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Does copyright law require that a human create a work? Yesterday the D.C. Circuit in Thaler v. Perlmutter held that it does and that a machine (such as a computer operating a generative AI program) cannot be designated as the author of the work. However, the D.C. Circuit refrained from saying more for now, leaving other questions about the use of AI when creating works for another day.

Dr. Stephen Thaler, a computer scientist who works with artificial intelligence, submitted a copyright application in 2019 for the image below, which he titled “A Recent Entrance to Paradise.” On the application, Thaler identified himself as the claimant, while designating a generative AI platform that he created and called the “Creativity Machine” as the author. For explanation of how the copyright was transferred from the machine as author to himself as claimant, Thaler stated his “ownership of the machine” caused the transfer. He would later argue that some form of work-for-hire transferred ownership to himself.

The Copyright Office denied registration, holding that copyright law requires a human author. Thaler appealed the decision to the District Court for the District of Columbia, which affirmed. As part of his case before the district court, Thaler raised, for the first time, the argument that he was in fact the author based on his creation of the Creativity Machine. However, because he had claimed on the record that the machine was the author throughout the proceedings before the Copyright Office, the district court held that he had waived this argument. Thaler then appealed to the D.C. Circuit Court of Appeals.

The D.C. Circuit’s decision yesterday affirmed both the Copyright Office’s and the district court’s decisions refusing Thaler’s copyright application for registration. On the key issue of copyright authorship, the court held that the text and structure of the Copyright Act requires a human author. Section 201 of the Copyright Act states that ownership “vests initially in the author or authors” of a work. While “author” is undefined, the court looked to at least seven other provisions throughout the Copyright Act that required various acts or states of mind of the author. These included reliance on the author’s life, references to the author’s widow or widower and children, the act of signature required for copyright transfer, and the intent needed to create a joint work of authorship. However, the court deemed none of these requirements applicable to a machine “author.” The court also relied on the Copyright Office’s long-standing policy of refusing registration to nonhuman authors and other appellate court decisions by the Seventh and Ninth circuits that refused claims of copyright authorship inhering in nature, “otherworldly entities,” or animals. Finally, the court held that Thaler’s work-for-hire claim failed at least because the machine had not signed any document designating the work as being made for hire, and that he had waived any claim of personal authorship because he had failed to raise it before the Copyright Office. Therefore, the D.C. Circuit affirmed the denial of registration of the work with the Creativity Machine designated as the author.

While this case is the first to address the question of copyright authorship in the context of generative artificial intelligence, its holding is not unexpected. As briefly referenced above, other appellate courts have addressed the question of nonhuman authorship in other scenarios and come to the same conclusion. Therefore, while Thaler is important for extending the same holding to the context of AI creations, the requirement of human authorship is neither new nor unusual. As the Ninth Circuit held in Naruto v. Slater (a case involving the famous “monkey selfie” photograph), there is a strong presumption in the law that statutes are written with humans as the subjects of rights, not animals or machines. The numerous textual references to the lives, acts, and intentions of authors in the Copyright Act made it easy for the D.C. Circuit not to overturn that presumption here. The D.C. Circuit also held that it did not need to address whether the U.S. Constitution requires a human author under the current case. That issue is left for a future litigant to contend with.

Moreover, Thaler presented his case for machine authorship in the most extreme form possible — a claim that the author was solely the “Creativity Machine,” with no human input at all. As the court references late in the decision, there have now been at least four copyright applications denied registration in whole or in part by the Copyright Office because the author used AI in creating or editing a work, but also relied on human input and human claims of authorship. The D.C. Circuit wisely decided to let that issue await a future ruling. Yet, as a result of that caution, litigants should recognize the limitations of the Thaler decision.

Finally, both Thaler and the other cases coming through the Copyright Office only concern AI creation of visual works of art. They do not concern other fields of creative works, such as written works or music. While the main holding of Thaler — that copyright protection cannot be granted where a machine is the sole creator — will certainly apply in these other fields, the permissible contours of AI-human interaction and their effect on authorship in these other categories of works are even more unclear given the lack of disputes arising to date.

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Fair use — a critical defense in copyright law that allows limited use of copyrighted material without permission — has emerged as a key battleground in the wave of artificial intelligence (AI) copyright litigation. In a significant revision of his earlier position, Judge Stephanos Bibas in the United States District Court for the District of Delaware has dealt a blow to artificial intelligence companies by blocking their ability to rely on this defense in Thomson Reuters Enterprise Centre GmbH v. ROSS Intelligence Inc.

Fair use serves as a safety valve in copyright law, permitting uses of copyrighted works for purposes such as criticism, commentary, news reporting, teaching, scholarship, or research. Courts evaluate fair use through four factors, with particular emphasis on whether the use transforms the original work and how it affects the market for the copyrighted work.

The case originated when Thomson Reuters sued ROSS Intelligence for using content from Westlaw — the legal research platform’s headnotes and proprietary Key Number System — to train an AI-powered legal research competitor. ROSS had initially sought to license Westlaw content, but when Thomson Reuters refused, ROSS turned to a third-party company, LegalEase Solutions. LegalEase created approximately 25,000 legal question-and-answer pairs, allegedly derived from Westlaw’s copyrighted content, which ROSS then used to train its AI system.

In September 2023, Bibas denied Thomson Reuters’ motion for summary judgment on fair use, finding that the question was heavily fact-dependent and required jury determination. He particularly emphasized factual disputes about whether ROSS’s use was transformative and how it affected potential markets.

However, in August 2024, Bibas took the unusual step of continuing the scheduled trial and inviting renewed summary judgment briefing. His opinion represents a dramatic shift, explicitly acknowledging that his “prior opinion wrongly concluded that I had to send this factor to a jury.” While noting that fair use involves mixed questions of law and fact, Bibas recognized that the ultimate determination in this case “primarily involves legal work.”

Bibas’ unusual move to invite renewed briefing stemmed from his realization, upon deeper study of fair use doctrine, that his earlier ruling afforded too much weight to factual disputes and did not fully account for how courts should assess transformative use in AI-related cases. Rather than viewing transformation through the lens of whether ROSS created a novel product, Bibas recognized that the key question was whether ROSS’s use of Thomson Reuters’ content served substantially the same purpose as the original works.

He concluded that while fair use involves factual elements, the dispositive questions in the case were ultimately legal ones appropriate for resolution by the court. His key analytical shifts included rejecting the notion that ROSS’s use might be transformative merely because it created a “brand-new research platform.”

Critically, Bibas distinguished ROSS’s use from cases like Google v. Oracle where copying was necessary to access underlying functional elements. While Google needed to copy Java API code to enable interoperability between software programs, ROSS had no similar technical necessity to copy Westlaw’s headnotes and organizational system. ROSS could have developed its own legal summaries and classification scheme to train its AI — it simply found it more expedient to build upon Thomson Reuters’ existing work.

The concept of “transformative” use lies at the heart of the fair use analysis. This principle was recently examined by the Supreme Court in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, where the Court significantly narrowed the scope of transformative use under the first fair use factor. The Court held that when two works serve “substantially the same purpose,” the fact that the second work may add “new expression, meaning, or message” is not enough to tip the first factor in favor of fair use.

This framework for analyzing transformative use provides important context for understanding how courts may evaluate AI companies’ fair use defenses. AI companies have consistently argued that their use of copyrighted materials for training data is transformative because the AI systems learn patterns and relationships from the works rather than reproducing their expressive content. They contend that this process fundamentally transforms the original works’ purpose and character. However, Bibas’ ruling suggests courts may be increasingly skeptical of such arguments, particularly when the resulting AI products compete in similar markets to the original works.

While this ruling represents a setback for one of the key defenses believed to be available to AI companies in copyright litigation, fair use is only one of several defenses these companies are raising in more than 30 pending lawsuits. Other defenses include arguments about copyrightability, substantial similarity, and whether training data uses constitute copying at all. A weakening of the fair use defense, while significant, does not necessarily predict the ultimate outcome of these cases.

Additionally, this case involved a particularly direct form of market competition — an AI system trained on legal content to compete with the original legal research platform. Other cases involving different types of training data or AI applications that don’t directly compete with the source materials might be distinguished. For instance, an AI trained on literary works to generate news articles might present a more compelling case for transformative use since the end product serves a fundamentally different purpose than the training data.

Nevertheless, Bibas’ ruling may alter how AI companies approach training data acquisition. If other courts follow his lead in viewing fair use primarily as a legal rather than factual determination, these companies may explore licensing agreements with copyright holders — a process that some have already undertaken.

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Trademark law protects businesses’ brand identities and helps prevent consumer confusion. The U.S. trademark system operates at both federal and state levels. Federal registration through the United States Patent and Trademark Office (USPTO) gives nationwide protection and the right to use the coveted ® symbol, along with crucial benefits such as constructive notice of ownership throughout the country and presumptive validity of the mark. Federal registration also enables trademark holders to enforce their rights in federal courts and can serve as a basis for securing trademark protection in foreign countries.

State trademark systems provide vital protection for businesses operating primarily within a single state or in industries where federal registration may be unavailable due to federal restrictions. For cannabis businesses in particular, state protection has become essential given the industry’s current legal status.

For federal trademark registration, your mark must be used in lawful interstate commerce and function as a source identifier rather than merely describing the product, as well as be distinctive. Distinctiveness can be inherent, like the invented word KODAK, or acquired through market use, like AMERICAN AIRLINES. These requirements ensure trademarks serve their core purpose: clearly indicating the source of goods and services while allowing businesses to build and maintain valuable brand identities.

Cannabis Trademark Challenges

Marijuana’s federal status as a Schedule I controlled substance under the Controlled Substances Act creates significant barriers for trademark protection. The USPTO consistently holds that use of a mark in commerce must be lawful under federal law to qualify for federal registration. This means marijuana businesses operating under a state-legal marijuana regime still cannot access federal trademark protection for their core products and services.

The 2018 Farm Bill created one notable exception by legalizing hemp (cannabis with 0.3% or less delta-9 THC). This opened a narrow pathway for federal trademark protection of hemp-derived goods and services. However, the USPTO maintains strict oversight: Marks for products exceeding the THC threshold — as well as consumable products containing hemp — remain ineligible for federal registration because they cannot be lawfully sold in interstate commerce.

State trademark systems have become a significant protection route for cannabis businesses. States with legal cannabis typically allow registration of cannabis-related marks. However, state registration comes with significant limitations. Most importantly, these rights only exist within state borders. For businesses operating across multiple states, this creates a complex patchwork of protection that can be challenging to manage and enforce. State rights may also offer less robust enforcement mechanisms compared to federal registration.

Protection Strategies

Cannabis businesses can implement several effective approaches to protect their intellectual property rights. Many cannabis operators successfully register federal trademarks for ancillary goods and services that don’t directly involve federally prohibited substances. For example, a dispensary might register its mark for branded merchandise like clothing and accessories, or for smoking devices that don’t contain cannabis. Educational services about cannabis cultivation or industry best practices can also qualify, provided they don’t promote federally illegal substances.

When developing trademark strategies, cannabis businesses should consider implementing a combination of these approaches to create the most comprehensive protection possible under current law. This might involve securing federal registration for ancillary goods and services, while simultaneously pursuing state registrations in key markets and maintaining documentation of common law rights.

Retail store services present another avenue for protection, though businesses must carefully describe these services to exclude federally prohibited goods. The USPTO examines specimens, applicants’ websites, and other evidence of use carefully to ensure applicants aren’t attempting to register marks for federally prohibited cannabis products under the guise of lawful goods or services.

Common law rights offer yet another important layer of protection. These rights arise automatically from use of a mark in commerce, even without registration. Under common law principles, the first entity to use a mark in a particular geographic area generally acquires priority rights within that region. While valuable, enforcing common law rights typically requires proving actual use in commerce and establishing consumer recognition of the mark — a more challenging process than enforcing registered marks.

State registration creates a public record of an owner’s rights and provides several meaningful benefits. It can deter potential infringers, simplify enforcement actions within the state, and serve as valuable documentation of trademark rights in anticipation of eventual federal legalization. State registrations often provide procedural advantages in state court proceedings, such as presumptive evidence of ownership and validity of the mark.

Current Developments

The Department of Justice has proposed rescheduling cannabis from Schedule I to Schedule III of the Controlled Substances Act. The DEA’s public hearing on this has been pushed to early 2025. While this delay has prompted some industry observers to question the inevitability of rescheduling, we maintain that rescheduling remains likely because it has broad bipartisan support and there is significant administrative momentum already in motion. The rescheduling process requires coordinated review by both the Department of Health and Human Services and the DEA, with each agency evaluating different aspects of the proposed change. Robert F. Kennedy Jr., the current nominee for HHS secretary, supports cannabis legalization and has proposed using cannabis tax revenue for drug treatment programs.

Rescheduling to Schedule III could fundamentally alter trademark registration rules. While cannabis would still be federally regulated, businesses might finally be able to register federal trademarks by meeting the “lawful use in commerce” requirement. However, the exact scope of available protection would likely depend on specific implementing regulations and USPTO guidance.

Looking Ahead

Federal legalization would transform cannabis trademark protection, though implementation would likely unfold gradually through a complex regulatory process. New regulatory compliance requirements would likely emerge as conditions for registration, potentially including specific product testing standards, labeling requirements, and marketing restrictions that could impact trademark strategies.

Cannabis businesses require sophisticated brand protection strategies that work now and preserve future opportunities. This starts with creating strong, distinctive brands that can withstand scrutiny under traditional trademark principles while navigating industry-specific regulatory constraints. Businesses should maintain robust state trademark registrations and document common law usage meticulously. Businesses also should develop contingency plans for various legalization scenarios, including strategies for converting state rights to federal registrations and consolidating trademark portfolios across jurisdictions.

As federal legalization approaches, businesses might consider filing intent-to-use applications at strategic moments to secure priority dates for future registration. International opportunities may also emerge as more countries liberalize their cannabis laws. Protection under international trademark treaties such as the Madrid Protocol could become possible for U.S. cannabis businesses following federal legalization, though this will require careful analysis of varying national laws regarding cannabis.

Success in this rapidly evolving landscape requires cannabis businesses to be both proactive in protecting their current rights and strategically positioned for the significant changes that federal legalization will bring.

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Late last week in Natera, Inc. v. NeoGenomics Laboratories, Inc. (24-1324), the Federal Circuit affirmed a preliminary injunction ruling from the lower court that mostly prohibits NeoGenomics from selling its oncology test marketed as RaDaR®. In doing so, the appellate panel confirms that the district court need not conduct claim construction at the preliminary injunction stage and also reiterates an accused infringer’s burden when arguing invalidity to challenge a patent owner’s likelihood of success on the merits of its infringement claim(s). 

Background

Last summer, Natera sued competitor NeoGenomics in the Middle District of North Carolina for infringement of U.S. Patent Nos. 11,519,035 and 11,530,454. This came just a few short months after NeoGenomics announced its commercial offering of RaDaR, marketed as a liquid biopsy test to assess the efficacy of cancer treatment and the risk of cancer recurrence through detection of trace amounts of circulating tumor DNA (ctDNA) within the bloodstream (also referred to as molecular/minimal residual disease (MRD)). Natera’s test — marketed as Signatera™ — is also a ctDNA test for treatment monitoring and molecular/minimal residual disease (MRD) assessment in patients previously diagnosed with cancer. Both tests are tumor-informed, i.e., designed from a patient’s genetic information based on a tissue biopsy of the patient’s tumor. 

Natera also moved for a preliminary injunction.

Lower Court Decision

In granting the preliminary injunction motion, the district court evaluated (1) Natera’s likelihood of success on the merits of its infringement claim with respect to the ʼ035 patent; (2) the likelihood of irreparable injury to Natera without the injunction; (3) the balance of equities; and (4) the public interest. 

With respect to the first factor, while NeoGenomics presented both non-infringement and invalidity defenses, the district court found Natera likely to succeed in proving infringement of the ʼ035 patent and NeoGenomics to have failed to raise a substantial question of invalidity. The district court did not opine on the likelihood of success of Natera’s ’454 patent infringement claim. The injunction ordered NeoGenomics to stop making, using, selling, or offering for sale its RaDaR assay, as well as promoting, advertising, marketing, servicing, distributing, or supplying the RaDaR assay. 

NeoGenomics appealed and challenged the district court’s analysis with respect to each of the four factors. 

Appellate Reversal

The appellate panel reviewed the grant of preliminary injunction for abuse of discretion.  Cutting to the chase, it found none. 

More specifically, with respect to the first factor — the likelihood of success of Natera’s infringement claims — NeoGenomics took the position that the district court failed to resolve a key dispute on claim construction. However, the appellate panel found no legal error in the district court conducting its infringement analysis without explicit claim construction. Not only does the court have no obligation to construe claims at the preliminary injunction stage, neither party presented a claim construction dispute to the court. In fact, NeoGenomics did not raise the claim construction dispute until its motion to stay the preliminary injunction pending appeal. Moreover, with respect to NeoGenomics’ argument that to infringe the PCR process in its RaDaR assay must satisfy two steps of the method claimed in the ʼ035 patent (which was purportedly contrary to prior precedent), the panel found no error in the lower court’s claim scope applied in its likelihood of infringement analysis.

In addition, the panel discerned no clear error by the lower court in finding that NeoGenomics failed to raise a substantial question of patent validity. In particular, the Federal Circuit clarified that, while an accused infringer “‘need not make out a case of actual invalidity’ to avoid a preliminary injunction but need only show a substantial question of invalidity,” there is no lower “mere vulnerability” to the invalidity standard as NeoGenomics argued. The panel was also critical of NeoGenomics’ obviousness arguments and found that Natera’s considerable evidence of obstacles preventing a skilled artisan from properly amplifying and sequencing cfDNA to arrive at the claimed invention to be effectively overcome by NeoGenomics’ “conclusory arguments without meaningful supporting documentation.”

The panel was also not swayed by NeoGenomics’ challenges to the district court’s findings on irreparable harm. NeoGenomics had argued that the district court’s finding was based on a misinterpretation of the Federal Circuit’s holding in Presidio Components v. American Technical Ceramics to impose an unconditional rule that direct competition with an alleged infringer creates irreparable harm. The panel disagreed that the lower court imposed any such categorical rule, and noted that the lower court also found other supporting factors such as Natera’s unwillingness to license its patent, potential for lost partnerships, and difficulties faced by patients switching between the two tests. NeoGenomics had also argued that the causal nexus for the alleged harm was tied to the tumor-informed nature of the assay, which was not claimed in the asserted Natera patents. However, the appellate panel ruled that there was sufficient evidence to show that the tumor-informed nature of RaDaR assay could not be achieved without practicing the claims of the ʼ035 patent such that there was a sufficient nexus to establish irreparable harm.

With respect to the public interest factor, the Federal Circuit was not persuaded by NeoGenomics’ argument that no test (including Signatera) can adequately replace the high sensitivity of RaDaR to meet patients’ needs, especially given that both RaDaR and Signatera are approved for the same cancer indications. In addition, the panel found that the injunction order was sufficiently tailored to prevent any harm to cancer patients. More specifically, the injunction carved out exceptions for patients already using RaDaR and for certain finalized or in-process research projects, studies, and clinical trials. Thus, the Federal Circuit took no issue with the district court’s courts conclusion that the public interest factor weighs in favor of the preliminary injunction. In fact, it applauded the lower court in its structuring of the injunction to avoid public harm while at the same time largely prohibiting the use, manufacture, or sale of RaDaR for cancer remission.

Key Takeaways

First, while a district court has no obligation to construe claim terms in order to rule on a preliminary injunction motion, if there is a term that could be pivotal in the court’s determination of the first factor, the claim construction dispute should be raised early and often. For example, raising the claim construction dispute in the opposition brief before the district court, at the technology tutorial, and/or at the preliminary injunction hearing may help to establish that the district court abused its discretion if an appeal becomes necessary. 

Second, although a defendant’s burden at the preliminary injunction stage is only to show a “substantial question” of invalidity, making a showing under that standard is likely more attainable with comprehensive invalidity arguments backed by meaningful supporting documentation.

Third, this is a compelling example of how patents can and do create barriers (temporary and/or permanent) to market entry and/or success for competitors. Thus far, Natera has been successful in wielding its IP to interfere with its competitors’ ability to market and sell rival products. Indeed, in addition to this preliminary injunction, Natera was also granted a permanent injunction against Invitae Corporation and its Personalized Cancer Monitoring (PCM) product at the end of 2023. Natera’s unwillingness to license (as noted by the lower court) and proven appetite to enforce its patents will likely allow Natera to dominate the diagnostic testing market in this specific area unless and until NeoGenomics or another competitor is able to adequately design around the patents and stay out of Natera’s crosshairs.

Fourth, it is not often that preliminary injunctions are granted in U.S. patent litigation.  But, when one is, it packs quite a punch. Shortly after the lower court issued its ruling in late December, NeoGenomics shares (NEO) plunged 16.49%. In comparison, Natera’s stock is at an all-time high (up over 80% just in the last six months).

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On June 13, 2024, the Supreme Court handed down its decision in Vidal v. Elster, a case that pitted trademark law against the First Amendment’s free speech protections. While the Court unanimously upheld the Patent and Trademark Office’s (PTO) refusal to register a contentious mark, the justices’ concurring opinions reveal sharp divisions over the proper framework for analyzing First Amendment challenges and the role of history in constitutional interpretation.

The Case: A “Small” Matter with Big Implications

At the heart of the case was Steve Elster’s attempt to register the trademark “Trump too small” for use on shirts and hats. If you’re wondering about the origin of this rather diminutive phrase, it harkens back to a memorable 2016 primary debate exchange between then-candidate Donald Trump and Sen. Marco Rubio.

The PTO refused registration under the Lanham Act’s “names clause,” which prohibits registering a trademark containing a living person’s name without their consent. This case marks the third in a recent trio of decisions, following Matal v. Tam and Iancu v. Brunetti, which struck down other Lanham Act restrictions on “disparaging” and “immoral” or “scandalous” marks as unconstitutional.

To Scrutinize or Not to Scrutinize: The Justices Weigh In

A threshold issue in the case was whether the names clause, as a content-based speech regulation, should face heightened scrutiny. In a plot twist that might shock First Amendment aficionados, all nine justices agreed it should not. Content-based restrictions on speech are presumptively unconstitutional and generally subject to strict scrutiny — requiring the government to show the law is narrowly tailored to achieve a compelling interest. Not so here.

Why the unanimous shoulder shrug to heightened scrutiny? Well, it turns out trademarks and the First Amendment have been coexisting peacefully for over two centuries without raising censorship concerns. As Justice Clarence Thomas put it, this long history suggests “heightened scrutiny need not always apply in this unique context.” Indeed, trademarks are inherently content-based. The whole point is to identify the source of goods based on the content of the mark.

Justice Sonia Sotomayor added another wrinkle. She pointed out that denying trademark registration doesn’t actually restrict speech. When the PTO refuses to register a mark under the names clause, it “does not prevent [the applicant] from using his mark in commerce or communicating any message incidental to the mark.” The applicant just doesn’t get the additional benefits of federal registration, such as nationwide priority and presumptions of validity. It’s like the government declining to give you a gold star for your controversial book report — you can still write it, you just don’t get extra credit.

The History and Tradition Tango: Justices Clash Over Interpretive Approach

Here’s where things get spicy. Thomas, writing for a five-justice majority, led us on a historical field trip. He delved into past trademark practices, essentially arguing, “[w]e’ve been doing it this way for ages, so it must be constitutional.”

But Justice Amy Coney Barrett did not appear to be a fan of this field trip. In her concurrence, she argued that the Court’s historical evidence was not as rock-solid as Thomas made it out to be. She even suggested that some early cases allowed famous living persons’ names to be trademarked without consent.

More fundamentally, Barrett questioned the wisdom of relying solely on historical practice to determine constitutionality. She argued that “tradition is not an end in itself” and in a particularly sharp rebuke, she wrote: “I fear that the Court uses it that way here.” Barrett pointed out the irony in the majority’s approach, noting that while it claims to avoid “judge-made tests,” it effectively creates a new one by making historical tradition dispositive.

A New Test Enters the Ring: Reasonableness in Light of Trademark’s Purpose

Instead of this historical focus, Barrett proposed evaluating content-based trademark restrictions based on whether they are “reasonable in light of the purpose of the trademark system.” It seems as if this proposal would ask: “Does this rule actually help trademarks do their job, or is it just making life difficult for creative entrepreneurs?” Under this framework, she concluded that the names clause is constitutional because it serves trademark law’s core purposes of facilitating source identification and protecting mark owners’ goodwill.

Sotomayor, joined by Justices Elena Kagan and Ketanji Brown Jackson, took the critique a step further. She argued that the history-focused approach was about as clear as mud to judges and litigants. In a particularly colorful analogy, she compared it to “entering a crowded cocktail party and looking over everyone’s heads to find your friends.” She expressed concern about the confusion this approach has caused in lower courts, citing as an example the difficulties courts have faced in applying the historical test from New York State Rifle & Pistol Association v. Bruen in Second Amendment cases.

The Takeaway: More Questions Than Answers

While Vidal v. Elster leaves the names clause intact, it highlights tensions between trademark law and free speech. It also provides new insight into the justices’ competing visions of constitutional interpretation and the role of history.

Even Thomas acknowledged the narrowness of the holding, conceding that not every content-based trademark restriction must find support in history and tradition. This admission, along with the concurring justices’ critiques, suggests that Barrett’s purpose-driven approach may provide a more reliable roadmap for Congress in regulating trademarks going forward.

At minimum, the case sets the stage for further battles over the use of history and tradition in constitutional cases. As for Steve Elster, he may not have gotten his trademark, but he certainly got the Court talking.

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As generative AI systems become increasingly sophisticated and widespread, concerns around the use of copyrighted works in their training data continue to intensify. The proposed Generative AI Copyright Disclosure Act of 2024 attempts to address this unease by introducing new transparency requirements for AI developers.

The Bill’s Purpose and Requirements

The primary goal of the bill is to ensure that copyright owners have visibility into whether their intellectual property is being used to train generative AI models. If enacted, the law would require companies to submit notices to the U.S. Copyright Office detailing the copyrighted works used in their AI training datasets. These notices would need to be filed within 30 days before or after the public release of a generative AI system.

The Copyright Office would then maintain a public database of these notices, allowing creators to search and see if their works have been included. The hope is that this transparency will help copyright holders make more informed decisions about licensing their IP and seeking compensation where appropriate.

Potential Benefits for Copyright Owners

The bill’s notice requirements and public database could be a significant step forward for creators looking to protect their IP in the age of AI. By providing a way to track the usage of their works in generative AI systems, the law would empower copyright owners to take action against unauthorized use and potentially negotiate licenses or royalties. This could be particularly valuable for individual artists, writers, and other creators who may lack the resources to monitor the vast landscape of AI applications on their own.

Challenges and Obstacles for AI Developers

While the bill’s intentions are laudable, it raises several practical challenges for AI companies. The 30-day window to file notices could be difficult to meet, particularly for startups or smaller organizations with limited resources. The vague requirement for a “sufficiently detailed summary” of copyrighted works used also leaves much room for interpretation and potential non-compliance.

Moreover, many AI training datasets are compiled by crawling the open web, which could make identifying and isolating every single copyrighted work extremely burdensome. The technical challenges of building and maintaining a comprehensive, searchable database of notices could be substantial.

Impact on AI Innovation

The additional administrative overhead and legal liabilities introduced by the bill could have a chilling effect on the pace of AI innovation. Smaller players may struggle to keep up with the compliance burdens, while larger tech giants with more resources may be able to adapt more easily. This could further entrench incumbent advantages and raise barriers to entry for new startups.

Some companies might choose to move their AI development efforts outside the U.S. to avoid these regulations altogether. This could put the U.S. at a competitive disadvantage in the global race for AI leadership.

If more copyright owners start denying the use of their works for AI training, it could also limit the data available and hinder progress in certain domains. AI systems rely on large, diverse datasets to learn and improve, so restrictions on training data could have far-reaching effects.

The Way Forward

Balancing the rights of copyright owners with the need for continued AI innovation will be a critical challenge in the years ahead. While the Generative AI Copyright Disclosure Act is a well-intentioned effort to strike that balance in the U.S., its current form raises significant practical and policy questions.

Policymakers will need to engage in extensive dialogue with stakeholders from the AI industry and creative communities to refine the bill’s requirements and avoid undue burdens or unintended consequences. Developing clear, workable standards for responsible AI development and training data sourcing will be essential. Ultimately, fostering a thriving and ethical AI ecosystem will require ongoing collaboration and adaptation as the technology continues to evolve. The Generative AI Copyright Disclosure Act of 2024 is at least a conversation starter around the intersection of AI and intellectual property rights.

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On May 9, 2024, the Supreme Court released its decision in Warner Chappell Music v. Nealy, a case with significant implications for damages available to plaintiffs in copyright infringement claims. The Court assumed, without deciding, that the discovery rule applies to copyright infringement claims. Operating under this assumption, the Court held that a copyright plaintiff can recover damages for acts that occurred more than three years before the filing of a lawsuit — as long as the claim is timely under the discovery rule. The decision resolves a narrow damages question, leaving the broader issue of the discovery rule’s validity for another day.

Licensing While Incarcerated

The case centers around Sherman Nealy, the founder of Music Specialist, Inc. (MSI), who alleged that Warner Chappell Music and other defendants infringed on copyrights owned by MSI. Nealy claimed that Tony Butler, an employee hired to create music for MSI, unlawfully licensed MSI’s works to Warner Chappell and others while Nealy was incarcerated. Nealy asserted that he was unaware of these licenses until after his release from prison.

In granting partial summary judgment for Warner Chappell, the district court held that the Copyright Act’s statute of limitations precludes recovery of damages for acts that occurred more than three years before the filing of the lawsuit, even though Nealy did not discover the infringement until more than three years after the infringing acts took place. The district court then certified that order for interlocutory appeal to the Eleventh Circuit, which held “when a copyright plaintiff has a timely claim under the discovery accrual rule for infringement that occurred more than three years before the lawsuit was filed, the plaintiff may recover damages for that infringement.”

The decision deepened a circuit split between the Ninth and the Second circuits (with the Eleventh Circuit joining the Ninth), traceable to a line in the Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer, Inc.: “A successful plaintiff can gain retrospective relief only three years back from the time of suit.” The Second Circuit, in Sohm v. Scholastic Inc., read the line as imposing a separate damages bar, limiting damages to the three-year period preceding the filing of a lawsuit, even for claims that are timely under the discovery rule.

The Court’s Decision

In a 6-3 decision authored by Justice Elena Kagan, the Court expressly rejected the Second Circuit’s view, stating it has “no textual support” and is “self-defeating.” The Court assumed, without deciding, that the discovery rule applies to copyright infringement claims and held — under this assumption — the Copyright Act imposes no separate time limit on the recovery of damages for timely infringement claims. If a claim is timely under the discovery rule (i.e., brought within three years of discovery), the plaintiff can recover damages for infringing acts no matter when they occurred.

The Court reasoned that the Copyright Act’s statute of limitations provision establishes a three-year period for filing suit that begins when the claim accrues (here assumed to be upon discovery). But the act contains no separate three-year time limit on recovering damages measured from the date of infringement. The Court found no support for a separate damages limit in the act’s remedial provisions.

However, the Court expressly avoided deciding whether the discovery rule actually governs the timeliness of copyright claims in the first place, since that issue was not properly presented. It simply assumed the rule’s applicability to answer the narrow damages question before it.

In a dissenting opinion, Justice Neil Gorsuch argued that the Court should have first addressed the logically antecedent question of whether the Copyright Act even allows for a discovery rule at all before opining on the rule’s operational details. He suggested the act likely does not permit the rule except in cases of fraud or concealment.

Implications for Copyright Plaintiffs

The Court’s decision in Warner Chappell Music v. Nealy is a qualified victory for copyright plaintiffs, albeit an important one for cases in the Second Circuit because it overturns the holding in Sohm. By allowing the recovery of damages for acts that occurred more than three years before the filing of a lawsuit, the decision significantly increases the potential recovery for plaintiffs in the circuit. The decision will be especially beneficial for plaintiffs like Nealy who, due to incarceration or other circumstances, are unable to closely monitor their copyrights.

However, the decision leaves open the crucial question of whether the discovery rule actually applies to copyright infringement claims under the Copyright Act. If the Court later holds that it does not, the impact of this decision will be significantly diminished.

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There have been only a few precedential decisions from the Federal Circuit related to obviousness since spring sprung. While these decisions have produced mixed results for the lower courts, clinical study protocols have held up to appellate scrutiny both in the context of motivation to combine and reasonable expectation of success.

Reversed and Remanded to the Bench

At the beginning of the month, in Janssen Pharmaceuticals, Inc. v. Teva Pharmaceuticals USA, Inc. (No. 22-1258), a Federal Circuit panel told U.S. District Judge Claire C. Cecchi (New Jersey) that she erred in finding claims to a schizophrenia drug nonobvious.

Janssen markets and sells Invega Sustenna®, which, according to the website, is an extended-release injectable suspension of paliperidone palmitate used to treat schizophrenia in adults. Prior to Invega Sustenna, the conventional approach for dosing of antipsychotic drugs was to “start low and go slow.” The dosing regimens for Invega Sustenna® and claimed in U.S. Patent No. 9,439,906 are contrary to this conventional approach in that injections of high, rather than low, loading doses are used to begin treatment. 

When Janssen sued Teva for allegedly infringing claims of the ʼ906 patent, Teva tried to convince Judge Cecchi in a bench trial that the claims of the ʼ906 patent are invalid as obvious based on a clinical study protocol describing an interventional Phase III clinical trial, which hypothesized that three fixed doses of paliperidone palmitate would be more efficacious than a placebo in treating subjects with schizophrenia, U.S. Patent No. 6,555,544, which describes the composition used in the claim of the ’906 patent, and International Publication No. WO 2006/114384, which describes preparation of aseptic crystalline paliperidone palmitate. 

On appeal, the Federal Circuit first took issue with the lower court’s finding that Teva failed to show that it would be obvious to use the claimed dosing regimen for the general population of patients because the clinical study protocol did not show that the drug had generalized safety and efficacy. In this regard, the panel explained that, since the ʼ906 patent describes a dosing regimen for “a psychiatric patient” being treated for schizophrenia, and “nothing in the claims requires that the [dosing] regimen be used for — let alone be ideal for — the patient population generally,” an analysis based on a general population of patients was improperly framed. The lower court was told that it instead should have focused its reasonable expectation of success analysis on a single schizophrenia patent.

In addition, the Federal Circuit found fault with the lower court’s failure to give adequate weight to the perspective and creativity of a person of ordinary skill in the art when deciding whether the dosing regimen claimed in the ʼ906 patent would have been obvious based on the prior art combination. In this regard, the panel explained that the lower court erred by focusing on the clinical study protocol’s lack of results rather than considering what the protocol would fairly suggest to a person of ordinary skill in the art. In fact, the panel concluded that a person of ordinary skill in the art would still have ascribed “significance … to the Phase III status of the protocol” and the knowledge that paliperidone palmitate was already marketed for schizophrenia.  In this regard, the appellate panel deemed the lower court to have taken a “seemingly siloed and inflexible approach.” 

Moreover, the panel explained that, while identifying a recognized problem or need in the prior art is one way to demonstrate motivation, there was no requirement for Teva to show that the clinical study protocol was flawed for a person of ordinary skill in the art to be motivated to modify it. Rather, the opinion reminds us that:

[a] motivation ‘may be found explicitly or implicitly in market forces; design incentives; the interrelated teachings of multiple patents; any need or problem known in the field of endeavor at the time of invention and addressed by the patent; and the background knowledge, creativity, and common sense of the person of ordinary skill.’

Suffice it to say, the Federal Circuit found that the lower court’s obviousness analysis “ran afoul of KSR’s basic mandate in a number of ways.” In any event, Teva now has the renewed opportunity to prove that the ʼ906 patent is invalid. With almost $3 billion in sales in 2023 and the ʼ906 patent being the last remaining Orange Book patent for Invega Sustenna, Janssen has a lot at stake. 

Applause to the Bench

In mid-April in Salix Pharmaceuticals, LTD. et al v. Norwich Pharmaceuticals, Inc.(22-2153), a divided panel of the Federal Circuit affirmed a District of Delaware ruling invalidating certain claims of Salix’s U.S. Patent Nos. 8,309,569 (claim 2), 10,765,667 (claim 3), 7,612,199 (claim 4), and 7,902,206 (claim 36) invalid as obvious. This family of patents protected the composition and use of Xifaxan®, which is used to treat IBS-D.  

After a bench trial, Judge Richard G. Andrews held that the claims were invalid as obvious based on a clinical study protocol published on the clinicaltrials.gov website describing a Phase II study and a journal article. The protocol does not include any efficacy or safety data or the claimed dose of 1,650 mg/day or thrice-daily dosing (550 mg/dose), but does provide an outline of a planned Phase II clinical trial evaluating twice-daily doses (1,100 mg/day and 2,200 mg/day) for the treatment of IBS-D. The journal article teaches a 400mg dose administered three times a day for the treatment of IBS, but also mentioned that optimal dosing may be higher.  Based on these separate teachings, the lower court found that the protocol and journal article disclose each and every limitation of the claims-at-issue, and then concluded that a person of ordinary skill in the art would have been motivated to combine the protocol and journal article to arrive at the claims with a reasonable expectation of success.

On appeal, Salix argued that, even if the protocol and journal article in combination discloses the claimed dosage, there was insufficient evidence to support a finding of a reasonable expectation of success in using that particular dosage amount. In this vein, amici argued in support of Salix that disclosure of clinical trials are not sufficient to inform a skilled artisan about the reasonable likelihood of success in the future and that there is a very low success rate of clinical trials. However, the majority found no error in the district court’s holding that a person of ordinary skill in the art would have considered the combination of the two references (not just the protocol) and possessed a reasonable expectation of success in using the 550mg/dose from the protocol (after noting from the journal article that the optimal dosage for IBS may be higher than 400mg TID) since “certainty and absolute predictability are not required to establish a reasonable expectation of success.” 

What Says the High Court on Clinical Study Protocols?

If the recent denial of cert in Vanda Pharmaceuticals Inc., Petitioner v. Teva Pharmaceuticals USA, Inc. is any indication, it does not seem like the justices are particularly interested in reviewing the Federal Circuit’s obviousness test (at least when clinical study protocols are in the mix). Vanda had argued that the “reasonable expectation of success” test when combining prior art in the obviousness review used by the Federal Circuit was wrong and counter to Supreme Court precedent from 2007 requiring “predictable results.”

The Vanda appeal stemmed from a 2022 bench trial in the District of Delaware where U.S. District Judge Colm Connolly found Vanda’s patents covering Hetlioz®, which is used to treat certain sleep disorders, invalid as obvious. Briefly, two different combinations of prior art, both of which include references discussing Phase II or Phase II clinical trials, were determined to render the claims obvious. The Federal Circuit affirmed the lower court’s finding of obviousness and noted that the use of ongoing clinical trials as one piece of evidence, combined with other prior art references, to support a finding of reasonable expectation of success is not error.

Vanda argued to the high court that the Federal Circuit’s test would make “the mere existence of a clinical trial” part of a reasonable expectation of success in the obviousness analysis, which would make “experimentation unpatentable, no matter how innovative or unpredictable the results.” Vanda’s petition was denied cert without further explanation. 

So, What’s the Takeaway?

We know that generally, when the obviousness test involves combining references, a person of ordinary skill in the art (1) must have been motivated to make such a combination, and (2) have had a reasonable expectation of success in arriving at the claimed invention. In the context of clinical study protocols, we also know that the lack of safety and efficacy data does justify discounting a protocol in either (1) or (2). Rather, with respect to reasonable expectation of success, the Salix majority did caution that:

[a]lthough we have rejected the idea that ‘efficacy data [are] always required for a reasonable expectation of success,’ OSI Pharms., LLC v. Apotex Inc., 939 F.3d 1375, 1385 (Fed. Cir. 2019), we are hesitant to conclude as a general matter that the disclosure of a Phase II clinical trial plan, standing alone, provides an expectation of success sufficient to render obvious a dosage that was not included within the planned clinical trial.

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In a case that pitted two sellers of construction equipment against each other — I Dig Texas, LLC v. Creager — the U.S. Court of Appeals for the Tenth Circuit was tasked with excavating the truth behind claims of false advertising and copyright infringement. The court had to dig deep to determine whether there was a solid foundation for the allegations that I Dig Texas had built its profits on the back of Creager’s copyrighted photographs and whether I Dig Texas’s “Made in the USA” claims were as sturdy as the skid steer attachments they sold.

I Dig Texas used copyrighted photographs of Creager’s products — which were made in China — in its advertisements. These advertisements stated I Dig Texas’s products were made in the United States and encouraged consumers to purchase its skid steer attachments rather than Creager’s foreign-made attachments.

I Dig Texas filed a lawsuit against Creager Services in state court, asserting several state-law claims. In response, Creager filed counterclaims, including federal claims for copyright infringement under the Copyright Act and false advertising and false designation of origin under the Lanham Act, as well as state-law claims. The case was removed to federal court.

Creager argued that I Dig Texas infringed on its copyrights by using photographs of Creager’s products and sought only actual damages. To recover profits from the alleged infringement, Creager needed to prove a connection between I Dig Texas’s use of the copyrighted images and any profits earned. The court found that Creager failed to provide evidence linking I Dig Texas’s use of the photographs to any increase in profits. Consequently, the court affirmed summary judgment in favor of I Dig Texas on the copyright infringement claim.

Regarding the Lanham Act claims, Creager contended that I Dig Texas’s advertisements misrepresented the origin of its products by stating they were made in the United States. However, the court determined that the advertisements were ambiguous because they could refer to either the origin of the components or the assembly location of the final product. Since some of I Dig Texas’s products were assembled in the United States, even if they contained foreign components, the court found that the advertisements were not literally false. Likewise, the court ruled that the use of patriotic symbols in the advertisements was ambiguous and could not render them literally false.

The Key Takeaways

  • To prove copyright infringement and recover the infringer’s profits in the Tenth Circuit, a plaintiff must establish a clear connection between the defendant’s use of the copyrighted material and any profits earned.
  • Under the Lanham Act, advertisements claiming a product is “made in the USA” or “American-made” — or using patriotic symbols — cannot be considered literally false if they are determined to be ambiguous. If a product is assembled in the United States but contains foreign components, the Tenth Circuit considers the claim ambiguous because it could refer to either the origin of the components or the assembly location.

This decision highlights a somewhat counterintuitive result in the application of the Lanham Act to false advertising claims. While businesses are generally advised to craft clear and unambiguous advertising language to avoid potential legal issues, in this case, the ambiguity in I Dig Texas’s advertisements actually worked in its favor. By using language that could be interpreted in multiple ways, I Dig Texas avoided a finding of literal falsity under the Lanham Act.

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Last week in Luv n’ Care, Ltd. v. Laurain, the Federal Circuit put the lower court in time out and probably made Eazy-PZ, LLC (EZPZ) cry just a little bit harder. In this precedential decision involving U.S. Patent No. 9.462,903, the appellate panel vacated a Western District of Louisiana judgment of no inequitable conduct and affirmed the lower court’s judgment of unclean hands. However, the panel also vacated the lower court’s grant of partial summary judgment of invalidity. The parties will now have to get back to the table (or bench) to find out whether the ʼ903 patent is unenforceable and/or valid, and whether EZPZ’s behavior will result in further punishment.

The Invention

903-Patent-Self-Sealing-Integrated-Tableware-and-Dining-Mat

The ʼ903 patent describes and claims a surface contact self-sealing integrated tableware and dining mat. As shown in FIG. 5 of the ʼ903 patent, the self-sealing integrated tableware and dining mat includes a rubber-like planar portion 20 surrounded by an outer edge 22. A receptable 32 lies on the upper surface 26 and has a raised perimeter 28 defining at least one concavity 30 (e.g., in FIG. 5, the receptable 32 includes an oval portion 32B and a pair of bowls 34). The mat has an undersurface 24 disposed for sealable contact with an underlying surface to prevent lateral displacement of the mat. In other words, a toddler can’t move or flip the mat over without peeling the undersurface 24 from the underlying surface starting first at the outer edge 22.

The Back Story

Almost eight years ago, Luv n’ care, Ltd. and Nouri E. Hakim (LNC) sued Lindsey Laurain and EZPZ in the District Court of the Western District of Louisiana under the Lanham Act (and Louisiana’s Unfair Trade Practices and Consumer Protection Law) based on what LNC alleged to be “acts of unfair competition” by EZPZ. LNC also sought declaratory judgment that U.S. Design Patent No. D745,327 is invalid, unenforceable, and not infringed. A few months later, when the ʼ903 patent was issued and assigned to EZPZ, LNC added the newly issued patent to its declaratory judgment claim. EZPZ counterclaimed against LNC for infringement of the ʼ327 and ʼ903 patents and also alleged copyright, trademark, and trade dress infringement, violation of LUTPA, and unjust enrichment. 

LNC moved for partial summary judgment of invalidity of the ʼ903 patent, which the district court granted. In a bench trial, which involved only LNC’s allegations of inequitable conduct of the ʼ903 patent and unclean hands by EZPZ, the court found that LNC did not meet its burden with respect to unenforceability of the ʼ903 patent, but that EZPZ was barred from obtaining relief on any counterclaims remaining in the suit due to unclean hands based on litigation misconduct. Ouch. 

The Appeal

The issues on appeal were numerous:

  1. Whether the district court erred in finding that the doctrine of unclean hands bars EZPZ from obtaining relief on its claims;
  2. Whether LNC failed to prove the ’903 patent is unenforceable due to inequitable conduct;
  3. Whether the claims of the ’903 patent are invalid as obvious; and
  4. Whether the district court erred in denying LNC attorney fees and costs.

To dispose of the most straightforward issue first (with respect to this specific appeal only), the lower court’s obviousness finding was vacated and remanded because, according to the appellate panel, genuine disputes of material fact are evident from the record. In other words, obviousness was not ripe for summary judgment.

Turning back to the first issue, the appellate panel found no error in the district court’s holding and affirmed. More specifically, the panel rejected EZPZ’s argument that that EZPZ’s litigation misconduct did not rise to the level of “unconscionable acts” or have the requisite nexus to the ’903 patent infringement claims. In this vein, EZPZ’s misconduct, which included, for example, (a) lack of disclosure of patent applications related to the ’903 patent (at least one of which involved claim construction relevant to a disputed claim term in the ʼ903 patent) until well after the close of fact discovery and dispositive motion practice, (b) attempts to block LNC’s efforts to discover the inventor’s prior art searches, and (c) repeated evasive testimony, was deemed by the panel to be directly relevant to the development of LNC’s litigation strategy.

On the second issue, LNC gets a second bite at the apple now that the appellate panel vacated the district court’s holding that LNC failed to meet its burden with respect to inequitable conduct and remanded for further proceedings. To set the stage for the reprimand from the panel, the opinion first reminded the lower court that 1) to prove inequitable conduct, a party must show by clear and convincing evidence that the patentee a) withheld material information from the PTO, and b) did so with the specific intent to deceive the PTO, and that a) and b) are separate requirements. The lower court was then instructed to determine whether the acts by the patentee during prosecution amounted to affirmative egregious misconduct and were, therefore, per se material (without need to prove its impact on the PTO’s patentability determination). If the lower court determines that the acts by the patentee do not amount to affirmative egregious misconduct, then it must evaluate whether the PTO’s patentability decision may have differed if the patentee had accurately described the prior art and disclosed the video showing certain features of the prior art. In addition, since the panel vacated the lower court’s finding that other prior art was cumulative and, thus, non-material, the lower court has to revisit that issue. Moreover, the lower court must reevaluate EZPZ’s deceptive intent based on misconduct in the aggregate. In this aspect, the panel explained that,

[w]hen a person having a duty of candor and good faith has engaged in serial misconduct during the prosecution of the same or related patents, it is not enough for a court to consider each individual act of misconduct without also considering the collective whole.

…

Here, the district court did not apply this legal standard and, thereby, abused its discretion. The district court considered each of Ms. Laurain’s and Mr. Williams’ individual acts of misconduct in isolation and failed to address the collective weight of the evidence regarding each person’s misconduct as a whole.

The lower court was also scolded for its finding that EZPZ’s misrepresentations during prosecution amounted only to gross negligence. Rather, as the panel chastised, “[s]uch purposeful omission or misrepresentation of key teachings of prior art references may, instead, be indicative of a specific intent to deceive the PTO.”  

With respect to the final issue on appeal, the panel agreed with LNC that the court erred by not naming LNC as the prevailing party. This is highly relevant because, if a court deems a case exceptional, it may award attorneys’ fees to the prevailing party. As to LNC’s prevailing party status, the panel explained that LNC brought the case against EZPZ seeking a declaratory judgment of non-infringement, invalidity, and unenforceability of the ’903 patent. Since EZPZ came to the table without washing its hands, it became unable to enforce its’903 patent against LNC. As such, even though some of LNC’s claims were not successful (including its LUTPA claims) or dismissed without prejudice, and the unenforceability of the ʼ903 may change on remand, the inability for EZPZ to obtain relief from LNC for any alleged infringement of the ʼ903 patent, the ’327 design patent, and trade dress still puts LNC in the winning spot for the purposes of the prevailing party portion of the attorneys’ fees analysis. Since this prong is met, the attorneys’ fee award now hinges on whether the lower court on remand finds the case to be exceptional (at its conclusion and based on the totality of the circumstances).

Key Takeaways

The lower court has a lot of clean up to do on remand. On the other hand, EZPZ can do nothing to erase its acts and omissions during prosecution of the ʼ903 patent or during the litigation itself.  Indeed, with respect to the inequitable conduct allegation, the panel seems to be strongly suggesting to the lower court that the bevy of acts and/or omissions during prosecution do constitute inequitable conduct. 

And, with respect to attempting to predict the lower court’s ultimate finding on exceptionality, we can consult a few previous decisions from the Federal Circuit where exceptionality was found to be lacking. In this vein, an earlier post on OneSubsea, IP v. FMC Technologies, Inc., No. 22-1099 (Fed. Cir. May 23, 2023) teaches us that zealous advocacy alone is insufficient to make a case exceptional. In other words, an aggressive litigation strategy does not equate to the type of litigation misconduct typically required for a finding of exceptionality under 35 U.S.C. § 285.  Litigation misconduct rising to the level of a finding of unclean hands as we have here feels quite different than an aggressive litigation strategy. In addition, unlike in United Cannabis, Corp. v. Pure Hemp Collective Inc., No. 22-1363 (Fed. Cir. May 8, 2023), where Pure Hemp argued exceptionality based on an inequitable conduct allegation that was eventually voluntarily dismissed by Pure Hemp, LNC’s arguments do not seem to be “extremely weak” or “unsupported” such that they will not be found to satisfy 35 U.S.C. § 285. Indeed, from these two cases (and providing that the lower court on remand finds inequitable conduct), it seems that EZPZ’s bad behavior may result in LNC getting its legal bills paid.