JOLT Digest

Determination of Patentable Subject Matter Not Limited to Machine-or-Transformation Test; Some Business Method Patents Survive
By Davis Doherty – Edited by Matt Gelfand

Bilski v. Kappos, No. 08-964 (U.S. June 28, 2010)
Slip Opinion

In a 9-0 decision, the Supreme Court affirmed an en banc ruling by the Court of Appeals for the Federal Circuit, which held that the petitioners’ claimed invention, a commodities risk-hedging method, was unpatentable. At the same time, a 4-1-4 split on the broader issue of patentable subject matter resulted in a narrow opinion that  leaves open the possibility that some business method patents may be appropriate.

In an opinion penned by Justice Kennedy, joined by Chief Justice Roberts and Justices Thomas and Alito, and in part by Justice Scalia, the Supreme Court held the petitioners’ claimed invention was unpatentable under the Patent Act because it was an abstract idea. See 35 U.S.C. § 101 (2006). While the Court affirmed the Federal Circuit’s en banc ruling, its decision overturned the appellate court’s holding that a “process” is patent eligible under § 101 only if: “(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” In re Bilski, 545 F. 3d 943, 954 (Fed. Cir. 2008) (en banc opinion). The Court noted that while this “machine-or-transformation” test may be a useful indicator of patentability in most cases, the text of the Patent Act is incompatible with the use of the test as an exclusive standard. Justice Stevens wrote a concurrence, joined only by Justices Ginsburg, Breyer, and Sotomayor, that would have struck down business method patents as categorically patent-ineligible subject matter.

Briefs and relevant court documents are available at SCOTUSwiki. SCOTUSblog provides an overview of the case. Inventive Step criticizes the decision for its failure to provide guidance on patent eligibility. Patently-O provides analysis regarding the import of the Court’s concurring opinions.

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Supreme Court Holds That a Government Employer’s Search of an Employee’s Messages on a Work-Related Pager Was Reasonable and Not a Violation of the Fourth Amendment
By Andrew Segna – Edited by Helen He

Ontario v. Quon, No. 08-1332 (U.S. Jun. 17, 2010)
Slip Opinion

The United States Supreme Court reversed a Ninth Circuit Court of Appeals decision that held that the Petitioner City of Ontario’s (“Ontario”) search of the Respondent Jeff Quon’s text messages was unreasonable and, therefore, a violation of Quan’s reasonable expectation of privacy under the Fourth Amendment.

The Supreme Court held that the search administered by the Petitioner was reasonable and did not violate the Respondent’s Fourth Amendment rights regarding government employers. To reach this conclusion, Justice Kennedy assumed that Quon did have a reasonable expectation of privacy. Under the standards outlined by the plurality and Justice Scalia’s concurrence in O’Connor v. Ortega, the Supreme Court held that the legitimacy of the City’s reasoning behind the search and the nonexcessive measures utilized demonstrated reasonableness. In so holding, Justice Kennedy recognized  this decision’s potential to determine the larger question surrounding employees’ expectation of privacy with regards to government employers and the rapid growth of information and communication technology today. Kennedy mentioned the changing privacy expectations of employees and arguments for and against increased privacy but asserted that he wanted to avoid the volatile and far-reaching consequence of addressing such an issue. Therefore, he concluded that there was a reasonable expectation of privacy in this case in order to narrow the holding.

The New York Times has an overview of the Supreme Court’s decision. SCOTUSBlog analyzed the majority opinion and Justice Scalia’s concurrence in the case and their implications for the question of privacy in the realm of technology. The Electronic Frontier Foundation, who filed an amicus brief in favor of a narrow holding, elaborated upon its support for and concerns about the holding. (more…)

By Ian B. Brooks

Illinois Establishes Standard for Identifying Anonymous Internet Commenters

Evan Brown at Internet Cases reports that the Appellate Court of Illinois, Third District has set forth a standard for identifying an anonymous internet commenter in Maxon v. Ottawa Publishing Co., No. 3-08-0805 (Ill. App. 3d June 1, 2010). A couple from Illinois, unhappy with anonymous comments on a local newspaper website, sought to identify the commenters. Illinois Rules on Civil Proceedings Rule 224 allows a petitioner to file a petition to identify a person “responsible in damages.” The trial court followed the analysis of Dendrite International. Inc. v. Doe No. 3, 775 A.2d 756 (N.J. Super. Ct. App. Div. 2001) and Doe v. Cahill, 884 A.2d 451 (Del. 2005), in denying the petition. The appellate court reversed and remanded, setting forth a new standard that requires a court to “insure that the petition: (1) is verified; (2) states with particularity facts that would establish a cause of action for defamation; (3) seeks only the identity of the potential defendant and no other information necessary to establish the cause of action of defamation; and (4) is subjected to a hearing at which the court determines that the petition sufficiently states a cause of action for defamation against the unnamed potential defendant.” Maxon, slip op. at 9. As Brown notes, this standard — unlike that of past cases — does not require the petitioner to attempt to identify the commenter.

FCC Votes to Proceed with Net Neutrality Regulations

Joelle Tessler for the Associated Press reports that the Federal Communications Commission has voted to accept public comments on three proposed broadband regulations. The regulations are part of the FCC’s latest attempt to establish oversight of broadband providers. The proposal would redefine broadband access as a telecommunications service, allowing the FCC greater regulatory control. FCC Chairman Julius Genachowski hopes to ensure that broadband providers treat network traffic equally, limiting their ability to selectively block traffic. JOLT Digest previously highlighted the objections of many members of Congress to the FCC’s attempts to regulate in the aftermath of Comcast Corp. v. FCC.

Napolitano Calls for Balance Between Civil Liberties and Security

Lolita C. Baldor for the Associated Press reports that in a recent speech, Homeland Security Secretary Janet Napolitano discussed the balance between fighting terrorism and maintaining civil liberties. Citing the recent homegrown, online terrorist recruitment efforts, Napolitano suggested that the law should allow the government to monitor these growing threats. Napolitano believes that by monitoring Internet communications the United States can better protect national security without necessarily “having a deleterious effect on individual rights.”

Summary Judgment Entered Against Chuck DeVore on Copyright Claims
By Harry Zhou – Edited by Helen He

Henley v. DeVore, No. 8:09-cv-00481-JVS-RNB (C.D. Cal. Jun. 10, 2010)
Order

The U.S. District Court for the Central District of California issued a formal ruling on Musician Don Henley’s copyright and Lanham Act claims against California Assemblyman Chuck DeVore. Rejecting DeVore’s fair use defense, the court entered summary judgment in favor of Henley on all claims of copyright infringement. Henley’s false endorsement claim under the Lanham Act was dismissed. The court denied summary adjudication to both parties on the issue of whether the infringement was willful.

The court ruled that DeVore was not entitled to a fair use defense because his use of Henley’s work failed to meet the standards as established by Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 575 (1994). Specifically, the court held that DeVore’s use was more satirical than parodic, borrowed too heavily from the originals and had the potential effect of market substitution. In dismissing DeVore’s Lanham Act claim, the court cited the absence of authority for the theory that a performer could acquire a trademark in her or his own musical performance.

The Hollywood Reporter features a summary of an earlier tentative ruling. CrawDaddy! provides a detailed account of the events leading up to the dispute. BusinessWire gives a brief discussion of the ruling’s repercussions. (more…)

By Kassity Liu

Judge Orders Copyright Plaintiff to Justify Joining Thousands of Defendants in a Single Lawsuit

Ars Technica reports that Federal Judge Rosemary Collyer ordered the US Copyright Group to explain why joining thousands of anonymous “John Does” into one lawsuit is permissible under the Federal Rules of Civil Procedure (FRCP). The judge, after encountering one case that was filed against 4,577 anonymous P2P defendants, issued the order requiring the Group to “convince [her] within two weeks that jamming 4,577 people into a single lawsuit is a proper use of the court system.” In an amicus brief filed by the ACLU and EFF, the two organizations argued that this type of joinder is improper according to FRCP 20, which states that a plaintiff may only join a defendant in a lawsuit if the plaintiff is able to “assert . . . relief jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences.” If it permits this suit, the court runs the risk of denying a fair trial to a large number of defendants; however, forcing the plaintiff to pursue a case against each individual defendant may result in undue delay and expense.

Ninth Circuit Decision may Swallow the Protections Afforded by the First Sale Doctrine

Ben Sheffner reports in his blog that the Ninth Circuit recently posted the oral arguments given by the opposing parties in UMG Recordings, Inc. v. Augusto. The case will address the scope of the first sale doctrine, which places limitations on the control of copyright owners over the reselling or distribution of their products. The Electronic Frontier Foundation provides an overview of the case. In 2007, Universal Music Group (UMG) sued Troy Augusto for reselling its promotional CDs, alleging that the reselling violated “its exclusive right to distribute its works under 17 USC § 106(3)” because these CDs were only licensed “for a limited purpose to a limited group.” The district court had relied upon an obscure postal statute that “characterize[d] unordered merchandise as a gift” (internal quotations omitted) to find that the reselling was protected by the first sale doctrine and thus did not violate U.S. copyright law. If the Ninth Circuit rules for UMG, then copyright owners would gain the power to limit the distribution of their products using limited license labels.

FTC to Launch Investigation in Apple’s Exclusionary Practices with its Mobile Operating System

Ars Technica reports that the FTC is investigating whether Apple’s decision to allow only certain third-party compilers to place software and data on its mobile operative system constitutes a violation of U.S. antitrust law. The investigation is still in its early stages and has not become public, but inside sources suggest that the FTC and the U.S. Department of Justice settled their rumored debate over which agency would investigate Apple’s practices. Last month, Ars Technica reported on the discussions between the two agencies regarding “which one [would] launch the antitrust inquiry” that preceded the current FTC investigation. It is unknown which companies are behind the complaint to the FTC; both Adobe and Google are listed as potential parties.