Imagine your favorite author is releasing a new book, but you can’t read it at the same time as the rest of world, instead you have to wait weeks or maybe even longer for it to come out in a format that you can read. This is a reality for approximately 160 million people around the world who are blind or suffer from other visual impairments. The overwhelming majority of published works are never made available in braille, large print or audio versions. Those works that are made available in accessible formats are usually released later than regular print versions and are sold at an increased cost. To address this problem, the World Blind Union has started the International Right to Read campaign. The purpose of the campaign is to ensure that “everyone [is] able to read the same book at the same time at the same price.”

As part of the campaign, the World Blind Union is working with the World Intellectual Property Organisation (WIPO) to effect changes in copyright law which would allow more written works to be made available in accessible formats. Although there is a sizeable market for accessible works, lingering concerns over rights clearances and downstream infringement have resulted in fewer works being released in accessible formats. At the May 2009 meeting of WIPO’s Standing Committee on Copyright and Related Rights (SCCR), a proposed treaty intended to benefit the blind and visually impaired was introduced. The proposed treaty, which has the approval of the World Blind Union, would require the adoption of copyright exceptions and limitations for the purpose of providing accessible formats for the blind and visually impaired. The full text of the proposed treaty is available here.

One interesting feature of the proposed treaty is that it would allow for qualified distribution of copyrighted works in accessible formats without the permission of the rights holders, and such works could be made available in countries whose laws presently contain no copyright exceptions geared towards protecting the interests of the visually impaired. This proposal raises interesting legal and public policy questions. Should the copyright holders’ rights trump the interests of the visually impaired in gaining equal access to copyrighted works? Or, do current copyright laws unfairly disadvantage the visually impaired by denying them access to copyrighted works on the same basis as others?

At the SCCR meeting, the United States expressed its commitment to working towards enhancing the accessibility of copyrighted works for the blind and visually impaired. The United States already has some laws in place to protect the interests of the visually impaired. For example, the “Chafee Amendment” is an exception to the Copyright Act which allows authorized entities such as the Library of Congress to reproduce and distribute certain literary works in accessible formats for use by the blind and disabled. The Individual with Disabilities Education Act of 2004 allows publishers of educational materials to use a specialized file format which allows materials to be translated into other accessible formats such as braille for use by students with visual impairments. If adopted, the proposed treaty would further enhance access to copyrighted works for the blind and visually disabled. The United States Copyright Office and the United States Patent and Trademark Office recently sought comments on the treaty proposal as well as other suggestions on how to facilitate access of the blind or visually impaired to copyrighted material.  Reply comments are due by December 4, 2009.

If adopted, the proposed treaty may not have a substantial impact on US copyright law, which already contains special provisions to enhance the accessibility of copyrighted works for the blind and visually impaired. However, one of the main goals of the proposed treaty is to provide greater access to copyrighted material in countries without similar exceptions. The importance of this initiative is therefore underscored by the estimate that 90 percent of visually impaired persons live in countries of low or moderate incomes, which are less likely to have highly developed copyright laws.

Part 2: A Brief Overview of Petitioner’s Arguments

This post provides an overview of the main arguments from the petitioner’s brief to the Supreme Court. According to Bilski, the petitioner and patent applicant, the Federal Circuit erred by adopting the mandatory machine-or-transformation test and rejecting Bilski’s patent application. Bilski highlighted five main arguments for reversal of the Federal Circuit.

First, Bilski argues that the mandatory machine-or-transformation test is inconsistent with the patent statute and Supreme Court precedent. According to Bilski, § 101 has always been broadly interpreted, and there is no statutory basis for treating processes differently from the other categories of patentable subject matter under § 101. Furthermore, although the machine-or-transformation test is one possible way to assess process patentability, the Supreme Court has twice rejected this test as the exclusive test. In Gottschalk v. Benson, 409 U.S. 63 (1972), the Court expressly stated that although the machine-or-transformation test could be used, this was not the only test for processes. The Court then reaffirmed this position in Parker v. Flook, 437 U.S. 584 (1978), emphasizing the broad definition of “process.” In the most recent case, Diamond v. Diehr, 450 U.S. 175 (1981), the Court quoted Benson in stating “[t]ransformation and reduction of an article ‘to a different state or thing’ is the clue to the patentability of a process claim that does not include particular machines.” Although the Court said in Benson this is “the clue” to patentability, the Court’s holding specifically rejected the idea that every process must pass the machine-or-transformation test. Additionally, in Diehr, the quote was only used to illustrate an example of how a process could be patentable under § 101. Thus, the Federal Circuit’s mandatory test is inconsistent with this precedent. Finally, the Court should not impose a rigid test under the threshold inquiry for patentability because this is consistent with the Court’s recent rejection of rigid rules in patent cases. See, e.g., eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006); KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007).

Second, Bilski argues that business methods should be patentable under § 101 in light of § 273, which provides an affirmative defense to infringement of business method patents that are commercially used. According to Bilski, § 273 represents Congress’s approval of business methods and the “useful, concrete, and tangible result” test from State Street Bank. Additionally, the legislative history does not indicate that the § 273 defense was intended to be available only to those business methods that pass the machine-or-transformation test. In effect, the mandatory machine-or-transformation test would make § 273 a meaningless defense since this class of business method patents could not exist.

Third, Bilski argues that courts should not impose limits on the broad statutory language of § 101 because this is a matter of public policy that should be addressed by the legislature. In applying the mandatory machine-or-transformation test, the Federal Circuit inappropriately disrupted the expectations of patent owners and inventors. Thus, the Federal Circuit should not have imposed this limit, especially under the threshold inquiry for patentability, because the legislature, not the courts, should decide such issues of public policy.

Fourth, Bilski argues that the Court should reaffirm the flexible practical application rule for inventions involving fundamental principles. In other words, although abstract ideas, laws of nature, and natural phenomena are not patentable under § 101, a practical application of any of these principles should be patentable.

Finally, petitioner argues that the Federal Circuit erred when it rejected Bilski’s application. Bilski argues that the process is patentable because none of the claims involve an abstract idea, law of nature, or natural phenomenon. Bilski contends that a method for hedging risk is not an abstract idea, and that even if it were an abstract idea, it is still patentable because the patent recites a practical application of a mathematical formula which has a useful result in the field of commodities trading.

Thus, in essence, Bilski argues that the Federal Circuit erred in rejecting this patent because a more flexible test should have been applied, and based on this flexible test, Bilski’s process is patentable under § 101.

Coming up next:

Part 3: A Brief Overview of Respondent’s Arguments
Part 4: Issues Raised in Oral Argument and What’s at Stake

With the economy still on the rebound, more and more consumers are cutting luxury items out of their budgets and instead looking for ways to save on items that previously might have been a splurge. Discount retailer Target has attempted to attract thrifty yet style conscious buyers by offering designer-inspired clothing and home furnishings at the low prices its customers expect. But has the retail giant gone too far in copying designs of the luxury brands its customers covet?

In late September, luxury handbag and accessory designer Coach sued Target alleging that the retailer is selling handbags that copy two of its designs, the Ergo fold-over handbag and its Signature Patchwork line. Coach Services, Inc. v. Target Corp., No. 09 CV 8329 (S.D.N.Y. filed September 28, 2009). The lawsuit includes claims of trademark infringement and unfair competition. In its complaint, Coach claims the bags sold at Target are “exact and/or confusingly similar reproductions” of Coach designs.

The practice of copying original fashion designs and then selling the reproductions under a different label is known as design piracy. The practice is all too common, but unfortunately for the original designers, current U.S. intellectual property law offers only limited protection for fashion designs. For example, trademark law provides strong protection against the copying of distinctive company marks or logos but does little to protect against copying the design and style of a product. The theory behind the distinction is that company marks or logos are inherently distinctive and serve as a means to verify the product as authentic, whereas imitation of the design or style of a product is unlikely to result in customer confusion as to the origins of the item. See Louis Vuitton Malletier v. Dooney & Bourke, Inc., 454 F.3d 108, 116 (2d Cir. 2006). The test for trademark infringement developed by the Second Circuit, where a majority of lawsuits concerning fashion items are filed, requires (1) that the plaintiff’s mark is sufficiently distinctive to merit protection and (2) that defendant’s use of a similar mark is likely to cause consumer confusion. Gruner + Jahr USA Publ’g v. Meredith Corp., 991 F.2d 1072, 1075 (2d Cir. 1993). Trademark law’s narrow view as to which aspects of an item should be entitled to protection has made it difficult for designers to fight design piracy through trademark infringement claims.

Any claim for trademark infringement is commonly paired with a claim of unfair competition. The ultimate inquiry in both claims is the same – whether the consumer is likely to be confused as to the origin or authenticity of the product as a result of the similarity of the marks. However, a claim of unfair competition is broader in scope than a claim of trademark infringement. Under the Lanham Act, trademark infringement reaches only “reproduction, counterfeit, copy or colorable imitation of a registered mark.” 15 U.S.C. §1114(1)(a). When evaluating a claim of unfair competition, a court may also consider other factors which may cause confusion as to the origin of the product, including trade dress which may encompass product design. Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205 (2000). Thus, designers may have more luck protecting their designs through unfair competition than through trademark infringement.

While the designers continue to try to find ways to protect their designs from misappropriation, retailers like Target continue to capitalize on the sale of items bearing remarkable similarities to higher end brands. This lawsuit is just the most recent in a string of similar suits against Target. In 2002, shoe manufacturer adidas sued Target alleging trademark infringement and unfair competition for selling shoes featuring adidas’ trademark three stripe pattern. Adidas-Salomon AG v. Target Corp., 228 F.Supp.2d 1192 (D. Or. 2002). The suit was later settled, but adidas sued Target again in 2008 alleging that the retailer violated the settlement agreement by selling shoes with two and four parallel stripes.

In 2005, Vera Bradley, seller of high end handbags and other goods, sued Target for selling skirts and swimwear featuring designs that looked “substantially similar” to cloth designs copyrighted by Vera Bradley. The suit was later resolved out of court.

Target was sued by Lucky Brand Dungarees for copyright infringement in 2006 after the retailer began selling girls jeans with an embroidered floral design and rear pocket stitch design which Lucky claimed was “virtually identical” to the unique designs used on its own jeans. In the same year, Target was hit with another copyright infringement suit by Williams-Sonoma alleging that Target copied the designs of a number of their products including Christmas stockings and votive candle holders. The lawsuit claimed that quilted Christmas stockings sold at Target contained “every distinctive element” of Christmas stockings sold at Pottery Barn, a chain operated by Williams-Sonoma.

The vast majority of these suits are quietly dismissed or settled, but the large numbers of such suits raises questions as to whether Target and other discount retailers unfairly benefit from lax intellectual property law protection of fashion designs and other decorative items. For additional discussion of intellectual property law protection of fashion designs, see Biana Borukhovich, Fashion Design: The Work of Art That Is Still Unrecognized in the United States, 9 Wake Forest Intell. Prop. L.J. 3 (2009).

Part 1: Background and The Federal Circuit’s Decision

According to § 101, the first step in determining whether a claimed invention is patent-eligible involves an assessment of whether the invention is a “new and useful process, machine, manufacture, or composition of matter.”

Last year, the Federal Circuit was called upon to decide whether a particular applicant’s claimed business method qualified as a patentable “process” under § 101 in Bilski. Prior to Bilski, courts had applied various tests to determine what constitutes patentable subject matter under § 101. For example, a claimed invention could be patentable under § 101 if it transformed an article or physical object to a different state or thing, or if it otherwise produced a “useful, concrete and tangible result.” See State St. Bank & Tr. v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998). However, the Federal Circuit rejected this test, along with several others, in Bilski, and instead adopted the “machine-or-transformation” test as the exclusive test for all process claims.

In Bilski, the applicant sought a patent for “a method of hedging risk in the field of commodities trading,” which is a type of invention that is generally referred to as a “business method.” The Federal Circuit held that Bilski’s application did not claim patentable subject matter. The court did not say that all business methods were unpatentable. Instead, it held that the “machine-or-transformation” test was the exclusive test for determining whether a claimed invention is a patentable process under § 101. Thus, in this case, Bilski’s claimed business method was not a patentable process under § 101 since (1) it was not tied to a particular machine or apparatus, and (2) it did not transform a particular article into a different state or thing.

However, as the dissenting opinions illustrate, the majority’s decision raises several issues. For example, according to Judge Newman, the mandatory machine-or-transformation test is problematic because it is contrary to both statute and precedent. Furthermore, Judge Newman argued that it is inappropriate for the courts to apply such a rigid, mandatory test under the threshold inquiry for determining patentability because Congress intended for § 101 to be read broadly. In addition, the contradiction between the majority’s holding and prior precedent is problematic considering the public’s reliance on this precedent. Therefore, the majority’s holding is troublesome because it creates a great deal of uncertainty for both past and future patent owners, and it affects all types of process patents, not just business methods.

On the other hand, Judge Mayer’s dissent criticized the majority for not expressly overruling State Street Bank and holding that all business methods are not patentable. Judge Mayer argued that protecting business methods actually impedes the progress of science and the useful arts, stifles innovation, and results in patents that are of poor quality. Accordingly, the patent office’s limited resources would be better spent on applications for inventions that are truly useful technological advances, as opposed to business methods, which have historically been unpatentable.

As these points illustrate, the Federal Circuit’s holding raises several issues concerning the proper test for patentable processes under § 101, and whether business methods should even be patentable at all. Thus, recognizing the importance of this issue, the Supreme Court granted certiorari to review the question of what constitutes a patentable process under § 101. Oral arguments are scheduled to be heard on Monday, November 9th.

Coming up next:

Part 2: A Brief Overview of Petitioner’s Arguments
Part 3: A Brief Overview of Respondent’s Arguments
Part 4: Issues Raised in Oral Argument and What’s at Stake

The IPLJ Blog will offer a new forum for IPLJ Editors and Staff to discuss current events and issues in various areas of IP law.  The blog will provide short postings analyzing current cases, trends and issues in IP law.