On May 22, 2017, the United States Supreme Court in TC Heartland LLC v. Kraft Foods Group Brands LLC, 581 U.S. ___ (2017) narrowed the scope of where a corporate defendant “resides” for venue purposes under the patent venue statute (28 U.S.C. § 1400(b)).  Previously, patent plaintiffs could sue corporate defendants in any district court where the corporation was subject to personal jurisdiction, essentially where a defendant sold products.  However, and as a result of TC Heartland’s unanimous (8-0) decision reversing the Federal Circuit, 28 U.S.C. § 1400(b) remains the only applicable patent venue statute, and as applied to domestic corporations in patent cases, a “defendant resides only in the state of its incorporation.”

A number of results are likely in the wake of this dramatic shift in venue law.  First, TC Heartland presents a significant roadblock to patentees filing lawsuits in a particular forum – which critics label “forum shopping” -- simply because a corporate defendant placed a product into the stream of commerce.  The inevitable outcome will steer the filing of patent cases to Delaware, the state where many U.S. companies are incorporated.  Second, and where litigation is already pending, corporate defendants are likely to file motions to change venue (assuming the waivable defense of venue has been properly preserved). 

 Third, and as alternative to filing suit in the defendant’s state of incorporation, plaintiffs’ attorneys may file suit in a forum that instead satisfies the second prong of 28 U.S.C. § 1400(b), “where the defendant has committed acts of infringement and has a regular and established place of business.”  While the Federal Circuit has interpreted this phrase to mean doing business “through a permanent and continuous presence,” parties will surely battle over the confines of the pertinent statutory language, and litigate factors such as physical stores of the business, where key personnel are located, and the business’ online presence.  Fourth, situations may arise where there is no district court in which venue would be proper for all named defendants.  To avoid risking inconsistent rulings from litigating cases in separate districts, expect to see an increase in multi-jurisdiction litigation (“MDL”), which can serve as a useful vehicle in litigating overlapping issues in pretrial proceedings, with the individual cases referring back to the original court for trial.

 Many issues in the field of patent law will arise in the aftermath of TC Heartland.  Malloy and Malloy, P.L’s knowledgeable and experienced intellectual property lawyers are ready to advise you and guide your case as these issues come to the forefront. 

In the case of TC Heartland LLC v. Kraft Foods Group Brands LLC, the United States Supreme Court issued an opinion that is likely to limit the universe of available venues in which a patent holder can bring an action for infringement. Under the particular patent venue statute, the appropriate venue for patent infringement is anywhere infringement has occured, as long as the accused infringer has a regular and established place of business, or where the accused infringer "resides." In the context of a corporation, the definition of residing had been open to interpretation, but the TC Heartland opinion made explicit that residence under the patent venue statute refers only to the state of incorporation. 

Firm Attorneys Peter Matos, Meredith Mendez and Jonathan Woodard were successful in enforcing  the valuable intellectual property rights of well-known jeweler Merit Diamond Corporation related to its highly successful Sirena®  Collection in federal court in Miami, Florida.  Merit sued Defendants, Sears, Roebuck & Co., Sears Holdings Management Corporation, Sears Brands, LLC, Kmart Operations LLC, Kmart Corporation, iStar Jewelry LLC, Yelnats, Inc., and Stanley Creations, Inc. for copyright and trade dress infringement due to their sale and manufacture of infringing jewelry.  The Court entered a Judgment upon consent in favor of Merit requiring the Defendants to pay Merit Diamond the amount of $90,000 and permanently cease all manufacture, distribution, and sale of the infringing products. http://bit.ly/2qT9pwg

The 11th Circuit in Fourth Estate Public Benefit v. Wall-Street.com, LLC, No. 16-13726 (11th Cir. 2017) has reaffirmed its position that a copyright owner cannot file a copyright infringement lawsuit unless the Register of Copyrights registers the copyright in the works at issue. 

Although registration is not required to own a copyright, it is required for a copyright owner to enforce its rights in court in a copyright infringement action. The Copyright Act provides that “registration” of a copyright is a precondition to filing suit for copyright infringement. 17 U.S.C. § 411(a).

In Fourth Estate, the plaintiff filed an application to register its works, although the Register of Copyrights did not register the works. The Court held that “registration” occurs when the Register of Copyrights registers the copyright and not merely when an owner files an application to register the copyright. Therefore, the Court affirmed the district court’s dismissal of the plaintiff’s complaint on the basis that it failed to plead compliance with the registration requirement of 17 U.S.C. § 411(a). 

This decision represents a split in authority among the circuits as some circuits such as the Ninth and Fifth Circuits follow the “application approach”, which requires a copyright owner to file the deposit, application, and fee required for registration before filing a suit for infringement.

 

The U.S. Supreme Court ruled in Star Athletica v. Varsity Brands, that decorative elements of a cheerleading uniform are protectable by copyright law, a ruling the Court said was aimed at resolving "widespread disagreement" on when such designs are eligible for protection. The decision bolsters the legal protections for pictures, sculptures and graphic designs. The case examined the limits of copyright protection for clothing, furniture and other useful items that can have both functional and distinctive ornamental aspects. The Court reasoned that the cheerleader uniform design met the test of being able to "exist as its own pictorial, graphic, or sculptural work" and that it was eligible for copyright protection when it was separated from the utilitarian article. The ruling could have expansive implications for designers in the fashion industry, who seek to protect ornamental designs that are affixed on useful articles like clothing.

Thursday, 23 March 2017 02:29

Supreme Court Limits Laches in Patent Cases

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The Supreme Court recently held in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC that the defense of laches cannot be invoked against a claim for damages brought within the statutory six-year limit. The decision comes at little surprise given the Court's ruling in Petrella v. Metro-Goldwyn-Mayer, which considered a similar provision of the Copyright Act. The Court reasoned that Congress set forth an express limitations period in the patent laws, and giving effect to laches within the statutory period would amount to judicial overriding. In his lone dissent, Justice Breyer noted that the decision ignores the application of laches to reign in abusive pre-litigation conduct by a patent holder who unreasonably delays suit, knowing he can collect damages for the previous six years of infringement.

In a recent opinion narrowing the international reach of U.S. patent laws, the United States Supreme Court overturned the Federal Circuit’s determination that shipping a single part of a patented invention, to be joined with other components overseas, can constitute infringement.

In Life Techs. Corp. v. Promega Corp., No. 14-1538, Life Technologies manufactured an enzyme to be used in a DNA analysis kit, and shipped the enzyme to London where the company proceeded to manufacture the remaining components of the toolkit.  Promega Corp. filed suit, alleging patent infringement due to Life Technologies’ supplying the single component for genetic testing from the United States to the United Kingdom.  In reversing the district court’s order granting Life Technologies’ motion for judgment as a matter of law, the Federal Circuit held that certain circumstances can impose liability on a party under 35 §271(f)(1) for “supplying or causing to be supplied a single component for combination outside the United States.”

The Supreme Court reversed the Federal Circuit, and after engaging in a statutory construction of the plural term “components,” held that merely supplying a single component does not constitute infringement under Section 271(f)(1).  In the decision for the high court, Justice Sotomayor wrote that the governing statute does not apply to the quality of components, rather the quantity:  “We hold that the phrase ‘substantial portion’ in 35 U. S. C. §271(f )(1) has a quantitative, not a qualitative, meaning. We hold further that §271(f )(1) does not cover the supply of a single component of a multicomponent invention.”

While the scope of 35 §271(f)(1) remains subject to further litigation, specifically vis-à-vis how many components would constitute “a substantial portion,” Life Technologies makes clear that a party cannot be liable under 35 §271(f)(1) due to the extraterritorial supply of a single component. 

 

 

Inter Partes Review is a proceeding that the USPTO adopted in 2012 that allows a challenge to an issued patent based on obviousness or lack of novelty. Inter Partes Review has become an increasingly common tool to invalidate a patent as an alternative to litigation in Federal Court. In Covidien LP v. University of Florida Research Foundation Inc., the US Patent Trial and Appeal Board addressed the issue of whether sovereign immunity would extend to a state actor who owns rights to a patent being challenged in an administrative forum such as an Inter Partes Review. Under the 11th Amendment of the U.S. Constitution, the 50 States of the Union and their branches, have immunity from a lawsuit instituted by a private party. Court decisions interpreting the 11th Amendment have construed it broadly to extend this immunity not only to lawsuits in a court of law, but also to other adjudicative proceedings such as those of administrative agencies.  

An Inter Partes Review in many way parallels a lawsuit in a court of law. For example, there is discovery, depositions, motions, and oral argument. Further, a panel of judges decide not only the outcome of the proceeding, but also whether the proceeding may even be instituted. In Covidien LP v. University of Florida Research Foundation Inc., the U.S. Patent Trial and Appeal Board ruled in favor of the University of Florida Research Foundation. The U.S. Patent Trial and Appeal Board decided that due to the similarities between civil litigation and an InterPartes Review, the University of Florida Research Foundation, being an arm of the State of Florida, was entitled to assert sovereign immunity as a defense to the institution of an Inter Partes Review.  This decision may have an effect on the number of Inter Partes Reviews that are instituted against public research institutions, such as state universities.

 

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