In 2013, the Supreme Court decided three patent cases. By June of 2014, it is expected that there will have been six more decisions in patent cases. This week alone, there have been oral arguments heard or decisions released in four cases, addressing the indefiniteness standard (Nautilus v. Biosig Instruments), the standard for awarding attorneys' fees in patent cases (Octane Fitness/ Highmark), and the standard for inducing patent infringement (Limelight v. Akamai). When considered together and along with Alice Corp. v. CLS Bank (argued on March 31), the implications will likely be far reaching.
Supreme Court Relaxes "Exceptional" Case Standard in Pair of Fee-Shifting Patent Cases
On April 29, 2014, the Supreme Court handed down decisions in two companion cases that relaxed the "exceptional" case standard under the fee-shifting provision of the Patent Act (35 U.S.C. § 285). In Octane Fitness, LLC v. Icon Health & Fitness, Inc., No. 12-1184 (2014) and Highmark Inc. v. Allcare Health Management System, Inc., No. 12-1163 (2014), the Court adopted a lower, more discretionary standard for determining whether a case is "exceptional." In Octane Fitness, the Court empowered the district court to determine that a case is "exceptional" if it is "simply one that stands out from others with respect to the substantive strength of a party's litigating position ... or the unreasonable manner in which the case was litigated." The district court can, therefore, determine whether a case is exceptional on a case-by-case basis given the totality of circumstances. Relatedly, in Highmark the Court held that the district court's § 285 determination should be reviewed under a deferential abuse-of-discretion standard. While these decisions are likely to be viewed as a victory for the defense bar, particularly those who have complained of abusive patent litigation from some non-practicing entities (NPEs), the decisions may have broader implications for both patentees and accused infringers, resulting in more focused advocacy and less over-reaching. Also, both decisions will resonate loudly on Capitol Hill, where loser-pays fee-shifting is a central, albeit controversial provision in several patent reform bills, including H.R. 3309 that passed the House in December, and S. 1013 and S. 1612 now being debated in the Senate.
A more detailed discussion of this topic is available on our IP Litigation Current blog.
Supreme Court Takes on the Federal Circuit's "Extravagant" Indefiniteness Standard
On April 28, 2014, the Supreme Court heard oral argument in Nautilus, Inc. v. Biosig Instruments, Inc., No. 13-369. Biosig sued Nautilus in 2004 over a patent covering heart rate monitor technology associated with exercise equipment. The district court invalidated the claims for being indefinite, however the Federal Circuit reversed concluding that the claims would have been understood by one of ordinary skill in the art, even if that person required a small amount of experimentation using standard equipment and methods. The claims at issue require that two electrodes be in a "spaced relationship" from each other "whereby" the system would function. The principal issue presented is whether the claims are invalid as indefinite under 35 U.S.C. § 112 ¶ 2 since the term "spaced relationship" is amenable to different reasonable constructions. During the oral argument, the Justices indicated that this case may signal the end of the Federal Circuit's "insolubly ambiguous" standard for indefiniteness. Unfortunately, the Justices did not express any enthusiasm for the alternative standards proposed by Nautilus, Biosig, or the U.S. Government, leaving it to the Court to fashion a better–currently unknown–standard.
A more detailed discussion of this topic is available on our IP Litigation Current blog.
Supreme Court Hears Argument on Induced Infringement in Limelight v. Akamai
On April 30, 2014, the Supreme Court heard oral argument in Limelight Networks, Inc. v. Akamai Techs., Inc., No. 12-786, which concerns the standard for inducing patent infringement under 35 U.S.C. § 271(b). In the case below, Plaintiff Akamai alleged infringement of method claims directed at efficient delivery of web content. Defendant Limelight maintained a network of servers and placed certain content elements on its servers, but it did not modify other content providers' web pages itself, a step that was required by the asserted claims. Instead, it instructed is customers to carry out the modification. A jury nonetheless found that Limelight directly infringed the asserted claims. The District Court, however, granted judgment as a matter of law that Limelight could not directly infringe because it did not perform every claim step, either itself or through another acting at its direction or control (the "single entity rule"). A panel of the Federal Circuit affirmed, but then the en banc Court found Limelight instead liable for inducing infringement, without relaxing the single entity rule for direct infringement. The Justices' questions during oral argument did not necessarily reveal how they will decide the case, but many feel that it is unlikely that the High Court will affirm the Federal Circuit's en banc decision and find that a defendant can be liable for inducing patent infringement without an act of direct infringement. Further, while expressing policy concerns about the single entity rule, the Justices were laser focused on the fact that the direct infringement question was not before the Court.
A more detailed discussion of this topic is available on our IP Litigation Current blog.
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