Originally published February/March 2009
A reporter on recent patent and trademark opinions from the United States District Court for the District of Massachusetts
In February and March 2009, the District Court addressed the following issues related to patent and trademark law: jurisdiction; infringement and the doctrine of equivalents; interpretation of releases; sponsored links and "use" of trademark; and initial interest confusion.
PATENT
American Medical Systems, Inc. v. Biolitec, Inc., C.A. No. 08-cv-30061-MAP, 2009 WL 820263 (D. Mass. March 26, 2009) (Ponsor, D.J.) [Jurisdiction].
The District Court (Ponsor, D.J.) granted Defendant Biolitec AG's motion to dismiss for lack of personal jurisdiction disposing of claims of patent infringement, false advertising, and unfair competition brought by Plaintiff American Medical Systems, Inc. ("AMSI").
Biolitec AG is a German corporation and is the parent of several subsidiaries, including four other defendants in this action. It moved for dismissal of the complaint on three grounds, including lack of personal jurisdiction.
AMSI argued that the Court has personal jurisdiction over Biolitec AG for two reasons. First, it asserted that Biolitec AG was subject to jurisdiction as a result of the parent-subsidiary relationship it shares with Defendant Biolitec, Inc. (its American subsidiary). The Court, however, found such reasoning unpersuasive. In order to pierce the corporate veil, AMSI was required to show "lack of corporate independence, fraudulent intent, and manifest injustice." AMSI made none of these showings. Second, AMSI sought to establish jurisdiction through Biolitec AG's contacts with Massachusetts. The alleged contacts, however, were predicated on the fact that certain employees of Biolitec, Inc. were actually employees of Biolitec AG and were acting as such. The record, however, failed to support these claims.
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Legislation for Patent Pilot Program Passes House As reported on in the last issue of Nutter's Patent and Trademark Bulletin for the District of Massachusetts, legislation has been introduced in the Senate to establish a pilot program that would allow judges to opt-in and opt-out of hearing patent cases. On March 17, 2009, the House of Representatives passed its counterpart bill (H.R. 628). The text of the bill together with the Congressional Record can be viewed on the Library of Congress's website at http://thomas.loc.gov/. |
American Medical Systems, Inc. v. Biolitec, Inc., C.A. No. 07-cv-30109-MAP, 2009 WL 738858 (D. Mass. March 20, 2009) (Ponsor, D.J.) [Patent Infringement; Doctrine of Equivalents].
The District Court (Posner, D.J.) granted the motion for summary judgment of non-infringement filed by Defendant Biolitec, Inc. ("Biolitec"). As predicted by the preceding Markman Order, the interpretation of the term "photoselective vaporization" proved to be fatal to the infringement claim brought by Plaintiff American Medical Systems, Inc. ("AMSI").
AMSI brought suit against Biolitec alleging infringement of U.S. Patent No. 6,986,764 ("the '764 patent"). The '764 patent generally discloses a method and system for photoselective vaporization of the prostate and other tissue. The disclosed methods and systems are considered useful for the treatment of Benign Prostatic Hyperplasia, commonly referred to as BPH, to reduce the size of the prostate.
The process of "photoselective vaporization" is generally described in the '764 patent, and includes the ablation of the prostate tissue by holding a laser light 1-2 mm away from the tissue. In view of the Markman Order, construing the term "photoselective vaporization," the Court considered the following two elements to be required: (1) high absorptivity of the laser in tissue and (2) negligible absorptivity (at most) of the laser in water or other irrigant.
In analyzing the potential for both literal infringement and infringement under the doctrine of equivalents, the Court found the most significant, undisputed fact to be that the laser light of Biolitec's device is absorbed to more than a negligible degree by water or other irrigants. Specifically, while AMSI's device uses a wavelength of 532 nm that has photoselective properties, Biolitec's device uses a wavelength of 980 nm that does not have the same photoselective properties. In particular, the absorptivity of the 980 nm laser light in water is at least 14 times greater than the absorptivity of the 532 nm laser light, and possibly up to 1,100 times greater. As a result, Biolitec's device places its laser in direct contact with prostate tissue to prevent absorption of the laser in the water irrigant. Conversely, AMSI's device is used 1-2 mm away from the tissue and uses a wavelength that has negligible absorptivity (at most). The Court considered the absorptivity of the Biolitec's device to not be negligible, and thus it did not literally infringe the '764 patent.
With respect to the doctrine of equivalents analysis, the Court rejected the "function-way-result" test, finding it inappropriate in this context. It found that application of this test ignored the essential language of the Markman Order, which required specific characteristics for "photoselective vaporization." The Court instead considered three other rules for determining whether a device or method infringes by equivalents: (1) the "all limitations" rule; (2) the "specific exclusion" rule; and (3) the "disclaimer" rule.
The Court found under the "all limitations" rule that the device did not infringe. Not only did the device not contain each limitation, but it was not an equivalent because the 980 nm laser light is absorbed more than negligibly in water. Finding infringement under the doctrine of equivalents would thus "entirely vitiate the limitation" as required by the Markman Order. Likewise, the Court held that the '764 patent specifically excludes laser lights that are absorbed more than negligibly in water. Quite simply, "equivalency cannot embrace a structure that is specifically excluded by the scope of the claims." Finally, the Court found that the "disclaimer" rule precludes a finding of infringement. It held that the patent was attempting to find the then-best practice of using specific wavelengths and the patentees were aware of the disadvantages of other non-photoselective wavelengths. At bottom, the "construction of the patent claims . . . particularly in the interpretation of the term 'photoselective vaporization,' [was] fatal to Plaintiffs' infringement claims."
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Federal Appeals Court Backs Bureaucrats At The U.S. Patent Office in Tafas v. Doll A divided panel of the Court of Appeals for the Federal Circuit has brought back into play draconian rules proposed by the U.S. Patent And Trademark Office ("USPTO") in 2007 to deal with its backlog of unexamined applications. The rules had been struck down by a lower federal court on the eve of their effective date – much to the relief of almost everyone outside of the Patent Office. Last week, however, the Federal Circuit concluded that the USPTO had the authority to promulgate several of the controversial rules and remanded the case to the lower court for further consideration. While it is not clear that the new Obama administration has any interest in revisiting this issue, the appellate court decision gives the next Commissioner of Patents authority to impose additional burdens on applicants. To read more visit http://www.nutter.com/publications_events.php?section=13&ReportID=843. |
TRADEMARK
Great Clips, Inc. v. Hair Cuttery of Greater Boston, L.L.C. and Great Cuts, Inc., C.A. No. 08-cv-10959-DPW, 2009 WL 458554 (D. Mass. Feb. 18, 2009) (Woodlock, D.J.) [Settlement Releases].
The District Court (Woodlock, D.J.) interpreted a settlement agreement that had resolved a trademark dispute before the United States Patent & Trademark Office ("USPTO"). Plaintiff Great Clips, Inc. ("Great Clips") sought a declaratory judgment that Defendants were barred from challenging its mark, "Great Clips." Defendants counterclaimed for trademark infringement. The Court granted summary judgment to Great Clips.
The dispute involved trademarks used by hair salons. Plaintiff registered its mark "Great Clips" with the USPTO. Subsequently, Defendant Dalan Corporation ("Dalan") attempted to register its own mark for "Great Cuts." Great Clips filed a notice of opposition in the USPTO and, in response, Dalan brought a counterclaim against Great Clips, seeking cancellation of Great Clip's mark. The parties entered into a settlement agreement in 1989, in which they agreed not to object to the registration of each other's mark.
In 2008, Great Clips planned to open hair salons in a new territory - Massachusetts and New Hampshire. Defendants Hair Cuttery of Greater Boston, L.L.C. and Great Cuts, Inc., the successors-in-interest to Dalan, operate in New England and opposed the use of the "Great Clips" mark in New England. The defendants believed that the settlement agreement did not prevent them from bringing legal action against Great Clips to protect their "Great Cuts" mark.
This case revolved around paragraph four of the settlement agreement, which stated: "Each party releases the other from any and all claims that arise or may arise from the application and registration of its own respective mark(s) mentioned in this agreement." Great Clips argued that paragraph four released each party from any future infringement claims. The defendants argued for a more limited interpretation - that the release only applied to the then-present dispute before the USPTO.
First, the Court analyzed the meaning of the term "application" in paragraph four. Great Clips argued that "application" meant "use," while the defendants argued that "application" refers to an application for trademark registration. The Court found that when examining paragraph four in isolation, "the most natural" reading of the term "application" is as a reference to an application for a trademark. However, the Court explained that the paragraph had to be examined in the context of the whole settlement agreement. After doing so, the Court found that the defendant's argument for limiting the settlement agreement to the past dispute before the USPTO did not make sense. The Court pointed to various other paragraphs in the settlement agreement that made the limited interpretation of paragraph four awkward and superfluous. The Court concluded, "I find that no reasonable person interpreting the Settlement Agreement as 'a coherent whole' could interpret paragraph four as anything other than a broad release of all claims in connection with the parties' respective use of the 'Great Clips' and 'Great Cuts' trademarks."
The defendants also argued that a release for future infringement of intellectual property rights should be void as against public policy, pointing to FASA Corp. v. Playmates Toys, Inc., 982 F. Supp. 1061 (N.D. Ill. 1995). However, the Court distinguished the present case from the FASA case. In the FASA case, the potential future claims were unknown, but in this case, the parties were aware of the marks at issue and the manner in which the marks were used. The Court found that the present case was more similar to the case of Brennan's Inc. v. Dickie Brennan & Co. Inc., 376 F.3d 356 (5th Cir. 2004), which validated a settlement agreement that waived the right to bring future trademark infringement claims based on the future use of a particular mark.
Hearts On Fire Co. v. Blue Nile, Inc., C.A. No. 08-cv-11053-NG, 2009 WL 794482 (D. Mass. March 27, 2009) (Gertner, D.J.) [Sponsored Links, "Use In Commerce," Initial Interest Confusion].
The District Court (Gertner, D.J.) addressed two novel legal questions in its denial of the motion to dismiss filed by defendant Blue Nile, Inc. ("Blue Nile"). First, the Court held that the purchase of trademarks to trigger advertising when that trademark is placed in a search engine constitutes "use" within the meaning of the Lanham Act. Second, the Court addressed the "initial interest confusion" doctrine and set forth specific factors for a plaintiff to demonstrate the requisite likelihood of confusion above and beyond the eight criteria well-established by the First Circuit when the use involves keyword searching and sponsored links.
Plaintiff Hearts on Fire Company, LLC ("Hearts on Fire") sells its trademarked diamonds and jewelry to authorized retailers and does not sell diamonds directly to the public. It brought this action against Blue Nile, an online diamond and jewelry retail store, alleging that Blue Nile committed trademark infringement by using the "Hearts on Fire" trademark to trigger a sponsored link for its website www.bluenile.com. Specifically, Hearts on Fire alleged that Blue Nile paid a search engine to display a sponsored link with the Blue Nile website when a user searched for the phrase "hearts on fire." It also contended that, once on the www.bluenile.com website, a user could search the website using the "hearts on fire" phrase and would be directed to a list of webpages within the cite containing the words "hearts" and "on fire." Notably, Blue Nile does not sell Hearts on Fire's diamonds nor is it an authorized dealer of Hearts on Fire. Hearts on Fire alleged that these uses of its mark constitute trademark infringement and unfair competition under the Lanham Act. It further alleged that such use caused harm in that consumers were diverted by the sponsored links.
The Court first answered the threshold question of whether the purchase of a trademarked keyword to display a sponsored link constitutes a "use" within the meaning of the Lanham Act. Recognizing the split of authority on this issue, the Court sided with the Third, Fourth, Eighth, and Ninth Circuits in recognizing that such a purchase is precisely the kind of "use" contemplated by the statute. It concluded, "In effect, one company has relied on its competitor's trademark to place advertisements for its own products in front of consumers searching for that exact mark. The Lanham Act's use requirement is not so narrow or cramped that it would fail to treat this conduct as 'use in commerce.'"
Next the Court addressed whether the "use" could cause confusion. Hearts on Fire alleged that the mere fact that the user received a link to Blue Nile's website was enough to confuse the online shopper. The First Circuit has yet to fully address this "initial interest confusion" concept and the Court looked to law outside the Circuit to determine the extent of the confusion necessary to allow Hearts on Fire to meet the requisite threshold to survive a motion to dismiss. "Based on the twin goals of trademark protection, the Court conclude[d] that initial interest confusion can support a claim under the Lanham Act – but only where the plaintiff has plausibly alleged that consumers were confused, not simply diverted." Moreover, the confusion has to be more than fleeting and more than a "mere possibility." The Court found that Hearts on Fire's had pled sufficient facts to overcome this hurdle. It acknowledged, however, that showing initial interest confusion may be more difficult in the internet context than in other contexts. It set forth an admittedly non-exhaustive list of seven additional factors for determining likelihood of confusion. These factors include: the content of the search results webpage that was displayed, including the content of the sponsored link itself; the sophistication of the Plaintiff's potential customers; and the specific context of a consumer who has deliberately searched for trademarked diamonds only to find a sponsored link to a diamond retailer.
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Of note, Judge Gertner's decision in Hearts on Fire Co. v. Blue Nile, Inc., C.A. No. 08-cv-11053-NG, 2009 WL 794482 (D. Mass. March 27, 2009), addresses two novel questions of law involving the use of a trademarked keyword to trigger so-called "sponsored links." * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * On the national stage:
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The Patent and Trademark Bulletin for the District of Massachusetts is a publication of the Intellectual Property Litigation practice of Nutter McClennen & Fish LLP in Boston. The bulletin is edited by Timothy D. Johnston and Heather B. Repicky. Assistance in the preparation of this issue was provided by Ronald E. Cahill, Rory P. Pheiffer, Gabriella K. Eisner, and Jonah M. Fecteau.
This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.
