Category: Intellectual Property

Iced Out: Use of Ice Cube’s Image and Catchphrase Was Not Endorsement

Rapper and actor O’Shea Jackson, professionally known as Ice Cube, lost his day in court (for now) on claims of false endorsement against trading platform Robinhood because he failed to plausibly allege that Robinhood’s use of his image and catchphrase implied endorsement.  Robinhood had published a newsletter on its website “Robinhood Snacks” which featured an article discussing market corrections for technology stocks with an alteration of Ice Cube’s lyric and catchphrase “Check yo self before you wreck yourself”—here, “Correct yourself before you wreck yourself”—along with the below image of Ice Cube from Are We Done Yet? (2007):

In response, Ice Cube filed a complaint in the U.S. District Court for the Northern District of California, alleging that Robinhood’s article falsely implied that he had endorsed Robinhood and its services.  He claimed false endorsement under the Lanham Act as well as misappropriation of likeness and unfair competition under California law.  Robinhood filed a motion to dismiss the complaint for lack of standing and a motion to strike the state law claims under California’s Anti-SLAPP statute as protected speech.

As noted by the court, to establish standing a plaintiff must demonstrate an “injury in fact,” meaning the plaintiff suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.”  Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).  Citing Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1110 (9th Cir. 1992), the court further held that “a celebrity whose endorsement of a product is implied through the imitation of a distinctive attribute of the celebrity’s identity, has standing to sue for false endorsement” under the Lanham Act.

While the court acknowledged that a celebrity could establish standing under Waits, Robinhood argued that Ice Cube failed to plausibly plead (1) his celebrity status, (2) he was deprived of compensation, and (3) use of his identity and catchphrase implied endorsement.

In ruling on the motion to dismiss, the court found that Ice Cube sufficiently pleaded celebrity status.  It discredited Robinhood’s argument that Ice Cube lacked such status because he relied on his music in the 1980s and movies in the 1990s.  The court questioned why Robinhood would have used Ice Cube’s image and catchphrase in the first place if he had no status as a celebrity.  The court also found that Ice Cube robustly alleged he had commercialized his celebrity status and therefore adequately pleaded economic injury.

In the end, however, the court held that Ice Cube did not plausibly plead that the use of his likeness or catchphrase suggested he endorsed Robinhood’s products.  Although Ice Cube cited Robinhood’s other celebrity endorsements from rappers Nas and Jay-Z, the court found those endorsements were irrelevant.  It also contrasted Robinhood’s use of his likeness and catchphrase with other cases cited by Ice Cube, which all involved explicit endorsements.  Furthermore, without explaining the distinction, the court noted that the article was part of a newsletter, not an “advertisement” as Ice Cube claimed, and that under such circumstances no other court had found standing.  Thus, the court concluded that Ice Cube lacked standing because “he did not allege how Robinhood’s use of his identity created the misapprehension that the plaintiff sponsored, endorsed, or is affiliated with Robinhood.”

Although the court granted Robinhood’s motion to dismiss, it allowed Ice Cube to amend his complaint, which he amended and refiled on July 6, 2021.   Whether Ice Cube has now plausibly pleaded endorsement remains to be seen.

The case is Jackson v. Robinhood Markets, Inc., No. 21-CV-02304-LB (N.D. Cal. June 15, 2021).

© 2021 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
For more articles on trademark misappropriation, visit the NLR Communications, Media & Internet section.

Don’t Count Your Lamborghinis Before Your Trademark is in Use

The US Court of Appeals for the Ninth Circuit affirmed a grant of summary judgment, finding that a trademark registrant had alleged infringement of its trademark without having engaged in bona fide use of the trademark in commerce, as required by the Lanham Act. The Court found no material issue of fact as to whether the registrant had used the mark in commerce in a manner to properly secure registration, and the alleged infringer therefore was entitled to cancellation of the registration. Social Technologies LLC v. Apple Inc., Case No. 320-15241 (9th Cir. July 13, 2021) (Restani, J., sitting by designation)

This dispute traces back to a 2016 intent-to-use US trademark application filed by Social Technologies for the mark MEMOJI in connection with a mobile phone software application. After filing its application, Social Technologies engaged in some early-stage activities to develop a business plan and seek investors. On June 4, 2018, Apple announced its own MEMOJI software, acquired from a third party, that allowed users to transform images of themselves into emoji-style characters. At that date, Social Technologies had not yet written any code for its own app and had engaged only in promotional activities for the planned software.

Apple’s MEMOJI announcement triggered Social Technologies to rush to develop its MEMOJI app, which it launched three weeks later (although system bugs caused the app to be removed promptly from the Google Play Store). Social Technologies then used that app launch to submit a statement of use for its trademark application in order to secure registration of the MEMOJI trademark. The record also showed that over the course of those three weeks, Social Technologies’ co-founder and president sent several internal emails urging acceleration of the software development in preparation to file a trademark infringement lawsuit against Apple, writing to the company’s developers that it was “[t]ime to get paid, gentlemen,” and to “[g]et your Lamborghini picked out!”

By September 2018, Apple had initiated a petition before the Trademark Trial & Appeal Board to cancel Social Technologies’ MEMOJI registration. Social Technologies responded by filing a lawsuit for trademark infringement and seeking a declaratory judgment of non-infringement and validity of its MEMOJI registration. When both parties moved for summary judgement, the district court determined that Social Technologies had not engaged in bona fide use of the MEMOJI trademark and held that Apple was entitled to cancellation of Social Technologies’ registration. Social Technologies appealed.

Reviewing the district court’s grant of summary judgment de novo, the Ninth Circuit framed its analysis under the Lanham Act’s use in commerce requirement, which requires bona fide use of a mark in the ordinary course of trade and “not merely to reserve a right” in the mark. The issue on appeal was whether Social Technologies used the MEMOJI mark in commerce in such a manner to render its trademark registration valid.

The Ninth Circuit then explained the Lanham Act’s use in commerce requirement, which requires “use of a genuine character” determined by the totality of the circumstances (including “non-sales activity”), and explained that mere adoption of a trademark, without bona fide use in commerce, in an attempt to reserve rights for the future, is insufficient to establish rights in the mark. The Court reviewed supporting case law, distinguishing between cases where mere promotional activities or internal sales were determined not to constitute use in commerce, and cases where continuous use of a mark as a business name, in public relations campaigns, in sales presentations and in media coverage together sufficiently established bona fide use in commerce. The Court explained that looks for “external manifestation” and “sufficiently public use” to warrant trademark protection.

On the facts of the case before it, the Ninth Circuit found that the record evidence clearly demonstrated that Social Technologies’ use of the MEMOJI mark had not been bona fide use in commerce. With respect to its activities prior to Apple’s June 2018 MEMOJI announcement (which included no software code, the unsuccessful solicitation of investors, and no “association among consumers between the mark and the mark’s owner”), there was not sufficient use to entitle Social Technologies to trademark protection. The Court found that Social Technologies failed to put forward evidence that its admittedly rushed release of the software following Apple’s 2018 announcement was for a genuine commercial purpose warranting trademark protection, rather than mere “token use” in an attempt to reserve a right in the mark.

Affirming the district court’s grant of summary judgment, the Ninth Circuit concluded that Social Technologies did not engage in bona fide use of the MEMOJI trademark in commerce, that its registration was invalid, and that Apple was entitled to cancellation of Social Technologies’ MEMOJI registration.

© 2021 McDermott Will & Emery
For more articles on IP law, visit the NLR

Do What You Learned in Kindergarten: Fight Fair and Play by the Rules—Avoiding Litigation Misconduct

Holding

In Performance Chemical Company v. True Chemical Solutions, LLC, No. W-21-CV-00222-ADA (W.D. Tex. May 21, 2021), Judge Albright of the Western District of Texas found that True Chemical Solutions (“True Chem”) violated the Court’s discovery order in bad faith and caused substantial prejudice to Performance Chemical Company (“PCC”). The district court granted PCC’s motion for sanctions against True Chem and dismissed the case.

Background

PCC filed suit alleging that True Chem infringed PCC’s patented Automated Water Treatment Trailers, or frac trailers. Id. at 2. Throughout the litigation, a key issue was whether True Chem automated its frac trailer by using a programmable logic controller (“PLC”) to automate the pumps within the trailer.

During discovery, PCC requested that its expert be allowed to inspect a True Chem frac trailer, which True Chem resisted. Id. The Court ordered True Chem to allow the inspection. When PCC expressed concern that True Chem would present an incomplete trailer for inspection, the Court specifically ordered that the inspection be of a trailer that was complete and included all relevant components. Id. at 3.

In response to the Court’s order, True Chem produced trailers for inspection. However, when PCC inspected the trailers, it found no PLC automation device, even though the trailers were manufactured to be capable of automation. Id.

PCC also tried to ascertain from True Chem’s employees in depositions whether True Chem’s frac trailers were automated. Under oath, True Chem employees repeatedly testified that True Chem did not automate frac trailers by installing a PLC. Id. Due to these representations, PCC could only rely on circumstantial evidence to prove its infringement theories regarding automation. Id. at 4.

After the close of discovery and in response to a court-ordered document search, True Chem produced more than 50,000 new documents. Id. Those documents contained information appearing to show that third-party automation companies had been retained by True Chem to automate its frac trailers. Id.  PCC deposed representatives of these third-party companies, which confirmed that, in 2019, True Chem had hired a third party to install a PLC on frac trailersand that those PLC devices were still mounted the last time the third-party company interacted with the trailer. Id. at 5.  The PLC device in question was large and would have required considerable effort to install and maintain. Id. PCC argued, and the Court agreed, that removing it from a trailer would have required considerable effort. Id.

True Chem did not dispute that the third-party company installed a PLC on frac trailers but, unsurprisingly, disputed the implication that it removed the PLC device specifically to dodge discovery.

Legal Standard

Under the Federal Rules of Evidence, a court may issue sanctions against a party who “fails to obey an order to provide or permit discovery.” Fed. R. Civ. P. 37(b)(2)(A). One of the sanctions allowed by Rule 37 is “rendering a default judgment against the disobedient party.”

The Fifth Circuit requires a finding of bad faith or willful conduct for the severest sanctions under Rule 37, such as striking pleadings, dismissing a case, or rendering default judgment. Additionally, before dismissing a case for discovery abuse, the Fifth Circuit requires that several factors be met. The factors include: (1) that the violation of the discovery order be attributable to the client instead of the attorney; (2) that the violating party’s misconduct must cause substantial prejudice to the opposing party; and (3) a finding that less drastic sanctions would not be appropriate. Performance Chemical Co., No. W-21-CV-00222-ADA (W.D. Tex. May 21, 2021), at 2 (citing FDIC v. Conner, 20 F. 3d 1376, 1380-81 (5th Cir. 1994)).

First Factor: Violation of the Discovery Order be Attributable to the Client Instead of the Attorney

The Court found that True Chem committed discovery violations with a pattern of “contumacious conduct and delay.” The Court issued a specific order that True Chem make all components in its custody or control, whether attached to trailers or not, available for inspection.

A True Chem employee testified that the company did not employ automation—even though True Chem had received an invoice for the automation project. Id. at 6. True Chem had not produced the PLC, or even notified counsel of the PLC’s existence, or taken steps to amend pleadings, supplement interrogatories, or notify opposing counsel or the Court, until a year later. Id. at 7. In fact, it was only after PCC subpoenaed a third-party company that it could determine the nature of the invoices and discover the PLC device.  It was only 154 days after the close of discovery as part of a 50,000-piece document dump that True Chem produced invoices pertaining to the allegedly non-existent automation. Id. at 4, 7.  Even then, True Chem still had not turned over the PLC device for inspection.

The Court found that, for a full year, True Chem stonewalled production of the PLC device. This led the Court to determine that the first factor, violation of the discovery order, was attributable to True Chem.[1]

Second Factor: Violating Party’s Misconduct Must Cause Substantial Prejudice to the Opposing Party

The Court found that PCC was forced to incur unnecessary attorneys’ fees and discovery costs as a result of the misconduct of True Chem and its counsel. Specifically, PCC was forced to engage in thorough and extensive third-party discovery, including up to the week before trial, when True Chem finally disclosed the PLC device. Id. at 8.

True Chem tried to use its failure for its own gain by arguing that, since PCC forced disclosure by True Chem of the PLC project, PCC had to limit its timeframe for damages. Id. at 8-9. The Court rejected that argument, stating that it “cannot understand why any attorney would attempt to use its own blatant discovery violations as a sword to argue that the opposition must limit its properly pleaded claims.” Id. at 9.

The Court found that True Chem’s actions caused substantial prejudice to PCC, preventing PCC’s “timely and appropriate preparation for trial.” Therefore, the Court found that the second factor was satisfied.

Third Factor: Less Drastic Sanctions Would Not be Appropriate

The Court held that the third factor was satisfied because True Chem demonstrated “flagrant bad faith and callous disregard of its responsibilities.” Id. at 9.  Specifically, the Court found that had it not been for the diligent comb through of 50,000 documents at the eleventh hour, the continuous and lengthy egregious conduct of the case would have gone undiscovered. Id. at 10.

Since all three prongs were satisfied, the Court held that it was only adequate to sanction True Chem with a “death-penalty sanction,” and that anything less would not provide sufficient deterrence from similar behavior in other cases. Id. at 10.

The Court granted PCC’s motion for sanctions and struck True Chem’s non-infringement defense and invalidity counterclaims. The Court further found that True Chem willfully infringed the asserted patents, ordered that True Chem be permanently enjoined from continuing its infringing activity, and that PCC be awarded its attorneys’ fees.

Further Developments

On June 7, 2021, PCC moved for entry of a damages award of $16.9M (representing treble lost profits through 2019 ($5.6M) plus prejudgment interest ($0.6M)) and attorneys’ fees. PCC argued no damages trial was necessary for a number of reasons: the Court’s inherent powers in connection with its sanctions ruling, the status as a default case with no party entitled to a jury trial on damages, the fact that PCC’s evidence conclusively established lost profits, and the fact that True Chem’s damages expert’s opinions had been struck “in their entirety.”

On June 15, 2021, Judge Albright granted True Chem’s attorneys’ motion to withdraw from the case.

Takeaways

While this case may seem like an outlier, it is important to remember that litigation is supposed to be a fair fight. Each side should timely disclose any relevant documents during discovery and adhere to any Court orders to allow trial to proceed in a timely manner and to prevent undue burden on the opposing party. Flagrantly disrespecting these principles may lead to an unforgiving response by the court.

The same is true in patent prosecution. The duty of good faith and candor set forth in Rule 56 is supposed to guarantee that patents are procured in a fair and timely proceeding that avoids placing an undue burden on the USPTO. As prosecution counsel, you should ask hard questions, which here would have involved questions regarding possible public use or sale. The prosecutor should consider asking those questions in writing. And if the patent prosecutor has suspicions of untruthful statements or other misconduct by the applicant, withdrawal from prosecution may be the best move.

[1]Note that on March 25, 2021, PCC seems to have argued TrueChem’s counsel was also complicit.  According to a Law360 article, in PCC’s Response in Opposition to True Chemical Solutions LLC’s Motion to Strike Scott Weingust’s Expert Report (sealed), “PCC replied that True Chem’s response highlighted for the first time that True Chem’s former attorneys . . . were ‘complicit’ and that they made things worse in the two months since they were informed of the misconduct.” Hu, Tiffany, “Chemical Co. Wants to Skip IP Damages Trial After Sanctions,” Law360, June 16, 2021. Although Judge Albright only assigned responsibility to True Chem and not its counsel, in the sanction order he commented, “it is worth noting that True Chem’s counsel . . . knew of the existence of the automation project on January 20, 2021, two months before such information was revealed to PCC.” See Order, FN1, (emphasis in original). Also, “PCC located invoices that were either concealed or overlooked as the result of willful incompetence on the part of the attorneys and then had to engage in third-party discovery to determine the nature of the invoices. Id. at 7.

© 2021 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
For more articles on IP law, visit the NLR Litigation / Trial Practice section.

The Vatican Faces a Copyright Infringement Lawsuit

Street artist Alessia Babrow has sued the Vatican, alleging that the Philatelic and Numismatic Office of the Vatican City State copied her artwork without her permission and reprinted it as a stamp. The art was a painting of Jesus by nineteenth-century artist Heinrich Hofmann, to which Ms. Babrow had added the slogan “just use it.” Besides neglecting to request Ms. Babrow’s permission, the Vatican allegedly only credited Hofmann, and not Ms. Babrow, for the derivative work. Ms. Babrow is seeking approximately $160,000 in damages and reportedly turned down a private visit with the Pope in favor of continuing her lawsuit.

The remaining summaries of news headlines are separated by region for your browsing convenience.

 UNITED STATES

Graffiti Cleanup Effort Leads to VARA Lawsuit

Aerosol artist Michael McLeer a/k/a Kaves has sued the New York Police Department for painting over some of his outdoor artworks in New York City that he claims were made with full authorization of the property owner. One of the works that the NYPD allegedly painted over had been in place for 13 years. The lawsuit claims that the NYPD allegedly failed to inquire into the permitted status of the art prior to painting over it. Kaves has sued under the Visual Artists Rights Act (VARA), which has previously been used successfully to protect street art. The matter was filed before the federal court in Brooklyn, the same court in which the now-famous 5Pointz case involving destruction of street art originated.

Painting Stolen by Nazis Finds Home in Oklahoma

Camille Pissarro’s La Bergère Rentrant des Moutons (Shepherdess Bringing in Sheep) (1886) was the subject of an almost 10-year restitution saga led by Holocaust survivor Léone-Noëlle Meyer, whose parents were the lawful owners of the artwork when it was looted by the Nazis in 1941. The artwork was donated to the University of Oklahoma in 2000 by Clara Weitzenhoffer, a subsequent good faith purchaser for value. In 2016, Ms. Meyer reached a settlement with the University of Oklahoma, in accordance with which the artwork was to travel between the United States and France every three years. Ms. Meyer subsequently tried to invalidate the settlement, in part given the subsequent passage of the Holocaust Expropriated Art Recovery Act of 2016, which would have benefited her restitution efforts. After facing significant setbacks in her legal case, including fines for breaching the terms of the agreement, Ms. Meyers has discontinued her efforts to invalidate the 2016 settlement. Now, the painting will be on display on a rotating basis in France and at the University of Oklahoma.

Corita Kent’s Art Studio Granted Landmark Status, Escapes Demolition

Artist Corita Kent, a former Catholic nun who became a Pop artist and an activist, was inspired by Andy Warhol’s 1962 Ferus Gallery exhibition to address the pressing issues of racial and social injustice through art. Her studio in Los Angeles became a gathering spot in the 1960s for female activists. When the studio was slated to be razed and turned into a parking lot by the current property owner, the Corita Art Center called for the studio’s preservation, noting the shortage of cultural landmarks celebrating women’s heritage in Los Angeles (only 3 percent of the cultural monuments in Los Angeles represent women). The Los Angeles City Council agreed to grant landmark status to the studio.

EUROPE

Artists Who Sell Directly to Collectors Are Not “Art Market Participants” Under New UK Law

On June 10, a new anti‒money laundering regulation came into full force in the United Kingdom, under which art market participants (AMPs) who sell artworks for €10,000 or more must comply with the new regulations, including verification of clients’ identity, due diligence on each transaction and involved compliance programs. In a relief for artists, however, the UK Treasury recently announced that artists will not be considered AMPs and will therefore not need to comply with the new costly regulations. Welcome relief it may be, but too late for many artists who already undertook the expense to comply with the regulations.

Banksy’s Work May Not Be Protected by Either Copyright or Trademark

Famously anonymous street artist Banksy’s words, “copyright is for losers,” are coming back to haunt him as his representatives lose another trademark battle to protect one of his artworks against commercial exploitation by third parties. Pest Control Office Limited, the company that holds itself out as responsible for issuing certificates of authenticity for Banksy, filed a number of applications for trademark protection, in the United Kingdom and abroad for some of Banksy’s works. One such graphic trademark, consisting of Banksy’s image of a monkey wearing a sandwich board, was held invalid by the European Union Intellectual Property Office (EUIPO). The application for declaration of invalidity was brought by a greeting card company that had copied Banksy’s work for use in their greeting cards. The EUIPO cited Banksy’s explicit statements that the public is free to use any copyrighted work, as well as the artist’s elusive identity, making it difficult to protect his artworks under copyright laws, as factors in its decision. Similar applications to invalidate other trademarks of Banksy’s artworks are to be heard by EUIPO within the next month or so. The outcome is likely to be similar.

Oxford Classics Professor Accused of Selling Stolen Art to Hobby Lobby

Craft chain Hobby Lobby filed suit against an Oxford University professor of classics for allegedly selling Hobby Lobby $760,000 worth of stolen ancient Egypt art. According to the complaint, Hobby Lobby made many purchases of art from Dr. Obbink over the course of three years to include in Hobby Lobby’s planned Museum of the Bible, but the art it received had allegedly been stolen from Oxford University’s Sackler Library. Obbink had represented to Hobby Lobby that he was selling papyri that came from private collectors. Hobby Lobby has returned the art to Oxford.

© 2021 Wilson Elser

ARTICLE BY Jana S. Farmer and Sarah Fink of
Wilson Elser Moskowitz Edelman & Dicker LLP
For more articles on art law, visit the NLRIntellectual Property section.

Yu v. Apple – Transubstantiation of a Camera into an Abstract Idea

Every time the courts re-define a mechanical device as an abstract idea, I struggle with the rationale that is applied to evaluate the claimed subject matter for patent eligibility under s. 101. I am not a computer scientist so the Alice/Bilski notion that a computer programmed to perform a function more quickly than it can be performed by a human sitting at a desk with a pencil and paper is not a technological advance has some appeal. After all, the idea of patents being granted for computerized versions of hoary business practices threatened to overwhelm the PTO. One the other hand, Diehr warned that all inventions can be reduced to underlying principles of nature which, once known make their implementation obvious. Recently, Yu v Apple , Appeal No. 2020-1760  (Fed. Cir., June 11, 2021) exemplifies the dangers of this oversimplification when it is used to render a specialized camera claimed in U.S. Pat. No. 6,611,289 patent-ineligible. This was a split panel decision, with Judge Prost writing for Judge Taranto and Judge Newman dissenting.

Transubstantiation is, of course, a religious doctrine that is the change—though not the appearance—of the bread and wine used in the Eucharist to become Christ’s real presence. I do not intend to discuss religion, but only to provide an example of a big leap of faith. Applying this definition so that the wine and the bread are concrete compositions while the presence of Christ is necessarily an abstract or intangible idea, it becomes apparent that a majority on the Yu panel held that it is appropriate to convert a concrete machine into an abstract idea which, in this case, is defined as its purpose:

          “Claim 1. An improved digital camera comprising:

A first and a second image sensor closely positioned with respect to a common plane…

Two lenses, each being mounted in front of one of said two image sensors:

said first image sensor producing a first image and said second image sensor producing a second image;

an analog-to-digital converting circuitry coupled to said first and said second image sensor and

digitalizing said first and said intensity images to produce correspondingly a first digital image and a second digital image;

an image memory…for storing [the digital images]; and

a digital image processor…producing a resultant digital image from the first digital image enhanced with said second digital image.”

I have compressed the claim somewhat. The panel agreed with the district court that the claims were directed to “the abstract idea of taking two pictures and using these pictures to enhance each other in some way.” The majority continues its Mayo/Alice Step 1 analysis:

“Given the claim language and the specification, we conclude that claim 1 ‘is directed to a result or effect that itself is the abstract idea and merely invoke[s] generic processes and machinery’ rather than ‘a specific means or method that improves the relevant technology.’”

I have written in earlier posts that whether or not a claimed invention is an improvement over the prior art is now a requirement to get past both steps of the Mayo/Alice test. This “improvement test” has not historically been used in patent eligibility analyses. In other words, the fact that a claim provides no more than an alternative route to the same outcome found in the prior art should not be a factor given weight in determining if the claim is a patent-eligible “machine”. That is the task of s.101. Furthermore, once the claim has been simplified to a broad abstract idea, the majority applies a “generic environment” test to the mechanical components recited in the claim. Although the Yu claim recited very concrete components, such as lenses and sensors, because these components were well-known and conventional, they merely “provide a generic environment in order to carry out the abstract idea”  [citing In re TLI Comm. LLC Patent Litigation, 823 Fed. Cir. 607 (Fed. Cir. 2016)]. This is a slippery slope since, if the machine—the camera—does not add up to a technological advance—and the components are, at least, individually described in terms of their “basic functions”, the Mayo/Alice inquiry is over. Almost by definition, there can be no inventive step, and the majority certainly agrees that Step 2 fails to make the abstract idea inventive:

“Here, the claimed hardware configuration itself is not an advance and does not itself produce the asserted advance of enhancement of one image by another, which, as explained, is an abstract idea. The claimed configuration does not add sufficient substance to the underlying abstract idea of enhancement—the generic hardware limitations of claim 1 merely serve as a “conduit for the abstract idea.”[citing TLI again.]

Judge Newman’s dissent gets right down to first principles: “This camera is a mechanical and electronic device of defined structure and mechanism; it is not an ‘abstract idea’… The ‘289 patent specification states that the digital camera achieves superior image definition. A statement of purpose or advantage does not convert a device into an abstract idea…A device that uses known components does not thereby become an abstract idea, and is not on that ground ineligible for access to patenting.” Judge Newman sees the majority’s opinion as “enlarging this instability [of technological development] in all fields, for the court holds that the question of whether the components of a new device are well-known and conventional affects Section 101 eligibility, without reaching the patentability criteria of novelty and nonobviousness.”

© 2021 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

ARTICLE BY Warren Woessner of Schwegman, Lundberg & Woessner, P.A.
For more articles on IP law, visit the NLRIntellectual Property section.

Not With a Bang but a Whimper

In a non-precedential Order issued by the US Court of Appeals for the Federal Circuit—on remand from the US Supreme Court’s April 2021 decision upholding Google’s fair use defense to Oracle’s copyright infringement claim—the Court recalled its mandate in the case “solely with respect to fair use,” leaving intact the Federal Circuit’s May 2014 judgment favoring Oracle on the question of copyrightability. Oracle America Inc. v. Google LLC, Case Nos. 17-1118; 1202 (Fed. Cir. May 14, 2021)(PER CURIAM). After recalling its mandate, the Federal Circuit issued its order without further briefing by the parties.

© 2021 McDermott Will & Emery

ARTICLE BY Ewa A. Wojciechowska of McDermott Will & Emery
For more articles on IP law, visit the NLRIntellectual Property section.

Hello Again, Worlds: A Failed Gaming IPR Leads to § 101 Success

The tides have turned again in the litigation campaign against gaming companies by Worlds, Inc., who many may recognize as one of the named parties in often-cited Federal Circuit case law on real-parties in interest (“RPI”). In 2018, the Federal Circuit shook up the IPR landscape with a series of RPI decisions, starting with Wi-Fi One, LLC v. Broadcom Corp., which held that the PTAB’s time-bar determinations under § 315(b) are appealable. A series of frequently-cited Federal Circuit decisions followed, including Applications in Internet Time, LLC v. RPX Corp. and Worlds, Inc. v. Bungie, Inc.

In Worlds, Inc. v. Bungie, Inc., the PTAB issued final written decisions holding 34 out of 40 challenged claims unpatentable. On appeal, the Federal Circuit held that the petitioner bears the burden of persuasion for proving that the petition is not time-barred under § 315(b), meaning Bungie had the burden of persuasion to show that Activision—which had been served with a complaint more than one year before Bungie filed its petition—was not an RPI. The Federal Circuit vacated and remanded, and on remand, the PTAB vacated its final written decisions.

Those vacated IPR decisions laid the groundwork for invalidating Worlds’ patents. Recently, a U.S. District Court (D. Mass.) invalidated the asserted patents under § 101, based in part on the PTAB’s substantive analysis. See Worlds, Inc. v. Activision Blizzard, Inc., et al., No. 12-cv-10576-DJC, Dkt. 358 (D. Mass. Apr. 30, 2021) (“Decision”). The Court noted that the PTAB decisions were vacated on procedural grounds and considered the PTAB findings as persuasive authority. “Although now vacated, the substance of the PTAB’s prior rulings serves to support the Court’s analysis below that the client-side and server-side filtering of position information is not inventive.” Decision at 7-8.

The parties focused on four representative claims, including claim 1 of U.S. Patent No. 7,945,856 (the “’856 patent”).

For Step 1, World’s prior arguments, including in the IPR, were used against it. Worlds had argued that its patents were directed at a method of “crowd control” and that these claims are the filtering function to do so. Citing to those characterizations, the Court held the claims to be directed to “the abstract idea of ‘filtering’ (here of ‘position’ information”) which amounts to ‘crowd control.’” Decision at 14.

Activision argued that such filtering is “a fundamental and well-known concept for organizing human activity,” and that the claims do nothing more than recite a general client-server computer architecture to perform routine functions of filtering information to address the generic problem of crowd control. See Decision at 14 (citing BASCOM Global Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1348 (Fed. Cir. 2016)). The Court agreed that this conclusion was consistent with Mayo, Alice, and other cases.

For Step 2, Worlds’ briefing relied heavily on BASCOM’s holding that an inventive concept “may arise … in the ordered combination of the limitations.” BASCOM, 827 F.3d at 1349 (emphasis added). Worlds argued that the claims teach an inventive ordered combination of steps: “a multistep process whereby a server receives position information of avatars associated with network clients; the server filters the received positions and then sends selected packets to each client,” whereby a client can then further determine which avatars to display.” See Decision at 17.

However, the Court held that “there is nothing in the ordering of the steps in the claims (i.e., receiving, determining, comparing) that make them inventive; the ‘steps are organized in a completely conventional way.’” Decision at 18. “The steps of the claims here use only ‘generic functional language to achieve the purported solution’ of filtering of position information for crowd control.” Id. (citing Two-way Media, Ltd. V. Comcast Cable Comms. LLC, 874 F.3d 1329, 1339 (Fed. Cir. 2017)). “None of the remaining claims are limited to ‘any specific form or implementation of filtering . . . .” Id.

While Worlds emphasized technical-sounding terminologies, such as clients, servers, avatars, networks, and packets, the Court noted that “[c]lient-server networks, virtual worlds, avatars, or position and orientation information are not inventions of Worlds but rather, their patents seek to demonstrate their use in a technological environment.” Decision at 19. “That is, Worlds’ asserted claims use a general-purpose computer to employ well-known filtering or crowd control methods and means that ultimately use same to display graphical results and generate a view of the virtual world, none of which is inherently inventive or sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.” Id.

Notably, the briefing and the Court’s decision did not appear to rely on expert testimony or evidence in the district court litigation. Therefore, the PTAB’s technical analysis from its vacated decisions played an important role, providing the foundation for the Court’s conclusion that “client-side and server-side filtering of position information is not inventive.” Decision at 7-8.

While gaming companies must be mindful of the many potential procedural pitfalls in PTAB challenges, this recent decision shows the importance of attacking non-inventive patents using both § 101 and IPRs.

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.

ARTICLE BY Harper Batts and Jeffrey Liang of Sheppard, Mullin, Richter & Hampton LLP
For more articles on gaming IPR, visit the NLRIntellectual Property section.

The Value of IP in Fashion/Retail Insolvencies

A strong brand creates a competitive edge; such a brand will often enhance consumer loyalty, not only because of the products offered, but also because of the name on the label. While a brand may have a strong customer base, in today’s climate it, unfortunately, does not mean that the business has enough financial security to withstand the struggles faced by the declining traditional bricks and mortar shopping in the United Kingdom or the global COVID-19 pandemic. In the first six months of 2020, more bricks and mortar retailers went into administration in the United Kingdom, compared with the whole of 2019. With the sad reality that many brands are facing financial struggles, it is important to consider the value of a brand’s intellectual property (IP) when such brands are facing insolvency.

A brand’s IP can be made up of registered trademarks, the associated goodwill with those marks, designs (registered and unregistered), copyright and trade secrets, to name just a few. The IP is how consumers identify one product from another. The value of a brand is likely to have huge appeal for anyone looking to step in and purchase a company going through administration, especially when it comes to fashion. Particularly where a brand has a strong reputation, it can often continue to thrive after going through the insolvency process. Many brands have ceased trading in retail units following administration but have adapted to create or maintain a strong online presence.

Many UK businesses have followed suit and this year have announced (following administration) that they are closing all of their bricks and mortar shops and will only continue to trade online. Such brands include the prestigious footwear company, Oliver Sweeney; TM Lewin, the 120-year-old British formal menswear brand; Antler, the luxury luggage company originally founded in 1914; and the retro fashion chain, Cath Kidston.

The timeline of buying a company that is in administration, and, therefore, the opportunity (if any) to carry out due diligence, is considerably shorter than the usual acquisition process. Additionally, any information provided by the administrators cannot be relied on, and no warranties or indemnities will typically be given. A buyer should, therefore, consider undertaking its own searches into the assets of a company. In relation to the IP, the following (at a minimum) should be considered:

  1. Identify the IP — what IP does the brand have? Does the brand have registered trademarks (words/logos), designs protected by copyright or perhaps a registration, the ‘get-up’ of its websites or stores, or any potential databases such as customers or suppliers?
  2. Ownership — it is important to consider whether the IP ownership sits with the correct party to ensure it will be validly transferred following completion of the acquisition. Any registrations should be in the name of the business, not an individual employee or contractor. If there are any discrepancies in ownership, steps should be taken to ensure a valid assignment could be put in place.
  3. Is it valid — for any registered IP, a buyer should ensure the registrations have been renewed, as required, and subsist. For any unregistered rights such as copyright or designs, if possible, calculations should be made as to when the expiration dates might arise. For copyright, protection ends at the end of the calendar year following 70 years after the author’s death and for unregistered designs, protection ends a maximum of 15 years after the first creation.

For those brands facing financial difficulty, the importance of validly holding IP assets cannot be understated. Having IP correctly and validly held could help in uncertain times when financial assistance may be needed, particularly where the brand is of interest to bankruptcy bidders.

Tegan Miller-McCormack, a trainee solicitor in the Mergers & Acquisitions/Private Equity practice, contributed to this article.

©2021 Katten Muchin Rosenman LLP

ARTICLE BY Sarah Simpson, Prav Reddy and Mark Johnson of
Katten
For more articles on fashion insolvencies, visit the NLR Bankruptcy & Restructuring section.

The “Truth Hurts”: Judge Rules Lizzo is 100% That [Copyright Owner]

Judge Dolly M. Gee of the Central District of California recently awarded singer Lizzo a major victory in a copyright dispute concerning the artist’s hit song “Truth Hurts.” In her ruling, Judge Gee dismissed with prejudice a claim that Lizzo must share copyright ownership of “Truth Hurts” with the plaintiffs in the case, because the co-ownership claim was based only on the plaintiffs’ contributions to a prior independent work. See Melissa Jefferson v. Justin Raisen et al.

The proceedings began in 2019, when Lizzo filed an action against songwriters Justin Raisen, Jeremiah Raisen, and Justin “Yves” Rothman, seeking a judicial declaration of non-infringement as to “Truth Hurts.” In response, the three songwriters filed a counterclaim for declaratory relief, seeking a judgment stating that they are joint authors and co-owners of the work.

The Raisens and Rothman allege that in April of 2017, they met with Lizzo and her collaborator Saint John for writing and recording sessions where they worked on a different song, titled “Healthy.” They claim that during that session, while searching the internet for inspiration, Saint John came across a meme that read “I did a DNA test and found out I’m 100% that…” Amused by the line, Jeremiah Raisen suggested it be used as a lyric in “Healthy.” Although Lizzo and Saint John were against the idea at first, they eventually included the “100%” lyric in “Healthy.”

The songwriters allege that after their session, Lizzo continued working on “Healthy,” and that she eventually evolved the song into “Truth Hurts.” “Truth Hurts” was then released in September of 2017, crediting Lizzo, Saint John, and two others as writers. The Raisens and Rothman allege that “Truth Hurts” incorporates the “100%” lyric and other musical elements from “Healthy.” These alleged facts form the basis of the songwriters’ copyright co-ownership claim.

Last year, Judge Gee dismissed the co-ownership counterclaims without prejudice, to the extent they were premised on allegations that Lizzo copied “Healthy” in creating “Truth Hurts.” In that prior order, the court concluded “[j]oint authorship in a prior work is insufficient to make one a joint author of a derivative work.”

The court reached the same conclusion here, after considering the songwriters’ amended counterclaims. Even though the amended counterclaims were “stripped of all statements that Truth Hurts copied or was derived from Healthy,” they “continue[d] to allege the same underlying facts that indicate ‘Healthy’ was a standalone song and not an incomplete, partial contribution.” Put differently, the counterclaimants continued to allege that “Healthy” and “Truth Hurts” were distinct songs. Specifically, the court pointed to allegations that “Healthy” was being considered for inclusion on Lizzo’s upcoming EP. Again, the court determined that joint authorship on a prior standalone work is not enough to confer joint authorship in a derivative work.

The court clarified that even though joint authorship of a prior work is insufficient to sustain co-ownership claims, it does not preclude them. If the songwriters had adequately pled the required elements of joint authorship, they could have still succeeded on their co-ownership claim. But the court determined that the songwriters failed to do so; the court ruled two of the three factors required for establishing joint authorship weighed against a finding of joint authorship. Though the court did not address the third factor,[1] it found the songwriters’ failure as to the other two factors was enough to preclude their joint authorship claim.

First, the court determined the songwriters pled no facts suggesting control over “Truth Hurts.” The songwriters only alleged control over elements of “Healthy.” The court found this might have been persuasive had they been able to show that “Truth Hurts” was actually the end product of “Healthy.” But because the songwriters’ allegations suggested that the two works were entirely distinct, their purported control over “Healthy” carried no weight as to “Truth Hurts.” As the court noted, even assuming the songwriters controlled Lizzo’s use of the “100%” lyric in “Healthy,” they had no control over her choice to use it in “Truth Hurts.”

Second, the court ruled the songwriters failed to adequately plead manifestation of a shared intent to be co-authors. The songwriters argued that by crediting Saint John on “Truth Hurts” based solely on his contributions during the April 2017 sessions, Lizzo manifested an intent and understanding that all the collaborators at the April 2017 sessions would be co-authors. The court was unconvinced. First, even assuming a shared intent to co-author songs written at the April 2017 sessions, “Truth Hurts” was not written at those sessions. Judge Gee noted that at the time of the April 2017 sessions, the Raisens and Rothman only intended to co-author “Healthy” – not some future undefined work. Further, the court found Lizzo’s choice to credit St. John and others actually showed an intent not to include the Raisens and Rothman; she explicitly chose to exclude them while choosing to include others.

This decision serves as a reminder that co-ownership claims and infringement claims are not interchangeable. Claims for co-ownership must be grounded in contributions to the work at issue, and not in some other independent work – even if the works may share elements.

__________________________________________

[1] The third factor, which the court did not address, is whether the audience appeal of the work turns on both contributions and whether the share of each contribution in the work’s success can be appraised.

© 2021 Proskauer Rose LLP.

ARTICLE BY Sandra A Crawshaw-Sparks,  David A Munkittrick
and Anisha Shenai-Khatkhate of Proskauer Rose LLP
For more articles on copyright, visit the NLR Intellectual Property section.

You Want Some “Metchup” with That?

The US Court of Appeals for the Fifth Circuit found no infringement by a large, well-known company that used the registered mark of an individual whose own use was local and generated only a few sales and minimal profits. The Court vacated and remanded the case to determine whether plaintiff had abandoned the mark. Dennis Perry v. H.J. Heinz Co. Brands, L.L.C., Case No. 20-30418 (5th Cir. Apr. 12, 2021) (Graves, J.)

In 2010, Dennis Perry created a condiment concoction in his home kitchen that he named “Metchup,” constituting a blend of private label mustard and ketchup, and a blend of mayonnaise and ketchup. Perry sold the concoction in the lobby of his small motel in Louisiana. The US Patent & Trademark Office granted registration for his trademark “Metchup” and after five years declared his mark “incontestable.” Perry had slow sales, however, only selling about 60 bottles with $50 total profit over the years. Perry had a Facebook page for his product, but did not advertise or sell the product in stores or online.

Meanwhile, Heinz produced a condiment called “Mayochup,” a blend of mayonnaise and ketchup, that it began selling in the United States in 2018. Heinz held an online naming contest to promote its product, and when one participant suggested the name “Metchup,” Heinz posted a mock-up picture with the “Metchup” name, along with other proposals. Heinz’s counsel saw Perry’s trademark registration, but because Heinz was not actually selling a product named “Metchup” and there were so few indications that Perry’s product was actually being sold, Heinz concluded that Perry’s mark was not in use and could be used in its promotion. When Perry saw Heinz’s posting, he sued for trademark infringement.

The district court found that while Perry may have once had a valid trademark registration for “Metchup,” there was no likelihood of confusion with the Heinz product and the mark had been abandoned as a consequence of de minimis use. Perry appealed.

The Fifth Circuit analyzed the dispute based on the eight-factor likelihood of confusion test. The Court found three factors weighed in Perry’s favor:

  • Product similarity: Both products were mixed condiments.
  • Potential purchaser care: Consumers would exercise less care for a low-priced condiment.
  • Mark similarity: Both products used the same word “Metchup,” although the Court noted that the packaging design looked very different.

The Court also found five factors weighed in Heinz’s favor:

  • The type of mark on the spectrum (i.e., whether the name is related to what the product is): Here, the mark was “suggestive” because it was a mash-up of names related to the sauces used.
  • Outlet and purchaser identity: The parties targeted different markets because Perry had limited sales in one motel, while Heinz targeted online and at almost all grocery stores.
  • Advertising identity: Perry did not advertise besides his one Facebook page without online sales, while Heinz had large-scale advertising and sales.
  • Defendant’s intent: Heinz did not intend to infringe because it assumed Perry’s mark was no longer in use.
  • Actual confusion: There was no record or survey of any consumers actually being confused on the source of the products.

Weighing the factors overall, the Fifth Circuit concluded that use of Perry’s mark ultimately was not widespread enough for a consumer buying the Heinz product to be confused. Absent a likelihood of confusion, the Court agreed with the district court that Heinz’s use did not constitute infringement.

With regard to whether Perry had abandoned the mark for non-use, the Fifth Circuit noted that while Perry’s registration had achieved “incontestable” status because it was registered for more than five years, incontestable marks are still subject to a defense of abandonment as a consequence of intentional discontinued use of the mark in commerce. On this issue, the Court found that the district court erred by misplacing the burden of proof standard for abandonment and by misapplying the “use in commerce” requirement.

First, the burden should not have been on Perry to disprove abandonment. The Fifth Circuit explained that the burden was on Heinz to prove that Perry did not use the mark in commerce. Second, Heinz had not proven abandonment because abandonment requires “complete discontinuance of use” of the mark. There is no threshold sales requirement for “use” under the Lanham Act. Even minor and sporadic good faith use of a mark (in this case generating about $50 in profit) will defeat an abandonment defense because even de minimis activities can still influence interstate commerce and be regulated by Congress. The Court remanded the case for a fact-finder to determine whether Perry was making good faith use of the mark in commerce—did Perry have a good faith intent to continue to use his mark in commerce, or was he just trying to ketchup to Heinz’s condiment success?

This post was written by Darra Loganzo.

© 2021 McDermott Will & Emery
For more articles on patent infringement, visit the NLR Intellectual Property section.