Articles Posted in U.S. Supreme Court

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Lexmark holds patents on the components of toner cartridges that it manufactures and sells. Lexmark allows consumers to buy a cartridge at full price, with no restrictions, or to buy a cartridge at a discount through Lexmark’s “Return Program,” by signing a contract agreeing to use the cartridge only once and to refrain from transferring the cartridge to anyone but Lexmark. Remanufacturers acquire empty Lexmark cartridges—including Return Program cartridges—from purchasers in the U.S. and overseas, refill them, and resell them in the U.S. Lexmark sued remanufacturers with respect to Return Program cartridges that Lexmark had sold within the U.S. and cartridges that Lexmark had sold abroad and that remanufacturers imported into the country. The Federal Circuit ruled for Lexmark with respect to both. The Supreme Court reversed. Lexmark exhausted its patent rights (35 U.S.C. 271(a)) in all of the cartridges. 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. If a patentee negotiates a contract restricting the purchaser’s right to use or resell an item, it may be able to enforce that restriction as a matter of contract law, but may not do so through a patent infringement lawsuit. The exhaustion doctrine is not a presumption about the authority that comes along with a sale; it is a limit on the scope of the patentee’s rights. The Patent Act just ensures that the patentee receives one reward—of whatever it considers satisfactory compensation—for every item that passes outside the scope of its patent monopoly. View "Impression Products, Inc. v. Lexmark International, Inc." on Justia Law

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The patent venue statute, 28 U.S.C. 1400(b), provides that “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” In its 1957 “Fourco” decision, the Supreme Court concluded that for purposes of section 1400(b) a domestic corporation “resides” only in its state of incorporation, rejecting the argument that section 1400(b) incorporates the broader definition of corporate “residence” contained in the general venue statute, 28 U.S.C. 1391(c). Congress has not amended section 1400(b) since Fourco. Kraft filed a patent infringement suit in the District of Delaware against TC, a competitor, organized under Indiana law and headquartered in Indiana. TC ships the allegedly infringing products into Delaware. Reversing the district court and Federal Circuit, the Supreme Court held that, ss applied to domestic corporations, “reside[nce]” in section 1400(b) refers only to the state of incorporation. Section 1400(b) was enacted as a "stand alone" statute. Amendments to section 1391 did not modify the meaning of 1400(b) as interpreted by Fourco. View "TC Heartland LLC v. Kraft Foods Group Brands LLC" on Justia Law

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In 2003, SCA notified First Quality that its adult incontinence products infringed an SCA patent. First Quality responded that its patent antedated SCA’s patent and made it invalid. In 2004, SCA sought reexamination of its patent. In 2007, the Patent and Trademark Office confirmed the SCA patent’s validity. SCA sued for patent infringement in 2010. The district court granted First Quality summary judgment, citing equitable estoppel and laches. While SCA’s appeal was pending, the Supreme Court held that laches could not preclude a claim for damages incurred within the Copyright Act’s 3-year limitations period. The Federal Circuit nevertheless affirmed, based on Circuit precedent, which permitted laches to be asserted against a claim incurred within the Patent Act’s 6-year limitations period, 35 U.S.C. 286. The Supreme Court vacated. Laches cannot be invoked as a defense against a claim for damages brought within the limitations period. A statute of limitations reflects a congressional decision that timeliness is better judged by a hard and fast rule instead of a case-specific judicial determination. Applying laches within a statutory limitations period would give judges a “legislation-overriding” role that exceeds the Judiciary’s power and would clash with the gap-filling purpose for which the laches defense developed in the equity courts. View "SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC" on Justia Law

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Promega sublicensed a patent, which claims a toolkit for genetic testing, to Life Technologies for the manufacture and sale of kits for use in licensed law enforcement fields worldwide. One of the kit’s five components, an enzyme, was manufactured by Life Technologies in the U.S. and shipped to the United Kingdom, where the other components were made, for combination there. When Life Technologies began selling kits outside the licensed fields of use, Promega sued, citing section 271(f)(1) of the Patent Act, which prohibits the supply from the U.S. of “all or a substantial portion of the components of a patented invention” for combination abroad. The district court held that the section did not encompass the supply of a single component of a multicomponent invention. The Federal Circuit reversed, reasoning that a single important component could constitute a “substantial portion” of the components of an invention. The Supreme Court reversed. The supply of a single component of a multicomponent invention for manufacture abroad does not give rise to liability under section 271(f)(1), which refers to a quantitative measurement. The Court rejected Promega’s proffered “case-specific approach,” which would require a factfinder to decipher whether the components at issue are a “substantial portion” under either a qualitative or a quantitative test. When a product is made abroad and all components but a single commodity article are supplied from abroad, the activity is outside the statute’s scope. View "Life Technologies Corp. v. Promega Corp." on Justia Law

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The Patent Act prohibits the manufacture or sale an “article of manufacture” to which a patented design or a colorable imitation thereof has been applied and makes an infringer liable “to the extent of his total profit,” 35 U.S.C. 289. A jury found that Samsung smartphones infringed Apple's design patents, which covered a rectangular front face with rounded edges and a grid of colorful icons on a black screen. Apple was awarded $399 million—Samsung’s entire profit from the sale of its infringing smartphones. The Federal Circuit affirmed the award. A unanimous Supreme Court reversed and remanded. In the case of a multicomponent product, the relevant “article of manufacture” for a section 289 damages award need not be the end product sold to the consumer but may be only a component of that product. The Court noted Patent Act section 171(a), which makes certain “design[s] for an article of manufacture” eligible for design patent protection and permits a design patent that extends to only a component of a multicomponent product. 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 declined to resolve whether the relevant article of manufacture for each design patent at issue is the smartphone or a particular smartphone component. View "Samsung Electronics Co. v. Apple Inc." on Justia Law

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A third party may ask the Patent and Trademark Office (PTO) for inter partes review to reexamine claims in an issued patent and to cancel any claim found to be unpatentable in light of prior art; the decision “whether to institute an inter partes review . . . shall be final and non-appealable,” 35 U.S.C. 314(d). PTO is authorized to issue regulations governing inter partes review. One such regulation provides that, during inter partes review, a patent claim “shall be given its broadest reasonable construction in light of the specification of the patent in which it appears.” Garmin sought inter partes review of Cuozzo’s patent, asserting that claim 17 was obvious in light of prior patents. PTO reexamined claims 17, 10 and 14, finding those claims to be logically linked to the challenge; concluded that the claims were obvious in light of prior art; and canceled the claims. The Federal Circuit and Supreme Court affirmed. Section 314(d) bars a challenge to the decision to institute review. The “strong presumption” favoring judicial review is overcome by clear and convincing indications that Congress intended to bar review of the determination “to initiate an inter partes review under this section,” or where the challenge consists of questions closely tied to statutes related to that determination. Cuozzo’s claim does not implicate a constitutional question, nor present other questions beyond “this section.” The regulation requiring the broadest reasonable construction standard is a reasonable exercise of PTO's rulemaking authority, which is not limited to procedural regulations. The purpose of inter partes review is not only to resolve disputes among parties, but also to protect the public’s “paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.” Congress did not dictate what standard should apply in inter partes review. The broadest reasonable construction standard helps ensure precision in drafting claims and prevents a patent from tying up too much knowledge; PTO has used the standard for more than 100 years. View "Cuozzo Speed Techs., LLC v. Lee" on Justia Law

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In Patent Act infringement cases, courts may increase the damages up to three times the amount assessed, 35 U.S.C. 284. Under the Federal Circuit’s “Seagate” test for section 284 damages, a patent-holder had to demonstrate by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent and that the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.” The Federal Circuit reviewed objective recklessness de novo; subjective knowledge for substantial evidence; and the award of enhanced damages for abuse of discretion. The Supreme Court unanimously held that the Seagate test is inconsistent with section 284, which includes no precise rule for awarding damages. By requiring an objective recklessness finding, the test excluded from discretionary punishment many of the most culpable offenders, including the “wanton and malicious pirate” who intentionally infringes a patent, with no thoughts about its validity or defenses. A patent infringer’s subjective willfulness, whether intentional or knowing, may warrant enhanced damages, regardless of whether infringement was objectively reckless. Under Seagate, the ability of the infringer to muster a reasonable defense at trial was dispositive, even if he was not previously aware of the defense. Culpability is generally measured against the actor’s knowledge at the time of the challenged conduct. Seagate’s clear and convincing evidence requirement is also inconsistent with section 284, which imposes no specific evidentiary burden, much less such a high one. The Court also rejected the Federal Circuit’s tripartite appellate review framework. Section 284 commits the enhanced damages determination to the district court’s discretion; that decision should be reviewed for abuse of discretion. View "Halo Elecs., Inc. v. Pulse Elecs., Inc." on Justia Law

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Alice Corporation holds patents that disclose a scheme for mitigating “settlement risk,” i.e., the risk that only one party to an agreed-upon financial exchange will satisfy its obligation. The patent claims are designed to facilitate the exchange of financial obligations between parties, using a computer system as a third-party intermediary. The patents claim: a method for exchanging financial obligations; a computer system configured to carry out that method; and a computer-readable medium containing program code for performing that method. CLS, a global network that facilitates currency transactions, challenged the claims as not infringed, invalid, or unenforceable. Alice counterclaimed infringement. After the Supreme Court’s decision in Bilski, the district court held that the claims were ineligible for patent protection under 35 U.S.C. 101. The Federal Circuit and a unanimous Supreme Court affirmed. Section 101, which defines the subject matter eligible for patent protection, contains an implicit exception for laws of nature, natural phenomena, and abstract ideas. In applying the exception, patents that claim the building blocks of human ingenuity, which are ineligible for patent protection, must be distinguished from those that integrate the building blocks into something more, making them patent-eligible. The claims at issue are directed to a patent-ineligible concept: the abstract idea of intermediated settlement, which is “‘a fundamental economic practice long prevalent in our system of commerce.” The method claims, which simply require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention. Stating an abstract idea, adding the words “apply it with a computer,” simply combines two steps, with the same deficient result. Taking the claim elements separately, the functions performed by the computer at each step are purely conventional: creating and maintaining “shadow” accounts, obtaining data, adjusting account balances, and issuing automated instructions. They do not purport to improve the functioning of the computer itself or improve any other technology or technical field. The system claims are no different in substance from the method claims, reciting a handful of generic computer components configured to implement the same idea. View "Alice Corp. v. CLS Bank Int'l" on Justia Law

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A patent specification must “conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as [the] invention,” 35 U.S.C. 112. The 753 patent involves a heart-rate monitor used with exercise equipment; it asserts that prior monitors were often inaccurate in measuring the electrical signals accompanying each heartbeat (ECG signals) because of the presence of other electrical signals generated by the user’s skeletal muscles that can impede ECG signal detection. The invention claims to improve on prior art by detecting and processing ECG signals in a way that filters out the interference. Claim 1 refers to a “heart rate monitor for use by a user in association with exercise apparatus and/or exercise procedures.” The claim comprises a cylindrical bar fitted with a display device; electronic circuitry including a difference amplifier; and, on each half of the bar, a “live” electrode and a “common” electrode “mounted ... in spaced relationship with each other.” The exclusive licensee alleged that Nautilus, without obtaining a license, sold exercise machines containing its patented technology. The district court granted Nautilus summary judgment on the ground that the claim term “in spaced relationship with each other” failed the definiteness requirement. The Federal Circuit reversed, concluding that a patent claim passes the threshold so long as the claim is “amenable to construction,” and, as construed, is not “insolubly ambiguous.” The Supreme Court vacated. A patent is invalid for indefiniteness if its claims, read in light of the patent’s specification and prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention. Section 112’s definiteness requirement must take into account the inherent limitations of language. The standard mandates clarity, while recognizing that absolute precision is unattainable. The Federal Circuit inquired whether the claims were “amenable to construction” or “insolubly ambiguous,” but such formulations lack the precision section 112 demands. To tolerate imprecision just short of that rendering a claim “insolubly ambiguous” would diminish the definiteness requirement’s public-notice function and foster the innovation-discouraging “zone of uncertainty.” The Court remanded so that the Federal Circuit can reconsider, under the proper standard, whether the relevant claims in the 753 patent are sufficiently definite. View "Nautilus, Inc. v. Biosig Instruments, Inc" on Justia Law

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Akamai is the exclusive licensee of a patent that claims a method of delivering electronic data using a content delivery network (CDN). Limelight also operates a CDN and carries out several of the steps claimed in the patent, but its customers, rather than Limelight itself, perform a step of the patent known as “tagging.” Under Federal Circuit case law, liability for direct infringement under 35 U.S.C. 271(a) requires performance of all steps of a method patent to be attributable to a single party. The district court concluded that Limelight could not have directly infringed the patent at issue because performance of the tagging step could not be attributed to it. The en banc Federal Circuit reversed, holding that a defendant who performed some steps of a method patent and encouraged others to perform the rest could be liable for inducement of infringement even if no one was liable for direct infringement. The Supreme Court reversed. A defendant is not liable for inducing infringement under section 271(b) when no one has directly infringed. The Federal Circuit’s contrary view would deprive section 271(b) of ascertainable standards and require the courts to develop parallel bodies of infringement law. Citing section 271(f), the Court stated that Congress knows how to impose inducement liability predicated on noninfringing conduct when it wishes to do so. Though a would-be infringer could evade liability by dividing performance of a method patent’s steps with another whose conduct cannot be attributed to the defendant, a desire to avoid this consequence does not justify fundamentally altering the rules of inducement liability clearly required by the Patent Act’s text and structure. View "Limelight Networks, Inc. v. Akamai Techs, Inc." on Justia Law