Patent Loving Judge Keeps Pissing Off Patent Appeals Court, But Doesn't Seem To Care Very Much

from the how-is-this-allowed?!? dept

You may recall last fall we had an absolutely astounding story about Judge Alan Albright, a former patent litigator, who was appointed as the only judge in the federal district court in Waco. He very, very quickly made it clear that he wanted all patent cases to come to him, turning the Western District of Texas into the new favored home of patent trolls, taking the mantle from East Texas, which has famously been the trolls' preferred home for over a decade. Albright did things most people inherently recognize no judge should ever do. This includes things like literally going on a publicity tour to convince patent holders and trolls to file patent cases in his court. To this day, he seems to relish the fact that, despite being on the bench for just a little over two years, more than 20% of all patent cases end up on his personal docket.

With his desire to be the judge of choice for patent holders, he also built up a reputation for refusing to transfer cases to more appropriate jurisdictions -- even though the Supreme Court made clear in 2017 that patent cases should go to the appropriate docket, rather than whatever one the patent holder wants. A paper published last fall all about Albright's troubling role in patent cases called this out specifically.

Since taking the bench, Judge Albright has likewise staunchly refused to transfer cases out of the Western District. As of July 7, 2020, he has decided thirteen motions seeking transfer away from the Western District under § 1404(a); he has denied eleven. In fact, in a recent order, Judge Albright effectively told Apple—which has been sued at least ten times in cases assigned to Judge Albright and regularly seeks to have those cases moved to the Northern District of California—to stop filing transfer motions.

At the time we wrote that story last fall, the Court of Appeals for the Federal Circuit (CAFC), which handles all patent appeals, had just told Albright to transfer at least one of those cases. In February it got angry at Albright again in a case involving SK Hynix. Incredibly, even though SK Hynix sought to transfer the case all the way back in early May of last year, Judge Albright not only refused to rule on the motion to transfer, but ordered SK Hynix to go through the expensive discovery process -- which is what tends to destroy defendants in patent suits and push them to settle. After months of the judge refusing to even respond to the motion to transfer and having to go through expensive discovery, SK Hynix asked the CAFC to weigh in, and they slammed Albright, reminding him that they'd already scolded him about this last year:

We agree with SK hynix that the district court’s handling of the transfer motion up until this point in the case has amounted to egregious delay and blatant disregard for precedent. As we recently reiterated, “[a]lthough district courts have discretion as to how to handle their dockets, once a party files a transfer motion, disposing of that motion should unquestionably take top priority.” In re Apple Inc., 979 F.3d 1332, 1337 (Fed. Cir. 2020) (citations omitted); see also In re Horseshoe Entm’t, 337 F.3d 429, 433 (5th Cir. 2003) (“[I]n our view disposition of that [transfer] motion should have taken a top priority in the handling of this case by the . . . District Court.”). No such priority was given to the motion here, as it simply lingered unnecessarily on the docket while the district court required the parties to proceed ahead with the merits.

Unfortunately, rather than force Albright to transfer the case, they noted that he'd finally agreed to have a hearing on the motion to transfer, so they'd basically let it slide. The very next day, Albright ruled on the motion... and denied the transfer, saying the trial would move forward. A few days ago, SK Hynix agreed to a settlement to end the case.

Last month, CAFC had to step in again on an Albright case where he seemed to have done exactly the same thing. This case involved TracFone. In June, it had filed a motion asking Albright to either (1) dismiss the case for being in an improper venue, or (2) transfer it to a more appropriate venue. Albright did neither. Instead he pushed TracFone into discovery while simply not ruling on the motion. Notice a pattern? So did the CAFC:

We addressed strikingly similar circumstances from the same district court last month in SK hynix. There, as here, the petitioners sought mandamus relief from this court after waiting nearly eight months for a ruling on a motion to transfer that was fully briefed. We agreed with the petitioner that “the district court’s handling of the transfer motion up until this point in the case has amounted to egregious delay and blatant disregard for precedent.” 835 F. App’x at 600–01. We did not compel further action because the district court scheduled a hearing while the petition was pending before this court, but we directed the district court to stay proceedings, including the upcoming Markman hearing, until the district court ruled on the motion. We explained that mandamus was appropriate because “precedent compels entitlement to such relief and the district court’s continued refusal to give priority to deciding the transfer issues demonstrates that SK hynix has no alternative means by which to obtain it.”

It then points out what a travesty this is:

In Google, we explained that lengthy delays in resolving transfer motions can frustrate the intent of § 1404(a) by forcing defendants “to expend resources litigating substantive matters in an inconvenient venue while a motion to transfer lingers unnecessarily on the docket.” 2015 WL 5294800 at *1. We concluded that a trial court’s failure to act on a fully briefed transfer motion that had been pending for approximately eight months while pressing forward with discovery and claim construction issues amounted to an arbitrary refusal to consider the merits of the transfer motion. Id. at *1–2. We therefore directed the district court to promptly rule and to stay all proceedings pending completion of the motion. Id. at *2.

Our decisions in Google and SK hynix rest on a principle well-established in Fifth Circuit law: That district courts must give promptly filed transfer motions “top priority” before resolving the substantive issues in the case. In re Horseshoe Entm’t, 337 F.3d 429, 433 (5th Cir. 2003) (“[I]n our view disposition of that [transfer] motion should have taken a top priority in the handling of this case by the . . . District Court.”); see also In re Apple, Inc., 979 F.3d 1332, 1337 (Fed. Cir. 2020 (explaining that “once a party files a transfer motion, disposing of that motion should un-questionably take top priority.”); In re Nintendo Co., Ltd., 544 F. App’x 934, 941 (Fed. Cir. 2013) (“[A] trial court must first address whether it is a proper and convenient venue before addressing any substantive portion of the case.”).

We agree with TracFone that the circumstances here are comparable to those in Google. As in Google, the facts here establish that the district court has clearly abused its discretion. And, unlike in SK hynix, the court to date has taken no action to suggest it is proceeding towards quick resolution of the motion.

Ouch. Having been benchslapped yet again, Judge Albright announced that he was finally going to start doing what he should have been doing all along: issuing a standing order admitting that certain other issues, such as the important Markman hearing where the judge basically determines what the patent claims cover, would be held off until he was able to review venue transfer requests. Markman hearings don't need to be held right away, but Judge Albright seemed to push to get them going quickly even while ignoring transfer requests. But now he says he'll make sure to rule on transfer prior to any Markman hearing:

When there is a pending inter-district transfer, the Court will either promptly enter an order resolving the pending motion(s) prior to the Markman hearing or it will postpone the Markman hearing until it has had the opportunity to do so. The Court will not conduct a Markman hearing until it has resolved the pending motion to transfer.

It only took a bunch of CAFC benchslaps to get there. Of course, getting him to rule quickly doesn't mean that he'll actually transfer the cases. Three days after CAFC yelled at Albright about the TracFone situation, he denied the transfer request (as well as the dismissal request) even while admitting that TracFone's preferred venue in South Florida would be more convenient for the witnesses and parties.

Also, it looked like CAFC was on the verge of benchslapping him again, but he (WOW!) actually transferred one case to Houston. Of course, that was after he'd already denied the transfer last summer, and CAFC had already told him to reconsider, which he hadn't actually gotten around to many months later. The defendant in that case, Nitro Fluids, had gone back to CAFC to ask it to make Albright rule, and thus he finally did so -- leading the CAFC to drop the issue as moot.

And, most recently, Albright has denied a request by Microsoft to transfer a patent case out of his court. In this most recent ruling Albright declares that: "A party seeking transfer to an allegedly more convenient forum carries a significant burden." I mean, yeah, in your court.

I remain flummoxed as to how this is allowed. I cannot come up with any reasonable explanation for allowing a judge to act this way. It is beyond sketchy. He's advertising his court as friendly to patent filers, and when defendants seek to move cases to more appropriate venues, he stalls, forces them into expensive processes -- despite courts telling him to stop -- and when he finally makes a slight nod towards obeying the rules, he still regularly rejects the transfer requests. Even if he and his supporters argue that there's some reason that all of this makes sense, at the very least, it reeks of gaming the system, bias against patent defendants, and not wanting to play by the rules. It's shameful behavior by a judge.

Filed Under: alan albright, cafc, district court, markman hearings, patent trolls, patents, transfers, waco

Watch Out: The Patent Maximalists Are On The Warpath To Destroy Innovation And Empower Patent Trolls

from the it-never-ends dept

Over the last year or so there's been a concerted effort by patent maximalists to try to shred a long line of very good Supreme Court rulings that finally (after two decades) limited just some of the destructive nature of patent trolling. There was an attempt in Congress to literally reject all of those key Supreme Court cases, and bring back Congress's full support for patent trolling. The current head of the patent office has been spewing a bunch of similar nonsense as well, and seems to have no recognition that patents that are too broad hinder, rather than help innovation. And now we have Judge Randall Rader, who ran the federal patent court, the Court of Appeals for the Federal Circuit (CAFC), for many years before stepping down due to an ethics scandal.

That ethics scandal? Being way too chummy with patent lawyers who practice before him. As we've noted over the years, part of the problem with the setup of CAFC -- a special appeals court for all patent appeals cases to go to -- was that the judges on it tended over time to buy into patent maximalism, because they basically only spoke to patent lawyers.

Judge Rader has now decided to pop back up again to argue that we need more bad and broad patents in order to enable more patent trolls. Or America won't be able to compete. Or some such nonsense.

Our country’s founders understood that patents are critical to innovation. For that reason, the principle is enshrined in our Constitution, which grants Congress the power “to promote the Progress of Science and useful Arts” by awarding “Inventors the exclusive Right” to their discoveries. Indeed, our patent system incentivized and empowered early inventors like Thomas Edison and Alexander Graham Bell, and helped create today’s technological giants like Apple, Google, Microsoft and IBM.

This is basic economics. Patents guarantee a limited monopoly on inventions (usually 20 years), which lets inventors recoup the costs of research and development, and repay investors who help convert scientific theory into usable technology. It is no coincidence that America in the 20th century had both the strongest patent system and the most powerful economy in the world.

This is ahistorical claptrap. Patents have never been "critical" to innovation. Plenty of studies have shown that innovation occurs in the absence of patent laws (and seems to occur even faster in those markets). And if we're talking "basic economics" let's send Judge Rader back to his Econ 101 class. Monopolies are the antithesis of innovation. Inventors recoup the cost of research and development by selling a product in the market. And yes, there are reasonable concerns about copycats, but copycats are what drive innovation. The originator has to keep innovating, and making their product better, and copycats tend to trail innovators.

Indeed, the monopolies are what slow innovation, by taking away the incentive for inventors to actually make their product better. This is why the steam engine didn't really take off until the patents expired. We see this over and over again.

Also, Rader ignores that while his argument might make sense in a few limited areas of innovation, the vast majority of innovation happening today has nothing to do with patents at all. The R&D cost of developing "software" doesn't need to be recouped the way he describes, and software is already protected by copyright. Google didn't rely on the patent system -- and it's insulting to the company to say that they did. Microsoft and Apple didn't start relying on the patent system until much later in their lives -- well past what's considered their "innovative" period, and only to limit smaller competitors and slow down the pace of innovation.

In short, Judge Rader has no idea what he's talking about. And that's just in the lead in to this piece. Because now he's going to complain that we don't have more software patents -- attacking the most important and useful Supreme Court case in decades, the Alice case that effectively invalidated a ton of ridiculous software patents that never should have been granted. The impact of the Alice ruling was fantastic. Tons of software patents were invalidated. It destroyed the business model of a bunch of patent trolls and it (for a little while at least) got the US Patent Office to start rejecting a bunch of bad patents.

But, of course, the ruling in the Alice case was overruling one of the most ridiculous CAFC rulings in which Judge Rader himself said a bunch of ridiculous things. So now he wants to undo the Supreme Court's ruling that rejected his ideas about software patents.

In Alice Corp. v. CLS Bank, the Supreme Court ruled that a computer service designed to mitigate risk in financial transactions could not be patented despite the fact that computers and software were involved because the invention related to an “abstract idea.”

In so ruling, the court undid decades of strong patent protection by throwing open the floodgates to categories of U.S. innovation that would no longer qualify for patent protection. Twenty years ago, America largely protected computer software and emerging technologies while Europe and Asia did not. Since then, patent protection in Europe and Asia has advanced, while the U.S. has taken a huge step backwards with Alice and cases that followed.

The result is that many countries are now more competitive than ours in promoting innovation.

This is ridiculous. Yes, China is doing a lot more patenting than before, but as an anti-competitive tool to block American companies. There is no sign that software patents is why the US is somehow "less competitive" than before. Rader is making that up.

Now the phrase “abstract idea” does not appear in any patent law that Congress enacted. Despite the fact that almost every invention starts with an abstract idea, the Supreme Court declined to define what the phrase means. It noted that it “need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.”

This is hogwash. The reason abstract ideas are not patentable is because the whole point of the patent system was supposed to be to get inventors to reveal the details of what their invention was so that others could make use of it once the patent expired. But there is no invention of an "abstract idea." The Supreme Court was right to reject it because the idea of patenting abstract ideas was a huge drain on innovation in the first place, where you just had a bunch of lawyers throwing around dumb ideas, adding "on a computer" or "on the internet" and then being able to shakedown companies that actually innovate.

American companies are now struggling to keep up with foreign competitors like Huawei and Samsung, which benefit from patent rights in their home countries that no longer exist in our own. As Senators Coons and Tillis observed, high-tech inventors “are receiving patents in Europe and China, but not in the United States. Why should we cede our competitive edge at this critical juncture?”

Oh bullshit. They're not struggling to keep up with foreign companies because of patents, but because of some bad decisions in building out their own product suite -- which is part of the reason that Cisco has been pushing efforts to ban Huawei around the world, rather than fighting on an even playing field. It's not about the patents.

Despite bipartisan support, however, efforts to change the law stalled. Some might think that, in the midst of a global pandemic, Congress was right to put patent rights on the backburner. But the current crisis only highlights the need for reform. Under our current approach to patent eligibility, diagnostic tests for Covid-19 cannot be patented, so the resources and incentives to develop new tests in the U.S. were weak and unready.

Yes, Congress was right to put patent reform on the backburner (and it happened way before COVID-19 because there wasn't nearly enough support in Congress for the bill). And, again, patents are not the incentive to create tools to fight COVID-19. Public health, public safety, and the market are all doing a pretty fucking good job creating incentives. The idea that we were unready because of weak patent laws is complete and utter hogwash.

Besides, after nationwide shutdowns and an uncertain path to reopening the economy, American industries could use a break.

A break... meaning tons of new patent trolls shutting down the actual innovative companies by a bunch of patent lawyers shaking down the system to buy new yachts? Fuck that.

One hope still remains: the Supreme Court, which has the power to clean up its own mess. One of the Federal Circuit’s most egregious decisions, Chamberlain Group v. Techtronic Industries, is now on appeal to the Supreme Court. In a decision that Senator Tillis called “madness,” the Federal Circuit put a garage-door opener patent under its sledgehammer. If garage-door openers are too “abstract” for patenting, what else is left? As the patent owner in the Chamberlain case put it, this is “a patent emergency.”

As Judge Rader well knows, he is totally misrepresenting the Chamberlain case. The patent was not on a "garage door opener" but a specific type of garage door opener, in which one of the key claims was for "wirelessly communicating status information about a system." THAT is the "abstract idea" that should not be patentable, because of course that shouldn't be patentable. We didn't need a patent system to add a fucking wireless communication system to a garage door opener, Randall. Get real.

What the CAFC, correctly (I should add), found was that if you took out abstract ideas like that, there was nothing inventive at all going on here. This was just combining a few well known ideas into a new use case. And, sure, that should be rewarded, but that's how the market works. It gets rewarded in the market. Make a better mousetrap, etc. etc. etc. Not hire a lawyer to patent your better mousetrap and then wait for others to make the same obvious mixing and matching of off the shelf technology and sue them out of existence.

This is patent maximalist gaslighting.

Filed Under: business model patents, cafc, innovation, patent eligible subject matter, patent maximalism, patent trolls, patents, randall rader, software patents

Appeals Court Smacks Down Patent Troll Blackbird, Orders It To Pay $363k In Attorneys Fees To Company It Sued

from the take-that dept

Remember Blackbird Technologies? This was the patent trolling firm made up almost entirely of lawyers who insisted they weren't a law firm... they just bought up patents for basically nothing and then threatened and/or sued a bunch of companies claiming patent infringement. A few years back it was suing basically everyone over some dubious patents. But it made a pretty massive strategic error in suing Cloudlfare because Cloudflare decided to fight back, not just to win its case, but to invalidate as many Blackbird patents as possible, while simultaneously reporting the ethics violations involved in pretending not to be a law firm when you really are (and in what appeared to be trying to purchase the bare right to sue, rather than the actual full patent rights).

That process ended poorly for Blackbird, who lost in court and on appeal, in a fairly demeaning way (the courts gave Cloudflare a complete and total victory -- and the appeal was even ruled upon within days of the hearing, which is almost unheard of in such cases). It still cost Cloudflare hundreds of thousands of dollars, but Blackbird had lost many of its employees and had cut back significantly on filing new lawsuits.

And now it's in even more trouble. The Court of Appeals for the Federal Circuit (CAFC, the appeals court that handles all patent cases) has upheld a lower court's order telling Blackbird it needs to pay $363,243.80 in legal fees to one of the companies it tried to shake down, Health in Motion LLC (HIM). The court clearly sees what's going on here, and its recounting of how Blackbird tried to get out of the case is... really something to behold. First, Blackbird sued and, following the typical patent trolling playbook, asked for $80,000 to settle. That number is (purposely) significantly less than it would take to fight the case in court. That's how the whole patent trolling shakedown process works. Sue, and then offer to settle for less than it would cost the defendant, even if they won the case. But HIM also decided to fight back and told Blackbird that it should pay them for having to waste this time on lawyers. From the CAFC summary, this is a fun read (if you're confused "Appellees" is HIM, the defendant in the case):

In June 2017, Blackbird offered to settle its case against Appellees for $80,000.... Appellees declined Blackbird’s offer, explaining that Blackbird’s “infringement allegations lack[ed] merit” “[i]n view of the substantial differences between what is claimed in the [’]976 [p]atent and the accused device,” .... Appellees also explained that they “believe[d] there [was] a strong likelihood” that Blackbird would be ordered to pay Appellees’ attorney fees, and countered with a settlement offer that included, inter alia, Blackbird “mak[ing] a payment of $120,000” to Appellees.

In October 2017, Blackbird made another settlement offer, this time for $50,000... (“Blackbird’s counsel . . . made an oral offer to settle the case if [Appellees] paid Blackbird $50,000.”). Again, Appellees declined.... In April 2018, Blackbird offered to settle yet again, this time for $15,000.... Appellees once again declined, “maintain[ing] their request that Blackbird pay a portion of [Appellees’] expenses[.]”... Later that same month, and again the following month (May 2018), Blackbird offered “a ‘walk-away’ settlement whereby [Appellees] would receive a license to the [’976] patent for zero dollars, and the case would be dismissed.”.... Once again, Appellees declined.... (Blackbird’s Vice President and Head of Litigation stating that “[Appellees], through counsel, have rejected all settlement offers by Blackbird . . . , including the zero-dollar ‘walk-away’ offer. . . . I understand the reasoning for this to be that [Appellees] have a belief that they will ultimate[ly] be awarded their legal fees after judgment in this matter”).

This is amusing. It's basically "Pay us $80k to go away." "No, fuckers, how about you pay us $120k." "Okay, how about $50k to go away." "No. You pay us." "$15k?" "No, you pay us!" "Okay, how about we just walk away for nothing." "No, dammit, you pay us."

Given that Blackbird's trolling strategy flopped pretty spectacularly, they then tried strategy two: run away!

In May 2018, shortly before discovery was scheduled to end, Appellees filed a motion for summary judgment.... Blackbird opposed... but, after Appellees’ motion was fully briefed, and without notifying Appellees in advance, Blackbird filed a notice of voluntary dismissal with prejudice... executed a covenant not to sue,... and filed a motion to dismiss for lack of subject matter jurisdiction.... (Appellees’ lead counsel explaining that “Blackbird’s counsel never mentioned that he intended to file a covenant not to sue. . . . Blackbird surprisingly filed a Notice of Dismissal, Covenant Not to Sue[,] and Motion to Dismiss”);... (Appellees’ counsel stating that Appellees “didn’t even get a call from Blackbird, [Appellees] just saw . . . on the [CM/]ECF [system] that [Blackbird] had filed these documents dismissing the case”).

That, right there, is Blackbird realizing "oh fuck, we're screwed."

The court notes that in "exceptional" cases,the courts may award legal fees. And this was an exceptional case.

Considering the “totality of the circumstances,” the District Court found that Blackbird’s case against Appellees is “exceptional within the meaning of [§] 285 and Octane Fitness.”.... Specifically, the District Court determined that Blackbird’s case against Appellees is “exceptional” because it “stand[s] out from . . . others with respect to” both “the substantive strength of [Blackbird’s] litigation position” and “the unreasonable manner in which the case [was] litigated” by Blackbird.... The District Court also found that “granting a fee award [was] warranted” in this case “to deter future abusive litigation.”... Finally, the District Court concluded that Appellees’ requested award of $363,243.80 was reasonable considering each attorney’s “comparable skill, experience, and reputation.”

And, as the CAFC notes, all of that was exactly right. I won't go through the full smackdown, but let's just say that CAFC found Blackbird's arguments "unpersuasive." Blackbird tried to argue that it couldn't have possibly known that its "litigation position was purportedly weak," but the court highlights that this is belied by the company's own actions.

...the exercise of even a modicum of due diligence by Blackbird, as part of a presuit investigation, would have revealed the weaknesses in its litigation position.

It also mocks Blackbird's silly claim that it only would have known that its legal position was weak if it was on notice from the court. As CAFC basically says, Blackbird's own actions disprove this claim:

It is also unclear what effect, if any, notice would have had on Blackbird’s conduct, as Blackbird waited until the “eve of trial” to dismiss its suit... despite being aware of Appellees’ non-infringement contentions months before....

At a minimum, Blackbird was aware of Appellees’ intention to seek attorney fees and expenses as early as December 2016, when, in answering Blackbird’s Original Complaint, Appellees requested attorney fees and expenses..... While this request may not have provided the “focused” and “supported” notice that we have looked for in other cases... it undermines Blackbird’s attempt to blame others, including the District Court, for it being purportedly unaware of the weaknesses in its litigation position. Accordingly, the District Court did not abuse its discretion in determining that this case “stands out” with respect to the lack of substantive strength in Blackbird’s litigation position.

Also, CAFC notes, it wasn't just Blackbird's laughably weak legal position that made this "exceptional." Blackbird's actions very much contributed to that decision, including its pursuit of "nuisance value settlements" (i.e., trolling).

The District Court did not limit its findings to the substantive strength of Blackbird’s litigation position, and further determined that Blackbird’s case against Appellees was “exceptional” because Blackbird “litigated . . . in an unreasonable manner.” ... The District Court made multiple findings to support this determination... each of which is supported by the record. First, the District Court found that Blackbird “made multiple settlement demands that were far less than the anticipated cost of defense,” i.e., nuisance value settlement offers.... By its own admission, Blackbird made a series of decreasing settlement offers... each of which was significantly less than the cost of litigation ... (Appellees’ litigation costs totaled at least $363,243.80).

Second, the District Court found that Blackbird unreasonably “delayed in producing documents, withheld many documents until after [Appellees] took [Blackbird’s] deposition[,] and completely failed to produce other responsive documents.”... Again, the record supports the District Court’s findings; indeed, the record shows numerous, unexcused delays by Blackbird in producing documents... as well as Blackbird’s attempts to withhold responsive documents entirely, without notice or excuse, until Appellees learned of the documents during depositions... (Blackbird admitting that it “had the documents in-house” yet failed to produce them),... (Blackbird admitting “[t]hat [it] is true” that “documents identified in th[e] deposition” have never been produced). While Blackbird subsequently implied that some of these documents might be privileged... Blackbird has failed to identify in the record any such assertion of privilege prior to the depositions.

Finally, the District Court determined that Blackbird had unreasonably “filed a notice of dismissal, covenant not to sue, and motion to dismiss without first notifying [Appellees’] counsel, on the same day pretrial submissions were due and shortly before [Appellees’] motion for summary judgment was to be decided.” ... The record supports these findings.... Accordingly, the District Court did not abuse its discretion in determining that this case stands out with respect to the manner in which Blackbird litigated.

Also, the court points out, Blackbird is a damn patent troll who does this type of stuff all the time:

In addition to its findings as to the substantive strength of Blackbird’s litigation position and conduct during litigation, the District Court found that “granting a fee award [was] warranted” in this case “to deter future abusive litigation.”... (explaining that Blackbird “has filed over one hundred patent infringement lawsuits, and none have been decided, on the merits, in favor of [Blackbird]”)

From there, the court looks at the requested attorneys fees and finds them perfectly reasonable... and concludes that Blackbird needs to pay up to the tune of $363,243.80.

Filed Under: cafc, legal fees, patent troll, patents, shakedown, vexatious
Companies: blackbird, health in motion

Top Oracle Lawyer Attempting To Gaslight Entire Software Community: Insists APIs Are Executable

from the oh-come-on dept

Last week, the Solicitor General of the White House weighed in on Google's request for the Supreme Court to overturn the Federal Circuit's ridiculously confused ruling in the Oracle/Google case concerning the copyrightability of APIs (and whether or not repurposing them is fair use). Not surprisingly, as the Solicitor General has been siding with Oracle all along, it suggests that the Supreme Court not hear the case. Of course, it does so by completely misrepresenting what's at stake in the case -- pretending that this is about whether or not software source code is copyright-eligible:

This case concerns the copyrightability of computer code. To induce a computer to perform a function, a person must give the computer written instructions. Typically, those instructions are written in “source code,” which consists of words, numbers, and symbols in a particular “programming language,” which has its own syntax and semantics. The source code is then converted into binary “object code”—ones and zeros—that is readable by the computer.

It is both “firmly established” and undisputed in this case that computer code can be copyrightable as a “literary work[].” 1 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 2A.10[B] (2019). Section 101 defines a “computer program” as “a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.” 17 U.S.C. 101. And various Copyright Act provisions recognize that a person may own a copyright in a “computer program.”

Except... that's not what this case is about. Even remotely. Literally no one denies that software source code is subject to copyright. The question is whether or not an Application Programming Interface -- an API -- is subject to copyright. As we've been saying from the beginning, the most frustrating thing about this entire case is that you have non-technically savvy lawyers and judges simply refusing to comprehend that an API is not software. It's not executable code. It's not "source code" for software. An API is a set of specifications for allowing the access of data, an application, or service. It's a "method of operation," which is simply not subject to copyright law. Indeed, back in 1996, the Supreme Court ruled in Lotus v. Borland that a user interface to a computer program is not subject to copyright under Section 102(b) as the interface is a "method of operation."

In the Solicitor General's brief, they wipe this away by insisting that the ruling in Lotus v. Borland is different because that was about an interface, whereas this case is about source code.

The Federal Circuit’s construction of Section 102(b) in this case does not conflict with those decisions. See 14-410 U.S. Br. 19-22. In Lotus, the First Circuit invoked Section 102(b) to find that the arrangement of menu commands presented to a software user was an uncopyrightable “‘method of operation’” for the software at issue. 49 F.3d at 815-818. The case did not address the copyrightability of computer code, and the First Circuit has subsequently acknowledged, consistent with the decision below, that Section 102(b) codifies the idea/expression dichotomy.

Right. But this case also does "not address the copyrightability of computer code." Because it's not about computer code.

While it's no surprise that the Solicitor General has now gotten this wrong, what was a little surprising was that Oracle's lead lawyer in this case, spent half the weekend acting like a common Twitter troll, gaslighting the entire software community on Twitter, making repeatedly false claims about APIs, and then attacking anyone who pointed out that she's flat out wrong by accusing them of being Google shills.

Annette Hurst, prior to this nonsense, was fairly widely respected intellectual property lawyer and a big time partner at Orrick, one of the largest law firms in the world. She's been involved in some big copyright cases in the past, such as the famed Mattel v. MGA case (she was on the right side of that one) and also in the important Kirtsaeng case in which she again represented the correct side.

However, when it comes to the Oracle case, she seems to jump in to argue things that are blatantly ignorant of how software actually works. You may recall, after the jury in the district court found that Google's use of the Java APIs were fair use, she laughably insisted that it would kill open source software because it meant software source code couldn't be opened up any more. Except, once again, she was totally confusing an API with executable software code.

Years on, and she's still not just confused, but actively misrepresenting things. Famed and well-respected litigator and law professor Mark Lemley called out the Solicitor General's "indefensible" statement that Lotus v. Borland does not conflict with this ruling, and Hurst responded dismissively:

But, again, she's focusing on the wrong thing. "Software is protected by copyright." Well, duh. No one disagrees. This case is not about that. It's about whether or not an API is protected by copyright. But Hurst keeps conflating executable software code and APIs. And while expert after expert called her out on this on Twitter, she just kept digging in deeper, variously calling any critic a Google shill or, perhaps worse, insisting that APIs are executable code.

This is not just wrong, it's head-slappingly, stupidly wrong. And every single reply to Hurst are people telling her it's wrong in so many different ways.

As more and more people called out this nonsense, literally her only claim was to argue that anyone taking the other side must have been funded by Google.

What's doubly ironic here is that the link she puts in that post, is to a shadowy non-profit whose only role in life is to write up laughingly misleading reports accusing tons of people of being Google shills based on shoddy (to downright incorrect) research. It has been forced to run multiple corrections to its bad reporting. And, the best part is: for an organization that claims its sole purpose is to shine a light on what it claims is Google's secret funding... the Google Transparency Project refuses to name a single one of its own donors. Though, there is one who has taken credit: Oracle. The very company which has probably paid Hurst's employer enough money for her to buy a few very nice homes just on this case alone.

Hurst may be a great copyright lawyer, but she doesn't know shit about what an API is, and, incredibly and unfortunately, has convinced the Federal Circuit that an API is no different than software. She may succeed in convincing the Supreme Court that as well, as she's apparently convinced the Solicitor General. None of that makes it right however. And her going around parading her ignorance and attacking those who actually know what the fuck they're talking about concerning the difference between an API and executable code is a disgrace.

This is not something that one can just say it's a difference of opinions over. We can disagree over whether or not APIs should be covered by copyright. That's an opinion. We can disagree over whether or not Google's copying of an API should be considered fair use. We can disagree over what we think the state of copyright should be. But what no one can deny is that an API is not executable code. And yet, Hurst continues to argue it and (ridiculously) has convinced some courts of this blatantly incorrect thing, which is helping her client get the opinions it wants on the other things above. And that's despicable.

Filed Under: annette hurst, apis, cafc, copyright, interfaces, methods of operation, software, solicitor general, source code, supreme court
Companies: google, oracle

Appeals Court Takes No Time At All In Rejecting Patent Troll's Ridiculous Lawsuit Against Cloudflare

from the buh-bye-now dept

You may recall that back in May of 2017, a patent trolling operation called Blackbird Technologies picked on the wrong internet company to troll. Having built up some success blasting frivolous lawsuits at other internet companies, it chose to go after Cloudflare. That was a mistake. Cloudflare didn't just hit back, it promised to destroy the patent trolling firm, Blackbird Technologies. It opened up a campaign to crowdsource prior art not just on the patent at issue in its lawsuit but on every patent that Blackbird Technology claimed to hold.

Almost exactly a year ago, Cloudflare won its case with the court invalidating the patent. It was such an easy decision that it took US District Court Judge Vince Chhabria barely over a page explaining why the patent was so clearly invalid and the case was dismissed.

Blackbird, for reasons that escape me, decided to appeal to the Federal Circuit. Now, we've spent the better part of two decades mocking the Federal Circuit and its history of nutty decisions, but there are some cases so obviously bad that even the CAFC can't fuck them up. This is one. A CAFC panel heard the case last week and found the situation so utterly stupid that it only took a few days for it to affirm the lower court ruling. Indeed, its ruling is even shorter than the district court's ruling. The CAFC opinion doesn't even say anything other than: "Affirmed."

Ouch.

According to Cloudflare's General Counsel, Doug Kramer, in a blog post on Cloudflare's site, the CAFC panel didn't have a single question for the company's lawyers (which is nearly unheard of), leaving him with tons of extra time:

A panel of three judges from that court heard arguments on the appeal last Friday, but didn’t ask our attorney a single question about the substance of our argument on the abstractness of the patent. He sat down with almost half of his 15 minutes of argument time left because there was nothing more to say. Yesterday, just three business days after that hearing, the court affirmed the lower court’s decision in summary fashion, which means they didn’t even write about the claims or arguments, they just said “Affirmed” (see below).

Of course, as Kramer further notes in the post, even "easy victories" take a ton of time and resources, not to mention other kinds of costs that can impact a business in lots of ways:

Blackbird filed this case in March 16, 2017. For nearly two years, anyone doing due diligence on Cloudflare might have had questions about whether there was a cloud over our rights to our technology. And we had to go through a lot of briefing, and the related legal expenses, to get to this point. Blackbird’s combined legal filings at the district court and appellate court amounted to more than 650 pages, our responsive briefs were more than 900 pages.

The two courts spent less than two pages describing a result that was obvious to them, but it took us two years of uncertainty and cost to get there. Federal court litigation doesn’t make anything easy. Even if Blackbird had won the case, it is not clear they would have been able to collect significant damages. Our allegedly infringing use was not a product or feature that we charged for or made money from – it was essentially posting interstitial messages for various errors. Even though we were able to win this case early in the legal process and keep our costs as low as possible, it’s possible we spent more money resolving this matter than Blackbird would have been able to collect from us after trial.

This is why trolling works. This is why so many plaintiffs use the judicial system as a weapon, even when their lawsuits clearly have no merit. Even to get an "easy win" you can lose, big time.

Filed Under: cafc, patent trolling, patents
Companies: blackbird technologies, cloudflare

Supreme Court Asked To Correct Appeals Court (Again) And Explain That Patentable Ideas Need To Be New

from the it's-kind-of-a-key-point dept

In order for something to be patentable subject matter, it has to meet a few criteria, listed out in the Patent Act. It needs to be a "useful process, machine, manufacture, or composition of matter" and it needs to be "non-obvious" to someone "having ordinary skill in the art." But, perhaps most importantly it needs to be a new invention. You can't patent something someone else already invented. That's why prior art is so important.

Already, the US Patent Office is notoriously bad at finding prior art, which has been a big complaint here at Techdirt for over a decade. Part of this is that they limit what they'll even look at as prior art, unless information is put directly in front of their faces by those trying to invalidate bad patents. Generally, most of the prior art that patent examiners look at consisted of... earlier patents and scientific journals. And that's not nearly enough for a whole variety of reasons. But, now the Federal Circuit has suggested that even earlier patent applications may not really count as prior art.

EFF and R Street teamed up to file an amicus brief with the Supreme Court asking it to reverse the Federal Circuit (something the court has done over and over and over and over and over again in the last dozen or so years).

At issue was an attempt to invalidate a patent showing prior art in an earlier patent application. Seems like this should be a slam dunk. There's the patent and an earlier application showing the prior art. Therefore, not novel and not patent eligible. But the courts decided to get nitpicky, and argued that because the prior art in question wasn't directly in the "claims" of the patent, but in the description, it somehow didn't count. The brief explains why this is ridiculous:

First, patents are granted to encourage disclosure of new inventions. Granting a patent on an invention already disclosed to the public works the opposite effect, closing off knowledge that was previously free to use.

Second, Ariosa’s rule will render the criteria for patentability unstable over time, even as applied to a single patent, because it renders the prior art status of a patent application dependent on the contents of applications filed later. Under the Federal Circuit’s rule, then, what is prior art one day could evaporate the next, or vice versa.

Third, applicants will have even less motivation to draft narrow claims, which give the public greater notice and certainty as to a patent’s scope. Drafting broad claims will now not only allow them to ensnare more infringers, but will also be necessary to ensure their submission prevents the allowance of claims covering all it teaches.

Fourth, examiners will have to choose between allowing overbroad claims to issue and requiring amendments that narrow the claims, but in so doing, shrink the pool of prior art available to the examiner in future patent applications. This potentially affects incentives both for their substantive work, in terms of whether to allow or reject patent claims, and for their procedural incentives to complete examination more or less quickly.

But it seems there's an even more basic issue: quibbling over where the prior art lives is not really the key. It's that the prior art exists at all. Once you have that, it doesn't matter where it showed up, whether in a patent description or on the back of a bubblegum wrapper, so long as the dates it was created is clear.

Hopefully, the Supreme Court decides it's worth explaining the basics of patent law to CAFC yet again.

Filed Under: cafc, inventions, new, novelty, patents, prior art, supreme court
Companies: ariosa, illumina

Federal Circuit Agrees To Speed Up Publication Of Court Documents After EFF Complaint

from the broadband-world,-dial-up-court-system dept

A small but significant win for transparency has been obtained by the EFF. As we're all well aware, the federal courts often seem to be at odds with the First Amendment they're supposed to be upholding by allowing plaintiffs -- especially the government -- to seal filings, if not entire dockets, with alarming regularity.

Lots of these are tied to the government's law enforcement work. But some of it has to do with disputes over intellectual property the public already has access to. Patent cases see an inordinate amount of document sealing, taking a lot of the "public" out of "public court system." There's a presumption of openness that's supposed to apply across the board. The government gets around this by making claims about national security or law enforcement means/methods. But in patent cases -- where the underlying patents are already accessible to the public via the USPTO's website -- the Patent Trial and Appeal Board's (PTAB) frequently allows filings to be sealed.

Making things even more opaque (if only temporarily), the Federal Circuit (which presides over the PTAB) has been delaying the public release of documents for several days, despite all courts relying heavily on an electronic filing system. This isn't just a problem for members of the public who expect filings to appear in a timely fashion. It's also a problem for litigants, as the EFF points out:

The court’s current practice is to docket briefs as “tendered” when they are first filed and to disable public access until the briefs are accepted by the Clerk’s Office. This sometimes leads to briefs being withheld from the public for more than a week.

While this may not seem like a big deal, the public’s right of access to courts includes a right to timely access. The delays at the Federal Circuit mean that briefs sometimes don’t become available until after supporting amicus briefs are due. Amici are encouraged not to duplicate party briefs, but that’s a challenge if they can’t read the party briefs in time.

The EFF sent a letter to the Federal Circuit, informing it that this system that didn't do any favors for the public it's supposed to serve. It never received a direct answer, but it appears the Federal Circuit did listen to the EFF. A policy change that took effect at the beginning of August removes the bizarre waiting period between filings and their accessibility via the Federal Circuit's site.

Earlier this month, the Federal Circuit announced a new compliance review policy. While that new policy [PDF] doesn’t specifically mention the practice of withholding briefs as “tendered,” we have confirmed with the Clerk’s Office that briefs are now available on PACER as soon as they are filed. Our review of recent dockets also suggests that briefs are now available to the public right away.

This fix follows on the heels of the other fixes by the Federal Circuit which force litigants to respect the presumption of openness. The Federal Circuit's bar for sealing documents is likely the strictest in the federal court system: litigants have to file a separate motion if they want to seal more than 15 words in any filing, much less the filing itself. Hopefully, other federal courts will follow this lead and force litigants to show their work if they're seeking to render a presumptively transparent process opaque.

Filed Under: cafc, court records, federal circuit, public documents, transparency
Companies: eff

Appeals Court Rejects Sketchy Plan To Pretend To Sell Patents To Native American Nation To Avoid Scrutiny

from the sovereign-assholery dept

Some ethically sketchy patent lawyers thought they had come up with a brilliant scam to avoid having awful patents scrutinized by the special review board created by Congress within the Patent Office -- a process known as "inter partes review" or IPR. This Patent and Trademark Appeals Board (PTAB) has been a useful tool in going back and reversing the mistakes made by patent examiners in letting through bad patents. However, back in September, we wrote about a fairly devious plan by the lawyers from the law firm of Shore Chan DePumpo to help their clients avoid a PTAB review. The situation began with a PTAB ruling back in early 2017 in a review of a patent held by the University of Florida. The University claimed sovereign immunity exempted it from the whole PTAB process under the 11th Amendment (universities claiming sovereign immunity in patent cases goes way back) and the PTAB agreed it had no jurisdiction.

Sensing an opportunity, the lawyers at Shore Chan DePumpo worked out a neat little scheme in which a pharmaceutical company would "sell" its patents to a Native American nation (in this case, the St. Regis Mohawk Tribe). The "sale" was in name only. The pharmaceutical companies retained not just an exclusive license to the patents, but basically all other rights as well. The only thing St. Regis got was a nice little income stream in exchange for having its sovereign status used to shield the pharma companies' patents from scrutiny before the PTAB.

I'm sure it seemed like a good idea to someone at the time, but it has been an utter failure. In October, the district court made it clear that this was a scam it didn't intend to allow to go forward. Then, in February, the PTAB itself denied the tribe's motion, pointing out that the PTAB wasn't stupid and totally understood the scam being played:

Upon consideration of the record, and for the reasons discussed below, we determine the Tribe has not established that the doctrine of tribal sovereign immunity should be applied to these proceedings. Furthermore, we determine that these proceedings can continue even without the Tribe's participation in view of Allergan's retained ownership interests in the challenged patents. The Tribe's Motion is therefore denied.

And now, just to add one more nail to the coffin of this terrible idea, the Federal Circuit, which traditionally is happy to rubber stamp any scam to keep patent owners happy, has rejected this plan as well. The CAFC ruling doesn't call out this procedure as a scam, but rather focuses in on the procedural questions of whether or not the IPR process is akin to an agency enforcement action (which would not be blocked by sovereign immunity) v. a civil lawsuit (which would be). It goes through a number of factors and decides that it's more of an agency action, and thus the tribe (acting as a front for the pharma companies) can't claim sovereign immunity and avoid having the Patent Office review its patents.

I guess the lawyers at Shore Chan DePumpo will just have to go back to sending frivolous takedown notices to bloggers who criticize the firm...

Filed Under: cafc, federal circuit, inter partes review, ipr, mohawk nation, patents, ptab, sham transactions, sovereign immunity, st. regis mohawk tribe, uspto
Companies: allergan, mylan

The Federal Circuit's Judicial Hypocrisy In Overturning Jury Concerning Java API Fair Use Question

from the so-ridiculous dept

Yesterday we went through the details of the truly awful appeals court decision by the Court of Appeals for the Federal Circuit (CAFC) concerning whether or not Google copying a few pieces of the Java API for Android was fair use. As we mentioned, there were a whole bunch of oddities both in the procedural history of the case, but especially in the CAFC's decision here that has left a ton of legal experts scratching their heads. What becomes quite clear is that the CAFC panel decided long ago that Google infringed, and it's not going to let the law or even consistency get in its way. As you'll recall, the same three panel set of judges (Judges Kathleen O'Malley, Jay Plager, and Richard Taranto) made a terrible, nonsensical, technically ignorant ruling four years ago, saying that APIs are covered by copyright and then sent the case back to the lower court to hold a new trial on fair use.

As we noted in yesterday's post, what's really incredible is that part of the reasoning in the CAFC opinion from four years ago is "this is an issue that a jury should hear to determine if it's fair use." And the ruling yesterday said "no reasonable jury could possibly find fair use" (after the jury here did find fair use). Which raises the question of why the fuck did the CAFC send the case back in the first place? To waste everyone's time? To pad the wages of the very very expensive lawyers employed by Oracle and Google? To waste Judge Alsup's time?

Carolyn Homer, a lawyer who recently left a "biglaw" firm where she did copyright and free speech law for a public interest free speech law job, put together a fantastic chart comparing the 2014 CAFC ruling in this case and the 2018 ruling, highlighting where they appear to disagree with one another.

In case you can't see that, I'll recreate it for you in text, because it highlights just how far these three judges bent over backwards to get the result they wanted, even if it involved totally reversing themselves from four years ago.

CAFC in Oracle v. Google, 2014

Fair use is a mixed question of law and fact.

CAFC in Oracle v. Google, 2018

The Supreme Court has said that fair use is a mixed question of law and fact... [but] whether hte use at issue is ultimately a fair one is something we [r]eview de novo.... Despite this case law, all aspects of Google's fair use defense went ot the jury with neither party arguing it should not.

CAFC in Oracle v. Google, 2014

On balance, we find that due respect for the limit of our appellate function requires that we remand the fair use question for a new trial.

CAFC in Oracle v. Google, 2018

The jury returned a verdict in favor of Google on its fair use defense.... All jury findings relating to fair use ... must, under governing Supreme Court and Ninth Circuit case law, be viewed as advisory only.

So this is the key. Juries are supposed to resolve questions of fact. Judges are supposed to resolve questions of law. The line between the two can get blurry, but here CAFC is playing a tricky two step game. In 2014, it argued that because fair use has a component of "fact" in it, it's an issue for the jury to decide, and thus made it clear that a new trial was necessary on fair use because of "the limit of our appellate function" (to make determinations on matters of fact). But here, once the jury came back with a result that the same judges disliked, it miraculously started arguing that, well, really, we can review the jury's decision because we can and because juries are "advisory only." That alone is a fairly striking claim, given that the courts are supposed to be pretty careful about only overturning juries on matters of law, not facts.

This clearly is the same three judge panel completely moving the goalposts from their earlier decision in the same case because they don't like the outcome.

CAFC in Oracle v. Google, 2014

We cannot say that there are no material facts in dispute on the question of whether Google's use is "transformative," even under a correct reading of the law.

CAFC in Oracle v. Google, 2018

Google's use of the API packages is not transformative as a matter of law...

Got that? In 2014 the court is saying, this is a factual issue that a jury needs to decide. In 2018, after its upset with what the jury decided, suddenly it's a matter of law that CAFC can miraculously decide and overturn the jury.

CAFC in Oracle v. Google, 2014

[R]easonable jurors might find that [the functional aspects of an API] are relevant to Google's fair use defense under the second and third factors of the inquiry.

CAFC in Oracle v. Google, 2018

Although it is clear that the 37 API packages at issue involved some level of creativity--and no reasonable jury could disagree with that conclusion--reasonable jurors could have concluded that functional considerations were both substantial and important.... The Ninth Circuit has recognized, however, that this second factor "typically has not been terribly significant in the overall fair use balancing."

Another fun one. In 2014, the court pointed out that perhaps the 2nd factor (the nature of the work -- in this case, the fact that it's an API that is functional rather than expressive) could weigh heavily on the fair use analysis. In 2018 when the jury did exactly what the CAFC suggested it might, but which the CAFC obviously hoped it would not, it suddenly poo-poos the idea that the 2nd factor really matters at all.

CAFC in Oracle v. Google, 2014

[T]h[e]se core packages ... may be necessary for anyone to copy if they are to write programs in the Java language. And, it may be that others of the packages were similarly essential components of any Java language-based program. So far, that type of filtration analysis has not occurred.

CAFC in Oracle v. Google, 2018

Even assuming the jury accepted Google's argument that it copied only a small portion of Java, no reasonable jury could conclude that what was copied was qualitatively insignificant, particularly when the material copied was important to the creation of the Android platform.

Once again, four years ago, these same three judges, looking at the same issue said that the question of what was necessary or essential was one for the jury to decide. Four years later, when the jury decided exactly that question in a result CAFC doesn't like, suddenly it changes its tune to say that "no reasonable jury" could have ruled the way that CAFC itself said a reasonable jury could rule the last time it looked at this case.

CAFC in Oracle v. Google, 2014

Because there are material facts in dispute on this [market impact] factor as well, remand is necessary...

CAFC in Oracle v. Google, 2018

The district court concluded that he jury "could reasonably have found that use of the declaring lines of code (including their SSO) in Android caused no harm to the market for the copyrighted works, which were for desktop and laptop computers." ... [But we find] no reasonable jury could have concluded that there was no market harm to Oracle from Google's copying.

This one is even more blatant. Four years ago this very same panel, looking at this very same case, said a jury had to decide whether the market impact of the copying was fair use or not. Then, four years later, after the jury did just what CAFC said it must (but where it came out with a result that CAFC doesn't like) suddenly, CAFC insists that no reasonable jury could have possibly ruled this way.

CAFC in Oracle v. Google, 2014

On remand, the district court should revisit and revise its jury instructions on fair use consistent with this opinion so as to provide the jury with a clear and appropriate picture of the fair use defense.

CAFC in Oracle v. Google, 2018

[W]e conclude that Google's use of the 37 Java API packages was not fair use as a matter of law. We therefore reverse the district court's decisions denying Oracle's motions for JMOL and remand for a trial on damages.

Again, in 2014, the same three judge panel was insistent that the jury and only the jury could decide what counted as fair use. And now, suddenly, magically, after the jury just did that, CAFC has decided it's not an issue of fact after all, and CAFC can just snap its fingers so that it's a matter of law, and overrule the jury.

What... the... fuck? Appeals courts sometimes will make dumb rulings, but it's quite astounding at just how much these three judges have telegraphed their position here when you compare the 2014 ruling with the 2018 ruling-- they wouldn't touch the fair use analysis four years ago, insisting that a jury had to do it -- and then just stomped all over the jury claiming that no reasonable jury could rule the way they said a reasonable jury had to rule just four years ago.

The same three judges. The same case.

If various appeals fail and this case does go back for a jury trial on damages, and the jury comes back with a super low damages amount like $1, that four years from now we'll be discussing a CAFC ruling about how "no reasonable jury" could do such a thing?

Hopefully, either CAFC will agree to rehear this case en banc and the other CAFC judges will realize just how bad this ruling is, or perhaps the Supreme Court will actually be persuaded to listen this time. The rumor mill has said that the Supreme Court was interested last time around, but after the Solicitor General told them not to (which, we're told, was hotly disputed within the White House) it passed. But nearly all of the players are different this time around. Of course, Oracle and its CEO have a very close relationship with the current administration, so it's possible that could create pressure on the Solicitor General to support Oracle's position.

Either way, the comparison between these two rulings isn't just judicial hypocrisy, it's judicial corruption. That's not in the sense that anyone was paid off (and, seriously, stop suggesting that -- it's not what's happening). It's corruption in the form of a panel of judges clearly wanting a particular result, and willing to do things they're not supposed to do to get that result.

Filed Under: apis, cafc, copyright, deference, fair use, federal circuit, juries
Companies: google, oracle

Insanity Wins As Appeals Court Overturns Google's Fair Use Victory For Java APIs

from the this-is-bad dept

Oh, CAFC. The Court of Appeals for the Federal Circuit has spent decades fucking up patent law, and now they're doing their damndest to fuck up copyright law as well. In case you'd forgotten, the big case between Oracle and Google over whether or not Google infringed on Oracle's copyrights is still going on -- and it appears it will still be going on for quite a while longer, as CAFC this morning came down with a laughably stupid opinion, overturning the district court's jury verdict, which had said that Google's use of a few parts of Java's API was protected by fair use. That jury verdict was kind of silly in the first place, because the whole trial (the second one in the case) made little sense, as basically everyone outside of Oracle and the CAFC had previously understood (correctly) that APIs are simply not covered by copyright.

Section 102(b) of the Copyright Act says quite clearly:

In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.

And an API is pretty clearly a procedure, process, system or method of operation -- it's just instructions on how to access certain elements, similar to a recipe. But, CAFC (who shouldn't be hearing this case in the first place) simply couldn't be bothered to comprehend what an API is, and insisted that because to the judges non-technical brains, an API looks the same as software, it must be copyrightable as software. That was after Judge Alsup in the district court (following trial #1) had spent quite a lot of time explaining to CAFC why APIs are not copyrightable.

Thus, we had the second trial, which was weird, because all of the arguments about fair use, were couched in this weird "um, well, it's not really copyrightable at all, but CAFC says it's copyrightable, so let's just say it's fair use" argument. And the jury then said, yes, it's fair use.

But CAFC has now rejected that and sent the case back to the lower court for a third trial for damages. And, while we normally expect bad reasoning from CAFC decisions, this one is particularly stupid. In short, CAFC's reasoning is basically "we think this is infringement, and thus we're going to handwave around the law to make sure that it's infringement." It's bad. And, again, CAFC shouldn't even be hearing the case. CAFC hears appeals on patent cases, and originally there were a few patent claims in this case, but they all got dumped at a very early stage. So this case should have gone to the 9th Circuit (who also might have messed it up, but it has at least a marginally better record than CAFC).

Anyway, the CAFC does an awful lot of handwaving around historical precedent to justify its decision to basically start from scratch in going through the fair use four factors. As we've discussed multiple times, one of the problems with the four factors test is that it allows a court to choose who it likes better, and then twist the four factors to give it the outcome it wants. That appears to be what is happening here. On the first factor (nature of the use), CAFC basically says "we think the jury is stupid, this is obviously commercial use, and thus it goes against Google." Google had argued (and the jury had implicitly agreed) that because Google doesn't charge for Android, and interoperability and progress of innovation enabled by using similar API setups are not inherently commercial motives, that this was fair use. The court basically says "but Google has so much money!" which is not how a fair use argument works. But... CAFC.

That Google might also have non-commercial motives is irrelevant as a matter of law. As the Supreme Court made clear when The Nation magazine published excerpts from Harper & Row’s book, partly for the purpose of providing the public newsworthy information, the question “is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.” Harper & Row, 471 U.S. at 562. Second, although Google maintains that its revenue flows from advertisements, not from Android, commerciality does not depend on how Google earns its money. Indeed, “[d]irect economic benefit is not required to demonstrate a commercial use.” A&M Records, 239 F.3d at 1015. We find, therefore, that, to the extent we must assume the jury found Google’s use of the API packages to be anything other than overwhelmingly commercial, that conclusion finds no substantial evidentiary support in the record. Accordingly, Google’s commercial use of the API packages weighs against a finding of fair use.

On the question of transformative use, the lower court had suggested that using the APIs in a "fresh context" (such as for smartphones) could be seen as transformative. But, again CAFC says "nope."

Google’s arguments are without merit. As explained below, Google’s use of the API packages is not transformative as a matter of law because: (1) it does not fit within the uses listed in the preamble to § 107; (2) the purpose of the API packages in Android is the same as the purpose of the packages in the Java platform; (3) Google made no alteration to the expressive content or message of the copyrighted material; and (4) smartphones were not a new context.

CAFC also, once again, shows that it still doesn't understand why APIs and code are not the same thing:

That Google wrote its own implementing code is irrelevant to the question of whether use of the APIs was transformative. As we noted in the prior appeal, “no plagiarist can excuse the wrong by showing how much of his work he did not pirate.” Oracle, 750 F.3d at 1375 (quoting Harper & Row, 471 U.S. at 565). The relevant question is whether Google altered “the expressive content or message of the original work” that it copied—not whether it rewrote the portions it did not copy.

But that's not the relevant question. The relevant question is how the copied text is being used, and in Google's case it's in a completely different context, which is why it had to write its own implementing code. Again, this is fallout from CAFC's earlier wrong decision in that it still does not understand that API instructions are not the same as implementing code itself.

The court also more or less laughs at the idea that Google had "good faith" reasons for doing what it did:

Ultimately, we find that, even assuming the jury was unpersuaded that Google acted in bad faith, the highly commercial and non-transformative nature of the use strongly support the conclusion that the first factor weighs against a finding of fair use.

On factor two of the four factors analysis -- the nature of the work -- CAFC again actually gives that one to Google and says that the jury could have found that weighed towards fair use, but immediately points out that it's going to give this factor less weight, because... it still doesn't understand the difference between APIs and software, and insists that if it gave this factor any weight, it would destroy the idea of copyright for software. Of course, that's only true if you can't tell the difference between an API and software.

We note, moreover, that allowing this one factor to dictate a conclusion of fair use in all cases involving copying of software could effectively negate Congress’s express declaration—continuing unchanged for some forty years—that software is copyrightable. Accordingly, though the jury’s assumed view of the nature of the copyrighted work weighs in favor of finding fair use, it has less significance to the overall analysis.

On factor three, concerning the amount use, the court again is so incredibly confused it's frustrating. Google has long held (and the jury and the lower court appeared to agree) that it used the bare minimum of the Java API to enable basic interoperability in building apps for Android. But CAFC is so tied up in its own made up reality, that it insists no reasonable jury could agree with this:

Even assuming the jury accepted Google’s argument that it copied only a small portion of Java, no reasonable jury could conclude that what was copied was qualitatively insignificant, particularly when the material copied was important to the creation of the Android platform.

Eventually, though CAFC says factor 3 could be either "neutral" or "arguably weighs against" fair use.

On to factor four -- the impact on the market. Factors one and four tend to be the ones that courts focus on the most. And, here, Oracle has spent plenty of time whining that its own total failure to capitalize on Java in the mobile market should be blamed on Google's copying piece of its API as opposed to the reality, which is that Oracle completely botched its own efforts in the space, because it's Oracle. The court more or less ignores various points about how Oracle wasn't really in the mobile market and more or less says "Google was super successful, so clearly it was at the expense of Oracle."

Given the record evidence of actual and potential harm, we conclude that “unrestricted and widespread conduct of the sort engaged in by” Google would result in “a substantially adverse impact on the potential market for the original” and its derivatives.

And, thus, the court then weighs factors one and four most heavily, and says it's not fair use, and back to Northern California we go for trial number three, specifically on the damages question. I imagine Google will appeal this, either asking for an en banc rehearing or to the Supreme Court. The Supreme Court refused to hear the previous request on the question of copyrightability of APIs, so this is probably a long shot. However, there are a few oddities within the ruling that maybe will catch someone's attention at the Supreme Court (and the Supreme Court has spent years dunking on CAFC and mocking its dumb decisions, so maybe they'd like to do that again).

Honestly, the most concerning part of the whole thing is how much of a mess CAFC has made of the whole process. The court ruled correctly originally that APIs are not subject to copyright. CAFC threw that out and ordered the court to have a jury determine the fair use question. The jury found it to be fair use, and even though CAFC had ordered the issue be heard by a jury, it now says "meh, we disagree with the jury." That's... bizarre.

Anyway, considering the importance of interoperability in software, this case is yet another potential disaster, limited only by the fact that CAFC doesn't cover any particular region and most copyright cases aren't influenced by CAFC precedent since those cases would flow up through the other appeals courts. However, you can see how someone wishing to go after others for API infringement might just throw in a silly patent claim just get it into CAFC. Hopefully the Supreme Court steps in and fixes this, but if not, it would be nice (I know, I know...) if Congress actually stepped up and pointed out that APIs are not covered by copyright at all. And while they're at it, they should burn CAFC to the ground. It was a dumb idea in the first place and should be shut down.

Filed Under: api, apis, cafc, copyright, fair use, interfaces, interoperability, programming
Companies: google, oracle