Dog Toy Maker in the Doghouse (Again) for Tarnishing Jack Daniel’s Marks
Addressing this case for the third time, the US District Court for the District of Arizona found on remand that Jack Daniel’s was entitled to a permanent injunction after finding that VIP Products’ “Bad Spaniels” dog toy diluted Jack Daniel’s trademark and trade dress, despite VIP not having infringed those marks. VIP Products LLC v. Jack Daniel’s Properties Inc., Case No. CV-14-02057-PHX-SMM (D. Ariz. Jan. 21, 2025).
This case began more than 10 years ago when VIP filed a declaratory judgment action that its “Bad Spaniels” Silly Squeaker dog toy did not infringe or dilute Jack Daniel’s trademark rights. Jack Daniel’s counterclaimed, alleging trademark infringement and dilution. The district court initially entered a permanent injunction against VIP, finding that VIP’s “Bad Spaniels” toy violated and tarnished Jack Daniel’s trademarks and trade dress. VIP appealed, and the US Court of Appeals for the Ninth Circuit found that VIP’s use of “Bad Spaniels” was protected expressive speech under the First Amendment. On remand, the district court granted summary judgment to VIP on infringement and dilution. Jack Daniel’s appealed, but the Ninth Circuit affirmed the grant of summary judgment.
The Supreme Court granted certiorari and held that the heightened protection afforded by the First Amendment does not apply where the contested mark is used as a trademark. The Supreme Court therefore vacated the Ninth Circuit’s decision and remanded for further consideration. The Ninth Circuit remanded the case to the district court to determine whether VIP’s use of “Bad Spaniels” tarnished and/or infringed Jack Daniel’s trademarks and trade dress, consistent with the Supreme Court’s decision.
On remand, VIP attempted to challenge the constitutionality of the Lanham Act’s cause of action for dilution by tarnishment, arguing that “the statute amounts to unconstitutional viewpoint discrimination by enjoining the use of a mark that ‘harms the reputation’ of a famous mark.” Ultimately, the district court did not consider the merits of the constitutional challenge. The district court stated that although it was not precluded from considering VIP’s constitutional challenge, the issue was not properly before the court because VIP had not amended its pleadings to assert the challenge.
The district court assessed dilution by tarnishment using a three-factor analysis of fame, similarity, and reputational harm. With respect to fame, the parties did not dispute that the JACK DANIEL’S mark was famous. Nonetheless, VIP contended that Jack Daniel’s had not shown tarnishment of a famous mark by a “correlative junior mark.” Specifically, VIP argued that the famous JACK DANIEL’S mark correlated with VIP’s “Bad Spaniels,” and VIP’s use of “Old. No. 2” correlated with Jack Daniel’s mark “Old No. 7.” According to VIP, there could be no tarnishment because only the latter was offensive and Jack Daniel’s had not demonstrated that “Old. No. 7” was a famous mark. The district court disagreed with VIP’s correlative mark argument, stating, “it is VIP’s use of Jack Daniel’s marks – on a poop-themed dog chew toy – that Jack Daniel’s claims tarnish its trademarks, not ‘Bad Spaniels’ itself when taken in isolation.”
The district court had already found a high degree of similarity between the marks, which VIP did not contest because the “Bad Spaniels” toy had been “intentionally designed” to mimic Jack Daniel’s Tennessee Whiskey.
Addressing the third factor (reputational harm), the district court stated that “the relevant inquiry is how the use of the junior mark affects the consumer’s positive impressions of the famous mark.” Here, because “Jack Daniel’s produces a product intended for human consumption, association of Jack Daniel’s marks with something like dog feces is particularly detrimental,” even if “it is obviously true that ‘Bad Spaniels’ does not actually contain dog feces and consumers would not believe that it does.”
Although VIP’s “parodic intentions in creating ‘Bad Spaniels’ d[id] not exempt VIP from the [Trademark Dilution Revision Act’s] cause of action for dilution by tarnishment,” the district court noted that the parody was relevant to the likelihood of confusion analysis. When assessing a parody’s impact on the infringement analysis, the court first reviewed whether VIP’s “Bad Spaniels” product evoked Jack Daniel’s, and “whether it creates contrasts through humor adequate to dispel confusion as to the source of the parody.” Here, the court found that “Bad Spaniels” met both factors because it “both evokes and humorously contrasts with Jack Daniel’s marks such that it succeeds as a parody.”
Having established that “Bad Spaniels” qualified as a successful parody, the district court turned to the typical likelihood of confusion factors. The court noted that the finding of parody tipped some factors that would ordinarily favor the plaintiff in VIP’s favor: “Adjusting the Sleekcraft [likelihood of confusion] factors to account for parody neutralizes or flips three important factors – similarity of the marks, VIP’s intent, and strength of Jack Daniel’s mark.”
Here, the similarity of the marks favored VIP, as similarities were necessary for the parody to successfully evoke the Jack Daniel’s marks. Likewise, the strength of Jack Daniel’s marks weighed in VIP’s favor, as the “widespread recognition of the parodied trademark” allowed the parody to avoid consumer confusion. Finally, VIP’s intent in selecting the mark was a neutral factor, as VIP did not intend to create confusion or deceive consumers, but to create a parody product.
Although VIP prevailed on the issue of trademark infringement, the district court nonetheless found that a permanent injunction was appropriate here because “‘Bad Spaniels’ finds itself in the category of a non-confusion parody product that is nonetheless impermissible under the Lanham Act’s cause of action for tarnishment.”
Practice Note: It will be interesting to see whether and how this case continues. The ruling leaves open the possibility for a constitutional challenge to the Lanham Act’s cause of action for dilution by tarnishment. For now, it suggests that parodies that may be sheltered from infringement are still susceptible to dilution by tarnishment.
Does an Arbitration Agreement Require the Employer’s Signature? Read the Fine Print
The California Court of Appeal recently reminded employers in an unpublished (but nonetheless chastening) opinion of the importance of carefully drafting arbitration agreements. In Pich v. LaserAway, LLC et al, the court affirmed the trial court’s denial of the employer’s motion to compel a former employee’s representative wage-and-hour suit to arbitration because the arbitration agreement in question was signed only by the employee—not the employer.
While acknowledging that California courts have recognized that arbitration agreements bearing only the employee’s signature without a corresponding signature from the employer can still be valid, the Court found that, in this case, the plain text of the arbitration agreement required a signature from both parties to be effective.
For example, the arbitration agreement contained lines such as: “The Company and I understand and agree that, by signing this Agreement, we are expressly waiving any and all rights to a trial before a judge and/or a jury,” and “[t]he parties acknowledge and agree that each has read this agreement carefully and understand that by signing it, each is waiving all rights to a trial or hearing before a judge or jury of any and all disputes and claims subject to arbitration under this agreement.” (Italics added.)
Therefore, the Court found that the agreement by its own terms required a signature from the employer to be valid and, lacking one, never took effect and never became a valid agreement to arbitrate.
Although this decision is unpublished and therefore noncitable, it is still an important reminder to employers to think carefully when drafting arbitration agreements. As we have covered, California courts are often eager to find weak spots that can provide an excuse to deny arbitration.
Breaking: NLRB Drops Opposition to SpaceX’s Constitutionality Arguments
On February 3, 2025, the National Labor Relations Board (“NLRB” or the “Board”) filed a letter with the U.S. Court of Appeals for the Fifth Circuit on Space Exploration Technologies Corp. v. NLRB, Consolidated Case No. 24-50627, et al., indicating that it would not address constitutionality arguments raised in SpaceX’s brief. As reported here, those arguments were as follows:
The NLRB’s structure is unconstitutional in that it limits the removal of NLRB Administrative Law Judges (“ALJs”) and Board Members, and permits Board Members to exercise executive, legislative, and judicial power in the same administrative proceeding; and
The Board’s new expanded remedies violate employers’ Seventh Amendment right to a trial-by-jury.
The Board’s position follows President Trump’s firing of Board Member Gwynne A. Wilcox, which set up a constitutional battle over the President’s removal power under Section 3(a) of the NLRA. As discussed here, that move left the Board without a quorum, which the Board indicated prevents it from “review[ing] ALJ recommended findings and orders” in the underlying unfair labor practice proceeding at issue in the SpaceX case.
While neither constitutional argument raised by SpaceX is directly implicated by Member Wilcox’s firing, the Board indicated in its letter that “[i]n light of these executive actions, Board counsel is not in a position to address the Board-member-removability arguments raised in the government’s briefs.” However, Board counsel will still argue that the injunctions—halting the merits of the SpaceX case until the constitutionality arguments are resolved—should be reversed. It remains to be seen whether interested parties will take up the defense against these constitutionality arguments in the Board’s stead.
The DEI Whirlwind Continues – New Lawsuit Challenges Constitutionality of Anti-DEI Orders
On Monday, February 3, a group of organizations, including representatives of university diversity officers, sued President Trump and his administration, seeking to halt and declare unconstitutional two executive orders aimed at ending diversity, equity, and inclusion (DEI) programs. The lawsuit, filed in the U.S. District Court of the District of Maryland, challenges Trump’s orders as exceeding his constitutional authority and violating principals of equality.
These executive orders from the first week of Trump’s presidency target DEI programs within the federal government and institutions that receive federal funding. One challenged order aims to eliminate DEI offices and positions in the federal government. The other order seeks to deter publicly traded corporations, universities, and other large entities from supporting diversity initiatives.
The plaintiffs are the National Association of Diversity Officers in Higher Education, the American Association of University Professors, the Restaurant Opportunities Center United, and Baltimore’s mayor and city council. They argue that the executive orders undermine efforts to correct historical discrimination against women, racial minorities, and LGBTQ individuals.
In their complaint, the plaintiffs allege that these executive orders:
Exceed President Trump’s constitutional authority, infringing on the spending power, which the Constitution grants exclusively to Congress, by threatening economic sanctions for those who advocate equality and inclusion;
Violate the separation of powers enshrined in the Constitution;
Are unconstitutionally vague, meaning they fail to provide a person with fair notice of what is prohibited in violation of the Fifth Amendment; and
Violate the First Amendment Free Speech Clause by creating a chilling effect on expression or participation in anything that might be related to DEI.
The plaintiffs seek both preliminary and permanent injunctions to block the orders, as well as a declaration that both executive orders are unlawful and unconstitutional.
This lawsuit evidences ongoing debates over the role of DEI programs in addressing inequality. Those challenging the orders argue that DEI programs are necessary to correct long-standing disparities. Those in favor of eliminating DEI programs contend that such programs unfairly disadvantage other applicants. As this challenge to President Trump’s anti-DEI orders unfolds, it will have significant implications for the future of diversity efforts in both the public and private sectors.
Employers and universities alike should work with outside counsel to ensure they are compliant with applicable law and assess organizational risk where appropriate.
Eye-Catching: Biosimilars Injunction Prevails
Addressing a preliminary injunction in patent litigation related to the Biologics Price Competition and Innovation Act (BPCIA), the US Court of Appeals for the Federal Circuit upheld the district court’s grant of a preliminary injunction, finding that there was a proper exercise of personal jurisdiction and that no substantial question of invalidity had been raised for the patents at issue that would prevent the injunction from issuing. Regeneron Pharmaceuticals, Inc. v. Mylan Pharmaceuticals Inc., Case No. 24-1965 (Fed. Cir. Jan. 29, 2025) (Moore, C.J.; Reyna, Taranto, JJ.)
Regeneron holds a Biologics License Application for Eylea®, a therapeutic product containing aflibercept (a VEGF antagonist used in various treatments for eye diseases). Regeneron owns multiple patents related to its Eylea® product, including a patent directed to intravitreal injections using VEGF formulations. Mylan, Samsung Bioepis (SB), and other companies filed abbreviated Biologics License Applications (aBLAs) with the US Food and Drug Administration (FDA) seeking approval to market Eylea® biosimilars. Regeneron brought suit against these parties asserting infringement of its patent and filed a motion for a preliminary injunction.
The district court granted the preliminary injunction against SB, enjoining it from offering for sale or selling the subject of its aBLA without a license from Regeneron. SB appealed, arguing that:
The exercise of personal jurisdiction over it was improper.
There was a substantial question of invalidity of the patent under either obviousness-type double patenting or lack of adequate written description.
There was no causal nexus established.
The Federal Circuit upheld the exercise of personal jurisdiction on SB, finding that SB had minimum contacts with the state of West Virginia. SB is headquartered in South Korea and entered into a development and commercialization agreement with Biogen for a biosimilar to Eylea®, SB15, that gives SB continuing rights and responsibilities as the agreement is implemented. The Court found that SB did not have to distribute the product itself under the agreement for it to be subject to personal jurisdiction. Further, the Court found that SB’s aBLA and internal documentation indicated an intent to distribute SB15 US-wide, which was sufficient to establish intent to distribute the product in West Virginia.
The Federal Circuit also upheld the district court’s grant of the preliminary injunction. SB invoked another patent in the same family as the asserted patent that was directed to an intravitreal injection containing a VEGF trap as the reference patent for an obviousness-type double patenting theory. The Federal Circuit upheld the district court’s findings that the stability requirement, the “glycosylated” requirement, and the “vial” limitations in the claims of the asserted patent were all patentably distinct from the reference patent. The Court found that the stability requirement recited in the asserted patent was more specific than, and not inherent within, the reference patent. The Court further agreed that the reference patent embraced both non-glycosylated and glycosylated aflibercept, not only the glycosylated aflibercept contained in the asserted patent claims.
The Federal Circuit then addressed SB’s arguments that the specification lacked sufficient written description for the claimed glycosylation and stability requirements of the asserted patent. The Court rebuffed SB’s argument, finding that the specification described an embodiment with glycosylated aflibercept and crediting expert testimony that a person of ordinary skill in the art (POSA) would understand from the example that aflibercept could be glycosylated at those specific residues. The Court also disagreed with SB’s argument that the upper and lower bounds of the stability requirements were not described in the specification because a specification does not need to express the details of every embodiment of the invention, and credited expert testimony that a POSA would understand from the specification that those bounds would be included.
Finally, the Federal Circuit addressed SB’s argument that the district court erred in finding a causal nexus between SB’s infringement and Regeneron’s irreparable harm. The Court found no evidence that SB possessed or planned to commercialize a noninfringing product and found that the combination recited in the asserted claims (essentially the Eylea® product) was what drove consumer demand.
Rules Are Rules, Especially in Trademark Proceedings
The Commissioner for Trademarks recently issued a precedential decision terminating a reexamination proceeding for the registrant’s failure to respond within a statutory time period, where there was insufficient justification to waive the response requirement. In re Trigroup USA LLC, Reg. No. 7094794 (Jan. 24, 2025) (Gooder, Comm’r for Trademarks)
The Trademark Modernization Act of 2020 (TMA) created two new trademark proceedings: expungement and reexamination. The US Patent & Trademark Office (PTO) began accepting petitions for these proceedings in 2021. The reexamination proceeding must be filed within the first five years after the registration of a trademark and can only be filed against applications filed on the basis of use (§ 1(a)) or intent to use (§ 1(b)). The proceeding questions whether the mark was in use by a certain date:
In the case of a use-based application, the mark must have been in use on all the goods or services identified in the application by the filing date of the application.
In the case of an intent-to-use application, the mark must have been in use on all the goods or services identified in the application by either the date the Allegation of Use was filed or the deadline for filing the Statement of Use.
A party filing for reexamination must submit evidence that the mark was not in use by those relevant dates.
When the PTO institutes a reexamination proceeding, it issues an Office Action providing the registrant with the opportunity to rebut the claims of non-use. The rules require a response within three months of the Office Action issue date, and failure to respond results in the cancellation of the registration.
Here, the registrant did not respond to the Office Action, and the PTO cancelled the registration. The registrant then filed a Petition to the Director requesting reinstatement of the registration. Such a petition is required to include a response to the original Office Action. However, in this case, the registrant did not provide such a response, and on that basis the Commissioner found that the Petition should not be granted.
The Commissioner further found that even if the petition had included a complete response, it did not set forth sufficient facts to justify a late response. Trademark Rule 2.146(a)(5) permits the Director to waive any requirement of the rules that is not mandated by statute only “in an extraordinary situation, when justice requires, and no other party is injured.” 37 C.F.R. § 2.146(a)(5).
The registrant explained that it had an ongoing matter in China and the failure to respond was due to inadvertent error because it was dealing with the Chinese matter. The Commissioner found that this was not an extraordinary circumstance. The registrant also explained that cancellation of the registration would hinder its ongoing efforts in China and prevent it from manufacturing its products there. The Commissioner found that justice did not require the waiver of the PTO rules just because there would be harm to the registrant: “a party cannot be excused from the rule merely because the results in a particular case may be harsh.”
Practice Note: The Commissioner found that the registrant established neither an extraordinary circumstance nor that justice required a waiver of the rules to permit a late response and reinstate the registration. This is a lesson to practitioners to make sure that all responsive deadlines are met and to follow the rules and requirements because some mistakes are incurable.
California Climate Disclosure Laws Survive Significant Challenge
Judge Wright (C.D. Cal.) has significantly narrowed the Chamber of Commerce’s lawsuit challenging California’s climate disclosure laws. (These disclosure laws mandate disclosure of Scope 1, Scope 2, and Scope 3 greenhouse gas emissions for companies with over $1 billion in revenue, and the disclosure of climate-related financial risks for companies with over $500 million in revenue.) The Chamber of Commerce had filed a lawsuit challenging these laws on a number of grounds, including that California’s disclosure regime violated the supremacy clause and improperly applied extraterritorially–i.e., outside California. Both of these arguments were rejected by the federal district court.
Significantly, the Court rejected the Chamber of Commerce’s argument that a “law [] ‘aimed at stigmatizing’ and ‘shaming’ companies to ‘pressure[] them to lower their emissions’”–in other words, “a disclosure regime intended to regulate emissions through third-party actions”–constituted a “de facto regulatory scheme subject to preemption.” Further, the Court also held that the law survived a challenge that it improperly burdened interstate commerce by regulating extraterritorial conduct by holding that the Chamber of Commerce “fail[ed] to plausibly allege a significant burden on interstate commerce.” In other words, even though this decision was limited in scope–for example, certain claims could be re-filed as they were dismissed without prejudice–the Court nonetheless rejected the legal theories underpinning common challenges to state-level climate disclosure laws. (Also, certain claims were dismissed due to technical legal issues–e.g., the challenge to the mandatory disclosure of greenhouse gas emissions was dismissed as not yet being ripe for adjudication.) This decision may encourage other states to implement mandatory climate disclosure regimes similar to that enacted by California.
However, the challenge to California’s climate disclosure laws by the Chamber of Commerce remains unresolved. The State of California had not moved to dismiss the First Amendment challenge brought by the Chamber of Commerce–the court had previously rejected the Chamber of Commerce’s facial challenge to the law’s validity under the First Amendment–and so the Chamber of Commerce’s lawsuit can continue as it endeavors to construct a record to sustain its challenge based upon its argument that the First Amendment bars the climate disclosure laws as a form of compelled speech.
A US Chamber of Commerce challenge to California’s emissions reporting law was narrowed after a district judge said it failed to state a sufficient claim against a disclosure provision. The state’s climate-related financial risk disclosure requirement isn’t a regulatory scheme subject to preemption, the US District Court for the Central District of California said when it dismissed that claim with prejudice. That requirement, also known as SB 261, doesn’t discriminate against or sufficiently burden interstate commerce to support an extraterritoriality claim either, Judge Otis D. Wright II said, but he added the chamber could refile that claim. Claims against SB 253, California’s greenhouse emissions disclosure requirement, weren’t ripe, the court said, dismissing Supremacy Clause and extraterritoriality claims against it without prejudice. The state’s dismissal motion declined to address the chamber’s First Amendment argument.
news.bloomberglaw.com/…
Ninth Circuit Blocks Enforcement of California Social Media Addiction Law Pending Appeal
On January 28, 2025, the U.S. Court of Appeals of the Ninth Circuit temporarily enjoined enforcement of S.B. 976, the Protecting Our Kids from Social Media Addiction Act (“the Act”) in its entirety, pending an appeal in a case brought by NetChoice, a technology trade group. The Act was set to take effect January 1, 2025, which was extended to February 1, 2025 by a district court order. Our earlier post provides a summary of the Act’s requirements and restrictions. Under an expedited appeal schedule, the Ninth Circuit will hear arguments in this case in April 2025 and will not grant the parties briefing schedule extensions.
OPT OUT WOES: Albertson’s Sued in TCPA Class Action for Allegedly Failing to Honor Stop Request– And its Harbinger of Things to Come
April 11, 2025.
That’s the date the FCC’s new and incredibly dangerous TCPA revocation rules are set to take effect.
If you’re not aware of the new rule you need to watch this incredibly important webinar that breaks it down right now:
Even without the massive expansion of revocation scope in April, some companies are having a tough time with their revocation process.
For instance Albertson’s was just sued in a TCPA class action asserting it failed to honor a consumer opt out request.
A litigator named Jennifer Schofield claims she personally placed her number on the national DNC way back in 2006. Nonetheless, she contends Albertson’s began texting her in 2024 from shortcode 48687.
According to Schofield, she texted “stop” and received a response from Albertson’s confirming no further texts would be sent.
Yet she received another text.
Schofield again allegedly texted “STOP” and, once again, continued to receive texts.
Schofield contends she was annoyed and harassed and sued Albertson’s under the TCPA. She also hopes to represent two nationwide classes:
IDNC Class: All persons within the United States who, within thefour years prior to the filing of this lawsuit through the date ofclass certification, received two or more text messages within any12-month period, from or on behalf of Defendant, regardingDefendant’s goods or services, to said person’s residential cellulartelephone number, after communicating to Defendant that they didnot wish to receive text messages by replying to the messages witha “stop” or similar opt-out instruction.
DNC CLASS: All persons in the United States who, within thefour years prior to the filing of this action through the date of classcertification, (1) were sent more than one text message within any12-month period; (2) where the person’s telephone number hadbeen listed on the National Do Not Call Registry for at least thirtydays; (3) regarding Defendant’s property, goods, and/or services;(4) to said person’s residential cellular telephone number; (5) aftermaking a request to Defendant to not receive further text messagesby replying with a “stop” or similar opt-out instruction in responseto Defendant’s text message(s).
Obviously we don’t know whether the allegations have any merit–the case was just filed– but we will keep an eye on it.
Full complaint here: Albertsons Complaint
New PTAB Guidance on Enabling Requirement Under § 102 of the AIA and Construction of Chemical Compound
Synopsis: In a recently issued final written decision, the Patent Trial and Appeal Board (the “Board”) found all challenged claims of U.S. Patent No.11,572,334 (“the ’334 patent”) unpatentable.1 The Board’s decision centered on two issues: (1) when does a prior art patent need to be enabled under § 102 of the America Invents Act (“AIA”) to qualify as an anticipatory reference and (2) as a matter of claim construction, is the claim phrase “the compound of Formula (III) is (Z)-endoxifen” limited to the free base form of endoxifen or does it also encompass other forms of endoxifen (i.e., salts, crystalline forms, solvates, etc.).
On the first point, the Board held that under the current AIA § 102, an anticipation reference must be enabling as of the earliest possible effective filing date of the challenged patent. That is a departure from the Federal Circuit’s precedent under pre-AIA § 102(b), which requires anticipation references to be enabling one year before the effective filing date of the challenged patent. The Board also clarified several procedural aspects related to enablement challenges of anticipation references, including that it is a Patent Owner’s initial burden to prove that an anticipation reference is not enabling, and the types of evidence that a Petitioner may rely on to rebut an enablement challenge.
Turning to claim construction, the Board initially construed the claim phrase “the compound of Formula (III) is (Z)-endoxifen” as encompassing various forms of (Z)-endoxifen in its institution decision. At trial, however, the Board requested additional briefing on the issue, and in its final written decision reversed course and construed the phrase as being limited to only the free base form of (Z)-endoxifen.
The Board’s holdings on these issues offer important guidance to both patent practitioners generally and Hatch-Waxman attorneys specifically.
I. Background
Atossa Therapeutics, Inc. (“Atossa” or “Patent Owner”) owns the ’334 patent, which is titled “Methods for Making and Using Endoxifen.” ’334 patent at Title. The ’334 patent explains that endoxifen is an active metabolite of a drug known as tamoxifen. Id., 2:36-38. “Tamoxifen is a selective estrogen receptor modulator that is used for the treatment of women with endocrine responsive breast cancer.” Id., 1:63-66.
The ’334 patent also explains that there are two isomers of endoxifen: (Z)-endoxifen and (E)-endoxifen. Id., 3:1-44. Of these two isomers, “[i]t is widely accepted that (Z)-endoxifen is the main active metabolite responsible for the clinical efficacy of tamoxifen.” Id., 2:36-38.
With those two points in mind, the ’334 patent discloses “industrially scalable methods of making (Z)-endoxifen or a salt thereof, crystalline forms of endoxif[e]n, and compositions comprising them” as well as “methods for treating hormone-dependent breast and hormone-dependent reproductive tract disorders.” Id., Abstract. The ’334 patent issued with 22 claims, including the following independent claims:
An oral formulation comprising an endoxifen composition encapsulated in an enteric capsule, wherein the endoxifen composition comprises a compound of Formula (III):
wherein at least 90% by weight of the compound of Formula (III) is (Z)-endoxifen.
A method of delivering (Z)-endoxifen to a subject, the method comprising administering to the subject an oral formulation comprising an endoxifen composition encapsulated in an enteric capsule, wherein the endoxifen composition comprises a compound of Formula (III):
wherein at least 90% by weight of the compound of Formula (III) is (Z)-endoxifen.
Id., claims 1 and 15.
Intas Pharmaceuticals Ltd. (“Intas” or “Petitioner”) markets endoxifen under the brand name Zonalta® in India where it is approved “[f]or the acute treatment of manic episodes with or without mixed features of Bipolar I disorder.”2 After the ’334 patent issued on February 7, 2023, Intas filed a petition requesting post-grant review (“PGR”) of all issued claims of the ’334 patent based on one anticipation ground and five separate obviousness grounds. PGR2023-00043, Paper 37 at 6. All six grounds relied on U.S. Patent No. 9,333,190 (“Ahmad”) as a prior art reference. Id.
II. The Board’s Final Written Decision
Anticipation references under AIA § 102 must be enabled as of the effective filing date of the challenged patent
The Board began its decision by noting, among other things, that because the ’334 patent’s earliest possible effective filing date is September 11, 2017, it is subject to the provisions of the AIA. Id. at 7. Likewise, the provisions of AIA § 102 were applied to Petitioner’s anticipation and obviousness grounds. Id., 15-20. That became highly relevant to the Board’s decision because although it has long been a requirement that “[a]n anticipatory reference must also be enabling,” there was “no controlling case law specifically addressing the timeframe of enablement of an anticipatory reference under the current AIA § 102.” Id., 15, 18-19.
The Board explained that “under pre-AIA § 102(b), the Federal Circuit held that the relevant timeframe for determining whether prior art reference is enabling is one year before the effective filing date of the patent-in-suit.” Id., 18 (citing Bristol-Myers Squibb Co. v. Ben Venue Lab’ys, Inc., 246 F.3d 1368, 1379 (Fed. Cir. 2001); In re Samour, 571 F.2d 559, 562–63 (CCPA 1978)). In other words, under pre-AIA § 102(b), a prior art reference must be enabling to a person of ordinary skill in the art (“POSA”) at least one year before the priority date of the challenged patent. That requirement was borne out of the one-year bar date of pre-AIA § 102(b). Id., 19.
Turning to the requirements of AIA § 102, the Board held that “[a]lthough AIA § 102(b)(1) provides for a one-year grace period under certain circumstances, that exception does not apply to the facts of this case.” Id. As a result, the Board agreed with Petitioner and “determine[d] that Ahmad need only be enabling prior to the earliest possible effective filing date of the ’334 Patent, i.e., on September 11, 2017.” Id.
Finally, Patent Owner argued that “[p]ost-effective filing date evidence offered to illuminate the post-effective filing date state of the art,” and to establish that an anticipatory reference is enabled, “is improper.” Id. (quoting Patent Owner Sur-reply at 12). The Board disagreed and clarified that under Bristol-Myers Squibb, “the Federal Circuit expressly held that ‘[e]nablement of an anticipatory reference may be demonstrated by a later reference.’” Id. (quoting 246 F.3d at 1379 (citing Donohue, 766 F.2d at 532; Samour, 571 F.2d at 562)). And the Board made clear that it is “Patent Owner’s burden to establish by a preponderance of the evidence that [an anticipatory reference] is not enabling,” consistent with the Federal Circuit’s prior holdings on that issue. Id., 17.
Application of the Board’s AIA § 102 enablement holding to Petitioner’s anticipation ground
Applying its new rule to Petitioner’s grounds, the Board found the claims anticipated. Notably, Patent Owner did not contest the fact that the prior art reference (Ahmad) disclosed every limitation of the challenged claims of the ’334 patent. Id., 20. Rather, Patent Owner argued that Ahmad did not enable the claimed invention as required by AIA § 102. Id. “Specifically, Patent Owner assert[ed] that Ahmad [did] not teach a POSA how to achieve 90% pure (Z)-endoxifen, as required by each of the claims.” Id. “Petitioner argue[d] that Ahmad [was] enabling because using 90% pure (Z)-endoxifen was in the public’s possession, as shown” by other references. Id., 20-21. The Board agreed with Petitioner and held that because Ahmad sufficiently enabled the claims, Patent Owner failed to carry its burden to prove that Ahmad was not enabling. Id., 21, 31.
The Board distinguished this case from two Federal Circuit cases relied on by Patent Owner: Forest Lab’ys, Inc. v. Ivax Pharms., Inc., 501 F.3d 1263 (Fed. Cir. 2007) and Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075 (Fed. Cir. 2008). In those cases, the Federal Circuit held that the prior art references did not enable a POSA to make substantially pure isomers (or enantiomers) of the drug compounds recited in the challenged patents. 501 F.3d at 1263; 550 F.3d at 1075. Here, however, the Board found that Ahmad, along with other references in the prior art, taught a POSA how to separate the (E)- and (Z)-isomers of endoxifen, and thus how to make a composition having 90 % pure (Z)-endoxifen. PGR2023-00043, Paper 37 at 21-31.
The Board also rejected Patent Owner’s argument that because “Ahmad does not contain any working examples of the synthetic method that result in a 90% pure (Z)-endoxifen,” the reference is not enabled. Id., 23. Rather, “as Petitioner note[d], the Federal Circuit does not require actual performance to be enabling.” Id. (citing Bristol-Myers, 246 F.3d at 1379). In addition, the Board agreed with Petitioner that two other references demonstrated that a POSA would have been enabled by Ahmad as of the effective filing date. Id., 20-25. While some of those references were published after Ahmad, Petitioner was allowed to rely on those references to demonstrate what was known by a POSA as of that effective filing date. Id.
The Board also rejected several additional technical and scientific arguments that Patent Owner presented, and briefly addressed the Wands factors. Id., 29-31. The Board concluded that “Patent Owner has not shown by a preponderance of the evidence that a POSA reading Ahmad would have been unable to make 90% pure (Z)-endoxifen.” Id., 29. Thus, because Ahmad enabled a POSA to make 90% pure (Z)-endoxifen (i.e., the free base form of (Z)-endoxifen), and because it disclosed every limitation of the challenged claims, those claims were found unpatentable as anticipated by Ahmad.
The claim phrase “the compound of Formula (III) is (Z)-endoxifen” construed as limited to the free base form of (Z)-endoxifen
Another important issue addressed in the Board’s decision was how to construe the claim phrase “the compound of Formula (III) is (Z)-endoxifen.” PGR2023-00043, Paper 37 at 10-13. The Board initially “construed sua sponte” this claim phrase in its Institution Decision because they “disagreed with Patent Owner’s argument that the phrase is limited to the free base form of (Z)-endoxifen.” Id., 10. Instead, the Board initially determined “that for purposes of the Institution Decision, the construction of ‘the compound of Formula (III) is (Z)-endoxifen’ includes the polymorphic, salt, free base, co-crystal and solvate forms of (Z)-endoxifen.” Id.
After post-trial briefing on this issue, requested by the Board “[d]uring trial,” the Board reversed course and held that “the intrinsic evidence supports construing the limitation ‘the compound of Formula (III) is (Z)-endoxifen’ to be limited to the (Z)-endoxifen free base form and excludes the salt and solvate forms.” Id., 10, 13. While the Board acknowledged that the specification broadly defines “the compound of Formula (III)” to encompass various forms of endoxifen (i.e., polymorphic forms, salts, etc.), “[t]he claim further narrows ‘the compound of formula (III)’ to ‘(Z)-endoxifen.’” Id., 12. And the Board explained that the question was “whether ‘(Z)-endoxifen’ should be construed broadly to include the free base and salt form or if it should be limited to its free base form.” Id.
The Board reasoned that “[w]hen read as a whole … the Specification consistently identifies (Z)-endoxifen salts as separate from (Z)-endoxifen.” Id., 13. Specifically, “the ’334 Patent refers to ‘(Z)-endoxifen and salts thereof,’ suggesting that references to ‘(Z)-endoxifen’ alone do not include the salt forms unless expressly identified as such.” Id. And the Board noted that the specification’s focus was on “preparations of endoxifen free base that are … at least 90% (Z)-endoxifen free base.” Id., 13 (emphasis added) (quoting ’334 patent at 83:43-45).
In view of “the language of the claims and the Specification as a whole,” the Board determined “that the intrinsic evidence supports construing the limitation ‘the compound of Formula (III) is (Z)-endoxifen’ to be limited to the (Z)-endoxifen free base form and excludes the salt and solvate forms.” Id.
III. Conclusion and Takeaways
The Board’s decision provides important guidance on several issues, most notably that a prior art patent must be enabling as of the earliest effective filing date of the challenged patent to serve as an anticipatory reference under AIA § 102. It is worth noting, however, that the Board implied that there may be situations under AIA § 102(b)(1), which “provides for a one-year grace period under certain circumstances,” in which an anticipatory reference may need to be enabled before the effective filing date of the challenged patent. Id., 19. Relatedly, the Board’s decision reaffirms that if a patent owner challenges whether an anticipation reference is enabled, the petitioner may rely on other references, including later-published references, to overcome the patent owner’s enablement challenge.
This decision also highlights the importance of claim construction in the context of patents that claim chemical compounds by structure and/or name. Indeed, whether a claim is limited to only the free base form of a compound (as was the case here) or if it also encompasses other forms of the compound (i.e., salts, polymorphs, etc.) can be critically important to both infringement and invalidity issues in litigation. While the Board determined that the ’334 patent was limited to the free base form of (Z)-endoxifen, it was admittedly a close call. Both patent prosecutors and litigators should review the Board’s decision here when considering whether a claimed chemical compound is limited to a particular form or if it more broadly encompasses multiple forms of the compound.
[1] Intas Pharms. Ltd. v. Atossa Therapeutics, Inc., PGR2023-00043, Paper 37 (PTAB Jan. 29, 2025)
[2] List of new drugs approved in the year 2019 till date. Central Drugs Standard Control Organization, Government of India. Available at: https:// cdsco.gov.in/opencms/resources/UploadCDSCOWeb/2018/ UploadApprovalNewDrugs/newdrugaapproaldec2019.pdf.
Is Pareto Optimality The Answer For Controlling Stockholder Transactions?
Yesterday’s post concerned the Delaware Supreme Court’s decision that the business judgment rule applied to TripAdvisor’s decision to reincorporate in Nevada. Maffei v. Palkon, 2025 WL 384054 (Del. Feb. 4, 2025). This holding reversed Vice Chancellor J. Travis Laster’s earlier ruling that the entire fairness doctrine applied because the reincorporation involved a non ratable benefit in a controlling stockholder transaction. The Supreme Court essentially decided that heightened scrutiny was not warranted because there was no material non ratable benefit.
Professor Stephen Bainbridge promptly posted a detailed summary and analysis of the decision. Among other things, Professor Bainbridge proposes that “the Delaware Courts should narrow the class of cases under which entire fairness is the standard of review by adopting a reinvigorated Sinclair Oil [Sinclair Oil Corp. v. Levien, 280 A.2d 717, 723 (Del. 1971)] threshold test under which entire fairness is triggered only when the controller receives a benefit at the expense of and to the exclusion of the minority”.
I have also been thinking that Delaware’s focus on whether a benefit is non ratable is incomplete. Implicit in this view is that transactions are always a zero sum game in which the controller’s gain is the minority’s loss. However, not every transaction is a zero sum game. Why should a controller’s decision be subject to heightened review when nothing is taken from the minority? My view is that corporate law should maximize total benefits to stockholders. Thus, a move towards pareto optimality is in society’s interests if someone can be made better off and no one is made worse off.
Seventh Circuit Clarifies Plaintiffs’ Evidentiary Burden in FLSA Cases
In Osborn v. JAB Management Services, Inc., No. 24-1573 (January 22, 2025), the U.S. Court of Appeals for the Seventh Circuit affirmed a district court’s entry of summary judgment in favor of an employer on a former employee’s overtime claims under the Fair Labor Standards Act (FLSA), finding her testimony regarding the hours she worked insufficient to raise an issue of material fact.
The Seventh Circuit’s decision clarifies the evidence nonexempt employees must present to create a jury question as to whether they worked uncompensated overtime.
Quick Hits
The FLSA requires employers to pay nonexempt employees—including those paid on a salary basis—overtime for all hours worked beyond forty in any workweek.
The district court, applying a “just and reasonable inference” standard, found that an employee who had not tracked her time worked over forty hours and relied on her testimony of the duties performed to support her overtime claims had not presented evidence sufficient to overcome an order of summary judgment for the employer.
On appeal, the Seventh Circuit affirmed summary judgment for the employer, stating that Federal Rule of Civil Procedure 56 governs summary judgment, and the more lenient “just and reasonable inference” standard for calculating damages applies after a plaintiff meets the initial burden of establishing liability.
Background
Tara Osborn was a longtime employee of JAB Management Services, which contracts with other entities to provide prison healthcare. At the time of her termination of employment, Osborn was a technical support specialist providing on-call support regarding inmate medical records. The technical support specialist is a fully remote, salaried nonexempt position. Osborn was free to design her own schedule, although typical business hours ran from 8:00 a.m. to 5:00 p.m.
Osborn admitted she did not track any time she worked over forty hours. JAB Management did not track her overtime either. Still, Osborn claimed to have worked an average of ten hours per day and fifteen hours of overtime per week. When asked to describe her work, Osborn stated she “had to work outside of normal business hours to take support calls, respond to emails, drive to client sites, and ‘patch servers,’” including irregular weekend work.
The Seventh Circuit noted that toward the end of her employment with JAB Management, Osborn’s supervisors stated she “failed to explain what she was working on throughout the day, yet she complained about having too much to do.” As a result, some of her tasks were reassigned to her coworkers, while Osborn’s supervisors coached her to correct her performance. When Osborn’s performance did not improve, JAB Management terminated her employment.
Osborn then sued JAB Management, alleging the company had failed to pay her overtime compensation as required by the FLSA. JAB Management moved for summary judgment. The district court, applying a “just and reasonable inference” standard, granted JAB Management’s motion, holding that Osborn had failed to “prove by a just and reasonable inference the amount and extent of work she performed.” Osborn appealed to the Seventh Circuit.
The Seventh Circuit’s Analysis
The Seventh Circuit first clarified that the burden of proof at summary judgment (governed by Federal Rule of Civil Procedure 56) differs from the “just and reasonable difference” standard, stating, “The just and reasonable inference standard ‘applies to damages questions only after an employee has met the initial burden to establish liability.’”
To establish liability, an employee who claims that he or she was not compensated for overtime in violation of the FLSA must present evidence of the hours worked, which can be established through the employee’s testimony. To survive summary judgment, the employee’s evidence must place the employee’s version of events beyond the level of mere speculation or conjecture. As the Seventh Circuit noted, “While employees need not describe their schedules ‘with perfect accuracy,’ they should be able to offer ‘testimony coherently describ[ing]’ their typical workweeks.”
When pressed for details on what she did for ten hours per day, Osborn responded vaguely that she worked on “[c]ustomer issues, the database, the reports, it is very labor intensive.” While Osborn claimed to have coworkers who could testify regarding her workload, she failed to offer their sworn testimony. The court found her claim of consistently working fifteen hours of overtime per week to be inconsistent with her reports of call volume declining over time and significant changes to her duties.
Citing Sixth and Eighth Circuit decisions in support, the Seventh Circuit held, “[T]he evidence [Osborn] has produced fails to provide us with even a general sense of her typical workweek.”
“If this claim survived summary judgment,” the court continued, “then any FLSA claim in which the employee vaguely describes her schedule as having exceeded forty hours per week would reach a jury.”
Key Takeaways
JAB Management clarifies the evidentiary burden employees must meet at the summary judgment stage of proceedings when alleging failures to pay overtime compensation under the FLSA. Like other circuits, the Seventh Circuit has held that conclusory estimates about an employee’s average workweek, without more, do not permit a trier of fact to conclude an employee worked overtime. Under the court’s holding, nonexempt employees claiming unpaid overtime have a burden of producing at least some admissible evidence of their specific overtime hours worked and the duties they allegedly performed during those hours.