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A Big Week for Intellectual Property: Supreme Court Decides Patent and Copyright Cases

March 29, 2017

Last week, the U.S. Supreme Court issued two opinions on intellectual property issues. On March 21, 2017, the Court decided in a 7-1 opinion that laches is no longer a valid defense to a claim of patent infringement occurring during the six-year statute of limitations period under the Patent Act. The next day, on March 22, 2017, the Court decided 6-2 that designs on a cheerleading uniform could be protected under copyright law.

Star Athletica LLC v. Varsity Brands, Inc. 

In Star Athletica, the Supreme Court set forth a two-part test for determining when an element incorporated into the design of a useful article could be copyrightable: (1) the design must be “perceived as a two- or three-dimensional work of art separate from the useful article” and (2) the design will still be copyrightable “if it were imagined separately from the useful article into which it was incorporated.” The Court held that Varsity Brands’ designs on cheerleading uniforms meet this test.

Varsity Brands has over 200 U.S. copyright registrations for two-dimensional designs that appear on copyright uniforms and other apparel. Varsity Brands sued Star Athletica for copyright infringement of five of these registrations. The District Court granted summary judgment for Star Athletica, finding the designs only serve to identify the garments on which they appear as cheerleading uniforms. As such, the designs could not be “‘physically or conceptually’ separated…‘from the utilitarian function’ of the uniform.” The Sixth Circuit reversed, and Star Athletica appealed to the Supreme Court.

The majority opinion held that the arrangements of lines, chevrons, and colorful shapes appearing on the uniforms are copyrightable as separable features of the designs of the uniforms. With this decision, the Court clarified the applicability of the “separability” test to two-dimensional “pictorial, graphic, or sculptural features” of any “useful article” under 17 U.S.C. § 101. The Court rejected the distinction drawn by some courts between “physical” and “conceptual” separability, finding the statute only requires the design element of the useful article to qualify as a non-useful pictorial, graphic, or sculptural work on its own. (“The focus of the separability inquiry is on the extracted feature and not on any aspects of the useful article that remain after the imaginary extraction.”). The dissent, however, argued that cheerleader uniforms are useful articles and that separating the design elements from the uniforms merely replicates the underlying uniform. As such, separability would be impossible, and the design elements would not be copyrightable. Despite a ruling in favor of Varsity Brands, the Court passed on the issue of whether the design elements are sufficiently original to be copyrightable.

The decision in this case was highly anticipated by those in the fashion industry, who have pushed for greater intellectual property protection for clothing. Although apparel is still a “useful article” under copyright law, and therefore not protectable, Star Athletica clarifies when design elements on clothing—which may be functional—are nevertheless copyrightable.

SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC

In SCA Hygiene Products, the Supreme Court held that laches is no longer available as a defense if a patent suit is brought within the Patent Act’s statute of limitations. Laches is an equitable defense that a claim is barred due to an unreasonable and prejudicial delay by the plaintiff in bringing the claim.

The case dates back to 2003, when SCA notified First Quality that First Quality’s adult incontinence products infringed one of SCA’s patents. Upon SCA’s request in 2004, the US Trademark Office determined in 2007 that SCA’s patent was valid. SCA then sued First Quality for patent infringement in 2010. The District Court granted summary judgment for First Quality on the grounds of equitable estoppel and laches, and the decision was twice affirmed by the Federal Circuit.

The Court followed its precedent in Petrella v. Metro-Goldwyn-Mayer, Inc. in reversing the Federal Circuit. In Petrella, the Court held in 2014 that laches is not a valid defense to copyright claims involving damages incurred within the Copyright Act’s three-year statute of limitations. As in the Petrella decision, the Court reasoned in SCA Hygiene Products that “separation-of-powers principles and the traditional role of laches in equity” prohibits judges from overriding the limitations period set by Congress in favor of interposing laches as a defense in cases involving damages. In his dissent, Justice Breyer argued that in drafting the Patent Act Congress “intended the statute to keep laches as a defense.” He also reaffirmed his opinion that Petrella was wrongly decided.

In light of the Petrella decision, many predicted the outcome of SCA Hygiene Products. However, the case does vacate Federal Circuit precedent, which had until this opinion carved out a patent-specific rule for asserting the laches defense. The decision raises concerns by parties frequently targeted by patent infringement claims that the elimination of laches may encourage a patent owner to delay a potential claim until the patent reaches its ultimate value, in order to maximize damages for the patent owner.

With a few other patent and trademark cases pending before the Supreme Court in 2017, we look forward to further developments in intellectual property law.

© 2017 McNees Wallace & Nurick LLC
McNees Intellectual Property Alert is presented with the understanding that the publisher does not render specific legal, accounting or other professional service to the reader. Due to the rapidly changing nature of the law, information contained in this publication may become outdated. Anyone using this material must always research original sources of authority and update this information to ensure accuracy and applicability to specific legal matters. In no event will the authors, the reviewers or the publisher be liable for any damage, whether direct, indirect or consequential, claimed to result from the use of this material.