June 6, 2013

Southern District of Indiana Dismisses Declaratory Judgment Suit

Indianapolis, Ind. -- The Southern District of Indiana has dismissed a declaratory judgment suit filed by ZPS America, LLC of Marion County, Ind. ("ZPS") holding that it was an ZPSLogo.JPGimpermissible attempt to secure its preferred forum in anticipation of litigation that Hammond Enterprises, Inc. of Pittsburg, Calif. ("Hammond") had promised to initiate imminently. 

ZPS manufactures the Mori-Say TMZ 642 CNC machine ("TMZ machine"), a high-precision lathe that can be configured to manufacture various precision parts.  In early 2009, after discussing its requirements, Hammond purchased two TMZ machines from ZPS.  Accounts vary regarding whether the TMZ machines ever performed as had been promised.  Attempts were made by the parties and their attorneys to resolve the issues with the machines but settlement discussions broke down in June 2012.  

HammondEnterprisesLogo.JPGOn June 4, 2012, Hammond's lawyer sent ZPS a letter stating that the machines had been misrepresented and that Hammond was only interested in "hearing back from you...that ZPS is prepared to make arrangements to accept the return of both machines.  If we do not hear from you by Friday, June 15 [2012], that you are prepared to accept their return, we have been authorized to file a lawsuit against ZPS and will proceed to do so." 

On June 14, 2012, one day before the deadline in Hammond's letter, ZPS filed suit against Hammond in Marion Circuit Court, an Indiana state court.  Its complaint was for damages and declaratory judgment.  It asked that the court declare that Hammond had accepted the machines and was not entitled to revoke that acceptance; its damages claim arose from nonpayment by Hammond of amounts due for filter systems that had been purchased for the TMZ machines.  Notice of that suit was served on June 26, 2012. 

On July 10, 2012, Hammond filed a lawsuit against ZPS in the Northern District of California, seeking damages based on claims for negligent misrepresentation, revocation of acceptance, breach of contract, breach of express warranty, and breach of implied warranty.  On July 12, 2012, Hammond served ZPS with a summons and complaint.  On that same day, Hammond removed the action filed by ZPS in state court to the Southern District of Indiana, asserting diversity jurisdiction. 

Hammond argued to the Indiana federal court that it should exercise its discretion to dismiss the complaint on the grounds that ZPS "raced to the courthouse" to deprive Hammond, the "natural plaintiff," of the forum of its choosing. 

The Indiana federal court held that ZPS' declaratory judgment action was impermissible, as it had been filed in anticipation of litigation, beating Hammond to the courthouse by filing the day before the deadline to settle that had been set by Hammond.  The court further held that the additional state-law claim for breach of contract that ZPS had asserted did not secure a place for it in the Indiana court. 

The court cited three reasons for its decision: (1) the fact that a plaintiff filed a declaratory judgment action first does not give it a right to choose the forum; (2) the plaintiff's additional claims for affirmative or coercive relief may be filed as counterclaims in the second-filed action; and (3) the plaintiff should not be rewarded for filing a declaratory judgment action as a pre-emptive strike.  The court declined to exercise jurisdiction over the matter and dismissed the case without prejudice.  

Practice Tip 

Declaratory judgment actions are frequently filed in intellectual-property matters, especially patent litigation.  Such a suit allows the potential defendant not only to choose its own forum, to the extent that the forum is consistent with jurisdictional restrictions, but also to remove an ever-present cloud of potential litigation and potential damages for patent infringement that may be continuing to accrue. 

The Declaratory Judgment Act provides that "any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought."  A federal district court may, in its discretion, decline to hear a case brought under the Act, even if the court has subject matter jurisdiction. 

In general, if two actions are pending in two different courts that concern the same general claims, the case filed first takes priority.  However, the Seventh Circuit has never adhered to a rigid first-to-file rule.  In addition, courts generally give priority to the coercive action (such as an action for damages or an injunction) over the declaratory judgment action, regardless of which case was filed first. 

Courts also depart from the first-to-file rule if, as was true in this case, the declaratory judgment action is filed in anticipation of litigation by the other party.  Here, rather than responding to Hammond regarding its letter, which contained a plain declaration of intent to file suit with a deadline for a response, ZPS filed suit.  Only after securing a favorable forum did ZPS offer to negotiate a settlement.  It was this conduct that the court held justified a dismissal of the declaratory judgment action as an improper anticipatory filing.

Continue reading "Southern District of Indiana Dismisses Declaratory Judgment Suit" »

June 4, 2013

169 Trademark Registrations Issued to Indiana Companies in May, 2013

The US Trademark Office issued the following  trademark registrations to persons and businesses in Indiana in May, 2013, based on applications filed by Indiana Trademark Attorneys:

Reg. Number Mark Click to View
1 4332704 IRIS View
2 4342755 INTERACTION MOBILIZER View
3 4344545 IDREADER View
4 4342700 JOIN THE ASSASSIN NATION View
5 4342671 RALSTON'S DRAFTHOUSE View
6 4342670 View
7 4342628 WHERE DATA MEETS DESIGN View
8 4342547 View
9 4342402 AIR DRIVE View
10 4342246 ROCKREVOLT View

Continue reading "169 Trademark Registrations Issued to Indiana Companies in May, 2013" »

June 3, 2013

Patent Office Issues 121 Patents To Indiana Citizens in May, 2013

The US Patent Office issued the following 121 patent registrations to persons and businesses in Indiana in May, 2013, based on applications filed by Indiana Patent Attorneys:

 

PAT. NO.

Title

1

D683,434

Faucet body

2

D683,432

Faucet

3

D683,431

Faucet

4

D683,430

Faucet

5

D683,429

Faucet cover

6

D683,428

Faucet

7

D683,350

Necklace web key

8

8,452,953

Insulin pump programming software for selectively modifying configuration data

9

8,452,570

Systems and apparatuses for testing blood glucose measurement engines

10

8,452,545

Method and system for determining the difference between pre-prandial and post-prandial blood glucose values

Continue reading "Patent Office Issues 121 Patents To Indiana Citizens in May, 2013" »

May 29, 2013

Dan's Comp Sues Ian Smith for Trademark Infringement in Facebook Advertisement

Evansville, Ind. -- Trademark lawyers for XP Innovation, LLC d/b/a Dan's Comp ("Dan's Comp") of Mt. Vernon, Ind. sued Ian Smith ("Smith") of Massillon, Ohio alleging that he infringed various trademarks owned by Dan's Comp, Registration Nos. 2,176,911, 2,176,580, 2,607,447, 3,853,112, 3,940,083, 3,957,948, 4,074,705 and 4,101,708, which have been registered with the U.S. Trademark Office.

Dan's Comp owns and operates one of the world's largest BMX bicycle stores.  It also DansComLogo.JPGowns related trademarks registered in connection with sales of bicycles and bicycle-related goods.  These marks include "Dan's," "Dan's Competition," "Dan's BMX" and "high speed mail order."  Dan's Comp also owns trademarks to "Dan's Comp" with a lightning-bolt graphic and to the same lightning-bolt graphic and a similar lightning-bolt graphic as separate marks.

In its complaint, Dan's Comp alleged that it uses its marks in connection with bicycles and bicycle-related goods and services in all fifty states, the District of Columbia, and throughout the world.  It further claimed that it spends tens of thousands of dollars each year to advertise and promote the Dan's Comp marks and the associated goods and services in the United States and throughout the world.  It asserts that, as a result of its use of the Dan's Comp marks, the marks have developed significant goodwill in the market.

This lawsuit pertains to an advertisement that Dan's Comp claims that Smith placed on Facebook.com.  The advertisement read "Free Bike From Dans [sic] Comp."  Users who clicked on the advertisement were redirected to a survey website, which was alleged to have been designed to appear as if it were affiliated with Dan's Comp through the unauthorized use of the Dan's Comp marks.  Users were prompted to answer survey questions regarding their buying habits in relation to Dan's Comp goods and services. 

At the conclusion of the survey, users were prompted to enter their email addresses and mobile phone numbers.  Immediately afterward, a text message containing an "offer" was sent to each user's mobile number.  Various offers included an "Amazing Facts Mobile Alert" for $9.99 per month and a membership to the "Mobile Tunez Club," also for $9.99 per month.  The text message also included a PIN number that was to be entered on the website addressed "http://surveysallday.com/bmx/winner.php" in a box on a page entitled "SCORE YOUR BIKE."  Apparently, entry of the four-digit pin would register the user for the service described in the text message.  It is further claimed that no free bicycles were provided to any users.  Allegedly, thousands of individuals entered their personal information on the survey website.

Continue reading "Dan's Comp Sues Ian Smith for Trademark Infringement in Facebook Advertisement" »

May 28, 2013

Patent Office Finalizes "After Consideration" Pilot Rules

Washington, D.C. -- Indiana inventors can now take advantage of new Patent Office procedure by having their patent attorneys file the appropriate paperwork.  The USPTO launched the USPTO-Logo.JPGAfter Final Consideration Pilot 2.0 (AFCP 2.0) on May 19, 2013. Designed to be more efficient and effective than the AFCP, AFCP 2.0 is part of the USPTO's on-going efforts towards compact prosecution and increased collaboration between examiners and stakeholders.

"Compact prosecution remains one of our top goals," said Teresa Stanek Rea, Acting Under Secretary of Commerce for Intellectual Property and Acting Director of the USPTO. "As with the original AFCP pilot, the new AFCP 2.0 pilot allows additional flexibility for applicants and examiners to work together and provides even greater opportunity for communication after final than the original pilot."

Like AFCP, AFCP 2.0 authorizes additional time for examiners to search and/or consider responses after final rejection. Under AFCP 2.0, examiners will also use the additional time to schedule and conduct an interview to discuss the results of their search and/or consideration with you, if your response does not place the application in condition for allowance. In this way, you will benefit from the additional search and consideration afforded by the pilot, even when the results do not lead to allowance.

In addition, the procedure for obtaining consideration under AFCP 2.0 has been revised. The revised procedure focuses the pilot on review of proposed claim amendments and allows the USPTO to better evaluate the pilot.

To be eligible for consideration under AFCP 2.0, Indiana patent applicants must file a response under 37 CFR §1.116, which includes a request for consideration under the pilot (Form PTO/SB/434) and an amendment to at least one independent claim that does not broaden the scope of the independent claim in any aspect.  A notice published in the Federal Register at 78 Fed. Reg. 29117 has a complete description of how to request consideration under AFCP 2.0. As was the case with the AFCP, examiners will continue to use their professional judgment to decide whether the response can be fully considered under AFCP 2.0.  This will include determining whether any additional search is required and can be completed within the allotted time, in order to determine whether the application can be allowed.

 

Continue reading "Patent Office Finalizes "After Consideration" Pilot Rules" »

May 24, 2013

Automated Products Sues Norco for Infringement of Patented Roof-Support Rafters

South Bend, Ind. - Patent lawyers for Automated Products International, LLC ("API") of LaGrange, Ind. sued alleging that Norco Industries, Inc. ("Norco") of Elkhart, Ind. infringed NorcoLogo.JPGPatent No. 7,134,711 (the "'711 Patent") which has been issued by the U.S. Patent Office. 

The '711 Patent is directed to recreational-vehicle roof-support rafters.  API alleges that Norco has been and is currently infringing the patent.  API also asserts that through continuous marking of its products, it has provided "constructive notice of [Norco's] infringement."

API seeks a judgment declaring that Norco has infringed the '711 Patent; damages equal to at least a reasonable royalty; treble damages upon a finding of willful and deliberate infringement; attorneys' fees upon a finding that the case is exceptional; and an injunction.

Practice Tip:  The law of the "reasonable royalty" has been in transition recently.  The "25% rule," an approach that allocated 25% of the profits from an infringement to the patentee and the remaining 75% to the infringer, has been abandoned.  Long used in federal courts to establish a reasonable royalty as compensation for patent infringement under § 284 of the Patent Act, it was rejected by the Federal Circuit in 2011.  In its ruling in Uniloc v. Microsoft, the court held: "the 25 percent rule of thumb is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation.  Evidence relying on the 25 percent rule of thumb is thus inadmissible under Daubert and the Federal Rules of Evidence, because it fails to tie a reasonable royalty base to the facts of the case at issue."

Continue reading "Automated Products Sues Norco for Infringement of Patented Roof-Support Rafters" »

May 23, 2013

Keystone Management and Lockridge Sue Alleging Copyright Infringement of Architectural Work

Indianapolis, Ind. -- Copyright lawyers for Keystone Management Systems, Inc. f/k/a Keystone Builders Resource Group, Inc. ("Keystone Management") and Lockridge Homes-Indianapolis, LLC ("Lockridge"), both of Richmond, Va., filed a copyright infringement lawsuit LockridgeLogo.JPGalleging William Clyde Moore, Jr. ("Moore") and Carol Cooper ("Cooper"), d/b/a DrafTech, both of Indianapolis, Ind., infringed the copyrighted work "Birkshire II" (architectural work: 1-396-233; and technical drawings: VA 1-396-224), which is registered with the U.S. Copyright Office.

Keystone Management is in the business of creating, designing, producing, distributing and marketing original architectural working drawings, architectural works and related technical drawings ("the Keystone Designs").  Lockridge is in the business of constructing, marketing and selling distinctive single-family residential homes.  Keystone Management has granted to Lockridge the right to use the Keystone Designs.

Moore allegedly asked to purchase one of the Keystone Designs but no agreement was reached.  He also allegedly discussed various home plans with Lockridge for the purpose of constructing a single-family home on his property.  As a part of this discussion, Lockridge provided Moore with a rendering of the floor plan for the Birkshire II design.  Moore then allegedly provided these plans to Cooper for the purpose of constructing a home in the Birkshire II design.  Construction is either underway or completed.

Keystone Management and Lockridge sued in the Southern District of Indiana.  They list two counts in their complaint: copyright infringement and unjust enrichment.  They seek an injunction; impoundment and destruction of any homes built from the Keystone Designs; for damages up to $150,000 for each infringement; costs and fees.

We have blogged about similar cases here, here and here. 

Practice Tip #1: Copyright protection extends to any architectural work created on or after December 1, 1990, but architectural designs embodied in buildings constructed prior to that date are not eligible for copyright protection. 

Practice Tip #2: The second claim, for unjust enrichment, is preempted by The Copyright Act.

Continue reading "Keystone Management and Lockridge Sue Alleging Copyright Infringement of Architectural Work" »

May 22, 2013

J & J Sports Sues Five Restaurants for Unauthorized Interception and Broadcast of Championship Fight

Indianapolis, Ind. -- Intellectual property lawyers for J & J Sports Productions, Inc. ("J&J Sports") of Campbell, Calif. have sued five Indianapolis restaurants and their owners in the Southern District of Indiana for illegally displaying the 2011 World Boxing Organization Welterweight J&JSportsLogo.JPGChampionship Fight.

J & J Sports was granted exclusive nationwide commercial rights to the closed-circuit distribution of the "Manny Pacquiao v. Shane Mosley, WBO World Welterweight Championship Fight" Program ("the Program"), which was telecast nationwide on Saturday, May 7, 2011. 

In five separate but similar complaints, J&J Sports has alleged such wrongful acts as interception, reception, publication, divulgence, display, exhibition, and tortious conversion of the Program.  The claims have been made both against the restaurants and as personal liability claims against the owners.  The five restaurants that have been sued are: Fandango's Night Club, La Favorita Mexican Restaurant, El Rey Del Taco Mexican Restaurant, Taqueria Night Club and Costa Brava Mexican Restaurant.  Of these, at least one, Fandango's Night Club, has been sued before under similar circumstances.

Each group of defendants has been accused of violating 47 U.S.C. § 605 and 47 U.S.C. § 553.  Each complaint also lists a count of conversion.  Among its assertions of wrongdoing, J&J Sports has alleged interception under 47 U.S.C. 605, which is a different cause of action from copyright infringement. The interception claim has a two-year statute of limitations, which explains why the complaints were filed on May 6, 2013.

The complaints seek statutory damages of $100,000 for each violation of 47 U.S.C. § 605; $10,000 for each violation of 47 U.S.C. § 553; $50,000 for each willful violation of 47 U.S.C. § 553; costs and attorney fees.

In 2011, J&J Sports filed 708 lawsuits.  We have blogged before about J&J Sports here, here and here.

Practice Tip: All of these lawsuits were filed on the eve of the two-year anniversary of the program that the defendants are alleged to have illegally broadcast.  When Congress passed the Cable Communication Act, a statute of limitations was not included.  Some federal courts have determined that a two-year statute of limitation is appropriate while other federal courts have used a three-year statute of limitations.

Overhauser Law Offices, the publisher of this website, has represented several hundred persons and businesses accused of infringing satellite signals.

Continue reading "J & J Sports Sues Five Restaurants for Unauthorized Interception and Broadcast of Championship Fight" »

May 20, 2013

U.S. Supreme Court Rules Against Indiana Farmer in "Roundup Ready" Soybean Patent Decision

Washington D.C. -- The U.S. Supreme Court has ruled that "patent exhaustion" does not bar an infringement claim against Indiana farmer Vernon Bowman for reproducing patented seeds by planting and harvesting second generation seeds without the patent holder's permission. MonsantoLogo.JPG Bowman v. Monsanto Co., U.S., No 11-796, 5/13/2013.  Monsanto produces and sells patented soybean seed that is genetically altered to resist its "RoundUp" herbicide. Bowman is a farmer who purchased soybean for planting from a grain elevator, expecting that most of the grain elevator soybean would be Monsanto's herbicide-resistant soybean. In the subsequent patent infringement brought by Monsanto, Bowman argued that Monsanto's sale of its seed that he ultimately purchased from the grain elevator exhausted any patent rights in the seed. The argument was rejected by both the District Court and the Federal Circuit, and the Supreme Court agreed to review the case.

Patent Exhaustion Only for Sold Article

Under the patent exhaustion doctrine, an authorized sale of a patented product cuts off the patent owner's right to control of that product, because the sale of that product fulfills the patent law by providing a reward to the patentee.  However, this limitation on patent rights applies only to the particular article sold.  If the purchaser could make and sell endless copies, the patent would effectively protect just a single sale.

In this case, the patent exhaustion doctrine provides Bowman with the right to use the purchased product in several different ways without Monsanto's permission, including resale, human consumption or animal consumption of the product. However, it does not permit Bowman to make additional patented soybeans without Monsanto's permission.

Bowman contended that his use of the purchased seed was covered by the patent exhaustion doctrine because that is the normal way farmers use seed, and that Monsanto seeks an impermissible exception to the exhaustion doctrine for patented seeds and other self-replicating technologies.

The Court rejected the argument, pointing out that it is Bowman who seeks an unprecedented exception to the well-settled rule that the exhaustion doctrine does not extend to the right to make a new product.

Continue reading "U.S. Supreme Court Rules Against Indiana Farmer in "Roundup Ready" Soybean Patent Decision" »

May 17, 2013

Purdue University Celebrates Innovation

Lafayette, Ind. -- Purdue University students are creating and patenting products while pursuing their degrees.  Purdue is celebrating the inventiveness of five of those students: Julia Alspaugh, Zachary Amodt, Sean Connell, Andrew Glassman and Anne Dye Zakrajsek.

Julia Alspaugh, a mechanical engineer in her second year as a master's student, researches biomedicine.  She says, "I see mechanical engineering as a broad field that analyzes the world's processes and how the machinery and technology that makes them work can be simplified and improved." 

Julia is part of a large, interdisciplinary team seeking numerous patents related to the use of novel, resorbable biomaterials to create fixation devices for next-generation orthopedic devices, such as the plates, pins and screws used to set broken limbs or repair damaged tissues and joints.

"These devices would provide support while the bone and joint healed, for example, then degrade within a few years without leaving any foreign or potentially toxic materials in the body," she explains.  "It's a similar concept to the dissolving stitches now used in many dental surgeries, but on a larger and more complex scale."

For Julia, the most surprising thing she's encountered in the patent process is unrelated to engineering or biomedicine.  "Learning how to make sure what we are working on is novel and patentable has been more challenging than expected," she says. "It may be an awesome new technology, but we also have to keep in mind its marketability.  It requires communication between many different people with different interests and ways of doing things."

Zachary Amodt dropped out of school to join the military after September 11, 2001.  Ten years later, he returned and is now holding a provisional patent inspired by his experience as a combat medic in war zones all over the world.

Continue reading "Purdue University Celebrates Innovation" »

May 16, 2013

Serenity Springs Prevails Against Allegations of Trademark Infringement and Cybersquatting

Indianapolis, Ind. -- The Indiana Court of Appeals has vacated a trial court's judgment in favor of the LaPorte County Convention and Visitors Bureau (the "Bureau") of LaPorte, Ind., holding that neither trademark infringement nor cybersquatting had been committed by Serenity Springs ("Serenity") of LaPorte, Ind.

SerenitySpringsLogo.JPGSerenity operates a resort in LaPorte County.  The Bureau is a special-purpose governmental unit charged with representing the visitor industry by marketing to potential visitors to the LaPorte area.

On September 9, 2009, the Bureau announced at a public meeting that it planned to adopt the phrase "Visit Michigan City LaPorte" as its branding identifier for the area.  A representative of Serenity was in attendance.  Immediately afterward, an employee for Serenity registered the domain name "visitmichigancitylaporte.com" and set it up to redirect internet traffic to Serenity's website.

LaPorteCountyLogo.JPGThe Bureau sent a cease-and-desist letter claiming trademark infringement and cybersquatting.  Serenity responded that (1) it had registered and begun using the domain name before the Bureau had made any commercial use of it and (2) the designation was not protectable as a trademark because it was merely descriptive and had not acquired distinctiveness.

In April 2010, the Bureau filed an application with the Indiana Secretary of State to register "Visit Michigan City LaPorte" as a trademark under the Indiana Trademark Act.  In its application, the Bureau indicated that it had first used the mark in commerce on September 9, 2009.  The application was approved.  Nonetheless, Serenity continued using the visitmichigancitylaporte.com domain name.

The Bureau sued Serenity in the LaPorte Superior Court alleging, inter alia, trademark infringement, cybersquatting and unfair competition by Serenity.  The trial court permanently enjoined Serenity from using "Visit Michigan City LaPorte" and ordered the transfer of the domain name "visitmichigancitylaporte.com" to the Bureau.

Serenity appealed the trial court's holding that it had committed trademark infringement and cybersquatting.  The trial court had held that, due to the Bureau's status as a governmental entity, it was entitled to a different application of trademark law.  Specifically, it held that there was a lesser requirement for using the mark to acquire trademark rights.

The appellate court disagreed.  It has long been held that the exclusive right to use a mark is acquired through adoption and use of the mark in commerce.  The appellate court also held that this mark was clearly geographical in nature and that it was "difficult to conceive of a mark that falls more squarely within the category of geographically descriptive marks."  Geographically descriptive designations generally fall within the descriptive category; thus, to be protected, the must have acquire secondary meaning.

The trial court considered the entirety of the time that the Bureau had been using the mark in considering whether the Bureau had established secondary meaning.  It found that such secondary meaning had been established.  However, the correct test for secondary meaning is to evaluate whether secondary meaning had been established by the senior user immediately prior to the time and place that the junior user began to use the mark.  As this was, on its face, entirely unsupported by evidence, the appellate court held that the trial court erred in its determination that the Bureau had acquired secondary meaning in the mark.  The appellate court reversed the trial court's judgment, holding that the Bureau had not established that it held a valid and protectable trademark in the designation "Visit Michigan City LaPorte."

The appellate court did, however, point out that additional claims had been made by the Bureau which had not been reached by the trial court.  One of the claims, unfair competition, does not require the existence of a protectable trademark.  Instead, it is an open-ended category of torts designed to protect "commercial values."  The appellate court remanded with instructions to the trial court to vacate its judgment as to trademark infringement and cybersquatting and to adjudicate the Bureau's remaining claims. 

Practice Tip #1: While the Indiana Trademark Act and the Lanham Act have many similarities, the former does not provide all of the protections afforded by the latter.  While the Lanham Act provides that federal registration of a mark provides prima facie evidence of its validity, the Indiana Trademark Act contains no such provisions.  A certificate of registration with the Indiana Secretary of State is proof of registration only (although such a registration is necessary to support a claim of infringement under the Indiana Trademark Act).

Practice Tip #2: One wonders if the entirety of this litigation might have been avoided by taking one simple step: registering the domain name before making the public announcement.

Continue reading "Serenity Springs Prevails Against Allegations of Trademark Infringement and Cybersquatting" »

May 15, 2013

Federal Circuit Denies Petition by ArcelorMittal France for Rehearing in Patent Infringement Case

Washington, D.C. -- The United States Court of Appeals for the Federal Circuit denied the petition of ArcelorMittal for a rehearing in its patent infringement lawsuit against AK Steel involving ULTRALUME®.

AK Steel produces flat-rolled carbon and stainless and electrical steels.  Their products are primarily for automotive, infrastructure, manufacturing, construction, and electricity-generation and distribution markets. The company, headquartered in West Chester, Ohio, also employs people in Indiana, Pennsylvania, and Kentucky.

ArcelorMittal is a multinational steel manufacturing corporation headquartered in Avenue de la Liberté, Luxembourg. It is the world's largest steel producer, with an annual crude steel production of 97.2 million tons as of 2011.

At issue in this suit was a claim of patent infringement by ArcelorMittal France and ArcelorMittal Atlantique et Lorraine (collectively "ArcelorMittal") against AK Steel et al. of Patent No. 6,296,805, entitled "Coated hot- and cold-rolled steel sheet comprising a very high resistance after thermal treatment," ("the '805 patent") which has been issued by the U.S. Patent Office. 

The '805 patent covers boron steel sheeting with an aluminum-based coating applied after rolling the sheet to its final thickness. The steel is used for "hot-stamping," a process which involves rapidly heating the steel, stamping it into parts of the desired shape, and then rapidly cooling them.  The rapid heating and cooling alters the crystalline structure of the steel, converting it to austenite and then martensite.  By altering the steel's microstructure in this manner, hot-stamping produces particularly strong steel.  Because hot-stamped steel is so strong, parts created using the process can be thinner and lighter than steel parts produced with other methods while being just as strong.

ArcelorMittal sued AK Steel and two other steel producers in the United States District Court for the District of Delaware, alleging infringement of the '805 patent.  In 2011, a jury found that defendants AK Steel, Severstal Dearborn, Inc., and Wheeling-Nisshin Inc. had not infringed ArcelorMittal's patent and that the asserted claims were invalid as anticipated and obvious.

ArcelorMittal appealed from the judgment of the trial court, challenging both the district court's claim construction and the jury's verdict.

The federal circuit upheld the district court's claim construction in part and reversed it in part. It also reversed the jury's verdict of anticipation.  With respect to obviousness, a new trial was required because a claim-construction error by the district court prevented the jury from properly considering ArcelorMittal's evidence of commercial success.

Despite the mixed results - partially affirming, partially reversing, partially vacating and remanding for a new trial - the decision of the federal circuit has confirmed that AK Steel did not infringe Arcelor's patent and can sell Ultralume, its aluminized boron steel product.

Practice Tip: Patent decisions of the Federal Circuit, a federal appellate court, are unique in that they are binding precedent throughout the United States.  Decisions of the Federal Circuit can be superseded only by decisions of the U.S. Supreme Court or by legislation.  As such, Federal Circuit decisions are often the final word nationwide on the issues of patent law that the court decides.  In contrast, the authority of other federal appellate courts is restricted by geographic location.  In those courts, the federal common law often varies among the circuits (a "circuit split"). 

Continue reading "Federal Circuit Denies Petition by ArcelorMittal France for Rehearing in Patent Infringement Case" »

May 13, 2013

Court of Appeals for Federal Circuit Can Not Agree When Computer Implemented Methods Are Patentable

As reported by the American Intellectual Property Law Association, in a severely splintered decision, the en banc Federal Circuit was unable to agree on a rationale for analyzing the abstract idea exception to patent eligibility for computer implemented method claims, computer-readable media, and system claims. CLS Bank International v. Alice Corp., en banc Fed. Cir., No. 11-1301, 5/10/13.

Instead, the court issued a 58-word per curiam opinion for the Court, affirming by a majority vote the patent ineligibility of method and computer-readable media claims are ineligible, and affirming by a 5-5 tie vote the patent ineligibility system claims. Six separate opinions (totaling 127 pages) were issued by judges stating their agreement or disagreement with the result in the appeal.

The challenged patents in this case are directed to a computerized trading platform for exchanging obligations in which a trusted third party settles obligations between a first and second party so as to eliminate "settlement risk." Seven Judges (Chief Judge Rader and Judges Lourie, Dyk, Prose, Reyna, Wallach, and Moore) voted to affirm the decision that the method and media claims were ineligible were. As to the system claims, those who would find ineligibility were Judges Lourie, Dyk, Prost, Renya, and Wallach; those who would find eligibility were Chief Judge Rader and Judges Newman, Linn, O'Malley, and Moore.

Judge Lourie's Opinion

In its en banc order for this case, the Court posed two questions for briefing: (1) what test should the court adopt for determining if a computer-implemented invention is patent ineligible "abstract ideal," and when does a computer lend patent eligibility to an otherwise ineligible idea; and (2) should it matter whether the invention is claimed as a method, system, or storage medium, and should such claims be considered equivalent for purposes of Section 101.

Judge Lourie filed a concurring opinion joined by Judges Dyk, Prost, Renya, and Wallach. He wrote that the Supreme Court in Section 101 cases has cautioned against the preemption of fundamental tools of science, against the use of formalistic approaches that permit drafting strategies to circumvent Section 101 exclusions, and against bright-line rules that do not accommodate changing technology. His opinion makes the following points:

Preemption: The Section 101 concern is not preemption per se since any patent inherently includes some preemption in the right to exclude. "Rather, the animating concern is that claims should not be coextensive with a natural law, natural phenomenon, or abstract idea; a patent-eligible claim must include one or more substantive limitations that, in the words of the Supreme Court, add 'significantly more' to the basic principle, with the result that the claim covers significantly less."

Inventive concept: The Supreme Court's reference to an "inventive concept" requirement under Section 101 is not a reference to "inventiveness" for patentability. Instead, it is the "genuine human contribution to the claimed subject matter" and must be "a product of human ingenuity." Nor should the Court's use of terms such as "routine" or "conventional" in discussing patent ineligibility be confused with the novelty and nonobviousness. The question, is whether steps combined with a natural law or abstract idea are so insignificant that the claim effectively covers the natural law or abstract idea itself.

Threshold requirement and presumption of validity: It is incorrect to argue that patent eligibility under Section 101 is a "threshold test" that must always be considered first among all of the possible bases for finding invalidity. District courts are entrusted with great discretion to control their dockets, including the order of issues presented during litigation. In addition, the presumption of validity under 35 U.S.C. 282 applies when Section 101 patent ineligibility is raised as an invalidity challenge.

Method claims: The method claims in this case involve the concept of reducing settlement risk by facilitating a trade through third-party intermediation, an abstract idea that is not patent eligible standing alone. Limitations of keeping and maintaining shadow records do not add "anything of substance to the claims." The requirement for computer implementation is not specific enough and lacks express language defining the computer's participation. "Furthermore, simply appending generic computer functionality to lend speed or efficiency to the performance of an otherwise abstract concept does not meaningfully limit claim scope for purposes of patent eligibility."

Computer-readable medium claims: Although the computer readable storage medium claims recite a physical device, the patent eligibility analysis must look past drafting formalities and focus on the "true substance of the claims." The claim term is stated in broadly and every substantive limitation pertains to the method steps of the program code embodied in the medium. Thus, the claim is not truly drawn to the medium but rather to the underlying method. Despite the Beauregard format, these claims are equivalent to the methods they recite for patent eligibility purposes.

System claims: These claims recite a computerized system to carry out steps that mirror the method claims of maintaining, controlling, and adjusting shadow records. The computer-based limitations recited in the system claims cannot support any meaningful distinction from the computer-based limitations that failed to supply an "inventive concept" to the related method claims. Applying a different approach for system claims than for method claims "would reward precisely the type of clever claim drafting that the Supreme Court has repeatedly instructed us to ignore."

We are not here faced with a computer per se. Such are surely patent-eligible machines. We are faced with abstract methods coupled with computers adapted to perform those methods. And that is the fallacy of relying on Alappat, as the concurrence in part does. Not only has the world of technology changed, but the legal world has changed. The Supreme Court has spoken since Alappat on the question of patent eligibility, and we must take note of that change. Abstract methods do not become patent-eligible machines by being clothed in computer language.

Chief Judge Rader's Opinion

Chief Judge Rader filed a concurring-in-part, dissenting-in-part opinion, joined by Judges Linn, Moore, and O'Malley. He stated that the asserted system claims were wrongly ruled ineligible. However, Judges Linn and O'Malley disagreed with the view of Judges Rader and Moore that method and media claims were ineligible. Judge Rader's opinion makes the following points:

Court created subject matter exceptions: The claims are the key to the patent eligibility inquiry into the subject matter exclusions of abstract ideas, laws of nature and natural phenomena and abstract ideas. "Any claim can be stripped down, simplified, generalized, or paraphrased to remove all of its concrete limitations, until at its core, something that could be characterized as an abstract idea is revealed. * * * A court cannot go hunting for abstractions by ignoring the concrete, palpable, tangible limitations of the invention the patentee actually claims."

Specific Claim limitations: A claim may be premised on an abstract idea, but the question is whether the claim contains limitations that meaningfully tie that idea to a concrete reality or actual application of that idea. "The key to this inquiry is whether the claims tie the otherwise abstract idea to a specific way of doing something with a computer, or a specific computer for doing something; if so, they likely will be patent eligible, unlike claims directed to nothing more than the idea of doing that thing on a computer." As explained in Alappat, a special purpose computer, i.e., a new machine, specially designed to implement a process may be sufficient.

Inventive concept and presumption of validity: The "inventive concept" language in the Section 101 inquiry should not be read to conflate patent eligibility principles with validity principles, or to insert an "inventiveness" or "ingenuity" factor into the inquiry. The term is a shorthand for asking whether the recited steps of the claim are inherently required to implement the abstract idea. In footnote 5, Judge Rader complains that Judge Lourie's interpretation of "inventive concept" as the "genuine human contribution" incorrectly injects "ingenuity" into the analysis.  The presumption of validity that applies to other validity challenges also applies to patent eligibility challenges under Section 101, which require proof by clear and convincing evidence. 

System claims: The system claims are patent eligible. The Supreme Court has said that a useful and important clue to patent eligibility for a method claim may be where the method is tied to a machine; "it would seem that a claim embodying the machine itself, with all its structural and functional limitations, would rarely, if ever, be an abstract idea," Judge Rader observed.

In footnote 7, Judge Rader disagreed with Judge Lourie that a computer must do something other than what a computer does before it can considered patent eligible. Everything done by a computer can be done by a human. Requiring a computer to do something that a human could not would mean that computer implementation could never product patent eligibility. "Indeed, even an increase in speed alone may be sufficient to result in a meaningful limitation." Labeling the claimed system an abstract concept "wrenches all meaning from those words, and turns a narrow exception into one which may swallow the expansive rule (and with it much of the investment and innovation in software)."

The recited steps in the system claim are not inherent in the abstract idea of using an escrow, which can be done without a data processing system that includes a data storage unit coupled to a computer which has been modified by software to receive transactions adjust records, and generate electronic instructions according to specific structural limitations in both software and hardware formats.

Method claims: Writing only for himself and Judge Moore, Judge Rader observed that method claim describes the general and theoretical concept of using a neutral intermediary in exchange transactions to reduce risk that one party will honor the deal, i.e., an escrow arrangement. The question then is whether the recited steps are inherent in an escrow and claimed at a high level of generality, such that in fact the claim is not to a practical application of the concept of an escrow, but in effect claims the abstract concept of an escrow. Judge Rader concluded that each step of the method merely recites a general step inherent within the concept of an escrow, using a third party intermediary in this fashion. While the claim limits use of an escrow to the context of this particular field, that attempted limitation is not enough.

In a separate opinion entitled "Additional Reflections," Judge Rader noted "when all else fails, consult the statute."

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May 10, 2013

Endotach Patent Claims Construed

Indianapolis, Ind. -- The Southern District of Indiana has construed the claims of two patents-in-suit in the matter of Endotach LLC v. Cook Medical Inc.

In 2012, patent attorneys for Endotach LLC of Frisco, Texas sued Cook Medical Inc. of Bloomington, Ind., alleging infringement of Patent No. 5,122,154, entitled "Endovascular Bypass Graft," and Patent No. 5,593,417, entitled "Intravascular Stent with Secure Mounting Means," both issued by the U.S. Patent Office.  The suit, initially filed in the Northern District of Florida, was transferred to the Southern District of Indiana.

CookMedicalLogo.JPGThe patents, both of which were issued in the 1990s, were granted to Dr. Valentine Rhodes, an award-winning surgeon who practiced in the field of vascular medicine for over 30 years.  The patents are directed to intraluminal and endovascular grafts for placement within a blood vessel, duct or lumen to hold it open.  As it pertains to this lawsuit, the patents-in-suit are used for revascularization of aneurysms or stenosis occurring in blood vessels which includes anchoring projections to aid in securing the graft in place within the blood vessel.

Upon the death of Dr. Rhodes, the patents-in-suit passed as part of his estate to his wife, Brenda Rhodes.  While Mrs. Rhodes remains the owner of the patents, Endotach is the exclusive licensee and has the right to enforce the patents against all infringers. 

In its complaint, Endotach asserted infringement of one or more claims in each of the patents-in-suit.  It sought a judgment that the patents-in-suit have been infringed, either literally and/or under the doctrine of equivalents; damages, including treble damages; costs; interest; attorneys' fees and an injunction. 

In its opinion, the court construed multiple terms:

·         The term "stent means" was construed to mean "a generally ring-like, hollow support that is resistant to contraction back to a compact state once it has been expanded"

·         The term "resistant to contraction back" was construed to mean "able to withstand the force or effect of"

·         The term "tubular member" was construed to mean "tubular member"

·         The term "anchoring means" was construed to mean "multiple projections or protuberances with a leading portion and a trailing portion, such that one surface of the trailing portion is positioned at an acute angle relative to the direction of fluid flow"

·         The term "projections" was construed to mean "protuberances or parts that extend outward from a surface"

·         The term "a leading portion" was construed to mean "part of a projection oriented in the upstream direction of the fluid flow"

·         The term "a trailing portion" was construed to mean "part of a projection oriented in the downstream direction of the fluid flow, with at least one portion positioned at an acute angle to the fluid flow"

·         The term "at least one surface" was construed to mean "one portion, part or surface of the trailing portion of a projection oriented at an acute angle to the fluid flow"

·         The terms "engagement with" and "engaging" were construed to mean "to partly embed, interlock or enmesh"

·         The term "tightly" was construed to mean "firmly"

·         The term "stent" was construed to mean "a hollow support"

Practice Tip: When construing the terms in the asserted claims of a patent-in-suit, the court must determine the meaning of the language used before it can ascertain the scope of the claims that the plaintiff asserts are infringed.  In doing so, the court's interpretive focus is not the subjective intent of the party employing a certain term, but the objective test of what one of ordinary skill in the art at the time of the invention would have understood the term to mean.

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May 9, 2013

Tough Mudder Sues Mudderland for Trademark and Service Mark Infringement

South Bend, Ind. -- Tough Mudder LLC of Brooklyn, N.Y. sued alleging trademark infringement by Mudderland of Kingsbury, Ind.; and Rick and Susan Hollaway, both of Hebron, Ind. of Tough Mudder trademarks registered under Registration Nos. 3,810,118; 4,131,912; 4,308,918; 4,131,913; 4,241,510; 4,241,512; 4,241,513; and 4,233,607 for marks containing "MUDDER," which have been registered with the U.S. Trademark Office.

Tough Mudder is in the obstacle-course industry with challenges such as multi-mile mud ToughMudderLogo.JPGobstacle courses.  In the past three years, Tough Mudder has held such challenges in the United States, Canada, the United Kingdom and Australia with over a million registrations.  Tough Mudder has been recognized by such well-known news sources as The Wall Street Journal, ESPN, National Geographic and Sports Illustrated.

In addition to federally registered marks, Tough Mudder asserts that it is the owner of common law and federal service mark rights available without registration in the words "Mudder" and "Mudders" for use in connection with various outdoor events.  It also asserts common law and federal unregistered service mark rights in the phrases "Walk the Plank" and "Berlins Walls" that are also used in conjunction with outdoor obstacle courses and similar events.

Also in the obstacle-course industry, Rick and Susan Hollaway co-own and co-operate an unincorporated entity named "Mudderland."  In 2012, the Hollaways designed, organized and promoted an obstacle-course mud challenge under the name "Mudderland" which was similar MudderlandLogo2.JPGto those held by Tough Mudder. In doing so, Tough Mudder alleges that the Holloways were attempting to benefit illegally from Tough Mudder's brand by using the similar name "Mudderland" for an obstacle-course event.  The Hollaways also included other similar indicia such as the color orange and similar-or-identical obstacle names.  After having been contacted by Tough Mudder, Susan Hollaway agreed to cease using the name "Mudderland" and to abandon the domain name www.mudderland.com.

Despite this purported agreement to discontinue the use of the name "Mudderland" and the associated domain name, Tough Mudder learned in 2013 that the Hollaways had resumed using both.  The Hollaways planned to host a 2013 event which would also include an event named "Walk the Plank" and another named "Berlin Wall," both of which are similar to names claimed by Tough Mudder.  The Holloways' "Mudderland" website is again using the same color scheme as Tough Mudder's website, with orange as the predominant color.

Trademark lawyers for Tough Mudder brought this case after the Holloways failed to abide by the alleged earlier agreement by the Holloways to cease what the complaint calls their "admittedly infringing activity" of Tough Mudder's "extraordinarily valuable trademark rights."

Tough Mudder claims that its first use in commerce of both the Tough Mudder mark and the Mudder family of marks predate the Hollaways' first use and therefore Tough Mudder's use of the marks has priority.  The complaint asserts that, in addition to the constructive notice of the Mudder marks provided by the federal trademark registrations, the Holloways also had actual notice of Tough Mudder's rights in the marks as of May 21, 2012 when Tough Mudder sent the first cease-and-desist letter via e-mail to the Hollaways.  Further, it is asserted that the Holloways knew of Tough Mudder's rights and acted with wanton disregard for those rights and with the willful intent of benefiting from the goodwill of the Tough Mudder marks.  Tough Mudder asserts that the Hollaways' actions are likely to cause confusion, to cause mistake and to deceive consumers as to the source, nature and quality of the goods and services offered by the Hollaways and/or Tough Mudder.

Tough Mudder's complaint lists ten counts:

·         Count 1: Federal and State Trademark Infringement

·         Count 2: Trade Name Infringement

·         Count 3: State Trademark Infringement

·         Count 4: Federal Statutory Unfair Competition

·         Count 5: False Designation of Origin

·         Count 6: Common Law Unfair Competition

·         Count 7: Trademark Dilution, § 1125(c)

·         Count 8: Trademark Dilution, Indiana Code § 24-2-1-13.5

·         Count 9: Violation of the Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d)(1)(A)

·         Count 10: False Advertising, 15 U.S.C. 1125(a)

Tough Mudder lists 20 separate requests for relief, among them: preliminary and permanent injunctions; transfer of the domain name www.mudderland.com to Tough Mudder; destruction of infringing items; an accounting of the profits by Mudderland attributable to infringement or other wrongful conduct; an accounting of damages to Tough Mudder; statutory damages; punitive and/or treble damages; costs of the action; and attorneys' fees.

Practice Tip: There are facts weighing in favor of both parties in this case and, perhaps, that is why the Hollaways have decided to continue with the allegedly infringing activities.  Tough Mudder has in its favor such elements as similarity of various names, along with use of the color orange, in conjunction with muddy endurance races.  On the other hand, courts are reluctant to set aside colors for any one entity (see here).  Also, both the terms "Mudder" (a racehorse that runs well on a muddy racetrack) and "Mudderland" (when considered to be a whimsical spelling of "Motherland") have meaning independent of any given to them through commercial use.

 

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