John Wiley and Sons v. Kirtsaeng: Textbooks, Copyright, and Universal Exhaustion

On the eve of the arrival of Superstorm Sandy, the Supreme Court of the United States heard oral arguments in John Wiley and Sons v. Kirtsaeng, a case involving the international reach of the First Sale Doctrine.  The impending storm provided a fittingly overwrought metaphor for the Court’s attempt to interpret the Copyright Act as it pertains to so-called “gray-market” works published outside the U.S. and imported for sale.  Though similar issues were tackled in the 2010 Omega S.A. v. Costco Wholesale Corp. case, the Court’s 4-4 decision left the gray market in an unsatisfying state of suspended jurisprudence.  With all nine justices weighing in on Kirtsaeng, the Court has an opportunity to establish precedent in a case that is sure to affect many U.S. retailers and their customers.

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The Long Road to a Supranational Patent System in the European Union

On June 29, 2012, Mr. Herman Van Rompuy, the President of the European Council, announced that twenty-five of the twenty-seven Member States of the European Union (EU) finally reached an agreement concerning the creation of a unitary patent system. Anticipated for more than thirty years, the announcement legitimately raised enthusiasm on the part of European authorities, inventors and entrepreneurs. Unfortunately, hope did not last. The day before the European Parliament was to debate and vote on the proposed regulations, the European Council removed three key articles from the draft agreement. In protest, the Parliament cancelled the debating and voting sessions. Today questions remain whether the agreement will be reviewed and adopted any time soon, or if national egos, political pressures, the interests of lobby groups and procedural complexities will keep impeding EU competitiveness.

The EU has no unified patent system. In order to secure EU-wide protection, an inventor must obtain a patent from the European Patent Office (EPO). Then, he must seek validation of his patent in each Member State. Most Member States require the patent to be translated in their official language(s). This generates large translation costs which increase the cost of patenting.  According to the Danish Prime Minister, it can cost up to €20,000 to obtain coverage in just thirteen Member States. Approximately €14,000 of that total comes from translation costs alone. The absence of a unified patent system generates administrative complexities but also legal uncertainties, because the courts of each Member State can rule differently on the same issue within the same patent. This situation does not only impede the competitiveness of individual European companies (especially small- and medium-sized enterprises), but it also hampers EU competitiveness and economic growth in general.

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The Curious Case of Design Patents

Design patents have not received much press until recently. However, the smartphone industry and fashion houses are increasingly turning to patent law to protect their designs. Recent disputes between Apple and Samsung as well as Lululemon and Calvin Klein illustrate an increased reliance on design patents for market domination. Will this become a trend, encouraging design patent applications and enforcement? How could design patent protection help or harm innovation in the future, both for large and small companies?

35 U.S.C. § 171 provides that “whoever invents any new, original and ornamental design for an article of manufacture may obtain a patent therefor, subject to the conditions and requirements of this title.” Ornamentality is determined by the aesthetic, eye-pleasing features of the article not dictated by functional considerations. See Trimble Products, Inc. v. W. T. Grant Co. The purpose behind design patent protection is to advance the decorative arts. See Forestek Plating & Mfg. Co. v. Knapp-Monarch Co. Utility patents afford protection to useful processes and products, but design patents are mainly concerned with the visual characteristics of an article. Holders of utility patents enjoy a 20-year monopoly, whereas design patent holders only have a 14-year monopoly.

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The Uncertain Future of Divided Patent Infringement

The law of patent infringement is governed by 35 U.S.C. § 271. In particular, § 271(a) describes what constitutes infringement:

Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent. § 271(a).

On the other hand, § 271(b) governs liability when an entity induces another to infringe a patent:

Whoever actively induces infringement of a patent shall be liable as an infringer. § 271(b).

According to the current joint infringement rule under BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), courts construe the term “whoever” in § 271(a) as encompassing multiple entities, but only when one of them exerts “direction or control” over the others, so they can be viewed as one collective single entity. This is the so-called “single-entity rule.”

However, this rule poses a problem for innovative technologies, such as cloud computing and personalized medicine, which necessarily require collaborative effort by multiple parties for their implementation. For example, a personalized diagnostic technique may require a biotech company that performs the analysis, a pharmaceutical company that manufactures the drug, and a physician that collects data and provides treatment. Under such circumstances, it is often necessary to include all these steps performed by multiple parties in a patent claim to make it patentable. However, under the single-entity rule, a patent holder may be left remediless when multiple entities collusively perform all the steps in a claim, but no single entity performs all of the steps or exerts direction or control over the other entities.

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Platform 2.0

Recent changes in the Terms of Use for Application Programming Interfaces (“APIs”) highlight the ways law and technology can work together to promote business innovation. While in the past web platforms have been relatively care free about how their data is used through APIs, such platforms have recently taken up a significant interest in controlling how the data is subsequently used. These policy changes, firmly within the discretion of such platforms, are a sign of things to come for web and mobile services.

Facebook, through its platform offering, ushered in a wave of website application innovation. For large web and mobile technology ventures, it is no longer enough to focus just on user adoption—developer adoption of a platform has become just as important. No amount of users can substitute for a cadre of independent developers. The most successful companies, such as Twitter and Facebook, now prioritize their API users the same way first generation web companies catered to unique website visitors. By supplying a platform for third-party developers to build upon, companies can harness outside creativity to drive growth on their platforms. API adoption has led to follow-on innovation and, in many cases, development of critical features that redefine the underlying platform.

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California Privacy Legislation: Wins and Losses

During September 2012, the California legislature voted in favor of three laws recognizing new privacy rights resulting from technological advancements and the ubiquity of Internet activity in the lives of Americans. California Governor Jerry Brown took two steps forward in the name of privacy by signing two of the laws, but took one step back by vetoing the third.

Social Media Information Off-limits For Employers and Postsecondary Educational Institutions

On September 27, 2012, Governor Brown signed two laws effectuating new protections for personal social media account information and passwords, thus making California the third state (joining Maryland and Illinois) to enact a social media privacy law—something even Congress is considering implementing on a federal level. The first law, Senate Bill 1349, institutes new privacy protections for students at California’s postsecondary educational institutions, and the second law, Assembly Bill 1844, institutes similar protections for employees or applicants for employment. Both laws take effect January 1, 2013. The laws have been hailed by privacy proponents, like the ACLU, as an affirmation of existing privacy rights brought into the online context. But, not all discussion of the new laws has been as positive. Some legal experts critique the laws for being too vague in their language and thus problematically overbroad in their eventual application.

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Patents, Progress, and Prognostication: A Recent AIA-Mandated Study Scans a Hazy Horizon

Last year’s passage of the Leahy-Smith America Invents Act (AIA) promised significant changes to the Patent Act, but the effect of those changes remains to be seen – largely because the most sweeping revisions have not yet taken effect.  Though the AIA was signed on September 16, 2011, there have been few changes in the patent process.  Fees have been raised, a reserve fund has been created, and much research has begun.  However, many revisions are still inchoate, and require a bureaucratic process of meetings, reports, and recommendations.

In January of this year, the United States Patent and Trademark Office (“PTO”) released two AIA-mandated reports.  The first report is titled “International Patent Protections for Small Businesses,” and it analyzes the value of foreign patents for startups.  Though hardly a sliver of the coming overhaul of the Patent Act, the report is an interesting study in one element of the AIA’s perceived role in stimulating a still-flagging economy. Continue reading

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Drafting Health Sciences Process Claims after Prometheus

The Supreme Court’s decision in Mayo v. Prometheus (2012) raised the 35 USC §101 bar on patentable process claims in the health sciences.  Prometheus’ patented processes adjusted the dosage of thiopurine, based on the concentration of drug metabolites in a patient’s blood.  The Supreme Court found that these metabolite-efficacy relationships embodied laws of nature: “the relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm” are “laws of nature.”  Moreover, the additional steps of “administering” the drug and “determining” the metabolite levels did not make the claims patentable.  The Court noted that doctors already “administered” thiopurine drugs to treat patients with autoimmune diseases, and methods for “determining” metabolite levels were “well known in the art.”  Therefore, these two additional steps were “purely conventional or obvious pre-solution activity” and they were not sufficient to make the entire processes patentable.

While Prometheus may have narrowed the scope of §101, it also left clues for how to successfully draft patentable health sciences process claims.  These clues are: (1) root the process in a physical transformation; and (2) frame a robust inventive concept. Continue reading

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Golan v. Holder and the URAA’s Impact on the Public Domain

Peter and the Wolf, a symphony written by Sergei Prokofiev in 1936, recently received national attention through the Supreme Court decision of Golan v. Holder.  Golan, decided on January 18th, 2012, upheld the constitutionality of Section 514 of the Uruguay Round Agreements Act (“URAA”)—a provision that brought the United States into better compliance with international copyright conventions.  Section 514 removes certain foreign works, like Peter and the Wolf (a popular orchestral piece for young children), from the public domain.  In other words, Section 514 “restores” copyright entitlements to the owners of these works for a specified amount of time.

The controversy of this Section arises for people like Lawrence Golan who previously enjoyed free access to these works without having to seek permission from copyright holders.  Others, like the Electronic Frontier Foundation, see even larger issues between private and public interests at stake with the upholding of URAA.  Accordingly, the petitioners challenged the constitutionality of the Section both under the Constitution’s Copyright and Patent Clause (Art. I, § 8, cl. 8 ) and under the First Amendment of the Constitution.  Although the Court ultimately upheld the constitutionality of Section 514, the majority and dissent opinions bring some interesting tensions to the foreground.

Legal Background

The International Context

The Berne Convention, which originally went into effect in 1886, is an agreement that governs the copyright relations between its member nations.  More specifically, the Berne Convention grants nationals of member nations copyright protection in other member nations for a minimum of the author’s lifespan plus fifty years, unless the copyright term has expired in the nation of origin or the nation in question. Continue reading

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Recent Developments in Trade Secret Law

With New Jersey’s recent adoption of a variation of the Uniform Trade Secret Act (“UTSA”), all but four states (Massachusetts, New York, North Carolina and Texas) have implemented some form of the UTSA. However, courts in some of the states adopting versions of the UTSA are still drawing the limits of their statutory liability for misappropriation of trade secrets. Most recently, courts in California and Virginia have handed down key decisions clarifying statutory application.

New Jersey Joins the Ranks of the UTSA

On January 9, 2012, Governor Chris Christie signed into law the New Jersey Trade Secrets Act (S-2456/A921), which covers issues of trade secret misappropriation previously dealt with under common law. The statute aligns closely with the UTSA but differs in some significant ways. First, the statute specifically incorporates the protections of the common law stating that application of the statute shall not “be construed to deny, abrogate or impair any common law . . . right, remedy or prohibition.” One interpretation of the statute predicts that application of this section of the statute will protect proprietary and/or confidential information that does not meet the statutory requirements of trade secret, but was none the less protected under common law. Continue reading

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