Infringement and Defenses
Moderator: Prof. Michael B. Abramowicz, George Washington University Law School
William F. Lee, WilmerHale LLP: Literal infringement/each and every element of the claim—useful for laypeople to think about the claim. In many jurisdictions (Germany, Netherlands, Japan) around the world, focus is less specific terms of the claim and more the essence of the invention. Having seen both regimes, essence approach is more flexible but less predictable—depends on what adjudicator thinks the essence of the invention is. One thing juries do understand, whether they understand the claim in its entirety, they understand that each and every thing described in the claim needs to be there. Useful framework for trial, appellate, and beyond.
As we think about things like “should we have all elements or essence system,” any changes have to be viewed from global, not US property right, perspective. eBay: from his perspective, the biggest effect of eBay has been to move IP litigation outside the US; Germany, Netherlands, Japan, Korea have become more important b/c injunctions follow as night does day there, and they are not stayed pending appeal. 59 Apple/Samsung cases outside the US w/injunction regimes that were much more patentee-friendly.
Prof. Dmitry Karshtedt, George Washington University Law School: Interesting tensions in this area. At claim construction stage, judges may look at essence, even if not always. Biggest concern is symmetry b/t infringement and defenses. Claims drafted by patentee, but odd to say that SCt is concerned about claim limitations but in Mayo the Ct was dismissive of the draftsman’s art. Exhaustion: look at LG, court says it doesn’t have to be every element if it’s substantially embodied, it may exhaust. But that moves away from the primacy of the claim. Tensions worth noting; some can be explained by construing against the drafter, but the essence can affect claim construction, and that hasn’t been flagged sufficiently.
Abramowicz: Formalism v. purposivism is an issue across bodies of law. Attention to economic/policy issues. Should this be the same in IP versus outside? Same in © as in patent?
RT: Fromer has written about peripheral v. core claiming in © v. patent: derivative works right differs, and the court may be the first time you get an interpretation of the meaning v. more substantive examination for patent.
Malcolm L. Stewart, Deputy Solicitor General of the United States: Techniques of statutory construction. Tax code has industry-specific provisions, parsing fine details/drawing inferences from use of term in different provisions. You can’t do that w/infringement provisions b/c they’re not written at that level of detail, intended to cover all the industries that might be covered by patent and ©. But the concepts of infringement have been around for 100s of years, differing from modern regulatory statutes; there’s a wealth of material about patent & © infringement as traditionally understood. What drives courts is unavailability of one method of statutory construction, plus historical rich background, e.g. on inducement.
Abramowicz: Karshtedt has argued for more flexible liability for person A for person B’s acts.
Karshtedt: tort & criminal law concepts of aiding and abetting. One intuition is: if you commit a crime/tort w/physical instrument, we treat it as direct liability not inducement or secondary liability. Sometimes another human being can be such an instrument—a completely passive human user who doesn’t know about the tech and who is just executing steps in a method claim. That’s direct and not indirect liability; the real responsibility lies w/the manufacturer. Inducement was really encouraging/giving someone a weapon where the other person was central in committing the crime. The differences in the facts inform these questions. The courts have been very formal in direct/indirect boxes; the line is not so sharp. See this in Aereo too, where the issue is direct/indirect. See that in patent too; don’t have to be physically carrying out the act, and use in patent doesn’t have to be physical use—just take advantage of.
Lee: We’ve had a number of cases w/attempts to apply traditional causation concepts to 300-year-old patent concepts; people struggle w/proximate, but-for causation. If we changed, what would the standard be? How would that change the evidence that fact finders hear? If it was cause in fact v. inducement—the evidence might not change a bunch; would it have much effect? Not clear. Another point: 300-year-old principles, the history has been that they exist and modified, amended, over time but there in some form. The process has always been that development a new tech, or convergence of tech, are seen in light of old principles. As you think about changes, it’s a system that’s there to accommodate unimagined tech, and thus must be flexible.
Prof. Rebecca Tushnet, Georgetown University Law Center: Formalism as transaction and error-cost lowering: Type I and Type II errors, but lower systemic costs. Lack of formalism doesn’t work very well in TM—Google as potentially directly liable for KW advertising carried out by advertisers. But Google won all those cases at the end, as it should; the direct liability mirage just was very very costly for the system.
Infringement in context, not just global but remedies: statutory damages. That affects direct/indirect liability too b/c of lack of any knowledge/intent if we call an ISP directly liable it’s quickly in billions.
Designated skeptic about private law as a distinctive set of tools. [Whether you engaged in a public performance is not so much a matter of good faith in the ordinary sense. Consider regulatory analogies instead of private law analogies: Tax evasion/tax avoidance distinction that arguably mapped better onto Aereo than other analogies. Evasion is a wrong; avoidance is not. Likewise, creating a nonprofit archive or museum in order to take advantage of the various limitations copyright law provides for such archives: that’s not wrongful if you really create a nonprofit. Nor is structuring a business around fair use. Interesting to talk about corporate law analogy: the whole point of the corporate structure is to cut off individual liability, which is why people were really dubious about that enterprise at its historical beginning, but if you do it correctly we make it almost impossible to pierce the corporate veil.]
Stewart: Aereo: We know from precedent that a cable system was supposed to be covered by public performance, but not a seller of rooftop antennas. Wanted to know which this was more like. People had different answers; we had our brief about our reasons, but it came down to gut instinct. We filed the brief we did b/c gov’t decisionmakers felt it was more like cable, and the Court majority agreed. There was no complex statutory language you could turn to in order to make the choice b/t competing paradigms. Not fascinating as a legal puzzle, but as factual one.
The dissenters in Aereo: this might be prohibited by some other aspect of the © law, and if not probably should be, but if they found a loophole so be it, that’s for Congress to fix. Court majority’s reaction: it sure looked like a public performance in every respect. This wasn’t a loophole but in fact the very thing Congress sought to cover.
Abramowicz: we didn’t see patent analogies. To what extent should areas of IP look at one another? To what extent should IP look to contract law, tort law? Is there a special relationship b/t © and patent? Or is the first step to think about contract and tort b/c all new problems are old.
Stewart: depends on the type of problem you’re dealing with. Inducement liability: if Congress had codified it differently, that’d be good evidence of a difference, but without that borrowing seems plausible.
Lee: Where the statutes differ on their face, that’s easy; where they share language, that’s easy; the harder ones are specific provisions that might, if stretched, have some analogous meaning—harder to do and more dangerous.
Abramowicz: Akamai: no inducement w/o primary infringement.
Karshtedt: There are other ways to infringe besides physically doing things. Mental state isn’t even mentioned in inducement, though it’s correctly read in due to background common law. Just b/c patent act doesn’t mention respondeat superior doesn’t mean that respondeat superior doesn’t apply, etc. Inducement can mean many different things—e.g., aiding and abetting. We should impose higher mental states for making food for an infringer/providing a platform that can be used for an infringer v. making a device that can only be used to perform steps of a method claim. Akamai was unanimous, unusually, in Fed. Cir. even though vicarious liability may not be the best fit. Take common sense intuitions about holding Akamai liable b/c it’s providing a service that can only be used to infringe.
RT: you get some weird results that are path-dependent: TM and © vicarious liability differ, but why?
Stewart: Grokster considered two historical analogies: seller of equipment useful for almost nothing but infringement, and that = liability; or product suitable for both uses, but manufacturer specifically encouraged use for infringement, and that = liability. The Court really paid no attention to the fact that concepts of secondary liability have been codified in Patent Act as provision covering components specifically made for use in patented invention and as provision covering active inducement—striking that there was no attempt to get lessons from that.
Another thing—Court has a very strong recognition of the fact that a lot of tech can be used in infringing or noninfringing ways; in many instances vendor can confidently predict infringing and lawful use. Court leery of infringement liability in those circumstances.
RT: responses of litigants: Scale/ inability to control design through traditional law (e.g., creator of Bittorrent, which nobody thinks is liable for inducement, but nonetheless enables a lot of infringement); related move to admin/new forms of lawmaking/non-law making w/ICANN, copyright strike system, etc.; other attempts to police design or behavior on platforms; moves in Europe where they don’t care about the common law. Consider hydraulic effects of making rules in common law reasoning manner.
Lee: inducement claims in patent have proliferated v. 15 years ago. Why? Claims litigated today were drafted 15 years ago; struggling to address new inventions. But also particularly in the US, litigating an inducement claim, even w/additional burden of showing some level of culpability, is simpler and potentially more lucrative, b/c you’re going after one defendant but the acts of direct infringement are those of other parties w/a larger revenue base than the actor you focus on.
Jonathan Band: Scalia’s Aereo dissent spent a lot of time criticizing the majority for not identifying a volitional actor—the individual or Aereo. Majority was very cagey; assumed that Aereo was a volitional actor but didn’t use the word. That’s led some litigants to say that Aereo got rid of the volition requirement. Perfect 10 said volition still exists. Why was the SCt so averse to using the word, and is it significant?
Stewart: Can’t remember ever hearing volitional as a magic word that would help you to determine whether a particular entity was subject to infringement liability. We didn’t frame the issue that way, but not from conscious shying away; that just wasn’t the most natural way of describing what was going on. In the context of a cable operator, there are two volitional actors: the cable operator itself making certain choices about how machinery will work and what channels will be available, and then to get a program transmitted the person in the house has to adjust the channel; both are volitional. The initial determination about lack of liability for cable/Congressional override—not naturally explained as a disagreement about volition, but rather as what kind of volition counts. Same is true in Aereo: both are making volitional choices. Dispute b/t majority and dissent was whether Aereo did enough to make it the public performer.
RT: my realist answer is Dropbox. If you don’t say volition, you don’t have to explain why Dropbox isn’t exactly the same as Aereo.
Karshtedt: Sleepwalking as question of volition, or being dropped off drunk in a public square and then getting arrested for public intoxication; to say that Aereo didn’t engage in volitional conduct is weird. The question is whether your conduct is sufficient for direct or indirect liability and that’s a judgment call. It’s volitional to make a product, but is that enough?
Lee: if you’re a patent owner today, filing in Germany will get you a decision in 9 months; filing in Germany, Netherlands, and ITC is the strategically optimal choice. It’s a commercial question b/c these tend to be big markets; you have to enforce your rights in each market.
Many companies move all their products through the Netherlands for tax reasons; that is what makes the Netherlands a key jurisdiction. German courts think they’ve done a good thing by attracting IP litigation. In China, now seeing a switch in enforcement as well.
Q: is state of mind evidence for inducement available? [May differ as between © and patent, given DMCA for © and lack of registration requirement.]
Lee: clearly a heightened standard, useful at JMOL and on appeal; courts looking at jury verdict are thus more willing to look at the evidence.
Q: does claiming actually provide more certainty or just supposed certainty? The original idea of peripheral claiming would be requiring all elements + that the accused device/etc. do what the invention does; Fed. Cir. has abandoned the second part as the disfavored reverse doctrine of equivalents. Would that be better?
Lee: compared to other jurisdictions, our juries and judges, even at the Fed. Cir., are just bright people hearing about the claims. They get inventions in two ways: claims in literalistic fashion where judge tells them what the claims mean, but they also always get the narrative of how the invention was made, the problem to be solved, how the inventor did it, as well as the narrative of how the infringing product was developed. Element by element infringement analysis is more predictable/precise than other systems, but it’s important to remember that juries/judges get all that in a narrative context communicating much of the essence of the invention as well.
Karshtedt: so is Germany central claiming?
Lee: (1) yes; (2) litigating to a court appointed expert selected by the judge; (3) most important thing about Germany is that it’s a little bit East Texas/Delaware—on the margin, it’s better to be the patentee than not.
Q: Avoidance/evasion for patent inducement: can there be inducement when you believe you’re engaging in legal conduct b/c the patent is invalid? Opportunism goes to intent. But intent to do what?
Stewart: another area in which language of the statute didn’t solve the problem. Court could have drawn the line in various places. Could mean “actively/deliberately brings about conduct that turns out to be infringing” v. “intended to infringe/knew about the patent.” Court rejected the former. We unsuccessfully advocated to draw the line b/t knowledge of the patent v. knowledge of infringement; Court requires knowledge that the conduct itself was infringing. Dissent’s argument: if you go this far, you should require knowledge that what you’re inducing is illegal, and if you think the patent is invalid you don’t know it’s illegal. Court thought that tilted too far b/c illicit intent is too difficult to prove; court also referenced general principal that ignorance of the law is no defense.
Karshtedt: Some problems in PSM debate may have come from Fed. Cir.’s narrowing of experimental use defense. Still, damages would be pretty low in such cases; nonetheless it increases pressure to invalidate research based patents. Maybe revisit that.