Source: https://www.mwe.com/en/thought-leadership/publications/2008/09/ip-update-vol-11-no-9-september-2008
Timestamp: 2018-04-24 18:04:14
Document Index: 799656661

Matched Legal Cases: ['§ 253', '§ 102', '§ 102', '§ 271', '§ 355', '§ 102', '§ 1337', '§ 337', '§ 337', '§ 287', '§ 251']

IP Update, Vol. 11, No. 9, September 2008 | Publications | Thought Leadership | McDermott Will and Emery
IP Update, Vol. 11, No. 9, September 2008
Design Patents / Infringement / Ordinary Observer Test - Design Patents—The “Point of Novelty” Test Is Jettisoned
Patents / Inequitable Conduct - Federal Circuit Provides Detailed Guidance on Inequitable Conduct Analysis
Patents / Declaratory Judgment Jurisdiction - Federal Circuit Elaborates on Declaratory Judgment Jurisdiction Analysis in a Post-MedImmune World
**WEB ONLY** Patents / Case or Controversy Requirement - Dismissal of Declaratory Judgment Counterclaims in Fosamax Case Vacated as Moot
Patents / On-Sale Bar - Charging “Beta Testers” Triggers the On-Sale Bar; Does Not Qualify as Experimental Use
Patents / Hatch-Waxman - Even After Patent Has Expired, District Court Has Jurisdiction to Set Exclusivity Date
Patents / Doctrine of Equivalents / Willfulness - “Curved” and “Straight” Are Equivalent Under the Doctrine of Equivalents
**WEB ONLY** Patent / Claim Construction / ITC - ITC Decision Floors Respondents
**WEB ONLY** Patents / Damages - It’s Not How Quickly You Design-Around; It’s How Quickly You STOP Infringing!
Patent / Method Claims - Calling All Patentees: Disclose Potential Alternatives for Claimed Steps in a Method Claim
Patents / Reissue Applications - Broadened Reissue Application Invalid if Filed More than Two Years After Original Patent Issued
Patents / Litigation - Recusal Challenge Based on Technical Intern’s Prior History Must Evidence a High Level of Partiality
Patents / Claim Construction - Narrow Claim Construction Where Claim Could Have Been Drafted More Clearly
Patents / Claim Construction - Federal Circuit Reinterprets Claims Based on Intrinsic Evidence
Trademark / Infringement - Trademark Owner Retains the Right to Sue for Infringement
Copyright / Open Source - Enforceability of Open Source Copyright Licenses: Remedies Not Limited to Breach of Contract
Copyright / Infringement - Buffer Question: How Long Is "Transitory"?
Design Patents / Infringement / Ordinary Observer Test
Design Patents—The “Point of Novelty” Test Is Jettisoned
In an en banc decision addressing the ordinary-observer test and following point-of-novelty test for design patent infringement, the U. S. Court of Appeals for the Federal Circuit held that in accordance with the Supreme Court’s Gorham decision that the ordinary observer test should be the sole test for determining whether a design patent is infringed. Egyptian Goddess, Inc. et al. v. Swisa, Inc. et al., Case No. 06-1562 (Fed. Cir., September 22, 2008) (Bryson, J.) (en banc).
The Federal Circuit granted an en banc rehearing in this case to address the appropriate legal standard to assess design patent infringement. The Federal Circuit asked the parties to address whether the point of novelty test should continue to be a test for infringement, whether the” non-trivial advance” test should be used to determine what design feature is a point of novelty and whether the district courts should perform claim construction (in design patent cases). In rendering its decision, the court had the benefit of 15 amicus curiae briefs.
Previously, at the district court, Egyptian Goddess (EGI) asserted that its point of novelty was a combination of four of the claimed design elements, i.e., the four sides of a claimed illustrated nail buffer with a square tubular cross section. However, the district court found that all elements were found in the prior art Nailco patent, except that in the prior art the nail buffer body was triangular rather than square. The district court granted summary judgment on the grounds that the accused Swisa nail buffers did not contain the point of novelty of Egyptian Goddess’s patent design, stating “[t]he only point of novelty in the [EGI design patent] over the Nailco [triangular design] patent is the addition of the fourth side without a pad.” The district court had found that no reasonable juror could conclude the EGI’s asserted point of novelty constituted “a non-trivial advance over the prior art,” which already disclosed nail buffers with square cross-sections. EGI appealed.
A panel of the Federal Circuit affirmed, concluding that the district court did not err in rejecting EGI’s asserted point of novelty as a matter of law. Over a strong dissent, the Federal Circuit held that the initial burden is on the patentee to “to present its contentions as to the points of novelty,” which can be either a single novel design element or a combination of elements that are known in the prior art. If the combination of known design elements constitute a point of novelty, the combination must be “a non-trivial advance over the prior art.” (See IP Update, Vol. 10, No. 9, published September 2007.)
Based largely on the dissent in the panel opinion, EGI sought en banc review, arguing that the point-of-novelty test should no longer be used as the second part of the test for design patent infringement. Rather, EGI argued that the Gorham test, which focused on an ordinary observer familiar with the prior art, would fulfill the point-of-novelty test. Swisa, on the other hand, argued that the point-of-novelty test was adopted by the Supreme Court in Whitman Saddle.
In considering the issue en banc, the Federal Circuit held that the point-of-novelty test should no longer be used in the analysis of a design patent infringement and rejected the non-trivial advance test. The Court then held that the Supreme Court’s Gorham ordinary observer test should be the sole test for determining whether a design patent is infringed—stating that the “ordinary observer” would benefit from a comparison of the claimed design and accused design. The Court stated, “Our rejection of the point of novelty test does not mean … that the differences between the claimed design and prior art designs are irrelevant. To the contrary, examining the novel features of the claimed design can be an important component of the comparison of the claimed design with the accused design and the prior art. But the comparison of the designs . . . must be conducted as part of the ordinary observer test.” The Court emphasized that such comparisons is not a test of validity, but is designed solely for purposes of infringement. According to the Court, the burden of proof of infringement is on the patentee, but the burden of the production of the prior art is on the accused infringer.
As to design patent claim construction under Markman, the Court stated that given the difficulty of describing a design in words, the preferable course ordinarily will be for a district court not to attempt to “construe” as design claim by providing a detailed verbal description. However, absent a showing of prejudice, a district court’s decision to issue a detailed claim construction will not be reversible error.
Practice Note: Will examination of design patent applications become more stringent as a result of Egyptian Goddess? Perhaps so. The Federal Circuit went out of its way to quote a long passage from the 1893 Supreme Court Whitman Saddle case as to the patentability of a design: “Mere mechanical skill is insufficient. … The exercise of the inventive and originative skill is required.”
Federal Circuit Provides Detailed Guidance on Inequitable Conduct Analysis
By Amanda E. Koenig
The U.S. Court of Appeals for the Federal Circuit has now set out a concise primer on inequitable conduct in its latest, and most comprehensive, decision in a series of decisions emphasizing that the inequitable conduct analysis must be performed thoroughly and that a challenger wishing to show inequitable conduct must strictly adhere to the test’s high evidentiary burdens. Lest would-be challengers despair, however, the severity of the Court’s conclusions was tempered by its provision of an in-depth analysis precisely articulating how to meet the test’s evidentiary burdens. Star Scientific, Inc. v. R. J. Reynolds Tobacco Co., Case No. 07-1448 (Fed. Cir., Aug. 25, 2008) (Michel, C.J.).
The inequitable conduct charges at issue in Star stem from prior art information the inventor shared with Star’s original prosecution counsel and the conveyance to, and handling of that information by, subsequent prosecution counsel. Star holds two patents on tobacco curing technology aimed at producing cured tobacco with reduced levels of certain carcinogens. While the application for the first patent was being prepared, the inventor wrote Star’s original prosecution counsel with information about prior art in the field. The original prosecution counsel deemed the information immaterial. Soon thereafter, Star obtained new prosecution counsel, who continued prosecuting the first patent, but did not disclose the inventor’s communications or conclusions about the prior art to the U.S Patent and Trademark Office (USPTO) before the first patent issued. Star’s new prosecution counsel also filed an application for the second patent. After the first patent issued, Star’s new prosecution counsel had learned of the inventor’s communications about the prior art. Still, the new prosecution counsel did not disclose the actual communications to the USPTO during the prosecution of the second, though it did disclose similar information. The district court held that Star had committed inequitable conduct and held both patents unenforceable. Star appealed.
The Federal Circuit held that the district court clearly erred—R.J. Reynolds failed to prove the intent prong of the inequitable conduct analysis with respect to the first patent and failed to prove the materiality prong with respect to the second patent. Still, the relevance of the Federal Circuit’s opinion lies less in the outcome or rules of law articulated and more in the way it sets out a comprehensive inequitable conduct roadmap for practitioners.
There are two steps to the inequitable conduct analysis and they must proceed in sequence. First, one must show clear and convincing evidence of both materiality and deceptive intent. As to the former, the Federal Circuit repeated the well-known rule that cumulative information is not material. As to the latter, the Federal Circuit delved deeper into the significance of indirect evidence and the burden on the patentee to provide a good faith explanation for their failure to disclose information to the USPTO. Specifically, while indirect and circumstantial evidence may be used to infer intent, the clear and convincing standard requires that the inference that intent exists be “the single most reasonable inference” based upon the evidence. Thus, where indirect evidence is susceptible to two reasonable interpretations, it cannot meet the clear and convincing evidence standard as to either interpretation. Similarly, given that the burden to show inequitable conduct falls on the challenger, the absence of a patentee’s good faith explanation for their failure to disclose material information to the PTO can not—by itself—provide the requisite clear and convincing evidence of intent. Only after both materiality and intent have been shown by clear and convincing evidence should the court turn to the balancing step. Therefore, while a stronger showing of materiality may lessen the burden to show intent—and vice-versa—neither burden falls below the threshold clear and convincing evidence standard.
Interestingly, the Court’s analysis of the evidence suggests that RJR might have been able to meet its burden had it pursued key discovery one or two steps further. For instance, RJR based its intent arguments on the theory that Star conspired to deliberately prevent original prosecution counsel from disclosing the inventor’s communications to the USPTO by replacing them with new prosecution counsel and purposely keeping new prosecution counsel ignorant of the inventor’s communication. Yet, the Court found a major gap in RJR’s theory: “RJR failed to elicit any testimony or submit any other evidence indicating that Star knew what the [inventor’s communication] said prior to replacing [old prosecution counsel], or that the [communication] was a reason for changing firms.”
Practice Note: While Star reinforces the high threshold that must be met to render a patent unenforceable due to inequitable conduct, the Federal Circuit’s admonition in last year in Cargill that “[c]lose cases should be resolved by disclosure, not unilaterally by the applicant” stands firm. Those alleging inequitable conduct must be diligent during discovery to extract all evidence necessary to meet their clear and convincing evidence burden in a manner that minimizes reliance on indirect and circumstantial evidence.
Federal Circuit Elaborates on Declaratory Judgment Jurisdiction Analysis in a Post-MedImmune World
In the latest of a series of post-MedImmune decisions regarding jurisdiction over declaratory judgment actions in patent cases, the U.S. Court of Appeals for the Federal Circuit further delineated the subtle borderland between jurisdiction and lack thereof. Prasco, LLC v. Medicis Pharmaceutical Corp., Case No. 07-1524, (Fed. Cir., Aug. 15, 2008) (Gajarsa, J.).
The manufacturer of a generic benzoyl peroxide product attempted to bring a declaratory judgment action for non-infringement of four patents that were marked on a competitor’s benzoyl peroxide product. The generic manufacturer had not been sued for infringement on these patents nor had it been threatened or approached for a license. The manufacturer based its claim of jurisdiction simply upon the fact that its competitor marked the product with the four patents, had sued Prasco previously on an unrelated patent and a different product and had not signed a covenant not to sue on the four patents in question.
Comparing the inquiry into Article III jurisdiction with tests for standing, ripeness and mootness, the Federal Circuit explained that there was no “injury in fact” or “actual harm” that plaintiff Prasco had suffered and therefore there was no jurisdiction. The Court noted that “MedImmune does not change our long-standing rule that the existence of a patent is not sufficient to establish declaratory judgment jurisdiction.”
The Federal Circuit also commented on the circumstances that can lead to jurisdiction under MedImmune. The Court explained that MedImmune did not “do away with the relevance” of a reasonable apprehension of suit to the question of jurisdiction but rather recognized that the “reasonable apprehension of suit” test was not the only route to declaratory judgment jurisdiction. An injury in fact sufficient to create an actual controversy requires “real and immediate injury or threat of future injury that is caused by the defendants—an objective standard that cannot be met by a purely subjective or speculative fear of future harm.” The Court enumerated several types of behavior that could create jurisdiction, including creating a reasonable apprehension of suit, demanding royalty payments or creating a barrier to regulatory approval of a product. The Court then concluded that Prasco’s stated concerns were too hypothetical to find jurisdiction, noting that Prasco had gone forward with the commercialization of its product despite such subjective concerns.
Patents / Case or Controversy Requirement
By Shon Lo
Addressing the Article III case or controversy requirement in the context of the exclusivity forfeiture position of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA), the U.S. Court of Appeals for the Federal Circuit, in a non-precedential per curiam opinion, affirmed a district court’s dismissal of Apotex’s counterclaims for declaratory judgment of invalidity and non-infringement. Merck & Co., Inc. v. Apotex Inc., Case No. 08-1133 (Fed. Cir., Aug. 21, 2008) (per curiam).
In the course of obtaining U.S. Food and Drug Administration (FDA) approval for its glaucoma medications Trusopt® and Cosopt®, Merck informed the FDA that three patents covered the drugs: U.S. Patents No. 4,787,413 (the ’413 patent), No. 6,248,735 (the ’735 patent) and No. 6,316,443 (the’443 patent). In April 2006, Merck filed disclaimers of the ’735 and ’443 patents under 35 U.S.C. § 253. In March 2006, Apotex filed an Abbreviated New Drug Application (ANDA) to market generic versions of Trusopt® and Cosopt®. Merck filed suit in December 2006 alleging infringement of the ’413 only. Apotex counterclaimed, seeking declaratory judgments of invalidity and non-infringement of the ’443 and the ’735 patents. Because of the Court’s decision in a related case, Apotex was enjoined from marketing any generics under the ’413 patent until October 28, 2008, and another company, Hi-Tech, retained generic marketing exclusivity on the ’735 and ’443 patents, barring a forfeiture event. Apotex pursued the theory that a declaratory judgment of invalidity or non-infringement would trigger a forfeiture and would allow it to bring its generic to market as soon as its ANDA was approved. However, the district court dismissed Apotex’s counterclaims for failure to state an Article III case or controversy.
The Federal Circuit affirmed under MedImmune, stating the proper standard for determining whether a declaratory judgment action satisfies the Article III case or controversy requirement as “whether the facts alleged, under all circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Article III also requires that the dispute “admit of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.” In this case, the Court found itself unable to provide any realistic relief because the October 28, 2008 deadline would have passed long before Apotex could have obtained a final judgment on its counterclaims. Therefore, the counterclaims did not present a justiciable case or controversy.
Charging “Beta Testers” Triggers the On-Sale Bar; Does Not Qualify as Experimental Use
Charging “beta testers” to place calls with a fledgling telecommunications invention more than a year prior to filing a patent application did not qualify as experimental use and thus triggered the on-sale bar, the U.S. Court of Appeals for the Federal Circuit recently decided in affirming a summary judgment invalidating two patents. Cygnus Telecommunications Technology v. Telesys Communications, LLC, et al., Case Nos. 07-1328, 08-1023 (Fed. Cir., Aug. 19, 2008) (Bryson, J.).
In the late 1980s, inventor James Alleman developed technology to take advantage of a pricing discrepancy that made a telephone call from the United States to a foreign country was cheaper than vice versa. With a computer system that interacted with telephone exchange carriers, Alleman enabled a foreign user to initiate a call to the United States, enter the destination number and then hang up. Next, the computer in the United States would call back the foreign user and simultaneously bridge the user to the desired United States destination line. Thus, the call was effectively initiated in the United States and therefore cheaper for the foreign user.
During ongoing development as early as March 1990, Alleman billed several beta testers who used the technology to make long-distance phone calls. Alleman filed a patent application on the system in April 1992; this application matured into two U.S. patents. The subsequent patent owner, Cygnus, later asserted both patents in two infringement suits against 18 defendants including Telesys and AT&T. The suits were consolidated into a single multidistrict (MDL) proceeding. After the district court granted the defendants’ motions for summary judgment on invalidity (based on on-sale bar) and non-infringement, Cygnus appealed.
Before analyzing the substantive issues, the Federal Circuit, applying regional circuit procedural law—in this case, the Ninth Circuit—refused to consider “any part of the record that was not presented to or cited to the district judge in connection with [the] motion [giving rise to the appeal], even if that evidence can be found somewhere in the voluminous materials that are part of the record on appeal.” Thus, Cygnus was unable to introduce evidence that it had left out of its original district court summary judgment briefs even if such evidence existed elsewhere in the district court record.
Based only on the record presented to the district court, the Federal Circuit addressed the on-sale bar, under which a patent may be held invalid under § 102(b) if prior to the critical date the invention was ready for patenting and was the subject of a commercial sale or offer for sale.
Here, the Federal Circuit agreed with the district court that the invention met the “ready for patenting” prong due to a sworn declaration made in 1997 by Alleman to the U.S. Patent & Trademark Office that the claims of the invention had been reduced to practice before June 27, 1990, prior to the critical date (of April 14, 1991). Even though the USPTO did not ultimately rely on his declaration to issue the patents, Cygnus was unable to contradict or at least qualify the inventor’s earlier statement due to the narrowed record. Moreover, even if additional evidence was allowed, the Court indicated an unwillingness to discount an inventor’s clear statement of reduction to practice.
Additionally, the Court concluded that the existence of paying users was sufficient to constitute a sale for purposes of § 102(b) (and not experimental use)—whether or not that particular paid-for version of the invention actually proved commercially viable or generated a profit. The court noted that under well-established Federal Circuit case law, “experimental use cannot occur after a reduction to practice.” Therefore, the beta testers’ use of the system could not be excluded as a commercial use under the experimental use doctrine because such use persisted after Alleman’s admitted reduction to practice.
Practice Note: Along with highlighting what does not constitute experimental use, this case serves as a reminder to practitioners that, depending on the procedural law of the circuit in which the case arose, the mere existence of evidence somewhere in the district court record is an insufficient basis to argue such evidence at Federal Circuit if it was not relied on in presenting the issue to the district court.
Even After Patent Has Expired, District Court Has Jurisdiction to Set Exclusivity Date
Addressing a number of issues in a Hatch-Waxman litigation over the generic versions of the drug Prilosec, the U.S. Court of Appeals for the Federal Circuit upheld a district court’s rulings of infringement and validity. In re Omeprazole Patent Litigation (AstraZeneca AB v. Apotex Corp. and Impax Labs., Inc.), Case Nos. 07-1414, -1416, -1458, ‑1459 (Fed. Cir., Aug. 20, 2008) (Bryson, J.).
The two patents at issue relate to drug preparations containing omeprazole, the active ingredient in Prilosec, a gastric acid inhibitor. The patents claim an outside enteric coating over an inert subcoating for a drug tablet or capsule that increase stability of the drug while on the shelf and protect the active ingredient from degradation due to gastric acid in the stomach, so that the active ingredient can be released in the small intestine. The patents expired on April 20, 2007, but the Food and Drug Administration (FDA) granted AstraZeneca a six-month exclusivity extension due to pediatric testing. On May 31, 2007, the district court found that Apotex and Impax Labs each infringed the two patents at issue and that the patents were not invalid due to anticipation, the public-use bar or obviousness.
On appeal, both parties argued that the district court lost jurisdiction over the case after the at issue patents expired on April 20, 2007. They further argued that AstraZeneca’s claim of infringement became moot. In finding jurisdiction, the Federal Circuit relied on 35 U.S.C. § 271(e)(4)(A), which requires the district court, after a finding of infringement, to set the effective date for approval of a generic version to the expiration date of the patent and 21 U.S.C. § 355a(b)-(c), which extends the period of FDA approval of a generic version to six months after the patent expires in the case of pediatric testing. Based on these statutes, the Court found that the plaintiff’s claim was still justiciable since there was still time left in the plaintiff’s exclusivity period.
Impax argued that the patents were invalid under the public use bar of 35 U.S.C. § 102(b). Before the critical date (one year prior to filing the patents), AstraZeneca commissioned large clinical studies to determine the safety and efficacy of the drug formulation in order to gain FDA approval. The district court did not find the patents invalid because the studies were experimental uses, and therefore not public uses, and the patented formulation was not ready for patenting until after the studies were completed. The district court had found that even if the patented formulation had been reduced to practice before or during the clinical studies, the experimental use exception negated the public-use bar.
The Federal Circuit found that the district court misapplied the experimental use exception—once an invention is reduced to practice, it cannot be the subject of an experimental use exception. That ruling was not fatal to the patent in this case, however, because the district court found as a factual matter that the claimed formulation was not ready for patenting until after the studies were completed. The Court found that because there were still stability problems during testing, the formulation was changed during the different phases of clinical studies and the formulation that was patented was the one that was tested during the last phase (Phase III). Readiness for patenting can be shown by reduction to practice before the critical date and reduction to practice requires both constructing an embodiment or performing a process meeting all the limitations and determining that the invention works for its intended purpose. Impax did not demonstrate that without conducting the Phase III trials the inventors knew that the Phase III formulation would achieve the claimed stability. Since Impax did not produce evidence that the inventors determined before the studies were completed that the invention would work for its intended purpose, there was no error in the district court’s finding of no reduction to practice or readiness for patenting prior to the critical date.
Patents / Doctrine of Equivalents / Willfulness
“Curved” and “Straight” Are Equivalent Under the Doctrine of Equivalents
By Mary Boyle, Ph.D.
In an opinion addressing a panoply of patent law issues, the U.S. Court of Appeals for the Federal Circuit upheld a finding of infringement under the doctrine of equivalents but vacated the finding of willful infringement. Voda v. Cordis Corp., Case Nos. 07-1297 -1343 (Fed. Cir., Aug. 18, 2008) (Gajarsa, J.).
Voda’s involved patents related to catheters used in interventional cardiology. Certain claims-in-suit included a limitation of a “second straight portion” or “a first substantially straight leg.” Before the claims issued, Cordis redesigned the accused catheters to have a “curve portion,” instead of a straight portion, to avoid literal infringement.
Ultimately, Voda sued Cordis for patent infringement. A jury found that Cordis’ catheters infringed under the doctrine of equivalents and that the infringement was willful. Cordis appealed.
On the doctrine of equivalents, the Federal Circuit affirmed in part observing that an equivalents analysis can be articulated in two ways. Under the “function-way-result” test, “an element in the accused device is equivalent to a claim limitation if it performs substantially the same function in substantially the same way to obtain substantially the same result.” Alternatively, under the “insubstantial differences” test, “an accused element is equivalent to a claim limitation if the only differences between the two are insubstantial.” Voda’s expert testified that the “curve portion” and a straight portion perform the same function, in the same way, to achieve the same result. Voda’s expert also testified that the differences were insubstantial because cardiologists would have difficulty distinguishing the two during use. Consequently, the Federal Circuit held that Voda had presented substantial evidence from which a jury could find that the redesigned “curve portion” of the accused product was equivalent to the straight and substantially straight limitations. However, the Federal Circuit reversed the judgment of infringement for two of the asserted claims, noting that under Festo amendments and arguments made during prosecution (that the catheters must have a particular leg that is “substantially straight”) barred application of the doctrine of equivalents for those claims.
The Federal Circuit also vacated the finding of willful infringement. The district court instructed the jury that “[w]hen a person becomes aware that a patent may have relevance to his or her activities, that person has a duty to exercise due care and to investigate whether or not his or her activities or proposed activities infringe any valid, enforceable claim of the patent.” This jury instruction was erroneous under the Federal Circuit’s en banc Seagate decision, which eliminated the affirmative duty of due care to avoid willful infringement, substituting instead the standard of “objective recklessness.” Conceding that the jury instruction was error given the intervening change in the law, Voda argued that the error was harmless. The Federal Circuit disagreed. In view of the evidence that Cordis had redesigned its catheters before the issuance of the patents-in-suit and had obtained several opinions of counsel, the Federal Circuit determined that a correct jury instruction may have resulted in a jury verdict of no willfulness. The Federal Circuit remanded and left it to the discretion of the district court whether to order a new trial on willfulness or whether to grant judgment as a matter of law that the evidence of willfulness was insufficient. The Federal Circuit rejected Cordis’ argument that a new trial on infringement would be required under the Seventh Amendment if a new trial on willfulness were ordered.
Patent / Claim Construction / ITC
ITC Decision Floors Respondents
By Bonnie J. Warren
The U.S. Court of Appeals for the Federal Circuit affirmed the International Trade Commission’s (ITC or Commission) final determination of infringement of three patents directed to a mechanism for coupling adjacent floor panels of laminate flooring without requiring permanent attachment (i.e., without use of adhesives and/or nails). Yingbin-Nature (Guangdong) Wood Industry Co. v. International Trade Commission, Case No. 07-1311 (Fed. Cir., July 31, 2008) (Michel, C.J.).
Unilin Beheer B.V. Flooring Industries, Ltd. (Unilin) filed a complaint with the ITC, under 19 U.S.C. § 1337(a)(1)(B) § 337, alleging that Power Dekor Group Co. Ltd., Yingbin-Nature Wood Industry Co., Jiangsu Lodgi Wood Industry Co. (collectively Power Dekor) and several other companies imported and sold laminate floor panels that infringed certain claims of Unilin’s patents. Following an investigation, the presiding administrative law judge (ALJ) concluded that the Power Dekor accused products did not infringe certain of the asserted claims (the lower lip claims); that other claims (the clearance claims) are invalid for lack of written description support; and each of the Power Dekor accused products infringed certain other claims (the snap action claims).
The Commission reviewed the ALJ’s Initial Determination (ID) in part and reversed the ALJ’s conclusions as to the first two issues, concluding that the Power Dekor accused products did infringe the lower lip claims; and the clearance claims satisfied the written description requirement (and were therefore not invalid). The Commission took no position on the ALJ’s findings that each of the Power Dekor accused products infringed one or more of the snap action claims. Thus, the ALJ’s ID became the final determination of the Commission with respect to the snap action claims. Accordingly, the Commission terminated the investigation with a finding of violation of § 337 and entered a general exclusion order (GEO) excluding the Power Dekor accused products. Power Dekor appealed in-part the Commission’s conclusions of Power Dekor’s infringement of the lower lip claims and upholding the validity of the clearance claims.
Prior to oral argument, the Federal Circuit requested that the parties brief the issue of whether Power Dekor appeal to the Federal Circuit was moot because the accused Power Dekor products all infringe at least one of the snap action claims and the GEO is supported by the infringement of those claims. At oral argument, Unilin contended that the appeal was moot because even if the Federal Circuit agreed with Power Dekor on its issues with respect to infringement of the lower lip claims and validity of the clearance claims, Power Dekor’s accused products would still be excluded from the United States based on the unappealed finding by the Commission that those products infringe the snap action claims.
Power Dekor and the Commission argued that the appeal was not moot. Power Dekor contended that the controversy on appeal was not whether the seven Power Dekor products found to infringe would be excluded from importation, but rather related to the scope of the GEO that affects the type of products that Power Dekor will be permitted to import in the future. According to Power Dekor, based on the ITC rulings, it will import products that, under the Commission’s rulings, do not infringe the snap action claims, but would infringe the lower lip claims (i.e., products similar to Respondent Vohringer’s “Lock 7” product) and the clearance claims (i.e., products similar to Respondent Yekalon’s “Engagement 2” product). Essentially, Power Dekor argued that under the Commission’s rulings, it would be collaterally estopped from arguing in future proceedings, whether before Customs or the Commission, that products similar to the “Lock 7” and “Engagement 2” products do not infringe the lower lip claims. The Commission agreed with Power Dekor that the appeal was not moot because there is a live controversy about the scope of the GEO.
Power Dekor also contended that the clearance claims are invalid for lack of adequate written description in the originally-filed disclosure of the concept of “clearances.” Power Dekor argued that the concept of “clearances” was introduced as new matter in the application leading to the patent through alterations to 14 paragraphs, the introduction of new reference numbers in certain figures and the addition of two completely new paragraphs. Power Dekor also contended that the Commission was incorrect in concluding that the patentee merely introduced the word “clearances” as a generic term that encompasses the “recesses,” “chambers/dust chambers” and “spaces/intermediate spaces” that were disclosed in the original disclosure. Power Dekor argued that those three terms were used in the original disclosure to describe three different types of spaces and that nothing in the original disclosure indicates to one of ordinary skill that those terms can be treated the same. The Commission and Unilin responded that the Commission’s conclusions regarding validity were supported by substantial evidence. They also contended that merely adding the generic word “clearance” to describe those spaces did not constitute new matter and that there is nothing improper about using the term “clearance” in two different ways within the patent.
The Federal Circuit held that Power Dekor’s challenge to the validity of the clearance claims was not moot. However, the Federal Circuit concluded that the portion of Power Dekor’s appeal regarding infringement of the lower lip claims was moot because the exclusion of the Power Dekor products was supported by the unappealed Commission decision finding that those products infringed the snap action claims. Thus the Court reasoned that any injury caused by the exclusion of those products could not be redressed by any Federal Circuit determination on the lower lip claims. The Federal Circuit also concluded that there was no showing that collateral estoppel would apply to Power Dekor’s future products because the Commission’s factual findings regarding the “Lock 7” and “Engagement 2” products are only preclusive as to Vohringer and Yekalon, respectively.
On review of the validity of the clearance claims, the Federal Circuit agreed with the Commission and Unilin that the Commissions conclusion regarding validity was supported by substantial evidence. The Federal Circuit also found that the term “clearances” was supported by the originally filed disclosure.
It’s Not How Quickly You Design-Around; It’s How Quickly You STOP Infringing!
The U.S. Court of Appeals for the Federal Circuit recently concluded that a district court got it wrong on the issue of patent infringement damages. DSW Inc. v. Shoe Pavilion, Case No. 08-1085 (Fed. Cir., Aug. 19, 2008) (Mayer, J.).
DSW and Shoe Pavilion are large shoe retailers. DSW owns a patent with claims directed to a method and system (apparatus) for stocking and displaying footwear so that customers can select and try on shoes without salesperson assistance.
DSW used its patented display system in its own stores, but did not mark it with a patent number as 35 U.S.C. § 287(a) requires for recovering patent infringement damages. Instead, DSW provided notice of infringement by directly informing Shoe Pavilion, in May 2006, that the display design used in some of Shoe Pavilion's stores violated DSW’s patent. Shoe Pavilion agreed to change the design of its potentially infringing shoe displays, to avoid DSW’s infringement claims. Within seven months of DSW’s notification of infringement, Shoe Pavilion had re-designed and replaced its allegedly infringing display systems.
Meanwhile, in October 2006, DSW filed a patent infringement lawsuit against Shoe Pavilion, claiming that even the redesigned display systems infringed DSW’s patent. The district court did not agree and granted summary judgment that Shoe Pavilion’s redesigned display systems did not infringe the patent.
The district court also granted summary judgment that DSW was not entitled to damages for Shoe Pavilion’s use of its old display systems in the intervening period between DSW’s May 2006 notification and Shoe Pavilion’s implementation of the redesigned system, six or seven months later. Citing 1936 Supreme Court precedent of Wine Railway, the district court found that damages were not available as a matter of law because Shoe Pavilion took reasonable steps to remove all of its potentially infringing shoe displays in a timely manner upon receipt of DSW’s notice of infringement.
On appeal, the Federal Circuit unequivocally rejected the district court’s decision on damages for the intervening period, finding that the district court misapplied the Wine Railway standard. It stated, “Wine Railway provides no support for the trial court’s summary judgment on damages.” Instead, the Federal Circuit explained, “Wine Railway flatly states that a patentee may indeed recover damages for infringement that continues after actual notice is provided.”
Putting to rest any doubt that an accused infringer’s timeliness and diligence in accomplishing a design-around solution may stave off patent infringement damages, the Court stated, “[w]ithout a doubt, the law offers an infringer no exception to liability for the time it takes to terminate infringing activities, no matter how expeditious and reasonable its efforts.” The Court ultimately held that if the patent is valid, then “damages are owed on the design for the 6-7 months of continued infringement while Shoe Pavilion phased out use of the displays in its stores.”
Practice Note: Once a party is on notice that it is a potential infringer, it is not sufficient to merely design-around the asserted patent—no matter how quickly or diligently. What is key, in terms of cutting off damages, is that the alleged infringement must immediately stop.
Patent / Method Claims
Calling All Patentees: Disclose Potential Alternatives for Claimed Steps in a Method Claim
Addressing issues of infringement of a method claim patent, the U.S. Court of Appeals for the Federal Circuit reversed a finding of infringement of a method for routing “1-800” telephone calls to an appropriate service location because the accused infringer did not assign 800 calls to any service location prior to the call. 800 Adept, Inc. v. Murex Securities, Ltd. et al., 2008 U.S. App. LEXIS 18521, Case No. 07-1272 -1356 (Fed. Cir., Aug. 29, 2008) (Plager, J.).
Plaintiff 800 Adept (Adept) and defendant Murex Securities, Murex Licensing and Targus Information (Targus) sell competing services that are used to route calls made to 800 numbers. Each company owns patents covering systems and methods for call routing. Some businesses advertise a single 800 number but have multiple service locations. When a caller dials the 800 number of one of these businesses, the system determines which location is called. Customers include owners of 800 numbers, as well as providers of telecommunications platforms that route 800 calls for such businesses.
A jury essentially found for plaintiff Adept on all issues, and the trial court entered judgment, issued a permanent injunction and awarded enhanced damages of $24 million on the patent infringement claim, bringing the total damages award to $49 million. Adept appealed.
On appeal, the Federal Circuit reversed. The dispute was whether the claims of the patents-at-issue required assignment of a service location telephone number to the telephone number of each potential service location called before any call is placed. The plaintiff did not dispute that the assignment must occur before a call is placed, but argued that the “assigning limitation” can be satisfied by placing an algorithm “in or with” a database, even though the algorithm is implemented during the call. The Federal Circuit held that nothing in the claims, specification or prosecution history suggests that storing an algorithm that will be used to determine the telephone number of the correct service location during a telephone call constitutes an assignment of a service location telephone number to a potential caller before a telephone call is placed. The Court went on to note that all of the intrinsic claim construction evidence (claims, specification and prosecution history) characterized the invention as one in which all calculations necessary for assigning service location telephone numbers to callers are performed before any telephone calls are made. Thus, the Court reasoned that the algorithm could not be used during the call, as per the accused infringers’ method.
The Federal Circuit went on to state that the district court improperly construed the “assigning” step to not exclude calculations made during the telephone call. This allowed the jury to improperly find that the accused infringer, which made calculations during the call, infringed the patents. Because all calculations necessary to complete the assignment are performed in real-time while the caller is on the line, the Court reasoned Targus service did not satisfy the “assigning” limitation.
Patents / Reissue Applications
Broadened Reissue Application Invalid if Filed More than Two Years After Original Patent Issued
Predictably, the U.S. Court of Appeals for the Federal Circuit affirmed a district court’s ruling that reissue patent applications can only broaden the patent scope of the original claims if filed within two years of the grant of the original patent. Brady Construction Innovations v. Perfect Wall and Metal-Lite et al., Case Nos. 07-1460, -1486 (Fed. Cir., Aug. 15, 2008) (Michel, J.)
Slip Track Systems and Brady Construction Innovations, Inc. (collectively Brady), sued Metal-Lite in the Central District of California alleging that their patent could have priority over a Metal-Lite patent that issued on the same day and that Metal Lite’s products infringed the Brady’s patent. A jury found that the patent, directed to a building construction assembly, was entitled to priority and that Metal-Lite’s products infringed Brady’s patent.
On appeal, the Federal Circuit affirmed the priority determination but vacated and remanded the infringement determination holding that the prosecution history of Brady’s patent limited its invention to studs having pre-existing holes that provided traction to a header in a wall with respect to the studs when under stress. On remand, the district court granted Metal-Lite’s motion for summary judgment of non-infringement because the accused products did not use studs with pre-existing holes.
Perhaps under stress, Brady filed an application for a reissue of the patent 12 years after issuance. The reissue maintained the original claims and slipped in independent claim 11 directed to a different embodiment than the original claims. The newly added limitation included at least one hole that is formed by attachment means such as a self-tapping screw. The U.S. Patent and Trademark Office (USPTO) allowed the reissue application and Brady quickly sued its competitors for infringement.
The district court granted the defendant’s motion for summary judgment of invalidity because the reissue violated 35 U.S.C. § 251’s prohibition on broadening reissues more than two years after the original patent issued. On Appeal, Brady admitted that the accused products would not infringe the claims of the original patent, but would infringe reissue claim 11. Brady argued that new claim 11 was narrower than the original claims because it tacked on the new limitation of the self-tapping screw.
The Federal Circuit found that the accused products in which the hole is not pre-existing but instead formed using a self-tapping screw, while not infringing the claims of the original patent, would infringe reissue claim 11. Therefore, the Court concluded that the reissue application broadened the scope of the original claims and was thus invalid for being filed more than two years after the original patent issued.
Practice Note: A reissue applications is a tool for broadening the scope of the claims of the original patent if the new claims are made for an invention that was disclosed in the original patent and filed within two years of the original patent grant date.
Recusal Challenge Based on Technical Intern’s Prior History Must Evidence a High Level of Partiality
The U.S. Court of Appeals for the Federal Circuit, in a non-precedential opinion, affirmed the district’s denial of Uniloc’s motion for recusal based on contacts with Microsoft by the district judge’s intern assigned to the case. Uniloc USA, Inc. and Uniloc Singapore Private Limited., Case No. 08-1121 (Fed. Cir., Aug. 7, 2008) (Moore, J.; Michel, C. J., dissenting-in-part.)
The district court hired an intern to aid the judge in resolving certain technical details that arose when Uniloc sued Microsoft for infringement of a patent relating to software activation technology. The unpaid intern was an evening law student and was finishing his Ph.D. in computer science.
After objecting to the hiring of the intern, Uniloc filed a motion to recuse the judge from the case. Uniloc objected to the intern, and ultimately the judge, because it believed the intern possessed “financial and contractual relationships” with Microsoft. These relationships included the receipt of royalty payments by Microsoft Press pursuant to publishing contracts for four programming guides co-authored by the intern that were published 9-11 years ago. the assignment of copyrights for his books to Microsoft, a generic expression of thanks to certain Microsoft and Microsoft Press employees in his books, an expression of admiration for Microsoft products in articles written and published by him in Microsoft journals and indirect financing for his graduate studies from a Microsoft research grant scheduled to expire before the start of his summer internship with the district court.
The Federal Circuit, applying the First Circuit’s rule that a judge is required to step down “only if the charge against her is supported by a factual foundation and the facts provide what an objective, knowledgeable member of the public would find to be a reasonable basis for doubting the judge’s impartiality,” focused on the fact that the intern had never worked for Microsoft himself and that none of his publications related to Microsoft’s Product Activation technology such that he might have personal knowledge of disputed evidentiary facts in this case.
Also, the Court noted that it was the district judge, not the intern, who was the ultimate decision-maker in this case. The Court stated that while certain law clerks have been said to be capable of exerting substantial influence over the judges for whom they work, the same can not be said of interns. They also pointed to the fact that the district judge explicitly made the same point when the judge noted the limited and indirect role that the intern would play in the court’s decision-making. These factors led the Federal Circuit to agree with the lower court that no reasonable member of the public could question the judge’s impartiality.
Narrow Claim Construction Where Claim Could Have Been Drafted More Clearly
Addressing the issue of claim construction, the U.S. Court of Appeals for the Federal Circuit found that a lower court erred in its claim construction while affirming a finding that the plaintiff did not release its infringement claim as a part of an earlier settlement agreement asserted by the defendant as a basis for an affirmative defense. Howmedica Osteonics Corp., v. Wright Medical Technology, Inc., Case No. 07-1363 (Fed. Cir., Sept. 2, 2008) (Dyk, C.J.; Prost, C.J. dissenting).
Howmedica is the owner of a patent with claims to an artificial knee prosthesis to replace part or all of the knee joint. Claim 15, the only independent claim asserted, recites a knee prosthesis with a “femoral component including at least one condylar element” and requires that the condylar element have a certain geometry. The parties had agreed that claim 15 can cover a unicondylar prosthesis, where only one artificial condyle is employed and one natural condyle remains. However, based on the use of the plural “condyles” throughout the patent specification, “the importance of having the same radii on both condylar elements” to achieving the benefits of the patent and the testimony of the inventor, the district court concluded that in a bicondylar prosthesis, where both condyles are replaced, “both condyles must meet [the geometric] requirements.” Since Howmedica could not show that both condylar elements of the accused product meet geometric limitations of claim 15, the court found judgment of non-infringement.
The Federal Circuit, using plain language to interpret the claim term “the condylar element,” reached the conclusion that the district court erred and held that the claim requires only one of the condylar elements to meet the specified geometric limitation. According to the Court, if the patentee had intended both condyles in a bicondylar prosthesis to meet these limitations, he could have used the claim language to achieve that result by reciting that “each condylar element,” rather than “the condylar element,” conforms to the geometric requirements.
The second issue on appeal was related to the validity of the affirmative defense raised by the defendant. The parties had entered into a settlement agreement in connection with an earlier patent litigation in New Jersey. The New Jersey settlement was reached after the patent was granted, but before the initiation of the current litigation and contained a clause that would release the defendant from any claims by Howmedica “including, but not limited to, any and all claims and counter claims that were or could have been asserted by Howmedica in the lawsuit.” The district court, by looking at another related agreement signed by the same parties at the same time in connection with another case in Massachusetts, interpreted the release clause in the New Jersey case narrowly and granted summary judgment in favor of Howmedica. The Court affirmed district court’s judgment.
In dissent, Judge Prost argued that “the fact that a claim could have been drafted more clearly is not, by itself, a sufficient basis to adopt a particular interpretation of claim language.”
Federal Circuit Reinterprets Claims Based on Intrinsic Evidence
Disagreeing with a district court’s interpretation that a “frame” in sunglasses included rims, the U.S. Court of Appeals for the Federal Circuit, in a non-precedential decision, reversed a district court’s summary judgment of non-infringement as to one patent, but affirmed the grant of summary judgment of non-infringement as to two other patents. Aspex Eyewear, Inc. v. Altair Eyewear, Inc., Case Nos. 07-1380, -1407 (Fed. Cir., Aug. 1, 2008) (Michel, C.J.).
The patents-in-suit claim eyeglasses with auxiliary sunglasses that attach to the eyeglasses with magnets. Aspex Eyewear, Inc. (Aspex) and Contour Optik, Inc. (Contour), the assignee of the three patents-in-suit, sued Altair Eyewear, Inc. (Altair), alleging that Altair infringed. All of Altair’s sunglasses that attach to the primary eyeglasses are rimless, with the bridge and earpieces attached to the lenses by pins.
Relying solely on the intrinsic evidence, the district court ruled that the term “frame” in the claims of one of three patents-in-suit included rims and granted summary judgment of non-infringement because it found the pins in the accused rimless glasses supported the lenses in a different way than rims, which encircled the lenses. The district court also determined that the claim term “retaining mechanism” limitation in the two other patents-in-suit was a means-plus-function limited to rims, the only structure disclosed in the specification, and granted summary judgment of non-infringement.
The district court also denied Altair’s motion for partial summary judgment alleging that Aspex was a “bare” licensee and lacked standing to sue. Aspex argued that it had standing pursuant to a written agreement between Aspex and Chic Optic, Inc. (Chic), which received an exclusive license before the assignment of the patents-in-suit to Contour and oral and/or implied agreements between Contour, Chic and Aspex under which Aspex received an exclusive license from Chic. The district court denied Altair’s motion after finding enough evidence to believe there was an oral and/or implied exclusive license between Chic and Aspex, even though the Chic-Aspex written agreement referring to patents in existence was insufficient to confer standing since it was executed before the patents-in-suit issued. Aspex and Contour appealed from the district court’s summary judgment of non-infringement and Altair cross-appealed on the issue of standing.
The Federal Circuit reviewed the grant of summary judgment and claim construction de novo and disagreed with the district court’s construction of the claim terms “therein” and “frame.” The Court held that the dictionary definition of the term therein did not limit the frame to one with rims, but that the term therein simply meant to hold lenses “in that place” and that the specification did not support the narrow interpretation requiring a frame to have rims. The Court reversed the district court’s summary judgment of non-infringement as to the corresponding patent and remanded for further proceedings consistent with the revised claim construction.
However, the Court affirmed the district court’s holding that a “retaining mechanism” as recited in the two other patents-in-suit was a means-plus-function limitation because the only structure disclosed in the specification for performing the claimed lens-retaining functions were rims. The Court agreed with the district court that pins in the accused sunglasses retained the lenses “in a substantially different way” than rims and affirmed the district court’s summary judgment of non-infringement because pins were not equivalent to rims.
The Court also reviewed the denial of summary judgment as to standing for abuse of discretion and affirmed because the evidence was sufficient to establish a genuine issue of material fact as to whether Aspex had an oral or implied exclusive license, Chic and Aspex were both owned by members of the same family in a close business relationship, Aspex operated as an exclusive licensee and there was testimony that Aspex was an exclusive licensee. The Court rejected Altair’s arguments and held that an exclusive license does not have to be in writing for the licensee to have standing if the patentee or assignee is also joined, as Contour was in this case.
Trademark Owner Retains the Right to Sue for Infringement
Addressing the issue of whether the owner of a trademark registered by a corporation that has filed for bankruptcy maintains the right to sue for trademark infringement, the U.S. Court of Appeals for the Sixth Circuit reversed the ruling of the lower court and held that an owner of a mark registered by a corporation that filed for Chapter 7 has the right to sue to for violation of that mark. Guaranty Residential Lending Inc. v. Homestead Mortgage Co., Case Nos. 07-01773-01815 (6th Cir., Sept. 4, 2008) (McKeague, Jr., J.) (unpublished).
Guaranty sued Homestead for intentional misappropriation of its common-law trademark “Homestead Mortgage.” The trademark was registered by a third party, Bob Fitzner. Although Guaranty knew of Fitnzer’s ownership of the mark because its federal application was rejected on the basis of likelihood of confusion with that registration, the firm nevertheless continued to use the mark.
In March of 2001, Fitzner lost the right to sue or defend the mark in state and federal court in Texas when he failed to pay a franchise fee. Fitzner filed for Chapter 7 and his company, Bob Fitzner, Inc. (BFI), was officially dissolved in 2002. At the time of filing, Fitzner failed to list his beneficial title to the registration as assets of BFI, which included his right to the mark. However, according to Texas law, BFI had a three-year wind-down period during which it would hold title and liquidate assets. In January 2005, one month after Guaranty filed its suit, BFI assigned the mark to Fitzner retroactive to 2002, and Fitzner licensed the mark to Homestead.
In July of 2005, Homestead filed an answer and counter-complaint, adding Fitzner as a counter-plaintiff and sued for misappropriation of his trademark. Guaranty moved to dismiss the counterclaims for lack of standing. The district court granted Guaranty’s motion to dismiss, stating that because Fitzner did not schedule his beneficial title to the mark when he filed for bankruptcy, he had no right to sue.
On appeal, the Sixth Circuit applied Texas law to determine capacity to sue. The Court noted that under Texas law, Fitzner retained the right to sue or defend in a suit outside of Texas even after the company’s corporate privileges were forfeited. Thus, the Court held that Fitzner gained the capacity to sue based on BFI’s transfer to Fitzner of all rights in the mark in Michigan and remanded the case.
Copyright / Open Source
Enforceability of Open Source Copyright Licenses: Remedies Not Limited to Breach of Contract
In a unusual copyright decision testing remedies for breach of an open source copyright license, the U.S. Court of Appeals for the Federal Circuit recently determined in that software developers who release their code under an open source license do not waive their right to sue for copyright infringement. The Court confirmed that “copyright holders who engage in open source licensing have the right to control the modification and distribution of copyrighted material.” Jacobsen v. Katzer, Case No. 08-1001 (Fed. Cir., Aug. 13, 2008) (Hochberg, Dist. J., sitting by designation).
In Jacobsen, the Federal Circuit addressed the district court’s rejection of the copyright owner’s motion for preliminary injunction against Kamind Associates and its CEO Matthew Katzer, which was based upon their alleged infringement of Jacobsen’s computer programming code. Jacobsen developed model train software and made it available online for free, subject to the conditions in a standard open source software “Creative Common” license. One of the conditions required proper attribution of Jacobsen as the author of the licensed software.
According to Jacobsen, Katzer and Kamind, a company that develops model railroad software, incorporated portions of his software code into one of the company’s products without complying with certain terms of the open source license. Jacobsen claimed that Katzer/Kamind did not comply with license provisions requiring the inclusion of copyright notices, references to a file that sets forth the license terms and a description of how the user had changed the software. Jacobsen moved for a preliminary injunction to enjoin the defendants from willfully infringing his software. In denying the motion, the district court held that because the license allowed potential licensees to copy, distribute and create derivative works from Jacobsen’s software, it was an unlimited non-exclusive license. The court noted that a non-exclusive license effectively constitutes a waiver of the right to sue for infringement, so long as the licensee’s use of the work is within the scope of the license. Additionally, the court found that the license provision requiring attribution was not a restriction on the scope of the license, but merely a contractual covenant. Accordingly, the district court held that Katzer/Kamind did not infringe Jacobsen’s copyright by copying and redistributing the software source code files. If anything, Katzer/Kamind merely breached the license by not including the required attributions. Because breach of contract creates no presumption of irreparable harm, the court rejected Jacobsen’s motion for a preliminary injunction.
On appeal, the Federal Circuit considered the “heart of the argument,” which was “whether the terms of the Artistic License are conditions of, or merely covenants to, the copyright license.” Jacobsen argued that the terms defined the scope of the license and that any use outside of those restrictions constituted copyright infringement. Katzer/Kamind argued that the terms were merely covenants because code made available for free could not provide the copyright holder economic rights.
Ultimately, the Federal Circuit found that the limitations in Jacobsen’s license were conditions on the scope of the license and Katzer/Kamind could be found liable for copyright infringement as well as breach of contract for the violations. In finding that the license terms were conditions, the Federal Circuit rejected Katzer’s/Kamind’s economic argument, stating “[t]he choice to exact consideration in the form of compliance with the open source requirements of disclosure and explanation of changes, rather than as a dollar-denominated fee, is entitled to no less legal recognition.” Additionally, the Federal Circuit found that the specific language in the license created conditions on the rights to copy, modify and distribute because the license was conditioned on compliance. Therefore, modification and distribution of the copyrighted materials without providing copyright notices and a tracking of modifications would be outside of the scope of the license and would constitute infringement. Because the district court did not make factual determinations on Jacobsen’s likelihood of success on the merits in proving that Katzer/Kamind violated the conditions of the license, the Federal Circuit remanded the case for further proceedings consistent with its opinion.
Practice Note: This decision will likely reduce the uncertainty concerning the enforceability of copyright claims upon the violation of public licenses, such as the Creative Commons license.
Buffer Question: How Long Is "Transitory"?
The U. S. Court of Appeals for the Second Circuit vacated an injunction and reversed an award of summary judgment of copyright infringement based on Cablevision’s providing its cable customers a new Remote Storage Digital Video Recorder (RS-DVR) service. In a decision limited to the question of direct infringement only the Court held that Cablevision’s RS-DVR system did not violate the copyright holders’ rights of reproduction and public performance. The Cartoon Network v. CSC Holdings, Inc. and Cablevision Systems Corp., 2008 U.S. App. LEXIS 16458 (2nd Cir., August 4, 2008) (Walker, J.).
Cablevision’s RS-DVR system works similarly to existing video recording systems, except that instead of recording a program to a video cassette or disc, the RS-DVR records programming to a remote Cablevision hard drive. Once customers select programs for copying, the RS-DVR system logs these requests and, when the programming is normally sent to the customer, the system splits the programming data into two data streams. One data stream is transmitted directly to the customer and the second is stored temporarily in a buffer. This second data stream is then stored for later viewing by the customer only if a prior request was made.
Copies, as defined by the Copyright Act, “are material objects … in which a work is fixed by any method … and from which the work can be … reproduced.” The Act provides that a work is fixed when it “is sufficiently permanent or stable to permit it to be … reproduced … for a period of more than transitory duration.” The court held that the storage of the buffered program data for 1.2 seconds does not meet the “more than transitory duration” requirement and thus does not create “copies” as defined by the Act. In doing so, the court distinguished the Ninth Circuit’s MAI Systems v. Peak Computer decision, noting that buffering data may, but does not necessarily, result in copying. Analogizing Cablevision to a vendor that makes photocopiers available to the public, the court further held that Cablevision was not directly liable for the creation of playback copies from the buffered data because the copies are made only by the RS-DVR customer.
In considering whether Cablevision’s transmission of the recorded programming violated the content providers’ exclusive right to “perform the copyrighted work publicly,” the court held that the RS-DVR playback was not a performance “to the public” because each RS-DVR transmission is made to a single customer using a copy made by that customer.