigation in the same court involving the same patent and technology. Thus, there was substantial justification for maintaining the suit in the Eastern District of Texas.

In Prometheus Laboratories, Inc. v. Mayo Collaborative Services, Case No. 2008-1403, the Federal Circuit again reversed the district court's grant of summary judgment of invalidity on Prometheus's asserted method claims.
Prometheus's claims at issue were methods for determining the optimal dosage of drugs to treat autoimmune diseases. The relevant portion of Prometheus's method claims included a step determining the levels of the drugs metabolites in the patient's body and a step warning a physician of potentially toxic levels of the same metabolites. Prometheus sued Mayo after Mayo announced it would begin to use an internal test for the same metabolites. Mayo's test differed in that it used different levels to determine toxicity of the relevant drug metabolites.
The district court granted Mayo's motion for summary judgment of invalidity under 35 U.S.C. § 101, reasoning that Prometheus's claims were framed as treatment methods. In particular, the district court reasoned that the determination of metabolite levels was merely a data-gathering step in the claim that led to the final "warning" step of alerting a physician of potentially toxic levels. In addition, the district court held that Prometheus's claims covered a natural body process that the inventors did not actually "invent".
The Federal Circuit first dismissed the idea that the claims are treatment methods because alerting a physician is only one step or portion of the claim. Based on Bilski, the claim considered as a whole fits as "an application of a law of nature" as opposed to a claim of an unpatentable natural phenomenon. Further, while the machine-or-transformation test was not the exclusive test to determine invalidity post-Bilski, the Federal Circuit reasoned that it was still highly relevant. In this case, the Federal Circuit reasoned that the transformation was present within the human body and its components following the administration or determination of a specific class of drugs.

In Akamai Technologies, Inc. v. Limelight Networks, Inc., Case No. 2009-1372, the Federal Circuit affirmed the district court's grant of the defendant Limelight's motion for JMOL of noninfringement of method claims reciting steps performed by different actors.
The patent owner asserted method claims requiring "for a given page normally served from the content provider domain, tagging the embedded objects of the page so that requests for the page objects resolve to the domain instead of the content provider domain." It was not disputed that Limelight did not itself perform this step of the asserted claims, and that the tagging step above was performed by Akamai's customers, the content providers. The separation of these steps was expressly laid out in Limelight's customer contracts.
Akamai urged joint infringement by arguing that Limelight directed or controlled the step performed by content providers because, among other things, Limelight provided step-by-step instructions, provided technical assistance, and contractually required providers to perform the steps. Akamai cited BMC Resources for the proposition that "a party cannot avoid infringement simply by contracting out steps of a patented process to another entity."
In affirming noninfringement, the court noted that implicit in its prior holdings in Muniauction and BMC Resources, that "the performance of a method step may be attributed to an accused infringer when the relationship between the accused infringer and another party performing a method step is that of principal and agent, applying generally accepted principles of the law of agency as explicated by the Supreme Court and the Restatement of Agency." Thus, "for infringement to be found, both parties must consent that the agent is acting on the principal's behalf and subject to the principal's control."
The Federal Circuit held that "direction and control" was insufficient without attribution of acts to another. Likewise, a test based on benefits is improper because any contractual agreement includes benefits for each party. The Federal Circuit expressly held that "there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps."
Here, instructions, however explicit, did not create an agency relationship. The Federal Circuit noted that the contract here did not obligate content providers to use Limelight's service, but that if the provider chose to use Limelight's service, certain steps had to be performed by content providers first for which Limelight was "merely providing the customers with the tools" to exercise independent discretion and control. The Federal Circuit further noted that proper drafting can typically overcome a joint infringement problem, as had been done by the claims asserted in the other patents of the case.

In WiAV Solutions LLC v. Motorola, Inc., Case No. 2010-1266, the Federal Circuit reversed the district court's holding that WiAV lacked constitutional standing to sue the defendants for patent infringement because several third parties have a limited right to license the patents in WiAV's exclusive field of use.
WiAV obtained the exclusive right to (1) make, use, offer to sell, export, and import hardware products in the wireless handset field of use; (2) assign and sublicense its rights in the licensed patents; and (3) sue third parties for infringement of the licensed patents in the wireless handset field of use. However, six third parties previously obtained licensing rights to the same patents limiting their right to grant sublicenses to fields of use outside of WiAV's or to affiliates and subsidiaries of the third parties.
WiAV sued defendants for infringing the licensed patents, but the district court granted the defendants' motion to dismiss for lack of standing. Finding that third parties retained a right to sublicense the patents in the field of use, the district court concluded that WiAV is not an exclusive licensee and therefore lacked standing. The district court held that a party cannot be an exclusive licensee of patent if others have the right to grant sublicenses under the patent.
On appeal, the Federal Circuit reversed the district court's holding and explained there is no bright-line rule that a party cannot be an exclusive licensee of a patent if others have the right to license the patent. The Federal Circuit noted that to be an exclusive licensee, a party need not be the only party with the right to license the patent. Rather, a licensee is an exclusive one if it holds any of the exclusionary rights that accompany a patent. The Federal Circuit reasoned that an exclusive licensee may have standing to sue some parties and not others depending on the scope of its exclusionary rights. Here, there is no evidence that the defendants are affiliates or subsidiaries of the third parties eligible to obtain a sublicense in WiAV's field of use. As such, the Federal Circuit concluded that WiAV established standing by showing it has the right under the licensed patents to exclude the defendants from engaging in infringing activity and is harmed by their alleged conduct.

Note: Federal Circuit case summaries provided by Irfan Lateef of Knobbe Martens.

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