TOP 10 IP CASES OF 2002

1. Festo Corp. v. Shoketsu Kinzoku Kogyo
After a split U.S. Court of Appeals ruled that an amended patent claim disallows the patent holder from claiming a range of equivalents for the amended part, the U.S. Supreme Court decisively reversed the decision. In doing so, the high court upheld the doctrine of equivalents* by stating that a patentee may show that the amendment does not surrender the particular equivalent in question. The ruling establishes a flexible standard that still does little to clear up the confusion surrounding the doctrine of equivalents. The Federal Circuit recently ordered a new round of briefing for the case to consider whether the presumption established by the high court is a question of fact, which should be determined at trial, or a question of law. *The Doctrine of Equivalents holds that something which falls outside the literal scope of a patent claim may be found to be an infringement of that claim. It can thus be considered "equivalent" to the patented method or structure.

2. Johnson & Johnston Assoc. Inc. v. R.E. Service Co. Inc.
In this case, the doctrine of equivalents was called into question by a Federal Circuit which held that subject matter disclosed in a patent specification, but not made a part of the claims, is dedicated to the public, and as such may not be the basis of an infringement claim under the doctrine of equivalents. The case illustrates the Federal Circuit's continuing skepticism about the doctrine of equivalents.

3. U.S. v. Elcomsoft Co. Ltd.
The Northern District of California upheld the criminal prosecution of a Russian software company and one of its employees for violation of the anti-circumvention provisions of the DMCA. Elcomsoft was prosecuted for selling software that allows users to remove copying restrictions embedded in digital books. The court rejected a range of constitutional challenges brought by Elcomsoft in deciding that the statute in question is not overly broad or vague. The court determined that the statute does not prevent fair use of copyrighted materials, but merely limits the technological means of exercising that use. The decision opens the way for vigorous criminal enforcement of the DMCA.

4. Kelly v. Arriba Soft Corp.
This case brought up the question of what is "fair use" on the Internet. Arriba developed a visual search engine that responds to queries by displaying thumbnail and full-size images taken from other websites. Plaintiff Leslie Kelly claimed that photos from her website were illegally displayed by the Arriba search engine. The Ninth U.S. Circuit Court of Appeals held that Arriba's use of thumbnail images of Kelly's photos was fair use because they were used in a transformative context, which means that the software helps to index and improve access to images on the Internet. The market value of the photos 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 considered fair use, because it was not transformative and was likely to harm the market for Kelly's work by reducing visits to her website and allowing free downloads.

5. Aimster Copyright Litigation
In a victory for the music industry, an Illinois federal court ruled that Aimster, an Internet digital music service, was guilty of copyright infringement. Aimster used America Online's Instant Messaging feature to allow subscribers to exchange copyrighted music files with one another. Granting a preliminary injunction, the court held that the plaintiffs, a group of record companies and music publishers, had presented valid claims of contributory and vicarious copyright infringement, and that Aimster could not take cover under the "safe harbor" provisions that apply to Internet service providers under the Digital Millennium Copyright Act. While the court stressed that it was not bound by the Ninth Circuit's rulings in A&M Records Inc. v. Napster Inc. (2001), it reached a similar decision.

6. Karl Storz Endoscopy-American Inc. v. Surgical Technologies Inc.
Can the repair of a trademarked item constitute trademark infringement? This was the issue presented before the Ninth Circuit Court. Storz, a maker of surgical endoscopes, sued firms that repair those instruments which are owned by hospitals. The court reversed the summary judgment for the defendant, stating that, in the realm of commerce, repair is considered use (this is 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 view makes practical sense, it is difficult to reconcile with the broad language of the Lanham Act, which states that a trademark is used when goods are sold or transported in commerce.

7. Barcamerica Int'l USA Trust v. Tyfield Importers Inc.
This case illustrated the risks of unsupervised licensing in which adequate quality controls are not applied to licensee. The Ninth Circuit held that Barcamerica abandoned its trademark rights for its wine by failing to exercise even minimal supervision over a licensee's production. According to the court, Barcamerica had no contractual rights of inspection or supervision, 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 this type of "naked" licensing are severe, it is quite easy to comply with the rule. The court indicated that the decision might well have been different had Barcamerica simply sampled the licensee's product.

8. Veeck v. Southern Bldg. Code Congress Int'l Inc.
The Fifth U.S. Circuit Court of Appeals debated whether the Copyright Act prohibits copying of building codes. Anna and Savoy, two small towns in Texas, adopted a model building code published by the Southern Building Code Congress. The court held that building codes, once enacted into law, lose their copyright protection. The reasoning was what "the law," whether articulated in judicial opinions or legislative acts or ordinances, is in the public domain and thus, not subject to copyright. The court also found that building codes, when adopted, became facts exempt from copyright protection.

9. Mattel Inc. v. MCA Records Inc.
In this clash of First Amendment rights and trademark issues, the Ninth Circuit Court considered if Mattel, the well-known toy maker and owner of the Barbie trademark, could successfully challenge the trademark's use in "Barbie Girl," a Top 40 song performed by the Danish band Aqua. In the song "Barbie Girl," the band parodies the world of Barbie. The court ruled that Barbie is not just a toy but a cultural icon, and can thus be the object of parody of the values she represents. A dilution claim was also dismissed on the grounds that the song qualified as a non-commercial use under the exception to dilution liability in the Federal Trademark Dilution Act of 1995.

10. Playboy Enterprises Inc. v. Welles
Playboy Enterprises failed in its attempt to prevent its 1981 Playmate of the Year, Terri Welles, from using their trademarks on her website. The Ninth Circuit held that Welles' use of Playboy marks on her Web site was proper. The court applied a three-part test for nominative use: 1) The product or service must not be readily identifiable without use of the trademark, 2) only so much of the mark as is reasonably necessary to identify the product or service is used, and 3) the user must not 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.