Intellectual Property

In California Costume Collections, Inc v. Pandaloon, LLC, 2-21-cv-01323 (CDCA Apr. 7, 2022) (John W. Holcomb), the Central District of California recently considered whether a plaintiff plead an inequitable conduct claim with the required particularity concerning knowledge of materiality. In the case, Plaintiff California Costume Collections (“CCC”) filed its Complaint against Defendant Pandaloon, LLC (“Pandaloon”) for declaratory judgment of non-infringement, invalidity, and unenforceability of U.S. Design Patent No. D806,325 (the “D325 Patent”) for a “Pet Costume.” In response, Pandaloon filed a Motion to dismiss Count Three of the Complaint—in which CCC alleges that the D325 Patent is unenforceable due to inequitable conduct—on the ground that it fails to state a claim for relief under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

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In California, an idea theft claim is based in large part on the California Supreme Court case of Desny v. Wilder. In Desny, the plaintiff Victor Desny wrote a script depicting the real-life story of Floyd Collins, a boy who made headlines after he was trapped in a cave eighty feet underground.  In an effort to market his script, Desny called Billy Wilder, a writer, producer and director at Paramount Pictures. Desny could not get through to Wilder and subsequently stripped his script to the bare facts so that Wilder’s secretary could copy it in short-hand over the phone.  After reading his synopsis, Desny told Wilder’s secretary that Wilder and Paramount could use the script only if they paid him a reasonable amount for doing so. Shortly thereafter, Wilder created his own movie script mirroring Densy’s. Because Densy’s script was based on historical facts, and because Desny only conveyed the bare minimum of those facts to Wilder’s secretary, both parties conceded for the purpose of the appeal that the synopsis was not sufficiently original to form the basis of a federal copyright claim. The Court, however, held that Densy stated sufficient facts to establish the existence of an implied-in-fact contract between the parties. The California Supreme Court explained that where an idea is furnished by one party to another, a contract sometimes may be implied even in the absence of an express promise to pay; a contract exists where “the circumstances preceding and attending disclosure, together with the conduct of the offeree acting with knowledge of the circumstances, show a promise to pay.

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We previously wrote about a lawsuit filed in the Northern District of California against Instagram regarding the use of Instagram’s embedding tools. The plaintiffs, in that case, are two photojournalists who captured images of the George Floyd protests and the 2016 election and posted them to Instagram. Various media companies embedded the photos using Instagram’s proprietary embedding tools. The photos, therefore, appeared on websites without any license from the original photographers.

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When entering into contracts, parties commonly include forum selection clauses to govern future litigation between the parties. When doing so, parties need to actively consider whether they intend that forum selection clause to prohibit filing petitions, such as petitions for inter partes review of patents, with the United States Patent and Trademark Office’s Patent Trial and Appeal Board (“PTAB”). The Court of Appeals for the Federal Circuit has generally recognized that parties can bargain away these rights, including through forum selection clauses in contracts. This issue recently arose in Nippon Shinyaku v. Sarepta.

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The United States Copyright Office has refused to register a copyright for a work of art created by a machine.

The work of art is a two-dimensional picture that is mostly dark and sort of looks like a painting. It is a view looking towards a series of two archways over railroad tracks, with walls along the sides covered in very dark green, purple, blue, and pink foliage, with a tiny bit of blue and cloudy sky above. The title is “A Recent Entrance to Paradise.” The work was created by a machine called “Creativity Machine” and was submitted for copyright registration in 2018 by Steven Thaler.

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This column previously addressed the case of Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., when it was decided by the Ninth Circuit about two years ago. Unicolors is the owner of copyrights in various fabric designs, including a 2011 copyright registration that consisted of 31 separate designs. Unicolors sued H&M for copyright infringement when H&M stores began selling a jacket and skirt that contained artwork that Unicolors claimed to be identical to one of the designs in its 2011 registration. The jury found in Unicolors favor and H&M moved the court for judgment as a matter of law, which the trial court denied. On appeal, the Ninth Circuit disagreed with the district court and ruled that because Unicolors had made a mistake of law in connection with the registration (i.e. it registered it as a single publication when some of the designs were apparently not put on sale to the public all at once), the registration should have been found to be invalid. Unicolors appealed this decision to the U.S. Supreme Court, which heard the case last November.

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In Pierce Manufacturing, Inc., et. al v. E-One, Inc. et. al, 8-18-cv-00617 (MDFL Feb. 16, 2022) (Thomas P. Barber) the Court denied in part plaintiffs’ motion for pre-judgment interest that would have accrued during a stay due to COVID-19. In the case, Defendants were found liable for infringing certain claims in Plaintiffs’ asserted patent and the jury awarded Plaintiffs damages of $1,287,854 in lost profits and $170,500 in reasonable royalties. The parties did not dispute that an award of prejudgment and post-judgment interest was appropriate along with the damages award. Instead, the dispute was to the accrual time, rate, and calculation of prejudgment interest.

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In what could be one of the biggest NFT cases to arise so far, Nike has sued resale marketplace StockX for trademark infringement in the Southern District of New York, claiming that StockX is selling NFTs that display Nike’s trademarks without Nike’s permission. In the Complaint, Nike alleges that StockX has infringed nine of its sneaker designs to create a line of NFTs that are part of its collection that StockX has branded the “Vault.” The collection consists entirely of allegedly unauthorized images of Nike sneakers. According to Nike, that’s because StockX is using Nike’s reputation and popularity to increase its sales. Specifically, Nike alleges that “Recognizing firsthand the immense value of Nike’s brands, StockX has chosen to compete in the NFT market not by taking the time to develop its own intellectual property rights, but rather by blatantly freeriding, almost exclusively, on the back of Nike’s famous trademarks and associated goodwill.”

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The Second Circuit recently reversed an injunction stripping designer and Instagram influencer Hayley Paige Gutman of her Instagram accounts in a dispute with her former business partners.

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INTERPROFESSION DU GRUYÈRE, et al., v. U.S. DAIRY EXPORT COUNCIL, et al., twas all about exclusive right to control the use of Gruyere for cheeses in the US.  This case began with a 2015 application by Interprofession du Gruyère, a Swiss registered association, and Syndicat Interprofessionnel du Gruyère , a French syndicat for a certification mark  GRUYERE.  A certification mark is used to certify regional or other origin, material, mode of manufacture, quality, accuracy, or other characteristics of goods or services or that the work or labor on the goods or services was performed by members of a union or other organization.  So, for example, the mark ROQUEFORT is used to certify cheese that comes from a specific municipality in France; UL or Underwriters Laboratories certifies, among other things, representative samplings of electrical equipment meeting certain safety standard.

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