Source: https://www.mwe.com/de/insights/ip-update-december-2016/
Timestamp: 2020-01-26 05:12:17
Document Index: 250703508

Matched Legal Cases: ['§ 289', '§ 289', '§ 289', '§ 289', '§ 289', '§ 289', '§171', '§ 289', '§ 1295', '§ 1391', '§ 1400', '§ 1391', '§ 325', '§ 315', '§ 1498', '§ 315', '§ 1498', '§ 315', '§ 315']

IP Update, Vol. 19, No. 12 - McDermott Will & Emery
For Design Patent Damages, “Article of Manufacture”...
Federal Circuit Dives into Specification to Determine P...
Expanded Federal Circuit Jurisdiction: Classifying Comp...
Another Look at Willful Infringement under Halo’s Pre...
PTAB’s Working Definition for CBM Jurisdiction Deemed...
New Ground of Invalidity Introduced After Institution R...
Federal Circuit Panel Urges Court to Revisit Reviewabil...
Denial of En Banc Review Preserves PTAB Practice of Par...
Adding Pre-Existing Technology Won’t Save a Patent-In...
AIA Diligence Standard Does Not Require Daily Work on I...
Conception and Reduction to Practice, and the Limits of...
Enfish, Microsoft Receive Mixed Results on PTAB Rulings...
No Place Like Home: Supreme Court to Review Whether § ...
Supreme Court Will Spill Some Ink Regarding Patent Exha...
Third Time’s Not the Charm for IPR Petitioner Adding ...
IPR One-Year Time Bar Does Not Apply to Government Cont...
Satisfaction of Lanham Act Use “in Commerce” Requir...
Surrender Dorothy: Court Upholds Damages, Injunction fo...
Failure to Introduce Source Code of Original Work Fatal...
Geistiges Eigentum Urheberrecht Patentstreitigkeiten Patentportfolio Post-Grant Markenstreitigkeiten Markenzeichen Geistiges Eigentum in der
pharmazeutischen Industrie Geistiges Eigentum im Bereich Technologie Technologie Telekommunikation, Medien & Technologie Amerika
Justice Sotomayor, writing for a unanimous Supreme Court of the United States, held that for purposes of determining damages for design patent infringement under 35 USC § 289, the relevant “article of manufacture” may include either the end product sold to the consumer or simply a component of that product. Samsung Elecs. Co. v. Apple, Inc., Case. No. 15-777 (Supr. Ct., Dec. 6, 2016) (Sotomayor, Justice). This decision reverses a damages award of $400 million against Samsung, which had been affirmed on appeal by the US Court of Appeals for the Federal Circuit.
Apple sued Samsung for infringement of a range of its utility and design patents and dilution of its trade dresses. The district court entered final judgment in favor of Apple after a jury trial, upholding the jury’s findings of infringement, dilution and validity, as well its damage award that included $399 million in design patent damages, the latter equaling Samsung’s entire profit made from sales of the infringing smartphones. Samsung appealed.
The Federal Circuit affirmed the district court’s findings related to design patent infringement and design patent damages, notwithstanding Samsung’s argument that damages should be limited to profits from the front face, bezel or display screen design of the smartphone, not to profits from the entire smartphone. The Federal Circuit disagreed, stating that such apportionment arguments were rejected by Congress and prohibited under § 289 (IP Update, Vol. 18, No. 6).
According to the Federal Circuit, the term “article of manufacture,” as codified in § 289, does not mean specific components of an infringing article unless those components are sold separately from the end product. Rather, the Court found that the “total profit” accounted for under § 289 is the infringer’s total profits from an entire product, regardless of whether the infringement is attributable to the product as a whole or simply one or more components. The Court rejected criticism from amici that allowing an award based on infringement of a design of one component of a complex article “makes no sense in the modern world,” on the basis that it was bound to do so by statute.
Samsung petitioned for certiorari, arguing that rewarding profits for sales of an entire product where only a small component of that product was infringed over-compensates the patent holder by allowing massive windfalls exceeding the inventive value of the patents. Samsung raised the question: “[w]here a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?” (IP Update, Vol. 19, No. 3).
Justice Sotomayor explained that the Federal Circuit’s interpretation of “article of manufacture” was too narrow. Sotomayor explained that an award of damages under § 289 must follow a two-step inquiry: (1) identifying the “article of manufacture” to which the infringed design has been applied, and (2) calculating the infringer’s total profit made on that article of manufacture. Under the first step, in the case of a single-component product, the “article of manufacture” is the product itself. In the case of a multicomponent product, however, it may not be so obvious. The Supreme Court explained that under either circumstance, the term “article of manufacture” as used in § 289 may encompass both a product sold to a consumer and a component (or components) of that product.
The Supreme Court noted that, based on dictionary definitions of “article” and “manufacture,” the term “article of manufacture” is “simply a thing made by hand or machine,” noting that the definition is broad enough to encompass both an end product and the individual components of that product. As Sotomayor explained, this broader interpretation of “article of manufacture” is consistent with 35 USC §171(a), which defines the scope of eligible design patents thus: “[w]hoever invents any new, original and ornamental design for an article of manufacture may obtain a patent therefor.” Because the US Patent and Trademark Office and the courts have permitted design patents for designs extending to complete products, as well as to components of a multicomponent product, the Supreme Court reasoned that “article of manufacture” should be understood to include both components and end products.
The Court declined to define the specific article of manufacture at issue since neither party had briefed the issue, and remanded the case to the Federal Circuit. In ordering remand, the Supreme Court declined to explain how the Federal Circuit or lower courts should go about the task of deciding whether profits apply to the product as a whole or to an individual component. “We decline to lay out a test for the first step of the § 289 damages inquiry in the absence of adequate briefing by the parties.”
Practice Note: Future patent holders will likely attempt to define the article of manufacture as broadly as possible in order to ensure the maximum damages award.
On remand, it will be interesting to see if the Supreme Court’s broader definition of the statutory “article of manufacture” language will be found to include digital designs, such as the graphical user interface (GUI) icons on the Samsung phones.
Soon after its decision in this case, the Supreme Court granted certiorari in another design patent case, Systems, Inc. v. Nordock, Inc., and immediately remanded that case to the Federal Circuit “for further consideration in light of Samsung Electronics Co. v. Apple, Inc.”
Expanded Federal Circuit Jurisdiction: Classifying Compulsory Counterclaims
Addressing jurisdictional issues under the America Invents Act (AIA), the US Court of Appeals for the Federal Circuit denied a petition for a writ of mandamus challenging a district court order compelling a petitioner to produce allegedly privileged documents. In re: Rearden LLC, Case No. 16-125 (Fed. Cir., Nov. 17, 2016) (Stoll, J).
Virtue Global Holding Limited (VGHL) filed a district court complaint accusing Rearden of false or misleading representations of fact concerning ownership of visual effects technology contained in various hardware, source code and physical assets, and protected by trademarks, copyrights, trade secrets and patents (MOVA assets). Both VGHL and Rearden claimed ownership of the MOVA assets, and each sought a declaration that it owned the assets. VGHL also argued that Rearden’s patent assignments were invalid, and Rearden counterclaimed seeking damages for patent infringement. The central issue on appeal related to VGHL’s motion to compel Rearden to produce, during discovery, certain documents Rearden exchanged with its corporate lawyer. Finding that Rearden failed to show it could assert the attorney-client privilege, and had in fact waived any such privilege, the magistrate judge granted VGHL’s motion to compel. Rearden objected, but the district court found that Rearden failed to establish that the magistrate’s findings were clearly erroneous or contrary to law.
Rearden petitioned the Federal Circuit for a writ of mandamus challenging the district court’s order. VGHL argued that the Federal Circuit lacked jurisdiction to issue mandamus because the issue lay solely with the regional circuit court of appeal. The Federal Circuit disagreed, noting that 28 USC § 1295(a) grants the Federal Circuit appellate jurisdiction “in any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress relating to patents.” Notably, the AIA expanded the Federal Circuit’s jurisdiction to encompass compulsory counterclaims “arising under” patent law. This expanded jurisdiction is limited to compulsory counterclaims and does not include permissive counterclaims.
The Federal Circuit’s decision on jurisdiction thus boiled down to whether Rearden’s patent infringement counterclaim was compulsory or permissive. Under Rule 13 of the Federal Rules of Civil Procedure, a compulsory counterclaim is one that “arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim.” In this case, the Court found the claims to be compulsory because they involved the same patents; shared overlapping legal and factual issues; shared substantial evidentiary overlap such that the same evidence could refute both the claims of ownership and the counterclaims of infringement; and shared a close, logical relation—the ownership and rightful use of the technology in the MOVA assets.
Turning to the merits of the mandamus petition, the Federal Circuit reviewed the district court’s denial of a request for an evidentiary hearing and denial to supplement the record under an abuse of discretion standard. Because petitioners sought relief by way of mandamus, the Federal Circuit emphasized that its review was “particularly deferential” and that it would only overturn the district court’s determination if Rearden showed that it had a clear and indisputable right to relief and no adequate alternative legal channels to obtain the same relief. Ultimately, Rearden fell short of meeting this standard, and the Court declined to enter mandamus relief.
PATENTS / INDEFINITENESS / EXCEPTIONAL CASE
PATENTS / AIA / CBM
PATENTS / IPR / PROCEDURE
Addressing whether it is proper for the Patent Trial and Appeal Board (PTAB or Board) to institute inter partes review (IPR) for only some (not all) claims challenged in an IPR petition, the US Court of Appeals for the Federal Circuit denied en banc review of an earlier decision allowing such practice. SAS Institute, Inc. v. ComplementSoft, LLC, Case Nos. 15-1346; -1347 (Fed. Cir., Nov. 7, 2016) (per curiam) (Newman, J, dissenting).
ComplementSoft brought suit against SAS for infringement of a patent relating to an integrated development environment. SAS then filed a request for IPR of all 16 claims of the patent. The PTAB instituted an IPR of some of the challenged claims and eventually issued a final written decision for those claims. SAS appealed the PTAB’s final written decision, arguing that the decision was deficient for failing to address the patentability of all claims challenged in the IPR petition. In a June 2016 decision (IP Update, Vol. 19, No. 7), the Federal Circuit found this argument foreclosed by its Synopsis decision (IP Update, Vol. 19, No. 3) and concluded that the statute only requires the PTAB to address the claims “as to which review was granted.” SAS filed a petition for rehearing and thereafter a petition for rehearing en banc, both of which were denied per curiam.
Judge Newman dissented here, as she did in Synopsis. In dissent, Newman again argued that the PTAB’s practice of deciding the validity of only some of the claims challenged in an IPR petition “foils the legislative purpose of resolving certain patent issues in an administrative forum, newly available to litigants previously confined to the district court.” Newman considered both the statutory language and the legislative record to conclude that the practice of instituting IPR based on some, but not all, claims of a patent is contrary to the provisions of the America Invents Act (AIA). According to Newman, partial institution is improper because it “leaves the unselected claims dangling” without finality or estoppel. A party may therefore be obliged to additionally litigate the claims not reviewed in the IPR. Further, estoppel cannot arise as to claims that the PTAB declines to review. Therefore, Newman argued that partial institution in an IPR proceeding negates the purpose of the AIA—that any patent claim challenged by the petitioner and any new claim added during the proceeding could be fully and finally decided.
PATENTS / AIA / CBM / SUBJECT MATTER ELIGIBILITY
PATENTS / AIA / DILIGENCE / SUBSTANTIAL EVIDENCE
PATENTS / AIA / EVIDENCE
PATENTS / PAY-FOR-DELAY
Addressing a pay-for-delay and pharmaceutical-settlement antitrust jury trial for the first time since the 2012 Supreme Court of the United States decision in FTC v. Actavis (IP Update, Vol. 16, No. 7), the US Court of Appeals for the First Circuit affirmed the district court’s decision denying a new trial after the jury found that plaintiffs had not shown they suffered an antitrust injury that entitled them to damages. In re: Nexium (Esomeprazole) Antitrust Litigation, Case Nos. 15-2005; -2006; -2007 (1st Cir., Nov. 21, 2016) (Lynch, J).
In 2005, prior to the case at hand, AstraZeneca and Ranbaxy Pharmaceuticals reached a settlement agreement in response to a Hatch-Waxman litigation involving AstraZeneca’s prescription heartburn medication Nexium and Ranbaxy’s generic equivalent. AstraZeneca claimed that Ranbaxy’s generic infringed six of its patents, including two expiring on May 27, 2014. As part of the settlement agreement, Ranbaxy agreed to delay the launch of its generic until May 27, 2014, in return for various promises from AstraZeneca, including the agreement not to market its own authorized generic version of Nexium during Ranbaxy’s 180-day exclusivity period (called a “no-AG clause”), and others concerning manufacturing and distribution. The case involved similar settlements between AstraZeneca and two other generic manufacturers—Teva and Dr. Reddy’s—but those defendants settled before trial.
Subsequently, a collection of pharmaceutical retail outlets and certified classes of direct purchasers and end payors sued AstraZeneca and Ranbaxy claiming that their settlement “constituted a large and unjustified payment” that was a pay-for-delay settlement with anticompetitive effects. Pay-for-delay or “reverse payment” settlements refer to a situation where a brand name manufacturer and patent holder pays a generic manufacturer and alleged patent infringer to settle and delay the generic’s entry into the market. In FTC v. Actavis, the Court found that these settlements can carry the “risk of significant anticompetitive effects” and are therefore subject to antitrust rule of reason analysis. More recently, in In re: Loestrin, the First Circuit stated that these “reverse payments” may be non-monetary and may take the form of other advantages to the generic manufacturer.
At trial, the jury found that plaintiffs proved an antitrust violation but had not shown that they suffered an antitrust injury that entitled them to damages. Plaintiffs moved for a new trial, and the district court denied the motion. On appeal, plaintiffs claimed that the district court made a number of fundamental errors, including 1) various evidentiary rulings, including the exclusion of expert witnesses; 2) erroneously granting judgment as a matter of law in the defendants’ favor on the issue of overarching conspiracy; 3) reversible error in the special verdict form and jury instructions; and 4) in summary judgment rulings, “cut[ting] down the number of causal mechanisms through which the plaintiffs could make their case to the jury.”
After a detailed explanation of the New Drug Application and Abbreviated New Drug Application process, and a comprehensive history of the underlying lawsuits and settlements and the case’s summary judgment and trial proceedings, the First Circuit found no reversible error by the district court. The First Circuit found that any errors at summary judgment were “rendered harmless” by the jury verdict and trial proceedings; that the verdict form, although “perhaps . . . inartfully phrased,” was balanced by thorough jury instructions; and that the plaintiffs’ failure to preserve their own objections and decisions to limit testimony or forego certain arguments were strategic choices by plaintiffs and not Court error. The Court concluded that the reason for the verdict was simply a “fail[ure] to convince the jury” of antitrust injury in addition to the antitrust violation.
The Supreme Court will review the US Court of Appeals for the Federal Circuit’s April 2016 decision in In re: TC Heartland, LLC, which concluded that certain changes made to the general venue statute (§ 1391) in 2011 did not affect the Federal Circuit’s 1990 ruling in VE Holding v. Johnson Gas Appliance, a case in which the appellate court held that the patent venue statute (§ 1400) is governed by the definition of “resides” in § 1391 (IP Update, Vol. 19, No. 5).
Practice Note: Many amici have supported TC Heartland’s cert petition on the basis that the existing Federal Circuit rule encourages forum shopping by patent owners in patent cases. Although the case does not involve the US District Court for the Eastern District of Texas (ED TX), where more patent suits are filed than in any other court, a decision restricting venue would likely dramatically affect that court, as almost none of the corporate defendants that are presently forced to litigate there would be subject to venue in ED TX.
Third Time’s Not the Charm for IPR Petitioner Adding Known References to Previously Rejected Prior Art Combination
Addressing whether to institute an inter partes review (IPR) based on a third petition by the same petitioner against the same patent claims, the Patent Trial and Appeal Board (PTAB or Board) denied institution both as an exercise of its discretion and because the petition relied on substantially the same prior art as the previous petition. Duncan Parking Techs., Inc. v. IPS Group, Inc., Case No. IPR2016-00145 (PTAB, Nov. 21, 2016) (Kim, APJ).
IPS Group sued Duncan Parking Technologies in district court for allegedly infringing two patents directed to electronic parking meters. Shortly after receiving the district court complaint, Duncan Parking filed two IPR petitions against each patent. The PTAB denied both petitions with respect to one of the patents. Then, one month prior to the one-year IPR filing deadline, Duncan filed a third petition, adding two new references to a prior art combination presented in one of the denied petitions.
IPS Group filed a preliminary response that contested unpatentability on the merits, and also argued that the new petition should be denied for citing substantially the same prior art as the previous petition. IPS Group characterized the third petition as “incremental petitioning” (i.e., relying on the PTAB’s denial to fix the identified deficiencies and mounting another attack). The PTAB agreed and denied the new petition on procedural grounds.
The PTAB first noted that institution of an IPR is discretionary. In this case, three of the five references in the new petition were already used as a combination in a prior petition. As for the two “new” references, both were discussed in a prior petition, both were of record during original prosecution, and one of the two was even incorporated by reference into one of the three references from the prior petition.
In denying institution, the PTAB explained that its primary concerns were fundamental fairness to the parties and its own limited resources. The PTAB cautioned petitioners not to expect automatic acceptance of multiple petitions against the same claims using substantially the same prior art, where the petitions are filed after the petitioner has an opportunity to study the patent owner’s response and the PTAB’s decision in connection with previous petitions on the same claims. The PTAB found this concern particularly important where, as here, a petitioner knows about the newly asserted prior art. The PTAB also emphasized that the onus to provide the rationale for multiple petitions lies with the petitioner, noting that this petitioner’s boilerplate statement that the new combination had not been previously applied was not sufficiently convincing.
The PTAB also set forth alternate grounds for denial based on 35 USC § 325(d)’s guidance that the institution decision can take into account the fact that the same or substantially the same prior art or arguments were previously presented. The PTAB concluded that the connections between the new art and the previous art were enough to consider the new petition as relying on substantially the same art as the prior petition.
Addressing obviousness issues, including commercial success, the Patent Trial and Appeal Board (PTAB or Board) maintained its previous decision invalidating the claims of a patent related to coaxial cable connectors after the US Court of Appeals for the Federal Circuit remanded the case to the PTAB to address whether the prior art teaches a particular claim limitation as properly construed and to reassess the patent owner’s evidence of commercial success. Corning Optical Communications RF, LLC v. PPC Broadband, Inc., Case No. IPR2013-00340 (PTAB, Nov. 16, 2016) (Zecher, APJ).
Corning filed a petition requesting inter partes review (IPR) of claims of a patent directed to a coaxial cable connector. After instituting the IPR proceeding, the PTAB construed the term “continuity member” to require that “the continuity member need only make contact with the coupler/nut and the post to establish an electrical connection there,” but without requiring consistent or continuous contact. The PTAB then issued a final written decision invalidating the claims as being obvious over the prior art.
On appeal, the Federal Circuit affirmed the PTAB’s construction of the term “continuity member” under the broadest reasonable interpretation (BRI) standard, even though the Court concluded that the construction was not correct under Phillips (IP Update, Vol. 19, No. 3). The Federal Circuit, however, concluded that other claim limitations required the continuity member to “maintain electrical continuity” during certain specified periods of operation of the connector, and that “maintaining electrical continuity” required consistent or continuous contact under either a BRI or Phillips construction. The Federal Circuit further determined that the PTAB did not make any factual findings as to whether the prior art maintains “consistent or continuous contact.” The Court also disagreed with the PTAB’s analysis of commercial success, finding that the PTAB erred in concluding that PPC’s commercial product did not meet all the limitations of the challenged claims when the evidence of record was to the contrary. The Court noted that there is a presumption in IPR proceedings that any commercial success of the products is due to the patented invention. In view of the above, the Federal Circuit remanded the case back to the PTAB (IP Update, Vol. 19, No. 11).
On remand, the PTAB maintained its obviousness decision. In particular, in light of the Federal Circuit’s guidance, and assessing the claimed invention “as a whole,” the PTAB found that the prior art did teach the “maintain electrical continuity” limitation. The PTAB also concluded that the evidence of record did not establish commercial success, because PPC’s market share had not increased after introduction of the relevant commercial product and because it was unclear whether PPC’s relevant commercial product was a true alternative to its pre-existing product or a replacement for a discontinued pre-existing product.
IPR One-Year Time Bar Does Not Apply to Government Contractor
Addressing the appropriate application of the one-year time bar for filing an inter partes review (IPR), the Patent Trial and Appeal Board (PTAB or Board) concluded that the time bar of 35 USC § 315(b) is not triggered by a government contractor’s involvement in patent infringement proceedings against the US government in the US Court of Federal Claims (CFC). AM General LLC v. UUSI LLC, Case No. IPR2016-01049 (PTAB, Nov. 7, 2016) (Rice, APJ).
UUSI is the owner of a patent directed to a glow plug controller system that assists in starting a diesel engine. UUSI asserted this patent against the US government in a CFC action arising under 28 USC § 1498. The petitioner and government contractor, AM General, separately filed an IPR petition against three claims of the asserted patent.
In its preliminary response, UUSI argued that AM General lacked standing to file an IPR petition based on the one-year bar of § 315(b). Specifically, UUSI argued that the time bar arose because AM General’s IPR petition was filed more than one year after the government (which UUSI argued is in privity with AM General) was served with a complaint in the CFC alleging infringement of the patent at issue (under 28 USC § 1498), and that AM General, as an interested party to the CFC proceeding, was served with a Rule 14 Notice/Summons with a copy of the complaint, and also with the amended complaint. The PTAB rejected both arguments.
First, the PTAB found that AM General was not in privity with the government because AM General did not have a full and fair opportunity to litigate the invalidity issues in the CFC action and lacks the right to appeal the CFC’s final judgment. In addition, UUSI failed to present sufficient evidence showing that AM General is controlling the CFC action. The PTAB also found that AM General’s indemnification of the government in the CFC action does not create a privity relationship between the two parties, as the mere existence of the agreement does not establish that the government has the opportunity to control the IPR proceeding, in particular where, as here, there is no evidence that AM General must defend the claim against the government.
Second, the PTAB found that service of a Rule 14 Notice/Summons and a copy of the complaint does not establish that AM General was “served with a complaint alleging infringement of the patent” within the meaning of § 315(b). The PTAB explained that the § 315(b) time-bar does not apply to a third party who was not a defendant but merely appeared in the litigation for the purpose of responding to the subpoena. Here, although AM General was served with a copy of the complaint, the PTAB concluded that AM General is no more than a nominal defendant in the CFC action because there is no claim before the CFC that is directed against AM General. In addition, the PTAB noted that the CFC judgment cannot support the assertion of issue preclusion against AM General by either the government or UUSI.
In a decision addressing the use “in commerce” requirement under the Lanham Act, the US Court of Appeals for the Federal Circuit reversed and remanded a Trademark Trial and Appeal Board (TTAB) decision cancelling a trademark registration, explaining that the registrant’s de minimis use of the trademark in commerce prior to filing its use-based trademark applications was not a failure to use the registered mark in commerce. Christian Faith Fellowship Church v. Adidas AG, Case No. 16-1296 (Fed. Cir., Nov. 14, 2016) (Stoll, J).
In March 2005, Christian Faith Fellowship Church (CFFC) filed two use-based applications for the mark ADD A ZERO (standard characters and stylized) for certain clothing items. Four years later, adidas AG (Adidas) sought to register the trademark ADIZERO for clothing. The US Patent and Trademark Office refused to register Adidas’s mark because of a likelihood of confusion with CFFC’s registered marks. Adidas then petitioned the TTAB to cancel CFFC’s registrations on several grounds, including that CFFC’s de minimis use constituted a failure to use the trademarks in commerce before they were registered, and that CFFC had abandoned its trademarks through non-use.
The TTAB granted Adidas’s petition, holding that CFFC’s use of the mark only twice in interstate commerce did not satisfy the use “in commerce” clause under the Lanham Act. The Lanham Act defines “commerce” as “all commerce which may be lawfully regulated by Congress,” meaning all commerce subject to Congress’s power under the Commerce Clause. Congress’s Commerce Clause power, in turn, includes the power to regulate interstate commerce. The Supreme Court of the United States has broadly interpreted the Commerce Clause to include not only purely interstate transactions, but also transactions that have a substantial effect on interstate commerce. CFFC appealed.
On appeal, the Federal Circuit found that the single sale in interstate commerce (a sale of two hats from CFFC’s Illinois store to a Wisconsin resident) constituted sufficient use “in commerce” to support CFFC’s use-based trademark applications. The Court stressed that this “transaction…fell comfortably within the bounds of the [Commerce Clause] powers already sketched out by the Supreme Court.” The Court criticized the TTAB’s reasoning that the sale was de minimis and not sufficient to prove use “in commerce,” stating that such a determination ran counter to the Supreme Court’s prior Commerce Clause decisions—namely, Gonzales v. Raich, which held that the “de minimis character of individual instances” subject to the Commerce Clause “is of no consequence.” The Court made clear that its reasoning regarding the in commerce requirement applied equally to trademarks (for goods) and service marks. To the extent that earlier decisions of the TTAB held that the Lanham Act required commercial activity beyond what was sufficient to be subject to Congress’s Commerce Clause power, the Court stated they were “incorrect.” “[T]he definition of commerce in the Lanham Act means exactly what the statute says, i.e., ‘all commerce which may lawfully be regulated by Congress.’”
The Federal Circuit thus reversed the TTAB’s cancellation of CFFC’s registrations and remanded the matter to the TTAB to address Adidas’s other grounds for cancellation—namely, whether CFFC had abandoned the trademark through non-use.
Practice Note: This decision confirms what many already believed: almost any bona fide transaction will qualify as use in commerce. Trademark owners should keep records of the use that is the basis for their use-based trademark application in the event their registrations are challenged on this ground. Once a trademark registration is secured, trademark owners must be careful to not abandon their trademark by failing to continue to make bona fide use of their mark.
TRADEMARKS / COPYRIGHTS / DAMAGES AND INJUNCTIVE RELIEF
COPYRIGHTS / INFRINGEMENT / DERIVATIVE WORKS / BURDEN OF PROOF