Saturday, March 8, 2014

An Indefinite Claim Term Yields An Indefinite Claim, Right?


Every Penny Counts sued Wells Fargo Bank for infringement of U.S. Patent 8,025,217 directed to a method and system to create and distribute excess funds from consumer spending transactions.  Generally, the '217 patent describes a system where transactions are rounded up to the next nearest dollar, with the excess amount being placed into a separate account.  Claim 1 is reproduced below:

1. A system for accumulating credits from a customer account belonging to the customer and managed by an institution and placing the credits into a provider account, comprising:

an information processor; said information processor including a data store with data identifying the customer, the rounding determinant, the managed institution, and the account;

said data store including machine readable instructions authorizing the processor to access and read the customer account;

said data store including machine readable instructions to calculate rounders after receiving a plurality of payment transactions from the read customer account and to calculate an excess based on the rounders;

said data store including machine readable instructions to withdraw the excess from the customer account;

said data store including machine readable instructions to transfer the withdrawn excess to the provider account.

The boldfaced terms above address the problem resolved by the Court recently.  The preamble introduces "a customer account" and "a provider account," but the information processor does something with "the account."  The defendant argument is that such drafting is indefinite as it does not clearly identify what is covered.

As every patent lawyer knows, each claim term must have a proper "antecedent basis," meaning before a definite article (i.e. "the") is used to describe the term, the term must have first been introduced earlier in the claim.  But the foregoing sentence is not a complete statement of the law:
The requirement of antecedent basis is a rule of patent drafting ..., [but] the failure to provide explicit antecedent basis for terms does not always render a claim indefinite.  Energizer Holdings, Inc. v. Int'l Trade Comm'n, 435 F.3d 1366, 1370 (Fed. Cir. 2006).  Instead, in "the absence of explicit antecedent basis ... [,] the scope of a claim [must] be reasonably ascertainable by those skilled in the art.  Energizer Holdings, 435 F.3d at 1370 (construing Bose Corp. v. JBL, Inc., 274 F.3d 1354, 1359 (Fed. Cir. 2001)).
The Court went on to discuss numerous typographical and other scrivenor's errors riddled throughout the '217 specification.  For example, in addressing plaintiff's argument concerning the use of singular words versus plural, the Court stated:
The patent is infested with scrivener's (and other) errors, and the prospect of a missing "s" fits comfortably within the patterns discernible in the patent. . . . These errors - which say nothing of the drafter's grammatical and syntactical incompetence and bemusing judgment - confirm that "account" lacking an "s" by mistake accords with the level of compositional adroitness and dexterity that pervades the patent.
Ouch.  (Added as a footnote to the above quotation was the Court's explanation of "bemusing judgment" noting that one of the many acronyms used in drafting the specification was "PMS".)

The Court concluded the term "the account" was indefinite.  But that does not resolve the question of whether or not Claim 1 is indefinite.  And for that, the Court said no.  Indefiniteness of a claim is a very high standard:
[A] somewhat indefinite term, depending on the centrality of the term to the claim, is not necessarily equivalent to a fatally indefinite claim.
The Court appears to be as impressed with the law on this topic as it is with the '217 patent's specification:
The sources for the resolution of ambiguity in a claim include resort to either or both of the specification (of which the claim is a part) and the prosecution history.  The familiar decisional precedent, perennially groping for a less indefinite definition of "indefinite," requires that to invalidate a claim for "indefiniteness" the district court must determine that, clearly and convincingly and contrary to the presumption of validity, the claim is "insolubly ambiguous" and "not amenable to claim construction.
And under this test, the claim must survive:
The '217 patent is a notably simple (although vexingly composed) patent that addresses a notably simple subject -- an authorized movement of money from one account to another account after a simple mathematical computation.  Although the entire patent is awkwardly drafted, the oppugned claim is simple.  The specification is simple.  The drawings are simple.  The patent as a whole, notwithstanding the deficiencies, seems understandable; the claim seems understandable.  In short, the indefiniteness of the term "the account" leaves no unmanageable gap in the information available for determining the scope of the claim.  No practical incapacity or disabling uncertainty appears as a consequence of the fact that "the account" might mean one thing or the other.  In sum, the extent of the indefiniteness in the term "the account" is inconsequential and falls far short of the "insoluble ambiguity" required to invalidate the claim.
Motion for partial summary judgment for indefiniteness, denied.  (Dennis Crouch at Patently-O has also written on this case here.)
Every Penny Counts, Inc. v. Wells Fargo Bank, N.A., Case No. 8:11-CV-2826 (M.D. Fla. Mar. 5, 2014) (J. Merryday)

Friday, November 1, 2013

Are a Principal's Tax Returns Relevant In a Vicarious Copyright and Trademark Case?

Yes.  Coach sued a flea market and its owner for trademark, trade dress, and copyright infringement related to alleged sales of counterfeit Coach products.  Coach seeks statutory damages under both the Copyright Act and Lanham Act.  The defendant flea market and its owner refused to provide their tax returns, arguing they were not relevant.  Coach responded that the defendants
are facilitating and contributing the promotion and sale of the counterfeit and infringing products ... and [they] have made substantial profits from the infringing activity they have allowed to occur.
In addressing Coach's motion to compel, the Court was initially concerned with a split in the Southern District of Florida's analysis of this issue, where some courts required a heightened level of protection because of public policy issues:
Using the procedure in Rule 34(a), parties can request the production of documents and other things within the scope of FED. R. CIV. P. 26(b). However, when a party asks for tax returns, most courts acknowledge that the request raises public policy concerns. Camp v. Correctional Medical Services, No. 2:08cv227-WKW(WO), 2009 WL 424723 * 2 (M.D. Ala. Feb. 17, 2009); Platypus Wear, Inc. v. Clarke Modet & Co., Inc., No. 06-20976-CIV, 2008 WL 728540 * 3 (S.D. Fla. Mar. 17, 2008). Federal courts are split on the question whether income tax returns are entitled to enhanced protection from discovery. United States v. Certain Real Property, 444 F. Supp. 2d 1258, 1262-64 (S.D. Fla. 2006) (collecting cases). For example, some courts in the Southern District of Florida hold that a party seeking the production of tax returns must show a compelling need, in addition to relevance, while other courts in the same district find that ordinary relevance is all that is required. Id. And, even courts which hold that relevancy is the sole issue have taken steps to protect the confidentiality of tax returns. See EEOC v. Dimare Ruskin, Inc., No. 2:11-cv-158-FtM-36SPC, 2011 WL 3715067 * 4 (M.D. Fla. Aug. 24, 2011); Platypus Wear, Inc. v. Clarke Modet & Co., Inc., 2008 WL 728540 at *3. The Eleventh Circuit has not explicitly addressed the issue or recognized a special privilege for tax records. But, in Maddow v. Proctor & Gamble Co., Inc., 107 F.3d 846, 853 (11th Cir. 1997), the court found that the district court did not abuse its discretion in compelling tax records because they were “arguably relevant to the case.” 
The Court followed Maddow, recognizing that a vicariously liable trademark and copyright defendant's finances are relevant for discovery purposes, particularly where the plaintiff seeks statutory damages.  [For instance, in the Copyright context, the plaintiff will be required to produce the defendant's gross revenues in order to satisfy its statutory obligations for receiving statutory damages.  To do so, the plaintiff must first gather evidence.]:
“A party infringes vicariously by ‘profiting from direct infringement while declining to exercise a right to stop or limit it.’” Pegasus Imaging Corp. v. Northrop Grumman Corp., 8:07-cv-1937-T-27EAJ, 2008 WL 5099691 * 2 (M.D. Fla. Nov. 25, 2008) (quoting Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005)). Coach alleges that Josephs and Visitors reaped profits from turning a blind eye to the sale of counterfeit and infringing merchandise at the flea market.  If true, then their tax returns may contain information relevant to prove that they benefitted financially from the flea market vendors activities.  
Coach has invoked its right to recover statutory damages. In at least three infringement cases courts have found that a defendant’s tax returns are relevant when the plaintiff asks for statutory damages. See, Coach, Inc. v. Swap Shop, Inc., No. 12-60400-CIV, 2013 WL 4407064 * 3 holding that “‘Defendant’s corporate federal income tax returns are relevant to the issue of statutory damages under section 504(c)(1) in a copyright infringement action.’” (quoting Quackenbush Music, Ltd. v. Alana, Inc., No. 92-10687-S, 1992 WL 439746 * 2 (D. Mass. Nov. 2, 1992)); Coach, Inc. v. Hubert Keller, Inc., Case No. CV411-285, 911 F.Supp.2d 1303, 1310 (S.D. Ga. 2012) (recognizing that if plaintiff had invoked its right to statutory damages it would be entitled to the defendant’s tax returns.).
Motion to Compel, granted.
Coach, Inc. v. Visitors Flea Market, LLC, Case No. 6:11-CV-1905 (M.D. Fla. Oct. 24, 2013) (Mag. Smith)

Monday, October 7, 2013

Court Won't "Rubber Stamp" Request for Injunction

Broadcast Music, Inc. sued a bar (Evie's Tavern Ellenton) and its owner for copyright infringement.  The bar played a number of songs without license, and BMI sought to enforce its rights.  The bar defended by arguing that BMI didn't have proper title to the copyrights at issue.  At summary judgment, BMI proved otherwise (documenting the chain of title sufficiently to convince the Court that it owned the licenses for five of the works at issue).

Defendants' argument was an attempt to rely on 17 U.S.C. 204(a), which provides:

(a) A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent.
Defendants' argument was that, in the chain of transfers, there was a gap in an assignment, where the principal of one of the corporate owners of one of the copyrights drafted a letter assigning his rights, but that letter was not sufficient to transfer the interest his corporation had in the copyright.  [Notably, the Court was not persuaded with Defendant's evidence, and had this to say:
As an initial matter, and before reaching the merits of the dispute, the Court will pause to note that the documents submitted by the defendants that purport to be declarations are woefully inadequate.  The Court will, therefore strike all statements that are not facts based on Mr. Evanoff's personal knowledge.  In effect, that leaves only portions of [certain paragraphs of Defendants' motion and affidavit].  All other paragraphs are stricken, and the Court will consider the legal arguments contained within them to the extent they have merit.
] Ouch.  The Court did not spend much time addressing the 204(a) claim:
when (as in this case) there is no dispute between the copyright owner and the transferee about the status of the copyright, it would be unusual and unwarranted to permit a third-party infringer to invoke section 204(a) to avoid suit for copyright infringement.
Finding that the bar had infringed at least 5 works, the Court turned to BMI's request for an injunction.  No "rubber stamp" here:
There is no question that the entry of a permanent injunction seems entirely appropriate in this case.  In fact, it has been quite customary in these types of cases to permanently enjoin further acts of infringement simply as a matter of course.  But in light of the Supreme Court's admonition in eBay, that all four factors must be given thoughtful consideration prior to issuing permanent injunction, the Court is not willing to simply "rubber stamp" BMI's request.  See eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006).  ... A finding of liability of copyright infringement does not conclusively establish the remaining principles of equity that form the basis for injunctive relief.  
BMI's request for injunctive relief was denied without prejudice, so that the parties could meet and confer to determine if they could agree to appropriate relief.

Defendant's Motion for Summary Judgment, Denied; Plaintiff's Motion for Summary Judgment Granted in Part, Denied in Part.
Broadcast Music, Inc. v. Evie's Tavern Ellenton, Inc., Case No. 8:11-CV-2056 (Sept. 30, 2013) (J. Kovachevich)

Friday, October 4, 2013

Attorneys May Now Bring Cellphones, Laptops, and Tablets Into Middle District of Florida Courthouses

Lawyers have needed to stow their cellphones before bringing them into MDFLA courthouses and obtain Court order to bring in laptops.  As of September 26, 2013, that has now changed.  While the Court retains its general policy that no one may bring a personal electronic device past security, the following exception has been added:
2.4 Attorneys
Any attorney permitted to practice law in the Middle District of Florida may bring any personal electronic device beyond the courthouse's security checkpoint by presenting a valid Florida Bar identification card or pro hac vice order.  In addition to the restrictions set forth in paragraph 2, attorneys may not use personal electronic devices directly outside of any courtroom when court is in session.
"Personal electronic devices" are:
things like cellular telephones, "smart phones," laptop computers, and tablet computers.
So I can shelve my form motion for permission to bring in my computer.  Standard caveats still apply, which is to say they must be kept on silent, can't be shared with others, can't be used to disrupt any proceeding, and can't search for juror information.  And the security personnel may inspect them.  The full order is below.

In re: Possession and Use of Personal Electronic Devices in Federal Courthouses in the Middle District of Florida, General Order 6:13-MC-94-ORL-22

Tuesday, October 1, 2013

Patent and Trademark Office Estimates It Can Run 4 Weeks During Shutdown

From the U.S. Patent and Trademark's website:
During the general government shutdown that began October 1, 2013, the United States Patent and Trademark Office will remain open, using prior year reserve fee collections to operate as usual for approximately four weeks. We continue to assess our fee collections compared to our operating requirements to determine how long we will be able to operate in this capacity during a general government shutdown. We will provide an update as more definitive information becomes available.
You can read the full post here.

Monday, September 30, 2013

Florida's Idea Statute of Frauds

Florida Statute § 501.972 is interesting, and to my knowledge has never before been cited by any court.  That has now changed.

Joseph Kaminski, an engineer whom I believe worked for Honeywell building technology for NASA (see here), wanted to help BP after the Deepwater explosion.  BP had set up a system for receiving proposed solutions for stopping the oil leak, and Kaminski submitted a couple of his ideas.  Included in one of his submissions was the following:
Please take this under advisement.  Especially when the new little top hat fails tomorrow for all the reasons I stated.  This will work and it is far easier than the 100 ton top hat.  It will also be great for your image in this whole thing.  When My son and I become paid hero's [sic] for the idea and helping you from here in tampabay [sic] florida.  I will say it was BP's willingness to work and find the right solution from anyone anywhere for this very unique problem.  You will also pay me and my son at least 2 million for the idea and my personal help to guarantee [sic] its succes [sic].
Kaminski believes BP used at least two of his ideas, so he sued for breach of an implied contract as well as unjust enrichment.  BP sought refuge under Florida's (unique?) Idea Protection Statute, which reads as follows:
501. 972   Actions based upon use of a creation that is not protected under federal copyright law.
(1) Except as provided in subsection (2), the use of an idea, procedure, process, system, method of operation, concept, principle, discovery, thought, or other creation that is not a work of authorship protected under federal copyright law does not give rise to a claim or cause of action, in law or in equity, unless the parties to the claim or cause of action have executed a writing sufficient to indicate that a contract has been made between them governing such use.
(2) Subsection (1) does not affect or limit:
     (a) Any cause of action based in copyright, trademark, patent, or trade secret; or
     (b) Any defense raised in connection with a cause of action described in paragraph (2).
Fla. Stat. § 501.972.  In other words, Florida has a statute of frauds for uses of ideas.  While this law was passed in 2006, it does not appear to have been used by a Court previously.

Here, the Court was convinced by BP's argument that this statute shielded BP from liability.  The Court analyzed the Copyright Act and noted the similarity in language between this statute's definition of what is not protected by Copyright and the Copyright Act's similar definitional language.  Recognizing that copyright does not protect ideas, but expressions of ideas, the Court found Kaminski's submissions to be ideas clearly governed by Florida's law:
Here, Plaintiff's ideas are not works of authorship and are expressly excluded from protection under the Copyright Act; Section 501.972 therefore applies to BP's use of Plaintiff's idea.
Because there was no writing between the parties executed by BP, Kaminski's claim fails.

Defendant's Motion for Summary Judgment, Granted.
Kaminski v. BP Exploration & Production, Inc., Case No. 8:12-cv-826 (M.D. Fla. Sept. 24, 2013) (J. Bucklew)

Thursday, September 12, 2013

Can You Get Self-Help Relief Through A Default Judgment?

Not if you don't plead it in your complaint.   Sony sued Discount Cameras & Computers Inc. and Mauricio Martinez for trademark infringement and a handful of other causes related to Discount Camera's unauthorized usage of the SONY trademarks.  Defendants did not respond, so Sony sought and received a default.  After the Clerk entered Default, Sony moved for a Default Judgment, seeking an injunction.  So far, so good.  But the proposed judgment included the following language:
ORDERED and ADJUDGED that the Defendants ... shall, within fifteen (15) days of the date of entry of this Default Final Judgment and Permanent Injunction, remove [from their premises] all signage bearing one or more of the SONY Trademarks ...
ORDERED and ADJUDGED that, in the event that the Defendants ... fail to remove from the business premises ... all signage ... then the Court hereby authorizes the Plaintiffs and their representatives ... to enter the property ... and remove all signage...
(emphasis added).  The Court did not approve of this language, relying on Fed. R. Civ. P. 54(c) ("A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings."):
Plaintiffs are therefore entitled to default judgment on all of their claims, as well as a permanent injunction enjoining Defendants from further infringement and unlawful conduct -- but only as to the injunctive relief demanded in the Complaint (Doc. 1).  Plaintiffs are not entitled to self-help should Defendants continue to infringe Plaintiff's marks.  The Court declines to retain jurisdiction over this matter.
Motion for Default Judgment, Granted in Part, Denied in Part.
Sony Corp. v. Discount Cameras & Computers, Inc., Case No. 6:12-cv-1892 (M.D. Fla. Sept. 5, 2013) (J. Dalton) (adopting Report and Recommendation of Mag. Baker).