infringement of patent

In 1976, Universal City Studios, Inc., and Walt Disney Productions, owners of copyrights in motion pictures and other audiovisual works, commenced a copyright infringement action in the United States District Court for the Central District of California against Sony Corporation of America and related entities that manufacture and sell Betamax video tape recorders. The Betamax consists of a tuner that receives signals from the public airwaves, a recorder that places those signals on magnetic tape, and an adapter that converts the signals for playback on a television set. It includes a timer for unattended recording, a pause button to omit commercials, and a fast-forward control. Surveys of several hundred Betamax owners conducted by both parties in 1978 showed that the primary use for most owners was time-shifting, recording a program for single later viewing and then erasing it. Sony's survey indicated that over 80 percent of interviewees watched at least as much regular television as before owning a Betamax. Seven point three percent of use was to record sports events whose professional leagues had no objection to home recording, and representatives of religious and educational broadcasters also testified they had no objection. After a lengthy trial, the District Court in 1979 denied all relief to the respondents, finding that time-shifting was fair use, that Sony had no direct involvement with any infringing activity, and that the Betamax was a staple article of commerce capable of substantial noninfringing uses. The court noted Sony's instruction booklet warned that unauthorized recording of copyrighted material may violate copyright laws. The Ninth Circuit in 1981 reversed the District Court's judgment on the copyright claim, holding petitioners liable for contributory infringement without setting aside any findings of fact, and remanded for consideration of damages or a continuing royalty. The Supreme Court granted certiorari in 1982, ordered reargument in 1983, and issued its decision in January 1984.

Markman owns United States Reissue Patent No. 33,054 for his Inventory Control and Reporting System for Drycleaning Stores. The patent describes a system that can monitor and report the status, location, and movement of clothing in a dry-cleaning establishment. The Markman system consists of a keyboard and data processor to generate written records for each transaction, including a bar code readable by optical detectors operated by employees, who log the progress of clothing through the dry-cleaning process. Respondent Westview's product also includes a keyboard and processor, and it lists charges for the dry-cleaning services on bar-coded tickets that can be read by portable optical detectors. Markman brought an infringement suit against Westview and Althon Enterprises, an operator of dry-cleaning establishments using Westview’s products. Part of the dispute hinged upon the meaning of the word inventory, a term found in Markman’s independent claim 1, which states that Markman’s product can maintain an inventory total and detect and localize spurious additions to inventory. The case was tried before a jury, which heard, among others, a witness produced by Markman who testified about the meaning of the claim language. After the jury compared the patent to Westview’s device, it found an infringement of Markman’s independent claim 1 and dependent claim 10. The District Court for the Eastern District of Pennsylvania granted Westview’s deferred motion for judgment as a matter of law. One of its reasons was that the term inventory in Markman’s patent encompasses both cash inventory and the actual physical inventory of articles of clothing. The court directed a verdict on the ground that Westview’s device does not have the means to maintain an inventory total. Markman appealed to the United States Court of Appeals for the Federal Circuit, which affirmed the district court’s judgment. Markman sought review, and the Supreme Court granted certiorari.

Respondents Grokster, Ltd. and StreamCast Networks, Inc. distribute free software products that enable computer users to share electronic files through peer-to-peer networks. Grokster's software employs FastTrack technology while StreamCast distributes Morpheus software that relies on Gnutella technology. Users of either product can send requests for files directly to the computers of others on the network, with results communicated back and files downloaded directly from peers' computers without any central server intercepting the content. A group of copyright holders including motion picture studios, recording companies, songwriters, and music publishers, referred to collectively as MGM, sued Grokster and StreamCast in the United States District Court for the Central District of California. MGM alleged that the companies knowingly and intentionally distributed their software to enable users to reproduce and distribute copyrighted works in violation of the Copyright Act. MGM commissioned a statistician to conduct a systematic search, and his study showed that nearly 90% of the files available for download on the FastTrack system were copyrighted works. Well over 100 million copies of the software in question are known to have been downloaded, and billions of files are shared across the FastTrack and Gnutella networks each month. Grokster and StreamCast concede the infringement in most downloads, and it is uncontested that they are aware that users employ their software primarily to download copyrighted files. From time to time, moreover, the companies have learned about their users' infringement directly, as from users who have sent e-mail to each company with questions about playing copyrighted movies they had downloaded, to whom the companies have responded with guidance. MGM notified the companies of 8 million copyrighted files that could be obtained using their software. After the notorious file-sharing service, Napster, was sued by copyright holders for facilitation of copyright infringement, StreamCast gave away a software program of a kind known as OpenNap, designed as compatible with the Napster program and open to Napster users for downloading files from other Napster and OpenNap users' computers. The evidence that Grokster sought to capture the market of former Napster users is sparser but revealing. Grokster launched its own OpenNap system called Swaptor and inserted digital codes into its Web site so that computer users using Web search engines to look for "Napster" or "[f]ree filesharing" would be directed to the Grokster Web site. StreamCast monitored both the number of users downloading its OpenNap program and the number of music files they downloaded. It also used the resulting OpenNap network to distribute copies of the Morpheus software and to encourage users to adopt it. Internal company documents indicate that StreamCast hoped to attract large numbers of former Napster users if that company was shut down by court order or otherwise, and that StreamCast planned to be the next Napster. Finally, there is no evidence that either company made an effort to filter copyrighted material from users' downloads or otherwise impede the sharing of copyrighted files. Grokster and StreamCast receive no revenue from users, who obtain the software itself for nothing. Instead, both companies generate income by selling advertising space, and they stream the advertising to Grokster and Morpheus users while they are employing the programs. After discovery, the parties on each side of the case cross-moved for summary judgment. The court nonetheless granted summary judgment in favor of Grokster and StreamCast as to any liability arising from distribution of the then current versions of their software. The Court of Appeals affirmed. The Supreme Court granted certiorari.

In 1950, two antitrust actions were filed in the United States District Court for the Northern District of Illinois. Rohlfing involved 87 plaintiffs, all operators of independent retail shoe repair shops, suing six named defendants consisting of manufacturers, wholesalers, and retail mail order houses and chain operators. Shaffer involved six plaintiffs, all wholesalers of shoe repair supplies, suing six defendants including manufacturers, wholesalers of such supplies, and a retail shoe shop chain operator. Both complaints charged conspiracy to monopolize and fix prices in violation of the Sherman Act together with price discrimination under the Robinson-Patman Act. Both complaints prayed for injunctive relief, treble damages, and an accounting. The cases proved burdensome to District Judge La Buy. In Rohlfing alone, 27 pages of the record consisted of docket entries showing that the judge had conducted many hearings on preliminary pleas and motions. The original complaint had been twice amended following orders on misjoinder and severance, 14 defendants had been dismissed with prejudice, summary judgment hearings had been held, over 50 depositions had been taken, and multiple hearings had addressed compelling testimony and production of records. Several hearings included oral argument and briefs and resulted in the filing of opinions and memoranda by the judge. On February 23, 1955, the cases were called on a motion to reset them for trial, with Rohlfing holding the number one position below the black line on the trial list. All parties sought an early trial, though plaintiffs requested an adjournment until May. The judge observed that it had taken a long time to get the case at issue and that he had heard more motions in this case than any other. After plaintiffs estimated a six-week trial, the judge inquired whether the parties could agree to have a master hear it. The next day in chambers the judge entered orders of reference sua sponte, declaring that the court was confronted with an extremely congested calendar and that exceptional conditions existed for this reason. The orders referred each case to a master to take evidence and report findings of fact and conclusions of law, directed the master to commence trial on a specified date, and required the parties to supply security for costs. All parties objected to the references and filed motions to vacate them. Upon the judge's refusal to vacate, petitions for mandamus were filed in the Court of Appeals for the Seventh Circuit seeking writs ordering the judge to vacate the references. The Court of Appeals unanimously concluded it possessed power to issue the writs and, by a divided court, determined that the circumstances required their issuance. The Supreme Court granted certiorari.

In the early 1990s, Vernon Minton developed a computer program and telecommunications network known as the Texas Computer Exchange Network, or TEXCEN, designed to facilitate securities trading. In March 1995, he leased the system to R. M. Stark & Co., a securities brokerage. A little over a year later, Minton applied for a patent for an interactive securities trading system based substantially on TEXCEN, and the U.S. Patent and Trademark Office issued the patent in January 2000. Minton, represented by Jerry Gunn and the other petitioners, filed a patent infringement suit in Federal District Court against the National Association of Securities Dealers, Inc. and the NASDAQ Stock Market, Inc. NASD and NASDAQ moved for summary judgment on the ground that the patent was invalid under the on-sale bar because Minton had leased TEXCEN more than one year prior to filing his application. The District Court granted the motion and declared the patent invalid in 2002. Minton then filed a motion for reconsideration arguing for the first time that the lease fell within the experimental-use exception, but the District Court denied the motion. Minton appealed to the U.S. Court of Appeals for the Federal Circuit, which affirmed on the ground that the experimental-use argument had been waived. Minton then brought this legal malpractice action in Texas state court against Gunn and the other lawyers. The defendants defended on the ground that the lease to Stark was not for an experimental use, and the trial court granted summary judgment after finding less than a scintilla of proof on that point. On appeal, Minton argued for the first time that the Texas court lacked subject matter jurisdiction because the malpractice claim arose under federal patent law. A divided panel of the Court of Appeals of Texas rejected the jurisdictional argument and affirmed on the merits. The Supreme Court of Texas reversed. The U.S. Supreme Court granted certiorari.