Monday, July 28, 2014

Stay Against a "Peripheral" Defendant?

Not if the defendant is a direct competitor.  The Andersons, Inc. has sued Harrell's, LLC and three other defendants for infringement of U.S. Patent Nos. 6,884,756; 8,435,321; and 8,574,631 relating to water-dispersible pellet fertilizer.  Harrell's asked the Court to stay the case against it, arguing that it was a "peripheral" defendant in that it merely bought the accused products from the other defendants and resold them.

The Court outlined the law for such a stay:
A district court has inherent discretionary authority to stay proceedings to control its docket and further the interests of justice. CTI-Container Leasing Corp. v. Uiterwyk Corp., 685 F.2d 1284, 1288 (11th Cir. 1982). The applicant for a stay “must make out a clear case of hardship or inequity in being required to go forward, if there is even a fair possibility that the stay for which he prays will work damage to some one else.” Landis v. N. Am. Co., 299 U.S. 248, 255, 57 S.Ct. 163, 166 (1936).  
When a patent-holder sues both the manufacturer of an allegedly infringing device and a customer of the manufacturer--who merely resells the device to the public--district courts frequently stay the claims against the customer-retailer while the suit against the manufacturer proceeds. See generally Heinz Kettler GMBH & Co. v. Indian Indus., Inc., 575 F. Supp. 2d 728, 730 (E.D. Va. 2008); Ricoh Co., Ltd. v. Aeroflex Inc., 279 F. Supp. 2d 554, 557 (D. Del. 2003); Oplus Techs., Ltd. v. Sears Holding Corp., No. 11-cv-8539, 2012 WL 2280696, at *4 (N.D. Ill. Jun. 15, 2012). In such cases, the manufacturer of the allegedly-infringing device is considered to be the real-party interest and in a better position to contest validity and infringement. See id
Notwithstanding these frequent stays, the situation is different when the "peripheral" defendant is one of plaintiff's competitors:
Plaintiff alleges that Harrell's is Plaintiff's direct competitor, that Harrell's previously approached Plaintiff about buying its product, that Plaintiff refused, and that Harrell's then sought out the accused product from [another defendant].  Plaintiff thus maintains that discovery from Harrell's will be relevant to validity, particularly non-obviousness, as well as the issue of willful infringement.
Harrell's desire to avoid the expense and time to participate in discovery did not present an undue hardship or inequity.

Motion to stay, denied.
The Andersons, Inc. v. Enviro Granulation, LLC., Case No. 8:13-CV-3004 (M.D. Fla. July 21, 2014) (J. Covington)

Tuesday, July 15, 2014

Expert Lied On The Stand - New Trial, Right?

No.
Rembrandt Vision Technologies sued Johnson & Johnson Vision Care for alleged infringement of U.S. Patent No. 5,712,327.  During a two-week jury trial, the Court granted judgment as a matter of law in favor of Defendant based on defects in one of the Plaintiff's expert's testimony.  The jury had also found in Defendant's favor.  After the jury ruled against it, Plaintiff filed a motion asking for discovery and to reopen the case because one of Defendant's expert's had apparently lied on the stand -- he said he conducted a test when he had not personally done so and he had not told the truth about his qualifications.  The Court denied the request for discovery into this matter.  That decision (granting judgment as a matter of law and denying Plaintiff's request for discovery) was appealed and the Federal Circuit affirmed without reaching the question of whether or not denying discovery for the alleged perjury was proper.  See Rembrandt Vision Technologies, LP v. Johnson & Johnson Vision Care, Inc., 725 F.3d 1377 (Fed. Cir. 2013).

Plaintiff next asked the Court for a new trial pursuant to Fed. R. Civ. P. 60(b)(2) and (b)(3).  For relief under 60(b)(2) (newly discovered evidence), the requesting party must show:
(1) the evidence must be newly discovered since the trial;
(2) due diligence on the part of the movant to discover the new evidence must be shown;
(3) the evidence must not be merely cumulative or impeaching;
(4) the evidence must be material; and
(5) the evidence must be such that a new trial would probably produce a new result.
quoting Waddell v. Hendry Cnty. Sheriff's Office, 329 F.3d 1300, 1309 (11th Cir. 2003).  The Court was satisfied that the plaintiff met the first two elements, but elements (3) through (5) caused problems:
Regardless of the seriousness of Dr. Bielawski's offense, however, Rembrandt still must demonstrate that a new trial would probably produce a different result.  Upon sober reflection, I conclude it cannot do so. ... Rembrandt's lost opportunity to impeach Dr. Bielawski with evidence of his false testimony does not lead to Rule 60(b)(2) relief. ...Having carefully followed the evidence at trial, the Court was unsurprised by the jury's verdict of non-infringement.
It is interesting to also note that the Court conducted a three-hour hearing to address this motion, and specifically noted: "The reader is encouraged to consider the transcript of the three-hour August 2, 2013 hearing, in which counsel and the Court engaged in extensive discussions on this motion.  (Doc. 373)."

The Court turned next to Rule 60(b)(3), seeking relief from a final judgment on the basis of fraud, misrepresentation, or misconduct "by an opposing party."  Ultimately, the Court rejected plaintiff's bid because it could not show that the expert's misconduct was misconduct "by an opposing party" because the Plaintiff couldn't show that the Defendant's counsel knew or should have known of the expert's misconduct:
With the benefit of this type of hindsight [relating to the evidence showing the expert's false testimony], it is tempting to fault [Defendant's] lawyers for not discovering Dr. Bielawski's misconduct.  However, he was apparently successful in convincing [Defendant's] lawyers that he knew the subject matter and that he was going to give truthful testimony.
So, a defense expert lies on the stand and the plaintiff gets no remedy?  The Court was concerned with this perception as well:
The Seventh Circuit has put it aptly:
A motion under Rule 60(b)( often puts to a court a question without a right answer.  The district judge must weigh incommesurables -- the value of finality, the probability that an error affected the outcome of the proceeding, the probability that a second go-round would product a 'better' outcome, the costs of that second proceeding to the parties (and ultimately to society as the finality of judgments is undercut).
(citation omitted).
This is a close and difficult call.  The Court recognizes that this decision could be interpreted as not taking seriously enough the integrity of this Court's proceedings and the importance of truthful witnesses.  The Court could also be accused of treating misconduct by Rembrandt's expert witness more seriously than that of JJVC's.  While this criticism would be understandable, there are other important attributes to be considered and balanced -- finality, respect for the jury's verdict, and whether the ultimate result is just.  I sat through the trial, heard all of the evidence, and have not conducted a lengthy hearing on the Rule 60 motion.  I believe, notwithstanding the serious misconduct by Dr. Bielawski, this was a fair, through imperfect trial.  The jury's verdict is supported by the untainted evidence and should be allowed to stand.
All is not lost, however, for the plaintiff.  The Court has left open other possibilities, including reporting the issue to the U.S. Attorney's Office and requiring Defendant to explain why it should not pay Plaintiff's attorney's fees and costs associated with the investigation into the expert's misconduct.  It is also worth noting that the expert has apparently been sanctioned by his university (including a reduction in pay) and has moved to teach in Korea.

Motion to set aside judgment, denied.
Rembrandt Vision Technologies, L.P. v. Johnson & Johnson Vision Care, Inc., Case No. 3:11-CV-819 (M.D. Fla. July 10, 2014) (J. Corrigan).

Friday, July 11, 2014

Red Hot Trailers vs. Real Hot Trailers

Right Trailers, Inc. holds U.S. Trademark Registration No. 4,327,039 for the mark "RED HOT TRAILERS."  Southern Wholesale Trailers and RVs put up a wooden sign outside their business that read "Red Hot Trailers."  In response to a cease and desist from Right Trailers, Southern Wholesale changed the sign to read "Real Hot Trailers."  The font for both signs was a cursive-like font.  Right Trailers sent another cease and desist stating that the "new" name looked the same and was still likely to yield consumer confusion.  Southern Wholesale refused to change the sign.  Pictures of before (Red Hot Trailers) and after (Real Hot Trailers) are below:



Right Trailers sued Southern Wholesale and its owner, William Hobson for trademark infringement and unfair competition.  Defendants moved to dismiss.  As to Mr. Hobson, Defendants argued that there had been no allegations that he was personally liable for the allegations of the complaint.  The Court agreed, but gave the plaintiff a helping hand:
In Bentley Motors Ltd. Corp. v. McEntegart, No. 8:12–cv– 1582–T–33TBM, 2012 WL 4458397 at *3 (M.D.Fla. Sept.26, 2012), this Court noted that Bentley alleged in the complaint that the defendant, Fraray, individually was a “moving, conscious, and active force behind the infringing acts at issue, and actively participates in and approves the acts.” Therefore, the Court found that there was no basis to dismiss Fraray as a defendant. See also BabbitElec., Inc. v. Dynascan Corp., 38 F.3d 1161, 1184 (11th Cir.1994) (“a corporate officer who directs, controls, ratifies, participates in, or is the moving force behind the infringing activity, is personally liable for such infringement ...”).
 In the instant case, Right Trailers alleges no facts in its complaint that Hobson is the “moving force” behind the allegedly infringing activity. The only allegation against Hobson in the complaint states, “Upon information and belie[f], the Defendant, WILLIAM R. HOBSON, is an individual residing at all relevant times within the jurisdiction of this Court at 6710 Poley Creek Drive West in Lakeland, Polk County, Florida 33811.” (Doc. # 1 at ¶ 7). At the hearing, counsel for Right Trailers conceded that the complaint does not contain adequate allegations against Hobson. Therefore, the grants the Motion to Dismiss to the extent that the Court dismisses all claims asserted against William R. Hobson. However, the Court grants Right Trailers leave to amend the complaint on or before July 15, 2014, if it so chooses.

The Court next turned to Defendants' argument that Plaintiff hadn't pleaded a viable claim for trademark infringement.  Defendants' argument relied on two theories.  First, because Right Trailer's trademark registration was not yet incontestable, it did not serve as a basis to establish that "RED HOT TRAILERS" was a protectable trademark.  [Editor's note: What??]  Second, Plaintiff had not established a probability of confusion because Defendants used the word "Real" instead of "Red".  [Editor's note: Have you seen Coming To America?]  The Court quickly dispensed with these arguments.

As to the first argument, the trademark registration serves as prima facie evidence of the validity of the mark.  The defendants can challenge that, but it's enough to survive a motion to dismiss.  As to the second argument, the Court relied on the pictures above and stated:

Upon due consideration, the Court determines that the allegations in the complaint and the depictions of Southern Wholesale's signage are sufficient to plead the possibility of confusion, mistake, or deception. Right Trailers' trademark infringement claim is accordingly not subject to dismissal on this basis.
Motion to dismiss granted in part (with leave to amend); otherwise denied.
Right Trailers, Inc. v. Hobson, Case No. 8:14-CV-1004 (M.D. Fla. July 2, 2014) (J. Covington)

Tuesday, July 8, 2014

Preliminary Injunction - David vs. Goliath

Conair Corporation has substantial rights to U.S. Patent Nos. 8,607,804 and 8,651,118 (and its subsidiary owns Design Patent D696,456) relating to a hair styling device.  Conair sold approximately one million of these devices in 2013 and projects that it will sell approximately two million this year (2014).  Barbar, Inc apparently made 2,500 hair styling devices that bear a resemblance to Conair's.  

On May 30, 2014, Conair sought a temporary restraining order to prevent Barbar from displaying the allegedly infringing device at a trade show in Orlando the next day.  The Court denied that motion and converted it into a motion for preliminary injunction.  In denying the TRO, the Court noted:

Patent cases are notoriously complex. See Minemyer v. B-Roc Representatives, Inc., 07 C 1763, 2010 WL 3787093 (N.D. Ill. Sept. 21, 2010) aff'd sub nom. Minemyer v. R-Boc Representatives, Inc., 515 F. App’x 897 (Fed. Cir. 2013) (noting that patent cases are more time- consuming and are more taxing on judicial resources than most civil cases). In this instance, the Plaintiffs ask the Court to determine in less than a day that they have a substantial likelihood of success on a patent case involving three patents, unfair competition, and an alleged violation of trade dress. Simply put, less than twenty-four hours is too little time for a Court to make a reasoned and reflective determination as to whether Plaintiffs have a substantial likelihood of succeed on such a complex matter.
Conair Corp. v. Barbar, Inc, Case No. 6:14-CV-831 (M.D. Fla. May 30, 2014) (J. Presnell).  The parties moved onto a preliminary injunction.  The Court held an evidentiary hearing and ultimately concluded a preliminary injunction was not warranted because of the significant difference in the parties' respective sizes:
The Plaintiffs' theory of irreparable harm is that they will suffer price erosion and that their reputation and product's reputation will be tarnished. (See Doc. 2–1 at 6–7). As to price erosion, a competitor whose sales would represent less than .2% of the Plaintiffs projected sales for this year is not a significant threat to the Plaintiffs' price point. Moreover, the testimony at the evidentiary hearing showed that the Defendants' two-for-one pricing discount was simply for trade show marketing purposes and does not represent the regular pricing of the Defendants' product. (See Doc. 30 at 32:16–33:7 (describing receipt for two of Defendants' products for total cost of $100)). That limited marketing effort does not represent an intent to presently compete with the Plaintiffs' product at a dramatically lower price. 
With respect to the representational injury to the Plaintiffs' product, the evidence was mixed and none of the negative reviews could be clearly traced to any alleged faults with the Defendants' product. (See Docs. 1–1, 1–3 (attachments to Complaint showing positive reviews of Plaintiffs' product); Docs. 21–3. 21–4, 21–5, 21–6 (showing negative reviews of Plaintiffs' product). Further, even assuming that representational harm can be traced to the Defendants' product, the volume of Defendants' sales is de minimis. See Am. Beverage Corp. v. Diageo N. Am., Inc., 936 F.Supp.2d 555, 615 (W.D.Pa.2013) (addressing where large sales volume supported lack of irreparable harm upon showing of fault with allegedly infringing product). Accordingly assertions that the Defendants' product would be tarnished in a non-compensable manner are speculative.

Motion for preliminary injunction, denied.
Conair Corp. v. Barbar, Inc., Case No. 6:14-CV-831 (M.D. Fla. July 3, 2014) (J. Presnell)

Monday, June 30, 2014

Quashing a John Doe Subpoena To Protect Your Privacy?

Nope.  Malibu Media owns a library of adult films (and the associated copyrights) and sells access to its members for a monthly (or yearly) fee.  80,000 users per month access its films without paying using sites like BitTorrent.  So there is a fair amount of litigation throughout the federal courts where Malibu Media seeks recovery for copyright infringement.  Through its investigations, Malibu can find out the IP address of the alleged infringer, but needs to get to a person to figure out whom to sue.  So they sue John Doe, and file a motion asking for permission to serve a subpoena prior to the Rule 26(f) scheduling conference (as it's not possible to serve a defendant, let alone have a case management conference, if you don't know who the defendant is).  A plaintiff in such a circumstance must show good cause for issuing a subpoena.  Courts routinely find good cause exists when Plaintiff's makes:
(1) a prima facie showing of infringement,
(2) there is no other way to identify the Doe Defendant, and
(3) there is a risk an ISP will destroy its logs prior to the [Rule 26(f) conference].
quoting UMG Recording, Inc. v. Doe, Case No. 08-193 (N.D. Cal. Sept. 3, 2008).  Malibu met that standard here and received permission to serve the subpoena to the ISP.

John Doe anonymously filed a motion to quash the subpoena, arguing that: (1) the ISP can't identify the actual infringer, it can only identify whomever pays for the IP address; (2) such techniques by plaintiffs like Malibu are "Bad Investigation Techniques;" and (3) identifying the information allows "Plaintiff to Pursue Abusive Litigation."

The problem with these arguments was they did not deal with the means for quashing a subpoena spelled out in Rule 45, which requires a Court to quash a subpoena when the subpoena: (1) does not allow reasonable time to comply; (2) violates certain geographic restrictions; (3) requires disclosure of protected information; or (4) subjects the recipient to undue burden.  The Court is also permitted (but not required) to quash a subpoena: (1) to protect a person from disclosing a trade secret or other confidential information; or (2) to protect from the disclosure of an expert's opinion.

Here, John Doe's argument didn't fall into these exceptions so the Court could not (and did not) quash the subpoena.

Motion to quash subpoena, denied.
Malibu Media, LLC v. Doe, Case No. 2:14-CV-154 (M.D. Fla. June 24, 2014) (Mag. Mirando)

Thursday, June 26, 2014

Is "Pods" generic for promoting self storage goods and services?

We'll have to let the experts opine on that question.  U-Haul is using the words "pod" and "pods" on its website to attract web traffic.  PODS Enterprises, Inc. ("PEI") owns a number of federal trademark registrations for PODS (and associated designs).  See Registration Nos. 2,365,848, 3,011,459, 3,666,828, and 3,689,446.  PEI sued U-Haul for trademark infringement.  (U-Haul has sought cancellation of the four registrations).

In its defense in the litigation, U-Haul is arguing that "pods" is generic for portable containers used in transportation and storage of goods.  (As you'll likely recall, generic trademarks are no trademarks at all.  The test generally followed is the primary significance test; i.e. what is the primary significance of the mark in question in the minds of the consuming public -- to identify the goods or the producer of the goods?  If it identifies the goods, the mark is generic.  If its primary significance is to identify the producer, the mark is not generic.)  The most widely used survey to resolve genericness issues is known as a Teflon survey:
A Teflon survey first establishes whether the respondent grasps the distinction between comon names (airline or automobile) and brand names (American Airlines or Chevrolet), and then asks the respondent to categorize a number of terms as common or brand...
See also E.T. Browne Drug Co. v. Cococare Prods., Inc., 538 F.3d 185, 195 (3d Cir. 2008).   Here, U-Haul's expert designed a Teflon survey "to determine whether U.S. consumers who are likely to use moving and storage services understand the principal or primary significance of the terms 'pods' and 'pod' in the context of moving and storage to be a brand or proprietary name or, alternatively, to be a common or generic name."

The expert testified that the relevant consuming public was those people "likely to use moving and storage services."  But the survey (of 694 respondents) was only conducted on people who had actually  moved in the past few years or those that were expecting to move within the next year.  PEI believed the survey methodology was flawed for 2 reasons.  First, it included too few people because it did not include people who were likely to use storage services over the next year (it only included those likely to move over the next year).  Second, the survey included too many people because it included respondents who intended to move without using a moving or storage company.  PEI challenged the expert's methodology as flawed, and called on the Court as gatekeeper to exclude the expert under Daubert.

The Court dispensed with the motion quickly:
The general reliability of Teflon surveys cannot be questioned, given their wide acceptance.  See In re DaimlerChrysler AG, Serial No. 74/734,869 (TTAB July 26, 001) ("The so-called ‘Teflon survey’ is widely accepted in determining whether a term is generic.”); Anheuser–Busch Inc. v. Stroh BreweryCo., 750 F.2d 631, 639 (8th Cir.1984) (characterizing a Teflon survey as “properly conducted”); Invisible Fence, Inc. v. Fido ‘s Fence, Inc., No.3:09–CV–25, 2013 WL 6191634 (E.D.Tenn. Nov.26, 2013) (accepting a survey that “generally” complies with Teflon ). Rather, PEI perceives multiple technical deficiencies in Dr. Wood's survey, including an improper universe of respondents and improper questioning.
Such technical deficiencies go to the weight of Dr. Wood's opinions, not their admissibility.
Motion to Exclude Expert, Denied.
Pods Enterprises, Inc. v. U-Haul International, Inc., Case No. 8:12-cv-1479 (M.D. Fla. June 12, 2014) (J. Whittemore)

Saturday, June 21, 2014

Permanent Injunction For A Willful Copyright Infringer?

Nope.  Injunctions do not automatically flow after a finding of infringement, even where infringement is willful.  Yellow Pages Photos sued Ziplocal and Yellow Pages Group for unauthorized usage of YPP's photos.  YPP produces and licenses images for use in advertising.  Ziplocal was formerly a licensee of YPP and YPG created and produced advertisements for Ziplocal.

YPP prevailed at trial, convincing the jury that defendants had willfully infringed its copyrights.  Specifically, the jury awarded $100,001 against Ziplocal for breach of contract, willful copyright infringement of 123 works, and contributory copyright infringement of 123 works.  The jury also awarded $123,000 against YPG for willful copyright infringement of 123 works.  After the jury trial, YPP sought both prejudgment interest and a permanent injunction.

To obtain a permanent injunction, you must show: (1) irreparable harm; (2) damages do not adequately compensate you for the harm; (3) the balance of hardships justifies an injunction; and (4) the public interest is best served with an injunction.  Even though you've established willful infringement, you must still prove these four factors.  The problem for YPP was that it had testified that money was enough to compensate for its injury and that it hadn't made any new sales in years:
Looking at the factors of irreparable harm and inadequate remedy at law, the Court concludes that Plaintiff has not shown that it will likely suffer irreparable harm in the future such that the damages already awarded by the jury will not adequately compensate for any losses. At the time of trial, and according to its sealed financial records, Plaintiff had not secured new customers since 2009. As the income from Plaintiff's photos and licensing revenues declined, Plaintiff did not obtain new customers, although Plaintiff's principal continued to attempt to market the photos and entered into negotiations to sell licenses to no avail. Without a new market or income stream derived from photos or licenses for approximately five years, Plaintiff is unable to show that it would be irreparably harmed by loss of income.
 

In addition to the lack of irreparable harm, Plaintiff's principal's testimony supports a finding that damages provide an adequate remedy at law, thereby negating the necessity of entering permanent injunctive relief. Plaintiff's principal testified that a monetary award would compensate him for Plaintiff's losses in the market. The Court concludes that the jury's finding of willful infringement on the part of both Defendants and ensuing damage award, provides an adequate remedy at law for Plaintiff's losses.

The Court did, however, award prejudgement interest ($17k against Ziplocal and $22k against YPG).

Permanent Injunction denied; prejudgment interest granted.
Yellow Pages Photos, Inc. v. Ziplocal, LP, Case No. 8:12-cv-755 (M.D. Fla. June 18, 2014) (J. Lazzara)