Cadwalader attorneys review the most significant IP issues from 2019, including new IP legislation and U.S. Supreme Court decisions. They offer insights on what's to come in 2020, including the big news that the Supreme Court will hear the Oracle v Google case relating to copyright infringement of protected software.
Intellectual property law is about properly incentivizing inventors and entrepreneurs to innovate, in order to promote progress in the arts and sciences. It is no surprise then that in our digital age, IP-related cases have come to the forefront of both the U.S. Supreme Court's docket and new legislation.
Here, we look back to the most significant IP issues of 2019 and look ahead to what will be big IP issues in 2020.
Looking Back at 2019
Patents—New Bills on the Block
This year Congress considered two different bicameral and bipartisan patent legislative bills.
First, Sens. Chris Coons (D-Del.) and Tom Cotton (R-Ark.), and Reps. Steve Stivers (R-Ohio) and Bill Foster (D-Ill.), introduced the STRONGER Patents Act of 2019 (H.R. 3666 and S. 2082), which awards injunctive relief against infringers, improves PTAB proceedings and ends fee diversion.
Second, another patent bill, sponsored by Sens. Thom Tillis (R-N.C.) and Coons, attempts to address the severe limitations to patent eligibility imposed by several Supreme Court decisions (e.g., Alice v. CLS Bank). If passed, this bill would bring the U.S. one step closer to addressing the high number of patents rendered invalid due to recent Supreme Court decisions.
Lose Yourself in the Copyright
Enacted in October 2018, the Music Modernization Act (MMA) seeks to modernize music licensing by addressing digital streaming licensing systems, protect music recorded prior to 1972, and permit royalties to producers, mixers, and sound engineers.
Eminem's publisher, Eight Mile Style, brought suit against Spotify for copyright infringement, and in the process challenged the constitutionality of the MMA. The lawsuit alleges Spotify violated this act because it "did not engage in the required commercially reasonable efforts to match sound recordings" and that the MMA's "retroactive elimination of the right to profits to infringement, statutory damages, and attorney's fees" is unconstitutional under the Takings Clause.
Time will tell if the MMA will help the music industry as intended or continue to be challenged for its alleged shortcomings.
Supreme Court to the Rescue
A hot button issue for trademarks was recently resolved by the Supreme Court. Section 365 of the Bankruptcy Code allowed a debtor to "reject any executory contract," but protected licensees by retaining their rights to "intellectual property" licenses. However, trademarks were not explicitly included in the list of protected "intellectual property" in the Code, leaving licensees in limbo on whether they would continue to retain their licensed trademark rights if their licensor declared bankruptcy.
A nation-wide circuit split was resolved in Mission Products Holding Inc. v. Tempnology LLC, where the high court held that a debtor cannot reject a trademark license under Section 365 of the Bankruptcy Code without breaching the license thereby preserving the licensee's rights to the licensed trademarks.
Lesson in Tolerance of Vulgarity
In 2018, the Supreme Court held "The Slants" was registrable as a trademark for an Asian American rock group and declared the Lanham Act's prohibition on marks that "disparage" any "person, living or dead," unconstitutional.
In 2019, the Supreme Court held another provision of the Lanham Act unconstitutional, i.e, the provision preventing registration of "immoral or scandalous" marks in Iancu v. Brunetti.
Erik Brunetti sought to register the name FUCT for his clothing line. The majority opinion held the provision invalid because it results in viewpoint-based discrimination. Justice Sonia Sotomayor's partly dissenting opinion warned that the "Court's decision today will beget unfortunate results. ... The coming rush to register such trademarks—and the Government's immediate powerlessness to say no—is eminently avoidable."
Future cases on this issue will be worth watching.
Looking Ahead to 2020
Patents—Kicking the Can Down the Road
The Supreme Court's patent-eligibility jurisprudence has resulted in a high number of patents being held invalid at the early stages of litigation. However, recent Federal Circuit decisions (e.g., Aatrix Software Inc., v. Greed Shades Software Inc.) have denied these motions on the grounds that the allegations raise factual issues not resolvable without discovery.
This new trend will result in increased costs for litigants but
may provide greater security for patentees. A recent Federal
Circuit decision, Cellspin Soft Inc. v. Fitbit Inc.,
followed this trend holding the lower court erred in granting the
motion to dismiss. Cellspin is currently on petition for
certiorari. If granted, the Supreme Court's decision may
significantly impact of how courts handle cases involving 35 U.S.C.
The Curse of Blackbeard
A photo of the shipwreck of the Queen Anne's Revenge, famously known as Blackbeard's pirate ship, made its way to the Supreme Court after its author, Frederick Allen, sued North Carolina for unauthorized use of his copyrighted photo in Allen v. Cooper. North Carolina defended itself by claiming sovereign immunity. At issue before the Supreme Court is whether the Copyright Remedy Clarification Act gave Allen the right to sue North Carolina despite North Carolina's claim of sovereign immunity. This case also has the potential to validate the act, which lower courts have found unconstitutional under the 11th amendment. If Allen wins, a flood of new lawsuits against states for copyright infringement may result.
Searching for Answers
The Supreme Court has announced it will review Oracle America, Inc., v. Google Inc. in which the Federal Circuit held that Google's use of Java APIs in making the Android platform violated copyright law because it was not sufficiently transformative to qualify as a "fair use." If the Federal Circuit's decision is upheld, it may result in more companies seeking license agreements from Oracle or developing original software to avoid similar lawsuits. However, affirmance would also strengthen copyright protections for software developers.
Although the climate in Washington is not currently conducive to IP law legislation given competing priorities, it is promising that several bills have shown some bipartisan support. In the end, understanding the 2019 decisions can guide interested parties as to the law, and an awareness of proposed and newly enacted laws will provide instructive direction going forward.
Originally Published by Bloomberg Law
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