Supreme Court

AIPLA Provides Legislative Proposal on Patent Eligible Subject Matter

May 17, 2017

The AIPLA has provided a new Legislative Proposal and Report on Patent Eligible Subject Matter under 35 U.S.C. § 101. This report urges congressional action to overhaul, and indeed expressly overrule the current judicially created framework under section 101 in light of recent jurisprudence from the Supreme Court and other lower Courts applying the new standard.

You can read the full Proposal here.

Review of Recent IP Supreme Court Cases

August 15, 2016

The Supreme Court has recently decided three different cases related to intellectual property issues. The Court reviewed the process of instituting an inter partes review (IPR) in In re Cuozzo Speed Techs., finding that a decision of whether to institute an IPR is nonappealable. Additionally, it was held that it is reasonable for the USPTO to use a broadest reasonable interpretation standard for claim construction in IPRs is reasonable.

In Halo v. Pulse; Stryker v. Zimmer, the Supreme Court reviewed the Federal Circuit’s Seagate test for enhanced damages in patent infringement cases. It was found that the Seagate test is too rigid and not consistent with Section 284. The Supreme Court leaves to the discretion of the court the right to enhance damages for egregious behavior.

The final intellectual property case heard by the Supreme Court, Kirtsaeng v. John Wiley & Sons, reviewed the standard for awarding attorney’s fees to a defendant in a copyright case. The Court held that a district court may give substantial weight to the objective reasonableness of the position of the losing party, yet should also account for other relevant circumstances for awarding attorney’s fees.

The Supreme Court has already granted petitions to hear several more intellectual property cases in the upcoming October term. Issues to be decided include calculation of damages in design patent infringement cases, infringement based on supply of a single component of a multi-component invention, protectability of features of a useful article under the Copyright Act, and the application of laches for claims brought within a statutory limitations period. The full presentation may be downloaded here.

Supreme Court Rules Streaming Broadcast Television via a Pay Service over the Internet Without Paying Licensing Fees Illegal

June 27, 2014

On Wednesday, June 25, the Supreme Court ruled that Aereo violated copyright laws by publicly performing copyrighted works. Aereo is a startup whose business model revolves around recording broadcast television programming and storing the programming on their servers. The programming is then streamed on demand to users who pay a monthly fee for the service. The court analogized the business model to cable and satellite television companies who pay billions in fees for the right to retransmit broadcast television programming. Dissenters are concerned that this ruling could have broader impacts pertaining to internet streaming services, arguing that copyright laws are not violated so long as the material is legally obtained and then delivered at the request of an individual (and is therefore a private vs. public performance). The Supreme Court was careful to state that their ruling only applies to the specific circumstances of the Aereo case, but only time will tell the full impacts of the ruling.

Regarding “Patent Trolling”, Plaintiff Ordered to Pay Attorney’s Fees after First Application of New Standard for Awarding Attorney’s Fees in Patent Cases

June 19, 2014

In the case of Lumen View Tech. LLC v., Inc. , the Southern District of New York has become the first court to hand down an opinion and order following the Supreme Court decision of Octane Fitness, LLC v. Icon Health & Fitness, Inc. In Octane Fitness, the Supreme Court made it easier for defendants in patent infringement proceedings to collect attorney’s fees if the case is deemed baseless and/or was brought in bad faith. In Lumen View Tech. LLC v., Inc., the defendant (Find the Best) operated a search engine. The plaintiff (Lumen) issued a letter to the defendant threatening legal repercussions if a “one time licensing fee” was not paid for violating patent 8,069,073 (“ hereafter the ′073 patent”).

Interestingly, the ‘073 patent deals with a computer implemented matchmaking method between two or more parties. Prior to the litigation, Find the Best informed Lumen that they were not in violation of the ‘073 patent as their search engine only requires preference data from a single user and not between multiple parties, as the patented process requires. After several communications between the parties (including an accusation by Lumen’s attorney that Find the Best had committed a hate crime by using the term “patent troll”), litigation proceeded with Lumen claiming infringement of their ‘073 patent.

The court eventually ruled that the ‘073 patent was invalid for claiming an abstract idea. It further found that the case was exceptional under the totality of the circumstances test articulated in Octane Fitness, stating “[n]o reasonable litigant could have expected success on the merits in Lumen’s patent infringement lawsuit against FTB because the ‘073 Patent claimed a bilateral matchmaking process requiring multiple parties to input preference information, while FTB’s ‘AssistMe’ feature utilizes the preference data of only one party.” The court went on to state that under the motivation prong of the test “Lumen’s motivation in this litigation was to extract a nuisance settlement from FTB on the theory that FTB would rather pay an unjustified license fee than bear the costs of the threatened expensive litigation.” Finally, the court found that under the deterrence prong of the test “Lumen’s motivation in this litigation was to extract a nuisance settlement from FTB on the theory that FTB would rather pay an unjustified license fee than bear the costs of the threatened expensive litigation.” Using this reasoning, the court awarded fees and nontaxable expenses.

In related news, the Innovation Act (a bill providing changes to 35 U.S.C. with the goal of dissuading “patent trolls”) has stalled in congress. Part of this act was designed to make recovering attorney’s fees by a prevailing party easier than it is today by awarding fees “unless the court finds that the position and conduct of the nonprevailing party or parties were reasonably justified in law and fact or that special circumstances make an award unjust.” It is expected that the Innovation Act will return to the floor in a year’s time. In the meantime, Octane Fitness provides the applicable standard for recovering attorney’s fees in patent infringement cases. In light of these changes, patent owners must be more certain of their position prior to initiating litigation against an alleged infringer. Conversely, those accused of patent infringement that is believed to be baseless have one more avenue to pursue for recovery of attorney’s fees.

Supreme Court Modifies Standard for Awarding Attorney’s Fees in Patent Cases

May 2, 2014

Two recently decided Supreme Court cases have made it easier for a party to be granted attorney’s fees after winning a case. According to 35 U.S.C. §285, a court may award attorney’s fees to a winning party in “exceptional” cases. Since 2005, the determination of the whether a case is exceptional has followed the guidelines outlined by the Federal Circuit in Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F. 3d 1378 (2005). These guidelines set a high standard for what is to be considered “exceptional.” Under Brooks, a case was exceptional only if there was “some material inappropriate conduct” or when the litigation is both “brought in subjective bad faith” and “objectively baseless.” Furthering the difficulty of proving an exceptional case, these requirements had to be established by clear and convincing evidence.

Two recent decisions by the Supreme Court have modified the requirements for showing an exceptional case. In Octane Fitness, LLC v. Icon Health & Fitness, Inc., the Supreme Court overturned the ruling in Brooks declaring it “unduly rigid” and stating that it “impermissibly encumbers the statutory grant of discretion to district courts.” Instead, the Supreme Court focused on the ordinary definition of the term “exceptional” meaning uncommon, rare, or not ordinary. Therefore, an exceptional case is “one that stands out from others with respect to the substantive strength of a party’s litigating position . . . or the unreasonable manner in which the case was litigated.” The result is a more flexible standard relying on the district court’s discretion in consideration of the facts of the case and the totality of the circumstances.

In the companion case Highmark Inc. v. Allcare Health Management System, Inc., the Supreme Court ruled on the standard of review that appellate courts should use when reviewing an exceptional case determination made by the district court. In Highmark, the appellate court had reviewed an exceptional case determination de novo, granting no deference to the District Court’s decision. However, because the new test set forth in Octane Fitness relies on the discretion of the district court to determine whether a case is exceptional, the Supreme Court held that an appellate court should review this decision using an abuse-of-discretion standard.