Several months ago, I reported on a 7th Circuit decision that a state did not waive sovereign immunity by challenging a TTAB cancellation through a de novo action in federal district court rather than a straight appeal to the Federal Circuit. Well, on rehearing, the 7th Circuit has now changed its mind. Citing the procedural advantages of a de novo district court action over a straight Federal Circuit appeal, the 7th Circuit held that it would be unfair to allow a state to choose an advantageous federal forum and later be able to claim sovereign immunity if the adverse party asserted counterclaims against it.
Board of Regents of the Univ. of Wisc. Sys. v. Phoenix Int’l Software, Inc., No. 08-4164 (7th Cir. Aug. 5, 2011).
Showing posts with label Procedural issues. Show all posts
Showing posts with label Procedural issues. Show all posts
Monday, August 08, 2011
Wednesday, May 25, 2011
3d Circuit: For waiver of privilege, timing makes a difference
If a third party is present during an otherwise privileged communication, the privilege is waived, right? Not exactly, said the Third Circuit today. If a third party is present when the privileged communication is made, the privilege doesn’t attach at all. That’s different from a true waiver situation where a communication that is privileged when made is later disclosed to a third party.
This distinction makes a practical difference when the party asserting waiver wants to see documents beyond the initial communication(s) via a “scope of waiver” argument. If the initial communication(s) was not privileged when made, then there could be no waiver and consequently no opportunity to seek other privileged communications on the subject via a “scope of waiver” argument. The party asserting waiver gets only the initial communication(s).
The case is In re Application of Chevron Corp., No. 10-4699 (3d Cir. May 25, 2011), and the initial communications at issue were made in the presence of filmmakers who were—at the behest of the plaintiffs’ lawyers—shooting a movie of a notorious Ecuadorian environmental case against Chevron (while the case was going on).
This distinction makes a practical difference when the party asserting waiver wants to see documents beyond the initial communication(s) via a “scope of waiver” argument. If the initial communication(s) was not privileged when made, then there could be no waiver and consequently no opportunity to seek other privileged communications on the subject via a “scope of waiver” argument. The party asserting waiver gets only the initial communication(s).
The case is In re Application of Chevron Corp., No. 10-4699 (3d Cir. May 25, 2011), and the initial communications at issue were made in the presence of filmmakers who were—at the behest of the plaintiffs’ lawyers—shooting a movie of a notorious Ecuadorian environmental case against Chevron (while the case was going on).
Monday, May 23, 2011
2d Cir. decision about injunction bonds, attorneys' fees, and the presumption of recovery
The Second Circuit today decided that a wrongfully enjoined party (1) is entitled to a “rebuttable presumption in favor of recovery . . . for provable damages” against a FRCP 65(c) injunction bond; and (2) such damages may include attorneys’ fees if they were fees that were “incurred in complying with the injunction.” (emphasis added).
As to the “presumption,” the Second Circuit indicated that the presumption attaches only after “the wrongfully enjoined party . . . first demonstrate[s] that the damages sought were proximately caused by the wrongful injunction” and “properly substantiate[s] the damages sought.” (This doesn’t seem to me to be much of a presumption, since it sounds a lot like what any injured party in any case needs to prove to obtain damages.)
The case is Nokia Corp. v. InterDigital, Inc., No. 10-1358 (2d Cir. May 23, 2011).
For those interested, the injunction—which was later vacated and therefore “wrongful”—required InterDigital to stay or terminate its ITC proceeding against Nokia and another company as to Nokia, based on an alleged arbitration agreement between InterDigital and Nokia. So instead of one ITC proceeding, InterDigital for a while had to arbitrate against Nokia while it litigated an ITC proceeding against the other company. InterDigital later claimed that it incurred substantial attorneys’ fees staying the ITC proceeding as to Nokia and having to incur duplicative fees and expenses litigating its claims against Nokia and the other company in two different forums.
As to the “presumption,” the Second Circuit indicated that the presumption attaches only after “the wrongfully enjoined party . . . first demonstrate[s] that the damages sought were proximately caused by the wrongful injunction” and “properly substantiate[s] the damages sought.” (This doesn’t seem to me to be much of a presumption, since it sounds a lot like what any injured party in any case needs to prove to obtain damages.)
The case is Nokia Corp. v. InterDigital, Inc., No. 10-1358 (2d Cir. May 23, 2011).
For those interested, the injunction—which was later vacated and therefore “wrongful”—required InterDigital to stay or terminate its ITC proceeding against Nokia and another company as to Nokia, based on an alleged arbitration agreement between InterDigital and Nokia. So instead of one ITC proceeding, InterDigital for a while had to arbitrate against Nokia while it litigated an ITC proceeding against the other company. InterDigital later claimed that it incurred substantial attorneys’ fees staying the ITC proceeding as to Nokia and having to incur duplicative fees and expenses litigating its claims against Nokia and the other company in two different forums.
Wednesday, December 29, 2010
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!
(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!
Friday, June 25, 2010
Fed. Cir. Overturns Yet Another E.D. Tex. “No Transfer” Order
The Federal Circuit yesterday rejected a plaintiff’s attorney’s attempt to “game the system” by arranging to have its client open up what appeared to be a sham office in the E.D. Tex. before filing a patent suit there against an Indiana company.
In In re Zimmer Holdings, Inc., No. 2010-M938 (Fed. Cir. June 24, 2010), the evidence showed that the plaintiff's Longview, Texas, office was shared with another of plaintiff’s counsel’s clients. The plaintiff was not registered to do business in Texas, had no employees in Texas, and actually has deeper ties to Michigan, where it conducts its R&D, where its two officers reside, and where its patent prosecution is done. But the district court denied a section 1404(a) transfer.
The Federal Circuit granted the defendant's petition for mandamus. It chastised the district court for admittedly refusing to “scrutinize litigants’ business decisions to determine whether opening an office in a particular location has a legitimate business purpose or is merely a tactic to manipulate venue.” Citing Hertz Corp. v. Friend, 130 S. Ct. 1181, 1195 (2010), the Federal Circuit urged district courts to do just that. Calling the Longview office "a legal fiction" (slip op. at 8), the court held that manipulation is precisely what transpired in this case: “This is a classic case where the plaintiff is attempting to game the system by artificially seeking to establish venue by sharing office space with another of the trial counsel’s clients.” (Id. at 6.)
In In re Zimmer Holdings, Inc., No. 2010-M938 (Fed. Cir. June 24, 2010), the evidence showed that the plaintiff's Longview, Texas, office was shared with another of plaintiff’s counsel’s clients. The plaintiff was not registered to do business in Texas, had no employees in Texas, and actually has deeper ties to Michigan, where it conducts its R&D, where its two officers reside, and where its patent prosecution is done. But the district court denied a section 1404(a) transfer.
The Federal Circuit granted the defendant's petition for mandamus. It chastised the district court for admittedly refusing to “scrutinize litigants’ business decisions to determine whether opening an office in a particular location has a legitimate business purpose or is merely a tactic to manipulate venue.” Citing Hertz Corp. v. Friend, 130 S. Ct. 1181, 1195 (2010), the Federal Circuit urged district courts to do just that. Calling the Longview office "a legal fiction" (slip op. at 8), the court held that manipulation is precisely what transpired in this case: “This is a classic case where the plaintiff is attempting to game the system by artificially seeking to establish venue by sharing office space with another of the trial counsel’s clients.” (Id. at 6.)
Friday, February 26, 2010
9th Cir. decision re enforcement of judgment by levying on and auctioning off domain names
In Office Depot, Inc. v. Zuccarini, No. 07-16788 (9th Cir. Feb. 26, 2010), the Ninth Circuit held Office Depot’s money judgment against notorious cybersquatter could be enforced by levying upon and selling off his domain names.
VeriSign, the registry for all “.com” and .net” domain names, is located in the N.D. Cal. The 9th Circuit permitted an enforcement procedure comprising: (1) registering the judgment in the N.D. Cal.; and (2) moving for the appointment of a receiver, who would then (3) obtain the domain names from the VeriSign registry and sell them off at auction. In approving this procedure, the court held that domain names are “property” that can be levied upon under California law. The court further held that, for purposes of the quasi in rem jurisdiction that applied to such attachment proceedings, domain names are located wherever the registry or registrar is located.
VeriSign, the registry for all “.com” and .net” domain names, is located in the N.D. Cal. The 9th Circuit permitted an enforcement procedure comprising: (1) registering the judgment in the N.D. Cal.; and (2) moving for the appointment of a receiver, who would then (3) obtain the domain names from the VeriSign registry and sell them off at auction. In approving this procedure, the court held that domain names are “property” that can be levied upon under California law. The court further held that, for purposes of the quasi in rem jurisdiction that applied to such attachment proceedings, domain names are located wherever the registry or registrar is located.
Thursday, September 03, 2009
6th Circuit decision affirming dismissal of TM infringement complaint under rule 12(b)(6)
In a decision with potentially important procedural ramifications, the 6th Circuit today affirmed the rule 12(b)(6) dismissal of a trademark infringement complaint for failure to state a claim.
In Hensley Mfg., Inc. v. ProPride, Inc., No. 08-1834 (6th Cir. Sept. 3, 2009), the plaintiff alleged it was the owner of the HENSLEY mark, which it purchased from Jim Hensley when it purchased Hensley’s trailer hitch business. Jim Hensley then started working with a competing company (ProPride). At ProPride, Hensley designed a competing trailer hitch, and to promote it, ProPride created some print advertisements and webpages that talked about “the Jim Hensley Hitch Story,” described Jim Hensley’s history of designing trailer hitches at Hensley Mfg., and touted how he has now designed an even better hitch at ProPride. The ads and webpages all contained a disclaimer that Jim Hensley is no longer affiliated with Hensley Mfg. The complaint attached the ads and print-outs of the webpages.
The district court dismissed the complaint under rule 12(b)(6) finding that the allegations and attachments showed that the fair use defense applied as a matter of law.
The 6th Circuit affirmed. The court held that it need not get into the likelihood of confusion factors because the complaint and its attachments showed, as a matter of law, that the word “Hensley” was not being used as a trademark (i.e., an indicator of source). Examining the attachments closely, the court held that they conclusively demonstrated instead that the name “Hensley” was being used lawfully solely to refer to the individual accomplishments and reputation of Jim Hensley, and the attached ads and webpages did not create a likelihood of confusion as to source.
The 6th Circuit also expressly approved of the district court’s having based the dismissal on the “fair use” defense, even though, by first moving to dismiss the complaint, the defendants hadn’t even pleaded it yet. The 6th Circuit reasoned that there’s nothing wrong with dismissing a complaint where the allegations conclusively establish an affirmative defense as a matter of law.
IMPLICATIONS: One of the lessons here might be to be careful not to plead yourself out of court. Specifically, it might be useful to consider whether the complaint in this case could have been dismissed under rule 12(b)(6) if the plaintiff hadn’t attached copies of the offending ads and webpages. On the other hand, the 6th Circuit referenced at the outset the (arguably heightened) “plausibility” pleading standard in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), although it did not ultimately appear to rest the dismissal in any significant way on the “implausibility” of the factual allegations in the complaint itself. So it may conversely be useful to consider if there is such a thing as a trademark complaint that is too bare-boned. At minimum, however, in any trademark case where a plaintiff is considering unusually detailed factual allegations and/or attaching copies of the allegedly infringing uses to the complaint, the pleader would do well to consider whether the pleading would survive the sort of analysis the 6th Circuit used here.
In Hensley Mfg., Inc. v. ProPride, Inc., No. 08-1834 (6th Cir. Sept. 3, 2009), the plaintiff alleged it was the owner of the HENSLEY mark, which it purchased from Jim Hensley when it purchased Hensley’s trailer hitch business. Jim Hensley then started working with a competing company (ProPride). At ProPride, Hensley designed a competing trailer hitch, and to promote it, ProPride created some print advertisements and webpages that talked about “the Jim Hensley Hitch Story,” described Jim Hensley’s history of designing trailer hitches at Hensley Mfg., and touted how he has now designed an even better hitch at ProPride. The ads and webpages all contained a disclaimer that Jim Hensley is no longer affiliated with Hensley Mfg. The complaint attached the ads and print-outs of the webpages.
The district court dismissed the complaint under rule 12(b)(6) finding that the allegations and attachments showed that the fair use defense applied as a matter of law.
The 6th Circuit affirmed. The court held that it need not get into the likelihood of confusion factors because the complaint and its attachments showed, as a matter of law, that the word “Hensley” was not being used as a trademark (i.e., an indicator of source). Examining the attachments closely, the court held that they conclusively demonstrated instead that the name “Hensley” was being used lawfully solely to refer to the individual accomplishments and reputation of Jim Hensley, and the attached ads and webpages did not create a likelihood of confusion as to source.
The 6th Circuit also expressly approved of the district court’s having based the dismissal on the “fair use” defense, even though, by first moving to dismiss the complaint, the defendants hadn’t even pleaded it yet. The 6th Circuit reasoned that there’s nothing wrong with dismissing a complaint where the allegations conclusively establish an affirmative defense as a matter of law.
IMPLICATIONS: One of the lessons here might be to be careful not to plead yourself out of court. Specifically, it might be useful to consider whether the complaint in this case could have been dismissed under rule 12(b)(6) if the plaintiff hadn’t attached copies of the offending ads and webpages. On the other hand, the 6th Circuit referenced at the outset the (arguably heightened) “plausibility” pleading standard in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), although it did not ultimately appear to rest the dismissal in any significant way on the “implausibility” of the factual allegations in the complaint itself. So it may conversely be useful to consider if there is such a thing as a trademark complaint that is too bare-boned. At minimum, however, in any trademark case where a plaintiff is considering unusually detailed factual allegations and/or attaching copies of the allegedly infringing uses to the complaint, the pleader would do well to consider whether the pleading would survive the sort of analysis the 6th Circuit used here.
Sunday, June 28, 2009
5th Circuit: Need "Fixed" Product Design to Invoke DJ Jurisdiction in Trade Dress Dispute
On May 8, the 5th Circuit affirmed the dismissal of a declaratory judgment action concerning the trade dress of a bottom-dump truck trailer design. In Vantage Trailers, Inc. v. Beall Corp., No. 08-21039 (5th Cir. May 8, 2009), the defendant Beall owned a registered trademark for the design of its bottom-dump trailer. It learned that its rival, Vantage, had begun to manufacture and offer to sell a competing bottom-dump trailer, and so wrote Vantage a nasty letter accusing the new trailer design of trade dress infringement. Vantage sued for a declaration of noninfringement.
The 5th Circuit, however, pointed out that during the litigation Vantage had made certain modifications to the external configuration of the trailers. During this period, Vantage also sent one of its customers different depictions of the trailer. Based primarily on these facts, the 5th Circuit concluded that Vantage was thus “not immediately prepared to manufacture and sell trailers at the time it filed suit.” As a consequence, the courts entertaining the dispute would be unable to “compare [the shape of Vantage’s trailers] against that of Beall’s trailers” to determine whether trade dress infringement existed. Citing two patent DJ decisions (one from the Federal Circuit and a much older one from the 7th Circuit), the 5th Circuit held that Vantage “failed to meet its burden to show that its design was substantially fixed as to the potentially infringing elements, i.e., the appearance of the trailers, at the time of suit” (emphasis added), and therefore affirmed dismissal of the declaratory judgment action for lack of an immediate and real controversy.
The 5th Circuit, however, pointed out that during the litigation Vantage had made certain modifications to the external configuration of the trailers. During this period, Vantage also sent one of its customers different depictions of the trailer. Based primarily on these facts, the 5th Circuit concluded that Vantage was thus “not immediately prepared to manufacture and sell trailers at the time it filed suit.” As a consequence, the courts entertaining the dispute would be unable to “compare [the shape of Vantage’s trailers] against that of Beall’s trailers” to determine whether trade dress infringement existed. Citing two patent DJ decisions (one from the Federal Circuit and a much older one from the 7th Circuit), the 5th Circuit held that Vantage “failed to meet its burden to show that its design was substantially fixed as to the potentially infringing elements, i.e., the appearance of the trailers, at the time of suit” (emphasis added), and therefore affirmed dismissal of the declaratory judgment action for lack of an immediate and real controversy.
The War of 1404 Continues
The Federal Circuit recently issued two precedential orders concerning transfers under 28 U.S.C. § 1404(a). Both concerned E.D. Tex. cases.
In In re Volkswagen of America, Inc., No. Misc. 897 (Fed. Cir. May 22, 2009), the court denied a writ of mandamus that sought to overturn the E.D.Tex. court's refusal to transfer two patent infringement cases (based on the same patents) brought by a Texas company against many, many auto manufacturers located around the world. In a short order, the court agreed with the district court that it made sense to try such a case in one district. Apparently the Federal Circuit viewed the E.D. Tex. as good as any other district for that purpose.
In In re Genentech Inc. and Biogen, Inc., No. Misc. 901 (Fed. Cir. May 22, 2009), however, the court granted the writ of mandamus and ordered the E.D. Tex. to transfer a patent suit brought by a German company against a San Diego company and a San Francisco company to San Francisco. In a lengthier discussion, the Federal Circuit explained that the district court made several legal errors in its convenience analysis.
In In re Volkswagen of America, Inc., No. Misc. 897 (Fed. Cir. May 22, 2009), the court denied a writ of mandamus that sought to overturn the E.D.Tex. court's refusal to transfer two patent infringement cases (based on the same patents) brought by a Texas company against many, many auto manufacturers located around the world. In a short order, the court agreed with the district court that it made sense to try such a case in one district. Apparently the Federal Circuit viewed the E.D. Tex. as good as any other district for that purpose.
In In re Genentech Inc. and Biogen, Inc., No. Misc. 901 (Fed. Cir. May 22, 2009), however, the court granted the writ of mandamus and ordered the E.D. Tex. to transfer a patent suit brought by a German company against a San Diego company and a San Francisco company to San Francisco. In a lengthier discussion, the Federal Circuit explained that the district court made several legal errors in its convenience analysis.
Wednesday, November 12, 2008
5th Circuit's en banc decision on section 1404(a) transfers in In re VW
In this much anticipated decision, the en banc court has directed the E.D. Tex. to transfer this car crash case, which had the barest connection, if any, to that district, to the N.D. Tex., Dallas Division.
For those who don't want to wade through 37 pages of majority and dissenting opinions, it looks to me that this decision will be as relevant to patent cases as the now-vacated prior panel opinion would have been. How the E.D. Tex. judges will APPLY the case, however, will certainly be an interesting question. As with the prior panel's opinion, the en banc decision:
For those who don't want to wade through 37 pages of majority and dissenting opinions, it looks to me that this decision will be as relevant to patent cases as the now-vacated prior panel opinion would have been. How the E.D. Tex. judges will APPLY the case, however, will certainly be an interesting question. As with the prior panel's opinion, the en banc decision:
- said that the oft-repeated concept of the "weight given to a plaintiff's choice of forum" simply means that the movant has the burden of proof to show "good cause" for transfer, and no more than that.
- held that under 1404(a), "good cause" for transfer means "when the transferee forum is clearly more convenient, a transfer should be ordered."
- said that a court should NOT completely discount that the documents and physical evidence are located outside the district simply because of "advances in copying technology and information storage."
- re-affirmed the 5th Circuit rule of thumb that where witnesses reside more than 100 miles from the court, the inconvenience to them increases as the distance beyond 100 miles increases.
Perhaps most importantly, the court discounted that the denizens of Marshall may have an interest in the case simply because the product is available there. The en banc court reasoned that such a concept could apply "virtually to any judicial district or division in the United States."
Wednesday, April 09, 2008
Two interesting 11th Circuit decisions (by the same panel!); ALSO, Several Posts that Blogger deleted during a 7-month period from 2007-08
The issues the 11th Circuit addressed in two interesting recent cases included progressive encroachment, fraud on the PTO in obtaining registration, metatags, and the application of the Supreme Court's decision in the recent patent case eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) to trademark claims.
In Angel Flight of Georgia, Inc. v. Angel Flight America, Inc., No. 07-11460 (11th Cir. Apr. 4, 2008), the court affirmed the district court's rejection of laches and acquiescence defenses on the facts in the case because it found progressive encroachment (the defendant had recently greatly expanded its use of plaintiff's mark in plaintiff's territory) and resulting inevitable confusion.
The Angel Flight court also held that if a person falsely states in a section 1(a) affidavit that no other person has the right to use the mark, but knows that others with rights are in fact using it, then the registration is subject to cancellation for fraud.
In the second case, North American Medical Corp. v. Axiom Worldwide, Inc., No. 07-11574 (11th Cir. Apr. 7, 2008) the court found that use of a competitor's trademarks in metatags would constitute infringement. In this case, the use of the plaintiff's marks in metatags, for some reason, were not fully hidden, but actually appeared in the blurb describing the defendant's website in the Google search results listing. (I don't know enough about computer programming or the way Google searches the web to know why that would happen -- I thought that metatags didn't show up at all unless you actively searched the source code for particular webpages.) Anyway, the court held that this went beyond "initial interest confusion" (which it did not accept or reject as a basis for liability in the 11th Circuit) and caused instead a likelihood of "source confusion" -- which it differentiated from initial interest confusion because "source confusion" cannot be dispelled simply by taking a closer look, as initial interest confusion can be.
Despite affirming the liability aspect of this preliminary injunction appeal, the North American Medical court vacated the preliminary injunction based on eBay. Ruling that eBay's rejection of broad rules either pro- or anti-injunction "is applicable to the instant case," the Court held that eBay wasn't limited to patent law, and it wasn't limited to permanent injunctions. The Court remanded to the district court to determine whether the familiar "presumption of irreparable harm" is one of those general rules that eBay prohibits and, if so, to take evidence on whether irreparable harm was likely to occur absent an injunction. I believe that this is the most explicit appellate discussion to date on whether eBay applies to trademark law. (I believe it does, as I wrote in this article.) It also held that eBay, which concerned permanent injunctions, applies equally to preliminary injunction cases (which,, I also predicted in my article).
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10th Circuit decision regarding VAIL and 1-800-SKI-VAIL
The 10th Circuit, in a 2-1 decision, yesterday affirmed a district court ruling, after a bench trial, that the defendants' 1-800-SKI-VAIL toll-free number for Vail, Colorado related marketing services does not infringe the plaintiff's VAIL mark for ski resort services. Vail Assocs., Inc. v. Vend-Tel-Co., No. 05-1058 (10th Cir. Feb. 7, 2008). I don't think this opinion announced any significant legal rules, but rather was more fact-based.
The opinions are kind of analytical messes, in my view. I had to read it through twice to figure out exactly what the analysis was. My conclusion is that the majority was persuaded that 1-800-SKI-VAIL referred to VAIL and skiing descriptively, not as a mark for resort services, although section 1115(b)(4) and the phrase "fair, descriptive use" are never mentioned anywhere in the opinion. The majority then analyzed the evidence on the likelihood of confusion factors, and found no clear errors on any of these factors based on the evidence at trial. Presumably, this can be rationalized as determining whether the use was "fair" even if it was descriptive.
The dissent also focused on the likelihood of confusion factors, but came to the opposite conclusion. The majority, however, repeatedly chided the dissent for blowing off the "clearly erroneous" standard of review.
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2d Circuit decision re whether 3rd party proposing TM to a company "used" proposed mark
This recent 2d Circuit case may be useful to companies who receive unsolicited "suggestions" from third parties about services, products, or marks.
A guy (hereinafter, the "guy") sent several credit card companies a proposal for personalized credit cards with the cardholder's picture on it. The guy proposed using the tagline "My Life, My Card" in connection with them. None of the companies accepted the guy's proposal, but around the same time, American Express's ad agency independently came up with a theme for some ads where celebrities talk about how they use their AmEx cards. The ad agency proposed using the slogan "MY LIFE. MY CARD." with the ad campaign.
When AmEx began airing the ads, a legal tussle broke out.
The Second Circuit, in American Express Co. v. Goetz, No. 06-2184-cv (2d Cir. Feb. 4, 2008), held that the guy had not "used" the slogan as a trademark. It cited McCarthy and a line of cases dealing with ad agencies whose business is to suggest ad campaigns to others. These cases hold that the ad agencies don't actually "use" the suggested marks to identify their services. Instead, they propose that others use it. Rather than a mark, it's simply the ad agencies' creative work (which may, in certain instances, be subject to copyright protection). So here, the guy was out of luck because he didn't "use" the mark to identify his own business.
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Puzzling 9th Circuit Decision
Wow -- there's really been a spate of holiday season trademark decisions. Well, they do make great stocking stuffers!
The 9th Circuit today issued an especially puzzling opinion. In Applied Information Sciences Corp. v. eBay, Inc., No. 05-56123 (Dec. 28, 2007), "the district court granted eBay's motion [for summary judgment] on the ground that AIS does not have a valid, protected interest in the mark." The 9th Circuit did not mention whether eBay's motion concerned any other issues.
The 9th Circuit held that AIS did have a valid, protected interest in its mark, but then affirmed the grant of summary judgment in eBay's favor anyway "because in opposing eBay's motion for summary judgment AIS failed to produce any admissible evidence tending to show a likelihood of confusion, or even address any of the Sleekcraft factors."
So here's the confusing part:
(a) did eBay's motion also contend that there was no genuine issue of material fact on likelihood of confusion (the 9th Circuit didn't say); or
-- and this next possibility is more troubling --
(b) did eBay's motion not also contend that there was no likelihood of confusion?
If it's (b), why was AIS supposed to put in evidence that there was a likelihood of confusion if the motion concerned validity and protectibility? Is the implicit, unstated rationale based upon the sometimes-cited-but-more-often-forgotten burden-shifting under rule 56? Specifically, some cases hold that where the moving party does not bear the burden of proof, and it moves for summary judgment on less than all elements of the nonmoving party's claim, the moving party with the burden of proof is required to come forward with evidence on each element of its claim.
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4th Cir.: Foreign Applicants May be Subpoenaed to Travel to the US and Testify in TTAB Proceedings
In a 2-1 decision, the 4th Circuit today held that a foreign trademark applicant with no real presence whatsoever in the US may be compelled by a subpoena under 35 U.S.C. § 24 to provide rule 30(b)(6) testimony in the E.D. Va. (because the PTO is located there). This statute empowers district courts to issue subpoenas in aid of PTO proceedings "for any witness residing or being within such district."
The majority in Rosenruist-Gestao E Servicos LDA v. Virgin Enterprises Ltd., No. 06-1588 (Dec. 27, 2007), based its ruling primarily on the ground that nothing in 35 U.S.C. § 24 limits the term "witness" to real people, and so it applies to corporations if they are the "witness." Due to a technicality in the procedural posture of the case, the majority expressly declined to reach the foreign applicant's argument that it didn't qualify as "residing or being within such district." That didn't stop the majority, however, from issuing a one-line footnote -- which it admitted was dictum -- suggesting that the mere act of applying for a registration satisfies the "residing or being within such district" requirement.
The dissent -- which I found pretty persuasive -- really took the majority to task for blowing off the PTO's interpretation (in the TBMP) of the limited reach of subpoena power in inter partes proceedings, as well as the majority's use of procedural technicalities to dodge the issue of whether the applicant, solely by virtue of applying for a registration, thereby rendered itself "residing or being within [the E.D. Va.]" The dissent also lamented that the majority ignored international comity concerns.
By the way, this case would appear fully to apply to inter partes patent proceedings too.
If the applicant has the $$, this decision would seem a likely candidate for en banc rehearing.
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3d Cir. Decision re: Trade Dress and Store Brand Equivalents Products
The Third Circuit recently issued a fairly lengthy decision concerning how close the packaging of store brand equivalent products can come in mimicking brand name products.
The decision in McNeil Nutritionals, LLC v. Heartland Sweeteners, LLC, No. 07-2644 (Dec. 24, 2007) came on an appeal of an order denying McNeil Nutritionals' motion for a preliminary injunction against several store brand equivalents of SPLENDA sweetener. Although the Third Circuit's analysis is largely turned on the specific facts in the case, it did reverse-in-part as to certain of the store brands manufactured by Heartland, largely on its assessment of the prominence of the logo and name of the store itself on the package. The Court acknowledged that, "[a]rguably under our holding, store brands can 'get away' with a little more similarity than other defendants' products when they prominently display a well-known label, i.e., a store-specific signature . . . ." (Slip op. at 39.) The Court suggested, however, that this was in part a consequence of the fact that -- at least with respect to stores that use their logos prominently in the store and on other store-brand products -- consumers are familiar enough with the store logo that when they see it prominently displayed on a package that has some similarities with the national brand, they can still tell the difference. (Id.)
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9th Circuit: atty's fees UNavailable in counterfeiting case where statutory damages elected!
If a prevailing plaintiff in a counterfeiting case elects statutory damages under 15 USC § 1117(c), does he qualify for attorney's fees too under § 1117(b)? Not in the 9th Circuit anymore, according to K & N Engineering, Inc. v. Bulat, No. 06-55393 (9th Cir. Dec. 18, 2007).
The court reasoned as follows: actual damages and/or defendant's profits are available under § 1117(a). Section 1117(b) says that counterfeiting plaintiffs get "three times such damages or profits, . . . together with a reasonable attorney's fee." Section 1117(c) allows the prevailing counterfeiting plaintiff to "elect . . . instead of actual damages and profits . . . , an award of statutory damages." Section 1117(c) doesn't mention attorney's fees, so attorney's fees under § 1117(b) aren't available if a plaintiff chooses statutory damages under § 1117(c). (The court didn't say whether the plaintiff could still argue it gets attorney's fees under the "exceptional case" aspect of § 1117(a).)
To me, this makes no sense. Section 1117(b) applies to counterfeiting cases. It provides for treble damages/profits AND attorney's fees. Section 1117(c) says that a plaintiff can pick statutory damages "instead of actual damages and profits under subsection (a)." It does not say "instead of actual damages and profits and attorney's fees." It doesn't explicitly purport to provide an alternative to all of subsection (b), just to "actual damages and profits under subsection (a)." Automatic attorney's fees aren't damages, aren't profits, and aren't in subsection (a). Thus, the more natural reading would seem to be that the prevailing counterfeiting plaintiff can choose between actual damages under subsection (a) or statutory damages under subsection (c), and still get automatic fees under subsection (b).
I don't know if other circuits have dealt with this issue, but the 9th Circuit certainly didn't cite any in support of this surprising result.
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11th Circuit decision concerning post-sale confusion and misuse of another's TM on hidden parts
Is it infringement when a company uses someone else's trademark on an internal part that is ordinarily hidden from view?
The 11th Circuit recently rejected such a claim. In Custom Mfg. and Eng'g, Inc. v. Midway Servs., Inc., No. 05-12906 (Nov. 21, 2007), the product was a water meter reading system marketed to apartment complex owners. The defendant used the plaintiff's "Custom Manufacturing" mark on an internal circuit board for the meter. The plaintiff's mark was visible only upon removing an opaque plastic housing unit that fully enclosed the circuit board. To borrow from (and distinguish) a very familiar product, while there may in fact have been something analogous to "Intel" on the "Inside," potential buyers and users would not know that there was "Custom Manufacturing" inside without disassembling the unit.
The plaintiff argued that post-sale confusion was likely, because repair technicians or inspecting fire marshals would see the plaintiff's mark. The 11th Circuit rejected this argument, not for legal insufficiency, but for lack of proof. It held that the plaintiff had failed to proffer sufficient evidence "that it was likely that third-party technicians would view and be confused as to the origin of the circuit boards." The Court viewed as an "antecedent question" the issue of whether anyone was "likely to see the circuit boards at all."
The lesson here would appear to be that it is important, when arguing that non-external misuse of a mark is infringing, to present proof that the relevant user or purchaser group would (or did) actually see the misused trademark. Without such proof, the alleged infringement would be, as the 11th Circuit quipped, "like a proverbial tree falling in the forest" with no one around to hear it.
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4th Cir. decision allowing parodies may hurt well-known marks
In a decision that could hurt owners of well-known or iconic marks, the Fourth Circuit recently handed Louis Vuitton a defeat in its attempt to stop a pet products company from selling a dog chew toy in the shape of a handbag and labeled CHEWY VUITON. The Court’s legal rationale concerned how parodies fit within the statutes that govern trademark law. Although Fourth Circuit rulings are binding only in federal courts in Maryland, Virginia, West Virginia, North Carolina, and South Carolina, this decision, if followed by other courts, could have a significant impact on the future ability of the owners of well-known marks to enforce their rights against parodic uses.
In Louis Vuitton Malletier, S.A. v. Haute Diggity Dog, LLC, No. 06-2267 (4th Cir. Nov. 13, 2007), Louis Vuitton had sued Haute Diggity Dog—which sells a number of dog toys and beds with names that spoof well-known luxury brands, including Chewnel No. 5, Dog Perignon, Sniffany, and Furcedes—for trademark infringement under the Lanham Act, 15 U.S.C. § 1114, and trademark dilution under the recently-amended Federal Trademark Dilution Act (“FTDA”), 15 U.S.C. § 1125(c).
Haute Diggity Dog asserted that its CHEWY VUITON chew toy was merely a “parody” of the LOUIS VUITTON mark, and therefore did not infringe or dilute the LOUIS VUITTON mark. The district court agreed, granting summary judgment in favor of Haute Diggity Dog, based on the observation that successful parodies must, by definition, both call to mind the object of the parody and simultaneously differentiate the parody from the object of the parody.
The Fourth Circuit largely agreed with this rationale. In its analysis, the Fourth Circuit did not regard “parody” as a per se defense to claims under the Lanham Act or the FTDA. Instead, it stated that, once a challenged use is found to be a “parody,” that finding must influence the way the court assesses the multiple “likelihood of confusion” factors commonly used under the Lanham Act and the multiple dilution factors expressly set forth in the FTDA.
To qualify as a parody under the Fourth Circuit’s test, the parodic use must satisfy three elements. It must: (1) “convey just enough of the original design to allow the consumer to appreciate the point of the parody”; (2) “communicate some articulable element of satire, ridicule, joking, or amusement”; and (3) be different enough so that it also “communicates that it is not [the original] product.”
One of the more significant aspects of the Fourth Circuit’s analysis was its remarks about how the “fame and popularity” of the original mark weighs in the legal analysis. In infringement and dilution cases not involving parodies, the “fame and popularity” of the original mark weighs in favor of a finding of infringement or dilution. But under the Fourth Circuit’s analysis, “the opposite may be true when a legitimate claim of parody is involved.”
Applying this reverse rule, the Fourth Circuit held that the “Chewy Vuiton” parodic use meant that consumers would be unlikely to be confused because they would “readily recognize” it as a parody. As to dilution, the Court similarly held that the stronger the brand owner’s mark, the “more likely that a parody will not impair the distinctiveness of the mark.”
This analysis would appear to punish a brand owner's success in promoting its mark by making the brand owner more susceptible to parodies and other attempts to capitalize on the brand owner's hard-won goodwill through impugning, mocking, or joking. That result itself may appear to represent a “parody” of the Lanham Act and, especially, the FTDA, which are designed to give broader protection to brand owners in direct proportion to their success in promoting their marks.
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5th Cir. decision ordering E.D. Tex. to transfer a case under 1404(a)
Yesterday the Fifth Circuit sent a shot across the bow of the E.D. Tex. concerning its reluctance to transfer cases. Although it was a products liability case, I read it as holding implications for -- and maybe even silently directed at -- patent cases there, as well.
In re Volkswagen of Am., Inc., No. 07-40058 (5th Cir. Oct. 24, 2007) involved a Dallas (i.e., N.D. Tex.) car wreck that spawned a product liability case against VW. In an earlier unpublished panel decision, the 5th Circuit rejected a petition for mandamus to order the transfer to Dallas. On rehearing, the Court flip-flopped, and ordered transfer.
The Court went through the governing 1404(a) transfer factors pretty thoroughly. Some of the parts of the decision I thought were notable were:
• The Court said that the oft-repeated concept of the "weight given to a plaintiff's choice of forum" simply means that the movant has the burden of proof to show "good cause" for transfer, and no more than that.
• Under 1404(a), "good cause" for transfer means "when the transferee forum is clearly more convenient, a transfer should be ordered."
• A court should NOT completely discount that the documents and physical evidence are located outside the district simply because of "advances in copying technology and information storage." (Maybe the advent of "Beam me up, Scottie" technology might require future re-visiting of this notion).
• Where witnesses reside more than 100 miles from the court, the inconvenience to them increases as the distance beyond 100 miles increases.
But the biggest hint to me that the Fifth Circuit may have been thinking of patent cases too was its discussion of the citizenry of Marshall's interest in the case. The E.D. had said they had a interest in a case involving allegedly defective VWs because VWs are available in the district. The 5th Circuit said that this analysis "eviscerates" the public interest factor where the relevant events took place, and the documents and witnesses are located, outside the district. The Court then ended re-emphasizing this point:
Since the Federal Circuit looks to regional circuit precedents in reviewing challenges to 1404(a) decisions, it would appear that this last point will perhaps be a significant factor in future venue disputes in E.D. Tex. patent cases. Arguably, it may even apply more forcefully in patent cases, where the E.D. Tex.'s interest in IP rights is more theoretical than its interest in a case involving an allegedly defective car available there.
In Angel Flight of Georgia, Inc. v. Angel Flight America, Inc., No. 07-11460 (11th Cir. Apr. 4, 2008), the court affirmed the district court's rejection of laches and acquiescence defenses on the facts in the case because it found progressive encroachment (the defendant had recently greatly expanded its use of plaintiff's mark in plaintiff's territory) and resulting inevitable confusion.
The Angel Flight court also held that if a person falsely states in a section 1(a) affidavit that no other person has the right to use the mark, but knows that others with rights are in fact using it, then the registration is subject to cancellation for fraud.
In the second case, North American Medical Corp. v. Axiom Worldwide, Inc., No. 07-11574 (11th Cir. Apr. 7, 2008) the court found that use of a competitor's trademarks in metatags would constitute infringement. In this case, the use of the plaintiff's marks in metatags, for some reason, were not fully hidden, but actually appeared in the blurb describing the defendant's website in the Google search results listing. (I don't know enough about computer programming or the way Google searches the web to know why that would happen -- I thought that metatags didn't show up at all unless you actively searched the source code for particular webpages.) Anyway, the court held that this went beyond "initial interest confusion" (which it did not accept or reject as a basis for liability in the 11th Circuit) and caused instead a likelihood of "source confusion" -- which it differentiated from initial interest confusion because "source confusion" cannot be dispelled simply by taking a closer look, as initial interest confusion can be.
Despite affirming the liability aspect of this preliminary injunction appeal, the North American Medical court vacated the preliminary injunction based on eBay. Ruling that eBay's rejection of broad rules either pro- or anti-injunction "is applicable to the instant case," the Court held that eBay wasn't limited to patent law, and it wasn't limited to permanent injunctions. The Court remanded to the district court to determine whether the familiar "presumption of irreparable harm" is one of those general rules that eBay prohibits and, if so, to take evidence on whether irreparable harm was likely to occur absent an injunction. I believe that this is the most explicit appellate discussion to date on whether eBay applies to trademark law. (I believe it does, as I wrote in this article.) It also held that eBay, which concerned permanent injunctions, applies equally to preliminary injunction cases (which,
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10th Circuit decision regarding VAIL and 1-800-SKI-VAIL
The 10th Circuit, in a 2-1 decision, yesterday affirmed a district court ruling, after a bench trial, that the defendants' 1-800-SKI-VAIL toll-free number for Vail, Colorado related marketing services does not infringe the plaintiff's VAIL mark for ski resort services. Vail Assocs., Inc. v. Vend-Tel-Co., No. 05-1058 (10th Cir. Feb. 7, 2008). I don't think this opinion announced any significant legal rules, but rather was more fact-based.
The opinions are kind of analytical messes, in my view. I had to read it through twice to figure out exactly what the analysis was. My conclusion is that the majority was persuaded that 1-800-SKI-VAIL referred to VAIL and skiing descriptively, not as a mark for resort services, although section 1115(b)(4) and the phrase "fair, descriptive use" are never mentioned anywhere in the opinion. The majority then analyzed the evidence on the likelihood of confusion factors, and found no clear errors on any of these factors based on the evidence at trial. Presumably, this can be rationalized as determining whether the use was "fair" even if it was descriptive.
The dissent also focused on the likelihood of confusion factors, but came to the opposite conclusion. The majority, however, repeatedly chided the dissent for blowing off the "clearly erroneous" standard of review.
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2d Circuit decision re whether 3rd party proposing TM to a company "used" proposed mark
This recent 2d Circuit case may be useful to companies who receive unsolicited "suggestions" from third parties about services, products, or marks.
A guy (hereinafter, the "guy") sent several credit card companies a proposal for personalized credit cards with the cardholder's picture on it. The guy proposed using the tagline "My Life, My Card" in connection with them. None of the companies accepted the guy's proposal, but around the same time, American Express's ad agency independently came up with a theme for some ads where celebrities talk about how they use their AmEx cards. The ad agency proposed using the slogan "MY LIFE. MY CARD." with the ad campaign.
When AmEx began airing the ads, a legal tussle broke out.
The Second Circuit, in American Express Co. v. Goetz, No. 06-2184-cv (2d Cir. Feb. 4, 2008), held that the guy had not "used" the slogan as a trademark. It cited McCarthy and a line of cases dealing with ad agencies whose business is to suggest ad campaigns to others. These cases hold that the ad agencies don't actually "use" the suggested marks to identify their services. Instead, they propose that others use it. Rather than a mark, it's simply the ad agencies' creative work (which may, in certain instances, be subject to copyright protection). So here, the guy was out of luck because he didn't "use" the mark to identify his own business.
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Puzzling 9th Circuit Decision
Wow -- there's really been a spate of holiday season trademark decisions. Well, they do make great stocking stuffers!
The 9th Circuit today issued an especially puzzling opinion. In Applied Information Sciences Corp. v. eBay, Inc., No. 05-56123 (Dec. 28, 2007), "the district court granted eBay's motion [for summary judgment] on the ground that AIS does not have a valid, protected interest in the mark." The 9th Circuit did not mention whether eBay's motion concerned any other issues.
The 9th Circuit held that AIS did have a valid, protected interest in its mark, but then affirmed the grant of summary judgment in eBay's favor anyway "because in opposing eBay's motion for summary judgment AIS failed to produce any admissible evidence tending to show a likelihood of confusion, or even address any of the Sleekcraft factors."
So here's the confusing part:
(a) did eBay's motion also contend that there was no genuine issue of material fact on likelihood of confusion (the 9th Circuit didn't say); or
-- and this next possibility is more troubling --
(b) did eBay's motion not also contend that there was no likelihood of confusion?
If it's (b), why was AIS supposed to put in evidence that there was a likelihood of confusion if the motion concerned validity and protectibility? Is the implicit, unstated rationale based upon the sometimes-cited-but-more-often-forgotten burden-shifting under rule 56? Specifically, some cases hold that where the moving party does not bear the burden of proof, and it moves for summary judgment on less than all elements of the nonmoving party's claim, the moving party with the burden of proof is required to come forward with evidence on each element of its claim.
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4th Cir.: Foreign Applicants May be Subpoenaed to Travel to the US and Testify in TTAB Proceedings
In a 2-1 decision, the 4th Circuit today held that a foreign trademark applicant with no real presence whatsoever in the US may be compelled by a subpoena under 35 U.S.C. § 24 to provide rule 30(b)(6) testimony in the E.D. Va. (because the PTO is located there). This statute empowers district courts to issue subpoenas in aid of PTO proceedings "for any witness residing or being within such district."
The majority in Rosenruist-Gestao E Servicos LDA v. Virgin Enterprises Ltd., No. 06-1588 (Dec. 27, 2007), based its ruling primarily on the ground that nothing in 35 U.S.C. § 24 limits the term "witness" to real people, and so it applies to corporations if they are the "witness." Due to a technicality in the procedural posture of the case, the majority expressly declined to reach the foreign applicant's argument that it didn't qualify as "residing or being within such district." That didn't stop the majority, however, from issuing a one-line footnote -- which it admitted was dictum -- suggesting that the mere act of applying for a registration satisfies the "residing or being within such district" requirement.
The dissent -- which I found pretty persuasive -- really took the majority to task for blowing off the PTO's interpretation (in the TBMP) of the limited reach of subpoena power in inter partes proceedings, as well as the majority's use of procedural technicalities to dodge the issue of whether the applicant, solely by virtue of applying for a registration, thereby rendered itself "residing or being within [the E.D. Va.]" The dissent also lamented that the majority ignored international comity concerns.
By the way, this case would appear fully to apply to inter partes patent proceedings too.
If the applicant has the $$, this decision would seem a likely candidate for en banc rehearing.
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3d Cir. Decision re: Trade Dress and Store Brand Equivalents Products
The Third Circuit recently issued a fairly lengthy decision concerning how close the packaging of store brand equivalent products can come in mimicking brand name products.
The decision in McNeil Nutritionals, LLC v. Heartland Sweeteners, LLC, No. 07-2644 (Dec. 24, 2007) came on an appeal of an order denying McNeil Nutritionals' motion for a preliminary injunction against several store brand equivalents of SPLENDA sweetener. Although the Third Circuit's analysis is largely turned on the specific facts in the case, it did reverse-in-part as to certain of the store brands manufactured by Heartland, largely on its assessment of the prominence of the logo and name of the store itself on the package. The Court acknowledged that, "[a]rguably under our holding, store brands can 'get away' with a little more similarity than other defendants' products when they prominently display a well-known label, i.e., a store-specific signature . . . ." (Slip op. at 39.) The Court suggested, however, that this was in part a consequence of the fact that -- at least with respect to stores that use their logos prominently in the store and on other store-brand products -- consumers are familiar enough with the store logo that when they see it prominently displayed on a package that has some similarities with the national brand, they can still tell the difference. (Id.)
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9th Circuit: atty's fees UNavailable in counterfeiting case where statutory damages elected!
If a prevailing plaintiff in a counterfeiting case elects statutory damages under 15 USC § 1117(c), does he qualify for attorney's fees too under § 1117(b)? Not in the 9th Circuit anymore, according to K & N Engineering, Inc. v. Bulat, No. 06-55393 (9th Cir. Dec. 18, 2007).
The court reasoned as follows: actual damages and/or defendant's profits are available under § 1117(a). Section 1117(b) says that counterfeiting plaintiffs get "three times such damages or profits, . . . together with a reasonable attorney's fee." Section 1117(c) allows the prevailing counterfeiting plaintiff to "elect . . . instead of actual damages and profits . . . , an award of statutory damages." Section 1117(c) doesn't mention attorney's fees, so attorney's fees under § 1117(b) aren't available if a plaintiff chooses statutory damages under § 1117(c). (The court didn't say whether the plaintiff could still argue it gets attorney's fees under the "exceptional case" aspect of § 1117(a).)
To me, this makes no sense. Section 1117(b) applies to counterfeiting cases. It provides for treble damages/profits AND attorney's fees. Section 1117(c) says that a plaintiff can pick statutory damages "instead of actual damages and profits under subsection (a)." It does not say "instead of actual damages and profits and attorney's fees." It doesn't explicitly purport to provide an alternative to all of subsection (b), just to "actual damages and profits under subsection (a)." Automatic attorney's fees aren't damages, aren't profits, and aren't in subsection (a). Thus, the more natural reading would seem to be that the prevailing counterfeiting plaintiff can choose between actual damages under subsection (a) or statutory damages under subsection (c), and still get automatic fees under subsection (b).
I don't know if other circuits have dealt with this issue, but the 9th Circuit certainly didn't cite any in support of this surprising result.
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11th Circuit decision concerning post-sale confusion and misuse of another's TM on hidden parts
Is it infringement when a company uses someone else's trademark on an internal part that is ordinarily hidden from view?
The 11th Circuit recently rejected such a claim. In Custom Mfg. and Eng'g, Inc. v. Midway Servs., Inc., No. 05-12906 (Nov. 21, 2007), the product was a water meter reading system marketed to apartment complex owners. The defendant used the plaintiff's "Custom Manufacturing" mark on an internal circuit board for the meter. The plaintiff's mark was visible only upon removing an opaque plastic housing unit that fully enclosed the circuit board. To borrow from (and distinguish) a very familiar product, while there may in fact have been something analogous to "Intel" on the "Inside," potential buyers and users would not know that there was "Custom Manufacturing" inside without disassembling the unit.
The plaintiff argued that post-sale confusion was likely, because repair technicians or inspecting fire marshals would see the plaintiff's mark. The 11th Circuit rejected this argument, not for legal insufficiency, but for lack of proof. It held that the plaintiff had failed to proffer sufficient evidence "that it was likely that third-party technicians would view and be confused as to the origin of the circuit boards." The Court viewed as an "antecedent question" the issue of whether anyone was "likely to see the circuit boards at all."
The lesson here would appear to be that it is important, when arguing that non-external misuse of a mark is infringing, to present proof that the relevant user or purchaser group would (or did) actually see the misused trademark. Without such proof, the alleged infringement would be, as the 11th Circuit quipped, "like a proverbial tree falling in the forest" with no one around to hear it.
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4th Cir. decision allowing parodies may hurt well-known marks
In a decision that could hurt owners of well-known or iconic marks, the Fourth Circuit recently handed Louis Vuitton a defeat in its attempt to stop a pet products company from selling a dog chew toy in the shape of a handbag and labeled CHEWY VUITON. The Court’s legal rationale concerned how parodies fit within the statutes that govern trademark law. Although Fourth Circuit rulings are binding only in federal courts in Maryland, Virginia, West Virginia, North Carolina, and South Carolina, this decision, if followed by other courts, could have a significant impact on the future ability of the owners of well-known marks to enforce their rights against parodic uses.
In Louis Vuitton Malletier, S.A. v. Haute Diggity Dog, LLC, No. 06-2267 (4th Cir. Nov. 13, 2007), Louis Vuitton had sued Haute Diggity Dog—which sells a number of dog toys and beds with names that spoof well-known luxury brands, including Chewnel No. 5, Dog Perignon, Sniffany, and Furcedes—for trademark infringement under the Lanham Act, 15 U.S.C. § 1114, and trademark dilution under the recently-amended Federal Trademark Dilution Act (“FTDA”), 15 U.S.C. § 1125(c).
Haute Diggity Dog asserted that its CHEWY VUITON chew toy was merely a “parody” of the LOUIS VUITTON mark, and therefore did not infringe or dilute the LOUIS VUITTON mark. The district court agreed, granting summary judgment in favor of Haute Diggity Dog, based on the observation that successful parodies must, by definition, both call to mind the object of the parody and simultaneously differentiate the parody from the object of the parody.
The Fourth Circuit largely agreed with this rationale. In its analysis, the Fourth Circuit did not regard “parody” as a per se defense to claims under the Lanham Act or the FTDA. Instead, it stated that, once a challenged use is found to be a “parody,” that finding must influence the way the court assesses the multiple “likelihood of confusion” factors commonly used under the Lanham Act and the multiple dilution factors expressly set forth in the FTDA.
To qualify as a parody under the Fourth Circuit’s test, the parodic use must satisfy three elements. It must: (1) “convey just enough of the original design to allow the consumer to appreciate the point of the parody”; (2) “communicate some articulable element of satire, ridicule, joking, or amusement”; and (3) be different enough so that it also “communicates that it is not [the original] product.”
One of the more significant aspects of the Fourth Circuit’s analysis was its remarks about how the “fame and popularity” of the original mark weighs in the legal analysis. In infringement and dilution cases not involving parodies, the “fame and popularity” of the original mark weighs in favor of a finding of infringement or dilution. But under the Fourth Circuit’s analysis, “the opposite may be true when a legitimate claim of parody is involved.”
Applying this reverse rule, the Fourth Circuit held that the “Chewy Vuiton” parodic use meant that consumers would be unlikely to be confused because they would “readily recognize” it as a parody. As to dilution, the Court similarly held that the stronger the brand owner’s mark, the “more likely that a parody will not impair the distinctiveness of the mark.”
This analysis would appear to punish a brand owner's success in promoting its mark by making the brand owner more susceptible to parodies and other attempts to capitalize on the brand owner's hard-won goodwill through impugning, mocking, or joking. That result itself may appear to represent a “parody” of the Lanham Act and, especially, the FTDA, which are designed to give broader protection to brand owners in direct proportion to their success in promoting their marks.
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5th Cir. decision ordering E.D. Tex. to transfer a case under 1404(a)
Yesterday the Fifth Circuit sent a shot across the bow of the E.D. Tex. concerning its reluctance to transfer cases. Although it was a products liability case, I read it as holding implications for -- and maybe even silently directed at -- patent cases there, as well.
In re Volkswagen of Am., Inc., No. 07-40058 (5th Cir. Oct. 24, 2007) involved a Dallas (i.e., N.D. Tex.) car wreck that spawned a product liability case against VW. In an earlier unpublished panel decision, the 5th Circuit rejected a petition for mandamus to order the transfer to Dallas. On rehearing, the Court flip-flopped, and ordered transfer.
The Court went through the governing 1404(a) transfer factors pretty thoroughly. Some of the parts of the decision I thought were notable were:
• The Court said that the oft-repeated concept of the "weight given to a plaintiff's choice of forum" simply means that the movant has the burden of proof to show "good cause" for transfer, and no more than that.
• Under 1404(a), "good cause" for transfer means "when the transferee forum is clearly more convenient, a transfer should be ordered."
• A court should NOT completely discount that the documents and physical evidence are located outside the district simply because of "advances in copying technology and information storage." (Maybe the advent of "Beam me up, Scottie" technology might require future re-visiting of this notion).
• Where witnesses reside more than 100 miles from the court, the inconvenience to them increases as the distance beyond 100 miles increases.
But the biggest hint to me that the Fifth Circuit may have been thinking of patent cases too was its discussion of the citizenry of Marshall's interest in the case. The E.D. had said they had a interest in a case involving allegedly defective VWs because VWs are available in the district. The 5th Circuit said that this analysis "eviscerates" the public interest factor where the relevant events took place, and the documents and witnesses are located, outside the district. The Court then ended re-emphasizing this point:
The record indicates that the [car] was purchased from a location in the Dallas Division, and that Marshall, Texas, has no Volkswagen dealership. But again, the larger point is the one we emphasize: that a product is available within a given jurisdiction is insufficient to neutralize the legitimate local interest in adjudicating local disputes.
Since the Federal Circuit looks to regional circuit precedents in reviewing challenges to 1404(a) decisions, it would appear that this last point will perhaps be a significant factor in future venue disputes in E.D. Tex. patent cases. Arguably, it may even apply more forcefully in patent cases, where the E.D. Tex.'s interest in IP rights is more theoretical than its interest in a case involving an allegedly defective car available there.
Tuesday, September 18, 2007
11th Circuit decision concerning when a district court can overturn credibility determinations of magistrate judges on r&r's
In Amlong & Amlong, P.A. v. Denny's, Inc., No. 04-14499 (amended Sept. 17, 2007), the district judge had referred a sanctions motion to the magistrate judge to hold an evidentiary hearing. After hearing extensive testimony, the magistrate judge reported and recommended that the sanctions motion be denied, finding that the attorney in question did not act in bad faith. The district judge, conducting its "de novo determination" as required by 28 U.S.C. § 636(b), disagreed after reviewing the transcript of the hearing before the magistrate judge, and concluded that the testimony showed bad faith.
The 11th Circuit held that the district judge erred in rejecting the magistrate judge's implicit determination that the lawyer's testimony concerning the acts in question and the motives for them was credible. The appeals court held that "[r]ejecting credibility findings made by a magistrate judge without holding a new hearing is permissible only when there is an 'articulable basis for rejecting the magistrate's original resolution of credibility.' " Since there wasn't any such "articulable basis" here, the court reversed.
The 11th Circuit held that the district judge erred in rejecting the magistrate judge's implicit determination that the lawyer's testimony concerning the acts in question and the motives for them was credible. The appeals court held that "[r]ejecting credibility findings made by a magistrate judge without holding a new hearing is permissible only when there is an 'articulable basis for rejecting the magistrate's original resolution of credibility.' " Since there wasn't any such "articulable basis" here, the court reversed.
Saturday, August 19, 2006
3d Circuit decision on whether a TTAB decision collaterally estops a later infringement case
The Third Circuit recently decided that a district court infringement case was properly dismissed on grounds of collateral estoppel based on a prior TTAB cancellation proceeding between the parties on the same mark. The case was more notable -- at least from a trademark standpoint -- for what it DIDN'T discuss, rather than what it did discuss.
The 3d Circuit's decision in Jean Alexander Cosmetics v. L'Oreal USA, Inc., No. 05-4321 (3d Cir. Aug. 14, 2006), focused primarily on the element of collateral estoppel that requires that the issue on which collateral estoppel is sought have been "necessary to the decision" in the earlier litigation. Because the TTAB decision was based on alternative holdings, either one of which would have supported the ultimate decision, the Third Circuit engaged in an extended discussion of this issue, trying to figure out whether it preferred the position of the First Restatement of Judgments (alternative holdings can result in preclusion) or the Second Restatement (neither of alternative holdings can result in preclusion). It chose the First Restatement's position.
Oddly, the Third Circuit didn't even raise the issue of whether the TTAB decision on likelihood of confusion was identical to the issue of likelihood of confusion to be litigated in the district court infringement action. You might recall that the Second Circuit held nine years ago that there sometimes are substantial differences in the factors and facts that the TTAB considers in its cases (the TTAB does not always assess what is actually going on in the marketplace and frequently limits its analysis to what is stated on a registration or application) and what district courts consider in infringement cases (district courts, at least in the 2d Circuit, are supposed to look at what is going on in the "entire marketplace context"). See, e.g., Levy v. Kosher Overseers Ass'n of Amer., Inc., 104 F.3d 38 (2d Cir. 1997) (sorry, no link). The Levy court refused to apply collateral estoppel where the TTAB's decision didn't assess those marketplace factors.
The 3d Circuit's decision in Jean Alexander Cosmetics v. L'Oreal USA, Inc., No. 05-4321 (3d Cir. Aug. 14, 2006), focused primarily on the element of collateral estoppel that requires that the issue on which collateral estoppel is sought have been "necessary to the decision" in the earlier litigation. Because the TTAB decision was based on alternative holdings, either one of which would have supported the ultimate decision, the Third Circuit engaged in an extended discussion of this issue, trying to figure out whether it preferred the position of the First Restatement of Judgments (alternative holdings can result in preclusion) or the Second Restatement (neither of alternative holdings can result in preclusion). It chose the First Restatement's position.
Oddly, the Third Circuit didn't even raise the issue of whether the TTAB decision on likelihood of confusion was identical to the issue of likelihood of confusion to be litigated in the district court infringement action. You might recall that the Second Circuit held nine years ago that there sometimes are substantial differences in the factors and facts that the TTAB considers in its cases (the TTAB does not always assess what is actually going on in the marketplace and frequently limits its analysis to what is stated on a registration or application) and what district courts consider in infringement cases (district courts, at least in the 2d Circuit, are supposed to look at what is going on in the "entire marketplace context"). See, e.g., Levy v. Kosher Overseers Ass'n of Amer., Inc., 104 F.3d 38 (2d Cir. 1997) (sorry, no link). The Levy court refused to apply collateral estoppel where the TTAB's decision didn't assess those marketplace factors.
Wednesday, June 21, 2006
Eighth Circuit copyright decision on expert testimony and "substantial similarity" test
Can "substantial similarity" of expression be the subject of expert testimony? No, says the Eighth Circuit in The Rottlund Co. v. Pinnacle Corp., No. 05-1296 (8th Cir. June 20, 2006).
The case involved allegations that the defendant infringed plaintiff's copyrights in townhouse design plans. In a copyright case, plaintiffs must show ownership of a valid copyright (this was not at issue) and copying of protected expression. Copying of protected expression can be shown by direct evidence of copying OR indirectly by showing (a) access to the copyrighted materials (this was not at issue) and (b) substantial similarity of both (i) ideas (this was not at issue) and (ii) expression. (The three elements that were not at issue were decided in plaintiff's favor at summary judgment.)
So the real issues left for the jury were: was there direct copying; and were the defendants' works substantially similar to the expression in plaintiff's works?
The Eighth Circuit explained that to determine whether there's a substantial similarity of expression, expert opinion and "analytical dissection" (i.e., element-by-element comparison) are impermissible. Instead, substantial similarity of expression is an "intrinsic" issue: it is measured by the response of an ordinary, reasonable person.
The trial court, however, had allowed the defendants to put on an expert who testified regarding what he believed to be key differences between several individual elements of parties' townhouse layouts. He also testified several times that, in his opinion, these differences led him to the conclusion that there was "no copying." The jury apparently believed the expert, and found against the plaintiff.
The Eighth Circuit reversed and remanded for a new trial because the district court not only shouldn't have let the expert analytically dissect the individual elements of expression, but it shouldn't have entertained ANY expert testimony at all on the intrinsic issue of similarity of expression. Because that element depends on the perception of an ordinary, reasonable person, that's something the jury should decide for itself. Further, the Eighth Circuit rejected the defendant's explanation that the expert's testimony was merely rebuttal of some small amount of evidence of direct copying, saying that the expert's testimony was "unhelpful" on the "ultimate issue" of copying.
The case involved allegations that the defendant infringed plaintiff's copyrights in townhouse design plans. In a copyright case, plaintiffs must show ownership of a valid copyright (this was not at issue) and copying of protected expression. Copying of protected expression can be shown by direct evidence of copying OR indirectly by showing (a) access to the copyrighted materials (this was not at issue) and (b) substantial similarity of both (i) ideas (this was not at issue) and (ii) expression. (The three elements that were not at issue were decided in plaintiff's favor at summary judgment.)
So the real issues left for the jury were: was there direct copying; and were the defendants' works substantially similar to the expression in plaintiff's works?
The Eighth Circuit explained that to determine whether there's a substantial similarity of expression, expert opinion and "analytical dissection" (i.e., element-by-element comparison) are impermissible. Instead, substantial similarity of expression is an "intrinsic" issue: it is measured by the response of an ordinary, reasonable person.
The trial court, however, had allowed the defendants to put on an expert who testified regarding what he believed to be key differences between several individual elements of parties' townhouse layouts. He also testified several times that, in his opinion, these differences led him to the conclusion that there was "no copying." The jury apparently believed the expert, and found against the plaintiff.
The Eighth Circuit reversed and remanded for a new trial because the district court not only shouldn't have let the expert analytically dissect the individual elements of expression, but it shouldn't have entertained ANY expert testimony at all on the intrinsic issue of similarity of expression. Because that element depends on the perception of an ordinary, reasonable person, that's something the jury should decide for itself. Further, the Eighth Circuit rejected the defendant's explanation that the expert's testimony was merely rebuttal of some small amount of evidence of direct copying, saying that the expert's testimony was "unhelpful" on the "ultimate issue" of copying.
Thursday, May 11, 2006
"Advice of Counsel" Defense and Scope of Waiver of Privileges
When a defendant in a patent case (or a trademark case, for that matter) introduces evidence of communications or documents otherwise falling within some privilege in defense of a charge of willful infringement, then quite obviously that privilege is waived. The question is, how far does the waiver extend? The Federal Circuit recently issued a very clear explanation of its view concerning the scope of the waiver that necessarily flows from a defendant's disclosure that he relied on advice given by counsel.
In In re Echostar Communications Corp., Misc. Nos. 803, 805 (Fed. Cir. May 1, 2006), defendant Echostar asserted, in response to a charge of willful infringement, that it had relied on the advice given by its in-house counsel. Echostar later got additional advice from an outside law firm, but elected not to rely on it. The plaintiff, however, moved to compel and got a district court order that, because Echostar was relying on its in-house counsel's advice as a defense, it waived attorney-client privilege and attorney work-product immunity as to all communications from any counsel on that subject, whether or not it was communicated to Echostar. That last italicized bit is important, because, remember, the "advice of counsel" defense goes to the defendant's state of mind. So the district court's ruling, in essence, said that even information not communicated to the client is relevant to the client's state of mind. Yikes!
The Federal Circuit had problems with it too. They focused on work-product doctrine, since they viewed the scope of a work-product waiver as being narrower than a waiver of the attorney-client privilege. Specifically, waivers of privilege are for all privileged materials on the same subject, but a work product waiver extends only to "factual" or "non-opinion" work product on the same subject matter.
The court then broke down the scope of the work product waiver into three categories: (1) documents that themselves are a communication, like a letter or e-mail; (2) documents that discuss or memorialize a communication between the lawyer and the client, but aren't themselves communicated to the client; and (3) documents that analyze the law, the facts, trial strategy, or anything else that reflect the attorney's mental processes, but aren't sent to the client. The court explained that categories (1) & (2), since they either embody or discuss a communication to the client, do inform the client's state of mind, and are discoverable. But category (3) documents, since they aren't communication to the client, don't and aren't.
Seems about right to me. And I see no reason why this reasoning ought not to apply to trademark cases as well. Overall, a good, sensible opinion from a circuit that (at least on trademark matters), I frequently disagree with.
In In re Echostar Communications Corp., Misc. Nos. 803, 805 (Fed. Cir. May 1, 2006), defendant Echostar asserted, in response to a charge of willful infringement, that it had relied on the advice given by its in-house counsel. Echostar later got additional advice from an outside law firm, but elected not to rely on it. The plaintiff, however, moved to compel and got a district court order that, because Echostar was relying on its in-house counsel's advice as a defense, it waived attorney-client privilege and attorney work-product immunity as to all communications from any counsel on that subject, whether or not it was communicated to Echostar. That last italicized bit is important, because, remember, the "advice of counsel" defense goes to the defendant's state of mind. So the district court's ruling, in essence, said that even information not communicated to the client is relevant to the client's state of mind. Yikes!
The Federal Circuit had problems with it too. They focused on work-product doctrine, since they viewed the scope of a work-product waiver as being narrower than a waiver of the attorney-client privilege. Specifically, waivers of privilege are for all privileged materials on the same subject, but a work product waiver extends only to "factual" or "non-opinion" work product on the same subject matter.
The court then broke down the scope of the work product waiver into three categories: (1) documents that themselves are a communication, like a letter or e-mail; (2) documents that discuss or memorialize a communication between the lawyer and the client, but aren't themselves communicated to the client; and (3) documents that analyze the law, the facts, trial strategy, or anything else that reflect the attorney's mental processes, but aren't sent to the client. The court explained that categories (1) & (2), since they either embody or discuss a communication to the client, do inform the client's state of mind, and are discoverable. But category (3) documents, since they aren't communication to the client, don't and aren't.
Seems about right to me. And I see no reason why this reasoning ought not to apply to trademark cases as well. Overall, a good, sensible opinion from a circuit that (at least on trademark matters), I frequently disagree with.
Saturday, May 07, 2005
Mi jury demand es tu jury demand
The Ninth Circuit recently held that a plaintiff who didn't demand a jury trial on his trademark and trade dress infringement claims was nevertheless entitled to a jury trial on those claims under the defendant's demand for a jury trial on its counterclaims for business disparagement and false advertising, where the counterclaims were based on the alleged falsity of plaintiff's statements to customers that the defendant was infringing plaintiff's TM and trade dress rights. Whew! Long sentence! The court thought the claims and counterclaims were related enough that the plaintiff could have reasonably relied on the defendant's demand. California Scents v. Surco Prods., Inc., No. 03-56116 (May 6, 2005).
Tuesday, February 15, 2005
9th Circuit says settlement moots Gator.com v. LL Bean dispute
Many folks are aware that Gator.com and LL Bean have been duking it out in California over the legality under the Lanham Act and the Copyright Act of Gator.com's practice of signing up web surfers to receive pop-up ads tied to the web sites they were viewing. The district court kicked the case on Bean's pre-answer rule 12(b)(2) motion, holding that there was no personal jurisdiction over Bean in California. While the personal jurisdictional issue was under en banc consideration at the 9th Circuit, the parties settled the substance of their dispute, with Gator.com phasing out its pop-ups when web surfers are on Bean's website, and Bean releasing Gator.com from liability for claims of infringement, etc.
The settlement had a strange wrinkle, however. If Bean were to win the appeal (no personal jurisdiction over Bean), then Gator.com would pay it an additional 10K. If Gator.com were to win (p.j. over Bean in Cal.), then Bean got nothing.
Although it isn't clear to me why the parties wanted to continue to have the appeal heard with such a paltry stake riding on it (precedent?), they nevertheless pressed forward. But the en banc 9th Circuit pressed back, and held that the parties' settlement mooted the case. The court reasoned that the 10K personal jurisdiction was a "side bet" only: the REAL dispute as to whether Gator.com's business practices were legal was fully resolved by the settlement. The court distinguished prior cases where a settlement payment was contingent on the outcome of an appeal by noting that, in such cases, the contingent payment was in essence a liquidated amount for damages claimed in the original dispute. In this dispute, by contrast, said the court, there is no damage claim (because Bean moved to dismiss and won before it answered and counterclaimed?), and the personal jurisdiction argument has nothing to do with the substance of the controversy between the parties.
The settlement had a strange wrinkle, however. If Bean were to win the appeal (no personal jurisdiction over Bean), then Gator.com would pay it an additional 10K. If Gator.com were to win (p.j. over Bean in Cal.), then Bean got nothing.
Although it isn't clear to me why the parties wanted to continue to have the appeal heard with such a paltry stake riding on it (precedent?), they nevertheless pressed forward. But the en banc 9th Circuit pressed back, and held that the parties' settlement mooted the case. The court reasoned that the 10K personal jurisdiction was a "side bet" only: the REAL dispute as to whether Gator.com's business practices were legal was fully resolved by the settlement. The court distinguished prior cases where a settlement payment was contingent on the outcome of an appeal by noting that, in such cases, the contingent payment was in essence a liquidated amount for damages claimed in the original dispute. In this dispute, by contrast, said the court, there is no damage claim (because Bean moved to dismiss and won before it answered and counterclaimed?), and the personal jurisdiction argument has nothing to do with the substance of the controversy between the parties.
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