MVS Filewrapper® Blog: Is the Supreme Court Re-Aiming Markman?

Post by Alex Christian

The 1996 United States Supreme Court decision in Markman v. Westview Instruments established a landmark change for claim construction in patent infringement cases.  That case established that the meaning of the claim language of a patent is a matter of law for a judge to decide, and not a matter of fact that should be determined by the jury. Since the decision, what is now known as a "Claim Construction Hearing" or a "Markman hearing" is now common place in patent infringement cases.  Nearly two decades after the Markman decision, the Supreme Court has taken a case with the potential to dramatically alter this aspect of patent litigation.

The Markman hearing has become one of—if not the single—most important events in a patent infringement case.  In a Markman hearing, the Court is required to interpret any claims at issue in the case brought forth by the parties.  This usually includes extensive briefing, expert reports, expert testimony, and oral arguments before the Court. Markman hearings are so important and so influential that often the party who prevails in the Markman hearing will go to be the successful party—whether by trial or by settlement—in the case.

On October 15, 2014, the Supreme Court heard arguments on the case of Teva Pharmaceuticals v. Sandoz.  The case is centered on the question of what appellate rules should apply to claim construction decisions.  Currently, there is tension between the Federal Circuit case law and the Federal Rules of Civil Procedure regarding the way in which a district court's factual findings relating to claim construction are treated on appeal. The specific issue presented to the Supreme Court is:   

Whether a district court's factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case) or only for clear error, as Federal Rule of Civil Procedure 52(a) requires.

Among the issues addressed during oral arguments, a significant amount of the debate dealt with the framework through which to view patent claims: similar to statues, which receive a de novo review; or like contracts, for which the district courts are given deference for underlying conclusions. You can find the transcript to the oral arguments here.

This particular case highlights the complexities Markman hearings have introduced into patent litigation, and the potentially tenuous ground upon which patent litigation has settled in the last several decades.  Perhaps the most complex issue that could be raised by the Supreme Court's eventual decision in this case, is that Markman hearings are considered by some as a violation of a plaintiff patent-owner's 7th Amendment right to a jury trial.

For additional background on the Markman decision, see Ed Sease's article, "Markman Misses the Mark, Miserably" available here.

MVS Filewrapper® Blog: Supreme Court Determines Internet Service Violates Copyrights

The Supreme Court has issued its much anticipated decision in American Broadcasting Co., Inc. v. Aereo, Inc.  The Court held that an internet service provided by Aereo—which allows subscribes to watch television programs over the internet contemporaneous with the programs as they are broadcasted over the air—violates of a copyright owner's exclusive right to perform a work publicly under the 1976 Copyright Act.  This decision represents an interesting historical development in copyright law. 

 

Amendment of the Copyright Act in 1976 was motivated, at least in part, in response to previous court decisions relating to systems very similar to the one at issue in Aereo. Specifically, in the 1968 case Fortnight Corp. v. United Artists Television and in the 1974 case Teleprompter Corp. v. Columbia Broadcasting System, Inc. the Supreme Court held operations such as reception and rechanneling of broadcast TV signals for simultaneous viewing to be "viewer functions," and not within the purview of the public performance right.  The 1976 Copyright Act subsequently clarified that to "'perform' an audiovisual work means 'to show its images in any sequence or to make the sounds accompanying it audible.'" Thus, under the 1976 Copyright Act, services that allow subscribers to view television shows contemporaneous or nearly contemporaneous with the broadcasting constitute a performance. 

 

Aereo argued that rather than performing the work in violation of the Copyright Act, it is merely an "equipment provider." The Supreme Court did acknowledge a technological difference between Aereo's services and the services at issue in Fortnight Corp. and Teleprompter—Aereo's service is "inert" until a subscriber chooses a program, whereas with the cable systems in Fortnight Corp. and Teleprompter transmitted constantly.  However, the Court was not persuaded that this difference mattered, and notably also found Aereo subscribers to constitute "the public" under the Act.

 

Also notable was the statement by the Court, in the body of the decision, that it does not believe this decision will discourage the emergence or use of different technologies. This seems to signal the Court's understanding that as technology continues to advance, while the Copyright Act remains the same, it will be increasingly important for courts to ensure that the Act does not tread on innovation and artistic creation, but rather to promote their progress as required by Article I, Section 8, Clause 8 of the United States Constitution. 

 

The full opinion is available here.

MVS Filewrapper® Blog: Generic Computer Implementation Cannot Save Patent-Ineligible Abstract Idea

On June 19, 2014, the Supreme Court issued its much-anticipated opinion in Alice Corp. v. CLS Bank Int'l.  The Petitioner, Alice Corporation ("Alice Corp.") is the assignee of the four patents at issue which disclose method, system, and media claims related to a computerized scheme for mitigating "settlement risk."  Respondents CLS Bank International and CLS Services Ltd. ("CLS") operate a network that facilitates currency transactions.  In 2007, CLS filed claims against Alice Corp. seeking a declaratory judgment that the claims at issue were invalid, unenforceable, and not infringed.  The parties filed cross-motions for summary judgment as to whether the asserted claims were patent-eligible subject matter under 35 U.S.C. § 101.  The District Court held that the claims were patent ineligible for failing to meet the requirements of section 101.  On appeal, a divided panel of the Court of Appeals for the Federal Circuit originally reversed the decision of the District Court however, after a rehearing en banc, the Federal Circuit affirmed the opinion of the District Court.

 

Alice Corp. appealed the decision of the en banc panel of the Federal Circuit to the Supreme Court.  The Supreme Court utilized the two-step framework set forth in Mayo Collaborative Servs. v. Prometheus Laboratories, Inc. in order to determine whether (1) the claims at issue are directed to a law of nature, natural phenomenon, abstract idea, or otherwise patent ineligible concept and (2) if so, the elements of the claim both individually and "as an ordered combination" add elements such that the patent ineligible concept was "transformed" into a patent-eligible application.

 

At the first step, the Supreme Court cited its precedent in Bilski v. Kappos in analyzing the claims at issue.  The Court wrote, "Petitioner's claims involve a method of exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk. . . . On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk."  The Court then compared these claims to the "risk hedging" in Bilski in determining that "intermediated settlement, like hedging, is an 'abstract idea' beyond the scope of § 101."   Citing Bilski, the Court rejected Alice Corp.'s argument that the abstract idea category is confined to "'preexisting, fundamental truth[s]' that '"exis[t] in principle apart from any human action.'"  As such, the Court held that the claims are "squarely within" the realm of abstract ideas and, thus, directed at patent-ineligible subject matter.

 

At the second step of the Mayo analysis, the Court reviewed its decisions in Gottschalk v. Benson, Diamond v. Diehr, Parker v. Flook, and Mayo in once again confirming that the "mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention."  The Court found the use of the computer in the claim elements was "purely conventional" and amounted to nothing more than "an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer." The Court further found that neither the system nor the media claims were different in substance and simply "recite a handful of generic computer components configured to implement the same idea."

 

Accordingly, the Supreme Court affirmed the decision of the Federal Circuit, finding the method claims to be patent ineligible and "[b]ecause petitioner's system and media claims add nothing of substance to the underlying abstract idea, we hold they too are patent ineligible under § 101."

MVS Filewrapper® Blog: Supreme Court Holds Induced Infringement Requires Direct Infringement

This week the U.S. Supreme Court issued its decision in Limelight Networks, Inc. v. Akamai Technologies, concluding that an act of direct patent infringement must be present for a claim of inducement of infringement. The decision unanimously held that a defendant may not be liable for inducing infringement of a patent under 35 U.S.C. Section 27(b) when no one has directly infringed the patent under Section 271(a) or any other statutory provision. 

 

The dispute between the parties arose over a patent assigned to the Massachusetts Institute of Technology, claiming a method of using a "content delivery network" (CDN) for the delivery of electronic data, of which Akamai is the exclusive licensee. Akamai, using a CDN, allows its clients to store on its servers certain components of their website, which are designated through a "tagging" process. Limelight also operates a CDN and carries out several steps of the patent in question, but requires their users to do their own tagging process. Initially, Akamai won the suit in District Court, however after the jury returned its verdict, the Federal Circuit decided Muniauction, Inc. v. Thomson Corp. which held that "direct infringement requires a single party to perform every step of a claimed method" but is satisfied if a single defendant exercise control or direction over the entire process. In light of this decision, Limelight moved for reconsideration of its motion for judgment as a matter of law, which the District Court then granted. The Federal Circuit granted en banc review and reversed. The Federal Circuit held that steps taken by multiple parties can result in induced infringement, but expound on its decision stating, “To be clear, we hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity.”

 

The Supreme Court reversed the Federal Circuit, holding that a defendant may not be liable for inducing infringement unless there is at least one underlying instance of direct infringement. The Court concluded that all of the claimed steps would have to be attributed for a single actor for direct infringement to occur under the Muniauction decision, but because Limelight did not undertake all of the steps claimed in the patent and cannot be held responsible for all those steps, there was no infringement.

  

The complete opinion can be found here.

MVS Filewrapper® Blog: Supreme Court Defines Scope of Definiteness Required in Patent Claims

Today the U.S. Supreme Court issued its decision in Nautilus, Inc. v. Biosig Instruments, Inc. defining the standard for definiteness necessary to meet the requirements of 35 U.S.C. Section 112, second paragraph.  The decision unanimously rejected the "insolubly ambiguous" standard previously employed by the Federal Circuit to determine whether patent claims meet the statutory requirement to "particularly point out and distinctly claim the subject matter which the applicant regards as the invention."

The dispute between the two exercise equipment manufacturers Nautilus Inc. and Biosig Instruments Inc. related to heart rate monitors patented by Biosig in 1994. Biosig accused Nautilus of infringing its patented heart rate monitors in exercise equipment (such as treadmills). Nautilus alleged the Biosig patent was invalid due to "indefiniteness" of its claims. The U.S. Court of Appeals for the Federal Circuit ruled in favor of Biosig finding its patent to be valid, concluding the claimed term "spaced relationship" of electrodes measuring a user's heart rate was sufficiently described as to be understood by a person of ordinary skill in the art to which the invention pertains. The U.S. Supreme Court reversed this decision, finding the Federal Circuit's standard for permitting vaguely written claims—so long as they are not "insolubly ambiguous"to be insufficient for informing skilled artisans about the scope of an invention when reviewing claim language. The dispute between the companies has now been remanded back to the Federal Circuit for reconsideration; however, it is unclear whether the outcome of the infringement decision will ultimately change upon application of the definiteness standard set forth by the Court. 

The test set forth by the Court to determine whether a patent is invalid for indefiniteness is as follows: a claim is indefinite if, when read in light of the specification of the patent (and the prosecution history) "fails to inform, with reasonable certainty, those skilled in the art about the scope of the invention." (Emphasis added). Therefore, the standard for meeting the written description requirement mandates that claims provide "reasonable certainty" to skilled artisans. This overturns the standard previously employed by the Federal Circuit which only required that a claim is "amenable to construction" and is not "insolubly ambiguous."

The decision provides clear incentive for patent drafters to eliminate 'zones of uncertainty' or ambiguity from patent claims. Such incentive is provided in the form of the Court's criticism of drafting and patent examination that results in ambiguity relating to claim terms or scope.

A complete copy of the opinion can be found here.

MVS Filewrapper® Blog: Supreme Court Issues Indefiniteness and Inducement Decisions

The Supreme Court this week issued its decisions in two much anticipated IP cases.  The Court's decision in Limelight Networks v. Akamai Tech. concludes that at least one underlying act of direct patent infringement must be present for a claim of inducement of infringement.  In Nautilus v. BioSig the Court instituted a new standard for indefiniteness, supplanting the existing "insolubly ambiguous" standard. 

 

The full opinions can be found here and here.  More thorough analyses of these cases will follow shortly.   

MVS Filewrapper® Blog: Copyright 3-year Statute of Limitations Trumps Laches Defense

PETRELLA v. METRO-GOLDWYN-MAYER, INC.

 

Frank Petrella wrote two screenplays and one book based on the life of boxing champion Jake LaMotta.  One of the screenplays, registered in 1963, identifies Patrella as the sole author, written in collaboration with LaMotta.  LaMotta and Patrella assigned their rights in the screenplay, including renewal rights, to Chartoff-Winkler Productions, Inc. in 1976, who in turn sold the motion picture rights to Metro-Goldwyn-Mayer, Inc. (MGM).  MGM released the motion picture portrayal of Jake LaMotta in 1980:  Raging Bull, staring Robert DeNiro and directed by Martin Scorcese. 

 

Patrella died in 1981, during the original term of the copyright in the screenplay.  Under the Supreme Court's decisions in Stewart v. Abend and Miller Music Corp. v. Charles N. Daniels, Inc., the right to renewal of the copyright reverted to Patrella's heirs, unencumbered by any of the assignments previously made by Patrella.  Patrella's daughter filed a renewal of the copyright in the screenplay in 1991.  In 1998, Patrella's daughter notified MGM that she owned the copyright in the screenplay, and any further exploitation of any derivative work, including Raging Bull, infringed that copyright.  A copyright infringement suit was not filed, however, until 2009.

 

Section 507(b) of the Copyright Act establishes a three-year limitation on claims seeking relieve for copyright infringement.  The 2009 complaint sought monetary and injunctive relief for violation of the copyright in the 1963 screenplay by using, producing, and distributing Raging Bull.  However, the complaint only sought such relief for acts occurring on or after January 6, 2006—three years prior to filing the suit.  MGM moved for summary judgment based on the doctrine of laches, asserting that even though the three-year limitations period set out in the statute had not run out, the claim was still barred under the equitable principle of laches— the 18 year delay between obtaining the copyright and filing suit was unreasonable and prejudicial.  The district court granted the motion, which was affirmed by the Ninth Circuit Court of Appeals.     

 

On ultimate appeal, the Supreme Court held that a copyright infringement suit seeking relief solely for conduct occurring within the limitations period cannot be precluded by a claim of laches, so long as the claim for damages is brought within the three-year window.  The Court highlighted that laches is an equitable defense, applicable to claims for which the legislature has not provided a limitation period.  Although laches may not preclude an infringement claim made within the limitations period, the Court made clear that other doctrines such as estoppel may limit the relief awarded.   

 

The full opinion is available here. 

MVS Filewrapper® Blog:Supreme Court Revises Standards for Sanctions in Exceptional Patent Cases

Two U.S. Supreme Court opinions issued today—Octane Fitness, LLC v. Icon Health & Fitness, Inc. and Highmark Inc. v. Allcare Health Management System, Inc.—have changed the framework for which exceptional cases are analyzed under § 285 of the Patent Act.  For years, the controlling case with regard to § 285 of the Patent Act was Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc.  In Brooks Furniture, the Federal Circuit defined an "exceptional case" as one which involves either "material inappropriate conduct" or is both "objectively baseless" and "brought in subjective bad faith."  Under this framework, the determination is a mixed question of law and fact.  Accordingly, the objective-baselessness determination is reviewed de novo on appeal without any deference to the determinations made by the district court.

 

The two Supreme Court decisions in Octane Fitness and Highmark specifically reject the Brooks Furniture framework as "unduly rigid and inconsistent with the text of § 285."  Instead, the word "exceptional" in § 285 should be "interpreted in accordance with its ordinary meaning." In its opinion, the Supreme Court characterized the Brooks Furniture framework as taking away a district court's power to award fees in exceptional cases due to overly restrictive standards.  Justice Sotomayor, writing for the Court in the Octane Fitness opinion, sums up Brooks Furniture as a "formulation [that] superimposes an inflexible framework onto statutory text that is inherently flexible."

 

The Octane Fitness framework that now controls exceptional case determinations states that an "'exceptional' case . . . is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated." Additionally, litigants are no longer required to establish their entitlement to fees under § 285 by clear and convincing evidence, as § 285 does not provide any specific evidentiary burden.

MVS Filewrapper® Blog: Who May Bring a Federal False Advertising Suit?

     The Supreme Court's recent decision in Lexmark International, Inc. v. Static Control Components, Inc. prescribed the appropriate framework for determining whether a plaintiff has standing in a false advertising action under the 15 U.S.C. 1125(a).  Prior to this decision, there were three competing approaches to determining whether a plaintiff has standing to bring suit under the Lanham Act: 

 

·         The Third, Fifth, Eighth and Eleventh Circuits utilized an antitrust standing or a set of factors laid out in Associated General Contractors;

 

·         The Seventh, Ninth and Tenth Circuits used a categorical test which only permits actual competitors to bring false advertising suits under the Lanham Act; and lastly

 

·         The Second Circuit applied a "reasonable interest' approach," under which a Lanham Act plaintiff "has standing if the claimant can demonstrate '(1) a reasonable interest to be protected against the alleged false advertising and (2) a reasonable basis for believing that the interest is likely to be damaged by the alleged false advertising.'"

 

     In this case, the Sixth Circuit applied the Second Circuit's reasonable-interest test and concluded that Static Control had "standing because it 'alleged a cognizable interest in its business reputation and sales to remanufacturers and sufficiently alleged that th[o]se interests were harmed by Lexmark's statements to the remanufacturers that Static Control was engaging in illegal conduct."  The Supreme Court held that in order to have standing, a plaintiff "ordinarily must show that its economic or reputational injury flows directly from the deception wrought by the defendant's advertising; and that occurs when deception of consumers causes them to withhold trade from the plaintiff." Thus, direct application of a zone-of-interest test and proximate-cause requirement "supplies the relevant limits on who may sue under §1125(a)" and supplants the tests previously applied by the lower courts.   

MVS Filewrapper® Blog: 2014 Supreme Court Cases Relating to Intellectual Property

On January 10, 2014 the Supreme Court agreed to review a variety of intellectual property cases in the upcoming session, including two patent cases, a copyright case, and a trademark case (including Lanham Act claim).  A brief overview of these cases is provided and more detail will be available once decisions are entered by the Court.

Limelight Networks, Inc. v. Akamai Technologies, Inc. (U.S., No. 12-786.)

Question Presented to the Supreme Court: Whether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. § 271(b) even though no one has committed direct infringement under § 271(a).

The Federal Circuit dismissed the “single-entity” rule for finding induced infringement of a method/process claim, finding that steps taken by multiple parties can result in induced infringement. The Federal Circuit stated, “To be clear, we hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity.” If the Supreme Court upholds the Federal Circuit’s ruling, a patentee has increased opportunity to assert induced infringement for method/process claims in the marketplace.

Nautilus, Inc., v. Biosig Instruments, Inc. (U.S., No. 13-369)

Question Presented to the Supreme Court: Does the Federal Circuit’s acceptance of ambiguous patent claims with multiple reasonable interpretations—so long as the ambiguity is not “insoluble” by a court—defeat the statutory requirement of particular and distinct patent claiming? Does the presumption of validity dilute the requirement of particular and distinct patent claiming?

The Federal Circuit reversed a district court decision that a patent claim to a heart rate monitor was invalid for indefiniteness as a matter of law because of its use of the claim term “spaced relationship” in describing the positioning of two electrodes with respect to each other. The Court held that this claim term was not one that is “insolubly ambiguous” when the intrinsic evidence is considered from the perspective of a person of skill in the art. It considered the functionality of the claimed monitor, as described in the specification, as did the USPTO when the claim was under reexamination. “[T]he claims provide inherent parameters sufficient for a skilled artisan to understand the bounds of ‘spaced relationship.’” Judge Schall concurred in the result but would have used a more narrow analysis, explaining that he would not have used the functional limitation to address the definiteness issue.

 

POM Wonderful LLC v. The Coca-Cola Company, U.S. (No. 12-761)

Question Presented to the Supreme Court: Whether the court of appeals erred in holding that a private party cannot bring a Lanham Act claim challenging a product label regulated under the Food, Drug, and Cosmetic Act.

The case arising out of the 9th Circuit resulted in affirming judgment in favor of Coca-Cola, finding that POM's Lanham Act challenge to Coca-Cola’s “Pomegranate Blueberry” name was barred under the Food Drug and Cosmetic Act (FDCA).  Applicability of Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a) (authorizing actions of false/misleading description of goods), The FDCA and/or state law claims will be addressed.

American Broadcasting Companies, Inc. v. Aereo, Inc. (U.S., No. 13-461)

Question Presented to the Supreme Court: Does a company “publicly perform” a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet?

The Second Circuit denied reviewal of a panel decision that online streaming of TV programs to individual subscribers is not an infringing public performance. The panel found that the creation of a copy of a broadcast that is transmitted to individual subscribes failed to establish infringement as streaming “to the public.”

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