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Exploring the Latest in Intellectual Property Law
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European UPC Issues Its First Decisions on the Merits

by | Jul 18, 2024 | ,

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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Rimini, Meeny, Miny, Moe: Ninth Circuit Affirms Most PI Violation Findings, Reverses Others

by | Sep 7, 2023 |

Addressing the boundaries of a permanent injunction awarded to a major software developer, the US Court of Appeals for the Ninth Circuit largely agreed that the defending developer was in contempt for violating the order but reversed on certain issues where the district court overextended the injunction. Oracle USA, Inc. v. Rimini St., Inc., Case No. 22-15188 (9th Cir. Aug. 24, 2023) (Bybee, Bumatay, JJ.; Bennett, Dist. J., sitting by designation).

Oracle creates enterprise software to carry out business functions. Oracle’s customers buy licenses to its products, which require updates and technical support. These necessary support services can be outsourced to third-party vendors, such as Rimini.

This case is the byproduct of a 13-year battle that Oracle initiated on the grounds that Rimini’s support services constituted copyright infringement. Rimini made generic versions of Oracle software on Rimini computers to develop updates and bug fixes (local hosting) and supported clients by using development environments created pursuant to a different client’s license (cross-use). After multiple appeals and remands, the case resulted in a permanent injunction prohibiting Rimini from reproducing or cross-using Oracle software unless pursuant to a customer license. Rimini revamped its support services and sought a declaratory judgment of noninfringement. After Oracle was permitted to conduct discovery into potential violations of the injunction, the district court held a bench trial on 10 possible violations. The district court found Rimini in contempt for five of the 10 alleged violations (issues 1–4 and 8). On two others (issues 7 and 9), the district court found no contempt but enjoined Rimini from continuing a specific copying practice. The district court sanctioned Rimini $630,000, calculated according to statutory damages available under the Copyright Act.

Rimini appealed each contempt finding, the injunction and the sanctions.

First, the Ninth Circuit addressed the five contempt findings, sorted into three groups:

  • Local hosting (issue 1)
  • Cross-use (issues 2–4)
  • Database copying (issue 8).

On issue 1, the Ninth Circuit affirmed. The lower court had found that Rimini received copyrighted files from its clients. Instead of following internal policies requiring them to quarantine or report these files, Rimini employees forwarded and saved them locally. Based on the plain language of the PI, this was a clear violation.

On issues 2–4, regarding cross-use, the Ninth Circuit also affirmed. Rimini used one client’s environment to modify and test updates that the client did not need and were intended for other clients. Since the injunction specifically prohibited cross-use, this was a violation. Rimini lodged multiple failed arguments, including that the injunction only prohibited cross-use in “generic” (non-client) environments, so its use of one client’s environment to support another client was allowed. The Court disagreed that the injunction was so specific.

On issue 8 (database copying), however, the Ninth Circuit reversed. The district court held Rimini in contempt for making copies of an Oracle database file on Rimini systems. When the client uploaded the file to Salesforce for Rimini to provide technical assistance, a copy was automatically created on Rimini’s system. Here, the [...]

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Quack, Waddle and Duck: Order That Grants Injunctive Relief Is an Injunction

by | Jun 15, 2023 |

The US Court of Appeals for the Fourth Circuit vacated and remanded a district court ruling, finding that the district court failed to properly apply the Federal Rules of Civil Procedure (FRCP) in granting injunctive relief. Wudi Industrial (Shanghai) Co., Ltd. v. Wong et al., Case Nos. 22-1495; -1662 (4th Cir. June 5, 2023) (Gregory, King, JJ.) (Rushing, J., dissenting). The dissent argued that the district court simply entered a permissible order enforcing a settlement agreement between the parties.

The FRCP outlines the necessary criteria and steps for courts to grant injunctive relief. FRCP 52(a)(2) requires courts to state the findings and conclusions that support their actions. FRCP 65(d) requires courts to state the reasons why the injunction was issued, state the injunction’s terms specifically or describe the restrained/required act(s) in detail. Per the Supreme Court’s Ebay test, a party seeking injunctive relief must demonstrate the following:

  • It has suffered an irreparable injury.
  • Remedies available at law, such as monetary damages, are inadequate to compensate for that injury.
  • Considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted.
  • The public interest would not be disserved by an injunction.

Wudi Industrial competes with Wai L. Wong and his business entity GT Omega Racing (collectively, GTOR) in marketing video gaming chairs and other products. GTOR challenged Wudi’s GTRACING trademark registration in a cancellation proceeding at the Trademark Trial & Appeal Board, alleging that the mark encroached on GTOR’s earlier use of GT OMEGA RACING. The Board ruled in favor of GTOR, and Wudi initiated a first appeal at the district court. The parties subsequently entered into a concurrent-use agreement that assigned to Wudi the right to use the GTRACING word mark in all global markets except within a European carve-out of 53 named countries in exchange for a $4.5 million payment to GTOR. Under the agreement, Wudi was barred from purchasing ad words from search engines and shopping sites or using any social media platforms to promote GTRACING in the European carve-out countries.

In May 2022, GTOR filed a motion for enforcement in the district court, alleging breach because some of Wudi’s marketing and promotional content in the European carve-out contained the GTRACING mark. The district court granted GTOR’s motion and issued a first order. Under threat of contempt for noncompliance, Wudi was ordered to cease impermissible conduct and take down all posts accessible in the European carve-out containing GTRACING within seven days. In June 2022, the district court issued a second order stating that the first order was a grant of specific performance, not a preliminary injunction. Wudi appealed both orders.

The Fourth Circuit vacated and remanded the district court’s first and second orders because of procedural errors amounting to abuses of discretion, despite the dissent’s argument that the orders merely enforced the parties’ agreement. The Court concluded that the first order constituted a preliminary injunction, later made permanent by the second order, because “if it walks like a duck, quacks like a [...]

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When Are Compulsory Copyright Licenses Compulsory?

by | Oct 20, 2022 |

The US Court of Appeals for the Second Circuit partially affirmed a district court’s summary judgment order holding that audiovisual recordings of live concerts do not fall within the scope of the Copyright Act’s compulsory license provision while purchasers of audio-only recordings obtain a compulsory license in the copyright of the work fixed by their predecessors/sellers. ABKCO Music, Inc. et al. v. Sagan et al., Case No. 20-3816 (2d Cir. Oct. 6, 2022) (Jacobs, Wesley, Menashi, JJ.)

In 2002, William Sagan purchased, through Norton, a collection of audio and audiovisual live concert recordings from Bill Graham Archives. All three parties are named defendants in this case. The agreement conveyed all intellectual property that the Archives held (from a transaction with Sagan) and included a disclaimer stating that record company and artist approval was required to exploit the recordings. The defendants’ subsequent purchases of other recordings contained similar limited assurance language regarding intellectual property rights. In 2006, the defendants made the entire collection publicly available online for a streaming and downloading fee. A year later, the defendants began using a third-party licensing agent to obtain compulsory licenses under 17 USC § 115 and negotiated licenses from plaintiff music publishers in the audio and audiovisual live concert recordings.

Section 115 of the Copyright Act requires persons seeking to make and distribute phonorecords of a previously published musical work to obtain a compulsory license by providing notice to the copyright owner before distribution and paying government-prescribed royalties. (§ 115(a)(1), (b), (c).) The Copyright Act defines phonorecords as “[m]aterial objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed.” (§ 101.) Section 115’s substantive requirements for duplications of audio/sound recordings fixed by another include requirements that the sound be fixed lawfully, and that duplication be authorized by the copyright owner. (§ 115(a)(1).)

In 2015, the music publishers sued defendants for copyright infringement of 197 musical works posted online without valid compulsory licenses. The music publishers alleged that the defendants did not obtain compulsory licenses for audiovisual works as required by § 115 and that the defendants failed to comply with § 115 substantive compulsory licensing requirements for audio-only works. Defendants argued implied license and equitable estoppel as affirmative defenses. The publishers sought damages and a permanent injunction pursuant to the Copyright Act.

The district court, on summary judgment, ruled that the defendants had no valid license authorizing the reproduction and distribution of the musical works in either audio or audiovisual format, that the defendants had neither an implied license nor any basis for estoppel, and that Sagan (a principal in several of the defendant streaming services) was liable for direct infringement. The district court denied the publishers’ request for an injunction but granted the publishers an award of attorneys’ fees. The defendants appealed from the summary judgment order and the order granting fees and costs. The plaintiffs cross-appealed denial of an injunction.

The Second Circuit affirmed the district court’s holding that the defendants infringed each musical work [...]

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Play It Again and Again (Sam): Meanwhile No Injunction, No Fees

by | Sep 15, 2022 |

In its third opportunity to review the district court’s decision in this trade secret case involving flooring, the US Court of Appeals for the Eleventh Circuit again reversed, this time vacating a permanent injunction and an award of attorneys’ fees. The Eleventh Circuit noted that the district court failed to make the findings required to support an injunction and abused its discretion in awarding full fees notwithstanding prior reversal of relief awarded. AcryliCon USA, LLC v. Silikal GmbH, Case No. 21-12853 (11th Cir. Aug. 29, 2022) (Newsom, Marcus, JJ.; Middlebrooks, Distr. J.)

In an earlier appeal in this case, the Eleventh Circuit reversed a ruling on trade secret misappropriation rendered by the district court in favor of AcryliCon USA (AC-USA) and vacated the damages award. An aspect of the Court’s ruling was that the “permanent” injunction entered by the district court was only preliminary in nature (not permanent) and was, as a matter of law, dissolved because the district court did not include it in the original final judgment. On remand, the district court was ordered to determine the appropriate amount of attorneys’ fees the prevailing party should receive. However, the district court just entered the same amount of attorneys’ fees it had originally awarded and again entered a “permanent” injunction barring the use of the trade secret at issue, concluding that it was obliged to do so by the Eleventh Circuit’s ruling in the first appeal.

In the second appeal, the Eleventh Circuit held that AC-USA failed, as a matter of law, to prove its misappropriation claim and reversed the judgment entered in favor of AC-USA on that count. The Court also reversed the district court’s judgment that its $1.5 million damages award could be sustained on the basis of the contract claim once the misappropriation claim was reversed. The Court ruled that, as a matter of law, since AC-USA had failed to prove actual damages on its consequential damages theory, it could only recover nominal damages based on its breach of contract claim. Finally, the Court concluded that AC-USA was entitled to attorneys’ fees only on its breach of contract claim because, under Georgia law, even a nominal damages award would still materially alter the legal relationship between the parties.

In the second remand, the district court awarded essentially the same amount of attorneys’ fees ($1.3 million) to AC-USA but acknowledged that, since Silikal prevailed in vacating the award of compensatory and punitive damages, Silikal “was the prevailing party on the appeal under the terms of the [agreement]” and was entitled to almost $500,000 in attorneys’ fees for its successful appeal. The district court also awarded $100 in nominal damages to AC-USA for its successful appeal on the breach of contract claim. The district court then entered a permanent injunction enjoining Silikal “from disclosing or using in any way, directly or indirectly, the [ . . . resin . . . ] to anyone other than Plaintiff.”

Both parties appealed. AC-USA appealed the award of [...]

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No Appellate Jurisdiction to Review Post-Verdict Appeal of Previously Denied SJ Motion

by | Jan 21, 2021 |

In a closely watched trademark/counterfeiting case, the US Court of Appeals for the Second Circuit affirmed a judgment for contributory infringement, award of permanent injunction and monetary damage award against a commercial landlord found to have been willfully blind to trademark infringement and counterfeiting occurring on its leased property. Omega SA v. 375 Canal, LLC, Case No. 19-969 (2d Cir. Jan. 6, 2021) (Menashi, J.) (Lohier, J., concurring in part, dissenting in part). The Court also concluded that it could not consider a post-verdict appeal on a legal issue raised in a denied summary judgment motion (i.e., whether the landlord needed to know of a specific vendor involved in the counterfeiting) when the appellant failed to file a timely notice of appeal and did not seek an interlocutory appeal or file a Rule 50 motion for judgment as a matter of law on the issue.

375 Canal LLC is a commercial landlord with properties in Manhattan, including 375 Canal Street. Omega SA is a watch company. Omega sued Canal for contributory trademark infringement, alleging that Canal had continued to lease space at 375 Canal Street to vendors despite knowing that the vendors were selling counterfeit Omega goods. After discovery, Canal moved for summary judgment, contending that Omega did not identify a specific vendor to which Canal continued to lease property despite knowing or having reason to know that the specific vendor was selling counterfeit goods. Omega argued that its primary theory of willful blindness did not require identification of a specific vendor. The district court denied Canal’s motion, agreeing that Omega was not required to identify a specific vendor.

The jury found that Canal had contributorily and willfully infringed Omega’s trademarks, and awarded $1.1 million in statutory damages. The district court amended the final judgment to include a permanent injunction prohibiting Canal from infringing and taking other actions with respect to Omega’s marks, even outside of 375 Canal Street. Canal appealed, arguing that the district court erred by not requiring Omega to identify a specific vendor that Canal knew or should have known was infringing Omega’s trademarks. Canal raised this argument by appealing the pre-trial order denying Canal’s motion for summary judgment and the jury instructions.

The Second Circuit dismissed Canal’s appeal of the summary judgment denial and affirmed the jury instructions on the merits. On Canal’s challenge to the summary judgment denial, the Court began with the premise that a party generally cannot appeal an order denying summary judgment after a full trial on the merits because of its interlocutory character, which is not within appellate jurisdiction. The denial of Canal’s summary judgment motion did not qualify for an exception allowing review, such as situations where Congress has provided for review of certain interlocutory decisions, or where the Supreme Court has construed certain denials of summary judgment, such as those on the basis of qualified immunity, as final decisions permitting review. But even if it had qualified, Canal would have been required to file a notice of appeal within [...]

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