U.S. Supreme Court Will Decide Key IP Cases in 2014

by Bond Schoeneck & King PLLC

IP continues to be a hot area of the law at the Supreme Court, with many IP cases recently argued or scheduled for argument in 2014.  Below is a quick glimpse at several of these cases, including the potential impact of decisions in the cases.

Alice Corp. Pty., Ltd. v. CLS Bank International

  • Issue to be decided:  Whether patent claims to computer-implemented inventions are directed to patent-eligible subject matter.

A highly fractured decision from the Federal Circuit in 2013 affirmed that the claims at issue in Alice – which were directed to a computerized method, a computer readable storage medium containing program code, and a computer system to implement that code – were patent ineligible subject matter.  The en banc panel of ten judges issued seven different opinions.  Seven judges found that the method claims and computer readable medium claims were not patent eligible.  Five judges found that the computer systems claims were not patent eligible.  The panel did not agree on a standard to determine whether a computer-implemented invention is a patent ineligible, abstract idea.

Regardless of how the Supreme Court rules on these claims, the decision will have a significant impact on the software industry and could potentially affect the validity of thousands of existing software patents.  Indeed, the potential impact is emphasized by the number of software-related groups that have submitted amicus briefs in this case.  Oral argument in the case was held on March 31, 2014, and a ruling is expected in June.

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

  • Issue to be decided:  Does inducement require direct patent infringement by another?

The Federal Circuit recently ruled en banc that a defendant could be liable for inducing patent infringement of a method claim even if no single entity had committed direct infringement under Section 271(a).  Instead, multiple parties could collectively perform all the steps of the method.  The Federal Circuit’s decision effectively overruled BMC Resources, Inc. v. Paymentech, L.P. which held that inducement required that a single party commit all the acts constituting infringement.

Although the Federal Circuit’s ruling prevents sophisticated infringers from avoiding liability by creatively dividing the steps of infringement, a single-party standard of direct infringement was a clearer standard for understanding inducement.  A ruling by the Supreme Court that a defendant is liable for inducing patent infringement under a multiple party theory could open the doors for infringement claims that were not viable under the BMC Resources ruling.

Nautilus, Inc., v. Biosig Instruments, Inc.

  • Issue to be decided: What is the standard for patent indefiniteness?

The claims at issue in Nautilus use the claim term “spaced relationship” to describe the positioning of two electrodes with respect to one another.  The Federal Circuit reversed the district court’s decision that the claim was invalid for indefiniteness, holding that the term was not “insolubly ambiguous” when considered from the perspective of a person of skill in the art reading the specification.

Before the Supreme Court is the issue of whether the current standard for definiteness – whether any ambiguity in the claim’s scope is not “insoluble” – is the proper standard when 35 U.S.C. § 112 requires that the claims “particularly point[] out and distinctly claim[] the subject matter” of the invention.  Nautilus argues that a claim with more than one reasonable interpretation does not satisfy this statutory requirement.  A ruling changing the current standard could impact the validity of numerous issued patents.

Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc.

  • Issue to be decided:  Should claim construction be reviewed de novo on appeal?

On appeal, the Federal Circuit reviews claim constructions de novo without deference to a district court’s ruling.  In Teva, for example, the Federal Circuit performed a de novo construction of the meaning of claim term “molecular weight” and subsequently reversed the district court. Accordingly, the Supreme Court will decide if the de novo standard applies to claim construction, or whether the more deferential standard of review for clear error applies.

The Supreme Court’s decision will have a substantial impact on appeals at the Federal Circuit.  Currently, the Federal Circuit adopts new constructions in a significant percentage of all claim construction rulings it reviews.  This has resulted in an atmosphere of uncertainty in the patent litigation field, and has substantially increased the expense associated with patent litigation.  A holding that claim construction is entitled to deference will undoubtedly increase the likelihood of settlement following claim construction, for example, and could potentially lower patent litigation costs.

American Broadcasting Cos., Inc. v. Aereo, Inc.

  • Issue to be decided: When does an internet transmission count as a “public performance”?

Aereo uses thousands of dime-sized antennas, one for each customer, to capture and stream local broadcast television over the internet without a license or paying fees to the copyright holders. Broadcasters allege that this constitutes a “public performance,” while Aereo argues that each transmission is a private performance because the audience for that transmission is only the user assigned to the individual antenna.  On appeal of a decision not to issue a preliminary injunction, the Second Circuit agreed with Aereo and concluded that the transmission was not a public performance.

Aereo is yet another battle in the war between new media and old media, and the Supreme Court’s decision will have a significant impact on that war. Broadcasters have threatened that if Aereo’s model is upheld, they will stop broadcasting over airwaves and switch entirely to a subscription model.

POM Wonderful LLC v. The Coca-Cola Company

  • Issue to be decided:  Who has standing to challenge a food label as false under the Lanham Act.

POM alleges that Coca-Cola sells a pomegranate blueberry juice blend that is only 0.5% pomegranate and blueberry juice, and that this product will mislead consumers in violation of the Lanham Act and California’s false advertising and unfair competition laws.  Section 43(a) of the Lanham Act, for example, authorizes actions for use of a false or misleading description or representation “in connection with any goods.”  However, the Ninth Circuit barred POM’s claims, holding that the Food and Drug Administration has exclusive authority to file claims for violations of the Food, Drug and Cosmetics Act (FDCA), which regulates the labels on juices and many other items.

A ruling by the Supreme Court that a private party can bring a Lanham Act claim challenging a product label regulated under the FDCA could open the door for similar challenges, although the Court may be leaning this way.  Indeed, Chief Justice John Roberts noted during oral argument that he didn’t know why it was impossible to have a label that fully complied with FDA regulations and couldn’t also be misleading under the Lanham Act.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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