IP UPDATE
Exploring the latest in intellectual property law
IP UPDATE
Exploring the latest in intellectual property law
Results for "Patent infringement"
Subscribe to Results for "Patent infringement"'s Posts

UPC Court of Appeal Rules on Suspending First Instance Enforcement, Managing Director Liability

by | Nov 21, 2024 | ,

The Court of Appeal (CoA) of the Unified Patent Court (UPC) addressed a request for suspensive effect of an appeal and ruled that managing directors of an alleged patent-infringing company cannot be held liable as “intermediaries” under Article 63 of the Agreement on a Unified Patent Court (UPCA). Koninklijke Philips NV v. Belkin GmbH, UPC_CoA_579/2024, ORD_53377/2024 (UPC CoA Oct. 29, 2024) (Rombach, J.)

In contrast to German law (for example), appeals before the UPC generally do not have suspensive effect (See Article 74(1) of the UPCA). Thus, first instance decisions are immediately enforceable under Article 82 of the UPCA and Rule 354 of the UPC Rules of Procedure (RoP), which can have significant economic implications, particularly in the context of injunctions against the affected companies. To mitigate such effects, an application for suspensive effect may be filed under Rule 223.1 of the RoP.

In the present case, Philips initiated an infringement action against the Belkin Group before the Local Division Munich (CFI_390/2024), targeting not only the Belkin Group but also its subsidiaries’ managing directors. In its first instance decision, the Munich court ruled in favor of Philips and granted an injunction against Belkin and its subsidiaries’ managing directors, classifying the latter as “intermediaries” within the meaning of Article 63(1), Section 2 of the UPCA. Belkin appealed and requested suspensive effect under Rule 223.1 of the RoP.

The CoA partially granted this request, ordering suspensive effect with regard to the injunction against the managing directors. The CoA ruled that the suspensive effect of an appeal is an exception that can only be ordered in special circumstances. This involves determining whether the appellant’s interest in maintaining the status quo until the decision of the appeal exceptionally outweighs the respondent’s interest in enforcement. The CoA clarified that such circumstances exist where the decision being appealed is manifestly wrong. Whether this is the case – and whether there is, therefore, an evident violation of the law – is assessed on the basis of the factual findings and legal considerations of the first instance decision. If these findings or legal considerations prove to be untenable on summary examination, suspensive effect must be ordered.

In the present case, the CoA found a manifest error of law in the classification of the managing directors as “intermediaries” within the meaning of Article 63 of the UPCA and Article 11 of Directive 2004/48. It reasoned that managing directors, acting in their official capacity, represent the company itself and are not external to it. Therefore, the appellant company cannot be a “third party” in relation to its CEO. Accordingly, liability under Article 63(1), Section 2 of the UPCA as an intermediary cannot arise solely from the CEO functioning as a managing director.

Consequently, the CoA granted suspensive effect for the injunction against the managing directors but dismissed the application for suspensive effect in all other respects.

Practice Note: Practitioners should carefully consider the rule exception framework when applying for suspensive effect before the UPC. To be successful, a convincing, case-specific justification [...]

Continue Reading



read more

No Matter How You Slice and Dice It, Conclusory Evidence Can’t Support Entire Market Value Damages

by | Oct 10, 2024 |

The US Court of Appeals for the Federal Circuit concluded that the entire market value rule was not applicable where conclusory expert testimony was the only evidence that a product’s infringing features drove consumer demand, and therefore reversed. Provisur Techs., Inc. v. Weber, Inc., Case No. 23-1438 (Fed. Cir. Oct. 2, 2024) (Moore, C.J.; Taranto, Cecchi, JJ.)

Provisur sued Weber in the Western District of Missouri over three patents related to slicing and packaging meats and cheeses. The jury determined that Weber willfully infringed several claims of the three asserted patents and awarded damages. Following the trial, Weber moved for judgment as a matter of law (JMOL) on the issues of infringement and willfulness, and a new trial on infringement, willfulness, and damages. The district court denied Weber’s motion in its entirety. Weber appealed.

The Federal Circuit affirmed the district court’s judgment with respect to two of the asserted patents but reversed the infringement finding on the sole asserted claim of the third patent. Provisur’s infringement theory was that the consumer could program the device to infringe the limitations of the claim. However, at trial, Provisur provided no evidence that it was actually possible for the consumer to configure the device to practice the claim or that any consumer had ever done so. Some of the software necessary to be configured in an infringing manner was not accessible to the consumer. Instead, only Weber service technicians could access it. Provisur also proffered no evidence that the devices had ever actually been configured to infringe the claims, instead only offering evidence that the claims could have been infringed.

Next, the Federal Circuit assessed willfulness. Weber’s primary argument was that the district court improperly allowed expert testimony in violation of 35 U.S.C. § 298, which states that a party’s failure “to obtain the advice of counsel with respect to any allegedly infringed patent . . . may not be used to prove that the accused infringer willfully infringed the patent.” Provisur’s expert, who testified about industry standards for intellectual property management, “did not distinguish between legal and non-legal services when testifying about consulting a third party.” The Court concluded that that portion of the testimony was inadmissible and the remaining evidence could not support a finding of willfulness.

Finally, the Federal Circuit addressed the damages issue, specifically focusing on the reasonable royalty award. The infringing features were subparts of a larger accused product – which had many non-infringing features. The accused product contained multiple separate machines unrelated to the alleged invention.

Provisur’s royalty award was predicated on its use of the entire market value rule, where the base to which the royalty rate is applied is the cost of the entire accused product as opposed the cost of just the infringing part. The Federal Circuit noted that the entire market value rule is an acceptable theory, but it requires a showing that the infringing part “is the basis for customer demand.”

Provisur’s damages expert used the entire market value rule in calculating the [...]

Continue Reading



read more

Rewind: Federal Circuit Grants En Banc Rehearing Over Royalty Damages

by | Oct 3, 2024 |

The en banc US Court of Appeals for the Federal Circuit issued a per curiam order vacating its previous panel decision upholding a district court’s denial of the defendant’s motion for a new trial on damages. In that decision, the Federal Circuit found that the plaintiff’s damages expert adequately demonstrated the economic comparability of prior license agreements to a hypothetical negotiation between the parties. Now, the Court has granted the defendant’s petition for rehearing en banc. EcoFactor, Inc. v. Google LLC, Case No. 23-1101 (Fed. Cir. Sept. 25, 2024) (per curiam) (Moore, C.J.; Lourie, Dyk, Prost, Reyna, Taranto, Chen, Hughes, Stoll, Stark, JJ.) Judge Prost dissented in part in the original panel decision.

EcoFactor sued Google over Nest thermostats allegedly infringing EcoFactor’s HVAC patent. The initial appeal revolved around the validity of the patent, the infringement verdict, and the damages awarded. Google argued that the patent was directed to an abstract idea and therefore was patent ineligible under 35 U.S.C. §101. Google also argued that the district court erred in its rulings on noninfringement and damages. The Federal Circuit majority upheld the district court’s decisions, finding genuine issues of material fact on patent validity, substantial evidence of infringement, and admissible expert testimony supporting the damages award. The Court dismissed Google’s challenge to the expert’s use of license agreements for calculating royalties, as the Court found the methodology reasonable. However, Judge Prost’s dissent in the original panel decision criticized the damages calculation, arguing that the expert’s methodology lacked rigor, particularly for failing to apportion the patented technology’s value from other licensed patents.

The en banc Federal Circuit will now reconsider the practice of using a patent owner’s prior license agreements to determine royalty rates, a method that can become complicated when the scope of licenses varies or when lump sums and royalties are not clearly apportioned.

The en banc order directed the parties to file new briefs limited to the issue of whether “the district court[] adhere[d] to Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), in its allowance of testimony from EcoFactor’s damages expert assigning a per-unit royalty rate to the three licenses in evidence in this case.”



read more

A New Vision: Collateral Estoppel Doesn’t Extend to Related Claims

by | Sep 19, 2024 |

The US Court of Appeals for the Federal Circuit reversed a district court order excluding expert validity testimony based on collateral estoppel stemming from an inter partes review (IPR) proceeding of a related patent, finding that an unpatentability decision in an IPR does not collaterally estop a patentee from making validity arguments about related claims in a district court litigation. ParkerVision, Inc. v. Qualcomm Inc., Case Nos. 22-1755; 24-2221 (Fed. Cir. Sept. 6, 2024) (Lourie, Mayer, Stark, JJ.)

This case has a long and complicated history. In 2011, ParkerVision sued Qualcomm for alleged infringement of eight patents related to wireless communications technology. In October 2013, a jury returned verdicts rejecting Qualcomm’s invalidity defense, finding 11 claims across four patents to be infringed by Qualcomm, and awarded $172 million in damages to ParkerVision.

In June 2014, the district court granted Qualcomm’s motion for a judgment as a matter of law on noninfringement, which the Federal Circuit affirmed in late 2015. Meanwhile, ParkerVision filed a second case against Qualcomm in May 2014 alleging infringement of 11 more patents. That case was stayed in favor of a Section 337 investigation that ParkerVision filed against Qualcomm at the International Trade Commission.

Qualcomm then filed 10 petitions for IPR, six of which targeted one of ParkerVision’s patents. While the challenged apparatus claims of that patent were found unpatentable during the IPR, the challenged method claims survived. The district court statutory stay (during the Commission proceeding) was lifted in December 2018. Prior to trial, the district court granted Qualcomm’s Daubert motions seeking to exclude ParkerVision’s expert’s testimony on invalidity due to collateral estoppel arising from the IPRs, and the expert’s testimony on infringement for being unreliable. The district court granted Qualcomm’s motion for summary judgment of noninfringement based on its finding that the asserted claims were materially similar to the claims from the first case. ParkerVision appealed.

In July 2024, after the briefing was completed and the Federal Circuit held oral argument, the Court dismissed the appeal for lack of appellate jurisdiction and returned it to the district court because Qualcomm’s invalidity counterclaims had not been adjudicated. The parties then filed a joint motion at the district court seeking entry of a final judgment, which was granted in August 2024. ParkerVision appealed again.

The Federal Circuit reinstated ParkerVision’s initial appeal and reversed the district court’s determination. On the summary judgment of noninfringement, the Court rejected the collateral estoppel finding because the district court failed to conduct claim construction to determine whether the scope of the claims was the same as in the first case. As for the district court’s exclusion of expert validity testimony due to the IPRs, the Federal Circuit concluded that because of the different legal standards for proving invalidity (preponderance versus clear and convincing), a finding underlying an unpatentability decision in an IPR does not collaterally estop a patentee from making validity arguments regarding related claims in district court litigation.

Finally, the Federal Circuit concluded that the district court had abused its discretion [...]

Continue Reading



read more

Back to the Future: Expert Can Be Skilled Artisan Based on Later-Acquired Knowledge

by | Sep 12, 2024 |

The US Court of Appeals for the Federal Circuit clarified that a technical expert does not need to have been a person of ordinary skill in the art (POSITA) at the time of the invention. Instead, they may rely on later-acquired knowledge to offer testimony from the vantage point of a skilled artisan at the time of the invention. Osseo Imaging, LLC v. Planmeca USA Inc., Case No. 23-1627 (Fed. Cir. Sept. 4, 2024) (Dyk, Clevenger, Stoll, JJ.)

Osseo owns patents related to orthopedic imaging systems that use X-ray beam techniques to create tomographic and/or densitometric models of a scanned object. The alleged invention date of the patents was 1999. Osseo sued Planmeca for infringement of dental imaging systems that generate and display 3D models to a user.

At trial, the jury was instructed to determine the requisite level of ordinary skill and was told that a POSITA would have a bachelor’s degree in electrical or computer engineering, plus three to five years’ experience working in a diagnostic imaging environment that uses the techniques described in the asserted patents. During cross-examination, Planmeca sought to demonstrate that Osseo’s technical expert did not have the requisite experience in 1999, the alleged date of invention. The jury returned a verdict that Planmeca infringed the asserted patents.

After trial, Planmeca moved for judgment as a matter of law (JMOL), arguing that Osseo’s expert’s testimony should be disregarded because he was not a POSITA at the time of the patents’ alleged date of invention in 1999. The district court denied the motion as legally incorrect. Planmeca appealed.

Planmeca argued that the district court erred in denying JMOL because although Osseo’s expert became a POSITA eight to 10 years after the time of the invention, he was not so skilled at the time of the invention, and thus the verdict could not be supported by his testimony. The Federal Circuit reiterated that “[to] offer expert testimony from the perspective of a skilled artisan in a patent case – like for claim construction, validity, or infringement – a witness must at least have ordinary skill in the art.” The Court rejected Planmeca’s argument to add a timing requirement that the expert must have possessed the requisite ordinary skill in the art at the time of the invention. Instead, the expert must be qualified to offer testimony from the vantage point of a skilled artisan.

The Federal Circuit explained that it made little sense to add a timing requirement because an expert could acquire the necessary skill level later and develop an understanding of what a POSITA knew at the time of the invention. The Court noted that the fact that the expert was not a POSITA at the time of the invention may well be used during cross-examination to undermine the credibility of the expert but also noted that an expert could avoid such potential damage by explaining how they gained the perspective of a POSITA at the time of the invention.

Accordingly, the Federal Circuit affirmed [...]

Continue Reading



read more

Due Diligence Deficit Sinks Fraud Claims in Trademark Battle

by | Aug 22, 2024 |

The US Court of Appeals for the Second Circuit affirmed the dismissal of an independent action asserting “fraud on the court” based on the finding that the alleged fraud on the US Patent & Trademark Office (PTO) should have been uncovered by the exercise of due diligence in a prior action. Marco Destin Inc. v. Levy et al., Case No. 23-1330 (2d Cir. Aug. 8, 2024) (Jacobs, Sack, Sullivan, JJ.)

In 2007, L&L Wings filed a lawsuit against Marco Destin and related entities (collectively, Marco Destin) in the District Court for the Southern District of New York, asserting claims of breach of contract and trademark infringement related to Marco Destin’s unauthorized use of L&L’s unregistered trademark WINGS on beach apparel. Although L&L and Marco Destin entered into an allegedly valid temporary licensing agreement in 1998, L&L alleged that Marco Destin continued to use the mark after the agreement expired in 2006. Post-discovery, L&L revealed a recent trademark registration for the WINGS mark, causing L&L and Marco Destin to enter a stipulated order of settlement and dismissal in 2011. Marco Destin paid L&L $3.5 million, ceased using the WINGS mark, and agreed to never bring an action based on the WINGS mark or the 1998 temporary licensing agreement.

More than a decade later, Marco Destin sued L&L again in the Southern District of New York for “fraud on the court” and “fraud” and demanded vacatur, sanctions and damages due to key facts revealed in a separate unrelated Eastern District of North Carolina action. In relevant part, it was discovered that L&L was not the owner of the WINGS mark. Rather, an entity named Shepard Morrow owned the WINGS mark and licensed it to L&L for a brief period in the 1990s. L&L stopped paying the required licensing fees to Shepard Morrow and improperly licensed the unregistered WINGS mark to other entities (including Marco Destin). As a result, the Eastern District of North Carolina granted sanctions against L&L for failing to disclose Shepard Morrow’s trademark registration and license agreement, and L&L’s WINGS mark registration was cancelled as a consequence of L&L’s false representations to the PTO. L&L moved to dismiss Marco Destin’s New York complaint pursuant to FRCP 12(b)(6). The district court granted the motion to dismiss, concluding that the “fraud on the court” claim was an independent action for relief from a judgment under Rule 60(d)(3) and Marco Destin had a reasonable opportunity to discover L&L’s false representations during the initial litigation. Marco Destin appealed.

The Second Circuit affirmed, reviewing the dismissal of an independent action for fraud on the court under FRCP 60(d)(3) for abuse of discretion. A party challenging a judgment may file either a timely motion within a fixed time window – one year under FRCP 60(b)(3) – or an independent action any time after that pursuant to FRCP 60(d)(3). Independent actions require a more demanding showing of fraud (such as fraud on the court itself) than a timely motion, and generally claimants seeking equitable relief through independent [...]

Continue Reading



read more

Not Just a Blip: Section 101 as Affirmative Defense

by | Aug 15, 2024 |

On appeal from a motion to dismiss based on subject matter eligibility, the US Court of Appeals for the Federal Circuit held that a district court appropriately analyzed certain claims as representative claims and that the claims were directed to an abstract idea and did not recite an inventive concept. Mobile Acuity, Ltd. v. Blippar Ltd., Case No. 22-2216 (Fed. Cir. Aug. 6, 2024) (Lourie, Bryson, Stark, JJ.)

Mobile Acuity sued Blippar for infringement of claims from two patents directed to software for accessing stored information with a captured image. Mobile Acuity’s operative second amended complaint asserted that Blippar infringed “at least Claims 9, 11, and 16” of one patent and “Claims 9, 11, and 16” of the other. Blippar asserted that claim 9 of each patent was “representative of the entire claim set in each respective Asserted Patent” and that the patents were invalid under 35 U.S.C. § 101. The district court granted Blippar’s motion and subsequently denied Mobile Acuity’s motion to amend the judgment and for leave to file a third amended complaint.

Mobile Acuity appealed, asserting that the district court committed several errors, including the treatment of claim 9 in each asserted patent as a representative claim and the holding that the asserted patents were invalid as claiming ineligible subject matter.

Mobile Acuity first argued that the district court erred in holding that a challenge under § 101 is not an affirmative defense. The Federal Circuit agreed that an eligibility challenge on § 101 grounds is an affirmative defense but found that the district court simply misspoke when it stated during oral argument “[w]e are not talking about an affirmative defense.” However, the Federal Circuit concluded that the “error in word choice was harmless because the district court applied the correct legal standard for evaluating an affirmative defense at the motion to dismiss stage.”

In support of its denied motion to amend, Mobile Acuity argued that “the district court required it to ‘anticipate [the] defendant’s affirmative defense in its complaint.’” The Federal Circuit rebuffed this argument, concluding that the district court did not grant the motion to dismiss on the grounds that Mobile Acuity failed to address patentable subject matter in its complaints but correctly dismissed based on an affirmative defense that “clearly appears on the face of the pleading.” The Court stated that “as we have repeatedly recognized, it is possible and proper to determine patent eligibility under 35 U.S.C. § 101 on a Rule 12(b)(6) motion.”

On the merits, the Federal Circuit first determined that the district court did not merely treat claim 9 of each of the asserted patents as representative of all claims. The Federal Circuit explained that “the court did more, separately analyzing all six claims Mobile Acuity specifically identified in the operative complaint,” as well as two additional claims. The Federal Circuit also agreed with the district court that the six claims were representative “of all claims of the two Asserted Patents.”

As to the merits of the motion to dismiss, [...]

Continue Reading



read more

Preliminary Injunction Upheld in Cancer Relapse Detection Case

by | Jul 25, 2024 |

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



read more

European UPC Issues Its First Decisions on the Merits

by | Jul 18, 2024 | ,

Franz Kaldewei GmbH & Co. KG v. Bette GmbH & Co. KG

The Unified Patent Court (UPC) issued its first decision on the merits, granting the first-ever permanent injunction covering seven UPC member states. Franz Kaldewei GmbH & Co. KG v. Bette GmbH & Co. KG (Düsseldorf Local Division, July 3, 2024).

The UPC found that the asserted patent was invalid in its granted form due to obviousness but upheld as valid an auxiliary request on which the injunction is based. Among other things, the Düsseldorf Local Division discussed procedural lapses around a missed deadline (denying the defendant a submission of certain documents one day prior to the oral hearing), jointly hearing the infringement case, and a counterclaim for revocation and inventive step. In this regard, the Court proceeded pragmatically and flexibly, as the UPC Court of Appeal (CoA) did in 10x Genomics, but unlike the European Patent Office (EPO) with its focus on the closest prior art and building a problem-solution approach thereon.

The decision further dealt with claims for information on the scope of infringement, claims for recall or removal from the channels of commerce, and considerations against requiring security for enforcement of a judgment on the merits in the given case.

Regarding so-called contributory infringement (i.e., indirect use of the invention), the UPC held that there is a double territorial requirement: the offer and/or delivery of the essential element must take place within UPC territory, and the invention must also be used within UPC territory. The Court left open the question of whether it is sufficient that the offering/delivery exists in a member state and the invention is intended for direct use in another, different member state. Further case law will have to clarify this point. Regarding the prior use defense, it follows from the decision that there is no “UPC/European” prior use. The existence of a right of prior use must be asserted for each member state according to its national law, and the respective defendant must provide the relevant information for each country individually.

Practice Notes:

  • The UPC has shown that it is capable of dealing efficiently with both infringement and invalidity questions within the short timeframe it has set itself. The UPC delivered on its promise to issue a decision on the merits in just over a year and only a few weeks after the oral hearing.
  • Regarding claim interpretation, the Düsseldorf Local Division referred to the CoA’s decisions on February 26, 2024, and May 13, 2024, stating that the principles of Article 69 EPC apply to both validity and infringement proceedings.

DexCom, Inc. v. Abbott et al.

The day after the UPC’s decision on the merits in Franz Kaldewei granting a permanent injunction, the Paris Local Division delivered its first decision on the merits and declared the patent in suit invalid in 17 UPC member states. DexCom, Inc. v. Abbott et al. (Paris Local Division, July 4, 2024).

The Paris Local Division also ruled on both infringement and validity questions and [...]

Continue Reading



read more

What Makes a Trademark Case “Exceptional” in the Fifth Circuit?

by | Jul 11, 2024 |

The US Court of Appeals for the Fifth Circuit affirmed a senior party mark but found that the district court committed clear error in finding that a similar junior party mark was valid. The Fifth Circuit also found that the district court abused its discretion in awarding attorneys’ fees to the senior user. Appliance Liquidation Outlet, L.L.C. v. Axis Supply Corp., Case No. 23-50413 (5th Cir. June 21, 2024) (Smith, Haynes, Douglas, JJ.)

Appliance Liquidation Outlet (ALO), a decades-old appliance store in San Antonio, Texas, brought a trademark action under the Lanham Act and Texas law (which in all relevant aspects tracks the Lanham Act) against Axis Supply Corporation, another San Antonio appliance store that opened in 2021. Axis’s store and social media prominently featured the phrase “Appliance Liquidation”:

ALO noted that Axis’s opening happened to coincide with an influx of customers conflating ALO with Axis. ALO’s storefront had prominently displayed a banner reciting “Appliance Liquidation Outlet” for years:

Although ALO had never registered its mark, ALO had long engaged in a variety of promotional activities to raise brand recognition, including partnering with local sports teams and holding antique exhibitions and car shows.

Soon after Axis opened its store, ALO experienced a rush of customers who failed to differentiate between the stores and believed that ALO operated both. ALO requested that Axis stop using “Appliance Liquidation” and sued Axis in state court when Axis refused. Axis removed the dispute to the federal district court. After a bench trial, the district court held for ALO, enjoining Axis from using “Appliance Liquidation” and “Appliance Liquidation Outlet” and causing confusion between the two businesses. The district court also awarded attorneys’ fees under 15 U.S.C. § 1117(a) to ALO, finding that Axis’s decision to change its name only a week before trial (about 1.5 years into the dispute) amounted to litigating in an unreasonable manner. Axis appealed.

The Fifth Circuit affirmed the district court’s holding that Axis had infringed ALO’s “Appliance Liquidation Outlet” mark but assigned clear error to the district court’s finding that “Appliance Liquidation” was valid mark. The Fifth Circuit also found that the district court had abused its discretion in awarding attorneys’ fees to ALO.

With respect to the marks’ validity, the Fifth Circuit noted that both marks were unregistered and thus were not presumptively valid. The Court found that the record did not support the conclusion that “Appliance Liquidation” was a source identifier and thus found that it was not a valid mark. However, the Fifth Circuit was satisfied that “Appliance Liquidation Outlet” served as a source identifier. The Court found that although “Appliance Liquidation Outlet” was descriptive, the evidence established that San Antonian consumers perceived the mark as conveying information about ALO, not merely reflecting a class of services or businesses, and [...]

Continue Reading



read more

BLOG EDITORS

Paul Devinsky

Amol Parikh

Jodi Benassi

STAY CONNECTED

Subscribe

TOPICS

ARCHIVES