IP UPDATE

Supreme Court to consider whether ISPs can be liable for contributory copyright infringement

by Amol Parikh | Jul 10, 2025 | Cert Alert

The Supreme Court of the United States has agreed to review whether an internet service provider (ISP) can be liable for copyright infringement for providing an internet connection that leads to piracy. Cox Communications, Inc. v. Sony Music Entertainment, Case No. 24-171 (Supr. Ct. June 30, 2025) (certiorari granted). The questions presented are:

Whether the US Court of Appeals for the Fourth Circuit erred in holding that a service provider can be held liable for “materially contributing” to copyright infringement merely because it knew that people were using certain accounts to infringe and did not terminate access without proof that the service provider affirmatively fostered infringement or otherwise intended to promote it.
Whether the Fourth Circuit erred in holding that mere knowledge of another’s direct infringement suffices to find willfulness under 17 U.S.C. § 504(c).

In Sony Music Entm’t., et al. v. Cox Commc’ns, Inc., Case No. 21-1168 (4th Cir. Feb. 20, 2024), the Fourth Circuit upheld a jury verdict finding Cox liable for contributory copyright infringement, rejecting Cox’s arguments that its service was also used for lawful activity and that its contribution must amount to aiding and abetting the infringement. The Court, however, reversed the jury’s verdict of vicarious liability, finding that Cox did not profit from its subscribers’ acts of infringement and thus did not meet the legal prerequisite for that form of secondary liability.

Prosecution history primacy: “Consisting essentially of” means what applicant said it meant

by Peter Marston | Jul 10, 2025 | Life Sciences, Patents

In a decision that underscores the primacy of prosecution history to determine claim scope, the US Court of Appeals for the Federal Circuit reversed the Patent Trial & Appeal Board’s interpretation of the transitional phrase “consisting essentially of,” holding that the patentee’s actions during prosecution narrowed the claims beyond the conventional construction. Eye Therapies, LLC v. Slayback Pharma, LLC, Case No. 23-2173 (Fed. Cir. June 30, 2025) (Scarsi, Dist. J., by designation; Taranto, Stoll, JJ.)

The case involved a method for reducing eye redness using low concentrations of brimonidine, a vasoconstrictive compound. Eye Therapies owns a patent that claims methods of administering brimonidine “consisting essentially of” the active ingredient. During inter partes review (IPR), the Board applied the typical construction of that transitional phrase, allowing for the presence of other active agents as long as they did not materially affect the invention’s basic and novel properties. Based on that reading, the Board found the claims obvious over prior art references that disclosed brimonidine in combination with other drugs. On appeal, Eye Therapies argued that the Board’s construction was too broad and inconsistent with the prosecution history.

The Federal Circuit agreed. Although “consisting essentially of” is generally understood to permit unlisted ingredients that don’t materially affect the invention, the Court emphasized that this meaning can be overridden by the intrinsic record. In this case, the applicant amended the claims to avoid prior art and repeatedly argued that the invention involved only brimonidine, with no other active agents. During the original prosecution, the examiner allowed the claims on that basis. The Court found these statements to be definitional, particularly in light of the applicant’s use of “i.e.” to equate the claim language with a brimonidine-only method. Given the clarity and consistency of the applicant’s position, the Court concluded that the prosecution history required a narrower reading than the one the Board used based on the phrase’s conventional meaning.

The Federal Circuit acknowledged that the patent specification disclosed embodiments containing additional active agents. That alone, however, did not justify a broader construction. The narrowing amendment came after the specification was drafted, and the Court reiterated that not every embodiment must fall within the scope of the claims, particularly when the claims have been narrowed during prosecution. The Court also noted that other embodiments in the specification were fully consistent with the narrower interpretation. Taken together, these factors reinforced the conclusion that the applicant’s prosecution statements – not the broader illustrative disclosures – defined the proper scope of the claims.

The Federal Circuit distinguished its 2009 decision in Ecolab v. FMC, where it declined to apply prosecution history disclaimer despite similar language. In Ecolab, the patentee initially stated that peracetic acid was the “sole antimicrobial agent,” but the examiner clarified that “consisting essentially of” did not mean “solely.” The applicant never repeated the statement and secured allowance on other grounds. The specification in Ecolab also described compositions that included other known antimicrobial agents, which supported the broader interpretation. In contrast, the applicant here amended the claims, consistently [...]

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Fair use or foul play? The AI fair use copyright line

by Jodi Benassi | Jul 2, 2025 | Copyrights

The US District Court for the Northern District of California granted summary judgment in favor of an artificial intelligence (AI) company, finding that its use of lawfully acquired copyrighted materials for training and its digitization of acquired print works fell within the bounds of fair use. However, the district court explicitly rejected the AI company’s attempt to invoke fair use as a defense to rely on pirated copies of copyrighted works as lawful training data. Andrea Bartz, et al. v. Anthropic PBC, Case No. 24-CV-05417-WHA (N.D. Cal. June 23, 2025) (Alsup, J.)

Anthropic, an AI company, acquired more than seven million copyrighted books without authorization by downloading them from pirate websites. It also lawfully purchased print books, removed their bindings, scanned each page, and stored them in digitized, searchable files. The goal was twofold:

To create a central digital library intended, in Anthropic’s words, to contain “all the books in the world” and to be preserved indefinitely.
To use this library to train the large language models (LLMs) that power Anthropic’s AI assistant, Claude.

Each work selected for training the LLM was copied through four main stages:

Each selected book was copied from the library to create a working copy for training.
Each book was “cleaned” by removing low-value or repetitive content (e.g., footers).
Cleaned books were converted into “tokenized” versions by being simplified and split into short character sequences, then translated into numerical tokens using Anthropic’s custom dictionary. These tokens were repeatedly used in training, allowing the model to discover statistical relationships across massive text data.
Each fully trained LLM itself retained “compressed” copies of the books.

Once the LLM was trained, it did not output any of the books through Claude to the public. The company placed particular value on books with well-curated facts, structured analyses, and compelling narratives (i.e., works that reflected well-written creative expressions) because Claude’s users expected clear, accurate, and well-written responses to their questions.

Andrea Bartz, along with two other authors whose books were copied from pirated and purchased sources and used to train Claude, sued Anthropic for copyright infringement. In response, Anthropic filed an early motion for summary judgment on fair use only under Section 107 of the Copyright Act.

To assess the applicability of the fair use defense, the court separated and analyzed Anthropic’s actions across three distinct categories of use.

Transformative training (fair use)

The authors challenged only the inputs used to train the LLMs, not their outputs. The district court found that Anthropic’s use of copyrighted books to train its LLMs was a transformative use, comparable to how humans read and learn from texts and produce new, original writing. While the authors claimed that the LLMs memorized their creative expression, there was no evidence that Claude released infringing material to the public. The court concluded that using the works as training inputs – not for direct replication, but to enable the generation of new content – favored a finding of fair use.

Format-shifting copies (fair use)

[...]

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Seeing double? Director instructs Board to resolve claim construction pre-institution

by Benjamin Ediger, Ph.D. | Jul 2, 2025 | Patents

The acting director of the US Patent & Trademark Office (PTO) vacated and remanded a Patent Trial & Appeal Board decision to institute two inter partes review (IPR) petitions that challenged the same claims. The acting director determined that the two petitions primarily differed with respect to claim construction. In a decision designated as “informative,” he authorized the Board to resolve claim construction pre-institution in view of the Consolidated Trial Practice Guide’s (CTPG) direction that “one petition should be sufficient to challenge the claims of a patent in most situations.” CrowdStrike, Inc. v. GoSecure, Inc., IPR2025-00068; -00070 (PTAB June 25, 2025) (Stewart, Act. Dir.) The PTO designates a decision as informative when it provides “norms on recurring issues, guidance on issues of first impression to the Board, guidance on Board rules and practices, and guidance on issues that may develop through analysis of recurring issues in many cases.”

CrowdStrike submitted two IPR petitions that challenged the same claims of GoSecure’s patent. The Board instituted both IPRs. GoSecure requested director review, asserting that instituting both petitions was an abuse of the Board’s discretion. On review, the acting director determined that the Board abused its discretion in view of the CTPG’s direction.

The acting director concluded that the two petitions did not reflect an exception to the CTPG’s direction. He determined that CrowdStrike’s petitions were primarily distinguished by the constructions applied to a claim term. The acting director explained that the Board should have construed the term at issue prior to granting institution, concluding that the Board’s institution decision amounted to improper expansion of CrowdStrike’s permitted word count and placed a substantial and unnecessary burden on the Board and GoSecure that could raise fairness, timing, and efficiency concerns. The acting director vacated and remanded the Board’s institution decision.

The acting director also instructed the Board that the patent owner should be allowed to “submit whatever arguments are necessary for the panel to make a claim construction determination” even if the patent owner has not addressed the issue.

When it comes to objective criteria of nonobviousness, nexus is looser for license evidence

by Amit Kumar Saha, PhD | Jun 26, 2025 | Patents

The US Court of Appeals for the Federal Circuit partially reversed a decision by the Patent Trial & Appeal Board, effectively relaxing the nexus requirements for patent licenses pertaining to their usage as objective indicia of nonobviousness. Ancora Technologies, Inc. v. Roku, Inc. et. al., Case Nos. 23-1674; -1701 (Fed. Cir. June 16, 2025) (Lourie, Reyna, Hughes, JJ.) (per curium).

Ancora owns a patent directed to limiting software use on a computer through license verification. The patented technology centers on storing an “agent,” which is a license verification program, in a computer’s basic input/output system (BIOS) rather than in volatile memory. In 2021, Nintendo, Roku, and VIZIO separately filed petitions for inter partes review (IPR) challenging claims of Ancora’s patent. The Board consolidated the proceedings and ultimately found certain claims of the patent unpatentable as obvious over a combination of two prior art references: Hellman (which discloses storing license information in nonvolatile memory) and Chou (which discloses a BIOS-level security routine). Ancora appealed.

Ancora raised three issues on appeal:

That the Board erred in construing the claim term “agent”
That even if the Board correctly construed “agent,” it nonetheless erred in determining obviousness under 35 U.S.C. § 103 based on a combination of Hellman and Chou
That the Board erred in its analysis of secondary considerations of nonobviousness.

The Federal Circuit affirmed the Board’s construction of “agent” to mean “a software program or routine” with no further limitations. The Court disagreed with Ancora’s argument that “agent” was limited to use in software only, primarily because neither the patent nor prosecution history provided any disclaimer of hardware. For similar reasons, the Court also disagreed with Ancora’s argument that “agent” was limited to use at the operating-system level.

On the obviousness determination, the Federal Circuit upheld the Board’s conclusion that the combination of Hellman and Chou rendered the claims prima facie obvious. The Court rejected Ancora’s argument that the Hellman/Chou combination would not provide motivation to combine since they are redundant.

The Federal Circuit disagreed with the Board’s analysis of the objective indicia of nonobviousness, particularly the treatment of Ancora’s licensing evidence. The Board found that Ancora failed to establish a sufficient nexus between the claimed invention and evidence of two objective indicia of nonobviousness: industry praise and licensing.

The Federal Circuit agreed with the Board on industry lack of nexus for the alleged praise (where the Board found that praise for the invention in a press release and an agreement between Ancora and another company offering products using the patent was directed broadly to the patent and not specifically to the challenged claims). However, the Court found that the Board erred regarding the appropriate nexus as it relates to Ancora’s licensing evidence.

The Board found that Ancora failed to show a nexus between the challenged claims and two licenses it obtained through settlement agreements in other cases. The Federal Circuit disagreed, finding that the Board applied an overly stringent nexus standard inconsistent with precedent. While products may require detailed [...]

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