Intellectual Property in Georgia - Laurence P. Colton and Nigam J. Acharya

• Publication year: 2001

Intellectual Property in Georgiaby Laurence P. Colton^* and

Nigam J. Acharya^**

I. Introduction

This Article surveys case law developments in Georgia in the area of intellectual property including patents, copyrights, and trademarks from June 1, 1999 to May 31, 2000. The authors have not attempted to include all cases that touch upon intellectual property but instead have selected decisions that are more significant or interesting.

Intellectual property law comprises several discrete yet overlapping areas of law. The three primary areas are patent, trademark, and copyright law. Secondary areas include trade secret, trade dress, and know-how. Patent and copyright law are provided for in the United States Constitution.¹ Thus, the cases regarding these two areas are based on federal law and are gleaned from the federal courts. Trademark law has both federal² and state aspects; thus, the cases regarding this area are based on federal or state law, or both, and are gleaned from the federal courts and Georgia state courts.

II. Patent Cases

The Georgia Court of Appeals opinion in Bell v. Sasser³ arose following the sale of stock of a closely held corporation by the president of the competing corporation. The closely held corporation brought action an against the seller and the competing corporation, alleging, inter alia, that the seller and the competing corporation conspired to drive the closely held corporation out of business. The seller of stock in the closely held corporation was the president of the competing corporation. The superior court denied the seller's and the competing corporation's motion for summary judgment on the conspiracy claim, and all parties appealed.⁴ The Georgia Court of Appeals held a competing corporation's threats to file a patent infringement suit against a closely held corporation did not establish a prima facie case of conspiracy to drive the closely held corporation out of business, absent a showing that the president of the competing corporation participated in sending the letters or that the threats were made in bad faith.⁵

In Nelson v. Adams,⁶ the Supreme Court held judicial speculation that the sole shareholder was liable for plaintiff's attorney fees did not justify adding the sole shareholder as a party after the judgment was entered.⁷ The Court reasoned this action violated the shareholder's due process rights as reflected in Rule 15 and Rule 12(a)(1) of the Federal Rules of Civil Procedure.⁸

After dismissal of plaintiff licensee's patent infringement suit and the grant of attorney fees and costs for defendants, defendants moved to amend their third-party complaint to add plaintiff licensee's sole shareholder as a third-party defendant and also amend the judgment. This amendment subjected the sole shareholder to individual liability for these fees.⁹ The Supreme Court held an amended judgment that imposes liability simultaneously with an amendment of the pleadings violates Rule 15 and due process.¹⁰ Furthermore, the Court held plaintiff did not waive his due process rights.¹¹ The Court stressed that Congress had specifically promulgated the Federal Rules of Civil

Procedure to ensure due process, and because Rule 15 specifically gave a ten day period for a party to respond to being joined, the imposition of a final judgment before this time violated the Due Process Clause.¹²

In Mackay v. Commissioner of Patents & Trademarks,¹³ the Supreme Court denied a petition for writ of certiorari after the Federal Circuit affirmed the district court's holding that it lacked jurisdiction for hearing either a Federal Torts Claims Act ("FTCA")¹⁴ or an Administrative Procedures Act ("APA")¹⁵ claim.¹⁶ On October 30, 1996, Mackay filed a patent application with the United States Patent and Trademark Office ("PTO"). On January 17, 1997, the PTO notified Mackay his patent application was incomplete and could not be accorded a filing date. Mackay did not submit the required materials in the time allowed by the PTO; therefore, the PTO terminated his patent application.¹⁷

On January 18, 1998, Mackay filed a complaint in the district court seeking relief of $2 billion because the PTO "willfully negated the patent."¹⁸ The district court assumed Mackay was seeking relief under either the FTCA or the APA, and concluded it had no jurisdiction to hear the claims. Mackay appealed the district court's dismissal of his case to the United States Court of Appeals for the District of Columbia ("the D.C. Circuit"). The D.C. Circuit transferred the case to the Federal Circuit because the Federal Circuit has exclusive jurisdiction to hear claims relating to practice before the PTO.¹⁹

The district court stated that jurisdiction could not be found for an FTCA claim because Mackay did not allege that he exhausted his administrative remedies before filing his action in the district court.²⁰ Mackay indicated in his complaint that he discussed his patent application with an examiner at the PTO. He made no allegation that he exhausted the appropriate administrative remedies available to him, such as filing a petition with the Commissioner of Patents and Trademarks to contest the PTO's failure to assign a priority date pursuant to 37 C.F.R. Sec. 1.53(e)(2).²¹ Thus, because Mackay did not pursue administrative remedies before filing his complaint in the district court, the district court had no jurisdiction under the FTCA.²² Similarly, the district court did not have jurisdiction to hear Mackay's claim for monetary damages under the APA.²³ The APA waives the sovereign immunity of the United States only for "[a]n action in a court of the United States seeking relief other than monetary damages."²⁴ Therefore, Mackay's request for monetary damages in the amount of $2 billion precluded the district court from granting the relief he sought under the APA.

In College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board,²⁵ the Supreme Court held state infringement of a patent, though interfering with a patent owner's right to exclude others, may neither be remedied pursuant to authority under the Patent Clause nor preventively remedied under the Due Process Clause.²⁶ In College Savings Bank, the patent owner brought an action against a Florida agency, alleging infringement of a patented apparatus and method for administering a college investment program. The United States intervened to defend the constitutionality of the statute. The trial court denied the state agency's motion to dismiss for lack of subject matter jurisdiction, and the agency appealed.²⁷ The Federal Circuit affirmed, and the Supreme Court granted certiorari.²⁸ Chief Justice Rehnquist wrote the opinion for the Court.²⁹

The Court emphasized that the sovereign immunity guaranteed under the Eleventh Amendment to the Constitution barred suits against defendant states and that this immunity could be abrogated pursuant to the Due Process Clause.³⁰ However, the Court recognized that appropriate legislation pursuant to authority from the Fourteenth Amendment to the Constitution may be used to abrogate the Eleventh Amendment only where the State provides no remedy, or only inadequate remedies, to injured patent owners for the State's infringement of a patent and hence may be a deprivation of property without due process.³¹

A determination of whether a Congressional act validly abrogates states' sovereign immunity generally requires consideration of two questions: "whether Congress has 'unequivocally expressed its intent to abrogate the immunity,' . . . and second, whether Congress has acted 'pursuant to a valid exercise of power.'"³² The Patent and Plant Variety Protection Remedy Clarification Act ("Patent Remedy Act")³³ clearly expresses Congress' intention to abrogate states' immunity from patent infringement claims.³⁴ However, the Supreme Court reiterated that neither the Commerce Clause nor the Patent Clause provided Congress with the authority to abrogate state sovereign immunity from patent infringement claims.³⁵

Congress may pass legislation pursuant to the Fourteenth Amendment to the Constitution to abrogate sovereign immunity.³⁶ However, in order for Congress to do so, "it must identify [states' conduct that transgresses] the Fourteenth Amendment's substantive provisions, and must tailor its legislative scheme to remedying or preventing such conduct."³⁷ In analyzing whether the Patent Remedy Act was appropriate, the Court in College Savings Bank found the conduct Congress intended to remedy was "state infringement of patents and the use of sovereign immunity to deny patent owners compensation for the invasion of the patent rights."³⁸

Although appropriate legislation pursuant to the Enforcement Clause of the Fourteenth Amendment can abrogate state sovereignty, the propriety of any such legislation '"must be judged with reference to the historical experience ... it reflects.'"³⁹ Patents are considered "property" of which no person may be deprived by a state without due process of law.⁴⁰ Hence, Congress can stop state patent infringement if there is a pattern or a history of state infringement. The Supreme Court in College Savings Bank found Congress enacted the Patent Remedy Act absent a showing of any patterns of state patent infringement.⁴¹ The Court added that "only where the State provides no remedy, or only inadequate remedies, to injured patent owners for [the State's] infringe- ment . . . [can] a deprivation of property without due process result."⁴² It also noted that with regard to the Patent Remedy Act, Congress had "barely considered" available remedies for patent infringement claims against a state.⁴³

In Dickinson v. Zurko,⁴⁴ the Supreme Court held the APA's standards govern the judicial review of findings of fact made by federal administrative agencies and apply when the Federal Circuit reviews findings of fact made by the PTO.⁴⁵ The Court stressed that Congress intended uniform review of administrative agencies and did not...