Decisions in Brief

• Author: John C. Gatz
• Position: John C. Gatz is a member of the firm Nixon Peabody in Chicago, Illinois. Column contributors include the following writers: Copyrights: Zachary J. Smolinski, Smolinski Law PC; Michael N. Spink, Brinks, Hofer, Gilson & Lione; Mark R. Anderson, Akerman LLP. Patents: Cynthia K. Barnett, Johnson & Johnson; R. Trevor Carter, Daniel M. Lechleiter,...
• Pages: 60-64

PATENTS

Decisions in Brief

COPYRIGHTS By John C. Gatz

Published in Landslide® magazine, Volume 10, Number 4 , a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.

This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

Arbitration

Waymo LLC v. Uber Techs., Inc., 870 F.3d 1342, 124

U.S.P.Q.2d 1547 (Fed. Cir. 2017). The Federal Circuit

afrmed the district court’s decision denying the defen-

dant’s motion to compel arbitration. The defendant argued

that arbitration should be compelled because of an arbitration

agreement between the plaintiff and an intervenor, Levan-

dowski. The Federal Circuit applied the law of California and

the Ninth Circuit. The defendant argued the plaintiff should

be compelled to arbitrate because the claims relate to the

employment agreement with the intervenor. However, the

complaint neither alleges breach of the employment agree-

ment nor cites to any provision of the employment agreement.

Because the plaintiffs do not need to rely on the employment

agreement to prove its claims, arbitration is not required.

Copyright Claim Moot in Breach of Software

License Case

SAS Inst., Inc. v. World Programming Ltd., 874 F.3d 370 (4th

Cir. 2017). SAS and WPL are competitors in statistical analy-

sis software. SAS sells its SAS System software in both a full

version and a lower priced Learning Edition that is marketed

to allow people to learn to program in the SAS language. The

Learning Edition license from SAS includes a prohibition on

reverse engineering and allows the software to be used only

for nonproduction purposes. WPL acquired several copies of

the Learning Edition from SAS and developed its own soft-

ware. SAS sued WPL for copyright infringement and breach

of contract in the UK and North Carolina. The UK court

referred the software copyright question to the Court of Jus-

tice of the European Union, which determined neither the

functionality of a computer program nor the programming

language are copyright-protected by EU law. In North Caro-

lina, SAS was granted summary judgment on the breach of

contract claim, while WPL was granted summary judgment

of not infringing the copyright of the SAS software. SAS was

awarded $79 million in damages, but the court did not issue

an injunction against WPL. Both parties appealed.

The Fourth Circuit ruled that the UK litigation did not pre-

clude the US case, that SAS was not entitled to an injunction,

and that the copyright claim was moot. The Fourth Circuit ana-

lyzed WPL’s claim that res judicata from the UK case barred

this suit. The Fourth Circuit found that legal and factual dif-

ferences in the US case and the UK case prevented WPL from

meeting the standards required for res judicata. Turning to

the breach of contract claim, the Fourth Circuit found that the

meaning of reverse engineering was consistent with the rul-

ing of the district court, and that WPL had violated the reverse

engineering restriction of the Learning Edition license. The

Fourth Circuit also found that WPL had used the Learning

Edition in violation of the non-production limitation by creat-

ing a commercial software product. The Fourth Circuit ruled

that SAS had not shown that it was entitled to an injunction.

The Fourth Circuit found that the damages received by SAS

exceeded the injury suffered by SAS before the trial, so there-

fore the damages award included future damages.

Risky Business

OpenRisk, LLC v. MicroStrategy Services Corp., 2017 WL

5711021, 2017 U.S. App. LEXIS 22736 (4th Cir. 2017). The

plaintiff OpenRisk contracted with defendant MicroStrategy

to create a cloud environment that would host OpenRisk’s data

and programming. When OpenRisk faced insolvency, three

of its principal ofcers resigned and formed a new company.

MicroStrategy copied and transferred data from the Open-

Risk cloud environment to a new environment established for

the new company, and then purportedly deleted the data from

OpenRisk’s environment without the notice of termination

required by the parties’ contract. OpenRisk sued MicroStrat-

egy for computer fraud under Virginia’s Computer Crimes Act

and for other state-law violations. The district court granted

summary judgment almost entirely in MicroStrategy’s favor,

holding that the federal Copyright Act preempts OpenRisk’s

computer fraud claims because they were all premised on

underlying conduct that falls within the scope of copyright pro-

tection—the unauthorized copying of data.

The Fourth Circuit upheld the decision. The Fourth Circuit

reviewed the two-pronged inquiry under 17 U.S.C. § 301(a),

namely whether: (a) the data and software were within the

scope of the subject-matter of copyright, and (b) the rights

granted under state law were equivalent to those protected by

federal copyright. There was no dispute under the rst prong,

and under the second, the Fourth Circuit agreed that the state

claims turned on the allegations that MicroStrategy made

unauthorized copies of the data on the OpenRisk cloud envi-

ronment and then transferred that data. The Fourth Circuit

found those claims equivalent to copyright law’s prohibition

of unauthorized reproduction and dissemination.

Attorneys’ Fees

NantKwest, Inc. v. Matal, 869 F.3d 1327, 124 U.S.P.Q.2d

1068 (Fed. Cir. 2017). The Federal Circuit, sitting en banc,

issued an order vacating the prior decision of a three-judge

panel of the Federal Circuit and ordered the parties to le new

briefs addressing whether attorney fees are included in the

“all expenses” provision of U.S.C. § 145.

Claim Construction

Cisco Sys., Inc. v. Int’l Trade Comm’n, 873 F.3d 1354,

124 U.S.P.Q.2d 1482 (Fed. Cir. 2017). The Federal Circuit

afrmed the ITC’s decision of infringement and the scope of

the limited exclusion order. Arista challenged the Commis-

sion’s claim construction on two grounds. First, Arista argued

that the construction failed due to grammar, but the Federal