What cloud computing services need to know about the Aereo decision

In June. the United States Supreme Court issued its much-anticipated decision in American Broadcasting Cos. v. Aereo, Inc. The decision effectively shut down the Aereo service, at least temporarily as it explores fundamental changes to its business model to permit it to continue distributing content while complying with the Court’s decision.

The Aereo service in question offered subscribers the ability to watch television broadcasts over the Internet, streamed in substantially real time as the programs were being distributed over-the-air by the original broadcasters. Aereo implemented this service via a network of antennas. When a subscriber selected a program, Aereo would select an antenna, deliver the program to the subscriber via the antenna, and dedicate the antenna to the subscriber until the program was complete.

The question that the Court considered was whether Aereo’s retransmission violated U.S. copyright law.  The Court focused on the section of the Copyright Act that gives a copyright owner the exclusive right to “perform the copyrighted work publicly.” The Copyright Act defines that exclusive right to include the right to “transmit or otherwise communicate a performance . . . of the [copyrighted] work . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times.”

Aereo argued that it did not transmit any performances “publicly” but rather only enabled the transmission of content privately, to a single subscriber at a time. However, the Court found that Aereo’s overall system could transmit a program to many subscribers, and that its activities constituted a “public” performance. In particular, the Court stated:  “we conclude that when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of discrete communications it makes.”

The Court’s conclusion, if taken out of context, could cause cloud storage service providers to be concerned. Services that allow users to store music, video and other content online for on-demand delivery may indeed wonder whether their services permit “public performance” when a user accesses stored online content.

However, the Court took care to say that its ruling was limited to an interpretation of the Copyright Act’s Transmit Clause, which the Court said was intended to apply “to cable companies and their equivalents, [and] did not intend to discourage or to control the emergence or use of different kinds of technologies.” The Court noted that the term “public” in this context “does not extend to those who act as owners or possessors of the relevant product. And we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content.”

Thus, not only did the Court state that it was not addressing remote storage systems, it also hinted that it would not consider distribution of remotely stored content in a cloud storage service to be a violation of copyright law because those distributions were not to the “public.”

So, at least for the present, remote storage services can take comfort in lower court decisions such as Cartoon Network LP v. CSC Holdings (2nd Cir. 2008), which held that remote DVRs may operate without violating copyright law.

 

 

Upcoming 3 Rivers Venture Fair provides opportunity to connect emerging companies with investors

This year’s 3 Rivers Venture Fair is scheduled for October 7 and 8, 2014 at PNC Invite_LogoPark in Pittsburgh, PA.  The 3RVF connects investors, entrepreneurs, business leaders and service providers who are interested in discovering innovation breakthroughs, ground-floor investment opportunities and trends in industries ranging from life sciences, to energy, to manufacturing, to electronics and software, and more.

The 3RVF is accepting nominations for presenting companies, but the available slots are filling fast.  Companies seeking venture investment should click here to apply to be considered for a presentation as a featured company.  Or, if you know a rising company who may benefit from the exposure and potential investment, nominate that company via the attached link.  Presenting companies will receive free admission to the event, and will participate in a Presenters’ Bootcamp to help sharpen presentations prior to the main event.

Although the application deadline is August 13, several presentation slots have already been filled.  And when the slots are gone, the application process will be closed.  So, apply now to be considered.  See you at the 3RVF!

Alice’s Adventures: how has USPTO examination changed in the first few weeks after Alice v. CLS Bank?

In the first few weeks after the Supreme Court published its opinion in Alice Corporation Pty Ltd. v. CLS Bank Int’l, the USPTO appears to be struggling with exactly how the Court’s decision should affect USPTO examination procedures. However, that struggle may soon be resolved as additional guidance from the USPTO and the courts shed more light on how Alice will be implemented.

A week after the Court issued its decision, the USPTO published a set of Preliminary Examination Instructions in view of the Supreme Court Decision in Alice.  The Preliminary Examination Instructions explained that Alice made clear that (1) the USPTO should consistently use the same subject matter eligibility analysis for evaluating abstract ideas as it uses for laws of nature, and (2) the USPTO should treat method claims and apparatus claims the same for the purpose of eligibility.

With those two exceptions, the Preliminary Examination Instructions state that “the basic inquiries to determine subject matter eligibility remain the same.” In particular, Examiners should ask (1) does the claim involve an abstract idea, and (2) if so, does the claim include enough additional elements to ensure that the claim amounts to significantly more than the abstract idea itself?

However, in the weeks since the decision, USPTO Office Actions in pending applications have been anything but consistent. In some cases, the USPTO has Continue reading

USPTO seeks comment on “virtual marking” of patented products

When a company sells a product for which it also holds a patent, it is common practice for the company to mark the product with the patent number.  Patent marking serves to place the public on notice that the product is patented  — thus potentially deterring infringers.

More importantly, marking a product helps to maximize the damages available in an infringement action.  Section 287(a) of the Patent Act states that a patent owner who fails to mark its products can only collect damages for infringement if the infringer was notified of the infringement and continued to infringe anyway.

Complying with patent marking obligations can be difficult, especially for products that are covered by multiple patents. The ubiquity of e-commerce, smartphones, and our “always wired” society have led many to consider whether the patent marking requirement is antiquated. Congress did so in 2011, when the America Invents Act (AIA) allowed patent holders to mark a product with a website address instead of a patent number, if the website contains a list of patents covering the product.

The AIA also directed the USPTO to provide Congress with a report on the effectiveness of virtual marking by September 16, 2014.

In order to help it prepare that report, the USPTO seeks public input. Specifically, the USPTO is inviting public comment on the following aspects of virtual marking:

  • whether virtual marking is effective for giving public notice;
  • whether virtual marking has limited or improved the public’s ability to access patent information;
  • whether and what legal issues arise from virtual marking; and
  • whether virtual marking has any deficiencies.

The USPTO is accepting comments via email at virtualmarking@uspto.gov, and via other methods described in the USPTO’s full notice.  Act fast:  comments must be submitted by July 16, 2014.

Supreme Court delivers blow to “abstract” software patents, while stating that software still can be patent-eligible

In an opinion long-awaited by the software community, the U.S. Supreme Court has found a computer-implemented method and system for exchanging financial obligations ineligible for patenting.

In Alice Corporation Pty Ltd. v. CLS Bank Int’l, the Court considered the question of whether the claims of four patents covered patent-eligible subject matter. In its decision, the Court found all of the patents’ claims were “drawn to the abstract idea of intermediated settlement,” which is “a fundamental economic practice long prevalent in our system of commerce.” While acknowledging that “at some level, all inventions … embody, use, rest upon, or apply … abstract ideas,” the Court found this particular set of inventions to be patent-ineligible.

The Court declined to provide any general guidance on what other inventions might be considered to be “abstract ideas.” Instead, the Court focused on the particular patent claims in front of it and stated:

we need not labor to delimit the precise contours of the “abstract ideas” category in this case.  It is enough to recognize that there is no meaningful distinction between the concept of risk hedging in Bilski [v Kappos] and the concept of intermediated settlement at issue here.

In contrast to the highly fractured Federal Circuit decision, the Supreme Court’s decision was unanimous. However, by declining to provide any general guidance, the Court’s long-awaited opinion does not fully resolve the confusion about precisely when software is and is not patent-eligible.

However, the Court did provide some insight into its thought process by way of example. The Court discussed prior decisions involving: (1) methods of measuring metabolites in the bloodstream (Mayo v. Prometheus); (2) using a mathematical formula to adjust alarm limits for certain operating conditions in a catalytic conversion process (Parker v. Flook); and (3) a computer-implemented process for curing rubber (Diamond v. Diehr). Noting that the first two inventions were patent-ineligible while the third invention qualified for patenting, the Court explained that the rubber curing invention “improved an existing technological process” and was designed to “solve a technological problem.”

The Court explained that “[t]hese cases demonstrate that the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.”  Applying those cases to a representative claim (claim 33 of U.S. Patent 5,970,479), the Court found discrete processing steps such as limitations requiring creating shadow records, using a computer to adjust and maintain those shadow records, and reconciling shadow records and corresponding exchange institution accounts through end-of-day transactions to be “purely conventional” steps in an intermediated settlement.  Adding a generic computer to those steps did not make them patent-eligible.

The Court’s decision suggests that software inventions that are tied to particular technologies (such as manufacturing processes) may fare better than those that are tied to non-technological methods (such financial transactions). However, time and future court interpretations of this decision will be required to determine the decision’s precise impact.

By focusing its analysis on a specific claim set rather than providing any general guidance, the Court seemed to be mindful of Federal Circuit Judge Moore’s warning that the result could mean “the death of hundreds of thousands of patents.” Instead, the Court specifically stated:  “There is no dispute that many computer-implemented claims are formally addressed to patent-eligible subject matter.”

So, while the Court’s decision places number of software patents into question, it does not quite deliver a knockout punch to software patents in general.

IAM Patent 1000 Released – 2014 Edition

Intellectual Asset Management (IAM) magazine has released the IAM Patent 1000:  The World’s Leading Patent  Practitioners 2014.  Each year, IAM surveys its readers and asks them to recommend patent licensing and prosecution attorneys for inclusion in the guide.  According to IAM:

[The IAM Patent 1000 is] a unique guide that identifies the top patent practitioners in key jurisdictions around the globe. . . .
The IAM Patent 1000 has fast become the definitive directory exclusively dedicated to identifying the world’s leading patent services providers. The extensive research process for this guide was conducted over several months by a team of full-time analysts, and involved in excess of 1,500 interviews with patent specialists across the globe.

The IAM Patent 1000 is available on the IAM website to registered users via this link.   I am honored that IAM named me to its lists for both patent licensing and patent prosecution for the fourth consecutive year.  In addition, I am pleased to note that my law firm, Fox Rothschild, is named to the guide’s honor roll for patent prosecution.

Joint ownership of patents can create enforcement risks; here’s how to avoid them

When two or more research institutions, corporations or other entities collaborate on an invention, it is common for them to agree that any patents resulting from the collaboration will be jointly owned. However, a jointly owned patent can be nothing more than a piece of paper if no party has a right to use the patent to stop infringement. The collaboration agreement, patent assignment documents or both must be carefully drafted to ensure that enforcement rights are protected.

This risk was recently highlighted in STC.UNM v. Intel Corp., Fed. Cir., No. 2013-1241, 6/6/14. In the case, STC.UNM attempted to sue Intel for infringement of a patent. The patent was a continuation-in-part of an earlier patent application that was jointly owned by the University of New Mexico (UNM) and Sandia Corp. Because of procedural matters involving a terminal disclaimer, UNM and Sandia also were co-owners of the patent in suit. However, Sandia refused to join the lawsuit, and there was no agreement in place between UNM and Sandia that required Sandia to do so.

The district court dismissed the case for a lack of standing, and the Federal Circuit affirmed.  As the Federal Circuit stated:

“as a matter of substantive patent law, all co-owners must ordinarily consent to join as plaintiffs in an infringement suit”

The reasoning for this ruling was that if only one co-owner sues, it effectively deprives the other co-owner of the right to sue and collect damages for infringement.

Both courts also refused to involuntarily join Sandia to the case as a necessary party.

The case highlights risks that can occur if joint owners of a patent don’t carefully specify enforcement rights — and obligations of both parties — in the relevant agreements.  When collaboration will result in invention, it’s important that the collaboration agreement, assignment agreement, or both specify who has enforcement rights. Even more important, it’s critical that the agreement require the non-enforcing co-owners to participate in the enforcement action when and if needed.