HALO ELECTRONICS, INC. v. PULSE ELECTRONICS, INC.

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.  

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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.

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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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HANA FINANCIAL, INC. v. HANA BANK

Held: Whether two trademarks may be tacked for purposes of determining priority is a question for the jury. Pp. 3–8.

(a) Lower courts have held that two marks may be tacked when they are considered to be “legal equivalents,” i.e., they “create the same, continuing commercial impression.” Van Dyne-Crotty, Inc. v. Wear-Guard Corp. 926 F. 2d 1156, 1159. And “commercial impression” “must be viewed through the eyes of a consumer.” DuoProSS Meditech Corp. v. Inviro Medical Devices, Ltd., 695 F. 3d 1247, 1253. When the relevant question is how an ordinary person or community would make an assessment, the jury is generally the decisionmaker that ought to provide the fact-intensive answer. See, e.g., United States v. Gaudin, 515 U. S. 506, 512. Pp. 3–5.

(b) Each of petitioner’s four arguments in support of its view that tacking is a question of law to be resolved by a judge is unpersuasive. First, it may be true that the “legal equivalents” test involves a legal standard, but such “ ‘mixed question[s] of law and fact,’ [have] typically been resolved by juries.” Gaudin, 515 U. S., at 512. And any concern that a jury may improperly apply the relevant legal standard can be remedied by crafting careful jury instructions. Second, petitioner offers no support for its claim that tacking determinations create new law in a unique way that requires those determinations to be reserved for judges. Third, petitioner worries that the predictability required for a functioning trademark system will be absent if tacking questions are assigned to juries, but offers no reason why trademark tacking should be treated differently from the tort, contract, and criminal justice systems, where juries answer often-dispositive factual questions or make dispositive applications of legal standards to facts. Finally, in arguing that judges have historically resolved tacking disputes, petitioner points to cases arising in the contexts of bench trials, summary judgment, and the like, in which it is undisputed that judges may resolve tacking disputes. Pp. 5–8.

735 F. 3d. 1158, affirmed.

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SCOTUS: TEVA PHARMACEUTICALS USA, INC., ET AL. v. SANDOZ, INC.

Held: When reviewing a district court’s resolution of subsidiary factual matters made in the course of its construction of a patent claim, the Federal Circuit must apply a “clear error,” not a de novo, standard of review. Pp. 4–16.

(a) Federal Rule of Civil Procedure 52(a)(6) states that a court of appeals “must not . . . set aside” a district court’s “[f]indings of fact” unless they are “clearly erroneous.” It sets out a “clear command,”Anderson v. Bessemer City, 470 U. S. 564, 574, and “does not make exceptions or . . . exclude certain categories of factual findings” from the court of appeals’ obligation, Pullman-Standard v. Swint, 456 U. S. 273, 287. The Rule thus applies to both subsidiary and ultimate facts. Ibid. And the function of an appeals court reviewing the findings of a “ ‘district court sitting without a jury . . . is not to decide factual issues de novo.’” Anderson, supra, at 573. Even if exceptions to the Rule were permissible, there is no convincing ground for creating an exception here. Markman v. Westview Instruments, Inc., 517 U. S. 370, neither created, nor argued for, such an exception. There, the Court held that the ultimate question of claim construction is for the judge, not the jury, id., at 372, but it did not thereby create an exception from the ordinary rule governing appellate review of factual matters. Instead, the Court pointed out that a judge, in construing a patent claim, is engaged in much the same task as the judge would be in construing other written instruments, such as deeds, contracts, or tariffs. Id., at 384, 386, 388, 389. Construction of written instruments often presents a “question solely of law,” at least when the words in those instruments are “used in their ordinary meaning.” Great Northern R. Co. v. Merchants Elevator Co., 259 U. S. 285, 291. But if a written instrument uses “technical words or phrases not commonly understood,” id., at 292, those words may give rise to a factual dispute. If so, extrinsic evidence may help to “establish a usage of trade or locality.” Ibid. And in that circumstance, the “determination of the matter of fact” will “preced[e]” the “function of construction.” Ibid.

The Markman Court also recognized that courts will sometimes have to resolve subsidiary factual disputes in patent construction; Rule 52 requires appellate courts to review such disputes under the “clearly erroneous” standard. Application of this standard is further supported by precedent and by practical considerations. Clear error review is “particularly” important in patent cases because a district court judge who has presided over, and listened to, the entire proceeding has a comparatively greater opportunity to gain the necessary “familiarity with specific scientific problems and principles,” Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U. S. 605, 610, than an appeals court judge who must read a written transcript or perhaps just those portions referenced by the parties. Pp. 4–8.

(b) Arguments to the contrary are unavailing. Sandoz claims that separating “factual” from “legal” questions may be difficult and, like the Federal Circuit, posits that it is simpler for the appellate court to review the entirety of the district court’s claim construction de novo than to apply two separate standards. But courts of appeals have long been able to separate factual from legal matters, see, e.g., First Options of Chicago, Inc. v. Kaplan, 514 U. S. 938, 947–948, and the Federal Circuit’s efforts to treat factual findings and legal conclusions similarly have brought with them their own complexities. As for Sandoz’s argument that “clear error” review will bring about less uniformity, neither the Circuit nor Sandoz has shown that divergent claim construction stemming from divergent findings of fact on subsidiary matters should occur more than occasionally. Pp. 8–11.

(c) This leaves the question of how the clear error standard should be applied when reviewing subsidiary factfinding in patent claim construction. When the district court reviews only evidence intrinsic to the patent, the judge’s determination is solely a determination of law, and the court of appeals will review that construction de novo. However, where the district court needs to consult extrinsic evidence in order to understand, for example, the background science or the meaning of a term in the relevant art during the relevant time period, and where those subsidiary facts are in dispute, courts will need to make subsidiary factual findings about the extrinsic evidence. The district judge, after deciding the factual dispute, will then interpret the patent claim in light of the facts as he has found them. The ultimate construction of the claim is a legal conclusion that the appellate court can review de novo. But to overturn the judge’s resolution of an underlying factual dispute, the appellate court must find that the judge, in respect to those factual findings, has made a clear error. Pp. 11–14.

(d) Here, for example, the District Court made a factual finding, crediting Teva’s expert’s account, and thereby rejecting Sandoz’s expert’s contrary explanation, about how a skilled artisan would understand the way in which a curve created from chromatogram data reflects molecular weights. Based on that factual finding, the District Court reached the legal conclusion that figure 1 did not undermine Teva’s argument that molecular weight referred to the first method of calculating molecular weight. When the Federal Circuit reviewed the District Court’s decision, it did not accept Teva’s expert’s explanation, and it failed to accept that explanation without finding that the District Court’s contrary determination was “clearly erroneous.” The Federal Circuit erred in failing to review this factual finding only for clear error. Teva asserts that there are two additional instances in which the Federal Circuit rejected the District Court’s factual findings without concluding that they were clearly erroneous; those matters are left for the Federal Circuit to consider on remand. Pp. 14– 16.

723 F. 3d 1363, vacated and remanded.

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AMERICAN BROADCASTING COS., INC., ET AL . v . AEREO, INC.

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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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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Limelight Networks, Inc. v. Akamai Techs, Inc.

Held: A defendant is not liable for inducing infringement under §271(b) when no one has directly infringed under §271(a) or any other statutory provision. Pp. 4–11.

(a) Liability for inducement must be predicated on direct infringe- ment. Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U. S. 336, 341. Assuming that Muniauction’s holding is correct, respond- ents’ method has not been infringed because the performance of all of its steps is not attributable to any one person. Since direct infringement has not occurred, there can be no inducement of infringement under §271(b). The Federal Circuit’s contrary view would deprive §271(b) of ascertainable standards and require the courts to develop two parallel bodies of infringement law. This Court’s reading of §271(b) is reinforced by §271(f)(1), which illustrates that Congress knows how to impose inducement liability predicated on non- infringing conduct when it wishes to do so. The notion that conduct which would be infringing in altered circumstances can form the ba- sis for contributory infringement has been rejected, see Deepsouth Packing Co. v. Laitram Corp., 406 U. S. 518, 526–527, and there is no reason to apply a different rule for inducement. Pp. 4–7.

(b) Respondents claim that principles from tort law and criminal aiding and abetting doctrine, as well as patent law principles in ex- istence before the 1952 Patent Act, support the Federal Circuit’s reading of the statute, but their arguments are unpersuasive. Though a would-be infringer could evade liability by dividing perfor- mance of a method patent’s steps with another whose conduct cannot be attributed to the defendant, this is merely a result of the Federal Circuit’s interpretation of §271(a), and a desire to avoid this conse- quence does not justify fundamentally altering the rules of induce- ment liability clearly required by the Patent Act’s text and structure. Pp. 8–10.

(c) Because the question presented here is clearly focused on §271(b) and presupposes that Limelight has not committed direct in- fringement under §271(a), the Court declines to address whether the Federal Circuit’s decision in Muniauction is correct. P. 10.

692 F. 3d 1301, reversed and remanded. A LITO , J., delivered the opinion for a unanimous Court.

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Nautilus, Inc. v. Biosig Instruments, Inc

Held: 1. A patent is invalid for indefiniteness if its claims, read in light of the patent’s specification and prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention. The parties agree that definiteness is to be evaluated from the perspective of a person skilled in the relevant art, that claims are to be read in light of the patent’s specification and prosecution histo­ry, and that definiteness is to be measured as of the time of the pa­ tent application. The parties disagree as to how much imprecision §112, ¶2 tolerates.

Section 112’s definiteness requirement must take into account the inherent limitations of language. See Festo Corp. v. Shoketsu Kinzo- ku Kogyo Kabushiki Co., 535 U. S. 722, 731. On the one hand, some modicum of uncertainty is the “price of ensuring the appropriate in­ centives for innovation,” id., at 732; and patents are “not addressed to lawyers, or even to the public generally,” but to those skilled in the relevant art, Carnegie Steel Co. v. Cambria Iron Co., 185 U. S. 403, 437. At the same time, a patent must be precise enough to afford clear notice of what is claimed, thereby “ ‘appris[ing] the public of what is still open to them,’ ” Markman v. Westview Instruments, Inc., 517 U. S. 370, 373, in a manner that avoids “[a] zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement claims,” United Carbon Co. v. Binney & Smith Co., 317 U. S. 228, 236. The standard adopted here mandates clarity, while recognizing that absolute precision is unattainable. It also accords with opinions of this Court stating that “the certainty which the law requires in patents is not greater than is reasonable, having regard to their subject-matter.” Minerals Separation, Ltd. v. Hyde, 242 U. S. 261, 270. Pp. 8–11.

2. The Federal Circuit’s standard, which tolerates some ambiguous claims but not others, does not satisfy the statute’s definiteness re­ quirement. The Court of Appeals inquired whether the ’753 patent’s claims were “amenable to construction” or “insolubly ambiguous,” but such formulations lack the precision §112, ¶2 demands. To tolerate imprecision just short of that rendering a claim “insolubly ambigu­ ous” would diminish the definiteness requirement’s public-notice function and foster the innovation-discouraging “zone of uncertainty,” United Carbon, 317 U. S., at 236, against which this Court has warned. While some of the Federal Circuit’s fuller explications of the term “insolubly ambiguous” may come closer to tracking the statuto­ ry prescription, this Court must ensure that the Federal Circuit’s test is at least “probative of the essential inquiry.” Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520 U. S. 17, 40. The expressions “in­ solubly ambiguous” and “amenable to construction,” which permeate the Federal Circuit’s recent decisions concerning §112, ¶2, fall short in this regard and can leave courts and the patent bar at sea without a reliable compass. Pp. 11–13.

3. This Court, as “a court of review, not of first view,” Cutter v. Wil- kinson, 544 U. S. 709, 718, n. 7, follows its ordinary practice of re­ manding so that the Federal Circuit can reconsider, under the proper standard, whether the relevant claims in the ’753 patent are suffi­ ciently definite, see, e.g., Johnson v. California, 543 U. S. 499, 515. Pp. 13–14.

715 F. 3d 891, vacated and remanded. G INSBURG , J., delivered the opinion for a unanimous Court.

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