|
In This Issue
·
Federal
Circuit Vacates and Remands PTAB Finding of Non-Obviousness as Unsupported by
the Record
·
Second
Circuit Reinstates Professional Photographers’ Copyright Infringement Claim Against
NFL and AP
Contact Us:
P. Branko Pejic
www.gbpatent.com
bpejic@gbpatent.com
703-716-1191 (phone)
703-716-1180 (fax)
|
Federal Circuit Vacates and Remands
PTAB Finding of Non-Obviousness as Unsupported by the Record
The Federal Circuit recently vacated and remanded a PTAB finding of
non-obviousness as unsupported by the record in BASF Corporation v. Enthone, Inc. in connection with an Inter
Partes Review (“IPR”) sought by BASF of Enthone’s U.S. Patent No. 7,303,992
(“the ‘992 patent”), which is directed to a method of manufacturing
semiconductor integrated circuit devices wherein the PTAB found the ‘992 patent
not invalid in view of two prior art combinations.
On appeal, neither party disputed that both prior art combinations
taught the recited limitations.
Rather, the question turned on whether a person of ordinary skill in
the art would have been motivated to combine the references. BASF’s appeal raised two primary arguments;
specifically that: (i) the PTAB erred by applying an
overly “stringent version” of the motivation to combine test, and (ii) the
PTAB’s findings were inadequately explained and not supported by substantial
evidence in the record. The Federal
Circuit was not persuaded by BASF’s first argument that there was no
motivation to combine the references, but did hold
that the PTAB’s findings were unsupported by the record.
With respect to the motivation to combine, the Federal Circuit (i)
cited KSR International Co. v. Teleflex
Inc. and observed that the Supreme Court admonished against employing
overly rigid tests for obviousness; and (ii) noted that while some
predictability of the art could impact the level of disclosure required to
motivate the combination, the record as a whole supported the obviousness
analysis applied by the PTAB.
The Federal Circuit, however, found that the PTAB’s decision was not
supported by substantial evidence.
Specifically, the Federal Circuit held that the PTAB (i) by citing
only one passage in Enthone’s expert declaration had no reasonable basis to
limit the teachings of one of the prior art references, and (ii) reached an
inconsistent conclusion regarding the teachings of a different prior art
reference in a previous IPR involving a different Enthone patent.
The Federal Circuit appeared particularly bothered by the PTAB’s
inconsistent conclusions as to the teachings of the “Barstad reference” In connection
with an IPR involving U.S. Patent No. 7,815,786 as well as the same parties. In that IPR, the same prior art combinations
were asserted, and the PTAB made findings regarding the reference that were
“inconsistent” with the PTAB’s instant findings in the ‘992 patent IPR. As such, the Federal Circuit found that the
PTAB acted arbitrarily and capriciously by failing to provide a reasoned
explanation for reaching an inconsistent finding regarding the “Barstad
reference” in the instant IPR.
The Federal Circuit further observed that this inconsistency is
critical, and the PTAB’s rejection of BASF’s argument regarding the teachings
of the “Barstad reference” without “any reasoned explanation for th[is]
inconsistent result” makes it necessary to vacate and remand the PTAB’s
ruling to allow the PTAB to fully evaluate and consider the teachings of the
reference.
Second
Circuit Reinstates Professional Photographers’ Copyright Infringement Claim
Against NFL and AP
The Second Circuit recently reinstated the copyright infringement
claims by professional photographers alleging that National Football League
and Associated Press exploited thousands of NFL event photographs without
authorization or payment in Spinelli v.
National Football League, while also affirming dismissal of
photographers’ antitrust claims against that NFL and AP.
By way of background, the NFL and AP entered into a 2009 agreement
under which the AP became the exclusive agent for and distributor of
commercial licenses for photographs containing NFL intellectual
property. AP guaranteed the NFL a
share of the royalty revenue received in connection with those photographs as
well as granted the NFL a broad complimentary license for photos of NFL
events for which AP owned the copyright. AP, due to its position as exclusive
licensing agent, served as the gatekeeper for professional sports
photographers who wished to shoot NFL events.
Also in 2009, Plaintiffs, seven professional sports photographers,
entered into “contributor agreements” with AP in which the photographers
provided the AP with a broad license to use their NFL photographs, in
exchange for certain royalty payments, but the photographers retained “all
rights, title and interest in and to” each of the photographs utilized by AP,
as well as the right to sue for infringement.
Plaintiffs, thereafter, learned that the NFL was making widespread
use of the photographs without paying royalties. Unbeknownst to Plaintiffs,
when AP and the NFL renewed their agreement in April 2012, AP expanded the
NFL’s complimentary license to cover photographs owned by contributing
photographers. When Plaintiffs confronted AP about this issue, AP told Plaintiffs
that they could either (i) permit AP to grant complimentary licenses to the
NFL or (ii) opt out of their contributor agreements and no longer shoot NFL
events. Plaintiffs then sued AP and
the NFL in 2013 for copyright infringement, breach of contract, breach of the
implied covenant of good faith and fair dealing, breach of fiduciary duty,
fraud, and unconscionability, alleging that the NFL and AP exploited
thousands of Plaintiffs’ photographs without a license and without proper
compensation. Plaintiffs also asserted antitrust claims under the Sherman
Act, alleging that the NFL and AP conspired to restrain trade in the market
for commercial licenses of NFL event photographs. Defendants NFL and AP moved
to dismiss Plaintiffs’ claims, and the district court granted the motion in
its entirety. On appeal, however, the Second Circuit reversed the dismissal
of Plaintiffs’ copyright infringement claims in substantial part, as well as Plaintiffs’
contract and fraud claims, but affirmed dismissal of the remaining claims.
As to the 2009-2012 time period, the Second Circuit rejected Defendants’
license defense, and held that Defendants were barred from arguing that AP
granted the NFL a retroactive license for this period in 2012 because
“[b]efore the 2012 AP-NFL agreement was executed, Plaintiffs had the right to
sue the NFL for copyright infringement, and if the retroactive license AP
granted in 2012 were effective, AP would have [impermissibly] extinguished
that right.” The Second Circuit also
rejected Defendants’ arguments that AP, through its conduct, had impliedly
licensed the NFL’s exploitation of the photographs during the 2009-2012 time
period because Plaintiffs’ allegations “plausibly support an inference that
before the 2012 AP-NFL agreement was signed, AP had not granted the NFL a
complimentary license to Plaintiffs’ works, and the NFL knew it.” For
example, Plaintiffs alleged that in 2012, AP told them that the NFL was
insisting on a license to use AP’s contributor content on a complimentary
basis, and the fact that AP did not yet have authority to grant such a
license was delaying negotiation of the new AP-NFL agreement.
Turning to the 2012-2015 time period, the Second Circuit agreed with
Plaintiffs that the contributor agreements were, at minimum, ambiguous as to
whether AP was permitted to grant the NFL a complimentary license to use
contributor photographs without paying royalties. According to the Second
Circuit, “[d]iscovery and trial will shine greater light on whether the
extrinsic evidence actually weighs in Plaintiffs’ favor, but at this stage of
the case, Plaintiffs have plausibly alleged that AP’s complimentary license
to the NFL was not permitted by the contributor agreements.”
The Second Circuit also concluded that the district court erred in
dismissing Plaintiffs’ claims for breach of the implied covenant of good
faith and fair dealing finding that Plaintiffs plausibly alleged that the
contributor agreements at least implicitly prohibited AP from licensing or
selling Plaintiffs’ photographs “in a way that benefits AP, but yields little
to no value for Plaintiffs,” thereby depriving plaintiffs of the fruits of
their bargain. The Second Circuit accordingly rejected Defendants’ argument
that implying this right on behalf of Plaintiffs contravened the NFL’s and
AP’s express rights under the contributor agreements.
The Second Circuit further found that Plaintiffs adequately pleaded
a claim for fraud on the theory that AP falsely told Plaintiffs that it would
not grant the NFL complimentary access to their photographs so as to induce Plaintiffs to sign their contributor
agreements. The Second Circuit explained that if it was ultimately
determined, after discovery, that the contributor agreements’ express or
implied terms did not prohibit AP’s alleged conduct, Plaintiffs would have a
non-duplicative claim for fraud; otherwise, the Second Circuit opined, “AP
will, at most, have done nothing more than falsely promise to abide by the
terms of the contributor agreements.”
On the other hand, the Second Circuit affirmed the dismissal of Plaintiffs’
breach of fiduciary duty and unconscionability claims. Not only did the
relationship between plaintiffs and AP “arise from arm’s-length agreements,”
the Second Circuit opined, but those agreements also expressly disclaimed
that they gave rise to a fiduciary-like relationship. As to the claim that
the contributor agreements were unconscionable, the Second Circuit held that Plaintiffs’
allegations indicated they had ratified those agreements by performing and
accepting the benefits thereof and were not, as they argued, acting under
duress.
Finally, the Second Circuit affirmed dismissal of the antitrust
claims, holding Plaintiffs did not plausibly allege an adverse effect on
competition in the market for commercial licenses for NFL event photographs —
as opposed to the market for the photographs themselves. Nonetheless, the
court noted that the NFL was not immune from antitrust scrutiny and could be
vulnerable to such claims in the event that
similarly situated photographers were to define the relevant market
differently.
|
