Filewrapper® | A patent, trademark, and copyright law blog by MVS - Supreme Court

MVS Filewrapper® Blog: Supreme Court Rejects Patent Exhaustion Defense for Patented Bean Replanting

Mon, 13 May 2013 16:50:00-0500

The Supreme Court has handed down its much anticipated decision in Bowman v. Monsanto Co., holding that the defense of patent exhaustion does not apply to the practice of planting and harvesting patented seeds through planting and harvesting without the patent holder's permission.

The case centers on the Roundup Ready gene, which confers resistance to glyphosate herbicides such as Roundup. Monsanto owns U.S. Patent Nos. 5,352,605 and RE39,247E, which cover the Roundup Ready gene, as well as seeds incorporating the gene. The Roundup Ready gene stably integrated into the genomic material of soybeans sold by Monsanto, which means that once the seeds are planted, the plants that grow from those seeds and any seeds produced by that plant also have the Roundup Ready gene.

Monsanto markets both the Roundup Ready seeds and the Roundup herbicide to farmers. However, the seeds are sold subject to a licensing agreement that permits a grower to plant the purchased seed in only one growing season-the grower in prohibited from saving any of the harvested seed for replanting in a subsequent growing season. Growers are permitted under the agreement to consume the seeds or to sell the seeds as a commodity for eventual consumption. Due to the popularity of Roundup Ready seeds, a significant proportion of commodity seeds are Roundup Ready.

Vernon Bowman purchased Roundup Ready seeds from a licensed seller each year for his first planting of the growing season. Bowman also made a second planting each season, for which he used seed that was not purchased from a licensed seller. Instead, Bowman purchased commodity seed, planted the seed, treated the plants with glyphosphate herbicide, and harvested the seed from the surviving plants, which he then used for second plantings in subsequent growing seasons. Because these seeds survived the glyphosphate herbicide treatment, they necessarily possessed the Roundup Ready gene. Ultimately, Bowman harvested eight crops through this system of growing and replanting, effectively generating a homogenous Roundup Ready source of seed that was not purchased from Monsanto.

Monsanto sued Bowman in the U.S. District Court for the Southern District of Indiana, alleging that Bowman's harvesting and replanting of Roundup Ready seeds infringed its patents. In his defense, Bowman asserted that the doctrine of patent exhaustion prevented Monsanto from controlling his use of the seeds because they were the subject of a prior authorized sale. The trial court rejected Bowman's patent exhaustion defense, finding for Monsanto. On appeal, the Federal Circuit affirmed, concluding that the patent exhaustion defense was not available to Bowman because he had created newly infringing articles through the harvesting and replanting-Bowman had replicated Monsanto's patented technology by planting the seeds and thereby creating newly infringing plants and seeds.

The Supreme Court, like the district court and the Federal Circuit, concluded that Bowman could not rely on the doctrine of patent exhaustion. The Court held that while the patent exhaustion doctrine restricts a patentee's right to control what others can do with a particular article sold, it does not affect the patentee's ability to prevent a buyer from making new copies of a patented item. Thus, the Court determined that the patent exhaustion doctrine enabled Bowman to resell the patented commodity soybeans he purchased, or consume the beans, or feed them to his animals without interference from Monsanto, but it did not enable Bowman to make additional patented soybeans without Monsanto's permission.

The Court relied on its precedent in J.E.M. Ag. Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc., where the Court explained that only a patent holder, and not the holder of a certificate issued under the Plant Variety Protection Act, could prohibit a farmer who legally purchases and plants a protected seed from saving harvested seed for replanting. The Court also dismissed Bowman's argument that patent exhaustion should apply in this case because soybeans naturally self-replicate, and therefore the seeds themselves-and not Bowman-were responsible for producing copies. Such a "blame-the-bean" defense was unpersuasive in light of the Bowman's active role in purchasing, planting, selecting, harvesting, and replanting the infringing seeds for eight successive crops.

The Court took care to limit its holding to the situation before it, stating that it is a closer question as to whether the patent exhaustion doctrine would apply where an article's self-replication occurs outside the purchaser's control, or is necessary by incidental step in using the item for another purpose.

MVS Filewrapper® Blog: Supreme Court Decides Foreign First Sale Doctrine

Thu, 28 Mar 2013 10:42:00-0500

The Supreme Court recently decided a much anticipated case, finally answering a long awaited question: Does the first sale doctrine apply to copyrighted works manufactured in other countries? According to the Supreme Court in Kirtsaeng v. John Wiley & Sons, Inc., the answer to this question is yes.

John Wiley & Sons sued Supap Kirtsaeng for selling textbooks on eBay that he imported from foreign countries. The books were printed by a wholly-owned subsidiary of Wiley, Wiley Asia, and were marked with a legend designating them for sale only in Europe, Asia, Africa, and the Middle East. Wiley alleged that selling the foreign textbooks in the United States infringed its U.S. copyrights on its American editions. Kirtsaeng attempted to assert that the first sale doctrine precluded liability, but was denied the ability to raise the defense by the district court judge. The jury found that Kirtsaeng was liable for willful copyright infringement for eight works and awarded $75,000 in damages for each work.

Kirtsaeng appealed the jury's verdict to the Second Circuit Court of Appeals. The Second Circuit concluded that the district court was correct to preclude Kirtsaeng from raising the first sale doctrine because the books at issue were manufactured outside the United States. The appellate court based its decision on the language of the 1976 Copyright Act and the Supreme Court's decision in Quality King Distributors, Inc. v. L'anza Research Int'l, Inc., 523 U.S. 135 (1998). In Quality King, the Supreme Court held that § 602(a)(1), by referencing the exclusive distribution right of § 106(3), incorporates the later subsections' limitations including, in particular, the "first sale" doctrine of § 109. However, the Supreme Court in Quality King expressly decided not to answer the question of whether or not a copyright work manufactured abroad was eligible for the first sale doctrine exemption of § 109.

In reviewing the Second Circuit’s decision, the Supreme Court took Quality King one step further, holding that the first sale doctrine applies to copyrighted works both manufactured in the U.S. and abroad, notwithstanding the 1976 Act's provision against importation of copyrighted works in §§ 602 and 603. As some have noted, this unique situation occurred because, as written, the 1976 Act—as it relates to the importation of foreign works and the first sale doctrine—has two equally plausible statutory constructions, as evidenced by the fact that the circuit courts are divided on the issue.

The Supreme Court's decision in Kirtsaeng focused mainly on the correct statutory interpretation of § 109(a) of the 1976 Act. Specifically, the Court answered "whether the words 'lawfully made under this title' restrict the scope of §109(a)'s 'first sale' doctrine geographically." Wiley's interpretation of § 109(a) follows the Second and Ninth Circuit which apply "a form of geographical limitation" on the imposition of the first sale doctrine, stating that the doctrine only covers works manufactured and created in America. Kirtsaeng, on the other hand, suggests the words "lawfully made under this title" impose a "non-geographical limitation" on the first sale doctrine. The Supreme Court agreed, stating:

In our view, §109(a)'s language, its context, and the common-law history of the "first sale" doctrine, taken together, favor a non-geographical interpretation. We also doubt that Congress would have intended to create the practical copyright-related harms with which a geographic interpretation would threaten ordinary scholarly, artistic, commercial and consumer activities. We consequently conclude that Kirtsaeng's nongeographical reading is the better reading of the [1976] Act.

In making its decision, the Court relied on what it considered to be a proper reading of “'lawfully made under this title” in § 109(a) of the 1976 Act. The Court found "linguistic difficulty" with previous circuit's interpretations of § 109(a). The Ninth Circuit's interpretation was particularly difficult to reconcile in the Court's opinion, as the interpretation contained a "half-geographical/half-nongeographical interpretation" of the phrase "lawfully made under this title." The Ninth Circuit, for example in Denbicare U.S.A. Inc. v. Toys "R" Us, Inc., has interpreted the first sale doctrine to cover both (1) copies manufactured aboard but first sold in the United States and (2) copies manufactured abroad but first sold in the United States with the American copyright owner's permission. According to the Court, "it would seem that those five words either do cover copies lawfully made abroad or they do not" and declined an attempt to read a half-geographic limitation in § 109(a) of the Act.

The Court also looked to the common law to solidify what it held to be the proper statutory interpretation of § 109(a). "The 'first sale' doctrine is a common-law doctrine with an impeccable historic pedigree . . . [and] makes no geographical distinctions [in the application of the 'first sale' doctrine." The Court drew on the conclusion reached in Bobbs-Merrill v. Straus, the first case to discuss and interpret the 'first sale' doctrine. In Bobbs-Merril the Court stated "that the copyright laws were not 'intended to create a right which would permit the holder of the copyright to fasten, by notice in a book . . . a restriction upon the subsequent alienation of the subject-matter of copyright after the owner had parted with the title to one who had acquired full dominion over it."

The Court's decision in Kirtsaeng provides a clarification of the 'first sale' doctrine as it applies to copyrighted works manufactured in other countries. It remains to be seen how this long-awaited decision will affect both book publishers and the public at large.

MVS Filewrapper® Blog: U.S. Supreme Court Addresses Jurisdiction In Patent Related Case

Thu, 21 Feb 2013 08:54:00-0500

In an unanimous decision in Gunn v. Minton, the United States Supreme Court clarified: (1) 28 U.S.C. § 1338(a) does not necessarily deprive state courts of subject matter jurisdiction for cases dealing with patent law, such as a legal malpractice claim asserted against an attorney representing someone in patent litigation; and (2) a state-based malpractice claim asserted a patent attorney does not necessarily evoke federal subject matter jurisdiction.

Gunn represented Minton in a patent infringement suit. During that suit Minton’s patent was held invalid as violating the “on sale” bar in 35 U.S.C. § 102(b) for leasing the subject matter of the patent more than one year prior to the date of the patent application. Minton argued, in a motion for reconsideration, that the lease was part of testing and fit within the experimental use exception to the on sale bar. The district court denied the motion and the Court of Appeals for the Federal Circuit affirmed the district court’s ruling. Subsequently, Minton sued his attorneys for legal malpractice claiming that they failed to timely raise the experimental use argument, which resulted in the improper invalidation of his patent and loss of the patent infringement lawsuit. This malpractice lawsuit was brought in Texas state court. The attorneys that represented Minton in the patent infringement suit argued that regardless of the timing of the experimental use argument, it would have failed. The Texas trial court agreed. Minton appealed the ruling to the Texas Supreme Court. On appeal Minton argued that the Texas court did not have proper subject matter jurisdiction because this claim properly fits under federal question jurisdiction pursuant to 28 U.S.C. § 1338(a), which provides exclusive federal jurisdiction thereby depriving state courts of jurisdiction. The Texas Supreme Court ruled in favor of Minton’s argument and Gunn appealed the holding to the United States Supreme Court.

The United States Supreme Court held that § 1338(a) does not deprive state courts of subject matter jurisdiction over the malpractice claim because federal law did not create the cause of action. Section 1338(a) only deprives state court jurisdiction where the cause of action is created by federal law. Specifically, § 1338(a) states, “No state Court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents . . . .” This cause of action, however, does not arise under the Patent Act; rather it is a state legal malpractice claim based on previous litigation arising under the Patent Act. To determine whether federal jurisdiction would be proper at all the United States Supreme Court relied on its precedent Grable & Sons Metal and Prods., Inc. v. Darue Eng’g & Mfg. to determine whether a federal issue is actually disputed. Grable provides four prongs that must each be met for federal jurisdiction to be proper over a state law claim. The federal issue must be: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress. Slip. op. at p. 6 (citing Grable, 545 U.S. 308, 314 (2005)). The Supreme Court held that Minton met the first two prongs, but failed on the third and fourth. The Supreme Court’s analysis of the third prong determined that it did not matter how the state court handled the hypothetical questions related to the timing of the experimental use argument because either way it would not change the result of the actual patent litigation. With respect to the fourth prong, the Court held that permitting state courts to engage in “a hypothetical patent issue” for the purpose of resolving a state legal malpractice claim does not disrupt the balance between state and federal responsibilities. Id. at p. 12. Moreover, the Court noted that states “have ‘a special responsibility for maintaining standards among members of the licensed professions.’” Id. (quotation omitted). The Court's conclusion was that no federal subject matter jurisdiction existed under 28 U.S.C. § 1338(a) and that state jurisdiction would be proper to handle this claim. Therefore, the Texas Supreme Court's ruling was reversed.

New and Useful - Janurary 14, 2013

Mon, 14 Jan 2013 09:52:00-0500

· The Supreme Court handed down its decision in Already, LLC v. Nike, Inc. The Court held that Nike’s covenant not to sue Alreadyfor alleged infringement of Nike’s AIR FORCE 1 trademark—entered into after Nike had filed suit and Already had filed a counterclaim challenging the mark’s validity—rendered both Nike’s claims and Already’s counterclaims moot. The Court held that because Already failed to show that it engages in or has sufficiently concrete plans to engage in activities that would arguably infringe Nike’s trademark yet not be covered by the covenant not to sue, its claims could not survive Nike’s motion to dismiss.

· The USPTO has issued a Request for Comments and Notice of Roundtable Events for Partnership for Enhancement of Quality of Software-Related Patents. The notice provides two separate roundtable events with the same agendas, one occurring in Silicon Valley on Tuesday February 12, 2013, beginning at 9 a.m. and the second occurring in New York City on Wednesday, February 27, 2013 beginning at 9 a.m. (both local time). Topics on the agenda include: (1) how to improve clarity of claim boundaries that define the scope of patent protection for claims that use functional language; (2) identification of additional topics for future discussion by the Software Partnership; and (3) opportunity for oral presentations on the Request for Comments on Preparation of Patent Applications. Written comments are requested in response to the first two discussion topics. Written comments on the third discussion topic must be submitted as directed in the forthcoming Request for Comments on Preparation of Patent Applications. Registration for the events is requested by February 4, 2013. For additional information see the official notice.

· The USPTO has also extended a pilot program allowing an applicant to request a twelve-month time period to pay the search fee, the examination fee, any excess claim fees, and the surcharge (for the late submission of the search fee and the examination fee) in a nonprovisional application, under specific conditions. The program has been extended until December 31, 2013, with the possibility of further extension. To qualify, the applicant must satisfy the following conditions: (1) Applicant must submit a certification and request to participate in the Extended Missing Parts Pilot Program with the nonprovisional application on filing, (2) the application must be a nonprovisional utility or plant application filed within the duration of the pilot program; (3) the nonprovisional application must directly claim the benefit under 35 U.S.C. 119(e) and 37 CFR 1.78 of a prior provisional application filed within the previous twelve months (the specific reference to the provisional application must be in an application data sheet); and (4) applicant must not have filed a nonpublication request. Additional information is available here.

· The Second Circuit Court of Appeals affirmed in part and remanded in part a decision by the Southern District of New York finding willful infringement on the part of a retailer for infringing the Fendi trademark by selling allegedly counterfeit Fendi-branded products. The district court awarded $12,324,062.66 in trebled damages, prejudgment interest, costs, and attorneys' fees, including disgorgement of Ashley Reed's based on a finding of willful infringement. The Second Circuit affirmed the district court’s finding of infringement and willfulness, but remanded for clarification of the period of disgorgement.

· The Federal Circuit has issued a new opinion on determining obviousness. A more thourough examination of the dicision in The C.W. Zumbiel Company, Inc. v. Kappos will be available soon here at Filewrapper.

Court Redefines Knowledge Requirement for Induced Infringement

Wed, 15 Jun 2011 14:07:00-0500

In a recent decision, authored by Justice Alito and joined by all the other Justices but Justice Kennedy, the Supreme Court redefined the knowledge requirement for finding induced infringement under 35 U.S.C. § 271(b). The case—which centered on a patent for an innovative fryer—provided an opportunity for the Court to elucidate what is required for active inducement of infringement: that the party accused of inducing infringement must have knowledge that the induced acts constitute patent infringement. The Court then further held that this knowledge requirement could be satisfied by willful blindness, a concept borrowed primarily from criminal law.
The Court began its analysis of induced infringement with a brief examination of the statute, finding the text “short, simple, and with respect to the question presented in this case, inconclusive.” The Court did, however, note that the language of § 271(b) included an implied element of intent. The Court then defined precisely what that intent element necessitates, relying on the 1964 decision in Aro Mfg. Co. v. Convertible Top Replacement Co. (Aro II) to support the determination that knowledge under § 271(b) specifically requires knowledge of the patent. The Court reasoned that knowledge for contributory infringement under § 271(c), which was specifically addressed in Aro II, was necessarily the same as knowledge for inducement. Aro II established “that a violator of § 271(c) must know ‘that the combination for which his component was especially designed was both patented and infringed.’” The Court adopted this knowledge standard to § 271(b), concluding that “induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement.”
In so deciding, the Court definitively rejected deliberate indifference as the standard for knowledge—the standard the Federal Circuit had relied on in affirming the District Court’s finding of inducement. The Court nevertheless affirmed the Federal Circuit, however, because it concluded that the knowledge requirement could be satisfied by a showing of willful blindness. Stating that such a proposition was supported both by traditional concepts of culpability and by the precedent, the Court held that “defendants cannot escape the reach of [] statutes by deliberately shielding themselves from clear evidence of critical fact that are strongly suggested by the circumstances.” The Court acknowledged that willful blindness is principally a criminal law concept, having been endorsed in that context as early as the Court’s decision in 1899 in Spurr v. United States, 174 U.S. 728. Yet the Court concluded that “[g]iven the long history of willful blindness and its wide acceptance in the Federal Judiciary, we can see no reason why the doctrine should not apply in civil lawsuits for induced patent infringement under 35 U.S.C. § 271(b).”
Ultimately, the Court provided a two-part test for willful blindness for inducement. First, a defendant must subjectively believe there is a high probability that a patent exists and would be infringed, and second must take deliberate actions to avoid knowing that fact. In this case, the facts supported such a finding. Specifically, the defendant was aware when it copied the plaintiff’s product that the product was an innovation in the U.S. market; defendant decided to copy an overseas model of the product, which it knew would not bear U.S. Patent markings; and the defendant decided not to inform an attorney it hired to give a right-to-use opinion that it copied the plaintiff’s product. Taken together, the Court concluded the defendants actions were tantamount to “manufacture [of] a claim of plausible deniability in the event that [defendant] was later accused of patent infringement.”
The Court’s decision provides a definitive—albeit somewhat heightened—standard for proving induced infringement under 35 U.S.C. § 271(b). It remains to be seen how this subjective standard will be applied going forward.
For the complete opinion, click here.

Supreme Court Clarifies Ownership Rights in Federally Funded Inventions Under the Bayh-Dole Act

Wed, 08 Jun 2011 09:28:00-0500

In a 7-2 decision released yesterday, the Supreme Court ruled the University and Small Business Patent Procedures Act of 1980 (“the Bayh-Dole Act”) does not displace the general rule that rights in an invention belong to the inventor, and does not automatically vest title to federally funded inventions in the contractors receiving the federal funds. Chief Justice Roberts, writing for the majority, wrote that the Act does not “reorder[] the normal priority of rights in an invention” through language allowing contractors to retain title to “invention[s] of the contractor.”

The Majority based its opinion on the general rule of patent law that rights in an invention belong to the inventor, a rule confirmed by the Court’s precedent. Although the Court recognized that this general rule can be superseded by congressional act—and in fact has previously been superseded by legislation relating to the Atomic Energy Commission, the Department of Energy, and NASA, for example—it noted that the Bayh-Dole Act contains no language specifically vesting ownership of federally funded inventions with the federal government, or with anyone else, including the contractor. Further, the Court held that language in the Act permitting contractors to “elect to retain title” was not the equivalent of vesting title in those contractors. Thus, the Act does not automatically vest rights in the invention in the contractor by virtue of the fact that the invention was funded (at least in part) by the federal government.

The Court effectively held that the provisions of the Bayh-Dole Act affecting the rights of contractors in federally funded inventions apply only under circumstances where the contractor has already acquired those rights, i.e. upon effective assignment of the rights by the inventor to the contractor. The dissent, written by Justice Breyer and joined by Justice Ginsberg, argue that such a position undermines the purpose of the Act, and runs contrary to the policies behind the Act, by “allow[ing] individual inventors, for whose invention the public has paid, to avoid the Act’s corresponding restrictions.” The Majority addresses this concern by remarking that the issue of inventor’s individual rights is unlikely to become common because the assignments generally included in employment agreements will usually work to vest the rights to the invention in the contractor.

It is worth noting that under the facts of this case—where the inventor signed a separate agreement and assignment with another company after entering into an agreement with, and while still in the employ of, the contractor—the assignment to the contractor turned out to be ineffective. This suggests that there may be other particular circumstances where the contractor may not obtain right in the invention despite the existence of an assignment by the inventor.

This case serves as an important reminder for employers, and especially contractors receiving federal research funds, to make sure that they require proper and effective assignments are executed. The Court reaffirmed that mere employment is insufficient to vest title in an employee’s invention in the employer, and further held that the Bayh-Dole Act does not guarantee otherwise.

For the full opinion, click here.

Bayh-Dole Patent Ownership Dispute to be heard by Supreme Court

Mon, 08 Nov 2010 10:36:00-0500

Last week, the Supreme Court announced it will review the Federal Circuit decision in Stanford v. Roche, addressing patent ownership under the Bayh-Dole Act, after granting Stanford's petition for a writ of certiorari. The Court will decide an interesting patent ownership dispute involving the contractual obligation of a University inventor to assign rights to the University and the same inventor's prior assignment of future rights to a company (which eventually became Roche). The Federal Circuit ruled against Stanford, finding that the prior assignment of the inventor trumped the assignment obligation he later had with the University.

The question presented is:

Whether a federal contractor university's statutory right under the Bayh-Dole Act, 35 U.S.C. §§ 200-212, in inventions arising from federally funded research can be terminated unilaterally by an individual inventor through a separate agreement purporting to assign the inventor's rights to a third party.

More on Bd. of Trustees of Leland Stanford Jr. Univ. v. Roche Molecular Sys., after the jump.

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Supreme Court hears arguments today regarding first sale doctrine and international purchases

Mon, 08 Nov 2010 10:32:00-0500

This morning the Supreme Court will hear oral argument in Costco Wholesale Corp. v. Omega S.A., a case regarding the potential international scope of the first sale doctrine. Costco lawfully purchased authentic Omega watches abroad and imported them to the United States for sale in its stores. Omega sued for copyright infringement, arguing the watches bore a copyrighted design and the purchase abroad did not exhaust its rights under the first sale doctrine.

The Ninth Circuit agreed with Omega, holding the foreign purchase did not exhaust Omega's copyright rights in the United States (our post regarding the Ninth Circuit's decision is here). Costco sought review by the Supreme Court, which granted certiorari in April after inviting the United States to file a brief with its views on the matter. The Solicitor General (at the time, Elena Kagan) filed a brief recommending the Court deny certiorari. As a result of her involvement, Justice Kagan is recused from the case.

For our discussion of the Ninth Circuit decision being reviewed, click here.

For SCOTUS Blog's collection of documents relevant to the case, click here.

Supreme Court to hear case regarding proper standard for proving inducing infringement under 271(b)

Tue, 12 Oct 2010 11:52:00-0500

In an order today, the Supreme Court agreed to hear a case regarding the necessary intent for inducing infringement under 35 U.S.C. § 271(b). The case is Global-Tech Appliances, Inc. v. SEB S.A., docket number 10-6. The specific question presented is:

Whether the legal standard for the state of mind element of a claim for actively inducing infringement under 35 U.S.C. § 271(b) is "deliberate indifference of a known risk" that an infringement may occur, as the Court of Appeals for the Federal Circuit held, or "purposeful, culpable expression and conduct" to encourage an infringement, as this Court taught in MGM Studios, Inc. v. Grokster; Ltd., 545 U.S. 913, 937, 125 S. Ct. 2764,2780,162 L. Ed. 2d 781, 801 (2005)?

The Supreme Court's full order list is here. The original Federal Circuit opinion under review is here.

SCOTUSblog has the certiorari-stage documents collected here. The case is set to be argued in the current term, but no schedule has yet been set for briefing on the merits or oral argument.

Supreme Court: Business method patents survive, but barely; Bilski's claims unpatentable

Tue, 29 Jun 2010 10:53:00-0500

Yesterday, the Supreme Court decided Bilski v. Kappos, the most recent case at the Court probing the boundaries of patentable subject matter under § 101. Details of the underlying facts of the Bilski case may be found in our post on the Federal Circuit's en banc decision here.

All nine Justices agreed that Bilski's method claims were not patentable. All nine Justices also agreed the "machine-or-transformation" test, held by the Federal Circuit to be the exclusive test for whether method claims are patentable subject matter, was a useful test, but not the exclusive test for such claims. In this way, the outcome was similar to KSR. There, the Federal Circuit had adopted an exclusive test for the question of obviousness. The Supreme Court then held the test was useful, but not the exclusive test for obviousness. In addition, all members of the Court at least expressed skepticism that the "useful, concrete, tangible result" test from State Street was a viable test, with the majority stating "nothing in today's opinion should be read as endorsing interpretations of § 101 that the Court of Appeals for the Federal Circuit has used in the past," citing State Street, and the Justice Stevens opinion concurring in the judgment stating it would be a "grave mistake" to assume that all claims meeting this test are patentable.

The disagreement among the Justices came when considering the question of whether business methods as a more general category fall within the scope of patentable subject matter defined in § 101. More detail of that disagreement after the jump.

Update: The Court, in its last orders of the Term, has issued a GVR in two § 101 cases, the Prometheus case, relating to methods for measuring the level of certain drug metabolites in the system for the purpose of adjusting the drug administration level, and the Classen case, a nonprecedential opinion relating to a method of selecting a vaccination schedule by comparing alternatives and selecting the alternative with the lower likelihood of autoimmune disorders. The Federal Circuit will therefore have two opportunities to address § 101 in light of the Court's guidance sooner rather than later.

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Bilski decided

Mon, 28 Jun 2010 09:53:00-0500

This morning, the Supreme Court handed down its opinion in Bilski v. Kappos. The court affirmed the Federal Circuit's decision.

We'll have more detailed analysis soon.

To read the opinion, click here.

Supreme Court: NFL collective licensing of trademarks not immune from Section 1 antitrust scrutiny

Wed, 26 May 2010 15:52:00-0500

Monday the Supreme Court unanimously held the NFL's practice of collectively licensing the trademarks of all 32 individual teams is not immune from antitrust scrutiny under Section 1 of the Sherman Act. The NFL argued that because the marks are all licensed through a single entity, NFL Properties, there was no "contract, combination, . . . or conspiracy" under § 1, and therefore there could be no antitrust problem.

The Court disagreed. The Court first observed the question of whether there is a "single enterprise" is not dependent on the specific legal structure of the entities. As stated by the Court (internal citations omitted):

The relevant inquiry, therefore, is whether there is a "contract, combination . . . or conspiracy" amongst "separate economic actors pursuing separate economic interests," such that the agreement "deprives the marketplace of independent centers of decisionmaking," and therefore of "diversity of entrepreneurial interests," and thus of actual or potential competition.

Applying this framework, the Court held the existence of NFL Properties was not sufficient to prevent a "contract, combination . . . or conspiracy" and therefore avoid § 1 scrutiny. The teams are "sparately controlled, potential competitors with economic interests that are distinct from NFLP's financial well-being."

Despite holding the NFL's actions were subject to review under § 1, the Court did not pass on the merits, and noted some aspects of the NFL may provide a sufficient justification of its licensing practices under the Rule of Reason. Ultimately, it will be up to the district court to address the merits of the case and determine whether there is a § 1 violation.

Click below for more detail of American Needle, Inc. v. National Football League and links to media coverage of the case.

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Supreme Court: Registration requirement of 411(a) not jurisdictional for copyright claims

Tue, 02 Mar 2010 12:32:00-0500

Today the Supreme Court decided Reed Elsevier, Inc. v. Muchnick, a case regarding whether the registration requirement of 17 U.S.C. § 411(a) is jurisdictional or a claim processing rule. The Court held the requirement to be nonjurisdictional.

The case involves a class action for copyright infringement by freelance journalists based on republication of works in electronic databases that originally appeared in, for example, newspapers. Some members of the class had copyright registrations, some did not. Nevertheless, the district court certified the class and approved the proposed settlement agreement. The Second Circuit sua sponte raised the issue of jurisdiction, and eventually held the district court lacked jurisdiction to enter an order regarding the unregistered copyrights by virtue of § 411(a).

The Supreme Court disagreed, and held the registration requirement of § 411(a) did not prevent a court from entering an order affecting unregistered copyrights. Specifically, the Court held there was nothing in the statute that indicated Congress intended the requirement to be jurisdictional. Notably, the Court observed § 411(a) did not "clearly state[]" that its requirement was jurisdictional, and also explicitly permits claims involving unregistered works in certain circumstances. This was inconsistent with a jurisdictional requirement, and therefore the district court had jurisdiction to approve the settlement agreement even though it adjudicated claims for unregistered copyrights.

The Court left the question as to whether district courts should sua sponte dismiss copyright cases where the Plaintiff is asserting an unregistered copyright for another day.

More detail of Reed Elsevier, Inc. v. Muchnick after the jump.

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Highlights from oral arguments in Bilski v. Kappos

Wed, 11 Nov 2009 13:49:00-0500

On Monday, the Supreme Court heard oral argument in Bilski v. Kappos in an effort to determine the proper test to be applied to determine whether a claim is patentable subject matter under § 101. The oral argument transcript is available from the Court's website here.

Click below for our thoughts on the arguments and some of the more interesting quotes from the Justices' questioning.

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Supreme Court grants certiorari in Bilski

Mon, 01 Jun 2009 09:50:00-0500

In an order today, the Supreme Court agreed to hear an appeal in Bilski v. Doll regarding the patentability of method claims. Back in October, the Federal Circuit decided In re Bilski, adopting the "machine-or-transformation" test as the exclusive test to determine whether a method is drawn to patentable subject matter.

Bilski filed a petition for certiorari in January. Some thought the Court may take the case given its recent interest in the area of patentable subject matter, specifically the Laboratory Corp. v. Metabolite Laboratories, Inc. case where certiorari was dismissed as improvidently granted after oral argument was held. Although the Court did not render a decision in that case, three justices (Breyer, Stevens, and Souter) dissented from the dismissal of certiorari and would have held the claims directed to nonstatutory subject matter. SCOTUS Blog had the case among its petitions to watch for last Friday's conference, which compiles the cases the authors believe have a reasonable chance of being heard by the Court.

When the Laboratory Corp. case was pending, many believed the Court was looking to rein in abstract method claims. The granting of certiorari may be an indication that this is still the case, and the Court was simply waiting for the issue to be better presented. However, at least one of the previous votes to restrict the permissible scope of method claims, Justice Souter, will not be on the Court when the case is considered next term. Whether this will make a difference in the outcome remains to be seen. Of course, until the Court renders a decision in the case (probably not until sometime in 2010), the Federal Circuit's decision remains the law, and the machine-or-transformation test is the sole test for whether a method claim meets the requirements of § 101.