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American Institute of Physics v. Schwegman Lundberg & Woessner, Pa.

United States District Court, Eighth Circuit

July 30, 2013

American Institute of Physics, John Wiley & Sons, Inc., and Wiley Periodicals, Inc., Plaintiffs,
Schwegman Lundberg & Woessner, P.A., and John Doe Nos. 1-10. Defendants,
The United States Patent and Trademark Office, Intervenor Defendant.

American Institute of Physics v. SCHWEGMAN LUNDBERG & WOESSNER, PA, Dist. Court, Minnesota 2013

William I. Dunnegan, Esq., and Laura Scillepi, Esq., Dunnegan & Scileppi LLC; Michelle Kreidler Dove, Esq., Bassford Remele; and Timothy J. Pramas, Esq., Manty & Associates, PA, counsel for Plaintiffs.

Devan V. Padmanabhan, Esq., Paul J. Robbennolt, Esq., and Sri K. Sankaran, Esq., Winthrop & Weinstine, PA; and Robert W. Clarida, Esq., Reitler Kailas & Rosenblatt LLC, Esq., counsel for Defendants.

Benjamin T. Hickman, Esq., Erika R. Mozangue, Esq., and Friedrich A.P. Siekert, Esq., Assistant United States Attorneys, counsel for Intervenor Defendant.


JEFFREY J. KEYES, Magistrate Judge.

This matter is before the Court on the following motions:

1. Plaintiffs American Institute of Physics, John Wiley & Sons, Inc., and Wiley Periodicals, Inc.'s (collectively "the Publishers"), Motion to Dismiss and for Summary Judgment on the Counterclaim of Intervening Defendant the United States Patent and Trademark Office (Doc. No. 93);
2. The Publishers' Amended Motion for Partial Summary Judgment Establishing the Liability of Defendant Schwegman, Lundberg & Woessner, P.A. ("Schwegman"), for Copyright Infringement (Doc. No. 116);
3. Intervenor Defendant United States Patent and Trademark Office's ("USPTO") Motion for Summary Judgment on its Fair Use Defense and Counterclaim (Doc. No. 153);
4. Schwegman's Motion for Summary Judgment (Doc. No. 156);
5. The Publishers' Motion to Exclude the Expert Witness Testimony of Jean-Pierre Dube (Doc. No. 160); and
6. Schwegman's Motion to Exclude Expert Testimony, Report and Declaration of Randall H. Victoria (Doc. No. 190).

The District Court has referred these motions for a Report and Recommendation under 28 U.S.C. § 636 and D. Minn. LR 72.1.

For the reasons that follow, this Court concludes that Schwegman is entitled to the fair use defense as a matter of law and recommends that the District Court grant Schwegman's motion for summary judgment. In reaching its conclusion regarding fair use, this Court relies in part on evidence presented by Schwegman's expert witness Dr. Jean-Pierre Dube. Therefore, this Court addresses the Publishers' motion to exclude Dr. Dube's testimony and ultimately concludes that the motion should be denied. This Court further recommends that the District Court deny the remaining motions as moot.

Finally, the Publishers have scheduled a hearing on a motion to exclude the testimony of Schwegman's expert witness Douglas Lichtman, whose expert report addresses public policy implications of the "fair use" analysis in this case. The District Court has also referred that motion to this Court for a Report and Recommendation. However, because Schwegman is entitled to judgment as a matter of law on its "fair use" defense without considering Lichtman's expert report, the motion to exclude Lichtman's testimony is also moot. This Court will, therefore, cancel the hearing on the motion to exclude Lichtman's testimony pending the District Court's action concerning this Report and Recommendation.


I. Overview and Procedural History

The Publishers produce and distribute scientific journals that contain scholarly articles in several scientific disciplines. Schwegman is a Minneapolis law firm that specializes in prosecuting its clients' patent applications with the USPTO and foreign patent offices. Schwegman obtained and later copied eighteen of Plaintiffs' copyrighted scientific journal articles (the "Articles") from a USPTO database and other sources.[1] The Publishers allege that by getting those copies without paying for a license, and by making internal copies within the law firm, Schwegman infringed the Publishers' copyrights. Both Schwegman and the USPTO assert that Schwegman's copying of the Articles constitutes a non-infringing "fair use."[2]

The Publishers have changed the focus of their claims since the inception of this litigation. When the Publishers initially filed this case, they asserted that Schwegman had engaged in unauthorized copying of the Articles constituting copyright infringement by submitting copies of the Articles to the USPTO in conjunction with applications for patents and making various unlicensed internal copies of the Articles within the firm and for the firm's clients. ( See Doc. No. 1, Compl. ¶¶ 1, 14-22.) The Publishers narrowed the scope of the case by later amending their Complaint. In the Amended Complaint, the Publishers state that they are no longer alleging copyright infringement in this case for the following three types of conduct:

(i) making such copies of a copyrighted work for submission to the PTO as may be required by the rules and regulations of the PTO, (ii) transmitting such copies to the PTO, or (iii) making one archival copy of that work transmitted to the PTO for Defendants' internal file to document what has been transmitted.

(Doc. No. 41, Am. Compl. ¶ 1.) Thus, the Publishers have limited their claims of copyright infringement to Schwegman's downloading, storing, making internal copies of, and distributing the Articles by email. ( Id. (asserting that this action "arises from the unauthorized copying and/or distribution of Plaintiffs' copyrighted works by a law firm, and its professionals, in connection with their scientific, technical and medical research on behalf of themselves and their clients"); id. ¶¶ 13, 20-21 (connecting allegations of Schwegman's unauthorized copying to the law firm's for-profit patent prosecution work).) Schwegman and the USPTO maintain that even in this more limited conduct, Schwegman's use of the Articles constitutes "fair use."

II. Submitting Prior Art with a Patent Application

Although the Publishers have narrowed the scope of their claims in this case and no longer assert infringement for the submission of a copy of any Article to the USPTO, the manner in which Schwegman used the Articles remains intertwined with Schwegman's practice as a patent prosecution firm.[3] Therefore, the patent application process, and requirements imposed by the USPTO and other patent offices in certain foreign jurisdictions are still relevant to this case.

In the United States, the Patent Act allows the USPTO to grant patents for new, useful, and nonobvious inventions. 35 U.S.C. §§ 101-03. To determine whether an invention is new, useful, and nonobvious, and whether issuing a patent serves the public interest, the USPTO must become "aware of and evaluate[] the teachings of all information material to patentability." 37 C.F.R. § 1.56(a). To do this, the USPTO imposes a "duty of candor and good faith in dealing with the Office[.]" Id. This obligation "includes a duty to disclose to the Office all information known to [an individual associated with the prosecution of a patent application] to be material to patentability[.]" Id. Patent applicants must submit information regardless of whether it helps or harms their claims of patentability. Id. § 1.56(b)(1)-(2). This information is often referred to as "prior art."

So that patent applicants comply with the duty to disclose relevant prior art, the USPTO "encourage[s]" patent applicants to submit an Information Disclosure Statement to the USPTO. 37 C.F.R. § 1.51(d); Id. §§ 1.97-1.98. If the applicant files a disclosure statement, that statement must include, among other things, "a legible copy of... [e]ach publication or that portion which caused it to be listed [and] [a]ll other information or that portion which caused it to be listed[.]" Id. § 1.98(a)(2)(ii) & (iv). Thus, when a patent applicant files a disclosure statement, the USPTO's regulations require the applicant to submit copies of publications, in whole or in part, that are material to the applicant's claims of patentability for her inventions. See 37 C.F.R. § 1.97(i) (providing that if an information disclosure statement does not comply with the requirements of § 1.98, which includes the requirement of providing a legible copy of non-patent literature, it "will not be considered by the Office"); ( see also Doc. No. 159, Decl. of Paul Robbenolt ("Robbenolt Decl."), Ex. 1, Expert Report of Bradley A. Forrest ("Forrest Report") ¶ 10 ("Generally, if an article is merely cited [as opposed to submitted in full], the Patent Office will not consider it.").[4] Other than filing a disclosure statement, the record reflects no means by which patent applicants, or any individual associated with the prosecution of a patent application, can or do comply with the USPTO's requirement that that they "disclose to the Office all information known to [] to be material to patentability[.]" 37 C.F.R. § 1.56(a). Here, Schwegman provided the Articles to the USPTO "to comply with the duty of disclosure and to help the Patent Office determine whether the invention disclosed in the application is novel and non-obvious and deserving of a patent." (Forrest Report ¶ 7.)

Schwegman prosecutes foreign patents as well, and Schwegman used one of the Articles, the Rabeau Article, in helping a client apply for patents from the Japan Patent Office ("JPO") and the European Patent Office ("EPO"). The rules governing patent applications in these patent offices are not identical to the USPTO rules. For example, the European Patent Convention applies to patent practice before the EPO. For a long period, the EPO rules did not require applicants to submit any prior art, and the patent examiners themselves found prior art relevant to an EPO patent application. See Jeffrey M. Kuhn, Information Overload at the U.S. Patent and Trademark Office: Reframing the Duty of Disclosure in Patent Law as a Search and Filter Problem, 13 Yale J. L. & Tech. 90, 135 & n.224 (Fall 2010-2011). But since January 1, 2011, when the EPO's Administrative Council's amendment of Rule 141 went into effect, the EPO imposes a limited duty of disclosure of prior art. See The European Patent Convention, Implementing Regulations of the Convention on the Grant of European Patents, Part VII, Ch. VII, Rule 141(1) (effective Jan. 1, 2011) [hereinafter "Convention Rule 141"], Convention Rule 141(1) provides that an applicant who has sought priority for a European patent with respect to an invention for which the applicant has already filed an application for a patent in a member of the World Trade Organization must file a copy of the results of any search for prior art that was "carried out by the authority with which the previous applications was filed." Convention Rule 141. Thus, when an applicant for patent protection under the European Patent Convention already holds a patent for the same invention in a non-European nation that is a member of the World Trade Organization, the EPO patent applicant must disclose prior art references to the EPO.

The Japan Patent Office also imposes an obligation on its patent applicants to provide references to prior art. Japan Patent Office, Examination Guidelines on Requirement for Disclosure of Information on Prior Art Documents (Provisional Translation) art_doc.pdf (discussing the obligation facing an applicant for a Japanese patent under Section 36(4)(ii) of Japan's Patent Law to disclose information on documents containing prior art that are known to the applicant at the time of filing a patent application).

The EPO cited the Rabeau Article in an "international search report on October 24, 2006, and in a European patent application on September 8, 2009." (Doc. No. 122, 2/25/13 Decl. of William Dunnegan ("2/25/13 Dunnegan Decl."), Ex. BG, Schwegman's Supplemental Response to Interrogatory No. 13 at 37.) And the JPO cited the Rabeau Article in an "office action" by an examiner in connection with a Japanese patent application. ( Id. at 38.) A Schwegman attorney later accessed an electronic copy of the Rabeau Article in Schwegman's electronic document management system in October 2012 in response to the JPO office action and printed out a copy for his review. ( Id. )

III. The Audience for the Articles

Because this case involves Schwegman's assertion of a "fair use" defense, the Court must consider, among other things, the audience for the Articles. The Publishers publish their journals "for the purpose of informing interested readers of the state of the art of [various scientific disciplines.]" (Doc. No. 118, Decl. of Susann Brailey ("Brailey Decl.") ¶ 60; Doc. No. 119, Decl. of Christopher McKenzie ("McKenzie Decl.") ¶ 16.) The Publishers assert that their "interested readers include not only academics, but also researchers in private industry and the government, as well as certain members of the general public." (Brailey Decl. ¶ 60; McKenzie Decl. ¶ 16.) The Publishers "therefore expect inventors and their patent attorneys to be within the target audience of [their] journals. (Brailey Decl. ¶ 61; McKenzie Decl. ¶ 17.) Through an organization known as the Copyright Clearance Center, the Publishers identify licenses they have issued to nine law firms allowing those firms "the right to internally reproduce [the Publishers' articles]." (Doc. No. 163, Decl. of William Dunnegan in Supp. of Pls.' Mot. to Exclude the Expert Witness Testimony of Jean-Pierre Dube ("4/12/13 Dunnegan Decl.") ¶ 7; 4/112/13 Dunnegan Decl., Ex. E (license agreements between the Copyright Clearance Center and various law firms).)

Schwegman presents evidence that academic journals like those distributed by the Publishers "serve[] as a platform through which original research findings are submitted by authors, peer-reviewed by experts and then transmitted to the intended reader audience of scholars and practitioners." (4/12/13 Dunnegan Decl., Ex. A, Expert Report of Jean-Pierre Dube ("Dube Report") ¶ 12.) Authors of such articles want to have their work published in reputable journals to increase their academic prestige. ( See Dube Report ¶¶ 12-13.) "Readers searching for high-quality research to read and potentially cite are also essential to the reputation of the journal" in which such articles are published. ( Id. ¶ 15.) This creates a "two-sided market" in which "authors benefit from greater impact and citations and thus prefer a journal that has more readers, [and] readers benefit from content and thus prefer journals with more articles.'" ( Id. (quoting McCabe, M. and C. Snyder, The Best Business Model for Scholarly Journals: An Economist's Perspective, Nature Web Focus (July 16, 2004)).) The Publishers attempt to capitalize on this two-sided market by highlighting the journals' positions and rankings within their various specialties. ( Id. ¶ 18.) And they focus on "disseminat[ing] new data and scholarly ideas oriented towards a very specialized, research-oriented audience of readers."[5] ( Id. ¶ 19.)

According to Schwegman's expert witness, economist Dr. Jean-Pierre Dube, attorneys reviewing scholarly articles to decide whether those articles must be submitted as prior art to a patent office read the articles for a different purpose and fall outside the target audience for such material. Dr. Dube states that "[a]ttorneys reviewing articles to determine whether they should be disclosed to the PTO are not reading the articles for the same purpose at [sic] the target audience." (Dube Report ¶ 11.) Instead, these attorneys read such articles "to determine if [they] contain subject matter that is relevant to the invention for which the attorney is trying to obtain patent protection, which would then require him to provide a copy to the PTO." ( Id. ¶ 12.) As a result, Dr. Dube concludes that "patent attorneys are not the target audience or target market for plaintiffs' technical articles." ( Id. ¶ 29; see also id. ¶ 27.) Dr. Dube acknowledges that when an attorney who would be willing to pay gets a copy of an article to review for submission in support of a patent application and does not pay for that copy, this does affect the potential market for and market value of a copyrighted article. ( Id. ¶ 26.)

IV. How Schwegman Obtained and Used the Articles

As noted above, this case concerns eighteen scientific articles that the Publishers selected for publications in their scientific journals.[6] (Brailey Decl., Exs. A, E, H, L, P, S, W, Z, AD, AH, AL, AO, AS, AV; McKenzie Decl., Exs. AY, BB; Robbenolt Decl., Exs. 2-3 (attaching Solensten and Ye articles); Am. Compl. ¶ 14, Schedule A (listing all 18 Articles).) Schwegman obtained a copy of eleven of the Articles by downloading them from a website maintained by the USPTO known as "PAIR." (2/25/13 Dunnegan Decl., Ex. BG, Schwegman's Suppl. Resps. to Interrogs. 1-18, passim. ) "PAIR" is the USPTO's Patent Application Information Retrieval system, and it consists of both a public and a private application. United States Patent and Trademark Office, Check the Filing Status of Your Patent Application, process/status/index.jsp. Public PAIR provides interested people access to issued patents and published patent applications. Id. Private PAIR, on the other hand, "provides secure real-time access to pending application status and history" for registered patent attorneys, independent inventors, and individuals with "customer number[s]" or a certificate. Id.

For several of the Articles[7] Schwegman obtained from Private PAIR, Schwegman had inherited patent application files from another law firm that cited the relevant corresponding Articles, but the inherited files did not contain copies of the Articles. (2/25/13 Dunnegan Decl., Schwegman's Suppl. Answers to Interrogs. 1-4, 6-7, 9-12, 16.) Schwegman downloaded these Articles from Private PAIR after the USPTO listed the Schwegman firm as counsel of record associated with the inherited patent applications, and the attorneys involved stored the copies in Schwegman's electronic file management system.[8] ( See id.; see also Robbenolt Decl., Ex. 10, Jan. 15, 2013 Dep. of Peter Rebuffoni ("Rebuffoni Dep.") 24:11-21 (discussing Schwegman's shift to a "paperless office").) The Publishers assert that by downloading these articles from Private PAIR, copying these Articles to the firm's electronic file management system, and opening an electronic copy on a computer screen, Schwegman infringed the Publishers' copyrights. (Doc. No. 117, Pl.'s Mem. in Supp. of Mot. for Summ. J. Against Schwegman ("Pl.'s Summ. J. Mem.") 15-16.) Schwegman does not dispute that it paid no licensing fees to the Publishers when it obtained these eleven copies from Private PAIR.

Schwegman also keeps a copy of the remaining Articles it obtained from sources other than Private PAIR in its electronic file management system. (2/13/2013 Forrest Dep. 18:1-21 (discussing the records in the electronic system for all eighteen Articles).) Schwegman downloaded the remaining seven Articles from a variety of sources. It downloaded the Fischbein Article from the University of Pennsylvania website. (2/25/13 Dunnegan Decl., Ex. BG, Schwegman's Suppl. Ans. to Interrog. 5.) It downloaded the Goncalves Article from an attachment to an email a Schwegman attorney received from an inventor in whose patent application the Goncalves Article was cited as prior art. ( Id., Ex. BG, Schwegman's Suppl. Ans. to Interrog. 8.) It is not entirely clear how Schwegman first obtained copies of the Rabeau, Lee, and Reneker Articles, but each appears to have been placed on the electronic file management system so that Schwegman's lawyers could use it in the firm's patent-prosecution practice. Schwegman eventually cited each of these Articles in patent applications submitted to the USPTO.[9] ( See id., Schwegman's Suppl. Ans. to Interrogs. 13-14, 18.) And it is unclear how Schwegman first obtained a copy of the Solensten Article. But Schwegman states that the date the Solensten Article was added to Schwegman's electronic file management system coincides with the filing of an Information Disclosure Statement with the USPTO. ( Id., Schwegman's Suppl. Ans. to Interrog. 15.) Finally, Schwegman obtained the Ye Article by downloading it subject to a license from one of the Publishers, American Institute of Physics. ( Id., Schwegman's Suppl. Ans. to Interrog. 17.)

The Publishers allege that Schwegman engaged in a similar course of infringing activity with these non-Private PAIR Articles. Specifically, the Publishers assert that Schwegman infringed their copyrights by: (1) obtaining copies of these Articles through emails, from the internet, and otherwise; (2) storing copies of these Articles on the firm's electronic file management system; (3) viewing these Articles on computer screens shortly after placing them in that electronic file management system; (4) emailing copies of certain Articles to the firm's clients; and (5) in two instances, emailing one Article to another attorney in connection with a ...

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