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

Kodak’s recent bankruptcy filing raises a host of issues relating to intellectual property. Foremost among these is the need for any Kodak patent licensees to diligently monitor the on-going proceedings to ensure their rights are preserved in the thousands of patents in Kodak’s portfolio. Among these are some 1,150 digital imaging patents slated to be auctioned later this year.

U.S. bankruptcy laws provide the framework for dealing with patents owned by a debtor. In particular, section 365 of the Bankruptcy Code provides that Kodak, as the “debtor-in-possession,” has the right to assume or reject its “executory” contracts, contracts where the parties owe each other ongoing material obligations. Nearly all the patent licenses at issue likely will qualify as executory contracts. If Kodak rejects such an executory contract, the licensee may seek to collect damages for breach of contract, but any relief would be as an unsecured creditor, which typically is the lowest priority among other creditors.

A Gibbons-authored article on the intricacies of the issues recently was featured in The Business Advisor.

Ralph A. Dengler is Counsel to the Gibbons Intellectual Property Department.

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The Gibbons Apprenticeship Program has been featured in the first edition of Seton Hall Law At Work. This new series takes a look at innovative working arrangements between employers and graduates of the Seton Hall University School of Law.

This article focuses on the Gibbons Apprenticeship Program, a client-focused attorney recruitment and development platform that exposes recent law school graduates to the day-to-day responsibilities of law firm junior associates and trains them in a “real world” law firm environment.

Highlighted in this article is John J. Cahill, the firm’s first Intellectual Property apprentice, who has since been hired as an Associate at Gibbons. This fall, Gibbons hired its second Intellectual Property apprentice, Jillian A. Centanni.

Click here  to view the complete article.

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As anticipated, Eastman Kodak Co. filed a petition for Chapter 11 bankruptcy relief this morning in the United States Bankruptcy Court for the Southern District of New York. This development followed a recent flurry of patent infringement suits involving Kodak, and on the heels of Kodak’s unrequited efforts to license or sell off its substantial intellectual property (“IP”) portfolio.

Kodak recounted in its supporting affidavit its path of decline over recent years, citing, among other factors, liquidity challenges precipitated by difficulties collecting licensing fees from infringers of its intellectual property. The affidavit indicates that Kodak’s IP portfolio comprises nearly 9,000 U.S. patent and trademark registrations and applications, and over 13,000 foreign patents and trademarks registrations and applications. Thus, a critical component of its reorganization strategy is the sale of approximately 1,150 digital imaging patents. The patent portfolio has an estimated value of $2.2 to $2.6 billion, according to Kodak’s financing motion filed today. Kodak’s agreement with its lender, Citigroup, sets a June 30, 2012 deadline for Kodak to file a bidding procedures motion with the court with respect to the patent sale.

Between 2003 and 2010, Kodak generated approximately $450 million annually of licensing revenue from its digital-imaging patents. Last year, revenues shrank to $98 million. According to Kodak, the drop resulted largely from “infringers” employing a “strategy of delay in light of Kodak’s liquidity position.” Nevertheless, the digital-imaging portfolio is sure to generate significant interest. Readers should recall that last July, Nortel sold its patent portfolio in a bankruptcy auction. The sale of approximately 6,000 patents, including approximately 2,600 U.S. patents, yielded $4.5 billion in proceeds. According to one observer, Nortel represented the biggest skirmish to date in “a global commercial war being waged” wherein “patents have become the new lethal weaponry.”

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In 2006, the Chinese government pledged to foster future innovation in China by promoting science and technology development in key fields and enhancing innovation capacity. In the National Medium- and Long-Term Plan for Science and Technology Development (2006-2020) published by the State Council, China pledged that by 2020 research and development (“R&D”) investment will exceed 2.5% of China’s total GDP, and that progress of science and technology will contribute at least 60 percent to the country’s development.

As part of the effort in achieving these considerable goals, China has turned its focus towards increasing intellectual property filings with the State Intellectual Property Office (“SIPO”) for the Peoples Republic of China (“PRC”) and increasing intellectual property filings by Chinese businesses and inventors. While the quality of patents and the corresponding ability to enforce in China and abroad is a concern, in 2010, the SIPO for the PRC published the National Patent Development Strategy projecting that annual Chinese patent filings will reach 2 million by 2015. In support of this projection, SIPO published data indicates that growth in Chinese patent filings from 2005 to 2010 has been approximately 20%. Additionally, it was reported that the number of patent applications filed in China exceeded 300,000 in 2009.

As further evidence of China’s commitment in the international arena, the government now subsidizes Chinese corporation foreign and Patent Cooperation Treaty (“PCT”) filings. As a result, in 2010 and 2011 China was among the top four countries in PCT filings and in 2009 and 2010 two Chinese companies, ZTE Corporation and Huawei Technologies, were among the top five applicants using the PCT to obtain patent protection.

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We previously reviewed a copyright case involving Marvel and a comic book author’s relinquishment of any copyrights in the iconic characters Hulk, Spiderman, the X-Men and others because the works were determined to be “for hire.” Marvel Worldwide v. Kirby.

In an unrelated action, Judge Forrest of the Southern District of New York recently found in favor of Marvel, in Gary Friedrich Enters., LLC v. Marvel Enters., Inc. The court ruled that the plaintiff writer, Gary Friedrich, although he indisputably conceived of the character, “Ghost Rider,” and wrote the initial comic book, had ceded all rights in the character to Marvel.

The decision turned on two defining moments where the court found plaintiff conveyed his rights by contract: 1) at the time of plaintiff’s payment for the initial creation of the character in 1971 and 1972; and 2) in a separate contract signed by the parties in 1978, when plaintiff was a freelancer for Marvel.

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Yesterday, Governor Chris Christie signed into law the New Jersey Trade Secrets Act, A-921/S-2456 providing state law protection against trade secret misappropriation. Prior to enactment, New Jersey was one of only four states (including New York, Massachusetts and Texas) that had not adopted some form of the Uniform Trade Secrets Act.

We previously reported on this important New Jersey law development, which takes immediate effect. In sum, trade secrets can be used to protect a company’s know-how and other proprietary information. Companies should be guided by the NJTSA and ensure they have policies and practices in place to identify and safeguard such trade secrets. In addition, companies should continuously and actively monitor for evidence of possible trade secret misappropriation.

Todd M. Nosher is an Associate in the Gibbons Intellectual Property Department. Thomas J. Bean and Ralph A. Dengler, Counsel to the Gibbons Intellectual Property Department, co-authored this post.

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Coming off a year that included the Smith-Leahy “America Invents Act,” 2012 portends to have some significant developments in IP law.

Decisions for IP practitioners and industry to watch for include:

• the Supreme Court’s decision in Caraco Pharm. Labs. Ltd. v. Novo Nordisk A/S, regarding “use codes” and section viii carve-outs under the Hatch-Waxman Act;
• the Supreme Court’s decision in Mayo v. Prometheus, regarding patentable subject matter, post-Bilski; and
• the Federal Circuit’s upcoming en banc decisions in McKesson and Akamai, regarding joint infringement liability.

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