IP Update, Volume 3, No. 9, September 2000
September 2000
IN THIS ISSUE
- Trademark/Infringement - Claim Preclusion Will Not Bar a Petition for Cancellation Filed by the Plaintiff in a Prior Lawsuit for Trademark Infringement
- Patent/Prosecution - Final Rules Issued for RCE Practice, Provisional Applications and Prior Art for Obviousness
- Patents - Scope of Article "A" in Claim Interpreted by Federal Circuit Court of Appeals
- Trade Secrets - Trade Secret Misappropriation Claims Do Not Require Corroboration of Trade Secret Existence
- Copyright/Internet - Ticketmaster v. Tickets.com: In the Wake of eBay v. Bidder’s Edge, Ticketmaster Court Refuses to Enjoin Copying of Website Data
- Domain Name/Internet - New Top Level Domain Proposals to be Accepted in Early September
Claim Preclusion Will Not Bar a Petition for Cancellation Filed by the Plaintiff in a Prior Lawsuit for Trademark Infringement
By James E. Griffith
The U.S. Court of Appeals for the Federal Circuit, reversing the dismissal of a trademark opposition by the Trademark Trial and Appeal Board (TTAB), held that the doctrine of claim preclusion did not bar a later petition for cancellation where petitioner had previously brought a suit for trademark infringement against the registrant. Jet, Inc. v. Sewage Aeration, Case No. 99-1518 (Fed. Cir. August 23, 2000).
Under the doctrine of claim preclusion, a judgment on the merits in a prior suit bars a second suit involving the same parties based on the same cause of action. A suit will be barred by claim preclusion if the following three factors are present: (1) identity of parties, (2) an earlier final judgment on the merits of a claim, and (3) the basis of the second claim on the same set of transactional facts as the first. Courts have variously defined the transaction" as a "core of operative facts," the "same operative facts," or the "same nucleus of operative facts," and "based on the same, or nearly the same, factual allegations."
In Jet, the parties agreed that the first two factors were present. The claim preclusion analysis therefore hinged solely upon an analysis of the transactional facts involved in the two causes of action, i.e., a trademark infringement action and a cancellation proceeding.
After reciting the elements of each cause of action, the Court noted that an infringement action requires that the plaintiff have a valid, registered mark and that the defendant has used an infringing mark in commerce in connection with the sale or promotion of goods or services. In contradistraction, a cancellation proceeding only requires that the respondent (the party in the position of the defendant) hold a federally registered mark and is only an inquiry into the registrability of the mark.
The Federal Circuit noted that the denial of claim preclusion did not close the door on a claim of issue preclusion, a defense which bars the revisiting of "issues" that have already been litigated between the parties in a prior proceeding. Consequently, the Court remanded to the TTAB for consideration of "whether the (likelihood of confusion) issue decided in the infringement litigation is sufficiently the same as that involved in the cancellation proceeding to determine that (the plaintiff) should not now be allowed to relitigate" the issue.
Final Rules Issued for RCE Practice, Provisional Applications and Prior Art for Obviousness
By Lawrence T. Cullen
RCE Practice
The USPTO issued final rules for the Request for Continued Examination (RCE) practice, which will replace the current Continued Prosecution Application (CPA) practice. Section 1.53(d)(1) has been amended to provide that CPA practice does not apply to applications, including CPAs filed on or after May 29, 2000. The new RCE practice is implemented in section 1.114 and is available for continuing prosecution of an application filed on or after May 29, 2000.
Section 1.114(a) requires that, if prosecution is closed, the request may be made by filing a submission and an appropriate fee prior to the earliest of: 1) payment of the issue fee, unless a petition under 1.313 is granted; 2) abandonment of the application; or 3) the filing of a notice of appeal to the CAFC. Section 1.114(b) defines prosecution as being closed if the application is under appeal, a final Office Action is outstanding, a notice of allowance is sent, or an action that otherwise closes the prosecution is taken. Section 1.114(c) sets forth that a "submission" is an IDS, an amendment, new arguments, or new evidence in support of patentability.
The new RCE practice has the following significant differences from the CPA practice: an RCE is not permitted unless prosecution in an application is closed; the fee for an RCE does not have an additional claim calculation fee component; the filing (request) fee may not be deferred; the request is entitled to the benefit of a certificate of mailing; and the applicant may not obtain examination of a different or divisional invention via an RCE request.
Provisional Applications
The USPTO issued final rules for implementing the amendments to title 35 regarding provisional applications.
Section 1.7 provides that if the day that is twelve months after the filing date of a provisional application falls on a Saturday, Sunday or a Federal Holiday within the District of Columbia, then the period of pendency is extended to the next business day. Moreover, under new section 1.53(c)(3), a provisional application may simply be converted to a nonprovisional application. However, if the provisional is converted to a nonprovisional, the term of the subsequently issued patent will start upon the provisional filing date, whereas the term for a patent issued from a new application claiming priority to a provisional would start upon the filing date of the new application. Moreover, in order for a provisional to be converted to a nonprovisional, a conversion fee under section 1.17(i) must be paid, and the provisional application must comply with all matters that a nonprovisional must comply, such as a completed oath/declaration, a nonprovisional filing fee, and the requirements of 35 U.S.C. § 112. In the event that a converted provisional is filed as a provisional without the nonprovisional filing fee and/or without an appropriate oath/declaration, then a surcharge will be required, as set forth under section 1.16(e). The above aspects would be avoided by simply filing a new application which claims priority to the provisional under 35 U.S.C. § 119.
Obviousness Over Prior Art
The USPTO also amended section 1.104(c)(4) to exclude prior art under 35 U.S.C. § 102(e), (g) or (f) which was commonly owned or was subject to assignment to the same entity at the time the invention was made. Previously, the exclusion applied only to prior art under § 102(g) and (f). Although the effective date of the revised section 1.104(c)(4) is May 29, 2000, these prior art exclusion provisions became effective immediately upon passage of the American Inventors Protection Act of 1999, which was November 29, 1999.
Scope of Article "A" in Claim Interpreted by Federal Circuit Court of Appeals
By Natalia Blinkova
In a dispute over the indefinite article "a" or "an," the Federal Circuit reiterated its traditional claim construction. In KCJ Corp. v. Kinetic Concepts, Inc., 2000 U.S. App. LEXIS 20963 (Fed. Cir. Aug. 18, 2000), the Court read the clause "a…continuous…chamber" to mean "having one or more continuous chambers." (emphasis supplied).
The case concerned the claims of a patent on therapeutic mattresses for preventing bedsores. Whereas the district court read the clause in question to signify "one non-interrupted inflatable chamber," the Federal Circuit held that "an indefinite article 'a' or 'an' in patent parlance carries the meaning of 'one or more' in open-ended claims containing the transitional phrase 'comprising'."
The article "a" receives this customary interpretation unless the claim language or context suggests an ambiguity in the general meaning of an article. In that case, the court looks to the written description and prosecution history to determine whether to limit the meaning of "a" or "an" to mean singular rather than one or more. However, when, as in KCJ Corp., intrinsic evidence does not disclaim the accepted meaning, the court presumes the article to mean "one or more."
Trade Secret Misappropriation Claims Do Not Require Corroboration of Trade Secret Existence
By Dawn L. Palmer
The Federal Circuit has now held that a trade secret holder does not need to corroborate the existence of the trade secret with evidence beyond that of interested parties. Also, while clarifying a previous Federal Circuit case, the court stated that the award of interest in misappropriation cases should not always be treated the same as in patent cases. C&F Packing Co. v. IBP, Inc., Case # 99-1312, -1313 (Fed. Cir. 2000).
C&F owned U.S. Patent No. 4,800,094 ("the '094 patent") directed to a process for making pre-cooked sausage toppings. C&F retained improvements made on the process and related equipment after the application filing as trade secrets.
Under a supply contract with Pizza Hut, C&F divulged its process to several other suppliers of Pizza Hut. In 1989, Pizza Hut provided IBP, a competitor of C&F, with information regarding a process for making pre-cooked sausage toppings and began purchasing sausage from IBP soon thereafter.
C&F sued IBP for patent infringement and Illinois state law claims including trade secret misappropriation. C&F also sued Pizza Hut for inducement of patent infringement and several Illinois state law claims, including trade secret misappropriation and fraud. Following counterclaims and motions to dismiss by IBP and Pizza Hut, the only claims before the jury were the misappropriation claims against IBP.
Based on its determination that C&F possessed trade secrets, the jury found that IBP had misappropriated those trade secrets and awarded $11 million. An additional $5 million in prejudgment interest was also awarded by the court. On appeal, IBP asked that the jury decision and award of prejudgment interest be set aside.
IBP argued that the trade secret misappropriation judgment against it be set aside because, inter alia, C&F had not corroborated the existence of its trade secret by providing evidence from persons other than interested parties, as is required in patent interference determinations. The Federal Circuit rejected this argument, reasoning that patent priority law relates to the timing of inventive activities and the inventor’s diligence, not the existence of the invention. The court went on to agree that the record supported the jury’s decision that C&F had met the requirements of Illinois trade secret statutory and common law.
However, the court reversed the award of prejudgment interest as unsupported by Illinois law that requires express agreement, express statutory authority, or a violated fiduciary or confidential relationship between the parties in order to support such an award. In doing so, the court rejected the analogy to patent and trademark cases, in which prejudgment interest is authorized. The court also rejected reliance on Richardson v. Suzuki Motor Co. in which the Federal Circuit reasoned that damages for trade secret misappropriation should not be treated differently than damages for patent infringement. The court distinguished Richardson as involving a violated fiduciary relationship between the parties, while no such direct relationship existed between C&F and IBP.
Practice Hint: In cases where trade secret subject matter that extends beyond the teachings of the patent is present, consideration should be given to the inclusion of trade secret misappropriation claims. Since such claims are not subject to many of the defenses and complexities of patent claims in a litigation context, trade secret claims may be easier for the plaintiff to prove, more difficult for the defendant to rebut, and provide the plaintiff with additional discovery possibilities.
Ticketmaster v. Tickets.com: In the Wake of eBay v. Bidder’s Edge, Ticketmaster Court Refuses to Enjoin Copying of Website Data
By Laura Eversole
The U.S. District Court for the Central District of California refused to enjoin the copying of facts from a website, see Ticketmaster Corp. v. Tickets.com, Inc., Civ. Action No. 99-7654-HLH (August 11, 2000) (unpublished decision), on the heels of a case reaching the opposite conclusion on similar facts. See eBay v. Bidder’s Edge., 100 F. Supp. 2d 1058 (N.D. Cal. 2000).
Ticketmaster operates the largest ticket brokerage business in the country, deriving revenue from ticket sales and from advertising. Tickets.com operates primarily as a clearing house offering information as to where tickets to any event can be obtained. Much of the information Tickets.com displays about particular events is gathered by software robots from Ticketmaster’s web site. Tickets.com explained that the copying was necessary for it to be able to extract the factual data (i.e., the date, time, and venue of an event) regarding Ticketmaster events which Tickets.com reported on its website.
Considering first Ticketmaster’s copyright infringement claim, the court found that Tickets.com extracted facts, which are not protectable under the Copyright Act. Even though Ticketmaster had expended great care and expense to gather the information, Tickets.com’s copying could not support a claim for relief under copyright law. As to Tickets.com’s copying of more than facts, storing the data for 10-15 seconds, and then extracting the facts and discarding the remainder, the court held that no injunction could issue because Tickets.com’s use was a "fair use." Likening Tickets.com’s use to reverse engineering, the court noted that Tickets.com did not use the copy competitively and destroyed any copies made once it obtained the non-protectable factual data.
The court also found Ticketmaster’s claim of trespass insufficient to support the entry of a preliminary injunction, specifically noting that the facts presented to it bore no resemblance to the trespass considered by the eBay court. In eBay, the court found that the extensive use of eBay’s servers, coupled with the threat of additional parasitic users if no injunction were issued, justified the entry of a preliminary injunction. Here, however, Ticketmaster could not show a threat of physical harm to its computer system due to Tickets.com’s use, nor could it show that other competitors would join in the fray and further tax Ticketmaster’s computers. Noting that Ticketmaster’s claim had some merit, the court found the facts insufficient to support the preliminary relief requested.
Both the Ticketmaster and eBay decisions have been appealed.
New Top Level Domain Proposals to be Accepted in Early September
By Wendy L. Toman
On August 15, 2000, the Internet Corporation for Assigned Names and Numbers (ICANN), the authority that will decide which new top level domains (TLD) will be available for registration, released guidelines for assessing new TLD proposals. In July, ICANN decided that it would proceed with adding new TLDs to the Internet. Beginning September 5, 2000, ICANN will begin accepting new TLD proposals, with anticipation that the new TLDs will be open for domain name registrations in early 2001.
ICANN has expressed that its first priority in selecting new TLDs is to maintain the stability of the Internet, and therefore the TLDs should in no way disrupt the Internet’s operations and efficiency. The new TLDs must conform with the current root system, basing all Internet protocol addresses on the A root as a definitive source. ICANN has explained that TLDs that rely on an alternative root system threaten the stability and availability of the current Internet protocol scheme. Security is another part of stability, and new proposals should address issues relating to maintaining security.
It is expected that ICANN will select between 3 and 10 new TLDs for its "trial phase." During this phase, the Internet community will be afforded the opportunity to evaluate the new TLDs. ICANN expressed that this trial period will allow it the ability to access the ways in which the Domain Name System (DNS) could evolve and grow. In addition, ICANN is focusing on continuing to develop a competitive marketplace at both the registry and registrar levels. Proposals for new TLDs should address how the proposed TLD will compete with the current TLDs (.com, .net, and .org).
For specifics regarding the criteria for the new TLDs, you may access http://www.icann.org/tlds/tld-criteria-15aug00.htm.
