IP UPDATE

To kill a derivative: Licensee has no post-termination copyright control

by Rick Evans | Aug 7, 2025 | Copyrights

Addressing a dispute concerning two derivative stage adaptations of Harper Lee’s To Kill a Mockingbird, the US Court of Appeals for the Second Circuit affirmed the district court’s grant of declaratory relief, finding that the plaintiff did not infringe any copyright interest in derivative works following the termination of the defendant’s exclusive licensing grant. Atticus Limited Liability Company v. The Dramatic Publishing Company, Case No. 23-1226 (2d Cir. July 29, 2025) (Wesley, Chin, Perez, JJ.)

In 1969, Harper Lee granted Dramatic an exclusive license to create and license a derivative work stage adaptation of To Kill a Mockingbird for non-first-class productions (e.g., amateur and community theater). Lee terminated that grant in 2011 under the Copyright Act’s termination provisions, effective in 2016. In 2015, Lee granted exclusive rights to develop and perform a second derivative stage adaptation to Atticus.

In 2019, Dramatic initiated arbitration against Lee’s estate asserting continued exclusive rights to non-first-class productions despite the termination. The arbitrator ruled in favor of Dramatic. Subsequently, Atticus, which was not a party to the arbitration, sought declaratory judgment that performances of its play did not infringe any rights held by Dramatic. The district court ruled in favor of Atticus and awarded Atticus more than $200,000 in attorneys’ fees. Dramatic appealed the judgment and the parties cross-appealed the award of fees.

Dramatic argued that its exclusive right to stage non-first-class productions of To Kill a Mockingbird survived Lee’s termination of the 1969 grant under the Copyright Act’s derivative works exception. The Second Circuit rejected this argument, finding that Dramatic improperly equated its rights in the derivative work with ownership rights in the original copyrighted work. While Dramatic could continue using its play under the original grant, it could not prevent the creation or authorization of new adaptations. Those exclusive rights belonged to Lee and reverted to her upon termination of the grant.

Dramatic also argued that:

Lee’s grant to Atticus was invalid because it preceded the effective termination date of Dramatic’s grant.
Atticus’ claim was untimely.
Atticus’ claims were barred by res judicata based on the earlier arbitration.

The Second Circuit disposed of each of these arguments, explaining that:

The grant date was irrelevant because Dramatic no longer held exclusive rights.
The statute of limitations did not toll because Atticus’ claim was for noninfringement, not ownership.
The claims were not barred by res judicata because Atticus was not a party to the arbitration.

Regarding the award of attorneys’ fees, the Second Circuit agreed that Dramatic’s statute of limitations and res judicata defenses were objectively unreasonable, justifying a fee award, but found no basis for fees based on an alleged forfeiture of Dramatic’s statute of limitations defense since it was properly raised in the answer, even if not included in its opposition to Atticus’ pre-answer motion for summary judgment. The Court further found that Atticus was not entitled to attorneys’ fees for Dramatic’s limited discovery efforts to determine Atticus’ involvement in the arbitration or for the current appeal. Accordingly, the [...]

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Dim damages methods can doom bright ideas

by Keval Amin | Aug 7, 2025 | Patents

In a mixed ruling on evidentiary exclusions and damages methodology, the US Court of Appeals for the Federal Circuit affirmed in part, reversed in part, vacated in part, and remanded a district court’s decision that excluded patent validity evidence and granted judgment as a matter of law (JMOL). The Federal Circuit found that the district court erred in blocking the defendant’s invalidity case and directed it to reassess the reliability of the damages expert’s testimony under Rule 702. Jiaxing Super Lighting Co., Ltd. v. CH Lighting Technology Co., Ltd., Case No. 23-1715 (Fed. Cir. July 28, 2025) (Dyk, Chen, Hughes, JJ.)

Jiaxing Super Lighting and its affiliate Obert (collectively, Super Lighting) sued CH Lighting over three patents related to LED tube lamps – two covering structural designs and one addressing electrical safety. CH Lighting admitted infringement but argued that the structural patents were invalid under the America Invents Act’s (AIA) on-sale bar. The district court excluded key evidence, found the remaining expert testimony insufficient, and granted JMOL in Super Lighting’s favor. A jury later found CH Lighting liable and awarded damages, which the district court doubled. CH Lighting’s motions for a new trial and renewed JMOL were denied. CH appealed.

CH Lighting contended that certain 2014 LED tubes met all claim limitations and triggered the on-sale bar. The Federal Circuit disagreed, affirming the district court’s finding that CH Lighting’s expert lacked a proper foundation, having offered no concrete evidence or personal knowledge of the alleged sales. However, the Court found error in the exclusion of two key evidentiary items: testimony authenticating sales documents and an internal presentation showing competitor products predating the patents. The district court excluded the documents for lack of authentication and barred the presentation because of its connection to a dropped inequitable conduct claim, later reasoning that the products shown differed in wattage. The Federal Circuit rejected both rationales, explaining that the relevant inquiry focused on whether the products disclosed patented features, not their wattage. The Federal Circuit deemed these exclusions an abuse of discretion, warranting a retrial on validity.

The Federal Circuit separately upheld the jury’s findings on a different patent where the jury found the patent not invalid for anticipation and infringed. CH Lighting had argued that a prior art reference anticipated the asserted claims and that the accused chips could not infringe if the reference did not. The Court found, based on the conflicting testimony of the parties’ expert witnesses, that the jury was free to credit one expert over the other and therefore had substantial evidence supporting the jury’s no invalidity verdict. Similarly, the parties’ experts presented conflicting evidence on infringement and that Jiaxing’s expert’s theory was not necessarily inconsistent with the validity ruling. The Court thus affirmed the findings of validity and infringement.

Turning to damages, the Federal Circuit emphasized that expert testimony must be based on reliable methodology and sufficient factual grounding, reinforcing standards articulated in the recent EcoFactor, Inc. v. Google en banc decision. Because the jury [...]

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Federal Circuit lacks jurisdiction over award that doesn’t raise issue of patent law

by Katherine Pappas | Aug 7, 2025 | Patents

The US Court of Appeals for the Federal Circuit determined that it lacked appellate jurisdiction over a district court judgment confirming an arbitration award stemming from a dispute over royalties paid under patent license and supply agreements. The Court concluded that the petition did not “necessarily raise” a substantial issue of patent law. Acorda Therapeutics Inc. v. Alkermes PLC, Case No. 2023-2374 (Fed. Cir. July 25, 2025) (Taranto, Hughes, Stark, JJ.)

Acorda Therapeutics, the developer of Ampyra®, a treatment for multiple sclerosis, licensed a patent from Alkermes covering Ampyra’s active ingredient. In exchange, Acorda paid running royalties and sourced the active ingredient directly from Alkermes. Although the patent expired in July 2018, Acorda continued making royalty payments for two years without formal protest.

In July 2020, Acorda challenged the ongoing payments and initiated arbitration. Acorda sought a declaration that the licensing royalty provision was unenforceable after the patent’s expiration and sought recovery of royalties paid after July 2018, invoking unjust enrichment. The arbitration tribunal agreed that the royalty provision was unenforceable after the patent’s expiration. However, it limited Acorda’s recovery to payments made under formal written protest, which only started in July 2020. This ruling relied on a state law principle that payments made with full knowledge of the facts, even if under a mistake of law, are not recoverable unless accompanied by written protest.

Acorda filed suit in federal district court under the Federal Arbitration Act, invoking diversity jurisdiction. It sought confirmation of the tribunal’s findings, except for the denial of recoupment of more than $65 million in unprotested payments made between 2018 and 2020. Acorda argued that the tribunal’s refusal to allow full recoupment constituted “manifest disregard” of the law and offered two alternative theories: the tribunal improperly applied state law in derogation of federal patent law, and the award effectively enforced an illegal licensing agreement. The district court upheld the tribunal’s award. Acorda appealed.

The Federal Circuit declined to reach the merits and instead examined its jurisdiction. Under the “well-pleaded complaint” rule, the Federal Circuit’s jurisdiction applies only if patent law creates the cause of action or the plaintiff’s right to relief necessarily depends on resolving a substantial question of patent law.In its 1988 decision in Christianson v. Colt Industries and 2013 decision in Gunn v. Minton, the Supreme Court made clear that situations falling within the “special and small” second category (where right to relief necessarily depends on resolution of a substantial question of patent law) are “extremely rare.”

Here, Acorda’s complaint did not assert a patent cause of action. The request to confirm the arbitration award could be resolved without judicial interpretation of patent law. The Federal Circuit also noted that even the modification request, although it was premised on the award’s finding of unenforceability, presented two alternative arguments, only one of which involved patent law. Because the district court could have ruled for Acorda without addressing patent law, the Federal Circuit concluded that patent law was not “necessarily raised.” As a result, the Federal [...]

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It’s not monkey business: NFTs can be trademarked

by Ashley K. Justice | Jul 31, 2025 | Trademarks

The US Court of Appeals for the Ninth Circuit concluded that a non-fungible token (NFT) is a “good” under the Lanham Act but reversed the district court’s grant of summary judgment for trademark infringement because the owner did not prove as a matter of law that the defendants’ use was likely to cause confusion. The Ninth Circuit also affirmed the district court’s dismissal of the defendants’ counterclaim for declaratory relief regarding copyright ownership. Yuga Labs, Inc. v. Ryder Ripps and Jeremy Cahen, Case No. 24-879 (9th Cir. July 23, 2025) (Bade, Forrest, Curiel, JJ.)

Yuga Labs is the creator of the Bored Ape Yacht Club (BAYC) NFT collection. Yuga created this collection through a smart contract recorded on the blockchain Ethereum. Each BAYC NFT has a cartoon of a bored ape and a sequential unique identifier called an ape ID. Per its terms and conditions, BAYC NFT consumers receive commercial and personal rights free of royalty fees.

Ryder Ripps and Jermey Cahen created the Ryder Ripps Bored Ape Yacht Club (RR/BAYC) using the same ape images and ape IDs. The collection was also hosted on an Ethereum blockchain smart contract. They criticized Yuga for “using neo-Nazi symbolism, alt-right dog whistles, and racist imagery” and alleged that they created RR/BAYC as satire and criticism. Ripps made the RR/BAYC smart contracts’ names “Bored Ape Yacht Club” and made the smart contract symbol “BAYC.” Ripps’ website includes an artist statement that the artwork is a “new mint of BAYC imagery.” NFT marketplace websites for RR/BAYC displayed a large header “Bored Ape Yacht Club” and in a smaller text “@ryder_ripps.”

Yuga sued Ripps and Cahen for several claims, including trademark infringement based on a false designation of origin theory, false advertising, and cybersquatting. In response, the defendants asserted that Yuga did not have enforceable trademark rights, and even if it did, the defendants’ use was protected by fair use and the First Amendment. The defendants asserted several counterclaims, including knowing misrepresentation of infringing activity under the Digital Millenium Copyright Act (DMCA), and sought declaratory judgment of no copyright ownership.

The district court granted Yuga’s motion for summary judgment on its false designation of origin and cybersquatting claims. Yuga withdrew its remaining claims, so the trial proceeded only for equitable remedies on the false designation of origin and cybersquatting. At trial, the district court found that Yuga’s BAYC marks were unregistered trademarks. The district court awarded Yuga disgorgement of the defendants’ profits, maximum statutory damages, and attorneys’ fees after finding that the case was exceptional due to the defendants’ willful infringement, bad faith intent to profit, and litigation conduct. The defendants were also permanently enjoined. The defendants appealed the grant of summary judgment and sought vacatur of the remedies.

The Ninth Circuit first addressed the defendants’ argument that NFTs are not goods protected by the Lanham Act. The Court concluded that NFTs are goods under the Lanham Act based on a US Patent & Trademark Office report that determined them as such. The Court also [...]

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Kissing cousins? SUNKIST and KIST deemed confusingly similar

by Sydney E. McDermott | Jul 31, 2025 | Trademarks

The US Court of Appeals for the Federal Circuit reversed a Trademark Trial & Appeal Board decision, concluding that there was a likelihood of confusion between the marks KIST and SUNKIST when used in connection with soft drinks. Sunkist Growers, Inc. v. Intrastate Distributors, Inc., Case No. 24-1212 (Fed. Cir. July 23, 2025) (Prost, Taranto, Stark, JJ.)

For at least 90 years, Sunkist has offered soft drinks under the SUNKIST trademark both directly to consumers and through its licenses. Intrastate Distributors Inc. (IDI) purchased the KIST brand and proceeded to use the KIST mark for soft drink and sparkling water products. The KIST mark was active for about a decade before being cancelled in 2013. In 2019, IDI filed intent-to-use trademark applications for the KIST mark both in standard characters and in a stylized character form for “[s]oft drinks, namely, sodas and sparkling water; concentrates and syrups for making soft drinks.” Sunkist opposed the registration, arguing the KIST mark was likely to cause confusion with the SUNKIST mark.

Focusing its analysis on the SUNKIST standard character mark, the Board determined that all DuPont factors other than similarity of the marks favored likelihood of confusion. The Board found that the marks were not sufficiently similar because they conveyed different commercial impressions. According to the Board, while SUNKIST referenced the sun, the KIST mark referenced a kiss, relying on the image of lips that appear next to the KIST mark. The Board therefore found no likelihood of confusion between IDI’s marks and the registered SUNKIST marks. Sunkist appealed.

The Federal Circuit began by emphasizing that the KIST mark was not a design mark and the image of lips did not always appear beside the mark. The Court relied on the following image in its opinion, noting that “[n]one of the bottles include a lips image or reference a kiss” and instead “emphasize flavors.”

The Federal Circuit noted that the record contains no evidence concerning the degree of consumer exposure to the mark with the image of lips versus without lips. The Court found that the Board relied too heavily on the KIST mark’s appearance alongside an image of lips, and ultimately determined that substantial evidence did not support the finding that the mark referenced a kiss. The Court noted that while some of the SUNKIST marks contained a sun, many were standard character marks that did not include a sun. The Court thus concluded that substantial evidence did not support a finding that the similarity of the marks favored no likelihood of confusion.

Since the Board had previously found that the remaining DuPont factors favored likelihood of confusion and the Federal Circuit determined that the similarity of the marks also favored likelihood of confusion, the only remaining consideration was actual confusion. Although Sunkist had not proven instances of actual confusion, the Court noted that its precedents had never required actual confusion, [...]

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