Publications

In a dramatic Sunday morning hearing (conducted remotely via telephone), lawyers for TikTok and the Trump Administration battled over whether the government’s order banning TikTok from the Apple and Google app stores would take effect that night.

The Trump Administration has argued for months that TikTok is a threat to national security because its corporate owner, ByteDance, is a Chinese company. Most recently, the Commerce Department issued rules, which were to take effect on September 27 at 11:59pm, banning the app from U.S. app stores and prevented any further software updates. TikTok filed a lawsuit earlier this month challenging the Trump Administration’s actions. On September 23, it filed a motion for preliminary injunction, essentially asking the Court to stop the Commerce Department’s ban from taking effect.

Judge Carl J. Nichols of the United States District Court for the District of Columbia issued an order granting TikTok’s injunction. The ban did not go into effect, and TikTok remains available in the Apple and Google app stores.

The most interesting part of the opinion granting the injunction is the Court’s analysis of the government’s claims that TikTok presents a threat to national security. The government’s ban is based on the International Emergency Economic Powers Act (the “IEEPA”), which gives the federal government the right to ban certain economic transactions which threaten national security. For example, the government has designated the Islamic Republic of Iran a state sponsor of terrorism, and has blocked all financial transactions with the Iranian state and members of the Iranian government. Millions of dollars per year are seized from Iranian officials who attempt to route transactions through U.S. banks.

However, the IEEPA contains express exceptions for the transfer of information and personal communications. The Court found that TikTok users were trading films, photographs, art, and news across international borders, which fall squarely within the informational and personal exceptions to the IEEPA. The Court drew a parallel to news services, which can contain information and even propaganda from blocked entities, but cannot be banned through the IEEPA.

In short, it was not sufficient for the federal government to argue that information shared through TikTok might be accessed by China, because the sharing of information and personal correspondence cannot, by itself, establish a threat to national security under the IEEPA.

Although the Court’s order is almost certainly going to be appealed and the issue will be litigated for some time, TikTok’s has overcome a major hurdle in winning this preliminary injunction. It seems, for the time being, that TikTok is here to stay.

When it comes to football, I am a huge fan and love watching games on TV.  However, I do not typically pay attention to the commercials during games, with one major exception:  the Super Bowl.  Like most everyone, I am always curious to see which company will have the best and the worst Super Bowl commercials.  We always expect Anheuser-Busch (maker of Bud Light) and Molson Coors (maker of Miller Lite and Coors Lite) to bring out big gun ads.  After all, for many football fans, a game day means grabbing a beer (or several), so companies spend a lot of money to convince fans to grab their brands over others.  The competition rose to a new level in Super Bowl LIII when Anheuser-Busch introduced its ad campaign mocking Molson Coors’ use of corn syrup in brewing Miller Lite and Coors Lite.  These ads not only triggered a social media battle but also a battle in the courtroom over whether the Bud Lite ads constituted false or misleading advertising.

During the 2019 Super Bowl, Anheuser-Busch started its “corn syrup” ad campaign with an ad featuring the Bud Light King and his subjects trying to return a barrel of corn syrup, which they had received by mistake, to the Miller Light and Coors Light castles.  The ad effectively told a story that Anheuser-Busch does not use corn syrup to make Bud Light, but Molson Coors uses it to make Miller Lite and Coors Lite.

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The case of Egenera, Inc. v. Cisco Systems, Inc. raised the question of whether inventors named on a patent can be repeatedly changed as litigation strategy changes. Because of judicial estoppel, the district court said no way.  But, on appeal, the Court of Appeals for the Federal Circuit said no problem—at least no problem in this case.

Mr. Shulter was listed as an inventor on Egenera, Inc.’s (“Egenera”) patent application and the resulting patent, U.S. Patent No. 7,231,430 (the “’430 Patent”).  The ‘430 patent relates to “a platform for automatically deploying a scalable and reconfigurable virtual network” of processors.  The claimed approach alleviates the need for physical reconfiguration of processors by allowing “processing resources [to] be deployed rapidly and easily through software.”

In 2016, Egenera sued Cisco Systems, Inc. (“Cisco) alleging Cisco’s enterprise server systems infringed the ‘430 patent.  In response, Cisco challenged the validity of the patent’s claims in a petition for inter partes review (“IPR”).   Cisco’s IPR petition included the “Grosner” prior art.   In an attempt to overcome “Grosner,” Egenera claimed an earlier conception date for invention in its response to the IPR.  However, that earlier conception date predated Egenera’s hiring of Mr. Shulter, who had been listed as an inventor.  Egenera attempted to reconcile this dilemma, explaining that after reviewing the IPR petition, it realized “all claims had been conceived before … Mr. Shulter, had started working there,” so he could not be an inventor. Then Egenera asked the United States Patent and Trademark Office (“USPTO”) to remove Mr. Shulter from the patent.  The USPTO granted the request.

After Mr. Shulter was removed as an inventor, the district court construed the ‘430 claims.  The district court “issued an order construing the patent’s ‘logic’ terms as means-plus-function elements.” Means-plus-function elements are limited to the structure disclosed in the specification.  In this case, that structure was a “tripartite structure.”  Cisco argued that Mr. Shulter invented the tripartite structure, and therefore, the patent was invalid because it did not correctly list all of the inventors. The district court agreed.  In response, Egenera changed its strategy and tried to add Mr. Shulter back as an inventor of the ‘430 Patent.  The district court ruled that judicial estoppel prevented “’resurrecting Mr. Shulter’s inventorship.”  Egenera appealed.

Under 35 U.S.C. § 256, errors in the list of inventors of a patent can be corrected either through a petition to the Director of the USPTO or by order of a court.  The Federal Circuit stated that “error” in this context “is simply an incorrect listing of inventors” irrespective of whether the list is incorrect due to honest or dishonest mistakes.  In other words, omitted inventors can be added and wrongly included inventors can be removed.  The statute further states that the error “shall not invalidate the patent in which such error occurred if it can be corrected.”  On appeal, the Federal Circuit determined that “Egenera’s assertion in its inventorship petition [to the USPTO] was incorrect:  Mr. Schulter was an inventor.  According, we conclude that Mr. Schulter’s omission was ‘error.’”

The Federal Circuit then turned to the question of whether judicial estoppel prevented correction of the inventorship error.  “Judicial estoppel prevents a party from taking a position in litigation that is inconsistent with a position successfully taken in a prior legal proceeding.  The purpose behind this doctrine is to preserve the integrity of legal proceedings.  The applicable standard here is that applied by the First Circuit, which evaluates three factors:

(1) whether a party’s earlier and later positions are “clearly inconsistent,” — that is, “mutually exclusive”;

(2) whether the party “succeeded in persuading a court to accept” the earlier position; and

(3) whether the party would “derive an unfair advantage or impose an unfair detriment” on the other side if not estopped.

While the district court found all three factors had been met, the Federal Circuit disagreed.

Addressing the first factor, the Federal Circuit stated that “[t]o be ‘clearly inconsistent,” positions must be ‘mutually exclusive’ and ‘directly inconsistent.”  Considering the present facts, the Federal Circuit stated “[w]e do not think that multiple corrections under § 256 are per se ‘mutually exclusive.’  In any event, the district court’s intervening claim-construction and inventorship determinations further justify any seeming inconsistency.” Egenera’s request to remove Mr. Shulter as an inventor was consistent with its preferred claim construction.  Once Egenera lost its claim construction position, “it was entirely consistent for Egenera to request an accompanying formal correction of inventorship” to add Mr. Shulter back as an inventor.  Therefore, because of the “intervening claim construction,” Egenera had not taken “clearly inconsistent” or “mutually exclusive” positions.

Evaluating the second factor, the Federal Circuit analyzed whether Egenera had “succeeded in persuading a court to accept” its earlier position.  Egenera’s petition to the USPTO to delete Mr. Shulter did not contain any statement of facts, but rather just a statements that it was an error to list Mr. Shulter and that all the other inventors agreed.  The USPTO does not perform a substantive examination of such petitions, but just checks “for the presence of supporting statements and the required fee.”  Therefore, the Federal Circuit stated that such a petition to the USPTO for change of inventorship is not sufficient to serve as “’persuasion’ of a ‘court’ for judicial estoppel purposes.”

As to the third judicial estoppel factor, the Federal Circuit determined Egenera did not gain unfair advantage nor would Cisco suffer unfair prejudice as the result of Egenera’s earlier position that Mr. Shulter was not an inventor.  Although Egenera had taken the position that Mr. Shulter was not an inventor to gain an advantage in the IPR, the IPR petition was denied before the change in inventorship was approved by the USPTO.  Further, the IPR petition was denied without addressing Egenera’s arguments relating to the priority date of the ‘430 patent.  Notably, the Federal Circuit stated that “[t]hings might be different had Egenera succeeded in swearing behind the prior art….But that is not this case.”

As a result, Federal Circuit found “the district court abused its discretion by applying judicial estoppel, vacated the invalidity judgement, and remanded the case for further proceedings.