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March 2017
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Nichia Corp v. Everlight Americas

Nichia Corporation sued Everlight Electronics Co., LTD., Everlight Americas, INC., and Zenaro Lighting, Inc. (collectively, “Everlight”) for infringement of three of its patents. Following a bench trial, the district court found Everlight infringed all three patents and had not proved them invalid. The court denied, however, Nichia’s request for a permanent injunction against Everlight. Nichia appeals the district court’s refusal to enter an injunction against Everlight. Everlight cross-appeals the court’s judgment that it infringes Nichia’s patents and that it failed to prove the patents invalid. We affirm.

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SoundExchange, Inc. v. Muzak LLC

This case pits SoundExchange, a nonprofit entity, charged with the responsibility of collecting royalties for performing artists and copyright owners of music, against Muzak, a company that supplies digital music channels to satellite television networks who, in turn, sell to subscribers. SoundExchange sued Muzak under the Copyright Act in district court, claiming that Muzak underpaid royalties owed. The district court dismissed SoundExchange’s complaint. (From the point of view of classic administrative law, the Register of Copyrights, to which we normally are obliged to defer, plays a rather unusual role.) Although the case is close – the controlling statute is dreadfully ambiguous – we conclude that SoundExchange has the better position, and therefore reverse the district court.

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Fairchild (Taiwan) Corp. v. Power Integrations, Inc.

Fairchild (Taiwan) Corporation moves the court to remand this case to the Patent Trial and Appeal Board with instructions to vacate certain aspects of its final decision in the underlying inter partes reexamination and issue a reexamination certificate. Power Integrations, Inc. opposes the motion. We agree with Fairchild and grant the motion.

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Covertech Fabricating Inc v. TVM Building Products Inc

Too often the silence of contracting parties must be filled by the voice of the courts. Such is the case here, where we are called upon to resolve a trademark dispute in which no written contract designates ownership, and, in the process, to clarify the paradigm through which common law ownership of an unregistered trademark is determined when the initial sale of goods bearing the mark is between a manufacturer and its exclusive distributor. The District Court in this case awarded ownership to the manufacturer, but did so on the basis of the first use test, and found the distributor liable for infringement and fraud before rejecting its defense of acquiescence and awarding damages under the Lanham Act. Because the District Court failed to recognize and apply the rebuttable presumption of manufacturer ownership that we conclude pertains where priority of ownership is not otherwise established, and because the District Court incorrectly relied on gross sales unadjusted to reflect sales of infringing products to calculate damages, we will affirm on alternative grounds as to ownership, will affirm as to fraud and acquiescence, and will vacate and remand as to damages.

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Phil-Insul Corp. v. Airlite Plastics

Phil-Insul Corp. d/b/a IntegraSpec (“IntegraSpec”) filed suit against Airlite Plastics Co. and Formtech, LLC (collectively, “Airlite”) alleging infringement of U.S. Patent No. 5,428,933 (“the ’933 Patent”), which relates to insulating concrete forms (“ICFs”) that are used in the construction of buildings. Airlite moved for summary judgment of noninfringement, arguing that IntegraSpec’s claims are precluded by our decision in a prior action. In that case, IntegraSpec asserted claims from the same patent against different defendants with similar products. There, after construing the claims, the district court granted summary judgment of noninfringement, and subsequently granted the parties’ stipulated request for a Rule 54(b) certification for immediate appeal. IntegraSpec timely appealed, challenging only the district court’s claim construction. We summarily affirmed the district court’s final judgment without an opinion. PhilInsul Corp. v. Reward Wall Sys., Inc., 580 F. App’x 907 (Fed. Cir. 2014).

In this case, Airlite argued that IntegraSpec’s infringement claims are the same as the infringement claims it asserted and lost in Reward Wall and that Airlite’s accused products have the same design as the products found noninfringing in that prior litigation. The district court agreed, and granted Airlite’s motion for summary judgment of noninfringement. Phil-Insul Corp. v. Airlite Plastics, Co., No. 8:12-cv-151, 2016 WL 5107131 (D. Neb. Mar. 2, 2016) (“Decision on Appeal”). Because we agree that IntegraSpec’s claims are barred by collateral estoppel, we affirm.

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Rembrandt Wireless Technologies, LP v. Samsung Electronics Co., Ltd.

A jury found that Samsung infringed Rembrandt’s asserted patents, which the jury also found not invalid over prior art cited by Samsung. The jury awarded Rembrandt $15.7 million in damages. After trial, Samsung moved for judgment as a matter of law on obviousness and damages, which the district court denied. Samsung appeals the district court’s denial of JMOL, as well as the district court’s claim construction order and an order denying Samsung’s motion to limit Rembrandt’s damages for alleged failure to mark patented articles.

Because we agree with the district court’s challenged claim construction and its denial of Samsung’s JMOL motions, we affirm those decisions. We disagree, however, with the district court’s denial of Samsung’s motion based on the marking statute, and we vacate that decision and remand for proceedings consistent with this opinion.

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Core Wireless Licensing S.A.R.L. v. Apple, Inc.

This appeal arises from a patent infringement action brought in the United States District Court for the Eastern District of Texas. The plaintiff, Core Wireless Licensing S.a.r.l., is the owner of U.S. Patent No. 6,978,143 (“the ’143 patent”). Claim 17 of the patent, the only claim at issue in this appeal, recites a mobile station, such as a mobile telephone, that is connected to a cellular system or network. The claim is directed to means for sending packet data from the mobile station to the network using a selected channel.

Following trial, the jury found that the defendant, Apple Inc., did not infringe any of the asserted claims. The district court denied Core Wireless’s motion for judgment as a matter of law, and Core Wireless took this appeal. We affirm.

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Lipitor Antitrust Litigation

A pharmaceutical company holding the patent on a drug sues the manufacturer of a generic version of that drug for patent infringement. The patent-holder and the generic manufacturer later settle, with the former paying the latter not to produce a generic until the patents at issue expire. In FTC v. Actavis, Inc., 133 S. Ct. 2233 (2013), the Supreme Court recognized that such a settlement—commonly known as a “reverse payment”—where large and unjustified, can sometimes unreasonably diminish competition in violation of the antitrust laws. To answer the antitrust question, Actavis explained, “it is not normally necessary to litigate patent validity” because “the size of the unexplained reverse payment can provide a workable surrogate for a patent’s weakness.” Id. at 2236-37.

These two sets of consolidated appeals involve allegations that the companies holding the patents for Lipitor and Effexor XR delayed entry into the market of generic versions of those drugs. The companies did so, plaintiffs say, by engaging in an overarching monopolistic scheme that involved fraudulently procuring and enforcing the underlying patents and then entering into a reverse-payment settlement agreement with a generic manufacturer. With a single exception, every complaint asserts one of these monopolization claims against the patent-holders. The cases were assigned to the same district judge, who ultimately dismissed the bulk of plaintiffs’ claims.

In this opinion, we address two questions of federal jurisdiction. First, do plaintiffs’ allegations of fraudulent procurement and enforcement of the patents require us to transfer these appeals to the Court of Appeals for the Federal Circuit? That court has exclusive jurisdiction over appeals from civil actions “arising under” patent law. 28 U.S.C. § 1295(a)(1). But not all cases presenting questions of patent law necessarily arise under patent law. See Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (1986). Where, as here, patent law neither creates plaintiffs’ cause of action nor is a necessary element to any of plaintiffs’ well-pleaded claims, jurisdiction lies in this Court, not the Federal Circuit.

The second jurisdictional question we confront is confined to one of the Lipitor appeals, RP Healthcare, Inc. v. Pfizer, Inc., No. 14-4632. That case, brought by a group of California pharmacists, involves claims solely under California law and was filed in California state court. Following removal the District Court declined to remand the case to state court, citing potential patent defenses. That was error, as federal jurisdiction depends on the content of the plaintiff’s complaint, not a defendant’s possible defenses. Before final judgment, however, the remaining non-diverse defendants were voluntarily dismissed, thus raising the possibility that, notwithstanding the District Court’s failure to remand the case, it possessed diversity jurisdiction before the time it entered judgment. See Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996). But because the state of the record before us is unclear with regard to the citizenship of the parties, we cannot reach the merits of this appeal until that question is resolved. We will accordingly remand the RP Healthcare appeal to the District Court so it can conduct jurisdictional discovery and address the matter in the first instance.

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Novartis AG v. Torrent Pharmaceuticals, Limited

This is an appeal from the Final Written Decision of the United States Patent and Trademark Office, Patent Trial and Appeal Board (Board) in two consolidated inter partes review (IPR) proceedings of U.S. Patent No. 8,324,283 (the ’283 patent), owned by Novartis AG and Mistubishi Tanabe Pharma Corp. (collectively, Novartis). The Board instituted IPRs on all claims of the ’283 patent based on petitions filed by Torrent Pharmaceuticals Limited, Apotex, Inc. and Mylan Pharmaceuticals Inc. (collectively, Petitioners). After reviewing the claims, receiving extensive briefing, and hearing oral argument, the Board found all original claims of the ’283 patent and Novartis’ proposed substitute claims unpatentable as obvious. See Torrent Pharm. Ltd. v. Novartis AG, Nos. IPR2014-00784, IPR2015-00518, 2015 WL 5719630 (PTAB Sept. 24, 2015) (Final Written Decision). Novartis raises a series of challenges to the Board’s analysis of the evidence and ultimate determination of unpatentability. For the reasons stated below, we affirm.

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Mavrix Photographs, LLC v. LiveJournal, Inc.

Digital Millennium Copyright Act

The panel (1) reversed the district court’s holding, on summary judgment, that the defendant was protected by the safe harbor of the Digital Millennium Copyright Act from liability for posting the plaintiff’s photographs online and (2) vacated a discovery order.

The panel held that the safe harbor set forth in 17 U.S.C. § 512(c) would apply if the photographs were posted at the direction of users. The defendant, a social media platform, posted the photographs after a team of volunteer moderators, led by an employee of the defendant, reviewed and approved them. The panel held that whether the photographs were posted at the direction of users depended on whether the acts of the moderators could be attributed to the defendant. Disagreeing with the district court, the panel held that the common law of agency applied to the defendant’s safe harbor defense. Because there were genuine factual disputes regarding whether the moderators were the defendant’s agents, the panel reversed the district court’s summary judgment and remanded the case for trial. The panel also discussed the remaining elements of the safe harbor affirmative defense. If an internet service provider shows that the infringing material was posted “at the direction of the user,” it must then also show that (1) it lacked actual or red flag knowledge of the infringing material; and (2) it did not financially benefit from infringements that it had the right and ability to control. The panel held that to fully assess actual knowledge, the fact finder must consider not only whether the copyright holder has given notice of the infringement, but also the service provider’s subjective knowledge of the infringing nature of the posts. The panel held that to determine whether the defendant had red flag knowledge, the fact finder would need to assess whether it would be objectively obvious to a reasonable person that material bearing a generic watermark or a watermark referring to the plaintiff’s website was infringing. When assessing the service provider’s right and ability to control the infringements, the fact finder should consider the service provider’s procedures that existed at the time of the infringements and whether the service provider had “something more” than the ability to remove or block access to posted materials.

Finally, the panel vacated the district court’s order denying discovery of the moderators’ identities.

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