Articles Posted in US Court of Appeals for the Third Circuit

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Sköld coined the name “Restoraderm” for a proprietary drug-delivery formulation that he developed for potential use in skin-care products. He entered into a 2001 letter of intent with CollaGenex, a skin-care company, stating that “[a]ll trademarks associated with the drug delivery system … shall be applied for and registered in the name of CollaGenex and be the exclusive property of CollaGenex.” Their 2002 contract reiterated those provisions and stated that termination of the agreement would not affect any vested rights. With Sköld’s cooperation, CollaGenex applied to register the Restoraderm mark. Under a 2004 Agreement, Sköld transferred Restoraderm patent rights and goodwill to CollaGenex, without mentioning trademark rights. After Galderma bought CollaGenex it used Restoraderm as a brand name on products employing other technologies. In 2009, Galderma terminated the 2004 Agreement, asserting that it owned the trade name and that Sköld should not use the name. Sköld markets products based on the original Restoraderm technology that do not bear the Restoraderm mark. Galderma’s Restoraderm product line has enjoyed international success. Sköld sued, alleging trademark infringement, false advertising, unfair competition, breach of contract, and unjust enrichment. Only Sköld’s unjust enrichment claim was successful. The Third Circuit reversed in part, absolving Galderma of liability. The 2004 agreement, rather than voiding CollaGenex’s ownership of the mark by implication, confirmed that CollaGenex owned the Restoraderm mark. Galderma succeeded to those vested rights. View "Skold v. Galderma Laboratories L.P." on Justia Law

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The Photographers entered into representation agreements with Corbis, a photography agency, providing Corbis authority to sub-license their works to third parties on a non-exclusive, fixed-duration basis. The agreements include forum selection clauses and give Corbis sole authority to make and settle claims for unauthorized use of images. If Corbis declines to bring such a claim within 60 days, the Photographers may bring actions. Corbis sub-licensed their photographs to McGraw-Hill. The invoices included the name of the photographer responsible for the work and incorporated Corbis’ standard “Terms and Conditions,” which included mandatory, exclusive forum selection clauses. The Photographers each brought a copyright action against McGraw-Hill in the Eastern District of Pennsylvania. McGraw-Hill moved to transfer venue under 28 U.S.C. 1404(a), arguing that the disputes implicate the Corbis–McGraw-Hill agreements, under which the proper venue was the Southern District of New York. One judge denied the motion, reasoning that the claims are based purely on copyright law, so the action is not a “dispute regarding th[e] Agreement[s],” and not subject to the forum selection clauses. Another judge reasoned that the copyright claims depend upon the interpretation of the Corbis–McGraw-Hill agreements so that the photographer was subject to the forum selection clause as an intended third-party beneficiary. In consolidated actions, the Third Circuit concluded that the photographers are not bound because they are not intended beneficiaries of the agreements, nor are they closely related parties. Because the erring district court’s mistakes were not clear or indisputable, the court declined to grant mandamus relief. View "In re: McGraw-Hill Global Education Holdings, LLC" on Justia Law

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In 2005, Tanksley, a Philadelphia actor and producer, created a three-episode television pilot, Cream, for which he received a copyright. In 2015, Fox Television debuted a new series, Empire, from award-winning producer and director Lee Daniels. Tanksley sued, claiming that Empire infringed on his copyright of Cream. The district court found no substantial similarity between the two shows and dismissed. The Third Circuit affirmed. Superficial similarities notwithstanding, Cream and Empire are not substantially similar as a matter of law. The shared premise of the shows—an African-American, male record executive— is unprotectable. These characters fit squarely within the class of “prototypes” to which copyright protection has never extended. Considering the protectable elements of Cream, “no reasonable jury, properly instructed, could find that the two works are substantially similar.” View "Tanksley v. Daniels" on Justia Law

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Spireas earned $40 million in technology license royalties in 2007-2008s. Royalties paid under a license agreement are usually taxed as ordinary income at 35 percent but Spireas claimed capital gains treatment (15 percent) under 26 U.S.C. 1235(a), which applies to money received “in consideration of” “[a] transfer . . . of property consisting of all substantial rights to a patent.” The IRS disagreed and gave Spireas notice of a $5.8 million deficiency for the two tax years. The Tax Court and Third Circuit affirmed. To qualify for automatic capital-gains treatment, income must be paid in exchange for a “transfer of property” that consists of “all substantial rights” to a “patent.” Not every transfer of “rights” qualifies because the statute grants capital gains treatment only to transfers of property. Spireas’s original theory was that he reduced the formulation to practice in 2000, giving him the required property interest, and later assigned his interest. Spireas later abandoned that theory, arguing that he transferred his rights prospectively in 1998. Because that was two years before the invention of the formulation, Spireas’s second position cannot depend on the legal standard of reduction to actual practice to establish that he held a property right at the time of transfer. Spireas’s sole claim on appeal was, therefore, waived. View "Spireas v. Commissioner of Internal Revenue" on Justia Law

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Spireas earned $40 million in technology license royalties in 2007-2008s. Royalties paid under a license agreement are usually taxed as ordinary income at 35 percent but Spireas claimed capital gains treatment (15 percent) under 26 U.S.C. 1235(a), which applies to money received “in consideration of” “[a] transfer . . . of property consisting of all substantial rights to a patent.” The IRS disagreed and gave Spireas notice of a $5.8 million deficiency for the two tax years. The Tax Court and Third Circuit affirmed. To qualify for automatic capital-gains treatment, income must be paid in exchange for a “transfer of property” that consists of “all substantial rights” to a “patent.” Not every transfer of “rights” qualifies because the statute grants capital gains treatment only to transfers of property. Spireas’s original theory was that he reduced the formulation to practice in 2000, giving him the required property interest, and later assigned his interest. Spireas later abandoned that theory, arguing that he transferred his rights prospectively in 1998. Because that was two years before the invention of the formulation, Spireas’s second position cannot depend on the legal standard of reduction to actual practice to establish that he held a property right at the time of transfer. Spireas’s sole claim on appeal was, therefore, waived. View "Spireas v. Commissioner of Internal Revenue" on Justia Law

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Parks was founded in the 1950s and was the first African-American-owned company to be publicly traded on the NYSE. Parks engaged in radio and television advertising, using a well-known slogan, “More Parks Sausages, Mom, Please.” Though the PARKS brand had likely developed prominence sufficient for common law trademark protection before 1970, the name was not registered in the Patent and Trademark Office until 1970. In the early 2000s, Parks failed to renew the registration. Following the death of its owner, the company had fallen on hard times and had licensed the production and sale of its products. In 2014, Tyson, the owner of the BALL PARK brand, launched a premium frankfurter product called PARK’S FINEST. Parks sued, alleging false advertising and trademark infringement. The district court determined that the false advertising claim was a repetition of the trademark claim and that the PARKS mark was too weak to merit protection against Tyson’s use of PARK’S FINEST. The Third Circuit affirmed. The fact that the PARKS mark has existed for a long time and that it enjoyed secondary meaning half a century ago cannot overcome the factors against Parks. There is almost no direct-to-consumer advertising; Parks has a minuscule market share, and there is practically no record of actual confusion. View "Parks LLC v. Tyson Foods Inc" on Justia Law