Tuesday, September 16, 2014

7th Circuit doesn't like transformativeness or factor 1, still finds fair use

Kienitz v. Sconnie Nation LLC, No. 13-3004 (7th Cir. Sept. 15, 2014)

Just the facts:

While a student at the University of Wisconsin in 1969, Paul Soglin attended the first Mifflin Street Block Party, whose theme (according to Soglin) was “taking a sharp stick and poking it in the eye of authority.” Now in his seventh term as Mayor of Madison, Wisconsin, Soglin does not appreciate being on the pointy end. He wants to shut down the annual event. For the 2012 Block Party, Sconnie Nation made some tshirts and tank tops displaying an image of Soglin’s face and the phrase “Sorry for Partying.” The 54 sales, on which Sconnie Nation cleared a small profit, led to this suit, in which photographer Michael Kienitz accuses Sconnie Nation and its vendor of copyright infringement. Sconnie Nation concedes starting with a photograph that Kienitz took at Soglin’s inauguration in 2011. Soglin (with Kienitz’s permission) had posted it on the City’s website, from which Sconnie Nation downloaded a copy. The photograph was posterized, the background was removed, and Soglin’s face was turned lime green and surrounded by multicolored writing. Here are the original and the revision: A magistrate judge, serving by consent under 28 U.S.C. §636(c), granted summary judgment for the defendants, holding that Sconnie Nation had made fair use of the photo.
Kienitz's photo and T-shirt graphic
The court of appeals affirmed, albeit narrowly.  It began with factor one, commenting that transformativeness doesn’t appear in the statute, though the Supreme Court “mentioned” it in Campbell.  (“Mentioned” is sort of like saying WMDs were “among” the reasons the US offered for war in Iraq.  But ok, set the tone.)  The court then expressed “skeptic[ism]” about the approach of Prince v. Cariou, “because asking exclusively whether something is ‘transformative’ not only replaces the list in §107 but also could override 17 U.S.C. §106(2), which protects derivative works.”  Instead, it’s better to stick with the statutory list, “of which the most important usually is the fourth (market effect).”  (Richard Primus refers to this kind of interpretive re-prioritizing of Supreme Court decisions by courts of appeals as “underruling.”)

I think it’s important to pause for a moment here, because we’re all used to the clever and extremely readable rhetoric of 7th Circuit opinions, but let’s not rush too fast past what this opinion is doing.  Having not quoted either the Supreme Court or the Second Circuit’s definition of transformativeness (which might allow one to assess whether there is too great an overlap with the derivative works right, or for that matter with the reproduction right since that’s what the majority of Second Circuit transformativeness findings deal with), the Seventh Circuit tells us to stick to the statute.  But it doesn’t tell us what the first factor does attempt to privilege and deprivilege. Instead, the court goes to its own economic lingo-driven test: “whether the contested use is a complement to the protected work (allowed) rather than a substitute for it (prohibited).”  Where this appears in the statute is left as an exercise for the reader, though by placement in the opinion we might possibly infer that it is the appropriate rephrasing of factor one, as opposed to inappropriate transformativeness (though the court later says that factor one isn’t relevant at all).  However, complement/substitute requires some baseline for understanding the appropriate scope of the copyright right—the markets to which copyright owners are entitled—just like transformativeness does.

Anyhow, t-shirts and tank tops don’t substitute for the original photographs.  (Do they serve as complements?  Judging by the analysis below, no.)  Kienitz didn’t argue that his plans for licensing the work for apparel were disrupted by defendants’ use or that demand for the original or any other use he contemplated was reduced.  

Other than market harm, only the amount taken mattered here:

Defendants removed so much of the original that, as with the Cheshire Cat, only the smile remains. Defendants started with a low resolution version posted on the City’s website, so much of the original’s detail never had a chance to reach the copy; the original’s background is gone; its colors and shading are gone; the expression in Soglin’s eyes can no longer be read; after the posterization (and reproduction by silkscreening), the effect of the lighting in the original is almost extinguished. What is left, besides a hint of Soglin’s smile, is the outline of his face, which can’t be copyrighted. Defendants could have achieved the same effect by starting with a snapshot taken on the street.

Factor one didn’t do much: the use was for-profit, but the choice of design was a “form of political commentary.” The nature of the work was likewise “unilluminating,” and then the court repeats its market harm conclusion, apparently now as a matter of the nature of the work: “Kienitz does not argue that defendants’ acts have reduced the value of this photograph, which he licensed to Soglin at no royalty and which is posted on a public website for viewing and downloading without cost.”

Kienitz had two points on his side:

First, defendants did not need to use the copyrighted work. They wanted to mock the Mayor, not to comment on Kienitz’s skills as a photographer or his artistry in producing this particular photograph. There’s no good reason why defendants should be allowed to appropriate someone else’s copyrighted efforts as the starting point in their lampoon, when so many noncopyrighted alternatives (including snapshots they could have taken themselves) were available.

Except: If the factor (3) analysis is correct, how is there any appropriation of the copyrighted work? Feist says second-comers aren’t required to duplicate fact-gathering efforts, as a matter of constitutional law.  But never mind!  Fair use isn’t designed to protect the lazy, the court says.  Instead, it’s to facilitate uses that wouldn’t be possible if negotiation with copyright owners were always required, like parodies or academic uses.

Another point in Kienitz’s favor is that “this use may injure Kienitz’s longrange commercial opportunities, even though it does not reduce the value he derives from this particular picture. He promises his subjects that the photos will be licensed only for dignified uses. Fewer people will hire or cooperate with Kienitz if they think that the high quality of his work will make the photos more effective when used against them!”  (Judicial factfinding at its finest.  Even on its own terms this doesn’t make any sense, since the factor (3) analysis hangs on the extreme distortion of the crappy low-res version on the website, which could happen to any photo.)

But Kienitz didn’t make this argument that the Seventh Circuit just made up for him, and anyway that’s not enough to outweigh the fact that, “by the time defendants were done, almost none of the copyrighted work remained.” (Or, you know, the Campbell rule of law that demand suppression of this sort isn’t actionable, but that rule is both normative rather than efficiency-based and also comes from the Supreme Court and not the Seventh Circuit, so I guess it can safely be ignored.)  Affirmed.

Monday, September 15, 2014

Transformation by subtraction redux?

First there was Garfield without Garfield.  Now there's 3eanuts, turning Peanuts strips into raw expressions of angst and meaninglessness by subtracting the last, (partially) redemptive panel. HT Zach Schrag.

Don't mess with Texas whiskey?

Interesting article about a bourbon whiskey plastered with Texan signifiers, but apparently bottled (rather than distilled) in Texas.  The article makes several interesting advertising law-related claims: (1) sophisticated readers who examined the label in detail would be able to divine that the product was not distilled in Texas because of the absence of the key word "distilled," (2) this is nonetheless confusing because of the ordinary meaning of "made in Texas" to those not familiar with alcohol labeling regulations and the rest of the signifiers on the bottle, and (3) anti-government-regulation types nonetheless have an interest in prohibitions on fraud, so how should they think about this?

1835 label, "come and take it!" Texas Made

HT James Milles.

google it: verb status doesn't mean Google is generic

Elliot v. Google Inc., No. CV–12–1072, 2014 WL 4447764 (D. Ariz. Sept. 10, 2014)

Based on the evidence submitted here, Google seems to have thought long and hard about genericity, and prepared consumer surveys accordingly.  FWIW, my opinion has long been that generic and brand understandings can coexist in the same person; many people who ask for “a kleenex” are also aware that there is a particular brand of tissue called Kleenex.  And it’s much more so when the name is used as a different part of speech.  “To google” is an activity; Google is an entity.

The Google marks at issue covered “computer hardware; computer software for creating indexes of information, indexes of web sites and indexes of other information resources” (the 502 mark) and a mark with a longer description for pretty much the same thing except this time starting with “Computer services” (the 075 mark).  Elliot registered 763 domain names that combined “google” with a brand, person, or term (e.g., googlebarackobama.net), and Google promptly filed a UDRP proceeding.  The UDRP naturally ordered the transfer of the domain names.  Elliot then sued for cancellation of the marks.  Google’s counterclaims were the Lanham Act/state ones you’d expect. This opinion deals with summary judgment on genericity.

The court’s summary of Elliot’s argument:

Plaintiffs contend the GOOGLE mark has become generic because a majority of the public understands the word google, when used as a verb, to mean the indiscriminate act of searching on the internet without regard to the search engine used. Underlying Plaintiffs’ argument is the proposition that verbs, as a matter of law, are incapable of distinguishing one service from another, and can only refer to a category of services.

Google responded that there was no evidence that could justify a finding that a significant portion, let alone a majority, of the consuming public failed to identify Google as an indicator of source, regardless of how the term was employed grammatically.

The relevant question was the primary significance of the mark to the consuming public, in connection with the goods or services at issue. A trademark doesn’t cease to function when it’s used primarily as a verb; “a trademark performs its statutory function so long as it distinguishes a product or service from those of others and indicates the product’s or service’s source.”  If someone verbifies a brand name, if they mean that the activity will be performed with the trademark owner’s product or service, then they’re still using the mark as source-denoting: “e.g., ‘I will PHOTOSHOP the image’ could mean the act of manipulating an image by using the trademarked Photoshop graphics editing software developed and sold by Adobe Systems.”  (Incidentally, this suggests that an example of possible genericide long used in the Ginsburg et al. trademark casebook isn’t as existentially threatening as all that; see also the Xerox ad below futilely begging people not to use Xerox as a verb.)
Is LapLink giving Xerox and FedEx anything to worry about?

Take two trademarks and call me in the morning.

Verbification, however, isn’t inherently brand-protective: “[A] mark can also be used as a verb in an indiscriminate sense so as to refer to a category of activity in general, e.g., ‘I will PHOTOSHOP the image’ could be understood to mean image manipulation by using graphics editing software other than Adobe Photoshop.”  That usage doesn’t perform a trademark function.  “[I]nstead, it functions as a synecdoche describing both a particular species of activity (e.g. using Adobe’s PHOTOSHOP brand software) and the genus of services to which the species belongs (e.g. using image manipulation software in general).” 

Comment: I would disagree. As long as the user is aware that it’s a synecdoche, the distinction between mark and non-mark service remains, just as people are well aware that ranch workers are more than disembodied “hands.”  “Aspirin,” by contrast, is not a synecdoche; it’s the name of a product.  And the court immediately walks that back: “It cannot be understated that a mark is not rendered generic merely because the mark serves a synecdochian ‘dual function’ of identifying a particular species of service while at the same time indicating the genus of services to which the species belongs.”  Rather, the generic sense must be the term’s “principal” significance before genericity exists.  Moreover, per McCarthy, casual conversational uses aren’t evidence of generic use; primary significance is determined by use and understanding in the context of purchasing decisions. (Somewhat awkward for Google’s free service, then; someone who says “google it!” is in fact suggesting the equivalent of a purchase.)

Trademark law rewards effort in building a brand.  “It is thus contrary to both the letter and spirit of trademark law to strip a mark of legal protection solely because the mark—cultivated by diligent marketing, enforcement, and quality control—has become so strong and widespread that the public adopts the mark to describe that act of using the class of products or services to which the mark belongs.” The court cited Laura Heymann: “top-of-mind use of a trademark in its verb form, far from indicating the mark’s generic status, may well indicate the enduring fame of the brand.” Laura A. Heymann, The Grammar of Trademarks, 14 Lewis & Clark L.Rev. 1313 (2010).  This is especially true for arbitrary or fanciful marks. 

“If the primary significance of such a mark to a majority of the consuming public is to differentiate one service from the services of others, then the mark is not generic. This is true regardless of whether the public also uses the mark as an indiscriminate verb.”  As a result, the proper test is whether the primary significance of “google” to a majority of the public who performs searches on the internet is a reference to the Google search engine as opposed to a descriptive term for search engines in general.

Google’s expert, linguist Geoffrey Nunberg, opined that for some “highly distinctive and famous marks,” “the name of a particular product is used to convey the genus without actually denoting it.” His expert report supported Google’s position that figurative uses of marks can include verbifying them “to denote the characteristic action associated with the product or service they represent.” His examples were TiVo, Fed–Ex, Skype, and Google.  As he noted, “when somebody says, ‘I need the book tomorrow-can you Fed Ex it to me?’ we ordinarily assume that a shipment by UPS will be acceptable as well, without assuming that the verb to Fed–Ex simply means to ship by priority courier.”

Google’s survey expert, Gerald Ford, conducted a Teflon survey, first asking participants in a phone survey whether “Hewlett Packard” and “computer” were brands names or common names. All 420 respondents successfully identified “Hewlett Packard” as a brand name and “computer” as a common name.  They were then asked to classify six terms: STP; Coke; Jello; refrigerator; margarine; and aspirin.  They were told that “don’t know” or “no opinion” were acceptable; “both” answers were also recorded.  They were then asked to classify five more terms: browser; website; Amazon; Yahoo; and Google, specifically with respect to searching on the internet.  The 19 respondents who said they didn’t search on the internet were subsequently excluded.

Ultimately, 93.77% of internet searchers identified GOOGLE as a brand name and 5.25% identified GOOGLE as a common name.  The results were similar for YAHOO!, and both beat COKE (89.53% brand name, 6.73% common name).  (I understand the rhetorical reason for taking these results out to two decimal places, but I doubt it’s really justified.)  The only mark that beat Google was AMAZON, 96.51 % and 2.99%, respectively.  Ford calculated that, at a 95% confidence level, his results had an estimated error +/-2.37%.

Elliot objected that the study was irrelevant because it didn’t account for verb usage.  While the 9th Circuit criticized Teflon surveys in its Anti-Monopoly decision, Congress then passed the Trademark Clarification Act of 1984 to overturn that decision and “clarify that a mark may have a ‘dual purpose’ of identifying goods and services and indicating the source of the goods and services.”  The survey was relevant to answer the question of the primary significance of the term “google.”

Elliot’s counsel used “Google Consumer Surveys” to create surveys that asked respondents to select one of three answers to the prompt: “I most often use the word google to mean.” The 1,033 responses for the first survey were: “to search something on the internet” (52.2%); “the name of a specific search engine” (28.7%); and “the internet (in general) (19.1%).” The 1,007 responses for the second survey were “to search something on the internet” (72%); “the name of a company” (11.5%); and “the internet (in general)” (16.6%).  Plaintiffs argued that these results were evidence of a predominant use of “google” as an indiscriminate verb meaning to search on the internet.

The court found that there was no evidence these surveys were conducted according to generally accepted principles, or analyzed with reliable statistical methods.  Counsel didn’t have adequate training to design a survey or to interpret survey results. Nunberg, who the court found qualified to opine about designing survey questions about the meanings of words, testified that he thought the two main surveys were “worthless” because asking “what does X mean to you” is “the vaguest possible question you can ask” and because the possible responses did not allow respondents to answer that the word “google” meant “to use the Google search engine.” Because neither the surveys nor the opinions derived therefrom met the threshold standard of reliability under the FRE, they were inadmissible.

Plaintiffs’ consumer survey expert, James Berger, conducted a “substantially modified” Thermos survey.  While the Teflon survey is more common, he used the Thermos version because it allowed him to test verb use.  (In a footnote, the court opined that there were doubtless better surveys for genericity than either, given that genericity is not binary as the primary sigificance test often frames it.  But of course advocates are conservative and only want to approve surveys that have a good chance of being admissible, a chance maximized by the form having actually been admitted in other cases.)  In the survey, 251 respondents were screened and then asked: “If you were going to ask a friend to search for something on the Internet, what word or phrase would you use to tell him/her what you want him/her to do?” Slightly over half of the validated respondents’ answers (129) contained the word google.

However, Berger testified that his survey did nothing to test whether consumers understand that “google” as a mark refers to one company (framed that way it’s tautological, though), and that it was not important to ask respondents about their understanding of the word google.  Indeed, he stated that his survey didn’t test the primary significance of “google” or whether the term was generic for search engine hardware and software.  Thermos surveys ordinarily ask several questions, but his survey asked only one substantive question.  The court found this opinion partially admissible (not the part where he opined about counsel’s surveys).  While there was no authority accepting a one-question Thermos survey, it wasn’t inadmissible junk science.

So, the heart of the matter: the primary significance of “google” to the consuming public.  First, Google got the strong presumption of validity conferred by its (incontestable) federal registrations, which includes the specific presumption of non-genericity.  Thus, Google met its initial burden of showing that plaintiffs hadn’t raised a genuine issue of material fact.  Plaintiffs were required to show specific facts from which a jury could find that GOOGLE was generic.

Relevant evidence includes dictionary usage; mark-holder usage; competitor usage; media usage; and consumer surveys.  Plaintiffs couldn’t find a dictionary whose definition of the word “google” neglected to mention the trademark significance of the term.  They attributed that to Google’s “intimidation.”  For example, Google asked wordspy.com to modify its definition of google (“To search for information on the Web, particularly by using the Google search engine”) to “take into account the trademark status of Google.” Likewise, Merriam-Webster stated that “we were trying to be as respectful as we possibly could be about Google’s trademark.” Viewing the dictionary evidence in the light most favorable to plaintiffs, it showed that “google” had meaning as an “indiscriminate” verb.

Mark-holder usage: Plaintiffs highlighted that Google’s co-founder Larry Page stated on July 8, 1998, “Have fun and keep googling,” and that entering the search query “define: google” into the Google search engine resulted in a verb definition of: “Use an internet search engine, particularly google.com.”  They also noted other domain names using “google” that they didn’t buy.  But Google also used GOOGLE as a mark in national ad campaigns; had policies establishing “strict standards” for third party uses; published rules and guidelines for use of the mark; and spent a lot of money policing use.  (It’s not a lot of money relative to how valuable the brand is (over $113 billion, estimated), but you don’t have to spend some arbitrary fraction of brand value on enforcement.)  Nonenforcement may be evidence of genericity, but on these facts it would be unreasonable to conclude that Google didn’t enforce its rights.

Competitors’ use: there was no evidence that competitors used the term in a non-trademark fashion.  Murphy Door Bed Co., Inc. v. Interior Sleep Sys., Inc., 874 F.2d 95 (2d Cir.1989), says that competitors’ non-use is not independently sufficient to prove non-genericness because threats of enforcement of the mark might deter use. But it’s still “peripheral[]” evidence that the mark is not generic. Competitors’ ability to accurately describe their products or services without using the term in question suggests the term is not generic. As a corollary, the existence of a short and simple descriptive term for the genus to which the trademarked species belongs also evidences the mark in question as not generic. “Internet search engine” is that term here.

Media use: plaintiffs argued that the media often used “google” as an indiscriminate verb.  Google noted that some of plaintiffs’ evidence also recognized the trademark significance of “google,” and plaintiffs didn’t find a major media outlet referring to a competing search engine as a “google.” This evidence showed that “google” is sometimes used as verb to mean search on the internet.

Consumer survey evidence confirmed that the word google is indeed used as a verb. Berger’s survey could be used to infer that a majority of the consuming public understands the verb to refer to the indiscriminate act of searching on the internet. But that wasn’t dispositive about primary significance; the Berger survey didn’t test the primary significance of “google.”

While summary judgment is disfavored in trademark cases (obligatory cite to 9th Circuit precedent, arguably honored more in the breach in both the original and later senses of that phrase), it’s still appropriate when there’s no genuine issue of material fact. That was the sistuation here.  “Congress has spoken with particular clarity and force on the issue of whether a registered trademark is subject to cancellation as generic because it has more than one significance: ‘A registered mark shall not be deemed to be the generic name of goods or services solely because such mark is also used as a name of or to identify a unique product or service.’” Therefore, as a matter of law, a mark is not generic only because it simultaneously signifies more than just the trademarked product.  (That’s … actually not what the statutory language says at all, and it wasn’t what overruling anti-Monopoly was about.  Google’s search engine isn’t a unique product, which is why the verb use matters.)   

The court identified four possible meanings for “google”: (1) a trademark designating the Google search engine; (2) a verb referring to the act of searching on the internet using the Google search engine; (3) a verb referring to the act of searching on the internet using any search engine; and (4) a common descriptive term for search engines in general.  Cancellation would be appropriate “only if the fourth meaning is the primary significance of the word google to a majority of the consuming public.” 

But plaintiffs’ evidence only showed that (2) and (3) existed as meanings, and, drawing all reasonable inferences in their favor, that (3) was more significant than (2).  But the leap to “(3) is the most frequently used meaning” wasn’t justified, since plaintiffs had no evidence that verb use was more frequent than non-verb use.  And even if that leap were allowed, there was still no evidence to suggest that (4) was the primary significance of “google.”  It was undisputed that “well over 90% of the consuming public understands the word google with respect to searching on the internet as designating not to a common name, but a particular brand.” That fact established that (1) was more significant than (4) to a “vast majority” of the consuming public.  Even if a majority of the public understands (3) as a perfectly cromulent meaning, (1) and (3) weren’t mutually exclusive.  Summary judgment for Google on genericity.

Friday, September 12, 2014

SCIPR: statistics and preview of next Term

Supreme Court Analytics on the Past Term

Professor Edward Lee, IIT Chicago-Kent College of Law
Professor David Schwartz, IIT Chicago-Kent College of Law

Small sample!  6 patent cases from Fed. Cir., 5 reversed and 1 affirmed; 2 reversals in © cases; 1 reversal/1 affirmance in Lanham Act cases.  Overall 73% reversal of all cases incl. non-IP. Fed. Cir. may be special case b/c circuit splits aren’t an issue so they may be more likely to take cases they’re going to reverse.  Alice was affirmed, but it was of a 6-6 ruling that upheld the district court.  And when Lanham Act case was affirmed, the Court rejected the test used by the circuit court.

All 6 patent cases and both Lanham Act cases were unanimous; both © cases were 6-3.  Overall, Court was 66% unanimous including non-IP.  Voting alignments: Ginsburg-Sotomayor-Kagan were 100% in majority and together; other axes were Roberts-Kennedy-Breyer and Scalia-Thomas-Alito. SG participation: SG on winning side 7 times, not in Pom Wonderful.  Except in Alice, respondent received more questions in oral argument (or the same number); losing side always got more questions.

Rise in IP cases over last few years.  Bounces around over last 50 years, but in last decade there’s a relatively large increase from 2-3 year to high water mark of 10 and 6-7 a few years in a row.  Growth especially in patent cases.

Q: why?

Schwartz: Patent law is more in the news, possibly. Justices think the Fed. Cir. is getting it wrong.  Patent bar is more active in persuading Court that patents matter—cf. Kappos’s statement about the importance of IP to the economy.

Preview of the Upcoming Term: Cert. petitions granted & to watch, Supreme Court IP practice

Hana Financial, Inc. v. Hana Bank (Whether the court or the jury determines if use of an older mark may be tacked to a newer one.)

B&B Hardware, Inc. v. Hargis Industries, Inc. (Whether the Trademark Trial and Appeal Board's finding of a likelihood of confusion precludes respondent from relitigating that issue in infringement litigation, and, if not, what deference should the trial court give to the TTAB finding.)

Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. (Whether a district court's factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires—and as the panel explicitly did in this case—or only for clear error, as Federal Rule of Civil Procedure 52(a) requires.)

Moderator: Professor Christopher Schmidt, Director, Institute on the Supreme Court of the United States (ISCOTUS), IIT Chicago-Kent College of Law

Panelists: Thomas Saunders, Counsel to POM Wonderful, Partner, WilmerHale LLP: Hana, TM tacking.  Priority of use is very important. Shouldn’t sacrifice rights from small adjustments to TM over time.  Very strict doctrine—some changes lead to lost ability to tack rights to prior mark.  Two marks should be “legal equivalents” for tacking purposes.  Question: who makes the determination, the judge or the jury?  9th Cir. says circuits take different approaches to whether confusion is an issue of law or fact; we think the same sort of issues come into play w/tacking so we say it’s an issue of fact.  Watch for: (1) Unlike IP cases without a split, this has a classic split and is harder to predict.  (2) Because of the likely confusion overlap, there’s a question of whether the back door issue of this case is how likely confusion should be treated. The way the case is being argued tends to delink those standards.  Emphasis on the particular aspects of tacking that might distinguish it.  (RT: But the Court in IP cases often goes beyond what the parties argued, as occurred in Wal-Mart, for example.)

B&B v. Hargis: TTAB deference.  Prevailing party in TTAB says you’ve had your chance to litigate so we win likely confusion if you don’t stop use.  8th Circuit says no.  One argument: if you give deference to another circuit whose confusion test differs somewhat, why wouldn’t you defer to the TTAB even if its confusion test differs somewhat as well?  So again, SCt may take up the broader issue of what the likely confusion standard is—whether all the circuits’ tests are essentially directed to the same thing even if they differ in wording.

Professor Peter Menell, University of California Berkeley School of Law: Teva v. Sandoz: very important case about case management.  Markman déjà vu.  Fed. Cir. held to the idea that it was a question of law, though SCt called it “mongrel,” and treated it as subject to de novo review. This has been very controversial in the Fed. Cir.  Dct judges claim vehemently that this usurps their power/ability to put together a record and learn the science and tech. Resulted in very high reversal rate, at least initially; come down quite a bit, but not because the Fed. Cir. is now finding the dct gets the right answer but is rather losing interest.  Fed. Cir. is reviewing cases with mixed questions w/o much of a record, because dcts fear writing anything down.  A black box.  SCt will answer whether this is a Q of law.  Do dcts have a special role in finding factual Qs?  Dcts often don’t have special insight into what PHOSITA was like at the time of prosecution.

Strongest argument for affirmance: a lot of big tech companies don’t trust district judges and want second bite at apple.  He thinks that there should be a reversal but there’s a political element. Comes down to whether SCt thinks EDTex or Fed. Cir. is the more renegade jurisdiction.  He thinks: ultimate question is mixed question, and Fed. Cir. can always review that—if dct diverges from prosecution history, for example. But subsidiary questions like what a skilled worker would know are issues of fact. Issues are often not technical in a scientific sense but in a patent drafting sense, and the Fed. Cir. and SCt haven’t confronted that.  If reversed, dramatic effects on claim construction procedure: leeway to do evidentiary hearings and build a record.

Domenic Perella, Counsel to Highmark Inc.; Partner, Hogan Lovells LLP: Layman’s perspective on Teva.  Meaning of a document = generally a question of law.  If that’s not actually what goes on for people on the ground construing a patent, that’s important to educate the Court on, and he thought the topside briefs did a good job—what happened below was not legal interpretation but gathering of facts.

Mark Perry, Counsel to CLS Bank International, Partner, Gibson Dunn LLP: SCt has shown interest in nuts and bolts of federal procedure/practice, and all these cases are about proper allocation of authority of stakeholders in IP: jury/court, agency/court, dct/appellate court. Past Term: statute of limitations, discovery, tolling—Court has a renewed interest in these issues.

Jameson Jones, Counsel to Static Control Components, Partner, Bartlit Beck LLP: Ultimately Teva may not give a lot of guidance; it could say that the facts are very narrow—could be limited to “is molecular weight calculable in a number of different ways?”  How broadly you go with inferences from facts as legal ultimately will determine importance of case.

Menell: a lot of Markman cases are about ordinary terms interpreted in the context of the claim; scientists may read differently than we do, whereas they often agree on the meaning of exotic terms.  It may be true that statutory/contract interpretations rarely involve that kind of dispute over meaning of terms, but patents do.

Constantine Trela, Jr., Counsel to Alice Corp.; Partner, Sidley Austin LLP: Meaning of a term to a practitioner at the time is a legal issue b/c it’s the ultimate issue in the case.  If so, Fed. Cir.’s legal sails may not be much trimmed.

Menell: Ultimate Q is how you take what people think and nest it w/in the patent claim and specification. That’s where you get the room for Fed. Cir. to intervene.  Battle of experts is something dcts deal with all the time.

Q: why so many IP cases?

Menell: Court engaging in gap-filling exercises.  If you look at reform proposals from 10 years ago, the AIA only dealt with ½ the issues; the others were dealt with by the SCt or the Fed. Cir.  SCt had ignored patents but has now engaged; feel a responsibility to this area of the law. The beatings will continue until people behave/until the sense that the patent system is out of control dissipates.  Patent office has really cut back in the last year; there’s still enough mischief out there to see more patent cases.  Harder to see systematic source of cases for © and TM.

Perella: surges occur in many kinds of SCt cases—criminal, etc. Then the ripples dissipate.  Similar here.

Perry: disagrees. We’re watching a transformation of the economy into information-based, tech-based and the stakes are so high that an area of the law that used to be the province of subject matter experts in small regional firms is completely different now.  Multibillion-dollar cases being litigated w/huge downstream consequences. Congress has written into law a guarantee of litigation almost impossible to settle as part of Hatch-Waxman, so now it’s part of the business model.  Cellphones: at each other hammer and tongs.  So much economic incentive to sue.

Saunders: you get lots of reversals of the Fed. Cir. but with a vague standard, which puts authority back into the hands of the Fed. Cir. which has to interpret the standard in the average case.