Copyright Infringement Liability for Generative AI Training Following the Copyright Office’s AI Report and Administrative
When multiple forces act on an object, its direction of motion is determined by the net force, which is the vector sum of all individual forces.
When this happens within our federal government, we call it “interesting times.”
Not unlike other areas of the United States federal government of late, the U.S. Copyright Office has been thrown into turmoil following a stunning sequence of events this past week. As reported in multiple news outlets:
On Thursday, May 8, 2025, President Donald Trump fired Librarian of Congress Carla Hayden, the first woman and the first African American to be librarian of Congress.[i] The Library of Congress is the larger federal agency within which the U.S. Copyright Office resides.
On Friday, May 9, 2025, the U.S. Copyright Office released a “Pre-Publication Version” of the third and final part of its three-part Report on Artificial Intelligence.[ii] This Part 3 of the Report is entitled “Generative AI Training” and makes the case for finding copyright infringement where copyrighted works are used without permission to train generative AI models (more on this below).[iii] The Report was posted to the Copyright and AI landing page of the Copyright Office’s website a day after the firing of the Librarian of Congress and roughly 5 months after the official Publication of Part 2, which is about a month shorter than the interval between Parts 1 and 2 of the Report.[iv]
On Saturday afternoon, May 10, 2025, the Registrar of Copyrights, Shira Perlmutter, received an email from the White House informing her that her job as Register of Copyrights and Director at the U.S. Copyright Office had been “terminated effective immediately.”[v]
These recent events follow earlier criticism by prominent leaders of technology companies regarding perceived constraints posed by U.S. intellectual property laws on the development of artificial intelligence products and services. For example, on April 13, 2025, Jack Dorsey, co-founder of the companies formally known as Twitter and Square, posted: “delete all IP law,” to which Elon Musk replied, “I agree.”[vi] More broadly, as lobbying in favor of regulatory relief has increased with the change of administration,[vii] the mood in Washington appears to have shifted from caution to pro-development of the AI industry, as shown by the current President’s repeal[viii] of his predecessor’s sweeping executive order and the more recent attempt by Congressional Republicans to insert into the tax and spending bill a moratorium on state AI legislation.[ix]
Given all of this, interested parties may be left to wonder whether and to what extent they should rely upon the guidance and analysis of the Copyright Office’s AI Report. The question is particularly acute for parties involved in active litigation concerning the question of copyright infringement for generative AI training.
What’s next?
Let’s deal with what we know and leave the political speculation to other sources.
First, IP law is not going away anytime soon. Patent and copyright law are enshrined in the U.S. Constitution.[x] And nobody is calling for the end of all trademarks. We all have a brand, after all, and the ability to control one’s reputation by excluding others from unauthorized use is essential to all businesses. Bold statements aside, the law will continue to evolve but the need to support innovation though intellectual property rights retains broad recognition by serious people.
Second, Jack Boyle’s words, spoken in another context, seem to best capture the dynamic environment in Washington these days: “nobody knows ‘nothin.”[xi] Speculation on motive and the future direction of any particular legal issue or policy, including those involving AI, is a risky bet. While a pattern has emerged showing a preference by the administration for prioritizing pro-growth of the AI sector through relaxed legal barriers, ultimately these issues will play out in federal courts where considerations of legal precedent and constitutionality may impose restraints on executive and certain legislative actions.
Third, the U.S. Copyright Office’s AI Report does not carry the force of law. It does signal the Office’s approach to important legal issues within its purview, which approach could theoretically change with the change in leadership. And, more relevantly to the subject matter of this most recent portion of the Report, it can also serve as a roadmap for litigants, persuasive authority for courts, and input to the legislative process.
Fourth, agree with it or not, the Report as written is now in the public domain. Whether or not its authors continue to draw a paycheck from the federal government, and whether their successors write a new chapter or revision, the analysis speaks for itself and has been widely disseminated. A party who ignores this in-depth and well sourced treatment does so at its own peril.
So, what does the Report say?
Prima Facie Case for Infringement. The Report begins by finding that a prima facie claim for copyright infringement is easily met. In the Office’s view, multiple steps required to produce a dataset useful for generative AI “clearly implicate” the copyright owners’ right to control the reproduction of their works. These steps include the collection and curation of the copyrighted works, their use in training, and deployment of the model.[xii] Less clear, in the Office’s view, is whether or not the output material of the resulting generative AI model (which may, in some cases, look very much like and even compete with the original work) may implicate the copyright owners’ rights to control public display and performance of their works.[xiii]
Fair Use Defense. The Report proceeds with an analysis of the “fair use” defense to copyright infringement, including each of the statutory fair use factors set forth in 17 U.S.C. § 107, which are:
the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
the nature of the copyrighted work;
the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
the effect of the use upon the potential market for or value of the copyrighted work.
After an in-depth consideration of each of the factors,[xiv] as informed by existing legal precedent and the comments received through the Notice of Inquiry (NOI) process that gave rise to the Report, the Copyright Office offers the following somewhat equivocal perspective:
As generative AI involves a spectrum of uses and impacts, it is not possible to prejudge litigation outcomes. The Office expects that some uses of copyrighted works for generative AI training will qualify as fair use, and some will not. On one end of the spectrum, uses for purposes of noncommercial research or analysis that do not enable portions of the works to be reproduced in the outputs are likely to be fair. On the other end, the copying of expressive works from pirate sources in order to generate unrestricted content that competes in the marketplace, when licensing is reasonably available, is unlikely to qualify as fair use. Many uses, however, will fall somewhere in between.[xv]
Recommendation for Licensing. Licensing, the Copyright Office suggests, is a workable solution for both resolving the ambiguity of legal rights and fairly balancing the interests of content creators and AI developers.[xvi] Options suggested in the Report may include the forms of streamlined voluntary approaches already in the market as well as adapted statutory approaches such as compulsory licensing and extended collective licensing (“ECL”).
Final Analysis. Governmental turmoil aside, the Copyright Office’s AI Report, now completed with the delivery of its third installment, provides a solid starting point for litigants, courts, legislators, and businesses to understand the competing viewpoints and legal arguments related to artificial intelligence. This guidance will likely show up in legal briefs in the near future and it may also motivate efforts to address these issues legislatively.
ENDNOTES
[i] “Trump administration fires top copyright official days after firing Librarian of Congress,” Associated Press, May 11, 2025 (last visited May 11, 2025).
[ii] See Copyright Office statement on May 9, 2025 accompanying the posting of Part 3 of its Report on Artificial Intelligence (last visited May 11, 2025).
[iii] U.S. Copyright Office Report on Artificial Intelligence, Part 3: Generative AI Training, Pre-Publication Version, May 2025 (herein, “Copyright Report, Part 3”) (last visited May 11, 2025).
[iv] For an analysis of Parts 1 and 2 of the Copyright Office Report on Artificial Intelligence, see “Charting a Course on AI Policy: the U.S. Copyright Office Speaks!,” Krabacher, April 2, 2025.
[v] “Trump fires top US copyright official,” Politico, May 10, 2025 (based on POLITICO receipt of internal Library of Congress communications (last visited May 11, 2025); “Trump administration fires top copyright official days after firing Librarian of Congress,” Associated Press, May 11, 2025 (last visited May 11, 2025).
[vi] “Jack Dorsey and Elon Musk would like to ‘delete all IP law’,” April 13, 2025, Techcrunch (last visited May 11, 2025).
[vii] See, e.g., “Emboldened by Trump, AI Companies Lobby for Fewer Rules,” New York Times, March 24, 2025 (last visited May 13, 2025).
[viii] Executive Order: Removing Barriers to American Leadership In Artificial Intelligence, January 23, 2025 (last visited May 13, 2025).
[ix] State AI Regulation Ban Tucked Into Republican Tax, Fiscal Bill, Bloomberg, May 12, 2025 (last visited May 13, 2025).
[x] U.S. Const. Article I, Section 8, Clause 8 of the U.S. Constitution (the “Patent and Copyright Clause”).
[xi] See. e.g., John Boyle interview posted on Sensible Investing YouTube, September 26, 2012: “All You Need To Know About Investing In Three Words,” (last visited May 16, 2025).
[xii] Copyright Report, Part 3, pg. 26 – 31.
[xiii] Copyright Report, Part 3, pg. 31.
[xiv] Copyright Report, Part 3, pg. 32 – 74.
[xv] Copyright Report, Part 3, pg. 74.
[xvi] See U.S. Copyright Office Report at page 103.
Tenth Circuit Affirms Dismissal of Trade Secret Claims for Lack of Particularity and Secrecy
On April 22, 2025, the Tenth Circuit affirmed summary judgment in favor of a sales manager and his new employer on claims under the Defend Trade Secrets Act (“DTSA”), the Oklahoma Uniform Trade Secrets Act (“OUTSA”), and common law claims for misappropriation of confidential business information and civil conspiracy, which were brought by his former employer, Double Eagle Alloys, Inc. (“Plaintiff”). Double Eagle Alloys, Inc. v. Hooper, 24-5089 (10th Cir. Apr 22, 2025).
Plaintiff alleged that the former employee misappropriated files containing pump shaft quality (“PSQ”) specifications (internal standards for specialty metal products), along with pricing data and customer drawings. The district court granted summary judgment in favor of Defendants, dismissing Plaintiff’s DTSA and OUTSA claims for failing to identify the alleged trade secrets with sufficient particularity and for not differentiating protected trade secrets from unprotected information. The court also dismissed Plaintiff’s common law misappropriation claim due to insufficient evidence of secrecy and consequently dismissed the civil conspiracy claim for lack of an underlying tort.
On appeal, the Tenth Circuit agreed with the district court, finding there was insufficient evidence that the allegedly stolen information qualified as a trade secret under the DTSA. The Tenth Circuit held that Plaintiff had failed to establish these elements, noting that much of the information had been publicly disclosed or shared with third parties, and that Plaintiff had not demonstrated what efforts it took to maintain the secrecy of the information.
The Tenth Circuit rejected the OUTSA claim for the same reason. Plaintiff grouped the allegedly misappropriated files into broad categories—namely, PSQ, pricing information, and customer drawings—but offered little detail to distinguish what, if anything, qualified for protection. Some documents were sourced from customers, some were shared online, and others reflected information available from competitors. According to the court, Plaintiff relied on affidavits containing conclusory statements asserting confidentiality, but provided no evidence identifying specific trade secrets or explaining how the information was secured or economically valuable.
This ruling illustrates how courts approach trade secret claims built on broadly described information and minimal factual support.
China’s National People’s Congress Passes Promoting the Private Economy With IP Provisions
China’s National People’s Congress recently passed the Law of the People’s Republic of China on Promoting the Private Economy (中华人民共和国民营经济促进法) with several intellectual property provisions. The Law goes into effect on May 20, 2025 and aims to “help create a stable, fair, transparent and predictable environment for the development of the private economy,” e.g., to restrict government overreach that hurts private companies such as the 2021 crackdown on the private tutoring industry.
A translation of the relevant IP provisions follow. The full text is available here (Chinese only).
Article 21 Banking financial institutions and others shall, in accordance with laws and regulations, accept guarantee methods that meet the requirements of loan business, and provide loans secured by accounts receivable, warehouse receipts, equity, intellectual property rights, and other rights pledges to private economic organizations.
People’s governments at all levels and their relevant departments shall provide support and convenience for the registration, valuation, trading circulation, and information sharing of movable property and rights pledges.
Article 30 The State shall ensure that private economic organizations participate in standard-setting work in accordance with the law, and strengthen information disclosure and social supervision in standard-setting.
The State shall provide private economic organizations with services and convenience in terms of scientific research infrastructure, technology verification, standards and norms, quality certification, inspection and testing, intellectual property rights, demonstration applications, and other aspects.
Article 33 The State shall strengthen the protection of original innovations by private economic organizations and their operators. The protection of intellectual property rights for innovation achievements shall be strengthened, a punitive damages system for intellectual property infringement shall be implemented, and illegal acts such as infringement of trademark rights, patent rights, copyrights, trade secrets, and counterfeit confusion shall be investigated and dealt with in accordance with the law.
Regional and departmental collaboration for intellectual property protection shall be strengthened to provide private economic organizations with rapid collaborative protection of intellectual property rights, diverse dispute resolution, rights protection assistance, guidance on responding to overseas intellectual property disputes, and risk early warning services.
Article 36 Private economic organizations shall, in their production and business activities, comply with laws and regulations concerning labor employment, work safety, occupational health, social security, ecological environment, quality standards, intellectual property rights, network and data security, fiscal and taxation, finance, and other aspects; they shall not seek illegitimate interests through bribery, fraud, or other means, nor shall they disrupt market and financial order, damage the ecological environment, harm the legitimate rights and interests of workers, or compromise social public interests.
State organs shall supervise and manage the production and business activities of private economic organizations in accordance with the law.
USPTO Accelerates Patent Issuance Timeline—Key Impacts for Patent Applicants and Holders
Effective May 13, 2025, the United States Patent and Trademark Office (USPTO) will implement a significant change to its patent issuance process, substantially reducing the time between issue notification and patent issuance. According to the USPTO notice, the target time to issuance will be approximately two weeks from the notice of issuance, down from the current average of three weeks. This change is part of the USPTO’s broader modernization efforts, including the adoption of electronic patent grants just over two years ago.
Key Impacts for Patent Applicants and Holders
1. Earlier Patent Issuance and Market Entry
The expedited timeline means that patentees will receive their official patent grant sooner, enabling earlier protection of their inventions. This acceleration provides earlier enforceable rights and protection for patented inventions, which can be critical for business planning, investment, and competitive positioning.
2. Adjustments to Filing Strategies for Continuing Applications
Applicants intending to file continuing applications (such as continuation, divisional, or continuation-in-part applications) must be aware that the shortened window between issue notification and issuance requires prompt filing of any continuing application. Particularly, applicants should begin consideration of whether to file a continuing application upon receipt of the Notice of Allowance rather than waiting until closer to issuance.
Moreover, the USPTO recent implemented a Continuing Application Fee (CAF) for continuing applications filed more than six years after their earliest benefit date. Thus, the practice of speculative continuing application filings may be cost prohibitive for older patent families, further reinforcing the need for earlier consideration of a continuation filing.
3. Impacts on Quick Path Information Disclosure Statements (IDS) Practice
The Quick Path IDS (QPIDS) program allows for submission of prior art references after payment of the issue fee without requiring that prosecution be reopened in certain circumstances. Each QPIDS filing does, however, require submission of a Petition to Withdraw from Issue After Payment of the Issue Fee. According to the MPEP, “[w]hile a petition to withdraw an application from issue may be granted as late as one day prior to the patent issue date, it may not be possible to avoid publication and dissemination when the petition is granted within 3 weeks of the issue date.” (emphasis added). Thus, the window to file a QPIDS request is substantially narrowed by the expedited issuance, and a QPIDS request may not be acted on if submitted after the issue notification is received.
To ensure consideration of all known prior art, Applicants should conduct a final review for any outstanding prior art or IDS needs before paying the issue fee. If new information arises after issue fee payment, immediate action is required, but there is no assurance that the QPIDS process will be successful in preventing issuance. Based on the relevance of the prior art, a continuing application may be warranted to ensure patentability over any late-discovered prior art.
Action Items for Patent Applicants and Holders
Begin review of patent applications and consider whether to file a continuing application upon receipt of the Notice of Allowance and well before paying the issue fee.
Monitor issue notifications closely and track all issue dates if a continuing application is to be filed. If necessary, consider filing a continuing application with only one claim to meet the copendency requirement and file a preliminary amendment with the full claim set thereafter.
Ensure all prior art, especially that from co-pending foreign applications, is filed before payment of the issue fee.
Generative AI Training May Not Qualify for the Fair Use Defense
Last week, the Copyright Office released the third and final part of its report exploring copyright-related issues posed by artificial intelligence (AI). Unlike the first two parts, the third was released as a “pre-publication” version. It was published less than a day after Dr. Carla Hayden, the Librarian of Congress, was fired by President Trump and a day before Shira Perlmutter, the Register of Copyrights, was fired by President Trump. Building off its earlier parts, the latest publication focuses on how copyright law and the fair use defense should be applied to companies that use copyrighted works to train AI models.
The report concluded that companies presumptively infringe the copyright protections of others when they copy materials to use in training data. Additionally, the report concluded that the numerical parameters of the model can also be infringing when it can reproduce the copyrighted work as a memorized example.
However, the fair use defense permits copying another’s work. Many uses of copyrighted works by an AI model are likely transformative. However, the Office concluded that commercializing copyrighted works in training data to compete with the original works is unlikely to fit the fair use exception. AI models rapidly create new works that imitate a creator’s style. The Office concluded that this market dilution weighs against the fair use argument for generative AI companies.
Recognizing that the copyrighted data is needed in the training data, the report concluded by exploring different licensing frameworks that companies can use to acquire the data. The report does not recommend that the government intervene to establish a licensing regime right away, but that the market should continue to develop.
It is unclear if the Trump administration will rescind the report or issue a final report with changes. However, companies developing AI tools should likely consider the report regardless of the administration’s actions.
China’s National Intellectual Property Administration Releases Guidelines for the Construction and Operation of Patent Pools
On May 13, 2025, China’s National Intellectual Property Administration (CNIPA) in conjunction with the Ministry of Science and Technology, the Ministry of Industry and Information Technology, the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration for Market Regulation, and the Chinese Academy of Science released the Guidelines for the Construction and Operation of Patent Pools (专利池建设运行工作指引).
A translation follows. The original text can be found here (Chinese only).
Chapter 1 General Provisions
Article 1 These Guidelines are formulated to guide and strengthen the high-quality construction of patent pools, guide and support the scientific establishment, rational layout, standardized management and efficient operation of patent pools, better operate the role of patent pools, promote the transformation and application of patents, promote fair and orderly competition in the industry, and accelerate the cultivation and development of new quality productivity.Article 2 Patent pool refers to a patent application model in which two or more patent holders entrust one of them or a third-party operation and management organization through an agreement to jointly operate the patents held in a certain technical field, and carry out cross-licensing, one-stop licensing and other businesses and related services.Article 3 Patent pools have the following main functions:(I) Integrate patent resources, reduce patent licensing transaction costs, and improve patent licensing and use efficiency.(II) Promote the industrialization and application of patent technology, expand the scale and benefits of patent industrialization, and accelerate the transformation of innovative achievements into real productivity.(III) Carry out diversified operation services, improve corporate patent compliance awareness and risk prevention level, and optimize the ecological environment for industrial innovation and development.Article 4 The construction and operation of patent pools shall follow the following principles:(I) Market-oriented principle. In accordance with the laws of the market economy, a business operation model that conforms to the characteristics of the industry and the needs of enterprises shall be established to ensure the market-oriented operation and sustainable development of the patent pool.(ii) The principle of interest balance. The legitimate rights and interests of patent licensors and licensees shall be protected, the balance between licensing rates and industrial profits shall be taken into account, and the due interest returns of various entities in the whole process from innovation investment to implementation of results shall be guaranteed.(iii) The principle of openness. All types of qualified domestic and foreign patent holders shall be supported to join the patent pool, participate in the operation of the patent pool and obtain due rights and interests, and encourage and support the market-oriented, standardized and international development of the patent pool.(iv) The principle of non-discrimination. The licensing business shall be carried out equally for the whole society to ensure that all patent users have equal opportunities and obtain licenses in accordance with fair, reasonable and non-discriminatory rules.Article 5 The CNNIPA shall, together with relevant departments, provide overall guidance and support for the construction and operation of patent pools. Local intellectual property management departments and relevant departments are encouraged to strengthen guidance, support and service guarantees for the construction of patent pools according to local conditions.
Chapter II Establishment of Patent Pool
Article 6 Patent pools are usually initiated and established by patent owners or patent operation management organizations with significant innovation advantages and greater industry influence in the industry, and patent owners in related fields are absorbed as members of the patent pool.Article 7 The main links of the establishment of patent pools include:(i) Clarify the basic positioning. The initiator shall determine the basic positioning of the patent pool, such as the expected functions, business forms, business models and development directions, based on the needs.(ii) Determine the patent pool operation management organization. The patent pool operation management organization shall have relevant professional capabilities such as patent resource integration, operation management, consultation and negotiation, and risk response, and shall be responsible for the operation and management of the patent pool under the entrustment of the patent owner.(iii) Formulate the charter. The initiator shall formulate the organizational charter based on the basic functional positioning of the patent pool, which mainly includes the purpose, criteria, rules of procedure, organizational structure, responsibilities and powers of the operation management organization, member joining and exit mechanism, member rights and obligations, business development model, risk prevention and dispute resolution mechanism, etc.(iv) Screening patents to be included in the pool.——Establish standards. The patent pool operation and management organization shall formulate fair and reasonable patent entry standards and clarify the evaluation and review mechanism for patents entering the pool.——Application for entry into the pool. The patent owner shall submit a patent entry application to the patent pool operation and management organization and provide relevant information. For utility model and design patents, a patent right evaluation report may be required.——Evaluation and review. The patent pool operation and management organization shall organize experts or entrust a third-party evaluation service organization to evaluate and review the patents applied for entry into the pool in accordance with the patent entry standards and determine the list of patents entering the pool.——Signing an agreement. The patent pool operation and management organization shall sign a patent entry agreement with the patent owner to agree on the list of patents entering the pool, the rights and obligations of both parties, the method of income distribution, the entry period, the exit mechanism, confidentiality requirements and dispute resolution.
Chapter III Operation and Management of Patent Pools
Article 8 Establish a reasonable licensing fee mechanism. Patent pool members mainly obtain income through the patent pool’s external one-stop licensing. The licensing fee rate is generally determined by the initiator or patent pool operation and management organization based on the number of patents, patent value, average profit margin of related industries, price of patent products, contribution of patents to product value, stage of technology development, industry acceptance, judicial judgment results and other factors. When the patent pool determines or adjusts the licensing fee rate, it can fully communicate and negotiate with potential licensees to balance the interests of the relevant parties.Article 9 Establish a fair income distribution mechanism. The patent pool operation and management organization may extract management fees from the operating income according to a certain proportion or charge service fees according to the agreed operating model, and determine the income distribution ratio of the patent pool members based on the patent pool entry agreement, combined with factors such as the number of licensed patents and patent contribution.Article 10 Establish a flexible and efficient service management model. The patent pool operation and management organization may actively expand its operating business based on the needs of industrial development and the functional positioning of the patent pool, and provide value-added or public welfare services such as evaluation consultation, litigation response, negotiation, overseas risk analysis, and compliance investigation to patent pool members or other entities. Strengthen the internal management of the patent pool and establish a sound member communication and consultation mechanism.Article 11 Establish a moderately transparent information disclosure mechanism. Encourage patent pool operation and management institutions to appropriately disclose relevant information based on the functional positioning of patent pools, or provide necessary information based on the reasonable requirements of relevant parties. For patent pools of standard essential patents, encourage patent pool operation and management institutions to timely and fully disclose information such as claim comparison tables of patents in the pool and the results of necessity examination.
Chapter IV Safeguard Measures
Article 12 Support the formulation of relevant norms and standards for the construction and operation of patent pools. Encourage patent pools that are in line with the national industrial development orientation, have standardized and efficient construction and operation, and have a significant role in promoting industrial innovation and development to report relevant information to the CNIPA on a voluntary basis. Support the exploration of the construction of patent pool information resource centers to track and publish relevant information about patent pools.Article 13 Strengthen business training and personnel training. Encourage local government departments to organize and carry out relevant training on the construction and operation of patent pools in combination with the needs of industrial development. Strengthen the construction of professional personnel teams and encourage patent pool operation and management institutions to cultivate and introduce professional personnel with international vision and advanced management concepts. Promote the establishment of a patent pool operation and management expert team to strengthen the talent guarantee and professional support for the construction and operation of patent pools.Article 14 Strengthen publicity and exchanges. All departments and localities should timely summarize and publicize the progress, achievements and experience of the construction and operation of patent pools, positively guide and widely popularize the concept of patent pool operation, and promote the formation of a good atmosphere conducive to the high-quality construction and operation of patent pools. Support the development of domestic and foreign exchange activities, share and absorb the successful experience of the construction and operation of patent pools, continuously strengthen international consensus, and explore and promote the formation of fair, reasonable, open, inclusive, mutually beneficial and win-win international rules for the construction and operation of patent pools.
Chapter V Supplementary Provisions
Article 15 The construction and operation of patent pools shall strictly abide by national laws and regulations, and shall not violate the Anti-Monopoly Law of the People’s Republic of China, the Anti-Monopoly Guidelines of the Anti-Monopoly Commission of the State Council on the Field of Intellectual Property Rights, the Anti-Monopoly Guidelines for Standard Essential Patents, the Provisions on Prohibition of Abuse of Intellectual Property Rights to Exclude and Restrict Competition, and the Provisions on the Administration of Patents Involving National Standards (Interim) and other relevant regulations, and shall not hinder fair competition in the market and the healthy development of the industry. Patent pool operation management agencies are encouraged to report to antitrust law enforcement agencies in advance, actively accept supervision and guidance, and ensure the compliance construction and operation of patent pools.Article 16 Encourage and support relevant departments, local governments, social groups, industry organizations, etc. to refer to and use these guidelines in the construction and operation of patent pools.
False Connection: Post-Application Date Evidence Can Be Considered
The US Court of Appeals for the Federal Circuit affirmed the Trademark Trial & Appeal Board’s refusal to register a mark on the grounds of false connection, explaining that the false connection inquiry can include evidence that arises during the examination after filing. In re Thomas D. Foster, APC, Case No. 23-1527 (Fed. Cir. May 7, 2025) (Moore, Prost, Stoll, JJ.)
Under § 2(a) of the Lanham Act (15 U.S.C. § 1052(a)), a trademark can be refused registration if it “falsely suggests a connection with persons, living or dead, institutions, beliefs, or national symbols.” To determine if a mark falsely suggests a connection, the Board can use a non-exhaustive four-part test that inquires whether:
The mark is the same, or a close approximation of, the name previously used by another person or institution.
The mark points uniquely or unmistakably to that person or institution.
That person or institution is not connected with the activities performed by the applicant under the mark.
The fame or reputation of the person or institution is such that, when the mark is used with the applicant’s goods or services, a connection with the person or institution would be presumed.
Here, Thomas D. Foster filed a trademark application for the mark US SPACE FORCE on March 19, 2018, six days after President Trump proposed forming a “Space Force.” Registration was refused on the grounds of a false suggestion of a connection with the US government. The Board affirmed and denied reconsideration. Foster appealed.
Foster argued that the Board improperly considered evidence that post-dated the application’s filing date and that substantial evidence did not support the Board’s findings under the first two elements of the four-part false connections test.
Regarding Foster’s first argument, the Federal Circuit found it permissible to use facts that arise after an application’s filing date and during the examination process to assess a false connection. The Court reasoned that this was consistent with other § 2 inquiries that consider evidence that arises through the date the Board issues its decision, such as likelihood of confusion (§ 2(d)) and distinctiveness (§ 2(f)). Therefore, the Court found that the Board did not err in its consideration of evidence that arose during the examination process.
The Federal Circuit disagreed with Foster’s second argument, finding that substantial evidence supported the Board’s findings under the false connection test. Under the first part of the test, the Board found that US SPACE FORCE was the same as, or a close approximation of, a name or identity of the United States. The Court concluded that this was supported by substantial evidence, specifically pre-application evidence (President Trump’s announcement and national news articles discussing the formation of the US Space Force) and post-application evidence (the official establishment of the US Space Force and national news articles). Under the second part of the test, the Board had found that US SPACE FORCE pointed uniquely and unmistakably to the United States. The Board again relied on news coverage and the fact that the mark and the name of the military branch were identical. The Court determined this was sufficient for substantial evidence and therefore affirmed the refusal of registration.
Practice Note: To determine whether a false suggestion of a connection exists, the Board may consider evidence that arises during the examination process. The Board will typically use either the four-part false connections test or consider the factors identified by the Federal Circuit in Univ. of Notre Dame Du Lac v. J.C. Gourmet Food Imps. (1983) or In re E.I. du Pont de Nemours & Co. (1973).
No Article III Appellate Standing Under the Sun
The US Court of Appeals for the Federal Circuit dismissed Incyte’s appeal of a Patent Trial & Appeal Board decision, holding that a disappointed validity challenger lacked appellate standing to challenge the Board’s final written decision. Incyte Corp. v. Sun Pharmaceuticals Industries, Inc., Case No. 23-1300 (Fed. Cir. May 7, 2025) (Moore, C.J.; Hughes, Cunningham, JJ.) (Hughes, J., concurring).
After the Board upheld the validity of challenged claims of a patent owned by Sun Pharmaceuticals in a post-grant review proceeding (PGR), Incyte appealed and sought a determination that the claims were unpatentable. Sun Pharmaceuticals challenged whether Incyte had Article III standing to support an appeal to the Federal Circuit based on a lack of injury-in-fact.
The Federal Circuit focused on its jurisdiction to hear the appeal as a threshold issue and whether Incyte, as the party seeking review, met its burden of establishing Article III standing at the time it filed its appeal.
As context, the Federal Circuit noted that standing requires a concrete, actual, or imminent injury that is traceable to the challenged conduct and likely to be redressed by the court’s decision. Incyte asserted it had standing to appeal based on potential infringement liability and under the competitor standing doctrine.
Addressing potential infringement liability, the Federal Circuit noted Incyte’s reliance on a supplemental declaration from an in-house business development leader submitted during briefing. Noting that Incyte’s Article III standing was “not self-evident,” the Court ruled that Incyte should have presented evidence prior to its reply brief and declined to consider the supplemental evidence. Incyte was on notice that its appellate standing was challenged, and that evidence of its standing should have been submitted at the earliest possible opportunity. Finding no good cause for the delay, the Court declined to exercise its discretion to consider Incyte’s supplemental evidence and, based only on earlier submitted evidence, found that Incyte failed to establish that it had “concrete plans for future activity” that would create a “substantial risk of future infringement.”
In its discussion of the competitor standing doctrine, which allows competitors to challenge patents that could harm their competitive position, the Federal Circuit found the doctrine inapplicable because Incyte failed to show it would suffer economic harm from the Board’s ruling on patent validity. Rather, the Board’s ruling upholding specific patent claims “does not, by the operation of ordinary economic forces, naturally harm a [challenger] just because it is a competitor in the same market as the beneficiary of the government action (the patentee).” As the Court explained, “it is not enough to show a benefit to a competitor to establish injury in fact; the party seeking to establish standing must show a concrete injury to itself.”
The Federal Circuit held that because Incyte had not shown it was currently engaged in or had non-speculative plans to engage in conduct covered by the challenged patent, it was unable to establish injury-in-fact.
In his concurrence, Judge Hughes stated that while Incyte lacked Article III standing, he believed that Federal Circuit precedent was “overly rigid” and “narrow.” It is Judge Hughes’ belief that:
In the context of appeals from administrative post-grant proceedings generally, and the facts of this case[,] present a circumstance in which I believe our precedent dictates an outcome inconsistent with the spirit of Article III standing. Our precedent on whether parties have standing to appeal to this court from an adverse administrative post-grant review is too restrictive and creates a special standing rule for patent cases. The existence of this narrower special rule is even more pronounced in the pharmaceutical space, where our precedent leads to the (in my opinion, improper) conclusion of no standing for the inventor of the underlying compound.
Clickbait: Actual Scope (Not Intended Scope) Determines Broadening Reissue Analysis
The US Court of Appeals for the Federal Circuit affirmed the Patent Trial & Appeal Board’s rejection of a proposed reissue claim for being broader than the original claim, denying the inventors’ argument that the analysis should focus on the intended scope of the original claim rather than the actual scope. In re Kostić, Case No. 23-1437 (Fed. Cir. May 6, 2025) (Stoll, Clevenger, Cunningham, JJ.)
Miodrag Kostić and Guy Vandevelde are the owners and listed inventors of a patent directed to “method[s] implemented on an online network connecting websites to computers of respective users for buying and selling of click-through traffic.” Click-through links are typically seen on an internet search engine or other website inviting the user to visit another page, often to direct sales. Typical prior art transactions would require an advertiser to pay the search engine (or other seller) an upfront fee in addition to a fee per click, not knowing in advance what volume or responsiveness the link will generate. The patent at issue discloses a method where the advertiser and seller first conduct a trial of click-through traffic to get more information before the bidding and sale process. The specification also discloses a “direct sale process” permitting a seller to bypass the trial and instead post its website parameters and price/click requirement so advertisers can start the sale process immediately.
The independent claim recites a “method of implementing on an online network connecting websites to computers of respective users for buying and selling of click-through traffic from a first exchange partner’s web site.” The claim requires “conducting a pre-bidding trial of click-through traffic” and “conducting a bidding process after the trial period is concluded.” A dependent claim further requires “wherein the intermediary web site enables interested exchange partners to conduct a direct exchange of click-through traffic without a trial process.”
The patent was issued in 2013, and the inventors filed for reissue in 2019. The reissue application cited an error, stating that the “[d]ependent claim [] fails to include limitations of [the independent] claim,” where the dependent claim “expressly excludes the trial bidding process referred to in the method of [the independent] claim,” which would render it invalid under 35 U.S.C. § 112. To fix the error, the inventors attempted to rewrite the dependent claim as an independent claim that omitted a trial process.
The examiner issued a nonfinal Reissue Office Action rejecting the reissue application as a broadening reissue outside of the statutory two-year period. The examiner found that the original dependent claim is interpreted to require all steps of the independent claim, including the trial period, and further to require a direct sale without its own trial, beyond the trial claimed in the independent claim. The inventors attempted to rewrite the dependent claim as the method of independent claim with “and/or” language regarding the trial process versus direct to sale process. The amendment was rejected for the same reasons. The Board affirmed on appeal.
Whether amendments made during reissue enlarge the scope of the claim in violation of 35 U.S.C. § 251 is a matter of claim construction. The inventors argued that the proper inquiry was not whether the scope of the proposed reissue version of the dependent claim was broader than the scope of the original dependent claim but whether the scope of the proposed reissue claim was broader than the “intended scope” of original dependent claim.
The Federal Circuit rejected the inventors’ argument, finding that it contradicted the plain text of § 251(d), which prohibits reissue patents enlarging the scope of the claims, not reissue patents enlarging the intended scope of the claims. The Court further reasoned that “[l]ooking at the intended scope rather than the actual scope of the original claim would prejudice competitors who had reason to rely on the implied disclaimer involved in the terms of the original patent.” Finding that the text, history, and purpose of § 251 all counsel against reviewing the “intended scope” of claims on reissue, the Court affirmed the Board’s denial.
Breaking New Grounds to Limits of IPR Estoppel
In a matter of first impression, the US Court of Appeals for the Federal Circuit found that inter partes review (IPR) estoppel does not preclude a petitioner from relying on the same patents and printed publications as evidence in asserting a ground that could not have been raised during the IPR proceeding, such as that the claimed invention was known or used by others, on sale, or in public use. Ingenico Inc. v. IOENGINE, LLC, Case No. 23-1367 (Fed. Cir. May 7, 2025) (Dyk, Prost, Hughes, JJ.)
IOENGINE owns patents directed to a portable device, such as a USB thumb drive, that includes a processor that causes communications to be sent to a network server in response to user interaction with an interface on a terminal. Ingenico filed a declaratory judgment action against IOENGINE after one of Ingenico’s customers was sued for infringement based on Ingenico’s products. Ingenico filed IPR petitions challenging the asserted patents, which resulted in final written decisions that held most of the challenged claims unpatentable.
Back at the district court, IOENGINE proceeded with the remaining claims. At summary judgment, IOENGINE moved, under 35 U.S.C. § 315(e)(2), to preclude Ingenico from relying on “documentation related to DiskOnKey Upgrade software,” arguing that Ingenico reasonably could have been expected to raise that prior art during the IPR proceedings. The district court ruled that “Ingenico will be estopped from relying on those documents [to prove invalidity] except to the extent . . . that they form part of a substantively different combination of references that could not reasonably have been raised in the IPRs.”
At trial, Ingenico introduced evidence of a prior art USB device known as the DiskOnKey. The DiskOnKey device was offered with various software applications, including an application called Firmware Upgrader, and was equipped with capabilities described in a Software Development Kit (together, the DiskOnKey system). Ingenico argued that the DiskOnKey system invalidated the asserted claims as anticipated or obvious because it was either “on sale” or “in public use” under 35 U.S.C. § 102(b), or “known or used by others . . . before the date of the invention” under 35 U.S.C. § 102(a). The jury returned a verdict finding the patents were infringed but invalid as anticipated and obvious. Both parties appealed.
IOENGINE did not dispute the jury’s finding that the DiskOnKey system invalidated the claims-at-issue as anticipated or obvious if the DiskOnKey system was prior art, but instead argued that the jury’s finding that the Firmware Upgrader portion of the DiskOnKey system was either “on sale” or “in public use,” or “known or used by others . . . before the invention.”
The Federal Circuit found that the jury’s finding that the Firmware Upgrader was accessible to the public was supported by substantial evidence. Specifically, Ingenico had introduced a press release promoting the launch of the Firmware Upgrader and a website from which the Firmware Upgrader was available for download. IOENGINE argued that this evidence did not show actual use, but the Court rejected this argument, finding there was substantial evidence in the record from which the jury could have concluded that the DiskOnKey system, including the Firmware Upgrader, was in public use.
IOENGINE also asserted that the district court improperly allowed Ingenico to rely on prior art at trial, arguing that under 35 U.S.C. § 315(e)(2), Ingenico should have been estopped from presenting the Firmware Upgrader. IOENGINE asserted that IPR estoppel applied because the Firmware Upgrader was entirely cumulative and substantively identical to the Readme instructions and screenshots – which, according to IOENGINE, were printed publications that reasonably could have been raised during the IPR.
Under § 315(e)(2), a petitioner is estopped from asserting invalidity “on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” The Federal Circuit stated that whether Ingenico should be estopped depended on the proper interpretation of the term “ground” used in the statute. Analyzing the statutory language and legislative history surrounding the statute, the Court found that a “ground” is not the prior art asserted during an IPR but is instead the invalidity assertion on which the prior art is based.
The only invalidity challenges that a petitioner can make during an IPR proceeding are that the claims were patented or described in a printed publication, and this is the scope of estoppel. Thus, the Federal Circuit concluded that “IPR estoppel does not preclude a petitioner from relying on the same patents and printed publications as evidence in asserting a ground that could not be raised during the IPR, such as that the claimed invention was known or used by others, on sale, or in public use.”
Designated Informative: PTO Director Declines IPR Institution Following District Court § 101 Invalidation
The US Patent & Trademark Office (PTO) designated a recent Director Review decision as informative, signaling its significance for future proceedings. The decision emphasizes that a final district court ruling invalidating a patent weighs heavily against instituting inter partes review (IPR) under the Fintiv framework, reinforcing the agency’s stance on minimizing duplicative litigation. Hulu LLC v. Piranha Media Distribution LLC, IPR2024-01252; -01253 (PTAB Director Review Apr. 17, 2025) (Stewart, PTO Dir.)
Piranha requested Director Review of the Patent Trial & Appeal Board’s decision granting institution of two IPRs filed by Hulu. Piranha argued that the decision should be reversed and the IPRs denied institution, citing a district court final judgment invalidating the challenged claims under 35 U.S.C. § 101 issued before the institution decision was made. Hulu argued that Director Review was unwarranted.
In the district court litigation, Piranha asserted that Hulu infringed claims from two patents related to integration of advertising content into digital media streams. Hulu moved to dismiss the complaint, arguing that the asserted patents were ineligible for patenting under § 101. The district court determined that the asserted claims were directed to the abstract idea of “displaying an advertisement in exchange for access to copyrighted material, as well as the abstract idea of receiving, organizing, and displaying data,” and contained no inventive concept. The district court granted Hulu’s motion to dismiss and held the claims patent ineligible and therefore invalid under § 101.
The Director explained that since a district court had already ruled the patent claims invalid, launching separate IPRs to assess their patentability on other grounds was unnecessary. The Director noted that if the Federal Circuit overturned the district court’s decision, Hulu could still pursue its invalidity arguments during remand proceedings. Declining to institute review was the more efficient and practical path under the circumstances, the Director said.
While the Board applied the Fintiv framework in its institution decision, the Director observed that the framework does not align neatly with the facts of this case, where a final district court judgment under § 101 preceded the Board’s decision. The Director ultimately concluded that a second review proceeding was unwarranted given the claims’ current invalid status.
No Protectable Code: No Literal or Nonliteral Copying
The US Court of Appeals for the Eighth Circuit affirmed a district court’s ruling that a plaintiff failed to establish copyright protection for its software platforms, drawing a distinction between “literal” copying (direct duplication of source code) and “nonliteral” copying (reproduction of structure, sequence, or user interface). InfoDeli, LLC v. Western Robidoux, Inc., et al., Case No. 20-2146 (8th Cir. May 5, 2025) (Gruender, Kelly, Grasz, JJ.)
InfoDeli partnered with Western Robidoux, Inc. (WRI), a commercial printing and fulfillment firm co-owned by family members, in 2009 to form a joint venture. The agreement leveraged InfoDeli’s expertise in developing custom webstore platforms and WRI’s capacity for printing and fulfillment. Their collaboration served major clients such as Boehringer Ingelheim Vetmedica Inc. (BIVI) and CEVA Animal Health, LLC, both providers of animal health products. InfoDeli built webstores enabling the companies’ sales teams to order promotional materials, which WRI then fulfilled. InfoDeli developed the Vectra Rebate platform for CEVA, allowing marketing staff to issue customer coupons that were also fulfilled by WRI.
By early 2014, tensions emerged. Without informing InfoDeli, WRI hired a competitor, Engage Mobile Solutions, to replace InfoDeli’s platforms for CEVA and BIVI. Engage used open-source software, in contrast to InfoDeli’s proprietary systems. WRI also shared InfoDeli-developed content with Engage to aid the transition. Shortly thereafter, WRI abruptly terminated its joint venture with InfoDeli.
InfoDeli sued WRI, CEVA, BIVI, and Engage for copyright infringement, tortious interference, and violations of the Missouri Computer Tampering Act related to certain webstores. The defendants counterclaimed conversion and tortious interference. The district court ruled in favor of the defendants on the copyright claims and denied InfoDeli’s motion on the counterclaims. After a jury sided with the defendants, InfoDeli filed motions for judgment and a new trial, both of which were denied. InfoDeli appealed.
The Eighth Circuit found that InfoDeli failed to prove its platforms were protected by copyright. The Court distinguished between “literal” and “nonliteral” copying, explaining that literal copying referred to direct duplication of original source code while nonliteral copying involved reproducing the overall structure or user interface. The district court had already determined that the nonliteral elements of InfoDeli’s platforms were not copyrightable. On appeal, InfoDeli did not challenge this determination regarding the individual elements. Instead, InfoDeli argued that the platforms should be protected “as a whole,” claiming that the interrelationship of elements made them protectable. However, the Eighth Circuit found that InfoDeli did not explain how the elements’ arrangement exhibited the required creativity for copyright protection.
InfoDeli further argued that the district court erred in not considering the verbatim copying of its source code. However, since InfoDeli’s complaint only alleged infringement of nonliteral elements, the Eighth Circuit found that the district court properly focused on those claims.
InfoDeli also argued that the district court erred by relying on InfoDeli’s expert’s list of protectable elements for the BIVI platform. However, the Court rejected this claim, pointing to precedent holding that when a plaintiff identifies specific elements as protectable, it effectively concedes that the remaining elements are not.