Amster Rothstein & Ebenstein, LLP - Intellectual Property Law http://www.arelaw.com/ Amster, Rothstein & Ebenstein is a well-established mid-sized legal firm engaged exclusively in the practice of intellectual property law, including patents, trademarks, copyrights, unfair competition and related matters. Since our inception in 1953, we have earned an impressive record of successes for our clients, from individuals to multinational corporations, both domestic and worldwide. These successes are borne of the vigorous application of legal expertise, innovation and objective analysis. en Wed, 29 Mar 2017 22:52:08 +0000 Floodlight Design CMS 95th Annual Dinner in Honor of the Federal Judiciary http://www.arelaw.com/publications/view/nyipla/ <div><a href="/" target="_blank">Anthony F. Lo Cicero,</a> <a href="http://www.arelaw.com/professional/cmacedo/" target="_blank">Charles Macedo,</a>&nbsp;<a href="http://www.arelaw.com/professional/dgoldberg/" target="_blank">David Goldberg</a></div><div><br />Each year, the New York Intellectual Property Law Association (&ldquo;NYIPLA&rdquo;) hosts its annual dinner in honor the Federal Judiciary. &nbsp;This year, the 95th Annual Dinner in Honor of the Federal Judiciary will be held at:<br /><br /><strong>New York Hilton Midtown<br /></strong><br /> Amster, Rothstein &amp; Ebenstein LLP is pleased to support this event, and will be hosting a reception at the <strong>Lincoln Suite </strong>in the hotel.</div> <div>&nbsp;</div> <div>Please stop by and join us for refreshments, entertainment and to catch up.</div> <div>&nbsp;</div> <div>We look forward to seeing you at this great event.</div> <div>&nbsp;</div> <div><strong><em>Anthony F. Lo Cicero, Past President Emeritus</em></strong></div><div><strong><em>Charles R. Macedo, Board Member</em></strong></div><div><strong><em>David Goldberg, Co-Chair, Amicus Brief Committee</em></strong></div><div><em>&nbsp;</em></div><div><em>And the rest of your friends and colleagues at </em></div><div><strong><em>Amster, Rothstein &amp; Ebenstein LLP<br /></em></strong></div> Fri, 31 Mar 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/nyipla/ Supreme Court Clarifies Lost Profit Remedy for Design Patent Infringement http://www.arelaw.com/publications/view/jiplp032417/ <b><i>Samsung Electronics Co., Ltd. v. Apple, Inc.<br /><br /></i></b><div><b><u>Abstract</u></b></div> <div><br />On December 6, 2016, the United States Supreme Court issued its decision in <i>Samsung Electronics Co., Ltd. v. Apple Inc.</i>, unanimously reversing the United States Court of Appeals for the Federal Circuit&rsquo;s decision which affirmed the award to Apple of $399 million in damages for Samsung&rsquo;s design patent infringement -- the entire profit Samsung made from its sales of infringing smartphones.&nbsp; The Court reversed the decision of the Federal Circuit as inconsistent with Section 289 of the Patent Act and remanded the case for further proceedings consistent with the opinion of the Court.&nbsp; Slip op. at 8-9.&nbsp;</div> <div><b><u><br />Legal Context</u></b></div> <div><br />Pursuant to Section 289 of the Patent Act, damages specific to design patent infringement are as follows:</div> <div>&nbsp;</div> <div style="margin-left: 40px;">Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.</div> <div style="margin-left: 40px;">&nbsp;</div> <div style="margin-left: 40px;">Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.</div> <div>&nbsp;</div> <div>35 U.S.C. &sect;&nbsp;289.</div> <div><br />The issue as decided by the Court was whether, in the case of a multi-component product, the term &ldquo;&lsquo;article of manufacture&rsquo; must always be the end product sold to the consumer or whether it can also be a component of that product.&rdquo; &nbsp;Slip op. at 5.&nbsp; Here, the distinction was between the smartphone in its entirety or the portion of the smartphone that was the subject of the patented design (e.g., the front face).</div> <div><b><u><br />Facts</u></b></div> <div><br />In 2011, Apple sued Samsung in the United States District Court for the Northern District of California, asserting, <i>inter alia</i>, that certain of Samsung&rsquo;s smartphones infringed Apple&rsquo;s design patents which covered the iPhone&rsquo;s rectangular shape with rounded corners and screen display.&nbsp; After a prolonged trial, the jury found that Samsung did infringe Apple&rsquo;s design patents related to Apple&rsquo;s iPhone.&nbsp; The district court upheld the jury&rsquo;s finding of infringement and $399 million in damages -- the entire profit Samsung made from its sales of the infringing smartphones.&nbsp;</div> <div><br />On appeal, the Federal Circuit ultimately affirmed the jury&rsquo;s verdict on the design patent infringement and the related damages award. &nbsp;The Federal Circuit rejected Samsung&rsquo;s argument &ldquo;that the profits awarded should have been limited to the infringing &lsquo;article of manufacture&rsquo;&rdquo; and &ldquo;not the entire infringing product.&rdquo; &nbsp;786 F. 3d 983, 1002 (2015). &nbsp;The Federal Circuit found that &ldquo;limit[ing] the damages&rdquo; award was not required since the &ldquo;innards of Samsung&rsquo;s smartphones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers.&rdquo; <i>Id.</i>&nbsp;</div> <div><br />The Supreme Court granted certiorari and reversed the decision of the Federal Circuit.</div> <div><b><u><br />Analysis</u></b></div> <div><br />Relying upon the text of the statute and the ordinary meaning of the terms, the Court found that &ldquo;the term &lsquo;article of manufacture&rsquo; is broad enough to encompass both a product sold to a consumer as well as a component of that product.&nbsp; That a component may be integrated into a larger product, in other words, does not put it outside the category of articles of manufacture.&rdquo;&nbsp; Slip op. at 6.&nbsp; The Court noted that this reading is consistent with 35 U.S.C. &sect;&nbsp;171(a) which allows for design patent protection for only a component of a multicomponent part, as well as 35 U.S.C. &sect;&nbsp;101 which permits patent protection for &ldquo;any new and useful . . . manufacture,&rdquo; including parts of a machine separate from the machine itself.&nbsp; <i>Id. </i>at 7.</div> <div><br />The Court thus set forth a new &ldquo;two step&rdquo; test for &ldquo;[a]rriving at a damages award under &sect; 289&rdquo;:</div> <div><br />1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &ldquo;identify the &lsquo;article of manufacture&rsquo; to which the infringed design has been applied.&rdquo;; and</div> <div><br />2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &ldquo;calculate the infringer&rsquo;s total profit made on that article of manufacture.&rdquo;</div> <div><i><br />Id.</i> at 5.</div> <div><br />With respect to the first step, the Court declined to set forth a test for identifying the relevant article of manufacture.&nbsp; <i>Id.</i> at 58.</div> <div><br />While not necessary to the resolution of the case, we note that the Court did reaffirm its prior infringement test from <i>Gorham Co. v. White</i>, 14 Wall. 511 (1872), stating that &ldquo;[t]his Court has explained that a design patent is infringed &lsquo;if, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same.&rsquo;&rdquo;&nbsp; Slip op. at 2 (quoting <i>Gorham Co. v. White</i>, 14 Wall. 511, 528 (1872)).&nbsp;</div> <div><b><u><br />Practical Significance</u></b></div> <div><br />While, on the one hand, the decision has allowed for an &ldquo;article of manufacture&rdquo; to be a component of what is actually sold to the consumer, on the other hand, it also confirms that the damages are the &ldquo;lost profits&rdquo; associated with that article.&nbsp;&nbsp; Unfortunately, as the Court failed to set forth a test to identify that which constitutes the relevant article of manufacture, it remains to be seen how district courts will determine whether the article of manufacture is less than the entire product.</div> <div>&nbsp;</div> <div>&nbsp;</div> <div>*Charles R. Macedo is a partner and Jessica Capasso and Michael Sebba are associates at Amster, Rothstein and Ebenstein LLP.&nbsp; Their practice specializes in intellectual property issues, including litigating patent, trademark and other intellectual property disputes.&nbsp; They may be reached at <a href="mailto:cmacedo@arelaw.com">cmacedo@arelaw.com</a>, <a href="mailto:jcapasso@arelaw.com">jcapasso@arelaw.com</a> and <a href="mailto:msebba@arelaw.com">msebba@arelaw.com</a>. &nbsp;</div> <div>&nbsp;</div> <div><div><div>Mr. Macedo is also the author of&nbsp;<em>The Corporate Insider&rsquo;s Guide to US Patent Practice</em>.<br />&nbsp;</div></div>&copy; The Author(s) 2017. Published by Oxford University Press. All rights reserved.</div><div>&nbsp;</div> Fri, 24 Mar 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/jiplp032417/ Patently-O Reports on Amicus Brief Submitted by Amster, Rothstein & Ebenstein on Behalf of the NYIPLA in Oracle http://www.arelaw.com/publications/view/inthepress030317/ (February 20, 2017)&nbsp; Patently-O today mentions an Amicus Brief submitted by attorneys including Amster, Rothstein &amp; Ebenstein&rsquo;s <a href="http://www.arelaw.com/professional/cmacedo/" target="_blank">Charles R. Macedo</a> and <a href="http://www.arelaw.com/professional/ahassett/" target="_blank">Annemarie Hassett</a> on behalf of the New York Intellectual Property Law Association in <i>Oracle America, Inc. v. Google Inc.</i>, Nos. 2017-1118, -1202 (Fed. Cir.).&nbsp; In this case, the United States Court of Appeals for the Federal Circuit is being asked to set parameters for the scope of the fair use defense in copyright law, including what constitutes a &ldquo;transformative use&rdquo; of computer programming code.&nbsp; The article is available at <a href="http://patentlyo.com/patent/2017/02/google-oracle-copyrighted.html" target="_blank">http://patentlyo.com/patent/2017/02/google-oracle-copyrighted.html</a> and the NYIPLA&rsquo;s Amicus Brief is available at <a href="https://www.nyipla.org/nyipla/AmicusBriefsNews.asp" target="_blank">https://www.nyipla.org/nyipla/AmicusBriefsNews.asp</a>.&nbsp; Fri, 03 Mar 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/inthepress030317/ Patent Law Alert: <br>In <i>Life Technologies Corp. v. Promega Corp.,<i/> U.S. Supreme Court Held That Supply of a Single Component of a Multicomponent Invention for Manufacture Abroad Does Not Give Rise to Liability for Patent Infringement Under 35 U.S.C. § 271(f)(1)<br> http://www.arelaw.com/publications/view/alert022417/ <div>On February 22, 2017, the United States Supreme Court issued its decision in <i>Life Technologies Corp. v. Promega Corp.</i>, unanimously reversing the United States Court of Appeals for the Federal Circuit&rsquo;s decision that the supply of a single component of a multicomponent invention for manufacture abroad may trigger liability for patent infringement under 35 U.S.C. &sect; 271(f)(1).&nbsp; &nbsp;&nbsp;</div> <div><br />The full text of Section 271(f)(1) reads as follows:<br />&nbsp;</div> <div style="margin-left: 40px;">Whoever without authority supplies or causes to be supplied in or from the United States <b><i>all or a substantial portion of the components of a patented invention</i></b>, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.</div> <div><br />35 U.S.C. &sect;&nbsp;271(f)(1) (emphasis added).</div> <div><br />The issue before the Supreme Court was &ldquo;whether the supply of <b><i>a single component</i></b> of a multicomponent invention is an infringing act under 35 U.S.C. &sect;271(f)(1).&rdquo;&nbsp; Slip op. at 4 (emphasis added).&nbsp; The Federal Circuit had previously decided that the scope of the term &ldquo;a substantial portion of the components of a patent invention&rdquo; recited in Section 271(f)(1) may encompass a single important component of the invention.&nbsp; <i>See id</i>.&nbsp; The Supreme Court rejected the Federal Circuit&rsquo;s broad interpretation of Section 271(f)(1).</div> <div><br />First, the Supreme Court determined that the term &ldquo;substantial portion&rdquo; in the statute refers to a <b><i>quantitative</i></b> measurement rather than a qualitative measurement.&nbsp; <i>See</i> slip op. at 5-8.&nbsp; The Court then tackled the question of &ldquo;whether, as a matter of law, a single component can ever constitute a &lsquo;substantial portion&rsquo; so as to trigger liability under &sect;271(f)(1).&rdquo;&nbsp; Slip op. at 8.&nbsp; After examining the text, context, and structure of Section 271(f)(1), the Court concluded that Section 271(f)(1) does not cover the supply of a single component of a multicomponent invention.&nbsp; <i>See</i> Slip op. at 8-10.&nbsp;</div> <div><br />The Court, however, provided no guidance as to how many components of a multicomponent invention would be required to constitute &ldquo;a substantial portion&rdquo; to trigger liability under Section 271(f)(1):<br />&nbsp;&nbsp;</div> <div style="margin-left: 40px;">We do not today define how close to &ldquo;all&rdquo; of the components &ldquo;a substantial portion&rdquo; must be.&nbsp; We hold only that one component does not constitute &ldquo;all or a substantial portion&rdquo; of a multicomponent invention under &sect;271(f)(1).</div> <div><br />Slip op. at 10.&nbsp; The concurring opinion by Justices Alito and Thomas further emphasized this point:<br />&nbsp;</div> <div style="margin-left: 40px;">[W]hile the Court holds that a single component cannot constitute a substantial portion of an invention&rsquo;s components for &sect;271(f)(1) purposes, I do not read the opinion to suggest that <i>any</i> number greater than one is sufficient.&nbsp; In other words, today&rsquo;s opinion establishes that more than one component is necessary, but does not address <i>how much</i> more.</div> <div><br />Slip op. at 1 (Alito, J., concurring) (emphasis in original).&nbsp; &nbsp;</div> <div><br />We will continue to monitor the Courts for the latest developments on this issue.</div> <div><br />*Charles R. Macedo is a partner and Jung S. Hahm is senior counsel at Amster, Rothstein and Ebenstein LLP.&nbsp; Their practice specializes in intellectual property issues, including litigating patent, trademark and other intellectual property disputes.&nbsp; They may be reached at <a href="mailto:cmacedo@arelaw.com">cmacedo@arelaw.com</a> and <a href="mailto:jhahm@arelaw.com">jhahm@arelaw.com</a>. &nbsp;</div> Fri, 24 Feb 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/alert022417/ Brief for Amicus Curiae NYIPLA In Support of Respondent, Impression Products, Inc. v. Lexmark International, Inc. (Fed. Cir. Feb. 22, 2017) http://www.arelaw.com/publications/view/amicus022317/ <strong>Click to download pdf: &nbsp;</strong><a href="/images/file/Brief%20for%20Amicus%20Curiae%20NYIPLA%20In%20Support%20of%20Respondent,%20Impression%20Products,%20Inc_%20v_%20Lexmark%20International,%20Inc_%20(Fed_%20Cir_%20%20Feb_%2022,%202017).pdf" target="_blank">Brief for Amicus Curiae NYIPLA In Support of Respondent, Impression Products, Inc. v. Lexmark International, Inc. (Fed. Cir. &nbsp;Feb. 22, 2017)</a> Thu, 23 Feb 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/amicus022317/ Brief for Amicus Curiae NYIPLA in Support of Neither Party, Oracle America, Inc. v. Google Inc. (U.S. February 17, 2017) http://www.arelaw.com/publications/view/amicus022217/ <strong>Click to download pdf:&nbsp;</strong><span style="font-size:11.0pt;font-family:" new=""><a href="/images/file/2017-1118%20-1202%20Brief%20for%20Amicus%20Curiae%20NYIPLA%20in%20Support%20of%20Neither%20Party.pdf" target="_blank">Brief for Amicus Curiae NYIPLA in Support of Neither Party, Oracle America, Inc. v. Google Inc. (U.S. February 17, 2017)</a></span> Wed, 22 Feb 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/amicus022217/ Practical Law <br>General Contract Clauses: Confidentiality Agreement Clauses After the Defend Trade Secrets Act<br> http://www.arelaw.com/publications/view/practicallaw012517/ <div><a href="/images/file/General%20Contract%20Clauses%20Confidentiality%20Agreement%20Clauses%20After%20the%20Defend%20Trade%20Secrets%20Act%20(3).pdf" target="_blank">General Contract Clauses:&nbsp;Confidentiality Agreement Clauses&nbsp;After the Defend Trade Secrets Act (3)</a></div> Wed, 25 Jan 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/practicallaw012517/ In The Press:<br>Askeladden LLC Announces Amster Rothstein & Ebenstein LLP Filed IPR On Its Behalf Against Verify Smart<br> http://www.arelaw.com/publications/view/inthepress011917/ <div><div><strong>Askeladden Urges Review of Verify Smart&rsquo;s Patent Related to Identity Verification in Electronic Transactions<br /></strong></div><div><em>Seeks cancellation of all claims in view of known authentication and verification technologies &nbsp; &nbsp;</em></div><p><a href="http://www.patentqualityinitiative.com/-/media/pqi/files/press%20releases/pqi%20-%20verify%20smart%20ipr%20release.pdf?la=en" target="_blank">Download PDF of Press Release</a></p></div><div>Askeladden LLC, as part of its Patent Quality Initiative, is challenging the validity of U.S. Patent No. 8,285,648 which Verify Smart Corporation has asserted against technology and financial services companies including Apple, Facebook, Microsoft and Discover. Askeladden&rsquo;s <a href="http://www.patentqualityinitiative.com/about%20pqi/patent%20challenge%20committee" target="_blank">Patent Challenge Committee</a>&mdash;respected and experienced experts in the field of patent law&mdash;decided to file this challenge as part of Askeladden&rsquo;s efforts to protect innovation in the financial and technology industries.&nbsp;<br /><br /> Verify Smart&rsquo;s patent is directed to a system and methods for verifying the identity of users in the course of electronic transactions. Askeladden&rsquo;s petition for Inter Partes Review (IPR), filed yesterday with the Patent Trial and Appeal Board (PTAB), argues that the patent&rsquo;s claims were known and obvious at the time the application for the patent was filed and therefore should be found unpatentable by the PTAB.&nbsp;<br /><br />&ldquo;Lawsuits based on poor quality patents undermine the core purposes of the patent system,&rdquo; said Sean Reilly, General Counsel of Askeladden. &ldquo;We look forward to continuing our efforts to promote patent quality in 2017.&rdquo;&nbsp;<br /><br />Askeladden is represented by Amster, Rothstein &amp; Ebenstein LLP.<br /><br /><strong>About Patent Quality Initiative</strong><br /> Askeladden is an education, information and advocacy organization with the goal of improving the understanding, use and reliability of patents in financial services and other industries. As part of its Patent Quality Initiative, Askeladden strives to promote better patents and patent holder behaviors by regularly filing amicus briefs, Inter Partes Reviews (IPRs) and engaging in educational activities.</div> Thu, 19 Jan 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/inthepress011917/ In Practice: <br>CORPORATE-LEGAL-DEPARTMENTS, Drafting Guide - Practical Guidance: Non-Disclosure and Confidentiality<br> http://www.arelaw.com/publications/view/bnabloomberg01-18-17/ <div><strong><a href="/images/In Practice CORPORATE-LEGAL-DEP.pdf" target="_blank">Practical Guidance: Non-Disclosure and Confidentiality Agreements</a></strong><br /><br /><strong>Purpose</strong>: This Practical Guidance discusses key issues that should be considered in&nbsp;drafting confidentiality agreements in view of the Defense Against Trade Secrets Act of 2016. It identifies key&nbsp;clauses typically included in such agreements and provides guidance on considerations in drafting clause.<br />&nbsp;</div><div>The guidance was authored by attorneys <a href="mailto:cmacedo@arelaw.com">Charles R. Macedo</a>, and <a href="mailto:msebba@arelaw.com">Michael Sebba</a>, of <a href="http://www.arelaw.com" target="_blank">Amster, Rothstein &amp;&nbsp;Ebenstein LLP</a>, New York, N.Y. <a href="http://www.arelaw.com/professional/cmacedo/" target="_blank">Mr. Macedo</a> is a partner with the firm, and litigates all areas of intellectual&nbsp;property law, including patent, trademark and copyright law, with a special emphasis in complex litigation&nbsp;and appellate work. <a href="http://www.arelaw.com/professional/michael-sebba/" target="_blank">Mr. Sebba</a>, an associate, is an intellectual property litigator and prosecutor.</div> Wed, 18 Jan 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/bnabloomberg01-18-17/ ARE Patent Law Alert:<br>USPTO Updates Guidance on Patent Subject Matter Eligibility With New Examples Of Patent-Eligible Subject Matter<br> http://www.arelaw.com/publications/view/alert011017/ <div>As we reported last November, the U.S. Patent and Trademark Office (&ldquo;PTO&rdquo;) has continued to update its guidance to examiners on patent-eligibility under 35 U.S.C. &sect; 101 as the Federal Circuit continues to issue decisions providing examples of patent-eligible subject matter.</div> <div>&nbsp;</div> <div>In December, the PTO issued additional guidance including:</div> <div>&nbsp;</div> <div>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <a href="https://www.uspto.gov/sites/default/files/documents/ieg-bus-meth-exs-dec2016.pdf" target="_blank"><b>Subject Matter Eligibility Examples: Business Methods</b></a> (December 15, 2016)</div> <div>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <a href="https://www.uspto.gov/sites/default/files/documents/ieg-qrs-dec2016.pptx" target="_blank"><b>December 2016: Interim Eligibility Guidance Quick Reference Sheet</b></a> (December 15, 2016)</div> <div>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <a href="https://www.uspto.gov/sites/default/files/documents/ieg-dec-2016-sme_crt_dec.xlsx" target="_blank"><b>Subject Matter Eligibility Court Decisions Through December 15, 2016</b></a></div> <div>&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <a href="https://www.uspto.gov/sites/default/files/documents/ieg-dec-2016-ex_index.pdf" target="_blank"><b>Index of Eligibility Examples</b></a> (December 21, 2016)</div> <div>&nbsp;</div> <div>These new guidance materials provide an additional arsenal for patent holders arguing patent eligibility with examiners before the PTO.</div> <div>&nbsp;</div> <div>We provide a brief summary of each of these materials as follows:</div> <div>&nbsp;</div> <div><b>Examples 34-36</b></div> <div>&nbsp;</div> <div>In the December 15, 2016, &ldquo;Subject Matter Eligibility Examples: Business Methods,&rdquo; the PTO sets forth Examples 34-36 which demonstrate the difference between patent-ineligible and patent-eligible subject matter for three classes of &ldquo;business method&rdquo; patent claims. An updated list of all the examples including the new Examples 34-36 is provided at <a href="https://www.uspto.gov/sites/default/files/documents/ieg-dec-2016-ex_index.pdf" target="_blank">https://www.uspto.gov/sites/default/files/documents/ieg-dec-2016-ex_index.pdf</a>.</div> <div>&nbsp;</div> <div><b>Example 34 </b>is directed to a <b>System for Filtering Internet Content,</b> based on the Federal Circuit&rsquo;s decision in <i>BASCOM Global Internet v. AT&amp;T Mobility, LLC</i>.</div> <div>&nbsp;</div> <div>In this Example, the PTO sets forth an example of a claim which is considered patent eligible under Step 2B of the Alice framework.</div> <div>&nbsp;</div> <div>In particular, the Example indicates that while filtering content is considered an abstract idea of &ldquo;a method of organizing human activity&rdquo; under Step 2A, the claimed &ldquo;combination&rdquo; of known elements were nonetheless &ldquo;unconventional and non-generic&rdquo; so as to constitute &ldquo;something more&rdquo; to make the claim patent eligible. In particular, the analysis of Claim 1 of Example 34 explains in pertinent part:<br />&nbsp;</div> <div style="margin-left: 40px;">Here, an inventive concept can be found in the unconventional and non‐generic <b><i>combination </i></b>of known elements, and more specifically &ldquo;the installation of a filtering tool at a specific location, remote from the end‐users, with customizable filtering features specific to each end user&rdquo; where the filtering tool at the ISP is able to &ldquo;identify individual accounts that communicate with the ISP server, and to associate a request for Internet content with a specific individual account.&rdquo; The Federal Circuit also determined that the claimed arrangement of elements in the system results in an improvement in the technology of filtering content on the Internet, because it offers &ldquo;both the benefits of a filter on the local computer, and the benefits of a filter on the ISP server.&rdquo;</div><div><br />(<i>Id</i>. at 3-4 (emphasis in original)).</div> <div>&nbsp;</div> <div>The Guidance also points out that the specification explained that &ldquo;this combination was not well-understood, routine or conventional activity&rdquo; as additional support for the patent-eligibility conclusion. (<i>Id</i>. at 4). The Guidance also points to the conclusion that &ldquo;the claim recites a &ldquo;technology‐based solution&rdquo; of filtering content on the Internet that overcomes the disadvantages of prior art filtering systems. Thus, when viewed as an ordered combination, the claim limitations amount to significantly more than the abstract idea of content filtering.&rdquo; (<i>Id</i>.).</div> <div>&nbsp;</div> <div>The Guidance recognizes that reasons for allowance could provide &ldquo;that the claim recites the abstract idea of filtering content. However, the claim is eligible because analyzing the claim limitations as an ordered combination demonstrates that the claim is a particular application of and an improvement to the technology of filtering content on the Internet, rather than well‐understood, routine, conventional activity or a simple instruction to apply the abstract idea of filtering content on the Internet or to perform the abstract idea on a generic set of computers.&rdquo; (<i>Id</i>.).</div> <div>&nbsp;</div> <div>The Guidance also contrasts <i>BASCOM&rsquo;s</i> holding to prior Federal Circuit decisions in <i>Intellectual Ventures I</i>, <i>Content Extraction</i>, <i>Ultramercial</i> and <i>Accenture</i>, by drawing the following distinction:</div> <div>Unlike the claims in <i>Intellectual Ventures I</i>, <i>Content Extraction</i>, <i>Ultramercial</i>, and <i>Accenture</i>, claim 1 of <i>BASCOM </i>is not simply directed to the abstract idea of filtering content on the Internet or on generic computer components performing conventional activities. Instead, claim 1 &ldquo;carve[s] out a specific location for the filtering system (a remote ISP server) and require the filtering system to give users the ability to customize filtering for their individual network accounts.&rdquo;</div> <div>(<i>Id</i>. at 5). Thus, the PTO is recommending that examiners to draw similar distinctions to find claims patent-eligible even when they use generic computer components, as long as such components are used in non-conventional ways.</div> <div>&nbsp;</div> <div><b>Example 35</b> sets forth three claims directed to<b> Verifying A Bank Customer&rsquo;s Identity to Permit An ATM Transaction</b>. The example draws a distinction between Claim 1, which is ineligible as being &ldquo;directed to an abstract idea&rdquo; and Claims 2 and 3 which are also directed to the same abstract idea but have additional elements that amount to significantly more than the abstract idea &ldquo;because they implement the abstract idea with specific meaningful limitations.&rdquo; (<i>Id</i>. at 5).</div> <div>&nbsp;</div> <div>All three claims are directed to the same basic subject matter of &ldquo;a method of conducting a secure automated teller transaction with a financial institution by authenticating a customer&rsquo;s identity.&rdquo; Claim 1, which is described as not eligible, merely claims three broad steps of &ldquo;obtaining&rdquo; customer-specific information, &ldquo;comparing&rdquo; that information with other information to &ldquo;verify the customer&rsquo;s identity&rdquo; and &ldquo;determining&rdquo; whether the transaction should go forward.</div> <div>&nbsp;</div> <div>Claims 2 and 3, which are described as eligible, differ from Claim 1 in that both Claims 2 and 3 include detailed steps of &ldquo;how&rdquo; the comparing step is performed, and Claim 3, also provides details of &ldquo;how&rdquo; a &ldquo;control signal&rdquo; is used to provide access or deny access to the ATM based on the specific comparing methodology.</div> <div>&nbsp;</div> <div>In discussing Claim 1, the Guidance states the steps of claim &ldquo;describe a method of fraud prevention by verifying the authenticity of the customer&rsquo;s identity prior to proceeding with a banking transaction, which is a &ldquo;long prevalent&rdquo; business practice that bank tellers have used for many years. Fraud prevention by verifying the identity of the customer is as fundamental to business as the economic concepts that were identified as abstract ideas by the Supreme Court, such as intermediated settlement (<i>Alice Corp.</i>) and risk hedging (<i>Bilski</i>).&rdquo; (<i>Id</i>. at 8).</div> <div>&nbsp;</div> <div>This example seems to recognize that establishing the business practice is &ldquo;long prevalent&rdquo; is part of the required analysis to find a business practice &ldquo;abstract&rdquo; under the <i>Alice</i> and <i>Bilski</i> framework, although this concept is not explicitly discussed.</div> <div>&nbsp;</div> <div>The examples also conclude that Claims 2 and 3 are directed to the same abstract idea, but are nonetheless eligible under Step 2B because they include significantly more than the abstract idea.</div> <div>&nbsp;</div> <div>In particular, with respect to Claim 2, the examples explain why the additional detail in the comparing step is enough something more to make them eligible as follows:</div><div style="margin-left: 40px;">&nbsp;</div> <div style="margin-left: 40px;">However, the <b><i>combination </i></b>of the steps (<i>e.g</i>., the ATM providing a random code, the mobile communication device&rsquo;s generation of the image having encrypted code data in response to the random code, the ATM&rsquo;s decryption and analysis of the code data, and the subsequent determination of whether the transaction should proceed based on the analysis of the code data) operates in a non‐ conventional and non‐generic way to ensure that the customer&rsquo;s identity is verified in a secure manner that is more than the conventional verification process employed by an ATM alone. In combination, these steps do not represent merely gathering data for comparison or security purposes, but instead set up a sequence of events that address unique problems associated with bank cards and ATMs (<i>e.g</i>., the use of stolen or &ldquo;skimmed&rdquo; bank cards and/or customer information to perform unauthorized transactions). Thus, like in <i>BASCOM</i>, the claimed combination of additional elements presents a specific, discrete implementation of the abstract idea. Further, the combination of obtaining information from the mobile communication device (instead of the ATM keypad) and using the image (instead of a PIN) to verify the customer&rsquo;s identity by matching identification information does not merely select information by content or source, in contrast to <i>Electric Power, </i>but instead describes a process that differs from the routine and conventional sequence of events normally conducted by ATM verification, such as entering a PIN, similar to the unconventional sequence of events in <i>DDR</i>. The additional elements in claim 2 thus represent significantly more (<i>i.e., </i>provide an inventive concept) because they are <b>a practical implementation of the abstract idea of fraud prevention that performs identity verification in a non</b><b>‐conventional and non</b><b>‐generic way, even though the steps use well</b><b>‐known components (a processor and mobile communication device). </b>Claim 2 is eligible (<i>Step 2B: Yes</i>).</div> <div><br />(<i>Id</i>. at 10 (emphasis added)).</div> <div>&nbsp;</div> <div>The analysis for Claim 3 is comparable, but relies upon the combination of steps of &ldquo;the ATM&rsquo;s provision of the random code, the mobile communication device&rsquo;s generation of the customer confirmation code in response to the random code, the ATM&rsquo;s analysis of the customer confirmation code, and the ATM&rsquo;s subsequent sending of a control signal to provide or prevent access to the keypad of the ATM and thus allow or prevent a transaction based on the analysis of the code data sets&rdquo; (<i>Id.</i> at 11). Interestingly, the use the &ldquo;control signal&rdquo; as the specific way of &ldquo;determining whether the transaction should proceed&rdquo; was the type of detail sufficient to make the claim eligible.<br />&nbsp;</div> <div><b>Example 36</b> sets forth three claims directed to<b> Tracking Inventory</b>. The example draws a distinction between Claim 1, which is ineligible as being &ldquo;directed to an abstract idea&rdquo; and Claims 2 and 3 which are also directed to the same abstract idea but have additional elements that amount to significantly more than the abstract idea because &ldquo;they recite specific limitations other than what would be well‐understood, routine, conventional activities in the field, which amount to significantly more.&rdquo; (<i>Id</i>. at 12).<br />&nbsp;</div> <div>In these examples, the PTO is distinguishing between Claim 1 which merely includes high-level general steps for tracking inventory, and Claims 2 and 3 which explain &ldquo;how&rdquo; an unconventional machine vision technique is used to track inventory.</div> <div>In the context of Claim 2, the analysis explains:<br />&nbsp;</div> <div style="margin-left: 40px;">However, the memory and processor in combination with a high‐resolution video camera array with predetermined overlapping views that reconstructs the 3‐D coordinates of the item of inventory using overlapping images of the item and prior knowledge of the location and field of view of the camera(s) provides significantly more than the abstract idea of using data collection techniques to manage inventory. As explained in the specification, at the time of this invention<b><i>, using a high</i></b><b><i>‐ resolution video camera array with overlapping views to track items of inventory was not well</i></b><b><i>‐ understood, routine, conventional activity to those in the field of inventory control.</i></b> In fact, the use of this camera array provides the ability to track objects throughout the entire storage space rather than simply the view of a single camera and determine their 3‐D location without any of the manual steps that were required of previous methods. That is, the <b><i>video camera array with reconstruction software provides the technological solution to the technological problem of automatically tracking objects and determining their physical position using a computer vision system</i></b>. Like in <i>DDR</i>, the claimed solution here is necessarily rooted in computer technology to address a problem specifically arising in the realm of computer vision systems. The claimed limitations are not simply an attempt to generally link the abstract idea to the technological environment of computer vision systems. Rather, these are meaningful limitations that confine the claim to a particular useful application. Accordingly, when viewed as a combination, the additional elements thus yield a claim as a whole that amounts to significantly more than the abstract idea of inventory management (<i>Step 2B: Yes</i>). The claim is patent eligible.</div> <div><br />(<i>Id</i>. at 15 (emphasis added)). Thus, the analysis looks to the specific technical solution claimed on &ldquo;how&rdquo; the tracking is accomplished in what is assumed for purposes of the analysis is a non-conventional way at the time of the invention.<br /><br />The analysis offers a comparable analysis for Claim 3 as follows:<br />&nbsp;</div> <div style="margin-left: 40px;">In combination, however, the limitations do amount to significantly more than the abstract idea of inventory management. As explained in the specification, the combination of the camera array&rsquo;s acquisition of high resolution image sequences, and the processor&rsquo;s performance of step (b)&rsquo;s extracting contour and character information from the images to create feature vectors, step (c)&rsquo;s recognizing and tracking items of inventory using the feature vectors and a recognition model, and step (d)&rsquo;s determining the physical location of the recognized items using the position of the item in the image sequence(s<b><i>) is not well</i></b><b><i>‐understood, routine, conventional activity in this field</i></b>. This combination of limitations provides a hardware and software solution that improves upon previous inventory management techniques by avoiding the cumbersome use of RFID and GPS transmitters and the inaccuracy issues that plagued previous computer vision solutions. This combination of features provide meaningful limitations to the practical application of inventory tracking with computer vision<b><i>, by improving the system&rsquo;s ability to identify and track objects across multiple cameras in a three</i></b><b><i>‐dimensional space</i></b>. These limitations do not simply limit the abstract idea to the technological environment of image processing, but are instead meaningful limitations that integrate the abstract idea into a particular application that uses character and contour information from high resolution images to recognize items of inventory. When viewed as a combination, the additional elements thus yield a claim as a whole that amounts to significantly more than the abstract idea of inventory management (<i>Step 2B: Yes</i>). The claim is patent eligible.</div> <div><br />(<i>Id</i>. at 15 (emphasis added)).<br />&nbsp;</div> <div>A general take away from these examples, is that inclusion of a combination of detailed steps explaining &ldquo;how&rdquo; an otherwise generic process is being performed in an unconventional and non-routine way at the time of the invention should be enough something more to make a claim patent eligible, even when the claim is generally directed to business processes, such as ATM transactions and tracking inventory.<br />&nbsp;</div> <div><b>Quick Reference Sheet<br /><br type="_moz" /></b></div> <div>The December Guidance also includes a Quick Reference Sheet to assist examiners (and applicants) with relevant cases that are available to rely upon during prosecution.</div> <div>With respect to Step 2A (whether the claim is directed to an abstract idea), the Quick Reference Sheet includes the following diagram:</div> <div><br /><img src="/images/Alert01017.jpg" width="624" height="392" alt="" /><br /><br />With respect to Step 2B, i.e. whether the claim as a whole amounts to significant more than the recited judicial exception, the Quick Reference Sheet includes the following diagram:<br /><br /><img src="/images/Alert01017(2).jpg" width="624" height="356" alt="" /><br /><br /><div>A more detailed spreadsheet of case law is also provided by the PTO at <a href="https://www.uspto.gov/sites/default/files/documents/ieg-dec-2016-sme_crt_dec.xlsx" target="_blank">https://www.uspto.gov/sites/default/files/documents/ieg-dec-2016-sme_crt_dec.xlsx<br /><br type="_moz" /></a></div> <div>We will continue to monitor developments in patent-eligibility under 35 U.S.C. &sect;&nbsp;101. In the meantime, for more information on patent-eligibility, please contact one of our attorneys.</div> <div>&nbsp;</div> <div>Charles R. Macedo and Benjamin M. &nbsp;Halpern are partners, and Michael Sebba is an associate at Amster, Rothstein and Ebenstein LLP.&nbsp; Their practice specializes in intellectual property issues, including litigating patent, trademark and other intellectual property disputes.&nbsp; They may be reached at&nbsp; <a href="/cdn-cgi/l/email-protection#d7b4bab6b4b2b3b897b6a5b2bbb6a0f9b4b8ba">cmacedo@arelaw.com</a>, <a href="/cdn-cgi/l/email-protection#3a58525b564a5f48547a5b485f565b4d14595557">bhalpern@arelaw.com</a>, and <a href="/cdn-cgi/l/email-protection#b3dec0d6d1d1d2f3d2c1d6dfd2c49dd0dcde">msebba@arelaw.com</a>. &nbsp;&nbsp;</div> <div>&nbsp;</div></div> Tue, 10 Jan 2017 00:00:00 +0000 http://www.arelaw.com/publications/view/alert011017/ ARE Trademark Law Alert <br>Federal Circuit Reverses Trademark Trial and Appeal Board Holding that Providing Software May Constitute Providing a Service<br> http://www.arelaw.com/publications/view/alert121916/ On December 12, 2016, the United States Court of Appeals for the Federal Circuit issued its decision in <i>In re: Jobdiva, Inc.</i>, vacating the decision of the Trademark Trial and Appeal Board (the &ldquo;Board&rdquo;) which cancelled JobDiva&rsquo;s trademark registrations in connection with &ldquo;personnel placement and recruitment services&rdquo; based on abandonment.&nbsp; The Court vacated the Board&rsquo;s decision as having applied the wrong legal standard, but it did not determine whether JobDiva had in fact offered the services listed in its Registrations.&nbsp; Rather, the Court sent the case back to the Board to make that factual determination.&nbsp; Slip op. at 12.<br /><br /> <div>In a cancellation proceeding instituted by JobDiva against Jobvite, Inc., JobDiva asserted ownership of two trademark registrations for the service marks JOBDIVA and JOBDIVA plus design, for personnel placement and recruitment services.&nbsp; Jobvite, Inc. counterclaimed,&nbsp; petitioning the Board to cancel JobDiva&rsquo;s trademark registrations on the basis that JobDiva failed to perform personnel placement and recruitment services.&nbsp; The Board granted Jobvite&rsquo;s counterclaims on the basis of abandonment since, other than supplying its software, there was no evidence of JobDiva&rsquo;s performance of personnel placement and recruitment services resulting in nonuse for three consecutive years.&nbsp; The Board held that &ldquo;[a] term that <i>only </i>identifies a computer program does not become a service mark merely because the program is sold or licensed in commerce.&nbsp; Such a mark does not serve to identify a service unless it is also used to identify and distinguish the service itself, as opposed to the program.&rdquo;&nbsp; The Board found that JobDiva merely offered software for providing personnel placement and recruitment rather than offering personnel placement and recruitment services themselves.&nbsp; Slip op. at. 4-5.</div> <div><br />In reviewing the Board&rsquo;s decision, the Federal Circuit made clear that &ldquo;[e]ven though a service may be performed by a company&rsquo;s software, the company may well be rendering a service.&rdquo;&nbsp; Slip op. at 9.&nbsp; The Court further explained, that &ldquo;[t]o determine whether a mark is used in connection with the services described in the registration, a key consideration is the perception of the user.&nbsp; The question is whether a user would associate the mark with &lsquo;personnel placement and recruitment&rsquo; services performed by JobDiva, even if JobDiva&rsquo;s software performs each of the steps of the service.&rdquo;&nbsp; <i>Id. </i>at 10.&nbsp; The Court made clear that this is a &ldquo;factual determination that must be conducted on a case-by-case basis.&rdquo;&nbsp; <i>Id. </i>at 11.&nbsp; Here, considerations include the nature of the user&rsquo;s interaction with JobDiva when using JobDiva&rsquo;s software and the location of the software host.&nbsp; <i>Id.</i>&nbsp;</div> <div><br />The Court explained that if JobDiva sold its software to a customer who hosted it on its own website, a user&rsquo;s interaction would appear to be with the customer and not JobDiva.&nbsp; Thus, the user would not likely associate the service with the JOBDIVA mark.&nbsp; In contrast, if the software was hosted on JobDiva&rsquo;s website, users would be more likely to perceive &ldquo;direct interation with JobDiva during operation of the software,&rdquo; and thus, associate the service with JobDiva.&nbsp; On the other hand, if a purchaser acquired ownership of JobDiva&rsquo;s software, then the Federal Circuit held it would likely preclude a finding that JobDiva has rendered services, unless JobDiva&rsquo;s activities after the sale create the perception that JobDiva was in fact providing services. &nbsp;Because the question to be determined was a factual one, the Court remanded it to the Board to answer in the first instance.</div> <div><br />The decision of the Federal Circuit is timely as businesses are increasingly offering software as a service rather than as a product. &nbsp;We will continue to monitor the courts for the latest developments on this issue.</div> <div>&nbsp;</div> *Chester Rothstein and Charles R. Macedo are partners and Jessica Capasso is an associate at Amster, Rothstein and Ebenstein LLP.&nbsp; Their practice specializes in intellectual property issues, including litigating trademark, patent, and other intellectual property disputes.&nbsp; They may be reached at <a href="mailto:crothstein@arelaw.com">crothstein@arelaw.com</a>, <a href="mailto:cmacedo@arelaw.com">cmacedo@arelaw.com</a>, and <a href="mailto:jcapasso@arelaw.com">jcapasso@arelaw.com</a> Mon, 19 Dec 2016 00:00:00 +0000 http://www.arelaw.com/publications/view/alert121916/ In The Press: <br>Askeladden LLC Announces Amster Rothstein & Ebenstein LLP Seeks Inter Partes Review Of Encoditech Patent On It's Behalf<br> http://www.arelaw.com/publications/view/inthepress120916/ <div><strong>Askeladden Seeks Inter Partes Review of Encoditech Patent Asserted in More than Thirty Lawsuits&nbsp;</strong></div><div>&nbsp;</div><div><em>Asserts that claimed systems and methods for secure mobile communications were known and obvious<br /><br /></em><a href="http://www.patentqualityinitiative.com/-/media/pqi/files/press%20releases/pqi%20-%20encoditech%20ipr%20release.pdf?la=en" target="_blank">Download PDF of Press Release</a><br /><br /> New York, NY - Askeladden LLC, as part of its Patent Quality Initiative, filed a petition for Inter Partes Review (IPR) with the Patent Trial and Appeal Board (PTAB) yesterday seeking review of U.S. Patent No. 6,321,095 assigned to Encoditech, LLC. Encoditech has asserted infringement of its patent in thirty-three lawsuits against a wide variety of companies including American Express, Best Buy, LinkedIn, and Under Armour.<br /><br /> Encoditech&rsquo;s patent claims methods and systems for establishing direct and secure communications between mobile devices. Askeladden&rsquo;s IPR petition asserts that the patent&rsquo;s claims were known and obvious at the time the application for the patent was filed and therefore should be found unpatentable by the PTAB.&nbsp;<br /><br /> Askeladden highlights the fact that the issued version of claim 7 of Encoditech&rsquo;s patent was rejected by the Patent Office during examination, and an amendment made to overcome the rejection was inadvertently omitted from the patent when it issued. &nbsp;Encoditech has not tried to correct this error, but rather has asserted infringement of claim 7 in litigation.<br /><br />&ldquo;Our goal is to promote and protect innovation in the financial services sector and other industries,&rdquo; said Sean Reilly, General Counsel of Askeladden. &ldquo;Litigation based on invalid patents that should not have been issued needlessly diverts valuable resources away from research and product development.&rdquo;<br /><br />Askeladden&rsquo;s <a href="http://www.patentqualityinitiative.com/about%20pqi/patent%20challenge%20committee" target="_blank">Patent Challenge Committee</a>&mdash;which is comprised of individuals regarded as thought leaders with respect to the patent system&mdash;decided to challenge this patent through the IPR process as part of Askeladden&rsquo;s Patent Quality Initiative.<br /><br /> Askeladden is represented by Amster, Rothstein &amp; Ebenstein LLP.<br /><br /><strong>About Patent Quality Initiative</strong><br /> Askeladden is an education, information and advocacy organization with the goal of improving the understanding, use and reliability of patents in financial services and other industries. As part of its Patent Quality Initiative, Askeladden strives to promote better patents and patent holder behaviors by regularly filing amicus briefs, Inter Partes Reviews (IPRs) and engaging in educational activities.</div> Fri, 09 Dec 2016 00:00:00 +0000 http://www.arelaw.com/publications/view/inthepress120916/ Patent Law Alert: <br> Supreme Court Clarifies Lost Profit Remedy for Design Patent Infringement in <i>Samsung Electronics Co., Ltd. v. Apple, Inc.</i> <br> http://www.arelaw.com/publications/view/alert120616/ <div>On December 6, 2016, the United States Supreme Court issued its decision in <i>Samsung Electronics Co., Ltd. v. Apple Inc.</i>, unanimously reversing the United States Court of Appeals for the Federal Circuit&rsquo;s decision which affirmed the award to Apple of $399 million in damages for Samsung&rsquo;s design patent infringement -- the entire profit Samsung made from its sales of infringing smartphones.&nbsp; The Court reversed the decision of the Federal Circuit as inconsistent with Section 289 of the Patent Act and remanded the case for further proceedings consistent with the opinion of the Court.&nbsp; Slip op. at 8-9.&nbsp;</div> <div>Pursuant to Section 289 of the Patent Act, damages specific to design patent infringement are as follows:</div> <div>&nbsp;</div> <div style="margin-left: 40px;">Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.</div> <div style="margin-left: 40px;">&nbsp;</div> <div style="margin-left: 40px;">Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.</div> <div style="margin-left: 40px;">&nbsp;</div> <div>35 U.S.C. &sect;&nbsp;289.<br />&nbsp;</div> <div>The issue as decided by the Court was whether, in the case of a multi-component product, the term &ldquo;&lsquo;article of manufacture&rsquo; must always be the end product sold to the consumer or whether it can also be a component of that product.&rdquo; &nbsp;Slip op. at 5.&nbsp; Here, the distinction was between the smartphone in its entirety or the portion of the smartphone that was the subject of the patented design (e.g., the front face).<br />&nbsp;</div> <div>Relying upon the text of the statute and the ordinary meaning of the terms, the Court found that &ldquo;the term &lsquo;article of manufacture&rsquo; is broad enough to encompass both a product sold to a consumer as well as a component of that product.&nbsp; That a component may be integrated into a larger product, in other words, does not put it outside the category of articles of manufacture.&rdquo;&nbsp; Slip op. at 6.&nbsp; The Court noted that this reading is consistent with 35 U.S.C. &sect;&nbsp;171(a) which allows for design patent protection for only a component of a multicomponent part, as well as 35 U.S.C. &sect;&nbsp;101 which permits patent protection for &ldquo;any new and useful . . . manufacture,&rdquo; including parts of a machine separate from the machine itself.&nbsp; <i>Id. </i>at 7.</div> <div><br />The Court thus set forth a new &ldquo;two step&rdquo; test for &ldquo;[a]rriving at a damages award under &sect; 289&rdquo;:</div> <div>&nbsp;</div><div style="margin-left: 40px;"><br />1. &nbsp; &nbsp; &nbsp; &ldquo;identify the &lsquo;article of manufacture&rsquo; to which the infringed design has been applied.&rdquo;; and</div> <div style="margin-left: 40px;"><br />2. &nbsp; &nbsp; &nbsp; &ldquo;calculate the infringer&rsquo;s total profit made on that article of manufacture.&rdquo;</div> <div><i><br />Id.</i> at 5.</div> <div><br />With respect to the first step, the Court declined to set forth a test for identifying the relevant article of manufacture.&nbsp; <i>Id.</i> at 58.</div> <div><br />While not necessary to the resolution of the case, we note that the Court did reaffirm its prior infringement test from <i>Gorham Co. v. White</i>, 14 Wall. 511 (1872), stating that &ldquo;[t]his Court has explained that a design patent is infringed &lsquo;if, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same.&rsquo;&rdquo;&nbsp; Slip op. at 2 (quoting <i>Gorham Co. v. White</i>, 14 Wall. 511, 528 (1872)).&nbsp;</div> <div><br />We will continue to monitor the Courts for the latest developments on this issue.</div> <div>&nbsp;</div> *Charles R. Macedo is a partner and Jessica Capasso and Michael Sebba are associates at Amster, Rothstein and Ebenstein LLP.&nbsp; Their practice specializes in intellectual property issues, including litigating patent, trademark and other intellectual property disputes.&nbsp; They may be reached at <a href="/cdn-cgi/l/email-protection#82e1efe3e1e7e6edc2e3f0e7eee3f5ace1edef">cmacedo@arelaw.com</a>, <a href="/cdn-cgi/l/email-protection#dbb1b8baabbaa8a8b49bbaa9beb7baacf5b8b4b6">jcapasso@arelaw.com</a> and <a href="/cdn-cgi/l/email-protection#e5889680878784a5849780898492cb868a88">msebba@arelaw.com</a> Tue, 06 Dec 2016 00:00:00 +0000 http://www.arelaw.com/publications/view/alert120616/ ARE Patent Law Alert:<br>In <i>Unwired Planet v. Google</i>, the Federal Circuit Rejected the PTAB’s Expansive View of “Covered Business Method” Patent<br> http://www.arelaw.com/publications/view/alert112916/ <div>A &ldquo;covered business method&rdquo; (CBM) patent review is one of several post-grant trial proceedings established under the America Invents Act (AIA) that is conducted at the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (PTO).&nbsp; A patent is qualified for CBM patent review only if it is a &ldquo;covered business method patent.&rdquo;&nbsp; The AIA defines a CBM patent as:<br />&nbsp;</div> <div style="margin-left: 40px;">a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.&nbsp;<br />&nbsp;</div> <div>AIA &sect; 18(d)(1).&nbsp; The PTO subsequently adopted this statutory definition of a CBM patent by regulation without any alteration.&nbsp; <i>See</i> 37 C.F.R. &sect; 42.301(a).&nbsp; In many cases, however, the PTAB has been applying a much broader definition of a CBM patent.&nbsp; In <i>Unwired Planet v. Google</i>, the Federal Circuit rejected the PTAB&rsquo;s expansive view of a CBM patent as exceeding the statutory authority.<br /><br /> In <i>Unwired Planet, LLC v. Google</i>, CBM2014-00006, the PTAB applied the following standard to determine whether the challenged patent is a CBM patent:<br />&nbsp;</div> <div style="margin-left: 40px;">whether the patent claims activities that are financial in nature, <b><i>incidental to a financial activity</i></b>, or<b><i> complementary to a financial activity</i></b>.&nbsp;<br />&nbsp;</div> <div>CBM2014-00006, Paper 11, slip op. at 11 (PTAB Apr. 8, 2014) (emphasis added).&nbsp; The challenged patent in the CBM proceeding is directed to a system and method for restricting access by a &ldquo;client application&rdquo; to a wireless device&rsquo;s location information.&nbsp; The PTAB reasoned that since the specification of the challenged patent indicates that the &ldquo;client application&rdquo; may be associated with a service or goods provider, such as a hotel, restaurant, or store, the subject matter recited in the challenged claim is &ldquo;incidental or complementary to the financial activity or product sales.&rdquo;&nbsp; <i>Id</i>.&nbsp; As such, the PTAB determined that the challenged patent was a CBM patent and instituted a CBM patent review.&nbsp; The PTAB ultimately issued a final written decision invalidating the challenged claims under section 101.&nbsp; The patent owner appealed from, among others, the PTAB&rsquo;s determination that the challenged patent was a CBM patent, which the Federal Circuit has jurisdiction to review.&nbsp; <i>See Versata Dev. Grp., Inc. v. SAP Am., Inc</i>., 793 F.3d 1306, 1323 (Fed. Cir. 2015).<br />&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</div> <div>In <i>Unwired Planet, LLC v. Google Inc.</i>, Case No. 2015-1812 (Fed. Cir. Nov. 21, 2016), the Federal Circuit rejected the PTAB&rsquo;s determination and held that &ldquo;the Board&rsquo;s reliance on whether the patent claims activities &lsquo;incidental to&rsquo; or complementary to&rsquo; a financial activity as the legal standard to determine whether a patent is a CBM patent was not in accordance with the law.&rdquo;&nbsp; Slip op. at 13.&nbsp;<br />&nbsp;</div> <div>As the Federal Circuit noted, the &ldquo;incidental&rdquo; or &ldquo;complementary&rdquo; language in the PTAB&rsquo;s own definition does not appear in the statute.&nbsp; Rather, this language came from &ldquo;a single floor comment&rdquo; by Senator Schumer during the Senate debate over the AIA that the PTO quoted as an example of the legislative history.&nbsp; Since the PTO did not adopt this general policy statement through rule making procedures, the Federal Circuit held that the PTO cannot apply or rely upon it as law.&nbsp; <i>See id</i>. at 8-10.&nbsp;<br />&nbsp;</div> <div>In all events, the Federal Circuit held that &ldquo;[t]he authoritative statement of the Board&rsquo;s authority to conduct a CBM review is the text of the statute,&rdquo; and &ldquo;[t]he Board&rsquo;s application of the &lsquo;incidental to&rsquo; and &lsquo;complementary to&rsquo; language from the PTO policy statement instead of the statutory definition renders superfluous the limits Congress placed on the definition of a CBM patent.&rdquo;&nbsp; <i>Id</i>. at 11-12.&nbsp;<br />&nbsp;</div> <div>In rejecting the PTAB&rsquo;s expansive view of a CBM patent, the Federal Circuit provided a clear guidance that &ldquo;CBM patents are limited to those <b><i>with claims that are directed to methods and apparatuses of particular types and with particular uses &lsquo;in the practice, administration, or management of a financial product or service&rsquo;</i></b>&rdquo; in accordance with the statutory definition.&nbsp; <i>Id</i>. at 12 (emphasis added).&nbsp; In this connection, the Federal Circuit provided some illustrative examples of patents that cannot automatically become CBM patents:<br />&nbsp;</div> <div style="margin-left: 40px;">The patent for a novel lightbulb that is found to work particularly well in bank vaults does not become a CBM patent because of its incidental or complementary use in banks. Likewise, it cannot be the case that a patent covering a method and corresponding apparatuses becomes a CBM patent because its practice could involve a potential sale of a good or service. All patents, at some level, relate to potential sale of a good or service.<br />&nbsp;</div> <div><i>Id</i>.<br />&nbsp;</div> <div>The Federal Circuit vacated the PTAB&rsquo;s final written decision from the CBM proceeding and remanded the case to the PTAB to determine whether the challenged patent is a CBM patent in accordance with the Federal Circuit&rsquo;s opinion.&nbsp; <i>Id</i>. at 13.&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</div> <div>We will continue to monitor developments in CBM eligibility under the AIA. &nbsp;In the meantime, for more information on CBM patent review and other post-grant trial proceedings, please contact one of our attorneys.</div> <div>&nbsp;</div> <div>*<a href="http://www.arelaw.com/professional/cmacedo/">Charles R. Macedo</a> is a partner and <a href="http://www.arelaw.com/professional/jcapasso/">Jung</a> S. Hahm is senior counsel at <a href="http://www.arelaw.com/">Amster, Rothstein &amp; Ebenstein LLP</a>.&nbsp; Their practice specializes in intellectual property issues, including litigating patent, trademark and other intellectual property disputes.&nbsp; They may be reached at <a href="/cdn-cgi/l/email-protection#87e4eae6e4e2e3e8c7e6f5e2ebe6f0a9e4e8ea">cmacedo@arelaw.com</a> and <a href="/cdn-cgi/l/email-protection#b6dcded7dedbf6d7c4d3dad7c198d5d9db">jhahm@arelaw.com</a>.&nbsp;</div> Tue, 29 Nov 2016 00:00:00 +0000 http://www.arelaw.com/publications/view/alert112916/ Brief of Amicus Curiae NYIPLA in Support of Neither Party, Lee v. Tam (U.S. November 21, 2016) http://www.arelaw.com/publications/view/amicus112116/ <strong>Click to download pdf: </strong><a href="/images/file/15-1293%20ac%20NYIPLA%20supporting%20neither%20party.pdf" target="_blank">Brief of Amicus Curiae NYIPLA in Support of Neither Party, <em>Lee v. Tam</em> (U.S. November 21, 2016)</a> Mon, 21 Nov 2016 00:00:00 +0000 http://www.arelaw.com/publications/view/amicus112116/ Getting The Deal Through <br>Trademarks 2017 Book - US Section<br> http://www.arelaw.com/publications/view/11082016/ &nbsp; Tue, 08 Nov 2016 00:00:00 +0000 http://www.arelaw.com/publications/view/11082016/ ARE Patent Law Alert:<br>USPTO Updates Guidance on Patent Subject Matter Eligibility as Federal Circuit Continues to Issue Decisions Finding Patents Eligible under 35 U.S.C. § 101<br> http://www.arelaw.com/publications/view/alert110416/ <p>The U.S. Patent and Trademark Office (&ldquo;USPTO&rdquo;) issued a <a href="https://www.uspto.gov/sites/default/files/documents/McRo-Bascom-Memo.pdf">new memorandum</a> earlier this week regarding recent Federal Circuit decisions on subject matter eligibility under 35 U.S.C. &sect; 101.&nbsp; This is the third such memo it has issued since May to supplement its May 2016 Update to its Guidance on patent subject matter eligibility.&nbsp; The USPTO&rsquo;s previous memos discussed the decisions in (i) <a href="https://www.uspto.gov/sites/default/files/documents/ieg-may-2016_enfish_memo.pdf"><i>Enfish, LLC v. Microsoft Corp.</i> and <i>TLI Communications LLC v. A.V. Automative, LLC</i></a>; and (ii) <a href="https://www.uspto.gov/sites/default/files/documents/memo_rlm-sequenom.pdf"><i>Rapid Litigation Management v. CellzDirect</i> and <i>Sequenom v. Ariosa</i></a>.&nbsp;</p> <p>This week&rsquo;s memo discusses the Federal Circuit&rsquo;s recent decisions in<i> McRO, Inc. v. Bandai Namco Games Am. Inc.</i>, 120 U.S.P.Q.2d 1091 (Fed. Cir. 2016) and <i>BASCOM Global Internet Servs. v. AT&amp;T Mobility LLC</i>, 827 F .3d 1341 (Fed. Cir. 2016), which both reversed patent-ineligibility decisions by their respective district courts.&nbsp; The memo also acknowledged this week&rsquo;s Federal Circuit decision in <i>Amdocs (Israel) Ltd. v. Openet Telecom, Inc.</i>, No. 2015-1180 (Fed. Cir. Nov. 1, 2016), and noted that it would be discussed further in forthcoming updates to the USPTO&rsquo;s subject matter eligibility guidance.</p> <p><b><i>McRO</i></b></p> <p>This most recent USPTO guidance summarizes the key takeaways from <i>McRO</i> (previously reported <a href="http://www.arelaw.com/publications/view/alert091316/">here</a>) as:</p> <ul><li>Cautioning that courts &ldquo;must be careful to avoid oversimplifying the claims&rdquo; by looking at them generally and failing to account for the specific requirements of the claims;<br /><br type="_moz" />&nbsp;</li><li>Clarifying that an &ldquo;improvement in computer-related technology&rdquo; (as opposed to an abstract idea that is merely implemented by a generic computer) is not limited to improvements in the operation of a computer or a computer network <i>per se, </i>but may also be claimed as a set of &ldquo;rules&rdquo; (basically mathematical relationships) that improve computer-related technology by allowing computer performance of a function not previously performable by a computer; and<br />&nbsp;</li><li>Explaining that the &ldquo;improvement in computer-related technology&rdquo; can be found by: (i) looking to the teachings of the specification about how the claimed invention improves a computer or other technology; or (ii) recognizing that the claims recite <b><i>a particular solution to a problem or a particular way to achieve a desired outcome defined by the claimed invention, as opposed to merely claiming the idea of a solution or outcome</i></b>.</li></ul> <p>With regard to this last takeaway, the USPTO&rsquo;s guidance distinguishes (i) <i>Affinity Labs of TX v. DirecTV </i>as a case that relied on the specification&rsquo;s failure to provide details regarding the manner in which the invention accomplished the alleged improvement when holding that the claims were directed to an abstract idea and not an &ldquo;improvement in computer-related technology&rdquo;; and (ii) <i>Electric Power Group </i>as a case where the claims recited the desired result of the invention <b><i>without identifying a particular tool for achieving that result</i></b>.</p> <p><b><i>BASCOM</i></b></p> <p>The USPTO memo summarized the key takeaway from <i>BASCOM</i> (previously reported <a href="http://www.arelaw.com/publications/view/are-patent-law-alert-in-bascom-v-att-the-federal-circuit-continu/">here</a>) as:</p> <ul><li>Clarifying that the additional elements of the claims must be considered <b><i>in combination</i></b> as well as individually at step two of the <i>Alice </i>analysis, because the nonconventional and non-generic arrangement of known, conventional elements may be sufficient to transform the claim into a patent-eligible application of the underlying abstract idea.</li></ul> <p><b>Preemption</b></p> <p>The USPTO memo also makes a statement about preemption, noting that, although several recent Federal Circuit decisions (e.g., <i>Rapid Litigation</i>, <i>BASCOM</i>, and <i>McRO</i>) discuss the role of preemption in the eligibility analysis, &ldquo;[e]xaminers should continue to use the <i>Mayo/Alice </i>framework ... to resolve questions of preemption&rdquo; rather than evaluating preemption independently.</p> <p><b>Precedential Decisions</b></p> <p>In addition to the memo, the USPTO updated its chart of court decisions on subject matter eligibility, and reminded examiners to &ldquo;avoid relying upon or citing non-precedential decisions (e.g., <i>SmartGene</i>, <i>Cyberfone</i>) unless the facts of the application under examination uniquely match the facts at issue in the non-precedential decision.&rdquo;&nbsp; The updated chart makes it easier for examiners to see whether a decision is precedential or non-precedential.</p> <p><b>Upcoming USPTO Roundtables</b></p> <p>The USPTO will be hosting two roundtables to facilitate discussion on patent subject matter eligibility on November 14 in Alexandria, Virginia and on December 5 in Stanford, California (both viewable by live webcast).&nbsp; The USPTO is also accepting written comments on its subject matter eligibility guidance on an ongoing basis and on larger questions concerning the legal contours of eligible subject matter in the U.S. patent system until January 18, 2017.&nbsp; Additional details are available at&nbsp;<a href="http://www.uspto.gov/patent/laws-and-regulations/examination-policy/2014-interim-guidance-subject-matter-eligibility-0">www.uspto.gov/patent/laws-and-regulations/examination-policy/2014-interim-guidance-subject-matter-eligibility-0</a>.</p> <p><b><i>Amdocs </i></b><b>and Recent Trends in Patent-Eligibility Decisions</b></p> <p>In addition to the USPTO&rsquo;s memo, patent-eligibility law experienced another significant development this week when the Federal Circuit issued its decision in <a href="http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1180.Opinion.10-28-2016.1.PDF"><i>Amdocs v. Openet Telecom</i></a>.&nbsp; The <i>Amdocs </i>decision was on November 1, after it had been pending for over a year since its oral argument last October.&nbsp; The 2-1 decision found all four patents-at-issue to be patent-eligible, and reversed and remanded the district court&rsquo;s decision that had granted judgment on the pleadings.&nbsp; As noted above, the USPTO&rsquo;s memo did not discuss this most recent Federal Circuit decision finding claims to be patent-eligible, but stated that it will be included in upcoming USPTO subject matter eligibility guidance.</p> <p>Judge Plager wrote the majority opinion and was joined by Judge Newman. &nbsp;The four related patents generally concern &ldquo;parts of a system designed to solve an accounting and billing problem faced by network service providers.&rdquo; &nbsp;Rather than trying to identify an abstract idea at step one of the <i>Alice </i>test, the majority skipped right to step two, holding that, even if the representative claims of each of the patents-at-issue were directed to the abstract ideas identified by the district court, each representative claim also contained an inventive concept that transformed the claim into something more than merely an abstract idea itself.</p> <p>Starting with a representative claim of one of the four patents-at-issue, the majority relied on its previous construction of the claim term &ldquo;enhance&rdquo; as requiring the claims to be performed upon the invention&rsquo;s distributed architecture as disclosed in the specification.&nbsp; The majority explained that:</p> <p style="margin-left: 40px;">[T]his claim entails an unconventional technological solution (enhancing data in a distributed fashion) to a technological problem (massive record flows which previously required massive databases). The solution requires arguably generic components, including network devices and &ldquo;gatherers&rdquo; which &ldquo;gather&rdquo; information. However, the claim&rsquo;s enhancing limitation necessarily requires that these generic components operate in an unconventional manner to achieve an improvement in computer functionality [over the prior art].</p> <p>The majority found that the representative claims of the remaining three patents were eligible for similar reasons.</p> <p>Judge Reyna wrote an opinion dissenting-in-part and concurring-in-part.&nbsp; He argued that two of the four patents were patent-ineligible, and that the rationale used by the majority to find the other two patents eligible was faulty.&nbsp; For the two patents he found patent-eligible, he found them eligible under step one (unlike the majority opinion that which skipped to step two) and he criticized the majority for not identifying an abstract idea under step one of the <i>Alice</i> test, stating that their approach &ldquo;ignores and undermines&rdquo; the Federal Circuit&rsquo;s holdings in <i>Enfish</i>, <i>McRO</i>, and the <i>Affinity Labs </i>cases, which point out that the step one inquiry is significant<i>.</i>&nbsp;</p> <p>Judge Reyna&rsquo;s approach to the patent-eligibility analysis was slightly different from the majority&rsquo;s; rather than framing the question as whether the claim included a technological solution to a technological problem, Judge Reyna framed the <i>Alice </i>analysis as looking at whether the claims were &ldquo;directed to&rdquo; an abstract idea (such as a result, or desired goal) rather than to an application (such as a particular means of accomplishing that result or goal).&nbsp; In Judge Reyna&rsquo;s view, step one of the Alice test is a kind of &ldquo;quick look&rdquo; at whether the claim is clearly directed to an application (e.g., by including clear structural or procedural means that describe <i>how</i> that goal is achieved), and step two looks more carefully and holistically at the details of the claim if there is doubt at step one.</p> <p>Judge Reyna stated that two of the patents were patent-eligible because, even though they <i>included</i> the abstract ideas identified by the district court, the representative claims were not &ldquo;directed to&rdquo; these abstract ideas since the claims recited enough process limitations defining a specific way of arriving at those abstract goals to pass the &ldquo;coarse eligibility filter of &sect; 101.&rdquo;&nbsp; However, he agreed with the district court&rsquo;s determination for the other two patents-at-issue, explaining that the claims failed to recite any structure or process limiting the claim to a particular means of achieving the recited goals.</p> <p><i>Amdocs </i>is the sixth Federal Circuit decision finding claims to be patent-eligible since the Supreme Court&rsquo;s <i>Alice </i>decision in June 2014, and is the fifth such decision in the last six months.&nbsp; This trend of increased decisions finding claims patent-eligible is not just occurring at the Federal Circuit, but is noticeable in the district courts as well.&nbsp; Before May of this year, the majority of patent-eligibility decisions from the district courts resulted in patent invalidity but, since May, only about half of district court patent-eligibility decisions have found the patents-at-issue to be invalid.</p> <p>We will continue to monitor developments in patent-eligibility under 35 U.S.C. &sect; 101. &nbsp;In the meantime, for more information on patent-eligibility, please contact one of our attorneys.</p> <p>_____________</p> <p><a href="http://www.arelaw.com/professional/cmacedo/">Charles R. Macedo</a>&nbsp;is a partner and&nbsp;<a href="http://www.arelaw.com/professional/shudak/">Sandra A. Hudak</a>&nbsp;is an associate at Amster, Rothstein &amp; Ebenstein LLP.&nbsp; Their practice specializes in intellectual property issues including litigating patent, copyright, trademark, and other intellectual property disputes.&nbsp; They may be reached at&nbsp;<a href="mailto:cmacedo@arelaw.com">cmacedo@arelaw.com&nbsp;</a>and&nbsp;<a href="mailto:shudak@arelaw.com">shudak@arelaw.com</a>.</p> Fri, 04 Nov 2016 00:00:00 +0000 http://www.arelaw.com/publications/view/alert110416/ Jury returns verdict for Google in question of fair use of Oracles code http://www.arelaw.com/publications/view/jiplp092316/ <em>Oracle Am., Inc v Google Inc</em>, No C 10-03561 WHA, 2016&thinsp;U.S. Dist. LEXIS 74931 (Northern District of California, 8 June 2016) (<em>Oracle III</em>) <div id="abstract-1" itemprop="description"><p><strong>Abstract</strong></p> <p>On 26 May 2016 a jury returned a verdict that upheld Google&rsquo;s fair use defence in a long-running copyright dispute brought by Oracle over Google&rsquo;s misappropriation of certain Java code. The recent jury verdict is the latest installment in a litigation that began in 2010 with Oracle accusing Google of copying certain portions of its Java application programming interface in Google&rsquo;s Android operating system. The verdict, if upheld on appeal, exonerates Google of liability for infringing Oracle&rsquo;s copyright on the software in question. The case had the potential for significant damages because of the size of the Android market in question and significant implications on the commercial use of open source software.</p></div> <div id="sec-1"><p><strong>Legal Context</strong></p> <p>US courts have struggled for decades over if&mdash;and how&mdash;copyright law should protect computer software. Oracle&rsquo;s Java API has straddled the lines of this struggle in a highly public manner.</p> <p>This dispute raised the issues of (1) whether and to what extent software code is copyrightable, and (2) when an alleged infringer is entitled to rely upon a fair use defence in a software copyright dispute. In a previous appeal, the US Court of Appeals for the Federal Circuit (&lsquo;Federal Circuit&rsquo;) held that certain portions of Oracle&rsquo;s Java application programming interface (&lsquo;API&rsquo;) were copyrightable, and remanded the case for trial on whether Google&rsquo;s use was &lsquo;fair use&rsquo;. In the present trial, the jury considered the fair use defence, ultimately deciding in favour of Google. The case is now expected to be appealed to the Federal Circuit.</p></div> <div id="sec-2"><p><strong>Facts</strong></p> <p>Sun Microsystems (&lsquo;Sun&rsquo;) created and developed the popular open source Java programming language, and the specific computer code at issue here. In 2012, Oracle America, Inc purchased Sun and Sun&rsquo;s rights to Java.</p> <p>Google created and distributes its Android operating system, which includes certain segments of Java software. As pertinent to this dispute, Android contains 37 code packages copied-in-part out of the larger Java API. The copied code consists of the declarations and headers of various classes and methods in the Java API. These segments of code allow programmers to use the same commands in Android as they would when writing an ordinary Java program, and thus saves the programmers&mdash;and notably Android app writers&mdash;from learning a different programming language. The crux of the litigation is thus the status of the Java API under copyright law and Google&rsquo;s liability for copying it, a practice which is very common in the industry.</p> <div id="sec-3"><p><strong>Oracle I</strong><br /> <br /> On 8 May 2010, Oracle filed suit in the District Court, alleging that Google infringed both copyrights and patents by copying parts of the Java API in the Android operating system (<em>Oracle Am., Inc v</em> <em>Google Inc</em>, 872 F. Supp. 2d 974 (Northern District of California, 2012) (<em>Oracle I</em>)).</p> <p>The parties agreed to split the issues between the judge and the jury. The judge would issue rulings on whether the software was protectable by copyright and on Google&rsquo;s equitable defences. The jury would decide whether Google had infringed the copyright claims and if so, whether it had a valid fair use defence (<em>Oracle I</em> at 975).</p> <p>The judge held that the relevant software was not protectable by copyright (<em>Oracle I</em> at 977). Finding no direct precedent for the issue, the judge focused his analysis on the Second Circuit&rsquo;s &lsquo;abstract-filtration-comparison&rsquo; test, which the Ninth Circuit has adopted as the framework for analysis of software copyright claims (<em>Oracle I</em> at 988). The judge relied heavily on the fact that the code in question was mainly functional, which meant that it could not be protected (Id.).</p> <p>In the first jury trial, the jury, which was instructed to assume copyrightability of Oracle&rsquo;s Java API, found that Google had infringed the copyrights (Jury Verdict, ECF No 1087). The jurors were deadlocked on the fair use defence, but the judge entered final judgment dismissing the case because of his finding on lack of copyrightability (Final Judgment, ECF No. 1211). Both parties appealed to the Federal Circuit.</p></div> <div id="sec-4"><p>Oracle II<br /> <br /> The Federal Circuit had jurisdiction over the appeal based on the patent infringement claims in the original complaint. The patents in question were not appealed after the jury returned a verdict of non-infringement of the patents (Jury Verdict, ECF No. 1190).</p> <p>More importantly, the Federal Circuit reversed the District Court&rsquo;s denial of copyright protection and remanded to decide the fair use defence, which the prior jury had been deadlocked on (<em>Oracle Am., Inc v Google Inc</em>, 750 F3d 1339, 1348 (Fed Cir 2014) (<em>Oracle II</em>), <em>cert denied</em> 135&thinsp;S Ct 2887 (2015)).</p> <p>In reaching its decision, the Federal Circuit applied the same &lsquo;abstraction-filtration-comparison&rsquo; test that the District Court identified (<em>Oracle II</em> at 1357&ndash;9). The court found that proper application of the abstraction and filtration steps of the test showed that the code in question was protectable by copyright (Id.). In the decision, a unanimous panel of three judges remarked that there are no hard and fast rules regarding copyrightability of computer software, and that many other courts had found software protectable under copyright (Id.). The court also dismissed the lower court&rsquo;s reliance on the functionality of the software (<em>Oracle II</em> at 1367):</p> <p style="margin-left: 40px;"><q id="disp-quote-1">We agree with Oracle that, under Ninth Circuit law, an original work - even one that serves a function - is entitled to copyright protection as long as the author had multiple ways to express the underlying idea<em>.</em> </q></p> <p>Here, the undisputed facts that Sun wrote the code and that Google could have written Android to accomplish the same functionality without copying the language was sufficient evidence to show that the Java API software is protectable by copyright (<em>Oracle II</em> at 1367&ndash;8).</p></div></div> <div id="sec-5"><p><strong>Analysis</strong></p> <p>On remand from <em>Oracle II</em>, the District Court submitted the fair use issue to a jury, which returned a verdict for Google (Jury Verdict, <em>Oracle III</em>, ECF No. 1982). In his instructions to the jury, the judge presented the four factors included in 17 USC &sect;107, the statute codifying the fair use defence. These factors are:</p> <ol id="list-1"> <li id="list-item-1"><p>purpose and character of the use;</p></li> <li id="list-item-2"><p>nature of the copyrighted work;</p></li> <li id="list-item-3"><p>amount and substantiality of the copied work; and</p></li> <li id="list-item-4"><p>the effect of the use on the market for the copyrighted work. (Final Charge to the Jury at 12, <em>Oracle III</em>, ECF No. 1928)</p></li> </ol> <p>The judge instructed the jury that none of the factors are dispositive and that the four factors listed are not exclusive, which meant that the jury was free to consider any other relevant factors (Id.).</p></div> <div id="sec-6"><p><strong>Practical Significance</strong></p> <p>This case is an example of the ongoing attempt to harmonize copyright law, which was substantially revised in 1976, with modern computer software, especially in light of the creation of computer programming languages that are free to use. The case is also significant because of the potential damages involved; Oracle filed expert declarations supporting claims of $9.3 billion dollars in damages due to the copyright infringement (declaration of Edward A. Bayley, Exhibit G at 7, <em>Oracle III</em>, ECF No. 1571).</p> <p>The Federal Circuit&rsquo;s reversal of the lower court&rsquo;s copyrightability decision is significant because of the analysis the court applied. The Federal Circuit was interpreting Ninth Circuit copyright law, and it agreed with the District Court&rsquo;s identification of the &lsquo;abstract-filtration-comparison&rsquo; test as the proper Ninth Circuit standard for use with computer software. However, the Federal Circuit focused heavily on the independent creation and creativity used when constructing the relevant Java APIs. The analysis and tone used in the decision harkens back to the <em>Feist</em> decision, 499 US 340 (1991), and the relatively low bar to gaining copyright protection for a work described there. This decision sets a low standard for computer software to meet to gain copyright protection, especially in light of the software in question: the functional declarations of classes and methods of the Java API, not an entire computer program or relevant portion of the implementing code.</p> <p>The District Court&rsquo;s jury instructions regarding fair use followed the statutory expression closely with a few interesting additions. At Oracle&rsquo;s prompting, the court told the jury that they could consider whether Google acted in good faith prior to the commencement as part of purpose and character of the use. Google strenuously opposed Oracle&rsquo;s position, and the judge ended up comprising by mentioning the good faith factor to the jury, but limiting consideration only to actions before commencement of the suit (see Order Denying Rule 50 Motions at 2, <em>Oracle III</em>, ECF No. 1988). He also authorized Google to present evidence supporting its good faith in rebuttal to the claim of bad faith.</p> <p>Google argued for an instruction that told the jury to consider whether Google&rsquo;s actions were consistent with industry practice which rose to the level of &lsquo;custom&rsquo;, which would presumably negate a bad faith claim. The judge did not include &lsquo;custom&rsquo; as an independent factor to consider under the nature and purpose of use because of the minimal precedent supporting Google&rsquo;s position (Id. at 3). However, the judge did include whether Google was following industry practice as a consideration when evaluating Google&rsquo;s good faith (Id.). This is important because the practice of copying the type of code at issue here is widespread in the technology sector.</p> <p>In <em>Oracle II</em> many saw the Federal Circuit&rsquo;s decision as lowering the threshold of originality necessary to protect computer software. With the latest Jury verdict, some see the pendulum swinging back with the applicability of a fair use defence, particularly when the originality threshold has been lowered too much. What happens next in this long-running battle only time will tell.</p></div> <div id="fn-group-1"><div><p><br /> <strong>Footnotes</strong><br /> <br /> Charles R. Macedo is also the author of <em>The Corporate Insider&rsquo;s Guide to US Patent Practice</em>, published by Oxford University Press in 2009.</p></div> &copy; The Author(s) 2016. Published by Oxford University Press. All rights reserved.</div> <p>&nbsp;</p> Fri, 23 Sep 2016 00:00:00 +0000 http://www.arelaw.com/publications/view/jiplp092316/ Supreme Court rejects Seagate test for enhanced damages in patent cases http://www.arelaw.com/publications/view/jiplp09-22-16/ <em>Halo Electronics, Inc v Pulse Electronics, Inc</em>, No. 14-1513 and <em>Stryker Corp. v Zimmer, Inc</em>, No. 14-1520, 2016&thinsp;US LEXIS 3776, US 13 June 2016<br /><br /><div id="abstract-1" itemprop="description"><p><strong>Abstract</strong></p><p>On 13 June 2016, the United States Supreme Court issued a joint decision in <em>Halo Electronics, Inc v Pulse Electronics, Inc</em>, No. 14-1513 and <em>Stryker Corp. v Zimmer, Inc</em>, No. 14-1520, slip op. (US 13 June 2016) (collectively, &lsquo;<em>Halo</em>&rsquo;), unanimously rejecting the United States Court of Appeals for the Federal Circuit&rsquo;s <em>Seagate</em> test for enhanced damages in a patent case as &lsquo;unduly rigid&rsquo; and &lsquo;inconsistent&rsquo; with the plain language of 35&thinsp;U.S.C. &sect; 284.</p></div><div id="sec-1"><p><strong>Legal Context</strong></p><p>Under Section 284 of the Patent Act, where there has been a finding of infringement, courts &lsquo;<em>may</em> increase the damages up to three times the amount found or assessed&rsquo;. 35&thinsp;U.S.C. &sect;&nbsp;284 (emphasis added). In <em>In re Seagate Technology, LLC</em>, 497 F. 3d 1360, 1371 (2007) (&lsquo;<em>Seagate</em>&rsquo;), the Federal Circuit set forth a specific test for determining whether enhanced damages under Section 284 are appropriate. Under the <em>Seagate</em> test, a patent owner must show by <em>clear and convincing</em> evidence: (i) that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent; and (ii) that this objectively defined risk was either known or so obvious that it should have been known to the accused infringer. Id. Only if both parts of the test are satisfied may the district court consider whether to award enhanced damages. Id. An award of enhanced damages is subject to trifurcated appellate review where the first question of <em>Seagate</em> is reviewed de novo, and the second question and ultimate decision of whether to award enhanced damages is reviewed for abuse of discretion (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *11).</p></div><div id="sec-2"><p><strong>Facts</strong></p><p>In 2007, Petitioner Halo Electronics, Inc (&lsquo;Halo Electronics&rsquo;), owner of patents for electronic packages containing transformers designed to be mounted to the surface of circuit boards, sued Respondents Pulse Electronics, Inc and Pulse Electronics Corp. (collectively, &lsquo;Pulse&rsquo;) for patent infringement (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *12). A jury ruled in favour of Halo Electronics, finding that Pulse had infringed Halo Electronics&rsquo; patents and that it was highly probable that Pulse had done so wilfully. However, the district court did not award enhanced damages under Section 284 on the basis that Halo Electronics &lsquo;had failed to show objective recklessness under the first step of <em>Seagate</em>&rsquo;. The Federal Circuit affirmed.</p><p>In 2010, in a separate action, Petitioners Stryker Corporation, Stryker Puerto Rico, Ltd, and Stryker Sales Corporation (collectively, &lsquo;Stryker&rsquo;) sued respondents Zimmer, Inc and Zimmer Surgical, Inc (collectively, &lsquo;Zimmer&rsquo;) for patent infringement relating to a pulsed lavage device used to clean tissue during orthopaedic surgery (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *12&ndash;13). A jury found that Zimmer wilfully infringed Stryker&rsquo;s patents, awarding US$70 million in lost profits and US$6.1 million in supplemental damages. The jury further trebled the damages under Section 284, resulting in a total damages award of more than US$228 million. The Federal Circuit vacated the award of treble damages on the basis that Zimmer had asserted &lsquo;reasonable defenses&rsquo; at trial.</p><p>The US Supreme Court granted certiorari in both cases, ultimately vacating the decisions of the US Court of Appeals for the Federal Circuit which had found no enhanced damages, and remanding the cases for further proceedings consistent with the opinion of the court.</p></div><div id="sec-3"><p><strong>Analysis</strong></p><p>In <em>Halo</em>, the Supreme Court began its analysis by retracing over two centuries of history, including the various Patent Acts dating back to 1793, Supreme Court cases from the late nineteenth century, and Circuit Court cases from the early twentieth century. Notably, the Supreme Court recognized that the provisions of the 1952 Patent Act must be read in light of historical practice:</p><p style="margin-left: 40px;"><q id="disp-quote-1">It is against this backdrop that Congress, in the 1952 codification of the Patent Act, enacted &sect;284. &lsquo;The stated purpose of the 1952 revision was &lsquo;merely reorganization in language to clarify the statement of the statutes.&rsquo; This Court accordingly described &sect;284&mdash;consistent with the history of enhanced damages under the Patent Act&mdash;as providing that &lsquo;punitive or increased damages&rsquo; could be recovered &lsquo;in a case of willful or bad-faith infringement&rsquo;.</q></p><p><em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *9&ndash;10 (internal citations omitted).</p><p>The Supreme Court then focused on the language of Section 282, confirming that it contains &lsquo;no express limit or condition&rsquo; and that the word &lsquo;may&rsquo; &lsquo;clearly connotes discretion&rsquo; on the part of the district court (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *14). The Supreme Court cautioned however, that enhanced damages under Section 284 are &lsquo;generally reserved for egregious cases of culpable behavior&rsquo;. (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *15). That being said, the court found the <em>Seagate</em> test to be &lsquo;<em>unduly rigid</em>&rsquo; and &lsquo;impermissibly encumber[ing] the statutory grant of discretion to district courts&rsquo;. Id. (quoting <em>Octane Fitness, LLC v</em> <em>ICON Health &amp; Fitness,</em> <em>Inc</em>, 134&thinsp;S. Ct. 1749, 1755 (2014)) (emphasis added).</p><p>Specifically, the Supreme Court took issue with <em>Seagate&rsquo;s</em> requirement of a finding of &lsquo;objective recklessness&rsquo; before a district court may consider enhanced damages (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *15&ndash;16). The court held that this standard allows an infringer to insulate himself from enhanced damages by simply mustering a reasonable, yet unsuccessful, defence at trial, even where the infringer &lsquo;did not act on the basis of the defense or was even aware of it&rsquo;. (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *17). Thus, even the most culpable infringer may escape enhanced damages &lsquo;solely on the strength of his attorney&rsquo;s ingenuity&rsquo;. Rather, &lsquo;[t]he subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless&rsquo;.</p><p>The Supreme Court emphasized that &lsquo;culpability is generally measured against the knowledge of the actor at the time of the challenged conduct&rsquo; and Section 284 &lsquo;allows district courts to punish the full range of culpable behavior&rsquo; in a manner that is free &lsquo;from the inelastic constraints of the <em>Seagate</em> test&rsquo;. (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *17&ndash;18). The Supreme Court &lsquo;eschew[ed] any rigid formula for awarding enhanced damages under &sect;&nbsp;284&rsquo;. (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *20). Further, the Supreme Court rejected the heightened clear and convincing standard required for enhanced damages under <em>Seagate</em> as inappropriate and inconsistent with Section 284 (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *19&ndash;20). Rather, &lsquo;patent-infringement litigation has always been governed by a preponderance of the evidence standard&rsquo;. (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *20). Finally, the Supreme Court also rejected the Federal Circuit&rsquo;s three part standard for appellate review, holding that a district court&rsquo;s decision regarding enhanced damages should be wholly reviewed on appeal for abuse of discretion.</p><p>Ultimately, the Supreme Court reiterated that while Section 284 gives district courts discretion to award enhanced damages against patent infringers, district courts should be guided by &lsquo;sound legal principles&rsquo; developed over many years of application and interpretation of the Patent Act in which enhanced damages are awarded only in &lsquo;egregious cases of misconduct beyond typical infringement&rsquo;. (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *24).</p><p>Notably, Justice Breyer&rsquo;s concurrence, joined by Justices Kennedy and Alito, reiterated that enhanced damages should be carefully applied &lsquo;to ensure that they only target cases of egregious misconduct&rsquo;, lest the fear of treble damages frustrate the purpose of the Patent Act &lsquo;to promote the progress of science and useful arts&rsquo;. (<em>Halo</em>, 2016&thinsp;US LEXIS 3776, at *30-31 (Breyer, J., concurring)).</p></div><div id="sec-4"><div><p><strong>Practical Significance</strong></p></div><p>Under <em>Halo</em>, we will likely see more patent owners seeking enhanced damages, and <em>Halo</em> certainly increases the odds of patent owners being awarded enhanced damages in a successful patent infringement litigation. However, while the Supreme Court has rejected the rigidness of the <em>Seagate</em> test, <em>Halo</em> makes clear that it is still the case that enhanced damages should be awarded only in the most egregious circumstances. It remains to be seen whether lower courts will interpret <em>Halo</em> in such a way that enhanced damages will be awarded more frequently.</p>&copy; The Author(s) 2016. Published by Oxford University Press. All rights reserved.</div> Thu, 22 Sep 2016 00:00:00 +0000 http://www.arelaw.com/publications/view/jiplp09-22-16/ US Supreme Court clarifies attorney’s fees standard under section 505 of the Copyright Act http://www.arelaw.com/publications/view/jiplp091316/ <em>Kirtsaeng v John Wiley &amp; Sons, Inc</em>, No 15&ndash;375, 2016&thinsp;US Lexis 3922 (US 16 June 2016)<br /> <br /> <div id="abstract-1" itemprop="description"><h2><br />Abstract</h2> <div id="p-1">On 16 June 2016, the US Supreme Court delivered an opinion addressing the appropriate standard for the attorney fee shifting provision of the Copyright Act, 17 USC &sect; 505. Writing for a unanimous cou rt, Justice Kagan agreed with the &lsquo;objective reasonableness&rsquo; standard employed by the District Court in denying award of attorney&rsquo;s fees, but remanded the decision for further consideration after stressing that the reasonableness inquiry is only one part of the &sect; 505 analysis and is not controlling. Courts should instead examine all relevant factors when considering whether to award attorney&rsquo;s fees.</div></div> <div id="sec-1"><div>&nbsp;</div> <h2>Legal Context</h2> <div id="p-2">Section 505 of the Copyright Act authorizes courts to award a prevailing party reasonable attorney&rsquo;s fees in a copyright claim. Such authorization is at the discretion of the trial court. The award of attorney&rsquo;s fees to the prevailing party differs from the ordinary US practice of each side paying its own costs in litigation. The US Supreme Court has previously instructed courts to examine a range of factors when deciding whether to award attorney&rsquo;s fees under &sect; 505, noting that the inquiry does not follow a &lsquo;precise rule or formula&rsquo; (<em>Fogerty v</em> <em>Fantasy, Inc</em>, 510&thinsp;US 517, 533-34 (1994)).</div></div> <div id="sec-2"><div>&nbsp;</div> <h2>Facts</h2> <div id="p-3">In the present case, petitioner was sued for copyright infringement after he purchased textbooks at lower prices overseas and resold them in the United States (<em>Kirtsaeng v</em> <em>John Wiley &amp; Sons, Inc</em>, No 15-375, 2016&thinsp;US Lexis 3922, at *6 (US 16 June 2016)). He prevailed after extended litigation by relying on the &lsquo;first-sale doctrine&rsquo; codified at 17 USC &sect; 109. That litigation, which resulted in an earlier Supreme Court decision (<em>Kirtsaeng v</em> <em>John Wiley &amp; Sons, Inc</em>, 133&thinsp;S Ct 1351 (2013)), affirmed the applicability of the first-sale doctrine in cases involving copyrighted works purchased in foreign countries.</div> <div id="p-4"><br /> After successfully employing the first-sale doctrine as a defence, petitioner returned to court to recover more than USD 2 million in attorney&rsquo;s fees under &sect; 505 of the Copyright Act. The district court denied the motion, placing substantial weight on the objective reasonableness of the textbook publisher&rsquo;s position ( <em>John Wiley &amp; Sons, Inc</em> <em>v</em> <em>Kirtsaen</em>g, No 08-cv-07834, 2013&thinsp;US Dist LEXIS 179113, at *2 (SDNY 20 Dec 2013)). The US Court of Appeals for the Second Circuit affirmed in an unsigned Summary Opinion (<em>John Wiley &amp; Sons, Inc</em> <em>v</em> <em>Kirtsaen</em>g, 605 F App&rsquo;x 48, 49 (2d Cir 2015)). Petitioner appealed to the Supreme Court, which accepted certiorari on the question of &lsquo;What is the appropriate standard for awarding attorneys&rsquo; fees to a prevailing party under &sect; 505 of the Copyright Act?&rsquo; (<em>Kirtsaeng v</em> <em>John Wiley &amp; Sons, Inc</em><em>,</em> 136&thinsp;S Ct 890 (2016)).</div></div> <div id="sec-3"><div>&nbsp;</div> <h2>Analysis</h2> <div id="p-5">Justice Kagan wrote the opinion for a unanimous court, remanding the decision. The court found at the outset that the respondent book publisher, John Wiley &amp; Sons, Inc (&lsquo;Wiley&rsquo;), argued a reasonable position in the previous proceedings, citing the fact that several US appellate courts and three Justices of the Supreme Court agreed with the position (<em>Kirtsaeng</em>, 2016&thinsp;US Lexis 3922, at *8). Following <em>Forgerty</em> (at both parties&rsquo; suggestion), the court noted that the &sect; 505 inquiry was at the discretion of the district court and that the inquiry could not follow a precise rule or formula (ibid, *9). The <em>Kirtsaeng</em> court reiterated that a district court may not award attorney&rsquo;s fees as a matter of course, and may not treat plaintiffs and defendants differently (ibid). It also reviewed a list of non-exclusive factors that a district court may consider in a &sect; 505 analysis, including frivolousness, motivation, and objective unreasonableness (ibid, *10).</div> <div id="p-6"><br /> The court examined precedent on similar fee-shifting schemes and found that any factor used in a &sect; 505 analysis must support the goals of the Copyright Act (ibid, *12). Citing <em>Fogerty</em> and the US Constitution, the court found that the Copyright Act &lsquo;ultimately serves the purpose of enriching the general public through access to creative works&rsquo; (ibid, *12, citing <em>Fogerty</em>, 510&thinsp;US at 527). The two primary aims of copyright law in the United States were described as: &lsquo;encouraging and rewarding authors&rsquo; creations while also enabling others to build on that work&rsquo; (<em>Kirtsaeng</em>, 2016&thinsp;US Lexis 3922, at *12&ndash;13).</div> <div id="p-7"><br /> Wiley argued that granting substantial weight to the reasonable objectiveness of the opposing party&rsquo;s position and arguments would further the objectives of the Copyright Act (ibid, *13). On the other hand, Kirtsaeng argued that the standard for awarding fees should be whether the case &lsquo;resolved an important or close legal issue and thus &ldquo;meaningfully clarifie[d] copyright law&rdquo; &rsquo; (ibid, *11, quoting Brief for Petitioner at 36).</div> <div id="p-8"><br /> The court sided with Wiley, holding that reasonable objectiveness was the proper factor for a court to consider (<em>Kirtsaeng</em>, 2016&thinsp;US Lexis 3922, at *13). The court stated that the reasonable objectiveness test promotes the goals of the Copyright Act by encouraging parties with strong legal positions to stand on their rights while deterring parties with weak positions from litigating (ibid, *14). This ensures that authors with valid copyright infringement claims will actively protect their work, but also encourages free access to and use of creative work by discouraging overly aggressive authors from bringing weak claims of infringement with the sole purpose of discouraging use of their work (ibid).</div> <div id="p-9"><br /> Adopting Kirtsaeng&rsquo;s submission&mdash;the court reasoned&mdash;would discourage parties from litigating valid claims because of a lack of certainty regarding the award of attorney&rsquo;s fees (ibid, *15). Close legal questions may be decided either way, and basing the award of attorney&rsquo;s fees on close legal questions may discourage parties from bringing litigation because the award may easily and unpredictably switch from an inducement to a penalty (ibid, *15&ndash;16). The court also noted that Wiley&rsquo;s reasonable objectiveness test was easier to administrate because a district court that has completed a copyright trial will be intimately familiar with the reasonableness of a party&rsquo;s position (ibid, *16). By contrast, the precedential or &lsquo;law-clarifying value&rsquo; of a decision may not be clear until many years later (ibid).</div> <div id="p-10"><br /> This said, the court stressed that reasonable objectiveness is not the only factor a district court may, or should, consider in a &sect; 505 analysis (ibid, *19&ndash;20). It listed several instances where other factors may be as relevant, if not more so, than objective reasonableness, including situations involving litigation misconduct and overly aggressive litigation tactics (ibid). The court stressed that while a court may place substantial weight on the objective reasonableness of a party&rsquo;s position, it must consider all of the circumstances of a given case prior to reaching a decision (ibid).</div> <div id="p-11"><br /> After examining the record of the decisions below, the court raised concerns that the appellate court&rsquo;s decisions on &sect; 505 fee-shifting had created a near presumption against granting fees if a party&rsquo;s position is objectively reasonable (ibid, *21). The court remanded to ensure that the district court had considered all of the relevant factors after the present clarification on the issue (ibid). The decision emphasized that the court was making no judgment on whether this particular case should result in an award of fees (ibid, *22).</div></div> <div id="sec-4"><div><div>&nbsp;</div></div> <h2>Practical Significance</h2> <div id="p-12">In this decision, a unanimous court upheld the use of reasonable objectiveness as a factor in a &sect; 505 analysis. However, the court also stressed the multi-factor nature of the analysis, noting that a lower court should examine all of the relevant factors when making a decision to award attorney&rsquo;s fees. Although the court did acknowledge that substantial weight may be given to the reasonable objectiveness factor, it provided several examples of instances where other factors would be more important, such as instances of litigation misconduct by the losing party. Going forward, we can expect that future fee disputes in copyright cases in the USA will continue to contest which factors should be considered and how they should be weighed, with a district court judge being the arbitrator of such disputes.<br /> &nbsp;</div> <div id="p-12">&copy; The Author(s) 2016. Published by Oxford University Press. All rights reserved.</div></div> Tue, 13 Sep 2016 00:00:00 +0000 http://www.arelaw.com/publications/view/jiplp091316/