Intellectual Property

Apple & Samsung Litigation Shows Need for Patent Reform

December 3, 2012
Intellectual Property, Litigation, Patents

by Thomas Manewitz, UMN Law Student, MJLST Managing Editor

In the past two years, two of the world’s mobile technology leviathans, Apple and Samsung, have engaged in multibillion dollar patent infringement litigation. Specifically, Apple has been seeking damages and fighting for injunctions on several of Samsung’s mobile products in markets across the globe. On August 24, 2012 in the United States, Apple won a 1.049 billion dollar damages award for Samsung’s “willful patent infringement.” In the same lawsuit, Samsung counter sued and won zero damages. In the wake of this trial, Apple is seeking an injunction for 20 Samsung products.

Samsung provides the market with a popular Apple alternative that does not come close to dominating the market share. In the context of the litigation, both Samsung and Apple were forced to release their U.S. sales numbers. Samsung, who is at risk of having its products blocked from the U.S. markets, sold 21 million smart phones and 1.4 million tablets, while Apple sold 86 million smart phones and 34 million tablets. New and different products are now at risk from being removed from consumer markets because of our patent litigation structure. I will not argue that this case alone will temper innovation; however, it does beg the question as to whether or not high profile patent litigation, and the patent system as it currently stands, optimizes the production societal good and innovation. Perhaps the United States patent system should be reorganized based on different principle. For a discussion of the reorganization of the patent system see the United States patent system see Liza Vertinsky’s article in the Minnesota Journal of Law, Science & Tehcnology, “An Organizational Approach to the Design of Patent Law.”

Apple & Samsung Litigation Shows Need for Patent Reform

December 3, 2012
Intellectual Property, Litigation, Patents

by Thomas Manewitz, UMN Law Student, MJLST Managing Editor

In the past two years, two of the world’s mobile technology leviathans, Apple and Samsung, have engaged in multibillion dollar patent infringement litigation. Specifically, Apple has been seeking damages and fighting for injunctions on several of Samsung’s mobile products in markets across the globe. On August 24, 2012 in the United States, Apple won a 1.049 billion dollar damages award for Samsung’s “willful patent infringement.” In the same lawsuit, Samsung counter sued and won zero damages. In the wake of this trial, Apple is seeking an injunction for 20 Samsung products.

Samsung provides the market with a popular Apple alternative that does not come close to dominating the market share. In the context of the litigation, both Samsung and Apple were forced to release their U.S. sales numbers. Samsung, who is at risk of having its products blocked from the U.S. markets, sold 21 million smart phones and 1.4 million tablets, while Apple sold 86 million smart phones and 34 million tablets. New and different products are now at risk from being removed from consumer markets because of our patent litigation structure. I will not argue that this case alone will temper innovation; however, it does beg the question as to whether or not high profile patent litigation, and the patent system as it currently stands, optimizes the production societal good and innovation. Perhaps the United States patent system should be reorganized based on different principle. For a discussion of the reorganization of the patent system see the United States patent system see Liza Vertinsky’s article in the Minnesota Journal of Law, Science & Tehcnology, “An Organizational Approach to the Design of Patent Law.”

Ask Not What Your Country Can Do For Your Patent . . .

October 26, 2012
Intellectual Property, Patents

by Caroline Marsili, UMN Law Student, MJLST Staff

The candidates aren’t talking about patents (with the exception of a brief quip about IP piracy in last Tuesday’s debate). But if it’s “all about the economy,” they should be talking patent policy.

In the presidential and vice-presidential debates of recent weeks, the candidates have exchanged vitriol and “gotchas,” and have established a contrast in both policy and character for voters. Notably absent from the debates has been discussion of innovation, and more specifically, the role of IP policy in innovation. IP policy would seem an attractive platform for discussing job creation, as IP industries account for a vast portion of the Nation’s jobs and GDP (“IP-intensive industries” accounted for 27.7 of all jobs in the economy in 2010). It’s possible that the candidates find common ground on this issue. Alternatively, the topic is, for the time-being, moot in the wake of the America Invents Act, the full effects of which are yet to be seen.

Since its passage just over a year ago, some critics have expressed doubt that the Act will create jobs and promote innovation as promised. Others argue not that the Act is failing, but that it represents a misplaced effort to reform patent policy.

The solution? “Don’t just reform patents, get rid of them.” A recent working paper by Boldrin & Levine makes the bold case that our patent system is ultimately more trouble than it’s worth. The authors admit that abolishing patents “may seem ‘pie-in-the-sky'” and acknowledge the glut of transitional issues that would need addressing; just the same, they conclude that the key to reforming our patent system is to get rid of it. Their central beef with the system is the want of empirical evidence that it does what it purports to do: promote innovation and productivity. Meanwhile, there are other incentives for innovation and many negative externalities of the patent system.

Other authors have proposed less radical approaches to revamping the patent system. In her recent article in MJLST, “An Organizational Approach to the Design of Patent Law“, Liza Vertinsky also finds that empirical literature fails to decisively connect patents to innovation and economic growth. However, Vertinsky takes a more optimistic approach to the floundering patent system, arguing that policy-makers should seize reform efforts as an opportunity to tailor the patent law to innovation objectives. The America Invents Act, she argues, isn’t a significant change in the direction of patent policy and instead seeks to remedy narrower concerns with administrative backlog, litigation costs and patent quality. In her view, patent policy should be revamped to encourage innovation based on how individuals and organizations–corporations, Congress, the PTO–really function.

Vertinsky’s “organizational approach” entails a new way of thinking about patents in terms of how patent policy, informed by economic theory, should be fashioned to strengthen the organization of innovation rather than focusing on incentivizing acts of invention. For example, patent laws can be tailored to the needs of different innovation processes across different industries. While sweeping changes in patent policy are unlikely at this time (witness the battles encountered in passing and implementing the America Invents Act), Vertinsky’s proposals should inform discussion among policy-makers about what the patent system can and should do. The Obama Administration’s national innovation strategy neglected to give patent policy a more central role in encouraging innovation, but the desire to build an “innovation economy” is certainly there, and a rational and successful patent policy is vital to attaining the kinds of high-level jobs and industry the country needs and the candidates promise.

(Others think patent policy may not matter at all. What do you think?).

The Supreme Court to Decide the Fate of the First-Sale Doctrine in Kirtsaeng

October 11, 2012
Intellectual Property, Litigation

by Benjamin Hamborg, UMN Law Student, MJLST Articles Editor

Later this month, the U.S. Supreme Court is scheduled to hear oral arguments in Kirtsaeng v. John Wiley & Sons, Inc., a case which should decide once and for all whether the first-sale doctrine applies to works manufactured outside of the United States. As I described last spring in volume 13 of the Minnesota Journal of Law, Science & Technology, the case arises from Supap Kirtsaeng’s attempt to take advantage of the disparity in pricing between textbooks manufactured for sale in the United States and those manufactured and sold internationally. Kirtsaeng’s plan involved purchasing textbooks published by John Wiley & Sons, Inc.’s wholly-owned subsidiary John Wiley & Sons (Asia) Pte Ltd., then reselling the textbooks online to consumers within the United States.

While textbooks published by John Wiley & Sons, (Asia) Pte Ltd. for the international market are nearly identical in terms of content to their U.S. counterparts, the international versions sell for significantly less due to differences in quality and design. When John Wiley & Sons, Inc.–as the registered copyright holder of the United States editions of the works sold by Kirtsaeng–sued for copyright infringement, Kirtsaeng based his defense on the first-sale doctrine, which allows “the owner of a particular copy [of a copyrighted work] . . . lawfully made under this title . . . to sell or otherwise dispose of the possession of that copy” without the permission of the copyright holder.

The question the Supreme Court will face on October 29th is whether the first-sale doctrine applies to works manufactured outside of the United States, a question which the Second–in John Wiley & Sons, Inc. v. Kirtsaeng–and Ninth Circuits have already answered in the negative. The prospect of nationwide denial of the first-sale doctrine to works manufactured outside of the United States has broad implications with regard to the sale of gray-market goods within the United States. Many large United States retailers, particularly online retailers, use gray-market goods to deliver products to customers at a substantial savings. In fact, there exists “an estimated $63 billion annual market ‘for goods that are purchased abroad, then imported and resold without the permission of the manufacturer.'”

Narrowing of the first-sale doctrine may even affect the ability of libraries in the United States to lend foreign manufactured books. As Andrew Albanese recently pointed out, “if a library bought a book in the U.S. from a U.S. publisher, and that book happened to be printed in China . . . . the uncertainty the Second Circuit interpretation [of the first-sale doctrine] would create for libraries could deter many libraries from lending [the] materials in question.” Finally, if the Second Circuit’s holding is affirmed by the Supreme Court, companies that manufacture copyright-protected goods within the United States will have an incentive to move their manufacturing plants abroad so as to gain greater control over the sale of their products.

Mashing up Copyright Infringment with the Beastie Boys and Ghostface Killah

October 3, 2012
Intellectual Property, Internet

by Eric Maloney, UMN Law Student, MJLST Staff

Apparently, Bridgeport Music has never seen the episode of Chappelle’s Show declaring that “Wu-Tang Clan ain’t nothing to [mess] with.” The record label has decided to sue the group, specifically artists Raekwon, Ghostface Killah, Method Man, and producer RZA, for reportedly using a sample of a 1970’s recording originally by the Magictones on a 2009 Raekwon album track. The portion of the recording allegedly utilized in production of the song was sped up to change the sample’s key from E minor to F# minor, and constituted four measures of the original tune. The sample was only ten seconds long.

Wu-Tang Clan isn’t the only group currently under scrutiny for their use of sampling. The Beastie Boys are also facing an infringement suit, due to allegedly sampling two songs by a group called Trouble Funk in four of their tracks from the late 1980’s. This suit is different in at least one respect from the Bridgeport matter: the record company, Tuf America, will have to show not only infringement, but also explain why the suit shouldn’t be barred by the statute of limitations after over 20 years have passed since the Beasties released these songs.

These lawsuits are hardly novel; hip-hop and electronica artists have been subject to infringement liability for years now due to the rise in their use of digital sampling methods. The Beastie Boys especially have been repeatedly sued for using unauthorized samples. (See, e.g. Newton v. Diamond, 204 F. Supp. 2d 1244 (C.D. Cal. 2002). For a great summary of the history of sampling in music production and court cases regarding infringement, see Professor Tracy Reilly’s article Good Fences Make Good Neighboring Rights in the Winter 2012 issue of the Minnesota Journal of Law, Science & Technology.

As Professor Reilly indicates in her article, the latest federal appeals court to directly address this issue has taken a hard-line stance: appropriation of any part of a sound recording is a physical taking, no matter how minute the sample may be. That case, Bridgeport Music v. Dimnesion Films, featured the same plaintiff record company that is now suing Wu-Tang Clan. The Sixth Circuit Court of Appeals in this instance held that there is no type of de minimis protection for use of small samples; instead, any unauthorized, direct sample of a protected recording subsequently used by an artist constitutes infringement.

The risk that courts run in following such a bright-line doctrine is that they may be a bit behind trends in culture and technology in dealing so harshly with those who choose to sample copyrighted works. So-called “mash-up” artists, such as Greg Gillis of Girl Talk, make a living through exclusively sampling copyrighted works and then distributing them for free under the penumbra of “fair use.” His sampling is both notorious and fairly obvious; there are websites dedicated to tracking which samples he chooses to use in his productions. Gillis is still able to make a living by touring and selling merchandise, while also speaking out against current copyright infringement standards.

As digital sampling techniques continue to improve and the demand for “mash-up” artists grows, the Bridgeport ruling will start to look dated in the face of the reality of modern-day music production. This is especially true in the case against the Wu-Tang Clan, where it appears somewhat absurd to condition liability on such a small amount of sampled music. For now, though, artists will need to stay on their toes and be sure to license any samples, no matter how minimal, or face the consequences. This doctrine may stifle creativity for the time being, but perhaps all this legal wrangling will give artists emotional fodder for future compositions. Either way, it’s becoming clearer as more of these suits are brought that greater clarity on the issue is needed, either from Congress or the courts. A better balance between encouraging creativity and protecting copyrights than what is given to us by Bridgeport can hopefully be found as this area of law continues to evolve.

The Written Description Requirement Strikes Back

September 12, 2012
Intellectual Property, Patents

by Nihal Parkar, UMN Law Student, MJLST Staff

The written description requirement for patents often resembles the proverbial neglected middle child–it is left to its own devices and entrusted with its own care. The typical patent practitioner carefully chisels away at the claims with a thesaurus, and then proceeds to encase the exquisite sculpture with a glob of written description. Yes, the detailed description of the drawings and alternative embodiments may follow the core structure of the claims, but let’s face it–the average specification is hardly as painfully beautiful as the average claim.

A recent paper by Aaron Rabinowitz in Volume 12 of the Minnesota Journal of Law, Science & Technology, Ending the Invalidity Shell Game: Stabilizing the Application of the Written Description Requirement in Patent Litigation, analyzes this paradox in the context of how courts apply the written description requirement to routinely invalidate patents issued by the USPTO–those very issued patents that have gone through the tortious path of examination at the PTO and have been vetted by examiners and reshaped in course of the ping-pong game of office actions and their replies.

A high level of invalidation by the courts seems problematic. After all, shouldn’t patent owners be entitled to rely on the PTO’s evaluation of their patent, and be freely able to assert the patent against alleged infringers in court, without fearing that the court will find the written description to be as addled with holes as the typical chunk of Swiss cheese? Well, the courts can’t quite be blamed, given that the PTO works in mysterious ways. Reviewing the file wrapper often does not explain how each claim fulfilled the written description requirement in combination with the rest of the specification. A law firm helpfully points out, “Make Sure Your Patents Do Not Prove Their Own Invalidity!” To add to the complexity of the situation, the “written description requirement is separate from enablement.”

Patent owners would be wise to worry about the potential pitfalls of the written description getting shredded between Scylla and Charybdis. As Rabinowitz points out, “over 2000-2009, parties that attacked a patent on written description grounds succeeded more than forty percent of the time.”

Fortunately, Rabinowitz does not merely cry wolf, but supplies some solutions to keep the wolf at bay. To strengthen a patent’s validity, patent applicants can choose “to affirmatively identify the written description support for their claims in the application”. And then eagerly wait for “the PTO to either approve or question the applicant’s statement of support.” Of course, with patent examiners already being somewhat overburdened, the PTO may not be enthusiastic about yet another step in prosecution.

Rabinowitz’ article raises an interesting question that is often overlooked, and provides a practical, workable solution that is likely to be of benefit to patent owners, patent challengers, the PTO, and the courts.

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