Supreme Court weighs in on disgorgement of profits for trademark infringement and appealability of IPR institutions.

The Supreme Court has resolved a Circuit split and held that willfulness is not a prerequisite to disgorgement of defendant’s profits in a trademark infringement case.  Willfulness remains a factor to consider, but is no longer a threshold to obtaining profits.  You can read my summary of the case on the L&A website here.

This was not the Supreme Court’s only recent foray into the IP world.  Earlier this week, the Supreme Court determined that the decision of the Patent Office on the timeliness of a petition for inter partes review is  not appealable.  An IPR petition must be filed within one year of the service of a complaint alleging patent infringement of the subject patent.  Should the PTO accept a petition that the patent holder considers to have been untimely, the patent holder has no recourse through the courts as a result of this ruling.  My colleagues Craig Smith and  Peter Evangelatos provide more detail here.  

 

Also, a reminder that we at Lando & Anastasi are tracking the impact of COVID on the USPTO, prominent foreign patent offices, and the Copyright Office, as well as the impact on civil litigation in the Federal Courts of New England and the state courts of Massachusetts.  You can find this information, updated as new information becomes available, here.  

Solta Medical, Inc. v. Lumenis, Inc. et al. (19-cv-11600).

Solta sued Lumenis, Inc. and its Israeli-based corporate parent Lumenis Ltd. In 2019, accusing them of infringing two patents related to improvements in controlled cooling of skin and other tissue being treated by lasers.  Lumenis Ltd. Moved to dismiss for lack of personal jurisdiction, asserting that the U.S. entity was responsible for all efforts to market and sell the accused products in the United States (and in Massachusetts).  Judge Casper applied the prima facie standard and taking all factual allegations in the complaint and uncontroverted factual allegations made by the defendant as true, as is required where the motion is decided without an evidentiary hearing.  She noted that Lumenis Ltd. Manufactures the accused products in Israel and then sells the products through wholly-owned subsidiaries in the United States and other countries.  Lumenis, Inc., one such wholly-owned subsidiary, has sold accused products and directed marketing activity into Massachusetts.  The accused products were identified as Lumenis Ltd. Products in an SEC filing, and Lumenis Ltd. Is the entity that applied for FDA approval to market and sell in the United States.  While noting that ownership of a Massachusetts subsidiary is not, standing alone, sufficient to establish personal jurisdiction, here the two Lumenis entities are both transacting business for the purposes of satisfying the long-arm statute of the Commonwealth.  Lumenis Ltd’s’ SEC filing indicated that it provides training and certification of field service engineers for the accused products and operates communications centers for each regional sales and marketing areas.  This collaboration with Lumenis, Inc. is sufficient to establish personal jurisdiction over Lumenis Ltd. For complaints associated with the sales of these products.

Endobotics, LLC v. Design Standards Corporation et al. (20-cv-10742).

Endobiotics accuses Design Standards Corporation (DSC) and Medrobotics Corporation of infringing U.S. Patent No. 7,147,650, as well as trade secret misappropriation, violation of the Defend Trade Secrets Act, unfair competition, breach of contract, tortious interference, unjust enrichment and conversion.  Endobotics’ predecessor in interest, Cambridge Endoscopic Devices, developed and patented a surgical instrument that improved the manipulative ability of tools affixed to the end of the instrument.  Cambridge Endoscopy contracted with DSC to validate the design and manufacture of the instrument.  Endobotics alleges that this agreement provided that Cambridge Endoscopy would exclusively own all products, inventions and designs arising from this work, and that the agreement included confidentiality and non-disclosure clauses that protected Cambridge Endoscopy’s trade secrets, although Endobotics acknowledges that it does not have a copy of the agreement.  When Cambridge Endoscopy declared bankruptcy, Endobotics acquired the patent as well as Cambridge Endoscopy’s trade secret and know-how related to the instrument.  In 2010, Endobotics executed an NDA with Medrobotics to explore producing the instrument for Medrobotics.  According to the complaint, Medrobotics ultimately declined to enter into an agreement with Endobotics, and instead approached DSC directly to manufacture a competing system that improperly utilized Cambridge Endoscopy’s trade secret information.  Endobotics discovered the Medrobotics system at a 2017 trade show, and further investigation resulted in this lawsuit.  The case is before Judge Saylor.

Tile, Inc. v. S&W Dealz et al. (20-cv-10712).

Tile, which sells Bluetooth devices that can be attached to phones, car keys and the like and can be used to find the item to which it has been attached, sued S&W Dealz and Trend Goods, accusing them of infringing its federally-registered “TILE” trademark through their sale of Tile products through on-line commerce sites including Amazon.com.  Tile sells its products through authorized resellers, who are limited in the locations and websites that they can offer the products.  Authorized resellers are also prohibited from selling or otherwise diverting Tile products to any other party for subsequent resale.  While the defendants sell Tile products (apparently liquidated or used), their sale outside of the authorized network are non-genuine in that they are not new (despite being so listed) and do not come with Tile’s warranty.  Tile asserted trademark infringement unfair competition and false advertising under the Lanham Act, as well as state law unfair competition.

Tile’s complaint acknowledged that Tile did not know the name and address of either defendant, but did know the Amazon seller identification number for each.  Accordingly, the same day that Tile filed the complaint, it filed a motion for alternative service of process, seeking leave to serve them through Amazon’s electronic mail service that the defendants use to communicate with customers.  Under Massachusetts state law, which the Federal Rules refer to as an allowable means of service, service by alternative means can be used when a plaintiff cannot find the defendant, the last and usual abode of the defendant, or an agent on whom service can be made.  So long as the alternative means of service is reasonably calculated, under the circumstances, to give notice of the pendency of the action and afford them an opportunity to respond, due process is met.  Judge Burroughs, who is assigned to the case, agreed and granted the motion for alternative service.

Larson v. Perry (19-cv-10203).

Judge Talwani denied Defendants Jeffrey A. Cohen and Cohen Business Law Group’s motion for reconsideration of her previous finding that the claims against them could not be dismissed at the pleading stage.  She rejected Cohen’s argument that her prior decision was based on case law that was not controlling; while she agreed that the particular case was not “controlling” but instead was, as a decision of a district judge presiding over a diversity action, merely persuasive authority.  She instead pointed to the controlling decision of the Massachusetts Supreme Judicial Court, which provides for litigation privilege where the communications at issue are made prior to the onset of litigation only where the communications relate to a legal proceeding which is contemplated in good faith and which is under serious consideration.  Judge Talwani also rejected Cohen’s argument that Larson had failed to sufficiently allege bad faith as required under the controlling SJC decision, finding that the issue had not been raised in the Motion to Dismiss and thus could not be brought for the first time in a motion for reconsideration.

Lillibaby Update.

In March 2019, Lillebaby sued Columbus Trading Partners in this district, accusing the company of infringing two patents, U.S. Patent Nos. 8,172,116 and 8,424,732, directed to child carriers having adaptive leg supports. The same day, Lillebaby filed 22 additional suits around the country, accusing other entities of infringing the same patents (including, for some reason, redundantly suing Columbus Trading Partners in Connecticut), and filed a complaint regarding the same companies with the International Trade Commission (ITC) seeking to obtain an order preventing importation of the accused products into the United States.   The Columbus Trading Partners suit appears to have settled in August, which resulted in the termination of the ITC complaint with respect to Columbus, but the ITC case pressed forward with respect to parties who did not reach a settlement.

The ITC case was eventually narrowed to a single claim of the ‘116 patent. The ITC has now deemed the patent invalid and unenforceable. To disqualify asserted references as prior art, LilleBaby sought to claim an earlier priority date than the filing date, relying on a declaration by inventor Lisbeth Lehan. This was rejected, however, as uncorroborated. The ITC then determined that the prior art both anticipated and rendered obvious the asserted claim of the ‘116 patent.

Additionally, the ITC determined the claim to be unenforceable due to inequitable conduct that occurred during prosecution of the patent. At the time of filing, Lisbeth Lehan and her husband, Stephen Lehan, both signed a declaration stating that each was an inventor. But at trial, both acknowledged that Lisbeth was the sole inventor, and that Stephen made no inventive contribution, and Stephen testified that he knew he was not an inventor at the time he signed the declaration. The ITC found this to be unmistakably false and per se material. The Lehans testified that they named Stephen because they believed (albeit incorrectly) that having a U.S. citizen on the application would bolster the strength of the patent, and Lisbeth was not a citizen. While the Lehans corrected the inventorship to remove Stephen just before filing suit, which would save the validity of the patent, such correction does not erase the intentional misleading of the Patent Office.

Minden Pictures Inc. v. Find Import Corp. (20-cv-10598).

Stock photography company Minden Pictures accuses Find Import of copyright infringement and violation of the Digital Millenium Copyright Act in connection with Find Import’s alleged use of a Minden-controlled photograph on its website. As has been the case with several similar Minden complaints filed in Massachusetts, this complaint alleges copying and removal of copyright management information without providing any suggestion of access and seek full statutory damages for willfulness without factual allegations of the same.