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Third Circuit Orders Second Look at Delays and Disgorgement of Profits

by Sarah Bro | Aug 26, 2021 | Trademarks

In a long-running trademark dispute between two charitable organizations, the US Court of Appeals for the Third Circuit found that the appellee did not preserve its challenge to the district court’s denial of summary judgment on its trademark cancelation claims, the appellant waived any challenge to the validity of the defendant’s mark and the district court did not abuse its discretion by declining to award enhanced monetary relief or prejudgment interest. Kars 4 Kids Inc. v America Can!, Case Nos. 20-2813; -2900 (3rd Cir., August 10, 2021) (Shwartz, J.) The Court also vacated-in-part and remanded for the district court to reexamine its laches and disgorgement conclusions under applicable law.

As charitable organizations that sell donated vehicles to fund children’s programs, both America Can (as CARS FOR KIDS) and Kars 4 Kids have used similar trademarks since their respective starts in the early- to mid-1990s. In 2003 and 2013, America Can sent cease and desist letters to Kars 4 Kids after seeing its advertisements in the state of Texas. In 2014, Kars 4 Kids sued America Can for federal and state trademark infringement, unfair competition and trademark dilution claims. Less than one year later, America Can filed its own suit—alleging the same claims—plus a petition to cancel a Kars 4 Kids trademark registration and seeking a nationwide injunction and financial compensation.

Both parties appeal from a denial of their respective summary judgment motions as well as (1) the jury finding that Kars 4 Kids willfully infringed America Can’s trademark rights in Texas, (2) the rejection of America Can’s petition for cancellation of a KARS FOR KIDS trademark registration finding that the registration was not knowingly procured by fraudulent means, (3) the conclusion that laches did not apply against America Can’s claims, (4) disgorgement of Kars 4 Kids profits in Texas totaling about $10.6 million, (5) rejection of enhanced monetary relief and (6) an injunction against Kars 4 Kids with respect to use of its trademark in Texas and from using the carsforkids.com domain name. On appeal, Kars 4 Kids also renewed its motion for judgment as a matter of law, including an argument that America Can’s trademark is invalid.

The Third Circuit rejected Kars 4 Kids’ effort to overturn the jury’s liability verdict, concluding that Kars 4 Kids failed to preserve its challenge to the validity of the CARS FOR KIDS trademark when it left that issue out of its Rule 50(a) motion. Instead, evidence of America Can’s continuous use of the CARS FOR KIDS mark well prior to 2003 predated Kars 4 Kids’ first use of its trademark in Texas in 2003 and established America Can’s ownership of the CARS FOR KIDS trademark in Texas.

However, after examining the laches claim, the Third Circuit explained that it considered (1) the plaintiff’s inexcusable delay in bringing suit and (2) prejudice to the defendant as a result of the delay. With no statute of limitations under the Lanham Act, the parties agreed that their claims are properly analogized to New Jersey’s six-year [...]

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If You Seek or Browse and Can Find, It’s Publicly Available, but Anticipation Isn’t Obvious and Requires Notice

by McDermott Will & Emery | Feb 11, 2021 | America Invents Act, Patents

The US Court of Appeals for the Federal Circuit found that facilitating browsing of documents on a website was sufficient to support public accessibility of prior art references, but that the Patent Trial and Appeal Board cannot sua sponte invalidate a claim as anticipated under § 102 unless that specific statutory ground had previously been noticed. M & K Holdings, Inc. v. Samsung Electronics Co., Ltd., Case No. 20-1160 (Fed. Cir. Feb. 1, 2021) (Bryson, J.)

In response to M & K Holdings’ suit for patent infringement, Samsung filed an inter partes review (IPR) petition seeking cancellation of all claims of the asserted patent as obvious. The patent is directed to an efficient method for compressing video files by “decoding a moving picture in inter prediction mode,” using a motion vector to quantify where “reference pictures are used to estimate motion of a current block” over the video duration. Samsung’s petition relied on references generated in connection with the Joint Collaborative Team on Video Coding (JCT-VC), which established industry standards for high-efficiency video coding (HEVC). All three prior art references were uploaded to JCT-VC’s website before the critical date.

After the Board held all claims of the patent unpatentable, M & K appealed, arguing that the Board erred by relying on references that do not qualify as prior art printed publications under 35 USC § 102, and by finding claim 3 anticipated when the petition for IPR asserted only obviousness as to that claim.

Public Accessibility and Printed Publications

M & K argued that a person of ordinary skill could not have located two of the three prior art references by exercising reasonable diligence, and therefore the Board’s holding that those references were publicly accessible was erroneous. Specifically, M & K argued that the structure and search capabilities of the JCT-VC website (requiring navigating to the JCT-VC landing page, clicking on the “All meetings” link and selecting a particular meeting in order to access documents, without any explanation that the “All meetings” label contains a document repository, and with no search functionality on the landing page or the “All meetings” page) meant that even if a user happened to navigate to a meeting page of the website, the user could not search documents by content, but could search only by date, title and number.

The Federal Circuit disagreed, explaining that public accessibility does not require a website’s landing page to have search functionality. Instead, “given the prominence of JCT-VC, the dispositive question is whether interested users of the JCT-VC website could have located [the references] through reasonable diligence.” The Court agreed that substantial evidence supported that interested users could have done so.

Regardless of whether the website described itself as a document repository, the Federal Circuit noted that a skilled artisan browsing the JCT-VC website would understand that it was structured to serve the JCT-VC’s purpose of developing HEVC standards through member meetings and communications. Therefore, a skilled artisan browsing the JCT-VC website would have realized that documents are hosted [...]

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Logic to Modify: Even Deceptive Intent Does Not Bar Inventorship Correction

by Paul Devinsky | Sep 16, 2020 | Patents

The US Court of Appeals for the Federal Circuit vacated a district court invalidity determination finding that judicial estoppel prevented a patent owner from relisting an inventor previously removed for strategic litigation purposes. Egenera, Inc. v. Cisco Sys., Inc., Case Nos. 19-2015, -2387 (Fed. Cir. Aug. 28, 2020) (Prost, C.J.).

Egenera sued Cisco for infringement of a patent directed to a reconfigurable virtual network that included a “logic to modify” and transmit received messages. In response Cisco petitioned for inter partes review (IPR). During the IPR’s pendency, Egenera realized that all claim limitations were conceived of before inventor Schulter began working at the company, and petitioned the US Patent and Trademark Office (PTO) to remove Schulter as a listed inventor. The Patent and Trial Appeal Board (PTAB) declined to institute Cisco’s IPR, and the PTO granted Egenera’s petition to remove Schulter shortly thereafter.

During the litigation, the district court construed the patent claims’ “logic” terms as means-plus-function elements and concluded that the “logic to modify” limitation corresponded to a “tripartite structure” described in the specification. Cisco then asserted invalidity under pre-America Invents Act (AIA) § 102(f), contending that Schulter invented the tripartite structure, and that the patent therefore did not list all inventors. Egenera attempted to re-correct inventorship to include Schulter, but the court rejected the attempt. The district court found the patent invalid under § 102(f), reasoning that judicial estoppel precluded Egenera from “resurrecting” Schulter’s inventorship. Egenera appealed both the means-plus-function construction and the judicial estoppel finding.

The Federal Circuit first addressed whether Egenera could correct inventorship absent any judicial estoppel. The Court looked to the plain meaning of post-AIA § 256, which provides that “the error of omitting inventors . . . shall not invalidate the patent . . . if it can be corrected.” Notably, post-AIA § 256 removed the requirement that an inventorship error occur “without . . . deceptive intent.” The Federal Circuit stated it plainly: “‘Error’ is simply the incorrect listing of inventors” and does not exclude even deceptive intention. The Court explained that the inequitable conduct rules provide a safety valve for such actions, not § 256. The Court also noted that at the time Egenera removed Schulter as an inventor, no one had argued that “logic to modify” was means-plus-function language, which it presumptively was not. Egenera’s preferred construction of that term was consistent with its assertion that Schulter was not an inventor. The omission of Schulter as inventor was thus an “error” within the scope of § 256.

The Federal Circuit next turned to whether Egenera was judicially estopped from relisting Schulter as an inventor. Applying the First Circuit’s New Hampshire factors, the Federal Circuit looked to whether Egenera’s positions were inconsistent, whether its first position was successfully accepted by the court, and whether Egenera would derive an unfair advantage if not estopped. The Federal Circuit found that the district court erred in finding Egenera’s changing inventorship positions inconsistent. The Court explained that inventorship is complex and can depend on claim [...]

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Liability for Copyright Infringement Attaches if Conduct Exceeds Scope of License

by Jodi Benassi | Sep 2, 2020 | Copyrights

The US Court of Appeals for the Ninth Circuit revived a software owner’s copyright infringement suit because the district court erred in granting summary judgment of no infringement by failing to analyze whether the accused infringer exceeded the scope of a copyright license. Oracle America, Inc., et al. v. Hewlett Packard Enterprise Company, Case No. 19-15506 (9th Cir. Aug. 20, 2020) (Smith, J.).

Oracle owns registered copyrights for Solaris software, including copyrighted software patches. Oracle requires its customers have a prepaid annual support contract, for each server they desire to be under support, to access the software patches. Customers under a support plan can access patches through an Oracle support website.

Hewlett Packard Enterprise (HPE) provides a “one-stop-shop” for support to its customers, including HPE servers running Solaris. HPE provides this support directly and through its partners. One of HPE’s partners is Terix Computer Company. Terix arranged for joint HPE-Terix customers to have Oracle support for all of their servers through a single server support plan. Terix accomplished this by downloading Solaris software patches, using the customer’s credentials (created using a Terix-supplied credit card), to make copies for servers that were not part of the support contract.

In 2013, Oracle sued Terix for copyright infringement. The court granted Oracle summary judgment, and Terix stipulated to a judgment on the claims without admitting liability. Oracle and HPE entered into an agreement, effective May 6, 2015, to toll the statute of limitations for any claims Oracle might assert against HPE.

In 2016, Oracle sued HPE for direct copyright infringement concerning HPE’s direct support customers, and for indirect infringement concerning joint HPE-Terix customers. Oracle also sued for claims of intentional interference and unfair competition under California state law. The parties did not dispute that the tolling agreement applied, so the court considered whether the copyright infringement claims were barred for conduct before May 6, 2012. The Copyright Act provides that a copyright infringement claim is subject to a three-year statute of limitations, which runs separately for each violation. Under Ninth Circuit law, a copyright infringement claim begins to accrue “when a when a party discovers, or reasonably should have discovered, the alleged infringement.” Importantly, actual or constructive knowledge triggers the statute of limitations. The Ninth Circuit has explained that suspicion of copyright infringement places a duty on the copyright holder to investigate further into possible infringement or lose the claim.

Oracle conceded that it had concerns about Terix and suspicions about HPE as early as 2010, but argued that HPE used fraudulent means to keep Oracle unaware of its actions, so it had no duty to inquire. The district court disagreed, finding that once Oracle had constructive knowledge, the doctrine of fraudulent concealment was no longer an option to toll the limitations. Because Oracle failed to investigate HPE, the court determined that HPE was entitled to summary judgment on the infringement claims for pre-May 6, 2012, conduct. Oracle appealed.

The Ninth Circuit explained that to prove indirect infringement, Oracle had to show that [...]

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Bad Faith Required to Prevent Speech Regarding Potential Patent Infringement

by Lisa P. Rumin | Apr 15, 2020 | Patents

The US Court of Appeals for the Federal Circuit found that a district court abused its discretion in granting a preliminary injunction enjoining a patent holder from making claims of patent infringement without finding that those infringement claims were made in bad faith. The Federal Circuit reversed, vacated and remanded the district court’s decision. Myco Indus., Inc. v. BlephEx, LLC, Case No. 2019-2374 (Fed. Cir. Apr. 3, 2020) (O’Malley, J.).

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