April 2012

Inequitable Conduct After Therasense: Definitely Harder to Prove

Specific intent to deceive the USPTO did not exist where an inventor removed mention of a reference from his patent application, and then testified that the “reference was cumulative or merely provided background information.”  Imura International U.S.A., Inc. v. HR Technology, Inc., No. 08-2220 (D. Kans. April 24, 2012).  The party asserting inequitable conduct also failed to show materiality under the but-for standard of Therasense.  This case is worth noting as yet another example of how Therasense has had a tangible, limiting impact on assertions of inequitable conduct.  Asserting inequitable conduct is unquestionably a harder defense to succeed upon than it used to be.

Answering an In Rem Action Against a Domain Name under the ACPA

The Anti-cybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d) allows a trademark owner to “file an in rem civil action against a domain name in the judicial district in which the domain name registrar, domain name registry, or other domain name authority that registered or assigned the domain name is located” where personal jurisdiction over the accused domain name infringer cannot be established, or where that party cannot be found.  15 U.S.C. § 1125(d)(2).  However, the statute does not specify procedures for responding to an in rem complaint.  In Saurikit, LLC v. Cydia.com, No. 1:11cv888 (N.D. Va. April 17, 2012), the Court held that an Answer on behalf of the domain name was acceptable where it identified “the owner of the domain name, and earlier pleadings explicitly state[d]” that the domain name owner had engaged the signing counsel “to represent its interest in this in rem action.” The plaintiff had filed a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), arguing “that it [was] entitled to judgment because there is no Answer on file by a ‘claimant.’”  An earlier Eastern District of Virginia case, Caesars World, Inc., v. Caesars-Palace.com, 112 F. Supp. 2d 505 (E.D.… Read More »Answering an In Rem Action Against a Domain Name under the ACPA

A Narrow View of “Loss” under the CFAA

A recent case takes a narrow view of the “loss” that will sustain a civil action under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, a criminal statute that includes a right of civil suit favored by many plaintiffs.  Int’l. Chauffeured Service, Inc. v. Faster Operating Corp, No. 11 Civ. 2662 (S.D.N.Y. April 13, 2012).  The court granted the defendant’s motion to dismiss the plaintiff’s CFAA claims because, despite pleading over $5 million in damages in business losses flowing from the defendant’s alleged misappropriation of data from a computer database, the plaintiff could plead a “loss” of only $1413, as the Court construed that term under the CFAA. The plaintiff alleged that the defendant had violated the CFAA by “intentionally access[ing] a protected computer without authorization, and as a result of such conduct, recklessly caus[ing] damage.” 18 U.S.C. § 1030(a)(5)(B).  The CFAA provides a civil right of action, 18 U.S.C. § 1030(g), against one who has caused “loss to 1 or more persons during any 1-year period . . . aggregating at least $5,000 in value.”  18 U.S.C.  § 1030(c)(4)(A)(i)(I).  Further, the CFAA defines “loss” as: any reasonable cost to any victim, including the cost of responding to… Read More »A Narrow View of “Loss” under the CFAA

Patent Infringement: Summary Judgment Fails Under the Doctrine of Equivalents

When is a patent infringement defendant entitled to summary judgment of non-infringement under the doctrine of equivalents?  That question was addressed in CSB-Systems International, Inc. v. SAP America, Inc., No. 10-2156 (E.D. Pa. April 16, 2012), where the court granted summary judgment of no literal infringement, but denied the defendant summary judgment of non-infringement under the doctrine of equivalents (a.k.a., the “DOE”). The independent claim of the patent-in-suit, U.S. 5,631,953, recited “[a] circuit arrangement for integration of EDP systems in utilization of telephone systems connected to a public ISDN or Euro ISDN telephone network.”  In its claim construction order, the Court construed the claim term “[t]elephone extensions which are directly connectable to a telephone network selected from the group consisting of a public ISDN telephone network and Euro ISDN telephone network” to mean “telephones and/or other devices such as fax devices of the type that can be connected to either the public ISDN or Euro ISDN telephone network.” The plaintiff’s expert, testifying at deposition, “effectively admitted the essential fact that VoIP phones cannot be ‘directly connected’ to an ISDN telephone network.”  The court was thus “precluded from finding literal infringement.”  The court also rejected the plaintiff’s argument (characterized by the… Read More »Patent Infringement: Summary Judgment Fails Under the Doctrine of Equivalents

Preliminary Injunction for Software Copyright Infringement

When can a plaintiff obtain a preliminary injunction relating to a customer’s use and distribution of copyrighted software beyond the scope of the customer’s license?  The court in Accusoft Corp. v. Quest Diagnostics, Inc., No. 12-40007 (D. Mass. April 18, 2012), granted a preliminary injunction, but limited the preliminary relief so as to properly balance the hardships between the parties. The plaintiff’s software program, ImageGear, “operates as a component in other software applications to provide discrete imaging functions.”  The plaintiff sold both “development licenses, which allow the licensee to incorporate ImageGear into those other software applications,” as well as “distribution licenses, which authorize distribution of those applications once ImageGear has been incorporated into them.”  The defendants had both development and distribution licenses for two products, and a development license, but no express distribution license, for a third product, OptiMaxx.  The plaintiff filed suit alleging that it had discovered numerous unauthorized distributions of OptiMaxx, and subsequently moved for “preliminary injunctive relief prohibiting [the defendants] from further use or distribution of OptiMaxx and requiring . . . recall [of] all existing licenses,” or alternatively for “a prospective injunction that would prohibit further distribution of OptiMaxx.” Although the plaintiff did not grant an… Read More »Preliminary Injunction for Software Copyright Infringement

Impact of Therasense: Defendant Denied Motion to Plead Inequitable Conduct

In Pixion, Inc. v. Citrix Systems, Inc., No. C 09-03496 (N.D. Cal. April 16, 2012), the court denied Citrix’s motion for leave to amend its Answer to plead the affirmative defense of inequitable conduct because Citrix could not “show that the USPTO would have rejected the” patents-in-suit even if the allegedly withheld reference had been disclosed. Pixion’s patents allegedly covered “online conferencing and collaboration systems.”  Citrix alleged “that Pixion failed to disclose references to software named ‘CU-SeeMe’ in any patent applications to which the Patents-in-Suit claim priority or in the prosecutions of” two of the four patents-in-suit.  According to Citrix, deposition testimony of an inventor established that the CU-SeeMe software “incorporated all the claims in the patents-in-suit,” and “was material” and “not cumulative.”  Pixion responded that Citrix’s motion was futile because CU-SeeMe was disclosed to the USPTO in two of the patents-in-suit, and the same examiner had handled all four of the patents-in-suit. The court agreed with Pixion.  Under Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc), “Citrix would have to prove that “submission of the withheld item would have led to a rejection.’”  Here, Citrix could not make that proof with respect… Read More »Impact of Therasense: Defendant Denied Motion to Plead Inequitable Conduct

Ninth Circuit Affirms Narrow Construction of “exceeds authorized access” in the CFAA

The Ninth Circuit has affirmed that the phrase “exceeds authorized access” in the Computer Fraud and Abuse Act (CFAA) should be read to cover only accessing prohibited files, rather than making unauthorized use of files to which one had been permitted access.  United States v. Nosal, No. 10-10038 (9th Cir. Apr. 10, 2012).  In a colorful opinion authored by Chief Judge Alex Kozinski, writing for nine of his colleagues on an eleven-judge panel, the court held “that the phrase ‘exceeds authorized access’ in the CFAA does not extend to violations of use restrictions.” The criminal defendant, Nosal, had left the Korn/Ferry recruiting firm, and then had enticed former colleagues still employed by Korn/Ferry to steal confidential information to be used in starting a competing business.  Korn/Ferry had authorized these employees to access the database including the information, but “had a policy that forbade disclosing confidential information.”  Nosal was indicted on 20 counts, including violations of 18 U.S.C. § 1030(a)(4) of the CFAA “for aiding and abetting the Korn/Ferry employees in ‘exceed[ing] their] authorized access’ with intent to defraud.” The CFAA defines “exceeds authorized access” as “to access a computer with authorization and to use such access to obtain or alter… Read More »Ninth Circuit Affirms Narrow Construction of “exceeds authorized access” in the CFAA

Business Methods Patents Still Being Asserted in Litigation

Business methods patents are alive and well, based at least on an anecdotal review of recent court filings.  Consider, for example, a case that I have selected more or less at random, Phoenix Licensing LLC v. Nationwide Mutual Insurance Company, filed on April 16, 2012, in the Eastern District of Texas.  Phoenix Licensing, which Internet searching reveals is no stranger to asserting and litigating patents, has asserted three patents, U.S. 7,890,366 ( “Personalized communication documents, system and method for preparing same”), 6,999,938 (“Automated reply generation direct marketing system”), and 5,987,434 (“Apparatus and method for transacting marketing and sales of financial products”). The patent titles alone are suggestive.  I won’t reproduce the claims here (you might want to peruse them from the above links), but they also bespeak a particular patent genre that has recently been accorded suspect status.  For example, consider independent claim 52 of the ‘938 patent, which recites “[a] method for automatically preparing customized communications for a plurality of consumer entities, and replying to responses from consumer entities with customized replies.”  Is this a business method claim?  True, the claim does recite that various steps are performed “automatically.”  However, the claim as a whole is directed to preparing… Read More »Business Methods Patents Still Being Asserted in Litigation

Patent Infringement Notice Pleading: A Lesson from Contrasting Cases?

Two recent cases provide a contrast that may illustrate minimum notice pleading requirements for patent infringement plaintiffs.  In j2 Global Communications, Inc. v. Vitelity Communications, LLC, No. CV 11-07904 (C.D. Cal. April 12, 2012), the court held that the plaintiff had adequately described the accused products, and denied a motion to dismiss.  In contrast, the court in Avocet Sports Technology, Inc. v. Garmin International, Inc., No. C 11-04049 (N.D. Cal March 22, 2012), granted a motion to dismiss the complaint (with leave to amend) where the plaintiff failed to identify adequately the products accused of infringement. In j2 Global, the plaintiff alleged that the defendant “provides certain Internet fax services that infringe Plaintiffs’ patents.”  Further, the accused fax services were identified by the brand name used by the defendant.  The court held that these “allegations are therefore sufficient to meet the pleading standard for patent infringement.” In Avocet, the plaintiff alleged that a number of defendants “infringed the ‘427 Patent by introducing, demonstrating, using, making, marketing, and selling altimeter devices which implemented the patented technology, as well as by actively inducing others to infringe that ‘427 Patent.”  In response to one defendant’s motion to dismiss, the plaintiff argued that allegedly… Read More »Patent Infringement Notice Pleading: A Lesson from Contrasting Cases?

Intellectual Property Assignments Are Crucial

This item is mainly for non-lawyers.  The worst thing in the world is to have difficulty obtaining an assignment of source code ownership from a software developer, or for the developer to depart with valuable trade secrets.  Working from the context of medical device development, my former colleague Steve Hansen has written a great post addressing issues surrounding securing and protecting technology developed by employees.  Highly recommended reading for managers and owners of software development; these are all issues that arise far too frequently in the software context, and this is an area where an ounce of prevention is worth a pound of cure.