By now, you have undoubtedly received ten thousand E-mails informing you of the Federal Circuit’s recent decision in Akamai Technologies, Inc. v. Limelight Networks, Inc. in which the Court continued to wrestle with the notion of divided infringement under 35 U.S.C.§ 271. In short, the Court refused to extend a new joint tortfeasor approach to direct infringement under 35 U.S.C. § 271(a), noting that to do so would make the other indirect infringement provisions of §§ 271(b) and (c) redundant. Instead, the Court reiterated that for direct infringement under §271(a) to occur, all steps of a method claim must be performed by or attributable to a single entity.
When can the combined acts of multiple parties be “attributed” to a single party? Yet again, the Court pointed to a “mastermind” theory in which one party exercises “direction or control” over the entire process to the point that every step is attributable to the controlling party.
The Court also outlined when vicarious liability might trigger direct infringement under §271(a): (1) principal-agent relationships; (2) contractual relationships; and (3) joint enterprises. The most interesting was “joint enterprise,” which occurs when there is an agreement between members sharing a “community of pecuniary interest” in a “common purpose,” with each having an “equal right to voice direction of the enterprise,” thereby giving “equal right of control.” What’s important to note is that none of these scenarios involved arms-length seller-customer relationships.
Since the Supreme Court last decided Akamai, the safest bet for patent prosecutors has been to craft claims to capture infringing activity by a single party. The Federal Circuit’s comments that “the claim drafter is the least cost avoider of the problem of unenforceable patents due to joint infringement” only reinforce this approach. Claiming the acts of your customers is rarely beneficial and, in light of the Federal Circuit’s recent decision, will not make your infringement case any easier.
Much has been written about the Supreme Court’s recent Akamai
decision. However, a more interesting topic is whether the Federal Circuit will revisit its standard for direct infringement of a method claim.
, the Federal Circuit held that for direct infringement of a method claim to occur, all of the claimed steps have to be attributable to a single actor, either by performing them itself or by directing or controlling others to perform them. In Akamai
, the Supreme Court appeared to question this standard, stating that “[a]ssuming without deciding that the Federal Circuit’s holding in Muniauction is correct…” and allowing the Federal Circuit the opportunity “to revisit the § 271(a) question if it so chooses.” Even though it acknowledged that under the Federal Circuit’s standard, a party could evade liability by dividing up performance of the steps of a method claim with another which the party did not direct or control, the Supreme Court was unwilling to create a new standard for indirect infringement that did not have a statutory basis.
Until the Federal Circuit changes the law, the Muniauction
standard stands- i.e.
, there can be no direct infringement of a method claim if all the steps are not attributable to one actor. More importantly, if there is no direct infringement, there can be no indirect infringement.
Patent prosecutors should keep this in mind when crafting claims and clients should consider this when they participate in a multi-step process. Claims should be drafted to ensnare a single actor and clients should evaluate whether one entity directs or controls an entire process when a method patent claim is at issue.
In case you have been on vacation for the past two weeks, here is a quick update of some major developments in the intellectual property arena. Depending on your position, they may represent the “good,” the “bad” or the “ugly.”
Alice Corporation Supreme Court Decision
Yesterday, in the Alice Corporation
case, the Supreme Court provided further comment on patent-eligible subject matter under 35 U.S.C. § 101 in the computer software context. The patent claims-at-issue were directed to “a computerized scheme for mitigating ‘settlement risk.’” The Court held, in part, that “the claims at issue [were] drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.” The takeaway is that merely reciting a computer system configured to implement an abstract concept will not be patent-eligible subject matter.
As previously reported, Federal Circuit Judge Randall Rader stepped down as chief judge last month in the midst of criticism over his controversial e-mail. Last week, Judge Radar announced
that he will be retiring from the bench at the end of the month. He intends to teach.
Washington Redskins Trademarks Cancelled
On June 18, 2014, the Trademark Trail and Appeal Board (“TTAB”) in the Amanda Blackhorse
matter cancelled Pro-Football, Inc.’s trademark registrations consisting in whole or in part for the term REDSKINS for professional football-related services. The marks were cancelled because they were found to be disparaging to Native Americans and as such, were obtained in violation of 15 U.S.C. §1052(a), which prohibits “registration of marks that may disparage persons or bring them into contempt or disrepute.” The TTAB was quick to point out that its decision solely related to the right to register these marks and does not deal with the right to use such marks. This is an important distinction as this case will surely be appealed and does not extinguish any common law enforcement rights that may exist. Thus, if you are thinking about starting your own REDSKINS clothing line, you might want to rethink that decision.
Yesterday, it was reported
that Tesla Motors has made the decision to allow anyone to use its patented technology. Expressing frustration with the evolution of long range electric cars, it hopes that this move will spark innovation. Tesla allegedly owns about 200 patents in this area, all of which are available for use.
Interestingly, this move also coincides with Tesla’s opening of the country’s largest lithium-ion battery plant. There’s speculation that Tesla may be trying to create other customers for its batteries with this bold move.
So, what happens if Tesla’s strategy backfires? Will it ever be able to enforce these patents once Pandora’s Box has been opened to allow free, good faith use by all? It seems like a risky decision.
The Federal Circuit Court of Appeals announced
that Chief Judge Randall R. Rader will be stepping down as Chief Judge on May 30, 2014. Judge Sharon Prost will succeed Judge Rader, who will remain active on the bench.
The Federal Circuit is a unique court of appeals because its jurisdiction is not based on its geographic location, but rather on particular subject matter. It is most well known for having exclusive jurisdiction
over patent appeals from all U.S. District Courts.
Nominated in 1990 by President Bush, Judge Rader has been one of the more outspoken and influential judges in the area of patent law. Although there are rumors being circulated as to why Judge Rader has stepped down, we should remember that there are always two sides to every story. Judge Rader could have remained within the Beltway all of these years, but, instead, he made an effort to assist practitioners across the country. We should keep this in mind in the coming weeks.
For the last 1 ½ years, we have heard about proposed U.S. legislation that is aimed at discouraging baseless patent troll lawsuits. Yet, nothing has been signed into law. We’ve also seen various state Attorney Generals’
offices take action, panels of federal judges
urging steps to heighten the pleading requirements for such suits and even FTC commissioners
weighing in on the issue.
Yesterday, the Obama Administration
announced various initiatives designed to improve patent quality and “combat patent trolls.” They have been touted as a renewal of President Obama’s call for patent reform from his State of the Union address. The White House highlighted five current initiatives ranging from “promoting transparency” (e.g.
, updating ownership information during USPTO proceedings) to “making patents clear” (e.g.
, helping USPTO examiners more effectively examine so-called “functional claims” to ensure that patent claims are clear). The White House further announced three new initiatives that are allegedly designed to “strengthen the quality and accessibility of the patent system.”
While providing more resources to USPTO examiners is always welcomed, it is doubtful that any of these initiatives will have any impact on curbing troll activity. The real power in troll cases comes from the fact that cases can be brought on very thin allegations of infringement and it is not commonplace for defendants to recoup their attorneys’ fees for defending against such actions. There is not a uniform set of rules that apply to all patent infringement cases in federal court and as such, plaintiffs can try to game the system by bringing cases in jurisdictions that are either unfamiliar with complex patent litigation or have no rules governing such cases or both. The end result is that defendants can be faced with having to pay hundreds of thousands of dollars in needless discovery (primarily related to electronic information, such as e-mail, and archived data, etc.) right out of the starting gate in those jurisdictions that do not have a phased approach to patent litigation. Even if the Federal Rules of Civil Procedure are amended to required more detailed patent litigation claims, patent troll activity may not necessarily decrease as crafty counsel will figure out language to meet the bare minimum that is required. What would have an impact is legislation that awards attorneys’ fees to the prevailing party (much like in the copyright context- 17 U.S.C. § 505). This would provide the ultimate disincentive to bring frivolous cases. It will be interesting to see if any meaningful measures are actually implemented in the near future as many people seem to think that there is a problem with the current system.
Most people are now aware of the changes by the American Invents Act to the inter partes
process for reviewing patents. There are no longer inter partes
reexaminations. Instead, parties can petition for inter parties
reviews. Generally speaking, a petitioner has 1 year from the date that it is served with “a complaint alleging infringement” to file a request for inter partes
review. 35 U.S.C. § 315(b). Until the recent decision
in St. Jude Medical, Cardiology Division, Inc. v. Volcano Corporation
, it was unclear as to whether “a complaint” also included a counterclaim of infringement by the patent owner. Earlier this month, the Patent Trial and Appeal Board (“Board”) confirmed that it does.
St. Jude Medical sued Volcano for infringement of its own patents. Volcano, in turn, counterclaimed with a charge of infringement of U.S. Patent No. 7,134,994 (“the ‘994 Patent”) in September of 2010. Two years later, the parties dismissed all claims relating to the ‘994 Patent with prejudice. Nonetheless, in April of 2013, St. Jude Medical petitioned for an inter partes
review of the ‘994 Patent. The Board denied the petition for falling outside the 1 year time limit imposed by 35 U.S.C. § 315(b).
The Board recognized Congress’ intent behind inter partes
reviews, which is to “‘provid[e] quick and cost effective alternatives to litigation.’” It found that a counterclaim was tantamount to a complaint. More importantly, it held that that Section 315(b) applies even when a complaint is later dismissed with prejudice.
Now, it is clear. If you want to petition for inter partes
review, you need to stay on top of the 1 year deadline. It doesn’t matter if the counterclaim is ultimately dismissed with prejudice. The clock continues. Companies should make sure to docket such deadlines.
Here is the latest in Activision’s quest to use Farney Daniels as its patent litigation counsel. (For those unfamiliar with the issue, see my prior postings
, which discuss various states’ reactions to this firm’s efforts to enforce patent rights for a particular patent troll across the country.) This past Monday, the Nebraska U.S. District Court Judge granted Activision’s request for a preliminary injunction against the Nebraska AG’s Office. Specifically, the Court prohibited the AG from:
[T]aking any steps to enforce the cease and desist order issued to Farney Daniels on July 18, 2013, in any manner that would prevent or impede the Farney Daniels firm from representing Activision in connection with licensing and litigation of U.S. patents owned by Activision with respect to companies based in, or having operations in, Nebraska.
However, this injunctive relief has no bearing on the AG’s ability to continue to investigate Farney Daniels for violations of the State’s Consumer Protection Act and the Court reserved the AG’s right to revisit the injunction should its investigation uncover a claim of bad faith by Farney Daniels.
Some may tout this as a great victory for Farney Daniels, but it wasn’t a great surprise. The Nebraska AG’s Office conceded that it wouldn’t oppose Farney Daniels attorneys’ requests to appear in the Activision matter because that matter pre-dated its cease and desist order, which only applied to future actions. Although Farney Daniels can now file new actions on behalf of Activision against Nebraska-based entities, it’s unclear that there is any desire to do so. Further, the Nebraska AG is still free to investigate any new claim asserted by Farney Daniels. As such, this firm will continue to operate under the watchful eye of the State and is not out of the woods yet.
As most of you have now realized, there has been a government shutdown. However, the USPTO reports
the following about its continued operations:
USPTO Operation Status
During the general government shutdown that began October 1, 2013, the United States Patent and Trademark Office will remain open, using prior year reserve fee collections to operate as usual for approximately four weeks. We continue to assess our fee collections compared to our operating requirements to determine how long we will be able to operate in this capacity during a general government shutdown. We will provide an update as more definitive information becomes available.
Should we exhaust these reserve funds before the general government shutdown comes to an end, USPTO would shut down at that time, although a very small staff would continue to work to accept new applications and maintain IT infrastructure, among other functions. (Should it become necessary for USPTO to shut down, details of the agency’s plan for an orderly shutdown is [sic] available on page 78 of the United States Department of Commerce’s shutdown plan.) Any new or updated public information related to USPTO operations during the government shutdown will be placed on this page.
As you can see, the USPTO is expending its prior year’s reserves to continue to operate for the next month. Applications are still being accepted and according to the USPTO, it will maintain a skeleton crew to accept new applications even in the event of an actual shutdown. I wouldn’t want to take the chance and would file any contemplated patent applications as soon as possible. Also, I would try to schedule any desired patent examiner interviews sooner than later.
As I previously posted
, Activision filed a Complaint in U.S. District Court challenging the Nebraska Attorney General’s Office’s prior cease and desist letter to a law firm called Farney Daniels. Last week, the Nebraska Attorney General’s Office fought back in its quest to curb troll activity when it filed its Brief
in opposition to Activision’s Complaint and Motion for Preliminary Injunction. The AG’s Office asked the Court to dismiss the Complaint for, among other things, failure to state a claim and/or to deny Activision’s preliminary injunction request.
One of its stronger arguments appears to be the Court’s lack of subject matter jurisdiction. The AG’s Office points out that its cease and desist letter was to Farney Daniels and not to Activision. It also noted that its prior prohibition pertained to “new” matters and Activision’s matter was filed 6 days before the AG’s Office even issued its letter to Farney Daniels. Thus, there is no “case or controversy” between the parties.
The AG’s Office also argued that Activision couldn’t meet its preliminary injunction burden of showing that it would likely succeed on the merits. It creatively argued that Activision cannot show that Farney Daniels’ actions didn’t constitute unfair or deceptive trade practices under Nebraska state law. If this case doesn’t get dismissed for lack of subject matter jurisdiction, it will be interesting to see how the Court analyzes Farney Daniels’ patent enforcement efforts under the Nebraska Consumer Protection Act.