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CEATS, Inc. v. Cont'l Airlines, Inc.

CEATS, Inc. (“CEATS”) brought this patent infringement suit against Continental Airlines, Inc.; Alaska Airlines, Inc.; Horizon Air Industries, Inc.; Delta Airlines, Inc.; Jetblue Airways Corp.; United Airlines, Inc.; Virgin America, Inc.; US Airways, Inc.; Ticketmaster, LLC.;, Inc.; Live Nation Worldwide, Inc.; and Airtran Airways, Inc. (collectively, “Continental”) in the United States District Court for the Eastern District of Texas. After the parties failed to reach a settlement during court ordered mediation, the case went to trial where a jury found that CEATS’s patents were infringed, but invalid. We affirmed the jury’s finding of invalidity in a prior appeal. CEATS, Inc. v. Continental Airlines, Inc. (“CEATS I”), 526 F. App’x 966 (Fed. Cir. Apr. 26, 2013).

While its first appeal was pending, CEATS filed a motion for relief from the judgment pursuant to Federal Rule of Civil Procedure 60(b) (2012) (“Rule 60(b)”) based on an alleged relationship between the court-appointed mediator and the law firm representing most of the accused infringers. This alleged relationship was brought to light in an unrelated case (“the Karlseng litigation”). After we affirmed the invalidity of CEATS’s patents in CEATS I, the district court denied CEATS’s Rule 60(b) motion. This appeal followed.

Although we disagree with the district court’s finding that the mediator had no duty to disclose his dealings with one of the firms involved in the litigation, we nonetheless agree that relief from judgment under Rule 60(b) was not warranted. See CEATS, Inc. v. Continental Airlines (“Rule 60(b) Order”), Inc., No. 6:10-cv-120, ECF No. 1101, slip op. at 16 (E.D. Tex. June 28, 2013). Therefore, we affirm.

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Held: Aereo performs petitioners’ works publicly within the meaning of the Transmit Clause. Pp. 4–18.

(a) Aereo “perform[s].” It does not merely supply equipment that allows others to do so. Pp. 4–10.

(1) One of Congress’ primary purposes in amending the Copyright Act in 1976 was to overturn this Court’s holdings that the activities of community antenna television (CATV) providers fell outside the Act’s scope. In Fortnightly Corp. v. United Artists Television, Inc., 392 U. S. 390, the Court determined that a CATV provider was more like a viewer than a broadcaster, because its system “no more than enhances the viewer’s capacity to receive the broadcaster’s signals [by] provid[ing] a well-located antenna with an efficient connection to the viewer’s television set.” Id., at 399. Therefore, the Court concluded, a CATV provider did not perform publicly. The Court reached the same determination in respect to a CATV provider that retransmitted signals from hundreds of miles away in Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U. S. 394. “The reception and rechanneling of [broadcast television signals] for simultaneous viewing is essentially a viewer function, irrespective of the distance between the broadcasting station and the ultimate viewer,” the Court said. Id., at 408. Pp. 4–7.

(2) In 1976, Congress amended the Copyright Act in large part to reject the Fortnightly and Teleprompter holdings. The Act now clarifies that to “perform” an audiovisual work means “to show its images in any sequence or to make the sounds accompanying it audible.” §101. Thus, both the broadcaster and the viewer “perform,” because they both show a television program’s images and make audible the program’s sounds. Congress also enacted the Transmit Clause, which specifies that an entity performs when it “transmit[s] . . . a performance . . . to the public.” Ibid. The Clause makes clear that an entity that acts like a CATV system itself performs, even when it simply enhances viewers’ ability to receive broadcast television signals. Congress further created a complex licensing scheme that sets out the conditions, including the payment of compulsory fees, under which cable systems may retransmit broadcasts to the public. §111. Congress made all three of these changes to bring cable system activities within the Copyright Act’s scope. Pp. 7–8.

(3) Because Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach, Aereo is not simply an equipment provider. Aereo sells a service that allows subscribers to watch television programs, many of which are copyrighted, virtually as they are being broadcast. Aereo uses its own equipment, housed in a centralized warehouse, outside of its users’ homes. By means of its technology, Aereo’s system “receive[s] programs that have been released to the public and carr[ies] them by private channels to additional viewers.” Fortnightly, supra, at 400. This Court recognizes one particular difference between Aereo’s system and the cable systems at issue in Fortnightly and Teleprompter: The systems in those cases transmitted constantly, whereas Aereo’s system remains inert until a subscriber indicates that she wants to watch a program. In other cases involving different kinds of service or technology providers, a user’s involvement in the operation of the provider’s equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the Act. But given Aereo’s overwhelming likeness to the cable companies targeted by the 1976 amendments, this sole technological difference between Aereo and traditional cable companies does not make a critical difference here. Pp. 8–10.

(b) Aereo also performs petitioners’ works “publicly.” Under the Clause, an entity performs a work publicly when it “transmit[s] . . . a performance . . . of the work . . . to the public.” §101. What performance, if any, does Aereo transmit? Petitioners say Aereo transmits a prior performance of their works, whereas Aereo says the performance it transmits is the new performance created by its act of transmitting. This Court assumes arguendo that Aereo is correct and thus assumes, for present purposes, that to transmit a performance of an audiovisual work means to communicate contemporaneously visible images and contemporaneously audible sounds of the work. Under the Court’s assumed definition, Aereo transmits a performance whenever its subscribers watch a program. What about the Clause’s further requirement that Aereo transmit a performance “to the public”? Aereo claims that because it transmits from user-specific copies, using individually-assigned antennas, and because each transmission is available to only one subscriber, it does not transmit a performance “to the public.” Viewed in terms of Congress’ regulatory objectives, these behind-the-scenes technological differences do not distinguish Aereo’s system from cable systems, which do perform publicly. Congress would as much have intended to protect a copyright holder from the unlicensed activities of Aereo as from those of cable companies. The text of the Clause effectuates Congress’ intent. Under the Clause, an entity may transmit a performance through multiple transmissions, where the performance is of the same work. Thus when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it “transmit[s] . . . a performance” to them, irrespective of the number of discrete communications it makes and irrespective of whether it transmits using a single copy of the work or, as Aereo does, using an individual personal copy for each viewer. Moreover, the subscribers to whom Aereo transmits constitute “the public” under the Act. This is because Aereo communicates the same contemporaneously perceptible images and sounds to a large number of people who are unrelated and unknown to each other. In addition, neither the record nor Aereo suggests that Aereo’s subscribers receive performances in their capacities as owners or possessors of the underlying works. This is relevant because when an entity performs to a set of people, whether they constitute “the public” often depends upon their relationship to the underlying work. Finally, the statute makes clear that the fact that Aereo’s subscribers may receive the same programs at different times and locations is of no consequence. Aereo transmits a performance of petitioners’ works “to the public.” Pp. 11– 15.

(c) Given the limited nature of this holding, the Court does not be- lieve its decision will discourage the emergence or use of different kinds of technologies. Pp. 15–17.

712 F. 3d 676, reversed and remanded. B REYER , J., delivered the opinion of the Court, in which R OBERTS , C. J., and K ENNEDY , G INSBURG , S OTOMAYOR , and K AGAN , JJ., joined. S CALIA , J., filed a dissenting opinion, in which T HOMAS and A LITO , JJ., joined.

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In re: Nordic Naturals, Inc.

This case is on appeal from the Trademark Trial and Appeal Board (“Board”) at the United States Patent and Trademark Office. Appellant Nordic Naturals, Inc. (“Nordic”) sought to register CHILDREN’S DHA, in standard characters, for “nutritional supplements containing DHA.” “DHA” is the abbreviation for docosahexaenoic acid, an omega-3 fatty acid that assists in brain development. The Board affirmed the examining attorney’s rejection of the mark as generic or, in the alternative, as merely descriptive and lacking acquired distinctiveness. Because the Board’s conclusion that the mark is generic is supported by substantial evidence, we affirm.

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Gemalto S.A. v. HTC Corp.

Gemalto S.A. (“Gemalto”) is the owner of U.S. Patent Nos. 6,308,317 (“the ’317 patent”), 7,117,485 (“the ’485 patent”), and 7,818,727 (“the ’727 patent”). Gemalto sued HTC Corporation, HTC America, Inc., Exedea, Inc., Google, Inc., Motorola Mobility, LLC, Samsung Electronics Co., Ltd., and Samsung Telecommunications America, LLC (collectively, “defendants”) in the Eastern District of Texas, alleging infringement of various claims of the three patents. The district court construed the asserted claims and granted summary judgment of non-infringement, concluding that the accused products did not infringe literally or under the doctrine of equivalents. On appeal, Gemalto challenges the district court’s claim construction and its grant of summary judgment of non-infringement under the doctrine of equivalents. We affirm.

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Triton Tech of TX, LLC v. Nintendo of Am, Inc.

Triton Tech of Texas, LLC (“Triton”) appeals from the district court’s judgment that the means-plus-function term “integrator means” renders the asserted claims of Triton’s U.S. Patent No. 5,181,181 invalid for indefiniteness. We affirm.

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Klinger v. Conan Doyle Estate, Ltd.

With the net effect on creativity of extending the copy-right protection of literary characters to the extraordinary lengths urged by the estate so uncertain, and no legal grounds suggested for extending copyright protection be-yond the limits fixed by Congress, the estate’s appeal bor-ders on the quixotic. The spectre of perpetual, or at least nearly perpetual, copyright (perpetual copyright would vio-late the copyright clause of the Constitution, Art. I, § 8, cl. 8, which authorizes copyright protection only for “limited Times”) looms, once one realizes that the Doyle estate is seeking 135 years (1887–2022) of copyright protection for the character of Sherlock Holmes as depicted in the first Sher-lock Holmes story. AFFIRMED.

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Alice Corp. v. CLS Bank Int’l

Held: Because the claims are drawn to a patent-ineligible abstract idea, they are not patent eligible under §101. Pp. 5–17.

(a) The Court has long held that §101, which defines the subject matter eligible for patent protection, contains an implicit exception for ‘ “[l]aws of nature, natural phenomena, and abstract ideas.’ ” Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U. S. ___, ___. In applying the §101 exception, this Court must distinguish patents that claim the “ ‘buildin[g] block[s]’ ” of human ingenuity, which are ineligible for patent protection, from those that integrate the building blocks into something more, see Mayo Collaborative Ser- vices v. Prometheus Laboratories, Inc., 566 U. S. ___, ___, thereby “transform[ing]” them into a patent-eligible invention, id., at ___. Pp. 5–6.

(b) Using this framework, the Court must first determine whether the claims at issue are directed to a patent-ineligible concept. 566 U. S., at ___. If so, the Court then asks whether the claim’s elements, considered both individually and “as an ordered combination,” “transform the nature of the claim” into a patent-eligible application. Id., at ___. Pp. 7–17.

(1) The claims at issue are directed to a patent-ineligible concept: the abstract idea of intermediated settlement. Under “the longstanding rule that ‘[a]n idea of itself is not patentable,’ ” Gottschalk v. Benson, 409 U. S. 63, 67, this Court has found ineligible patent claims involving an algorithm for converting binary-coded decimal numerals into pure binary form, id., at 71–72; a mathematical formula for computing “alarm limits” in a catalytic conversion process, Parker v. Flook, 437 U. S. 584, 594–595; and, most recently, a method for hedging against the financial risk of price fluctuations, Bilski, 561 U. S, at 599. It follows from these cases, and Bilski in particular, that the claims at issue are directed to an abstract idea. On their face, they are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of intermediated settlement is “ ‘a fundamental economic practice long prevalent in our system of commerce,’ ” ibid., and the use of a third-party intermediary (or “clearing house”) is a building block of the modern economy. Thus, intermediated settlement, like hedging, is an “abstract idea” beyond §101’s scope. Pp. 7– 10.

(2) Turning to the second step of Mayo’s framework: The method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention. Pp. 10–16.

(i) “Simply appending conventional steps, specified at a high level of generality,” to a method already “well known in the art” is not “enough” to supply the “ ‘inventive concept’ ” needed to make this transformation. Mayo, supra, at ___, ___. The introduction of a computer into the claims does not alter the analysis. Neither stating an abstract idea “while adding the words ‘apply it,’ ” Mayo, supra, at ___, nor limiting the use of an abstract idea “ ‘to a particular technological environment,’ ” Bilski, supra, at 610–611, is enough for patent eligibility. Stating an abstract idea while adding the words “apply it with a computer” simply combines those two steps, with the same deficient result. Wholly generic computer implementation is not generally the sort of “additional featur[e]” that provides any “practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea] itself.” Mayo, supra, at ___. Pp. 11–14.

(ii) Here, the representative method claim does no more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer. Taking the claim elements separately, the function performed by the computer at each step—creating and maintaining “shadow” accounts, obtaining data, adjusting account balances, and issuing automated instructions—is “[p]urely ‘conventional. ’ ” Mayo, 566 U. S., at ___. Considered “as an ordered combination,” these computer components “ad[d] nothing . . . that is not already present when the steps are considered separately.” Id., at ___. Viewed as a whole, these method claims simply recite the concept of intermediated settlement as performed by a generic computer. They do not, for example, purport to improve the functioning of the computer itself or effect an improvement in any other technology or technical field. An instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer is not “enough” to transform the abstract idea into a patent-eligible invention. Id., at ___. Pp. 14–16.

(3) Because petitioner’s system and media claims add nothing of substance to the underlying abstract idea, they too are patent ineligible under §101. Petitioner conceded below that its media claims rise or fall with its method claims. And the system claims are no different in substance from the method claims. The method claims recite the abstract idea implemented on a generic computer; the system claims recite a handful of generic computer components configured to implement the same idea. This Court has long “warn[ed] . . . against” interpreting §101 “in ways that make patent eligibility ‘depend simply on the draftsman’s art.’ ” Mayo, supra, at ___. Holding that the system claims are patent eligible would have exactly that result. Pp. 16–17.

717 F. 3d 1269, affirmed.

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Q. I. Press Controls, B.V. v. Kappos

Q.I. Press Controls, B.V. (“Q.I. Press”) appeals from the decision of the United States Patent and Trademark Office (“PTO”) Board of Patent Appeals and Interferences (“the Board”) reversing both the examiner’s obviousness rejection of claims 1–17 and 19–60 and written description rejection of claims 14 and 24 of U.S. Patent 6,867,423 (the “’423 patent”) in an inter partes reexamination. See Q.I. Press Controls, B.V. v. Quad/Tech, Inc., No. 2012- 002457 (B.P.A.I. May 11, 2012) (“Board Decision”). Quad/Tech, Inc. (“Quad/Tech”) cross-appeals from the Board’s decision affirming the examiner’s rejection of the ’423 patent’s claims 61–72 as obvious and claim 18 for failing to meet the requirements of § 112, ¶1.2 Because the Board erred in failing to consider the same obviousness rejection of claims 61–72 in connection with claims 1–17 and 19–60, but did not otherwise err, we vacate in part, affirm in part, and remand.

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In re: Dinsmore

Mark Dinsmore and David Caruso (“applicants”), who are the inventors named in U.S. Patent No. 7,236,568, applied to reissue the ’568 patent under 35 U.S.C. § 251. During the patent’s prosecution, they had recorded a terminal disclaimer in response to rejections for obviousness- type double patenting. The terminal disclaimer declares that the ’568 patent “shall be enforceable only for and during such period” as it is commonly owned with the patent that underlay the double-patenting rejections. In their reissue application, the applicants sought to modify the recorded terminal disclaimer to delete the commonownership provision, and to modify the claims that gave rise to the disclaimer, because the two patents are not and never have been commonly owned. An examiner in the Patent and Trademark Office rejected the reissue application, and the Patent Trial and Appeal Board affirmed. Ex parte Dinsmore, No. 13-6879, 2013 WL 5274029 (Patent Tr. & App. Bd. June 3, 2013). Because the applicants have not identified an “error” within the meaning of section 251, we affirm.

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Allergan, Inc. v. Apotex Inc.

Apotex Inc., Apotex Corp., Sandoz, Inc., Hit-Tech Pharmacal Co., Inc., Actavis, Inc., Watson Laboratories, Inc., and Watson Pharma, Inc. (collectively “appellants”) appeal from a final judgment of the U.S. District Court for the Middle District of North Carolina finding that appellants had infringed claims of U.S. Patent Nos. 7,388,029 (“’029 patent”) and 7,351,404 (“’404 patent”) and had failed to establish they were invalid. For the reasons stated below, we reverse the district court’s findings with respect to the validity of each patent.

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