Thursday August 28, 2014 0 comments
By Brian Lefort
Intellectual Property Attorney
Of the 75 opinions issued by the Supreme Court of the United States during its 2013-14 term, 10 of those opinions are related to intellectual property. This is obviously a high percentage of decisions in one area of the law, especially for intellectual property, for one term--which typically runs from the beginning of October until the end of June.
Upon reviewing the latest term's patent related opinions as a collective, it appears that the Supreme Court is sending a message to patent holders that their patents must be clearly written and cautiously asserted.
The breakdown of the 10 intellectual property related cases is as follows: five concern patents; two involve copyrights; two relate to false advertising; and one affects licensing (of patents).
I previously discussed two of the patent cases, namely Octane Fitness, LLC v. Icon Health & Fitness, Inc., and Highmark v. Allcare Health Management System, Inc. Those two cases, which were decided in April 2014 and make it easier for the prevailing party to recoup its attorney fees.
For example, in Octane Fitness, the Supreme Court stated that district courts can award attorney fees to the prevailing party when the case "stands out from others with respect to the substantive strength of a party's litigating position . . . or the unreasonable manner in which the case was litigated."
The other three patent cases were decided by the Supreme Court in June of this year: (1) Limelight Networks, Inc. v. Akamai Technologies, Inc.; (2) Nautilus, Inc. v. BioSig Instruments, Inc.; and (3) Alice Corporation Pty. Ltd. v. CLS Bank International. These three cases provide accused infringers with new and/or improved defenses for combating claims of patent infringement, particularly weak infringement claims that are often asserted by non-practicing entities (aka trolls).
Nautilus and Alice enhanced a defendant's ability to invalidate a patent under two typically, lesser-used statutory provisions. Specifically, in Nautilus, the Supreme Court held that under 35 U.S.C. § 112, ¶2 , "a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention."
According to the Supreme Court, patents must "be precise enough to afford clear notice of what is claimed." This newly established standard, which overrules the previously used standard established by the Court of Appeals for the Federal Circuit, attempts to inform the relevant public "about the scope of the invention with reasonable certainty . . . while recognizing that absolute precision is unattainable."
In Alice, the Supreme Court reaffirmed its earlier line of cases and held that patent claims directed to the mere implementation of an abstract idea on a computer are not patent eligible under 35 U.S.C. § 101.
Specifically, in deciding this particular case, the Supreme Court reasoned that using an intermediary third-party to verify the parties' ability to perform their respective obligations related to a financial transaction is an abstract idea. And the use of software and a general purpose computer to perform an intermediated settlement of the financial transactions does not provide the necessary inventive concept to transform the abstract idea into patent-eligible subject matter.
This case also states that software patents are less susceptible to a validity challenge if the claims are directed to "improve[ing] the functioning of the computer" or "effect[ing] an improvement in any other technology or technical field."
In Limelight Networks, the issue presented to the Supreme Court was whether a defendant can be liable for inducing a third party to infringe a method claim if all of the steps are performed by one party.
For example, in Limelight, the asserted method claims related to delivering content for websites, and Limelight did not perform the last claimed step. Rather, the last step was performed by Limelight's customers.
The Supreme Court decided that a defendant can only be liable for induced infringement when another party has performed all of the method steps. Stated differently, a party "cannot be liable for inducing infringement that never came to pass" because infringement doesn't arise unless one party performs all of the claimed steps.
Owners of software patents, particularly those that require the use of the Internet and/or interaction by multiple parties may, therefore, have a more difficult time showing that a "single entity" performed all of the claimed method steps.
In short, patent holders asserting patents with suspect validity are on notice that defendants now have additional or enhanced defenses with which to defend themselves.
And if a defendant is able to prove during trial that such patent is invalid, or if the defendant is able to establish that the claims are infringed only by the combined acts of multiple parties, the patent holder is more likely to be liable for the defendant's attorney fees than it was prior to the beginning of the Supreme Court's 2013-14 term.