SCOTUS' 2019 IP Cases Won't Be Boring, Law Professors Say
The justices have already granted cert in six cases, and several potential blockbusters are waiting in the wings. The solicitor general on Friday recommended against granting cert on one of one case, Google v. Oracle, though it said the correctness of the Federal Circuit's fair use decision is "not free from doubt."
September 27, 2019 at 07:45 PM
13 minute read
Intellectual property will feature prominently in the Supreme Court's upcoming term.
Before the justices even meet for their first conference Tuesday, the court already has six IP cases on its docket. The solicitor general has been asked to weigh in on three more this fall, any of which, if granted, would send shock waves through the IP community. Additional high-profile fights over issues such as sovereign immunity at the U.S. Patent and Trademark Office and medical diagnostics patents are steaming toward the court as well.
"It's going to be an interesting term," said Stanford Law professor Mark Lemley.
It's almost guaranteed to be more intriguing than last year's, which featured six mostly forgettable cases—unless you sell vulgarity-branded merchandise or the federal government is trying to haul you before the Patent Trial and Appeal Board.
So far the court has granted six IP cert petitions for the upcoming term, two each in patents, trademarks and copyrights. Like last year, most are focused on narrow issues. Romag v. Fossil, a showdown over trademark infringement damages, looks to be the biggest impact case of the group so far.
Waiting in the wings are three potential bombshells. The Supreme Court has already asked Solicitor General Noel Francisco for his office's views on Google v. Oracle, the copyrightability and fair use case; Berkheimer v. HP, a Federal Circuit decision that declared patent eligibility a question of both fact and law; and Hikma v. Vanda, on the patentability of newly discovered uses for old drugs.
"Any one of those three cases where there's a CVSG could be a blockbuster," Lemley said in an interview earlier this week.
The solicitor general on Friday recommended against granting cert in Google v. Oracle, though it said the correctness of the Federal Circuit's fair use decision is "not free from doubt."
With regard to the Section 101 cases, Lemley and George Washington University law professor Dmitry Karshtedt both say they don't believe the court is eager to wade back into patent eligibility after issuing four opinions earlier in the decade.
One reason that could change, according to Lemley, is "that the Federal Circuit after a few years of laying low, has kind of gone back to its usual tricks" on Section 101. "We're seeing many more irreconcilable and panel-specific decisions on this issue. So it looks like they need more guidance."
Karshtedt said he doesn't believe the Federal Circuit is flouting the Supreme Court precedents. "I think there's enough of an argument for further percolation that the court can convince itself not to grant," he said.
Term 2019 also ought to provide more insight into Justices Neil Gorsuch's and Brett Kavanaugh's views on patents. Karshtedt and Lemley both noted that Gorsuch has been assertive on patents during his first couple of years, already contributing a majority opinion and a couple of dissents. "Maybe that's, well, the junior guy gets hazed by being given all the IP cases," Lemley joked. But if Gorsuch continues to show active interest, that could change the IP dynamics at the court, including the mix of IP cases the court takes, and whether opinions continue to tend toward anonymity, he said.
Patent lawyers won't have to wait long for the first case of Term 2020. At the court's first session Oct. 7, the justices will hear argument in Peter v. NantKwest over whether the PTO can collect its in-house attorneys fees when it has to defend decisions to deny patent applications in district court.
Section 145 of the Patent Act states simply that "all the expenses of the proceedings shall be paid by the applicant." The Federal Circuit ruled en banc that that language isn't sufficiently specific and explicit to overcome the American rule that each side pays its own attorneys fees.
The PTO argues Section 145 doesn't implicate the American rule because it has nothing to do with which side prevails. The applicant pays, win or lose. The only question is whether the expenses include fees. The PTO points to a Fourth Circuit decision that construed a nearly identical provision of the Lanham Act as providing for attorney fee recovery.
Karshtedt said the government will have to explain why, if it believes the language of the statute clearly authorizes fees, the PTO waited some 170 years to enforce it. Irell & Manella partner Morgan Chu is counsel of record for NantKwest. That's PTO Director Andrei Iancu's old law firm, which is why he's recused and Deputy Director Laura Peter's name appears in the caption.
The second patent case on the court's docket, Thryv v. Click-to-Call Technologies, touches on a vexing procedural issue in the America Invents Act. AIA Section 314(d) states that the PTO director's decision to begin an administrative review of patent validity, known as an IPR, isn't subject to appellate review.
The Federal Circuit at first interpreted that provision as blocking review of whether a petitioner had brought its challenge within the one-year statute of limitations. After the Supreme Court seemed to crack the door open on appealability in 2016, the Federal Circuit by a 9-4 decision reversed course, saying the time bar can be reviewed after all. That's led to numerous appeals about whether petitioners have schemed their way around the time bar.
Before the Supreme Court, petitioner Thryv and the U.S. government argue that the Federal Circuit was right the first time. They say the plain language of Section 314(d)—which is headed "NO APPEAL"—should control. Thryv is represented by counsel of record Adam Charnes of Kilpatrick Townsend & Stockton.
Click-to-Call hasn't filed its merits brief yet. But at the cert stage counsel of record Daniel Geyser of Geyser PC pointed to Section 315(b), which says proceedings "may not be instituted" if a petition isn't filed within a year.
The Federal Circuit Bar Association and the American Intellectual Property Law Association support some measure of judicial review. Intel Corp. is backing the "no appeal" approach.
In last spring's Franchise Tax Board v. Hyatt, Justice Clarence Thomas wrote that "stare decisis does not compel continued adherence to [an] erroneous precedent." Dissenting Justice Stephen Breyer said the decision "can only cause one to wonder which cases the Court will overrule next."
Breyer probably wasn't thinking specifically about sovereign immunity from copyright suits. But a dispute over images of a sunken pirate ship will have the court revisiting a 1999 precedent, Florida Prepaid v. College Savings Bank. That decision held that Congress' Article I power to promote the progress of science and useful arts had to yield to the states' Eleventh Amendment sovereign immunity from suit in federal court.
The U.S. Court of Appeals for the Fourth Circuit said the same logic applies to copyright law and ordered videographer Frederick Allen's suit against the state of North Carolina dismissed. Allen alleged that he'd spent 10 years documenting the underwater wreck of the pirate ship Queen Anne's Revenge under a contract with North Carolina only to have North Carolina violate the agreement by posting portions of his work on the web.
George Washington University's Karshtedt said Florida Prepaid has been somewhat controversial." I'm not sure if the court is looking to overrule it or distinguish it," he said. Allen's Quinn Emanuel Urquhart & Sullivan counsel say they'll take either. "The Court can choose between its grounds, but it should uphold the validity of the [Copyright Remedy Clarification Act of 1990] and reverse the judgment below," counsel of record Derek Shaffer states in Allen's brief.
Allen is getting amicus support from the Recording Industry Association of America, the Washington Legal Foundation and Oracle America Corp., among others. Oracle says it got jobbed by the state of Oregon in 2015 after the state backed out of a sovereign immunity waiver Oracle had negotiated.
North Carolina says it posted only "a handful of images in educational videos and a museum newsletter," and that the legislative record of state copyright infringement in 1990 was too "meager" to support abrogation of states' immunity. It has amicus support from 31 other states, which say reversal would have "broad, negative consequences for state sovereignty more generally."
States can hold copyrights too. Georgia is suing Public.Resource.Org for disseminating the state's Official Code of Georgia Annotated for free on the Internet. Georgia argues that while its laws can't be copyrighted, the same isn't true for annotations—such as the summaries of judicial interpretations of the laws—which are prepared by a private contractor. The Eleventh Circuit opinion putting them in the public domain "threatens to upend the longstanding arrangements of Georgia and numerous other states," counsel of record Joshua Johnson of Vinson & Elkins argues in Georgia v. Public.Resource.Org.
The U.S. Government, Matthew Bender & Co. and The Software and Information Industry Association argue that only government edicts that carry the force of law should be exempt from copyright.
Public.Resource.Org is a nonprofit dedicated to improving public access to all sources of the law. It hasn't filed its merits brief yet, but at the cert stage it acknowledged the uncertain state of the government edict doctrine and invited the court to take the case. It argues that the Georgia General Assembly "is the driving force behind the annotations' creation" and that the Georgia Code Revision Commission "directly supervises and controls" their preparation.
Trademark lawyers will be all ears when the court hears Romag Fasteners v. Fossil, which will determine whether a finding of willful infringement is a prerequisite to awarding infringer's profits. Six circuits say it is, while six others say the infringer's intent is merely one factor among many a court should consider in fashioning an equitable remedy.
Williams & Connolly partner Lisa Blatt argues for Romag Fasteners Inc. that nothing in the Lanham Act requires a finding of willful infringement to award infringer's profits. Romag points out that when Congress added a dilution provision to the Lanham Act in 1999, it specified that willfulness is prerequisite for monetary damages, but did not make a similar change for infringement.
Fossil hasn't filed its merits brief yet. Lemley said he's skeptical that Congress intended to overrule centuries of trademark damages case law with its silence, but he acknowledges that "if you were to just read the statute and pay no attention to the history or the context," Romag could have a winning case.
He said he's hoping the court will follow the approach it took in the January patent decision Helsinn Healthcare and say, "Look, we don't think that silence on this issue meant to wreak this great change."
Rounding out the IP field so far is Lucky Brand Dungarees v. Marcel Fashions Group. Though technically a trademark case, the question turns on a general rule of civil procedure: whether a litigant can be precluded from raising a defense that it could have asserted, but didn't, in a previous action against the same opponent. Kirkland & Ellis represents petitioner Lucky Brands against Marcel and Dunnington Bartholow & Miller.
Those are just the IP cases we know the Supreme Court will hear. A few others that would seem to have a good shot at cert:
Regents of the University of Minnesota v. LSI: The Federal Circuit ruled last spring that states cannot invoke sovereign immunity to shield their patents from AIA review by the Patent Trial and Appeal Board. The university, which was backed by 14 other states at the Federal Circuit, has added Goldstein & Russell in seeking cert.
Ropes & Gray partner Matthew Rizzolo, who's not involved in the case, said he's expecting at least a request for the solicitor general's views. That would be interesting, he said, given that the PTAB initially ruled that sovereign immunity did apply, the DOJ successfully argued to the Federal Circuit that it does not, and the federal government is now facing a PTAB challenge of its own from Gilead Sciences.
Athena Diagnostics v. Mayo Collaborative Services: Athena Diagnostics Inc. still has a month left to petition for cert. It's hard to imagine the company won't after all 12 active Federal Circuit judges used the case to urge the Supreme Court or Congress to at least refine, if not overrule, the law of patent eligibility for medical diagnostics. Moreover, the case produced eight separate opinions concurring or denying from Athena's petition for en banc review. "That kind of fragmentation is something the [Supreme] Court might worry about," Lemley said. Karshtedt noted the Federal Circuit has raised similar concerns about diagnostics before. He said he's not sure if there's enough new with Athena to move the needle to cert.
Straight Path v. Apple and Power Analytics v. Operation Technology: Each of these petitions challenge the Federal Circuit's practice of issuing summary affirmances under the court's Rule 36. Straight Path argues that a written opinion is required when the court is presented a pure matter of law. Power Analytics argues that Rule 36 opinions are further muddying the waters around patent eligibility. Rule 36 opinions have come under some criticism, notably by University of Missouri law professor Dennis Crouch on his PatentlyO blog. It looks as if someone at the Supreme Court is listening. The court has requested briefs in opposition for both Straight Path and Power Analytics. Lemley said he doesn't see what the court could really do about Rule 36. "I'd be surprised if the court wrote an opinion saying there must always be an opinion in every case," he said. "The consequences would reverberate well beyond patent law."
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