IP UPDATE
Exploring the Latest in Intellectual Property Law
IP UPDATE
Exploring the Latest in Intellectual Property Law
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Holy Pulmonary Hypertension, Batman: Method of Treatment Not Constrained by Safety and Efficacy

by | Aug 3, 2023 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s holding that the asserted method of treatment patent was valid and infringed because safety and efficacy are not patent concerns. The Federal Circuit also affirmed the district court’s holding that certain claims of the product-by-process patent were invalid because the claimed product was in the prior art, regardless of the process by which it was made. United Therapeutics Corporation v. Liquidia Technologies, Inc., Case Nos. 22-2217; 23-1021 (Fed. Cir. July 24, 2023) (Lourie, Dyk, Stoll, JJ.)

United Therapeutics is the maker of Tyvaso®, a treprostinil formulation approved for treating pulmonary hypertension. United Therapeutics asserted two patents covering Tyvaso® against Liquidia’s § 505(b)(2) new drug application (NDA) on Yutrepia™. One patent was a method of treatment patent claiming to treat pulmonary hypertension by administering a “therapeutically effective” dose of a treprostinil formulation, and the other was a product-by-process patent claiming a treprostinil composition with lowered levels of impurities made by a specific salt formation process.

The district court found that United Therapeutics showed that a single administration of treprostinil improves a patient’s hemodynamics, establishing that administration of Liquidia’s Yutrepia, comprising treprostinil, would directly infringe the method of treatment claims. The district court also concluded that even though Yutrepia’s label did not provide hemodynamic data, the label’s instructions would inevitably lead to the administration of a therapeutically effective single event dose. The court thus concluded that Liquidia would induce infringement of the method of treatment claims.

The district court further found that the asserted claims were not invalid for lack of enablement or written description. The court reasoned that a skilled artisan would not need to engage in undue experimentation to practice the full scope of the claimed treatment of pulmonary hypertension, despite potential safety concerns in treating certain patients, since the claims did not require safety and efficacy. The court found that the claims were not invalid for lack of written description, finding that a skilled artisan would, based on the specification, understand that treprostinil would effectively vasodilate the pulmonary vasculature, improve hemodynamics and treat a patient’s elevated pulmonary blood pressure.

Liquidia appealed on five issues: claim construction of the term “treating pulmonary hypertension,” enablement, written description, induced infringement and infringement of the product by process claims. United Therapeutics cross-appealed on anticipation of the product by process claims and non-infringement of those claims.

First, regarding the construction of “treating pulmonary hypertension,” the Federal Circuit affirmed that the term encompassed all recognized groups of pulmonary hypertension but noted that the claim language “treating pulmonary hypertension” did not import any additional efficacy limitations or safety limitations, even those in a group that would not benefit from the treatment. The Court declined to read any safety or efficacy requirements into the claims, explaining that absent incorporation into the claims, the safety and efficacy of a claimed treatment are the purview of the US Food & Drug Administration (FDA), not patent law.

Regarding enablement and written description, Liquidia argued that the method [...]

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Burst That Bubble: Specific Knowledge Necessary to Prove Contributory Trademark Infringement

by and | Aug 3, 2023 |

The US Court of Appeals for the Ninth Circuit addressed contributory trademark infringement for the first time, finding that specific knowledge is required for liability to attach. Y.Y.G.M. SA, DBA Brandy Melville v. Redbubble, Inc., Case Nos. 21-56150; -56236 (9th Cir. July 24, 2023) (Callahan, Nelson, Thomas, JJ.)

Brandy Melville manufactures clothing and home goods and owns multiple trademarks, including the Brandy Melville Heart and LA Lightning marks. Redbubble is an online marketplace where individual artists upload designs for printing on demand on various articles and Redbubble handles payment, manufacturing and shipping.

In 2018, on two consecutive days, Brandy Melville notified Redbubble of infringing products on its marketplace. Redbubble removed them. One year later, Brandy Melville sued Redbubble for trademark infringement. The district court granted summary judgment to Redbubble on several of its claims. The case then went to trial on Brandy Melville’s contributory infringement and counterfeiting claims. The jury found Redbubble liable for contributory counterfeiting of the Brandy Melville Heart and LA Lightning marks, contributory infringement of those marks and contributory infringement of various unregistered trademarks. However, the court granted Redbubble judgment as a matter of law (JMOL) as to the contributory counterfeiting claim for the Heart mark. Brandy Melville moved for a permanent injunction, attorneys’ fees and prejudgment interest. The district court denied each of Brandy Melville’s motions.

Redbubble appealed the denial of JMOL on contributory infringement claims and the finding of willful contributory counterfeiting of the LA Lightning mark. Brandy Melville appealed the grant of JMOL on contributory counterfeiting of the Brandy Melville Heart mark and the denial of permanent injunction, attorneys’ fees and prejudgment interest.

Addressing Redbubble’s appeal, the Ninth Circuit considered contributory infringement and contributory counterfeiting together. The issue of the applicable standard in questions of contributory liability was novel for the Ninth Circuit. The Lanham Act provides a cause of action when a party intentionally induces trademark infringement or when the party continues to supply products to a third party, despite knowing or having reason to know that the third party is engaging in trademark infringement. This case dealt with the latter.

In other contexts, the Ninth Circuit has applied the “knows or has reason to know” standard as satisfying the willful blindness (in lieu of actual knowledge) element. Willful blindness requires a subjective belief that infringement is likely occurring and deliberate actions were taken to avoid knowledge of that infringement. Redbubble argued that willful blindness requires specific knowledge, while Brandy Melville argued that there is a duty to take reasonable corrective action once a party obtains general knowledge of infringement. The Court noted that for contributory copyright infringement, specific knowledge is not required. In keeping with its sister circuits, the Court held that “willful blindness for contributory trademark liability requires the defendant to have specific knowledge of infringers or instances of infringement.” The Court, therefore, vacated and remanded for the district court to reconsider Redbubble’s JMOL motion under this standard for contributory trademark infringement.

The Ninth Circuit next considered Brandy Melville’s appeal, beginning [...]

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Off the Charts: Derivative Work Copyright Registers All Material in Derivative Work

by and | Jul 27, 2023 |

In a matter of first impression, the US Court of Appeals for the Ninth Circuit reversed the district court’s partial grant of summary judgment in favor of the defendants, vacated a jury verdict and an award of attorneys’ fees, and remanded an action alleging infringement of copyright in two charts depicting organizational change. The Court agreed with other circuits that by registering a derivative work, an author registers all the material included in the derivative work, including any unregistered original works. Enterprise Management Limited, Inc. v. Construx Software Builders Inc., Case No. 22-35345 (9th Cir. July 17, 2023) (Fletcher, Clifton, Ikuta, JJ.)

Mary Lippitt and her company Enterprise Management filed a lawsuit against Steve McConnell and his company Construx for copyright infringement. Lippitt has built a career around advising companies on organizational change. To this end, she created charts and materials, including one titled “Managing Complex Change,” to demonstrate how an organization can fail by missing key transitional elements. According to Lippitt, the “Managing Complex Change” chart was registered with the US Copyright Office in 1987 as part of a presentation called “Transition: Accomplishing Organization Change.” The Copyright Office subsequently destroyed the deposit copy of the registration as part of its routine practice. In 2000, an updated presentation with an updated version of the chart was registered with the Copyright Office. In 2003, the updated chart, “Aligning for Success,” was registered individually.

In 2016, McConnell used Lippitt’s chart in a YouTube video presentation. McConnell titled the chart “Lippitt/Knoster Change Model,” added supplementary information and made stylistic changes. When Lippitt found out that McConnell used her chart, she sent cease-and-desist letters. After McConnell refused to stop using the chart, Lippitt sued.

Following discovery, McConnell moved for summary judgment, which the district court granted in part and denied in part. The district court ruled that Lippitt failed to show that she had registered the “Managing Complex Change” chart because she did not present evidence that the chart was included in the “Transition: Accomplishing Organization Change” material registered in 1987. The district court also denied the motion for summary judgment with respect to Lippitt’s claim that McConnell infringed the “Aligning for Success” chart because there was a genuine issue of material fact as to whether McConnell had copied it. Based on these rulings, the district court issued a pretrial order precluding Lippitt from basing any argument on her alleged ownership of the copyright in the “Managing Complex Change” chart, including any argument that McConnell infringed the “Aligning for Success” chart by copying elements from the “Managing Complex Change” chart. At trial, the jury returned a verdict for McConnell. The district court subsequently granted McConnell’s motion for attorneys’ fees. Lippitt appealed.

The Ninth Circuit first addressed whether Lippitt raised a genuine issue of material fact that she registered the “Managing Complex Change” chart by including it in the “Transition: Accomplishing Organization Change” materials. The Ninth Circuit explained that the district court’s ruling was partially based on the fact that the copyright for Lippitt’s original [...]

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Serving a Perfect 10: No Protection for Embedding

by and | Jul 27, 2023 |

The US Court of Appeals for the Ninth Circuit found that a photo- and video-sharing social networking service could not be liable for secondary copyright infringement because embedding a photo does not “display a copy” of the underlying image. Hunley v. Instagram, LLC, Case No. 22-15293 (9th Cir. July 17, 2023) (Bybee, Bumatay, Bennett, JJ.)

Embedding is a method of displaying images on a website by directing a browser to retrieve an image from the host server. Instead of hosting an image file on a home server, a website merely pulls the image, along with any other content, from an external server and displays it.

Alexis Hunley and Matthew Brauer are photographers who brought a class action lawsuit against Instagram on behalf of copyright owners whose work was “caused to be displayed via Instagram’s embedding tool on a third party website without the copyright owner’s consent.” Hunley alleged that Buzzfeed News and Time embedded Hunley’s Instagram posts (copyrighted photos and videos) within news articles. Hunley also alleged that Instagram’s embedding tool violated her exclusive display right under the Copyright Act by enabling third-party websites to display copyrighted photos posted to Instagram.

Hunley’s argument was unsuccessful, and the district court granted Instagram’s motion to dismiss. The district court determined that the Ninth Circuit’s 2007 holding in Perfect 10 precluded relief to Hunley. The court explained that under the “server test” set forth in Perfect 10, embedding websites that do not store an image or video does not “communicate a copy” of the image or video and therefore does not violate the copyright owner’s exclusive display right. The court explained that because Buzzfeed News and Time do not store images and videos, they do not “fix” the copyrighted work in any “tangible medium of express” (a copy), and therefore when they embed the images and videos on a website, they are not displaying “copies” of the copyrighted work. Hunley appealed.

Hunley argued that Perfect 10 was inconsistent with the Copyright Act, but the Ninth Circuit declined to consider the argument in detail as the proper procedure was to seek a rehearing en banc. While the Court was sympathetic to policy arguments advanced by Hunley (as well as other amici), the Court stated it was not its place to create a policy solution. Hunley’s final major argument questioned the validity of Perfect 10 in light of the Supreme Court’s 2014 decision in American Broadcasting Co. v. Aereo, but this too was rejected. The Ninth Circuit failed to see sufficient similarities between the performance and display rights, holding them as two distinct rights with few parallels.

Applying the server test to the facts presented, the Ninth Circuit found that Instagram could not be found secondarily liable for displaying images on third-party sites. Since Buzzfeed News and Time embedded the images and no copy was stored, they could not be liable for direct infringement. Because there was no direct infringement, there could be no secondary infringement, and the Court found that the district court properly [...]

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If You Can’t Say a Secret under an NDA, Don’t Say It at All

by | Jul 27, 2023 |

Considering a trade secret misappropriation claim involving a business pitch that was not subject to a non-disclosure agreement (NDA), the US Court of Appeals for the Sixth Circuit affirmed a district court’s summary judgment grant for the accused party, finding that it had not acquired the information through a confidential relationship. Novus Grp., LLC v. Prudential Fin., Inc., Case No. 22-3736 (6th Cir. July 17, 2023) (Sutton, Boggs, Readler, JJ.)

Eric Seyboldt and Mark McCanney founded Novus Group to launch their financial product called the Transitions Beneficiary Income Rider. The pair developed the Rider to address the diminishing availability of retirement income vehicles—such as pension plans or 401k profit-sharing plans—for modern workers. In operation, the Rider guaranteed that, following a policyholder’s death, an insurance company would pay pension-style death-benefit proceeds to non-spouse beneficiaries throughout their lifetimes.

Novus partnered with financial product developers Genesis and Annexus to ensure that the Rider was feasible and to assist with a pitch to Novus’s target customer, Nationwide. These relationships were governed by two contracts with confidentiality provisions: the Genesis-Novus and Annexus-Novus contracts. Before Novus was formed, Genesis and Annexus had also created a joint organization, AnnGen, which had its own confidentiality agreement with Nationwide concerning AnnGen’s New Heights product (AnnGen-Nationwide contract). Prior to Novus’s pitch, Nationwide refused to sign an NDA and warned that Novus should “not disclose any confidential information.” Despite the lack of an NDA, Novus and Annexus pitched the Rider concept to Nationwide, which elected not to pursue the product.

After the unsuccessful pitch, two Nationwide employees who allegedly had access to information concerning Novus’s Rider product left Nationwide for Prudential. Shortly thereafter, Prudential launched Legacy Protection Plus, a death-benefit rider that was similar to Novus’s Rider product. Novus believed Prudential stole its Rider concept and sued Prudential for trade secret misappropriation. Prudential moved for summary judgment. The district court granted the motion. Novus appealed.

On appeal, the Sixth Circuit assumed the existence of a trade secret and its unauthorized use, focusing solely on whether Prudential had acquired Novus’s trade secret as a result of a confidential relationship or through improper means. The Court noted that Novus had not raised a theory of “improper means” in district court and thus had waived that argument.

The Sixth Circuit also found that the two Nationwide employees did not have a duty to Novus to maintain its information in the utmost secrecy. Novus argued on appeal that such a duty arose from the web of agreements among Annexus, Genesis, Novus, AnnGen and Nationwide. However, Nationwide was not a party to the Annexus-Novus and Genesis-Novus contracts and was not bound by them. Further, Novus was not a signatory to or third-party beneficiary of the AnnGen-Nationwide contract, which narrowly covered the New Heights product developed by AnnGen, rather than Novus’s Rider. Instead of creating a duty of confidentiality, these contracts demonstrated that Novus knew how to create a confidential relationship, yet declined to form one with Nationwide, which had explicitly refused to sign an NDA. The [...]

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No Snipe Hunting: AIA Adherence Means No Interference (Proceedings)

by | Jul 27, 2023 | ,

The US Court of Appeals for the Federal Circuit concluded that patents and applications that have only ever contained claims with an effective filing date after March 16, 2013—i.e., pure America Invents Act (AIA) patents—may not be subjected to an interference proceeding by the US Patent & Trademark Office (PTO) Director. SNIPR Techs. Ltd. v. Rockefeller Univ., Case No. 2022-1260 (Fed. Cir. July 14, 2023) (Chen, Wallach, Hughes, JJ.)

SNIPR Technologies owns a family of five patents directed to methods of selectively killing bacteria using clustered regulatory interspaced short palindromic repeats (CRISPR) gene editing. SNIPR was involved in an interference proceeding with Rockefeller University, which filed a patent application for technology also directed to selectively killing bacteria. The SNIPR patents claimed priority to a Patent Cooperation Treaty application filed on May 3, 2016, thus placing the SNIPR patents squarely within the scope of the AIA. The Rockefeller application claimed priority to, among other things, a US provisional application filed on February 7, 2013, making the Rockefeller application a pure pre-AIA application. The Patent Trial & Appeal Board initially declared an interference between claims 20 to 33 of the Rockefeller application and all claims of the SNIPR patents. The Board ultimately identified Rockefeller as the senior party and canceled all of SNIPR’s claims. SNIPR appealed.

The issue before the Federal Circuit was whether the Board had the authority to cancel SNIPR’s pure AIA claims for lack of invention priority under pre-AIA § 102(g), and more broadly, whether pure AIA patents may, as a matter of law, be part of an interference proceeding.

First, the Federal Circuit examined the plain language of AIA § 3(n) and the statutory purpose and history of the AIA. The Court reasoned that “AIA § 3(n) makes clear that [unless Congress provides otherwise,] only pure pre-AIA and mixed patents may be part of an interference.” As the Court stated, AIA § 3(n)(1) does not permit the AIA’s amendments to apply retroactively and the AIA repealed the statutory grant of power to hear interferences (pre-AIA § 135), instead providing for derivation proceedings.

Next, the Federal Circuit addressed Rockefeller’s and the Director’s arguments that the statutory language of pre-AIA § 135(a) authorizes the Director to declare an interference for “any unexpired patent”—including unexpired pure AIA patents. Unpersuaded, the Court concluded that pre-AIA § 135(a), read in conjunction with the AIA, excludes pure AIA patents for the following reasons:

  • The AIA replaced interference proceedings with derivation proceedings.
  • The AIA deleted all other references to interferences.
  • The AIA repealed the first-to-invent system of patentability, rendering interference proceedings superfluous.
  • Permitting interferences for pure AIA patents would subject AIA patents to interferences “for over twenty years after the AIA’s effective date,” which would be contrary to the purpose of the AIA—to implement the first-to-file system of patentability.

Moreover, such a statutory construction would belie AIA § 3(n)(2), which expressly allows for interferences for mixed patents (i.e., patents and applications that contain, or contained at any time, at least one claim with [...]

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Invoking Generic Need for Claim Construction Won’t Avoid § 101 Dismissal

by | Jul 27, 2023 |

The US Court of Appeals for the Federal Circuit affirmed the dismissal of a patent infringement suit on § 101 grounds, rejecting the patentee’s argument that claim construction or discovery was required before assessing patent eligibility. Trinity Info Media, LLC v. Covalent, Inc., Case No. 22-1308 (Fed. Cir. July 14, 2023) (Stoll, Bryson, Cunningham, JJ.)

Trinity Info Media sued Covalent for infringement of patents related to poll-based networking systems that connect users in real time based on answers to polling questions. Covalent moved to dismiss, arguing that the patent claims were invalid under 35 U.S.C. § 101 because they were directed to patent-ineligible subject matter. In resolving the motion, the district court found that the claims were directed to the abstract idea of “matching users who gave corresponding answers to a question” and did not contain an inventive concept. The district court further found that the purported invention did not improve computer functionality but simply used “generic computer components as tools to perform the functions faster than a human would.” Accordingly, it found the asserted claims invalid under § 101 and granted the motion to dismiss. Trinity appealed.

Trinity argued that the district court erred by granting the motion without first allowing fact discovery and conducting claim construction. The Federal Circuit disagreed, finding that in order to overcome a motion to dismiss on § 101 grounds, “the patentee must propose a specific claim construction or identify specific facts that need development and explain why those circumstances must be resolved before the scope of the claims can be understood for § 101 purposes.” Trinity had identified claim terms to the district court, but never proffered any proposed constructions or explained how construction would affect the § 101 analysis. Because Trinity did not identify specific facts to be discovered or propose any particular claim construction that would alter the § 101 analysis, Trinity’s generic arguments were insufficient to avoid the motion to dismiss.

The Federal Circuit went on to analyze whether the asserted claims were invalid under the two-step framework established by Mayo and Alice. Under this framework, Step 1 evaluates whether the asserted claims are directed to a patent-ineligible concept, such as an abstract idea. Step 2 searches for an “inventive concept” by considering the claims to determine whether any elements “transform the nature of the claim” from ineligible subject matter into a patent-eligible application.

At Step 1, the Federal Circuit concluded that the claims were directed to the patent-ineligible abstract idea of “matching based on questioning.” The Court noted that a “telltale sign of abstraction is when the claimed functions are mental processes that can be performed in the human mind or using a pencil and paper” (citing Personal-Web), finding that the “human mind could review people’s answers to questions and identify matches based on those answers.” Further, the trivial variations appearing in some claims (e.g., using a handheld device, reviewing matches by swiping and matching based on gender) did not change the focus of the asserted claims. The Court explained that for software inventions, Step 1 [...]

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Reissue Boat Won’t Float: “Original Patent” Rule Sinks New Floating Grill Claims

by | Jul 20, 2023 |

Addressing the same invention requirement for reissue patents, the US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board decision to reject an overly broad reissue application. In re Float‘N’Grill LLC, Case No. 22-1438 (Fed. Cir. July 12, 2023) (Prost, Linn, Cunningham, JJ.)

Float‘N’Grill (FNG) owned a patent directed to a floating device that supports a grill so that users can grill food while in water. The patent’s specification lays out a single embodiment, illustrated in Figure 1 below, which includes a float (20) that has two supports (46, 48), each of which “includes a plurality of magnets” (60) so that the grill can be removably attached to the float:

FNG filed a reissue application that claimed new ways to “more generically” removably attach a grill to the float. In rejecting the reissue claims, the Examiner found that three of the new requested claims required zero magnets, three claims required one magnet, and one claim did not specifically require magnets but referred to a magnet in the preamble. This was in contrast to the issued patent’s only embodiment, which required multiple magnets. The Examiner, therefore, rejected the reissue claims for failure to meet the “original patent” requirement of 35 U.S.C. § 251. The Board affirmed. FNG appealed.

The question on appeal was whether FNG’s newly requested claims complied with § 251. The Federal Circuit explained that the only path to expanding the coverage of an issued patent is through a reissue application, which is subject to § 251’s limitations. Pertinent here, § 251 requires reissue claims to be directed to the same invention disclosed in the original patent. Citing Supreme Court and Federal Circuit decisions, the Court described the “original patent” requirement as a question of whether the issued patent’s disclosed invention “on its face, explicitly and unequivocally describe[s] the invention as recited in the reissue claims.”

Turning to FNG’s reissue claims, the Federal Circuit agreed with the Board, finding that the new claims were not directed to the same invention as the original patent and thus failed to satisfy § 251. The Court explained that the specification of FNG’s issued patent had just one embodiment, which featured “a plurality of magnets” to removably attach a grill to the floating device. The reissue claims, however, contemplated more general attachments without magnets.

FNG argued that its claims were acceptable under § 251 because the magnets were a “non-essential embodiment” of the invention. The Federal Circuit disagreed for four reasons:

  1. An element of a patent may be deemed essential even if the patent does not explicitly state as much. Thus, the magnets were essential to FNG’s original patent, even if not labeled so.
  2. It is irrelevant that a person of skill in the art may know to replace an original patent element with “some other undisclosed mechanism” to reach the same result. Here, a new way to attach a grill to the [...]

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Hit a Nerve? Obviousness Inquiry Must Address Claims at Issue

by | Jul 20, 2023 |

The US Court of Appeals for the Federal Circuit vacated and remanded a Patent Trial & Appeal Board non-obviousness decision, finding that the context of the proposed combination of prior art in the Board’s obviousness inquiry was not directed toward the context of the claim at issue. Axonics, Inc. v. Medtronic, Inc., Case No. 21-1451 (Fed Cir. July 10, 2023) (Lourie, Dyk, Taranto, JJ.)

Axonics filed petitions for inter partes review (IPR) challenging the validity of two patents owned by Medtronic as obvious. During the IPRs, the Board analyzed two prior art references, an article titled, “Electrical Stimulation of the Trigeminal Nerve Root for the Treatment of Chronic Facial Pain” by Ronald Young and a patent assigned to Gerber. The Medtronic patents described percutaneously positioning a lead to stimulate the sacral nerve. By contrast, Gerber described positioning an electrode in the sacral nerve region in a non-percutaneous way, and Young described positioning an electrode percutaneously to stimulate the trigeminal sensory root. The Board found that Medtronic’s patents were not obvious over Young in view of Gerber because of lack of motivation to combine the two prior art references. The Board also noted “that the proposed combination ‘would not be feasible in the trigeminal nerve region.’” Axonics appealed.

The Federal Circuit found that the Board erred in conducting the obviousness analysis. The Board’s proposed analysis centered on Young’s trigeminal sensory root context, not the Medtronic patents’ sacral nerve context. First, the Board questioned whether motivation to use the resulting combination of Young and Gerber existed in the trigeminal nerve context, but not in Medtronic patents’ sacral nerve context. Second, the Board found “that the relevant art [of the Medtronic patents] is medical leads specifically for sacral neuromodulation.”

Addressing the first error, the Federal Circuit explained that the prior art combination must be directed toward meeting the requirement of the claimed patent, not the requirement of the first prior art. The Court found that the Board did not conduct this analysis. Addressing the second error, the Court noted that “the relevant art” of the Medtronic patents was not “limited to medical leads for sacral-nerve stimulation.” The Court examined the specification of the patent as well as its claim and ruled that the scope of the Medtronic patents was broader than what the Board concluded.

The Court found that the Board’s errors were not harmless since the Board relied on these errors in rejecting Axonics’s obviousness arguments and provided no other reason for concluding Medtronic’s claims were not obvious. Therefore, the Court vacated the Board’s decision and remanded for further consideration.

Practice Note: In considering obviousness arguments under 35 U.S.C. § 103, keep in mind the difference between the claim at issue and the considered combination of prior art. The scope of the claim also needs to be considered based on the entirety of the patent.

Woohyeong Cho, a summer associate in the Washington, DC, office, also contributed to this case note.



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The Game of Life: Winner Gets Everything Except Attorneys’ Fees

by | Jul 13, 2023 |

The US Court of Appeals for the First Circuit agreed with the trial court regarding the reasonableness of the plaintiff’s legal positions and found that the trial court did not abuse its discretion in denying the defendants, as the prevailing party, attorneys’ fees. The First Circuit determined that the positions advanced by the unsuccessful plaintiffs were not objectively unreasonable. Markham Concepts, Inc. v. Hasbro, Inc., Case Nos. 19-1927; 21-1957; -1958 (1st Cir. June 22, 2023) (Kayatta, Lipez, Thompson, JJ.)

The underlying case involved a copyright action concerning ownership rights to The Game of Life, a board game that has been widely popular since its launch in 1960. The Game of Life became the center of a long-standing dispute between its creators, Reuben Klamer and Bill Markham. Klamer, a toy developer, conceived the initial idea for the game and enlisted Markham to design and create the game prototype. Markham believed he deserved greater recognition for his contribution and felt the royalty he received was unfairly low.

In its previous ruling on the merits, the First Circuit affirmed the district court’s decision in favor of the Hasbro defendants (including Klamer). The Hasbro defendants then sought attorneys’ fees, which the district court denied. Hasbro appealed and moved for appellate attorneys’ fees.

Although both the district court and the First Circuit examined various factors, such as Markham’s motivations and the need for compensation or deterrence, the key factor for both courts in determining whether to award legal fees hinged on the reasonableness of Markham’s litigation arguments.

The merits of the underlying case revolved around the termination right provided by the Copyright Act of 1976 (1976 Act), which allows authors to terminate copyright grants after a certain period and thereby disentangle themselves from agreements made before the true value of their work became apparent. This right does not apply to works made for hire. In this instance, the issue of whether The Game of Life qualified as a work made for hire was determined under the Copyright Act of 1909 (1909 Act), as the game was created long before the 1976 Act took effect. Under the 1909 Act, Markham had to meet the “instance and expense” test, which treats contractors as employees of the party commissioning the work, thereby presuming copyright ownership in the latter. The district court held that The Game of Life was a work for hire because it was created at Klamer’s instance and expense.

Markham’s primary argument relied on the 1989 Supreme Court decision in Reid, which interpreted “employee” for purposes of the work-for-hire test as being defined according to “the general common law of agency.” Although Markham acknowledged that Reid was directed to the 1976 Act, he contended that the logic of Reid should extend to the 1909 Act, thereby nullifying the “instance and expense” test in favor of the general common law of agency.

Four years after the Supreme Court’s decision in Reid, however, the First Circuit applied the “instance and expense” test in Forward to a work covered [...]

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