In VirtualAgility Inc. v. Salesforce.com, Inc., No. 2014-1232 (July 10, 2014), the Federal Circuit issued its first opinion directed to the issue of when it is appropriate to grant a stay of a district court patent infringement lawsuit while a covered business method review proceeding (“CBM”) occurs. The case will have important ramifications for future cases in which motions to stay are filed for both CBMs and inter partes reviews (“IPRs”), including setting forth some principles that should be followed by attorneys and district courts in the analysis. We set forth some of those principles up front and discuss how they were specifically addressed by the Federal Circuit below:
Chief Judge Leonard P. Stark of the District of Delaware recently issued revised procedures for managing patent cases that are assigned to him. These revised procedures affect nearly every aspect of a case including scheduling, motions, discovery, claim construction, and trial. Indeed, many of these issues must now be addressed very early in the case. Practitioners who practice in the District of Delaware should familiarize themselves with these new procedures and plan their cases accordingly.
With the Supreme Court’s Aereo decision finally out, the digital industry is struggling with its impact, if any, on various products and services, particularly with regard to cloud computing. However, the Supreme Court narrowly tailored the Aereo decision to services that closely resemble cable TV. Thus, suggestions that “the sky is falling” for cloud computing or other services that might re-transmit copyrighted content may be premature.
In Limelight Networks, Inc. v. Akamai Tech., Inc., the Supreme Court unanimously held that there can be no liability for induced infringement of a patented method where the steps of the method are carried out by separate actors. Yet, only one week later, the district court in Digital Reg of Tex., LLC v. Adobe Sys., 2014 U.S. Dist. LEXIS 79854 (N.D. Cal. June 10, 2014) denied summary judgment of non-infringement where the plaintiff had conceded that the acts of infringement were divided among multiple parties. Why? Because although the Limelight decision precludes liability for induced infringement under 35 U.S.C. §271(b) where no single entity is liable for direct infringement, the Supreme Court left untouched the existing law that liability for direct infringement under §271(a) can be found if the defendant exercises “control or direction” over the other actors. The Federal Circuit has explained that such control or direction can exist where a third party is “contractually obligated” to the accused infringer to perform the infringing acts. Indeed, the court in Digital Reg held that there was a genuine issue of material fact as to whether the terms of the defendants’ license agreements with their customers gave rise to liability under a control or direction theory. Thus, in the wake of Limelight’s rejection of §271(b) claims in divided infringement cases, it will be all the more important for patent practitioners (and contract drafters) to consider whether the terms and conditions of business agreements place the contracting party in a position of controlling the performance of other entities.
On June 19, 2014, the Supreme Court issued its opinion in Alice Corp. v. CLS Bank Int’l, No. 13-298, which was previously discussed here. In a unanimous opinion by Justice Thomas, the Court held, consistent with its precedent, that an abstract idea implemented on a generic computer is patent ineligible subject matter.
The Court’s decision affirms a divided en banc Federal Circuit ruling that found patent ineligible the method, medium, and system claims of Alice Corp.’s patent. Relying principally on its Mayo and Bilskidecisions, the Court concluded:
the claims at issue amount to “nothing significantly more” than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer… Under our precedents, that is not “enough” to transform an abstract idea into a patent-eligible invention.
At the outset, the Court reiterated its two-part test for distinguishing between patents that attempt to claim abstract concepts and those that claim the patent eligible application of an abstract concept: (1) “whether the claims at issue are directed to one of those patent-ineligible concepts”; and (2) if so, “what else is there in the claims”? Continue reading this entry