Relying on Phillips methodology and an open transitional phrase, the U.S. Court of Appeals for the Federal Circuit vacated a summary judgment grant of non-infringement and set aside a finding of equivalents barring prosecution history estoppel. Free Motions Fitness, Inc. v. Cybex International, Inc. Case No. 05-1006 (Fed. Cir. Sept. 16, 2005) (Dyk, J.; Prost, J. dissenting).
Free Motions sued both Cybex and Nautilus for infringing its exercise machine patents. The exercise machine in issue included cables and pulleys that lift a weight stack. The claimed invention required that specified cables and extension arms pivot or swivel about a certain point. In the accused device, the arm and pivot assembly operated in a manner different from that as literally claimed. Based on this difference and a finding of prosecution history estoppel that barred the patent owner from relying on the doctrine of equivalents, the district court granted summary judgment of no infringement. Free Motions appealed.
In reversing the district court, the Federal Circuit relied on several canons of construction to modify the district court’s claim construction. First, the Federal Circuit held the district court erred in construing the claimed “first” and “second” pivot points as requiring specific spatial locations relative to the extension arms. Instead, the Federal Circuit ruled that “first” and “second” are merely used to distinguish between repeated recitations of an element.
Next the Court took issue with the interpretation of the claim term “adjacent.” After concluding that the intrinsic evidence did not suggest a special definition for “adjacent” and that the term does not have a specialized meaning in the relevant art, the Court resorted to a dictionary definition. Under Phillips, where reference to a dictionary is necessary, the “task is to scrutinize the intrinsic evidence in order to determine the most appropriate definition,” not its broadest dictionary definition or its aggregate of multiple dictionary definitions. Nonetheless, the Court here construed “adjacent” broadly to simply mean “not distant,” rather than adopt the narrow and more common usage of “relatively near and having nothing of the same kind intervening.”
Also, the defendant argued the claimed phrase “a cable” should be limited to “a single cable” because that was the only embodiment described in the specification. However, the Federal Circuit rejected this argument, noting that “a” or “an” conventionally means “one or more” in claims containing an open-ended transitional phrase such as “comprising” and explained this convention is only overcome by evidence of “a clear intent by the patentee to limit the article to the singular.”
Relying in part on claims differentiation, the Federal Circuit found the references to a single cable were only a description of the preferred embodiment and did not “evince a clear intent to limit the article [cable] to the singular.”
The Federal Circuit also set aside the district court’s finding of prosecution history estoppel. During prosecution, the patentee amended a claim to define over prior art by reciting a relationship between an axis of rotation and another axis and argued the claimed assembly “provides for virtually no variation in cable tension,” whereas the prior art contained cables with tension variations. The district court concluded that Free Motion was estopped from asserting equivalence against an infringing device that also had the undesirable cable tension variation. Despite that record, the Court found no estoppel:
“The presence of an undesirable feature in addition to the elements recited in this claim, even when the undesirability of the feature formed the basis of an amendment and argument overcoming a rejection during prosecution, does not limit the claim unless there is a clear and unmistakable disclaimer of claim scope.”
The U.S. Court of Appeals for the Federal Circuit, reversing a controversial decision by the U.S. International Trade Commission, has held that a package license that includes “nonessential” patents along with “essential” patents, at no additional charge for the nonessential patents, is not per se patent misuse. U.S. Philips Corporation v. International Trade Commission, Case No. 04-1361 (Fed. Cir. Sept. 21, 2005) (Bryson, J.).
The U.S. International Trade Commission (ITC) held that notwithstanding its finding of infringement by several of the respondents, several of Philips’ patents directed to the manufacture of compact discs (CDs) were unenforceable due to patent misuse. As its reason, the ITC noted that Philips had not allowed its licensees to select which individual patents it wished to license at a fee corresponding to the selected patents. Instead, the challenged license was a package license where Philips charged a flat fee per disc for patents that were “essential” to practicing the published technical standards for manufacturing recordable compact discs and patents that were “nonessential” to practicing those standards. The ITC had found that such an arrangement constituted per se patent misuse by tying a license to the non-essential patents to a license in the essential patents. Further, it determined patent misuse under the rule of reason in that the royalty rate structure of the patent pooling arrangement constituted placed an unreasonable restraint on competition. Philips appealed.
Reversing and remanding, the Federal Circuit found the questioned patent pooling arrangement was not per se patent misuse. The Court distinguished the package license from a patent-to-product tying arrangement in which the patentee improperly conditions a patent license to the purchase of a separate, staple good. Instead, the Court found that the Philips’ package license was merely a promise not to sue and did not require the licensee to use any of the patented technology nor bar the licensee from using any competing technology. The Court concluded the ITC erred in finding that the package license forced licensees to license technology they did not want in exchange for patent rights they did want.
The Court also rejected the commission’s underlying premise that the package license would not have been unlawful if individual patents were offered at a lower price than the package as a whole. The evidence established that Philips charged the same price for the package license regardless of which patents the licensee used. The Court also noted that “[i]t is entirely rational for a patentee who has a patent that is essential to particular technology, as well as other patents that are not essential, to charge what the market will bear for the essential patent and to offer the others for free.” The Court specifically set forth the benefits of package licenses, including reduced transaction and report costs, as well as a reduction in the risk of costly litigation over unlicensed nonessential technology.
The Federal Circuit also found a lack of evidence demonstrating that the package licensed linked two products with an anticompetitive effect in the second product market. Nonessential patents are those for which there are “commercially feasible” alternatives. The Court found a lack of evidence establishing that there were commercially feasible alternatives to the nonessential patents. With no such alternatives there can be no anticompetitive effect because no competition for a viable product is foreclosed. The Court stated the commission’s ruling could render an agreement per se unlawful later in time that was lawful when executed due to developments in technology that would convert an “essential” patent to a “nonessential” patent. Such a ruling would render patents unenforceable due to developments that occurred after execution of the license thereby increasing litigation “since the reward for showing that even a single license in a package was ‘nonessential’ would be to render all the patents in the package unenforceable.”
For similar reasons, the Court also rejected the ITC’s rule of reason analysis, noting that contrary to the ITC’s findings, the respondents had failed to show any anticompetitive effect by virtue of the fact that some nonessential patents were bundled into their license. Further, there was no evidence supporting the ITC’s finding that competition in the area of the nonessential patients would be foreclosed as recipients of the license would be unwilling to consider alternatives.
The Philips decision distinguishes between “patent-to-product tying” cases, where the patent license is conditioned on the purchase of a product, and “package licensing” cases, where a group of patents are licensed at one price. Citing Supreme Court precedent, the Federal Circuit describes patent-to-product tying as a situation where “the patent owner uses the market power conferred by the patent to compel customers to purchase a product in a separate market that the customer might otherwise purchase from a competitor.” In Philips, since licensees were “not compel[led] … to use [Philips’s] technology,” the Court concluded the license was not anticompetitive. Interestingly. the Federal Circuit analyzed the case as if Philips was a licensor of its own intellectual property, not a licensor of pooled property rights of more than one company. The Philips case is now remanded to the ITC to determine whether “Philips’s package licensing agreements are more anticompetitive than procompetitive, and thus are unlawful under the rule of reason.”
The U.S. Court of Appeals for the Federal Circuit affirmed the district court’s denial of a plaintiff-patentee’s right to a jury trial where the only relief sought at the time of trial was equitable, notwithstanding the defendant’s claim for declaratory judgment of invalidity. In re Technology Licensing Corporation, Misc. Docket No. 765 (Fed. Cir. Sept.12, 2005) (Per Curium; Newman, J., dissenting).
After hearing on a motion challenging the Technology Licensing Corporation’s (TLC) formula for measuring damages, the district court entered an order that significantly reduced the amount of recoverable damages. Consequently, TLC voluntarily abandoned its claim for damages but continued to seek injunctive relief against future infringement. The accused infringer raised invalidity as a separate declaratory judgment claim, not only as an affirmative defense. However, after the plaintiff withdrew its damages demand, the defendant withdrew its jury demand. Despite only seeking equitable relief, TLC maintained that it still was entitled to a jury trial because of the defendant’s invalidity claim. The district court, citing to the Federal Circuit decision in Tegel v. Tokyo Electron, noted that where the only remedy sought by the patentee was injunctive relief and the defendant asserted invalidity as an affirmative defense, the patentee has no right to a jury trial. Analyzing the effect of a declaratory judgment of the invalidity claim (as opposed to raising invalidity as an affirmative defense) the district court looked to the Supreme Court decision in Tull and reasoned the declaratory judgment claim was also a claim arising in equity, and TLC was not entitled to a jury trial. TLC petitioned the Federal Circuit for a writ of mandamus to compel a jury trial.
The Federal Circuit denied TLC’s petition. Although the Court regarded this as a close issue, it ultimately held that because TLC had abandoned its damages claims for infringement, it also abandoned its right to a jury trial.
The Federal Circuit clarified that a patentee has the right to elect a jury when seeking damages in an infringement action or counterclaim. The accused infringer, or declaratory judgment counterclaimant, is entitled to a jury trial only if the infringement claim, as asserted by the patentee, would give rise to a jury trial. The Court noted its Lockwood decision does not (as argued by TLC) stand for the proposition that a counterclaim for invalidity always gives rise to a right for a jury trial (to either party). As the Court explained, correctly read, Lockwood only preserves the patentee’s right to a jury trial where it is seeking damages or the defendant/patent validity challenger’s right to a jury trial where the claim asserted by the patentee would independently give rise to a right to a jury trial. In other words, if a patentee seeks only equitable relief, the accused infringer has no right to a jury trial regardless of whether the accused infringer asserts invalidity as a defense or as a separate claim.
In a vigorous dissent, Judge Newman insisted court precedent make it clear that a jury trial on a claim of invalidity is available “as of right, whatever the requested remedy for infringement.”
Following on the heels of its en banc Phillips decision in which the U.S. Court of Appeals for the Federal Circuit recognized the importance of ascertaining the scope of its claims, the Court has now reviewed the extent to which the scope of a patent specification and claims must be aligned in order to satisfy the written description requirement of 35 U.S.C. § 112 ¶ 1. LizardTech, Inc. v. Earth Resources Mapping Inc, and Earth Resource Mapping Ltd., Case No. 05-1062 (Fed. Cir. Oct. 4, 2005 ) (Bryson, J.).
LizardTech’s patent concerned a computer program that used a discrete wavelet transform (DWT) to compress digital images. Because compressing images with DWT requires significant computer memory, prior art computer programs broke large images into smaller “tiles” before compressing them. These programs, however, often resulted in flawed images, including “edge artifacts” between the reconstituted tiles. The `835 patent improved on prior art by creating a “seamless DWT of the image.”
LizardTech brought an action alleging that Earth Resource Mapping, Inc. (ERM) infringed certain claims. The district court held, in part, that several of the asserted claims were invalid for failing to satisfy the written description requirement of § 112 ¶ 1. LizardTech appealed.
The Federal Circuit agreed with the district court that held the challenged claims were invalid for failing to provide an adequate written description under § 112 because those claims were broader than, and unsupported by, the specification. The specification provided only “one method for creating a seamless DWT, which is to ‘maintain updated sums’ of DWT coefficients.” While some of the asserted claims included this procedure, others lacked any “maintain updated sums” limitation. Thus, the Court determined the latter claim only required “taking a seamless DWT generically.” Since the specification only disclosed a specific method of creating a seamless DWT, and the claims in issue covered “all ways of performing DWT-based compression processes that lead to a seamless DWT,” the claims were broader than the specification.
The fact that the claim was broader than the specification did not immediately doom it to invalidity. “[I]t is unnecessary to spell out every detail of the invention in the specification; only enough must be included to convince a person of skill in the art that the inventor possessed the invention and to enable such a person to make and use the invention without undue experimentation.” Nevertheless, the Court found the patent failed to meet the requirements of § 112 on both counts. First, it failed to teach a person of skill in the art how to make a seamless DWT generically. Second, a person of skill in the art “would not understand LizardTech to have invented a method for making a seamless DWT, except by ‘maintaining updated [sic] sums of DWT coefficients.’”
While overbreadth has long been a concern in determining the validity of patent claims, the LizardTech and Phillips cases, read together, may signal a renewed focus on interpreting claims in the context of the written patent. Practitioners should be wary of relying on material outside the bounds of the patent document and instead concentrate on ensuring the patent reflects a comprehensive and consistent description of the invention.
After deciding in March of this year the term “component” as used in 35 U.S.C. § 271(f) includes software (Eolas Technologies, Inc. v. Microsoft Corp.) and the term “supplied” in the same statute includes copies of the software made overseas from a single master disk shipped from the United States (AT&T Corp. v. Microsoft Corp.), the U.S. Court of Appeals for the Federal Circuit has now affirmatively ruled that § 271(f) applies to all inventions, including those protected by method claims. Union Carbide Chemicals v. Shell Oil, Case No. 04-1475-1512 (Fed. Cir. Oct. 3, 2005) (Rader, J.). Although the Court in both AT&T and Eolas cases refused to limit the application of the statute to apparatus claims, the Union Carbide decision expressly states the statute also governs method and process claims.
The relevant issue on appeal was the district court’s in limine ruling to prohibit Union Carbide from submitting evidence of Shell’s foreign sales for the purpose of recovering additional damages under § 271(f). According to the district court, § 271(f) is not directed to process claims, and, thus, Shell’s supply of catalysts to its foreign affiliates, who in turn use the catalysts in their processes, did not create liability. However, after examining its relevant precedent, including the AT&T and Eolas decisions, the Federal Circuit rejected the lower court’s statutory interpretation, reemphasizing the words of the statute (i.e., “any component of a patented invention”) are broad and inclusive.
For a more in depth analysis of the history and judicial interpretation of § 271(f), please see <From Deepsouth Shrimp to Microsoft Windows: Exporting Components of Patented Inventions under 35 USC §271(f) at http://www.mwe.com/info/news/wpi005a.pdf.
U.S. companies need to remain mindful of § 271(f) even if only supplying components used for assembly or other inclusion in products or processes abroad.
Invoking the on-sale bar to novelty, the U.S. Court of Appeals for the Federal Circuit recently affirmed a summary judgment of a district court holding that U.S. Patent Number 4,900,659, owned by Enzo Biochem., Inc. (Enzo), is invalid under 35 U.S.C. § 102(b). Enzo Biochem, Inc. v. Gen-Probe, Inc., Case Nos. 04-1570 (Fed. Cir. Sept. 30, 2005) (Lourie, J.).
Enzo’s `659 patent relates to nucleic acid probes that selectively hybridize to the bacteria that cause gonorrhea, Neisseria gonorrhoeae, as well as methods for using those probes to detect the bacteria. In June 1982, Enzo and Ortho Diagnostic Systems (Ortho) entered into an agreement involving joint funding of research and development on “any human diagnostic product resulting from the program of research, … whether or not invented or developed by Enzo prior to the effective date of this agreement.” In August 1983 the parties executed an amendment that made it clear that a probe for gonorrhea was part of the agreement. In 1984 Enzo supplied Ortho a probe like that claimed. However, it was not until 1986 that Enzo filed its patent application. The district court found the transfer to be an invalidating sale and awarded summary judgment of invalidity. Enzo appealed.
The Supreme Court has established a two-prong test for the application of the on-sale bar, which the Federal Circuit followed: “First, the product must be the subject of a commercial offer for sale. Second, the invention must be ready for patenting” (Pfaff v. Wells Elecs.) Here, the inquiry focused on the first prong of that test.
The Federal Circuit commenced its analysis by analyzing whether part of the 1982 Enzo-Ortho agreement constituted a commercial offer for sale. The Federal Circuit focused on a particular provision that, unlike other provisions, encompassed an offer to supply Ortho’s worldwide requirements for commercial purposes at reasonable times and prices. According to the Court, this provision constituted an offer for sale and had been accepted. The Federal Circuit also agreed Enzo had failed to raise a genuine issue of material fact disputing that the subject matter of the agreement was the same as that of the patent, pointing out that the material had been shown to be the same as the American Type Culture Collection (ATCC) deposit made to support the `659 patent. Noting the invention had been reduced to practice and its utility as a probe for N. gonorrhoeae recognized, the Court determined the invention was “ready for patenting.” With regard to the method claims, the Court concluded the instructions on how to use the probe in the hybridization assay and the fact that the composition claims read on probes that hybridize with gonorrhoeae meant that practicing the method is inseparable from the compositions themselves.
If a district court is going to deny or reduce an award of attorney fees, it must provide an adequate explanation for doing so. That was the holding of the U.S. Court of Appeals for the Federal Circuit in International Rectifier Corp. v. Samsung Electronics Co., Ltd., Case No. 04-1429 (Fed. Cir. Sept. 23, 2005) (Linn, J.). The Court found the district court abused its discretion by denying a request for attorney fees and granting a reduced attorney fee award without providing a “concise but clear” explanation supporting its decision. According to the Federal Circuit, without adequate findings to substantiate the district court’s conclusions, the reviewing court cannot assess whether the district court abused its discretion in granting the fee reduction.
The case arose from a contempt proceeding initiated by International Rectifier against Samsung. International Rectifier alleged violation of a permanent injunction set forth in a consent order between the parties. In an earlier proceeding, the district court found Samsung was in contempt and was aided and abetted in the contempt by Ixys Corp. In 2004, the Federal Circuit reversed, holding that Samsung was not in contempt and that there was no evidence that Ixys aided or abetted Samsung’s alleged violation of the injunction.
Following remand, Samsung sought attorney fees, including over $1 million in fees for preparing the motion. International Rectifier opposed the request on the grounds that Samsung’s request was precluded by its alleged misconduct in conspiring to violate the injunction. International Rectifier also argued the fees were excessive. The district court agreed with International Rectifier and found the case “has been terribly over-lawyered.”
On appeal of the attorney fee award, the Federal Circuit reversed, finding the district court abused its discretion in denying Ixys’s request and reducing Samsung’s request for fees. The Federal Circuit, applying Ninth Circuit and California law, found the district court failed to give the required clear and concise explanation of reasons for the fee reduction and remanded the case for a further explanation.
For essentially the same reasons the Court also found the district court erred in denying Ixys’s request for fees. In doing so, the Court rejected the argument that a party that voluntarily intervenes in an action is precluded from seeking an award of attorney fees. However, the Court denied Ixys’s request for remand of the case to a different judge. Ixys argued Judge Real’s prior characterizations of Ixys’s conduct as wrongful, and his “repeated rulings in [International Rectifier ‘s] favor” warranted reassignment. The Federal Circuit disagreed, citing the extremely high threshold for reassignment and commenting it was confident the judge could put aside “any conviction that Ixys’s conduct was somehow wrongful” in assessing the appropriate fee award.
Revisiting the troublesome sixth paragraph of 35 U.S.C. § 112, the U.S. Court of Appeals for the Federal Circuit reversed a jury verdict of infringement holding there was a lack of substantial evidence where the plaintiff had failed to provide a structural analysis of the means-plus-function limitation in a contested claim. CytoLogix Corp. v. Ventana Medical Systems, Inc., Case No. 04-1446 (Fed. Cir. Sept. 21, 2005) (Dyk, J.).
At trial, CytoLogix and Ventana had agreed, contrary to the district court’s wishes, to forego a Markman hearing and to present expert witnesses to testify before the jury regarding conflicting claim constructions. The Federal Circuit disapprovingly noted in its opinion that when experts opine on claim construction before the jury, the risk of jury confusion is high, even when the district court makes it clear that its construction controls.
After the jury returned its verdict of infringement, the district court entered a judgment for CytoLogix and an injunction against Ventana. Ventana appealed, arguing the jury verdict resulted from an erroneous claim construction provided by the court. As neither party objected to the claim construction at trial, the Federal Circuit held that the issue on appeal was limited to whether the substantial evidence supported the verdict under the court’s construction.
One of the patents-in-suit contains the claim limitation “temperature controller means for regulating electric power,” which is a means-plus-function limitation under § 112 ¶ 6. As noted by the Court, in order to establish that the relevant structure in the accused device is “identical or equivalent to” the corresponding structure in the specification, the patent holder must do more than present testimony on the function of the structure.
Here, the testimony presented by CytoLogix through its expert witnesses identified a microprocessor in the accused product that they argued was the “means for converting temperature data,” and, therefore, it satisfied the district court’s construction of the “temperature controller.” The Federal Circuit, however, held that CytoLogix failed to compare the corresponding disclosed structure of the “temperature controller” in its patents to the structure of the accused device. Accordingly, the Federal Circuit held that CytoLogix failed to present substantial evidence of infringement of that claim and reversed the jury verdict of infringement.
When arguing infringement of a claim with means-plus-function limitations, conduct a structural analysis of the accused product and compare it to the structure disclosed in the specification.
Applying a number of the maxims laid out in its recent Phillips case, the U.S. Court of Appeals for the Federal Circuit has reversed another district court claim construction along with its grant of partial summary judgment of infringement and non-obviousness. Cross Medical Products, Inc. v. Medtronic Sofamor Danek, Inc. and Medtronic Sofamor Danek USA, Inc., Case No. 05-1043 (Fed. Cir. Sept. 30, 2005) (Linn, J.). The Court also held that it had jurisdiction to vacate the district court’s injunction even though the defendants had ceased the enjoined conduct before the injunction had been entered.
The single claim at issue in this case describes a device for performing posterior stabilization of bone segments of the spine and includes “anchoring means” for securing anchors to the bone segments. After confirming the claim term in dispute invoked § 112 ¶ 6, the Federal Circuit limited the corresponding disclosed structure to the polyaxial structure described in the specification and refused to extend the claim to a non-disclosed monoaxial structure that was not shown to be structurally equivalent. The Court held that in this instance, the doctrine of claim differentiation must yield to the interpretation mandated by § 112 ¶ 6, and, therefore, could not be used to expand the subject claim element. Consistent with Phillips, the Court further maintained that extrinsic evidence, such as product marking, that conflicts with the intrinsic evidence should have no bearing on construing the claim.
Construing the limitation “lower bone interface operatively joined to [the] bone segment,” the Court used a dictionary to determine the “ordinary meaning” of the claim terms (noting the Phillips injunction that the dictionary not be allowed to “contradict any definition found in or ascertained by a reading of the patent documents”) and then confirmed the meaning by resort to the written description.
As for infringement generally, the district court had held that Medtronic’s accused device need only be capable of operating in an infringing mode to meet the limitations of the claim. The Federal Circuit disagreed. It noted that the claim at issue requires the bone interface to be more than merely capable of contacting the bone segment; it requires actual contact with the bone segment. Since the accused device does not come into contact with bone until it is installed by a surgeon, the Court found Medtronic itself does not directly infringe the claim. The Court indicated there was a genuine issue of material fact, however, as to whether Medtronic induced or contributed to infringement by others.
On the jurisdictional point, Cross contended the Court lacked jurisdiction to hear the appeal under § 1292(a)(1). According to Cross, since Medtronic had previously removed the allegedly infringing products from the market, it could not satisfy the requirement—imposed (according to Cross) by the Supreme Court’s Carson decision—that the appeals court could assume jurisdiction only in cases were there would otherwise be “a serious or irreparable consequence.” The Federal Circuit rejected this contention, stating the Carson requirement applies only to orders having “the practical effect of granting or denying injunctions,” not to injunctions expressly granted.
Noting the many important distinctions between trademark infringement actions and trademark oppositions, the U.S. Court of Appeals for the Federal Circuit has held that failure in one does not automatically preclude pursuing the other. Mayer/Berkshire Corp. v. Berkshire Fashions, Case No. 04-1254 (Fed. Cir. Sept. 22, 2005) (Newman, J.).
Berkshire Fashions sought to register the mark BERKSHIRE in class 18 (tote bags, umbrellas, etc.). Meyer/Berkshire opposed and, at the same time, sued Berkshire Fashions for infringing its BERKSHIRE mark issued in class 25 (clothing). At trial, the jury found no likelihood of confusion arising out of Berkshire Fashion’s use of the BERKSHIRE mark, and the district court entered a judgment of non-infringement. Following the district court’s lead, the Trademark Trial and Appeal Board (TTAB) dismissed Meyer/Berkshire’s opposition and registered Berkshire Fashions’ BERKSHIRE mark in class 18.
Berkshire Fashions then filed a new application in class 25 to cover clothing. The application was initially refused based on Mayer/Berkshire’s previous registrations but later passed to publication (after the examiner was instructed to consider the implications of the district court litigation).
Mayer/Berkshire filed an opposition, and the TTAB granted summary judgment in favor of Berkshire Fashions, finding the district court had already decided that no confusion existed between the marks, and, therefore, applying res judicata and collateral estoppel, the issue could not be relitigated in the opposition.
The Federal Circuit reversed. It held that, for res judicata and collateral estoppel purposes, infringement and cancellation/opposition proceedings are different; they involve different burdens and different proofs, and they implicate different public policies. Moreover, Meyer/Berkshire had offered evidence that Berkshire Fashions had changed its marketing since the district court action, causing additional confusion, and its application covered goods that were not specifically considered in the litigation. The Court held that these facts further justified not giving the district court judgment preclusive effect because preclusion must be applied only in cases where it is “certain to every intent” (that is, where it applies beyond a reasonable doubt).
Addressing the issue of the effectiveness of disclaimers, the U.S. Court of Appeals for the Second Circuit held that a junior party could be enjoined from referring to Weight Watcher’s “Points” trademark in its packaging of frozen food unless it could prove the effectiveness of its disclaimer in avoiding a likelihood of confusion. Weight Watchers International, Inc. v. Luigino’s, Inc., Case No. 04-4103-CV (Second Cir. Sept. 12, 2005) (Kaplan, D.J., sitting by designation).
Weight Watchers registered the marks “Points” and “Winning Points” in connection with its diet program wherein certain foods are assigned point values based on calorie and fat content. Luigino’s markets frozen meals that prominently display a point value related to the fat and calorie content of the product. Next to the word “Points” on the front of the package, Luigino’s puts an asterisk that corresponds to a disclaimer on the back of the package identifying Weight Watchers as the owner of the “Points” trademark.
Weight Watchers sought a preliminary injunction against Luigino’s use of the packaging. Finding a likelihood of confusion, the district court granted the injunction but held that Luigino’s was entitled to convey factual information regarding the point value of its product as long as it stated that Luigino’s calculated the values.
The new packaging stated that Luigino’s calculated the point value. Otherwise, the packaging remained the same. Weight Watchers objected that the new packaging did not overcome the likelihood confusion and moved the district court to modify the injunction to include the new packaging. The district court denied the motion except for requiring the disclaimer on the back to be in larger print. Weight Watchers appealed.
The Second Circuit vacated and remanded. The Court held that since the district court had already found a likelihood of confusion in the packaging and the new packaging was “very similar” to the initial packaging, there was a “substantial” likelihood of confusion that required Luigino’s to establish the disclaimer’s effectiveness in curing the confusion. Under these circumstances, the Court held the district court had not properly shifted the burden to Luigino’s to prove the effectiveness of the disclaimer. Luigino’s having not sustained its burden, the Court held the lower court lacked a sufficient basis to deny the motion to modify. The Court further held that Weight Watchers’ one-month delay in moving to modify the injunction did not rebut the presumption that it had suffered irreparable harm from the likelihood of confusion caused by Luigino’s packaging.
In Jones Day v. Medianews Group, Case No. B178571, 2005 Cal. App. Unpub. LEXIS 7876 (Cal. App. Aug. 30, 2005) (Gutman, J.), the California Court of Appeal held a newspaper publisher that publishes illegally obtained material deemed “privileged and confidential” and “attorney work product” is protected from suit by California’s anti-SLAPP provision if the complaint arises from actions made in furtherance of the right to free speech in connection with a public issue.
The defendants came into possession of privileged documents Jones Day had prepared for its clients, Diebold Election Systems, Inc., a company that provides electronic voting software for use in elections. When Jones Day learned the defendants intended to publish the documents, it sued them for conversion, unfair and deceptive business practices, and misappropriation of trade secrets. The trial court granted Jones Day’s application for the return of the privileged documents, and the defendants appealed.
A few days later, however, Jones Day dismissed its complaint. The defendants then abandoned their appeal but filed a motion for attorneys’ fees under California’s anti-SLAPP statute (Cal. Code Civ. Proc. Section 425.16). (“SLAPP” stands for Strategic Litigation against Public Participation. Anti-SLAPP legislation is intended to discourage or punish lawsuits instituted to stifle free speech.) The trial court denied the attorneys’ fees motion on the grounds the defendants had not made a threshold showing Jones Day’s causes of action related to acts done in furtherance of the defendants’ free speech rights. Rather, the court reasoned, the primary right asserted by Jones Day was a right to its property—not a right protected by the First Amendment. The defendants appealed this ruling.
The California Court of Appeal reversed the trial court’s ruling, concluding Jones Day’s complaint arose from the defendants’ actions in furtherance of their right to free speech in connection with a public issue. The court reasoned the allegations of Jones Day’s complaint met the “free speech” prong because its complaint arose out of the defendants’ use of the privileged documents in connection with news reporting and because Jones Day complained it was injured by the sale of newspapers containing the privileged information.
With regard to the “public issue” prong, the court noted that “public interest does not equate with mere curiosity.” Rather, it is subject of concern to a substantial number of people. In other words, there must be a relationship between the statement and the public interest. Here, the defendants met the public issue prong because their article discussed Diebold’s use of poorly tested software and hardware during the Super Tuesday primary which, according to the court, was of the “utmost interest to society." The court rejected Jones Day’s argument that the gravamen of its complaint was the return of illegally obtained property. The appellate court remanded the case to the trial court to determine whether defendants were a prevailing party entitled to attorneys’ fees.