Publications / McDermott Newsletters / IP Update, Volume 3, No. 8, August 2000

IP Update, Volume 3, No. 8, August 2000

August 2000

IN THIS ISSUE

Patent/Prosecution

Be Careful What You Say, It Might Define Your Invention
By Stephen K. Shahida

Statements made by the inventor during the prosecution of a patent can modify the ordinary meaning of a claim term. Hockerson-Halberstadt, Inc. v. Avia Group International Inc., No. 99-1505, 2000 U.S. App. LEXIS 18139 (Fed Cir., July 27, 2000).

Hockerson-Halberstadt, Inc. (HHI) owns a patent related to athletic shoes having a heel that is bisected by a central groove creating two peripheral fins. HHI sued Avia alleging that one of Avia’s lines of athletic shoes infringed HHI’s patent. At trial, the court, relying on a statement made to the examiner during prosecution of the patent application, construed the claim term "central longitudinal groove" to mean "a relatively long and narrow structure that extends longitudinally or lengthwise completely through the center so as to divide the heel part into a pair of ‘fins.’ The width of the central longitudinal groove must be less than the combined width of the two fins." Under this construction, there was no infringement. HHI appealed.

The only issue on appeal was whether the trial court correctly construed the "central longitudinal groove" claim term. The Federal Circuit affirmed. Citing the language of the claim and the written description, the Court agreed with the trial court’s initial interpretation of a groove as a long and narrow structure. Turning to the prosecution history, the Court focused on statements by the inventor disclaiming a particular interpretation of "groove" in order to distinguish the invention over cited prior art. Specifically, in response to an obviousness rejection, the inventor had argued that the claimed invention "provides a much narrower groove for a totally different purpose, namely ... to involve as much of the underneath surface of the footwear as possible in a cushioning and supporting function." The Court concluded from that statement that the inventor had disavowed a groove width greater than that disclosed in the prior art.

The Court rejected HHI’s contention that the "much narrower groove" statement was an erroneous statement, declining to grant HHI a "mulligan" that would effectively erase the inventor’s disavowal of "a particular aspect of a claim term’s meaning." "Such an argument," the Court stated, "is inimical to the public notice function provided by the prosecution history. The prosecution history constitutes a public record of the patentee’s representations concerning the scope and meaning of the claims, and competitors are entitled to rely on those representations when ascertaining the degree of lawful conduct, such as designing around the claimed invention."

The Court distinguished earlier "conspicuous error" cases, finding that the HHI inventor’s statement narrowing the scope of the claim to overcome the prior art hurdle was not a "conspicuous error" that a reasonable competitor would perceive as erroneous in light of the specification.

Trademarks

Laches Defense Not Available to Knock-Off Trademark Infringer
By Paul Devinsky

The Court of Appeals for the Second Circuit now has found that where a defendant intentionally sells replica products, it is not entitled to invoke the equitable defense of laches against the trademark owner’s claim for injunctive relief. Hermes National v. Lederer de Paris 5th Avenue Inc., Case Nos. 99-9283, -9365 (2d. Cir. - July 10, 2000).

Hermes sued Lederer for trademark and trade dress infringement in connection with the sale of replica products bearing Hermes marks and designs. The Dist. Ct. for the So. Dist. of New York granted Lederer summary judgment finding that Hermes was barred from obtaining injunctive relief and damages as a result of latches.

The Second Circuit reversed, explaining that the equitable doctrine of laches is not available as a defense against a claim for injunctive relief where the defendant intentionally traded-off of the trademark owner’s name and intended that trademark infringement would occur. In remanding the case, the Second Circuit noted that although the District Court did not find evidence of point-of-sale confusion, it should consider the issue of post-sale confusion among the general public where the knock-off may be perceived as the genuine article.

Trademarks/Injunctive Relief/Dilution

First Amendment Trumps Broad Injunctive Relief in Trademark Case/Circuits Split on Actual Harm as an Element of a Dilution Claim
By John J. Dabney

The Fifth Circuit now has held that where First Amendment concerns are present, it is an abuse of discretion for a district court to fail to thoroughly consider disclaimer relief when crafting a remedy for alleged trademark infringement. Also, aligning itself with the Fourth Circuit but splitting with the Second Circuit, the court held that actual dilution is a necessary element of a claim under the Federal Trademark Dilution Act (FTDA). Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658 (5th Cir. 2000).

The owner of the famous POLO mark sued a lifestyle magazine that used POLO in its title. The district court entered a permanent injunction prohibiting all use of the POLO mark in the title of the magazine. The court acknowledged that the use of a mark in a magazine title raised First Amendment concerns, but held that because there were "alternative avenues of communication available," i.e., the defendant could publish the magazine under another title, a complete injunction was required.

The Fifth Circuit reversed and remanded because the district court failed to adequately consider whether a disclaimer would provide a sufficient remedy. The Fifth Circuit rejected the district court’s conclusion that because "adequate avenues of communication" were available, a complete injunction should issue. As the court put it:

Where the allegedly infringing speech is at least partly literary or artistic. . .and not solely a commercial appropriation of another’s mark, the preferred course is to accommodate trademark remedies with First Amendment interests. One obvious mode of accommodation is a disclaimer that will officially disassociate the junior user of the mark from the senior user’s product.

A disclaimer, the court added, could be particularly effective because there was no evidence of actual confusion and consumers were sophisticated. Further, the court explained that the safe distance rule — which allows a court to keep an infringer far away from the margin line — did not justify the broad injunctive relief granted by the district court, because that rule does not apply where First Amendment interests are at stake.

The court also found that to state a claim under the FTDA, a plaintiff must prove actual dilution resulting from the unauthorized use, not just a likelihood of dilution.

Practice Note: The Fifth Circuit is now in apparent agreement with the Fourth Circuit and split from the Second Circuit on whether actual dilution resulting from the dilutive use is a required element of a claim under the FTDA. Requiring proof of actual dilution imposes a substantial evidentiary burden on a plaintiff seeking relief under the FTDA and makes it extremely difficult for a plaintiff to obtain an injunction before the threatened dilutive use occurs.

Patent/Antitrust

Court Refuses to Find That Patented Product Constituted Relevant Product Market Under Antitrust Laws
By Scott S. Megregian

A U.S. Distr. Ct. now has further clarified the issue of when a single patented product constitutes a "relevant product market" under the antitrust laws. Sheet Metal Duct, Inc. v. Lindab, Inc., 2000 U.S. DIST LEXIS 9928 (E.D. Pa. 2000).

Lindab produced a patented ductwork product called "Spirosafe." Lindab designated Midstates Spiral as its exclusive distributor. Sheet Metal (a competitor of Midstates) only could buy Spirosafe from Midstates, which placed Sheet Metal at a competitive disadvantage to Midstates. Sheet Metal sued Lindab and Midstates alleging various antitrust violations, including monopolization, attempted monopolization and a conspiracy to establish an unlawful exclusive distributorship in violation of Sherman Act §§ 1 and 2.

Plaintiff’s claims were based on a relevant product market limited to the patented Spirosafe ductwork. Defendants moved to dismiss, inter alia, because plaintiff failed to allege a proper "relevant market." The Court found that "the allegation of a relevant market is necessary for claims under Sections 1 and 2 of the Sherman Act." In granting defendant’s motion to dismiss, the Court found plaintiff’s conclusory allegations that there was a relevant product market limited to the patented Spirosafe product to be insufficient.

The Court noted that "courts are generally unwilling to find that a patented product constitutes a relevant product market." Rather, the Court found that plaintiff is required to define a relevant product market with reference to "reasonable interchangeability of use." The Court acknowledged that, while a single patented product can constitute a relevant antitrust market in some circumstances, such an allegation only will withstand dismissal based on credible allegations that there are no reasonably interchangeable substitute products.

Practice Hint: In intellectual property cases, antitrust claims frequently arise as counterclaims to patent infringement claims. When crafting an antitrust counterclaim, practitioners should be careful not to define a narrow relevant market solely because the complainant’s product is patented. Rather, the counterclaim should address whether there are any meaningful substitutes for the patented product.

Patent/Infringement

Patentee’s Burden of Proof Under Doctrine of Equivalents Clarified
Contact: Paul Devinsky

The Federal Circuit now has clarified two issues concerning the requisite burdens of proof when considering infringement under the doctrine of equivalents. Fiskars, Inc. v. Hunt Mfg. Co., Case Nos. 98-1560, -1566 (Fed. Cir., July 24, 2000). The Court also upheld a sanction against one of the attorneys for vexatiously and unreasonably increasing the cost of the litigation.

The case concerned Fiskars’ U.S. Patent No. 5,322,001, directed to a paper cutter using a circular blade mounted on a carriage assembly that rode along a rail over the paper. The Distr. Ct. for the W. D. of Wisc. entered judgment against Hunt based on a jury verdict that Hunt infringed the patent in suit under the doctrine of equivalents. The court ruled that prosecution history estoppel did not apply, and also sanctioned Hunt’s counsel for vexatiously and unreasonably pursuing an inequitable conduct defense.

Regarding prosecution history estoppel, the record showed that during prosecution Friskars amended the claims to change the term "cutting blade" to "carriage assembly." Hunt argued this was done to avoid prior art cited by the examiner; Friskars countered that the change was made to broaden the claims beyond just cutting blades in order to encompass perforating and scoring blades. The court, after analyzing the prosecution history and prior art, found that the amendment was not made for reasons of patentability, and that therefore the presumption that an amendment to claims is made for reasons of patentability had been sufficiently rebutted by Friskars. The Federal Circuit discerned no error in that analysis.

Hunt, relying on hypothetical claim analysis in Wilson Sporting Goods, also argued that as part of Friskars’ burden of proof on infringement under the doctrine of equivalents, Friskars had the burden of establishing that Hunt’s device was not in the prior art. The Federal Circuit disagreed, noting that "it is an affirmative defense of the accused infringer to allege and to show that it is practicing the prior art ... The patentee is not required to negate an affirmative defense that has not been pled and supported with evidence." Because Hunt did not produce any evidence showing that its accused device was in the prior art, Friskars had nothing to rebut.

On the issue of inequitable conduct, Hunt asserted that Friskars was guilty of withholding information concerning a material prior art device from the examiner. The record showed that Friskars had submitted a brochure about the device and listed the submission on a PTO form filed in the case. The examiner drew a line through the entry, thereby indicating that he did not consider it. Hunt argued that this obligated Friskars to call the examiner’s attention to the prior art again. The Federal Circuit rejected this argument: "We do not know the examiner’s reason for lining out the [prior art], but Fiskars’ citation as prior art defeats Hunt’s charge that the ... device was withheld with deceptive intent. An applicant is not required to tell the PTO twice about the same prior art ... "

Finally, with regard to the sanctions, Hunt’s counsel argued that it had presented at least a prima facie case of inequitable conduct, such that the sanction was proper. But the Federal Circuit agreed with the lower court that "an applicant’s citation of prior art in accordance with the rules of the PTO precludes a finding of withholding of that prior art with deceptive intent." Thus, the evidence fell short of even a prima facie case of inequitable conduct.

Internet/Domain Names

Eastern District of Virginia Holds That Registering Domain Names With Network Solutions, Inc. Is Insufficient to Establish Personal Jurisdiction
By Carrie A. Shufflebarger

In a pair of cases, the Distr. Ct. for the E.D. of Virginia recently held that merely registering a domain name with Network Solutions, Inc. (NSI), a domain name registrar located in Virginia, is insufficient to confer personal jurisdiction over the domain name holder.

In America Online, Inc. v. Chih-Hsien Huang, et. al., Civ. No. 00-290-A, 2000 U.S. Dist. LEXIS 10232 (E.D. Va., July 13, 2000), America Online brought suit in the E.D. of Virginia against eAsia, Inc., a California corporation with its principal place of business in Taiwan, for violations of the Anti-Cybersquatting Consumer Protection Act (ACPA) and various other Lanham Act and common law trademark claims. The suit stemmed from eAsia’s use of America Online’s "ICQ" trademark in the domain names picq.com, picq.net and cicq.net, and its use of the mark on its websites.

America Online attempted to support personal jurisdiction over eAsia based on the "transacting business" provision of the Virginia Long-Arm Statute. While noting that the well-settled law in Virginia is that a single act may constitute the transaction of business in the state, and that the domain name registration transaction arguably falls within the plain language of the long-arm statute, the Court expressed its concern over the modest nature of the transaction. Instead, the Court based its finding of lack of personal jurisdiction on the due process requirements of the U.S. Constitution. The Court found eAsia had not purposefully availed itself of the privilege of conducting activities within Virginia, observing that eAsia entered into a standard registration agreement with no negotiation of terms, that it entered the contract via the Internet using its computers located in California and/or Taiwan, that the transactions were brief and involved little interaction, and that eAsia may not have even known it was transacting business with a company located in Virginia because NSI does not hold itself out as such on its website. Since eAsia had not purposefully directed its activities at the E.D. of Virginia, the Court found that due process would be offended if the Court asserted personal jurisdiction over it.

In Heathmount A.E. Corp. v. Technodome.com, Case No. CA-00-00714-A, 2000 U.S. Dist. LEXIS 10591 (E.D. Va., July 24, 2000), the court faced a similar issue in determining the nature of Heathmount’s burden to prove the "absence" of personal jurisdiction over a Canadian defendant in order to proceed in rem against domain names under the ACPA. Under the in rem provision of the ACPA, a plaintiff must "disprove" the presence of personal jurisdiction in order to proceed in rem by showing either that the owner of the domain name can not be ascertained and/or located after due diligence, or that the owner of the domain name is not subject to personal jurisdiction within any judicial district in the United States.

The Court determined that Heathmount had undertaken the requisite due diligence in attempting to uncover information about the defendant upon which it might base personal jurisdiction. Specifically, the Court noted that the defendant’s contract with NSI was the only contact the defendant had had with the United States, that Heathmount had contacted the defendant on several occasions in an attempt to gather information and resolve the dispute, and that the defendant had argued in an ICANN proceeding that he had not consented to jurisdiction in a Virginia state or federal court because the NSI service agreement under which he is bound did not contain a jurisdictional waiver. Based on these facts, the Court found that Heathmount had exercised the requisite amount of due diligence, and, based on the AOL case, the defendant was not subject to personal jurisdiction within Virginia. Accordingly, proceeding in rem pursuant to the ACPA was found to be proper.

Patent/e-Commerce

PTO Holds Roundtable on E-Commerce Patents
By Paul Devinsky and Stephen C. Carlson

On July 27, 2000, the U.S. Patent and Trademark Office (PTO) held a roundtable discussion with e-commerce business leaders and attorneys about improving the PTO’s practices for business method patent applications.

The major issue expressed by several members of the roundtable was that there is a strong perception in the e-commerce industry that many computer-implemented business method patents were too leniently examined. In particular, concerns were raised about the standard of obviousness applied by the examiners and the ability of examiners to find the best prior art for business methods.

In response, the PTO pointed to its initiative announced March 31, 2000 to provide a second-level review of all applications allowed in Class 705, which encompasses business methods. This initiative was reported in the April 2000 issue of the Intellectual Property Update. The PTO also announced that it has published guidelines clarifying how examiners are to formulate their obviousness rejections, with emphasis on what is a proper rationale to combine the references.

Several panelists made suggestions for sources of prior art that have not yet been effectively exploited by the PTO, including Internet newsgroups, old computer manuals and textbooks, and prior art clearinghouses and websites. The Director of the PTO stated that another source of prior art could come directly from the public in response to the eighteenth-month publication of applications (also reported in our April 2000 issue), although current law forbids formal pre-grant oppositions to patent applications.

Other concerns raised during the roundtable touched on reexamination. Due to the estoppel effect on any later litigation, many panelists felt that they would prefer to save their best prior art for the litigation.

Practice Hint: Despite the statutory presumption of validity for issued patents, practitioners are still concerned about the practical validity of business method patents. The e-Commerce Practice Group in the Intellectual Property Department at McDermott, Will & Emery has long recommended to its clients that applicants for e-commerce patents "shore up" this presumption of validity by going beyond mere compliance with the PTO’s disclosure requirements to affirmatively seek out the best prior art for citation as early in the prosecution history as possible.

Trademarks/Domain Names

Proof of Bad Faith Intent Required for In Rem Action Under the ACPA
By Paul Devinsky and Michelle L. Vizurraga

The S. Dist. of New York recently held that the in rem provisions of the Anti-Cybersquatting Consumer Protection Act (ACPA) require a showing of bad faith intent to profit from the registered mark by the domain name owner. BroadBridge Media, LLC v. Hypercd.com, 2000 U.S. Dist. LEXIS 9516 (July 7, 2000). This decision significantly increases the trademark owners’ burden in an in rem action under the ACPA by requiring a plaintiff to prove the bad faith intent of an individual or entity that may be either unidentifiable or impossible to locate.

In reaching its decision, the court interpreted the in rem provision of the ACPA to require that the trademark owner must be unable to obtain in personam jurisdiction over the registrant, who would otherwise have been a defendant in a civil action, brought under another provision of the ACPA, and that in order to be brought as a defendant requires, inter alia, the requisite bad faith intent.

The court also found that the Internet Corporation for Assigned Names and Numbers (ICANN) Policy does not prohibit concurrent ICANN administrative and federal district court proceedings under the ACPA over the same domain name.

Practice Note: The BroadBridge decision may be limited to its specific facts in the future because the registrant in this case appeared and argued its case, despite the court’s lack of in personam jurisdiction over it. Thus, this case did not unfold as a traditional in rem proceeding. As a result of the BroadBridge decision, in future in rem proceedings where the domain name registrant is identifiable, the plaintiff will be required to provide evidence of bad faith. However, in those instances where a domain name owner is unidentifiable, proving bad faith intent may present an impossible evidentiary burden.

Patent/Claim Construction

Patentee Not Entitled to Broad Interpretation of a § 112, ¶ 6 Claim Element Which Would Encompass Structurally Different Embodiments Would Defeat the Notice Function of Claims
By Leonard T. Guzman

In a case where a patent specification describes more than one embodiment of a physical structure for performing a function, the Federal Circuit now has held that a §112, ¶6 claim element need not be construed to encompass all of the disclosed embodiments. Ishida Co. v. Taylor, No. 99-1505 (Fed. Cir. July 20, 2000).

Alfred A. Taylor sued Ishida Co. ("Ishida") alleging infringement of U.S. Patent No. 4,663,917, which is directed to a packaging apparatus for packaging food products. The patent claims recite an improved packaging apparatus, where the improvement involved performing all of the operations required to package food products in a continuous motion in a single integrated machine.

The claimed invention, as recited in sole independent claim 1, had three elements: (1) a sealing and stripping means; (2) a first arm means; and (3) a second arm means. The only disputed element was the "sealing and stripping means."

In construing claim 1, the district court (1) interpreted the "sealing and stripping means" as a means-plus-function element under § 112, ¶ 6, (2) identified the function as "stripping and sealing" and (3) identified within the specification "purely mechanical" components of the two described embodiments as the structures corresponding to the "stripping and sealing means."

Based on that claim construction, the court granted Ishida’s summary judgment motion of non-infringement, finding that Ishida’s accused device in which control over the stripping and sealing motion was done by computer, achieves the "stripping and sealing" function in a substantially different way than the corresponding structures of the ‘917 patent.

The Federal Circuit affirmed. The Court noted that the specification depicted two separate embodiments that performed the claimed function, that each was structurally very different with only one embodiment including cam tracks, and that attempting to devise a "single claim construction that would encompass all of the illustrated embodiments ... would have had to be so broad as to describe systems with and without [a] basic structural element ... " Thus, a rule requiring a district court to formulate a single claim interpretation in this case "would defeat the notice function of claims, since a skilled artisan attempting, e.g., to design around the patent would have no way to know whether a single claim interpretation that encompassed both embodiments would include [a particular structural element] or not."

Practice Hint: In view of this decision, practitioners should be wary about trying to cover multiple embodiments using means plus function claim mechanical elements and should, instead, consider general structural language or, where necessary, multiple independent claims is to cover each embodiment separately.

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