Recently, the Supreme Court held that “[l]ack of knowledge of either fact or law can excuse an inaccuracy in a copyright registration,” as “§411(b) [of the Copyright Act] does not distinguish between a mistake of law and a mistake of fact.” Fabric designer Unicolors sued retailer H&M for copyright infringement based on a group copyright registration for 31 designs. After a jury finding in favor of Unicolors, H&M moved for judgment as a matter of law and argued that Unicolors’ registration certificate was invalid for containing inaccurate information. Relying on a Copyright Office regulation which provides that a single registration can cover multiple works only if those works were “included in the same unit of publication,” H&M argued that the designs at issue were not published as a single unit of publication: Unicolors had initially made a portion of the designs available exclusively to certain customers, while others were immediately made available to the public. The District Court held that, based on §411(b)(1)(A), because Unicolors did not know that it failed to satisfy the “single unit of publication” requirement when filing its application, the purported inaccuracy could not invalidate the registration.
On appeal, the Ninth Circuit agreed with H&M that Unicolors did not meet the “single unit of publication” requirement for registration, as it offered some of the 31 designs to certain customers. Further, the Ninth Circuit found that knowledge of the inaccuracy was irrelevant, since it interpreted the statute as excusing only good-faith mistakes of fact, not law. The Ninth Circuit held that Unicolors had known the relevant facts and that its knowledge of the law was irrelevant under the safe harbor provision.
In its reversal, the Supreme Court focused on the scope of the phrase “with knowledge that it was inaccurate.” Examining case law, dictionary definitions, and adjacent statutory provisions, the Court noted that “knowledge” means the “fact or condition of being aware of something,” and held that nothing in the statutory language suggests a distinction between a mistake of fact and a mistake of law. Thus, since Unicolors contended that it was not aware of the legal requirement that rendered the information in its application inaccurate, it could not include said information “with knowledge that it was inaccurate.”
Further, the Court noted that cases decided before Congress enacted §411(b) “overwhelming[ly held] that inadvertent mistakes on registration certificates [did] not invalidate a copyright and thus [did] not bar infringement actions.” Likewise, legislative history indicated that Congress enacted the statute to make it easier for nonlawyers to obtain valid copyright registrations. The relevant House Report notes that Congress intended to “eliminat[e] loopholes that might prevent enforcement of otherwise validly registered copyrights,” such invalidation based on mistakes on registration documents. Thus, copyright invalidation based on an applicant’s good-faith misunderstandings of copyright law’s technicalities would be contrary to legislative history.
The Supreme Court’s holding likely makes it easier for creatives to obtain valid copyright registrations without the assistance of a lawyer. However, the Court cautions that lower courts “need not automatically accept a copyright holder’s claim that it was unaware of the relevant legal requirements of copyright law,” as circumstantial evidence may lead to a finding of willful blindness or actual knowledge of legally inaccurate information.
The instant case shows how a district court applied the “customer-suit exception” in a patent infringement suit. Normally, courts give priority to a prior-filed action over a later-filed action. This is commonly known as the “first-filed rule.” However, in the context of patent litigation, the “customer-suit exception” provides an exception to the rule. The exception was applied in a recent decision handed down by Judge Albright of the Western District of Texas.
In general, the customer-suit exception provides that, when patent infringement actions are brought against a manufacturer and its customers, the manufacturer suit takes priority, even if the customers’ suit was filed first. In other words, the action against the customers will be stayed pending resolution of the action against the manufacturer. The same is true when the manufacturer files an invalidity action against the patent owner: the invalidity action has priority over the infringement action against the customers.
In prioritizing the action against the manufacturer, courts are removing the burdens of trial on the customers and protecting the manufacturer’s greater interest in defending against charges of patent infringement. In determining whether the customer-suit exception applies, courts analyze three factors: “(1) whether the customer-defendant in the earlier-filed case is merely a reseller; (2) whether the customer-defendant agrees to be bound by any decision in the later-filed case that is in favor of the patent owner; and (3) whether the manufacturer is the only source of the infringing product.” Sonrai Memory Ltd. v. Samsung Elecs. Co., 2022 WL 572301 at *3.
In Sonrai, Sonrai filed patent infringement actions against both manufacturers and customers of certain NAND flash memory chips. Samsung, being one of the customers, requested the court to stay the action against it pending resolution of the manufacturer actions.
In granting the stay, Judge Albright found that, although Samsung was more than a mere reseller, there was a “significant overlap” in the manufacturer and customer suits that drew the case within the rule. Specifically, he noted that 1) the defendants all agreed that the asserted apparatus claims were exclusively asserted against the chip and the products containing them; and 2) Sonrai used the same infringement claim chart in all of its actions against the customers. Accordingly, the Court concluded that its determinations in the manufacturer actions would simplify the Samsung case “so long as Samsung agree [sic] to be bound by those determinations.” Id.
Finally, for the third factor, the Court used its discretion to sever and stay Sonrai’s customer action from other actions brought against Samsung. The Court explained that it did so in the interests of conserving judicial and party resources and avoiding inconsistent judgments.
On February 11, 2022, the Western District of Texas considered the venue implications of Covid-19 remote work policies. The Court held that while Covid-19 did not change venue law, a company’s temporary lack of a physical office during Covid-19 caused the Court to have improper venue. The Court accordingly granted the motion to dismiss.
GreatGigz filed a patent infringement complaint in the Western District of Texas against ZipRecruiter, a Delaware corporation, alleging venue based on ZipRecruiter maintaining a regular and established place of business in the District. In patent cases, unless the action is filed in the defendant’s state of incorporation, venue is proper if the defendant has a “regular and established place of business” by: (1) having a physical place in the district; (2) it is a regular and established place of business; and (3) it is the place of the defendant.” In re Cray Inc., 871 F.3d 1355, 1360 (Fed. Cir. 2017).
While ZipRecruiter had leased office space in the District, that lease lapsed during the pandemic when employees were working remotely. GreatGigz argued the prior lease suggests a need for employees physically located in the District and that remote employees’ homes in the District serve as the physical location of ZipRecruiter. However, the Court found that GreatGigz did not prove that ZipRecruiter has a “regular and established” place of business in the District under the Cray test. Even though an employee’s home could be used to satisfy the first prong of Cray, the Court found the other prongs lacking. The Court analyzed venue under the “traditional approach” which looks at venue at the time of filing, rejecting the “reasonable and fair standard” which evaluates venue at the time the action accrued and whether the suit is filed within a reasonable time thereafter.
The Court analyzed whether employees’ homes were an established place of business by looking at (1) the permanence of the location; (2) whether the activity there is sporadic; (3) whether the employee can move out of the District without the approval of ZipRecruiter; (4) whether ZipRecruiter owns or leases the home; (5) whether the home was used to store, distribute, or sell goods; and (6) any marketing that identifies the homes as a place for business. The Court found each of these factors weighed against finding the homes to be the established location of ZipRecruiter. Therefore, although the pandemic changed the way America works, the Court held that it did not change established civil procedure and granted ZipRecruiter’s motion to dismiss for lack of proper venue.
While not analyzed by the Court, should ZipRecruiter sign a new office lease as its employees in the District begin to return to work, a similar Complaint refiled by GreatGigz at that time may establish proper venue. Thus, while the law on proper venue may not have changed due to Covid-19, remote working policies due to Covid-19 may provide certain companies with temporary periods of time where it should no longer be assumed that venue is proper where it has historically existed for the company.
Jason Keener (Irwin IP LLP) and David Brandon (Clark Hill LLP) represent Denice Shakarian Halicki, Eleanor Licensing, LLC, and Gone in 60 Seconds Motorsports, LLC in an ongoing federal lawsuit (case number 8:20-CV-01344) against Shelby/Classic Recreations. The lawsuit seeks millions in damages for unauthorized replicas of Denice Halicki’s copyrighted 2000 Remake film ‘Gone in 60 Seconds’ character, Eleanor car, involving Carroll Shelby Licensing, Inc., Carroll Hall Shelby Trust, Classic Recreations, LLC, Jason Engel, and Tony Engel.
To read the full article, visit: https://www.businesswire.com/news/home/20230202005298/en/Clark-Hill-Announces-Denice-Halicki%E2%80%99s-Breach-of-Contract-Case-Against-Shelby-for-Creating-Eleanor-Replica-Cars-Set-for-Trial
On February 14, 2022, the Southern District Court of New York ruled that “Say Yes To The Dress” designer Hayley Paige Gutman (“Gutman”) was required to split certain social media accounts with fashion company and former employer, JLM Couture, Inc. (“JLM”). The Court ordered JLM to return the TikTok account to Gutman because JLM did not use the account as an advertising platform for its brands, but gave JLM control over the disputed Instagram and Pinterest accounts.
In 2011, JLM and Gutman entered into a contract in which Gutman, as a designer for JLM, was required to post Hayley Paige (“HP”) brand materials and JLM-approved content on her social media accounts, to assist in JLM advertising, not to compete with JLM or post off-brand content, and not to use her name in trade or commerce without JLM’s permission. Pursuant to a marketing strategy intended to “combine the personality with the brand,” Gutman and JLM entered into a “Names Rights Agreement” under which JLM obtained certain trademark rights in Gutman’s name (i.e. “the Designer’s Name”). Following a falling out in 2019, Gutman changed the password to the “misshayleypaige” Instagram account (created after she joined JLM, but with a username Gutman was already using in social media), locking JLM out. Then, she began using it for non-JLM uses, such as to promote herself as a celebrity influencer and to endorse third-party products and services. JLM sued for breach of contract and moved for a preliminary injunction to regain control of those accounts and restrain Gutman from further breaches.
The Court originally granted JLM’s motion for preliminary injunction and entered a preliminary injunction order enjoining Gutman and other persons in active concert with her from taking a number of actions. Gutman appealed the preliminary injunction order and challenged the provisions (1) ordering her not to compete with JLM, (2) barring her from using “Hayley Paige Gutman” and its derivatives in trade or commerce, (3) awarding control over disputed accounts to JLM, and (4) that JLM did not breach the contract and forfeit its rights to seek injunctive relief. The Second Circuit affirmed that Gutman’s first, second, and fourth challenges were foreclosed by the plain language of the contract but that the Court erred in transferring control of the accounts to JLM because her contractual breaches did not alone support the relief of transferring the disputed accounts (a remedy sounding in property). Thus, the Second Circuit vacated those provisions of the preliminary injunction order and remanded for further consideration.
The Court found that JLM provided credible evidence that warranted injunctive relief relating to control of the Instagram and Pinterest accounts: that they served as “critical advertising platforms for the HP brands” but returned the TikTok account because JLM could not prove that the account served as an advertising platform for JLM’s HP brands, and unlike the other accounts, JLM could not show that it had access to the account before the preliminary injunction order. Thus, the Court required JLM to return the TikTok account credentials to Gutman with the caveat that her subsequent use of it was nonetheless limited by her obligations under the contract and the preliminary injunction order.
Gutman regained her TikTok account, but her use of it—and “the Designer’s Name”—remains bound by contract. And, even as Gutman and JLM’s battle rages on in courtrooms and on Twitter, “misshayleypaige” continues to post cleverly captioned photos to the Gram. A bleakly dystopian reminder of just how much one can give up with a piece of paper and a signature (JLM has rights in that too, btw).
Recently, the Court of Appeals for the Federal Circuit (“CAFC”) found that sending a quote to a potential customer was enough to invalidate a patent under the on-sale bar. Plaintiff and patent owner, Larry G. Junker sued Defendant Medical Components, Inc. (“MedComp”) in the Eastern District of Pennsylvania alleging that it infringed U.S. Design Patent No. D450,839 (the ‘839 patent). The district court rejected MedComp’s argument that an offer for sale of a product covered by the ‘839 patent prior to its critical date invalidated the patent under the on-sale bar of 35 U.S.C. § 102(b). The CAFC reversed the district court. In 1998, Junker engaged James Edding and his company to begin developing a handle for an introducer sheath for a catheter. Junker’s idea was to use a “Mickey Mouse ear” design to peel or tear away the handle and sheath after the catheter is introduced. By January 1999, after several rounds of prototypes, Eddings arrived at a satisfactory iteration. On January 8, 1999, at the request of Boston Scientific Corporation (“BSC”), Eddings sent a letter to BSC with a quote for an introducer sheath for a catheter that included a price chart with specific tiered information on prices for different sized devices to be shipped FOB to Athens, Texas and ended with an invitation for the parties to meet in person and discuss BSC’s needs. On February 7, 2000, after this letter was sent, Junker filed his application for the ‘839 patent, which covered the product developed by Eddings.
MedComp argued that the letter with the quote was an offer for sale made more than one year prior to the filing of the ‘839 patent application, and hence, invalidated the ‘839 patent under 35 U.S.C. § 102(b). The district court disagreed finding that because the letter contained an invitation for further discussion (and the parties did in fact have further discussions) it was precluded from being a commercial offer for sale.
On appeal, the CAFC acknowledged that “[o]nly an offer which rises to the level of a commercial offer for sale, one which the other party could make into a binding contract by simple acceptance (assuming consideration), constitutes an offer for sale under § 102(b).” The CAFC then turned to principles of contract law to discern whether the completeness of the terms evinced a commercial offer for sale. The CAFC found that the 1999 letter specifically inviting BSC to act, specifying shipment conditions and location, providing a payment term, and, most importantly, offering tiered pricing for size and quantity of product (with discounts for more product ordered), were all indications that it was a commercial offer for sale. Although, Junker argued, as the district court had, that the language of the letter indicated that it was a quote and invited further discussions, the CAFC noted that its precedent found that these two factors did not preclude finding a commercial offer for sale. The CAFC found that the district court’s approach too stringent because BSC could have merely responded with a number and size of product and the transaction would be complete.
Even though the ’839 patent was evaluated on pre-AIA standards, the AIA still maintains the on-sale bar as a requirement. Therefore, this case shows that sales quotes and similar communications with pricing information can be commercial offers for sale invalidating a later patent even if the communication requests further discussions regarding any potential sales.
The instant case highlights a disagreement between the Federal Circuit Judges Newman and Dyk regarding whether deference should be applied to an examiner’s amendment entered in order to overcome an indefiniteness rejection under 35 U.S.C. § 112(b). Judge Newman, writing for the majority, found that deference should be applied to an examiner’s amendment and reversed the District Court’s ruling of indefiniteness. Judge Dyk dissented and stated that the test for definiteness is whether the claims “inform those skilled in the art about the scope of the invention with reasonable certainty,”[1] not “whether the claim language was added by a patent examiner or was not indefinite to the examiner.” Opinion at 10.
The patents at issue were U.S. Pat. Nos. 10,120,961 (the “‘961 Patent”) and 10,109,105 (the “‘105 Patent”). The ‘961 and ‘105 patents claimed a computer-implemented method for building three-dimensional objects via a “Boolean operation” computation. The two terms at issue were: (1) “searching neighboring triangles of the last triangle pair that holds the last intersection point” and (2) “modified Watson method.”
The prosecution history for both patents involved rejections for indefiniteness and examiner-guided amendments of the claims that added the terms at issue to overcome these rejections. After the Applicant accepted the Examiner’s amendments, the examiner withdrew the rejections and allowed the claims. The District Court gave no deference to the Examiner’s allowance based on the amendments and found the claims invalid on the ground of claim indefiniteness under 35 U.S.C. § 112(b).
The majority reversed the District Court’s finding of indefiniteness because, among other reasons, no deference was given to the examiner-guided amendments. “Actions by PTO examiners are entitled to appropriate deference as official agency actions, for the examiners are deemed to be experienced in the relevant technology as well as the statutory requirements for patentability.” Opinion at 8.
Judge Dyk dissented, stating that it is irrelevant whether the indefinite language was introduced by the examiner. Further, Judge Dyk noted that the term “modified Watson method” did not have an ordinary and customary meaning to a person of ordinary skill in the art. Finally, Judge Dyk stated that the test for definiteness is whether the claims “inform those skilled in the art about the scope of the invention with reasonable certainty,”[2] not “whether the claim language was added by a patent examiner or was not indefinite to the examiner.” Opinion at 10.
[1] Nautilus, Inc. v. Biosig Instruments, Inc., 572 U.S. 898, 910 (2014).
[2] Nautilus, 572 U.S. at 910.
Irwin IP is growing as Gloria Rios joins our team as Senior Paralegal. Gloria joins us with more than a decade of experience in law. She will be building a paralegal team here at Irwin, so if you know anyone looking for a law clerk/case assistant position, please let us know!
Irwin IP welcomes its newest staff member, Allie Winkelman! She will serve as Assistant to the COO, Heather Bowen, by handling day to day office operations, assisting in coordinating and scheduling meetings/appointments, and running Irwin IP’s marketing and social media.