by Lee Gesmer | Jun 4, 2014 | Patents
In September 2012 I wrote a post titled Why Can’t We All Get Along? CAFC Fractures Over Divided Infringement. The post discussed an August 31, 2012 Court of Appeals for the Federal Circuit (“CAFC”) en banc decision in two cases consolidated on appeal, Akamai v. Limelight and McKesson v. Epic Systems (link). As I described in that post, the 11 judges on the CAFC, were unable to agree on whether patent infringement occurs when separate entities perform the steps of a patented method.
Six of the CAFC judges — a bare majority — formulated a new doctrine of “induced infringement”: a party can be liable for inducing infringement if it either (1) induces several parties to jointly carry out the steps necessary for infringement, or (2) performs some of the steps of the claimed method itself and induces a third party to perform the remaining steps claimed. In other words, the CAFC held that all the steps of a claimed method must be performed in order to find induced infringement, but all the steps need not have been performed by a single entity.
The losing parties before the CAFC appealed to the U.S. Supreme Court, which accepted review of the case, and which had no trouble holding (unanimously) to the contrary. A defendant cannot be held liable for inducing infringement of a patent method claim when no single entity has directly infringed the claim, and direct infringement is not established unless all steps of the claim are performed by a single entity (subject to the “control or direction” exception discussed briefly below). The Court noted that the Federal Circuit’s approach would “deprive [the inducement statute, 35 U.S.C] §271(b) of ascertainable standards,” and would have led to “two parallel bodies of infringement law: one for liability for direct infringement, and one for liability for inducement.” The Court was not persuaded otherwise by the argument that its holding would permit “a would-be infringer to evade liability by dividing performance with another.”
The Supreme Court’s decision was based, in large part, on the CAFC’s 2008 decision in Muniauction, Inc. v. Thomson Corp., where the CAFC held that where different steps of a method claim are performed by different entities, direct infringement requires a defendant to exercise “control or direction” over the steps the defendant itself does not perform. As the Supreme Court pointed out, the CAFC is free to revisit Miniauction in the future, but the Court declined to review it in the current appeal.* Until the CAFC revisits (and reverses or modifies) Miniauction, direct infringement will continue to require that every step of a claimed method be attributable to one actor (or satisfy the “control/direction” test), and no inducement can be found when no direct infringement has been committed. Until then, “divided infringement” will remain a defense to a claim of patent infringement, as well as a potential “design around” strategy for companies that can avoid a single actor performing, directing or controlling all of the steps of a method patent.
*[Note:] In its discussion of Muniauction the Court suggested the “possibility that the Federal Circuit erred by too narrowly circumscribing the scope of [direct infringement under] § 271(a).”
by Lee Gesmer | May 10, 2014 | Copyright
On November 26, 2013 I wrote a post titled “Oracle v. Google: How Google Could Lose on Appeal” (link). After oral argument before the CAFC a couple of weeks later I wrote a follow-up post, “Oral Argument in Oracle v. Google: A Setback for Google?” (link).
I thought I was being a bit paranoid on Google’s behalf, but I was wrong – if anything, I was being too optimistic. The CAFC reversed California federal district court judge William Alsup, upholding almost every argument made by Oracle.
Interoperatibility Goes To Fair Use, Not Copyrightability
In the “How Google Could Lose” post I noted that Oracle had a good argument that interoperability is properly raised in connection with a copyright fair use defense, not to determine whether the plaintiff’s work is copyright-protected in the first instance. The CAFC agreed, stating
Whether Google’s software is “interoperable” in some sense with any aspect of the Java platform … has no bearing on the threshold question of whether Oracle’s software is copyrightable. It is the interoperability and other needs of Oracle—not those of Google—that apply in the copyrightability context, and there is no evidence that when Oracle created the Java API packages at issue it did so to meet compatibility requirements of other pre-existing programs.
Filtration for Interoperatility Should be Performed Ex Ante, Not Ex Post
In “How Google Could Lose” I noted that:
under Altai it is the first programmer’s work (in this case Oracle) that is filtered, not the alleged infringer’s work (in this case Google), and the filtration is performed as of the time the first work is created (ex ante) not as of the date of infringement (ex post). When Oracle created the Java API it did not do so to meet compatibility requirements of other programs. Thus, copyright protection of the Java API was not invalidated by compatibility requirements at the time it was created.
The CAFC agreed, stating:
[W]e conclude that the district court erred in focusing its interoperability analysis on Google’s desires for its Android software … It is the interoperability and other needs of Oracle—not those of Google—that apply in the copyrightability context, and there is no evidence that when Oracle created the Java API packages at issue it did so to meet compatibility requirements of other pre-existing programs.
Lotus v. Borland Is Not the Law in the Ninth Circuit
In the “How Google Could Lose” post I noted that
“a close reading of Judge Alsup’s decision in Oracle/Google could lead one to conclude that this was the sole basis on which Judge Alsup found the structure of the Java API declaring code to be uncopyrightable, and therefore affirmance or reversal may depend on whether the CAFC concludes that Judge Alsup properly applied Lotus in Oracle/Google. . . . The CAFC could even reject Lotus outright, and hold that a system of commands is not a “method of operation” under §102(b). Both the Third and Tenth Circuits have indicated that the fact that the words of a program are used in the implementation of a process should not affect their copyrightability, and the CAFC could conclude that this is the appropriate approach under Ninth Circuit law.
In fact, this is exactly what the CAFC concluded:
[T]he Ninth Circuit has not adopted the [First Circuit’s] “method of operation” reasoning in Lotus, and we conclude that it is inconsistent with binding precedent. Specifically, we find that Lotus is incompatible with Ninth Circuit case law recognizing that the structure, sequence, and organization of a computer program is eligible for copyright protection where it qualifies as an expression of an idea, rather than the idea itself.
The only consolation that Google can take from this decision is that the court rejected Oracle’s argument that Google’s adoption of the Java declaring code did not qualify for fair use. Instead, the CAFC sent the case back to the federal district court for reconsideration (summary judgment motions and perhaps a trial) on that issue. Or, actually, a retrial, since the first jury trial on fair use resulted in a hung jury. However, as I read the decision, it seems to favor Oracle’s position on fair use, and I predict that Google will be hard pressed to justify its copying of the Java API declaring code based on fair use.
Perhaps the case will settle now, but Larry Ellison is not one to back down when he has the advantage. I suspect there are intellectual property damages experts across America dreaming of the case of a lifetime this weekend.
I gave an extensive presentation on Oracle v. Google at the Boston Bar Association on November 13, 2013. To see the slides, click here.
Oracle America, Inc. v. Google, Inc. (CAFC, May 9, 2014)
by Lee Gesmer | Apr 7, 2014 | Copyright
Can a state court order assignment of a defamatory posting on Ripoff Report to a prevailing plaintiff?
That may be the central question in Small Justice LLC, et al. v. Xcentric Ventures LLC, pending the U.S. District Court for the District of Massachusetts.
Here are the basic facts.
A Boston attorney* was defamed by a litigation adversary on the Ripoff Report (a website owned by Xcentric Ventures). The former adversary party, Richard Dupont, claimed that the lawyer was a perjurer with “a history of persecuting the elderly, especially, wealthy elderly women.” The lawyer was accused of filing “baseless lawsuits in order to seize assets from clients, from adversaries and even from his own family.” The posting urged readers to contact the FBI and the Securities and Exchange Commission with similar complaints, and claimed that the attorney had “a history of child abuse, domestic violence and bi-sexuality,” as well as an “addiction to illicit substances.” None of this is true.
*note: The lawyer is not named in this post, to minimize further negative publicity.
The lawyer brought suit against Dupont in Massachusetts state court, where he obtained a default judgment. However, this did him no good as far as the defamatory post was concerned. Ripoff Report is infamous for refusing to remove third-party postings, and the Communications Decency Act (“CDA”) (47 USC § 230) renders it almost impervious to suit by victims of third-party defamation, such as the lawyer victimized in this case.
The lawyer, however, attempted a clever work-around to avoid what he knew would be Ripoff Report’s CDA defense. As part of the remedy in state court the judge assigned to an LLC created by the lawyer — Small Justice LLC — the copyright in the defamatory posting. Small Justice, the copyright owner, then demanded that Ripoff Report take down the copyrighted material. Ripoff Report refused, and Small Justice sued Ripoff Report in federal court in Boston for copyright infringement (and libel, interference with contract, and violations of Massachusetts’ unfair competition statute).
Ripoff Report moved to dismiss (memo in support here), and Judge Denise Casper issued a decision on the motion on March 24, 2014 (Order here).
As the decision implies, however, Ripoff Report may have anticipated Small Justice’s copyright strategy. Ripoff Report’s terms of service required Dupont to check a box before posting his report, granting Ripoff Report an irrevocable license to display the post, as follows:
By posting information or content to any public area of www.RipoffReport.com, you automatically grant, and you represent and warrant that you have the right to grant, to Xcentric an irrevocable, perpetual, fully-paid, worldwide exclusive license to use, copy, perform, display and distribute such information and content and to prepare derivative works of, or incorporate into other works, such information and content, and to grant and authorize sublicenses of the foregoing.
Relying on this license, Ripoff Report argued that whatever rights Small Justice acquired from Dupont by reason of the state court transfer of ownership were subject to the license Dupont granted to Ripoff Report.
Judge Casper did not totally buy this argument, at least at the motion to dismiss stage. Relying on Specht v. Netscape Comm’ns Corp., 306 F.3d 17 (2d Cir. 2002) and Craigslist Inc. v. 3Taps Inc., 942 F. Supp. 2d 962 (N.D. Cal. 2013), Judge Casper held that:
Whether [the quoted paragraph] . . . was sufficient to transfer the copyrights in the Reports from Dupont to Xcentric depends on whether it was reasonable to expect that Dupont would have understood he was conveying those rights to Xcentric. … the Court cannot resolve the issue of the ownership of the copyrights on the present record. Although the process by which users posted to the Ripoff Report appears to be similar to the … context in Specht, the Court cannot say, on this record now before it, what a reasonably prudent offeree in Dupont’s position would have concluded about license.
Accordingly, the motion to dismiss the copyright claim was denied.
Admittedly, the outcome in this case is offensive.* The fact that a person can be defamed in this manner, and that Ripoff Report can use the CDA and contract law to render itself immune from suit, is appalling, at least on first impression (whether the defamed attorney would want to represent anyone naive enough to believe Dupont’s obviously bogus post might be a question worth asking).
*note: An editorial in Massachusetts Lawyers Weekly opined, “[the lawyer] is unquestionably pushing the envelope, but the Ripoff Report’s response to his libel suit makes clear that it’s time for a fresh approach to the growing problem of gratuitous attacks in online reviews. Casper should reject the defense’s motion to dismiss and allow his suit to go forward.”
Hopefully, Judge Casper’s decision will lead to a settlement in which the offending post is removed. However, Xcentric may feel it needs to litigate this case to conclusion to maintain the integrity of the (thus far successful) legal barrier it has created against liability. If that proves to be the case, the law and the facts in this case seem, unfortunately, to favor Xcentric.
Small Justice LLC, et al. v. Xcentric Ventures LLC, 2014 WL 1214828 (D. Mass. Mar. 24, 2014).
Update: Click here for the court’s 2015 summary judgment decision in this case.
by Lee Gesmer | Mar 31, 2014 | Trademark
Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated, that no man alive knows what it means. The parties to it understand it least; but it has been observed that no two Chancery lawyers can talk about it for five minutes, without coming to a total disagreement as to all the premises. Innumerable children have been born into the cause; innumerable young people have married into it; innumerable old people have died out of it. . . . Bleak House, Charles Dickens
We were writing about Lexmark v. Static Control 9 years ago. (2005 article). The case itself dates back to 2002. And, after the Supreme Court decision on March 25, 2014, it is not yet over. Lovers of Bleak House may want to shift their gaze in the direction of this case.
At its outset this case involved allegations of copyright infringement and violation of the DMCA’s anti-circumvention provisions. Those issues were resolved by court decisions, but one issue lingered on: whether Static Control could proceed with its false advertising counterclaim against Lexmark under Section 43(a) of the Lanham Act, even though the parties are not direct competitors. The Sixth Circuit held it could not, but the Supreme Court reversed, holding that it could. The Court ruled that a plaintiff who alleges injury to a commercial interest in reputation or sales flowing directly from the defendant’s actions in violation of the statute falls within the “zone of interests” Section 43(a) was designed to protect, even if the plaintiff and defendant are not direct competitors.
The short background on this case is as follows. Lexmark , a producer of toner cartridges for its laser printers, developed microchips for it toner cartridges and printers so that Lexmark printers would reject toner cartridges not containing a matching microchip. The goal, of course, was to frustrate remanufacturers of Lexmark printer cartridges, who had created a secondary market for used cartridges. Static Control replicated the cartridge microchips and sold them to the remanufacturers to enable the resale of Lexmark toner cartridges. Lexmark sued Static Control for copyright violations related to its source code in making the duplicate microchips, but Static Control won against that charge, leaving in place Static Control’s counterclaim that Lexmark had engaged in false advertising when it told remanufacturers that using Static Control’s products would constitute intellectual property infringement.*
*note: This summary is oversimplified. See the Sixth Circuit’s decision for full details.
The Sixth Circuit held that Static Control could not maintain its false advertising claim since, technically speaking, Static Control and Lexmark are not actual competitors – Static Control sells microchips, while Lexmark sells toner cartridges.
In the view of the Sixth Circuit, this distinction was fatal to Static Control’s false advertising counterclaim. However, the Supreme Court rejected a potpourri of different legal tests applied by the various federal circuit courts (including the Sixth Circuit), concluding that the issue was whether a false advertising plaintiff such as Static Control falls within the class of plaintiffs whom Congress has authorized to sue under the federal false advertsing statute, Section 43(a) of the Lanham Act. Using this approach, the Court created a two-part test: (1) whether the claim is within the “zone of interests” protected by the Lanham Act and (2) whether the alleged conduct proximately caused the alleged injury. The Court held that to meet part one of this test a plaintiff must plead “an injury to a commercial interest in reputation or sales.” To meet the second part a plaintiff must plead “economic or reputational injury flowing directly from the deception wrought by the defendant’s advertising” and that the deception causes consumers to withhold business from the plaintiff.
The Court found that Static Control’s allegations satisfied both components of this test. Having liberalized the test for standing in Lanham Act Section 43(a) false advertising cases, the Court sent the case back to the federal district court for the Eastern District of Kentucky, where Static Control will have an opportunity to attempt to prove that it suffered injury proximately caused by Lexmark’s alleged misrepresentations and where the case will resume, perhaps to someday challenge the longevity of Jarndyce v. Jarndyce.
Lexmark Int’l v. Static Components, Inc. (U.S. Supreme Court, March 25, 2014)
by Lee Gesmer | Mar 21, 2014 | General
- 9th Circuit holds copyright registration of a collective work registers the component works within it. Alaska Stock v. Houghton Mifflin (link)
- The PTO held its first Public Meeting on the Establishment of a Multistakeholder Forum on Improving the Operation of the Notice and Takedown System Under the DMCA (link)
- Long-running DMCA copyright suit settles. Viacom v. Youtube (press release) (blog post)
- Parties settle remaining issues in Prince v. Cariou copyright fair use case (blog post)
- Columbia Law Prof. Jane Ginsburg’s article on EU linking decision, Hyperlinking and Infringement: The CJEU Decides (sort of) (link)
- Prof. Eric Goldman’s post on Gardner v. CafePress (copyright/DMCA case; link to case in post) (link)
- Sup. Ct. Cal., County of San Francisco, holds that Instagram’s unilateral change of terms of service is enforceable (link)
- Michael Robertson, founder of MP3Tunes, found liable for copyright infringement in SDNY trial (link)
