Posts in US Supreme Court

This case concerns Star Athletica’s alleged infringement of Varsity Brands’ purported copyrights in the design of certain cheerleading uniforms. Under the Copyright Act, because clothing possesses an intrinsic utilitarian function (covering the body, providing warmth and protection from the elements, etc.), clothing designs historically have not been protected by copyright unless the claimed design is physically or conceptually separable from the garment’s utilitarian features. The district court found in favor of defendant Star Athletica, concluding that the design elements in Varsity Brands’ cheerleading uniforms were not separable from the uniform’s function. The Court of Appeals for the Sixth Circuit reversed, and in doing so, devised a new test for assessing the copyrightability of a design of a useful article.

While the Supreme Court spoke clearly and unanimously on the issue in Cuozzo, this hardly means the standard to be applied to claim construction in IPRs has been settled. Rather, it means only that the solution to the problem lies outside the courts. Because the Patent Office has adopted, by regulation, an unsatisfactory standard, Congress should step in. In the context of IPR proceedings, the Patent Trial and Appeal Board (PTAB) should be instructed to give claim terms their plain and ordinary meaning to one of skill in the art, just as the courts are instructed to do.

The Supreme Court is currently considering whether to review Amgen Inc. v. Sandoz Inc., the Federal Circuit’s first decision regarding the Biologics Price Competition and Innovation Act (BPCIA). Although the Federal Circuit does not technically have any input into the Supreme Court’s grant or denial of certiorari, it nonetheless took the opportunity last week to bolster one of the challenged holdings: that a biosimilar applicant cannot provide its biologic competitor with 180 days’ notice of intent to commercially market a biosimilar product until that product is licensed. Specifically, in the course of ruling in Amgen Inc. v. Apotex Inc. that a biosimilar applicant must provide such notice even if it participated in the BPCIA’s so-called “patent dance,” the Federal Circuit addressed a primary criticism of its earlier decision, namely, that permitting only post-licensure notice effectively extends by 180 days the twelve-year exclusivity term of the biologic product. The solution suggested by the panel, however, is far from a legal certainty.

On one hand, LifeTech argues that the Federal Circuit ruling was in conflict with the text and structure of the Patent Act as well as the presumption of extraterritoriality. Expanding the reach of the extraterritoriality in patent law, it claims, would distort the incentives for multinational companies to supply components from facilities in the United States, potentially causing long-term economic damage and disrupting the international system of national patents. On its side were the Solicitor General and amici curiae who also believe that if the ruling were upheld, it would likely interfere with modern global supply logistics and disproportionately burden U.S. manufacturers with global operations.

The waters surrounding Section 101 of the Patent Act are as muddied as they come. The statute sets forth only in broad strokes what inventions are patentable, leaving it to the courts to create an implied exception to patentability for laws of nature, natural phenomena, and abstract ideas. It has been difficult for lower courts to determine whether an invention falls within one of these excluded categories, and the U.S. Supreme Court has refused to provide a definition of what constitutes an “abstract idea.” Nonetheless, the Court in recent years has laid several foundation stones in Bilski, Mayo, Myriad and Alice for a bridge over these troubled waters. Trying to build upon these, the Federal Circuit issued two recent opinions dealing with Section 101: Enfish, LLC v. Microsoft Corporation and In re: TLI Communications LLC Patent Litigation. However, these decisions only create more confusion and cannot provide a safe means of passage over the turbulent waters of patent eligibility.

Cooper and MCM have submitted Petitions for Writ of Certiorari to the Supreme Court of the United States, asking it to consider the constitutionality of Article I final adjudication of issued patent claims, subject only to Article III appellate review. Importantly, the resolution of this question turns on the determination of (1) whether the claim of patent invalidity is a public or private right, and (2) if a private right, whether the claim may be delegated to an Article I tribunal for (a) advisory determination, requiring (b) enforcement by a federal district court, where (c) legal conclusions are reviewed de novo, and (d) factual conclusions are reviewed for substantial evidence. As revealed during briefing by litigants and amici, in addition to the Court of Appeals for the Federal Circuit’s (“CAFC”) precedential MCM opinion, ambiguity in the Court’s Stern decision has led to confusion, and the analysis required for question (2) has been improperly applied to the resolution of question (1). In light of this confusion—and the merits of the constitutional question aside—Cooper and MCM present the Court with a rare opportunity to clarify that questions (1) and (2) are in fact separate, and require, per its own decisional law, distinct modes of analysis.

Earlier today the United States Supreme Court denied certiorari to Sequenom, Inc., which will let stand a decision of the United States Court of Appeals for the Federal Circuit that ruled a truly revolutionary medical test to be patent ineligible. If the Supreme Court were to have taken the case they would have been required to reconsider the overwhelming breadth and scope of their prior ruling in Mayo Collaborative Servs. v. Prometheus Labs. Obviously, the Supreme Court is not ready to reconsider Mayo.

In rejecting the objective prong of Seagate, the Court rejected the notion that a defendant may escape the specter of enhanced damages by asserting a defense that the defendant was unaware of at the time the infringement occurred. For example, the Court pointed out that under the Seagate test, “[t]he existence of . . . a defense insulates the infringer from enhanced damages, even if he did not act on the basis of the defense or was even aware of it.” Halo at 10. But, as the Court stated, “culpability is generally measured against the knowledge of the actor at the time of the challenged conduct.” Id. Moreover, in response to an argument by Pulse based on the Court’s earlier Safeco decision, the Court held that “[n]othing in Safeco suggests that we should look to facts that the defendant neither knew nor had reason to know at the time he acted.” Id. at 11.

In last week’s Halo Elecs. v. Pulse Elecs. decision, the Supreme Court unanimously rejected the Federal Circuit’s Seagate standard for awarding enhanced damages in patent cases under Section 284, finding the Federal Circuit’s two-part test “impermissibly encumbers the statutory grant of discretion to district courts.” Slip Op. at 9. The Supreme Court’s decision, which vacated and remanded, means that the award of treble damage may very well be reinstated in that case, and reversals of enhanced patent damages rulings – both awards and denial – may become less common.

David Kappos, the director of the USPTO under President Obama from 2009 to 2013, recently called for congress to repeal section 101 of the patent act. According to Kappos, the current chaotic “I know it when I see it” 101 test that must be somehow consistently applied by thousands of USPTO examiners and hundreds of judges, means American inventors are better off seeking protection in China and Europe. While America “is providing less protection than other countries”, European countries are “putting their foot down in favor of innovation”.

AIA trials have been sought over 5,000 times to challenge patents and are widely used to resolve patent disputes. Many patent owners complained that these proceedings were unfairly tilted in favor of those challenging patents. Cuozzo sought Supreme Court review of two such practices that it felt went too far and were inappropriate given the language and intent of the AIA. However, the Court sided with the PTAB on both issues, leaving the AIA trial process, as practitioners have come to know it over the last four years, intact.

Jericho’s access control model was first used as the blueprint for the Department of Defense Global Information grid in 2007. The software was later deployed across two Department of Defense secure network enterprises, providing access control to over six million persons and entities. Five years later, President Obama mandated the use of this model in every U.S. Government enterprise. The district court found the patent claims to be patent ineligible under the abstract idea doctrine, saying it did not matter that the system operated faster and more efficiently. The Federal Circuit affirmed without opinion in a Rule 36 summary affirmance.

Justice Kagan stated as one primary factor that a District Court should put substantial weight on the reasonableness of the losing party’s position. The lower courts are in a good position to review and administer this factor, and it encourages parties with meritorious positions to advance them. Justice Kagan quite rightly stated that this was not the only factor, and that other previously articulated factors set forth in Fogerty also need to be evaluated. These include the “frivolousness [of the losing party’s position], [such party’s] motivation, objective unreasonableness, and the need in particular circumstances to advance considerations of compensation and deterrence.” Fogerty at 534, n.19.

“This is obviously a victory for some who challenge a patent’s validity in IPR proceedings since broadly construed claims are more vulnerable to attack than narrowly construed claims” remarked Scott Daniels, partner at Westerman Hattori Daniels & Adrian, LLP. “Still, the great majority of IPR decisions do not turn on claim construction and for those cases Cuozzo simply makes no difference.”… Levy, who was similarly dead on accurate with his predictions, raises an important point that so many in the patent community who were rooting for Cuozzo failed to keep in mind. Those challenging the action of an agency face a substantial uphill battle when they seek a judicial determination overriding agency rulemaking and statutory implementation.

In a unanimous decision delivered by Justice Breyer in Cuozzo Speed Technologies, LLC v. Lee, the United States Supreme Court upheld the United States Patent Office’s regulation requiring the Patent Trial and Appeal Board to apply the broadest reasonable interpretation (BRI) standard in Inter Partes Review (IPR) proceedings. The Supreme Court also held that the Patent Office’s decision to institute an IPR proceeding is not appealable to the Federal courts.