Headset manufacturer GN Netcom accuses electronics reseller Online King of infringing its JABRA and VXI trademarks. GN’s factual allegations are similar to those of its September lawsuit against TelQuest International; here, GN alleges that Online King buys actual GN products manufactured and sold to the international market that were not intended for sale in the United States and that are materially different than GN products intended to be sold in this country. As a general rule, the resale of genuine trademarked goods is not infringement, under an “exhaustion” theory; this does not apply, however, when the accused party is selling goods that materially differ from those sold by the trademark owner. The importation of “gray-market” goods, foreign manufactured goods that bear a valid U.S. trademark but that are imported into the country without the trademark owner’s consent, fall within this exception; it is not immediately clear whether goods actually manufactured in America, and GN’s complaint does not make clear where its goods intended for foreign sale are actually made.
Judge Stearns denied plaintiff’s motion to amend the complaint to add a principal-agent theory of direct infringement in a long-running multi-district litigation originally filed in 2012. Discovery in the matter was extended to August 2017, with the judge admonishing the parties that remaining discovery was to focus on new issues; Judge Stearns granted a motion to quash subpoenas directed to defendant BrainLab’s customers in September, noting that NeuroGrafix had been aware of its inducement theory of infringement for years and had no justification for waiting until the close of discovery to pursue that theory. NeuroGrafix subsequently moved for leave to file an amended complaint, citing newly discovered evidence that BrainLab provided compensation in the form of dinners, drinks and paid consulting opportunities to neurosurgeons. NeuroGrafix asserts that, as a result of these payments (which range from one hundred to several thousand dollars), a principal-agent relationship was formed whereby BrainLab directed or controlled the doctors’ performance and the doctors’ actions could thus be imputed to BrainLab pursuant to Akamai Techs. V. Limelight Networks, 797 F.3d 1020 (Fed. Cir. 2015). Judge Stearns found that the proposed complaint, which asserted that “BrainLab intends for Neurosurgeons to carry out each step” of the asserted claim was asserting induced, not direct, infringement, and NeuroGrafix had already been denied the opportunity to belatedly pursue such a theory.
Asigra hired Atlantis to develop and provide software to Asigra, a project that was initially expected to take about a year. After agreeing to the terms for this work, Asigra sought to accelerate the completion of the project. Asigra indicated that it could only do so by incorporating code from Atlantis’ own appliance product. The parties orally agreed to Asigra receiving a limited right to use this code, with the parties disputing the consideration due Atlantis for this right. After completion of the project, when a dispute arose over payment, Atlantis “unilaterally revoked the nonexclusive license” and sued Asigra for breach of contract, trade secret misappropriation, and copyright infringement, among other things. Asigra moved for judgment on the pleadings on all counts. Judge Hennessy granted Asigra’s motion with respect to the copyright claims, while denying it with respect to the other claims. He determined that Atlantis had granted a nonexclusive license to the code by the parties’ oral agreement, which became irrevocable upon the payment of consideration by Asigra. The reasoning is that, upon payment of consideration (regardless of whether it was complete consideration under the agreement) a contract has been formed, and the remedy for the aggrieved party is through contract law, not copyright.
Also of interest, Judge Hennessy determined that Asigra waived its argument that the allegedly misappropriated trade secrets were not adequately identified by raising it only in a footnote; First Circuit case law holds that arguments raised perfunctorily or solely by footnote are waived. He also denied judgment on the pleadings with respect to Asigra’s Ch. 93A claim, finding that one party’s breach of contract for the purpose of gaining leverage over the non-breaching party has been deemed an unfair business practice in Massachusetts.
Teva sued Eli Lilly, accusing it of infringing five Teva patents covering humanized monoclonal antibodies that can be used to treat migrane sufferers. This month, Teva submitted a Biologics License Application (“BLA”) to the FDA seeking approval to market their product, known as “fremanezumab.” Eli Lilly recently stated that it had filed its own BLA for a monoclonal antibody, to be called “Galcanezumab,” that targets the same peptide that Teva’s product targets. Based on Eli Lilly’s completion of Phase III clinical trial, its filing of the BLA, and its extensive press statements that it intends to make and sell the product upon receiving approval, Teva asserts that its cause of action is ripe for consideration by the courts. Regarding venue (Eli Lilly is not alleged to be a Massachusetts corporation), Teva asserts that Eli Lilly is registered to do business in the Commonwealth, has a registered agent and a Foreign Corporation Certificate of Registration in the Commonwealth, described its business in Massachusetts as “pharmaceutical manufacturing and sales” in 2017 Annual Report filed with the state, and employs consultants and sales people in Massachusetts to work with Massachusetts health care providers. Moreover, Eli Lilly is asserted to have a facility in Cambridge (in a building, coincidentally, that resides directly behind my firm’s office in Kendall Square) at which it does research and development work, including work on delivery of biologics and pain treatment, which Teva suggests meets the “committed acts of infringement” part of the patent venue statute.
RW IP Holdings sued Standard Innovation Corp. for infringement of U.S. Patent No. 6,028,531, “Terminal Units for a Mobile Communications System” by its sales of We-Vibe® adult toys that can be controlled remotely through a smartphone or the like. Direct, contributory and induced infringement are alleged, and damages, enhancement for willfulness, and attorneys’ fees are sought; no injunction is being sought however, as it appears the patent (which has a priority date of October 12, 1996) has expired.
Potentially of interest, Standard Innovation is alleged to be a Canadian corporation located in Ontario. While the complaint alleges advertising and sales into Massachusetts, there are no allegations that Standard Innovation has a regular and established place of business in the state. At present, it is unclear whether the venue requirements of TC Heartland will apply to foreign corporations, which previously could be sued in any venue in which personal jurisdiction could be established – the TC Heartland decision notes that the Court was not expressing an opinion on the subject. It will be interesting to see whether a venue challenge is made in this case.
Microsoft sued Terason and its president, Alice Chiang, for copyright and trademark infringement, false designation of origin, and unfair competition related to allegedly pirated versions of Microsoft software being advertised and distributed by Terason. Microsoft alleges that Terason customers purchase the software without being aware that it is not legally licensed by Microsoft. Terason manufactures color portable ultrasound equipment, and (according to the complaint) thousands of activations and attempted activations of Windows 10 and Windows 7 software occurred over the past six years from an IP address assigned to Terason. The product keys for these activations were either used more times than authorized by the applicable license or were used to activate software outside of the region for which they were authorized. Microsoft alleges that Chiang personally participated in or had the right to direct and control these activities and received a direct financial benefit from these activities, justifying personal liability either directly or under principles of secondary liability such as respondeat superior, vicarious liability and contributory infringement. The case is before Judge Gorton.
I am in San Francisco for the next few days, at the International Network of Boutique and International Law Firms (INBLF) Annual Meeting. This is a vetted network of boutique law firms that together provide a full range of legal services, while providing the focus on client service that comes with a smaller firm that focuses on a particular area of law. My firm, Lando & Anastasi, is the intellectual property firm of the Boston chapter of the INBLF. I will be posting on IP events in D. Mass. while I am here, but the posts may go up later in the day than is typical.