Oh Yes They Did: Ninth Circuit’s Holding May Turn DMCA Safe Harbor Protections on Its Head by Alexandra Taylor, Esq.

On April 07, the Ninth Circuit Court of Appeals issued its most recent decision on the scope of safe harbor protection extended to online providers, holding that an online provider may lose its safe harbor protection if its moderators assist in selecting content submitted by user.

The factual aspects of the case involve Mavrix Photographs, LLC, a celebrity photograph agency which sued LiveJournal, Inc. for copyright infringement of several of its photographs. LiveJournal runs LiveJournal.com, a social media platform which allows users to create and run communities online. One of LiveJournal.com’s more popular communities titled “Oh No They Didn’t!” features celebrity news and gossip, with the posts within said community often including photographs.

LiveJournal.com users submit posts to volunteer moderators, who then review the posts to ensure the posts comply with the sites rules, one of which is a prohibition on copyright infringement. LiveJournal also pays a full-time employee to review and approve the posts. Interestingly Mavrix did not submit a DMCA takedown request, and instead filed suit claiming rights in twenty photographs posted on “Oh No They Didn’t!” without Mavrix’s permission.

Under the DMCA, an online provider can claim safe harbor protection if: (1) the provider “does not have actual knowledge that the material or an activity using the material” is infringing; (2) in the absence of actual knowledge, the provider “is not aware of facts or circumstances from which infringing activity is apparent”; or (3) “upon obtaining such knowledge or awareness” the provider “acts expeditiously to remove, or disable access to, the material”. 17 U.S.C. § 512(c).

This is where the facts get really important and where the Ninth Circuit made its distinction. The district court granted LiveJournal summary judgment, holding that Section 512(c) shielded LiveJournal from liability. The Ninth Circuit reversed the summary judgment, finding critical LiveJournal’s role in posting the photographs to its platform. The Ninth Circuit ultimately held that whether the photographs were posted “at the direction of the users” was dependent on whether the moderators actions could be attributed to LiveJournal. Here, the court found that a juror could conclude an agency relationship between LiveJournal and its moderators based on the following facts: LiveJournal selects and gives specific direction to its moderators, LiveJournal users may have reasonably believed that the moderators had the authority to act on behalf of LiveJournal, and LiveJournal maintained sufficient control over the “Oh No They Didn’t!” community through LiveJournal’s supervision, selection, and removing of the moderators.

For the full Opinion, the case is Mavrix Photographs, LLC v. LiveJournal, Inc., No. 14-56596, 2017 WL 1289967, at *1 (9th Cir. Apr. 7, 2017).

V-I-C-T-O-R-Y for Varsity Brands, Inc. in Supreme Court Battle Over Decorative Elements of Cheerleading Uniforms by Alexandra Taylor, Esq.

On Wednesday, the U.S. Supreme Court issued its highly-anticipated Opinion on the copyrightability of design elements found in plaintiff’s cheerleading uniforms. In its initial lawsuit filed in 2010, Varsity Brands, Inc., the country’s largest cheerleading supplier, argued that Star Athletica, L.L.C. infringed its copyrighted designs consisting of chevrons, stripes, various line designs, and color blocks. Under the Copyright Act, “useful items”, such as an underlying garment, are barred from copyright protection. The case brought differing rulings in the lower courts as to whether the decorative elements in the garments were separable enough from the underlying garment to be eligible for copyright protection.

After “widespread disagreement” in the lower courts as to the ability to copyright such designs, the Supreme Court established a two-part test for determining when a design element in a useful item can be protected:

A feature incorporated into the design of a useful article is eligible for copyright protection only if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article, and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated.

The Supreme Court found that the test was satisfied in the instant case. Expectedly, the fashion industry lobbied for a lenient standard to allow more copyright protection, while consumer groups sought a more strict approach to foster competition. Though the Supreme Court limited the holding to two- or three-dimensional works of art, and not copyright protection for the underlying garment itself, the Court’s ruling has wide spread implications for fashion and related industries for companies and individuals to take advantage of.

For the full Opinion, the case is Star Athletica, L.L.C. v. Varsity Brands, Inc., et al., No. 15-866 (U.S. March 22, 2017).

Acceptance of Building Signage as Specimens Evidencing Use of a Trademark Remains Industry Specific by William Brees, Esq.

The Trademark Trial and Appeal Board (“TTAB”) refused to accept the following photographs of a trademark displayed on the front door of a building as acceptable specimens for real estate investment and acquisition services:bill 1

In re Republic National LLC, Serial No. 86513101 (February 23, 2017) [not precedential].

The board held that the signage on the front door was not actually used in providing the real estate investment and acquisition services and therefore must be considered advertisement. While it may seem strange that the door through which customers must enter to receive the cited services would not be considered as being used in connection with the services, the outcome of this case is consistent with earlier rulings by the board. For example, in In re R & B Receivables Management, Inc., Serial No. 77855168 (September 23, 2011) [not precedential] the TTAB refused to accept the following specimen for various financial advisory services based on the same reasoning:bill2

Because the two cases above did not involve use of the mark in actually providing the services, they were treated as advertisements for which there must be some link to the services shown in the specimen itself. Neither of the specimens show any description of the services provided. It would appear the non-descript nature of the building is the important factor in these decisions, because there is a long history of allowing photographs of building signage as specimens of use for service marks that appear to be buildings where the type of service applied for would be expected from that type of building. One example, randomly chosen from marks registered in 2016, is the specimen below, which was accepted as a specimen of use for restaurant services. bill3

United States Trademark Registration No. 5,109,887.

Brittany Maxey, Esq. and Alexandra Taylor, Esq. present “IP: What Every Brewer Needs to Know” at Green Bench Brewing Co. for Florida Brewers Guild

Brittany Maxey and Alexandra Taylor, both of Maxey Law Offices, PLLC, recently presented “IP: What Every Brewer Needs to Know” for members of Florida Brewers Guild at local St. Petersburg brewery Green Bench Brewing Co. Brittany and Alexandra led a conversation on intellectual property rights and considerations for brewers and breweries.

Applying the Alice Standard to Electronic Stock Trading by Kyle Chapin, Esq.

On January 18, 2017, the Court of Appeals for the Federal Circuit affirmed the decision by the United States District Court for the Northern District of Illinois that two patents related to electronic stock trading contain patent eligible subject matter. These patents are owned by Trading Technologies International, Inc. and are directed toward reducing the time it takes for a trader to place an electronic trade. Specifically, the patents solve a problem where a trader attempts to enter a trade at a particular price, but they miss that price because the market had changed before the trade was entered and executed.

This holding is another guide post in a patent litigator’s understanding of the 2014 Supreme Court holding in Alice Corporation Pty. Ltd. v. CLS Bank International which turned patent-eligibility for software and business method patents upside-down. If you are unsure of the significance of Alice, the Court set out the framework for the patent-eligibility of patents that effected the validity of an enormous number of patents, overnight. The two-part test set out in Alice states that, a claim falls outside § 101 where (1) it is “directed to” a patent-ineligible concept, i.e., a law of nature, natural phenomenon, or abstract idea, and (2), if so, the particular elements of the claim, considered “both individually and ‘as an ordered combination,’” do not add enough to “‘transform the nature of the claim’ into a patent-eligible application.”

In the present case, the Court reviewed the two patents in view of the two-part Alice test. In holding the patents valid, the Court agreed with the District Court in stating that the patents “solve problems of prior graphical user interface devices…in the context of computerized trading [] relating to speed, accuracy and usability.” This improvement “recite[s] more than setting, displaying, and selecting data or information that is visible on the [graphical user interface] device.” For these reasons the Court concluded the subject matter of the patents were not abstract and therefore patent eligible under Step one of Alice.

Next, the Court looked to the improvement in a trader’s efficiency and accuracy in placing trades using the electronic trading system which, the Court stated, distinguishes “the routine or conventional use of computers or the Internet.” The Court pointed to the “specific structure and concordant functionality of the graphical user interface” as reasons the system is removed from being an abstract idea. According to the Court, this improvement in efficiency and accuracy on the part of the trader are the “inventive concept” necessary to meet Step 2 of Alice. Thus, the Court held Trading Technologies International, Inc.’s patents were valid.

This decision provides further guidance and additional examples that can help guide patent litigators to a better understanding of the elements necessary to have patent-eligible subject matter within various software and business method patents.

Teva is blocked from selling the generic version of Alimta by Stephen Lewellyn, Esq.

On January 12, 2017, the Court of Appeals for the Federal Circuit handed Eli Lilly a win against Teva Pharmaceuticals that blocks Teva from selling its generic version of the cancer treatment drug Alimta.

The Court, following its precedent in Akamia V, found Teva’s proposed product labeling for its generic drug would induce infringement of U.S. Patent No. 7,772,209, which is owned by Eli Lilly. This patent claims a method of administering pemetrexed disodium to a patient and includes the step of administering an effective amount of folic acid before pemetrexed disodium. In practice, the folic acid is taken by the patient  at the direction of the treating physician. The direction includes taking a prescribed amount of folic acid following specific schedule. After which, the pemetrexed disodium is given to the patient by the physician. But, if the folic acid is not taken as directed, pemetrexed disodium is not given to the patient.

Since completing the claimed method requires action by two separate people, the question of induced infringement was at issue concerning the step of administering folic acid, which is completed by the patient.

Under Akamia V, when no single actor performs all the steps of a method claim, infringement only occurs “if the acts of one are attributable to the other such that a single entity is responsible for the infringement.” In one circumstance, performance of method steps is attributable to a single entity when that entity “directs or controls” others in completing the steps. Directing or controlling of others performance includes an actor that (1) conditions participation in an activity or receipt of a benefit upon others’ performance of one or more steps of the patented method, and (2) establishes the manner or timing of that performance.

Here, the Court found treating a patient with Teva’s generic drug satisfied both prongs because the treatment is conditioned on the patient first taking folic acid by the patient following a specific regiment that was prescribed by the doctor. This decision provides further guidance on how multi-actor method claims can be infringed under Akamia V.

District Court of Delaware Narrowly Applies the IPR Estoppel Provisions by Stephen Lewellyn, Esq.

A recent Delaware district court decision narrowly interpreted the estoppel provision of an Inter Partes review (IPR) to not include prior art and arguments that could have been raised, but were not raised by the Petitioner in the IPR. Intellectual Ventures I LLC v. Toshiba Corp., Civil Action No. 13-453, Slip Op. (DN 559) at 25–27 (D. Del. Dec. 19, 2016) (Memorandum Opinion).

Judge Robinson, arriving at the narrow interpretation first looked to the statutory language of 35 U.S.C. § 315(e)(2), which states in relevant part: “[t]he petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a) … may not assert [] in a civil action arising in whole or in part under section 1338 of title 28 … that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”

Recognizing that the prior art and arguments at issue could have reasonably been raised by the Petitioner in the IPR, and under the statute the Petitioner would be estopped from raising them in the district court case, Judge Robinson looked to the Federal Circuit’s literal interpretation of the above language and found no estoppel. Particularly, in Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293 (Fed. Cir. 2016), the Court determined that because PTAB did not institute an IPR on a particular ground the Petitioner “did not raise – nor could it have reasonably raised – the [rejected] ground during the IPR.”

Finding no estoppel, Judge Robinson stated: “Although extending the [Federal Circuit’s] logic to prior art references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of this parallel administrative proceeding, the court cannot divine a reasoned way around the Federal Circuit’s interpretation in Shaw.”

I predict this decision will be appealed to the Federal Circuit to weigh in on estoppel when prior art could have been, but were not raised by the IPR Petitioner. Nevertheless, as it stands now, at least in the District of Delaware, the estoppel provision does not seem to apply in such circumstances.