Posts in Circuit Courts of Appeal

On September 17, the United States Court of Appeals for the Third Circuit issued a precedential decision that affirmed in part, reversed in part, and remanded a decision by the District Court for the District of New Jersey, holding that trademark cancellation proceedings before the Trademark Trial and Appeal Board (TTAB) do not preclude infringement claims in federal district court. In 1969, David Beasley formed a band named “The Ebonys” in Camden, New Jersey. The Ebonys were one of many bands that helped create the “Philadelphia Sound” which incorporated elements of soul, funk, and disco. The Ebonys achieved some commercial success in the 1970s but failed to reach the notoriety of other groups. As the decades wore on, the Ebonys’ popularity faded, though Beasley alleges they performed continuously since their formation. In the mid-1990s William Howard joined the band, and in 1997, Beasley obtained a New Jersey state service mark for THE EBONYS. Relations between Howard and Beasley soured and the pair parted ways. Each artist believed themselves the owner of the Ebonys name, and in 2012, Howard obtained Registration No. 4,170,469 (the ‘469 mark) for THE EBONYS, as a federal trademark. 

President Joe Biden on Wednesday nominated eight new judges for federal courts, including Judge Lucy Koh for the U.S. Court of Appeals for the Ninth Circuit. Koh has been a prominent figure in intellectual property (IP) cases in recent years, particularly due to her 2019 order finding that Qualcomm had engaged in unlawful licensing practices, which included her issuance of a permanent, worldwide injunction against several of Qualcomm’s core business practices. IP leaders including retired Federal Circuit Chief Judge Paul Michel and law professor Kristen Osenga submitted amicus briefs in FTC v. Qualcomm detailing Koh’s legal errors in that ruling. The Ninth Circuit ultimately vacated her decision and reversed the injunction.

On September 3, the U.S. Court of Appeals for the Ninth Circuit issued a pair of decisions in Nomadix, Inc. v. Guest-Tek Interactive Entertainment Ltd. on appeal from a grant of permanent injunction entered by the Central District of California. In one decision, the Ninth Circuit affirmed injunctive relief preventing Guest-Tek from filing petitions for patent validity trials at the Patent Trial and Appeal Board (PTAB) in violation of a forum selection clause in Guest-Tek’s licensing agreement with Nomadix. In the other decision, the Ninth Circuit vacated portions of an attorneys’ fees award to Nomadix that covered the legal costs incurred by Nomadix during Guest-Tek’s PTAB petitions.

In a previous article, we discussed the difference between a reasonable royalty for patent infringement and a FRAND licensing rate, both in terms of their origins and objectives: the former being a creature of statute and case law that seeks to compensate a patent owner for infringement, whereas the latter is rooted in contract and seeks, amongst other things, to address issues of royalty stacking and discriminatory licensing. Despite these differences, we noted that these two concepts have often been treated interchangeably by courts, often leading to confusing results…. Pursuant to appeal of that decision, however, the United States Court of Appeals for the Fifth Circuit has now addressed the photonegative question in HTC Corp. et al. v. Telefonaktiebolaget LM et al., case number 19-40643: are patent laws regarding what constitutes a reasonable royalty applicable to questions of compliance with FRAND-related contractual obligations? Though the majority decision did a great job highlighting the distinction between these two different concepts, there was a concurring decision that continues to blur the line.

The U.S. Court of Appeals for the Fifth Circuit today affirmed an Eastern District of Texas court’s judgment for Ericsson, finding no error in the district court’s jury instructions, declaratory judgment or evidentiary rulings, and rejecting HTC Corporation’s allegations that Ericsson had breached its contractual obligation to offer a license on fair, reasonable, and non-discriminatory (FRAND) terms. The case stems from HTC’s refusal of a 2016 licensing deal in which Ericsson proposed a rate of $2.50 per 4G device to license its standard essential patents for mobile devices. Although HTC had previously paid Ericsson about $2.50 per device for the patents under a 2014 licensing agreement, in 2016 the company independently assessed the value of Ericsson’s patents and ultimately proposed a rate of $0.10 per device in 2017, which was based on the “smallest salable patent-practicing unit.” According to the Fifth Circuit, Ericsson considered this “so far off of the norm” that negotiations stopped, and a few days later, HTC filed suit in the U.S. District Court for the Eastern District of Texas, alleging breach of FRAND terms.

On August 24, the U.S. Court of Appeals for the Tenth Circuit affirmed in part, reversed in part and remanded a decision of the district court for the Western District of Oklahoma, holding that the Lanham Act applied to the defendants’ extraterritorial conduct…. The Tenth Circuit rejected Defendants’ first argument that the Lanham act cannot be applied extraterritorially. Citing Steele, the Tenth Circuit acknowledged that there is a general presumption against extraterritoriality, but that it may be applied abroad at least in some circumstances. Steele v. Bulova Watch Co., 344 U.S. 280, 282-285 (1952). In Steele, the Court reasoned that “the United States is not debarred . . . from governing the conduct of i[t]s own citizens upon the high seas or even in foreign countries when the rights of other nations or nationals are not infringed.” Id. at 285-86. Key to the Court’s decision was that the defendant’s “operations and effects were not confined within the territorial limits of a foreign nation,” but rather filtered through to the United States.

The U.S. Court of Appeals for the Ninth Circuit on Monday ruled that California common law on copyright protection does not include a right of public performance, reversing a partial summary judgment for Flo & Eddie, which controls the rights to the songs of the rock band the Turtles. The case began in 2013, when Flo & Eddie sued Sirius XM Radio, Inc. for playing the Turtles’ iconic pre-1972 recordings, such as “Happy Together” and “Elenore.” While AM/FM radio stations do not pay public performance royalties to sound recording owners, digital and satellite radio providers like Sirius XM must pay public performance royalties whenever they broadcast post-1972 music.

On August 17, in the case of I.O.B. Realty, Inc. v. Patsy’s Brand, Inc., the United States Court of Appeals for the Second Circuit ordered that the June 4, 2020 judgment of the United States District Court for the Southern District of New York be vacated for not complying with the Second Circuit’s mandate, with judgment being entered for Patsy’s Brand and the case dismissed. The decision is related to two decades of litigation. As court documents have described, the case has been protracted, highly contentious, and, at times, even scandalous.

The U.S. Court of Appeals for the Eighth Circuit yesterday reversed a Missouri district court’s grant of summary judgment for a group of real estate companies relating to copyright infringement claims brought by an architect over floorplans. While the appeals court said that another defense might well be available to the companies, the text of the statute, the broader statutory context, and the legislative history all suggest that “floorplans” were not intended to be encompassed by Section 120(a) of the U.S. Copyright Act.

On August 6, the U.S. Court of Appeals for the Eleventh Circuit issued a decision in Boigris v. EWC P&T, LLC in which the appellate court affirmed a ruling by the Southern District of Florida granting summary judgment to EWC, the owner of the nationwide European Wax Center chain of beauty salons, on cybersquatting claims filed against the owner of several GoDaddy domains that were registered in bad faith to profit from EWC’s stores. Although the majority found that the accused domain names and EWC’s registered trademarks were confusingly similar in sight, sound and meaning, the dissent raises interesting questions regarding the proper standard on confusing similarity at the summary judgment stage.

On June 21, the U.S. Supreme Court issued a unanimous ruling in National Collegiate Athletic Association v. Alston (Alston) in which the nation’s highest court affirmed an injunction entered by the Northern District of California prohibiting the NCAA from restricting education-related benefits that member schools can extend to student-athletes. Consolidated by the Supreme Court last December with related proceedings in American Athletic Conference v. Alston, this decision brings a close to the latest chapter in the ongoing skirmish between NCAA member schools and their student-athletes seeking a larger cut of revenues earned by colleges and NCAA athletic associations.

In “big IP cases that count,” the U.S. Federal Trade Commission (FTC) has had a mixed record lately, going one-for-three – good in baseball but bad in government appellate litigation. (The biggest recent FTC loss that counts, the Supreme Court’s unanimous April 2021 AMG decision (see here), did not involve IP, but had major negative implications for the FTC’s future ability to obtain monetary relief in IP-related prosecutions). In August 2020, the Ninth Circuit vacated a district court “finding that Qualcomm had engaged in unlawful licensing practices, and reversed a permanent, worldwide injunction against several of Qualcomm’s core business practices.” (The full Ninth Circuit subsequently denied the FTC’s request for rehearing en banc, and the FTC threw in the towel in March 2021, electing not to seek Supreme Court review).

On June 14, the U.S. Court of Appeals for the First Circuit issued a decision in Markham Concepts, Inc. v. Hasbro, Inc. affirming a lower court’s ruling that the game design firm that developed classic board game, “The Game of Life,” possessed no termination rights in Hasbro’s copyright to that game. In so ruling, the First Circuit reiterated that the “instance and expense” test to analyze work for hire status applies to works governed by the Copyright Act of 1909, and found that the district court properly applied that test in determining that Markham’s successors-in-interest had no termination rights.

The United States Supreme Court today ruled that a former police sergeant did not flout Section (a)(2) of the Computer Fraud and Abuse Act (CFAA) because that provision “does not cover those who…have improper motives for obtaining information that is otherwise available to them.” The opinion, authored by Justice Amy Coney Barrett, contradicts the U.S. government’s reading of the statute. Three justices dissented from the majority.

On Tuesday, June 1, the U.S. Supreme Court granted a petition for writ of certiorari filed by fabric designer Unicolors seeking to challenge the U.S. Court of Appeals for the Ninth Circuit’s ruling last May that reversed a jury verdict finding Swedish multinational clothing firm Hennes & Mauritz (H&M) liable for copyright infringement. The district court eventually entered a judgment awarding more than $500,000 to Unicolors. The case will ask the nation’s highest court to decide whether the Ninth Circuit properly construed the language of 17 U.S.C. § 411 in determining that the district court was required to refer Unicolors’ copyright registration to the U.S. Copyright Office because it contained inaccurate information with no evidence that the inaccurate information contained any indicia of fraud or material error regarding the work covered by the copyright registration.