Blawgletter®

"Cocoa Butter Formula" Fails Trademark Test; Third Circuit Rubs It In

A little cocoa butter will fix that right up, buddy.

As we enter the Dog Days of Summer -- and temperatures in Blawgletter's vicinity spike to 107 Fahrenheit -- let us pause to consider skincare products.  Specifically ones that feature an unguent of choice, the mother of moisturizers, the very queen of summertime salves:  cocoa butter.

A decision today out of the Third Circuit furnishes the occasion.  In the case, E.T. Browne Drug Company accused Cococare Products of infringing Browne's trademark in "Cocoa Butter Formula".  Browne called its product "Palmer's Cocoa Butter Formula", and Cococare named its -- what else? -- "Cococare Cocoa Butter Formula".  The district court threw the trademark infringement case out on summary judgment.

The Third Circuit affirmed in a soothing yet sunny opinion.  The court first identified the (eventually fatal) weakness in Browne's case -- that its trademark in "Cocoa Butter Formula" appeared only on the Patent and Trademark Office's Supplemental Register and deserved, at best, the lowest level of trademark protection.  The court parted with the district court on the question of whether Browne's evidence raised a fact question as to whether the mark qualified as unprotectibly "generic" or instead made it to the bottom-most protectibility rung, where "descriptive" marks sit.

Still, the court pointed out, a descriptive mark acquires trademark protection under the Lanham Act only if it obtains "secondary meaning" in the minds of customers.  Here, the court held, Browne slipped.  Browne's proof showed, at best, that "Palmer's Cocoa Butter Formula" had entered consumer consciousness.  That counted as no evidence that "Cocoa Butter Formula", by itself, had obtained secondary meaning (such that people associated it with Browne/Palmer's as the source).  E.T. Browne Drug Co. v. Cococare Products, Inc., Nos. 06-4543 & 06-4658 (3d Cir. Aug. 5, 2008).

Our feed also likes slather.

Eighth Circuit Reinstates Fiduciary Duty, Contract Claims

Tammy Wynette sang D-I-V-O-R-C-E.

The Eighth Circuit today overturned claims arising from a business divorce.  Each side owned half of a company, Twin City, before one bought out the other.  The sellers sued for fraud, breach of fiduciary duty, insider trading under an Iowa statute, and breach of contract.  The court held that fact issues barred summary judgment on the fiduciary duty, insider trading, and contract claims because the record suggested that the buyers breached fiduciary duties by not disclosing impending transactions to the sellers, used the secret information to trade on it, and breached a provision for recalculating the purchase price.

The transactions may have materially affected the value of the seller's Twin City stock, the court concluded, by ridding the company of a losing joint venture obligation, giving it control of its main operating company for cheap, and providing it with better financing.  Also, as insiders in a close corporation, the defendants under applicable Minnesota law had a duty to tell the sellers about the impending happy turn of events.  Questions of materiality and knowledge, the court held, precluded summary judgment. Dunning v. Bush, No. 07-2764 (8th Cir. Aug. 5, 2008).

The court also found ambiguity in a contract provision relating to recalculation of the purchase price for the plaintiffs' shares in Twin City and held that the district court erred in striking a breach of contract claim as a sanction for late supplementation of an expert report on valuation.

Our feed keeps on believing.

"Remote" DVR System Doesn't Infringe Copyright, Second Circuit Holds

Today's decision saves cable companies from having to do this.

The Second Circuit today reversed a summary judgment for Cartoon Network and other programming providers in a case accusing cable operators of directly infringing the programmers' copyrights in SpongeBob SquarePants, CNN news, and Dude, Where's My Car? (2000), among other television and cinematographic triumphs.

The lawsuit concerned a system for allowing cable subscribers to designate programs for future recording and eventual (hah!) playback.  But the system, unlike a playback device that sits in your living room or over your favorite bar, the "Remote Storage" Digital Video Recorder ("RS-DVR") system put the subscribers' choices on hard disks in some enormous server farm.  The programmers alleged that the off-premises recording and playback constituted direct infringement of their copyrights.  The district court agreed.

But not the Second Circuit.  It held that the works never become "fixed" in a tangible medium during the 1.2 seconds or less that the "buffering" process takes to store the programs on the cable companies' servers.  That part of the process, the court concluded, thus didn't satisfy the definition of "fixed", which requires fixation "for a period of more than transitory duration".  The Cartoon Network LP v. CSC Holdings, Inc., Nos. 07-1480 & 07-1511-cv, slip op. at 13-21 (2d Cir. Aug. 4, 2008) (applying 17 U.S.C. 101).

The court also rejected the argument that the cable guys made "copies" of the programs.  The subscribers made the volitional choice to slap the programs on the hard disks; the cable companies simply provided the means for gratifying their wishes.  Id. at 21-29.

Finally, the panel ruled that the RS-DVR system didn't "transmit" the movies and shows "publicly".  Because the transmissions went only to the specific subscribers, respectively, who punched the right buttons on their remote controls.  Id. at 29-44.

Our feed adores on the fair use doctrine.

Federal Circuit Reverses "Inequitable Conduct" S.J. for Microsoft; This Court, Indeed

Overlaying dots tricks the eye into seeing one color.

Today the Federal Circuit reversed a decision that invalidated patents for inequitable conduct. The court also held that the district court so deviated from proper analysis as to justify directing the Chief Judge of the originating district to reassign the case.

The dispute involved patents relating to digital halftoning. The invention permits representation of images with dots. Lots of dots.

The court tossed the inequitable conduct conclusion because the district court focused, improperly, on post-filing publication of a paper that explored ways to make halftone images more pleasing. The public disclosure, the court held, didn't prove the "materiality" prong of the inequitable conduct defense. Research Corp. Technologies, Inc. v. Microsoft Corp. , No. 06-1275 (Fed. Cir. Aug. 1, 2008).

Blawgletter notes, as we must, that the opinion uses the phrase "this court" 19 times -- and the word "indeed" four times -- in the course of 14 pages. While we generally admire judicial modesty, we marvel at the extent of judicial self-effacement. Indeed.

Our feed hits you right in efface.

D.C. Circuit Reverses Denial of Whole Foods Preliminary Injunction (Update)

The D.C. Circuit -- in a 2-1 decision -- today reversed the district court's refusal to enjoin Whole Foods from acquiring Wild Oats.  The majority concluded that "the district court committed legal error in assuming market definition must depend on marginal consumers; consequently, it underestimated the FTC's likelihood of success on the merits."  Federal Trade Comm'n v. Whole Foods Markets, Inc., No. 07-5276, slip op. at 2 (D.C. Cir. July 29, 2008).

The court remanded the case so that the district court could weigh the "equities" before ruling on whether to enter a preliminary injunction.  The court ordered a stay of the acquisition in August 2007 but soon after dissolved it.  The merger closed on August 28, 2007.

Crunchy!

Notice of Dismissal Automatic, Third Circuit Holds

Can you dismiss a complaint simply by filing a notice even after the court has granted a motion to dismiss?  Yes, the Third Circuit held today -- at least where the defendants haven't answered, the plaintiffs haven't dismissed a similar case before, and the district court's order granting dismissal also allowed the plaintiffs a chance to replead and didn't convert a motion to dismiss to a motion for summary judgment.  The court explained that in those circumstances Rule 41(a)(1)(A)(i) operates to effect dismissal automatically upon the filing of a notice.  In re Bath and Kitchen Fixtures Antitrust Litig., No. 07-1520 (3d Cir. July 28, 2008).

Happy Monday!

Federal Circuit Affirms Non-Infringement S.J.

Today a unanimous panel of the Federal Circuit upheld a summary judgment of non-infringement in a case that prompted the district court to describe the behavior of lawyers as less professional than "vipers slithering around on hot coals."  The suit accused several dozen companies of infringing a patent regarding "Character Pattern Recognition and Communications Apparatus".  The summary judgment hinged on whether the claim term "syllabic element" meant "a one-syllable letter group" or, more broadly, "a word or a part of a word" with no limit on the number of syllables comprising it.  The district court accepted the narrower construction.  The Federal Circuit agreed.  Board of Regents of the University of Texas System v. BENQ Am. Corp., No. 07-1388 (Fed. Cir. July 23, 2008).

Our feed wonders how the regents feel.

Absence of Email Didn't Compel Adverse Inference, Sixth Circuit Panel Holds

An Agripool catcher bag.

The Bankruptcy Appellate Panel of the Sixth Circuit today upheld a bankruptcy judge's failure to infer that missing emails would have hurt a creditor's "ordinary course of business" defense.  The trustee of the debtor, a lawn mower maker, sought to recover a "preference" payment that the debtor made to a catcher bag manufacturer within 90 days before the debtor filed for bankruptcy protection.  The bag supplier, an Italian company, Agripool, invoked the ordinary course of business defense, contending that it made no unusual efforts to collect from the debtor during the 90-day preference period.  The trustee, in turn, asked the bankruptcy judge to infer the opposite as a result of the vendor's failure to produce emails from the relevant time period.  The bankruptcy judge didn't draw the inference and concluded that Agripool established its defense.  The Sixth Circuit's Bankruptcy Appellate Panel held that the court didn't abuse its discretion in that respect.  Kaye v. Agripool, SRL (In re Murray, Inc.), No. 07-8064 (6th Cir. B.A.P. July 23, 2008).

The Panel nonetheless reversed, concluding that Agripool's expert relied on, um, unreliable information in opining that the payments to Agripool fell within ordinary commercial terms for the relevant industry.

Catcher of the Rye?

Second Circuit Green Lights Parmalat Case

The company Calisto Tanzi founded collapsed in 2003 when people learned its $5.4 billion bank account balance didn't exist.

A 2-1 panel of the Second Circuit today upheld an order that allowed American-style securities fraud litigation to move forward despite the Italian bankruptcy of the principal defendant, Parmalat.  The court held that 11 U.S.C. 304 -- a part of the old U.S. Bankruptcy Code, which went the way of the dinosaurs in 2005 -- didn't require the district court to enjoin proceedings against the successor to Parmalat.  The court cited, among other reasons, the fact that the Italian court needn't accept a U.S. judgment but that liquidating U.S. securities claims in the U.S. will advance resolution of the great big sprawling litigation whether by settlement or judgment.  Bondi v. Capital & Finance Asset Mgmt. S.A., No. 07-2949-cv (2d Cir. July 22, 2008).

Our feed has a song in its heart.

Third Circuit Strips "Wardrobe Malfunction" Fine

The Federal Communications Commission suffered a setback today when the Third Circuit tossed the agency's imposition of a fine for the baring of Janet Jackson's breast during the halftime show for Super Bowl XXXVIII on February 1, 2004.  The court held that the FCC disregarded its own rules for dealing with fleeting instances of "indecency" over the national airwaves.  CBS Corp. v. Federal Comm. Comm'n, No. 06-3575 (3d Cir. July 21, 2008).

Double entendres aplenty.