Author - Lorie Lambert

1
Misappropriators Beware: Motorola Court Embraces Extraterritorial Application of the Defend Trade Secrets Act
2
Shifting Gears on the Presumption of Nexus for Secondary Considerations of Non-Obviousness
3
In the Weeds: Key Intellectual Property Takeaways for the Cannabis Industry
4
Federal Circuit Upholds TTAB Ruling on Specimens of Use
5
A Modern Melody for the Music Industry: The Music Modernization Act is Now the Law of the Land
6
A Modern Melody for the Music Industry: The Music Modernization Act Just Passed Congress and Awaits Presidential Approval
7
Blockchain Can Change Everything: Even Trademark Transactions
8
Supreme Court to Consider Constitutionality of PTAB Proceedings
9
Coming Home? Part Two: Federal Circuit Denies Mandamus Petition Seeking Clarity on Waiver Issues Post-TC Heartland
10
Coming Home?: Federal Circuit Asked To Immediately Weigh In On Proper Venue Post-TC Heartland

Misappropriators Beware: Motorola Court Embraces Extraterritorial Application of the Defend Trade Secrets Act

On March 5, 2020, the U.S. District Court for the Northern District of Illinois entered a final judgment on a jury verdict of approximately $764.6 million in a high profile trade secret misappropriation case — Motorola Solutions, Inc. v. Hytera Communications Corp. Ltd.[1]  This judgment was made possible, in large part, by an earlier order from the district court holding that the Defend Trade Secrets Act (“DTSA”) applies to misappropriation that occurs outside the United States if (1) the misappropriator is a U.S. citizen or entity, or (2) “an act in furtherance of” the misappropriation occurred domestically.[2]  While Motorola is not the first case to recognize that the DTSA provides a private right of action for foreign misappropriation,[3] it appears to be the first substantive analysis of extraterritorial application of the DTSA to date.[4]   

Case Background

The Motorola case centered on allegations that Hytera, a Chinese rival of Motorola, misappropriated Motorola’s trade secrets to develop and sell a competing digital radio.[5]  Motorola claimed that Hytera hired three engineers away from Motorola’s Malaysian office, and that those engineers stole thousands of technical, confidential Motorola documents containing trade secrets and source code.[6]  According to Motorola, Hytera used Motorola’s trade secrets to develop a state-of-the-art digital radio that was functionally indistinguishable from Motorola’s digital radios.[7]  Hytera proceeded to sell its newly developed radios both internationally and in the United States.[8]  While the key actions that enabled Hytera’s acquisition of Motorola’s trade secrets took place overseas, certain actions related to the misappropriation occurred in the United States.[9]  In particular, Hytera advertised, promoted, and marketed products embodying the allegedly stolen trade secrets at numerous domestic trade shows.[10]

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Shifting Gears on the Presumption of Nexus for Secondary Considerations of Non-Obviousness

The Federal Circuit’s decision last week in Fox Factory, Inc. v. SRAM, LLC provided clarity regarding the nexus requirement of secondary considerations of non-obviousness, particularly with respect to whether a patentee is entitled to a presumption of nexus. [1]  Despite the Patent Trial and Appeal Board (“PTAB”) finding that the cited art disclosed all the limitations of the challenged patent—which claimed a bicycle chainring for engagement with a drivetrain—and that a skilled artisan would have been motivated to combine the cited prior art, the PTAB found that, based on an analysis of secondary considerations, the claims of the challenged patent were not obvious. [2]  The Federal Circuit focused in on the comparison of the patentee’s product and the scope of the challenged claims. [3]  In doing so, the panel found that “[a] patent claim is not co-extensive with a product that includes a ‘critical’ un-claimed feature . . . that materially impacts the product’s functionality.” [4] 

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In the Weeds: Key Intellectual Property Takeaways for the Cannabis Industry

Cannabis is a rapidly evolving field with 33 states and the District of Columbia having passed laws broadly legalizing some form of medicinal or recreational use. Of those states, eleven and the District of Columbia have adopted the broadest form of legalization: recreational use. General trends of decriminalization and legalization of cannabis, at the state level, may encourage future legalization at the federal level as well. As with any other high-growth opportunity, business investment in cannabis is on the rise, and intellectual property is a vital concern. Below are five intellectual property takeaways to consider for cannabis-related endeavors.

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Federal Circuit Upholds TTAB Ruling on Specimens of Use

Part of the trademark registration process is submitting a specimen of the mark as used in commerce (“specimen of use”). Recently, the U.S. Court of Appeals for the Federal Circuit (CAFC) upheld the decision of a split Trademark Trial and Appeal Board (TTAB) panel that refused to register the trademark “CASALANA” for “knit pile fabric made with wool for use as a textile in the manufacture of outerwear, gloves, apparel, and accessories,” stating that Siny Corp. (the applicant) did not submit an acceptable specimen of use. See In Re: Siny Corp. (Fed. Cir. Case. No. 18-1077).

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A Modern Melody for the Music Industry: The Music Modernization Act is Now the Law of the Land

On October 11, 2018, President Trump signed the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (MMA) into law. The MMA is intended to “modernize copyright law” as applied to songwriters, music publishers, digital music providers, record labels, and others involved in the creation and distribution of music.

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A Modern Melody for the Music Industry: The Music Modernization Act Just Passed Congress and Awaits Presidential Approval

By Mark Wittow, Katie Staba and Trevor M. Gates

On September 25, 2018, the House concurred in Senate amendments to the newly-named Orrin G. Hatch-Bob Goodlatte Music Modernization Act (the “MMA”), sending that act to the president for signature.[1] The MMA is intended to “modernize copyright law” as applied to songwriters, publishers, digital music providers, record labels, and others involved in the creation and distribution of music. The MMA consists of three parts:

  • Title I establishes a licensing collective for digital music service providers to grant blanket mechanical licenses to such providers and collect and distribute royalties to rights owners;
  • Title II creates a royalty structure to compensate owners of pre-1972 sound recordings; and
  • Title III provides a statutory right for producers, mixers, and sound engineers to collect royalties for digital transmissions of sound recordings.

The MMA is the result of unprecedented alignment among Republicans and Democrats, the U.S. House and Senate, and music industry stakeholders.[2] Nonetheless, this major update to copyright licensing law in the music industry may cause upheaval within the complex music marketplace structure, which encompasses songwriters, studio professionals, artists, record labels, and digital streaming services.[3]

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Blockchain Can Change Everything: Even Trademark Transactions

K&L Gates IP Partner, Susan Kayser, co-wrote the following article published in the American Bar Association.

Key issues for many brand owners are proving use of a trademark in commerce, maintaining the integrity of the brand, and combatting counterfeits. Blockchain—by its very nature—can efficiently provide the secure, reliable, and permanent records necessary to prove up genuine trademark use and genuine products. A secure database, spread across multiple computers, with the same record of all transactions, is ideal for tracking trademark transactions, as well as for eliminating paperwork and speeding up transactions.

A trademark and a blockchain have a complementary nature: a trademark acts as a source identifier, and a blockchain can validate a source. Providing trademark owners with a permanent, time-stamped, and secured record of information that is hosted on a peer-to-peer network, blockchain has the potential to transform trademark transactions. This article explores some of the myriad number of potential uses of blockchain for trademark transactions, including in establishing, licensing, and enforcing trademark rights.

Click to read the full article.

Supreme Court to Consider Constitutionality of PTAB Proceedings

On June 12, 2017, the U.S. Supreme Court granted Oil States Energy Services, LLC’s petition for a writ of certiorari to address the following question: “Whether inter partes review—an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.” The Supreme Court declined to grant certiorari on Oil States’ remaining two questions presented, relating to amendment procedures and claim construction.

Oil States’ argument is that patents are private property rights that can only be revoked by an Article III court, not by an Article I agency. In particular, Oil States urges the Supreme Court to overturn the Federal Circuit’s decision in MCM Portfolio LLC v. Hewlett-Packard Co., which held that patents are public rights and that “Congress has the power to delegate disputes over public rights to non-Article III courts.”[1]  The Federal Circuit has already upheld the constitutionality of the PTO’s ex parte reexamination process in Patlex Corp. v. Mossinghoff.[2]  In doing so, consistent with MCM, the Federal Circuit affirmed the power of an Article I agency to adjudicate the validity of an issued patent in the first instance.[3]

The Supreme Court previously rejected three other petitions challenging the constitutionality of Patent Trial and Appeal Board (“PTAB”) proceedings. And, as recently as last month, the same issue was presented for en banc review to the Federal Circuit, which declined to review in a 10–2 vote.[4]  Accordingly, this case will present the first opportunity for the Supreme Court to consider the constitutionality of the immensely popular post-grant proceedings put in place by the America Invents Act.  The case also presents interesting issues regarding a patentee’s right to a jury trial under the Seventh Amendment.

Updates to this alert will be provided as they become available.

[1] 812 F.3d 1284, 1289 (Fed. Cir. 2015).

[2] 758 F.2d 594 (Fed. Cir. 1985).

[3] Id. at 604.

[4] Cascades Projection LLC v. Epson Am., Inc., No. 2017-1517, slip op. at 2 (Fed. Cir. May 10, 2017).

By: Jason Engel, Devon Beane and Erik Halverson

Coming Home? Part Two: Federal Circuit Denies Mandamus Petition Seeking Clarity on Waiver Issues Post-TC Heartland

This legal alert is a follow-up to “Coming Home?: Federal Circuit Asked to Immediately Weigh in on Proper Venue Post-TC Heartland,” available here.

On the morning of June 9, 2017, the defendants in Cobalt Boats, LLC v. Sea Ray Boats, Inc., filed their Mandamus Petition seeking immediate review of the district court’s decision to deny their request to transfer venue. [1]  The defendants also renewed their emergency motion to stay the proceedings pending Federal Circuit review.  The Federal Circuit denied both requests late in the afternoon the same day.  The Federal Circuit did not weigh in on any of the substantive issues regarding waiver of venue challenges, but rather determined that mandamus relief was not the appropriate recourse in this instance. [2]

As with the previous denial of the defendants’ emergency motion to stay, Judge Newman dissented from the opinion.  Judge Newman again reiterated that “[t]here is little doubt that the Court’s decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, No. 16-341, 2017 WL 2216934 (U.S. May 22, 2017), was a change in the law of venue . . .” [3]  Judge Newman also opined that the case presented exceptional circumstances warranting mandamus review because “if the trial commences next Monday as scheduled, the landscape will have changed dramatically—without a stay, the event will be over, and an opportunity for this court to determine whether the district court’s decision was in compliance with the venue requirements revived by TC Heartland may have harsh consequences.” [4]

The district court in the underlying litigation is set to begin trial today.

Notes:
[1] No. 15-cv-21 (E.D. Va.).

[2] In re Sea Ray Boats, Inc., No. 17-124, Dkt. No. 15 at 2 (Fed. Cir. June 9, 2017).

[3] Id. at 5 (Newman, J., dissenting).

Coming Home?: Federal Circuit Asked To Immediately Weigh In On Proper Venue Post-TC Heartland

In a case pending in the Eastern District of Virginia, set to start trial on June 12, 2017, the defendants filed a motion to transfer the case to the Eastern District of Tennessee following the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341, 2017 WL 2216934 (U.S. May 22, 2017).  The district court ordered expedited briefing on the issue and ultimately determined that the defendants had waived their right to challenge venue.  In particular, according to the district court, “TC Heartland does not qualify for the intervening law exception to waiver because it merely affirms the viability of Fourco [Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 226 (1957)].” Cobalt Boats, LLC v. Sea Ray Boats, Inc., No. 15-cv-21, Opinion & Order at 6 (E.D. Va. June 7, 2017).

Because trial is just around the corner for these defendants, they filed an emergency motion to stay the district court case with the Federal Circuit to allow time to file a Petition for Writ of Mandamus (“Mandamus Petition”). On June 8, 2017, the Federal Circuit denied the motion without prejudice to refiling if defendants filed the Mandamus Petition.  Interestingly, however, Judge Newman dissented from the denial, stating unequivocally that TC Heartland “was a change in the law of venue.” In re: Sea Ray Boats, Inc., No. 17-124, Dkt. No. 4 at 3 (Fed. Cir. June 8, 2017) (Newman, J., dissenting).  Judge Newman explained that “[t]he processes of law are designed not for the convenience of judges, but as safeguards to litigants and warders of justice.” Id. at 4.  Because the change in law “bring[s] the propriety of the current venue directly into question,” Judge Newman believed a stay of the underlying trial was appropriate. Id.

On the morning of June 9, 2017, the defendants filed their Mandamus Petition and renewed their emergency motion to stay the trial.

Updates to this alert will be provided as they become available.

By: Jason Engel and Devon Curtis Beane

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