IP Law Alert : Intellectual Property Lawyers & Attorneys : Gibbons Law Firm : Copyrights, Patent Infringement, Unfair Competition

Among other changes, the America Invents Act (“AIA”) includes the new 35 U.S.C. § 299. This statute purports to reduce the ability of a patent owner to join multiple, unrelated defendants in a single action, a tactic often used by litigious non-practicing entities (“NPEs”), who press for nuisance value settlements. In addition, the AIA commissioned the Government Accounting Office (“GAO”) to study the consequences of NPEs, to include their costs, benefits and economic impact.

But why the need for all this? According to Boston University School of Law Working Paper No. 11-45, “The Private and Social Costs of Patent Trolls,” (Sep. 19, 2011), lawsuits by NPEs, sometimes referred to as “patent trolls,” cost businesses half a trillion dollars of lost wealth from 1990-2010, and averaged over $80 billion over the past four years. And, while use of this latter moniker might be considered derogatory, recently, in Highland Plastics, Inc. v. Sorensen Research and Development Trust, 11-cv-2246 (C.D.Ca. Aug. 17, 2011), the court denied a motion to strike the term “patent troll” from the complaint, stating that patent troll “is a term commonly used and understood in patent litigation and is not so pejorative as to make its use improper.” Id., Dn. 21 at 3.

Visceral reactions to litigious NPEs, under other names, are well-entrenched in patent law jurisprudence. For example, almost 70 years ago, Judge Learned Hand ruled that a patent was invalid and should not remain in the art as a “scarecrow.” Bresnick v. United States Vitamin Corp., 139 F.2d 239, 242 (2d Cir. 1943). Years later, in Colida v. Sanyo North America Corp., 2004 U.S. App. LEXIS 26723, *4 (Fed. Cir. Dec. 2, 2004) (unpublished), the Federal Circuit noted an alternative name for trolls, patent “predators.”

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The New Jersey Intellectual Property Law Association (“NJIPLA”) will be hosting its first annual "Electronics, Telecom and Software Patent Practice Update" on Wednesday, November 9, 2011, from 12:00-5:15 pm at the New Brunswick Hyatt.

This informative event is co-chaired by Robert E. Rudnick, a Director in the Gibbons Intellectual Property Department and Vice President of the NJIPLA, who will also be a panelist at the event speaking on the recently enacted Leahy-Smith America Invents Act and its impact on patent protection in the electrical arts.

The full agenda for the event may be viewed here. To register for this event, click here.

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Gibbons P.C. will once again sponsor lunch at the upcoming Rutgers University/Blanche and Irwin Lerner Center for Pharmaceutical Management Studies Program on Thursday, October 27, from 12:00 - 1:00 pm at Rutgers Business School - Newark.

Prior to the luncheon, from 10:30 am - 12:00 pm, Gibbons attorneys Charles A. Gaglia, Jr. and Sheila F. McShane will present, "Patents and Intellectual Property Rights," a discussion of recent legal developments and trends affecting the pharmaceutical industry.

The full agenda for this two-day program may be viewed here.

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Patent litigation has some eccentricities that, some say, require special attention in the court system. One historical effort to address this was the creation of the Federal Circuit in 1982 and the exclusive jurisdiction it possesses to hear patent litigation appeals from all district courts around the nation. This exclusive jurisdiction based on subject matter and not geographic location is fairly unique in the judicial system. Patent litigation often involves complex technical issues to determine patent invalidity and infringement, unique procedural devices (e.g. Markman hearings), and intricate legal issues with technical and economic underpinnings (inequitable conduct, price erosion, lost profits, etc.). For these reasons, patent litigants often prefer to have an experienced judge hear and manage the dispute so that the fairest outcome is had. To address and analyze these and other issues, on January 4, 2011, Congress created the “Patent Pilot Program.”

The Patent Pilot Program is a 10-year project designed to determine whether changes are needed in the way Courts resolve patent disputes due to the complexities, both technical and procedural, unique to patent related disputes. In the Patent Pilot Program, participating district courts will select a group of judges to hear patent cases. It is intended that these designated patent judges will hear the majority of the patent cases filed in their jurisdiction. When a patent case is initially filed in the participating district, it will be randomly assigned to all judges in the district, regardless of whether they have been specially designated to hear patent cases. If that judge was not specially designated as a patent judge, that judge can either accept or decline the patent case. If the case is declined, the case is then randomly assigned to one of the designated “patent” judges. One aim of the program is to specially train certain judges to hear and manage patent cases and to study the differences in reversal rates and disposition times between the “patent” and “non-patent” judges.

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On October 25, 2011, The Gibbons Institute of Law, Science & Technology and the New Jersey Intellectual Property Law Association are proud to present "The Ninth Annual Fall Lecture Series" featuring the Honorable Joel Pisano who will present his observations from the bench on two recent, much-awaited intellectual property law decisions: Therasense v. Becton Dickson and Microsoft v. i4i. In Therasense, the Federal Circuit finally resolved key inequitable conduct issues that had been in a state of vacillation for decades. In Microsoft, Justice Sotomayor presented the majority opinion on the standard of proof required for patent invalidity, a key consideration for all practitioners.

For additional information or to register, please click here.

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The Federal Circuit’s Myriad Genetics decision, Ass’n for Molecular Pathology v. U.S. Patent and Trademark Office, 99 U.S.P.Q. 2d 1938 (Fed. Cir. 2011), which invalidated most of the method claims in the patents at issue, brings to mind a concern about the value of method claims, particularly to the pharmaceutical industry.

The Myriad Genetics patents at issue included two types of method claims relating to human genetics: one involved determining whether a female patient had abnormal BRCA1/2 genes by comparison of BRCA1/2 gene and BRCA 1/2 RNA from the patient’s tumor sample to those from a non-tumor sample; the second was an activity screening method for anticancer drugs that compared the growth of a host cell transformed with a cancer-causing BRCA gene in the presence and absence, respectively, of the test compound.

The practice of these method claims abroad would not necessarily raise an infringement issue in the U.S. because neither type entails the importation into the U.S. of a product that would potentially infringe the Myriad Genetics composition claims or method claims. Rather, only data from the results of the method claims need be imported. The methods could be practiced in the absence of a claim to the BRCA genes themselves since the technology for isolating the genes, their sequences and the means of transforming host cells therewith are within the skill of the art.

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Earlier this week the Federal Circuit affirmed an International Trade Commission (“ITC”) decision by refusing to find a patent owner complainant’s litigation expenses satisfied the “domestic industry” requirement of 19 U.S.C § 337. The Court’s decision in John Mezzalingua Assocs. (d/b/a PPC, Inc.) v. International Trade Comm’n, 2010-1536 (Fed. Cir. October 4, 2011) is a blow to ITC complainants, in particular, non-practicing entities intent on relying solely on patent litigation expenses to establish the domestic industry requirement of § 337.

Patent owners are increasingly filing § 337 actions before the ITC seeking an “exclusion order” - an order that blocks infringing products from being imported to the United States. Section 337 is intended to protect domestic manufacturers by excluding importation of infringing products by foreign competitors. Although the ITC cannot award damages for a violation of § 337, an exclusion order is an effective tool for stopping the importation of infringing goods. Indeed, the threat of an exclusion order often provides patentees with a significant bargaining chip during negotiations involving patent disputes.

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On September 27, 2011, Chief Judge Randall Rader of the Federal Circuit announced that the Advisory Council of the Federal Circuit unanimously adopted a Model Order regarding e-discovery in patent cases. Its purpose is to serve as a “starting point” for district courts to streamline and reduce e-discovery costs, emphasizing email production limits.

E-mail discovery must be phased in after initial disclosures and production of basic documentation about patents, prior art, accused devices and financials have progressed. E-mail document requests must be propounded on specific issues; global requests will not cut it. Most importantly, e-mail discovery requests are required to be specifically limited as to custodians, search terms and timeframes, with only five custodians and five search terms per custodian per party permitted, absent a showing of distinct need. The Model Order mandates cost shifting for disproportionate electronic production requests, and also that inadvertent production of privileged documents does not constitute waiver.

The Model Order was motivated by cost concerns in patent litigations, based upon the finding that these types of cases “stood out for their high discovery expenses.” Thomas E. Willging et al., Discovery and Disclosure Practice, Problems, and Proposals for Change: A Case Based National Survey of Counsel in Closed Federal Civil Cases 38-39 (Fed. Judicial Ctr. 1997). Chief Judge Rader more expansively remarked that “the greatest weakness of the US court system is its expense,” and that the burden of extensive e-requests generally outweighs any benefit, noting that e-discovered documents rarely appear on trial exhibit lists and even more rarely are seen in appeals. All this is true.

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