Archive for June, 2009

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Tweets – Decisions Released on June 30, 2009

Tuesday, June 30th, 2009

Florida Franchise Act
Eleventh Circuit
Burger King Corp. v. Sadik d/b/a E-Z Eating
2008-15078
USDC SD Florida

Did a franchisor violate an implied covenant of good faith and fair dealing by failing to exempt a franchisee from a system-wide program? Defendant-Appellant operated four “in-line” Burger King franchises, i.e., the restaurants were not free-standing buildings, in New York City. Through a written franchise contract the Appellant had agreed to obey the Appellee’s manual of procedures as such may be amended over time at Appellee’s good faith discretion. The agreement further provided that Appellee was to furnish communications and advice regarding operations. It also stated that abandonment of any franchised restaurant constituted a material default and good cause for Appellee to terminate the contract. A limited license to use the franchise trademarks ran with the franchise agreement. After several years, some of Appellant’s restaurants became unprofitable and Appellant fell behind in its franchise payments. Then, Appellee issued a franchise-wide policy change that implemented a special menu and established maximum prices. Failure to comply with the new policy was deemed to trigger default under extant agreements. However, several exceptions were identified, each subject to specific criteria, and one such exception covered in-line franchise restaurants provided application for exemption was made in writing. Appellant did not institute the special menu, and apparently it did not transmit a formal application for exemption. Appellant also closed two restaurants. In response, Appellee transmitted notice that the franchise agreement was terminated together with a demand that Appellant cease using the licensed trademarks. Appellee subsequently sued for breach and payments. Appellant alleged inter alia that imposition of the special menu breached the implied duty of good faith and fair dealing. The district court rejected this counterclaim on motion for summary judgment and the instant appeal ensued. The Eleventh Circuit reviewed the parties’ franchise agreement and determined that the contract had granted Appellee considerable latititude in matters of franchise operations. Thus, Appellee held the power and authority to impose a special menu on its franchisees. Based on Appellant’s own deposition testimony, the Eleventh Circuit further determined that Appellant had failed to direct a conforming written application for exception to the special menu requirement and therefore the court did not have to address whether Appellee had acted in good faith. Accordingly, the judgment for the franchisor was AFFIRMED.

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Tweets – Decisions Released on June 29, 2009

Monday, June 29th, 2009

Communications Decency Act of 1996
Telecommunications Act of 1996
Tenth Circuit
FTC v. Accusearch, Inc.  d/b/a Abika.com
2008-8003
USDC Wyoming

Is the Federal Trade Commission entitled to enjoin a website operator from reselling personal and confidential information, including telephone records, in connection with the site? Defendant-Appellant ran a homepage that offered certain records obtainable via undisclosed third parties concerning target individuals, such as court dockets, sex offender status, tax data, romantic preferences, personality traits and even rumors. Plaintiff-Appellee procured a court order against Appellant to shut-down the intermediary website service. The instant appeal ensued. Appellant argued that an unfair-practice claim against Appellant should have been dismissed since Appellant had not directly violated any laws given its reliance on third parties to perform the searches and, further, because Appellee lacked authority to enforce the Telecommunications Act of 1996, 47 U.S.C. § 222. (Telephone records are safeguarded from unauthorized disclosure under § 702.) Appellant also urged that it was immunized from the injunction by the safe harbors provided website operators pursuant to the Communications Decency Act of 1996, 47 U.S.C. § 230. Further, Appellant contended that the injunction was unnecessary to prevent it from resuming trade in telephone records and thus was unconstitutionally overbroad. The Tenth Circuit disagreed with Appellant as to the first line of reasons it had proffered for reversal, observing that a violation of the Telecommunications Act turns upon conduct by anybody and not just the activities directly undertaken by a party. The court also held that Appellee has an implied authority to proceed against unfair practices even where those practices violate a statute Appellee lacks explicit authority to administer. The Tenth Circuit likewise sided with Appellee as to the Communications Decency Act argumentation, noting first however that should Appellant fail to satisfy a single requirement for safe harbor under the Act then Appellant could not qualify for protection. The court analyzed the Act with considerable rigor and ultimately concluded that, since Appellant had provided some informational content to buyers, Appellant had changed its status to that of an “information content provider” and thus was ineligible for statutory immunity. Finally, the Tenth Circuit held that the grant of injunctive relief had fully-complied with at least the minimal requisites set forth in U.S. v. Deberry, 430 F.3d 1294 (10th Cir. 2005). The district court did not err and thus its ruling is properly AFFIRMED.

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Tweets – Decisions Released on June 26, 2009

Sunday, June 28th, 2009

Copyright
Ninth Circuit
Cadkin v. May-Loo Music, Inc.
2008-55311
USDC CD California

Is a defendant entitled to attorney fees as a prevailing party under § 505 of the Copyright Act, 17 U.S.C. § 505, when a plaintiff voluntarily dismisses without prejudice a lawsuit containing copyright claims pursuant to Fed. R. Civ. P. 41(a)(1)(B)? Plaintiff-Appellant had created and recorded thousands of short musical works used in television and movies. It filed a federal complaint alleging inter alia that Defendant-Appellee had registered a collection of Appellant’s works with the Copyright Office under Appellee’s name. Appellant then moved for remand to state court and attached an amended complaint to the motion which admitted “none of the parties herein may own the rights in any of the musical compositions at issue.” The district court denied remand. Appellant voluntarily dismissed the action without prejudice. Appellee obtained an award of attorney fees from the court and Appellant lodged the instant appeal. The Ninth Circuit held that, because the Appellant remained free to refile its copyright claims in federal court following voluntary dismissal, the Appellee was not a “prevailing party” and thus was not entitled to the fees the district court had awarded it. Further, the circuit court ruling overturns contrary precedent, Corcoran v. Columbia Broadcasting System, Inc., 121 F.2d 575 (9th Cir. 1941).

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Patent Infringement
Federal Circuit
Garber v. Chicago Mercantile Exchange
2009-1047, -1384
USDC ND Illinois

Did a district court abuse its discretion by denying Plaintiff-Appellant Fed. R. Civ. P. 60(b) relief where the parties to a patent infringement suit had stipulated to voluntary dismissal without prejudice, the court acknowledged dismissal without prejudice, but the court later dismissed the case with prejudice? Original counsel for Appellant withdrew. Unable to procure substitute representation, Appellant obtained written agreement by the other side to dismiss the case without prejudice. The district court entered the stipulation, expressly recognized dismissal without prejudice and established a date by which Appellant was to refile the case. After Appellant failed to meet this date, the court entered a formal dismissal with prejudice. On appeal, Appellant argued that the joint stipulation entered into by all parties was filed pursuant to Fed. R. Civ. P. 41(a)(1). Because the stipulation was entered pursuant to that rule, the district court was immediately divested of subject matter jurisdiction according to Appellant. Thus, all orders following the entry of stipulation were void. Appellee disagreed, arguing that the agreement between the parties was filed pursuant to Rule 41(a)(2) and thus required action by the district court. The agreement, in this view, did not divest the court of jurisdiction but instead constituted a mere request for the district court to dismiss the case without prejudice on terms that the court considered proper. Appellee thus argued the court had retained jurisdiction over the case and was within its discretion to grant or deny the parties’ request. The Federal Circuit held for Appellant. It ruled that the stipulation entered was brought pursuant to Rule 41(a)(1) based on the fact the agreement was a stipulation agreed to by all parties. Therefore the Federal Circuit REVERSED the district court’s denial of Appellant’s Rule 60(b) motion for relief from the dismissal with prejudice.

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Tweets – Decisions Released on June 25, 2009

Sunday, June 28th, 2009

Communications Decency Act of 1996
Ninth Circuit
Zango, Inc. v. Kaspersky Lab, Inc.
2007-35800
USDC WD Washington

Does the Communications Decency Act of 1996, 47 U.S.C. § 230, shelter a distributor of Web security applications from a lawsuit that alleges the software improperly interferes with downloadable programs provided by an online media company? Defendant-Appellee sells Internet security software that blocks the operation of malware. It categorized Plaintiff-Appellant’s various downloadable and installable applications as malware and thus configured its software to block the operation of such unless explicitly consented to by an end user. Appellant sued on claims for injunctive relief, tortious interference with contractual rights, violation of the Washington Consumer Protection Act, trade libel and unjust enrichment. The district court granted summary judgment in favor of Appellee, holding that § 230(c)(2)(B) immunizes Appellee from the claims. On appeal, the Ninth Circuit observed that “this case presents a different problem, and a statutory provision with a different aim, from ones we have encountered before.” It stated that Appellee should receive safe harbor under § 230(c)(2)(B) from civil liability if Appellee is found to be a “provider” of “an interactive computer service.” The Ninth Circuit held that Appellee does qualify insofar as the plain language of the statute protects an “access software provider that provides or enables computer access by multiple users to a computer server” pursuant to § 230(f)(2), and court noted that Appellee’s application update servers faciliate such access by end users. Therefore, a provider of access tools that filter, screen, allow, or disallow content that the provider or user considers obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable “is protected from liability for any action taken to make available to others the technical means to restrict access to objectionable material.” Summary judgment for Appellee AFFIRMED.

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Patent
Federal Circuit
In re Richard P. Mettke
2009-1125
Board of Patent Appeals and Interferences

Appellant obtained U.S. Patent No. 5,602,905 for an “On-Line Communication Terminal/Apparatus.” Subsequently, he applied for reissue pursuant to 35 U.S.C. §251 and declared that he believed the patent to be wholly or partly inoperative or invalid by reason of his claiming less than he had the right to claim. Appellant urged that he had inadvertently omitted claims that recited “accessing the Internet” generally and not merely accessing “commercial on-line services” as originally expressed. As a consequence, several interested parties lodged protests to the reissue under 37 C.F.R. §1.291(a) and furnished additional references not previously considered during prosecution. The examining attorney rejected the claim revisions. The Board affirmed and, further, it entered a new ground of rejection for obviousness based upon the newly-disclosed references. On appeal the Federal Circuit AFFIRMED the rejection as well as the determination as to obviousness, holding on the latter question that three fresh references considered together did support the Board’s 35 U.S.C. § 103(a) conclusion.

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Right of Publicity
Eleventh Circuit
Estate of Nancy E. Benoit v. LFP Publishing Group, LLC d/b/a Hustler Magazine
2008-16148
USDC ND Georgia

Did twenty-year-old private, nude photographs qualify under the newsworthiness exception to the Georgia right of publicity when published with an article of sensational interest? Nancy Benoit had been a professional model and wrestler. She was brutally murdered by her husband, who was a well-known professional wrestler. Twenty years prior, Benoit had permitted a third party to take personal photographs and video of her appearing privately in the nude. Following death, Defendant-Appellee obtained images from the nude photo session and published them in connection with an article about the circumstances of Benoit’s life and demise. The estate filed a lawsuit in state court alleging right of publicity violations but later removed the case to the Northern District of Georgia. The district court granted Defendant-Appellee’s motion to dismiss for failure to state a claim premised on the court’s view that “there is no dispute that Ms. Benoit’s death was a ‘legitimate matter of public interest and concern.’” The estate timely appealed. In reviewing the decision, the Eleventh Circuit analyzed the privacy right underpinnings of the right of publicity and focused on its economic element. The court held that Benoit’s nudity is not per se newsworthy. The biographical piece itself was, however, deemed newsworthy given the events it described. The pertinent issue therefore was whether the textual content could elevate the otherwise protected, personal photographs into the newsworthiness exception realm. The Eleventh Circuit answered this question in the negative, finding that the private, nude photographs were not incident to a newsworthy article but rather the biography was incident to the photographs. Moreover, the photographs were not related in time or concept to the current incident of public interest. As to the economic element, the Eleventh Circuit held that the estate was entitled to control when and whether private images are made public in order to maximize the economic benefit to be derived from Benoit’s posthumous fame. Therefore, the dismissal by the district court was ruled erroneous and the decision REVERSED and REMANDED.

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Tweets – Decisions Released on June 24, 2009

Wednesday, June 24th, 2009

Trade Identity
Eighth Circuit
Champagne Louis Roederer v. J. Garcia Carrion, SA
2008-2907
USDC Minnesota

“Grapes of Wrath” – May a district court hold that laches bars a trademark infringement suit where the court has failed to conduct a substantive progressive encroachment analysis which determines when the infringement became actionable for the purpose of computing the period of delay? Plaintiff-Appellant owns registered federal trademarks for CRISTAL CHAMPAGNE and CRISTAL CHAMPAGNE LR for rare, very expensive sparkling wines that originate from the Champagne region in France. It sued Defendant-Appellee for trademark infringement more than fifteen years after learning the latter party was promoting inexpensive sparkling wines from Spain under various formatives of CRISTALINO. The district court granted Appellee’s motion to dismiss the suit on the ground of laches. The court noted that laches requires a progressive encroachment determination and concluded this favored Appellee. The conclusion was premised on the court’s observation “the evidence shows that sales of Cristalino have been greater than sales of Cristal since at least the mid-1990’s.” On appeal, the Eighth Circuit ruled that such progressive encroachment analysis is not adequate and therefore constitutes reversible error. “Although it would be unworkable to require a district court to locate the precise moment a trademark claim became actionable before proceeding with its laches analysis, more is required than merely citing marginal or irrelevant factors without reference to any of the principles governing trademark infringement.” The Eighth Circuit also held that Appellee had failed to show that it would suffer unjust prejudice from the fifteen-year delay since its sales of CRISTALINO accounted for only a small amount of the total business. The panel stated this factor alone could serve to preclude a laches dismissal. Accordingly, the decision to bar the trademark infringment lawsuit due to laches is REVERSED and REMANDED for further proceedings.

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Tweets – Decisions Released on June 22, 2009

Monday, June 22nd, 2009

Trade Identity
Eighth Circuit
B & B Hardware, Inc. v. Hargis Industries, Inc.
2007-3866
USDC ED Arkansas

Is a jury determination that a federally-registered mark is merely descriptive entitled to preclusive effect where the U.S. Patent & Trademark Office subsequently recognizes the mark has become incontestable? Since the 1990’s, the parties had fought one another for many rounds over their respective rights to the trademark SEALTITE. Plaintiff-Appellant was the first to register the mark with the USPTO for its product, an aerospace fastener. During pendancy of the application, Defendant-Appellee commenced use of SEALTITE for a line of self-drilling and self-taping screws directed to the metal building industry. Appellee filed a federal trademark application but registration was refused under 15 U.S.C. § 1052(d) in view of Appellant’s now-issued registration for SEALTITE. Appellee lodged a cancellation proceeding, however, the action was stayed after Appellant instituted a trademark infringement suit in federal court. The litigation went to trial and the jury determined that there was no infringement. Moreover, Appellant’s mark was found to be merely descriptive and without secondary meaning. Numerous actions between the parties ensued before the Trademark Trial and Appeal Board. Appellant’s federal registration attained incontestability status during the interim. Appellant filed a second trademark infringement suit against Appellee. In response, Appellee pursued dismissal on grounds of res judicata and collateral estoppel based upon the prior verdict. The district court granted Appellee’s motion to dismiss on collateral estoppel grounds despite having acknowledged the incontestability status of Appellant’s federal registration as well as TTAB rulings that had favored Appellant. The instant appeal was timely submitted. Appellant contended that the district court had erred in granting the motion to dismiss on the basis of collateral estoppel and, further, that the court had failed to defer to the TTAB position. The Eighth Circuit decided for Appellant and held that dismissal of the action was inappropriate given the district court had not properly evaluated how acquisition of incontestability status impacts the effect of the jury verdict in the original civil suit. It observed that incontestability “constitutes a significant intervening factual change.” The Eighth Circuit declined to address the matter of deference to TTAB decisions. Thus, the holding of the district court is REVERSED and the case REMANDED with instructions.

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Tweets – Decisions Released on June 19, 2009

Monday, June 22nd, 2009

Trade Identity
Second Circuit
Zino Davidoff SA v. CVS Corp.
2007-2872
USDC SD New York

Should an accused trademark infringer be preliminarily enjoined from removing UPC labels off fragrance packaging when the accused obtains the product through a third party supplier for resale? Plaintiff-Appellee owns trademarks for COOL WATER in connection with perfumes and colognes. It licenses another company to manufacture and distribute the branded fragrances inside the United States. The product line is considered upscale and, accordingly, Appellee has refused Appellant, which is a retail drugstore chain, permission to operate as an authorized distributor of the fragrances. Appellant circumvented this refusal by obtaining COOL WATER products from outside normal distribution channels and then Appellant destroyed the UPC markings on a percentage of the product packages before placing the fragrances on its retail shelves. Appellee learned of these practices. Following issuance of a temporary restraining order, Appellee investigated and concluded that Appellant had been selling both counterfeit and gray-market versions of COOL WATER products. Appellant agreed to cease selling counterfeit fragrances but it maintained that sales of product bearing adulterated UPC labels would continue. Appellee obtained a preliminary injunction that barred all sales of COOL WATER products with the UPC markings removed. In granting relief, the district court found that Appellant’s practice of destroying UPC labels interfered with Appellee’s ability to identify counterfeit goods and to control the quality of its legitimate products by identifying and recalling defective products. The court believed this likely constitutes trademark infringement. On appeal, the Second Circuit applied the test for issuing preliminary injunction in trademark infringement cases set forth at Fed. Express Corp. v. Fed. Espresso, Inc., 201 F.3d 168, 173 (2d Cir. 2000). It held that under these factors relief was properly granted insofar as Appellee was likely to succeed on the merits of its contentions and, further, that Appellee was likely to suffer irreparable harm in the absence of an injunction. Specifically, the adulteration of Appellee’s UPC labels interfered unlawfully with Appellee’s trademark rights no matter whether the fragrances had originated from authorized or unauthorized sources. The crux is Appellee’s ability to control the quality of products that bear its trademark. Consequently, the Second Circuit AFFIRMED the issuance of the preliminary injunction.

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Tweets – Decisions Released on June 18, 2009

Friday, June 19th, 2009

Patent Infringement
Trade Identity
Federal Circuit
McZeal v. Sprint Nextel Corp.
2008-1374
USDC SD Texas

Plaintiff-Appellant filed a lawsuit pro se alleging infringements of the registered service mark INTERNATIONAL WALKIE TALKIE and of U.S. Patent No. 6,763,226 for satellite based, tri-frequency cellular wireless and networking technologies. Early in the litigation, the district court dismissed the case on the basis of its determination that Appellant had failed to state a claim upon which relief could be granted. The Federal Circuit reversed and remanded with instructions. Appellant was required to furnish adequate support for his contentions. He did not comply with this requirement despite multiple opportunities. The district court again dismissed the suit on the ground of failure to state a claim, however, it added the ground that Appellant had not prosecuted the case actively. On appeal, the Federal Circuit ruled improper the dismissal for failure to make a justiciable claim but AFFIRMED dismissal on the alternative basis that Appellant had failed to prosecute the action.

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Tweets – Decisions Released on June 17, 2009

Wednesday, June 17th, 2009

Patent
Federal Circuit
Cartner and Motrim, Inc. v. Alamo Group, Inc.
2009-1097
USDC ND Ohio

The district court held that certain claims in U.S. Patent No. 5,197,284 which concern a deceleration circuit for slowing a hydraulic motor to a stop upon shut down are invalid for failure to meet the written description requirement of 35 U.S.C. § 112. The gravamen was the claim limitation “said flow control orifice being constantly operative.” On review it was determined that the district court had improperly construed the pertinent limitation because it discounted both the specification and prosecution history. Therefore, the Federal Circuit VACATED and REMANDED with its revised interpretation of terms.

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Tweets – Decisions Released on June 16, 2009

Wednesday, June 17th, 2009

Patent
Federal Circuit
In re David M. Baggett
2009-1029
Board of Patent Appeals and Interferences

The Board had rejected forty-nine of Appellant’s fifty patent application claims set forth in Serial No. 09/877,159 regarding technology to produce “constructed” fares for multi-step airline flights. Several references consisting of a prior patent application and open literature would teach the claimed subject matter and thus render it obvious to a PHOSITA in the Board’s view. The Federal Circuit held that the Board sufficiently articulated valid legal reasoning with adequate support that justified the conclusion of obviousness in respect of all claims except for three under KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007). The three outlier claims depend on a proper interpretation of the term “memoization” and the examining attorney was found to have erroneously applied a definition of the unrelated term, “memorization.” Accordingly, the Board stipulated to a REMAND on the interpretation of memoization and its decision on the affected three claims was VACATED. Rejection of majority claims AFFIRMED.

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