Luedeka Neely attorneys provide analysis of recent precedential cases from the Patent Trial and Appeal Board (PTAB) and Trademark Trial and Appeal Board (TTAB) for the period of September – October 2022.
- NXP USA, Inc. v. Impinj, Inc., IPR2021-01556, Paper 13 (September 7, 2022) (PTAB – sua sponte director review)
- Topics: post grant proceedings; consideration of whether to grant rehearing based on stipulations
- NPX requested institution of IPR, the PTAB denied it a first time, and then NPX requested rehearing on the PTAB’s decision not to institute IPR, which the PTAB again denied under 35 USC 314(a), citing the Apple Inc. v. Fintiv, Inc. factors. IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020). The factors are: (1) whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted; (2) proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision; (3) investment in the parallel proceeding by the court and the parties; (4) overlap between issues raised in the petition and in the parallel proceeding; (5) whether the petitioner and the defendant in the parallel proceeding are the same party; and (6) other circumstances that impact the Board’s exercise of discretion, including the merits. The board considers the factors holistically, and some facts may be relevant to more than one factors.
- NPX raised a novel argument with respect to the Fintiv factor (4) (which seems to be very important, essentially dispositive in many cases) when it requested rehearing the second time, which apparently had sufficiently serious implications to get the director of the USPTO to address the board’s decision sua sponte. To start, the Fintiv factors apply in situations where a petitioner petitions for IPR, but there is also parallel litigation on the same issues in a district court. More specifically, they apply where the district court has set a trial date after the PTAB’s deadline to issue a final decision. If the trial date is set before the deadline, then the PTAB applies NHK Spring Co. v. Intri-Plex Techs., Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential, designated May 7, 2019).
- In their request for rehearing, NPX argued that since only 3 of the 9 patents in issue would be a part of the trial, there was no guarantee there would be overlap between the issues raised in the petition (here, the issue was the patentability of Impinj’s ‘198 patent) AND NPX stipulated that if court did grant a trial on the 198 patent, that they (NPX) would not pursue any grounds based on the prior art references relied on in the PTAB’s decision. Normally, when a party stipulates that they won’t pursue the same grounds in parallel district court litigation that they are pursuing in the current the petition (or any grounds that could have reasonably been raised in the petition), then the PTAB will not discretionarily deny the institution of the IPR or PGR in view of that parallel district court litigation (which they often deny in view of those circumstances ). But this stipulation normally happens before the PTAB’s decision on whether to institute or deny an IPR or PGR. Here, NPX was trying to add this stipulation after that first decision on whether to grant or deny.
- The PTAB did not like that NPX offered the stipulation so late in the game without any good reason, so they denied rehearing on that ground and others. Director Vidal reviewed the decision and stated that the PTAB came to the right decision and elaborated further. In her review, she stated that allowing a petitioner to “wait and see if the Board denies institution under Fintiv, and then offer such a stipulation for the first time on rehearing, [would] frustrate[] these goals [preventing conflicts and duplicity] and would open the door to gamesmanship.” She then stated that “I therefore hold that the only appropriate time for a petitioner to offer a stipulation related to the Fintiv factor 4 analysis is prior to the Board’s decision of whether to institute review.”
- In our view, Director Vidal was trying to put a lock on the stipulation avenue to save the PTAB’s resources. Petitioners would be able to petition without the stipulation and wait and see if the board would allow it, without any real risk of being locked into an IPR (because with removal of the discretionary denial risk, the PTAB is essentially just going to look at the merits and decide whether to grant IPR — “reasonable likelihood.”)
- OpenSky Industries, LLC v. VLSI Technology LLC, IPR2021-01064, Paper 102 (October 4, 2022) (PTAB – sua sponte director review)
- Topics: abuse of IPR process; discovery misconduct sanctions; settlement negotiations vs. extortion; unethical conduct
- VLSI sued Intel for patent infringement in the Western District of TX (heard by Judge Albright) in 2019. Intel then filed IPR petitions in 2020, challenging the validity of VLSI’s patent. The board denied based on the Fintiv factors (because there was already a trial date set when Intel filed its petition), the case proceeded to trial in Feb. 2021, and a jury found that Intel infringed some of the claims of the patent under the doctrine of equivalents, and that those infringed claims were not invalid, resulting in a $675 million verdict for VLSI (in addition to a $1.5 billion verdict for VLSI in the same case, on different patents). Intel appealed (still pending) to the CAFC. OpenSky (formed in April 2021) filed a petition for IPR in June 2021, challenging the validity of the same patent claims Intel lost on and essentially copying and pasting Intel’s entire petition from 2020 (copycat petition practice). The board granted the petition in large part because OpenSky’s petitions addressed validity grounds different from those decided at trial. Patent holder VLSI challenged the board’s grant, filing a request for rehearing calling the board out for letting this new opportunistic entity challenge the patent. Director Vidal then instituted sua sponte director review of the board’s institution decision. (Intel joined after via 35 USC 315(c)). Our takeaway: shell companies are being formed to institute IPRs (which they use to extort parties) after large jury verdicts in situations where IPR was discretionarily denied in view of a trial date.
- After her decision to review, Dir. Vidal sent interrogatories to the parties, asking about whether there were any behind-the-scenes negotiations for settlement / termination of the IPR between any of the parties, and how/where/by whom OpenSky was formed). OpenSky inadequately responded, and Dir. Vidal held this constituted a failure to comply.
- Notably, OpenSky reached out to both VLSI and Intel, seeking money to either terminate the IPR or continue it. Intel refused. VLSI started to negotiate a deal.
- Result: (1) OpenSky now has to show a higher standard for IPR institution in this case (compelling merits vs. reasonable likelihood); (2) OpenSky has to show cause why it shouldn’t be ordered to pay compensatory expenses including attorney fees to VLSI; (3) OpenSky’s attorneys are probably going to hear from their state bar associations.
- Rasa Vineyards, LLC v. Rasasvada, LLC, 2022 U.S.P.Q.2d 769 (TTAB 2022) [May 9, 2022, re-designated as precedential, August 17, 2022]
- Topics: Accelerated Case Resolution (ACR) ; length of briefs
- The Trademark Trial and Appeal Board re-designates as precedential an interlocutory order in this Section 2(d) opposition involving an application to register the mark RASASVADA for alcohol and spirits. The Board had accepted the parties’ stipulation to proceed under the Accelerated Case Resolution (ACR) regime. Facing the Board was the question of whether the normal 55-page final brief limit applied, or whether the summary judgment limit of 25 pages applied, since the parties had stipulated to submission of the case “through ACR briefing in a cross-motion for summary judgment format.” The Board said “25.”
- When Applicant filed a 41-page brief (including table of contents), Opposer Rosa Vineyards moved to strike, requesting that applicant be required to re-submit a brief that satisfied the 25-page limit of Rule 2.127(a) for summary judgment briefing. Applicant argued that the stipulation regarding ACR did not recite a page limit, and that Rule 2.128(b) should govern. The Board sided with Rosa Vineyards, saying “The parties clearly stipulated to submission of their briefs in summary judgment format and the page limits of a motion for summary judgment apply. Applicant’s brief exceeds the 25 page limit including a table of contents and will therefore receive no consideration. See Mattel Inc. v. Brainy Baby Co., 101 USPQ2d 1140, 1141. (TTAB 2011) (overlength brief on motion for summary judgment will not be considered). In view thereof, Opposer’s motion to strike Applicant’s brief as overlength is granted and the brief will receive no consideration.”
- The Board, however, allowed Applicant one day to re-submit a brief limited to 25 pages, and applicant did so.
- JNF LLC v. Harwood International Incorporated, 2022 USPQ2d 862 (TTAB 2022)
- Petitioner JNF LLC was undoubtedly unhappy with the result of its petition to cancel a registration for the mark HAPPIEST HOUR for bar and restaurant services. JNF claimed prior use of THE HAPPIEST HOUR for the identical services, but it failed to prove priority. Its evidence regarding its first rendering of services under the mark was “characterized by contradictions, inconsistencies, and indefiniteness.” Its claim of use analogous to trademark use failed because its prior publicity “was not sufficiently clear, widespread and repetitive.”
- PepsiCo, Inc. v. Arriera Foods LLC, 2022 USPQ2d 856 (TTAB 2022)
- In this opposition to registration of the mark TORTRIX for “corn-based snack foods,” the Board ruled that a claim for misrepresentation of source under Section 14(3) of the Lanham Act is available not just to a cancellation petitioner, but also to an opposer. However, it dismissed Opposer PepsiCo’s Section 14(3) claim due to the insufficiency of its allegations. The Board also dismissed PepsiCo’s inadequately pleaded claims of fraud and lack of bona fide intent, but it allowed PepsiCo thirty days to file an amended notice of opposition.
- Narita Export LLC v. Adaptrend, Inc., 2022 USPQ2d 857 (TTAB 2022)
- The Board granted Petitioner Narita Export’s motion for summary judgment, unsurprisingly finding the registered mark TONOSAMA for gift baskets containing candy to be confusingly similar to Narita’s identical common law mark for candy. The only real dispute concerned Narita’s priority of use, which hinged on the validity of a nunc pro tunc assignment and an oral assignment.
- ARSA Distributing, Inc. v. Salud Natural Mexicana S.A. de C.V., 2022 USPQ2d 887 (TTAB 2022)
- Topics: priority; excusable nonuse
- Finding Applicant Salud Natural Mexicana’s long period of nonuse of its mark EUCALIN for nutritional supplements to be excusable, the Board dismissed this Section 2(d) opposition because Opposer ARSA Distributing was unable to prove priority.
- Opposer ARSA claimed prior common law rights in the mark EUCALIN for dietary and nutritional supplements, but Applicant asserted that ARSA was its U.S. distributor and therefore the goodwill generated by use of the mark went to the Applicant as the supplier of the product. ARSA argued that there was no distribution agreement, and in any case that Applicant had abandoned the mark because it stopped selling product from 2008 to 2015 and failed to produce any evidence of an intent to resume use during that period. Therefore, ARSA claimed, it had priority of use dating back to 2008.
- Why did applicant stop selling its product in 2008 you ask? Because the federal government designated the company as a specially designated narcotics trafficker (SDNT), meaning they trafficked meth into the US for Mexican drug cartels, resulting in a ban from doing business in the US. They were removed from the list of SDNTs in 2015 and subsequently filed an application to register the EUCALIN mark that same year.
- The Board first considered the issue of ownership of the EUCALIN mark. It observed that there is a legal presumption that Applicant, the manufacturer, owned the mark, but the presumption may be rebutted. In determining ownership between a manufacturer and distributor, the Board considers the following factors: (1) which party created and first affixed the mark to the product; (2) which party’s name appeared with the trademark on packaging and promotional materials; (3) which party maintained the quality and uniformity of the product, including technical changes; (4) which party does the consuming public believe stands behind the product, e.g., to whom customers direct complaints and turn to for correction of defective products; (5) which party paid for advertising; and (6) what a party represents to others about the source or origin of the product.
- The Board found that the first, second, third, and sixth factors favored pplicant, while the second and fifth favored ARSA, and it concluded that “[o]n balance, the factors favor Applicant.” Therefore, ARSA did not rebut the presumption that its use of the EUCALIN mark from 1999 to October 2008 inured to the benefit of applicant as owner of the mark.
- Next, the board addressed whether applicant had abandoned its rights in the EUCALIN mark. Abandonment required nonuse coupled with an intent not to resume use. ARSA established a presumptive prima facie case of abandonment based on applicant’s admitted nonuse of the mark during any three-year period between 2008 and 2015. The burden of production shifted to applicant to prove an intent to resume use.
- Applicant argued that, in view of the ban from conducting business in the United States, its nonuse of the mark from 2008 to 2015 was excusable. Furthermore, its intent to resume use was demonstrated by its prompt filing of an application to register the mark in October 2015, the infringement actions filed in Mexico, and its petition for cancellation of ARSA’s registration. The Board sided with applicant.
- As a last-ditch argument, ARSA contended that since Applicant did not resume actual use of the mark until nearly seven years after the ban was lifted in 2015, it did not maintain an intent to resume use. The Board was unmoved. Since 2016, applicant was engaged in litigation before the Board regarding the EUCALIN mark. Its “vigorous defense” of the instant opposition also supported a finding that it maintained an intent to resume use throughout the litigation. The Board found that applicant’s nonuse during the period of litigation was excusable, “negating the inference of abandonment.”