Supreme Court Grants Certiorari in Copyright, Patent, Lanham Act Cases

Supreme Court Grants Certiorari in Copyright, Patent, Lanham Act Cases

 WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court announced on Jan. 10 that it will hear four intellectual property cases in an upcoming term, covering issues ranging from the streaming of copyrighted content over the Internet to the rights of private companies to challenge false labels.

Injunction Sought

Justice Samuel A. Alito Jr. did not take part in the court’s decision to hear ABC Inc. v. Aereo Inc. (No. 14-461; See 1/6/14, Page 39), which presents the question of whether respondent Aereo Inc. “publicly performs” petitioner ABC Inc.’s copyrighted television programs when it retransmits a broadcast of the program without permission to paid subscribers online.

ABC brought the lawsuit, along with myriad television network co-plaintiffs (TV companies, collectively), in 2012 in the U.S. District Court for the Southern District of New York. The TV companies asserted several theories, including infringement of the public performance right, infringement of the right of reproduction and contributory infringement. They moved for a preliminary injunction barring Aereo from transmitting television programs to its subscribers while the programs were still being broadcast. Following expedited briefing and discovery and an evidentiary hearing, the District Court denied the motion, finding in favor of Aereo on the first factor for injunctive relief that the TV companies were not likely to succeed on the merits. The court based its finding on the Second Circuit U.S. Court of Appeals’ interpretation of the transmit clause of the Copyright Act in Cartoon Network LLP v. CSC Holdings Inc., 536 F.3d 121, 2008 U.S. App. LEXIS 16458 (2d Cir. 2008) (“Cablevision”) [an enhanced version of this opinion is available to lexis.com subscribers].

Not Materially Distinguishable

The District Court held that Aereo’s system was not materially distinguishable from the digital video recorder (DVR) at issue in Cablevision, which the Second Circuit said did not infringe copyright holders' public performance right. Regarding the other factors for injunctive relief, the District Court found that while the TV companies had demonstrated a likelihood that they would suffer irreparable harm in the absence of a preliminary injunction, an injunction would severely harm Aereo, likely ending its business. Therefore, the court said, the balance of hardships did not tip “decidedly” in favor of the plaintiffs. The TV companies appealed to the Second Circuit, which on April 1, 2013, affirmed the District Court’s ruling based on its decision in Cablevision (WNET, et al. v. Aereo, Inc., No. 12-2786, 712 F.3d 676, 2013 U.S. App. LEXIS 6578 (2d Cir. 2013) [enhanced version]. In a dissent, Circuit Judge Denny Chin said that “by transmitting (or retransmitting) copyrighted programming to the public without authorization, Aereo is engaging in copyright infringement in clear violation of the Copyright Act.”  A petition for writ of certiorari was filed with the Supreme Court in October 2013, and the case was distributed for conference on Jan. 10.

The TV companies are represented by Paul M. Price and Matthew E. Smith of Jenner & Block in Washington and Paul D. Clement and Erin E. Murphy of Bancroft in Washington. David C. Frederick, Aaron M. Panner and Caitlin S. Hall of Kellogg, Huber, Hansen, Todd, Evans & Figel in Washington, Brenda M. Cotter and Daniel Brown of Aereo in Boston, David R. Hosp and Mark S. Puzella of Fish & Richardson in Boston and Seth D. Greenstein of Constantine Cannon in Washington represent Aereo.

Impermissible Challenge

In POM Wonderful LLC v. The Coca-Cola Company, No. 12-761, 679 F.3d 1170, 2012 U.S. App. LEXIS 9921 (9th Cir. 2012) [enhanced version]; (See 12/16/13, Page 33), the question presented is whether the Ninth Circuit U.S. Court of Appeals “erred in holding that a private party cannot bring a Lanham Act claim challenging a product label regulated under the Food, Drug and Cosmetic Act.”  Petitioner POM Wonderful LLC makes and sells bottled pomegranate juice and pomegranate juice blends, including a pomegranate blueberry flavor. Respondent The Coca-Cola Co. in 2007 introduced a new product called “Pomegranate Blueberry” under its “Minute Maid” brand. The following year, POM filed suit in the U.S. District Court for the Central District of California, alleging that Coca-Cola misled consumers into believing that its product consisted primarily of pomegranate and blueberry juices. According to POM, Coca-Cola’s product actually consists mainly of apple and grape juices. According to POM, Coca-Cola’s actions violate the false advertising provision of the Lanham Act, California’s unfair competition (UCL) law and California’s false advertising law (FAL).

Coca-Cola moved to dismiss the complaint for failure to state a claim, and the District Court partially granted and partially denied the motion. The court found that POM’s Lanham Act challenge to Pomegranate Blueberry's name and labeling was barred because Pom's suit “may be construed as impermissibly challenging” Food and Drug Administration regulations permitting the name and labeling that Coca-Cola uses. The District Court found that POM’s claim could improperly require the court to interpret and apply FDA regulations on juice beverage labeling. The District Court held that POM’s Lanham Act challenge could otherwise proceed because although POM could not challenge Coca-Cola’s Pomegranate Blueberry name and labeling, it could challenge Coca-Cola’s other advertising and marketing of the product because those parts of the claim would not require the court to interpret FDA regulations. The court further held that the Food, Drug and Cosmetic Act (FDCA) expressly preempted POM’s state law claims to the extent the UCL and FAL impose obligations that are not identical to those imposed by the FDCA and its implementing regulations.

Judgment Entered

POM then amended its complaint to bring it within the scope of the court's ruling on the Lanham Act claim. Coca-Cola again moved to dismiss, but the District Court denied the motion and ruled that POM could conduct discovery to clarify which aspects of Coca-Cola’s conduct constituted labeling and therefore could not, under the court's earlier ruling, support POM’s Lanham Act claim, and which aspects constituted advertising or marketing and thus could support the Lanham Act claim. After discovery, the District Court partially granted summary judgment to Coca-Cola. The court reiterated that POM’s Lanham Act challenge to Coca-Cola’s Pomegranate Blueberry name and labeling was barred by the FDCA’s implementing regulations. The court further ruled that POM lacked statutory standing to pursue its state law claims. The District Court concluded that triable issues remained on the non-naming and non-labeling aspects of POM’s Lanham Act claim and permitted POM to proceed to trial on those matters. However, POM conceded that the summary judgment order prevented it from carrying its burden on the claim, so the court entered judgment for Coca-Cola.

POM appealed to the Ninth Circuit U.S. Court of Appeals, which on May 17, 2012, affirmed the District Court’s ruling in part and vacated it in part. The Ninth Circuit affirmed the District Court’s summary judgment to the extent that it barred POM’s Lanham Act claim with respect to Coca-Cola’s Pomegranate Blueberry name and labeling. The panel then vacated the summary judgment ruling to the extent that it held that POM lacked statutory standing on its UCL and FAL claims and remanded so that the District Court can rule on the state claims in accordance with the panel’s opinion. On remand, the District Court granted summary judgment to Coca-Cola on the state claims; POM’s appeal of that ruling is pending in the Ninth Circuit.

PhotoMedex

Regarding the Lanham Act claim, the Ninth Circuit, using the guidance of PhotoMedex, Inc. v. Irwin, 601 F.3d 919, 924 (9th Cir. 2010) [enhanced version], held that the FDCA and its regulations bar pursuit of the name and labeling aspects of the claim. “The naming component of POM’s claim is barred because, as best we can tell, FDA regulations authorize the name Coca-Cola has chosen. The FDA has concluded that a manufacturer may name a beverage using the name of a flavoring juice that is not predominant by volume,” the Ninth Circuit said. “The same goes for the labeling component of POM’s claim,” the panel added. POM responded by filing a petition for a writ of certiorari with the Supreme Court.

POM is represented by Seth P. Waxman, Randolph D. Moss, Brian M. Boynton, Felicia H. Ellsworth and Nicole Ries Fox of Wilmer Cutler Pickering Hale and Dorr in Washington. Steven A. Zalesin and Travis J. Tu of Patterson Belknap Webb & Tyler in New York represent Coca-Cola.

Heart Monitor

At issue in Nautilus Inc. v. Biosig Instruments, No. 13-369, 715 F.3d 891, 2013 U.S. App. LEXIS 8486 (Fed. Cir. 2013) [enhanced version] (See 5/6/13, Page 15) is respondent Biosig Instruments Inc.’s U.S. patent No. 5,337,753, which relates to a heart monitor attached to equipment during exercise. According to Biosig, the patent represents an improvement over prior art in that it eliminates electromyogram (EMG) signals while detecting the user's heart rate. Because EMG signals can mask electrocardiograph signals, it is often difficult for users to determine their true heart rate. Biosig first sued petitioner Nautilus Inc. in August 2004, and Nautilus sought ex parte re-examination of the ‘753 patent from the U.S. Patent and Trademark Office (PTO).

The request was granted, and claim 1 of the patent was initially rejected as anticipated by prior art known as Fujisaki. Biosig filed a response, and Nautilus requested a second re-examination, which was combined with the first re-examination proceeding. In June 2010, the PTO confirmed as valid the ‘752 patent, but the parties had already voluntarily dismissed their first action without prejudice. After prevailing before the PTO, Biosig filed the instant lawsuit before U.S. Judge Alvin K. Hellerstein of the Southern District of New York, again asserting infringement against Nautilus. In 2011, the judge construed the disputed claim term “spaced relationship” as “there is a defined relationship between the live electrode and the common electrode on one side of the cylindrical bar and the same or a different defined relationship between the live electrode and the common electrode on the other side of the cylindrical bar.”  Based on the construction, Judge Hellerstein granted Nautilus summary judgment that the term renders the ‘752 patent invalid as indefinite.

‘Ambiguous’ Claims

Biosig sought reconsideration of the ruling after the PTO denied a third request by Nautilus for reconsideration, but Judge Hellerstein denied the motion, leading Biosig to appeal to the Federal Circuit U.S. Court of Appeals. Reversing, the Federal Circuit found that although the specification of the ‘753 patent does not specifically define “spaced relationship” with actual parameters, the patent’s language, figures and specification “are telling” and provide “sufficient clarity to skilled artisans as to the bounds of this disputed term.”  According to the appellate panel, the patent “discloses certain inherent parameters of the claimed apparatus,” including a “whereby” clause that describes the function of substantially removing EMG signals.

In its petition for certiorari, Nautilus presents the following questions:  “(1) Whether the Federal Circuit’s acceptance of ambiguous patent claims with multiple reasonable interpretations — so long as the ambiguity is not ‘insoluble’ by a court — defeats the statutory requirement of particular and distinct patent claiming; and (2) whether the presumption of validity dilutes the requirement of particular and distinct patent claiming.”

Nautilus is represented by James E. Geringer, Jeffrey S. Love, John D. Vandenberg and Philip Warrick of Klarquist Sparkman in Portland, Ore. Michael J. Bonella, Daniel C. Mulveny, Jenna M. Pellecchia and Tod A. Kupstas of Kessler, Topaz, Meltzer and Check in Radnor, Pa., represent Biosig.

Internet Content Delivery

Finally, the Supreme Court granted certiorari in Limelight Networks Inc. v. Akamai Technologies Inc.,No. 12-786, 692 F.3d 1301, 2012 U.S. App. LEXIS 18532 (Fed. Cir. 2012) [enhanced version] (See 1/6/14, Page 30), which presents the question of whether the Federal Circuit “erred in holding that a defendant may be held liable for inducing patent infringement” under 35 U.S. Code Section 271(b) even though “no one has committed direct infringement under Section 271(a).”  Petitioner Limelight Networks Inc. and respondent Akamai Technologies Inc. provide Internet content delivery services and maintain their own content delivery network. U.S. patent No. 6,108,703, a “Global Hosting System” for website content, is assigned to the Massachusetts Institute of Technology (MIT) and licensed to Akamai. In 2006, Akamai and MIT (collectively, Akamai) sued Limelight in the U.S. District Court for the District of Massachusetts, alleging patent infringement.

In 2008, a jury found that Limelight infringed claims 19 to 21 and claim 34 of the ‘703 patent and that none of the infringed claims was invalid due to anticipation, obviousness, indefiniteness, lack of enablement or written description. The jury awarded Akamai damages of $41.5 million based on lost profits and reasonable royalty, plus prejudgment interest along with price erosion damages of $4 million. However, Judge Rya W. Zobel then granted judgment as a matter of law to Limelight, citing Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008) [enhanced version], which held that an accused infringer's control over its customers’ access to an online system, coupled with instructions on how to use that system, was not enough to establish direct infringement.

En Banc Review

In 2010, the Federal Circuit affirmed the ruling in Akamai, finding that “what is essential” in evaluating a claim of liability for joint infringement is “whether the relationship between the parties is such that acts of one may be attributed to the other.”  The panel said joint infringement “occurs when a party is contractually obligated to the accused infringer to perform a method step.”  The Federal Circuit granted a petition for rehearing en banc by Akamai, however, and in August 2012, a majority found that although all claimed steps of a method must be performed to find induced patent infringement, it is not necessary to prove that all steps were committed by a single entity. The majority reconsidered and overruled the Federal Circuit’s 2007 holding in BMC Resources Inc. v. Paymentech LP, 498 F.3d 1373 (Fed. Cir. 2007) [enhanced version] that “some other single entity” must be liable for direct infringement for a different party to be held liable for induced infringement pursuant to 35 U.S. Code Section 271(b) [an annotated version of this statute is available to lexis.com subscribers].

With regard to Limelight, the majority found that liability for induced infringement can be established on remand with a finding that Limelight knew of Akamai’s patent, that it performed all but one of the steps of the method claimed in the patent, that it induced content providers to perform the final step and that the content providers did, in fact, perform the step. In a dissent, five judges argued that the majority made a “sweeping change to the nation's patent policy” when it followed “its conception of what Congress ought to have done, rather than what it did.”  The majority ruling “is also an abdication of this court’s obligation to interpret Congressional policy rather than alter it,” according to the dissenters, who noted that “when this court convenes en banc, it frees itself of the obligation to follow its own prior precedential decisions.”

Akamai is represented by Donald R. Dunner of Finnegan, Henderson, Farabow, Garrett & Dunner in Washington. Aaron N. Panner of Kellogg, Huber, Hansen, Todd, Evans & Figel in Washington represents Limelight.

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