Motion to Dismiss An Amended Complaint Does Not Toll The Period for Filing Amended Responsive Pleading Gen’l Mills, Inc. v. Kraft Foods Global, Inc. Date: May 16, 2007 Panel: Bryson, Clevenger, Linn Author: Linn District court: D.Minn. Trial judge: Ericksen Summary: Fed Cir affirms grant of motion to dismiss infringement suit on the ground that the claim is barred by a covenant not to sue granted by General Mills, and affirms decision to treat Kraft’s counterclaim as abandoned. Choice of law: This appeal turned in large part on the interpretation of a settlement agreement, which contains a choice of law provision selecting Minnesota law. Although the Fed Cir applied Minnesota state law in interpreting the agreement, it noted that “we do not decide the scope of the rule articulated in Rhone-Poulenc [284 F.3d 1323] in other contexts where the parties have not agreed to their own assignment provisions or where other sources of law, such as the Bankruptcy Code, might trump ordinary contract provisions.” Covenant not to sue: In a previous litigation, General Mills resolved a suit against a company called Farley by entering into a settlement agreement through which General Mills granted a covenant not to sue to Farley in exchange for a lump sum payment. Through a series of transactions, Kraft became a successor to Farley. General Mills argued that Kraft did not succeed to the covenant not to sue because Kraft had sold Farley’s assets to a third party. The Fed Cir disagreed, ruling that neither the contract nor general principles of successorship under state law precluded Kraft from becoming a successor to Farley. “At least in the context of insurance contracts, Minnesota courts avoid construing contracts so as to forfeit a party’s rights ‘unless such an intent is manifest in ‘clear and unambiguous’ language.’ We have taken a similarly dim view of purported forfeitures of patent rights, as have other courts.” Slip op. at 8. Abandoned counterclaim: In response to the original complaint, Kraft included a counterclaim in its answer. When General Mills filed an amended complaint, Kraft filed a motion to dismiss under FRCP 12(b) and never filed an answer, leading the district court to deem the counterclaim abandoned after it entered judgment on the patent claim. The Fed Cir rejected Kraft’s argument that FRCP 12(a)(4)(A) tolled the deadline for filing an amended answer. While FRCP 12(a)(4)(A) allows a motion to dismiss to toll the deadline for filing an original answer, this tolling provision does not cover answers to an amended complaint. Instead, FRCP 15(a) controls the period for answering an amended complaint, and that period is “the time remaining for response to the original pleading or within 10 days after service of the amended pleading, whichever period may be the longer, unless the court otherwise orders.” Fed. R. Civ. P. 15(a).
KEY WORDS: CHOICE OF LAW, CONTRACT INTERPRETATION, STATE LAW, COVENANT NOT TO SUE, SUCCESSOR IN INTEREST, FORFEITURE, ANSWER TO COMPLAINT, FRCP 12, FRCP 15, FEDERAL RULE OF CIVIL PROCEDURE
BPAI Cannot Base Its Findings Solely On Its Own Expertise In Non-Ex Parte Proceedings Brand v. Miller Date: May 14, 2007 Panel: Michel, Archer, Dyk Author: Dyk District court: BPAI Trial judge: Summary: Fed Cir reverses and remands award of priority because “the Board impermissibly relied on its own expertise in determining the question of derivation and that the Board’s conclusion is not supported by substantial record evidence.” Slip op. at 1-2. Dickinson v. Zurko required the Fed Cir to review BPAI’s factual findings based “on the record” before the agency. The Fed Cir “therefore hold that, in the context of a contested case, it is impermissible for the Board to base its factual findings on its expertise, rather than on evidence in the record, although the Board’s expertise appropriately plays a role in interpreting record evidence. We do not-and need not-decide here the extent to which the Board in ex parte proceedings is so limited.” Slip op. at 10-11. Applying the holding to this case, the Fed Cir concluded that the Board impermissibly substituted its own opinion for record evidence concerning a skilled artisan’s knowledge, improperly drawing a conclusion without any basis in the record of the proceedings and thus without substantial evidence.
Fed Cir Gives Deference To PTO’s Interpretation of Procedural Standard in Agency’s Own Regulations FirstHealth of the Carolinas, Inc. Date: Feb. 27, 2007 Panel: Bryson, Gajarsa, Linn Author: Linn District court: TTAB Trial judge: Summary: Fed Cir affirms TTAB’s dismissal of FirstHealth’s counterclaim to cancel trademark. In response to CareFirst’s opposition to FirstHealth’s trademark applications, FirstHealth counterclaimed to cancel CareFirst’s own trademarks. The TTAB dismissed the counterclaim because FirstHealth supported its argument with deposition testimony which was not part of the record, and also dismissed CareFirst’s opposition. Jurisdiction: According to CareFirst, FirstHealth’s appeal was moot, because the TTAB’s unappealed ruling against CareFirst precludes CareFirst from ever opposing FirstHealth’s registration and thus negates the required “damage” under 15 USC 1064. The Fed Cir disagreed because the TTAB can only adjudicate the right to register and cannot determine issues of right to use, infringement, or unfair competition. Since the use of the CareFirst mark may still cause “damage” under section 1064, the appeal was not rendered moot. Excusable neglect: The TTAB did not err in denying FirstHealth’s motion to reopen the testimony period because FirstHealth did not meet the excusable neglect standard. Giving deference to the agency’s interpretation of “excusable neglect” in the context of its own regulation and applying TTAB’s precedent on point, the Fed Cir ruled that FirstHealth did not satisfy the PTO’s requirements for “excusable neglect,” because the reasons for its delay in submitting the deposition testimony was wholly within FirstHealth’s control.