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Copyright Standards of “Substantially Similar” and “Virtually Identical”

The term “substantially similar” causes plenty of confusion in copyright infringement cases.  Beyond the amorphous nature of the term, itself, courts use this language with subtly different meanings when evaluating the separate prongs of the test for infringement: (1) copying, and (2) misappropriation. It’s not enough to merely copy; to be liable for infringement, the defendant must take elements of a work that are original. Copying can be demonstrated by circumstantial evidence of access to the plaintiff’s work and substantial similarity of the defendant’s work, calling for only a probative level of similarity to support a factual conclusion of copying. However, the second prong, misappropriation, requires a qualitative analysis of the plaintiff’s work to determine the scope of copyright protection, which in turn yields a sliding, legal standard for infringement, i.e., whether the accused work is similar in terms of copying a substantial amount of protectable expression. The Ninth Circuit recently took that to the extreme in Sophia & Chloe v. Brighton Collectibles, a case involving jewelry as a sculptural work. Because Sophia & Chloe’s “Buddha Kiss” earrings were deemed to be so minimally original, and thus entitled to narrow copyright protection, the panel ruled that the proper standard for the misappropriation prong was “virtually identical” rather than “substantial similarity,” thereby re-invigorating a legal test most often used in the past for obscure cases involving multiple listing services and other content of limited creativity. In copyright litigation, the various meanings of substantially similar are definitely not virtually identical.

Federal Circuit Holds that Timeliness of Petitions for Inter Partes Review are Appealable

On January 8, 2018, the Federal Circuit ruled en banc that judicial review is available for a patent owner to challenge the Patent Trial and Appeal Board’s determination that a petitioner satisfied the timeliness requirement governing petitions for Inter Partes Review (“IPR”) codified in 35 U.S.C. § 315(b).  At its core, the opinion provides that if the Director of the PTO initiates an IPR ruling in contravention of the statute of limitations, an Article III court has the power to review that initiating decision.   

By way of background, Broadcom Corp. filed three separate petitions for IPR in 2013 pertaining to certain patents owned by Ericsson.  During the pendency of the IPR, Ericsson transferred ownership of the patents to Wi-Fi One, LLC (“Wi-Fi”).  In opposition to Broadcom’s petitions, Wi-Fi contended that the Director lacked authority under Section 315(b) and was precluded from initiating review on any of the three petitions because Broadcom was in privity with certain defendants that were found to have infringed the asserted claims in a jury trial in the Eastern District of Texas.  Accordingly, Wi-Fi asserted that the petitions were time-barred under 315(b) because Ericsson (the prior patent owner) had already brought infringement claims against defendants that were in privity with Broadcom more than a year prior to its petitions.  Ultimately, the Board instituted IPR on the subject claims, and issued final decisions holding that the claims were unpatentable.  In those decisions, the Board held that Wi-Fi had not demonstrated privity between Broadcom on the one hand, and the defendants in the Eastern District of Texas litigation on the other hand, and as a result, the petitions were not time-barred under 315(b).  Wi-Fi appealed those final decisions, contending that the Federal Circuit should reverse the Board’s time-bar determinations.  A panel of the Federal Circuit disagreed, holding that Section 315(b)’s time-bar rulings are non-appealable and unreviewable.

On Wi-Fi’s petition for rehearing en banc, the Federal Circuit granted Wi-Fi’s request and considered whether judicial review is available for a patent owner to challenge the Board’s determination that the petitioner satisfied the timeliness requirement of 35 U.S.C. 315(b).  Section

35 U.S.C. 315(b) provides that: “an inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”

After analyzing the Leahy-Smith America Invents Act (which created IPR proceedings), the Administrative Procedures Act (codifying the governing standards applicable to final decisions of the PTO), and the pertinent statutes, the Federal Circuit held that it will “abdicate judicial review only when Congress provides a ‘clear and convincing’ indication that it intends to prohibit review.”  In Wi-Fi One, however, the Court held that there was no clear and convincing indication of such congressional intent to overcome the presumption in favor of judicial review of agency actions.  Accordingly, the Federal Circuit remanded the case to the merits panel, affording Wi-Fi with an opportunity to have its arguments heard on the merits, to wit, whether Broadcom’s challenge to the subject patents were time-barred.  

Supreme Court to Determine International Scope of Lost Profits in Patent Infringement Suits

One measure of damages for patent infringement is compensation for lost profits of the patent owner. Additionally, a patent owner may enjoin the export of parts of a patented invention from the United States, if the parts will be assembled or used for an infringing purpose. However, the Supreme Court is set to answer the question of whether lost profits may be awarded to the patent owner for service contracts, performed outside the U.S., making use of those parts exported from the U.S. in the case of WesternGeco LLC v. ION Geophysical Corp. If the answer is affirmative, then the scope of damages available to a patent owner may be drastically expanded — up to USD $93 Million in WesternGeco’s case.

The USPTO During Government Shutdown

While many federal agencies are currently furloughed, the U.S. Patent and Trademark Office (“USPTO”) has announced that it will be able to maintain regular operations for a few weeks due to excess revenue from last year’s fee collections. Should the USPTO exhaust its reserve funds, the agency will officially shut down but maintain a small staff to accept new applications and maintain information-technology (“IT”) infrastructure. There is no comment at this time on whether outstanding USPTO deadlines would be extended in the event of a closure, but the Firm will continue to monitor the USPTO’s status and advise clients accordingly.