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European UPC Issues Its First Decisions on the Merits

by Dr. Laura Katharina Woll, LL.M. | Jul 18, 2024 | EU Update, Patents

Franz Kaldewei GmbH & Co. KG v. Bette GmbH & Co. KG

The Unified Patent Court (UPC) issued its first decision on the merits, granting the first-ever permanent injunction covering seven UPC member states. Franz Kaldewei GmbH & Co. KG v. Bette GmbH & Co. KG (Düsseldorf Local Division, July 3, 2024).

The UPC found that the asserted patent was invalid in its granted form due to obviousness but upheld as valid an auxiliary request on which the injunction is based. Among other things, the Düsseldorf Local Division discussed procedural lapses around a missed deadline (denying the defendant a submission of certain documents one day prior to the oral hearing), jointly hearing the infringement case, and a counterclaim for revocation and inventive step. In this regard, the Court proceeded pragmatically and flexibly, as the UPC Court of Appeal (CoA) did in 10x Genomics, but unlike the European Patent Office (EPO) with its focus on the closest prior art and building a problem-solution approach thereon.

The decision further dealt with claims for information on the scope of infringement, claims for recall or removal from the channels of commerce, and considerations against requiring security for enforcement of a judgment on the merits in the given case.

Regarding so-called contributory infringement (i.e., indirect use of the invention), the UPC held that there is a double territorial requirement: the offer and/or delivery of the essential element must take place within UPC territory, and the invention must also be used within UPC territory. The Court left open the question of whether it is sufficient that the offering/delivery exists in a member state and the invention is intended for direct use in another, different member state. Further case law will have to clarify this point. Regarding the prior use defense, it follows from the decision that there is no “UPC/European” prior use. The existence of a right of prior use must be asserted for each member state according to its national law, and the respective defendant must provide the relevant information for each country individually.

Practice Notes:

The UPC has shown that it is capable of dealing efficiently with both infringement and invalidity questions within the short timeframe it has set itself. The UPC delivered on its promise to issue a decision on the merits in just over a year and only a few weeks after the oral hearing.
Regarding claim interpretation, the Düsseldorf Local Division referred to the CoA’s decisions on February 26, 2024, and May 13, 2024, stating that the principles of Article 69 EPC apply to both validity and infringement proceedings.

DexCom, Inc. v. Abbott et al.

The day after the UPC’s decision on the merits in Franz Kaldewei granting a permanent injunction, the Paris Local Division delivered its first decision on the merits and declared the patent in suit invalid in 17 UPC member states. DexCom, Inc. v. Abbott et al. (Paris Local Division, July 4, 2024).

The Paris Local Division also ruled on both infringement and validity questions and [...]

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Smart Choice: Survey Design Didn’t Render Survey Unreliable

by Karen Gover | Jul 18, 2024 | Trademarks

Underscoring its faith in a jury’s competency to use its “common sense and experience” in evaluating evidence, the US Court of Appeals for the Ninth Circuit affirmed a district court’s judgment in favor of the defendants in a trademark infringement action following a trial, as well as its order partially denying the defendants’ motion for attorneys’ fees. BillFloat, Inc. v. Collins Cash, Inc., Case Nos. 23-15405; -15470 (9th Cir. July 1, 2024) (Thomas, McKeown, Christen, JJ.)

BillFloat and Collins Cash both provide financing to small businesses. In 2013, BillFloat began using SMARTBIZ as a trademark and registered the mark in 2014. That same year (2014), Collins Cash began using the mark SMART BUSINESS FUNDING, although it did not file an application to register the mark until 2020. Meanwhile, in 2018, BillFloat and Collins Cash entered into a partnership agreement under which Collins Cash would refer current and prospective customers to BillFloat in exchange for a referral fee. The parties’ agreement stated that “[i]f either Party employs attorneys to enforce any right arising out of or relating to this Agreement, the prevailing Party shall be entitled to recover reasonable attorneys’ fees.”

In 2020, upon learning of Collins Cash’s use of the SMART BUSINESS FUNDING mark, BillFloat brought claims for federal and state trademark infringement, breach of contract, unfair competition and unlawful business practices. The district court granted summary judgment to Collins Cash on the breach of contract claim and proceeded to trial on the trademark infringement claim.

Collins Cash engaged an expert to conduct a likelihood of confusion survey using the so-called “Squirt” methodology, which is used for lesser-known marks. BillFloat filed a motion to exclude the expert and his survey from trial, arguing that various errors made the survey unreliable and therefore inadmissible. The district court denied the motion and admitted the expert’s testimony and his survey. The district court also admitted testimony from BillFloat’s expert that challenged the survey. Both experts were cross-examined on their qualifications and on the merits of the survey.

The jury found that BillFloat had not established trademark infringement by a preponderance of the evidence. Post-trial, BillFloat moved for judgment as a matter of law and for a new trial, and Collins Cash moved for attorneys’ fees and non-taxable costs. The district court denied BillFloat’s motion and awarded Collins Cash attorneys’ fees under the partnership agreement for the breach of contract claim but declined to award Collins Cash attorneys’ fees for the trademark infringement claim or non-taxable costs for either claim. Both parties appealed.

BillFloat argued that the district court abused its discretion in admitting Collins Cash’s expert testimony and survey evidence. It also argued that the district court erred in declining to give BillFloat’s proposed jury instruction not to draw any inferences about the fact that BillFloat did not offer its own survey evidence.

The Ninth Circuit found no abuse of discretion on these issues. The Court pointed to the distinction between the admissibility of survey evidence as opposed to the relative weight a [...]

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SHOP SAFE Act: E-Commerce Trademark Enforcement Legislation Reintroduced in the House

by Christopher M. Bruno | Jun 27, 2024 | Trademarks

On June 11, 2024, Representatives Jerry Nadler (D-NY) and Darrell Issa (R-CA) of the US House of Representatives Judiciary Subcommittee on Courts, Intellectual Property, and the Internet reintroduced the Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce (SHOP SAFE) Act of 2024. The proposed legislation seeks to protect US consumers from unknowingly purchasing counterfeit goods by incentivizing e-commerce platforms to implement certain guidelines. If platforms fail to comply with the act, they could be subject to liability for the actions of third-party sellers.

The SHOP SAFE Act purports to address the growing threat of the online counterfeit marketplace. Consumers are increasingly shopping online, with estimated sales of more than $280 billion in US retail e-commerce for the first quarter of 2024. Counterfeiters have continued to target online consumers, yet under the current trademark regime, third-party counterfeit sellers are seldom held accountable for their role in the online marketplace. The legislation seeks to deter that threat by encouraging e-commerce practices that aim to better inform consumers and screen third-party sellers.

Under the SHOP SAFE Act as proposed, an e-commerce platform may be subject to a lawsuit when a third-party seller uses a counterfeit mark in commerce during a sale, offer, advertisement or distribution of a good that implicates health and safety on the platform. To reduce counterfeit offerings, the legislation purports to enlist platforms to actively monitor for trademark infringement.

The SHOP SAFE Act also would provide e-commerce platforms with a mechanism to protect themselves from contributory liability stemming from counterfeit offerings: a safe harbor if the e-commerce platform takes reasonable prophylactic measures to prevent infringing use of trademarks by a third-party seller. Best practices include imposing certain contractual limitations on third-party sellers, such as those related to:

Posting requirements and service of process in the United States.
Setting up proactive screening measures and processes to report and quickly disable and remove offerings of counterfeit goods.
Implementing written policies to terminate third-party accounts that repeatedly use counterfeit marks and to block those who attempt to rejoin.

Whether enactment of the SHOP SAFE Act would benefit the e-commence ecosystem is a matter of debate. Some contend that the measures are necessary to deputize platforms to better police the goods sold through their websites. Others claim that the legislation might be used to shut down, under the auspices of trademark enforcement, small businesses offering legitimate goods, especially because these businesses likely have fewer resources to challenge the platform’s determinations. As the SHOP SAFE Act has been previously introduced without movement, and given that this year is not primed for bipartisan action, it remains to be seen whether the act – which has companion US Senate legislation – moves forward toward passage.

Lauren Hong, a summer associate in the San Francisco office, also contributed to this article.

Fourth Estate Redux: Dismissal for Lack of Registration Not on the Merits

by Karen Gover | Jun 20, 2024 | Copyrights

In the latest development of a complicated eight-year court battle regarding a copyright infringement claim, the US Court of Appeals for the First Circuit vacated and remanded the district court’s dismissal on claim preclusion grounds. The Court concluded that dismissal for failure to register the copyright was not “on the merits,” and therefore preclusion did not apply. Foss v. Marvic Inc. et al., Case No. 23-1214 (1st Cir June 10, 2024) (Barron, C.J.; Lipez, Kayatta, JJ.)

In 2006, Cynthia Foss designed a brochure for Marvic, a purveyor of sunrooms, for $3,000. Foss’s grievance with Marvic began in 2016 when she discovered that Marvic had been using a modified version of that brochure without permission. Foss filed a copyright infringement claim in January 2018 demanding $264,000. She inaccurately alleged that she had applied to register the copyright for the brochure. Eight months later, Foss amended her complaint, falsely alleging that she had registered the brochure with the US Copyright Office in February 2018 when in fact she had only applied for registration.

The district court stayed the action pending the Supreme Court’s decision in Fourth Estate v. Wall-Street, which construed 17 U.S.C. § 411(a) to require registration before a copyright claimant may sue for infringement. After Fourth Estate was issued, the district court dismissed Foss’s copyright infringement claim because the Copyright Office had not acted on her application for copyright. Later, the Copyright Office granted Foss a copyright registration in the brochure. Rather than move for reconsideration of the dismissal of her claim in the first action, Foss filed an appeal, which she lost.

After losing the appeal, Foss filed a second copyright infringement complaint against Marvic based on the same facts as the first. Foss also filed an amended complaint naming Charter Communication. She sought a declaratory judgment that Charter was not entitled to assert a safe harbor defense under the Digital Millenium Copyright Act (DMCA). Marvic and Charter filed motions to dismiss. In February 2023, the district court granted the motions, finding that “[b]ecause Foss’s prior copyright infringement claim against Marvic was dismissed with prejudice, [we] agree[d], for substantially the reasons stated in their supporting memorand[a], that her copyright claims . . . are barred by res judicata.” Foss appealed.

On the issue of claim preclusion, the First Circuit concluded that the first dismissal had not been a “final judgment on the merits” because it was based exclusively on the failure to satisfy the precondition of registration. The Court noted that it had ruled on this issue in Foss v. Eastern States Exposition, another copyright infringement action brought by Foss. The Court explained that, as it concluded in the Eastern States Exposition case, dismissal due to lack of prior registration is “too disconnected from the merits of the underlying claim” to be claim preclusive.

Marvic argued that the prior dismissal “with prejudice” constituted a final judgment on the merits and that the dismissal was “a sanction” based on Foss’s “repeatedly ignoring court directives [...]

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The $X Factor: Demystifying Damages Calculations

by Keval Amin | Jun 13, 2024 | Patents

The US Court of Appeals for the Federal Circuit affirmed a district court’s decision to deny a defendant’s motion for a new trial on damages, finding that the plaintiff’s damages expert sufficiently showed that prior license agreements were economically comparable to a hypothetically negotiated agreement between the parties. EcoFactor, Inc. v. Google LLC, Case No. 23-1101 (Fed. Cir. June 3, 2024) (Reyna, Lourie, JJ.) (Prost, J., dissenting).

EcoFactor owns a patent directed to mitigating strain on the electricity grid by adjusting thermostat settings within HVAC systems. The patent describes a system where thermostats collect internal temperature readings and use them alongside external temperatures to estimate internal temperature change rates, including future predictions. EcoFactor sued Google alleging infringement based on Google’s Nest smart thermostat products.

After discovery, Google sought summary judgment, arguing that claims of EcoFactor’s patent were invalid as abstract ideas under 35 U.S.C. § 101. The district court denied this motion as well as Google’s Daubert motion to exclude the testimony of EcoFactor’s damages expert. At trial the jury found that Google infringed EcoFactor’s patent and awarded damages. The district court denied Google’s subsequent motions for judgment as a matter of law on noninfringement and for a new trial on damages. Google appealed.

Google raised three key issues. First, it argued that the district court erred in denying its motion for summary judgment. Second, Google asserted that the district court erred in denying its motion for judgment as a matter of law concerning the noninfringement of EcoFactor’s patent. Third, Google claimed that the district court wrongly denied its motion for a new trial on damages, arguing that EcoFactor’s damages expert opinion was based on unreliable methodology.

The Federal Circuit upheld the district court’s decision to deny summary judgment because there were genuine issues of material fact warranting a trial. The Court also affirmed the jury’s infringement verdict against Google, finding that it was supported by substantial evidence. Despite Google’s argument that its Nest thermostats did not meet the claims of EcoFactor’s patent, the Court concluded that expert testimony and corroborating documentation demonstrated otherwise.

On the damages issue, Google argued that EcoFactor’s expert testimony was unreliable because there was no evidence that the parties to the three license agreements used by the expert actually applied the royalty rate stated in the agreement. While Google acknowledged that each of the license agreements include a specified royalty rate, Google argued that each also included a “whereas” clause indicating that the licensee would pay EcoFactor a lump sum amount “set forth in this Agreement based on what EcoFactor believes is a reasonable royalty calculation of [$X] per-unit for . . . estimated past and [] projected future sales of products accused of infringement in the Litigation.” Google asserted that while the agreements may have included a stated rate, there was no evidence that the agreements actually applied the rate in calculating the lump sum payment.

The Federal Circuit rejected Google’s argument. The Court explained that the proposed royalty rate was derived from three [...]

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Getting to the Core of It: Assignment Clause Is Ambiguous

by Katherine Pappas | May 30, 2024 | Patents

The US Court of Appeals for the Federal Circuit vacated and remanded a district court’s grant of summary judgment, finding that the language used in an invention assignment clause was subject to more than one reasonable interpretation (i.e., ambiguous) and thus remand was necessary for further fact finding. Core Optical Tech., LLC v. Nokia Corp., Case Nos. 23-1001; -1002; -1003 (Fed. Cir. May 21, 2024) (Dyk, Taranto, JJ.) (Meyer, J., dissenting).

Core Optical filed complaints against three groups of defendants alleging patent infringement. The lead defendant, Nokia, moved for summary judgment, arguing that Core Optical did not have standing to bring the patent infringement suit. Nokia argued that by virtue of an invention assignment clause in an employment-related agreement signed in 1990, the inventor, Dr. Core, had assigned the patent rights to TRW, his employer at the time of the invention. In the agreement, Dr. Core “agreed to disclose to TRW and automatically assign to TRW all of his inventions that ‘relate to the business or activities of TRW’ and were ‘conceived, developed, or reduced to practice’ during his employment with TRW.” Nokia argued that by virtue of that earlier assignment, the subsequent assignment to Core Optical was ineffective. The agreement had a carveout from the assignment for inventions “developed entirely on [Dr. Core’s] own time” that was unrelated to his work for TRW. According to Nokia, based on the assignment, Core Optical did not have standing to assert the patent. The district court agreed and granted Nokia’s motion for summary judgment. Core Optical appealed.

The Federal Circuit reviewed the district court’s grant of summary judgment de novo, following Ninth Circuit and California law relating to the underlying contract dispute and related factual determinations. Under California law, the “fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties” (citing City of Atascadero v. MLPF&S (1998)). In granting summary judgment, the district court had held that the 1990 invention assignment agreement’s carveout did not encompass Dr. Core’s PhD research, which undisputedly led to the invention claimed in the patent. That finding was based in part on the TRW fellowship program that supported and enabled Dr. Core’s PhD work. However, Core Optical presented evidence that “Dr. Core was careful not to work on his PhD research while ‘on the clock’ at TRW and not to use TRW equipment, facilities, or supplies when working on his PhD research.”

The Federal Circuit disagreed with the district court that the matter was subject to resolution on summary judgment. The Court agreed with Core Optical that the “entirely-own-time” phrase did not unambiguously express a mutual intent to designate all the time Dr. Core spent performing his PhD research as his own time or, as Nokia argued, to indicate that some of the time Dr. Core spent performing his PhD research was partly TRW’s time (as the district court held). The Federal Circuit walked through the undisputed facts, including that Dr. Core sought funding from TRW for his PhD research and [...]

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Second Circuit Tells Rapper to Face the Music for Failing to Register the Work

by Karen Gover | May 23, 2024 | Copyrights

The US Court of Appeals for the Second Circuit affirmed the dismissal of a copyright infringement claim by one rap artist against another on the grounds that the plaintiff failed to register the work in question. The Court emphasized the distinction between a musical work and a sound recording of that work, noting that they are separately copyrightable and require separate registrations. Nwosuocha v. Glover, Case No. 23-703 (2d Cir. May 10, 2024) (Jacobs, Park, Nathan, CJ.) (per curium) (nonprecedential)

In fall 2016, the rapper Emelike Nwosuocha, who goes by Kidd Wes, wrote and published a song called “Made in America.” In May 2017, Kidd Wes registered an album that included “Made in America” with the US Copyright Office and was issued a sound recording registration. In 2018, the rapper Donald Glover, known as Childish Gambino, released the song “This is America.” The song won in all four of its nominated categories at the 61st Grammy Awards in 2019: Song of the Year, Record of the Year, Best Rap/Sung Performance and Best Music Video. Kidd Wes then filed a complaint in the US District Court for the Southern District of New York against Glover and his music labels, alleging infringement of his copyright.

A valid copyright registration is a prerequisite to suit under 17 U.S.C. § 411(a). Here, Kidd Wes only registered his copyright for the sound recording of “Made in America,” not for the musical work itself. Since his infringement allegations concerned the work and not the recording of the work, the district court granted Childish Gambino’s motion to dismiss the claim for failure to register the copyright at issue. The court also dismissed the claim for the independent reason that Childish Gambino’s song did not infringe.

Kidd Wes appealed, arguing that § 411(b) permits suit “regardless of whether the certificate [of registration] contains any inaccurate information,” unless the inaccuracy was knowing or material, and that the distinction between a sound recording and a musical work is an administrative classification imposed by the Register of Copyrights and therefore has “no significance with respect to the subject matter of copyright or the exclusive rights provided by [Title 17 of the United States Code].”

The Second Circuit rejected both lines of argument. First, the Court noted that failing to register the musical work “Made in America” is not the same as accidentally including inaccurate information on the registration form. The Court explained that “the difference between forgiving technical mistakes in a copyright application and allowing applications to create registrations in material never mentioned” is an important distinction, and they should not be conflated.

Second, the Second Circuit noted that the distinction between a musical work and a sound recording of that work is not just an administrative classification, but a distinction created by statute. (17 U.S.C. §§ 102(a)(2) and (a)(7).) The distinction is important, the Court explained, because “sound recordings and musical works are different artistic works that can be copyrighted by different creators and are infringed in different ways.”

Having [...]

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Prime Delivery: Amazon Program Now Offers Personal Jurisdiction to Patent Holders

by Courtney Seams | May 16, 2024 | Patents

Addressing the issue of personal jurisdiction in the context of a declaratory judgment case involving a program for resolving patent infringement claims, the US Court of Appeals for the Federal Circuit concluded that a patent owner has personal jurisdiction in the forum of an alleged infringer when it files a program claim against the alleged infringer. SnapRays, dba SnapPower v. Lighting Defense Group, Case No. 23-1184 (Fed. Cir. May 2, 2024) (Moore, CJ. Lourie, Dyk, JJ.)

The Amazon Patent Evaluation Express (APEX) program helps resolve patent infringement claims against sellers on Amazon. Under APEX, a patent owner submits an APEX Agreement to Amazon that identifies the allegedly infringed patent claim and the Amazon listings with the alleged infringing products. Amazon then sends this APEX Agreement to the seller, who can do one of the following to avoid removal of their accused listings:

Opt into APEX and let a third party determine whether their product likely infringes
Resolve the claim directly with the patent owner
File a lawsuit for declaratory judgment of noninfringement. If the seller does nothing, its listings are automatically removed from Amazon within three weeks of receipt of the APEX Agreement.

Lighting Defense Group (LDG), a Delaware company whose principal place of business is in Arizona, submitted an APEX Agreement alleging that SnapPower’s Amazon products (electrical outlet covers with integrated technology) infringed one of its patents. SnapPower, a Utah company whose principal place of business is in Utah, then filed a declaratory judgment action against LDG in Utah. LDG then filed a motion to dismiss for lack of personal jurisdiction. The district court granted the motion, finding that SnapPower did not demonstrate that LDG purposefully directed activities at SnapPower in Utah and that there was no evidence that LDG reached out to Utah other than through responses to SnapPower’s communications. SnapPower appealed.

The Federal Circuit reversed, finding that LDG was subject to personal jurisdiction under the Court’s three-prong test because (1) LDG purposefully directed its activities at SnapPower in Utah, (2) LDG’s submission of the APEX Agreement was directed to SnapPower in Utah and aimed to affect activities in Utah and (3) it would not be unreasonable to find personal jurisdiction over LDG in Utah.

In assessing the first prong, the Federal Circuit found that LDG knew, via APEX’s terms, that Amazon would notify SnapPower of the APEX Agreement and that the options available to SnapPower included a claim for declaratory judgment. Further, the Court found that the APEX Agreement had more power than cease and desist letters because of the automatic removal of the listings after three weeks, which would affect sales and activities in Utah.

In assessing the second prong, the Federal Circuit found that personal jurisdiction comported with due process because LDG’s actions aimed to affect marketing, sales and other activities in Utah and because the suit arose out of LDG’s activities in the forum.

In assessing the final prong, the Federal Circuit rejected LDG’s argument that allowing personal jurisdiction would “open the [...]

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Take Three for Take-Two: Jury Finds Implied License for Tattoos on Video-Game Avatar

by Karen Gover | May 9, 2024 | Copyrights

A jury rejected allegations that a video-game maker’s use of tattoos in a game violated the copyright of the artist who inked them, finding the video-game maker had an implied license to depict a player’s tattoos in its likeness of him. Hayden v. 2K Games Inc., Case No. 1:17-cv-02635 (N.D. Ohio)

Jimmy Hayden is a tattoo artist who has created works for many National Basketball Association (NBA) stars, including Lebron James, Shaquille O’Neal, Kyrie Irving, Danny Green and Tristan Thompson. Hayden filed suit against Take-Two Interactive Games, a developer, publisher and marketer of interactive entertainment and video games, in 2017 for the depiction of his copyrighted tattoos on the likenesses of James, Green and Thompson in the popular NBA 2K game series. The NBA 2K series allows players to control realistic avatars of more than 400 NBA players.

In January 2024, the district court dismissed the infringement claims concerning four of the six tattoos but ruled that claims concerning two of the tattoos on James could proceed to trial. The jury found that Take-Two’s agreement with the NBA and its players’ union to use James’s likeness included an implied license to depict his tattoos.

Practice Note: A likely issue on appeal will be whether the jury was correctly instructed in the implied license doctrine, which involves inferring intent from the parties’ conduct, as well as whether it applied the doctrine correctly.

Similar Cases

This case is the latest in a series of disputes between tattoo artists and the use of their work in video games. In 2020, Take-Two was sued in the US District Court for the Southern District of New York over its depiction of tattoos on NBA players, including James, Kenyon Martin and Eric Bledsoe. In that case, Solid Oak Sketches, Inc. v. Take-Two Games, Inc. (499 F.Supp.3d 333 (S.D.N.Y. 2020)), the district court granted Take-Two’s motion for summary judgment, finding that the tattoos depicted on the basketball players were not substantially similar to the actual tattoos, that the video game company’s use was within the license granted by the players to use their likeness and that the video game’s use of the copyrighted tattoos was transformative.

In another case, Alexander v. Take-Two Interactive Software, Inc. et al. (Case No. 18-cv-966-SMY, (S.D. Ill. 2022)), a tattoo artist won a jury trial concerning the depiction of tattoos on professional wrestler Randy Orton in Take-Two’s WWE 2K video game series. In that case, the jury awarded Alexander $3,750 in damages, finding that the reproduction of the tattoos was not fair use, but the small size of the award reflected their finding that the game’s profits were not attributable to the copied tattoos.

Unclean Hands Aren’t Just for Toddlers

by Jacob Michael Bass | Apr 25, 2024 | Patents

In an action involving manufacturers of a self-sealing dining mat for toddlers, the US Court of Appeals for the Federal Circuit affirmed a district court’s finding that the defendants were barred from obtaining relief on their counterclaims under the unclean hands doctrine, thereby vacating the district court’s other findings on inequitable conduct, obviousness, attorneys’ fees and costs. Luv N’ Care, Ltd. et al. v. Laurain et al., Case No. 22-1905 (Fed. Cir. Apr. 12, 2024) (Reyna, Hughes, Stark, JJ.)

Luv N’ Care and Nouri E. Hakim (collectively, LNC) filed suit against Lindsey Laurain and Eazy-PZ (EZPZ), asserting various claims for unfair competition under the Lanham Act and Louisiana law. LNC also sought declaratory judgment that EZPZ’s design patent was invalid, unenforceable and not infringed. After the suit was filed, the US Patent & Trademark Office (PTO) issued Laurain a utility patent directed toward self-sealing dining mats. Laurain subsequently assigned her rights to EZPZ, which then asserted counterclaims for utility patent, design patent and trademark infringement.

Following discovery, the district court granted LNC’s motion for summary judgment, finding all claims of EZPZ’s utility patent as obvious in view of three prior art references. EZPZ moved for reconsideration, which the district court denied, indicating that a “ruling providing further reasoning will follow in due course.” Before any such ruling issued, the PTO issued an ex parte reexamination certificate confirming the patentability of the utility patent claims two days before the district court’s bench trial began.

EZPZ did not provide this reexam certificate to the district court prior to the bench trial. During the bench trial, the district court found that EZPZ had not committed inequitable conduct but that EZPZ’s litigation conduct constituted unclean hands. After the district court entered judgment, EZPZ moved for reconsideration of summary judgment based on the ex parte reexamination certificate. The district court denied this motion and found that the evidence did not compel alteration of the prior ruling that the utility patent was invalid. It also denied LNC’s motion for attorneys’ fees and costs. EZPZ appealed.

The Federal Circuit affirmed the unclean hands determination but vacated the district court’s rulings on inequitable conduct, invalidity, attorneys’ fees and costs. As to unclean hands, the Court reasoned that EZPZ failed to disclose patent applications related to the utility patent until well after the close of discovery and dispositive motion practice. EZPZ also blocked LNC’s efforts to discover Laurain’s prior art searches by falsely claiming that she had conducted no such searches and that all responsive documents had been produced. It further found that EZPZ witnesses, including Laurain and EZPZ’s former outside counsel, repeatedly gave evasive testimony during depositions and at trial. The Court affirmed the district court’s determination that EZPZ’s misconduct bore an immediate and necessary connection to EZPZ’s claims for infringement because the undisclosed material was directly relevant to the development of LNC’s litigation strategy and undermined LNC’s ability to press its invalidity and unenforceability challenges. The Court found no clear error in the district court’s reasoning that [...]

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