BLOGS: Georgia IP Litigation



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Tuesday, January 19, 2016, 2:11 PM

New Georgia Statute on Bad Faith Patent Cases May Discourage Both Weak and Strong Cases from Being Brought in Georgia

Plaintiff Walter Farmer (“Farmer”) initiated suit in September 2014 asserting infringement of claim 1 of his U.S. Patent No. 7,362,007 (the “’007 Patent”), issued April 22, 2008, and covering uninterruptable power supply technology (“UPS”) products against Alpha Technologies, Inc. (“Alpha”).  Alpha moved pursuant to a relatively new Georgia statute, O.C.G.A. §10-1-772 et seq., for an order requiring Farmer to post a $250,000 bond because of Farmer's alleged bad faith patent assertion.  The motion was addressed by Special Master James L. Ewing, IV in a 29-page Recommendation and Opinion that was adopted by Judge Leigh Martin May on December 9, 2015.

Special Master Ewing detailed a series of communications over several months beginning in April 2014 between the parties whereby Farmer informed Alpha of the perceived infringement by providing a claim chart and Alpha requested time to investigate the matter.  After Alpha missed its own September deadline, Farmer initiated action but held off service in a further effort to resolve the matter.  Alpha requested that Farmer hold off service until December 5 by which time it would substantively respond. Alpha submitted a response on December 5 denying infringement and asserting invalidity (without providing a claim chart).  Alpha further asserted that it appeared “that Mr. Farmer failed to conduct an adequate investigation and analysis” though no reasoning was provided for this conclusion.

Farmer filed a return of service on January 29, 2015.  The Special Master then considered O.C.G.A. §10-1-772 in connection with Alpha’s motion.  That statute sets for nine factors that may be considered tending to support the requirement of bond and seven that may be considered in denying bond.  

The nine factors potentially favoring requirement of a bond are:
            (1)  The demand letter fails to include the patent number, the name and address of the owners or any assignees, and fails to show specifically how the recipient’s products are covered by claims of the patent;
            (2)  Prior to sending the demand letter no analysis comparing the claims to the accused products was done or the analysis failed to identify specific areas in which the accused products were covered by claims;
            (3)  The recipient requested information omitted from the demand letter (as specified in 1) and that information is not provided;
            (4)  The demand letter demands a license fee or response within an unreasonably short time;
            (5)  A license is offered for an amount not reasonably based on a reasonable estimate of the value of the patent;
            (6)  The asserted claim is meritless or should have been known to be so;
            (7)  The claim or assertion is deceptive;
            (8)  Other similar claims of patent infringement have been asserted and information listed in these factors was not provided or a count has found those similar claims to be meritless; or
            (9)  Any other factor the court finds relevant.

The seven factors which may be considered in support of a finding that there was no bad faith assertion are:
            (1)  The demand letter included the patent number, name of owners and assignees, if any, and showed specifically how the accused product was covered by the claims;
            (2)  The author of the demand letter provided any undisclosed information within a reasonable time after request;
            (3)  The author of the demand letter engaged in a good faith effort to establish infringement and to negotiate an appropriate remedy;
            (4)  The author of the demand letter has made a substantial investment in using or producing the patent or selling an item covered by its claims;
            (5)  The author of the demand letter is an inventor or original assignee, or is affiliated with an institution of higher education;
            (6)  The author has demonstrated good faith business practices in prior efforts to enforce the patent (or a substantially similar patent) or successfully enforced the patent (or a substantially similar patent); or
            (7)  any other factor the court finds relevant.

The Special Master addressed the factors in detail over 11 pages of his Recommendation and Report.  The comprehensive analysis found that the factors in each and every instance addressed favored denial of the motion.  Nevertheless, there was no sua sponte criticism of Alpha for bringing the motion.  Although the statute may require a plaintiff to defend a motion with little basis, neither the statute nor the Special Master, in this instance, portend any risk to a defendant for pursuing motion that does not satisfy any of the statute factors (much less a majority of them).
In providing his analysis, the Special Master found it unnecessary to address whether or not the Georgia statute had been preempted by federal law.  The Special Master found no reasonable likelihood that Farmer made a bad faith assertion of patent infringement, and with respect to each factor he found the position of Farmer superior to the position of Alpha.  The Special Master’s Recommendation and Opinion was adopted by Judge May in full without objection by the parties.

O.C.G.A. § 10-1-772 should serve as a road map to all counsel prior to filing a patent infringement action in Georgia.  There are two areas where it may have particular impact.   

First, non-practicing entities may be less inclined to initiate patent suits in Georgia as they may be subjected to motions and potential bond requirements that can be avoided elsewhere, and this statute makes it at least appear that the state is less receptive to NPE suits.  

Second, companies that want to assert patents in Georgia need to be mindful of the interplay between this new statute and the First-to-File rule, which strongly favors the choice of forum of the party first filing a patent infringement suit or suit for declaratory judgment on the patent.  See Michael A. Cicero, "First-to-file and Choice-of-Forum Roots Run too Deep for Micron to Curb Most Races to the Courthouse," Journal of the Patent and Trademark Office Society, August 2008, Vol. 90, No. 8, at 541-614.  See also Electronics for Imaging, Inc. v. Coyle, 394 F.3d 1341, 1347-1348 (Fed. Cir. 2005) (discussing anticipation alone insufficient to overcome First-to-File Rule being favored). 

A party seeking to send a demand letter in keeping the statute will usually want to avoid jurisdiction preemption by an infringing party (with a suit for declaratory judgment).  The statute, therefore, may require adoption of a strategy that takes the First-to-File rule into account.  For example, a conservative approach might involve sending a demand letter showing conformance with the statute and allowing a reasonable time for response.  The letter could be carefully drafted to satisfy an exception to the First-to-File Rule as discussed in T2 Products, LLC v. Advantus Corp., 2014 WL 4181932 at 2-4 (W.D.N.C.), and in Nutrition & Fitness, Inc. v. Blue Stuff, Inc., 264 F.Supp.2d 357, 360-362 (W.D.N.C. 2003)Under this approach, the recipient could be given an opportunity to further assist in expanding or clarifying the results of the infringement investigation (as described in the letter) and to respond to a claim chartYet, in addition, the letter could inform the recipient that litigation was imminent if contrary facts, opinions, and other information were not provided within a reasonable timeThe letter could propose thirty days as a reasonable time to respond, but might wisely indicate receptiveness to a longer period based on a reasonable request.  The letter could assert an objective of ensuring a full and fair decision on infringement was made before litigation commenced, but that, absent timely additional information, litigation was imminent and would be promptly commenced upon expiration of recipient's period to respond.  The paragraph could conclude with a statement that the letter was further intended to reasonably notify recipient of the status of the investigation and dispute, so as to avoid any necessity (or reasonableness) of anticipatory litigation on the part of recipient.  There are a number of factual specific considerations that must be taken into account in connection with this approach (for example, if a patent holder has a history of making unfulfilled threats, uncertainty remains - weighing against the exception).  

The First-to-File Rule has not lost its vitality and allows for a great deal of judicial discretion.  Therefore, no matter how good the strategy, there can be no guarantee of success to the patent holder in ultimately moving forward in the desired forum.  

In the final analysis, O.C.G.A. § 10-1-772 will likely discourage NPEs from pursuing claims with little merit in Georgia as designed, but the statute also complicates the strategic approach of Praciticing Entities and NPEs with stronger claims who desire to pursue a patent infringement claim in the stateA number of patent holders may elect to pursue claims in other jurisdictions where there is less risk (or cost) in ensuring that jursidiction can be obtained and retained in the forum preferred by the patent holder.


Walter Farmer v. Alpha Technologies, Inc., Dkt. No. 62, Case No. 1:14-cv-2958-LMM (N.D. Ga. Dec. 9, 2015), adopting the Recommendation and Opinion of Special Master James L. Ewing, IV, Dkt. No. 61, filed November 18, 2015.

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Tuesday, October 20, 2015, 11:10 AM

Beaulieu Group Floored by Competitor Mohawk’s Application and Use of New Mark for Residential Carpet

On September 30, 2015, Beaulieu Group, LLC (“Beaulieu”), a Georgia Corporation, brought a trademark infringement action against Mohawk Carpet Distribution, Inc. (“Mohawk”), a Delaware corporation with a principal place of business in Calhoun, Georgia. The complaint asserts claims for trademark infringement, false designation of origin and unfair competition (state and federal).


According to the complaint, Beaulieu is a global company that manufactures and sells a wide variety of flooring products, including carpet, carpet tiles and luxury vinyl flooring. Part of Beaulieu’s residential carpet product line is marketed under its "Bliss by Beaulieu" brand, including its EverClean collection, which is the mark at issue in this complaint. Beaulieu owns the trademark BLISS BY BEAULIEU EVERCLEAN (U.S. Reg. No. 4,293,216) and has applied for the mark EVERCLEAN (collectively, “EVERCLEAN Marks”) and alleges that these marks are an integral part of the Beaulieu Bliss product line and overall brand identity.



On August 19, 2014, Mohawk sought to register the mark SMARTSTRAND FOREVER CLEAN (App. No. 86/370,536) on an intent-to-use basis. Shortly after, Beaulieu filed an Opposition Proceeding, which is pending, requesting that the TTAB deny Mohawk’s registration on the basis of its EVERCLEAN marks. Beaulieu alleges that Mohawk has since begun to use, and is currently using, the SMARTSTRAND FOREVER CLEAN mark, which it argues is an attempt to capitalize on Beaulieu’s goodwill and is further confusing to consumers.

Beaulieu’s argument is that the marks are not only substantially similar with the use of words “ever” and “clean”, but because the goods are in the same industry consumers will likely be deceived as to the association, or lack thereof, between the brands. Further, Beaulieu cites Mohawk’s advertising strategy as an additional layer of deception to consumers, as Mohawk states their carpet is “the perfect carpet for families with kids and pets” and Beaulieu has advertised their carpet as the “carpet pet owners love to love!” Consumer confusion is an issue for companies as they typically do not have quality control over the competitor’s product, even though they may be wrongly associated with that product.
Beaulieu demanded a jury trial and asked for a permanent injunction restraining Mohawk from using SMARTSTRAND FOREVER CLEAN or any similar mark, damages, including attorneys’ fees and costs, as well as punitive damages, to be increased three times the amount thereof and lastly, a preliminary injunction forbidding Mohawk from registering or attempting to register the SMARTSTRAND FOREVER CLEAN mark. Mohawk waived service of the complaint, and its answer is currently due on November 30, 2015.  
These competitors have another trademark infringement case pending, Beaulieu Group, LLC v. Mohawk Industries, Inc., No. 4:15-cv-00124-HLM (N.D. Ga.), which was filed in July of 2015.

This case is Beaulieu Group, LLC v. Mohawk Carpet Distribution, Inc., No. 4:15-cv-00184-HLM, filed 09/30/15 in the U.S. District Court for the Northern District of Georgia, Rome Division, and assigned to U.S. District Judge Harold L. Murphy.

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Tuesday, October 6, 2015, 4:40 PM

Hi-Tech Accuses Dynamic of Trademark Infringement and False Claims of Steroid Powered Products

On September 28, 2015, Hi-Tech Pharmaceuticals, Inc. (“Hi-Tech”), a Georgia corporation, brought a trademark infringement action against Dynamic Sports Nutrition, LLC d/b/a Anabolic Research (“Dynamic”), and Brian Clapp (“Clapp”) (collectively Dynamic and Clapp are referred to as “Defendants”).  The complaint asserts claims for trademark infringement, false designation of origin and unfair competition (state and federal), false advertising, deceptive trade practices, and Georgia RICO violations. 

Hi-Tech, according to the complaint, “is a producer of high quality dietary supplements, including numerous products designed for muscle and body building, such as testosterone boosters, muscle-gainers, muscle preservation products, and legal hormone boosters.”  The complaint relates to DIANABOL® - “a muscle preservation dietary supplement for consumers seeking to gain muscle.”  Hi-Tech owns the registration to this mark (U.S. Reg. No. 3,378,354).

Dynamic has sought a trademark for D-Anabol 25 (U.S.Serial No. 85/280,036), which was denied by the USPTO based on the DIANABOL® mark.  The below image pictures the products of the two companies side by side.
 
The Hi-Tech Complaint paints a comprehensive picture quoting the USPTO's Office Action denying registration in paragraphs 23 and 24:
Online literature and/or advertisements for applicant’s product [DSN’s D-ANABOL] demonstrate that applicant’s and registrant’s [Hi-Tech’s] goods are:  (1) marketed through the same channels; (2) directed to the same potential customers; and (3) even promoted as comparable competing products wherein they provide, in part, ‘If you are looking to buy Dinabol … online, our D-anabol 25 is exactly what you need. . . . The dominate feature of the applicant’s mark is nearly identical in appearance to registrant’s mark.  The letter I is merely replaced with a hyphen.
Hi-Tech cites a number of different websites used by Defendants to promote the product, including www.BuySteroids.com, www.Steroid.com, and www.RoidStore.com.  Communications between representatives of Hi-Tech and Clapp are referenced that illustrate, according to the complaint, a pattern of deception regarding Clapp’s relationship with Dynamic and his interest protecting intellectual property rights.  After Hi-Tech learned of Clapp’s relationship, the complaint asserts that Clapp asserted that D-ANABOL 25 had an earlier first use date and that Dynamic continued to use that mark even after the claimed misperception of first use date was straightened out.

In paragraphs 56 through 123, the complaint set forth detailed allegations of specific false advertising claims alleged to have been made by Dynamic, including the mischaracterization of ingredients used in Dynamic products and the effect of the disclosed ingredients.  It remains to be seen whether the opening foray in this litigation will be vigorously opposed or the suit will be quickly settled, as often occurs with trademark lawsuits.

The case is Hi-Tech Pharmaceuticals, Inc. v. Dynamic Sports LLC, et al., No. 1:15-cv-03393-MHC, filed 09/28/15 in the U.S. District Court for the Northern District of Georgia, Atlanta Division, and assigned to U.S. District Judge Mark H. Cohen.

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Thursday, September 24, 2015, 1:54 PM

NexusCard Seeks Wonderland in Georgia After Alice Motion in Texas

NexusCard, Inc. (“NexusCard”), a California corporation with its principal place of business in Lake Forest, California, filed a patent infringement action on August 18, 2015, against grocery chain Winn-Dixie Stores, Inc. (“Winn-Dixie”), a Florida corporation, with a principal place of business in Jacksonville, Florida, relating to 5,924,080 (the ‘080 Patent) directed to a computerized discount redemption system, which published on July 13, 1999.  Figure 1 from the ‘080 Patent is reproduced below:

NexusCard asserts that the Winn-Dixie Rewards Program incorporates all the elements of several claims of the ‘080 Patent.  As can be seen from Figure 1 above, the ‘080 Patent details the steps routinely employed in seemingly all retail point-of-sale rewards programs.  In addition, other claims of the '080 patent cover related activities such as advertising the program and analyzing the data.

The prayer for relief does not seek lost profits, a recovery for willful infringement, or a finding that the case is exceptional.  Instead, NexusCard merely seeks a reasonable royalty plus prejudgment and post-judgment interest plus “such other and further relief as the Court may deem just and proper."

In June, NexusCard filed similar suits against other grocery and pharmacy chains, including Kroger, Walgreens, and CVS, in the Eastern District of Texas.  Several of those cases have already been settled and dismissed, but Kroger opted to file a motion to dismiss on the basis that the '080 patent is directed to unpatentable subject matter and therefore is invalid under 35 U.S.C. § 101 in view of the Supreme Court's guidance in Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014) and decisions of other courts following Alice.  A defendant in a separate case filed a similar motion to dismiss, and also asserted that NexusCard failed to state a plausible claim for direct or indirect infringement.  NexusCard filed the current suit against Winn-Dixie while those motions to dismiss were pending, showing no hesitation to move forward despite any concerns raised as to the '080 patent's validity in the Texas suits.

The case is NexusCard, Inc. v. Winn-Dixie Stores, Inc., No. 4:15-cv-138, filed in the U.S. District Court for the Middle District of Georgia, Columbus Division, on August 18, 2015, and assigned to U.S. District Judge Clay D. Land

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Wednesday, August 12, 2015, 11:47 AM

Atlanta Rapper Rich Homie Quan Seeks Cancellation or Transfer of Trademarks and Over $2,000,000 in Damages

Think It's A Game Entertainment, LLC ("TIG"), an Atlanta-based production company, Fly Merchandise Enterprises, LLC ("Fly"), and Girvan Henry ("Henry"), have left Atlanta rapper Rich Homie Quan feeling "some type of way."

Dequantes Lamar, better known by his stage name "Rich Homie Quan" ("Quan"), filed suit in the Northern District of Georgia against TIG, Fly, and Henry, alleging he incurred over $2,000,000 in damages based on a number of causes of action, including breach of contract, trademark infringement, and unfair competition.

Quan has achieved notoriety in recent years for his recording singles, "Type of Way" (certified Gold by the RIAA according to the complaint) and "Flex," among others.  The complaint alleges that Quan and TIG signed a "memorandum purporting to be a recording agreement," which called for Quan to receive a $19,200 advance and 50% of all profits from sales of Quan's records.  Quan alleges that the advance and the 50% split have not been paid.  According to the complaint, Quan "did not have the benefit of legal representation at the time he entered into the TIG Memorandum, nor was he advised to seek counsel."  Further, the complaint states that without Quan's consent Defendants entered into separate agreements with other record labels, including Def Jam.  Under those separate agreements, the Defendants were paid several hundred thousand dollars as an advance and further royalties from sales of Quan's music, which the complaint alleges were never passed on to Quan.

According to the complaint, Henry and Fly also filed and obtained trademark registrations for "RICH HOMIE QUAN" and a corresponding logo, shown below, which issued as U.S. Reg. No. 4,483,756 and U.S. Reg. No. 4,746,133, respectively.  Quan alleges that these applications were filed without his consent or knowledge, and that he is not listed as a "creator, author, or owner" of the marks, despite his use of the "Rich Homie Quan" stage name in connection with his career in entertainment.  The complaint seeks a finding that the Defendants committed fraud on the PTO, and asks the Court to cancel the registrations or, in the alternative, to transfer ownership of the marks to him.  The complaint alleges that Defendants' conduct also amounts to unfair competition under the Lanham Act, and seeks redress for damages incurred in connection with Defendants' use of the marks.

"Rich Homie Quan Logo" - U.S. Reg. No. 4,746,133

The complaint also seeks to have the "memorandum" declared unenforceable for lacking "material terms" and that the agreement be rescinded, or in the alternative, for breach of contract.  The complaint further contains counts for breach of fiduciary duty, unjust enrichment, conversion, and violation of the Georgia Deceptive Trade Practices Act (O.C.G.A. 10-1-370).  Quan seeks equitable title to assets purchased with "funds due Artist" relating to the agreement, recovery of damages, and attorneys' fees and costs.

The case is Lamar v. Think It's A Game Entertainment, LLC et al., Case No. 1:15-cv-2775-TCB, filed August 5, 2015 in the Northern District of Georgia, Atlanta Division, and is assigned to Judge Timothy Batten.

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Tuesday, August 11, 2015, 10:23 AM

Court Recognizes Alice Decision Potentially Impacts Case by Allowing Late Motion for Judgment on Pleadings

Mobile Telecommunications Technologies, LLC (“Mobile”)[background on company], initiated a patent infringement case against United Parcel Service, Inc. (“UPS”), in 2012 on U.S. Patent No. 5,786,748 on a method and apparatus for giving notification of express mail delivery.

UPS filed a Motion for Summary Judgment [Dkt. 95], which was submitted to a Special Master for consideration.  The Special Master issued a Report and Recommendation (“R&R”) [Dkt. 139] on July 8, 2015, recommending that the motion be granted in part and denied in part.  Both parties filed objections to the R&R [Dkts. 142 and 143].  In addition to its objection, UPS filed a motion for judgment on the pleadings [Dkt. 145] arguing that the asserted patent should be found invalid under 35 U.S.C. 101 in light of the Supreme Court's decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, et al., 134 S.Ct. 2347, 2350 (2014).  In Alice, the Supreme Court emphasized that “a patent-ineligible concept” or “abstract idea” is not made patentable by “generic computer implementation” described as a method claim. Id.

Judge Totenberg agreed with UPS that the resolution of this motion could obviate the need for deciding the summary judgment motion, and she therefore decided to allow the motion despite its lateness in the procedural timeline.  She ruled that it presented a threshold question of validity, which, “in the interest of judicial economy and efficiency,” was not appropriately deferred to trial.

The Court removed the pending summary judgment motion from the docket by denying it without prejudice, but committed to reviving the motion herself if UPS’s motion for judgment on the pleadings is denied.  This action achieved the removal of a decision on the summary judgment motion from the Court’s time tracking requirements, while avoiding adding a burden on either party to resurrect the summary judgment motion.

The case is Mobile Telecommunications Technologies, LLC v. United Parcel Service, Inc., Docket No. 148, decided August 4, 2015, in 1:12-cv-032223-AT, in the United States District Court for the Northern District of Georgia, Atlanta Division, assigned to Judge Amy Totenberg.

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Tuesday, August 4, 2015, 10:36 AM

Judge Ross Examines Morass of Pleadings and Refines Dispute to Supported Claims of Patent, Copyright, and Trade Dress Infringement

In an earlier post today we reported on the Third Amended Complaint filed by Lisa Duer (“Duer”), a resident of Woodstock, Georgia, alleging patent infringement, trademark infringement, copyright infringement, and trade dress infringement action against Bensussen Deutsch & Associates, Inc. (“BDA”), a Washington corporation, and Eli Lilly and Company (“Lilly”), an Indiana corporation (collectively the “Defendants”).  This post addresses Judge Eleanor L. Ross’s Order of July 8, 2015, which gave rise to that filing.

On July 8, Judge Ross ruled on three motions, one filed by Defendants and two by Plaintiffs.  The Court granted in part and denied in part the motion to dismiss of the Defendants and the motion to allow a Second Amended Complaint by Duer and denied Duer’s motion to file the Third Amended Complaint “as currently submitted.”  However, the Court allowed a more limited Third Amended Complaint – “limited to the inclusion of Plaintiff’s additional trademark infringement claim.”
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