Supreme Court to Tackle Plenty of IP Issues in 2014

16 January 2014 Publication
Author(s): Jeanne M. Gills Cynthia J. Rigsby Ruben J. Rodrigues Harold C. Wegner

Legal News Alert: Intellectual Property

On January 10, 2014 the Supreme Court granted certiorari in two patent cases, one copyright case, and a fourth case that may have implications for federal trademark law. The Court had already granted certiorari in at least five other IP-related cases set for argument in 2014. Needless to say, it will be a busy year for IP Law at the Supreme Court. The Supreme Court’s significant IP docket could bring important changes that may affect companies of all sizes and across a variety of industries.

Cases addressing the proper standard for inducing patent infringement (Limelight Networks, Inc. v. Akamai Techs., Inc., No. 12-786), the standard for finding a patent invalid due to indefiniteness (Nautilus, Inc. v. Biosig Instruments, Inc., No. 13-369), whether streaming TV service Aereo “publicly performs” copyrighted works (American Broadcasting Companies, Inc. v. Aereo, Inc., No. 13-461), and whether the Food, Drug, and Cosmetics Act precludes certain claims under the Lanham Act (POM Wonderful LLC v. The Coca Cola Co., No. 12-761) join already-pending cases concerning the patent eligibility of certain software-related patent claims (Alice Corp. v. CLS Bank Int’l, No. 13-298), the burden of proof in a declaratory judgment action brought by a patent licensee (Medtronic, Inc. v. Boston Scientific Corp., No. 12-1128), the award of attorney’s fees in patent cases (Highmark Inc. v. Allcare Management Sys., Inc., No. 12-1163 and Octane Fitness v. ICON Health and Fitness, No. 12-1184), and whether the defense of laches can apply to copyright claims brought within the statute of limitations proscribed by Congress (Petrella v. Metro-Goldwyn-Mayer, Inc., No. 12-1315).

Below is a brief summary of the issues presented in the most recent cases granted certiorari.

Limelight v. Akamai

The Supreme Court will revisit the Federal Circuit’s 2012 en banc decision in Akamai Techs., Inc. v. Limelight Networks, Inc., where the Federal Circuit held that a party may be liable for inducing patent infringement even where multiple parties perform different steps of a claimed invention. In that case, Akamai had accused Limelight with infringement of its patent on a method for delivering video content to consumers via the Internet. Prior to the Federal Circuit’s ruling in Akamai it was generally understood that a finding of induced infringement required either that a single direct infringer perform every step of a claimed method, or that the inducing infringer otherwise exercise “direction or control” over an alleged direct infringer that did not itself perform all the infringing steps. The Federal Circuit’s decision in Akamai greatly expanded the universe of parties that might now be liable for inducing patent infringement.

In particular, the computer and electronics industries, whose technologies often require the performance of multiple steps by different parties, are paying close attention to this case. The petitioner, accused infringer Limelight, garnered the support of three separate amici briefs that collectively represented the interests of well-known technology companies and technology trade organizations, including: Google, Cisco Systems, Oracle, Red Hat, SAP, Symantec, Xilinx, Altera Corp., HTC, SmugMug, Weatherford International, the CTIA—The Wireless Association, the Consumer Electronics Association, and MetroPCS Wireless. The Supreme Court also invited, and received, a brief on behalf of the United States that supported Limelight’s position—arguing that the Federal Circuit’s decision was a “significant expansion” to the scope of induced infringement liability which would correspond to an increase in burdensome litigation.

While it is unclear whether the Supreme Court will adopt or reject the Federal Circuit’s analysis in Akamai, any decision will likely bring more certainty to the landscape of induced infringement, which the entire technology community looks forward to.

Nautilus v. Biosig Instruments

Nautilus v. Biosig Instruments concerns the standards for finding a patent claim invalid as indefinite and whether the Federal Circuit’s current “insolubly ambiguous standard” is too liberal. The Federal Circuit held that functional claim language lacking specific parameters in the specification is not “insolubly ambiguous,” and thus not invalid as indefinite, if the claimed invention provides “inherent parameters” sufficient for a skilled artisan to understand the bounds of the claims. According to the Federal Circuit’s decision, patent claims may not be indefinite even where some experimentation is required as long as that experimentation is not “undue.” The Court’s ruling was in the context of heart monitors used on exercise equipment wherein the Court held that the functional claim language of "spaced relationship" was definite in view of the inherent parameters of the claimed apparatus despite the lack of specificity on how wide the spacing should be. The Federal Circuit also held that such functional language may be used in lieu of means-plus-function language and that it was permissible to define "spaced relationship" based on the function the spacing was intended to provide.

The case has important implications for both pending patent applications and issued patents. A decision in favor of the petitioner may call into question the validity of many patents drafted with the Federal Circuit’s “insolubly ambiguous” standard in mind, providing additional support to defendants attempting to invalidate patents in litigation. Meanwhile, a decision affirming the Federal Circuit’s ruling could create an incentive for patent applicants to push the boundaries of vague claim drafting, rendering claim construction proceedings more important than ever.

This case has also garnered a lot of interest from the technology community, with one amici brief filed in support of petitioner Nautilus by Amazon, Google, Limelight Networks, SAP America, NewEgg, NetApp, Garmin, SAS Institute, MediaFire, ESRI, J.C. Penney and another brief (also in support of petitioner) filed by non-profit organizations Public Knowledge and the Electronic Frontier Foundation.

ABC v. Aereo

In April 2013, the Second Circuit affirmed a district court’s denial of a preliminary injunction against Aereo on the grounds that Aereo’s transmission of broadcast TV over the Internet is not a “public performance” and thus can not infringe the public performance right under copyright law. Aereo’s service is built on top of a system that relies on numerous mini-TV antennas to transmit broadcast TV over the internet to its subscribers. Aereo contends that it does not infringe on broadcasters' copyrights because its mini-antennas are individually leased by the subscribers, which make the subsequently streamed content a "private performance" for each paying subscriber. In contrast, the broadcasters have argued that all services that retransmit broadcast programming to the public are offering "public performances" that require licenses from the copyright owners.

The case is particularly important since several district courts have disagreed as to whether such transmissions constitute private or public performances.

The case also has significant implications for the business models of Aereo and its competitors, as well as for the media and broadcast industries (including big content owners in the sports industry) that fear losing control over the distribution of their content—as reflected in the eight amicus briefs filed in support of the broadcast networks by numerous media-affiliated entities. A decision in Aereo’s favor could open the door for paid TV services to adopt Aereo’s model, potentially avoiding the millions of dollars that cable and satellite TV providers currently pay to broadcasters for the rights to carry their content.

POM Wonderful v. Coca Cola

While not itself a trademark case, the Ninth Circuit held that a private party could not bring a Lanham Act claim against a competitor over allegedly false or deceptive food product labels that were regulated by the federal Food, Drug and Cosmetics Act. POM Wonderful had accused Coca Cola of false or deceptive advertising in promoting various pomegranate juice blends that were alleged to primarily contain apple and grape juice, but which nonetheless complied with FDA regulations that allows manufacturers to use the names of all juices in a product no matter the amount used. The Supreme Court will now weigh in on the subject, and the Court’s analysis could have broader implications for companies involved in food product labeling. In particular, where actions that a party may argue give rise to a claim under the Lanham Act, if condoned by the Food, Drug and Cosmetics Act, can the federal Lanham Act claim nonetheless proceed? The Ninth Circuit had also found that POM may have standing to pursue its state law claims.

The United States filed a brief that supported denying certiorari, but nonetheless argued that that the Ninth Circuit erred by giving the Food, Drug and Cosmetics Act too broad a preclusive reach.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and our colleagues. If you have any questions about this update or would like to discuss this topic further, please contact your Foley attorney or the following:

Jeanne M. Gills
Chicago, Illinois

Cynthia J. Rigsby
Milwaukee, Wisconsin

Ruben J. Rodrigues
Boston, Massachusetts

Harold C. Wegner
Washington, D.C.