IP Update, Vol. 9, No. 10, October 2006
October 2006
Patents / Obviousness - The Federal Circuit Continues Defense of M-S-T
Patents / Inequitable Conduct - Materiality and Intent Don't Compel Finding of Inequitable Conduct
Patents / Reissue - Recapture Rule Only Applies to Surrender for Patentability Reasons
Patent / Trademark / Damages - No Double Dipping on Damages that Arise from the Same Operative Facts
Patents / Claim Construction - No Gear Shifting by the Court on Claim Construction
Patents / Reexamination - USPTO Limits Reexamination Only to Requested Claims
Trademarks / Legislation - Undiluting the Federal Trademark Dilution Act
Copyright / Compilation Copyright - Sixth Circuit Encounters Compilation Copyrights
The Federal Circuit Continues Defense of M-S-T
By Paul Devinsky
In its third major precedential decision on obviousness issued during the ongoing briefing in the KSR v. Teleflex Supreme Court appeal, the U.S. Court of Appeals for the Federal Circuit again defends the need to satisfy the “motivation-suggesting-teaching” (M-S-T) requirement as a predicate to a finding of obviousness, in the process taking the unusual step of reversing a district court’s denial of a motion for judgment as a matter of law (JMOL) of invalidity on obviousness. DyStar Textilfarben GMBH v. C. H. Patrick Co., Case No. 06-1088 (Fed. Cir., Oct. 3, 2006) (Michel, C.J.; Shall, J., concurring).
The patent in issue was an improvement regarding the prior art process for dying textiles by eliminating two steps of the traditional six-step process: stabilizing the leuco indigo solution into a paste or powder form and then reconstituting the solution in a preparation tank. Instead, the claimed process allowed a dyer to pour pre-reduced indigo solution directly into a dyebath and begin dyeing immediately. The defendant asserted certain claims of the patent were invalid as anticipated and that other claims were invalid as obvious in light of certain prior art. After a jury verdict declining to hold the patent claims in issue invalid for either anticipation or obviousness, defendants filed a motion for JMOL seeking to have the patent held invalid for, inter alia, obviousness. The magistrate judge, without opinion, denied the defendants’ motion for JMOL. The defendant appealed.
The Federal Circuit began its analysis by noting that a determination whether claimed invention would have been obvious “is a legal conclusion that we review de novo.” It also pointed out that under §103 (1952) and Graham v. John Deere (1966), the legal inquiry includes factual findings, and that, in the context of a jury trial, it reviews for substantial evidence.
Continuing the tutorial, the Court noted that in situations like the present case in which “all claim limitations are found in a number of prior art references,” the factfinder must determine “[w]hat the prior art teaches, whether it teaches away from the claimed invention, and whether it motivates a combination of teachings from different references.” The Court continued “[i]t is important in this inquiry to distinguish between the references sought be combined and the prior art, as the latter category is much broader. For example, textbooks or treatises may include basic principles unlikely to be restated in cited references.”
Then, citing to Alza Corp. v. Mylan Laboratories, Inc. (IP Update, Vol. 9, No. 9), the panel noted that “ ‘suggestion test’ – as our motivation-to-combine inquiry has come to be known – prevent[s] statutorily proscribed hindsight reasoning when determining the obviousness of an invention,” and is no more or less than the Federal Circuit’s way of implementing the hindsight proscription of Graham.
The Court essentially addressed the petitioners brief in KSR by stating: “the suggestion test is not a rigid categorical rule. The motivation need not be found in the references sought to be combined, but may be found in any number of sources, including common knowledge, the prior art as a whole, or the nature of the problem itself.”
After analyzing the prior art, the Court went systematically through the evidence presented on each of the four Graham factors. The key aspect of the analysis was the Court’s discussion of the scope and content of prior art and whether there was evidence to support the motivation to combine various prior art dyebath process references. The Court noted that the patent owner “misreads the court’s cases and misdescribes our suggestion test, echoing notions put forth recently by various commentators and accepted in major reports,” citing to the now famous 2003 report by the Federal Trade Commission and a 2004 report by the National Academy of Sciences.
The Court explained “[c]ontrary to some interpretations, we stated explicitly that evidence of a motivation to combine need not be found in the prior art references themselves, but rather may be found in the ‘knowledge of one of ordinary skill in the art, or, in some cases, from the nature of the problem to be solved.’ ” The Court then proceeded with a detailed analysis in defense of its 1999 In re Dembiczak and 2000 Ruiz v. A. B. Chance decisions, both of which have come under attack during the Supreme Court briefing in KSR.
The Court continued, writing that its “suggestion test is in actuality quite flexible and not only permits but requires, consideration of common knowledge and commons sense.” Then, apparently speaking almost directly to the Supreme Court, the Federal Circuit, in note 3, stated:
Indeed, the United States Supreme Court recently granted certiorari in a case involving this court’s application of suggestion test. KSR Int’l Co. v. Teleflex, Inc. In KSR, we vacated a district court’s grant of summary judgment of invalidity for obviousness. The district court found a motivation to combine not in the references but “largely on the nature of the problem to be solved,” which we did not deem erroneous. (citation omitted). Rather, we vacated because the court did not explain sufficiently its rationale, and failed to make “findings as to the specific understanding or principle within the knowledge of a skilled artisan that would have motivated one with no knowledge of [the] invention to make the combination in the manner claimed.” (citation omitted)
Finally the Court surveyed a series of post-Graham Supreme Court cases — Sakraida v. AG Pro, Inc., Anderson’s-Black Rock, Inc. v. Pavement Salvage Co. and United States v. Adams — before returning to the facts of the case at hand and holding that “an ordinary artisan with knowledge of [the prior art] would have realized that, by stabilizing catalytic hydrogenated leuco indigo solution in oxygen-excluding containers, he could devise a ‘cheaper, faster, and more convenient’ indigo dyeing process and that the asserted innovation, storing leuco indigo solution in airtight containers for immediate use in dyebaths, is the work of a skilled chemist, not of an inventor.”
Authors Ignorance of Invention in Published Abstract Irrelevant to Inherent Anticipation Doctrine
By Astrid Spain
In a decision not citable as precedent, the U.S. Court of Appeals for the Federal Circuit reversed a district court’s grant of summary judgment of no anticipation and held that all asserted claims are anticipated under 35 U.S.C. § 102 by an earlier published abstract. Nichols Institute Diagnostics, Inc. v. Scantibodies Clinical Laboratory, Inc., Case No. 06-1087 (Fed. Cir., Sept. 20, 2006) (Linn, J).
More than a year before the application for the patent-in-suit was filed, the inventors-to-be published an abstract disclosing that they created antisera containing antibodies that bound predominantly to human parathyroid hormone (hPTH) peptides having the first two amino acids and antibodies that bound to peptides of hPTH containing blocks of amino acid sequences through 37. The hPTH protein comprises 84 amino acids and plays an important role in regulating calcium metabolism. It was not until after the publication date that the authors of the abstract realized that, to be biologically active, a fragment of hPTH must have both the first two amino acids and be at least 34 amino acids long. Thus, it was not until after the abstract was published that the authors recognized that their disclosure could be used to specifically detect biologically active hPTH fragments. The application for the patent in issue was filed as a result of this late-breaking realization.
Nichols has an exclusive license to the patent in issue which is directed to compositions of antibodies that selectively bind to specific peptide sequences of hPTH. Nichols sued Scantibodies, claiming that Scantibodies infringed the patent. Scantibodies sought partial summary judgment of invalidity of Nichols’ patent as anticipated by the inventors’ own prior abstract. The district court denied Scantibodies’ motion for partial summary judgment. Scantibodies appealed.
The Federal Circuit reversed the district court, holding that the abstract inherently anticipated the patent because (1) the antiserum disclosed in the abstract contained the claimed antibody, and (2) it was well known how to isolate the claimed antibody from the other antibodies in the disclosed serum. The Court held that the claims were anticipated, even though the abstract did not expressly disclose the “selective” binding capability of the claimed antibody, because it “was undisputed that once the antibody is isolated from the sera, using well-known purification methods, the isolated antibody necessarily will exhibit the claimed ‘selective’ binding.” Moreover, it was immaterial that the inventors did not know the significance of the claimed antibody until after the abstract was submitted. Citing their Smith Kline decision, the Court noted that ‘[i]nherent anticipation does not require a person of ordinary skill in the art to recognize the inherent disclosure in the prior art at the time the prior art is created.’”
Patents / Fifth Amendment Taking
Federal Circuit Denies Petition for Rehearing En Banc on a Takings Claim for Just Compensation
By Ken Cage
By a poll, the U.S. Court of Appeals for the Federal Circuit denied a petition for rehearing en banc on its holding that the U.S. Court of Federal Claims lacks jurisdiction of a takings claim for just compensation for unauthorized use by the government under the Tucker Act, 28 U.S.C. § 1491. Zoltek Corporation v. United States, Case No. 04-5100, -5102 (Fed. Cir., March 31, 2006) (en banc; Newman, J., dissenting; Dyk, J. and Gajarsa, J., concurring).
Zoltek patented a method for manufacturing a carbon sheet product that is used by the United States in making the low-radar-signature F22 fighter plane designed and built by Lockheed Martin. The carbon fibers and carbon fiber mats and sheets were manufactured in Japan, which were provided to Lockheed’s subcontractors for use in the F22 fighter. Zoltek alleged that the mats and sheets were made for the United States using the claimed processes.
The Federal Circuit earlier this year affirmed a decision of the Federal Claims Court that the United States could not be sued under 28 U.S.C. § 1498 because all method steps in making the carbon fiber mats and sheets were not performed in the United States, but reversed the judgment of the Federal Claims Court that the patent owner could allege patent infringement as Fifth Amendment taking under the Tucker Act, 28 U.S.C. § 1491. See Zoltek Corporation v. United States, IP Update, Vol. 9, No. 4, April 2006. According to the panel majority, Congress provided a specific sovereign immunity waiver for the patentee to recover for patent infringement by the government, and “[h]ad Congress intended to clarify the dimensions of the patent rights as property interests under the Fifth Amendment, there would have been no need for the new and limited sovereign immunity waiver.”
In her dissent from the denial of the petition of rehearing en banc, Judge Newman opined that “[t]his ruling is contrary of decision, statute, policy and constitutional right,” citing by footnote the Fifth Amendment “[N]or shall private property be taken for public use, with just compensation.” According to Judge Newman, her colleagues reject the premise that patents are property and subject to the Fifth Amendment. After reviewing the history of the Tucker Act, Judge Newman concluded that “[t]here can be no doubt that the unlicensed use of a patented invention is remediable in the Court of Federal Claims.”
In concurring that Zoltek does not warrant an en banc review, Judge Dyk, with Judge Gajarsa joining, noted that the dissent has misread the majority opinion. According to Judge Dyk, the panel majority holds that private parties have a right of action against the United States for unauthorized use of a patent pursuant to 28 U.S.C. § 1498 and that Congress has not created a separate parallel takings remedy in the Court of Federal Claims.
Practice Note: 28 U.S.C. § 1498 (c), which states that the “provisions of this section [1498] shall not apply to any claim arising in a foreign country,” constrains the scope of the waiver of sovereign immunity by the United States. This provision — coupled with the fact that no product or product-by-process claims were asserted by Zoltek against the United States — was fatal to Zoltek’s patent infringement claim against the United States.
Materiality and Intent Don't Compel Finding of Inequitable Conduct
By David Gay
Deferring to a district court’s finding of “low” levels of materiality and intent with regard to inequitable conduct, the U.S. Court of Appeals for the Federal Circuit affirmed the lower court’s ruling that two patents asserted by Kemin Foods, L.C. were valid and enforceable. Kemin Foods, L.C. v. Pigmentos Vegetales del Centro S.A. de C.V., Case Nos. 05-1479, -1480, 06-1002 (Fed. Cir., Sept. 25, 2006) (Bryson, J.).
Kemin’s patents-in-suit, U.S. Patent No. 5,648,564 (the `564 patent) and U.S. Patent No. 5,382,714 (the `714 patent) are directed to purified lutein, a carotenoid both Kemin and accused infringer Pigmentos Vegetales (PIVEG) incorporate into dietary health supplements. The lower court found, inter alia, that the asserted claims were not invalid, that the `714 product claims were not infringed and that both patents were enforceable.
On appeal, PIVEG argued that the `714 patent was obvious over a reference in Poultry Science that taught every claim limitation except for lack of traces of toxic chemicals in the purified lutein product, which would have been known to one of ordinary skill in the art. The Court found Kemin’s expert’s trial testimony, explaining difficulties with removing all traces of toxic solvents, was sufficient for the jury to conclude that PIVEG failed to meet its burden of proof. Regarding enforceability of the `714 patent, the Court found that the unsubmitted Poultry Science article was material, but insufficient to warrant a finding of inequitable conduct. The Court reasoned that the level of materiality attaches to information disclosed in a reference and, because of questions relating to its reliability, the level of materiality for the Poultry Science article was low. Concluding insufficient evidence of intent to deceive, the Court noted that, although the president of Kemin was aware of the Poultry Science article, his explanation that he viewed it as “just another paper that made crystals of lutein that nobody could eat” was plausible.
With respect to the `564 patent, Kemin failed to disclose during prosecution that propylene glycol has been used in the industry to produce various poultry pigments. Kemin presented evidence that during prosecution, no one knew that these other propylene glycol processes were producing lutein crystals. The Court concluded that the presence of observed but uncharacterized crystals in the other processes supported the inference that there would have been no reason for Kemin to recognize that prior uses of propylene glycol in the poultry pigment industry were material to patentability.
Finally, with regard to Kemin’s challenge of the jury’s verdict of non-infringement of the ’714 patent, the Court found that it was reasonable for the jury to have concluded that the accused products do not meet two claim limitations. The Court concluded a jury could reasonably find the range of 6.14 to 9.86 was not “significantly less than 10%.” Finally, the Court rejected Kemin’s proffered construction of “no traces of toxic chemicals” as requiring only that the amounts be non-toxic to humans as unsupported given the patent’s lack of reference to toxicity thresholds.
Recapture Rule Only Applies to Surrender for Patentability Reasons
By Astrid Spain
Finding that limitations added by amendment during the original prosecution and removed during reissue were not added to overcome prior art and secure the patent, the U.S. Court of Appeals for the Federal Circuit affirmed a district court’s denial of ConAgra’s motion for judgment as a matter of law (JMOL) of invalidity based on the recapture rule. Kim v. ConAgra Foods., Inc., Case No. 05-1414 (Fed. Cir., Sept, 20, 2006) (Dyk, J.; Schall, J. dissenting).
Kim, a food chemist, believed that a composition including ascorbic acid and food acid would serve as a suitable alternative to potassium bromate in the breadmaking process. Kim obtained a patent for a potassium bromate replacer composition in 1996, but within weeks surrendered that patent to the U.S. Patent and Trademark Office (USPTO) and filed a reissue application. Kim then filed suit against ConAgra, alleging that ConAgra induced the infringement of independent Claims 5 and 10 of the reissue patent by requiring licensees of its “Healthy Choice®” brand name to use ConAgra’s recipes.
During claim construction, the district court instructed the jury that, in order to infringe, a bread must contain ingredients in the recited proportions and “in that particular bread, the ingredients must act as a potassium bromate replacer, that is, the ingredients must perform essentially the same function in the production of that bread as would potassium bromate.” The court also defined for the jury that “[p]otassium bromate is a slow acting oxidant once commonly used in the breadmaking process. Its function in the breadmaking process is to strengthen the dough, increase loaf volume, and contribute to fine crumb grain.”
On appeal, the Federal Circuit rejected Kim’s argument that the district court incorrectly construed the phrase “[a] potassium bromate replacer composition” in both claims 5 and 10 of the reissue patent by reading in a number of functional limitations rather than construing the term to mean simply a “potassium bromate substitute” that is present when potassium bromate is not.
Relying heavily on the specification, which disclosed that the claimed potassium bromate replacer functions as an oxidant, the Federal Circuit rejected Kim’s argument that there was no functional component of the potassium replacer. Regarding infringement of Claim 10, the Court pointed to the “consisting essentially of” transitional phrase, which compels a finding of no infringement where the accused product contains additional, unclaimed ingredients that materially affect the basic and novel properties of the invention. The Court pointed to ConAgra’s expert testimony that the additional ingredients in ConAgra’s accused products materially affected functionality and noted that Kim, who was qualified as an expert, had offered only conclusory testimony in rebuttal. Infringement arguments as to Claim 5 were similarly rejected based on the lack of objective evidence to support Kim’s expert opinion regarding the accused product.
ConAgra’s argument on cross-appeal, that the asserted claims of the reissue patent are invalid under the recapture rule and over the prior art, were also rejected by the Court. The reissue procedure allows a patentee to broaden the scope of an existing patent to include subject matter that had been erroneously excluded from that patent, but is limited by the “recapture rule,” which prevents a patentee from regaining through reissue the subject matter surrendered to obtain allowance of the original claims. Here, the Court found no indication in the prosecution history that would lead an objective observer to conclude that Kim added the particular limitation to overcome the pending obviousness rejection. Finally, the Court rejected ConAgra prior art attacks because the references, inter alia, did not contain the claimed proportions of ascorbic and food acids.
In dissent, Judge Schall objected to the extensive functional limitation conferred on the preamble “potassium bromate replacer,” finding that Kim had acted as her own lexicographer in defining this term.
No Double Dipping on Damages that Arise from the Same Operative Facts
By Kori Anne Bagrowski
The U. S. Court of Appeals for the Federal Circuit vacated an award of damages for trademark infringement based on a finding of impermissible double recovery because the plaintiff had already been awarded patent damages on the same set of operative facts. Aero Products International, Inc. v. Intex Recreation Corp., Case No. 05-1283 (Fed. Cir., Oct. 2, 2006) (Schall, J.).
Aero Products asserted both patent and trademark claims. Following a jury trial, the district court entered a judgment of infringement and validity in favor of Aero and ordered a permanent injunction. The damages totaled $6.9 million; $2.95 million was awarded for patent infringement damages, which the district court doubled based upon the jury’s finding of willful infringement, and $1 million was awarded for trademark infringement. Intex Recreation appealed.
The Federal Circuit, finding the damage award represented an impermissible double recovery, vacated the trademark infringement damages. Aero Products argued that the district court’s award of damages was properly allotted between two different wrongdoings, granting a reasonable royalty for patent infringement and a portion of the defendant’s profits for infringement of the “ONE TOUCH” trademark. The Federal Circuit disagreed, finding that on the facts of the case, Aero Products’ recovery of both patent and trademark infringement damages based on the same operative facts amounted to an impermissible double recovery.
First, addressing the appellate jurisdictional question the Court determined that, although the damages question involved trademark law, the unique characteristics of patent damages are properly resolved under Federal Circuit law. Turning to the merits, the Court noted that “double recovery of damages is impermissible,” explaining that “[t]he law is clear that the jury may award separate damages for each claim, ‘leaving it to the judge to make appropriate adjustments to avoid double recovery.’”
Aero Products based both its patent and trademark damages solely on sales of the accused mattresses, relying on no other evidence in support of its trademark damages. The Federal Circuit found the only use of the trademark was in connection with the sales of mattresses, which were the same mattresses that formed the basis for Aero Products’ patent infringement claim. The Federal Circuit reasoned that “all of the damages awarded to Aero flowed from the same operative facts: sales of the infringing Intex mattresses.” As such, Aero was “fully compensated for defendants’ patent infringement when it was awarded a reasonable royalty for patent infringement based on sales of the infringing Intex mattresses. It could not also be awarded defendants’ profits for trademark infringement based on the same sales of the same accused devices.” The court suggested that a Ninth Circuit case in which Nintendo recovered trademark and copyright damages arising from sales of the same video game cartridges was contrary to established Federal Circuit law disallowing double recovery. The Federal Circuit reasoned that “even though damages are claimed based upon separate statutes or causes of action, when the claims arise out of the same set of operative facts, its … there may be only one recovery.’
No Gear Shifting by the Court on Claim Construction
By Eric Hinkes
Addressing the issue of claim construction in terms of statements made in a public record, the U.S. Court of Appeals for the Federal Circuit held that it was not bound to the U.S. Patent and Trademark Office’s (USPTO) interpretation of a claim, even in reexamination proceedings. SRAM Corp. v. AD-II Eng’g, Inc., Case No. 05-1365 (Fed. Cir., Oct. 2, 2006) (Linn, J.).
SRAM Corporation, the owner of a patent for bicycle gearshift actuators, filed suit alleging that AD-II Engineering, a manufacturer of gear shifters, infringed its patent. AD-II Engineering argued that the patent at issue was invalid because it was anticipated by prior art. On cross summary judgment motions on validity, the district court construed the claims to require “precision index downshifting.” On the basis of that construction, it issued an order that the prior art asserted by AD-II did not anticipate the claims. AD-II appealed.
The Federal Circuit, finding that the district court erred in construing the claim limitation in issue, vacated and remanded the case. The Federal Circuit held that the district court erred by importing the limitation “precision index downshifting” from the specification into the claims since the claims did not specifically claim a positive indexing feature, but instead stated a broad two-step method that could apply to both indexed and non-indexed shifters. Even though the specification described a gear-shifting system that provided for precise index shifting, the claim language did not recite indexing at all.
Notably, the Federal Circuit declined SRAM’s invitation to adapt the district court claim construction on the basis that it was consistent with the position taken by the USPTO over the course of their re-examination proceedings. The Federal Circuit noted in its opinion, “While the Patent and Trademark Office (the PTO) generally gives claims their broadest reasonable interpretation consistent with the specification (citations omitted) paradoxically, in this case, the PTO construed the claim narrowly, rather than broadly,” in effect committing the same error as the district court.
Not to put too much of an exclamation mark on this discussion, the panel concluded “this court is not bound by the USPTO’s claim interpretation because we review claim construction de novo (citation omitted).”
Based on its new claim construction, the Court remanded the case for consideration of the anticipation issue.
USPTO Limits Reexamination Only to Requested Claims
By Ken Cage
After 24 years of reexamination practice, the U.S. Patent and Trademark Office (USPTO) has made a major policy shift. The USPTO revised its policy by stating that it will only examine claims in which the requester requests examination and a substantial new question (SNQ) of patentability was raised. (NOTICE OF CLARIFICATION OF OFFICE POLICY TO EXERCISE DISCRETION IN REEXAMINING FEWER THAN ALL OF THE PATENT CLAIMS, October 5, 2006.) This policy is being implemented to facilitate the USPTO’s compliance with its statutory mandate for “special dispatch” of 35 U.S.C. §§ 305 and 314(c) in handling ex parte and inter partes reexaminations. According to the USPTO, “the non-requested claims may be claims that are currently being litigated, thus introducing complexities delaying the proceeding as to the requested claims.” The USPTO noted that the Manual of Patent Examining Procedure (MPEP) states that each claim of a patent will be examined, citing MPEP § 2258 for ex parte reexaminations and MPEP § 2658(IV)(B) for inter partes reexaminations.
The USPTO limited the scope of claims reexamined in inter partes reexamination by relying on the logic of reasoning set forth in Sony Computer Entertainment America Inc., et al. v. Jon W. Dudas, Civil Action No. 1:05CV1447 (E.D.Va., May 22, 2006) holding that the scope of inter partes reexamination is claim-specific where the USPTO finds a SNQ of patentability affecting a claim of patent is raised. The USPTO analogously applied the logic of Sony to ex parte reexamination. Where reexamination is requested for fewer than all of the patent claims, the agency’s policy will be that the order granting or denying reexamination will be generally limited to a review on the merits of only the claims for which reexamination was requested. Additionally, when a final decision of the Federal court, after appeals, holds one or more of the claims invalid or unenforceable, then such claims will not be reviewed on the merits in a reexamination proceeding.
Practice Note: This clarification is a change from the MPEP policy and will likely be subject to case-by-case review as to related reexamination claims and/or amended claims presented by the patent owner. It is clear, however, that unless the requester requests reexamination of all patent claims, the USPTO will generally reexamine only the requested claims.
Undiluting the Federal Trademark Dilution Act
By Adele Frankel
On Friday, October 6, 2006, President George W. Bush signed into law the Trademark Dilution Revision Act of 2006 (the Act), a bill passed by Congress amending section (c) of the Lanham Act in order to reverse the Supreme Court’s decision in Moseley vs. Secret Catalogue Inc., 537 U.S. 418 (2003), relating to the Federal Trademark Dilution Act (FTDA), which introduced the concept of dilution into federal trademark law. In Moseley, the Court held that an adult novelties store called Victor’s Little Secret did not dilute the VICTORIA’S SECRET trademark in violation of the FTDA because that law requires a trademark owner to prove actual dilution, rather than a likelihood of dilution. Under this heightened standard of evidence established by the Court in Moseley, famous mark owners complained that proving actual dilution was nearly impossible until irreversible damage was done to their famous mark. Owners of famous marks, whose marks have been victims of dilution, argued that dilution occurs gradually, with each attempt by another commercial user to harnesses the famous trademark’s broad recognition for his own commercial products. Thus, the mark owners argued, infringing commercial users peel away the layers of a famous mark’s distinctiveness layer by layer.
The House of Representatives subcommittee that convened to discuss the Act referred to the diminution of a famous trademark as “death by a thousand cuts.” Thus, the standard that was set by the Court in Moseley undercut the effectiveness of the FTDA to protect famous marks from dilution. For each single use of the mark by a user other than the rightful owner of the famous mark, the harm, although present, usually is imperceptible, making it impossible to prove actual damage. Nonetheless, the cumulative effect of exploiting a famous mark’s popularity over time utterly destroys the value of the mark.
Aside from adopting a likelihood of dilution (rather than an actual dilution) standard, the Act purports to resolve the many splits in interpretation of the FTDA that exist in regional circuit court rulings. In remarks on the House floor, Congressman Lamar S. Smith, a Republican who represents Texas’ 21st district) said, “H.R. 683 clarifies a muddied legal landscape and enables the Federal Trademark Dilution Act to operate as Congress intended.” The Act’s revisions include:
- Clarification of what constitutes a famous mark qualifying for protection under the Act: “A mark is famous if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or service of the mark’s owner.”
- Resolution of a question that was raised but unanswered in Moseley, namely whether tarnishment is a form of dilution prohibited by federal trademark dilution law. The Act states that dilution can occur by blurring or tarnishment. Dilution by blurring is defined in the Act as “association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark.” In contrast, tarnishment is defined as “association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.” Both are now actionable as dilution under federal trademark law as revised by the Act.
- Clarification of the protection against dilution available for unregistered trade dress claimed to be famous. In particular, the owner must prove that “the claimed trade dress, taken as a whole, is not functional and is famous” and “if the claimed trade dress includes any mark or marks registered on the principal register, the unregistered matter, taken as a whole, is famous separate and apart from any fame of such registered marks.”
The Act also sets out a list of factors for the Court to consider in determining whether a famous mark’s distinctiveness is likely to be diluted by blurring, including “[t]he degree of inherent or acquired distinctiveness of the famous mark,” “[t]he degree of similarity between the mark or trade name and the famous mark,” “[w]hether the user of the mark or trade name intended to create an association with the famous mark” and “[a]ny actual association between the mark or trade name and the famous mark.”
Practice Note: Under the new regime, holders of famous marks can proceed with more certainty both when initiating a lawsuit and when adopting a mark. The new clarity on issues that split the circuit courts should eliminate forum shopping and help decrease unnecessary, costly lawsuits. Third parties adopting new marks are well advised to be mindful of any association that might be made between their mark and a famous mark, particularly if they are intentionally seeking to create an association with the famous mark.
Copyright / Compilation Copyright
Sixth Circuit Encounters Compilation Copyrights
By Natalie Ward
The U.S. Court of Appeals for the Sixth Circuit upheld the district court’s summary judgment in favor of Lexis Nexis, holding that the its compilation of electronic legal form templates was not substantially similar to plaintiff’s compilation and that plaintiff could not copyright the automation feature thereof. Ross Brovins & Oehmke v. Lexis Nexis Group, Case Nos. 05-1513 (6th Cir., Sept. 25, 2006) (Rogers, J). However, the court reversed the lower court’s 12(c) dismissal of a breach-of-contract claim, which is yet to be resolved.
Under a 1997 contract between the law firm of Ross Brovins, d.b.a. LawMode, and Lexis Nexis Group (Lexis), LawMode agreed to compile and organize templates of several hundred Michigan legal forms that Lexis would make publicly available by CD and internet. Although the compilation mostly included public domain forms, some original forms were included. In 2002, Lexis terminated the contract and published its own compilation of forms. Both parties used Lexis’ HotDocs Pro software to automate the forms by creating data entry “dialog boxes” and automatically replicating the user-entered data in relevant input fields.
LawMode filed suit against Lexis for copyright infringement, along with state contract and business torts claims. The latter claim was voluntarily dismissed. LawMode alleged that Lexis infringed its compilation copyright (i.e., selection and organization of the forms) and its automation copyright (i.e., for the appearance, selection and placement of input fields and interrelationships thereof). Following discovery, the district court granted summary judgment for Lexis on the copyright claim, but refused to dismiss the contract claim. The district court found that the organization of the forms and automation were not copyrightable. Subsequently, the district court dismissed the contract claim. LawMode appealed.
The appeals court upheld summary judgment on the copyright claim. With respect to LawMode’s selection of forms, the court found Lexis did not copy any “protectable” elements of the LawMode compilation and that the parties’ respective versions are were not substantially similar. The court noted that the Lexis compilation included 61 percent, or 350 of the 576 forms, from LawMode’s compilation. The court, relying on Feist, emphasized that “compilation copyright protection is very limited … usually requires substantial verbatim copying” and commented that “[s]ixty-one percent [could] hardly be considered the ‘same’ selection.” In reference to the arrangement of forms, the court noted that similarities between the LawMode and Lexis compilations resulted from the parties copying of the uncopyrightable, “obvious classification headings” from Michigan’s public forms index.
With respect to the automation copyright, the court held that LawMode’s automation lacked sufficient originality to warrant copyright protection because (1) LawMode had simply elected to use the default software settings to create the dialog boxes, and (2) the selection and placement of input fields, along with the interrelationship thereof, was dictated by the express terms of the forms. The court stressed that such interrelationships may warrant copyright protection if the automation “communicate[s] information not expressly contained on the face of the underlying forms.”
