Software Patentability Revisited

On May 12, 2016, the Court of Appeals for the Federal Circuit (“CAFC”) issued an opinion Enfish LLC. v. Microsoft Corporation upholding validity of software patent claims on  35 U.S.C. § 101 grounds.  The patents at issue, U.S. Patents Nos. 6,151,604 and 6,163,775, cover a self-referential table for a computer database.  Compared to traditional relational tables, where each entity modeled is provided in a separate table, in the self-referential model, all data entities are in a single table, with column definitions provided by rows in that same table.  The specification of the patents at issue recited advantages of the self-referential model compared to the relational model, including faster searching of data, more effective storage of data, and more flexibility in configuring the database.

While the District Court of Central District of California ruled the claims of these patents too abstract to be valid, CAFC reached a different conclusion.  CAFC held that the claims are not directed to an abstract idea within the meaning of Alice Corp., but are rather directed to a specific improvement to the way computers operate.  CAFC further clarified how the analysis of software claim validity under the two-step Alice Corp. test should take place.  In particular, the court ruled that not all claims directed to improvements in software are directed to an abstract idea, and thus may not need to be analyzed under the step of Alice Corp. test covering whether the claims amount to significantly more than the abstract ideaFurther, the court ruled that an invention’s ability to run on a general-purpose computer does not preclude patentability of the claims covering the invention and neither does the improvement not being defined by reference to physical components.

The Enfish decision is the second CAFC decision since Alice Corp. that upheld patentability of software patent claims under the 35 U.S.C. § 101.  While the decision may still be overturned either by an en banc CAFC decision or a Supreme Court decision, for now, the decision provides a ray of hope for software patent and patent application owners.

Infringe once, shame on you, infringe twice…

When can a court’s judgment for intellectual property infringement prevent a party for being sued again for the same type of conduct? In Marcel Fashions Group v. Lucky Brand Dungarees, Inc., the Second Circuit Court of Appeals explored such an issue. Both parties to the case make jeans, with the plaintiff (“Marcel”) owning a federal registration for the mark “Get Lucky” and the defendant (“Lucky Brand”) owning a federal registration for the trademark “Lucky Brand.”

The parties have been previously involved in multiple rounds of litigation over the Lucky Brand’s infringement of the mark “Get Lucky.” In 2003, this litigation resulted in a settlement forbidding Lucky Brand from using the mark “Get Lucky.” In 2005, another litigation ensued over Lucky Brand’s breach of the settlement agreement – Marcel emerged victorious, obtaining money damages against Lucky Brand for all breaches of the settlement since 2003 and a court injunction prohibiting Lucky Brand from using the mark “Get Lucky”; Marcel nevertheless failed to obtain injunctions against Lucky Brand’s use of other trademarks that include the word “lucky,” such as “Lucky Brand.” Leading to the present decision, Marcel and Lucky Brand clashed in litigation again in 2011, with Marcel once again suing Lucky Brand for money damages for infringement of the “Get Lucky” mark and seeking an injunction against the use of the mark “Lucky Brand”.   Lucky Brand argued that all claims in this litigation have already been decided in 2005 – that Marcel has already been compensated for all breaches of the 2003 settlement and that Marcel already tried, but failed, to obtain the injunction; accordingly, Lucky Brand argued, the lawsuit should be dismissed.

The Court of Appeals refuted Lucky Brand’s arguments and allowed the case to proceed forward. First, the Court reasoned, there is no sense in construing the 2005 decision as awarding damages for acts of infringement that have not occurred yet at that point of time. The Court also ruled that failing to obtain an injunction in a prior action does not prevent one from seeking the injunction in a later case; on the contrary, if money damages are not enough to stop infringement, the need for the injunction becomes clearer.   Thus, being found liable for infringement once does not immunize a party from being sued for new alleged acts of the same type of conduct.

 

 

Free Speech and Publicity Rights

While protection of free speech under the First Amendment remains one of the foundations of American society, the First Amendment is not always a defense against suits for violation of intellectual property, such as the rights to a person’s likeness (publicity rights), as the Ninth Circuit Court of Appeals recently illustrated in the Davis v. Electronic Arts case.  Electronic Arts (“EA”) makes the “NFL Madden” football videogame, which allows a player to control virtual likenesses of past and present NFL players. While EA pays significant royalties to NFL for the use of current player’s likenesses, EA does not have a license to use the likenesses of former NFL players.  When the former players sued EA for violation of their publicity rights, EA attempted to raise defenses based on the First Amendment, which the court rejected.

One of the defenses was that the use of the players’ likenesses was “transformative,” adding significant creative elements that transform the game into something more than a celebrity imitation; however, as the game replicates physical characteristics of the players and shows the players doing what they are famous for (playing football), the court rejected this defense.  Likewise, the court also rejected EA’s statutory and common law “public interest” defenses, which are based on the protection of publishing information in the interest of the public, because “NFL Madden” is not a reference source or a collection of facts about football but rather a game.  Likewise, the court rejected EA’s argument that the Roger’s test, a test that limits trademark rights when First Amendment rights are involved, should be extended to publicity rights.  Finally, the court rejected EA’s argument that the use of the players’ likenesses was protected as being “incidental” because accurate depictions of the players are central to the game.

Interestingly enough, EA previously brought up most of these arguments, and lost, in a similar case that involved NCAA Football games.  EA recycled these arguments to preserve them for a rehearing by the Ninth Circuit Court of Appeals en banc or by the Supreme Court, and whether the arguments gain any traction further in the appeal process remains to be seen.

A wonderful blend of juicy fruits

055-150x300On June 12, 2014, in POM Wonderful LLC. v. Coca-Cola Co., the U.S. Supreme Court held that a company may bring suit under the Lanham Act for unfair competition arising from false or misleading product descriptions, even though the Federal Food, Drug, and Cosmetic Act (FDCA) gives the Food & Drug Administration exclusive enforcement authority over misbranding of food and drink. Pom Wonderful LLC (“POM”) is a California business that grows pomegranates and distributes pomegranate juices, including a pomegranate-blueberry juice blend. POM sued The Coca-Cola Company (“Coca-Cola”) for unfair competition based on Coca-Cola’s sales of a pomegranate-blueberry juice blend through their Minute Maid subsidiary. While POM’s pomegranate-blueberry juice blend contained 85% pomegranate juice and 15% blueberry juice, Coca-Cola’s juice blend contained just 0.3 percent pomegranate juice, 0.2 percent blueberry juice, 0.1 percent raspberry juice, and 99.4 percent apple juice and was less expensive to produce and sell. (The pomegranate-blueberry component “amounts to a teaspoon in a half gallon.”) The Court applied established statutory interpretation rules to the Lanham Act and FDCA to find the acts to be complimentary, not preclusive. Although both acts concern food and beverage labeling, the Lanham Act protects commercial interests against unfair competition, while the FDCA protects public health and safety. As a result, competitors are free to bring Lanham Act claims for food and beverage labels that are also subject to regulation under the FDCA.

Happy Fourth of July

NSRW_Thomas_JeffersonHere in the States, the Fourth of July is celebrated as Independence Day, to commemorate the signing and adoption of the Declaration of Independence on July 4, 1776. Thomas Jefferson wrote the first draft of the Declaration, which was then edited and finalized by the Second Continental Congress. Jefferson later went on to help draft our first Patent Act in 1790 and to accomplish a great many other things.