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Warhol Case Hits High Court as Patent Fights Wait on Sideline

Sept. 30, 2022, 9:19 AM

As the US Supreme Court readies itself to hear a fight over Andy Warhol art in the first non-software copyright fair use case in decades, intellectual property practitioners wonder if the court will end a dry spell for patent cases.

Lynn Goldsmith hopes to preserve an appeals court ruling that Vanity Fair’s use of an Andy Warhol print infringed her photo of Prince. The case tests the boundary at which a new work transforms an old work enough to constitute fair use rather than stepping on derivative rights, and attorneys expect it to have major implications for copyright law in decades to come.

VIDEO: Prince, Andy Warhol, and Fair Use at the Supreme Court

The high court also just received a brief it requested from the Justice Department, encouraging the justices to weigh a trademark case testing the reach of the Lanham Act and when foreign sales can factor into US infringement damages.

But the court has been more reluctant to take up patent cases in recent years. Last year, it went an entire term without deciding any substantive patent law cases and refused to review a high-profile dispute on a controversial test for when inventions can be patented. Attorneys are watching the upcoming session to assess whether the justices will develop an appetite for patent law.

The retirement of Justice Stephen Breyer, who had a unique interest in patent law, leaves the court with justices who are attracted to patent cases only when they deal with other issues, such as the administrative state or separation of powers, said Paul R. Gugliuzza, a law professor at Temple University.

“That’s the question,” he said. “Will we see any patent cases at all, or if we do will they really be administrative law or constitutional law cases in patent law garb?”

Another Supreme Court term without a patent case would increase the spotlight on the US Court of Appeals for the Federal Circuit, Gugliuzza said, as the nation’s top patent court would effectively have the final say.

The full Federal Circuit then may need to review more patent cases en banc, which it has been reluctant to do in recent years, to issue more concrete rulings, Gugliuzza said.

“If the Supreme Court isn’t going to be interested,” he said, “it’s really in the Federal Circuit’s interest to take a hard look.”

Still, some petitions involving billion-dollar pharmaceutical drugs and a patent statute that the Supreme Court hasn’t weighed in on in decades could entice the justices, attorneys said.

Warhol: Fair or Unfair

Oral arguments for Andy Warhol Foundation v. Goldsmith are scheduled for Oct 12. Friend-of-the-court briefs from groups representing creative sectors, public interest groups, and scholars have poured in backing both sides, including the US government—through the Copyright Office—which threw its weight behind Goldsmith.

The case involves a colorized version of Goldsmith’s photo. A California federal district court found that the Warhol print qualified as fair use. But the Ninth Circuit criticized the trial court for playing “art critic,” and rejected fair use—at least in the context of its use on a magazine cover after Prince’s 2016 death.

Attorneys and academics hope for guidance that will lead to more predictable analysis of whether a new work sufficiently alters the nature of an old one to count as fair use, but vary in which direction they think it should go.

Some back strong derivative rights and argue that reversing the Ninth Circuit would open the door to free-riders and decimate markets for creators’ works. But other creative groups say letting the decision stand would have a chilling effect on legitimate art that uses pre-existing works as building blocks.

Pharma Challenges

Patent attorneys, meanwhile, are eagerly waiting to see if the Supreme Courtwill consider several open patent questions, particularly those with importance to the pharmaceutical industry.

Some drugmakers are looking to the Supreme Court to rein in what they see as the Federal Circuit’s tightening of Patent Act provisions that require inventors to fully describe what they’ve created—a popular mode of attack on branded medicine.

Three pending petitions at the high court ask the justices to provide clarity on the written description and enablement requirements under Section 112 of the Patent Act.

Life sciences companies say the tests have created an especially high burden on the industry as Biogen International GmbH and Amgen Inc. have seen their drug patents fall. Bristol-Myers Squibb Co.’s Juno Therapeutics unit lost a $1.2 billion patent infringement award after the Federal Circuit axed its patent for revolutionary treatments that use a body’s own immune system to fight cancer.

Amgen’s fight against Sanofi and Regeneron Pharmaceuticals Inc. to save its cholesterol drug patents has attracted some interest already from the justices, after the high court asked for the solicitor general’s views in April. The Biden administration, though, suggested the justices pass on Amgen’s petition, saying the Federal Circuit got it right.

Attorneys expect Amgen’s petition, which questions whether the statute requires a skilled expert to have the full scope of an invention, or Biogen and Juno’s bids to have the best shot at Supreme Court review this term.

“People use the written description effectively to block or undo large judgments in pharmaceutical cases,” Michelle Armond of Armond Wilson LLP said. “It’s been used very effectively against branded pharmaceutical companies, and they want clarity.”

Judicial Recusals, Panel Rehearings

Other cases that arise out of patent law but concern administrative and civil procedures are also up for consideration.

In Centripetal Networks v. Cisco Systems Inc., the cybersecurity company is asking the justices to take a look at when judges must recuse themselves due to a financial interest in one of the parties. Centripetal lost its $1.9 billion patent infringement award when the Federal Circuit determined the district court judge should have recused himself over his wife’s ownership of Cisco stock.

Novartis Pharmaceutical Corp. also plans to appeal an unusual Federal Circuit decision regarding its blockbuster multiple sclerosis drug Gilenya. Following the retirement of a judge on the original panel, a new Federal Circuit panel flipped the decision in a generic company’s favor.

The questions about appellate procedure in the Novartis case may draw the high court’s eye, Armond said. Chief Justice John Roberts already granted a stay of the Federal Circuit’s mandate in the case, blocking any potential generic drugs from entering the market while the justices consider whether to review the dispute.

Computer scientist Stephen Thaler also plans to appeal a Federal Circuit decision that said his creativity machine DABUS can’t be an inventor on a patent. He has asked the full Federal Circuit to review the panel’s ruling, though the appeals court hasn’t decided if it will rehear the case.

There are also petitions pending concerning patent eligibility, an administrative patent tribunal’s ability to start patent reviews, and an alleged “secret” US Patent and Trademark Office rule targeting one inventor.

Other Petitions

Lanham Act Reach: The Supreme Court earlier this week received a long-awaited brief from the US Solicitor General on a trademark case that raises the question of how far the Lanham Act reaches. The Tenth Circuit upheld an award that included $90 million for infringing radio remote control company Hetronic’s trademark by former licensee Abitron—despite almost all of the offending sales occurring abroad. Case: Abitron Austria GmbH v. Hetronic Int’l Inc.

State Copyright Immunity: A sportswriter is asking the Supreme Court to reverse a Fifth Circuit finding that Texas A&M University, as an arm of a sovereign state, can’t be sued for copyright infringement. He acknowledged that a 2020 high court ruling found a law making states liable for infringement didn’t constitutionally abrogate sovereign immunity. But he argued such laws can still be invoked on a case-by-case basis when there’s an actual violation of the Takings Clause of the US Constitution. Case: Canada Hockey LLC v. Texas A&M

Contract Law vs. Copyright Preemption: Digital media company Genius seeks to revive its copyright claim against Google for allegedly scraping lyrics for five million songs it had compiled and republishing them at the top of Google’s search results page, diverting traffic from Genius’ site. The Second Circuit ruled the Copyright Act pre-empted Genius’ breach-of-contact claims. Attorneys say a circuit split exists over how far that preemption, designed to prevent states from creating their own copyright-like property regimes, should reach into contract claims that some say are fundamentally different. Google’s response is due in November. ML Genius Holdings LLC v. Google LLC.

Rogers Test Rollback: Jack Daniel’s has made its second bid for the Supreme Court to consider reversing a Ninth Circuit finding that a whiskey-bottle shaped, pun-laden dog toy is fair use of its trade dress. It comes after an Arizona federal judge “begrudgingly” entered judgment once the high court declined to review the Ninth Circuit’s reversal of his rejection of fair use. Jack Daniel’s argues the low bar of the Rogers test for evaluating trademarks in expressive works shouldn’t apply to consumer commercial products like dog toys. Case: Jack Daniel’s Properties v. VIP Products Inc.

Substantial Similarity Standards: A writer, hoping to revive his lawsuit against Paramount over “What Men Want,” is challenging the Ninth Circuit’s requirement that a copyright claim pass its “extrinsic test"—objectively filtering out unprotectable elements and comparing what’s left—before the works can be considered as a whole. The Ninth Circuit affirmed a quick dismissal of the suit. Paramount waived its right to respond. Case: Joe Gregory Carlini v. Paramount Picttures Corp.

To contact the reporters on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com; Samantha Handler in Washington at shandler@bloombergindustry.com

To contact the editors responsible for this story: Adam M. Taylor at ataylor@bloombergindustry.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com