Does COVID19 Warrant A 90-Day Extension Of a Case Pending More Than A Year?

No.

Plaintiff in a patent infringement matter concerning Plaintiff's ceiling fan patents asked the court to delay all deadlines 90-days in light of the COVID19 crisis.  Plaintiff noted that the parties and attorneys are all located in states that imposed social distancing guidelines and other stay at home restrictions.  Due to this, the parties "are doubtful that any in person depositions may be taken at least for another sixty (60) days."

While sympathetic to the ongoing crisis, the Court also needed to weigh its obligation to advance cases on its docket, so it granted the motion in part, encouraging the parties to use remote technology to advance the case:

While the Court understands the challenges presented by the COVID-19 pandemic, the Court is not convinced that a three-month continuance is warranted. This case, which was filed in the District of Maryland in December 2018, has already been pending for well over a year. In addition, the parties still have more than three months for factual discovery, much of which can be conducted using remote technology. Nevertheless, out of an abundance of fairness, the Court will grant a 60-day extension of the case management and scheduling order. The parties are advised that the Court has an obligation to move its cases forward and will be disinclined to grant any further extensions of these deadlines. Therefore, in order to avoid any further delay, the parties are encouraged to utilize remote technology to conduct discovery until it is considered safe to meet in person. 

Motion for continuance, granted in part.
Delta T, LLC v. Dan's Fan City, Inc., Case No. 8:19-CV-01731 (M.D. Fla. April 9, 2020) (J. Covington)

Does The Labor Day Holiday's Mattress Sale Weekend Warrant a Temporary Restraining Order?

No.

The owner of the TEMPUR-PEDIC bedding brand ("Plaintiff") has sued a number of defendants, including a former retailer as well as the owner of the THERAPEDIC bedding brand.  Through that lawsuit, Plaintiff seeks to enjoin sales of the THERAPEDIC bedding.

To that end, on August 28, 2018, the Tuesday before the labor day holiday, Plaintiff filed suit.   Along with its complaint, Plaintiff also filed a motion for a temporary restraining order, as well as a motion for a preliminary injunction.  The next day, the Court denied the motion for TRO for failure to comply with Fed. R. Civ. P. 65(b)(1)(B)'s obligation that the filing lawyer certify what efforts she has made to give notice to the defending party, and why notice should not be required.  Notably, the Court also referred the motion for preliminary injunction the magistrate judge to conduct an evidentiary hearing and issue a report and recommendation.

After its motion was denied, Plaintiff's general counsel emailed the retailer defendant's general counsel demanding defendant cease sales, and provided a copy of the motion for TRO as well as the Court's order denying it.  Plaintiff's letter gave defendant one day to comply.  Defendant did not respond.

Plaintiff next renewed its motion for TRO on the evening of August 30, 2018 (the Thursday before the labor day holiday).  Plaintiff included a copy of its letter to the defendant in an attempt to satisfy Fed. R. Civ. P. 65(b)(1)(B).  The next day, Friday, around 11:50am Defendant's counsel contacted the Court and indicated that it wanted to oppose Plaintiff's motion for TRO.  The Court gave defendant until 3pm that day to file its response, which defendant did.

Plaintiff's argument for a TRO was based, in part, on the labor day sales weekend being "one of the bedding industry's biggest sales weekends."  Permitting defendant to sell the allegedly infringing products through this weekend would result in "significant irreparable harm to [Plaintiff's] brand and goodwill."  In response, defendant explained that its limited sales in a single test market, as well as its long standing trademark rights -- predating Plaintiff's trademark rights -- cautioned against the extraordinary remedy of an ex parte temporary restraining order.   The Court agreed with defendant:

The Court is mindful that “[a]n ex parte temporary restraining order is an extreme remedy to be used only with the utmost caution.” Levine v. Comcoa Ltd., 70 F.3d 1191, 1194 (11th Cir. 1995). Given the contested nature of the allegations underpinning Plaintiffs’ argument for a temporary restraining order, as well as Mattress Firm’s request that it be given an opportunity to respond fully before any injunctive relief is granted, the Court denies the Renewed Motion for Temporary Restraining Order. The Court finds that Plaintiffs have not carried their burden for the issuance of a temporary restraining order pursuant to Federal Rule of Civil Procedure 65 and Local Rule 4.05.

While absent from the Court's order, defendant also explained another interesting angle in its responsive brief.  Apparently, the parties have been engaged in separate litigations in Texas state and federal court, where the Texas state litigation is due to begin trial later this month.  According to defendant, Plaintiff has filed a number of motions seeking preliminary injunctions against defendant.  And defendant notes that the Texas state court denied a request for a temporary restraining order against defendant more than a year ago. 

Renewed motion for temporary restraining order, denied.

Tempur-Pedic North America, LLC v. Mattress Firm, Inc., Case No. 8:18-CV-2147-VMC-SPF (M.D. Fla. Aug. 31, 2018) (J. Covington)

Patent Eligibility Attack On the Pleadings?

Not where you need to rely on evidence outside the pleadings...

Stoneeagle Services has sued Pay-Plus Solutions and Premier Healthcare Exchange for infringement of U.S. Patent RE 43,904 and RE 44,748 relating to healthcare provider reimbursement systems and methods.  Defendants, as has become all too common, moved for judgment on the pleadings early in the case, arguing that the patents are not patent eligible.  They challenged "representative" claim 2:

2. A method of facilitating payment of adjudicated health care benefits to a health care provider comprising:
identifying the health care provider that renders medical services in anticipation of payment;
identifying a payer that has agreed to pay the health care provider on behalf of a patient subject to preselected conditions;
identifying an administrator that determines whether the medical services conducted by the service provider meet the preselected conditions by the payer, generates an explanation of benefits, and authorizes payment of the service provider for an authorized amount;
intercepting the explanation of benefits and payment information transmitted from the administrator to the health care provider;
acquiring a single-use, stored-value card account number and loading it with funds equal to the authorized amount;
merging the stored-value card account number, the authorized amount, a card verification value code, and an expiration date with the explanation of benefits into a computer-generated image file; and
transmitting the image file to the health care provider via a computer-implemented transmission.

Defendants argued that the claim was directed to the abstract idea of "paying a service provider by transmitting a payment combined with an explanation of the payment."  Plaintiff disagreed, arguing that the claim was narrowly directed at "(1) the use of stored-value cards; (2) by third-party payors; (3) to pay healthcare benefits; (4) via a computer-generated file, which couples the payment with an explanation of benefits."  Plaintiff also offered expert testimony in support of its position.

The Court recognized the logistical issue with entertaining such a motion at such an early stage in the proceedings.  Specifically, regardless of the parties' arguments, the Court must analyze whether the claims (not just a "representative" claim) are directed to an "abstract idea" and if so, whether the elements of the claims (considered individually and in combination) contain an "inventive step." How a Court can properly do this without looking beyond a patent and its specification is not clear.

Upon careful consideration of the parties' filings, Defendant's Motion for Judgment on the Pleadings is denied, as premature.  As an initial matter, both Defendants and Plaintiff cite to matters outside of the pleadings, in support of their respective positions, including the prosecution history of a "parent" patent, an expert report prepared by Robert Allen (Plaintiff's Chairman and CEO), and a declaration submitted by Mr. Allen.  However, discovery is still ongoing, and the record is thus not "fully developed."  Jozwiak [v. Stryker], 2010 WL 743834 at *4.  Due to the deficiency of the available record, the Court declines to convert Defendant's Rule 12(c) motion into a motion for summary judgment.
* * *
In this case, the parties dispute the basic character of the claimed subject matter. ... At the very least, proper construction of the term "stored-value card" is necessary prior to an assessment of whether the claims implicate a fundamental economic practice, and whether the claims comprise a sufficiently inventive process.

The Court was not also inclined to address claims as "representative" without a stipulation:

Finally, Defendant's Motion unilaterally designates certain claims as "representative." ...
"[A] party challenging the validity of a claim, absent a pretrial agreement or stipulation, must submit evidence supporting a conclusion of invalidity of each claim the challenger seeks to destroy."  Shelcore, Inc. v. Durham Indus., Inc., 745 F.2d 621, 625 (Fed. Cir. 1984) (underlined emphasis added); see, e.g., Alice Corp. Pty. Ltd., 134 S. Ct. at 2352 (noting that the parties agreed on representative claims); cf. Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n, Nos 2013-1588, et al., ___ F.3d ___, 2014 WL 7272219 at *4 (Fed. Cir. Dec. 23, 2014) (affirming district court's designation of claims as representative where patentee did not object).

Defendants' Motion fails to meaningfully address the claims not designated as "representative."  In order to narrow the issues, and to conserve both the Court's and the parties' resources, the parties are encouraged to stipulate to representative claims.  Absent a stipulation, Defendants will be required to address the challenged claims individually in any subsequent motion.

(emphasis provided by Court).  

Motion for judgment on the pleadings, denied as premature.

Stoneeagle Services, Inc. v. Pay-Plus Solutions, Inc., Case No. 8:13-CV-2240 (M.D. Fla. Feb. 9, 20150) (J. Covington)

Different Standards For Deciding Whether To Stay?

You may recall that Judge Covington denied a defendant's request to stay litigation, rejecting that defendant's argument that it was merely a "peripheral" defendant since it had only bought the accused product from another defendant.  While the Court noted in that decision that cases are generally stayed against peripheral defendants, that general rule does not apply where the peripheral defendant and the plaintiff are competitors.  In denying the peripheral defendant's request for stay, the Court required that defendant to put forward "an undue hardship or inequity."  Because that defendant couldn't, a stay was not appropriate.

The other defendants in that case separately moved to stay the litigation in favor of the inter partes reviews of the three patents-in-suit those defendants had instituted.  Here, for the primary defendant who had instituted inter partes reviews, the standard for granting a stay is different, relying on a "liberal policy" in favor of granting them:

“Courts have inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of a PTO” proceeding.  Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988). The party moving for a stay bears the burden of demonstrating that a stay is appropriate. See Landis v. N. Am. Co., 299 U.S. 248, 255 (1936). As acknowledged in Automatic Manufacturing Systems, Inc. v. Primera Technology, Inc., No. 6:12-cv-1727-RBD-DAB, 2013 WL 1969247, at *1 (M.D. Fla. May 13, 2013), “In patent cases, a number of courts reason that such stays should be liberally granted when there is a pending administrative proceeding pending before the USPTO.” (citing Sabert Corp. v. Waldington N. Am., No. 06-5423, 2007 WL 2705157, at *5 (D.N.J. Sept. 14, 2007)(highlighting the “liberal policy in favor of granting motions to stay proceedings” because review by the USPTO “might assist the court in making a validity determination or [] eliminate the need to make an infringement determination.”); WABCO Holdings, Inc. v. Bendix Commercial Vehicle Sys., LLC, No. 09-3179, 2010 WL 2628335, at *2 n.2 (D.N.J. June 28, 2010)(“the liberal policy towards stays . . . arises due to the potential waste in using a court’s time and energy when a USPTO decision could drastically alter the nature of the case.”))

The Court then addressed the typical factors: (1) whether the stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; (2) whether the stay will simplify the issues in question and trial of the case; and (3) whether a stay will reduce the burden of litigation on the participants or the court.   Here, the Court appeared persuaded in part because of the "highly technical component" of the case.  Importantly, while the Court previously rejected the peripheral defendant's request to stay because the peripheral defendant was a competitor, that same logic did not carry the day here:

The Andersons, Inc. also opposes the requested stay on the grounds that it is in direct competition with Defendants, and any stay of the proceedings will allow Defendants to continue their allegedly infringing activities unabated.  Defendants correctly counter that The Andersons, Inc. has not sought a preliminary injunction and that any damages The Andersons, Inc. incurs may be remedied with money damages.  See Tomco Equip. Co. v. SE Agri-Sys., Inc., 542 F. Supp. 2d 1303, 1308 (N.D. Ga. 2008)(rejecting the argument that plaintiff's damages "will intensify during a stay" because "the availability of money damages is sufficient to protect plaintiff from prejudice.").

Motion for stay, granted.  Case administratively closed and parties obligated to file a status report every 90 days.

The Andersons, Inc. v. Enviro Granulation, LLC., Case No. 8:13-CV-3004 (M.D. Fla. Aug. 14, 2014) (J. Covington)

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)

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)

Trademark Statute of Limitations - Governed by Laches

Roca Labs has sued Boogie Media, LLC and Slava Krasnov for unfair competition, cybersquatting, and trademark infringement concerning the trademarks NATURLA GASTRIC BYPASS, GASTRIC BYPASS NO SURGERY, ROCA LABS, and Gastric Bypass EffectTM.  Roca was able to serve the corporate defendant, but has not yet served the individual.

According to Fed. R. Civ. P. 4(m), a plaintiff is given 120 days to serve a defendant, lest the Court dismiss the claim without prejudice (or direct service be made within a certain time period).  Here, the 120 period expired on January 31, 2013.  Two months later, plaintiff asked for an extension of time to serve the individual defendant, arguing that it has made a number of attempts to serve the defendant, but has not succeeded.

The Court held that it could extend the deadline for "good cause," which has historically involved issues such as sudden illness, natural catastrophe, or evasion of service of process.  Problem for the plaintiff was that it did not submit any evidence (affidavit or the like) which demonstrated such good cause.

The Court also recognized its discretion in being able to extend the deadline in a circumstance where the applicable statute of limitations would bar relief to the plaintiff.   Here, the Court noted that the Florida state unfair competition claims had a 4 year statute of limitations, but noted that the federal  trademark and cybersquatting claims do not have an explicit statute of limitations:

The federal trademark and cybersquatting statutes do not contain a limitations period; rather laches principles apply. See Kason Indus. v. Component Hardware Group, Inc., 120 F.3d 1199, 1203 (11th Cir.1997) (“The Lanham Act does not contain a statute of limitations. However, in trademark cases, this circuit has followed the Sixth Circuit, which applies the period for analogous state law claims as the touchstone for laches.”); see Tandy Corp. v. Malone & Hyde, Inc., 769 F.2d 362, 365 (6th Cir.1985) (“The Lanham Act does not contain a statute of limitations. In determining when a plaintiff's suit should be barred under the Act, courts have consistently used principles of laches as developed by courts of equity.”); What–A–Burger of Va. v. Whataburger of Corpus Christi, 357 F.3d 441, 449 (4th Cir.2004) (“Courts use the doctrine of laches to address the inequities created by a trademark owner who, despite having a colorable claim, allows a competitor to develop its product around the mark and expand its business, only then to lower the litigation boom.”).

The Court then determined that the federal claims would be subjected to the same 4 year statute of limitation as the Florida unfair competition.  And this statute of limitation does not pose an immediate risk to plaintiff's claim.  

Motion for extension to effect service denied; Individual defendant dismissed without prejudice.

Roca Labs, Inc. v. Boogie Media, LLC, Case No. 8:12-cv-2231 (M.D. Fla. Apr. 19, 2013) (J. Covington) 

First-to-file rule is alive and well

AAMP of Florida owns U.S. Patent 8,014,540 entitled "Remote Control Interface For Replacement Vehicle Stereos."  AAMP is currently asserting the '540 Patent (and another) against Metra Electronics Corporation here in the Middle District.  AAMP sent a cease and desist letter to another company -- Crux Interfacing Solutions -- located in California.  The risk of doing so, of course, is that the California company will respond to the letter by filing its own lawsuit for a declaratory judgment of noninfringement/invalidity in its jurisdiction.  That's exactly what happened here, with Crux filing suit first in California.

AAMP responded quickly, filing its own patent infringement lawsuit against CRUX in Tampa ten days later.  Expectedly, Crux asked to dismiss this second filed case, or transfer it over to California where Crux's declaratory judgment action had been pending for ten days longer.

AAMP asked the Court to recognize the exception to the first-to-file rule when a party files a declaratory judgment action in an attempt to preempt a soon-to-be-plaintiff's chosen forum.  While the Court agreed that such an activity is an equitable consideration that must be considered in figuring out which of the two forums should handle the dispute, the Court recognized that the decision was in the hands of the Court handling the first case filed:

But, whatever merit there may be in AAMP's contention that Crux's California action falls within this "anticipatory declaratory judgment" exception to the first filed rule -- an issue upon which this Court expresses no opinion -- this Court finds that such a determination should be reached by the United States District Court for the Central District of California.  [Marietta Drapery & Window Coverings Co., Inc. v. N. River Ins. Co., 486 F.Supp.2d 1366, 1369 (N.D. Ga. 2007).]
"The 'first to file' rule not only determines which court may decide the merits of substantially similar issues, but also establishes which court may decide whether the second suit filed must be dismissed, stayed or transferred and consolidated." (citation omitted)

Thus, the case has to go to California to let that Court determine which of the two cases will go forward.  Perhaps it will come back.  We'll wait and see.

Motion to Dismiss, or in the Alternative, Transfer, Granted in Part.

AAMP of Florida, Inc. v. Audionics System, Inc., Case No. 8:12-cv-2922 (M.D. Fla. Mar. 18, 2013) (J. Covington)

Noerr-Pennington Immunity and Trademark Registrations

PODS sued ABF Freight Systems on a number of trademark infringement theories.  PODS owns trademark registrations for the term "PODS", the PODS logo, and "PODS PORTABLE ON DEMAND."  In advertising its competing storage solutions, ABF uses the term "pods" throughout its website.  Additionally, ABF has purchased the "pods" keyword for advertising purposes with Google and other search engines.  In defense, ABF filed a number of counterclaims and affirmative defenses.   At issue here are some of ABF's counterclaims, and one affirmative defense.


Common Law Unfair Competition


ABF asserted as a counterclaim that PODS' lawsuit was unfair competition because PODS "has no objective or subjective basis for believing ... that consumers are likely to be confused by ABF's use of the term 'pod' or 'pods.'"  ABF relied on Ohio law for the proposition that "lawsuits implemented with the design to gain an unfair advantage over a competing business are a basis for a common law suit for unfair competition."  Problem is, as the Court recognized, Florida law requires an unfair competition claim to include two elements:
(1) deceptive or fraudulent conduct of a competitor; and
(2) likelihood of consumer confusion

ABF's reliance on Ohio law didn't cut it, so the Court dismissed this counterclaim (without prejudice, should ABF be able to assert the elements of a Florida common law unfair competition claim).

Sherman Act Violation & Noerr-Pennington Immunity


Next, ABF accused PODS of attempted monopolization in violation of the Sherman Act by registering trademarks for the "generic term" "pods" and asserting those trademarks against competitors.  PODS responded by relying on Noerr-Pennington immunity.

Generally, the First Amendment immunizes a party from liability for petitioning the governement for redress from an injury.  ThisNoerr-Pennington immunity (named after the two cases from which it derives) extends to litigation: "Engaging in litigation to seek an anticompetitive outcome from a court is First Amendment activity that is immune from antitrust liability."  Like most things in the law, there is an exception.  Namely, a sham pleading.  You are immune from liability if you file a lawsuit, except if that lawsuit is a sham pleading.  The test for whether the lawsuit is a sham pleading considers: (1) whether the pleading is objectively baseless; and (2) whether the plaintiff brought the lawsuit did so with a subjective motivation to interfere directly with the business relations of a competitor.

ABF's argument under the sham exception is generally that PODS should know the 'pods' mark is generic, and thus it shouldn't assert its registrations.  The law, however, does not see things that way.  The 'pods' trademark registrations themselves are evidence that the marks are not generic.  ABF may be able to come forward evidence that they have become generic, but until they, they are presumed otherwise.  Indeed, ABF is seeking to cancel PODS's registrations.  Until then, the lawsuit and cease-and-desist letters are not shams.  So Noerr-Pennington immunity applies, and the counterclaim must be dismissed.

Unclean Hands Affirmative Defense


PODS also asked the Court to strike ABF's affirmative defense of unclean hands.  The Court's reasoning for doing so:

In trademark infringement suits, the doctrine of unclean hands requires allegations "specifically related to the trademark which is at issue and not collateral to the trademark itself."  Immuno Vital, Inc. v. Golden Sun, Inc., 49 F. Supp. 2d 1344, 1361 (S.D. Fla. 1997); see also Coca-Cola Co. v. Howard Johnson Co., 386 F. Supp. 330, 335 (N.D. Ga. 1974) (a court in equity may "deny the enforcement of a trademark to one who has used the trademark, itself, as the vehicle of unlawful antitrust activities").  "Merely because a plaintiff has violated the antitrust laws ... does not result in 'unclean hands' on plaintiff's part."  Coca-Cola, 386 F. Supp. at 337
Taken as a whole, ABF's allegations in support of its affirmative defense of unclean hands are intertwined with the allegations in its counterclaims -- that PODS engaged in trademark misuse and violated unfair competition and antitrust laws by sending cease-and-desist letters and filing suit.  Because those activities are not specifically related to the trademark itself, ABF has not properly asserted an unclean hands defense.

Additionally, Noerr-Pennington immunity protected PODS against this affirmative defense.

Motion to dismiss counterclaims and strike affirmative defense granted.

PODS Enterprises, Inc. v. ABF Freight Systems, Inc., Case No. 8:11-cv-84 (M.D. Fla. Oct. 17, 2011) (J. Covington)

Stay pending ex parte reexamination denied where parties are direct competitors

eComSystems sued Shared Marketing Services and Ace Hardware for infringement of 5 patents. Shared Marketing and Ace filed a request for ex parte reexamination with the Patent Office arguing that certain prior art rendered each of the patents invalid. 92% of ex parte reexamination requests are granted, and this case was no exception.

Shared Marketing and Ace asked the Court to stay the litigation pending resolution of the reexamination. The Court refused.

Courts typically analyze 3 factors when considering a motion to stay pending reexam: (1) will the stay unduly prejudice the non-moving party; (2) will the stay simplify the issues; and (3) will the stay streamline the litigation.

Here, the Court noted that the case was in its infancy, and thus on initial look the factors seemed to favor a stay. But 2 key points tilted the scale in the opposite direction. First, defendants requested ex parte reexamination and would not be bound by the result (and could thus relitigate the same invalidity issues if the patents survived reexamination). Second, eCom and Shared Marketing are direct competitors. Staying the litigation 2 years for reexam (and then another 2 for appeals) would prejudice eCom because it could not enjoin its competitor during this indefinite time frame:

However, because the pending Patent and Trademark Office proceedings are ex parte reexaminations, rather than inter partes reexaminations, the Court is not persuaded that the second and third factors weigh in favor of a stay. Rather, the Court anticipates that the benefits of a stay would likely to be marginal, at best.

Inter partes reexaminations provide a third party the right to participate in the reexamination process and, thus, have a res judicata effect on the third party requester in any subsequent or concurrent civil action. See 35 U.S.C. §§ 314- 315; Tomco2 Equip. Co. v. S.E. Agri-Systems, Inc., 542 F. Supp. 2d 1303, 1306 (N.D. Ga. 2008). Ex parte reexaminations, on the other hand, do not bar the requestor from relitigating the exact same issues in district court. Id.

* * *

Courts have recognized that where the parties are direct competitors, a stay would likely prejudice the non-movant. Tesco Corp. v. Weatherford Int'l, Inc., 599 F. Supp. 2d 848, 851 (S.D. Tex. 2009). In such situations, stays are denied where there is concern that the patent owner will be irreparably harmed because the accused product will continue to gain market share during the pendency of the stay. Heraeus Electro-Nite Co., LLC v. Vesuvius USA Corp., Case No. 09-2417, 2010 U.S. Dist. LEXIS 1887, at *3 (E.D. Pa. Jan. 11, 2010).

* * *

Furthermore, the potential prejudice to eCom is exacerbated by the lengthy and indefinite amount of time required to complete the reexamination proceedings for all five of the patents-in-suit. The requested stay would expire only after completion of the reexamination and the appellate process. Fusilamp, LLC v. Littelfuse, Inc., No. 10-20528-CIV, 2010 U.S. Dist. LEXIS 56553, at *12 (S.D. Fla. June 7, 2010). The reexamination process averages 25.4 months to complete, and the appellate process averages 24 months to complete. Id.

Motion to stay denied.

eComSystems, Inc. v. Shared Marketing Services, Inc., Case No. 8:10-CV-1531, slip op. (M.D. Fla. Jan. 26, 2011)(J. Covington)

Selling a product that can be used in a patented method does not constitute infringement

Minsurg markets and sells to physicians the TruFUSE system for use in spinal fusion surgeries. Minsurg also owns U.S. Patent No. 7,708,761 protecting a method for performing spinal surgery. The method protected generally requires the following steps:

1. place a portal into a human patient through a minimally invasive opening
2. access a spinal joint through the portal
3. insert a drill bit into the portal
4. drill a hole into the spinal joint
5. remove the drill bit
6. insert a joint fusion plug into the hole drilled
7. insert a tamping instrument into the portal
8. tamp the fusion plug

(while not claimed in the patent, presumably the surgeon should also remove the tamping instrument.)

Minsurg sued a number of defendants who sell competing surgical systems. Minsurg sought a preliminary injunction. Magistrate Judge Jenkins conducted an evidentiary hearing recommended denial of Minsurg's motion. The decision turned on how important "minimally invasive" was.

First, to get a preliminary injunction, Minsurg needed to establish that it was: (1) likely to succeed on the merits; (2) likely to suffer irreparable harm without the injunction; (3) the balance of hardships favored Minsurg; and (4) the public interest would be best served by granting the injunction.

A problem for Minsurg was that the '761 Patent protects a method of performing surgery, but the defendants were not the surgeons who allegedly practice the method. The defendants sell products which can be used to practice the method. So Minsurg asserted three theories of liability: (1) Defendants directly infringed the patent; (2) Defendants actively induced their customers to practice the method; and (3) Defendants contributed to the infringement.

To have patent infringement (under any of the theories), there must be an act of direct infringement. And with a method patent, direct infringement happens "only by one practicing the patented method." Joy Techs., Inc. v. Flakt, Inc., 6 F. 3d 770, 775 (Fed. Cir. 1993).

Direct Infringement

Because the Defendants themselves do not perform the steps of the method, they are not direct infringers:

Defendants do not perform the steps of the process set forth in the '761 Patent because they do not perform spinal fusion surgeries. Rather, Defendants sell systems used by physicians to perform such surgeries. Consequently, Plaintiff is not likely to succeed on its claims of direct infringement.

(This does not seem to have been a tough part of the decision, and skimming Plaintiff's motion, it does not appear Plaintiff really pursued direct infringement as a grounds for preliminary injunction here.)

Indirect Infringement - Induced infringement and Contributory infringement

Even though a defendant does not directly infringe a patent, it can still be held liable if it actively induces others to infringe the patent or contributes to another's infringement of the patent (where the piece the defendant contributes has no alternative non-infringing uses). Minsurg's theory here was that Defendants sold their kits and instructed their customers (the surgeons) on how to use them. And using the kits required practicing the claimed method. The Court did not agree.

As a factual matter, the claimed method requires the portal to be placed into a patient through a "minimally invasive" opening. Defendants offered testimony that the vast majority of spinal surgeries are done through an "open incision," as opposed to through a "minimally invasive incision." Thus, none of the Defendants' systems necessarily infringe because they can be used in non-infringing ways -- specifically when they are used through an "open incision."

Because there is a substantial, non-infringing use, Minsurg's only hope was to show evidence of active and willful inducement. "Evidence of active steps taken to induce infringement, such as advertising an infringing use, can support a finding of an intention for the product to be used in an infringing manner." Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1322 (Fed. Cir. 2009). Minsurg presented evidence of Defendants' advertising showing their systems being used in both open incisions and minimally invasive incisions. But Minsurg did not have any evidence of any physicians actually using the equipment in a minimally invasive procedure. And the advertising evidence did not appear to be sent out after the '761 Patent issued. (Thus, how could one market infringing steps before the patent laying out what infringement entailed issues. Presumably, there is an argument that whatever intervening rights attached to the '761 Patent during prosecution could help Minsurg here, but that is a topic for another post.)

Motion for preliminary injunction denied.

Minsurg International, Inc. v. Frontier Devices, Inc., Case No. 8:10-cv-1589, slip op. (Feb. 7, 2011) (J. Covington) adopting Report & Recommendation of Mag. Jenkins