IP UPDATE

David-Versus-Goliath Trademark Victory Isn’t Necessarily “Exceptional”

by Karen Gover | Jul 25, 2024 | Trademarks

The US Court of Appeals for the Third Circuit vacated an award of attorneys’ fees for reanalysis, explaining that the district court’s finding that the case was “exceptional” under the Lanham Act was based on policy considerations rather than the totality of the circumstances. Lontex Corp. v. Nike, Inc., Case Nos. 22-1417; -1418 (3rd Cir. July 10, 2024) (Hardiman, Matey, Phipps, JJ.)

Lontex Corporation is a small Pennsylvania business that manufactures and sells compression apparel to professional athletes and the public. Since 2008 it has held a registered trademark for the mark COOL COMPRESSION, which it used in conjunction with its sale of apparel. In 2015, Nike rebranded an athletic clothing line that included a category of “Cool” products designed to reduce body temperature, as well as various fits, including “Compression.” It also began using the words “Cool” and “Compression” together in the names of Nike clothing products sold online and in Nike catalogues. Nike used “Cool Compression” as a product name on tech sheets, which are internal documents used to explain Nike products to employees and third-party retailers.

The following year, upon discovering Nike’s use of the phrase “Cool Compression,” Lontex sent Nike a cease-and-desist letter. Nike’s lawyers directed the company to stop using the phrase “as soon as possible.” Nike took steps to remove the phrase from its website and catalogs but not its tech sheets. Two years later, Nike reached out to its third-party retailers and asked them to stop using “Compression” in product names.

Lontex sued Nike for trademark infringement of its COOL COMPRESSION mark, for contributory infringement based on its supply of “Cool Compression” products to retailers, and for counterfeiting. The district court dismissed the counterfeiting claim, and a jury trial was held on the infringement actions. The jury returned a verdict for Lontex, finding Nike liable for willful and contributory infringement. The jury awarded Lontex $142,000 in compensatory damages and $365,000 in punitive damages but declined to award Lontex disgorgement of Nike’s profits.

Post-trial, Nike renewed motions for judgment as a matter of law on fair use, trademark infringement, contributory infringement, willfulness and punitive damages. Lontex moved for disgorgement of profits and trebling of the damages awarded by the jury. The district court granted Lontex’s request for treble damages, increased the compensatory award to $426,000, and separately awarded Lontex almost $5 million in attorneys’ fees after finding that the case was “exceptional” under the Lanham Act. Both parties appealed.

As to the willfulness finding, Nike argued that the jury should not have been permitted to infer willfulness solely from its continued use of the mark after it received its cease-and-desist letter. The Third Circuit disagreed, pointing out that not only did Nike adopt the “Cool Compression” phrase without doing a trademark search, it also continued to use the phrase after receiving Lontex’s cease-and-desist letter and being advised by its own legal team to stop using it as soon as possible. The Court concluded that a jury could reasonably infer willful infringement. For similar reasons, [...]

Continue Reading

AI Takeover: PTO Issues More Patent Eligibility Guidance for AI Inventions

by Peter Brunovskis, PhD | Jul 25, 2024 | Patents, Technology

The US Patent & Trademark Office (PTO) issued a 2024 Guidance Update on Patent Subject Matter Eligibility, Including on Artificial Intelligence, which focuses on subject matter eligibility for artificial intelligence (AI)-based inventions. 89 Fed. Reg. 58128 (July 17, 2024).

The new guidance is part of the PTO’s ongoing efforts since 2019 to provide clarity on the issue of subject matter eligibility under 35 U.S.C. § 101 and to promote responsible innovation, competition and collaboration in AI technology development as espoused in the Biden administration’s Executive Order 14110, “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.” The guidance follows on the heels of the PTO’s recently issued Guidance on Use of AI-Based Tools in Practice Before the PTO and Inventorship Guidance for AI-Assisted Inventions.

The new guidance aims to assist PTO examiners, patent practitioners and stakeholders in evaluating the subject matter eligibility of patent claims involving AI technology. The guidance includes three main sections:

Section I provides background on issues concerning patentability of AI inventions.
Section II provides a general overview of the PTO’s patent subject matter eligibility guidance developed over the past five years.
Section III provides an update to certain areas of the guidance applicable to AI inventions.

As in the prior subject matter eligibility updates and discussions, the guidance document’s analysis of subject matter eligibility focuses on the Alice two-step analysis: an evaluation of whether a claim is directed to a judicial exception (i.e., abstract ideas, natural phenomena, laws of nature), and if so, an evaluation of whether the claim as a whole integrates the judicial exception into a practical application of that exception and/or an analysis of whether the claim recites additional elements that amount to significantly more than the recited judicial exception itself. The guidance highlights a number of relevant recent Federal Circuit cases and is further accompanied by three new examples with hypothetical patent claims for assisting PTO examiners in applying the guidance to an analysis of patent claim eligibility under 35 U.S.C. § 101.

The PTO requests written comments to the guidance through the Federal eRulemaking Portal by September 16, 2024. If there is anything to be gleaned from the guidance or the current state of patentability for AI inventions, the topic will remain highly controversial and heavily debated.

Preliminary Injunction Upheld in Cancer Relapse Detection Case

by Tim Dunker | Jul 25, 2024 | Patents

The US Court of Appeals for the Federal Circuit affirmed the grant of a preliminary injunction (PI) in the biopharmaceutical space, concluding that the plaintiff satisfied the requirements for injunctive relief, including likelihood of success on the merits. The injunction included “carve outs” for patients requiring access to the affected cancer detection kits. Natera, Inc. v. NeoGenomics Laboratories, Inc. Case No. 24-1324 (Fed. Cir. July 12, 2024) (Moore, CJ; Taranto, Chen, JJ.)

Natera and NeoGenomics are both research-focused healthcare companies manufacturing products used for early detection of cancer relapse. Natera and NeoGenomics both offer products designed to identify circulating tumor DNA (ctDNA) within the bloodstream to assess the efficacy of cancer treatment and the risk of recurrence. NeoGenomics’s product is named RaDaR.

Natera owns two patents, one claiming methods for amplifying targeted genetic material, such as cfDNA, while reducing amplification of non-targeted genetic material, and the other claiming methods for detecting variations in genetic material indicative of disease or disease recurrence, such as ctDNA. Natera sued NeoGenomics, alleging that RaDaR infringed both of Natera’s patents, and moved for a PI. The district court granted the PI, finding that Natera satisfied the requirements for injunctive relief, including likelihood of success on the merits as set forth in Purdue Pharma v. Boehringer Ingelheim (Fed. Cir. 2001). The injunction barred NeoGenomics from making, using, selling, offering for sale, marketing, distributing or supplying RaDaR, with certain carve outs for patients already using RaDaR and for finalized or in-process research projects, studies and clinical trials.

To show a likelihood of success on the merits, Natera had to show that it would likely prove infringement and that its infringement claim would likely withstand challenges to the validity and enforceability of the patents. On appeal, NeoGenomics argued that the district court did not properly evaluate the likelihood of success on the merits factor because it failed to resolve a claim construction dispute and instead applied an erroneous construction.

The Federal Circuit noted that NeoGenomics first raised the erroneous claim construction issue in its motion to stay the PI pending appeal, and that neither party raised a claim construction dispute during the PI briefing. The Court therefore concluded that the district court did not abuse its discretion by not engaging in explicit claim construction before evaluating likelihood of infringement. The Federal Circuit also found that the district court did not err by implicitly construing the claims because Natera presented evidence suggesting that RaDaR’s multi-cycle polymerase chain reaction (PCR) process likely practiced the tagging and amplifying steps of the relevant claims.

NeoGenomics also argued that the district court applied an incorrect legal standard in evaluating NeoGenomics’s obviousness challenge, asserting that “mere ‘vulnerability’” of the patent to an invalidity challenge sufficed to defeat a PI. The Federal Circuit explained that the correct analysis addresses whether the patentee has shown that it is more likely than not to prevail over an invalidity challenge. The Court explained that it was not sufficient to merely allege that the individual elements of the claimed [...]

Continue Reading

Canadian Legal Code? Copying Foreign Law Can’t Infringe Copyright Under US Law

by Alexander Piala, PhD | Jul 25, 2024 | Copyrights

The US Court of Appeals for the Fifth Circuit held that reprinting foreign law cannot be an infringement of US copyright law. Canadian Standards Association v. P.S. Knight Co., Ltd., Case No. 23-50081 (5th Cir. July 16, 2024) (King, Willett, Douglas, JJ.)

The Canadian Standards Association (CSA) is a nonprofit that owns Canadian copyright registrations to its model codes and standards. More than 40% of the CSA’s codes have been incorporated by reference into Canadian regulations and statutes.

Gordan Knight is the president and sole shareholder of both the Canadian company P.S. Knight and the US company P.S. Knight Americas. These companies sell versions of CSA’s copyrighted model codes and standards without a license.

In 2015, the CSA filed suit against Knight in Canada for infringing its copyrights to the Canadian Electrical Code. Knight was found to infringe, and the Canadian court enjoined Knight from reproducing, distributing or selling any publication that infringed CSA’s copyright to the code.

After losing his appeal against the Canadian court’s ruling, Knight formed P.S. Knight Americas. Using this company, Knight again produced his own versions of the CSA model codes. CSA filed suit against Knight, alleging infringement of its Canadian copyrights. The district court granted CSA’s motion for summary judgment of infringement and granted a permanent injunction against Knight, enjoining him from further infringing CSA’s copyrighted model codes.

Knight appealed, alleging that the district court erred in finding that Canadian copyrights covering laws could be enforced in the United States.

The Fifth Circuit explained that when analyzing infringement of a foreign copyright under US copyright law, a court first determines the ownership and the nature of the copyright by applying the law of the nation where the copyrights are held. Neither party contested that CSA owns valid Canadian copyrights in and to the model codes.

Infringement, however, is decided purely under US law. In a 2002 en banc opinion (Veeck v. Southern Building Code) the Fifth Circuit held that under US law, it is not copyright infringement to copy and reprint the law (in that case, model building codes that were enacted into law). Under Veeck, when model codes are enacted into law, “they become to that extent ‘the law’ of the governmental entities and may be reproduced or distributed as ‘the law’ of those jurisdictions.”

Here, it was uncontested that more than 40% of CSA’s model codes were incorporated into Canadian law by reference, and thus those model codes were part of Canadian law. Since the materials Knight copied were Canadian law, the Fifth Circuit held that such copying could not be infringement in the US: “because United States law applies to questions of infringement, Veeck is outcome determinative.” On this basis, the Fifth Circuit reversed the district court.

In dissent, Judge Douglas argued that the majority misapplied Veeck. He argued that the en banc court in Veeck held that law was not copyrightable subject matter in the US. Since copyrightability is determined based on the law of the foreign jurisdiction, and since [...]

Continue Reading

Credibility at Issue? Court May Compel Party Representative to Appear In Person

by Sydney E. McDermott | Jul 25, 2024 | Patents

Addressing for the first time whether a district court can compel a witness to appear in person for testimony involving fraud on the court, the US Court of Appeals for the Federal Circuit affirmed the district court’s determination that it could require an in-person appearance of the sole corporate representative to make a credibility determination. Backertop Licensing LLC v. Canary Connect, Inc., Case Nos. 23-2367; -2368; 24-1016; -1017 (Fed. Cir. July 16, 2024) (Prost, Hughes, Stoll, JJ.)

During an underlying litigation, the US District Court for the District of Delaware identified potential party and attorney misconduct in dozens of patent cases related to IP Edge and Mavexar, a patent monetization firm and an affiliated consulting firm, respectively. The district court found that IP Edge and Mavexar appeared to have created LLCs, recruited individuals to serve as the sole owners, assigned patents to the LLCs for “little or no consideration,” and recorded the complete assignment of patent rights without disclosing that IP Edge and Mavexar retained significant rights to the royalties and to any settlement proceeds resulting from litigation of the assigned patents. The LLCs then filed lawsuits asserting the rights of their assigned patents without reporting the significant rights retained by IP Edge and Mavexar.

The district court conducted an evidentiary hearing to “gather more information about its concerns” over potential professional misconduct violations and real parties in interest not being identified. One of the parties was Backertop Licensing LLC and its sole owner, Lori LaPray. The district court ordered the production of documents related to the potential fraud on the court and a declaration identifying “any and all assets owned by Backertop.” Shortly thereafter, Backertop filed a joint stipulation of dismissal, and two attorneys for Backertop sought to withdraw from their representation. The district court’s investigation continued, however, and Backertop’s “allegedly responsive production” contained documents, several of which “had clearly missing attachments or cover letters.”

Left unsatisfied with the production, the district court ordered LaPray to appear in person for a hearing to “assess her credibility.” Citing preexisting travel plans, a busy work schedule and childcare obligations, LaPray notified the court that she was unable to attend the hearing as scheduled and requested to appear telephonically instead. The district court moved the hearing date to accommodate LaPray’s travel schedule but required in-person appearance because “[c]redibility assessments are difficult to make over the phone.” Backertop argued, for the first time, in its motion for reconsideration that the court’s order was precluded under the Federal Rule of Civil Procedure 45 geographic limit. The district court rejected the argument because Rule 45 does not limit the court’s inherent power to order parties to appear sua sponte. After failing to appear at the rescheduling hearing and the show cause hearing, the district court held LaPray in civil contempt and imposed a $200 per day fine until she appeared in person in court. Backertop and LaPray appealed.

The Federal Circuit concluded that Rule 45’s geographic limit only applies to a party or attorney’s efforts [...]

Continue Reading