Blawgletter®

Quote of the Day: Boyce F. Martin, Jr.

Note the dripping red wax on the seal.

All bourbon is whiskey, but not all whiskey is bourbon.

Maker's Mark Distillery, Inc. v. Diageo N. Am., Inc., No. 10-5508, slip op. 4 (6th Cir. May 9, 2012) (affirming verdict and judgment that dripping-wax red seal on tequila bottles infringed trademark for same on bottles of bourbon) (per Boyce F. Martin, Jr., J.).

Federal Circuit Nips Multi-Party Patent Cases

The Federal Circuit today ruled that the Eastern District of Texas has the wrong idea about whether Rule 20(a) lets plaintiffs sue a bunch of defendants in one patent infringement case simply because they all infringed the same patents.

You have to show something more, it held -- such as that the defendants somehow acted in concert to infringe the same patent, made the same infringing product, or used the same infringing method to make their own infringing products. In re EMC Corp., Misc. No. 100 (Fed. Cir. May 4, 2012) (granting mandamus and ordering district court on remand to use different legal test in ruling on motions to sever and transfer).

Blawgletter notes that the ruling applies to mandamus petitions that pre-date the Leahy-Smith America Invents Act, which in 2011 changed the joinder rules in patent cases.

Settlement Privilege? Ha!

In the last 30 days, two U.S. courts of appeals have held (sort of) that no "settlement privilege" -- a right to deny others access to the terms of your settlements with third-parties -- exists.

In the first case, the Federal Circuit ruled, "in light of reason and experience, . . . that settlement negotiations related to reasonable royalties and damages calculations [in patent infringement cases] are not protected by a settlement negotiation privilege." In re MSTG, Inc., Misc. No. 996, slip op. 19 (Fed. Cir. Apr. 9, 2012) (denying mandamus petition seeking to halt order that required claimant to turn over documents showing settlement negotiations with infringement defendants).

The other case dealt with a barge that the Government of Ghana hired Balkan to render able to produce 150 megawatts of electricity. Balkan settled a case in Missouri federal court against its subcontractor, ProEnergy. Ghana wanted to know on what terms -- not least because Balkan had accused ProEnergy in the Show Me state case of messing up the barge at the same time it said, in its dispute with Ghana, that everything on the barge worked just fine. The Eighth Circuit said "[w]e have no reason to assume that the district court intended to acknowledge a novel claim to privilege." Government of Ghana v. ProEnergy Services, LLC, No. 11-2714, slip op. 6 n.3 (8th Cir. May 1, 2012). But it (a) went on to hold that the district court acted within its discretion when it refused to order ProEnergy to turn over its settlement agreement with Balkan but (b) seemed pretty clear it thought the settlement privilege idea a dim one.

Blawgletter notes that the later case didn't cite the one from three weeks earlier. Clerks, wake up!

Patent Department: Inventors Get Two Shots at Broad Scope, Supreme Court Says

If you don't live and breath patent law, you may wonder how people get patents. The Supreme Court today put a spotlight on the process. It made inventors happy.

You may have guessed that you have to apply for a patent. So far so good. One or more "examiners" in the United States Patent and Trademark Office look over your application and either accept or reject it, in whole or in part. Your lawyer or "patent agent" may argue with the PTO folks and may or may not convince them to "allow" your patent "claims". You may choose to resolve the examiners' concerns about your claims by making them narrower. Instead of a patent on light bulbs that use electricity, for instance, you might settle for a patent on light bulbs that use electricity flowing through a piece of tungsten.

But what if you think the PTO made you narrow your claims for no good reason? What recourse do you have?

The patent law of 1952 gives you the right either to go to the Court of Appeals for the Federal Circuit to review the PTO's ruling or to file suit in the United States District Court for the Eastern District of Virginia (until recently the District of the District of Columbia) to do something more.

Say you opt for the district court route. Can you offer new evidence, which you never showed to the PTO, to support your argument that your patent claims deserve a wider scope?

The Supreme Court held today, unanimously, that you can do just that. Kappos v. Hyatt, No. 10-1219 (U.S. Apr. 17, 2012).

Giving Docs to Feds Waives Privilege, Ninth Circuit Holds

The lawyer you hired to help you with lawsuits over the rights to Superman runs off with documents that you say contain top-secret attorney work product and attorney-client communications.

Worse, the lawyer gives a copy of the to your opponent, D.C. Comics. You report the theft to the Federal Bureau of Investigation. A grand jury subpoenas the documents from you. You hand the docs over without making any objection. D.C. Comics sues you and demands a copy of the docs you provided to the grand jury. Have you waived privilege?

Yes. Pacific Pictures Corp. v. D.C. Comics, No. 11071844 (9th Cir. Apr. 18, 2012).

U.S. E-Book Complaint Lays Out "Agency" Pact with Apple

You've likely heard by now that the Antitrust Division of the U.S. Department of Justice sued Apple and a bunch of e-book publishers for fixing prices on, well, e-books.

You can see the complaint here.

The key part comes in paragraph 7, which explains Apple's "agency" plan for thwarting Amazon's effort to cut all e-book prices to $9.99 thus:

The plan -- what Apple proudly described as an "aikido move" -- worked. Over three days in January 2010, each Publisher Defendant [and Apple] entered into a functionally identical agency contract . . . that would go into effect simultaneously in April 2010 and "chang[e] the industry permanently." These "Apple Agency Agreements" conferred on the Publisher Defendants the power to set Apple's retail prices for e-books, while granting Apple the assurance that the Publisher Defendants would raise retail e-book prices at all other e-book outlets, too. Instead of $9.99, electronic versions of bestsellers and newly released titles would be priced according to a set of price tiers contained in each of the Apple Agency Agreements that determined de facto retail e-book prices as a function of the title's hardcover list price. All bestselling and newly released titles bearing a hardcover list price between $25.01 and $35.00, for example, would be priced at $12.99, $14.99, or $16.99, with the retail e-book price increaasing in relation to the hardcover list price.

The tying of the e-book price to the hardcover list price had the effect of letting the publishers leverage their power over list prices in the hardcover realm into the e-book space. So the theory goes.

The DOJ doesn't ask for damages, just declaratory and equitable relief that would get rid of the Apple Agency Agreements.

The move comes months after private parties filed a slew of cases alleging the same section 1 violation of the Sherman Act. And they for sure DO seek damages. Lots of them. Three times lots of them even.

Second Circuit Roundup

Blawgletter hasn't hidden our liking for the cut of the Second Circuit's jib. We admire lots of things about the court. This week, three panels confirmed our High Opinion.

Let's see . . . one involved whether an antitrust complaint met the Twombly/Iqbal standard for pleading a "plausible" conspiracy, the second dealt with the use of video that belongs to others on YouTube, and the third concerned Texas lawyers who used hardball tactics to pre-empt a New York arbitration.

In Anderson News, L.L.C. v. Am. Media, Inc., No. 10-4591-cv (2d Cir. Apr. 3, 2012), Their Honors ruled that the district court erred in holding that the complaint failed to allege a "plausible" conspiracy among magazine publishers to punish a wholesaler for asking them to pay a "surcharge" for handling the magazines that didn't sell. "The question at the pleading stage is not whether there is a plausible alternative to the plaintiff's theory; the question is whether there are suficient factual allegations to make the complaint's claim plausible." Id. at 37.

The panel in Viacom Int'l, Inc. v. YouTube, Inc., No. 10-3270-cv (2d Cir. Apr. 5, 2012), revived a class action complaint against YouTube under the Digital Millennium Copyright Act. Unlike the district court, the appeals court held that YouTube didn't prove its right to a "safe harbor" under section 512(c) of the DMCA. It sent the case back for more attention to, among other things, evidence of (a) actual awareness by YouTube's founders of infringing clips and (b) YouTube's "willful blindness" to the posting of such clips on YouTube.

And Enmon v. Prospect Capital Corp., No. 10-2811-cv (2d Cir. Apr. 6, 2012), upheld sanctions (including more than $350,000 in fees) against a law firm in Houston, Arnold & Itkin, for over-the-top efforts to thwart an arbitration in New York by means of a temporary restraining order from a Texas state court and what the court deemed meritless challenges to the arbitral award against the firm's client.

Sales of Fake Handbags Earn $3.5 Million Trademark Award -- on Summary Judgment

Blawgletter marvels at the audacity of people who make, import, and sell knock-offs of famous brands of what you call luxury goods -- mostly purses and watches but lots of other high-end, show-off stuff, too.

We suspect they know that the wages of their trademark rip-off sin will run steep -- but only if Louis Vuitton or Gucci or Rolex or Hello Kitty catch them.

Well, LV did snag a couple of these audacious types. And pay they did. After giving LV a good deal of run-around, partly because of federal criminal charges against them, the ersatz designer handbag hawkers met their Doom before The Hon. Alvin K. Hellerstein, U.S.D.J., who granted summary judgment to LV on liability, damages, and fees.

The appeal posed some issues that the Second Circuit panel disposed of in a summary order. The other two -- whether Judge Hellerstein erred in refusing to postpone Judgment Day pending the outcome of the criminal case and whether he messed up in awarding $3 million in statutory damages and $.5 million in attorneys' fees -- formed the subject matter of the opinion the panel published.

The panel affirmed Judge Hellerstein in all respects. Louis Vuitton Malletier S.A. v. LY USA, Inc., No. 08-4483-cv (2d Cir. Mar. 29, 2012). The district court had vast discretion on the question of staying the case or not until a jury convicted or acquitted the defendants, the panel said. And abuse it he did not, in part because LV deserved a reasonably quick resolution and so did the purse-buying public. On the second question, the panel saw no reason to second-guess Judge Hellerstein's award of statutory damages and fees, even on summary judgment.

Fun facts:

"Louis Vuitton is a French fashion house founded in 1854." Id. at 6.

The defendants "were convicted principally of charges related to a mark registered by Burberry Limited, not Louis Vuitton." Id. at 22.

Calling fees that a firm earns for representing a client "attorneys' fees" instead of "attorney fees" or "attorney's fees" seems to the panel "likely more accurate". Id. at 3 n.1.

Lawsuit on the Side Doesn't Hinder Right to Arbitrate, Federal Circuit Affirms

Can you avoid your promise to arbitrate a dispute, or slow the process down, if you and the bad guy also have a lawsuit going on at the same time?

Nope. Promega Corp. v. Life Technologies Corp., No. 11-1263, slip op. 12 (Fed. Cir. Mar. 28, 2012) ("The district court's duty to compel arbitration is not altered by the fact that non-arbitrable claims may remain pending in the district court.").

Test Patent Failed "Law of Nature" Test, Supreme Court Holds

All nine justices on the U.S. Supreme Court today agreed to wipe out patents that told doctors how to tell how much of a drug to give a patient. The patents' sin? They did little more than describe a "law of nature".

Prometheus Labs held sole rights to a couple of patents. The patents dealt with testing patients with autoimmune diseases to find out whether a higher or lower dose of a drug would improve the drug's effect. Prometheus sold kits that let doctors give the tests, which measured how much "metabolites" patients produced after getting a dose of "a thiopurine compound". The Mayo Clinic bought the Prometheus tests for awhile but then quit and started using its own test.

Prometheus sued for patent infringement. It lost on summary judgment. The Federal Circuit reversed not once but twice -- the first time before Bilski v. Kappos, 130 S. Ct. 3218 (2010), which deemed a hedging process an unpatentable "abstract concept", and the second time after the Supreme Court sent the case back to it for further review in light of Bilski.

The Federal Circuit's ruling did not impress the justices. They, speaking through Justice Breyer, thought that the patents didn't do enough with a law of nature -- how a human body responds to a dose of a Drug A -- to avoid granting a monopoly on the law of nature:

If a law of nature is not patentable, then neither is a process reciting a law of nature, unless that process has additional features that provide practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself. A patent, for example, could not simply recite a law of nature and then add the instruction "apply the law." Einstein, we assume, could not have patented his famous law by claiming a process consisting of simply telling linear accellerator operators to refer to the law to determine how much energy an amount of mass has produced (or vice versa). Nor could Archimedes have secured a patent for his famous principle of flotating by claiming a process consisting of simply telling boat builders to refer to that principle in order to determine whether an object will float.

Mayo Collaborative Services v. Prometheus Laboratories, Inc., No. 10-1150, slip op. 8-9 (U.S. Mar. 20, 2012).

See, e.g., "'Process' Must Do Stuff to Deserve a Patent, Federal Circuit Affirms"; "Bolts of Business Insight May Flash in Pan at Supreme Court; Bilski the Hedger"; "Supreme Court Ends Term: Guns, Prayers, Accounting, and Patents".