Teva and the Foundation of Patent Litigation

Posted in Litigation, Patents

Patent_searchAmazingly, there is only one patent case on the Supreme Court’s docket, so far—though there are at least three more cases up for consideration at the cert-petition stage. (The Supreme Court decided five patent cases last term.) The case that is on the docket, Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., involves a patent dispute between Teva and various generic drug companies, over a drug prescribed for the treatment of multiple sclerosis. But the Teva case raises a question that has little to do with the details of the particular dispute between these drug companies. Instead, the Teva case arguably cuts to the foundation of all patent litigation.

Typically, under the rules of civil litigation, findings of fact are made by the district court and those factual findings “must not be set aside [by the court of appeals] unless clearly erroneous.” In other words, the court of appeals’ job is to focus on legal questions, deferring to the district court when it comes to questions of fact.

The procedure for patent litigation includes an early phase called “claim construction,” where the district court must construe the patent claims that are in dispute, before the trial—and even before summary judgment proceedings—can occur. Arguably claim construction is the foundation of patent litigation, and it involves a lot of scientific evidence from experts on both sides. The district court relies on this evidence (and on its determinations regarding the validity or credibility of the evidence) when it issues its factual findings and its decision regarding claim construction.

But on appeal in a patent case, the Court of Appeals for the Federal Circuit does not defer to the district court’s factual findings. Instead, the Federal Circuit may ignore the district court and make its own determinations regarding claim construction, under what is known as “de novo” review. As Teva puts it, this is contrary to the general rules of civil litigation—and it can make patent litigation “longer, more expensive, and less predictable.”

In Teva, the district court made factual findings pertaining to polypeptide chemistry, which guided the district court’s interpretation of a key term in Teva’s drug patent. But on appeal the Federal Circuit disagreed with those findings and construed Teva's patent in a way that invalidated it.

Now, Teva essentially asks the Supreme Court to put an end to the Federal Circuit’s de novo review of the district court's claim construction—requiring the Federal Circuit to give the same deference to the district court’s factual findings that is usually required in civil litigation.

In other words, the Teva case could have a profound effect on patent litigation going forward. If the Supreme Court does what Teva is asking it to do, claim construction will become much more important in the district court—because parties won't have an open door to challenge the claim construction on appeal.

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REVISITING PATENT REFORM

Posted in IP Ownership, Litigation, Patents

With the election of a Republican controlled Senate many expect the new congress to revisit the issue of patent reform.  Patent reform legislation was passed by the Republican controlled House of Representatives in 2013 but failed to get out of the Democratically controlled Senate.  With both the Senate and House in Republican hands, it appears likely that some form of patent reform legislation could pass Congress in 2015.

                The America Invents Act (AIA) passed in 2011 and was fully implemented in 2013.  It included a host of changes to patent eligibility, procedure and post grant review process, but many critics felt that it did not do enough to protect companies and consumers from frivolous patent litigation, particularly patent enforcement actions brought by non-practicing entities (patent holders who do not produce the patented product).

                Current patent reform movements have sought to remedy the perceived deficiencies in the AIA, and the House Republican bill, H.R. 3309, should provide a good guide to the types of reform we can expect to see from a new Congress.  H.R. 3309’s provisions included:

  • A requirement that plaintiffs be more specific in pleadings to the court;
  • A provision that would expand the awarding of attorney fees to the prevailing party;
  • Limited discovery early in an infringement proceeding (prior to claim construction);
  • Requirements of transparency in the ownership of Patents; and
  • Protection for customers and end users from patent infringement claims.

                While H.R. 3309 did not make it through the Senate, patent reform has traditionally enjoyed relative bi-partisan support and President Obama has seemed to favor the types of reforms found in H.R. 3309.  As a result, patent reform legislation might be an area where President Obama and the new Republican Congress can find common ground.

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Protection Under the DMCA (Digital Millennium Copyright Act) Safe Harbor

Posted in Copyrights, IP Ownership, PRACTICAL IP Tips, Websites, Domain Names & Apps

What is the DMCA?

The Digital Millennium Copyright Act (“DMCA”) is an amendment to the United States Copyright Act (i.e., the federal copyright law) signed into effect in October 1998 that, among other things, provides certain limitations on the liability of online service providers (“OSP”) for acts of copyright infringement.

The DMCA actually contains two types of liability limitations:

The first protects an OSP which provides a link to copyrighted online material located on another site.

The second, which we discuss in more detail here, limits the liability of OSPs that store copyrighted materials on a system or network they control or operate if (among other things), (i) such storage was directed by a third-party user, (ii) the service provider has designated an agent (also referred to as a “take-down agent”) to receive notifications of claimed infringement and (iii) the service provider has both registered the agent’s contact information with the U.S. Copyright Office and publicly provided such information on its website.

It is important to note that, because the DMCA protects against claims of copyright infringement and not other types of wrongdoing, it will not help against claims of infringement concerning trademarks or service marks or claims of defamation, stolen trade secrets, etc.

Why is the DMCA important?

The DMCA is a “safe-harbor,” which is legalese for a written exception to the general rule that an OSP is liable for the acts of infringement its users commit. Because the DMCA is intended to protect OSPs from inadvertent infringement by third parties, it will not help in a situation where the OSP itself is accused of infringement (i.e., posting copyrighted content in its own right), or where it knows content it hosts infringes a copyright.

Since the DMCA can be an absolute defense to liability for copyright infringement by a third party, registering a take-down agent may even prevent someone from suing the OSP for infringement in the first place.

Does the DMCA apply to me?

In essence, you qualify as an OSP and are eligible for protection under the DMCA if you operate, manage or host a website (including a blog) that allows users (aka third parties) to upload content. That can include the following activities:

  • Allowing users to post comments or reviews, or respond to discussion threads
  • Allowing users to upload media, such as pictures, .gifs or videos

The above is true because the definition of “infringe” or “infringement” is very broad and captures many activities. For example, if your site allows users to submit a thumbnail sized avatar and the user chooses a copyrighted image, you can be liable. Knowledge or intent are not relevant for purposes of liability for infringement under the copyright law; so, you can be held responsible for copyright infringement even if you have no idea these activities are going on (and, if you have not registered a DMCA agent, even if you take down the offending material immediately after being notified!).

How can I obtain protection under the DMCA? 

With 3 easy steps!

1.    Designate a copyright take-down agent to receive DMCA takedown notices.  

In order to designate an agent, an OSP must provide some basic information and pay a filing fee ($105 for the first OSP, $35 for up to 10 additional OSPs) to the U.S. Copyright Office. The requested information includes the full legal name of the OSP(s) and contact information (including email address) for the agent and the U.S. Copyright Office has provided a form for this purpose. The U.S. Copyright Office maintains an official list of designated agents, which allows a person who believes his or her work is being infringed to quickly send a takedown notice.

2.    Adopt a copyright infringement policy and notify site users.  

The OSP must publish a statement on its website to provide notice to the site users of its copyright infringement policies, the consequences of repeated infringing activity, and advising users of the takedown agent’s contact information.  Many people include a DMCA policy in their terms of service, but it may also be placed in a separate document.

 3.    Watch for and properly comply with any notice of claimed infringement received.

A person claiming infringement must provide the OSP a signed written notice meeting certain specifications, including: identification of the work which is allegedly infringing, a demand to remove such material, the claimant’s valid contact information, and statements to the effect that (i) the claimant is the owner of the material (or authorized to act on the owner’s behalf) and (ii) the material is not being used in an authorized manner.

Recall that the DMCA protects only against copyright infringement, not against other types of accused wrongdoing.  Therefore, an OSP must be careful to make sure any notice it receives alleges a copyright infringement and not some other type of wrong doing.

Also note that not all cease and desist letters or takedown notices will be proper, and an OSP is not under a legal obligation to comply with notices that do not meet the requirements. If a takedown notice does meet the proper requirements, an OSP should: (1) “expeditiously” remove or disable access to the potentially infringing material (unfortunately, the standard for “expeditious” is unclear) and (2) notify the potentially infringing user that his or her material has been removed to allow them to file a counter-notice. Often, a potentially offending user will not file a counter-notice, but if he or she does, the OSP should forward the counter-notice to the person who claimed infringement. That person must then file a lawsuit within 14 days; otherwise, the OSP may reinstate the disputed material.

While there is no requirement under the DMCA for an OSP to remove any material(s), the receipt of a valid takedown notice acts to give the OSP notice of the allegedly infringing activity, and therefore ineligible for limited liability. The OSP may then face liability for continuing to host the material.

Consult a qualified attorney if you are unsure of what the notice or demand letter is alleging or if you have questions about whether you must comply with a takedown notice.

I didn’t register a DMCA agent and now someone has filed a copyright infringement lawsuit against me. Am I out of luck?

In order to benefit from the safe harbor protections, an OSP must register a DMCA agent prior to an allegation of infringement which it wishes to defeat with the registration.

Even if an OSP has not registered a DMCA agent, it can still defend against a claim on the merits of the alleged infringement. For example, if the amount of supposedly infringing material is small or is posted in a way meant to be educational and includes a citation for the material, you may have a defense under the fair use doctrine (although a fair use defense may not apply depending on the facts of each particular situation). Some cases also indicate that a defense may exist by asserting that infringing third-party posts are simply not the responsibility of the OSP. However, if an OSP has not registered under the DMCA, it will not be able to claim that it was unaware of the infringing activity or that it quickly removed the offending material.

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Confusion on Software Patents and Alice v. CLS Bank - Alice in a Computer Wonderland

Posted in Litigation, Patents, Software

ComputerLast term the U.S. Supreme Court handed down Alice Corp. v. CLS Bank International. Alice drew interest for its focus on software and patentability under 35 U.S.C. § 101, the statute that codified eligibility for patent protection. The outcome impacts industries such as software, computer hardware, and telecommunications. Patents dealing with software or computer-implemented inventions may not lead the ten o'clock news...but some of the most successful American companies, such as Apple, Microsoft, and Google, work in this sector, and the Alice decision was of great interest to the whole industry. So the Supreme Court had all of Silicon Valley on the edge of its seat waiting for Alice.

The patents in suit in Alice dealt with software used in financial trading - specifically a computer-based method for intermediated settlement. For example, two parties to a financial trade choose to use a third party intermediary. This intermediary accepts payments from each side and completes the transaction when each party has fulfilled its obligations. A party's failure to pay terminates the trade. This system presents less risk because no money has been exchanged if one party fails its obligations. Alice's patents took this financial practice and implemented it on a computer. CLS Bank challenged the patents' subject matter eligibility under § 101. Section 101 states:

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.

The Supreme Court has previously found implicit exceptions to this statute, namely, laws of nature, natural phenomena, and abstract ideas are not eligible for patent protection.  

The Supreme Court heard the case after the district court invalidated Alice's patents on summary judgment. The judge ruled that a method of intermediated settlement to minimize risk is a "basic business or financial concept." At the Federal Circuit, a panel reversed the district court by a vote of 2-1. CLS Bank petitioned for en banc rehearing, which the court granted. Seven out of ten judges on the en banc panel agreed with the district court and invalidated Alice's patents. But the Federal Circuit created more confusion than certainty. The confusion came from the multiple opinions (seven) and the lack of a discernible standard for applying § 101. The plurality opinion, with five votes, outlined an analysis focusing on the risk of "preemption." Preemption occurs when a patent issues on a fundamental concept or idea. Upholding such a patent preempts the use of the building blocks of invention, therefore stifling innovation.

Alice appealed and the Supreme Court granted cert. A measure of interest in the case: third parties filed over forty amicus curiae briefs. The Supreme Court unanimously invalidated the patents. Justice Thomas, writing for the court, reasoned in part:

We need not labor to delimit the precise contours of the 'abstract ideas' category in this case. It is enough to recognize that there is no meaningful distinction between the concept of risk hedging in Bilski and the concept of intermediated settlement at issue here. Both are squarely within the realm of 'abstract ideas' as we have used that term.

Alice Corp. v. CLS Bank International, 134 S. Ct. 2347, 2357 (2014).

Since the decision, practitioners have debated whether Alice changed the law or affirmed it. Over the summer numerous courts invalidated computer-implemented patents on § 101 grounds based on the Alice decision. Examples include:

This wave of decisions suggests that Alice changed the law. On the other hand, the first judge to look at Alice's patents found them invalid. The Supreme Court affirmed, not overruled, the trial court judge.

We will see how the case law develops and how the USPTO implements Alice in its rulemaking. Our experience so far is that the USPTO is taking a tougher stand against software patents. Software is still patentable in certain circumstances but it will take time to discern the exact limits of software patentability post-Alice.  

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New Weapon for Combating Online Defamation in Texas

Posted in Defamation, In the News, Litigation

The Texas Supreme Court has held that authors of online content can be ordered to delete defamatory statements they make on their websites.

In Robert Kinney v. Andrew Barnes et al., the president of the BCG Attorney Search legal recruiting firm, Andrew Barnes, posted statements on the websites JDJournal.com and Employmentcrossing.com that implicated former BCG recruiter Robert Kinney in a kickback scheme during his time at BCG.  Barnes owned JDJournal.com and Employmentcrossing.com. 

Kinney sued Barnes for defamation, and sought an order that would:  (1) require Barnes to delete the alleged defamatory statements from his websites (and request that third-party publishers of the statements do the same) upon a final adjudication that the statements are defamatory; and (2) permanently enjoin Barnes from making similar statements in the future.  Barnes argued that Kinney’s requested relief would constitute prior restraints on his right to free speech under the Texas Constitution.    

The Texas Supreme Court held that ordering the deletion of statements after a final adjudication that those statements are defamatory would not constitute a prior restraint.  Justice Lehrmann wrote for the Court:  “Such an injunction does not prohibit future speech, but instead effectively requires the erasure of past speech that has already been found to be unprotected in the context in which it was made.  As such, it is accurately characterized as a remedy for one’s abuse of the liberty to speak and is not a prior restraint.”

However, the Court held that enjoining the making of similar statements in the future would constitute a prior restraint on speech, which would be permissible only in rare circumstances.  The Court then held that Kinney v. Barnes did not present such a circumstance.  Specifically, the Court held that enjoining future defamatory statements would not effectively remedy defamation without chilling free speech, even if similar statements had already been judged defamatory and ordered deleted.

In so holding, the Court rejected Kinney’s argument that the case for enjoining future online speech was more compelling due to the speed with which online defamatory statements can spread to a vast audience.  Rejecting Kinney’s argument, the Court made clear that online speech shall receive the same protection under the Texas Constitution as speech disseminated through other mediums.

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Copyright Protection is Not Monkey Business

Posted in Copyrights, In the News, IP Ownership

Macaca_nigra_self-portrait_(rotated_and_cropped)The U.S. Copyright Office released an updated 1,222-page “Compendium of U.S. Copyright Office Practices, Third Edition” earlier this week clarifying its position that it "will register an original work of authorship, provided that the work was created by a human being."  The report goes on to state that "[t]he Office will not register works produced by nature, animals, or plants.  Likewise, the Office cannot register a work purportedly created by divine or supernatural beings, although the Office may register a work where the application or the deposit copy(ies) state that the work was inspired by a divine spirit."  The report provides examples of works that will not be protected by copyright, and the first example is "A photograph taken by a monkey."

The report was released weeks after wildlife and nature photographer David Slater claimed that Wikimedia was infringing his copyrights in the "selfies" taken by macaque monkeys in Indonesia by allowing thepictures to be posted in Wikimedia Commons, a library of public domain photos.  Wikimedia refused to remove the images because it believed the monkey was the photographer, and, therefore, the "author" of the photo...and, as non-humans can't own copyrights, the photo was in the public domain.  Slater argued that he staged the shot and set up the selfie intentionally, so it's irrelevant that the monkey pressed the shutter (likening the monkey to an assistant).

Although Slater may still file a lawsuit against Wikimedia (as UK or European law may allow Slater to claim ownership if he employed "labour, skill and judgment" in connection with the photographs or they were part of his “intellectual creation”), he is currently offering free canvas prints of the monkey selfie and donating money to the Sulawesi Crested Black Macaques Conservation Programme for each print redeemed.

 

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SCOTUS Preview: Trademark Confusion

Posted in Litigation, Trademarks

Trademark

In the 2014-2015 term the Supreme Court will decide at least two important trademark cases. (There's still time for them to add more.) Here's a quick preview of one of them:

In B&B Hardware, Inc. v. Hargis Industries, Inc., B&B (a manufacturer of sealing fasteners) owns the registered mark "SEALTIGHT," and Hargis (also a manufacturer of sealing fasteners) sought to register the mark "SEALTITE." The marks are associated with similar products, but the products move in different channels of trade.

This case is about the two ways in which parties, under the Lanham Act, can litigate the issue of whether one mark is "likely to cause confusion" with another -- and how these two proceedings may or may not impact one another. Parties can litigate the "likely to cause confusion" question before the Trademark Trial and Appeal Board (TTAB), in disputes over the registration of new marks. And they can also litigate this same question in court, in lawsuits for trademark infringement.

B&B opposed Hargis's effort to register its mark, claiming "SEALTITE" was likely to cause confusion with B&B's "SEALTIGHT," which was already registered. In fact, Hargis even admitted there had been incidents of actual customer confusion. The TTAB agreed and eventually declined to register Hargis's mark.

While this proceeding before the TTAB was ongoing, B&B also filed suit in federal court for trademark infringement. And after the TTAB concluded that Hargis's mark was likely to cause confusion, B&B sought summary judgment in the district court -- arguing that the TTAB's conclusion precluded the district court from concluding otherwise. But the district court refused to give preclusive effect to the TTAB's decision, and even refused to allow B&B to present the TTAB's decision to the jury, as evidence of the likelihood of confusion. And, in the end, the district court ruled against B&B, finding that there was no likelihood of confusion and no infringement.

The Eighth Circuit Court of Appeals affirmed the district court's decision, and rejected B&B's contention that the TTAB's decision should have had preclusive effect. The court of appeals based its decision on the fact that the TTAB's standard for determining whether a mark was "likely to cause confusion" was different from the Eighth Circuit's standard -- and the court noted that B&B's ability to successfully oppose the registration of Hargis's mark did not necessarily establish an ability to successfully sue for infringement.

But, as B&B points out in its petition for certiorari to the Supreme Court, the circuit courts are divided over this preclusion issue, and the Eighth Circuit's decision to deny preclusive effect to the TTAB's ruling conflicts with decisions in other circuits. The Supreme Court granted certiorari to resolve this disagreement among the lower courts.

Notably, the Supreme Court reversed 73% of the decisions it reviewed last term. The Court reviewed two decisions by the Eighth Circuit, and reversed them both.

Given the facts of this case, given the unsavoriness of having two adjudicating bodies (the TTAB and the district court) reach conflicting conclusions on the same question, and given the Supreme Court's penchant for resolving circuit splits through reversals, my prediction (for what it's worth) is that the Court will reverse the Eighth Circuit, and hold that the TTAB's administrative determination that Hargis's mark was "likely to cause confusion" should have precluded the district court from determining otherwise -- or, at the very least, that the district court should have deferred to the TTAB's determination, unless the court found strong evidence to rebut it.

The case has not yet been set for oral argument.

 

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Who Owns the X-Men?

Posted in Copyrights, In the News, IP Ownership, Litigation

MagnetodebutA potentially important copyright case has made its way through the Second Circuit Court of Appeals and could be on its way to the Supreme Court.

If you’re not a big comic-book fan, you might not have heard of Jack Kirby. But if you’re breathing in America these days, you’ve probably heard of the X-Men, Thor, the Incredible Hulk, Iron Man, and the Fantastic Four. Kirby created (or co-created) these comic-book characters while working as an independent contractor for Marvel Comics, from 1958–1963, and his four kids have been trying to recover the copyrights to these characters for the past five years.

Kirby died in 1994. In 2009 his four children sought to terminate the assignment of Kirby’s copyrights to Marvel, to recover those rights for the extended renewal term under the 1976 Copyright Act. But Marvel filed suit to void this termination, claiming Kirby’s creations belonged to Marvel as “works for hire” under § 26 of the 1909 Copyright Act.

The 1909 Act was in effect during Kirby’s time at Marvel (1958–1963), but the Act’s “work for hire” provision did not apply to independent contractors until the Second Circuit extended it, by judicial decision, in 1972—well after Kirby had left Marvel. Much later, in a 1989 case called Community for Creative Nonviolence v. Reid, the Supreme Court criticized the Second Circuit’s judicial extension of the “work for hire” provision to independent contractors. But the Supreme Court has never squarely decided whether this extension of the “work for hire” provision under the 1909 Act was wrong.

This case, styled as Kirby v. Marvel Characters, Inc., essentially asks the Supreme Court to decide this question. The Second Circuit followed its own precedent to hold that the “work for hire” provision does apply to work created by independent contractors—a decision that voids the Kirbys’ attempt to recover their father’s copyrights under the 1976 Act. But the Kirby kids have taken their case to the Supreme Court—and the Supreme Court has asked Marvel to respond to the Kirbys’ petition, which is a sign that the Court might be interested in reviewing (and perhaps reversing) the Second Circuit’s decision.

 

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U.S. Supreme Court Says Aereo Is Illegal

Posted in Copyrights, In the News, IP Ownership, Litigation

Aereo is a company that provides (or used to provide) a service for streaming TV shows over the internet. Basically, an Aereo subscriber chooses a TV show that is currently broadcasting, and Aereo tunes an antenna to pick up the TV signal and translate it into data for streaming the show to the subscriber.

A group of TV producers, marketers, distributors, and broadcasters—all holders of copyrights to the shows being streamed—sued Aereo for copyright infringement, arguing that Aereo was infringing their right to “perform” their works “publicly.” In response, Aereo argued that it was not “performing” anything, under the meaning of the Copyright Act, but was merely providing equipment that enables viewers to view the performance.

The Supreme Court, in a 6-3 decision written by Justice Breyer, ruled against Aereo, saying that Aereo’s service does “perform” the works, and is therefore illegal. The Court did its best to limit its holding, to avoid discouraging the emergence or use of new or different technologies. But according to the Court’s majority, Aereo is functioning much like the cable-TV providers that the Copyright Act was specifically amended, in 1976, to reach. In other words, Aereo is acting illegally much like those cable-TV providers in the 1970s, who were broadcasting TV shows without permission from the copyright holders.

Justice Scalia filed a dissenting opinion, contending that Aereo does not “perform” anything under the meaning of the Copyright Act. According to Scalia, the majority’s “looks-like-cable-TV” standard is “improvised” and “will sow confusion for years to come,” in copyright law. But Scalia's opinion was joined only by Justices Thomas and Alito.

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Best Legal Practices for Brands on Social Media

Posted in Advertising, Copyrights, PRACTICAL IP Tips, Privacy & Data Protection, Trademarks, Websites, Domain Names & Apps

Legally promote your brands and fans on social media with this overview of intellectual property, privacy, advertising and promotions issues and solutions...Best Legal Practices for Brands on Social Media

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