IP News

District Court's Application of Laches Upheld

In Pro-Football, Inc. v. Suzan S. Harjo, et. al., No. 03-7162 (D.C. Cir. May 15, 2009), the Court of Appeals for the District of Columbia Circuit affirmed the district court's ruling that plaintiff Harjo's trademark disparagement claims against Pro-Football, Inc. were barred by laches.

In 1992, the plaintiffs, seven Native Americans, filed an action before the USPTO seeking cancellation of six Washington Redskins trademark registrations on the grounds that the marks were disparaging toward members of their ethnic group within the meaning of Section 2 of the Lanham Act, 15 U.S.C. ' 1052(a). Pro-Football, the owner of the marks, argued before the Trademark Trial and Appeal Board (“TTAB”) that the defense of laches should apply because the marks had been registered in 1967 and the plaintiffs did not file suit for 25 years. The TTAB disagreed and canceled the marks, holding that they were disparaging.

Pro-Football appealed the matter to the District Court for the District of Columbia, which held that laches applies because of the 25-year delay between the filing of the suit and registration of the marks.

The circuit court reversed the district court's decision, holding that laches applies only where parties have been unjustifiably delayed, and unjustifiable delay cannot start before a plaintiff reaches the age of majority. The youngest plaintiff, Mateo Romeo, was only one year old in 1967. Therefore, the D.C. Circuit Court remanded the case to the district court with instructions to perform the laches analysis starting from Romeo's 18th birthday.

On remand, the D.C. District Court again found that laches precluded plaintiffs' claims. Laches requires the defendants to have suffered both trial and economic prejudice as a result of the delay period, and the court determined both types of prejudice existed. The court held that the delay period caused plaintiffs to suffer from trial prejudice because of its substantial length, making evidentiary determinations about the time of filing of the marks difficult, in addition to the fact that the former Redskins president (and likely trial witness) died during the delay period. The court found economic prejudice based on Pro-Football's substantial financial investment in the marks during the delay period. The plaintiffs appealed, challenging the sufficiency of both these determinations.

The previous opinion issued by the D.C. Circuit Court left the standard of review undetermined, and the court concluded in this opinion that while the existence of material facts is judged de novo, an abuse of discretion standard is applied to the district court's application of undisputed facts in analyzing the laches doctrine. Accordingly, the D.C. Circuit Court applied an abuse of discretion standard since appellant only disputed the district court's application of the facts, rather than the facts themselves. The court held that since disparagement is analyzed at the time of registration, it was not outside the discretion of the district court to hold that the death of a likely trial witness during the delay period, as well as the length of the delay itself, reasonably constituted trial prejudice, and that the substantial and long-term investment of Pro-Football in the marks in question reasonably constituted economic prejudice. Accordingly, the D.C. Circuit Court found the district court did not abuse its discretion and affirmed the lower court's decision that plaintiff's claims had been precluded.

Government Co-ownership of a Patent Does Not Protect Private Co-owners from Liability

In KGK Synergize Inc. v. SourceOne Global Partners, LLC, No. 08 C 7403 (N.D. Ill. May 13, 2009), the District Court for the Northern District of Illinois held that government co-ownership of a patent does not extend government immunity to the private parties with whom the government co-owns a patent.

At issue in the case was U.S. Patent No. 6,987,125 (“the '125 patent”), which issued from U.S. application 09/528,488 (“the '488 application”) on Jan. 17, 2006 and relates to Sytrinol', a nutritional supplement for lowering cholesterol. The named inventors of the '125 patent include the President and CEO of defendant KGK Synergize Inc. (“KGK”), as well as two individuals who assigned their rights in the '488 application to the government prior to the '125 patent's issuance. On June 30, 2003, KGK entered into a licensing agreement with plaintiff SourceOne Global Partners, LLC (“SourceOne”), whereby KGK granted SourceOne an exclusive license to the portion of KGK's patent portfolio (including the '488 application) related to Sytrinol.

In late 2007, SourceOne announced that it had developed its own product, similar to Sytrinol, called Cholesstrinol'. About a year later, KGK began sending letters to SourceOne's business partners and associates warning that KGK considered the sale of Cholesstrinol to infringe several patents, including the '125 patent. Specifically, in a letter dated Dec. 11, 2008, KGK sent a cease and desist letter to SourceOne, claiming that the marketing and sale of Cholesstrinol constituted infringement of the '125 patent.

On Dec. 29, 2008, SourceOne filed suit seeking, inter alia, a declaratory judgment of noninfringement and invalidity of the '125 patent. KGK moved to dismiss SourceOne's claims relating to the '125 patent pursuant to Fed. R. Civ. P. 12(b)(1), (7), arguing: 1) that the court lacked subject matter jurisdiction over SourceOne's claims because of the absence from the suit of the patent's co-owner, the government, and 2) in the alternative, SourceOne's non-infringement and invalidity counts should be dismissed because the government is a required party who cannot be joined, violating Fed. R. Civ. P. 19.

On May 13, 2009, the district court denied KGK's motion. With regard to KGK's first argument, the court stated that KGK's claim for lack of jurisdiction was grounded in the government's immunity from suit. The court held that if the inability to join a sovereign as a party nullified the suit against other private parties, it would render Fed. R. Civ. P. 19 superfluous, which it is not. In regard to the second argument, the court held that the failure to join the government did not violate Rule 19 because it was in the court's equity power to rule that the absence of the government would not render a judgment inadequate or unfairly prejudicial to the government because KGK would adequately represent its interests. The court reasoned that it would not allow KGK to “retreat behind the government's cloak of immunity and prevent the infringement or validity of the '125 patent from ever being tested in court.”

Law Firm Hit with $72.6M Malpractice Verdict

In Air Measurement Technologies, Inc., v. Akin Gump Strauss Hauer & Feld, L.L.P., No. SA-03-CA-0541-RF (W.D. Tex. May 7, 2009), a jury found Akin Gump Strauss Hauer & Feld, L.L.P. liable to its former clients, Air Measure Technologies and the North-South Corporation, for $72.6 million in damages as a result of malpractice during the prosecution of a series of patents, U.S. Patent Nos. 5,157,378, 5,689,234 and 5,910,771. The plaintiffs retained Akin Gump to file and prosecute the patents relating to a “man down alarm” emergency system for firefighters and emergency workers. After issuance of the patents, plaintiffs initiated infringement suits against several of their competitors.

During the course of these litigations, evidence was produced suggesting that certain of those patents were unenforceable because of inequitable conduct allegedly committed by the Akin Gump attorneys prosecuting the patents. Specifically, plaintiffs alleged that Akin Gump knowingly: 1) filed one of the patent applications after the one-year “on sale” statutory bar period, and 2) failed to disclose all material and non-cumulative prior art during prosecution of another application. The plaintiffs eventually settled the infringement suits, but brought a malpractice suit against Akin Gump, alleging that the settlement amounts had been reduced because of negligent actions on the part of Akin Gump. In addition to the inequitable conduct allegations, the plaintiffs alleged that because of an unnecessary multi-year filing delay for one of the broader patents, the relevant period for calculating royalties had been reduced substantially, resulting in significantly lowered damages. The jury returned a verdict for plaintiffs in the amount of $72.6 million. The individual attorneys who prosecuted the patents were named as defendants as well, but the jury absolved these attorneys from personal liability, instead holding the firm to be 100% responsible for the damages incurred. Akin Gump has stated that it plans to appeal the decision.

Jeffrey S. Ginsberg is a partner, Matthew Berkowitz is an associate, and Liberty McAteer is a summer associate in the New York office of Kenyon & Kenyon LLP.

District Court's Application of Laches Upheld

In Pro-Football, Inc. v. Suzan S. Harjo, et. al., No. 03-7162 (D.C. Cir. May 15, 2009), the Court of Appeals for the District of Columbia Circuit affirmed the district court's ruling that plaintiff Harjo's trademark disparagement claims against Pro-Football, Inc. were barred by laches.

In 1992, the plaintiffs, seven Native Americans, filed an action before the USPTO seeking cancellation of six Washington Redskins trademark registrations on the grounds that the marks were disparaging toward members of their ethnic group within the meaning of Section 2 of the Lanham Act, 15 U.S.C. ' 1052(a). Pro-Football, the owner of the marks, argued before the Trademark Trial and Appeal Board (“TTAB”) that the defense of laches should apply because the marks had been registered in 1967 and the plaintiffs did not file suit for 25 years. The TTAB disagreed and canceled the marks, holding that they were disparaging.

Pro-Football appealed the matter to the District Court for the District of Columbia, which held that laches applies because of the 25-year delay between the filing of the suit and registration of the marks.

The circuit court reversed the district court's decision, holding that laches applies only where parties have been unjustifiably delayed, and unjustifiable delay cannot start before a plaintiff reaches the age of majority. The youngest plaintiff, Mateo Romeo, was only one year old in 1967. Therefore, the D.C. Circuit Court remanded the case to the district court with instructions to perform the laches analysis starting from Romeo's 18th birthday.

On remand, the D.C. District Court again found that laches precluded plaintiffs' claims. Laches requires the defendants to have suffered both trial and economic prejudice as a result of the delay period, and the court determined both types of prejudice existed. The court held that the delay period caused plaintiffs to suffer from trial prejudice because of its substantial length, making evidentiary determinations about the time of filing of the marks difficult, in addition to the fact that the former Redskins president (and likely trial witness) died during the delay period. The court found economic prejudice based on Pro-Football's substantial financial investment in the marks during the delay period. The plaintiffs appealed, challenging the sufficiency of both these determinations.

The previous opinion issued by the D.C. Circuit Court left the standard of review undetermined, and the court concluded in this opinion that while the existence of material facts is judged de novo, an abuse of discretion standard is applied to the district court's application of undisputed facts in analyzing the laches doctrine. Accordingly, the D.C. Circuit Court applied an abuse of discretion standard since appellant only disputed the district court's application of the facts, rather than the facts themselves. The court held that since disparagement is analyzed at the time of registration, it was not outside the discretion of the district court to hold that the death of a likely trial witness during the delay period, as well as the length of the delay itself, reasonably constituted trial prejudice, and that the substantial and long-term investment of Pro-Football in the marks in question reasonably constituted economic prejudice. Accordingly, the D.C. Circuit Court found the district court did not abuse its discretion and affirmed the lower court's decision that plaintiff's claims had been precluded.

Government Co-ownership of a Patent Does Not Protect Private Co-owners from Liability

In KGK Synergize Inc. v. SourceOne Global Partners, LLC, No. 08 C 7403 (N.D. Ill. May 13, 2009), the District Court for the Northern District of Illinois held that government co-ownership of a patent does not extend government immunity to the private parties with whom the government co-owns a patent.

At issue in the case was U.S. Patent No. 6,987,125 (“the '125 patent”), which issued from U.S. application 09/528,488 (“the '488 application”) on Jan. 17, 2006 and relates to Sytrinol', a nutritional supplement for lowering cholesterol. The named inventors of the '125 patent include the President and CEO of defendant KGK Synergize Inc. (“KGK”), as well as two individuals who assigned their rights in the '488 application to the government prior to the '125 patent's issuance. On June 30, 2003, KGK entered into a licensing agreement with plaintiff SourceOne Global Partners, LLC (“SourceOne”), whereby KGK granted SourceOne an exclusive license to the portion of KGK's patent portfolio (including the '488 application) related to Sytrinol.

In late 2007, SourceOne announced that it had developed its own product, similar to Sytrinol, called Cholesstrinol'. About a year later, KGK began sending letters to SourceOne's business partners and associates warning that KGK considered the sale of Cholesstrinol to infringe several patents, including the '125 patent. Specifically, in a letter dated Dec. 11, 2008, KGK sent a cease and desist letter to SourceOne, claiming that the marketing and sale of Cholesstrinol constituted infringement of the '125 patent.

On Dec. 29, 2008, SourceOne filed suit seeking, inter alia, a declaratory judgment of noninfringement and invalidity of the '125 patent. KGK moved to dismiss SourceOne's claims relating to the '125 patent pursuant to Fed. R. Civ. P. 12(b)(1), (7), arguing: 1) that the court lacked subject matter jurisdiction over SourceOne's claims because of the absence from the suit of the patent's co-owner, the government, and 2) in the alternative, SourceOne's non-infringement and invalidity counts should be dismissed because the government is a required party who cannot be joined, violating Fed. R. Civ. P. 19.

On May 13, 2009, the district court denied KGK's motion. With regard to KGK's first argument, the court stated that KGK's claim for lack of jurisdiction was grounded in the government's immunity from suit. The court held that if the inability to join a sovereign as a party nullified the suit against other private parties, it would render Fed. R. Civ. P. 19 superfluous, which it is not. In regard to the second argument, the court held that the failure to join the government did not violate Rule 19 because it was in the court's equity power to rule that the absence of the government would not render a judgment inadequate or unfairly prejudicial to the government because KGK would adequately represent its interests. The court reasoned that it would not allow KGK to “retreat behind the government's cloak of immunity and prevent the infringement or validity of the '125 patent from ever being tested in court.”

Law Firm Hit with $72.6M Malpractice Verdict

In Air Measurement Technologies, Inc., v. Akin Gump Strauss Hauer & Feld, L.L.P., No. SA-03-CA-0541-RF (W.D. Tex. May 7, 2009), a jury found Akin Gump Strauss Hauer & Feld, L.L.P. liable to its former clients, Air Measure Technologies and the North-South Corporation, for $72.6 million in damages as a result of malpractice during the prosecution of a series of patents, U.S. Patent Nos. 5,157,378, 5,689,234 and 5,910,771. The plaintiffs retained Akin Gump to file and prosecute the patents relating to a “man down alarm” emergency system for firefighters and emergency workers. After issuance of the patents, plaintiffs initiated infringement suits against several of their competitors.

During the course of these litigations, evidence was produced suggesting that certain of those patents were unenforceable because of inequitable conduct allegedly committed by the Akin Gump attorneys prosecuting the patents. Specifically, plaintiffs alleged that Akin Gump knowingly: 1) filed one of the patent applications after the one-year “on sale” statutory bar period, and 2) failed to disclose all material and non-cumulative prior art during prosecution of another application. The plaintiffs eventually settled the infringement suits, but brought a malpractice suit against Akin Gump, alleging that the settlement amounts had been reduced because of negligent actions on the part of Akin Gump. In addition to the inequitable conduct allegations, the plaintiffs alleged that because of an unnecessary multi-year filing delay for one of the broader patents, the relevant period for calculating royalties had been reduced substantially, resulting in significantly lowered damages. The jury returned a verdict for plaintiffs in the amount of $72.6 million. The individual attorneys who prosecuted the patents were named as defendants as well, but the jury absolved these attorneys from personal liability, instead holding the firm to be 100% responsible for the damages incurred. Akin Gump has stated that it plans to appeal the decision.

Jeffrey S. Ginsberg is a partner, Matthew Berkowitz is an associate, and Liberty McAteer is a summer associate in the New York office of Kenyon & Kenyon LLP.