Monday the Supreme Court unanimously held the NFL's practice of collectively licensing the trademarks of all 32 individual teams is not immune from antitrust scrutiny under Section 1 of the Sherman Act.  The NFL argued that because the marks are all licensed through a single entity, NFL Properties, there was no "contract, combination, . . . or conspiracy" under § 1, and therefore there could be no antitrust problem.

The Court disagreed.  The Court first observed the question of whether there is a "single enterprise" is not dependent on the specific legal structure of the entities.  As stated by the Court (internal citations omitted):

The relevant inquiry, therefore, is whether there is a "contract, combination . . . or conspiracy" amongst "separate economic actors pursuing separate economic interests," such that the agreement "deprives the marketplace of independent centers of decisionmaking," and therefore of "diversity of entrepreneurial interests," and thus of actual or potential competition.

Applying this framework, the Court held the existence of NFL Properties was not sufficient to prevent a "contract, combination . . . or conspiracy" and therefore avoid § 1 scrutiny.  The teams are "sparately controlled, potential competitors with economic interests that are distinct from NFLP's financial well-being." 

Despite holding the NFL's actions were subject to review under § 1, the Court did not pass on the merits, and noted some aspects of the NFL may provide a sufficient justification of its licensing practices under the Rule of Reason.  Ultimately, it will be up to the district court to address the merits of the case and determine whether there is a § 1 violation.

Click below for more detail of American Needle, Inc. v. National Football League and links to media coverage of the case.

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The Federal Circuit has agreed to hear en banc an interesting issue with regard to the potential for patent misuse in licensing.  The case is Princo Corp. v. ITC.  At issue is the patent pool related to the technology used for CD-R and CD-RW discs.  The alleged infringer, Princo, admitted infringement before the ITC, but asserted the patents unenforceable due to patent misuse.  The ITC originally rejected this defense, but a divided panel of the Federal Circuit held additional factual determinations were necessary to assess the defense.  

Currently-available CD-R and CD-RW discs use analog technology to assist the recording device in determining where on the disc the recording laser is located at any given time.  Another potential alternative (that has not been implemented in the marketplace) is using digital technology to make this determination.  According to the defendant, the digital alternative was never commercialized because of an agreement between Sony and Philips (two of the owners of patents in the relevant patent pool) not to license a Sony patent covering this digital alternative for this purpose.  According to the defendant, this amounted to a type of horizontal price fixing, and was therefore patent misuse.  The ITC disagreed, and held no misuse occurred.

A divided panel of the Federal Circuit disagreed, and remanded the case to the ITC for further factual development.  The court stated the precompetitive benefits sometimes seen in the context of patent pools are completely absent in the context of an agreement not to license patents covering a potentially competing technology.  The panel majority held this was at least potentially an antitrust violation under the rule of reason.

The en banc Federal Circuit has now agreed to address this issue, with the briefing cycle to be completed shortly after the new year.  Oral argument is not yet set (update, see below), but the case has the potential to provide some clarity on when an arguably anticompetitive licensing practice crosses over into patent misuse.

Click here for the order granting rehearing en banc.

Update (10/29):  The Federal Circuit has set oral argument in the case for March 3 at 2:00 PM.

Click below for a full summary of the panel decision in Princo Corp. v. Int'l Trade Comm'n.

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In a recent decision, the Federal Circuit affirmed a district court's dismissal of a patent licensor's claims for breach of a license agreement and patent infringement. The non-exclusive licensee arranged to have third parties manufacture the licensed product, but the product was sold by the licensee. The patent owner argued this was a breach of the license because the license stated the only rights granted were the rights to "make, use, and sell," with all rights not explicitly granted reserved to the patent owner. The district court held this language did not prevent the licensee from having a third party make the product, because the grant of the right to make implicitly grants the right to "have made."

The Federal Circuit affirmed. The court noted the controlling authority on point was a 1964 Court of Claims case, Carey v. United States. There, the Court of Claims held the right to "make" includes the right to engage others to do all of the work connected with its production absent express language to the contrary. Here, the Federal Circuit held because such a right is implicitly granted, the reservation of rights did not prevent the "have made" rights from being granted. As a result, utilizing a third party manufacturer did not constitute a breach of the license agreement such that the licensee may be subject to an infringement action, and the Federal Circuit affirmed the district court's dismissal of the case.

More detail on Corebrace, LLC v. Star Seismic, LLC after the jump.

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In a decision Wednesday, the Federal Circuit affirmed a district court's finding that a patentee's claims for patent infringement were barred by patent exhaustion in view of a settlement agreement between the patentee and a previous defendant in an infringement suit.  The patentee previously sued a third party, and the suit was resolved by a settlement agreement granting the third party a covenant not to sue under several patents.  The defendant in this case purchased and used products from the previously-sued third party.  The patentee sued, arguing the current defendant infringed even though it obtained the products from the party who had the covenant not to sue.  

In affirming the district court, the Federal Circuit held an unconditional covenant not to sue is, for purposes of a patent exhaustion analysis, the equivalent of a license under a patent.  Here, because the defendant purchased the allegedly infringing products from the party with the unconditional covenant not to sue, the patentee's rights were exhausted, and it could not assert the patents against the current defendant.

More detail regarding Transcore, L.P. v. Elec. Transaction Consultants Corp. after the jump.

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In a decision Tuesday, the Federal Circuit affirmed a district court's grant of a permanent injunction.  The district had previously granted a permanent injunction after a jury found willful infringement.  In a previous appeal, the Federal Circuit affirmed the finding of willful infringement, but vacated the permanent injunction because the district court did not consider the four-factor test mandated by the Supreme Court's decision in eBay v. MercExchange (which was decided while the appeal was pending).

On remand, the district court again granted a permanent injunction.  The Federal Circuit affirmed, holding there was no abuse of discretion, although it was a "close case."  The patentee had previously licensed the patent to two other parties (one as the result of settlement of a previous infringement suit), but the court held the existence of previous licenses did not mean an injunction could not issue.  Instead, it was one factor to consider among others when considering whether there is irreparable harm, including "the identity of the past licensees, the experience in the market since the licenses were granted, and the identity of the new infringer."  Finding no abuse of discretion by the lower court, on this or the other three factors, the Federal Circuit affirmed the injunction.

More detail of Acumed LLC v. Stryker Corp after the jump.

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In a recent decision, the Ninth Circuit reversed a district court's grant of summary judgment that a copyright holder did not have standing to sue for copyright, trademark, unfair competition, and related declaratory judgment claims.  The case involved the film Gone in 60 Seconds, produced and directed in 1974 by H.B. "Toby" Halicki, and remade in 2000.  The key issue was the construction of a 1995 Agreement that provided an option to remake the movie, and assigned certain of Halicki's rights to Hollywood Pictures (a division of the Walt Disney Company and producer of the 2000 film), and more specifically what rights were reserved to Halicki's wife (who obtained Halicki's rights after his death).  Based on the district court's construction of the agreement, the Plaintiffs did not have standing because they assigned all relevant rights in the Agreement, and specifically the rights to the remake of the famed Ford Mustang "Eleanor." 

The Ninth Circuit reversed, holding the agreement between the parties lacked explicit details about what rights the plaintiff might have in a derivative work – namely a remake of Eleanor.  However, the court found that the agreement was "reasonably susceptible to the interpretation" that the plaintiff had retained rights to the remake of Eleanor.  When combined with other extrinsic evidence not considered by the district court, it was clear to the court that plaintiff owned the rights to remake Eleanor, and therefore reversed the district court's holding of no standing to bring the copyright claim.

The court also highlighted several errors by the district court regarding trademark standing.  First, the district court held the plaintiff did not have standing to claim infringement of the "Eleanor" mark because she did not own a registration in the mark.  This was the wrong legal standard, because a plaintiff may also have standing to claim infringement if they are the owner of an unregistered mark.  The district court also held that the plaintiff did not have standing to sue on the "Gone in 60 Seconds" mark because her registrations were for toy cars and baseball caps, while the alleged infringement was for use of the mark on actual cars.  The Ninth Circuit noted the district court confused the test for infringement with the test for standing:  to establish standing under the Lanham Act, a plaintiff must only demonstrate that they are the owner of a mark for any class of products.  Because the plaintiff owned a registration for the Gone in 60 Seconds mark (even for different goods), she had standing under the Lanham Act to bring an infringement claim against the defendant.

More on Halicki Films, LLC v. Sanderson Sales & Mktg. after the jump.

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In this appeal from the United States District Court for the Northern District of New York, the Second Circuit reversed the dismissal of a copyright claim based on ambiguity in a contract, but affirmed dismissal of the antitrust claims because the plaintiff's proposed market definition was not plausible.

The district court dismissed the copyright claims based on a contract granting the defendants the right to copy the plaintiff's materials with no time limit.  The district court held this was unambiguous, and granted a perpetual license to the defendants.  The Second Circuit held the contract ambiguous, in part because under New York law "contracts which are vague as to their duration generally will not be construed to provide for perpetual performance."  As a result, the court remanded the case for the district court to determine the duration of the license granted by determining the parties' intent.

The Second Circuit agreed with the district court that the plaintiff defined the relevant market in an implausible manner, and affirmed the dismissal of the antitrust claims.  The plaintiff's proposed market definition did not encompass all interchangeable substitute products, even under the facts in the light most favorable to the plaintiff, and therefore dismissal was proper.

More detail of Chapman v. New York State Div. for Youth after the jump.

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In a recent decision, the Second Circuit affirmed a district court's summary judgment to the defendant in an antitrust case regarding trademark licensing.  The case involved the collective licensing setup of Major League Baseball Properties ("MLBP").  The plaintiff was a licensee of MLBP.  The court held the centralized licensing agent for all Major League Baseball teams did not violate § 1 of the Sherman Act.  

The plaintiff argued the agreement should be either per se illegal or subject to "quick look" rule of reason analysis.  The court rejected both of these contentions, instead applying traditional rule of reason analysis.  The court's lengthy opinion held that MLBP does not depress any collectibles market or violate antitrust provisions through its centralized licensing structure and equal apportionment of licensing revenue to each baseball club.

More on Major League Baseball Props., Inc. v. Salvino, Inc. after the jump.

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In a recent decision, the Ninth Circuit affirmed a district court's decision that a software developer's delivery of customized software includes a grant of an unlimited, non-exclusive, implied license to use, modify, and retain the source code of the programs in the absence of written agreements to the contrary. The Ninth Circuit also affirmed the district court’s determination that the license granted by the transfer defeated the developer’s trade secret claim based on the source code of the software as the license to modify the source code implicitly allowed access to the trade secrets in the source code.

More on Asset Mktg. Sys., Inc. v. Gagnon after the jump.

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In a decision last week, the Federal Circuit affirmed a district court's decision dismissing a case for lack of subject matter jurisdiction.  The plaintiff brought suit when it believed the patent holder had fraudulently concealed a second licensee of the same patents.  The plaintiff was a licensee of the defendant patent holder and therefore could not seek a declaration of noninfringement, so instead brought suit alleging the patent holder had violated the "Patent Exhaustion/First Sale doctrine" by collecting royalties on the same product twice.  The district court held patent exhaustion was not an independent cause of action but instead a defense to an infringement claim, and dismissed the case for lack of subject matter jurisdiction so any state law claims could be pursued in state court.

The Federal Circuit affirmed, observing the case met neither of the criteria for § 1338(a) jurisdiction under the Supreme Court's decision in Christianson v. Colt Industries Operating Corp.  The complaint neither alleged claims created by federal patent law, nor was the plaintiff's right to relief dependent upon resolution of a substantial question of federal patent law.  Accordingly, the court affirmed the district court's dismissal.

More detail of ExcelStor Tech., Inc. v. Papst Licensing GmbH & Co. after the jump.

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