Design Patent Damages: Samsung v. Apple

In a high-stakes case between two tech-world giants, the Supreme Court in Samsung Electronics Co. v. Apple Inc. (US 2016) dismissed a $399 million dollar jury verdict in favor of Apple for Samsung’s infringement of Apple’s smartphone design patents.  At issue in the case were several Apple design patents granted as early as 2009 which cover various aspects of the design of the first-generation iPhone including its black, rectangular front face with rounded corners and the distinctive interface displaying a grid of sixteen colorful icons on a black screen.  At trial, the jury found that several Samsung smartphones infringed Apple’s design patents under 35 U.S.C. § 289, which holds the infringer liable for its total profits.

On appeal to the Federal Circuit, Samsung argued that the damages should not be Samsung’s entire profits from selling its smartphones and damages should be limited to the components that are subject to Apple’s patents, in this case, the front face or screen of the smartphone rather than the entire smartphone.  The Federal Circuit upheld the jury verdict and rejected Samsung’s argument explaining that the infringed features are not sold separately to consumers and therefore should not be considered separately from the smartphone for the purpose of determining damages.

To Samsung’s relief, the Supreme Court reversed and held that design patent infringement damages can be calculated based on the overall device or alternatively on a component of the device.  The Court, however, declined to establish a test to determine whether for each design patent involved in the case, damages should be calculated based on the profits from the entire smartphone or merely a component of the smartphone.  The Supreme Court also failed to provide guidance on how to determine what portion of the infringer’s profits are attributable to a specific component or feature of the smartphone.  Instead, the Court remanded to the Federal Circuit for further proceeding.

Despite this decision, Samsung has won the battle but not the war, as the damages are likely to be reduced on remand but will still be substantial.  While design patents are often overlooked or ignored in favor of utility patents, the Samsung v. Apple litigation underscores the importance of including design patents as part of a patent portfolio.  For many products, the design of the product may have a significant impact on consumer opinion that is itself worthy of protection aside from the functional attributes of the product.  Here, Apple’s foresight in protecting the preferred designs of their smartphone allowed the company to win a large damages award over a key competitor, reserving to Apple a particular aesthetic that competitors will now be more careful to avoid imitating.

tassoneFor more information on patents and intellectual property law, contact Tyler Tassone, a member of Flaster Greenberg’s Intellectual Property Department.

Tyler Tassone concentrates his practice on patent and trademark matters. He graduated from Villanova University School of Law, cum laude, and received a Bachelor of Science Degree in Chemical Engineering, magna cum laude, from the University of Virginia. Tyler is licensed to pactice in Pennsylvania and before the USPTO.

New NHL Las Vegas Team Issued Initial Refusal for “Golden Knights” Trademarks, But Registration Is Still Possible

The United States Patent and Trademark Office issued an initial refusal to the new NHL franchise in their efforts to trademark “LAS VEGAS GOLDEN KNIGHTS” and “VEGAS GOLDEN KNIGHTS” – citing a likelihood of confusion with the registered mark “GOLDEN KNIGHTS COLLEGE OF SAINT ROSE.”  Each mark was registered for entertainment services (ice hockey exhibitions) and clothing.

Importantly, this is a common initial outcome when applying for a mark that has competitors in the same market using a similar mark.  While some media sites opted for more incendiary headlines in stating that the trademark has been “denied,” registration is still quite possible as the Vegas franchise is now given six months to respond to the Trademark office’s initial refusal.

Sports teams using the same nickname as one another is nothing new.  There are many examples of professional and college teams sharing the same name – e.g. Boston Bruins (NHL) and UCLA Bruins (college).  The Simpsons weighed in on the subject years ago, poking fun at the overuse of “Wildcats” as a team nickname:

To overcome the initial refusal, the Vegas franchise will need to show, among other things, that likelihood of confusion will not be an issue.  One problem is that “GOLDEN KNIGHTS” is displayed in both marks more prominently than any of the other words or descriptors.  In addition, the College of Saint Rose and the Vegas franchise will be using the marks in connection with the same goods and services – sporting events and clothing sales.

Another problem is that the College of Saint Rose registered the mark in connection with a particular design and stylized type face.  The Vegas franchise attempted to register their mark in standard characters, which would allow them to display the words in any design and type face – meaning that the two marks could be presented and displayed in the same manner, a “likelihood of confusion” issue which is explicitly cited by the trademark examiner in the initial refusal.

In response to the Trademark office, the Vegas franchise will most likely cite the numerous examples of professional and college teams sharing nicknames, as well as professional teams in different sports sharing nicknames – e.g. Arizona Cardinals (NFL) and St. Louis Cardinals (MLB).  In this case, it may also be crucial that the College of Saint Rose does not have an ice hockey team.  The Vegas franchise is also likely to disclaim “Las Vegas” and “Vegas” as unregistrable portions of their marks, because exclusive rights cannot be obtained in wording that is primarily geographically descriptive of the origin of the goods or services identified in the trademark application.

It remains to be seen whether the Vegas franchise will ultimately be successful in registering the “GOLDEN KNIGHTS” marks, but the matter is far from over, as the initial refusal is just the beginning.

For more information on registering trademarks and intellectual property law, contact Eric Clendening, a member of Flaster Greenberg’s Intellectual Property Department.

Eric R. Clendening is a member of Flaster Greenberg’s Intellectual Property and Litigation Departments. He focuses his practice on intellectual property litigation and commercial litigation, including contract disputes, employment litigation, and other commercial disputes. He also advises clients on protecting and enforcing intellectual property rights online, including the resolution of domain name disputes and matters concerning e-commerce, online speech and conduct, and related intellectual property issues involving trademarks and copyrights.

 

 

 

 

Hiring A Competitor’s Employee? Proceed With Caution!

For the first time since its enactment over four years ago, a federal court has interpreted a provision of the New Jersey Trade Secrets Act (the “Act”).  The decision, unfortunately, leaves New Jersey employers who are considering hiring a competitor’s employee on uncertain ground.

In Baxter Healthcare Corp. v. HQ Specialty Pharma Corp., Baxter, a pharmaceutical company, sued its competitor HQ for patent infringement, tortious interference with the non-competition provision of its former employee’s employment contract, and breach of the Act for misappropriation of its trade secrets.   The court refused to dismiss the claim under the Act, despite finding Baxter could not prove HQ knew the employee was subject to a non-compete agreement or had knowledge of the former employer’s trade secrets.

George Owoo worked as a scientist for Baxter before leaving to work for its competitor, HQ.  He was a specialist in esmolol premixed injectable bag drug delivery systems.  At the time it hired him, HQ was not a participant in that market.  However, HQ soon filed several patent applications, listing Owoo as the inventor, for new esmolol products that would compete with Baxter’s similar products.

Before hiring Owoo, HQ had interviewed him extensively to inquire about his experience at Baxter.  He repeatedly denied he had an employment contract with Baxter or any knowledge of Baxter’s trade secrets, insisting that his knowledge in the esmolol premixed injectable bag market was in the public domain.  Based upon his representations, HQ hired Owoo and put him to work on developing esmolol products.

To prove its interference with contract claim, Baxter needed to show that HQ had acted with “malice”, i.e., an intention to interfere with its former employee’s contractual obligations to Baxter.  Because there was no evidence HQ had any knowledge of the employment contract, and, to the contrary, had been repeatedly assured by Owoo he had no contract, the court ruled Baxter could not show HQ acted maliciously and, therefore, could not prove tortious interference.

By contrast, a claim under the Act requires neither an employment agreement nor knowledge of it by the new employer.  Baxter claimed HQ misappropriated Baxter’s trade secrets by using them without authorization to develop its own competing products.  The court stated HQ could be liable for breach of the Act if Baxter could show HQ had used Baxter’s trade secrets at a time when HQ either knew or should have known Owoo had acquired them through improper means.

The question before the court,therefore, was whether HQ knew or had reason to know that its new employee’s esmolol formulation for HQ was derived from his knowledge of Baxter’s trade secrets.  Significantly, the court found there was some evidence that suggested HQ knew of Owoo’s prior involvement in developing Baxter’s esmolol program.  Most troubling, the court found HQ’s interrogation about his work history at Baxter revealed a concern on HQ’s part that he might have been privy to Baxter’s trade secrets and might have been preparing to use them at HQ without Baxter’s authorization.  Thus, the very investigation by HQ that formed the basis for the court’s decision to dismiss the interference with contract claim became the key fact in the court’s conclusion not to dismiss Baxter’s Trade Secrets Act claim.

What can companies do in light of the Baxter decision to protect themselves from Act claims when they are considering hiring a competitor’s employee, who might have knowledge of its trade secrets?  The Baxter decision suggests that perhaps HQ was damned if it did and damned if it didn’t investigate.  Despite that HQ did investigate, and, in fact, at least in part, because it did investigate, the court refused to dismiss the Trade Secrets Act claim against it.  On the other hand, although not addressed by the court in Baxter, had HQ not investigated, the court almost certainly would have refused to dismiss the Trade Secrets Act claim, and perhaps the interference with contract claim, as well.  In other words, choosing not to investigate new employees’ backgrounds is not a wise strategy for avoiding future liability.

There are ways a new employer can enhance the benefit of its investigation in the hope of avoiding claims under the. Act.  First, HQ could have had its new employee sign a written statement following the investigation certifying that he (1) was not under any contractual obligations to Baxter, and (2) either had no knowledge of Baxter’s trade secrets, or, in any event, agrees not to use that knowledge in his new position.

Second, HQ accepted without attempting to verify Owoo’s claim that his information was in the public domain. Had it done so, it would have had a stronger argument to avoid liability under the Act.

Finally, employers can reduce exposure to liability by insulating their new employees from working in competition with their former employers.  That tactic might make the new employee less valuable to the new employer, so each employer will have to perform its own risk/reward analysis comparing the potential benefits of no restrictions on its new employee to the legal costs of an expensive lawsuit alleging violations of the Act.

There is no one-size-fits-all solution to the Hobson’s choice presented by the Baxter decision.  Companies considering hiring a competitor’s employee should proceed with caution, especially when the employee may know the competitor’s trade secrets.

Questions? Let Phil know.

 

Philip Kirchner is a shareholder in and former chair of Flaster/Greenberg P.C.’s Commercial Litigation Practice Group, a member of the Labor & Employment and Construction Litigation Practice Groups, and member of the Restaurant & Hospitality, Construction, Nonprofit & Charitable Organizations, Gaming and Alternative & Renewable Energy Industry Groups.

A How-To Guide for Singers and Songwriters to Obtain & Protect Their Copyrights

Hey Candidate, You Can’t Always Use What You Want!

Another national election is upon us and with each advertisement, arena event, train stop and rally, candidates pair music with the themes and messages of their campaigns.  However, the candidates’, particularly Trump’s, use of these hits has come under fire by the artists who write and perform the songs.  Artists, including Neil Young, Aerosmith, Survivor and, most recently, the Rolling Stones, have demanded that Trump cease and desist using their music in the past few months.

The artists objections are commonly based on politics that conflict with their own ideologies, or that of their fan base.  For example, in 1994, Bruce Springsteen famously denied Ronald Reagan’s request to use “Born in the U.S.A.” as a theme song about for Reagan’s bid for the White House.  Springsteen’s “Born in the U.S.A.” was a song about the plight of a Vietnam veteran and he apparently did not want it turned into a patriotic rallying cry for a candidate he spoke out against during that campaign season.  In 2016, Trump has used, or tried to use, Neil Young’s “Rockin in the Free World”, Aerosmith’s “Dream On”, Adele’s “Rolling in the Deep” and the Rolling Stones’ “Start Me Up” as part of his campaign.   All of these artists immediately, and very publicly, demanded Trump cease all use of their songs…some using their objection as a chance to rail against the candidate in a more general sense.

While the candidate almost always immediately, and wisely, ceases using the song that the artist objects to, the question lingers as to what would happen if the candidate continued to use the song over the objection of the artist.  Practically, the candidate would make himself/herself the target of someone who has a large publicity platform, and could ultimately shine a negative light on the candidate.  Legally, however, the artist has effective tools to stop the candidate from using their songs.

Get the Copyright

When the artist/writer puts pen to paper and creates an original work of authorship, the artist/writer has a common law copyright in that creation.  However, in order to establish a date for when the work/song was created, the artist should then register that work/song with the United States Copyright Office.  Registration of the work/song is inexpensive and can be done through the U.S. Copyright Office’s official website.  The important benefit of registering the song/work is that it establishes the date an artist created the work, so as to defeat claims by a person claiming a similar work at a later date.

Artists often have two registered copyrights on their songs.  The first is based on the written composition and is held by the person(s) that wrote the song.  The second copyright is the master recording of the song, which belongs to the artist(s) who performed the song.  The artist may own the master recording outright or may have assigned the rights to the master recording to the record company and/or music publisher.

It is important to note the artist only has protection for certain elements of a song.  The melody and the written lyrics of the song are enforceable protections under Copyright law.  However, the title of the song, basic chord progressions, and the general concept of the song are not protected.  Lines within lyrics are often not protected as well.  The gist of the protection is to protect the entirely of the lyrics, not just a line like “I love you more each day.”

How to Protect the Song/Copyrighted Work

While the creation of the song creates a protectable property and registration of that song with the U.S. Copyright Office establishes a date of creation, work still needs to be done to protect the song/work from use and copying.  When the artist becomes aware of a potential infringement (or copying) of the song/work, the artist should demand that the infringer cease and desist using the work.  If that does not stop the offending activity, the artist should file a complaint with a court of competent jurisdiction seeking to enjoin (stop) the offending party from using or copying the work during the pendency of the litigation and ultimately to permanently enjoin the offending party from ever using the work, along with money damages.  Once in litigation, the creator, in the case of use by a candidate, will have to show that the offending party used the work without a license or authorization or, in the case of another artist infringer, that the work is sufficiently similar to the original work, often through the testimony of an audiology/music expert.  In addition, the creator may also seek to show that, in the case of a candidate, use is creating public confusion, meaning that by the very use of a song at the campaign event, the public believes that the artist is endorsing the candidate.

Alternatively, if the creator artist is willing to allow the offending artist to use the song/work, or a protectable portion thereof (e.g. a “sample” of the work), the creator can license the work to others in return for payment (often calculated on a per use basis).  Licensing is common in both the world of politics and in the world of music.  A campaign can contact the person/entity who owns the song and request, or pay for, use of it.  An artist can do the same, usually in return for royalties.  How often have you heard a song reimagined, “covered” or “sampled”?  In most of those cases, a royalty or license has been agreed upon.  Where the “covering artist” or “sampler” fails to get the writer/artist’s agreement, litigation often ensues, not only leading to the original writer/artist obtaining damages for things such as the profits from the new artist but also a stain on the reputation of the new artist.

Regardless of the artist’s ideology, he/she should protect their song/work from anyone and everyone who seeks to use it.  Whether the artist supports the candidate seeking to use their work or is ideologically opposed to the candidate and his/her use, the artist should take action, either to halt the unauthorized use or to license the work.  Then, in the end, “you get what you need.”

Questions? Let Jeff know.

 

Jeffrey A. Cohen is a member of Flaster Greenberg’s Litigation, Intellectual Property, Corporate and Real Estate Practice Groups. He has been a trial attorney for more than 23 years, counseling and representing a diverse range of clients in matters related to commercial contracts, shareholder and partnership agreements, trademarks, copyrights, patents, including Hatch-Waxman, insurance coverage, franchise disputes and commercial construction.

Influential from the Stage to the Courtroom: Prince’s Lasting Impact on Copyright Ownership

In the weeks following the tragic sudden death of Prince Rogers Nelson (Prince), much of the media and general public have shared their memories of one of the most prolific and talented musicians in the country’s history.  Countless individuals have shared personal stories of the enigmatic artist or shared highlights of his legendary live performances.

Prince was also, however, a pioneer in intellectual property law, specifically with respect to copyrights.  In 2007, through his publishing administrator, Prince instituted litigation to stop a mother from posting a video of her own 13-month-old son merely dancing to Prince’s hit song, “Let’s Go Crazy.”  While that case is still active, the Ninth Circuit already issued a precedential opinion cautioning that copyright holders have a duty to consider in good faith whether allegedly infringing material constitutes fair use prior to sending a takedown notification.  More recently, Prince sued 22 of his own fans in 2014 for $1 million each for posting videos taken at his concerts, but the backlash of an artist suing his own fans quickly led him to voluntarily dismiss the action.

Prince’s most prolonged copyright battle, however, concerned his transfer of copyrights to his record label, Warner Brothers.  Prince signed with Warner Brothers in 1977, when he was just 18 years old, but he promptly soured on the idea that Warner Brothers owned the rights to any music he released.  In the early 1990s, Prince went as far as to change his name to an unpronounceable, self-described “love symbol” in an effort to release music on his own terms and own the copyrights to his work.  Warner Brothers, in an effort to protect its asserted contractual rights, resisted Prince’s efforts to break his record contract, regardless of what he wanted to call himself.

Prince, however, eventually gained bargaining power due to a key section of the 1976 Copyright Act.  Section 203 of the Act provides for the termination of copyright transfers during a five-year period, beginning 35 years after the execution of the initial grant of the copyright transfer.  The 7th Circuit stated that the purpose of that section is to give authors and their heirs a second chance to market works even after a transfer of rights has been made.  Accordingly, even if an artist signs a contract with a record company transferring all rights in a work in perpetuity, after 35 years, the artist or his/her heirs can terminate that grant and demand that the rights revert back to the artist.

For over 20 years, Prince’s protests such as changing his name and appearing in public with the word “slave” written across his face accomplished very little.  At the end of 2013, however, Section 203’s 35-year window was set to expire.  Deadlines typically spur action, and this was no exception. In early 2014, Prince and Warner Brothers reached a landmark agreement that gave Prince control over his back catalog.

Prince’s plight and hard stance against his record label paved the way for artists who produce copyrighted works today, especially in light of technological advances since Prince signed his initial Warner Brothers contract.  In 1977, it was likely unfathomable that artists could avoid signing contracts with companies to finance, manufacture, promote, and distribute their works.  In the digital/social media era, however, artists can directly connect much more easily with their customers.  Some musicians have declined to sign with large record labels to retain control over every aspect of the creation and release of their music.  Whether or not these artists acknowledge it, Prince undoubtedly influenced those artists who now make it a priority to maintain complete control over their works.

It is possible that in 2016, the 35-year window of Section 203 is too long a window to motivate emerging artists, who are looking for companies to pay the costs of production and marketing and provide them with up-front dollars, to hold tight to the ownership rights in their copyrighted works.  Regardless of whether Section 203 is amended to adjust to the digital era, however, there is little doubt that Prince’s public legal battles concerning copyrights have at least paved the way for artists to be more educated about their rights, and they will have a long-lasting impact on the music industry.

 

Questions? Let Scott know.

Scott C. Oberlander is a member of Flaster Greenberg’s Litigation Department, representing businesses and individuals in a wide range of disputes. He has particular experience counseling clients in various industries with respect to breach of contract claims, unfair and deceptive business practices, employment disputes and administrative actions.

Solar Energy Marketplace: Strike Now While the Sun is Hot

solar panel

Attention solar energy developers and EPCs: get to work now and do not stop until the industry “goes dark” or you will miss your chance to capitalize on the recent extension granted by the federal government….the extension of the investment tax credit (“ITC”) (at 30% and then phasing down over time).

Developers and EPCs now have the guaranty that the 30% ITC will be available to them for qualified investment credit facilities until December 31, 2019 (at which time projects commencing construction after that date receive a lesser ITC rate). The relevant statue provides for a phase-out schedule that reduces the ITC to 26%, then 22% and then 10%, which means that for every solar energy project that complies with the federal regulations and is placed in service in accordance with the published schedule, they (or the investment tax credit investor that they secure) will receive an actual tax credit (not tax deduction) in the amount of the specified percentage of qualified costs. The extension of the ITC will provide the economic security that developers and EPCs need to get projects funded and financed.  In addition, the extension enables investors and lenders to feel secure in their equity investment and construction financing because the ITC is a virtually essential element of the deal funding “capital stack”.

With the solar energy marketplace in a virtually exponential growth phase, it is essential that developers and EPCs charge forward to secure as many readily available (willing offtaker or purchaser, economically viable, cooperative utility, etc.) projects as possible within their financial and operational capacity. Once these easy to secure and complete projects have been accounted for, then sales, development and construction efforts will all be more difficult and possibly more expensive.

What can you do to take advantage of the ITC extension (and state solar renewable energy credit (SREC)) programs? Consult with your renewable energy counsel to learn what states should be receiving your most focused project location/sales efforts and how to secure, develop, fund and finance your projects,

Questions? Let Mitch know.

Mitch Cohen is a co-founder and member of Flaster Greenberg’s Alternative and Renewable Energy Practice, representing clients engaged in or considering business ventures in emerging green energy fields such as solar, wind, geothermal, cogeneration, biofuels and biomass. His clients include solar and other alternative energy developers, EPC contractors, energy consultants and alternative energy funding sources. He can be reached at mitch.cohen@flastergreenberg.com or 856.382.2222.

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