Today was a busy day at the Supreme Court for IP cases.
First, the Court granted cert in Microsoft v. i4i, a patent case raising the question of whether an issued patent can be found invalid only upon a showing of invalidity by clear and convincing evidence. The Patent Act provides that "[a] patent shall be presumed valid," but fails to indicate what level of proof is necessary. The Court of Appeals for the Federal Circuit has regularly held that the threshold is the clear and convincing standard, rather than the more common preponderance of the evidence standard. The rationale for such a high level of proof for proving invalidity is based on the U.S. Patent & Trademark Office's expertise in technical matters and the courts' willingness to defer to the PTO's expertise. However, the courts have continued to grant such deference to the PTO even in situations where the PTO has failed to review the prior art that may render the invention unpatentable. In such a situation, the high level of deference is uncalled for. The Supreme Court raised, but did not address, this question in its 2007 decision, KSR v. Teleflex ("We need not reach the question whether the failure to disclose [prior art during prosecution] voids the presumption of validity given to issued patents, for claim 4 is obvious despite the presumption. We nevertheless think it appropriate to note that the rationale underlying the presumptionâthat the PTO, in its expertise, has approved the claimâseems much diminished here.").
Second, the Court denied cert in Harper v. Maverick Recording Co., a copyright case raising the issue of whether the "innocent infringer" defense to limit statutory damages is foreclosed by § 402(d) of the Copyright Act when the infringer downloads the music rather than acquires a traditional hard copy (e.g. compact disc). In Harper, the defendant was a 16-year-old who downloaded infringing music files and argued that because of her age she did not know her conduct was infringing and therefore she should be able to take advantage of the innocent infringer defense found in § 504(c)(2) of the Copyright Act. The Fifth Circuit Court of Appeals rejected her argument and held that § 402(d) negated her innocent infringer defense. Section 402(d) removes the innocent infringer defense when a notice of copyright (e.g. © 2010 Ryan Vacca) appears on the phonorecord to which the defendant had access. The Fifth Circuit believed that such notice was sufficiently given by putting notice on the phonorecords, even though the defendant only accessed the music by downloading it online.
Although the Supreme Court denied cert, Justice Alito wrote a dissent (at p. 26) arguing that the Court should have taken the case to determine whether § 402(d) applies to downloaded music. Justice Alito stressed that § 402(d) was written in a pre-digital music times and he was unsure if the Fifth Circuit's approach was a correct interpretation § 402(d) in a digital music world. Unfortunately, unless a circuit split arises on this issue, the Supreme Court is unlikely to address this important question.
The third IP case of the day was the Court denying cert in Tiffany v. eBay (p. 15). This trademark case involved whether eBay could be contributorily liable for trademark infringement based on the counterfeit goods sold by eBay users. The Second Circuit Court of Appeals had previously held that eBay was not liable for contributory infringement because of the steps it had taken to remove counterfeit postings. Although the Second Circuit's opinion was not a model of clarity providing guidance to others who host sites where trademark infringement may occur, the Supreme Court denying cert was not a big surprise. For more on the Second Circuit's decision, see Eric Goldman's blog post here. (H/T to Steve Glista for the story on Tiffany v. eBay)
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