An article is here. Peoplel are slowly beginning to realize that it's hard to define a "troll." I always use the example of distressed patents: do we really want patents sold at bankruptcy to have less value to the purchaser solely because it doesn't make the product covered by the patent?
Our NYT op-ed, below, I still think is the right approach… with 285 interpreted right!
Guest post by Jorge L. Contreras. Prof. Contreras is an Associate Professor of Law at American University Washington College of Law.
As part of the global smartphone litigation between Apple and Samsung, the European Commission has been investigating Samsung’s use of injunctive relief to address infringement of standards-essential patents (SEPs). Last December, the Commission informed Samsung that its attempts to obtain injunctions against Apple based on SEPs covering the European Telecommunications Standardisation Institute's (ETSI) 3G UMTS mobile wireless standard constituted an abuse of dominant position under EU competition law. One of the key elements in the claim against Samsung was that it sought injunctions after having committed to license its SEPs to implementers of the UMTS standards on fair, reasonable and non-discriminatory (FRAND) terms, a common requirement within the standards-development world.
Last week the Commission announced that it has received a preliminary settlement proposal from Samsung. Under this proposal, Samsung would commit not to seek injunctions in Europe on the basis of SEPs covering a broad range of wireless telecommunications and networking standards (i.e., well beyond the UMTS standard at issue in the Apple case), so long as the alleged infringers agreed to comply with a specified process for determining appropriate FRAND royalty rates. This process would include good faith negotiations for at least 12 months, followed by arbitration at the International Chamber of Commerce (ICC) or litigation in the English High Court. Samsung’s commitment with respect to its SEPs would become the most recent in a growing number of public commitments being made voluntarily by patent holders to limit the enforcement of their patents covering standardized technologies.
For those following the smartphone wars, Samsung’s proposal should sound familiar, as it bears a striking resemblance to the terms on which Google settled an investigation by the U.S. Federal Trade Commission this summer. The FTC’s investigation of Google’s subsidiary Motorola Mobility also focused on the use of SEPs to seek injunctive relief against implementers of industry standards, and was based on the potential anticompetitive impact of this behavior. There are, however, several notable differences between the FTC’s Google settlement and what Samsung has proposed. Some of these are summarized in Table 1 below:
Table 1
Comparison of Google and Samsung (Proposed) Injunction Settlement Terms
|
|
FTC-Google Order (Jul. 23, 2013) |
Samsung Proposal to EC (Oct. 17, 2013) |
|
|
|
|
|
Scope of Non-injunction commitment |
Worldwide |
European Economic Area (EEA) |
|
Duration of Commitment |
10 years |
5 years |
|
Standards covered |
Any standard published by a standards-setting organization (SSO) |
Mobile Device* standards published by SSOs |
|
Mandatory negotiation period |
6 months |
12 months |
|
Designated arbitral tribunals |
AAA, JAMS, WIPO |
ICC |
|
Designated courts |
Any tribunal worldwide |
English High Court or EU Unified Patent Court |
* Mobile devices include smartphones and tablet devices but exclude desktop, notebook, subnotebook and laptop computers.
As Table 1 indicates, Samsung’s proposal is (not surprisingly) a bit less burdensome than the terms that Google agreed with the FTC. To wit, the proposed geographic coverage is narrower (the EEA rather than the whole world) and the duration is half as long (5 rather than 10 years). Interestingly, however, Samsung has proposed a mandatory negotiation period, during with it would be required to negotiate FRAND terms with a potential licensee, that is twice as long as the period agreed by Google (12 versus 6 months). As patent holders typically want to get to court as quickly as possible, it is not clear why Samsung has proposed a longer period, and this may simply be a function of private signaling made by the Commission. Samsung’s choice of arbitral tribunals is also interesting, inasmuch as it designates the private International Chamber of Commerce (ICC) over the UN-chartered World Intellectual Property Organization (WIPO), which has actively been seeking to get into the SEP arbitration business.
Just as the FTC did prior to finalization of the Google settlement, the EC has solicited public comments on the proposed Samsung settlement. The FTC received 25 submissions in response to its solicitation, and made several adjustments to the final Google order as a result. The EC has allowed 30 days for the submission of comments (through Nov. 16, 2013) and it is likely that many of the same issues that were raised in the comments to the FTC will surface again.
For those who are generally interested in voluntary patent pledges like the one proposed by Samsung, the Program on Information Justice and Intellectual Property (PIJIP) at American University’s Washington College of Law has established a new public web resource listing and describing non-SDO patent commitments. The site, which was launched last week, already includes 63 different non-SDO patent commitments covering thousands of patents. These pledges have been made by industry leaders such as Google, Microsoft, Apple and Intel, as well as small entities and, should its proposal to the EC be accepted, Samsung. We hope to continue to add information to this site, and invite the submission of additional non-SDO patent commitments by the public.
A while back, Chief Judge Rader, Professor Chien and I wrote an op-ed in the New York Times about how section 285 could be used to cure any "patent troll" problem. (It's here with a really cool patent troll graphic.) I've been meaning to explain why for a while, and, now with the Supreme Court taking a look, it seems a good time. (An article on the petition for cert, which quotes that article, is here.)
To me the answer is quite simple, if one does what one is supposed to do with statutes: consult them.
Section 285 and its Legislative History.
Fee shifting became available in patent cases for the first time in 1946, when Congress adopted 35 U.S.C. § 70. That statute gave federal courts broad equitable powers to allow for fee shifting to prevent injustice to accused infringers, as well as to ensure that an accused infringer would not only pay a reasonable royalty. See S. Rep. No. 1503 (79th Cong. 2d Sess. 1946). In the years immediately following the adoption of Section 70, courts emphasized that the statute focused on equity, fairness, and justice. For example, courts stated that awarding fees should be “bottomed upon a finding of unfairness, or bad faith in the conduct of the losing party, or some other equitable consideration of similar force, which makes it grossly unjust that the winner . . . be left to bear the burden of his own counsel fees . . . .” Park-in-Theatres, Inc. v. Perkins, 190 F.2d 137, 142 (9th Cir. 1951). Courts considered all factors, including whether the patentee could have simplified the case earlier, whether there were unreasonable infringement allegations, delay in suing, dropping customer-defendants, and so on. E.g., Merrill v. Builders Ornamental Iron Co., 197 F.2d 16 (10th Cir. 1952); Aeration Processes, Inc. v. Walter Kidde & Co., 170 F.2d 437 (2d Cir. 1948); Brennan v. Hawley Prods. Co., 98 F. Supp. 369 (N.D. Ill. 1951).
Nothing changed in 1952. Instead, Congress re-codified Section 70 into what we now have as Section 285. "Exceptional case" has no clear meaning. Congress could have said "in frivolous cases, fees can be shifted," but for some reason it added "exceptional case." The Federal Circuit in 1985 analyzed the legislative history (always risky, but in this case, correct I believe) and recognized Congress made clear that it was adopting the cases that had been decided between 1946 and 1952 under Section 70. Congress explained that was it was adding the phrase “exceptional case” to the Section 285 to capture the approach of those cases. See Mach. Corp. of Am. v. Gullfiber AB, 774 F.2d 467 (Fed. Cir. 1985) (explaining addition of the “exceptional case” language). Thus, Section 285 focuses on fairness, justice, and equity. It is a flexible statute, by design no different from Section 70.
Section 285 as Interpreted by The Federal Circuit
Early decisions of the Federal Circuit were generally consistent with the intended meaning of the state. For example, the Federal Circuit stated that unintentional errors were not enough to establish an exceptional case, but gross negligence in asserting infringement was sufficient. Machinery Corp., 774 F.2d at 473 (“The end inquiry . . . is whether [the patentee] recklessly concluded that [there was infringement] . . . .”). Again, equity was the real issue, and there was no finding of intent necessary: gross negligence was enough.
However, a 2005 decision suggested that Section 285 had a radically different meaning. Without discussing the statute's meaning or these early Federal Circuit decisions, the court in Brooks Furniture Mfg., Inc. v Dutailer Int’l, Inc., 393 F.3d 1378 (Fed Cir. 2005) stated that the standard developed by the Supreme Court in Professional Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49 (1993) governed fee shifting under Section 285. According to Brooks Furniture, to obtain fees under Section 285, an accused infringer must establish both that the infringement suit was objectively and subjectively baseless.
In my view, this is simply wrong.
Foremost, the interpretation is inconsistent with and unsupported by the statute’s text and history.
It is also absurd to assert that the text Congress adopted in 1952 included standards developed 40 years later.
Further, the policy behind the high standard in PRE has nothing to do with fee shifting. PRE was a liability case: the Court held that, because of the First Amendment right to petition government, a party can be sued for having previously sued someone only upon a showing the suit had been objectively and subjectively baseless. If one extends PRE to fee shifting, then Congress (and presumably state legislatures) can shift fees only if a suit is objectively and subjectively baseless. If that is true, then no doubt dozens of statutes are unconstitutional.
My View
As I wrote in the New York Times, Section 285 is flexible enough to cure any problem. The Federal Circuit just needs to do what Congress told them to do.
By Dennis Crouch
NCube (ARRIS Gp) v. SeaChange (Fed. Cir. 2013)
Injunctive relief is a powerful mechanism for stopping ongoing patent infringement and for forcing settlement by placing large hold-up costs on adjudged infringers who are locked-into maintaining their technology profile. In the area of multi-component systems, many accused-infringers and academics argue that the hold-up costs of injunctive relief sets-up an imbalance of power that results in a windfall settlement for minor-component patentees. The prototypical case is where an injunction is ordered to stop sales of a complex product based upon the finding that one of the many components infringes a patent.
The decision here offers a counterbalance based upon the recognition that product specifications and production methods are continually updated and modified. Major modifications may result in a new product version, but more minor changes regularly implemented without direct customer notification.
Here, the ARRIS patent covers a system of delivering streamed video that have been purchased online. Patent No. 5,805,804. A jury found that SeaChange’s ITV product was infringing and the district court entered a permanent injunction – enjoining SeaChange from using or selling the ITV product or “any devices not more than colorably different therefrom that clearly infringe the Adjudicated Claims of the ‘804 patent.” Although stated within the same paragraph here, it actually took four years for the court to order the permanent injunction following the jury verdict. The delay took into account post-verdict motions and briefing and then an appeal to the Federal Circuit where the verdict was affirmed.
By the time the injunction order became effective, SeaChange had modified its ITV system in order to avoid infringement. This approach is common. In essence, when an injunction issues regarding a minor component of a product, the outcome is normally not to cease manufacturing and sales but rather to modify or “patch” the product design and thus avoid the injunction. It’s also common that the work-around is – from the patentee’s point of view – still within the coverage of the patent.
After a failed settlement attempt, ARRIS filed a contempt motion asking the district court to stop the sales. However, the district court refused and that refusal has been affirmed on appeal the Federal Circuit. Rather, in order to stop the new product ARRIS would need to file an entirely new federal lawsuit.
Contempt motions are actually difficult to win. The basic rule is that the party seeking to enforce the injunction must provide clear and convincing evidence that the accused activity falls within the injunction. For new product designs, the courts only allow contempt when the new product is “no more than colorably different” than the one found to be infringing. See TiVo v. EchoStar (Fed. Cir. 2011) (en banc).
Here, the modification was to basically take a ClientID out of a particular table stored on the system and instead stored elsewhere on the system. Although the ClientID still performs the same function, the change “is a significant change to the system.”
The result then is that ARRIS only avenue for enforcement is to file a new infringement lawsuit.
The petition is here. The question presented was:
Did the Court of Appeals for the Federal Circuit err in restricting district courts’ equitable discretion in evaluating patent unenforceability, contrary to this Court’s precedent in Keystone Driller, Hazel-Atlas, and Precision Instrument, by applying a rigid test that (a) forecloses district courts from considering the entire circumstantial record; and (b) precludes district courts from granting equitable remedies where a patent applicant has violated the PTO’s duty of candor.
Update: the rest of the briefs are here (response to petition), and the SG's brief is here.
I still don't think Therasense is a proper construction, and I also still think the issue of its retroactivity could still lurk out there for someone to raise…
Ocean Tomo, LLC v. Jonathan Barney and PatentRatings LLC, Docket No. 12-cv-8450 (N.D. Ill. 2013)
Jonathan Barney is the founder of PatentRatings, the company that holds the patent on rating patents based upon a variety of objective criteria. See U.S. patent No. 6,556,992, 7,657,476, 7,716,226, 7,949,581, 7,962,511, 8,131,701, 8,504,560. In 2005, Barney joined Ocean Tomo and the company licensed use of his patent ratings information. According to the court documents, that agreement ended on a bad note in 2011:
After Barney began to work at Ocean Tomo, he quickly soured on the company as he discovered that "the environment at Ocean Tomo was rife with conflict, back-biting, and shady business and accounting practices." According to Barney, Ocean Tomo attempted to freeze him out, deprive him of the benefits he had been promised, and destroy him and PatentRatings financially so Ocean Tomo could appropriate the PatentRatings system and the associated intellectual property. Barney alleges that by February of 2011, the working environment at Ocean Tomo was so intolerable that he had no choice but to resign. He also alleges that Ocean Tomo used his resignation as an excuse to redeem a portion of his equity units without paying consideration and to reduce his share of profits and equity based on groundless claims of misconduct. . . . Barney also contends that Ocean Tomo wrongfully disclosed PatentRatings' confidential information to third-party software developers so they could reverse engineer the PatentRatings system and develop knock-off products based on PatentRatings' intellectual property. In addition, Barney asserts that Ocean Tomo wrongfully accessed PatentRatings' computer servers in Irvine, California, copied confidential data on the servers, and transferred that data to its own servers so it could attempt to reverse-engineer PatentRatings' product.
Prior to this lawsuit, the parties had actually arbitrated some of their disputes and a three-member panel found largely for Barney in rejecting Ocean Tomo's request for $2.5 million in damages. However, Ocean Tomo then sued in Illinois state court Barney for violation of his employment agreement, violation of the Illinois Trade Secret Act, violation of the Computer Fraud and Abuse Act (CFAA), and conversion. Barney removed the case to Federal Court countersued as noted above.
Although the case is still ongoing, the district court has dismissed several of Barney's claims for failure to state a claim upon which relief can be granted. These include Barney's claims of violation of an implied covenant of good faith and fair dealing; fraud; and the CFAA violation allegation. In particular, under Illionois law there is no independent cause of action for violation of the implied covenant of good faith and fair dealing, but rather that covenant is a part of each contract and thus must instead be alleged as part of a breach of contract claim. Barney's claim that Ocean Tomo committed fraud stemmed from his joining with the firm in 2005 and was thus barred by the Illinois five-year statute of limitations. Finally, the CFAA claim alleges that in September 2012 (long after the break-up) Ocean Tomo accessed PatentRatings' servers without authorization, copied confidential data and thereby caused at least $5,000 in damages. For a CFAA civil action, the damage threshold is a required element of a claim. However, in oral arguments PatentRatings admitted it was in the process of evaluating the damage an/or loss. The court therefore also dismissed the CFAA claim based upon PatentRatings' "tacit concession that its CFAA claim is deficient."
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Based upon an ongoing license, In Ocean Tomo continues to use the PatentRatings algorithms to report on patent quality through its Ocean Tomo Ratings.
= = = = =
District Court Decision: Download Gov.uscourts.ilnd.275661.52.0
This is an article I wrote several years ago, but I was asked today about its subject and so thought I'd throw it up here.
I think after this, the OED came out and disciplined a lawyer for this sort of thing.
By Dennis Crouch
Two interesting consumer products lawsuits filed this week:
Gillette sued BK Gifts for selling generic knock-off versions of the popular Gillette MACH3 and Proglide razor blades. The defendant has not been selling these as counterfeit goods but rather as goods offering the same functionality at a substantially lower price. Their website stated: “STOP OVERPAYING FOR RAZOR BLADES . . . If you like Gillette® MACH3®, MACH3® SENSITIVE or M3 Power you’ll love our Classic Razor Blades.” Now, the website states “WE No Longer Sell Razors Due to a Pending Lawsuit With Gillette.”
In the lawsuit, Gillette does not suggest that it invented any new technology or useful good but rather asserted six design patents that cover the ornamental design of its razors. US Design Patent Nos. D415315, D422751, D430023, D440874, D531518, and D575454. Of interest, the D’315 should expire on October 12, 2013 and several others will expire in 2014.
P&G’s lawsuit against Unilever involves three shampoo concoctions that are useful for dandruff: US Patent Nos. 6,451,300, 6,649,155, and 6,974,569. Although the patent makes some claims regarding the effective treatment of dandruff, I don’t see any file history information where the PTO asked for any proof to back-up those claims. An interesting aspect of the dispute is that P&G and Unilever have an ongoing contractual process for resolving patent disputes that involve a tiered approach that begins with good faith negotiations, then moves to mediation, and finally to non-binding arbitration. If that process fails, then the case can file in court. The complaint in this case indicates that the process has been successful in that the parties have settled five different patent disputes over the past five years without having to file a civil action. However, P&G alleges that Unilever has refused to arbitrate the case and instead filed inter partes review petitions with the PTO and filed a declaratory judgment action in the UK challenging the patent there. See IPR Nos. 2013-0505, 2013-0509, 2013-0510.
==
The twin patent-term-adjustment cases of Exelixis, Inc. v. Rea and Novartis AG v. Rea are now scheduled for oral arguments at the PTO.
In Intellect Wireless, Inc. v. HTC Corp., the court affirmed the district court's conclusion of inequitable conduct. Boiled down, the applicant filed a Rule 131 affidavit stating that it had actually reduced the invention to practice when, in fact, it had not. In a later affidavit, references to "actual reduction to practice" were removed, but the affidavit still contained references to a prototype–that had never been made, among other things. The court held that the affidavits were material, relying upon Therasense's statement that false affidavits were so by their nature. It held there was intent to deceive based upon the first affidavit alone, confirmed by the filing of the second without clearing matters up coupled with similar misconduct in other related cases.
The case does not appear to break new ground, but it does reinforce the fact that inequitable conduct is not a dead letter.
The article is here.
by DennisCrouch
Juxtacomm-Texas Software v. Tibco Software, et al. (Fed. Cir. 2013)
In this case the Federal Circuit only offered one paragraph of substantive analysis:
The decisions of the district court … , construing the relevant claim language of U.S. Patent No. 6,195,662 and granting the motion for summary judgment of invalidity based on 35 U.S.C. § 112 ¶ 2, are affirmed on the basis of the district court's opinions. The language of the claims controls their construction, and the invention set forth in the claims "is not what the patentee regarded as his invention." Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1349 (Fed. Cir. 2002).
Under Allen Eng'g, section 112 ¶ 2 requires that the patent "set forth what the applicant regards as his invention and … do so with sufficient particularity and distinctness." (Section 112 has now been rewritten and § 112 ¶ 2 is renumbered as § 112(b)). In most cases, 112 ¶ 2 challenges focus on the requirement of "sufficient particularity and distinctness" in the form of a definiteness challenge. However, this case focuses on the first portion of the provision and finds that the patentee failed to claim "what the applicant regards as his invention." And, that failure results in the relevant claims being held invalid. The district court wrote:
Section 112 ¶ 2 contains two requirements: "first, [the claim] must set forth what the applicant regards as his invention and second, it must do so with sufficient particularity and distinctness, i.e., the claim must be sufficiently definite." Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1348 (Fed.Cir.2002) (internal quotes removed) (quoting Solomon v. Kimberly–Clark Corp., 216 F.3d 1372, 1377 (Fed.Cir.2000)). A claim is invalid under the first prong of 35 U.S.C. § 112 ¶ 2, when one of skill in the relevant art, reading the specification would not understand the invention set forth in a claim is what the patentee regarded as his invention.
Juxtacomm's basic problem in this case is that the plain interpretation of its asserted claims result in a system that the patent document itself does not describe. The patent here is directed to a data transformation system and all asserted claims include some form of a "script processor for utilizing metadata from [a] metadata database to control data transformation within [a] systems interface and [to control] movement of said data into and out of a distribution system." The claim includes a limitation that a "script processor" that is designed "to control data transformation within said system interface." However, Juxtacomm's specification does not describe data transformation within the system interface. Based upon that difference, the court found an "irreconcilable contradiction" between the specification and the claims that renders the claims invalid under § 112 ¶ 2.
= = = = =
A major question left unaddressed by the court here is the overlap between, on the one hand, this § 112(b) issue of "irreconcilable contradiction" when comparing the specification with the patent claim and, on the other hand, the requirement of § 112(a) that the specification set forth a written description of the claimed invention. For its part, the district court here suggested in a footnote that the two doctrines have substantial overlap – writing that "the Court would [also] find it exceedingly difficult to preserve the validity of the ′662 in light of the requirements set forth in 35 U.S.C. § 112 ¶ 1 … [since] the specification simply does not disclose [the claimed] invention."
It appears to me that the overlap is likely complete. However, there is one important procedural distinction – that the inquiry under § 112(a) is generally seen as a question of fact while the inquiry under § 112(b) is a question of law. See Enzo Life Sciences, Inc. v. Digene Corp., 305 F.Supp.2d 406 (Fed. Cir. 2004). All things being equal, questions of law tend to be easier to resolve earlier in the case – such as on summary judgment. However, questions of law are also ordinarily more vigorously reviewed on appeal.
= = = = =
Read the CAFC Opinion and the District Court Opinion.
Emphasizing that even though discovery had not closed, the court unanimously affirmed a district court's decision not to permit amendment of contentions relating to infringement and claim construction. The cae is Kruse Techn. Partnerships v. VW, opinion by Judge Linn (joined by Judge Newmann). Judge Wallach dissented on claim construction grounds.
This is one of those tough issues: you have to get your claim construction contention correct, early, but… even what the district court holds has a large chance of being wrong. Bottom line is amend early, though not often.
One difficulty with studying patent enforcement is that so much of the action goes on behind closed doors and outside of court filings.
A colleague of mine is looking to interview a number of different participants for a research study on patent assertion entities. Specifically, the colleague is looking to talk to the following types of people:
If you fit within any of these categories and would be willing to answer a few questions, please e-mail your contact information to patentlawone@yahoo.com.
I have been assured that “interview data will remain confidential” and that “information gathered will be used strictly for academic research.” The researcher here has no affiliation to any party on either side of the current debates on patent assertion entities.
— Dennis
by Dennis Crouch
On Friday, Greg Gorder led a great discussion here at the University of Missouri School of Law as part of our symposium on Resolving IP Disputes. Gorder is a co-founder of the patent-law giant Intellectual Ventures. The focus of Gorder’s talk was on incremental invention and the “invention gap” associated with most products on the market. Intellectual Ventures basically defines this invention gap as the number of patents that a company is infringing when it makes or sells its products. The key figure that I walked away with was 80,000. Intellectual Ventures now owns over 80,000 patents and pending patent applications.
Later this week we should have video of the conference available for viewing.
While Mr. Gorder was speaking here at Mizzou, his company attorneys were busy filing a host of patent infringement lawsuits against the mobile carrier industry, including AT&T, Leap Wireless, Nextel, T-Mobile, and US Cellular. The patents in suit include U.S. Patent Nos. 6,640,248; 5,602,831; 6,023,783; 6,952,408; 6,370,153; 5,963,557; 8,310,993; 7,269,127; 7,848,353; 8,396,079; and 7,787,431. In typical aggregator form, the patents come from a diverse array of sources including Malibu Networks (a failed company with “promising technology” that “entered the market about two years too early”); Seiko (an ongoing company that wanted to monetize its invention surplus); California Institute of Technology (a large non-practicing entity); AirNet Communications; John Eng; IPWireless; Georgia Tech; and Neocific.
By Dennis Crouch
Supreme Court Action on 10/7/2013
Extraterritorial Application of US Patent Law: The Supreme Court has issued an invitation to the Solicitor General to file the Views of the Obama Administration (CVSG) in Maersk Drilling USA, Inc. v. Transocean Offshore Deepwater Drilling, Inc., Sct. No. 13-43 (2013). The focus of the case is location – and, what is meant by an “offer to sell . . . within the United States” under 35 U.S.C. § 271(a). The Federal Circuit held that the actual location of the offer is immaterial so long as the offer contemplated performance within the United States.
Subject Matter Eligibility: The Supreme Court has denied certiorari in the § 101 case challenging PerkinElmer’s patented “method for determining whether a pregnant woman is at an increased risk of having a fetus with Down’s syndrome.” Intema Ltd. v. PerkinElmer, Inc., Supreme Court No. 12-1372. The case with a much greater shot is Alice v. CLS Bank and perhaps its companion WildTangent v. Ultramcercial. Briefing of the petition continues in those cases.
False Marking: The Supreme Court has denied certiorari in PubPat’s False Marking case. PubPat had challenged the AIA’s retroactive rejection of non-competitor qui tam suits for false marking. Public Patent Foundation, Inc. v. McNeil-PPC, Inc., Sct. No. 13-161.
Prior Art Presumed Enabling: The Supreme Court has denied certiorari in the Finjan’s challenge to the PTO’s presumption that prior art is enabling. Finjan, Inc. v. U.S. Patent and Trademark Office, Sct. No. 12-1245.
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Patent Cases Where Petition for Certiorari has been Filed:
Limelight v. Akamai, Sct. No. 12-786, is still pending at the Supreme Court and awaiting comments from the US Solicitor General (CVSG) before the court decides whether to grant the petition for writ of certiorari. The question presented in that case is whether indirect infringement (inducement) requires underlying direct infringement by a single actor. The Federal Circuit says “no.”
Hyundai Motor America, Inc. v. Clear with Computers, LLC, Sct. No. 13-296. This pending case is a follow-up to the Supreme Court’s 2011 decision in Microsoft v. i4i where the court held that invalidity defenses must be proven with clear and convincing evidence. That decision included a concurrence by Justice Breyer indicating that questions of law (such as obviousness) need not be proven with clear and convincing evidence. “The question presented is whether, following i4i, a district court may … instruct a jury to apply the heightened ‘clear and convincing’ standard not only to disputed factual aspects of an invalidity claim, but also to the legal aspects of such a claim – including the ultimate question of a patent’s invalidity?”
The petition for writ of certiorari in Sony v. 1st Media, Sct. No. 12-1086, is fully briefed but has not yet been decided. That case involves the extent of district court discretion in evaluating the equitable doctrine of patent unenforceability. The case largely challenges the strict requirements of Therasense.
In Fox Group, Inc. v. Cree, Inc., Sct. No. 12-1378, the asserted patent was found invalid under 35 U.S.C. § 102(g)(2) since the subject matter of the patent had previously been invented. The statute only works if the prior inventor did not abandon, suppress, or conceal the prior invention and here the prior inventor concealed how to make the invention, did not commercialize it, and did not apply for a patent. However, the prior inventor did disclose the fact of the invention and publicly offered some non-enabling clues to the invention. Although briefing is now complete, the Supreme Court took no action in this case yet.
Nautilus v. Biosig is pending at the Supreme Court and awaiting a response from Biosig. The case questions whether the “Insolubly Ambiguous” standard for indefiniteness is overly strict.
Another pending petition is Nokia v. v. International Trade Commission, Sct. No. 12-1352. The case focuses on patent enforcement entities and the “domestic industry” requirement for USITC jurisdiction.
Organic Seed Growers and Trade Ass’n v. Monsanto Co, Sct. No. 13-303, is also pending as a petition for writ of certiorari. The case argues that organic farmers have jurisdiction to challenge Monsanto’s GMO seed patents.
Saffran v. Johnson & Johnson, Sct. No. 13-405. In this case, the patentee essentially asks the Supreme Court to decide the issue before the en banc Federal Circuit in Lighting Ballast Control. I.e., “Whether the Federal Circuit should have given deference to the district court’s factual findings in construing the patent claims.” This petition is something of a place-holder to give the patentee time to see the outcome of Lighting Ballast.
Artesyn Technologies, Inc. v. SynQor, Inc., Sct No. 13-375. In this pending case, the losing defendant has asked that the Supreme Court tell the Federal Circuit to “Follow KSR” and also “Follow Global-Tech” rather than recreating the formal TSM test and allowing recklessness serve as proof of knowledge for induced infringement. In the similar pending petition of Arthrex, Inc. v. Smith & Nephew, Inc., Sct. No. 13-290, the petitioner asks for a further definition of “willful blindness” for inducement.
Power Integrations, Inc. v. Fairchild Semiconductor International, Inc., Sct. No. 13-269. This damages case focuses on when lost-sales outside of the US can be captured under US law. Here, the patentee argues that those sales should be accounted-for when they are “direct and foreseeable result of patent infringement inside the United States.” Briefing is ongoing at the petitions stage.
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Patent cases where the Supreme Court has granted certiorari and will be hearing the case this term:
Medtronic Inc. v. Boston Scientific Corp., Sct. No. 12-1128 (Does a Declaratory Judgment plaintiff who is also an ongoing licensee of the patent have the burden of proving non-infringement?).
Highmark Inc. v. Allcare Health Mgmt. Sys., Sct. No. 12-1163 (When must deference be given to a lower court judgment regarding an exceptional case finding under §285?).
Octane Fitness, LLC v. Icon Health and Fitness, Inc., Sct. No. 12-1184 (What is the proper definition of an “exceptional case”?).
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Hal Wegner follows these developments closely and his Top-Ten lists are available through the LAIPLA website: http://www.laipla.net/hal-wegners-top-ten-patent-cases/
Chief Judge Woods of the Seventh Circuit spoke recently and said that the CAFC was "uniformly bad." An article with link to the text of her remarks, is here. The link to the text is here.
Wow.
I started doing patent cases in September, 1989. At that time, I could argue anticipation from multiple unrelated references. Claim construction? Maybe leave it for the jury, maybe the judge, maybe never decide it. DOE was the wild west. The court has done a lot of good.
Nowadays the disputes to me are narrower, but important. Section 101 is an obvious (ha, ha) area where the make-up of the panel could be outcome determinative. But that would probably be the case no matter who was trying to understand what the Supreme Court believes the law ought to be.
Those key splits I mentioned up front were, in contrast, fundamental questions that had never been resolved among the circuits despite 30 years of work with the patent act. Patent law is a lot better than it was — better — and it is a lot more efficient than it was — I know who is going to tell me what the claim means, and a lot of (albeit indeterminate) rules to help me figure that out. DOE is nowhere like it was. Damages — you would not recognize the damaegs theories we used to be able to assert.
Could it be better? I have no doubt about that it can: it is a human institution. The role of prior panel decisions sometimes is not given enough weight (a pet peave I'll write about under Section 285, shortly).
Would replacing it with the "old" system make it better? I have no doubt whatsoever that it would not. I have no doubt it would make things worse.
Wow, this one — Tecsec, Inc. v. IBM (Fed. Cir. 2013) — may have huge repercussions for appellate strategy, and also for the legal impact of hundreds of existing judgments. It deserves a read in full. Judge Reyna's dissent captures what happened:
The majority concludes that the district court misconstrued various claim terms from three TecSec, Inc. patents. It reaches this conclusion notwithstanding that the same claim terms, same constructions, same arguments, and same summary judgment order were previously before this court and reviewed on January 9, 2012. See TecSec, Inc. v. Int’l Bus. Mach. Corp. (“TecSec I”), 466 Fed. App’x 882 (Fed. Cir. 2012). In TecSec I, this court summarily affirmed the district court’s grant of summary judgment of noninfringement pursuant to Rule 36. Id. After TecSec lost its case against IBM, and without offering any additional evidence against the other defendants now before us, TecSec stipulated to noninfringement and has once again appealed the same district court’s claim constructions to this court. I respectfully dissent because I believe that entertaining this appeal gives TecSec a second bite at the apple and undermines the utility of Rule 36.
The key paragraph to the majority's basis for reaching a different result is this:
The Rule 36 judgment in the IBM appeal summarily affirmed the district court’s judgment that IBM did not directly or indirectly infringe TecSec’s patents. The district court’s judgment was based on two independent grounds. The district court first ruled as a matter of law that TecSec’s direct and indirect infringement claims failed for failure of proof that IBM itself or any of its customers performed every claimed step or made, used, sold, offered for sale, or imported any system containing all of the limitations of the asserted claims. As the dis- trict court stated in its opinion, without questioning TecSec’s construction of the terms now at issue, “TecSec has utterly failed to come forward with any evidence that IBM itself performed any of the steps of the method claims,” and “even if some user-implemented system were to meet all of the asserted claim limitations—which, as explained below it cannot . . . —TecSec has provided no evidence that IBM ever made, used, sold, offered to sell, or imported that entire claimed system . . . .” Summary Judgment Order, 769 F. Supp. 2d at 1010, 1012 (first emphasis added). The district court drew a similar conclusion regarding indirect infringement, as to which it found, as well, insufficient proof of the required intent. Given the absence of evidence that any steps were per- formed by IBM or that an entire claimed hard- ware/software system was ever made, used, sold, offered to sell, or imported by IBM or its customers, the district court was compelled to find no direct or indirect infringe- ment. Pennwalt Corp. v. Durand-Wayland, Inc., 833 F.2d 931, 949–50 (Fed. Cir. 1987) (en banc) (“Every Supreme Court decision which has addressed the issue of infringe- ment of a patent claim, beginning with Prouty v. Draper, 41 U.S. (16 Pet.) 335, 10 L.Ed. 985 (1842)—and the prece- dent is voluminous—has held that where a part of the claimed invention, that is, a limitation of the claim, is lacking in the accused device exactly or equivalently, there is no infringement.”) The district court, in finding a complete failure of proof regarding any act of infringe- ment by IBM or its customers, did not rely on any rejec- tion of TecSec’s constructions of the terms at issue here. Indeed, IBM represented to the court that we could affirm the district court’s judgment solely based on TecSec’s “complete failure of proof” and did not “need to get to claim construction.” TecSec, Inc. v. Int’l Bus. Machs. Corp., No. 2011-1303, Oral Arg. at 19:30–24:55, available at http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20 11-1303.mp3. While the district court also ruled in the alternative that TecSec failed to show that IBM’s software met various claim limitations, as construed, our Rule 36 decision does not articulate a basis for affirmance, let alone an explication on claim construction. On this record, it cannot be concluded simply on the basis of this court’s summary affirmance that we expressly or by necessary implication decided the claim construction issues in the IBM appeal .
The majority later reasoned: "Had claim construction been the only issue in the IBM appeal, and had that claim construction been essential to sustaining the judgment of noninfringement, the preclu- sive effect of our Rule 36 judgment would have been undeniable. But that was not the case."
I have a lot of questions. If infringement can be found, or not, only after claim construction (I think that's right, absent marginal odd-ball cases), then claim construction was necessary to the judgment. I also wonder how this fits in with the general rules about the impact of an affirmance of a judgment on alternate grounds, which the court does not discuss (perhaps the defendants did not appreciate these obscure doctrines; I don't know).
If the panel decision is correct, doesn't it mean that a lot of appealable judgments that were "affirmed" on appeal have no impact, even on the parties to that appeal? Suppose the district court clearly construes the claims, and based on that finds the patent both invalid and non-infringed. The case is Rule 36'd. Is nothing decided except claim construction? Isn't the patent, once again, "valid" because there is no binding judgment of invalidity? I may be missing something…
I bet there are an enormous number of fact patterns that might be implicated by this. I am trying to get my head around how a district court's order, which is binding on the parties, becomes non-binding when affirmed on appeal?
I know that this may have huge impact on Rule 36; if a panel's decision does not resolve claim construction, unless it is somehow more "necessary" than it was here, then perhaps a panel should not use Rule 36 very often? Interesting case with lots of systemic ripples, perhaps.
Picking the best available venue for a suit is a part of competent lawyering, and for a variety of reasons the Eastern District of Texas has been an oft-chosen site to sue. The Federal Circuit (and Congress) have sought to narrow the ability of patentees to sue in that court, as is well known.
Thus it is of note to me that the Federal Circuit granted a petition for mandamus review and held the district court had abused its discretion in not transfering the case to Ohio. The decision, In re Toa Techns., Inc., is here.
I have no view on the actual merits, but mandamus relief is an extraordinary remedy, and venue under 1404(a) a discretionary matter, meaning the grant of a petition should be extraordinarily rare. The Federal Circuit may be broadening the mandamus doctrine to acomplish some good, but that also may have unintended consequences in other areas. If something "as discretionary" as this can be reviewed and changed on mandamus, no doubt a lot of other things can to. It may be an opportunity for lawyers to "appeal" other issues, and also affects analysis of a venue decision — it may not stick.
Some things to ponder.
By Dennis Crouch
Activision TV v. Pinnacle Bancorp (D.Neb 2013)
In a second opinion in as many weeks, Federal Judge Bataillon (D.Neb.) has again ruled against the Nebraska State Attorney General and the state’s campaign against patent enforcement activities. [Link to Decision] Activision holds several patents that essentially cover the operation of a digital menu board with photographs. See U.S. Patent Nos. 8,330,613 and 7,369,058. And the company has sued a host of defendants and has sent out cease-and-desist letters to an even larger group, including some in Nebraska.
In response to those enforcement activities, the Nebraska Attorney General sent a letter to Activision’s litigation counsel ordering the firm to “immediately cease and desist the initiation of any and all new patent infringement enforcement efforts within the State of Nebraska pending the outcome of [the Attorney General] office’s investigation.”
In the first opinion, Judge Bataillon held that the firm could continue to represent Activision in Federal Court patent litigation by enjoining enforcement of that aspect of the Attorney General’s order. Following that order, Activision pressed on – asking the court to also enjoin the entire Attorney General order so that the firm could continue to pursue new out-of-court enforcement activities – such as contacting infringers and demanding that they pay for licenses. The Court has now sided with the patentee and against the Attorney General – finding that the restriction on enforcement activities likely operate as a prior-restraint on speech in violation of Activision (and its Attorneys) First Amendment rights of Free Speech and their Due Process rights.
The court finds the cease and desist order in this case is akin to a prior restraint. . . . The court finds Activision is likely to win on the merits as there is no claim or evidence to date of bad faith. Further, as there is no claim of bad faith, federal law governing these patents, including sending initial letters to businesses believed to violate a patent owned by Activision, is preempted by the federal government. Also, Activision has a First Amendment right to associate with counsel of its choosing without interference from the state of Nebraska. In addition, the cease and desist order operates in this case as a prior restraint on Activision’s speech and association rights. For these reasons, the court finds Activision is likely to win on the merits. . . .
The court is deeply concerned about the ability of the Attorney General to issue cease and desist orders, prior to the conclusion of the investigation, prior to any negative findings, prior to any hearings, and prior to permitting submission of documents and evidence by the Farney Daniels law firm. On the contrary, the Attorney General sent a request for information to Farney Daniels the same day it sent the cease and desist order, and gave Farney Daniels until August 18, 2013, to respond. Farney Daniels responded, and no further actions have been taken. The inability of Farney Daniels to submit such letters to businesses in Nebraska clearly infringes on the First Amendment rights of Activision to be represented by the counsel of their choice.
This opinion comes as a result of Activision’s motion for preliminary injunction (that has now been granted). Thus, the court found that the patentee was likely to win its case on the merits and that the Attorney General order was causing immediate irreparable harm. Under the laws of Appellate Procedure, the Attorney General has the right to immediately appeal this decision to the Court of Appeals to the Federal Circuit (where he would lose).
An important aspect of this decision is that it is not limited to patent law issues. Rather, the same First Amendment and Due Process claims here would apply any time the Attorney General issues a cease-and-desist order prior to conducting any investigation.
= = = = =
To be clear, the court did not shut-down the Attorney General’s investigation but instead found that it is improper for the Attorney General to compel silence without even conducting an investigation. “The court notes, there is no doubt the Attorney General generally has the power to investigate activity that it believes violates state law. . . . If … at some point during the investigation evidence supports a claim of bad faith, the Attorney General is free to revisit this preliminary injunction with the court.”
By Dennis Crouch
Earlier this week, I commented on the two attorney-fees cases pending before the US Supreme Court:
Both cases stem from the same perspective that the “exceptional case” requirement for attorney fees is too narrowly construed by the courts and especially by the Federal Circuit. See 35 U.S.C. § 285.
I noted in the prior post that the predecessor of Section 285 was first enacted in a 1946 Patent bill. The 1946 law was substantially similar to the current law (enacted in 1952) with the major difference that the 1946 act expressly gave the court “discretion” to award attorney fees to the prevailing party while the 1952 act removed that “discretion” term and instead indicated that the fee may be awarded “in exceptional cases.”
The Senate Report associated with the 1946 statute indicates that the statute is not intended to make fee awards an “ordinary thing in patent suits” but instead to reserve such awards for “gross injustice.”
It is not contemplated that the recovery of attorney’s fees will become an ordinary thing in patent suits, but the discretion given the court in this respect, in addition to the present discretion to award triple damages, will discourage infringement of a patent by anyone thinking that all he would be required to pay if he loses the suit would be a royalty. The provision is also made general so as to enable the court to prevent a gross injustice to an alleged infringer.
S. Rep. No. 1503, 79th Cong., 2d Sess. (1946), reprinted in 1946 U.S. Code Cong. Serv. 1386, 1387.
When the 1952 act was passed, the House Committee Report briefly mentioned the “exceptional case” amendment to the statute – indicating that the phrase “‘in exceptional cases’ has been added as expressing the intention of the present statute as shown by its legislative history and as interpreted by the courts.”
In several cases, the Federal Circuit has considered the standard and, after some debate, decided in Eltech Systems Corp. v. PPG Industries, Inc., 903 F.2d 805 (Fed. Cir. 1990), that the exceptional case standard should be the same for both prevailing plaintiffs and for prevailing defendants – writing: “we now reach the question and determine that there is and should be no difference in the standards applicable to patentees and infringers who engage in bad faith litigation.” The Eltech Systems case was then cited positively by the Supreme Court in Fogerty v. Fantasy, 510 U.S. 517 (1994) as justification for a party-neutral approach to fee shifting in copyright cases.
We note that the federal fee-shifting statutes in the patent and trademark fields, which are more closely related to that of copyright, support a party-neutral approach. Those statutes contain language similar to that of [17 U.S.C.] § 505, with the added proviso that fees are only to be awarded in “exceptional cases.” 35 U.S.C. § 285 (patent) (“The court in exceptional cases may award reasonable attorney fees to the prevailing party”); 15 U.S.C. § 1117 (trademark) (same). Consistent with the party-neutral language, courts have generally awarded attorney’s fees in an evenhanded manner based on the same criteria. For patent, see, e.g., Eltech Systems Corp. v. PPG Industries, Inc., 903 F.2d 805, 811 (Fed. Cir. 1990) (“[T]here is and should be no difference in the standards applicable to patentees and infringers who engage in bad faith litigation”). For trademark, see, e.g., Motown Productions, Inc. v. Cacomm, Inc., 849 F.2d 781, 786 (2nd Cir. 1988) (exceptional circumstances include cases in which losing party prosecuted or defended action in bad faith); but see Scotch Whisky Assn. v. Majestic Distilling Co., 958 F.2d 594 (4th Cir.) (finding in the legislative history that prevailing defendants are to be treated more favorably than prevailing plaintiffs), cert. denied, 506 U.S. 862 (1992).
Fogerty at note 12.
Of course, the problem with a party-neutral approach is that it can only be applied at a certain high level of granularity or abstractness. Since patentees and accused infringers make systematically different argument and have systematically different strategies, the particular causes of exceptional case findings tends to be different. Thus, losing infringers most often pay fees based upon ongoing willful and reckless infringement while losing patentees most often pay fees for suing on patent obtained through inequitable conduct or for bringing baseless lawsuits. At that low level of granularity, the differences are such that it is difficult to compare whether a party-neutral approach is being applied.
Notes:
Thanks to John Pinkerton at Thompson & Knight for providing me with this legislative history from the 1946 Act.