Posted on February 7, 2013 by Lisa H. Wang

Proposed Bill Seeks to Answer the Pay for Delay Debate

As the so-called pay for-delay case is ripening for Supreme Court oral argument on March 25, 2013, on Tuesday a bi-partisan group of senators introduced legislation meant to strongly deter such arrangements.

The introduction of the bill, known as the "Preserve Access to Affordable Generics Act," follows an annual FTC report disclosing 40 potential pay-for-delay deals struck in the 2012 fiscal year — a jump from 28 such deals in 2011. The goal of the bill is "to prohibit brand name drug companies from compensating generic drug companies to delay the entry of a generic drug into the market." Such reverse payments (payments made by branded pharmaceutical patent holders to generic challengers to postpone market entry) are considered lawful by some, and anti-competitive by others, including the FTC.

The proposed bill would establish a presumption that a drug related patent infringement settlement agreement has an anticompetitive effect and is unlawful if:

(i) an ANDA filer receives anything of value; and
 

(ii) the ANDA filer agrees to limit or forego research, development, manufacturing, marketing, or sales of the ANDA product for any period of time.

The parties to the agreement could rebut this presumption if they can:

demonstrate by clear and convincing evidence that the pro-competitive benefits of the agreement outweigh the anti-competitive effects of the agreement.

If a violation is found, the bill proposes that each party be subject to a civil penalty up to 3 times the value the party received for violating the bill.

We previously reported on the FTC's petition to the Supreme Court to resolve the apparent circuit split on the issue, where the Eleventh Circuit (followed by the Second and Federal Circuits) upheld reverse payments as long as the anti-competitive effects fall within the scope of the exclusionary potential of the patent, absent sham litigation or fraud; but the Third Circuit (and FTC) believe such payments are presumptively anti-competitive.

Gibbons will continue to monitor and provide updates on this important upcoming decision.


Lisa H. Wang is a Director in the Gibbons Intellectual Property Department. Christopher H. Strate, an Associate in the Gibbons Intellectual Property Department, co-authored this post.
Tags: , , , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link
Posted on January 10, 2013 by Catherine M. Clayton

The GOLD GLOVE Trademark Infringement Action: Will Rawlings Strike Out For Failure to Adequately Plead Its Case?

On January 7, 2013, Cincinnati Reds second baseman, and three-time Gold Glove Award-winner, Brandon Phillips, moved to dismiss Rawlings Sporting Goods Co. Inc.’s (“Rawlings”) trademark infringement action arising from his use of a glove with gold-colored features.

Rawlings is the company that grants baseball players the RAWLINGS GOLD GLOVE AWARD®, which consists of a gold-colored baseball glove attached to a solid base, dating back to 1957. Players who win the award are also given a functional baseball glove that has a metallic gold indicia on it. Last summer, Rawlings sued Phillips and Wilson Sporting Goods Company (“Wilson”) in the Eastern District of Missouri alleging that Wilson’s manufacture of, and Phillips’ use of, a baseball glove with metallic gold-colored webbing, web stitching and lettering infringe Rawlings’ rights in and to its GOLD GLOVE trademarks and the trade dress in its functional glove.

Rawlings’ amended complaint appears to rely on its GOLD GLOVE word marks, and only vaguely alludes to its trade dress, merely describing it as “the common law trade dress embodied in the distinctive famous metallic gold-colored baseball glove that forms the centerpiece of the world famous Rawlings GOLD GLOVE AWARD®.” In his motion to dismiss, Phillips argues that Rawlings’ complaint is fatally defective and should be dismissed because (1) Rawlings failed to meet the minimum pleading requirements for asserting trade dress in the color gold as applied to a baseball glove; and (2) Phillips and Wilson made no use of the words GOLD GLOVE or of any other word mark asserted by Rawlings in the action. Phillips also asserts that Rawlings failed to show any trademark rights in the color gold and that its trademark rights in the word GOLD GLOVE are insufficient to prevent the defendants’ use of the color. In late December, Wilson filed its own motion to dismiss asserting similar arguments.

This case is a good reminder of the distinction between word marks that include the name of a color and trademark rights in the colors themselves. It also cautions IP practitioners to keep in mind the heightened pleading requirements for common law trade dress claims. Rawlings has not yet responded to either motion, and it remains to be seen what its next steps will be. Gibbons will continue to monitor developments in this action.


Catherine M. Clayton is a Director in the Gibbons Intellectual Property Department. Ralph A. Dengler, Counsel to the Gibbons Intellectual Property Department, co-authored this post.
Tags: , , , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link
Posted on December 10, 2012 by Owen J. McKeon

ITC Finds That a "Pattern of Circumvention" is not Required Under Section 337(d)(2) to Obtain a General Exclusion Order

The International Trade Commission (the “ITC”) recently issued its opinion in Certain Lighting Control Devices Including Dimmer Switches and Parts Thereof (IV), Inv. No. 337-TA-776. The ITC opinion addressed whether the complainant had established the facts necessary for a finding of circumvention of a Limited Exclusion Order to justify the issuance of a General Exclusion Order. The ITC ultimately issued the General Exclusion Order sought by the complainant, disagreeing with the findings of the Administrative Law Judge and the recommendation of the Commission Investigative Staff.

As a background point, a Limited Exclusion Order is limited to those products specifically brought to the ITC’s attention as violative of Section 337, which addresses unfair practices in the import trade and especially for enforcing U.S. intellectual property rights at the border. A General Exclusion Order may issue against all infringing articles whether or not they were included in the ITC’s investigation.

The Section 337 investigation at issue stemmed from a complaint by Lutron Electronics Co., Inc. (“Lutron”) relating to the importation and sale of electric dimmer switches that infringe Lutron’s U.S. Patents. Administrative Law Judge Essex’s initial determination granted Lutron’s motion for summary determination in part as the respondents were in default. Specifically, Judge Essex found that the defaulting respondents met the importation requirement and that their accused products infringed at least one claim of the two Lutron patents at issue.

Judge Essex recommended the issuance of a Limited Exclusion Order rather than a General Exclusion Order, reasoning that a General Exclusion Order under Section 337(d)(2) was not the appropriate remedy unless a complainant established a “pattern of circumvention” of a Limited Exclusion Order. The Commission Investigative Staff agreed with Judge Essex that a Limited Exclusion Order sufficed.

Despite these conclusions, Lutron continued to argue that a General Exclusion Order was warranted and that it was the only remedy providing permanent relief. Lutron maintained that previous ITC investigations relating to the products at issue had proven ineffective, as non-respondent infringers had since entered the market. As a result, Lutron argued that a Limited Exclusion Order would have little long term effect and required it to file additional complaints. In support of its argument, Lutron submitted additional evidence to the ITC that had not yet become available when it argued before Judge Essex. Specifically, Lutron provided the names of twenty-one (21) new infringers who had entered the U.S. market and also identified numerous potential entrants.

Ultimately, the ITC was persuaded by Lutron’s arguments and found that the evidence satisfied the requirements of Section 337(d)(2) relating to the issuance of a General Exclusion Order. In doing so, the ITC found Lutron had presented compelling evidence of an increased demand for the infringing products, along with a large and growing number of non-respondent foreign manufacturers intent on marketing and distributing the infringing products in the US. Also, the ITC accepted Lutron’s arguments that these infringers and potential infringers were not easily identifiable as they engaged in frequent name changes and used numerous intermediaries. The ITC ultimately disagreed with the Commission Investigative Staff’s conclusion that the barrier for entering the relevant market is relatively low, and found that Judge Essex had used the incorrect evidentiary standard and misinterpreted Section 337(d)(2) by requiring a “pattern of circumvention” as opposed to “circumvention.”

The ITC’s decision here seemingly bodes well for complainants in Section 337 actions, given the Commission’s finding that a complainant need not prove a “pattern of circumvention,” but rather, “circumvention,” to establish grounds for issuance of a General Exclusion Order.

Gibbons will continue to monitor developments in this important area of ITC law.


Owen J. McKeon is a Director in the Gibbons Intellectual Property Department. Ralph A. Denger, Counsel to the Gibbons Intellectual Property Department, co-authored this post.
Tags: , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link
Posted on August 30, 2012 by Owen J. McKeon

Reckitt Benckiser v. Tris Pharma -- New Jersey Magistrate Finds No Trade Secret Misappropriation

In a recent “not for publication” Memorandum Opinion and Order relating to Reckitt Benckiser’s (“RB”) over-the-counter cough syrup, Delsym® (dextromethorphan polistirex), United States Magistrate Judge Douglas E. Arpert of the District of New Jersey found that RB failed to establish trade secret misappropriation, unfair competition, and tortious interference with business expectations claimed against Tris Pharma, following a four-day bench trial.

The case stemmed from RB’s allegations of patent infringement based on Tris’ Abbreviated New Drug Application with the FDA for a generic version of dextromethorphan polistirex. RB later amended its complaint to add counts relating to allegations that a former employee of a RB predecessor had access to and improperly used trade secrets relating to the Delsym® manufacturing process, formulations, and other private R&D information. Years after working for the RB predecessor, this employee was responsible for the development of Tris’ generic version of Delsym®. (In earlier rulings, the Court dismissed a breach of contract count and granted Tris’ motion for summary judgment of non-infringement.)

Regarding RB’s claim for trade secret misappropriation, the Court determined that RB failed to establish that it had an ownership interest in an alleged trade secret;  that the purported critical elements of the purported trade secret were not known to the public; and that the Tris employee disclosed any trade secret or confidential information in the course of his employment at Tris. (See slip op. at 70-73.) Regarding the former employee’s obligations, the Court noted that “absent a covenant not to compete, an employee may freely use the experience gained on one job for a subsequent company” (id. at 72), and that “an employee cannot be prohibited from using general knowledge and expertise for a future employer.” (Id.) The Court likewise ruled that RB’s unfair competition claim failed for similar reasons as the trade secret misappropriation count, and added that RB failed to establish that defendants acted in bad faith. (Id. at 73-74.) Finally, the Court determined that RB failed to establish the elements of their tortious interference claim, including any malicious intent by Tris. (Id. at 74-75.)

While this case is far from concluded, the Magistrate Judge’s decision raises key considerations for businesses, such as the need for internal policies and protections that both identify and safeguard the trade secrets and confidential/proprietary information a company provides to its employees. The ruling also highlights the convergence of trade secrets law with employment law and, in particular, the importance of confidentiality agreements and covenants not to compete. In these respects, companies not only need to have policies and protections in place, they need to ensure these policies and protections are being enforced consistently.

As practitioners are aware, early this year, the New Jersey Trade Secrets Act became law, which we reported here and here. The new trade secrets law may well have resulted in a different outcome for the parties in this case. But the important takeaway from the case is that businesses are well advised to consider their current practices and policies with respect to trade secrets and proprietary information, confidentiality agreements, and covenants not to compete. Stay tuned for an upcoming Gibbon program on these critical areas of law.


Owen J. McKeon is a Director in the Gibbons Intellectual Property Department. Ralph A. Dengler, Counsel to the Gibbons Intellectual Property Department, and Mitchell Boyarsky, a Director in the Gibbons Employment & Labor Law Department, co-authored this post.
Tags: , , , , , ,
  • Email This
  • Print
  • Comments/Questions
  • Trackbacks
  • Share Link