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Vedder Thinking | Articles The 2014 Term Brings More IP to the Supreme Court

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The U.S. Supreme Court's 2013 Term was an active one for intellectual property, once a rarity at the Court. So far, the 2014 Term, which starts October 6, is shaping up to offer more guidance in the intellectual property arena. The first oral argument in an intellectual property case is scheduled for just the second week of the Term. Cases touching on key trademark, patent and possibly copyright issues are all on deck.

B&B Hardware, Inc. v. Hargis Industries, Inc.

In July, the Supreme Court agreed to hear arguments in B&B Hardware, Inc. v. Hargis Industries, Inc. The questions are (1) whether a decision by the Trademark Trial and Appeal Board (TTAB) of the United States Patent and Trademark Office (USPTO) that there is a likelihood of confusion between two trademarks has a preclusive effect on federal district court trademark litigation, such that the trademark owner cannot relitigate the decision in an infringement action; and (2) if not fully precluded, whether the federal district court must give deference to the TTAB's finding of likelihood of confusion.

B&B registered its trademark "Sealtight" for industrial fasteners for the aerospace industry with the USPTO in 1993. Hargis filed an application to register its "Sealtight" for self-drilling, self-tapering screws for use in the metal-building industry at the USPTO in 1996, and was initially refused registration based on B&B's mark. Among other administrative proceedings, B&B opposed Hargis application through the opposition procedure available at the USPTO, and the TTAB made a determination that there was a likelihood of confusion between the two marks and denied registration of Hargis mark.

B&B and Hargis at the same time had been involved in a trademark infringement action in federal district court. B&B filed a summary judgment motion based on the TTAB's finding of likelihood of confusion. The district court denied the summary judgment motion and denied admission of the TTAB decision into evidence for the jury. The jury was told of the TTAB's conclusion, but ultimately found no likelihood of confusion. The court of appeals affirmed the district court's decision and also held that likelihood of confusion in the context of a registration does not equate to likelihood of confusion in the context of an infringement action.

Oral Argument in B&B Hardware, Inc. v. Hargis Industries, Inc. is set for December 2, 2014.

Hana Financial, Inc. v. Hana Bank

The Supreme Court has also agreed to hear arguments in another trademark matter, Hana Financial, Inc. v. Hana Bank.

In spring of 1994, Korean company Hana Bank began offering services in the United States under the name Hana Overseas Korean Club. In advertisements in the summer of that year, Hana Bank used the name "Hana Overseas Korean Club" in English and "Hana Bank" in Korean, along with Hana Bank's logo. Hana Financial, Inc. was founded in California in the fall of 1994. In 1996 Hana Financial obtained a federal trademark for its graphic logo with the words "Hana Financial." Hana Bank was aware of Hana Financial’s use of the name “Hana Financial,” but did not take action because the entities were not in direct competition.

In 2007, Hana Financial sued Hana Bank for trademark infringement. The district court jury found that Hana Bank had used the "Hana Bank" trademark in the United States continuously since before Hana Financial began using the "Hana Financial" trademark in 1995. The district court also found that under the tacking doctrine, Hana Bank could "tack" the date of its trademarks to the 1994 advertisements to include similar, but distinct, use of the term "Hana Bank." Under the tacking doctrine, a trademark owner can "tack" the date of the first use of a mark onto a subsequent mark to establish trademark priority and thus ownership where the two marks are so similar that consumers would generally regard them as being the same.

This case comes to the Supreme Court after two passes through the Ninth Circuit Court of Appeals. The district court first granted summary judgment to Hana Financial on the priority issue, but the Ninth Circuit reversed and remanded, holding that there was an issue of fact regarding priority. On its second pass through the district court, a jury found in favor of Hana Bank, finding that Hana Bank's first use had predated Hana Financial's use. The district court denied Hana Financial's motion for judgment after the verdict and its motion for a new trial. Hana Financial appealed, claiming that the determination of whether a trademark may be "tacked" to a prior mark is a question of law that must be determined by the court, not a question of fact that may be decided by a jury. The Ninth Circuit affirmed Hana Bank's win, and Hana Financial appealed to the Supreme Court.

The question thus before the Supreme Court is whether the jury or the court determines whether use of an older trademark may be tacked to a newer one. Oral arguments are set for December 3, 2014. The American Intellectual Property Law Association has filed an amicus curiae (friend of the court) brief in this case.

Teva Pharaceuticals USA v. Sandoz

Teva Pharmaceuticals USA manufactures Copaxone, which is used to treat multiple sclerosis. Sandoz and Mylan Pharmaceuticals filed Abbreviated New Drug Applications (ANDAs) to the Food and Drug Administration (FDA) to produce and market generic versions of Copaxone. Teva, which had patented Copaxone, sued Sandoz and Mylan for infringement based on the ANDA. Claims of the patent used the term "molecular weight." The district court had construed the term "molecular weight" to refer to the peak average molecular weight of the claimed polypeptide. The defendants had argued, and the district court rejected, that the term "molecular weight" was indefinite because it could refer to three different molecular weight measures. The district court instead heeded Teva's expert's testimony that a person of ordinary skill in the art would have known to use the peak average molecular weight. The district court thus held that the Sandoz and Mylan products infringed on Teva's patent.

The Federal Circuit Court of Appeals reviewed the district court's indefiniteness determination "de novo," i.e., without deference to the lower court's finding, and reversed the district court’s holding that the claims were not indefinite. The Federal Circuit reviewed not only the expert's testimony but the history of the prosecution of the patent application at the USPTO, and found that some of the claims were not shown to be definite.

The Supreme Court granted certiorari in March 2014 to consider whether a district court's factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and did in its review of this case), or only for clear error, as Federal Rule of Civil Procedure 52(a) requires. Oral argument is set for October 15, 2014. No fewer than ten (10) amicus curiae (friend of the court) briefs have been filed by various third parties, including Google and Intel.

More to Come?

As the Supreme Court's 2014 Term began, it had the opportunity to add to its docket at least two more cases.

On the patent side, in Pronova BioPharme Norge AS v. Teva Pharmaceuticals USA, Inc., the Court considered whether to grant certiorari to address the issue of whether the statutory bar for "public use" of an invention broadly bars a patent when an innovator company allows any public access to its invention, even if the invention is not actually used in public for its intended purpose.

On the copyright side, the Court considered whether to grant certiorari in Kirby v. Marvel Characters, Inc. to address the issues of (1) whether a court can constitutionally take copyrights to works originally owned and authored by an independent contractor and hand them to a private party by judicially re-designating them "works for hire;" (2) whether “employer” under the Copyright Act of 1909 can be judicially extended beyond conventional employment to independent contractors, when this contradicts its common-law meaning, binding Supreme Court precedent and longstanding canons of statutory construction; and (3) whether "work for hire" can be determined based on post-creation contingencies, like discretionary payment, when authorship and ownership of a copyrightable work, including "work for hire," vests at inception.

However, neither of these writs of certiorari in IP cases were granted, with Kirby being dismissed prior to the Supreme Court's scheduled September 29, 2014 conference.

In addition, the Court has called for the view of the U.S. Solicitor General in three more patent cases: Cisco Systems v. Commil USA, LLC; Commil USA, LLC v. Cisco Systems; and Kimble v. Marvel Enterprises.

Stay tuned, the 2014 Term may be yet another exciting term for intellectual property at the Supreme Court.

If you have questions about this article, please contact Rebecca Goldman Rudich at +1 (202) 312 3366 or your Vedder Price attorney.

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