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The answer is “Yes” because the U.S. government has waived sovereign immunity for claims of patent infringement.  This means the U.S. government can be sued for patent infringement in at least some instances.  However, special rules and certain limitations apply as explained in 28 U.S.C. § 1498, which states, in part:

(a) Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.

As a result, patent infringement lawsuits against the United States government, are not brought in Federal district courts but rather in the Court of Federal Claims, which is a special court “authorized to hear primarily money claims founded upon the Constitution, federal statutes, executive regulations, or contracts, express or implied in fact, with the United States.”  See https://www.uscfc.uscourts.gov/.  Further, a patent owner cannot sue a federal contractor who made the allegedly infringing product or performed the allegedly infringing method, but instead, must sue the U.S. government.  Note, however, the U.S. government’s contract with the federal contractor may require the contractor to indemnify the government for liability and costs.

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Under the Copyright Act, an owner of a copyright suing for infringement may elect to seek statutory damages instead of actual damages.  The amount of statutory damages under the Copyright Act are limited to $30,000 for innocent infringement and up to $150,000 for willful infringement.  In Desire, LLC v. Manna Textiles, Inc., et al. (decided February 2, 2021), the Ninth Circuit was confronted with the issue of whether a plaintiff is entitled to multiple statutory damage awards where some of the defendants are found to be jointly and severally liable with each other.

Desire is a fabric supplier that had obtained and registered with the Copyright office “a two dimensional floral print textile design.”  Shortly thereafter, a woman’s clothing manufacturing, Top Fashion, purchased a couple of yards of the fabric from Desire in order to secure a clothing order with Ashley Stewart, Inc., a woman’s clothing retailer.  Unfortunately, Top Fashion and Desire had a dispute over the fabric’s price.  Top Fashion then showed the design to Manna, a fabric designer, who in turn used a Chinese textile design firm to modify the design.  That designer changed approximately 30-40% of the original design, and Manna subsequently registered the “new” design with the Copyright Office.

Between late 2015 and Spring 2016, Manna sold this fabric to at least three manufacturers, who in turn created garments that were then sold to at least three retailers.  Desire then sued Manna, the manufacturing defendants and their retailer defendants, for copyright infringement.  Desire did not allege that the three manufacturing defendants acted in concert with one another or that the three retail defendants acted in concert with one another to infringe on Desire’s copyright.  (The Ninth Circuit’s opinion contains a diagram on page 8 showing the manufacturer/distribution chain if the reader is interested.)

The trial court granted summary judgment to Desire on the issues that it was the owner of a valid copyright and that Manna, and at least two manufacturing defendants, had access to the subject design.  The Court also concluded that Desire’s copyright design “was entitled to broad copyright protection.”  The Court then held that although the jury would determine whether copyright infringement had occurred, if it did so, the Court held that it would award up to seven statutory damages awards under a theory that some of the defendants were jointly and severally liable.

After a trial, the jury returned a verdict in Desire’s favor and found that Manna and two of the manufacturer defendants had willfully infringed on Desire’s copyright and that a third manufacturer and one retailer had innocently infringed on the copyright.  After totaling up the seven separate statutory awards, the trial court awarded Desire $480,000 in statutory damages, with 100% of that amount assessed jointly and severally against Manna.  The defendants appealed the ruling to the Ninth Circuit.  (This article will not address the issue of the copyright infringement liability that is discuss in the Court’s opinion.)

On appeal, the defendants argued that the district court had adopted “an erroneous view of joint and several liability” and the interplay with the Copyright Act’s statutory damages scheme.  The argued that because joint and several liability results where two or more defendants have contributed to the harm that the plaintiff suffered, even if they do so independently, “the Copyright Act permits only one award of statutory damages.”  Desire, on the other hand, argued that where the joint and several liability is only between some of the defendants as opposed to all of them completely, the Copyright Act should be read to allow for multiple statutory damage awards. The Ninth Circuit decided to adopt the defendants’ approach to statutory damages under the Copyright Act given the facts of the case.

The Ninth Circuit began by noting that the district court had properly apportioned joint and several liability between the upstream defendants, i.e., the manufacturers, and the downstream defendants, i.e., the retailers.  The Ninth Circuit did reject the defendants’ argument that joint and several liability should rest on a single indivisible injury, i.e., Desire’s loss of compensation.  The Ninth Circuit concluded that this view ignored that Desire’s damages were in fact divisible because each “upstream infringer” was a cause of the harm emanating from its chain of distribution because no downstream infringer would have received any infringing item “but for” the acts of the upstream infringers.  However, each downstream infringer, i.e., retailer, would have only been the cause of harm resulting from its own actions and not for those of the other retailer defendants in other distribution chains.

The Ninth Circuit then turned to the actual language of the Copyright Act that “permits a copyright owner to elect an award of statutory damages in lieu of actual damages and profits.”  Citing, 17 U.S.C. §504(c)(1).  This section allows the recovery of “an award of statutory damages for all infringements involved in the action with respect to any one work for which any one infringer is liable individually or for which any two or more infringers are liable jointly and severally.”  Thus, the number of awards for infringement do not focus on each separate infringement, but rather, on “(1) the number of individual `works’ infringed; and (2) the number of separate infringers.”  The Ninth Circuit found that there was no dispute that only a single work, i.e., the floral design, was alleged to have been infringed. Thus, the issue became whether multiple statutory damage awards can issue “where one infringer is jointly and severally liable with all other infringers but the other infringers are not completely, jointly and severally liable with one another.”  The Ninth Circuit concluded that this was not permissible.

The Court turned its attention to statutory interpretation, which holds that “when the statutory language is unambiguous, the plain meaning controls.”  The Court concluded that the plain language of section 504(c)(1) precluded multiple awards of statutory damages where there was only one work involved and the defendants have partial joint and several liability among them through a single tortfeasor, who is jointly and severally liable with all of them.

Desire argued that all of the defendants must be jointly and severally liable with each other for the infringement to constitute a single statutory damage award.  However, the Ninth Circuit held that such an approach would render the word “any” to be superfluous and essentially rewrite it as meaning “all.”  This would go against the intent of the statute.

The Ninth Circuit recognized that the whole purpose of a statutory damages award under the Act was to be an alternative to actual damages, and that the election always belonged to the copyright owner.  The Ninth Circuit concluded that Congress did not intend to create a windfall statutory award in cases such as the one before it.  For instance, although it is of dispute whether Manna’s actual profit on the subject design was no more than $5,000, the Ninth Circuit noted that adopting Desire’s result would result in an award “nearly 100 times its profits” if that were the case.

The Ninth Circuit also found that the statutory damage award in the Copyright Act had to fulfill the two remedial provisions of the Copyright Act, “to provide adequate compensation to the copyright holder and to deter infringement.”  It was not, as the Ninth Circuit had previously noted, to create a windfall for copyright owners.  The Ninth Circuit was mindful that, by adopting its approach, it might encourage copyright owners to file separate actions against various defendants to try to get around a single statutory damages award where there was joint and several liability.  The Court reasoned, however, that there were procedural mechanisms, such as consolidation or transfers, that would allow such attempts to be frustrated by having all the claims joined in a single action. Moreover, the Ninth Circuit concluded that it was their job to interpret the statutory language as opposed to weighing the possible benefits of alternative interpretations or policies.

Justice Wardlaw dissented and would have adapted Desire’s interpretation that would allow for multiple statutory damage awards.  Justice Wardlaw’s primary concern was that it would encourage copyright owners to bring actions that cut out the “common source defendant at the top of the chain” and seek multiple statutory damage awards against those lower on the chain of distribution through separate actions.

The Ninth Circuit’s decision in the Desire case is a reminder to copyright infringement plaintiffs of the availability to elect statutory damage, especially where actual damages are hard to prove or nominal.  However, the Desire ruling serves to place some restraint on a plaintiff’s ability to turn such an election into a windfall.

Is it possible to legally protect an idea?  The answer is: not really.

Intellectual property is intangible personal property.  There are four types of intellectual property that are protected by law:  patents, copyrights, trademarks, and trade secrets.  A separate set of laws governs each one.  Although ideas may be intangible personal property, ideas do not fit in any one of the types of intellectual property.

Patents protect inventions.  A utility patent covers a functional invention that is a machine, article of manufacture, composition of matter (such as a chemical or an isolated gene), or a process (a method of doing something).  A design patent covers an ornamental design for an article of manufacture.  A plant patent covers a new type of plant.  Some things cannot be patented: laws of nature, natural phenomena, and abstract ideas.

In order to get a patent a patent application must be filed in the United States Patent and Trademark Office.  A patent examiner reviews the application.  If the application satisfies certain requirements, a patent is granted.  First, the invention must be novel (new).  Second, the invention must be a nonobvious difference over what has been done before in the technological field.  From the time the application is filed, it may take several years before the applicant is granted a patent or the application is finally rejected.

The owner of a patent has the right to exclude others in the U.S. from making, using, selling, offering to sell, or importing the patented invention.  A patent is good from 20 years from its filing date.  If someone violates the rights of the patent owner, the owner may sue for patent infringement.  Patents are governed by federal law.

Copyrights cover original forms of authorship or expression fixed in a tangible medium.  They include books, film, computer programs or software, songs, plays, dance, photographs, sculpture, and other types of artwork.  Certain types of expression cannot be copyrighted.  For example, works that are not original because there is only way of expressing the work (such as phone books, forms, and instructions) cannot be copyrighted.  In addition, ideas, concepts, and discoveries are not protectable by copyright.

A copyright exists as soon as the work is created and fixed in a tangible medium.  The work can be registered in the U.S. Copyright Office.  The owner of a copyright has the exclusive rights to: reproduce and make copies of the work, distribute copies of the work, publicly perform and display the work, and create derivative works.  In general, a copyright is good for the life of the author plus 70 years.  If someone violates the copyright owner’s rights, the owner may sue for copyright infringement.  Like patents, copyrights are governed by federal law.

Trademarks are words, phrases, symbols, or designs used in commerce to identify the source of goods or services and to distinguish them from those of others.  A trademark (sometimes called a brand) provides the consumer with the knowledge the product or service they are purchasing comes from the source they associate with that mark.  Certain words cannot be trademarked, in particular, marks that are “merely descriptive” (i.e., marks that simply describe the product or service or its characteristics).  Ideas cannot be trademarked.

A person who uses a trademark in commerce has some common law rights.  A mark may also be federally registered in the PTO.  Some states also offer their own trademark registration systems, although federal registration provides the most protection.  In order to federally register a mark, an application must be filed in the PTO.  The application must contain a sample of the mark in use in commerce (unless the application is an “intent to use” application which reserves future rights), identify the goods or services for which the mark is being used, and list the date of first use of the mark in commerce.  The trademark examiner will review the application to see if certain requirements are met, including whether the mark is likely to be confused with other registered marks for the same or similar goods or services.  The registration process may take up to a year or possibly longer before the mark is granted registration or is finally rejected.

A trademark owner has the rights to prevent others from using the same or a similar mark in connection with the sale of the same or similar goods or services if the other mark is likely to confuse consumers as to the source of the goods or services.  If a trademark owner’s rights are violated, the trademark owner may sue for trademark infringement in federal court under the Lanham Act or in state court.  A federal registration for a trademark may be renewed every 10 years if the mark is in continuous use.

The fourth type of intellectual property is a trade secret.  Trade secrets are different from the other three types of intellectual property in that there is no federal registration system and the owner does not obtain any “monopoly” rights.  A trade secret is information that has economic value from being kept secret and that is the subject of reasonable efforts to keep it secret.  The owner of a trade secret may sue anyone who misappropriates (wrongfully acquires, discloses, or uses) the trade secret.

Trade secrets are governed by state law, although there are some federal statutes that also protect trade secrets.  Trade secret protection lasts as long as the information is kept secret.

Thus, none of the four areas of intellectual property law directly protects an idea.  While it may be possible to further develop an idea to make it into a patentable invention or to use the idea to create a copyrightable expression, trademark, or a valuable trade secret, the pure idea itself is not protected by these areas of law.

So, is there anything one can do to protect an idea?  If one wants to disclose an idea to someone else, the best choice is to enter into a nondisclosure agreement with the party to whom the idea will be disclosed.  A nondisclosure agreement prevents the receiving party from disclosing or using the idea without the discloser’s consent.  Of course, a nondisclosure agreement is only as good as the receiving party can be trusted.  If the receiving party breaches the nondisclosure agreement by disclosing the idea, the discloser has remedies for the breach, but cannot regain the idea’s secrecy.

In The Sherwin-Williams Company v. PPG Industries, Inc., 2-17-cv-01023 (WDPA 2021-01-21, Order), the court had to decide whether Plaintiff The Sherwin-Williams Co. (“Sherwin”) should be bound by its prior admission to the United States Patent and Trademark Office (“USPTO”) during vacated reexamination proceedings.  

During one of the reexamination proceedings, Sherwin admitted that certain prior art (“Perez”) disclosed a BPA-free coating, although it contended that its patents were valid for other reasons.  Subsequently, the entire reexamination proceeding was terminated without any action on the merits.  

Thereafter, in its invalidity contentions in the current litigation, Sherwin contended that Perez did not disclose a BPA-free coating and the admissions during reexamination did not admit that Perez disclosed or rendered obvious a certain limitation. In its initial expert report, Defendant PPG Industries’ (“PPG”) technical expert noted Sherwin’s admission to the USPTO that Perez disclosed a BPA-free coating.  In response, Sherwin’s expert opined that Perez did not disclose a BPA-free coating.  

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The Supreme Court recently denied petitions for certiorari in two of the most highly watched intellectual property cases before the Court. Those cases were Jack Daniel’s Properties Inc. v. VIP Products LLC and The Moodsters Company v. Walt Disney Company. Both cases were on petition from the Ninth Circuit and are summarized below for your convenience.

I.          Jack Daniel’s Properties, Inc. v. VIP Products LLC

In Jack Daniel’s Properties, Jack Daniel’s sued the maker of a dog toy, known as the Bad Spaniels Silly Squeaker, that was comedically modeled after the Jack Daniel’s Old. No. 7 bottle. The toy was a clear parody, but Jack Daniel’s alleged that the toy infringed its intellectual-property rights. VIP Products argued that their use wasn’t infringement because the toy was an expressive work entitled to First Amendment protection under Rogers v. Grimaldi. The district court rejected the argument and found VIP Products had infringed Jack Daniel’s trademark/trade dress.

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