Over thirty years ago, the USPTO awarded the first gene patent (US 4,447,538) and the Supreme Court held that biological inventions were subject to patent protection. Since then, tens of thousands of U.S. “gene” or DNA related patents have issued. However, there has been much uncertainty over the patentability of such inventions as of late.
We have previously reported on the circuitous voyage of Association for Molecular Pathology v. Myriad Genetics, et al. (“Myriad”) through the court system. On June 13, Myriad ran aground, with a unanimous Supreme Court ruling that human genes cannot be patented under §101 of the Patent Act, which sets forth the general provisions on patentability.
Justice Thomas, writing for the Court, rejected Myriad’s arguments that isolated genes should be found patentable, stating that Myriad “found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention.” Therefore, patent claims involving isolated DNA fail inquiry under §101.
Over thirty years ago, the USPTO awarded the first gene patent (US 4,447,538) and the Supreme Court held that biological inventions were subject to patent protection. Since then, tens of thousands of U.S. “gene” or DNA related patents have issued. However, there has been much uncertainty over the patentability of such inventions as of late.
Last month, we reported on seed giant, Monsanto’s Supreme Court victory involving the question of patent exhaustion with regard to its sale of seed incorporating its patented seed technologies. On Monday, June 10, Monsanto appeared to emerge victorious from another litigation related to its seed technology and business when the Federal Circuit affirmed a lower court ruling that a coalition of organic farmers and seed sellers had no standing to seek declaratory judgments of non-infringement and invalidity with respect to Monsanto’s patented seed technologies.
In March 2011, the Organic Seed Growers and Trade Association (“OSGATA”) and other organic farmers and seed sellers decided to take preemptive action against Monsanto, filing suit in district court, challenging Monsanto’s seed patents because they were concerned that Monsanto would be accusing them of patent infringement. OSGATA decided to file the declaratory judgment action because it was concerned that the seeds they used would be “contaminated” with Monsanto trait even though they had no desire or intention to use or sell seeds incorporating Monsanto’s patented seed technologies (“transgenic seeds”), nor did they approve of the use of glyphosate herbicide on their crops. In other words, even if their seeds were inadvertently contaminated with trace amounts of Monsanto’s transgenic seeds, these farmers and seed sellers would not be exploiting the “advantageous” traits of the seeds.
These plaintiffs requested a covenant not to sue from Monsanto, but Monsanto refused. Instead, Monsanto referred to the statement on its website, “[i]t has never been, nor will it be, Monsanto policy to exercise its patent rights where trace amounts of our patented traits are present in farmers’ fields as a result of inadvertent means.” Monsanto also offered assurances that it had no intention of asserting patent-infringement claims against OSGATA, and that fears of any such suit, or decisions not to grow certain crops (out of such fear) was unjustified.
We have recently posted on various developments relating to the surge of litigations involving non-practicing entities, or patent assertion entities, also called “patent trolls.” Last week, the Obama administration launched its latest attack on these litigious parties.
Last Tuesday, the President issued seven legislative recommendations and five executive orders aimed to reduce the number of patent troll cases being filed in federal court. Those recommendations and orders can be found at the White House’s website.
Reviewing these, it appears that the President’s actions will have nominal impact on the patent troll epidemic, but certain of his legislative recommendations -- which many practitioners have been advocating for years -- may help buck the trend. Though well-intentioned, the Executive Orders announced last week, including Patent Office training, education and outreach, will do little to address the economic incentives fundamental to the non-practicing entity model. But, legislative proposals aimed to strengthen § 285 of the Patent Act (regarding the award of attorney fees), if enacted, might make trolls think twice before filing lawsuits.
Last spring, we reported Twitter’s introduction of a novel employee patent assignment plan called the “Innovator’s Patent Agreement” (“IPA”). In short, the IPA is a patent assignment agreement, or transfer of patent ownership from an inventor/employee to a company, where the inventor retains control over how the patent is used.
Twitter’s IPA now is in play.
Last week, U.S. Patent No. 8,448,084 (“the ‘084 patent”) issued to inventor Loren Brichter (“Brichter”) and is assigned to Twitter. Twitter then announced it would apply the IPA for the first time. This means that Twitter will not assert the ‘084 patent against others unless acting defensively, or if Brichter gives the company permission to use the ‘084 patent offensively.
Time will tell if the IPA, which apparently has been adopted by a number of other technology companies, will have any impact on patent infringement litigation.
Somewhere, someone must have taken the famous cartoon of Elmer Fudd, in full hunting regalia, and changed the caption to read, “Shhhhhhhhhhh, I’m hunting Twolls.” (After securing the appropriate IP permissions, of course.)
This past fall, we posed the hypothetical question of whether it was open season for patent trolls, euphemistically referred to as non-practicing entities (“NPEs”) or patent assertion entities (“PAEs”), in the wake of the new 35 U.S.C. § 299.
Previously, we had reported that the “Saving High-Tech Innovators From Egregious Legal Disputes Act of 2012,” (or “Shield Act”) was introduced in the House of Representatives, to permit fee-shifting in patent litigations involving computer hardware and software. That legislation was reintroduced and is pending in committee. Other anti-troll legislation is pending as well.
IP practitioners should read and heed Judge Martini’s recent decision in Medidata Solutions, Inc. v. DATATRAK Int’l, Inc., 2-12-cv-04748 (D.N.J. May 13, 2013, Docket 33), which addresses considerations for declaratory judgment jurisdiction in a patent dispute.
The case involved two patents owned by DATATRAK, the “parent” ‘087 patent, and the “child” ‘294 patent, which issued from a continuation application.
In March 2011, DATATRAK sued Medidata in the Northern District of Ohio for patent infringement of the ‘087 patent. That case was stayed in December 2011 pending reexamination of the ‘087 patent. At the end of December 2011, and then again at the end of March 2012, DATATRAK made public statements indicating it would vigorously prosecute its claims against Medidata as soon as reexamination by the USPTO was complete.
This Spring has been fruitful for seed giant, Monsanto. We reported earlier that Monsanto and rival DuPont entered into technology licensing agreements, ending nearly four years of patent and antitrust litigation. On Monday, May 13, Monsanto’s cornucopia arrived, with the Supreme Court ruling unanimously in its favor.
This case revolved around the question of whether the doctrine of patent exhaustion allowed a farmer who bought patented seeds to, without permission, reproduce the seeds through planting and harvesting. The seeds in question were glyphosate herbicide-resistant soybean seeds, covered under two patents issued to Monsanto. The glyphosate resistance is an inheritable trait that is passed on from generation to generation. Monsanto sold these seeds under special licensing agreements that allowed end users to plant the seeds in one season. The end user was authorized to consume or sell the resulting crops, but under agreement, was prohibited from planting the seeds from this second generation. Subsequent plantings would require subsequent purchases of the seeds. Therefore, an end user, not complying with the terms of the licensing agreement, could, through planting and harvesting, generate an infinite number of herbicide resistant soybean plants (and seeds) from a single seed. This would effectively end run a patent holder’s exclusionary rights to the invention.
Petitioner Vernon Bowman, an Indiana farmer, purchased the patented seeds each year for his first crop of planting seasons. However, for his late-season plantings starting in 1999, Bowman purchased seeds, normally intended for livestock feed or human consumption, from a grain elevator. Due to the widespread use of the Monsanto-patented seeds, it was reasonable to anticipate that some of the seeds purchased from the grain elevator would also have the patented herbicide-resistance. These late-season plantings were treated with glyphosate herbicide, and seeds from the surviving plants (presumably with the patented herbicide-resistance) were saved for future plantings. This process was repeated for a total of eight generations of soybean crops.
We previously reported on the interplay between the Judicial Panel on Multi-District Litigation (“MDL”) under 28 U.S.C. § 1407(a) and the joinder rules under 35 USC § 299 of the America Invents Act (“AIA”).
In Unified Messaging Solutions, LLC v. United Online, Inc., et. al., 1-13-cv-00343 (N.D. Il. May 3, 2013) Judge Lefkow recently denied defendants’ motion to sever plaintiff’s infringement claims against them from pretrial consolidation in an MDL case, and rejected their argument that § 299 had been violated.
The Court held, inter alia, that Section 299’s prohibition on joinder did not “obviate a transferee court’s discretionary ability to order pretrial consolidation in multidistrict litigation. . . . The coordination that [defendants] advocate would thwart the court’s ability to manage the present litigation by transforming each case into an individual action circumventing the uniform rulings and judicial efficiency that the [MDL] intended . . . .” The Court also found that its order of pretrial consolidation did not implicate Section 299’s prohibition on consolidation of trials because “‘Section 1407 applies to pretrial proceedings’ while ‘Section 299 itself is silent as to the conduct of pretrial proceedings, nor does it mention Section 1407.’” (citing In re Bear Creek Tech., Inc., Patent Litig., 858 F. Supp. 2d 1375, 1377 (J.P.M.L. 2012). And, because the consolidated actions will ultimately be remanded to the trial courts from which they originated after the pretrial proceedings, the Court rejected movant’s argument.
Accordingly, practitioners can continue to expect consolidation of related litigations under 28 U.S.C. § 1407(a), where appropriate, despite the procedural transformations under the AIA.
Since March 16, 2013, the United States has been under a first-inventor to-file patent system. Although it has always been good scientific practice for inventors to keep and maintain laboratory notebooks, it was all the more important in a first-to-invent patent system. In light of the recent changes in U.S. patent law, will keeping and maintaining a laboratory notebook have any importance for patent applications filed under the new system?
Previously, if there was a dispute as to which independent party was first-to-invent, laboratory notebook records, among other materials, were routinely accepted in interference proceedings (priority proceedings before the patent office) as evidence of conception, reduction to practice, and diligence. However, under the current system, an independent inventor who fails to file first has little recourse.
As such, are laboratory notebooks still relevant at all, in terms of U.S. patent law? Certainly. Although interference proceedings are no longer available, inventors (petitioners) may request a derivation proceeding with the USPTO. These are available in the limited circumstances where it can be proved that the first-to-file party derived the invention from the true inventor and did so without authorization. It is the petitioner’s burden to show, with substantial evidence and at least one affidavit, that communication of the invention to the alleged deriver, and an unauthorized filing of a patent application occurred. A properly maintained laboratory notebook, as well as other means, documenting such communications would be helpful in providing much of the substantial evidence required.
A recent non-published case from the District Court of New Jersey serves as a reminder that navigating the damages phase of patent infringement is just as important as proving liability.
In Unicom Monitoring, LLC v. Cencom, Inc., Judge Cooper court denied the patent owner damages despite the fact that it succeeded in proving infringement. The patent at issue covered a device for rerouting alarm reports through a telephone line. Defendant Cencom was found to infringe claim 1 of the patent. Before the trial on Unicom’s damages, Cencom moved for summary judgment to dismiss Unicom’s damages claim because it failed to present expert evidence. Cencom also moved for summary judgment on injunctive relief because Unicom failed to establish its burden under the factors articulated by the Supreme Court in eBay Inc. v. MercExchange, LLC. Cencom argued that the only proof Unicom provided supporting Unicom’s reasonable royalty position was attorney argument, Cencom’s sales records, and statements from Unicom’s owners. The Court held that while expert testimony is not required to prove reasonable royalties, it agreed with Cencom that Unicom failed to establish competent proof to support its claim.
A factfinder cannot be asked to speculate from numbers unsupported by law and divorced from expert guidance but rather the factfinder needs either clear guidance from an expert about how to apply complex calculations or simple factual proofs about what this patentee has previously accepted in factually analogous licensing situations.Continue Reading...
On April 12, United States District Judge Ellis of the Eastern District of Virginia excluded the testimony of patentee Suffolk’s damages expert directed to a reasonable royalty based on the Nash Bargaining Solution, a kind of negotiation model. Suffolk’s expert used the Nash Bargaining Solution to determine that damages should be based on a 50/50 split of incremental profits. The Court struck this analysis, finding that the 50/50 split was analogous to the 25% rule previously rejected by the Federal Circuit in Uniloc v. Microsoft. (See infra).
As a matter of law, a patent owner is entitled to no less than a reasonable royalty for the use made of the invention by the infringer. The amount of the reasonable royalty is determined based on a hypothetical negotiation between a willing licensor and a willing licensee at the time that infringement began. Prior to 2011, one traditional method for determining a reasonable royalty was the 25% rule, which operated under the presumption that the licensee was entitled to 25% of the infringer’s gross profits on the accused device or process. This number would then be adjusted up or down based on the 15 factor test set forth in Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970). In the past, such method may have been relied upon by an expert facing a situation where the patent owner had not licensed the patent in suit and there were no known license agreements covering the relevant technology of that patent.
Despite its long-standing use, the Federal Circuit in Uniloc v. Microsoft, 632 F.3d 1292 (Fed. Cir. 2011) struck down this approach -- holding that “the 25 percent rule of thumb is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation..., because it fails to tie a reasonable royalty base to the facts of the case at issue.” Id. at 1315.
Gibbons Directors Robert Rudnick & Thomas Bean to Serve on Panel for Upcoming Gibbons Institute of Law, Science & Technology Event
Robert E. Rudnick and Thomas J. Bean, Directors in the Gibbons Intellectual Property Department, will serve as panelists at the upcoming Gibbons Institute of Law, Science & Technology event, "USTPO Patent Post-Issuance Proceedings Under the American Invents Act -- a New Frontier" on April 23.
Mr. Rudnick and Mr. Bean, along with Kenneth Corsello of IBM and other industry and academic leaders, will address post-grant proceedings under the American Invents Act (AIA), from both the patent owner's and challenger's perspectives, as well as discovery and other new rules of practice before the Patent Trial and Appeal Board (PTAB). CLE credits for New Jersey and New York will be offered.
For additional information or to register, please click here or contact Teresa Rizzo at email@example.com.
In Uniloc USA, Inc. v. Rackspace Hosting, Inc., Eastern District of Texas Chief District Judge Leonard Davis granted Rackspace’s motion to dismiss Uniloc’s complaint under Fed. R. Civ. P. 12(b)(6) for failure to allege infringement of a patentable claim under 35 U.S.C. § 101. This ruling is notable for several reasons: the Court granted an early motion to dismiss for the defendant in a historically pro-patentee jurisdiction (E.D. Texas), and the early dismissal resulted from the court finding the patent invalid under 35 U.S.C. § 101.
Uniloc brought suit against Rackspace for infringement of claim 1 of U.S. Patent No. 5,892,697 (the “’697 Patent”), which is directed to a method for processing floating-point numbers. Floating-point numbers, which are often used in software, “have at least three fields: (i) a sign to indicate positive or negative; (ii) an exponent; and (iii) a mantissa, which is the body of the number.” Uniloc, Dkt. No. 38 at 1. Computation of floating-point numbers was standardized in Institute of Electrical and Electronics Engineers (“IEEE”) Standard 754 prior to invention of the ’697 Patent. The ’697 Patent, however, purports to disclose a method which increases computational efficiencies when compared to the IEEE Standard 754.
In finding claim 1 invalid under 35 U.S.C. § 101, the Court first analyzed the claim under the Federal Circuit’s machine-or-transformation test, which the Supreme Court has deemed “a useful and important clue” but “not the sole test” for determining patent eligibility. Bilski v. Kappos, 130 S. Ct. 3218, 3225-27 (2010). In applying the machine-or-transformation test, the Court noted that the steps of claim 1 do not recite a machine, and the mere manipulation of data in claim 1 does not satisfy the transformation prong. Uniloc, Dkt. No. 38 at 5.
An End to the Seed War: Monsanto and DuPont Call Off Their Patent and Antitrust Lawsuits as a Decision in Bowman v. Monsanto is Pending
On March 25, seed giants DuPont and Monsanto entered into technology licensing agreements that ended their ongoing patent and antitrust lawsuits. According to the terms of the agreement, DuPont will pay at least $1.75 billion in licensing and royalty fees to Monsanto from 2014 to 2023. These payments include fixed royalty payments from 2014 to 2017, totaling $802 million, and per-unit based royalty payments from 2019 to 2023, subject to annual minimums, totaling $950 million. DuPont and Monsanto also will dismiss their respective patent and antitrust lawsuits, including the August 2012 damage award of $1 billion against DuPont that have been pending since 2009. Further details on these agreements can be found in DuPont and Monsanto’s joint March 26 press release and DuPont’s March 26 Form 8-K.
Through these agreements, DuPont will have broad access to Monsanto’s Genuity® Roundup Ready 2 Yield® and Genuity® Roundup Ready 2 Xtend™ patented seed technologies. Monsanto, in turn, will have access to several of DuPont’s crop-disease resistance and corn defoliation patented technologies.
This truce is likely to help DuPont and Monsanto, both market giants, to remain dominant in seed markets. Collectively, DuPont’s Pioneer seed unit and Monsanto generated sales in excess of $20 billion in 2012.
Patent and Copyright First-Sale and International Exhaustion Standards to Remain in Conflict ... For Now!
On the heels of its March 19, 2013, decision in Kirtsaeng v. John Wiley & Sons, Inc., where the Supreme Court held that international exhaustion , i.e., an ex-U.S. first-sale rule applies to copyrights, the Court has surprisingly denied Ninestar Technology Co. Ltd.’s (“Ninestar”) petition for certiorari to consider whether international exhaustion applies to patents.
In our previous report on the Kirtsaeng decision, we discussed the key points of the Court’s holding. It would seem reasonable to assume that the application of the ex-US first-sale rule should apply similarly to both copyrights and patents. However, a key distinction is that the first-sale rule in copyright law has a statutory basis under the Copyright Act (17 U.S.C. §109), whereas the first-sale rule in patent law is grounded in common law. Interestingly, Justice Breyer, delivering the majority opinion in Kirtsaeng, wrote, “[t]he common law doctrine makes no geographical distinctions . . . .” This appears to conflict with recent Federal Circuit holdings involving the first-sale rule in patent law, such as Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d 1094 (Fed. Cir. 2001) and Fuji Photo Film Co. v Jazz Photo Corp., 394 F.3d 1368 (Fed. Cir. 2005).
In the present case, Petitioner Ninestar carried out the practice of purchasing used Epson inkjet cartridges outside of the U.S., refilling the cartridges, and then importing the refilled cartridges for sale in the U.S. The International Trade Commission (“ITC”) ruled that Ninestar’s refilled cartridges violated Epson’s U.S. patents and issued general exclusion, limited exclusion, and cease and desist orders, prohibiting Ninestar from importing and selling the cartridges in the U.S. Ninestar continued its practice, and the ITC subsequently levied civil penalties against Ninestar in the amount of $11,110,000. Ninestar appealed the ITC ruling to the Federal Circuit, arguing that the first-sale doctrine extinguished Epson’s U.S. patent rights. The Federal Circuit affirmed the ITC’s ruling, applying the Jazz Photo standard that ex-US sales or manufacturing activity does not exhaust U.S. patents.
We have reported extensively on the pending Intellectual Property Exchange International (“IPXI”), the world’s first proposed exchange for licensing intellectual property.
In an email blast sent Wednesday morning, Ian McClure, the Director at IPXI, indicated that the Department of Justice (“DOJ”) concluded an eight-month business review of IPXI and issued a Business Review Letter (“BRL”) that highlighted IPXI's benefits and efficiencies. Importantly, according to IPXI, the DoJ declined to take any enforcement position against the IPXI at this time, as it did not know if IPXI’s activities would raise competitive concerns after operating. The BRL noted several benefits to the IPXI model, including increased licensing efficiency, sublicense transferability and greater transparency.
IPXI apparently requested this review as an essential step prior to launching the new exchange. The email also indicated that the IPXI now is poised to announce shortly the official launch of the marketing period for its first offerings.
Gibbons will stay tuned about this exciting development ...
Jillian A. Centanni is an Associate in the Gibbons Intellectual Property Department.
Parties to patent infringement actions heavily rely on experts to explain their “case.” The finder of fact, whether judge or jury, often views them as detached guides who truly understand the often esoteric subject technology, or other issues, given the expert’s credentials. Patent issues such as infringement, claim construction, validity, enforceability and damages, which are critical to a case, may rise or fall on these experts. Accordingly, and despite their “expert” status, there is no shortage of considerations surrounding them.
Sometimes, a party's expert just does not work out, and a substitute (possibly late in a case), may become an issue. Replacing or substituting new experts is not guaranteed: courts apply different standards to assess these situations, resulting in a variety of results.
Even if the original experts remain, practitioners must carefully work with them to ensure all necessary information is provided, while preventing the exposure of privileged or otherwise immunized communications. Recent jurisprudence likely will require the production of all communications, information or documents relied on or considered by the experts, although proving either or both might be contentious.
Vetting an expert early and diligently can avoid the problems arising with a substitute expert. The full article on this subject explores in detail recent case law and considerations for IP practitioners.
Andrew P. MacArthur is an Associate in the Gibbons Intellectual Property Department.
We reported last week on the discovery limitations under United States Patent and Trademark Office (“PTO”) guidelines as they pertain to inter partes review (“IPR”) proceedings. On Wednesday, in Abbott Labs. v. Cordis Corp., the Federal Circuit ruled that discovery is not allowed in inter partes re-examinations.
The case stemmed from Abbott’s motion to quash two subpoenas duces tecum issued by Cordis which sought documents for use in a pending IPR re-examination. Id. at 2. In the underlying action, Cordis sued Abbott in the District Court for the District of New Jersey for infringement of two of its patents directed to drug-eluting stents. Id. at 3. The PTO agreed to inter partes re-examination of the patents and by office action, the examiners found both patents obvious. Id. at 3-4. Cordis requested that subpoenas be issued ordering Abbott to produce documents for use in the pending re-examinations. Id. at 4. In particular, Cordis asserted that it believed these documents would help establish evidence copying of and other secondary considerations towards a finding of non-obviousness. Id. Cordis relied on 35 U.S.C. § 24 as its basis for issuance of these subpoenas. Id. at 2. Section 24 states, in relevant part, “the provisions of the Federal Rules of Civil Procedure relating to the attendance of witnesses and to the production of documents and things shall apply to contested cases in the Patent and Trademark Office.” 35 U.S.C. § 24. The District Court for the Eastern District of Virginia had granted the subpoenas in the pending PTO re-examinations, however, in separate action before the PTO, Cordis’ petitions were denied. Abbott, at 4-5.
On appeal, the Federal Circuit recognized that the AIA replaced inter partes re-examinations with inter partes review proceedings (IPR). Id. at 15. While the Court noted, and, as previously reported, IPR proceedings expressly permit depositions, it also recognized that there is no such allowance in re-examinations. Id. The Court considered whether and which type of PTO cases permit such discovery. Id. at 2. Writing for the panel comprised of Chief Judge Rader and Circuit Judge Reyna, Circuit Judge Dyk found that on review of the express language of section 24, its relationship with adjacent provisions of title 35, its legislative history, and the interpretation given to it by other courts, section 24 only empowers a district court to issue a subpoena for use in a “contested case” and that inter partes re-examinations are not “contested cases” under section 24. Id. at 6, 18.
Accused patent infringers continue to breath easier as an ever more challenging path to treble damages persists. Recent decisions from the Court of Appeals for the Federal Circuit placed the objective prong of the In re Seagate test toward establishing willful infringement squarely with a judge. The impact on appeal has taken effect.
Under 35 U.S.C. § 271(a), direct patent infringement is a “strict liability” offense. In certain cases, 35 U.S.C. § 284 may provide “up to three times” actual damages. A determination that the accused infringer willfully infringed is used to determine whether enhanced damages are warranted. Finisar Corp. v. DirecTV Group, Inc. 523 F.3d 1323, 1339 (Fed. Cir. 2008).
Historically, willful infringement was a question of fact reserved for a fact finder to decide under a negligence type standard of reasonableness. Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed. Cir. 1983). If a potential infringer was on actual notice of another’s patent rights, the Federal Circuit imposed an affirmative duty of due care to obtain competent opinion from counsel before the potential infringer makes, uses, offers to sell, or sells the subject of the patented invention. Id. at 1390. A jury determined whether the alleged infringer’s defenses to patent infringement were “reasonable” and whereby the accused infringer’s failure to produce opinion resulted in an adverse inference. See Fromson v. Western Litho Plate & Supply Co., 853 F.2d 1568, 1572-1573 (Fed. Cir. 1988); see also Kloster Speedsteel AB v. Crucible, Inc., 793 F.2d 1565, 1579-80 (Fed. Cir. 1986).
Companies accused of patent infringement have a number of basic alternatives to contemplate: settle the matter; defend the suit; or consider resort to a post grant patent proceeding at the United States Patent and Trademark Office (USPTO). With an eye towards cost, risk and accurate resolution, inter partes review (IPR) proceedings are an attractive alternative to settling or defending.
IPR proceedings are adjudicated by a panel of three Administrative Patent Judges (APJs) at the Patent Trial and Appeal Board (PTAB), who determine the validity of the patent at issue. In addition to a law degree and extensive patent law experience, APJs have a technical degree and are generally assigned to a case based on knowledge in a particular area of science. Therefore, a case with any scientific or technical complexity might be suitable for resolution before a PTAB panel. According to some researchers, an IPR proceeding should prove to be about an order of magnitude more cost effective than standard District Court litigation. And, while the average time to trial in District Court is about 27 months, by statute, an IPR hearing will go to decision within one year.
In District Court litigation, a predominant cost and consumption of litigation resources stems from discovery, both fact and expert. Here is where IPR might be an attractive option.
On Wednesday, March 13, the New Jersey Intellectual Property Association will host the 2013 Patent Litigation Seminar at the Woodbridge Hilton in Iselin, NJ. This seminar will cover a range of important patent litigation topics such as:
- The Divided Court on Divided Infringement: What Comes Next?
- Willful Infringement: The Federal Circuit is Listening
- The Clear Line Blurs - Where is the "Safe Harbor" of 271(e)(1) after Classen v. GSK & Momenta v. Amphastar?
- Prometheus v. Mayo: Judicial Activism or Reality Check?
- Observations on the Gene Patenting Debate
Robert E. Rudnick, the President of the NJIPLA and a Director in the Gibbons Intellectual Property Department, will kick-off the seminar by introducing the program and its speakers. Various professionals within the intellectual property field will tap into their own experience, as well as recent case law, in order to provide insight and knowledge on this complex matter. For more information or to register, please click here.
We previously reported on the proposed Saving High-Tech Innovators from Egregious Legal Disputes Act of 2012 (“SHIELD Act of 2012”), introduced in the House of Representatives as HR 6245 last year. This Act, intended to discourage frivolous patent litigations by so-called non-practicing entities (“NPEs,” or sometimes referred to as “patent trolls”), proposed adding new section 35 U.S.C. § 285A to make fee-shifting available under certain circumstances in patent litigations involving computer hardware and software patents. More specifically, it provided that fees could be awarded to a prevailing defendant upon finding that the party alleging infringement did not have a “reasonable likelihood of succeeding.” As written, the SHIELD Act of 2012 failed to garner sufficient support and died in committee.
A modified version of the SHIELD Act was re-introduced in the House on February 27, 2013, as HR 845 (“SHIELD Act of 2013”), and is currently in committee. As modified, the SHIELD Act of 2013 applies to all patents rather than just to computer hardware and software patents, and eliminates as a requirement finding that the party alleging infringement had no reasonable likelihood of succeeding.
Under the modified Act, a prevailing party asserting patent invalidity or noninfringement may move to recover full litigation costs if the party alleging infringement is unable to prove that it meets at least one condition specified by 35 U.S.C. § 285A(d), or if the Court finds that exceptional circumstances would otherwise make such a recovery unjust. 35 U.S.C. § 285A (d) requires that the party alleging infringement be at least one of: (1) an original inventor, (2) a party commercially exploiting the patent, or (3) a university or technology transfer organization. If a motion is made before the entry of a final judgment and the party alleging infringement fails to prove that it meets at least one condition specified by section (d), that party will be required to post a bond in an amount determined by the Court.
PhatRat's Helmet Impact Technology Patent Suit in N.D. Illinois -- Considerations For Defendant Riddell
In PhatRat Technology, LLC v. Riddell, PhatRat, the purported exclusive licensee of U.S. Patent Nos. 7,386,401 and 7,693,668 relating to helmet impact reporting technology (“the PhatRat patents”), sued sporting goods manufacturer Riddell in the Northern District of Illinois for infringement of the PhatRat patents. The PhatRat patents issued in June 2008 and April 2010, respectively.
The complaint states that Riddell has been aware of patents owned by PhatRat since July 2006, based on a license offer sent to Riddell. That offer allegedly asked Riddell to consider two other patents, which PhatRat describes in the complaint as “related” to each of the PhatRat patents. Ostensibly, PhatRat included this knowledge element in the complaint in order to substantiate its willful infringement assertions against Riddell.
IP practitioners will appreciate that a number of considerations come into play for Riddell. Foremost, given the date of the ascribed knowledge of the PhatRat patents, the equitable defense of laches may apply. Laches requires proof that the patentee “unreasonably and inexcusably delayed filing suit,” and this delay “caused material prejudice” to the defendant. E.g., Integrated Cards, L.L.C. v. McKillip Indus., Inc., No. 06-2071, 2009 U.S. Dist. LEXIS 108780, at *15 (N.D. Ill. 2009). A presumption of laches applies when the patentee knew or should have known, including constructive knowledge, about the infringing activity for more than six years. Id. at *15-16.
Facebook, and its “Like” button, seem to be ubiquitous.
Well, last week, Facebook and social bookmarking service, AddThis, were sued in the Eastern District of Virginia for willful infringement of two patents, U.S. Patent Nos. 6,415,316 and 6,289,362. These patents were filed by a Norwegian computer programmer, Joannes Jozef Everardus Van Der Meer, in the late 1990s. The ’316 patent is directed to enabling a user to create a “personal diary,” which the complaint states “today would be called ‘social media.’” The ’362 patent discloses techniques for automatic transfer “of third-party content from a content-provider’s website to the user’s personal diary page.” The complaint alleges that Facebook’s “Like” button and other features infringe the ’316 and ’362 patents.
The inventor, Van Der Meer, sought to commercialize the inventions disclosed in the ’316 and ’362 patents on his website www.surfbook.com beginning in the early 2000’s. Van Der Meer, however, was unable to finish his work and passed away in 2004. His family, including his widow, enlisted the help of Rembrandt Social Media, LP to monetize Van Der Meer’s inventions by bringing this patent infringement suit against Facebook and AddThis. Rembrandt Social Media, LP is an affiliate of Rembrandt IP Management, LLC, a company that works with patent owners to enforce their rights. An additional twist on the facts asserted in the complaint is that around September 2008, the law firm that had represented Van Der Meer in prosecuting and commercializing the patents-in-suit took over prosecution of a patent application of Mark Zuckerberg -- Facebook’s founder. This same firm allegedly continues to represent Facebook in patent matters, but terminated its relationship with Van Der Meer’s commercialization arm in July 2012.
In one of the apparently few judicial decisions of its kind to date, the District of Delaware recently granted a motion to stay six patent infringement actions, pursuant to Section 18 of the America Invents Act (AIA), pending resolution of post-grant review proceedings in the U.S. Patent & Trademark Office (USPTO) to reexamine the validity of the so-called covered business method (CBM) patents at issue. As defined by AIA § 18(d)(1) and 37 C.F.R. § 42.301, a CBM is “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.”
In Market-Alerts Pty. Ltd. v. Bloomberg Fin., et al., C.A. No. 12-780, D.I. 25 (D. Del. Feb. 5, 2013), the Court considered a new “fourth factor” that has been added by Section 18 of the AIA to the traditional three-factor stay analysis that federal courts apply when considering reexaminations. The fourth factor adds as a consideration “whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.” In considering this additional factor, the Court acknowledged that its apparent intent was “to ensure that district courts would grant stays pending CBM review proceedings at a higher rate than they have allowed stays pending ex parte reexaminations.” In fact, the Court noted, citing the relevant legislative history, the fourth stay factor was intended to “place a very heavy thumb on the scale in favor of a stay being granted.”
Ultimately, the Court ordered the stay, after considering this fourth factor, as well as the three traditional factors considered for staying civil patent litigations brought under 35 U.S.C. § 281: 1) simplification of the issues; 2) the status of the litigation, particularly discovery; and 3) any claimed undue prejudice to the nonmoving party. Notably, as to the issue of prejudice (or lack thereof), the Court noted that plaintiff, Market-Alerts Pty. Ltd., was not a direct competitor of the defendants, but rather, was primarily in the business of patent infringement litigation. As such, the Court found there would be no undue prejudice to plaintiff in staying the actions, as there was no resultant risk to plaintiff as a non-practicing entity of a “loss of market share” or an “erosion of goodwill.”
Discovery of computer source code—either through production, inspection, or deposition—is one of the more contentious aspects of patent litigation. Indeed, “few tasks excite a defendant less . . . . Engineers and management howl at the notion of providing strangers, and especially a fierce competitor, access to the crown jewels. Counsel struggle to understand even exactly what code exists and exactly how it can be made available for reasonable inspection. All sorts of questions are immediately posed. . . . Put simply, source code production is disruptive, expensive, and fraught with monumental opportunities to screw up.” Apple Inc. v. Samsung Elecs. Co., No. 11-1846, 2012 U.S. Dist. LEXIS 62971, *10-11 (N.D. Cal. May 4, 2012) (ECF No. 898).
On one hand, the patentee wants the code to particularly show or confirm that a product or service infringes (or operates in a certain manner) rather than pointing to technical documents (e.g., manuals, diagrams, etc.) which, though helpful, may not have the same specificity that code provides. The converse could also be true where the code’s meaning is debatable, while the technical documents explain in detail the accused system. On the other hand, the accused infringer is deeply concerned that the source code—which is the foundation of its products and thus represents a significant monetary investment—may seep to a competitor and accordingly alter the competitive landscape.
Recent cases generally have ordered source code be made available because it is relevant given the broad discovery permitted in litigation and it could be secured through a protective order or confidentiality agreement. Yet, because source code is so sensitive, courts have sometimes denied production where the code is duplicative of other information produced or where the protective order is insufficient in light of the competition between parties.
The ongoing Kodak bankruptcy has engendered interest in understanding the role of IP-related licenses in bankruptcy.
The recent decision in In re Spansion also merits consideration. There, following settlement of Spansion’s 2008 ITC patent infringement action against Samsung and Apple, Spansion and Apple entered into a letter agreement in February 2009 whereby Spansion agreed to dismiss its ITC action against Apple and promised to refrain from filing future actions relating to its asserted patents. In turn, Apple agreed to not disbar Spansion as a supplier and to consider Spansion for future products. In March 2009, Spansion filed for Chapter 11 bankruptcy in the Bankruptcy Court for the District of Delaware.
Moving under 11 U.S.C. § 365(a), Spansion sought to reject the letter agreement as an “executory contract,” that is, an ongoing contract between a non-debtor (Apple) and a debtor (Spansion). Under § 365(a), a debtor or trustee can reject the contract upon a showing that the contract is burdensome, a relatively easy threshold in most cases. Rejection of an executory contract constitutes a breach (not a termination) of the contract, entitling the non-debtor counter-party to file a claim for damages arising from the rejection of the contract. However, contract rejection claims are unsecured; the non-debtor typically receives little to no payment on such claims.
We previously reported on the Federal Circuit’s twin en banc decisions in Akamai Techs., Inc. v. Limelight Networks, Inc. and McKesson Techs. Inc. v. Epic Sys. Corp., 692 F.3d 1301 (Fed. Cir. 2012). These rulings dramatically altered the enforceability of method patent claims by relaxing the rules for proving liability in induced infringement cases. As anticipated, both Epic Systems (“Epic”), and Limelight Networks (“Limelight”) filed separate petitions for certiorari.
In the en banc decisions, the Federal Circuit ruled that liability for induced infringement of method claims under 35 U.S.C. § 271(b) did not require a single actor to carry out all of the steps of the claimed method. Instead, the Court held that induced infringement could be found if the defendant knowingly induced one or more actors to collectively carry out all of the steps of the claimed method. The Federal Circuit’s holding, if it stands, could have widespread consequences, causing countless numbers of previously non-infringing parties to suddenly find themselves potentially liable for induced infringement.
Epic and Limelight, in their petitions, argue that the Federal Circuit’s holding conflicts with Supreme Court precedent regarding indirect infringement of patents, creates significant uncertainty, and oversteps the High Court’s authority by taking on a role better suited for Congress.
Gibbons will continue to track the status of these pending petitions, and will report any further developments as they arise.
James Kang is an Apprentice in the Gibbons Intellectual Property Department. Charles H. Chevalier, an Assocaite in the Gibbons Intellectual Property Department, co-authored this post.
IP practitioners are well aware of the new rules heralded by the America Invents Act (“AIA”). Section 10 of the AIA authorizes the Director of the USPTO to set or adjust any patent fees under Title 35 or Title 15 of the United States Code to “recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents… and trademarks…, including administrative costs of the Office with respect to such patent or trademark fees.” Beginning on March 19, 2013, new fees will be instated, as published Friday, January 18, 2013, in the Code of Federal Registration, 37 C.F.R. Parts 1, 41, and 42 (“CFR”).
The new fees are a significant increase over the fees originally signed in to law a little over a year ago, September 16, 2011. Of note, the new fee schedule includes:
- A 27% increase in total utility application filing fees ($1260 → $1600);
- A 29% increase in the first Request for Continued Examination ($930 → $1200);
- A new Second and Subsequent RCE fee that represents an 83% increase over the prior fee ($930 → $1700);
- A 122% increase in total Appeal Fees ($1260 → $2800);
- A 39% / 24% / 54% increase in the 3.5 / 7.5 / 11.5 year maintenance fees respectively ($1150 → $1600 / $2900 → $3600 / $4810 → $7400);
- A 68% increase in the independent claim in excess of 3 fee ($250 → $420) and 29% increase in the total claims in excess of 20 fee ($62 → 80); and
- A new correction of inventorship after the first Office action fee: $600.
Fortunately, many of the new fees are reduced from those published in the proposal last September. See 77 Fed. Reg. 55028, Sept. 6, 2012.Continue Reading...
The America Invents Act (AIA), created a transitional program for post-grant review of certain patents claiming subject matter referred to as covered business methods (“CBM”). As defined by AIA § 18(d)(1) and 37 C.F.R. § 42.301, a CBM is “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.” 37 C.F.R. § 42.301 does, however, provide an exception for technological inventions. Whether a claim recites a technical feature is determined based on whether the claim is “novel and unobvious over the prior art; and [whether the claim] solves a technical problem using a technical solution.” Id.
The CBM post-grant review is a trial proceeding conducted before the Patent Trial & Appeal Board (hereinafter “the Board”) over a period of roughly 18 months. The procedure for the trial is outlined in the Office Patent Trial Practice Guide, 77 Fed. Reg. 48756. As an overview, the trial proceeding is initiated upon filing of a petition for covered business method challenge, which identifies the claims challenged and the grounds and supporting evidence on a claim-by-claim basis. The patent owner may file a preliminary response within three months of the petition. Within three months of the patent owner’s preliminary response, the Board makes a determination whether to institute review of the patent claims. The Board’s decision is followed by a three-month discovery period for the patent owner culminating in the filing of the patent owner’s response and possibly a motion to amend the claims. A subsequent three-month discovery period concludes with the petitioner’s reply to the patent owner’s response and any opposition to the patent owner’s amendments. The patent owner is then allowed an additional one-month discovery period before filing a reply to the petitioner’s opposition to the amendments. Both parties are permitted to file motions to exclude opponent’s evidence as inadmissible. An oral hearing is then set on request, and the trial process culminates with the issuance of a written opinion within 12 months of the Board’s decision to institute review.
On January 9, the Board ordered the first such patentability trial under the AIA. Back in September, German software company SAP petitioned for a Covered Business Method Patent Challenge, challenging Versata Development Group's U.S. Patent No. 6,553,350 (“the ’350 patent”). Versata subsequently filed a patent owner preliminary response opposing the institution of review.
On Monday, the Supreme Court denied Rates Technology Inc.’s petition for writ of certiorari to hear whether a pre-litigation no-challenge provision is void under Lear, Inc. v. Adkins, 395 U.S. 653 (1969) as the Second Circuit found. We previously discussed the petition, the Second Circuit’s holding, and the no-challenge clause which prevents a licensee from challenging the validity of a patent.
The import of this denial is that at least in the Second Circuit’s jurisdiction, patentees will possibly negotiate through the courts rather than before litigation to improve the chances that a no-challenge clause will be found valid. That is, patentees may file first and ask questions later. Additionally, if patentees do in fact negotiate licenses before filing, they may seek higher royalties given the licensees will still have a valuable defense at its disposal or may seek other provisions to offset or slow down licensees from challenging the validity of a patent.
Andrew P. MacArthur is an Associate in the Gibbons Intellectual Property Department.
Deferring judgment until after he hears testimony prior to trial, U.S. District Judge Richard G. Andrews of the District of Delaware nonetheless indicated in a recent Memorandum Opinion that he was inclined to exclude plaintiff’s patent damages expert.
In AVM Techs., LLC v. Intel Corp., C.A. No. 10-610-RGA, plaintiff AVM sued Intel for patent infringement relating to U.S. Patent No. 5,859,547, which claims improved dynamic logic circuits used in microprocessors. Intel filed a Daubert motion seeking to exclude AVM’s damages expert, who had opined that AVM was entitled to reasonable royalty damages of over $150 - $300 million.
Judge Andrews agreed with Intel that AVM misapplied the entire market value (“EMV”) rule. This rule, an exception to the general rule that royalty damages must be based on the “smallest salable patent-practicing unit,” allows recovery of reasonable royalty damages based on the value of an entire apparatus containing a patented feature, where that “patented feature alone causes customers to purchase” the apparatus. Judge Andrews found that AVM’s expert erred by failing to account for the many other important features besides the dynamic logic circuits and failing then to show that this patented feature drives demand for the entire microprocessor. As IP practitioners are aware, the Federal Circuit has established tight boundaries on the EMV rule, as set forth in Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1320 (Fed. Cir. 2010) (EMV is inapplicable “for minor patent improvements”), and more recently in LaserDynamics v. Quanta Comp., Inc., 694 F.3d 51, 67 (Fed. Cir. 2012) (royalties must be based “not on the entire product, but instead on the smallest salable patent-practicing unit.”)
In an effort to “enhance the quality of software patents,” the United States Patent and Trademark Office (“PTO”) has announced a partnership with the software community.
The Software Partnership will provide roundtable discussions between stakeholders and the PTO to share ideas and insights on software-related patents. The PTO will sponsor two roundtable events, one in Silicon Valley on February 12, and the other in New York City on February 27. In addition, the PTO plans to make each roundtable event available via Web cast, and will post Web cast information on its Internet Web site before the events.
Public attendees will have the opportunity to provide individual input, although group consensus advice will not be sought. The PTO will accept written comments about software patents through March 15. Registration to attend the roundtables is required and due by February 4. Written comments received by the PTO and list of event participants and their affiliations will be posted on the PTO’s Internet Web site.
As most Americans focused on the Congressional efforts to avoid the “fiscal cliff,” IP practitioners noted that Congress passed Senate-amended versions of a bill to amend the Smith-Leahy America Invents Act (AIA) (H.R. 6621) and a bill to increase penalties under the Economic Espionage Act (EEA)(H.R. 6029) on to the White House on January 1, 2013, for signature by President Obama. It is expected that President Obama will sign both bills into law shortly.
H.R. 6621 - amendments to the AIA
As we earlier reported, Representative Lamar Smith introduced H.R. 6621 to Congress on November 30, 2012, proposing a number of technical corrections to the America Invents Act as enacted on January 5, 2011, including:
- eliminating a 9 month “dead zone” for inter partes review of patents granted for applications having an effective filing date before March 16, 2013;
- extending the time for filing the inventor’s oath or declaration until the payment of the issue fee;
- eliminating a prohibition on post grant review for reissue patents with narrowing amendments;
- clarifying the standards for initiating derivation proceedings;
- clarifying the calculation for patent term adjustment; and
- repealing 35 U.S.C. § 373, which restricted the types of inventors or applicants that could file PCT applications at the U.S. Patent Office.
Like 2012, 2013 promises to be a busy and significant year for intellectual property law.
The Supreme Court is slated to decide a number of IP cases, including: Already, LLC d/b/a Yums v. Nike, Inc. (addressing the significance of a limited covenant-not-to-sue on declaratory judgment jurisdiction); Bowman v. Monsanto (determining whether the Federal Circuit erred by not finding patent exhaustion in second generation seeds and created an exception to patent exhaustion for self-replicating technologies); Gunn v. Minton (pertaining to whether federal courts have exclusive “arising under” jurisdiction when legal malpractice claims stem from a patent case); Kirtsaeng v. John Wiley & Sons, Inc. (regarding international copyright exhaustion, i.e., how Section 602(a)(1) and Section 109(a) of the Copyright Act apply to a copy that was legally acquired abroad and then imported into the United States); Federal Trade Comm’n v. Watson Pharm., Inc. (involving whether Hatch-Waxman reverse payment settlement agreements are legal); and most recently, Ass’n for Molecular Pathology v. Myriad Genetics, et al. (regarding the patentability of human genes and whether the petitioners have standing to challenge those patents). A pending petition for certiorari is Retractable Techs., Inc. v. Becton, Dickinson and Co. (regarding whether a court may depart from the plain and ordinary meaning of a claim term and whether claim terms are subject to de novo review on appeal). Following the Federal Circuit’s en banc decisions in Akamai and McKesson regarding induced infringement by multiple actors, it is possible that a petition for certiorari will be filed shortly in these cases.
The New Year will also see implementation of the first-to-file rule beginning on March 16, 2013, just as other provisions of the America Invents Act become the norm, such as the amendments to 35 U.S.C. § 102 regarding the definition of prior art.
Last week, in Gilead Sciences, Inc. v. Natco Pharma Ltd., the District of New Jersey ruled on summary judgment that Gilead Sciences did not unlawfully extend its patent protection on oseltamivir (Tamiflu), a neuraminidase inhibitor used to treat the flu, covered by U.S. Patent No. 5,763,483 (“the ’483 patent”). Natco Pharma sought to invalidate the ‘483 patent for obviousness-type double patenting in its attempt to market a generic version of Tamiflu prior to the patent’s expiration. Natco had alleged, inter alia, that the claims of the ’483 patent were invalid due to obviousness-type double-patenting over Gilead’s later issued U.S. Patent No. 5,952,375 (“the ’375 patent”).
Obviousness-type double-patenting is a judicially created doctrine that seeks to preclude an inventor from unjustifiably extending patent protection beyond the statutory limit. The relevant inquiry requires a two-step analysis: first, as a matter of law, a court construes the claim in the earlier patent and the claim in the later patent and determines any differences; second, a court decides if the differences between the two claims demonstrate a patentable distinction. Slip op. at 5, citations omitted.
Here, District of New Jersey Judge Susan A. Wigenton was presented with the nuanced-question of whether a later-issued, but earlier-expiring patent can be used as a reference to invalidate an earlier-issued, later-expiring patent. Id. Gilead’s ‘375 patent issued in September 1999 and claimed priority over a family of patent applications dating as far back as February 1995. The ‘483 patent issued in June 1998 from an application filed in December 1995. Analagous questions were previously considered by the District of Delaware last year. See Abbott Labs. v. Lupin Ltd., 2011 WL 1897322 (D. Del. May 19, 2011); Brigham & Women’s Hosp. Inc. v. Teva Pharm. USA, Inc., 761 F. Supp. 2d 210 (D. Del. 2011). And, similar disputes can be expected going forward due to practical anomalies now arising from enactment of the Uruguay Round Agreements Act of 1994 (the “URAA”), which changed the length of patent terms in the United States from the former period of 17 years calculated from the date of patent grant, to 20 years from the earliest effective filing date (effective June 8, 1995)).
On November 30, 2012, Representative Lamar Smith introduced H.R. 6621 to “correct and improve certain provisions of the Leahy-Smith America Invents Act and title 35, United States Code.”
The act seeks to provide a number of technical corrections to a variety of issues, including:
- eliminating a 9 month dead zone for inter partes review allowing inter partes reviews to be filed at any time for applications with an effective filing date before March 16, 2013;
- extending the time for filing the inventor’s oath or declaration until the payment of the issue fee;
- eliminating the prohibition on post grant review for reissue patents with narrowing amendments;
- clarifying the standards for initiating derivation proceedings;
- clarifying the calculation for patent term adjustment; and
- repealing 35 USC 373, which restricted the types of inventors or applicants that could file PCT applications at the U.S. Patent Office.
One “Technical Correction” that has gained a lot of attention is the elimination of 35 USC 154(c)(1). For applicants that had an application filed prior to June 8, 1995, this section provided that the patent term would be the greater of 20 years from filing or 17 years from issuance. As a result, applications that were filed before this date and that issue today have a 17 year patent term going forward. The proposed amendment will eliminate this 17 year option if these patent applications are still pending one year after enactment of the act. The apparent objective is to eliminate the enforceable term of submarine patents.
Gibbons will continue to monitor any developments surrounding H.R. 6621 and provide additional information in future posts.
The battle between the pharmaceutical industry and the Federal Trade Commission (“FTC”) over so-called “pay-for-delay” settlements will finally be examined and decided by the Supreme Court. Last Friday, the Court granted certiorari in Federal Trade Commission v. Watson Pharmaceuticals, Inc., one of two cases with filed certiorari petitions involving Hatch Waxman reverse payment settlements. The petition in the other case, In re K-Dur Antitrust Litigation, is still pending.
In Federal Trade Commission v. Watson Pharmaceuticals, Inc., the Supreme Court will address: whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud (as the Eleventh Circuit held), or instead are presumptively anticompetitive and unlawful (as the Third Circuit held).
We previously posted on the numerous developments leading up to this grant of certiorari. This issue seemingly gained traction with the Court following the K-Dur decision, in which the Third Circuit held reverse payments to be presumptively anti-competitive under the “quick look rule of reason analysis.” K-Dur thus created a circuit split with the Eleventh, Second, and Federal Circuits, which previously found reverse payments lawful -- provided that such agreements stay within the scope of the exclusionary potential of the patent.
As anticipated, the Supreme Court has granted certiorari in Association for Molecular Pathology v. Myriad Genetics, et al. (the “Myriad” case) to review the Circuit Court’s opinion. The Court previously granted certiorari to vacate and remand the Federal Circuit’s Myriad decision for reconsideration in view of the Court’s 2012 decision in Mayo Collaborative Services, et al. v. Prometheus Laboratories, Inc. (“Mayo”). Notwithstanding Mayo, the Federal Circuit reached the same result on remand as its initial decision.
We previously posted on various developments underlying the “Myriad” case. Prior to the certiorari grant, the Federal Circuit had held that isolated DNA sequences from human BRCA 1 and BRCA 2 genes are patentable subject matter under 35 U. S. C. §101. Specifically, the Federal Circuit reasoned that DNA sequences in their isolated state “are not the same molecules as DNA as it exists in the body; human intervention in cleaving or synthesizing a portion of native chromosomal DNA imparts on that isolated DNA a distractive chemical identity from that possessed by native DNA.” This was enough for the Federal Circuit to find patentable subject matter.
Myriad is assured to be one of the most followed cases on the Court’s docket this year. Of particular interest will be the Court’s consideration and application of its Mayo decision to the issues it now faces in Myriad.
Gibbons will continue to track future developments in this case from party briefing -- and the inevitable scores of amicus briefs likely to be filed -- through oral argument and final decision.
We previously reported on a sua sponte Memorandum Order where Senior U.S. District Court Judge Milton I. Shadur of the Northern District of Illinois took counsel to task for the quality of its answer and counterclaim.
In New Paradigm Enterprises, Inc., d/b/a Q101 v. Merlin Media LLC, No. 12 C 5160, Slip Op. (N.D. Ill. Oct. 12, 2012), Judge Shadur again took issue with the pleadings. This time, the Court sua sponte found New Paradigm’s responses to Merlin Media’s answers, counterclaims and affirmative defenses to be “problematic.”
Specifically, the Court determined that New Paradigm’s proposed “answers” to Merlin’s “affirmative defenses” were an impermissible pleading under Fed. R. Civ. P. 7(a), which delineates what pleadings are allowed. Next, pursuant to Fed. R. Civ. B. 8(b)(5) (regarding “lacking knowledge or information”), the Court ruled that New Paradigm’s repeated denials, couched as “based upon a lack of information and belief” was improper, as were New Paradigm’s requests for “strict proof,” which he ordered removed. Finally, the Court ordered that New Paradigm’s “nonresponses” in its answer, 16 and 32, ran afoul of Fed. R. Civ. P. 8(b)(1)(B), which bars “waffling” in nonresponse to the opposing party’s allegations.
As practitioners learned, The United States Patent and Trademark Office (USPTO) has confirmed that Director David Kappos plans to retire from his post in January 2013 after nearly three and a half years of service to the USPTO.
Director Kappos was sworn in as Under Secretary of Commerce for Intellectual Property and Director of the USPTO on August 13, 2009. His tenure has been evidenced by major change both within the USPTO and through the enactment of the Leahy Smith America Invents Act (herein “AIA” or “Act”) impacting global patent practice.
Director Kappos has been chiefly responsible for stewarding the implementation of rules for patent examination and patent prosecution based on the new law. The Act has largely brought the U.S. in line with European and Asian countries awarding patents on a “first to file” instead of a “first to invent” basis. The AIA is arguably the single most dramatic shift in patent practice in fifty years, overshadowing the introduction of patent application publications in 2001, the introduction of provisional applications in 1994, and perhaps even the signing of the Patent Cooperation Treaty in 1968. Implementation efforts, particularly in light of the new first to file provisions, have been onerous. However, except for provisions of the AIA that do not go into effect until February of 2013, implementation is essentially complete.
In a recent decision, the Second Circuit crowned Lear, Inc. v. Adkins, 395 U.S. 653 (1969), but a petition to the Supreme Court has the possibility of dethroning this ruling and Lear.
In Lear, the Court held that a licensee could challenge the validity of patents despite an agreement to the contrary. Contract law, the Court noted, must yield to the public’s interest in ensuring monopolies do not go unchecked. Lear, Inc., 395 U.S. at 670-71. Since that decision, courts have taken varied approaches to Lear. See, e.g., Licensee Patent Validity Challenges Following MedImmune: Implications for Patent Licensing,. 3 HASTINGS SCI. & TECH. L.J. 243-439 (2011).
Recently in Rates Tech. Inc. v. Speakeasy, Inc., et al., the Second Circuit held that a provision to not challenge validity entered into prior to litigation, but after an accusation of infringement is void under Lear. Speakeasy (which at the time was owned by Best Buy) previously entered into a license agreement with Rates Technology Inc. (“RTI”) where it agreed not to challenge the validity of RTI’s patents. Three years later Speakeasy was sold to several entities. RTI thereafter alleged that these entities infringed its patents. As such they filed a declaratory judgment action of invalidity and non-infringement. In conjunction with that, RTI filed a complaint against Speakeasy (and others) alleging breach of contract by virtue of Speakeasy allegedly providing information to the several entities concerning the validity of RTI’s patents.
Earlier this month, the Federal Circuit in Belkin Int’l, Inc. v. Kappos, 2012-1090, published an important decision potentially limiting the scope of both ex-parte and inter-partes reexaminations.
Traditionally during reexamination, practitioners submit information disclosure statements (IDS) to the Patent Office disclosing patents and printed publications with the understanding that the examiner would consider those references in relation to the claims subject to reexam. Very often, if the references were properly submitted, the examiner would record that the references were considered, but would not apply the references against the claims. The benefit to the patent owner is that this could create a heavy burden for subsequent defendants to show that the claims were invalid in view of this prior art. Belkin v. Kappos may change this practice and understanding.
As background, Belkin filed a request for inter-partes reexamination on 32 claims of U.S. Patent No. 7,035,281 in view of four prior art references. The Director determined that the first three references did not raise a substantial new question of patentability, but the fourth did. After the examiner issued an action closing prosecution, Belkin appealed, challenging the examiner’s failure to make rejections over the three references that the Director determined did not raise a substantial new question of patentability. The Board of Appeals determined that it did not have jurisdiction to decide whether a substantial new question of patentability existed with respect to the three references and affirmed the examiner.
Defendants in reverse-payment actions pending in the Third Circuit (New Jersey, Pennsylvania, and Delaware) take note: in In re Effexor XR Antitrust Litigation the Honorable Joel A. Pisano, U.S.D.J., of the District of New Jersey has stayed several class-action litigations challenging the legality of certain reverse-payment settlement agreements between Wyeth and generic drug manufacturer Teva Pharmaceuticals, pursuant to which Wyeth allegedly paid Teva to delay its marketing of a generic counterpart to Wyeth’s Effexor XR drug.
Judge Pisano issued the stay in light of the pending petition for certiorari with respect to the Third Circuit’s decision in In re K-Dur Antitrust Litigation, which created a circuit split by holding that reverse-payment settlement agreements constitute “prima facie evidence of an unreasonable restraint of trade” in violation of federal antitrust laws, even if the settlement agreement does not exceed the scope of the patent in suit. Other circuits, in contrast, have upheld such reverse-payment agreements when the agreement corresponds to the scope of the patent. We previously reported here and here on the circuit split and the pending petitions for certiorari on this issue.
Judge Pisano’s stay is to continue until the K-Dur proceedings in the Supreme Court have been concluded. Thus, if the Supreme Court hears K-Dur on the merits, the length of the stay could be significant.
USPTO Extends Deadline for Commenting on First Inventor to File Provisions of the AIA to November 5, 2012
On July 26, 2012, the U.S. Patent & Trademark Office (USPTO) published a notice of proposed rulemaking and a notice of proposed examination guidelines to implement the first-inventor-to-file (FITF) provisions of the AIA effective March 16, 2013. The notices set an initial comment deadline date of October 5, 2012. In response to requests for additional time to submit comments, the USPTO recently extended the comment deadline date to November 5, 2012.
On October 5, two prominent intellectual property law associations joined the ranks of those providing comments in regard to the two USPTO notices: the American Intellectual Property Law Association (AIPLA) and the Intellectual Property Owners Association (IPO). The AIPLA is a national bar association with approximately 14,000 members who are primarily attorneys in private/corporate practice, government service and/or academia. The IPO is a trade association whose membership represent more than 200 companies and 12,000 individuals. We briefly highlight below two areas of comment in which the AIPLA and IPO positions are in substantial agreement.
With the breadth of change introduced by the FITF provisions, the USPTO faces a considerable challenge in implementing rules and examination guidelines that effectively implement these provisions without introducing uncertainty and unintended consequences. It will be interesting to see what effect the comment period has on the USPTO’s ability to identify and eliminate “minefields” in the proposed rules and examination guidelines. We will continue to monitor and report on their actions in this regard.
As practitioners know, U.S. patent law provides for the recovery of patent infringement damages for a period of time when an infringer has actual or constructive notice of the infringed patent. Actual notice is provided by way of letter or similar mechanism to the infringer after infringement has begun. Constructive notice can be provided by placing the patent number on the patented product. Such constructive notice provides notice to the infringer of the existence of a patent prior to actual notice, thereby extending the time period for recovering damages up to the date the infringement begins.
Under the America Invents Act (“AIA”), constructive notice of the existence of a patent can now be provided pursuant to 35 U.S.C. § 287(a). Such notice is accomplished by “fixing on” or “marking” a patented product with the term “patented” or the abbreviation “pat” together with an Internet address accessible to the public without charge and that associates the patented article with the patent number.
With Virtual Marking, the need to modify labels or the product as patents issue or expire can be addressed simply by editing the list of associated patent numbers on the publicly available web page. Thus, the time and expense of modifying labels and product molds bearing patent numbers are a thing of the past. Virtual Marking became law on September 16, 2011. Congress has directed the USPTO to submit a report on virtual marking no later than September 16, 2014, which will analyze the effectiveness of 35 U.S.C. 287(a), the impact of virtual marking on public access to patent information and any issues (legal or otherwise) created by virtual marking.
Charles A. Gaglia, Jr. is Counsel to the Gibbons Intellectual Property Department.
The Federal Circuit recently reversed the Northern District of Georgia’s judgment of unenforceability based on inequitable conduct, in Outside The Box Innovations, LLC v. Travel Caddy, Inc. Other aspects of the decision are outside the scope of this blog.
In reversing, and citing last year’s en banc decision in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011), the CAFC reiterated that to establish unenforceability based on inequitable conduct before the United States Patent and Trademark Office (“PTO”), a party must prove by clear and convincing evidence that (1) information material to patentability was withheld from the PTO, or material misinformation was provided to the PTO, and that such act was done (2) with the intent to deceive or mislead.
The District Court had determined that Travel Caddy’s U.S. Patent No. 6,823,992 (“the ’992 patent”) and its continuation U.S. Patent No. 6,991,104 (“the ’104 patent”) are unenforceable for inequitable conduct because, inter alia, Travel Caddy did not disclose to the PTO information regarding the litigation involving the ’992 patent (parent) during prosecution of the ’104 application (child). Citing the Manual of Patent Examining Procedure §2001.06(c), which requires disclosure to the PTO “[w]here the subject matter for which a patent is being sought is or has been involved in litigation,” the lower court held that the ’992 patent litigation was material information and that Travel Caddy had the obligation to inform the examiner overseeing the prosecution of the ’104 patent application. The District Court found that even though only infringement of the ’992 patent was at issue, Travel Caddy should have known (or expected or anticipated) that validity would arise in the litigation and therefore, the litigation should have been disclosed to the PTO. Furthermore, the lower court inferred deceptive intent on the part of Travel Caddy because no other reasonable inference could be drawn for failing to disclose the current litigation during the pendency of the ’104 patent.
As we anticipated, the Federal Trade Commission (“FTC”) filed a petition for certiorari yesterday with the Supreme Court in FTC v. Watson Pharmaceuticals, Inc.
In that case, the Eleventh Circuit upheld reverse payments (payments made by branded pharmaceutical patent holders to generic challengers to postpone market entry under the scope-of-the-patent approach, i.e., as long as the anti-competitive effects fall within the scope of the exclusionary potential of the patent, absent sham litigation or fraud), as lawful. The Second and Federal Circuits follow that approach. In contrast, the Third Circuit has held that such payments are presumptively anti-competitive under the “quick look rule of reason analysis” that may be rebutted by showing that the payments was for something other than delay or that the payment has a competitive benefit, and thereby increases competition.
The FTC’s petition, filed by the U.S. Solicitor General, exhorts the Supreme Court to take up the case to resolve this clear Circuit split. The FTC’s petition urges the Court to adopt the Third Circuit’s interpretation that reverse-payment agreements are presumptively anti-competitive.
Clearly, much is at stake here; Gibbons will continue to monitor developments.
The PTO recently announced final rules regarding the new derivation proceedings, 37 C.F.R. Part 42, pursuant to the Smith-Leahy America Invents Act.
As practitioners are well aware, the AIA will transform the U.S. from a first-to-invent to a first-to-file patent system on March 16, 2013, aligning the U.S. with the European and Japanese systems. For all applications filed on or after March 16, 2013, under the first-to-file system, interference proceedings, which are used to determine “which [of two] part[ies] first invented [a] commonly claimed invention,” will become obsolete. Derivation proceedings will in part replace current interference practice, but will likely be applicable in a much narrower set of circumstances.
The new derivation proceedings will address scenarios where a party “derived” an idea from the actual inventor, and then was the first to file a patent application. The true inventor – the petitioner – will be able to petition for a so-called “derivation proceeding,” in order to demonstrate that the party who was first to file – the respondent – derived the invention from the petitioner.
We have written previously on numerous developments concerning reverse payments in Hatch-Waxman litigation settlements (i.e., payments made by branded pharmaceutical patent holders to generic challengers to postpone market entry of proposed generic products).
Earlier this month, we reported that Merck & Co. had filed a petition for a Writ of Certiorari seeking to challenge the Third Circuit’s decision in In re K-Dur Antitrust Litig. holding that reverse payments are prima facie evidence of an antitrust violation.
It now appears the Federal Trade Commission (“FTC”) will follow suit and file its own petition for Certiorari in FTC v. Watson Pharmaceuticals, Inc., No. 10-12729, where the Eleventh Circuit upheld reverse payments -- finding no antitrust violation in settlements involving generic Androgel. Indeed, FTC Chairman Jon Leibowitz, speaking last week at Fordham’s 39th Annual Conference on International Antitrust Law and Policy, suggested the likelihood that FDA will file such petition with the High Court on or before the October 16, 2012 deadline. Challenges to the conflicting Third and Eleventh Circuit decisions will virtually assure Supreme Court review of the antitrust implications of reverse payments.
Gibbons will continue to track the status of this potential petition and other developments relating to reverse payments including the Supreme Court’s likely grants of Certiorari. Stay tuned for more on these important developments.
As we previously discussed, the new inter partes review (IPR) procedures went into effect September 16, 2012, along with several other significant changes.
The IPR procedure replaces the previous inter partes reexamination and applies to any patent issued before, during, or after September 16, 2012. This removes one of the hurdles of the previous inter partes reexamination which applied only to applications filed after November 29, 1999. The PTO will only accept a valid IPR petition nine months after a patent issues. As in inter partes reexamination, the IPR permits the petitioner to challenge claims as being anticipated or obvious in view of published prior art references. Also, like the previous inter partes reexamination, IPR carries with it an estoppel effect barring the IPR petitioner from asserting the invalidity of any challenged claim on the same arguments and references in any district court action.
IPR differs significantly from inter partes reexamination in terms of the actual procedure, the decision maker, timing and costs. Unlike inter partes reexamination before an examiner, the IPR proceeding takes place before a panel of three administrative judges. The procedure is statutorily required to be completed within twelve months from the grant of the IPR (extended up to 18 months with good cause). Because the IPR process is setup like a “mini trial” its attendant costs are significantly higher than inter partes reexamination.
In August, we reported that a decision in the en banc Federal Circuit rehearings of Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010) and McKesson Techs. Inc. v. Epic Sys. Corp. , 98 U.S.P.Q.2d 1281 (Fed. Cir. 2011) appeared to be imminent. As predicted, on August 31, 2012, the Federal Circuit issued an en banc, per curiam opinion deciding both cases.
Each case had at issue the question of whether or not a method claim may be directly infringed when all of the claimed steps are not performed by a single party. In its per curiam majority opinion, the Court overruled its 2007 decision in BMC Resources, Inc. v. Paymentech, L.P., and held that induced infringement can be found even if a single actor is not liable for direct infringement. The per curiam majority opinion was joined by only six members of the eleven member panel (Judges Rader, Lourie, Bryson, Moore, Reyna and Wallach).
As a threshold point, the Court decided that it was unnecessary to reach the question of whether liability for direct infringement under 35 U.S.C. § 271(a) can be found when no single actor performs all of the claimed steps of a method claim. Instead, the Court held that infringement can be found under a theory of inducement, under 35 U.S.C. § 271(b), so long as all of the steps of the method are performed and a party knowingly induces one or more actors to perform the steps. This theory applies both when the party induces performance of all of the steps entirely by others, as well as when the party performs some of the steps itself. The Court supported its holding by finding that sections 271(a) and (b) of the Patent Act do not specifically require that the act of actual infringement required for a finding of inducement be limited to a single entity. In addition, the Court argued by analogy to the criminal law and general tort law that finding a party to be liable for acts committed by innocent intermediaries was “not an idiosyncrasy of the patent law.”
We previously reported on developments in various United States Courts of Appeal decisions concerning reverse payments in Hatch-Waxman litigation settlements - that is, payments made by branded pharmaceutical patent holders to generic challengers to postpone market entry of the generic product.
Most recently, as we reported here, the Third Circuit in In re K-Dur Antitrust Litig. bucked prior holdings of the Eleventh, Second, and Federal Circuits, ruling that a reverse payment is prima facie evidence of an antitrust violation and, therefore, serves as evidence of unreasonable restraints of trade. In light of the Third Circuit’s divergent decision from other circuit precedent, many predicted a subsequent Petition for Certiorari.
As expected, Merck & Co. recently filed its Petition for a Writ of Certiorari, citing this split of circuit authority as the compelling factor favoring a review by the Supreme Court.
Gibbons will continue to track the status of this pending petition and other developments relating to reverse payments. Of particular interest will be whether the Federal Trade Commission (“FTC”) opts to file its own Petition for a Writ of Certiorari in connection with the Eleventh Circuit’s decision upholding a reverse payment in FTC v. Watson Pharmaceuticals, Inc., No. 10-12729 (11th Cir. Apr. 25, 2012). Stay tuned for more on these important developments.
Todd M. Nosher is an Associate in the Gibbons Intellectual Property Department.
In Norman IP Holdings, LLC v. Lexmark Int’l, Inc., a recent Eastern District of Texas decision, Chief District Judge Leonard Davis provided guidance on the application of Fed. R. Civ. P. 20 (“Rule 20”) joinder and Fed. R. Civ. P. 42 (“Rule 42”) consolidation in patent infringement cases post-enactment of the Leahy-Smith America Invents Act (“AIA”). Norman IP brought suit against Lexmark and others on September 15, 2011, one day before the AIA was signed into law. Norman IP later added an additional 23 defendants. The defendants filed a motion to dismiss for improper joinder or to sever, and Norman IP alternatively requested that any severed cases be consolidated under Rule 42. The Court granted defendants’ motion to sever and issued an order consolidating the cases for pretrial issues excluding venue.
In the decision, Judge Davis assessed the defendants’ motion to sever under Rule 20 and under 35 U.S.C. § 299, the codification of the AIA joinder rule. Under Rule 20, defendants may be joined in an action if plaintiff’s asserted right to relief against each of the defendants “aris[es] out of the same transaction, occurrence, or series of transactions or occurrences.” 35 U.S.C. § 299 limits the scope of Rule 20 requiring that “accused infringers . . . not be joined in one action as defendants . . . based solely on allegations that they each have infringed the patent or patents in suit.”Continue Reading...
In WM. Wrigley Jr. v. Cadbury Adams USA, a recent Court of Appeals for the Federal Circuit decision related to chewing gum patents, Wrigley brought suit against Cadbury for infringement of its U.S. Patent Number 6,627,233 (“the ‘233 patent”) claiming a chewing gum including a combination of menthol and a physiological cooling agent, WS-23. Cadbury counterclaimed against Wrigley for infringement of Cadbury’s U.S. Patent Number 5,009,893 (“the ‘893 patent”) claiming a chewing gum including menthol and a similar cooling agent entitled WS-3.
The Federal Circuit affirmed the District Court holding that claim 34 of the Wrigley ‘233 patent was invalid for anticipation and obviousness. Regarding the issue of obviousness, the majority held that Wrigley had not met its burden of overcoming a prima facie case of obviousness based on a combination of two references. Of interest here is Circuit Judge Newman’s dissent regarding this issue. Judge Newman argued that prima facie obviousness was not established such that the burden of proof was shifted to Wrigley to demonstrate unexpected results for the claimed invention. Rather, Judge Newman argued that a prima facie case of obviousness cannot be sustained where there is evidence of commercial success and copying by the infringer.
In support of its commercial success argument, Wrigley produced a Cadbury internal study that stated that Wrigley products were superior to similar Cadbury products. The study, however, concluded that the advantages of the Wrigley products “differed from Cadbury’s comparable product in several ways that could have contributed to the commercial success of Wrigley’s gum.” Slip Op. at 13. The majority therefore concluded that Wrigley did not show a nexus between the commercial success and the claimed invention. Judge Newman, however, pointed out that Cadbury internal documents projected that, if it did not reformulate its gums to copy Wrigley’s new gums, it would lose substantial market share and revenue in the relevant market. Judge Newman therefore argued that these and similar statements in the Cadbury internal documents clearly established the nexus the majority found lacking.
In the authors’ view, Judge Newman’s analysis on the issue of copying and related commercial success might be relevant in view of the current litigation between Apple, Inc. and Samsung Electronics Co. Ltd., and the proofs in that case.
R. Hain Swope is Counsel to the Gibbons Intellectual Property Department.
As the summer rolls along, IP practitioners still await the Federal Circuit’s decisions in the en banc rehearings of Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010) and McKesson Techs. Inc. v. Epic Sys. Corp., 98 U.S.P.Q.2d 1281 (Fed. Cir. 2011), which will address liability among multiple step performers accused of patent infringement.
In Akamai, Limelight, Akamai’s direct competitor in the field of web page content storage, performed most of the claimed steps of method claims for the patent-in-suit, but its customers completed at least one of the other steps in each claim. Akamai relied on a joint liability theory to allege that Limelight controls or directs the activities of its customers. The District Court rejected the jury’s finding of joint infringement and found non-infringement based on earlier Federal Circuit precedent. In affirming the lower court, the Federal Circuit held that what is essential to finding joint infringement is determining that the accused infringers have an agency relationship or a contractual obligation to jointly perform the steps of the method. The Court concluded that the evidence did not demonstrate that Limelight’s customers perform any of the steps of the claimed method as agents for Limelight or by contract, and so found noninfringement as a matter of law.
In McKesson, McKesson sued Epic for infringing patented methods of communication between a healthcare provider and its patients. Each party acknowledged that the “initiating communication” step of the asserted claims is performed by patients of Epic’s healthcare provider customers. Epic, a software development company, licenses the accused MyChart software to its healthcare provider customers, for use by the providers’ patients at each patient’s option. If a patient wishes to use the MyChart software, the patient completes the claimed “initiate a communication” step with the MyChart web page. In affirming the lower court’s finding of non-infringement, the Federal Circuit cited Akamai and continued a decisional trend that generally favors finding infringement of a patented method only when a single entity performs all steps of the patented method. Once again, the McKesson Court found that actions by third parties only count toward a finding of joint infringement if those parties are acting as agents of or under the control and direction of a single direct infringer.
We previously reported on the new 35 U.S.C. § 299 of the America Invents Act. This statute aims, inter alia, to reduce the ability of a patent owner to join multiple, unrelated defendants in a single action, which is a tactic often employed by non-practicing entities (“NPEs”), sometimes referred to as “patent trolls,” who press defendants for nuisance value settlements.
Last week, a bipartisan bill entitled “Saving High-Tech Innovators From Egregious Legal Disputes Act of 2012,” (“Shield Act”) was introduced in the House of Representatives to permit fee-shifting in patent litigations involving computer hardware and software.
The proposed legislation, introduced as HR 6245, states in pertinent part that “upon making a determination that the party alleging the infringement of the patent did not have a reasonable likelihood of succeeding, the Court may award the recovery of full costs to the prevailing party, including reasonable attorney’s fees, other than the United States.” Aimed to curb suits brought by NPEs that are frivolous or otherwise lacking merit, HR 6245, if passed, could have significant ramifications going forward in the field of computer hardware and/or software patents.
Gibbons will continue to track the progress of this proposed legislation, as well as other developments relating to the America Invents Acts.
Starting on September 16th, seven important provisions of the America Invents Act (“AIA”) will take effect: inter partes review, post grant review, supplemental examination, third-party “preissuance submission,” substitute statement in lieu of the inventor’s oath/declaration, transitional program for covered business method patents, and citation of patent owner statements in a patent file. Not all of the provisions are applicable to every patent and/or patent application. So, it is important that one consults with patent counsel before taking action. Below are helpful takeaways and summaries of these key changes. More information can be found on the USPTO’s website.
Inter Partes Review
There are two important points to keep in mind here. First, inter partes review can only be requested after the 9-month window following the date of the issued patent. Second, this review can only be based on patents and printed publications. As a result, an accused infringer can only challenge novelty and non-obviousness of the invention.
A summary of the key components of inter parties review is listed below:
- A person who is not a patent owner and has not challenged the validity of a claim in Federal Court can initiate an inter partes review.
- All patents are eligible.
- Petition must be filed after the later of: 9 months after patent grant or the date after any post grant review (see below).
- Petitioner can raise patentability on 35 U.S.C. §§ 102 and 103 grounds, but only prior art consisting of patents or printed publications can be used.
- To grant an inter partes review, a petitioner must demonstrate that there is a reasonable likelihood that she would prevail as to at least one of the challenged claims.
35 U.S.C. § 122(e), adopted last fall as part of the Leahy-Smith America Invents Act (“AIA”), conditions third party submissions to the USPTO for consideration and inclusion in an application file. Recently, the USPTO published the final rules regulating these submissions by third parties: Changes to Implement the Preissuance Submissions by Third Parties Provision of the Leahy-Smith America Invents Act, 77 Fed. Reg. 42150 (2012). That is to say, the USPTO provided the requirements and guidance to anyone wishing to have the Office consider patents, published patent applications, or other printed publications of potential relevance during the examination of a pending application. The new rules pave the way for a third party to limit the scope of a pending patent application, particularly a competitor’s application, in a meaningful way.
A preissuance submission must “set forth a concise description of the asserted relevance of each submitted document” and contain the fee (currently $180) for submissions of up to ten documents. The fee is waived for submissions of fewer than three documents. Notably, § 122(e) does not restrict submissions to issues of novelty and non-obviousness. But, the submission cannot be comprised of argument alone and without an underlying published document.
A patent examiner is required to consider compliant third-party submissions in preparation for the next office action. These submissions will likely require rebuttal from the Applicant. Though they may be done anonymously, third-party submissions become part of the official file and will be listed on the face of any issued patent. The rules however do not require Applicants to independently file submitted documents with the Office in an Information Disclosure Statement.
Update - Hatch-Waxman Settlements: The FTC Regains Traction After Third Circuit Rules That Reverse Payments Violate Antitrust Law
As a follow-up to a previous article, the FTC has finally gotten an Appeals Court to take its view of reverse payments - Wile E. Coyote won this one. The FTC previously unsuccessfully attempted multiple avenues to invalidate reverse payments as part of Hatch-Waxman settlements - via the District Courts, proposed legislation, state court systems, and even the Supreme Court - but the Third Circuit has finally bitten, setting a clear circuit split.
Will the Supreme Court now step in? It could not have a clearer invitation - both the Third and Eleventh Circuits have analyzed the exact settlement agreement with resulting opposite holdings. Cf. Schering-Plough Corp. v. FTC, 402 F.3d 1056 (11th Cir. 2005).
This week, the Third Circuit Court of Appeals held that reverse payments (sometimes referred to as “pay-to-delay”) as part of the settlement of Hatch-Waxman litigations are evidence of unreasonable restraints of trade. Specifically, the Court in In re K-Dur Antitrust Litig. found that a settlement payment made by a pharmaceutical patent holder to a generic challenger - where there was an agreement to postpone market entry in exchange for the payment - constitutes prima facie evidence of an antitrust violation.
As we previously reported, the Smith-Leahy America Invents Act (“AIA”) prohibits plaintiff patent owners from joining multiple, unrelated defendants in a single action. An unintended, yet significant, consequence of this is that patent holders must bring serial litigations when more than one unrelated infringer is implicated. And, with the added possibility of declaratory judgment actions commenced in different venues, there is a real potential to have multiple cases -- involving the same patent(s) -- scattered across different judicial districts. Beyond the obvious resource concerns, this scenario may increase the risk of conflicting rulings.
The Multidistrict Litigation Statute, 28 U.S.C. § 1407(a), is an important procedural tool for such scenarios. The statute provides that the Multidistrict Litigation Panel (the “MDL Panel” or “Panel”) may transfer civil actions for coordinated or consolidated pretrial proceedings where the cases “involv[e] one or more common questions of fact,” and upon a determination that the transfer and consolidation: will be for “the convenience of parties and witnesses”; and “will promote the just and efficient conduct of such actions.” 28 U.S.C. § 1407(a). It is well-settled that centralization under § 1407(a) is appropriate in patent cases where it will eliminate duplicative discovery, prevent inconsistent pretrial rulings and conserve the resources of the parties, their counsel and the courts.
Some recent decisions by the MDL Panel are reminders of the importance of this procedural consideration:
The Gibbons Intellectual Property Department, and two of its attorneys, were among the 10 Gibbons practice areas and 20 individual attorneys ranked in the 2012 edition of the Chambers USA Guide to America’s Leading Lawyers for Business. Chambers annually rates the nation’s leading business lawyers and law firms through comprehensive interviews with top companies, attorneys, and business executives, plus extensive supplementary research.
The Chambers editorial and client testimonials included below highlight the Gibbons Intellectual Property Department and its attorneys:
Intellectual Property: Gibbons continues to cement its position as one of the go-to full-service firms in New Jersey. Representing a broad range of Fortune 500 and midmarket businesses, and with offices also in New York, Philadelphia and Delaware, the firm is well positioned to provide integrated and streamlined business advice. The firm’s 35-strong IP team is particularly active in the areas of patent, trademark and trade secrets disputes. The team has seen an increase in contentious matters in the past year, and also handled a substantial amount of work pertaining to patent due diligence. Sources say: “We are very satisfied with the services they provide and we’ve been very successful with them.”
In Mintz v. Dietz & Watson, an opinion penned by Chief Judge Rader, a three judge panel that also included Circuit Judges Newman and Dyk strongly admonished against the use of impermissible hindsight towards a finding of obviousness.
Despite finding that the accused products did not infringe and following a comprehensive analysis of hindsight, the CAFC further held that U.S. Patent No. 5,413,148 (the “’148 Patent”) was not invalid under § 103.
The ’148 Patent discloses a casing structure for meat products that produces the desirable checkerboard pattern on the meat’s surface by permitting the meat to bulge between the netting strands. Prior art solutions created the checkerboard pattern; however, solving an associated issue caused by the adherence of the strands during removal required an addition labor intensive and expensive step. The ’148 Patent solves the problem through an interlocking solution using a stretchable stockinette while also avoiding the more complex and costly process associated with prior art.
Apple v. Motorola - An End to the Smart Phone Wars or the Harbinger of New Standards for Proving Damages and Injunctions?
Judge Posner’s ruling in Apple v. Motorola last week may have brought an end to the patent war between the parties, but may be a harbinger for tougher standards for proving patent damages and injunctions. Apple and Motorola have accused each other of infringing patents directed to cell phone technology. Following a Daubert hearing, Judge Posner excluded the parties’ damages experts as unreliable. Because the parties cannot prove their respective damages without admissible expert opinion, the Court dismissed the case with prejudice.
Judge Posner’s opinion summarized the parties’ deficiencies in their respective claims for damages and injunctions. Of particular note is the issue of Motorola’s request for an injunction against Apple for refusing to pay a royalty under FRAND’s (Fair Reasonable and Non-Discriminatory) terms. The Judge noted that by agreeing to license its patents under the FRAND terms, Motorola had implicitly agreed that a royalty is adequate compensation to license the patented technology. Motorola cannot now seek to enjoin Apple from using technology that it states is a standard essential patent. To do so otherwise would amount to a form of patent hold up because Apple is locked into practicing the invention.
As to Motorola’s damages, Judge Posner dismissed its expert’s opinion as overreaching, characterizing it as “going for broke.” In other words, the Judge considered Motorola’s high damage estimate unsubstantiated in comparison to the actual representation of the patent in Motorola’s licensing portfolio.
Yesterday, the Supreme Court granted certiorari in Already, LLC dba Yums v. Nike, Inc., No. 11-982, an appeal from the Second Circuit’s decision that affirmed the Southern District’s holding that a covenant not to sue entered in a trademark dispute between Nike and Yums ended the case or controversy between the parties. The lower court also dismissed defendant’s counterclaims, which the Second Circuit also affirmed. See Nike, Inc. v. Already, LLC, 663 F.3d 89 (2nd Cir. 2011) (Lohier, J.).
The question presented on appeal is:
Whether a federal district court is divested of Article III jurisdiction over a party’s challenge to the validity of a federally registered trademark if the registrant promises not to assert its mark against the party’s then-existing commercial activities.Continue Reading...
Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc.: Federal Circuit Explains Willful Infringement
Last week, in Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., the Federal Circuit issued a precedential opinion concerning the willful infringement standard articulated in In re Seagate Technology, LLC (“Seagate”). After affirming the United States District Court for the District of Arizona, appellant Gore filed a petition for rehearing and rehearing en banc, challenging the District Court’s willfulness analysis. The Federal Circuit granted Gore’s petition for rehearing en banc for the sole purpose of determining the standard of review applicable to willful infringement.
Pursuant to 35 U.S.C. § 284, a willful infringement determination is necessary for enhanced damages, which can be up to three times actual damages. Supreme Court precedent requires a recklessness finding for enhanced damages. Seagate established a two-pronged test for recklessness ‘by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent [where] the patentee must also demonstrate that this objectively-defined risk . . . [was] either known or so obvious that it should have been known to the accused infringer.’ Slip op. at 4. Although Seagate set this two-pronged test, the Court ‘le[ft] it to future cases to further develop the application of this standard.’ Id. Case law since Seagate held that the objective prong was not met where “an accused infringer relies on a reasonable defense to a charge of infringement,” thus narrowing the issue for this appeal to whether a defense or noninfringement theory was reasonable. Id. at 5.
Although willfulness has previously been treated as a question of fact, the Federal Circuit recognized that treating the standard only as a question of fact “oversimplifies” the issue. Id. at 6. As a result, the Federal Circuit determined that the second prong of Seagate --the reasonableness of the relief -- may be a question of fact, but Seagate also required “a threshold determination of objective recklessness.” Id. The Court further explained that this standard “entails an objective assessment of potential defenses based on the risk presented by the patent.” Id. (emphasis added). This objective determination of recklessness is best decided by the “judge as a question of law subject to de novo review.” Id. Thus, the Federal Circuit has taken a full finding of willful infringement out of the jury’s hands.
Practitioners must be guided in their litigation strategies by the clarification set forth in this decision. Gibbons will keep apprized of how cases continue to interpret the willful infringement standard post-Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc.
Jillian A. Centanni is an Apprentice in the Gibbons Intellectual Property Department.
Two recent decisions highlight the importance of proper preparation during patent litigation, from the perspective of both plaintiffs and defendants.
In In re Bill of Lading, No. 2010-1493, 2012 U.S. App. LEXIS 11519 (Fed. Cir. June 7, 2012), the Court held that direct infringement only needs the same level of pleading as that outlined in Form 18 (which is a sample complaint for direct infringement) of the Appendix of Forms to the Federal Rules of Civil Procedure, while in contrast, indirect infringement needs to be pled in accordance with the higher standard delineated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). In re Bill of Lading, 2012 U.S. App. LEXIS 11519, at *17-27.
Applying these legal standards, the Court found that the plaintiff properly pled direct infringement and inducement, but failed to plead contributory infringement because the plaintiff did not state why the defendants’ products have no substantial non-infringing uses. Id. at *27-37. Rather, the plaintiff actually pled allegations from which the Court determined there were substantial non-infringing uses. Id. at *35. In re Bill of Lading is a reminder to plaintiffs that boilerplate allegations of indirect infringement will not suffice, and that plaintiffs will have to ensure they conduct the proper fact gathering before asserting this type of infringement.
Under the joint auspices of the US Patent and Trademark Office and the National Institute of Standards and Technology/Manufacturing Extension Partnership, the IP Awareness Assessment is now in the beta stage and available for businesses and inventors to assess their intellectual property awareness. Dubbed “a business and inventor’s IP education tool,” this web-based offering is designed to assess IP knowledge and provide personalized training resources for businesses and inventors.
The full assessment, made up of 62 questions and taking about 20-30 minutes to complete, includes questions in specific IP protection categories, such as Utility Patents, Trademarks, Copyrights, Trade Secrets and Design Patents, as well as general IP categories, like IP Strategies & Best Practices, Using Technology of Others, Licensing Technology to Others, International IP Rights and IP Asset Tracking. A shorter pre-assessment also is available, comprised of five questions, which takes about three minutes to complete and which allows a user to then choose a customized assessment specific to one of the above IP protection areas.
Once an assessment is completed, the program displays the results along with links for suggested training material resources. To access the IP Awareness Assessment, click here.
Ralph A. Dengler is Counsel to the Gibbons Intellectual Property Department.
In Merial Ltd. v. Cipla Ltd., the Federal Circuit recently reviewed an appeal from the Middle District of Georgia that found defendant Cipla (an Indian company) in contempt for violating an earlier injunction and finding co-defendant Velcera in contempt for acting in concert with Cipla to violate that injunction. The case arose from Cipla’s alleged infringement of Merial’s patents directed to flea and tick protection compositions, and Cipla’s underlying challenges to the District Court’s exercise of personal jurisdiction over it.
Notably, the Federal Circuit addressed the jurisdictional reach of the District Court over a foreign defendant in a patent infringement case. Judge Lourie, writing for a split panel that included Judges Reyna and Schall (who wrote a dissenting opinion), discussed the applicability of Federal Rule of Civil Procedure 4(k)(2) to the case. That rule, the Court observed “was adopted to provide a forum for federal claims . . . where a foreign defendant lacks substantial contacts with any single state, but has sufficient contacts with the United States as a whole to satisfy due process standards and justify the application of federal law.” The Court described Rule 4(k)(2) as a kind of “federal long-arm statute,” allowing a District Court to exercise jurisdiction, provided: (1) the claim arises under federal law, (2) the defendant is not subject to personal jurisdiction in another state, and (3) the exercise of jurisdiction satisfies due process.
Significantly, the ruling pointed out that while the burden of establishing personal jurisdiction typically rests with the plaintiff, Rule 4(k)(2) shifts this burden, whereby “if the defendant contends that he cannot be sued in the forum state and refuses to identify any other where suit is possible, then the Federal Court is entitled to use Rule 4(k)(2).”
Strategic Growth in the Face of a Recession: Gibbons IP Department Continues to Soar While Matching Clients' Needs
David E. De Lorenzi, Chair of the Gibbons Intellectual Property Department, was interviewed recently by Metropolitan Corporate Counsel regarding the IP Department’s strategic growth strategies during the recent economic downturn and the resulting added benefits to the firm's clients.
A copy of the complete interview may be viewed here.
The Supreme Court on Monday denied Research & Diagnostics Systems Inc.’s petition for a writ of certiorari to consider the degree of deference that should be afforded administrative decisions of the PTO on appeal to Federal District Court when new evidence is presented.
Streck Inc. sued R&D Systems, a blood test technology company, for patent infringement in Federal District Court. A Nebraska jury held R&D Systems liable for infringement following a finding that it had failed to establish a claim of priority over the disputed patents. In a parallel interference proceeding, the PTO awarded priority to R&D Systems. Streck appealed the PTO ruling in District Court under 35 U.S.C. § 146, where a patent holder may appeal a PTO determination concerning priority made pursuant to an interference proceeding.
On appeal, the Court found the evidence presented before the District Court differed from the evidence presented to the PTO. The Court analyzed the totality of the evidence de novo, without giving deference to the PTO ruling, and granted priority over the patents to Streck. The Federal Circuit affirmed.
Last month, Twitter introduced a draft of a radical employee patent assignment plan that the company hopes will play a part in a world “that fosters innovation, rather than dampening it.” The popular social media platform hopes that this initiative will affect how companies use their patents, which according to Twitter, sometimes impedes the innovation of others.
Twitter’s “Innovator’s Patent Agreement” (“IPA”) is an employee patent assignment agreement, or transfer of patent ownership from an inventor to a company, where the inventor retains control over how the patent is used. That is, under the IPA, Twitter agrees not to assert a patent against others unless acting defensively, or if the employee-inventor(s) give the company permission to do so. The assignment is “intended to run with the [p]atents” and purports to be binding on all subsequent owners for the life of the patent. Thus, the Twitter approach flips the typical paradigm: most companies have employment policies that require employees to assign any and all rights in their inventions to the company so that the company retains exclusive ownership and decision making control over its use, offensively and defensively.
The Twitter IPA is consistent with an open-source approach to computer software. But for some companies, patents are viewed as a valuable, intangible asset, and indeed, a new exchange for patent monetization, the IPXI is set to debut later this summer or in early fall to monetize such assets.
A district court’s inherent powers to control its docket and to stay proceedings are well-settled, harkening back to at least Landis v. N. Am. Co., 299 U.S. 248 (1936). Within the Eastern District of Texas, in determining whether a stay is warranted pending reexamination in a patent litigation, district courts typically consider factors such as whether a stay will unduly prejudice one party; whether a stay will simplify the issues in the case; and whether discovery is complete and a trial date has been set. E.g., Soverain Software LLC v. Amazon.com, Inc., 356 F.Supp.2d 660, 662 (E.D.Tex.2005). A survey of 2012 patent decisions rendered on the topic in the Eastern District of Texas has yielded the following:
Ambato Media, LLC v. Clarion Co., Ltd. Judge Gilstrap denied defendant’s motion to stay pending an ex parte reexamination requested nearly 18 months after the case began. The Court ruled that all three of the Soverain Software factors favored denying the stay. Of note as to the prejudice factor, the Court determined that a stay would unduly prejudice the patentee, commenting that the reexam had barely entered its merit stage and that in all likelihood, could take several years and would not conclude until after the trial date. The Court also remarked that when a case is stayed “witnesses may become unavailable . . . and evidence may be lost while the PTO proceedings take place.” The Court found this possibility of witness and evidence loss “heightened” because defendant admitted that it had discontinued some of the accused products. The Court also determined it was “speculative” for defendant to suggest that reexamination might simplify the case, and noted that granting a motion to stay under such provisional grounds would invite derailment of patent cases by reexamination instead of promoting efficient and timely resolution of patent cases. Lastly, the Court noted that extensive discovery, involving millions of pages of documents, had taken place already, and thus found the third factor to disfavor a stay, as well.
Adrain v. Vigilant Video, Inc. Judge Gilstrap denied plaintiff’s emergency motion to stay where during the ex parte reexamination (initiated by defendant), the PTO had finally rejected all pending claims, and issued an Advisory Action rejecting the subsequently amended claims. Confronting what it referred to as an “atypical” situation, the Court found that the Soverain Software factors still applied, and militated against a stay. The Court found that defendant had a “justiciable interest in the timely resolution of the case” and would be prejudiced by the stay. The Court further noted plaintiff’s chosen timing to file the motion to stay -- after Markman briefing was completed -- weighed against stay. The Court again held that the possibility that some of the claims may be affected was unavailing, preferring to deal with that contingency if and when it occurred, rather than putting the case on hold indefinitely. As to the discovery and trial posture of the case, the Court found this factor to slightly favor denying the stay, noting that claim construction had shifted and discovery was still on-going.
The U.S. Commerce Department recently released a comprehensive report, entitled “Intellectual Property and the U.S. Economy: Industries in Focus,” which identified 75 industries as IP intensive. The Report found that IP at such industries supported at least 40 million jobs in 2011. As of 2010, IP comprised more than $5 trillion dollars, or 34.8 percent of, U.S. gross domestic product (GDP) and accounted for 27.1 million American jobs. Between 2010 and 2011, the U.S. economic recovery resulted in a 1.6% increase in direct employment in IP-intensive industries, faster than the 1.0% growth in non-IP-intensive industries.
The Report concluded that the innovation protected by IP rights were key to creating new jobs and growing exports, all with a positive pervasive effect on the entire economy. IP-driven benefits flowed both upstream and downstream to every sector of the U.S. economy, and not just the final product of workers and companies: every job in some way produces, supplies, consumes, or relies on creativity and commercial distinctiveness to compete. Protecting ideas and IP promotes open and competitive markets, and will help ensure that the U.S. private sector remains America’s innovation engine.
Last month, in a sua sponte Memorandum Order in Technology Licensing Corp. v. Pelco, Inc., 11-cv-8544 (N.D. Ill. Mar. 5, 2012), Senior U.S. District Court Judge Milton I. Shadur recently took defendant to task for its answer and counterclaim.
In paragraphs 3, 5 and 6 of its answer defendant pled the boilerplate language that it was without knowledge or information sufficient to form a belief about the truth of the allegations of paragraph [ ] and therefore denies those allegations.” Judge Shadur rebuked defendant for this latter clause, stating it was “oxymoronic” that a party could assert in good faith that it did not have enough information to form a belief about an allegation, and then proceed to deny it.
The court also took issue with defendant’s affirmative defenses (“AD”) to the complaint. As to AD 1, which asserted noninfringement, the court criticized the response as violating the nature of an AD -- accepting all of the allegations of the complaint -- but then explaining why it was nevertheless not liable. The court outright struck AD 2, which asserted invalidity as directly at odds with §§ 7 and 8 of the complaint, which alleged direct and indirect infringement by defendants. As to AD 3, the court criticized it as “an impermissible laundry list that gives no clue as to the grounds for any of the contentions set out there.” The court noted that under the Federal Rules, notice pleading is required of defendants as well as plaintiffs, and so struck AD 3 without prejudice.
On April 26, the Gibbons Institute of Law, Science & Technology, Seton Hall University School of Law, and the New Jersey Intellectual Property Law Association will present, "Patent Litigation at the ITC: Views from the Government, In-House Attorneys and Outside Counsel."
Throughout the afternoon, two panels comprised of various government officials and in-house counsel will come together to share their views on patent litigation and how it is approached in their specific practice areas.
New Jersey, New York and Pennsylvania CLE credits will be granted at this program. Please click here for additional event details, including a list of featured speakers and pricing levels. To register, click here or call (973) 642-8187.
Supreme Court Affirms Kappos v. Hyatt, Paving the Way for New Evidence and Expansive Review of Patent Applications
Yesterday, in a unanimous decision, Kappos v. Hyatt, the Supreme Court affirmed a ruling of the Court of Appeals for the Federal Circuit holding that in a civil action under 35 U.S.C. § 145, a patent applicant has the right to present new evidence to the District Court regardless of whether that evidence previously was or could have been presented during the proceedings before the PTO. Further, when such new evidence is presented, the District Court must review any related factual conclusions affected by the new evidence de novo, without giving deference to any prior decision or finding of the PTO.
By way of background, Hyatt’s patent application, related to computer micro-controller designs, was rejected under 35 U.S.C § 112 for lack of written description and enablement. The Board of Patent Appeals and Interferences upheld the rejection and dismissed a request for rehearing on the basis that it raised new issues. Hyatt had submitted a declaration in support of his new and amended claims. In dismissing the request, the Board found that this declaration evidence could have been previously raised to either the examiner or the Board. The District Court agreed with the PTO, ruling that Hyatt’s failure to present the evidence to the PTO constituted a negligent act. The Federal Circuit reversed.
Under U.S. patent law, when the PTO denies an application for patent, an applicant has two routes of judicial review: an appeal of the denial to the Federal Circuit under 35 U. S. C.§ 141, or file a civil action in district court under 35 U. S. C.§ 145, whereby the Court will determine whether the applicant is entitled to receive a patent for his invention. In a § 141 proceeding, the Federal Circuit reviews the Board’s decision on the administrative record that was before the PTO and, therefore, no opportunity exists for the applicant to offer new evidence. Further, the Federal Circuit may only review factual findings if unsupported by substantial evidence. In a § 145 action, the patent applicant sues the Director of the PTO in District Court. The applicant may present new evidence, but until today, limitations on the applicant’s ability to introduce new evidence and the appropriate standard of review were as yet determined.
On April 2, 2012, the United States Patent and Trademark Office announced the implementation of a new After Final Consideration Pilot. The AFCP will allow an examiner to consider and enter amendments submitted after a final rejection that will require new searching by the examiner.
For a long time the Patent Office has been monitoring the length of time that applications have been pending and the increasing number of applications filed. The Patent Office has proposed numerous solutions that attempt to bend the application curve, including accelerated examination, pre-appeal brief conferences, and limiting the number of requests for continued examinations and continuation applications. The AFCP is another effort that has the potential to help reduce the application volume.
Prior to the introduction of this pilot, an examiner would only enter an after final amendment in very limited circumstances. An examiner may enter such an amendment when the “amendment merely cancels claims, adopts examiner suggestions, removes issues for appeal, or in some other way requires only a cursory review by the examiner.” M.P.E.P. 714.13.
Robert E. Rudnick, a Director in the Gibbons Intellectual Property Department, will be speaking at the Annual Joint Patent Practice Seminar on April 17, 2012, at the New York Marriott Marquis on the Federal Circuit’s decision in General Protecht Group, Inc. v. Leviton Mfg. Co., Inc. The case involved a forum selection clause in a patent settlement agreement. Mr. Rudnick’s presentation can be accessed here.
Over 400 individuals are expected to attend the seminar. The program for the event is available here.
In succession to remarks he made this past Fall about the soaring costs of electronic discovery in IP cases and unveiling the Model Order Regarding E-Discovery in Patent Cases, Federal Circuit Chief Judge Randall Rader recently told the ABA Section of IP Law that both the bar and the bench together, must continue to rein in the high costs of e-discovery. Chief Judge Rader suggested that attorneys’ need to limit their e-discovery requests and courts should consider implementing rules to facilitate efficient and cost effective discovery, as many have begun to do. The text of Chief Judge Rader’s speech may be viewed here.
The Chief Judge noted that in other countries, discovery practice is much more restrictive than in the U.S., making patent litigations, among other cases, easier and quicker to handle. In recent years, there has been significant movement in the U.S. to curtail e-discovery. For example, the Districts of Delaware, Kansas and Maryland all have adopted some form of default standards for e-discovery. The Seventh Circuit is in the second phase of its electronic discovery pilot program, and the U.S. International Trade Commission is considering implementing its own rules.
Most recently, in early March, the Eastern District of Texas proposed a Model Order that is based off of Chief Judge Rader’s Model Order, but differs in many ways. The Federal Circuit’s Model Order suggests that a requesting party be limited to e-mail discovery from five custodians with five search terms per custodian, while the Eastern District of Texas’ proposal calls for limits of eight custodians and 10 search terms. Additionally, the Eastern District of Texas’ proposal provides for limited written discovery and a deposition before the service of e-mail production requests.
Gibbons is pleased to announce that Charles H. Chevalier, Esq. has joined the firm as an Associate in the Intellectual Property Department. He will reside in Gibbons Newark office.
Prior to joining Gibbons, Charles was an attorney at Fitzpatrick, Cella, Harper & Scinto, where he focused his practice on complex patent litigation. Charles received his J.D., cum laude, from Seton Hall University School of Law and his B.A., in Biochemistry, from Swarthmore College.
Charles is admitted to practice in the States of New York and New Jersey and is registered to practice before the U.S. Patent and Trademark Office.
On Monday, the United States Supreme Court granted certiorari in the well-publicized Assn. For Molecular Pathology v. Myriad Genetics, et al. case (“Myriad”) for the purpose of vacating the underlying Federal Circuit decision -- finding isolated DNA sequences from human genes as patentable subject matter -- and remanding the case for reconsideration in view of its recent ruling in Mayo Collaborative Services, et al. v. Prometheus Laboratories, Inc. (“Mayo”).
We have previously written on both Myriad and Mayo. In Myriad, the Federal Circuit held that DNA sequences in their isolated state “are not the same molecules as DNA as it exists in the body; human intervention in cleaving or synthesizing a portion of native chromosomal DNA imparts on that isolated DNA a distractive chemical identity from that possessed by native DNA,” and upheld the validity of a patent claiming isolated DNA sequences. But last week, in a much anticipated case, the Supreme Court determined in Mayo that appending conventional steps to the laws of nature, natural phenomena and abstract ideas does not make such laws, phenomena and ideas patentable. Indeed, the Court expressed concerns that “patent law not inhibit further discovery by improperly tying up the future use of laws of nature.” Mayo, slip op. at 16.
Whether the Federal Circuit can reconcile its position in Myriad with the recent Mayo decision -- and the Court’s concerns stated therein -- remains to be seen. In the meantime, pundits and practitioners will continue to speculate on and grasp the influence of Mayo on Myriad, and beyond. As always, Gibbons P.C. will track the progress of these developments and provide updates accordingly.
Zoltek Corp. v. U.S.: Federal Circuit En Banc Reverses Zoltek III and Rules That 28 U.S.C. § 1498(a) Can Waive Immunity for Infringement Under 271(g)
The Federal Circuit recently demonstrated how active the Court is, and will continue to be. After having ruled in Zoltek III that the United States did not waive immunity from suit except for acts that would constitute direct infringement under 35 U.S.C. § 271(a), the Court voted sua sponte to reconsider the question en banc.
On March 14, 2012, the Court of Appeals for the Federal Circuit decided the issue of whether the Court of Federal Claims, following the Federal Circuit decision in Zoltek III, erred in allowing Zoltek to amend its complaint and transfer its claim for infringement under 35 U.S.C. § 271(g) against Lockheed Martin to the United States District Court for the Northern District of Georgia. Although the trial court concluded that the requirements under the transfer statue, 28 U.S.C. § 1631, were satisfied and allowed the amendment and transfer, the Federal Circuit determined that this was clear legal error. The en banc panel overruled the portion of Zoltek III limiting the government’s immunity waiver to § 271(a), reversed the trial court’s decision and remanded the case to the trial court.
By way of background, Zoltek is the assignee of United States Reissue Patent No. 34,162 (the “RE ‘162 Patent”), titled “Controlled Surface Electrical Resistance Carbon Fiber Sheet Product.” In its infringement contentions, Zoltek only asserted the method claims of the RE ‘162 Patent, 1-22 and 33-38, which contained the two steps of partially carbonizing the fiber starting material and then processing the fibers into sheet products. The products at issue were used in the F-22 jet aircraft, which Lockheed designed and built as the result of a contract with the U.S. government.
In a much anticipated decision, a unanimous Supreme Court today reversed the ruling of the Federal Circuit Court of Appeals, and held that Prometheus’ process is not patent eligible. Mayo Collaborative Servs. v. Prometheus Labs., Inc., No. 2008-1403, slip. op. (Fed. Cir. Dec. 17, 2010), rev’d, 566 U.S. __ (2012).
Mayo purchased and used medical diagnostic tests based on Prometheus Labs’ patents, but later sold and marketed its own diagnostic test. Prometheus Labs brought suit, asserting that Mayo’s test kits infringed its patents. The District Court found that while the test kit infringed Prometheus Labs’ patents, the court granted summary judgment that the processes claimed by the patents were not patentable subject matter under 35 U.S.C. § 101, because they claimed natural laws or natural phenomena, specifically, the correlations between thiopurine metabolite levels and the toxicity and efficacy of thiopurine drugs. On appeal, the Federal Circuit reversed, finding the processes to be patent eligible under its “machine or transformation test.” The case was remanded by the Supreme Court for reconsideration in light of Bilski v. Kappos, 561 U.S. __, slip. op. (2010), which sought to clarify the jurisprudence surrounding the “machine or transformation test,” and holding that the latter is not a definitive test of patent eligibility.
In Mayo, the Supreme Court held that the claimed processes have not transformed unpatentable natural laws into patentable applications. As a result, the processes are not patentable and therefore, the claims are invalid. In reaching its decision, the Court looked at the controlling precedents of Parker v. Flook, 437 U.S. 584 (1978) and Diamond v. Diehr, 450 U.S. 175 (1981). In both cases, the Court pointed out that a basic mathematical equation, like a law of nature, was not patentable. In Diehr, the Court held that the process was patent eligible because “of the way the additional steps of the process integrated the equation into the process as a whole.” Mayo, slip op. at 11-12. The process did not suggest that all the steps or a combination of those steps were obvious, already in use or conventional. Id. at 12. In Flook, the process was held not patentable because the claimed process only provided ‘an unpatentable formula for computing an updated alarm limit.’ Id. at 12. The Court then examined the instructions for those who administer doses of thiopure drugs and concluded that the instructions add “nothing specific to the laws of nature other than that is well-understood, routine, conventional activity, previously engaged in by those in the field.” Id. at 13.
In In re Staats, a Federal Circuit panel including Judges Dyk, O’Malley and Reyna found that the requirement set forth in 35 U.S.C. § 251 for filing broadening reissue application within two years of patent issuance is met once a first broadening reissue application has been filed within that time period, and that subsequently-filed and broadening continuation applications based on the first broadening reissue application need not be filed within the two-year period. In reaching this decision, the Federal Circuit interpreted and affirmed a ruling made by its predessor court, the United States Court of Customs and Patent Appeals (CCPA) in In re Doll.
Staats’ original patent, U.S. Pat. No. 5,950,600 entitled “Isochronous channel having a linked list of buffers,” granted on August 17, 1999 to Apple Computer Inc. On August 17, 2001, exactly two years after the patent grant, Staats filed a first broadening reissue application with claims directed to a first disclosed embodiment pertaining to a method for handling data on an isochronous channel using a linked list of buffers to implement a CPU-based interrupt system. A first reissue patent, U.S. RE38,641, issued on October 26, 2004.
Staats filed a second broadening reissue application on May 12, 2004 as a continuation of the first broadening reissue application, which issued as U.S. RE39,763 on August 7, 2007. In addition, Staats filed a third broadening reissue application on August 11, 2006, as a continuation of the second broadening reissue application. During prosecution, Staats added broadened claims directed to a second disclosed embodiment pertaining to a method which established the isochronous channel directly between a sensor node and a receiver node, without participation by the CPU. The U.S. Patent and Trademark Office (USPTO) rejected the third application as time-barred according to 35 U.S.C. § 251, and Staats appealed to the USPTO Board of Patent Appeals and Interferences (BPAI). Aware of Doll, the BPAI nevertheless affirmed by finding that, by including claims for the first time directed to the second embodiment, the broadening sought was unforeseeable and the public notice function inherent in the two-year broadening reissue filing requirement of 35 U.S.C. § 251 had not been satisfied. Staats appealed the BPAI decision to the Federal Circuit.
As President-Elect of the New Jersey Intellectual Property Law Association (NJIPLA), I am happy to announce that the NJIPLA will again host its well-received and well-attended "Annual Patent Litigation" seminar on Wednesday, March 14, 2012 at the Woodbridge Hilton.
This seminar is a half-day program starting at 11:45 am, and includes a meet and greet lunch. CLE credits for NJ (5.0) and NY/PA (4.5) will be awarded. The Woodbridge Hilton is easily accessible by car and a short walk from the Iselin train station, providing convenience for New York City and Philadelphia area attendees.
To view the event's agenda, please click here and to register, please click here.
2011 was a significant year for the “atomic bomb” of patent defenses, inequitable conduct. Inequitable conduct is a defense to patent infringement that potentially renders a patent, and its family, unenforceable when a patent applicant breaches its duty of candor and good faith to the USPTO. Two traditional hurdles for succeeding on an inequitable conduct defense were showing that withheld information or falsely disclosed information was material and the patent applicant intended to deceive the USPTO.
Prior to 2011, whether the information was considered material was guided by the duty to disclose set forth by the Code of Federal Regulations, 37 C.F.R. §1.56. The courts traditionally applied the “reasonable examiner” standard and considered whether a reasonable examiner would have considered the information important in deciding whether to allow the patent application. The information did not always need to be invalidating.
The intent element required a clear and convincing showing that the applicant made a deliberate decision to withhold a known material reference. While the materiality and intent elements were considered separate, the Federal Circuit had previously adopted a sliding scale approach in which patents could be found unenforceable with a reduced showing of intent and a strong showing of materiality, and vice versa.
One-E-Way Inc. v. Plantronics Inc.: Central District of California Court Finds Improper Joinder of Defendants
In a recent order, a judge in the United States District Court for the Central District of California held that the defendants were misjoined because even though “some of the products incorporate the same wireless technology [it] does not alter the fact that Plaintiff brings suit against unrelated defendants for independent acts of infringement.” One-E-Way Inc. v. Plantronics Inc. et al, 2:11-cv-06673, at 2 (CD Cal. January 19, 2012).
Plaintiff sued several defendants accusing them of selling and manufacturing various products containing patented digital audio technology. Id. at 1. The Court issued an Order to Show Cause on January 4, 2012 why some or all of the defendants should not be dropped from the case as a result of improper joinder. Id. In response, the Plaintiff argued that the joinder was proper because all the Defendants incorporated allegedly infringing Bluetooth technology. Id. at 2. (It does not appear the Defendants were provided an opportunity to support the Court’s Order to Show Cause.)
The Court first outlined the permissive joinder standard and accompanying cases across various districts under Fed. R. Civ. P. 20(a). In undertaking this analysis, the Court determined that for joinder to be proper, the Defendants must have engaged in related activities or otherwise acted in concert. Id. The facts in this case, however, indicated that the Defendants were being sued for possible independent acts of infringement without any connection between them. Id. As a result, the Court held that the Defendants had been misjoined and thus dropped all--without prejudice--but the first-named defendant. Id.
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.
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.”
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.
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.
Last week in Warner Chilcott Labs Ireland Ltd. v. Mylan Pharms., the Federal Circuit vacated a grant of preliminary injunction in a Hatch-Waxman case by the District Court of New Jersey. The Federal Circuit acted after the lower court granted a preliminary injunction without either holding an evidentiary hearing or making any findings as to the defendants’ invalidity defense.
The case arises out of Mylan’s filing of an ANDA to market a generic version of Doryx. One month before the 30-month stay expired and Mylan having received tentative approval from the FDA, Warner Chilcott moved for a preliminary injunction against a possible at risk-launch by Mylan. Warner Chilcott’s infringement case turned on whether Mylan’s ANDA product had a “stabilizing coat” as required under the patent in suit. The parties submitted briefs and expert witness declarations, and the court heard oral arguments from both parties on the traditional four factors for injunctive relief: irreparable harm; likelihood of success on the merits; balance of hardships; and the public interest. However, the court did not hold a live evidentiary hearing to hear the testimony of the battling experts, citing scheduling demands and a pressing criminal trial. Instead, the court deferred addressing those issues until the upcoming bench trial. In addition, the court also declined to make any factual determinations as to Mylan’s invalidity challenge. Ultimately, the lower court acknowledged that there were questions of facts to be resolved on the issue of a “stabilizing coat” and it enjoined Mylan from marketing its ANDA product until after trial on the merits.
The Federal Circuit vacated and remanded the lower court’s decision. Writing for the court, Justice O’Malley held that it was an abuse of discretion under established Third Circuit law to grant a preliminary injunction without holding an evidentiary hearing when there were unresolved issues of fact in dispute. In addition, the Federal Circuit also faulted the lower court for making only passing reference to Mylan’s invalidity challenge, and its likelihood of success, without providing an adequate factual record for appellate review.
Gibbons published an IP Law Alert this summer describing the forthcoming Intellectual Property Exchange International (“IPXI”). Along with providing background information about how the IPXI will monetize patents, and the process for listing an IP asset on the IPXI, this post discussed the growing pains associated with starting a financial exchange pegged to IP.
Since that posting, the IPXI has recently announced that it remains on track to begin operations in 2012 and has signed agreements with five entities: Philips, Com-Pac International, Rutgers University, Northwestern University and the University of Utah, to sponsor the Unit License Rights (ULRs) that are offered through the exchange. Additionally, IPXI has secured $10 million in additional funding from investors, including Philips and the Chicago Board Options Exchange. The IPXI was founded in 2009, but attracting licensees has been a challenge. Given the IPXI’s recent momentum, it will be interesting to see whether additional entities commit to the IPXI before its debut, or wait to commit until after the IPXI becomes operational.
Gibbons will continue to stay at the forefront of this, and other IP developments. For additional information about the IPXI, please go to the IPXI website at www.ipxi.com.
Jillian A. Centanni is an Apprentice in the Gibbons Intellectual Property Department.
Oral argument was recently heard before the Federal Circuit in the appeal of AstraZeneca Pharms. LP. v. Aurobindo Pharma Ltd. AstraZeneca, along with IPR Pharmaceuticals, Inc., and The Brigham and Women’s Hospital, Inc., (“Plaintiffs) sued ten generic drug companies alleging infringement of US Patent Nos. 6,858,618 (“the ‘618 patent”) and 7,030,152 (“the ‘152 patent”) under the Hatch-Waxman Act. These patents claim methods of treatment using rosuvastatin calcium, which Plaintiffs market as Crestor®.
The ten generic drug companies had filed abbreviated new drug applications (“ANDA”) with the U.S. FDA seeking to market generic versions of the drug to treat nonfamilial hypercholesterolemia, homozygous familial hypercholesterolemia or hypertriglyceridemia, uses which were not covered by the two method of use patents, but were FDA approved uses.
Plaintiffs alleged that Defendants’ generic tablets, if approved by the FDA, will be prescribed and administered to human patients according to the Crestor® label to treat heterozygous familial hypercholesterolemia (“HeFH”) and for the primary prevention of cardiovascular disease, which uses will constitute direct infringement of the ‘618 and ‘152 patents, respectively. As noted, the ANDA filed by the Defendants did not embody a use claimed in the patents. Plaintiffs alleged the claimed uses will occur nonetheless because the generic label will mirror the Crestor® label, and will be uses that Defendants know or should know will occur. Therefore, Defendants will actively induce, encourage, aid and abet this prescription and administration, with knowledge and specific intent that these uses infringe Plaintiffs’ rights under the ‘618 and ‘152 patents.Continue Reading...
Gibbons Intellectual Property Department Attains National and Metropolitan Rankings in 2012 Best Lawyers
Gibbons P.C. is proud to announce that two practices within its Intellectual Property Department have achieved national and metropolitan rankings in the 2012 edition of Best Lawyers®, the oldest and most respected peer-review publication in the legal profession. In addition, Department Chair David E. De Lorenzi has been individually ranked in three different IP categories.
The Department was singled out for national rankings in the categories of Patent Law (Tier 2) and Intellectual Property Litigation (Tier 3). In addition, the Intellectual Property Litigation practice was ranked in the first tier of the Newark, New Jersey metropolitan rankings, while the Patent Law practice achieved a second-tier ranking for Newark. Mr. De Lorenzi was ranked in three different categories: Intellectual Property Litigation, Patent Litigation, and Patent Law.
Because Best Lawyers is based on an exhaustive peer-review survey in which more than 41,000 leading attorneys cast almost 3.9 million votes on the legal abilities of other lawyers in their practice areas, and because lawyers are not required or allowed to pay a fee to be listed, inclusion in Best Lawyers is considered a singular honor. Corporate Counsel has called Best Lawyers “the most respected referral list of attorneys in practice.”
In the recent In re Klein decision, the Federal Circuit reversed the Board of Patent Appeals and Interferences’ decision because five separate obviousness rejections were not based on analogous art as compared to the claimed invention. In re Klein, 647 F.3d 1343, 1345 (Fed. Cir. 2011).
The claimed invention was a device for preparing sugar-water nectar for various species comprised of a vessel having a movable partition capable of separating water and sugar until it was desired to mix them. Id. at 1345-46. The partition could be inserted into the vessel at different tracks so that, when filled to a predetermined level, a nectar of the desired concentration of sugar would result from mixing the contents. Id. at 1350-51.
Three of the references (i.e., Roberts, Kirkman, and O’Connor) disclosed vessels, e.g. drawers, intended to retain dry objects each of which had the feature of movable partitions. Id. at 1348-51. The remaining two references (i.e., Greenspan and De Santo) disclosed vessels which would retain a liquid and mix it with a dry component or a second liquid to achieve a desired solution. These vessels contained barriers (also referred to as a “wall” or “partition” in the references) to prevent mixing of the contents until desired. Id. at 1351. The barriers were distinguished from the partitions of both Klein and the other groups of references (i.e., Roberts, Kirkman, and O’Connor) in that they were not movable. Id. at 1352.Continue Reading...
The New Jersey Intellectual Property Law Association (“NJIPLA”) will be hosting its first annual "Electronics, Telecom and Software Patent Practice Update" next 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.
Following last month’s enactment of the Leahy-Smith America Invents Act (“AIA”), significant limitations on multidefendant infringement suits are now in effect. Specifically, the joinder provision of the AIA, 35 U.S.C. § 299, permits accused infringers to be joined in one action only if any right to relief is asserted against the parties jointly, severally, or arising out of the same transactions or occurrences; and, common questions of fact as to all defendants will arise in the case. Simply put, patentees can no longer sue multiple defendants in the same litigation based solely on allegations that they each have infringed the patent(s)- in-suit.
This provision was seemingly drafted to stem litigious practices by non-practicing entities (“NPEs,” sometimes called “patent trolls”) who name multiple defendants in order to press for nuisance value settlements. It likely will have immediate effects on the geographic distribution of patent infringement filings going forward. Notably, some practitioners believe the Eastern District of Texas -- a one time hotbed for multi-defendant litigations -- might see a decrease in such actions, with many of those suits instead being filed in Delaware, the State of incorporation for many litigants, as reported in IP Law360. Contesting venue in the District of Delaware would be an uphill battle for those entities already incorporated in the First State.Continue Reading...
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.”
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.
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.
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.Continue Reading...
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.
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.Continue Reading...
Litigation Expenses Alone Insufficient to Satisfy "Domestic Industry" Requirement Says ITC and Federal Circuit Affirms
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.Continue Reading...
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.
The Federal Circuit recently found that intervening rights can apply to a claim that has been narrowed by argument only during a reexamination.
In Marine Polymer Technologies, Inc. v. HemCon, the Federal Circuit recently found that narrowing a claim by argument only changes the substantive scope of the claim for purposes of intervening rights. Specifically, a claim term that is changed during reexamination without changing a word in the claim can still substantively narrow the scope of a claim. Therefore, upon reissue of the patent, an infringer would have “… absolute intervening rights with respect to products manufactured before the date of reissue.”
Marine Polymer alleged infringement of certain claims of its U.S. Patent No. 6,864,245 (the “’245 Patent”). During the district court Markman proceedings, the definition of only one claim term, biocompatible p-GlcNAc, was in dispute. The term “biocompatible” appears in every claim of the ’245 Patent. Both plaintiff and defendant proposed term constructions. The District Court reject their proposals and adopted its own, concluding that biocompatible p-GlcNAc meant “polymers… with low variability, high purity, and no detectable biological reactivity as determined by biocompatibility tests.” Based on this claim construction, the district court granted summary judgment of literal infringement for all of the seven asserted claims.
Two cases decided last month highlight the somewhat disparate pleading standards in patent infringement actions among districts after Twombly and Iqbal. In The Nielsen Co. v. comScore, Inc., a plaintiff in the Eastern District of Virginia overcame a motion to dismiss infringement claims. Case No. 11-cv-168 (E.D.Va. Aug. 19, 2011) (Davis, J.). The court held that the claims for direct infringement met the lenient pleading standard of Form 18 provided under the Federal Rules. While in Medsquire LLC v. Spring Med. Sys. Inc., the district court for the Central District of California granted the defendant’s motion to dismiss. 2-11-cv-04504 (C.D. Cal. August 31, 2011) (Nguyen, J.). The court held the plaintiff’s Form 18 pleading resulted in conclusory statements that failed to include any facts identifying the relevant aspect of the [accused product] that infringed the patents and the complaint was insufficient to meet the “plausibility” standard set forth in Twombly and Iqbal.
Despite the heightened standard created in Twombly and Iqbal, district courts generally have not required heightened pleadings in the patents context with regard to direct infringement. In McZeal v. Sprint Nextel Corp., a pre-Iqbal decision, the Federal Circuit set a low bar for pleading direct infringement holding that the allegations of a pro se plaintiff must only meet the requirements of Form 18 of the Federal Rules. 501 F.3d 1354 (Fed. Cir. 2007). Furthermore, Federal Rule 84 expects a court to accept a pleading made in conformance with the forms as sufficient. Thus, for most districts the sufficiency of a Plaintiff’s direct infringement allegations can be met by following the dictates of Form 18. The Court in Medsquire, however, distinguished McZeal on the grounds that Plaintiff was represented by sophisticated counsel and the fact that the McZeal decision came before the holding in Iqbal.
A claim of direct infringement under Form 18 requires only: an allegation of jurisdiction and the specific patent law infringed; the identification of the patent and a statement that the plaintiff owns the patent; an identification of at least one infringing product; a statement that the defendant has been infringing the patent “by making, selling, and using” the product and a demand for relief. Under a Form 18 complaint, a plaintiff is not required to plead specifics as to how an allegedly infringing product works. See e.g. Adiscov, LLC v. Autonomy Corp., 762 F.Supp.2d 826 (E.D.Va. 2011), Mark IV Indus. Corp. v. Transcore, L.P., Case No. 09-cv-418 (D.Del. Dec. 2, 2009); Sharafabadi v. University of Idaho, Case No. 09-cv-1043 (W.D. Wash. Nov. 27, 2009); Automated Transactions, LLC v. First Niagara Fin. Group, Inc., Case No. 10-cv-00407 (W.D.N.Y. Aug. 31, 2010); Traffic Info., LLC v. Yahoo! Inc., Case No. 09-cv-246 (E.D.Tex. April 13, 2010); Microsoft Corp. v. Phoenix Solutions, Inc., 741 F.Supp.2d 1156 (C.D. Cal. 2010); and Apple Inc. v. Eforcity Corp., Case No. 10-cv-03216 (N.D. Cal. Apr. 5, 2011).
The Gibbons Institute of Law, Science & Technology presents "The 2011 Federal Circuit Year in Review"
On October 3, The Gibbons Institute of Law, Science & Technology will host its annual "Federal Circuit Year in Review" event at Seton Hall Law School. Ralph A. Dengler, Counsel to the Gibbons Intellectual Property Department, along with a panel of practitioners and jurists, including Chief Judge Brown and District Judge Simandle of the District of New Jersey, will review and discuss the Federal Circuit's key decisions from 2011, and their practical and future implications for the bar. These discussions will include cases involving damages; inequitable conduct; jurisdiction and venue; licensing; patentability of business methods; and preservation of ESI in anticipation of litigation, among other topics.
On Thursday, September 8, 2011, the Senate passed the America Invents Act and President Obama is expected to sign the legislation this week. Every 2 years since 2005, Congress has taken up the issue of patent reform to address issues surrounding patent validity (e.g. first-to-file v. first-to-conceive; best mode), patent prosecution (e.g. opposition proceedings; inventor’s oath), and patent litigation (e.g. forum shopping, damages, willful infringement, patent unenforceability).
One significant change in patent law provided by this Act is changing U.S. law from a first-to-conceive system to a first-to-file system. The first-to-conceive system was considered helpful to individual inventors and small companies with limited resources by giving them time to develop their inventions and to file patent applications. However, this system created uncertainty about who would have priority of invention and what prior art could be considered when assessing the validity of a patent. The U.S. was also out of step with the rest of the world, because it was the only country that used first-to-conceive.
In addition to creating greater certainty about a patent’s date of invention, this reform will have a significant effect on how patent practitioners advise their clients about obtaining protection for their inventions. The first-to-file system may increase the pressure to file patent applications quickly after conception and before commercial reduction to practice, as is common in Japan.
On Tuesday, September 6, 2011, the Senate invoked cloture on H.R. 1249, also known as the America Invents Act, making it almost a done deal for passage of this Act. One reason that this bill has succeeded over its predecessors is that, with one major exception, there is little difference between the House and Senate versions. The passage of H.R. 1249 will mark the culmination of a 6-year process to pass patent reform legislation that started with H.R. 2795.
The USPTO has provided a summary of the key provisions of H.R. 1249. One provision omitted from this bill but present in failed predecessors is the issue of damages. This generated significant opposition in the past. While H.R. 1249 is not without detractors, it reflects the compromise reached among individual inventors, universities, large and small business concerns. The most controversial provisions in the bill are the following:
- First Inventor to File. Transitions from a “first-to-invent” to a “first-inventor-to-file” patent system while maintaining a 1-year grace period for disclosures by the inventor.
$12.5 billion for 17,000 patents! $4.5 billion for 6,500 patents! These purchases by Google and a group spearheaded by Microsoft and Apple represent a shift in the value of respective patents. However, valuing patents is not a simple task, but requires proper attorney diligence to ensure the purchase of patents is done in an efficient manner as not all companies have the resources of Google and the Microsoft group.
In the first deal, Google allegedly paid a premium for 17,000 patents of Motorola Mobility. Some speculate that this was done to ward off lawsuits from Apple, Microsoft, Oracle, and the like targeting the Android, including application developers and manufacturers for the phone. Or maybe it was because Google's chief legal officer believes that a smart phone is possibly subject to approximately 250,000 potential patent claims. (In a related patent deal, Google obtained 1,000 patents from IBM after the Nortel deal, which is discussed below, fell through.)
In the second deal, the Microsoft group purchased 6,500 patents from a Nortel bankruptcy auction at 4.5 times the seller's valuation. This purchase was possibly done with future patent litigation and/or licensing in mind.
While invention promoters and IP registration firms claim to assist present and future IP holders, some have been found to offer little or nothing of value in exchange for the thousands of dollars paid to them. Here are ways to investigate these firms and learn about your rights to avoid being treated unfairly.
There are several resources available to help investigate and weed out unscrupulous invention promoters. The Federal Trade Commission offers a Consumer Alert listing the “sweet-sounding promises” of promoters that may do little or nothing in return for the fees they collect. Complaints regarding invention promoters can be filed with the FTC.
The U.S. Patent and Trademark Office maintains a Scam Prevention webpage as a public forum for the publication of complaints concerning invention promoters. The USPTO does not investigate or participate in any legal proceedings, but will forward any complaints to the invention promoter and will publish any response on the USPTO public web forum.
Under the American Inventors Protection Act of 1999, invention promoters are required by law to describe their business practices and disclose all invention promotion companies they have been affiliated with over the last 10 years before entering into a promotion contract with a customer.
The Chicago-based Intellectual Property Exchange International (“IPXI”), debuting in 2012, bills itself as “[T]he world’s first financial exchange focused on IP rights.” The IPXI will strive to eliminate current licensing inefficiencies like cost, lack of transparency and time consumption, by creating an open market for IP assets, where the intangible IP asset will become a commodity via a Unit License Right (“ULR”) contract. A ULR contract is the IPXI mechanism by which IP asset owners will be able to license technology in a non-discriminatory manner using a standard form license and on publicly disclosed terms. Each ULR contract will give the buyer the right to use a pre-established unit of IP, such as the right to make or sell up to a certain quantity of product covered by the asset.
The process for listing an IP asset on the IPXI will be analogous to that of an initial public offering on other financial exchanges: an IP owner (or “Sponsor”) will submit the proposed asset for consideration and consultation, due diligence by a “Selection Committee” at the IPXI will take place, including publication on the IPXI website of the proposed ULR contract and a comment period by IPXI Members. Following any revisions to the draft proposal, the Selection Committee will render a final decision about the ULR contract. If in agreement, the Sponsor then will assign or exclusively license the asset to a special purpose vehicle (“SPV”) formed by an IPXI affiliate, which will serve as master licensor for offering the ULR contracts. (Think of the SPV as a specialist on a financial exchange that is trying to link up buyers and sellers of a certain commodity.) Parties to the ULR contract agree to arbitrate any disputes, with the SPV ensuring compliance with the ULR contract terms and overseeing any necessary arbitration.
In a unanimous 8-0 concurrence (CJ Roberts took no part), Microsoft Corp. v. i4i Ltd. Partnership, 564 U.S. (2011) (Decided June 9, 2011), the Supreme Court approved the Court of Appeal for the Federal Circuit’s long standing rule that clear and convincing evidence is required to prove a patent invalid. In unequivocal language, the Court held that 35 U.S.C. § 282 “requires an invalidity defense to be proved by clear and convincing evidence.” Slip Op. at 1.
In its counterclaim to i4i’s willful infringement suit, Microsoft sought a finding that i4i’s patent was invalid and unenforceable as being barred by an on-sale bar. There was no challenge by i4i to Microsoft’s allegation that there was a prior sale more than one year prior to the patent application of a computer program known as S4. However, the parties did argue whether the S4 program embodied the claimed invention. Relevant to the issue before the Court, Microsoft objected in the court below that i4i’s jury instruction requiring the invalidity defense to be proved by a showing by clear and convincing evidence was improper. Rather Microsoft sought an instruction that for art not presented to the Examiner during prosecution of the application, to prove invalidity the burden should be a preponderance of the evidence. The District Court rejected Microsoft’s position, the jury found the patent valid and infringed, and the Federal Circuit affirmed.
In its opinion, the Court traced the origin of the clear and convincing standard to almost two decades before the invalidity defense was codified in § 282 by the Patent Act of 1952. In 1934, the Court found that “there is a presumption of validity, a presumption not to be overthrown except by clear and cogent evidence.” Radio Corp. of America v. Radio Engineering Laboratories, Inc., 293 U. S. 1, 2 (1934) (tracing the origins of the presumption through nearly a century of case law). The i4i Court adhered to the common-law jurisprudence that “a preponderance standard of proof was too ‘dubious’ a basis to deem a patent invalid.” Slip Op. at 8 (internal citations omitted). The Court determined that at the time Congress enacted the 1952 Patent Act, the presumption imposed a “heightened standard of proof.” Id.
Federal Circuit Reins In Doctrine of Inequitable Conduct in Therasense, Inc. v. Becton, Dickinson & Co.
On May 25, 2011, the Court of Appeals for the Federal Circuit handed down an en banc decision in Therasense, Inc. v. Becton, Dickinson & Co., revamping the standards used for judging patentees’ inequitable conduct in patent infringement cases. Significantly, the decision raises the bar for accused infringers wishing to demonstrate the requisite intent and materiality needed to support a finding of inequitable conduct. In particular, the decision reaffirms that intent and materiality standards are to be independently applied, and establishes a “but-for” test for materiality that is satisfied only when a patent claim would not have been allowed in prosecution but-for an alleged bad act (for example, a failure to disclose certain prior art references). It is hoped that the heightened standards will reduce the incidence of unwarranted inequitable conduct claims made by accused infringers during patent litigation, and reduce the volume of marginally relevant prior art disclosures made by patentees during patent prosecution.
Therasense sued Becton, Dickinson (“BD”) in the United States District Court for the Northern District of California, inter alia, for infringing U.S. Patent No. 5,820,551. Abbott filed the original application leading to the ’551 patent in 1984. The ’551 patent involves disposable blood glucose test strips for diabetes management. When blood contacts a test strip, glucose in the blood reacts with an enzyme on the strip, resulting in the transfer of electrons from the glucose to the enzyme. A mediator transfers these electrons to an electrode on the strip. Then, the electrons flow from the strip to a glucose meter, which calculates the glucose concentration based on the electrical current.
During prosecution, the original application saw multiple rejections for anticipation and obviousness, including repeated rejections over U.S. Patent No. 4,545,382, another patent owned by Therasense. In 1997, Therasense amended the claims to claim a new sensor that did not require a protective membrane for whole blood. Therasense asserted that this distinguished over the sensors disclosed by the ’382 patent, whose electrodes allegedly required a protective membrane. In response to a request by the examiner, Therasense submitted a declaration to this effect in the U.S. Patent and Trademark Office (“PTO”). Several years earlier, while prosecuting the European counterpart to the ’382 patent, Therasense made representations to the European Patent Office (“EPO”) arguing that such a membrane could be used in their invention but was not required. This representation was not disclosed to the examiner examining the original application leading to the ‘551 Patent.
On April 20, 2011, the Court of Appeals for the Federal Circuit handed down an en banc decision in TiVo, Inc. v. EchoStar Corp. that outlines new rules for contempt proceedings against a new or modified product when the original product has been barred subject to a permanent injunction. The decision is significant in that the new rules lower the burden faced by the patent owners to initiate such proceedings. The decision also illustrates the importance of clarifying the scope of injunctive orders at the time of entry.
TiVo sued EchoStar in 2004 in the United States District Court for the Eastern District of Texas for infringing U.S. Patent No. 6,233,389. Based on a jury finding in favor of TiVo, the District Court entered a judgment on the verdict and a permanent injunction against EchoStar in 2006. The injunction prohibited EchoStar from making, using, offering to sell or selling the infringing products (the “infringement” provision), and required EchoStar to disable certain infringing features for products placed with end users (the “disablement” provision). In response to an appeal by EchoStar (which was not directed to the injunction), the Federal Circuit issued a decision in 2008 that, inter alia, finalized the injunction order.
Shortly thereafter, TiVo moved in the District Court to find EchoStar in contempt of the order based on certain design-around activities it initiated as an alternative to disablement. The District Court issued a decision finding EchoStar in contempt in 2009. A panel of the Federal Circuit affirmed the District Court’s decision in 2010. The present decision resulted from EchoStar’s petition for rehearing en banc. Interestingly, the rehearing drew briefs from twenty amici. In the wake of the en banc decision, the parties agreed to a settlement on May 2, 2011, in which EchoStar will pay $500M to TiVo in exchange for a license to the ‘389 Patent.
Following a recent Federal Circuit decision, a patentee might now be able to assert a system claim against a single infringer for operating a distributed system, rather than naming joint infringers hosting portions of the distributed system. This is significant for entities that do business on-line, particularly enterprises with a cloud computing business model. Whereas in the past a patentee may have had to allege direct infringement among joint infringers (e.g., individual users, enterprises, and information technology system providers), and perhaps prove vicarious liability, now it may be possible to bring a direct infringement action against a sole infringer that might not be in possession of the complete system. E-commerce businesses, web-based providers of business services, providers of software as a service, electronic market makers, and other enterprises that use third-party server farms to host part, or all, of their system might now be named as the sole infringer. A patentee could perhaps now sue a competitor for infringement without having to sue the infringer’s IT provider. This could be particularly advantageous in cases where the patentee and the infringer share providers, and will permit the patentee to sue without jeopardizing its own business relationship with the provider.
In Centillion Data Systems (Centillion Data Sys., LLC v. Quest Commc’ns Int’l, Inc. et al., No. 2010-1110, -1131, slip op. (Fed. Cir. Jan. 20, 2011)), the Federal Circuit addressed direct infringement for use of a system claim where a single actor was not in possession of all the claimed system elements. Id. at 7. Here the court extended its analysis of the control and beneficial use doctrine, which the court applied in its Blackberry® opinion (NTP, Inc. v. Research in Motion, Ltd. 418 F.3d 1282 (2005)). In NTP, the court extended the extraterritoriality of U.S. patent law by finding that the location of use is “the place at which the system as whole is put into service” by exercise and beneficial use of the system. Id. at 1317.Continue Reading...
U.S. Patent & Trademark Office Circulates Supplementary Patent Examination Guidelines Regarding Definiteness of Claim Language
On February 9, 2011, the U.S. Patent & Trademark Office (USPTO) issued Supplementary Examination Guidelines for Determining Compliance With 35 U.S.C. § 112 and for Treatment of Related Issues in Patent Applications (the “Guidelines”). The Guidelines have immediate effect, but the USPTO will consider written comments received by April 11, 2011. Part 1 of the Guidelines pertains to the provisions of 35 U.S.C. § 112, 2 regarding claim definiteness, while Part 2 of the Guidelines pertains to the examination of so-called “computer-implemented functional claim limitations.”
In Part 1 of the Guidelines, a 3-step process is described for the examination of patent claims under 35 U.S.C. § 112, 2. Step 1 begins with an interpretation of the claims. The Guidelines emphasize that examiners must assign a “broadest reasonable interpretation” to claim terms that is consistent with the patent specification and reasonable from the perspective of “one of ordinary skill in the art.” Step 2 focuses on determining whether the claims as interpreted are “definite” and “clearly and precisely inform persons skilled in the art of the boundaries of protected subject matter.” Examples of indefinite claiming include: 1) “functional claiming” that recites a feature “by what is does rather than what it is,” 2) “terms of degree” which fail to include “some standard for measuring that degree,” 3) “subjective terms” for which the scope “must depend solely on the unrestrained, subjective opinion of a particular individual” and 4) “improper Markush groups” which define a number of different “species” of the claim term that fail to share either a “single structural similarity” or a “common use.” Step 2 also provides guidelines for interpreting so-called “means for” and “step for” limitations under 35 U.S.C. § 112, 6.
Step 3 concludes the examination process with guidelines for resolving any indefinite claim language identified in step 2. The Guidelines make clear that it is the examiner’s duty to provide a “sufficient explanation” of the indefinite language as part of a “clear record,” and to practice the principles of “compact [patent] prosecution” so that “the applicant has the chance to provide evidence of patentability and otherwise reply completely at the earliest opportunity.” Notably, examiners are encouraged to attempt to resolve indefiniteness issues with the patent applicant early on by interview before formally rejecting the patent application on indefiniteness and other grounds.
Corporate Reorganization Absent Assignment or License of Patent Rights Results In Preclusion Of Patentee's Lost Profits Damages
In a decision that highlights the import of assigning or licensing intellectual property assets during corporate reorganization, a district court recently ruled that a plaintiff patentee was not entitled to lost profit damages based on the patent at issue in an infringement action. In Duhn Oil Tool, Inc. v. Cooper Cameron Corporation (CAED January 24, 2011) Duhn Oil Tool, Inc. filed suit against Cooper Cameron Corporation alleging patent infringement. Following discovery, the defendant filed a motion for partial summary judgment arguing that the plaintiff patentee was not entitled to lost profits damages.
In considering the defendant’s motion, the court considered the implications of corporate reorganization involving the plaintiff patentee. As a result of a stock acquisition and restructuring of operations, all of the plaintiff patentee’s operations were transferred to a non-party parent. Although the plaintiff patentee continued to operate as a business entity post-acquisition, it was no longer involved in the business operations relating to the goods and services subject to the patent at issue in the litigation.
The district court ruled for the defendant and granted partial summary judgment on grounds that, as of the date of transfer of operations, the non-party parent alone incurred business expenses, made profits and suffered losses. The court found that the plaintiff patentee had neither “assigned the patent-in-suit to [non-party parent] nor granted a license to [non-party parent].” As such, plaintiff patentee was not entitled to lost profits damages after the date of reorganization, the time at which its parent took over operations relating to the patent at issue.Continue Reading...
Courts continue to wage a valiant effort to create consistency and provide guidance in the numerous false marking cases launched in the aftermath of Bon Tool. Defendants accused of false marking may seek dismissal on the basis that plaintiff lacks standing. In so doing, defendants often argue that plaintiff was not in the business and suffered no competitive injury as a result of false marking.
This strategy was effectively foreclosed when the Court of Appeals for the Federal Circuit reversed and remanded the Southern District of New York’s holding in Stauffer v. Brooks Brothers. In that case, the Federal Circuit concluded that the government’s right to have its laws effectively applied provided sufficient basis for a qui tam plaintiff to bring an action on its behalf. As a result, false marking defendants now seek alternative defensive strategies, including attacks on the sufficiency of the complaint and assertion of affirmative defenses. To see the results of two such attempts, see the discussion after the jump.Continue Reading...
In Re Acer America Corp. is the latest in a growing body of opinions authored by the Federal Circuit finding that the United States District Court for the Eastern District of Texas has abused its discretion in denying the transfer of a case to a more convenient venue under 28 U.S.C. § 1404(a). The United States Court of Appeals for the Fifth Circuit launched the opening salvo against the Eastern District’s unwillingness to transfer cases in its In re Volkswagen of America, Inc. opinion, and the Federal Circuit repeatedly has followed suit, granting writs of mandamus in favor of transfer in In re Nintendo Co., In re Hoffman-La Roche, Inc., In re Genentech, and In re TS Tech.
In the instant case, the U.S. District Court for the Eastern District of Texas denied a motion by twelve defendants seeking to transfer a patent infringement case to another district. The transfer motion was based primarily on the fact that all but one of the U.S.-based defendants were headquartered in California. Dell, as the lone Texas-based defendant, operates its headquarters outside of the Eastern District, 300 miles from Marshall, Texas, where the litigation was pending before Judge Everingham.
The Federal Circuit began its analysis by applying the public and private factors used in a forum non conveniens analysis. The private factors of the analysis include (1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make a trial easy, expeditious and inexpensive. The public factors to be considered are (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflicts of laws or in the application of foreign law.
The Federal Circuit Affirms in AstraZeneca v. Apotex, Finding Induced Infringement Based On Use of FDA-Mandated Labeling
The Federal Circuit’s recent decision in AstraZeneca LP v. Apotex Inc. illustrates the tension that generic drug manufacturers may face between complying with FDA labeling requirements and avoiding trespassing on others’ patent rights. In that decision, the Federal Circuit affirmed the District Court of New Jersey’s ruling enjoining Apotex’s “at risk” launch of a generic version of an inhaled corticosteroid for asthma patients. In short, AstraZeneca owned a method patent on once-daily dosing of the drug at issue. Although Apotex omitted all references to once-daily dosages from its product label, it was required by the FDA to include “downward titration” language that encouraged patients to reduce their daily intake of the drug to the lowest dose that provides a beneficial effect. AstraZeneca argued that this language induced patients to infringe its method patent, and the court agreed.
For its part, Apotex argued that it lacked the specific intent required to induce infringement because its product label did not instruct patients to engage in the infringing once-daily dosing, and because its instructions allowed for non-infringing use of the drug. The Federal Circuit was not persuaded. Rather, it agreed with the lower court that the language encouraging reduced intake would necessarily result in some users engaging in AstraZeneca’s patented method. The court also found that Apotex’s attempt to design its label around the infringing use showed that it had the requisite knowledge and intent to induce infringement.
On October 7, 2010, the U.S. Patent & Trademark Office (USPTO) issued a press release announcing the adoption of new procedures for measuring the quality of patent examination that will be implemented during the start of the 2011 fiscal year. After requesting public comment in both the Federal Register and Official Gazette and holding two round table discussions, a joint USPTO-Patent Public Advisory Committee (PPAC) Task Force developed a new composite quality metric including seven factors, and an associated procedure for obtaining measurements, identifying systemic problems and providing remediation through examiner training.
Currently, the USPTO measures the quality of patent examination according to two factors: (1) the quality of the action setting forth allowance or final rejection of the application; and (2) the quality of the actions taken during the course of examination;. In the October 7 press release, USPTO describes these two factors as “useful but insufficient measurements of patent examination quality.”
Under the new procedures, the USPTO will use seven quality measurements, which are described in detail in the USPTO publication "Adoption of Metrics for the Enhancement of Patent Quality Fiscal Year 2011." In addition to the two factors presently used, the new composite metric will also measure: (3) the use of best search practices in the examiner’s initial search for prior art; (4) the use of best examination practices in the first action on the merits; (5) trends in compact and efficient examination as reflected in aggregate USPTO data; (6) the perceptions of applicants and practitioners as measured by surveys; and (7) the perceptions of examiners as measured by surveys. While the USPTO presently measures the perceptions of applicants and practitioners, this factor was not previously incorporated within the composite metric.
Recently, the U.S. District Court for the Southern District of New York ruled that a generic drug manufacturer may not be required to provide advance notice to the innovator of their intent to launch at-risk a competing product. This decision is noteworthy in that it contrasts with the practice in the District Court of New Jersey where at least one generic company has been ordered to provide advance notice to the brand companies of an impending at-risk launch.
In Teva et al. v. Sandoz, Inc., 08-7611 (S.D.N.Y. October 12, 2010), the district court for the Southern District of New York, denied Teva's request for 10 days advance notice of Sandoz’s launch at risk of a generic version of Copaxone®. The court held that, “[w]hile other courts may have, in other circumstances, ordered generic drug makers to provide another party with notice of its intent and ability to launch, the Court finds that it is unnecessary to do so here.” The court found that Sandoz had no legal obligation to provide Teva with advance notice, particularly since there are no regulatory impediments by the FDA barring entry of Sandoz’s generic product. As such, the court held that ordering Sandoz to provide advance notice would effectively require it to disclose confidential business information to Teva. The court also dismissed Teva’s argument that advance notice could potentially avoid “saddling” the court with an emergency request for a temporary restraining order, noting that Fed. R. Civ. P. 65 sufficiently addresses any such concerns.
Lisa H. Wang is an Associate in the Gibbons Intellectual Property Department.
A Message from the Chair, David E. De Lorenzi:
On Tuesday, October 5, 2010, at 6:00 pm, the Gibbons Institute of Law, Science & Technology and the New Jersey Intellectual Property Law Association (NJIPLA) will host the 8th Annual Fall Lecture Series, "Inventing Our Way Out of Joblessness," featuring The Honorable Paul R. Michel, Former Chief Judge of the U.S. Court of Appeals for the Federal Circuit. Additional speakers include:
- Briana Bergen, Bristol-Myers Squibb
- Caren Khoo, Verizon Corporate Services Group Inc.
- David Opderbeck, Associate Professor of Law, Seton Hall University Law School
- Daniel Shulman, Pactiv Corporation
This event will be held at the Newark Club, located adjacent to Seton Hall Law School, in Newark, New Jersey. For additional event details, please click here.
As discussed in my previous blog, "Former Judge Paul Michel Discusses Proposed Changes to US Patent System," Judge Michel spoke, for the first time since his retirement, at the Global Intellectual Property Center of the U.S. Chamber of Commerce on July 21, 2010, providing commentary on the current state of the nation's patent system and how the system can be improved to bolster US economic growth. He will discuss similar topics on October 5.
David E. De Lorenzi is Chair of the Gibbons Intellectual Property Department.
A Message from the Chair, David E. De Lorenzi:
"Congress Needs to Act" is the first article published by Judge Paul R. Michel since his retirement from the Federal Circuit, where he served as the Chief Judge. Judge Michel's below speech was given on July 21, 2010, at the Global Intellectual Property Center of the U.S. Chamber of Commerce, providing commentary on the current state of the nation's patent system and how the system can be improved to bolster US economic growth.
Judge Michel will be a featured speaker on these same topics in October at the Gibbons Institute/NJIPLA Fall program in Newark, New Jersey. More details on the October program will be posted next month.
When the United States Court of Appeals for the Federal Circuit decided Bon Tool, it unwittingly triggered an avalanche of litigation against major corporations brought under 35 U.S.C. § 292, the false marking statute. The opinion resolved a split of authority regarding whether a manufacturer of a product could be subjected to a fine based on each article that had been falsely marked, or each decision to mark the article. Combined with the fact that the qui tam nature of the false marking statute obviated the need to establish traditional Article III standing, a new breed of patent trolls sprung into existence seemingly overnight, dedicated to the task of tracking down mis-marked products, and seeking to share half of a maximum $500 per falsely marked item bounty. The economic appeal in bringing such suits is obvious. A major manufacturer could potentially produce millions of falsely marked articles. Even if a court decided not to assess the full $500 penalty (which it has discretion to do), a successful plaintiff could still stand to reap a sizeable award based on the sheer number of falsely marked articles injected into the stream of commerce. Since that time, several cases have been decided that have helped to provide guidance to litigants on both sides of this rapidly evolving area of law.Continue Reading...
The Gibbons Institute of Law, Science & Technology hosted a webinar on July 1 to discuss the U.S. Supreme Court decision in Bilski v. Kappos that addressed the limitations on the patentability of business methods. More than 50 people listened to this webinar, which featured Erik Lillquist, Senior Associate Dean and Professor of Law, Seton Hall University School of Law; Robert E. Rudnick, Director, Intellectual Property, Gibbons P.C., and David W. Opderbeck, Associate Professor of Law and Director, Gibbons Institute of Law, Science & Technology, Seton Hall University School of Law.
The panelists reviewed, analyzed and discussed the implications of this decision with regard to patent protection in those industries employing business method and related software patents. Of particular interest to industry professionals and patent practitioners, Robert Rudnick provided a helpful list of best practices and tips for obtaining corresponding patent protection and enforcement in view of this important Supreme Court decision.
The webinar has been archived online and can be accessed by clicking here.
Robert E. Rudnick is a Director in the Gibbons Intellectual Property Department.
Supreme Court's Bilski Decision Rejects Federal Circuit's Machine-Or-Transformation Test For Business Method Patents
On June 28, 2010, the Supreme Court handed down a highly anticipated decision affirming the Federal Circuit in Bilski v. Kappos. At issue in Bilski was the patentability of a claimed business method or process for hedging against the risk of price changes in an energy market. The Court unanimously affirmed the Federal Circuit’s decision to reject Bilski’s process claims as being unpatentable, but split in its opinion as to the grounds for rejecting the claims.
The majority opinion of the Court was delivered by Justice Kennedy, joined in full by Chief Justice Roberts, Justices Thomas and Alito, and joined in part by Justice Scalia. The Court held that the “machine-or-transformation” test applied by the Federal Circuit to reject Bilski’s business method claims is not the sole test to be considered in determining whether a claimed process is a “patent-eligible” process. In particular the Court stated that the test may be insufficient for determining the patentability of inventions concerning emerging technologies including, for example, software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression and the manipulation of digital signals.
The Court rejected the outright exclusion of process claims directed to so-called “business methods,” finding that the scope of such an exclusion was unclear and that Congress’ “prior use” defense to the infringement of business method claims as expressed in 35 U.S.C. §§ 273 (a)(3), (b)(1) would be meaningless if such claims were fully excluded from consideration as patent-eligible inventions.
12-Month Extension to the Provisional Patent Application Period - Buying More Time to Commercialize Your Invention
On April 2, 2010, the USPTO issued a press release and published in the Federal Register a request for comment on a proposed change that would effectively give applicants a 12-month extension to the current provisional application period. Under the current rules, an applicant must file a nonprovisional application within 12-months after the filing of a provisional application pursuant to 35 U.S.C. § 119(e) and must thereafter complete any missing parts to that application within a time period of up to a maximum of seven months.
The latest proposed revision to the missing part practice would now give applicants an additional 12-month period under which to complete this application. Even with the new proposed revision, a nonprovisional application must still be filed within the first 12-month period following the filing of a provisional application and have a properly executed oath or declaration along with at least one claim. Applicants, however, will now be given up to a year rather than seven months to complete the nonprovisional application by payment of the required search fee and a nominal late payment surcharge. It should be noted that this change would not affect foreign filings, which must still be filed within 12 months after the filing date of a provisional application in accordance with the Paris Convention for the Protection of Industrial Property. Also, by exploiting the delayed payment, an applicant foregoes his right to opt not to have the patent application published at 18 months from the provisional patent application filing date.
The USPTO believes that by providing this additional time, applicants may now “ascertain the value of their inventions, thereby helping applicants decide whether to incur the additional costs associated with pursuing patent rights.” While initially expending only a relatively low cost to file the application, the applicant may now take the additional 12-month period to focus their time and efforts on commercialization. Additionally, the USPTO explained that, under the current statutory scheme, applicants routinely file several nonprovisional applications, which are dependant on various provisional applications. By providing an additional 12-month period, the USPTO believes that this will “help applicants focus on their most important applications and conserve USPTO resources.”
Recently certain members of the patent law bar have expressed surprise that the Federal Circuit has used the written description requirements of 35 U.S.C. §112, first paragraph to invalidate patents such as the University of California’s patent directed to insulin in Regents of the University of California v. Eli Lilly & Co., and Genentech’s patent directed to production of human growth hormone in Genentech, Inc. v. Novo Nordisk A/S. This issue has come to the forefront again in Ariad’s pending per curiam appeal from the Federal Circuit decision in Ariad Pharms., Inc. v. Eli Lilly & Co., vacated and rehearing en banc granted. Oral argument in the case was held on December 7, 2009. In the case under appeal, the Ariad patent was held not to meet the written description requirements of 35 U.S.C. §112, first paragraph.
The surprise of the patent bar to the Federal Circuit’s use of this written description requirement and the dual nature of this requirement to invalidate patents reminds me of the exclamation of the police chief in the movie Casablanca, upon being handed his winnings from roulette, “I’m shocked, shocked to find that gambling is going on here.” Written description and the dual requirements of 35 U.S.C. § 112 first paragraph for written description have been the bulwark of United States prosecution, especially interference practice for at least 35 years.
Several bills are currently pending in Congress establishing expedited marketing approval pathways for biosimilar drugs. The proposed pathways are analogous to the pathway for small molecule chemical drugs established by the passage of the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act. The Hatch-Waxman Act includes a data exclusivity provision whereby the FDA is prohibited from approving a competitor’s drug application relying on the innovator’s data for a statutory period of time. Recent debates concerning the biosimilar bills have focused on the data exclusivity period. These debates highlight the differences between biological drugs and small molecule chemical drugs and why a longer exclusivity period may be necessary to fill the “patent protection gap.”
Debate on Data Exclusivity Period
Under the Hatch-Waxman Act, a five-year exclusivity period is permitted for a new chemical entity. A three-year exclusivity period is permitted for new clinical investigations of small molecule drugs and other exclusivity periods are granted as incentives to develop drugs for children or small patient populations. With regard to biosimilars, proposals on data exclusivity terms have ranged from no exclusivity period to over 12 years. House bill H.R. 1427 sponsored by Representative Henry Waxman provides for five years of exclusivity while H.R. 1548 sponsored by Representative Anna Eshoo provides for an exclusivity period of up to 14.5 years. An FTC report questions whether any data exclusivity period is necessary, suggesting that existing patent protection and market-based pricing would offer sufficient incentive for biological drug development. The Biotechnology Industry Organization (BIO) counters that the FTC’s report failed to account for the advantage given to follow-on companies who rely on the innovator’s development and research work. In addition, BIO also notes that reliance on patent protection for biological drugs may be inadequate since the biosimilar regulatory approval pathway creates a “patent protection gap.”
Patent Protection Gap
According to BIO, a “patent protection gap” exists because a biosimilar drug is not required to be the “same” as the innovator drug. Representative Waxman’s bill requires only that the biologically similar drug have “no clinically meaningful differences between the biological product and the referenced product would be expected in terms of the safety, purity and potency if treatment were to be initiated with the biological product instead of the referenced product.” In other words, if the biosimilar drug is shown to have no “clinically meaningful difference” when compared to the innovator drug, it can theoretically gain approval even though the biosimilar drug may be different in structure, administration, or mechanism of action.
Duty of Disclosure: Applicant's Contradictory Statements to EPO and USPTO Support Finding of Inequitable Conduct
The Federal Circuit’s recent decision in Therasense, Inc. v. Becton, Dickinson & Co., No. 2008-1511 (Fed. Cir. Jan. 25, 2010) held that applicant’s statements made in proceedings before foreign patent offices may be required disclosures in prosecution before the USPTO (“PTO”), particularly when those statements directly contradict other statements made during prosecution. From the court’s holding: “An applicant’s earlier statements about prior art, especially one’s own prior art, are material to the PTO when those statements directly contradict the applicant’s position regarding that prior art in the PTO.”
The Therasense case involved U.S. Pat. No. 5,820,551, for a strip electrode used to measure the level of glucose in blood. The ‘551 patent is related to an earlier U.S. patent and its European counterpart. The statement “Optionally, but preferably when being used on live blood, a protective membrane surrounds both the enzyme and the mediator layers, permeable to water and glucose molecules” appeared in the specifications of all three patents.
In 1993, the European patent was revoked in an opposition proceeding based on a German reference. In a successful appeal to withdraw the revocation, the patentee distinguished the patented invention’s “optionally, but preferably” membrane requirement from the German reference, which required a membrane.
Judge Young recently wrote a colorful and entertaining decision addressing a “disconnect between the Federal Rules of Evidence and the substantive doctrines of patent law [that] seems to have gone totally unremarked both by the patent bar and evidence scholars.” In the end, Judge Young ruled that the patent laws on obviousness trump the Federal Rules of Evidence. NewRiver, Inc. v. Newkirk Products, Inc., C.A. No. 06-12146-WGY, Memorandum & Order (D. Mass. Dec. 16, 2009).
Plaintiff NewRiver brought a patent infringement action against the defendant Newkirk. After trial, the jury returned a verdict finding that Newkirk infringed claims 9-11 but that certain claims of the patent in suit, including the infringed claims 9-11, were invalid as obvious. The parties then filed various post trial motions including two filed by NewRiver: (1) a motion for judgment as matter of law that claims 9-11 are valid and not obvious; and (2) a motion for a new trial.
The Court reviewed the sufficiency of the evidence regarding the invalidity of claims 9-11, and found that evidence “sparse.” Indeed, the only evidence of invalidity of claims 9-11 consisted of the defendant’s expert reading the claim into evidence and concluding that the claims would have been obvious to a person skilled in the art. The expert did not identify any prior art, did not show where the limitations of the claims were in the prior art, or how the combined prior art references made the claims obvious. NewRiver did not object, and the issue of invalidity of claims 9-11 went to the jury with the only evidence being the expert’s unsupported opinion.
Some courts, whether by local patent rule or by individual order, are restricting the number of patent claim terms they are willing to construe. For example, the Northern District of California’s Local Patent Rule 4-1(b) directs parties to “jointly identify the 10 terms likely to be most significant to resolving the parties’ dispute, including those terms for which construction may be case or claim dispositive.” Other courts, such as the District of Massachusetts, have memorialized a suggestion that “no more than ten (10) terms per patent be identified as requiring construction.” See Appendix to D. Mass. Local Rule 16.6, section (B)(4)(d).
In jurisdictions with local patent rules but without specific rules limiting the number of terms that the court will construe, some judges are going beyond the local rules to impose such limits. For example, Judge Clark of the Eastern District of Texas has required parties to identify “no more than ten (10) disputed claim terms for construction,” in order to “secure the just, speedy and inexpensive determination” of the case. Hearing Components, Inc. v. Shure, Inc., Civ. No. 9:07-104, 2008 WL 2485426, at *1 (E.D. Tex. June 13, 2008). There, the parties had originally submitted about twenty terms for construction.
In other jurisdictions without specific local patent rules, some judges have likewise imposed limits on the number of terms they will construe. For example, Judge Sleet of the District of Delaware struck a joint claim construction chart that contained competing constructions for thirty-one claim terms or phrases spanning four patents. See Grape Technology Group, Inc. and KGB, Inc. v. Jingle Networks, Inc., Civ. No. 08-408 (D. Del.), Docket Entry 35 (Order dated Oct. 20, 2009). There, the Court ordered the parties to file an amended claim construction chart within five days, limited to ten disputed terms per patent-in-suit.
CONSUMERS FAIL TO MAKE THEIR MARK: Pro Se Plaintiffs Initiating Qui Tam Suits Under The False Marking Statute Face Uphill Battle
What do adjustable bow ties have in common with disposable coffee cup lids? Not much, other than the fact that they have recently been at the center of false patent marking suits brought against major corporations not by competitors, but consumers. In each case, a consumer noticed that markings on certain products referred to patents which had long since expired.
While most ordinary consumers would not attribute much significance to such a finding, these were no ordinary consumers. They were patent attorneys who, by virtue of their profession, were familiar with the false marking statute of the Patent Act. So when Matthew Pequignot sat down to his morning coffee and noticed that the lid of his cup was marked with an expired patent, he proceeded to file Pequignot v. Solo Cup Company. And when Raymond Stauffer noticed that his Brooks Brothers adjustlox bow-tie was affixed with an expired patent number, he initiated Stauffer v. Brooks Brothers, Inc.
Is an end coming for reverse payment settlements of Hatch-Waxman litigations?
The FTC, like Wile E. Coyote chasing The Road Runner, has been doggedly challenging settlements between brand name pharmaceutical companies and generics to resolve Hatch-Waxman litigations. Reverse payments settlements, which the FTC calls “pay-for-delay” deals, where Hatch-Waxman litigations are settled by the brand name drug company’s payment to the generics to stay off the market, have been the main target of the FTC since the late 1990’s. The FTC’s position is that reverse payments impermissibly thwart less expensive generic drugs from timely reaching consumers. While there is a circuit court split on the issue, the recent trend of courts, including the Federal Circuit, has been that reverse payments are acceptable because they are “within the exclusionary zone of the patent and thus [cannot] be redressed by federal antitrust law.” In re Ciprofloxacin (“Cipro”) Hydrochloride Antitrust Litig., 544 F.3d 1323, 1327 (Fed. Cir. 2008), cert. denied 129 S. Ct. 2828 (2009).
The Supreme Court has yet refused to weight in on reverse payments, denying certiorari this past summer despite the FTC’s, and, more recently, the DOJ’s entreaties to take up the issue in the Cipro case. Previously, the DOJ had remained on the sidelines in reverse payment fights, but under the Obama administration’s guidance, the DOJ is now advocating that reverse payments be prohibited. The DOJ’s position on the issue has struck the path for the new kid on the block in the war on reverse payments: Congress.
In Cipro, DOJ’s briefing to the Supreme Court advocated a presumption shift: that a prima facie antitrust claim for reverse payments could be established by showing only that the settlement was a result of consideration provided to the generic by the branded patentee, accompanied by the generic withdrawal of its challenge. The prima facie case could then, however, be rebutted upon a showing that reverse settlement did not unreasonably restrain competition.
During a recent AIPLA-sponsored discussion at the USPTO, patent practitioners met with heads of various Technology Centers to discuss USPTO caseloads and recent events. One of the more interesting topics was the increasing number of disclosures from applicants in light of McKesson and more recent inequitable conduct cases and measures that may be taken by the USPTO and practitioners in response.
In McKesson Information Solutions, Inc. v. Bridge Medical, Inc., 2006-1517 (Fed. Cir. 2006) the Court of Appeals for the Federal Circuit affirmed a district court’s finding of inequitable conduct for failure to disclose materials to the USPTO in violation of an applicant’s duty of disclosure under 37 C.F.R. 1.56. In that case, the patent attorney handled two similar, yet unrelated, pending patent applications before the USPTO and did not disclose in connection with one patent application certain documents, such as an office action and a prior art reference, cited in the other similar patent application.
In view of McKesson, patent practitioners may give additional consideration to disclosing office actions and references between related patent applications as well as office actions and references found in unrelated, yet similar patent applications. As the number of related applications and similar patent applications grows, the disclosure process may become more challenging due to the number of documents to cite and the timing of disclosure. For example, if, after a patent application has been allowed, an office action appears in a related or similar patent application, then the applicant may file an Information Disclosure Statement (IDS) disclosing the office action and along with a mandatory and costly payment for a Request for Continued Examination (RCE) to reopen prosecution of the allowed patent application so that the Examiner may review the office action and references cited therein.
During the discussion at the USPTO, the participants considered options such as a special “After-allowance RCE” of reduced price that would pay for the Examiner to review references disclosed by the applicant in the situation described above. Also of note was a suggestion that a feature be implemented within the USPTO’s electronic database that would allow applicants to link applications to allow office actions and references to be automatically disclosed between applications. This issue is on the USPTO’s radar, so stay tuned for developments.