United States: Preview: Supreme Court 2018/2019 Intellectual Property Docket

Although the U.S. Supreme Court historically has heard relatively few intellectual property cases, it has shown a heightened interest in recent years by granting certiorari in multiple cases each term. This trend continues in the current October 2018 term. The Court has grated certiorari in cases involving patents, copyrights, and trademarks. In addition, the Court has requested the views of the Solicitor General in two additional cases, signaling that it may add additional IP cases to its docket.

The Supreme Court has shown a heightened interest in recent years by granting certiorari in multiple cases each term. This trend continues in the current October 2018 term. The Court has grated certiorari in cases involving patents, copyrights, and trademarks.

The following are summaries of the IP cases currently on the Court's docket for argument this term:

Patent Cases

Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc., Case No. 17-1229 (Scheduled for argument on December 4, 2018).

The first IP case scheduled for argument this term concerns the definition of prior art under the America Invents Act, 35 U.S.C. § 102(a)(1). Under pre-AIA law, an offer for sale was available as prior art even if it was a private, undisclosed offer. The USPTO has interpreted the AIA as modifying this definition. During examination of patent claims governed by the AIA, the USPTO has indicated that § 102(a)(1) "does not cover secret sales or offers for sale. For example, an activity (such as a sale, offer for sale, or other commercial activity) is secret (non-public) if it is among individuals having an obligation of confidentiality to the inventor." MPEP § 2152(d).

In this case, the petitioner, Helsinn Healthcare S.A., entered into a research financing agreement giving another company the conditional right to purchase drug products that embodied Helsinn's invention. The agreement was made public in an SEC filing, but the agreement and filing did not disclose details of the invention. The Federal Circuit held that the AIA did not change the definition of an offer for sale to require the offer to make the invention itself available to the public, and held that "after the AIA, if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of the sale[.]" Helsinn Healthcare S.A. v. Teva Pharm. USA, Inc., 855 F.3d 1356 (Fed. Cir. 2017). The question presented in the current appeal is:

Whether, under the Leahy-Smith America Invents Act, an inventor's sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.

Return Mail Inc. v. U.S. Postal Service, Case No. 17-1594 (Argument not scheduled)

In a second patent case, the Court will consider whether the government is a "person" who may petition to institute review proceedings under the Leahy-Smith America Invents Act. Under the AIA, a "person" who has been "sued for infringement" or "charged with infringement" of a business method patent may file a petition for review under the Transitional Program for Covered Business Method Patents ("CBM") under certain circumstances. AIA § 18(a)(1)(B).

The petitioner in this case, Return Mail, Inc., owns a patent covering a process for handling returned and undeliverable mail. Return Mail filed an action against the United States Postal Service ("USPS") in the U.S. Court of Claims and the USPS then filed a petition for CBM review at the Patent Trial and Appeal Board ("PTAB"). The PTAB ruled that the challenged claims were unpatentable. The Federal Circuit affirmed in a 2-1 decision.

At the Supreme Court, Return Mail argues that the United States government is not a "person" eligible to file a petition for post grant review under the AIA, since the term "person" generally is not interpreted to include the government unless the governing statute expressly so provides (and the AIA does not define "person" to include the government). The specific question presented in the appeal is:

Whether the government is a "person" who may petition to institute review proceedings under the AIA.

Copyright Cases

Fourth Estate Public Benefit Corp. v. Wall-Street.com, Case No. 17-571 (Scheduled for argument on January 8, 2019).

In this copyright case, the Supreme Court will consider an issue concerning the jurisdictional requirements for filing a copyright infringement action that has split the circuit courts. The Copyright Act provides that "no civil action for infringement of the copyright in any United States work shall be instituted until" either (1) "registration of the copyright claim has been made in accordance with this title," or (2) "the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused." 17 U.S.C. § 411(a). The statute leaves open the question whether jurisdiction exists when the application for copyright registration has been filed but has not been granted or refused.

In this case, the Eleventh Circuit ruled that § 411(a) requires "a copyright owner to plead that the Register of Copyrights has acted on the application [for registration]—either by approving or denying it—before a copyright owner can file an infringement action." Fourth Estate Pub. Benefit Corp. v. Wall-Street.com, LLC, 856 F.3d 1338 (11th Cir. 2017). Although the Tenth Circuit follows the same approach, La Resolana Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195 (10th Cir. 2005), the Fifth and Ninth Circuits only require the copyright owner to have filed an application for registration and fee at the time the action is commenced. See Cosmetic Ideas, Inc. v. IAC/Interactivecorp, 606 F.3d 612 (9th Cir. 2010); Positive Black Talk Inc. v. Cash Money Records Inc., 394 F.3d 357 (5th Cir. 2004). The question presented is:

Whether "registration of [a] copyright claim has been made" within the meaning of § 411(a) when the copyright holder delivers the required application, deposit, and fee to the Copyright Office, as the Fifth and Ninth Circuits have held, or only once the Copyright Office acts on that application, as the Tenth Circuit and, in the decision below, the Eleventh Circuit have held.

Rimini Street Inc. v. Oracle USA Inc., No. 17-1625 (Scheduled for argument on January 14, 2019)

The second copyright case scheduled for argument this term involves a narrower issue: the definition of "costs" available to a prevailing party under the Copyright Act, 17 U.S.C. § 505.

In general, costs awarded to prevailing parties in federal court litigation are governed by 28 U.S.C. § 1920 and are limited to court clerk and marshal fees, transcript fees, disbursements for printing and witnesses, copying fees, docketing fees, and the compensation of court-appointed experts and interpreters. All other expenses are "non-taxable." Section 505 of the Copyright Act, on the other hand, states that prevailing parties are entitled to "full costs."

In this case, the district court awarded costs of over $12 million, most of which were non-taxable under § 1920. The Ninth Circuit affirmed on the grounds that § 505 governs the eligibility of cost in copyright actions, citing Twentieth Century Fox Film Corp. v. Entm't Distrib., 429 F.3d 869 (9th Cir. 2005). At least the Eighth and Eleventh Circuits have held that § 1920 controls in copyright actions, since § 505 does not expressly supplant the general provision limiting costs. The question presented in the appeal is:

Whether the Copyright Act's allowance of "full costs" (17 U.S.C. § 505) to a prevailing party is limited to taxable costs under 28 U.S.C. §§ 1920 and 1821, as the Eighth and Eleventh Circuits have held, or also authorizes non-taxable costs, as the Ninth Circuit holds.

Trademark Case

Mission Product Holdings Inc. v. Tempnology, LLC, Case No. 17-1657 (Argument not scheduled).

This trademark case presents another issue that has split the circuit courts: whether a licensee to an executory trademark license that is rejected by a debtor-licensor in a bankruptcy proceeding can take advantage of the protections afforded other licensees of intellectual property under Bankruptcy Code.

Under 11 U.S.C. § 365(n), when a debtor-licensor rejects an intellectual property license, the licensee can elect to continue to pay royalties and use the licensed intellectual property as it existed at the time of the licensor's bankruptcy filing. The effect of § 365(n) in cases involving trademark licenses is muddled, however, because the Bankruptcy Code omits trademarks from the statutory definition of "intellectual property." See 11 U.S.C. § 101(35A). As a result, disputes have arisen over the rights a trademark licensees to continue to use licensed marks after a licensor files for bankruptcy and rejects the license.

In this case, the First Circuit ruled that rejection of a trademark license during bankruptcy terminates the licensee's right to use the mark. In re Tempnology, LLC, 879 F.3d 389 (1st Cir. 2018). The Seventh Circuit has ruled differently, however, holding that the rejection of a trademark license merely is a breach of the license and the licensee may continue to perform under the license, including using the licensed mark. Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, 686 F.3d 372 (7th Cir. 2012). The question presented in the appeal is:

Whether, under §365 of the Bankruptcy Code, a debtor-licensor's "rejection" of a license agreement— which "constitutes a breach of such contract," 11 U.S.C. §365(g)—terminates rights of the licensee that would survive the licensor's breach under applicable nonbankruptcy law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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