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Electra Powers Second Circuit’s False Endorsement Analysis

by Nitya Anand | Jun 8, 2023 | Trademarks

Following on the heels of its 2021 decision in Electra v. 59 Murray, the US Court of Appeals for the Second Circuit affirmed the summary judgment denial of a Lanham Act claim related to false endorsement premised upon the unauthorized use of photographs in connection with promotional materials. Souza et. al. v. Exotic Island Enterprs., Inc., Case No. 21-2149 (2d Cir. May 19, 2023) (Lynch, Nardini, Menashi, JJ.) The Second Circuit also affirmed the district court’s summary judgment denial of Lanham Act false advertising and New York state right of publicity claims.

The operator of a gentlemen’s club used photographs of current and former professional models in social media posts promoting the club. The photographs were obtained without the models’ permission through a third-party vendor. The models sued the club operator asserting false endorsement, false advertising and right of publicity violations. The parties filed dueling summary judgment motions in February 2021. During the pendency of those motions, the Second Circuit decided Electra, a case involving overlapping plaintiffs suing on several of the same causes of action based on highly similar fact patterns. The district court subsequently granted the club operator’s motion for summary judgment and denied the models’ motion. The models appealed.

The Second Circuit relied heavily on its Electra decision to affirm the district court’s denial of the models’ false endorsement claim. To prevail on a false endorsement claim under Section 43 of the Lanham Act, the models were required to prove that there was a likelihood of confusion between their goods or services and those of the club operator. Likelihood of consumer confusion is evaluated using the eight Polaroid factors:

Strength of the trademark
Similarity of the marks
Proximity of the products and their competitiveness with one another
Evidence that the senior user may bridge the gap by developing a product for sale in the market of the alleged infringer’s product
Evidence of actual consumer confusion
Evidence that the imitative mark was adopted in bad faith
Respective quality of the products
Sophistication of consumers in the relevant market.

First, the models argued that the district court oversimplified the “strength of the mark” analysis (factor 1) to focus only on the recognizability of the mark. The Second Circuit disagreed, explaining that not only was Electra’s focus on recognizability binding precedent but also, that factor was required to be evaluated in the context of the mark’s strength in the false endorsement context (i.e., as a function of the extent to which the endorser’s identity could be linked with the product being sold). In other words, without an adequate showing that the models were recognized in the social media posts promoting the club, there could be no case of endorsement, let alone false endorsement.

Second, the models challenged the district court’s exclusion of their expert testimony on certain Polaroid factors. The district court excluded surveys conducted by the models’ expert as unreliable because they suffered from various methodological flaws and, therefore, did not provide a reliable [...]

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No Lost Value Damages Despite Trade Secret Misappropriation

by Jayita Guhaniyogi, PhD | Jun 8, 2023 | Trade Secrets

The US Court of Appeals for the Second Circuit vacated a damages award, finding that although there was liability for appropriating trade secrets, the trade secret proprietor was only entitled to compensatory damages under federal trade secret law, not avoided cost damages based on alleged estimated research and development or loss of value. Syntel Sterling Best Shores Mauritius, Ltd., et al. v. The TriZetto Grp., Inc., et al., Case No. 21-1370 (2d Cir. May 25, 2023) (Wesley, Raggi, Lohier, JJ.)

This case involved trade secrets concerning healthcare insurance software called Facets® that was developed by TriZetto and alleged misappropriation by a TriZetto subcontractor, Syntel Sterling. In 2010, TriZetto and Syntel entered a Master Service Agreement (MSA) under which Syntel agreed to support TriZetto’s Facets customers. In exchange, TriZetto granted Syntel access to its trade secrets related to Facets. In 2012, the parties amended the MSA to allow Syntel to compete directly with TriZetto for consulting services. A dispute arose in 2014 when Syntel’s competitor Cognizant acquired TriZetto. Syntel terminated the amended MSA and requested payment of rebates owed. TriZetto refused, raising concerns about Syntel’s continued use of confidential trade secrets post-termination.

Syntel filed suit for breach of contract in the Southern District of New York, and TriZetto counterclaimed. During trial, TriZetto proceeded on trade secret misappropriation counterclaims related to the Facets software under the Defend Trade Secrets Act (DTSA) and New York law. Syntel argued that the amended MSA authorized Syntel to compete for Facets services business while using TriZetto’s trade secrets.

During discovery, the district court issued a preclusion order that sanctioned Syntel for discovery misconduct, finding that “Syntel was actively creating a repository of [TriZetto’s] trade secrets on its own . . . to be used in future work.” Citing the preclusion order, the district court instructed the jury that Syntel had misappropriated two of 104 asserted trade secrets.

With respect to damages, TriZetto presented expert testimony that established that Syntel avoided spending about $285 million in research and development costs because of the misappropriation covering the period between 2004 and 2014, an amount that covered only a portion of TriZetto’s overall $500 million research and development costs. Syntel’s expert did not counter that amount. Instead, Syntel argued that these avoided costs did not apply here for several reasons: because the alleged misappropriation did not destroy the value of Facets since Syntel could have used Facets for free by entering a third-party access agreement with TriZetto because TriZetto continued to make millions using its Facets software, and because Syntel was not a software company but a competing service provider. The jury instructions included Syntel’s avoided development costs as one form of unjust enrichment that applied to the federal claims but not the state claims.

The jury returned a verdict in favor of TriZetto on all counts. The jury awarded TriZetto $285 million in avoided development costs under the DTSA as compensatory damages and double that amount in punitive damages. Following trial, Syntel renewed its motion for judgment as [...]

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Well Runs Dry: Summary Judgment Denial Supports Non-Exceptional Case Finding

by Amol Parikh | Jun 1, 2023 | Patents

The US Court of Appeals for the Federal Circuit affirmed a district court’s denial of attorneys’ fees, explaining that when a district court denies summary judgment and allows a plaintiff’s case to proceed, the district court effectively determines that the position of the party opposing summary judgment is not objectively baseless. OneSubsea IP UK Limited v. FMC Techs, Inc., Case No. 22-1099 (Fed. Cir. May 23, 2023) (Moore, Clevenger, Dyk, JJ.)

OneSubsea and FMC compete in the subsea oil and gas exploration and extraction industry. In March 2015, OneSubsea filed a lawsuit against FMC alleging infringement of 95 claims across 10 OneSubsea patents. After the district court issued its claim construction ruling, FMC moved for summary judgment of noninfringement. OneSubsea opposed. While the summary judgment motion was pending, the Patent Trial & Appeal Board instituted inter partes review (IPR) proceedings on a subset of the asserted patents. FMC argued that while a stay of district court proceedings would be appropriate, it was unnecessary in light of its pending summary judgment motion. In August 2016, the district court denied summary judgment and stayed the case.

The case remained stayed for three years, during which time the Board invalidated 76 claims. In 2019, the district court lifted the stay. At a pre-trial hearing in 2020 discussing whether additional discovery was needed to address summary judgment, FMC doubted the need for more discovery and pointed to the 3,200 record pages illustrating differences between the designs of the accused device and the patented devices. In response, the district court stated, “And you really think I’m going to be able to grant summary judgment on that?” After the hearing, FMC renewed its summary judgment motion, which OneSubsea opposed. In reply, FMC moved to exclude the report of OneSubsea’s expert because he applied the wrong claim construction. Ultimately, the district court granted FMC’s motion to exclude and its motion for summary judgment.

In 2021, FMC moved for attorneys’ fees based on OneSubsea’s “substantively weak infringement claims” after the claim construction order was issued and “litigation misconduct.” After briefing was complete, the district court announced that the case had been reassigned to another judge following the retirement of the original assigned judge. The new judge rejected FMC’s view that OneSubsea’s case was objectively baseless and further rejected FMC’s claims of litigation misconduct. FMC appealed.

As a threshold matter, FMC argued that the Federal Circuit should apply de novo review instead of an abuse-of-discretion standard because the new judge only briefly “lived with the case” and should be disqualified from exercising discretion in deciding FMC’s attorneys’ fees motion. The Court rejected FMC’s invitation to change the standard of review, citing the substantial body of law in which appellate courts have consistently reviewed successor judges’ decisions on discretionary issues for abuse of discretion.

Turning to the merits, the Federal Circuit found that FMC’s exceptional case argument lacked merit. The Court explained that the argument disregarded the district court’s observation that FMC’s demand for a prompt favorable noninfringement judgment based [...]

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Heart-to-Heart on Reduction to Practice: When It Comes to Testing, How Much Is Enough?

by Thomas DaMario | Jun 1, 2023 | Patents

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board decision that the patent owner successfully demonstrated that the claimed heart catheter invention was conceived and reduced to practice prior to the effective date of the reference, by record evidence of adequate testing to demonstrate that the invention would work for its intended purpose. Medtronic, Inc. v. Teleflex Innovations S.Á.R.L., Case Nos. 21-2356; -2358; -2361; -2363; -2365 (Fed. Cir. May 24, 2023) (Moore, C.J.; Lourie, J.) (Dyk, J., dissenting).

Teleflex Innovations owns five patents directed to guide extension catheters that use a tapered inner catheter that runs over a standard coronary guidewire to reduce the likelihood that a guide catheter will dislodge from the coronary artery’s opening. All of the patents are related and share a common specification. Around the time of the challenged patents’ priority date, the applicant was working to develop two commercial variants of similar technology: the “rapid exchange” (or “RX”) version of the GuideLiner product, which Teleflex claims practices the challenged patents, and an “over-the-wire” (or “OTW”) variant, which does not practice the challenged patents.

Medtronic petitioned for inter partes review (IPR), challenging all five patents on the basis that they were predated by a patent to Itou. During the IPR proceedings, Teleflex claimed that conception and reduction to practice occurred prior to Itou’s priority date and submitted several declarations and exhibits such as lab notebooks, internal company memoranda, presentations, invoices, sales orders, photographs, engineering drawings and documents from outside patent counsel in support of its contentions. Ultimately, the Board found that Itou did not constitute prior art and therefore Medtronic had failed to demonstrate that the challenged claims were unpatentable. Medtronic appealed.

On appeal, Medtronic did not challenge conception but argued that the Board’s findings on actual reduction to practice and reasonable diligence toward constructive reduction to practice should be reversed. To establish an actual reduction to practice, the patent owner must show that the inventors constructed an embodiment that met all the limitations of the claimed invention and determined that the invention would work for its intended purpose. Medtronic’s arguments were based on the grounds that the Board erred in three ways:

Incorrectly identifying the intended purpose of the claimed invention
Not requiring comparative testing to demonstrate that the invention worked for that purpose
Relying solely on uncorroborated inventor testimony.

On the first issue, Medtronic argued that the Board incorrectly found an over-broad intended purpose of the claimed invention by relying too heavily on extrinsic evidence. The Federal Circuit acknowledged that while “the patents themselves are the most important” evidence, “it is appropriate to consider extrinsic evidence, particularly when it does not contradict the patents themselves.” The Court went on to conclude that the intended purpose here was broader than the narrow purpose argued by Medtronic (relating to difficult occlusions)—“[t]he very title of the patents themselves, ‘Coaxial Guide Catheter for Interventional Cardiology Procedures,’ describes the purpose of the claimed inventions, and it is undisputed that the [...]

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On the Road Again: Alternative Designs May Impact Trade Dress Functionality Analysis

by Kavya Rallabhandi | May 25, 2023 | Trademarks

The US Court of Appeals for the Sixth Circuit reversed and remanded a summary judgment ruling, finding that there were genuine disputes of material fact regarding whether the plaintiff’s alleged trade dress was functional and therefore excluded from trade dress protection. DayCab Co., Inc. v. Prairie Tech., LLC, Case No. 22-5625 (6th Cir. May 11, 2023) (Moore, Clay, Stranch, JJ.)

DayCab manufactures conversion panels for tractor-trailer cabs. DayCab asserted Lanham Act and Tennessee Consumer Protection Act claims again Prairie Technology for trade dress infringement of its DayCab conversion kit. Prairie denied infringement and counterclaimed for declaratory judgment that DayCab’s trade dress was functional.

DayCab asserted that its product’s slant-back design, depth, rounded edges and gray color were protectable trade dress, explaining that it had carefully selected the angles, curves, tapers, lines, profile and appearance of the DayCab conversion kit. DayCab further argued that the 144-degree angle of the “slant-back” design, the dimensions of the depth and radius of the design, and the color were aesthetic and not functional. In support of its argument, DayCab presented competitor conversion kits to illustrate that there are many different appearances and ways to style conversion kits. DayCab attested that the only requirement for manufacturability is that the top of the fiberglass mold used for manufacturing the conversion kits must be slightly larger at the top than at the bottom. In response, Prairie presented expert testimony that the parties’ respective kits were not identical and that the panel’s depth, top body radius, lower body angle, flange/body radius and color were functional.

The parties filed cross motions for summary judgment. Prairie argued that DayCab could not prove that its trade dress was nonfunctional, had secondary meaning or that there was likelihood of confusion. The district court granted Prairie’s motion, finding that DayCab’s asserted trade dress was functional and therefore not protectable. The district court did not address secondary meaning or likelihood of confusion. DayCab appealed.

The Sixth Circuit reversed the district court’s summary judgment ruling, finding that the district court did not determine open questions about whether DayCab’s conversion kits’ slant-back design was functional. The Sixth Circuit further remanded because the district court did not consider whether Prairie’s kits infringed DayCab’s design. Regarding functionality of the conversion kit, the Court determined that existence of alternative designs and testimony from DayCab’s founder claiming that the design choices were aesthetic raised issues in the district court’s functionality ruling. The Court also noted that the existence of alternative designs was relevant to the functionality determination because they supported DayCab’s contentions that it designed the panel with aesthetic intent and that its resulting features were ornamental rather than functional.

The Sixth Circuit found that it was for the jury to determine secondary meaning and whether Prairie intentionally copied DayCab’s design. The Court also found that likelihood of confusion needed to be determined by a jury because of conflicting evidence: DayCab presented evidence that consumers inquired about ordering Prairie’s kits from DayCab because the products were similarly named and indistinguishable on [...]

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Elevate the $: Geographic Isolation Helps Defeat Trademark Infringement Claim

by Kathleen Lynch | May 25, 2023 | Trademarks

In a case between similarly named banks, the US Court of Appeals for the Tenth Circuit confirmed expert disclosure requirements, conducted a de novo likelihood of confusion analysis and ultimately upheld a finding of no trademark infringement. Elevate Federal Credit Union v. Elevations Credit Union, Case No. 22-4029 (10th Cir. May 10, 2023) (Bacharach, Moritz, Rossman, JJ.)

Elevate is a federal credit union with almost 13,000 total members, operating exclusively in three rural Utah counties. Elevations is a Colorado state-chartered credit union with more than 150,000 members. The parties’ respective logos are shown below:

Elevate filed a suit seeking declaratory judgment of noninfringement, and Elevations counterclaimed for trademark infringement. After excluding testimony from Elevations’s expert, the district court found no infringement and granted summary judgment in favor of Elevate. Elevations appealed.

Elevations raised two issues on appeal:

Did the district court abuse its discretion in excluding Elevations’s expert’s testimony?
Did the district court err in granting summary judgment to Elevate on likelihood of confusion?

The Tenth Circuit affirmed the district court on the first issue. Elevations’s expert conducted a survey that involved showing marks from internet searches to consumers and asking whether they thought any came from the same company. While this survey type is legitimate, the expert did not keep records of his searches, write down his search terms, identify his search engines, or justify why he conducted multiple internet searches but showed consumers only results from Bing and the Apple App store. The Tenth Circuit found that the district court could have reasonably considered this information “facts or data” considered by the expert that needed to be—but was not—disclosed. Because the expert failed to meet his disclosure obligations and because this failure was not excused by justification or harmlessness, the lower court did not abuse its discretion.

The Tenth Circuit also affirmed the summary judgment of no likelihood of confusion. The Court conducted a de novo review and analyzed the six factors below. The Court concluded that the following five factors weighed against the likelihood of confusion:

Level of care exercised by purchasers. When customers look to open bank accounts or borrow money, they exercise a great level of care. This is especially true here because credit unions have statutory membership restrictions, meaning consumers need to confirm they qualify for membership before applying.
Strength of senior mark. While Elevations’s marks are “suggestive” and therefore “fall[] midway in the range of conceptual strength,” many other businesses in Colorado use the root term “elevat,” which weakens Elevations’s mark. Elevations’s marks also are weak where Elevate operates in Utah due to lack of advertising.
Degree of similarity. While the marks have some similarities in appearance and sound, they differ in fonts, alignment, background colors, graphics and number of syllables. The Court also stated that the “significance of the similarities fades away” in light [...]

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First Circuit: Claim Preclusion Shouldn’t Apply to Bar Claims Under VARA

by Hannah Cohen | May 25, 2023 | Copyrights

Addressing for the first time whether federal res judicata law recognizes the alternative determinations doctrine, the US Court of Appeals for the First Circuit determined that a plaintiff’s claims under the Visual Artists Rights Act (VARA) were not precluded by a previous action in which she brought a federal copyright claim against the defendant. Foss v. Eastern States Exposition, Case No. 22-1313 (1st Cir. May 10, 2023) (Barron, Howard, Montecalvo, JJ.)

Cynthia Foss previously brought a federal copyright action against Eastern States Exposition that was dismissed. The previous action did not involve any claim under VARA. Eastern argued that claim preclusion should apply to bar the claim, and the district court agreed. Foss appealed.

To establish federal claim preclusion, a party must establish that there is a final judgment on the merits in an earlier suit, sufficient similarity between the causes of action asserted in the earlier and later suits, and sufficient identicality between the parties in the two suits. Foss did not dispute that the first and third requirements were satisfied, and thus the First Circuit’s decision turned on whether the second requirement was met.

Foss argued that the “alternative determinations” doctrine should apply. This doctrine strips a dismissal of claim preclusive effect if the dismissal rests on multiple grounds, not all of which would on their own render the dismissal claim preclusive. Whether the doctrine should apply was a matter of first impression in the First Circuit. Foss argued that the previous dismissal was in part based on “her failure to allege that she had satisfied the registration-related precondition to copyright infringement suits under § 411(a),” which was not a merits-based dismissal and therefore had no preclusive effect. Eastern argued that even if the First Circuit adopted the alternative determinations doctrine, the Court should limit the doctrine because the district court “rigorously considered” the merits-based rationale for dismissal in the previous action.

The First Circuit adopted the alternative determinations doctrine and rejected Eastern’s contention that the doctrine should not apply in the instant case because Eastern did not provide support for the contention that the district court in the previous action “rigorously considered” the merits-based grounds for dismissal of Foss’s federal copyright claims. The Court then remanded the case for further consideration, noting that Eastern might argue that the alternative disputes doctrine should be limited in this instance because of Foss’s failure to allege satisfaction of the precondition to suit, which might be prejudicial to Eastern.

Analogous Art Must Be Compared to Challenged Patent

by Alexandra Cavazos, PhD | May 25, 2023 | America Invents Act, Patents

The US Court of Appeals for the Federal Circuit reversed a Patent Trial & Appeal Board obviousness decision, finding that a prior art reference relating to automotive engine parts was not analogous art to the challenged patent, which related to injection devices used for drug delivery. Sanofi-Aventis Deutschland GMBH v. Mylan Pharmaceuticals Inc., Case No. 21-1981 (Fed. Cir. May 9, 2023) (Reyna, Mayer, Cunningham, JJ.)

Sanofi-Aventis owns a patent directed to a drug delivery device that can be configured to allow for the setting of different dose sizes. The main independent claim of the patent recites a spring washer element with “at least two fixing elements configured to axially and rotationally fix the spring washer relative to the housing.”

Mylan initiated an inter partes review (IPR) proceeding against the patent, arguing that the challenged claims were obvious based on a combination of three prior art references: Burren, Venezia and de Gennes. Burren described a drug injection device that used a coiled spring, while Venezia described a hypodermic syringe with a spring washer having a tongue that fit into a collar to prevent the washer from rotating relative to the collar. The third prior art reference, de Gennes, disclosed a large spring-washer-like device used in automobile engines to maintain the alignment between the engine and the transmission. Sanofi argued that de Gennes was non-analogous art because it was not in the same field of endeavor as the injection devices described in the patent and was not reasonably pertinent to a problem faced by the inventor of the challenged patent.

The Board adopted Mylan’s definition of the problem to be solved, which was “axially fixing two components relative towards each other.” Under this broad definition, the Board found that de Gennes was reasonably pertinent to the challenged patent and that claims were obvious in view of Burren in combination with Venezia and de Gennes. Sanofi appealed.

Sanofi argued that the Board erred in determining that de Gennes was analogous art. The Federal Circuit explained that in evaluating whether a reference is analogous, a patent challenger must compare the reference to the challenged patent. Applying this test, the Court found that substantial evidence did not support the conclusion that de Gennes was analogous to the challenged patent. Although Mylan had mapped de Gennes to certain elements of the challenged claims, there was no evidence that de Gennes—an automobile-related patent—was analogous to the challenged patent—a drug delivery device. The Court also found that statements that de Gennes and the challenged patent were “both interested in solving the same issue . . . [of] accommodating various cartridge lengths” were insufficient to show that de Gennes was analogous to the challenged patent.

No Extra Life: Harmless Claim Construction Error Does Not Restart Invalidity Challenge

by Christian Tatum | May 18, 2023 | America Invents Act, Patents

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board decision, finding that under the harmless error rule, the challenged claims were invalid as obvious even if the Board erred in claim construction. Bot M8 LLC v. Sony Interactive Entertainment LLC, Case Nos. 22-1291 (Fed. Cir. May 9, 2023) (Prost, Reyna, Cunningham, JJ.).

Bot M8 owns a patent related to a gaming machine that authenticates certain data and includes both a board and a motherboard. The independent claims require that a “game program” is stored in memory on the board and written to the motherboard only after the game program has been authenticated by a central processing unit (CPU) on the motherboard (the Write Limitation). Sony Interactive Entertainment petitioned for inter partes review (IPR). Ultimately, the Board determined that the challenged claims were unpatentable as obvious. Bot M8 appealed.

The issue presented to the Federal Circuit was what data the Write Limitation precludes from being written to the motherboard prior to authentication: (1) the entire game program, (2) any portion of the game program and/or (3) any data (including data not related to the game program). It was undisputed that the claims at minimum preclude writing the entire game program to the motherboard before authentication (option 1). Both the Board and the Court rejected Bot M8’s argument that would preclude writing any data whatsoever before authentication (option 3). The question thus resolved into whether the Write Limitation also precluded writing any portion of the game program prior to authentication (option 2). Bot M8 argued that it did.

Bot M8 focused on a statement made by the Board as indicative that the Board applied an erroneous claim construction that would allow a portion of the game program to be written prior to authentication (rejecting option 2): “[Bot M8] seeks to read into claim 1 a requirement that nothing related to, or any portion of, the gaming information be read into [the motherboard’s] RAM … prior to authenticating the game program.”

The Federal Circuit rejected Bot M8’s argument, finding that even if the Board erred in construing the claim, Bot M8 failed to demonstrate that the alleged error was harmful. Specifically, the Court found that any such error was harmless because the Board never needed to apply an improper construction since it found the prior art disclosed writing only non-game program data prior to authentication, a protocol that both the Board and the Court found was not precluded by the Write Limitation. Deeming the Board’s potential claim construction error harmless, the Court affirmed the Board’s invalidity determination.

Practice Note: Parties seeking to appeal a Board decision based on an improper claim construction theory should demonstrate how the Board’s error resulted in harm.

Blunt Rejection of Attorney Fees in Stipulated Dismissal

by Lillian Spetrino | May 18, 2023 | Patents

The US Court of Appeals for the Federal Circuit affirmed the rejection of attorney fees, finding that neither inequitable conduct nor a conflict of interest rendered the case exceptional given the limited factual record following a stipulated dismissal in a patent case. United Cannabis Corp. v. Pure Hemp Collective Inc., Case No. 22-1363 (Fed. Cir. May 8, 2023) (Lourie, Cunningham, Stark, JJ.).

United Cannabis Corporation (UCANN) sued Pure Hemp for patent infringement. After the litigation was stayed pending bankruptcy proceedings, the parties stipulated to the dismissal. Pure Hemp then sought attorney fees based on alleged inequitable conduct by UCANN during prosecution of the asserted patent due to nondisclosure of a prior art reference used in the patent’s specification and based on a purported conflict of interest by UCANN’s litigation counsel. The district court denied Pure Hemp’s request, finding that the case was not exceptional. Pure Hemp appealed.

Pure Hemp argued that the district court erred by (1) failing to find Pure Hemp to be the prevailing party in the litigation, (2) not concluding that the undisputed facts established inequitable conduct and (3) not recognizing that UCANN’s attorneys had a conflict of interest.

The Federal Circuit found that although the district court erred in not finding Pure Hemp to be the prevailing party, this was a harmless error. The Court explained that by fending off UCANN’s lawsuit with a stipulation dismissing UCANN’s claims with prejudice, Pure Hemp is a prevailing party under § 285. However, the Court concluded that this error was harmless because the district court ultimately concluded that this case was unexceptional.

The Federal Circuit found Pure Hemp’s arguments on inequitable conduct without merit. The Court explained that it had no findings to review because Pure Hemp voluntarily dismissed its inequitable conduct counterclaim and did not seek any post-dismissal inequitable conduct proceedings. Although Pure Hemp argued that it could prevail based on the undisputed facts in the record, the Court disagreed. It explained that even the limited record demonstrated at least a genuine dispute as to both the materiality and intent prongs of inequitable conduct and, therefore, the district court properly determined that Pure Hemp did not demonstrate that this case was exceptional.

The Federal Circuit also rejected Pure Hemp’s argument that copying and pasting portions from the prior art in the patent’s specification (but not disclosing the same prior art references) was inequitable conduct. The Court explained that unlike the nonbinding cases Pure Hemp relied on, the district court here did not find that the copied prior art was material, and the record gave no reason to disbelieve the explanation provided by UCANN’s prosecution counsel. The Court was also unpersuaded by Pure Hemp’s arguments to support inequitable conduct, explaining that the Court was not free to make its own findings on intent to deceive and materiality and, further, the district court was not required to provide its reasoning for its decision in attorney fee cases.

As to Pure Hemp’s argument that the case was exceptional because UCANN’s attorneys [...]

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