Laches, a judiciallyAudrey-Millemann-03_web created defense based on the plaintiff’s delay and prejudice to the defendant, is a proper defense to the recovery of damages in a patent infringement suit, even though the Supreme Court ruled in 2014 that laches does not apply in copyright infringement cases.

A divided en banc Federal Circuit Court of Appeals held in SCA Hygiene Products v. First Quality Baby Products (September 18, 2015) 2015 U.S. App. LEXIS 16621 that Congress specifically provided for a laches defense in the Patent Act, unlike the Copyright Act.

SCA owned a patent for adult incontinence devices; First Quality was a competitor. In 2003, SCA sent First Quality a letter stating that it believed First Quality’s products infringed SCA’s patent. First Quality replied that SCA’s patent was invalid based on a prior art patent. In 2004, SCA filed a petition for reexamination of its patent in the Patent and Trademark Office, citing the prior art patent. In 2007, the PTO upheld SCA’s patent. SCA had not informed First Quality of the reexamination because the reexamination proceedings were public, but First Quality believed that SCA had dropped its accusation in response to First Quality’s letter. During this time, First Quality had made significant investments in its business. SCA knew First Quality was expanding its business, but did not inform First Quality of the reexamination decision. In 2010, seven years after its last communication with First Quality, SCA sued First Quality for patent infringement.

Continue Reading Patent Owners Beware: Don’t Sleep on Your Rights!

Scott-Hervey-10-webIn July, this author wrote about Lenz v. Universal which, at the time, was pending before the 9th Circuit.  On September 14, 2015 the 9th Circuit came down with a ruling which answered whether a copyright owner must consider fair use before proceeding with a takedown notice under the DMCA, and, if so, what are the consequences for failing to do so.

The facts of Lenz are fairly simple. Lenz posted to YouTube a very short video of her young child dancing to a Prince song playing in the background. At the time, Universal Music Publishing was managing Prince’s music publishing. An attorney at Universal manually reviewed the posting but acknowledged that he did not consider whether the Lenz video was fair use. Universal sent a DMCA takedown notice to YouTube and YouTube removed access to the video. Most normal takedown situations end there; however, Lenz was upset, and, after trying and failing to remedy the situation herself, sought the aid of attorneys at the Electronic Frontier Foundation. Continue Reading Ninth Circuit Clarifies Copyright Holder’s Responsibility When Sending A Takedown Notice Under The DMCA

On September 9, 2015, the United States District Court for the Southern District of New York ruled that Costco was willfully infringing Tiffany & Co.’s trademarks by selling diamond engagement rings bearing the renowned jewelry retailer’s name. The suit started back in 2012 when a patron of Costco in Huntington Beach, California decided to reach out to Tiffany to express her disappointment in Tiffany offering its rings for sale at Costco. She also stated that the rings were being promoted on signs within the store as Tiffany diamond engagement rings. After receiving the complaint and knowing that it did not sell its rings through Costco, Tiffany launched an investigation revealing that the Huntington Beach Costco was in fact displaying diamond engagement rings in a case labeled with the word Tiffany. The investigation also revealed that the Costco salespeople were referring to them as Tiffany engagement rings. Accordingly, Tiffany took action.

According to the Court’s ruling, prior to the lawsuit, Costco promised that it would remove references to Tiffany from its display case signs and even sent a letter to customers who bought the rings offering a full refund if they were not satisfied. Irrespective of these acts, Tiffany filed suit, ironically enough, on February 14, 2013. In response, Costco filed a counterclaim alleging that Tiffany’s trademarks were invalid because they sought to prevent others from using the word “Tiffany” as a generic description of a type of ring setting. Almost a year and a half later, the Court ruled in favor of Tiffany and against Costco. Specifically, Judge Laura Taylor Swain ruled that the evidence established that Costco had infringed Tiffany’s trademarks by selling engagement rings and had confused consumers by using the word Tiffany in display cases. Judge Swain ruled that “Despite Costco’s arguments to the contrary, the court finds that, based on the record evidence, no rational finder of fact could conclude that Costco acted in good faith in adopting the Tiffany mark.”

Continue Reading Tiffany & Company v. Costco Wholesale: Tiffany is far from Generic

The Federal Circuit Court of Audrey-Millemann-03_webAppeals has established a new test for “divided” patent infringement. Direct infringement of a method patent exists when a single party performs all of the steps of the claimed method. 35 U.S.C. §271(a). Divided infringement occurs when all of the steps are not performed by a single party, but by two or more parties under circumstances such that one party is still responsible for the infringement.

The law of divided infringement has been a subject of much debate. The question is: should direct infringement be expanded so that a single party is liable for infringement of a method claim even if another party performed some of the steps of the method? Those who say “no” argue that one party cannot infringe a method patent if it does not perform all of the steps of the claimed method, and that any other interpretation is so broad that it would make infringers out of innocent parties. Those who say “yes,” however, argue that infringers can escape liability for patent infringement simply by dividing up the steps of the claimed method among two or more parties.

In its previous decision in this case, a panel at the Federal Circuit had held that a party can be liable for divided infringement if it shares a principal-agent relationship, a contract, or a joint enterprise with the other party who performs some of the steps. On appeal to the United States Supreme Court, however, the Supreme Court vacated that decision and remanded the case to the Federal Circuit, stating that the Federal Circuit’s test for divided infringement may have been too narrow.

Continue Reading Divided Infringement: A Stronger Sword for Plaintiffs

Companies and employers aroundJames-Kachmar-08_web the country seek to protect their intellectual property by, among other things, using non-compete provisions in employment agreements. Generally, these provisions are intended to prevent an employee from soliciting or doing business with a former employer’s customer/clients over a set period of time and/or in regard to a set geographical area. Under California law, and specifically Business and Professions Code section 16600, such provisions are unenforceable unless they fall within one of the statutory exceptions, i.e., primarily in connection with the sale of a business interest. For years, although California state courts would refuse to enforce such provisions under section 16600, federal courts in California sometimes applied a narrow court-created exception and allow such provisions to be enforced provided that they were narrowly tailored as to time and geographical area. In 2008, the California Supreme Court unequivocally ruled that such provisions were unenforceable under section 16600 and rejected the “narrowly restricted” exception used by federal courts. (See Edwards v. Arthur Andersen, LP, 44 Cal.4th 937 (2008).)

In response to the Edwards decision, many California companies and employers began to omit such provisions from their new employment agreements or re-write them with specific language restricting an employee from using trade secret information to unfairly compete. However, other companies and employers left their old agreements untouched and in place thinking merely that they would not enforce them should the need arise. A recent court decision, Couch v. Morgan Stanley & Co., Inc. (E.D. Cal. Aug. 7, 2015), reveals the risk an employer or company faces in failing to update their older employment agreements to remove or revise such provisions.

Continue Reading Hidden Pitfalls of Old Non-Compete Provisions