In a decision Wednesday, the Federal Circuit affirmed-in-part, vacated-in-part, and reversed-in-part a district court's decision regarding two patents.  The district court held the broadest claims of both patents invalid and not infringed, and dismissed claims of inequitable conduct relating to the patents.

The Federal Circuit affirmed with respect to one patent, but vacated and reversed with respect to the other.  Regarding the first patent, the court held there was no genuine issue of material fact that a product embodying all the claim limitations was in public use before the critical date.  There was also no genuine issue of material fact that the defendants were licensed under the patent, as the license grant was not limited to use with the plaintiff's products.

With regard to the second patent, however, the court held the defendant's motion for summary judgment of invalidity was not properly supported, and vacated the finding of invalidity.  Further, there were insufficient findings in the district court's summary judgment order to support a finding of noninfringement of the second patent.  The court also reinstated the defendant's claims of inequitable conduct, as not all claims of the patents had been found invalid, making an additional finding of unenforceability not moot.

More detail of Zenith Electronics Corp. v. PDI Commc'n Sys., Inc. after the jump.

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In a decision yesterday, the Federal Circuit affirmed a finding by a district court that a party may not be compelled to arbitrate as provided in a patent license agreement when the party was not a signatory party to the agreement but merely an assignee of the patent covered by the agreement.  As a result, the infringement case continues before the district court.

More detail of Datatreasury Corp. v. Wells Fargo & Co. after the jump.

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A story in yesterday's Wall Street Journal (via Bill Patry) illustrates how important it is for parties to a transaction to know what they're getting up-front.

Starting way back in the 1970s, Wal-Mart hired an outside company, Flagler Productions, to document various aspects of Wal-Mart's operations.  Flagler produced videos of Wal-Mart corporate officers and directors, "often in unguarded moments."  The original agreement to produce the videos was made with just a handshake, with apparently no written contract between the parties.  In total, Flagler produced over 15,000 tapes over the course of over 30 years.

In 2006, Wal-Mart stopped using Flagler.  As a result of losing this source of income, Flagler has now made its library of Wal-Mart video available to the public, and is seeking to sell its footage.  Needless to say, Wal-Mart isn't happy about this turn of events.

How could this happen?  In short, assuming there really is no written contract, Wal-Mart probably has no recourse.  This is because under copyright law, in the absence of a written agreement to the contrary, the copyright in works created by an independent contractor is generally held by the independent contractor (in this case Flagler), and not by the client (in this case Wal-Mart) who hired them to produce the works.  All the client gets is a non-exclusive license to use the produced work.

What this means here is that, under copyright law, Flagler is the owner of the videos, and is free to exploit the copyright in whatever way it sees fit.  Flagler has already begun placing clips of the videos on YouTube.  All this because Wal-Mart didn't get a written agreement up-front.

This situation all too frequently happens to businesses, simply because they don't realize that when they hire an independent contractor, they probably aren't getting the exclusive right to use that contractor's work unless they agree to that in writing up-front.  This can come up in situations from hiring someone to do your company's web design, to having a marketing firm prepare brochures or other promotional materials, or having a computer programmer write some custom software. 

Situations like these face businesses every day, which is why it's important to consult with competent intellectual property lawyers early on so you make sure not only that you get what you pay for, but that you know what you're getting.

In a decision last week, the Ninth Circuit affirmed a district court's dismissal of a copyright infringement claim for lack of standing, as well as several related claims.  The plaintiff obtained an "exclusive" license for one of the exclusive rights from a single co-owner of several copyrighted works.  However, because the plaintiff only obtained the license from one co-owner, and not from all co-owners, the license could not be exclusive, as one co-owner does not have the right to exclude other co-owners from exploiting the work.  Accordingly, as a nonexclusive licensee, the plaintiff did not have standing to assert the copyright infringement claims. 

More detail of Sybersound Records, Inc. v. UAV Corp. after the jump.

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In its second trademark decision Friday, the Seventh Circuit clarified what is required for a party to be authorized to use another entity's trademarks.  In this case, the plaintiff—one of four founders of two LLC's designed to manage and control a restaurant in Chicago—alleged trademark infringement against the three other co-founders based on the co-founders' use of the trademarks and trade dress of the two LLC's in similar restaurants in New York and Las Vegas.  The district court dismissed the case because it found that such use of the trademarks and trade dress was authorized according to the operating agreement of the LLC's.

The Seventh Circuit affirmed.  The court emphasized the operating agreement of one of the LLC's specifically contemplated and permitted expansion of the "Concept" of the Chicago restaurant (including the use of the trademarks and trade dress) in other locations if two of the co-founders desired to expand.  Because three of the co-founders desired the expansions to New York and Las Vegas, the expansion and corresponding use of the trademarks and trade dress was authorized.  Being authorized, the three co-founders' use of LLC's trademarks could not, as a matter of law, infringe the LLC's trademark and trade dress rights, and the district court therefore properly dismissed the claim.

More detail of Segal v. Geisha NYC LLC after the jump.

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In a precedential order last week, the Federal Circuit denied a petition for a writ of mandamus seeking to direct a district court to vacate its summary judgment order in favor of a patent infringement plaintiff and to enter judgment in favor of the alleged infringer.  The district court's order did not completely resolve the case, but did prevent the alleged infringer from presenting several defenses, including that it was either the actual owner of or had obtained a license under the asserted patents, as well as challenging the plaintiff's standing.

The court held that the fact that the defendant "may suffer hardship, inconvenience, or an unusually complex trial does not provide a basis for a court to grant mandamus," and that mandamus should only be granted when there is "no other means of obtaining the relief desired."  Here, because the issues raised would be reviewable after trial on a traditional appeal, the court rejected the petition for mandamus.

Judge Newman dissented.  In her opinion, it was apparent that the district court had likely made errors in its determination of the parties' summary judgment motions.  As a result, she would have granted the petition in order to review these issues and avoid what may otherwise be an unnecessary trial.

More detail of In re Roche Molecular Sys., Inc. after the jump.

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After the Supreme Court heard oral argument last week in Quanta Computer, Inc. v. LG Electronics, Inc. (No. 06-937), the media and blogosphere have begun to weigh in on the arguments.  You can find our take on the arguments in this post, or click below for a sampling of the coverage from other sources.  A decision is not expected until late spring.

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In a recent decision, the Sixth Circuit considered the scope a mandatory arbitration clause in a software license agreement, and specifically whether the clause mandated arbitration of certain copyright infringement and other claims arguably related to the agreement.  The district court entered an order compelling arbitration.

The Sixth Circuit partially reversed.  According to the court, given the broadly-worded nature of the arbitration clause, the key question was whether the cause of action could be maintained without reference to the contract.  If no reference to the contract was required to maintain the claim, it did not fall under the mandatory arbitration agreement; if reference was required, the claim must be arbitrated.

The court held that while many of the claims contained similar factual allegations, only some of the claims must be arbitrated.  Those claims that required reference to the agreement in order to determine which of the defendant's actions were arguably authorized had to be arbitrated, whereas those claims relating to similar subject matter as the agreement, but did not require any reference to the agreement, were not arbitrable.

More detail of NCR Corp. v. Korala Assocs. Ltd. after the jump.

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On Wednesday, the Supreme Court heard oral argument in Quanta Computer, Inc. v. LG Electronics, Inc. (No. 06-937), a case regarding the scope of the concept of patent exhaustion, also known as the first sale doctrine.  While the entirety of the arguments is worth a read (the transcript is available here), click below for our impressions of the arguments.

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In a decision Tuesday, the Eleventh Circuit affirmed a district court's finding of trademark infringement against a trademark licensee.  The alleged infringer was actually licensed to use the mark owner's trademark, but did not use the mark as described in the license, instead using an abbreviated form.  As a result, the court affirmed the jury's finding of infringement and the associated damages award, reviewing its seven-factor likelihood-of-confusion test and emphasizing the factors of actual confusion and type of mark.  

However, the court vacated the district court's injunction against further infringement.  Because the infringer was actually licensed to use the mark as a whole, an injunction that prevented further use of the truncated mark "or any other similar marks" (language often used in trademark injunctions) was inappropriately broad, as it would prevent the infringer from using the licensed mark.

More detail of Aronowitz v. Heath-Chem Corp. after the jump.

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