Transfer action raises questions around jurisdiction in trademark infringement cases
On 21 December 2021 the US Court of Appeals for the Second Circuit transferred an appeal of a preliminary injunction that enjoined alleged trademark infringement because the case (Hudson Furniture Inc v Lighting Design Wholesalers Inc) arose under patent law.
Hudson Furniture manufactures and designs lighting and furniture products, and owns design patents and trademarks for several of its designs. It also uses the trademarks HUDSON FURNITURE and BARLAS BAYLAR as house marks and has developed distinctive marks for PANGEA, LA CAGE and VALIANT. Lighting Design Wholesalers, run by Alan Mizrahi, posted photos of Hudson’s products on its website that included the PANGEA, LA CAGE and VALIANT marks. The website stated that the products were designed by Hudson, creating a false association between the two parties. While monitoring its marks online, Hudson came across Mizrahi’s website as well as a third party who purchased a VALIANT lighting design from Mizrahi.
Hudson filed a complaint in the Southern District of New York and moved for a preliminary injunction. Mizrahi moved to dismiss the complaint for lack of personal jurisdiction, alleging improper service of process. The district court disagreed and granted the preliminary injunction in part on the grounds that Hudson was likely to succeed on the merits of its copyright and trademark infringement claims. The district court denied the injunction with regard to the patent design claim because Hudson failed to submit sufficient evidence for the court to examine Hudson’s design and the allegedly infringing design side by side.
Lighting Design Wholesalers appealed the order to the Second Circuit, but Hudson asked the court to dismiss the appeal on the grounds that the complaint involved patent law claims and thus fell within the exclusive jurisdiction of the Court of Appeals for the Federal Circuit.
Arising under patent law
The Federal Circuit has exclusive jurisdiction over interlocutory appeals that arise under patent law. For the purposes of its jurisdiction, an action arises under patent law when a complaint establishes that either federal patent law creates the cause of action or the plaintiff’s right to relief depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the claims. The court concluded in this case that if the operative complaint arose in part under patent law, the Federal Circuit has exclusive jurisdiction over the appeal, even when the appeal does not involve the patent law claims.
Hudson’s complaint included six counts of patent infringement. Further, the appeal concerned the ruling on a motion for injunctive relief involving the non-patent claims and patent law claims because the district court denied the injunction as to the patent law claims. Even though the appeal did not concern those claims, this was sufficient to show that federal patent law created the cause of action, establishing the Federal Circuit’s exclusive jurisdiction.
Despite the court agreeing with Hudson, it declined to dismiss the appeal and instead chose to transfer it to the Federal Circuit in the interest of justice because the appeal was filed on time and in good faith.
Trademark practitioners should be highly aware of Section 1295, Chapter 28 of the US Code and its implications when approaching litigation with various types of IP claims. They should also be proactive about addressing a complaint’s patent law claims.
The court pointed out Hudson’s failure to submit evidence to compare the allegedly infringing patent designs in ruling on the preliminary injunction. Had Mizrahi brought an earlier motion against the sufficiency of the patent infringement claim, Hudson could have been required to at least show that its patent law claim had merit before the case was transferred to the Federal Circuit on those grounds alone.
This is an Insight article, written by a selected partner as part of WTR's co-published content. Read more on Insight
Copyright © Law Business ResearchCompany Number: 03281866 VAT: GB 160 7529 10