Supreme Court Docket Report - January 13, 2014

Keywords: Copyright Act, Patent Act, claim construction, Lanham Act, CERCLA, evidentiary hearing, Foreign Sovereign Immunities Act

Last Friday, the Supreme Court granted certiorari in seven cases of interest to the business community:

Copyright Act—Right of Public Performance—TV Broadcasting Patent Act—Inducing Infringement Patents—Claim Construction—Definiteness Requirement Lanham Act—Private Right Of Action To Challenge Labels Regulated Under Federal Food, Drug, And Cosmetic Act CERCLA—Preemption Of State Statutes Of Repose Internal Revenue Service—Investigatory Summonses—Right to Evidentiary Hearing Foreign Sovereign Immunities Act—Post-Trial Discovery Copyright Act—Right of Public Performance—TV Broadcasting

Section 106(4) of the Copyright Act of 1976 gives the owner of the copyright in an audiovisual work such as a television show the exclusive right to "perform the copyrighted work publicly," which includes "transmit[ting] or otherwise communicat[ing] a performance or display of the work ... to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times." On Friday, the Supreme Court granted certiorari in ABC, Inc., v. Aereo, Inc., No. 13-461, to determine whether a service that captures and retransmits broadcast television to subscribers over the Internet violates the right of public performance held by those who own the copyright in a television program.

When a subscriber logs on to Aereo's website and selects a program to watch, a specific Aereo antenna is assigned to that subscriber and tuned to his or her desired program, which is then captured and streamed to the user over the Internet. Aereo subscribers can use the service to watch live television or they can schedule programs to be recorded for viewing later. District courts in California and the District of Columbia have enjoined the operations of FilmOn X, another online TV service similar to Aereo, holding that the FilmOn X service infringes television networks' and broadcasters' copyrights.

But in the decision below (712 F.3d 676), a divided Second Circuit panel refused to enter an injunction against Aereo. The court held that when a court assesses whether an alleged infringer is transmitting a copyrighted work "to the public," it must determine the audience capable of receiving any particular transmission of that work. The majority thus concluded that Aereo's service does not infringe the public performance rights of television copyright holders, because each individual transmission by Aereo uses a stream from a different antenna and is received by only one particular subscriber's household.

The television petitioners argue that the Second Circuit's reading of the statute improperly makes the question of infringement depend on the technical details of the system used to transmit a work. They contend that courts should instead adopt a functional view and conclude that a party is transmitting a work publicly if numerous members of the public receive a transmission of a copyrighted work from that party, whether via a single act of transmission or numerous individual ones. On this view, the petitioners claim, Aereo's service infringes their copyrights, because Aereo transmits their television programs to large numbers of people without permission.

The outcome of this case will be tremendously important to the entertainment industry. Cable and satellite companies pay large fees to television networks and broadcasters to retransmit their programming, but could possibly avoid doing so if Aereo's method of obtaining that programming were available to them. The networks also claim that Aereo's business threatens the revenue that they receive from licensed services such as Hulu. As a result, some networks are reportedly contemplating ending free over-the-air broadcasting if Aereo prevails.

Absent extensions, which are highly unlikely, amicus briefs in support of the petitioners will be due on March 3, 2014, and amicus briefs in support of the respondent will be due on April 2, 2014.

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Patent Act—Inducing Infringement

Section 271(a) of the Patent Act imposes liability on a party who directly infringes a patent. Section 271(b), by contrast, renders liable one who indirectly infringes a patent by "actively induc[ing] infringement of [the] patent." 35 U.S.C. § 271(b). On Friday, the Supreme Court granted certiorari in Limelight Networks, Inc. v. Akamai Technologies, Inc., No. 12-786, to determine whether a patent holder may assert a claim under Section 271(b) in cases of so-called "divided" infringement—when, as in this case, the defendant performs some steps of a patented method and actively induces its customers to perform the remaining steps, even though neither the defendant nor the customers alone perform all the patented steps. That is, the Court will decide whether a claim of induced infringement is available when no person has directly infringed the patent.

Akamai Technologies is the exclusive licensee of a patent that claims a method of structuring websites for efficient handling of internet traffic. Akamai brought this infringement action against Limelight Networks, alleging that Limelight had performed some of the steps of Akamai's patented process and had instructed its customers to perform the remaining steps. A jury found that Limelight had infringed the patent via a "joint infringement" theory under Section 271(a), but the district court held that Akamai presented insufficient proof. On appeal, the Federal Circuit, sitting en banc, reversed on a 6-5 vote. Instead of resolving the case on a direct-infringement theory under Section 271(a), the majority decided the case under Section 271(b). The court held that an induced-infringement theory was cognizable where Limelight had actual knowledge of the patent, performed some of the steps, induced others to perform remaining steps, and—when combining its own conduct and the conduct it induced—all the steps of the patent claim were performed. 692 F.3d at 1318. Five members of the Federal Circuit dissented.

At the Supreme Court's invitation, the Solicitor General filed an amicus brief for the United States, taking the position that the Federal Circuit's reading of the Patent Act is incorrect; and urging the Court to grant review and reverse.

Because the Court's...