Cuozzo Speed Technologies, LLC v. Lee, No. 15-446 (June 26, 2016)

Cuozzo Speed Technologies, LLC v. Lee, No.
15-446 (June 26, 2016)

The Court affirmed the Federal Circuit, holding that the USPTO acted within its
authority in promulgating rules requiring the Patent Trial and Appeal Board to
construe patent claims in Inter Partes Review proceedings under the more
conservative broadest reasonable interpretation (or BRI) standard. The Court
also held that, with the exception of constitutional and other extraordinary
challenges, the PTABs decision to institute review in an IPR proceeding is not
appealable.
The eight justices participating in the case were unanimous that the USPTOs rules
applying the BRI claim construction standard were reasonable and within the
rulemaking authority delegated to the USPTO in the America Invents Act. See 35
U.S.C. 316(a)(4). The Court stressed that PTAB trials are administrative
proceedings that review the prior examination of an issued patent, akin to a
reexamination. As a result, the Court rejected arguments that the proceedings were
quasi-judicial requiring the PTAB to apply the claim construction standard used
in federal court litigation.
The Court noted that the use of BRI in PTAB trials may result in some
inconsistency with parallel district court actions, but that possibility has long been
present in our patent system based on the dual roles of the USPTO and the courts.
On the appealability of the PTABs decision to institute review, a majority of the
Court ruled that the AIA expressly provided that the decision is not
appealable. See 35 U.S.C. 314(d). It noted that despite 314(d), however, an
institution decision could be appealed to lodge a constitutional challenge or in
other extraordinary situations, such as the USPTO acting outside its statutory
limits.
Halo Electronics, Inc. v. Pulse Electronics, Inc., No. 14-1513 (June 13, 2016)
(decided with Stryker Corp. v. Zimmer, Inc., No. 141520).
The Court rejected the prevailing Seagate test for finding willful infringement in
patent cases, a finding that may increase the prospect of enhanced damages, up to
treble actual damages, under 35 U.S.C. 284. See In re Seagate Technology, LLC,
497 F. 3d 1360 (Fed. Cir. 2007) (en banc). UnderSeagate, a patent owner was
required to prove by clear and convincing evidence both (1) that the defendant
acted despite an objectively high likelihood that its actions constituted
infringement of a valid patent, without taking into consideration the defendants
actual state of mind; and (2) that the defendant either knew of the high likelihood
of infringement or it was so obvious that the defendant should have known the risk.
The Court ruled that the Seagate test was unduly rigid and effectively
insulat[ed] some of the worst patent infringers from any liability for enhanced
damages. In its place, the Court left the questions of willfulness and enhancement
of damages largely to the discretion of the district court, but limited them to
egregious cases.
The Court based its ruling on Section 284, which states only that a court may
award enhanced damages, using a word that the Court noted clearly connotes
discretion. The statute does not support the complex Seagate test applied by the
Federal Circuit.
The Court noted that although enhanced damage awards are discretionary, they
must be consistent with a pattern laid out in over 180 years of case law under the
Patent Act and earlier statutes. Based on that precedent, enhanced damages are
designed as a punitive or vindictive sanction for egregious infringement
behavior. The Court cautioned that such awards are generally reserved for
egregious cases of culpable behavior.
Kirtsaeng v. Wiley & Sons, Inc., No. 15-275 (June 16, 2016)
In this appeal from the Second Circuit, the Court held that when considering
whether to award attorneys fees to a prevailing party under the Copyright Act, a
court should give substantial weight to the objective reasonableness of the losing
partys position, but also should consider all other circumstances relevant to
granting a fee award.
The Court granted certiorari to resolve the question whether a court should give
substantial weight to the objective reasonableness of the losing partys position
in awarding attorneys fees in copyright cases. The Court unanimously held that
objective reasonableness must be considered, but held that a court also should give
due consideration to all other circumstances relevant to granting fees and
retain[s] discretion even when losing party advanced a reasonable claim or
defense. The Court reasoned that the results of such an approach enhance the
probability that both creators and users. . . will enjoy the substantive rights the
[Copyright] statute provides. The Court reiterated that a court must also give due
consideration to all other circumstances relevant to granting fees; and it retains
discretion, in light of those factors, to make an award even when the losing party
advanced a reasonable claim or defense.
The Court already has granted certiorari in four IP-related cases for the next term,
beginning in October 2016.
Samsung Electronics Co. v. Apple, Inc., No. 15-777.
In this case, arising from the Smartphone Wars between Samsung and Apple
relating to design patents covering Apples iPhone and other mobile devices, the
Court will consider the role of apportionment in measuring damages for design
patent infringement. The question presented is: Where a design patent is applied
to only a component of a product, should an award of infringers profits be limited
to those profits attributable to the component?

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