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Another year, another Festoheadline. Two years ago in Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki a deeply split en banc U.S. Court of Appeals for the Federal Circuit held that whenever a patent claim is amended, the patent holder may not claim any range of equivalents for the amended element. In the most significant patent case of the year, the U.S. Supreme Court emphatically reversed the decision. The court affirmed its commitment to a robust doctrine of equivalents and rejected an absolute bar. The court ruled that a patentee must show that the amendment does not surrender the particular equivalent in question. That presumption of surrender would not apply, and infringement could be found, for example, “when a particular equivalent may have been unforeseeable,” when the application was filed, or when “the rationale underlying the amendment may bear no more than a tangential relation to the equivalent in question.” While there wasn’t much to recommend the absolute bar adopted by the Federal Circuit, the Supreme Court’s flexible standard will do little to clear up the confusion surrounding the doctrine of equivalents. Indeed, the en banc Federal Circuit recently ordered a new round of briefing in Festo, to consider whether the rebuttable presumption established by the high court is a question of fact to be determined at trial or instead a question of law. The high court considered another controversial issue — the jurisdiction of the Federal Circuit — in Holmes Group Inc. v. Vornado Air Circulation Systems Inc. Under federal law, the Federal Circuit has appellate jurisdiction in cases where original jurisdiction was based, in whole or in part on 28 U.S.C. 1338, the statute that gives district courts jurisdiction over patent claims. The Federal Circuit had interpreted the statute to confer jurisdiction even when a counterclaim, not the plaintiff’s affirmative claim, arises under the patent laws. The Supreme Court disagreed, holding that a patent counterclaim cannot confer jurisdiction on the Federal Circuit. Under this holding, appeals in cases with patent counterclaims will be decided outside of the Federal Circuit — a development welcomed by Justice John Paul Stevens, who remarked in a concurrence that “occasional decisions by courts with broader jurisdiction will provide an antidote to the risk that the specialized court may develop an institutional bias.” While Holmesis true to precedent, it will promote a race to the courthouse in cases in which the Federal Circuit differs with other circuits on nonpatent — and particularly antitrust — issues. In Johnson & Johnston Assoc. Inc. v. R.E. Service Co. Inc. , an en banc Federal Circuit again considered the doctrine of equivalents, holding that subject matter disclosed in the patent specification, but not made a part of the claims, is dedicated to the public, and may not be the basis of an infringement claim under the doctrine. The case illustrates the Federal Circuit’s continuing skepticism about the doctrine of equivalents. The Federal Circuit made news in the biotechnology world when a panel reversed on rehearing an opinion it had issued only three months before. In Enzo Biochem Inc. v. Gen-Probe Inc. the court held that deposit of biological material in a public facility may satisfy the written-description requirement of the Patent Act. The court remanded for a determination of whether the written specification, including information available from the deposits, adequately described each of the claims at issue. Kelly v. Arriba Soft Corp. considered questions of fair use on the Internet. In response to a query, Arriba’s visual search engine displays thumbnail and full-size images taken from other Web sites. Included among those images were photographs taken by plaintiff Leslie Kelly, which appear on Kelly’s Web site. The 9th U.S. Circuit Court of Appeals held that Arriba’s use of thumbnail images of Kelly’s photos was fair use. The use was transformative because the search engine “functions as a tool to help index and improve access to images on the Internet,” and the market value was not affected because the thumbnails are too crude to substitute for the full-scale images. Arriba’s display of full-size images, however, was not fair use, because it was not transformative and was likely to harm the market for Kelly’s work by reducing visits to his Web site and allowing free downloads. In Veeck v. Southern Bldg. Code Congress Int’l Inc. , the 14 judges of the en banc 5th U.S. Circuit Court of Appeals debated whether the Copyright Act prohibits copying of the building codes of Anna and Savoy, two small Texas towns. Like many local governments, the towns had adopted verbatim a model code published by the Southern Building Code Congress. Splitting 8-to-6, the court held that, once enacted into law, the codes lost their copyright protection, because “‘the law,’ whether articulated in judicial opinions or legislative acts or ordinances, is in the public domain and thus not amenable to copyright.” The court also found that, when adopted, the codes became facts exempt from copyright protection. Surprisingly, the court never considered whether the license agreement under which the codes were provided, which prohibits copying, is enforceable as a matter of contract law. An Illinois federal court handed the music industry another victory over a digital music service accused of copyright infringement in In re Aimster Copyright Litigation. The Aimster service used America Online’s Instant Messaging feature to allow its subscribers to exchange copyrighted music files with one another. Granting a preliminary injunction, the court held that the plaintiffs, a group including record companies and music publishers, had shown a likelihood of success on claims of contributory and vicarious copyright infringement, and that Aimster could not take advantage of the safe harbor provisions of the Digital Millennium Copyright Act that apply to Internet service providers. While the court stressed that it was not bound by the 9th Circuit’s rulings in A&M Records Inc. v. Napster Inc. (2001), it reached a similar result. In United States v. Elcom Ltd a/k/a Elcomsoft Co. Ltd., the Northern District of California sanctioned criminal prosecution of a Russian software company and one of its employees for violation of the anticircumvention provisions of the DMCA. The defendants were prosecuted for selling software that allows users to remove copying restrictions embedded in digital books. The court rejected a host of constitutional challenges, finding that the statute is not overbroad or vague. The court determined that the statute does not prevent fair use of copyrighted materials, but merely limits the technological means of exercising those rights. The decision opens the way for vigorous criminal enforcement of the DMCA. Playboy Enterprises failed in its attempt to prevent its 1981 Playmate of the Year, Terri Welles, from using Playboy’s trademarks on her Web site. In Playboy Enterprises Inc. v. Welles , the 9th Circuit held that Welles’ use of Playboy marks on her Web site — in headlines, banner advertisements and in metatags (keywords used by search engines to identify Web sites) — were proper. The court applied a three-part test for nominative use: that the product or service is not readily identifiable without use of the trademark; that only so much of the mark as is reasonably necessary to identify the product or service is used; and that the user do nothing to suggest sponsorship or endorsement by the trademark holder. Welles’ use of a Playboy mark as part of the background “wallpaper” of the Web site, however, did not satisfy this test and was not protected from a claim of infringement or dilution. In Karl Storz Endoscopy-America Inc. v. Surgical Technologies Inc. , the 9th Circuit considered when repair of a trademarked item constitutes trademark infringement. Storz, a maker of surgical endoscopes, sued firms that repair those instruments for hospitals that own the items. Reversing summary judgment for the defendant, the court held that repair is considered use in commerce of the mark (a jurisdictional requirement of the Lanham Act). Under this test, an owner is allowed to repair the item itself or to arrange for minor repairs by others, without infringing the mark. While this holding makes practical sense, it is difficult to square with the broad language of the Lanham Act, which deems a mark in use in commerce when goods are sold or transported in commerce. Barcamerica Int’l USA Trust v. Tyfield Importers Inc. illustrates the risks of naked licensing — licensing a trademark without adequate quality controls over the licensee. The 9th Circuit held that Barcamerica had abandoned its rights in a trademark for wine by failing to exercise even minimal supervision over a licensee’s production. Barcamerica had no contractual rights of inspection or supervision, had no organized testing program, and “failed to demonstrate any knowledge of, or reliance on, the actual quality controls” of the licensee. While the consequences of naked licensing are severe, it is easy to comply with the rule — the court indicated that the result might have been different had Barcamerica simply sampled the licensee’s product. The 9th Circuit considered the impact of the First Amendment on trademark issues in Mattel Inc. v. MCA Records Inc. , in which the owner of the Barbie trademark unsuccessfully challenged the mark’s use in “Barbie Girl,” a Top 40 song performed by the Danish band Aqua. Calling Barbie “not just a toy but a cultural icon,” the court found that the song “pokes fun at Barbie and the values that Aqua contends she represents.” Under the 2nd Circuit’s test in Rogers v. Grimaldi(1989), use of the mark in the song’s title was not infringement because the title had artistic relevance to the song’s content. A dilution claim was also dismissed, because the song qualified as noncommercial use under the exception to dilution liability in the Federal Trademark Dilution Act of 1995. Lewis R. Clayton is a litigation partner at New York’s Paul, Weiss, Rifkind, Wharton & Garrison and co-chair of the firm’s IP litigation group.

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