Virginia IP Law : Virginia Intellectual Property Lawyer & Attorney : Troutman Sanders Law Firm : Technology & Patent Litigation

Inequitable Conduct

Applying the heightened standard for inequitable conduct set forth in Therasense v. Becton, Dickinson & Co., 2011 U.S. App. LEXIS 10590 (Fed. Cir. May 25, 2011), Judge Lee held that the information allegedly withheld from the PTO was neither material nor established the requisite intent. MeadWestvaco had disclosed other references on the same subject of the withheld information, and so that information was cumulative. Further, the defendants “cannot provide any evidence of a specific intent to deliberately withhold information to the PTO.” “‘[N]on-disclosure, by itself, cannot satisfy the deceptive intent element.’”

For more information on the Therasense decision, see our earlier post here.

Willful Blindness

Judge Lee found sufficient evidence to send the issue of “willful blindness” under Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2069-72 (2011) based on:

• Valois’ attempts to design around the MWV patents before the patents issued;
• Valois’ complete lack of knowledge of its supplier’s manufacturing process could support an inference that it deliberately avoided learning whether its supplier’s process infringed;
• Valois’ assertion that it has not provided any parameters or instructions to its suppliers lacked credibility.

For more detail on the "willful blindness" standard for inducement of infringement and the Global-Tech decision, see our earlier posts here and here.

Willful Infringement

Judge Lee also allowed MWV’s willful infringement to go to trial even though MWV did not move for a preliminary injunction. Judge Lee found evidence of objective recklessness based on evidence that:

• Valois copied MWV’s design;
• Valois lacked any good faith belief that its product did not infringe;
• Valois had a pure pecuniary motive
• Valois attempted to conceal its infringement;
• Valois failed to investigate its own conduct

The failure to move for a preliminary injunction, the Court held, was not dispositive but was merely a single factor in the willfulness analysis.

Other rulings

In addition, Judge Lee:

• Granted MWV’s motions for summary judgment on the defenses of anticipation and obviousness;
• Denied Rexam’s and Valois’ motions for summary judgment on indefiniteness because the claim terms at issue were amenable to construction;
• Denied Valois motion for summary judgment on infringement under 35 U.S.C. 271(a) based on its claim that its products were made outside the United States;
• Granted Valois’ motion for summary judgment on infringement under the doctrine of equivalents because MWV had added the key limitation during prosecution of the patent to overcome prior art.

Judge Lee found:

• The materials at issue were clearly work product, as they were obtained after MeadWestvaco had threatened suit. 
• MeadWestvaco failed to establish any substantial need for the information because Rexam had produced the testing that it planned to rely on at trial, MeadWestvaco performed its own tests on the allegedly infringing product, and MeadWestvaco had an opportunity to cross-examine Rexam’s testifying expert. 
• Rexam had not waived work product protection because neither consulting expert would testify at trial and Rexam had not selectively disclosed any information relating to their testing.
• Since it could not show “substantial need” for the materials, MeadWestvaco could not meet the higher standard of “exceptional circumstances” under Fed. R. Civ. P. 26(b)(4)(D)(ii) to require production.
• Sandvik Intellectual Property AB v. Kennametal, Inc., 2011 U.S. Dist. LEXIS 11104 (W.D. Pa. Feb. 4, 2011) did not apply because that case involved internal testing, not testing done by an outside expert and not done at the request of an attorney.
• Rexam did not waive the work product privilege by denying in its Answer that its products infringed MeadWestvaco’s patent.

Judge Lee’s ruling is a straightforward application of the rules governing consulting experts with which all litigators are familiar. In fact, it’s not clear why MeadWestvaco persisted in appealing Judge Jones’ decision to Judge Lee. Regardless, Judge Lee’s decision provides patent litigators with a good summary of the law governing expert discovery for citation in future EDVA cases.

Unjust enrichment claim dismissed

The order deals with Google’s motion to dismiss the unjust enrichment count of Rosetta Stone’s suit.  In it, the Court rules for Google on two grounds. 

First, applying the “Twiqbal” pleading standard (from the U.S. Supreme Court’s recent decisions in Twombly and Iqbal, about which we’ve previously posted with respect to patent cases here and here), the Court concludes that Rosetta Stone failed to plead sufficient factual material to make its unjust enrichment claim plausible.  Specifically, Rosetta Stone did not plead facts that would, if proven, show two of the three elements of a Virginia unjust enrichment claim -- namely, that Google (i) knew of the benefit conferred by use of Rosetta Stone’s marks; and (ii) accepted or retained the benefit under circumstances which render it inequitable for the defendant to do so without paying for its value.  On the latter point, the Court relies on Virginia law that the plaintiff cannot recover for an unjust enrichment claim unless he can show sufficient additional facts which imply that the defendant promised to pay the plaintiff for the benefit received, and the Court finds no facts that would show such a promise by Google.

Second, the Court concludes that Google is immune from such claims as an interactive computer service provider under the Communications Decency Act, which provides that such entities are not liable for the actions of third party content creators (here, the advertisers in Google’s AdWords program).

Summary judgment on trademark counts

The Court first identifies the five issues before it:

            1) whether Google's practice of auctioning Rosetta Stone's trademarks to third party advertisers for use in their Sponsored Link titles and advertisement text creates a likelihood of confusion to warrant granting summary judgment in favor of Rosetta Stone as to Counts I (trademark/service mark infringement under the Lanham Act), V (trademark infringement under Virginia Law), and VI (unfair competition under Virginia law).

            2) whether Google's use of Rosetta Stone's trademarks as keyword triggers under its advertising program is functional and, therefore, a non-infringing use.

            3) whether Google intentionally induces third party advertisers to bid on Rosetta Stone's trademarks or knowingly continues to permit advertisers selling counterfeit Rosetta Stone products to use the trademarks in their Sponsored Link titles and advertisement text, despite Rosetta Stone's reports of infringement, to warrant granting summary judgment in favor of Rosetta Stone as to Count II (contributory trademark/service mark infringement under the Lanham Act).

            4) whether Google exercises joint ownership and control over third party advertisers' Sponsored Link titles and advertisement text on its website to warrant granting summary judgment in favor of Rosetta Stone as to Count III (vicarious trademark/service mark infringement under the Lanham Act).

            5) whether Rosetta Stone sufficiently demonstrates economic loss resulting from a decline in its brand name, which is attributable to Google's practice of auctioning Rosetta Stone's trademarks for profit to third party advertisers, to warrant granting summary judgment in favor of Rosetta Stone as to Count IV (trademark/service mark dilution under the Lanham Act).

It then summarizes why it grants summary judgment to Google as follows:

The Court grants summary judgment in favor of Google on Counts I (trademark/service mark infringement under the Lanham Act), V (trademark infringement under Virginia Law), and VI (unfair competition under Virginia law) because “no reasonable trier of fact could find that Google's practice of auctioning Rosetta Stone's trademarks as keyword triggers to third party advertisers for use in their Sponsored Link titles and text creates a likelihood of confusion as to the source or origin of Rosetta Stone's goods.  Furthermore, because Google uses Rosetta Stone's trademark to identify relevant information to users searching on those trademarks, the use is a functional and non-infringing one.”

The Court grants summary judgment in favor of Google on Count II (contributory trademark/service mark infringement under the Lanham Act) because “no reasonable trier of fact could find that Google intentionally induces or knowingly continues to permit advertisers selling counterfeit Rosetta Stone products to use the trademarks in their Sponsored Link titles and advertisement text.”

The Court also grants summary judgment in favor of Google on Count III (vicarious trademark/service mark infringement under the Lanham Act) because “no reasonable trier of fact could find that Google exercises joint ownership and control over third party advertisers' Sponsored Links titles and text.  Neither Google's employees nor its Query Suggestion Tool directs or influences third party advertisers to bid on Rosetta Stone's trademarks when they subscribe to Google's advertising program.”

Finally, the Court grants summary judgment in favor of Google on Count IV (trademark/service mark dilution under the Lanham Act) because “there is no genuine dispute of material fact that Rosetta Stone's brand awareness has only increased since Google changed its trademark policy to permit the use of trademarked terms as keyword triggers and as words within Sponsored Link titles and advertisement text.”

In Rosetta Stone LTD v. Google Inc. (case no. 1:09-cv-00736), the prominent maker of language software sued Google for trademark/service mark infringement, contributory infringement, vicarious infringement, and dilution under the Lanham Act, as well as trademark infringement, unfair competition, and unjust enrichment under Virginia law.  (The First Amended Complaint and a number of other case documents are available from RECAP.)

The case revolved around the treatment of trademarked terms in Google’s AdWords advertising program, under which persons other than the mark owner can bid to have their site appear in searches for the trademarked terms.  As the CNet article linked above notes, Google has successfully defended such suits before.

Judge Lee’s orders (entered April 28, 2010) granted Google’s motion to dismiss on the unjust enrichment claim and granted Google’s motion for summary judgment on the first six claims.  As yet, the opinions giving the rationale for the Judge’s decision have not yet been posted.  In the meantime, you can check out Google’s memoranda in support of the motion to dismiss and the motion for summary judgment (in redacted form).