Publications

The validity of a United States patent can be challenged in federal court litigation.  Patents can also be challenged in the U.S. Patent and Trademark Office, which, in most cases, is a quicker and less costly process.

The PTO provides three procedures by which a patent can be challenged: inter partes review (IPR), post grant review (PGR), and ex parte reexamination.  In IPRs and PGRs, the challenger and the patent owner both participate, and the proceedings are handled by the Patent Trial and Appeal Board (PTAB).  In an ex parte reexamination, the challenger is not involved after the request for reexamination has been filed, and the proceeding is handled by the PTO examiners.

In IPRs and PGRs, anyone except the patent owner may file a petition to challenge the patent.  The filing fees are high, $41,500 for an IPR and $47,500 for a PGR, with additional fees depending on the number of claims challenged.  The proceedings are handled by a three-judge panel of administrative judges with technical background in the field of the patent.  There are two phases in these proceedings.  The first phase consists of the filing of the petition by the challenger, the filing of a response by the patent owner, and the decision whether to institute the IPR or PGR by the PTAB.  If the PTAB institutes the IPR or PGR, then the second phase (the trial phase) begins.  The second phase consists of discovery (more limited than in litigation), briefing, an oral hearing, and a final written decision by the panel.  The entire process from institution to the final decision should take no more than 12 months.  The parties may appeal the decision to the Federal Circuit Court of Appeals.

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On March 16, 2021, U.S. Circuit Judge Evan J. Wallach for the Federal Circuit Court of Appeals announced he plans to take senior status on May 31, 2021.  This semi-retirement is set to create the first vacancy at the Federal Circuit in almost six years.  The Federal Circuit handles all appeals of patent cases from Districts Courts in the U.S., and appeals from various government agencies.  Thus, the Federal Circuit is the only one of the thirteen federal courts of appeal whose jurisdiction is determined entirely on the subject of the lawsuit it hears, rather than on the geographical location from which the appeal originated.  This means the Federal Circuit can hear appeals from every District Court in the United States as long as it has subject matter jurisdiction. The only court in the United States with more authority over patent related issues in the United States Supreme Court.

The Federal Circuit was the only federal court of appeals that did not have any vacancies during President Donald Trump’s administration.  In fact, President Trump nominated and succeeded in putting a judge in every other appellate court during his four years in office, including fifty-four judges on the federal appeals bench.  However, the Federal Circuit remained untouched, and in fact currently has eight Democratic-President appointed judges, and four Republican-President appointed Judges.

Judge Wallach was confirmed in November 2011 after being nominated by President Obama, and will take senior status after spending nearly a decade at the Federal Circuit.  Senior status is a form of semi-retirement that allows judges to vacate their seats on the bench but keep working with the option of reducing their caseload.  Judge Wallach had previously served a 16-year stint as a judge in the U.S. Court of International Trade.

Some of Judge Wallach’s more well-known recent opinions include Phigenix, Inc. v. Immunogen, Inc. in 2017 that expanded the bar on competitor standing to appeal decisions from the Patent Trial and Appeal Board, and, Blackbird Tech LLC v. Health in Motion LLC, et al. in 2019 that expanded the ability of the winning side in patent litigation to recoup legal costs in exceptional cases by citing the number of patent lawsuits brought by the plaintiff (110 cases in a four-year period in the case of Blackbird).

Now, President Biden will have an opportunity to appoint a judge to the Federal Circuit for the first time in six years, and an opportunity to make an impact on the courts and the future of patent law in the United States.

We recently discussed a new trend in celebrity copyright litigation on our YouTube channel and podcast (The Briefing on YouTube). Specifically, we discussed celebrities taking a stand and defending copyright claims brought by photographers against celebrities who reposted photos on their social media accounts. Two specific celebs who have taken a stand are Emily Ratajkowski and LeBron James. I am writing today to discuss what may be a new strategy in such copyright litigation. That strategy is defaulting.

When a party is sued in federal court—the exclusive jurisdiction for copyright actions—they have 21 days from the date of service to file a responsive pleading under Federal Rule of Civil Procedure 12(a)(1)(B). If a defendant fails to file a response, the plaintiff can apply to the court for entry of default under Federal Rule of Civil Procedure 55(a). Unless the defendant files an untimely response, the court will likely enter the defendant’s default. Once that occurs, the defendant is deemed to have admitted the well-pleaded allegations of the complaint. The plaintiff can then apply to the court for entry of default judgment. In doing so, the plaintiff requests that the default judgment include all damages that the plaintiff claims to have incurred, attorney’s fees (if applicable), and costs. Of course, the plaintiff has to provide factual and legal support for the damages request. Obviously this isn’t an ideal situation for a defendant given that the plaintiff gets to provide uncontested evidence to the court to support its damages claim while the defendant is deemed liable due to the entry of default. If you ask most attorneys, they would tell you that defaulting is never advisable, unless perhaps you’re judgment proof. But a recent ruling from the United States District Court for the Southern District of New York may cause some attorneys to rethink things.

In the matter of Clint Brewer v. Sofia Vergara Enterprises, Inc. and Sofia Vergara (collectively, “Vergara”) (Docket No. 1:20-cv-4865-AKH), a photographer who licensed a photo that he took of Vergara walking onto the set of America’s Got Talent sued Vergara for copyright infringement after she reposted the photograph on her Instagram account to her 21.2 million followers. Brewer hired the infamous copyright troll Richard Liebowitz, who has been repeatedly sanctioned by the federal courts for filing frivolous litigation and who was recently suspended from practicing law in New York, pending a disciplinary investigation. In short, Brewer claimed that Vergara published his copyright-protected photograph to promote her clothing brand—which she arguably did since she tagged Wal Mart and mentioned her clothing line in the caption. Brewer’s prayer for relief included a claim for $150,000 in statutory damages under the Copyright Act and additional damages under the Digital Millennium Copyright Act for removing the copyright notice. Despite a significant request for damages, Vergara never responded to the complaint. It’s unclear whether this was intentional, but presumably it was given Vergara’s familiarity with litigation.

As a result of Vergara’s failure to respond, the Court entered her default, and Brewer subsequently moved the court for a default judgment. Although Brewer alleged that he was seeking up to $150,000 in statutory damages, his motion only sought $5,000 in statutory damages, $455 in attorney’s fees, and $440 in costs. In determining statutory damages, the court has great discretion to award between $750 and $150,000 per work, depending on whether the infringement was willful.

On February 18, 2021, the court issued its order and entered default judgment. The court exercised its discretion and awarded a mere $750 in statutory damages for the copyright infringement claim and refused to award attorney’s fees and costs. Given the amount in controversy for a violation of the Copyright Act, this is a great outcome, and it’s exponentially better when you consider that Vergara didn’t spend a dime in attorney’s fees or costs, which easily could have exceeded six figures if the matter were contested.

While this was a fantastic outcome for Vergara, I can’t say that I’ll be inclined to suggest to my clients that they simply default in such cases. The risk of doing so is far too great. Sure, the court in the Vergara case found that her conduct wasn’t willful, awarded the statutory minimum in damages, and refused to award attorney’s fees and costs. But it was also possible that a judge could have deemed her conduct willful and awarded the statutory maximum of $150,000 and attorney’s fees and costs. In this instance, the gamble paid off, and I will unquestionably inform my clients of this outcome, but I will not be the one to recommend the default strategy. If a client chooses to roll the dice after being provided with a thorough explanation of the possible outcomes, that is their prerogative. But flatly recommending such a course of action seems imprudent.

While Shakespeare may have wondered “what is in a name?”, the executives at Peloton believe that the trademark SPIN is of great importance. Last month (February, 2021), Peloton filed petitions to cancel the trademarks SPIN and SPINNING for physical fitness instruction and for stationary exercise bicycles on the grounds that the marks are generic. Mad Dogg Athletics, located in Venice, CA, is the owner of the trademarks SPIN and SPINNING. Mad Dogg registered SPIN on the principal register in 1998 and SPINNING in 1993. In its petition, Peloton asserted that Spin classes and spin bikes are part of the fitness lexicon and that Mad Dogg’s trademarks for SPIN and SPINNING have become generic. Peloton cited to Internet evidence, including memes, to support its argument that the terms SPIN and SPINNING have become generic.

It is a serious issue for a trademark owner if their trademark becomes generic.  Generic terms are terms that the relevant purchasing public understands primarily as the common or class name for the goods or services. Put in common parlance, if the general public primarily understands the word to designate the product rather than the producer, the word is generic. Generic terms are incapable of functioning as registrable trademarks denoting source, and are not registrable on the Supplemental Register or on the Principal Register after having acquired secondary meaning.

There is a two-part test used to determine whether a designation is generic: (1) What is the class of goods or services at issue? and (2) Does the relevant public understand the designation primarily to refer to that class of goods or services? The test turns upon the primary significance that the term would have to the relevant public.

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©2021. Published in Landslide, Vol. 13, No. 3, January/February 2021, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

The U.S. Supreme Court issued numerous landmark decisions in 2020, among those—for trademark scholars and practitioners—Romag Fasteners, Inc. v. Fossil, Inc.¹ The Court, with Justice Gorsuch delivering the majority opinion, held that a plaintiff in a trademark infringement suit is not required to show that a defendant willfully infringed the plaintiff’s trademark as a precondition to a profits award. But Justice Gorsuch’s opinion and Justice Alito’s and Justice Sotomayor’s concurrences were clear that mental state is still a highly important consideration in determining whether to award profits. To that end, even with the Romag decision clarifying that willfulness is not a precondition for a profits award in a trademark infringement suit, the lower courts are likely to still require plaintiffs to prove that defendants had high levels of culpability before awarding profits for trademark infringement. Practitioners should expect that juries will find that defendants who knew of infringement or were reckless concerning the possibility of such conduct deserve to lose their profits.

Romag solidifies the threat posed to companies that rely on third-party manufacturers. By allowing a profits award when infringement is perpetrated with a mental state less than willfulness, this decision incentivizes companies using Chinese and other foreign manufacturers to innovate in order to mitigate these risks, either by strengthening supply chain oversight or (more likely) by writing contracts to control the risk as much as possible. Considering the importance of Chinese manufacturing to global trade, the Chinese legal system and its evolving trademark enforcement system will likely cause companies to get creative.

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A recent case in the Southern District of New York calls into serious question the ubiquitous practice of embedding photographs on a content creator’s website.

An embedded photo is one that is not hosted on the website’s own server, but instead is linked to a third-party server like a social media site.  Instead of the photo being permanently available on the website, the website pulls the photo from the third-party site live when the website is accessed by a user.  Platforms like Twitter, Instagram, and TikTok make it extremely easy for websites to embed user posts, and provide website designers with tools specifically meant to make embedding seamless for the user.

In a recent case (Sinclair v. Ziff Davis, LLC, 1:18-cv-00790, S.D.N.Y.), a professional photographer posted a photo to Instagram that was later embedded by Mashable in an article on its website.  In its original ruling, the court held that Instagram’s terms of service (which every user, including Sinclair, accepts when signing up) permitted the embedding on links on third party websites.  The court ruled that Instagram had the right to relicense Sinclair’s image to Mashable, and granted Mashable a dismissal of Sinclair’s claims.

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