Indiana Intellectual Property Law News

February 5, 2014

Patent Office Issues 111 Patents To Indiana Citizens in January 2014

The U.S. Patent Office issued the following 111 patent registrations to persons and businesses in Indiana in January 2014, based on applications filed by Indiana patent attorneys:

Pat No.		Title
D698,459		Container
D698,294		Motorcycle license plate
D698,220		Tubular lever
D698,175		Side chair
8,639,547		Method for statistical comparison of occupations by skill sets and other relevant attributes
8,639,403		Modularized hybrid power train control
8,637,740		Omega-9 quality Brassica juncea
8,637,684		Tautomycetin and tautomycetin analog biosynthesis
8,637,533		Inhibitors of human phosphatidylinositol 3-kinase delta
8,637,265		Cathepsin E as a marker of colon cancer
8,637,183		Expanders for lead-acid batteries

February 3, 2014

Indiana Court of Appeals Rules in Favor of Resident’s Daughter in Nursing Facility Dispute

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Alexis Hutchison (“Hutchison”) (pictured right) appealed a small claims court (“trial court”) judgment in favor of Trilogy Health Services, LLC, d/b/a Springhurst Health Campus (“Springhurst”), on Springhurst’s claim against Hutchison and her now-deceased mother, Martha Farber (“Farber”), for payment of services provided to Farber while she was a resident at Springhurst. The Indiana Court of Appeals reversed.

For a number of years, Farber was ill with cancer, requiring various trips to, and stays at, hospitals. After one of her hospital visits, and finding that she was in need of constant care, she became a resident at Springhurst, a skilled nursing facility.

When Farber was admitted to Springhurst, Hutchison signed Springhurst’s Move-In Agreement (“Agreement”) as a “Responsible Party/Agent.” This Agreement stated that, to the extent that Hutchison was authorized to “control[] or access[]” her mother’s assets, she agreed to direct her mother’s income and resources towards any financial obligations which Farber had to Springhurst. Springhurst later contended that Farber and Hutchison, as Farber’s Responsible Party/Agent, owed $1,716.90 for services rendered to Farber. Farber disputed all but a small portion of the charges and Springhurst filed suit against Farber and Hutchinson.

A trial was held. During the trial, Hutchison testified that she was not Farber’s power of attorney and that she had “no authority to use [her] mother’s income for anything.” Hutchison indicated that the only thing she could have done was point out to her mother that a bill was owed. When Hutchison cross examined Dionne Fields (“Fields”), Springhurst’s business office manager, Fields admitted that Springhurst had no documents indicating that Hutchison had any authority over her mother’s financial affairs.

Hutchison also called as a witness her husband, David Hutchison (“David”), who was present when Hutchison signed the Agreement. David testified that Hutchison had asked if signing the Agreement would make her personally financially responsible for her mother’s stay at the nursing facility. The Springhurst representative, he said, had answered with “an emphatic no.”

The trial court found the evidence – including the language of the contract, the assurances of Springhurst that Hutchison would not be held personally liable and the uncontroverted testimony that Hutchison had no power of attorney over her mother – to be unpersuasive. It rendered a general judgment in favor of Springhurst stating that “the court found the plaintiff proved the defendant liable pursuant to contract and Indiana case law for the sum of $2,610.87” but declined to specify further facts or law in support of the judgment.

Hutchison, again acting as her own attorney, appealed this ruling and the Indiana Court of Appeals held in her favor. The appellate court first cited federal limitations that have been enacted regarding the notion of imposing upon one family member financial responsibility for another family member’s care. For example, under 42 U.S.C. §§1396r(c)(5)(A)(ii) and 1395i-3(c)(5)(A)(ii), a nursing home certified as eligible for Medicare or Medicaid reimbursement “must not require a third party guarantee of payment to the facility as a condition of admission . . . to, or continued stay in, the facility.” The Indiana Administrative Code provides a similar restriction in 410 Ind. Admin. Code 16.2-3.1-16.5.

The appellate court then acknowledged that resident rights activists echoed Hutchison’s argument that an agreement to assume the status of a “responsible party,” and the personal financial liability which might accompany that, might be inconsistent with federal law and inherently illegal. The court, however, declined to decide this issue, which was apparently one of first impression in Indiana courts.

The court also declined to address the testimony that Springhurst had assured Hutchison that she would not incur personal financial liability by signing the Agreement.

Instead, the court found the provisions of the Agreement itself, in conjunction with undisputed evidence, to be dispositive. The Agreement stated that Farber “may designate” a person to act on her behalf as a Responsible Party/Agent and that, if such a designation was to be made, “the Resident shall provide the Facility with a copy of a written agreement that authorizes such individual to manage, use, control or access the Resident’s income, financial account(s) or other resources” (emphasis added by the court). It was undisputed that neither Farber nor anyone else had provided Springhurst with any such document; indeed, the unrefuted evidence had been that Springhurst did not possess any such document.

The court noted that Hutchison’s responsibilities, then, were at most “to pay the Facility the full amount of the Resident’s income and resources that the Responsible Party/Agent controls or accesses” (emphasis added by the court). As it was undisputed that Hutchison possessed neither control nor access to Farber’s income and resources, the appellate court concluded that the trial court had clearly erred. It reversed and remanded the matter with instructions to the trial court to enter judgment in favor of Hutchison.

Practice Tip #1: Cases tried before the bench in small claims court are reviewed for clear error and appellate courts are particularly deferential to the trial court in small claims actions. The appellate court, when reviewing the case, will not reweigh the evidence or determine the credibility of witnesses but will consider only the evidence that supports the judgment and the reasonable inferences to be drawn therefrom. Moreover, when a trial court’s judgment is rendered as a “general judgment,” as was the case here, that judgment will be affirmed upon any legal theory consistent with the evidence. Thus, it is very important to put on one’s best possible case to the trial court, as substantial deference is given to the trial court’s findings.

Practice Tip #2: While this case was not an Indiana intellectual property case, we include it in the Indiana Intellectual Property Law Blog to congratulate Alexis Hutchison, a valued and talented member of the Overhauser Law Offices team, on her well-deserved success in litigating this matter.

January 30, 2014

Lilly Sues Glenmark Generics for Over Proposed Manufacture and Sale of Generic Version of ALIMTA®

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Indiana patent attorneys for Eli Lilly and Company of Indianapolis, Indiana (“Lilly”) filed a lawsuit in the Southern District of Indiana alleging that Glenmark Generics, Inc., USA of Mahwah, New Jersey (“Glenmark”) infringed Antifolate Combination Therapies, Patent No. 7,772,209, which has been issued by the U.S. Patent Office.

Lilly is engaged in the business of research, development, manufacture and sale of pharmaceutical products worldwide. Glenmark is in the business of distributing, selling, and offering to sell drug products throughout the United States.

ALIMTA®, which is allegedly licensed to Lilly, is a chemotherapy agent used for the treatment of various types of cancer. ALIMTA® is composed of the pharmaceutical chemical pemetrexed disodium. It is indicated, in combination with cisplatin, (a) for the treatment of patients with malignant pleural mesothelioma, or (b) for the initial treatment of locally advanced or metastatic nonsquamous non-small cell lung cancer. ALIMTA® also is indicated as a single agent for the treatment of patients with locally advanced or metastatic nonsquamous non-small cell lung cancer after prior chemotherapy. Additionally, ALIMTA® is indicated for maintenance treatment of patients with locally advanced or metastatic nonsquamous non-small cell lung cancer whose disease has not progressed after four cycles of platinum-based first-line chemotherapy. One or more claims of U.S. Patent No. 7,772,209 (“the ‘209 patent”) cover a method of administering pemetrexed disodium to a patient in need thereof that also involves administration of folic acid and vitamin B12.

This Indiana patent infringement lawsuit arises out of the filing by Defendant Glenmark of an Abbreviated New Drug Application (“ANDA”) with the U.S. Food and Drug Administration (“FDA”) seeking approval to manufacture and sell generic versions of ALIMTA® prior to the expiration of the ‘209 patent. Glenmark filed as a part of ANDA No. 205526 a certification of the type described in Section 505(j)(2)(A)(vii)(IV) of the Food, Drug and Cosmetic Act, 21 U.S.C. § 55(j)(2)(A)(vii)(IV), with respect to the ‘209 patent, asserting that the claims of the ‘209 patent are invalid, unenforceable, and/or not infringed by the manufacture, use, offer for sale, or sale of Glenmark’s ANDA products.

In its complaint, filed by an Indiana patent lawyer, Lilly states that Glenmark intends to engage in the manufacture, use, offer for sale, sale, marketing, distribution, and/or importation of Glenmark’s ANDA Products and the proposed labeling therefor immediately and imminently upon approval of ANDA No. 205526, i.e., prior to the expiration of the ‘209 patent. Lilly asserts that Glenmark’s actions constitute and/or will constitute infringement of the ‘209 patent, active inducement of infringement of the ‘209 patent, and contribution to the infringement by others of the ‘209 patent.

Lilly asks for:

• A judgment that Glenmark has infringed the ‘209 patent and/or will infringe, actively induce infringement of, and/or contribute to infringement by others of the ‘209 patent;
• A judgment ordering that the effective date of any FDA approval for Glenmark to make, use, offer for sale, sell, market, distribute, or import Glenmark’s ANDA Products, or any product the use of which infringes the ‘209 patent, be not earlier than the expiration date of the ‘209 patent, inclusive of any extension(s) and additional period(s) of exclusivity;
• A preliminary and permanent injunction enjoining Glenmark, and all persons acting in concert with Glenmark, from making, using, selling, offering for sale, marketing, distributing, or importing Glenmark’s ANDA Products, or any product the use of which infringes the ‘209 patent, or the inducement of or contribution to any of the foregoing, prior to the expiration date of the ‘209 patent, inclusive of any extension(s) and additional period(s) of exclusivity;
• A judgment declaring that making, using, selling, offering for sale, marketing, distributing, or importing of Glenmark’s ANDA Products, or any product the use of which infringes the ‘209 patent, prior to the expiration date of the ‘209 patent, infringes, will infringe, will actively induce infringement of, and/or will contribute to the infringement by others of the ‘209 patent;
• A declaration that this is an exceptional case and an award of attorneys’ fees pursuant to 35 U.S.C. § 285; and
• An award of Lilly’s costs and expenses in this action.

Practice Tip: The FDA’s ANDA process for generic drugs has been abbreviated such that, in general, the generic drug seeking approval does not require pre-clinical (animal and in vitro) testing. Instead, the process focuses on establishing that the product is bioequivalent to the “innovator” drug that has already undergone the full approval process. The statute that created the abbreviated process, however, had also created some interesting issues with respect to the period of exclusivity. For a look at some of these issues, see here.

January 29, 2014

Sixteen Doe Defendants Alleged to Have Infringed “Charlie Countryman”

By Overhauser Law Offices, LLC

South Bend, Indiana – Michigan copyright attorney Paul Nicoletti, on behalf of Countryman Nevada, LLC (“Countryman”), sued in the Northern District of Indiana alleging that 16 unidentified John Does infringed the copyright of the motion picture “Charlie Countryman,” which has been registered by the U.S. Copyright Office. The movie stars Shia LaBeouf, Evan Rachel Wood and Mads Mikkelsen. It was directed by Fredrick Bond.

Countryman alleges that the infringing transfer and copying of this movie, which was released on DVD in January 2014, was accomplished by Defendants using BitTorrent, a peer-to-peer file-sharing protocol. Plaintiff states that the BitTorrent protocol makes even small computers with low bandwidth capable of participating in large data transfers for copying large files such as movies.

In this Indiana lawsuit, the Doe Defendants are accused of deliberately participating in a peer-to-peer “swarm” and illegally reproducing and/or distributing portions of the movie “Countryman” in digital form with other Defendants. Countryman indicates in its complaint that it used geolocation technology to determine that the Doe Defendants were located in Indiana.

The complaint lists a single count: copyright infringement. The copyright lawyer for Plaintiff Countryman asks the court for permanent injunctions prohibiting infringement of Plaintiff’s movie by all Doe Defendants; the destruction of all copies of infringing works in any Defendant’s control; judgment that Defendants have willfully infringed Plaintiff’s copyrighted work; judgment that Defendants have otherwise injured the business reputation and business of Plaintiffs; actual damages or statutory damages; an order impounding all infringing copies of Plaintiff’s movie; attorneys’ fees and litigation expenses.

Practice Tip: This is at least the second movie starring Shia LaBeouf which is the subject of copyright litigation in Indiana. In October 2013, a similar Indiana lawsuit regarding “The Company You Keep,” also starring LaBeouf, was filed in the Southern District of Indiana. That lawsuit was also filed by copyright lawyer Nicoletti. In addition to these lawsuits filed by the owners of the copyrighted movies, LaBeouf seems to have intellectual property concerns of his own, most recently having been served with another cease and desist letter for posts to his Twitter feed.

January 27, 2014

Eli Lilly Sues Par Pharmaceutical Asserting Patent Infringement of Effient®

By Overhauser Law Offices, LLC

Indianapolis, Indiana – An Indiana patent attorney sued in the Southern District of Indiana on behalf of Eli Lilly and Company of Indianapolis, Indiana; Daiichi Sankyo Co., Ltd. of Tokyo, Japan (“Daiichi Sankyo”); Daiichi Sankyo, Inc. of Parsippany, New Jersey (“DSI”); and Ube Industries, Ltd. of Yamaguchi, Japan alleging that Par Pharmaceutical Companies, Inc. (“Par Pharmaceutical Companies”) and Par Pharmaceutical, Inc. (“Par”), both of Woodcliff Lake, New Jersey, (collectively “Par Pharmaceutical”) infringed Medicinal Compositions Containing Aspirin, Patent No. 8,404,703 (the “‘703 patent”) and Method of Treatment and Coadministration of Aspirin and Prasugrel, Patent No. 8,569,325 (the “‘325 patent”), which have been issued by the U.S. Patent Office.

This is a civil action for patent infringement. It arises out of the filing by Defendant Par of an Abbreviated New Drug Application (“ANDA”) with the United States Food and Drug Administration (“FDA”) seeking approval to manufacture and sell generic versions of two of Lilly’s pharmaceutical products, Effient® 5mg and Effient® 10mg tablets, prior to the expiration of Daiichi Sankyo’s and Ube’s U.S. patents, which purportedly cover methods of using Effient® products. Lilly asserts that it holds an exclusive license to these products. DSI currently co-promotes Effient® products in the United States with Lilly.

Effient® products were approved by the FDA for the reduction of thrombotic cardiovascular events in certain patients with acute coronary syndrome (ACS) who are to be managed with percutaneous coronary intervention (PCI, or angioplasty). The instructions accompanying Effient® products state that patients taking Effient® products should also take aspirin. The use of Effient® products in combination with aspirin for the reduction of thrombotic cardiovascular events in patients with ACS who are to be managed with PCI is covered by the claims of the ‘703 and ‘325 patents.

Par has submitted an Abbreviated New Drug Application (the “Par ANDA”) to the FDA pursuant to 21 U.S.C. § 355(j), seeking approval to market a generic version of Lilly’s product for oral administration (the “Par Products”) in the United States.

Plaintiffs assert that Par will knowingly include with the Par Products instructions for use that substantially copy the instructions for Effient® products, including instructions for administering the Par Products with aspirin as claimed in the ‘703 and ‘325 patents. Moreover, Plaintiffs contend that Par knows that the instructions that will accompany the Par Products will induce and/or contribute to others using the Par Products in the manner set forth in the instructions. Plaintiffs also contend that Par specifically intends that health care providers, and/or patients will use the Par Products in accordance with the instructions provided by Par to directly infringe one or more claims of the ‘703 and ‘325 patents. Par therefore will actively induce and/or contribute to infringement of the ‘703 and ‘325 patents, state Plaintiffs.

In the complaint, the Indiana patent lawyer for Plaintiffs listed the following counts:

• Count I: Infringement of U.S. Patent No. 8,404,703
• Count II: Declaratory Judgment of Infringement of U.S. Patent No. 8,404,703
• Count III: Infringement of U.S. Patent No. 8,569,325
• Count IV: Declaratory Judgment of Infringement of U.S. Patent No. 8,569,325

Plaintiffs ask the court for judgment:

A. That Defendants, either individually or collectively, have infringed or will infringe, after the Par ANDA is approved, one or more claims of the ‘703 patent;
B. That Defendants, either individually or collectively, have infringed or will infringe, after the Par ANDA is approved, one or more claims of the ‘325 patent;
C. That, pursuant to 35 U.S.C. § 271(e)(4)(B), Par and Par Pharmaceutical Companies be permanently enjoined from making, using, selling or offering to sell either or both of the Par Products within the United States, or importing either or both of the Par Products into the United States prior to the expiration of the ‘703 and ‘325 patents;
D. That, pursuant to 35 U.S.C. § 271(e)(4)(A), the effective date of any approval of the Par ANDA under § 505(j) of the Federal Food, Drug and Cosmetic Act (21 U.S.C. § 355(j)) shall not be earlier than the latest of the expiration dates of the ‘703 and ‘325 patents, including any extensions;
E. A judgment declaring that the ‘703 patent remains valid and enforceable;
F. A judgment declaring that the ‘325 patent remains valid and enforceable;
G. If either Par or Par Pharmaceutical Companies commercially makes, uses, sells or offers to sell either or both of the Par Products within the United States, or imports either or both of the Par Products into the United States, prior to the expiration of either of the ‘703 and ‘325 patents, including any extensions, that Plaintiffs will be awarded monetary damages for those infringing acts to the fullest extent allowed by law and be awarded prejudgment interest based on those monetary damages;
H. That this case be deemed exceptional under 35 U.S.C. § 285; and
I. That Plaintiffs be awarded reasonable attorney’s fees, costs and expenses.

Practice Tip: Lilly is not an infrequent litigant. This may be in part due to the fact that the company is facing a significant patent cliff. Its patent for a former top product, the antipsychotic Zyprexa – which once generated $5 billion in annual revenues – expired in 2011. Its top-selling drug of 2013, the antidepressant Cymbalta, lost patent protection last year. The patent on blockbuster Evista, a drug for breast cancer and osteoporosis, will expire this March.

January 24, 2014

USPTO Ranks #1 in Best Places to Work in the Federal Government

By Overhauser Law Offices, LLC

WASHINGTON, D.C. – The federal government’s annual employee survey finds that the USPTO tops the list of 371 federal agency subcomponents.

The U.S. Department of Commerce’s United States Patent and Trademark Office (“USPTO”) was named number one out of 300 agency subcomponents in the 2013 Best Places to Work in the Federal Government rankings released recently by the non-profit Partnership for Public Service (“PPS”). The annual report is based on a survey of more than 700,000 civil servants from 371 federal agencies and subcomponents conducted in 2013 by the Office of Personnel Management (“OPM”). The USPTO has consistently risen in the Best Places to Work rankings since 2009, ranking fifth in its category last year.

“This is a tremendous tribute to the tireless dedication of our hardworking employees, unions, and agency leaders,” said Commissioner for Patents Margaret A. (Peggy) Focarino (pictured below). “Our employees have faced significant challenges, including the impact of budget sequestration despite being a fully fee-funded agency, and the completion of our implementation of the Leahy-Smith America Invents Act, the most sweeping overhaul of our nation’s patent system in generations. Yet despite those challenges we maintained our upward momentum in being recognized by our employees as a Best Place to Work in the federal government.”

January 23, 2014

NCAA Heard in Federal Court Again on Antitrust and Right-of-Publicity Issues

By Overhauser Law Offices, LLC

Oakland, California – District Judge Claudia Wilkin (pictured) issued a new order regarding in re NCAA Student-Athlete Name & Likeness Licensing Litigation, a putative class action involving the Indianapolis-based National Collegiate Athletic Association (“NCAA”). The NCAA’s motion to dismiss on, inter alia, copyright and First-Amendment grounds was denied.

In this action, Plaintiffs, a group of twenty-five current and former college athletes who played for NCAA men’s football or basketball teams between 1953 and the present, pursued a putative class action against Defendant NCAA. They initially brought claims against Collegiate Licensing Company (“CLC”) and Electronic Arts Inc. (“EA”) as well, but agreed to settle those claims before this order was issued.

At the time of this order, four of the Plaintiffs (the “Right-of-Publicity Plaintiffs”) alleged that the NCAA misappropriated their names, images and likenesses in violation of their statutory and common law rights of publicity. In contrast, the other twenty-one Plaintiffs (the “Antitrust Plaintiffs”) alleged that the NCAA violated federal antitrust law by conspiring with EA and CLC to restrain competition in the market for the commercial use of their names, images and likenesses. This order addressed only the latter set of claims, which arise under the Sherman Antitrust Act, 15 U.S.C. § 1 et seq.

To be eligible to compete, the NCAA required student athletes to release in perpetuity all rights to the commercial use of their images. The Antitrust Plaintiffs contend that the “purposefully misleading” release forms then allowed the NCAA to sell or license the athletes’ identities to others.

In addition to the release that the athletes had signed, a price-fixing conspiracy/group boycott prevented the athletes from being able to pursue compensation for the licensing of their identities even after they stopped competing. This allegedly interfered with their ability to market “group licensing rights” for their identities in game broadcasts, rebroadcasts and video games. Because many of these Plaintiffs also went on to play professionally, such rights could be of considerable value.

Intellectual property attorneys for the NCAA argued that assertions of a right of publicity of student athletes in the context of game broadcasts were barred by the First Amendment as well as California statute. The court was not persuaded by either argument. On the First Amendment argument, the court held that, while the original broadcast might enjoy protection, “subsequent unauthorized reproductions” did not.

Likewise, the California statute cited by the intellectual property lawyers for the NCAA was not persuasive to the court. That statute provided that the athletes had no right of publicity in the “use of [his or her] name, voice, signature, photograph, or likeness in connection with any news, public affairs, or sports broadcast or account.” However, the court held that such right-of-publicity restrictions did not apply to licensing in other states that lacked similar statutes.

The court also rejected the NCAA’s copyright-preemption argument on two grounds. First, this was not properly considered under the law of copyright. The athletes were not asserting intellectual property rights under copyright law but rather sought to license their personas. As a persona cannot be copyrighted, copyright preemption did not apply. Moreover, the Plaintiffs’ claims were not of simple theft of intellectual property. They also asserted a broader antitrust right – to prevent injury to competition. Citing United States v. Microsoft Corp., 253 F.3d 34, 63 (D.C. Cir. 2001), the court stated, “[I]ntellectual property rights do not confer a privilege to violate the antitrust laws” and denied the NCAA’s motion to dismiss.

Practice Tip: The NCAA has been heard before on claims under the Sherman Act. NCAA v. Board of Regents, 468 U.S. 85 (1984). In that decision, the Court acknowledged that the NCAA must be given some leeway to adopt anticompetitive rules violating the Sherman Act, concluding that intercollegiate athletics is “an industry in which horizontal restraints on competition are essential if the product is to be available at all.”

January 22, 2014

Virginia District Court Awards Attorneys’ Fees to USPTO

By Overhauser Law Offices, LLC

Alexandria, Virginia – The District Court for the Eastern District of Virginia held in Shammas v. Focarino that the United States Patent and Trademark Office (“USPTO”) was entitled to recover attorneys’ fees when brought to court for a review of Trademark Trial and Appeal Board (“TTAB”) rulings.

An examiner for the USPTO had refused to register a trademark for the term PROBIOTIC for a fertilizer on the grounds that it was a generic term for fertilizers and, in the alternative, was descriptive with no secondary meaning. Plaintiff Milo Shammas brought the matter to the TTAB, which affirmed. Shammas then asked for a review of the TTAB decision under 15 U.S.C. 1071(b)(1) in the District Court for the Eastern District of Virginia.

Summary judgment was granted in favor of the USPTO, which then moved for fees and expenses under Section 21(b)(3) of the Lanham Act. Section 21(b)(3) provides that, in cases such as these, “all the expenses of the proceeding shall be paid by the party bringing the case, whether the final decision is in favor of such party or not.”

Shammus argued that it would be improper to award attorneys’ fees, as they were not included in the statutory term “expenses.” The court was not convinced, however, and held that the plain meaning of “expenses” included both attorneys’ fees and other costs. This interpretation, the court explained, was further bolstered by Congress’s inclusion of the word “all” before “expenses.”

In determining the correct measure of fees due, the court noted that, while using market rates for legal services is appropriate when calculating “reasonable attorneys’ fees,” an award of “expenses” must be based on the actual salaries (when calculated on a per-hour basis) of the government trademark lawyers who defended the action. Thus, in this case, where the statute provided for “expenses,” attorneys’ fees were properly based on the actual hourly rate paid to the attorneys.

Practice Tip #1: The American legal system typically requires each party to bear its own litigation expenses, including attorneys’ fees, regardless of the outcome of the case.

Practice Tip #2: This fee-shifting decision was a matter of first impression regarding Section 21(b)(3) of the Lanham Act. It held that “expenses” as contemplated therein included attorneys’ fees. Moreover, ex parte plaintiffs must pay those expenses whether or not they prevail on the merits.

Practice Tip #3: Section 1071 was characterized as “arguably an odd statute” by the court. The court remarked that the statute “provides unsuccessful trademark applicants with a choice between an appeal to the Court of Appeals for the Federal Circuit on the administrative record, or alternatively, an action in federal district court where the administrative record may be supplemented with new evidence. Congress’s decision to allow this choice is odd for several reasons. First, it serves to lessen the trademark applicant’s incentive to put her best evidentiary foot forward before the PTO given that if she fails before the PTO, she can supplement the record in the district court. Moreover, Congress no sooner provides this choice than it takes an energetic step to discourage its use by requiring the unsuccessful applicant who files the district court suit under § 1071(b) to pay all expenses of the district court proceeding, win, lose or draw. This could lead to an anomalous result where the applicant must pay the PTO’s expenses of the district court proceeding even where the PTO loses in the district court on the administrative record alone and no new evidence is admitted or considered. In this circumstance, there is little reason to saddle the unsuccessful applicant with the PTO’s expenses. A second anomalous result is that the statute invites forum shopping. By allowing an action to be filed in a district court in lieu of an appeal to the Court of Appeals for the Federal Circuit, the statute invites an unsuccessful applicant to pick a district court in a favorable circuit because the appeal will be to the circuit in which the district court sits, not to the Court of Appeals to the Federal Circuit.”

Practice Tip #4: When determining whether to use market rates or actual attorney-fee expenses in fee-shifting cases, the Seventh Circuit has reached a conclusion similar to the decision in this case. The Seventh Circuit has determined, for example, that it is incorrect to use the prevailing market rate to determine an award of attorneys’ fees under 28 U.S.C. § 1447(c) because the statute limited fee awards to “actual expenses, including attorney’s fees, incurred.” See Wisconsin v. Hotline Indus., Inc., 236 F.3d 363, 367 (7th Cir. 2000).

January 17, 2014

Global Patent Filings See Fastest Growth in 18 Years

By Overhauser Law Offices, LLC

Geneva, Switzerland – A new World Intellectual Property Organization (“WIPO”) report shows that in 2012 global patent filings increased at their strongest rate in nearly two decades as industrial-design registration notched its best-ever rate of growth. Intellectual property (“IP”) filings have sharply rebounded since a 2009 decline at the height of the financial crisis.

The report shows patent filings grew by 9.2% (2.35 million applications filed) in 2012. Utility model (“UM”) filings increased by 23.4%, industrial design filings by 17%, and trademark filings by 6.0%.

The 2013 edition of the World Intellectual Property Indicators also shows that, for the first time, China tops the ranking for both the source (filings by China) and the destination (filed in China) for the four types of IP (patents, utility models, trademarks and industrial designs). Of the top five IP offices worldwide, the State Intellectual Property Office of the People’s Republic of China (“SIPO”) was alone in recording double-digit growth for each of the four types of IP. Continued rapid filing growth in China is the main driver of global IP growth.

January 16, 2014

Fourth Circuit Affirms Districts Court’s Injunction and Admission of Evidence in False Advertising Case

By Overhauser Law Offices, LLC

Richmond, Virginia – PBM Products, LLC (“PBM”) sued Mead Johnson & Company, LLC (“Mead Johnson”) alleging false advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A) and (B), and commercial disparagement. Mead Johnson filed counterclaims against PBM. The district court dismissed the counterclaims and entered an injunction against Mead Johnson. Mead Johnson appealed. The United States Court of Appeals for the Fourth Circuit affirmed.

PBM produces store-brand, “generic,” infant formula. Mead Johnson produces baby formula products under the brand name Enfamil, including a standard formula, a formula with broken-down proteins, and a formula with added rice starch. Both companies use the same supplier for two key nutrients–docosahexaenoic acid (DHA) and arachidonic acid (ARA)–which are important to an infant’s brain and eye development. Mead Johnson calls these nutrients by their brand name “Lipil,” while PBM describes them generically as “lipids.” Both companies use the same level of the lipids. As a result, PBM includes a comparative advertising label on their formula that states, “Compare to Enfamil.”

PBM sued Mead Johnson under the Lanham Act, 15 U.S.C. § 1125(a), alleging that Mead Johnson engaged in false advertising and commercial disparagement when it distributed more than 1.5 million direct-to-consumer mailers that falsely claimed that PBM’s baby formula products were inferior to Mead Johnson’s baby formula products.

Mead Johnson filed counterclaims against PBM alleging breach of contract, defamation, false advertising, and civil contempt. Mead Johnson’s defamation counterclaim was based primarily on a press release issued by PBM CEO Paul Manning declaring that “Mead Johnson Lies About Baby Formula … Again.” Mead Johnson’s false advertising counterclaim alleged that labels on PBM’s products conveyed several implied messages comparing PBM and Mead Johnson’s formulas. Mead Johnson’s breach of contract and civil contempt counterclaims related to prior litigation between the parties.

After a jury found that Mead Johnson had engaged in false advertising, the district court issued an injunction prohibiting Mead Johnson from making similar claims, which enjoined all four advertising claims that Mead Johnson had made, including the express claim that “only Enfamil LIPIL is clinically proven to improve brain and eye development.”

On appeal, Mead Johnson presented three clusters of issues for review by the Fourth Circuit: (1) whether the district court erred in its dismissal of Mead Johnson’s counterclaims; (2) whether the district court abused its discretion in its admission of expert opinion testimony and evidence of prior litigation between the parties; and (3) whether the district court erred or abused its discretion in issuing the injunction.

The dismissals of Mead Johnson’s counterclaims for breach of contract, defamation, false advertising, and civil contempt were all affirmed. The allegedly defamatory statement “Mead Johnson Lies About Baby Formula … Again” was held to be true, as it was found that Mead Johnson had made false statements prior to the publication of PBM’s press release (“Mead Johnson Lies”) and had also made previous false statements about PBM’s baby formula (the “Again” portion of the PBM’s press release). The dismissal of the defamation claim on summary judgment was held to be proper as no false statement had been made.

The Fourth Circuit then upheld the district court’s disposal of Mead Johnson’s Lanham Act counterclaims as a matter of law. Those claims accruing prior to the two-year statute of limitations were affirmed to be time-barred. Claims accruing after that period were affirmed as correctly estopped under the equitable principle of laches.

The Fourth Circuit also held that the district court did not err in granting judgment as a matter of law on Mead Johnson’s Lanham Act counterclaim concerning PBM’s rice starch formula advertisements, holding that the district court had properly concluded that, because the consumer surveys that had been conducted by Mead Johnson had failed to address the allegations in the lawsuit, no relevant evidence had been produced by Mead Johnson on this claim. Moreover, it was held that Mead Johnson had failed to show either falsity of the statements or that any damage was caused by any of the “compare to Enfamil” language that had been used by PBM.

The appellate court then addressed Mead Johnson’s contention that the district court erred by admitting (1) expert survey evidence and (2) evidence of prior Lanham Act litigation between the parties. These decisions were reviewed for abuse of discretion.

Mead Johnson had argued that the survey evidence offered by PBM should be excluded as the consumers involved in the survey did not exactly match the “universe” of consumers appropriate to this litigation. The district court was not convinced. It noted that “while Mead Johnson has pointed out numerous ways in which it would have conducted [the] survey differently, its arguments do not demonstrate that the methods used were not of the type considered reliable by experts . . . .” The district court concluded that the possibility that the survey had targeted the wrong universe went to the weight to be accorded to the survey, not to its admissibility. The appellate court cited a Seventh Circuit case, AHP Subsidiary Holding Co. v. Stuart Hale Co., which noted that “[w]hile there will be occasions when the proffered survey is so flawed as to be completely unhelpful to the trier of fact and therefore inadmissible, such situations will be rare” and affirmed the district court’s conclusion “without difficulty.”

Mead Johnson also had also asserted that the district court had erred in admitting evidence of the 2001 and 2002 Lanham Act lawsuits filed by PBM, contending that the evidence was irrelevant and more prejudicial than probative. The Fourth Circuit found that the history of prior litigation was both relevant and that its probative value was not substantially outweighed by any danger of unfair prejudice. Moreover, in upholding the trial court’s ruling, the appellate court opined that a district court’s decision to admit evidence over an objection based on the potential for unfair prejudice “will not be overturned except under the most extraordinary circumstances, where [the district court’s] discretion has been plainly abused.”

The Fourth Circuit then turned to Mead Johnson’s contention that the injunction issued by the district court had been improper. Mead Johnson argued that the injunction was improper for two reasons. First, it asserted that PBM failed to establish any risk of recurrence of the violation. Second, it argued that the scope of the injunction was too broad, as it prohibited conduct that PBM had not proved at trial and that it was beyond the harm PBM sought to redress.

The appellate court was not persuaded. At trial, the jury had returned a verdict in favor of PBM on its false advertising claim and had awarded PBM $13.5 million in damages. In such a case, where a violation has been established and the party seeking the injunction has made a showing that such an injunction is proper, section 1116(a) of the Lanham Act vests district courts with the “power to grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable, to … prevent a violation under [§ 1125(a) of the Lanham Act].” The Fourth Circuit held that a showing sufficient to support the district court’s injunction had been made and upheld the lower court’s ruling. The appellate court further indicated that the injunction was proper as, “PBM cannot fairly compete with Mead Johnson unless and until Mead Johnson stops infecting the marketplace with misleading advertising.”

Finally, Mead Johnson argued that, because the general jury verdict did not specify which of the four statements in the mailer the jury found to be false and/or misleading, the district court’s injunction must be limited only to the mailer or other advertisements not colorably different from the mailer. The Fourth Circuit rejected the narrow construction suggested by Mead Johnson. It noted again that, inter alia, Mead Johnson’s claim that it was the “only clinically proven” formula had been found to be misleading by the district court. It concluded that because the district court’s interpretation of the jury verdict was plausible in light of the record viewed in its entirety, the factual findings upon which it based the scope of its injunction could not as a matter of law be clearly erroneous. Consequently, the scope of the injunction also was affirmed.

Practice Tip #1: These parties are familiar combatants on the Lanham Act battlefield. For example, in 2001, Mead Johnson distributed brochures and tear-off notepads to patients in pediatricians’ offices stating that store-brand formula did not have sufficient calcium or folic acid. PBM sued and obtained a restraining order prohibiting Mead Johnson from making similar statements. The parties settled that dispute. Then, in 2002, Mead Johnson distributed a chart to physicians stating that store-brand formula did not contain beneficial nucleotides. PBM sued and, again, the parties settled.

Practice Tip #2: The Lanham Act prohibits the “false or misleading description of fact, or false or misleading representation of fact, which … in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities.” 15 U.S.C.A. § 1125(a)(1)(B).

Practice Tip #3: In the Seventh Circuit, as with other federal circuits, “[A] court may find on its own that a statement is literally false, but, absent a literal falsehood, may find that a statement is impliedly misleading only if presented with evidence of actual consumer deception.” Abbott Labs. v. Mead Johnson & Co., 971 F.2d 6, 14 (7th Cir. 1992).

Practice Tip #4: Before an injunction may issue, the party seeking the injunction must demonstrate that (1) it has suffered an irreparable injury; (2) remedies available at law are inadequate; (3) the balance of the hardships favors the party seeking the injunction; and (4) the public interest would not be disserved by the injunction. eBay, Inc. v. MercExchange, 547 U.S. 388, 391 (2006).