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)

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.

i Cloud Communications, LLC v. Apple, Inc., Az. D (Complaint filed June 6, 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.

Affirmed.

Microsoft Corp. v. i4i Limited Partnership, 564 U.S. ___ (2011) (June 6, 2011)

Rule 11 sanctions motion directed to original complaint denied where plaintiff filed an amended complaint

eWinWin has sued Groupon for patent infringement relating to a number of patents here in the Middle District. Groupon responded with a number of counterclaims, and sent a Rule 11 safe harbor letter. eWinWin responded by offering to amend its complaint to remove some of the asserted patents from the litigation, narrow some of the asserted claims, and assert another patent that issued after the case had begun. Groupon would not consent. After the Rule 11 safe harbor period elapsed, Groupon filed its motion for sanctions. eWinWin then asked for leave to file its amended complaint. Judge Bucklew granted that leave. Today, she also denied Groupon's motion for sanctions:

In the instant motion for Rule 11 sanctions, Groupon alleges that the four counts asserted in eWinWin’s original complaint are frivolous and unsupportable. However, the amended complaint is substantially different from the original complaint in that eWinWin withdrew the infringement claims of two previously asserted patents, narrowed the infringement claims in another previously asserted patent, and added claims of infringement of a newly issued patent to the action. Because eWinWin’s amended complaint is substantially different from the original complaint and because Groupon’s motion for Rule 11 sanctions is based on the original complaint, the Court denies Groupon’s Rule 11 motion for sanctions without prejudice.

eWinWin v. Groupon, slip op., Case No. 8:10-cv-02678 (M.D. Fla. May 23, 2011) (J. Bucklew)

Possibility of repeal of false marking statute is not a basis to stay litigation

Last week, I wrote about Judge Merryday's denial of a motion for leave to add an equitable estoppel defense to a false marking claim in the Advanced Cartridge Technologies v. LexMark International dispute. Another interesting order has come out. The defendant had filed an inter partes reexamination request, and asked the court to stay the litigation while the reexamination runs its course. The court refused that first motion.

The defendant filed a second motion to stay, this time arguing not only that the reexamination would simplify the litigation, but also that "Congress will likely repeal the false patent marking statute, and that the Federal Circuit will likely hold the statute unconstitutional." The Court was not convinced:

Although either the re-examination or a change to the false patent marking statute promises to simplify the issues, neither the re-examination, nor the legislative effort to modify the false patent marking statute, nor the constitutional challenge before the Federal Circuit demonstrably will conclude before this litigation. The occurrence and content of each prospect is speculative and offers no sound basis to frustrate a litigant’s access to the court.

Second Motion to Stay denied.

Advanced Cartridge Technologies, LLC v. Lexmark International, Inc., slip op. Case No. 8:10-cv-0486 (M.D. Fla. Apr. 21, 2011) (J. Merryday)

The budget and the patent office

Director Kappos's blog entry (reproduced below) explains it all.

An Update on the USPTO's FY 2011 Budget:

As you may know, the FY 2011 budget was enacted on April 15, 2011 and contains the USPTO’s appropriation through the end of this fiscal year, September 30, 2011. With the enactment of the Full-Year Continuing Appropriations Act, 2011, our total spending authority for FY 2011 has been limited to $2.09 billion.

Given this level of spending authority, USPTO will have to make significant reductions for the current fiscal year.

We have not come by these decisions lightly; I recognize that these measures will create new challenges for our ability to carry out our agency’s mission, but we will continue seeking innovative ways to do more with less.

Effective immediately and until further notice:

• Track One of the Three-Track program, which offers expedited patent examination and was scheduled to go into effect on May 4, 2011, is postponed;
• The opening of the planned Nationwide Workforce satellite office in Detroit, as well as consideration of other possible satellite office locations, is postponed;
• Hiring—both for new positions and backfills—is frozen;
  
• IT projects will be scaled back;
  
• Funding for Patent Cooperation Treaty (PCT) outsourcing will be substantially reduced;
• Employee training will be reduced;
• All overtime is suspended.

In addition, business units will be required to reduce all other non-compensation-related expenses, including travel, conferences and contracts.

Trademarks is unaffected and will maintain normal operations.

I would like to thank our entire team for their continuing cooperation and patience, and for their dedication and service during this challenging time.

Patently-O and IP Watchdog have additional details.

"Equitable estoppel" as a defense to false marking? Nah

Advanced Cartridge Technologies has sued Lexmark here in Tampa for infringement of a handful of patents and false marking. Regarding the false marking allegations, ACT claims that Lexmark lists a bunch of patents on various products, and there are various issues with those patents. ACT also argues that each product is not covered by each patent, and thus it is false marking to include all of them on the packaging. Lexmark responds that it is not subject to false marking liability in part because it includes a disclaimer stating that the product is covered by one or more of the listed patents. Thus, because each product is covered by at least one of the listed patents, Lexmark argues it should not be subject to false marking liability because of its disclaimer. ACT disagrees that the disclaimer shields Lexmark.

In discovery, Lexmark learned that ACT marked a waste bin product with some toner patents. Lexmark asked for leave to file an amended answer so that it could assert the affirmative defenses of unclean hands and equitable estoppel "in light of [plaintiff's] interpretation of the false marking statute."

The Court took a paragraph to deny Lexmark's motion:

The plaintiff asserts a false patent marking claim. Alleging that the plaintiff also engages in false patent marking, the defendant moves (Doc. 105) for leave to file an amended answer asserting “the affirmative defenses of unclean hands and judicial estoppel.” However, the proposed defenses, perhaps legally and factually dubious in this instance, are untimely raised and probably productive of unwarranted delay and unnecessary expense.* The defendant's motion (Doc. 105) to file an amended answer is DENIED.

* The defense of "equitable estoppel" appears meritless in the present circumstances. The defense of "unclean hands," if available, requires a distinct showing of inequitable and pertinent conduct. Interestingly, the defendant identifies no case in which the equitable defense of "unclean hands" has barred a statutory false patent marketing claim.

Advanced Cartridge Technologies, LLC v. Lexmark International, Inc., slip op. Case No. 8:10-cv-0486 (M.D. Fla. Apr. 14, 2011) (J. Merryday)