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For Certain Not Secret Now: Court Declines to Seal Alleged Trade Secret in Amended Complaint

by Paul Devinsky | Mar 24, 2021 | Trade Secrets

The US Court of Appeals for the Federal Circuit affirmed a decision declining to seal information in an amended complaint where the defendant failed to prove that the information was a trade secret. DePuy Synthes Products, Inc. v. Veterinary Orthopedic Implants, Inc., Case No. 20-1514 (Fed. Cir. Mar. 12, 2021) (Dyk, J.)

After DePuy sued Veterinary Orthopedic Implants (VOI) for patent infringement, the district court issued a protective order providing that “supplier . . . names and identifying information” would be treated as “Highly Confidential Material—Attorney Eyes Only.” DePuy later filed an amended complaint containing such information when it joined VOI’s manufacturer as a defendant. The amended complaint disclosed the manufacturer as such and alleged additional facts about the defendants’ relationship. VOI argued that the manufacturer’s identity and additional facts about the VOI-manufacturer relationship should be sealed as trade secrets. DePuy argued that the manufacturer’s identity was already public, but took no position regarding the additional facts. After the district court declined to seal the amended complaint, VOI appealed.

The Federal Circuit first considered whether it had jurisdiction under the collateral order doctrine and whether the district court abused its discretion in denying the motion to seal.

The Federal Circuit found that it had jurisdiction under the collateral order doctrine because:

The district court’s order conclusively determined the sealing issue.
The sealing issue was important although unrelated to the merits of the infringement claim.
Meaningful review after final judgment would be impossible because disclosed information can never be secret again.

On the merits, the Federal Circuit found no abuse of discretion, reasoning that there was no clear error in the district court’s finding that the manufacturer’s identity was not a trade secret where (1) the manufacturer openly advertised itself as an orthopedic manufacturer, (2) the manufacturer and VOI did not have a confidentiality agreement or a confidential relationship giving rise to an implied obligation of confidentiality, and (3) a third-party email suggested that VOI’s relationship with the manufacturer was “known within the relevant community.” The Court further found no abuse of discretion in the district court’s declining to seal the additional allegations despite DePuy’s non-opposition because the district court was required to independently weigh the parties’ interest in confidentiality against the public right of access.

Practice Note: Parties routinely seek sealing of information that may not qualify as formal trade secrets. The district court’s duty to independently evaluate sealing means that parties must be prepared to articulate the particularized harm they will suffer absent sealing or risk the public disclosure of the information, even where the parties agree to treat information confidentially.

No Estoppel in the Name of Different Interests and Claims

by McDermott Will & Emery | Mar 17, 2021 | Patents

The US Court of Appeals for the Federal Circuit found that 35 USC § 314(d) did not bar its review of a Patent Trial & Appeal Board determination that a petitioner was not estopped from maintaining inter partes review (IPR) proceedings since the alleged estoppel-triggering event occurred post-institution. Uniloc 2017 LLC v. Facebook Inc., Case Nos. 19-1688, -1689 (Fed. Cir. Mar. 9, 2021) (Chen, J.)

Facebook and WhatsApp (collectively, Facebook) filed two IPR proceedings challenging certain claims of Uniloc’s patents. Apple also filed a petition challenging a subset of claims of the patent. Facebook subsequently filed a third petition that was substantively identical to Apple’s petition and also filed a motion to join Apple’s IPR. LG Electronics filed petitions identical to Facebook’s three petitions and also filed motions to join Facebook’s IPRs. The Board instituted Facebook’s third petition and granted Facebook’s motion to join Apple’s IPR. The Board then instituted Facebook’s original IPRs and ordered the parties to “brief the applicability, if any, of 35 U.S.C. § 315(e)(1)” against Facebook, in light of the soon-to-be-issued final written decision for Apple’s IPR. At the time, LG’s petition and motion to join Facebook’s IPRs had not been decided.

In response to the Board’s order, Facebook argued that it should not be estopped under § 315 from challenging the patentability of any claim upon the issuance of a final written decision in Apple’s IPR. Facebook argued that if the Board did find it estopped, Facebook should be able to continue as a petitioner against one of the claims, which it never challenged, in Apple’s IPR. Facebook also argued that if LG’s IPR petition was granted and LG was joined as a party to its first IPR, the IPR should proceed as to all challenged claims (regardless of whether Facebook was found estopped) because LG was not a party in Apple’s IPR. Uniloc responded, arguing that once the Board issued a final written decision in Apple’s IPR, Facebook would be estopped as to all claims challenged in its first IPR and the Board must terminate that proceeding. Uniloc also argued that allowing LG to join the IPR would create inefficiency and confusion.

The Board ultimately instituted LG’s IPR petitions and granted LG’s motion to join Facebook’s IPRs. In its Patent Owner Responses to the original Facebook IPR petitions, Uniloc argued that LG should be barred from maintaining the first Facebook IPR once the Board issued a final written decision in the Apple IPR because LG was estopped as a real party in interest (RPI) or privy to Facebook. A few months later, the Board issued a final written decision in the Apple IPR upholding the patentability of all challenged claims. The Board’s decision in the first Facebook IPR found that Facebook was estopped under § 315(e)(1) as to claims also challenged in Apple’s IPR, but not other claims since § 315(e)(1)’s estoppel provisions apply only to grounds that the petitioner raised or reasonably could have raised “with respect to that claim.”

In its final [...]

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Subscription to RSS Feed Doesn’t Trigger Implied-License Defense

by Jackie Toney | Mar 17, 2021 | Copyrights

The US Court of Appeals for the 11th Circuit affirmed a district court’s grant of judgment as a matter of law against an alleged copyright infringer on its implied-license defense, finding that a blog operator’s publication of entire articles through a really simple syndication (RSS) feed does not give rise to an implied license without substantial evidence showing an intent to grant a license. MidlevelU, Inc. v. ACI Information Group, Case No. 20-10856 (11th Cir. Mar. 3, 2021) (Pryor, J.)

MidlevelU published a free blog designed to attract potential customers in the midlevel healthcare market. MidlevelU made the full text of its blog articles (instead of only headlines and article summaries) available in an RSS feed. ACI is a content aggregator that subscribed to the blog’s RSS feed. ACI copied and published more than 800 entries from MidlevelU’s blog by including those articles in a curated index of abstracts and full-text articles of academic blogs. ACI had no license agreement with MidlevelU.

After discovering the ACI’s activities, MidlevelU registered 50 of its most recent articles for copyright protection with the US Copyright Office. MidlevelU also sent ACI a cease-and-desist letter demanding that its content be removed from ACI’s index. ACI removed the content from the index and coded links to index entries for MidlevelU’s articles so that they would redirect to the MidlevelU’s website. Months later, MidlevelU discovered that, although its content was no longer available on the index website, it still appeared in the website repositories of university libraries. These entries credited ACI as the content’s publisher and directed visitors to view the blog’s full-text content in the “subscribers only” section of the blog aggregator’s website.

MidlevelU sued ACI in federal district court, alleging copyright infringement of the registered articles. ACI asserted an implied-license defense. Relying on the Latimer case, which sets forth the test for implied license in work-for-hire situations, the district court entered judgment as a matter of law in MidlevelU’s favor, finding that there could be no implied license because the ACI could not meet the “creates a work at another person’s request” element of the Latimer test. ACI appealed.

The 11th Circuit found that the district court read Latimer too broadly by applying its holding outside of the work-for-hire context, but the Court nevertheless affirmed the district court’s decision because a jury could not have reasonably inferred from the evidence that the MidlevelU impliedly granted a license to ACI. The Court noted that it had never held that the Latimer test was the only way to prove an implied license. An implied license may arise from circumstances outside of work-for-hire situations: “Creating material at another’s request is not the essence of a license: an owner’s grant of permission to use the material is.”

When an owner clearly manifests consent to use of its copyrighted material, the owner impliedly grants a non-exclusive license. Citing Fields, a district court case in the search-engine web crawler context, ACI argued that an implied license arose because the MidlevelU did [...]

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Method for Determining Haplotype Phase Found Subject Matter Ineligible

by Paul Devinsky | Mar 17, 2021 | Patents

In an appeal from a final rejection of a pending application, the US Court of Appeals for the Federal Circuit held that claims directed to methods for determining “haplotype phase” were correctly rejected under 35 USC § 101 as subject matter ineligible. In Re Board of Trustees of The Leland Stanford Junior University, Case No. 20-1012 (Fed. Cir. Mar. 11, 2021) (Reyna, J.)

Haplotype phase is a scientific way of describing the methodology of determining from which parent a particular allele (or gene) is inherited. The representative claim involved (i) receiving allele data, (ii) receiving pedigree data, (iii) determining an inheritance state based on the allele data, (iv) receiving transition probability data; (v) receiving linkage disequilibrium data and then- determining a haplotype phase based on the pedigree data, the inheritance state for the information described in the allele data, the transition probability data and the population linkage disequilibrium data; and storing the haplotype phase in a computer system and providing the stored haplotype phase in response to a request.

Steps (i) through (iii) were known in the art for determining haplotype phase. The crux of the improved process depended on steps (iv) and (v). The additional data provided as “linkage disequilibrium data” and “transition probability data” allegedly enable haplotype phase to be inferred in regions of the gene where “inheritance state” may be uninformative. The additional data in the claimed method resulted in an increase in the number of haplotype phase predictions made.

The examiner, and then the Patent Trial & Appeal Board, found that the claimed process was directed toward patent eligible subject matter—a mathematical algorithm. Stanford appealed.

Applying the two-step framework established by the 2014 Supreme Court decision in Alice Corp. v. CLS Bank, the Federal Circuit first determined that the claims were directed to an abstract mathematical calculation under Alice step one.

Under step two of the Alice inquiry, the Federal Circuit found that the claims did not include additional limitations that, taken as a whole, provide an inventive concept that transforms the abstract idea into patent eligible subject matter. The Court reasoned that the representative claim “recites no steps that practically apply the claimed mathematical algorithm; instead [the claim] ends at storing the haplotype phase and ‘providing’ it ‘in response to a request.'” These steps alone were not enough to transform the abstract idea into patent eligible subject matter.

Stanford argued that the claimed process was directed to patent eligible subject matter and represented an improvement on a technological process—namely, an improvement in the number of haplotype phase predictions that this mathematical algorithm could yield. The Federal Circuit was unpersuaded that the pending claims did anything other than “merely enhance[] an ineligible concept.”

The Federal Circuit concluded that the claims only recited the conventional haplotype phase algorithm and then instruct: “apply it,” similar to the claimed subject matter prohibited by the Supreme Court in Alice. Accordingly, the Court affirmed the Board’s decision.

Doctrine of Equivalents Analysis Should Not Be Simple Binary Comparison

by Cecilia Choy, Ph.D. | Mar 17, 2021 | Patents

The US Court of Appeals for the Federal Circuit remanded a district court’s claim construction and grant of a defendant’s summary judgment motion of non-infringement under the doctrine of equivalents, finding that a reasonable juror could find that the accused products performed substantially the same function in substantially the same way to achieve substantially the same result as the claimed invention. Edgewell Personal Care Brands, LLC v. Munchkin, Inc., Case No. 20-1203 (Fed. Cir. Mar. 9, 2021) (Moore, J.)

Edgewell manufactures and sells the “Diaper Genie,” a diaper pail system with a replaceable cassette placed inside the pail for soiled diaper collection, forming a wrapper around the diapers. Munchkin marketed a refill cassette as compatible with Edgewell’s pails. Edgewell’s two patents at issue relate to improvements in the cassette. After claim construction, Edgewell asserted literal infringement of one patent and infringement under the doctrine of equivalents of the other patent. The district court granted Munchkin’s summary judgment motion of non-infringement against both patents. Edgewell appealed.

Edgewell’s first patent is directed to a cassette with a clearance at its bottom portion. The claim construction dispute turned on whether the claims required a clearance space after the cassette was installed. The district court construed the claim to require a space and to require that the claimed “clearance” cannot be filled by an unclaimed interfering member. The district court granted Munchkin summary judgment because Munchkin’s refill cassette had no space after the cassette was installed. The Federal Circuit reversed, explaining that an “apparatus claim is generally to be construed according to what the apparatus is, not what the apparatus does.” The Court found that without an express limitation, “clearance” should be construed to cover all uses of the claimed cassette. The Court determined that the specification and purpose of the “clearance” supported the notion that the claim does not require a clearance after insertion.

The second patent is directed to a cassette with a cover that includes a “tear-off” section. The district court’s construction of an annular cover was of a single, ring-shaped cover. Munchkin’s cassettes each include a two-part cover, and the district court granted Munchkin’s motion for summary judgment of non-infringement. Although the Federal Circuit agreed with the claim constructions, the Court found that the district court erred in granting summary judgment to Munchkin under the doctrine of equivalents for claim element vitiation on the basis that “annular cover” and “tear-off” limitations §§would be rendered meaningless.

The vitiation doctrine ensures that applying the doctrine of equivalents “does not effectively eliminate a claim element in its entirety.” The Federal Circuit found that the district court erred in evaluating this element as a binary choice—single-component structure versus a multi-component structure. Instead, the Court explained that the district court should have evaluated the evidence to determine whether a reasonable juror could find that the accused products perform substantially the same function, in substantially the same way, achieving substantially the same result as the corresponding claim elements. Edgewell’s expert opined that Munchkin’s products performed the [...]

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Can’t Camouflage Express Trademark Contract Terms

by Paul Devinsky | Mar 17, 2021 | Trademarks

Addressing a range of trademark licensing issues, including discretionary approval, exculpatory contract clauses and third party beneficiary standing, the US Court of Appeals for the Federal Circuit affirmed a lower court’s grant of summary judgment to the US Army, finding that the Army abided by the terms of a trademark licensing agreement with a brand management company that sold clothing bearing the Army logo. Authentic Apparel Grp., LLC v. United States, Case No. 20-1412 (Fed. Cir. Mar. 4, 2021) (Lourie, J.)

In a 2010 licensing agreement, the Army granted Authentic Apparel, a brand management company that licenses merchandise, a non-exclusive license to manufacture and sell clothing bearing the Army’s trademarks in exchange for royalties. The licensing agreement gave the Army sole and absolute discretion on whether to approve any products and marketing materials bearing the Army’s trademarks. The licensing agreement also included exculpatory clauses exempting the Army from liability for exercising this discretion. From 2011 to 2014, Authentic submitted 500 requests for product approval, and the Army disapproved of only 41. After a series of late or unpaid royalty payments, Authentic sent notice that it would not pay 2014 royalties. The Army then terminated the license to Authentic. In 2015, Authentic and its chairman, Ron Reuben, sued the US government for breach of contract of the licensing agreement. The alleged breaches included denial of the right to exploit the goodwill associated with the Army’s trademarks, refusal to permit Authentic to advertise its contribution to certain Army recreation programs, delay of approval for a financing agreement for a footwear line, and denial of approval for advertising featuring the actor Dwayne “The Rock” Johnson. The Court of Federal Claims granted summary judgment to the US government and dismissed Reuben as a co-plaintiff for lack of standing. Authentic appealed.

The two main issues on appeal were whether Authentic provided sufficient evidence to show there was a genuine dispute of material fact that the Army breached the terms of its contract or any implied duty of good faith, and whether Reuben was a third party beneficiary to have standing as a plaintiff to the suit.

As to the first issue, the Federal Circuit affirmed the lower court’s grant of summary judgment for the government because Authentic was unable to provide sufficient evidence that the Army breached the trademark licensing agreement. The Court found that:

The contracting parties contemplated the terms of the contract and voluntarily decided to include express language of broad discretionary approval and exculpatory clauses exempting liability for disapproval, and therefore they should be held to the express terms for which they bargained.

The Army did not act unreasonably or violate its duty of good faith and fair dealing in exercising its discretion because it did approve more than 90% of Authentic’s products.

Authentic’s argument that the Army’s discretion was too broad and restricted Authentic’s use of the trademarks to solely “decorative purposes” was without merit because (1) the Court was not evaluating the validity of the trademarks here, (2) Authentic still [...]

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First-to-File Rule Requires That Action Could Have Been Brought in Transferee Forum

by Paul Devinsky | Mar 11, 2021 | Patents

After issuing a rare grant of a mandamus petition directing a district court to stay proceedings until ruling on a pending motion to transfer, the US Court of Appeals for the Federal Circuit denied a subsequent mandamus petition to compel transfer after that district court denied the transfer. In re SK hynix Inc., Case No. 21-114 (Fed. Cir. Feb. 25, 2021) (Taranto, J.) (non-precedential). The Federal Circuit found that the doctrine of forum non conveniens and the first-to-file rule did not establish a basis for transfer because the action could not have initially been brought in the transferee forum and the patentee’s prior filings in that forum did not give consent for subsequently filed actions.

Netlist and SK hynix are competitors in the memory semiconductor space. Netlist sued SK hynix for patent infringement in the US District Court for the Western District of Texas. SK hynix moved to transfer the case to the US District Court for the Central District of California. With no ruling after eight months (while the case continued to move forward), SK hynix sought mandamus from the Federal Circuit to compel the district court to transfer the case. The Federal Circuit declined to transfer the case and instead stayed the district court proceedings until the district court ruled on the transfer motion. The district court then denied the transfer motion, rejecting SK hynix’s arguments that the doctrine of forum non conveniens and the first-to-file rule required transfer to the Central District of California. The district court also advanced the Markman hearing and trial dates. SK hynix again sought mandamus from the Federal Circuit to compel transfer and requested a stay of the district court proceedings because of the advanced Markman and trial dates.

Applying Fifth Circuit law, the Federal Circuit denied the mandamus petition, concluding that SK hynix had not shown that the district court clearly abused its discretion in denying the transfer motion. On the forum non conveniens issue, the Court found no clear abuse in the district court’s determination that SK hynix did not meet the threshold conditions for transfer under 28 USC § 1404(a), namely that the action “might have been brought” in the Central District of California or that, in the alternative, all the parties had consented to that venue for the action. As to the “might have been brought” inquiry, the Court found that the district court properly focused on whether the action might have been brought against SK hynix America, a domestic entity subject to the venue requirements of 28 USC § 1404(b) and headquartered in the Northern District of California, rather than SK hynix, a foreign entity not subject to the same venue requirements. The Court also found that SK hynix did not differentiate between the foreign and domestic SK hynix entities in its transfer motion. This was not an action that might have been brought against SK hynix in the Central District of California because SK hynix America lacked sufficient presence there to confer venue under [...]

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The Steep Price of Not Being Exceptional

by Paul Devinsky | Mar 11, 2021 | Trademarks

Addressing the appropriate standard for determining what makes a trademark case sufficiently exceptional to warrant an award of attorney fees, the US Court of Appeals for the Seventh Circuit upheld the denial of a renewed motion for attorneys’ fees under the Octane Fitness standard. LHO Chicago River, LLC v. Rosemoor Suites, LLC, Case No. 20-2506 (7th Cir. Feb.19, 2021 (Kanne, J.)

Some say that imitation is the highest form of flattery—but not in the world of trademarks. And certainly not according to LHO Chicago River. In 2014, LHO rebranded one of its Chicago hotels as “Hotel Chicago.” Two years later, Rosemoor did the same to its hotel on the west side of Chicago. LHO sued Rosemoor for trademark infringement (among other claims). Ultimately, LHO dropped the lawsuit after an unsuccessful motion for preliminary injunction. Rosemoor’s quest for attorneys’ fees, however, lived on.

Rosemoor’s initial request for attorneys’ fees amounted to $500,000. According to Rosemoor, the case was exceptional as defined by the Lanham Act and therefore justified reimbursement of its attorneys’ fees. Rosemoor’s first request was denied. Rosemoor appealed, arguing that the district court’s denial of attorneys’ fees was based on an incorrect standard as to what makes a trademark case exceptional. The renewed request for attorneys’ fees totaled $630,000. Once again Rosemoor was left to cover its own fees, and once again it appealed, but to no avail.

In denying Rosemoor’s initial request for attorneys’ fees, the district court used the “abuse-of-process” standard as explained in Burford v. Accounting Practice Sales. According to Rosemoor, the district court should have used the standard articulated in Octane Fitness v. ICON Health & Fitness to determine whether the case was exceptional. The Seventh Circuit agreed with Rosemoor regarding the appropriate standard, but did not agree that the case was exceptional.

Under Octane, “a case can be ‘exceptional’ if the court determines, under the totality of the circumstances, that it ‘stands out from others with respect to [1] the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or [2] the unreasonable manner in which the case was litigated.'” Relevant considerations for a party’s litigating position “include ‘frivolousness’ and ‘objective unreasonableness.'”

The Seventh Circuit determined that the district court did not abuse its discretion in deciding that the case was not exceptional and did not warrant fee shifting. The Court explained that LHO’s preliminary injunction pleading was not “frivolous or unreasonable,” LHO provided evidence of actual customer confusion, the disputed mark was “not plainly unworthy of protection,” LHO provided evidence of the mark’s secondary meaning, and Rosemoor failed to show that LHO engaged in exceptional litigation misconduct.

Practice Note: When the post-litigation dust settles, practitioners should help their clients evaluate whether their case truly is exceptional within the meaning of the Lanham Act and would thus warrant an award of attorneys’ fees. Appealing a disappointing judgment without strong “exceptional” grounds may end up costing more than it is worth.

Knowledge of Patent, Evidence of Infringement Are Necessary, but Not Sufficient, to Establish Willfulness

by Paul Devinsky | Mar 11, 2021 | Patents

Addressing claim construction, enablement, damages and willfulness, the US Court of Appeals for the Federal Circuit found that evidence of a defendant’s knowledge of the asserted patent and proof of infringement were, by themselves, legally insufficient to support a finding of willfulness. Bayer Healthcare LLC v. Baxalta Inc., Case No. 19-2418 (Fed. Cir. Mar. 1, 2021) (Stoll, J.)

Bayer owns a patent on certain recombinant forms of human factor VII (FVIII), a protein that is critical for blood coagulation. Recombinant FVIII is useful as a treatment for coagulation disorders, primarily Hemophilia A. Natural FVIII has a short half-life, making therapeutic administration expensive and inconvenient. Adding polyethylene glycol (a process known as PEGylating) to FVIII at random sites was found to increase the protein’s half-life but reduce its function. Bayer invented FVIII that is PEGylated in a specific region (the B-domain) so that it retains its function and maintains the longer half-life.

After Baxalta developed a PEGylated FVIII therapeutic, Adynovate®, Bayer sued Baxalta for infringement of its patent. During claim construction, the district court construed the claim preamble “an isolated polypeptide conjugate” to mean “a polypeptide conjugate where conjugation was not random,” finding that Bayer had disclaimed conjugates with random PEGylation. The district court also construed “at the B-domain” to mean “attachment at the B-domain such that the resulting conjugate retains functional FVIII activity,” rejecting Baxalta’s proposal of “at a site that is not any amine or carboxy site in FVIII and is in the B-domain” because Bayer had not disclaimed PEGylation at amine or carboxy sites. Before trial, Baxalta moved for clarification of the term “random” in the construction of the preamble, but the district court “again” rejected Baxalta’s argument that Bayer defined “random” conjugation as “any conjugation at amines or carboxy sites.”

Before trial, Baxalta moved to exclude the testimony of Bayer’s damages expert regarding his proposed reasonable-royalty rate. The expert had defined a bargaining range and proposed to testify that the royalty rate should be the midpoint of the range based on the Nash Bargaining Solution. The district court permitted the expert to testify as to the bargaining range but excluded the opinions regarding the midpoint as insufficiently tied to the facts of the case.

After trial, the district court granted Baxalta’s pre-verdict motion for judgment as a matter of law (JMOL) of no willful infringement. Subsequently, the jury returned a verdict that the claims were infringed and not invalid for non-enablement, and awarded damages based on an approximately 18% royalty rate for the period for which the parties had presented sales information. Baxalta moved for JMOL or a new trial on infringement, enablement and damages. Bayer moved for pre-verdict supplemental damages for the period between the presented sales data and the date of judgment, and for a new trial on the issue of willfulness. The district court denied all of Baxalta’s motions and Bayer’s motion for new trial, but granted Bayer’s motion for supplemental damages, applying the jury’s ~18% rate to sales data for the later period. [...]

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Click Fraud: Predicate to False Designation of Origin

by Jodi Benassi | Mar 11, 2021 | Trademarks

The US Court of Appeals for the Fifth Circuit affirmed that pay-per-click advertisers may be liable under the Lanham Act for “click fraud.” WickFire, LLC v. Laura Woodruff et al., Case No. 17-50340 (5th Cir. Feb. 26, 2021) (Owen, J.)

WickFire and TriMax Media are advertisers that compete in the pay-for-performance search engine marketing business, also known as pay-per-click marketing. In this type of marketing, every time a user clicks on an advertisement, the advertiser pays the search engine (i.e., Google) a small fee. If the user makes a purchase on the merchant’s site, the merchant pays the advertiser a commission. When a pay-per-click campaign runs smoothly, the advertiser pays a small amount for a click, the click results in a sale, and the commission to the advertiser is more than the advertiser paid for the click.

WickFire filed a lawsuit against TriMax, alleging that TriMax violated Section 43 of the Lanham Act by committing “click fraud” through repeatedly clicking on WickFire’s ads without any intent to make a purchase, and created false advertisements that were made to appear as though they belonged to WickFire, among other state law claims. Section 43(a) of the Lanham Act prohibits a person from making, “in connection with any goods or services,” a “false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which . . . is likely to cause confusion . . . as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities.” WickFire alleged that the ads included a trademark and links to a WickFire website designed to aggregate coupons for online merchants.

The case went to trial, and a jury found for WickFire with respect to the state law claims and the false advertising claim (although it did not award any damages for violation of the Lanham Act). The jury determined that TriMax misrepresented WickFire as the source of advertisements by placing ads containing identifying information distinct to WickFire in a manner that was likely to cause confusion. TriMax filed for judgment as a matter of law and for a new trial. The district court denied the motions and entered judgment. TriMax appealed.

On appeal, TriMax alleged that WickFire’s Lanham Act claim was foreclosed by the Supreme Court’s decision in Dastar v. Twentieth Century Fox. The Fifth Circuit disagreed. The Court explained that WickFire was not concerned with protecting an original idea, as Fox attempted to do in Dastar. Instead, WickFire was trying to protect the genuineness of its brand.

TriMax next argued that it was entitled to judgment as a matter of law because the jury did not have a legally sufficient evidentiary basis to find for WickFire. The Fifth Circuit thought otherwise, holding that it did not need to decide whether the evidence was sufficient as a matter of law because the jury did not award WickFire damages to the claim. The Court noted that since the jury found that there were no damages, WickFire [...]

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