IP UPDATE

Provider’s degree of control affects DMCA safe harbor

by Jolie B. Schenerman | Feb 26, 2026 | Copyrights

The US Court of Appeals for the Second Circuit affirmed dismissal of a photographer’s Digital Millennium Copyright Act (DMCA) claims against a digital media platform for lack of scienter but vacated summary judgment on copyright claims. The Second Circuit remanded the case to the district court with instructions to assess whether the accused infringer can claim protection under the DMCA’s service provider safe harbor. McGucken v. Shutterstock Inc., Case No. 23-7652 (2nd. Cir. Feb. 10, 2026) (Lynch, Lee, Perez, JJ.)

Elliott McGucken, a professional photographer, discovered that several hundred of his copyrighted photographs were uploaded to Shutterstock by three user accounts that generated more than $2,000 in licensing revenue. Shutterstock removed the images within four days of receiving takedown notices and terminated the uploading accounts. McGucken nevertheless sued, alleging copyright infringement under 17 U.S.C. § 106 and false copyright management information (CMI) under 17 U.S.C. § 1202. The district court granted summary judgment for Shutterstock on all claims. McGucken appealed.

The Second Circuit agreed that McGucken failed to raise a triable issue on Shutterstock’s scienter regarding CMI under the DMCA. First, the Court found that Shutterstock’s practice of placing a watermark on all images on its site did not demonstrate that it knowingly affixed false CMI to McGucken’s works for the purpose of facilitating infringement. Second, the Court found that Shutterstock’s automated removal of CMI from all uploaded images, which is done to avoid malware and strip personally identifiable information, did not show that Shutterstock knew it was removing McGucken’s CMI without authorization or that Shutterstock intended to conceal infringement. On these grounds, the Court affirmed dismissal of the § 1202 claim.

As for the safe harbor provision regarding the copyright infringement claim, the Second Circuit agreed that Shutterstock qualified as a “service provider” with a repeat infringer policy and no interference with standard technical measures. The Court also affirmed that Shutterstock lacked actual or red flag knowledge of the infringement and acted expeditiously once notified.

The Second Circuit found triable issues of fact, however, on two critical safe harbor elements under § 512(c)(1). The first issue was whether the storage was “at the direction of the user.” The Court stated that the factfinder must determine whether Shutterstock’s review of uploaded material involved “substantive and discretionary control” over what appears on the platform, including the level of aesthetic or editorial judgment applied when deciding which images to accept.

The second issue assessed was whether Shutterstock had the “right and ability to control” the alleged infringing activity. The Second Circuit explained that safe harbor is unavailable where the provider exercises “substantial control” over users’ activities, such that decisions about what content is allowed on the site go beyond promoting or demoting material. The Court noted that control may also be inferred if the provider selectively reviews only a subset of uploaded content rather than reviewing all user submissions.

Since these issues remained unresolved, the Second Circuit vacated summary judgment on the copyright claim and remanded for further proceedings.

Practice note: The Second Circuit’s clarification of [...]

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USPTO Director IPR institution discretion survives APA challenge

by Amol Parikh | Feb 26, 2026 | Patents

The US Court of Appeals for the Federal Circuit concluded that the United States Patent and Trademark Office’s (USPTO) framework for discretionary denials of inter partes review (IPR) is a general statement of policy, not a substantive rule, and therefore is exempt from the Administrative Procedure Act’s notice‑and‑comment requirements.

The USPTO Director issued a trio of related instructions to the Patent Trial & Appeal Board for its exercise of delegated non-institution authority, addressing the common situation where the IPR petitioner and the patent owner are already involved in a district court litigation over the patent at issue. Two of the instructions were in the form of precedential Board decisions, which set forth six exclusive factors, weighing in favor or against institution, that the Board must assess. These instructions are generally referred to as the NHK-Fintiv instructions that, as Board precedent, bind only the Board and not the USPTO Director.

Several IPR petitioners argued that the Director’s instructions to the Board effectively bind the USPTO as an agency and thus should have been promulgated through formal rulemaking.

The Federal Circuit disagreed, emphasizing that institution decisions rest ultimately with the USPTO Director. The Court explained that while the NHK-Fintiv framework provides guidance on how that discretionary authority may be exercised, the Director retains the ability to depart from the framework in any given case. To that end, the guidance does not carry the force and effect of law and does not impose legally binding obligations on the agency or the public.

Practice note: The decision reinforces the Federal Circuit’s post‑Arthrex theme that the Director enjoys broad and largely unreviewable discretion at the IPR institution stage.

Tied up: Federal Circuit affirms antitrust verdict in patent case

by Kassandra DiPietro | Feb 26, 2026 | Antitrust, Patents

The US Court of Appeals for the Federal Circuit affirmed a jury verdict finding that Ingevity engaged in unlawful tying under the Sherman Act by conditioning licenses to its patent on customers’ purchase of its unpatented products that were staple items of commerce. Ingevity Corp. v. BASF Corp., Case No. 24-1577 (Fed. Cir. Feb. 11, 2026) (Lourie, Prost, Cunningham, JJ.)

Ingevity sued BASF for patent infringement. BASF denied infringement, challenged the patent’s validity and enforceability, and asserted counterclaims for unlawful tying under federal antitrust law, alleging that Ingevity conditioned licenses to the patent on customers’ agreement to purchase Ingevity’s unpatented products. The district court granted summary judgment of invalidity and denied motions for summary judgment on BASF’s antitrust claims.

At trial, the jury found that Ingevity unlawfully tied licenses for the patent to sales of its unpatented products and awarded BASF antitrust damages. Ingevity moved for judgment as a matter of law or, alternatively, for a new trial, arguing that its conduct was protected under the Patent Act because its unpatented products were “nonstaple goods” (i.e., goods lacking substantial non-infringing uses) and that its actions were immune under the Noerr-Pennington doctrine. The district court denied those motions, and Ingevity appealed, challenging the jury’s tying liability finding, the rejection of Ingevity’s immunity defenses, and the damages award.

The Federal Circuit first addressed Ingevity’s statutory patent misuse defense under 35 U.S.C. § 271(d), which permits patentees to control nonstaple goods lacking substantial noninfringing uses. The Court concluded that substantial evidence supported the jury’s finding that Ingevity’s unpatented products were staple articles of commerce because the record showed actual and substantial noninfringing uses in air-intake systems. Business records, customer purchases, and technical evidence provided a sufficient basis for the jury to find that the products had recurring, practical noninfringing applications, defeating Ingevity’s reliance on § 271(d).

The Federal Circuit also rejected Ingevity’s immunity arguments. The Court determined that Ingevity forfeited its reframed immunity theory on appeal because it differed materially from the argument presented in the case below. In the alternative, the Court explained that conditioning patent licenses on the purchase of staple goods constitutes commercial tying conduct beyond mere patent enforcement communications and is not protected by either the Patent Act or the Noerr-Pennington doctrine. Accordingly, immunity did not shield Ingevity from antitrust liability.

The meaning is plain as day: Just follow the grammar

by Tyler Jackson | Feb 26, 2026 | Patents

The US Court of Appeals for the Federal Circuit reversed and vacated a decision by the Patent Trial & Appeal Board, explaining that the Board failed to consider common textual modifier language when applying the plain meaning to a disputed claim term. Netflix, Inc. v. DivX, LLC, Case No. 24-1541 (Fed. Cir. Feb. 13, 2026) (Moore, C.J.; Dyk, Taranto, JJ.)

DivX sued Netflix for infringing its patent directed to systems and methods for streaming partly encrypted media content. The patent uses encryption/decryption, a Digital Rights Management (DRM) technique, to protect streams of media content from unauthorized access or copying. This technique requires that cryptographic information be relayed to the playback device for users to watch streamed media content. The patent explains that encrypting parts of streamed media decreases the resources needed for encryption/decryption and provides the playback device with information on the portions that are encrypted and “common” decryption information.

Netflix petitioned for inter partes review (IPR) of all claims on the basis of obviousness. The Board rejected DivX’s proposed construction of limitation [l] of the representative claim: “locating encryption information that identifies encrypted portions of frames of video within the requested portions of the selected stream of protected video.” DivX’s argued that the “encryption information” must be located “within the requested portions of the selected stream of protected video.” The Board deemed DivX’s proposed claim construction as “too restrictive,” concluding that the claim suggested that the encryption information just needed to identify encrypted portions of frames that themselves were “within the requested portions of the selected stream of protected video.”

In its final written decision, the Board agreed with Netflix that a person of skill in the art would have been motivated to combine the asserted prior art but held that the artisan would not have reasonably expected success in combining the prior art and that therefore Netflix did not establish obviousness of the challenged claims.

The Federal Circuit vacated the Board’s decision on appeal and remanded the matter. On remand, the Board again concluded that Netflix did not demonstrate obviousness but this time accepted DivX’s originally proposed claim construction. Netflix appealed.

The Federal Circuit found the Board’s construction of limitation [l] was erroneous, agreeing with Netflix that limitation [l] was taught by the asserted prior art combination. Using the plain language doctrine, the Court found that limitation [l] was susceptible to two interpretations: “the modifier ‘within the requested portions of the selected stream of protected video’ could modify either ‘encrypted portions of frames of video’ or ‘encryption information.’” Accordingly, the Court relied on the principle that where commas or other textual signals are not used, it is presumed that the modifier is tied to the nearest available semantically plausible modificand. The Court determined that only the “encrypted portions of frames of video” needed to be “within the requested portions of the selected stream of protected video.” The Federal Circuit also determined that the context of the claim itself, the specification, and the prosecution history supported the construction that [...]

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Attorney-client relationship owed to both joint IP owners

by Taylor MacDonald | Feb 19, 2026 | Patents

Addressing attorney-client relationship formation and legal malpractice, the US Court of Appeals for the First Circuit reversed in part, vacated in part, and remanded a district court’s grant of summary judgment. The Court concluded that an attorney-client relationship existed as a matter of law and that a malpractice claim was premature for resolution at the summary judgment stage. BlueRadios, Inc. v. Hamilton, Brook, Smith & Reynolds, P.C., Case No. 24-1942 (1st Cir. Feb. 2, 2026) (Gelpi, Thompson, Montecalvo, JJ.)

In 2007, technology companies BlueRadios and Kopin Corporation entered into an agreement to jointly own intellectual property developed through their collaboration and assigned primary responsibility for patent prosecution to Kopin. That responsibility included retaining patent counsel. Kopin selected Hamilton, Brook, Smith & Reynolds (HBSR) to prosecute patents arising from the collaboration. HBSR worked with both companies to prepare and file patent applications, but over time the relationship between the agreement parties deteriorated.

In 2017, during discovery in unrelated litigation with Kopin, BlueRadios uncovered alleged conduct by HBSR that BlueRadios contended was contrary to its interests. On December 5, 2017, BlueRadios and HBSR entered into an agreement preserving any timely claims. BlueRadios filed suit against HBSR in 2021, asserting malpractice and related claims. The parties agreed that Massachusetts law governed and that, under the tolling agreement and the applicable statute of limitations, BlueRadios’ claims were timely if they accrued after December 5, 2014.

The district court granted summary judgment in HBSR’s favor, concluding that BlueRadios’ claims were time-barred, that no equitable tolling doctrine applied, and that no attorney-client relationship existed between BlueRadios and HBSR. BlueRadios appealed.

The First Circuit concluded that the district court failed to view the record in the light most favorable to BlueRadios when addressing the statute of limitations. The parties disputed when BlueRadios knew or reasonably should have known of the alleged harm caused by HBSR. Under Massachusetts law, this issue is typically a question of fact for the jury. Given the technical complexity of patent prosecution and BlueRadios’ lack of patent expertise, the Court found multiple reasonable interpretations of the record. The Court rejected the notion that internal correspondence or business decisions by BlueRadios conclusively demonstrated sufficient knowledge to trigger the statute of limitations as a matter of law.

The First Circuit further noted that BlueRadios’ later engagement of independent patent counsel did not necessarily reflect suspicion of malpractice, and that a reasonable jury could conclude that the review was undertaken for ordinary business reasons. Declining to aggregate the knowledge of client and counsel to establish accrual where neither independently possessed the requisite awareness, the Court reversed the district court’s statute-of-limitations ruling and vacated its dismissal of the related claims.

The First Circuit also addressed whether an implied attorney-client relationship existed between BlueRadios and HBSR, concluding that as a matter of law there was such a relationship. Applying Massachusetts law, the Court rejected the district court’s conclusion that BlueRadios failed to seek legal assistance from HBSR independent of Kopin. The 2007 agreement made clear that Kopin’s selection [...]

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