Publications / McDermott Newsletters / IP Update, Volume 4, No. 3, March 2001

IP Update, Volume 4, No. 3, March 2001

March 2001

IN THIS ISSUE

Patents/Doctrine of Equivalents

Festo Revisited
By Keith E. George

Applying the new Festo estoppel rule, the Federal Circuit relied on amendments and arguments from the prosecution history of the grandparent of a patent that was involved in litigation for an application of doctrine of equivalents (DOE) estoppel. The court also cited the prosecution history from the grandparent case to decide claim construction issues. Biovail Corp. Int’l v. Andrx Pharmaceuticals, Inc., Case No. 00-1260 (Fed. Cir. February 13, 2001).

Biovail is the exclusive licensee of a patent covering the drug Tiazac®, which is used to treat hypertension and angina. The patent claim specifies an extended release composition comprised of beads containing an effective amount of one or more Diltiazem salts as the active ingredient and a wetting agent. The claim states that these elements within the beads are in "admixture."

In light of comments accompanying the amendment in which the applicant first added the term "admixture" to claims in a grandparent application, the district court construed the term "admixture" as requiring two or more items commingled and interdispersed to obtain a "homogeneous product."

Andrx’s product comprises a bead, containing both Diltiazem hydrochloride (a salt) and sugar, encapsulated by a microporous membrane. However, the components in the beads are not mixed during the manufacturing process. The lower court found that there was no homogeneous "admixture" in the Andrx product, and, therefore, there was no literal infringement. Also, in view of the amendment and comments in the grandparent case, the lower court imposed prosecution history estoppel against patentee’s assertions that Andrx’s beads satisfied the "admixture" limitation under the doctrine of equivalents.

The Federal Circuit held that in a series of related patents, derived from the same initial application, prosecution history regarding a claim limitation in any patent that has issued applies with equal force to subsequently issued patents that contain the same limitation. The court relied on this prosecution history principle, both to interpret the "admixture" limitation and to decide issues relating to estoppel and equivalents.

Specifically, the Federal Circuit affirmed the lower court ruling that the term "admixture," when read in light of the relevant prosecution from the grandparent application, requires the materials in the beads to be interspersed so as to be homogeneous. Since the Andrx product is not homogeneously admixed in the dry state, the court affirmed the finding of no literal infringement.

The Federal Circuit, applying the rule from the Festo case, noted that the applicant had added the term "admixture" to the pertinent claims by amendment in the grandparent case, thus narrowing the claim to obtain allowance over the prior art; i.e., the classic reason related to patentability. Hence, the court found that Biovail was completely barred from claiming that any product not containing an homogeneous "admixture" infringes under the doctrine of equivalents.

Practice Note: Prosecution history in one case will impact a claim in a later case in a series, especially where the limitation from the claim in the later case is substantially the same as that in a claim of the earlier case. To avoid this kind of estoppel across multiple cases, in some circumstances it may be advisable to vary claim language between different cases, being careful to explain that the later used language is intended to mean something different from, but not narrower than, the earlier used language.

In formulating remarks in connection with a response to an office action, it is better to rely on the actual claim language and to avoid remarks that provide excessive definition for a claim term. Such remarks may be virtually read into the claim in litigation, resulting in an exceedingly narrow claim scope.

Copyright

Ninth Circuit Affirms Rationale Underlying Napster Injunction
By Carrie Shuffelbarger

The Court of Appeals for the Ninth Circuit affirmed the rationale underlying the district court’s grant of a preliminary injunction against music file-swapping software distributor Napster, finding that Plaintiff recording companies had demonstrated a likelihood of success on the merits of the case but found the injunction as issued to be overbroad. The case was remanded to the District Court. A&M Records, Inc. et al. v. Napster, Inc., Nos. 00-16401, 00-160403, 2001 U.S. App. LEXIS 1941 (9th Cir. February 12, 2001).

In affirming a majority of the rationale underlying the original preliminary injunction, the court noted that the Plaintiffs had shown a likelihood of success on their claims that Napster is liable for contributory and vicarious copyright infringement. Likewise, the court discredited Napster’s alleged fair use defenses, declining to find that "sampling," "space-shifting" or any other uses of the Napster system constituted fair use.

The Court declined, however, to affirm the preliminary injunction insofar as it was "overbroad" and posed an undue burden on Napster to comply with its terms. Rather, the Court remanded the case to the District Court, instructing the court to distribute the burden between the parties. Specifically the Court instructed that the burden should be on the plaintiffs to provide notice to Napster of copyrighted works and files containing such works available on the Napster system before Napster has the duty to disable access to the offending content. Upon receiving notice, Napster then bears the burden of policing the system within the limits of the system.

On remand, the District Court restructured the preliminary injunction, requiring the plaintiffs to provide notice to Napster of each copyrighted work available on the Napster system by title, artist and Napster file name. The notice also must include a certification that the plaintiffs own or control the rights allegedly infringed. Further, the injunction required all parties to use "reasonable measures" to identify similar variations of file names or misspellings of titles or artists’ names of the works identified by the plaintiffs. Once receiving notice from the plaintiffs or "reasonable knowledge" of infringement occurring on its system, Napster must disable or filter the content within three business days. A&M Records, Inc. et al. v. Napster, Inc., Nos. C 99-05183, C 00-1369, 2001 U.S. Dist. LEXIS 2186 (N.D. Cal., March 5, 2001).

Trademark/Distinctiveness

AOL Has Mixed Mail: The Prima Facie Evidence of Distinctiveness Accorded a Registered Trademark Found to Preclude a Summary Judgment Finding
By James E. Griffith

The U.S. Court of Appeals for the Fourth Circuit, in partially reversing a grant of summary judgment, held that a genuine issue of material fact existed as to whether the registered trademark BUDDY LIST was sufficiently distinctive to function as a valid mark. The lower court holding that the America Online (AOL) had failed to establish that the unregistered marks, YOU HAVE MAIL and IM, were sufficiently distinctive to function as trademarks was upheld. America Online, Inc. v. AT&T Corp., Case No. 99-2138, 2001 U.S. App. LEXIS 2866 (4th Cir. February 28, 2001).

AOL has employed the terms BUDDY LIST and IM in connection with its on-line services since 1997 and has used the phrase YOU HAVE MAIL since 1992. AOL federally registered the mark BUDDY LIST in 1998. AT&T subsequently adopted nearly identical terms to refer to various features of its online services, and AOL sued for trademark infringement. AT&T’s motion for summary judgment, that the marks were generic and could not be enforced as plaintiff’s exclusive property, was granted.

The Fourth Circuit upheld the grant of summary judgment regarding the marks YOU HAVE MAIL and IM, and it concluded that the plaintiff had not met its burden of establishing that these unregistered marks possessed a sufficient degree of distinctiveness to warrant trademark protection. Specifically, the court found that AOL could not claim exclusive rights in the phrase YOU HAVE MAIL because AOL used the phrase in its common, factual sense to tell its subscribers that they have mail and also because others in the relevant industry have used and continue to use the phrase in a nearly identical fashion. The circuit court agreed with the district court that AOL had not presented evidence sufficient to warrant enforcement of IM as a trademark.

However, the grant of summary judgment regarding the registered mark BUDDY LIST was reversed. The Fourth Circuit held that because a federal trademark registration functions as prima facie evidence of distinctiveness, the district court erred in ignoring that evidence. Moreover, the prima facie evidence provided by the certificate of registration was sufficient to establish a question of material fact as to the distinctiveness of the trademark that could not be resolved by summary judgment.

Practice Note: Trademark owners enjoy significant benefits when they are able to achieve registration on the Principal Register for their trademarks. The prima facie statutory presumption that a registered mark is distinctive can provide a trademark owner with a significant advantage in litigation against an infringer when the distinctiveness of the registered mark is at issue.

Patent/Litigation

A Showing of "Vulnerability" Is the Correct Standard to Establish the Substantial Question of Validity Needed to Defeat a Preliminary Injunction
By D. Sean Trainor

Reviewing a preliminary injunction granted by a lower court, the Federal Circuit found that barnesandnoble.com (BN) had raised a sufficiently substantial question as to the validity of Amazon’s patent claims to avoid a preliminary injunction. Amazon, Inc. v. barnesandnoble.com, Case No. 00-1109 (Fed. Cir. 2001).

The patent-in-suit, U.S. Patent No. 5,960,411, is directed to "single action" ordering of items in a client/server relationship, e.g., the Internet. Amazon accused the "Express Lane" feature of BN’s website of infringing the ‘411 patent. Each independent claim of the ‘411 patent included limitations to the "single action" facet of the invention. The district court construed the "single action" to occur only after other events transpired, that is, after the presentation of a description of the item being purchased and the presentation of the single action that the user must complete to order the presented item. Based on its interpretation, the district court ruled that Amazon would likely prove that BN infringed the ‘411 patent and that BN had not raised a substantial question as to the validity of the ‘411 patent. Consequently, the court issued a preliminary injunction.

The Federal Circuit reversed, noting that although BN likely infringed the claims of the ‘411 patent, BN had presented evidence sufficient to cast substantial doubt on the validity of the ‘411 patent claims. The Federal Circuit construed all of the independent claims of the ‘411 patent to require that the single action be performed immediately after a display of information regarding an item and absent any intervening action, but not necessarily after the initial display or after every display. In light of this construction, the Federal Circuit ruled that, because BN’s "Express Lane" feature allowed users to purchase items simply by clicking on the "Express Lane" button on the page displaying the product being purchased, BN likely infringed the independent claims.

Regarding validity, the Federal Circuit found that under its claim construction (which eliminated the temporal relationship between certain display and ordering actions found by the lower court), BN had raised a substantial question as to the validity of the ‘411 patent; a question substantial enough to defeat a preliminary injunction motion. The Court stated that,

In resisting a preliminary injunction…one need not make out a case of actual invalidity. Vulnerability is the issue at the preliminary injunction stage, while validity is the issue at trial. The showing of a substantial question as to invalidity thus requires less proof than the clear and convincing showing necessary to establish invalidity…

In the present case, the Federal Circuit noted that no single reference, on its face, disclosed each element of the claimed invention but that several did teach "key limitations of the claims." The Federal Circuit also noted that BN had proffered to the lower court that, if given the opportunity at trial, it could prove "that one of ordinary skill in the art could fill in the gaps." The Federal Circuit ruled that such evidence was sufficient to "mount a serious challenge to the validity of the Amazon patent" and to avoid a preliminary injunction: "validity challenges during preliminary injunction proceedings can be successful on evidence that would not support a judgment of invalidity at trial."

The case was remanded.

Patent/Litigation

All Things Discovered: Materials, Even Attorney-Client Privileged Materials and Confidential Communications, Are Not Protected If Disclosed To A Testifying Expert Witness
By Shamita Etienne-Cummings

The Federal Circuit has now held that all materials provided to a testifying expert are discoverable regardless of whether the expert actually relied upon the content of the material in formulating his opinion. In re Pioneer Hi Bred International, Inc., Case No. 01-M 661-O (Fed. Cir. Feb. 5, 2001).

During litigation involving claims for a breach of contract, patent infringement, and misappropriation of trade secrets, Monsanto deposed Pioneer's in-house counsel and designated Fed. R. Civ. P. 30(b)(6) representative for information regarding an analysis of financial and intellectual property benefits stemming from a merger involving Pioneer and DuPont. Pioneer invoked its attorney-client privilege and instructed the witness not to answer questions regarding this subject matter. Monsanto filed a motion to compel.

In granting Monsanto's motion to compel, the district court offered two reasons why it ordered Pioneer to produce documents and provide additional testimony regarding the disputed subject matter. First, the district court noted that the communications between Pioneer and its counsel regarding the financial and intellectual property implications of the merger was not privileged because the information was intended to be disclosed in a public proxy and to the S.E.C. Second, the district court found that Pioneer had waived its privilege with regard to the opinions and its communication with counsel by disclosing the information to the expert witnesses and DuPont officers and by designating its in-house counsel to testify as its Fed. R. Civ. P. 30(b)(6) representative.

Pioneer sought relief of the order by a writ of mandamus to the Federal Circuit. Applying Eight Circuit law, the Court vacated the district court's order in part, but agreed with the lower court holding that "attorney-client privilege and any work product protection had been waived by disclosure of confidential communication to expert witnesses." Citing to the 1993 Amendments to Rule 26(a)(2) and the accompanying Advisory Committee Note, the Court reasoned that because testifying experts are obligated to disclose data and other information that they consider in formulating their opinion, "litigants should no longer be able to argue that materials furnished to their experts to be used in forming their opinions, whether or not ultimately relied upon by the expert, are privileged or otherwise protected from disclosure when such persons are testifying or being deposed."

On another important point, the Court noted that by offering corporate counsel to testify as to certain factual matters or events, the corporation does not waive attorney-client privilege with regard to attorney-client communications about those facts or events.

Practice Note: All materials given to a testifying expert must be screened by litigation counsel. It should be assumed that all materials provided to the expert will be routinely discovered by the opponent.

Trademarks/E-Commerce

Unauthorized Data Harvesting of Internet Database by Automated Search "Robot" Constitutes Trespass to Chattels
By Michelle L. Vizurraga

The District Court for the Southern District of New York has now joined several other courts in holding that the unauthorized use of a software program or "robot" to access a party's Internet database constitutes a trespass to chattels. Register.com v. Verio Inc., 126 F. Supp. 2d 238 (S.D.N.Y. December 8, 2000).

Plaintiff, Register.com, is a top-level Internet domain name registrar that, in addition to domain name registration, offers related website and domain name hosting and email services. Register maintains a "WHOIS" database that contains the names, telephone number, and other contact information of its customers. Defendant, Verio Inc., offers website hosting and comprehensive Internet services, which directly compete with plaintiff's services. In 1999, defendant began using a software program or "robot" to search various Internet registry "WHOIS" databases, including plaintiff's database, to harvest data and ascertain new customers for its mass marketing efforts. Regester filed suit against Verio and moved for a preliminary injunction claiming trespass to chattels, breach of contract, violations of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and violations of the Computer Fraud and Abuse Act. The court granted the preliminary injunction, finding that plaintiff had demonstrated a likelihood of success on the merits of all claims and established that it would suffer irreparable harm without such relief.

The court explained that liability for trespass to chattels in New York arises when one uses a chattel outside the scope of consent of another and causes any harm from such use, even though the use does not become a conversion. The scope of consent in this case was found in the "terms of use" on plaintiff's website, which the court found did not prohibit the use of the search "robot" but did prohibit use of the data for defendant's own marketing purposes. Because Verio knew that the robot's data harvesting was unwelcome and it caused a strain on plaintiff's database, the court concluded there was sufficient evidence to establish a possessory interference by defendant and the requisite harm to support Register's trespass to chattels claim. The concern that the evidence of harm was unquantifiable were allayed by testimony from Register's technology officer that Verio's database searching resulted in more than a 2% diminishment of the resources of the Register system.

The court summarily rejected Verio's defense that Register's services could be analogized to that of a public utility whose facilities were also public, and found that Register had established a likelihood of success for breach of contract because Verio used the WHOIS database information for mass marketing purposes. The court also found that Verio's marketing tactics violated Section 43(a) of the Lanham Act, because Verio named Register in emails to prospective customers in soliciting new business, which was likely to cause confusion as to Verio's affiliation or sponsorship with Register. Finally, the court found that Verio's conduct prima facie violated the Computer Fraud and Abuse Act 18 U.S.C. § 1030 et. seq. because Register.com had established that Verio intentionally accessed its computers without authorization, obtained information and caused harm, thereby using the unauthorized access to obtain data for mass marketing purposes.

Practice Note: The trespass against chattle issue as it relates to the use of robots to exploit database information has also been the subject of recent litigation in California. See, cases reported in McDermott, Will & Emery IP Update editions of June 2000 and September 2000.

Trademark/Dilution

Second Circuit Holds that a Trademark Must Not Only Be Famous, It Must Also Be Inherently Distinctive in Order to Be Protected Under the Federal Dilution Act
By John J. Dabney and Robert W. Zelnick

The Second Circuit has held that in order to be protected under the federal Dilution Act, a trademark must not only be famous but must also be inherently distinctive. TCPIP Co. v. Haar Comms. Inc., 2001 U.S. App. LEXIS 2867 (2d Cir. Feb. 28, 2001).

Plaintiff owned the federally registered trademark THE CHILDREN’S PLACE for retail store services in the field of children’s clothing and accessories. The defendant registered the domain name thechildrensplace.com in preparation for creating an Internet portal for children. The district court awarded a preliminary injunction on the ground that defendant’s domain name infringed and diluted the plaintiff’s mark.

The Second Circuit affirmed in part and reversed in part. The court affirmed the finding of trademark infringement. However, the court reversed the finding of dilution, holding that as a matter of law, a descriptive mark is not entitled to protection under the Federal Dilution Act (§ 43(c)). The Court reasoned that descriptive marks have always been afforded a narrow scope of protection under trademark law, so as not to inhibit competitors from describing their products. According to the court, affording dilution protection to descriptive marks would undermine that important policy, even assuming that the mark in question
was famous.

In the course of his opinion, Judge Leval presented the view that providing even world-famous descriptive marks with dilution protection, would distort the "tenuous compromise wrought by the Lanham Act" regarding the narrow scope of protection afforded to descriptive marks:

Descriptive marks, often asserting geographical identity or nation-wide prominence, or claiming merit or strength, abound in the U.S. marketplace. A few well-known examples are American, National, Continental, Metropolitan, Pacific, Southern, Texas, Chicago, Federated, United, Consolidated, Allied, First National, Acme, Merit and so forth. Some of the holders of these inherently weak marks are huge companies; as a function of their commercial dominance, their marks have become famous. It seems unlikely that Congress could have intended that the holders of such non-distinctive marks would be entitled to claim exclusivity for them throughout all areas of commerce. (Emphasis supplied.)

Practice Note: The Second Circuit decision conflicts with the Third Circuit decision in Times Mirror Mags., Inc. v. Las Vegas Sports News, L.L.C., 212 F.3d 157 (3d Cir. 2000) where that court affirmed the finding that the mark THE SPORTING NEWS qualified for protection under the Federal Dilution Act on the basis of acquired, rather than inherent, distinctiveness. The Second Circuit decision may also be difficult to reconcile with the legislative history of the Dilution Act, which provides that protection should be afforded to such famous marks as the surname DUPONT, which had acquired distinctiveness as a trademark; and the explicit language of Dilution Act itself, which provides, in relevant part, that "[i]n determining whether a mark is distinctive and famous, a court may consider factors such as, but not limited to — (a) the degree of inherent or acquired distinctiveness of the mark." (Emphasis supplied.) As noted by Judge Loval, under the Second Circuit decision, some of the most famous trademarks would be denied protection under the dilution statute.

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