UPDATE 2-U.S. Supreme Court rulings may make life harder for patent trolls

Mon Jun 2, 2014 5:24pm EDT

(Recasts throughout)

By Diane Bartz and Lawrence Hurley

WASHINGTON, June 2 (Reuters) - The U.S. Supreme Court on Monday overturned two lower court patent decisions, one related to heart rate monitors and the other to management of Web images, in rulings that could make it harder for so-called patent trolls to win infringement cases.

In good news for Nautilus Inc, the court vacated an appeals court decision in a fight between the exercise equipment maker and Biosig Instruments over heart rate monitors. Biosig had accused Nautilus of infringing its patent, but Nautilus said the patent was unclear and invalid. An appeals court ruled for Biosig. The Supreme Court did not rule on the validity of Biosig's patent but asked the appeals court to reconsider.

The Supreme Court also ruled in favor of Limelight Networks Inc over claims by Akamai Technologies Inc that it infringed patented technology for managing Web images and video. The decision overturned an appeals court decision that had made it easier to prove that a company is liable based on the induced infringement theory.

In an induced infringement, one company performs at least one of the steps protected by a patent while another (encouraged by the first) performs the rest. For example, company A can sell a product that does not infringe a patent held by Company B but includes in its information instructions about how to do it. When the customer performs the steps, it has been induced to infringe.

Both decisions were unanimous.

In the Nautilus case, the Supreme Court said the appeals court had permitted patents to be written too vaguely by disallowing only those that were "insolubly ambiguous."

"In place of the 'insolubly ambiguous' standard, we hold that a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention," Justice Ruth Bader Ginsburg wrote on behalf of the court.

That ruling was the first since 1942 where the Supreme Court addressed the issue of how unclear, or "indefinite" a patent could be before it would be deemed invalid, said Harold Wegner, a patent expert with Foley & Lardner LLP.

In the Limelight decision, the justices said Limelight cannot be held liable for inducing patent infringement when no party has directly infringed the patent in question.

The court, in an opinion by Justice Samuel Alito, reversed an August 2012 ruling by a divided U.S. Court of Appeals for the Federal Circuit in Akamai's favor, which effectively made it easier to prove that a company is liable based on the induced infringement theory.

The decisions were bad news for patent trolls, the derisive name for companies that use weak or overbroad patents to litigate aggressively, said James Barney, a patent expert with Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

"Historically speaking, the patents that are often asserted by patent trolls do tend to have ambiguous claims," said Barney. "This case will have an impact on those types of claims."

The cases at the Supreme Court are Nautilus v Biosig Instruments, Inc, No. 13-369 and Limelight Networks, Inc v Akamai Technologies, Inc, No 12-786. (Reporting by Diane Bartz and Lawrence Hurley; Editing by Ros Krasny, Doina Chiacu, Leslie Adler and Steve Orlofsky)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article