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As I frequently mention in my articles, trademark law is a much more prevalent part of the average person’s life than they realize. We are surrounded by the trademarks of numerous companies every time that we step outside, or even when we look around our own homes. However, we would not generally expect for trademark law to be inserted into a presidential campaign. At least, not until Donald Trump threw his hat in the ring.

Since Donald Trump has coined the campaign slogan “Make America Great Again,” he has been quite diligent about protecting his brand. Trump’s army of trademark attorneys have been aggressively threatening companies such as Café Press and an anti-Trump interest group with cease and desist letters ordering that they cease using the mark “Make America Great Again.” Although this is a shock to many of us who are not accustomed to seeing trademark law inserted into the political sphere, it should not come as too much of a surprise given Mr. Trump’s involvement. Donald Trump‘s acute understanding of the power of branding has significantly contributed to his net worth that allegedly exceeds $8.7 billion dollars. So his diligent brand protection is hardly out of character.

Trademark claims have been regularly made at the lower levels of politics, such as in campaigns for local offices, but they are rarely seen at the presidential level. Despite Mitt Romney’s use of numerous creative campaign logos and designs in the 2012 election, none of them were trademarked. To the contrary, Team Obama did not hesitate to trademark its campaign logo utilizing the Obama “O” which symbolized “a rising sun and a new day.” According to the creator of the mark, brand development and design company Sender LLC, “The Sun Rising over the horizon evoked a new sense of hope.” The Obama Campaign felt so strongly about this meaning that the logo was registered with the United States Patent and Trademark office as a trademark. Still this was another exceptional case.

Trump, however, is the first candidate to register a mark utilizing “America.” According to numerous trademark experts, Trump can establish that he has a right to the trademark “Make America Great Again” because the public now associates the mark with him. I tend to agree. What this is really saying is that “Make America Great Again” has acquired secondary meaning in the marketplace as a result of advertising or continued usage. Under United States trademark law, many common phrases cannot be trademarked unless they have acquired such secondary meaning. That certainly seems to be the case here given Trump’s repeated appearances in the red baseball hat bearing the mark. He has also repeatedly utilized the mark during his campaign speeches. The mark has become so commonly associated with Trump that when Tom Brady was seen wearing the hat in the locker room, rumors spread that he was a Trump supporter.

Certain trademark experts have compared Trump’s right to “Make America Great Again” to that of Coke to “It’s the real thing” or Nike to “Just do it.” Logically, allowing such protection makes sense because when the mark becomes so closely associated with a company or an individual there is a “likelihood of consumer confusion” if others are permitted to sell goods bearing the mark. As such, other companies could wrongfully benefit from the goodwill of the individual or company who owns the mark.

Based on this brief analysis, it seems that while Trump’s trademarking of the phrase “Make America Great Again” may be uncommon in the sphere of presidential politics, it is likely permitted under United States trademark law. It remains to be seen whether this business-like mentality will have any effect on Trump’s campaign, but it certainly did not seem to affect the 2008 or the 2012 Obama campaigns. Irrespective of how you feel about Mr. Trump’s political views, you have to admit, the man knows how to protect his brand.

Laches, a judicially created defense based on the plaintiff’s delay and prejudice to the defendant, is a proper defense to the recovery of damages in a patent infringement suit, even though the Supreme Court ruled in 2014 that laches does not apply in copyright infringement cases.

A divided en banc Federal Circuit Court of Appeals held in SCA Hygiene Products v. First Quality Baby Products (September 18, 2015) 2015 U.S. App. LEXIS 16621 that Congress specifically provided for a laches defense in the Patent Act, unlike the Copyright Act.

SCA owned a patent for adult incontinence devices; First Quality was a competitor. In 2003, SCA sent First Quality a letter stating that it believed First Quality’s products infringed SCA’s patent. First Quality replied that SCA’s patent was invalid based on a prior art patent. In 2004, SCA filed a petition for reexamination of its patent in the Patent and Trademark Office, citing the prior art patent. In 2007, the PTO upheld SCA’s patent. SCA had not informed First Quality of the reexamination because the reexamination proceedings were public, but First Quality believed that SCA had dropped its accusation in response to First Quality’s letter. During this time, First Quality had made significant investments in its business. SCA knew First Quality was expanding its business, but did not inform First Quality of the reexamination decision. In 2010, seven years after its last communication with First Quality, SCA sued First Quality for patent infringement.

The trial court granted First Quality’s motion for summary judgment on laches and equitable estoppel. SCA appealed. A panel of the Federal Circuit affirmed the trial court’s decision on the laches defense and reversed it on the equitable estoppel defense.

On rehearing before the en banc Federal Circuit, SCA contended that the Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.Ct. 1962 (2014) eliminated laches as a defense. In Petrella, the Supreme Court held that laches is not a defense to a claim of copyright infringement brought within the Copyright Act’s statute of limitations. SCA argued that laches should not apply as a defense in patent infringement cases within the Patent Act’s six-year period for obtaining damages.

The Federal Circuit held that the Patent Act was not like the Copyright Act because the patent statutes expressly provided for both a six-year time limit on the recovery of monetary damages and a defense of laches.

The court explained that laches was codified in 35 U.S.C. §282(b)(1), which sets forth, in general terms, that defenses of “absence of liability” are permitted. The court relied on the commentary of the drafters of the Patent Act, which specifically stated that laches was a proper defense. The court noted that its holding is not new, as courts have interpreted §282 to permit laches as a proper defense to patent infringement claims for decades.

The court next addressed whether laches is a defense only to equitable relief (injunctions) or whether it is also a defense to legal relief (monetary damages). Although the patent statutes do not provide the answer to this question, the court concluded that laches is a defense to all forms of relief, based on this state of the case law in 1952 when the patent statutes were enacted. At that time, courts applied laches to bar both equitable and legal relief, and Congress intended to codify existing law in enacting the Patent Act. In analyzing Patrella, the court explained that the Supreme Court had:

“eliminate[d] copyright’s judicially-created laches defense because Congress, through a statute of limitations, has already spoken on the timeliness of the copyright infringement claims, so there is no room for a judicially-created timeliness doctrine.”

This is in contrast to the Patent Act, which the court explained as follows:

“The statutory scheme in patent law, however, is different. While Congress has spoken on the timeliness of patent damages claims, Congress also codified laches defense in §282. Thus, because §286 provides for a time limitation on the recovery of legal remedies, and §282 provides for laches as a defense to legal relief, the separation of powers concern is not present. . . . Laches therefore remains a viable defense to legal relief in patent law.”

Lastly, the court clarified that laches is a proper defense to a permanent injunction, but not to an ongoing royalty for a defendant’s continuing infringement. The factors considered in laches (the plaintiff’s delay and prejudice to the defendant) are relevant in deciding whether an injunction is appropriate, but the plaintiff’s delay should not bar it from recovering ongoing royalties for the defendant’s current infringement.

The court also distinguished the defense of equitable estoppel from laches. Equitable estoppel is a bar to the entire claim of patent infringement, precluding any relief. This is because equitable estoppel is premised on conduct by the patent owner that demonstrates acquiescence in the defendant’s infringing acts, essentially granting the defendant a license under the patent for the patent’s term.

In concluding, the court said that Congress can certainly change the law if it so chooses, but for now, laches survives. In that case, patent owners should be vigilant in protecting their rights.

On September 9, 2015, the United States District Court for the Southern District of New York ruled that Costco was willfully infringing Tiffany & Co.’s trademarks by selling diamond engagement rings bearing the renowned jewelry retailer’s name. The suit started back in 2012 when a patron of Costco in Huntington Beach, California decided to reach out to Tiffany to express her disappointment in Tiffany offering its rings for sale at Costco. She also stated that the rings were being promoted on signs within the store as Tiffany diamond engagement rings. After receiving the complaint and knowing that it did not sell its rings through Costco, Tiffany launched an investigation revealing that the Huntington Beach Costco was in fact displaying diamond engagement rings in a case labeled with the word Tiffany. The investigation also revealed that the Costco salespeople were referring to them as Tiffany engagement rings. Accordingly, Tiffany took action.

According to the Court’s ruling, prior to the lawsuit, Costco promised that it would remove references to Tiffany from its display case signs and even sent a letter to customers who bought the rings offering a full refund if they were not satisfied. Irrespective of these acts, Tiffany filed suit, ironically enough, on February 14, 2013. In response, Costco filed a counterclaim alleging that Tiffany’s trademarks were invalid because they sought to prevent others from using the word “Tiffany” as a generic description of a type of ring setting. Almost a year and a half later, the Court ruled in favor of Tiffany and against Costco. Specifically, Judge Laura Taylor Swain ruled that the evidence established that Costco had infringed Tiffany’s trademarks by selling engagement rings and had confused consumers by using the word Tiffany in display cases. Judge Swain ruled that “Despite Costco’s arguments to the contrary, the court finds that, based on the record evidence, no rational finder of fact could conclude that Costco acted in good faith in adopting the Tiffany mark.”

Under the ruling, Tiffany may now seek damages from Costco through a jury trial. These damages could include disgorgement of Costco’s related profits from the rings, as well as punitive damages. It seems likely that because of the egregious nature of the infringement, a jury will award Tiffany Costco’s related profits, with punitive damages to punish Costco’s seemingly intentional and deceptive conduct. That, however, assumes that the matter gets to the jury. The Court ordered the parties to “make good faith efforts to settle the outstanding issues” and given the unpredictability of juries, I believe the parties will reach a resolution on damages before a jury comes into play. With that said, it is debatable how much leverage Costco has to negotiate at this point with the Court already finding that it infringed Tiffany’s mark.

General Counsel for Tiffany, Leigh Harlan, stated that “We believe this decision further validates the strength and value of the Tiffany mark and reinforces our continuing efforts to protect the brand.” Ms. Harlan’s statements are bolstered by the .55% increase in the Tiffany stock to $82.32 the day after the issuance of Judge Swain’s ruling. Interestingly, Costco’s stock also went up .04% to $141.48 per share the same morning.

This ruling should not come as a surprise to many. The strength of the Tiffany mark in the realm of diamond rings is in my opinion second to none. So when an unpermitted party chooses to use the word Tiffany in conjunction with its sale of diamond rings, consumer confusion is almost inevitable. It would certainly be interesting to see how many consumers were duped into purchasing these Costco rings under the impression that they were getting a Tiffany ring at a substantial discount. Personally, I think it would be more interesting to see how the consumers who purchased these rings pawned them off on their significant others as a Tiffany ring without the distinctive Tiffany Blue Box. But that’s just me.

The Federal Circuit Court of Appeals has established a new test for “divided” patent infringement. Direct infringement of a method patent exists when a single party performs all of the steps of the claimed method. 35 U.S.C. §271(a). Divided infringement occurs when all of the steps are not performed by a single party, but by two or more parties under circumstances such that one party is still responsible for the infringement.

The law of divided infringement has been a subject of much debate. The question is: should direct infringement be expanded so that a single party is liable for infringement of a method claim even if another party performed some of the steps of the method? Those who say “no” argue that one party cannot infringe a method patent if it does not perform all of the steps of the claimed method, and that any other interpretation is so broad that it would make infringers out of innocent parties. Those who say “yes,” however, argue that infringers can escape liability for patent infringement simply by dividing up the steps of the claimed method among two or more parties.

In its previous decision in this case, a panel at the Federal Circuit had held that a party can be liable for divided infringement if it shares a principal-agent relationship, a contract, or a joint enterprise with the other party who performs some of the steps. On appeal to the United States Supreme Court, however, the Supreme Court vacated that decision and remanded the case to the Federal Circuit, stating that the Federal Circuit’s test for divided infringement may have been too narrow.

On remand, in a unanimous, en banc decision, the Federal Circuit established a new, more expansive test for divided infringement. The court held that a party can be liable for infringement of a method claim when another party performs some of the steps of the claimed method in two situations: (1) where the first party directs or controls the actions of the other party; and (2) where the first party and the other party form a joint enterprise.

The court explained that the first situation exists if there is principle-agent or contractual relationship, but also exists if the accused party conditions participation or receipt of a benefit upon performance of the step of the method and determines the manner or timing of the other party’s performance. Under these circumstances, the actions of the other party are attributed to the accused party. The second situation exists if there is a joint enterprise between two or more parties, such that all parties are responsible for acts of the others.

The court emphasized that its new test is a “governing legal framework” and that future cases may present differing factual situations in which liability will be found. The court stated: “[g]oing forward, principles of attribution are to be considered in context of the particular facts presented.”

In this case, plaintiff Akamai Technologies, Inc. owned a patent covering methods of delivering content over the Internet. Akamai sued Limelight Networks, Inc. for patent infringement. At trial, the parties agreed that the customers of Limelight, not Limelight itself, performed two steps of the claimed method – “tagging” and “serving.” The jury found that Limelight infringed the patent based on its finding that Limelight directed or controlled its customers’ performance of the tagging and serving steps. However, the district court entered judgment as a matter of law in favor of Limelight.

On appeal, a panel of the Federal Circuit affirmed the decision on the grounds that Limelight did not directly control its customers’ acts because there was no principal-agent relationship, contract, or joint enterprise.

In its second decision in this case, after the Supreme Court vacated the first decision, the Federal Circuit reversed the district court’s judgment and reinstated the jury’s verdict against Limelight. The court found that Limelight was liable under the new test for divided infringement because there was substantial evidence that Limelight had directed and controlled its customers’ acts. Limelight had conditioned its customers’ use of Limelight’s service on the customers’ proper performance of tagging and serving, and had set forth the manner and timing of its customers’ performance of these steps. These actions satisfied the court’s new test, in which a party can be held to direct or control another’s performance if it conditions participation or receipt of a benefit upon performance of a step of the patented method and also sets forth the manner or timing of the performance. Because Limelight was held to direct or control the acts of its customers, even if Limelight itself did not perform these two steps, the steps were attributable to Limelight. Because all of the steps of the claimed method were either performed by Limelight itself or attributable to Limelight, Limelight was liable for directly infringing Akamai’s patent.

This case provides a new basis for plaintiffs in divided infringement cases to prove liability among multiple actors performing a method claim. The case is also a warning to businesses who believe they are immune from patent infringement because they only perform some of the steps of a claimed method – liability may arise if another party performs the remaining steps.

Companies and employers around the country seek to protect their intellectual property by, among other things, using non-compete provisions in employment agreements. Generally, these provisions are intended to prevent an employee from soliciting or doing business with a former employer’s customer/clients over a set period of time and/or in regard to a set geographical area. Under California law, and specifically Business and Professions Code section 16600, such provisions are unenforceable unless they fall within one of the statutory exceptions, i.e., primarily in connection with the sale of a business interest. For years, although California state courts would refuse to enforce such provisions under section 16600, federal courts in California sometimes applied a narrow court-created exception and allow such provisions to be enforced provided that they were narrowly tailored as to time and geographical area. In 2008, the California Supreme Court unequivocally ruled that such provisions were unenforceable under section 16600 and rejected the “narrowly restricted” exception used by federal courts. (See Edwards v. Arthur Andersen, LP, 44 Cal.4th 937 (2008).)

In response to the Edwards decision, many California companies and employers began to omit such provisions from their new employment agreements or re-write them with specific language restricting an employee from using trade secret information to unfairly compete. However, other companies and employers left their old agreements untouched and in place thinking merely that they would not enforce them should the need arise. A recent court decision, Couch v. Morgan Stanley & Co., Inc. (E.D. Cal. Aug. 7, 2015), reveals the risk an employer or company faces in failing to update their older employment agreements to remove or revise such provisions.

In Couch, plaintiff was employed as a financial adviser for Morgan Stanley Smith Barney from September 2007 until January 2013. At the time of his hire in 2007, he signed an employment agreement that included a provision that he would not solicit customers of Morgan Stanley for one year following the termination of his employment. Although the employment agreement was signed in 2007, Morgan Stanley never updated this particular agreement with plaintiff following the California Supreme Court’s decision in the Edwards case in 2008.

During his employment, plaintiff held and ran for various elected offices. In 2012, he ran for and was elected to a seat on the Kern County Board of Supervisors. Given the time commitments such a position entailed, Morgan Stanley asked plaintiff to choose between serving on the Board or continuing as a financial adviser with the firm. After plaintiff indicated his unwillingness to resign his supervisor seat, Morgan Stanley terminated his employment.

In January 2014, plaintiff filed suit against Morgan Stanley and alleged various claims relating to his termination as well as two claims for interference with prospective economic relations. Plaintiff claimed, among other things, that the inclusion of the non-compete provision in his employment agreement by Morgan Stanley disrupted his potential economic relations with customers following the termination of his employment.

Morgan Stanley moved for summary judgment as to these intentional interference claims and raised a number of arguments. Morgan Stanley argued that plaintiff’s intentional interference claims should fail because: (1) the non-compete provision in the employment agreement was legal under then existing law in 2007; and (2) given that it had never sought to enforce the provision, it had not engaged in any conduct to interfere with plaintiff’s prospective economic relations. The district court rejected both of these contentions.

First, the Court recognized that while the non-compete provision may have been legal under pre-2007 Ninth Circuit case law, Morgan Stanley did not dispute that such provisions had become unlawful after the California Supreme Court’s decision in Edwards. The Court recognized that the California Supreme Court in Edwards specifically ruled that the Ninth Circuit’s “narrow restraint exception” was rejected and that any non-compete was unlawful unless it fell within one of the narrow statutory exceptions to section 16600. The Court continued by noting that neither it nor Morgan Stanley could find any legal authority for the proposition that a non-compete provision entered into before the Edwards decision “remains lawful even though it is unlawful post-Edwards.”

Next, the Court turned to Morgan Stanley’s argument that it had never sought to enforce the non-compete provision. The Court concluded that whether or not Morgan Stanley had ever sought to enforce its provisions was irrelevant. The Court reasoned that California state court cases had repeatedly held (especially post-Edwards) that non-compete provisions are “void and unenforceable under section 16600 and … their use violates section 17200 [of the Business and Professions Code].” Thus, the Court noted that the mere use of an unlawful non-compete provision in an employment agreement constitutes an unfair business practice under section 17200 and could supply the “wrongful act” requirement for an interference claim.

Luckily for Morgan Stanley, the Court granted judgment in its favor after finding that plaintiff could not establish that the inclusion of the non-compete provision in his employment agreement had caused him any damage. It therefore dismissed these claims against Morgan Stanley. Nevertheless, the Court’s reasoning concerning the “use” of such provisions should give companies and employers in California pause. To the extent employers and companies have elected not to revisit their older employment agreements to either delete or revise non-compete provisions, they are at risk of facing unfair business practices claims as well as other potential claims such as interference with prospective economic relations. Companies and employers in California are encouraged to review their older employment agreements to ensure they comply with current California law.