Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham. Here's what's cooking today:

• Some reaction to Thursday's Supreme Court ruling on "defense preclusion" and trademarks.

• Roku and Hulu say a pandemic shouldn't be grounds for putting "crown jewel" source code on the web.

• There's no topping the Ninth Circuit when it comes to eclectic IP decisions.

As always, you can email me your feedback and follow me on Twitter.

Justice Sonia Sotomayor. (Photo: Jason Doiy/ALM)

 

Supreme Court: Preclusion and Trademarks Don't Mix

The Supreme Court issued its opinion Thursday on "defense preclusion" in the trademark case Lucky Brand Dungarees v. Marcel Fashions Group. I have a writeup here.

The short version is that Lucky Brand Dungarees isn't precluded from raising a defense it could have raised 15 years ago, but didn't, in another action by Marcel. That's in part because the 2005 case involved the "Get Lucky" mark, whereas the current case involves the "Lucky Brand" mark. Kirkland & Ellis partner Dale Cendali had the winning argument for petitioner Lucky Brand Dungarees. Justice Sonia Sotomayor authored the unanimous opinion.

Here's some of the reaction I'm hearing from all of you about the decision:

➤ Finnegan Henderson Farabow Garrett & Dunner partner Naresh Kilaru was struck by Sotomayor's cautionary note that claim preclusion presents particular challenges in the trademark context. Marks are always evolving over time, and so are the items accused of infringing them. "Here, the differences were not minor," Kilaru says. "But the takeaway people might have is that claim preclusion might never apply."

➤ Debevoise & Plimpton counsel Megan Bannigan had a similar observation but with the opposite takeaway: "The Court rightfully recognized in its unanimous opinion that the two suits at issue were 'grounded on different conduct, involving different marks, occurring at different times' and thus did not 'share a common nucleus of operative facts' to warrant preclusion in this circumstance," she wrote. "Given the complex facts and long history of this case, we don't expect to see a significant impact on general trademark litigation going forward."

➤ Christian Liedtke of Acuminis PC came out somewhere in between. "Just like with many actual two party battles, the benefit of today's decision for the (civil litigation) community as a whole is limited to say the least," he says. "As a footnote of today's unanimous decision authored by Justice Sotomayor makes clear: 'Here, however, this Court need not determine when (if ever) applying claim preclusion to defenses may be appropriate, because a necessary predicate—identity of claims—is lacking.' [Emphasis added]"

➤ Brinks Gilson & Lione partner Andrew Avsec says the court stuck with traditional principles of res judicata and did not adopt the Second Circuit's "defense preclusion" test. "Therefore, trademark litigation plaintiffs must appreciate that asserting new claims will open the door for defendants to assert new defenses," he says. "Defendants in trademark litigation should likewise view the assertion of new claims as an opportunity to reassess their defenses, even if those defenses may have been previously available."

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Left to right, Paul Hastings partner Yar Chaikovsky and Ropes & Gray partner Andrew Thomases.

 

Roku: Don't Put Our 'Crown Jewel' on the Web

COVID-19 is wreaking havoc on the scheduling of patent trials. Courts from Texas to California have set firm dates for jury trials to begin in the next six weeks. But we all know that little in life is firm right now.

The pandemic is disrupting pretrial proceedings as well. For one example, Canon and Roku are locked in a battle in California and Texas over whether Roku must provide its operating system source code for Canon to review remotely, rather than on a secured computer disconnected from the internet.

Roku is getting amicus support from Hulu, which says that "California-based technology companies" are concerned about exposing "their highly sensitive and valuable source code to the vulnerabilities inherent in remote inspection."

Canon is suing TCL Electronics Holdings, a manufacturer of Roku TVs, in the Eastern District of Texas. Canon's Virginia-based expert witness has been reviewing Roku source code at the Alexandria offices of Roku outside counsel Oblon, McClelland, Maier & Neustadt. Roku had a courier hand-deliver a laptop containing the code from California to Virginia in April, so the expert could review it there in person. But Canon says its expert feels increasingly uneasy about the safety implications of hanging out in Oblon's offices, possibly in violation of Virginia's stay-at-home order.

Then on April 20 U.S. District Judge Rodney Gilstrap issued a standing order on pretrial procedures during the pandemic. The judge found that in-person source code review "is unduly hazardous, and in some cases impossible, during the COVID-19 crisis." His order invites parties to "submit creative proposals" that will allow for review "while protecting the security of the source code—which is highly sensitive and valuable information—as best as possible under the circumstances."

Canon moved a week later to modify the protective order in the case. It proposes that Roku provide remote access to the code via VPN or other secure connection. Canon can set up a camera to send real-time images of the expert, so that if he were to try to download software or take pictures of the code, Roku could instantly disconnect the remote connection, Canon says.

"Roku's unsupported security objection thus rings hollow," wrote Yar Chaikovsky and a team of Paul Hastings attorneys representing Canon, in their April 28 motion.

Roku, which is also represented by Ropes & Gray, is asking U.S. Magistrate Judge Joseph Spero of the Northern District of California to quash the subpoena. Roku's OS source code is the "crown jewel" of the company's $13.5 billion business, a team led by partner Andrew Thomases wrote in a May 4 motion. "Loss or misuse of that source code, whether advertent or accidental, would be devastating to Roku, and could be devastating to its partners" such as Netflix and Hulu.

Hulu shares the concern. There's no way for a company to know if an expert's personal computer is free from malware that could provide unauthorized access, O'Melveny & Myers partner Brett Williamson writes in Hulu's amicus brief. That's why the Northern District of California's Model Protective Order for Patent Cases specifies that "source code shall be made available for inspection on a secured computer in a secured room without Internet access or network access to other computers," according to Williamson.

Chaikovsky argues for Canon that Gilstrap should make this call—that Roku shouldn't get "two bites of the apple." He notes that "at least one other court" has prevailed on parties to re-think in-person review of source code during the pandemic.

That was U.S. District Judge William Alsup of the Northern District of California.

 

 

Ninth Circuit Dreams on Copyright Fees

When it comes to eclectic IP decisions, you just can't beat the Ninth Circuit. On Wednesday the court made new law on attorneys fees in copyright abandonment cases, in a case involving a famous TV preacher, his widow, and a Georgia minister who created an infringing website to "stick it to the devil."

You can read my breakdown of Doc's Dream v. Dolores Press here.

That's all from Skilled in the Art this week. I'll see you all again next Friday.