IP Law Alert

IP Law Alert

Practical Perspectives on Intellectual Property Legal Developments

Target/Visa Settlement: A Potential Guide Post in Data Breach Litigation

Posted in Privacy

While the winter holidays are a time for spending and good cheer, the 2013 holiday season was one that continues to be costly for Target. On December 19, 2013, Target publicly announced that computer hackers had stolen data, including credit card payment information, from millions of Target shoppers. In January 2014, Gibbons P.C., in light of the Target data breach, discussed the ramifications of delay in notifying consumers, whether the delay was intentional or as a result of compliance with law enforcement requests. Banks and credit unions, which had issued credit cards affected by the breach, were forced to reimburse Target customers in some cases and reissue millions of cards, brought a class action lawsuit against Target.

It is estimated that Target has spent more than $300 million associated with the December 2013 data breach. These costs include the recent $67 million settlement reached with Visa, which was reported on August 18, 2015. The Target/Visa settlement follows a rejected proposed settlement between Target and MasterCard for a significantly less amount. The proposed Target/MasterCard settlement was rejected by the financial institutions who had issued MasterCard-branded cards to Target customers. It is being reported, however, that Visa card issuers have accepted the Target/Visa settlement. If the Target/Visa settlement includes the standard releases, these card issuers will likely drop out of the pending class action lawsuit against Target. Moreover, since the Visa card issuers are some of the largest financial institutions, such as Chase, Bank of America, Capital One, and Citibank, the Target/Visa settlement could also signal an end to the pending class action lawsuit brought by the financial institutions and the nearing of the end of a very costly 2013 holiday season for Target.

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Federal Circuit Expands Liability for Direct Infringement Under § 271(a)

Posted in Patent

Last week, en banc, the United States Court of Appeals for the Federal Circuit in Akamai Technologies Inc. v. Limelight Networks, Inc. “unanimously set forth the law of divided infringement under 35 U.S.C. § 271(a),” and expanded direct infringement liability to include instances where, “an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.”

As previously reported, the Federal Circuit took up the Akamai case en banc, and held that a party may be liable for induced infringement under §271(b), even though there was no one person or entity that performed all of the claimed elements and was liable for direct infringement, as required by the Federal Circuit’s holding in Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008). The Supreme Court overturned this holding and reaffirmed the traditional understanding that a party cannot be liable for inducing infringement under 35 U.S.C. §271(b) unless there is direct infringement under 35 U.S.C. §271(a). In response to Akamai’s complaint that overturning Federal Circuit’s en banc opinion would create a loophole that would enable infringing inducers to avoid liability by dividing infringing acts amongst multiple parties, the Supreme Court stated: “the possibility that the Federal Circuit erred by too narrowly circumscribing the scope of §271(a) is no reason for this Court to err a second time by misconstruing §271(b) to impose liability for inducing infringement where no infringement has occurred.” In closing, the Court advised that “the Federal Circuit will have the opportunity to revisit the §271(a) question if it so chooses.”

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District Courts Adopting Middle Ground in Fashioning Statutory Damages Awards in Trademark Counterfeiting Cases

Posted in Trademark, Trademark Counterfeiting

Two recent opinions, one from the Northern District of Illinois and another from the Southern District of New York, offer guidance to those electing statutory damages in lieu of actual damages and profits in trademark counterfeiting cases. The takeaway for litigators is that courts appear to be taking a middle ground in statutory damages awards, awarding $1 million per mark/good combination instead of the $2 million statutory maximum.

In Monster Energy Co. v. Meng Chun Jing, the plaintiff trademark owner and seller of popular energy drinks sued over four hundred defendants including individuals and business entities who were believed to be residents of the People’s Republic of China (PRC) or other foreign jurisdictions. (Second Am. Compl. 21). Many of these defendants operated AliExpress Internet Stores on aliexpress.com, id. 38-43, allegedly offering for sale and selling counterfeit Monster Energy products in the United States. The plaintiff moved for summary judgment on trademark infringement, counterfeiting and false designation of origin claims against individuals operating two online stores, seeking $2 million in statutory damages against each defendant (alleged to be counterfeiting one mark apiece). Under 15 U.S.C. § 1117(c)(2), a plaintiff may elect statutory damages of not more than $2 million per counterfeit mark per type of goods sold, offered for sale, or distributed if the court finds willful counterfeiting. The court granted the motions for summary judgment and entered a statutory damages award of $1,000,000 against each of the two defendants.

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Federal Circuit Directs Magistrate Judge to Decide Motion to Transfer After Long Delay and Substantive Rulings While Motion Was Pending

Posted in Patent

The Court of Appeals for the Federal Circuit recently granted yet another writ of mandamus, this time directing a magistrate judge in the Eastern District of Texas to stay proceedings and decide a motion to transfer that had been pending for over nine months. In re: Google, Inc., 2015-138 (Fed. Cir. July 16, 2015). This decision is a part of a continuing trend, since 2008, of the Federal Circuit taking issue with rulings from the Eastern District of Texas denying transfer motions in patent infringement actions or denying the stay of proceedings in favor of an action pending in another jurisdiction.

Google, Inc., brought the motion to transfer venue to the Northern District of California, three months after being sued by Brite Smart, Corp., in the Texas forum. The court required the parties to proceed with extensive discovery without deciding the transfer motion, including exchanging infringement and invalidity contentions, engaging in depositions, and even conducting a Markman hearing.

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CRISPR Technology: A First-To-Invent Dispute in a Now First Inventor to File Patent Regime

Posted in Patent

On March 16, 2013, with the enactment of certain provisions of the America Invents Act (AIA), the United States’ patent system moved from being a first to invent patent system (first-to-invent) to a first inventor to file patent system (first-to-file) and retired the use of interference proceedings to determine priority of invention. Prior to and after the initiation of first-to-file system, there has been much debate as to the virtues of both systems. One aspect of this debate was that inventors with less resources and universities benefited more from the first-to-invent patent system rather than the first-to-file where resources can impact the ability to file quickly. It was in this atmosphere and as forecasted, that there was a surge in pre-March 16 application by inventors who sought to have their application reviewed under the first-to-invent system.

Two pre-March 16 filings that have captured attention recently involves CRISPR/Cas9 technology and the recipients of the 2015 Breakthrough Prize in the life sciences category. This dispute may be one of the last high profile priority of invention disputes that will be resolved by an interference proceeding.

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Itsy Bitsy Brulotte Climbed Up The Supreme Court Steps and Was Upheld

Posted in Licensing

We previously reported on the potential impact that the Supreme Court’s decision in the case of Kimble v. Marvel Enterprises, Inc. may have on patent licensing terms. On June 22, 2015, the Supreme Court, basing its decision on stare decisis, upheld Brulotte which had barred royalty payments on post patent expiration activities. Kimble et al. v. Marvel Ent., LLC, 576 U.S. __ (2015). The Supreme Court, referencing the Brulotte court’s opinion, found that such post expiration royalty provisions “conflict with patent law’s policy of establishing a ‘post expiration . . . public domain’ in which every person can make free use of a formerly patented product” Kimble, 576 U.S. at _ (slip op., at 5) (quoting Brulotte v. Thys Co., 379 U.S. 29, 33 (1964). In upholding that ruling, the Supreme Court reasoned that “stare decisis carries enhanced force when a decision . . . interprets a statute. Then, unlike in a constitutional case, critics of our ruling can take their objections across the street, and Congress can correct any mistake its sees.” Id. at _ (slip op., at 8).

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Federal Circuit Panel Concludes That It Lacks Jurisdiction to Review PTAB Decision Terminating IPR Proceeding

Posted in E-Commerce, Patent, USPTO

Recently, the Federal Circuit held that it lacks jurisdiction to review non-final Patent Trial and Appeal Board (“PTAB”) decisions, such as decisions to vacate or terminate a post-grant proceeding.

In GEA Process Engineering, Inc. v. Steuben Foods, Inc., the Federal Circuit denied GEA’s petition for writ of mandamus directing the PTAB to withdraw an order in which it terminated GEA’s five pending IPR proceedings on the grounds that these IPRs should have never been instituted. The PTAB reasoned that GEA failed to identify all real-parties-in-interest and, thus, the petitions were incomplete.

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Federal Circuit Issues Contentious Order Not to Review En Banc PTAB’s Claim Construction Standard For IPR Proceedings

Posted in Patent

On Wednesday, July 8, 2015, the Federal Circuit in a contentious 6-5 vote denied en banc review of its first opinion in connection with PTAB decision in an IPR proceeding, In re Cuozzo Speed Technologies, LLC.

As previously discussed, Cuozzo appealed the PTAB’s invalidation of three claims of U.S. Patent No. 6,778,074 on the grounds that the PTAB in its IPR decision improperly applied the “broadest reasonable interpretation” standard on claim construction, a standard that is traditionally applied to patent prosecution. A 2-1 panel for the Federal Circuit affirmed the application of this standard in view of the fact that the USPTO has been using this standard for more than a century and the majority’s conclusion “that Congress implicitly adopted the broadest reasonable interpretation standard in enacting the AIA.” The court also found that this was further supported by the statute giving the PTO Director the ability to establish the standards for establishing and governing inter partes review.

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Federal Circuit Affirms PTAB in First-Instituted Covered Business Method Review (CBM) Proceeding

Posted in E-Commerce, Patent

On July 9, 2015, the Federal Circuit affirmed a final written decision made by the U.S. Patent & Trademark Office Patent Trial and Appeal Board (“PTAB”) in SAP America, Inc. v. Versata Development Group, Inc. (CBM2012-00001), the PTAB’s first instituted Covered Business Method Review (“CBM”) Proceeding under § 18 of the Leahy-Smith America Invents Act (“AIA”). As a basis for the affirmance, the court established several important guidelines concerning Federal Circuit review of CBM proceedings which are highlighted below.

SAP began this case on September 6, 2012 by petitioning the PTAB to institute a CBM proceeding to invalidate certain claims in U.S. Patent No. 6,553,350 (“the ‘350 patent”). The PTAB decided to institute the proceeding on January 9, 2013, , finding that the ‘350 patent qualified as a “covered business method patent” under § 18 of the AIA, that 35 U.S.C. § 101 eligibility was a permissible ground for challenging patent claims in a CBM proceeding, and that the challenged claims were more likely than not unpatentable under § 101. In its final written decision on June 11, 2013, the PTAB, confirmed that the challenged claims were ineligible under § 101. After a PTAB denial of its subsequent request for rehearing, Versata appealed the decision to the Federal Circuit.

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USPTO Introduces an Expedited Patent Appeal Pilot

Posted in Patent, USPTO

On June 15, 2015, the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office (“USPTO”) introduced a new pilot program, beginning on June 19, 2015, that will allow appellants with multiple ex parte appeals pending before the PTAB to obtain an expedited review of one appeal in return for withdrawing another appeal. The stated goals of this program are to allow appellants with multiple ex parte appeals pending to have greater control over the priority with which their appeals are decided and reduce the backlog of appeals before the PTAB.

Appellants wishing to participate in the pilot program must file a Petition to the Chief Judge under 37 C.F.R. § 41.3. Normal petition fees are waived. The appellant must certify that, as of June 19, 2015, docketing notices were issued for both the appeal to be expedited (made “special”) and the appeal to be withdrawn, and that the patent applications in both appeals are owned by the same party or name at least one inventor in common. Additionally, appellants must also agree to waive oral hearing for the expedited appeal. The PTAB goal is to decide the expedited appeal within six months after receiving appellant’s petition.

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