Petitioner, Respondent.

No. 12-1158 IN THE Supreme Court of the United States MIRROR WORLDS, LLC, Petitioner, v. APPLE, INC., Respondent. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT BRIEF OF PATRICK RAYMOND AND BROADBAND itv, INC. AS AMICI CURIAE IN SUPPORT OF NEITHER PARTY BUT IN SUPPORT OF GRANTING THE PETITION DAVID LEICHTMAN Counsel of Record SHANE ST. HILL ROBINS, KAPLAN, MILLER & CIRESI L.L.P. 601 Lexington Avenue, Suite 3400 New York, New York 10022 (212) 980-7400 dleichtman@rkmc.com Attorneys for Amici Curiae Patrick Raymond and Broadband itv, Inc. 247634 A (800) 274-3321 (800) 359-6859

i TABLE OF CONTENTS Page TABLE OF CONTENTS.......................... i TABLE OF CITED AUTHORITIES.............. ii AMICI BRIEF OF PATRICK RAYMOND AND BROADBAND itv, INC. IN SUPPORT OF NEITHER PARTY BUT IN SUPPORT OF GRANTING THE PETITION.....................1 INTEREST OF THE AMICI CURIAE.............1 SUMMARY OF THE ARGUMENT................5 ARGUMENT....................................6 I. THE PATENT ACT AND THIS COURT S DECISION IN QUANTA MAKE CLEAR THAT THE SALE OF A PATENTED INVENTION CONSTITUTES A DIRECT INFRINGEMENT................6 II. PATENT INFRINGEMENT SHOULD NOT LIVE BY A DIFFERENT EVIDENTIARY STANDARD THAN OTHER TYPES OF CASES...............11 III. THE FEDERAL CIRCUIT S OPINION WOULD HAVE SEVERE CONSEQUENCES FOR INVENTORS AND SMALL TECHNOLOGY ORGANIZATIONS........................12

ii TABLE OF CITED AUTHORITIES CASES Page CLS Bank Int l v. Alice Corp. Pty. Ltd., 667 F. Supp. 2d 29 (D.D.C. 2009).................7 CLS Bank Int l v. Alice Corp. Pty, Ltd., 768 F. Supp. 2d 221 (D.D.C. 2011).................8 CLS Bank Int l v. Alice Corp. Pty. Ltd, 411 Fed. Appx. 306 (Fed. Cir. 2010)...............7 CLS Bank Int l v. Alice Corp. Pty. Ltd., 2013 U.S. App. LEXIS 9493 (Fed. Cir. May 10, 2013).........................8 CLS Bank Int l v. Alice Corp. Pty. Ltd., 685 F.3d 1341 (Fed. Cir. 2012)...................8 Dickinson v. Zurko, 527 U.S. 150 (U.S. 1999).......................11 ebay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (U.S. 2006)..................6, 11, 12 Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (U.S. 2011).....................11 In re King, 801 F.2d 1324 (Fed. Cir. 1986)...................9

iii Cited Authorities Page KSR Int l Co. v. Teleflex Inc., 550 U.S. 398 (U.S. 2007).......................11 MedImmune, Inc. v. Genentech, 549 U.S. 118 (U.S. 2007).......................12 Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008).........................6, 7, 9 Ricoh Co., Ltd. v. Quanta Computer Inc., 550 F.3d 1325 (Fed. Cir. 2008)...................8 W.L. Gore & Assocs., Inc. v. Medtronic, Inc., 874 F. Supp. 2d 526 (E.D. Va. 2012)..............10 WesternGeco L.L.C. v. ION Geophysical Corp., 869 F. Supp. 2d 793 (S.D. Tex. 2012).............10 STATUTES 35 U.S.C. 271(a)..........................6, 7, 9, 13 Sup. Ct. R. 37....................................1 America Invents Act..............................2 OTHER AUTHORITIES U.S. Patent No. 7,590,997..........................4 U.S. Patent No. 7,631,336..........................4

iv Cited Authorities Page U.S. Patent No. 7,774,819..........................5 U.S. Patent Publication No. 2006/0085905............1 U.S. Patent Publication No. 2013/0067704............1

1 AMICI BRIEF OF PATRICK RAYMOND AND BROADBAND ITV, INC. IN SUPPORT OF NEITHER PARTY BUT IN SUPPORT OF GRANTING THE PETITION INTEREST OF THE AMICI CURIAE 1 Patrick Raymond is an individual inventor who worked and continues to work in the advertising business, but who, in 2004, invented a better shower curtain holder that prevents clinging, beginning his journey as an independent inventor. He saw his product, the ShowerBow sold in national retail stores and on television. His patent application for the ShowerBow, filed originally as a provisional application in October 2004, bears U.S. Patent Publication Number 2006/0085905, but is now abandoned. A later patent application titled, Space-Creating Shower Curtain Hook, was filed on September 20, 2012, bears U.S. Patent Publication Number 2013/0067704 and is pending. As a result of his experiences, in 2007, Mr. Raymond started the Inventors Association of Manhattan, a New 1. No counsel for a party authored this brief in whole or in part, and no such counsel or party made a monetary contribution intended to fund the preparation or submission of this brief. No person other than the amici or their counsel, made a monetary contribution intended to fund its preparation or submission. The parties have been given notice of amici s intention to file this brief, provided their consent to do so. On May 15, 2013, counsel for amici contacted counsel for both Petitioner and Respondent, and asked whether both would consent to amici filing a brief in support of the Petition for Certiorari as well as to waiving the Rule 37 ten day notice requirement. Consent was provided subsequently by both parties.

2 York State non-profit with 1,000+ members today. In 2008, he was then elected to hold the post of Executive Director of the national United Inventors Association (UIA) where he produced a ground-breaking 10-part educational video entitled What Every Inventor Needs to Know with 15 of the country s top experts. His newsletter reached 10,000 inventors and 70+ local group leaders. He then pioneered UIA Certification, the industry standard for service providers. Mr. Raymond is a regular contributor to Inventors Digest magazine and national guest speaker, he also led 11-judge panel in the Inventor s Spotlight at the National Hardware Show in Las Vegas in 2009 and 2010. Patrick then invented the InventionScore, a revolutionary diagnostic algorithm that pinpoints where an inventor stands, and how to improve for maximum negotiating power with investors or companies. In 2011, he was appointed Editor-at-Large of Inventors Digest magazine and a year later, was invited as Invention Expert for the Huffington Post. His passion and expertise also came through on national cable TV as Co-Host of Invention Hunters on Food Network (2012-2013) and 101 Inventions that Changed the World on History Channel (2013). In 2012, upon passage of the America Invents Act ( AIA ), the group founded by Mr. Raymond Inventor s Association of Manhattan hosted the USPTO Roadshow: Implementation of the America Invents Act and met with David Kappos, the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office from 2009 to 2013. He spends a significant amount of time coaching inventors on how to develop their unique ideas into commercial products. Among other programs that the Inventors Association

3 of Manhattan host, include sessions entitled How Inventors Can Commercialize Their Inventions, The Fundamentals of Bringing A Toy or Game to Market, and the organization hosts lectures, workshops and seminars where expert inventors, licensing experts and retailers share their advice with independent inventors. Currently, Patrick is the Executive Vice President of Creative Strategy at RICG, a full-service multi-channel marketing agency, as well as the principal of a company he founded called Inventor Institute, Inc., which is dedicated to the education of inventors. Patrick holds a B.A. in Mass Communications and an M.B.A., and lives in New York City. Broadband itv, Inc. (BBiTV) was founded in 2001 in Honolulu, Hawaii to create innovative interactive television/video-on-demand applications supporting ondemand advertising, user-generated content and Webto-iTV applications for digital television. It had some early commercial success, with commercial applications launched on Oceanic Time Warner Cable including Promo!, which was the nation s first interactive cable channel dedicated to long-form advertising videos, including local and national products and services, and TVClassifieds, an interactive web-to-cable television classified ads platform that allowed users to create classified ads on television using web-based templates and content management. However, even though it was the innovator in its space, its primary operating business was ultimately forced out of the operating business. Today BBiTV continues, however, to invest in its patent portfolio in order to try to provide a return to

4 its early investors, and to work on development projects including an interactive community channel that enables community members to communicate and interact among themselves, as well as to buy and sell goods and services directly with one another, and a Web platform that facilitates businesses, community organizations, and individuals to publish video content directly to the television. BBiTV has also designed systems for television video personals and video greeting cards, talent contests and promotions, short films, and music videos for adults and teens. In addition to internal development projects, BBiTV also provides consulting services to content publishers and digital television system operators on the design, operation and monetization of on-demand video applications and platforms. With over 20 years of interactive television and on-demand video experience, and constant engagement with current trends and interactive technologies, BBiTV is able to provide uniquely relevant consulting expertise to its clients. BBiTV s applications are the foundation of a portfolio of U.S and international patents in video-on-demand and interactive television, reflecting multiple innovations first conceptualized and brought to market by BBiTV. It has three issued U.S. Patents, including: U.S. Patent No. 7,590,997, entitled, System and method for managing, converting and displaying video content on a video-ondemand platform, including ads used for drill-down navigation and consumer-generated classified ads ; U.S. Patent No. 7,631,336, entitled, Method for converting, navigating and displaying video content uploaded from the internet to a digital TV video-on-demand platform ;

5 and U.S. Patent No. 7,774,819, entitled, System for managing, converting, and transmitting video content for uploading online to a digital TV services provider system. BBiTV also has several issued international patents, and numerous patent applications pending. Both Mr. Raymond and BBiTV are interested in the subject matter of the Petition for Certiorari in this case because of their experiences in trying to protect their innovations. As independent inventors and small technology businesses, their experiences with the current U.S. patent system have given them insights into the practical every day realities that individuals and smaller organizations have when trying to obtain and enforce their intellectual property against larger institutions with far greater resources. The system increasingly places unfair and heavy burdens on individuals and smaller organizations, and amici believe the decision below adds further unjustified burdens on the protection of their inventions. SUMMARY OF THE ARGUMENT The amici curiae offer the Court their views of the negative repercussions and consequences that the Federal Circuit s incorrect approach regarding the treatment of method claims for software and operating system claims under United States Patent Law would have on inventors and small technology companies were it permitted to stand. While amici do not weigh in on who should ultimately win this particular case, there are important reasons, including statutory interpretation, stare decisis, and policy outcomes that merit this Court accepting the petition for full review.

6 In particular, the Federal Circuit s holding regarding the scope of Section 271(a) of the Patent Act with respect to the infringement of method claims as a result of the sale of a patented article embodying that method, runs afoul of the principles set forth in this Court s decision in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008). Moreover, its holding regarding the evidence that can be used to prove such infringement improperly creates a burden of proof in patent cases qualitatively different and higher than in other types of cases, a practice this Court warned about in ebay v. MercExchange, L.L.C., 547 U.S. 388, 392 93 (U.S. 2006), and elsewhere. ARGUMENT The Federal Circuit held that the sale of a product that embodies a method does not infringe a valid method claim in a U.S. patent under 35 U.S.C. Section 271(a). This approach is demonstrably wrong as a matter of law and as a matter of practical application and policy. I. THE PATENT ACT AND THIS COURT S DECISION IN QUANTA MAKE CLEAR THAT THE SALE OF A PATENTED INVENTION CONSTITUTES A DIRECT INFRINGEMENT While there can be no dispute that under 35 U.S.C. Section 271(a), the sale of a patented invention is a direct infringement, the Federal Circuit s decision below leaves the scope of this statutory right confused, if not eviscerated for method claims where the product sold embodies the patented method. Section 271(a) provides that whoever sells any patented invention, if unauthorized by the patent owner, infringes the patent. 35 U.S.C. 271(a). It does not distinguish between product, apparatus, system,

7 method or process claims instead it broadly includes any patented invention : Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent. 35 U.S.C. 271(a). Following that clear language, this Court s decision in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), held that the sale of a product embodying a patented method exhausts a patentee s rights. In so holding, the Court stated, It is true that a patented method may not be sold in the same way as an article or device, but methods nonetheless may be embodied in a product, the sale of which exhausts patent rights. Quanta Computer, Inc., 553 U.S. at 628. This Court s exhaustion holding thus necessarily flows from the fact that such a sale is a direct infringement; otherwise, it does not make any logical sense because, after all, how can the sale of something that doesn t infringe exhaust a right that is thus not implicated? Lower courts have echoed this sentiment: If a method may be sold for exhaustion purposes, then the Court sees no persuasive reason why a method could not also be sold for infringement purposes. CLS Bank Int l v. Alice Corp. Pty. Ltd., 667 F. Supp. 2d 29, 37 (D.D.C. 2009). 2 2. In CLS Bank Int l v. Alice Corp. Pty, Ltd., 667 F. Supp. 2d 29, 31 (D.D.C. 2009), the district court denied CLS Bank s motion for summary judgment of non-infringement. The Federal Circuit denied a petition for immediate appeal. CLS Bank Int l v. Alice Corp. Pty. Ltd, 411 Fed. Appx. 306, 307 (Fed. Cir. 2010).

8 Notwithstanding this seemingly basic logical reasoning, if the Federal Circuit s decision is permitted to stand, the state of the law would be that the sale of a product embodying a patented method does not constitute direct infringement of that method, yet if sold in a product by the patent holder would exhaust the patent holder s rights as to that method. Such a regime makes little sense. The Federal Circuit s decision below and its earlier opinion in Ricoh Co., Ltd. v. Quanta Computer Inc., 550 F.3d 1325, 1334 (Fed. Cir. 2008), taken in combination, draw improper distinctions between hardware claims on the one hand, and software or operating system claims on the other hand. In Ricoh, the Federal Circuit stated, confusingly, that while the court need not determine whether a process may ever be sold so as to give rise to liability under 271(a), nevertheless, because the allegedly infringing sale in this case was the sale of software (i.e., instructions to perform a process rather than the performance of the process itself), the court held that a party that sells or offers to sell software containing instructions to perform a patented method does not infringe the patent under 271(a). Ricoh, 550 F.3d at Subsequently, the district court granted CLS Bank s motion for summary judgment holding that Alice Corp. s patents were not directed at patentable subject matter. CLS Bank Int l v. Alice Corp. Pty, Ltd., 768 F. Supp. 2d 221, 255-256 (D.D.C. 2011). This holding was fi rst reversed by the Federal Circuit, CLS Bank Int l v. Alice Corp. Pty. Ltd., 685 F.3d 1341, 1356 (Fed. Cir. 2012), but subsequently the Federal Circuit ruling was vacated and the district court s finding that Alice Corp. s patents were not directed at patentable subject matter was upheld by the Federal Circuit sitting en banc. CLS Bank Int l v. Alice Corp. Pty. Ltd., 2013 U.S. App. LEXIS 9493, *7 8 (Fed. Cir. May 10, 2013).

9 1335. And the decision below piles on to this distinction by adding method claims for the process which runs as part of the computer s operating system are not and cannot be infringed. This dual regime (hardware on the one hand, and software/operating systems on the other hand) incorrectly cabins the breadth of the scope of Section 271(a) with respect to offers for sale and sales of patented products that embody method claims when those products are used by customers. And whatever the Federal Circuit s precedents may have been prior to this Court s decision in Quanta Computer, Inc. v. LG Electronics, Inc., such a distinction cannot be upheld in light of this Court s jurisprudence. 3 But the Federal Circuit s result creating a dual standard for different types of inventions is not only inconsistent with the statute and this Court s decision on Quanta, but is bad as a policy matter. That is because the result of the dual approach instead merely places an unnecessary burden on patent holders to sue customers of the large entities that sell products embodying patented methods. As a practical matter, such customers are in many instances indemnified by the supplier of the product in any event, so this simply creates an additional hoop for individual inventors and small patent owners to jump 3. The decision is also inconsistent with other patent law doctrines which treat method and apparatus claims alike. For example, for purposes of validity, it has been held that a prior art device that performs a process in normal operation can anticipate a method claim. See, e.g., In re King, 801 F.2d 1324 (Fed. Cir.1986) (same). That rule can only make sense if the method claim would be infringed by the sale of the device.

10 through on their way to justice. The Federal Circuit s rule thus creates an artificial construct that multiplies patent litigation needlessly because the real party in interest is only reached indirectly. This result is inconsistent with the intent of Congress as set forth in Section 271, and is bad for business policy, as it creates unnecessary layers of litigation and barriers to individual inventors and smaller entities enforcing their rights. 4 Moreover, the Federal Circuit s distinction ignores the practical reality that the line between devices and applications is blurring, as technology increasingly moves into a regime where technology in the cloud enables the mobile devices we all use every day. Applications are a manner of executing certain methods; and the Federal Circuit s dual rule makes the value of owning and developing method patents unclear for innovators, investors, and manufacturers. Whether the boundary of rights embodied by a patented method extends to a device which practices that method is a critical question to all of those stakeholders. There can really be no question that the value of such devices is strongly enhanced, if not entirely a result of, the use of these applications that execute patented methods. Thus, this is an important issue that should be addressed by the Court. 4. As pointed out in the Petition, lower courts, including the district court here, are being confused by the Federal Circuit s dual rule; clarity is thus needed from this Court and the time is ripe for a definitive rule. See, e.g., WesternGeco L.L.C. v. ION Geophysical Corp., 869 F. Supp. 2d 793, 799 (S.D. Tex. 2012); W.L. Gore & Assocs., Inc. v. Medtronic, Inc., 874 F. Supp. 2d 526, 545 (E.D. Va. 2012).

11 II. PATENT INFRINGEMENT SHOULD NOT LIVE BY A DIFFERENT EVIDENTIARY STANDARD THAN OTHER TYPES OF CASES The decisions of the lower courts in this case apply a different set of evidentiary rules for patent cases than other types of cases regarding the use of circumstantial evidence. This Court has disapproved of using different standards in patent law than in other cases, so clarification is needed. See, e.g., ebay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392-93 (U.S. 2006) (rejecting rule for injunctions unique to patent law); Dickinson v. Zurko, 527 U.S. 150, 165 (U.S. 1999) (rejecting rule for deference to agency unique to patent law), KSR Int l Co. v. Teleflex Inc., 550 U.S. 398, 421 (U.S. 2007) (urging lower courts to use common sense in determining patent obviousness); Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2069 (U.S. 2011) (rejecting rule for inducement liability unique to patent law). The Petition sets forth the circumstantial evidence that was presented at trial in connection with the infringement of the method claim at issue, and that is not repeated here. As noted above, the market value of many of the mobile devices we all use every day owes much to applications which simply execute patented methods. If an application which practices the method is part of what drives demand for the device, then circumstantial evidence that the seller marketed and promoted the device on the basis of the device s ability to use such applications and thus practice the patented methods embodied therein, there is no reason that such circumstantial evidence cannot lead a fact finder to a conclusion of infringement. Again, amici here do not weigh in on who should win on the

12 merits in this case, but the Federal Circuit s evidentiary rule does not comport with the general rules of evidence that apply in other civil cases, and this Court should thus undertake the review requested in the Petition. III. THE FEDERAL CIRCUIT S OPINION WOULD HAVE SEVERE CONSEQUENCES FOR INVENTORS AND SMALL TECHNOLOGY ORGANIZATIONS Amici are deeply concerned that the Federal Circuit s decision, and its result, if left standing, puts into doubt the extent to which their innovations will be protected going forward. There are already many roadblocks for individual inventors and small companies to protect their investments in innovation. The cost of patent litigation is severe, and after this Court s decision in MedImmune, Inc. v. Genentech, 549 U.S. 118, 137 (U.S. 2007), and its interpretation by lower courts, even a patentee who does not wish to litigate has a difficult time engaging a larger entity in a discussion about the use of the patentee s technology without the risk of a declaratory judgment action being filed, which could devastate an individual or small company financially because of its cost. Moreover, it is rare that an individual inventor or small entity can obtain an injunction for patent infringement following the lower courts interpretation of this Court s decision in ebay v. MercExchange, 547 U.S. 388, 392-93 (U.S. 2006). The unfortunate result of all of these obstacles in combination has created a rampant infringe now, pay later mentality and culture in some of this country s largest corporate institutions.

13 If the Federal Circuit s opinion below is allowed to stand, yet another obstacle will be placed in the way of the incentive to innovate. A right that cannot be practically and efficiently enforced is simply no right at all, or equates to a right without a remedy. That is clearly not what was envisioned by the Founders in providing for the establishment of a patent system, nor of Congress in enacting a broad Section 271(a) that makes no distinction between the type of patent claim at issue in an infringement analysis. A valid method claim embodied in the sale of a product should not be held to a different infringement standard than a claim to the apparatus. Amici thus urge the Court to grant the Petition for certiorari. Dated: May 17, 2013 Respectfully submitted, DAVID LEICHTMAN Counsel of Record SHANE ST. HILL ROBINS, KAPLAN, MILLER & CIRESI L.L.P. 601 Lexington Avenue, Suite 3400 New York, New York 10022 (212) 980-7400 dleichtman@rkmc.com Attorneys for Amici Curiae Patrick Raymond and Broadband itv, Inc.