7th Cir. decision on likelihood of confusion and 11th amendment immunity where state appeals TTAB cancellation order to district court

The Seventh Circuit recently issued an interesting decision in the appeal of a district court decision that reversed a TTAB-ordered cancellation. While long (85 pages, including a dissent), the opinion in Board of Regents of Univ. of Wisc. Sys. v. Phoenix Int’l Software, Inc., No. 08-4164 (7th Cir. Dec. 28, 2010), addressed two core issues:

(1) is actual use (rather than the description of goods and services in the registration) relevant to likelihood of confusion in the context of a district court proceeding challenging a TTAB-ordered cancellation? (yes); and

(2) by going the district court route rather than appealing the TTAB decision cancelling its registration directly to the Federal Circuit, did Wisconsin waive its sovereign immunity for 11th amendment purposes, thereby rendering itself vulnerable to Phoenix’s infringement counterclaims? (no).

The TTAB had granted Phoenix Int’l's petition to cancel Wisconsin’s registration. Rather than appeal to the Federal Circuit, Wisconsin challenged the decision in a district court. Phoenix counterclaimed for trademark infringement and sought damages. The district court gave Wisconsin a win/win: it granted summary judgment reversing the TTAB and reinstating Wisconsin’s registration, and held that the 11th amendment barred Phoenix’s counterclaims. The Seventh Circuit reversed and remanded for a likelihood of confusion trial, but affirmed Wisconsin’s immunity to the infringement counterclaims under the 11th amendment.

On the actual use vs. description-of-goods-and-services-in-the-registration issue, the Seventh Circuit noted first that this sub-issue, in the context of a likelihood of confusion analysis, is not a rote comparison of the parties’ goods, but whether the parties’ products are the kind that consumers would believe to come from the same source. The court further noted that the actual goods the parties’ marks are used on may inform the meaning of the terms used in the registration.

As to the 11th amendment issue, the majority held that the mere fact that Wisconsin chose to challenge the TTAB’s cancellation via a district court proceeding in which it could submit new evidence was not enough to constitute a waiver of 11th amendment immunity. The majority felt that, at bottom, for purposes of 11th amendment immunity, such a challenge is simply a continuation of the TTAB proceeding in which Wisconsin was effectively a defendant. The dissent believed that, for 11th amendment purposes, there was a material difference between a straight appeal to the Federal Circuit and the institution of a de novo proceeding at the district court, primarily because, by choosing to file a proceeding in the district court, the challenger could present new evidence.

Happy New Year!

9th Circuit Digital Millennium Copyright Act decision creates split with Federal Circuit on circumventing access controls

In a long, comprehensive opinion, the Ninth Circuit (among other rulings) created a circuit split by disagreeing with the Federal Circuit about the elements of violations of the Digital Millennium Copyright Act, 17 U.S.C. §§ 1201(a) & (b).

In MDY Industries, LLC v. Blizzard Entertainment, Inc., No. 09-15932 (9th Cir. Dec. 14, 2010), the Ninth Circuit addressed a dispute between the creator of the popular on-line game “World of Warcraft” and a manufacturer of a software program that automatically plays the game for users to help them progress through the game’s levels. In a nutshell, the Ninth Circuit held that §§ 1201(a)(1) & (2) created a brand new “copyright”—the right to prevent circumvention of measures designed to prevent or control access to a copyrighted work. The court held that § 1201(b), in contrast, prohibited trafficking in devices that circumvent measures that prevent traditional types of copyright infringement, such as copying, displaying, or performing a work.

The Ninth Circuit’s reading of § 1201(a) creates a circuit split with the Federal Circuit. The Federal Circuit had previously required § 1201(a) claimants to prove an additional element: that the circumventing technology infringes or facilitates the infringement of a copyright (i.e., an “infringement nexus requirement”). See Chamberlain Group, Inc. v. Skylink Techs., Inc., 381 F.3d 1178, 1203 (Fed. Cir. 2004). The Ninth Circuit believed that there was no textual support for requiring an “infringement nexus” and that the legislative history confirmed that no such nexus was required.

The circuit split may induce the Supreme Court to grant cert. if the decision is challenged.

Fed. Cir. orders transfer of multi-defendant patent case to N.D. Cal.

Did you think that having several defendants in multiple other districts insulated an E.D. Tex. patent plaintiff from a § 1404(a) transfer? If so, you may want to qualify that thought a bit.

The Federal Circuit today issued a writ of mandamus ordering the transfer of a multi-defendant patent case to the N.D. Cal. The key facts were these:

• The plaintiff was from the N.D. Cal.
  
• 11 of the 12 defendants were headquartered in California, with 6 of those actually headquartered in the N.D. Cal.
  
• Only one defendant (Dell) was headquartered in Texas (but not in the E.D. Tex.).

So the lesson seems to be this: the “multi-defendant defeats § 1404(a) transfer” strategy doesn't necessarily work where the majority of the defendants are from one particular area outside the forum (even if they’re all not from the same federal district).

In re Acer Amer. Corp., Misc. No. 942 (Fed. Cir. Dec. 3, 2010)