October 21, 2014

Surveying Intellectual Property: Predictions for the Supreme Court’s Rulings in 10 IP Cases

HarrisDoughertyBy Ray K. Harris and Thomas Dougherty

There are now ten IP cases under review in the Supreme Court. Why so many? And what will the Court do?

Why So Many IP Cases?

The Supreme Court docket demonstrates the accelerating importance of intellectual property. In the decade of the 1990s the Supreme Court wrote seven patent opinions.[1] The prior two decades saw a similar volume of patent cases. In the same decade, copyright cases decided in the Supreme Court (six)[2] and trademark cases decided in the Supreme Court (three, including two trade dress cases)[3] were about equally rare.

In the decade from 2000 to 2009, the Supreme Court increased the volume to 10 patent related opinions.[4] Total copyright cases (three)[5] and trademark cases (five, including two trade dress cases)[6] decided in the Supreme Court remained about the same.

In 2010 to 2012 the Supreme Court increased the pace to issue four patent opinions in three years.[7] The pace of Supreme Court copyright decisions (two)[8] remained about the same as over the last 20 years. The increase in patent litigation appears not to be aberrational.

Last year the Supreme Court again more than doubled the volume of patent cases handled and issued four patent-related opinions in one year.[9] The Supreme Court also decided one copyright case[10] and one trademark case.[11]

This year the Supreme Court has again increased the volume of patent cases and already has accepted for review six patent cases – more than half the volume it handled in the entire first decade of the 21st Century. The Court has also accepted for review two copyright and two trademark cases.

Why has the Supreme Court accepted review in so many IP cases? Because IP rights have grown in economic importance and clarity is required to maintain that economic value. The Federal Circuit was given exclusive jurisdiction over patent cases to avoid conflicts in treatment among the different Circuit Courts, but clarity (for example, on treatment of software-related inventions) has not uniformly emerged. Also, abusive assertion of IP rights imposes a substantial cost on the economy. Guidance for the Federal Circuit requires either Supreme Court review or Congressional action.

What Will The Court Do?

Here summaries of the issues raised and our humble PREDICTIONS of how these 10 current IP cases may be decided.

Patent. Two patent cases focus on the scope of what a patent may claim.

Alice Corp. Pty Ltd. v. CLS Bank Int’l, 717 F.3d 1269 (Fed. Cir. 2013), cert. granted, 134 S. Ct. 734 (2013) (the test for patentable subject-matter for software inventions). An equally divided court affirmed the District Court holding that the claims were not patent eligible. The Federal Circuit generated seven opinions and could not agree on the appropriate test. NEITHER CAN WE, BUT THE COURT CONTINUES TO DECIDE CASES DEFINING THE LINE BETWEEN INVENTION AND ABSTRACT IDEAS. The court will limit the scope of software patentability, but not eliminate it. SOFTWARE CAN BE PATENTED BUT NOT THESE CLAIMS. AFFIRMED. Watch for oral argument March 31.

Nautilus Inc. v. Biosig Instruments, Inc., 715 F.3d 891 (Fed. Cir. 2013), cert. granted, 134 S. Ct. 896 (2014) (determining when a claim term is indefinite — therefore invalidating the claim) There were multiple reasonable interpretations of the claim language “spaced relationship.” The Federal Circuit concluded the term was not insolubly ambiguous because “inherent parameters” would allow a person of ordinary skill to understand the term. Particular and distinct patent claiming is required by statute. 35 U.S.C. 112. REVERSED. THE COURT WILL REQUIRE TIGHTER CLAIM DRAFTING SO WHAT IS CLAIMED IS DISTINCT FROM WHAT IS NOT CLAIMED AND INFRINGEMENT LIABILITY IS MORE PREDICTABLE. Watch for oral argument April 28.

The remaining 4 patent cases focus on enforcement issues:

Medtronic Inc. v. Boston Scientific Corp., 571 U.S. ___ (Jan. 22, 2014). In a declaratory relief suit by a patent licensee the licensor/patentee always has the burden to prove infringement. REVERSED. WE ARE CERTAIN WE GOT THIS “PREDICTION” CORRECT.

Highmark Inc. v. Allcare Management Systems, Inc., 687 F.3d 1300 (Fed. Cir. 2012), cert. granted, 134 S. Ct. 48 (2013), and Octane Fitness, LLC v. ICON Health & Fitness, Inc., 496 Fed Appx. 57 (Fed. Cir. 2012), cert. granted, 134 S. Ct. 49 (2013) (the standard for awarding attorneys’ fees to the prevailing party). The infringement defendant prevailed in both cases. The Federal Circuit found no deference is owed to a district court’s finding regarding whether allegations of infringement were objectively unreasonable and neither case was “exceptional” under 35 U.S.C. § 285. The prevailing defendants assert (1) the District Court is entitled to deference, and (2) a showing that the litigation is objectively baseless and brought in subjective bad faith sets too high a standard for prevailing defendants (accused infringers) and conflicts with the lower bar set for prevailing plaintiffs (patent owners) — a showing “that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.”). THE COURT WILL ELIMINATE THE SUBJECTIVE ELEMENT OF THE REASONABLENESS TEST AND OTHERWISE AFFIRM THE APPELLATE DECISIONS ON THE OBJECTIVE ELEMENT WITHOUT DEFERENCE TO THE TRIAL COURT. This case was argued Feb. 26.

Limelight Networks, Inc. v. Akamai Technologies, Inc., 692 F.3d 1301 (Fed. Cir. 2012), cert. granted, 134 S. Ct. 895 (2014) (inducing infringement where separate elements of the method claim were carried out by different persons, hence there is no one person who directly infringed). The Federal Circuit held there can be inducement liability with no single direct infringer or agency relationship. AFFIRMED. INDUCING MULTIPLE ACTORS TO INFRINGE COLLECTIVELY IS WRONG (ONCE THE ADVERSE PRECEDENT IS NOT CONTROLLING). Watch for oral argument April 30.

Copyright. Both cases deal with defenses to enforcement of copyright protection.

Petrella v. Metro-Goldwyn-Mayer, Inc., 695 F.3d 946 (9th Cir. 2012), cert. granted, 134 S. Ct 50 (2013) (laches as a defense to damages incurred for the three-year period before suit is filed). The Copyright Act has a three-year statute of limitations, 17 U.S.C. 507(b). The Ninth Circuit found claims based on the 1980 film “Raging Bull” barred by laches. The other circuits are less receptive to this defense. AFFIRMED. DAMAGES AND INJUNCTIVE RELIEF ARE BOTH UNAVAILABLE FOR THE CONTINUING TORT ON THE FACTS PRESENTED. This case was argued Jan. 21.

American Broadcasting Companies, Inc. v. Aereo, Inc., 712 F.3d 676 (2nd Cir. 2013), cert. granted, 134 S. Ct. 896 (2014) (streaming a broadcasted video over the Internet so paid subscribers each subscriber receive transmission of a separate copy). The Second Circuit found no infringement of the public performance right. Both parties asked for review. Even the winner below wants to avoid the possibility of inconsistent decisions in other circuits. REVERSED. THE COURT WILL CONCLUDE CONGRESS DID NOT INTEND TO PERMIT THE “RUBE GOLDBERG” DESIGN ADOPTED TO AVOID INFRINGEMENT. STREAMING AND RECORDING ON DEMAND IS A PUBLIC PERFORMANCE. CONGRESS COULD AMEND THE STATUTE IF IT DISAGREES WITH THE COURT (WE ARE NOT ARROGANT ENOUGH TO TRY TO PREDICT CONGRESS — BE SERIOUS). Watch for oral argument April 22.

Trademark. Both cases involve false advertising under the Lanham Act.

POM Wonderful LLC v. Coca-Cola Co., 679 F.3d 1170 (9th Cir. 2012), cert. granted, 134 S. Ct. 895 (2014) (false advertising claims involving the labeling requirements of the Food Drug and Cosmetics Act). The Ninth Circuit found preemption. AFFIRMED. Watch for oral argument April 21.

Lexmark Int’l Inc. v. Static Control Components, Inc., 697 F.3d 387 (6th Cir. 2012), cert. granted, 133 S. Ct. 2766 (2013) (the test for standing to maintain a false advertising claim). The Ninth Circuit requires the plaintiff to be an actual competitor. Other circuits require antitrust standing. The Sixth Circuit and Second Circuit allow the plaintiff to sue if it has a “reasonable interest” in the case. AFFIRMED. THE COURT WILL ADOPT THE REASONABLE INTEREST STANDARD. This case was argued Dec. 3.

Only two of the nine remaining cases reversed. Not a smart bet? “Never tell me the odds.”[12]

Ray K. Harris practices in the area of commercial litigation, including trade secret, trademark, trade dress, computer software copyright, and other intellectual property protection matters. His representation of aerospace clients has included enforcement of patent and trade secret rights and licensing provisions related to IP. Reach Mr. Harris at rharris@fclaw.com.

Thomas A. Dougherty is a registered patent attorney who practices in all areas of intellectual property, and federal appeals. His practice includes international and domestic patent and trademark prosecution; inter partes reexaminations; portfolio management; freedom to operate, medical devices, general counsel services, M&A, and counseling for various clients and technologies. Reach Mr. Dougherty at tdougherty@fclaw.com

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

 


[1] Eli Lilly & Co. v. Medtronic Inc., 496 U.S. 661 (1990); Cardinal Chemical Co. v. Morton, 508 U.S. 150 (1993); Asgrow Seed Co. v. Winterboer, 513 U.S. 179 (1995); Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996); Warner-Jenkinson Co, Inc. v. Hilton Davis Chemical Co., 520 U.S. 17 (1997); Pfaff v. Wells Electronics Inc., 525 U.S. 55 (1998); and Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 527 U.S. 627 (1999). See also Dickinson v. Zurko, 527 U.S. 150 (1999) (administrative burden of proof).

[2] Stewart v. Abend, 495 U.S. 207 (1990), Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991); Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994); Campbell v. Acuff-Rose Music Inc., 510 U.S. 569 (1994); Feltner v. Columbia Pictures, 523 U.S. 340 (1998); and Quality King Distributors Inc. v. L’anza Research Int’l Inc., 532 U.S. 135 (1998). See also Lotus Dev. Corp. v. Borland Int’l Inc., 116 S. Ct 804 (1996) (aff’d by an equally divided court); Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49 (1993) (copyright claim was immune from antitrust liability).

[3] Two Pesos v. Taco Cabana, Inc., 505 U.S. 763 (1992); Qualitex v. Jacobson Products Co., Inc., 514 U.S. 159 (1995) and College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, 527 U.S. 666 (1999).

[4] JEM Ag. Supply Inc. v. Pioneer Hi-Bred Int’l, Inc., 534 U.S. 124 (2001) (patent alternative to plant variety protection act); Festo Corp. v. Shoketsu Kinzoku Kogyo Kubushiki Co., Ltd., 535 U.S. 722 (2002); Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826 (2002); Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005); Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006) (rule of reason antitrust analysis); eBay Inc. v. Merc-Exchange, LLC, 547 U.S. 388 (2006); MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007); KSR v. Teleflex, Inc., 550 U.S. 398 (2007); Microsoft Corp. v. AT&T Corp, Int’l Co., 550 U.S. 437 (2007); and Quanta Computer Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008).

[5] New York Times Co, Inc. v. Tasini, 533 U.S.483 (2001); Eldred v. Ashcroft, 537 U.S. 186 (2003); and Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

[6] Wal-Mart Stores, Inc. v. Samara Bros., Inc. Co., 529 U.S. 205 (2000); TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23 (2001); Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003); Dastar Corp. v. 20th Century Fox Film Corp., 539 U.S. 23 (2003); and KP Permanent Make-Up Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004).

[7] Bilski v. Kappos, 130 S. Ct. 3218 (2010); Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011); Bd of Trustees of Leland Stanford Jr. Univ. v. Roche Molecular Systems, Inc., 131 S. Ct. 2186 (2011); Microsoft Corp. v. i4i Ltd. Partnership., 131 S. Ct. 2238 (2011); and Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012). See also Kappos v. Hyatt, 132 U.S. 1690 (2012) (admissible evidence in administrative proceedings).

[8] Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010), and Golan v. Holder, 132 S. Ct. 873 (2012). See also Costco Wholesale Corp. v. Omega S.A., 131 S. Ct. 565 (2010) (aff’d by an equally divided court).

[9] Bowman v. Monsanto Co., 133 S. Ct. 1761 (2013); Gunn v. Minton, 133 S. Ct. 1059 (2013) (patent-related jurisdiction); Association for Molecular Pathology v. Myriad Genetics, 133 S. Ct. 2107 (2013); and FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013) (reverse payment patent license antitrust analysis).

[10] Kirtsaeng v. John Wiley & Sons, 133 S. Ct. 1351 (2013).

[11] Already LLC v. Nike Inc., 133 S. Ct. 721 (2013).

[12] Han Solo to C-3PO, Star Wars: The Empire Strikes Back (1980).

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