Intellectual Property Bulletin - Spring 2017

In This Issue

It’s Dangerous to Go Alone! Take This.
Intellectual Property Tips for the Esports Industry

With the annual Game Developers Conference spectacular in our rearview mirror, and the NBA’s partnership with Take-Two to launch an esports league for the NBA2K game on the horizon, game developers and professional gamers should consider how to best protect themselves and their intellectual property as they enter the new arenas of VR and esports. — Eric Ball and Kunyu Ching

PTAB, Explain Yourself! Federal Circuit Scrutinizes Articulated Rationales at the Patent Office

Despite the high bar for appellants to contest the adequacy of articulated reasoning for agency action by the Patent Trial and Appeal Board, the last few months brought several Federal Circuit decisions enforcing procedural decision-making requirements on the PTAB and reinforcing the need for the PTAB to adequately explain its evidentiary findings and legal conclusions. — Gregory Hopewell

Quick Updates

Veteran Loser Perfect 10’s Latest Ninth Circuit Defeat — Mitchell Zimmerman

Bringing Trademark Applications and Registrations Back From the Dead: Update on Proposed Changes to USPTO Revivals, Reinstatements and Petitions — Mark Jansen

Judgment Continues to Grow in CardiAQ Valve v. Neovasc Trade Secret Suit — Carly Bittman and Patrick E. Premo

The Growing Use of Patent Summary Affirmances — Christopher P. King

It’s Dangerous to Go Alone! Take This.
Intellectual Property Tips for the Esports Industry

By Eric Ball and Kunyu Ching

With the annual Game Developers Conference spectacular in our rearview mirror, and the NBA’s partnership with Take-Two to launch an esports league for the NBA2K game on the horizon, game developers and professional gamers should consider how to best protect themselves and their intellectual property as they enter the new arenas of VR and esports.

More Reality, More Problems

The development of more realistic games comes with the potential for more real trademark and copyright infringement problems. Under copyright law, developers can accurately reflect the exterior of buildings in their virtual reality or augmented reality games. Section 120 of the Copyright Act provides that the copyright in the architectural design of a building does not cover representations of the building if the building is ordinarily visible from a public place. This exception allows developers to accurately represent the new Salesforce Tower in San Francisco and One World Trade Center in New York City.

But the same exception may not apply to the interior of buildings or other copyrighted works inside or outside of a building. If, for example, an augmented reality game places a virtual game token on a sculpture inside a building, has the game created a derivative and infringing version of the sculpture? In a similar context, some graffiti artists have already sued for the reproduction of their works on clothing or in restaurant décor, such as Tierney v. Moschino (alleging copyright infringement based on the use of a graffiti artist’s work on clothing; case settled while there was a pending motion regarding whether graffiti was copyrightable) and Berreau v. McDonald’s, No. 2:16-cv-07394 (C.D. Cal.) (alleging copyright infringement of a graffiti artist’s work by putting copies of the graffiti on the décor of a McDonald’s; case dismissed on personal jurisdiction grounds). These graffiti artists could file a claim against a game developer who recreated their works in a hyper-realistic virtual reality game or if an augmented reality game modified the graffiti enough to create a derivative work. We have already seen similar copyright infringement claims against the NBA2K game for its realistic reproduction of NBA players’ tattoos inSolid Oak Sketches v. Visual Concepts, No. 1:16-cv-00724 (S.D.N.Y.).

For trademarks, the Rogers defense continues to allow game developers to use a third party’s trademarks without a license where the use of the trademark has artistic relevance to the game and is not explicitly misleading. Accordingly, a game developer can generally use the Starbucks mark in the representation of a coffee shop to show a realistic version of downtown Seattle. The Rogers defense has recently been used to knock down trademark claims both in advertisements for the game and advertising in the game in cases like Mil-Spec Monkey v. Activision Blizzard (granting summary judgment on trademark infringement claims against a commercial showing a clip of game play that included the third-party mark) and Virag v. Sony (dismissing trademark infringement claims regarding in-game advertisements).

But Rogers is not a cure-all. Developers should be cautious about using another’s trademark in the name or logo of the game itself. In CI Games v. Destination Films, No. 2:16-cv-05719 (C.D. Cal.), the plaintiff alleged trademark infringement based on confusion between its movie, Sniper: Ghost Shooter, and the defendant’s game, Sniper: Ghost Warrior. The defendant asserted a Rogers defense in a motion to dismiss, but the court punted the decision, finding instead that the Rogers defense is better evaluated at the summary judgment stage. The court reasoned that if a plaintiff could show that a defendant intentionally named its game something similar to the plaintiff’s movie, then this intent would fail the “not explicitly misleading” prong of the Roger’s defense. CI Games potentially takes the teeth out of a Rogers defense because defendants could be forced to wait until summary judgment—and incur significant costs in discovery and motion practice—before knowing whether the defense is available.

Our Trade Secret is in Another Castle

A trade secret is information that (1) is not generally known to the public, (2) provides economic benefit as a direct result of its secrecy and (3) is subject to reasonable efforts to maintain that secrecy. The classic example of a trade secret is the recipe for Coca-Cola.

If professional gamers have special techniques or methods that have brought them competitive and financial success, they should not expect those techniques to receive protection under the law once those moves are shared with the public. Broadcasting gaming techniques removes them from trade secret protection because they become known to the public. To protect a gaming technique as a trade secret, gamers should limit disclosure and require nondisclosure and/or confidentiality agreements within gaming teams and with third parties when possible. An esports team’s secret playbook or specific combination of multiple players’ moves—if properly protected from public disclosure—could be considered a trade secret. And a trade secret misappropriation claim might arise if one of those team members switched teams mid-season and shared their knowledge of the first team’s playbook with the new team.

All Your Publicity Are Belong to Us

The right of publicity is the right of an individual to control the commercial use of the person’s name, image, likeness or other identifiable personality aspect. Generally, the right of publicity works to prevent unscrupulous use of an individual’s image in advertisement without permission. For example, a company cannot use a celebrity’s image to create the false impression of that celebrity’s endorsement for its product.

Professional gamers may find themselves embroiled in publicity battles similar to those of professional athletes. Signing sponsorship deals or a team agreement may affect a gamer’s right of publicity to the extent it requires a gamer to appear in certain advertisements or if it permits the sponsor or team to use the individual gamer’s image for advertisements in their capacity as a gamer. This is similar to the limited right of publicity enjoyed by professional football players. The Eighth Circuit ruled in Dryer v. National Football League that the NFL is permitted to use players’ names and likenesses in game footage and interviews for historical documentaries because such films “represent speech of independent value and public interest.” Additionally, the Ninth Circuit recently ruled in Maloney v. T3 Media, Inc. that former NCAA athletes’ right of publicity claims are preempted by the Copyright Act “when a likeness has been captured in a copyrighted artistic visual work and the work itself is being distributed for personal use.”

By contrast, NCAA college football and basketball players have sued Electronic Arts for using their likenesses in video games that replicated the athletes’ height, weight, build, skin tone, hair style, facial features and other individually identifying information in In re NCAA Student-Athlete Name & Likeness Licensing Litigation (holding that EA’s unauthorized use of student-athletes’ likenesses in its video games was not transformative and not protected by the First Amendment; the plaintiffs’ class action suits eventually settled). Use of a professional gamer’s likeness or name without his or her consent in advertisements, videos, or video games could create similar right of publicity issues, as in Lohan v. Take-Two Interactive and Gravano v. Take-Two Interactive.

Player Used CDA 230: It’s Super Effective!

Section 230 of the Communications Decency Act states that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” This statute creates a defense for companies that provide a stage for speech in the United States from liability coming from the actions or speech of their users.

Under § 230, a gamer’s controversial speech on a sharing service or a message board generally cannot be used to hold the service or message board responsible. However, this does not mean that gamers can say whatever they like without consequences. A gamer’s speech might still be subject to contractual obligations under the sharing platform’s terms of service/use, which could lead to severance of the platform’s relationship with the gamer or even the banning of the gamer from the service if his or her speech is abusive or otherwise improper. Recently, a popular YouTube vlogger had the second season of his original gaming video series canceled by YouTube and his relationship with a Disney-owned network severed as a result of his controversial speech. Gamers may also be subject to additional behavioral standards under contract if they are on a gaming team or receive a sponsorship.

As powerful as § 230 is, there has been a recent pullback in its protections at the motion to dismiss stage. Message board operators, especially those that actively curate their users’ communications, should not presume that a court will hold they have complete immunity under § 230’s safe harbor. For example, in Enigma Software v. Bleeping Computer, the court held that § 230 may not bar defamation and false advertising claims against a message board operator based on conduct of a moderator. And in Darnaa v. Google, a federal court in California held that § 230(c)(2) immunity did not bar a claim for breach of the implied covenant of good faith and fair dealing where YouTube removed a video based on suspicion that the uploader inflated view counts.

With these recent developments in the gaming world, game developers, professional gamers and other players in the virtual reality and esports space should be mindful of how to protect their own intellectual property rights while not infringing on the rights of others.

PTAB, Explain Yourself! Federal Circuit Scrutinizes Articulated Rationales at the Patent Office

By Gregory Hopewell

Despite the high bar for appellants to contest the adequacy of articulated reasoning for agency action by the Patent Trial and Appeal Board, the last few months brought several Federal Circuit decisions enforcing these procedural decision-making requirements on the PTAB and reinforcing the need for the PTAB to adequately explain its evidentiary findings and legal conclusions.

As an administrative agency, the United States Patent and Trademark Office enjoys broad discretion in its decision-making. Its evidentiary findings need only be supported by substantial evidence, and it must articulate its rationale in reaching its conclusions from the evidence.

These standards are not high. In In re Kotzab, the court held that “Substantial evidence is something less than the weight of the evidence but more than a mere scintilla of evidence.” This standard requires only “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion,” according to the court in In re Applied Materials. “Less than the weight of the evidence” that “a reasonable mind ‘might’ accept” do not inspire confidence in an appellant.

Typically, final and reviewable decisions by the USPTO are appealed to the PTAB, in either contested proceedings or in ex parte patent examination appeals. Even when the PTAB does not clearly explain itself, such decisions may still be upheld by the Federal Circuit when “we may reasonably discern that it followed a proper path, even if that path is less than perfectly clear,” according to the court’s decision in Ariosa Diagnostics v. Verinata Health.

The sufficiency of the PTAB’s explanation is perhaps most keenly felt when patent claims are rejected as obvious. When rejecting claims as obvious, the PTAB must identify a reason that a person of ordinary skill in the art would have modified the references to yield the claimed invention. Under KSR International v. Teleflex, this inquiry is a flexible one that may rely on “common sense.” To patent applicants and patentees, this “common sense” can appear to be license for the PTAB to apply loose hindsight and conjecture.

In In re Nuvasive, the Federal Circuit remanded the PTAB’s decision in an inter partes review for failing to adequately articulate a motivation to combine two references. The court emphasized the need for adequate articulation of agency action and that adequate review by the court requires articulation of a motivation to combine when contested. The court identified three common situations in which the motivation to combine is insufficiently articulated: (1) a conclusory statement of a motivation unsupported by articulated reasoning; (2) a summary of competing arguments and rejection or acceptance thereof without explaining why the prevailing argument is accepted; and (3) a sole reliance on “common sense” as a reason to combine, without an analysis of how common sense applies. In Nuvasive, the Federal Circuit reversed because the PTAB had summarized arguments of the parties, but “the PTAB never actually made an explanation-supported finding that the evidence affirmatively proved that the PHOSITA [i.e., person having ordinary skill in the art] would have sought [information that would lead a skilled artisan to make the combination].”

Additional recent cases follow suit. In In re Van Os, the Federal Circuit remanded in an ex parte patent application appeal. The PTAB had found that the combination of two user-interface techniques would have been “intuitive.” Citing Nuvasive, the Federal Circuit reversed because “intuitive,” without more, effectively becomes a replacement for “common sense” and does not meaningfully differ from a conclusory statement that the combination would have been obvious.

In Personal Web Technologies v. Apple, the court remanded in an inter partes review. Emphasizing reviewability and principles of agency law, the Federal Circuit initially emphasized the need for a clear record. It clarified that the PTAB’s reasoning that a skilled artisan “would have understood that the combination… would have allowed for [a combination of features]” was insufficient (emphasis in original). Rather, the court emphasized that the requirement is not whether one “could have” combined references, but instead requires a reasoning of why those two references would be selected and combined to reach the claimed invention.

The Federal Circuit has also remanded when the PTAB articulated none of its own reasoning. In Icon Health and Fitness v. Strava, on appeal from an inter partes re-examination, the court remanded to the PTAB some patent claims and affirmed others based solely on the adequacy of the PTAB’s articulated evidence and reasoning. With respect to some claims, the PTAB stated it had addressed certain arguments “as discussed above.” It had not. Nonetheless, the Federal Circuit still evaluated support in the record based on the PTAB’s general statement that for any unaddressed issues, it agreed with the appellee and the underlying examiner. For certain of these claims, however, the examiner made no findings and instead incorporated by reference the arguments of the appellee Strava. The Federal Circuit dismissed these as providing no support because “[a]ttorney argument is not evidence,” and the incorporation by reference did not transform the argument into factual findings or required explanation. Accordingly, for some claims, neither the PTAB nor the examiner had made particular findings, and those claims were remanded. For other claims, in which the examiner did provide an explanation separate from attorney argument, the Federal Circuit affirmed.

Unfortunately for the owners in these various cases, the remedies in these actions were to remand to the PTAB to provide an adequate rationale for its decision, rather than a reversal. In both Van Os and Icon Health, however, Judges Newman and O’Malley, respectively, wrote separately to support reversal rather than remand because in examination proceedings, the USPTO has the obligation to establish unpatentability. Thus, when unpatentability has been insufficiently established, they argue, the remedy should be a granted patent. This issue may continue to simmer and invite en banc consideration.

Typically, contesting “motivation to combine” is a challenging proposition for patent owners and patent applicants. The flexible inquiry lends itself to hindsight reasoning that can be difficult to clearly challenge. Together, these cases revitalize the requirement that these considerations be clearly articulated and flow from support in the record in both contested proceeding and ex parte appeals. To many applicants, contesting “motivation to combine” is a difficult burden that often appears challenging to appeal at the examiner level because of its nuanced flexibility.

These cases suggest that applicants should do so more often. Because examiners are expected to perform “compact prosecution,” examiners must examine an application for all conditions of patentability (and make corresponding rejections) at each office action and are expected to bring forward the best available references in a rejection. See 37 C.F.R. 1.104(a)(1). As a result, when an examiner is reversed, an examiner “should never regard such a reversal as a challenge to make a new search to uncover other and better references” and, when the examiner has specific knowledge of such references, may reopen prosecution only with technology center director approval. See Manual of Patent Examining Procedure (M.P.E.P.) § 1214.04. Thus, should the PTAB follow these cases and reverse an examiner’s improperly articulated motivation to combine, the applicant typically can expect a patent rather than a further search and articulation by the examiner.

As discussed in the Quick Update below, while the Federal Circuit has recently enforced the need for the USPTO to articulate its rationales as an administrative agency, the Federal Circuit itself has increasingly declined to articulate its own rationales by issuing summary affirmances without opinion.

Quick Updates

Veteran Loser Perfect 10’s Latest Ninth Circuit Defeat

By Mitchell Zimmerman

In the 1940s, Jehovah’s Witnesses, tenaciously litigious in defense of free expression, generated a half-dozen Supreme Court decisions that came to define First Amendment rights in the 20th century. With comparable persistence, but in the service of less lofty interests, erotic-photo publisher Perfect 10 has fought—and nearly always lost—a series of reported cases that have, in significant part, come to define the contours of the law of copyright infringement in the online realm. The company’s latest Ninth Circuit loss, however, in Perfect 10 v. Giganews, does not so much resolve unsettled questions of copyright law as confirm established standards.

(Disclosure: Fenwick & West represents Giganews in this litigation.)

Perfect 10’s copyrighted images of naked women are found across the internet, and Perfect 10 has devoted considerable energy to trying to hold third parties responsible for alleged infringements, meeting many defeats.

In Perfect 10 v. CCBill, the court rejected Perfect 10’s claim that CCBill was liable for providing web hosting and online credit card services to internet enterprises that allegedly infringed Perfect 10’s copyrights. In Perfect 10 v. Amazon, Inc. (involving Google), the Ninth Circuit held that the copying of images by Google’s visual search engine, in order to display thumbnail search results, represented fair use. The court further held that Google did not itself publicly display images (and hence did not directly infringe) when its search engine employed “frames” to facilitate end users’ viewing of allegedly infringing content stored on other websites. And in Perfect 10 v. Visa, the court held Visa and MasterCard were not secondarily liable for processing payments for merchants Perfect 10 had accused of infringement.

Perfect 10 remained undaunted by losses, perhaps because the company is not so much in the business of publishing as in the business of extracting revenue from litigation settlements—largely, it appears, against parties not in a position to fully litigate. As the district court observed in Giganews, across the lifetime of Perfect 10, most of its revenues have been derived not from publication but from litigation and, more specifically, from settlements and defaults because “Perfect 10 has never obtained a judgment in a contested proceeding.”

In its latest foray, Perfect 10 tilted against two USENET service providers, Giganews and Livewire, which respectively host or provide access to USENET newsgroups and messages. USENET users upload and download materials through the defendants’ automated systems, and Perfect 10 alleged that its images were featured. Asserting that Giganews and Livewire had failed to remove them, Perfect 10 claimed direct, contributory and vicarious copyright infringement.

Key Holdings on Summary Judgment

Volition/Causation and Direct Infringement

The Ninth Circuit shot down the direct infringement claims by applying the by-now-familiar principle, endorsed by four federal courts of appeal, that direct infringement requires “volitional conduct.” Passively providing an automated system that others may use to infringe does not mean the system provider has engaged in the act of infringement. The Ninth Circuit panel referred to this requirement as “causation,” but the different terminology appears to be of little importance.

The main legal issue on the direct infringement claim in Giganews was whether the U.S. Supreme Court’s 2014 decision in ABC v. Aereo had sub silentio overruled the unbroken line of cases requiring volition or causation. The Ninth Circuit’s answer: No. Neither providing automated access services to USENET users, nor providing a binary file reader, nor a technical facility allowing for automated posting and availability constitute volitional acts supporting a direct infringement claim when they occur as a result of automated processes.

Contributory Infringement

For liability to attach, a defendant, with knowledge of an infringing activity, must materially contribute to the infringement orinduce it. The court in Giganews found that in an internet context, a defendant can be deemed to have “materially contributed” if they could have taken “simple measures to prevent further damage to copyrighted works, yet continue[d] to provide access to infringing works.” In this case, the issue turned on Giganews’ process for taking down infringing works in response to notices from Perfect 10.

“Giganews presented sufficient evidence that Perfect 10's proposed method for locating infringing messages,” using search terms rather than readily available machine-readable Message–ID codes, “was onerous and unreasonably complicated.” Since Perfect 10’s method was “unreliable and burdensome,” it was not a “reasonable and feasible means” of removing infringing matter, so Giganews’s failure to use that method cannot be deemed to have materially contributed to the infringement.

As for the inducement branch, Perfect 10 offered no meaningful evidence that the defendants had a purpose of promoting infringement, disposing of that part of its claim.

Vicarious Infringement and the Plaintiff’s Copyrighted Matter

Vicarious liability requires that the defendant has (1) the right and ability to supervise the infringing conduct and (2) a direct financial interest in the infringing activity.

In internet cases, the Ninth Circuit has held the financial element may be satisfied when infringing matter acts as a draw to a website. The draw need not be substantial, but it is not enough to allege that infringing matter in general draws users to a defendant’s service. Rather, as the court held in Giganews, a plaintiff must show that “there is [a] causal link between the infringement of plaintiff’s own copyrighted works and any profit to the service provider” (emphasis added). Perfect 10 offered no such evidence; hence, summary judgment was appropriate.

Bringing Trademark Applications and Registrations Back From the Dead: Update on Proposed Changes to USPTO Revivals, Reinstatements and Petitions

By Mark Jansen

To keep federal trademark applications and registrations “alive,” trademark owners are required to timely respond to notices from the United States Patent and Trademark Office, including responding to Office actions within six months, or filing statements of use or post-registration filings in the allotted timeline. A limited number of extensions of the deadline may be available, depending on the filing. If an applicant/registrant does not meet these deadlines, applications are considered abandoned (in full or in part, depending on the circumstances), and registrations may be cancelled, with the USPTO updating its records accordingly. In the U.S., abandonment or cancellation by the USPTO doesn’t necessarily mean a complete loss of rights, as there are some mechanisms available for bringing trademark applications and registrations back from the dead, but the USPTO is strict about these deadlines. That is because applicants (and USPTO examiners) rely on the accuracy of the USPTO’s records to determine whether prior applications or registrations exist on the registry, and the status of a potentially conflicting application or registration is taken into consideration when evaluating filing a new trademark application for a similar mark.

The USPTO is considering proposed amendments to the rules around reviving or reinstating trademarks that have been abandoned or canceled, and other petitions to the director, which have been codified in Part 2 of Title 37 of the Code of Federal Regulations. Currently, applicants can file one of the following within two months of an application’s abandonment: (1) a petition to revive —if the application was unintentionally abandoned; or (2) a request for reinstatement —if the application was abandoned due to USPTO error (e.g., lost or mishandled documents). Requests for reinstatement are also available to registrants with proof that a USPTO error caused a registration to be canceled or expired. There are specific circumstances under which those requests are allowed. Petitions to the director, which can cover a wide variety of issues (most of which are outside the scope of this article, but typically include an objection to the USPTO’s handling of a particular matter because it did not follow procedure), can also be filed by applicants/registrants, but are not typically used for abandoned/canceled marks.

The proposed amendments to the Code of Federal Regulations are merely an effort to codify the rules set out in the Trademark Manual of Examining Procedure, so from a practical point of view, the process for filing revivals, reinstatements and petitions remains the same. The focus of the proposed “changes” is: (1) the onus on brand owners to diligently check the status of their applications and registrations, and timely request corrective action; (2) the prohibition on filing more than one consecutive petition to revive for an application, where the applicant alleges it didn’t receive an Office action and (3) clarifying that there is no fee for filing a request for reinstatement and describing the type of proof required to support such a request.

By all accounts, little would change for brand owners under the USPTO’s newly proposed rules. But this serves as a good reminder that brand owners should regularly monitor the status of their trademark applications/registrations and keep their contact information current with the USPTO to avoid dealing with the hassle of trying to bring their trademark applications and registrations back from the dead.

Judgment Continues to Grow in CardiAQ Valve v. Neovasc Trade Secret Suit

By Carly Bittman and Patrick E. Premo

The U.S. District Court for the District of Massachusetts recently awarded prejudgment and post-judgment interest in the trade secret suit between CardiAQ Valve Technologies and Neovasc (No. 14-cv-12405-ADB (D. Mass.)), adding another $21 million to the $91 million judgment entered against Neovasc last October. The case underscores the fact that extended litigation in trade secret disputes may significantly increase damages calculated under a reasonable royalty standard.

The suit stemmed from CardiAQ’s hiring of Neovasc in 2010 to help construct prototypes of a valve-implant device. CardiAQ alleged that Neovasc breached the parties’ nondisclosure agreement and misappropriated CardiAQ’s trade secrets by using CardiAQ’s confidential information to develop its own competing product. Following a two-week jury trial in May 2016, CardiAQ was awarded $70 million in damages for Neovasc’s theft of trade secrets. Judge Burroughs of the District of Massachusetts later granted CardiAQ’s motion for enhanced damages, awarding the company an additional $21 million and entering a $91 million judgment against Neovasc.

In rejecting Neovasc’s argument that prejudgment interest should not be conferred because the jury’s award depended on future events and reflected the value of CardiAQ’s damages only after the suit was filed, the court relied on the jury instructions that had been entered at trial. In particular, the jury had been instructed that if it found for CardiAQ on any of its trade secret claims, it was to determine damages under a reasonable royalty standard, defined as the amount that CardiAQ would have been willing to accept, and that Neovasc would have been willing to pay, if the parties had engaged in a hypothetical arms-length negotiation for the information before the misappropriation occurred. Although the jury had not offered any reasoning for its $70 million damages award, the court found that the jury’s decision reflected the amount that it believed Neovasc would have paid CardiAQ in a hypothetical negotiation occurring in 2010, well before the lawsuit was filed in 2014. The court therefore concluded that the verdict demonstrated the jury’s determination that CardiAQ should have received $70 million in 2010 and that CardiAQ was accordingly entitled to prejudgment interest on that figure.

The court also rejected Neovasc’s argument that CardiAQ was foreclosed from seeking prejudgment interest because the jury was never informed that such interest could later be added to the award, noting that Neovasc cited no authority for the proposition that a jury must be aware of the availability of prejudgment interest prior to making a determination of damages. The court also disagreed that an award of prejudgment interest would constitute a windfall to CardiAQ, finding instead that the award would fulfill the purpose of awarding prejudgment interest, namely to compensate CardiAQ for its inability to use the money that Neovasc should have paid it in 2010.

Lastly, the court found that CardiAQ was entitled to post-judgment interest of $2,354.27 per day from the date the judgment was entered until the judgment was satisfied, basing the figure on the $70 million jury verdict, the $21 million in enhanced damages and the $20,675,154 prejudgment interest award. As a result, the nearly six years between the trade secret misappropriation and the judgment in this case added over 20 percent to an already significant damages award.

The Growing Use of Patent Summary Affirmances

By Christopher P. King

The number of summary affirmances in patent cases at the Federal Circuit has grown explosively over the last several years, from 96 in 2013 to 179 in 2016. In a summary affirmance, the court merely affirms the prior decision, without providing any written opinion setting forth the reasons for doing so.

The rise of summary affirmances may reflect the increased number of appeals at the Federal Circuit engendered by the new types of proceedings permitted since 2012 by the America Invents Act. Such proceedings (e.g., inter partes reviews), decided by the Patent Trial and Appeal Board rather than by a district court, have often been appealed to the Federal Circuit. According to a recent article in Law360, on appeal, the Federal Circuit has proven very deferential to the PTAB’s decisions, affirming a vast majority of the decisions, typically via summary affirmances. See Ryan Davis,Fed. Circ.’s Embrace of PTAB to Fuel More AIA Reviews, Law360 (Mar. 8, 2016).

Summary affirmances are intended to be used solely for cases where the logic is so clear that no explanation is required, particularly in cases where oral argument took place. Judge Moore, for example, speaking at the PTAB Bar Association’s inaugural conference on March 3, opined that “I don’t think that anyone that ever comes to an oral argument that I’ve participated in loses and doesn’t know why.” See Matthew Bultman, Fed. Circ. Can Manage Influx of Cases, Judges Say, Law360 (Mar. 3, 2017). However, some litigants contend that the use of summary affirmances has sometimes been extended beyond the realm of clear-cut cases, leading to uncertainty and confusion. The company Leak Surveys, for example, requested a rehearing after the Federal Circuit issued a summary affirmance upholding a PTAB IPR decision invalidating parts of two of its patents, arguing that the court should provide an opinion when it relies on new or alternative grounds to affirm the PTAB. (Leak Surveys v. FLIR Systems, Nos. 16-1299, -1300, Dkt. 64 (Fed. Cir. Feb. 9, 2017)). More recently, on February 27, inventors Pui-Kwong Chan, May Sung Mak and Yung Wang asked for a rehearing after a Federal Circuit panel issued a summary affirmance upholding a PTAB judgment cancelling multiple claims in their patent on cancer treatment. (Chan v. Yang, No. 16-1214, Dkt. 48 (Fed. Cir. Feb. 27, 2017)).

Some commentators, in contrast, have no objection to the current use of summary affirmances. These commentators note that although the total number of summary affirmances has increased, the increase merely tracks the increase in the number of appeals handled by the Federal Circuit, with the percentage of decisions involving a summary affirmance holding steady. Accordingly, these commentators argue, despite the significant use of summary affirmances, there have still been more than enough published opinions to provide legal guidance.

Yet other commentators contend that the issuance of substantive opinions along with decisions is not merely a pragmatic decision left to the discretion of the Federal Circuit based on its current caseload, but rather is a statutory requirement inherent in the Patent Act itself, at least in the case of appeals from the PTAB. These commentators cite the language of 35 U.S.C. § 144, which states that the “Federal Circuit shall review the decision from which an appeal is taken on the record before the Patent and Trademark Office … [and] shall issue to the Director its mandate and opinion.” Leak Surveys, for example, has cited this statutory language in its request for rehearing and has suggested that it might bring the issue to the U.S. Supreme Court for clarification.