§ I. Patent Cases
Arthrex, Inc. v. Smith & Nephew, Inc., 35 F.4th 1328 (Fed. Cir. 2022)
Facts: This case concerns whether the Commissioner for Patents has constitutional authority to decide petitions for rehearing regarding inter partes review (“IPR”) of a patent, which are normally decided only by the Director.
In 2015, Arthrex sued Smith & Nephew (“S&N”) alleging patent infringement. S&N petitioned for IPR, arguing that the Arthrex patent was anticipated. The Patent Trial and Appeal Board (“PTAB” or “Board”) of Administrative Patent Judges (“APJs”) instituted an IPR and agreed with S&N. Arthrex appealed the Board’s decision and the Board’s constitutional authority to issue the agency’s final decision. Arthrex argued that the President did not nominate the APJs nor did the Senate confirm them. The constitutional issue reached the Supreme Court in 2021. See United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021). The Supreme Court reviewed the Appointments Clause and agreed that APJs could not issue any “final decision binding the Executive Branch.” The Supreme Court remedied this by allowing parties to request rehearing of board decisions by the Patent Office’s Acting Director.
On remand, Arthrex requested a rehearing, but the office of the Director was vacant. The rehearing decision thus fell to the Deputy Director, which was also vacant. Under an Agency Organization order, third in line is the Commissioner. The Commissioner denied Arthrex’s rehearing request and ordered that the Board decision be made final. Arthrex appealed to the Federal Circuit.
Held: The Commissioner has the authority to act as the Director and decide whether the Board will issue a rehearing under the Appointments Clause, Federal Vacancies Reform Act, and the Constitution’s separation of powers.
Reasoning: The Federal Circuit explained that under the Appointments Clause, Congress has the authority to vest appointment power in the Heads of Departments. Congress empowered the Secretary of Commerce to appoint the Commissioner of Patents, which the Federal Circuit found to fall within the Appointments Clause.
Arthrex argued that the Commissioner did not have the authority to issue a final binding decision because the Commissioner was not Presidentially appointed. The Federal Circuit rejected this argument because inferior officers may perform the functions and duties when a senior director position is vacant on a “temporary, acting basis.” The Federal Circuit further explained previous Supreme Court precedent that an inferior officer may assume the duties of a superior officer for limited periods under special circumstances without being Presidentially appointed and Senate confirmed.
Arthrex also argued that the Federal Vacancies Reform Act precluded the Commissioner from issuing a final decision. The Federal Circuit disagreed, finding that this Act only applied to non-delegable duties and that deciding rehearing requests is delegable. The Federal Circuit noted that the legislative intent of this Act was to limit what could be considered non-delegable and that no statutory language limited rehearing request decisions to the Director.
Finally, the Federal Circuit rejected Arthrex’s separation of powers argument. Arthrex argued that because the Commissioner could be removed for cause only, the Commissioner could not act as a Director since this would encroach upon Executive power. The Federal Circuit disagreed, explaining that the “for cause” restriction only applied to the Commissioner position; the President could at any time select a different acting Director.
Nippon Shinyaku Co., Ltd. v. Sarepta Therapeutics, Inc., 25 F.4th 998 (Fed. Cir. 2022)
Facts: This case concerns the enforceability of a forum selection clause for IP disputes to preclude inter partes review (“IPR”) of a patent at the Patent Office.
The parties signed a confidentiality agreement that included a forum selection clause for IP actions after the contract term. The agreement specified the District of Delaware as the forum but included administrative proceedings as a type of action subject to the clause. A mutual covenant not to sue barred administrative proceedings and patent validity challenges but ended with the term of the agreement. Sarepta filed an IPR, and Nippon Shinyaku sued in Delaware to enjoin Sarepta from continuing the IPR challenge.
The lower court held that Nippon Shinyaku had not shown a reasonable probability of succeeding on the argument that the agreement effectively barred IPRs. The district court noted IPRs cannot be brought in Delaware, the specified forum, and the mutual covenant not to sue deferred all IPRs for a limited time. The district court read the forum selection clause to apply to standard district court proceedings, but not to IPRs. If Sarepta was forced to wait out the delay imposed by the covenant not to sue, its IPR petitions would be time-barred, a result which the court found would be wrong.
Held: Applying Delaware law to interpret the contract, the Federal Circuit reversed, holding that the plain language of the contract’s forum selection clause effectively precluded IPRs despite that clause mentioning administrative agency actions (which include IPRs).
Reasoning: The Court reasoned that no tension or conflict exists between the forum-selection and no-suit clauses. The covenant not to sue broadly prohibited litigating any issue relating to patents, regardless of the forum. The forum selection clause allowed litigating any issue related to patents, if they can be brought in the District of Delaware. The Court noted that the parties are entitled to bargain away rights, including through use of forum selection clauses. The Court reversed the district court and ordered the entry of a preliminary injunction.
Weisner v. Google LLC, 51 F.4th 1073 (Fed. Cir. 2022)
Facts: This case concerns the patentability analysis for abstract ideas.
Weisner, an independent inventor, sued Google for infringement of four patents related to digital records and physical location history. The patents disclose a system that collects “leg history,” defined as “the accumulation of a digital record of a person’s physical presence across time.” Leg history can be collected automatically or entered manually. Two of the patents disclose using the leg history to improve search results by comparing a previous user’s entries (the “useful person”) to a searching person’s points of interest. The useful person and search results are based on commonalities of previously visited locations that the searching person also visited. Data from the leg history is then used to create a digital travel log of places the searching person previously visited, and in some cases, is used for future searches.
Google moved to dismiss at the pleading stage, arguing all four patents disclosed patent-ineligible subject matter. The Southern District of New York considered all four patents together because they shared identical specifications and had similar claims. The District Court agreed with Google and granted the motion. Weisner appealed.
Held: Patents directed to digital travel logs are generic and patent ineligible, but patents directed to improving search results, even if abstract, may be patent eligible.
Reasoning: The Federal Circuit divided the patents into two claim sets. Claim Set A disclosed only digital travel logs and Claim Set B disclosed digital travel logs and using location histories to improve search results. The Court applied the Alice analysis to both claim sets. Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 217 (2014). At Alice step one, the court “determine[s] whether the claims at issue are directed to … [a] patent-ineligible concept[,]” such as a law of nature, natural phenomena, or an abstract idea. Id. at 217. If so, the Court moves to Alice step two to “consider the elements of each claim both individually and ‘as an ordered combination’ to determine whether the additional elements ‘transform the nature of the claim’ into a patent-eligible application.” Id. In other words, step two is “a search for an ‘inventive concept.’” Id. at 217-18 (quoting Mayo, 566 U.S. at 72).
At Alice step one for Claim Set A, the Court reasoned that humans consistently have kept travel logs and diaries compiling dates and times. In rejecting Weisner’s argument that this travel history was limited to members only (i.e., individuals using the digital record system), the Federal Circuit explained that this was nothing more than “attorney argument” that was not disclosed in the complaint, the patent claims, or specifications. Because Claim Set A was directed to an abstract idea, the Court turned to Alice step two. The Court determined that the specification and claims described components that are conventional and non-inventive. The Court again rejected Weisner’s argument that reserving exclusive access for subscribers or “members” is transformative.
Turning to Claim Set B, the Federal Circuit applied Alice step one to determine that the accumulation of location histories is described in a generic fashion, but that improvements to digital searching were described with sufficient detail. The Court ultimately concluded that Claim Set B is directed to an abstract idea, but that the claims are eligible under Alice step two. The Court reasoned that Claim Set B implemented a specific solution to a technological problem by prioritizing conventional search results. By specifying the mechanism through which the improved search results are achieved, the claims could be patent eligible.
Dissent: Judge Hughes dissented, arguing that all four patents were ineligible. Judge Hughes reasoned that the only improvement was the addition of new searchable data, namely location history.
Am. Nat’l Mfg. Inc. v. Sleep No. Corp., 52 F.4th 1371 (Fed. Cir. 2022)
Facts: This case concerns claim amendments in inter partes review (“IPR”) proceedings.
American National filed IPR petitions challenging many claims of two patents owned by Sleep Number. The Patent Trial and Appeal Board found all but six of the challenged claims unpatentable. Sleep Number filed motions to amend contingent on a finding of unpatentability. Sleep Number not only proposed to amend the patent claims to match those that withstood the challenge, but also proposed amendments “for consistency with terms used in the industry and in related patents.” American National opposed on multiple grounds, including: (1) the amendments were not responsive to a ground of unpatentability; (2) the relevant specification contained an error rendering the claims nonenabled; and (3) the proposed amendments invited a potential change in inventorship. The Board rejected American National’s arguments and granted Sleep Number’s motions to amend. American National appealed and Sleep Number cross appealed.
Held: A party may amend claims during an IPR proceeding to address other issues not responsive to an unpatentability ground, as long as the amendment is also responsive to an unpatentability ground.
Reasoning: The Court first affirmed that the Board could consider proposed claim amendments that are not responsive to an unpatentability ground in IPR proceedings. The Court endorsed the Board’s analysis of this issue in Lectrosonics, Inc. v. Zaxcom, Inc., No. IPR2018-01129, 2019 WL 1118864, at *2 (P.T.A.B. Feb. 25, 2019) (precedential), which interpreted 37 C.F.R. § 42.121(a)(2)(i). That regulation requires that amendments be responsive to a ground of unpatentability. Under Lectrosonics, initially responsive amendments may also address other issues, such as those arising under Section 101 and Section 112.
The Court next rejected American National’s argument that an admitted error in the specification of a priority application necessarily results in non-enablement. Relying on PPG Indus. v. Guardian Indus. Corp., 75 F.3d 1558 (Fed. Cir. 1996), the Court held that obvious specification errors need not destroy enablement if a person of ordinary skill in the art would readily recognize them as errors. Considering the error here obvious in view of the specification itself, the Court affirmed the Board on this issue.
The Court also rejected American National’s argument that adding a term to the claims that was only used in related patents (incorporated by reference and with additional inventors) raised an inventorship issue. The patents themselves made clear that the term was well known in the art, so reciting well-known terms in amended claims does not affect inventorship.
Finding none of the remaining arguments by either American National or Sleep Number persuasive, the Court affirmed the Board’s decisions granting Sleep Number’s motion to amend.
LG Elecs. Inc. v. Immervision, Inc., 39 F.4th 1364 (Fed. Cir. 2022)
Facts: This case concerns how to treat a prior art reference containing an obvious error.
Immervision owns a patent relating to capturing and displaying digital panoramic images using panoramic objective lenses. LG filed two inter partes review (IPR) petitions, each challenging a dependent claim of the patent. Fundamental to LG’s obviousness argument was the Tada reference, which is a U.S. patent claiming priority from and incorporating by reference a Japanese priority patent application. Tada explicitly taught nearly all limitations of the challenged claim but missed one element relating to a particular function of the lenses. To cure this deficiency of Tada, LG’s expert reconstructed the lens in one figure in Tada using the information retrieved from an “aspheric coefficients” table in the Japanese priority document and testified that the reconstructed lens would function as claimed. In response, Immervision’s expert followed the same approach but pointed out an error in the table. Immervision argued that such incorrect disclosure cannot support any obviousness ground. In its final written decision, the Board sided with Immervision and concluded that LG failed to prove that the claim was obvious over Tada. LG appealed.
Held: Obviously erroneous disclosure in prior art reference cannot be used in an invalidity challenge.
Reasoning: On appeal, neither side disputed that the “aspheric coefficients” in the Tada table were erroneous. The question was whether substantial evidence supported the Board’s finding that the error would have been apparent to a person of ordinary skill in the art, causing them to disregard the disclosure.
The Court first set forth the legal standard for evaluating obvious errors in prior art, revisiting In re Yale, 434 F.2d 666 (C.C.P.A. 1970). Yale held that obvious errors in prior art would not prevent a “true inventor” from seeking patent protection later. The Court regarded the Yale standard as sound law and rejected LG’s two interpretations of Yale.
LG contended that the Yale standard imposes a “temporal urgency” requirement: because Immervision’s expert spent over ten hours to correct it, the error was not obvious. The Court disagreed, but recognized that the time and effort an ordinary skilled artisan spent on spotting an error might be a relevant factor. LG also suggested that Yale should be limited to typographical errors, but the Court rejected this.
Applying the Yale standard, the Court agreed that the Board correctly identified several aspects of the table that would alert the ordinary skilled artisan to the error in the aspheric coefficients. These aspects included that the table was corrected in the issued U.S. patent, that comparison between U.S. and Japanese versions showed a transcription error, and that other disclosures in the specification were inconsistent.
Considering the parties’ remaining arguments unpersuasive, the Court affirmed the Board’s finding upholding the claim as supported by substantial evidence.
International Business Machines Corp. v. Zillow Group, Inc., 50 F.4th 1371 (Fed. Cir. 2022)
Facts: This case concerns the subject matter eligibility of computer method claims.
International Business Machines (“IBM”) sued Zillow for infringement of several patents on computer displays of geospatial data. The patents taught displaying layered data on a spatially oriented display (like a map), based on nonspatial display attributes (like visual characteristics—color hues, line patterns, shapes, etc.)
Zillow moved for judgment on the pleadings, arguing ineligible subject matter under 35 U.S.C. § 101. Patent eligibility is assessed using a two-part inquiry developed in the case Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 217 (2014). The first inquiry is whether a patent claim is “directed to” an ineligible law of nature, natural phenomena, or abstract idea. If not, the subject matter of the claim is eligible. If so, the court determines whether the claim nonetheless includes an inventive concept sufficient to transform the nature of the claim into a patent-eligible application.
After applying the two-step framework in Alice, the district court found that two of the patents were ineligible as “directed to abstract ideas, contained no inventive concept, and failed to recite patentable subject matter.” IBM appealed, arguing that the District Court erred under the second step of the Alice framework.
Held: A patentee’s allegation that computer method claims made data analysis more efficient, without reference to the function or operation of the computer itself, was not sufficient to overcome a challenge under 35 U.S.C. § 101.
Reasoning: On appeal, IBM relied on an expert declaration stating that the claimed method allowed for better visualization of data, which in turn resulted in more efficient data analysis. Citing cases applying the Alice framework to software, the Federal Circuit noted that [the step-one] inquiry often turns on whether the claims focus on specific asserted improvements in computer capabilities or instead on a process or system invoking computers merely as a tool. The Federal Circuit found that any improved efficiency of IBM’s patents did not improve the functions of the computer itself, as the claims could be performed by hand and would yield the same improved efficiency.
Dissent: Judge Stoll dissented in part, arguing that IBM had adequately alleged that two of the claims were patent eligible. Judge Stoll reasoned that the claims addressed physical limitations with computer displays wherein large datasets would be “densely packed” and rendered “incomprehensible.”
§ II. Copyright Cases
Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., 142 S. Ct. 941 (2022)
Facts: This case interprets the Copyright Act safe harbor provision, 17 U.S.C. § 411(b), which excuses inaccurate copyright registrations as long as the copyright holder lacked “knowledge it was inaccurate.”
Unicolors owns copyrights in fabric designs and sued H&M for copyright infringement. After the jury found infringement, H&M moved for judgment as a matter of law, arguing that Unicolors’ registration was invalid as inaccurate, negating the suit (a valid copyright registration for the work was a prerequisite for the lawsuit). Unicolors had improperly filed a single application for 31 separate works which were not “included in the same unit of publication” in violation of the Copyright Office regulation in 37 C.F.R. § 202.3(b)(4). Unicolors claimed ignorance of this regulation and inaccuracy, and should be excused by the safe harbor provision. The trial court agreed and denied H&M’s motion.
The Ninth Circuit disagreed with the trial court as it reasoned that the safe harbor provision did not excuse mistakes of law. Unicolors subsequently sought review of the scope of the safe harbor provision by the Supreme Court.
Held: In a 6-3 decision, the Supreme Court held that the safe harbor provision, 17 U.S.C. § 411(b), excuses inaccuracy in a copyright registration that arises from both lack of knowledge of fact and law.
Reasoning: The majority confirmed that Unicolors’ mistake was one of law as it concerned a legal labeling issue that lay people must look to experts to resolve and Unicolors was unaware of the legal mistake when it made the registration.
The majority next interpreted the safe harbor provision to excuse both factual and legal mistakes for several reasons. First, the provision only requires a lack of “knowledge,” which historically means the fact or condition of being aware of something, and does not distinguish between factual or legal mistakes. Second, nearby statutory provisions indicate that had Congress wanted to make such a distinction it knew how to accomplish that explicitly. Third, cases decided before the enactment of this provision overwhelmingly held that mistakes of both law and fact were excused and Congress did not intend to alter this. Last, the majority believed the legislative intent was to facilitate copyright registration by nonlawyers, which supports excusing mistakes of law. Finding none of H&M’s arguments persuasive, the majority vacated the Ninth Circuit’s decision and remanded the case.
Dissent: Justice Thomas dissented, joined by Justice Alito and Justice Gorsuch. The dissent would have dismissed the writ of certiorari without interpreting the statute since Unicolors did not raise the point in the courts below and there was no existing circuit split on the issue.
Gray v. Hudson, 28 F.4th 87 (9th Cir. 2022)
Facts: This case concerns proving music copyright infringement through circumstantial evidence.
The plaintiffs, a group of Christian hip-hop artists, sued singer Katy Perry and several others for copyright infringement in 2016, claiming that Katy Perry’s 2013 hit “Dark Horse” copied a similar ostinato (i.e., a repeating musical phrase or rhythm) in their song “Joyful Noise.” Instead of showing direct copying, the plaintiffs used circumstantial evidence of substantial similarity between the ostinatos in “Joyful Noise” and “Dark Horse.” A jury awarded the plaintiffs $2.8 million in damages. The defendants then moved for judgment as a matter of law (JMOL), which the trial court granted because it found that the ostinato was not copyrightable original expression, or alternatively, the copyright was so “thin” that it could be infringed only by “virtually identical” works, which had not been proven by the plaintiffs. The appeal followed.
Held: A repeating musical phrase or rhythm may not be copyrightable.
Reasoning: The Ninth Circuit reviewed the trial court’s grant of JMOL de novo and agreed with the trial court that plaintiffs had not shown the originality of the Joyful Noise ostinato.
At the outset, the Court revisited the framework for copyright infringement. The Court noted that instead of proving direct copying, the plaintiffs proved that (1) the defendants had “access” to their work and (2) the ostinatos in the works are “substantially similar.” The Court found the second prong dispositive. The Ninth Circuit has traditionally applied a two-part test comprising “extrinsic” and “intrinsic” components and required that “[b]oth tests [are] satisfied for the works to be deemed substantially similar.” Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435, 1442 (9th Cir. 1994); Skidmore as Tr. for Randy Craig Wolfe Tr. v. Led Zeppelin, 952 F.3d 1051, 1064 (9th Cir. 2020). While the extrinsic test considers similarities between the ideas and expression of the works from an objective viewpoint, the intrinsic test focuses on what an ordinary reasonable observer thinks. While courts defer to a jury’s finding of intrinsic similarity, courts must also ensure that the objective extrinsic test is satisfied.
Noting the jury’s finding of intrinsic similarity, the Court addressed the extrinsic test. Because this necessarily identifies the “protected material” in a plaintiff’s work, the Court considered the threshold issue of what in the Joyful Noise ostinato qualified as original expression. Upon examining the trial record, the Court concluded that the Joyful Noise ostinato consisted entirely of unprotectible commonplace elements (e.g., the length of each ostinato, the rhythm, the timbre, the musical texture, the use of synthesizers to accompany vocal performers, the pitch sequences, and the scale degrees), as conceded by the plaintiffs’ expert. The plaintiffs argued originality existed in the combination of elements. The Court disagreed, concluding that even the arrangement of musical building blocks in the ostinato was “manifestly conventional.” Accordingly, the Court held that the extrinsic test has not been satisfied.
Finding none of the plaintiffs’ remaining arguments persuasive, the Court affirmed the trial court’s order.
§ III. Trademark/Trade Dress Cases
Meenaxi Enterprise Inc. v. The Coca Cola Company, 38 F.4th 1067 (Fed. Cir. 2022)
Facts: This case involves the requirements for maintaining a statutory cause of action under § 14(3) of the Lanham Act, 15 U.S.C. § 1064(3), for activities outside the United States.
The Coca-Cola Company sought to cancel Meenaxi Enterprise, Inc.’s registrations for THUMS UP and LIMCA under § 14(3) of the Lanham Act, 15 U.S.C. § 1064(3), asserting that Meenaxi was using these marks to misrepresent the source of its goods. Since the 1970s, Coca-Cola has distributed Thums Up cola and Limca lemon-lime soda in India and other foreign markets and obtained registrations for both marks in those countries. Meenaxi distributed Thums Up cola and Limca lemon-lime soda in the United States since 2008 and registered the marks THUMS UP and LIMCA in connection with soft drinks (among other goods) in International Class 32 with the United States Patent and Trademark Office. Coca-Cola claimed that Meenaxi traded on Coca-Cola’s goodwill with Indian-American consumers by misleading them into thinking that Meenaxi’s beverages were the same as those sold by Coca-Cola in India. The Trademark Trial and Appeal Board (“Board”) held in Coca-Cola’s favor and cancelled Meenaxi’s registrations.
Held: To maintain a statutory cause of action under the Lanham Act for activities solely conducted outside the United States, the claimant must provide concrete evidence of reputational injury or lost sales.
Reasoning: The Federal Circuit reversed the Board’s decision to cancel Meenaxi’s registrations. The Federal Circuit held that Coca-Cola failed to establish a statutory cause of action based on lost sales or reputational injury. The Federal Circuit noted that the territoriality principle was not implicated as Coca-Cola based its claim solely on its alleged injury occurring in the United States. The Federal Circuit reasoned that third-party sales of Coca-Cola’s Indian products in the US were limited, and Coca-Cola failed to provide survey evidence that Americans of Indian descent would know the marks’ reputation in India. Thus, Coca-Cola failed to prove the marks’ reputation in the U.S. or establish the right to bring a statutory cause of action under § 14(3) of the Lanham Act, 15 U.S.C. § 1064(3).
Concurrence: Judge Reyna concurred to express that the case should have been governed by the territoriality principle and the well-known mark exception. The territoriality principle indicates that trademark rights do not extend beyond the geographic territory with which the marks are recognized unless the mark itself falls within the limited well-known mark exception.
In re Elster, 26 F.4th 1328 (Fed. Cir. 2022)
Facts: This case concerns the protections of the First Amendment and the registrability of a trademark in contravention of section 2(c) of the Lanham Act.
The applicant Elster sought to register TRUMP TOO SMALL for use on shirts in International Class 25. Elster indicated that this mark stemmed from an exchange between Donald Trump and Senator Marco Rubio during the 2016 presidential primary debate and aims to “convey[ ] that some features of President Trump and his policies are diminutive.” The Examining Attorney refused the application on two grounds: under section 2(c) of the Lanham Act which prohibits registration of a mark that “comprises a name . . . identifying a particular living individual” without the individual’s “written consent”; and section 2(a) of the Lanham Act, which bars registration of trademarks that “falsely suggest a connection with persons, living or dead.” § 1052(c); 1052(a). Elster appealed the refusal, asserting that the mark was political commentary, so refusal infringed on his First Amendment rights as content-based discrimination.
The Trademark Trial and Appeal Board (“Board”) affirmed the Examining Attorney’s refusal solely on section 2(c). The Board noted the government’s compelling interest to protect the named individual’s rights of privacy and publicity. Elster appealed.
Held: The government has no valid interest that could overcome the First Amendment protections afforded to the political criticism embodied in Elster’s TRUMP TOO SMALL mark and the application of section 2(c) to the Elster’s mark is unconstitutional.
Reasoning: The Federal Circuit reasoned that speech that is otherwise protectable does not lose protection merely because the speech is sought as a trademark and is commercial. Because section 2(c) as applied to Elster’s case constituted content-based discrimination, the government must prove that it has an interest in limiting speech on privacy or publicity grounds if that speech involves criticism of government officials.
Regarding President Trump’s privacy interest, the Federal Circuit noted that as a public figure, he enjoys no right of privacy protecting him from criticism in the absence of actual malice. As for publicity grounds, the Federal Circuit made two points. First, President Trump’s name was not used to exploit his commercial interests or dilute the commercial value of his name. Second, registration would not suggest President Trump has endorsed Elster’s products. Because of the President’s status as a public official, and because Elster’s mark communicates his disagreement with and criticism of the then-President’s approach to governance, the government has no interest in restricting Elster’s speech from trademark protection.