On June 25, 2014, the U.S. Supreme Court held that Aereo, Inc. infringes the copyrights of television producers, broadcasters, marketers, and distributors by streaming delayed television content to its subscribers. Specifically, the Court held that Aereo “performed” the copyrighted works within the meaning of the Transmit Clause of the Copyright Act of 1976. The Transmit Clause gives copyright holders the exclusive right to transmit or otherwise perform a copyrighted work to the public by means of a device or process. Aereo had hoped to distinguish its service by arguing the streaming content was delayed several seconds from the live over-the-air broadcasts and arguing it was simply an equipment provider due to its individually-assigned antennas sending subscriber-specific content to one subscriber at a time. However, the Justices equated Aereo to a community antenna television provider (CATV) or cable television service that contemporaneously communicates perceptible images and sounds to a large number of people. Congress amended the Copyright Act in 1976 to specially bring CATV companies within the scope of copyright protection. Obviously, this is a victory for television copyright holders and possibly an indication of how the Court would rule on challenges to internet-based cab and hotel providers who by-pass current licenses and taxes associated with hired cars and traditional hotel rooms.
By Vincent Allen
The Supreme Court affirmed the Federal Circuit’s decision in Alice Corporation v. CLS Bank holding that patents directed to schemes or methods of mitigating settlement risks in the exchange of financial obligations between two parties claimed unpatentable subject matter. Although the patents recited system claims implementing the method on a computer system, the Supreme Court held that merely reciting a generic computer in the claims does not make an otherwise abstract idea patent eligible. The decision re-affirms long-standing Supreme Court precedent with respect to the un-patentability of abstract ideas and reiterates the importance of drafting the patent application on such methods in a way that takes the claimed subject matter out of the abstract idea category and puts it into the implementation category. Without an adequate disclosure of a specialized implementation, the patent application may be rejected by the patent office and, even if the application is granted, any patent obtained could be invalidated in litigation. Click for the Alice Decision.
In a patent suit involving a patent covering an elliptical trainer exercise machine, the US Supreme Court significantly changed a long-established standard for awarding attorney fees to the prevailing party. Under the old standard, the trial court had the discretion to order the losing party to pay the prevailing party’s attorney fees if it found that the case was “exceptional.” A case was regarded as “exceptional” if it was “objectively baseless and brought in subjective bad faith.” This is a tough standard to meet. The Supreme Court has now lowered the bar so that an “exceptional case” is one that either “stands out from others” with regard to the party’s litigation position (considering the law and the facts of the case), or is litigated in an unreasonable manner. The Supreme Court instructed that the trial court should look at the totality of the circumstances, and that there were no fixed formulae or rules to apply. Rather, the court should exercise its equitable discretion. Octane Fitness, LLC v. Icon Heath & Fitness, Inc., 2014 U.S. LEXIS 3107, 134 S.Ct. 1739, 572US__, (2014),
The US Supreme Court has now lowered the bar to permit “fee-shifting” – ordering a losing party to pay the prevailing party’s attorney fees. The new standard is that if the case either “stands out from others” with regard to the party’s litigation position (considering the law and the facts of the case), or is litigated in an unreasonable manner, then the prevailing party may be awarded its fees.
By Vincent J. Allen
There was a brief glimmer of hope for those patents with claims covering steps performed by more than one entity. But once again the Supreme Court has chastised the Federal Circuit for not following its prior precedent. Specifically, there can be no active inducement of infringement unless there is first direct infringement, and direct infringement does not exist if more than one entity is performing the steps. This case illustrates the importance of drafting claims that are directed to single actor and thinking about how infringers might try to design around the claims by having a third party perform one or more of the claimed steps. Review LimelightYellowCopy for the Supreme Court’s opinion.