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Bar News - June 15, 2016


Intellectual Property Law: SCOTUS to Review Clothing Copyrights and Laches Defense

By:

The US Supreme Court on May 2, 2016, granted cert in two intellectual property cases that will both be heard and decided next term.

In Star Athletica v. Varsity Brands, the Supreme Court will consider whether clothing designs can be protected under copyright law. The question to be decided in Star Athletica is how to determine whether a feature or design that is part of a “useful article,” such as clothing or furniture, is original enough to gain its own copyright protection. In other words, where does the functional aspect of cheerleading apparel end and original, creative design begin? It’s a question the petitioners argue is “the single most vexing, unresolved question in all of copyright.”

Under US copyright law, courts have generally held that clothing designs are functional and ineligible for copyright protection. Most fashion contains elements that are both functional and creative, but only non-functional original, creative designs are generally protectable under copyright law.

The US Copyright Office initially refused to register Varsity Brands’ designs for its designs of stripes, chevrons and color blocks on its cheerleading apparel. However, Varsity later prevailed in getting some of its designs approved for registration with the US Copyright Office.

The brouhaha began when Varsity Brands, the world’s largest cheerleading apparel company, says that its rival, Star Athletica, copied their proprietary designs, which consisted of colorful chevron patterns and stripes. Varsity then sued Star Athletica for copyright infringement. Star Athletica countered that Varsity’s copyrights were invalid.

A federal district court ruled for Star Athletica and rejected Varsity’s claim, finding that the copyright covered design features such as chevrons, stripes, and patterns, but those design features could not be separated from the cheerleader apparel and thus not protectable.

However, last year, the US Court of Appeals for the Sixth Circuit ruled in favor of Varsity and found its clothing and designs were not simply functional and were entitled to copyright protection.

Currently, there are at least 10 different tests used by lower courts around the country to determine how to separate copyrightable designs from the rest of a useful article. Given the patchwork of conflicting tests for conceptual separability, Star Athletica appealed to the US Supreme Court. In asking the Supreme Court to take its case, Star Athletica is hoping the court will help to clarify and provide some uniformity in the law as to when a component feature of a useful article is entitled to copyright protection.

Although the Supreme Court is to decide the question of whether creative aspects of clothing are protected under copyright law, the potential impact could have far broader implications, not only for the apparel industry, but also for other industries, such as textiles, furniture and home goods, which use graphic designs that can have both functional and distinctive ornamental aspects.

SCA Hygiene Products v. First Quality Baby Products

In the second intellectual property case, SCA Hygiene Products v. First Quality Baby Products, the Supreme Court will consider whether the equitable defense of laches can be invoked to bar recovery of damages in patent infringement lawsuits.

In agreeing to hear SCA, the Supreme Court is essentially stepping back into the ring after its 2014 decision that knocked out the defense of laches in the context of copyright cases in Petrella v. Metro-Goldwyn-Mayer Inc., which involved the film Raging Bull. In Petrella, the Supreme Court ruled that the doctrine of laches could not be invoked to bar a copyright infringement claim for the recovery of damages that was brought within the Copyright Act’s three-year statute of limitations.

In light of its decision in Petrella, the Supreme Court in SCA must confront the question of whether laches is still a defense to patent infringement. The Supreme Court’s decision in Petrella is contrary to the precedent of the Federal Circuit for patent cases, which holds that laches can bar damages incurred prior to the commencement of a suit, but not injunctive relief.

SCA involves a dispute pertaining to patents for adult incontinence products and whether a patent holder who waits too long to defend its rights loses the option to challenge the alleged infringement of its patent rights.

SCA Hygiene Products is a Swedish company that produces and sells adult incontinence products under the “Tena” brand in the US. Its competitor, First Quality, a US company, sells adult incontinence products under various private labels. In an October 2003 letter to First Quality, SCA initially alleged infringement of its patent (US Patent No. 6,375,646). However, SCA did not file suit against First Quality until 2010.

First Quality sought to have the case dismissed based on the defense of laches, because SCA waited almost seven years from its initial accusation of patent infringement to file suit. First Quality argued that SCA’s delay was prejudicial and that SCA’s claims of patent infringement should be barred based on the doctrine of laches. A federal judge ruled in favor of First Quality, granting summary judgment on both laches and equitable estoppel. SCA appealed to the Federal Circuit, which upheld only the laches claim.

SCA then sought en banc rehearing of the case. The Federal Circuit agreed that Petrella applied to patent law with respect to the six-year statutory limit for patent damages under Section 286 of the Patent Act, which prescribes that “no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint.”

The Federal Circuit, however, distinguished Petrella from SCA, holding 6-5, that the defense of laches does bar legal relief in patent infringement claims accruing within the six-year statute of limitation period. The Federal Circuit found that unlike copyright law, Section 282(b)(1) of the Patent Act specifically allows for laches to be asserted as a defense.

The Supreme Court must now decide whether its decision in Petrella also applies to patent infringement cases – whether a patent holders’ unreasonable delay in suing for infringement is barred based on the doctrine of laches, and whether to allow the defense of laches to continue in patent infringement cases.


Lisa Thompson

Lisa N. Thompson is an attorney with Hage Hodes in Manchester. Her practice focuses on business law and intellectual property matters. She can be reached by email.

Supreme Court Rule 42(9) requires all NH admitted attorneys to notify the Bar Association of any address change, home or office.

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