Why it matters

Retail companies have closely monitored a series of cases from the U.S. Supreme Court on down, which have focused on IP matters covering induced and direct infringement under the Patent Act (and, in one case, the Tariff Act of 1930); the likelihood of confusion under the Lanham (Trademark) Act; and standing to sue under the Copyright Act. Read on for a survey of cases that struck our eye.

Detailed discussion

Following is a survey of recent U.S. Supreme Court, circuit court and district court decisions covering a range of IP matters impacting retailers and consumer products companies that we found worthy of note:

Patent Cases: Commil USA, LLC v. Cisco Systems, Inc.: On May 26, 2015, the U.S. Supreme Court held that a defendant's good faith belief regarding a patent's invalidity is not a defense to an induced infringement claim. The Supreme Court granted certiorari to consider "a question of first impression: whether knowledge of, or belief in, a patent's validity is required for induced infringement under §271(b) [of the Patent Act]." The Court vacated the Federal Circuit's judgment and remanded the case to the district court for further proceedings consistent with its opinion. Justice Anthony Kennedy wrote the majority opinion with Justice Antonin Scalia dissenting. The Court found that defendant's belief regarding patent validity is not a defense to a claim of induced infringement. The Court pointed out that, if an accused infringer believes a patent to be invalid, it has numerous avenues to pursue, including seeking inter partes review or reexamination of the patent through the PTO (as Cisco did in the latter case). Moreover, the Court stated that creating a "new" defense to induced infringement revolving around belief in invalidity would "render litigation more burdensome for everyone involved," and that such a new defense could prove useful to combat "frivolous" cases brought by so-called "patent trolls"; however, the Court stated that the district courts have within their arsenal tools to combat such suits, including the imposition of attorney sanctions and fee awards, and concluded that "[t]hese safeguards, combined with the avenues that accused inducers have to obtain rulings on the validity of patents, militate in favor of maintaining the separation expressed throughout the Patent Act between infringement and validity. This dichotomy means that belief in invalidity is no defense to a claim of induced infringement." (Emphasis added.)

See here to read the 5/26/15 U.S. Supreme Court decision in Commil USA, LLC v. Cisco Systems, Inc.

Akamai Technologies, Inc. v. Limelight Networks, Inc.: On August 13, 2015, the Federal Circuit, sitting en banc, unanimously expanded the scope of direct infringement under § 271(a) of the Patent Act in situations where all the steps of a claimed method are not actually being performed by the accused infringer, holding that an entity will be held liable for the performance of method steps by others if (1) the entity directed or controlled the others' performance, or (2) the entity and the others are part of a joint enterprise. The court held that "[d]irect infringement under § 271(a) occurs where all steps of a claimed method are performed by or attributable to a single entity….Where more than one actor is involved in practicing the steps, a court must determine whether the acts of one are attributable to the other such that a single entity is responsible for the infringement. We will hold an entity responsible for others' performance of method steps in two sets of circumstances: (1) where that entity directs or controls others' performance, and (2) where the actors form a joint enterprise." (Emphasis added.) Applying these principles to the facts of the case, the court held that "the facts Akamai presented at trial constitute substantial evidence from which a jury could find that Limelight directed or controlled its customers' performance of each remaining method step. As such, substantial evidence supports the jury's verdict that all steps of the claimed methods were performed by or attributable to Limelight. Therefore, Limelight is liable for direct infringement."

See here to read the 8/13/15 Federal Circuit decision in Akamai Technologies, Inc. v. Limelight Networks, Inc.

Suprema, Inc. v. International Trade Commission: On August 10, 2015, the Federal Circuit, sitting en banc, overturned a decision by its own panel and held that the International Trade Commission (ITC) has the power to exclude goods whose mere importation does not infringe a patent, but whose use by the importer afterwards directly infringes the patent at the inducement of the seller of the goods. The question before the en banc panel was whether "the [ITC] correctly concluded that unfair trade acts covered by Section 337 [of the Tariff Act of 1930] include the importation of articles used to infringe by the importer at the inducement of the articles' seller." The court stated that "because Section 337 does not answer the question before us, the Commission's interpretation of Section 337 is entitled to Chevron deference," i.e., the principle of administrative law established by the U.S. Supreme Court in 1984 inChevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., that requires courts to defer to "reasonable" interpretations of statutes made by the governmental agencies charged with enforcing them. ApplyingChevron deference to the situation at hand, the court held that "the Commission's interpretation that the phrase 'articles that infringe' covers goods that were used by an importer to directly infringe post-importation as a result of the seller's inducement is reasonable.Accordingly, we return the case to the panel for further proceedings consistent with this opinion." (Emphasis added.)

See here to read the 8/10/15 Federal Circuit decision in Suprema, Inc. v. International Trade Commission.

Trademark Cases:

Multi Time Machine, Inc. v. Amazon.com, Inc.: On October 21, 2015, the Ninth Circuit reversed itself and withdrew its earlier July 6, 2015, opinion in which it had held that it is a question of material fact for a jury to decide as to whether online retailer Amazon.Com, Inc. (Amazon) created a likelihood of consumer confusion through the format of its product search returns. This time around, the court held that, because the search results returned by Amazon "clearly labeled the name and manufacturer of each product offered for sale and even included photographs of the items, no reasonably prudent shopper accustomed to shopping online would likely be confused as to the source of the products." This time, the majority opinion was written by Judge Silverman with Judge Bea dissenting. Analysis and holding: The question before the Ninth Circuit (both times) was whether the factual scenario set forth above regarding Amazon's search results methods constituted trademark infringement. In the October 21 opinion, the Ninth Circuit concluded that it did not. The court acknowledged but differentiated its 1979 decision in AMF, Inc. v. Sleekcraft Boats, which established an eight-factor test for determining likelihood of confusion, stating that the Sleekcraft test is not "particularly apt" in this situation and that "the ultimate test for determining likelihood of confusion is whether a 'reasonably prudent consumer' in the marketplace is likely to be confused as to the origin of the goods." Thus, the court stated, the case turned on "the answers to the following two questions: (1) Who is the relevant reasonable consumer?; and (2) What would he reasonably believe based on what he saw on the screen?" The court analyzed those two questions as related to the facts of the case and the applicable law, and held "[i]n light of Amazon's clear labeling of the products it carries, by brand name and model, accompanied by a photograph of the item, no rational trier of fact could find that a reasonably prudent consumer accustomed to shopping online would likely be confused by the Amazon search results. Accordingly, we affirm the district court's grant of summary judgment in favor of Amazon." (Emphasis added.)

See here to read the 10/21/15 Ninth Circuit decision in Multi Time Machine, Inc. v. Amazon.com, Inc.

Tiffany & Co. v. Costco Wholesale Corp.: On September 9, 2015, a district court judge in the Southern District of New York granted summary judgment to Tiffany & Co. (Tiffany) on its trademark infringement claim against Costco Wholesale Corp. (Costco), finding as a matter of law that Costco's sale of rings advertised as "Tiffany" settings gave rise to a likelihood of confusion and that "Tiffany" is not a generic term so as to enable Costco to claim fair use. The court held that "[b]ecause Tiffany has proffered credible evidence establishing both: (1) that it owns a validly registered mark; and (2) that Costco's use of that mark is likely to cause confusion, and because Costco has failed to proffer contrary evidence that raises a disputed issue of fact with respect to either prong of the Lanham Act infringement analysis, the Court grants Tiffany's motion for summary judgment insofar as it seeks a finding of Costco's liability for trademark infringement." (Emphasis added.) The court further granted Tiffany's motion with respect to Costco's liability for "trademark counterfeiting" under the Lanham Act, and rejected Costco's counterclaims alleging "genericism" and fair use.

See here to read the 9/9/15 S.D.N.Y. decision in Tiffany & Co. v. Costco Wholesale Corp.

Copyright Case:

Minden Pictures, Inc. v. John Wiley & Sons, Inc.: On July 29, 2015, the Ninth Circuit held that, under the "divisibility principle" embodied in the Copyright Act, a licensing agent for individual photographs had standing to sue a textbook publisher for unauthorized use of the photographs, even though the individual photographers retained the right to personal and limited commercial use thereof. The question before the Ninth Circuit was "whether Minden, as a licensing agent, has statutory standing under the Copyright Act to bring an infringement suit based on alleged violations of the terms of its licenses to Wiley." The court concluded that it does. The court pointed out that, under the Copyright Act, "a single copyright, or right thereunder, may be divided between parties, with each co-owner entitled to sue to protect his or her interest in the right" and "[w]e see no reason why the divisibility principle should not apply with equal force when the interest granted is an exclusive license to grant licenses to others." The court thus concluded that "[b]ecause we conclude that the Agency Agreements convey the rights to reproduce, distribute, and display the photographs to Minden via an 'exclusive license' to grant licenses to third parties, we hold that Minden may bring an infringement action to remedy the unauthorized reproduction, distribution, and display of the photographs by those to whom it has granted licenses." (Emphasis added.)

See here to read the 7/29/15 Ninth Circuit decision in Minden Pictures, Inc. v. John Wiley & Sons, Inc.