Intellectual Property

Compulsory Licensing and Health Law

March 10, 2016
Competition, Drug Policy, Healthcare, Intellectual Property

Nolan Hudalla, MJLST Staffer

In her articleA Public Health Imperative: The Need for Meaningful Change in the Trans-Pacific Partnership’s Intellectual Property Chapter, Roma Patel discusses the benefits that TRIPS “flexibilities” provide to the pharmaceutical markets in developing nations. Specific to this discussion, Ms. Patel notes that malaria is a permissible reason for a country to declare a “national emergency” or “circumstance of extreme urgency” under TRIPS. Such a declaration would allow a nation to utilize the TRIPS compulsory licensing provision. This permits “a government to allow the sale and manufacture of patented medicine without the patent holder’s consent.” With the recent development of aviable malaria vaccine, what can we expect the impact of this provision to be? In particular, will countries invoke compulsory licensing on the basis of a malaria “national emergency,” and, if so, what results can we anticipate?

According to history, we can’t expect much. According to Nicol & Owoeye, “[t]o date, there is little to suggest that the Implementation Decision and the Protocol [for the compulsory licensing provisions] can meaningfully contribute to reversing the failure of the industrialized world to supply essential medicines to the countries that need them the most. Nor does there appear to be widespread enthusiasm for using Implementation Decision and Protocol mechanisms to facilitate the provision of low-cost or no-cost pharmaceuticals to those most in need.” This certainly appears to be true for impoverished African nations. For example, the continent has already been devastated by the HIV/AIDS epidemic, yet compulsory licensing has not provided a sufficient solution. In fact, according to a UNAIDS report, “[o]f the 21.2 million people in Africa eligible for antiretroviral therapy in 2013 under the 2013 WHO guidelines, only 7.6 million people were receiving HIV treatment as of December 2012.”

Brian Owens’ article Questions Raised about Whether Compulsory Licenses get Best Pricesdiscusses one of the reasons for the disappointing results of compulsory licensing. He notes that “[t]he use of so-called ‘compulsory licenses’ by developing countries to obtain cheaper drugs for HIV and AIDS by circumventing patents has not been the best strategy for achieving the lowest prices over the past decade . . . .” Expanding on this, Owens states that, “of the 30 cases of compulsory licensing from 2003 to 2012 for which reliable data was available, the median price achieved through international procurement was lower for 19 of them [than compulsory licensing]—in the majority of cases by more than 25% . . . . The effect was strongest in the poorest countries, where in six out of seven cases the procurement price was more than 25% lower than the compulsory license price.” Amir Attaran, the director of the study discussed in Owens’ article, asserts that “countries should not rush into using compulsory licenses until they have exhausted all other options. “Countries can save money using compulsory licenses, but they can save more by negotiating and using international procurement channels . . . If saving money is paramount, then compulsory licenses may not be the optimal strategy.”

Unfortunately, saving money is paramount for many African nations. Thus the greatest “flexibility” given to these nations is not always a practical solution. Perhaps the arrival of the first malaria vaccine will motivate international leaders to learn from prior experience. Hopefully the international community will reconsider compulsory licensing, as Roma Patel did, to determine how it can better provide access to life-saving medications.

USPTO to Decide Who Will Own the Pioneer Gene Editing Patent for the Next Billion-Dollar Industry

January 28, 2016
Biotechnology, Competition, Intellectual Property

Na An, MJLST Staffer

Earlier this month, the United States Patent and Trademark Office (USPTO) declared an interference to determine which one of the two research groups will be awarded the patent protection of one of the most important scientific discoveries in the past decade: CRISPR technology. This technology enables deletion, repair or replacement of genes in such a precise fashion that it could be worth billions of dollars in human health, agriculture and biotechnology industries.

Clustered regularly-interspaced short palindromic repeats system (CRISPR) is a mechanism used by the immune system to resist invading viruses by recording their genetic information and then specifically target these exogenous genetic elements in bacteria, mammals and other organisms. It provides a reliable and precise tool for editing genes. Upon its discovery, CRISPR has been adopted for a wide range of applications from creating animal models with human cancers and turning specific genes on and off to genetically modifying plants.

In 2015, companies rushed to invest and occupy early markets of this potentially billion-dollar industry. The first was Novartis, who signed two deals with gene-editing start-ups to use CRISPR for engineering immune cells and blood stem cells, and as a tool for drug discovery. Soon after, AstraZeneca shook hands with the Wellcome Trust Sanger Institute, the Innovative Genomics Initiative, the Broad and Whitehead Institutes, and Thermo Fisher Scientific to identify and validate new targets in preclinical models with CRISPR. Simultaneously, immunotherapy firm Juno Therapeutics made deals with Editas and Vertex Pharmaceuticals to create anticancer immune cell therapies with an agreement that could be valued at $2.6 billion.

Amid the fast surge of research and commercial opportunities, a patent fight over CRISPR simmers in the background, which raises great uncertainties of the future market structure and commercial potential. The UC Berkeley team, lead by chemist Jennifer Doudna, filed a patent application (No. 13/842,859) on March 15, 2013 with a priority date of May 25, 2012. The application contained broad claims to CRISPR technology, but described only “genetically modified cells that produce Cas9,” an enzyme crucial to CRISPR mechanism, and “Cas9 transgenic non-human multicellular organisms.” On October 15, 2013, the MIT researcher Feng Zhang filed his own patent application (No. 14/054,414) with a priority date of December 12, 2012. Unlike the Doudna application, Zhang contemplated specifically adapting CRISPR in eukaryotic cells. Through Accelerated Examination, USPTO granted Zhang a patent on April 15, 2014, even though Doudna had an earlier invention date and filing date. After several amendments to Doudna application in response to two third-party submissions, the world has been waiting on the USPTO to make a decision. On January 19, 2016, the patent office finally agreed to conduct an interference to decide who was the rightful applicant to award the patent protection on CRISPR.

Since both applications have priority dates prior to March 16, 2013, the patent will be granted on a “first to invent” basis. Interference cases are historically rare and could stretch out for years, considering the high probability that the losing party will appeal the decision. It is unclear what the result will be. Mari Serebrov, regulatory editor at Thomson Reuters BioWorld, said “if the courts rule the technology isn’t patentable, it could chill investment. On the other hand, if one group is allowed the patent, it could result in a monopoly and will probably make licenses more expensive or discourage research because the patents could lock up the field, depending on how broadly they are written.” Faced with the great uncertainty, Monsanto has limited CRISPR’s applications until a decision is made. Tom Adams, vice president of global biotechnology at Monsanto, said “until we understand the intellectual property it’s hard to do much.”

As more capital is pouring in and risks skyrocketing, companies and researchers need to use caution in their inventive and investment activities relating to CRISPR.

Patent Damages

January 20, 2016
Competition, Intellectual Property, Patents

Tianxiang (Max) Zhou, MJLST Staffer

In Dec. 2015, almost five years after Apple sued Samsung for infringing a smartphone design patent, Samsung agrees to pay Apple $548 million. Apple is now demanding Samsung pay an additional $180 million for the patent dispute. Besides the huge amounts of damages, the case is not over and it continues raising fundamental issues of how to evaluate values of design patent infringements.

In the petition for writ of certiorari challenging the $400 million that it has paid for infringing Apple’s design patent, Samsung writes, “The questions presented are: . . . Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?”

The second issue stated in the writ is noteworthy. Under the current rule, the awards in a design patent infringement case to the patent owner are the whole profits from the sale of the infringing products. This rule has created and will create massive jury verdicts in design patent infringement cases, and the Supreme Court has not reviewed the rule. As Samsung writes in the petition, “the Supreme Court has not reviewed a design-patent case in more than 120 years.” With the new development of the industries and various design patents, it is doubted whether the awards of whole profits are reasonable.

Although statistically the Supreme Court will not take the case, the issue of design patent awards raised heated discussions. In 2014, a group of 27 law professors submitted an amicus brief in support of Samsung urging the Federal Circuit to interpret the relevant statutory provision to limit the award of profits in design patent infringement cases. The amicus brief stated: “the Court should require proof of some connection between the patented design and the defendant’s profits, the order the district court to remit the award of profits to the extent it exceeds those profits attributable to the patented designs.” The professors argued the origin and context of the controlling statute Section 289, and that awarding a defendant’s entire profits makes no sense in the modern world, and to prevent disgorgement of profits.

As stated above, the Supreme Court has not reviewed the issue for over one hundred years. With the unsettled dispute between Samsung and Apple continuing, we could look forward to whether the Supreme Court would take the case and redefine Section 289. However, a question posed to the judges is, if the awards to the design patent infringement are not the whole profits of the sale, then what proportion of the profits should be awarded? Judges should figure out a reasonable standard to evaluate the amount attribute to the infringed design.

Recent Developments in Automated Vehicles Suggest Broad Effects on Urban Life

January 20, 2016
Autonomous Vehicles, Business Law, Competition, Intellectual Property

J. Adam Sorenson, MJLST Staffer

In “Climbing Mount Next: The Effects of Autonomous Vehicles on Society” from Volume 16, Issue 2 of the Minnesota Journal of Law, Science & Technology, David Levinson discusses the then current state of automated vehicles and what effects they will have on society in the near and distant future. Levinson evaluates the effect of driverless cars in numerous ways, including the capacity and vehicles-as-a-service (VaaS). Both of these changes are illuminated slightly by a recent announcement by Tesla Motors, a large player in the autonomous vehicle arena.

This week Tesla announced Summon which allows a user to summon their tesla using their phone. As of now, this technology can only be used to summon your car to the end of your drive way and to put it away for the night. Tesla sees a future where this technology can be used to summon your vehicle from anywhere in the city or even in the country. This future technology, or something very similar to it, would play a pivotal role in providing urban areas with VaaS. VaaS would essentially be a taxi service without drivers, allowing for “cloud commuting” which would require fewer vehicles overall for a given area. Ford has also announced what it calls FordPass, which is designed to be used with human-driven cars, but allows for leasing a car among a group of individuals and sharing the vehicle. This technology could easily be transferred to the world of autonomous vehicles and could be expanded to include entire cities and multiple cars.

Beyond VaaS, these new developments bring us closer to the benefits to capacity Levinson mentions in his article. Levinson mentions the benefits to traffic congestion and bottlenecks which could be alleviated by accurate and safe autonomous vehicles. Driverless vehicles would allow for narrower lanes, higher speed limits, and less space between cars on the highway, but Levinson concedes that these cars still need to “go somewhere, so auto-mobility still requires some capacity on city streets as well as freeways, but ubiquitous adoption of autonomous vehicles would save space on parking, and lane width everywhere.” Tesla is seeking to alleviate some of these issues by allowing a vehicle to be summoned from a further distance, alleviating some parking congestion.

Audi, however, is seeking to tackle the problem in a slightly different fashion. Audi is partnering with Boston suburb Somerville to develop a network including self-parking cars. “UCLA urban planning professor Donald Shoup found 30 percent of the traffic in a downtown area is simply people looking for parking” and eliminating this traffic would allow for much higher capacity in these areas. Similarly, these cars will not have people getting in and out of them, allowing for much more compact parking areas and much higher capacity for parking. Audi and Tesla are just some of the companies working to be at the forefront of automated vehicle technology, but there is no denying that whoever the developments are coming from, the effects and changes David Levinson identified are coming, and they’re here to stay.

Digital Millennium Copyright Act Exemptions Announced

November 17, 2015
Copyrights, Data, Intellectual Property, Internet, Privacy

Zach Berger, MJLST Staffer

The Digital Millennium Copyright Act (DMCA) first enacted in 1998, prevents owners of digital devices from making use of these devices in any way that the copyright holder does not explicitly permit. Codified in part in 17 U.S.C. § 1201, the DMCA makes it illegal to circumvent digital security measures that prevent unauthorized access to copyrighted works such has movies, video games, and computer programs. This law prevents users from breaking what is known as access controls, even if the purpose would fall under lawful fair use. According to the Electronic Frontier Foundation’s (a nonprofit digital rights organization) staff attorney Kit Walsh, “This ‘access control’ rule is supposed to protect against unlawful copying. But as we’ve seen in the recent Volkswagen scandal . . . it can be used instead to hide wrongdoing hidden in computer code.” Essentially, everything not explicitly permitted is forbidden.

However, these restrictions are not iron clad. Every three years, users are allowed to request exemptions to this law for lawful fair uses from the Library of Congress (LOC), but these exemptions are not easy to receive. In order to receive an exemption, activists must not only propose new exemptions, but also plead for ones already granted to be continued. The system is flawed, as users often need to have a way to circumvent their devices to make full use of the products. However, the LOC has recently released its new list of exemptions, and this expanded list represents a small victory for digital rights activists.

The exemptions granted will go into effect in 2016, and cover 22 types of uses affecting movies, e-books, smart phones, tablets, video games and even cars. Some of the highlights of the exemptions are as follows:

Movies where circumvention is used in order to make use of short portions of the motion pictures:
- For educational uses by University and grade school instructors and students.
- For e-books offering film analysis
- For uses in noncommercial videos
Smart devices
- Can “jailbreak” these devices to allow them to interoperate with or remove software applications, allows phones to be unlocked from their carrier
- Such devices include, smart phones, televisions, and tablets or other mobile computing devices
  - In 2012, jailbreaking smartphones was allowed, but not tablets. This distinction has been removed.
- Video Games
  - Fan operated online servers are now allowed to support video games once the publishers shut down official servers.
    - However, this only applies to games that would be made nearly unplayable without the servers.
  - Museums, libraries, and archives can go a step further by jailbreaking games as needed to get them functioning properly again.
- Computer programs that operate things primarily designed for use by individual consumers, for purposes of diagnosis, repair, and modification
  - This includes voting machines, automobiles, and implantation medical devices.
- Computer programs that control automobiles, for purposes of diagnosis, repair, and modification of the vehicle

These new exemptions are a small, but significant victory for consumers under the DMCA. The ability to analyze your automotive software is especially relevant in the wake of the aforementioned Volkswagen emissions scandal. However, the exemptions are subject to some important caveats. For example, only video games that are almost completely unplayable can have user made servers. This means that games where only an online multiplayer feature is lost, such servers are not allowed. A better long-term solution is clearly needed, as this burdensome process is flawed and has led to what the EFF has called “unintended consequences.” Regardless, as long as we still have this draconian law, exemptions will be welcomed. To read the final rule, register’s recommendation, and introduction (which provides a general overview) click here.

Supreme Court to Hear Willful Infringement Cases: Will the Justices Clear the Way for Enhanced Damages for Patentees?

November 17, 2015
Competition, Intellectual Property, Patents

Na An, MJLST Staffer

The U.S. Supreme Court granted certiorari to hear two patent cases challenging the current Federal Circuit standard for proving willful infringement on October 19, 2015. The finding of willfulness allows judges to award triple damages, providing more leverage for patentees in licensing and settlement negotiations. The patent litigation world watches with great anticipation as the Court’s Octane Fitness decision rejected a similar rule for awarding attorney’s fees in patent cases last year.

The Federal Circuit established the current willfulness test in its landmark Seagate decision in 2007, which required the patentee to prove that there was an objectively high likelihood that the infringer’s actions constituted infringement and that the likelihood was either known or so obvious that it should have been known to the accused infringer. The Seagate two-prong test overruled decades of precedents that had imposed an affirmative duty on accused infringers to obtain opinion of counsel and posed a substantially heightened burden for a patentee seeking to establish willfulness. Later on, the Federal Circuit recognized the complexity of post-Seagate inquiry and held in Bard Peripheral Vascular that the threshold objective prong of the test is a question of law, reallocating the roles of the judge and jury in determining willfulness of the infringement. Consequently, as opposed to the traditional consideration of willfulness as a question of fact, a district court must now determine whether a reasonable person would have found there to be a high likelihood of infringement (first prong), while the jury determines the patent infringer’s subjective intent (second prong).

Upon a finding of willfulness, the court has discretion to increase the damages up to three times the amount found or assessed, as authorized in 35 U.S.C. § 284. This statutory provision is very similar to § 285, which grants the court power to award reasonable attorney fees in exceptional cases. Before the Supreme Court’s Octane Fitness decision last year, the Federal Circuit restricted its application of § 285 to cases, in which the losing party’s position was “objectively baseless” and brought in “subjective bad faith.” Octane Fitness rejected such a rigid rule and held that judges can decide to award fees when a case “stands out from others.” Seagate’s two-prong test bears a striking resemblance to pre-Octane fee inquiry, sparking much anticipation among practitioners and scholars that the high court would similarly strike down the restrictive willfulness test. The Court found its opportunity in Halo and Stryker.

Halo involves infringement of three US patents, which disclose “surface mount electronic packages containing transformers for mounting on a printed circuit board inside electronic devices.” The Federal Circuit affirmed the district court’s denial of increased damages because the patentee failed to satisfy the objective prong of the Seagate test. Similar issues arose in Stryker. The patents in Stryker were directed to devices that deliver pressurized irrigation for different medical therapies, and the Federal Circuit again denied increased damages due to district court’s failure to undertake an objective assessment of the infringer’s defense. Interestingly, Judge Kathleen O’Malley, concurring in Halo, called for a complete reevaluation of the two-prong test for finding willful infringement, and she reasoned that increased damages and attorney fees should be grouped, given their analogous frameworks and statutory provisions. Therefore, in light of the Octane Fitness decision, the Seagate two-prong test merits reconsideration.

The Federal Circuit voted 8-2 in March not to reconsider the willfulness standard en banc in Halo; nevertheless, the Court granted certiorari without a sharp divide in the lower court. It signals that the Court is unlikely to retain the Seagate standard. But the question remains how much more flexible the new test will be. Will the Court use the same “stands out from others” language in Octane Fitness? Are the justices taking the second prong of the Seagate test away from juries? Or are we going back to the pre-Seagate rule that a mere notice of patent infringement triggers an affirmative duty on the defendant to obtain opinion of counsel? Additionally, the statutory language in § 284 says nothing about willfulness. Will the court give judges even broader discretion to award increased damages in absence of willfulness? If so, is there a danger of more forum shopping? We eagerly await the high court’s decision.

The Legal Persona of Electronic Entities – Are Electronic Entities Independent Entities?

November 13, 2015
Data, Intellectual Property, Internet

Natalie Gao, MJLST Staffer

The advent of the electronic age brought about digital changes and easier accessibility to more information but with this electronic age came certain electronic problems. One such problem is whether or not electronic entities like, (1) usernames online, (2) software agents, (3) avatars, (4) robots, and (5) artificial intelligence, are independent entities under law. A username for a website like eBay or for a forum, for all intents and purposes may well be just a pseudonym for the person behind the computer. But at what point does the electronic entity become an independent entity, and at what point does the electronic entity start have the rights and responsibilities of a legally independent entity?

In 2007, Plaintiff Marc Bragg brought suit against Defendants Linden Research Inc. (Linden), owner of the massive multiplayer online role playing game (MMORPG) Second Life, and its Chief Executive Officer. Second Life is a game with a telling title and it essentially allows its players to have a second life. It has a market for goods, extensive communications functions, and even a red-light district, and real universities have been given digital campuses in the game, where they have held lectures. Players of Second Life purchase items and land in-game with real money.

Plaintiff Bragg’s digital land was frozen in-game by moderators due to “suspicious” activity(s) and Plaintiff brought suit claiming he had property rights to the digital land. Bragg v. Linden Research, Inc., like its descendants including Evans v. Linden Research, Inc. (2011), have been settled out of court and therefore do not offer the legal precedents it could potentially have had regarding its unique fact pattern(s). And Second Life is also a very unique game because pre-2007, Linden had been promoting Second Life by announcing they recognize virtual property rights and that whatever users owned in-game would be belong to the user instead of to Linden. But can the users really own digital land? Would it be the users themselves owning the ditigal land or the avatars they make on the website, the ones living this “second life”, be the true owners? And at what point can avatars or any electronic entity even have rights and responsibilities?

An independent entity is not the same as a legal independent entity because an latter, beyond just existing independently, has rights and responsibilities pursuant to law. MMORPGs may use avatars to allow users to play games and avatars may be one step more independent than a username, but is that avatar an independent entity that can, for example, legally conduct commercial transactions? Or rather, is the avatar conducting a “transaction” in a leisure context? In Bragg v. Linden Research, Inc., the court touches on the issue of transactions but it rules only on civil procedure and contract law. And what about avatars existing now in some games that can play itself? Is “automatic” enough to make something an “independent entity”?

The concept of an independent electronic entity is discussed in length in Bridging the Accountability Gap: Rights for New Entities in the Information Society. Authors Koops, Hildebrandt, and Jaquet-Chiffelle compares the legal personhood of electronic artificial entities with animals, ships, trust funds, and organizations, arguing that giving legal personhood to basically all (or just “all”) currently existing electronic entities bring up problems such as needing representation with agency, lacking the “intent” required for certain crimes and/or areas of law, and likely needing to base some of their legal appeals in area of human/civil rights. The entities may be “actants” (in that they are capable of acting) but they are not always autonomous. A robot will need mens rea to assess responsibility, and none of the five listed entities do not have consciousness (which animals do have), let alone self-consciousness. The authors argue that none of the artificial entities fit the prima facies definition of a legal person and instead they moved to evaluate the entities on a continuum from automatic (acting) to autonomic (acting on its own), as well as the entity’s ability to contract and bear legal responsibility. And they come up with three possible solutions, one “Short Term”, one “Middle Term”, and one “Long Term”. The Short Term method, which seems to be the most legally feasible under today’s law, purposes creating a corporation (a legally independent entity) to create the electronic entity. This concept is reminiscent of theorist Gunther Teubner’s idea of a using a hybrid entity, one that combines an electronic agent(s) with a company with limited liability, instead of an individual entity to give something rights and responsibilities.

Inevitably, even though under the actual claims brought to the court, Bragg v. Linden Research, Inc. mostly seems more like an open-source licensing issue than an issue of electronic independent entity, Koops, Hildebrandt, and Jaquet-Chiffelle still tries to answer some questions that may be very salient one day. Programs can be probabilistic algorithms but no matter how unpredictable the program may be, their unpredictability is fixed in the algorithm. An artificial intelligence (AI), a program that grows and learns and create unpredictability on its own, may be a thing of science fiction and The Avengers, may one day be reality. And an AI does not have to be the AI of IRobot; it does not have to have a personality. At what point will we have to treat electronic entities as legally autonomic and hold it responsible for the things it has done? Will the future genius-programmer, who creates an AI to watch over the trusts in his/her care, be held accountable when that AI starts illegally funneling money out to the AmeriCorp bank account the AI was created to watch over, into the personal saving accounts of lamer non-MJLST law journals in the University of Minnesota? Koops, Hildebrandt, and Jaquet-Chiffelle argues yes, but it largely depends on the AI itself and the area of law.

Apple Loses Multi-Million Dollar Lawsuit

October 20, 2015
Intellectual Property, Patents

Riley Conlin, MJLST Staffer

Earlier this month, the Wisconsin Alumni Research Foundation (WARF) won a large patent lawsuit against Apple Inc. The suit relates to WARF’s 1998 patent of a technology that improves microchip efficiency. WARF initiated the suit in January 2014 contending that Apple’s A7, A8 and A8X processors violate the patent. The processors are found in the iPhone 5s, 6, 6 Plus, and many variations of the iPad.

Apple denied that their microchips infringed WARF’s patent and contended that the patent was invalid. The U.S. Patent and Trademark Office declined to review the patent’s validity. The jury, sitting in the U.S. District Court for the Western District of Wisconsin, concluded that Apple’s processing chips improperly used technology owned by WARF. U.S. District Court Judge William Conley has scheduled to trial in three phases. First, the jury determined whether or not Apple was liable. Second, the jury will determine the appropriate damages. Finally, the jury will consider whether Apple willfully violated the patent, which could lead to additional damages. Based on Conley’s recent ruling, Apple already faces damages reaching potentially $862.4 million.

WARF has initiated lawsuits around this patent before. In 2008, the foundation used that patent to sue Intel Corp. However, that case never made it to trial, because it was settled shortly prior to it beginning.

In September 2015, WARF filed a subsequent lawsuit against Apple. The foundation contends that Apple’s A9 and A9X chips also infringe upon their patent. The A9 and A9X chips can be found in Apple’s more recent technology including the: iPhone 6S and 6S Plus, and the iPad Pro.

Akamai Techs. v. Limelight Networks: An Expansion of the Scope of Patent Direct Infringement

October 13, 2015
Intellectual Property, Litigation, Patents

Tianxiang (“Max”) Zhou, MJLST Staffer

This August the Federal Circuit Court delivered an en banc opinion of Akamai Techs. v. Limelight Networks, affirming the jury decision awarding $40 million in damages. The per curium opinion provided that the Court “unanimously set forth the law of divided infringement under 35 U.S.C. § 271(a)” and there was substantial evidence “support[ing] the jury’s finding that Limelight directly infringed U.S. Patent No. 6,108,703.” Accordingly, the Federal Circuit reversed the District Court’s grant of Limelight’s motion for judgment of non-infringement as a matter of law.

The issue in this case is whether Limelight should be liable for direct infringement of the patent by inducing consumers to infringe the patent and should thus be jointly and directly liable under 35 U.S.C. §271(a). The Supreme Court held that induced infringement under §271(b) requires a single direct infringer. According to the Supreme Court, Limelight should not be liable as the it only performed some but not all of the infringement steps.

The Federal Circuit expanded the scope of direct infringement and held Limelight liable. The Federal Circuit held that Direct infringement under §271(a) occurs where “all steps of a claimed method are performed by or attributable to a single entity.” According to the Federal Circuit, when there are two or more actors from a joint enterprise, all can be charged with the acts of the other, “rendering each liable for the steps performed by the other as if each is a single actor.” The Court further cited the definition of joint enterprise in Restatement (Second) of Torts and provided four factors in determining whether there is joint enterprise.

The case is important because it set forth the rule that the actors in a joint enterprise can be liable for the other actors. The case prevented a possible way to dodge the direct infringement liability by inducing the consumers to perform some of actions of infringement.

Are Trademark’s a Medium for Free Speech?: Federal Circuit Considers Whether Section 2(a) of the Lanham Act Violates the First Amendment

October 6, 2015
Constitutional Law, Intellectual Property, Trademark Law

Michael Laird, MJLST Staffer

The Federal Circuit recently heard arguments en banc in a case considering the relationship between intellectual property regimes, specifically trademark law, and freedom of speech under the First Amendment of the U.S. Constitution. The long-term rule comes from the U.S. Court of Customs and Patent Appeals—the predecessor to the Federal Circuit—in the case In re McGinley. 660 F.2d 481 (C.C.P.A. 1981). There, the court held: “with respect to appellant’s First Amendment rights, it is clear that PTO’s refusal to register appellant’s mark [as a trademark] does not affect his right to use it. No conduct is proscribed, and no tangible form of expression is suppressed.” Id. at 484. Under that traditional rule, trademark law was held consistent with the first amendment because an applicant is still permitted to use a mark, whether or not it is trademark eligible. However, that precedent may be at risk.

On Friday, October 3, the Federal Circuit heard arguments for In re Tam on the question of whether § 2(a) of the Lanham Act is consistent with the right of free speech. Section 2(a) bars trademark eligibility for a mark that “consists of or comprises of immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” 28 U.S.C. § 1052(a). In Tam, § 2(a) was the basis for denying trademark registration for “The Slants”, the name of an Asian-American band because of its disparagement of those of Asian descent.

The court appeared to latch on to concerns that the logic of McGinley would be applicable in the copyright regime since rejection of a copyright would also not inhibit the applicant’s right to use that material. The court asked: “would [it] be constitutional and not a first amendment violation if Congress enacted a statute that said, ‘we’re going to regulate Copyrights and not allow copyright registration to issue to scandalous, immoral, or disparaging copyrights?’” Recording of Oral Arguments, In re Tam, No. 2014-1203 at 39:13 (Fed. Cir. October 2, 2015). The Government conceded, and Court appeared to agree that Congress could not bar disparaging art from copyright registration, as it does with trademarks. See id. at 39:33.

If a work cannot be denied copyright registration because the government concludes the work is disparaging, then some distinction between a copyright and trademark must exist for the government to reject a trademark on that basis. The Government was mostly unsuccessful in providing a means to distinguish the two regimes. The court, however, discussed a few possibilities.

First, the nature of speech in copyrighted material differs from the marks which are eligible for trademark protection. Copyrightable material may involve fundamental political speech and other private speech, which is protected under a heightened scrutiny by the first amendment. Id. at 41:30. Conversely, trademarks, as a means to associate the producer of goods and a brand or logo, constitutes commercial speech.

Second, as one judge stated: “the distinction that could be made is that in copyright, if the government has these limitations it’s so coercive that it essentially…prevents you from [certain] speech. Whereas the trademark realm, although it takes away some benefits of federal registration…it’s not so coercive that the restriction is a burden on free speech.” Id. at 44:30. This argument relates to McGinley, since independent of whether a trademark is granted or denied, the mark owner has the right to use his or her mark in public. In the copyright realm however, the logic of McGinley fails because the denial of a copyright might actually chill speech because of the risk that it will be misappropriated by someone else.

Third, the court differentiated the purpose of the copyright and trademark regimes: “isn’t a copyright a forum for the expression of the arts…whereas a trademark goes to the very heart of stability in the marketplace?” Id. at 5:23. Like a distinction between the nature of a trademark and copyright, the purpose of the systems diverge. Copyright is inherently protective of speech generally. Yet, most trademarks do not concern traditional speech, but protecting an association between the producer of a good and a brand or other mark.

Whether any argument will persuade the court that trademark law is distinct from copyright in some way that permits a disparagement bar to trademark registration remains to be seen. Notably, the court need not resolve the issue, if it were to determine that § 2(a) should be upheld or rejected based on the whether a trademark constitutes private, public, or commercial speech. Either way, the implications of the court’s ruling could impact another major ongoing disparagement case concerning the Washington Redskins’ trademark which is being appealed in the Fourth Circuit. If you are interested in listening to the argument in full, you can find a copy here.

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