In 2005, the Federal Circuit established the framework for the construction of patent claim terms. In its landmark holding in Philips v. AWH Corp., the Federal Circuit stated that “words of a claim ‘are generally given their ordinary and customary meaning . . . [and] that the ordinary and customary meaning of a claim term is the meaning that the term would have to a person of ordinary skill in the art . . . .”
Author: Charles H. Chevalier
In today’s digital age, cloud computing has lowered the barrier of entry into many marketplaces by providing network access to a shared pool of configurable computing resources. Cloud services allow business to forego upfront capital costs on servers, network infrastructure, and software allowing companies to focus on establishing and differentiating its business instead of worrying about its IT resources. Additionally, it is typically a “pay as you go” service meaning that businesses can scale up or down as needed in real time. However, entrusting a third-party as the sole source of the company’s network, software, and data storage functionality puts the company at risk of losing these services should the provider enter bankruptcy.
We previously reported on the potential impact that the Supreme Court’s decision in the case of Kimble v. Marvel Enterprises, Inc. may have on patent licensing terms. On June 22, 2015, the Supreme Court, basing its decision on stare decisis, upheld Brulotte which had barred royalty payments on post patent expiration activities. Kimble et al. v. Marvel Ent., LLC, 576 U.S. __ (2015). The Supreme Court, referencing the Brulotte court’s opinion, found that such post expiration royalty provisions “conflict with patent law’s policy of establishing a ‘post expiration . . . public domain’ in which every person can make free use of a formerly patented product” Kimble, 576 U.S. at _ (slip op., at 5) (quoting Brulotte v. Thys Co., 379 U.S. 29, 33 (1964). In upholding that ruling, the Supreme Court reasoned that “stare decisis carries enhanced force when a decision . . . interprets a statute. Then, unlike in a constitutional case, critics of our ruling can take their objections across the street, and Congress can correct any mistake its sees.” Id. at _ (slip op., at 8).
As licensing professionals await the decision of the Supreme Court in the case of Kimble v. Marvel Enterprises, Inc., which is widely believed to determine the future viability of the fifty year old decision of the Court in Brulotte v. Thys Co., it may be useful to consider the practical impact such a decision may have. The Brulotte decision held that use of the monopoly power of a patent to exact royalty payments on post expiration activities was a per se violation of the anti-trust laws. The reasoning was based on an analogy of the Court’s earlier prohibitions against tie-in arrangements where the use of a patented article required the purchase of an unpatented article. The patented invention was considered to be in the public domain upon expiration and thus free to use by all.
The Federal Circuit recently addressed the issue of whether Patent Term Adjustment (“PTA”) can be reduced under 35 U.S.C. § 154(b)(1)(C) by conduct that does not actually cause delay in the conclusion of prosecution. Section 154(b)(1)(C) provides that PTA “shall be reduced by a period equal to the period of time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application.” The USPTO has interpreted the statute to mean that conduct that did delay or that could potentially delay the examination of a patent applications should be sanctioned. In Gilead Sciences Inc. v. Lee, Gilead Sciences, Inc. (“Gilead”) contested the USPTO’s interpretation and argued that the statue required actual delay in the conclusion of prosecution. The Federal Circuit held that Congress’s intent in enacting the statute was “to sanction not only applicant conduct or behavior that result in actual delay, but also those having the potential to result in delay irrespective of whether such delay actually occurred.”
Heightened Pleading in Patent Complaints to Frustrate Trolls – Exception for Hatch-Waxman/ANDA Cases
All branches of government have worked to decrease frivolous litigation by non-practicing entities (“NPEs”), or patent trolls, in order to both encourage developing technology and allow businesses to utilize that technology without a looming threat of disruptive and costly litigation. In the course of our coverage of these efforts, we have seen state and federal legislative bodies, as well as the United States Patent and Trademark Office (“USPTO”), the executive branch, and the courts, suggesting potential solutions. Congress is currently weighing a revamped version of House Judiciary Committee Chairman Bob Goodlatte’s Innovation Act bill, which seeks to reform patent litigation by focusing on pleading standards.
On Tuesday, the Federal Circuit issued its first ruling on an appealed Patent Trial and Appeal Board (“PTAB”) decision of an inter partes review (“IPR”). Cuozzo Speed Technologies (“Cuozzo”) owns U.S. Patent No. 6,778,074 (the “’074 patent”) entitled “Speed Limit Indicator and Method for Displaying Speed and the Relevant Speed Limit.” Garmin International, Inc. and Garmin USA, Inc. (collectively, “Garmin”) petitioned the United States Patent and Trademark Office (“USPTO”) for IPR of claims 10, 14, and 17 of the ’074 patent. The PTAB found the claims to be invalid as obvious.
We have previously posted on the judiciary’s attempts to address frivolous and unwarranted suits brought by patent holding, non-practicing entities (“NPEs”). To deter such litigation, courts have the power to award attorneys’ fees and costs to defendants subject to such baseless suits. In an October 23 Opinion and Order in Lumen View Tech., LLC v. Findthebest.com, Inc., District Judge Denise Cote, applying 35 U.S.C. § 285 (“Section 285”), not only awarded the defendant its attorneys’ fees and costs, but also applied an enhancement to the awarded fees.
Because I Said So: Courts’ Inherent Powers to Impose Fees for Bad Faith, Vexatious, or Wanton Litigation
Fee shifting has been a recent theme in patent litigation, with judges, legislators, and state attorney generals alike attempting to curb abuses of the patent system by creating new penalties. One judge has fallen back on the long-standing inherent powers of the judiciary to do so. This appealing new method of punishing patent litigation abusers comes from the U.S. District Court of the District of Delaware, one of the nation’s busiest patent dockets. Judge Richard G. Andrews’ well-reasoned opinion awards attorneys’ fees to the defendant on the basis of the court’s inherent powers to penalize those who act in “bad faith, vexatiously, wantonly, or for oppressive reasons.” Parallel Iron LLC v. NetApp Inc., No. 12-769, Slip Op. at 15 (D.Del. Sept. 12, 2004).
We have previously posted on proposed federal and state legislation aimed at addressing the toll of “patent troll” litigation by non-practicing entities on the U.S. economy. The Gibbons IP Law Alert has previously posted regarding such issues on August 26, 2014, June 25, 2014, March 10, 2014, and December 13, 2013. Continuing the trend, the New Jersey General Assembly panel recently advanced bill A-2462 to address so called “Patent Troll” litigation. Consistent with other recent efforts at curbing patent litigation abuses, this bill attempts to identify wrongdoers and penalize specific abuses through monetary sanctions.