The Standard Remains the Same: Supreme Court Confirms PTAB Claims Construction Rules

The United States Supreme Court today unanimously decided to permit the Patent Trial and Appeal Board (“PTAB”) to continue using a tougher standard for claims construction than the standard applied in litigation. In Cuozzo Speed Technologies LLC v. Lee, the Court ruled that the PTAB’s application of the so-called “broadest reasonable interpretation” standard was consistent with the “reasonable exercise of rulemaking authority that Congress delegated to the patent office.” The Court also declined to overturn an earlier Federal Circuit ruling that the PTAB’s decision to institute a review under the America Invents Act (“AIA”) is not reviewable on appeal.

Cuozzo is an important decision since it will affect not only how patent attorneys draft patent applications, but also strategic choices of whether to pursue invalidation of patents through PTAB proceedings, such as post-grant review or inter partes review, or through litigation. All things being equal, under Cuozzo, patents are more likely to be invalidated using the broadest reasonable interpretation standard since a broadly construed claim is more susceptible to arguments that the invention is anticipated or made obvious by prior art or that the patent claim is indefinite.

Supreme Court Clarifies Standards Governing the Attorneys’ Fees Awards In Copyright Litigation

CopyrightThis morning, the Supreme Court issued its most recent ruling in Kirtsaeng v. John Wiley & Sons, Inc., unanimously holding that the “objective reasonableness” of an unsuccessful litigant’s position should be accorded “substantial weight” when awarding attorneys’ fees in copyright cases.  The Court, however, also noted that this factor is not dispositive and district courts must examine a wide-array of other factors. 

This case first came before the Court in 2012 when the Plaintiff, Supap Kirtsaeng, petitioned the Court to reverse the Second Circuit’s holding that he had infringed John Wiley & Sons copyrights by reselling textbooks in the United States that he had purchased in Thailand.  After the Court ruled in his favor, he returned to the District Court, seeking over $2 million in fees under the Copyright Act’s fee-shifting provision, 17 U.S.C. § 505.

The District Court and the Second Circuit held that fees were inappropriate because Wiley’s position in the underlying litigation had been “objectively reasonable.”  No. 08-cv-07834 (S.D.N.Y. Dec. 20, 2013); 605 F. Appx. 48, 49, 50 (2nd Cir. 2015).  At the Supreme Court, both parties argued that the Copyright Act fee-shifting statute should be interpreted to further the overall goals of the Copyright Act, but took different positions on how that should be accomplished.  Kirtsaeng argued that fees should be awarded to successful litigants whose cases “meaningfully clarif[y]” copyright law.  Wiley, on other hand, argued that “giving substantial weight to the reasonableness of a losing party’s position” best serves those goals.

The Court agreed with Wiley.  The Court began its analysis by noting that the Copyright Act  “serves the purpose of enriching the general public through access to creative works.”  Slip Op. at 6.  Thus, the Court aimed to craft guidance that would further those goals by “encouraging and rewarding authors’ creations while also enabling others to build on that work.”  Id.  The Court reasoned that Kirtsaeng’s approach would not further the goals of the Copyright Act because it would disincentivize litigants from pursuing cases that would “meaningfully clarify” copyright law by imposing a financial penalty for losing.  It would also be difficult to implement because the long-term implications of a court’s holding are often not immediately clear.

The Court found that Wiley’s “objective reasonableness” test, on the other hand, furthers the goals of the Copyright Act by encouraging parties with strong legal positions to litigate (since they stand to recover fees) and those with weak positions to settle (since they face the potential of paying two sets of fees).  The Court reasoned that Wiley’s approach is also more administrable because a court that has ruled on the merits of a copyright case can easily assess the reasonableness of the losing party’s position.

But, while the Court held the “objective reasonableness” factor should be given “substantial weight,” it held it is not dispositive.  Instead, courts must consider other factors that further the goals of the Copyright Act, and can award fees where a losing party’s position is reasonable if doing so would further the goals of the Copyright Act and vice versa.  Slip. Op. at 10-11.  Because it was not clear if the lower courts had properly weighed factors other than objective reasonableness, the Court remanded the case to the District Court to review the fee application “giving substantial weight to the reasonableness of Wiley’s position but also taking into account all other relevant factors.”   Slip Op. at 12. 

Ultimately, consistent with its recent decisions on fee-shifting statutes related to patent law, Kirtsaeng increases the discretion district courts have in making fee award determinations in copyright cases, giving them leeway to consider the totality of the circumstances.

This post was authored by Joseph Grasser and Allyson Madrid.

Europe – Trade Secrets Directive gets final approval

By way of follow-up to earlier posts (here and here), we can report that the Council of the European Union has formally adopted the Trade Secrets Directive.  This is the last step in the EU legislative process.  The Directive must now be published in the EU Official Journal.  It will come into force 20 days later.  Each EU Member State must implement the Directive into national law.  They will have two years to do this.  So, Member States are likely to have laws in force on this by mid-2018.  In the UK this is, of course, subject to the outcome of the referendum on EU membership.

The Directive aims to introduce a new, harmonised standard of protection for trade secrets across EU Member States, in an attempt to counter the increasingly widespread problem of trade secrets theft and to promote cross-border innovation.  Currently, not all Member States have a national definition of “trade secret” which makes it very difficult for businesses to know what interests are protected in each territory.  Also, there is currently little consistency across Member States on the remedies available to businesses where their trade secrets have been misappropriated.  Broadly, the Directive introduces a statutory definition of ‘trade secret’, harmonises the circumstances in which the misappropriation of a trade secret will be unlawful and provides a common set of remedies.  True harmonisation will, however, be jeopardised by the fact that the Directive is a minimum harmonisation measure meaning that Member States may implement more far-reaching protection for trade secrets than provided by the Directive if they wish.

It has been suggested that the UK will not need to enact implementing legislation as the existing law protecting trade secrets adequately reflects the substance of the Directive.  This is doubtful but we await the UK government’s view on this.

The Trade Secrets Directive has been adopted in Europe just weeks after the Defend Trade Secrets Act was signed into law in the US.  The DTSA creates a federal civil cause of action – and federal subject matter jurisdiction – for trade secrets misappropriation that “occurs on or after the date of the enactment” of the law and that affects interstate or foreign commerce.  For more information on the new US trade secrets law, please read the posts on our blog here and here.

We will post a more detailed analysis of the Directive, and the implications for businesses, when it comes into force.  In the meantime, if you would like to discuss any aspect of the protection of trade secrets in the UK or EU, please feel free to call Carlton Daniel.

 

 

Weekly Data Privacy Alert – 31 May 2016

Please click here to read the latest data privacy alert from the Squire Patton Boggs Data Protection & Cybersecurity team. This week’s alert covers news from:

EU

  • EU Member States Urge the Commission to Remove Barriers to the Flow of Data
  • European Data Protection Supervisor Publishes Its Annual Report
  • European Parliament Tells the European Commission to Reopen Negotiations on Privacy Shield

UK

  • The ICO Issues a List of Priorities to Prepare for GDPR

Germany

  • Court Rules That Dashcam Recordings Can Be Admissible for Prosecution of Severe Traffic Offences

US

  • Irish Data Protection Commissioner to Bring EU-US Data Flows Before European Court of Justice Again

For more information on any of these items, or data privacy issues generally, please feel free to call any of the following individuals:

Annette Demmel (Berlin)

Caroline Egan (London)

Stephanie Faber (Paris)

Francesca Fellowes (Leeds)

Andy Kruppa (Miami)

Ann LaFrance (London)

Jonathan Weiss (Miami)

 

 

Webinar: Defend Trade Secrets Act of 2016

We invite you to participate in our webinar on the Defend Trade Secrets Acts of 2016 on Thursday, June 9, 2016 at 9:00 am pdt.

President Obama signed the Defend Trade Secrets Act of 2016 (DTSA), S. 1890, into law on May 11, 2016. The DTSA creates the first-ever federal civil cause of action for trade secret misappropriation. Long the domain of state law, the DTSA’s advent “elevates” trade secrets to the same federal protection historically enjoyed by patents, trademarks/trade dress, and copyrights.

To aid our clients and friends in understanding the DTSA and its possible use and implications, we will host a webinar on June 9. Our speakers, Steven M. Auvil, David Elkins and Jill S. Kirila will cover the following topics:

  • Key DTSA provisions, open questions, and underlying policy considerations
  • Practical considerations in bringing trade secrets claims, including the relative advantages and disadvantages of bringing such claims in federal court under the DTSA versus bringing them in state court under state trade secrets law
  • Practical considerations in defending DTSA claims
  • Best practices to take full advantage of the DTSA

Please visit our Event Page to register for this webinar.

CLE is approved in AZ, CA, NJ and NY and pending in FL, OH and TX.

New EU cybersecurity requirements soon to fall on “essential services” operators

On 17 May 2016, the Council of the European Union formally adopted the Network and Information Security (NIS) Directive at first reading, paving the way for its final adoption and entry into force in August 2016.

What is the NIS Directive?

The Directive aims to step up the security of network and information systems across the EU. Initially proposed in 2013, it has been progressing through the EU legislative procedure for some time. The Directive aims to:

  • Improve the cybersecurity capabilities of Member States;
  • Improve cooperation between Member States on the issue of cybersecurity;
  • Ensure that operators of essential services in “critical sectors”, such as banking, health, energy and transport and key digital service providers, such as online marketplaces, search engines and cloud services, take appropriate security measures and report cybersecurity incidents to the relevant national authorities;
  • Ensure that each EU country designates one or more national authorities to implement and enforce the Directive and create Computer Security Incident Response Teams (CSIRTs) responsible for monitoring and responding to security incidents at national level; and
  • Establish an EU-wide strategy for dealing with cyber threats.

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Who is subject to the NIS Directive?

The NIS Directive applies to two categories of service providers: operators of essential services and digital service providers.

(i) Operators of essential services

A company is an operator of essential services if:

  • It provides a service which is essential for the maintenance of critical societal and/or economic activities;
  • The provision of that service depends on network and information systems; and
  • An incident affecting the network and information systems of that service would have significant disruptive effect on its provision or on public safety.

The NIS Directive will require operators of essential services in the energy (electricity, oil and gas), transport (air, rail and roads), banking and healthcare sectors to take security measures and report cyberattack incidents to national authorities.

(ii) Digital service providers

The NIS Directive applies to three main categories of digital service providers: online marketplaces, online search engines and cloud computing services. Whether or not to include digital service providers within the scope of the Directive was one of the most contentious issues during the two years of negotiations around the Directive. Following lengthy negotiations, social networks and payment service providers were excluded.

  • An “online marketplace” is defined as “a digital service that allows consumers and/or traders…to conclude online sales and service contracts with traders either on the online marketplace’s website or on a trader’s website that uses computing services provided by the online marketplace.” This broad definition includes marketplaces that engage in B2C as well as B2B transactions. Whilst app stores are deemed to be in scope, price-comparison websites are not.
  • An online search engine is defined as “a digital service that allows users to perform searches of, in principle, all websites or websites in a particular language on the basis of a query or any subject in the form of a keyword, phrase or other input; and returns links in which information related to the requested content can be found.” However, the NIS Directive does clarify that search engines within a particular site will not be subject to the Directive.
  • A “cloud computing service” is widely defined as a “digital service that enables access to a scalable and elastic pool of sharable computing resources.” This could catch companies providing public, private and hybrid cloud services.

What are the sanctions for non-compliance with the NIS Directive?

Failure to comply with the NIS Directive will trigger substantial penalties for the most serious infringements: up to 2% of a company’s global turnover.  Businesses within the scope of the Directive must conduct internal audits to ensure that their network and information security practices are compliant with the new requirements, well documented and effective.

What are the next steps?

The NIS Directive must now be approved by the European Parliament. It is expected to come into force in August 2016. Thereafter, Member States will have 21 months to transpose the Directive into national law, and six months after that to identify operators of essential services.

For more information on how the NIS Directive could impact your business, please feel free to call Aline Doussin.

This post was authored by Aline Doussin and Oliver Bartholomew.

 

 

ITC Affirms Summary Determinations of Patent Invalidity Based on Indefiniteness in Wireless Headsets and Automated Teller Machines

Trend or coincidence? The International Trade Commission (ITC) has affirmed summary determination rulings of patent invalidity in two, separate investigations: Certain Wireless Headsets, Inv. No. 337-TA-943 and Certain Automated Teller Machines and Point of Sale Devices and Associated Software Thereof, Inv. No. 337-TA-958. This follows the April 4, 2016 affirmance of ALJ Lord’s Section 101-based invalidity summary determination in Certain Activity Tracking Devices, Systems, and Components Thereof, Inv. No. 337-TA-963 [see our previous blog post].

Please read our full blog on The Trade Practitioner for further detail.

Weekly Data Privacy Alert – 23 May 2016

Please click here to read the latest data privacy alert from the Squire Patton Boggs Data Protection & Cybersecurity team. This week’s alert covers news from:

EU

  • EU Council Adopts the Network and Information Security Directive
  • The Court of Justice of the EU Advises that IP Addresses are Personal Data

France

  • The CNIL Publishes Blanket Authorisations for Data Controllers in the Healthcare Sector

Germany

  • Bundesrat Debates Criminal Prosecution of  “Gawkers”

US

  • U.S. Supreme Court Issues Opinion in Spokeo, Inc. v. Robins
  • US Senate Committee on Commerce, Science, & Transportation Holds Hearing Entitled “The Telephone Consumer Protection Act at 25: Effects on Consumers and Business”

For more information on any of these items, or data privacy issues generally, please feel free to call any of the following individuals:

 

 

 

The Defend Trade Secrets Act – Key Takeaways

The Defend Trade Secrets Act was signed into law on May 11, 2016.  It creates the first-ever federal civil cause of action for trade secret misappropriation.  We have prepared an article on the Act.  The article distills the DTSA’s most important aspects – and omissions – into a distinct set of takeaways of practical use to readers.  Please click here to read the article.

For more information on the DTSA, or any aspect of trade secret protection, please feel free to call David Elkins or Steve Auvil.

UK: Custodial sentence for online infringement to be increased to 10 years

The UK government has announced its intention to increase the maximum custodial sentence for online copyright infringement from two years to ten years.  This will match the current maximum sentence for copyright infringement in physical goods.

Maximum sentence

The government first consulted on this proposal in July 2015.  The overwhelming majority of respondents were against an increase in the maximum custodial sentence, saying that online infringement could not be equated with other serious offences carrying the same maximum sentence, including firearms offences, rioting and child cruelty.  Despite this, the government intends to press ahead with its plans and introduce legislation amending S107(4A) and S198(5A) of the Copyright Designs and Patents Act 1988 (CDPA), which set out the penalties available for online copyright infringement.  The government’s position is that “online offences should be treated no less seriously than their physical counterparts.  Harmonising these will provide a deterrent effect to criminals and, where criminality continues, provide for tangible punitive action.”  The government intends to introduce the amending legislation “at the earliest legislative opportunity”.  The government’s thinking in this area and the plans for new legislation are set out in this document.

That the government intends to go ahead with the proposed increase in the maximum custodial sentence, despite strong opposition in the consultation process, demonstrates how keen it is to stamp out online infringement and protect the creative industries, which add an estimated £84.1 billion to the UK economy each year.  It is worth noting that the new increased sentence will apply not only to businesses that have online infringement at the core of their profit-making model, but also anyone who shares a copyright work online (including a private individual outside the scope of commercial activity) knowing that they should not be doing so.  This would catch individuals engaged in uploading unauthorised copies of films, books or music to dedicated file sharing websites.

For more information on protecting copyright online, please feel free to call Florian Traub.

 

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