Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.
1. In a recent opinion from the Ninth Circuit Court of Appeals, which we previously wrote about (Takeaway No. 1), the Court affirmed the denial of a motion for preliminary injunction in a trademark case. The Court found no abuse of discretion by the district court, which found that the plaintiff had not shown a likelihood of success on the merits because it could not negate the defendant’s fair use defense (i.e., that it was using the asserted FREELANCER mark only in a descriptive sense, not as a trademark). The Court also found that the plaintiff had not submitted any evidence to support actual or likely irreparable harm should the injunction be denied. The takeaway here is not only that preliminary injunctive relief requires strong evidence, but also that descriptive uses of trademarks may being the alleged infringement within the fair use doctrine.
2. In a recent opinion on yet another set of mandamus petitions related to Judge Alan Albright failing to transfer patent cases out of the Western District of Texas, the Federal Circuit Court of Appeals ordered cases transferred to the Northern District of California. Aside from the Federal Circuit finding Judge Albright’s weighing of the transfer factors incorrectly, the more interesting aspect of this decision is that it rejected consideration of the plaintiffs’ venue manipulation efforts to require the case to stay in West Texas. The owners of the patent assigned rights to sue in limited geographic areas to other, ostensibly related entities. The plaintiffs’ argument was that the suit could not have been brought in the Northern District of California because the plaintiff was only injured where it had the right to use – in the Western District of Texas. The Federal Circuit gave this arrangement no weight based on the impressive efforts of the plaintiffs attempts to manipulate venue. The takeaway here is that the Federal Circuit does not like what is going on with Judge Albright’s accumulation of patent cases and is pressuring him in connection with transfer motions. Thus, while it may be desirable to litigate in West Texas (or East Texas), the Federal Circuit is wise to venue manipulation, and judges’ efforts to deny transfer motions on relatively thin grounds. So, Plaintiffs may not want to go overboard in efforts to secure a preferred venue on thin grounds.
3. In a recent decision out of the Eastern District of Pennsylvania, the Court denied a motion to dismiss trade secret misappropriation and related claims. In the case, the plaintiff, a fashion rental by mail company, had what it alleged were proprietary systems to run its business on the back end, and also to engage consumers about the available fashion rentals and such. The defendant, a larger fashion retailer, and the plaintiff began discussions about the defendant possibly investing in the plaintiff company. As a result, the plaintiff had the defendant sign an NDA, and confidential information about plaintiff’s systems were shared for evaluation of the deal. A substantial amount of interaction between the parties occurred. Several months later, the defendant retailer backed out of the discussions, and shortly thereafter, launched a business that competed with plaintiff and allegedly used the plaintiff’s proprietary technology. Among other claims, the plaintiff asserted claims under the Defend Trade Secrets Act (DTSA) and the Pennsylvania Uniform Trade Secrets Act (PUTSA). The defendant moved to dismiss under Rule 12(b)(6). The Court, however, denied defendant’s motion finding that plaintiff’s allegations of the nature of its trade secrets, the reasonable measures to protect the secrecy of those trade secrets (including the defendant itself signing an NDA), the independent value of the trade secret because of its being kept secret, and facts supporting the misappropriation. The Court noted the broad definitions of “trade secrets” under the DTSA and PUTSA, and noted the significant number of factual allegations to support the elements of the trade secret claims. In essence, the Court provide a roadmap for plausibly alleging trade secret misappropriation claims. Lastly, in what may be something of a practice pointer, the Court rejected the defendant’s citation of summary judgment cases to support its motion to dismiss. In short, the Court roundly denied defendant’s motion.