IP Update, Vol. 10, No. 4, April 2007
April 2007
Patents / Lack of Enablement - Prosecution Victory Leads To Litigation Defeat
Patents / Claim Construction - Keeping It Close to the Vest: When Is a Preamble More than a Garment?
Patents / Prosecution - Some Mistakes Just Can’t Be Undone
Patents / Obviousness - Motivation to Combine Can Arise from Problem to Be Solved
Trademarks / Famous Marks - The Name May Be Famous Somewhere, But Not in U.S.
Trademarks / Genericness - Federal Circuit Affirms Denial of Registration for LAWYERS.COM Mark
Copyright / Infringement - In a Long-Winded Case: Particular Embodiment of Poof Doll Protected
Patents / Declaratory Judgment
The Federal Circuit Jettisons Reasonable Apprehension DJ Standard in Light of MedImmune
By Jennifer D. Olson, Astrid R. Spain and Paul Devinsky
Reacting to a footnote comment in the Supreme Court’s recent decision in MedImmune, Inc. v. Genentech, Inc., (IP Update Vol. 10, No. 1) the U.S. Court of Appeals for the Federal Circuit recently reversed two district court cases granting dismissals of declaratory judgment actions. SanDisk Corp. v. STMicroelectronics, Case No. 05-1300 (Fed. Cir., Mar. 26, 2007) (Linn, .J.) (Bryson, J. concurring) and Teva Pharmaceuticals USA Inc. v. Novartis Pharmaceuticals Corp., Case No. 06-1181 (Fed. Cir., Mar. 30, 2007) (Gajarsa, J.).
In both decisions the Federal Circuit announced it was jettisoning its traditional two-prong declaratory judgment jurisdiction test that involved a determination of whether conduct by the patentee created a reasonable apprehension on the part of the declaratory plaintiff that it will face an infringement suit, and whether conduct by the declaratory judgment plaintiff amounts to infringing activity or concrete steps taken with the intent to conduct such activity. The Federal Circuit explained that the Supreme Court, in footnote 11 of its MedImmune decision, stated that the “reasonable apprehension” test “conflicts” with and “contradicts” several of the high court’s declaratory jurisdiction decisions. Instead, the Federal Circuit adopted a “totality of the circumstances” test.
MedImmune relied on and reaffirmed the standard articulated over 60 years ago in Maryland Casualty Co. v. Pacific Coal & Oil Co., “[B]asically, the question in each case is whether the facts alleged under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Acknowledging that it could no longer analyze declaratory judgment jurisdiction cases under the “reasonable apprehension” standard, the Federal Circuit examined the district court decisions under the “all the circumstances” standard.
In the SanDisk case, SanDisk had sought a declaratory judgment of non-infringement and invalidity of 14 STMicroelectronics (ST) patents that had been discussed during cross-licensing discussions. During the licensing discussions ST sought a royalty under its patents based on specific, identified activity by SanDisk. At that time, ST made a detailed presentation that identified, on an element-by-element basis, the manner in which ST believed each SanDisk product infringed specific claims of each ST patent. In addition, for each of the 14 patents, ST gave SanDisk a packet of materials that included a copy of the patent, reverse engineering reports and diagrams depicting a detailed infringement analysis. However, ST’s representative told SanDisk that “ST has absolutely no plan whatsoever to sue SanDisk.”
The district court dismissed SanDisk’s declaratory judgment complaint, reasoning that there was no actual controversy since ST told SanDisk it “did not intend to sue SanDisk for infringement.” SanDisk appealed.
The Federal Circuit, in vacating and remanding the dismissal, considered each of the above facts and concluded that “ST has engaged in a course of conduct that shows a preparedness and willingness to enforce its patent rights despite (the) statement,” that it had no plans to sue. Under a totality of the circumstances analysis, the Federal Circuit found that the “facts evince that the conditions of creating a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment were fulfilled.” The Court was willing to look behind ST’s promise not to sue, noting that “ST has engaged in a course of conduct that shows a preparedness and willingness to enforce its patent rights.”
In his concurring opinion, Judge Bryson noted that the change wrought by the MedImmune decision heralded “a sweeping change” in the law of declaratory judgment jurisdiction in connection with patent license negotiations. The decision effectively states that if a patentee enters into licensing negotiations with a detailed infringement analysis, declaratory judgment jurisdiction is likely triggered. However, as noted by the Court (in footnote 1), this result can be mitigated by conducting license negotiations under a “suitable confidentiality agreement.”
In the Teva Pharmaceuticals case, Novartis held a New Drug Application (NDA) and listed five patents in the FDA’s Orange Book covering its drug Famvir®. Teva filed an Abbreviated New Drug Application (ANDA) with the FDA for generic famciclovir tablets and certified under Paragraph IV of 21 U.S.C. § 355 (j) (2) (A) that its drug did not infringe the Novartis patents or that the patents were invalid. Novartis brought an infringement suit against Teva for infringement of one of its five patents, directed to the active ingredient famciclovir. Teva filed a declaratory judgment action on the four remaining patents, directed to methods of therapeutic use. The district court dismissed the case for lack of jurisdiction, finding no reasonable apprehension of imminent suit as to the four patents.
The Federal Circuit reversed, based on examining the following facts: Novartis’ listing of its Famvir patents in the Orange Book; Teva’s act of infringement by submitting the ANDA and certifying that it did not infringe Novartis’ Famvir Orange Book patents or that the patents were invalid; and Novartis’ previous filing of a lawsuit on one of its five patents based on Teva’s infringements in submitting the ANDA. The Federal Circuit found that the combination of these circumstances established sufficient controversy to support declaratory judgment jurisdiction action.
Practice Note: Based on the facts analyzed by the Court in the SanDisk case, patentees entering into licensing negotiations should appreciate that if they provide the prospective licensee with a detailed infringement analysis, declaratory judgment jurisdiction is likely triggered. However, as noted by the Court (in footnote 1) this result can be mitigated by conducting license negotiations under a “suitable confidentiality agreement.” Likewise, the Teva decision suggests that generic drug companies may now be able to pursue declaratory judgment invalidity actions against patents listed in the Orange Book by submitting an ANDA, certifying the invalidity of an Orange Book listed patent, in cases in which the patent owner declines to file suit.
Patents / Declaratory Judgment
District Courts Have Broad Discretion to Hear a Declaratory Judgment Action
By Anish R. Desai
Heralding the SanDisk and Teva cases (issued shortly after Cellco), the U.S. Court of Appeals for the Federal Circuit affirmed the district court’s decision to dismiss the declaratory judgment action filed by Cellco Partnership, while at the same time concluding that the district court incorrectly held that no actual controversy existed. Cellco Partnership v. Broadcom Corp., Case No. 06-1514 (Fed. Cir., Mar. 19, 2007) (per curiam).
The appellant, Cellco, filed a declaratory judgment action in district court on patents that were the subject of a pending U.S. International Trade Commission (ITC) proceeding instituted by the appellee, Broadcom, against Qualcomm. The district court dismissed the action, holding that no actual controversy existed between the parties, despite the fact that Qualcomm manufactures chips used by Cellco, which was likely to intervene in the parallel district court case filed by Broadcom against Qualcomm, an action that was stayed pending resolution of the ITC investigation.
The Federal Circuit pointed to several factors, including the commonality of issues raised in both the ITC action and the declaratory judgment suit, in concluding that the district court erred as a matter of law in finding no actual controversy between Cellco and Broadcom. However, many of these same factors persuaded the Court to uphold the dismissal of the declaratory judgment action based on a principal reaffirmed by the Supreme Court in its MedImmune decision (see IP Update Vol. 10, No. 1), that district courts have “unique and substantial discretion” in determining whether to decide cases over which they have declaratory judgment jurisdiction. The Court thus affirmed the reasoning of the district court that, in the exercise of its decision, allowing Cellco’s declaratory judgment action to proceed would be an inappropriate use of multiple judicial districts.
Practice Note: Also see case note in this issue regarding the SanDisk and Teva cases.
Prosecution Victory Leads To Litigation Defeat
By André De La Cruz
The U.S. Court of Appeals for the Federal Circuit affirmed the district court’s grant of summary judgment in favor of defendant, holding the patent in suit invalid for lack of enablement and anticipation. Liebel-Flarsheim Co. v. Medrad, Inc., Case Nos. 06-1156, -1157 (Fed. Cir., Mar. 22, 2007) (Lourie, J.).
Liebel asserted four patents against Medrad: two were directed to “a front loading injector … for delivering a contrast agent to a patient” and two were directed to “a computer-controlled injector” for controlling a plunger in a syringe. As to the front loading injector patents, each matured from the identical specification that specifically mentioned that a “pressure jacket” was necessary to practice the claimed invention and that specifically taught away a “jacketless system” as being impractical. During prosecution, however, Liebel was informed that Medrad, a competitor, was using jacketless injectors. Liebel subsequently broadened several of its claims to read on Medrad’s injectors. In doing so, however, the court termed Liebel the “Pyrrhic victor,” in that its initial success of having broad claims issue, ultimately led to the patent being held invalid as not enabling the claimed “jacketless system.”
Medrad argued that the broadened claims were invalid under §112, ¶ 1 in that the specification did not describe “the manner and process of making and using” the invention “so as to enable any person skilled in the art to make and use it” without undue experimentation. In this case, the Court noted that in instances in which the specification teaches away from an aspect of the claimed invention, that, in and of itself, is “evidence that at least a significant amount of experimentation would have been necessary to practice the claimed invention.” In addition, the specification did not provide any support relating to the “making or using” of a jacketless system. After noting that the inventors had previously made unsuccessful attempts to produce a “jacketless system” the Court concluded that no genuine issue of material fact existed with respect to whether one of ordinary skill in the art must engage in undue experimentation to practice a jacketless system based on the teachings at hand and affirmed the district court’s finding of invalidity.
As for the two “computer-controlled injector” patents, Medrad asserted that its own patent disclosed “every limitation of the claimed invention, either explicitly or inherently,” and thus, invalidated Liebel’s patents under §102. Although the Medrad prior art had been previously disclosed to the patent examiner, the Court concluded that the prior art clearly disclosed the subject matter claimed in Liebel’s broadened patent claims. The Court noted that Liebel successfully broadened its claims during prosecution and urged a broad construction during the claim interpretation phase of the district court proceeding. As a result of this success, the Federal Circuit found the broadened claims were anticipated.
Patents / Prosecution History Estoppel
The End May Be Near for the Tangential Relationship Exception to DOE Estoppel Presumption
By Matthew G. Cunningham
Reaffirming the narrow application of the tangential relationship exception to the Festo presumption of prosecution history estoppel, the U.S. Court of Appeals for the Federal Circuit reversed a finding of infringement under the doctrine of equivalents. Cross Medical Products, Inc. v. Medtronic Sofamor Danek, Inc., Case No. 05-1415 (Fed. Cir., Mar. 20, 2007) (per curiam) (Rader, J., concurring).
In an earlier decision in this litigation, the district court ruled that Medtronic’s polyaxial screws literally infringed Cross Medical’s U.S. Patent No. 5,474,555 (the ’555 patent). Medtronic then redesigned its polyaxial screws to avoid the claimed “thread depth” recitation that required threads extending below the top of the claimed rod. Medtronic replaced the corresponding threads with an undercut.
Cross Medical subsequently accused Medtronic’s redesigned products of infringement under the doctrine of equivalents. Medtronic argued that under principles of prosecution history estoppel, Cross Medical should be precluded from so doing. Prosecution history estoppel prevents a patentee from recapturing under the doctrine of equivalents subject matter surrendered during prosecution to obtain a patent. During the prosecution of the ’555 patent, the patentee responded to a rejection under § 112 by amending its claim 5 to include the “thread depth” requirement, thereby gaining allowance of the application.
Under Festo, this narrowing amendment creates a presumption of prosecution history estoppel which can be rebutted, inter alia, by demonstrating (as Cross Medical argued here) that the alleged equivalent was unforeseeable at the time of the amendment or that the alleged equivalent was only tangentially related to the amendment. The district court found that under the tangential relationship test, the presumption of prosecution history estoppel was successfully rebutted and determined that the redesigned products infringed under the doctrine of equivalents. Medtronic appealed.
The Federal Circuit began its analysis by reaffirming “the principle that the tangential relation criterion for overcoming the Festo presumption is very narrow” and “an amendment made to avoid the prior art that contains the equivalent in question is not tangential.” The Court concluded that the narrowing amendment excludes the accused equivalent that does not include the recited “thread depth” limitation added by amendment. On that basis the Court held the design-around was not captured under the doctrine of equivalents (as the equivalent required to do so related directly to the amendment) and ruled that Cross Medical could not overcome the Festo estoppel presumption and invoke the doctrine of equivalents.
In a concurring opinion, Judge Rader called into question whether the tangential relationship exception will ever be used successfully again. Rader expressed his view that the tangential exception “exacerbate[s] the policy deficiencies of the doctrine of equivalents” since “[u]pon invoking tangentiality, the patentee has already admitted that the equivalent falls within the scope of surrendered subject matter.”
In Judge Rader’s view, the tangential relationship exception undermines the public notice of claims. He cited Medtronic’s deliberate design-around as an example. Even though Medtronic considered the prosecution history of the ’555 patent in connection with its redesign, the prosecution history will not (itself) address a “tangential” equivalent as a patentee will ordinarily attempt to explain any narrowing amendment in such a way as to narrow the tangential relationship exception and thereby attempt to preserve the broadest possible scope of equivalents. In Judge Rader’s view, if, in review of the prosecution history, the public reasonably believes that the subject matter that was surrendered during prosecution is part of the public domain, the tangential relationship exception to the estoppel presumption should not apply.
Practice Note: The Federal Circuit reiterated that U.S. law encourages design-arounds, as they bring a steady flow of innovations to the marketplace. Cross Medical illustrates the benefits and utility of a properly calculated redesign effort. Judge Rader’s views echo the original Federal Circuit Festo “brightline” rule and put new pressure on parties attempting to invoke the doctrine of equivalents.
Keeping It Close to the Vest: When Is a Preamble More than a Garment?
By Nathaniel McQueen
Addressing the issue of whether a term in a preamble may be a material limitation to a claim, the U.S. Court of Appeals for the Federal Circuit vacated a contempt order that was issued for violation of a settlement agreement because, based on a preamble limitation, the device in question could not be reasonably found to literally infringe the subject patent. Bass Pro Trademarks, LLC v. Cabela’s, Inc., Case No. 06-1276 (Fed. Cir., Apr. 6, 2007) (Newman, J.).
In a prior patent infringement suit, Bass Pro obtained a favorable settlement agreement from Cabela’s in which Cabela’s admitted infringement of Bass Pro’s combination vest and pivotable seat member claimed in U.S. Patent. No. 5,620,227 (the ’227 patent). In the consent judgment, Cabela’s agreed to be permanently enjoined from the unauthorized making, using, selling or inducing others to use the inventions claimed in the ’227 patent. Two years later, Cabela’s began selling an “EZ Chair Combo,” a folding seat held by back-pack type straps and having a fabric panel at the wearer’s back. Bass Pro alleged that the fabric panel constituted a “garment that integrated a rigid seat into it” and moved the district court to find Cabela’s in contempt for violation of the consent judgment. The district court granted the contempt motion, noting that Bass Pro “claims are not limited to a traditional vest” as described in the specification, but only required a vest comprising a dorsal member and shoulder support means. Furthermore, because the term “vest” appeared only in the claim preamble, the district court found that term “vest” was not a substantive claim limitation.
Cabela’s appealed, arguing that during the prosecution of the ’227 patent, Bass Pro amended the preamble to recite a “vest,” rather than a “garment” as originally claimed and argued that the invention was distinguished over the prior art because it was a unique combination of a vest and pivotable seat, in contrast to a garment that only covered the user’s back. Accordingly, Cabela’s argued that since Bass Pro had to rely on the term “vest” to procure its patent, the district court erred in holding that “vest” was not a substantial claim limitation. The Federal Court agreed, held the recited “vest” was a “material” element of the claim and vacated the contempt order, along with the accompanying sanctions.
Practice Note: When prosecuting patents, it is generally wise to attempt to maintain the broadest claim scope possible when amending claims and presenting arguments to overcome prior art references. Prosecution history can provide valuable ammunition for limiting the scope of a patent.
Some Mistakes Just Can’t Be Undone
By Jane Bu
The U.S. Court of Appeals for the Federal Circuit reversed the district court’s finding of infringement of claims “corrected” by certificate of correction (COC), while permitting plaintiffs to pursue infringement allegations under the original, uncorrected claims, holding the COC was invalid. Central Admixture Pharmacy Services Inc. et al. v. Advanced Cardiac Solutions PC et al., Case No. 06-1307 (Fed. Cir., Apr. 3, 2007) (Gajarsa, J.).
Prior to initiating the lawsuit, Central filed a request under 35 U.S.C. § 255 for a COC to replace all occurrences in the patent of the word “osmolarity” with “osmolality.” Both of these words measure the concentration of a solution. The U.S. Patent and Trademark Office (USPTO) issued the certification after the complaint was filed. Based on the claims (as amended by the COC) the district court (on summary judgment) found Advanced Cardiac Solutions PC (ACS) liable for willful infringement. ACS appealed.
The Federal Circuit began its analysis by noting that in order to invalidate a COC, the challenger must prove under a clear and convincing standard both that the corrected claims are broader than the original claims (a question of law) and that the presence of the clerical or typographical error is not clearly evident to one of skill in the art (a question of fact). The Court further noted that if “an error makes its own correction known to one of skill in the art, those errors do not raise serious public notice problems.” In the contrast, if the mistake resulted “in another word that is spelled correctly and reads logically in the context of the sentence,” then the error cannot be remedied by using a COC. Doing so will only result in broadening the patent claims.
In this case, the substitution of the corrected unit “osmolality” led to a slight deduction of concentration of the patented solution by 1 or 2 percent. Despite the mistake, the recited unit (osmolarity) still measures the appropriate property of the patented solution and the claimed range remains effective for the stated purpose in the specification. However slight the change of concentration was, there is a possibility for defendants’ accused solution concentration to fall outside of the original, “uncorrected” claims but within the “corrected,” broader claim. Thus, by mistakenly using the word “osmolarity,” Central made precisely the latter type of mistake that is incurable by a COC. As the Federal Circuit explained, to one of skill in the art, the concentration represents by osmolarity “is not a manifestly erroneous one.”
Practice Note: In the process of prosecuting patents, the patentee should be very careful to choose clear and precise technical units or terms in the patent claims.
Attempt to Cure Non-Disclosure to the USPTO Renders Patent Unenforceable
By John A. Lee
The U.S. Court of Appeals for the Federal Circuit affirmed a trial court’s ruling that a patentee’s attempt, during the prosecution of a later patent application to cure its initial failure to disclose material art during an earlier patent application, constituted inequitable conduct. eSpeed, Inc. v. BrokerTec USA, L.L.C., Case No. 06-1385 (Fed. Cir., Mar. 20, 2007) (Moore, J.).
Patentee (Cantor Fitzgerald, assignor to eSpeed) developed an automated system to record financial trade transactions. The automated system was the successor to a system that used an “outcry” method, in which voice brokers expressed the bids and offers and designated clerks recorded the transaction. Under the “outcry” method, the ability to accurately capture the transactions depended upon the recording clerk’s ability to interpret what occurred on the trading floor. The patentee also developed “new rules” which eliminated the ability under the “old rules” for a few traders to tie up the market for long periods of time.
Prior to 1995, the patentee developed its CFTS 2.0 system, providing a platform to support both the automated trading and the “outcry” method. In 1995, patentee launched its CFTS 3.1 system, a commercially viable automatic trading system capable of using either the old or the new rules.
In 1998, the patentee filed a patent application claiming an automated system to record the trade transactions. However, during the prosecution of the applications, patentee failed to disclose either of the CFTS 2.0/3.1 systems to the U.S. Patent and Trademark Office (USPTO). After the patent issued, the patentee sued Liberty Brokerage. However, on realizing it had not disclosed the CFTS 2.0/3.1 systems to the USPTO, the patentee dismissed the suit.
After dismissing the suit against Liberty Brokerage, eSpeed filed new inventors’ declarations with the USPTO, in a later-filed patent application claiming priority to the earlier-filed patent application. In these declarations, eSpeed disclosed the CFTS 2.0/3.1 systems to the USPTO, attaching a group of documents from Cantor describing the systems. The inventors also declared that they did not realize they had a duty to disclose the systems in the earlier patent application. They also averred that CFTS 3.1 system did not include the new rules.
The patent examiner apparently did not consider the internal Cantor documents to be prior art publications and allowed the application to mature into a new patent. eSpeed sued BrokerTec for infringing the later patent. A jury found that BrokerTec infringed the patent but also invalidated the patent. The trial court also ruled that the later patent was unenforceable. It concluded that CFTS 2.0/3.1 system was material and should have been disclosed to the USPTO and that the statement made to the USPTO indicating that the CFTS 3.1 system did not include the “new rules” was false. The trial court also concluded that the patentee intended to deceive the USPTO when they claimed that the CFTS 3.1 system did not include “new rules.” eSpeed appealed.
The Federal Circuit affirmed, finding the false statement about the “new rules” to be material, especially in view of the disclosure failure in the earlier application. As for intent, the Court affirmed the district court finding that false statement about the “new rules” intentionally obscured the teaching of the Cantor documents provided to the USPTO.
Practice Note: Attempting to cure an earlier mistake (non-disclosure of material information in an earlier patent application) in a later application with false (or less than full) information may only compound the problem.
Motivation to Combine Can Arise from Problem to Be Solved
By Astrid R. Spain
Finding a new salt form of a composition obvious in view of the prior art, the U.S. Court of Appeals for the Federal Circuit held that a motivation to combine references can be gleaned not only from the prior art as a whole, but also from the nature of the problem to be solved. Pfizer Inc. v. Apotex, Inc., Case No. 06-1261 (Fed. Cir., Mar. 22, 2007,) (Michel, C.J.).
Pfizer owns U.S. Patent No. 4,879,303 (the ’303 patent), which relates to amlodipine besylate, marketed as Norvasc® for treatment of hypertension and angina. Pfizer was previously awarded U.S. Patent No. 4,572,909 (the ’909 patent), which claims certain dihydropyridine compounds and their pharmaceutically acceptable acid addition salts. The ’909 patent discloses 10 pharmaceutically acceptable acid addition salts of amlodipine and describes maleate as the preferred salt. Pfizer scientists subsequently encountered two problems with the amlodipine maleate tablet formulation: chemical instability and stickiness. After testing seven other acid addition salts of amlodipine, Pfizer settled on amlodipine besylate and filed a further U.S. patent application that matured into the ’303 patent. During prosecution, the examiner initially rejected the claims as obvious over the ’909 patent in view of secondary references, including a scientific journal article. Pfizer overcame the rejection by filing a Rule 1.132 Declaration from one of its scientists stating that “each salt imparts unique properties to the parent compound,” and therefore, “the besylate salt of amlodipine is a unique compound and not an obvious one.”
Apotex filed an Abbreviated New Drug Application (ANDA) with the FDA for generic amlodipine besylate tablets and Pfizer filed suit. Following a bench trial, the district court determined, inter alia, that Apotex failed to meet its burden of proving invalidity.
On appeal, in support of the district court decision, Pfizer argued that the earlier ’909 patent does not suggest or motivate the skilled artisan to make amlodipine besylate because none of the anions listed in the ’909 patent have a cyclic structure like besylate. Pfizer also argued that even if the ’909 patent were combined with the cited scientific journal article, the skilled artisan would not have been motivated to make amlodipine besylate because the publication shows that besylate was a very rarely used anion in the pharmaceutical industry. Echoing the string of obviousness decisions preceding oral argument in the (still pending) KSR v. Teleflex Supreme Court appeal, (See IP Update, Vol. 9, No. 12) the Court rejected this argument, stating that “a suggestion, teaching, or motivation to combine the relevant prior art teachings to achieve the claimed invention does not have to be found explicitly in the prior art references sought to be combined,” but rather “may be found in any number of sources, including common knowledge, the prior art as a whole, or the nature of the problem itself.” The fact that some of the prior art references relied upon by Apotex disclosed besylate salts in pharmaceuticals unrelated to amlodipine was considered irrelevant because disclosed characteristics such as enhanced stability and solubility are universally useful. The Court noted that “obviousness cannot be avoided simply by a showing of some degree of unpredictability in the art so long as there was a reasonable probability of success,” and pointed to Pfizer’s supplemental FDA filing, which indicated that the besylate salt of amlodipine would work for its intended purpose. The Court also rejected Pfizer’s assertion that amlodipine besylate would have been, at most, obvious to try, noting that only one parameter needed to be varied via routine testing and that the prior art taught a specific approach to the problem rather than only a “general approach that seemed to be a promising field of experimentation.” The Court further rejected the district court’s finding of unexpected results because the record showed no evidence of what it was the skilled artisan would have found to expected. Summarizing its findings, the Court concluded that “[a]t most, then, Pfizer engaged in routine, verification testing to optimize selection of one of several known and clearly suggested pharmaceutically acceptable salts to ease its commercial manufacturing and marketing of the tablet form of the therapeutic amlodipine. ”
District Court’s Discretionary Orders Cannot Be Challenged through Interlocutory Appeal
By Michelle Cai, Ph.D.
The U.S. Court of Appeals for the Federal Circuit denied a petition for a writ of mandamus to direct the district court to issue a protective order conditionally staying the depositions of petitioners’ CEOs. In re Advanced Micro Devices, Inc., Case No. 07-M847 (Fed. Cir., Mar. 27, 2007) (Prost, J.) (non-precedential).
In a patent infringement suit filed against AMD and others, Tessera sought deposition of AMD’s three CEOs. AMD moved for a protective order on the ground that its CEOs did not have any unique knowledge pertaining to the matter that could not be discovered by less intrusive methods of discovery. A special master denied the motion, and the district court later denied AMD’s objection to the special master’s order. AMD petitioned for a writ of mandamus for an interlocutory review of the district court’s order.
The Federal Circuit denied AMD’s petition. The Court stated that, under precedent of the U.S. Supreme Court, a party seeking a writ of mandamus must bear the burden of proving that it has no other means to attain the desired relief and that its right to issuance of the writ is “clear and indisputable.” As the appeal involved a procedural issue not unique to patent law, the Federal Circuit applied the law of the regional circuit in this instance(the Ninth Circuit), which reviews the decision whether to grant a motion for a protective order under the “abuse of discretion” standard.
Quoting the Supreme Court’s Allied Chem. decision, the Federal Circuit held that, “[w]here a matter is committed to [the trial court’s] discretion, it cannot be said that a litigant’s right to a particular result is ‘clear and indisputable.’” The Federal Circuit thus reasoned that because AMD’s petition challenges the district court’s exercise of discretion, AMD could not show that its right to issuance of the writ is clear and indisputable.
Practice Note: In Allied Chem. the Supreme Court suggested in dicta that it might be “appropriate in certain circumstances to use mandamus to review a discretionary order by a trial court.”
While non-precedential, this Federal Circuit decision serves as a sobering reminder of the district court’s discretionary power during the discovery process. The Federal Circuit is not likely to intervene in discovery disputes, even for the most intrusive discovery requests or discovery obviously designed to harass.
Patents / Patent Term Extension
Terminally Disclaimed Patent Eligible for Hatch-Waxman Patent Term Extension
By Astrid R. Spain
In a decision that evoked a collective sigh of relief from brand drug makers, the U.S. Court of Appeals for the Federal Circuit held that a patent term extension under 35 U.S.C. §156 may be applied to a patent that is subject to a terminal disclaimer under 35 U.S.C §253. Merck & Co. v. Hi-Tech Pharmacal Co., Case No. 06-1401 (Fed. Cir., Mar. 29, 2007) (Linn, J.).
Merck owns U.S. Patent No. 4,797,413, covering dorzolamide, the active ingredient in TRUSOPT®, a drug used to treat glaucoma. The ’413 patent issued from a continuation-in-part application that claims priority from Merck’s U.S. Patent No. 4,677,115. During prosecution of the ’413 patent, the patent examiner rejected the claims for “obviousness-type double patenting,” explaining that the claims were not patentably distinct from those of the earlier issued ’115 patent. To overcome the rejection, Merck filed a terminal disclaimer, disclaiming the terminal part of any patent beyond June 30, 2004.
The FDA approved Merck’s New Drug Application (NDA) for TRUSOPT® in 1994, after several years of FDA regulatory review. Due to the lengthy review process, the FDA granted Merck a patent term extension under § 156, thereby extending the term of the ’413 patent to April 28, 2008. Section 156 was enacted as part of the Hatch-Waxman Act and allows NDA holders to choose one patent for patent term extension per approved drug. After Hi-Tech filed Abbreviated New Drug Applications (ANDAs) for generic versions, Merck sued Hi-Tech for infringement of the ’413 patent. As its only defense, Hi-Tech asserted that the patent term extension on the ’413 patent was invalid due to the Merck’s voluntary terminal disclaimer. The district court was not impressed and entered final judgment on the pleadings in Merck’s favor and enjoined Hi-Tech from selling generic dorzolamide products until expiration of the ’413 patent. Hi-Tech appealed.
On appeal, the Federal Circuit noted that “the language of Section 156 is unambiguous and fulfills a purpose unrelated to and not in conflict with that of Section 253.” The Court pointed out that § 156 enumerates specific conditions under which a patent term “shall be extended,” none of which concerns terminal disclaimers. The Court further noted consistency between the legislative history and the mandatory language of §156. The Court also contrasted §156 to §154, which excludes patents in which a terminal disclaimer has been filed from the benefit of a term adjustment for U.S. Patent and Trademark Office (USPTO) delays, noting that §156 contains no such exclusionary language. Finally, the Court explained that § 156 and § 253 are compatible. The purpose of the terminal disclaimer remains fulfilled by virtue of the fact that the date from which any Hatch-Waxman extension is computed is the terminally disclaimed date. At the same time, the purpose of the patent term extension, which is restoration of some of the patent term lost due to regulatory review, also is satisfied.
The Name May Be Famous Somewhere, But Not in U.S.
By Tiffini D. Smith
Addressing the issue of whether the famous marks exception to the territoriality principle of trademark protection exists under federal law, the U.S. Court of Appeals for the Second Circuit affirmed the grant of summary judgment in favor of defendants, holding that the plaintiff, the proprietor of an arguable famous mark overseas, could not pursue a trademark infringement claim after it abandoned its trademark in the United States. ITC Ltd. v. Punchgini, Inc., Case No. 05-0933 (2nd Cir., Mar. 28, 2007) (Raggi, J.).
ITC is an Indian corporation that owns and operates, through its subsidiaries, Indian restaurants named “Bukhara.” ITC opened two U.S. “Bukhara” restaurants, one in New York and one in Chicago. Shortly after opening the New York restaurant, ITC filed for and obtained a federal trademark application for “Bukhara.” Several years later, ITC closed its New York restaurant and some time later its Chicago restaurant. On the closing of the Chicago restaurant, ITC ceased using the “Bukhara” trademark. Two years later, Punchgini opened a restaurant in New York under the name “Bukhara Grill.” Sometime later, ITC filed suit in federal court alleging trademark infringement, federal unfair competition, state unfair competition and false advertising. Defendants countered that ITC effectively abandoned its rights in the “Bukhara” trademark by failure to use the mark in the United States.
The district court agreed with the defendant, finding that ITC abandoned its rights in the “Bukhara” mark as it ceased continuously using the mark in the United States for more than three years. The abandonment doctrine derives from the principle that trademark rights are acquired and maintained through continuous use of the mark. Once a trademark owner ceases use of the mark without the foreseeable intent to resume use, the mark is deemed abandoned and the mark returns to the public domain. ITC appealed.
The Second Circuit affirmed, finding that ITC failed to show intent to resume use. Accordingly, ITC’s trademark registration for “Bukhara” was canceled.
ITC also asserted a claim of unfair competition under § 43 (a) (1) (A) of the Lanham Act. To succeed on a claim of unfair competition, a plaintiff must show three things: that plaintiff had priority rights in the mark at the time of the defendant’s challenged actions, that the mark is distinctive as to the source of goods and/or services and that there is a likelihood of confusion between plaintiff’s goods and/or services and that of the defendant. As ITC abandoned the “Bukhara” mark in the United States, in order to prove that it had superior rights in the mark at the time of defendants’ allegedly infringing use, ITC asserted that its “Bukhara” mark had acquired famous status outside of the United States and, as a result, the mark was renowned in the United States prior to defendants’ use.
The Territoriality Principle recognizes that “ownership of a mark in one country does not automatically confer upon the owner the exclusive right to use that mark in another country.” However, there is a well-established U.S. common law exception for famous marks, wherein a mark is deemed famous abroad and is therefore afforded the protections of U.S. laws. However, as acknowledged by the Second Circuit, district courts have varied interpretations of the applicability of the famous mark exception in federal law. Some district court decisions have held that rights obtained by the operation of the famous mark exception at common law could be asserted in a federal unfair competition action, while other decisions have held the famous marks doctrine has no place in federal law where Congress has enacted a statute, i.e., the Lanham Act.
In resolving the conflict, the Second Circuit held that ITC could not bring a federal claim for unfair competition as Congress had not incorporated the substantive protections of the famous marks doctrine into the Lanham Act. However, the Court left open the applicability of the famous mark doctrine to a state claim of unfair competition.
Practice Note: Unless this case is accepted for appeal by the Supreme Court (or legislatively reversed), it would seem that trademarks, regardless of their fame abroad, will no longer be afforded famous mark protection under U.S. federal unfair competition law in the Second Circuit.
Federal Circuit Affirms Denial of Registration for LAWYERS.COM Mark
By Natalie A. Ward
Citing principles of genericness, the U.S. Court of Appeals for the Federal Circuit affirmed the USPTO’s refusal to register LAWYERS.COM mark for an online database featuring information about lawyers, the law, and legal news. In re Reed Elsevier Properties Inc., Case No. 06-1309 (Fed. Cir., Apr. 12, 2007) (Mayer, J.).
Reed Elsevier (Elsevier) operates a lawyer database and legal information website at www.lawyers.com. In 1998, Elsevier submitted a trademark application for the mark “LAWYERS.COM.” The corresponding services included “[p]roviding access to an online database featuring information exchange in the fields of law, lawyers, legal news and legal services.” The examining attorney refused registration based on genericness. Elsevier then omitted “lawyers” from the description of services and attempted to register the mark on the Supplemental Register. Again, the examining attorney denied registration.
On appeal, the Trademark Trial and Appeal Board (the Board) affirmed the examining attorney’s refusal, finding information about and from lawyers to be a “central and inextricably intertwined element” of the website’s features. Furthermore, the Board concluded that the relevant public, which included lawyers and laypersons seeking lawyers and legal information, would readily conclude that the mark described a website featuring such legal information.
Elsevier appealed, arguing that the revised description of goods was “discrete” from the omitted services (i.e., “information exchange concerning lawyers”). However, the Court disagreed, emphasizing that lawyers are integral to and often the focus of the legal news and services provided. With respect to the relevant public’s understanding, the Court highlighted the Board’s review of eight websites that incorporated “lawyer” or “lawyers” in their domain names and the corresponding legal content of same.
Internet Service Provider Was Reasonable, If Not a “Perfect 10,” in Reasonably Implementing a Repeat Infringer Policy
By Christine Pepe
The U.S. Court of Appeals for the Ninth Circuit affirmed in part and reversed in part the district court’s rulings relating to whether defendants qualified for statutory safe harbors from copyright infringement liability under the Digital Millennium Copyright Act (DMCA). Perfect 10, Inc. v. CCBill, LLC, CWIE LLC and Netpass Systems, Inc., Case Nos. 04-57143, 57207 (9th Cir., Mar. 29, 2007) (Smith, J.).
Perfect 10, the publisher of an adult entertainment magazine and the owner of the subscription website perfect10.com, alleged that defendants violated their copyrights by providing services to websites that posted images stolen from Perfect 10’s magazine and website. Defendants provide web hosting and related Internet connectivity services to various website owners. The district court held that defendants were immune from copyright infringement liability under the DMCA safe harbor provisions.
To be eligible for any of the four safe harbors under 17 U.S.C. § 512(a) through (d), a service provider must first meet the threshold condition that it has adopted and reasonably implemented a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers. In ruling for the defendants, the district court held that a service provider “implements” a policy if it has a working notification system, a procedure for dealing with DMCA-compliant notifications, and if it does not actively prevent copyright owners from collecting information needed to issue such notifications. An implementation is reasonable, the district court held, if under appropriate circumstances, the service provider terminates users who repeatedly or blatantly infringe copyrights.
On appeal, Perfect 10 argued that there was a genuine issue of fact as to whether defendants prevented implementation of their policies by failing to keep track of repeatedly infringing webmasters. The only evidence offered by Perfect 10 was a single page from defendants’ DMCA log, which showed some empty fields in the column labeled “Webmasters [sic] Name.” The Ninth Circuit rejected Perfect 10’s argument, finding that defendants routinely recorded most of the e-mail addresses and/or names of the webmasters in their DMCA log.
Perfect 10 also argued that defendants unreasonably implemented their repeat infringer policy by tolerating flagrant copyright infringement by its users despite notice of infringement from Perfect 10. The Court held that a service provider need not affirmatively police its users for evidence of repeat infringement and is not liable if it does not know of the infringement. A service provider is also not liable if it acts expeditiously to remove or disable access to the material after it has received notification of claimed infringement meeting the requirements of § 512 (c) (3). The Court affirmed the district court’s finding that Perfect 10 failed to provide notice that substantially complied with the requirements of the statute its “notices” did not contain a good-faith statement under penalty of perjury that the use constituted infringement. The Court further held that to comply with the statute, a notice must be a single written communication. The statute does not permit the copyright holder to post hoc cobble together an allegation of notice compliance from a series of separately defective notices.
Finally, Perfect 10 argued that defendants were aware of a number of “red flags” for infringement. Under the so-called “red flag” test, a service provider loses immunity by failing to take action when it is aware of facts or circumstances from which infringing activity is apparent. Specifically, Perfect 10 argued that the password hacking website hosted by defendants obviously infringes or contributes to infringement. The Court concluded that there was no way for a service provider to conclude that the passwords enabled infringement without trying the passwords and verifying that they enabled illegal access to copyrighted material. The Court declined to shift this burden from the copyright owner to the service provider. The Court did, however, remand for a determination of whether there were “red flags” raised by third parties that identified to defendants repeat infringers who were not terminated.
In a Long-Winded Case: Particular Embodiment of Poof Doll Protected
By Irina R. Kushner
In affirming a grant of partial summary judgment on the issue of liability for copyright infringement, the U.S. Court of Appeals for the Seventh Circuit found the particular embodiment of “Pull My Finger® Fred,” a farting plush doll, protected by copyright and thus, infringed by defendant’s copying of plaintiff’s protected work. JCW Investments, Inc. v. Novelty, Inc., Case No. 05-2498 (7th Cir., Mar. 20, 2007) (Wood, J.).
The plaintiff, doing business as Tekky Toys, designs and sells a line of “farting dolls.” “Pull My Finger® Fred” was its first such doll. The creators applied for and received a copyright registration on Fred, which they subsequently assigned to Tekky. The defendant, Novelty, manufactures and sells a similar product entitled “Fartman.” As described by Judge Wood, “Fartman could be Fred’s twin.” Tekky first learned of Fartman in March 2002, and it filed suit three months later, alleging copyright infringement, Lanham Act trademark infringement (for use of the phrase “Pull My Finger”) and Illinois unfair competition. Tekky won on all claims, after finding Novelty liable for willful trademark infringement the district court awarded Tekky $50,000 in punitive damages. Novelty appealed.
Novelty argued that the district court’s protection of Tekky’s doll extended beyond the expression to the common elements knows as scenes a faire. Novelty also challenged the district court’s finding that it had access to Fred, that defendant’s toy was copied from Fartman (rather than independently created) and that the two toys were “substantially similar.” The Seventh Circuit was not persuaded.
To prove copyright infringement, one must establish two elements: ownership of a valid copyright and copying of constituent elements of the work that are original. Although copying may be proven by direct evidence, it may also be inferred “where the defendant had access to the copyrighted work and the accused work is substantially similar.” Here, Tekky had a valid copyright in Fred, a fact that raised presumptions of ownership and validity which Novelty never challenged. Although Novelty’s president admitted to having access to Fred, Tekky still had to show substantial similarity. The Seventh Circuit concluded that “no objective person would find these dolls to be more than minimally distinguishable.” In rejecting Novelty’s claim that it was merely copying ideas, the Court stated that “[i]t is not the idea of a farting, crude man that is protected, but this particular embodiment of that concept. Novelty could have created another plush doll of a middle-aged farting man that would seem nothing like Fred.”
On Tekky’s claim that it should receive punitive damages based on its state unfair competition claim, Novelty argued that the Lanham Act preempts the award of punitive damages under Illinois state law. The Court affirmed the district court, reasoning that had Congress intended the Lanham Act to displace state punitive damage remedies, it would have “acted more clearly.”
