Monthly Archives: March 2013

Federal Circuit to Reconsider De Novo Claim Construction Review–Lighting Ballast Control Order

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

Federal CircuitOn March 15, 2013, the Federal Circuit issued an order in Lighting Ballast Control LLC v. Philips Electronics North America Corp, Case No. 2012-1014, -1015, stating that an en banc panel of the Court will consider whether and to what extent it should afford any deference to a district court’s patent claim construction. The Federal Circuit is determining whether it will overrule its prior decision in Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998).

The Supreme Court, in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), determined that claim construction is a matter of law exclusively for the courts, and is not a factual matter for juries (although it did recognize that claim construction is somewhat of a “mongrel,” having aspects that are both legal and factual). In Cybor, the Federal Circuit considered what the implication of that finding would be on how it, as an appellate court, would review a trial court’s construction of the claims in a patent. It concluded that because claim construction is a matter of law, it would review a district court’s construction of the terms in a patent de novo, meaning without any deference to the lower court’s conclusion. This has been the state of the law for some time now.

The implications of the Cybor decision are significant to patent holders and those accused of infringement. As a practical matter, parties to a lawsuit have come to view a district court’s claim construction as a somewhat intermediate position. After all, if the Federal Circuit will give no deference to the district court’s conclusions, there is a significant possibility that those conclusions could be reversed on appeal. Fair or not, the perception of the Federal Circuit among some practitioners is that a trial court’s claim construction only has a 50/50 chance of being affirmed on appeal. (For some interesting studies of Federal Circuit reversal rates, see here, here, and here). Many have complained that this uncertainty discourages settlement, because the “losing” side on the claim construction issue often feels that it will be “vindicated” on appeal.

On the other hand, by having the Federal Circuit have the “final say” on claim construction, it promotes more consistency and, hopefully, better results, as the Federal Circuit is often far more familiar with claim construction issues than many district courts and they (and their clerks) are often better versed in the technologies described in these patents.

Patent holders are also fearful that if claim construction is not reviewed de novo, an unfavorable claim construction by a district court may be very difficult to overcome and could affect how a particular term is construed in other patents held by the patentee. If the Federal Circuit has the final say, a patentee has more options. For instance, it can appeal to the Federal Circuit a get a fresh look at the issue, or it can settle the case with a realistic hope that the Federal Circuit in a later case would not be particularly beholden to how a district court in a previous case construed a claim term.

Thus, this case will be particularly important for parties in patent litigation. It will be very interesting to listen to the oral argument in the Lighting Ballast case and see what the Federal Circuit ultimately decides. This may, in the end, be another issue that the Supreme Court will decide to weigh in on.

Advertisements

U.S. Supreme Court Interprets the “First Sale” Doctrine

Supreme Court

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

On March 19, 2013, in Kirtsaeng v. Wiley & Sons, Inc., No. 11-697, the U.S. Supreme Court held that the “first sale” doctrine applies to copies of a copyrighted work lawfully made abroad.  Specifically, a buyer or other lawful owner of a copy (of a copyrighted work) lawfully manufactured abroad is protected under the “first sale” doctrine and such buyer may bring that copy into the United States (and sell it or give it away) without obtaining permission to do so from the copyright owner.

Section 106 of the Copyright Act grants the owner of copyright exclusive rights including the right to distribute copies of the copyrighted work to the public by sale or other transfer of ownership.  One limitation on these exclusive rights falls under Section 109(a) of the Copyright Act (commonly referred to as the “first sale” doctrine), which provides that the owner of a particular copy lawfully made under this title is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy.  Thus, once a copy has been lawfully sold or its ownership otherwise lawfully transferred, the buyer of that copy and subsequent owners are free to dispose of the copy as they wish.  Section 602(a)(1) further provides that importation into the United States, without the authority of the owner of copyright under this title, of copies of a work that have been acquired outside the United States is an infringement of the exclusive rights to distribute copies under Section 106.

Wiley & Sons publishes academic books and assigns rights to publish, print and sell the English language textbooks abroad to its wholly owned foreign subsidiary.  Supap Kirtsaeng, while studying in the United States, asked his friends and family to purchase copies of foreign edition English-language textbooks at Thai book shops, which sold the books at low prices, and to mail the books to him in the United States, wherein he used the books, sold them, reimbursed his family and friends and kept the profit.

In 2008, Wiley initiated a lawsuit against Kirtsaeng for copyright infringement on the grounds that Kirtsaeng’s unauthorized importation of its books and his later resale of those books amounted to an infringement of Wiley’s Section 106(3) exclusive right to distribute as well as the Section 602 related import prohibition.  Kirtsaeng defended against the claim on the ground that the books he had acquired were “lawfully made” and that he had acquired them legitimately.  His position was that the “first sale” doctrine under Section 109(a) permitted him to resell or otherwise dispose of the books without the copyright owner’s further permission.  The District Court ruled that the “first sale” defense was not available to Kirtsaeng because the doctrine does not apply to “foreign-manufactured goods.”  The Second Circuit agreed with the District Court.

The Court analyzed the language within these statutes, and in particular the phrase “lawfully made under this title.”  Wiley argued that the phrase imposes a form of geographical limitation and that the “first sale” doctrine does not apply to copies of American copyrighted works manufactured abroad.  Kirtsaeng argued that the phrase imposes a non-geographical limitation, and in particular, that the intention was for the phrase to mean “made in accordance with” or “in compliance with the Copyright Act.”  In this case, Kirtsaeng asserted that the “first sale” doctrine would apply to copyrighted works as long as their manufacture met the requirements of American copyright law, e.g. copies manufactured abroad with the permission of the copyright owner.  The Court considered the language of Section 109(a), its context and the common-law history of the “first sale” doctrine and concluded that Section 109(a) favors a non-geographical interpretation.  The U.S. Supreme Court determined that, while Section 602(a)(1) makes clear that importing a copy without permission violates the owner’s exclusive distribution right, it also refers explicitly to Section 106(3), which is by its terms is subject to various limitations including the “first sale” limitation under Section 109(a).

A complete copy of the Court’s Opinion can be found on the United States Supreme Court’s website.

Court Reduces Damages Award in the Apple/Samsung Patent Battle

by: Kelly A. Williams, a shareholder at Picadio Sneath Miller & Norton, P.C.

iPhone ImageOn March 1, 2013, United States District Judge Lucy H. Koh of the Northern District of California ordered that the jury award of $1,049,343,540.00 entered last August against Samsung and in favor of Apple in their patent suit be reduced by $450,514,650.00.  The court determined that the jury had based part of its award on an impermissible legal theory, and she could not reasonably calculate the amount of excess while effectuating the intent of the jury.  For the Galaxy Prevail, which was found to infringe only utility patents, the jury awarded Samsung’s profits.  This was a legally impermissible remedy for a utility patent infringement.  For several other devices, the court determined that the jury improperly awarded damages for sales made before Samsung had notice of the Apple patents at issue.

Thus, the court ordered a new trial on damages for the following products:  Galaxy Prevail, Gem, Indulge, Infuse 4G, Galaxy SII AT&T, Captivate, Continuum, Droid Charge, Epic 4G, Exhibit 4G, Galaxy Tab, Nexus S 4G, Replenish, and Transform.  The jury award stood for the remaining 14 products as well as $598,908,892.00 of the original award.

Additionally, the court denied Apple’s attempt to increase the amount of damages.  Judge Koh cited the longstanding rule that the Seventh Amendment prohibits a judicial increase in a damages award made by a jury.  Apple argued that rule did not apply because there was no dispute about the proper amount of damages, but the court disagreed.  However, the court did determine that supplemental damages for infringing sales that were not considered by the jury because the sales occurred after the trial had concluded was appropriate.  The court decided to delay the consideration of the amount of these damages, however, until after the completion of appeals in the case.