SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC

Laches cannot be invoked as a defense against a claim for damages brought within §286’s 6-year limitations period. Pp. 3–16.

(a) Petrella’s holding rested on both separation-of-powers principles and the traditional role of laches in equity. A statute of limitations reflects a congressional decision that timeliness is better judged by a hard and fast rule instead of a case-specific judicial determination. Applying laches within a limitations period specified by Congress would give judges a “legislation-overriding” role that exceeds the Judiciary’s power. 572 U. S., at ___. Moreover, applying laches within a limitations period would clash with the gap-filling purpose for which the defense developed in the equity courts. Pp. 3–5.

(b) Petrella’s reasoning easily fits §286. There, the Court found in the Copyright Act’s language a congressional judgment that a claim filed within three years of accrual cannot be dismissed on timeliness grounds. 572 U. S., at ___. By that same logic, §286 of the Patent Act represents Congress’s judgment that a patentee may recover damages for any infringement committed within six years of the filing of the claim.

First Quality contends that this case differs from Petrella because a true statute of limitations runs forward from the date a cause of action accrues, whereas §286’s limitations period runs backward from the filing of the complaint. However, Petrella repeatedly characterized the Copyright Act’s limitations period as running backward from the date the suit was filed. First Quality also contends that a true statute of limitations begins to run when the plaintiff discovers a cause of action, which is not the case with §286’s limitations period, but ordinarily, a statute of limitations begins to run on the date that the claim accrues, not when the cause of action is discovered. Pp. 5– 8.

(c) The Federal Circuit based its decision on the idea that §282 of the Patent Act, which provides for “defenses in any action involving the validity or infringement of a patent,” creates an exception to §286 by codifying laches as such a defense, and First Quality argues that laches is a defense within §282(b)(1) based on “unenforceability.” Even assuming that §282(b)(1) incorporates a laches defense of some dimension, it does not necessarily follow that the defense may be invoked to bar a claim for damages incurred within the period set out in §286. Indeed, it would be exceedingly unusual, if not unprecedented, if Congress chose to include in the Patent Act both a statute of limitations for damages and a laches provision applicable to a damages claim. Neither the Federal Circuit, nor any party, has identified a single federal statute that provides such dual protection against untimely claims. Pp. 8–9.

(d) The Federal Circuit and First Quality rely on lower court patent cases decided before the 1952 Patent Act to argue that §282 codified a pre-1952 practice of permitting laches to be asserted against damages claims. But the most prominent feature of the relevant legal landscape at that time was the well-established rule that laches cannot be invoked to bar a claim for damages incurred within a limitations period specified by Congress. In light of this rule, which Petrella confirmed and restated, 572 U. S., at ___, nothing less than a broad and unambiguous consensus of lower court decisions could support the inference that §282(b)(1) codifies a very different patent-law-specific rule. Pp. 9–10.

(e) The Federal Circuit and First Quality rely on three types of cases: (1) pre-1938 equity cases; (2) pre-1938 claims at law; and (3) cases decided after the merger of law and equity in 1938. None of these establishes a broad, unambiguous consensus in favor of applying laches to damages claims in the patent context.

Many of the pre-1938 equity cases do not even reveal whether the plaintiff asked for damages, and of the cases in which damages were sought, many merely suggest in dicta that laches might limit damages. The handful of cases that apply laches against a damages claim are too few to establish a settled, national consensus. In any event, the most that can possibly be gathered from a pre-1938 equity case is that laches could defeat a damages claim in an equity court, not that the defense could entirely prevent a patentee from recovering damages.

Similarly, even if all three pre-1938 cases at law cited by First Quality squarely held that laches could be applied to a damages claim within the limitations period, that number would be insufficient to overcome the presumption that Congress legislates against the background of general common-law principles. First Quality argues that the small number of cases at law should not count against its position because there were few patent cases brought at law after 1870, but it is First Quality’s burden to show that Congress departed from the traditional common-law rule.

As for the post-1938 patent case law, there is scant evidence supporting First Quality’s claim that courts continued to apply laches to damages claims after the merger of law and equity. Only two Courts of Appeals held that laches could bar a damages claim, and that does not constitute a settled, uniform practice of applying laches to damages claims. Pp. 11–15.

(f) First Quality’s additional arguments are unconvincing and do not require extended discussion. It points to post-1952 Court of Appeals decisions holding that laches can be invoked as a defense against a damages claim, but nothing that Congress has done since 1952 has altered §282’s meaning. As for the various policy arguments presented here, this Court cannot overrule Congress’s judgment based on its own policy views. Pp. 15–16.

807 F. 3d 1311, vacated in part and remanded.

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Star Athletica v. Varsity Brands

A feature incorporated into the design of a useful article is eligible for copyright protection only if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article, and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated. That test is satisfied here. Pp. 3–17.

(a) Separability analysis is necessary in this case. Respondents claim that two-dimensional surface decorations are always separable, even without resorting to a §101 analysis, because they are “on a useful article” rather than “designs of a useful article.” But this argument is inconsistent with §101’s text. ”[P]ictorial” and “graphic” denote two-dimensional features such as pictures, paintings, or drawings. Thus, by providing protection for “pictorial, graphical, and sculptural works” incorporated into the “design of a useful article,” §101 necessarily contemplates that such a design can include two dimensional features. This Court will not adjudicate in the first instance the Government’s distinct argument against applying separability analysis, which was neither raised below nor advanced here by any party. Pp. 4–6.

(b) Whether a feature incorporated into a useful article “can be identified separately from,” and is “capable of existing independently of,” the article’s “utilitarian aspects” is a matter of “statutory interpretation.” Mazer v. Stein, 347 U. S. 201, 214. Pp. 6–10.

(1) Section 101’s separate-identification requirement is met if the decision maker is able to look at the useful article and spot some two or three-dimensional element that appears to have pictorial, graphic, or sculptural qualities. To satisfy the independent-existence requirement, the feature must be able to exist as its own pictorial, graphic, or sculptural work once it is imagined apart from the useful article. If the feature could not exist as a pictorial, graphic, or sculptural work on its own, it is simply one of the article’s utilitarian aspects. And to qualify as a pictorial, graphic, or sculptural work on its own, the feature cannot be a useful article or “[a]n article that is normally a part of a useful article,” §101. Neither could one claim a copyright in a useful article by creating a replica of it in another medium. Pp. 7–8.

(2) The statute as a whole confirms this interpretation. Section 101, which protects art first fixed in the medium of a useful article, is essentially the mirror image of §113(a), which protects art first fixed in a medium other than a useful article and subsequently applied to a useful article. Together, these provisions make clear that copyright protection extends to pictorial, graphic, and sculptural works regardless of whether they were created as freestanding art or as features of useful articles. P. 8.

(3) This interpretation is also consistent with the Copyright Act’s history. In Mazer, a case decided under the 1909 Copyright Act, the Court held that respondents owned a copyright in a statuette created for use as a lamp base. In so holding, the Court approved a Copyright Office regulation extending protection to works of art that might also serve a useful purpose and held that it was irrelevant to the copyright inquiry whether the statuette was initially created as a freestanding sculpture or as a lamp base. Soon after, the Copyright Office enacted a regulation implementing Mazer’s holding that anticipated the language of §101, thereby introducing the modern separability test to copyright law. Congress essentially lifted the language from those post-Mazer regulations and placed it in §101 of the 1976 Act. Pp. 8–10.

(c) Applying the proper test here, the surface decorations on the cheerleading uniforms are separable and therefore eligible for copyright protection. First, the decorations can be identified as features having pictorial, graphic, or sculptural qualities. Second, if those decorations were separated from the uniforms and applied in another medium, they would qualify as two-dimensional works of art under §101. Imaginatively removing the decorations from the uniforms and applying them in another medium also would not replicate the uniform itself.

The dissent argues that the decorations are ineligible for copyright protection because, when imaginatively extracted, they form a picture of a cheerleading uniform. Petitioner similarly claims that the decorations cannot be copyrighted because, even when extracted from the useful article, they retain the outline of a cheerleading uniform. But this is not a bar to copyright. Just as two-dimensional fine art correlates to the shape of the canvas on which it is painted, two dimensional applied art correlates to the contours of the article on which it is applied. The only feature of respondents’ cheerleading uniform eligible for a copyright is the two-dimensional applied art on the surface of the uniforms. Respondents may prohibit the reproduction only of the surface designs on a uniform or in any other medium of expression. Respondents have no right to prevent anyone from manufacturing a cheerleading uniform that is identical in shape, cut, or dimensions to the uniforms at issue here. Pp. 10–12.

(d) None of the objections raised by petitioner or the Government is meritorious. Pp. 12–17.

(1) Petitioner and the Government focus on the relative utility of the plain white uniform that would remain if the designs were physically removed from the uniform. But the separability inquiry focuses on the extracted feature and not on any aspects of the useful article remaining after the imaginary extraction. The statute does not require the imagined remainder to be a fully functioning useful article at all. Nor can an artistic feature that would be eligible for copyright protection on its own lose that protection simply because it was first created as a feature of the design of a useful article, even if it makes that article more useful. This has been the rule since Mazer, and it is consistent with the statute’s explicit protection of “applied art.” In rejecting petitioner’s view, the Court necessarily abandons the distinction between “physical” and “conceptual” separability adopted by some courts and commentators. Pp. 12–15.

(2) Petitioner also suggests incorporating two “objective” components into the test—one requiring consideration of evidence of the creator’s design methods, purposes, and reasons, and one looking to the feature’s marketability. The Court declines to incorporate these components because neither is grounded in the statute’s text. Pp. 15–16.

(3) Finally, petitioner claims that protecting surface decorations is inconsistent with Congress’ intent to entirely exclude industrial design from copyright. But Congress has given limited copyright protection to certain features of industrial design. Approaching the statute with presumptive hostility toward protection for industrial design would undermine that choice. In any event, the test adopted here does not render the underlying uniform eligible for copyright protection. Pp. 16–17.

799 F. 3d 468, affirmed.

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Held: The supply of a single component of a multicomponent invention for manufacture abroad does not give rise to §271(f)(1) liability. Pp. 4–11.

(a) Section 271(f)(1)’s phrase “substantial portion” refers to a quantitative measurement. Although the Patent Act itself does not define the term “substantial,” and the term’s ordinary meaning may refer either to qualitative importance or to quantitatively large size, the statutory context points to a quantitative meaning. Neighboring words “all” and “portion” convey a quantitative meaning, and nothing in the neighboring text points to a qualitative interpretation. Moreover, a qualitative reading would render the modifying phrase “of the components” unnecessary the first time it is used in §271(f)(1). Only the quantitative approach thus gives meaning to each statutory provision.

Promega’s proffered “case-specific approach,” which would require a factfinder to decipher whether the components at issue are a “substantial portion” under either a qualitative or a quantitative test, is rejected. Tasking juries with interpreting the statute’s meaning on an ad hoc basis would only compound, not resolve, the statute’s ambiguity. And Promega’s proposal to adopt an analytical framework that accounts for both the components’ quantitative and qualitative aspects is likely to complicate rather than aid the factfinder’s review. Pp. 4–8.

(b) Under a quantitative approach, a single component cannot constitute a “substantial portion” triggering §271(f)(1) liability. This conclusion is reinforced by §271(f)’s text, context, and structure. Section 271(f)(1) consistently refers to the plural “components,” indicating that multiple components make up the substantial portion. Reading §271(f)(1) to cover any single component would also leave little room for §271(f)(2), which refers to “any component,” and would undermine §271(f)(2)’s express reference to a single component “especially made or especially adapted for use in the invention.” The better reading allows the two provisions to work in tandem and gives each provision its unique application. Pp. 8–10.

(c) The history of §271(f) further bolsters this conclusion. Congress enacted §271(f) in response to Deepsouth Packing Co. v. Laitram Corp., 406 U. S. 518, to fill a gap in the enforceability of patent rights by reaching components that are manufactured in the United States but assembled overseas. Consistent with Congress’s intent, a supplier may be liable under §271(f)(1) for supplying from the United States all or a substantial portion of the components of the invention or under §271(f)(2) for supplying a single component if it is especially made or especially adapted for use in the invention and not a staple article or commodity. But, as here, when a product is made abroad and all components but a single commodity article are supplied from abroad, the activity is outside the statute’s scope. Pp. 10–11.

773 F. 3d. 1338, reversed and remanded.


Samsung Electronics Co. v. Apple Inc.

Section 289 of the Patent Act makes it unlawful to manufacture or sell an “article of manufacture” to which a patented design or a colorable imitation thereof has been applied and makes an infringer liable to the patent holder “to the extent of his total profit.” 35 U. S. C. §289. As relevant here, a jury found that various smartphones manufactured by petitioners (collectively, Samsung) infringed design patents owned by respondent Apple Inc. that covered a rectangular front face with rounded edges and a grid of colorful icons on a black screen. Apple was awarded $399 million in damages—Samsung’s entire profit from the sale of its infringing smartphones. The Federal Circuit affirmed the damages award, rejecting Samsung’s argument that damages should be limited because the relevant articles of manufacture were the front face or screen rather than the entire smartphone. The court reasoned that such a limit was not required because the components of Samsung’s smartphones were not sold separately to ordinary consumers and thus were not distinct articles of manufacture.

Held: In the case of a multicomponent product, the relevant “article of manufacture” for arriving at a §289 damages award need not be the end product sold to the consumer but may be only a component of that product. Pp. 4–9.

(a) The statutory text resolves the issue here. An “article of manufacture,” which is simply a thing made by hand or machine, encompasses both a product sold to a consumer and a component of that product. This reading is consistent with §171(a) of the Patent Act, which makes certain “design[s] for an article of manufacture” eligible for design patent protection, and which has been understood by the Patent Office and the courts to permit a design patent that extends to only a component of a multicomponent product, see, e.g., Ex parte Adams, 84 Off. Gaz. Pat. Office 311; Application of Zahn, 617 F. 2d 261, 268 (CCPA). This reading is also consistent with the Court’s reading of the term “manufacture” in §101, which makes “any new and useful . . . manufacture” eligible for utility patent protection. See Diamond v. Chakrabarty, 447 U. S. 303 . Pp. 4–7.

(b) Because the term “article of manufacture” is broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not, the Federal Circuit’s narrower reading cannot be squared with §289’s text. Absent adequate briefing by the parties, this Court declines to resolve whether the relevant article of manufacture for each design patent at issue here is the smartphone or a particular smartphone component. Doing so is not necessary to resolve the question presented, and the Federal Circuit may address any remaining issues on remand. Pp. 7–8.

786 F. 3d 983, reversed and remanded.

Sotomayor, J., delivered the opinion for a unanimous Court.

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Cuozzo Speed Technologies, LLC v. Lee


1. Section 314(d) bars Cuozzo’s challenge to the Patent Office’s decision to institute inter partes review. Pp. 7–12.

(a) The text of §314(d) expressly states that the Patent Office’s determinations whether to institute inter partes review “shall be final and nonappealable.” Moreover, construing §314(d) to permit judicial review of the Patent Office’s preliminary decision to institute inter partes review undercuts the important congressional objective of giving the agency significant power to revisit and revise earlier patent grants. Past practice in respect to related proceedings, including the predecessor to inter partes review, also supports the conclusion that Congress did not intend for courts to review these initial determinations. Finally, reading §314(d) as limited to interlocutory appeals would render the provision largely superfluous in light of the Administrative Procedure Act. Pp. 7–9.

(b) The “strong presumption” favoring judicial review, Mach Mining, LLC v. EEOC, 575 U. S. ___, ___, is overcome here by these “ ‘clear and convincing’ ” indications that Congress intended to bar review, Block v. Community Nutrition Institute, 467 U. S. 340, 349. Given that presumption, however, the interpretation adopted here applies to cases in which the challenge is to the Patent Office’s determination “to initiate an inter partes review under this section,” or where the challenge consists of questions closely tied to the application and interpretation of statutes related to that determination. Cuozzo’s claim does not implicate a constitutional question, nor does it present other questions of interpretation that reach well beyond “this section” in terms of scope and impact. Rather, Cuozzo’s allegation that Garmin’s petition did not plead “with particularity” the challenge to claims 10 and 14 as required by §312 is little more than a challenge to the Patent Office’s conclusion under §314(a) that the “information presented in the petition” warranted review. Pp. 9–12.

2. The Patent Office regulation requiring the Board to apply the broadest reasonable construction standard to interpret patent claims is a reasonable exercise of the rulemaking authority granted to the Patent Office by statute. Pp. 12–20.

(a) Where a statute leaves a gap or is ambiguous, this Court typically interprets a congressional grant of rulemaking authority as giving the agency leeway to enact rules that are reasonable in light of the text, nature, and purpose of the statute. United States v. Mead Corp., 533 U. S. 218, 229; Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842–843. Here, the statute grants the Patent Office the authority to issue regulations “governing inter partes review,” and no statutory provision unambiguously mandates a particular claim construction standard. The Patent Office’s rulemaking authority is not limited to procedural regulations. Analogies to interpretations of other congressional grants of rulemaking authority in other statutes, which themselves do not unambiguously contain a limitation to procedural rules, cannot magically render unambiguous the different language in the different statutory grant of rulemaking authority at issue. The nature and purpose of inter partes review does not unambiguously require the Patent Office to apply one particular claim construction standard. Cuozzo’s contention that the purpose of inter partes review—to establish trial-like procedures for reviewing previously issued patents—supports the application of the ordinary meaning standard ignores the fact that in other significant respects, inter partes review is less like a judicial proceeding and more like a specialized agency proceeding. This indicates that Congress designed a hybrid proceeding. The purpose of inter partes review is not only to resolve patent-related disputes among parties, but also to protect the public’s “paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.” Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U. S. 806, 816. Neither the statute’s language, nor its purpose, nor its legislative history suggests that Congress decided what standard should apply in inter partes review. Pp. 12–17.

(b) The regulation is a reasonable exercise of the Patent Office’s rulemaking authority. The broadest reasonable construction standard helps ensure precision in drafting claims and prevents a patent from tying up too much knowledge, which, in turn, helps members of the public draw useful information from the disclosed invention and understand the lawful limits of the claim. The Patent Office has used this standard for more than 100 years and has applied it in proceedings which, as here, resemble district court litigation. Cuozzo’s two arguments in response are unavailing. Applying the broadest reasonable construction standard in inter partes review is not, as Cuozzo suggests, unfair to a patent holder, who may move to amend at least once in the review process, and who has had several opportunities to amend in the original application process. And though the application of one standard in inter partes review and another in district court proceedings may produce inconsistent outcomes, that structure is inherent to Congress’ regulatory design, and it is also consistent with past practice, as the patent system has long provided different tracks for the review and adjudication of patent claims. The Patent Office’s regulation is reasonable, and this Court does not decide whether a better alternative exists as a matter of policy. Pp. 17–20.

793 F. 3d 1268, affirmed.

BREYER, J., delivered the opinion for a unanimous Court with respect to Parts I and III, and the opinion of the Court with respect to Part II, in which ROBERTS, C. J., and KENNEDY, THOMAS, GINSBURG, and KAGAN, JJ., joined. THOMAS, J., filed a concurring opinion. ALITO, J., filed an opinion concurring in part and dissenting in part, in which SOTOMAYOR, J., joined.

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Kirtsaeng v. John Wiley & Sons, Inc.

Held: 1. When deciding whether to award attorney’s fees under §505, a district court should give substantial weight to the objective reasonableness of the losing party’s position, while still taking into account all other circumstances relevant to granting fees. Pp. 3–11.

(a) Section 505 states that a district court “may . . . award a reasonable attorney’s fee to the prevailing party.” Although the text “clearly connotes discretion” and eschews any “precise rule or formula,” Fogerty v. Fantasy, Inc., 510 U. S. 517, the Court has placed two restrictions on that authority: First, a court may not “award[ ] attorney’s fees as a matter of course,” id., at 533; and second, a court may not treat prevailing plaintiffs and prevailing defendants differently, id., at 527. The Court also noted “several nonexclusive factors” for courts to consider, e.g., “frivolousness, motivation, objective unreasonableness[,] and the need in particular circumstances to advance considerations of compensation and deterrence,” id., at 534, n. 19, and left open the possibility of providing further guidance in the future, id., at 534–535.

This Court agrees with both Kirtsaeng and Wiley that additional guidance respecting the application of §505 is proper so as to further channel district court discretion towards the purposes of the Copyright Act. In addressing other open-ended fee-shifting statutes, this Court has emphasized that “in a system of laws discretion is rarely without limits,” and it has “found” those limits by looking to “the large objectives of the relevant Act.” Flight Attendants v. Zipes, 491 U. S. 754, 759. In accord with such precedents, this Court must determine what approach to fee awards under §505 best advances the well-settled objectives of the Copyright Act, which are to “enrich[ ] the general public through access to creative works” by striking a balance between encouraging and rewarding authors’ creations and enabling others to build on that work. Fogerty, 510 U. S., at 527, 526. Fee awards should thus encourage the types of lawsuits that advance those aims. Pp. 3–6.

(b) Wiley’s approach—to put substantial weight on the reasonableness of a losing party’s position—passes this test because it enhances the probability that creators and users (i.e., plaintiffs and defendants) will enjoy the substantive rights the Act provides. Parties with strong positions are encouraged to stand on their rights, given the likelihood that they will recover fees from the losing (i.e., unreasonable) party; those with weak ones are deterred by the likelihood of having to pay two sets of fees. By contrast, Kirtsaeng’s proposal—to give special consideration to whether a suit meaningfully clarified copyright law by resolving an important and close legal issue—would produce no sure benefits. Even accepting that litigation of close cases advances the public interest, fee-shifting will not necessarily, or even usually, encourage parties to litigate those cases to judgment. While fees increase the reward for a victory, they also enhance the penalty for a defeat—and the parties in hard cases cannot be confident if they will win or lose.

Wiley’s approach is also more administrable. A district court that has ruled on the merits of a copyright case can easily assess whether the losing party advanced an unreasonable position. By contrast, a judge may not know whether a newly decided issue will have broad legal significance. Pp. 6–10.

(c) Still, objective reasonableness can be only a substantial factor in assessing fee applications—not the controlling one. In deciding whether to fee-shift, district courts must take into account a range of considerations beyond the reasonableness of litigating positions. Pp. 10–11. 2. While the Second Circuit properly calls for district courts to give “substantial weight” to the reasonableness of a losing party’s litigating positions, its language at times suggests that a finding of reasonableness raises a presumption against granting fees, and that goes too far in cabining the district court’s analysis. Because the District Court thus may not have understood the full scope of its discretion, it should have the opportunity to reconsider Kirtsaeng’s fee application. On remand, the District Court should continue to give substantial weight to the reasonableness of Wiley’s position but also take into account all other relevant factors. Pp. 11–12.

605 Fed. Appx. 48, vacated and remanded.

KAGAN, J., delivered the opinion for a unanimous Court.

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The Seagate test is not consistent with §284. Pp. 7–15.

(a) The pertinent language of §284 contains no explicit limit or condition on when enhanced damages are appropriate, and this Court has emphasized that the “word ‘may’ clearly connotes discretion.” Martin v. Franklin Capital Corp., 546 U. S. 132, 136. At the same time, however, “[d]iscretion is not whim.” Id., at 139. Although there is “no precise rule or formula” for awarding damages under §284, a district court’s “discretion should be exercised in light of the considerations” underlying the grant of that discretion. Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U. S. ___, ___. Here, 180 years of enhanced damage awards under the Patent Act establish that they are not to be meted out in a typical infringement case, but are instead designed as a sanction for egregious infringement behavior. Pp. 7–9.

(b) In many respects, the Seagate test rightly reflects this historic guidance. It is, however, “unduly rigid, and . . . impermissibly encumbers the statutory grant of discretion to district courts.” Octane Fitness, 572 U. S., at ___. Pp. 9–13.

(1) By requiring an objective recklessness finding in every case, the Seagate test excludes from discretionary punishment many of the most culpable offenders, including the “wanton and malicious pirate” who intentionally infringes a patent—with no doubts about its validity or any notion of a defense—for no purpose other than to steal the patentee’s business. Seymour v. McCormick, 16 How. 480, 488. Under Seagate, a district court may not even consider enhanced damages for such a pirate, unless the court first determines that his infringement was “objectively” reckless. In the context of such deliberate wrongdoing, however, it is not clear why an independent showing of objective recklessness should be a prerequisite to enhanced damages. Octane Fitness arose in a different context but is instructive here. There, a two-part test for determining when a case was “exceptional”—and therefore eligible for an award of attorney’s fees—was rejected because a claim of “subjective bad faith” alone could “warrant a fee award.” 572 U. S., at ___. So too here: A patent infringer’s subjective willfulness, whether intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless. The Seagate test further errs by making dispositive the ability of the infringer to muster a reasonable defense at trial, even if he did not act on the basis of that defense or was even aware of it. Culpability, however, is generally measured against the actor’s knowledge at the time of the challenged conduct. In sum, §284 allows district courts to punish the full range of culpable behavior. In so doing, they should take into account the particular circumstances of each case and reserve punishment for egregious cases typified by willful misconduct. Pp. 9–11.

(2) Seagate’s requirement that recklessness be proved by clear and convincing evidence is also inconsistent with §284. Once again, Octane Fitness is instructive. There, a clear and convincing standard for awards of attorney’s fees was rejected because the statute at issue supplied no basis for imposing a heightened standard. Here, too, §284 “imposes no specific evidentiary burden, much less such a high one,” 572 U. S., at ___. And the fact that Congress erected a higher standard of proof elsewhere in the Patent Act, but not in §284, is telling. “[P]atent-infringement litigation has always been governed by a preponderance of the evidence standard.” Id., at ___. Enhanced damages are no exception. P. 12.

(3) Having eschewed any rigid formula for awarding enhanced damages under §284, this Court likewise rejects the Federal Circuit’s tripartite appellate review framework. In Highmark Inc. v. Allcare Health Management System, Inc., 572 U. S. ___, the Court built on the Octane Fitness holding—which confirmed district court discretion to award attorney’s fees—and rejected a similar multipart standard of review in favor of abuse of discretion review. The same conclusion follows naturally from the holding here: Because §284 “commits the determination” whether enhanced damages are appropriate to the district court’s discretion, “that decision is to be reviewed on appeal for abuse of discretion.” Id., at ___. Nearly two centuries of enhanced damage awards have given substance to the notion that district courts’ discretion is limited, and the Federal Circuit should review their exercise of that discretion in light of longstanding considerations that have guided both Congress and the courts. Pp. 12–13.

(c) Respondents’ additional arguments are unpersuasive. They claim that Congress ratified the Seagate test when it reenacted §284 in 2011 without pertinent change, but the reenacted language unambiguously confirmed discretion in the district courts. Neither isolated snippets of legislative history nor a reference to willfulness in another recently enacted section reflects an endorsement of Seagate’s test. Respondents are also concerned that allowing district courts unlimited discretion to award enhanced damages could upset the balance between the protection of patent rights and the interest in technological innovation. That concern—while serious—cannot justify imposing an artificial construct such as the Seagate test on the limited discretion conferred under §284. Pp. 13–15.

No. 14–1513, 769 F. 3d 1371; No. 14–1520, 782 F. 3d 649, vacated and remanded.  


Kimble v. Marvel Entertainment, LLC

Respondent Marvel Entertainment’s corporate predecessor agreed to purchase petitioner Stephen Kimble’s patent for a Spider-Man toy in exchange for a lump sum plus a 3% royalty on future sales. The agreement set no end date for royalties. As the patent neared the end of its statutory 20-year term, Marvel discovered Brulotte v. Thys Co., 379 U. S. 29, in which this Court held that a patentee cannot continue to receive royalties for sales made after his patent expires. Marvel then sought a declaratory judgment in federal district court confirming that it could stop paying Kimble royalties. The district court granted relief, and the Ninth Circuit affirmed. Kimble now asks this Court to overrule Brulotte.

Held: Stare decisis requires this Court to adhere to Brulotte. Pp. 3–18.

(a) A patent typically expires 20 years from its application date. 35 U. S. C. §154(a)(2). At that point, the unrestricted right to make or use the article passes to the public. See Sears, Roebuck & Co. v. Stiffel Co., 376 U. S. 225, 230. This Court has carefully guarded the significance of that expiration date, declining to enforce laws and contracts that restrict free public access to formerly patented, as well as unpatentable, inventions. See, e.g., id., at 230–233; Scott Paper Co. v. Marcalus Mfg. Co., 326 U. S. 249, 255–256.

Brulotte applied that principle to a patent licensing agreement that provided for the payment of royalties accruing after the patent’s expiration. 379 U. S., at 30. The Court held that the post-patent royalty provision was “unlawful per se,” id., at 30, 32, because it continued “the patent monopoly beyond the [patent] period,” id., at 33, and, in so doing, conflicted with patent law’s policy of establishing a “postexpiration . . . public domain,” ibid.

The Brulotte rule may prevent some parties from entering into deals they desire, but parties can often find ways to achieve similar outcomes. For example, Brulotte leaves parties free to defer payments for pre-expiration use of a patent, tie royalties to non-patent rights, or make non-royalty-based business arrangements. Contending that such alternatives are not enough, Kimble asks this Court to abandon Brulotte’s bright-line rule in favor of a case-by-case approach based on antitrust law’s “rule of reason.” Pp. 3–7.

(b) The doctrine of stare decisis provides that today’s Court should stand by yesterday’s decisions. Application of that doctrine, though “not an inexorable command,” is the “preferred course.” Payne v. Tennessee, 501 U. S. 808, 828, 827. Overruling a case always requires “special justification”—over and above the belief “that the precedent was wrongly decided.” Halliburton Co. v. Erica P. John Fund, Inc., 573 U. S. ___, ___. Where, as here, the precedent interprets a statute, stare decisis carries enhanced force, since critics are free to take their objections to Congress. See e.g., Patterson v. McLean Credit Union, 491 U. S. 164, 172–173. Congress, moreover, has spurned multiple opportunities to reverse Brulotte, see Watson v. United States, 552 U. S. 74, 82–83, and has even rebuffed bills that would have replaced Brulotte’s per se rule with the standard Kimble urges. In addition, Brulotte implicates property and contract law, two contexts in which considerations favoring stare decisis are “at their acme,” Payne, 501 U. S., at 828, because parties are especially likely to rely on such precedents when ordering their affairs.

Given those good reasons for adhering to stare decisis in this case, this Court would need a very strong justification for overruling Brulotte. But traditional justifications for abandoning stare decisis do not help Kimble here. First, Brulotte’s doctrinal underpinnings have not eroded over time. The patent statute at issue in Brulotte is essentially unchanged. And the precedent on which the Brulotte Court primarily relied, like other decisions enforcing a patent’s cutoff date, remains good law. Indeed, Brulotte’s close relation to a whole web of precedents means that overruling it could threaten others. Second, nothing about Brulotte has proved unworkable. See Patterson, 491 U. S., at 173. To the contrary, the decision itself is simple to apply—particularly as compared to Kimble’s proposed alternative, which can produce high litigation costs and unpredictable results. Pp. 7–12.

(c) Neither of the justifications Kimble offers gives cause to overrule Brulotte. Pp. 12–18.

(1) Kimble first argues the Brulotte hinged on an economic error—i.e., an assumption that post-expiration royalties are always anticompetitive. This Court sees no error in Kimble’s economic analy-sis. But even assuming Kimble is right that Brulotte relied on an economic misjudgment, Congress is the right entity to fix it. The patent laws are not like the Sherman Act, which gives courts exceptional authority to shape the law and reconsider precedent based on better economic analysis. Moreover, Kimble’s argument is based not on evolving economic theory but rather on a claim that the Brulotte Court simply made the wrong call. That claim fails to clear stare decisis’s high bar. In any event, Brulotte did not even turn on the notion that post-patent royalties harm competition. Instead, the Brulotte Court simply applied the categorical principle that all patent-related benefits must end when the patent term expires. Kimble’s real complaint may go to the merits of that principle as a policy matter. But Congress, not this Court, gets to make patent policy. Pp. 12–16.

(2) Kimble also argues that Brulotte suppresses technological innovation and harms the national economy by preventing parties from reaching agreements to commercialize patents. This Court cannot tell whether that is true. Brulotte leaves parties free to enter alternative arrangements that may suffice to accomplish parties’ payment deferral and risk-spreading goals. And neither Kimble nor his amici offer any empirical evidence connecting Brulotte to decreased innovation. In any event, claims about a statutory precedent’s consequences for innovation are “more appropriately addressed to Congress.”

Halliburton, 573 U. S., at ___. Pp. 16–18. 727 F. 3d 856, affirmed.

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US Supreme Court Decision: COMMIL USA, LLC v. CISCO SYSTEMS, INC.

Held: A defendant’s belief regarding patent validity is not a defense to an induced infringement claim. Pp. 5–14.

(a) While this case centers on inducement liability, 35 U. S. C. §271(b), which attaches only if the defendant knew of the patent and that “the induced acts constitute patent infringement,” Global-Tech Appliances, Inc. v. SEB S. A., 563 U. S. ___, ___, the discussion here also refers to direct infringement, §271(a), a strict-liability offense in which a defendant’s mental state is irrelevant, and contributory infringement, §271(c), which, like inducement liability, requires knowledge of the patent in suit and knowledge of patent infringement, Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U. S. 476, 488 (Aro II). Pp. 5–6.

(b) In Global-Tech, this Court held that “induced infringement . . . requires knowledge that the induced acts constitute patent infringement,” 563 U. S., at ___, relying on the reasoning of Aro II, a contributory infringement case, because the mental state imposed in each instance is similar. Contrary to the claim of Commil and the Government as amicus, it was not only knowledge of the existence of respondent’s patent that led the Court to affirm the liability finding in Global-Tech, but also the fact that petitioner’s actions demonstrated that it knew it would be causing customers to infringe respondent’s patent. 563 U. S., at ___. Qualifying or limiting that holding could make a person, or entity, liable for induced or contributory infringement even though he did not know the acts were infringing. GlobalTech requires more, namely proof the defendant knew the acts were infringing. And that opinion was clear in rejecting any lesser mental state as the standard. Id., at ___. Pp. 6–9.

(c) Because induced infringement and validity are separate issues and have separate defenses under the Act, belief regarding validity cannot negate §271(b)’s scienter requirement of “actively induce[d] infringement,” i.e., the intent to “bring about the desired result” of infringement, 563 U. S., at ___. When infringement is the issue, the patent’s validity is not the question to be confronted. See Cardinal Chemical Co. v. Morton Int’l, Inc., 508 U. S. 83. Otherwise, the long held presumption that a patent is valid, §282(a), would be undermined, permitting circumvention of the high bar—the clear and convincing standard—that defendants must surmount to rebut the presumption. See Microsoft Corp. v. i4i Ltd. Partnership, 564 U. S. ___, ___–___. To be sure, if a patent is shown to be invalid, there is no patent to be infringed. But the orderly administration of the patent system requires courts to interpret and implement the statutory framework to determine the procedures and sequences that the parties must follow to prove the act of wrongful inducement and any related issues of patent validity.

There are practical reasons not to create a defense of belief in invalidity for induced infringement. Accused inducers who believe a patent is invalid have other, proper ways to obtain a ruling to that effect, including, e.g., seeking ex parte reexamination of the patent by the Patent and Trademark Office, something Cisco did here. Creating such a defense could also have negative consequences, including, e.g., rendering litigation more burdensome for all involved. Pp. 9–13.

(d) District courts have the authority and responsibility to ensure that frivolous cases—brought by companies using patents as a sword to go after defendants for money—are dissuaded, though no issue of frivolity has been raised here. Safeguards—including, e.g., sanctioning attorneys for bringing such suits, see Fed. Rule Civ. Proc. 11— combined with the avenues that accused inducers have to obtain rulings on the validity of patents, militate in favor of maintaining the separation between infringement and validity expressed in the Patent Act. Pp. 13–14. 720 F. 3d 1361, vacated and remanded.



B&B Hardware, Inc. v. Hargis Industries, Inc.

Held: So long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before a district court, issue preclusion should apply. Pp. 8–22.

(a) An agency decision can ground issue preclusion. The Court’s cases establish that when Congress authorizes agencies to resolve disputes, “courts may take it as given that Congress has legislated with the expectation that [issue preclusion] will apply except when a statutory purpose to the contrary is evident.” Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U. S. 104, 108. Constitutional avoidance does not compel a different conclusion. Pp. 8–12.

(b) Neither the Lanham Act’s text nor its structure rebuts the “presumption” in favor of giving preclusive effect to TTAB decisions where the ordinary elements of issue preclusion are met. Astoria, 501 U. S., at 108. This case is unlike Astoria. There, where exhausting the administrative process was a prerequisite to suit in court, giving preclusive effect to the agency’s determination in that very administrative process could have rendered the judicial suit “strictly pro forma.” Id., at 111. By contrast, registration involves a separate proceeding to decide separate rights. Pp. 12–14.

(c) There is no categorical reason why registration decisions can never meet the ordinary elements of issue preclusion. That many registrations will not satisfy those ordinary elements does not mean that none will. Pp. 15–22.

(1) Contrary to the Eighth Circuit’s conclusion, the same likelihood-of-confusion standard applies to both registration and infringement. The factors that the TTAB and the Eighth Circuit use to assess likelihood of confusion are not fundamentally different, and, more important, the operative language of each statute is essentially the same.

Hargis claims that the standards are different, noting that the registration provision asks whether the marks “resemble” each other, 15 U. S. C. §1052(d), while the infringement provision is directed towards the “use in commerce” of the marks, §1114(1). That the TTAB and a district court do not always consider the same usages, however, does not mean that the TTAB applies a different standard to the usages it does consider. If a mark owner uses its mark in materially the same ways as the usages included in its registration application, then the TTAB is deciding the same likelihood-of-confusion issue as a district court in infringement litigation. For a similar reason, the Eighth Circuit erred in holding that issue preclusion could not apply because the TTAB relied too heavily on “appearance and sound.” Pp. 15–19.

(2) The fact that the TTAB and district courts use different procedures suggests only that sometimes issue preclusion might be inappropriate, not that it always is. Here, there is no categorical “reason to doubt the quality, extensiveness, or fairness,” Montana v. United States, 440 U. S. 147, 164, n. 11, of the agency’s procedures. In large part they are exactly the same as in federal court. Also contrary to the Eighth Circuit’s conclusion, B&B, the party opposing registration, not Hargis, bore the burden of persuasion before the TTAB, just as it did in the infringement suit. Pp. 19–21.

(3) Hargis is also wrong that the stakes for registration are always too low for issue preclusion in later infringement litigation. When registration is opposed, there is good reason to think that both sides will take the matter seriously. Congress’ creation of an elaborate registration scheme, with many important rights attached and backed up by plenary review, confirms that registration decisions can be weighty enough to ground issue preclusion. Pp. 21–22.

716 F. 3d 1020, reversed and remanded.

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