IP UPDATE

Up in Smoke: Statutory Trademark Damages Can Exceed Actual Damages

by Taylor MacDonald | May 15, 2025 | Trademarks

Addressing a jury’s statutory damages award that surpassed the plaintiffs’ actual damages, the US Court of Appeals for the Eleventh Circuit affirmed the district court’s denial of the defendant’s motion for judgment as a matter of law (JMOL), finding that the award was consistent with trademark damages law given the jury’s finding of no willfulness and was not violative of constitutional due process. Top Tobacco, L.P. v. Star Importers & Wholesalers, Inc., Case No. 24-10765 (11th Cir. Apr. 30, 2025) (Pryor, Grant, Kid, JJ.)

Top Tobacco, Republic Technologies, and Republic Tobacco (collectively, Republic) sued Star Importers & Wholesalers for trademark violations and the sale of counterfeit cigarette rolling papers. Prior to trial, the district court granted summary judgment in favor of Republic. Thus, the only issues tried to the jury were damages related, including whether Star’s conduct had been willful, whether the company’s president should be personally liable, and the appropriate damages award.

Republic sought damages under 15 U.S.C. § 1117(c) of the Lanham Act, permitting the jury to look beyond actual damages and award up to $200,000 per non-willfully infringed mark or $2 million per willfully infringed mark. The jury instructions explained to the jury that it could consider multiple factors, including lost revenue, the conduct’s willfulness, and whether the counterfeit goods were a public safety risk. The instructions also clarified that the statute permitted both compensatory and punitive rationales for the award, as long as it was not a windfall for Republic. Ultimately, the jury found that Star’s conduct had not been willful and granted the plaintiffs $123,000 per infringed mark. Star moved for JMOL, arguing the total $1.107 million award was inconsistent with the finding of no willfulness. The district court denied the motion. Star appealed.

The Eleventh Circuit affirmed the district court’s denial of the JMOL motion, concluding that:

The jury was permitted to provide an award greater than actual damages.
The jury was permitted to consider punitive and deterrence rationales despite finding the actions were not willful.
The award did not violate constitutional due process.

Applying the principles of statutory construction, the Eleventh Circuit explained that because § 1117(a) permits an award for actual damages, § 1117(c)’s purpose was explicitly to allow awards greater than the actual loss suffered. Further, the jury’s role of factfinder under the Seventh Amendment precluded the district court from overriding a verdict that fell within the statute. Finally, the Court noted that the jury instructions were a safeguard against punishing defendants without any regard for actual damages because the instructions protected against a windfall for the plaintiff. In this case, the jury had facts regarding the marks’ strength, potential dangers of the counterfeit papers’ chemicals, and the prevalence of counterfeiting in the industry. Thus, the Court found that the jury had substantial evidence for the award – which was below the statutory maximum – and that it was not a windfall for Republic.

Similarly, the Eleventh Circuit reasoned that since the jury awarded damages below the statutory maximum [...]

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Clickbait: Actual Scope (Not Intended Scope) Determines Broadening Reissue Analysis

by Tim Dunker | May 15, 2025 | Patents

The US Court of Appeals for the Federal Circuit affirmed the Patent Trial & Appeal Board’s rejection of a proposed reissue claim for being broader than the original claim, denying the inventors’ argument that the analysis should focus on the intended scope of the original claim rather than the actual scope. In re Kostić, Case No. 23-1437 (Fed. Cir. May 6, 2025) (Stoll, Clevenger, Cunningham, JJ.)

Miodrag Kostić and Guy Vandevelde are the owners and listed inventors of a patent directed to “method[s] implemented on an online network connecting websites to computers of respective users for buying and selling of click-through traffic.” Click-through links are typically seen on an internet search engine or other website inviting the user to visit another page, often to direct sales. Typical prior art transactions would require an advertiser to pay the search engine (or other seller) an upfront fee in addition to a fee per click, not knowing in advance what volume or responsiveness the link will generate. The patent at issue discloses a method where the advertiser and seller first conduct a trial of click-through traffic to get more information before the bidding and sale process. The specification also discloses a “direct sale process” permitting a seller to bypass the trial and instead post its website parameters and price/click requirement so advertisers can start the sale process immediately.

The independent claim recites a “method of implementing on an online network connecting websites to computers of respective users for buying and selling of click-through traffic from a first exchange partner’s web site.” The claim requires “conducting a pre-bidding trial of click-through traffic” and “conducting a bidding process after the trial period is concluded.” A dependent claim further requires “wherein the intermediary web site enables interested exchange partners to conduct a direct exchange of click-through traffic without a trial process.”

The patent was issued in 2013, and the inventors filed for reissue in 2019. The reissue application cited an error, stating that the “[d]ependent claim [] fails to include limitations of [the independent] claim,” where the dependent claim “expressly excludes the trial bidding process referred to in the method of [the independent] claim,” which would render it invalid under 35 U.S.C. § 112. To fix the error, the inventors attempted to rewrite the dependent claim as an independent claim that omitted a trial process.

The examiner issued a nonfinal Reissue Office Action rejecting the reissue application as a broadening reissue outside of the statutory two-year period. The examiner found that the original dependent claim is interpreted to require all steps of the independent claim, including the trial period, and further to require a direct sale without its own trial, beyond the trial claimed in the independent claim. The inventors attempted to rewrite the dependent claim as the method of independent claim with “and/or” language regarding the trial process versus direct to sale process. The amendment was rejected for the same reasons. The Board affirmed on appeal.

Whether amendments made during reissue enlarge the scope of [...]

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No Article III Appellate Standing Under the Sun

by Anisa Noorassa | May 15, 2025 | Patents

The US Court of Appeals for the Federal Circuit dismissed Incyte’s appeal of a Patent Trial & Appeal Board decision, holding that a disappointed validity challenger lacked appellate standing to challenge the Board’s final written decision. Incyte Corp. v. Sun Pharmaceuticals Industries, Inc., Case No. 23-1300 (Fed. Cir. May 7, 2025) (Moore, C.J.; Hughes, Cunningham, JJ.) (Hughes, J., concurring).

After the Board upheld the validity of challenged claims of a patent owned by Sun Pharmaceuticals in a post-grant review proceeding (PGR), Incyte appealed and sought a determination that the claims were unpatentable. Sun Pharmaceuticals challenged whether Incyte had Article III standing to support an appeal to the Federal Circuit based on a lack of injury-in-fact.

The Federal Circuit focused on its jurisdiction to hear the appeal as a threshold issue and whether Incyte, as the party seeking review, met its burden of establishing Article III standing at the time it filed its appeal.

As context, the Federal Circuit noted that standing requires a concrete, actual, or imminent injury that is traceable to the challenged conduct and likely to be redressed by the court’s decision. Incyte asserted it had standing to appeal based on potential infringement liability and under the competitor standing doctrine.

Addressing potential infringement liability, the Federal Circuit noted Incyte’s reliance on a supplemental declaration from an in-house business development leader submitted during briefing. Noting that Incyte’s Article III standing was “not self-evident,” the Court ruled that Incyte should have presented evidence prior to its reply brief and declined to consider the supplemental evidence. Incyte was on notice that its appellate standing was challenged, and that evidence of its standing should have been submitted at the earliest possible opportunity. Finding no good cause for the delay, the Court declined to exercise its discretion to consider Incyte’s supplemental evidence and, based only on earlier submitted evidence, found that Incyte failed to establish that it had “concrete plans for future activity” that would create a “substantial risk of future infringement.”

In its discussion of the competitor standing doctrine, which allows competitors to challenge patents that could harm their competitive position, the Federal Circuit found the doctrine inapplicable because Incyte failed to show it would suffer economic harm from the Board’s ruling on patent validity. Rather, the Board’s ruling upholding specific patent claims “does not, by the operation of ordinary economic forces, naturally harm a [challenger] just because it is a competitor in the same market as the beneficiary of the government action (the patentee).” As the Court explained, “it is not enough to show a benefit to a competitor to establish injury in fact; the party seeking to establish standing must show a concrete injury to itself.”

The Federal Circuit held that because Incyte had not shown it was currently engaged in or had non-speculative plans to engage in conduct covered by the challenged patent, it was unable to establish injury-in-fact.

In his concurrence, Judge Hughes stated that while Incyte lacked Article III standing, he believed that Federal Circuit precedent was [...]

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Designated Informative: PTO Director Declines IPR Institution Following District Court § 101 Invalidation

by Jodi Benassi | May 15, 2025 | Patents

The US Patent & Trademark Office (PTO) designated a recent Director Review decision as informative, signaling its significance for future proceedings. The decision emphasizes that a final district court ruling invalidating a patent weighs heavily against instituting inter partes review (IPR) under the Fintiv framework, reinforcing the agency’s stance on minimizing duplicative litigation. Hulu LLC v. Piranha Media Distribution LLC, IPR2024-01252; -01253 (PTAB Director Review Apr. 17, 2025) (Stewart, PTO Dir.)

Piranha requested Director Review of the Patent Trial & Appeal Board’s decision granting institution of two IPRs filed by Hulu. Piranha argued that the decision should be reversed and the IPRs denied institution, citing a district court final judgment invalidating the challenged claims under 35 U.S.C. § 101 issued before the institution decision was made. Hulu argued that Director Review was unwarranted.

In the district court litigation, Piranha asserted that Hulu infringed claims from two patents related to integration of advertising content into digital media streams. Hulu moved to dismiss the complaint, arguing that the asserted patents were ineligible for patenting under § 101. The district court determined that the asserted claims were directed to the abstract idea of “displaying an advertisement in exchange for access to copyrighted material, as well as the abstract idea of receiving, organizing, and displaying data,” and contained no inventive concept. The district court granted Hulu’s motion to dismiss and held the claims patent ineligible and therefore invalid under § 101.

The Director explained that since a district court had already ruled the patent claims invalid, launching separate IPRs to assess their patentability on other grounds was unnecessary. The Director noted that if the Federal Circuit overturned the district court’s decision, Hulu could still pursue its invalidity arguments during remand proceedings. Declining to institute review was the more efficient and practical path under the circumstances, the Director said.

While the Board applied the Fintiv framework in its institution decision, the Director observed that the framework does not align neatly with the facts of this case, where a final district court judgment under § 101 preceded the Board’s decision. The Director ultimately concluded that a second review proceeding was unwarranted given the claims’ current invalid status.

False Connection: Post-Application Date Evidence Can Be Considered

by Ashley K. Justice | May 15, 2025 | Trademarks

The US Court of Appeals for the Federal Circuit affirmed the Trademark Trial & Appeal Board’s refusal to register a mark on the grounds of false connection, explaining that the false connection inquiry can include evidence that arises during the examination after filing. In re Thomas D. Foster, APC, Case No. 23-1527 (Fed. Cir. May 7, 2025) (Moore, Prost, Stoll, JJ.)

Under § 2(a) of the Lanham Act (15 U.S.C. § 1052(a)), a trademark can be refused registration if it “falsely suggests a connection with persons, living or dead, institutions, beliefs, or national symbols.” To determine if a mark falsely suggests a connection, the Board can use a non-exhaustive four-part test that inquires whether:

The mark is the same, or a close approximation of, the name previously used by another person or institution.
The mark points uniquely or unmistakably to that person or institution.
That person or institution is not connected with the activities performed by the applicant under the mark.
The fame or reputation of the person or institution is such that, when the mark is used with the applicant’s goods or services, a connection with the person or institution would be presumed.

Here, Thomas D. Foster filed a trademark application for the mark US SPACE FORCE on March 19, 2018, six days after President Trump proposed forming a “Space Force.” Registration was refused on the grounds of a false suggestion of a connection with the US government. The Board affirmed and denied reconsideration. Foster appealed.

Foster argued that the Board improperly considered evidence that post-dated the application’s filing date and that substantial evidence did not support the Board’s findings under the first two elements of the four-part false connections test.

Regarding Foster’s first argument, the Federal Circuit found it permissible to use facts that arise after an application’s filing date and during the examination process to assess a false connection. The Court reasoned that this was consistent with other § 2 inquiries that consider evidence that arises through the date the Board issues its decision, such as likelihood of confusion (§ 2(d)) and distinctiveness (§ 2(f)). Therefore, the Court found that the Board did not err in its consideration of evidence that arose during the examination process.

The Federal Circuit disagreed with Foster’s second argument, finding that substantial evidence supported the Board’s findings under the false connection test. Under the first part of the test, the Board found that US SPACE FORCE was the same as, or a close approximation of, a name or identity of the United States. The Court concluded that this was supported by substantial evidence, specifically pre-application evidence (President Trump’s announcement and national news articles discussing the formation of the US Space Force) and post-application evidence (the official establishment of the US Space Force and national news articles). Under the second part of the test, the Board had found that US SPACE FORCE pointed uniquely and unmistakably to the United States. The Board again relied on news coverage and the fact that [...]

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