Supreme Court Intellectual Property Review 2013

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Supreme Court Intellectual Property Review 2013

  1. 1. Supreme Court IP Review Stephen M. Komarec
  2. 2. Growing relevance of IP • SCOTUS is hearing an increasing % of IP cases • “Still, the presence of four core IP cases among the 48 grants to date for OT2012 …, 8% of the argument calendar, is remarkable. For comparison, I count 5% IP cases in OT2011 (4/75) and 6% in OT 2010 (5/84). To get a sense for longer trends, ten years ago the Court decided 3 IP cases out of 73 opinions (4%) and twenty years ago only 2 out of 114 (2%).” • Ronald Mann, Is the new economy driving the Court’s docket?, SCOTUSblog (Oct. 15, 2012, 1:51 PM), http://www.scotusblog.com/2012/10/is-the-new- economy-driving-the-courts-docket/
  3. 3. What’s Recently Passed! • Association for Molecular Pathology v. Myriad Genetics, Inc. • No. 12-398, June 13, 2013 • Patentable Subject Matter
  4. 4. What’s Passed • Bowman v. Monsanto Co. (No. 11-796, May 13, 2013) • Patent Exhaustion • Kirtsaeng v. John Wiley & Sons (No.11-697, March 19, 2013) • Copyright Exhaustion • Already, LLC v. Nike, Inc. (No. 11-982, January 9, 2013) • Jurisdiction for Trademark Validity • Gunn v. Minton (No. 11-1118, February 20, 2013) • Jurisdiction for Patent Malpractice
  5. 5. What’s to Come • Medtronic Inc. v. Boston Scientific Corp. et al. • 695 F.3d 1266 (Fed. Cir. 2012) • Burden of showing patent infringement under license agreement • Federal Trade Commission v. Watson Pharmaceuticals Inc. • 677 F.3d 1298 (11th Cir. 2012) • Pharmaceutical “pay-for-delay” arrangement in patent infringement settlement
  6. 6. A new economy or a new politic? • Who is the alleged infringer? • A competitor? • A consumer? • What is the IP owner’s strategy? • Protecting what’s rightfully theirs? • Battling with equal competitor/Protecting market share? • Aggressive assertion/Stifle competition?
  7. 7. Patent Exhaustion • Association for Molecular Pathology v. Myriad Genetics, Inc. • Patentable Subject Matter • 1) Are naturally occurring segments of human DNA patent eligable by virtue of their isolation from the rest of the human genome? • 2) Is synthetically created cDNA patent eligible?
  8. 8. Patent Eligibility • Naturally Occurring DNA Segment • Is a product of nature • Not patentable • cDNA • Not naturally occurring • Patentable
  9. 9. Noteworthy Language • “Myriad’s principal contribution was uncovering the precise location and genetic sequence of the … genes within [the] chromosomes.” • “Groundbreaking, innovative, or even brilliant discovery does not by itself satisfy the §101 inquiry.” • “But extensive effort alone is insufficient to satisfy the demands of §101.”
  10. 10. Patent Language • “It is a discovery of the present invention ….” • The Detailed Description describes the “iterative process” of discovery • The Claims were directed to the genetic sequence in the gene • Not a specific chemical composition of a particular molecule
  11. 11. Patent Exhaustion • Bowman v. Monsanto Co. et al. • Question Presented • 1) Does patent exhaustion exist after an authorized sale? • 2) Is there an exception to patent exhaustion for self-replicating technologies?
  12. 12. Patented & Licensed Seeds • Resistant to herbicides including Monsanto’s Roundup • Patented • 5,352,605 & RE39,247 • Sold under license • Can be planted in only one season • Can be 1) consumed or 2) sold as a commodity to grain elevator for later animal or human consumption
  13. 13. Actual Exhaustion • 1st authorized sale of a patented article exhausts patent rights First Sale Destroy Non-Infringing Uses Eat Re-Sell Exhaustion
  14. 14. The Monsanto Way • Protected Seed First Sale Authorized Reproduction Licensed Use: “Planting” Consume : “Eat” Sell
  15. 15. The Bowman way • Bootleg Seed First Sale Licensed Use, Production & Sale Deceptive Purchase & Unauthorized Use Infringing Reproduction 8 Public Perception ?
  16. 16. Bowman’s Arguments • Patent Exhaustion • “[T]he initial authorized sale of a patented item terminates all patent rights to that item.” • Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617, 625 (2008). • “Blame-the-Bean”
  17. 17. Supreme Court Rule • Patent Exhaustion • It is “well settled” principle “that the exhaustion doctrine does not extend to the right to ‘make’ a new product.” • Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 346 (1961).
  18. 18. Decision & Analysis • Patent not Exhausted • “Because Bowman reproduced Monsanto’s patented invention, the exhaustion doctrine does not protect him.” • Exception to Doctrine not Created • Self-replication is “Using” and “Making” • There may be self-replicating software issues
  19. 19. Copyright Exhaustion • Kirtsaeng v. John Wiley & Sons, Inc. • Question Presented • 1) How do the importation provisions and the first sale doctrine of the Copyright statutes impact copies that are legally made outside the U.S. and later imported without permission?
  20. 20. Manufactured in the U.S. The Wiley Way • Copyrighted Textbook Manufactured Abroad First Sale Abroad $ First Sale in the U.S. $$
  21. 21. Disclaimers • The Fine Print
  22. 22. • “Exhausted” Textbook The Kirtsaeng Way Manufactured Abroad First Sale Abroad $ Imported to U.S. Sold in the U.S. $$ Public Perception?
  23. 23. The Statutes • § 106(3): Exclusive right to distribute copies • § 109(a): Exclusive rights limited by “First Sale Doctrine” • Extends to works “made lawfully under this title” • § 602(a)(1): Importation into the U.S. of works that have been acquired outside the U.S. “is infringement of the exclusive right to distribute copies … under section 106”
  24. 24. Grey Market Goods • It is lawful to “re-import” domestically produced works that have been exported • Quality King Distributors, Inc. v. L’anza Research Int’l, Inc., 523 U.S. 135 (1998) • Can works legally produced abroad be imported? • Kirtsaeng
  25. 25. “Lawfully made under this title” • Kirtsaeng: Non-Geographical Limitation • First Sale Doctrine applies to all legal sales • Wiley & Sons: Geographic Limitation • First Sale Doctrine does not apply to copies made abroad
  26. 26. Decision & Analysis • Non-Geographic Interpretation is proper • Legislative History • Statutory Interpretation • Constitutional Objectives for Copyrights • Practical Concerns • Economic “horribles” • It is lawful to import into the U.S. for re-sale a copyrighted work legally purchased abroad when the work was legally made abroad (or in the U.S.)
  27. 27. Trademark Jurisdiction • Already, LLC v. Nike, Inc. • Question Presented • Is a federal court divested of jurisdiction for a federal trademark validity challenge if the registrant promises not to assert the mark?
  28. 28. Trademark Dispute • Nike “Air Force 1” • TM Reg. No. 3,451,905 • Already “Sugars” • U.S. Design Pat. No. D594,641
  29. 29. Proceedings • Nike sued Already for TM infringement • Already counterclaimed that TM is invalid • Nike issued “Covenant Not to Sue”
  30. 30. Covenant Not to Sue • Nike admits that Already no longer infringes • Nike promises not to raise a TM claim against Already • Unconditional and Irrevocable
  31. 31. Legal Theory • Both the District Court & the Second Circuit ruled in favor of Nike • Jurisdiction • Voluntary Cessation Doctrine
  32. 32. Supreme Court • Nike • Met formidable burden of showing that wrongful behavior (e.g. aggressive TM assertion) would not recur • Already • Failed to show an injury that would give rise to jurisdiction
  33. 33. Decision & Analysis • Already • Would have to admit infringement • Nike’s “wrongful behavior” • Trademark Bullying Public Perception?
  34. 34. Patent Jurisdiction • Gunn et al. v. Minton • Question Presented • Do state law legal malpractice claims relating to substantive patent matters “arise under” jurisdiction of the federal courts?
  35. 35. The Malpractice Claim • State District Court • Minton argued that failure to raise experimental use defense led to invalidity • On Appeal • Minton argued that because the error “arose” under patent law, it “arises under” federal jurisdiction • Supreme Court of Texas • Decided it was a Federal Court issue
  36. 36. The Legal Standard • Federal jurisdiction over state law claim will lie if the issue is: • 1) necessarily raised; • 2) actually disputed; • 3) substantial; and • 4) capable of resolution in federal court without disrupting the federal- state balance approved by Congress
  37. 37. Supreme Court • Minton’s claim fails to meet: • 3) The federal issue is not substantial “in the relevant sense” • The issue is substantial to the parties • The issue is not substantial to the federal system as a whole • 4) Malpractice is a state issue • Federal Court jurisdiction over patent case established by Congress is not intended to displace State interest in regulating the legal profession
  38. 38. Still going … • SCOTUS is not done yet! • Medtronic Inc. v. Boston Scientific • Must the patentee prove infringement? or • Must the licensee prove non-infringement? • Federal Trade Commission v. Watson Pharmaceuticals Inc. • Settlement agreement in a patent dispute • 1) A restriction on generic entry until a future date, and • 2) The brand’s payment of money or other value to the generic • Anti-Trust issue?
  39. 39. Conclusions • IP is at the Frontlines • Could filter down to being a more visible political issue • Proposed Congressional actions • Importance of having an IP enforcement plan • Who are you going to license? • Who are you going to sue? • How far are you going to take it? • What will the public perception be?
  40. 40. Intellectual Property: Key Topics for In-House Counsel and Business Lawyers Today

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