Friday, August 02, 2013

copying articles for patent prosecution is fair use

American Institute of Physics v. Schwegman Lundberg & Woessner, P.A., No. 12-528 (D. Minn. July 30, 2013) (magistrate report and recommendation)

AIP (aka the scientific journal publishers) sued Schwegman for using various published articles in its patent prosecution practice. The magistrate concluded that this was fair use as a matter of law and recommended a grant of summary judgment in Schwegman’s favor. 

Schwegman obtained and copied 18 of the publishers’ journal articles from a USPTO database and other sources; the publishers alleged that obtaining these copies and making internal copies infringed.  Initially, the publishers alleged that submitting copies to the USPTO in conjunction with patent applications was infringing, but eventually amended the complaint so that they weren’t alleging infringement from making copies required by PTO rules and regulations, transmitting such copies to the PTO, or making an archival copy for an internal file documenting the transmission. Instead, they limited their claims to Schwegman’s downloading, storing, making internal copies of, and distributing the Articles by email. The publishers didn’t concede that submitting copies to the PTO wasn’t fair; they just didn’t challenge it.

However, the magistrate continued, the allegedly infringing uses remained intertwined with Schwegman’s patent prosecution practice, making US and foreign patent requirements relevant.  The PTO has to evaluate the teachings of all information material to patentability, and therefore imposes a duty of candor and good faith in dealing with the PTO.  This includes a duty to disclose “all information known to [an individual associated with the prosecution of a patent application] to be material to patentability,” whether it helps or harms the application. To comply with this duty, the PTO encourages submission of an Information Disclosure Statement, which must include “a legible copy of . . . [e]ach publication or that portion which caused it to be listed [and] [a]ll other information or that portion which caused it to be listed[.]”  Generally, if an article is merely cited instead of submitted in full, the PTO won’t consider it.  Other than filing a disclosure statement, the record didn’t show any other means by which applicants could or do comply with the disclosure requirement. Schwegman provided the articles at issue to the PTO to comply with the duty of disclosure; it also used one of the articles in helping a client apply for Japanese and European patents.  The rules for those jurisdictions are not identical, but the EPO imposes a limited duty of disclosure of prior art, and the JPO also imposes an obligation to provide references to prior art.  Both offices cited the article at issue in various proceedings; a Schwegman attorney later accessed an electronic copy of the article in Schwegman’s electronic document management system in response to the JPO office action and printed out a copy to review.

The magistrate turned to the expected audience for the articles, which the publishers claimed included inventors and patent attorneys.  The publishers have, through the CCC, issued licenses to nine law firms for internal reproduction of articles. Schwegman’s evidence was that the publishers’ journals served as a platform “through which original research findings are submitted by authors, peer-reviewed by experts and then transmitted to the intended reader audience of scholars and practitioners.” Authors want to publish in reputable journals to increase their prestige, and readers searching for high-quality research are essential to the journal’s reputation, creating a two-sided market in which “‘authors benefit from greater impact and citations and thus prefer a journal that has more readers, [and] readers benefit from content and thus prefer journals with more articles.’” The publishers attempt to capitalize on this by highlighting their journals’ rankings within their specialties.  “According to Schwegman’s expert witness, economist Dr. Jean-Pierre Dubé, attorneys reviewing scholarly articles to decide whether those articles must be submitted as prior art to a patent office read the articles for a different purpose and fall outside the target audience for such material.”  However, Dubé acknowledged that if a lawyer who was willing to pay for a copy of an article to review it didn’t pay, that would affect the potential market for copies.

Schwegman obtained the articles in various ways, mostly by downloading them from a PTO website, PAIR (Patent Application Information Retrieval system).  Public PAIR provides interested people access to issued patents and published patent applications. Private PAIR “provides secure real-time access to pending application status and history” for registered patent attorneys, independent inventors, and individuals with “customer number[s]” or a certificate.  For some of the articles retrieved from Private PAIR, Schwegman inherited patent application files from another law firm that cited the relevant articles, but the inherited files did not contain copies of the articles, so Schwegman downloaded them and stored them in its own electronic file management system.  The other articles came from a variety of sources, including the University of Pennsylvania website and an attachment to an email to a Schwegman lawyer from an inventor in whose patent application the relevant was cited as prior art.  One article was downloaded subject to a license from one of the publishers.  All the articles were eventually cited in US patent applications.  

The publishers alleged that Schwegman infringed by (1) obtaining copies through emails, from the internet, and otherwise; (2) storing copies on the firm’s electronic file management system; (3) viewing them; (4) emailing copies to the firm’s clients; and (5) emailing one article to another attorney in connection with a foreign patent application in Europe, and making a physical copy of that article in connection with a foreign patent application in Japan.  The core issue, since it’s hard for lawyers to control what gets emailed to them, surrounded the document management system, which allows lawyers to access documents stored on the firm’s server.  Schwegman doesn’t restrict lawyers’ ability to access such files, but the purpose of its database is to store articles that will be disclosed to the PTO.  The system doesn’t allow text searches, only metadata searches (e.g., author and title), which aren’t very useful in a search for prior art.

So, fair use.  When the defendant’s use isn’t for the same “intrinsic” purpose as the copyright owner’s, that supports fair use.  A reasonable jury could only conclude that Schwegman’s purpose was to comply with the PTO’s disclosure rules and to represent its clients’ interests in obtaining patents in Europe and Japan. No record evidence supported any other purpose distinct from Schwegman’s compliance with the obligations imposed by various patent offices. This purpose was not the same as the publishers’ purpose: they produced their articles “for a purpose that has little, if any, relationship to Schwegman’s purpose in using them.”  Rather than acting with a purpose of providing information relevant to patentability of specific inventions, the publishers distributed the articles “to inform the scientific community of advancements in scientific research and new scientific discoveries that have been made, and to allow the scientific community to test the quality of the authors’ methods and conclusions.”  The publishers’ own declaration stated that their purpose was  to “inform[] interested readers of the state of the art,” not to “ensur[e] that a government agency is provided with the information it needs to determine whether an invention is novel or non-obvious.”

The magistrate also noted that no reasonable jury could find that the copyrightable elements of the articles—their expression, as opposed to the facts they conveyed—had any relationship to Schwegman’s use.  This weighed heavily in favor of fair use.

It didn’t matter that there was no change in the content in Schwegman’s hands.  That might make the term “transformative” “a messy fit” because that label seems most apt when a user actually changes the content of the work (but note that Tony Reese has long argued that change in purpose is a much better predictor of a fair use finding than change in content, and this decision is another datum in favor of his argument).  But pure reproduction can still be fair use when the purpose and character of the use differs from the purpose of the original, “such as photocopying for use in a classroom.”  (Citing §107, as well as the legislative history and William Patry.)  Cases in which defendants used works in connection with judicial proceedings supported this conclusion: evidentiary use is “indifferent to” the copyrightable elements of the work. 

This new and different purpose extends to internal copies a law firm makes while it analyzes copyrighted material and determines whether it would serve the client’s interests to present the material to a decision-maker.  Schwegman’s use here had a similarly evidentiary character related to effective client representation. “[I]t would be an absurd result if an attorney seeking to advance her client’s interests before a patent office were not permitted to copy and review the very type of information that the attorney is required to evaluate in connection with a patent application.”  Only the facts and ideas contained in the articles were of use to Schwegman.  Thus, no reasonable jury could find that the purpose and character of Schwegman’s use was the same as the publishers’ intrinsic purpose. 

Commerciality therefore played a limited role.  The key profit/nonprofit distinction was “whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.” Citing Harper & Row, the publishers argued that Schwegman’s profit-seeking status should weigh against it, especially since Schwegman charged clients a flat rate for downloading documents from Private PAIR and billed for attorney and paralegal time spent locating and reviewing relevant prior art.  But this wasn’t a case of unfairly profiting without paying the customary price, because of the new and different evidentiary character of the use. The publishers argued that this was just Texaco redux.  American Geophysical Union v. Texaco Inc., 60 F.3d 913 (2d Cir. 1994). But in Texaco, the evidence showed a systematic process of encouraging employees to copy articles to make more copies available without paying.  Here, there was no evidence that would allow a reasonable jury to conclude that Schwegman was maintaining a mini-research library to avoid paying per-lawyer licenses.  It would be different if the law firm was making copies of “a copyrighted legal treatise on patent prosecution or a practitioner’s manual on effective methods for filing patent applications with the USPTO or other patent offices,” in which case the purpose of its use would likely be identical to the original purpose of teaching lawyers to prosecute patents.

Then the magistrate jumped straight to factor four.  There was no evidence of an effect on the traditional target market: “academics, physical scientists and researchers, engineers, educators, students, and members of the general public who want to read peer-reviewed scholarly, highly specialized articles about the physical sciences and other scientific disciplines.”  The only evidence the publishers submitted was the fact that they’d lose revenues compared to a world in which patent lawyers did pay license fees.  Licenses are available, and some patent law firms did pay for licenses, though the record didn’t show whether those licenses were for uses made to comply with PTO and foreign patent office requirements.  But the missing license fee can’t be the sort of negative effect that weighs heavily against a finding of fair use, or it would always weigh against fair use and make this factor meaningless.  As Bill Graham Archives held, the copyright owner isn’t entitled to preempt a defendant from exploiting markets that that weren’t “‘traditional, reasonable, or likely to be developed[.]’”  And the first factor is heavily interrelated to the fourth; the fact that Schwegman’s use was different than, and not superseding, the original purpose meant that this market wasn’t traditional, reasonable, or likely to be developed.  That some law firms took licenses didn’t make patent firms into such a market.  (It’s not hard to see that “likely to be developed” here is not an empirical claim nearly as much as it is a normative claim founded on the first two concepts in this triad.)  Texaco was not to the contrary, even though that case relied on the fact that the publishers made a license available; that case didn’t involve a new purpose.

Clean-up: the nature of the copyrighted work weighed slightly in Schwegman’s favor, given the highly factual content of the articles. The amount used was the whole work, but this factor has to be considered in context of factor one: whether the amount used is reasonable in relation to the copying’s purpose. Copying an entire work doesn’t preclude a finding of fair use if that’s not more than necessary to further the purpose.  “The evidence permits no reasonable inference other than that Schwegman’s copying was essential to allow the law firm to evaluate whether the information in the Articles was prior art that needed to be disclosed in connection with patent applications.”  Thus, factor three also favored a finding of fair use.

Other factors: the publishers argued that fair use was inappropriate because Schwegman never had an authorized/licensed copy.  But there was no authority requiring this when the use is fair.  This seemed to be a bad faith argument.  But there was no indication that “Schwegman simply stole the Articles the way a person might when he ‘pirates’ a song on the internet.”  Schwegman paid for a copy of one article, and obtained others from Private PAIR when they inherited client files.  Other sources were undetermined; one came from a university website (did the publisher send a takedown notice?), and one from a client.  These were not the acts of a “chiseler.” No reasonable jury could find bad faith. 

Schwegman’s use didn’t create any reasonable disincentive for the publishers to keep on publishing, and its copying promoted the progress of science and useful arts, the very purpose of the Copyright Act, by assisting patent examiners.

The magistrate recommended denying PTO’s motion for summary judgment on its counterclaim for a declaratory judgment of fair use as moot.  The PTO was basically an amicus, not a party with a cognizable Article III case or controversy.

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