Mary Siceloff

By Anthony Daye

Recently, my Alma Mater, The University of Southern California, was sued by a former member of the Trojan football team. Former cornerback Brian Baucham filed a lawsuit against USC and former coach Lane Kiffin, alleging he suffered permanent injuries after being forced to play in a game while he was ill. Baucham’s lawsuit claimed that he was “forced by Coach Kiffin to play a home game even though Mr. Baucham was very ill and diagnosed by the USC Health Clinic with an influenza-like illness, viral pharyngitis and dehydration.” After playing in a game against Berkeley, “Baucham suffered from cardiopulmonary damage, as well as brain injury with neurocognitive deficits,” according to the lawsuit. Baucham alleges that USC and Kiffin violated both the NCAA and USC injury protocol programs when they forced him to play.

This got me to thinking: Now that the National Labor Relations Board has found that scholarship football players are employees under the NLRA, what if Mr. Baucham filed suit against USC as an employee?

What causes of action could an employee have against an employer that forces them to work when they are injured or seriously ill?

Failure to Reasonably Accommodate a Disability: The Americans with Disabilities Act (ADA) and the California Fair Employment and Housing Act require that most employers provide qualified individuals with disabilities with reasonable accommodations. Whether or not the employee has a qualifying disability should always be carefully analyzed. For example, an employee’s bad back or sprained knee can be a disability; telling them to “tough it out” is not a reasonable accommodation. Keep in mind that time off of work may be considered a “reasonable accommodation” depending on the circumstances.

Workers’ Compensation – Aggravation of Pre-Existing Injuries: Even if an employee has a pre-existing injury that is bothering him/her at work (i.e. a skiing injury), forcing an employee to “fight through the pain” may cause the employee to aggravate the pre-existing injury. This essentially means that the employee’s injury is now worse than it was before, which will likely lead to a workers’ compensation claim. This is similar to what Baucham alleges in his law suit against USC.

FMLA Violation: The Family and Medical Leave Act (FMLA) provides for job protected leave and benefits coverage entitlements to employees who meet FMLA eligibility requirements. FMLA regulations define a “serious health condition” as an illness, injury, impairment, or physical or mental condition that requires the employee to be away from work. For example, if an employee comes to his/her employer with a doctor’s note for a Crossfit injury and needs a week off during the busiest time of the year, the employer has to allow the leave if the employee has:

(a) worked for the employer for at least 12 months;

(b) has worked at least 1,250 hours during the 12 months prior to the start of the FMLA leave; and

(c) works at a location where at least 50 employees are employed at the location or within 75 miles of the location.

Because this employee is an avid Crossfitter, he/she repeatedly shows up injured to work needing days off at a time. This means the employer must repeatedly allow the employee to take time off for qualifying injuries, up to 12 weeks per year.

In addition to the traditional employment claims, there is nothing to stop and employee from tacking on non-traditional claims such as negligence, intentional infliction of emotional distress, and negligent infliction of emotional distress to name a few. Moreover, both injured employees and their coworkers may have claims against employers based on general negligence (similar to negligent hiring) and OSHA regulations.

Suffice it to say, employers should think twice before requiring injured employees to “take one for the team” and work through pain as a condition of continued employment.

A few years ago, I wrote a column addressing a case in which Pom Wonderful LLC sued Coca Cola Company in connection with the marketing of one of its pomegranate-blueberry juice products. That case dealt with whether one of Pom Wonderful’s claims were barred by the Federal Drug and Cosmetic Act with regard to labeling issues.

Ever protective of its brand, Pom Wonderful was recently successful before the Ninth Circuit in a trademark infringement case. Pom Wonderful sued a competing pomegranate beverage maker doing business under the name Pur Beverages for trademark infringement. After the district court denied Pom Wonderful’s motion for preliminary injunction barring the defendant from selling its competing beverage, Pom Wonderful appealed to the Ninth Circuit.

Pom Wonderful owns numerous trademark registrations that make up its “Pom” brand family. Pom Wonderful spends significant sums in marketing its products and policing against other companies’ uses that may infringe on its trademarks. In connection with these efforts, Pom Wonderful discovered that Pur was selling a pomegranate flavored energy drink that it called “Pŏm”. When Pur refused to change its marking, Pom Wonderful sued it for trademark infringement and moved for an injunction.

The Ninth Circuit concluded that the district court erred in denying Pom Wonderful’s motion for preliminary injunction. While a preliminary injunction is “an extraordinary and drastic remedy,” an injunction should issue where the moving party, such as Pom Wonderful, can establish that “(1) it is likely to succeed on the merits; (2) it is likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in its favor; and (4) an injunction is in the public interest.” The primary issue facing the Ninth Circuit was whether the lower court had erred in determining that Pom Wonderful had not demonstrated the likelihood of success on the merits.

The Court began by recognizing that Pom Wonderful, to prevail on a claim of trademark infringement, would have to show that: “(1) it has a protected ownership interest in the `Pom’ mark; and (2) Pur’s use of the word ‘Pŏm’ is likely to cause consumer confusion thereby infringing upon Pom Wonderful’s rights.” The Court did not have to spend much time on the first factor because Pom Wonderful’s registration of its trademarks was “prima facie evidence of the validity of the mark”. This registration provided Pom Wonderful the “exclusive right to use the ‘Pom’ mark [and] covers all design variations of the word because ‘Pom’ was registered as a standard character mark,” i.e., a mark that makes no claim to any particular font, style, color or display size.

Turning to the issue of likelihood of consumer confusion, the Ninth Circuit stated that it had to use the factors from AMF, Inc. v. Sleekcraft Boats, 5999 F.2d 341 9th Cir. 1979) (“the Sleekcraft Factors”) in assessing the likelihood of consumer confusion. These factors are as follows: “(1) strength of the protected mark; (2) proximity and relatedness of the goods; (3) type of goods and the degree of consumer care; (4) similarity of the protected mark and the allegedly infringing mark; (5) marketing channel convergence; (6) evidence of actual consumer confusion; (7) defendant’s intent in selecting the allegedly infringing mark; and (8) likelihood of product expansion.” The Ninth Circuit turned to each of these factors in turn to determine that the lower court had erred.

Strength of the Protected Mark: The Ninth Circuit found that the lower court had correctly found that this factor favored Pom Wonderful. Although the mark “Pom” does not necessarily mean pomegranate by resorting to conventional dictionaries, it requires customers to use some additional imagination and perception to attribute the mark to Pom Wonderful’s goods. Given its substantial investment in its sales and marketing efforts, the Court held that “Pom Wonderful enjoys sufficient marketplace recognition to render its `Pom’ mark commercially strong.”

Relatedness of Goods: The Ninth Circuit found that the lower court had also correctly found that this second factor favored Pom Wonderful and that Pom Wonderful’s juice beverages were related to Pur’s “Pŏm” energy drink. This factor addresses “related goods … are those `which would be reasonably thought by the buying public to come from the same source if sold under the same mark’.” The Court concluded that a fruit juice beverage and a fruit flavored energy drink are sufficiently complimentary that a reasonable consumer would connect them.

Degree of Consumer Care: This was another factor that the Ninth Circuit concluded had been properly found by the lower court to be in Pom Wonderful’s favor. Given the nature of the beverage market whereby customers typically by single unit beverages at low cost, a “consumer [would] exercise a low degree of care and sophistication” in making such purchases

Similarity of Marks: Here, the Ninth Circuit found that the lower court erred in concluding that there was not a similarity of marks. The Ninth Circuit compared the product labeling and noted that they had “many obvious visual similarities,” including each containing three letters with a stylized second letter. The Ninth Circuit further went beyond the mere look of the labeling and found that because the marks were pronounced in precisely the same manner, “the marks are aurally identical.” Finally, the Ninth Circuit concluded that the two marks had the same meaning in that they both referred to pomegranate flavoring and/or ingredients. Given the visual, aural and semantic similarities, and having to weigh similarities more heavily than dissimilarities between the marks, the Ninth Circuit concluded that the lower court erred in not finding the marks to be similar for purposes of the injunction motion.

Marketing Channel Convergence: The Ninth Circuit concluded that the lower court again erred in concluding that this factor did not favor Pom Wonderful. This factor concerns “whether the parties’ customer basis overlap” and “how the parties advertise and market their products.” The Ninth Circuit concluded that Pom Wonderful would likely be able to establish that “both companies use parallel market channels” and that they both sell their products through supermarkets throughout the country, with at least one overlapping state and one overlapping supermarket chain. The Ninth Circuit also concluded that both products were similar in that they were “inexpensive and marketed to health conscience consumers.” Therefore, the Ninth Circuit held that this factor should have been weighed in Pom Wonderful’s favor.

Turning to the three remaining factors: actual confusion, defendant’s intent and product expansion, the Court held that the record before the lower court indicated that these factors did not favor one side or the other. Thus, in looking at the totality of the circumstances, the Ninth Circuit found that five of the Sleekcraft factors favored Pom Wonderful and the other three were neutral. Thus, the Ninth Circuit held that the lower court erred in not finding that Pom Wonderful had established the likelihood of success on the merits to warrant injunctive relief. The Ninth Circuit remanded the case back to the lower court to consider whether Pom Wonderful had established the other factors necessary for injunctive relief in light of its ruling.

The Federal Circuit Court of Appeals has applied the Supreme Court’s test for unpatentable abstract ideas to patents covering methods to determine a person’s likelihood of getting certain types of cancer.

In University of Utah Research Foundation v. Ambry Genetics Corp., 2014 U.S. App. LEXIS 23692, decided by the Federal Circuit on December 17, 2014, the court addressed the patentability of two types of claims:  compositions and methods.  The composition claims were directed to single strands of DNA called “primers” that correspond to the double-stranded DNA of a gene.  The method claims were directed to diagnostic methods used to determine whether a patient carries a particular gene mutation that carries an increased risk of breast and ovarian cancer.

The plaintiffs were Myriad Genetics, University of Utah, and others.  They discovered the BRCA1 and BRCA2 genes that, when mutated, cause breast and ovarian cancer.  Myriad developed diagnostic test kits to detect the presence of the mutations.  Myriad patented the natural gene sequences, synthetic primers, and medical test kits.

In 2013, the U.S. Supreme Court held that Myriad’s claims to the natural gene sequences were invalid.  Association for Molecular Pathology v. Myriad, 133 S. Ct. 2107 (2013).  The Court found that the gene sequences were not patent-eligible subject matter, but were instead ineligible natural phenomena.

After the Supreme Court’s decision,  Ambry Genetics began selling its test kits for the BRCA1 and BRCA2 genes.  Myriad sued Ambry Genetics for infringement of the claims to the primers and the diagnostic methods.  The district court for the District of Utah denied Myriad’s motion for preliminary injunction, holding that the claims covered patent-ineligible subject matter.  The district court found that the primers and the methods were products of nature, essentially the same as the natural DNA of the gene, and therefore patent-ineligible.

The Federal Circuit affirmed.  The court held that the primer claims were patent-ineligible as products of nature, even though they were synthetic, as they were identical in structure to the natural DNA.  As to the method claims, the court explained that it did not need to decide if the method claims were patent-ineligible as laws of nature, but instead applied the Supreme Court’s test for claims that are directed to abstract ideas.  That test was set forth in a business method case, Alice Corp. v. CLS Bank, International, 134 S. Ct. 2347 (2014).  Under the Alice Corp. test, a court must first determine whether the claim covers a patent-ineligible idea.  If so, the court must then determine whether the remaining claim elements transform the claim into patent-eligible subject matter (i.e., whether there is a further “inventive concept” that makes the claim patent-eligible).

The court applied the two-part Alice Corp. test to Myriad’s method claims.  According to the court, the first part of the test was met because the step of comparing the gene sequences of the patient’s DNA to the normal DNA of the BRCA genes was an abstract idea.  The second part of the test was met because the remaining steps of the claims did not add an “inventive concept” to transform the claim into patent-eligible subject matter.  The court found that these steps were “routine and conventional activity.”  Because both parts of the test were met, the court held that the method claims were patent-ineligible.

This decision was in the best interest of patients.  Myriad’s claims to the diagnostic methods are invalid.  This means that Ambry Genetics and other competitors will be able to offer their own diagnostic test kits to patients, and the price of the kits will drop.  More patients will be tested, and that’s a good thing.

Just over a month ago I wrote about the Davis v. Electronic Arts matter that was pending before the Ninth Circuit Court of Appeal.  Specifically, I opined that the matter was ripe for Supreme Court review in light of the circuit split that is developing with respect to the misappropriation of likeness in video games.  In my last blog, I explained that a number of legal scholars, and myself, believed that Electronic Arts had absolutely no chance of prevailing in Davis in light of an identical case that Electronic Arts lost at the trial level and on appeal (Keller v. Electronic Arts) wherein NCAA college football players brought a similar claim for the use of their likeness in the Electronic Arts video game franchise NCAA Football.  The matter was submitted to the Ninth Circuit on September 11, 2014, and the Ninth Circuit issued its opinion on January 6, 2015.

In the Davis v. Electronic Arts opinion (Case No. 12-15737), the Ninth Circuit rejected the legal razzle dazzle (pardon the football expression) raised by Electronic Arts and upheld the denial of Electronic Arts’ motion to strike the case as a strategic lawsuit against public participation (SLAPP).  Specifically, the Ninth Circuit rejected the argument that the use of the former players’ likeness was protected under the First Amendment as “incidental use.”  The Court disagreed with Electronic Arts’ characterization of the role of the former players’ likeness in the video game because it was central to Electronic Arts’ main commercial purpose: to create a realistic virtual simulation of football games involving current and former NFL teams.  Electronic Arts acknowledged that the likeness of the current NFL players carries substantial commercial value and failed to offer a meaningful distinction with respect to the former NFL players.  Instead, it argued that there are thousands of players in the video game and accordingly, any individual player’s likeness has only “de minimis commercial value.”  However, the Court refused to accept this highly technical argument and instead found “no basis for such a sweeping statement.”

The Court also rejected Electronic Arts’ transformative use defense, which is a defense used when the “work in question adds significant creative elements so as to be transformed into something more than a mere celebrity likeness or imitation.”  The Court stated that the case was analogous to Keller in that the game “replicates players’ physical characteristics and allows users to manipulate them in the performance of the same activity for which they are known in real life—playing football for an NFL team.”  “Neither the individual players’ likeness nor the graphics and other background content are transformed more in Madden NFL than they were in NCAA Football. “  In fact, Electronic Arts did not even attempt to distinguish the two games.  Accordingly, the Court found that Electronic Arts had not shown that the transformative use defense applies to the claims.

Thus, the Ninth Circuit ruled exactly how the majority of legal scholars believed it would and followed Keller.  As a result, the circuit split regarding the misappropriation of likeness in video games has been reemphasized and it is quite possible that Electronic Arts will petition the Supreme Court for review to resolve the split.  It remains to be seen whether the Supreme Court will review the case in light of the sparse number of cases it reviews every year.  But be sure to check back periodically because if the Supreme Court grants review, we will be here with the play-by-play.

By Labor & Employment

The U.S. Supreme Court has declined to review California high court’s landmark decision in Iskanian v. CLS Transportation Los Angeles, which held that arbitration agreements with mandatory class waivers are generally enforceable, but carved out an exception for the state’s Private Attorney General Act (“PAGA”) claims.

As discussed in our prior blog post, The New PAGA-Waiver Trap Door, while the California Supreme Court in Iskanian held that an employee cannot waive their right to a PAGA lawsuit, not all California federal courts agree. A number of federal trial judges in California have disagreed and ruled that PAGA waivers are enforceable in their courts. (See, e.g., Lucero v. Sears Holding Mgmt. Corp., 2014 U.S. Dist. LEXIS 168782 (S.D. Cal. Dec. 2, 2014); Mill v. Kmart Corp., 2014 U.S. Dist. LEXIS 165666 (N.D. Cal. Nov. 26, 2014); Ortiz v. Hobby Lobby Stores, Inc., 2014 U.S. Dist. LEXIS 140552 (E.D. Cal. Oct. 1, 2014); Chico v. Hilton Worldwide, Inc., 2014 U.S. Dist. LEXIS 147752 (C.D. Cal. Oct. 7, 2014); and Langston v. 20/20,Companies, Inc., 2014 WL 5335734 (C.D. Cal. Oct. 17, 2014).

CLS and other California employers were hoping the U.S. Supreme Court would resolve this growing conflict. Unfortunately, for now, the U.S. Supreme Court has decided they will not resolve this divide. Accordingly, a PAGA waiver in an arbitration agreement may or may not be enforceable, depending on whether the action is in state or federal court. Employers who wish to have arbitration agreements with PAGA waivers should consult legal counsel to determine if doing so is advisable.