A Joke So Funny Louis Vuitton Forgot to Laugh – The Danger of Suing Over a Parody

 

 

 

 

 

By Steven Abreu. A member of our Trademark Practice Group

Louis Vuitton bags symbolize a luxurious lifestyle. At the opposite end of the scale of luxury is the simple utilitarian canvas tote bag. In Louis Vuitton Malletier, S.A. v. My Other Bag, Inc., the Second Circuit reckoned with a canvas tote bag manufacturer making a statement about luxury brands like Louis Vuitton on the side of its canvas bags.  In the process, the court affirmed that parties who demonstrate fair use of another party’s mark by way of a successful parody have a valuable and enduring defense against trademark infringement, trademark dilution and copyright infringement claims.

One side of the tote bags made by My Other Bag, Inc. (“MOB’) displays the words MY OTHER BAG in big fanciful writing; the other side displays a full color depiction of a well-known luxury bag. One of MOB’s line of bags contains a picture of a well-known Louis Vuitton bag design adorned with imitations of Louis Vuitton’s trademarked icons printed directly onto the canvas bag.

According to MOB’s creator, a person carrying a My Other Bag tote is making an ironic statement that his or her “other bag” is an expensive luxury item.  The statement is similar to the well-known “My Other Car is a …” bumper stickers that were popularized in the 80s.

Louis Vuitton cultivates a sense of exclusivity and luxury and routinely protects its exclusivity by asserting its intellectual property rights against others. Unsurprisingly Louis Vuitton brought suit against MOB claiming that its use of lookalike Louis Vuitton designs and insignias were an infringement of, and a dilution of, Louis Vuitton’s trademarks. More....

Challenging a Competitor’s Patent in the Patent Office: Great When it Works, but Failure Increases the Risk of a Court-Issued Injunction

 

 

 

 

 

By Thomas Tuytschaevers. A member of our Patent Practice Group

Recent developments in an infringement dispute in San Francisco yield valuable lessons regarding the hazards that may befall a company that challenges the validity of a rival’s patent in the United States Patent and Trademark Office. If the company loses its challenge, it may be that much more vulnerable to a preliminary injunction in subsequent infringement litigation.

Illumina, Inc. sells gene-sequencing equipment in the clinical laboratory market, where it competes with Qiagen, N.V and its subsidiaries.  In April 2016, Qiagen introduced its new GeneReader NGS system with a vigorous marketing campaign that seemed to be asking for trouble:  It claimed that the new system works in the “same way as Illumina’s machines.”  Illumina sued Qiagen and its subsidiaries for infringing US patent 7,566,537, and took the unusual step of asking the trial court for a preliminary injunction to halt the sale of Qiagen’s new product during the litigation.

As its name implies, a preliminary injunction in a patent case is a pre-trial order prohibiting an accused infringer from selling its product during the infringement trail.  It is a “drastic and extraordinary” remedy because it takes effect before infringement is proven, and before trial has even begun. (Patent suits often take two years or longer to get to trial.)   If granted rashly, a preliminary injunction causes potentially grievous harm to the accused infringer’s business, but if denied, risks irreparable injury to the patent owner.

Consequently, a court will grant a preliminary injunction only if the patent owner can show that (1) it is likely to prove the alleged infringement at trial; (2) it is likely to suffer irreparable harm if the injunction is not granted; (3) in measuring the hardship of an injunction on the accused infringer against the hardship of continuing infringement on the patent owner, the balance of hardships weighs in the patent owner’s favor; and (4) an injunction is in the public interest.  Despite the attractiveness of the preliminary injunction, patent owners rarely seek them, and courts rarely grant them, because the burden of proof is so high.

In Illumina v. Qiagen, however, Illumina was successful thanks in large part to assistance from Qiagen itself.  First, Qiagen chose to mount a difficult defense: It did not deny that Illumina was likely to succeed in showing infringement, so argued instead that Illumina’s patent was invalid in view of certain prior art.  An invalidity defense is difficult because U.S. law presumes a patent to be valid, so while the patent owner needs only to prove infringement by a preponderance of the evidence (i.e., that infringement is more likely than not), the accused infringer must prove invalidity by the higher “clear and convincing evidence” standard. More...

Litigators’ Perspective on the Patent Eligibility of Software: Courts Continue to Refine the Analysis in the Wake of Key Supreme Court Decision

 

 

 

 

 

By Lisa Tittemore and Brandon Scruggs. Ms. Tittemore is Co-Chair of the Litigation Practice Group and Mr. Scruggs is a member of the Litigation Practice Group

Recent precedential opinions from the Federal Circuit Court of Appeals – one of which represented a victory for our client Iatric Systems^[1] – allow some insight regarding the boundary between what is and what is not patent-eligible subject matter in the field of computers and computer software.  In the two cases, FairWarning IP, LLC v. Iatric Systems, Inc. and McRO, Inc. v. Bandai Namco Games America Inc., the Federal Circuit interpreted the Supreme Court’s controversial 2014 decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, which we have previously discussed.

In Alice, the Supreme Court announced the applicability of a two-step framework for determining patent eligibility under Section 101 of the Patent Act in the context of computer-related patents:

• First, courts must determine whether the patent claims at issue are “directed to” a patent-ineligible concept, such as an abstract idea.
• Second, if the claims are directed to patent-ineligible subject matter, courts must ask whether any of the additional limitations in the patent claims transform the claim into a patent-eligible application of a patent-ineligible concept.

Using that framework, which the Supreme Court had earlier articulated in the biotechnology context, the court in Alice invalidated patents that covered mitigating settlement risk in financial transactions using a computer system.  The court cautioned that patent eligibility requires more of a patent claim than simply stating an abstract idea and saying “apply it.”  However, the court also warned against reading its decision broadly, “lest it swallow all of patent law,” acknowledging that at some level all inventions rest upon laws of nature, natural phenomena, or abstract ideas.  Although simply implementing a process on a computer does not impart patent eligibility, patents that “improve an existing technological process” may be patent-eligible.

The analysis in Alice dramatically altered the approach that courts had applied in evaluating patent-eligibility for computer-related inventions.  Trial judges and the Federal Circuit alike have struggled to apply the Alice framework without slipping into an impenetrably vague “I know it when I see it” standard.  The Federal Circuit’s September and October 2016 decisions in McRO and Fairwarning IP provide useful guideposts.

McRO involved patent claims that describe a method for automatically producing lip synchronization and facial expressions in animated characters, a process which was previously done by human animators, using a computer, to manipulate the character model using an intuitive process.  The invention automated the 3D animator’s task, using rules with specific characteristics that require several variables to interact in a certain way.  The federal court in Los Angeles granted the defendant’s motion to throw out the case, finding the asserted claims “too broad” and unpatentable. More...

Massachusetts Creates Tax Credit Program for Angel Investors

By Thomas Carey. Chair of our Business Practice Group

On August 10, 2016, Governor Baker signed HB4569 into law, creating a tax credit program intended to spur angel investments into local high-tech start-ups, particularly those in the fields of digital e-health, information technology and healthcare. The program will permit investors in qualifying businesses to take a tax credit of 20% of the amount invested – or 30% if the business is in a Gateway Municipality.  This tax credit program is limited to $25 million annually, with the credits being doled out by theMassachusetts Life Sciences Center.

Companies wishing to be qualified for the program must have (i) a principal place of business in Massachusetts, (ii) a fully-developed business plan with short- and long-term forecasts including R&D, profit and loss, cash flow and details of angel investor funding, (iii) 20 or fewer full-time employees (at least half of whom work out of the company’s principal place of business), and (iv) less than $500,000 in gross revenue in the prior fiscal year.

The program does not cover investments in hedge funds, venture capital funds, retail operations, real estate, professional services, gaming or financial services.

Investors must be accredited investors, as defined by the SEC. Their qualifying investments are limited to $125,000 in any one business per year and $250,000 total for any one business.  No single taxpayer can claim more than $50,000 in tax credits in a year but investors may defer claiming tax credits for up to three years. Qualifying investors may not be the principal owner of the business and be involved in it on a full-time basis. More...

Recent Decisions Shed Light On How to Avoid Enhanced Damages for Patent Infringement

By Dorothy Wu Chiang. A member of our Patent Practice Group

In its June 2016 decision in Halo Electronics Inc. v. Pulse Electronics, Inc., whichwe covered in our June issue, the Supreme Court loosened the conditions under which a trial court may award enhanced damages to a patent owner. Haloemphasized that trial courts must retain discretion to punish “egregious” behavior by an infringer, based on the infringer’s knowledge at the time of the conduct in question. A defendant’s ability to muster a plausible defense after the fact should be of no consequence if its infringement at the time was willful and egregious.

This standard suggests that a company may take proactive measures that can prevent its behavior from being perceived as egregious. Specifically, before engaging in conduct that might infringe a competitor’s patent, a company might do well to obtain an opinion of counsel on the validity of that patent and the likelihood of infringing it. Already, some post-Halo decisions demonstrate that the presence or absence of such contemporaneous legal advice may affect a judge’s decision whether to assess enhanced damages against an infringer.

WBIP, LLC. v. Kohler, Co. involved competitors in the marine generator business. An internal Kohler memo requesting funding for developing products to compete with Westerbeke Corporation indicated that Kohler was aware of Westerbeke’s patents. Kohler took no action to evaluate the scope of the patents or avoid their claim limitations. Moreover, Kohler’s other activities demonstrated that it had deliberately tried to “plunder” Westerbeke’s business; Kohler employees had visited Westerbeke representatives at a trade show, questioned them about their technology, and released a competing product within a year.

Westerbeke assigned its patents to WPIB, which sued Kohler for infringement before Halo was decided.  The trial judge ruled that Kohler had willfully infringed WBIP’s patents and granted WPIB enhanced damages of 50%. Kohler appealed, and the Federal Circuit affirmed the district court in view of the Halo decision that had issued just weeks earlier. Halo required the Federal Circuit to review the enhanced damages based on whether the trial court had abused its discretion in awarding them. This deferential standard means that a trial judge’s award of enhanced damages is unlikely to be overturned.  More...

On-Sale Bar Clarified for Drugmaker

By Samuel Petuchowski, Ph.D.. A member of our Patent Practice Group

A patent application should be filed as soon as possible. Not only do patent rights go to the first inventor to file a patent application, but no invention may be patented if it has been publicly disclosed more than a year before an application is filed.

US law applicable to patent applications filed prior to March 15, 2013, that is, before the America Invents Act (AIA) took effect, specifically barred patenting anything more than one year after the first instance of its being sold or offered for sale.

In the case of The Medicines Company (“MedCo”) v. Hospira, Inc., MedCo ordered three batches of the anti-coagulant drug bivalirudin to be made by a manufacturing contractor, Ben Venue Laboratories, using a process that Medco later patented. While the market value of a commercial batch would have been about $10 million, no one could have sold the drug to consumers because FDA approval was still pending at the time.

When MedCo later sued Hospira for patent infringement, one of Hospira’s defenses was that MedCo’s patent application came too late, since it was filed more than a year after MedCo paid Ben Venue to make the preliminary batches for validation purposes.

The policy underlying the “on-sale” bar as it existed in Section 102(b) of the pre-AIA Patent Act was to preclude an inventor from profiting from the commercial use of an invention for a prolonged period before sharing it with the public by filing a patent application.  However, the statute sought to give the inventor a “reasonable” time to discern the potential value of an invention before undertaking the patenting process.  In 1998, the Supreme Court, in its decision in Pfaff v. Wells Electronics Inc., established a two-part test to determine whether an offer for sale occurred that would bar patenting more than a year later: The invention had to be the subject of a “commercial offer for sale” and had to be “ready for patenting.” More...

Insurance Coverage for Data Breaches: A Pig in a Poke for Retail Establishments?

By Thomas Carey. Chair of our Business Practice Group

P.F. Chang’s China Bistro Inc., which operates over 200 restaurants in the United States, purchased a cyber insurance policy from Federal Insurance Company. Federal marketed the policy as “a flexible insurance solution designed by cyber risk experts to address the full breadth of risks associated with doing business in today’s technology-dependent world” that covers “direct loss, legal liability, and consequential loss resulting from cyber security breaches.”  (Emphasis supplied).

During the underwriting process, Federal classified PF Chang’s as a high-risk client because it conducts more than six million transactions per year with customer credit cards, begetting extensive exposure to customer identity theft.  PF Chang’s paid an annual premium of $134,000 for the policy.

In 2014, while the policy was in effect, PF Chang’s received notification from the United States Secret Service of a potential data breach involving credit and debit card numbers stolen from its restaurants.  The company immediately conducted an investigation and determined that 33 of its restaurants were potentially affected.

PF Chang’s notified its insurer, which ultimately reimbursed more than $1.7 million of costs resulting from the data breach. This reimbursement covered the cost of conducting a forensic investigation and, defending litigation filed by (a) customers who alleged their credit card information was compromised, and (b) a bank that issued credit cards that were allegedly compromised. More...