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Thursday, April 24, 2014, 4:38 PM

Padgett Business Services Goes After Former Franchisee for Trademark Infringement

Smallbizpros, Inc., d/b/a Padgett Business Services (“Padgett”)[1] asserts trademark infringement in connection with allegations of post-termination obligations of John A. Terris, Sr. (“Terris”) of Brunswick, Georgia, in its complaint filed in the Middle District of Georgia on April 3, 2014.  The complaint seeks an injunction, declaration that Terris’ franchise has been terminated, damages, including actual, punitive, Terris’ profits, trebling of damages, interest, and attorney fees.

The complaint alleges that Padgett is a business services company providing business services through the United States.  Those services include tax consultation and preparation, government compliance and financial reporting, general business advice, and payroll services.  Collectively Padgett’s unique system is known as the “Padgett Business Services System.”  

Padgett has owned the trade name Padgett Business Services® and has provided services under related marks for over 40 years (the “Padgett Marks”).  Services are provided through a network of approximately 400 franchise offices, all operating under the name “Padgett Business Services.”  The franchise agreements license use of the Padgett Marks.  The Terris franchise agreement was entered into in December 1993 and lasted for 20 years before terminating on December 31, 2013, according to the complaint. 

Upon expiration, the terms of the franchise agreement required Terris to return all proprietary materials and discontinue use of the Padgett Marks.  In addition, Terris was precluded from owning or engaging as a manager in any competing business in the franchise territory, as well as from diverting customers to any competitor.  Terris confirmed to Padgett on December 31, 2013 that he did not intend to continue in a relationship.  Shortly thereafter, Padgett reminded Terris of his post-termination responsibilities.  On January 15, 2014, Terris wrote by email to Padgett denying any post-termination responsibilities.  He later explained that he based his understanding on the fact that the franchise had expired rather than being terminated.  Terris continued to provide competing services utilizing the name “Premiere Business Services."  Terris took no steps to transfer his clients over to Padgett.  Instead he continued servicing the clients, using the same phone number – one he was required to turn over to Padgett.

Padgett alleges federal unfair competition under Section 43(a) of the Lanham Act in one of two alternative ways:
(1)    Terris has represented he remains associated with Padgett, when in fact he is not; or
(2)    Terris has represented that he is no longer associated with Padgett, but is confusing the public over the "origin or affiliation of his services" by continuing to use the Padgett Business Services System.
The complaint also alleges willful federal trademark infringement under 15 U.S.C. § 1114, asserting that it is an exceptional case under § 1117 justifying the trebling of damages.  The complaint goes on to allege trademark dilution and breach of contract.
The case is Smallbizpros, Inc., d/b/a Padgett Business Services v. John A. Terris, Sr., No. 3:14-cv-00034-CDL, filed 04/03/14 in the U.S. District Court for the Middle District of Georgia, Athens Division, and has been assigned to U.S. District Judge Clay D. Land.


[1] Another Padgett trademark case has been the subject of an earlier post.

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Wednesday, April 23, 2014, 4:02 PM

Judge Thrash Declines to Read in Limitations From the Specification in Dysphagia Treatment Patent Dispute

Fig. 7B of '873 patent
On April 4, 2014, Judge Thrash issued an opinion and order construing a number of claims of U.S. Patent Nos. 5,725,564 ("the '564 patent"), 5,987,359 ("the '359 patent"), 6,104,958 ("the '958 patent"), and 7,280,873 ("the '873 patent").  The four related patents, owned by Plaintiffs VitalStim, LLC, ESD LLC, DJO LLC, and Empi LLC, relate to methods and devices for treating dysphagia, a medical condition characterized by difficulty in swallowing.  The patents disclose a procedure called "neuromuscular electrical stimulation therapy," in which controlled electrical currents are applied to a patient's throat to facilitate swallowing.  Plaintiffs asserted the four patents against eSwallow USA, LLC ("eSwallow"), and the parties disputed the meaning of eight claim terms (some of which were common to multiple patents).  Judge Thrash adopted the Plaintiffs' position on each and every disputed claim term and refused to accept eSwallow's invitation to depart from the plain language of the claims.

"Plurality" means only two?

With respect to the claim term "selectively placing a plurality of electrodes," eSwallow argued that the specification only disclosed the use of "pairs" of electrodes, and thus should be so limited.  The Court disagreed, first noting that "although the Court may look at the whole patent" in construing claim terms, "particular embodiments appearing in the written description will not be used to limit claim language that has broader effect."[1]

Means-plus-function in absence of word "means"

Next, eSwallow argued that the term "governor for regulating" should be treated as a means-plus-function claim term because it lacks sufficiently definite structure.  The Court pointed to the general rule that "a claim term that does not uses 'means' will trigger the rebuttable presumption that §112, 6 does not apply."[2]  Judge Thrash found that eSwallow did not meet its burden to overcome the presumption, and found that "governor" was sufficiently definite.  Thus, the Court ruled that the term is not a means-plus-function claim term.

"Predetermined" limited to values in specification?

The Court again rebuffed eSwallow's attempt to limit certain claim language to the values of embodiments disclosed in the patent specifications.  Four different claim terms used the word "predetermined" (e.g., "predetermined frequency," "predetermined duration"), and the Plaintiffs argued that the word simply means a "value that is determined prior to application of the therapy."  Judge Thrash stated that "[o]nce more, the Defendant impermissibly attempts to use the specification to limit the scope of the claim terms," and noted that at no point in the specification did the patentee express an intent to deviate from the plain and ordinary meaning of the term.  As a result, the Court adopted the Plaintiffs' construction of the term "predetermined."

Court refuses to strike "programmed" from claim language

Finally, eSwallow argued that the word "programmed" should be ignored or eliminated from the term "output protector circuit is programmed to limit said intensity."  But again, the Court held that there was no basis in law or fact to omit the word and noted that "it is a well-established rule that claims are interpreted toward giving effect to all terms in the claim." [3]  The complete constructions adopted by the Court are as follows:

Term
Construction
“selectively placing a plurality of electrodes” (‘564 patent, ‘873 patent)
“plurality of electrodes” construed to mean “more than one electrode”
“a governor for regulating the electrical pulses such that one of current so as not to exceed 4.4 milliamps RMS or power so as not to exceed 9.6 MW RMS” (‘564 patent)
Not a means-plus-function claim term
“predetermined” (‘359 patent – appears in four separate claim terms)
“a value that is determined prior to the administration of the therapy”
“output protector circuit is programmed to limit said intensity” (‘958 patent)
Plain and ordinary meaning

VitalStim LLC, et al. v. eSwallow USA, LLC, 1:12-cv-4169-TWT, Dkt. No. 62 (N.D. Ga. Apr. 4, 2014)
----------------
[1] Teleflex, Inc. v. Ficosa N. Am. Corp., 299 F.3d 1313, 1327 (Fed. Cir. 2002).
[2] CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1369 (Fed. Cir. 2002).
[3] Digital-Vending Servs. Int'l, LLC v. Univ. of Phoenix, Inc., 672 F.3d 1270, 1275 (Fed. Cir. 2012).

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What Makes a Copy-Cat a Copy-Cat? The Complex Case of Architectural Copyright

Note: This article is authored by our colleague Mitch Tuchman, who practices copyright law in the firm's Raleigh, NC office.  Though the subject order comes from a Southern District of Florida case, the subject matter is pertinent and the decision is important enough that it is likely to influence other copyright cases in the 11th Circuit courts.  The article first appeared here on ArchDaily.com, and has been republished with permission.
When an eminent jurist asks, “What does a  of an architectural work truly protect?” you may be certain the question is not rhetorical. The U.S.  Act does provide protection from infringement for architectural works, but it does so in terms so ambiguous that a judge might wonder, as did federal district court judge James Lawrence King in a case he decided earlier this year, whether broadly applicable standards for determining infringement even exist. Finding “the usual analysis … too vague and the language misleading,” King blazed a trail of his own in Sieger Suarez Architectural Partnership v. Arquitectonica International Inc., 2014 U.S. Dist. LEXIS 19140, proposing detailed guideposts for future courts to follow.
Sieger Suarez involved two Miami architectural firms and a 43-story condominium tower nearing completion in suburban Sunny Isles. The Sieger Suarez firm was engaged in 2000 by the project’s first owner. When the project, now known as Regalia, changed hands, the new owners dropped Sieger Suarez and engaged Arquitectonica in 2006. This is a scenario made familiar in scores of disputes involving allegations of infringement of architectural works.
Befitting a beachfront property with floor-through units starting at $7 million,  both designs present dramatic, undulating exteriors. “When facing any of the buildings’ four sides,” King wrote in his opinion, “the façades create the impression of a wave rippling horizontally across the sides of the buildings.” Further, in cross-section, both buildings reveal what King described as a “flower shape,” “a stylized rectangle, with gently rounded corners and an outward bulge more-or-less in the center of each of the four sides.” Should this flower shape, combined with the wavelike exteriors, have been enough to sustain Sieger Suarez’s claim of infringement against its competitor and the property’s owners?

The Law
Understanding cases of this sort requires an appreciation of two copyright principles: the distinction between ideas and the expression of ideas, on the one hand, and the nature and scope of protectable compilations, on the other.
Copyright protects the expression of ideas but not ideas themselves: books but not words or literary conventions (“boy meets girl”), music but not notes or styles, software but not commonplace routines, and architecture but not floors and ceilings, doors and windows, walls and halls.
Copyright also protects compilations, that is, aggregations of protectable expression and unprotectable ideas, selected, coordinated and arranged in ways that the result is original even if its constituent parts are not. Think databases. Architectural works are often analogized to compilations, combinations of elements that might not be copyrightable taken in isolation (walls and halls) but achieve a measure of expressive distinctiveness through their inventive combinations.
There is no uniformity among federal appeals courts on how to determine the scope of protection for architectural works. District courts are required to conform with precedent established by the controlling court of appeals, in King’s case the Court of Appeals for the Eleventh Circuit headquartered in Atlanta. Lower court judges, such as King, may construe that precedent in innovative ways subject to review by the applicable higher court.
These principles are the building blocks with which cases involving architectural works, such as Sieger Suarez, are built. These are the elements that Judge King used to fashion his noteworthy opinion.
The Facts
In January 2006, shortly before being terminated, the firm submitted applications to register its 2003 technical drawings for registration in the Copyright Office. Four months later, possibly in an effort to collect unpaid fees on the Regalia project, it sent its plans and AutoCAD to the project owner. Two months later, on July 20, 2006, in connection with another matter ,Arquitectonica’s attorney sent his client’s plans for Regalia to Sieger Suarez.  Five days after that Sieger Suarez submitted applications to register copyrights in additional documents of service it had prepared for the project six years earlier.
This confusing chronology notwithstanding, it seems plain the Arquitectonica had access to Sieger Suarez’s plans and could have copied them, and Sieger Suarez had notice of Arquitectonica’s allegedly infringing drawings and could have filed suit based on its registered copyrights. It did not sue, however, for seven more years, until construction of Regalia was under way.
Determining Infringement
To prevail on a claim of copyright infringement, the plaintiff must show that it owns a valid copyright in a work and the defendant copied protectable elements of the registered work. As here, where there is no direct proof of copying, no smoking guns or homemade videos, a plaintiff may establish copying by demonstrating that the defendant had access to the plaintiff’s work, which was undisputed, and that the plaintiff’s and defendant’s works are substantially similar. King’s job? Determine the presence or absence of substantial similarity between the parties’ designs. Spoiler alert: he found none.
In the course of deciding the issue, King confronted the undulating, wavelike legal uncertainty that caused him to ask what copyright in an architectural works truly protects. If, as the law recites, an architectural work includes “the overall form as well as the arrangement and composition of spaces and elements in the design” but excludes “individual standard features”; if that overall form is a compilation of protectable expressions and unprotectable ideas; if compilations are, as some courts have concluded, eligible for only “thin” protection”—“baby” protection, King called it—what can be compared in order to determine infringement?
Usually, substantial similarity is established through the eyes of that convenient legal fiction: the average lay observer. King refused to go along. “In practice,” he wrote,
[T]he “average observer” referred to by the cases is not average at all. The law in this area … is complex and the distinction between expression and idea can be a difficult one. As such, an “average” observer is one who is fully aware of the law, trained to understand the elements of infringement and protectable features, with knowledge of architectural designs, and with experience to decide the facts of a given case. Such a person is neither average nor ordinary.
Following precedent, he insisted, “As the Eleventh Circuit has noted, ‘The substantial similarity required for infringement . . . must be substantial similarity of expression, not substantial similarity of ideas.’”  And expression, remember, may include entire compilations.  King then enunciated his way, a new way, of determining where to look for similarities.
Rather than simply continue down the oft-misleading road of ad hoc analysis, [this] Court will consider certain telling factors of substantial similarity and suggests that this non-exclusive and non-exhaustive list of guideposts should be used by future courts as guideposts for determining the level of similarity between architectural works….
King’s guideposts are four in number: (1) the manner by which a design is achieved; (2) use of ornamental structures and details; (3) how an individual interacts with the space; and (4) location.
Substantial Similarity Analysis: Exteriors
Turning first to the façades of the Sieger-Suarez and Arquitectonica designs, and specifically to the wavelike illusion, King noted that the defendant’s design is achieved by the addition of wrap-around, irregularly-shaped balconies to an otherwise rectangular-shaped building. These irregularly-shaped balconies combine, floor-by-floor, to create the impression of an oscillating wave running the entire height of the building. Starting from the first balconied floor, Defendant’s oscillating wave is achieved by shifting the center bulge of each successive floor’s balcony just slightly to the side of the balcony beneath it. These staggered balconies and the changing placement of the center bulges results in a dynamic wave across the façade of Defendant’s building.
Plaintiff, on the other hand, achieves the outward appearance in a strikingly different manner. Plaintiff’s design is created by the addition of rounded corner balconies to an otherwise irregularly-shaped building with sharply rounded corners and an outward bulge at the center of each of its four sides. Thus, the flower shape of the building is created by structural elements and bay windows that are integral to the design’s floor plans, to which rounded corner balconies are added to complete the flower shape. The bulging bay windows and rounded corner balconies appear in the same place on every floor and combine to create a smooth, static wave that runs the height of the building.
While other judges, sitting in other courts, might look at the parties’ respective designs and attempt an aesthetic resolution to the similarity comparison, King boldly looked past the similarities apparent on the surface and asked what lies underneath, what structural imperatives brought each designer to its expression of the flower shape as it rose from ground to sky.
Despite the fact that both buildings in cross-section adhere, more or less, to the flower shape, that shape results from entirely different structural approaches, irregularly shaped floors stacked one above another in the Sieger Suarez design and an essentially rectangular tower with wrap-around terraces, each slightly different from the terraces above and below in the Arquitectonica design. In other words, though the idea, a flower shape, was superficially similar, the expression of the idea was radically different and hence not substantially similar at all. Or in King’s words, “non-structural ornamental exterior terraces versus bay windows that are both structural and integral to the interior floor plan, is a critical distinction.” King characterized the resulting shape of the Arquitectonica design “dynamic”; the shape of the Sieger-Suarez design, “static.”
To find substantial similarity between the two designs in this case would require a finding that Plaintiff owns a copyright in a concept, i.e. this flower shape, something the Eleventh Circuit has consistently rejected. The shape is an idea while the building and terraces combine to create a protectable expression. Defendant’s expression of the flower shape is plainly different and does not infringe upon Plaintiff’s expression.
Substantial Similarity Analysis: Interiors
King undertook a similar analysis of the interior floor plans of the competing designs. Sieger Suarez’s expression of the flower design, with bulging sides and rounded bay windows at each corner results in living spaces with few straight lines. Defendant’s use of a rectangular tower—its irregularly shaped terraces notwithstanding—results in rectangular rooms. Not only do the shape and size of the parties’ rooms differ, the ways in which inhabitants are intended to occupy, furnish and make use of those rooms differs as well.
King made additional comparisons, but no superficial similarities were sufficient to overcome the conclusion that the buildings showed no substantial similarity.
King’s Guideposts in Practice
While King did not give equal weight to each of his “guideposts,” the brilliance of his approach is in providing a technique to replace the ad hoc decision making that typically characterizes decisions in this context. It’s a bit like watching Julia Child on television back in the day. What mattered most was not the dish itself but how she taught the viewer the technique.
Final Irony
Given copyright’s three-year statute of limitations, Sieger Suarez would have had to have filed suit no later than July 20, 2009, unless it could show damages accruing with respect to continuing cognizable causes of action.  Sieger Suarez pled no such causes of action, and King accordingly ruled plaintiff’s claims exhausted.
Mitch Tuchman practices copyright law in the Research Triangle Park, North Carolina, office of Womble Carlyle Sandridge & Rice, LLP.

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Thursday, April 17, 2014, 12:25 PM

Augusta-Based Eagle Parts Files Complaint Against Allshields, Inc. Alleging Infringment of "Windshield Fastening Device" Patent

On April 3, 2014, Eagle Parts & Products, Inc. of Augusta, Georgia (“Eagle”) filed a complaint against Allshields, Inc. of Raleigh, North Carolina (“Allshields”) alleging infringement of U.S. Patent No. 7,380,860 (“the ‘860 patent”) for a “windshield fastening device.”

According to the complaint, Eagle is a leading manufacturer of golf carts, parts, and accessories and is the owner, by assignment, of the ‘860 patent which issued on June 3, 2008. Allshields manufactures and offers for sale its “Cart Armor” windshield as an upgrade or accessory for a variety of golf cart types. Eagle alleges that a number of Allshield’s products infringe at least two claims of the ’860 patent. Defendant’s allegedly infringing products include “Cart Armor” folding windshields with model numbers: 5-500A, 5-510A, 5-520A, 5-100A, 5-110A, 5-300A, 5-310A, 5-320A, 5-330A and other folding windshields bearing model numbers 7-110A and 7-510A.


Above: Images of Allshield's "Cart Armor" product
Below: Figs. 1, 2, 5, and 7 of the ’860 patent


Eagle is seeking a ruling that one or more claims of the ’860 patent have been infringed, a permanent injunction, and damages (to be enhanced by a finding of willful infringement), along with costs and attorneys' fees.

The case is Eagle Parts & Products, Inc. v. Allshields, Inc., Case No. 1:14-cv-00087-JRH-BKE filed in the United States District Court of the Southern District of Georgia, Augusta Division, and is assigned to Judge R. Randal Hall.

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Novel Aspect of Invention Determined in Favor of Datascape in Patent Dispute Against Sprint

Judge Clarence Cooper adopted Special Master Gale R. Peterson’s report in its entirety ruling in favor of Datascape, Inc., in denying the summary judgment motion of Spring Spectrum, L.P, and Sprint Solutions, Inc. (collectively “Sprint”) for Invalidity and Non-Enablement of the claims at issue in the five asserted patents [U.S. Patents Nos. 5,742,845, 5,905,908, 6,366,967, 6,684,269, and 6,745,259].  Michael Cicero previously posted an article on the claim construction order entered in this case on February 5, 2013. 

The key dispute between the parties over the Special Master’s report is set forth on page 3 of the Order:  “The parties disagree about whether a person of ordinary skill in the art would have been familiar with [telephones communicating over an open network] in 1995 and with how to connect the telephones to the open network.”  The Court found this aspect of the dispute to be fact intensive, requiring denial of summary judgment.  The Court disagreed with the supposition of Sprint that the novel aspect of the patent was the devices to be connected.  Rather, “[t]he novel aspect of the patent is the implementation and usage of extended open network protocols, which facilitate input/output operations with a non-standard I/O devices.”

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Monday, April 14, 2014, 2:24 PM

T-12 Entertainment Speaks Up in Trademark Complaint Over Use of "I Plead the 5th" Mark

On March 24, 2014, T-12 Entertainment, LLC and Kareem Hawthorne, both of Georgia (collectively, “Plaintiffs”), filed a complaint against Young Kings Enterprises, Inc., Ego Entertainment, LLC., Troy Williams, Anthony Adighibe, Charles Bryant Bourgeois, Desmond Key, Dae’shawn Shelton, and Korey Felder, all of Georgia, and Fred Clark, of Texas, (collectively, “Defendants”) alleging that the Defendants' use of the phrase "I Plead the Fifth" in connection with spring break events infringes their trademark rights.

Plaintiffs and Defendants are in the business of, among other things, planning and hosting Spring Break party and entertainment events. According to the complaint, Plaintiffs hosted a series of spring break events in Miami from 2009-2013 using the name "I Plead the 5th," and have accordingly developed trademark rights in it. In 2014, Plaintiffs allegedly learned that Defendants were planning to put on their own series of spring break events in Miami using the name "I Plead the Fifth."
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Tuesday, April 8, 2014, 4:55 PM

Intellectual Property in the Gutter: Claims Construed in Sewer Line Resin Lining Patent Dispute

Sumner C. Rosenberg issued a Special Master’s Report and Recommendation construing terms at issue in three patents -- U.S. Patent Nos. 5,927,341 ("the ‘341 patent"), 6,337,114 ("the ‘114 patent"), and 6,899,832 ("the ‘832 patent") -- asserted by Insituform Technologies, Inc., and INA Acquisition Corp. (collectively “ITI”) against AMerik Supplies, Inc., and Erik Nielsen who brought a third party complaint against Cosmic-Sondermaschinenbau GmbH (collectively “Defendants”).[1] The report updates a report of October 8, 2009, in view of the completion of reexaminations of the patents-in-suit.

The Special Master reviewed additional briefing, including objections by ITI to the initial report and response thereto, and held a hearing on February 19, 2014.
The Special Master noted that his report from October 8, 2009, remained unchanged except as to construction of the term “resin absorbable material,” addressed in Section IV.C. of the Report.  This was the only term addressed in the supplemental briefing.
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