A blog about patent, copyright and trademark law in the U.S. District Court
for the Southern District of New York

Court Denies Preliminary Injunction, Finding No Likelihood of Success on the Merits

In a June 29, 2015 ruling, Judge Robert W. Sweet denied the plaintiff’s motion for a preliminary injunction against the defendant’s use of the plaintiff’s trademarks in purchased keyword internet searches. Among other things, Judge Sweet found that the plaintiff had not demonstrated a likelihood of success on the merits because where a plaintiff “is seeking an injunction that will alter, rather than maintain, the status quo, it is required to show ‘a clear or substantial likelihood of success,’ . . . a higher showing than the likelihood of success on the merits required under the traditional preliminary injunction standard.” The Court found that while the plaintiff’s “case is persuasive, and there is a real possibility that it will prevail on its merits, at this stage it has not made a showing sufficient to meet this bar.”

Court Invalidates Patent As Claiming Patent-Ineligible Subject Matter

In a June 29, 2015 ruling, Judge Katherine Polk Failla invalidated U.S. Patent No. 7,885,887 under 35 U.S.C. § 101 as claiming ineligible subject matter. The Court summarized representative claim 1 as having the following “relevant limitations”:
(i) a computer operating either on the Internet or other network with access to a server; (ii) providing software tools with a suite of features allowing management of one or more creative projects; (iii) making certain types of offers associated with the project in exchange for funds for the project; (iv) facilitating the acceptance of offers by fans; (v) storing contact and marketing information of those who have accepted offers in exchange for funds in a database; and (vi) providing software tools that enable and control the exchange of information with a fan through the database.
In invalidating the patent, Judge Failla first noted that the “‘887 Patent’s claims are directed to the concept of a crowd-funding or fan-funding, i.e., raising funds for a project from interested individuals in exchange for incentives,” and concluded that these “claims are squarely about patronage – a concept that is ‘beyond question of ancient lineage.’” The Court then considered whether the claims in the ‘887 patent nevertheless had an “inventive concept,” and found that beyond “the abstract idea of patronage, the claims merely recite ‘well-understood, routine conventional activities or routine data-gathering steps.” Judge Failla thus concluded that “because the ‘887 Patent claims the abstract idea of incentive-based fan-funding and lacks an ‘inventive concept’ sufficient to ‘transform’ the claimed subject matter into a patent-eligible application of that idea, it is invalid under Section 101.”

Court Finds Copyright Ownership Claim Time-Barred, Allows Work-for-Hire Defense

In a June 26, 2015 ruling, Judge Kimba M. Wood ruled that the counterclaim plaintiff’s copyright ownership claim over certain photographs taken by the counterclaim defendant was barred by the three year statute of limitations. The Court wrote that the statute begins to run “‘when a reasonably diligent plaintiff would have been put on inquiry as to the existence of a right.’” Judge Wood found that the counterclaim plaintiff had been put on notice of the counterclaim defendant’s “‘express assertion of sole authorship or ownership’” more than three years before suit. Judge Wood nevertheless permitted the counterclaim plaintiff to assert its work-for-hire defense in response to the counterclaim defendant’s copyright ownership claim, noting that the statute of limitations does not bar a defense. In considering the work-for-hire defense, the Court wrote that merely because the counterclaim defendant’s job responsibilities included taking photographs at times, that does not automatically mean that every photograph the counterclaim defendant took (for example, while “off the clock”) was in the scope of his employment duties, and thus denied in part summary judgment on the defense.

Court Finds No Laches Where There Is Intentional Trademark Infringement

In a June 22, 2015 ruling, Judge Jed S. Rakoff granted the plaintiffs’ summary judgment motion on the defendants’ laches defense in a trademark action on the ground that the defendants intentionally infringed. Judge Rakoff wrote that “the defendants fail to clear the critical threshold hurdle applicable to any party asserting an equitable defense – clean hands,” noting that “a laches defense is not available to a defendant who ‘intentionally traded off the [plaintiff's] name and protected products.’” The Court concluded that even “viewing the evidence in the light most favorable to defendants, the conclusion that defendants intentionally infringed plaintiffs’ trademark and trade dress is inescapable,” and granted plaintiffs’ summary judgment on the defense.

Court Applies "Plausibility" Pleading Standard to Patent Invalidity Counterclaim

In a June 16, 2015 ruling, Judge Denise Cote ruled that the Twombly/Iqbal pleading standard applies to a patent invalidity counterclaim. The counterclaim plaintiff argued that the enhanced pleading standard was inconsistent with the Local Patent Rules, which provide for the early disclosure of invalidity contentions. The Court adopted Judge Engelmayer’s earlier decision on the issue that “‘[a]lthough some superfluity may result, the Local Patent Rules and the [Twombly/Iqbal] pleading standard are not inconsistent. And in the absence of any directive that claims of invalidity . . . should be measured under a different standard than almost all other claims in this Circuit are, the Court declines to do so.’”

Court Denies, in Part, Ex Parte TRO in Counterfeit Action

In a June 15, 2015 ruling, Judge Richard J. Sullivan denied in part the plaintiff’s application for an ex parte temporary restraining order to enjoin the defendants’ sale of allegedly counterfeit goods and for related relief. As to enjoining the sale of goods, Judge Sullivan wrote that “Plaintiff fails to explain why Defenants’ alleged conduct, ongoing since at least November 2014, . . . is of a type where advance notice of the relief sought ‘would itself be likely to trigger irreparable injury.’” The Court also denied ex parte relief “locking and transferring” the defendants’ infringing websites, finding that the plaintiff has again failed to explain why notice would be harmful. Judge Sullivan did, however, freeze the defendants’ PayPal account, and permitted service by email.

Court Declines to Divide Ownership of Collabortively Developed Trademark

In a May 29, 2015 ruling, Judge Valerie Caproni decided ownership of the “Fashion Digital” trademark for fashion-related conferences between the two parties that had collaboratively developed the mark, Greenpearl and Hussain. The Court rejected dividing ownership between the parties, noting that “division of ownership has come to be strongly disfavored because it is not beneficial to the public, even if it might be equitable as between the parties.” In awarding ownership of the mark to Hussain, Judge Caproni wrote:
In sum, because there is no dispositive contractual agreement, the Court finds that Hussain is the party who (1) most proximately exerted control over the nature and quality of the services that the consuming public identified with the mark; (2) invented the mark; and (3) was seen by the public as the driving force behind the mark. Fashion Digital was a joint endeavor between Hussain and GreenPearl; because the parties’ joint endeavor has disintegrated, and the Court cannot assign a portion of the mark to each party, the Court finds that the balance of equities weighs in Hussain’s favor.
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