How Not to Obtain a Preliminary Injunction: Trademark Edition by Alexandra Taylor, Esq.

Forever 21 has had a busy year in the intellectual property world, defending lawsuits and warding off cease and desist letters for numerous claims of IP infringement and counterfeit. In a particular lawsuit brought by Puma, Puma initially moved for a temporary restraining order, which the Court denied. In April, Puma then moved for a preliminary injunction requesting the Court to order Forever 21 to immediately cease selling the allegedly copied shoes. Puma was again unsuccessful, as the Court denied the preliminary injunction request last month. While unsuccessful, some great practice points come out of the Court’s ruling on the preliminary injunction.

As a legal standard, a party seeking a preliminary injunction must make a clear showing of: (1) a likelihood of success on the merits, (2) a likelihood of irreparable injury to the plaintiff if injunctive relief is not granted, (3) a balance of hardships favoring the plaintiff, and (4) an advancement of the public interest. Here, the Court looked only at the second prong to determine whether Puma sufficiently met its burden as to “irreparable injury”. The Court noted that “[i]t is well established that as the party seeking emergency relief,[Puma] must make a clear showing that it is at risk of irreparable harm, which entails showing a likelihood of substantial and immediate irreparable injury.”

In order to prevail on the “irreparable injury” prong, Puma must have shown that remedies available at law, such as monetary damages, would be insufficient to compensate Puma’s injury. As evidence in support of its “irreparable injury”, Puma submitted a declaration of Mr. Adam Petrick, the company’s Global Direct of Brand and Marketing. In the declaration, Petrick detailed how Forever 21’s knock-offs injure brands, depress sales volume and prices, and diminished the excitement after the launch of Puma’s “Fenty” line with global superstar Rihanna. However this is all that Puma submitted. And the Court found it grossly insufficient, stating “Puma dedicates a mere two and a half pages to this factor in its motion.”

Lesson learned: IP owners cannot solely rely on the merits of their claim to obtain a preliminary injunction. As a practice point, to better align yourself in order to obtain a preliminary injunction, remember that the “irreparable injury” should not lend itself to be compensated by monetary damages. If monetary damages are an appropriate remedy for your “injury”, then a preliminary injunction is not your best route. An effective way to show “irreparable injury” is to submit evidence showing the damage done to your brand, not financially, but in the eyes of the consumer. This can be done by surveying consumers, or via affidavits from specific for a less financially cumbersome approach.

For the Court’s Order, the case is Puma SE v. Forever 21, Inc., No. 2:17-cv-02523-PSG-E (C.D. Cal).

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Start Me Up: How Startups Can (and Should!) Protect Their Intellectual Property Rights by Alexandra Taylor, Esq.

Starting a business has a laundry list of to dos. More often than not, protecting intellectual property, and more importantly doing your due diligence in researching existing brands, is left on the back burner. One of the worst things a startup can do is ignore their IP. This can have grave consequences, whether you fail to protect your own IP and have to fight a third party for your rights, or infringe on a third party’s IP and are dragged into court to defend your company. And the dreaded “R” word, forced rebrand.

Take the following example: Susie opens a bicycle shop called SPIN. (What some may not recognize is SPIN is Susie’s trademark, the brand that she is offering her products and services under. This is completely separate from Spin Florida, LLC, Susie’s corporate entity). Susie’s bike shop is a hit and becomes known as THE bike shop in the town. Fast forward six months later, Susie decides she wants to protect her trademark. She hires an IP attorney to perform research on her SPIN trademark. Unfortunately, another company has already filed a trademark application before Susie for the same trademark. If Susie wants to file her own application, the other company’s application will prevent her from filing, and she will have to fight their application in court if she wants to get over this hurdle. Susie hits another road bump: she receives a cease and desist letter from SPINNERS, a nation-wide bicycle chain. SPINNERS demands that Susie cease using the SPIN trademark within 30 days and pay $3,000 for her infringement, or they will file a lawsuit against her. Susie is forced to rebrand, spending thousands on new signage and marketing materials. Changing the name of Susie’s store has also shaken the confidence in her customers and new consumers who heard about SPIN can’t find her store.

This may sound like a dramatized scenario, but it is something we have seen countless times, affecting anyone from a local business to a nationwide company. Below are a few practice points to help ward off some potential pitfalls:

Practice Point #1: Perform due diligence research BEFORE you launch, produce business cards, marketing materials, and signage. You may find that your brand infringes on a third parties rights, or that so many other companies have a similarly named brand that consumers won’t be able to pick your business out of a line up. If you are forced to change your brand identity or rebrand entirely, a lot of money will be wasted that you may not be able to recoup.

Practice Point #2: File for trademark protection. Depending on your business, state or federal protection is the route you need to go. Within the State of Florida, a trademark must be in use before an application can be filed. However, the United States Patent and Trademark Office allows both intent to use and use based applications to be filed. Take advantage of this!

Practice Point #3: Contracts. Unless you are the sole owner, contracts are imperative to plan for the future of the company’s IP. What if a partner leaves the business entity, does the IP stay with the entity or leave with him/her? Who owns the IP assets? Have contracts lay out the ownership and future of the IP from the start to result in cleaner relationships and transitions

down the road. Don’t forget that although intangible, IP is a piece of property like that of real estate, machinery, etc.

Practice Point #4: Always think towards the future. This goes along with all of the points above. You may be thinking “We’re a very small business”, “We’re just locally owned”, “We don’t have plans to expand out of the county”. If you are an entrepreneur, chances are that no matter how small you are now, you don’t want to stay small. Think of the dreams and goals of your company, and ensure that your IP strategies align with those goals. If you are currently selling your products at a farmers market, but have plans to launch an entire e-commerce website, it won’t take long for third parties to find you if your trademark infringes on their brand.

Oh Yes They Did: Ninth Circuit’s Holding May Turn DMCA Safe Harbor Protections on Its Head by Alexandra Taylor, Esq.

On April 07, the Ninth Circuit Court of Appeals issued its most recent decision on the scope of safe harbor protection extended to online providers, holding that an online provider may lose its safe harbor protection if its moderators assist in selecting content submitted by user.

The factual aspects of the case involve Mavrix Photographs, LLC, a celebrity photograph agency which sued LiveJournal, Inc. for copyright infringement of several of its photographs. LiveJournal runs LiveJournal.com, a social media platform which allows users to create and run communities online. One of LiveJournal.com’s more popular communities titled “Oh No They Didn’t!” features celebrity news and gossip, with the posts within said community often including photographs.

LiveJournal.com users submit posts to volunteer moderators, who then review the posts to ensure the posts comply with the sites rules, one of which is a prohibition on copyright infringement. LiveJournal also pays a full-time employee to review and approve the posts. Interestingly Mavrix did not submit a DMCA takedown request, and instead filed suit claiming rights in twenty photographs posted on “Oh No They Didn’t!” without Mavrix’s permission.

Under the DMCA, an online provider can claim safe harbor protection if: (1) the provider “does not have actual knowledge that the material or an activity using the material” is infringing; (2) in the absence of actual knowledge, the provider “is not aware of facts or circumstances from which infringing activity is apparent”; or (3) “upon obtaining such knowledge or awareness” the provider “acts expeditiously to remove, or disable access to, the material”. 17 U.S.C. § 512(c).

This is where the facts get really important and where the Ninth Circuit made its distinction. The district court granted LiveJournal summary judgment, holding that Section 512(c) shielded LiveJournal from liability. The Ninth Circuit reversed the summary judgment, finding critical LiveJournal’s role in posting the photographs to its platform. The Ninth Circuit ultimately held that whether the photographs were posted “at the direction of the users” was dependent on whether the moderators actions could be attributed to LiveJournal. Here, the court found that a juror could conclude an agency relationship between LiveJournal and its moderators based on the following facts: LiveJournal selects and gives specific direction to its moderators, LiveJournal users may have reasonably believed that the moderators had the authority to act on behalf of LiveJournal, and LiveJournal maintained sufficient control over the “Oh No They Didn’t!” community through LiveJournal’s supervision, selection, and removing of the moderators.

For the full Opinion, the case is Mavrix Photographs, LLC v. LiveJournal, Inc., No. 14-56596, 2017 WL 1289967, at *1 (9th Cir. Apr. 7, 2017).

Brittany Maxey, Esq. and Alexandra Taylor, Esq. present “IP: What Every Brewer Needs to Know” at Green Bench Brewing Co. for Florida Brewers Guild

Brittany Maxey and Alexandra Taylor, both of Maxey Law Offices, PLLC, recently presented “IP: What Every Brewer Needs to Know” for members of Florida Brewers Guild at local St. Petersburg brewery Green Bench Brewing Co. Brittany and Alexandra led a conversation on intellectual property rights and considerations for brewers and breweries.

Applying the Alice Standard to Electronic Stock Trading by Kyle Chapin, Esq.

On January 18, 2017, the Court of Appeals for the Federal Circuit affirmed the decision by the United States District Court for the Northern District of Illinois that two patents related to electronic stock trading contain patent eligible subject matter. These patents are owned by Trading Technologies International, Inc. and are directed toward reducing the time it takes for a trader to place an electronic trade. Specifically, the patents solve a problem where a trader attempts to enter a trade at a particular price, but they miss that price because the market had changed before the trade was entered and executed.

This holding is another guide post in a patent litigator’s understanding of the 2014 Supreme Court holding in Alice Corporation Pty. Ltd. v. CLS Bank International which turned patent-eligibility for software and business method patents upside-down. If you are unsure of the significance of Alice, the Court set out the framework for the patent-eligibility of patents that effected the validity of an enormous number of patents, overnight. The two-part test set out in Alice states that, a claim falls outside § 101 where (1) it is “directed to” a patent-ineligible concept, i.e., a law of nature, natural phenomenon, or abstract idea, and (2), if so, the particular elements of the claim, considered “both individually and ‘as an ordered combination,’” do not add enough to “‘transform the nature of the claim’ into a patent-eligible application.”

In the present case, the Court reviewed the two patents in view of the two-part Alice test. In holding the patents valid, the Court agreed with the District Court in stating that the patents “solve problems of prior graphical user interface devices…in the context of computerized trading [] relating to speed, accuracy and usability.” This improvement “recite[s] more than setting, displaying, and selecting data or information that is visible on the [graphical user interface] device.” For these reasons the Court concluded the subject matter of the patents were not abstract and therefore patent eligible under Step one of Alice.

Next, the Court looked to the improvement in a trader’s efficiency and accuracy in placing trades using the electronic trading system which, the Court stated, distinguishes “the routine or conventional use of computers or the Internet.” The Court pointed to the “specific structure and concordant functionality of the graphical user interface” as reasons the system is removed from being an abstract idea. According to the Court, this improvement in efficiency and accuracy on the part of the trader are the “inventive concept” necessary to meet Step 2 of Alice. Thus, the Court held Trading Technologies International, Inc.’s patents were valid.

This decision provides further guidance and additional examples that can help guide patent litigators to a better understanding of the elements necessary to have patent-eligible subject matter within various software and business method patents.

Teva is blocked from selling the generic version of Alimta by Stephen Lewellyn, Esq.

On January 12, 2017, the Court of Appeals for the Federal Circuit handed Eli Lilly a win against Teva Pharmaceuticals that blocks Teva from selling its generic version of the cancer treatment drug Alimta.

The Court, following its precedent in Akamia V, found Teva’s proposed product labeling for its generic drug would induce infringement of U.S. Patent No. 7,772,209, which is owned by Eli Lilly. This patent claims a method of administering pemetrexed disodium to a patient and includes the step of administering an effective amount of folic acid before pemetrexed disodium. In practice, the folic acid is taken by the patient  at the direction of the treating physician. The direction includes taking a prescribed amount of folic acid following specific schedule. After which, the pemetrexed disodium is given to the patient by the physician. But, if the folic acid is not taken as directed, pemetrexed disodium is not given to the patient.

Since completing the claimed method requires action by two separate people, the question of induced infringement was at issue concerning the step of administering folic acid, which is completed by the patient.

Under Akamia V, when no single actor performs all the steps of a method claim, infringement only occurs “if the acts of one are attributable to the other such that a single entity is responsible for the infringement.” In one circumstance, performance of method steps is attributable to a single entity when that entity “directs or controls” others in completing the steps. Directing or controlling of others performance includes an actor that (1) conditions participation in an activity or receipt of a benefit upon others’ performance of one or more steps of the patented method, and (2) establishes the manner or timing of that performance.

Here, the Court found treating a patient with Teva’s generic drug satisfied both prongs because the treatment is conditioned on the patient first taking folic acid by the patient following a specific regiment that was prescribed by the doctor. This decision provides further guidance on how multi-actor method claims can be infringed under Akamia V.

District Court of Delaware Narrowly Applies the IPR Estoppel Provisions by Stephen Lewellyn, Esq.

A recent Delaware district court decision narrowly interpreted the estoppel provision of an Inter Partes review (IPR) to not include prior art and arguments that could have been raised, but were not raised by the Petitioner in the IPR. Intellectual Ventures I LLC v. Toshiba Corp., Civil Action No. 13-453, Slip Op. (DN 559) at 25–27 (D. Del. Dec. 19, 2016) (Memorandum Opinion).

Judge Robinson, arriving at the narrow interpretation first looked to the statutory language of 35 U.S.C. § 315(e)(2), which states in relevant part: “[t]he petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a) … may not assert [] in a civil action arising in whole or in part under section 1338 of title 28 … that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”

Recognizing that the prior art and arguments at issue could have reasonably been raised by the Petitioner in the IPR, and under the statute the Petitioner would be estopped from raising them in the district court case, Judge Robinson looked to the Federal Circuit’s literal interpretation of the above language and found no estoppel. Particularly, in Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293 (Fed. Cir. 2016), the Court determined that because PTAB did not institute an IPR on a particular ground the Petitioner “did not raise – nor could it have reasonably raised – the [rejected] ground during the IPR.”

Finding no estoppel, Judge Robinson stated: “Although extending the [Federal Circuit’s] logic to prior art references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of this parallel administrative proceeding, the court cannot divine a reasoned way around the Federal Circuit’s interpretation in Shaw.”

I predict this decision will be appealed to the Federal Circuit to weigh in on estoppel when prior art could have been, but were not raised by the IPR Petitioner. Nevertheless, as it stands now, at least in the District of Delaware, the estoppel provision does not seem to apply in such circumstances.