By: Regina McCarthy
Intellectual property (“IP”) litigation appears to again be popular in 2017, as the Supreme Court and the Court of Appeals for the Federal Circuit consider issues in patent, trademark, and copyright law. Below are ten key decisions to watch this year.
The Supreme Court has agreed to hear an appeal from TC Heartland in a case involving patent venue laws. The Federal Circuit has held that patent lawsuits can be filed anywhere the defendant has made sales. TC Heartland argues that this has led to forum shopping. The Supreme Court will decide whether to limit where patent lawsuits can be filed.
The Supreme Court will consider whether laches should remain a defense in patent litigation. Laches is an equitable doctrine barring suits after an unreasonable delay in making an assertion of a claim. The Federal Circuit has ruled that laches remains a viable doctrine in patent cases because Congress codified it in the Patent Act. During oral argument at the Supreme Court, the Justices seemed skeptical of the defense. If the Supreme Court strikes down laches in patent cases, non-practicing entities may be motivated to delay litigation in order to maximize damages.
The Supreme Court will determine whether disparaging trademarks can be registered by the Trademark Office. The Federal Circuit struck down the disparagement law that allowed the USPTO to reject any trademark application that it deemed to be disparaging. Although the law against disparaging trademarks was codified in 1946, the Supreme Court has never interpreted its meaning or scope, leaving the USPTO discretion in determining what marks were disparaging.
Patent exhaustion will also be considered by the Supreme Court in 2017. The Federal Circuit has ruled that foreign sales do not exhaust U.S. patent rights, and that post-sale restrictions on patented items are permissible. The Supreme Court’s decision will impact whether, and to what extent, a manufacturer can use its patents to control how products are used after it sells them. Depending on the outcome, patent practitioners may need to revisit licensing agreements to ensure that they comply with the ruling.
The Supreme Court will rule on whether the shipment of a single component of a patented invention to be combined with others overseas can constitute infringement. In 2014, the Federal Circuit ruled that a single component was sufficient to constitute infringement. Section 271(f)(1) of the Patent Act states that it is an act of infringement to supply all or a substantial portion of the components of a patented invention from the U.S. to actively induce the combination of components outside the U.S. The Federal Circuit has interpreted “substantial” to mean “important.” The Supreme Court will determine whether “substantial” is a qualitative or a quantitative term.
The Supreme Court will hear arguments in a case involving copyright registrations on design concepts for clothing. Varsity Brands (Varsity) received copyright registration for the two-dimensional artwork of designs similar to the ones that Star Athletica (Star) was advertising on its clothing. Star argues that Varsity did not have valid copyrights because the designs were for useful articles, which cannot be copyrighted, and the designs cannot be separated from the articles of clothing themselves. The Sixth Circuit held that the Copyright Act allows graphic features of a design to be copyrighted even when those designs are not separable from a useful article. The Supreme Court will decide the appropriate test to determine whether a feature of a useful article is copyrightable under the Copyright Act.
In an en banc review, the Federal Circuit will determine whether to uphold the Patent Trial and Appeal Board’s (PTAB) rule that patent owners have the burden of proving that their proposed claims are patentable. Aqua Products argued that the party who challenges a patent should be required to prove that the new claims are not patentable. The Federal Circuit will also consider whether, when the petitioner does not challenge the patentability of a proposed amended claim, or the PTAB finds the challenge to be inadequate, the PTAB may raise patentability challenges to the claim of its own accord.
Design patents took the main stage in late 2016 when the Supreme Court reversed Apple’s $400 million award over Samsung. The Supreme Court held that an article of manufacture can be only the specific components of the product that were infringed, and infringers must only pay for the total profits from the specific components. The case was remanded to the Federal Circuit to define a test determining whether a component of a product is in fact the “article” for which profits must be paid.
The Federal Circuit will decide whether a patent owner can challenge the PTO’s determination that the petitioner satisfied the timeliness requirement governing the filing of petitions for inter partes review (IPR). A petition for IPR must be filed within one year of when the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent. The issue in this case is whether a party is in privity with the petitioner. The Federal Circuit has previously held that the determination by the PTO on whether to institute an IPR is final and non-appealable.
In late December of 2016, the New York State Court of Appeals sided with Sirius XM, holding that the issue of copyright royalty payments was determined by the federal Copyright Act and that an alleged state copyright for pre-1972 sound recordings did not exist. The ruling came after a settlement between the Turtles members and Sirius XM in a related case in California. There is a chance we may see this case in the Supreme Court as early as this year. Although the cases turn on questions of individual state laws, the question of whether such laws could interfere with interstate commerce remains unanswered.