Welch Foods, a cooperative corporation owned by more than 750 farmer families, filed suit against its former licensee Healthy Food Brands (“HFB”), accusing it of violating its contract with Welch and of trademark infringement in connection with HFB’s continued marketing and sale of licensed products post-termination. Welch owns a number of federal trademark registrations to marks that include the term “WELCH’S” for a variety of food products and services. In 2014, Welch and HFB entered into a license agreement under which HFB would develop, manufacture and sell products such as dried and freeze-dried fruits and trail mixes under the WELCH’S BRAND. The license granted exclusivity in this area. The agreement provided for the payment of royalties based on sales, with certain minimum royalties established, and also sets forth reporting requirements on HFB sales. Welch asserts that HFB has missed a number of royalty payments and has never provided the required sales information, with the purpose of hiding the actual level of sales. After providing written notice of these breaches and allowing the passage of the required time to cure, Welch terminated the agreement in June, 2019. While the agreement requires the return or destruction of all WELCH’S-branded products upon termination, Welch asserts that HFB has instead continued to sell these products. Welch asserts breach of contract, breach of the covenant of good faith and fair dealing that is inherently applied to Massachusetts contracts, quantum meruit, unjust enrichment, trademark infringement, false association, unfair competition and dilution under the Lanham Act, and violation of Mass. G.L. c. 93A. Judge Stearns has been assigned the case.
Keith Viglione, a professional photographer whose work can be seen at https://www.617images.com/, accuses 15 Beacon Street Corporation, the owner of XV Beacon Hotel, and 15 Beacon’s president and director, Paul Roiff of infringing the copyright in a photograph of the Prudential Tower lit up with “GO PATS” in its windows. He asserts that 15 Beacon placed a copy of this photograph on the XV Beacon Hotel’s website, and that the copyright management information was removed from the photograph. He asserts vicarious copyright infringement against Roiff. The case is before Judge Stearns.
Judge Stearns denied Cisco’s motion for attorneys’ fees under § 285. Cisco asserted that the case became exceptional on August 17, 2016, when Egenera, in a parallel IPR proceeding, submitted a declaration from one of its employees stating that he had been erroneously named as an inventor. Egenera removed him as an inventor so that it could rely on an internal document that pre-dated his employment to swear behind a reference. The patent was subsequently invalidated for failure to name all inventors when Judge Stearns construed the claims and determined that the employee had made an inventive contribution. According to Cisco, Egenera at that point had thoroughly reviewed the inventorship issue and should have realized, at least as of the claim construction order, that the employee was improperly removed. While agreeing that Egenera’s investigation was “wanting,” Judge Stearns found that the survival of the inventorship dispute through summary judgment meant that the case did not rise to exceptional.
Cisco’s Bill of Costs was denied in part. He allowed costs related to professionally produced video deposition clips and trial demonstratives, noting that the prevalence of witness credibility issues necessitated their use, but found the requested amount of $60,341 for a three-day trial excessive by half. He further cut summons and subpoena costs to eliminate the excess fees charged for emergency or urgent service.
This is the second case I have seen in recent days in which exceptionality was tied to amenability to summary judgment – Judge Saylor denied a request for fees because the plaintiff had not sought summary judgment. I do not that the grant of summary judgment does not automatically result in a finding of exceptionality, however, and hope that this recent small trend does not become a de facto precedent for the award of attorneys’ fees, as I can envision cases that, while having issues of fact in dispute, still rise to the level of exceptionality, and would hate to see arguments to that effect precluded.
Judge Stearns granted photographer John Curtis Rice default judgment, finding that SAJ wrongfully reproduced Rice’s copyrighted photograph of New York City taken by drone from above in SAJ’s “DroneLife” drone news website. The default came after SAJ’s CEO was informed that he (a non-lawyer) could not file an answer on SAJ’s behalf and SAJ could not afford to pay for a defense. Judge Stearns refused, however, to go along with Rice’s demand for regarding damages and fees. Rice had sought $3000 in actual damages for copyright infringement, $10,000 in statutory damages for removal of copyright management information, and $3,825 in fees and $475 in costs, asserting that SAJ’s “infringement and refusal to appear and respond” were “objectively unreasonable.” Judge Stearns, noting that an intern at SAJ had utilized the image without the corporation’s knowledge and that SAJ immediately took down the photograph upon learning of its use, determined that the violations were “unintentional, very limited, and the source of no discernable profit to SAJ.” He awarded only the minimum $750 in statutory damages.
As I have previously noted, the attorney representing Rice has achieved quite a bit of notoriety in demanding vastly unreasonable sums having no ties to the actual infringement or actual likely measure of damages. As Judge Furman of Liebowitz’s home court in the Southern District of New York, recently noted, “[i]n his relatively short career litigating in this District, Richard Liebowitz has earned the dubious distinction of being a regular target of sanctions-related motions and orders. Indeed, it is no exaggeration to say that there is a growing body of law in this District devoted to the question of whether and when to impose sanctions on Mr. Liebowitz alone.” Perhaps this decision is an indication that courts outside of New York’s Southern District are taking note of Mr. Liebowitz’s predatory practices.
Photographer Richard Sobol, faced with counterclaims that he repeatedly lied to the Copyright Office to obtain his registrations, opted to settle his infringement suit against the makers of a Barney Frank documentary. Sobol had asserted that filmmakers Sheila Canavan and Michael Chandler had used ten of his photographs without license. Canavan and Chandler asserted that Sobol had lied to the Copyright Office about the initial publication date of the photographs and that he was the photographer on three of them, and that some of his submissions were actually screenshots from the documentary. Sobol’s settlement seems to validate the defendants’ positions – he agreed to dismiss all claims with prejudice, and admitted that the film did not infringe his copyright, that he did not take three of the photographs covered by one of the registrations, that six of the photographs covered by the registration were published more than five years prior to registration, and that two registrations were invalid and must be cancelled. Sobol agreed to cancel the registrations. Sobol further acknowledged that the defendants expected to recover more than $480,000 in damages should the case proceed, and agreed to pay an undisclosed amount as a part of the settlement.
Uniloc 2017, a non-practicing entity affiliated with the original Uniloc, sued Paychex, Akamai and athenahealth, accusing each of infringing a pair of patents relating to the management and distribution of application programs to target stations on a network. The patents originally belonged to IBM, and have an odd chain of title through the PTO’s assignment page – it appears that Uniloc assigned a security interest in the patents to Fortress Credit Co. in 2014 without having first obtained title from IBM – that assignment (to Uniloc Luxembourg S.A.) was executed in 2016. The patents each claim priority to a December 1998 filing, so both have expired. The cases are all before Judge Stearns.
Judge Stearns denied Samsung’s motion to dismiss for failure to state a claim, agreeing that the complaint meets the Twombly “plausibility” standard because it states the patents alleged to be infringed and the acts by which they are allegedly infringed. Rain Computing asserts that Samsung’s delivery of their apps to end user devices via an app store that requires registration and subscription to use, which are asserted to infringe Rain’s patent directed to methods and systems for delivering software to client terminals based on a subscription service. Judge Stearns held that the Federal Rules of Civil Procedure, even as explained by Twombly, “do not require a plaintiff to plead facts establishing that each element of an asserted claim is met.” This holding seems to be inconsistent with a pair of prior D. Mass. cases (Rampage v. Global Graphics, Judge Burroughs, and Sunrise Techs. V. Cimcon Lighting, Judge Gorton) that held that a patent plaintiff “must allege that defendant’s product practices all the elements of at least one of the claims of the subject patent.” It will be interesting to see whether Samsung will challenge this decision down the road.