Posts in US Supreme Court

The Supreme Court issued a split 5-4 decision earlier today, in which a plurality of the Court agreed with the U.S. Court of Appeals for the Federal Circuit (CAFC) that the structure of the Patent Trial and Appeal Board (PTAB) under the America Invents Act (AIA) has resulted in Administrative Patent Judges (APJs) being unconstitutionally appointed principal officers, but took a different approach than the CAFC to fixing the problem. Some were surprised by the conservative Court’s choice to sever the statute and ultimately hand the United States Patent and Trademark Office (USPTO) Director—a political appointee—power to review final decisions, though it was not surprising that they attempted to fashion a solution that would preserve the PTAB and inter partes review (IPR) system. Justice Gorsuch, in his partial dissent, said that he would have identified the constitutional violation, explained his reasoning, and simply “set aside” the PTAB decision at issue. Instead, said Gorsuch, “Effectively, the Court subtracts statutory powers from one set of executive officials and adds them to another.”

While the decision is not likely to have any immediate impact, it does raise questions about implications down the line, including how the USPTO and its new Director will address the ruling. Below, industry stakeholders consider what the Court did (and did not do) and provide their take on this highly anticipated holding.

The Supreme Court has issued its ruling in Arthrex v. Smith & Nephew, taking a different approach to curing the statute than did the U.S. Court of Appeals for the Federal Circuit (CAFC) in 2019, and ultimately vacating and remanding the case back to the Acting Director of the U.S. Patent and Trademark Office (USPTO). While the CAFC held that the statute could be severed and rendered constitutional by making Patent Trial and Appeal Board (PTAB) Administrative Patent Judges (APJs) removeable at will, the Supreme Court said that remedy was not sufficient. The Court said: “[R]egardless whether the Government is correct that at-will removal by the Secretary would cure the constitutional problem, review by the Director better reflects the structure of supervision within the PTO and the nature of APJs’ duties.”

iLife Technologies last week petitioned the U.S. Supreme Court to hear its appeal of a January 2021 U.S. Court of Appeals for the Federal Circuit decision upholding a district court’s finding of patent ineligibility for claim 1 of iLife’s U.S. Patent No. 6,864,796. Claim 1 of the ‘796 patent “is directed to a motion detection system that evaluates relative movement of a body based on both dynamic acceleration (e.g., vibration, body movement) and static acceleration (i.e., the position of a body relative to earth).” iLife had accused Nintendoof infringing the patent through sales of products such as Wii Sports, Wii Sports Resort, Wii Club Sports and Mario Kart 8.

Alice in Wonderland syndrome is a medical condition for which there is no known treatment. It causes a disturbance of perception and has a serious impact on the life of those afflicted, and I suspect on those who surround those afflicted. Of course, those in the patent community who work on software implemented innovations know all of this too well. Think this is a joke? Sadly, no. Alice in Wonderland syndrome is a real thing.

As I write this, the United States Supreme Court is deciding whether to grant certiorari in the American Axle case, setting the stage for another sea change in patent eligibility law. In 2020, the Federal Circuit issued a puzzling opinion penned by Judge Dyk finding American Axle’s method of manufacturing drive shaft assemblies (U.S. Pat. No. 7,774,911) to be a patent in-eligible law of nature. Specifically, claim 22 of the ‘911 patent recites “tuning a mass and a stiffness of at least one liner” and inserting the liner into a drive shaft such that it damps certain vibrational modes. Fig. 4 shows the liner (204) at the center of the dispute in green.

On June 10, the U.S. Court of Appeals for the Federal Circuit (CAFC) transferred Ronald Chandler et. al. v. Phoenix Services, LLC to the United States Court of Appeals for the Fifth Circuit due to lack of jurisdiction, since the case did not arise under the patent laws of the United States. The CAFC previously affirmed a holding that U.S. Patent No. 8,171,993 (‘993 patent) was unenforceable due to inequitable conduct because Heat On-The-Fly, the company that filed for the ‘993 patent, knowingly didn’t disclose prior uses of the process. The plaintiffs, Chandler Manufacturing and Supertherm Fluid Heating Services (collectively Chandler), alleged that the defendant, Phoenix Services, continued enforcement of the ‘933 patent on their website and that this conduct constituted an antitrust violation under Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965), a 1965 Supreme Court decision that held that enforcement of a patent procured by fraud on the United States Patent and Trademark Office (USPTO) can be the basis for an antitrust claim.

On June 13, 2016, the Supreme Court decided Halo Elecs., Inc. v. Pulse Elecs., Inc., addressing standards for recovery of enhanced damages for patent infringement pursuant to Section 284 of the Patent Act, under which a “court may increase the damages up to three times the amount found or assessed.” In Halo, the Supreme Court rejected damages-related requirements imposed by In re Seagate Tech., LLC, a 2007 decision from the U.S. Court of Appeals for the Federal Circuit. With patentee litigants freed from what the Supreme Court called Seagate’s “inelastic constraints” in favor of a totality-of-circumstances approach, a consensus developed that Halo would facilitate recovery of enhanced damages. Statistics suggest alignment with that view.

The United States Supreme Court today ruled that a former police sergeant did not flout Section (a)(2) of the Computer Fraud and Abuse Act (CFAA) because that provision “does not cover those who…have improper motives for obtaining information that is otherwise available to them.” The opinion, authored by Justice Amy Coney Barrett, contradicts the U.S. government’s reading of the statute. Three justices dissented from the majority.

Today, district courts evaluate whether patent infringement complaints satisfy the plausibility standard under Fed. R. Civ. P. 8 and the Supreme Court’s Iqbal–Twombly standard. Five years after abrogation of Form 18 (a sample patent infringement complaint that was said to be plaintiff-friendly) and nearly 15 years after Twombly, jurisdictional analyses have diverged. Fed. R. Civ. P. 12(b)(6) and 12(c) motions have developed into a targeted, widely-used tactic. Both motions provide defendants with a low-risk, high-reward opportunity. As plaintiff or defendant, start by evaluating the possible-to-plausible pleading spectrum.

On Tuesday, June 1, the U.S. Supreme Court granted a petition for writ of certiorari filed by fabric designer Unicolors seeking to challenge the U.S. Court of Appeals for the Ninth Circuit’s ruling last May that reversed a jury verdict finding Swedish multinational clothing firm Hennes & Mauritz (H&M) liable for copyright infringement. The district court eventually entered a judgment awarding more than $500,000 to Unicolors. The case will ask the nation’s highest court to decide whether the Ninth Circuit properly construed the language of 17 U.S.C. § 411 in determining that the district court was required to refer Unicolors’ copyright registration to the U.S. Copyright Office because it contained inaccurate information with no evidence that the inaccurate information contained any indicia of fraud or material error regarding the work covered by the copyright registration.

On Wednesday, May 19, the response brief of the Federal Trade Commission (FTC) was filed with the U.S. Supreme Court in AbbVie v. FTC. The petition for writ of certiorari filed by AbbVie asks the nation’s highest court to decide whether lower courts erred in finding that AbbVie’s Hatch-Waxman district court litigation involving patents covering its AndroGel testosterone treatment met the sham litigation exception to Noerr-Pennington doctrine. The FTC’s brief urged the Supreme Court to deny AbbVie’s petition for writ, a decision that arguably could cast into doubt pharmaceutical firms’ ability to enforce their patent rights under decades-old legislation meant to balance the economic interests of innovative drug developers with the public interests served by generic drug makers.

On April 5, the U.S. Supreme Court held 6-2 that Google’s copying of 11,500 lines of code from the Java SE Application Programming Interface (API) in creating its Android operating system was a fair use. The ruling ends a decade-long battle between Google and fellow software giant Oracle, which purchased Java developer Sun Microsystems in 2010. It also overturns the Federal Circuit’s 2018 ruling in favor of Oracle, which could have led to a multi-billion dollar award against Google. Oracle Am., Inc. v. Google LLC, 886 F.3d 1179 (Fed. Cir. 2018). A recent decision from a district court in the Western District of Pennsylvania emphasizes the relevance of the Supreme Court decision in Google v. Oracle. While the case predates the Google decision, it brings up some important issues that were sidestepped in the opinion itself but were raised in the arguments presented in briefs and oral arguments for the Google case.

Last week, the Regulatory Transparency Project of the Federalist Society released a paper titled “Holding States Accountable for Copyright Piracy.” The paper was authored by Alden Abbott, Kevin Madigan, Adam Mossoff, Kristen Osenga, and Zvi Rosen and noted that the U.S. Supreme Court has recognized that “copyright is the engine of free expression that supplies the economic incentive to create and disseminate ideas.” However, citing Allen v. Cooper, the paper explained that a recent Supreme Court decision has jeopardized the U.S. copyright system by “severely limiting” the ability of creators and copyright owners to hold states accountable for infringement by holding that states can escape accountability for intentional acts of infringement by invoking the doctrine of sovereign immunity. The paper further emphasized the injustice that Allen has brought forth, since current law allows states to claim the benefits of copyright protection for their own works and works transferred to them, while escaping liability when they infringe the copyrights of others. Solutions were proposed to level the playing field, including Congress enacting a law validly abrogating state sovereign immunity and waiving sovereign immunity for states acting as market participants.

Could the United States Supreme Court once again weigh in on Section 101 subject-matter eligibility? With the Court having asked for the views of the Solicitor General yesterday, it seems increasingly likely. Late in 2020, patentee American Axle & Manufacturing, Inc. (American Axle) petitioned the Supreme Court for writ of certiorari, arguing that the Federal Circuit is “at a loss as to how to uniformly apply § 101.” Pet. for Writ of Certiorari at 3 (Dec. 28, 2020). Organizations such as the New York Intellectual Property Law Association, the New York City Bar Association, and the Chicago Patent Attorneys organization have all submitted amicus briefs supporting American Axle’s ask. On March 1, former USPTO Director David Kappos, former Federal Circuit Chief Judge Paul Michel, and Senator Thom Tillis from North Carolina also jointly filed an amicus brief, arguing that the “disparate and inconsistent application” of the current Section 101 jurisprudence has led to “an unpredictable and unstable” patent system. Br. in Support of Am. Axle’s Pet. for Writ of Certiorari at 5 (Mar. 12, 2021).

On April 22, 2021, the United States Supreme Court issued a decision in Carr v. Saul, which dealt with a constitutional Appointments Clause challenge to Administrative Law Judges (ALJs) under the Social Security Administration (SSA). In particular, the issue in Carr was whether claimants for disability benefits had forfeited their Appointments Clause challenges by failing to raise those constitutional challenges before the agency. The Supreme Court has now ruled that the claimants’ challenges were not forfeited. The decision favoring the claimants was unanimous, although the Court was not quite unanimous on the legal bases for the ruling. The question to be addressed in this essay is what effect, if any, Carr has on practice before the United States Patent and Trademark Office (USPTO); and in particular, whether constitutional challenges must be raised before the agency lest those challenges be forfeited.