Justia Government & Administrative Law Opinion Summaries

Every five years, the Copyright Royalty Board (the “Board”) issues a statutory license that establishes the terms and rates under which certain entities that stream copyrighted songs over the internet make royalty payments to the songs’ copyright owners. The “webcasters” that are subject to the license are “noninteractive” — i.e., they stream music without letting their listeners choose songs on demand. This appeal challenges on various grounds the Board’s most recent noninteractive webcaster license Final Determination, covering calendar years 2021 through 2025.   The DC Circuit sustained Board’s Final Determination in all respects. The court held that the Board’s decision to set a royalty rate that was slightly below the Willig model’s flawed opportunity-cost measure is neither here nor there. And thus, the court explained, it has no occasion to decide, as SoundExchange urges, whether it would, as a matter of law, violate the willing buyer/willing seller standard for the Board to set a royalty rate below some definitive measure of opportunity cost. View "National Religious Broadcasters Noncommercial Music License Committee v. CRB" on Justia Law

Plaintiffs, Apple and four other companies, have repeatedly been sued for patent infringement and thereafter petitioned the Patent and Trademark Office (PTO) to institute inter partes reviews (IPRs), under 35 U.S.C. 311–319, with unpatentability challenges to patent claims that were asserted against them in court. They sued the PTO under the Administrative Procedure Act (APA), 5 U.S.C. 701– 706, challenging instructions issued to the Patent Trial and Appeal Board concerning how to exercise, under delegation by the Director, the Director’s discretion whether to institute a requested IPR. Plaintiffs assert that the instructions are likely to produce too many denials.The district court dismissed the APA action, finding that the Director’s instructions were made unreviewable by 35 U.S.C. 314(d): “The determination by the Director whether to institute an inter partes review under [section 314] shall be final and nonappealable.” The Federal Circuit affirmed the unreviewability dismissal of plaintiffs’ challenges to the instructions as being contrary to the statute and arbitrary and capricious. No constitutional challenges are presented. The court reversed the unreviewability dismissal of the challenge to the instructions as having been improperly issued because they had to be, but were not, promulgated through notice-and-comment rulemaking under 5 U.S.C. 553. Apple had standing to present that challenge. View "Apple Inc. v. Vidal" on Justia Law

Centripetal filed an infringement complaint against PAN, which then filed an inter partes review (IPR) petition for one patent and a post-grant review (PGR) petition for another. While the petitions were pending, the Patent and Trademark Office (USPTO) updated its interim guidance, noting that the agency “does not accept requests for Director review of decisions on institution.” The Patent Trial and Appeal Board denied institution. PAN filed Requests for Director Rehearing. The agency responded that USPTO "does not accept requests for Director review of decisions on institution ... parties may only request Director review of final written decisions" issued in IPR and PGR and that PAN’s “rehearing requests will not revert to the Board panel and there will be no further review of the Board’s decision.”PAN sought mandamus relief. A newly-appointed Director updated the interim guidance to state that “the Office does not accept requests for Director review of institution decisions” but that “the Director has always retained and continues to retain the authority to review such decisions sua sponte.” The Director has since exercised that authority. PAN argues that the Director’s current policy was contrary to the Appointments Clause, as interpreted by the Supreme Court in “Arthrex,” (2021). The Federal Circuit denied the petition. That the Appointments Clause requires that a Presidentially-appointed, Senate-confirmed officer have review authority does not mean that a principal officer, once bestowed with such authority, cannot delegate it to other agency officers. View "In Re Palo Alto Networks, Inc." on Justia Law

Arthrex sued S&N, alleging infringement. S&N sought inter partes review (IPR). The Patent Trial and Appeal Board found that prior art anticipated several claims. Arthrex challenged the decision on the merits and argued that the Board lacked constitutional authority to issue the final decision because its Administrative Patent Judges (APJs) were not nominated by the President and confirmed by the Senate, as the Appointments Clause requires for principal officers.The Federal Circuit severed the statutory limitations on the removal of APJs and remanded for rehearing by a new panel. The Supreme Court vacated and remanded, finding that the appropriate remedy was to exempt the Director from 35 U.S.C. 6(c), which precludes anyone but the Board from granting rehearing of a Board decision, and remand to the Acting Director for a decision on whether to rehear the case. The offices of the Director and Deputy Director were vacant. Agency Organization Order 45-1 states, “If both the [Director] and the Deputy [Director] positions are vacant, the Commissioner for Patents . . . will perform the non-exclusive functions and duties of the [Director].” The Commissioner denied rehearing and ordered that the Board’s decision “is the final decision of the agency.”The Federal Circuit affirmed, rejecting arguments that the Commissioner violated the Appointments Clause, the Federal Vacancies Reform Act, 5 U.S.C. 3345, or the Constitution’s separation of powers in denying Arthrex’s rehearing request. The court agreed that prior art anticipated the challenged claims. View "Smith & Nephew, Inc. v. Arthrex, Inc." on Justia Law

Administrative Patent Judges (APJs) conduct adversarial proceedings for challenging the validity of an existing patent before the Patent Trial and Appeal Board (PTAB), 35 U.S.C. 6(a), (c). The Secretary of Commerce appoints PTAB members, including APJs, except the Director, who is nominated by the President and confirmed by the Senate. APJs concluded that Arthrex’s patent was invalid. The Federal Circuit concluded that the APJs were principal officers who must be appointed by the President with the advice and consent of the Senate; their appointment was unconstitutional. To remedy this violation, the court invalidated the APJs’ tenure protections, making them removable at will by the Secretary.The Supreme Court vacated. The unreviewable authority wielded by APJs during patent review is incompatible with their appointment by the Secretary to an inferior office. Inferior officers must be “directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate.” While the Director has administrative oversight, neither he nor any other superior executive officer can directly review APJ decisions. A decision by the APJs under his charge compels the Director to “issue and publish a certificate” canceling or confirming patent claims he previously allowed. Given the insulation of PTAB decisions from executive review, APJs exercise power that conflicts with the Appointments Clause’s purpose “to preserve political accountability.”Four justices concluded that section 6(c) cannot constitutionally be enforced to prevent the Director from reviewing final APJ decisions. The Director may review final PTAB decisions and may issue decisions on behalf of the Board. Section 6(c) otherwise remains operative. Because the source of the constitutional violation is the restraint on the Director’s review authority not the appointment of APJs, Arthrex is not entitled to a hearing before a new panel. View "United States v. Arthrex, Inc." on Justia Law

New Vision sued SG in the federal district court in Nevada. SG then filed Patent Trial and Appeal Board petitions. The Board declined to respect the forum selection agreement in the parties’ license agreement, which referred to “exclusive” jurisdiction in the appropriate federal or state court in the state of Nevada, and proceeded to a final decision, finding the claims at issue as well as proposed substitute claims, patent-ineligible under 35 U.S.C. 101.The Federal Circuit vacated and remanded the Board’s decisions for consideration of the forum selection clause in light of its 2019 “Arthrex” decision. Because Arthrex issued after the Board’s final-written decisions and after New Vision sought Board rehearing, New Vision has not waived its Arthrex challenge by raising it for the first time in its opening brief. The Board’s rejection of the parties’ choice of forum is subject to judicial review; section 324(e) does not bar review of Board decisions “separate . . . to the in[stitu]tion decision.” View "New Vision Gaming & Development, Inc. v. SG Gaming, Inc." on Justia Law

In 2013, the Naval Facilities Engineering Command installed copyrighted graphics-rendering software created by German company Bitmanagement onto all computers in the Navy-Marine Corps Intranet. No express contract or license agreement authorized the Navy’s actions. In 2016, Bitmanagement filed suit, alleging copyright infringement, 28 U.S.C. 1498(b). The Claims Court found that, while Bitmanagement had established a prima facie case of copyright infringement, the Navy was not liable because it was authorized to make copies by an implied license, arising from the Navy’s purchase of individual licenses to test the software and various agreements between the Navy and the vendor.The Federal Circuit vacated and remanded for the calculation of damages. The Claims Court ended its analysis prematurely by failing to consider whether the Navy complied with the terms of the implied license, which can readily be understood from the parties’ entire course of dealings. The implied license was conditioned on the Navy using a license-tracking software, Flexera, to “FlexWrap” the program and monitor the number of simultaneous users. The Navy failed to effectively FlexWrap the copies it made; Flexera tracking did not occur as contemplated by the implied license. That failure to comply creates liability for infringement. View "Bitmanagement Software GMBH v. United States" on Justia Law

Crocs's Design Patent 789, titled “Footwear,” has a single claim for the “ornamental design for footwear.” Crocs sued Dawgs for infringement, Dawgs sought inter partes reexamination (IPE) under 35 U.S.C. 311. The district court stayed its proceedings. The examiner rejected the claim as anticipated, 35 U.S.C. 102(b). While an appeal to the Patent Trial and Appeal Board was pending, Dawgs filed for Chapter 11 bankruptcy. The bankruptcy court approved the sale of all of its assets to a new entity, Holdings, “not free and clear of any Claims Crocs . . . may hold for patent infringement occurring post-Closing Date by any person ... or any defenses Crocs may have in respect of any litigation claims that are sold.” The bankruptcy court authorized the distribution of the net sale proceeds and dismissed Dawgs’s bankruptcy case. Holdings assigned all rights, including explicitly the claims asserted by Dawgs in the infringement action and the IPE, to Mojave. Dawgs dissolved but continued to exist for limited purposes, including “prosecuting and defending suits" and "claims of any kind.”The Board declined to change the real-party-in-interest from the IPE requestor to Mojave, then reversed the examiner’s rejection of the patent’s claim. The Federal Circuit granted the motion to substitute. The assignments indicate that Mojave is Dawgs's successor-in-interest; as such, Mojave has standing. If the Board precludes substitution on the basis of a transfer in interest because of a late filing, it would defeat the important interest in having the proper party before the Board. View "Mojave Desert Holdings, LLC v. Crocs, Inc." on Justia Law

SFM owns the federal registration for SPROUTS for use in connection with grocery store services. The SPROUTS mark was first used in commerce not later than April 2002. Corcamore owns a federal trademark registration for SPROUT for use in connection with vending machine services, claiming a first use date of May 2008. Corcamore’s SPROUT mark is used on a cashless payment card, an associated customer loyalty program, and a website for customers.SFM filed a petition with the Trademark Trial and Appeal Board to cancel Corcamore’s registration. Corcamore argued that SFM lacked standing. The Board determined that the Supreme Court’s Lexmark decision was not applicable; Lexmark was limited to civil actions for false advertising (15 U.S.C. 1125(a)) and does not extend to cancellation of registered marks (section 1064). The court concluded that SFM had standing because it sufficiently alleged a real interest in the proceeding and a reasonable belief of damage. Corcamore informed SFM’s counsel that it would bring “procedural maneuvers,” then proceeded to file motions in violation of Board orders, to refuse to cooperate with discovery, and to disregard Board-imposed sanctions.The Board granted SFM default judgment, citing 37 C.F.R. 2.120(h) and its inherent authority to control its docket. The Board concluded that a lesser sanction would be inappropriate because Corcamore had already violated sanctions and had engaged in willful, bad-faith tactics, consistent with its “procedural maneuvers” letter, taxing Board resources. The Federal Circuit affirmed. SFM was entitled to maintain a petition for cancellation of trademark registrations. The Board did not abuse its discretion in imposing default judgment. View "Corcamore, LLC v. SFM, LLC" on Justia Law

The Navy began a program to design and build littoral combat ships (LCS) and issued a request for proposals. During the initial phase of the LCS procurement, FastShip met with and discussed a potential hull design with government contractors subject to non-disclosure and confidentiality agreements. FastShip was not awarded a contract. FastShip filed an unsuccessful administrative claim, alleging patent infringement. The Claims Court found that the FastShip patents were valid and directly infringed by the government. The Federal Circuit affirmed.The Claims Court awarded FastShip attorney’s fees and expenses ($6,178,288.29); 28 U.S.C. 1498(a), which provides for a fee award to smaller entities that have prevailed on infringement claims, unless the government can show that its position was “substantially justified.” The court concluded that the government’s pre-litigation conduct and litigation positions were not “as a whole” substantially justified. It unreasonable for a government contractor to gather information from FastShip but not to include it as part of the team that was awarded the contract and the Navy took an exceedingly long time to act on FastShip’s administrative claim and did not provide sufficient analysis in denying the claim. The court found the government’s litigation positions unreasonable, including its arguments with respect to one document and its reliance on the testimony of its expert to prove obviousness despite his “extraordinary skill.” The Federal Circuit vacated. Reliance on this pre-litigation conduct in the fee analysis was an error. View "FastShip, LLC v. United States" on Justia Law