With multiple IP issues percolating in the lower courts, there will likely be many federal issues decided in the coming years. With the passing of Justice Ginsberg, Amy Coney Barrett stands as the nominee to inherit those votes and a staunch textualist. Here are the some of the most recent Barrett decisions on intellectual property matters.
J.S.T. Corp. v. Foxconn Interconnect Technology (Trade Secrets)
This 7th Circuit appeal came earlier this year focusing on a trade secret misappropriation and jurisdiction to bring the claims. A customer to J.S.T. provided one of their proprietary adapter designs to J.S.T.’s competitor, Foxconn, attempting to have them manufacture them instead of J.S.T. J.S.T. filed suit in Illinois for misappropriation and unjust enrichment, but Foxconn moved to dismiss for lack of personal jurisdiction.
They argued that because Foxconn and the other defendants had no headquarters in Illinois and neither manufactured nor sold the adapters in Illinois, there could be no personal jurisdiction. Foxconn and the other defendants sold the adapters in Texas or China, which were bought to be used in automobiles which were then sold nationwide. J.S.T. argued that this downstream commerce in Illinois was sufficient to establish personal jurisdiction in trade secret cases, but the District Court disagreed.
On appeal, Judge Barrett authored the opinion, affirming the lower court. As Barrett explained “[f]or the point of consumer sale to be as relevant to this litigation as it is to products liability suits, there must also be a connection here between downstream consumer sales and J.S.T.’s underlying claims.” This differs from both product liability and trademark claims, which can satisfy jurisdiction requirements at the consumer level. For trade secrets, the claim bases of “acquisition, disclosure, and use of a secret are all actions that can be completed long before an offending product ever comes into contact with a consumer.” Accordingly, looking to the text of the trade secret claim language, Judge Barrett saw no basis for personal jurisdiction, and her peers agreed.
Ariel Investments, LLC v. Ariel Capital Advisors LLC (Trademark)
In 2018, the 7th Circuit heard a trademark dispute between the Florida-based Ariel Capital Advisors (ACA) and the Chicago-based Ariel Investments, LLC (AI). AI was founded in 1983, while ACA was formed in 2014, with each advising and managing financial investments. AI brought suit in 2018 for trademark infringement and sought an injunction requiring a name change by ACA in the District of Chicago. The court obliged with a court order, and ACA complied by changing their name to Bray Capital Advisors, but challenged the ruling on appeal.
ACA appealed on the basis that the court had no jurisdiction to decide the case, explaining that they had no office, no clients, no property, and no staff in Chicago, nor has any employee even visit Illinois at all. AI responded that for intellectual property cases, the defendant essentially “reached into the holder’s home forum to take its property” and availed itself to jurisdiction. The appellate court disagreed.
As Barrett explains in authoring the decision, “Perhaps the Lanham Act ought to authorize nationwide service, as the antitrust and securities laws do…[b]ut it does not, so personal jurisdiction depends on state law.” On that basis, AI failed to show specific jurisdiction or the requisite minimum contacts. As Barrett quotes from the Supreme Court decision in 2014, Walden v. Fiore, “the plaintiff cannot be the only link between the defendant and the forum. Rather, it is the defendant’s conduct that must form the necessary connection with the forum State that is the basis for its jurisdiction over him”. Accordingly, she explains “No matter how one might characterize the relation between Ariel Investments and Ariel Capital, it is easy to describe the relation between Illinois and Ariel Capital: none. That resolves this litigation.”
Sullivan v. Flora Inc. (Copyright)
In 2019, Barrett joined the majority decision siding the 7th Circuit with the 1st, 9th, 11th, and D.C. circuits in an ongoing split. In the case, the decision resolved the definition of “one work” and whether a compilation qualifies or is a set of different works. Amy Sullivan, a graphic design artist, produced 33 illustrations for Joseph Silver as part of his freelance product specialist work. The illustrations were for a project Silver was working on for Flora, Inc. Without Flora’s knowledge, Silver had used Sullivan for the project, and obtained excusive rights to the illustrations for two specific ad campaigns. Instead, Flora used the illustrations in the two campaigns, as well as a number of others.
Sullivan then registered 17 of the illustrations under one copyright and 16 under another, and filed suit against Flora, Inc. in the Western District of Wisconsin. Sullivan argued that each of the 33 illustrations was a part of “one work” and that she should be awarded statutory damages on each of the 33 counts. Conversely, Flora, Inc. argued that the statutory damages could only be awarded for each collective or group works, a mere 2 counts of infringement.
The district court found for Sullivan and awarded all 33 counts of statutory damages, but on appeal, the 7th Circuit reversed, with Barret joining the majority. As the decision explains, controlling weight should be afforded to the text of Section 504(c), providing that “all the parts of a compilation or derivative work constitute one work”, and to the artists decision to bundle the works or to issue them separately.
Unsurprisingly, Barrett’s minimal IP record shows a consistency with her larger approach to judicial analysis, with an emphasis on the statutory language and adherence thereto. Should she pass the senate, she would bolster an already statutorily inclined bench, providing IP owners with greater predictability on their rights moving forward.