IP Update, Volume 7, No. 11, November 2004
November 2004
- Copyright / Digital Millennium Copyright Act - Blocking Only the Use of Copyrighted Work Is Not Effectively Controlling Access Under the DMCA
Copyright / Digital Millennium Copyright Act
Blocking Only the Use of Copyrighted Work Is Not Effectively Controlling Access Under the DMCA
By Seth Greenstein and Bernard Codd
The U.S. Court of Appeals for the Sixth Circuit reversed and remanded a preliminary injunction enjoining Static Control Components, Inc. (SCC) from selling its SMARTEK chip that enabled remanufacture of replacement laser printer toner cartridges. Lexmark Int’l, Inc. v. Static Control Components, Inc., Case No. 03-5400 (6th Cir. Oct. 26, 2004) (Sutton, J.). The Court of Appeals interpreted the Digital Millennium Copyright Act (DMCA) as preserving consumers’ rights to use purchased products for their intended purposes.
Lexmark manufactures printers and toner cartridges. Lexmark toner cartridges contain a microchip that communicates with the printer. If a code calculated by the microchip matches a code calculated by the printer the printer functions normally. If the two codes do not match, the printer will not allow use of the Printer Engine Program, which resides on the printer and controls a variety of printer functions, and, thus, the printer will not operate. The SCC SMARTEK chip, which includes an identical copy of Lexmark’s Toner Loading Program, breaks Lexmark’s “secret code” and permits third-party printing cartridge remanufacturers to recycle Lexmark toner cartridges as a low-cost alternative to new Lexmark toner cartridges. The Toner Loading Program is a short program that measures toner levels, while the Printer Engine Program is a much larger and complicated program.
Alleging three theories of liability, Lexmark brought suit against SCC seeking to enjoin SCC from distributing the SMARTEK chips. Lexmark claimed SCC infringed Lexmark’s copyright by copying the Toner Loading Program on the SMARTEK chips; violated the Digital Millennium Copyright Act, 17 U.S.C. § 1201(a)(2), by selling a product that circumvents access controls on the Toner Loading Program; and violated the DMCA by selling a product that circumvents access to the Printer Engine Program.
Reasoning the computer programs were literary works and entitled to copyright protection, the district court concluded Lexmark would likely prevail on the merits and issued a preliminary injunction. The court held the Toner Loading Program was not a “lock-out code,” and even if the Toner Loading Program was a lock-out code, copyright infringement had taken place because “[s]ecurity systems are just like any other computer program and are not inherently unprotectable.”
The Sixth Circuit found the district court committed three related legal errors in determining Lexmark had a likelihood of prevailing on its copyright claims with respect to the Toner Loading Program: 1) refusing to consider whether external factors such as compatibility requirements, industry standards and efficiency constrained the number of ways the Toner Loading Program could be written; 2) considering under the correct legal standard for distinguishing protectable expression from unprotectable ideas the constraints on the Toner Loading Program established by the evidence; and 3) concluding that the Toner Loading Program was not being used as a lock-out code.
Applying the doctrines of merger and scènes à faire, the Sixth Circuit reversed the district court. The Sixth Circuit reasoned the determining factor should be not whether any alternative ways of writing the program theoretically exist but whether such options were practical under the circumstances. The court found Lexmark failed to prove it was likely to prevail on its claim that the Toner Loading Program was protected by copyright, in light of evidence the Toner Loading Program was expressed in the most straightforward way and any substantial differences in the code, in light of the existing constraints, would be inefficient.
Noting if any single byte of the Toner Loading Program was altered, the printer would not function, the appellate court determined the Toner Loading Program also functioned as alock-out code. Therefore, SCC’s use of the Toner Loading Program as a key to the lock-out function was a fair use dictated by functional compatibility requirements. The court rejected Lexmark’s claim that SCC could have discovered through reverse engineering ways to change the lock-out code, in light of evidence that the trial-and-error testing that would be required (without access to Lexmark secrets) would be computationally impossible.
Addressing Lexmark’s claims under the DMCA, the Sixth Circuit presumed the Printer Engine Program was protected by copyright. The court opined it was the purchase of a Lexmark printer that “controls access” to the Printer Engine Program, not Lexmark’s authentication program. The court explained that “effectively controlling access” under the DMCA referred to the prevention of access to the copyrightable expression (i.e., the code) of a copyrighted software program. Because Lexmark had not limited access to read and copy the Printer Engine Program but only prevented its use (which functions are not protected by copyright), Lexmark could not claim to have put in place a technological measure that effectively controls access to a protected work.
Considering the intent of the DMCA, the court supported its construction of “controls access” by noting that Congress enacted the DMCA to combat the threat of massive piracy of digital works due to the ease with which they could be copied and distributed. The court determined Congress did not intend to create liability for the circumvention of technological measures designed to prevent consumers from using consumer goods while leaving the copyrighted work unprotected. The decision comes soon after another case in which the U.S. Court of Appeals for the Federal Circuit held the anticircumvention provisions of the DMCA did not prevent the sale of replacement garage door openers. Chamberlain v. Skylink Technologies, Inc., Case No. 04-1118 (Fed. Cir. Aug. 31, 2004), discussed in IP Update (October 2004).
The Ordinary Meaning Trumped by Inferences Drawn from Intrinsic Evidence
By Steven Allis
In affirming a summary judgment of non-infringement based on a narrow claim construction, the U.S. Court of Appeals for the Federal Circuit has confirmed dictionary definitions are not preemptive of the intrinsic evidence, and courts are not permitted to disregard the intrinsic record in claim construction. C.R. Bard, Inc. v. United States Surgical Corp., Case No. 04-1135 (Fed. Cir. Oct. 29, 2004) (Michel, J.).
In district court, Bard asserted that U.S. Surgical infringed its patent for a mesh surgical “plug” device, i.e., an implantable medical device made out of fabric used to occlude and repair hernias. The lower court ruled on summary judgment that there was no infringement because Bard’s patent was limited to fabric plugs having pleats. Bard appealed the summary judgment, arguing the district court improperly limited the asserted claim to require pleats. The disputed claim language regarded the terms “conformable” and “pliable,” which were used in the claim to describe the characteristics of the claimed plug.
On appeal, Bard argued that the district court improperly ignored the ordinary meaning of commonly known claim terms in favor of an implied definition derived from the intrinsic evidence. In support, Bard argued that the Federal Circuit’s decision in Texas Digital Sys., Inc. v. Telegenix, Inc. (IP Update, Vol. 5, No. 11, Nov. 2002) held the ordinary meaning should control, and dictionary definitions “trump” the intrinsic record unless there is a clear definition presented by the patentee or a disavowal of the ordinary meaning.
The Federal Circuit affirmed, noting that Texas Digital notwithstanding, dictionary definitions do not trump the intrinsic record, and the intrinsic record cannot be disregarded. The Federal Circuit next considered the disputed claim construction and concluded the extrinsic dictionary definitions urged by Bard were irrelevant because the patentee had limited the scope of the claim in the intrinsic record, and the dictionary definitions offered by Bard were misapplied to the claim. The Federal Circuit relied on express statements in the intrinsic record to limit the invention to pleated plugs despite Bard’s arguments that those limitations regarded only a single embodiment of the invention. The Court also relied on a reference to pleats in the “summary of the invention” to infer the entire invention, and not just a single embodiment, was limited to pleated plugs. Because of these express and implied limitations, the Federal Circuit concluded the patentee had disavowed non-pleated plugs, thereby rendering Bard’s dictionary definitions irrelevant to the claim construction analysis.
The Court also held Bard’s dictionary definitions of the disputed terms “comfortable” and “pliable” were misapplied to the meaning of the term “plug.” Specifically, the court found the references to “pleats” in the intrinsic record limited the structure of the plug to a pleated plug, and the disputed terms referred solely to the effects produced by the claimed structure. In other words, the claimed structure was limited to a plug with pleats, and the recited functional aspects did not conflict with or alter that structure. In short, the Federal Circuit rejected the argument that the terms used to describe the characteristics of the plugs defined the plug’s claimed structure.
Patents / Federal Circuit Practice
Federal Circuit Signals Intent to Crack Down on Violation of Circuit Procedural Rules
By Matthew Weil
The U.S. Court of Appeals for the Federal Circuit has sent a stern warning to attorneys practicing before it. In Re Violation Of Rule 28(c), Miscellaneous No. 774 (Fed. Cir. Nov. 8, 2004) (per curiam).
In a case pending before it, a litigant failed to observe the rules limiting cross-appeal reply briefs to issues presented by the cross-appeal. Although the Federal Circuit declined to impose a sanction in this case, it signaled a tough stance on future violators. In a per curiam order, the Court said “we wish to make clear that it is the duty of counsel to familiarize themselves with applicable rules, and that, in future cases, serious violations of applicable rules, whether or not ‘inadvertent,’ will potentially subject counsel to sanctions.” In addition to the subject matter limitations imposed by Rule 28(c), the Court also singled out Federal Circuit Rule 47.6, which prohibits the citation of non-precedential opinions and rules governing situations in which a cross-appeal is appropriate.
Patents / Design Invalidity and Infringement
Point of Novelty Testimony Not Required for Design Patent Infringement
By Horace Ng
The U.S. Court of Appeals for the Federal Circuit reversed the district court’s finding of invalidity and non-infringement with respect to the plaintiff’s design patents, holding a design patent plaintiff is not required to offer testimony in order to prove that the “points of novelty” of the design patents were infringed. Bernhardt, L.L.C. v. Collezione Europa USA, Inc., Case No.04-1024 (Fed Cir. Oct. 20, 2004) (Linn, J.)
Bernhardt sued Collezione for design patent infringement. Bernhardt’s design patents covered a number of furniture designs. At trial, the parties disputed which designs were exhibited at an exhibition organized by Bernhardt, which admittedly took place more than one year prior to the filing dates of Bernhardt’s design patents, and whether such exhibition was considered a public use under §102(b).
The trial record indicated there was no direct evidence showing which designs were present at the exhibition. In its attempt to demonstrate the claimed designs were displayed at the exhibition, Collezione was only able to offer indirect evidence, such as product ID numbers and evaluation comments. The trial record also showed that while attendees at the exhibition were not required to formally execute any confidentiality agreement, Bernhardt employed a number of other precautionary measures to restrict subsequent dissemination of information obtained at the exhibition. The district court concluded Bernhardt’s patents were invalid and not infringed. Bernhardt appealed.
The Federal Circuit reversed, noting that for design patents both the invalidity and infringement analyses first require a court to construe the claimed design. Next, the fact-finder must compare the claimed design to the article in question, employing both the ordinary observer and the point of novelty tests.
On the question of invalidity, the Federal Circuit addressed use of the exhibited designs and the circumstances surrounding the exhibition separately. With respect to the exhibited designs, the Federal Circuit found the district court incorrectly applied the ordinary observer and the point of novelty tests by failing to properly analyze whether the furniture designs actually displayed at the exhibition were substantially similar in appearance in the eyes of an ordinary observer to the claimed designs and determine whether the points of novelty of the claimed designs were misappropriated. The Federal Circuit noted that the district court relied on evidence offered by Collezione to conclude the exhibited furniture pieces were “similar” to the patented furniture design, without benefit of invoking the ordinary observer and point of novelty tests.
With respect to the circumstances surrounding the exhibition, the Federal Circuit found the district court improperly focused on the absence of confidentiality agreements, without considering the totality of circumstances. The exhibition was not open to the public, identification of attendees was checked, attendees were not allowed to make written notes or take photographs inside the showroom and attendees had an incentive not to divulge Bernhardt’s designs due to possible exclusion from future exhibitions. On that basis the Federal Circuit concluded the “public use” analysis performed by the district court was incomplete.
On the question of infringement, the Federal Circuit held “in order to establish the points of novelty in a design patent infringement action, … the patentee must introduce into evidence, at a minimum, the design patent at issue, its prosecution history, and the relevant prior art references cited in the prosecution history; and must present, in some form, its contentions as to points of novelty. The contentions may be made in any appropriate way, such as in proposed findings of fact.” The Federal Circuit further noted that “when the points of novelty can be discerned from the patent, its prosecution history, the cited prior art, and the patentee’s contentions, any additional evidence, such as expert testimony, is not necessary to establish the points of novelty.” On that basis the Federal Circuit found Bernhardt had satisfied its burden by including the points of novelty in its proposed findings of fact.
Patents / Government Contracting
Failure to Comply with Government Invention Reporting Requirements Leads to Forfeiture
By Kelli Watson and Kori Anne Bagrowski
Addressing the issue of government contractor’s obligation to disclose a subject invention, the U.S. Court of Appeals for the Federal Circuit, in a case of first impression, affirmed a decision from the Armed Services Board of Contract Appeals (the Board) that a defense contractor forfeited title to a patent for failure to timely disclose the invention the government. Campbell Plastics Engineering & MFG., Inc. v. Lest Brownlee, Acting Secretary of the Army, Case No. 03-1512 (Fed. Cir. Nov. 10, 2004) (Clevenger, J.).
Campbell Plastics entered into a contract with the Army to develop certain components of an aircrew protective mask, as part of a program for small, disadvantaged business concerns. The contract incorporates in relevant part clauses from the Federal Acquisition Regulations (FARS), including a “Patent Rights-Retention by the Contractor” clause (FAR 52.227-11) and a “Patents Reporting of Subject Inventions” clause (FAR 252.227-7039). These clauses require a contractor to disclose and elect title to any subject invention developed pursuant to a government contract and set forth the requirements to do so. These clauses further provide that the government may obtain title to an invention developed pursuant to a government contract if the contractor fails to disclose the invention within two months from the date in which the inventor discloses the invention in writing to the contractor personnel responsible for patent matters. The contract also specifies the contractor is to disclose all inventions in interim and final reports and on a prescribed form.
During the period of performance pursuant to the contract, Campbell Plastics made progress reports on the development of a “sonic weld or snap fit” a component of an aircrew mask. Campbell Plastics also submitted invention disclosure forms on which it repeatedly indicated there was no invention. The Army published a report on the protective mask that referenced the sonic welded components in the mask. Soon after, Campbell Plastics contacted an attorney to draft a patent application for a “Sonic Welded Gas Mask and Process.” The government was made aware of the patent application as it was subject to a secrecy determination review after it was files with the U.S. Patent and Trademark Office (USPTO). After the patent issued Campbell Plastics notified the Army in writing of the patent to the sonic welded gas mask and the administrative contracting officer (AEO) made a demand for title.
Campbell appealed, arguing it had complied with the invention disclosure timing requirements of the FAR because it disclosed to the government, via progress reports, all the features of the invention throughout the contractual period; the government had in its possession an enabling disclosure of the invention as evidenced by the government’s publication regarding the aircrew protective mask; and the government had in its possession an enabling disclosure of the invention when it reviewed the patent application filled by Campbell and the USPTO for secrecy determination purposes. The AEO and the Board denied Campbell’s appeal, finding Campbell failed to comply with the prescribed method of disclosure and, citing to the clear language of the contract as to the manner in which inventions were to be disclosed, rejected Campbell’s argument that “forfeiture” is disfavored at common law.
The Federal Circuit affirmed. In doing so, it rejected Campbell’s argument that the Board abused its discretion in demanding title to the Campbell’s patents. The Federal Circuit found that the Board correctly applied the proper test, considering evidence of whether the government official acted with subjective bad faith; whether the official had a reasonable, contract-related basis for the decision rendered; the amount of discretion given to the official; and whether the official violated a statute or regulation.
Litigation / Declaratory Judgment
Threats Aimed at Impeding Another’s Commercial Activity Create a Justiciable Controversy
By Kori Anne Bagrowski
The U.S. Court of Appeals for the Federal Circuit held the district court clearly erred in its decision to dismiss an action seeking declaratory judgment. The Federal Circuit reasoned the dispute had the requisite immediacy and reality, and the district court abused its discretion by failing to take responsibility to resolve it. Capo, Inc. v. Dioptics Medical Products, Inc. Case No. 04-1045 (Fed. Cir. Oct. 25, 2004) (Newman, J.).
The dispute involved “wear-over” sunglasses adapted to fit over or clip onto eyeglasses. Dioptics threatened to sue Capo for patent infringement. In a telephone conversation, Dioptics’ president stated to Capo that it was expanding its patent portfolio to 40 patents covering the entire basic wear-over sunglass frame shapes. Dioptics’ president asserted that it intended to vigorously defend its patents against infringement and claimed it would win.
Capo thereupon filed its declaratory judgment complaint. Dioptics declined to counterclaim for infringement but moved for dismissal, claiming it had never even seen Capo’s “Suncovers” product and had not analyzed it for possible infringement of any Dioptics patents. However, while the declaratory judgment proceeding was still pending, Dioptics filed another suit alleging trade dress infringement and unfair competition, claiming the Capo product was substantially similar in design, appearance and functionality to those of Dioptics. Capo argued Dioptics’ filing of a trade dress infringement suit was inconsistent with its contention it had never seen or analyzed Capo’s product and there was no threat of suit.
The district court found no case or controversy existed and, in exercise of “its considerable discretion,” declined to exercise its declaratory judgment jurisdiction. Capo appealed.
Applying an “abuse of discretion” standard, the Federal Circuit reversed, finding that the district court clearly erred. The Federal Court reasoned the unresolved dispute met the objective standard for declaratory judgment, and the district court did not have the requisite “well-founded reasons” to decline Capco’s action. Dioptics threatened a patent infringement suit unless Capo abandoned its marketing of the “Suncovers” product. The statements aimed at impeding Capo’s commercial activity put Capo in reasonable apprehension of suit because Capco had entered the marketplace with the accused product. The Federal Circuit reasoned the objective apprehension was deliberately and intentionally created by the president of Dioptics, and it was irrelevant whether Dioptics had adequately investigated the basis of its threats. The Federal Circuit also noted that a defendant cannot avoid a declaratory judgment action by its failure or refusal to make a compulsory counterclaim.
Practice Note
“Jawboning” and aggressive negotiation may not always establish a justiciable controversy. However, threats aimed at impeding another’s commercial activity, leaving no doubt of an impending patent infringement suit, create a reasonable apprehension that may be resolved by declaratory judgment.
Trademarks / Anti-Cybersquatting Consumer Protection Act
Registration of “foradodge.com” Violates ACPA
By Annie Brose
Addressing the applicability of the Anti-Cybersquatting Consumer Protection Act (ACPA) to a domain name incorporating the famous trademark DODGE, the U.S. Court of Appeals for the Sixth Circuit recently affirmed a lower court’s granting of summary judgment transferring the domain name where the defendant registered the domain name “foradodge.com.” DaimlerChrysler v. The Net Inc., Case No. 03-1950, 04a0368p.06 (6th Cir. Oct. 28, 2004) (Kennedy, C.J.).
In 1996, defendant Keith Maydak registered the domain name “foradodge.com” along with several other questionable domain names, under the name of the nonexistent entity The Net Inc. At the time, the plaintiff, DaimlerChrysler, was already advertising and using as a toll free number 1-800-4-A-DODGE in addition to owning the domain name 4ADODGE.COM with a website established at the address. DaimlerChrysler filed suit under the Anti-Cybersquatting Consumer Protection Act, and the district court granted summary judgment in its favor. Net Inc. appealed to the Sixth Circuit asserting DaimlerChrysler had failed to meet two of the criteria required to establish a claim under the ACPA.
Net Inc. argued that the district court erred in finding that the mark “4ADODGE” qualified as a protected trademark under the ACPA, and Net Inc. had a bad faith intent to profit off of the registration of the domain name “foradodge.com.” First, Net Inc. argued 4ADODGE was not entitled to trademark protection because it merely used the registered mark DODGE as part of a telephone number and as a website, contrasting it to marks such as 1-800-FLOWERS that is used as an actual business name. The Sixth Circuit disagreed, finding the domain name foradodge.com confusingly similar to the mark DODGE because a domain name incorporating a registered mark is confusingly similar if a consumer might think the mark owner used, approved or permitted the use of the mark. The court also found the slight differences between the domain name and the registered mark (i.e. the mere addition of a prepositional phrase) were irrelevant. Additionally, Net Inc. claimed it had no bad faith intent when it registered the mark with the professed intention of using the mark to establish a website marketing its “dodging” services, such as tax avoidance and other ways to circumvent “society’s general paradigm.” Despite Net Inc.’s claims, the Sixth Circuit affirmed the district court’s finding of bad faith intent and found the defendant’s behavior qualified for all but one of the ACPA’s nine factors relevant to bad faith.
The Sixth Circuit also addressed Net Inc.’s third-party complaint against the United States that the ACPA provided for an unlawful taking in violation of the Fifth Amendment. Again, the appellate court affirmed the lower court’s ruling noting that a regulatory taking only occurs when the government prevents a property owner from making use of a specific property that otherwise would be permissible. Because the use infringed the trademark of DaimlerChrysler, this did not qualify as a taking.
Intellectual Property Licences and Technology Transfer
By Duncan Curley
Intellectual Property Licences and Technology Transfer is a practical guide that examines the new European Technology Transfer Block Exemption Regulation and the impact the changes in the law will have on IP licences. This book simplifies this highly complex topic and will provide practical advice. To purchase a copy (paperback £49.95, hardback £59.95), please contact Extenza-Turpin, books@extenza-turpin.com, tel. + 44 (0) 1767 604951, fax + 44 (0) 1767 601640, Extenza-Turpin, Stratton Business Park, Pegasus Drive, Biggleswade, Bedfordshire, SG18 8QB, UK.
