Category Archives: Federal Laws

Attorneys’ Fees for Patent Suit Winners? Supreme Court to Clarify the Law

Attorneys’ fees are generally not awarded to the winning party in a suit. However, under the patent statute1 a court may award reasonable attorney fees in “exceptional” cases. The Federal Circuit has addressed how to decide if a patent lawsuit is exceptional, and now the Supreme Court has decided to review that decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc.2

The fact that the Supreme Court is continuing to guide the Federal Circuit is more important than eventual ruling itself. The Federal Circuit has ways of applying general federal civil procedure statutes to patent lawsuits in a manner different from application to general lawsuits.

For example, the Federal Circuit created a rule based on the declaratory judgment statute3. This rule clarified when an accused patent infringer could sue a patentee for a declaration of noninfringement without having to wait for the patentee to file an infringement suit first. The Supreme Court reversed the Federal Circuit decision. While the rule was useful and made sense, the rule did not have a firm basis in the statute it was supposed to interpret.

The Supreme Court has decided that in the absence of a reason to the contrary, the Federal Circuit should not interpret federal law differently for patent cases. This guidance should help make the Federal Circuit’s decision making process more consistent with that of other federal appeals courts and provide greater certainty in interpreting general civil procedure laws in patent cases.

1. 35 U.S.C. § 285 (2012)
2. 496 Fed. Appx. 57; 2012 U.S. App. LEXIS 22096; cert granted, 186 L. Ed. 2d 962, 2013 U.S. LEXIS 5133 (U.S. 2013)
3. 28 U.S.C. § 2201 (2012)


Supreme Court Allows Congress to Take Works Out of the Public Domain

It is now necessary to check copyright status of foreign origin works in order to avoid copyright infringement. Many works that were free to use are now back in copyright. In a January 18, 2012 decision1, the Supreme Court upheld a law, the URAA2, that takes many foreign origin works out of the public domain. The law restores copyrights in the United States on all works that were still in copyright in their countries of origin as of January 1, 1996. The law is the United States’ implementation of a section of a treaty3 that seeks to equalize international recognition of copyrights among 162 countries.

Classic movies that were formerly in the public domain include Metropolis (1927), Things to Come (1936) from the H.G. Wells novel, and The Third Man (1949). They are now back in copyright. The music of Igor Stravinsky which had formerly been in the public domain is now in copyright in the United States.

The Court, in effect, said that the Constitution gave Congress the right to do pretty much as it pleases with respect to copyright law. The petitioners, people and entities, had been using works that were in the public domain. The decision has left them with a situation in which they must abandon investments in enterprises which were perfectly legitimate expressions of First Amendment speech. The lower court had found that, “Congress could have complied with the Convention without interfering with Plaintiffs’ protected speech.” Many in the legal community feel that the Supreme Court allowed Congress to exceed its Constitutional authority. Apparently, ideology played no part in the result. The opinion was written by Ginsburg and joined in by Scalia. The dissent was written by Breyer and joined in by Alito.

Exercise caution. We do not yet know how intense the avalanche of copyright infringement suits will be.

1. Golan v. Holder, Case No. 10–545, January 18, 2012, 565 U.S. ___ (2012)

2. Uruguay Round Agreements Act (URAA), 17 U.S.C. 104A (1994), URAA §514

3. Berne Convention for the Protection of Literary and Artistic Works, September 9, 1886, as last revised at Paris on July 24, 1971, 1161 U.N.T.S. 30


SBIR Reauthorization Agreement Finally Reached by Congressional Committees

The Small Business Innovation Research (SBIR) program has been reauthorized for six years.  The program had been hanging on through several short term continuing resolutions.  The Senate and the House Armed Services Committees announced that they have agreed on a long-term reauthorization of the SBIR program during conference negotiations on the Fiscal Year 2012 National Defense Authorization Act (NDAA).  President Obama is prepared to sign the bill when it reaches his desk.

Award amounts will be increased.  Small businesses will face less uncertainty because the reauthorization requires most agencies to complete their review process for applicants within 90 days.

Funding increases from 2.5% to 3.2% of each agency’s extramural research budget for the SBIR program and from 0.3% to 0.45% over the course of reauthorization for the Small Business Technology Transfer (STTR) program. Contract amounts are increased from $100,000 to $150,000 for Phase I awards and from $750,000 to $1 million for Phase II awards.  Performance-based standards are introduced to encourage companies to focus on commercialization through Phase III.

A compromise has been reached which allows venture backed companies to participate in 25% of awards for NIH, DOE, and NSF and 15% of awards for other federal agencies.

A number of our high tech and life sciences clients have been able to launch new product lines through SBIR grants.  The reauthorization should maintain the vitality of the program.

Stopping the Copy, Scram, and Compete Employee

(Protecting Your Digital Information Using the Federal Computer Fraud and Abuse Act)

The News

 Legal protection for sensitive computer files has been strengthened by a new decision from the Ninth Circuit Federal Court of Appeals.1

 The Risk

 Imagine this scenario: Your computer programmer remotely downloaded sensitive files before dawn. On arriving at the office, the programmer resigned without notice. The Navy awarded you a desirable contract because those sensitive files provided you with a unique capability. Now you find out that the programmer will be consulting for a competitor who wants to take the place of your company when the contract is up for renewal. What can you do? What could you have done to discourage or prevent this?

 Trade Secret Law Protections

 There are many deterrents and remedies available under trade secret law. A trade secret owner can seek money damages and can often seek an injunction to prevent use of the trade secret by others. Requirements for making out a case can include showing that the material taken was in fact confidential, it provided some business advantage, and that the owner took all proper steps to protect the information. Requirements are simpler if a company can seek recovery based on the elements of an employee’s unauthorized taking or damaging of sensitive data after gaining authorized entry into the computer. Federal law provides for recovery based on these elements.

 The Computer Fraud and Abuse Act

 One of the most effective tools in dealing with the risk described above is the Computer Fraud and Abuse Act2 (CFAA). The CFAA permits civil suits for access to a computer followed by an unauthorized damaging action. The CFAA is also a criminal statute that defines a number of different computer crimes.

 Even if a valid password is used to gain access to a computer, taking damaging action in excess of a user’s authorization is forbidden. Unauthorized actions include obtaining information “fraudulently” or damaging a computer or computer data. Taking data for the employee’s own purposes and to the detriment of the computer owner is “fraudulent.”

 Until this year there had been some doubt as to whether a violation could be made out if a user entered a computer with a valid password. This year, the Ninth Circuit Court of Appeals, which covers California and a number of other states, interpreted the CFAA to put this doubt to rest. A password provides authorization for a user to enter a computer. However, it does not allow a user to do anything he or she wishes once access has been gained. An employee “exceeds authorized access” by violating the employer’s rules governing conduct after gaining access to the computer by, e.g., stealing or damaging files.

 Setting the Limits of Authorization

 Authorization must be defined. Otherwise, it cannot be exceeded.

 To be protected, an employer must have published a computer access policy, e.g., in the employee manual, which defines conditions for entry into a computer and which limits actions that may be taken once conditions for entry have been met. Employees must be aware of the policy.

 An employer can provide copies to employees, and have employees acknowledge in writing that they have received and understand the policy. Some employees may feel like they are being treated like suspicious characters. However, a policy need not create an adverse relationship. The policy can be presented as a tool for working with employees as trusted team members who are being provided with clear computer use standards. The rules protect the company’s business and the employees’ jobs.

 The policy should be tailored to the company’s business. Some companies will need to allow remote access by many employees and perhaps by many customers. Other companies may need to have servers with very rigorous controls. One example of a computer use standard is, “Employees are not authorized to download any Company data onto any computer or memory media not owned by the company.”

 Establishing clear boundaries on authorization simplifies understanding the boundaries of authorized access.


 Many cases of unauthorized access have been detected. Ignoring this issue could be costly. However, the cost of working with counsel to establish an internal system for establishing protection under the CFAA is small, especially compared to the value of programs and data which may form the entire basis for a company’s revenue. It is up to an employer to take appropriate steps to ensure protection under the CFAA.

1. United States v. Nosal, 642 F.3d 781 (9th Cir. 2011)

2. 18 U.S.C. § 1030