|
|
|
|
|
|
||||
|
|
|
|
|
|
» Home Page » Members » Practice Areas » Clients   » Publications Articles VIP Newsletter Guide to Registering Read Excerpts  » Events & Speaking » Contact Us » 1-800-343-IDEA |
|
U.S. Intellectual Property and New Media Law Update NOT SO SECRET BID INFORMATION Capital Asset Research Corp. v. Finnegan et al (Eleventh Cir. - November 13, 1998) PATENT INFRINGEMENT AS ADVERTISING INJURY Miller v. Travelers Indem. Co. (Sixth Cir. - December 21, 1998) FALLING WATER AS TRADE DRESS INFRINGEMENT Kroin Inc. v. Kohler Co. (First Cir. - December 22, 1998) DOWN THE PAPERLESS TOILET Finance Investment Co. (Bermuda) et al. v. Goodman, et al. (Seventh Cir. - December 23, 1998) NOT SO SECRET BID INFORMATION Capital Asset Research Corp. v. Finnegan et al (Eleventh Cir. - November 13, 1998) Plaintiff, a Florida corporation and Defendant, a New Jersey corporation, are sizeable institutional players in the business of purchasing tax liens from state and local governments. They acquire a tax lien on the property by paying the delinquent taxes. If the property owner subsequently fails to satisfy the lien, and foreclosure proceedings take place, they bid on the property at public auction. Both Plaintiff and Defendant profit by acquiring properties at bargain rates. Plaintiff hired the Defendant Finnegan to run its business in the State of Georgia. Defendant Finnegan became an employee of co-defendant Breen Capital Holdings Corp. in 1996. Finnegan, however, remained involved with Plaintiff's day to day operations in order to administer the foreclosure process on the Fulton County tax executions which had already been purchased by Plaintiff with Finnegan's assistance. After leaving plaintiff, Fulton County placed for auction a number of tax deeds on properties of which Defendant Finnegan did the tax execution and foreclosure work. Defendants outbid Plaintiff on twenty four properties. At the bench trial in federal court, the District Court found that Finnegan had misappropriated a computer diskette containing information which constituted a trade secret under the Georgia Trade Secret Act of 1990 and awarded Plaintiff damages of approximately $31,000 plus attorneys fees and enjoined Finnegan from having any dealings for one year with the properties included in Plaintiff's current portfolio of tax executions. The Eleventh Circuit concentrated on the question of whether there was a protectable trade secret. The primary trade secret alleged was the formula used by Plaintiff to evaluate the amount to bid on a tax deed. This formula determined the maximum bid price at which Plaintiff believes it can make a reasonable profit on the purchase of the tax deed at auction. Thus, Plaintiff claimed as trade secrets its compilation of property-specific information, its national database on tax redemption behavior and its final bid guidelines for tax deeds sold at auction. The court noted that much of this information is public record and/or available through the services of a third party and used throughout the USA industry. All of which were accordingly not secret. The only things the Court found which might have been a trade secret are national statistics on property owner redemption rates and the amount that the Plaintiff was prepared to bid on each property. The payment records of the owners of the properties are a matter of public record. Further the database of nationwide tax redemption behavior did not warrant trade secret status since it was not shown to correlate with an individual purchase decision. It was also possible that a competitor could generate ceiling bids similar to Plaintiff's through publicly available information - wholly legitimate means. No trade secret, no violation, no award and no injunction. The decision can be reviewed at: http://caselaw.findlaw.com/cgi-bin/getcase.pl?court=11th&navby=case&no=979285OPN PATENT INFRINGEMENT AS ADVERTISING INJURY Miller v. Travelers Indem. Co. (Sixth Cir. - December 21, 1998) This case is more about insurance than patent law, but is of interest to the over-creative patent attorney. Haworth and Miller design and produce modular office systems, paneling and furnishing. Haworth holds patents on a configuration of power supply modules within pre-fabricated office panels. In its promotional material, Miller pictured a configuration of its panels that, if so assembled, would have infringed Haworth's patents. Individual panels and numerous assembly variations would not infringe. Thus there was no direct infringement by Miller since it, as a general rule, did not so assemble the panels and there was no contributory infringement given the non infringing uses. This left a claim that an advertisement by Miller was an inducement to its customers to infringe. Haworth sued Miller and Miller sued Travelers for refusing to defend and pay for any damages arising from the Hayworth suit. The claim against Travelers was based on an insurance policy for any damages "caused by an .... 'advertising injury'". According to the insurance contract "'advertising injury' means injury arising out of the named insured's advertising, promotional or publicity activities conducted during the policy period, because of libel, slander, piracy, unfair competition, idea misappropriation, or infringement of copyright, title or slogan". The District Court found that the terms of Travelers' policy were unambiguous and did not provide for indemnification arising out of patent infringement and therefore granted summary judgment in favor of Travelers. While the Sixth Circuit found that the terms "piracy", "idea misappropriation" or "unfair competition" might under other circumstances include patent infringement, the policy taken as a whole would not allow such a reading. Since the policy specifically includes copyright infringement as part of the definition of "advertising injury", the implication of the omission of the words " patent infringement" means it is not included. The decision can be reviewed at: http://www.law.emory.edu/6circuit/dec98/98a0373p.06.html FALLING WATER AS TRADE DRESS INFRINGEMENT Kroin Inc. v. Kohler Co. (First Cir. - December 22, 1998) This is an appeal to the 1st Circuit from a preliminary injunction enjoining Kohler from selling the Kohler Falling Water faucet. Kohler clearly intended to produce a faucet like Plaintiff's but not identical to it. There were two bases offered to the District Court to support preliminary relief: infringement of, and dilution of, Plaintiff's trade dress. Plaintiff won its preliminary injunction for dilution but not for infringement. The District Court found that while not inherently distinctive, Plaintiff's faucet had acquired secondary meaning, was in fact famous, and thus was protectable. There was no infringement because there was no confusion on the part of consumers. However, under the Dilution Act, no confusion is required and the District Court found that Kohler's faucet diluted the identity of Plaintiff's famous faucet. On appeal, the Defendant raised a serious constitutional concern. If the Federal Dilution Act was applied to the trade dress of competing products in the manner suggested by the District Court, a perpetual monopoly protecting a product design would result. This would be a perpetual monopoly prohibited by the patent clause of the constitution. The First Circuit then proceeded to sidestep this issue entirely. The First Circuit first noted that a party which wishes to establish fame of the trade dress for which protection is sought bears a significantly greater burden than the burden of establishing distinctiveness for infringement purposes. Under First Circuit law, the District Court had found that secondary meaning existed since purchasers of high end bathroom fixtures, including interior designers, knew the faucet on sight and there was sufficient money and effort invested in promoting it as coming from a unique source, although through a variety of distributors. The First Circuit found that the fame and other dilution requirements were not met through an analysis of the inadequacy of the evidence. The decision can be reviewed at: http://www.law.emory.edu/1circuit/dec98/98-1334.01a.html DOWN THE PAPERLESS TOILET Finance Investment Co. (Bermuda) et al. v. Goodman, et al. (Seventh Cir. - December 23, 1998) By the time this case reached the Seventh Circuit, the only thing left in trademark case was a peripheral fight over sanctions and attorneys' fees. Plaintiff's companies licence or distribute paperless toilets (however that might conceivably be done) under the trademark CLOSOMAT. Surprisingly, there does appear to be a market for such products, at least among the handicapped and outside the United States. The dispute began over an article appearing in a bathroom fixture trade magazine distributed mostly in Europe with a small circulation in the United States. The article pictured another's toilet but repeatedly incorrectly referred to it as Plaintiff's CLOSOMAT. Not satisfied with an apology letter, the principal of the various Plaintiffs caused them to sue the Defendant manufacturer and the publisher of the magazine under the Lanham Act. In a first action in Florida, the manufacturer of the toilet actually shown in the article filed uncontested affidavits that it had nothing to do with the article and the District Court entered summary judgment in favor of the manufacturer. The Court went on to find that nothing in the record suggesting that the publisher had committed a tort in the state of Florida and thus the court lacked in personam jurisdiction. A few months after the Florida District Court granted summary judgment, the same companies filed a substantially identical complaint against the manufacturer of the misidentified toilet in the US District Court for the Northern District of Indiana. The complaint alleged that the Defendant had knowingly paid for, drafted or otherwise assisted the magazine company with the publication of the article in violation of the Lanham Act. Thereafter the remnants of the Florida lawsuit were transferred to the Indiana Court and consolidated. The Indiana Court granted summary judgment to the Defendants on all counts and ordered the Plaintiff's companies and their counsel to show why they should not be required to pay that company's reasonable attorneys fees. Defendant filed a motion for $800,000 in attorneys fees and expenses. A long battle of memoranda on the sanction issues ensued. The parties may have believed in paperless toilets but not in paperless suits. At the end of this onslaught, the court awarded $100,000 in sanctions plus attorneys fees under Rule 11, Section 28 U.S.C. Sec. 1927, and, 15 U.S.C. Sec. 1117.The sanctions were granted since Plaintiffs were not entitled to sue under the Lanham Act as a matter of law and the plaintiffs knew that their claims lacked substantive merit. Among other things, the District Court found that none of the Plaintiffs were entitled to sue on the trademark and should have known that there was not a proper claim in any case under the previous Florida litigation. After detailed analysis the Court found that the sanctions on all grounds were proper. The only question was the amount. The District Court failed to indicate the basis of its thought as to why the award should be $100,000. This reduced the Circuit to speculation. The record indicates that an award greater than $100,000 might be appropriate and sent the matter back to the District Court to determine an appropriate amount. In closing, however, the Court gave a warning to the Defendants in presenting its bill that "pigs get fat, but hogs get slaughtered". The decision can be reviewed at: http://www.kentlaw.edu/7circuit/1998/dec/95-2871.html |
|
|
|
|
|
|
||||
|
|
Call for a free consultation:
|
|