Mary Siceloff, Author at Weintraub Tobin

The PTAB Requires Settlement and Collateral Agreements to Terminate IPRs

Published: July 2, 2020

by Jo Dale Carothers, Ph.D.
The IP Law Blog

Following the America Invents Act, a petition for inter partes review (“IPR”) has become a common method for challenging the validity of a patent before the Patent Trial and Appeal Board (“PTAB”) at the United States Patent and Trademark Office (“USPTO”). Such challenges are often brought by petitioners in response to a patent owner suing them for patent infringement. But what happens to the IPR if the parties settle the infringement lawsuit?

When parties settle the underlying dispute, they can request that the IPR be terminated. Under 35 U.S.C. § 317(a),

An inter partes review instituted under this chapter shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Office has decided the merits of the proceeding before the request for termination is filed.

However, under 35 U.S.C. § 317(b), any settlement agreement, including any collateral agreements that are referenced, must be filed with the USPTO before the termination of the IPR. Specifically, the statute states:

Any agreement or understanding between the patent owner and a petitioner, including any collateral agreements referred to in such agreement or understanding, made in connection with, or in contemplation of, the termination of an inter partes review under this section shall be in writing and a true copy of such agreement or understanding shall be filed in the Office before the termination of the inter partes review as between the parties. At the request of a party to the proceeding, the agreement or understanding shall be treated as business confidential information, shall be kept separate from the file of the involved patents, and shall be made available only to Federal Government agencies on written request, or to any person on a showing of good cause.

Webinar: Choose Your Friends Wisely or Face the Consequences under the New Provider Enrollment Rule

When: Jun 28 - Jul 1, 2020
Where: Webinar

American Health Lawyers Association, Annual Meeting, Choose Your Friends Wisely or Face the Consequences under the New Provider Enrollment Rule.

WT Clients: Darrin Menezes Resolves 6-Figure Dispute Between Multi-National Companies

Published: June 30, 2020

Weintraub Attorney Darrin Menezes recently represented a multi-national Israeli corporation against a San Francisco-based subsidiary of a multi-national Czech conglomerate and obtained a substantial six-figure settlement immediately after filing the complaint despite the existence of a limitation of liability provision.

Darrin is an experienced trial attorney and a member of the Firm’s Litigation and Real Estate practice groups.

WT Deals: Jennifer Fox to Write and Direct Film Adaptation for “The Other Dr. Gilmore”

Published: June 30, 2020

Tara Sattler negotiated the rights for Emmy nominated director Jennifer Fox to write and direct the film adaptation for The Other Dr. Gilmore. The story includes important social issues that are relevant to today such as universal healthcare, mental health care, and how lack of these resources can contribute to mass incarceration. The film will be developed and produced by Concordia Studio, along with Social Construct Films and Maven Screen Media.

For more details, read the full article in Deadline.

Frustration of Purpose: How Two WWII-era Cases Provide Guidance Regarding Lease Enforcement During the COVID-19 Health Crisis

Published: June 26, 2020

by Mark E. Ellinghouse

Unlike the Great Recession in 2008, landlords and tenants responding to the negative economic impact of the COVID-19 health crisis appear to be focusing more on rent relief as opposed to strict interpretation and enforcement. Both sides seem to acknowledge that this downturn is driven by external, uncontrollable influences, and therefore each side should cooperate to weather the storm. It is the approach we most strongly encourage our clients to take, as it strengthens the relationship between landlord and tenant and avoids unnecessary expenditures on costly lease enforcement.

Not all parties have taken this approach, however. Some, whether out of opportunity or desperation, have instead taken a more aggressive position, claiming that the uncontrollable nature of this pandemic justifies suspension of contractual duties and/or entitles a party to terminate its lease. Many legal arguments have been proffered to support this position, including force majeure, impossibility, casualty, eminent domain and frustration of purpose. This article will discuss the latter, clarifying the nature of the doctrine and explaining how two precedential decisions may affect how it may apply to current lease disputes.

What is Frustration of Purpose?

Frustration of purpose applies when performance of a contract or lease remains possible, but the fundamental reason of one of the parties for entering into the contract has been frustrated by an unanticipated supervening circumstance, destroying substantially the value of performance by the party standing on the contract.[1] If the doctrine applies, the party to the contract is discharged from its obligations under the contract, including the remainder of the term. This doctrine has been considered by many California courts, including those addressing the impact of government-imposed regulations on the obligations of tenants and landlords under a lease.

Can Frustration of Purpose be Used by a Tenant to Justify Immediate Termination of a Lease?

In a case which dates back to World War II[2], a landlord leased commercial space to a tenant who intended to display neon signs to illuminate and advertise for his business. After the lease commenced, the United States government ordered, as an emergency war measure, that all outside lighting, including neon signs, be shut off between sunset and sunrise. The tenant claimed that he was prevented, due to the order and without fault on his part, from using the neon signs he used to illuminate his business during the nighttime, and that both parties contemplated such use as the primary purpose of the lease at the time of the execution of the contract. The lease between the parties clearly contemplated the use of the neon signs, but did not state what hours the signs could be lit. The tenant first offered to surrender the lease, terminate it, and allow the landlord to remove the signs. However, after the landlord refused, the tenant stopped paying rent, and the landlord sued to collect.

The court agreed with the tenant. Relying on the doctrine of frustration of purpose, the court held that the tenant was entitled to terminate the lease because the parties clearly contemplated, prior to entering into the contract, that the use of the signs at night “was the essential, primary and principal basis for which the signs were rented.” Therefore, as the governmental order prevented the tenant from using the signs, the entire purpose of the lease was frustrated and the tenant was discharged from its obligations under the lease, including future rent.

Does Frustration of Purpose Automatically Apply and Permit Termination of a Lease?

Not all tenants are entitled to rely on frustration of purpose to terminate their leases simply because an intervening event has occurred. In another WWII case[3], the California Supreme Court considered the effect of a wartime order on a lease for an auto dealership. In 1941, the tenant rented property in Beverly Hills for the purpose of displaying and selling new cars “and for no other purpose whatsoever.” On January 1, 1942, the federal government ordered that the sale of all new automobiles be discontinued to support the war effort. Recognizing the effect that the order would likely have on the tenant’s business, the landlord lifted all restrictions in the lease regarding the tenant’s use of the premises. The landlord also permitted tenant to sublease and offered to reduce the rent if the tenant was unable to operate profitably. Despite these concessions, the tenant sought to repudiate and terminate the lease, claiming frustration of purpose. The landlord then sued for unpaid rent.

In this case the landlord prevailed, as the court found that the tenant was not entitled to terminate the lease based on frustration of purpose. At trial, the tenant admitted that he continued to sell new automobiles and gasoline at the location, confirming that the tenant was able to operate consistent with its original purpose to some extent. The court also found that the landlord made considerable concessions which, in this particular instance, were significant given that the property was located on a main artery in Los Angeles County and the location was adaptable to many commercial purposes if the tenant chose to utilize the premises in a different way. In fact, after the tenant vacated the premises, the landlord immediately found a willing tenant to step in and rent the property. The court held that even though the government regulation made business more difficult and less profitable, a tenant could not invoke the doctrine of frustration of purpose unless the regulation completely destroyed the value of the lease.

Lessons for Landlords and Tenants Considering the Impact of Frustration of Purpose

These two cases offer up a couple takeaways regarding the obligations of landlords and tenants following an unanticipated supervening circumstance, such as the COVID-19 health crisis and related governmental orders requiring individuals to shelter in place.

First, landlords should be mindful that providing flexibility to a tenant in occupying their leased premises may help avoid a claim of frustration of purpose and termination of the lease. For the auto dealership landlord, the court strongly considered the flexibility, fairness, and cooperation of the landlord, who did everything it could to ensure that the leased premises retained some value for the tenant. By removing use restrictions, allowing transfers and subletting, and/or reducing rent, the landlord was able to overcome the argument that the purpose of the lease was frustrated. Unlike the neon signs case, in which the entire and sole purpose of the tenant’s lease was deprived as a result of the governmental order, the auto dealership landlord took affirmative acts to preserve such value and thereby protect its lease. In sum, it behooves a landlord – where economically feasible – to cooperate with a tenant and/or offer concessions in order to prevent a tenant from claiming the purpose of the lease was entirely frustrated. Even if those measures prove to be unsuccessful, it may later benefit the landlord in court.

Second, landlords and tenants should consider the impact of restrictive use provisions in their leases. Landlords, especially in multi-tenant shopping centers, generally want to narrowly define a tenant’s permissible use so as to avoid overlapping and/or violation of exclusivity restrictions. The most recent health crisis reminds landlords of the dangers of taking this approach, as doing so may coerce a tenant into the unwanted conclusion that its purpose was entirely frustrated. Landlords may also want to grant a tenant the ability to pursue alternative uses with their landlord’s consent, which might provide a secondary manner of broadening the purpose. In either case, the language of the lease should be clear as to the purpose of the lease so as to avoid unwanted interpretation by a court. In the neon signs case, the court was left to determine what the primary purpose of the lease was because the parties failed to define its purpose with specificity. Careful drafting may have given the landlord more options or remedies.

While global pandemics and the related government-mandated use restrictions are rare, they can have a significant effect on businesses of all sizes and across industries. These two cases remind landlords and tenants that special attention should be paid both to the language of a lease and each party’s response to these crises. Not only will such consideration and cooperation benefit a landlord should the matter proceed to litigation, it will also engender goodwill with the tenant or future tenants. If you would like assistance with interpreting lease provisions and/or responses to the COVID-19 health crisis, whether in connection with a claim of frustration of purpose or not, please contact the attorneys at Weintraub Tobin.

[1] Cutter Laboratories, Inc. v. Twining (1963) 221 Cal. App. 2d 302, 314–315.

[2] 20th Century Lites, Inc. v. Goodman (1944) 64 Cal. App. 2d Supp. 938.

[3] Lloyd v. Murphy (1944) 25 Cal. 2d 48.

“Birds of a Feather” – The Ninth Circuit Confronts “Single Unit of Publication” Copyright Issue

Published: June 25, 2020

by James Kachmar
The IP Law Blog

Unicolors, Inc. creates and markets artistic design fabrics to various garment manufacturers. Some of these designs are marketed to the public and placed in its showroom while other designs are considered “confined” works that Unicolor sells to certain customers. Unicolors withholds marketing them to the general public for a set period of time. In order to save money, Unicolors often times groups various designs into a “single work” when filing with the U.S. Copyright office for copyright registration. The Ninth Circuit in Unicolors v. H&M Hennes & Mauritz (May 29, 2020), recently addressed whether this practice, grouping both public and “confined” works into a single registration application, creates a valid copyright that Unicolors could enforce.

The specific design at issue in the case was part of a “single unit registration” of 31 different designs that Unicolor registered with the copyright office in 2011. In 2015, H&M stores began selling a jacket and skirt that contained art work that Unicolors alleged was identical to its 2011 design and thus infringed on Unicolors’ 2011 copyright.

Although Unicolors’ 2011 registration consisted of 31 separate designs, a number of these designs were designated as “confined” designs that were made for specific customers and withheld from the public for a couple of months. At the expiration of that waiting period, Unicolors would then place the “confined” works in its show room and/or market them to other customers. Although Unicolors engaged in this practice with respect to the 2011 registration, it represented in that registration application that the first publication date of the 31 designs was January 15, 2011 which testimony established was the date when Unicolors presented the designs to its employee-sales people and not to the general public.

The trial court allowed Unicolors claim to go to a jury, which returned a verdict in Unicolors favor and awarded it nearly $850,000 in damages. After denying H&M’s renewed motion for judgment as a matter of law or for new trial (and after Unicolors accepted a reduction of damages to $266,000), the trial court awarded Unicolors more than $500,000 in attorneys’ fees. H&M appealed these decisions to the Ninth Circuit.

The two elements that a plaintiff must prove to establish copyright infringement are: “(1) ownership of a valid copyright; and (2) copying of constituent elements of the work that are original.” The Ninth Circuit’s analysis in Unicolors focused only on the first prong – ownership of a valid copyright. As to this issue, the Ninth Circuit recognized that “a registration certificate issued by the U.S. Register of Copyrights constitutes prima facie evidence of the validity of a plaintiff’s copyright.”

The Ninth Circuit continued by recognizing that the issue of copyright ownership is rarely contested given that “the mere receipt of a registration certificate issued by the Register of Copyrights ordinarily satisfies” this element. However, the Ninth Circuit cautioned that a registration certificate cannot confer ownership “if the registrant secured the registration by knowingly including inaccurate information in the application for copyright registration that, if known by the Register of Copyrights, would have caused it to deny registration.” Normally, once a defendant claims that a plaintiff has included inaccurate information in its registration application with knowledge that it was inaccurate, the district court is required to submit this evidence to the Register of Copyrights “to advise whether the inaccurate information, if known, would have caused [it] to refuse registration.”

H&M contended that the district court erred because H&M’s renewed motion had established that while Unicolors had used a single copyright registration for the 31 separate works, they did not offer or sell these works “in some integrated manner.” In fact, the evidence showed that at least nine of the works were considered “confined” and were sold separately and exclusively to individual customers separate from the other 22 works that comprised the registration. The district court rejected H&M’s arguments because: (1) it believed that invalidation required that H&M establish that Unicolors intended to defraud the Copyright Office; and (2) although Unicolors may have marketed and sold the various works separately, “that did not mean all of the works were not first made available to the public – i.e., published – on the same day.”

The Ninth Circuit disagreed with both of these findings. It began by recognizing that it had previously suggested that intent-to-defraud was a requirement for registration validation; however, it noted that it had clarified last year that no such intent-to-defraud requirement existed.

In turning to the next factor, i.e., the issue of “a single unit of publication,” the Court recognized that this was an issue of first impression. It decided, however, that in looking at the clear language in the Copyright Act, “the plain meaning of `single unit’ … requires that the registrant first publish the collection of works in a singular, bundled collection.” That is, in looking to the common definitions of the words in the phrase “a single unit of publication,” the Court interpreted these to mean “some singular, bundled item that contains all works identified in the registration.”

The Court reached this interpretation by applying the principle noscitur a sociis, or “birds of a feather flock together,” that requires “that words in statutes are given more precise content by neighboring words.” In applying this to the issue before it, the Ninth Circuit held that “a collection of works does not qualify as a `single unit of publication’ unless all individual works of the collection were first published as a singular, bundled unit.”

After reaching this determination, the Ninth Circuit concluded that the evidence was clear that Unicolors had not established that it “published” these designs as a “singular, bundled unit” because at least some of the designs “were initially made available only to individual, exclusive customers.” The Ninth Circuit found that the evidence supported a finding that Unicolors knew that the information in its copyright registration application was inaccurate and that the district court, based on this evidence, should have requested the Register of Copyrights to weigh in on whether it would have refused the registration in light of these facts. Because the trial court had not done this, the Ninth Circuit concluded that it had erred and therefore reversed the entry of judgment and award of attorney’s fees and remanded the case to the trial court to submit an inquiry to the Register of Copyrights as normally required.

The Unicolors decision is a reminder that attorneys litigating copyright infringement should not necessarily take the first prong of proving in infringement case, i.e., ownership of a valid copyright, for granted. Further investigation or discovery on this issue may be warranted, especially in the case where multiple designs or works are registered as a single work.

Weintraub Tobin’s 2020 Labor & Employment Seminar and Training Schedule is Updated

Published: June 23, 2020

Weintraub Tobin’s 2020 Labor and Employment Seminar and Training schedule has been recently updated and is now available.

If you have any questions on any of our seminars or would like to inquire about private, custom-tailored training, please contact:

Ramona Carrillo

(916) 558-6046

[email protected]

Webinar – Reasonably Approaching Reasonable Accommodations: Don’t Make it Harder Than it Already Is

When: Jul 16, 2020
Where: Webinar

Summary:
Most employers know that employees may need to be accommodated from time to time for various reasons under California and/or Federal law. It is important for employers to understand these laws and comply with how the courts and various federal and state regulatory agencies interpret them, as well as learn what their rights and obligations are regarding: (1) engaging in the interactive process; and (2) providing reasonable accommodations. This is even more true in the current COVID-19 world we find ourselves in.

This seminar was presented and recorded on July 16, 2020. A recording of this webinar can be viewed on the Weintraub Tobin YouTube page. Please keep in mind that the COVID-19 pandemic is a fluid situation and information is constantly being updated. We recommend that you check with your professional advisors to make sure you have the most current information.

PTO Fast Tracks COVID-19 Patent and Trademark Applications

Published: June 18, 2020

by Audrey A. Millemann
The IP Law Blog

The United States Patent and Trademark Office has established a new program for prioritized examination for patent applications for inventions related to COVID-19 and for trademark applications for marks used for certain medical products and services used in connection with COVID-19.

On May 7, 2020, the Director of the PTO announced the program for patent applications. The program applies to products and processes related to the COVID-19 pandemic, specifically, to those subject to FDA approval for COVID-19 use, including investigational new drug applications, investigational device exemptions, new drug applications, biologics license applications, pre-market approvals, and emergency use authorizations.

To participate in the program, the patent applicant must be a small or micro entity. The fees typically charged by the PTO for prioritized examination will be waived for qualifying patent applications. If the patent application qualifies, the PTO will examine the application and reach a final determination within 12 months, and, in some cases, within six months. The patent application program is limited to the first 500 applications, although the program may be extended.

On June 15, 2020, the Director of the PTO announced a similar PTO program for trademark applications. The program applies to marks for a product or service that is subject to FDA approval for COVID-19 use or a medical or medical research service for the prevention or treatment of COVID-19. An applicant must file a petition to qualify for the prioritized examination. The PTO will waive the fees for these petitions.

According to the Director, the goal of the prioritized examination programs is to “help to bring important and possibly life-saving treatments to market more quickly.”

And we can all hope for that!

Reopening Commercial Buildings: Guidelines and Legal Duties

Published: June 17, 2020

Landlords and property managers have massive amounts of guidance materials available to them as they prepare to reopen their properties. These materials detail many different things a property owner can do. In the face of this, the question being asked by many owners is: what are they actually required to do, what is their legal duty? Unfortunately, the answer is both fact- and circumstance-specific, taking into account the property and its users, as well as federal, state and local requirements. But landlords and property managers should always be cautious about measures they commit to implement because commitments that exceed the minimum required by the circumstances can, if not implemented fully, expose them to liability.

As landlords and property managers prepare to reopen their commercial, retail, and office buildings, they have available to them a wide variety of guides and resources. There is no shortage of these materials, which are being prepared and provided by commercial real estate trade groups and the large brokerage/property management companies, as well as all manner of law firms and other professional advisors. As with much of the information that has circulated during the pandemic, available information has been packaged and repackaged, and pushed out in great volume. Many people have described taking it as “drinking from a firehose.” This makes sense — advisors want to be helpful to their clients and position themselves as experts to the public and prospective clients.

These materials offer detailed guidance on a wide variety of steps that can be taken to both make buildings safer and to make tenants and other users comfortable in returning to these spaces. They provide thoughtful advice, recommendations, and practical checklists. The guides include communications and management advice; social distancing, cleaning and disinfecting protocols; and guidance specific to different areas and elements of each property. Altogether, it is an impressive set of resources.

It is clear from reviewing these materials that there is a lot that landlords and property managers can do. That there is always one more thing that can be done. The practical question that these materials beg however is: what does a landlord and property manager need to do in order to protect themselves from claims and liability? What is required? What is my duty as a landlord or property manager, and what is the standard of care? The materials are much more tight-lipped on this issue, in many ways the crucial, practical and bottom-line issue on the minds of landlords and property managers.

At least one of the trade groups has recognized the issue in their materials, declaring that “[t]his Guide or any part thereof does not, and is not intended to, create a standard of care for any real estate professional or property manager” and “is not meant to advocate, promote or suggest any preferred method or methods for dealing with a Pandemic.” Additional comments beg the question: “Users should seek advice from a qualified professional before applying any information contained in this Guide to their own particular circumstances. Users should always obtain appropriate professional advice on… legal issues.” The concern is the liability exposure created if landlords have a duty to do all of these things, and the standard of care is compliance with these exhaustive guidelines.

The answer, unfortunately, is that it depends on the specific circumstances. Most leases do not have provisions which clearly define or disclaim duties in connection with this pandemic. This leaves the matter open to argument, and the various guidelines and industry resources can be part of that argument. Establishing the existence of a legal duty and the applicable standard of care is key to a successful claim. For a tort claim of negligence against a landlord, a plaintiff will need to prove the landlord owed a duty to the plaintiff, the landlord breached the standard of care applicable to that duty, plaintiff suffered an injury, and the landlord’s breach of the standard of care was the proximate cause of that injury.

What is the standard of care? California Civil Code 1714 (a) states that “everyone is responsible… for an injury occasioned to another by his or her want of ordinary care or skill in the management of his or her property or person…” The courts have held that this duty of care espoused in Section 1714 applies to possessors of land for injuries to people on their premises (see Rowland v. Christian (1968) 69 Cal.2d 108, 119) and that a landlord owes a tenant the same duty of reasonable care in providing and maintaining a leased premises. (Becker v. IRM Corp. (1985) 38 Cal.3d 454, 467.) Under these cases, any departure from that standard will be analyzed by balancing various factors, including the foreseeability of the harm, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty and liability and the availability of insurance for the risk involved.

The take-away from all of this for landlords and property managers is: be careful in taking on duties. The existence of a duty does not have a single, objective standard, and therefore landlords and property managers should be careful in defining and assuming these duties by, among other things, agreeing to perform certain tasks or assuming responsibility for obligations that they may not otherwise be responsible for. If a duty is taken on, be sure that it is performed to the standard of care. In other words, if you’re going to agree to do something, you need to actually do it; failing to complete that which you have agreed to do is prime fodder for a claim of negligence.

Landlords should also be mindful of their resources outside of the lease. This can include reviewing available insurance coverage and other risk management tools to mitigate liability exposure, as well as revising leases as appropriate to clarify and define landlord’s duties going forward. The current circumstances were difficult to predict, but a diligent landlord can minimize future issues by targeting the concerns raised and addressing them for future leases.