Source: https://www.lacba.org/sections/entertainment-and-intellectual-property-law/elips-section-newsletters/march-2011
Timestamp: 2019-04-19 05:04:07+00:00

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Welcome to the second issue of our newsletter. Thanks so much to the Editor, Jeff Mandell for making it happen.
Thanks to your support, we are in the home stretch of a most successful program year. We have had outstanding CLE events, programs for law students, and social and cultural events. As you can see from the calendar of our upcoming events, we have a lot more in store for you before the program year ends.
As always, your officers and Executive Committee want to serve you even better. Our suggestion box is open! Please email me at jk@jeffkichaven.com with your thoughts. We also welcome your involvement and efforts on behalf of the section. Interested in writing for this newsletter? Becoming more involved and active in our programs? Got an altogether new idea about something we should be doing, and in which you would like to be involved? Please, please, just let us know. There is room for everyone with energy and ideas.
It is a pleasure to be your Chair this year. Thank you so much for the opportunity.
In this our second issue, Jeff Kichaven poses a question to our readers and invites you to respond. To give the idea a test drive, Jeff asked a handful of lawyers to share their thoughts. The question he asked and the answers he received are below.
the same question. Send your answers to the newsletter editor (see below for contact info), and we'll publish as many as possible in an upcoming issue of the newsletter.
Question: "What is the case, statute or other development in the past 12 months that has had the biggest impact on your practice?"
1. The geometric growth of social media. Social media now permeates almost every aspect of business and law. Like almost any new media technology, it offers unprecedented opportunities, but also creates enormous uncertainty and risk. Companies can now interact with large numbers of consumers in a direct and relatively inexpensive way. Marketing, customer service, hiring, branding, and publicity are all done using social media, and almost all of your employees are using social media in one way or another. But as the use of social media grows, so do the issues it raises. From privacy, to defamation, to trademark and copyright issues, to employment, securities law, and more, social media can touch on virtually every aspect of an entertainment company's operations. The savvy companies are adapting by implementing targeted social media training and corporate policy to mitigate risk - policies that still allow them to take advantage of this enormously powerful tool.
2. In the past 12 months, counterfeiting and piracy continued to grow exponentially, causing brand owners to race to keep up and get out ahead of the problem. The global market for counterfeit goods has been estimated at $600 billion, accounting for at least 5% of world trade. U.S. Customs and Border Protection (CBP) continues to seize counterfeit goods coming through more than 300 U.S. water ports, airports and land crossings, including pharmaceuticals, children's toys and dolls, cosmetics, perfume, sunglasses, cell phones, fitness equipment, beer, cigarettes, and even condoms. No branded products are too inexpensive, ordinary or obscure to be safe from counterfeiters. It is more important now than ever for brand owners to address this risk, starting with some basic steps to protect and enforce their trademarks and copyrights. I have been advising my clients to register not only word marks and logos, but also their trademark rights in distinctive product packaging, product configuration or design, and even color schemes in advertising. CBP has taken steps during this past year to make it easier for brand owners to record their registered trademarks and copyrights and to provide supporting information about their intellectual property and products to facilitate seizures of counterfeit and pirated goods. In November 2010, the final text for the Anti-Counterfeiting Trade Agreement (ACTA) was released, bringing us closer to having international standards on IP rights enforcement. In February 2011, the U.S. Trade Representative released a list of more than 30 "notorious markets" around the world, including both physical and Internet marketplaces that are rife with pirated or counterfeit goods. No doubt we will be checking this naughty list twice, all year long.
3. The recent development that has had the biggest affect on my practice has been digital advertising. Many companies are using innovative means (such as smart phone apps, widgets, social networking sites, targeted advertising and blogs) to reach consumers. This trend includes entertainment as well as other industries. Marketers understand that platforms like Facebook and Twitter can provide unprecedented opportunities to build brand awareness. The numbers tell the story. Facebook has over 600 million users - twice the US population size according to recent census results.
As digital marketing grows, so do the legal issues. Today, Congress, the EU, and numerous judges are considering important issues relating to privacy, intellectual property, and commerce. Behavioral advertising is one example. The Federal Trade Commission ("FTC") defines behavioral advertising as "the process of tracking consumers' activities online to target advertising." The FTC has proposed a "Do Not Track" list to prevent targeted advertising without user consent. The EU passed a new directive requiring "explicit" consent before users can be served targeted advertising. US legislators have joined the dialogue, introducing several privacy bills - with Senator Kerry's March 16th bill being the most recent. The plaintiffs' bar has seized the opportunity to step up class action activity. There are currently over 30 behavioral advertising class actions pending in state and federal courts throughout the country.
These developments impact the way clients approach digital marketing – from a policy and litigation standpoint. It is an exciting area with more twists and turns to come.
Use of a trademark as a search engine keyword that triggers the display of a competitor's advertisement is a "use in commerce" under the Lanham Act. Most relevant factors to the analysis of the likelihood of confusion in such a case were the strength of the mark, the evidence of actual confusion, the type of goods and degree of care likely to be exercised by the purchaser, and the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page.
Doctrine of indivisibility does not deprive copyright holders of the right to transfer--or retain--the component parts of their copyrights. Even if plaintiff owned trademarks in Betty Boop cartoon character, plaintiff could not assert a trademark infringement action based on defendant's use of character as functional aesthetic components of defendant's product.
Fleischer Studios, Inc. v. A.V.E.L.A., Inc.
Plaintiff that sold software program--which automatically played the early levels of a popular multiplayer online role-playing game in which players interact in a virtual world while advancing through 70 levels--was not liable for secondary contract infringement, even though plaintiff was not entitled to an essential step defense. Players were licensees rather than owners of game software, where the game owner's prohibitions against bots and unauthorized third-party software were covenants rather than copyright-enforceable conditions absent a nexus between the provisions and the licensor's exclusive rights of copyright. Plaintiff's programming of its software to avoid detection did not violate Sec. 1201(a) (2) of the Digital Millennium Copyright Act--which prohibits the circumvention of any technological measure that effectively controls access to a protected work and grants copyright owners the right to enforce that prohibition--with respect to the game's literal elements and individual no literal elements such as source code and visual and audible components. The game's detection software did not effectively control access to those elements. Modification violated Sec. 1201(a) (2) as to the game's dynamic no literal elements, which included travel through the virtual world.
MDY Industries, LLC v. Blizzard Entertainment, Inc.
Finding that trademark VERICHECK was suggestive, rather than descriptive, was not clearly erroneous where similar marks had been held suggestive by the courts and by the PTO. District court's finding that defendant's use of vericheck.com domain name was likely to cause confusion with VERICHECK trademark was not erroneous where the names were confusingly similar, defendant used the name to promote services of plaintiff's competitors, the parties both marketed over the Internet, plaintiff had made significant use of the mark to promote its services, and plaintiff presented evidence of actual consumer confusion. Award of attorney fees to plaintiff under the Lanham act was not an abuse of discretion where defendant's willful registration and use of a domain name confusingly similar to plaintiff's trademark, his "attempt to extort thousands of dollars from" plaintiff for the rights to the name, his disregard for plaintiff's trademark rights, his "pattern and practice of cyber squatting, including a pattern and practice of abusive litigation practices," and his "disregard for the submission of inaccurate answers to interrogatories" made the case "exceptional" within the meaning of the act.
Creation of avatars depicting real-life musicians for use in videogame allowing players to simulate playing in a rock band was not transformative use of musicians' personas subject to First Amendment protection. Plaintiffs were not required to show defendant's nontransformative use of avatars based on them was "explicitly misleading" to state a viable claim for unfair competition.
District court applied incorrect legal standard requiring junior trademark be "identical or nearly identical" to a senior mark in evaluating a dilution claim since this standard did not survive enactment of the Trademark Dilution Revision Act of 2006. This error was not harmless since application of the correct, less-demanding standard set forth in the act--which directs courts to consider enumerated factors, including the degree of similarity between two marks--could have tipped the balance in favor of plaintiff.
Use of plaintiffs' names and aspects of their personae to create characters for a dramatic television series constituted speech in connection with an issue of public interest, so trial court erred in denying defendants' special motion to strike causes of action for defamation and false light invasion of privacy, absent a showing that plaintiffs were likely to prevail on the merits. Neither defendants' expropriation of plaintiffs' names for synopses--that were inadvertently made public--of a television program, nor airing of clearly fictional program whose characters shared some general characteristics with plaintiffs, constituted defamation or invasion of privacy where no reasonable person would believe that the synopses or the program depicted plaintiffs.
Tamkin v. CBS Broadcasting, Inc.
In ABB Inc. v. Cooper Ind., LLC, Case No. 2010-1227, the Federal Circuit reversed the district court's dismissal of ABB's declaratory judgment ("DJ") claim for lack of subject matter jurisdiction. The Federal Circuit concluded that ABB's DJ action arose under the patent laws and jurisdiction was conferred by 28 U.S.C. § 1338.
Cooper previously sued ABB for infringement of Cooper's patents related to electronic equipment containing dielectric fluid. The parties entered into a settlement and license agreement in which Cooper granted ABB a license to Cooper's patents. The license did not give ABB the right to sublicense third parties to make products covered by the patents. Nevertheless, ABB began outsourcing the manufacture of ABB's product to a third party, whom ABB indemnified. Cooper wrote to both ABB and the third party alleging breach of the agreement and threatening to protect their rights. ABB then filed a DJ action seeking, in part, declarations of non-infringement of the Cooper patents. Cooper moved to dismiss for lack of subject matter jurisdiction. The district court granted the motion, finding that the issues raised by ABB's complaint hinged exclusively on the interpretation of the agreement and no federal question was presented in ABB's complaint. In ABB Inc. v. Cooper Ind., LLC, Case No. 2010-1227, the Federal Circuit reversed the district court's dismissal of ABB's declaratory judgment ("DJ") claim for lack of subject matter jurisdiction. The Federal Circuit concluded that ABB's DJ action arose under the patent laws and jurisdiction was conferred by 28 U.S.C. § 1338.In ABB Inc. v. Cooper Ind., LLC, Case No. 2010-1227, the Federal Circuit reversed the district court's dismissal of ABB's declaratory judgment ("DJ") claim for lack of subject matter jurisdiction. The Federal Circuit concluded that ABB's DJ action arose under the patent laws and jurisdiction was conferred by 28 U.S.C. § 1338.
On appeal, the Federal Circuit reversed the district court's findings, holding first that the warning letters sent from Cooper to ABB and the third party indicated that there was an immediate controversy surrounding infringement. ABB had an interest in determining whether it would incur liability for induced infringement, and it had an interest in determining whether it would be liable for indemnification, which turned on whether the third party would be liable for infringement.
The Federal Circuit then disagreed with Cooper's assertion that federal question jurisdiction did not exist for ABB's DJ action because ABB only raised a state law license defense to the infringement claim. The Federal Circuit stated that the general rule is that DJ jurisdiction exists when the defendant's coercive action arises under federal law, and they saw no reason to depart from that general principle when the defense is non-federal in nature.
In re Katz Interactive Processing Patent Litigation, Case No. 2009-1450, the Federal Circuit affirmed in part, vacated in part, and remanded the judgment holding numerous claims from Katz's patent portfolio either invalid or not infringed.
Katz owns a number of patents on interactive call processing systems and call conferencing systems. The 14 patents at issue in the appeal relate to interactive call processing systems.
Between 2005 and 2006, Katz filed 25 separate actions in different federal district courts. All the cases were transferred to the Central District of California for coordinated pretrial proceedings. Across all 25 actions, Katz asserted a total of 1,975 claims from 31 patents against 165 defendants in 50 groups of related corporate entities ("defendant groups"). Katz subsequently filed 28 additional actions that were also transferred to the same judge. The appeal arose from the initial 25 actions.
To make the case manageable, the district court ordered Katz to select no more than 40 claims per defendant group and after discovery to narrow the number of selected claims to 16 per defendant group. The district court further directed that the total number of claims to be asserted against all defendants could not exceed 64. However, the district court permitted Katz to add new claims if they "raise[d] issues of infringement/validity that [were] not duplicative" of previously selected claims. Katz added new claims to exceed a total of 64 across all the actions, but the number of claims did not exceed 16 per defendant group.
Katz did not select any additional claims and instead of seeking to show that the non-asserted claims raised non-duplicative issues of infringement or validity, Katz moved the district court to sever and stay the non-selected claims. Katz contended that the district court's requirement that it select particular claims violated its due process rights because the district court's order could result in decisions having a preclusive effect on non-selected claims regardless of whether those claims presented distinct issues of invalidity or infringement. The district court denied Katz's motion.
The defendants then jointly moved for summary judgment on the issues of anticipation, obviousness, written description, and indefiniteness. The defendants also moved individually for summary judgment on case-specific grounds. The district court held all the claims selected against the appellees to be either invalid or not infringed by the appellees' accused devices. The district court then entered final judgments in favor of the appellees. Katz appealed.
Due to the length of the opinion and complexity of the case, only the due process, indefiniteness and written description portions are discussed below in detail.
The Federal Circuit rejected Katz's due process claim because the claim selection procedure implemented by the district court was adequate to protect Katz's rights with respect to the unasserted claims. The Federal Circuit found that the district court acted reasonably by limiting the number of claims to be asserted and by allowing Katz to assert additional claims if Katz could show the additional claims presented unique issues. In addition, the Federal Circuit found it was reasonable for the district court to deny Katz's motion to sever and stay the disposition of all the unselected claims because Katz did not even attempt to avail himself of the opportunity to show the unasserted claims raised separate legal issues.
Katz appealed the district court's ruling that claims directed to a "means for processing" were indefinite. In particular, the district court held that the claims failed to disclose structure corresponding to the recited function in the form of a computer algorithm.
The Federal Circuit affirmed the district court's ruling for some of the claims and remanded others.
Particularly, the Federal Circuit held that the claims reciting "processing means . . . for receiving customer number data entered by a caller and for storing the customer number data . . . and based on a condition coupling an incoming call to the operator terminal, the processing means visually displaying the customer number data," were clearly indefinite because the specifications did not disclose an algorithm corresponding to the "based on a condition coupling an incoming call to the operator terminal." The Federal Circuit found this language constituted a specialized function. Thus, the Federal Circuit found the claims invalid because they were directed at a processor programmed to perform a specialized function, but the specification did not disclose the internal structure of that processor in the form of an algorithm.
However, the Federal Circuit disagreed with the district court's ruling that those claims reciting the functions of "processing," "receiving," and "storing," generally, were also indefinite. The Federal Circuit stated that those functions can be achieved by any general purpose computer without special programming. Thus, the functions of "processing," "receiving," and "storing" were coextensive with the structure disclosed, that is, a general purpose processor. As there was a dispute between the parties regarding the meaning of "processing," the Federal Circuit remanded to the district court to construe that term along with the terms "receiving" and "storing," and to determine whether the functions recited in those seven contested claims can be performed by a general purpose processor or, instead, constitute specific computer-implemented functions as to which corresponding algorithms must be disclosed.
The Federal Circuit affirmed the district court's invalidation of a number of claims for lack of written description and remanded others.
In one of the patents at issue the district court invalidated a number of claims that claimed "visually displaying customer number data" and "receiving customer number data entered by a caller." The district court concluded that the specification needed to describe the visual display of customer number data entered by a caller, which it did not.
Katz disputed the lack of written description and cited three statements in the specification. The Federal Circuit found that each failed to show that the inventor was in possession of the claimed invention as of the filing date and that Katz failed to point to a genuine factual dispute over whether the specification disclosed the display of caller-entered customer numbers. Another claim was remanded by the Federal Circuit because the district court had not construed an important claim term.
The Federal Circuit also affirmed the district court's invalidation of some of the claims for obviousness, found no reversible error in the district court's claim construction, and affirmed the district court's finding of non-infringement for some of the claims.
In Centocor Ortho Biotech, Inc. v. Abbott Laboratories, Case No. 2010-1144, the Federal Circuit reversed the district court's denial of the defendant's motion for JMOL of invalidity and the $1.67 billion jury verdict in favor of the plaintiff, because claims of the asserted patent lacked written description support under 35 U.S.C. § 112.
On appeal, the Federal Circuit reviewed the patent's written description supporting plaintiff Centocor's claims to human variable regions in TNF-a antibodies, as well as expert testimony provided by defendant Abbott and testimony from the patent's inventor. The Federal Circuit found that the patent did not disclose a human variable region satisfying the claim limitations. The patent, while disclosing mouse variable regions, did not disclose any relationship between a human variable region and a mouse variable region that would convey to one of ordinary skill in the art that Centocor possessed fully-human antibodies or antibody variable regions that would fall within the asserted claims. The Federal Circuit stated that a "mere wish or plan" for making and identifying the claimed invention is insufficient. The Federal Circuit also rejected an argument from Centocor characterizing prior case law in Noelle (together with PTO guidelines) as holding that disclosure of a well-characterized protein generally places the possessor of the protein in possession of antibodies to that protein. Here, evidence showed that generating fully-human TNF-a antibodies was not a straightforward endeavor at the time, and as such, Centocor's possession of the TNF-a protein did not place it in possession of the claimed antibody. Accordingly, the Federal Circuit found that the asserted claims of the patent were invalid for lack of written description, and reversed the district court's judgment and denial of the defendant's motion for JMOL.
In Hologic, Inc. v. Senorx, Inc., Case No. 2010-1235, the Federal Circuit reversed the district court's grant of summary judgment of invalidity as to one claim of a patent and reversed judgment following a jury verdict of invalidity as to another, because the rulings were based on an erroneous claim construction.
The independent claim at issue (Claim 1) relates to a brachytherapy balloon that can be inserted into the body to deliver radiation to the site of an extracted tumor. The claim recites a radiation source located inside a balloon and "asymmetrically located and arranged within the [balloon] to provide predetermined asymmetric isodose curves with respect to the apparatus volume." The district court rejected the patent owner's proposed claim construction limiting the radiation source's asymmetry to asymmetry about a longitudinal axis of the balloon, and accepted the alleged infringer's construction that the radiation source is located inside the balloon so as to be asymmetric with respect to the balloon's volume.
On appeal, the Federal Circuit disagreed with the district court's claim construction, finding that the phrase "with respect to the apparatus volume" at the end of the claim referred to the asymmetry of the predetermined isodose curves. Because the asymmetry of the location of the radiation sources was not explicitly stated in the claim, the Federal Circuit turned to the specification and found that all of the descriptions of the invention contemplating the placement of a radiation source described displacement from the longitudinal axis of the balloon. The alleged infringer argued that the language of another independent claim, specifically requiring "asymmetric placement of a radiation source with respect to a longitudinal axis through the apparatus volume," showed that when the patent owner wanted to include that limitation, he knew how to do so. The Federal Circuit rejected this argument, finding that the differences between the claims should not result "in an entirely different reading of the asymmetry of the radiation source in claim 1 that is not called for by the plain language of [claim 1] and is not otherwise supported by the specification."
In Siemens Medical Solutions USA, Inc. v. Saint-Gobain Ceramins & Plastics, Inc., Case No. 2010-1145, the Federal Circuit affirmed the district court's denial of Saint-Gobain's (SG) motion for JMOL or a new trial following the jury's finding of SG's infringement, but vacated the district court's damages award and remanded for determination of additional damages.
Siemens owns a patent directed to PET scanners comprising LSO scintillator crystals. SG manufactures LYSO scintillator crystals, which differ from LSO in that 10% of the lutetium is substituted for by yttrium. SG sells these crystals to Phillips for inclusion in their PET scanners. SG has a license to another patent, not owned by Siemens, which has claims covering LYSO crystals. Siemens sued SG for infringement, including willful infringement of the Siemens patent. The jury found in favor of Siemens, but found that the infringement was not willful. SG moved for JMOL or for a new trial. The district court denied these motions, but granted SG's request to reduce the damages award, because there was not sufficient evidence to show that Phillips actually sold 18 of the scanners at issue.
On appeal, SG argued that because their crystals were separately patented in another patent, a finding of equivalence was tantamount to a finding of obviousness of the other patent, and so a higher evidentiary burden was required. The Federal Circuit found that case law consistently held that separate patentability does not negate infringement and is just a consideration in the analysis. The Federal Circuit noted that the doctrines of equivalence and obviousness have different analytical frameworks (insubstantial differences test vs. Graham factors) that are applied using different time frames (at time of infringement vs. at time of invention). The Federal Circuit further noted that a finding of infringement only relates to SG's marketed product, not the entire scope of the other patent, as a finding of obviousness would. The Federal Circuit also found that the jury was not clearly misled by the lower court's ruling excluding specific jury instructions on the validity of the other patent, because Siemens never directly challenged its validity.
In response to Siemens's cross-appeal of the lower court's decision to reduce the jury's damages award, the Federal Circuit found that the evidence supported Phillips's making, but not selling the additional 18 scanners. Thus, the Federal Circuit found that reasonable royalties, but not lost profits, should apply to the 18 unsold scanners. Accordingly, the Federal Circuit vacated and remanded the damages award.
In dissent, Judge Prost stated that the tests for obviousness and equivalence overlap. The dissent stated that once a court finds insubstantial difference, a finding of obviousness only requires some motivation to make a substitution. As such, Judge Prost proposed that a separately-patented and presumptively nonobvious substitution cannot be "insubstantial" unless some fact distinguishes the equivalence finding from the PTO's earlier nonobviousness determination, such as a change in the state of the art from the time of invention.
Note: Federal Circuit case summaries provided by Irfan Lateef of Knobbe Martens.
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