Friday, June 24, 2011

Want to fight over deposition dates in front of Magistrate Judge Wilson? Be warned.

Got this order via Docket Navigator this morning. I've written previously about the Advanced Cartridge v. Lexmark litigation. It appears the parties couldn't agree on when to take a deposition. So they brought that dispute in front of Magistrate Wilson. He offered a solution:
When parties cannot agree on the scheduling of a deposition, it is my practice to select a date arbitrarily, without regard to the convenience of the parties. Therefore, unless the parties can agree otherwise, the parties are directed to schedule Carter's deposition for the time period between July 1 and July 5, 2011. Further, if the parties cannot agree on a date during this five-day window, the parties are directed to conduct Carter's deposition on Tuesday, July 5, 2011, at 9 a.m. However, as I indicated, the parties are permitted, and encouraged, to select another date if they can agree on a mutually convenient day.
That's one way to spend the July 4th weekend.

The Court then rejected defendant's argument that it needed to conduct the deposition in advance of the pre-trial conference so that it could bring discovery issues to the Court's attention at the pre-trial conference:
[T]here will be no discovery issues arising from Carter's deposition addressed at the pre-trial conference, as the discovery-related motions deadline passed long ago.
Nuff said.

Advanced Cartridge Technologies, LLC v. Lexmark Internatinoal, Inc., slip op., Case No. 8:10-cv-0486 (M.D. Fla. June 22, 2011) (Mag. Wilson)

Thursday, June 23, 2011

Heard of the band Expose? 11th Circuit addresses "joint endeavors"

What does that video have to do with trademark law? It will help explain "joint endeavors," of course.

Trademark rights are generally established through use of a mark in commerce. Who, then, owns a trademark for a band? The band members? The record company who promotes the band? Expose will help answer that question.

A dispute arose between band members and various entertainment companies. One of the entertainment companies had sued the band members concerning their use of the Expose mark. Nobody had a federal registration. The Court had to determine who actually owned the mark.

The entertainment company argued that it owned the mark because its predecessor had adopted it. The Court explained the law:
Common-law trademark rights are “‘appropriated only through actual prior use in commerce.’” Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1193–94 (11th Cir. 2001) (quoting Tally-Ho, Inc. v. Coast Cmty. Coll. Dist., 889 F.2d 1018, 1022 (11th Cir. 1989)). “[T]he use of a mark in commerce . . . must be sufficient to establish ownership rights for a plaintiff to recover against subsequent users under section 43(a).” Id. at 1195. Crystal bore the burden of proving its prior use.

We have applied a two-part test to determine whether a party has proved “prior use” of a mark sufficient to establish ownership: “‘[E]vidence showing, first, adoption, and, second, use in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark.’” Id. (alteration in original) (footnotes omitted) (quoting New Eng. Duplicating Co. v. Mendes, 190 F.2d 415, 418 (1st Cir. 1951)). The district court was required to inquire into the “totality of the circumstances” surrounding the prior use of the mark “to determine whether such an association or notice [was] present.” Id. (internal quotation marks omitted). We have determined that a company proved prior use of a mark sufficient to establish ownership when, among other things, “the distribution” of the mark was “widespread” because the mark was accessible to anyone with access to the Internet, id. at 1196; the evidence established that “members of the targeted public actually associated the mark . . . with the [product] to which it was affixed,” id.; “the mark served to identify the source of the [product],” id. at 1197; and “other potential users of the mark had notice that the mark was in use in connection with [the product],” id.
So, who gets the rights? Band or entertainment company? It depends on who controls the quality of goods/services. If the entertainment company is controlling the quality of the recordings, then it could have rights. Here, that wasn't the case. So the entertainment company had no prior rights to the mark.

Since the entertainment company couldn't prove it had first adopted the mark, the Court needed to address the "joint endeavor" issue:
Because Crystal failed to prove that it first appropriated the Exposé mark, the district court was required to determine the owner of the mark “where prior ownership by one of several claimants cannot be established.” Bell, 640 F. Supp. at 580. The Bell court aptly described this controversy as a “case of joint endeavors.” Id. We have yet to address a trademark dispute of this type, but other courts have consistently resolved such disputes by awarding trademark rights to the claimant who controls the nature and quality of the services performed under the mark. See Robi v. Reed, 173 F.3d 736, 740 (9th Cir. 1999); Polar Music, 714 F.2d at 1571; Ligotti v. Garafolo, 562 F. Supp. 2d 204, 227 (D.N.H. 2008); Bell, 640 F. Supp. at 580; Rick v. Buchansky, 609 F. Supp. 1522, 1537–38 (S.D.N.Y. 1985).

The Bell court applied a two-step approach in this circumstance: “[T]o determine ownership in a case of this kind, a court must first identify that quality or characteristic for which the group is known by the public. It then may proceed to the second step of the ownership inquiry, namely, who controls that quality or characteristic.” Bell, 640 F. Supp. at 581 (footnotes omitted). See also Ligotti, 562 F. Supp. 2d at 217–27; 2 McCarthy, supra, § 16:45, pp. 16-85 to -86 (“Whether the service mark or name [of a performing group] identifies and distinguishes that particular performer combination or just style and quality [is] an issue of fact. . . . The issue to be resolved is whether the mark signifies personalities, or style and quality regardless of personalities.”). In Bell, the members of the band “New Edition” and the companies that had produced, recorded, and marketed their first album disputed the rights to the name of the band. The Bell court ruled that the band members owned the mark because they had first appropriated it, and alternatively they owned the mark under the “joint endeavors” test. 640 F. Supp. at 580–82. The court explained that “the quality which the mark New Edition identified was first and foremost the [band members] with their distinctive personalities and style as performers.” Id. at 582.
Here, the district court properly applied the "joint endeavors" test. The entertainment company hadn't exercised control over the band members, and hadn't taken an active role in scheduling any of the group's performances. The band members controlled the band's image, and thus they were entitled to ownership of the rights at common law.

I can't say that I listened to this band. The Court did sprinkle a number of references to the band's songs as a means of dividing up the opinion. (i.e. "'Seasons Change,' see Expose, Seasons Change, on Exposure (Arista Records 1987), but the law in this Circuit about the requirements for ownership of a trademark or service mark at common law has remained relatively constant.") So, we'll get to thank this 80s band for helping us understand the trademark concept of "joint endeavors." Thanks, Expose.

Wednesday, June 22, 2011

Leave to amend answer to assert inequitable defense is ok in the early stages

Mitsubishi Heavy Industries and General Electric are engaged in various patent infringement litigations related to "modern-day wind turbines." In defending itself, GE claims that Mitsubishi cannot enforce at least one of the patents-in-suit because of inequitable conduct Mitsubishi committed on the Patent Office. Problem is, GE claims it could not properly assert its inequitable conduct counterclaim prior to the Court's deadline for amending pleadings.

The basis of the alleged inequitable conduct stems from a failure by Mitsubishi to cite certain prior art to the Patent Office during prosecution of the subject patent. Three Japanese prior art references were cited in a Japanese patent application (from which the subject patent claims priority). These references were not cited to the U.S. Patent Office. In one of the other litigations between the parties, GE asked for copies of the Japanese patent application and the cited references, but was not provided any English translations. GE did not receive English translations until after the deadline had passed to amend its answer (and assert its inequitable conduct claim).

For a Court to grant leave, good cause must be shown. GE argued that such good cause existed because it could not satisfy heightened pleading requirements of Rule 9 and its obligations under Rule 11 without having English translations of the prior art references. And it didn't have those translations until after the deadline to amend.

Mitsubishi objected that if leave were granted, it would be "greatly prejudiced." The Court was not persuaded:
Although Defendant does not provide specific dates showing when it received the English translation of the '312 patent application and associated prior art references, or when exactly Defendant obtained the necessary facts to enable it to plead with particularity inequitable conduct, it seems that Defendant obtained this information after the October 19, 2010 deadline to amend pleadings. In appreciation of the requirements and consequences of Rule 11, Defendant waited until it had the necessary factual predicate to move to add the affirmative defenses and counterclaim based upon inequitable conduct. Accordingly, the Court finds the Defendant has demonstrated good cause to amend its pleading after the deadline.
Leave to amend granted.

Mitsubishi Heavy Industries, Ltd. v. General Electric, Co., slip op., Case No. 6:10-cv-00812, (M.D. Fla. June 14, 2011) (Mag. Kelly)

Tuesday, June 14, 2011

The Court may consider Patent and Trademark Office records in deciding a motion to dismiss

Savtira Corp. (a Delaware company) sued Savtira Corp. (a Florida company) for trademark infringement, unfair competition, and deceptive trade practices.

Plaintiff's first count is for "Trademark Infringement." But plaintiff did not indicate if its claim was based on state or federal law, or whether the claim was a statutory claim or a claim based in common law. On this basis, defendant asked the Court to dismiss the claim. The Court obliged (granting leave to amend the complaint):
The Court concludes that Defendants’ motion to dismiss is due to be granted as to this claim. Plaintiff failed to identify the legal basis for its trademark infringement claim, and therefore it is not sufficient to give Defendants fair notice of what the claim is and the grounds upon which it rests. Twombly, 550 U.S. at 555. Nevertheless, Savtira Delaware’s trademark infringement claim shall be dismissed without prejudice, and Savtira Delaware shall have leave to amend this claim.
Count Two asserts a claim of unfair competition. Defendant moved to dismiss this count because defendant argued it had priority in the mark since plaintiff filed its intent-to-use trademark application after defendant was incorporated. To support this argument, defendant attached a copy of plaintiff's intent-to-use trademark application for the mark. Plaintiff responded by arguing that the Court should not consider the intent-to-use application record, as it was outside the four corners of the complaint. The Court did not agree:
[T]he Eleventh Circuit has adopted the “incorporation by reference” doctrine, under which the district court may take judicial notice of certain facts without converting the motion to dismiss into one for summary judgment, if the attached document is (1) central to the plaintiff’s claim and (2) undisputed. Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002); see also Universal Express, 177 Fed. Appx. at 53 (citing Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1278 (11th Cir. 1999)). Public records, including administrative agency records, are documents that may be incorporated by reference. Universal Express, 177 Fed. Appx. at 53 (citing Bryant, 187 F.3d at 1278). Because records from the United States Patent and Trademark Office are (1) central to Plaintiff’s claims of trademark infringement and unfair competition and (2) a public record that Plaintiff has not disputed, the Court may consider the records in resolving a motion to dismiss. See Horsley, 304 F.3d at 1134 (11th Cir. 2002).
Plaintiff's backup argument was that it had adequately pleaded the elements of an unfair competition claim under 15 U.S.C. 1525(a). The Court agreed:
To state a claim under 15 U.S.C. § 1125(a), a plaintiff must plead facts that demonstrate (1) that it had prior rights to its mark or name and (2) that the other party had adopted a mark or name that was the same, or confusingly similar to its mark, such that consumers were likely to confuse the two. Lone Star Steakhouse & Saloon, Inc. v. Longhorn Steaks, Inc., 106 F.3d 355, 358 (11th Cir. 1997). To satisfy the first element of trademark infringement under Section 43 of the Lanham Act, proof of a valid trademark, a plaintiff need not have a registered mark. Tana v. Dantanna’s, 611 F.3d 767, 773 (11th Cir. 2010). Ownership of a mark under the Lanham Act is determined by use, and registration does not necessarily create ownership. Compton v. Fifth Ave. Ass’n, Inc., 7 F. Supp. 2d 1328, 1331 (M.D. Fla. 1998); see also In re Wrubleski, 380 B.R. 635, 639 (Bankr. S.D. Fla. 2008) (“The party that first uses a mark, develops common law trademark rights that are, or may be, superior to the rights acquired by a later registrant of the mark.” (quoting Goldberg v. Cuzcatlan Bevs., Inc., 260 B.R. 48, 53 (Bankr. S.D. Fla. 2001))).
Plaintiff adequately pleaded this count because it pleaded: (1) it commenced business first; and (2) defendant's use of the mark would harm plaintiff.

Motion to dismiss granted in part, otherwise denied.
Savtira Corp. v. Hillier, slip op., Case No. 8:11-cv-0719 (M.D. Fla. June 7, 2011) (J. Bucklew)

Monday, June 13, 2011

Are you excited about Apple's iCloud announcement? Someone isn't

A week ago today, Apple announced its new iCloud service. The people I've spoken with are generally extremely excited about this. An Arizona company, however, is not thrilled. iCloud Communications has sued Apple for infringing its iCloud trademarks. This is, of course, not the first time Apple has been sued for trademark infringement. Indeed, the Plaintiff lays out its parade of horribles for "Apple's Pattern of Willful Trademark Infringement":
  • The Beatles record label Apple Corp sued Apple.
  • McIntosh Labs, a stereo-maker, sued Apple for its Macintosh computers
  • Terrytoon sued for Apple's adoption of the "Mighty Mouse" name.
  • Cisco sued for the iPhone.
  • (On information and belief), Apple didn't get Fujutsu's permission before using the iPad mark.
  • Innovative Media Group sued for Apple's use of the iAds mark.
Interestingly (at least for me anyway), one running theme with each of these "horribles" (aside from Mighty Mouse) is that Apple is still using the challenged mark.

The Plaintiff also points out a tactic Apple is using to keep secret its new product announcements while at the same time establishing trademark rights in them. Apple files a trademark application abroad prior to its product announcement, and then files a U.S. trademark application claiming priority to the foreign application around the same time Apple makes its product announcement.

The Plaintiff also alleges that Apple bought from a Swedish consulting company a U.S. trademark registration for the mark "iCloud." The Plaintiff claims this acquisition is invalid, however.

Potentially interesting case to watch.

Thursday, June 9, 2011

Want to invalidate a patent in litigation? You still need to prove invalidity with clear and convincing evidence - Microsoft v. i4i

Justice Sotomayor said it succintly:
Under §282 of the Patent Act of 1952, “[a] patent shall be presumed valid” and “[t]he burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.” 35 U. S. C. §282. We consider whether §282 requires an invalidity defense to be proved by clear and convincing evidence. We hold that it does.
Defendants seeking to invalidate a patent must do so with clear and convincing evidence. Microsoft lost a large judgment to i4i for its custom XML feature of Word. Read more details here, if you like. Microsoft eventually asked the Supreme Court to lower this standard. At the least, Microsoft asked the Court to craft a standard that kept a clear and convincing burden if a defendant wanted to invalidate a patent with prior art the Patent Office had previously considered. But, for new prior art that had never been before the Patent Office, Microsoft asked the Court to lower the burden. The Court didn't adopt such a standard, but did give Microsoft something:

Simply put, if the PTO did not have all material facts before it, its considered judgment may lose significant force. Cf. KSR, 550 U. S., at 427. And, concomitantly, the challenger’s burden to persuade the jury of its invalidity defense by clear and convincing evidence may be easier to sustain. In this respect, although we have no occasion to endorse any particular formulation, we note that a jury instruction on the effect of new evidence can, and when requested, most often should be given. When warranted, the jury may be instructed to consider that it has heard evidence that the PTO had no opportunity to evaluate before granting the patent. When it is disputed whether the evidence presented to the jury differs from that evalu- ated by the PTO, the jury may be instructed to consider that question. In either case, the jury may be instructed to evaluate whether the evidence before it is materially new, and if so, to consider that fact when determining whether an invalidity defense has been proved by clear and convincing evidence.

The Court then concluded:

Congress specified the applicable standard of proof in 1952 when it codified the common-law presumption of patent validity. Since then, it has allowed the Federal Circuit’s correct interpretation of §282 to stand. Any recalibration of the standard of proof remains in its hands

Justice Breyer's concurrence (joined by Justices Scalia and Alito)

These three Justices joined the opinion of the Court, but wrote separately to make clear the distinction between standards of proof as applied to facts (i.e. when a product was first sold) and as applied to the law (i.e. do the given facts show that the product in question was previously in public use). As to the latter -- issues of law -- the Court's opinion on the clear and convincing standard has no bearing.

Justice Thomas's concurrence

Justice Thomas concurred in the judgement of the Court, but did not agree that Congress had codified a standard by utilizing the expression "presumed valid." Rather, because the statute is silent on the standard of proof, it simply did not change the common law, which included the heightened standard. Same result, different reason.