Ending this blog.

Since I now work for the USPTO, I believe it's imprudent to continue commenting on these appellate decisions, so I have decided to stop blogging on IP matters.  But feel free to drop by my wine blog at http://bighousewine.blogspot.com.  No ethics issues in continuing that one!

Thanks for visiting.

2d Cir.: Nike's broad covenant-not-to-sue for TM infringement kills jurisdiction over invalidity/cancellation DJ under MedImmune test

Nike was recently rewarded for pulling a potentially risky litigation move: trying to avoid a troublesome DJ/cancellation counterclaim by unilaterally issuing a broad covenant-not-to-sue. This move is a little like surrendering without knowing for sure if the adversary can shoot you when you raise your hands.


After filing an action alleging Yums infringed Nike’s marks for its “Air Force 1” shoes, Yums filed a counterclaim for a DJ of invalidity and a demand that Nike’s registrations be cancelled. Apparently the counterclaim gave Nike second thoughts, because it then sent Yums a covenant not to sue for footwear “based on the appearance of any [Yum’s] current and/or previous footwear product designs.” Nike then moved to dismiss: (1) its own infringement claims without prejudice under FRCP 41(a)(2) and (2) Yum’s counterclaim without prejudice for lack of a case or controversy under FRCP 12(b)(1).

The 2d Circuit affirmed the dismissal of the counterclaims for lack of a case or controversy. Applying the test under MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), the court ignored whether Yums retained any “reasonable apprehension” of suit, and focused only on whether there remained any “real and substantial” controversy after the broad covenant was issued.

Based primarily on the breadth of the covenant (which covered all past and present Yum’s designs and any future sales of present designs) and on the lack of any evidence that Yum’s intends to infringe or counterfeit through any future design, the Second Circuit held that the basis for a DJ evaporated upon issuance of the covenant, and that the request for cancellation (under 15 U.S.C. § 1119) is merely a remedy, not an independent source of jurisdiction.

The case is Nike, Inc. v. Already, LLC d/b/a Yums, No. 11-314-cv (2d Cir. Nov. 10, 2011).

1st Circuit: Insurance Policy "Antitrust Exclusion" Also Excludes False Advertising/Labeling Claim

The First Circuit recently held that an insurer was not required to defend and indemnify its insured against claims for misleading product labeling.

Accused of deceptive trade practices, false and misleading advertising, and deceptive labeling (the court did not specify whether these were federal and/or state claims), Welch Foods sought defense and indemnity from its insurer.

The policy at issue in Welch Foods v. National Union Fire Ins. Co., No. 10-2261 (1st Cir. Oct. 24, 2011) (per curiam), which otherwise covered the claims, contained the italicized exclusion below:

Antitrust Exclusion

The Insurer shall not be liable to make any payment for Loss in connection with a Claim made against the Insured . . . alleging, arising out of, based upon or attributable to, or in any way involving, either directly or indirectly, antitrust violations, price fixing, price discriminations, unfair competition, deceptive trade practices and/or monopolies, including any actions, proceedings, claims or investigations related thereto . . . . (emphasis added)

The terms “unfair competition” and “deceptive trade practices” were undefined.

The Court rejected Welch’s argument that, because the heading (“Antitrust Exclusion”) and several of the listed violations focused on anticompetitive antitrust-type behavior, the terms “unfair competition” and “deceptive trade practices” must also refer to antitrust-type behavior—not false advertising or false labeling.

10th Circuit: infringement of patent(!) covering "promotion" or "advertising" may trigger insurance policy covering "advertising injury"

The 10th Circuit recently reinstated a company’s lawsuit to force its insurers to defend and indemnify it in a patent infringement against the company. The case serves as a reminder to insureds to read through their insurance policies carefully each time they are sued and not to reflexively assume that a patent infringement claim (or any other type of case) may not be covered.


Dish Network Corp. v. Arch Specialty Ins. Co. et al., No. 10-1445 (10th Cir. Oct. 17, 2011), involved patent infringement claims by the well-known patent plaintiff Ronald A. Katz Technology Licensing, L.P. The complaint did not mention advertising. Nor did it specify which patent claims were infringed and how. But some of the claims of the asserted patents mentioned systems and processes for advertising or promoting products.

The policies at issue provided for coverage of claims asserting “misappropriation of advertising ideas or style of doing business.” Under Colorado law, the 10th Circuit held:

(1) “when the underlying complaint alleges any facts or claims that might fall within the ambit of the policy, the insurer must tender a defense”;

(2) to avoid the duty to defend, insurers “must prove [the claim] cannot” fall within the policy;

(3) while such cases may be rare, “patent infringement can qualify as an advertising injury if the patent involves any process or invention which could reasonably be considered an “advertising idea’”;

(4) given the patent complaint’s general allegations, the insurers could not disprove that the claim did not encompass the allegation that Dish Network’s advertising infringed the patent claims that disclosed processes and systems for promoting or advertising products (i.e. “advertising ideas”);

(5) the required “causation” for the advertising injury was satisfied by the patent complaint’s typical “irreparable harm” allegation that the infringer “continues” to infringe and won’t stop “unless enjoined by this Court”; and

(6) the duty to defend an entire suit arises when “the complaint even potentially alleges conduct within the policy”—it’s not restricted to the “core complaint” or “primary grievance,” and advertising need not be the “sole cause of the alleged injury.”

9th Cir.: Apple Not Misuse Copyright by Restricting Use of MAC OS X Operating System Software to Apple computers

The 9th Circuit today held that Apple may continue to prohibit buyers (i.e., licensees) of its MAC OS X operating system software from using the system on non-Apple computers.


The ruling in Apple Inc. v. Psystar Corp., No. 10-15113 (9th Cir. Sept. 28, 2011), concerned Apple’s claim that Psystar infringed Apple’s software copyright when it (1) bought Apple software, (2) imaged it on to non-Apple computers, and (3) then sold the computers (together with a CD containing an unopened, purchased copy of the Apple software).

The court held that the purported license agreement accompanying each CD containing MAC OS X made the transaction of buying the software a valid license and not a simple sale. (If it had been a simple sale, then first sale doctrine would have ended Apple’s ability to restrict how Psystar used the software.) The agreement stated that it was a license, not a sale, and contained significant use and transfer restrictions. It therefore met the “license not sale” test of Vernor v. Autodesk, Inc., 621 F.3d 1102, 1111 (9th Cir. 2010).

Nor did the restrictions in the license amount to copyright misuse, because they “reasonably restrict[ed] use of the software” but did not “prevent the development of competing products.” The court distinguished decisions in cases where similar restrictions on which products software could be used with effectively made it impossible for users to develop competing software.

The lesson: use restrictions in software copyright licenses may be very strict indeed unless the restrictions effectively prevent users from developing competing products.

9th Cir.: Anti-cybersquatting law not cover "re-registration" (i.e., renewal) of domain name . . .

. . . as long as the initial registration was lawful. The case is GoPets Ltd. v. Hise, No. 08-56110 (9th Cir. Sept. 22, 2011).

Here’s the timeline. In 1999, defendant Hise registered the domain name gopets.com. Gopets.com is among over 1300 domain names that Hise registered in the last decade. In other words, he’s a “domain name ‘entrepreneur.’” In 2004, plaintiff GoPets started a PC game under the name GoPets, featuring virtual pets that move between the computers of registered users. Later, plaintiff began a series of unsuccessful negotiations with Hise to buy the domain name.

During the negotiations, lots transpired. Hise transferred the domain name to his company. Plaintiff registered its GoPets mark. A month later, Hise’s company “re-registered”—I am not sure why the court refused to use the word “renewed”—the domain name registration. Plaintiff filed and lost a UDRP arbitration because Hise registered before plaintiff began using GoPets. Hise then registered 17 different domain names incorporating “gopets.” Hise’s last demand to plaintiff was $5 million. Finally, plaintiff sued in court.

The 9th Circuit held that Hise’s original registration of gopets.com was lawful, because the ACPA (15 U.S.C. § 1125(d)) requires that a claimant own a “mark that is distinctive at the time of registration”—and plaintiff didn’t begin using its mark until years later. The court further held that “re-registration” (renewal) is not subject to the ACPA if the initial registration was lawful. But the court held that Hise’s subsequent registrations of the 17 “gopets” variant domain names after Hise began negotiations with plaintiff violated the ACPA.

1st Cir.: Compare infringing software with copyrighted code, not modified, non-copyrighted version

There are two critical lessons for software companies in Airframe Systems, Inc. v. L-3 Communications Corp., No. 10-2001 (1st Cir. Sept. 14, 2011):

    (1) It’s not enough to register the copyright in the original source code. When you modify it, register the modified versions too; and

    (2) retain copies of all prior versions because you never know which one you might need in an infringement case.

Plaintiff Airframe registered the original software code, then licensed defendant L-3 to use that code. As its clients changed computer systems, Airframe routinely modified its software. When L-3 upgraded its computer system, it got ahold of a newer version of the code and began using it. Airframe found out and sued.

The First Circuit noted that to prove infringement, a plaintiff has to prove both “factual copying” of the copyrighted work and “substantial similarity.” Faced with a summary judgment motion, Airframe put in an affidavit showing how similar L-3’s software was with an updated but unregistered version of the copyrighted software. (The court didn’t explain why Airframe didn’t compare the infringing code to the original, registered code.) The 1st Circuit affirmed summary judgment against Airframe, explaining that Airframe never proved the content of its registered software, so it couldn’t, as a matter of law, establish factual copying.

9th Cir.: ISPs providing servers for Louis Vuitton counterfeiters are contributory infringers

Money quote: ISPs who “physically host websites on their servers and route internet traffic to and from those websites” perform a service that “is the Internet equivalent of leasing real estate.”

The court in Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., No. 10-15909 (Sept. 9, 2011) dealt with claims of contributory trademark infringement and contributory copyright infringement.

There were lots of holdings on both liability and damages as to contributory infringers. On the trademark liability side, the court noted that Vuitton had to show that the defendant “continued to supply its services to one who it knew or had reason to know was engaging in trademark infringement” and “had direct control and monitoring (sic) of the instrumentality used by a third party to infringe.” The ISPs were found to have “direct control over the ‘master switch’ that kept the websites online and available.”

As to the copyright claim, the court noted that Vuitton had to prove that the defendant “materially contributed” to the copyright infringement, and that “material contribution turns on whether the activity in question ‘substantially assists’ direct infringement.” The court concluded that “providing direct infringers with server space satisfies that standard.”

The court also held that statutory counterfeiting damages are available not just against direct counterfeiters, but also against those who contribute to counterfeiting. As to copyright statutory damages, the court held that “a plaintiff may receive a single statutory award for all infringements of any one copyrighted work from either (1) any one defendant, where the defendant is separately liable, or (2) multiple defendants, where those defendants are jointly and severally liable.” (emphasis added).

TTAB opinion about scope of bona fide intent to use challenges (some or all of goods?)

The TTABlog recently pointed out a precedential TTAB decision that could be read to throw doubt on the scope of any claim that the applicant/registrant lacked a bona fide intent to use the mark in connection a class of goods in which the applicant lists several specific goods. I thought it was settled that lack of BFI to use on some specific goods didn’t sink the other goods listed, but maybe it’s not settled after all.

The decision is Spirits Int’l, B.V. v. S.S. Tataris Zetin, Opp. No. 91163779 (July 6, 2011). You should read the TTABlog’s take on the decision. My own reading of the opinion – which is certainly less than clear on this point -- is that it does not create a categorical rule that lack of BFI for any good in the class knocks out the whole class. The opinion states that the lack of BFI count was pleaded as to the two classes in their entireties. The opinion also notes that there was also a more specific allegation that there was no BFI as to any alcoholic beverages listed among the non-alcoholic beverage goods in the application.  From these statements I infer that the specific allegation that there was no BFI as to alcoholic beverages was not a limitation on the scope of the claim, but simply a factual allegation that the opposer pleaded in support of its broader "whole class" claim.

At trial, the opposer introduced evidence in the form of lack of any documents as to some of the goods (the alcoholic beverages). This was sufficient to shift the burden of production the applicant, who then submitted nothing. Thus, when the applicant failed to put in any evidence whatsoever and failed to file a merits brief, the claim adjudicated was the "whole class" claim. I infer from this that if the applicant had submitted sufficient evidence of BFI as to non-alcoholic goods, then the opposition would have been only partially sustained, and only the alcoholic products would have been struck.

Still, this ruling is unclear enough that it could be argued to support a more categorical rule. An applicant in this position should certainly consider (as noted in the opinion) deleting specific goods as to which BFI is lacking or questionable so as not to endanger registration as to the other goods where BFI is provable, at least until the TTAB clarifies its position on this.

Thanks to TTABlog for highlighting the issue.

Night vision goggles don't prevent 11th Circuit from botching another trademark decision

I called out the 11th Circuit last year for faulty reasoning in a restaurant trademark dispute, and now, it appears, they’ve botched another trademark case. It was a dispute between a manufacturer of night vision goggles and its sales/distribution partner, and the issue was proof of secondary meaning.

In Knights Armament Co. v. Optical Sys. Tech. Inc., No. 09-14480 (11th Cir. Sept. 2, 2011), OTSI developed and manufactured the product to sell to the US military.  It partnered with another company (KAC) that has a lot of experience marketing to the military. OTSI came up with the trademarks UNIVERSAL NIGHT SIGHT and UNS.  KAC’s contracts with the government touted the products under these marks.  After selling a bunch of OTSI’s goggles to the military, KAC began developing a competing goggles under the marks KNIGHTSCOPE, UNIVERSAL KNIGHTSCOPE and UKS.

Finding that OTSI owned the marks UNIVERSAL NIGHT SIGHT and UNS, but that the marks were descriptive, the court attempted to determine whether the marks had developed secondary meaning. Affirming the district court’s “no” decision, the 11th Circuit said that no secondary meaning could have developed because “there was no indication [in the government contracts] that the UNS/Universal Nightsight mark belonged to OTSI, and not KAC, [so] consumers had no reason to associate OTSI’s mark with its product, and not KAC.”

It seems to me that this reasoning is at odds with the principle that, for secondary meaning to exist, consumers need not associate the mark with a specific company, but only with a single source, even if the source is anonymous. Thus, the 11th Circuit asked and answered the wrong question: whether OTSI made it clear to the military that these were its trademarks. The right question was whether the government associated the marks with a single source—any single source (even if that was the distributor, KAC). It seems like the answer here would have been “yes”—but because the court framed its analysis around the wrong question, the facts referenced in the opinion don’t permit that question to be answered with absolute certainty. But whatever the facts relevant to that question were, they would almost certainly have to viewed through the lens of the principle that, as between a distributor of a product (a licensee) and the manufacturer (the licensor), the manufacturer owns the rights in the mark it selected.

I wonder if the parties properly briefed this issue.  Trademark law can get pretty arcane, and if a party's lawyers aren't very familiar with it, issues can be missed, courts can be led astray, and decisions can be framed incorrectly.  In patent cases, clients and general litigators generally know to call in specialists.  In trademark cases, not so much.