The Supreme Court’s 2016-2017 Term

³ Section 1400(b) also provides that a “civil action for patent infringement may be brought in the judicial district where… the defendant has committed acts of infringement and has a regular and established place of business.” However, TC Heartland “is not registered to conduct business in Delaware and has no meaningful local presence there, [although] it does ship the allegedly infringing products into the State.”

Life Technologies Corporation v. Promega Corporation

Life Technologies

involved 35 USC §271(f)(1), which prohibits the supply from the United States of “all or a substantial portion of the components of a patented invention” for combination abroad. The patent in suit claimed a five component toolkit for genetic testing. One component was made in the US and shipped to the UK where it was combined with the other four components. Focusing on “substantial portion,” the Federal Circuit held that there was infringement under §271(f)(1), saying that “the dictionary definition of ‘substantial’ is ‘important’ or “essential’,” and thus suggested that a single important component can be a “‘substantial portion of the components’” of a patented invention. The Supreme Court reversed. It first held that “the phrase ‘substantial portion’ has a quantitative, not a qualitative meaning;” and then held further that “§271(f)(1) does not cover the supply of a single component of a multicomponent invention.” In reaching these conclusions, the Court noted that “the phrase ‘substantial portion’ is modified by ‘of the components of a patented invention’,” and that “Section 271(f)(1) consistently refers to ‘components’ in the plural…. indicat[ing] that multiple components constitute the substantial portion.” The case was remanded to the Federal Circuit, that at some future date will likely have to decide “how close to ‘all’ of the components ‘a substantial portion’ must be…. under §271(f)(1).”

Matal v. Tam

The PTO refused to register a dance-rock band’s name, “The Slants,” as a trademark based on the Lanham Act provision prohibiting the registration of trademarks that may “disparage . . . or bring . . . into contemp[t] or disrepute” any “persons, living or dead.” The

en banc

Federal Circuit found the disparagement clause unconstitutional under the First Amendment’s Free Speech Clause. The Supreme Court agreed, and affirmed the Federal Circuit decision:

During its October 1, 2016 to June 30, 2017 Term, the Supreme Court handed down eight IP decisions, six in patent cases, one in a copyright case, and one in a trademark case. The eight are summarized below, in alphabetical order.

Amgen v. Sandoz

, and

Sandoz v. Amgen.

The Supreme Court’s 2016-2017 Term – An IP Case Summary

James Lampert, WilmerHale

, Retired

The Supreme Court’s 2016-2017 Term – An IP Case Summary

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2017 Ⓒ Boston Patent Law Association

NEWSLETTER ARCHIVE

Volume 48, Issue 3

Impression Products v. Lexmark Int'l

This case presented two questions about the scope of the patent exhaustion doctrine:

1. Whether a patentee that sells an item under an express restriction on the purchaser’s right to reuse or resell the product may enforce that restriction through an infringement lawsuit.

2. Whether a patentee exhausts its patent rights by selling its product outside the United States, where American patent laws do not apply.

The en banc Federal Circuit relied on its prior decisions in Mallinckrodt, Inc. v. Medipart, Inc., 976 F. 2d 700 (1992), and Jazz Photo Corp. v. International Trade Commission, 264 F. 3d 1094 (2001). With respect to Lexmark’s sale of ink toner cartridges in the US subject to restrictions that expressly prohibited reuse and resale, the Federal Circuit concluded that Lexmark could sue for infringement when Impression Products refurbished and resold cartridges. With respect to Lexmark’s sales abroad, the Federal Circuit held that Lexmark was free to sue Impression Products for bringing the foreign-sold cartridges to market in the United States. The Supreme Court reversed both Federal Circuit holdings: “a patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale.” With respect to the cartridges that Lexmark sold in the United States, the unanimous Supreme Court said:

We conclude that Lexmark exhausted its patent rights in these cartridges the moment it sold them. The single-use/no-resale restrictions in Lexmark’s contracts with customers may have been clear and enforceable under contract law, but they do not entitle Lexmark to retain patent rights in an item that it has elected to sell.

As for the cartridges that had been sold overseas and then imported into the United States, seven of eight Justices¹ held that “An authorized sale outside the United States, just as one within the United States, exhausts all rights under the Patent Act.”

Under §262(l) of the Biologics Price Competition and Innovation Act (BPCIA), an applicant seeking FDA approval of a biosimilar must provide its application and manufacturing information to the manufacturer of the corresponding biologic within 20 days of the date the FDA notifies the applicant that it has accepted the application for review, and must give notice to the manufacturer at least 180 days before marketing the biosimilar commercially. These two cases raised the same two questions. One was whether the requirement that an applicant provide the information to the manufacturer of the biologic is enforceable by injunction. The Federal Circuit held that no injunction was authorized under either the BPCIA or state law. The Supreme Court agreed that there was no right to injunctive relief as a matter of federal law. But it disagreed with the Federal Circuit’s reasoning regarding a possible injunction under California state law, and remanded the case to the Federal Circuit to determine whether California law would treat noncompliance with the BPCIA as “unlawful,” and, if so, whether the BPCIA pre-empts any additional state-law remedy. The second question was whether an applicant must give notice to the manufacturer after, rather than before, obtaining a license from the FDA for its biosimilar. The Federal Circuit said that an applicant could provide effective notice of commercial marketing only

after

the FDA had licensed the biosimilar. The Supreme Court reversed, holding that an applicant may provide notice

before

obtaining a license.

We now hold that this provision violates the Free Speech Clause of the First Amendment. It offends a bedrock First Amendment principle: Speech may not be banned on the ground that it expresses ideas that offend.

amsung Electronics Co. v. Apple

Section 289 of the Patent Act provides a damages remedy specific to design patent infringement: “any article of manufacture to which [a patented] design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit.”

Samsung

, the Federal Circuit identified the entire smartphone as the only permissible “article of manufacture” for the purpose of calculating §289 damages because consumers could not separately purchase components of the smartphones. The Supreme Court reversed, saying that, “reading ‘article of manufacture’ in §289 to cover only an end product sold to a consumer gave too narrow a meaning to the phrase.” The Court held that “the term ‘article of manufacture’ is broad enough to embrace both a product sold to a consumer and a component of that product, whether sold separately or not.” The Court left it to the Federal Circuit on remand to “resolve whether, for each of the design patents at issue here, the relevant article of manufacture is the smartphone, or a particular smartphone component.”

SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC

The question before both the Federal Circuit and the Supreme Court was whether the equitable defense of laches could be a defense against a claim for damages that was brought within the 6-year period set out in the Patent Act. The Federal Circuit held, en banc, that laches could be asserted. The Supreme Court reversed. In

Petrella

v. Metro-Goldwyn-Mayer, Inc.,

572 U. S. ___ (2014), the Court had held that laches cannot preclude a claim for damages incurred within the Copyright Act’s 3-year limitations period. In

SCA Hygiene

, the Court followed “the logic of

Petrella,

” saying that Section 286 of the Patent Act “represents a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of the claim,” and held that “Laches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by §286.”² In its opinion, the Supreme Court noted that the Federal Circuit and First Quality had incorrectly

Dismiss[ed] the significance of this Court’s many reiterations of the general rule because they were not made in patent cases. But as the dissenters below noted, “[p]atent law is governed by the same common-law principles, methods of statutory interpretation, and procedural rules as other areas of civil litigation.” 807 F. 3d, at 1333 (opinion of Hughes, J.).”

² In light of its decision in

SCA Hygiene Products

, the Supreme Court vacated Federal Circuit laches decisions in three other cases,

Romag Fasteners, Inc. v. Fossil Inc., Endotach LLC v. Cook Medical LLC, and Medinol Ltd v. Cordis Corp.,

and remanded the three to the Federal Circuit.

Star Athletica, LLC v. Varsity Brands

The question before both the Sixth Circuit and the Supreme Court was whether two-dimensional designs for cheerleading uniforms satisfied that Copyright Act test – “can [the designs] be identified separately from, and [are they] capable of existing independently of, the utilitarian aspects of the article.” i.e., the uniform. The Sixty Circuit said that they did, and the Supreme Court affirmed. As a matter of statutory construction, the Court said that

a feature of the design of a useful article is eligible for copyright if, when identified and imagined apart from the useful article, it would qualify as a pictorial, graphic, or sculptural work either on its own or when fixed in some other tangible medium. Applying this test to the surface decorations on the cheerleading uniforms is straightforward. First, one can identify the decorations as features having pictorial, graphic, or sculptural qualities. Second, if the arrangement of colors, shapes, stripes, and chevrons on the surface of the cheerleading uniforms were separated from the uniform and applied in another medium—for example, on a painter’s canvas—they would qualify as “two-dimensional . . . works of . . . art,” §101.

The Court left open whether the designs were sufficiently original to qualify for copyright protection.

TC Heartland LLC v. Kraft Foods Group Brands LLC

Here, the question was what is the proper venue for a patent infringement lawsuit brought against a domestic corporation. Kraft sued TC Heartland in Delaware. TC Heartland is an Indiana corporation and is headquartered in Indiana. The patent venue statute, 28 U. S. C. §1400(b), provides that a “civil action for patent infringement may be brought in the judicial district where the defendant resides.”³ The general venue statute, §1391, says that, “[e]xcept as otherwise provided by law” and “[f]or all venue purposes,” a corporation “shall be deemed to reside, if a defendant, in any district in which such

defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.” The question before both the Federal Circuit and Supreme Court was whether §1400(b) incorporates the general venue statute’s broader definition of where a corporation “resides.” The Federal Circuit held that it did. The Supreme Court said it did not, and reversed. Following its 1957 decision in

Fourco Glass Co. v. Transmirra Products Corp.,

and rejecting the argument that later amendments to §1391 changed the meaning of §1400(b) as interpreted by

Fourco

, the Supreme Court held that, as applied to domestic corporations, “resides” in Section 1400(b) refers only to the state of incorporation.

Looking forward, it is important to remember that these eight decisions were only part of the Court’s IP docket. During the October 2016 term, the vast majority of the petitions for certiorari before the Supreme Court were denied. However, the Court granted certiorari in two still-pending patent cases that likely will be argued during the October 2017 Term, and four petitions apparently remain pending. The two cases in which certiorari has been granted are:

SAS Institute Inc. v. Lee, No. 16-969

- Question Presented:

¹ Justice Gorsuch took no part in this case.

Oil States Energy Services, LLC v. Greene's Energy Group, LLC, No. 16-712

- Questions Presented:

1. Whether

inter partes

review—an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

2. Whether the amendment process implemented by the PTO in

inter partes

review conflicts with this Court's decision in

Cuozzo Speed Technologies, LLC v. Lee,

136 S. Ct. 2131 (2016), and congressional direction.

3. Whether the “broadest reasonable interpretation” of patent claims—upheld in

Cuozzo

for use in

inter partes

review—requires the application of traditional claim construction principles, including disclaimer by disparagement of prior art and reading claims in light of the patent's specification.

In two of the four now-pending petitions,

Samsung Electronics Co., Ltd. v. Apple Inc.

and

Western Geco LLC v. Ion Geophysical,

“the Acting Solicitor General [was] invited to file a brief … expressing the views of the United States.”

Samsung Electronics

presents three questions:

Western Geco

presents one question:

1. Do this Court’s decisions in

Graham v. John Deere Co.,

383 U.S. 1 (1966), and

KSR International Co. v. Teleflex Inc.,

550 U.S. 398 (2007), require a court to hold patents obvious as a matter of law under 35 U.S.C. § 103 where the patents make at most trivial advances over technologies well-known to a person of skill in the art?

2. Does this Court's decision in

eBay Inc. v. MercExchange, L.L.C.,

547 U.S. 388 (2006), require application of the four-factor test for injunctions in accordance with traditional equitable principles, and therefore require more than merely “some connection” between an infringing feature and asserted irreparable harm to support issuance of an injunction for patent infringement?

3. Does this Court’s decision in

Warner-Jenkinson Co. v. Hilton Davis Chemical Co.,

520 U.S. 17 (1997), require evidence that an accused product meets all elements of the relevant claim to support entry of a judgment of patent infringement?

Whether the court of appeals erred in holding that lost profits arising from prohibited combinations occurring outside of the United States are categorically unavailable in cases where patent infringement is proven under 35 U.S.C. § 271(f).

One of the other two pending petitions,

In re Celgard

, was filed only a few days before the end of the 2016 term. The Court denied certiorari in the other,

Arunachalam v. United States District Court for the District of Delaware,

but the Petitioner filed a petition for rehearing on June 19, 2017.

Does 35 U.S.C. § 318(a), which provides that the Patent Trial and Appeal Board in an inter partes review “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner,” require that the Board to issue a final written decision as to every claim challenged by the petitioner, or does it allow that Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner, as the Federal Circuit held?

Index

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Message from the President Monica Grewal

Harvesting Innovation: 3 Tips for IP Managers

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Save the Date: BPLA Annual PCT Seminar and Madrid Protocol Seminar

The Annual Dinner to Honor the Federal Judiciary, May 12, 2017