Tag Archives: Copyright

Supreme Court Clarifies Copyright Attorney Fees: Reasonable Defense Not a Presumptive Excuse

Patent,

by Dennis Crouch

In Kirtsaeng v. John Wiley & Sons (2016), the Supreme Court has vacated the Second Circuit’s ruling denying attorney-fee awards in the copyright case – but offered a balanced opinion that places a number of limits on when fees may be awarded.

The opinion holds the reasonableness of the losing party’s position should be a substantial factor.  I.e., the more reasonable that position, the less likely that fees should be awarded.  However, objective reasonableness is not the ‘controlling factor.’

That means in any given case a court may award fees even though the losing party offered reasonable arguments (or, conversely, deny fees even though the losing party made unreasonable ones). For example, a court may order fee-shifting because of a party’s litigation misconduct, whatever the reasonableness of his claims or defenses. Or a court may do so to deter repeated instances of copyright infringement or overaggressive assertions of copyright claims, again even if the losing position was reasonable in a particular case. Although objective reasonableness carries significant weight, courts must view all the circumstances of a case on their own terms, in light of the Copyright Act’s essential goals.

[internal citations omitted].

The problem with the Second Circuit decision was that it appeared to allow reasonableness to be a presumptive controlling factor. “[T]hat goes too far in cabining how a district court must structure its analysis and what it may conclude from its review of relevant factors.”

The decision does not cite either of the Supreme Court’s attorney fee cases from 2014. (Octane Fitness and Highmark).  However, the principles at issue here are likely to carry-over directly to patent cases – namely that although the reasonableness of a losing-party’s argument is an important factor in attorney fee awards, it should not prescriptively control the outcome.  That said, the copyright statutory language for attorney fees is quite different from that of the patent statute. The major difference is that the copyright statute indicates discretionary authority for district courts in their fee awards while the patent statute limits fee awards to “exceptional cases.”  That difference suggests to me that fee awards (according to the statute) should be more difficult to obtain in patent cases than in copyright cases.   In both patents and copyrights, the Supreme Court has now called for a flexible analysis and has also particularly indicated that the broader purposes of the respective intellectual property laws should be considered when determining whether to award fees.

 

Copyright on Computer Programs: Solicitor General Argues that APIs are Unquestionably Copyright Eligible

Patent,

by Dennis Crouch

In recent years, much attention has focused on whether the output of computer software engineers is properly the subject of patent rights. Now, however, an important case is pending before the U.S. Supreme Court regarding whether computer programs are protectable under copyright.  Here, the particular issues involve copyright protection over program interface (API) function calls that allow programs to communicate with one another.

Google v. Oracle (awaiting writ of certiorari).

When Google developed the API-toolkit for Android, it wanted to use Java-like functionality, but didn’t want to pay the license fee. So, rather than copying the Java code, the company had its engineers re-code the functionality.  Because copyright doesn’t cover functionality, this approach works to avoid copyright infringement. The one caveat was that Google did not want to force developers learn a whole new toolkit of functional calls and so the company copied the set of more than 6,000 function calls.  This approach allows Google to free-ride off of the popularity of Java.  As I wrote earlier:

As an example, Google used the Java method header “java.lang.Math.max(a,b)”.  When called, the “max” function returns the greater of the two inputs.

In considering the case, the Federal Circuit ruled that the Java API taxonomy was copyrightable — rejecting the idea/expression merger doctrine since there are many other ways that functionally equivalent method-calls could have been constructed besides those found in Java.  The court wrote: “merger cannot bar copyright protection for any lines of declaring source code unless Sun/Oracle had only one way, or a limited number of ways, to write them.”

The petition for writ of certiori to the Supreme Court asks the following question:

Whether Section 102(b) [of the Copyright Act] precludes copyright protection for original software code that defines and organizes a set of functions that are useful in writing computer programs.

In the most recent filing in the case, the Solicitor General has suggested that the court not take the case – because it was correctly decided by the Federal Circuit.  For the SG, computer programs are unquestionably copyrightable, including the API function calls at issue here.  Rather than being a question of copyrightability, the SG suggest that Google’s best argument is fair use — although the SG does not offer an opinion of whether that is a winning argument.

[Read the New SG Brief: SGBriefGoogleOracle]

Petitioner contends, however, that even if the declaring code is an “original work[] of authorship” under Section 102(a), it is not entitled to copyright protection because it constitutes a “method of operation” or “system” within the meaning of Section 102(b). That argument is incorrect. . . . Section 102(b) is not a limitation on what kinds of expressive works may be protected by a copyright. Rather, it is a limitation on how broadly the copyright extends. Although a book on how to build a bicycle may be eligible for copyright protection, that copyright does not include any exclusive right to practice the bicycle-building method that the book explains; nor can the author prevent another person from writing a better book with a clearer explanation of the same process.

In years past, the Supreme Court has often followed the recommendation of the SG in deciding whether to grant petitions for writ of certiorari.  However, this particular brief does not wrestle with the copyright issues in a straight way, but rather appears to argue in favor of a politically chosen conclusion. In my mind, this suggests that the court should give less weight to the brief than may have been expected apriori.

Copyrighting Your Patent?

Patent, ,

by Dennis Crouch

Although it sounds of a malformed naive question, at times patent applicants do want to copyright their patent.  The patent application may, for instance, include software code, prose, or particular schematics that would seemingly be amenable to copyright protection.

In 1987, the USPTO created an official policy allowing patentees to include a “Copyright or Mask Work Notice in Patents” in order to “protect the various intellectual property rights of the author or inventor.”  Those instructions were then codified in 37 C.F.R. 1.71(d)-(e)(1988).  The rule requires that a copyright notice be accompanied with with a grant of permission to make certain copies:

A portion of the disclosure of this patent document contains material which is subject to (copyright or mask work) protection. The (copyright or mask work) owner has no objection to the facsimile reproduction by anyone of the patent document or the patent disclosure, as it appears in the Patent and Trademark Office patent file or records, but otherwise reserves all (copyright or mask work) rights whatsoever.

See also, MPEP 608(w).

Unfortunately, neither the rule nor statute provide any indication of the impact of a notice failure.

Published works are no longer required to include any copyright notice, and the PTO has never indicated (AFAIK) that submission without the copyright notice constitutes a waiver or abandonment of copyright protections.  However, the failure to include a (c) notice could potentially be relevant to fair-use analysis.

Santa Clara Copyright Law Professor Tyler Ochoa pointed me to Korzybski v. Underwood & Underwood, 36 F.2d 727 (2d Cir. 1929).  In that 75 year old case, the appellate panel held that a patent filing served as a dedication of all rights in the disclosure to the public domain.

When Korzybski filed his application and received his patent, he . . . dedicated it to the public, save for the right to make, use, and vend it during the period for which the patent gave him that monopoly. The public had the right to the information disclosed in his patent and the right to use and copy the text and diagrams. . . . Everything disclosed in the patent became a part of the public domain.

. . . The defendant has done no more than photograph the [patented] anthropometer. This we hold it had a right to do, because the anthropometer was an embodiment of the drawings of the patent. The copyright was invalid, because the subject-matter had become a part of the public domain when complainant filed the prior application which resulted in the grant of his patent.

An inventor who has applied for and obtained a patent cannot extend his monopoly by taking out a copyright.

The Korzybski decision is based two distinct doctrines: (1) failure of formalities (no longer the law) and (2) the traditional judge-made public policy that copyrights should not be used to extent patent rights (likely still the law).

I wanted to look at the number of patents that actually include the copyright notice and how that number has changed over time.  The first chart shows the number of patents issued each year containing the copyright notice and the second chart provides charts the numbers as a percentage relative to the total patents issued each year.

PatentsClaimingCopyright

PatentsClaimingCopyrightPercent
Although the relative percentage has changed over time, it has always remained under 1%.  My basic explanation for the percentage being so low is that the copyright notice requires an express waiver of certain rights – why do that without some justifiable gains?

Willfulness Interplays Between Patent and Copyright

Patent, ,

by Dennis Crouch

As with patent law, willful copyright infringement also leads to enhanced damages. In Seagate (Fed. Cir. 2007), the en banc Federal Circuit drew an analogy to copyright doctrine in determining that willfulness in the patent context should also include reckless indifference.  Truthfully though, copyright law was not as uniform in its approach as suggested by the panel decision.

In Olem Shoe Corp. v. Washington Shoe Corp. (11th Cir. 2015), the Eleventh Circuit goes the other way and relies on the Federal Circuit doctrine on willfulness to help it further refine the test for copyright.  In a issue of first impression for the Atlanta-based Court of Appeals, affirmed that willfulness in copyright law also requires proof that the infringer acted “despite an objective high likelihood that the actions taken” constituted infringement and that the risk of infringement was known or should have been known by the infringer.

ShoeCopy
The district court had found infringement but no willfulness. (See comparisons above). On appeal, the panel affirmed — finding that the copyright holder presented no evidence “with regard to actual knowledge that Olem’s boots infringed Washington Shoe’s copyrights. That is, there is no evidence that Olem knew of Washington Shoe’s copyrights and chose to violate them.”  The panel also found insufficient evidence to raise a genuine issue of material fact of reckless disregard.

In particular, Washington Shoe argued that its cease-and-desist letters should have created sufficient notice.  However, that suggestion was rejected because the letters “did not include reference to copyright registration numbers or deposit copies. . . [and thus] provided nothing from which Olem could have determined that the claim was legitimate.”  Washington Shoe also noted the similarity of the boots  – including evidence that the boots are identical – as a clear signpost of infringement.   However, the appellate panel also found that similarity to provide no basis for a willfulness finding.  Finally, for willfulness, the panel refused to place any burden on the infringer to prove that it had an alternative design source.

* * * * *

A few interesting aspects of the case:

  • First, I should note that, although expounding upon new law, the panel determined that the decision was non-precedential.  This is likely because two of the three panel members were sitting by designation (one from a district court and the other from the USCIT).
  • As part of its deliberative process, the district court requested insight from the register of copyrights regarding whether certain alleged inaccurate information regarding the copyright registration would have caused the register to deny registration. Such a request is permitted under 17 U.S.C. 411(b).  This approach is wildly different from the patent law approach where there is essentially no communication between the patent office and the court of enforcement.
  • The copyright statute only particularly provides for enhanced willfulness damages if the copyright holder first chooses statutory damages (rather than proving actual damages).

Google Looks to Narrow both Copyrights and Patents through Supreme Court Action

Patent,

by Dennis Crouch

Two pending Supreme Court now have higher profiles with the Supreme Court’s invitation to the Solicitor General to provide views of the administration.  In both cases, the petitioners have set-up the Federal Circuit as a misguided court.

The focus of Google v. Oracle (Sct. Docket No. 14-410) is the extent that software is eligible for copyright protection. The petition asks:

Whether copyright protection extends to all elements of an original work of computer software, including a system or method of operation, that an author could have written in more than one way.

Unlike patent law, the copyright eligibility statute includes a set of express exclusions. In particular, although “original works of authorship” are generally eligible for copyright protection, “[i]n no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.” 17 U.S.C. § 102(b).  In its decision the Federal Circuit found Oracle’s Java API taxonomy copyrightable as a whole. In particular, the appellate panel led by Judge O’Malley rejected the idea/expression merger doctrine since there are many other ways that functionally equivalent method-calls could have been constructed besides those found in Java.  “Merger cannot bar copyright protection for any lines of declaring source code unless Sun/Oracle had only one way, or a limited number of ways, to write them.” [Read my prior discussion here and here]

 

The second case – also involving Google – is Google v. Vederi (Sct. Docket No. 14-448).  In that case, the Google raises the following question:

Whether, when an applicant for a patent amends a claim to overcome the PTOs earlier disallowance of the claim, a court should (i) presume that the amendment narrowed the claim and strictly construe the amended claim language against the applicant, as this Court has held; or (ii) presume that the claim scope remained the same and require that any narrowing be clear and unmistakable, as the Federal Circuit has held.

Although the first part of the question is interesting, the second part appears quite misguided as Federal Circuit law does not presume that claims maintain the identical scope following an amendment to overcome a rejection by the PTO.  That said, the Federal Circuit has strayed significantly from Pre-1952 disclaimer law exemplified by cases such as Supply Co. v. Ace Patents Corp., 315 U.S. 126, 137 (1942); Keystone Driller Co. v. Nw. Eng’g Corp., 294 U.S. 42, 48 (1935); Smith v. Magic City Kennel Club, Inc., 282 U.S. 784, 789–90 (1931); I.T.S. Rubber Co. v. Essex Rubber Co., 272 U.S. 429, 443–44 (1926); and Hubbell v. United States, 179 U.S. 77, 84 (1900).

 

Copyrighting Software? Google v. Oracle

Patent,

by Dennis Crouch

When Google wrote its program-interface (API) for Android, the company made a strategic decision to mimic the method call structure of Java.  Java is an extremely popular and powerful programming language and Google determined that free-riding on Java popularity would facilitate its catch-up game in the  third-party app marketplace.  As an example, Google used the Java method header “java.lang.Math.max(a,b)”.  When called, the “max” function returns the greater of the two inputs.  In Android’s API, Google copied a set of 37 different Java “packages” that each contain many classes and method calls (such as “max()”).  Overall, Google copied the header structure for more than six-thousand methods.  Although Java is offered for both open source and commercial licenses, Google refused to comply with either regime.

Java’s originator Sun Microsystems was known for broadly sharing its creations without enforcing its IP rights.  That aura changed when Sun was purchased by Oracle and certainly when Oracle sued Google for copyright infringement, inter alia.

In the Copyright lawsuit, the district court held that the API method headers were not protectable under copyright. However, the Federal Circuit reversed on appeal — finding the Java API taxonomy copyrightable as a whole. In particular, the appellate panel led by Judge O’Malley rejected the idea/expression merger doctrine since there are many other ways that functionally equivalent method-calls could have been constructed besides those found in Java.  “Merger cannot bar copyright protection for any lines of declaring source code unless Sun/Oracle had only one way, or a limited number of ways, to write them.”

Now, Google has petitioned the Supreme Court for a writ of certiorari asking:

Whether copyright protection extends to all elements of an original work of computer software, including a system or method of operation, that an author could have written in more than one way.

Here, Google references 17 U.S.C. 102(b) which bars copyright protection for “any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of [its] form [of expression].”  And, Google pushes-back against the notion that the merger doctrine accounts for the limits of 102(b) as suggested by the Federal Circuit.

Google also interestingly notes that the Federal Circuit opinion here “erases a fundamental boundary between patent and copyright law.”  However, rather than supporting software patents, Google argues that copyright protection here would serve as an end-run around the limitations set by Alice Corp.

Just last Term, this Court confirmed that, while some software-related patent claims may be eligible for patent protection under 35 U.S.C. § 101, many are not. Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014). Like Section 102(b) of the Copyright Act, Section 101 of the Patent Act protects future innovation by preventing anyone from “ ‘inhibit[ing] further discovery by improperly tying up the future use of’ the[] building blocks of human ingenuity.”

Extending copyright protection to methods and systems of operation would undermine the limits on patent protection.

The argument is interesting because it turns the usual analysis on its head. Ordinarily folks argue that copyright and patent should be complementary and that overlap should be avoided. Here, however, the petitioner argues that copyright should not cover a particular subject matter area precisely because it is not covered by patent. This also generally suggests that the case will have an impact on software patent eligibility.

The petition was filed by Daryl Joseffer’s team at King & Spalding and I give a more-likely-than-not chance of grant.  In this type of case, the Supreme Court is likely to request input from the Solicitor General and I would expect that the SG/White-House would support grant.  If granted, the Federal Circuit will almost certainly be reversed.  The merger doctrine is a mess and genuinely needs clarity.  The difficult question in my mind is whether the court will be able articulate a reasoned boundary between software that is protectable and that which is not.

In an amicus brief (supporting certiorari) a group of computer scientists (with the Electronic Frontier Foundation) argues that companies should not be able to use copyright to prevent others from interfacing with their systems.

Petition Briefs:

Supreme Court: In Copyright, Laches Cannot Preclude Actions Taken Within Three Year Statute of Limitations

Copyright, Laches, Patent, Patent Cases 2014, Supreme Court, , , ,

By Dennis Crouch

Petrella v. MGM (Supreme Court 2014)

Frank Petrella wrote a screenplay back in 1963 based on the life of Jake LaMotta and assigned rights to UA/MGM who made the movie Raging Bull. Under the old renewal system, renewal rights went to Petrella’s heir, Paula Petrella, who renewed the copyright in 1991 in a fashion that (seemingly) eliminates the prior license. In 1998 she informed MGM that its continued exploitation of the Raging Bull movie violated her copyright. Finally, in 2009, she did sue – alleging copyright infringement.

Copyright infringement has a three-year statute of limitations indicating that “No civil action shall be maintained under the [Act] unless it is commenced within three years after the claim accrued.” 17 U.S.C. §507(b). However, as in patent law, copyright follows a “separate-accrual rule” that sees each successive violation of a copyright as a new infringing act with its own statute of limitations. Thus, under the statute of limitations, MGM could be liable for its post-2006 actions such as copying and distributing the work.

In the lawsuit, MGM separately asserted the equitable defense of laches based upon the long and unreasonable delay in bringing suit.

In a 6-3 decision, the Supreme Court has sided with Petrella – finding that the statute of limitations does all the work on the question of liability – leaving latches only to potentially shape the remedy.

Laches, we hold, cannot be invoked to preclude adjudication of a claim for damages brought within the three-year window. As to equitable relief, in extraordinary circumstances, laches may bar at the very threshold the particular relief requested by the plaintiff. And a plaintiff’s delay can always be brought to bear at the remedial stage.

The court was clear that equitable estoppel may also apply, but that generally requires some affirmative act by the rights-holder (that leads to

In a footnote, the court draws some parallels with the six-year statute of limitations for collecting back-damages in patent law. 35 U.S.C. § 286. In a 1992 en banc decision, the Federal Circuit held that laches can be an additional bar to collecting back-damages even within the six-year limit. A. C. Aukerman Co. v. R. L. Chaides Constr. Co., 960 F. 2d 1020 (Fed. Cir. 1992) (en banc). Noting that decision, the Supreme Court here only remarked that “We have not had occasion to review the Federal Circuit’s position.”

One interesting aspect of the decision was the unusual split between the majority and dissent. Justice Ginsburg penned the majority opinion that was joined by Justices Scalia, Thomas, Alito, Sotomayor, and Kagen.  Justice Breyer dissented and was joined by Chief Justice Roberts and Justice Kennedy.

Guest Post: Are APIs Patent or Copyright Subject Matter?

Patent, , , , , ,

Guest Post by Pamela Samuelson, Richard M. Sherman Distinguished Professor of Law at Berkeley Law School. I asked Professor Samuelson to provide a discussion of the recent Federal Circuit decision in Oracle v. Google. DC.

Application programming interfaces (APIs) are informational equivalents of the familiar plug and socket design through which appliances, such as lamps, interoperate with the electrical grid. Just as a plug must conform precisely to the contours of the socket in order for electricity to flow to enable the appliance to operate, a computer program designed to be compatible with another program must conform precisely to the API of the first program which establishes rules about how other programs must send and receive information so that the two programs can work together to execute specific tasks.

No matter how much creativity might have gone into the design of the existing program’s interfaces and no matter how many choices the first programmer had when creating this design, once that the API exists, it becomes a constraint on the design of follow-on programs developed to interoperate with it. Anyone who develops an API is, in a very real sense, designing that aspect of the program for itself and for others.

One of the many errors in Judge O’Malley’s decision in the Oracle v. Google case was her insistence that the merger of idea and expression in computer program copyright cases can only be found when the developer of an API had no choice except to design the interface in a particular way. If there is any creativity in the design of the API and if its designer had choices among different ways to accomplish the objective, then copyright’s originality standard has been satisfied and not just the program code in which the API is embodied, but the SSO of the API, becomes copyrightable. Indeed, harkening back to an earlier era, Judge O’Malley repeated the unfortunate dicta from the Apple v. Franklin case about compatibility being a “commercial and competitive objective” which is irrelevant to whether program ideas and expressions have merged.

The Ninth Circuit in the Sega v. Accolade case, as well as the Second Circuit in Computer Associates v. Altai, have rejected this hostility toward achieving software compatibility and toward reuse of the APIs in subsequent programs.

Although purporting to follow Ninth Circuit caselaw, Judge O’Malley in Oracle v. Google ignored some key aspects of the holding in Sega. Accolade reverse-engineered Sega programs in order to discern the SSO of the Sega interface so that it could adapt its videogames to run on the Sega platform. The principal reason that the Ninth Circuit upheld Accolade’s fair use defense as to copies made in the reverse engineering process was because “[i]f disassembly of copyrighted object code is per se an unfair use, the owner of the copyright gains a de facto monopoly over the functional aspects of his work—aspects that were expressly denied copyright protection by Congress,” citing § 102(b). To get the kind of protection Sega was seeking, the Ninth Circuit said it “must satisfy the more stringent standards imposed by the patent laws.”

Judge O’Malley in Oracle also ignored the Ninth Circuit rejection of Sega’s claim that Accolade infringed based on the literal copying of some Sega code insofar as that code was essential to enabling the Accolade program to run on the Sega platform. That Sega code might have been original in the sense of being creative when first written in source code form, but by making that code essential to interoperability, the expression in that program merged with its function, and hence Accolade’s reproduction of it was not an infringement.

The SSO of the Sega interface was almost certainly creative initially as well. Yet, once that interface was developed, it was a constraint on the design choices that Accolade and other software developers faced when trying to make videogames to run on Sega platforms. The Second Circuit similarly rejected Computer Associates’ claim that Altai had infringed the SSO of its program interface and suggested that patents might be a more suitable form of legal protection for many innovations embodied in software.

Under Sega and Altai, the SSO of APIs are not within the scope of copyright protection for computer programs. Subsequent cases—at least until the Federal Circuit decision in Oracle v. Google—have overwhelmingly endorsed this approach to compatibility issues in software cases.

Perhaps Judge O’Malley was worried that if she did not extend copyright protection to the Java APIs in Oracle v. Google, there would be too little intellectual property protection available to computer programs. After all, she was one of the Federal Circuit judges who would have upheld all of the patent claims for computer-implemented inventions in the CLS Bank v. Alice Corp. case that is now pending before the U.S. Supreme Court. She joined an opinion that warned that if courts struck down the claims in CLS Bank, this mean that hundreds of thousands of software and business method patents would be invalidated. Given the Supreme Court’s skepticism about the Federal Circuit’s rulings on patentable subject matter, there is reason to think that at least some software patents may indeed fall when the Court issues its opinion in Alice. Would such invalidations affect the scope of copyright protection for software?

In the most expansive interpretation of software copyright law since Whelan v. Jaslow, Judge O’Malley in Oracle v. Google endorsed dual protection for APIs from both copyright and patent law. This ignored an important statement from that court’s earlier ruling in Atari Games v. Nintendo that “patent and copyright laws protect distinct aspects of a computer program.” The Oracle opinion instead invoked the dicta from Mazer v. Stein that “[n]either the Copyright Statute nor any other says that because a thing is patentable it may not be copyrighted.”

While it may have been true that the statuette of a Balinese dancer in Mazer was eligible for both copyright as a sculpture and a design patent for an ornamental design of an article of manufacture (as a lamp base), nothing in that decision or any other has upheld utility patent and copyright protection in the same aspect of the same creation, and it seems unlikely that the Supreme Court would abrogate the longstanding tradition tracing back to Baker v. Selden that copyrights protects expression in works of authorship and patents protect utilitarian designs.

In “The Strange Odyssey of Software Interfaces as Intellectual Property,” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1323818, I traced the tortuous evolution of the law in relation to the protection of software interfaces. At first, they were not treated as intellectual property at all. Firms published APIs so that others would make programs to run on their computing systems. As firms recognized that they could license interface information to generate revenues, APIs were protected as trade secrets. In the mid- to late 1980s, some argued that the “structure, sequence, and organization” (SSO) of APIs should be protected by copyright law, but by the early 1990s, courts decided they were unprotectable elements of programs, more suited to patent than to copyright protection. And so firms began patenting interface designs, as well as continuing to license them as trade secrets.

If Judge O’Malley’s opinion in the Oracle v. Google case is to be believed, APIs have migrated back into copyright’s realm big time. Unless overturned by the Supreme Court or repudiated or distinguished in subsequent cases, the Oracle decision may well reignite the software copyright wars that so many of us thought had died out after the Sega, Altai, and their progeny.

Federal Circuit Supports Dual Patent/Copyright Protection for Interface Software

Patent

Oracle v. Google (Fed. Cir. 2014)

More to come on this case, but the bottom line is that the Federal Circuit held that “API packages are entitled to copyright protection” despite their functionality. The court writes “we thus decline any invitation to declare that protection of software programs should be the domain of patent law, and only patent law.”

http://www.cafc.uscourts.gov/images/stories/opinions-orders/13-1021.Opinion.5-7-2014.1.PDF

Disjunction in IP Litigation: Patent Courts are not Copyright Courts

Patent,

By Dennis Crouch

In the last four months of 2012 about 4,000 intellectual property lawsuits were filed in federal courts. Of these, about 2,000 were patent cases along with 1,000 copyright and 1,000 trademark cases. Patent litigators are well aware of the ongoing popularity of the Eastern District of Texas and the rising popularity of the Delaware court. I wanted to look at how that concentration is different on the copyright and trademark side. It is easy to draw two quick conclusions from the case filings. First, I note that the most popular patent infringement jurisdictions are among the least popular jurisdictions in the other two areas. Very few copyright or trademark cases are filed in EDTX or DDEL. Second, I can conclude that the patent litigation cases are much more highly concentrated in a smaller number of jurisdictions than that of either copyright or trademark. (One measure of this is that the top three patent jurisdictions have 59% of the patent cases while the top three copyright and trademark jurisdictions have 32% and 28% respectively). Part of the explanation for the high concentration of patent cases is the clustering of NPE cases that involve a single plaintiff against multiple defendants filed before a single court. However, I would suggest that the driving explanation is simply the popularity of EDTX and DDEL. The appellate courts provide even more disjunction between the IP regimes since almost all of the patent litigation appeals are heard by the Court of Appeals for the Federal Circuit whereas that court sees very few copyright or trademark infringement actions. Likewise, the appellate courts that hear the most copyright and trademark appeals never hear patent appeals. As I have written previously, the bulk of governmental money spent on administering intellectual property rights goes through the US Patent & Trademark Office (PTO) — an executive agency housed within the Department of Commerce. The US Copyright Office, however, is not part of the administration but rather is housed within the Library of Congress, which itself is managed by Congress rather than the President. Thus the US Copyright Office does not officially represent the Administration or shape Administration policy.

All of this is an odd setup – especially with the rising and overlapping market role for intellectual property rights. From a theoretical standpoint, it is unclear whether the fractured structure leads to rights that are either too strong or too weak. What we can tell is that the structure leads to a lack of coordination of the various IP systems within the US.

For its part, the US Supreme Court has an almost regular practice of doing a comparative analysis in its intellectual property cases that considers how a particular issue is handled in other areas of IP law. Harmony in these areas is part of what the court calls a ‘carefully crafted balance.’ To this end, the court has recognized that the scope and coverage offered by patent law is relevant to the relevant scope and coverage of copyright and trademark protection. Likewise, in the upcoming fee-shifting cases, we can expect that the court will use copyright and trademark precedent as a guide. Perhaps unfortunately, few lower courts have the cross-IP-jurisdictional experience of the US Supreme Court that would be necessary to reasonably draw the same types of parallels.

The chart below shows the most-popular 25 jurisdictions for case filings in the final four months of 2012.

 

 

 

 

 

 

Thanks to LexMachina for this data.

Antigua Preparing to Move Forward with WTO Authorized Rejection of US Copyrights

Patent

By Dennis Crouch

Over the past several decades, the US has been at the forefront of pushing through low international trade barriers and strong intellectual property rights. The current scheme is organized through the World Trade Organization and the vast majority of nations have signed-on as members. The WTO has a dispute resolution mechanism that allows one country to bring another country to task for failing to abide by their trade-related promises. Most of these cases involve either import restrictions placed on certain goods or the “dumping” of goods.

Since around 2003, the US has taken fairly effective measures to destabilize the market for cross-border gambling and betting services. In response to those measures, the country of Antigua and Barbuda filed a WTO dispute complaining that the US action was a trade violation and, the WTO panel agreed with Antigua. The particular findings are that “three US federal laws (the Wire Act, the Travel Act and the Illegal Gambling Business Act) and the provisions of four US state laws (those of Louisiana, Massachusetts, South Dakota and Utah) on their face, prohibit … cross-border supply … contrary to the United States’ specific market access commitments for gambling and betting services.” [Link]

The penalty for a WTO violation typically involves the WTO allowing counter-measures by the injured party – typically their own import quota or restriction. In countries with a strong domestic industry, the import quota can provide a strong, be it temporary, boost. However, those quotas also injure local consumers who typically pay more for lower quality goods or services. Antigua’s particular situation is also unique because the country does not have much of any domestic industry beyond tourism (including Gambling). As such, a typical quota does not make sense as a penalty against the US.

At the end of the day, the WTO authorized Antigua to suspend its TRIPs obligations with respect to U.S. intellectual property at a cost to the US.

Antigua is now rapidly moving forward with a monetization scheme that would essentially create a local market for copyrighted work owned by U.S. entities, but where no royalties are paid to the U.S. copyright holders. Antiguan legislation is expected in the upcoming weeks followed by bids from private contractors to build-out the online marketplace.

First-Sale Doctrine: Authorized Foreign Sales Exhaust US Copyrights [and US Patents]

Patent,

By Dennis Crouch

Kirtsaeng v. John Wiley & Sons (Supreme Court 2013)

In a 6-3 decision, the Supreme Court here holds that the first-sale doctrine applies to copies of a copyrighted work lawfully made abroad. Although the decision does not mention patent law, the case has obvious implications for patent law by weakening the ability of a patentee to legally enforce country-by-country market segmentation. The case may also have some implications for streaming of copyrighted content based on national origin.

Kirtsaeng moved to the US from Thailand and set up a side business of importing textbooks from Thailand and reselling them in the US for a substantial profit. To be clear, the imported books were not counterfeit but actual authorized versions of textbooks. Still, Wiley sued Kirtsaeng for copyright infringement and argued that the first-sale doctrine did not apply to its authorized foreign sales.

The first sale doctrine – also known as “exhaustion” – is a core feature of both copyright and patent law. The doctrine holds that intellectual property (IP) rights associated with a particular copy of a work are exhausted once there is an authorized sale or manufacture of the that copy. This doctrine allows for a robust chain of distribution and secondary market where distributors and resellers don’t need to worry about IP infringement so long as they are not dealing in counterfeit copies. One difference between copyright and patent law is that the first-sale doctrine is codified in the Copyright Act but is purely federal common law for patents. 17 U.S.C. §109(a).

In holding that a foreign authorized sale exhausts a company’s U.S. copyright, the Supreme Court obviously walked through some amount of statutory interpretation. However, the court held that its decision is also consistent with common law ideals of “impeccable historic pedigree.” The result here is that this case strongly challenges the Federal Circuit’s precedent in cases such as Jazz Photo that reject the notion of international exhaustion. To be clear, however, the Kirtsaeng decision does not actually mention patent law.

The Supreme Court is sitting on the first-sale patent case of Bowman v. Monsanto. Although that is not an international exhaustion case, parts of this decision have implications there. First, the court favorably discussed old common law doctrines that refuse to permit or enforce restraints on the alienation of chattels. In addition to citing Lord Coke, the court also wrote that the first-sale doctrine fits within that sphere of thought because it “frees courts from the administrative burden of trying to enforce restrictions upon difficult-to-trace, readily movable goods. And it avoids the selective enforcement inherent in any such effort.”

The patent case most directly impacted is Ninestar Tech. v. ITC that is pending a decision from the Supreme Court on Ninestar’s petition for writ of certiorari. That case asks the exact parallel question of “Whether the initial authorized sale outside the United States of a patented item terminates all patent rights to that item.” At this point, the Court will do well to ask the Federal Circuit to take a fresh look at their decision in that case.

The court did recognize that the decision weakens the value of the given intellectual property right. In that regard, the court basically said “tough luck” – writing that “the Constitution’s language nowhere suggests that its limited exclusive right should include a right to divide markets or a concomitant right to charge different purchasers different prices for the same book, say to increase or to maximize gain.” We can expect some amount of push-back from right-holders on this case. And, Congress would certainly be able to change the law through a new statute.

Patent Prosecutors Licensing of Copyrights for Prior Art Submissions

Patent, ,

By Dennis Crouch

CCC v. Oblon Spivak (license agreement)

The Copyright Clearance Center (CCC) is a collective agent for many copyright holders and serves as a one-stop-shop for folks to license copyrights for use. CCC offers licenses to many (perhaps most) of the academic publications (non-patent literature) submitted to the USPTO under the Rule 56 duty of disclosure. In recent years, CCC has implemented a buffet license approach that allows a business to use their entire catalog for a fixed negotiated price.

Until recently, few patent law firms have seen any copyright infringement risk associated non-patent prior art because the copies are most typically obtained from a licensed database and the submission to the PTO and file-copies are both likely fair use and therefore would not constitute copyright infringement. Thus, most firms have developed their its patent prosecution practices with an implicit belief that its prosecution related uses of scientific journal articles are noninfringing uses of the articles. In the spring of 2012, the publisher John Wiley began suing patent law firms – taking the contrary view that (1) making file copies; (2) sharing copies with clients; and (3) submitting copies to the USPTO each constitute actionable copyright infringement. These lawsuits are ongoing.

The CCC license would allow both internal copying and submitting copies to the USPTO, although it does not allow the sharing copies with clients. Of course, these actions were all previously thought to be fair use. Professor Jamie Boyle has an interesting essay from 2007 discussing the problems with this license. His main point is that once we start paying for fair use material it stops being fair use going forward and moves toward a “culture of permission” that, in his view, is normatively bad.

I contacted the CCC folks and received some information from CCC’s General Counsel Frederic Haber. The first point is that the Wiley articles that are the subject of the lawsuits are included within the license (still, the blanket license still does not include sharing articles outside of the firm). The second point is costs. CCC uses a model of basically charging on a per-professional-employee basis. For patent law firms, their current negotiated going rate is around $300 per year per registered attorney. The third point is that the form license includes a waiver of any unasserted claims of past infringement (with the caveat that the waiver only takes effect after one-year of license coverage). The fourth point is that the downside of losing a lawsuit is statutory damages.

Oblon is in a special case because the firm has the highest patent throughput of any firm in the country. Because of that, the firm would have likely been part of any upcoming second round of lawsuits. On that note, Oblon’s Managing Partner Brad Lytle writes that the “license allows us to go about our business and focus our efforts on protecting the intellectual property of our clients.” In other words, the license allows the firm to avoid the annoyance of a lawsuit. The question for firms and attorneys moving forward is (1) whether the fair use argument is sufficient and (2) whether your firm is small enough to fly under-the-radar. And, of course, there is the remaining problem that the license does not allow for the sharing of the articles with folks outside of the firm.

Update: A further communication from the folks at CCC indicates that, although “the repertory license is specifically designed for the internal use of the licensed organization”, “one exception to that general rule is that the licensee may provide individual copies (paper or electronic) to prospects, clients or customers of the licensee in response to requests from those outside people.”

International Copyright Exhaustion: Supreme Court to Decide Whether Copyright Holders Can Block Imports

Patent, ,

By Dennis Crouch

Kirtsaeng v. John Wiley & Sons, Inc. (Supreme Court 2012)

Oral arguments are being held this morning in the Kirtsaeng copyright case involving international exhaustion. The case has direct implications on international patent law considerations.

Kirstaeng purchased legitimate copies of Wiley textbooks in various foreign countries and then imported those into the US for resale. The international versions of the textbooks vary somewhat from the US version (e.g., the foreign version covers evolution and is printed on cheaper paper). However, Kirtsaeng was able to find a substantial US market for the books and used the revenue to fund his own education. Copyright includes the exclusive right of distribution, and resale of a product is typically seen as a form of distribution. 17 U.S.C. 106. A separate provision also bars importation of copyrighted works without permission of the copyright holder. 17 U.S.C. 602(a)(1). However, the copyright statute also includes an exception known as copyright exhaustion or the first sale doctrine. 17 U.S.C. 109. The statute provides:

[T]he owner of a particular copy … lawfully made under this title … is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy.

Patent law has an equivalent doctrine. Notably, however, the patent law doctrine of exhaustion is not bound by any statute but does stem from parallel common law origins. The exhaustion doctrine allows for a robust secondary market for goods.

In this case, Wiley wants to use its US copyrights to block Kirtsaeng from reselling his books. Kirtsaeng argues that he purchased non-counterfeit authorized copies of the books and that Wiley’s copyrights are therefore exhausted. Wiley, in turn, focuses on the statute and argues that the US copyright is not exhausted because the foreign-made books were not “lawfully made under this title” where “this title” refers to the US Copyright Act. In its appellate decision, the Second Circuit agreed with Wiley and held that the foreign sale did not trigger the Section 109 exception. The decision supports a notion of country-by-country price discrimination of works protected by copyright (or patent). Unfortunately for US consumers, the price of these goods is typically higher in the US than abroad. In addition to price discrimination, the law is also being used to control access to goods in various countries. In many cases, these ideas have been implemented as mechanisms for preventing important of goods that do not – at first glance – appear to be protected by intellectual property. In the Supreme Court cases of Costco v. Omega and Quality King Distribs., Inc. v. L’anza Research Int’l, Inc., 523 U.S. 135 (1998), the asserted copyrights were unrelated to the value of the product being sold. In Costco, the protected copyright was a small symbol on the under-side of the watch while in Quality King, the protected copyright was the shampoo bottle label. (On remand, the district court dismissed Omega’s action on the ground of copyright misuse.)

The Supreme Court is hearing oral arguments in the case this morning. In 2010 the court heard Costco v. Omega. In that case, however, the court was deadlocked 4-4 (thus affirming the copyright holder’s position). The ninth justice that will sit on this case is Justice Kagen who had recused herself in 2010 – apparently after working on the case as Solicitor General. In her absence, the DOJ has supported the copyright holders in arguing against international exhaustion.

In my view, Wiley likely has the better argument based on a straight reading of the statute. However, the implementation of Section 109 was largely a codification of the 1908 Supreme Court decision in Bobbs-Merrill Co v. Straus. And, it appears that international copyright exhaustion was on the mind of Congress at that time. Further, we already know that if the text of the statute is construed as copyright holders suggest, then the statute does not entirely define the scope of exhaustion. For instance, authorized sales within the US are seen as exhausting the copyright even if the work was not “lawfully made” in the US. In my mind, this opens the door to a potential atextual expansion of the exhaustion doctrine.

There are several interesting briefs filed in the case. The IPO, AIPLA, ABA all support the copyright holders rights to block importation of goods that the copyright holder sold abroad. For the most part, these organizations say that their arguments are “limited to the Copyright Act” and should not be read into “other fields, such as trademark and patent law” which “involve distinct statutory schemes and implicate separate policy concerns.”

A group of law professors led by Jason Shultz filed an amicus brief and argues that the Wiley’s argument “runs contrary to the statutory context in which § 109(a) appears, the common-law backdrop against which Congress legislated, and analogous principles of patent law as well.” Federal Circuit precedent on the topic runs parallel to the Wiley decision finding no international exhaustion. See Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d 1094 (Fed. Cir. 2001) and Fuji Photo Film Co. v. Jazz Photo Corp., 394 F.3d 1368 (Fed. Cir. 2005). Interestingly, the brief rejects the Jazz Photo cases as against the weight of past and present Supreme Court precedent on the topic.

Mark Lemley filed a brief on behalf of Powell Books, et al. that runs in parallel with a brief filed by a group of art museums. Both briefs argue that their respective operations (selling used books and showing artwork) have long relied upon international exhaustion. If copyrights are not so exhausted, both business models will suffer greatly.

Notes:

Alleged Copyright Infringement by Patent Prosecutors

Copyright, Patent, Patent Cases 2012, Patent Prosecution

By Dennis Crouch

American Institute of Physics and John Wiley & Sons v. Schwegman Ludberg (D.Minn)

Publishers John Wiley & Sons and American Institute of Physics have asked the Minnesota District Court for leave to amend and narrow their complaint against the Schwegman law firm. The amendment would drop any allegation that submitting copies of copyright works to the USPTO constitute copyright infringement. The plaintiffs write that the amended complaint

does not allege that this unauthorized copying includes (i) making such copies of a copyrighted work for submission to the PTO as may be required by the rules and regulations of the PTO, (ii) transmitting such copies to the PTO, or (iii) making an archival copy of that work transmitted to the PTO for Defendants’ internal file to document what has been transmitted.

To be clear, however, the plaintiffs have not dropped their case, but continue to allege that other copies and transmission do constitute copyright infringement. Further, because Wiley does not have any proof of those other activities, it argues that the now unchallenged submission to the PTO serves as “evidence of broader use and circulation” sufficient to permit the complaint to move forward.

The newly amended complaint thus recites no factual basis other than the fact that Schwegman is a law firm that prosecutes patents and that, because Schwegman submitted copies of certain articles to the USPTO that it must have also made unauthorized copies. The complaint:

14. Upon information and belief, Defendants have engaged in Unauthorized Copying with respect to the copyrighted articles from Plaintiffs’ journals, including but limited to the articles identified on Schedule A.

15. Plaintiffs cannot know the full extent of Defendants’ Unauthorized Copying without discovery.

The amended complaint also adds a further list of obscure scientific articles that were submitted to the PTO by Schwegman and were allegedly copied internally in an unauthorized manner. The plaintiffs have not yet filed any proposed amendments in the MBHB case.

The USPTO intervened in these cases supporting the law firms. It appears that this amendment is meant to appease the USPTO so that it will fall out of the case – making the defendants look much less sympathetic.

Notes:

  • Despite its high-sounding name, the American Institute of Physics (AIP) is basically a publishing house struggling to survive.
  • Open Access: Depending upon pricing structure, access to a journal such as the Journal of Applied Physics costs as much as $15k per year.  Academic authors generally receive no compensation for publication and there is a growing movement amongst academia toward open access journals.  Almost all law reviews make their works freely available online.  This enforcement project may push the sciences in that direction as well.
  • See also:

    • Copyright Claim Against Patent Firm Who Submits Copyrighted Article Withstands Rule 12(b)(6) Challenge

    Ethics, ,

        I still don't quite know what to make of this. 

        Let's start by framing the issue in terms of ethics: a lawyer has an obligation to disclose material information to the USPTO under Rule 56 and TheraSense.  Sometimes, that may require disclosure, not just of a citation, but of an actual copy of an article or document.

        What if submitting a document is required, but doing so violates copyright law?

        In Am. Institute of Physics v. Schwegman Lundberg & Woessner, PA, __ F.Supp.2d __ (D. Minn. July 2, 2012), the alleged copyright holder sued the patent firm and contended that filing copies of copyrighted articles violated its copyright.  The defendant filed a Rule 12(b)(6) motion.  Much of the resulting decision is about pleading requirements post-Twombly, but part of the decision addressed whether "distribution" of the works had occurred:

    Finally, Defendants argue that Plaintiffs have failed to adequately plead a public-distribution claim. One of the “bundle of rights” granted under the Copyright Act is the right to “distribute copies . . . of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.” 17 U.S.C. § 106(3) (emphasis added). The Complaint alleges that Defendants “distribut[ed]” copies of their works “outside of Schwegman” (Compl. ¶ 18), but the only identified recipient of such “distribution” is the PTO. According to Defendants, the PTO is not “the public” under the Copyright Act and, hence, any claim based on their “distribution” to the PTO must fail. (Reply at 6-7.)….

    There may be merit to this argument. Some courts have held that a limited distribution to a government agency does not constitute “publication” under the copyright laws….

    The problem, however, is that Defendants only casually mentioned this issue in their opening brief, arguing in one sentence – in the midst of the Twombly argument, and without citation to any authority – that “Plaintiffs fail to allege that [the] . . . so-called distributions were made ‘to the public,’ and only public distributions fall within . . . Section 106(3).” (Def. Mem. at 5.) Not until their Reply did Defendants flesh out this argument (over nearly two pages), citing several cases ostensibly supporting it. By not squarely raising this issue in their opening memorandum, the Court believes Plaintiffs did not have an adequate opportunity to address it.  

    Consequently, the district court denied the defendant's Rule 12(b)(6) motion — for now.

        So, this narrow band of conduct — submission to the Office — may not be unlawful conduct, but for now let's suppose it is. Obviously, a lawyer cannot engage in illegal conduct.  What does he do when faced with this problem?

        The first step may be to narrow the circumstances in which it arises:  if filing a copy is not required, don't file one.  This could of course cause some delays in prosecution, which may not be in the best interests of the client.  But lawyers obviously should avoid unlawful conduct, particularly conduct that could expose the lawyer to liability, and (I would think) the client to copyright liabilty under some sort of agency theory, at least.

        The second step would be to disclose.  There is no exception to Rule 56 that says material information need not be disclosed if it is subject to copyright.  Indeed, even trade secret information must be disclosed if material to patentability, as you know.

        The third step would be to hope that (a) courts find that disclosure is not distribution or (b) it is fair use in most instances.  I don't know much about copyright law, but my sense from what I do know and from the Schwegman opinion is that the former is likely, and the latter, though an affirmative defense, is also likely.  It will hardly reduce demand for scientific articles if you can find them in files in the USPTO if you're lucky enough to find it.

        I wonder about the other issues where I see copyrighted material copied, say in patent litigation. Discovery materials are not submitted to a court, but are distributed to private parties.  Later, if there's a trial, they are copied and one copy might be used as an exhibit and submitted to a court.  What about those? (I ask not rhetorically since, again, I don't know copyright.) 

     

    Patent of the Day: Protecting Copyright through Patents

    Patent

    This morning I was browsing through some patents. The first one I looked at is Patent No. 8,185,967 issued to Digimarc and titled a Method and apparatus for content management.  The patent claims priority to a series of continuations that lead back to a provisional application filed in 1999.  And, the gist of the invention appears to be a technological method for enforcing a licensing agreement that limits the number of times a video is accessed by users.  

    The patent’s claim 1 includes two basic steps: (1) maintaining a list of identifiers associated with previously accessed A/V items; and (2) restricting access to those A/V items.  The claim includes a limitation that the steps occur using “electronic memory” and a “programmed electronic processor” that are part of a “portable device.”

    Claim 1 reads as follows:

    1. A method comprising:

    utilizing electronic memory housed in a portable device, maintaining a listing of up to N identifiers associated with previously accessed audio or video items, where N is an integer, and where each previously accessed audio or video item has an identifier associated therewith;

    utilizing a programmed electronic processor housed in the portable device, i) restricting access to an encountered audio or video item if an identifier associated with the encountered audio or video item is one of the N identifiers associated with the previously accessed audio or video items, or ii) limiting a number of content items each with a different user identifier associated therewith that can be accessed in a certain amount of time. 


     

    Overlapping Copyright and Patent Rights

    Patent

    by Dennis Crouch

    Oracle v. Google (N.D. Cal. 2012)

    Oracle and Google are battling over whether Google improperly relied on Java OS code when developing its Android operating system.  The intellectual property rights associated with Java are now owned by Oracle, who purchased Sun Microsystems in 2009. Although there are some factual disputes, a jury recently concluded that Google did indeed copy and use portions the Java code.  However, the jury could not decide whether the use was improper or whether it instead should be considered an appropriate fair use.

    In addition to being protected by copyright, the same Java code is also (allegedly) protected by patents owned by Oracle.  Thus, Oracle has argued that Google’s actions constitute both copyright and patent infringement.  

    Although pre-software, the Supreme Court has written some about the overlap between various intellectual property rights.  In Mazer v. Stein, 347 U.S. 201 (1954), the Supreme Court stated refused to hold that mere patentability of a lamp structure did not preclude the creator from obtaining copyright protection.  Mazer focused on potential protectability and does not address whether an entity can properly claim and/or assert both copyright and patent rights over the same subject matter as Oracle appears to be doing here. In addition, there is some suggestion from the case that the Supreme Court was talking about design patents rather than utility patents.  In other contexts, the Supreme Court has been hostile to overlapping IP rights. See, most recently, Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003) and TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23 (2001).