There are currently multiple significant IP cases pending at the Supreme Court, including both the Oracle case and the Arthrex cases, and a number of petitions denied cert. Here are the latest case updates on IP at the Supreme Court:

Google v. Oracle

On October 7^th, the Supreme Court heard oral arguments for the Google v. Oracle case on appeal from the Federal Circuit. The case centers around the Android operating system designed by Google in their first foray into the smartphone arena. In the coding, Google used 11,000 lines of the Java SE platform coding for common interface commands. Oracle, the current owner of the Java SE platform, filed suit on the basis that the use of the lines constituted infringement. While a jury found them to be “fair use”, the Federal Circuit disagreed, reversing the decision, and leading to the current appeal at the Supreme Court.

Accordingly, the questions before the Supreme Court now are:

(1) Whether copyright protection extends to a software interface; and

(2) whether, as the jury found, the petitioner’s use of a software interface in the context of creating a new computer program constitutes fair use.

The decision could be the most significant copyright decision in at least a decade and will be important to developers and practitioners alike to watch moving forward.

Arthrex

Earlier this month, the Supreme Court denied certiorari to a number of cases. Notably this does not include the Arthrex cases challenging the constitutionality of the USPTO’s Patent Trial & Appeal Board.

On October 14,, 2020, as predicted by Maier & Maier’s own, Steve Kunin, the Supreme Court granted cert in three related Arthex cases: (1) United States v. Arthrex, Inc. (19-1434), (2) Smith & Nephew, Inc. v. Arthrex, Inc. (19-1452), and (3) Arthrex, Inc. v. Smith & Nephew, Inc. (19-1458).

The case rests on the question of whether the Administrative Patent Judges (“APJ’s”) are principal officers or inferior officiers, and accordingly, whether their appointment is constitutional. Specifically, the Supreme Court has identified the following two questions for review:

(1) Whether, for purposes of the Appointments Clause, U.S. Const. Art. II, § 2, Cl. 2, administrative patent judges of the U.S. Patent and Trademark Office are principal officers who must be appointed by the President with the Senate’s advice and consent, or ‘inferior Officers’ whose appointment Congress has permissibly vested in a department head.

(2) Whether, if administrative patent judges are principal officers, the court of appeals properly cured any Appointments Clause defect in the current statutory scheme prospectively by severing the application of 5 U.S.C. 7513(a) to those judges.

Briefing and oral arguments, as well as likely amicus briefs will likely follow before these questions are resolved, and may be one of the first cases heard by any replacement for the late Ruth Bader Ginsburg on the Court.

Cert Denied

Unlike the pending Oracle and Arthrex decisions, the following cases have been denied certiorari by the Supreme Court and will not be heard on appeal:

• • • BioDelivery Sciences International, Inc. v. Aquestive Therapeutics, Inc., fka MonoSol RX, LLC, No. 19-1381 (Appealing IPR Termination)
    • TCL Communication Technology Holdings Limited v. Telefonaktiebolaget LM Ericsson, No. 19-1269 (Right to a Jury Trial for Specific Performance of FRAND license)
    • Willowood, LLC v. Syngenta Crop Protection, LLC, No. 19-1147 (Divided Infringement and 271(g))
    • The Chamberlain Group, Inc. v. Techtronic Industries Co., No. 19-1299.; Thomas v. Iancu, No. 19-1435; Primbas v. Iancu, No. 19-1464; Morsa v. Iancu, No. 20-32 (Patent Eligibility)
    • Ameranth, Inc., Petitioner v. Domino’s Pizza, LLC, No. 19-1351 (Sua Sponte Judicial Order Due Process)
    • Polidi v. Lee, No. 19-1430; Piccone v. United States Patent and Trademark Office, No. 19-8844 (Exclusion of Patent Attorneys by USPTO)
    • SRAM, LLC v. FOX Factory, Inc., No. 20-158 (Secondary Indicia for Obviousness nexus)
    • Arthrex, Inc. v. Smith & Nephew, Inc., No. 19-1204 (Application of IPR decisions retroactively to related pending applications)
    • Cheetah Omni LLC v. AT&T Services, Inc., No. 20-68 (Licensing Patents under Federal & State law)

As Artificial Intelligence (“AI”) continues to transform industries across both the U.S. and the globe, the United States Patent and Trademark Office has been handling the issues at a much higher rate. In response to the developing field, the USPTO released a report on AI and the related Intellectual Property issues.

“The USPTO has long been committed to ensuring our nation maintains its leadership in all areas of innovation, especially in emerging technologies such as artificial intelligence,” highlighted Andrei Iancu. Director of the USPTO. In preparing the report, the USPTO sought input from and received comments from over 200 comments from bar associations, trade associations, law firms, academic authorities, industry practitioners in electronics, software, automobiles, medical and pharmaceutical industries, and foreign patent offices.

Overall, the report indicates that there is a high degree of confidence in the USPTO to handle many of the issues relating to patent, trademark, and copyright issues relating to AI. The report also emphasized the importance of maintaining a close eye for the developments in this industry to ensure the U.S. maintains its status as a global leader in this critical technology.

With multiple IP issues percolating in the lower courts, there will likely be many federal issues decided in the coming years. With the passing of Justice Ginsberg, Amy Coney Barrett stands as the nominee to inherit those votes and a staunch textualist. Here are the some of the most recent Barrett decisions on intellectual property matters.

J.S.T. Corp. v. Foxconn Interconnect Technology (Trade Secrets)

This 7^th Circuit appeal came earlier this year focusing on a trade secret misappropriation and jurisdiction to bring the claims. A customer to J.S.T. provided one of their proprietary adapter designs to J.S.T.’s competitor, Foxconn, attempting to have them manufacture them instead of J.S.T. J.S.T. filed suit in Illinois for misappropriation and unjust enrichment, but Foxconn moved to dismiss for lack of personal jurisdiction.

They argued that because Foxconn and the other defendants had no headquarters in Illinois and neither manufactured nor sold the adapters in Illinois, there could be no personal jurisdiction. Foxconn and the other defendants sold the adapters in Texas or China, which were bought to be used in automobiles which were then sold nationwide. J.S.T. argued that this downstream commerce in Illinois was sufficient to establish personal jurisdiction in trade secret cases, but the District Court disagreed.

On appeal, Judge Barrett authored the opinion, affirming the lower court. As Barrett explained “[f]or the point of consumer sale to be as relevant to this litigation as it is to products liability suits, there must also be a connection here between downstream consumer sales and J.S.T.’s underlying claims.” This differs from both product liability and trademark claims, which can satisfy jurisdiction requirements at the consumer level. For trade secrets, the claim bases of “acquisition, disclosure, and use of a secret are all actions that can be completed long before an offending product ever comes into contact with a consumer.” Accordingly, looking to the text of the trade secret claim language, Judge Barrett saw no basis for personal jurisdiction, and her peers agreed.

Ariel Investments, LLC v. Ariel Capital Advisors LLC (Trademark)

In 2018, the 7^th Circuit heard a trademark dispute between the Florida-based Ariel Capital Advisors (ACA) and the Chicago-based Ariel Investments, LLC (AI). AI was founded in 1983, while ACA was formed in 2014, with each advising and managing financial investments. AI brought suit in 2018 for trademark infringement and sought an injunction requiring a name change by ACA in the District of Chicago. The court obliged with a court order, and ACA complied by changing their name to Bray Capital Advisors, but challenged the ruling on appeal.

ACA appealed on the basis that the court had no jurisdiction to decide the case, explaining that they had no office, no clients, no property, and no staff in Chicago, nor has any employee even visit Illinois at all. AI responded that for intellectual property cases, the defendant essentially “reached into the holder’s home forum to take its property” and availed itself to jurisdiction. The appellate court disagreed.

As Barrett explains in authoring the decision, “Perhaps the Lanham Act ought to authorize nationwide service, as the antitrust and securities laws do…[b]ut it does not, so personal jurisdiction depends on state law.” On that basis, AI failed to show specific jurisdiction or the requisite minimum contacts. As Barrett quotes from the Supreme Court decision in 2014, Walden v. Fiore, “the plaintiff cannot be the only link between the defendant and the forum. Rather, it is the defendant’s conduct that must form the necessary connection with the forum State that is the basis for its jurisdiction over him”. Accordingly, she explains “No matter how one might characterize the relation between Ariel Investments and Ariel Capital, it is easy to describe the relation between Illinois and Ariel Capital: none. That resolves this litigation.”

Sullivan v. Flora Inc. (Copyright)

In 2019, Barrett joined the majority decision siding the 7^th Circuit with the 1^st, 9^th, 11^th, and D.C. circuits in an ongoing split. In the case, the decision resolved the definition of “one work” and whether a compilation qualifies or is a set of different works. Amy Sullivan, a graphic design artist, produced 33 illustrations for Joseph Silver as part of his freelance product specialist work. The illustrations were for a project Silver was working on for Flora, Inc. Without Flora’s knowledge, Silver had used Sullivan for the project, and obtained excusive rights to the illustrations for two specific ad campaigns. Instead, Flora used the illustrations in the two campaigns, as well as a number of others.

Sullivan then registered 17 of the illustrations under one copyright and 16 under another, and filed suit against Flora, Inc. in the Western District of Wisconsin. Sullivan argued that each of the 33 illustrations was a part of “one work” and that she should be awarded statutory damages on each of the 33 counts. Conversely, Flora, Inc. argued that the statutory damages could only be awarded for each collective or group works, a mere 2 counts of infringement.

The district court found for Sullivan and awarded all 33 counts of statutory damages, but on appeal, the 7^th Circuit reversed, with Barret joining the majority. As the decision explains, controlling weight should be afforded to the text of Section 504(c), providing that “all the parts of a compilation or derivative work constitute one work”, and to the artists decision to bundle the works or to issue them separately.

Unsurprisingly, Barrett’s minimal IP record shows a consistency with her larger approach to judicial analysis, with an emphasis on the statutory language and adherence thereto. Should she pass the senate, she would bolster an already statutorily inclined bench, providing IP owners with greater predictability on their rights moving forward.

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On July 22, the Federal Circuit ruled that marking requirements for pre-suit damages cannot be satisfied based on defendant’s infringement of a related method claim in Packet Intelligence LLC v. NetScout Systems, Inc.

In the case, Packet Intelligence sued NetScout Systems for patent infringement in the Eastern District of Texas. The Jury found in favor of Packet Intelligence on all issues and awarded both pre-suit and post-suit damages. Following the jury trial, the court also enhanced damages and awarded an ongoing royalty for post-verdict infringement.

NetScout appealed to the Federal Circuit, arguing that in order to be subject to pre-suit damages Packet intelligence’s licensees must have properly marked their patent-practicing products. NetScout concluded that because they failed to do so, the award of pre-suit damages was in error. The Federal Circuit agreed.

Judge Lourie explained in the written opinion. While the defendant has the primary burden to “articulate the products it believes are unmarked ‘patented articles”, this initial burden was met by NetScout. The low bar for this need only “put the patentee on notice that certain licensees sold specific unmarked products”. The Federal Circuit ruled that the District Court incorrectly placed a burden on them to prove these products practiced the patent, when the burden should rightly be on the plaintiff to demonstrate that they did not.

Finally, the Federal Circuit was not convinced that NetScout’s infringement of related patents could be used to satisfy the marking obligation in place of actual compliance. Per the decision, “Packet Intelligence is barred from recovering damages for pre-suit sales of the…products because it failed to comply with the marking requirement. It cannot circumvent § 287 and include those products in its royalty base simply by arguing that NetScout’s infringement of related method claims drove sales.”

The Federal Circuit ruled that the PTAB May review all aspects of patentability for substitute claims in inter partes review (IPR) proceedings in Uniloc 2017 LLC v. Hulu, LLC last month.

At the PTAB, Hulu petitioned for IPR on Uniloc’s patent “System and Method for Adjustable Licensing of Digital Products”.  In the course of the proceeding, Uniloc offered substitute claims under $ 316(d). Hulu challenged these substitute claims as obvious under § 103, as enlarging the claim scope in violation of § 316(d), and as claiming non-statutory subject matter under § 101. The Board rejected the first two grounds, but agreed that the substitute claims were ineligible under § 101. Based solely on its ineligibility under § 101, the Board then rejected Uniloc’s proposed substitute claims.

After a failed rehearing at the PTAB arguing that substitute claims could not be reviewed under § 101, Uniloc appealed the decision to the Federal Circuit. The Federal Circuit upheld the Board’s ruling with Judge Wallach authoring the decision. The Federal Circuit found that the Board is to find “patentability” of substitute claims in IPR cases, based on legislative history and structure of the statute the court found this to require a full analysis of proposed substitute changes, and is not limited by § 311(b) for these purposes. The Federal Circuit accordingly reasoned that the Board was correct in including § 101 in its patentability analysis for substitute claims.

This is a significant development and should be noted with caution for patent owners and petitioners alike at the PTAB to factor into their decisions in any IPR proceeding with substitute claims.