Attorney Fees in Copyright Cases, Part II

Patent

by Dennis Crouch

WC Realty recently filed a petition for certiorari that builds upon and expands the issues presented in the Property Matters case that I wrote about recently.  Both cases focus on whether a voluntary dismissal of a copyright infringement action under Rule 41(a)(1) bars "prevailing party" status under §505 of the Copyright Act.  Under Section 505, "the court may also award a reasonable attorney’s fee to the prevailing party."   This is almost identical to the Patent Act's fee shifting provision except that patent law limits discretion to "exceptional cases."  35 U.S.C. 285.

The petition presents two distinct but related questions about how voluntary dismissals should be handled under §505 of the Copyright Act. The first question addresses the fundamental threshold issue: whether a defendant can even qualify as a "prevailing party" after a plaintiff voluntarily dismisses under Rule 41(a)(1). The Eleventh Circuit has created a categorical bar, holding that defendants cannot be prevailing parties without court-ordered dismissal, even when the dismissal is "with prejudice" and precludes refiling. The second question examines how voluntary dismissals should be weighed when courts exercise their discretion to award fees under §505.

Voluntary Dismissals and Attorney Fees

The case arose when Affordable Aerial Photography (AAP) sued WC Realty for copyright infringement over real estate photographs. After WC Realty incurred substantial defense costs, AAP voluntarily dismissed its claims "with prejudice" under Rule 41(a)(1). The district court denied WC Realty's request for attorney's fees, and the Eleventh Circuit affirmed, holding that WC Realty could not be a "prevailing party" because there was no "judicial action rejecting or rebuffing" AAP's claims.

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USPTO’s Rapid Policy Shifts Threaten Patent System Stability

Patent

by Dennis Crouch

The U.S. Patent and Trademark Office faces unprecedented challenges as recent executive directives force dramatic changes to its operations. I think that folks across the spectrum from right to left would agree that current changemaking at the White House is following a brutalist approach that treats all federal employees and agencies as interchangeable parts rather than recognizing their unique roles, specialized expertise, and operational requirements. Rather, it is following the old adage that to make an omelet you must break  a few eggs.  The White House appears willing to sacrifice individual careers, institutional knowledge, and what Reagan Appointee Sandra Day O'Connor termed a "carefully crafted" systems, in pursuit of its broader agendas and the hope of later instilling federal workers who are more favorable to conservative control.  So far, USPTO Acting Director Coke Morgan Stewart has been silent except to indicate that she is fully implementing White House orders and requests.

A joint letter from the Intellectual Property Owners Association (IPO) and American Intellectual Property Law Association (AIPLA) to Congress highlights that the patent application backlog is at a high point. But, rather than addressing this critical backlog, recent policy shifts threaten to exacerbate delays and trigger a major exodus of experienced patent professionals from the system that is fully user-fee funded. FINAL-IPO-AIPLA-Joint-Letter-to-Senate-re-Hiring-Freeze-and-Return-to-Work-2.3.25.  The letter asks that the USPTO be "exempted from executive actions that could further hinder its ability to meet its mission. . . .  Specifically, the Hiring Freeze, the Return to In-Person Work mandate, and the Deferred Resignation Email to Federal Employees could severely restrict the agency’s ability to address its growing workload."  The letter avoids discussing other hot button issues, such as the USPTO's full compliance with White House executive order titled "Defending Women from Gender Ideology Extremism and Restoring Biological Truth."

Of particular concern today is the new mandate requiring

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The Upcoming Trade Wars: Intellectual Property Rights at Center Stage

Patent

by Dennis Crouch

Recent Senate testimony from Commerce Secretary nominee Howard Lutnick provides a window into how intellectual property rights will likely become a central battlefield in escalating international trade tensions. During his confirmation hearing before the Senate Commerce Committee, Lutnick articulated an aggressive stance on protecting American intellectual property, particularly focusing on stated abuses by China.

I have cued his testimony in the video below to begin with his a retelling of key aspects of his life story that is truly a testament to extraordinary resilience.

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Federal Circuit Outcomes from the Past Four Years

Patent

by Dennis Crouch

[Update – I should have noted that these are limited to appeals from the USPTO – primarily IPR decisions focusing on the issue of obviousness]

The pie chart shown here depicts the distribution of Federal Circuit case outputs from 2000 to 2024 across three categories. The plurality of cases, 44%, resulted in a Non-Precedential Opinion, indicating a substantial volume of decisions with limited precedential impact. Following this, 38% of outcomes are categorized as “No Opinion (R.36).”  These are cases where the court issued a summary affirmance of a lower tribunal holding without any written explanation.  I want to note for a moment here that other federal appellate courts also have an approach known as “summary affirmance, but those courts always provide at least a brief explanation of the ruling and its justification. The Federal Circuit provides no opinion, just the judgment.

The final segment, 18% of dispositions, represent cases with Precedential Opinion.  This represents the smallest category and highlighting the court’s selection of cases deemed to warrant formal published opinions with binding effect on subsequent decisions.

 

 

Follow-up on Peterson v. Minerva: LIFT OUR VOICES Amicus Brief

Patent

by Dennis Crouch

In early January 2025, I wrote about Peterson v. Minerva Surgical, No. 24-712, a case involving a former Minerva sales director (Dan Peterson) seeking Supreme Court review of an arbitration award that went against his whistleblower claims. See Dennis Crouch, Patents as Product Liability Admissions: A Cert Petition Highlights Novel Use of Patent Filings in Whistleblower Case, Patently-O (Jan. 4, 2025).  As I explained in that post, Peterson's argument for review relies on Minerva's own patent filings as evidence that the company knew about safety issues with its endometrial ablation device —and that it fraudulently provided contradictory testimony during the arbitration proceedings.

The case has now drawn additional attention through an amicus brief filed by Lift Our Voices (LOV), filed by my University of Missouri Law School colleague Professor Michael Tripp.  LOV, led by former Fox News anchor Gretchen Carlson, advocates for workplace safety and equity -- and has particularly focused on how forced arbitration and non-disclosure agreements lead to a continuation of sexual harassment in the workforce. The brief presents the case as emblematic of broader concerns about the use of forced arbitration and non-disclosure agreements (NDAs) to shield corporate misconduct from public scrutiny.

Federal Appellate Judge: "I have No Power": LOV's brief emphasizes how the Tenth Circuit's extreme deference to arbitrators has effectively nullified any meaningful judicial review. The brief directly quotes the circuit court's striking admissions of powerlessness, including statements that federal courts "do not have discretion," "do not have power," and "cannot set aside an arbitration award based on legal error."  This language, LOV argues, represents a concerning abdication of Article III judicial authority that Congress never intended when enacting the Federal Arbitration Act (FAA) -- concluding that the Arbitrator was faced with a factual dispute about safety and decided that the device had not yet been proven unsafe.

The case provides stark language about the extremely limited scope of judicial review over arbitration awards. Specifically, the Tenth Circuit emphasizes in Peterson v. Minerva Surgical, Inc., No. 24-3003 (10th Cir. Aug. 15, 2024): "the standard of review of arbitral awards 'is among the narrowest known to the law.'" The court goes on to state directly that "federal courts do not have power to review an arbitrator's factual findings." And when it comes to legal errors, the court explains that it "cannot set aside an arbitration award based on legal error unless it amounts to 'a manifest disregard of the law, defined as willful inattentiveness to the governing law.'"

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Biologics Patent Enforcement: Regeneron Patents Block Biosimilar Entry for EYLEA

Patent

by Dennis Crouch

In a pair of significant decisions issued today, the Federal Circuit upheld preliminary injunctions blocking the launch of biosimilar versions of Regeneron's blockbuster drug EYLEA® (aflibercept). Regeneron Pharms., Inc. v. Mylan Pharms. Inc., No. 2024-1965 (Fed. Cir. Jan. 29, 2025) (precedential); and Regeneron Pharms., Inc. v. Mylan Pharms. Inc., No. 2024-2009 (Fed. Cir. Jan. 29, 2025) (nonprecedential). The cases pit Regeneron against foreign manufacturers, including Samsung Bioepis (SB) and Formycon AG, who had obtained FDA approval for their biosimilar products under the Biologics Price Competition and Innovation Act (BPCIA). Writing for a unanimous panel, Judge Taranto focused on three key issues: (1) personal jurisdiction over foreign biosimilar manufacturers; (2) obviousness-type double patenting in the biologics context; and  (3) standards for preliminary injunctive relief.  The decisions effectively maintain Regeneron's market exclusivity for EYLEA®, which generates approximately $6 billion in annual sales and serves as a primary treatment for several serious eye conditions including wet age-related macular degeneration. U.S. Patent No. 11,084,865.

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Is Google Simply Asking for More Efficient Infringement?

Patent

by Dennis Crouch

Three new amicus briefs were recently filed supporting EcoFactor in the pending en banc case against Google over patent damages methodology.

The briefs - one from Law Professor Michael Risch along with a group of patent trial attorneys and another from the Alliance of U.S. Startups and Inventors for Jobs (USIJ) argue that Google's position - further limiting expert damages testimony - threatens to undermine core aspects of patent damages law while potentially violating the Seventh Amendment's right to a jury trial.  The third brief, filed by Professor Gregory Dolin argues that Judge Newman - who the court "temporarily" suspended in 2023 - should be permitted to sit on the en banc panel.  (I put "temp" in scare quotes because it appears that this suspension is - in fact - permanent).

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Discovery, Injury, and Diligence: Reconciling Subjective and Objective Copyright Limitations Standards Post-Warner Chappell

Patent

by Dennis Crouch and Tim Knight

The Supreme Court is being asked to decide a case that could have a major impact on copyright law. The case involves photographs taken by Michael Grecco in 2017, but the lawsuit was not filed until 2021. The key question is whether the Copyright Act's three-year statute of limitations runs from when copyright infringement occurs or from when the copyright holder discovers it. The circuits are currently split on this issue, and the Supreme Court may finally settle the issue that has been brewing for years. (Note that the split overwhelmingly favors the discovery rule but there are differences in how it is applied). 

Although we don't delve into the issues of model-rights here -- it is interesting to note that Michael Grecco was the photographer; the model is a famous model Amber Rose (not involved in the lawsuit) and the shoes are designed by famed designer Ruthie Davis, who is also the accused infringer.

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USPTO’s Remote Work Program Faces Potential Rapid Dismantling Under New Federal Guidelines

Patent

by Dennis Crouch

Last week, I wrote about the twin challenges facing the USPTO: a return-to-office mandate and a hiring freeze that could significantly impact patent operations. Today’s joint memorandum from OMB and OPM provides a rapid timeline for implementing these changes, with agencies required to submit detailed implementation plans by February 7th, 2025. [OMB OPM Come Home Memo].

The USPTO must develop a comprehensive plan addressing not just space and staffing, but also the “risks, barriers, and resource constraints” that could prevent expeditious return to in-person work. While patent examiners await official word from agency leadership about their specific situations, the clock is ticking on what could be the most significant operational change at the USPTO in decades.

As someone who practiced 20 years ago — at a time when USPTO examiner morale was low and the agency had difficulty recruiting quality candidates — I recognize that things are so much better today. (Do you agree?).  For those of us outside the USPTO, now is the time to voice support both for the examiner community and uninterrupted USPTO operations — especially if you can provide Dir. Stewart with evidence that will aid efforts to water-down the negative effect of these orders.

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Fraud on the Court: Finality and the Ghost of Hazel-Atlas

Patent

by Dennis Crouch

The Supreme Court will soon consider whether to hear an important case about fraud on the court (and the USPTO) and the judiciary's obligation to address it.  Marco Destin, Inc. v. Levy, Case No. 24-787. The issue now before the Court asks whether it was proper for the lower court to overlook fraud that affects the judicial process itself in favor of finality of judgment. [Marco Destin Petition]

Fraud cases are typically interesting reads, and this one fits the bill. In 1993, L&L Wings entered into a trademark license agreement with Shepard Morrow for the use of the "WINGS" mark in retail store services -- particularly for use on beach merchandise. L&L Wings made only the initial $10,000 royalty payment under the agreement, then defaulted on the remaining payments. Despite losing its rights to the mark, L&L Wings continued using the mark and even began sublicensing it to others, including Marco Destin (Alvin's Island) in 1998.

In 2007 L&L Wings (owned by respondents Shaul Levy and Meir Levy) sued Marco Destin for trademark infringement in the Southern District of New York. According to the cert petition, L&L's attorney Bennett Krasner knew at the time that L&L Wings had no rights to the mark, having personally negotiated the earlier failed licensing deal with Morrow. Yet the complaint omitted any mention of Morrow's ownership or L&L Wings' status as a former licensee.

During that litigation, Krasner allegedly deepened the deception by obtaining a federal trademark registration for "WINGS" through what the petition characterizes as fraudulent representations to the USPTO. The application claimed L&L Wings had been in "continuous high-profile use" of the mark for nearly 30 years and failed to disclose Morrow's prior ownership. After obtaining the registration, Krasner introduced it as evidence in the New York case, leading to summary judgment against Marco Destin and ultimately a $3.5 million settlement.

The fraud only came to light years later through separate litigation in North Carolina between L&L Wings and Beach Mart. There, a jury found that L&L Wings had knowingly made false representations to the USPTO to obtain the WINGS registration. The court canceled the registration and awarded $12.5 million in punitive damages. This verdict drove L&L Wings into bankruptcy.

Armed with evidence of the fraud, Marco Destin sought to vacate the earlier $3.5 million settlement through an independent action authorized under Federal Rule of Civil Procedure 60(d)(3).  As suggested above, all of this is part of the L&L Wings bankruptcy proceedings and and so Marco Destin is unlikely to obtain its full recovery even if it wins this case -- instead it will form part of the queue with the other creditors.

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The Reverse Doctrine of Equivalents: An “Anachronistic Exception” Lives Another Day

Patent

by Dennis Crouch

I have been following the Steuben Foods appeal for the past year - thinking that it may be the case where the Federal Circuit nails in the coffin on the reverse doctrine of equivalents. The new decision ultimately left this question open, but it provides a fascinating exploration of three distinct doctrines of equivalence in patent law:

  • The Reverse Doctrine of Equivalents (RDOE): This centuries-old defense, originating from the Supreme Court's 1898 Boyden Power-Brake decision, allows an accused infringer to escape liability even when their device falls within the literal scope of the claims. A key question here was whether this doctrine even survived the 1952 Patent Act.
  • The Doctrine of Equivalents (DOE): This traditional doctrine allows patent holders to prove infringement even when the accused device falls outside the literal scope of the claims. In this case, the court examined whether continuous sterilant addition could be equivalent to intermittent addition.
  • Means-Plus-Function Equivalents: Under 35 U.S.C. § 112(f), means-plus-function claims cover not only the corresponding disclosed structure but also its equivalents. The court here analyzed whether rotary wheels could be equivalent to the disclosed conveyor structures.

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Detailed Return-to-Office Implementation Guidance: Potentially Major Disruption for USPTO Operations

Patent

Dennis Crouch

In a significant development likely affecting USPTO operations, the Office of Personnel Management (OPM) has issued detailed implementation guidance for President Trump's January 20, 2025 return-to-office mandate. The guidance provides strict timelines and requirements that could force dramatic changes at the USPTO, where remote work has been a cornerstone of operations for decades.

The OPM memo, signed by Acting Director Charles Ezell, requires agencies to take immediate action, with initial steps due by January 24, 2025 (tomorrow).

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Federal Circuit (Again) Upholds Ravgen’s Fetal DNA cffDNA Patent

Patent

by Dennis Crouch

In a January 22, 2025 decision, the Federal Circuit once again maintained validity of Ravgen's fetal DNA testing patent. Its new decision also provides some important guidance on standing requirements for appealing IPR decisions. Streck, Inc. v. Ravgen, Inc., No. 2023-1989 (Fed. Cir. Jan. 22, 2025). This companion case to the recent LabCorp decision addresses similar issues regarding both patentability and procedural requirements.  See, Dennis Crouch, Not Quite Teaching Away: Federal Circuit Clarifies Evidence Needed to Defeat Motivation to Combine, Patently-O (Jan 2025).

The Technology: The patent at issue (U.S. Patent No. 7,332,277) relates to methods for non-invasive fetal DNA testing. This is an incredibly important area of technology because the leading prior form of testing (amniocentesis) is relatively dangerous to the growing fetus. Cell free fetal DNA (cffDNA) floats around in the mother's blood stream. But, not very much, and what is there tends to be somewhat unstable.  The claimed method involves analyzing cell-free fetal DNA from maternal blood samples while using agents that prevent cell lysis (breakdown). The key independent claim requires "determining the sequence of a locus of interest on free fetal DNA" from a maternal blood sample that includes both the fetal DNA and a cell lysis inhibitor. A dependent claim specifically identifies the inhibitor as being selected from glutaraldehyde, formaldehyde, or formalin. The patent at issue here lists Ravgen's founder Ravinder Dhallan as the inventor and claims back to a 2003 provisional application filing.

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Rocky Start for the USPTO under President Trump and Director Stewart

Patent

by Dennis Crouch

It is tough that one of the very first acts of new USPTO Director Coke Morgan Stewart’s was to cancel hiring for the agency. Two weeks ago I saw a notice that the USPTO expected to hire over 800 new examiners during 2025 in an attempt to address the ever growing backlog of unexamined patent applications.  But, today the agency rescinded offers already given and cancelled its job ads.  Although unclear, examiners still in their first year probationary period may also be let go.  What we have here is the patent office being caught up in the larger political theatre with real world consequences — directly for those individuals losing promised employment and more generally for the intellectual property system as a whole.

This is the first time I have ever searched USAJobs and found nothing for the USPTO.

Still, this week the USPTO did not rescind the notices of allowances already mailed. And the patents issued on time at 12:01 am on Tuesday 1/21/25.  This includes US12206106 and US12204163.  These two are notable because they each list 28 inventors.  One of the more interesting is US12205207, issued to Snap Inc.  The ‘207 patent describes a system for automated image generation within a messaging or social media platform. The core innovation enables users to generate custom images directly within the platform’s interface by entering text prompts, which are then processed by an AI text-to-image generator to create multiple image options. Users can select from these generated images and immediately apply them as profile backgrounds, chat wallpapers, or media content backgrounds without leaving the platform.

 

1. A system comprising:

a memory that stores instructions; and

one or more processors configured by the instructions to perform operations comprising:

causing presentation, at a first user device associated with a first user of an interaction system, of a prompt selection interface of an interaction application provided by the interaction system, the interaction application enabling the first user to obtain automatically generated images and to interact with at least a second user of the interaction system;

receiving, from the first user device and via the prompt selection interface of the interaction application, an image generation request comprising a text prompt;

responsive to receiving the image generation request via the prompt selection interface of the interaction application, generating, via an automated text-to-image generator associated with the interaction system and based on the text prompt, an image;

causing presentation, at the first user device, of the image in an image selection interface of the interaction application;

receiving, from the first user device and via the image selection interface of the interaction application, an indication of user input to select the image; and responsive to receiving the indication of the user input to select, via the image selection interface of the interaction application, the image generated via the automated text-to-image generator: modifying, using the selected image generated via the automated text-to-image generator, a user image that is associated with the first user within the interaction system, and enabling the second user of the interaction system to be presented with the modified user image via the interaction application.

Heartbeat of the USPTO

Patent

By Dennis Crouch

The chart above is not an EKG.  Rather, it shows the ebb and flow of USPTO activity -- the heartbeat of the 10,000+ patent examiners whose activity follows the bi-weekly quota system. The regular peaks come every two weeks, but the chart shows an overlay of two additional quotas: quarterly quotas (the higher blip every 3 months) and yearly quotas (the messy blip at the end of each fiscal year).  Like their patent attorney counterparts, patent examiners are also deadline driven and their output increases as each deadline approaches.

The next chart focuses in on a single 14 day biweek and the blue line shows data collected from from more than a million non-final and final office actions entered 2022-2024. 

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Trading Technologies Files Supreme Court Petition on Patent Eligibility, Rule 60(b)(3), and Federal Circuit Procedural Issues

Patent

by Dennis Crouch

Trading Technologies (TT) has petitioned the Supreme Court to review a Federal Circuit decision raising three significant questions about patent law and civil procedure. The case stems from TT's patent infringement suit against IBG LLC and Interactive Brokers LLC over patents related to electronic trading user interfaces.  U.S. Patent Nos. 6,766,304, 6,772,132, 7,676,411, and 7,813,996.  (I have mentioned this previously, but TT is a former client and I was involved with enforcing the '304 and '132 patents in the past).

The case caption now lists Harris Brumfield as trustee following TT's 2021 sale, though the litigation began and was primarily conducted by Trading Technologies. 20250103171844464_2025-01-02 No 24- Petition.

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USPTO Faces Twin Challenges: Return-to-Office Mandate and Hiring Freeze Could Significantly Impact Patent Operations

Patent

by Dennis Crouch

Two executive orders issued by President Trump on January 20, 2025, may present significant challenges for the USPTO's operations. The first order mandates a return to in-person work across federal agencies, while the second implements a broad federal hiring freeze. Although the outcome is still unclear, these directives could substantially impact the USPTO's approximately 13,000 remote workers, most of whom are patent examiners, and potentially disrupt the office's plans to expand its examining corps to address growing application backlogs and increasing pendency.

USPTO officials will likely be seeking exemptions, but the sheer number of USPTO remote workers may well undermine the administration's broader return-to-office messaging if left unreduced. 

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Welcome USPTO Director Coke Morgan Stewart

Patent

by Dennis Crouch

Just after President Trump spoke the oath of office, Coke Morgan Stewart was also sworn in as Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO on January 20, 2025. She is serving as Acting Director. The previous Director, Kathi Vidal, departed to Winston & Strawn in December, and Deputy Director Derrick Brent, who had been serving in an interim capacity, has also now resigned. Commissioner Vaishali Udupa is remaining in her position for now as is Commissioner Gooder.

Welcome Director Stewart.

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