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Thryv, Inc. v. Click-to-Call Technologies, LP

PATENT – Decided: April 20, 2020

Holding: A patent owner cannot obtain judicial review of a Patent Trial and Appeal Board decision that 35 U.S.C. § 315(b)’s time bar did not prohibit the institution of an inter partes review.

Under 35 U.S.C. § 315(b), a petition for inter partes review is time-barred if “filed more than 1 year after the date on which the petitioner…is served with a complaint alleging infringement of the patent.”  Under 35 U.S.C. § 314(d), the "determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”   

Respondent Click-to-Call Technologies filed a patent infringement action against petitioner Thryv, and Thryv filed an IPR petition with the PTAB.  Because of an earlier voluntarily dismissed patent infringement lawsuit involving the same patent and the parties’ predecessors, the respondent challenged the petition as time-barred under 35 U.S.C. § 315(b).  Rejecting Click-to-Call’s time bar argument, the PTAB issued a final written decision finding each challenged claim unpatentable. The Federal Circuit initially ruled it lacked jurisdiction over the appeal under section 314(d), but the Supreme Court summarily vacated and remanded that decision after its 2016 decision in Cuozzo Speed Technologies, LLC v. Lee.  The Federal Circuit, sitting en banc, then decided a case in which it held it had jurisdiction over appeals like Click-to-Call’s.  Returning to Click-to-Call’s appeal and again ruling en banc, the Federal Circuit issued a divided (7-2) opinion finding the IPR petition was time-barred and instructing the PTAB to dismiss it.

In a 7-2 decision delivered by Justice Ruth Bader Ginsburg, the Supreme Court reversed the Federal Circuit’s threshold ruling that it had jurisdiction over Click-to-Call’s appeal.  The Court held instead that section 314(d) barred review of the PTAB’s application of the time bar. Relying on Cuozzo, the Court posited that section 314(d) bars review of matters “‘closely tied to the application and interpretation of statutes related to’ the institution decision,” including the application of section 315(b).  Justice Neil Gorsuch, joined by Justice Sonia Sotomayor, dissented, proffering a narrower reading of section 314(d).  The dissent would interpret the nonappealable “determination by the Director . . . under this section” to refer solely to the Director’s determination under section 314(a), ie, whether the petition demonstrated a reasonable likelihood of success on at least one claim, and not to the procedural bar in 315(b).

Proponents of the outcome in Thryv argue this result is appropriate in view of Congress’s intent in passing the America Invents Act to provide a speedy mechanism for the Patent Office to revisit patent validity.  Other commentators argue the decision improperly insulates judicial review of the agency’s procedural findings on institution.  Justice Gorsuch’s dissent expressed concern about the result “carr[ying] us another step down the road of ceding core judicial powers to agency officials and leaving the disposition of private rights and liberties to bureaucratic mercy.”  This debate warrants attention in view of the pending petitions challenging the constitutionality of inter partes review in Collabo Innovations v. Sony and Arthrex v. Smith & Nephew.

Lucky Brands Dungarees, Inc. v. Marcel Fashion Grp.

TRADEMARK – Decided: May 14, 2020

Holding: Federal preclusion principles did not bar defendant from raising defenses new defenses in subsequent litigation because the later action challenged new conduct.

Is “defense preclusion” a valid application of res judicata? Res judicata comprises two doctrines: (1) claim preclusion, which bars successive litigation of the same claim by the same parties; and (2) issue preclusion, which bars successive litigation of an issue of fact or law actually litigated and resolved in a prior decision.

In 2001, Marcel Fashion sued Lucky Brands Dungarees for infringement of Marcel’s registered trademark, GET LUCKY.  The parties settled in 2003. In 2005, after Marcel licensed GET LUCKY to others in the clothing industry, Lucky sued Marcel and others for unfair competition and infringement of Lucky’s marks, and Marcel counterclaimed that Lucky continued to infringe GET LUCKY. Lucky filed a motion to dismiss the counterclaim as resolved by the 2003 settlement and the court denied the motion without prejudice. After a jury found Lucky had infringed, the parties jointly entered into a 2010 final order and judgment.  In 2011, Marcel again sued Lucky for continued infringement, and the district court dismissed for claim preclusion in view of the 2003 settlement agreement.  The Second Circuit vacated and remanded, finding the final order and judgment did not cover subsequent infringement.  On remand, Lucky moved to dismiss and Marcel argued Lucky was prevented from arguing that the 2003 settlement prevented Marcel’s suit.  The district court granted Lucky’s motion to dismiss, finding no defense preclusion. A different Second Circuit panel vacated and remanded, finding Lucky was barred by defense preclusion for failing to adjudicate the settlement defense in the 2005 litigation.

In a unanimous opinion by Justice Sotomayor, the Court clarified that “defense preclusion” is not a standalone doctrine of res judicata, but instead “must, at a minimum, satisfy the strictures of” claim and issue preclusion.  Since the 2011 action “involved different marks, different legal theories, and different conduct—occurring at different times,” claim preclusion did not bar Lucky from asserting its settlement agreement defense in the 2011 action.   And the parties agreed that issue preclusion did not apply.  Thus, the Second Circuit’s decision barring Lucky’s settlement agreement defense

Important to practitioners, the Court declined to find “defense preclusion” is an independent doctrine of res judicata, rejecting Marcel’s argument that defenses may be precluded in the context of judgment enforcement, collateral attack on a judgment, or subsequent suits related to the validity of bonds.  Going forward, parties who wish to advance a res judicata argument to bar a defense should ground that defense in the principles of claim and issue preclusion.

Romag Fasteners, Inc. v. Fossil, Inc., et al.

TRADEMARK – Decision: April 23, 2020

Decision: Under 15 U.S.C. § 1117(a) of the Lanham Act, willful infringement is not a prerequisite for an award of an infringer’s profits for a violation of Section 43(a), 15 U.S.C. § 1125(a).

The Lanham Act entitles a plaintiff to recover a defendant’s profits “subject to the principles of equity” for “a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title.” 15 U.S.C. § 1117(a). Section 1125(a) creates a federal cause of action for false representations regarding the origin, endorsement, or association of goods through the use of another’s mark; 1125(c) was later added to create an action for trademark dilution.

The jury in a patent and trademark suit filed by Romag against Fossil returned a verdict finding trademark infringement under 1125(a) and awarded lost profits to Romag, among other remedies. However, the jury did not find willful infringement, which the district court ruled was required for an award of profits under Second Circuit precedent interpreting 1125(a).  The court thus struck the jury’s profit award.  The Federal Circuit affirmed.

In a unanimous opinion by Justice Gorsuch, the Court found the plain statutory language of section 1117(a) does not require willful infringement for profits under section 1125(a).  While willfulness is explicitly required to seek profits on a dilution claim under section 1125(c), the Lanham Act places no similar precondition on 1125(a) or (d) and carefully tailors remedies to a party’s intent in other sections.

For a more in-depth analysis of this decision and its impact, see this alert by Gina Durham and Michael Geller of DLA Piper’s Trademark, Copyright and Media practice.