Laws of .com

Volume V, Issue 9: May 3, 2007

U.S. Supreme Court Reins-in Reach of U.S. Patents Abroad

Major Retailer Sued by Banks in Data Theft Class Action

U.S. Supreme Court Revisits "Obviousness" Test for Patents

Australia's Federal Government to Criminalize Identity Theft

Chinese Political Prisoner Sues Yahoo in U.S. Court

Internet Libel Suit Targets Google's Blogspot & Wikipedia

Ticketmaster Sues eBay over Online Resale of Tickets

U.S. Supreme Court Reins-in Reach of U.S. Patents Abroad

In a 7-1 decision, the U.S. Supreme Court sided with Microsoft and found that installing copies of software made from a master disk shipped from the U.S. on computer systems in other countries is not an infringement of a U.S. patent. AT&T had claimed damages for every Windows-based computer combined outside the United States that included a digital speech coder system covered by AT&T’s patent. Lower courts had awarded substantial damages for foreign-based infringements.

To determine the issue, the Court had to examine 35 U.S.C. §271(f), the U.S. patent statute that makes it an infringement to supply from the United States components of a patented invention in a manner so as to actively induce the combination of such components outside of the United States in a way that would infringe the patent, if the combination had occurred in the United States.

The master disk software was distinguished from the actual copies (“components”) made from the disk that were combined with the computer systems abroad. As well, the court concluded that the copies were not “supplied” from the United States for purposes of finding patent infringement under §271(f). A narrow interpretation was applied to the provision in view of the presumption of territorial limits to patents.

For a copy of the decision, visit:
http://tinyurl.com/2d7eua

Back to Headlines

Major Retailer Sued by Banks in Data Theft Class Action

Earlier this year, TJX Companies (an operator of a chain of discount retail stores in the United States) announced that a data breach, initially announced in January 2007, was much larger than originally thought. Apparently, data harvesting software had been installed on the company’s system in mid-2005 and had not been discovered until early 2007, compromising approximately 45,000,000 individuals’ personal information.

In April 2007, the Massachusetts Bankers Association, the Connecticut Bankers Association, the Maine Association of Community Banks, as well as several individual banks initiated class action proceedings against TJX for this security breach. This is unsurprising, as it is banks that issue credit cards that bear the lion’s share of losses from such security breaches, both from unauthorized charges to stolen credit card numbers and the costs of reissuing cards.

For additional information, visit:
http://hartfordbusiness.com/news1384.html

Back to Headlines

U.S. Supreme Court Revisits "Obviousness" Test for Patents

On April 30, 2007, Justice Anthony Kennedy delivered the opinion for a unanimous U.S. Supreme Court in KSR International Co. v. Teleflex Inc. et al., in which the highest U.S. court reversed a decision of the Court of Appeals for the Federal Circuit. The case is about an alleged patent infringement by KSR of one of Teleflex’s patents, which discloses a position-adjustable pedal system used in cars. KSR countered that one of the claims of Teleflex’s patent was invalid under the Patent Act.

The central issue of the appeal is the application of the “obviousness” analysis as set out in Graham v. John Deere Co. of Kansas City, an earlier Supreme Court decision that has been followed by the lower courts when interpreting §103 of the Patent Act, which forbids the issuance of a patent when:

...the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art.

In Graham, the Supreme Court set out an objective analysis for applying §103 of the Patent Act:

[T]he scope and content of the prior art are...determined; differences between the prior art and the claims at issue are...ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background the obviousness or nonobviousness of the subject matter is determined.

Since Graham, the Court of Appeals for the Federal Circuit had developed in 1982 a “teaching, suggestion, or motivation” (TSM) test to complement the “obviousness” analysis of §103 of the Patent Act. Under the TSM test, a patent claim would be obvious only if “the prior art, the nature of the problem, or the knowledge of a person having ordinary skill in the art reveals some motivation or suggestion to combine the prior art teachings.” In short, an invention is obvious if a person of ordinary skill in a particular field would have thought to combine certain elements of previous inventions to solve a certain need or problem based on his review of existing teachings or suggestions (e.g. scientific literature, issued patents, etc.).

Justice Kennedy held that the Court of Appeals for the Federal Circuit had addressed the obviousness question in a manner inconsistent with §103 of the Patent Act and Graham. The TSM test, in the opinion of the highest court, is a “helpful insight”, but not a “mandatory formula”. While the TSM test per se is not inconsistent with the Graham analysis, it is a general principle and should not be applied as a rule, thus limiting the generality of the Graham analysis.

Justice Kennedy held that the Court of Appeals for the Federal Circuit had erred in its rigid application of the TSM test, because it placed undue emphasis on published articles and explicit content of issued patents in its examination of “teachings” and “suggestions”. In the words of Justice Kennedy:

[t]he diversity of inventive pursuits and of modern technology counsels against limiting the analysis in this way...[i]n many fields it may be that there is little discussion of obvious techniques or combinations, and it often may be the case that market demand, rather than scientific literature, will drive design trends.

The Supreme Court reversed the Court of Appeals for the Federal Circuit decision, and the case is remanded to the lower courts for further proceedings.

For a copy of the U.S. Supreme Court’s decision, visit:
http://www.supremecourtus.gov/opinions/06pdf/04-1350.pdf

Back to Headlines

Australia's Federal Government to Criminalize Identity Theft

The federal government of Australia has made its proposed legislation on identity theft available for public comment. The legislation, when passed, will create three new criminal offences: identity crime, including identity theft and identity fraud; selling of identity data; and, possessing equipment to create identity information. In addition, the legislation proposes that victims of identity theft be furnished with court-issued certificates in an effort to help lessen the damages they suffered and restore their credit ratings. Queensland and South Australia are currently the only two jurisdictions that have identity theft-specific offences in Australia.

For additional information, visit:
http://tinyurl.com/2zldh5

Back to Headlines

Chinese Political Prisoner Sues Yahoo in U.S. Court

On April 18, 2007, Chinese political prisoner Wang Xiaoning, along with his wife Yu Ling, and several other unidentified plaintiffs, filed a lawsuit against Yahoo in the U.S. District Court for the Northern District of California. The suit accuses the company of abetting the commission of torture by helping Chinese authorities identify political dissidents who were later beaten and imprisoned. The lawsuit, filed under the Alien Tort Claims Act and the Torture Victims Protection Act, is believed to be the first of its kind against an Internet-based company for its activities in China.

The lawsuit contends that Yahoo HK, which is a wholly-owned subsidiary of Yahoo based in Hong Kong, provided the police with information linking Wang to posts on the Internet which contravene Chinese censorship laws. Yahoo did not comment on the allegations; however, a spokesman, Jim Cullinan, did make a statement: “Yahoo China will not know whether [a] demand for information is for a legitimate criminal investigation or is going to be used to prosecute political dissidents”.

Human rights groups have criticized several Internet-based companies, including Cisco Systems, Microsoft and Google with accusations of aiding the Chinese government in monitoring and censoring the Internet.

For additional information, visit:
http://www.iht.com/articles/2007/04/19/news/yahoo.php

Back to Headlines

Internet Libel Suit Targets Google's Blogspot & Wikipedia

Wayne Crookes, a former campaign manager for the Green Party of Canada, has filed suit for libel in British Columbia against Google, Wikipedia and others. The lawsuit is in connection with postings made by anonymous users on Google’s Blogspot.com, in an entry under Mr. Crookes’ name on Wikipedia, and by contributors to Openpolitics.ca, an online political forum run by Green Party activist Michael Pilling. The claims cast a very wide net of liability, naming as defendants not only the Internet intermediaries who hosted the offending posts, but also individuals and intermediaries who published or hosted links to the postings, alleging that linking constitutes republishing.

Although Wikipedia took down the offending material when requested by Mr. Crookes, it reappeared on two subsequent occasions. Each time, Wikipedia removed it upon request. Nevertheless, Mr. Crookes has alleged than Wikipedia should be held liable for failing to monitor its website to ensure the material did not reappear.

Mr. Pilling has stated that he intends to defend himself vigorously, noting that he is being sued for postings made by others and that the offending pages were promptly taken down from public view. A page on the Openpolitics.ca website currently displays a prominent apology.

Whereas in the United States Internet intermediaries are shielded from liability for defamation in certain circumstances by Section 230 of the Communications Decency Act, the law in Canada is less clear. In a recent article, Professor Michael Geist has recommended the adoption of similar statutory protections in Canada, on the grounds that liability should rest with those directly responsible and not comparative bystanders with deep pockets.

For additional information, visit:
http://www.thestar.com/Business/article/208639

Back to Headlines

Ticketmaster Sues eBay over Online Resale of Tickets

Ticketmaster recently sued eBay Inc. and its StubHub subsidiary for reselling tickets originally generated by Ticketmaster. The lawsuit alleges that eBay sales of “official premium tickets” to an upcoming music tour violates Ticketmaster’s exclusive right to sell tickets to events at the venues on tour. The ticket prices on eBay are up to three times the amount charged by Ticketmaster. Ticketmaster is seeking to recover all revenue from the eBay sales, as well as punitive damages and a permanent injunction to prevent similar practices by eBay in the future.

For additional information, visit:
http://news.zdnet.com/2100-9588_22-6178001.html

Back to Headlines