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In recent months, the U.S. Court of Appeals for the Federal Circuit has decided two cases that may indicate the Federal Circuit’s inclination to take a more expansive view of the “experimental use” exception to invalidity based on public use. The U.S. Code, 35 USC �102(b), provides for the invalidation of a patent if the invention was in “public use or sale in this country, more than one year prior to the date of the application for patent in the United States.” A patent will not be held invalid under �102(b) if this public use was experimental. On the trademark front, the 2nd U.S. Circuit Court of Appeals recently held that the original Cohiba cigar trademark had gone up in smoke, at least in the United States. Cohiba Cigars were introduced in 1968 and became the flagship brand of the Cuban cigars industry. Developed initially as a medium-bodied protocol cigar for presentation only by officials of the Cuban government, Cohiba cigars were marketed widely beginning in 1982. ‘BERNHARDT v. COLLEZIONE EUROPA’ In Bernhardt LLC v. Collezione Europa USA Inc. [FOOTNOTE 1], the Federal Circuit vacated the judgment of a lower court, which held various design patents owned by Bernhardt LLC invalid and not infringed. The lower court had determined that the patents were invalid for prior public use. Bernhardt’s patents were directed to six furniture designs allegedly infringed by its competitor, Collezione Europa USA Inc. Bernhardt sued Collezione for patent infringement. Collezione answered the allegation by denying infringement and filing a counterclaim for invalidity of four of the six asserted patents. The district court held that Collezione was not liable for infringement and that four of the patents were invalid under 35 USC �102(b) because the claimed subject matter had been in public use for more than a year before the patents’ filing date. At issue was Bernhardt’s participation in a private exhibition more than a year prior to the earliest filing date of the patents. At the exhibition, Bernhardt showcased new designs to its key customers and to the press. It tightly controlled access to the exhibition, and attendance was by invitation only. Attendees were escorted at all times by Bernhardt personnel, and the attendees had to show identification that was twice verified. Photography was strictly prohibited. While these strict measures were taken, attendees were under no legal obligation to maintain the confidentiality of the displayed furniture design. The Federal Circuit reversed the trial court’s decision because the court said it was an error to hold that lack of a confidentiality agreement is not dispositive on the issue of a prior public use under the statute. The trial court was required to look at the totality of the circumstances to determine whether Berhardt’s policies surrounding the exhibition comported with the policies that underlie the public use bar. The Federal Circuit vacated and remanded the trial court’s decision because the trial court focused on solely the lack of a confidentiality agreement. Regarding the issue of infringement, the Federal Circuit also held that the trial court erred by requiring Bernhardt to introduce expert witness testimony demonstrating that the accused Collezione furniture appropriated the point of novelty disclosed in Bernhardt’s design patents. Although Bernhardt had filed proposed factual findings that included contentions regarding the point of novelty of its patented designs, the trial court ignored this evidence and instead insisted that expert testimony was necessary for Bernhardt to make out its claim of infringement. Stating that it had never “unequivocally spoken to what minimum evidence a patentee must present to satisfy its burden under the points of novelty test,” the Federal Circuit held that a patentee must, at a minimum, introduce the design patent at issue, its prosecution history and its contentions as to the relevant points of novelty. The court said that a patentee is free to make points of novelty contentions in any appropriate way, including written statements identifying the points of novelty and how the accused design appropriates them. Since the trial court’s analysis focused on the lack of expert witness testimony, the Federal Circuit vacated the judgment of noninfringement and remanded for reconsideration of infringement in light of Bernhardt’s written points of novelty contentions. ‘LISLE CORP. v. A.J. MANUFACTURING CO.’ Less than five months after the Collezione decision, the Federal Circuit again took up the issue of public use in Lisle Corporation v. A.J. Manufacturing Co. [FOOTNOTE 2] In Lisle, the Federal Circuit affirmed the judgment of a district court that had found a patent owned by Lisle Corp. valid and infringed. Lisle’s patent was directed toward an inner rod tool used in servicing the rack and pinion steering control system found in automobiles. Lisle’s patented tool simplified the process of removing tie rods in servicing a car because it had the ability to use wrench discs of a variety of sizes. In 2002, Lisle filed an infringement suit against A.J. Manufacturing Co. due to A.J.’s sale of a similar tie rod tool. A.J. denied infringement and asserted invalidity. The district court granted summary judgment in favor of Lisle on the infringement issue and denied A.J’s motion for summary judgment of invalidity for indefiniteness or “impossibility.” A jury trial was then held on the single issue of whether Lisle’s patent was invalid on the ground of public use under 35 USC �102 (b). The jury found that the patent was not invalid on public use grounds. After the lower court denied A.J’s motion for judgment as a matter of law on the invalidity of Lisle’s patent, A.J. appealed. The Federal Circuit first addressed the issue of whether A.J’s tie rod tool infringed Lisle’s patent. In order to assess infringement, the court applied the two-step process of proper claim construction and then a comparison of the properly construed claims against the allegedly infringing article. The court first addressed the issue of whether the claim construction was correct. The Federal Circuit agreed, with a slight modification, with both of the lower court’s claim constructions. The Federal Circuit observed that the purpose of Lisle’s patent was to provide one tool that could be used on a variety of different tie rods and the patent’s “retainer” was part of that purpose. The specification had repeatedly referred to the “retainer” as a rotably affixed collar or ring, and A.J. argued that this was a claim limitation. The Federal Circuit disagreed. The court determined that the “retainer” facilitated the objective by permitting the body of the tool to engage and disengage wrench discs. Moreover, as the patent itself stated that the retainer’s configuration could be varied, the Federal Circuit refused to give the term “retainer” a narrower claim construction. After finding that A.J.’s product met Lisle’s patent limitation, the Federal Circuit affirmed the grant of summary judgment of literal infringement. The Federal Circuit then turned to whether Lisle’s patent was invalid on the ground of public use. A.J.’s primary argument was Lisle’s inability to show an experimental use defense because Lisle had shown little formal control over the mechanics to whom it had given the prototype. In 1989, Lisle delivered a prototype tool to four different automobile repair shops. Lisle did not dispute that the prototype tool would have fallen within the scope of the patent at issue. Lisle did not receive any payment and did not require any of the mechanics to enter into a formal confidentiality agreement. In 1992, over 30 months after the first prototype tool had been distributed, Lisle filed the application, which led to the patent at issue in the case. Noting that failure of Lisle’s experimental use defense would turn the delivery of the prototypes into evidence of public use, the court found that substantial evidence supported the jury findings in favor of Lisle. The Federal Circuit relied on the testimony of a Lisle engineer who stated that he and other employees contacted the mechanics who held the prototypes every two to four weeks to receive testing feedback and made modifications according to such feedback. Moreover, Lisle had a prior working relationship with the mechanics and held weekly meetings regarding the progress of the tie rod project. Lisle argued that the mechanics knew the prototype tool was given to them for experimental purposes. The Federal Circuit also noted that Lisle had not charged the mechanics for the use of the prototypes. Considering the evidence as a whole, the Federal Circuit agreed with Lisle that a reasonable jury could have found that Lisle had rebutted A.J.’s prima facie case of invalidity due to public use. A.J. argued that the jury instructions for invalidity should have required the patentee to present “convincing evidence” of experimental use. The jury instructions instead referred to “evidence” of experimental use. The Federal Circuit found harmless the district court’s failure to instruct the jury that Lisle was required to produce “evidence” rather than “convincing evidence” of experimental use as set forth in TP Laboratories Inc. v. Professional Positioners Inc. [FOOTNOTE 3] The court observed that, if a party challenging the validity of a patent presents a prima facie case of public use, “the patentee must come forward with ‘convincing evidence’ of experimental use to counter that showing.” However, the court stressed that the “convincing evidence” language in TP Laboratories did not “impose a burden of production comparable to the clear and convincing evidence required to invalidate a patent.” Thus, the Federal Circuit affirmed the district court’s refusal to grant A.J.’s motion for judgment as a matter of law and concluded that “convincing evidence” of experimental use had been presented. This case is significant because the patentee was successful in rebutting a claim of invalidity due to public use, even though the patentee had permitted members of the relevant public to access a prototype of its invention for several years and without any formal agreement of confidentiality. Moreover, unlike the Collezione case, the patentee had no control over who entered into the repair shops or on whose car the repairmen used the patented device. CUBA STRIPPED OF RIGHTS In Empresa Cubana Del Tabaco v. Culbro Corp., [FOOTNOTE 4] the 2nd Circuit struck down the Cuban government’s trademark rights to the country’s famous Cohiba cigar trademark in the U.S., citing the U.S. trade embargo against the Caribbean island nation. The Cuban Asset Control Regulations prevent Cuban entities from selling cigars in the United States. Empresa Cuban del Tabaco, a Cuban company, had argued that despite its inability to sell cigars in the United States, that it owned the Cohiba mark in the U.S. The district court held that Cubatabaco owned the United States trademark Cohiba under the “famous marks doctrine.” The mark had never been registered or used in the United States. However, the district court held that Cubatabaco’s Cohiba mark was sufficiently famous in the United States by the time General Cigar Co., a U.S. company, began to sell Cohiba cigars, so as to entitle the Cuban mark to protection. The district court enjoined General Cigar from using the Cohiba mark and gave the rights to the trademark to Cubatabaco. HISTORICAL BACKGROUND In 1969, Cubatabaco filed an application to register to Cohiba mark in Cuba. By 1978 Cubatabaco had registered its mark in 17 countries but not in the United States. In 1982 Cubatabaco began selling Cohiba cigars outside of Cuba. General Cigar first learned of the name “Cohiba” after executives read a Forbes magazine article stating that Cubatabaco intended to sell its Cohiba cigars outside of Cuba. General Cigar registered the Cohiba trademark with the U.S. Patent and Trademark Office in 1978. In January 1997, Cubatabaco commenced an action in the PTO to cancel General Cigar’s registration of the Cohiba mark. Later that year, Cubatabaco sued General Cigar, alleging numerous claims for various trademark and unfair competition violations as well as treaty violations. The court dismissed a variety of claims but granted judgment in favor of Cubatabaco against General Cigar on its claim for infringement. The court canceled General Cigar’s trademark registration for the Cohiba mark and permanently enjoined General Cigar from using the Cohiba mark. The district court invoked the common law “famous marks doctrine,” which holds that a party with a well-known mark at the time another party starts to use the mark has priority over the party using the mark. The court concluded that the Cuban Cohiba mark was sufficiently well-known in the United States and that Cubatabaco was entitled to protection. The district court found that General Cigar had infringed the Cohiba mark and permanently enjoined General Cigar from using the mark. The court also ordered General Cigar to deliver to Cubatabaco all goods and labels bearing the Cohiba mark. On appeal, General Cigar argued that the Embargo Regulations precluded Cubatabaco from acquiring rights in the Cohiba mark in the United States through the famous marks doctrine. Even though this argument had not been presented in the lower court, the 2nd Circuit addressed this issue because it implicated an issue of “significant public concern.” The 2nd Circuit first addressed the issue of trademark infringement. The 2nd Circuit said that General Cigar did not infringe the Cohiba trademark because acquisition of the mark by the famous marks doctrine is prohibited by the Embargo Regulations. The court observed that the Embargo Regulations prohibit a broad range of transactions involving property in which a Cuban entity has an interest. Exceptions to the transfer of property rights to a Cuban entity must be by general or specific license; otherwise it is barred. The court concluded that there had been a transfer of property rights to a Cuban entity for two reasons. First, “property” includes trademarks, and the transfer had the effect to “transfer” U.S. property to Cuba, notwithstanding the transfer was a legal transfer to a Cuban entity and not a physical transfer. The 2nd Circuit rejected Cubatabaco’s argument that “transfer” did not include the operation of law, because the court pointed to several other references in the Embargo Regulations that specifically permitted transfer of property by operation of law, such as intestate succession or marital status. After determining the transfer was barred by the Embargo Regulations, the 2nd Circuit turned to whether this transfer was allowed because there was a general or specific license thatallowed Cubatabaco to acquire rights to the U.S. Cohiba mark. The court could not identify a general license that would allow for the transfer of the mark through the famous marks doctrine. The 2nd Circuit further concluded that the specific license issued to Cubatabaco thatallowed it to sue in the United States did not permit acquisition of the mark via the famous marks doctrine. Thus, the 2nd Circuit reversed the district court’s finding of trademark infringement and granted the rights in the Cohiba mark back to General Cigar. This case is interesting because it creates a dichotomy whereby trademark rights may not be acquired through common law protection if it is transferred to a Cuban entity but may be acquired if the Cuban entity files an application with the PTO. ::::FOOTNOTES:::: FN1 386 F. 3d 1371 (Fed. Cir. 2004). FN2 No. 04-1275, 04-1346, 2005 WL 326634 (Fed. Cir. Feb. 11, 2005). FN3 724 F.2d 965, 971 (Fed. Cir. 1984) FN4 No. 04-2526, 04-3005, 2005 U.S. App. Lexis 3242 (2d Cir. Feb. 24, 2005).

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