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JULY 2017

 Supreme Court Finds the Lanham Act’s Disparagement Clause Unconstitutional

On June 19, 2017, the Supreme Court issued its decision in Matal v. Tam, No. 15-1293.  The case involved a challenge by the Asian rock band The Slants to the United States Patent & Trademark Office’s (“PTO”) denial of registration of the band’s name as a trademark.  Section 2(a) of the Lanham Act (15 U.S.C. Sec. 1052(a)) authorized the PTO to refuse registration of any mark that the trademark examiner found to be disparaging.  The Slants contend that they had chosen their name in order to reclaim what had become a derogatory term for Asian-Americans and argued that Section 2(a)’s disparagement clause was unconstitutional infringement on free speech.  The Supreme Court agreed, holding that the disparagement clause violates the free speech clause of the First Amendment.

This is an issue that the Intellectual Property Section has followed for some time.  The more well-known case involving the disparagement clause involved the PTO’s decision to cancel six trademarks owned by the Washington Redskins.  At the 2015 Winter Meeting, the Intellectual Property section presented on the Redskins matter and discussed the case law under the disparagement clause at some length.  Interestingly, at that time, the majority of courts had rejected First Amendment challenges to the disparagement clause.  There is no doubt that the Tam decision is a positive result for the Washington Redskins.  It will be interesting to see if the decision encourages others to seek registration of what may be considered disparaging terms or phrases as trademarks.

 

JUNE 2017

 

On May 22, 2017, the Supreme Court issued its decision in TC Heartland LLC v. Kraft Food Group Brands LLC.  The case involved an interpretation of the venue provision for patent infringement lawsuits, 28 U.S.C. Section 1400(b).  The statute provides that patent infringement lawsuits “may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”  In 1957, in Fourco Glass Co. v. Transmirra Products Corp., the Supreme Court held that, for purposes of Section 1400(b), a domestic corporation resides only in its state of incorporation.  At issue in TC Heartland was whether amendments to the general venue statute, 28 U.S.C. Section 1391, necessitated a change in the Fourco decision, which several lower courts had endorsed.  Ultimately, the court decided that no change was needed and affirmed its earlier decision in Fourco.

 

Commentators discussing TC Heartland believe that it will limit the ability of so-called “patent trolls” to bring patent infringement lawsuits in what they perceive to be favorable venues instead of the defendant’s state of incorporation.



MAY 2017

Lost Profit Calculations in Patent Cases Clarified In Recent Federal Circuit Decision

 

In March 2017, The Federal Circuit issued its decision in Mentor Graphics Corp. v. EVE-USA, Inc. 851 F.3d 1275 (Fed. Cir. 2017). This decision provides some needed guidance on how lost profits are calculated in patent cases, an area where there had been conflicting decisions in the district courts. The underlying dispute concerns a patent for a feature of an emulator, a machine that tests for bugs in computer chips.


This was a complex case with a long history. In the district court, the jury found that the defendant had infringed on two features of the plaintiff’s patent and awarded the plaintiff $36 million. On appeal, the defendant argued that the $36 million damage award was improper as it should have reflected an apportionment analysis that factored in non-infringing features for product sales. In other words, defendant argued that plaintiff was not entitled to the lost sales, but only the value attributable to plaintiff’s features of the emulator. The Federal Circuit disagreed and held that once the four Panduit test factors are met,[1] apportionment is taken into consideration as lost profits are tied to “specific claim limitations and ensure that damages are commensurate with the value of the patented features.” 851 F.3d at 1288. Thus it upheld the jury damages award. 

 

The defendant has sought a rehearing before the full panel. Stay tuned.



[1] A patentee is entitled to lost profits if it can establish (1) a demand for the patented product; (2) absence of acceptable non-infringing alternatives; (3) manufacturing and marketing capability to exploit the demand; and (4) the amount of profit it would have made. Panduit Corp. v. Stahlin Bros. Fibre Works, 575 F.2d 1152, 1156 (6th Cir. 1978)

 

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Todd A. HanchettStoel Rives, LLP, Portland, OR
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