There are now ten intellectual property (IP) cases under review in the U.S. Supreme Court. Why so many? And will they effect you?

Why So Many IP Cases?

The Supreme Court docket demonstrates the escalating importance of intellectual property.

This year alone the Supreme Court already has accepted for review 6 patent cases –the same volume it handled in the entire decade of the1990s. The Court has also accepted for review two copyright and two trademark cases. 

Why does the Supreme Court accept review in so many IP cases? Because IP rights have grown in economic importance and clarity is required to maintain that economic value. The Federal Circuit was given exclusive jurisdiction over patent cases to provide consistency, but uniformity (for example on treatment of software related inventions) has not always emerged. Also, abusive assertion of IP rights imposes a substantial cost on the economy. The desired clarity requires either Supreme Court review or Congressional action. 

What Will The Court Do That Effects You?

Patent. Businesses are facing patent claims from entities trying to generate revenue from patent damages. These entities acquire large patent portfolios then sue. The high cost of patent litigation means many businesses will settle for less than the cost of defense and the validity of the patents may not be tested. This business model is described by various names – some more pejorative than others: for example, non-practicing entity (NPE); patent aggregation entity (PAE) or troll. Some studies have estimated 60% of patent lawsuits are brought by entities that do not produce any product and just exist to recover patent damages. 

To reduce the economic impact on business, many observers suggest the Supreme Court (or Congress) should change the incentives in patent law to reduce this litigation and enhance the quality of patents issued. It is simply less expensive not to issue patents that claim more than the true invention than it costs to invalidate them in court.

Here are our humble PREDICTIONS of how the 10 current IP cases may be decided to reduce litigation and improve the predictability of liability (promoting early settlement).

  1. Clarify the scope of what a patent may claim so everyone can more confidently predict what is prohibited. 

Patents related to business methods and software are often accused of impeding businesses migrating to new uses of the Internet and social media. There is no clear definition of what should be patentable in this area. The most recent Federal Circuit case generated 7 opinions and could not agree on the appropriate test. Alice Corp. Pty Ltd. v. CLS Bank Int’l, 717 F.3d 1269 (Fed. Cir. 2013), cert granted, 134 S. Ct. 734 (2013) THE SUPREME COURT CONTINUES TO DECIDE CASES DEFINING THE LINE BETWEEN INVENTION AND ABSTRACT IDEAS. THE COURT WILL LIMIT THE SCOPE OF SOFTWARE PATENTABILITY BUT NOT ELIMINATE IT. 

The scope of a patent is defined by the claims. If a claim term is indefinite, the claim is invalid. Particular and distinct patent claiming is required by the patent statute. The Federal Circuit only invalidates a claim if it is insolubly ambiguous. Multiple reasonable interpretations of the claim language might not make it invalid. Nautilus Inc. v. Biosig Instruments, Inc., 715 F.3d 891 (Fed. Cir. 2013), cert. granted, 134 S. Ct. 896 (2014). THE SUPREME COURT WILL REQUIRE TIGHTER CLAIM DRAFTING SO WHAT IS CLAIMED IS DISTINCT FROM WHAT IS NOT CLAIMED AND INFRINGEMENT LIABILITY IS MORE PREDICTABLE. 

  1. Always require the patent owner to prove infringement. 

The Supreme Court has already addressed this issue. The Licensor/Patentee always has the burden to prove infringement regardless of who files the lawsuit Medtronic Inc. v. Mirowski Family Ventures LLC, 134 S. Ct. 843 (Jan. 22, 2014). 

  1. Impose liability even where infringement is by multiple parties. 

Sometimes the damage is caused because someone “induces” others to take the steps that actually infringe the patent. If the steps that actually infringe are carried out by different persons, there is no one person who directly infringed. The Federal Circuit recently changed its mind and held there can be inducement liability with no single direct infringer. Limelight Networks, Inc. v. Akamai Technologies, Inc., 692 F3d 1301 (Fed. Cir. 2012), cert granted, 134 S. Ct. 895 (2014). INDUCING MULTIPLE ACTORS TO INFRINGE COLLECTIVELY IS WRONG AND THE LACK OF A SINGLE INFRINGER SHOULD NOT MATTER.

  1. Award attorneys’ fees against the patent owner if the claim was unreasonable. 

Attorneys’ fees can be awarded to the winner (either plaintiff or defendant) in patent litigation only if the case was “exceptional” under 35 U.S.C. § 285. But recovery of attorneys’ fees is easier for a plaintiff than for a defendant. Either party must show the loser’s position was objectively unreasonable, but the defendant must also show that the litigation was brought in subjective bad faith. Highmark Inc. v. Allcare Management Systems, Inc., 687 F.3d 1300 (Fed. Cir. 2012), cert. granted, 134 S. Ct. 48 (2013), and Octane Fitness, LLC v. ICON Health & Fitness, Inc., 496 Fed Appx. 57 (Fed. Cir. 2012), cert. granted, 134 S. Ct. 49 (2013) THE COURT WILL ELIMINATE THE SUBJECTIVE ELEMENT OF THE REASONABLENESS TEST FOR DEFENDANTS BECAUSE IT ENCOURAGES LITIGATION. 

Copyright. Changing technology requires the copyright law to adapt to new circumstances while serving the Constitutional purpose of promoting the creation of creative expression. Allowing others to use the work without compensation discourages and unfairly hampers creative effort. Imposing liability many years after a claim could have been brought has the same undesirable effect. 

  1. Require prompt enforcement of copyright protection.

The Copyright Act has a 3 year statute of limitations. Generally, damages can be recovered for the 3 year period before suit is filed. But what if a plaintiff waits many years before filing suit? The Ninth Circuit found claims based on the 1980 film Raging Bull barred by laches – unreasonable delay that results in harm to the Defendant. Petrella v. Metro- Goldwyn-Mayer, Inc., 695 F3d 946 (9th Cir. 2012), cert. granted, 134 S. Ct 50 (2013) Other courts are less receptive to this defense. PLAINTIFF WAITED 19 YEARS TO SUE. DAMAGES AND INJUNCTIVE RELIEF SHOULD BOTH UNAVAILABLE AFTER SO LONG A DELAY CAUSES LOSS OF INVESTMENT AND LOSS OF EVIDENCE TO DEFEND THE CLAIM. 

  1. Clarify the scope of liability for streaming over the Internet. 

Several companies offer to steam broadcast television over the internet to computers and mobile devices without a license. By a technical redundancy in the design of the system each paid subscriber each receives transmission of a separate copy of the programming. The Second Circuit found no infringement because there was no public performance. Both parties asked for review. Even the winner below wants to avoid the possibility of inconsistent decisions in other Circuits. American Broadcasting Companies, Inc. v. Aereo, Inc., 712 F3d 676 (2nd Cir. 2013), cert. granted, 134 S. Ct. 896 (2014). CONGRESS DID NOT INTEND TO PERMIT THE “RUBE GOLDBERG” DESIGN ADOPTED TO AVOID INFRINGEMENT. STREAMING IS A PUBLIC PERFORMANCE. 

Trademark. Prohibitions on false advertising are necessary to protect the public and should be broadly enforced. But when Congress enacts specific statutory requirements, businesses should not be subject to suit for complying.

  1. Uniformly define who can sue for false advertising. 

The Ninth Circuit requires the plaintiff to be an actual competitor. Other Circuits require antitrust standing. The Sixth Circuit and Second Circuit allow the plaintiff to sue if it has a “reasonable interest” in the case. Lexmark Int’l Inc. v. Static Control Components, Inc., 697 F.3d 387 (6th Cir. 2012), cert. granted, 133 S. Ct. 2766 (2013). THE COURT WILL ADOPT THE REASONABLE INTEREST STANDARD AS THE UNIFORM TEST. 

  1. Give Defendants the benefit of the doubt when statutes conflict. 

Plaintiff sued for false advertising even though the Defendant complied with the labeling requirements of the Food Drug and Cosmetics Act. The Ninth Circuit found the Defendant’s compliance was enough to avoid liability under the doctrine of preemption. POM Wonderful LLC v. Coca-Cola Co., 679 F.3d 1170 (9th Cir. 2012), cert. granted, 134 S. Ct. 895 (2014). THIS IS A FAIR RESULT WHEN THE STATUTE REQUIRES SPECIFIC LABEL CONTENTS.