Monthly Archives: June, 2014

Supreme Court Finds Lanham Act False Advertising Claim Not Preempted By FDCA

Today (June 12, 2014), the Supreme Court issued its opinion in POM Wonderful LLC v. Coca-Cola Co. The POM case raised the question of whether a private suit for false advertising under Section 43 of the Lanham Act (15 USC 1125) was preempted by the provisions of the federal Food, Drug, and Cosmetic Act (“FDCA”), which sets forth requirements for product labelling and advertising.

In POM, the Supreme Court found that false advertising claims under Section 43 are not preempted by the FDCA. In so holding, the Court found that there was no statutory text or established interpretive principle to support the contention that the FDCA precluded Lanham Act suits like the one brought by POM. Instead, the Court explained that the FDCA and the Lanham Act complemented each other in the federal regulation of misleading food and beverage labels. The FDCA statutory regime was designed primarily to protect the health and safety of the public at large. Unlike the Lanham Act, which relied in substantial part for its enforcement on private suits brought by injured competitors, the FDCA provided the United States with nearly exclusive enforcement authority. Neither the Lanham Act nor the FDCA, in express terms, prohibited or limited Lanham Act claims challenging labels that were regulated by the FDCA.

In the final analysis, the Supreme Court emphasized that the Lanham Act protected commercial interests against unfair competition, while the FDCA protected public health and safety, and therefore concluded there was no preemption.

The POM decision can be found here: http://www.supremecourt.gov/opinions/13pdf/12-761_6k47.pdf

Does Laches Remain A Viable Defense To Trademark Infringement Claims After The Supreme Court’s Petrella Decision?

Here’s another interesting post from our summer law clerk Ashley Franco:

On May 19, 2014, in Petrella v. MGM, the Supreme Court held that the equitable defense of laches is not a complete bar to a copyright infringement claim brought within the three-year statute of limitations provided under the Copyright Act. You can read more about the Petrella decision in our prior post about the case, which is found here: https://affinitylaw.wordpress.com/2014/05/19/us-supreme-court-holds-laches-not-a-complete-bar-to-copyright-infringement-claim/

The defense of laches often can be a strong defense in trademark infringement cases as well as copyright infringement cases. Is the defense of laches still a viable defense in trademark infringement cases after Petrella?

By way of definition, the doctrine of laches is an affirmative defense available to defendants who are sued for intellectual property infringement, when the plaintiff has unreasonably delayed in bringing his or her suit. The doctrine of laches consists of three elements (1) unreasonable lapse of time (2) neglect to assert a right or claim (3) to the detriment of another. If a defendant proves all three, then the plaintiff’s claim is barred by the doctrine of laches. The doctrine of laches can be a very valuable defense for the infringement defendant because although the plaintiff might have a strong case, he/she/it can be barred from relief if the plaintiff didn’t sue soon enough.

In Petrella, the Court held that the doctrine of laches was not be a complete bar to a copyright infringement claim otherwise filed within the statute of limitations because the Copyright Act provides an express statute of limitations (three years) for copyright infringement claims.

Trademark infringement claims are governed by the Lanham Act, which has no express statute of limitations for trademark infringement claims. On the contrary, courts usually analogize to state law limitations periods for trademark infringement claims.

Applying the reasoning in Petrella to trademark law, the doctrine of laches should still be a complete defense to belatedly-filed trademark infringement claims since there is no express statute of limitations in the Lanham Act. Indeed, in footnote 15 of the Petrella decision, the Supreme Court itself suggests that the Petrella decision is consistent with the Lanham Act. Consequently, laches still should be a strong defense to a trademark infringement claim filed by a plaintiff who unreasonably waited too long to file suit.

Supreme Court Clarifies Procedure For Litigation Of So-Called “Non-Core” Or “Stern” Claims In Bankruptcy Court

On June 9, 2014, the United States Supreme Court issued its eagerly awaited decision in Executive Benefits Insurance Agency v. Arkison (In Re Bellingham Insurance Agency), which is commonly referred to as “Bellingham.”

In Stern v. Marshall (a case arising from the infamous relationship between Anna Nicole Smith and J. Howard Marshall), the Supreme Court held that a bankruptcy court did not have jurisdiction to enter final judgment in so-called “non-core” proceedings, which very simply defined are cases that are related to a pending case but do not involve the restructuring of the affairs of the debtor (the so-called “core” proceedings). Examples of non-core proceedings are state law breach of contract claims, tort claims, and non-bankruptcy federal law claims.

The Stern decision created uncertainty because bankruptcy law requires that non-core proceedings be asserted in the bankruptcy case to which they are related. So the question was: How are non-core proceedings to be finally adjudicated when, under Stern, the bankruptcy court cannot enter final judgment in such cases?

The Bellingham decision answers this question. In Bellingham, the Supreme Court held that the procedure for bankruptcy courts to follow to adjudicate non-core claims is for the bankruptcy court to prepare proposed findings of fact and conclusions of law for the district judge. The district judge then will review the bankruptcy court’s proposed findings of fact and conclusions of law de novo and enter final judgment.

While ultimately more time consuming and likely more expensive than many would have liked, the procedure set forth by the Supreme Court in Bellingham now resolves the question left open in Stern as to what procedure the bankruptcy courts should follow to adjudicate non-core claims.

California Court Adopts Broad Definition Of What Is A Trade Secret

In the recent decision in Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc., the California Court of Appeal explored the outer limits of what constitutes a protectable trade secret, and found that trade secrets (at least in California) are broadly defined.

Among the issues in Altavion was to what extent ideas — as opposed to specific products, formulas, computer codes, etc. – can be protected as trade secrets. The Court of Appeal held that so long as it is protected from public disclosure (i.e. “secret”) and has independent economic value, even an idea can qualify as a trade secret. Consequently, the Altavion case shows that ideas, concepts and designs can be protectable trade secrets even if not general and not reduced to specific practice.

In Altavion, the Court of Appeal also rejected the idea that a generalized idea and/or invention could not be protected under trade secret law if it could be protected by a patent, noting that there is substantial overlap between trade secrets and patents and an idea, so long as it is kept secret, even if the idea also could be protected by a patent as well. Indeed, the court noted that more and more businesses rely on trade secret law to protect their intellectual property given the growing number of patents that are invalidated by the courts.

Finally, in Altavion, the Court of Appeal explained that the mere fact that some elements of a claimed trade secret were in the public domain will not necessarily defeat a trade secret claim. The court rejected an analysis of the individual elements of a claimed trade secret (such as often is done in copyright infringement litigation) and found instead that the combination of matters in the public domain still can qualify as a trade secret so long as the combination was secret and had independent economic value.

The Altavion case obviously is a must read for anyone interested in trade secret law.

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