Standing Cured by Revoking an “Irrevocable” License Prior to Commencing Suit
In Uniloc 2017 LLC v. Google LLC, Appeal No. 21-1498, the Federal Circuit held that an “irrevocable” patent license could be terminated by mutual agreement and such a license was not a right that by its nature would fall within a survival provision of a termination agreement.
Uniloc sued Google for patent infringement and Google moved to dismiss for lack of standing under the theory that Uniloc lacked standing because it had granted Fortress Credit Co. a license and right to sublicense the asserted patents pursuant to a default provision in a revenue sharing agreement. Uniloc argued that even if it had granted such a license to Fortress, any license was eliminated by a termination agreement executed between Uniloc and Fortress prior to the suit against Google. The district court granted the motion to dismiss, finding that an “irrevocable” license had been granted, that it survived the termination agreement, and that it deprived Uniloc of standing.
The Federal Circuit indicated that (1) the sole issue was whether the termination agreement eliminated any license Fortress had and (2) if this license was eliminated, then the parties had agreed that Uniloc had standing in this case. Turning to the language of the termination agreement, the Federal Circuit noted that the agreement appeared to terminate Fortress’s license by stating that the license and any rights “shall terminate.” The Federal Circuit then explained that the district court misunderstood the meaning of “irrevocable” in the license agreement. The term meant that the license was “irrevocable” by the unilateral actions of the licensor, but that this did not suggest that the license was “irrevocable” by mutual agreement as occurred in the termination agreement. The Federal Circuit also rejected Google’s reliance on a survival provision in the termination agreement, distinguishing the Fortress license from other rights that by their nature make them survive termination. Thus, the Federal Circuit reversed and remanded to the district court.
The Statutory Presumption of Validity of a Federally Registered Trade Dress Applies Even Where the Trademark Examiner May Not Have Followed PTO Procedures
In Soclean, Inc. v. Sunset Healthcare Solutions, Inc. Appeal No. 21-2311, the Federal Circuit held that, a trademark is entitled to a statutory presumption of validity even if the trademark examiner did not follow Patent and Trademark Office procedures during prosecution.
SoClean, Inc. sued Sunset Healthcare Solutions, Inc. (“Sunset”) for trade dress infringement, among other claims. The trade dress registration at issue was the configuration of replacement filters for Continuous Positive Airway Pressure (“CPAP”) sanitizing devices. The district court granted, in part, SoClean’s motion to preliminarily enjoin Sunset, enjoining Sunset from marketing its filters using an image alone. The district court ordered Sunset’s marketing to prominently display the Sunset brand. Sunset appealed, challenging the district court’s treatment of the likelihood-of-success factor in the preliminary injunction analysis.
On appeal, the Federal Circuit affirmed the preliminary injunction. Sunset argued the district court abused its discretion by affording too much weight to the presumption of validity of the trademark because the examiner violated procedures when it did not require additional evidence that the product design had acquired secondary meaning. The Federal Circuit held that the “presumption of validity is not conditional.” The Federal Circuit concluded that the district court did not abuse its discretion by declining “to revisit the examiner’s actions and alter the statutory presumption of validity.” Sunset further argued the district court erred by considering the availability of alternative filter designs after finding SoClean’s trade dress was functional. But the district court never found the filter design was functional. Rather, the district court found SoClean was likely to defeat Sunset’s functionality challenge because the trade dress comprises both functional and non-functional features. The Federal Circuit held alternative designs are a relevant consideration in the functionality analysis and there was no error.
IPR Disclaimers May Not Be Used to Shapeshift Claims
In Cupp Computing as v. Trend Micro Inc., Appeal No. 20-2262, the Federal Circuit held that patent Owners cannot attempt to narrow claims by disclaiming claim scope during an IPR proceeding.
Trend Micro filed IPR petitions challenging three CUPP patents related to addressing malicious attacks aimed at mobile devices. During the IPR proceedings, CUPP disclaimed embodiments that did not include a “security system processor” that was remote from a mobile device. CUPP then argued that Trend Micro’s prior art reference did not disclose a “security system processor.” The PTAB rejected CUPP’s attempt to narrow the claims through an IPR disclaimer and held that the challenged claims were obvious. CUPP appealed.
On appeal, the Federal Circuit affirmed the Board’s decision to ignore CUPP’s disavowal. The Federal Circuit explained that allowing a patentee to tailor challenged claims through disclaimer during IPR proceedings would “substantially undermine the IPR process.” The court noted that Congress designed IPR proceedings to allow the Patent Office to “revisit and revise earlier patent grants.” Allowing patentees to disclaim subject matter would instead force the Patent Office to “focus on claims the patentee now wishes it had secured.” Furthermore, the Federal Circuit explained that Congress created a specialized process for patentees to amend their claims in an IPR, and that the amendment process includes safeguards that would be circumvented with a disclaimer. As an example, the Court explained that the amendment process gives “accused infringers ‘intervening rights’ protection for substantively amended claims, ensuring that such claims have only prospective effect.” Additionally, since IPR petitioners can only challenge claims under § 102 or § 103, accepting disclaimers would allow patentees to modify their claims free of scrutiny for compliance with § 101 requirements. Thus, the Federal Circuit held that disclaimers in IPR proceedings “are not binding in the proceeding in which they are made.” However, the Court emphasized that a disclaimer by the patentee during an IPR is binding in later proceedings.