New Decisions

September 9, 2015

Indiana Copyright Litigation: Court Allows Copyright Plaintiff to Add New Defendants

Indianapolis, Indiana – Acting as his own Indiana copyright lawyer, Larry G. Philpot of Indianapolis, Indiana, filed a motion to amend his complaint in the Southern District of Indiana, Indianapolis Division in his ongoing intellectual property litigation against Mansion America, LLC and Oak Ridge Boys Theater of Branson, Missouri.

This lawsuit, which was filed in August 2014, alleges that Defendants Mansion America, LLC and Oak Ridge Boys Theater infringed the copyright of a photo that Plaintiff Philpot took of Willie Nelson during a 2009 performance in St. Louis, Missouri. A copyright to the photograph, Certificate Number VAu 1-132-411, was issued by the U.S. Copyright Office in 2012.

Mansion America filed a motion to dismiss the copyright litigation. The court granted Philpot leave to conduct limited discovery to assist him in responding to that motion. Plaintiff Philpot now indicates to the court that the discovery provided him with additional information, including the identities of additional parties who had been before been unknown to him. Philpot consequently asked the court for leave to amend his complaint.

The court noted that that, while the time for amending the complaint as a matter of right had elapsed, it was still within the court’s discretion to allow the amendment and that, under the Federal Rules of Civil Procedure, the court should “freely give leave when justice so requires.” Finding that there had been “no undue delay, bad faith, dilatory motive, undue prejudice, or futility of amendment,” and that Philpot had “diligently pursued discovery and prosecuted his case,” the court found that justice required that leave be granted to Philpot to amend his complaint.

August 31, 2015

Indiana Patent Law: Court Orders TapLogic to Provide Additional Detail Regarding Non-Infringement Contentions

By Overhauser Law Offices, LLC

Fort Wayne, Indiana – Magistrate Judge Susan Collins ordered TapLogic, LLC to serve Agri-Labs with more-detailed preliminary non-infringement contentions (“PNICs”) in the ongoing patent litigation between TapLogic and Agri-Labs Holdings, LLC over TapLogic’s smart phone application “Ag PhD Soil Test.”

At issue in this patent litigation is U.S. Patent No. 8,286,857 (the “`857 Patent” or the “patent-in-Suit”), to which Agri-Labs claims ownership. The patent-in-suit, which was issued based upon an application filed by inventor Tony Wayne Covely, has been registered by the U.S. Patent Office. The `857 Patent generally relates to a system and method for performing soil analysis that uses smart phones, applications for smart phones, soil containers having unique identifiers, and global positioning (“GPS”).

In January, an Indiana patent attorney for Agri-Labs filed an intellectual property complaint in the Northern District of Indiana Fort Wayne Division alleging that TapLogic infringed on the ‘857 Patent. TapLogic counterclaimed. It asked the court for a declaratory judgment that it has not infringed Agri-Labs’ patent and that the claims of the patent are invalid. On July 1, 2015, the parties exchanged their respective contentions regarding infringement.

The instant order addresses Agri-Labs’ request that the court order TapLogic to provide a more detailed PNIC. Agri-Labs asserts that the PNICs it received were deficient, providing “nothing more than vague, conclusory language that simply mimics the language of the claims when identifying its theories of non-infringement.”

As is true for a party serving preliminary infringement contentions (“PICs”), a party serving PNICs must provide an infringement-claim chart for each accused product or process (the “accused instrumentality”). Each claim chart must contain the following contentions: (1) “each claim of each patent in suit that is allegedly infringed by the accused instrumentality;” (2) “[a] specific identification of where each limitation of the claim is found within each accused instrumentality, including . . . the identity of the structures, acts, or materials in the accused instrumentality that performs the claimed function”; and (3) “[w]hether each limitation of each asserted claim is literally present in the accused instrumentality or present under the doctrine of equivalents.”

The court noted that TapLogic’s PNICs merely recite the language of each claim and then deny that its Ag PhD Soil Test performs that function or includes that feature. As an example, one portion of Claim 1 was described as “scanning said unique identifier associated with said soil sample container containing said at least one soil sample with a handheld remote terminal, wherein said handheld remote terminal includes a handheld remote terminal sampling application.” In reply, Agri-Labs stated that its application “does NOT scan said unique identifier associated with said soil sample container containing said at least one soil sample with a handheld remote terminal, wherein said handheld remote terminal includes a handheld remote terminal sampling application.”

Consequently, the court agreed that TapLogic’s PNICs were inadequate because they lacked sufficient detail. It ordered TapLogic to serve Agri-Labs with detailed PNICs.

August 26, 2015

Indiana Patent Litigation: Court Permits Bonutti to Withdraw Counterclaim, Denies Attorneys’ Fees to Biomet

By Overhauser Law Offices, LLC

Hammond, Indiana – In the matter of Biomet, Inc. v. Bonutti Skeletal Innovations, LLC, the Northern District of Indiana, Hammond Division granted Defendant Bonutti’s motion to dismiss with prejudice its counterclaim. Bonutti’s counterclaim alleged that Biomet had infringed U.S. Patent No. 7,806,897 (the “‘897 patent”). Patent attorneys for Biomet Inc. asked the court to impose attorneys’ fees as a condition of the dismissal but this motion was denied.

On March 8, 2013, patent lawyers for Plaintiff Biomet filed an action for declaratory judgment against Bonutti Skeletal Innovations LLC. At issue were contentions of patent infringement of fifteen patents. Bonutti counterclaimed against Biomet and several other counterclaim Defendants. This multi-faceted dispute had been resolved with respect to some of the patents prior to this order. Other allegations of patent infringement remained.

Among the assertions by Bonutti that had remained was a counterclaim that Biomet had infringed the ‘897 patent. In this order, the court granted Bonutti’s request under Rule 41(a)(2) to dismiss this counterclaim with prejudice. The court also addressed Biomet’s contention that it should be awarded attorneys’ fees as a “prevailing party” in this portion of the patent litigation.

The court denied attorneys’ fees to Biomet on several grounds. First, it noted that, while attorney’s fees are available as part of a Rule 41(a)(2) dismissal without prejudice, this is justified as compensation for requiring a defendant to incur unnecessary litigation expenses. That same rationale does not apply where, as in this case, the dismissal is with prejudice.

Additionally, the court noted that any request for attorneys’ fees was premature. Such fees are only available to the “prevailing party” and Biomet had not established itself as such a prevailing party. Biomet may yet be able to recover attorneys’ fees if, at the conclusion of the patent lawsuit, Biomet is held to be the prevailing party.

July 28, 2015

Supreme Court Keeps Brulotte – Post-Expiration Patent Royalties are Still Unlawful Per Se

By Overhauser Law Offices, LLC

Washington, D.C. – The U.S. Supreme Court recently decided a patent-royalty lawsuit, Kimble v. Marvel Entertainment, LLC. The Court, divided 6-3, ruled against Kimble.

Stephen Kimble sued Marvel in 1997 for infringing his patent, U. S. Patent No. 5,072,856,

with its “Web Blaster,” a toy that allowed users to mimic Spider-Man’s web-slinging superpower. The litigation ended with a settlement wherein Marvel purchased Kimble’s patent for a lump sum and agreed to pay a 3% perpetual royalty on future sales.

July 24, 2015

Seventh Circuit Trademark Law: WD-40 Did Not Infringe “Inhibitor” Trademark

By Overhauser Law Offices, LLC

Chicago, Illinois – The United States Court of Appeals for the Seventh Circuit affirmed the

ruling of the United States District Court for the Northern District of Illinois, Western Division in the matter of Sorenson v. WD-40 Company, holding that WD-40’s use of “inhibitor” and a crosshair graphic on its product labels did not constitute trademark infringement.

Plaintiff Jeffrey Sorensen founded and is the CEO of a company that produces a line of rust-inhibiting products, which were first sold in 1997. These products contain a substance called volatile corrosion inhibitor (“VCI”). Sorenson owns a federally registered trademark – THE INHIBITOR – for this line of products. He also claims common-law trademark rights to an orange-and-black crosshair design mark that is associated with these products.

June 29, 2015

Seventh Circuit Trademark Law: District Court Has Discretion Regarding Award of Attorneys’ Fees Under Lanham Act

By Overhauser Law Offices, LLC

Chicago, Illinois – The Seventh Circuit affirmed the denial of attorneys’ fees under the Lanham Act by the District Court for the Southern District of Illinois.

Plaintiff William Burford and Defendant Accounting Practice Sales, Inc. (“APS”) were parties to a contract under which Burford had agreed to market and facilitate the purchase and sale of accounting practices on behalf of APS. APS terminated the contract. Shortly thereafter, Burford started a competing business. For this business, Burford chose the name “American Accounting Practice Sales.” Burford also sued APS and Gary Holmes, the owner of APS, for breach of contract.

In response to Burford’s contract-claims lawsuit, APS filed a four-count counterclaim. Included in those counterclaims was an allegation that Burford had misappropriated APS’s trade name in violation of the Lanham Act, 15 U.S.C. § 1051 et seq. by using the business name “American Accounting Practice Sales.”

The district court held for APS on the contract claim, reasoning that the contract between the parties was of indefinite duration and was therefore terminable at will. After this ruling in favor of APS, but before the district court could consider the counterclaim, APS voluntarily dismissed its counterclaim under the Lanham Act with prejudice.

Burford then contended that, as the prevailing party on the Lanham Act claim, he was entitled to attorneys’ fees under 15 U.S.C. § 1117(a), asserting that APS’s pursuit of the Lanham Act claim was meritless and amounted to an abuse of process. The district court refused to grant attorneys’ fees on the theory that APS’s claim under the Lanham Act claim could have been pursued by a rational party seeking to protect its trademark.

Burford appealed. As part of his appeal, he asked the Seventh Circuit to reverse the district court’s denial of his request for attorneys’ fees under the Lanham Act. Circuit Judges William J. Bauer and David F. Hamilton, and District Court Judge Sara L. Ellis, sitting by designation, heard the matter.

The Seventh Circuit first held that the district court had erred in holding that the contract had not been breached. While indefinite-term contracts are by default terminable at will, it noted that the parties had contracted around that general rule by providing that APS could terminate the contract only if Burford violated the terms of the contract. On this issue, the Seventh Circuit reversed the district court.

On the question of attorneys’ fees, the Seventh Circuit affirmed the district court. Under 15 U.S.C. § 1117(a)(3), district courts have the discretion to award attorneys’ fees to those prevailing under the Act in “exceptional cases.” Such an “exceptional case” within the meaning of the Lanham Act can be found in those cases where the district court determines that the decision to bring the claim could be called an abuse of process.

In turn, such an abuse of process can be discerned in cases where, for example, “a rational litigant would pursue [the claim] only because it would impose disproportionate costs on his opponent” or where there was evidence that the party advancing the Lanham Act claim had done so “to obtain an advantage unrelated to obtaining a favorable judgment.”

The Seventh Circuit noted that Burford had failed to persuade the district court that the pursuit of the claim was objectively unreasonable or was intended to harass or to obtain an advantage unrelated to winning a favorable judgment. Consequently, because decision whether to award attorneys’ fees under the Lanham Act is left to the district court’s sound discretion, the lower court’s refusal to grant such fees was affirmed.

June 16, 2015

Indiana Copyright Law: Court Prevents Copyright Plaintiff Bell from Outmaneuvering Legal System; Orders Bell to Pay Almost $34,000 in Fees and Costs

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Plaintiff and Indiana copyright attorney Richard Bell of McCordsville, Indiana was ordered by Judge Tanya Walton Pratt of the Southern District of Indiana to pay almost $34,000 in attorney’s fees and costs to Defendant Charles Lantz, whom Bell had sued on unsupported allegations of copyright infringement.

Indiana copyright attorney Richard Bell, who is also a professional photographer, has sued hundreds for copyright infringement. The lawsuits began in 2011. At issue in Bell’s spate of litigation were allegations of unauthorized use of his copyrighted photograph of the Indianapolis skyline, which had been registered at the U.S. Copyright Office. The ongoing saga of this multiplicity of copyright lawsuits took an interesting, if unsurprising, turn last week.

According to an article in The Indiana Lawyer, Bell has said that most Defendants whom he has sued have settled early. Acknowledging the expense of litigation – and the relative ease of escaping litigation by simply paying a settlement without any finding of liability – Bell said, “A responsible lawyer and their clients, they obviously know it’s going to be far more expensive to try it.”

A current copyright-infringement lawsuit, filed January 8, 2013 by Bell, named forty-seven Defendants. Forty-six of those Defendants were dismissed from the lawsuit, including some who settled and some against whom a default judgment was issued. Default judgments of $2,500 were awarded in this litigation.

One Defendant, Charles Lantz, refused to pay for copyright infringement that he had not committed and hired Indiana intellectual property attorney Paul Overhauser (publisher of this blog) to defend him. In December 2014, Lantz’s perseverance paid off and the court granted an unopposed motion for voluntary dismissal of the litigation against Lantz. Last week, Lantz’s perseverance paid off again when Overhauser, on behalf of Lantz, sought and was awarded $33,974.65 in attorney’s fees and costs from Plaintiff Bell.

The court explained that, because Bell’s copyright litigation against Lantz had been dismissed with prejudice, Lantz became the “prevailing party” under the Copyright Act. Under 17 U.S.C. § 505, in any civil copyright action, the district court may award litigation costs, including attorney’s fees, to the prevailing party.

In evaluating whether to exercise its discretion to award such costs to Lantz, the court stated, “Defendants who defeat a copyright infringement action are entitled to a strong presumption in favor of a grant of fees.” The court looked to the Fogerty factors, which are so named after Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994), a U.S. Supreme Court case involving the shifting of costs in copyright litigation. These factors are nonexclusive and include: “(1) the frivolousness of the action; (2) the losing party’s motivation for filing or contesting the action; (3) the objective unreasonableness of the action; and (4) the need to advance considerations of compensation and deterrence.”

The court found that each of these factors weighed against Bell. It stated that Bell had possessed no evidence against Lantz that would prove either a conversion or a copyright claim. It also characterized Bell’s motivation for filing the lawsuit as “questionable,” noting that Bell had attempted to save himself “extensive filing fees” by improperly joining defendants and had “sued forty-seven defendants and then quickly offered settlements to defendants who were unwilling to pay for a legal defense.”

Regarding the third and fourth factors, the court held that the litigation was objectively unreasonable, given that Lantz had been sued “without any evidence to support the claims.” The court then turned to the last of the Fogerty factors, the need to advance considerations of compensation and deterrence. It noted that Bell had leveraged his status as a practicing attorney “to file meritless suits and to attempt to outmaneuver the legal system” (which was perhaps a hat tip to the now-famous opinion written by Judge Otis D. Wright III, who employed similar language against another copyright plaintiff widely regarded as a copyright troll).

Finally, the court was not swayed by Bell’s assertions that Lantz had failed to inform Bell that the wrong defendant had been sued and that Lantz had incurred unnecessary attorney’s fees. In response to these claims, the court noted that Lantz had “denied liability at his first opportunity.” The court also opined that, while defense counsel is not required to take the most economical defense strategy in defending a copyright lawsuit, it appeared that the “most economical approach feasible” may have been taken.

With all Fogerty factors weighing against Bell and no viable opposition permitting either an escape from fees and costs or a lessening of the amount, the court awarded to Defendant Lantz $33,974.65, the full amount requested.

Practice Tip: The Indiana Lawyer wrote an interesting piece regarding Judge Pratt’s order. That article may be viewed here.

May 1, 2015

Appellate Patent Law: Federal Circuit Affirms that Prior Art was Anticipatory

By Overhauser Law Offices, LLC

Washington, D.C. – The United States Court of Appeals for the Federal Circuit heard an appeal in the matter of Ineos USA LLC v. Berry Plastics Corporation. It affirmed the decision reached by the United States District Court for the Southern District of Texas, Case No. 3:13-cv-00017, regarding the infringement of Patent No. 6,846,863 (the “‘863 patent), which was issued by the U.S. Patent and Trademark Office.

Ineos holds the ‘863 patent, which was directed to polyethylene-based compositions which could be used to form shaped products, such as screw caps for bottles. In a patent lawsuit filed in Texas, Ineos accused Berry Plastics of infringing its ‘863 patent.

Berry Plastics moved for summary judgment that the asserted claims were anticipated independently by various prior art references, including U.S. Patent No. 5,948,846. Prior art incorporated a lubricant to allow the cap to glide better, which facilitated unscrewing the cap. However, in addition to increasing usability, the prior chemical formulations also imparted a bad odor and flavor to food products stored in contact with them. Ineos’ ‘863 patent claimed to have solved this problem by modifying the proportions of polyethylene, lubricants, and additives.

The district court ruled in Berry Plastic’s favor, holding that the ‘863 patent was invalid as anticipated by prior art under 35 U.S.C. § 102 (2006).

Ineos appealed from the district court’s ruling. The Federal Circuit affirmed, holding that Ineos had failed to show that the range claimed by the ‘863 patent was “critical to the operability of [Ineos’] invention.”

April 30, 2015

Supreme Court Holds TTAB Decision Can Have Issue Preclusion Effect

By Overhauser Law Offices, LLC

The Supreme Court on March 24, 2015, held that a Trademark Trial and Appeal Board (TTAB) decision should be given issue preclusion effect when the usages it adjudicated are materially the same as those before a district court. B&B Hardware, Inc. v. Hargis Industries, Inc., U.S., No. 13-352, 3/24/2015.

Reversing an Eighth Circuit decision, the Court found no categorical reason why issue preclusion can never apply. The same likelihood of confusion standard applies for both registration and infringement, Justice Alito explained, even if the TTAB and the district court do not always consider the same usages. A concurring opinion was filed by Justice Ginsburg, who stressed that preclusion will not apply for a great many TTAB decisions. Justice Thomas (joined by Justice Scalia) dissented, objecting to the presumption of preclusion for adjudicating agencies. The Court’s decision is consistent with the position taken in an AIPLA amicus brief filed in this case.

Background

April 28, 2015

Indiana Copyright Litigation: Magistrate Rejects Malibu Media’s Request for Fees and Sanctions

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Magistrate Judge Mark J. Dinsmore recommended that Judge William T. Lawrence deny Malibu Media’s motion for fees and sanctions against two Defendants and copyright lawyer Jonathan Phillips.

This Indiana federal lawsuit involves allegations of the use of BitTorrent to illegally download copyrighted adult films. Plaintiff Malibu Media, LLC of Malibu, California initiated copyright litigation in the Southern District of Indiana alleging that Charles and Kelley Tashiro, husband and wife, violated its intellectual property rights by downloading copyrighted videos without authorization.

On the morning of a scheduled evidentiary hearing in the matter, attorney Phillips, who at the time represented both husband and wife, learned of Mr. Tashiro’s intent to invoke his Fifth Amendment rights to avoid testifying about certain matters. The defense attorney for the Tashiros advised the court that, as a result, a conflict of interest between husband and wife had arisen and that he would be withdrawing as the defense attorney for Mr. Tashiro. As a result, the court postponed that day’s hearing.

Malibu Media subsequently filed a motion asking the court for sanctions, seeking to hold Mr. Tashiro and his copyright attorney jointly and severally liable for the costs and fees incurred in its preparations for the postponed hearing. Malibu Media contended that the defense lawyer’s failure to recognize the conflict of interest between the two Defendants in a timely manner had required Malibu Media to incur unnecessary expenses for the evidentiary hearing. More specifically, Malibu Media contended that it incurred several thousand dollars in unnecessary fees, travel expenses, and other costs. It sought to recover those fees, expenses, and costs 1) under Federal Rule of Civil Procedure 37; 2) under 28 U.S.C. § 1927; 3) through an exercise of the court’s inherent authority; and 4) under Federal Rule of Civil Procedure 16.

Magistrate Judge Dinsmore first concluded that FRCP 37 was inapplicable, as it was generally appropriate for “disputes or misconduct during discovery” and the delay of the evidentiary hearing had not resulted from discovery misconduct.

Plaintiff’s claim under 28 U.S.C. § 1927 was also rejected. That section provides that the court may order costs, expenses, and attorneys’ fees incurred as a result of an attorney’s unreasonable or vexatious expansion of the proceedings in litigation.

Malibu Media asserted that this section applied because the copyright attorney’s failure to timely recognize a conflict of interest between the husband-and-wife Defendants failed to meet the standard of care required of attorneys. The court disagreed, stating that the case had involved no incompatibility of the copyright Defendants’ positions, as both had steadfastly asserted that neither had infringed any of Malibu Media’s copyrighted material and that no evidence had been destroyed. Consequently, the defense attorney’s belief that he could provide concurrent representation to both Defendants was neither unreasonable nor vexatious and, thus, relief under 28 U.S.C. § 1927 was unavailable.

Moreover, the court explained, even had § 1927 applied, it provided recompense only for the excess costs and fees incurred – those that would not have been otherwise necessary. Because much of the material prepared by intellectual property counsel for Malibu Media would likely prove useful later in the litigation, those costs and fees had not been incurred unnecessarily.

Magistrate Judge Dinsmore also rejected Malibu Media’s argument that the court should sanction Mr. Tashiro and the defense attorney under the inherent authority that the court holds to manage its affairs through the sanctioning of a party that has abused the judicial process. The court had already determined during its analysis under § 1927 that the defense attorney had acted neither unreasonably nor vexatiously. Thus, a sanction against the defense attorney for abuse of process was similarly found to be improper. The court also declined to hold that Mr. Tashiro’s decision to invoke his Fifth Amendment rights was an abuse of judicial process.

The court then addressed Malibu Media’s contention that Federal Rule of Civil Procedure 16 authorized sanctions in this case. It concluded that, as the rule authorized the imposition of sanctions only in matters regarding scheduling conferences or other pre-trial conferences, it did not apply to the evidentiary hearing at issue in this request for sanctions.

Finally, Magistrate Judge Dinsmore recommended to Judge Lawrence that Malibu Media’s motion, which had been filed without the required statement showing that Plaintiff’s attorney made reasonable efforts to confer with opposing counsel prior to filing the motion for sanctions, be denied for failure to comply with Local Rule 7-1(g).