The Supreme Court recently handed down its decision in Kirtsaeng v. John Wiley & Sons, a copyright exhaustion case concerning the sale of “gray-market” works published outside the United States and imported for sale. In a surprisingly decisive 6-3 decision, the Court reversed the Second Circuit’s decision and held that the first sale doctrine applies to copyrighted works lawfully produced abroad.
The facts of the case center around the actions of a student by the name of Sarap Kirtsaeng, who sold “gray-market” textbooks imported from Thailand beginning in 1997. Kirtsaeng, who did business on eBay under the handle “Bluechristine99,” set up a very lucrative online business wherein his relatives sent him textbooks from Thailand that he then sold to students in the U.S. Since textbooks are significantly less expensive in Thailand than in the U.S., Kirtsaeng was able to realize a tidy profit of roughly $100,000—and effectively subsidize an undergraduate degree from Cornell University and a Ph.D. in math from the University of Southern California. U.S. publishers caught wind of Kirtsaeng’s business and were not amused. John Wiley filed suit and won in federal district court; the Second Circuit later affirmed, setting up a showdown in the Supreme Court.
In Already LLC. v. Nike, Inc. the Supreme Court recently held that a broad covenant not to sue hinders defendant’s counterclaims of trademark invalidity. Therefore, by choosing to proffer a covenant not to sue, Nike eliminated any legal controversy between the parties such that Already was not able to raise counterclaims of invalidity and cancellation of Nike’s trademark. This trademark case grapples with the “case or controversy” requirement under Article III, Section 2, Clause 1 of the United States Constitution, as well as the Declaratory Judgment Act. It also gives trademark holders pointers for drafting effective covenants that can shield them from defendants’ challenges to the trademark validity and potential loss of the mark. However, this may not be an entirely helpful litigation strategy in every context, and trademark holders should proceed with caution if they choose to take advantage of such covenants as they may give rise to naked licensing and abandonment of the trademark.
The Fourth Amendment generally requires that government searches must be reasonable, which typically can be satisfied via a warrant. Searches at the border, however, traditionally occupy a special status in connection with U.S. Fourth Amendment law. Recognizing that “the government’s interest in preventing the entry of unwanted persons and effects is at its zenith at the international border,” border searches are generally deemed “reasonable simply by virtue of the fact that they occur at the border.” While the Ninth Circuit has stated that the border is not an “anything goes” zone, the court has nevertheless previously held that reasonable suspicion is not required before searching electronic devices at the border. As a result, laptops and other electronic devices are commonly subject to cursory searches at the border. For some individuals, these searches can move beyond cursory review and include detailed forensic analysis that can reveal not only every file stored on the device, but also files that have previously been deleted.
Recently, however, the Ninth Circuit issued an en banc decision requiring that reasonable suspicion exist before boarder agents engage in forensic computer searches. The court also noted that password protecting an entire electronic device is not a factor that can be used to trigger reasonable suspicion. The decision is likely to impact law enforcement’s ability to engage in border searches of digital devices. Civil liberties groups have recognized the decision as providing some important additional 4th amendment protection for international travelers.
On April 15, 2013, the Supreme Court will hear the oral arguments for one of the most highly anticipated patent law cases of last year: Association for Molecular Pathology, Inc, et al. v. USPTO, et al. The one and only question before the Supreme Court is whether isolated DNA containing all or portions of the BRCA1 and BRCA2 (Breast Cancer Susceptibility Genes 1 and 2) gene sequences are patentable under 35 U.S.C. § 101. This turns on whether the isolated DNA is just like the native DNA found in the human body, or whether it is transformed into a different compound by isolating it under lab conditions.
The case has had a protracted history reaching back to 2009. The American Civil Liberties Union (ACLU) and the Public Patent Foundation (PUBPAT) initially filed a lawsuit against Myriad Genetics, Directors of the University of Utah Research Foundation (UURF) and the United States Patent and Trademark Office (USPTO), claiming that patents on BRCA1 and BRCA2 violated 35 USC § 101 (the patentable subject matter statute), as well as Article 1, Section 8, Clause 8 of the US Constitution and the First and Fourteenth Amendments. On March 29, 2010, United States District Court for the Southern District of New York concluded that the isolated DNA is not “markedly different” from native DNA because both shared the same function of conveying information and had the same nucleotide sequence. Thus BRCA1 and BRCA2 were held to be unpatentable. The District Court also invalidated Myriad’s method patents, and dismissed the constitutional claims against the USPTO based on the doctrine of constitutional avoidance.
What’s the case about?
The Doctrine of Patent Exhaustion holds that the authorized sale of a patented item extinguishes all of the patent holder’s rights to it. Any subsequent use of that item by the purchaser is not infringement. In other words, the purchaser of a patented item can do whatever he or she likes with it. But what if that item is capable of self-replication? Does the patent holder have the right to control subsequent generations of the item? This was the issue the Supreme Court confronted in Bowman v. Monsanto.
The story is this: Mr. Bowman, a farmer from Indiana, would plant soybeans two times each year. For his first crop, he purchased Monsanto’s Roundup Ready seeds. These seeds contained a patented genetic modification that made them resistant to the weed-killer Roundup. To make this purchase, Bowman had to agree not to replant any of the 2nd generation soybeans. He was allowed to plant the seeds once, but was prohibited from replanting the offspring.
Bowman complied with the terms of this agreement for his first crop, but he also planted a second crop of soybeans each year. He purchased the seeds for this second crop not from Monsanto, but from a local grain elevator at a significantly lower price. Bowman would sell some of the offspring from this crop and use the rest for replanting.
So how did Bowman infringe Monsanto’s patent? Well, as it turned out, some of the seeds from the grain elevator contained the Roundup Ready technology. Bowman knew this—he would plant these seeds and apply herbicide to them, killing all but the Roundup Ready ones. Monsanto told Bowman to discontinue this practice. When he refused, Monsanto filed a lawsuit seeking damages and an injunction.
On March 4, 2013, the White House officially responded to an online petition calling for the legalization of cell phone unlocking. The process of unlocking a cell phone usually refers to installing software that allows a cell phone to be used on multiple wireless carriers. Cell phone unlocking had previously been legal under an exemption granted by the Copyright Office pursuant to its DMCA 1201 Rulemaking powers; however, in 2012 the Copyright Office declined to renew the exemption.
Following the end of the exemption, several consumers protested the end of legal cell phone unlocking. A petition to the president was created, and crossed the recently raised 100,000-signature threshold, guaranteeing a response from the Administration. The White House responded to the petition astonishingly fast—within a weekend—by voicing strong support for cell phone unlocking. One of the suggestions put forth by the White House was that the Federal Communications Commission should investigate whether it is within their power to address the legalization of cell phone unlocking. Notably, this suggestion has been well received by the FCC, as Chairman Genachowski has expressed enthusiasm for the FCC investigating the issue. The question remains, however, whether there are steps the FCC can actually take that fall within their agency powers to address the issue. This post explores that question.
We are now in the tail end of the season where millions of America brave wintry weather, TSA pat downs, and slow airplane wifi to spend quality time with loved ones. If gingerbread cookies and holiday shopping get old, you simply need a short break from a Top Gear marathon, or you are sick in bed with a mall-induced flu, we’ve put together a little holiday patent reform round up. This post will focus on three recent developments aimed at reforming our patent system: (1) the USPTO’s efforts ad crowd-sourcing the search for prior art, (2) heavyweight technology industry players’ newfound interest in lobbying Congress to take action on software patent reform, and (3) a recent conference at a Silicon Valley law school seeking solutions to problems surrounding software patents.
After much hand wringing regarding the state of the patent system in America, the cogs of political, academic, and legal reform are slowly turning. Just last year, Congress passed the America Invents Act (“AIA”), the first major patent reform legislation in decades. Despite certain landmark changes, such as moving from a first to invent to a first to file system for patent grants, some wonder whether the AIA alone will have a substantial effect on the recent proliferation of patent troll lawsuits.
Tagged askpatents.com, btlj, htli, non practicing entities, npe, patent, patent litigation, patent reform, patent trolls, santa clara law, SHIELD Act, software patents, stackexchange
This post was co-authored by Marion Bergeret, Berkeley Law LL.M. Candidate 2013, and Babak Siavoshy, Teaching Fellow, Samuelson Law, Technology & Public Policy Clinic.
Last month the California Supreme Court heard oral argument in Apple v. Superior Court (Krescent), a consumer class action filed against Apple to contest the company’s collection of consumer personal information. The plaintiffs’ immediate target is online services like iTunes and the App Store, which they would like to see subjected to the same privacy laws as brick-and-mortar retailers. But the case may also have an impact on the privacy rights of customers using mobile payments apps like Square and Google Wallet.
At issue is the Song-Beverly Credit Card Act, a California law that prohibits retailers from asking for any “personal identification information” that is “unnecessary to the credit card transaction” as a condition for accepting a customer’s credit card payment. The Supreme Court must decide whether the 1971 Act, which was last updated in 2011, precludes “online” retailers from collecting customers’ personal information—including address and telephone number—when processing credit card transactions.
Amidst current discussions on the “problem” posed by software patents, David Kappos, Director of the United States Patent and Trademark Office (USPTO), recently delivered a speech defending the existence of such patents. Kappos argued that innovations in the software industry are no less worthy of patent protection compared to other inventions, and that the America Invents Act (AIA) has introduced administrative proceedings in the USPTO that will increase the quality of patents by weeding out overly broad ones that give monopolies to unworthy inventions.
The AIA introduced five administrative proceedings, giving authority to the newly established Patent Trial and Appeal Board (PTAB) in the USPTO to determine the validity of patents. These proceedings are: (1) post-grant review; (2) inter partes review; (3) transitional post-grant review for business method patents; (4) supplemental examination; and (5) derivation proceedings. Inter partes reviews replace the procedure of inter partes reexamination, while ex parte reexaminations are still in place and run parallel to these new proceedings. Among these, the first three types are of particular importance because they allow third parties to submit prior art. Accordingly to Director Kappos, for software patents, much of the prior art is “in the form of previously written software, which is difficult to find and more difficult to understand,” and “shifting terminology results in near-endless synonyms that frustrate even the most diligent searcher.” Thus, having such administrative proceedings allows those who have the incentive and resources––often competitors to the patent holder––to find and submit prior art. This blog post provides a basic overview of these three types of proceedings, examining whether they will contribute to solving the software patent problem.
The individual defendants in two high profile peer to peer song sharing cases, Capitol v. Thomas-Rasset and Sony v. Tenenbaum, recently faced major defeats in challenges over high statutory damages awarded against them. This raises questions as to the roles of judges and juries in determining the fairness and proportionality of statutory damages in copyright infringement cases. These litigation sagas have been closely watched in copyright circles, and it is important to trace their development throughout the years to appreciate the importance of the current decisions.
Let’s first start with Capitol v. Thomas. Jammie Thomas-Rasset, a single mom of four children from Minnesota, downloaded and shared 24 songs through the now-defunct Kazaa. In 2006, six major recording companies filed a complaint against Thomas alleging copyright infringement. In 2007, a jury found Thomas guilty of willful infringement, and awarded $222,000 in damages ($9,250 per song). Thomas then filed for and was granted a new trial. After a second trial in 2009, a jury again found Thomas guilty of willful infringement and awarded statutory damages of $1,920,000 ($80,000 per song).