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U.S. Intellectual Property and New Media Law Update WHICH SWISS ARMY KNIFE? The Forschner Group et al. v. Arrow Trading Co., Inc. (2nd Cir. -Decided- September 4, 1997) LET THE INK FLOW FREE - REFILLING OF HP CARTRIDGES NOT AN INFRINGEMENT OF HP PATENTS Hewlett-Packard Co. v. Repeat-O-Type Stencil Manufacturing Corp. (Fed. Cir. -Decided- August 12, 1997) STILL, YET AGAIN, ANOTHER, FURTHER, CASE ON INTERNET JURISDICTIONAL ISSUES American Network, Inc. v. Access America/Connect Atlanta, Inc. (SDNY -Decided- August 13, 1997) WHO STOLE THE BASE? - THE COPYRIGHT OFFICE PREPARES A REPORT ON THE LEGAL PROTECTION FOR DATABASES U.S. Copyright Office Report on Legal Protection for Databases (Database Report - August 21, 1997) WHICH SWISS ARMY KNIFE? The Forschner Group et al. v. Arrow Trading Co., Inc. (2nd Cir. -Decided- September 4, 1997) This case started in 1993 when the Forschner Group sued Arrow Trading Co. for trademark infringement arising from Arrow Trading Co.'s copy of the Swiss Army Knife. The case is unusual because of the history of the Swiss Army Knife itself. From the beginning of the century, two Swiss firms, Victorinox and Wenger had been the only purveyors of Swiss Army Knives. The two Swiss firms agreed among themselves that Victorinox would use the term "Original Swiss Army Knife" and Wenger would use the term "The Genuine Swiss Army Knife." The phrase Swiss Army Knife has never enjoyed trademark protection per se. In 1992 Arrow began marketing a red pocket knife called "A Swiss Army Knife." Aside from a similar physical appearance, the Arrow knife is inexpensive and fails to meet the standard of high quality found in Plaintiff's knife. The complaint originally alleged three causes of action; two claims under Section 43(a) of the Lanham Act, namely, misrepresentation as to the characteristic quality and origin of the goods and false advertising with respect to geographic origin and quality; and the third claim for unfair competition under New York State Common Law. After an initial decision in favor of the Plaintiff and a successful appeal by the Defendant on all the original 43(a) claims except for a trade dress claim, the District Court on remand found that the trade dress of Arrow's knife, particularly its red color, had substantially increased the likelihood of consumer confusion and as such was a basis for false designation of origin under Section 43(a) of the Lanham Act. Accordingly, the District Court ordered that the phrase "Swiss Army Knife" be immediately preceded by or immediately followed by the Defendant's name. Thirteen days after the judgment was entered, Defendants began promoting its knife as "The Classic Swiss Army Knife" at a premium show at the Jacob Javitz Convention Center. The District Court found Defendant in contempt. Defendant appealed arguing that the court's finding of contempt was for actions which were beyond the scope of the injunction and Plaintiff cross-appealed in order to obtain an injunction to cover the use of the color red on a multi-functional pocket knife handle. The Court of Appeals found that Plaintiff had failed to establish that the color red on the handles had acquired secondary meaning since it does not indicate a single source of origin in Victorinox, since similar knives were also manufactured and sold by Wenger and a third company which used "Swiss Master" on its red multi-purpose knife. Thus, no extension of the injunction was granted. However, under New York unfair competition law, the injunction was found proper since it stopped Arrow from passing off its knife as the Plaintiff's knife. Accordingly, the District Court did not abuse its discretion in reaching a balance between Plaintiff's and Defendant's conflicting interests. This decision is available on-line at: http://www.law.pace.edu/lawlib/legal/us-legal/judiciary/second-circuit/test3/96-7945.opn.html LET THE INK FLOW FREE - REFILLING OF HP CARTRIDGES NOT AN INFRINGEMENT OF HP PATENTS Hewlett-Packard Co. v. Repeat-O-Type Stencil Manufacturing Corp. (Fed. Cir. -Decided- August 12, 1997) In this case the Federal Circuit confirmed the opinion of the U.S. District Court for the Northern District of California dismissing Plaintiff Hewlett-Packard's ("H-P")claim for patent infringement. H-P manufactures and sells ink jet printers and disposable ink cartridges for its printers. The cartridge structure and method are patented. As we all know, these cartridges eventually run out of ink. H-P relies on the cartridge being discarded and replaced by a new one and so informs the consumer in its literature. Defendant marches to the sound of a different drummer. It purchases empty, unused cartridges, modifies them so they would be refillable and then resells them as refillable ink jet cartridges. Defendants have even patented their modification. Not surprisingly, H-P wanted to stop the loss in sales of its filled cartridges and sued on twelve of its repertoire of patents and claims of trademark infringement and unfair competition. The Defendant moved for summary judgment of non-infringement on all asserted patents and H-P moved for summary judgment of infringement on the trademark claims and two of the patents. H-P won on the trademark infringement count, which was not appealed, and the Defendant won on the patent count. Defendant argued that the base cartridge before modification originated with H-P and, thus, could not be a basis for infringement in its original form since it was sold to them with authority of the patent holder. H-P argued that because of the modifications the resulting cartridges were, in fact, new devices which were not authorized and, therefore, infringed. The Court first noted that if a seller sells a product without restriction, it, in effect promises the purchaser that in exchange for the price paid it will not interfere with the purchaser's full enjoyment of the product purchased. The buyer has an implied license to any use of the product to which the parties might reasonably contemplate the product will be put. This right, however, does not extend to the right to make a new device or to reconstruct one which has been spent. In other words, repair is allowed, reconstruction is not. Defendant's modification is not a conventional repair since the changes made to the purchased cartridges are not to repair broken or defective elements. On the other hand, the modifications did not constitute a reconstruction of the patented combination since for a reconstruction, the change must occur after the patented combination, as a whole, has been spent, i.e., when material of the combination ceases to exist. Balancing this, the Court found that the modifications to the caps of the H-P cartridges are more akin to permissible repair than to impermissible reconstruction. The decision is not available on-line. STILL, YET AGAIN, ANOTHER, FURTHER, CASE ON INTERNET JURISDICTIONAL ISSUES American Network, Inc. v. Access America/Connect Atlanta, Inc. (SDNY -Decided- August 13, 1997) The question of the day, jurisdiction based on Internet usage, is so hot that hardly a week goes by without another case. In this one, Plaintiff, American Network, Inc., a New York internet access provider, asserted claims of trademark infringement and unfair competition against Defendant, Access America, another internet access provider. Plaintiff uses AMERICAN.NET and Defendant uses AMERICA.NET for its similar services. Defendant moved to dismiss the complaint for lack of personal jurisdiction. Defendant has its only office and all of its business facilities in Alpharetta, Georgia. It's server is in Georgia. At the top of Defendant's home page are the words "America. Net" in large letters. Among other things, the home page indicates that AMERICA.NET not only provides markets for Internet products and services to the immediate area, but also is in the business of helping people across the U.S. to get into the Internet access provider business. Defendant claims that it has 7,500 subscribers worldwide but only six in New York. This constitutes less than 0.08% of its customer base and contributes only $150 a month out of its monthly revenues of $195,000. Plaintiff has 18,000 customers including 1500 in New York City. Plaintiff uses the mark AMERICAN NETWORK INC. and AMERICAN NET and owns the registration for the mark AMERICAN NETWORK INC. The Court looked to the New York Long-Arm Statute. As was the case in the recent Bensusan Rest. Corp. v. King ("Blue Note") case, there were two possible bases for long arm jurisdiction under New York law: (1) Defendant committed a tortuous act causing injury to personal property within the state or (2) the Defendant expects or should expect the acts to have consequences within the state and derives substantial revenue from interstate or international commerce. Defendants argued against jurisdiction on relatively narrow grounds: the Plaintiff did not suffer any injury in New York and it was not reasonably foreseeable that Defendants' acts in Georgia would have consequences in New York. With regard to the first alternative, the Court found that there was sufficient evidence to establish injury within the state even though Defendant was not present within the state. Please note that in Blue Note case, the Second Circuit had found that Defendants physical presence was required in the state. The present case was decided prior to the Second Circuit decision. In any case, the second prong is still satisfied. Defendant admitted it derives substantial income from interstate commerce, the only question with regard to the second alternative is whether it expected its acts to have consequences in New York. The Court found that it was reasonably foreseeable that publishing its home page on its web site with the offending mark would have New York consequences, pointing to Defendant's use on its own web page of statements that it could help customers across the U.S. and that it had signed New York subscribers. In the Blue Note case, there was no substantial income from interstate commerce and the Defendant didn't expect its acts to have consequences in New York. This decision can be viewed at: http://www.bna.com/e-law/cases/amnet.html The Bensusan Rest. Corp. v. King article and decision can be viewed at: http://home.dti.net/bdpc/september15,97.htm#paramount WHO STOLE THE BASE? - THE COPYRIGHT OFFICE PREPARES A REPORT ON THE LEGAL PROTECTION FOR DATABASES U.S. Copyright Office Report on Legal Protection for Databases (Database Report - August 21, 1997) At the request of Senator Orrin Hatch, the Copyright Office has prepared a report on legal protection for databases. The report gives an overview of the past and present, domestic and international legal framework for database protection. It describes database industry practices in securing protection against unauthorized use and the Copyright Office registration practices relating to databases. The report does not make recommendations on either the advisability or the form of any database protection legislation. A 19-page summary or the complete 120-page report can be viewed at: http://lcweb.loc.gov/copyright/more.html#rptt |
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