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Exploring the Latest in Intellectual Property Law
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Robbing Peter to Pay Paul? Supreme Court to Consider Scope of Lanham Act “Defendant’s Profit” Award

by | Jul 11, 2024 | ,

The Supreme Court has agreed to consider the breadth of a damages award in a long-running trademark dispute between two real estate companies. Dewberry Group, Inc. v. Dewberry Engineers, Inc., Docket No. 23-900 (Supr. Ct. June 24, 2024).

Dewberry Group and Dewberry Engineers both offer commercial real estate services in the same geographic area. The two companies dispute the use of the name “Dewberry” for use in real estate: Dewberry Group has acquired common law rights, and Dewberry Engineers owns registered trademarks. Dewberry Engineers sued Dewberry Group, but the initial litigation ended in settlement in 2007. As part of the settlement, Dewberry Group agreed to various terms, including that it would use a specific logo and an abbreviated name in certain overlapping markets.

Ten years later, Dewberry Group rebranded and attempted to register new marks containing the word “Dewberry” and abandoned the logo and name specified by the settlement agreement. In 2020, Dewberry Engineers again sued Dewberry Group, this time for violating the terms of the confidential settlement agreement and for infringing Dewberry Engineers’ trademarks. The lower court granted Dewberry Engineers summary judgment, a permanent injunction and monetary damages. The damages award included profit disgorgement pursuant to the Lanham Act, 15 U.S.C. § 1117(a), under which the US Court of Appeals for the Fourth Circuit ordered Dewberry Group’s affiliates to disgorge almost $43 million in profits. Dewberry Group appealed, and the Fourth Circuit affirmed in a 2 – 1 decision.

Dewberry Group petitioned for certiorari on the issue of damages, arguing that the Fourth Circuit’s decision to allow Dewberry Engineers to collect damages based on Dewberry Group’s affiliates’ profits “silently invites courts to ignore corporate separateness in trademark disputes without regard to veil-piercing principles.” Dewberry Group argued that the Fourth Circuit decision was substantively incorrect and contradictory to Ninth and Eleventh Circuit decisions as well as the Lanham Act. According to Dewberry Group, the $43 million “never passed through [Dewberry Group’s] hands,” and in fact the company “had zero net profits.” Because the Lanham Act allows only for disgorgement of a defendant’s profits – not defendant’s affiliates’ profits or a penalty against the defendant – Dewberry Group contended that the damages award was improper.

The issue presented is: Whether an award of the “defendant’s profits” under the Lanham Act, 15 U.S.C. § 1117(a), can include an order for the defendant to disgorge the distinct profits of legally separate non-party corporate affiliates.



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PTO Continues to Wave Wands in Assessing Enablement

by | Jan 18, 2024 |

In light of the 2023 Supreme Court of the United States decision in Amgen Inc. v. Sanofi, the US Patent & Trademark Office (PTO) published guidelines for PTO employees to use, regardless of technology, to ascertain compliance with the enablement requirement under 35 U.S.C. § 112. (89 Fed. Reg. 1563 (Jan. 10, 2024).) Unsurprising to those familiar with the Amgen decision, the PTO hewed closely to existing practice.

The PTO collected the Supreme Court’s clarifications regarding the relationship between the enablement requirement and an amount of experimentation, namely that although particular disclosure of all embodiments is not required, claims are not enabled if they require more than reasonable experimentation. Regarding the “reasonable experimentation” requirement, the PTO explained that consistent with several post-Amgen US Court of Appeals for the Federal Circuit opinions, it would continue to apply the factors that the Federal Circuit announced in its 1988 In re Wands decision.

Although the PTO intends to continue to rely on pre-Amgen Federal Circuit Wands analyses as instructive, it found particular persuasive force since the Federal Circuit’s decision was affirmed by the Supreme Court in Amgen. There, according to the guidance, the Federal Circuit concluded that the genus claims were not enabled because of the amount of experimentation required to test whether antibodies satisfied certain functional limitations. Thus, because “the scope of the claims was far broader in functional diversity than the disclosed examples, … [and] the invention was in an unpredictable field of science with respect to satisfying the full scope of the functional limitations, … there was not adequate guidance in the specification.”

The PTO also noted that the Federal Circuit’s 2023 Baxalta v. Genentech decision, like Amgen, found claims directed to antibodies that contained certain functional limitations to be invalid. There, the Court, like the PTO, detected no appreciable difference between the reasonable experimentation standard as articulated in Wands and the standard as set forth in Amgen. The guidance canvassed other post-Amgen enablement decisions, all of which the PTO read to support continued reliance on Wands.

Practice Note: Although the PTO says that it will continue to apply the Wands factors as it has before, the Amgen decision may, as a practical matter, make establishing enablement of functional limitations more difficult. Whether examiners—especially those in life sciences technology areas—change the course of their review post-Amgen remains to be seen.



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Rough Seas Ahead? Supreme Court to Reconsider Chevron Doctrine

by | Oct 26, 2023 |

The Supreme Court of the United States has agreed to reconsider the Chevron doctrine, which instructs courts to defer to a federal agency’s reasonable interpretation of an ambiguous statute that US Congress delegated to the agency to administer. Relentless, Inc. v. Department of Commerce, Case No. 22-1219 (Supr. Ct., Oct. 13, 2023) (certiorari granted). The question presented is:

Whether the Court should overrule Chevron or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.

The case involves the Magnuson-Stevens Fishery Conservation and Management Act (MSA), which governs fishery management in federal waters. The MSA states that, with the approval of the US Secretary of Commerce, the National Marine Fisheries Service (NOAA Fisheries) may require fishing vessels to carry federal observers who enforce the agency’s regulations. Congress appropriates funds for these observers. Deeming annual congressional appropriations for the federal observers insufficient, NOAA Fisheries asserted a right to require fishing vessels to enter into contracts to pay the federal observers. The US Court of Appeals for the First Circuit approved this practice, finding that the mere fact that the MSA provides for federal observers gave the agency carte blanche to charge the regulated party for those observers.

This case will be heard in tandem with Loper Bright Enterprises v. Raimondo, which raises a similar Chervon doctrine (deference) issue, during the January 2024 argument session.



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Seeking Harmony: Supreme Court to Consider Retrospective Relief for Timely Copyright Claims Under Discovery Rule

by | Oct 5, 2023 |

The Supreme Court of the United States agreed to consider whether a copyright plaintiff’s timely claim under the discovery rule is subject to retrospective relief for infringement occurring more than three years before the suit was filed. Warner Chappell Music, et al. v. Nealy, Case No. 22-1078 (Supr. Ct., Sept. 29, 2023) (certiorari granted). The specific question presented is as follows:

Whether, under the discovery accrual rule applied by the circuit courts and the Copyright Act’s statute of limitations for civil actions, 17 U. S. C. §507(b), a copyright plaintiff can recover damages for acts that allegedly occurred more than three years before the filing of a lawsuit.

Music Specialist and Sherman Nealy (collectively, Nealy) filed a copyright infringement suit against Warner alleging that Warner was using Nealy’s musical works based on invalid third-party licenses and in violation of 17 U.S.C. § 501. The alleged copyright infringement occurred as early as 10 years before Nealy filed the lawsuit. The district court denied Warner’s motion for summary judgment on statute of limitation grounds, finding that there was a genuine dispute of material fact regarding when Nealy’s claim accrual occurred. In a separate order, the district court certified for interlocutory appeal whether “damages in this copyright action are limited to the three-year lookback period as calculated from the date of the filing of the Complaint pursuant to the Copyright Act and Petrella.” Warner appealed.

The US Court of Appeals for the Eleventh Circuit agreed with the district court, issuing a decision that where a copyright plaintiff has a timely claim for infringement occurring more than three years before the filing of the lawsuit, the plaintiff may obtain retrospective relief for that infringement.

The Eleventh Circuit’s approach specifically disagreed with the Second Circuit’s approach to the application of the discovery rule, thereby creating a circuit split.



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Double Jeopardy Doesn’t Attach to Venue and Vicinage Clause Violations

by | Jun 29, 2023 |

The Supreme Court of the United States concluded that the Constitution’s Double Jeopardy Clause does not preclude retrial of a criminal defendant who was prosecuted in an improper venue and before a jury drawn from the wrong district. Smith v. United States, Case No. 21-1576 (Sup. Ct. June 15, 2023) (Alito, Justice.)

Timothy Smith was indicted in the Northern District of Florida for stealing trade secrets from StrikeLines, a company that uses sonar equipment to identify private artificial reefs that individuals construct to attract fish. In particular, Smith was accused of “surreptitiously” obtaining portions of coordinates and data from StrikeLines’ website.

At trial, the district court denied Smith’s motions to dismiss the indictment and for judgment of acquittal due to improper venue. Smith unsuccessfully argued that “he had accessed the data from Mobile, Alabama (in the Southern District of Alabama) and [that] the servers storing StrikeLines’ coordinates were located in Orlando, Florida (Middle District of Florida).” On appeal, the US Court of Appeals for the Eleventh Circuit reversed but concluded that “the ‘remedy for improper venue is vacatur of the conviction, not acquittal or dismissal with prejudice,’ and that the ‘Double Jeopardy Clause is not implicated by a retrial in a proper venue.’” Smith appealed to the Supreme Court.

On writ of certiorari, the issue before the Supreme Court was “whether the Constitution permits the retrial of a defendant following a trial in an improper venue and before a jury drawn from the wrong district,” or if retrial is barred by the Double Jeopardy Clause.

Citing precedent and the text of the Venue and Vicinage Clauses, Smith advanced the theory that the purpose of the Clauses bars retrial and requires acquittal. However, as the Supreme Court explained, neither purpose nor precedent demanded that the Venue or Vicinage Clauses be excepted from the general rule that, unless prohibited by the Double Jeopardy Clause, “a defendant [who] obtains a reversal of a prior, unsatisfied conviction . . . may be retried in the normal course of events.” The Court rejected Smith’s argument that the Venue Clause is meant to prevent the hardship of undergoing trial in a distant forum because the clause is “keyed to the location of the alleged ‘Crimes’” and not the district in which the defendant resides. The Court similarly rejected Smith’s arguments related to the purpose of the Vicinage Clause, noting that the Court has “repeatedly acknowledged that retrials are the appropriate remedy for violations of other [Sixth Amendment] jury-trial rights.”

Next, Smith appealed to the historical background of the Venue and Vicinage Clauses. The Supreme Court examined the relevant historical background and explained that the remedy at common law for a trial in an improper venue and before a jury drawn from the wrong vicinage did not preclude retrial. Moreover, the Court noted that it previously “embraced the retrial rule for a venue error” and that other federal and state courts have similarly ordered retrials for venue violations.

Finally, Smith argued that the Venue and Vicinage Clauses [...]

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“TRUMP TOO SMALL” Trademark Decision Heads to Supreme Court

by | Jun 15, 2023 | ,

The Supreme Court agreed to review the US Patent & Trademark Office’s (PTO) challenge to a February 2022 ruling by the US Court of Appeals for the Federal Circuit. In the ruling at issue, the Federal Circuit held that applying Sec. 2(c) of the Lanham Act (which bars registration of a trademark that consists of or comprises a name of a particular living individual without their written consent) may unconstitutionally restrict free speech in violation of the First Amendment in certain instances. Vidal v. Elster, Docket No. 22-704 (Supr. Ct., June 5, 2023).

In 2018, Steve Elster filed an application to register the mark TRUMP TOO SMALL for use on t-shirts, in reference to a 2016 Republican presidential primary debate exchange between then-candidate Donald Trump and Senator Marco Rubio (R-FL). The PTO examining attorney and subsequently the Trademark Trial & Appeal Board refused registration of the mark on grounds that it clearly referred to former President Trump, and that Elster did not have written consent to use former President Trump’s name, in violation of Sec. 2(c) of the Lanham Act. On Elster’s appeal, the Federal Circuit ruled that the Board’s refusal to register the trademark TRUMP TOO SMALL for use on t-shirts involved content-based discrimination that was not justified by a compelling or substantial government interest.

Following PTO Director Vidal’s January 2023 petition for a writ of certiorari, the Supreme Court granted cert and will consider whether the First Amendment allows content-based but viewpoint-neutral restrictions on which trademarks may be registered—and in this case, the PTO’s restriction on marks that consist of or comprise a name identifying a particular living individual (such as former President Donald Trump) except by their written consent.

The issue on which cert was granted: Whether the refusal to register a trademark under 15 U.S.C. § 1052(c) violates the free speech clause of the First Amendment when the mark contains criticism of a government official or public figure.



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2023 IP Outlook: What to Watch in Patent, Trademark and Copyright Law

by , , , , , , , , , , , , , and | Feb 7, 2023 | , , , , ,

Coming out of 2022, developments around the globe are shaping the intellectual property (IP) landscape in the new year. We are seeing cases at the intersection of IP law and NFTs, the opening of the Unified Patent Court in Europe, and decisions from the Supreme Court of the United States and the Court of Appeals for the Federal Circuit affecting innovators and brand owners.

McDermott’s 2023 IP Outlook examines the top trends and decisions in IP law from the past year and shares what you and your business should look out for in the year ahead.

The Latest in SEP Licensing

Amol Parikh

The uncertainty surrounding standard essential patent (SEP) licensing persisted in 2022 and shows little sign of clearing in 2023. SEPs must be licensed to technology implementers on fair, reasonable and nondiscriminatory (FRAND) terms. Because there is no formal definition of FRAND terms, however, legal decisions involving FRAND have historically been determined by courts and non-governmental standard-setting organizations (SSOs). Disputes are frequent—especially between patent owners and technology implementers—and are becoming even more so as advanced wireless technologies such as 5G and WiFi 6 proliferate. Read more.

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Improper Inventorship in US Patent Litigations

Mandy H. Kim | Cecilia Choy, Ph.D.

Inventorship issues can have serious implications in patent litigation, leading to invalidation or unenforceability of the patent at issue, as seen in several notable 2022 cases. In the coming year, patent owners should take steps to minimize risks related to improper inventorship challenges. Read more.

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Patent Decisions Affecting Pharma and Biotech Companies

Douglas H. Carsten | Anisa Noorassa

The past year brought many developments in the life sciences patent legal space. Three decisions in particular hold potential ramifications for drug makers and patent holders in 2023. This year, the Supreme Court of the United States is also expected to consider standards patents claiming a genus must meet to withstand a validity challenge under Section 112—a ruling that could have a significant impact on patent holders in the biotech industry. Read more. 

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Trends in the Western District of Texas

Syed K. Fareed | Alexander Piala, Ph.D. | Christian Tatum

Over the past year, two developments infiltrated the Western District of Texas (WDTX) which may decrease the success of venue transfers and keep case volume steady in 2023. These developments could also give plaintiffs more control over where litigation takes place, including more control over having a case tried before Judge Alan Albright in the Waco Division of the WDTX.
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Supreme Court to Consider First Amendment Protection for Parody Dog Toy

by | Nov 29, 2022 | ,

The Supreme Court of the United States has agreed to consider the scope of protection afforded by the First Amendment to commercial parody products that feature the unauthorized use of another party’s trademark(s). Jack Daniel’s Properties, Inc. v. VIP Products LLC, Case No. 22-148 (Supr. Ct. Nov. 21, 2022) (certiorari granted). The questions presented are as follows:

  1. Whether humorous use of another’s trademark as one’s own on a commercial product is subject to the Lanham Act’s traditional likelihood-of-confusion analysis, or instead receives heightened First Amendment protection from trademark-infringement claims.
  2. Whether humorous use of another’s mark as one’s own on a commercial product is “noncommercial” under 15 U.S.C. § 1125(c)(3)(C), thus barring as a matter of law a claim of dilution by tarnishment under the Trademark Dilution Revision Act.

This is the second time Jack Daniel’s has filed a petition for certiorari in connection with this case. The Supreme Court first considered the matter in January 2021, following the US Court of Appeals for the Ninth Circuit’s decision to vacate and remand the district court’s finding of trademark infringement, reverse the judgment on dilution and uphold the validity of Jack Daniel’s trademark and trade dress rights.

The case then returned to the district court, which granted summary judgment to VIP Products. The Ninth Circuit affirmed and then Jack Daniel’s filed its second petition for certiorari.

The Supreme Court will seek to settle the long-standing split amongst the US Courts of Appeal regarding the proper analysis for parody in trademark infringement and dilution claims and the scope of protection afforded to it via the First Amendment.



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After Supreme Court Remand, Copyright Infringement Claims Upheld in View of Registrant’s Unknown Inaccuracies

by | Nov 17, 2022 |

In February 2022, the Supreme Court of the United States held in Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., that lack of either factual or legal knowledge on the part of a copyright holder can excuse an inaccuracy in the holder’s registration under the Copyright Act’s safe-harbor provision, 17 U.S.C. §411(b)(1), which governs the effect of inaccurate information in a copyright application. In light of this decision, the Supreme Court remanded the copyright dispute between textile design company Unicolors and global fast-fashion retail giant H&M Hennes & Mauritz to the US Court of Appeals for the Ninth Circuit for further proceedings on the issue of whether Unicolors held a valid copyright in a 2011 textile design asserted in its copyright infringement claim against H&M. On remand, the Ninth Circuit concluded that under the correct standard confirmed by the Supreme Court, Unicolors held a valid copyright registration because the factual inaccuracies in its application were excused by the safe-harbor provision. The Ninth Circuit affirmed the prior jury verdict against H&M for copyright infringement and remanded with respect to the issue of damages only. Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., Case Nos. 18-56253; -56548 (9th Cir. Nov. 10, 2022) (Bea, Bade, McCalla, JJ.)

The Copyright Act safe-harbor provision saves a copyright registration from invalidity when the application contains errors, except when the copyright registrant knowingly transmitted inaccurate material facts to the US Copyright Office. After the Supreme Court made it clear that “[l]ack of knowledge of either fact or law can excuse an inaccuracy in a copyright registration,” the Ninth Circuit was charged with determining whether Unicolors submitted its copyright application with knowledge that the information therein was factually inaccurate and with knowledge that the application failed to comply with the specific governing legal requirements. The Court first analyzed the validity of Unicolors’s asserted copyright registration, then addressed the remaining issues raised by H&M on appeal.

The Ninth Circuit’s first step in the validity assessment was to determine whether Unicolors’s application did, in fact, contain an inaccuracy. As in its prior decision, the Court concluded that the application was inaccurate because Unicolors registered a collection of 31 separate fabric designs as a single-unit publication when those 31 works were not initially published as a singular bundled collection, as required under the Copyright Act.

The second step of the Ninth Circuit’s inquiry looked at whether Unicolors submitted its copyright application knowing that it contained errors. This is where the Court departed from its prior decision and affirmed the district court’s decision regarding the validity of the registration. Specifically, the Court found that the single-unit registration issue was an unsettled question of law at the time of Unicolors’s application, such that Unicolors did not know that it submitted an application containing false information because it lacked the requisite knowledge of inaccuracy and lacked an intent to defraud the Copyright Office. Finding Unicolors’s copyright registration valid, the Court determined that Unicolors could maintain its copyright infringement claim against H&M.

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Supreme Court to Consider Whether Lanham Act Reaches Foreign Defendants’ Extraterritorial Conduct

by | Nov 10, 2022 | ,

The Supreme Court of the United States agreed to review the geographic scope of the Lanham Act and the extent to which trademark owners can use US trademarks to police foreign sales. Abitron Austria GmbH et al. v. Hetronic International Inc., Case No. 21-1043 (Supr. Ct. Nov. 4, 2022) (certiorari granted). The question presented is as follows:

Whether the court of appeals erred in applying the Lanham Act extraterritorially to petitioners’ foreign sales, including purely foreign sales that never reached the United States or confused U.S. consumers.

In the underlying case, the US Court of Appeals for the Tenth Circuit upheld a damages award for Hetronic International based on its conclusion that the Lanham Act can affect conduct that substantially affects US commerce, such as the products Hetronic Germany and others sold to European customers.

The US Solicitor General suggested that the case is “a suitable vehicle” to clarify the Lanham Act’s geographic scope, noting that the Lanham Act provides a remedy for a foreign defendant’s use of a US trademark abroad only if that use is likely to cause confusion within the United States.



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