Preliminary Injunction - David vs. Goliath

Conair Corporation has substantial rights to U.S. Patent Nos. 8,607,804 and 8,651,118 (and its subsidiary owns Design Patent D696,456) relating to a hair styling device.  Conair sold approximately one million of these devices in 2013 and projects that it will sell approximately two million this year (2014).  Barbar, Inc apparently made 2,500 hair styling devices that bear a resemblance to Conair's.  

On May 30, 2014, Conair sought a temporary restraining order to prevent Barbar from displaying the allegedly infringing device at a trade show in Orlando the next day.  The Court denied that motion and converted it into a motion for preliminary injunction.  In denying the TRO, the Court noted:

Patent cases are notoriously complex. See Minemyer v. B-Roc Representatives, Inc., 07 C 1763, 2010 WL 3787093 (N.D. Ill. Sept. 21, 2010) aff'd sub nom. Minemyer v. R-Boc Representatives, Inc., 515 F. App’x 897 (Fed. Cir. 2013) (noting that patent cases are more time- consuming and are more taxing on judicial resources than most civil cases). In this instance, the Plaintiffs ask the Court to determine in less than a day that they have a substantial likelihood of success on a patent case involving three patents, unfair competition, and an alleged violation of trade dress. Simply put, less than twenty-four hours is too little time for a Court to make a reasoned and reflective determination as to whether Plaintiffs have a substantial likelihood of succeed on such a complex matter.

Conair Corp. v. Barbar, Inc, Case No. 6:14-CV-831 (M.D. Fla. May 30, 2014) (J. Presnell).  The parties moved onto a preliminary injunction.  The Court held an evidentiary hearing and ultimately concluded a preliminary injunction was not warranted because of the significant difference in the parties' respective sizes:

The Plaintiffs' theory of irreparable harm is that they will suffer price erosion and that their reputation and product's reputation will be tarnished. (See Doc. 2–1 at 6–7). As to price erosion, a competitor whose sales would represent less than .2% of the Plaintiffs projected sales for this year is not a significant threat to the Plaintiffs' price point. Moreover, the testimony at the evidentiary hearing showed that the Defendants' two-for-one pricing discount was simply for trade show marketing purposes and does not represent the regular pricing of the Defendants' product. (See Doc. 30 at 32:16–33:7 (describing receipt for two of Defendants' products for total cost of $100)). That limited marketing effort does not represent an intent to presently compete with the Plaintiffs' product at a dramatically lower price. 

With respect to the representational injury to the Plaintiffs' product, the evidence was mixed and none of the negative reviews could be clearly traced to any alleged faults with the Defendants' product. (See Docs. 1–1, 1–3 (attachments to Complaint showing positive reviews of Plaintiffs' product); Docs. 21–3. 21–4, 21–5, 21–6 (showing negative reviews of Plaintiffs' product). Further, even assuming that representational harm can be traced to the Defendants' product, the volume of Defendants' sales is de minimis. See Am. Beverage Corp. v. Diageo N. Am., Inc., 936 F.Supp.2d 555, 615 (W.D.Pa.2013) (addressing where large sales volume supported lack of irreparable harm upon showing of fault with allegedly infringing product). Accordingly assertions that the Defendants' product would be tarnished in a non-compensable manner are speculative.

Motion for preliminary injunction, denied.

Conair Corp. v. Barbar, Inc., Case No. 6:14-CV-831 (M.D. Fla. July 3, 2014) (J. Presnell)

Can A Non-Exclusive Trademark Licensee Sue for Trademark Infringement?

No.

Hollywood Collectibles had a license to manufacture knives in connection with the trademark RAMBO.  (The knives were replicas of the knives in the first three Rambo movies.)  Hollywood Collectibles granted a sublicense to Master Cutlery.  After the fourth Rambo movie was released,  Hollywood again obtained a license to manufacture replica knives, and again granted a sublicense to Master.  Both sublicenses to to Master expired in 2010.  The parties attempted to negotiate another sublicense, but that did not work out.  Hollywood formally terminated the sublicense in 2012.

Master continues to manufacture replica knives, so Hollywood sued for (among other things) trademark infringement.  Master moved to dismiss for lack of jurisdiction, as Hollywood didn't have standing:

Lanham Act's cause of action for infringement of a registered trademark, 15 U.S.C. § 1114(1), is available only to a “registrant” of the trademark at issue, a term the Act defines as extending to the actual registrant's “legal representatives, predecessors, successors and assigns.” 15U.S.C. § 1127. Under some circumstances, an exclusive licensee has standing to pursue a trademark infringement action. See, e.g., Drew Estate Holding Co., LLCv. Fantasia Distribution, Inc., 875 F.Supp.2d 1360, 1366 (S.D.Fla.2012) (citing cases). However, in both of the licenses obtained by Hollywood Collectibles, the licensor retained the right to manufacture and sell Rambo knives for promotional and other purposes .  As a nonexclusive licensee, Hollywood Collectibles lacks standing to pursue a trademark infringement claim.

Motion to dismiss granted with prejudice.

Hollywood Collectibles Group, LLC v. Master Cutlery, Inc., Case No. 6:14-CV-176 (M.D. Fla. May 22, 2014) (J. Presnell)

Amended Pleading (Rule 15(a)(1)) vs. Supplemental Pleading (Rule 15(d)) -- Are they different?

Yes.

MacNeil IP (an Illinois company) sent a cease and desist letter to Kramer America (a Florida company) informing Kramer of a number of patents owned by MacNeil and asserting that Kramer infringed one of those patents.  As is the risk whenever you send a letter accusing another of infringement, Kramer responding by filing a declaratory judgment lawsuit, asking the Court to declare that Kramer did not infringe the patent MacNeil had accused it of infringing.

MacNeil responded by doing two things.  First, it provided Kramer a covenant promising that it would not sue Kramer for the patent MacNeil previously accused Kramer of infringing.  This had the net effect of removing subject matter jurisdiction as no controversy existed between the parties related to that patent any longer.  (For a discussion on this approach, see my post on Super Sack.)  MacNeil also filed a patent infringement case in Illinois, charging Kramer with infringing some of MacNeil's other patents.

Kramer responded to the covenant not to sue by filing an Amended Complaint, pursuant to Fed. R. Civ. P. 15(a)(1), asking now for a declaration that it did not infringe the patents MacNeil sued over in Illinois.  MacNeil objected, and asked the Court to strike the "Amended Complaint" as not being an amended complaint at all.  Instead, MacNeil argued the "Amended Complaint" was a "Supplemental Complaint" pursuant to Rule 15(d), which Kramer needed leave of court to file.

Rule 15(a)(1) allows a party to file an amended pleading, without leave of court, within a 21-day time period (which Kramer was within).  Rule 15(d), on the other hand, allows a party to file a supplemental pleading setting out any transaction, occurrence, or event that happened after the original pleading was filed.  But a party must first receive permission from the Court to file such a supplemental pleading.

MacNeil further argued that the "Amended Complaint" could not supplement the original complaint under Rule 15(d) because, while there was subject matter jurisdiction for the original complaint as, at the time it was filed, there was a controversy between the parties related to the patent at issue therein, there was not subject matter jurisdiction at the time the original complaint was filed related to the other patents because they had not been asserted against Kramer.

The Court refused to strike the Amended Complaint, and instead invited MacNeil to file a motion to dismiss the Amended Complaint under this subject matter jurisdiction analysis.  MacNeil did precisely that.

MacNeil's cease and desist letter stated:

We ... are writing to you concerning the ... vehicle floor mat that you manufacture, sell, offer to sell and import.  MacNeil owns multiple patents directed to vehicle floor trays, including U.S. Patent Nos. 7,401,837; 7,316,847; 7686,370; 7607,713; 7,444,748; 7686,371; and 7,784,848. ....
It has come to our attention that your use, manufacture, sale, offers to sell and importing of the ... mats infringes at least one of the MacNeil IP LLC patents.  See U.S. Patent No. 7,401,837 attached hereto....

While MacNeil provided a covenant not to sue on the '837 patent, MacNeil did sue Kramer for infringement of the '370 and '819 patents.

The issues presented are different for the '370 patent and the '819 patent.  First, the '370 patent is identified in MacNeil's letter.  The '819 is not.  Second, the '819 patent is related to a mechanism for affixing a floor mat to a vehicle floor, and not to a floor tray itself.  Thus, the Court determined that subject matter properly exists for the declaratory judgment case related to the '370 patent.  But the declaratory judgment count concerning the '819 patent (and related trade dress and unfair competition issues) did not present a justiciable issue at the time the complaint was filed because they had not been asserted.

[NOTE: This presents an interesting timing issue to me.  Kramer has subject matter jurisdiction here in Florida on one patent claim.  The day after it filed its declaratory judgment case here, MacNeil filed a patent infringement case in Illinois asserting another patent (not previously identified in its letter).  But MacNeil's letter says that Kramer allegedly infringes "at least one of" MacNeil's patents.  So Kramer amends its complaint to name the two others MacNeil sued on in Illinois.  One of those cases can stick because that patent number happened to be mentioned in the cease and desist letter, but the other can't because it wasn't mentioned?  This seems to give MacNeil grounds to go back to Illinois -- the second filed jurisdiction -- and seek to proceed there on the second patent.  Thus, 2 different court will be addressing the same parties in similar patents at the same time.  Perhaps the next round of motions here will shake that issue out.  We'll see.]

Kramer America, Inc. v. MacNeil IP, LLC, Case No. 6:11-cv-1489, (M.D. Fla. Dec. 8, 2011 (motion to strike amended complaint) Feb. 3, 2012 (motion to dismiss amended complaint)) (J. Presnell)

Is A Patent Claim's Preamble Limiting? Following the Guideposts...

Enpat sued a number of entities (in separate cases) for infringing U.S. Patent No. 6,328,260, a patent related to a wing spar modification kit to be used for strengthening wings on certain amphibious airplanes.  Asking for claim construction, one defendant argued that the preamble of the first independent claim was limiting.  Enpat disagreed, arguing instead that the preamble merely recited an intended use.

The preamble of claim 1 reads:

A modification kit for retrofitting a wing spar on an amphibious airplane, said airplane having a root rib, and said wing spar comprising a wing-spar cap angle that is attached to a wing spar web, said wing spar web having an upper edge and a lower edge and an inboard end that attaches to said root rib, a first series of wing-attach bolt-holes that is provided in said upper edge and a second series of wing-attach bolt-holes that is provided in said lower edge of said wing spar web, wherein said root rib is angled relative to a vertical plane of said amphibious airplanes, and wherein said inboard end of said wing spar has an inboard-end angle that corresponds to an angle of said root rib, said modification kit comprising:

The Court recognized that no litmus test exists for determining whether or not a preamble is limiting.  Instead, a number of "guideposts" should be followed.  If the preamble merely describes "the use of an invention" while the body of the claim sets forth a "structurally complete invention," the preamble is not limiting.  But the preamble may be limiting if (1) the applicant clearly relies on it during prosecution as distinguishing the invention over the prior art; or (2) a particular disputed phrase within the preamble provides the antecedent basis for a limitation within the claim.

After laying out this law, the Court concluded that the '260 patent and its file history did not rely on the preamble language as a basis for distinguishing the invention from the prior art.  The defendant sought to capitalize on a scrivener's error in the claim body language.  The claim body referred to the limitation "said wing spar."  Defendant pointed to the preamble as the only antecedent basis for "wing spar."  While no qualm could be had with that statement, the Court saw through it:

While a cursory reading of claim 1 confirms [Defendant's] statement, a fair reading of claim 1 in the context of the entire Patent reveals that "said wing spar" in the body of claim 1 should read "said wing spar web."  Read without the scrivener's omission of "web," one need not resort to the preamble to find any antecedent basis for the "wing spar" referenced in the body of the claim.

Defendant's second approach was to point to limitations in dependent claim 10 that had their antecedent basis in the preamble.  Enpat agreed.  The Court thus found the preamble limiting only for claim 10 (and not the broader independent claim 1).

Enpat, Inc. v. Shannon, Case No. 6:11-cv-84 (M.D. Fla. Nov. 30, 2011) (J. Presnell)

Dear Trademark Owners, Don't Wait 4 Years to Assert Your Unfair Competition Claims

Franchisor Western Sizzlin had a franchisee in Kissimmee from 1995 through 2004.  The location was taken over by Pinnacle Business Partners ("PBP").  While PBP did make royalty payments to Western Sizzlin in 2005, the parties were unable to come to an agreement, and PBP declined to sign a franchise agreement.  Western Sizzlin demanded PBP remove its "Sizzlin Grill" signs at that time due to their similarity to Western Sizzlin's "Western Sizzlin" trademarks.  

Four years later, in November 2009, Western Sizzlin visited the Kissimmee location and saw the signs and decor were the same.  Western Sizzlin demanded royalties and that PBP cease its usage.  Western Sizzlin then sued for trademark infringement as well as unfair competition, unjust enrichment, and violation of the Florida Deceptive and Unfair Trade Practices Act.  PBP sought summary judgment of the unfair competition, unjust enrichment, and FDUTPA claims as time barred.  Specifically, each of those claims has a four-year statute of limitations, and Western Sizzlin did not sue until 2010 -- five years after it knew of the alleged violations.  Western Sizzlin responded by arguing that there was a dispute as to how much knowledge Western Sizzlin had as to PBP's alleged violations in 2006.  But Western Sizzlin did not offer evidence to support this argument.

As its second argument, Western Sizzlin explained that a PBP representative previously assured Western Sizzlin that PBP would change the signage, but Western Sizzlin did not discover until November 2009 that PBP hadn't.  Thus, PBP should be equitably estopped from asserting the statute of limitations.  The Court did not agree:

Under Florida law, equitable estoppel arises when one party lulls another party into a disadvantageous legal position.  Major League Baseball v. Morsani, 790 So. 2d 1071, 1076 (Fla.2001).  “Equitable estoppel presupposes a legal shortcoming in a party’s case that is directly attributable to the opposing party’s misconduct. The doctrine bars the wrongdoer from asserting that shortcoming and profiting from his or her own misconduct. Equitable estoppel thus functions as a shield, not a sword, and operates against the wrongdoer, not the victim.”  Id.

In this case, the “shortcoming” is that the Plaintiff waited more than four years after learning of the alleged violations before filing suit.  A simple assurance that the sign would be changed could in theory “lull” a party into delaying the filing of suit for the length of time needed to change – or at least remove – the sign, perhaps a few weeks in this scenario.  It would not be enough to lull a party into delaying for more than forty-eight months.  And there is no suggestion that the Defendant somehow prevented the Plaintiff from visiting the restaurant, or even just driving by it, to see if the sign had been changed.  WSC has failed to establish any grounds for the application of equitable estoppel here.

Motion for Summary Judgment granted.

Western Sizzlin Corp. v. Pinnacle Business Partners, LLC, slip op., Case No. 6:10-cv-1452 (M.D. Fla. Nov. 23, 2011) (J. Presnell)

A consent judgment to "obey the law" doesn't cut it

Plastic Tubing Industries, Inc. accused Blue Diamond Industries, LLC and Mark Stuhlreyer of infringing U.S. Patent Nos. 5,516,229; 5,520,481; and 7,661,903 each generally directed to drainage pipes. The parties resolved their dispute, and asked the Court to enter a consent judgment. The proposed consent judgment included the following proposed order:

1. The Defendants, and Defendants' officers, directors, owners, agents, servants, employees, successors, heirs and assigns, and any other persons in active concert or privity or in participation with any of then, are hereby enjoined from infringing PTI's Patents.

* * *

8. The Defendants ... are hereby enjoined from aiding, abetting, contributing, causing or assisting anyone or any entity in engaging in the activities prohibited by this Injunction or infringing the intellectual property described above.

Judge Presnell succinctly refused to enter this consent judgment:

The proposed consent judgment is essentially an extremely broad "obey the law" injunction requiring the Court to retain jurisdiction over this action indefinitely. The Court declines to do so.

The parties revised their proposed consent judgment (to be more direct and prohibit defendants from making, using, selling, or offering for sale mulit-pipe systems that constitute a material part of the invention covered by PTI's patents), which the Court entered.

Plastic Tubing Industries, Inc. v. Blue Diamond Industries, LLC, Case No. 6:10-cv-1227, slip op. (Dec. 28, 2010) (J. Presnell)