Where Does Trademark Infringement Tort Occur For Venue Purposes?

Where the trademark owner resides, at least under Florida's long-arm statute:

Under Florida's long-arm statute, Defendant is subject to personal jurisdiction where it commits a “tortious act within th[e district].” § 48.193(1)(a)(2), Fla. Stat. Trademark infringement is considered a tortious act under Florida's long-arm statute, Mighty Men of God, Inc. v. World Outreach Church of Murfreesboro Tenn., Inc., 6:14-cv-947-Orl-41TBS, 2015 WL 1534446, at 3 (M.D. Fla. Apr. 6, 2015), and is deemed to take place where the trademark owner resides, Nida Corp. v. Nida, 118 F. Supp. 2d 1223, 1228 (M.D. Fla. 2000).  Because the true owner of the trademark and trade dress at issue is disputed among the parties, Plaintiff is credited as the trademark holder for the purposes of determining venue.  Because Plaintiff resides in the Middle District, the tortious act of trademark infringement is deemed to have occurred here.   Thus the Middle District has personal jurisdiction over Defendant under Florida’s long-arm statute.

Motion to dismiss or transfer, denied.
Tile World Corp. v. Miavana & Family, Inc., Case No. 6:15-CV-919 (M.D. Fla. Dec. 2, 2015) (J. Antoon)

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)

Personal jurisdiction for patent infringement on an out-of-state subsidiary with its own operational control? Nope.

Digitech Information Systems sued Ally Financial and Capital Auto Receivables, Inc. ("CARI") for infringement of U.S. Patent No. 7,739,180.  The '180 Patent relates to a method of selecting leases to optimize an investment portfolio.  Ally leases new and used vehicles from GM and non-GM franchised dealers.  CARI, a wholly-owned subsidiary of Ally, acts as a depositor and initial certificate holder for various asset-backed securities.  CARI is not registered in Florida, and does not do business here.  On this basis, CARI moved for dismissal for lack of personal jurisdiction.

Digitech opposed that motion, arguing that Ally's actions should be imputed to CARI for purposes of establishing personal jurisdiction.  The Court was not convinced.

General Jurisdiction


Digitech argued the Court could exercise general jurisdiction over CARI because "it is reasonable to assume that the creation and operation of CARI is a mere corporate formality."  This wasn't enough -- just being a subsidiary of a company subjected to personal jurisdiction in Florida does not necessarily extend personal jurisdiction to the sub:

“It is well settled in Florida that the mere presence of a subsidiary in Florida, without more, does not subject a non-Florida corporate parent to long-arm jurisdiction.”  Enic, PLC v. F.F. South & Co., 870 So. 2d 888, 891 (Fla. 5th DCA 2004) (citations omitted); Meier v. Sun Int’l Hotels, Ltd., 288 F.3d 1264, 1272 (11th Cir. 2002) (“Generally, a foreign parent corporation is not subject to the jurisdiction of a forum state merely because a subsidiary is doing business there.”).  However, a corporation that engages in substantial activity in Florida through a subsidiary may be subject to personal jurisdiction in Florida.  Universal Caribbean Establishment v. Bard, 543 So. 2d 447, 448 (Fla. 4th DCA 1989).  In order “[t]o determine whether a foreign corporation is liable based on a subsidiary’s substantial activity, [courts] consider the ownership of the subsidiary, the business activities of the subsidiary, and the financial relationship between the corporation and the subsidiary.” Abramson v. Walt Disney Co., 132 F. App’x 273, 275-76 (11th Cir. 2005) (citing Meier, 288 F.3d at1272-73).  

What is required for jurisdiction based on the relationship between a parent corporation and a subsidiary “is not some control but ‘operational control’ by the parent over the subsidiary.”  Gen. Cigar Holdings, Inc. v. Altadis, S.A., 205 F. Supp. 2d 1335, 1344 (S.D. Fla. 2002) (quoting State v. Am. Tobacco Co., 707 So. 2d 851, 856 (Fla. 4th DCA 1998); see also Dev. Corp. of Palm Beach v. WBC Constr., L.L.C., 925 So. 2d 1156, 1161-62 (Fla. 4th DCA 2006) (“The amount of control exercised by the parent must be high and very significant.”). 

Here, Digitech did not establish operational control by Ally over CARI.  Thus, no personal jurisdiction.

The Court next rejected Digitech's argument that CARI should be subjected to specific jurisdiction because there was not sufficient evidence to support such jurisdiction.

Motion to dismiss granted.

Digitech Information Systems, Inc. v. Ally Financial, Inc., slip op., Case No. 6:10-cv-1398 (M.D. Fla. Sept. 1, 2011)(J. Antoon)

[Note.  GrayRobinson, PA. was involved in the above-captioned matter]

Willful infringement alone does not get you enhanced damages

Harris sued FedEx for infringing a number of patents relating to systems for gathering flight performance data from aircraft for analysis. Generally, the technology provided for aircrafts to wirelessly transmit certain flight performance data to an airport based receiver. In prior systems, the data needed to be manually removed from the aircraft and delivered to the centralized storage area, or through some direct line-of-sight infrared link or fiber optic cable. Harris' patents protected a system for this data gathering which utilized wireless transmission of the flight data via a radio frequency link.

FedEx developed a system for gathering flight statistics on its B727 aircraft. This system wirelessly transmitted flight data from parked airplanes to one of FedEx's servers in Tennessee. This system was found to infringe Harris' patents. And the infringement was found to be willful. Harris sought enhanced damages, attorneys' fees, and an injunction.

Enhanced Damages

35 U.S.C. 284 allows a court to increase a patent infringement damage award by up to three times. A plaintiff must establish that the defendant's infringement was willful. Damages are enhanced in order to penalize an infringer for their increased culpability. A court should consider consider the following factors in deciding whether or not to enhance damages:

1. whether the infringer deliberately copied the ideas or design of another
2. whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed
3. the infringer's behavior as a party to the litigation
4. the defendant's size and financial condition
5. the closeness of the case
6. the duration of the defendant's misconduct
7. remedial action taken by the defendant
8. the defendant's motivation to harm; and
9. whether the defendant attempted to conceal its misconduct

The court analyzed each of these factors, finding 1, 3, 6, 8, and 9 weighed against enhancing damages, while 2 and 5 supported (the others were neutral). FedEx's defenses, even though they didn't succeed, weren't frivolous. FedEx had made a good faith effort to defend itself. In sum, FedEx's conduct was not to egregious as to warrant an award of enhanced damages.

Attorneys' Fees

In patent cases, the prevailing party may be awarded its attorneys' fees if the case is an "exceptional case." If a defendant is found to be a willful infringer, the case is presumed to be an exceptional case, and the court must explain why a case is not exceptional if the court is going to refuse an award of attorneys' fees. Here, the Court did not need to provide that explanation, because it found the case was exceptional and awarded Harris its reasonable attorneys' fees.

Permanent Injunction

It used to be (until 2006) that if you prevailed as a plaintiff in a patent infringement case, you were presumably entitled to an injunction. (That presumption could be rebutted, but the defendant had to do the rebutting). The Supreme Court changed this landscape with its eBay decision, throwing patent law back into the category of other harms -- if you wanted an injunction, you have to prove you're entitled to it. To prove that, a plaintiff must show:

1. it suffered irreparable harm
2. the remedies at law (i.e. money damages) are inadequate to compensate for that harm
3. the balance of hardships in granting an injunction favor the plaintiff; and
4. the public interest would not be disserved by entering an injunction

The court addressed each of these elements. Concerning irreparable harm, the court noted that a finding of past infringement, alone, does not show irreparable harm. But it does tend to suggest such harm. Here, FedEx argued in part that Harris also licensed its patents. Because of this, FedEx argued, Harris didn't suffer irreparable harm because it has shown that it is willing to license (i.e. accept money) the use of its technology. The court was not convinced by this argument. FedEx's use of its infringing system interfered with Harris' licensing opportunities. This interference was irreparable.

Regarding the second factor, FedEx's interference with Harris' licensing opportunities was not curable by money. As such, Harris was entitled to equitable relief. The final two factors also favored an injunction. So the Court ordered one be entered. The parties now have to submitted a proposed injunction for the Court to issue.

Conclusion

Just because a defendant is found to have willfully infringed a patent does not mean the plaintiff will necessarily get enhanced damages. Nor does it mean the plaintiff will get its attorneys fees (although the defendant has to convince the court to explain why attorneys's fees wouldn't be warranted against the willful infringer). And the right to an injunction depends on the existence of irreparable harm (and the other elements).

Harris v. FedEx, Case No. 6:07-cv-1819, slip op. (M.D. Fla. Feb. 28, 2011) (J. Antoon)