Court Raises the Heat on Patentee Who Persisted with Baseless Infringement Suit

By Samuel J. Petuchowski, a member of our Patent Practice Group

Much patent discourse during the last decade has been driven by the perceived vulnerability of manufacturers to patent assertion by so-called “non-practicing entities,” known as NPEs (or less charitable epithets), who own patents but do not practice them. A Pricewaterhouse Coopers 1995-2009 patent litigation study, The Continued Evolution of Patent Damages Law, puts the fraction of decided patent cases involving NPEs over that period at 19.4%.

While the merits of a patent suit might be considered to rest on the simple question of whether a party is infringing a valid patent, part of the disquietude with NPE suits derives from the perception that NPEs have nothing to lose because they are not in a business covered by the patents at suit.

The Federal Circuit’s recent decision, in MarcTec, LLC v. Johnson & Johnson and Cordis Corporation, is likely to change that perception. It affirms a federal trial court’s judgment against an NPE and an award of $4.9 million to cover the attorneys’ fees and expert costs incurred by the defendants.

The two patents asserted by plaintiff MarcTec are drawn from a portfolio of over 219 U.S. and foreign patents and 143 pending patent applications held by MarcTec, many of which are listed on the curriculum vitae of Dr. Peter Bonutti, an Effingham, Illinois orthopedic surgeon and (obviously) a prolific inventor.

The two patents, differing in claims but otherwise identical, are drawn to a “tubular member” (or a “surgical device”) that is implantable in the body, is expandable and has a polymer containing a therapeutic agent bonded to it. One might be excused for thinking that this sounds like the description of a drug-eluting stent (or “intraluminal graft,” as it is called in the art).[Read the full article]

Not the Cadillac of Trade Secrets, But Still Deserving of Protection

By Joel Leeman, a member of our Litigation Practice Group

A federal court has endorsed a Rolls-Royce strategy for putting a genie back in a bottle. In this case, the genie was a manual of procedures for the repair and overhaul of helicopter engines that Rolls-Royce wished to protect as a trade secret, but which had once been in general circulation with scant effort to keep it confidential. As a result, the manual had been widely available to the engine-repair industry for some time.

To correct the situation, Rolls-Royce instituted a practice of issuing updates to the repair procedures only to its Authorized Maintenance Centers (“AMC's”), requiring them to sign nondisclosure agreements and adding a confidentiality legend on each page of each document updating the repair procedures. In AvidAir Helicopter Supply, Inc. v. Rolls-Royce Corp., the Eighth Circuit Court of Appeals found these actions sufficient to confer trade secret protectability on Rolls-Royce’s updated procedures.


The repair and overhaul procedures developed by Rolls-Royce had been approved by the Federal Aviation Administration. Any repair shop wishing to work on an engine must, by regulation, adhere to an FAA-approved procedure. Thus, a repair shop would face great expense in engineering its own procedures and getting the FAA to approve them. The easier route, by far, was to get a copy of the updated Rolls-Royce manual.

Although not an AMC, AvidAir managed to acquire a version of the updated manual. In 2002, Rolls-Royce demanded that AvidAir stop using its manual, claiming trade secret protection.

In 2003, responding to a Rolls-Royce complaint, the FAA found that AvidAir was not following Revision 13, the latest iteration of the manual. Since this deficiency jeopardized the company’s ability to provide certified repairs, AvidAir contrived to get a copy of Revision 13 from an AMC and adjusted its procedures accordingly. Rolls-Royce then sued AvidAir for theft of its trade secrets.

Both parties agreed that the case was governed by the Uniform Trade Secret Act, which defines a trade secret as information (including compilation) that:

1. Derives independent economic value from not being generally known or legitimately accessible to persons who can obtain economic value from its disclosure; and
2. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

The trial judge in Missouri held that Revision 13 was in fact a protectable trade secret, although earlier revisions, available before Rolls-Royce tightened its safeguards, did not qualify as secrets. The jury awarded damages to Rolls-Royce, and the judge ordered AvidAir to return the trade secret material to Rolls-Royce but did not forbid the company from continuing to overhaul helicopter engines as long as it relied on publicly known procedures.[Read the full article]

To Russia With Love: Supreme Court Upholds Restoration of Copyright in Works of Russian Authors and Composers (And Many Others)

By Thomas Carey, Chair of the Business Practice Group

Seldom does a United States Supreme Court justice refer to a (perhaps mythical) statement of a 6th-century British king in interpreting the U.S. Constitution, but it happened last week in Golan v. Holder. That case, which we have reported on at both the trial and appellate level, involves a constitutional challenge to the power of Congress to retroactively restore copyright protection to foreign works.

The United States, like most countries, is a party to the Berne Convention, which requires its members to provide at least as much copyright protection to foreign authors and composers as it does to its domestic authors and composers.

When Congress ratified the Berne Convention in 1989, it was reluctant to apply it retroactively. As a result, U.S. copyright protection was denied to pre-existing works of foreign authors unless those works were already protected under U.S. copyright law (as may have happened if the author registered the work with the U.S. Copyright Office). While other countries objected to this minimalist approach to the treaty, there was initially no effective means of compelling the United States to adopt a more generous interpretation of the treaty.

That changed in 1994 as a result of the Uruguay round of multilateral trade negotiations. The Uruguay Round established the World Trade Organization (WTO); produced the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS); and created a process by which TRIPS violators could be subject to trade sanctions under WTO procedures.

Under the threat of such sanctions, the United States considered more seriously its commitment under the Berne Convention. The result was the enactment of the Uruguay Round Agreements Act (URAA), which at §514 provided for the restoration of copyright in foreign works that predated U.S. accession to the Berne Convention.

The prospect of removing works from the public domain provoked the ire of many, including orchestra conductors, musicians and publishers, all of whom had enjoyed the opportunity to perform or publish millions of foreign works (such as the compositions of Shostakovich and Prokofiev) without having to worry about compensating the authors or composers who created them. Such removal was felt by many to retract, on the effective date of §514, rights of free speech that were available the day before.

They filed a lawsuit against the U.S. attorney general, seeking a ruling that §514 of the URAA was unconstitutional. The case had numerous twists and turn, eventually landing at the doorstep of the Supreme Court.

The case attracted widespread attention. The 52 amicus briefs nearly all argued that Congress had no power to remove works that had already been in the public domain. In a 6-2 decision, the Supreme Court disagreed.[Read the entire article]

Starbucks Absorbs Another Loss in Its Long Trademark Battle with Charbucks

By Steve Abreu, a member of our Trademark Practice Group

No doubt about it: It is hard for brand owners to protect against trademark dilution, even with a name as famous as STARBUCKS. With its decision in Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., a federal court in Manhattan has yet again served a bitter brew to the coffee chain in this 14-year dispute.

In 1997, Black Bear Micro Roastery began marketing its premium dark roast coffee under the name “Black Bear Mr. Charbucks Blend Coffee.” Not surprisingly, Starbucks objected to Black Bear’s use of “CHARBUCKS,” and eventually sued the New Hampshire roaster for both trademark infringement and trademark dilution in a 2001 lawsuit.

In 2005, the court handed Starbucks its first defeat in the suit, ruling that the use of CHARBUCKS resulted in no actual dilution under federal trademark law. The next year, Congress passed the Trademark Dilution Revision Act (TDRA), which significantly eased the burden of proof on a brand owner. Now, the owner of a famous mark is required to show only that the defendant's mark is likely to cause dilution.

The court of appeals asked the trial court to reconsider Starbucks’s claim under the new law, specifically whether dilution by “blurring” had occurred. Diluting a mark by blurring it means impairing its distinctiveness. According to the federal courts, “blurring occurs where the defendant uses or modifies the plaintiff’s famous mark to identify the defendant’s goods, raising the possibility that the mark will lose its ability to serve as a unique identifier of the plaintiff’s product.”

In determining whether dilution by blurring has occurred, the TDRA requires courts to consider the following factors:

1. The degree of similarity between the mark and the famous mark,
2. The degree of inherent or acquired distinctiveness of the famous mark,
3. The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark,
4. The degree of recognition of the famous mark,
5. Whether the user of the non-famous mark intended to create an association with the famous mark, and
6. Any actual association between the non-famous mark and the famous mark.

In a second rejection of Starbucks’s claims, the trial court determined, among other things, that blurring did not occur because the marks were not substantially similar. However, the court of appeals reversed the dilution-by-blurring part of the decision because “substantial similarity” between the famous mark and the junior mark was not necessary in order to prove trademark dilution.

The court of appeals asked the district court to reconsider, once again, whether the association in consumers’ minds between CHARBUCKS and STARBUCKS was sufficient to show that Black Bear had had Starbucks’s fame in mind when developing and selling its Mr. Charbucks line of coffee.

The court of appeals added that any reliance by Black Bear on a parody defense was improper because the parody – using the mark Charbucks -- was not commentary on Starbucks coffee, but a reference to Black Bear’s coffee. We previously analyzed this 2009 court of appeals decision.

In the most recent development, the district court re-evaluated whether dilution by blurring occurred. Remarkably, despite finding that four of the six dilution factors favored Starbucks, the court concluded that dilution by blurring had not been proven because the marks are only minimally similar and, based on the results of a survey, only “weakly associated in consumers’ minds.” [Read the full article]