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March 2017

Supreme Court Sets New Copyrightability Test Regarding Useful Articles

Takeaway: Courts have been struggling with agreeing on a test pertaining to the copyrightable of useful articles, and the Supreme Court resolved the longstanding disagreement by holding that the test is that a copyrightable design “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.” Star Athletica, LLC v. Varsity Brands, Inc., 580 U.S. ___, No. 15-866, 2017 WL 1066261, at *1 (Mar. 22, 2017).

In the Western District of Tennessee, Varsity Brands sued Star Athletica and alleged copyright infringement on the copyrighted designs of its cheerleading uniforms, as shown below.

Star Athletica argued that because cheerleading uniforms are useful by nature, the designs are not copyrightable and on summary judgment, the district court agreed with Star Athletica that because the designs reflected the “core of the ideal—of ‘cheerleading-uniform-ness’” the design features are not copyrightable as they are not conceptually separate from its utilitarian aspect.

The Sixth Circuit reversed and the Supreme Court agreed, both stating that there were aspects that were conceptually separable between the design elements and the utilitarian elements of the uniform.

In applying the Supreme Court’s new test, Justice Thomas reasoned that if the uniforms’ “arrangement of colors, shapes, stripes, and chevrons were separated from the uniform and applied in another medium—for example, on a painter’s canvas—[it] would qualify” as a protectable work of art and is protectable under Section 101 as conceptually separable.

However, the Court clarified that a uniform “of identical shape, cut, and dimension” would not qualify as copyright infringement, which begs the question to what extent shape and cut are protectable under this new standard, especially in relation to the fashion and furniture industry.

Iris Connex v. Dell: Textbook “Exceptionality” Case

Takeaway: Iris Connex LLC v. Dell Inc. sends clear warning signs to patent trolls that form shell corporations and allege frivolous claims.  When dealing with parties alleging frivolous claims, send a letter to the party regarding implausibility of their claims as warning soon after the complaint is filed, and if such attempts to resolve amicably are discounted, promptly file motions of dismissal as well as cover different grounds of sanctions and monetary relief to increase the potential of total relief granted. 

In Iris Connex LLC v. Dell Inc. (E.D. Tex. Jan. 2017), the court held that Iris Connex’s actions were the “clearest example” of what qualifies the case to be exceptional and sanctionable.

Iris Connex sued Dell, as well as seventeen other defendants, for patent infringement, and soon after the filing of the complaint, Dell filed a motion to dismiss, arguing that the infringement claims were implausible.

The court agreed with Dell’s position and moved the motion to dismiss, sua sponte, to a motion for summary judgment and entered summary judgment of non-infringement.  In response, Dell filed for a motion of attorneys’ fees as well as sanctions under Section 285 and 1927, Rule 11, and the court’s inherent power.

Further, Dell brought to attention the issue that Iris Connex was an empty shell company, and it turned out that it was the first of two levels of shell corporations, attempting to shield the owner, Brian Yates.

Relying on Section 285 and Octane Fitness LLC v. Icon Health & Fitness Inc., 134 S.Ct. 1749 (2014), the court held that the case showed exceptionality based on the following three factors: (1) the case should be determined on a case-by-case exercise of the district court’s discretion, considering the totality of the circumstances, (2) the case serves as the one and only constraint on a district court’s discretion, and (3) the case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position or the unreasonable manner in which the case was litigated.

Further, since Brian Yates was technically a “non-party,” the court also analyzed whether he would be liable under Section 285, and deemed that he was because (1) he was responsible for conduct that makes the case exceptional, (2) he was afforded due process, and (3) it was equitable to do so.  Having passed all of these requirements, Iris Connex and Yates were held jointly and severally liable under Section 285.

Under Rule 11, the court found Iris Connex’s attorney sanctionable as his arguments failed to pass even the most objective standard of review. As a patent attorney, he was required to “interpret the pertinent claims of the patent in issue before filing a complaint” while making a “reasonable effort to determine whether the accused device satisfies each of the claim limitations.”

As for sanctions under court’s inherent power, which address “a full range of litigation abuses,” the court used a two-part test from the Eastern District of Michigan: “[t]o be subject to the Court’s inherent power to sanction, a non-party not subject to court order must (1) have a substantial interest in the outcome of the litigation and (2) substantially participate in the proceedings in which he interfered.”

The court found that even though there is “nothing inherently wrong with Mr. Yates or anyone else capitalizing on underused patents in the marketplace… one cannot abuse the judicial process through the creation of shell entities to facilitate the assertion of otherwise meritless claims as part of a scheme to avoid the risks that Section 285 creates.”

Supreme Court Holds Laches Defense No Longer Bars Patent Damages For Infringement Within Six-Years From Filing of Claim

Takeaway: Parties may no longer rely on a laches defense based on any form of delay for bringing a patent infringement case if it the infringement committed was still within a six-year period from the filing of the claim. 

The Supreme Court reversed the Federal Circuit, and held that a suit cannot be barred for delay for collecting damages for any infringement committed within six years of the filing of the claim under a laches defense.  SCA Hygiene Products Aktiebolag v First Quality Baby Products, LLC, No. 15-927 (March 21, 2017).  However, the laches defense may still be applied for a claim of equitable relief, such as permanent injunction.

The Court explained that because the six-year statute of limitations of 35 U.S.C. § 286 of the Patent Act is indistinguishable from the Copyright Act’s 17 U.S.C. § 507(b) statue of limitations, and because the Court recently held in Petrella v. Metro-Goldwyn-Mayer that the Copyright Act’s statue of limitations precludes a laches defense that can essentially override its bright-line rule, the same rationale should be applied for patent law.

At its inception, laches was intended to be a gap-filler doctrine to address case-specific circumstances where a statutory bar did not seem fit, but with the existence of bright-line rule for the statute of limitations, there no longer exist a gap to be filled.

Therefore, parties on both sides of a patent infringement case must now adhere to the bright-line rule of six years for the statute of limitations and any pre-suit discussions must take into consideration that a laches defense that is inconsistent with the statute of limitations is no longer a viable defense.

Federal Circuit Clarifies That Certain Mathematical Equation-Based Systems Are Not Abstract Ideas If They Use Unconventional Configurations and/or Only Claim Application of Particular Configurations

Takeaway: When claiming an invention that may be tied to and/or are applications of physics or laws of nature, one should try to describe that “unconventional” configuration of any known elements and also focus the claims on the application of a principal based on a particular configuration of elements solving a technical problem.

The Federal Circuit reversed a Court of Federal Claim’s decision that claimed that an inertial tracking system was non-patentable subject matter because it was directed at an abstract idea.  Thales Visionix Inc. v. United States, No. 15-5150 (Fed. Cir. Mar. 8, 2017),

The claims of the patent at issue comprised a first sensor of a tracked object, a second sensor on a moving reference frame, and an element that receives signals from both sensors in order to determine an orientation of the tracked object in relation to the moving reference frame.

The prior art focused on measuring the inertial changes in relation to the Earth and because the present invention measured changes in relation to the moving reference frame, it resulted in better accuracy.

The Court of Federal Claims found that the claims were directed to mere laws of physics because it was using “mathematical equations for determining the relative position of a moving object to a moving reference frame.” Thales Visionix Inc. v. United States 122 Fed. Cl. 245, 252 (2015). The court further explained that the equations represented “building block[s] of human ingenuity” based on “complex mathematical concept[s] and a solution to the problem of tracking two moving objects in relation to each other.”

However, the Federal Circuit compared the present case to Diamond v. Diehr, 450 U.S. 175 (1981) and found that just like Diehr, which found claims that improved prior methods of curing rubber by constantly measuring actual temperature as patentable, the present case used known equations in conjunction with “unconventional utilization of inertial sensors” and also only sought protection for the application of those unconventional configurations of sensors.

In finding that the Court of Federal Claims erred in its holding that the invention was unpatentable as directed to mere laws of physics, the Federal Circuit clarified yet another way to overcome similar 101 subject matter-based rejections.

Provisional Patent Applications Must Provide Written Description Support to Afford Provisional Filing Date

Takeaway: The Patent Trial and Appeal Board (“PTAB”) denied instituting an inter  partes review based on the patent owner’s challenge that the prior art used for asserting obviousness could not afford the provisional filing date because there was insufficient written description support and therefore should not qualify as prior art. Provisional Patent applications must sufficiently disclose the invention. 

In Forty Seven, Inc. v. Stichting Sanquin Bloedvoorziening, IPR2016-01529, Paper 13 (P.TA.B., Feb. 9, 2017), the PTAB agreed with the patent owner that the prior art reference used for an obviousness challenge should not be afforded the provisional patent application filing date because there was not enough written description support.

The petitioner of the inter partes review (“IPR”) of U.S. Patent No. 9,352,037 (“the ’037 patent”) asserted the IPR based on obviousness grounds, relying on WO 2009/091547 to Majetti (“Majetti”) as a primary reference. However in order for Majetti to be considered prior art, its effective filing date must be based on its priority application, U.S. Provisional Application No. 61/011,324, which predated the ’037 patent.

However, the patent owner argued that claim 10 of the provisional application did not provide sufficient written description to support claim 10 of Majetti.  The patent owner contended that claim 10 of Majetti is directed to a broad genus of agents for treating acute myeloid leukemia cancer stem cells and the provisional application failed to provide a representative number of species to adequately describe the genus.  Therefore, under 35 U.S.C. § 112, the claims of Majetti were not fully supported by the disclosure of the provisional application.

The PTAB applied Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1350 (Fed. Cir. 2010), which states that a “sufficient description of a genus . . . requires the disclosure of either a representative number of species falling within the scope of the genus or structural features common to the genus so that one of skill in the art can visualize or recognize the members of the genus.”  Therefore, Majetti was not entitled to the filing date of its provisional patent application and thus the PTAB denied the institution of the IPR.

PTAB Reversed For Obviousness Rejection of Method Patent for Treating Penile Fibrosis

Takeaway: An earlier priority date is not given to a patent application if the provisional application fails to disclose the necessary elements that are being relied on in the claims. Further, a court cannot draw a parallel between a cause of an illness with an effect of an illness if those two are not mutually exclusive in terms of claim construction.

The Federal Circuit reversed and remanded a PTAB finding of obviousness in an Inter Partes Review (“IPR”), asserting that there was no motivation to combine the prior art references because the prior art references were used for symptoms of erectile dysfunction ,while the present invention was used for penile fibrosis, which is only one of the many potential causes of erectile dysfunction.  L.A. Biomedical Research Inst. at Harbor-UCLA Med. Ctr. v. Eli Lilly & Co., No. 2016-1518, 2017 U.S. App. LEXIS 3582 (Fed. Cir. Feb. 28, 2017).

The first issue the court took on pertained to the priority of LA Biomed’s patent which claimed priority to a provisional patent application filed on October 22, 2002. However, because the specification of the provisional failed to disclose the dosage limitation of “up to 1.5 mg/mg/kg/day,” LA Biomed’s patent was not afforded the earlier priority date.

Next, in regards to claim construction, the Federal Circuit reviewed three separate terms, the first of which was the phrase “an individual with at least one of penile tunical fibrosis and corporal tissue fibrosis.”  The Board construed the term as “an individual hav[ing] symptoms that may be associated with penile fibrosis, such as [erectile dysfunction].” The Court stated that this was an overly broad reading of the phrase because erectile dysfunction can have causes other than penile fibrosis and penile fibrosis does not always result in erectile dysfunction.

Also, Federal Circuit stated that the limitation “arresting or regressing that at least one of the penile tunical fibrosis and corporal tissue fibrosis” would require that the method either halts the progression of or reverses penile fibrosis.  The court held that the phrase has patentable weight and adds efficacy because the patent claims only specify a maximum dosage level and a minimum treatment period, as opposed to an express dosage amount.

Further, for claim 1 of LA Biomed’s patent, LA Biomed argued that the limitation for a “continuous long-term regimen” along with the limitation for administering a PDE5 inhibitor “up to 1.5 mg/kg/day for not less than 45 days” was to give the term “continuous long-term” to mean that the drug concentration in the patient’s body must be at a “constant level” or “steady state” concentration. The court rejected this argument because the patent never mentions such a requirement.

Lastly, in terms of obviousness for combining the prior art references, the Federal Circuit concluded that because the references relied on by the PTAB to render the patent obvious were based on treatments of erectile dysfunction, it has not been shown that it would be obvious to use a long-term continuous treatment using PDE5 inhibitors to achieve arrest or regression of penile fibrosis.

As such, the Federal Circuit reversed and remanded the case.

Be Wary When Registering Black-and-White Trademarks Abroad

Takeaway: In the United States, filing a trademark registration for a logo and presenting it in black and white allows the trademark owner to use the mark in any color.  However, that is not always the case abroad, so trademark owners should also check with local counsel for rules pertaining to how the presentation of color is treated in foreign jurisdictions.

In numerous countries, filing a black-and-white registration for a trademark may result in protection for only the black-and-white version of the mark.  This is the case in the EU, Thailand, and Kazakhstan as well as other countries (although this is a case-specific issue, so always check with local counsel).

Further, some countries even require that the use of the trademark be in black-and-white or else the registration may be subject to cancellation on non-use grounds.

Therefore, when beginning to expand internationally, be sure to ask about the color requirement in the countries you are planning to expand to, as one of your pre-filing questions with local counsel.

Recent Developments Concerning the Federal Court

Photo from Chicago Sun-Times

Excerpts from the Federal Bar Association’s February Government Relations Update.
Full update can be found here: http://www.fedbar.org/Advocacy/Legislative-Update.aspx
“The first three weeks of the Trump Administration have been bold and turbulent, giving birth to many of the actions that candidate Trump promised during his campaign, with 20 executive orders in ten days.  One of them, imposing a temporary travel ban on the flow of immigrants and refugees into the United States, precipitated the first major legal challenges to the new Administration.  The President nominated Circuit Judge Neil Gorsuch to become associate justice to the United States Supreme Court, and Sen. Jeffrey Sessions was confirmed by the Senate as Attorney General.  Judicial vacancies on the federal bench remained at high levels. [1]

The Gorsuch Nomination

President Trump on January 31 nominated Judge Neil M. Gorsuch of the Denver-based Tenth Circuit Court of Appeals to the United States Supreme Court, succeeding the late Justice Antonin Scalia.  Now it is up to the Senate again to give its “Advice and Consent,” and Senate Judiciary Committee Chairman Chuck Grassley (R-IA) has convened hearings on the nomination in mid-March, in line with the timeline since the 1980’s for Supreme Court nomination hearings. Since 1900, the Senate has given hearings to every Supreme Court nominee except for two who withdrew and most recently Judge Merrick Garland, nominated by President Obama.

The Senate unanimously approved Judge Gorsuch’s nomination to the Tenth Circuit in 2007, but a contentious path to confirmation yet remains.  Democratic opposition, compounded by frustration over Republican obstruction over the Garland nomination last year, will more likely delay confirmation than defeat it.  If confirmed, the 49-year old appeals court judge would be the first conservative addition to the Supreme Court in a decade and the youngest justice since Clarence Thomas.  Judge Gorsuch also would be the first former law clerk to serve on the bench alongside his or her old boss, Justice Anthony Kennedy.

Whether Senate Republicans invoke the so-called nuclear option and remove the 60-vote requirement on ending filibusters on Supreme Court nominations is unclear.  Democrats ended the requirement on district and circuit nominations in November 2013 when they controlled the Senate.  President Donald Trump on February 1 said Senate Republicans should “go for it” and invoke the nuclear option.

Nationwide Federal Court Circuit and District Judicial Vacancies
As of February 13, in addition to an open Supreme Court seat, 117 Article III judicial vacancies await nomination by the President, including 18 seats on the federal courts of appeals and 91 federal district court seats. That is more than twice as many vacancies that existed when President Obama took office in 2009, providing considerable opportunity to the new Administration to populate and reshape the federal bench.

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