IP Law Daily, STRATEGIC PERSPECTIVES: Top intellectual property law developments for December 2021, (Jan 7, 2022)

By Thomas Long, J.D.

In case you missed the in-depth intellectual property law coverage in the December 2021 issues of IP Law Daily, here are highlights of the month’s most notable developments.

As 2021 drew to a close, the Copyright Office continued making preparations for the launch of the Copyright Claims Board by publishing a slate of proposed procedural rules, while also postponing the commencement date for the small-claims tribunal to an unspecified date in the first half of 2022. The USPTO filed a salvo in its battle against trademark fraud by issuing formal sanctions against a Chinese company and its principal for engaging in multiple abuses of the trademark system. On the litigation front, among other developments, pop superstar Taylor Swift must face claims that she cribbed lyrics for her hit “Shake It Off”; COVID-19 vaccine might be on the hook for infringing a rival’s patent for a compound that interferes with the ability of mRNA to transit viruses in the body; and the Trademark Trial and Appeal Board, in a precedential opinion, rejected an application to register the color cream in connection with guitar pickups, on the basis of a lack of distinctiveness.

COPYRIGHT

Proposed rules—Copyright Claims Board. On December 8, the Copyright Office issued a proposed regulations to establish procedures for the “small claims” tribunal created by a statute enacted in December 2020. The proposed regulations would set the rules for discovery, the submission of evidence, the availability of hearings and post-decision review, and a wide range of other case management issues. Initial written comments to the proposed rule are due on February 7, 2022. Written reply comments are due on February 22, 2022. The new proposal adds to a number of internal rules that the Office has proposed to govern the Copyright Claims Board (CCB), a voluntary, alternative forum for parties to resolve copyright disputes with a value of $30,000 or less. The CCB was originally set to go into operation at the end of 2021, but the Copyright Office has announced on November 30 that the start date will be delayed by up to 180 additional days.

Substantial similarity—song lyrics—C.D. Cal.: Two songwriters who allege that Taylor Swift lifted their lyrics for her 2014 megahit “Shake It Off” will be entitled to a jury trial on their allegations, the federal court in Los Angeles ruled. The lawsuit was filed by the authors of a musical composition titled “Playas Gon’ Play,” which was recorded and released in 2001 by all-girl group 3LW. The authors assert that Swift copied a short phrase from the original work that uses a variation on the theme of “players” (or “playas”) and “haters.” Swift moved for summary judgment on the grounds that no reasonable jury could find substantial similarity between the two sets of lyrics. The court, while acknowledging that Swift may have made “a strong closing argument for the jury,” nonetheless found that judgment as a matter of law in favor of the pop singer was not warranted. Although there were noticeable differences between the works, the songs were similar enough to send the case to a jury. The court said that it could not “determine that no reasonable juror could find substantial similarity of lyrical phrasing, word arrangement, or poetic structure between the two works” (Hall v. Swift, December 9, 2021, Fitzgerald, M.).

PATENT

Standing—obviousness—COVID-19 vaccines—Fed. Cir.: The developer of one of the most successful and popular vaccines for COVID-19 could be subject to a potentially expensive infringement lawsuit in the wake of two decisions issued by the U.S. Court of Appeals for the Federal Circuit. The court set aside two administrative appeals by Moderna, Inc., to the validity of patents held by a competitor, one on standing grounds, the other on the merits. The decisions arose from Moderna’s challenge to two patents directed to chemical compounds made up of combinations of four different types of lipids that work together to interfere with the ability of viruses to infect the body. The chemical compounds are designed to interfere with the process by which one of the body’s central genetic material—messenger ribonucleic acid, or mRNA—transmit viruses to human cells. Moderna filed a petition with the Patent Trial and Appeal Board for inter partes review of one patent in 2018, asserting that it had sublicensed the patent from its owner through an intermediary licensee and that its financial interests were threatened by its monetary obligations under that license. In a 2019 decision, the Board found that several of the claims of that patent were invalid as anticipated by an earlier patent publication, but it upheld the validity of the remaining claims. In 2020, Moderna petitioned the Board to challenge the validity of the second patent on prior art grounds. The challenge in that petition depended on the patent owner’s threat to sue Moderna for allegedly infringing the patent via Moderna’s mRNA vaccine. The Board found that Moderna failed to meet its burden of proving obviousness. The court held that Moderna had standing to appeal the 2020 decision—because of the threat of litigation over its COVID vaccine—but not the 2019 decision. With respect to the 2019 decision, the court said that the evidence of financial burden was speculative, and new developments in 2020 did not create standing. The court affirmed the Board’s decision with respect to the validity of the second patent, stating that the Board’s conclusion was consistent with precedents where “we have held that evidence that components interacted in an unpredictable or unexpected way could render a combination nonobvious” (ModernaTx, Inc. v. Arbutus Biopharma Corp. December 1, 2021, Lourie, A.).

PUBLICITY RIGHTS

Copyright preemption—yearbook photos—N.D. Ill.: Family history website Ancestry.com must face claims under the Illinois Right of Publicity Act with respect to its use of yearbook photos, the federal district court in Chicago decided. In denying, in part, Ancestry’s motion to dismiss the putative class action case alleging that Ancestry used an Illinois man’s name, identity, image, and likeness to advertise Ancestry’s products and services without consent, the court concluded that the Copyright Act does not preempt a claim brought under the Illinois statute. Nor was the claim precluded by Section 230 of the Communications Decency Act. The court, however, dismissed claims alleging intrusion upon seclusion and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Bonilla v. Ancestry.com Inc., December 7, 2021, Kendall, V.).

TRADEMARK

Sanctions by USPTO for abuses of trademark system. In an order designated as citable precedent, David Gooder, the Commissioner for Trademarks, acting on delegated authority by interim USPTO Director Andrew Hirshfeld, sanctioned a Chinese company for abusing the trademark process. The Chinese company had all pending trademark matters terminated and was permanently banned from ever filing again because of serial abuses of the trademark system. Huanyee Intellectual Property Co., Ltd, and its executive director, Yusha Zhang, were the subjects of an investigation that found that, in filing 15,000 trademark matters, they (1) engaged in the unauthorized practice of law; (2) provided false domicile addresses; (3) impermissibly entered others’ signatures; and (4) repeatedly violated the terms of use for uspto.gov. The USPTO rejected Huanyee and Zhang’s request not to disclose the matter publicly, concluding that the Privacy Act applies only to U.S. citizens and lawful permanent residents (In re Zhang, December 10, 2021, Gooder, D.).

Likelihood of confusion—competitive proximity—Fed. Cir.: The Federal Circuit affirmed a decision by the Trademark Trial and Appeal Board that rejected an opposition to a trademark application filed by Sky Cinemas LLC relating to movie theaters, by Sky International, AG, a media company that offers media streaming services. Sky International argued that the marks were too similar and likely to cause confusion among consumers. The Federal Circuit agreed with the TTAB’s analysis that operating movie theaters was not within Sky International’s natural zone of expansion, and thus the marks would not be likely to cause confusion among consumers. Although the court opined that the channels of trade and classes of customers for the two areas of business were the same, all other analytical factors weighed against finding that Sky International was likely to “bridge the gap” between streaming services and operating movie theaters. The court noted in particular that Sky International did not offer key features of movie theater operation, such as “food and beverage services,” “large auditoriums with luxury seating,” and “wall-to-wall curved screens.” The court also agreed with Sky Cinemas that “theaters offer a ‘night out’ experience” different from that offered by streaming services (Sky International AG v. Sky Cinemas LLC, December 17, 2021, Bryson, W.).

Color marks—lack of distinctiveness—TTAB: A trademark examining attorney properly refused to register the color cream as the mark for a three-dimensional guitar pickup, the Trademark Trial and Appeal Board ruled in an opinion designated as precedential. There was no evidence of exclusivity of use, “look for” advertising, or significant sales to support a finding that the color cream as applied to electronic sound pickups for guitars had acquired distinctiveness in the market. Moreover, the applicant’s use of the cream color on guitar pickups was not substantially exclusive. The applicant’s attempt to offer “fill-in-the-blank” dealer and customer declarations as evidence of consumer association, instead of survey evidence, was not successful, as was its attempt to distinguish its asserted mark from third-party uses of the color by limiting the description of the goods to double-coil pickups. The applicant’s claim that it sold over 30,000 units embodying the mark was not supported by further details regarding those sales, including how they compared to those of its competitors (In re Dimarzio, Inc., December 3, 2021, Lebow, M.).

TRADE SECRETS

Misappropriation—sanctions for baseless claims—6th Cir.: A misappropriation suit involving a trade secret described in only three words was baseless, the U.S. Court of Appeals in Cincinnati has held. Sanctions were upheld against the plaintiff for engaging in bad faith conduct by exaggerating the claim in seeking an emergency ex parte seizure order from a federal district court. The purported trade secret was “buried” in a settlement agreement, and it could not have been misappropriated when a law firm passed the agreement along to its client. The agreement that contained the trade secret was lawfully obtained by the law firm, and even if the law firm became aware of the trade secret’s presence in the agreement, neither it nor its client used or communicated the trade secret to third parties. The district court correctly determined that the plaintiff acted in bad faith, the Sixth Circuit concluded. The claim was baseless because the mishandling of confidential third-party discovery does not equate to misappropriation of a trade secret. The settlement agreement was obtained by a lawful subpoena. Moreover, the plaintiff knew when it filed the action that the alleged trade secret had been received through legitimate discovery means and had not been distributed further. The plaintiff acted with improper motive, based on the “extraordinary means” by which it prosecuted the case. The plaintiff was not forthcoming in its claim for ex parte emergency relief, and it exaggerated the content of the trade secret and intentionally muddled timelines, the appellate court said (Magnesium Machine, LLC v. Terves, LLC, December 6, 2021, Larsen, J.).

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