Letter from AmeriKat: Disruptive Companies, Disruptive Technologies, Disruptive Litigation

As close to being disruptive to
technology as the AmeriKat
gets

MIT's  list of of  2013's 50 Disruptive Companies was recently published.  The project, MIT is keen to point out, is not a quantitative assessment of the R&D spend or number of patents or a ranking of these figures.  It is, instead, meant to encapsulate the variety of ways that innovations are commercialized from the start-up to the long-established.  All of the stories from the AmeriKat's US post this week involve at least one (often more) of these companies which is a reminder (not that us IP lawyers need reminding), that the mere act of innovation and commercialization is not the apex of "disruption", it is often the litigation or enforcement of those technologies that can itself be a litmus test of an innovators' impact on the rest of the market.

Last Friday, the US Supreme Court granted the writ of certiorari in the Akamai Technologies v Limelight Networks case.  Akamai commenced patent infringement proceedings against Limelight relating to a patent for a method for helping website owners efficiently manage online traffic.  In a 6-5 decision in 2010, the CAFC held that Limelight would be liable if Akamai proved that Limelight performed some of the claim and then directed its customers to complete the remaining steps of the claimed method.  That is to say that as long as Akamai could prove that all of the steps of a claimed method were performed, it was not necessary to prove that all the steps were committed by a single entity in order to prove induced infringement.  The CAFC stated that

"[t]he problem of divided infringement in induced infringement cases typically arises only with respect of method claims...[where] parties that jointly practice a patented invention can often arrange to share performance of the claimed steps between them."  

Akamai argued that a party should not be held liable for inducting another party to infringe a patent if that party did not perform every claim in the patent.  In making its decision the CAFC reconsidered and overruled its 2007 decision which held that for a party to be liable for induced infringement, some other entity must be liable for direct infringement (BMC Resources, Inc v Paymentech (2007)).

Google, Cisco and Oracle filed an amici curiae brief arguing that if the Supreme Court followed the CAFC's decision the effect would be to expand the liability for patent infringement for tech companies and

"...exacerbate the growing problem of high-cost and abusive patent litigation.  Whereas before, both direct and indirect infringement accusations could be assessed based on the uniform single-entity rule, the Federal Circuit's decision means that accusations of infringement now implicate consideration and investigation of every link along the supply, distribution, and use chains - even where patent defendants lack knowledge or control of the activities of their customers, end users, or suppliers.   

The effects of the new rule will be especially deleterious for providers of complex goods and services, including manufacturers of software, hardware and network technologies.  The new rule opens the door to unpredictable potential theories of divided infringement liability based on the actions of an unlimited number of participants in the complex networks that characterize current information technology markets.  Moreover, any potential problems addressed by the new rule are overstated and can be better addressed by proper claim draft."

These sentiments were echoed by the Obama administration who wrote in its amicus brief that the Supreme Court's review of this issue was necessary so as

"to avert a significant expansion of the scope of inducement liability (and a corresponding increase in burdensome litigation) that is not justified under a proper understanding of Section 271".

The oral arguments are expected to be heard in April.

Back in October, Pinterest commenced a trade mark infringement action against Pintrips, an online trip planning start-up which allows users to "pin" flights while planning their travel.  The introduction of Pinterest's complaint reads as follows:

"This action arises from Pintrips’ decision to adopt a social media brand that is confusingly similar to Pinterest’s, and its refusal to recognize, discuss or remediate the confusion it causes among consumers. Pinterest is a world-renowned provider of social media services and the beneficiary of a hard-earned reputation in a PIN-formative family of trademarks, notably including the famous PINTEREST trademark. When Pintrips launched its own social media service, it could have adopted any number of trademarks. Instead it chose PINTRIPS, which is similar in appearance, sound,and commercial impression to PINTEREST. In doing so, Pintrips has chosen a brand that causes confusion among consumer and implies a connection, affiliation or sponsorship that does not exist."

This week Pintrips filed a motion to dismiss arguing that the term "pin" is too generic and thus Pinterest has made a claim on insufficient grounds.  The motion records that

"This Complaint is a textbook example of an industry giant using a spurious lawsuit to bully a small entity into giving up its right to use a generic, common term that merely describes a core function of its service."

The motion also lists various other third party applications, including those from Facebook, Google and Microsoft, that use the term "pin".  Those entities have, so far, not been subject to legal complaints from Pinterest.

Pinterest recently lost an opposition at OHIM against an earlier filed Community trade mark application for PINTEREST by a  London-based start-up company called Premium Interest (readers can read OHIM's November decision here).  Merpel is seriously raising her long whiskery eyebrows at that one....