Federal Circuit Presumes Patent Power Equals Market Power
By Craig P. Seebald
Over the past two decades, there has been a general consensus that courts and antitrust agencies should not presume that a patent conveys market power under the Sherman Act. For instance, the U.S. Department of Justice stated in its Antitrust Guidelines for the Licensing of Intellectual Property that the “agencies will not presume that a patent, copyright, or trade secret necessarily conveys market power upon its owner.” The Federal Circuit’s decision in Independent Ink, Inc. v. Illinois Tool Works, Inc ., Case No. 04-1196 (Fed. Cir., Jan. 25, 2005) (Dyk, J.) marks a sharp reversal of the general consensus regarding market power and patents.
In Independent Ink , Trident Inc., a wholly-owned subsidiary of Illinois Tool Works, was the owner of U.S. Pat. No. 5,343,266 which disclosed an ink jet and an ink supply system for printing bar codes. Trident also sold ink. Trident insisted that a licensor could make, use and sell Trident ink jet printing devices only if the licensor purchased ink from Trident. Independent Ink, a competing manufacturer of ink, sued Trident seeking a declaratory judgment of non-infringement and invalidity of Trident’s patents and claiming that Trident tied its Trident device with Trident ink.
A tying claim requires a showing that a defendant has market power in the tying product, that there were two separate products involved, that the defendant conditioned the sale of the tying product on the purchase of the tied product and that there was an effect on interstate commerce. The district court granted summary judgment to Trident, finding Independent made no showing that Trident had market power in the tying market. On appeal, Independent argued that the district court erred in requiring the plaintiff to prove affirmatively market power.
The Federal Circuit first clarified that the antitrust consequences of patent tying was a question of federal circuit law, not regional circuit law.
Relying on two older Supreme Court decisions ( International Salt Co. v. United States and United States v. Loew’s Inc .), the Federal Circuit held that Independent did not need to show that Trident had market power to defeat summary judgment. The Court held that a patent creates a presumption of market power in a tying claim. The Court held that this presumption could only be rebutted by expert economic testimony or other credible economic evidence showing cross-elasticity of demand.
The Independent Ink decision will likely reinvigorate patent tying claims in the federal courts. Given the presumption of market power that arises from owning a patent, patent owners need to be careful when licensing their intellectual property to ensure that the licensee is not forced to buy another product or license another patent as a condition of obtaining the underlying license.
Objective Criteria Fail to Overcome Prima Facia Obviousness
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In a ruling that effectively shortens the period of patent protection for Merck & Co., Inc.’s (Merck) second-biggest seller in a decade, the U.S. Court of Appeals for the Federal Circuit reversed and vacated a lower court ruling and held that Merck’s U.S. Patent No. 5,994,329 (the `329 patent) is invalid as obvious over the prior art. Merck & Co., Inc, v. Teva Pharmaceuticals USA , Inc ., Case No. 04-1105 (Fed. Cir., Jan. 28, 2005) (Gajarsa, J., Rader, J. dissenting).
Merck has U.S. Food and Drug Administration (FDA) approval to market a once-weekly dose of alendronate monosodium trihydrate, which it does under the trade name FOSAMAX. The `329 patent is listed in the FDA’s Orange Book for Merck’s FOSAMAX dosages of 35 mg and 70 mg. Teva filed an Abbreviated New Drug Application (ANDA) to market a generic version of FOSAMAX. Merck sued, alleging infringement of its `329 patent, which claims a method for treating osteoporosis by administering “about 70 mg” of the compound once weekly and a method for preventing the disease by administering “about 35 mg” of the compound weekly. In a Markman proceeding, the district court determined that the claim term “about” had been specifically defined by Merck and thus given a special meaning. In particular, the district court concluded that the term “about” was an attempt to take into account the different salt forms and formulations of alendronic acid in order to deliver the exact 35 or 70 mg of sodium alendronate. Teva’s ANDA for 35 and 70 mg dosages was held to infringe.
The Federal Circuit disagreed, finding that the district court had construed the claim term “about” in a manner inconsistent with the specification since the patentee had failed to clearly redefine the term. The Federal Circuit concluded that the term “about” should be given its ordinary and accepted meaning of “approximately.”
The panel then found that regardless of whether the term “about” is construed as above or as by the district court, based on an application of the Graham factors, the relevant claims of the `329 patent were rendered obvious in view of the two prior art articles, one of which teaches a once-weekly dose of 40 mg or 80 mg. The Federal Circuit noted that, while the district court had correctly found Merck’s once-weekly dosing of FOSAMAX was commercially successful, this fact had minimal probative value on the issue of obviousness because others were legally barred from commercially testing the formulations given Merck’s patent coverage. The Federal Circuit further disagreed with the discounted weight afforded the prior art because the articles were not published in a peer-reviewed journal or authored by one skilled in the art.
In a strong dissent, Judge Rader warned patentees that they should elect the lexicographer option at their own risk and accused the majority of paying only lip-service to this option. He further advocated “the basic jurisprudential rule of according trial courts proper deference.”
Mere Orange Book Listing Does Not Create Reasonable Apprehension of Infringement Suit
Contact Paul Devinsky
In a decision that addresses key provisions of the Hatch-Waxman Act, the U.S. Court of Appeals for the Federal Circuit affirmed a district court’s holding that an Orange Book listing does not create a legal controversy sufficient to trigger federal jurisdiction. Teva Pharmaceuticals USA, Inc. v. Pfizer Inc ., Case No. 04-1186 (Fed. Cir., Jan. 21, 2005) (Shall J.; Mayer, J. dissenting).
Teva filed an Abbreviated New Drug Application (ANDA) pursuant to the provisions of the Hatch-Waxman Amendments to the Federal Food, Drug and Cosmetic Act. In its ANDA, Teva sought the approval of the U.S. Food and Drug Administration (FDA) to market its generic version of the drug sertraline hydrochloride, sold by Pfizer Inc. (Pfizer) under the name ZOLOFT. Pfizer holds two patents relating to ZOLOFT: U.S. Patent No. 4,356,518 (the `518 patent) and U.S. Patent No. 5,248,699 (the `699 patent). Teva’s ANDA filing contained a paragraph IV certification, which stated that its generic drug did not infringe the `699 patent or, alternatively, that the `699 patent is invalid. Pursuant to the provisions of the Hatch-Waxman Act, Pfizer had 45 days from the date it received notice of Teva’s paragraph IV certification to sue Teva for infringement of the `699 patent based upon the ANDA filing. After Pfizer failed to sue Teva within the 45-day period of Pfizer’s receipt of notice of the paragraph IV certification, Teva filed a declaratory judgment action against Pfizer seeking a declaration that its generic drug did not infringe Pfizer’s `699 patent or that the claims of the `699 patent were invalid. The district court dismissed Teva’s suit for lack of jurisdiction because Teva failed to establish that an actual controversy existed, as is required under the Declaratory Judgment Act.
On appeal, Teva argued that the district court erred when it determined that Pfizer had not created a reasonable apprehension that it would bring an infringement suit against Teva. Teva relied primarily on Pfizer’s listing of the `699 patent in the Orange Book to argue that Pfizer had created a reasonable apprehension as is required to establish an actual controversy under the Declaratory Judgment Act. The Court found Teva’s reliance on Pfizer’s listing of the `699 patent in the Orange Book misplaced and pointed out that the listing of a patent in the Orange Book is a statutory requirement for an ANDA filer. According to the Court, Pfizer’s compliance with the Hatch-Waxman Act listing requirement should not be construed as a blanket threat of Pfizer’s patent enforcement intentions to potential infringers. The Federal Circuit noted that it is not prepared to hold that an Orange Book listing, by itself, evinces an intent to sue any ANDA filer who submits a paragraph IV certification with respect to the patent. The Court concluded that more is required for an actual controversy than the existence of an adversely held patent.
In his dissent, Judge Mayer pointed out that, if the brand-name drug manufacturer does not bring an infringement action within the 45-day window, an injury is created to the subsequent ANDA filer, who is without recourse. Therefore, subsequent ANDA filers should be allowed to file a declaratory judgment action to bring the matter of infringement and validity to a head for all generic manufacturers.
Convincing Evidence of Experimental Use Rebuts Public Use
Contact Paul Devinsky
The Federal Circuit has affirmed a district court’s denial of judgment as a matter of law (JMOL) of invalidity on the grounds that the purported “prior public use” was, in fact, experimental. Lisle Corporation v. A.J. Manufacturing Co. , Case No. 04-1275, 1346 (Fed. Cir., Feb. 11, 2005).
Lisle Corporation sued A.J. Manufacturing for infringing its patent on a vehicle steering control system. In the district court and on appeal, A.J. Manufacturing argued that Lisle’s patent was invalid because Lisle filed its application over 30 months after a prototype of the patented tool was distributed to various repair shops, without compensation and without a confidentiality agreement. Citing TP Laboratories , A.J. Manufacturing argued that it was an error to instruct the jury that Lisle merely had to come forward with “evidence” of experimental use, rather than “convincing evidence.”
The Court rejected A.J. Manufacturing’s argument. The Court agreed that if the challenger presents a prima facia case of public use, the patentee must come forward with convincing evidence of experimental use. But the Court held that “convincing” evidence merely means sufficient evidence to prevent the challenger from meeting its clear and convincing burden. The Court declined to read TP Laboratories as requiring the patent owner to rebut a claim of public use with clear and convincing evidence.
In this case, Lisle relied on the testimony of the co-inventor and engineer who testified that he needed to know how well the product at issue would work before it would be ready for patenting. The witness testified that Lisle’s protocol was to contact the mechanics receiving the prototype and get feedback within a few weeks and that the information he received from outside mechanics was used to add additional features to the prototype. The witness also testified that Lisle had a prior working relationship with the mechanics and that he believed the mechanics knew that the prototype was given to them for experimental testing. During the development program, Lisle also prepared reports detailing the status of the project, future plans for testing, data regarding the project and suggestions for improvement from outside mechanics. The Court held that the evidence was sufficient to rebut a prima facia case of public use and that A.J. Manufacturing had failed to make a clear and convincing showing. Under the circumstances, the Court found that the district court’s failure to specify (in its jury instructions) the proper allocation regarding the burden of persuasion (Lisle’s burden was to rebut any clear and convincing showing of public use by A.J. Manufacturing) was harmless.
No Appellate Jurisdiction Where Terms of Settlement Agreement Not Satisfied Prior to Entry of Judgement
By David Larson
Where a settlement agreement included a condition precedent to dismissal, the district court was powerless to dismiss the case as settled as long as that condition remained unfulfilled. The U.S. Court of Appeals for the Federal Circuit dismissed for lack of appellate jurisdiction. Silicon Image, Inc. v. Genesis Microchip Inc., Case No. 04-1207 (Fed. Cir., Jan. 28, 2005).
As members of the Digital Display Working Group (DDWG), Silicon and Genesis agreed to share intellectual property, royalty-free, in order to promote an industry-standard digital video interface. Silicon sued Genesis claiming Genesis exceeded its rights under this agreement and infringed Silicon’s patents. Shortly before trial, the parties reached a settlement, memorializing their agreement in a Memorandum of Understanding (MOU). The MOU contemplated subsequent preparation of a Definitive Agreement.
While negotiating the Definitive Agreement, the parties disagreed as to the interpretation of the MOU. Silicon argued that under the Definitive Agreement, Genesis agreed to pay and was required to pay royalties on certain categories of products regardless of the DDWG agreement or infringement. Genesis argued that the royalties were due only on “infringing” products. Largely because of this dispute, the parties could not agree to a Definitive Agreement and the MOU became the binding settlement agreement.
After an evidentiary hearing, the district court concluded that an agreement had been formed and Silicon’s interpretation was correct. The district court issued an Amended Final Judgment Order, which incorporated the terms of the MOU and required Silicon to certify that it had received an up-front payment, as specified in the MOU. However, Genesis sought and obtained, over Silicon’s opposition, a stay of the Amended Final Judgment Order pending appeal. The specified up-front payment was placed in an escrow account and Silicon never received or certified receipt of the payment.
The Federal Circuit held that the contingency presented in the MOU — certification of receipt of the upfront payment by Silicon — was unmet and, therefore, the parties’ agreement precluded dismissal. The Federal Circuit reasoned that once the district court determined that the contingency was part of the bargain, it was powerless to dismiss Silicon’s infringement claims until the parties complied with the terms of their agreement.
Federal Circuit Enforces Jurisdictional Discovery Where Existing Record Is Insufficient
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In two recent cases, the U.S. Court of Appeals for the Federal Circuit vacated dismissals based on a lack of personal jurisdiction and remanded due to insufficient evidence of record. In Trintec v. Pedre , the Federal Circuit ordered the District Court of District of the Columbia to reconsider its decision that it lacks personal jurisdiction over Pedre, a New York corporation, in a patent infringement suit brought by Trintec. Trintec Industries, Inc. v. Pedre Promotional Products, Inc. , Case No. 04-1293 (Fed. Cir., Jan. 19, 2005) (Freidman, S.J.). Similarly, in CEA v. CMO , the Federal Circuit vacated a Delaware district court’s decision that Delaware does not have jurisdiction over CMO, a Taiwanese corporation, in a suit for patent infringement. Commissariat a l’Energie Atomique v. Chi Mei Optoelectronics Corporation , Case No. 04-1139 (Fed. Cir., Jan. 19, 2005) (Dyk, J.),
In Trintec v. Pedre , Trintec sued Pedre over two patents that cover automated small volume production of printed faces for use in wristwatches, clocks and similar instruments. The district court gave no reasons for its decision that it lacks personal jurisdiction over Pedre. The Federal Circuit concluded that more evidence is needed before a decision as to the existence of specific or general personal jurisdiction could properly be made and ordered the district court to reconsider its decision.
Trintec offered evidence in support of its claim of jurisdiction showing the following:
Pedre operated an interactive website to advertise its products to Washington, D.C., customers with internet access
Third-party websites made Pedre products available and/or provided hyperlinks to Pedre.com to Washington, D.C., customers with internet access
Pedre exhibited at two trade shows in Washington, D.C.
A sales representative makes two annual visits to Washington, D.C. a year
Pedre made minimal actual sales in Washington, D.C.
The Federal Circuit explained that each fact proffered by Trintec was too ambiguous to permit the Federal Circuit to make an informed judgment on the jurisdictional issue. The Federal Circuit stated that on remand the district court should take all necessary action to ensure that the record is adequate to determine whether it has personal jurisdiction over Pedre. The Federal Circuit emphasized that if the district court concludes that the existing record is insufficient to support personal jurisdiction, then Trintec is entitled to jurisdictional discovery.
In CEA v. CMO , CEA sued CMO over two patents directed to technology for the design and manufacture of LCDs and related products. CMO is the world’s third-largest manufacturer of LCD modules, which other companies incorporate into computer monitors and sell to brand-name computer manufacturers. CEA contends CMO derives substantial revenue from sales in Delaware. The Federal Circuit stated that the U.S. Supreme Court in its 1987 Asahi case was evenly split on whether the mere introduction of products into the “stream of commerce” is sufficient under the due process clause to confer jurisdiction. The Federal Circuit did not decide that question, but remanded for discovery on “additional conduct” such as marketing arrangements and the role of CMO’s website as a channel to customers. The Federal Circuit held that the district court erred in denying CEA’s request for jurisdictional discovery and ordered the district court to grant limited jurisdictional discovery and to further consider its jurisdiction based on such discovery.
Details, Details . . . Federal Circuit Requires a Record to Preserve Issues for Appeal or Justify Attorney Fee Award
By Matthew F. Weil
The U.S. Court of Appeals for the Federal Circuit has reaffirmed the exacting standard for preserving challenges to the sufficiency of the evidence for appeal. Junker v. Eddings , Case Nos. 04-1208, -1271 (Fed. Cir., Feb. 8, 2005) (Newman, J.). The Court also held that the district court may not award attorney fees in excess of those actually incurred without detailing its reasons for doing so.
Junker, an inventor and a salesman of medical devices, obtained a design patent on a propeller-shaped design for an introducer sheath. At trial, a Texas jury found the defendants liable for willful infringement. The defendants appealed, challenging the jury’s verdict on a factual grounds not argued to the jury or squarely presented in a judgment as a matter of law (JMOL) motion at the close of all evidence. The Federal Circuit declined to entertain the new argument, pointing out that Rule 50(a) provides that a motion for JMOL made before the case is submitted to the jury “shall specify . . . the facts on which the moving party is entitled to the judgment” in order to give the non-moving party an opportunity to cure the defects in proof and to inform the trial court of the precise issues it must decide in ruling on the motion.
According to the Court, the general statements in the defendants’ original JMOL motion were not adequate to inform either Junker or the district court that the defendants’ challenges to the validity of the design patent involved certain specific elements of the design later asserted as a basis for the appeal.
The district court also awarded Junker attorney fees of $275,000 under 35 U.S.C. § 285. This amount was almost double the $126,712.50 Junker’s attorney actually charged Junker. The Court noted that the kind of evidence usually analyzed in determining a reasonable attorney fee (“hourly time records, full expense statements, documentation of attorney hourly billing rates in the community for the particular type of work involved, the attorney’s particular skills and experience, and detailed billing records or client’s actual bills showing tasks performed in connection with the litigation”) was “[c]onspicuously absent” from the district court’s fee award order. Lacking a record upon which to base its review, the Federal Circuit vacated and remanded the fee award.
A Mark Is Famous if it Is Famous to the Relevant Consuming Public
Contact Paul Devinsky
The U.S. Court of Appeals for the Federal Circuit affirmed the Trademark Trial and Appeal Board’s (TTAB) decision that the mark VEUVE ROYALE for sparkling wine would likely cause confusion with the marks VEUVE CLICQUOT PONSARDIN and VEUVE CLICQUOT. The Federal Circuit, however, held that there is no likelihood of confusion with the mark THE WIDOW. Palm Bay Imports, Inc. v. Veuve Clicquot Ponsardin Maison Fondee En 1772 , Case No. 04-1042 (Fed. Cir., Feb. 9, 2005) (Lourie, A.).
Palm Bay filed an intent-to-use trademark application for the mark VEUVE ROYALE for sparkling wine. Veuve Clicquot Ponsardin (VCP) filed an opposition alleging a likelihood of confusion with its own marks. The TTAB refused registration of VEUVE ROYALE finding a likelihood of confusion with three marks: VEUVE CLICQUOT PONSARDIN, VEUVE CLICQUOT and THE WIDOW.
Palm Bay appealed TTAB’s finding on four DuPont factors: the fame of VCP’s; third-party use of the term VEUVE; the similarity of the marks; and purchaser sophistication.
The Federal Circuit, for the first time, addressed the question of what segment of the consuming public must be aware of a mark in order for it to be considered famous. The Federal Circuit held that it is not the general public awareness standard, but the relevant consuming public, i.e., “the class of customers and potential customers of a product or service, and not the general public.” For the mark at issue, the relevant consuming public is purchasers of champagne and sparkling wine. Under this standard, VCP’s substantial sales volume; advertising expenditures; ranking as the second leading champagne brand in the United States; media exposure; and widespread presence in restaurants, liquor stores, wine shops and other retail establishments made VCP’s marks famous.
As to the similarity of the marks, the common term VEUVE is an arbitrary term as applied to champagne and sparkling wine. In addition, VEUVE, as the first word to appear on the label, is a prominent feature. Likewise, VEUVE also constitutes “the dominant feature” in the commercial impression created by VEUVE ROYALE because ROYALE is more laudatory and less source-indicating than VEUVE. The Federal Circuit distinguished other cases where the courts found no likelihood of confusion based on common terms because the common terms were generic or non-distinctive terms.
For the third DuPont factor under review — third-party use of the term VEUVE — Palm Bay argued that at least five other different alcoholic beverages use the term VEUVE. The Federal Circuit, however, agreed with the TTAB that the only evidence, an industry trade publication distributed to the trade, was insufficient to show that the consumers actually encounter these brands in the marketplace. Palm Bay also argued that at least six stores in New York, as well as internet websites and restaurant lists, used another third-party mark VEUVE DE VERNAY for sparkling wine. The Federal Circuit explained although that the evidence showed more than de minimis use, it did not rise to the level of demonstrating that the single third-party use was so widespread as to “condition” the consuming public, where customers have been educated to distinguish between different marks on the basis of minute distinctions.
The final DuPont factor reviewed by the Federal Circuit was purchaser sophistication, a factor which it found mitigated in favor of finding a likelihood of confusion. The Federal Circuit agreed with the TTAB that general consumers, not just connoisseurs, purchase champagne or sparkling wines on celebratory occasions or as holiday presents for friends and colleagues, with little care or prior knowledge. In fact, the Court noted that even more sophisticated purchasers who may be aware that champagne houses offer both types of products under similar marks, could easily conclude that VEUVE ROYALE was VCP’s sparkling wine.
As to the mark THE WIDOW, the Federal Circuit first noted that the doctrine of foreign equivalents is not an absolute rule and merely a guideline. The doctrine should be applied only when it is likely that the ordinary American purchaser would “stop and translate into its English equivalent.” Here, the Federal Circuit found that the TTAB erred in finding that the doctrine applies because an American buyer will not likely translate “VEUVE” into “widow.”
Specific Description of Trade Dress Required for Injunction [Tumblebus Sent Tumbling over a Trade Dress Injunction]
Jennifer M. Mikulina
The U.S. Court of Appeals for the Sixth Circuit vacated in part a preliminary injunction issued by the district court, finding a failure to provide specific detail regarding the trade dress at issue. Tumblebus Inc. v. Meredith Cramer d/b/a Tumblebus of Louisville , Case No. 04-5060 (Sixth Cir., Jan. 13, 2005).
The plaintiff, Tumblebus, uses several school buses retrofitted with athletic equipment to provide children’s physical education activities at various locations (daycare centers, birthday parties, etc.) in the greater Louisville, Kentucky, area. Tumblebus also sells its “mobile gyms on wheels” to third parties and allows these third parties to use the “Tumblebus” name to market their services. Although Tumblebus does not have written contracts with all purchasers, it enters oral agreements with each purchaser limiting the geographic area in which it can offer Tumblebus services. In 2002, Cranmer purchased a Tumblebus bus from another third party and began to operate in Louisville under the name “Tumblebus.” Efforts by the plaintiff to restrict Cranmer’s use of the TUMBLEBUS mark in the Louisville area were fruitless, and, by the time plaintiff filed suit against Cranmer in 2003, it had evidence of consumer confusion based on Cranmer’s operation in the Louisville area.
Tumblebus’ complaint accused Cranmer of trademark infringement, trade dress infringement and false advertising. The district court issued a preliminary injunction restricting Cranmer’s use of the TUMBLEBUS trademark and related trade dress in the Louisville area while the action was pending. Although the Sixth Circuit affirmed the district court’s preliminary injunction order preventing Cranmer’s use of the TUMBLEBUS trademark, it vacated the lower court’s holding regarding the Tumblebus trade dress.
The Sixth Circuit explained that it is appropriate to issue a preliminary injunction prohibiting use of particular trade dress, as long as the court describes in detail the specific acts it is restraining. According to the appellate court, “a party must first identify what particular elements or attributes comprise the protectable trade dress” to recover for trade dress infringement. After establishing these specific elements, the party must “show by a preponderance of the evidence that its trade dress is distinctive in the marketplace, that its trade dress is primarily nonfunctional and that the defendant’s trade dress is confusingly similar to the party’s protected trade dress.” The appellate court could not assess Tumblebus Inc.’s likelihood of success on the merits of its trade dress infringement claim because the lower court did not identify which “particular aspects of Tumblebus Inc.’s vehicular design qualify as distinctive trade dress that is primarily nonfunctional and confusingly similar to Cranmer’s vehicle design.”
Plaintiffs in a trade dress infringement action must provide specific information regarding the protectable elements of their nonfunctional and distinctive trade dress.
No 120 Day Requirement for Completion of Service Outside United States
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Addressing the issue of service in foreign jurisdictions, the U.S. Court of Appeals for the Seventh Circuit found that the 120-day rule under Federal Rules of Civil Procedure (Fed. R. Civ. P.) 4(m) does not apply to service in foreign countries. Nylok Corporation v. Fastener World Incorporation , Case No. 30 C 8238 (Seventh Cir. Jan. 25, 2005).
Nylok, the owner of a registered trademark, brought an action against four Taiwanese companies and one Korean company for infringement of its registered trademark. Nylok served the foreign corporations in their home countries through use of a professional service agent, who was hired two days after the complaint was filed. The service agent prepared the necessary documents and forwarded them to the governments of the respective defendants 41 days after the complaint was filed. Less than two months after the filing of the complaint, the district court notified Nylok that service on the foreign companies needed to be completed within 120 days from the filing of the complaint pursuant to Rule 4(m). Nylok responded by filing a motion arguing that Rule 4(m) does not apply to foreign service. Upon the expiry of 120 days from filing, the district court dismissed Nylok’s complaint. Nylok appealed.
Fed. R. Civ. P. 4(m) specifically states that it “does not apply to service in a foreign country.” The Seventh Circuit found that the rule recognizes that service in some foreign countries may take longer than 120 days. While the Court recognized that foreign service may take longer than service in the United States and is out of the hands of the plaintiff, it also recognized that the amount of time for completion of service is not unlimited. Rather, the Seventh Circuit found that individual district courts should be able to control their own dockets and implied that a district court may dismiss an action in appropriate cases, e.g. , if the plaintiff has made no attempt to begin process within the 120 day period.
Here, because Nylok made all reasonable efforts to serve the defendants within the 120 day period and instructed the service agent to begin preparation of the service of documents within days of filing the complaint, the Court found that Nylok was entitled to continue to litigate its infringement claim and that the dismissal had been improper.
No Likely Confusion in The Ritz
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Five trademark applications filed by The Ritz Hotel, Ltd. 20 years ago have finally cleared the opposition hurdle. In a precedential opinion, the U.S. Court of Appeals for the Federal Circuit reversed the part of the Trademark Trial and Appeal Board’s (TTAB’s) decision that had refused registration of two marks, and affirmed the part that had dismissed Shen’s opposition as to the other three. Shen Mfg. Co. v. The Ritz Hotel, Ltd ., Appeals Nos. 04-1063, -1076 (Fed. Cir., Dec. 17, 2004).
Twenty years ago, The Ritz sought to register a number of marks:
PUTTING ON THE RITZ for shower curtains
RITZ PARIS RITZ HOTEL and Design for dinnerware
The same RITZ PARIS RITZ Hotel and Design mark for various floor and wall coverings
RITZ for cooking and wine selection classes
THE RITZ KIDS for clothing.
The Board dismissed Shen’s opposition as to the first three as the marks in question are sufficiently dissimilar to prevent any likelihood of confusion. However, the Board sustained Shen’s opposition as to the last two marks, relying on Shen’s use of the mark RITZ since 1892 for various textile items, including dish towels, potholders, aprons, bathroom towels and ironing board covers.
Presented with a task of determining likelihood of confusion, the Federal Circuit analyzed three of the 13 duPont factors: the alleged fame of Shen’s RITZ mark, the similarity of the marks and the relatedness of the goods. The Federal Circuit first considered Shen’s assertion that its RITZ mark is famous and entitled to enhanced protection under §2(d) of the Lanham Act. Agreeing with the TTAB, the Court found inadequate Shen’s evidence of $5 million in annual sales, use of its mark for more than a century and hundreds of thousands of dollars in annual advertising expenditures. The Federal Circuit found Shen’s evidence “does not compare in terms of sales, advertising or media interest” with that in other cases in which the Federal Circuit has found fame.
Analyzing the second and third factors, the Federal Circuit agreed with the Board that PUTTING ON THE RITZ is sufficiently different from RITZ to avoid a likelihood of confusion. The Court condemned Shen’s dissection of the phrase PUTTING ON THE RITZ into “PUTTING ON THE” and “RITZ” to overemphasize “RITZ.” It reached the same conclusion as to the two RITZ PARIS RITZ HOTEL and Design marks.
As to the mark RITZ for cooking and wine selection classes, the Federal Circuit disagreed with the TTAB that those services are related to Shen’s kitchen textiles. The Board had reasoned that “in providing cooking courses ... it would be necessary that one make use of kitchen towels, dish clothes, aprons, barbeque mitts and potholders.” The Federal Circuit rejected the Board reasoning and noted that the fact that “[t]wo goods are used together does not, in itself, justify a finding of relatedness.” Instead, it emphasized the lack of evidence that the consuming public would perceive these goods and services as originating from the same source. It ruled that “[a]lthough the marks are identical, the differences in the products as well as the weakness of Shen’s mark” required dismissal of Shen’s opposition to this mark.
Finally, as to the mark THE RITZ KIDS, the Federal Circuit rejected the Board’s finding that the goods are related, because the hotel’s goods included gloves and Shen’s barbecue mitts are a kind of glove. Further, the Court found the hotel’s mark THE RITZ KIDS and Shen’s mark RITZ dissimilar. It found “THE” has elevated significance because of the well-known manner in which people refer to the hotel as “The Ritz” or “The Ritz Hotel”, but not as “Ritz” or “Ritz Hotel.” The Federal Circuit further found significance in the word “KIDS” as it indicates that the goods are geared toward children. Accordingly, Shen’s opposition was dismissed.
Interestingly enough, despite over the century of simultaneous use of the RITZ marks by the parties, there was no mention in either the Board’s opinion or that of the Federal Circuit about actual confusion or the lack thereof. The Ritz Hotel was opened in 1898 and Shen Manufacturing Co., Inc. started its kitchen textiles business in 1892.
The article entitled, "No Confusion Likely at the Ritz," which appeared in the December 2004/January 2005 issue of the IP Update, inadvertently failed to identify as co-author, John L. Welch, a well-published author and frequent lecturer on trademark topics and especially the jurisprudence of the TTAB. Mr. Welch reports, comments and analyzes current events regarding trademarks in his informative web blog called "The TTABlog" at www.thettablog.blogspot.com .
Tenth Circuit Finds Trademark Infringement Possible Where Mark Used on Related But Non-Competing Goods
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The U.S. Court of Appeals for the Tenth Circuit has reversed a district court’s grant of summary judgment of no infringement, holding that the use of a mark on related but non-competing goods can constitute infringement under the Lanham Act. Team Tires Plus Ltd. v. Tires Plus Inc ., Case No. 03-2300 (Tenth Cir Jan. 6, 2005) (McConnell, J.).
In 1983, Team Tires Plus Ltd. registered the TIRES PLUS mark for “rendering technical aid and assistance in the establishment of automobile tire stores and automobile maintenance centers.” In 1986, the defendant, Tires Plus, opened its first retail tire store named Tires Plus in Albuquerque, New Mexico. Though it objected to the use of the mark in letters in 1994 and 1995, the plaintiff (which operated its business primarily in the Minneapolis-St. Paul metropolitan area) took no legal action until 2001, after it had decided to expand its operation to New Mexico and neighboring states. The district court dismissed the plaintiff’s claims on summary judgment on the grounds that consulting services and tire sales were not competing businesses. The plaintiff appealed.
Quoting from the Supreme Court’s 1992 Two Pesos decision, the Court of Appeals held the district court erred by assuming that a trademark provides protection only when the defendant uses the mark on directly competing goods. It reiterated that the key inquiry is whether the consumer is ‘likely to be deceived or confused by the similarity of the marks.’”
The district court also erred when it held that the plaintiff’s mark “cannot reasonably be considered to cover franchising.” The Court of Appeals looked to the exchange between the plaintiff and the U.S. Patent and Trademark Office (USPTO) and held that the USPTO was aware that the plaintiff was engaged in franchising and understood the mark description to cover franchising. Accordingly, the Court of Appeals remanded for a new likelihood-of-confusion analysis.