IP Law Alert

IP Law Alert

Practical Perspectives on Intellectual Property Legal Developments

Has Alice Really Changed The §101 Standard for Patentability of Business Method Claims?

Posted in Patent

In the latest Supreme Court case on patentability under §35 U.S.C. 101, Alice Corp. Pty v. CLS Bank Int’l. (“Alice”), the Court addressed business method patent issues, finding that the claims at issue for mitigating settlement risks were drawn to an abstract idea and their generic computer implementation failed to transform the abstract idea into patent-eligible subject matter. 134 S. Ct. 2347 (2014). In its opinion, the Court re-applied the two-step test set forth in Mayo Collaborative Serv. v. Prometheus Lab., Inc., 566 U.S. 1289 (2012):

(i) whether the claims are directed to patent-ineligible matter (e.g., abstract idea); and

(ii) whether the claims contain an inventive concept (e.g., “additional features to ensure that the claim is more than a drafting effort designed to monopolize the abstract idea.”).

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Service of Discovery Also Subject to New Deadline in Delaware Federal Court

Posted in Intellectual Property, Patent

We previously posted on the new deadline of 6:00 p.m. Eastern Time for all filings other than initial pleadings in the U.S. District Court for the District of Delaware. On October 15, 2014, Chief Judge Leonard Stark of the District of Delaware issued a letter addressing certain questions about the new rule. Chief Judge Stark reiterated that filings and service must be completed by 6:00 p.m. Eastern Time, and further indicated that this rule applies to all filing and service deadlines — including service of discovery materials — in every case in the District of Delaware, other than initial pleadings or those cases in Bankruptcy Court.

Chief Judge Stark explained clearly that “the 6:00 p.m. deadline applies to the exchange among parties of discovery requests and discovery responses, and it applies even if such requests or responses are made by hand delivery.” The rule cannot be altered by both parties’ consent in specific cases, but rather only by judicial relaxation of the rule, a “discretion [that] will be exercised rarely (most likely during trial).” A judge’s discretion to relax the deadline is even further limited to only the deadline for a “particular paper.” The Chief Judge noted that the local chapter of the Federal Bar Association was forming a new committee “to explore work-life balance issues” and suggested that the committee’s recommendations to the Court could result in further rule changes.

Gibbons will continue to monitor the local rules of the District of Delaware and other district courts.

Christopher Viceconte is a Director in the Gibbons Business & Commercial Litigation Department. Gianna Cricco-Lizza, an Associate in the Gibbons Business & Commercial Litigation Department, co-authored this post.

Put Away that Midnight Oil: New Rule in the District of Delaware

Posted in Intellectual Property, Patent

On October 2, 2014, Chief Judge Leonard Stark of the U.S. District Court for the District of Delaware announced a new deadline of 6:00 p.m. Eastern Time for all filings other than initial pleadings. As of October 16, 2014, “[a]side from initial pleadings, all electronic transmissions of documents (including, but not limited to, motions, briefs, appendices, and discovery responses) must be completed by 6:00 p.m. Eastern Time, in order to be considered timely filed and served that day.” Initial pleadings which are filed before midnight will still be considered timely.

Chief Judge Stark’s standing order modifies section (F) of the Court’s Revised Administrative Procedures Governing Filing and Service by Electronic Means and presents a significant change from the familiar practice of filing up until 11:59 p.m. The new rule applies to pending as well as future matters. The District of Delaware is second only to the Eastern District of Texas in the number of patent cases filed; both of which have nearly three times the number of patent cases as the third busiest district, the Central District of California. Accounting for over 40% of the patent cases filed in the United States, Texas and Delaware have become favorites of plaintiff-patent holders due to, among other things, the jurisdictions’ streamlined pre-trial processes and skilled judges. Given Delaware’s ranking as the second most active district court in number of filings (788 to date for 2014) and parties (2395 to date for 2014), the nationwide patent litigators who represent clients in the District of Delaware should ensure that their Delaware counsel are provided pleadings and discovery materials sufficiently in advance of the new deadline to ensure timely filing and service.

Gibbons will continue to monitor other district courts’ local rules to see if other courts adopt a similar rule.

Christopher Viceconte is a Director in the Gibbons Business & Commercial Litigation Department. Gianna Cricco-Lizza, an Associate in the Gibbons Business & Commercial Litigation Department, co-authored this post.

Second Circuit Issues Decision in Gucci America, Inc. et. al. v. Li et. al.

Posted in Privacy

On September 17, 2014, the Second Circuit issued its long awaited decision in Gucci America, Inc. et. al. v. Li et. al., 2014 WL 4629049 (Appeal Nos. 11-3934 & 12-4557). In its decision, the Court vacated and remanded an August 2011 order compelling nonparty Bank of China (BOC) to comply with a document subpoena and asset freeze provision in an injunction and a May 2012 order denying the bank’s motion to reconsider. The court also reversed a November 2012 decision holding the bank in contempt for non-compliance with the court’s August 2011 order and imposing civil penalties.

The asset freeze purported to enjoin banks with notice of the injunction from transferring money out of defendants’ bank accounts, while the subpoena sought records concerning the defendants and their accounts at the bank. BOC had sought reconsideration of the court’s August 2011 order, arguing that Chinese law prohibited commercial banks in China from freezing accounts or turning over account records pursuant to foreign court orders.

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Because I Said So: Courts’ Inherent Powers to Impose Fees for Bad Faith, Vexatious, or Wanton Litigation

Posted in Patent

Fee shifting has been a recent theme in patent litigation, with judges, legislators, and state attorney generals alike attempting to curb abuses of the patent system by creating new penalties. One judge has fallen back on the long-standing inherent powers of the judiciary to do so. This appealing new method of punishing patent litigation abusers comes from the U.S. District Court of the District of Delaware, one of the nation’s busiest patent dockets. Judge Richard G. Andrews’ well-reasoned opinion awards attorneys’ fees to the defendant on the basis of the court’s inherent powers to penalize those who act in “bad faith, vexatiously, wantonly, or for oppressive reasons.” Parallel Iron LLC v. NetApp Inc., No. 12-769, Slip Op. at 15 (D.Del. Sept. 12, 2004).

The court examined first the defendant’s request for fees under 35 U.S.C. § 285 of the Patent Act. Fees under this provision are awarded to a “prevailing party” in exceptional cases. Despite noting the Supreme Court’s recent redefinition of “exceptional” to merely a case that stands out from others, the court concentrated its analysis on the issue of prevailing party. The court noted that to be a prevailing party required some “material alteration of the legal relationship of the parties.” Id. at 5. Here, the case, along with several other cases involving the same patents, settled through a license granted to one party, that included a sublicense to the defendant. Id. at 3-4. The court noted that it had “made no finding regarding any substantive issue in the case,” having neither construed any terms of the patents, nor resolved either motions to dismiss or for summary judgment. Id. at 7. Accordingly, the court held that a bona fide licensing agreement achieved after litigation began without substantive favorable decision by the court would be insufficient to establish a defendant had been the prevailing party in the litigation pursuant to Section 285. Id. at 8.

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New Jersey Assembly Advances Bill To Address Bad-Faith Patent Infringement Actions

Posted in Patent

We have previously posted on proposed federal and state legislation aimed at addressing the toll of “patent troll” litigation by non-practicing entities on the U.S. economy. The Gibbons IP Law Alert has previously posted regarding such issues on August 26, 2014June 25, 2014March 10, 2014, and  December 13, 2013. Continuing the trend, the New Jersey General Assembly panel recently advanced bill A-2462  to address so called “Patent Troll” litigation. Consistent with other recent efforts at curbing patent litigation abuses, this bill attempts to identify wrongdoers and penalize specific abuses through monetary sanctions.

The proposed bill is aimed to “protect New Jersey businesses from abusive and bad faith assertions of patent infringement.” The bill specifically refers to Patent Assertion Entities (“PAEs”) and defines them as entities that “focus on aggressive litigation” employing tactics such as:

  1. suing thousands of companies at once;
  2. bringing suit without specific evidence of infringement;
  3. creating shell companies that make it difficult to identify the actual asserting entity; and
  4. bringing infringement allegations on technologies “not imagined” at the time the asserted patents were granted.

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A Contested Order By The Federal Circuit Denies Request For En Banc Review Of Its Decision That Patent Co-Owners May Not Be Involuntarily Joined In A Patent Dispute

Posted in Patent

Recently, the Federal Circuit issued an order denying a request for en banc review of a panel decision that held that a patent co-owner may not be involuntarily joined as a plaintiff in a patent dispute.

It is generally recognized that all owners to a patent in suit must be a party to the action, otherwise the suit is dismissed for lack of standing. The reason is that a defendant should not be subjected to multiple suits by different parties regarding the same patent. The Federal Circuit in STC.UNM v. Intel Corporation considered the situation in which Sandia Corp (a co-owner of the patent in suit) refused to join STC.UNM’s (the licensing arm of the University of New Mexico) patent infringement suit against Intel.

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Patent Assertion Entities Hit With Rule 11 Sanctions and Section 285 Attorneys’ Fees in Separate Delaware District Court Cases

Posted in Patent

Much attention has been said about the role 35, U.S.C. § 285 in combating vexatious litigations brought by patent assertion entities (“PAE”) following the Supreme Court’s decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014). Overshadowed by the Supreme Court’s ruling is the imposition of sanctions under Federal Rule of Civil Procedure 11. Not anymore. In a recent federal court case before Judge Richard G. Andrews, of the District of Delaware, the patent assertion entity (PAE) plaintiff was hit with R. 11 sanctions, resulting in the dismissal of all pending actions. This ruling illustrates that courts have multiple avenues to exercise their discretion on how to approach PAE actions, and offers insights as to how defendants can thwart PAE litigants that bring baseless patent infringement claims.

In Vehicle Operation Technologies LLC. v. American Honda Motor Co. Inc.,  et al., C.A. Nos. 13-537-RGA; 13-538-RGA; 13-539-RGA; 13-540-RGA; 13-541-RGA; 13-542-RGA; 13-712-RGA, Sept. 12, 2014, PAE Vehicle Operation Technologies (VOT) filed suit against Honda, BMW, Ford, GM, Nissan, Porsche, and Mitsubishi for allegedly infringing U.S. Patent No. 7,145,442 (“the ‘442 patent”), a patent regarding vehicle display systems. During the initial scheduling conference, BMW noted that a claim scope disavowal during the prosecution of the ‘442 patent that made the case ripe for immediate dismissal. BMW and other defendants subsequently sought and were granted leave to file R. 11 motions.

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Blurred Lines: Third Circuit’s Lanham Act Attorneys’ Fees Analysis Follows Recent Supreme Court Ruling in Patent Case

Posted in Patent, Trademark

The Court of Appeals for the Third Circuit recently decided that the U.S. Supreme Court’s April decision on attorneys’ fees in a patent case, Octane Fitness, LLC v. Icon Health & Fitness, Inc., should also be applied in trademark cases under the Lanham Act. See Fair Wind Sailing, Inc. v. Dempster, Nos. 13-3305 & 14-1572 (3d Cir. Sept. 4, 2014). Defendant Dempster had successfully moved to dismiss the action under Rule 12(b)(6) of the Federal Rules of Civil Procedure and was awarded its attorneys’ fees under § 35(a) of the Lanham Act and the Virgin Islands Code. Plaintiff Fair Wind Sailing appealed the fee award. The Third Circuit ultimately vacated the District Court’s fee award and remanded, instructing the court below to utilize an inquiry consistent with the Supreme Court’s decision in Octane Fitness.

By way of background, the Third Circuit had long applied a two-step inquiry with regards to attorneys’ fees under section 35(a), which statutorily permits attorneys’ fees in “exceptional” trademark cases, defined by case law to require both culpable conduct by the losing party and then “exceptional” circumstances. See Green v. Fornario, 486 F.3d 100, 103 (3d Cir. 2007). This inquiry was also consistent with the standard applied for attorneys’ fees in patent cases under precedent from the Court of Appeals for the Federal Circuit, which asked if the litigation was both “brought in subjective bad faith” and “objectively baseless.” See Brooks Furniture Mfg., Inc. v. Duailier Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005). As we have previously discussed, at the end of last year, the Federal Circuit backed away from this heightened standard of the exceptionality, indicating that district courts should examine the totality of the circumstances. However, the Supreme Court went a step further.

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Gibbons Hires Fourth Intellectual Property Apprentice

Posted in Intellectual Property

Ankit D. Patel has joined Gibbons P.C. as an Apprentice in the Intellectual Property Department. Mr. Patel is the fourth participant in the firm’s Apprenticeship Program, which Gibbons launched in 2010 to help maximize the value of its legal and client services while also providing a solid training ground for new attorneys. James J. Kang, the firm’s most recent Apprentice, was recently promoted to an Associate position in the Intellectual Property Department.

As the Intellectual Property Department Apprentice, Mr. Patel will be exposed to the day-to-day responsibilities of a law firm junior associate and will be trained in a “real world” law firm environment. He will also “shadow” attorneys throughout the IP Department, at the firm, in court, and, when appropriate, at client meetings. Clients are generally not billed for any Apprentice training time, which allows the firm to train new attorneys while providing value to clients.

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