IP Update, Volume 3, No. 6, June 2000
June 2000
IN THIS ISSUE
- Patents - Absence of Function Described in Specification but Not Claimed Is Basis for Summary Judgment of No Equivalents
- Patents/Breach of Contract - Federal Circuit Takes Jurisdiction Over Breach of Contract Claim Involving Patent License
- Trademarks - Trafficking in Counterfeit Marks Apart From Goods Creates No Liability Under Criminal Counterfeiting Statute
- Internet/Domain Names - Federal District Courts Not Bound by the Outcome of an ICANN Administrative Proceeding
- Internet/Cybersquatting - Court Dismisses In Rem Action Against Alleged Cybersquatter
- Internet/Copyrights - District Court Enjoins the Unauthorized Searching of Website by Software Robots As Trespass Against Chattel
- Patents/Prosecution - New PTO Rule Changes Prosecution After Final Rejection; Adopts Credit Card Accounts
Absence of Function Described in Specification but Not Claimed Is Basis for Summary Judgment of No Equivalents
By Paul Devinsky
The failure of an accused device to perform the "reliability function" described in a patent specification, but not claimed, justified a summary judgment of no infringement under the doctrine of equivalents. Vehicular Technologies Corp v. Titan Wheel International, Inc. No. 99-1042, (Fed. Cir., May 22, 2000).
Vehicular Technologies Corp. (VT) is the assignee of U.S. Patent No. 5,413,015 which is directed to an automatic locking differential for automobiles. The patent claims recite an improved locking differential having parts that are easily manufactured, installed and maintained. The improvement was due in part to spring assemblies that use two concentric coil springs and a pin rather than the prior art spring-disk-pin grouping.
Titan Wheel International Inc., (Titan) initially copied the design, but later modified the locking differential by replacing the inner spring of the two-spring assembly with a single -spring having a plug stuck in one end. VT sued Titan alleging infringement under the doctrine of equivalents. In an earlier case, the district court granted VT’s motion for a preliminary injunction, but the injunction was vacated by the Federal Circuit, finding that the district court failed to recognize "reliability" as a function performed by the "two concentric springs" claim limitation, a function not present in the accused device. In that case, Judge Newman dissented, arguing that the majority had incorrectly imposed a new "all advantages rule." On remand, the district court issued a summary judgment ruling of noninfringement, finding that the '015 patent disavowed all devices not equipped with a double-spring assembly.
In this appeal, VT contends that, based on testimony of the inventor of the '015 patent, the summary judgment record raised significant issues about the importance of the reliability objective as stated in the patent specification.
The Court first observed that a previous Federal Circuit panel had already interpreted the '015 patent claims and considered the issue of infringement by equivalents, finding that one important function of the "two concentric springs" limitation was to improve reliability. The Court found that an accused device which does not perform this function could rarely, if ever, be considered to be "insubstantially changed" from the claimed invention:
"In other words, the extrinsic evidence invoked by [VT] to show a potential issue of fact relating to the importance of the reliability issues does not trump the clear disclosures and assertions in the patent itself."
The Court also found that no reasonable jury could find infringement by equivalents since the claim uses the closed "consisting of" format which expressly requires two springs:
The phrase "consisting of" is a term of art in patent law signifying restriction and exclusion, while, in contrast, the term "comprising" indicates an open-ended construction. In simple terms, a drafter uses the phrase "consisting of" to mean "I claim what follows and nothing else." A drafter uses the term "comprising" to mean "I claim at least what follows and potentially more." In this case, the drafter limited the claim to two concentric springs and nothing else.
Practice Note: Two important lessons can be learned from this case: (1) intrinsic claim construction evidence trumps extrinsic evidence almost every time; and (2) avoid "consisting of" claim preambles whenever possible, especially for mechanical inventions.
Federal Circuit Takes Jurisdiction Over Breach of Contract Claim Involving Patent License
By Laura Eversole
The Federal Circuit recently accepted a case transferred from the Seventh Circuit involving the breach of a patent license agreement. U.S. Valves, Inc. v. Dray, 99-1586, -1587, 2000 U.S. App. LEXIS 11374 (Fed. Cir., May 22, 2000).
The dispute involved an "internal piston valve" invented and patented by Dray. Dray exclusively licensed his patent rights to U.S. Valves. After a falling out between the parties, Dray began making and selling the internal valves himself, as well as a "sliding ring valve" that serves the same purpose as the internal piston valve. U.S. Valves filed suit for breach of contract, claiming that the sale of either valve by Dray violated the exclusive license agreement.
U.S. Valves brought its claim in Indiana state court, but Dray removed it to federal district court based on diversity jurisdiction. The trial court found in favor of U.S. Valves and awarded damages. Both parties appealed various aspects of the trial court’s decision to the U.S. Court of Appeals for the Seventh Circuit. Dray subsequently asked the Seventh Circuit to transfer the appeal to the Federal Circuit alleging U.S. Valves’ claim required an application of patent law. The Seventh Circuit agreed and transferred the case.
Accepting jurisdiction, the Federal Circuit noted that patent law jurisdiction only extends to those cases in which federal patent law creates the cause of action or that the plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal patent law. The license agreement at issue granted U.S. Valves "an exclusive right to manufacture, use, sell, advertise and distribute the Licensed Product." Thus, according to the Court, in order to establish its claim for relief, U.S. Valves would have to show that valves sold by Dray were covered by the licensed patents, i.e., that the valves infringed the licensed patents, and therefore, patent law was a necessary element of U.S. Valves’ breach of contract action.
Practice Note: Applying the same reasoning relied upon by the Federal Circuit and the Seventh Circuit, it would appear that many claims involving the breach of a patent licensing agreement (i.e., disputes regarding "covered products") present a question of federal law. Parties involved in patent license disputes having an issue of whether a product is within the scope of a license grant should consider filing or removing such cases to federal district court.
Trafficking in Counterfeit Marks Apart From Goods Creates No Liability Under Criminal Counterfeiting Statute
By John J. Dabney
The Tenth Circuit has held that a defendant cannot be held criminally liable under the federal criminal counterfeiting statute for trafficking in federally registered trademarks which are not attached to the product to be sold.
United States v. Giles, 2000 U.S. App. LEXIS 11089 (10th Cir., May 19, 2000).
The defendant, Giles, sold a "patch set," which consisted of a leather patch and a gold medallion, both of which bore the federally registered logo of "Dooney & Bourke," and a leather strap used to attach the medallion to a purse or piece of luggage; the leather patch would be attached by sewing or gluing. Once attached, the "patch set" would have the effect of making the purse or luggage appear to be branded by Dooney & Bourke.
Giles was indicted and convicted by a jury under the federal criminal counterfeiting statute, 18 U.S.C. § 2320, for trafficking in counterfeit goods and sentenced to prison. Giles' motions to dismiss the indictment and for acquittal were denied.
On appeal, the Tenth Circuit reversed, noting that in order to be held criminally liable for trafficking in counterfeit goods under the statute, a defendant must, among other things, have trafficked in "goods" and used a counterfeit mark on or in connection with such "goods." Reviewing the criminal counterfeiting statute and the Lanham Act, the court reasoned that the term "goods" as used in the criminal statute, did not include the mark itself disconnected from the goods which were ultimately sold for profit. The court concluded that the "patch sets" were simply marks disconnected from the actual goods sold for profit, i.e., the purses and luggage. Because the court found that the criminal statute does not prohibit trafficking in counterfeit marks, divorced from the underlying "goods," the conviction was reversed and the case remanded with instructions to dismiss the indictment.
The court distinguished the Fifth Circuit’s decision in Boston Professional Hockey, which had held that the marks themselves constituted goods, on the ground that the case involved a violation of the civil Lanham Act and, in any event, had applied an overly broad conception of trademark rights.
Federal District Courts Not Bound by the Outcome of an ICANN Administrative Proceeding
By Carrie A. Shufflebarger
The United States District Court for the Northern District of Illinois recently held that it is not bound by the outcome of an Internet Corporation for Assigned Names and Numbers administrative proceeding (ICANN proceeding) filed pursuant to the Uniform Domain Name Dispute Resolution Policy (UDRP). Weber-Stephen Products Co. v. Armitage Hardware and Building Supply, Inc., No. 00 C 1738 (N.D. Ill., May 3, 2000).
Plaintiff Weber-Stephen Products Company (Weber) initiated an ICANN proceeding pursuant to the UDRP against Defendant Armitage Hardware and Building Supply, Inc. (Armitage), the registrant of several domain names that allegedly violate Weber’s trademark rights. The next day, Weber also filed suit against Armitage in the federal court, alleging, inter alia, violations of the Anticybersquatting Consumer Protection Act (ACPA). Armitage filed a motion with the Court requesting that the Court declare the administrative proceeding non-binding, and stay the federal court case in favor of the administrative action.
Citing the UDRP and its accompanying rules, the Court determined that it is not bound by the outcome of an ICANN proceeding. The Court noted that the UDRP rules contemplate the possibility of parallel proceedings in federal court, and that sections of the UDRP state that administrative panel decisions will not be implemented if an official copy of a complaint is filed within 10 business days of the decision. Based on these provisions, the Court granted Armitage’s motion to stay the case pending the outcome of the ICANN proceeding. The Court declined, however, to determine what standard of deference (if any) it would give to such a decision, noting that neither the ICANN Policy nor its governing rules dictate to Courts what weight should be given to a panel’s administrative decision.
Court Dismisses In Rem Action Against Alleged Cybersquatter
By Carrie A. Shufflebarger
In rem jurisdiction under the Anticybersquatting Consumer Protection Act (ACPA) requires proof that a plaintiff cannot obtain in personam jurisdiction over the defendant, as well due process. Lucent Technologies, Inc. v. Lucentsucks.com, Civil Action No. 99-1916-A, 2000 U.S. Dist. LEXIS 6159 (E.D.Va. May 3, 2000).
Lucent sent a cease and desist letter via Federal Express to Russell Johnson, the registrant of Lucentsucks.com, which was returned as undeliverable. Lucent sent a second cease and desist letter to Johnson by e-mail and United States mail, the latter of which was successfully delivered because Johnson had left a forwarding address with the United States Postal Service. Eight days after sending the second letter, Lucent filed an in rem action against the domain name "Lucentsucks.com" pursuant to § 1125(d)(2)(A)(ii)(II) of the ACPA. Five days after the in rem action was filed, Johnson contacted Lucent’s counsel.
The Court dismissed the in rem suit, finding that Lucent had failed to satisfy the in rem jurisdictional provision of the ACPA. This provision allows a plaintiff to proceed with an in rem action only if the Court finds either that the plaintiff is unable to obtain in personam jurisdiction over the domain name registrant, or that through due diligence the plaintiff was unable to find the domain name registrant. Since Lucent knew Johnson was the registrant, proceeding under the in rem provision of the ACPA was inappropriate. Further, the Court found that Lucent had failed to satisfy the due diligence clause of the ACPA because it did not allow a reasonable time for Johnson to respond to its second cease and desist letter before filing the in rem action. The Court determined that due process mandates a reasonable time to respond to such demands, and that eight days does not satisfy this due process requirement.
District Court Enjoins the Unauthorized Searching of Website by Software Robots As Trespass Against Chattel
By Laura Eversole
Relying on a trespass to chattel theory, the U.S. District Court for the Northern District of California recently enjoined the use of an automated querying program designed to crawl the eBay web site. See eBay, Inc. v. Bidder’s Edge, Inc., No. C-99-21200, 2000 U.S. Dist. LEXIS 7287 (N.D. CA., May 23, 2000).
eBay, an Internet-based trading site, brought suit against Bidder's Edge for unauthorized use of eBay’s website. Bidder's Edge used software robots to collect information about eBay’s auctions to place on its own website. The eBay website contained a specific "click on" notice in the form of a robot.txt file that indicated access to the site by software robots was restricted. In spite of this notice, the Bidder's Edge robots accessed the eBay site approximately 100,000 times per day, representing up to 1.53% of the total load on eBay’s listing servers. eBay requested that Bidder's Edge cease accessing eBay’s site and cease posting information about eBay’s auctions on its own website. After eBay’s offer to extend a license to Bidder's Edge was rejected, eBay attempted to block further access by blocking the IP addresses Bidder's Edge used to query the eBay servers. However, Bidder's Edge continued to crawl eBay’s site using proxy servers to evade eBay’s blocks.
eBay sought preliminary injunctive relief to prevent Bidder's Edge from accessing the eBay computer system. The district court issued a preliminary injunction over Bidder's Edge argument that since the eBay site is publicly accessible, it cannot be a trespasser. Rather, the court found that eBay had demonstrated a likelihood of success on the merits of its trespass claim, likening that claim to a trespass against real property. The court stated: "If eBay were a brick and mortar auction house with limited seating capacity, eBay would appear to be entitled to reserve those seats for potential bidders [and] to refuse entrance to individuals (or robots) with no intention of bidding."
The court rejected Bidder's Edge’s argument that eBay’s trespass claim was preempted by federal copyright law and thus should be dismissed since eBay’s earlier filed copyright infringement claim had been dismissed. The court held that the right to exclude others from using physical personal property (here, eBay’s servers) is not equivalent to rights protected by copyright laws and thus the trespass claim was not preempted. In doing so, the court noted that just three months ago, the district court for the Central District of California reached a different conclusion in Ticketmaster Corp. v. Tickets.com, Inc., 2000 U.S. Dist. LEXIS 4553, No. CV-99-7654 (Mar. 27, 2000).
New PTO Rule Changes Prosecution After Final Rejection; Adopts Credit Card Accounts
By Stephen C. Carlson and Thomas D. Robbins
The USPTO has issued a new rule, 37 CFR § 1.114, effective May 29, 2000, that permits continued examination of an application after final rejection or allowance by filing a Request for Continued Examination (RCE). The new RCE practice replaces the use of Continued Prosecution Application (CPA) practice for all utility patent applications filed after May 29, 2000. Either the new RCE practice or the current CPA practice may be used to continue examination of utility patent applications filed on or after June 8, 1995 but prior to May 29, 2000. The RCE practice is not available for utility patent applications filed before
June 8, 1995, provisional patent applications, re-examinations, applications on appeal to the Federal Circuit or design patent applications.
An RCE filing continues prosecution after a final action or closing of prosecution on the merits by filing a "submission" and a fee identical in amount to a basic application filing fee. A submission under Rule 1.114 may include such filings as an information disclosure statement (IDS), an amendment, new arguments or new evidence in support of patentability. Upon timely filing of the submission, the USPTO will withdraw the finality of any Office Action and will enter and consider the submission. An RCE filing made after an appeal to the Board of Patent Appeals and Interferences will be treated as a request to withdraw the appeal and reopen prosecution before the examiner.
Because both CPA and RCE practice are available for utility patent applications filed between June 8, 1995 and May 29, 2000, the patent practitioner should be aware of the differences between the two practices. The basic difference is that an RCE filing continues examination of the current application on which it is based, but the CPA is technically the filing of a new application. Therefore, when filing a CPA, any additional excess claim fee must be paid. However, with a CPA the applicant may shift any prior election of restricted claims and also may benefit from new USPTO provisions applicable to applications filed after May 29, 2000, including patent term extensions to compensate for USPTO delays and disqualification of certain commonly assigned patents as prior art for obviousness under 35 U.S.C. § 103(c).
In another notice, the USPTO has announced that, effective June 5, 2000, credit card payments for any patent process fee, trademark process fee and information product fee will be accepted under Rule 1.23. Any refunds for such payments will be made to the credit card account.
