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Federal Circuit: PTO Can’t Shift Burden of Proof of Patentability to Applicant

Posted in Copyright Law, Patent Law

In In re Stepan Co., 2017 U.S. App. LEXIS 16246, decided August 25, 2017 the Federal Circuit Court of Appeals made it very clear that during patent prosecution, the burden of proving patent ability lies with the PTO examiner. 

The patent applicant was Stepan Co., who filed a patent application for formulas of an herbicide.  The herbicide was a composition of a glyphosate salt and a surfactant system.  The claims required the formula to have a cloud point above 70ºC or no cloud point.  The cloud point is the temperature at which a liquid turns cloudy because its components are separating.  The herbicide formulas had to have a cloud point above 70ºC to prevent the surfactants from separating.

The PTO examiner rejected all of Stephan Co.’s claims on the grounds that they were obvious over the prior art.  The prior art did not have the same cloud point or the same components, but the examiner stated that the claims were obvious because a person skilled in the art would have achieved the claimed parameters by “routine optimization” of the formula.  The examiner also found that, based on general statements in the prior art references, the skilled artisan would have been motivated to create the claimed formula.

On appeal to the Patent Trial and Appeal Board, the PTAB affirmed the examiner’s conclusion that all of Stepan Co.’s claims were obvious.  The PTAB held that Stepan Co. had not rebutted the prima facie case of obviousness established by the examiner.  The PTAB said that Stepan Co. had not produced evidence that a skilled artisan would not have achieved a cloud point above 70ºC by routine optimization.  The PTAB did not consider Stepan Co.’s evidence that the prior art references disclosed compositions that had a cloud point of 60ºC (and therefore taught away from compositions that could be used at a higher temperature).  In addition, the PTAB found that Stepan Co. did not show that a cloud point above 70ºC was critical to the compositions or that it yielded unexpected results.

On appeal, the Federal Circuit vacated the PTAB’s decision.  The court explained that in order to make a finding of obviousness, the PTO must show “that a skilled artisan would have been motivated to combine the teachings of the prior art … and that the skilled artisan would have had a reasonable expectation of success.”  These are questions of fact reviewed by the appellate court for substantial evidence.

The Federal Circuit found that the PTAB had made several errors: it did not articulate its reasoning for its finding of obviousness; it rejected Stephan Co.’s evidence of non-obviousness; and it shifted the burden of proof of patentability to the applicant.

First, the Federal Circuit held that PTAB had to explain why “routine optimization” would have produced the claimed composition.  The PTAB’s conclusion was not sufficient.  According to the court:

“Stating that a person of ordinary skill in the art would have arrived at the claimed invention through routine optimization falls short of the standard.  Missing from the Board’s analysis is an explanation as to why it would have been routine optimization to arrive at the claimed invention.  . . . [T]he Board must provide some rational underpinning  explaining why a person of ordinary person in the art would have arrived at the claimed invention through routine optimization.”

Second, the PTAB did not set forth why the skilled artisan would have had a reasonable expectation of success in modifying the prior art.  The PTO has to show that a skilled artisan “must be motivated to do more than merely vary to all parameters or try each of numerous possible choices until one possibly arrived at a successful result.”

Third, the PTAB ignored Stepan Co.’s evidence that the prior art disclosed failures that were relevant.  These failures showed why a skilled artisan would not have had a reasonable expectation of success in modifying the prior art references.

Fourth, the PTAB shifted the burden of patentability to Stepan Co.  “The PTO bears the burden of establishing a prima facie case of obviousness…. ‘Only if this burden is met does the burden of coming forward with rebuttal argument or evidence shift to the applicant.’”  The Board improperly required Stepan Co. to demonstrate why the cloud point was a critical element of the claimed composition.

Because of the PTAB’s errors, the Federal Circuit vacated the decision and remanded the case for further proceedings.

Bridgestone Brands, LLC v. Firestone Public House, LLC: Battle of the Brands

Posted in Uncategorized

Just over two months ago, Sacramento’s beloved Firestone Public House was sued by multinational conglomerate Bridgestone Brands, LLC for trademark infringement, trademark dilution, and unfair competition based upon Firestone’s use of the FIRESTONE mark. I initially found this dispute to be quite interesting in light of what I appeared to be vastly different groups of consumers being served by the respective entities: tire consumers vis-à-vis food and beverage consumers. However, I subsequently learned that Bridgestone’s use of the FIRESTONE mark goes beyond tires and into the restaurant and bar industry, as reflected by its federally registered trademark. 

The complaint includes allegations relating to the fact that the 16th and L Street location occupied by the Firestone Public House was previously occupied by a Firestone Tire location for 75 years, and is in fact known as the Firestone Building around Sacramento, giving rise to a greater likelihood of consumer confusion. Perhaps more importantly, as mentioned above, Bridgestone owns a federally registered trademark for restaurant and bar services, which according to the U.S. Patent and Trademark Office’s file, dates back to December 1954. In its answer and counterclaim, Firestone Public House seeks to cancel Bridgestone’s mark and contends that the mark was not registered until after Firestone Public House opened. That fact, however, may be of little consequence if Bridgestone has been using the mark in commerce since 1954. In fact, Firestone’s counterclaim is likely only a strategic action taken in an attempt to gain settlement leverage. Specifically, it seems Firestone is trying to force Bridgestone to have some skin in the game so that a more favorable settlement can be reached.

It is unlikely that we will ever see this case adjudicated on the merits. Firestone, although seemingly quite a successful venture, is not nearly as well funded as Bridgestone, so it seems unlikely that it will be as willing to throw money at litigation if it can reach some form of acceptable resolution. And while Bridgestone is flush with cash, it didn’t get that way from throwing money down the drain, and it will probably reach a deal with Firestone that it can live with. After all, it doesn’t seem likely that Firestone’s use of the mark will greatly impact Bridgestone’s reputation in the restaurant and bar industry, especially since most people are unaware of Blackstone’s Firestone branded restaurants.

But with that said, it also remains possible that Bridgestone will refuse to play ball and negotiate with Firestone in good faith. It wouldn’t be the first time that a national conglomerate stepped in and tried to bully a successful, but significantly smaller company. In fact, perhaps we should expect that sort of behavior from a party who stepped in and sued a distantly located, single-location restaurant over its use of the trademark. It remains to be seen how this will shake out but we will be keeping an eye on this case, and if there are any significant developments, we will be sure to write about them.

Court Denies Plaintiff’s Motion to Disqualify its Former Counsel as Counsel for Defendant in a Patent Litigation Action After Plaintiff Delayed Filing its Disqualification Motion for Over A Year After Discovering the Conflict.

Posted in Patent Law

In Eolas Technologies Incorporated v., Inc., 3-17-cv-03022 (CAND August 24, 2017, Order) (Tigar, USDJ) the United States District Court for the Northern District of California recently denied plaintiff Eolas Technologies Incorporated’s (“Eolas”) motion to disqualify its former counsel, Latham and Watkins (“Latham”), as counsel for defendant (“Amazon”) because Eolas delayed filing its disqualification motion for over a year after it learned of the potentially conflicting representation.  The Court further found Eolas waived its disqualification argument because the delay substantially prejudiced Amazon in its defense of Eolas’ patent infringement action against Amazon. 

On November 24, 2015, Eolas filed a patent infringement action in the Eastern District of Texas against Amazon, asserting infringement by Amazon of U.S. Patent No. 9,195,507 (the “’507 patent”).  The ‘507 Patent relates generally to manipulating data in a computer network, and specifically to retrieving, presenting and manipulating embedded program objects in distributed hypermedia systems.  After the case was filed, Amazon moved to transfer the case to the Northern District of California, and, on April 28, 2017, that case was transferred.

At some point between 1998 and 2006, Latham attorneys represented Eolas in some capacity, and although the exact scope and duration of that representation is contested, Eolas claimed that “Latham was privy to all of Eolas’ proprietary and confidential information relating to its technology, patents, patent applications, business, litigation and licensing strategies, particularly those relating to the ‘906” patent, which is the parent to the ‘507 patent-in-suit.  As a result, Eolas argued Latham must be disqualified from representing Amazon because “Amazon’s defense is predicated on attacking [the ‘906 patent,] the very patent that Latham once competed to assert and later defended, and about which Latham has acquired substantial confidential and strategic information.”

As a preliminary matter, the Court first had to decide whether Texas or California law governed.  As noted, the case was originally filed in the Eastern District of Texas, as was the motion to disqualify, but the case was transferred to the Northern District of California before a decision on the motion issued.  Amazon argued that Texas law still governed.  Eolas argued that California law now applies.  The Court held that it should apply Texas law when analyzing the motion to disqualify because when Latham agreed to represent Amazon, the case was pending in the Eastern District of Texas and Latham would have been correct to expect that Texas ethical codes would apply to any motion to disqualify.  The Court then reasoned that the same law should apply now because “[a] change of venue under § 1404(a) generally should be, with respect to state law, but a change of courtrooms.”  Thus, the Court applied Texas law to the motion to disqualify.

Moving on to the substance of the motion, the Court first noted that under Texas law, “[w]aiver of a motion for disqualification of counsel is proper where the delay in moving for a disqualification is for an extended period of time, or where it is done on the eve of trial.”  However, there was a factual disagreement about when Eolas discovered Latham’s alleged conflict.  Eolas claimed that, until January 6, 2017, “nobody at Eolas knew that Latham was representing Amazon.”  Amazon, on the other hand, asserted that Eolas had known that Latham represented Amazon a year earlier, by January 2016.

The Court sided with Amazon.  Specifically, the Court noted that Latham had appeared in the case for Amazon in January 2016, and that this appearance was recognized by Eolas’ counsel.  Under Texas law, an attorney’s knowledge is imputed to a client, in this case Eolas.  The Court also noted that Eolas knew that it had previously retained Latham, including for work related to the ‘906 patent.  Therefore, the Court found Eolas knew about the Latham conflict for a year before it decided to file its motion to disqualify, and that one year qualifies as an extended delay.

The Court also found that Amazon would face substantial prejudice from Latham’s disqualification.  The Court noted that in 2016 – the year during which Eolas knew of the alleged conflict but took no action – Latham billed over 3,400 hours to defend that action and prepare the matter for trial.  The Court found this large expenditure of time and resources weighed in favor of waiver.  Thus, the Court concluded that Eolas waived its right to seek disqualification by waiting one year after discovering Latham’s conflict to file its motion, and denied the motion to disqualify Amazon’s counsel.

This case is a good reminder to timely raise all issues and potential challenges.  Otherwise, if clients and their counsel delay to long after having been found to be aware of the issue or potential challenge, a court may find it to have been waived and/or unfairly prejudicial to the other party given the delay.

Patent Myths Corrected – Part Two

Posted in Copyright Law, Trademark Law

My last column was the first of two columns discussing some of the most common misconceptions or myths about patents.  Here is the second part, starting with number five on my list. 

  1. A Patent Does Not Give the Patent Owner the Right to Practice the Invention.

Inventors and patent owners often assume that a patent gives them rights to practice the patented invention, i.e., freedom from infringement.  Not true.

A patent is a grant to its owner of the right to exclude others from making, using, offering to sell, and selling the patented invention in the United States, or importing the invention into the United States.  These rights are called exclusionary rights.  A patent does not provide its owner with the rights to do these things.  An invention may be patentable but still infringe another person’s patent.  In such a case, the patent owner may have a patent on the invention but cannot make or use the invention unless they obtain a license from the owner of the patent that is infringed.

  1. Patents Do Not Infringe Other Patents.

A patent cannot infringe another patent.  Only a machine, article of manufacture, composition of matter, or process can infringe a patent.

As stated above, a patent gives its owner the right to exclude others from making, using, offering to sell, selling, or importing the patented invention.  The patent is infringed if any of these acts are committed in the United States without the patent owner’s permission.  Thus, there is no infringement unless someone makes, uses, offers to sell, or sells the invention in the United States, or imports the invention into the United States.  An invention described in a patent may infringe another patent, but only if it is made, used, offered for sale, sold, or imported in the United States.  The patent itself is not an act of infringement.

  1. Patentability and Patent Infringement are Not the Same Thing.

Inventors often think that if their invention is patentable, then it cannot infringe other patents.  Not so.  Patentability and patent infringement are two different things.  An invention may be both patentable and infringe an existing patent.  In both cases, the starting point of the analysis is the claims.

To determine if an invention is patentable, the invention, as it is claimed, is compared to what is known in the field (the prior art).  In general, prior art includes written documents (such as other patents, published articles, catalogs, and websites), as well as actions by the inventor and third parties, that exist before the patent application is filed.

The first requirement of patentability is that the claims must be novel (new or different) over the prior art.  The test for novelty is performed by looking at each element of the invention as claimed.  If all of the elements of the claimed invention are present in a single prior art reference, then the invention is not novel and is said to be anticipated by the prior art.  The invention is not patentable.

The second requirement of patentability is that the claims must be nonobvious over the prior art.  The invention is obvious if the differences between the invention and the prior art are such that the invention, as a whole, would have been obvious at the time it was made to a person with ordinary skill in the art.  Unlike the test for novelty, the test for obviousness is not limited to a single prior art reference – any number of references can be combined to render an invention obvious.  For obviousness to be found, every element of the claimed invention must be present or suggested in the prior art, although not necessarily in the same reference.

To determine if an invention infringes an existing, in force (not expired) patent, the claims of the patent in question are compared to the invention (in a patent infringement action, the district court first interprets or construes the claims to determine their meaning and scope).  If each element of a claim is present in the invention (literally, or in some cases, by an equivalent), that claim is infringed.  Only one claim need be infringed for the patent to be infringed.

Thus, although it sounds counter-intuitive, an invention can be patentable over a prior art patent and, at the same time, infringe the same patent.

California Finally Rolling Out Its Own Cannabis Trademark Laws

Posted in Legal Info, Patent Law, Trademark Law

California was the first state to legalize marijuana for medical use.  In 1996, California approved Proposition 215, the California Compassionate Use Act.  Two decades later, California voters approved  Proposition 64, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA).  Despite the fact that cannabis has been legal in California since 1996, you still can’t get a trademark in California for marijuana, medical or otherwise.  Why is that.

The problem results from a disconnect between California’s trademark statutes and the California laws governing legal cannabis use.  California Business and Professions Code Section 14272 provides as follows:

The intent of this chapter is to provide a system of state trademark registration and protection substantially consistent with the federal system of trademark registration and protection under the Trademark Act of 1946 (15 U.S.C. Sec. 1051 et seq.), as amended. To that end, the construction given the federal act should be examined as nonbinding authority for interpreting and construing this chapter.

The USPTO regularly rejects applications to register trademarks related to cannabis on the grounds that such use would not constitute “lawful use in commerce”.  The legal reasoning underlying such rejection goes as follows:  Under federal trademark law, the registration of a trademark requires use of that mark in connection with the goods or services in commerce.  Federal trademark law defines “commerce” as all commerce which may lawfully be regulated by Congress.  If the goods or services covered by a mark are unlawful, actual lawful use in commerce is not possible.  And in those situations, a mark covering such unlawful goods or services cannot be federally registered.

Cannabis and products that are primarily intended or designed for use in connection with cannabis are federally illegal under the Controlled Substances Act.  The federal trademark office has taken the position that if a mark covers a good or services that would be illegal under the CSA, lawful use in commerce is not possible, and as such, the mark cannot be federally registered.

The trademark examiners in Sacramento have gone further than taking USPTO reasoning as nonbinding authority; they have taken the USPTO reasoning as gospel in  rejecting state applications for cannabis.  However, California’s lawmakers are proposing an amendment to California’s trademark laws that will address this inconsistency.

AB 64 proposes to, notwithstanding those provisions, authorize the use of specified classifications for marks related to medical cannabis and nonmedical cannabis, including medicinal cannabis, goods and services that are lawfully in commerce under state law in the State of California

AB 64 intends to provide a statutory mechanism for allowing the registration of a California trademark for cannabis products.  The bill proposes two new classifications of goods and services may be used for trademark marks related to cannabis, including medicinal cannabis that are lawfully in commerce under state law in the State of California.  The proposed classes are:

(1) 500 for goods that are cannabis or cannabis products, including medicinal cannabis or medicinal cannabis products.

(2) 501 for services related to cannabis or cannabis products, including medicinal cannabis or medicinal cannabis products.

While AB 64 would appear to solve conflict at the California Secretary of State’s trademark department, the down side is that California state trademark registrations for cannabis products will not be available until January 1, 2018.


Patent Myths Corrected – Part One

Posted in Patent Law

Patent law is a complicated area of law governed by a confusing set of statutes and regulations that are interpreted by the United States Patent and Trademark Office (PTO) and the federal courts.  Patents themselves are sometimes almost unintelligible and, if intelligible, may require many hours of reading to understand.  It is no wonder that there are a lot of misconceptions or myths about patents.

This is the first of two columns in which I will discuss a few of the most common aspects of patent law that are misunderstood.

  1. Ideas Are Not Patentable.

Clients often want to patent an idea.  Ideas are not patentable – inventions are patentable.

To be patentable, an invention must fall within one of four categories, referred to as statutory subject matter.  Those categories are:  processes (also referred to as methods), machines, articles of manufacture, and compositions of matter.

Process patents include patents for methods of doing just about anything, including some computer software and some methods of doing business (although business method patents are now under increasing scrutiny both in the PTO and in the courts).  Machine or apparatus patents include traditional types of machines as well as computer systems.  Articles of manufacture are devices such as tools or just about any non-machine.  Compositions of matter include chemical compositions, genes, and genetically engineered (non-natural) living organisms, including bacteria, plants, and animals.

The above four categories are the categories of inventions for which a utility patent can be obtained.  There are two additional types of patents:  design patents and plant patents.

Design patents protect ornamental designs for articles of manufacture, such as chairs, dishes, and glassware.  A design patent protects only the appearance of the article, not any aspect of its functionality.  An article may be the subject of both a design patent and a utility patent, however, if it has both ornamental design and function.

Plant patents protect distinct, new varieties of asexually reproducible plants (i.e., plants that can be reproduced without seeds, such as by budding or grafting).  They include such plants as certain types of roses, nuts, flowering plants, and fruit trees.

There are several things that are specifically not patentable.  They are:  abstract ideas and mental processes, laws of nature, natural phenomena, and mathematical algorithms.

Even if a client’s idea fits within one of the four categories of statutory subject matter, it still is not patentable if it is in its infancy.  The idea must be an invention.  The inventor need not have actually made the invention (reduced it to practice), but must have a complete and operative understanding of the invention.  The patent application must contain a detailed written description of the invention and must describe how to make and use the invention without undue experimentation.  Thus, an idea that is not fully fleshed out, even if it is patentable subject matter, is not ready to patent.  The inventor must be able to describe what the invention actually is.


  1. The Inventor Cannot Withhold Details of the Invention to Prevent the Public from Copying.

In addition to a detailed description of how to make and use the invention, a patent application must also include the “best mode” of carrying out the invention.  The best mode is the best way of using the invention known to the inventor at the time the application is filed.

This requirement prevents the inventor from keeping the best way of using the invention a secret.  A patent is a trade-off:  in exchange for the Government giving the inventor the rights to exclude others from making, using, selling, or offering to sell the invention, the inventor must fully disclose the invention to the public in the patent.  This is so that the public may practice the invention after the patent expires.

If an invention is easy to reverse-engineer, trade secret protection is essentially useless and patent protection is the better choice.  This is because patents, unlike a trade secret, protect against reverse engineering.  On the other hand, if an invention is difficult to reverse-engineer, trade secret protection may be preferable to obtaining a patent because, unlike a patent, a trade secret does not expire.


  1. You Cannot Tell What a Patent Protects by Looking Only at the Text or the Drawings.

A utility patent contains several parts:  a specification or disclosure, a drawing if necessary, and at least one claim.  The specification is a detailed description of the invention that tells a person of ordinary skill in the art how to make and use the invention and describes the best mode of carrying out the invention.  The drawings (which may include flow charts) must illustrate all essential elements of the invention.  Drawings are typically necessary for inventions that fall within the subject matter categories of machines, articles of manufacture, and processes; drawings are usually not necessary for compositions of matter.

The specification and drawings describe the different versions (embodiments) of the invention or examples of the invention.  They do not define what the patent owner may enforce with the patent.  This is determined by the claims.

The claims must contain the patentable elements of the invention.  It is the claims that are used to determine whether there is infringement.  The claims must be read in light of the specification and the drawings, but the claims define what the patent protects.  Sometimes, the claims are broader than what is described in the specification and the drawings, so one must read and interpret the claims to know what the patent protects.


  1. A Provisional Patent Application is Not a Quicker, Cheaper Way of Getting a Patent.

A provisional patent application cannot become a patent.  Despite its name, a provisional patent application is not really a patent application at all because it cannot mature into a patent.  Rather, a provisional patent application acts as a placeholder for a utility application – it is a mechanism for allowing an inventor to obtain an earlier filing date for a utility application.

A provisional patent application requires a specification and a drawing if necessary, and should contain at least one claim.  It must satisfy the same requirements as a utility application (written description, enablement, and best mode).  A provisional application is not ever examined by the PTO and no patent ever issues directly from it.  An inventor has one year from the filing date of the provisional application in which to file a non-provisional utility patent application for the same invention, claiming the benefit of the filing date of the provisional application.    Because a provisional application requires the same level of detail as a utility application, it is typically not much quicker or less costly than a utility application.

If a client has limited time or funds, however, filing a provisional application may be better than filing no patent application.  For example, a provisional application may be advantageous if the inventor needs to disclose the invention on short notice and does not have enough time to have a utility application prepared.  In that situation, the provisional application may provide the inventor with an earlier filing date than might otherwise be obtained, as long as what is later claimed in the utility application was disclosed in the provisional application.

Ninth Circuit Holds that “Reverse Confusion” Need Not Be Pled with Specificity

Posted in Trademark Law

A plaintiff seeking to prevail on a trademark infringement claim needs to establish that there is some likelihood of confusion between its mark and that of the defendant.  Generally, a plaintiff establishes that there is “forward” confusion by showing that customers believed they were doing business with plaintiff but because of a confusion in their respective marks, were actually doing business with the defendant.  Sometimes, however, a plaintiff will seek to establish “reverse confusion” in that a customer believing they were doing business with a defendant actually ends up doing business with the plaintiff.  The Ninth Circuit, in the case Marketquest Group v. BIC Corp. (decided July 7, 2017), was faced with the issue as to whether a plaintiff seeking to prevail under a theory of “reverse confusion” is required to plead that theory with specificity.

For nearly 20 years, Marketquest produced and sold promotional products utilizing its registered trademarks “All-in-One” and “The Write Choice.”  In 2009, BIC Corporation acquired a competitor in the promotional products field and began publishing promotional product catalogs featuring the phase “All-in-One” and in other advertising, using the phrase “The WRITE Pen Choice for 30 Years.”  Marketquest sued BIC for trademark infringement.  After the District Court granted summary judgment to BIC, Marketquest appealed to the Ninth Circuit.  (This article does not address the other issues decided by the Ninth Circuity other than the pleading requirement.)

In seeking to have the Ninth Circuit reject the appeal, BIC argued that Marketquest could not proceed under a “reverse confusion” theory because it had not specifically pled such a theory in its complaint. The Ninth Circuit began by recognizing that the Lanham Act allows a trademark owner to pursue a cause of action against someone who uses the trademark in commerce “when such use is likely to cause confusion.”  Given that neither party questioned the validity of Marketquest’s trademarks, the Ninth Circuit recognized that the main issue before the lower court was “whether there is a likelihood of confusion: that is, whether Defendants’ `actual practice[s were] likely to produce confusion in the minds of consumers about the origin of the goods … in question.’”  Since at least 2005, the Ninth Circuit has recognized two theories of consumer confusion: “forward confusion” and “reverse confusion”.  See Surfvivor Media, Inc. v. Survivor Prods., 406 F.32 625 (9th Cir. 2005).  Because Marketquest was attempting to establish trademark infringement under a theory of “reverse confusion,” BIC argued that it was required to plead such a theory with specificity in its complaint and that having failed to do so, the lower court properly granted judgment against it.

The Ninth Circuit recognized that it had not addressed this issue before, but that the First Circuit, in Dorpan, S.L. v. Hotel Melia, Inc. 728 F.3d 55 (1st Cir. 2013), had.  In that case the First Circuit ruled that “`reverse confusion’ is not a separate legal claim requiring separate pleading.  Rather, it is a descriptive term referring to certain circumstances that can give rise to a likelihood of confusion.”  The Ninth Circuit adopted this approach and ruled in Marketquest’s favor “when reverse confusion is compatible with the theory of infringement alleged in the complaint, a  Plaintiff need not specifically plead it.”

BIC argued that at least two prior Ninth Circuit cases required a different result.  BIC first cited the Ninth Circuit’s decision in Surfvivor to support its argument that strict pleading is required. However, the Ninth Circuit rejected this argument and held that the only the thing that the Surfvivor case held was that when reverse confusion is the only plausible theory in a trademark infringement complaint, a plaintiff cannot establish a viable trademark infringement claim based on “forward confusion.”

BIC also cited Murray v. Cable National Broadcasting Co., 86 F.3d 858 (9th Cir. 1996) in support of its proposition that in order to plead a “reverse confusion” theory, “a plaintiff must allege that the defendant `saturated the market with advertising’ or alleged actual reverse confusion from customers.”  The Ninth Circuit likewise rejected this argument recognizing that its Murray decision was decided before it had even recognized a theory of infringement based on “reverse confusion.”  More importantly, the Ninth Circuit concluded that the plaintiff in Murray had not alleged any cognizable trademark infringement claim regardless of whether it was based on “forward confusion” or “reverse confusion.”

The Ninth Circuit concluded that although Marketquest did not use the words “reverse confusion” in its complaint, nor did it allege that the defendants had saturated the market, it had alleged generally that customers “were confused `as to whether some affiliation, connection or association existed’ among defendants and Marketplace and specifically alleged that there were actual instances of forward confusion (i.e., that consumers that that defendant’s goods came from Marketquest).”  Although Marketquest did not raise issues of ”reverse confusion” until its motion for preliminary injunction and later on summary judgment, the lower court’s order did recognize that Marketquest was asserting infringement based on “reverse confusion.”  Although it had not pled such a theory with specificity in its complaint, the Ninth Circuit concluded that the lower court properly allowed Marketquest to proceed under a “reverse confusion” theory and held that Marketquest was not required to plead such a theory with specificity in its complaint.

The Ninth Circuit’s opinion in Marketquest will give plaintiffs some leeway in pleading their theory of trademark infringement. However, plaintiffs will still be required to allege some likelihood of confusion between its mark and that of the defendant in order to avoid a dismissal of their infringement claim.


James Kachmar is a shareholder in Weintraub Tobin Chediak Coleman Grodin’s litigation section.  He represents corporate and individual clients in both state and federal courts in various business litigation matters, including trade secret misappropriation, unfair business competition, stockholder disputes, and intellectual property disputes.  For additional articles on intellectual property issues, please visit Weintraub’s law blog at

Repeated Discovery Failures and Abusive Litigation Tactics Warrant Terminating Sanctions, Treble Damages, Attorney Fees and Permanent Injunction Against Defendant In Patent Litigation Case.

Posted in Trademark Law

By:  Eric Caligiuri

In TASER International, Inc. v. PhaZZer Electronics, Inc. et al, 6-16-cv-00366 (FLMD July 21, 2017, Order), a Florida District Court took the drastic step of entering a default judgment in favor of Plaintiff Taser, along with an award of compensatory and treble damages, an award of reasonable attorneys’ fees and costs, and injunctive relief because of Defendant Phazzer’s discovery failures and abusive litigation tactics.  According to the Court, since the outset of the litigation, Phazzer had engaged in a pattern of bad faith conduct designed and intended to delay, stall, and increase the cost of the litigation.  The Court determined no relief other than terminating sanctions would be adequate to address Phazzer’s repeated violations.  In the case, Plaintiff Taser filed a complaint against Defendant Phazzer for patent and trademark infringement, false advertising, and unfair competition. 

In the order granting the terminating sanctions, the Court began by summarizing the “abusive litigation and discovery practices” it found the Defendant undertook during the litigation.  Specifically, the Court noted that after three motions to compel, and after the case had been ongoing for nearly a year, plaintiff “TASER still has not received the most basic information regarding the details and relationships between Phazzer and its manufacturer/suppliers/distributors of the accused . . .[infringing] product.”  In addition, the Court noted that while Taser had been attempting to schedule depositions for five months, Phazzer continued to assert that “[e]very one of the handful of critical witnesses associated with Phazzer, a small, closely-held company, are represented to be on vacation, out of the country, in surgery, or convalescing.”

Furthermore, after multiple failures by corporate representative for Phazzer to appear when required, the Court order that a representative of Phazzer must attend a hearing on their counsel’s request to withdraw, cautioning that “[f]ailure to comply with this Order may result in imposition of sanctions, including entry of a default or default judgment against the offending party or counsel.”  However, the Court noted that no representative from Phazzer Electronics attended the hearing in clear violation of the Court’s Order.  Moreover, in addition to the “flagrant discovery abuse and contemptuous behavior exhibited by Phazzer,” the Court also cited to numerous attempts by Phazzer to derail the litigation by repeatedly attempting to stay the proceedings, and by filing a last minute emergency motion for a protective order.

As for legal authority for its terminating and others sanctions ordered against Phazzer, the Court stated Rule 37 of the Federal Rules of Civil Procedure “allows district court judges broad discretion to fashion appropriate sanctions for the violation of discovery orders.”  The Court then noted Rule 37 “authorizes a variety of sanctions, such as, striking pleadings, rendering a default judgment, and holding the disobeying party in contempt of court.”  Furthermore, Rule 37 provides that “the court must order the disobedient party, attorney advising that party, or both to pay the reasonable expenses, including attorney’s fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.”

Although the sanction of default is seen as a “last resort,” the Court reasoned a party’s “willfull or bad faith disregard” for discovery orders may call for this type of sanction when the party failed to comply with a court order compelling discovery and warning that the failure to comply might result in a default judgment.  The Court also noted bad faith may be found through “delaying or disrupting the litigation or hampering enforcement of a court order.”  The Court then found that Defendant Phazzer engaged in the above-described misconduct with the subjective intent to abuse the judicial process.  Thus, the Court found the imposition of terminating sanctions, along with compensatory and treble damages, attorneys’ fees and costs, and a permanent injunction to be “necessary to adequately punish Phazzer for its wanton and repetitive disregard of this Court’s orders and as a consequence of its willful abuse of the discovery process. The imposition of lesser sanctions would underrepresent the seriousness of the offensive conduct.”

Although an extreme example, this case is a good reminder to parties and attorneys alike that all litigation must be taken seriously and that the discovery process must be respected.  Failure to do so can lead to sanctions, up to and including terminating sanctions in particularly egregious cases.

Amazon Tips its Hand with New Trademark Application

Posted in Copyright Law, Patent Law, Trademark Law

As you likely know, Amazon is taking the world by storm. Whether it is through its convenient offering of household goods, and pretty much anything else you can imagine, to your door, or through its expansive selection of movies and television shows provided through its Amazon Prime streaming service, Amazon is a major player in multiple industries. Recently, Amazon surprised the general public when it agreed to purchase Whole Foods Market for $13.7 billion and judging from its recently trademark application, Amazon is nowhere near done with its expansion. 

On July 6, 2017, Amazon filed a trademark application for “prepared food kits composed of meat, poultry, fish, seafood, fruit and/or vegetable.” The trademark that Amazon seeks to register is WE DO THE PREP.  YOU BE THE CHEF. Does this concept sound familiar? Perhaps even a bit like Blue Apron? If so, that’s probably because it is exactly like Blue Apron. If you aren’t familiar with Blue Apron, it is a meal-kit delivery service backed by major venture capital groups, including Fidelity and Bessemer Venture Partners. It was founded in August 2012 and has enjoyed major success to date. According to the Times Herald, as of September 2016, Blue Apron had shipped 8 million meal servings. This success led to the company going public last month.

Since that time, the value of Blue Apron’s stock has declined steadily, but it recently took its hardest hit when Amazon’s trademark application hit the public sphere, resulting in more than a ten percent drop in price per share. But what does this mean? And more importantly for purposes of this article, how is it related to intellectual property? Well, although there are likely various factors involved in the further decline of Blue Apron’s stock price, such as overvaluation, the most recent drop in stock price is likely caused by Amazon’s extraordinary goodwill.

Usually, when we discuss a mark’s goodwill, it is the product of the owner building goodwill in the mark through its use in commerce. But here, we have an instance where the mark has never been used in commerce and it already has substantial goodwill. The reason is that WE DO THE PREP. YOU BE THE CHEF. is inherently imbued with Amazon’s sizable goodwill. Not to mention, in light of the pending Whole Foods buyout, the mark is likely benefitting from Whole Foods’s goodwill, as consumers likely anticipate that Amazon will utilize Whole Foods products in its food kits. Although I don’t think that has been confirmed or even mentioned by anyone in the know, it is a reasonable assumption. Either way, it is clear that the mark is riding the coattails of its parent company and its parent company’s soon-to-be acquired subsidiary to give itself a head start into the food delivery marketplace. Whether that is indicative of future success in the marketplace remains to be seen.

Diddy’s @Infringement Instagram Post

Posted in Cyberspace Law, Entertainment Law, Web/Tech

In today’s age of rapid fire social media, posting to feed the ever growing hunger of a digitally connected audience has become second nature to celebrities and other influencers.  In fact, the larger the number of followers, the greater the compulsion to constantly connect.  And that’s where the problems can arise.

The facts underlying the claim seemed innocuous enough.  Hip hop celebrity Sean “Diddy” Combs was delivering an inspirational speech to young students at a new charter school he founded in Harlem.  Professional photographer Matthew McDermott took a picture of Combs surrounded by students; the picture eventually accompanied an online article in the New York Post.  McDermott’s name was featured in the credits identifying him as the photographer.  A few weeks later, Combs posts the picture on his Instagram account with comments about the charter school.  The result, a copyright infringement lawsuit for Combs.

Taking issue with Combs’ posting of the photo (and not including his credit), McDermott filed a lawsuit.  In the lawsuit, McDermott claimed that Combs did not license the photograph from him, that Combs removed his photography credit and that the page with the photograph received over 40,000 likes.  McDermott alleged that by publishing the photograph on his Instagram page, Combs infringed his copyright,  Technically, McDermott’s claim is accurate.  Under Section 106 of the Copyright Act, the owner of a copyright has the exclusive rights to (a)  reproduce the copyrighted work in copies, and (b) in the case of a picture, display the copyrighted work publicly.  Combs allegedly violated both of these rights by copying the picture from the New York Post and then posting it on his Instagram page.

McDermott’s second claim was one not regularly seen: a claim that Combs had violated Section 1202 of the Copyright, enacted pursuant to the Digital Millennium Copyright Act.  Section 1202 provides that no one shall, without the permission of the copyright owner (1) intentionally remove or alter any copyright management information; or (2) distribute, or publicly perform works knowing that copyright management information has been removed without the permission of the copyright owner knowing or having reasonable grounds to know, that it will induce, enable, facilitate, or conceal an infringement.  The term “copyright management information” is defined in the section as any of the following information conveyed in connection with copies of a work: (1) the name of, and other identifying information about, the author of a work; and (2) the name of, and other identifying information about, the copyright owner of the work, including the information set forth in a notice of copyright.

McDermott claimed that by removing the credit that was included with the photograph as it was displayed in the New York Post, Combs violated both of the above provisions of the DMCA.

Since McDermott had registered his copyright in the photograph, if found liable for infringement, Combs could face liability for statutory damages up to $150,000 and attorney fees; add to that another potential $25,000 in liability for the DMCA violation.  According to a filing with the court, Combs and McDermott have settled the dispute.  As such, we will never know whether Combs could have defeated the infringement claim with a fair use argument.  Additionally, we will never know whether the court would have accepted McDermott’s claim that his photo credit qualified as “copyright management information.” (Certain courts read Section 1202 as applicable only to technological copyright protection methods and digital methods of conveying copyright management information.)  One thing is for certain:  this most likely ended up being one expensive Instagram post for Combs.