June 2012

When Is Software a Work for Hire?

A recent California case provides a good illustration of different possible grounds for finding that software is a work made for hire under the Copyright Act.  Siniouguine v.  Mediachase Ltd., CV 11-6113-JFW (AGRx) (C.D. Cal. June 11, 2012).  Among other things, the court held that the software was “specially commissioned” and qualified as a work made for hire as “contributions to a collective work” and “compilations.” Siniouguine, the plaintiff, had been employed by Mediachase, the defendant.  He had signed an employment agreement under which his work product was “a ‘work-made-for-hire’ specially ordered or commissioned by” Mediachase.  The plaintiff subsequently assisted in creating a calendar application and an e-commerce application, referred to as “the Programs.”  After the plaintiff sued Mediachase for copyright infringement and a declaration of copyright ownership, Mediachase brought a plethora of counterclaims, and argued that it owned the copyrights, either by assignment or as works made for hire. The US Copyright Act defines a “work made for hire” as either a “(1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use” in one of nine enumerated categories “if the parties expressly agree in… Read More »When Is Software a Work for Hire?

Federal Circuit Upholds Obviousness Rejection

What are the chances of overcoming the obviousness rejection of a patent claim having all of its elements disclosed in the prior art, albeit by multiple references?  In the wake of KSR v. Teleflex, the odds of succeeding with such an argument have unquestionably suffered.  Certainly one cannot be surprised at the result in In re Mouttet, No. 2011-1451 (June 26, 2012), where the Federal Circuit affirmed the Board of Patent Appeals and Interferences, which in turn had affirmed a patent examiner’s rejections under 35 U.S.C. § 103. Mouttet’s patent claims were directed to a “Crossbar Arithmetic Processor.”  As the court described it: Mouttet’s crossbar array consists of two intersecting sets of conductive parallel wires. At the wire junctions, or “crosspoints,” a thin film material or molecular component acts as a bridge between the wires. The resistance of the thin film material or molecular component between the intersecting wires may be altered by controlling the voltages applied to individual wires in the first and second sets. By altering the resistance, each crosspoint can be programmed to be in a high resistance (low conduction) state or low resistance (high conduction) state. The two states can represent the binary values “0” and… Read More »Federal Circuit Upholds Obviousness Rejection

Bad Faith Not Shown Under the ACPA

A jury finding that cybersquatting defendants had not acted in bad faith, and thus enjoyed a safe harbor from liability under the Anti-Cybersquatting Consumer Protection Act (ACPA), 15 U.S.C. § 1125(d), has been upheld by the Eleventh Circuit.  Pensacola Motor Sales, Inc. v. Eastern Shore Toyota LLC, No. 10-15761 (11th Cir. June 21, 2012). The parties in this case were competing car dealers.  The defendant car dealer (Eastern Shore), in concert with an Internet marketing expert, had pursued a two-pronged Internet marketing strategy.  Under a “defensive” strategy, Eastern Shore purchased, but did not use, desirable domain names to keep them out of its competitor’s hands.  Under an “offensive” strategy, Eastern Shore built “microsites” using domain names that were related to the car business; the microsites redirected users to Eastern Shore’s site.  Eastern Shore ultimately owned around 4,000 domain names, examples of which included “www.facebooktoyota.com, www.youtubeusedcar.com, and www.ebayautoprices.com.”  After eBay sent it a cease and desist letter alleging trademark infringement and violations of the ACPA, Eastern Shore relinquished the domain name related to eBay, but made no effort to review other domain names for possible infringement. The plaintiff, Bob Tyler Toyota, discovered an operational microsite at “www.bobtylerprices.com,” and several other allegedly… Read More »Bad Faith Not Shown Under the ACPA

Plaintiff Goes First In Trade Secrets Discovery

A classic tension in trade secrets cases lies between plaintiffs’ reluctance to identify their trade secrets and defendants’ contentions that plaintiffs will tailor their accusations of trade secrets theft to match information produced by the defendants.  Acknowledging this tension, a Nevada magistrate judge has held that a plaintiff had not identified allegedly stolen trade secrets with sufficient particularity, and that the defendant need not respond to discovery requests until the plaintiff had done so.  Switch Communications Group v. Ballard, No. 2:11-cv-00285-KJD-GWF (D. Nev. June 19, 2012). Ballard, the defendant, had been the plaintiff’s chief financial officer for two years prior to being terminated.  Switch, the plaintiff and an operator of computer data centers, alleged that the defendant had possessed its trade secrets, and was planning to use them to build a competing data center.  Ballard admitted involvement in a project to build a competitor’s data center, and that he had knowledge of the plaintiff’s business.  He denied, however, that this information constituted trade secrets or confidential information, or information that was confidential under his employment agreement with Switch. After Switch’s original interrogatory answers concerning its alleged trade secrets were vague, Ballard brought a successful motion to compel more specific answers. … Read More »Plaintiff Goes First In Trade Secrets Discovery

Amended Patent Infringement Complaint Allowed After Federal Circuit Decision

An amended complaint for patent infringement has been allowed under the standard recently set forth by the Federal Circuit in In re Bill of Lading Transmission & Processing Sys. Patent Litig., No. 2010-1493 (Fed. Cir. June 7, 2012).  Under the Federal Circuit’s recent holding, the court had a relatively easy decision in Pagemelding, Inc. v. ESPN, Inc., No. C 11-06263 WHA (N.D. Cal. June 18, 2012).  This was the plaintiff’s second attempt to amend its complaint in this case, an earlier motion, prior to the Bill of Lading decision, having been denied. Bill of Lading stated that complaints for direct patent infringement merely need hew to Form 18 of the Federal Rules of Civil Procedure.  Thus, the plaintiff’s detailed allegations concerning the operation of ESPN’s allegedly infringing websites, including an analysis of how certain claim elements were practiced, met the standard of Form 18. Further, the plaintiff had adequately pled induced infringement.  Although induced infringement required a pleading of direct infringement, that pleading of direct infringement was sufficient if it met Form 18, and if there were facts giving rise to an inference that a direct infringer existed.  Here, ESPN actively promoted its website to third-party users.  It also solicited Internet… Read More »Amended Patent Infringement Complaint Allowed After Federal Circuit Decision

Nominal Defendant in Forum Does Not Prevent Venue Transfer in Patent Case

Venue could not be established in an Illinois patent case simply by naming a “peripheral defendant” located in Illinois.  A motion to transfer venue to the Central District of California, the locale having the most connections to the alleged infringement, was therefore granted.  Oplus Technologies, Ltd. v. Sears Holdings Corp., No. 11-cv-8539 (N.D. Ill. June 15, 2012).  The court also severed and stayed claims pending against Sears, the peripheral defendant, pending adjudication of claims against Vizio, the main defendant. Oplus sued Vizio and Sears in the Northern District of Illinois, alleging infringement of two patents relating to video signal technology.  Vizio made, imported, and sold the accused products, which it had supplied to Sears, but only up until two years before the lawsuit was filed.  Further, “Sears had no involvement in the design, development, manufacture or any other aspects of the accused Vizio products.”  Moreover, Vizio had provided Sears’ counsel in the action after Sears made a tender of defense and indemnity, which Vizio accepted. First addressing the motion to sever and stay claims against Sears, the court stated that Sears was the kind of peripheral patent infringement defendant who had nothing substantive to offer to the lawsuit.  Sears constituted… Read More »Nominal Defendant in Forum Does Not Prevent Venue Transfer in Patent Case

Federal Circuit Refines Willful Infringement Standard

The Federal Circuit “now holds that the threshold objective prong of the willfulness standard . . . is a question of law based on underlying mixed questions of law and fact and is subject to de novo review.”  Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., No. 2010-1510 (June 14, 2012).  The panel here (Judges Newman, Gajarsa, and Linn) had previously affirmed the trial court in all respects.  Gore (the defendant/appellant) petitioned for rehearing en banc.  The Federal Circuit granted the petition, and “returned the matter to the panel for reconsideration . . . for the sole purpose of revisiting the issue of willfulness and further explicating the standard of review applicable to it.” Judge Gajarsa began his opinion for the panel majority by noting that In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc), had, after establishing that an objective standard of recklessness applied to the wilfulness determination, left “the application of this standard” open for “future cases to further develop.”  Seagate’s two-pronged test requires showing, first, that the threshold of objective recklessness has been met, and, then, that the accused infringer knew or should have known of the risk of infringement, i.e.,… Read More »Federal Circuit Refines Willful Infringement Standard

No Personal Jurisdiction Based on “Location” of Patent

A patent owner’s residence in Washington state did not confer personal jurisdiction over defendants in a dispute over the defendants’ rights to license and sub-license the patent.  VSIM Patent Co., LLC v. Benson, No. C12-102RSL (W.D. Wash. 2012).  The action that the patent owner brought did, however, end up conferring a right to fees and costs on the defendants under a Washington fee shifting statute. The plaintiff patent owner sought a declaratory judgment that “licenses and sub-licenses granted or received by one or more of the Defendants before Plaintiff took ownership of the patent” were either invalid or owned by the plaintiff.  The defendants moved to dismiss, arguing that the plaintiff had not met its burden of establishing personal jurisdiction.  This was a diversity case, and Washington’s long-arm statute authorized jurisdiction to the extent of the limits of the U.S. Constitution. The plaintiff made the argument that the court had personal jurisdiction over the defendants because it had in rem jurisdiction over the patent.  However, “it is black letter law that an in rem action allows ‘the court jurisdiction only over the res, and not over the defendant personally.’”  (Citation omitted.)  Further, “the situs of intangible property does not automatically… Read More »No Personal Jurisdiction Based on “Location” of Patent

Is Claim Construction a Prerequisite for Determining Patent Eligibility?

A court has denied a motion for summary judgment of invalidity based on Bilski v. Kappos, in part because the motion had been brought in advance of claim construction, and ahead of the court’s normal schedule for dispositive motions.  Lendingtree, LLC v. Zillow, Inc., No. 3:10-cv-00439-W (W.D.N.C. June 4, 2012).  Calling the motion premature, the court relied on the fact that neither Bilski nor Dealertrack, Inc. v. Huber, 674 F.3d 1315, (C.A.Fed 2012), indicated that a patent-eligibility determination was necessary prior to claim construction.  Further, these issues had been considered concurrently in Dealertrack.  Accordingly, the defendants’ motion was stricken, and could be raised later at an appropriate time. The Lendingtree court clearly had other motivations — defense counsel had represented an intention to bring a Rule 12 motion to dismiss based on a personal jurisdiction argument, and the court was not happy to see a Rule 56 summary judgment motion making substantive invalidity arguments instead.  That said, this case is worth noting for the court’s clear statements concerning the appropriate timing of a motion for invalidity under 35 U.S.C.  § 101. It is also worth noting, Dealertrack notwithstanding, that the Lendingtree court ignored considerable authority suggesting that Section 101 patent-eligibility… Read More »Is Claim Construction a Prerequisite for Determining Patent Eligibility?

Multidistrict Litigation Under The AIA

The Panel on Multidistrict Litigation (MDL) has further clarified its view of the interplay between the anti-joinder provisions of the America Invents Act (AIA), 35 U.S.C. § 299, and the provision for “coordinated or consolidated pretrial proceedings” under the MDL statute, 28 U.S.C. § 1407.  In In re Maxim Integrated Products, Inc., MDL No. 2354 (June 8, 2012), the MDL panel, upon a motion by the owner of five patents related to mobile commerce, consolidated fourteen actions pending in five different judicial districts. The parties responding to the patent owner’s motion all opposed centralization, and, in the alternative, proposed various transferee forums.  Unsurprisingly, these parties were unanimous in opposing transfer to the Eastern District of Texas, where ten of the fourteen actions were pending. The responding parties “principally argued that any common factual issues among the actions are subsumed by unique factual issues presented by each defendant, including questions of contributory or induced infringement.”  According to the MDL panel, however, variations in the defendants’ use of the accused technology were counterbalanced by “common factual questions concerning the background of the patents and the subject matter.”  Despite these common factual questions, different defendants were poised to advance different claim constructions and… Read More »Multidistrict Litigation Under The AIA