Supreme Court Relaxes Standards for Awarding Attorneys’ Fees in Patent Cases

by: Robert Wagner, patent attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

Law and MoneyAs we noted earlier, the United States Supreme Court has taken a renewed interest in intellectual property and patent cases as of late. In Octane Fitness, LLC v. Icon Health & Fitness, Inc., No. 12-1184, the Supreme Court reversed the Federal Circuit’s long-standing standard for determining whether to award attorneys’ fees to the prevailing party in a patent infringement action. Now, prevailing parties need only show by a preponderance of the evidence that the case was “simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” And, this decision lies in the sound discretion of the trial court.

In Octane Fitness, ICON sued Octane Fitness for infringement of U.S. Patent No. 6,019,710. The district court granted summary judgment in favor of Octane Fitness, but declined to award attorneys’ fees under 35 U.S.C. § 285, finding that the infringement claims were not frivolous, objectively baseless, or brought in bad faith. Octane Fitness appealed, arguing that the Federal Circuit’s standard for awarding fees under § 285 was too restrictive, but the Federal Circuit disagreed. The Supreme Court granted certiorari to clarify the standard.

In a unanimous decision written by Justice Sotomayor, the Supreme Court looked to the statute, which reads in its entirety:

The court in exceptional cases may award reasonable attorney fees to the prevailing party.

Finding that the Patent Act provides no definition or guidance beyond this statement, the Court looked to the common understanding of the term “exceptional” and to when the provision was enacted and the standards that it was meant to codify.

“Exceptional,” the Court found, was meant to encompass things that are out of the ordinary, unusual, or special. The Court further concluded that Congress intended that courts be given discretion to determine when something was exceptional.

Putting these together, the Court held that courts have the discretion to award attorneys’ fees when a case “stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.”

The Court rejected the Federal Circuit’s more rigid approach of limiting fee awards only when there has been litigation misconduct or if the party’s position was brought in bad faith and was objectively baseless.  Moreover, the Court found no basis to require the prevailing party to prove its entitlement to fees by clear and convincing evidence.

This decision may have substantial consequences going forward in patent cases, for both plaintiffs and defendants. Because the Court has emphasized that this decision is left to the discretion of the trial court, and the standard is much more flexible, one would expect to see more courts awarding fees. In theory, this will act as a deterrent for bringing frivolous patent claims and may reduce some of the more objectionable patent troll cases. But, it may also put more pressure on defendants with weaker defenses to settle, rather than to litigate at all costs. Only time will tell to see what effects come from this decision.

Court Awards Limited Enhanced Damages in CMU v. Marvell Case

by: Robert Wagner, patent attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

marvell_chipYesterday, Judge Nora Barry Fischer issued her opinion in the Carnegie Mellon University v. Marvell Technology Group, Ltd. patent infringement lawsuit in the United States District Court for the Western District of Pennsylvania (Case No. 2:09-cv-00290-NBF) and awarded an additional 23% in enhanced damages above and beyond the jury’s $1.17 billion award. In total, with all enhancements and interest awards, Marvell is facing at least a $1,535,889,387.60 damage award with an ongoing $0.50/chip royalty for the lifetime of the patent.

The jury returned a $1.17 billion award in December 2012, finding that Marvell willfully infringed two of CMU’s patents (U.S. Patent Nos. 6,201,839 and 6,438,180). It awarded a royalty of $0.50 per chip Marvell sold using the patented technology. In September 2013, the Court denied Marvell’s post-trial motions and determined that Marvell’s infringement was willful. The Court yesterday determined that some enhancement of the damage award was appropriate, although not to the extent requested by CMU (who wanted an additional 200% in damages).

In weighing the parties’ arguments as to whether the damage award should be enhanced, Judge Fischer appeared to focus primarily on three factors. First, she was concerned that a double or triple award of damages could cripple Marvell. Second, she was concerned about CMU’s “inexcusable” delay for almost 6 years after learning of Marvell’s infringement before taking action. Finally, she balanced these factors against Marvell’s willful infringement and its actions before CMU filed suit.

Weighing all of these factors (and the others under the Read test), Judge Fischer concluded that a 23% enhancement properly balanced all of the relevant interests.

In this decision, Judge Fischer also awarded damages on the sales of additional infringing products that were not part of the jury’s verdict but occurred before entry of judgment (this was uncontested), established a post-judgment royalty rate of $0.50 per infringing chip sold, and set a 0.14% post-judgment interest rate. She denied CMU’s motion for a permanent injunction and for prejudgment interest, finding that neither were warranted under the circumstances.

Given the amounts at issue, one expects that these decisions will not be the final word in this case, and that at least the Federal Circuit will be looking at this case on appeal.

Is CafePress a Service Provider and Could Its Stripping of Metadata Cost It Safe Harbor Status Under the DMCA?

by Cara Disheroon, attorney at Picadio Sneath Miller & Norton, P.C. ()

The Southern District of California recently grappled with these issues in Steven M. Gardner v. CafePress Inc., Case No. 3:13-cv-1108-GPC-JMA (S.D. Cal. Feb. 26, 2014). The case centered on a copyright infringement claim against the self-publishing site CafePress and provides an interesting analysis of the safe harbor provision of the Digital Millennium Copyright Act (DMCA) at 17 U.S.C. § 512.

The facts regarding the images were undisputed.  Plaintiff, Gardner alleged copyright infringement of various wildlife images which were distributed for sale on the site by CafePress users. Gardner filed suit and CafePress, on the same day they received the complaint, disabled access to the alleged infringing material.  Subsequently, they discovered a second member’s use of the artist’s work and immediately disabled and terminated the second user’s account. Before the material was disabled however, $6,320 worth of products was sold. CafePress then moved for summary judgment based on the safe harbor provision of § 512.

In analyzing whether CafePress could take advantage of the safe harbor provision, the court began with an analysis of the term “service provider” under § 512(c). Noting that the language “a provider of online services or network access, or the operator of facilities therefor” was a broad definition, they then compared CafePress to other vendors such as Amazon and eBay. Unlike these companies however, CafePress’s service differed as they actually determine the prices for retail products, pay users only a royalty or commission, possess the ability to modify designs and determine which products are sold. The court found CafePress’s activities to be beyond a service that “merely facilitates the exchange of information between internet users” and thus the court was unable to find as a matter of law, that CafePress was a “service provider.”

Moreover, § 512(i) requires that the provider must have “adopted and reasonably implemented” a policy to terminate repeat infringers and not interfere with “standard technical measures” used to protect copyrighted works. Plaintiff contended that CafePress interfered with “standard technical measures” by deleting metadata when images are uploaded to the website. The court agreed stating that the deletion created a dispute of material fact thereby precluding judgment as a matter of law and adding “From a logical perspective, metadata appears to be an easy and economical way to attach copyright information to an image.” At this stage, the discussion is only dicta but it is nevertheless important as the court appears to be placing the burden on CafePress and given the fact that many social media sites routinely strip metadata, a ruling on the merits could potentially affect a whole host of sites which conduct the practice.

CafePress did prevail on its Motion for Partial Judgment as to statutory damages and attorney fees given that Gardner had failed to register his images before the alleged infringement. Concluding that the alleged acts constituted the same “series of acts” that commenced prior to registration of the images, the court granted CafePress’s motion. This means that Gardner is limited to his actual damages of $6,320 and may affect whether the case proceeds to trial.

If the case does proceed however, a ruling by the court on the merits could have a huge impact on numerous self-publishing sites with the potential loss of safe harbor status and the risk of significant statutory damages.

 

“Johnny Football”

By: Joe Carnicella, intellectual property attorney with Picadio Sneath Miller & Norton, P.C. ()

On March 20, 2014, the USPTO rejected an application for the “Johnny Football” trademark on the grounds that the applied-for-mark consists of a name, portrait or signature identifying a particular living individual whose written consent to register the mark is not of record.  On November 1, 2012, Kenneth R. Reynolds Family Investments, an investment firm based in College Station, Texas, filed for the trademark “Johnny Football” as Johnny Manziel began his ascent to fame as Texas A&M’s quarterback.  Johnny Manziel, through his organization JMAN2 Enterprises, filed for the same trademark three months later.   The investment firm now has six months to request that the USPTO reconsider its decision or to file an appeal.  The application filed by Manziel’s organization has been stayed pending the outcome of the investment firm’s application.

What Is a Trademark?

PSMN What Is...? SeriesBy: Joe Carnicella, intellectual property attorney with Picadio Sneath Miller & Norton, P.C. ()

As part of our “What is . . . ?” series, it’s time to find out just what is a trademark / service mark.

A trademark / service mark is a word, phrase, symbol or design, or a combination thereof, that identifies and distinguishes the goods or services from those manufactured or sold by others and to indicate the source of goods or services, even if that source is unknown.  There are five categories of marks: fanciful, arbitrary, suggestive, descriptive and generic.  A fanciful mark comprises a term that has been invented for the sole purpose of functioning as a trademark or service mark.  These words are either unknown in the language or are completely out of common usage.  Examples of fanciful marks include PEPSI and KODAK.  An arbitrary mark comprises words that are common in language but, when used to identify particular goods or services, do not suggest or describe a significant ingredient, quality or characteristic of the goods or services.  An example of an arbitrary mark is APPLE for computers.  A suggestive mark comprises words that, when applied to the goods or services at issue, require imagination, thought or perception to reach a conclusion as to the nature of those goods or services.  A descriptive mark comprises words that merely describe an ingredient, quality, characteristic, function, feature, purpose or use of the specified goods or services.  Finally, a generic mark comprises words that the relevant purchasing public understands primarily as the common or class name for the goods or services.

Now that you have an understanding of what is a trademark / service mark, the next step is to determine whether you can and should obtain a mark.  An important issue to determine is whether a mark is registrable.  One of the most common grounds for refusal of a registration is that the potential mark causes a likelihood of confusion with an existing mark.  In particular, a likelihood of confusion exists when the marks are similar and the goods or services relate in a way that such consumers would mistakenly believe they come from the same source.  Other grounds for refusal exist as well.  The other important issue to determine is whether the mark is enforceable based on the strength of the mark.  The strongest mark, and thus, the easiest to enforce, is a fanciful mark, and next in line would be an arbitrary mark followed by a suggestive mark.

If you are interested in obtaining a trademark / service mark, you should consult a trademark attorney to advise and to assist you with the federal registration process.       Continue reading

What Is the Difference Between a Provisional and Non-Provisional Patent Application?

by: Robert Wagner, patent attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

What is the Difference Between a Provisional and Non-Provisional Patent Application?

PSMN What Is...? SeriesOne of the key decisions that an inventor needs to make in the patenting process is whether to file a provisional or non-provisional patent application, so understanding the difference between these two kinds of applications is important for inventors. Both of these types of applications serve useful roles in the patent process, but they are two very different kinds of patent applications that create very different rights.

Non-Provisional Applications

A non-provisional patent application is an application filed with the United States Patent & Trademark Office that is examined by a patent examiner and can potentially lead to the issuance of a patent. It has a number of formal requirements that must be satisfied in order to be accepted by the Patent Office. For instance, it must contain a written description of the invention with sufficient detail to both demonstrate that the inventor has invented something and to explain it in sufficient detail such that one of ordinary skill in the art could practice the invention without undue experimentation. It generally must contain formal drawings that show various embodiments of the invention. It must be accompanied by an oath or declaration by the inventor or inventors that confirms that they invented the invention described in the application. The inventors must also identify all relevant prior art that they are aware of. Finally, it must contain a series of claims, which are what defines the scope of the patent and the protections it provides.

In general, non-provisional applications are complicated documents that must be prepared with extreme care if an inventor wants a patent that will be enforceable and that will product his or her invention to the broadest extent possible. The precise language of the claims is incredibly important, as is making sure that the written description and drawings adequately explain the invention and enable one to make and use it. As such, it takes time (and money) to draft one correctly.

Provisional Applications

A provisional application, on the other hand, is never examined by a patent examiner and can never lead to the issuance of a patent by itself. Unlike a non-provisional application, there are only two requirements for filing a provisional application—it must contain a written description of the invention and sufficient drawings (which can be informal) to understand the invention. The other formal requirements of a non-provisional application (such as formal drawings, claims, oaths, declarations, and prior art disclosures) are not necessary. A provisional patent application lasts for one year before it expires, and this one-year period cannot be extended.

Because provisional applications are significantly less formal than a non-provisional application, they can be drafted more quickly (and cheaply) and can include more information than is necessary or prudent to include in a non-provisional application. Inventors can literally attach journal articles, PowerPoint slides, photographs, hand-written drawings, etc. to the application, in addition to the narrative that describes the invention.

In order for a provisional application to lead to the issuance of a patent, it must either be converted or it must be appropriately referenced in a non-provisional application that is filed within one year of the filing date of the provisional application (this one-year date cannot be extended).

So, why would one choose to file a provisional application?

So, if a provisional application only lasts for one year and cannot, by itself, ever become a patent, why would anyone want to file one? Under the current patent laws, the public sale or disclosure of an invention before a patent application (either a non-provisional or provisional application) has been filed can act as a bar that prohibits an inventor from being able to obtain a patent on the invention in the future. A provisional application provides a way for an inventor to get an application on file before a key event so as not to prevent him or her from getting a patent later on.

For example, if a company is about to present a new product at a trade show or if an inventor is about to present a paper or give a talk at a conference, the inventor can file a provisional application that contains the materials that will be publicly disclosed, along with a sufficiently detailed write-up of the invention, before that information is disclosed without having to go through the considerable time and effort required to file a non-provisional application.

In addition, in the new first-inventor-to-file regime that exists under the America Invents Act (AIA), it may be prudent for an inventor to file a series of provisional applications as it is refining and developing a new product or invention in order to protect those ideas from another inventor filing in the Patent Office first. A provisional patent application provides a quicker and cheaper means for doing so.

Conclusion

These descriptions give you some idea of the differences between provisional and non-provisional patent applications. Both types of applications serve important roles in the patenting process, and are often utilized in concert—i.e., an inventor files a provisional patent application followed by a non-provisional patent application within a year. As with all the information in our What Is…? series, there is significantly more detail and nuance behind what is described in this article. If you are interested in obtaining a patent, you should consult a patent attorney to help you determine which application is appropriate for the circumstances you find yourself in.

What Is a Patent?

by: Robert Wagner, patent attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

PSMN What Is...? Series

What is a Patent?

At its most basic, a patent is a right granted by the United States government to prevent someone else from making, using, selling, offering for sale, or importing a product in the United States that uses the patented invention or process. It is a right to exclude, and not a right for the inventor to make, use, sell, offer for sale, or import the product himself or herself. This is an important distinction that is often overlooked by inventors who may think that getting a patent entitles them to use their own invention.

The right to a patent is actually enshrined in the Constitution, and is found in Article I, Section 8, Clause 8, which states:

The Congress shall have Power To…promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries….

In order to obtain a patent, an inventor must apply to the United States Patent and Trademark Office (USPTO) in Alexandria, Virginia. The USPTO is responsible for examining all patent applications and determining whether an invention qualifies for a patent. In general, an invention must be new, novel, and useful to potentially qualify. If the USPTO determines that the invention qualifies for a patent, it issues the patent and publishes it in a public registry of all patents. The USPTO has issued more than 9.3 million utility, design, and plant patents since the first utility patent was issued back in 1790.

If you look at a patent (it is a document), you will see that it has a number of major parts. The front page contains information about the patent, including its number, when it was filed and issued, who the inventor is, related patents, what other patents and prior art were looked at before issuing the patent, and what attorney or law firm helped draft the patent, among many other things. There is also a brief summary (the abstract) that describes the invention. The next pages contain drawings that help describe the invention. Later pages include background information about the invention, as well as a detailed description of it. Finally, the patent ends with a series of numbered claims. Each claim is a single sentence that describes the legal boundaries of the invention. The claims are the most important part of the patent.

Patents generally last for 20 years from the date of the earliest non-provisional application filed by the inventor. This duration can be longer or shorter depending on various circumstances, including how long the patent office takes to examine the patent application and whether the inventor has other, related applications.

Once a patent expires, the invention is in the public domain, and anyone can use it without permission from the inventor. This is the tradeoff that comes from being given a period of time in which the inventor can exclude others from using the invention.

Again, this description provides a broad overview of what a patent is, and there is a lot more detail behind each of these concepts. In our upcoming articles in our What Is…? series, we will explore some of the concepts discussed in this post in greater depth, explaining about the different kinds of patents (utility, design, and plant), the different types of applications (non-provisional, provisional, PCT, continuations, continuations in part, and divisionals), the different types of claims (independent and dependent) and what kinds of inventions can be patented, among many other things. We hope you’ll join us.

Our New What Is…? Series

by: Robert Wagner, intellectual property attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

3d illustration of person with word Q&A cubesPatent and intellectual property law can be intimidating and confusing, especially to inventors, individuals, and companies that have never been through the patent, trademark, or copyright process. In the coming weeks and months, we are going to be posting a number of articles designed to answer some basic questions about patents, trademarks, and copyrights. We’re calling this our “What Is…?” series.

These explanations and discussions are designed to provide a basic overview of these concepts, and are not meant to be the definitive statement on any of them. Patent and intellectual property law, as well as other areas of the law, are full of subtleties, nuances, and exceptions that can change the results or answers depending on the factual and legal circumstances that you find yourself in. So, what might be generally true is not always true. As with any legal issue, you should consult with a qualified attorney to determine how these concepts apply to you in your specific situation.

Our hope is to help you in understanding these basic concepts in what can be a complex and confusing area. If you have suggestions for future topics, please let us know in the comments.

Articles

Court Holds That IP Address Evidence Is Not Sufficient to Allege Claim for Copyright Infringement

Guest post by Cara Disheroon, attorney at Picadio Sneath Miller & Norton, P.C. ()

Cara L DisheroonIn Elf-Man LLC v. Cariveau, No. C13-0507RSL, 2014 U.S. Dist. LEXIS (W.D. Wash., Jan.17, 2014), the U.S. District Court for the Western District of Washington found that a production company’s complaint alleging copyright infringement for the internet downloading of its film, “Elf-Man,” did not state a “plausible” ground for relief when the company’s only evidence of infringement was the use of defendants’ IP addresses.

The production company initially filed an action against 152 Doe defendants for allegedly downloading the film using the BitTorrent application, which identified defendants through their IP address.  Following a dismissal of the Doe defendants in the original complaint, plaintiff filed a First Amended Complaint naming eighteen individual defendants.  Four of these defendants filed a motion to dismiss arguing that the complaint failed to state a claim that was “plausible” under the Federal Rules.

The court agreed stating that plaintiff provided no factual allegations that supported claims that defendants directly or indirectly stole copyrighted material.  Noting that plaintiff alleged only that the defendants purchased internet access and failed to ensure that others did not use that access to download copyrighted material, the Court addressed the claims of direct, contributory, and indirect infringement in turn.   Regarding the direct and indirect infringement allegations, the court reasoned that the mere identification of defendants’ IP address “tells us very little about who actually downloaded Elf-Man using that IP address.”  Citing various other possibilities, including another family member, guest, or freeloader who could have engaged in the infringing activity, the Court found that plaintiff alleged facts that were merely possible.  In the eyes of the court, it was also possible that defendants simply failed to secure their connection against third-party interlopers.  The conclusory allegations of the complaint therefore failed to give rise to a plausible inference.

Regarding the indirect infringement claim, the Court again found that plaintiff’s complaint was conclusory and failed to provide facts that would support a finding that defendants intentionally encouraged or promoted the infringement.  Plaintiff argued that defendants should be held liable for contributory infringement “because they failed to take affirmative steps to prevent unauthorized use of their internet access….” The Court, while agreeing with plaintiff that courts continue to analyze contributory liability claims and that not all issues had been litigated, held that courts have fixed the requirement that defendant’s contribution to the infringement be intentional.  Absent this essential element of the claim, defendants’ motion to dismiss was granted.

The decision arguably adds to the already difficult burden of copyright holders to protect their works from online infringement but also demonstrates the balancing act of courts which require proof that a particular individual behind the IP address actually pirated the copyrighted work.

USPTO Posts Questionable Advice for People Who Receive Demand Letters

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C. ()

Last week, the US Patent and Trademark Office expanded its website to include a section to help individuals and companies to respond when receiving demand letters from patent holders. As one of our colleagues, Gene Quinn, over at IPWatchdog.com notes, this resource (albeit in “Beta” form) is fairly one-sided and offers some problematic advice to those who receive demand letters.USPTO

Much of the advice on the USPTO’s website is fairly generic, but the overall tenor of the advice seems to ignore that legitimate patent owners with legitimate and valid patents often send these demand letters to stop individuals and companies from infringing their patents. Indeed, that is one of the fundamental rights that comes with owning a patent—the ability to stop others from using your invention.

Instead, the fundamental assumption on the USPTO’s website seems to be that only patent trolls send demand letters. For instance, the USPTO suggests that one response is to simply ignore a demand letter because some patent owners send these demand letters to mislead or intimidate the recipients into paying for licenses that they do not need. While the USPTO notes that this approach carries some risk, that advice is buried at the end. Oddly, the USPTO never suggests that one option after receiving a demand letter is to simply stop infringing the patent.

The USPTO also downplays the importance of consulting with an attorney to help understand the risks and to respond to the patent owner in an appropriate manner. Patent law is not a simple subject, and most individuals simply do not have the expertise or knowledge to determine whether they are infringing, whether the patent is valid and enforceable, and what the risks may actually be.

In my years of practice, I have noticed that many individuals do not understand what the scope of a patent is unless they have significant prior experience with patents. They tend to look at the description of the invention in the specification or the drawings, rather than the claims, when trying to assess their exposure. As patent practitioners know, it is the claims that truly matter (although the specification is important to understanding those claims), and those claims are often far broader then the particular embodiments disclosed in the specification. In addition, claims are not written in a format that is simple to understand, or there are statements made during the prosecution of the patent that are important to understanding their scope, which compounds the problem. Thus, there is a very real risk that individuals will drastically underestimate the risk that they infringe unless they receive competent legal advice.

While hiring an attorney may be an expensive proposition, the consequences of not doing so may be far greater. A typical patent infringement lawsuit can easily cost more than $500,000 to defend, even where the amount at issue is small (and can cost tens of millions of dollars when significant amounts are at issue). And, once a lawsuit begins, it can be very hard for a defendant to unilaterally stop it. If an individual is truly infringing, an attorney can help the client understand the risks and suggest ways of resolving the matter before litigation begins, which potentially can save an individual hundreds of thousands of dollars. Simply ignoring a demand letter can be the last thing an accused infringer should do unless there is a very good reason for doing so because ignoring the demand letter starts to lay the groundwork for a finding of willful infringement, which potentially entitles the patent owner to triple damages and an award of its attorneys’ fees and costs.

The problem of extortionate patent trolls is very real, and I have represented numerous companies that have been the targets of these kinds of trolls. It is extremely frustrating to explain to a client the financial costs and distractions that come with defending a meritless lawsuit brought by patent troll and the fact that there often is no simple way to make the lawsuit disappear without paying some amount of money to the troll. That being said, I’ve also represented legitimate companies with patents on innovations they developed that help give them a competitive edge in the marketplace. They have spent significant time and resources in developing these innovations and bringing them to market and understandably want to protect those investments. The USPTO’s blanket advice to individuals and companies that might receive a demand letter is not particularly helpful and understates the real risks and costs that are at issue. It is somewhat disturbing that an office that is charged with issuing valid patents and supporting innovation would put out such incomplete and unbalanced advice. Hopefully, the USPTO will present more balanced and useful advice when this website moves out of its “beta” stage.