IP News

The Federal Circuit denied the writ, holding that settlement negotiations were not privileged. It stated that while the number and extent of privileges are not set in stone, the Supreme Court had identified six factors courts should consider when deciding whether to recognize a new privilege. In this case, all six factors weighed against creating a new privilege. First, no state had enacted a negotiation privilege outside of mediations; second, Congress had considered what protections to give settlement negotiations when it adopted the Rules of Evidence in 1973 and had only made them non-admissible (as opposed to non-discoverable), and even that rule allowed for negotiation evidence to be used in certain circumstances; third, such a privilege has never been recommended by the Advisory Committee of the Judicial Conference; fourth, the privilege would not advance the public good since settlements are already frequently made without such a protection; fifth, any negotiation privilege would have to have numerous exceptions; and finally, courts already have effective methods of limiting discovery to protect parties that are unfairly burdened. Due to all the factors weighing against a new privilege, the court held that the settlement negotiations were not protected by privilege, and denied the writ.

'National Chamber' Held to Be Merely Descriptive

On April 3, 2012, the Federal Circuit upheld a Trademark Trial and Appeal Board's ruling that refused registration to the Chamber of Commerce of the United States for the mark “NATIONAL CHAMBER” on the basis of descriptiveness. In the case, In re the Chamber of Commerce of the United States of America, No. 2011-1330, the Chamber of Commerce (“COC”) was seeking through two applications to register the NATIONAL CHAMBER mark for various services within International Class 35, including “providing online directory information services featuring information regarding local and state Chambers of Commerce” (the '075 application) and “analysis of governmental policy relating to businesses and analysis of regulatory activity relating to businesses, all for the purpose of promoting the interests of businessmen and businesswomen” (the '745 application).

The court held that a mark “need only describe a single feature or attribute” of a good or service in order to be descriptive, and that the TTAB's determination that a mark is merely descriptive is a factual finding reviewed for substantial evidence. Here, the court held that substantial evidence supported a finding of descriptiveness for both applications. The TTAB held, and the court held as conceded, that “national” means nationwide in scope and “chamber” is commonly used to refer to a chamber of commerce. Therefore, the NATIONAL CHAMBER mark was descriptive of services that are nationwide in scope and relate to chambers of commerce. The court also held that there was substantial evidence that both providing online directory information about local chambers of commerce, and promoting the interests of businessmen and businesswomen were services “within the scope of traditional chambers of commerce activities.”

Therefore, since there was substantial evidence that the NATIONAL CHAMBER mark was descriptive of at least one service from each application, the court held that both applications were properly refused for descriptiveness.

Inequitable Conduct Ruling Upheld Where District Court Made Separate Findings of Intent and Materiality

Although the Federal Circuit's opinion in Therasense Inc et al. v. Becton Dickinson & Co. raised the standard for which to find inequitable conduct, on April 9, 2012 the Federal Circuit affirmed a district court's pre-Therasense holding of inequitable conduct because the district court made separate findings of intent and materiality.

The two patents at issue in Aventis Pharma S.A. v. Hospira, Inc., No. 2011-1018, (the '561 and '512 patents) involved the administration of certain drugs known as taxanes that are administered through an intravenous infusion. Because taxanes have low solubility in water, they must be mixed with certain additives and solutions for the infusion. The patents-in-suit described certain additives that reduced allergic relations. The district court held that: 1) the patents were invalid for obviousness due to prior art described in two earlier references; and 2) it was inequitable conduct for the inventor to not bring those two earlier references to the PTO's attention.

On appeal, the Federal Circuit upheld the findings of obviousness and then moved on to the more interesting question of inequitable conduct. The district court's opinion had come down before the Federal Circuit ruled in Therasense. In Therasense, the court rejected the sliding-scale approach to proving inequitable conduct and held that “a defendant must establish both the materiality of the withheld reference and the applicant's intent to deceive the PTO.” In addition, the standard for materiality was “but-for” ' in other words, but-for the hiding of the reference at issue, the PTO would not have allowed a claim.

The court held that although the district court's opinion did not have the guidance of Therasense, its holding was still in line with that case because the court had made separate findings of intent and materiality, and it did not err in either finding. First, with regard to materiality, the court held that the references were by definition material where, as in this case, claims had been found to be invalid on the basis of the references. Second, with regard to intent, the court held that the district court's finding of intent was not clearly erroneous due to the extensive testimony from the inventor and experts regarding the inventor's reasoning for not disclosing the references to the PTO. Giving deference to the factual findings of the lower court, the Federal Circuit held that “we cannot conclude that the court's finding that [the inventor] withheld [an earlier reference] with the specific intent to deceive the PTO was clearly erroneous.”

Because the lower court's opinion and findings supported a holding of both intent and materiality, the Federal Circuit affirmed the district court's pre-Therasense finding of inequitable conduct.

Howard J. Shire is a partner and Aaron Johnson is an associate in the New York office of Kenyon & Kenyon LLP.

Federal Circuit Holds Settlement Negotiations Not Privileged

In an opinion issued on April 9, 2012, the Federal Circuit held that settlement negotiations were not privileged and therefore a party could be compelled to produce negotiation documents. The case underlying In re MSTG, Inc., Misc. Docket No. 996, involved MSTG, Inc. suing AT&T Mobility LLC and a number of other cellular phone providers, alleging infringement of certain 3G telephony-related patents. MSTG settled with every defendant except AT&T, and most of the settlement agreements involved licenses for MSTG's patents.

Because one of the questions in the litigation with AT&T was the amount of a reasonable royalty for the patents-in-suit, AT&T requested not only the settlement and license agreements MSTG had entered into with the former co-defendants, but also documents relating to the negotiation of those agreements. When MSTG refused to produce those documents, AT&T filed a motion to compel. The motion was initially rejected by the magistrate judge, who found that AT&T had not shown the documents to be relevant or discoverable. However, after an MSTG expert report described those licenses as reflecting certain compromises, AT&T moved the magistrate judge to reconsider the order. On reconsideration, the magistrate judge found that MSTG could not rely on the business reasons underlying the agreements for its own arguments, while at the same time shielding those reasons from examination. It ordered MSTG to produce the documents, and the district court adopted the order. As a result, MSTG petitioned the Federal Circuit for a writ of mandamus to vacate the order. MSTG argued that settlement negotiations were protected by privilege.

The Federal Circuit denied the writ, holding that settlement negotiations were not privileged. It stated that while the number and extent of privileges are not set in stone, the Supreme Court had identified six factors courts should consider when deciding whether to recognize a new privilege. In this case, all six factors weighed against creating a new privilege. First, no state had enacted a negotiation privilege outside of mediations; second, Congress had considered what protections to give settlement negotiations when it adopted the Rules of Evidence in 1973 and had only made them non-admissible (as opposed to non-discoverable), and even that rule allowed for negotiation evidence to be used in certain circumstances; third, such a privilege has never been recommended by the Advisory Committee of the Judicial Conference; fourth, the privilege would not advance the public good since settlements are already frequently made without such a protection; fifth, any negotiation privilege would have to have numerous exceptions; and finally, courts already have effective methods of limiting discovery to protect parties that are unfairly burdened. Due to all the factors weighing against a new privilege, the court held that the settlement negotiations were not protected by privilege, and denied the writ.

'National Chamber' Held to Be Merely Descriptive

On April 3, 2012, the Federal Circuit upheld a Trademark Trial and Appeal Board's ruling that refused registration to the Chamber of Commerce of the United States for the mark “NATIONAL CHAMBER” on the basis of descriptiveness. In the case, In re the Chamber of Commerce of the United States of America, No. 2011-1330, the Chamber of Commerce (“COC”) was seeking through two applications to register the NATIONAL CHAMBER mark for various services within International Class 35, including “providing online directory information services featuring information regarding local and state Chambers of Commerce” (the '075 application) and “analysis of governmental policy relating to businesses and analysis of regulatory activity relating to businesses, all for the purpose of promoting the interests of businessmen and businesswomen” (the '745 application).

The court held that a mark “need only describe a single feature or attribute” of a good or service in order to be descriptive, and that the TTAB's determination that a mark is merely descriptive is a factual finding reviewed for substantial evidence. Here, the court held that substantial evidence supported a finding of descriptiveness for both applications. The TTAB held, and the court held as conceded, that “national” means nationwide in scope and “chamber” is commonly used to refer to a chamber of commerce. Therefore, the NATIONAL CHAMBER mark was descriptive of services that are nationwide in scope and relate to chambers of commerce. The court also held that there was substantial evidence that both providing online directory information about local chambers of commerce, and promoting the interests of businessmen and businesswomen were services “within the scope of traditional chambers of commerce activities.”

Therefore, since there was substantial evidence that the NATIONAL CHAMBER mark was descriptive of at least one service from each application, the court held that both applications were properly refused for descriptiveness.

Inequitable Conduct Ruling Upheld Where District Court Made Separate Findings of Intent and Materiality

Although the Federal Circuit's opinion in Therasense Inc et al. v. Becton Dickinson & Co. raised the standard for which to find inequitable conduct, on April 9, 2012 the Federal Circuit affirmed a district court's pre-Therasense holding of inequitable conduct because the district court made separate findings of intent and materiality.

The two patents at issue in Aventis Pharma S.A. v. Hospira, Inc., No. 2011-1018, (the '561 and '512 patents) involved the administration of certain drugs known as taxanes that are administered through an intravenous infusion. Because taxanes have low solubility in water, they must be mixed with certain additives and solutions for the infusion. The patents-in-suit described certain additives that reduced allergic relations. The district court held that: 1) the patents were invalid for obviousness due to prior art described in two earlier references; and 2) it was inequitable conduct for the inventor to not bring those two earlier references to the PTO's attention.

On appeal, the Federal Circuit upheld the findings of obviousness and then moved on to the more interesting question of inequitable conduct. The district court's opinion had come down before the Federal Circuit ruled in Therasense. In Therasense, the court rejected the sliding-scale approach to proving inequitable conduct and held that “a defendant must establish both the materiality of the withheld reference and the applicant's intent to deceive the PTO.” In addition, the standard for materiality was “but-for” ' in other words, but-for the hiding of the reference at issue, the PTO would not have allowed a claim.

The court held that although the district court's opinion did not have the guidance of Therasense, its holding was still in line with that case because the court had made separate findings of intent and materiality, and it did not err in either finding. First, with regard to materiality, the court held that the references were by definition material where, as in this case, claims had been found to be invalid on the basis of the references. Second, with regard to intent, the court held that the district court's finding of intent was not clearly erroneous due to the extensive testimony from the inventor and experts regarding the inventor's reasoning for not disclosing the references to the PTO. Giving deference to the factual findings of the lower court, the Federal Circuit held that “we cannot conclude that the court's finding that [the inventor] withheld [an earlier reference] with the specific intent to deceive the PTO was clearly erroneous.”

Because the lower court's opinion and findings supported a holding of both intent and materiality, the Federal Circuit affirmed the district court's pre-Therasense finding of inequitable conduct.

Howard J. Shire is a partner and Aaron Johnson is an associate in the New York office of Kenyon & Kenyon LLP.