IP Law Daily Manufacturer entitled to declaration of non-infringement of competitor’s trade dress, but antitrust claims barred
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Tuesday, November 7, 2017

Manufacturer entitled to declaration of non-infringement of competitor’s trade dress, but antitrust claims barred

By Mark Engstrom, J.D.

In cross-appeals of a federal district court’s dismissal of a lawsuit involving the alleged copying of design molds used for the manufacture of "fiberglass utility bodies" in trucks, the U.S. Court of Appeals for the Federal Circuit has found that truck-body manufacturer Industrial Models Inc. was entitled to a declaratory judgment of non-infringement of the defendants’ trade dress, but the court also found that the Noerr-Pennington doctrine immunized defendants SNF Inc., BrandFX, and BrandFX Holdings (collectively, the "SNF entities") from antitrust liability. Because SNF had expressly threatened to sue Industrial Models for patent infringement, the Federal Circuit had jurisdiction over the parties’ appeal, which was transferred from the U.S. Court of Appeals in New Orleans (Industrial Models, Inc. v. SNF, Inc., November 7, 2017, Wallach, E.).

After SNF voluntarily dismissed its state court action against Industrial Models (the "Texas lawsuit") for trade dress infringement and unfair competition, Industrial Models sued the SNF entities in federal court, asserting antitrust claims and seeking a declaratory judgment of non-infringement of the defendants’ patent, copyright, and trade dress rights in manufacturing molds used for "fiberglass utility bodies" in trucks. The federal suit was filed in response to a cease-and-desist letter that Industrial Models had received from SNF, which asserted that the molds in Industrial Models’ possession had been "splashed and built from BrandFX products and designs and infringe on our trade dress, our copyrights and our patents."

Jurisdiction. According to the Federal Circuit, SNF had expressly threatened to sue Industrial Models for patent infringement. Although SNF had subsequently assigned its patent rights to BFX, its infringement threat was never withdrawn. Because the patent claim fell under the patent statute and was not wholly frivolous, the Federal Circuit concluded that the Fifth Circuit’s decision to transfer the case was "at least plausible." Accordingly, jurisdiction under 28 U.S.C. §1295(a)(1) was sufficiently established.

The Federal Circuit also found that the district court possessed jurisdiction under 28 U.S.C §2201(a). Industrial Models had devoted substantial resources to its utility mold business, the court explained, and SNF had sent cease-and-desist letters that threatened an imminent lawsuit for patent, copyright, and trade dress infringement. In addition, SNF had brought a state court action for trade dress infringement. Finally, each SNF entity had refused to sign a covenant not to sue, and each had maintained their litigation positions for nearly a year before filing a motion to dismiss. In the court’s view, those actions were sufficient to satisfy the case or controversy requirements of Article III.

Antitrust claims. Industrial Models asserted claims under sections 1 and 2 of the Sherman Act, but the district court found that the Noerr-Pennington doctrine, which allowed parties to petition the government for certain actions without facing antitrust scrutiny, immunized the SNF entities.

On appeal, Industrial Models argued that the sham litigation exception to the Noerr-Pennington doctrine was applicable in this case because "[t]he facts set forth in the Complaint clearly and robustly allege that [the SNF entities] engaged in objectively baseless litigation threats and actual litigation." The Federal Circuit disagreed.

Industrial Models failed to show that any of the alleged acts related to the Texas lawsuit were objectively baseless. Moreover, unlike other cases that found the sham litigation exception applicable, the SNF entities had not engaged in a pattern of baseless, repetitive claims.

With respect to patent and copyright, the complaint simply alleged that, before the Texas lawsuit was filed, SNF issued two statements in letters to Industrial Models. In the first letter, SNF stated that the molds at issue infringed its trade dress, copyrights, and patents. In the second letter—a cease-and-desist demand—SNF stated that "BrandFX owns valuable patent and trade dress rights in the molds." None of the allegations included a clear threat of litigation with respect to patent or copyright infringement, however, and the Texas lawsuit did not include any claims of patent or copyright infringement. Without specific threats of litigation, SNF’s "isolated statements" were insufficient to support an antitrust claim, the court explained, even if the statements were objectively unreasonable.

For those reasons, the Federal Circuit affirmed the district court’s dismissal of the antitrust claims.

Trade dress claims. The SNF entities challenged the district court’s grant of summary judgment, to Industrial Models, for a declaration of non-infringement of their trade dress. In the Federal Circuit’s view, the district court had correctly ruled that the SNF entities failed to identify anything more than the "overall shape, profile and appearance" of the utility bodies as their trade dress.

SNF did not present any evidence regarding functionality beyond the "bare assertion" by BFX’s Vice President that the claimed features were "aesthetic," the Federal Circuit explained, but that assertion could not defeat the presumption of functionality. The lack of evidence regarding functionality was sufficient, by itself, to grant summary judgment to Industrial Models, but the SNF entities also conceded that they failed to provide sufficient evidence of a nexus or likelihood of confusion between the claimed molds and purportedly infringing molds.

For those reasons, the Federal Circuit affirmed the district court’s grant of summary judgment to Industrial Models for a declaration that Industrial Models did not infringe the defendants’ trade dress.

Attorney fees. The district court found that the case was exceptional and awarded $239,408 in attorney fees to Industrial Models on its claims for a declaratory judgment. The court failed, however, to specify the amount of fees that were separately attributable to the patent, copyright, and trade dress claims. The Federal Circuit concluded that the Industrial Models was entitled to attorney fees on the trade dress claims, which constituted the bulk of the defendants’ conduct, but not the patent or copyright claims. In the court’s view, the defendants’ conduct in responding to the declaratory judgment claims for patent and copyright non-infringement was "not unreasonable." The court thus vacated the district court’s grant of attorney fees to the extent that the fee award covered the patent and copyright claims. In addition, the case was remanded with instructions to calculate attorney fees under 15 U.S.C. §1117(a) alone.

The case is Nos. 2017-1172 and 2017-1173.

Attorneys: Eric Van Campen Jansson (Jansson, Munger, McKinley & Kirby, Ltd.) for Industrial Models, Inc. Michael D. Anderson (Kelly, Hart & Hallman, LLP) for SNF Inc., BrandFX Holdings LLC, and BrandFX LLC, d/b/a BrandFX.

Companies: Industrial Models, Inc.; SNF, Inc.; BrandFX Holdings, LLC; BrandFX LLC, d/b/a BrandFX

MainStory: TopStory Copyright Patent Trademark FedCirNews

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