A unanimous panel of the US Court of Appeals for the Seventh Circuit awarded sanctions under Federal Rule of Appeals 38 against Amazon seller Ellishbooks for its frivolous appeal from a default judgment. Quincy Bioscience, LLC v. Ellishbooks, et al., Case No. 19-1799 (7th Cir. June 5, 2020) (Wood, J.).
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Reversing an award of attorney’s fees, the US Court of Appeals for the Federal Circuit found that a district court abused its discretion in making an exceptional-case determination where patent and trademark infringement claims were reasonable. Munchkin, Inc. v. Luv N-Care, LTD., Admar International, Inc., Case No. 19-1454 (Fed. Cir. June 8, 2020) (Chen, J.).
Munchkin sued LNC for trademark infringement, unfair competition, trade dress infringement and patent infringement based on LNC’s no-spill drinking cups. LNC filed a petition for inter partes review (IPR) with the Patent Trial and Appeal Board (PTAB). While the IPR was pending, Munchkin voluntarily dismissed all of its non-patent claims with prejudice. The PTAB subsequently found Munchkin’s patent was unpatentable. After the PTAB’s finding, Munchkin dismissed its patent infringement claim.
LNC filed a motion for attorney’s fees under 35 U.S.C. § 285 and 15 U.S.C. § 1117(a), arguing that the trademark and trade dress infringement claims were substantively weak and that Munchkin should have been aware of the weakness of the patent’s validity. The district court agreed that the case was exceptional and granted LNC’s motion. Munchkin appealed.
The Patent Act and Lanham Act allow courts to award reasonable attorney’s fees to the prevailing party, but only in exceptional cases. The Federal Circuit reviewed the district court’s award for abuse of discretion under the Ninth Circuit standard for attorney’s fees as set forth in Octane Fitness LLC v. ICON Health & Fitness, Inc. (IP Update, Vol. 17, No. 5). The Supreme Court in Octane Fitness held that an exceptional case is “one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.”
The Federal Circuit noted that the district court’s exceptional-case determination rested on issues that were not fully litigated before the court. Addressing the patent infringement claim, the Court first found that the district court’s claim construction ruling favored Munchkin, creating a serious hurdle for LNC’s invalidity challenge. However, to find the case exceptional, the district court dismissed its own Markman construction as merely a non-final interim order. The Court found that was not the right question, and instead, the relevant question was whether Munchkin’s validity position was reasonable—not whether there is a possibility of reconsideration of the claim construction.
LNC argued that Munchkin was unreasonable in maintaining its patent infringement lawsuit once the PTAB instituted the IPR because, based on the statistics, it was more likely than not that the patent would be found invalid. The Federal Circuit disagreed, stating clearly that IPR statistics combined with the merits outcome is not enough. What is required is a “fact-dependent, case-by-case” analysis. The Federal Circuit found nothing unreasonable about Munchkin’s patent infringement claim.
Addressing the trademark claims, the Federal Circuit determined that Munchkin cannot be faulted for litigating a claim it was granted permission to pursue. Since the district court allowed Munchkin to amend its complaint, finding no grounds for prejudice, bad faith [...]
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The US Court of Appeals for the Ninth Circuit affirmed a denial of a jury trial demand in a trademark infringement lawsuit where only a claim of disgorgement of profits was at issue. JL Beverage Company, LLC v. Jim Beam Brands Co., Beam Inc., Case No. 18-16597 (9th Cir. May 27, 2020) (Wallace, J.) (Friedland, J., concurring).
JL sued Jim Beam for trademark infringement. JL manufactured and sold vodka in bottles featuring stylized depictions of lips. Jim Beam also sells vodka in bottles featuring stylized depictions of lips. JL alleged that consumers would confuse its “Johnny Love Vodka” lip mark with Jim Beam’s Pucker line of flavored vodka products.
After JL failed to provide a computation of actual damages during discovery, Jim Beam sought to limit the damages JL could seek at trial. The district court found that JL’s failure prevented Jim Beam from preparing a responsive case and granted Jim Beam’s motion to exclude JL’s claims for actual damages. Jim Beam further argued that JL may not recover a royalty because 1) it is not appropriate in situations, like this one, where the parties did not have a previous royalty agreement and 2) as with actual damages, JL never identified a means of calculating a reasonable royalty or produced evidence upon which a fact finder could determine such a royalty. Again, the court agreed, and limited JL’s damage claims to equitable disgorgement of Jim Beam’s profits, as provided under the Lanham Act.
Without claims for actual damages or royalties, Jim Beam moved to strike JL’s demand for a jury trial. Since the Lanham Act does not afford the right to a jury trial, the district court considered whether the Seventh Amendment affords such a right in a trademark dispute. The Seventh Amendment provides that “[i]n Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.” The district court found controlling law in Ninth Circuit precedent Fifty-Six Hope Road Music, which held that that the Seventh Amendment does not afford the right to a jury calculation of profits for two reasons: disgorgement is an equitable remedy, and the specific issue of profit determination cannot be said to be traditionally tried by a jury. The district court denied JL’s demand for a jury trial, held a two-day bench trial and ultimately determined that Jim Beam did not infringe JL’s marks. JL appealed the district court’s order granting Jim Beam’s motion to strike its jury trial demand and the district court’s judgment.
The Ninth Circuit affirmed the district court’s order and judgment, finding no error in the court’s likelihood of confusion analysis on any of the factors, nor in its denial of the jury trial.
In a concurring opinion, Judge Friedland wrote separately to address the tension between the Court’s holdings in Fifty-Six Hope Road Music (a trademark case) and Sid & Marty Krofft (a copyright case). In Krofft, the Ninth Circuit found a right to a jury trial in a copyright case where there was only a claim [...]
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The US Court of Appeals for the Eleventh Circuit reversed a district court’s grant of summary judgment invalidating a service mark for lacking distinctiveness, finding that a reasonable jury could understand the mark to entail a double meaning and therefore making it sufficiently distinctive to receive trademark protection. Engineered Tax Servs., Inc. v. Scarpello Consulting, Inc., Case No. 18-13690 (11th Cir. May 14, 2020) (Newsom, J.).
The US Court of Appeals for the Seventh Circuit held that a brewing company’s statements that a competitor’s beers were made with corn syrup were not false and misleading under the Lanham Act because the competitor listed corn syrup as an ingredient in its beers. Molson Coors Beverage Co. USA LLC v. Anheuser-Busch Cos., LLC, Case Nos. 19-2200, -2713, -2782, -3097, -3116 (7th Cir. May 1, 2020) (Easterbrook, J.).
A unanimous panel of the US Court of Appeals for the Seventh Circuit upheld a default judgment and permanent injunction against an online marketer for trademark infringement, false advertising, dilution, unfair competition under the Lanham Act, and claims under Illinois statutory and common law. Quincy Bioscience, LLC v. Ellishbooks, et al., Case No. 19-1799 (7th Cir. Apr. 24, 2020) (Wood, J.).
Resolving a split among the circuits regarding whether proof of willfulness is necessary for an award of a trademark infringer’s profits, the Supreme Court of the United States issued a unanimous decision holding that the plain language of the Lanham Act has never required a showing of willful infringement in order to obtain a profits award in a suit for trademark infringement under §1125(a). Romag Fasteners, Inc. v. Fossil, Inc., et al. Case No. 18-1233 (Supr. Ct. Apr. 23, 2020) (Gorsuch, Justice) (Alito, Justice, concurring) (Sotomayor, Justice, concurring).
Addressing issues related to the disgorgement of profits and attorneys’ fees in a trademark infringement lawsuit, the US Court of Appeals for the Eighth Circuit affirmed a denial of such fees and profits. Safeway Transit LLC and Aleksey Silenko v. Discount Party Bus, Inc., Party Bus MN LLC, and Adam Fernandez, Case No. 18-2990 (8th Cir. Apr. 6, 2020) (Smith, J.).
In 2000, Alex Fernandez started Party Bus MN, which was the first party-bus company in the Twin Cities region. In 2004, Fernandez formed Discount Party Bus Co., LLC (DPB). Fernandez also used the names “Rent My Party Bus” and “952 Limo Bus” in print advertising before 2008.
Addressing the scope of trade dress protection, the US Court of Appeals for the Fourth Circuit found that the shape and color scheme of a product was functional and therefore only eligible for patent law’s protection of utilitarian inventions. CTB, Inc. v. Hog Slat, Inc., Case No. 18-2107 (4th Cir. Mar. 27, 2020) (Wynn, J.) (Keenan, J. concurring) (Rushing, J. concurring).
The US Court of Appeals for the Seventh Circuit officially joined its sister circuits in holding that the Supreme Court standard for awarding attorney’s fees in patent cases, set forth in Octane Fitness, LLC v. ICON Health & Fitness, Inc., was equally applicable to attorney’s fees claims under the Lanham Act. In doing so, the Seventh Circuit overruled its prior holding that a plaintiff’s claims were only “exceptional” under the Lanham Act if they constituted an abuse of process. LHO Chicago River, LLC v. Perillo, Case. No. 19-1848 (7th Cir. Nov. 8, 2019) (Manion, J).
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