12 FOR 2012

Here is a link to the materials from last night's IP presentation at the Brewhouse.

Thanks to all those who came, and especially to those who helped close it down.

Upcoming IP Seminar in Norwalk, CT

I will be hosting a seminar at The Brewhouse Restaurant - 13 Marshall Street, Norwalk, CT, Thursday, February 2, 2012, 6:00 PM – 7:30 PM

The program is entitled:

12 for 2012: 12 Things Every Business Needs To Know About IP This Year -

12 key factors to consider in your IP strategy for 2012. Summarized in 12 slides within 48 minutes, with a 12 minute Q&A.

Complimentary cocktails and hors d'oeuvres.

Topics will include:

The impact of the America Invents Act on IP Strategy;

The advantages and disadvantages of IP licenses and sales;

How to adapt to 2011 case law hostile to rights owners;

The powerful branding trick used by the world’s most successful brand owners;

The real reason copyright registration is important; and

What to expect now that SOPA is dead.

If you are interested, please register at :www.foxrothschild.com/events/eventDetail.aspx

I look forward to seeing everyone there.

 

 

POST-LICENSE USE OF TRADEMARK IS COUNTERFEITING

A former trademark licensee’s continued use of a trademark after termination of the license constitutes trademark counterfeiting. That is the holding in a recent District of Indiana default judgment case, Century 21 v. Destiny Real Estate. The court explained:

If an unrelated entity had created an identical trademark and provided authorized goods or services (or the kind provided by the owner of the mark) under that mark, there would be no question that there was counterfeiting. The Court can conceive of no reason why an ex-franchisee should escape liability for counterfeiting simply because that person had access to a franchisor’s original marks because of the former relationship and therefore did not need to reproduce an identical or substantially similar mark.

Other courts have come to differing conclusions on this issues, in various contexts. In a 1997 case, the 6th Circuit held that a franchisee’s holdover use of a trademark was not counterfeiting. The 9th Circuit held that the licensee’s holdover was counterfeiting in a 2005 case involving continuing use of the Idaho potato certification mark.

The significance is that pursuant to 15 U.S.C. § 1117(b), if he is found to be a counterfeiter, the former licensee can be liable for statutory damages(up to $2 million in cases of willful counterfeiting), and will be liable for three times profits or damages, whichever amount is greater, together with a reasonable attorney’s fee unless the court finds “extenuating circumstances.” If he is merely an infringer, statutory damages are not available and treble damages and attorneys’ fees are less certain to be awarded. They may be awarded “subject to the principles of equity.”

The Century 21 court’s damage, injunction and individual liability analyses also are noteworthy. Century 21 sought its actual damages plus treble damages. The court held that such an amount would be quadruple, rather than treble damages, one multiple too many. The court further reduced the award to two times damages, on the ground that the liquidated damages provided for in the license agreement and awarded by the Court coincided with the actual damages, and therefore to awarded treble damages in addition would again result in quadruple recovery.

On a cheerful note for trademark owners, the Court granted a permanent injunction, finding that “the injury especially justifying injunctive relief is the loss of control over and harm to its valuable name and trademark, in which it has invested substantial effort and money over time to develop goodwill.” If that is going to suffice under Ebay, trademark owners may not need to be as concerned that injunctions against infringers will be harder to come by.

The court declined to impose liability on Destiny Real Estate’s principal. After surveying the law on individual liability for corporate trademark infringement, the Court found that Century 21’s allegations that the individual was President of the company and authorized or approved of the misconduct were not sufficient bases to hold the individual liable for the corporation’s infringement.
 

REAL WORLD EFFECTS OF THE ABSENCE OF PRESUMED IRREPARABLE HARM

If you want to see the effect of recent cases abolishing the presumption of irreparable harm following automatically from a likelihood of success, consider the recent decision in the Apple v. Samsung case. Apple sued Samsung for infringements of three design patents and one method patent, each of which pertained to the IPad or IPhone.  Apple sought a preliminary injunction prohibiting sale of three Samsung phones and one tablet.  The court denied Apple a preliminary injunction with respect to all four Samsung products, despite finding that Apple had demonstrated a likelihood of success with respect to three of its patents, in whole or in part because Apple was unable to demonstrate irreparable harm.  

If irreparable harm had been presumed, perhaps Apple would have gotten its injunction against one or more of the Samsung products.
 

NO PRESUMPTION OF IRREPARABLE HARM IN FALSE ADVERTISING CASES EITHER

Irreparable injury cannot be presumed in Lanham Act false advertising cases. That was the ruling in Leatherman Tool v. Coast Cutlery, a case decided in October in the District of Oregon. In that case the court found that Leatherman made a preliminary showing that its competitor, Coast Cutlery, deliberately included in advertising literally false statements concerning the sharpness of its knife blades. The court did not issue a preliminary injunction, however, because it found Leatherman’s affidavits avowing concern that sales would be diverted were speculative, and insufficient to prove that Leatherman would be irreparably harmed by its competitor’s literally false advertising.

On the heels of cases within the past five years expressly ruling a presumption of irreparable harm does not apply in patent and copyright cases,  a recent decision from the First Circuit in a trademark case and a one from the District of Arizona concerning another Lanham Act case, it is now seems likely, to the extent it was not after the Supreme Court's decision in Ebay, that  the days in which plaintiffs can count on a presumption of irreparable harm in an IP case of any type may be numbered.

The challenge now, for intellectual property owners, scrupulous advertisers and courts, is to prevent us from sliding into a culture of infringe now, pay later. Infringers will no doubt in every case assert that irreparable harm cannot be proven because the wrongdoing can be remedied by payment of damages, in the form of a license fee or, in the case of false advertisers and trademark infringers, payments for proven diverted sales. That leaves the plaintiff with a difficult task to prove otherwise, the danger the presumption of irreparable harm was designed to prevent. And so the battle lines are re-drawn. 

DEFINITELY NO PRESUMPTION OF IRREPARABLE HARM FOR PATENT INFRINGEMENT

The Federal Circuit this week expressly confirmed that there is no presumption of irreparable harm for patent infringement, and injunctions should not be granted automatically in patent cases. That is consistent with the Supreme Court's decision in Ebay v. MercExchange and the rule in copyright cases as reported in the July 13, 2011 post on this blog.

The following is an excerpt of the relevant portion of the opinion in Robert Bosch LLC v. Pylon Mfg. Corp., No. 11-1096 (Fed. Cir. Oct. 12, 2011) (internal citations omitted):

Prior to the Supreme Court’s decision in eBay, this court followed the general rule that a permanent injunction will issue once infringement and validity have been adjudged, absent a sound reason to deny such relief. . . . In addition, at least in the context of preliminary injunctive relief, we applied an express presumption of irreparable harm upon finding that a plaintiff was likely to succeed on the merits of a patent infringement claim. In eBay, the Supreme Court made clear that "broad classifications" and "categorical rule[s]" have no place in this inquiry. Instead, courts are to exercise their discretion in accordance with traditional principles of equity. The Supreme Court, however, did not expressly address the presumption of irreparable harm, and our subsequent cases have not definitively clarified whether that presumption remains intact. . . . We take this opportunity to put the question to rest and confirm that eBay jettisoned the presumption of irreparable harm as it applies to determining the appropriateness of injunctive relief. In so holding, we join at least two of our sister circuits that have reached the same conclusion as it relates to a similar presumption in copyright infringement matters. Although eBay abolishes our general rule that an in-junction normally will issue when a patent is found to have been valid and infringed, it does not swing the pendulum in the opposite direction. In other words, even though a successful patent infringement plaintiff can no longer rely on presumptions or other shortcuts to support a request for a permanent injunction, it does not follow that courts should entirely ignore the fundamental nature of patents as property rights granting the owner the right to exclude. . . . While the patentee’s right to exclude alone cannot justify an injunction, it should not be ignored either. 

The foregoing is a guest post authored by Chris Kinkade of Fox Rothschild's Princeton, NJ office.


 

COPYRIGHT - DAMAGES BETTER, INJUNCTIONS WORSE

Copyright litigants would be wise to focus early on available infringement remedies in light of recent decisions. Following the Supreme Court decision in Ebay v. MercExchange and the Second Circuit Decision in the Salinger v. Colting case, litigants need to plan that they will need to prove irreparable injury to get an injunction, the presumption of irreparable harm is no longer available. That could make injunctions tougher to get in some cases. At the same time, litigants should plan that pre-judgment interest, dating back to the beginning of the infringement, is available based on the Third Circuit's recent decision in the Haughey case. Pre-judgment interest could significantly increase damages in certain cases.  So it might be harder to make 'em stop, but you might make 'em pay more.
 

WE HAVE AN INJUNCTION, WHY CAN'T WE GET CONTEMPT?

It is not always the case that once a court issues an injunction prohibiting further patent infringement , any further infringement will be punishable by contempt. That is often a disappointment for patent owners, but the recent Federal Circuit en banc opinion in Tivo v. Echostar explains how this can occur.

A two part inquiry is required to determine whether the enjoined party may be found in contempt. The first question is whether there are “colorable differences” between the enjoined product and the re-designed product. The crucial question for determining whether there are colorable differences is: what are the differences between the features relied on to determine infringement and the modified features? If the differences are “colorable” or “significant” there can be no contempt, even if the re-design still infringes the patent. If, on the other hand, any differences are not colorable, the court must then determine whether the re-design infringes the patent. The enjoined party should be held in contempt only if the differences are non-colorable and the re-design infringes.

On a motion for contempt, the patentee bears the burden of proving both the absence of colorable differences and the continuing infringement by clear and convincing evidence. It is no defense, however, that the enjoined party did not intend to violate the injunction, although the court may in its discretion consider diligence and good-faith efforts for purposes of mitigating the punishment.

The Court rejected Echostar’s argument that it should not be held in contempt because the injunction was vague and overbroad. The Court emphasized that the time to challenge the clarity of the injunction is when it issues; a party cannot act first and then complain about ambiguity or breadth when it is caught.
 

Dead and Buried

LimeWire died this week. Enjoined out of existence like Napster, Grokster and Aimster before it. Its legacy is that it helped fuel contempt for the copyright law in a substantial segment of the population.

 Here’s what you will see if you go to the LimeWire site.

Legal Notice
This is an official notice that LimeWire is under a court-ordered injunction to stop distributing and supporting its file-sharing software. Downloading or sharing copyrighted content without authorization is illegal.


Good.