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Woodard Emhardt Obtains Dismissal of Trademark Infringement Complaint

May 19, 2016

Judge Stivers of the U.S. District Court for the Western District of Kentucky recently ordered that a trademark infringement lawsuit filed against operators of historical horse racing games by numerous prominent race tracks should be dismissed. The suit alleged that the defendants infringed upon the Plaintiffs’ trademarks by using the racetracks’ names to identify the location where historic horse races had taken place. The Court reasoned that the defendants were “fully within their rights to describe where an event took place in their wagering system without implying the owners of the racetrack are sponsoring the game…” Moreover, the court found that the defendants were protected by the fair use defense when describing where an event took place, even when the location described is most commonly conveyed using a registered trademark. Woodard Emhardt attorneys Spiro Bereveskos and Bill McKenna are representing the Defendants.

Woodard Emhardt Obtains Dismissal of Patent Infringement Complaint Under Section 101

May 12, 2016

Judge Stivers of the U.S. District Court for the Western District of Kentucky recently ordered that a patent infringement lawsuit filed against operators of historical horse racing games should be dismissed as the three patents asserted failed to claim patent eligible subject matter under 35 U.S.C. 101. In dismissing all three infringement claims, the Court wrote “[Plaintiff]’s patents encompass subject matter facially unpatentable under Section 101. The only plausible reading of the ‘150, ‘887, and ‘737 patents reflects that they are ineligible for patent protection. The Asserted Patents are abstract ideas, and [plaintiff] has failed to demonstrate an inventive concept required to transform these claims into patentable subject matter within the meaning of Section 101. Thus, the claims asserted in the Amended Complaint must be dismissed.” The opportunity for companies facing the threat of infringement from patent holders to obtain either invalidate those patents or obtain prompt and efficient dismissal such as this in litigation has significantly increased following the Supreme Court’s decision in Alice. Woodard Emhardt attorneys Spiro Bereveskos and Bill McKenna are representing the Defendants.

Woodard Emhardt Obtains Order Transferring Patent Case out of the ED of Texas

September 28, 2012

Judge Leonard Davis of the Eastern District of Texas recently ordered that a patent infringement lawsuit filed against an Indianapolis based company be transferred to the Southern District of Indiana.  The lawsuit was filed following the effective date of the new joinder provisions of the America Invents Act which prevent Plaintiffs from filing large multi-defendant lawsuits.  The case involved a New York based Plaintiff and Judge Davis found that the Southern District of Indiana was clearly a more appropriate forum.  Woodard Emhardt attorneys Spiro Bereveskos and Bill McKenna are representing the Defendant.

Seventh Circuit Court of Appeals Proposes New Standards For Awarding Attorneys’ Fees in Trademark Infringement Suits

May 4, 2011

15 U.S.C. §1117(a) allows attorneys’ fees to be awarded to prevailing parties in federal Lanham Act suits (brought primarily for trademark infringement) — but only in “exceptional cases.”  So what constitutes an exceptional case?  Are the various Circuit courts in agreement?  Richard Posner, writing on behalf of the Seventh Circuit Court of Appeals, attempted to answer these questions in Nightingale Home Health Care, Inc. v. Anodyne Therapy LLC, No. 10-2327 (7th Cir. Nov. 23, 2010).

As background, Nightingale, a provider of home healthcare services, had purchased several infrared lamps from Anodyne.  The lamps were FDA-approved for relieving minor muscle and joint pain and improving superficial circulation, but not for treating peripheral neuropathy.  In the lawsuit, Nightingale claimed that an Anodyne sales representative falsely represented that the lamps had been approved by the FDA for treating peripheral neuropathy.  Later, Nightingale replaced Anodyne’s lamps with virtually identical lamps from another supplier, apparently for price-related reasons unrelated to the scope of the FDA’s approval.  The district court found that Nightingale had made the Lanham Act claim in an attempt to coerce a price reduction from Anodyne.  After Anodyne successfully defended against Nightingale’s suit, the district judge granted Anodyne’s request for attorneys’ fees in the amount of $72,747.  On appeal, Nightingale argued that the case was not “exceptional.”

Judge Posner reviewed the standards for exceptionality in the various Federal Circuits and noted:

• The Fourth, Sixth, Tenth and D.C. Circuits apply different tests depending on whether it was the plaintiff or the defendant who prevailed.  In the Fourth and D.C. Circuits, a prevailing plaintiff is entitled to attorneys’ fees if the defendant’s infringement was in bad faith.  A prevailing defendant can qualify for attorneys’ fees for “something less than bad faith” by the plaintiff.  Examples are economic coercion, groundless arguments, and failure to cite controlling law.  In the Tenth Circuit, a prevailing plaintiff has to prove the defendant acted in bad faith, while a prevailing defendant need only show (i) lack of any foundation for the lawsuit; (ii) the plaintiff’s bad faith in bringing suit; (iii) the unusually vexatious and oppressive manner in which it was prosecuted; or (iv) “perhaps other reasons as well.”  In the Sixth Circuit, a prevailing plaintiff must prove the defendant’s infringement was “malicious, fraudulent, willful or deliberate.”  A prevailing defendant must prove the plaintiff’s suit was “oppressive” (quoting the Tenth Circuit factors).

• In the Second, Fifth and Eleventh Circuits, prevailing defendants and prevailing plaintiffs must prove that their opponent litigated in bad faith or — when the defendant is the prevailing party — that the suit was a fraud.  The Fifth Circuit adds that a court should “consider the merits and substance of the civil action when examining the plaintiff’s good or bad faith.”

• The First, Third, Eighth and Ninth Circuits (like the Second and Eleventh Circuits) make no distinction between prevailing plaintiffs and prevailing defendants.  However, a showing of bad faith is not necessarily required.  Willfulness short of bad faith or fraud will suffice.

Prior to Nightingale, the Seventh Circuit was starting to show its own incongruity.  Initially, in Door Systems, Inc. v. Pro-Line Door Systems, Inc., 126 F.3d 1028 (7th Cir. 1997), another Posner-written opinion, the Court asked whether the conduct of the party from which attorneys’ fees was sought had been “oppressive”.  Regarding a plaintiff’s suit, the answer would turn on whether the suit “was something that might be described not just as a losing suit but as a suit that had elements of an abuse of process, whether or not it had all the elements of the tort.”  A different test was set forth for “oppressive” conduct by a defendant.  In that instance, the question turned on “whether the defendant had lacked a solid justification for the defense or had put the plaintiff to an unreasonable expense in suing.”

Subsequently to Door Systems, in S Industries, Inc. v. Centra 2000, Inc., 249 F.3d 625 (7th Cir. 2001), a non-Posner-written opinion, the Court said that oppressive conduct by plaintiffs would be conduct that “lacked merit, had elements of an abuse of process claim, and plaintiff’s conduct in the litigation unreasonably increased the cost of defending against the suit.”  Also, it said a finding that a suit was oppressive could be “based solely on the weakness” of the plaintiff’s claims (e.g., malicious prosecution).

Subsequently to S Industries, in TE-TAMA Truth Foundation-Family of URI, Inc. v. World Church of the Creator, 392 F.3d 248 (7th Cir. 2004), a non-Posner-written opinion, the Court said that oppressive conduct by defendants includes not only willful infringement of the plaintiff’s trademark, but also “vexatious litigation conduct” and that oppressive conduct by plaintiffs also includes “vexatious litigation conduct.”

In Nightingale — which can only be described as a righting of the ship with Posner at the helm — the Seventh Circuit essentially returned to Door Systems and concluded that “a case under the Lanham Act is ‘exceptional,’ in the sense of warranting an award of reasonable attorneys’ fees to the winning party, if the losing party was the plaintiff and was guilty of abuse of process in suing, or if the losing party was the defendant and had no defense yet persisted in the TM infringement or false advertising for which he was being sued, in order to impose costs on his opponent.”

In order to avoid an elaborate inquiry into the state of the mind of the party from which reimbursement is sought, Judge Posner added that it should be enough to justify the award “if the party seeking it can show that his opponents claim of defense was objectively unreasonable — was a claim or defense that a rational litigant would pursue only because it would impose disproportionate costs on his opponent — in other words only because it was extortionate in character, if not necessary in provable intention.”

For context, Posner reviewed the legislative history of the Lanham Act yet offered a “more practical concern” which is essentially protecting and enhancing competition in the marketplace.  In this case, Nightingale was said to impair competition in the marketplace by filing a Lanham Act claim with no possible merit.  It misused the legal process primarily to accomplish a purpose for which it was not designed — to compel the victim to yield on some matter not involved in the suit.  Specifically, it made the claim in an attempt to coerce a price reduction from Anodyne.

In addition to affirming the judgment in District Court, the Seventh Circuit also granted Anodyne’s motion for fees and costs for the appeal.

Even adhering to the various tests set forth by the Circuit courts, it is generally considered quite difficult to obtain an award of attorneys’ fees in trademark infringement lawsuits.  Therefore, it is important to have an experienced trademark litigator review your case and devise an appropriate strategy before initiating a lawsuit.      

Please contact us if you would like to learn more about the Nightingale case or discuss any aspect of trademark litigation.

December 2010 Litigation Lunch – Irreparable Harm in Preliminary Injunctions and Inevitable Disclosure

December 3, 2010

This month’s litigation group presentation includes a discussion of the state of the law regarding preliminary injunctions in trademark infringement cases.  The presentation also examines similar issues with respect to trade secret infringement, particularly as they relate to the doctrine of inevitable disclosure.  Click here to download a copy of this presentation.

Case Law Update: Inequitable Conduct Law Continues to Evolve

June 30, 2010

In a recent decision, the Federal Circuit ruled a company’s patent unenforceable due to the inequitable conduct committed by the company’s non-inventor president. As background, Avid’s founder and president, Dr. Hannis Stoddard, hired three engineers to develop a product based on his idea of identifying and processing recovered animals. Dr. Stoddard was not an inventor on the patent that ultimately issued, but he did demonstrate an early version of the technology at a trade show more than a year prior to the filing date of the issued patent. This demonstration was not disclosed to the United States Patent and Trademark Office (“USPTO”) during prosecution of the patent, and Dr. Stoddard did not dispute that this information was withheld with specific intent to deceive the USPTO for the purposes of obtaining a patent. He argued that he was neither an inventor nor an attorney and therefore owed no duty of candor to the USPTO; however, the district court disagreed and found Avid’s patent unenforceable for inequitable conduct committed by Dr. Stoddard. 

The regulations governing inequitable conduct are provided by 37 C.F.R. §1.56 (“Rule 56”), which imposes a duty to disclose information to the USPTO when an individual is (1) associated with the filing and prosecution of a patent application, and (2) knows that the information in question is material. For purposes of identifying who owes a duty of candor to the USPTO, Rule 56 defines “individual(s) associated with the filing or prosecution of a patent application” as (1) each named inventor, (2) each attorney or agent that prepares or prosecutes the application, and (3) every other person who is substantively involved in the preparation or prosecution of the application and who is associated with the inventor or assignee. 37 C.F.R §1.56(c). 

Dr. Stoddard is neither an inventor nor an attorney or agent involved in the preparation or prosecution of the patent, so the issue of whether or not he owed a duty to candor to the USPTO involved an analysis of whether or not he was “substantially involved” in the preparation or prosecution of the patent, and whether or not the prior demonstration was material to patentability. 

With respect to “substantially involved,” the Federal Circuit identified a number of factors in affirming the ruling of the district court that Dr. Stoddard met this requirement. Some of these factors included his position and responsibilities in the company, his involvement in hiring the engineers/inventors to develop the product, and his communication with the inventors during prosecution of the patent in Europe. 

With respect to materiality, the Federal Circuit dismissed Avid’s argument that the demonstration was not material to the patentability of the claims even though it would not have lead to a proper §102(b) rejection by the USPTO. Indeed, the demonstration involved a preliminary product that failed to contain all of the elements of the issued patent claims. Moreover, an infringement jury was given information regarding the demonstration and still found the patent valid. However, the court reasoned that the demonstration, while not invalidating, was the closest prior art and was thus material. By doing so, the court relied on the “reasonable examiner” standard, which was written out of the old Rule 56 (i.e., prior to the 1992 amendments). The current Rule 56 is much more objective and likely would have found this demonstration non-material to patentability. 

The Federal Circuit thus affirmed the lower court’s ruling that Avid’s patent was unenforceable for inequitable conduct committed by Dr. Stoddard. This case seems to be a close call, and it certainly didn’t help that Dr. Stoddard purposefully withheld the information knowing that it would likely have some impact during prosecution. If anything, this case serves as a reminder to submit any relevant information to the USPTO even if the person aware of this information is only remotely involved in the preparation and prosecution of a patent application. 

See Avid Identification Sys. v. Crystal Import Corp., No. 09-1216 (Fed. Cir. April 27, 2010).

Supreme Court Hears Oral Arguments in Bilski v. Kappos

November 10, 2009

Monday the U.S. Supreme Court heard oral arguments in the highly anticipated Bilski v. Kappos case.  The Court’s decision in this case, which is expected by the spring of 2010, will shape what types of technology is and is not eligible for patent protection.

A transcript of the hour-long oral argument is available here.

The Conflict Between European Privacy Laws and U.S. Discovery Requirements

August 17, 2009

Recently adopted European data protection laws designed to protect the privacy of European employees can easily conflict with U.S. civil litigation document production requirements.  The dilemma for multinational companies can be whether to comply with U.S. court discovery obligations and risk European civil and criminal penalties or to comply with European law, and risk sanctions or default in U.S. litigation.

Under U.S. law, when a lawsuit is commenced, a company is required to preserve records relating to the issues in the lawsuit, and thereafter to produce for inspection, copies of such documents as are properly requested during the course of the litigation.  These activities may be illegal in Europe.  According to Indiana University Maurer School of Law Professor Fred Cate, the mere retention of European records containing personal data in anticipation of a U.S. discovery request would itself violate European rules.  Moreover, the mere electronic searching of the records themselves may violate the European rules.  A French high court held that an employer had no legal right to read its employees’ e-mails and other documents, even if the employer supplied the computer and expressly provided that employees were not to use their computers for personal use.  A Greek data protection authority held that an employer can not automatically scan an employee’s emails, unless the employee is informed in advance and has been given a technical means to protect the secrecy of his own communications.  The Italian Supreme Court held that an employer can only monitor employee emails if there is an agreement with the local union or approval is obtained from the local labor office.  A Texas court concluded that the Volkswagen’s printed corporate telephone directory was subject to privacy rights in Germany that prevented it from having to be disclosed in U.S. litigation.  Volkswagen, A.G. v. Valdez, 909 S.W.2d 900 (Tex. 1995).   There is no mechanism under European law that permits U.S. companies to obtain information from Europe that contains business records that contain personal information, and as to what constitutes “personal information” is very broadly construed so as to include even a corporate phone directory.

Please contact us if you would like more information on the apparent conflict between European privacy laws and U.S. discovery requirements.

Litigation in the Digital Age of Discovery: How to Ensure “Reasonable” Searching of Electronically Stored Information

July 29, 2009

We litigate in a digital age. As a result, electronically stored information (ESI) is subject to discovery in a lawsuit. Discovery demands that each side produce to the other side its information that is relevant to the suit. These days, business information is commonly “filed” in computers, servers and other electronic storage medium more so than in filing cabinets. These electronic sources are repositories of relevant ESI, which must be identified and produced in litigation.

How does a party identify all of the relevant information located in these electronic storage media? The “rules” for how to search ESI are still being written, but recent cases are laying out some boundaries.

In Qualcomm Inc. v. Broadcomm Corp., a district court in California found that Qualcomm’s failure to conduct basic searches on ESI prior to trial was equivalent to withholding documents. The penalty for not producing the 46,000 relevant documents was Broadcomm’s attorney’s fees – about $10 million. Importantly, the court believed that Qualcomm, its attorneys, or both had intentionally not searched for the highly relevant documents in order to preserve their case.

Qualcomm’s take home message: Make sure that your company searches all ESI relevant to the litigation. Attorneys handling your company’s litigation will need to understand your business’s structure, the various roles of your employees, and where information is kept. Any witness for deposition or trial will also need to have his or her data searched.

In Victor Stanley, Inc. v. Creative Pipe Inc., a district court in Maryland found that Creative Pipe had waived privilege on 165 electronically stored documents it had inadvertently produced to opposing counsel. The waiver allows opposing counsel to use the documents as evidence at trial, provided they are otherwise admissible. Importantly, the court determined that Creative Pipe “overproduced” as a result of not conducting reasonable searches, and not reviewing what they were producing.

In the digital age of litigation, companies must straddle the line between producing relevant ESI, but not “overproducing” ESI. Is there a method for doing this? Studies are still underway to evaluate ESI searching procedures and recommend standard processes for litigants. In the meantime, both Qualcomm and Victor Stanley agree that companies must be able to justify the search process they use. This includes choosing appropriate keywords; performing sophisticated searches when necessary; and “sampling” the results to assure it is yielding the expected results. Courts suggest the ideal is that parties devise and adhere to a joint protocol for searching.

While appropriate searching may seem intimidating, it is possible to do it appropriately and cost-effectively. Attorneys at Woodard, Emhardt, Moriarty, McNett & Henry possess the scientific and technical backgrounds necessary to ensure that a correct methodology is chosen for ESI searching. As stated in Victor Stanley, “…doing it right the first time is always cheaper than doing it over if ordered to do so by the court.” 250 F.R.D. 251, 261 (D. Md. 2008).