USF Young Innovator Competition

I am honored to be serving as a judge for the preliminary phase in this year's USF Young Innovator Competition.  Read more about it here.

Does a Trademark Owner Need a Judgment Against a Direct Infringer Before Pursuing a Vicarious Infringer?

No.

Slep-Tone Entertainment Corp. owns a U.S. Trademark Registration for the mark Sound Choice in connection with karaoke products.  Slep-Tone sued a restaurant, which had hired one or more karaoke operators who allegedly were using Slep-Tone's trademark without Slep-Tone's authority.  Slep-Tone's claim against the restaurant is that the restaurant derives a benefit from the karaoke operators' use of the mark, and the restaurant knows the karaoke operators are not operated to use the trademark.

The restaurant sought dismissal, arguing that Slep-Tone must first establish that the karaoke operators are infringing the trademark.  The Court was not convinced.

Defendant’s argument lacks merit. As Plaintiff points out, this Court previously held in a related Slep-Tone case that to prevail on a contributory trademark infringement claim, a plaintiff must show that the defendant “intentionally induces another to infringe a trademark, or [ ] continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement....” Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 854, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982).

Vicarious liability for trademark infringement “requires a finding that the defendant and the infringer have an apparent or actual partnership, have authority to bind one another in transactions with third parties or exercise joint ownership or control over the infringing product.” RGS Labs Intern., Inc. v. The Sherwin-Williams Co., 2010 WL 317778, at *3 (S.D. Fla. Jan. 11, 2010) (citing Hard Rock Café Licensing Corp. v. Concession Servs., Inc., 955 F.2d 1143, 1150 (7th Cir. 1992)).

Here, with respect to all of the claims alleged in the complaint, it is immaterial whether the karaoke operators are named in the complaint. Plaintiff also does not need to achieve a judgment in its favor against the karaoke operators before it brings the instant action. Plaintiff’s allegations are sufficient because they include the facts that Defendant was aware of the karaoke operators’ unlawful activity and continued to utilize their services at its establishment. In other words, a finder of fact could determine that Defendant had the ability to control whether its karaoke providers/operators were performing using lawful, properly licensed accompaniment tracks.

Motion to dismiss denied.
Slep-Tone Entertainment Corp. v. Il Mio Sogno, LLC, Case No. 8:12-cv-1187 (M.D. Fla. Aug. 3, 2012) (J. Moody)

Patent eligible subject matter for a method of managing financial instruments?

Digitech Information Systems sued BMW Financial Services NA, LLC for infringement of U.S. Patent 7,739,180 directed to a method of managing financial instruments, equipment lease derivatives, and other collateral instruments, data architecture, application and process program.  Claim 1 recites:

A method for selecting leases to optimize an investment portfolio comprising
the steps of:
     receiving data regarding an equipment purchase price, an equipment sales price, a number of units, a lease purchase price, a life of lease, a lease acquisition fee, an accelerated depreciation of change, and a yearly payment;
     calculating by computer a total purchase price by adding the lease purchase price to the lease acquisition fee;
     calculating by computer an accelerated depreciation result by multiplying the equipment purchase price by the number of units;
     calculating by computer a rate of return by subtracting from the yearly payment the total purchase price and the accelerated depreciation result and dividing by the lease purchase price; and
     selecting a lease based on the rate of return being greater or equal to a predetermined value and using the selected lease to create lease backed financial instrument derivatives and optimize the investment portfolio.

Months ago, BMW sought and was awarded summary judgment that the '180 Patent is invalid for not being directed to patent eligible subject matter under 35 U.S.C. § 101.  Digitech sought to undo that damage by asking the Court to reconsider.

Motions for reconsideration are tough.  Three main grounds can justify reconsideration: (1) change in the law; (2) new evidence; or (3) a need to correct clear error or prevent manifest injustice.   Digitech argued that all three applied here.  As to a change in the law, a few recent Federal Circuit decisions (CLS Bank Int'l. v. Alice Corp, 103 U.S.P.A.2d 1297 (Fed. Cir. 2012) and Bancorp Services, LLC v. Sun Life Assur. Co. of Canada (U.S.), ___ F.3d ___ (Fed. Cir. 2012)) and  have addressed patent eligibility under § 101.  As to new facts, Digitech brought up some deposition testimony.  As to clear error, Digitech raised some challenges to how the Court had construed the claims.

The Court was not persuaded by any of these arguments.  Regarding the new law, the Court recognized that the test for patent eligibility under § 101 - the abstract idea test -- is not well defined:

This so-called "abstract idea test" is not a concrete test but rather a set of guidelines promulgated in various Supreme Court and Federal Circuit opinions.

True enough.  This has created the unfortunate result that the test for abstractness still works out as "I know it when I see it" reasoning and logic.  Dennis Crouch (a.k.a. Patently-O) recently posted on the CLS Bank and Bancorp decisions.  CLS Bank found computerized stock trading claims patent eligible, while Bancorp found computer related financial claims patent ineligible.  Prof. Crouch aptly concluded his post as follows:

It is simply ridiculous that after 40 years of debate, we still do not have an answer to the simple question of whether (or when) software is patentable.

I would rephrase that comment slightly, as we know that software is patent eligible, but we still have a great lack of clarity as to when.  And it has less to do with the software itself and more to do with how that software is claimed.

The Digitech decision is another example of this theme.  Judge Antoon analyzed the CLS Bank and Bancorp decisions and found Digitech's claims closer-in-kind to Bancorp's.  Accordingly, the '180 patent remains invalid.  We'll have to see what happens on appeal.

Motion for Reconsideration Denied.
Digitech Information Systems, Inc. v. BMW Financial Services NA, LLC, Case No. 6:10-cv-1373 (M.D. Fla. July 30, 2012) (J. Antoon)

Tough Mudder vs. Baddest Mudder

Tough Mudder has been around since 2009, staging outdoor endurance and obstacle courses throughout the country.  A number of friends have participated in these events.  They sound cool, but the idea of allowing someone to shock me with electricity doesn't appeal to me so I've not yet signed up.  Apparently, there's another challenger in town -- Baddest Mudder.  Baddest Mudder has scheduled an event in November of this year in Brooksville.   Baddest Mudder also includes the following disclaimer on its website:

NOTICE
We want to notify the general public and all others that Tough Mudder LLC. is in no WAY shape or form related to, operated by, directed by or affiliated with "BADDEST MUDDER"
All We r... Is what we r...
Welcome To The Badlands

Tough Mudder sued Baddest Mudder for trademark infringement, false designation of origin, trademark dilution, and trademark cyberpiracy.  To speed things along, Tough Mudder also sought a temporary restraining order pursuant to Fed. R. Civ. P.  65(b).  A pretty aggressive approach.  As a refresher, temporary restraining orders, prohibiting an adverse party from doing something without notice,  are proper only when:
1) specific facts clearly show that immediate and irreparable harm will result before the adverse party can be heard; and
2) the moving party certifies in writing any efforts to give notice and the reasons why notice should not be required.


Here, Tough Mudder's TRO argument addresses the standards for a preliminary injunction, but did not specifically identify what the immediate irreparable harm was.  Instead, the irreparable harm complained of was, expectedly, the injury to Tough Mudder's goodwill.   Tough Mudder filed its TRO motion on a Friday.  Judge Scriven denied it the following Monday:

Federal Rule of Civil Procedure 65(b)(1) provides that a TRO may be granted  without notice only if the party requesting the TRO can: (1) offer specific facts clearly showing that “immediate and irreparable injury, loss, or damage will result to the movant  before the adverse party can be heard in opposition;” and (2) the movant’s attorney certifies in writing any efforts made to give notice and the reasons why it should not be  required.  The Court has reviewed Plaintiff’s motion, memorandum, amended complaint,  and accompanying documents.  Upon consideration and review, the Court finds that a temporary restraining order without notice should not be granted since it does not clearly appear that immediate and irreparable harm will result before Defendants can be  heard in opposition.  The main event to be held by Defendants which Plaintiff claims will  cause its injury is not scheduled to be held until November 2, 2012.  Plaintiff  has not provided sufficient reasons why notice of the TRO has not been given and should not be given to Defendants.

I imagine the next motion we will see will be the preliminary injunction motion.

Motion for Temporary Restraining Order, Denied.
Tough Mudder, LLC v. La. Placa, Case No. 8:12-cv-1513 (M.D. Fla. Jul. 9, 2012) (J. Scriven)

If you sell airplane parts in South Carolina to a customer who advertises and flies in Florida, are you subjected to personal jurisdiction in Florida for patent infringement?

No.

William Fondriest sued Chippewa Aerospace and Icore International for infringement of U.S. Pat. No. 7,135,790 related to jet aircraft landing gear.  Icore was dismissed earlier with the Plaintiff's consent.  

Plaintiff alleged both general jurisdiction and specific jurisdiction.  As to general jurisdiction, which requires "continuous and systematic general business contacts between the defendant and the forum state," Plaintiff relied on Chippewa's long standing and ongoing relationships with multiple companies that maintain significant operations in Florida.  Chippewa's customers's significant connections to Florida did not carry over to justify suing Chippewa here:

The fact that Chippewa allegedly provides Harness Products to airlines that advertise in Florida and fly throughout Florida does not demonstrate the continuous and systematic contacts that warrant the exercise of jurisdiction over Chippewa.

Plaintiff next tried specific jurisdiction, which involves a three-prong test: (1) defendant purposefully directed its activities at the residents of Florida; (2) the claim arises out of or is related to those activities; and (3) asserting personal jurisdiction is reasonable and fair.  Plaintiff argued that the regional airlines Chippewa sells to use Chippewa's allegedly infringing product in flights to and from Florida (and thus commit infringement in Florida). Chippewa responded that it manufactures the products in South Carolina, has never sold one in Florida or to a customer in Florida, has never received any payment from anyone in Florida, and has never delivered the allegedly infringing product to Florida.  Instead, Chippewa has sold the product to a customer in North Carolina and another in Utah and those sold to the North Carolina entity were installed on landing gear for companies in Wisconsin and Canada.

There is no evidence before this court to indicate that Chippewa purposefully directed its activities at residents of Florida.  Thus, Plaintiff's claim does not arise out of tor relate to activities that Chippewa purposefully directed at residents of Florida.  Assertion of personal jurisdiction over Chippewa would be unreasonable and unfair, as there are no contacts between Chippewa and Florida that give rise to the claims asserted by Plaintiff in this case.

Motion to dismiss for lack of personal jurisdiction granted.

Fondriest v. Chippewa Aerospace, Inc., Case No. 6:11-cv-1206 (M.D. Fla. Mar. 16, 2012) (J. Honeywell)

Litigants -- pick your battles wisely; Rube Goldberg's Self-Operating Napkin more interesting than sanctions motion

PPS Data sued Athenahealth for patent infringement.  Athenahealth thought PPS didn't do a thorough enough pre-suit investigation, and filed a Rule 11 motion seeking sanctions.  PPS responded that it investigated the accused product and reasonably believed it read on the claims.  In responding to Athenahealth's sanction motion, PPS made a   request for "counter-sanctions" against Athenahealth and its counsel for filing a "frivolous" Rule 11 motion.  Athenahealth, of course, responded.  PPS next filed a motion to strike a paragraph from that response, to which Athenahealth filed another response.  You can imagine how pleased the Court was to receive this barrage.

First, the Court dispensed with the law.  An adequate pre-suit investigation in a patent case requires a plaintiff to: (1) investigate the legal basis of the patent infringement claims (i.e. interpret the claims to be at issue); and (2) conduct a comparison of the accused product and the asserted claim(2).  

Here, neither party presented the Court with Plaintiff's pre-suit claim interpretation -- thus the Court could only conclude that such construction was reasonable.  As to the comparison of the accused product, PPS relied on Athenahealth's public statements about its products.  Athenahealth challenged this with the affidavit testimony of its managing director.  This was not persuasive.  As my trial advocacy professor often stated, "that goes to the weight, not admissibility."  The Court saw things the same way: 

To the extent that affidavit can be seen as a repudiation of Defendant's public statements about its product, the affidavit may call into question the accuracy of those statements or, perhaps, the credibility of the managing director.  It does not, however, cast doubt on the reasonableness of Plaintiff's reliance on Defendant's public statements.

Having now denied Athenahealth's sanctions motion, the Court addressed the various briefings.  I see no reason to try to improve on the Court's language, so I quote it below:

Putting to one side the original motion for sanctions, the Court must now turn to several papers that related to Defendant's motion in a Rube Goldberg-like manner. [FN - The Official Rube Goldberg Website]
* * *
All-in-all, the Court finds Rube Goldberg's cartoon of a Self-Operating Napkin more entertaining than the Rube Goldberg-like web of papers submitted in this case.  Although both parties have likely spent a great deal of time and money preparing these submissions, neither party has benefitted.  The Court has spent too much time addressing them.  For future submissions, counsel should note that this Court, like the U.S. Court of Appeals for the Seventh Circuit, "is not inclined to award sanctions in favor of a party that cannot be bothered to follow the rules itself."  Heinen v. Northrop Grumman Corp., 2012 WL 372988, at *2 (7th Cir. Feb. 7, 2012).
Furthermore, as this case remains in its early stages, counsel are advised that the effect of launching a litigation nuclear arsenal directed at peripheral issues not genuinely intended to advance the case toward resolution in an efficient, meaningful way will greatly diminish the credit given by the Court to future filings.  Choose your battles wisely lest the early salvos cost you the war.

Motion for sanctions denied.

PPS Data, LLC v. Athenahealth, Inc., Case No. 3:11-cv-746 (M.D. Fla. Feb. 23, 2012) (J. Dalton, Jr.)

Pro Se Litigants - Be Warned - Futile Demonstrations Will Not Last Long

Pearle Vision sued an individual (his wife and related corporate entitle) for unauthorized operation of a two "Pearle Vision" stores.  Pearle Vision moved for a preliminary injunction.  Defendants responded without counsel, with the following notice:

Now coming is the man george-leslie, formerly of the Haffner family, by Limited Appearance and not by general appearance, reserving all rights, by necessity, for the protection of freedom, rights, titles, and interests in this civil action. The sole purpose of this limited appearance is to honor this court and at all pertinent times by acting under Variation of Agreement, in good-fath, with clean hands, with no intention of contempt, delay, or obstruction of the due process of the law, but for the purpose of maintaining the domestic, private, and public international order. Moreover, limited appearance is made in an effort to facilitate the peaceful and immediate-settlement of any and all stated disputes or claims, charges) [sic] and to further facilitate the immediate satisfaction, closure, and discharge of GEORGE L. HAFFNER pertaining to this account . . . and any other related account(s).

Additional documents were filed with similar language.  The defendants next filed two boxes of documents with the Court.  The corporation never appeared, so Plaintiff sought (and obtained) default.  The individual defendants returned to the Court with more documents.  The Court was not entertained.  Rule 55 provides that if party fails to defend itself, default is appropriate.   While no explicit definition is provided for "otherwise defend," such actions include attacking service, moving to dismiss, and seeking summary judgment.  Nothing the defendants had done fell into this type of activity:

None of the documents filed by Haffner and Mabry reveals an intent to “defend” the suit. Indeed, the documents reveal no intent whatsoever. Failing to conform with the prescriptions of Rule 8 by either responding “to the substance of the allegation” or stating a defense in “short and plain terms,” Haffner and Mabry fail to “plead or otherwise defend.” See 10 MOORE’S FEDERAL PRACTICE § 55.02 (3d ed. 2010) (“[D]efault promotes efficient administration of justice by requiring a responding party to conform with the requirements set out in the Federal Rules in a timely fashion.”).  Haffner and Mabry have defaulted.

Default granted, with Pearle Vision invited to brief damages for the Court.

Luxottica Retail North America, Inc. v. George L. Haffner Enterprises, Inc., Case No. 8:11-cv-2433 (M.D. Fla. Dec. 16, 2011) (J. Merryday)