The original title of this post was going to be “Three Times Clothiers Gets Their Panties in a Twist over Spanx Tanks” but when I discussed it with my wife she suggested the title I went with, which I thought was much funnier than what I originally wrote. So, yes for those of you who might have thought otherwise, writing a patent related blog can in fact be a family affair.
Those of you who are familiar with DJs and patent litigation in general, let me save you the next three minutes of your life and suggest you stop reading now. The rest of this post will cover some of the considerations in patent litigation and the impact of the Supreme Court decision in MedImmune v. Genentech on it.
This particular lawsuit is a complaint for declaratory relief or as it is more commonly referred to, a Declaratory Judgement suit or DJ. In this particular case, Spanx says that they were approached by a company called Yummie Tummie (where do they came up with these names) and accused of using the same designs with their products as are contained in the design patents filed by Times Three Clothiers which does business as Yummie Tummie. The details are provided below from the complaint:
On or about January 18, 2013, Yummie Tummie (through counsel) contacted Spanx by letter, informing Spanx that Yummie Tummie is the owner of the Patents-in-Suit, enclosing a copy of the Patents-in-Suit, and stating that “Spanx is making, offering for sale and selling shapewear products … in the United States that contain Yummie’s patented designs” and that the Spanx products “appear substantially the same as the patented designs from the point of view of an ordinary observer, thereby, constituting design patent infringement.” In its January 18 letter, Yummie Tummie identified the allegedly infringing Spanx products as including “The Total Taming Tank A226764, also known as The Spanx Total Taming Tank, the Top This Tank Style 1847 and The Top This Cami Style 1846” (collectively, the “Accused Products”). Yummie Tummie further noted in its letter that it “vigorously enforces the rights in its patents,” referenced patent infringement litigation it recently settled with Maidenform, and demanded, among other things, that Spanx cease manufacturing, offering for sale, and selling the Accused Products.
On or about February 14, 2013, Spanx (through counsel) responded to Yummie Tummie’s January 18, 2013 letter, describing in detail significant differences between the Accused Products and the Patents-in-Suit and stating, among other things, that it does not believe the Accused Products infringe the Patents-in-Suit.
Since Yummie Tummie contacted Spanx in January 2013, counsel for Spanx and Yummie Tummie have communicated on several occasions by telephone and in writing concerning the Patents-in-Suit. During these telephone conferences, Yummie Tummie continued to maintain that the Accused Products infringe the Patents-in-Suit and expressed its willingness to enforce its patents against Spanx.
As a result of Yummie Tummie’s continued assertions that Spanx is infringing the Patents-in-Suit, and Spanx’s denial of the same, an actual and justiciable controversy exists between the parties of sufficient immediacy and reality to warrant issuance of a declaratory judgment under 28 U.S.C. §§ 2201 and 2202 as to the alleged infringement of the designs claimed in the Patents-in-Suit by Spanx’s products, including the Accused Products.
To summarize, Yummie Tummie sends a letter claiming design patent infringement, Spanx responds saying we don’t infringe, the parties talk a few times by phone where Yummie Tummie continues to say that Spanx does infringe and Spanx decides to file a lawsuit for declaratory relief to prove they don’t.
So why would Spanx file for declaratory relief when Yummie Tummie hasn’t actually sued them yet. The answer, in most cases of this type, seems to revolve around the issue of setting the jurisdiction and venue for deciding the infringement case. This looks to be the case in this suit by what Spanx wrote in the complaint:
This action arises under the patent laws of the United States, Title 35 of the United States Code, § 1 et seq., with a specific remedy sought under the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202. An actual, substantial, and continuing justiciable controversy exists between Spanx and Yummie Tummie that requires a declaration of rights by this Court.
This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 and 1338(a).
This Court has personal jurisdiction over Yummie Tummie by virtue of Yummie Tummie’s purposeful contact with this district, including, on information and belief, Yummie Tummie’s substantial business conducted with customers residing in this district; and Yummie Tummie’s attempts to enforce design patents purportedly assigned to it against Spanx, an entity having a principal place of business in Georgia, for alleged infringing activity occurring in Georgia.
Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391.
So, Spanx is headquartered in Georgia and will potentially be provided with “home field advantage” by having this case heard in a court in their own backyard as opposed to having it heard in a court that would be more convenient for Yummie Tummie. Speaking of which, when Yummie Tummie filed suit against Maidenform, as mentioned earlier, they did so in the Southern District of New York so there is every reason to believe they would file there again if they had decided (or do decide) to pursue litigation against Spanx.
Now the S.D. of New York is not the E.D. of Texas, which is presumed to be patent holder friendly, but it will likely cost Spanx a lot less money to argue whether they infringe the Patents-In-Suit in Georgia then it will in NY.
At the beginning of the post I mentioned MedImmune v. Genentech, this case was covered in the Top Patent Cases infographic I posted previously, and it is known primarily because it changed the standard by which declaratory judgments can be filed. Pre-MedImmune it was much more difficult for groups that might be accused of patent infringement to seek declaratory relief. Referring to a Jackson Walker L.L.P. paper entitled A Post-MedImmune Reference Guide to Declaratory Judgment Jurisdiction, we find the following:
In MedImmune, the Supreme Court rejected the “reasonable-apprehension-of-suit test” that was previously used to determine whether declaratory judgment jurisdiction existed and replaced it with the following inquiry:
Whether the facts alleged, under all circumstances, show that there is a substantial controversy between parties having adverse legal interests of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.
In essence, MedImmune lowered the bar for companies looking to set the venue and challenge potential infringement before being served with a patent infringement suit. In practice, this makes it more difficult for a patent holder to seek to negotiate a license for a patent. The Jackson Walker paper goes on to suggest the following:
For intellectual property owners, these cases continue to suggest that the best way to secure a desired forum is to file suit prior to negotiating with potential defendants.
With all the talk of so called “patent trolls”, non-practicing entities (NPEs) and frivolous lawsuits it is important to realize that in the case of a DJ it is the party which may end up being an accused infringer who is actually firing the first shot in litigation. In some cases, negotiation and resolution, without involving the courts, may be the true intent of the patent holder but that option is being taken off the table.