On July 29, 2015, with bipartisan support, Congressional leaders in both the House and the Senate introduced identical bills, HR 3326 and S. 1890, respectively, entitled, the “Defend Trade Secrets Act of 2015″ (“DTSA 2015″). The proposed legislation attempts to authorize a private civil action in federal court for the misappropriation of a trade secret that is related to a product or service used in, or intended for use in, interstate or foreign commerce. Additionally, the proposed legislations seeks to (a) create a uniform standard for trade secret misappropriation; (b) provide parties pathways to injunctive relief and compensatory damages; and (c) create remedies for trade secret misappropriation that are similar to other violations of intellectual property rights, for example, including exemplary damages and attorneys’ fees available in the event of willful and malicious misappropriation of a trade secret. An interesting feature of the DTSA 2015 is the availability of an ex parte seizure order for plaintiffs fearful of the dissemination of their trade secret(s). The proposed ex parte seizure allows for the government to seize property necessary to prevent the propagation or dissemination of the trade secret prior to giving notice of the lawsuit to the defendant. Continue Reading
In Equals Three, LLC v. Jukin Media, Inc., the United States District Court for the Central District of California presented an informative “fair use” analysis in a dispute between two media companies over viral videos. The Court’s decision highlights the fact-sensitive nature of the doctrine of fair use. It also clarifies the extent to which a use must be transformative in order to be deemed fair use.
According to the lawsuit, Jukin Media, Inc. (“Jukin”) scours the internet for potential viral videos for use inter alia on its YouTube network or proprietary websites. Subsequently, Jukin enters into licensing agreements with the videos’ creators. Order at 2. Equals Three, LLC (“Equals Three”), the Plaintiff in the lawsuit, also engages in content publishing, which sometimes includes portions of Jukin’s videos. However, Equals Three’s episodes are introduced by a host who provides sarcastic, derisive commentary and facial expressions towards the subjects shown in the videos. Id. at 3. After Equals Three refused to pay Jukin a licensing fee for the use of Jukin’s videos, Jukin filed with YouTube a complaint against Equals Three’s videos, effectively preventing Equals Three from receiving advertising revenue. Id. at 5-6. Equals Three sued, seeking a declaratory judgment and relief under § 512(f) of the Digital Millenium Copyright Act (“DCMA”) for fraudulent takedown notices. Jukin counterclaimed for copyright infringement. Id. at 1-2.
A federal district court in the Northern District of Illinois has refused a request by certain defendants accused of trademark counterfeiting to release funds frozen in PayPal accounts and to increase the amount of a bond posted by the plaintiff in the case. The case highlights an uptick in challenges to financial asset restraints by defendants and nonparties in trademark counterfeiting cases and the discretion courts have in setting an appropriate bond to protect defendants in such cases.
Brand owner Monster Energy Co. (“Monster”) sued hundreds of defendants, alleging that the defendants were offering counterfeit goods for sale on internet stores. A TRO later converted to an injunction required nonparty PayPal, Inc. to locate all accounts and funds connected to the defendants, defendants’ online marketplace accounts or websites, and to restrain and enjoin any such accounts or funds based in China or Hong Kong from transferring or disposing of any money or other assets until further ordered by the court. Id. at par. 8. Accounts were frozen/seized under the ex parte (without prior notice) seizure provisions of the Lanham Act.
Last week, the U.S. Supreme Court granted certiorari to review the standard for willful infringement under 35 U.S.C. § 284. The Court was specifically asked to reject the rigid two-part test set forth by the Federal Circuit in In re Seagate, 497 F.3d 1360 (Fed. Cir. 2007), which requires the court to determine whether an alleged infringer: (1) acted despite an objectively high likelihood that its actions constituted infringement of a valid patent; and (2) this objectively-defined risk was either known or so obvious that it should have been known to the accused infringer.
In the present matter, Halo Electronics Inc. (“Halo”) sued Pulse Electronics Inc. (“Pulse”) alleging that Pulse infringed its patent by shipping infringing product into the U.S. and inducing others to import end products containing the infringing product into the U.S. Halo further alleged that Pulse’s infringement was willful and, thereby, sought enhanced damages under 35 U.S.C. § 284.
Recently, the Federal Circuit, sitting en banc, ruled in SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC that laches remains a viable defense in patent infringement actions. In doing so, the Federal Circuit rejected the extension of the Supreme Court’s 2014 decision in Petrella v. Metro-Goldwyn-Mayer, Inc., which held that the laches defense does not apply in copyright cases because the copyright statute provides a three year statute of limitations for bringing an infringement suit.
Laches, an equitable defense based on the plaintiff’s unreasonable, prejudicial delay in commencing a lawsuit that traditionally precludes pre-suit damages, has long been recognized as a defense to patent infringement.
In State of Vermont v MPHJ Technology Investments, what appears initially as a factual simple matter, presents a complex procedural lesson in the timeliness and basis for removal of a matter from state court to federal court.
The Simple Facts
In 2012, a number of Vermont businesses began receiving correspondence from MPHJ shell corporations alleging patent infringement. As a pattern, a business would receive an initial letter from the MPHJ corporation saying that the business had been identified as using patented technology. The letter included a survey to determine infringement and offered a licensing arrangement. If there was no response from Letter No. 1, Letter Nos. 2 and 3 would follow from MPHJ’s counsel, stating that the lack of a response was an admission and implying that litigation would follow.
The State of Vermont received a number of complaints from businesses, and in 2013 filed a complaint against MPHJ, alleging unfair trade practices and deceptive trade practices under the Vermont Consumer Protection Act (VCPA). The State sought to permanently enjoin MPHJ from (1) “engaging in any business activity in, into or from Vermont that violates Vermont law” and (2) “threatening Vermont businesses with patent-infringement lawsuits. MPHJ then attempted several procedural moves to remove the case to federal court.
After more than five years of litigating access to documents requested in a subpoena directed to a nonparty foreign bank, the district court in Gucci Am. Inc. v. Weixing Li has ordered the bank to produce the documents, despite objections from the bank that production would violate Chinese law. The decision written by Judge Sullivan of the Southern District of New York, is an important decision for brand owners seeking to obtain financial documentation related to the sale of allegedly counterfeit goods.
As detailed in a prior post, the case was brought in 2010 by a brand owner and its affiliates against defendants accused of trademark counterfeiting. After a court-ordered preliminary injunction (i) prohibited banks with notice of the order from transferring any money from defendants’ bank accounts and (ii) required subpoenaed third parties to produce responsive documents within ten days, the plaintiffs served a subpoena on a U.S. branch of the Bank of China (BOC) seeking defendants’ account information. The brand owner plaintiffs had obtained evidence that certain defendants had wired sales proceeds to accounts at the Chinese headquarters of BOC. BOC filed objections to the subpoena, arguing that production of the documents would violate Chinese law. The district court ordered the bank to comply with the subpoena. The bank appealed to the Second Circuit.
The United States Court of Appeals for the Federal Circuit is deciding whether to reconsider en banc its panel decision in Ariosa Diagnostics, Inc. v. Sequenom, Inc. Numerous amici have lined up in support of rehearing. At stake is what room recent U.S. Supreme Court jurisprudence leaves for obtaining patent claims involving diagnostic innovations that use established processes.
The patent claims methods of using cell-free fetal DNA (“cffDNA”). Id. at 3. The Sequenom researchers who obtained the patent had discovered that such cffDNA could be found in a pregnant mother’s blood serum and plasma. This discovery meant that information such as the fetus’s gender, paternity, and certain genetic defects could be determined from a mother’s blood sample rather than from riskier and more invasive procedures which obtain genetic material from the placenta or the fetus. Id. at 3-4.
In today’s digital age, cloud computing has lowered the barrier of entry into many marketplaces by providing network access to a shared pool of configurable computing resources. Cloud services allow business to forego upfront capital costs on servers, network infrastructure, and software allowing companies to focus on establishing and differentiating its business instead of worrying about its IT resources. Additionally, it is typically a “pay as you go” service meaning that businesses can scale up or down as needed in real time. However, entrusting a third-party as the sole source of the company’s network, software, and data storage functionality puts the company at risk of losing these services should the provider enter bankruptcy.
Because the majority of cloud computing services provide a “pay as you go” utility-type subscription service under software as a service (SaaS) agreements, they are unlike the typical software license agreements utilized for enterprise software. Software licenses permit the customer to possess and use the software in object code form while under SaaS agreements, the customer only has remote access to the software. This is typically not an issue as long as the software functions properly and data access is maintained. However, without access to the source code, the customer could be at risk of losing access to the software and its data should the cloud service provider enter bankruptcy.
Brand owners are increasingly asserting claims against owners of real property where alleged trademark counterfeiting is taking place. Three recent actions filed in the Southern District of New York, styled Michael Kors, LLC v. Mulberry Street Properties Corp., et. al., 15-cv-5504 (S.D.N.Y.); Michael Kors, LLC v. Canal Venture, Inc. et. al., 15-cv-5788 (S.D.N.Y.); and Michael Kors, LLC v. Mid Center Equities Associates, et. al., 15-cv-5856 (S.D.N.Y.), raise the question of when property owners/lessors can be held jointly and severally liable for damages resulting from the sale of counterfeit goods on their properties.
The Michael Kors LLC (MK) complaints assert various claims against tenants accused of selling counterfeit goods. The complaints further assert a private right of action under N.Y. Real Prop. L. § 231 against the owners of property where these sales have allegedly taken place. MK alleges that the property owners are jointly and severally liable for damages resulting from the sale of allegedly counterfeit goods on these properties. Under section 231 and interpretive case law, property owners may be liable for damages resulting from unlawful activities on their property where they “knowingly” lease or grant possession of space to be used or occupied, in part or in whole, for the manufacture, distribution, sale, or offer for sale of counterfeit goods. Joint and several liability means that these property owners can be found independently liable for the full extent of damages stemming from illicit sales, even where they did not actually sell or participate in any such sales.