1. U.S. Supreme Court and Intellectual Property: 2015-2016 Term and a Look Ahead
John B. Pegram
Fish & Richardson P.C.

2. U.S. Supreme Court and Intellectual Property
We will briefly discuss:
An Overview of the U.S. Supreme Court and Intellectual Property.
Three IP cases decided in the Term: Cuozzo, Halo and Kirtsaeng.
An important patent case in which review was denied: Sequenom v. Ariosa Diagnostics.
Three patent cases accepted for review in the next term: Life Tech, CA Hygiene and Samsung v. Apple.
Some of the other cases most likely to be accepted for review in

3. Overview
Supreme Court review of IP issues has increased dramatically over the last decade.
There has been a high reversal rate of the Federal Circuit by the Supreme Court.
The death of Justice Antonin Scalia on February 13, 2016, left a vacancy on the Court.
Limited effect on IP decisions, which usually have a majority of more than five justices
Possible reduction in numbers of IP cases accepted for review because of:
More work for less justices, and
One less justice to provide the four votes required for review.

4. 2016 Supreme Court IP Decisions

5. 2016 Supreme Court IP Decisions
Cuozzo Speed Technologies, LLC v. Lee, ___ U.S. ____ ,136 S.Ct (June 20, ) patent claim construction standard to use in IPR post-grant proceedings.
Halo Electronics v. Pulse Electronics, Inc. & Stryker v. Zimmer ___ U.,S. ____ , 136 S.Ct (June 13, 2016) willful patent infringement and enhanced damages.
Kirtsaeng v. John Wiley & Sons, Inc., ___ U.S. ____ , 136 S.Ct (June 16, 2016) award of attorneys’ fees in copyright cases.

6. Cuozzo (Claim Construction)
1. The Court approved use of the existing USPTO “Broadest Reasonable Interpretation” (“BRI”) claim construction standard in PTAB proceedings
The BRI standard has been used in all USPTO proceedings for many years.
The Court rejected changing the standard for IPRs to the Markman procedure used by District Courts to determine the correct construction based on the contents of the patent, its prosecution history and the prior art.

7. Cuozzo (Institution Decision Appeals)
2. The Court affirmed the Federal Circuit’s decision that the AIA does not permit appeal of decisions by the PTAB whether or not to institute an IPR.
The Court left open the possibility that the bar against judicial review is not absolute if an appeals raises constitutional questions.
The Court specifically suggested lack of due process or indefiniteness as potentially appealable issues.

8. Halo & Kirtsaeng (State of Mind)
These decisions are particularly interesting because the Court is again considering the state of mind of infringers.
Ordinary, direct infringement does not require proving the infringer knew of the patent or intended to infringe.
In the previous term, the Court held that good-faith belief in the invalidity of an asserted patent is not a defense to induced infringement. Commil USA, LLC v. Cisco Systems, Inc. ___ U.S. ____ , 135 S.Ct (May 26, 2015)
Halo addresses the discretionary standard for increasing damages up to three times actual damages in patent cases.
Willful infringement can be a basis for increased damages.
Kirtsaeng addresses the standard for award of attorneys fees in copyright cases.
Copyright Act has different language from Patent Act re award of attorneys fees.

9. Halo (Patent Willfulness & Increased Damages
Section 284 of the Patent Act provides that, in a case of infringement, courts “may increase the damages up to three times the amount found or assessed.”
Patentee could obtain enhanced damages only if it could prove, by clear and convincing evidence, that a defendant's infringement was "willful.“
Until Halo, the Federal Circuit applied its two pronged Seagate test in reviewing willfulness decisions:
(1) Was the defendant's legal position "objectively reckless" as determined at the time of trial, and
(2) Was the risk of infringement was known or so obvious it should have been known to the defendant.
The Court had rejected a similar test for award of attorneys fees in exceptional patent cases in Octane Fitness v. Icon, ___ U.S. ____, 134 S. Ct. 1749, 1756 (2014).

10. Halo (Patent Willfulness & Increased Damages
The Halo decision
Eliminated two-part Seagate test, essentially eliminating Seagate’s first prong.
Seagate test is "unduly rigid, and it impermissibly encumbers the statutory grant of discretion to district courts"
Adopted more flexible standard of greater discretion by district judges to enhance damages.
Halo wiped out the Federal Circuit's "clear and convincing" evidentiary burden for award of increased damages and replaced it with the lesser preponderance of the evidence burden.
The defendant’s subjective belief is now assessed “at the time of the challenged conduct.”

11. After Halo: Who Decides “Willfulness”?
The patent statute assigns the enhancement determination to the court.
35 U.S.C. § 284 (“the court may increase the damages up to three times the amount found or assessed.”)
The Federal Circuit has previously assigned determination of willfulness to the jury:
See, e.g., Shiley v. Bentley Labs., Inc., 794 F.2d 1561, 1568 (Fed. Cir. 1986) (“The trial court apparently deemed it necessary to label as ‘advisory’ one of the jury's fact findings on willful infringement, and to make its own finding of fact, to enable it to exercise the court's statutory discretion to award increased damages. That step was neither appropriate nor necessary.”)
The role of a jury is likely to arise in future cases in the Federal Circuit:
Judge O’Malley’s Halo concurrence in the Federal Circuit flags this as an issue ripe for reconsideration
INSIGHTS Litigation Webinar Series

12. After Halo: What Will Be the Role of Attorney Opinions?
Failure to obtain or disclose an opinion can’t be used to prove willfulness. See 35 U.S.C. § 298
Halo holds that the defendant’s subjective belief is assessed “at the time of the challenged conduct.”
That implies that a defendant whose conduct might expose it to a legitimate charge of willfulness would be well-advised to secure an opinion.
At a minimum, defendants will want to conduct a contemporaneous analysis and document it in writing when their other conduct puts them at risk for a willfulness finding.
INSIGHTS Litigation Webinar Series

13. Kirtsaeng (Copyright Attorney Fees)
Question before the Court: What standard should the courts apply in determining an award of attorney fees award under § 505 of the Copyright Act?
Section 505 provides that a “court may … award a reasonable attorney’s fee to the prevailing party” in a copyright case
Unlike the Patent Act, the Copyright Act does not requires a finding that a case is “exceptional” in order to award attorneys fees.
The Circuit Courts of Appeal had applied different standards:
The Ninth and Eleventh Circuits award attorneys’ fees when the prevailing party’s successful claim or defense advanced the purposes of the Copyright Act
The Fifth and Seventh Circuits use a presumption in favor of attorneys’ fees for a prevailing party that the losing party must overcome
The Second Circuit places substantial weight on whether the losing party’s claim or defense was “objectively unreasonable”

14. Kirtsaeng (Copyright Attorney Fees)
Holding:
Section 505 requires consideration of all relevant factors.
It was correct to place “substantial weight” on objective reasonableness of party’s positions.
Influence:
This ruling follows the Supreme Court’s recent trend in intellectual property of avoiding bright line tests or rules in favor of giving discretion to the district court when awarding attorney’s fees and other additions to actual damages.

15. Cert. Denied: Sequenom Inc. v. Ariosa Diagnostic, Inc.
Question Presented: Whether a novel method is patent-eligible where:
a researcher is the first to discover a natural phenomenon;
that unique knowledge motivates him to apply a new combination of known techniques to that discovery; and
he thereby achieves a previously impossible result without preempting other uses of the discovery?
Major criticisms of the refusal to review this case:
A significant invention; and
A lost opportunity to clarify the law of patentable subject matter.
Supreme Court appears to be avoiding patent eligibility cases recently.

16. IP Cases the Supreme Court Has Agreed to Hear

17. IP Cases the Supreme Court Has Agreed to Hear
Life Tech. Corp. v. Promega Corp. – Cert. granted June 2016 – induced infringement.
CA Hygiene Prods. Aktiebolag v. First Quality Baby Prods. – Cert. granted May – patent laches.
Samsung Electronics v. Apple – Cert granted March 2016 – design patent damages for iPhone.

18. Samsung v. Apple (Design Patent Damages)
First design patent case to be heard in over a century (last case was Gorham v White (1871) relating to flatware).
Questions Presented:
Where a design patent includes unprotected non-ornamental features, should a district court be required to limit that patent to its protected ornamental scope?
Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?
Oral argument was on October 11, 2016.

19. Samsung v. Apple (Design Patent Damages)
Patent Act Section design patent infringers “shall be liable to the owner to the extent of his total profit.”
District Court awarded damages without regard to value of the patented component.

20. Life Tech. (Inducing Infringement & Extraterritoriality)
Questions presented:
Whether the Federal Circuit erred in holding that a single entity can “actively induce” itself to infringe a patent under 35 U.S.C. §271(f)(1).
Whether the Federal Circuit erred in holding that supplying a single, commodity component of a multi-component invention from the United States is an infringing act under 35 U.S.C. §271(f)(1), exposing the manufacturer to liability for all worldwide sales.
What does “substantial” mean?

21. SCA Hygiene (Laches) Question Presented:
Whether and to what extent the defense of laches may bar a claim for patent infringement brought within the Patent Act’s six-year statutory limitations period, 35 U.S.C. § 286.
A different legal issue from laches in copyright cases, addressed by the Court in Petrella v. Metro-Goldwyn-Mayer:
Laches cannot override a clear statutory provision in the Copyright Act (3 year statute of limitations), meaning that delay will not prevent damages from being obtained during the statute of limitation.
The patent law does not include a true statute of limitations, barring any action on a claim after a period of years.
Section 286 only limits recovery of patent infringement damages to a period of six years before the Complaint is filed,

22. Some Pending Petitions

23. IPR Constitutionality
Cooper is the inventor of patents directed to online payment methods.
Patent validity was challenged in an IPR proceeding.
Two petitions involve the same question of Constitutionality of the law creating the IPR procedure: Cooper v. Lee and Cooper v. Square:
Whether 35 U.S.C. §318(b) violates Article III of the United States Constitution, to the extent that it empowers an executive agency tribunal to assert judicial power canceling private property rights amongst private parties embroiled in a private federal dispute of a type known in the common law courts of 1789, rather than merely issue an advisory opinion as an adjunct to a trial court.
Substantially the same issue is raised by the petition in MCM Portfolio v. HP.
Does IPR violate Article III of the Constitution?

24. IPR Constitutionality
Possible consolidated consideration by the Supreme Court
Cooper v. Lee
Fully briefed
Consideration of the petition has been postponed
(cert. den.)
Cooper v. Square
Square waived its response to the petition
Supreme Court issued a call for response (CFR)
(cert. pending) Square’s response due October 11th.
MCM Portfolio v. HP

25. IPR Institution Procedure
Petitions by J&J subsidiaries, suggesting that it is impermissible for the PTO Director to delegate institution of IPRs to the PTAB, because institution involves policy issues.
Ethicon Endo-Surgery, Inc. v. Covidien LP
LifeScan Scotland, Ltd. v. Pharmatech Solutions, Inc.
Question presented:
“Whether the Leahy-Smith America Invents Act permits the Patent Trial and Appeal Board instead of the Director to make inter partes review institution decisions.”
Responses to Petitions due in November

26. Petitions awaiting the Views of the Solicitor General
The Supreme Court has invited the views of the Solicitor General in the following patent & technology cases:
Impression Products, Inc. v. Lexmark International, Inc. (awaiting Ct. action)
Patent exhaustion–unreasonable restraints on downstream uses.
Sandoz Inc. v. Amgen Inc. (awaiting SG brief)
Does the notice requirement of the Biologics Price Control and Innovation Act (BPCIA) create an effective six-month exclusivity post-FDA approval?
Cross-petition addresses failure to participate in the “patent dance.”
GlaxoSmithKline v. King Drug Company (Ct. conference in Nov.)
Antitrust reverse payment issue – appeal from the 3rd Cir.

27. Disclaimer
The purpose of this presentation is to provide educational and informational content, and is not intended to provide legal services or advice.
The opinions, views and other statements expressed by the presenter are solely those of the presenter, and do not necessarily represent those of his employer, clients or the organizers of any meeting at which they are presented.

28. The End
John B. Pegram