IP CASES TO WATCH
2014
Seattle IP Inn of Court – Group 4
Introduction
Shannon Jost
Nautilus, Inc. v. Biosig Instruments, Inc.
Shannon Jost
Alice Corp. Pty. Ltd v. CLS Bank Int’l
Tim Seeley
Highmark, Inc. v. AllCare Health Mgmt.
Sys.; Icon Health & Fitness, Inc. v. Octane
Fitness, LLC
Paul Leuzzi
Limelight Networks, Inc. v. Akamai Tech.,
Inc.
David Binney, Antoine McNamara
POM Wonderful LLC v. The Coca-Cola
Co., B&B Hardware v. Hargis Indus.
Alina Morris
Stacie Foster
Lisa Finkral
Lighting Ballast Control v. Phillips Elec.
Kirk Johns
Petrella v. Metro-Goldwyn-Mayer, Inc.
Tonya Gisselberg
J. Bowman Neely
Wrap-Up and Questions
Agenda
Carmen Wong
Julianne Henley
Subject Technology: Heart rate monitor that measures heart rates by
processing ECG signals. Claimed invention included electronic circuitry.
Claim 1 is representative and recites, in relevant part:
A heart rate monitor for use by a user in association with exercise apparatus
and/or exercise procedures, comprising:
an elongate member;
electronic circuitry including a difference amplifier having a first input
terminal of a first polarity and a second input terminal of a second polarity
opposite to said first polarity;
said elongate member comprising a first half and a second half;
a first live electrode and a first common electrode mounted on said first half
in spaced relationship with each other;
a second live electrode and a second common electrode mounted on said
second half in spaced relationship with each other;
said first and second common electrodes being connected to each other and
to a point of common potential . . . .
Nautilus v. Biosig Instruments
Nautilus – “spaced relationship”?
35 U.S.C. § 112 ¶ 2: “the specification shall conclude with one or more claims
particularly pointing out and distinctly claiming the subject matter which the
inventor or a joint inventor regards as the invention.”
Markman v. Westview Instruments, Inc.: “[t]he limits of a patent must be known
for the protection of the patentee, the encouragement of the inventive genius of
others and the assurance that the subject of the patent will be dedicated
ultimately to the public.” Otherwise, a “zone of uncertainty which enterprise
and experimentation may enter only at the risk of infringement claims would
discourage invention only a little less than unequivocal foreclosure of the field,”
and “[t]he public [would] be deprived of rights supposed to belong to it, without
being clearly told what it is that limits these rights.”
517 U.S. 370, 390 (1996) (quoting General Electric Co. v. Wabash
Appliance Corp., 304 U.S. 364, 369 (1938); United Carbon Co. v. Binney &
Smith Co., 317 U.S. 228 (1942); Merrill v. Yeomans, 94 U.S. 568, 573
(1877).
Nautilus- Indefiniteness Standards
•
District Court: Claim element requiring
electrodes to be in a “spaced relationship”
with each other was indefinite
•
Federal Circuit: Although the claim term
wasn’t expressly defined in the
specification, the “claim language,
specification and figures” of the asserted
patent “provide[d] sufficient clarity to
skilled artisans as to the bounds of this
disputed term.”
•
A claim term is indefinite only when it is
“not amenable to construction” or
“insolubly ambiguous.”
•
A claim is not indefinite under § 112 so
long as a court can find that the claim has
some discernable meaning, and is not
“insolubly ambiguous” even when the
claim is capable of multiple reasonable
interpretations.
Nautilus – Lower Courts
(1) Whether the Federal Circuit’s acceptance of
ambiguous patent claims with multiple reasonable
interpretations – so long as the ambiguity is not
“insoluble” by a court – defeats the statutory
requirement of particular and distinct patent
claiming; and
(2) Whether the presumption of validity dilutes the
requirement of particular and distinct patent
claiming.
Nautilus – Questions Presented
• Under Federal Circuit standard, scope of patent may not be
known until claim is construed by court. Claim did not
provide clear notice, on its face, of what it covered. Shouldn’t
the public know what a patent covers at the time of issuance?
Must we wait for appeal?
• If “reasonable persons [may] disagree” about the proper scope
of a patent claim, how should the public proceed?
• If a claim may be definite where the court can discern its
function, without clearly claiming how to perform that
function, does the patent claim preempt all solutions which
address that function?
• Unclear and overbroad patents are key contributor to
ballooning expense and frequency of patent litigation.
Nautilus – Representative
Petitioner and Amici Arguments
Predictions – What will SCOTUS do?
• 35 U.S.C. § 101: “Whoever invents or discovers
any new and useful process, machine,
manufacture, or composition of matter, or any
new and useful improvement thereof, may obtain
a patent therefor, subject to the conditions and
requirements of this title.”
Alice Corp. Pty. Ltd. v. CLS Bank Int’l
• Asserted claims generally directed to a computerized method
for performing a “form of escrow” designed to mitigate the
risk that only one party to a financial transaction will perform
its contractual obligations at settlement.
• Claims recite computer-implemented methods of settling
financial transactions, as well as computer-readable media
capable of storing, and generic computer systems capable of
running, programming instructions for performing the claimed
method.
• The patents do not disclose or claim the specific programming
required to implement the claimed methods.
• District Court: No patentable claims.
CLS – Claimed Invention and Lower
Court Ruling
(1) “What test should the court adopt to determine
whether a computer-implemented invention is a
patent ineligible ‘abstract idea’; and when, if
ever, does the presence of a computer in a claim
lend patent eligibility to an otherwise ineligible
abstract idea?” and
(2) “In assessing patent eligibility under 35 U.S.C.
§ 101 of a computer-implemented invention,
should it matter whether the invention is
claimed as a method, system, or storage
medium ...?”
CLS – Questions before en banc CAFC
• 6 separate opinions, none endorsed by a majority.
• 5-5 split as to whether Alice’s claims to computer
system inventions were patentable (leaving in
place the lower court’s SJ that they were nonpatentable).
• Alice’s remaining claims held non-patentable, but
based on different, conflicting reasons.
• No clear legal standard emerged as to whether,
and when, computer-implemented inventions are
patentable.
CLS –en banc CAFC
Whether claims to computer-implemented
inventions—including claims to systems and
machines, processes, and items of manufacture—
are directed to patent-eligible subject matter within
the meaning of 35 U.S.C. § 101 as interpreted by
this Court?
CLS – Question Presented - SCOTUS
Predictions – What will SCOTUS do?
The Fee-Shifting Dash
Congress vs Courts
Paul W. Leuzzi
Weyerhaeuser Company
Seattle IP Inn of Court - February 20, 2014
Brief History
 35 U.S.C. §285
The court “in exceptional cases may award reasonable attorney fees to
the prevailing party”
 Exceptional
 Willful infringement or inequitable conduct
 Otherwise, only if both:
The litigation is brought in subjective bad faith, and
The litigation is objectively baseless
 Clear and convincing evidentiary standard
 Standard of Review on Appeal
 Exceptional determination – abuse of discretion/clear error
 Award of attorney fees – abuse of discretion
§285 Under Pressure Today
 Abusive Litigation
 Difficult to end case early, even when weak
 Bad actors seek to increase litigation costs to pressure settlements
 Deadweight to economy
 Rarity of Fee Awards
 Only about 1% of cases
 Supreme Court
 Deciding two cases, oral argument on February 26th
Congressional Activity
 At least 12 bills introduced relating to patent litigation
 4 have fee provisions and 3 seek to amend Rule 11
 Judicial Pronouncements
 Chief Judge Radar’s Op-Ed in the New York Times (June 4, 2013)
 States §285 gives judges authority to curtail abusive litigation
 Directs District Judges to seek out more opportunities to award
fees
Octane
Octane Fitness v Icon Health & Fitness
 District Court
 Icon (a large company) sued Octane (a start-up) for infringement of its
patented linkage system for elliptical machines. After claim construction
Octane was granted summary judgment, finding multiple claim limitations
missing from the accused device.
 District court denied Octane’s motion for fees under §285 as not being
objectively baseless.
 Federal Circuit
 Affirmed judgment and denial of fees.
 No reason to revisit standard for exceptionality.
 Rehearing en banc denied.
Octane
Octane Fitness v Icon Health & Fitness
 Question Presented:
 Whether a district court, in exercising its discretion to award attorney fees in
exceptional-cases under §285, should use traditional equitable factors…rather
than the Federal Circuit’s rigid test requiring both objective baselessness and
subjective bad faith?
 Equitable Factors:
 Consistent with Supreme Court rulings and Copyright and Lanham Acts.
 District courts discretionary authority should not be improperly appropriated
by federal Circuit.
 Goverment supports return to pre-Brooks “totality of circumstances” test.
 Need to address litigation abuse.
 Brooks Test:
 Courts should require misconduct.
 Fee shifting implicates First Amendment.
Highmark
Highmark Inc. v. Allcare Health Management Systems, Inc.
 District Court
 Ruled for Highmark on its DJ of non-infringement, invalidity and
unenforceability of Allcare’s patents covering heath management system.
 Allcare, a patent assertion entity, counterclaimed for infringement of 3
claims, 1 of which was subsequently withdrawn.
 Federal Circuit
 Affirmed without written opinion.
 District Court
 Granted motion for exceptional case and award for fees and sanctions
under Rule 11.
 Federal Circuit
 Held objective baselessness is a question of law subject to de novo review.
 Affirms for withdrawn claim but reverses asserted claim objectively
baseless and that Allcare’s actions, when considered separately, amount to
misconduct.
Rehearing en banc denied.
Highmark
Highmark Inc. v. Allcare Health Management Systems, Inc.
 Question Presented:
 Whether a district court’s exceptional-case finding under §285, based on
its judgment that a suit is objectively baseless, is entitled to deference?
 Deferential Review:
 Consistent with Supreme Court precedent under EAJA and Rule 11
 District courts best suited to evaluate entire record and make decision.
 Preserves resources by discouraging appeals.
 De Novo Review:
 Consistent with de novo review of claim construction on which
objectively baselessness will depend.
 Federal Circuit has expertise to make a legal determination
 Enhances uniformity and therefore predictability.
Congressional Activity
 12 Bills Pending in Congress.
 4 Have Fee Provisions.
 3 Seek to Amend Rule 11.
The Federal Circuit
 Chief Judge Rader’s 2013 Op-Ed.
 Kilopass.
 December, 2013 Panel Decision.
 Court not persuaded that objective baselessness imposes too great of a
burden.
 Bad faith determination is based on the “totality of the circumstances”.
 Bad faith can be inferred.
 Questions whether
 bad faith should be a requirement
 clear and convincing standard
 but as a panel decision is unable to change.
QUESTIONS?
2014: Eye on the Supreme Court
Akamai vs. Limelight
Can patent infringement be induced if no
single entity is liable for direct infringement?
Direct Infringement
1. A method for . . . comprising:
A
•
•
•
•
generating . . . ;
transmitting . . . ;
receiving . . . ;
playing . . . .
Induced Infringement
B
A
1. A method for . . . comprising:
•
•
•
•
generating . . . ;
transmitting . . . ;
receiving . . . ;
playing . . . .
35 U.S.C. § 271(b):
“Whoever actively induces infringement of a
patent shall be liable as an infringer”
Divided Infringement
B
A
1. A method for . . . comprising:
•
•
•
•
generating . . . ;
transmitting . . . ;
receiving . . . ;
playing . . . .
No single entity performs all of the limitations.
No one is liable for direct infringement.
Divided Infringement w/ Inducement
Limelight
B
A
1. A method for . . . comprising:
•
•
•
•
generating . . . ;
transmitting . . . ;
receiving . . . ;
playing . . . .
What if B induces A to perform all of the method steps
that B does not itself perform?
Before Akamai
• “Indirect infringement requires, as a predicate, a
finding that some party amongst the accused actors
has committed the entire act of direct infringement.”
– BMC Resources, Inc. v. Paymentech, LP, 498 F.3d 1373 (Fed. Cir. 2007)
Akamai — Majority
• BMC Resources overruled
– “[T]hat there can be no indirect infringement without
direct infringement . . . is well settled.”
– “[But] [r]equiring proof that there has been direct
infringement . . . is not the same as requiring proof that a
single party would be liable as a direct infringer.”
• “[A]ll the steps of a claimed method must be
performed . . . to find induced infringement, but
. . . it is not necessary to prove that all the steps
were committed by a single entity.”
Akamai — Majority (cont’d)
• Policy argument
– “It would be a bizarre result to hold someone liable for
inducing another to perform all of the steps of a method
claim but to hold harmless one who goes further by
actually performing some of the steps himself.”
• Textual argument
– 35 U.S.C. § 271(b) (“Whoever actively induces
infringement of a patent shall be liable as an infringer”).
Akamai — Linn Dissent
• How can there be direct infringement if there is
no direct infringer?
• Vicarious liability is sufficient to protect patent
holders and prevent gamesmanship
• Even if vicarious liability were not sufficient, it is
the job of Congress, not the Court, to fix the law
Akamai — Newman Dissent
• Agrees with Judge Linn that inducement cannot
occur unless a single entity directly infringes
• But Newman would find direct infringement even
where no single entity performs all of the steps
– “Infringement is not a question of how many people it
takes to perform a patented method.”
• Under Newman’s approach, Limelight could be
liable for both direct and induced infringement
Akamai — SG’s amicus brief
• Fed. Circuit majority opinion has “intuitive force”
– “As a matter of patent policy, there is no obvious reason
why a party should be liable for inducing infringement
when it actively induces another party to perform all the
steps of the process, but not liable when it performs some
steps and induces another party to perform the rest.”
• Also agrees that vicarious liability is insufficient
– Reversing the Fed. Cir. “will likely permit vendors such as
Limelight to avoid liability altogether”
• But fixing the mess in Congress’ job, not the Court
– “That statutory gap is unfortunate, but it reflects the
better reading of the current statutory language in light of
established background principles of vicarious liability.”
Akamai — Other Amici
• This is really bad for us because…
• Altera
– Fed. Cir. decision introduces uncertainty in business;
potential liability despite apparent non-infringement
– Intent requirement could be met by defendant continuing
activity post-suit
• Google
– Federal Circuit decision gives trolls a new weapon
– Permits liability for practicing prior art
• CTIA
– Federal Circuit decision encourages bad claims-drafting
POM Wonderful LLC
v.
The Coca Cola Company
Case Summary by:
Julianne Henley & Carmen Wong
Presented by:
Stacie Foster
POM Case
• Background: Coca Cola’s
Product
– Coca Cola released a
MINUTE MAID branded
drink labeled
“Pomegranate Blueberry
Flavored Blend of 5 Juices”
(“Juice Drink”).
POM Case
• Background: Coca Cola’s
Product Ingredients
– 99.4% Apple & Grape
Juices
– .3% pomegranate juice
– .2% blueberry juice
– .1% raspberry juice
POM Case
• Background: Coca Cola’s
Product Ingredients
– Product named “Pomegranate
Blueberry Flavored Blend of 5
Juices
– The word “pomegranate” and
“blueberry” were in larger font
than the rest of the name
– All 5 fruits were prominently
illustrated on the label of Coca
Cola’s Juice Drink
POM Case
• Background: POM’s Product
– POM sells POM
WONDERFUL branded
drinks including
pomegranate and
pomegranate blueberry
juices.
POM Case
• 11/26/08: POM sues Coca Cola in C.D. Cal.
– False advertising (Lanham Act & Cal. BPC)
– Statutory Unfair Competition (Cal. BPC)
– POM: Coca Cola’s product misled
consumers into believing it was mostly
made of pomegranate and blueberry juices
POM Case
• District Court & 9th Circuit:
– The District Court & 9th Circuit held that the
Federal Food, Drug, & Cosmetic Act (FDCA)
preempted POM’s Lanham Act claims
against Coca Cola’s Juice Drink (as well as
state law claims to the extent they
conflicted with the FDCA).
POM Case
• SCOTUS: whether 9th Circuit Court erred in
holding that a private party cannot bring a
Lanham Act claim challenging a product label
regulated under the Federal Food, Drug, &
Cosmetic Act.
POM Case
• POM’s Arguments:
– The Lanham Act and FDCA are
not in “irreconcilable conflict”
• Circuit Split:
– 3rd, 8th, and 10th recognize false
labeling & advertising claims
under the Lanham Act
– 9th: FDCA preempts these
claims
POM Case
• Coca Cola’s Argument:
– Circuits are not in conflict -- the
cases POM relies on outside
the 9th Circuit did not address
the FDCA’s preemption of the
Lanham Act.
– Government has adequate
resources to regulate food and
beverage labels and should be
permitted to do so.
POM Case
• Solicitor General’s Amicus Brief:
– Urged the Supreme Court not to grant Certiorari
– FDCA is not “privately enforceable” and permits
manufacturers to use truthful flavoring names on
food and beverage labels.
B & B Hardware, Inc.
v.
Hargis Industries Inc.
Presented by:
Stacie Foster and Alina Morris
B & B Hardware v. Hargis Indus.
• B & B Hardware:
– Mark:
– Goods:
– Use:
– Registered:
SEALTIGHT
industrial fasteners for the
aerospace industry
1990
1993
B & B Hardware v. Hargis Indus.
• Hargis Industries:
– Mark:
– Goods:
– Use:
– Filed:
– Refused:
SEALTITE
self-drilling, self-taping screws for
use in the metal-building industry
1992
1996
B&B, and merely descriptive
B & B Hardware v. Hargis Indus.
• 1997: Hargis petitions to cancel B&B
– Abandonment
– Priority
• 1998: B&B sues Hargis in Arkansas
• Cancellation suspended
• 2000: Arkansas Court
– B&B’s mark descriptive and unregistrable
– Didn’t reach likelihood of confusion
B & B Hardware v. Hargis Indus.
• 2001: Cancellation resumes, Hargis amends
B&B to include descriptiveness claim
• 2001: Hargis’ Examiner withdraws refusal over
B&B registration
– Hargis submitted Ark. descriptiveness decision
• 2002: Hargis’ Examiner withdraws
descriptiveness refusal
– Hargis submitted acquired distinctiveness claim
B & B Hardware v. Hargis Indus.
• 2002: Hargis app publishes
• 2003: B&B opposes Hargis app
• 2003: Hargis’ amended petition to cancel B&B
deemed untimely by TTAB
– Petition amended 5+ years post registration
– Knew/should have known basis for
descriptiveness claim from the outset
• 2003: Hargis’ cancellation of B&B dismissed
B & B Hardware v. Hargis Indus.
• 2006: B&B sues Hargis in Arkansas again
• 2007: TTAB sustains B&B’s opposition
– Likelihood of confusion
– Priority
– No issue preclusion from Arkansas
• Ark. didn’t consider likelihood of confusion
• B&B’s mark is now incontestable
B & B Hardware v. Hargis Indus.
• B&B’s Second Arkansas Suit Continues!
– B&B argues 2007 TTAB decision should have
preclusive effect
– B&B argues 2007 TTAB decision should at least
have deference and be part of evidence
• Ark. Court: no preclusion or inclusion
• Ark. Jury: no likelihood of confusion
• 8th Circuit: TTAB not preclusive on LoC
B & B Hardware v. Hargis Indus.
• B&B: TTAB preclusion
or deference:
– LoC Factors
– Facts found
– Market considered
– Same ultimate issue
– TTAB experts
– Enforce repose
B & B Hardware v. Hargis Indus.
• Hargis: no preclusion
or deference:
– Messy history
– 4 different tribunals
– Different info.
– LoC standards
– Article I vs. Article III Ct.
Petrella v. MGM
or
Don’t be that lame, then tell
me laches doesn’t apply.
Tonya Gisselberg and J. Bowman Neely
Case time line
• 1963 & 1973 – Frank Peter Petrella and boxer Jake LaMotta create
a book and 2 screen plays based on LaMotta’s life.
• 11/19/1976 – Copyrights assigned by Petrella and LaMotta.
• 1980 – United Artists released Raging Bull.
• 1981 – Frank Petrella died.
• 1991 – Paula Petrella filed a renewal application for the 1963
screen play.
• 7 year gap.
• 1998 – Petrella’s attorney informed the defendants of their
copyright infringement.
• 1998 – 2000 Letters exchanged regarding the infringement.
• 9 year gap.
• 2009 – Petrella sued MGM, UA and others for copyright
infringement.
Ninth Circuit Ruling
We hold that Petrella’s copyright, unjust
enrichment and accounting claims are barred by
laches, and we therefore affirm the district court’s
grant of summary judgment in favor of the
defendants.
Petrella v. MGM, 695 F.3d 946, 957 (2012).
Petrella abandoned her non-copyright claims on
appeal to the U.S. Supreme Court.
Relief requested by Petrella from the
U.S. Supreme Court
• Petrella filed suit on 1/6/2009.
• In light of the three-year statutory limitations
period, Petrella sought damages and
injunctive relief for acts of infringement
occurring on or after January 6, 2006.
Copyright Act civil statute of
limitations
No civil action shall be maintained under the
provisions of this title unless it is commenced
within three years after the claim accrued.
17 U.S.C. §507(b).
Laches
Laches is an equitable defense that prevents a
plaintiff, who with full knowledge of the facts,
acquiesces in a transaction and sleeps upon his
rights.
Elements of the defense:
(1) the plaintiff delayed in initiating the lawsuit;
(2) the delay was unreasonable; and
(3) the delay resulted in prejudice.
Circuits Split re Laches in Copyright
Cases
• Fourth Circuit – no laches.
• Eleventh Circuit – strong presumption of
timeliness if suit filed within the statutory period.
Laches available only in extraordinary
circumstances.
• Second Circuit - laches is available as a bar to
injunctive relief but not to money damages.
• Sixth Circuit – laches is available in only “the most
compelling of cases.”
• Ninth Circuit - laches can bar all relief, both legal
and equitable
Petrella frames the issue before the
U.S. Supreme Court
Whether the nonstatutory defense of laches is
available without restriction to bar all remedies
for civil copyright claims filed within the threeyear statute of limitations prescribed by
Congress, 17 U.S.C. § 507(b).
Petrella’s Arguments
• Petrella’s claims for relief should not be completely barred.
• Congress has prescribed the time allowed for bringing
copyright infringement suits and courts may not impose
additional timeliness doctrines, such as laches.
• Laches cannot bar either injunctive relief or damages for
copyright infringement, as it would result in
uncompensated compulsory licenses and laches cannot
limit legal, as opposed to equitable, remedies.
• Precluding laches provides the benefits of preventing
evidentiary concerns from trumping heirs’ copyrights,
reducing needless litigation by copyright holders and
protecting against financial prejudice through the equitable
estoppel doctrine.
MGM’s Arguments
• Federal courts have the inherent equitable
power to apply laches in all civil actions.
• Congress intended that federal courts would
apply laches in copyright cases.
• Laches may bar an entire claim regardless of
the relief sought.
• Petitioner’s entire claim is barred by her
unreasonable delay and the resulting
prejudice.
Justices’ Comments
Justice Alito – The copyright statute of
limitations says you can’t do it (bring a claim)
unless it’s within 3 years. It doesn’t say that if
it’s within 3 years, you’re home free.
Justice Sotomayor – In terms of injunctive relief,
given their reliance on your failure to act for 18
years, they shouldn’t be put out of business and
told that they can’t continue in their business.
Justices’ Comments cont.
Justice Kagan – You don’t have very many cases
where courts have applied laches as against the
statute of limitations, but that’s because you can’t
think of many instances in which it would be
considered unfair to take the entire statute of
limitations to bring a suit.
Justice Breyer – Who in their right mind would go
ahead and make this year after year if a huge
amount of money is going to be paid to this
copyright owner who delayed for 30 years and
didn’t even seem to own it.
Justices’ Comments cont.
Justice Kennedy – Estoppel applies. Why isn’t
laches just a first cousin of estoppel? Estoppel is an
affirmative misrepresentation. Why isn’t laches
here almost a misrepresentation?
Justice Sotomayor – Your complaint is not against
the witness dying. Your complaint is about what
Congress does, which is to give a person the right to
keep a copyright or renew it when the individual
with whom you probably dealt with is dead. That’s
always going to be the case.
Justices’ Comments cont.
Justice Ginsburg – Why is it unreasonable for the
plaintiff to wait to see if the copyright is worth
anything?