SoCal IP Law Group

The SoCal IP Law Blog

SoCal IP Institute :: July 28, 2014 :: Subject Matter Eligibility Post-Alice and Stays in view of CBM Reviews

Our weekly SoCal IP Institute meeting on Monday, July 28, 2014 will be a discussion of two Federal Circuit cases.  The first pertains to subject matter eligibility.  The second pertains to the grant of a stay during the pendency of a later-filed covered business method patents review. Brief synopses of the cases appear below.

Digitech Image Tech., LLC. v. Electronics for Imaging, Inc. et al, No. 2013-1600 etc. (Fed. Cir. July 11, 2014) (available here).  The plaintiff asserted a patent related to an “improved device profile” for the color and spatial profile of devices such as digital image processors, such as digital cameras.  On motion of several defendants, the district court found that the patent’s “improved device profile” amounted to data that was not within the categories of statutory subject matter under Section 101.

The Federal Circuit, here, agreed with the district court finding that the device profile claims were directed to data, which is not one of the identified categories and, further, that the method claims are directed to an “abstract idea” and, therefore are not eligible for patent protection.

VirtualAgility Inc. v. Salesforce.com, Inc. et al., No. 2014-1232 (Fed. Cir. July 10, 2014) (available here).  VirtualAgility sued several defendants in January of 2013. In May of 2013, some of those defendants sought review under the new AIA CBM patent review process.  Specifically, the defendants asserted that the patent was invalid under Sections 101, 102, and 103.  Shortly thereafter, the defendants sought a stay in the case.  The district court denied the motion in January of 2014, with claim construction then due to be completed in April.

The Federal Circuit entered a stay pending interlocutory appeal (available under the AIA for refusals to grant stays).  Under a very careful review of the four factors set forth in the statute, the Federal Circuit found that the district court incorrectly evaluated two of the factors and, therefore, three of the four weighed in favor of granting a stay.  Accordingly, the district court was reversed and the stay was granted pending completion of the CBM review.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 28, 2014 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.

SoCal IP Institute :: July 21, 2014 :: Guest Speakers Ari Katz and Yoav Keren to Discuss Online Brand Protection

Our weekly SoCal IP Institute meeting on Monday, July 21, 2014 will be a discussion by Ari Katz and Yoav Keren of BrandShield Ltd.  BrandShield was established to develop technology and solutions to help businesses protect their brand online from infringement.  The Company is backed by Israel’s Chief Scientist and with an R&D center based in Israel.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 21, 2014 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.

SoCal IP Institute :: July 14, 2014 :: Liens on IP do not Create Federal Questions and Receivership Over Some George Clinton Recordings Affirmed

Our weekly SoCal IP Institute meeting on Monday, July 14, 2014 will be a discussion of one 4th Circuit case regarding federal subject matter jurisdiction for liens enforced on intellectual property and a 9th Circuit decision on the appointment of a receiver and that receiver’s rights over IP held by an individual. Brief synopses of the cases appear below.

Flying Pigs, LLC v. RRAJ Franchising, LLC, No. 13-2135 (4th Cir. July 1, 2014) (available here). Through a very convoluted set of steps including foreclosure on a series of renters, two bankruptcy proceedings, an overarching settlement agreement across several parties, and removal (twice) of proceedings from Lenoir County, North Carolina Superior Court to the Eastern District of North Carolina, Flying Pigs came to bring a lien-related proceeding in Superior Court.  Defendant RRAJ removed the case under “federal question” subject matter jurisdiction.  The district court denied Flying Pigs’ remand motion and granted RRAJ a dismissal with prejudice.

The 4th Circuit vacated the district court’s dismissal order, and returned the matter to the Superior Court.  Specifically, the 4th Circuit held that the matter did not raise a federal question, but instead arose under state law–essentially as a lawsuit to enforce a lien in part against the IP.

Hendricks & Lewis PLLC v. Clinton, No. 13-35010 (June 23, 2014) (available here).  Hendricks & Lewis PLLC represented George Clinton in a series of legal matters over the course of a number of years.  Mr. Clinton failed to pay for those services. The bill totaled over $3 million, but was reduced to just over $1.5 million in arbitration proceedings in which Mr. Clinton did not participate.  A year after the arbitration, Clinton sued Hendricks & Lewis for malpractice.  They, in turn, sought to enforce the arbitration award.  The district court appointed a receiver for Mr. Clinton’s assets and authorized the license or sale of the copyrights in order to cover the fee award.

The 9th Circuit held that under Washington law Clinton’s copyrights in the masters were subject to execution to satisfy judgments made against him. The panel also held that § 201(e) of the federal Copyright Act did not protect Clinton from the involuntary transfer of his copyrighted works. The court further held that under Washington law the district court did not abuse its discretion by appointing a receiver to manage or sell ownership of the copyrights. The court also held that Clinton may raise claims of fraud on the court and judicial estoppel for the first time on appeal, but concluded that both claims were meritless. Finally, the court held that Clinton failed to raise his preemption, Erie doctrine, and due process arguments before the district court, and, therefore, they would generally not be considered, and in any event they were without merit.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 14, 2014 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.

SoCal IP Institute :: July 7, 2014 :: Copyright infringement and trade secrets

Our weekly SoCal IP Institute meeting on Monday, July 7, 2014 will be a discussion of a Supreme Court case on copyright infringement and a California Appellate opinion on trade secrets. Brief synopses appear below.

ABC v. Aereo (U.S. June 25, 2014) (available here).  The Supreme Court held that Aereo’s service, which provided subscribers the ability to view television programs over the Internet at about the same time as they were being broadcast over the air, constituted copyright infringement because the service “performed” the copyrighted work publicly under the Transmit Clause.

New Castle Beverage, Inc. v. Spicy Beer Mix, Inc.  (Cal. Court of Appeal June 17, 2014) (available here). In this unpublished opinion, the California Court of Appeal affirmed the trial court’s ruling that the spice mix was not sufficiently defined and therefore did not constitute a trade secret.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 7, 2014 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.

SoCal IP Institute :: June 30, 2014 :: Conflicts of Interest

Our weekly SoCal IP Institute meeting on Monday, June 30, 2014 will be a video presentation on Conflicts of Interest.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, June 30, 2014 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE Ethics credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.

SoCal IP Institute :: June 30, 2014 :: Conflicts of Interest

Our weekly SoCal IP Institute meeting on Monday, June 30, 2014 will be a video presentation on Conflicts of Interest.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, June 30, 2014 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE Ethics credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.

SoCal IP Institute :: June 16, 2014 :: Supreme Court on Indefiniteness and Copyright

Our weekly SoCal IP Institute meeting on Monday, June 16, 2014 will be a discussion of two Supreme Court cases.  The first deals with indefiniteness and the second deals with copyright ownership. Brief synopses of the cases appear below.

Nautilus, Inc. v. Biosig Instrum., Inc. 110 U.S.P.Q.2d 1688, 572 U.S.___  June 2, 2014) (available here). In Nautilus, the Supreme Court remanded to the Federal Circuit to determine whether claims to an exercise machine were indefinite under 35 U.S.C. §112,¶2. Procedurally, the District Court granted Nautilus’ summary judgment motion to dismiss on the basis of invalidity, but the Federal Circuit reversed saying the claim term at issue was not “insolubly ambiguous.”  In remanding, the Supreme Court stated that the “insolubly ambiguous” standard does not comport with the statute.  “To tolerate imprecision just short of that rendering a claim ‘insolubly ambiguous’ would diminish the definiteness requirement’s public-notice function and foster the innovation-discouraging ‘zone of uncertainty.’ ”  The ball is back in the CAFC’s court to clearly define a definiteness test.

Side-issue brought up in Nautilus: What are “hybrid” apparatus/method claims, and when are they invalid?

Petrella v. Metro-Goldwyn-Mayer, Inc. et al., S.Ct. No. 12-1315 (May 19, 2014) (available here).  The screenplay for the movie “Raging Bull,” written by Jack Petrella and Jake LaMotta, was copyrighted in 1963 and assigned to MGM.  The movie was released in 1980, and upon Petrella’s death, his rights reverted to his daughter, plaintiff here.  She renewed the copyright in 1991, becoming its sole owner.  In 1998 she threatened MGM with an infringement suit, and in 2009 she sued, claiming monetary and injunctive relief limited to the three years prior to the date the suit was filed.  The Ninth Circuit granted summary judgment to MGM based on laches.  The Supreme Court reversed on a 6-3 vote, holding that laches does not apply to copyright claims for damages brought within the copyright statute’s prescribed three-year window.  In extraordinary circumstances, however, laches might curtail some forms of equitable relief.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, June 16, 2014 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.

SoCal IP Institute :: June 2, 2014 :: TTAB Says ‘Chanel’ For Real Estate Services Dilutes the Fashion Brand; Altavion, Inc. wins trade secret case against Konica Minolta Systems Laboratory regarding its digital stamping technology

Our weekly SoCal IP Institute meeting on Monday, June 2, 2014 will be a discussion of a recent TTAB precedential case and state trade secret opinion. Brief synopses appear below.

Chanel, Inc. v. Jerzy Makarczyk (TTAB May 27, 2014) (available here.).  Here, Karczyk (“applicant”), filed an application pursuant to Section 1(a) of the Trademark Act to register the mark CHANEL for “real estate development and construction of commercial, residential and hotel property” in Class 37.  Chanel, Inc. (“opposer”) opposed the registration of applicant’s mark on the grounds of likelihood of dilution by blurring under Section 43(c) of the Trademark Act, 15 U.S.C. § 1125(c); likelihood of confusion under Section 2(d) of the Trademark Act, 15 U.S.C. § 1052(d); and false suggestion of a connection under Trademark Act Section 2(a),15 U.S.C. § 1152(a).  Chanel, Inc., prevailed in this precedential opinion.

Altavion, Inc. v. Konica Minolta Systems Laboratory (Cal. Court of Appeal May 9, 2014) (available here), held that patentable ideas, if kept secret, can constitute information protectable by trade secret law, clearing up confusion created by a 2010 decision (Silvaco Data Systems v. Intel Corp.), which had stated that “[t]rade secret law does not protect ideas as such” and that trade secret protection only extends to information tending to communicate or disclose ideas to another.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, June 2, 2014 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.

Apple v Google isn’t the Real News

This post is by Steven C. Sereboff, partner at SoCal IP Law Group LLP.


Newswires on May 16, 2014 reported that Apple and Google have settled all of their current patent litigation (20 cases worldwide according to news reports). This isn’t really true, and some reporters mistook the settlement as a significant change in the Apple-Google relationship. However, this probably wasn’t Google’s settlement – it was probably Lenovo’s settlement. As often happens with patents and the press, the press seems to have misunderstood what is going on. These companies have not changed their views about patents. No, it was much simpler, and reflected in the adage, “the enemy of my enemy is my friend.”

The first error in reporting: Apple and Google were not in patent litigation. No, it was Google’s subsidiary, Motorola Mobility that was in litigation with Apple. The patent war started when Moto sued Apple for infringing a Moto patent. Google later bought Moto and inherited the Moto patent people and their war with Apple. The rest was just the ordinary outcome of Mutually Assured Destruction – missiles launching from wherever the silos happened to hold the patents. Google didn’t start this fight, and it was Moto patent people, not Google people (who hate patents), that were running the war with Apple. This was never really Google’s fight.

The second error: The reporters failed to appreciate the importance of Lenovo. Lenovo, a huge Chinese company which bought IBM’s laptop business several years ago, is now buying Moto. Lenovo surely was not buying Moto for its patent war with Apple. Just as it did with IBM’s Thinkpad business, Lenovo wants Moto for its brand, its technology and its distribution. Lenovo surely is not buying Moto to take over a bunch of patent litigation with Apple, especially after seeing that several years of litigation didn’t really benefit either side. As is typical in corporate acquisitions, Lenovo probably pressured Google to eliminate the risk, cost and distraction of the ongoing Apple litigation. Google, which clearly wants to get out of the handset business, is settling with Apple, just as it is probably closing out a host of other issues with the Moto business. Normally, when big companies settle patent cases, they cross-license their patents to avoid fighting again for a while. That didn’t happen here. Google and Apple did not cross-license. Instead, they agreed only to dismiss the litigation. This might leave Lenovo somewhat exposed to Apple’s patents, but one would expect that if Apple had good patents to assert against Moto, it would have done so. Thus, Lenovo in effect has an Apple license. Likewise, Apple doesn’t need a Google license. Apple’s real threat remains Samsung. Moto’s phones were never a serious threat to Apple, and Lenovo/Moto is much more of a market threat to Samsung than to Apple. Thus, releasing Moto from the patent wars helps Lenovo which, at least in the short term, will hurt Samsung a lot more than it might hurt Apple. Thus,  “the enemy of my enemy is my friend.”

The third error: Nobody reported the Babbage decision, issued May 15, 2014. Babbage is an NPE (some might say patent troll) that sued a bunch of video game companies in September 2013 in the Eastern District of Texas. Judge Gilstrap’s opinion in those consolidated cases demonstrates the change of attitudes in the courts toward NPE litigation. For those of us with a history in the patent business, the AIA and court decisions in the last five years or so have significantly raised the stakes in NPE litigation. This shift has far more importance than the Apple and Moto settlement (except maybe for the litigators in those cases who have lost a great revenue stream).

In short, weaker patent cases have become less valuable. This impacts patent warriors like Apple and Moto, but it’s more significant to single-patent suits than to large portfolio owners who continue to have leverage from the economic burdens of scale. For those of us who have been assessing NPE case values for a long time, a lot of what we see looks more like potential liabilities, especially with the latest case law relating to fee shifting. This has resulted in a considerable shift in the market, albeit one that a lot of people have failed to appreciate.

This takes us back to the Babbage case. About one week before its patent expired, Babbage filed those lawsuits. Four months later, after Babbage had amended its complaint twice (which usually reflects a confused plaintiff), the defendants moved to dismiss. At the end of his analysis at page 4, Judge Gilstrap explained, “Even affording Babbage every possible benefit of the doubt, it has failed to allege more than a de minimis indirect infringement claim, which does not justify or support the use of this Court’s limited resources.” If this weren’t clear enough, the judge concluded at page 5, “Accordingly, Babbage is hereby ORDERED to appear [in two weeks] and show cause why sanctions should not be imposed in light of the above conduct.”

Some might downplay Judge Gilstrap’s holding because Babbage only alleged induced infringement, but that would miss the import of the decision. In the past, we became accustomed to seeing parties smacked in EDTX, but it was almost always defendants getting smacked. Many critics of EDTX argue that the judges welcomed patent suits to help the local economy. Regardless, when you see judges smacking a plaintiff, especially for something that they probably would have tolerated in the past, you need to pay attention. The patent business has never been static, and it is going through some rapid changes.

Look at the last ten years, and you see that the pendulum of patent power has shifted decidedly from patent owners to the accused infringers. As with any pendulum, first it slowed, then it paused, and then it started to move with increasing speed in the other direction. This pendulum is not linear, though. Like the massive pendulum in the Smithsonian Museum of Natural History, this one is sweeping in 3D space. Though it is moving away from where it was, the movement is more circular than linear. In other words, the future is not the exact opposite of the past. A lot of people don’t see this. Thus, a simple count of new patent suits might report that numbers continue to grow. As with most shifts in law and society, it takes time for things to trickle around. It will take time to see more Babbage-like decisions before people see that the pendulum has moved. After a few high profile fee awards, though, the word will spread, especially when the courts make the lawyers and their collaborators pay, and this seems inevitable.

On the other hand, the really strong cases remain valuable, and the lawyers that can win those cases are much, much more valuable. Patents now must survive a more critical court room, and probably several attacks in the USPTO, not to mention a panel of judges at the CAFC that are struggling with the pendulum’s swing. This means a greater investment into these cases, and a longer timeline where more can go wrong. Despite the weakening of the power of patents, the system can still work. Talented attorneys with good patent cases will continue to win, and fee shifting may even make these cases more valuable, as it should.

One can also hope to see companies like Apple and Google direct their resources into real benefits to society, like real innovation and also to giving some credit to the little guys that actually invented the wonderful technology that they later built.

SoCal IP Institute :: May 19, 2014 :: Updates from INTA’s Annual Meeting

Please join us for our weekly SoCal IP Institute meeting on Monday, May 19, 2014. Mark Goldstein will discuss his trip to Hong Kong for the International Trademark Association’s 136th Annual Meeting held earlier this week.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, May 19, 2014 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.

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