Search Results for: commil cisco

Cisco on the Wrong Side of Xenophobia and Anti-Religious Jury Tactics

Patent,

Update – After thinking reading through this post, it is probably too harsh against Cisco. I was primarily set-off because I read this case involving Cisco's problematic litigation tactics immediately after I read about Cisco's general counsel complaining to Congress about the problematic litigation tactics of patent licensing companies.

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By Dennis Crouch

Foreign litigants often have a real fear of American juries. Back in 2003, Judge Moore (then Professor Moore) authored an interesting article titled Xenophobia in American Courts. In her article, Judge Moore looked at a large dataset of patent cases and found substantial support for the hypothesis that foreign parties are treated worse by juries than their domestic counterparts. This issue has been explored in a number of ways by academics and has parallels to other jury bias issues based upon race or religion. In general, the notion is that it is cognitively easier for people to negatively judge the actions of someone considered an "other."

The recent case of Commil v. Cisco raises some of these issues. And, although Judge Moore was not on the panel, the Federal Circuit agreed that anti-foreign and anti-Semitic tactics before the jury create prejudice that warrant a new trial.

The patentee, Commil, is an Israeli company that filed an infringement suit against Cisco in the Eastern District of Texas. In the first trial, the jury awarded $3.7 million in damages. However, Judge Everingham ordered a new trial based upon the prejudicial effect of "Cisco's counsel's improper religious comments." In the new trial, the jury awarded $63.7 million in damages. On appeal, Cisco asked that the first trial judgment be reinstated. On appeal, however, the Federal Circuit affirmed the new trial finding.

The particular prejudicial are as follows:

  • While being cross-examined, Mr. David (the Commil inventor and co-owner) mentioned eating at a barbeque restaurant to which Cisco's counsel responded "I bet not pork." Counsel then went-on to ask Mr. David whether his cousin was a "bottom-feeder who swims around on the bottom buying people's houses that they got kicked out of for next to nothing."
  • In closing arguments, Cisco's counsel began with a reference of the trial of Jesus – saying "You remember the most important trial in history, which we all read about as kids, in the Bible had that very question from the judge. What is truth?"

Considering these statements, Judge Everingham wrote:

This argument, when read in context with Cisco's counsel's comment regarding Mr. David and Mr. Arazi's religious heritage, impliedly aligns Cisco's counsel's religious preference with that of the jurors and employs an "us v. them" mentality – i.e., "we are Christian and they are Jewish."

Commil USA, LLC v. Cisco Sys., Inc., No. 2:07–CV–341, slip op. at 3 (E.D.Tex. Dec. 29, 2010).

On appeal, the Federal Circuit found that these actions warranted review and additionally highlighted other aspects from the trial:

For instance, during the voir dire, Commil's counsel explained that the case began in Israel, "the Holy Land for many religions." Later, during closing argument, Commil's counsel argued with respect to damages that Cisco wanted the jurors to "split the baby" and "You know, that wasn't wise at the time of King Solomon. It's not wise today."

Based upon these elements, the Federal Circuit had no trouble finding that the new trial was warranted.

 

[Updated to delete my harsher remarks]

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The interesting and important legal issue in this case is how the Federal Circuit allowed a partial-new-trial rather than a full trial.

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See also, Hal Wegner, Commil v. Cisco, a Sidebar: Judicial Denunciation of Anti-Semitic Jury Tactics, http://www.laipla.net/commil-v-cisco-a-sidebar-judicial-denunciation-of-anti-semitic-jury-tactics/ .

Commil v. Cisco: Issues of validity “may” negate intent for inducement

Patent

By Jason Rantanen (note that you can now follow me on Twitter @PatentlyO_Jason).  For the sake of disclosure: while I was in practice I represented Cisco in an unrelated patent infringement litigation involving wireless technology.

Commil USA, LLC v. Cisco Systems, Inc. (Fed. Cir. 2013) Download 12-1042.Opinion.6-21-2013.1
Panel: Newman (concurring-in-part, dissenting-in-part), Prost (author), O'Malley (concurring-in-part, dissenting-in-part)

Cisco appealed from a jury finding that it induced infringement of Commil's patent.  The primary issues addressed by the court were a pre-Global-Tech jury instruction and the appropriateness of considering validity when determining whether the accused party posessed the requisite state of mind for inducement of infringement.  All three judges on the panel agreed that the jury instruction was both erroneous and prejudicial while Judges Prost and O'Malley agreed that issues of validity may be considered in the intent inquiry. 

Jury Instruction for Inducement: During the April 2011 trial, the jury was given the following instructions relating to inducement:

If you find that a third party has directly infringed Claim 1, 4, or 6 of the '395 patent,
then Commil must prove by a preponderance of the evidence that Cisco actively and knowingly aided and abetted that direct infringement.

Furthermore, Commil must show that Cisco actually intended to cause the acts that constitute direct infringement and that Cisco knew or should have known that its actions would induce actual infringement. Inducing third-party infringement cannot occur unintentionally. This is different from direct infringement, which can occur unintentionally. Cisco also cannot be liable for inducing infringement if it was not aware of the existence of the patent.

If you find that a third party has directly infringed Claim 1, 4, or 6 of the '395 patent
and that Cisco knew or should have known that its actions would induce direct infringement, you may find that Cisco induced another to infringe Commil's patent if it provided instructions and directions to perform the infringing act through labels, advertising, or other sales methods.

(Emphasis added).  Note that the court's opinion contains only bits and pieces of these instructions.  In order to obtain them in their entirety, I pulled the April 8, 2011 trial transcript via Lex Machina.

The jury found in Commil's favor and award it $63,791,153 in damages.  Approximately two months later, the Supreme Court issued its opinion in Global-Tech v. SEB, in which it held that induced infringement "requires knowledge that the induced acts constitute patent infringement," a requirement that can be satisfied either through actual knowledge or willful blindness.  131 S.Ct. 2060, 2068, 2072 (2011).  Based on Global-Tech, Cisco argued that the "should have known" language in the above jury instruction erroneously permitted the jury to find that it liable based on a negligence standard.

On appeal, the Federal Circuit agreed with Cisco that the instruction was legally erroneous under Global-Tech and that the error was prejudicial to Cisco.  "With respect to whether the induced acts constitute patent infringement, it is clear that the jury was permitted to find induced infringement based on mere negligence where knowledge is required. This erroneous instruction certainly could have changed the result. Facts sufficient to support a negligence finding are not necessarily sufficient to support a finding of knowledge."  Slip Op. at 8.

Issues of Validity May Negate Intent: Cisco also argued, and the majority agreed, that it should have been allowed to present evidence relating to its good-faith belief that the asserted claims were invalid.  Just as a good-faith belief of non-infringement is relevant to the intent inquiry for inducement, so too is a good-faith belief about the invalidity of the claims relevant:

It is axiomatic that one cannot infringe an invalid patent. [] Accordingly, one could be aware of a patent and induce another to perform the steps of the patent claim, but have a good-faith belief that the patent is not valid. Under those circumstances, it can hardly be said that the alleged inducer intended to induce infringement. Thus, a good-faith belief of invalidity is evidence that may negate the specific intent to encourage another’s infringement, which is required for induced infringement. Several district courts have considered this question and come to the same conclusion.[]

We now hold that evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement.1 This is, of course, not to say that such evidence precludes a finding of induced infringement. Rather, it is evidence that should be considered by the fact-finder in determining whether an accused party knew “that the induced acts constitute patent infringement.” Global-Tech, 131 S. Ct. at 2068.

Slip Op. at 10-11 (internal citations omitted).

Judge Newman's Dissent: Judge Newman dissented as to the validity component of the court's ruling.  In her view, the only intent issue involved in inducement the question of infringement; an infringer's belief as to the validity of the patent plays no rule in the determination of inducement: 

A defendant’s ultimate liability for induced infringement, as for direct infringement, is subject to various defenses including patent invalidity and unenforceability. However, whether there is infringement in fact does not depend on the belief of the accused infringer that it might succeed in invalidating the patent. Such a belief, even if held in good faith, does not negate infringement of a valid and enforceable patent. This rule applies, whether the infringement is direct or indirect. My colleagues err in holding that “evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement.” Maj. op. at 11.

Slip Op. at 22.  One difficulty with Judge Newman's position is that she bases it on the principle that "A mistake of law, even if made in good faith, does not absolve a tortfeasor."  Slip Op. at 21.  This principle, however, would seem to apply as much to mistakes about infringement – which Judge Newman agrees are relevant to the question of inducement – as it would to mistakes about validity.  Both can involve mistakes about fundamentally legal questions or the application of law to fact. (I've also argued in the past that this tort principle does not translate well to patent law [p. 1617-1620]). 

The New Trial Issue and Judge O'Malley's Dissent: During the initial trial, according to the district court, "Cisco's trial counsel attempted to play upon religious prejudices and other ethnic stereotypes."  Slip Op. at 12.  After Commil lost on indirect infringement, the district court granted it a partial new trial on the issues of infringement and damages (that's the trial discussed above).  All three judges agreed that the district court did not abuse its discretion in granting Commil a new trial.  However, the district court also declined to include issues of validity in the new trial, a decision affirmed by Judge Prost joined by Judge Newman. 

Writing in dissent, Judge O'Malley disagreed that the district court's decision to grant Commil a new trial on the issue of infringement while not allowing Cisco a new trial on the issue of validity survived Seventh Amendment scrutiny.  Judge O'Malley also would have addressed "Cisco's potentially dispositive arguments regarding whether Commil did or ever could prove the third party direct infringement which is a necessary predicate to Commil’s induced infringement claim."  Slip Op. at 26.

Cisco Argues that the Inducement Mens Rea Should Focus on Knowledge of Wrongdoing Rather than Merely Infringement

Patent

by Dennis Crouch

In the pending appeal of Commil v. Cisco, the Supreme Court is further honing-in on the knowledge aspect of induced infringement.  In particular, the court is addressing whether a defendant’s reasonable and good-faith (but ultimately incorrect) belief that a patent is invalid can be used to prove that the defendant did not knowingly induce infringement.

As background, the patent statute indicates that “[w]hoever actively induces infringement of a patent shall be liable as an infringer.”  In its 2011 Global-Tech decision, the Supreme Court ruled that inducement requires that the alleged inducer have acted with knowledge that the induced acts constituted patent infringement.

The patentee, Commil, argues that both statute and tradition distinguish between the doctrines of infringement and validity.  See 35 U.S.C. 282(b). In Commil’s construct, someone might infringe the patent, but not be held liable if the patent is found invalid or otherwise unenforceable.  Applying that distinction directly to Global-Tech knowledge-of-infringement requirement suggests that knowledge-of-invalidity is irrelevant. [I should note that Commil actually suggests that the court should relax its Global-Tech rule to only require knowledge of the patent’s existence and its potential relevance.]

Briefing is ongoing in the case with Cisco having now filed its responsive brief on the merits.  Oral arguments are now scheduled for March 31, 2015. The other patent case of the term – Kimble v. Marvel will also be heard that day.

In its brief, Cisco argues that a  good-faith but incorrect belief of non-infringement should excuse liability for inducement.  [Cisco Merits Brief]. As its central evidence, Cisco points to other language in Global-Tech that provides support for its infringement.  In particular, the Supreme Court noted that the case might turn the “probability of wrongdoing.” Further, the doctrinal statement from Global Tech does not merely focus on knowledge of infringement but instead whether the defendant will be “liable as an infringer.”  That liability element appropriately sweeps in the potential that the patent is invalid or otherwise not enforceable.  For support, Cisco cites to a series of other decisions where the scienter requirement’s purpose is tied to the moral justification of culpability. See, e.g., MGM v. Grokster, 545 U.S. 913 (2005) (copyright inducement).  Cisco plays upon the contemporary Supreme Court’s bent toward patent non-exceptionalism by citing to various tort and criminal inducement doctrines whose scienter requirements turn on belief of wrondoing.

Cisco also argues that the invalidity-belief-defense is good policy — especially because so many patents are actually invalid and because willful infringement already allows such a defense.  And, as might be expected based upon the Cisco CEO’s recent WSJ editorial, the brief also complains about the problem of patent trolls.

But a recent study shows that a record 5,411 patent infringement cases were filed in 2013, with the number of suits brought by nonpracticing entities growing by almost 20% over the previous year. . . . It is unrealistic to believe that inducement suits are not part of this problem and would not dramatically multiply if Commil obtains the change in law it seeks.

Although Cisco’s legal and policy arguments have merit, I suspect that the hundred-billion-dollar company’s attempt to play the victim here will be unsuccessful. At the very least though, this may be the first time in recent memory that the company has agreed that willful infringement is a ‘wrongdoing.’

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An important subtext here is that the knowledge requirement becomes a critical defense only when it turns out that the patent actually is valid, enforceable, and being practiced based upon the active inducement of the defendant.  From a practical standpoint, the belief-of-invalidity-defense could short-circuit inducement cases when the defendant has a solid written opinion of counsel.  However, that presumably only saves an inducer from past-infringement and once validity is confirmed, any ongoing acts will lead to liability.

Commil v. Cisco: Opening Briefs on Escaping Inducement Liability

Patent

by Dennis Crouch

The patent statute identifiers “infringers” as those who make or use a patented invention without permission of the patentee. See 35 U.S.C. 271(a) (make, use, sell, offer-to-sell, or import).  The statute goes-on to also create joint-liability for inducting infringement.  35 U.S.C. 271(b) (“Whoever actively induces infringement of a patent shall be liable as an infringer.”).  

In Commil v. Cisco, the Supreme Court is focused on inducement and the question of whether “a defendant’s belief that a patent is invalid is a defense to induced infringement” even when the patent is ultimately found valid and the belief proved unfounded.   The Federal Circuit held such a belief to be sufficient – if in good faith – to excuse allegations of inducement.  Commil challenges that new rule of law.  In its opinion, the Federal Circuit wrote that “[i]t is axiomatic that one cannot infringe an invalid patent” and thus one cannot induce infringement of a patent [wrongly] believed to be invalid.

The first round of merits briefs have been with the Supreme Court. In its brief, Commil does a good job of characterizing the case:

This case presents the question of whether a defendant may know about a patent, know that the patent is potentially relevant to its commercial activities, intentionally cause its customers to act in a manner that directly infringes the patent, and then avoid all liability because it subjectively—but incorrectly—believed that the patent was invalid. Cases in which the defendant’s belief of invalidity was correct, of course, will never implicate this question, as in those cases the patent will be invalidated and a finding of invalidity moots the infringement question.

[Commil Brief].

A core issue in the case is what the court meant in last term’s Global Tech decision when it held: “induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement.”  Here, Commil seems to have the best historical argument based also upon Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964) (“Aro II”).

In its brief, Commil also does not let go of the sideshow that throughout the trial “Cisco’s counsel used religious references and played on stereotypes about Commil’s owner and inventors, who are Jewish and reside in Israel.”  [See Patently-O]

A number of entities have filed briefs in support of Commil. Writing for the IPO, Paul Berghoff explains:

This new defense is unsupported by the text of Section 271(b), which nowhere mentions validity. Indeed, the patent statute lists noninfringement and invalidity as separate and distinct defenses in Section 282(b). Infringement and validity are independent questions and, although invalidity may preclude a defendant’s liability in a patent suit, it does not preclude a finding of infringement.

In practice, the Federal Circuit’s decision in Commil renders inducement wholly ineffectual as a patent enforcement tool.

[IPO Brief in Support of Commil].

AIPLA largely agrees with the IPO – arguing that the new defense will “significantly undermine the ability of patent owners to enforce their rights against indirect infringers, which is sometimes their only realistic mechanism for enforcement against infringing competitors.” [AIPLA Brief]

Filing its own amicus brief, the U.S. Government (SG) also agrees with Commil – and takes a position that would re-invigorate inducement as a cause of action. Namely, the U.S. Gov’t argues that inducement only requires receipt of the patentee’s viewpoint that the conduct is infringing. See Aro II.  The Government’s point here is that the Federal Circuit is way off-base because its premise – that a non-infringement-belief avoids infringement – is wrong.

[U.S. Gov’t Brief].

Several industry briefs explain the negative impact of the decision on their industry.

  • Gilead Sciences: Treatment method patents are all-but lost.
  • Abbvie: The pharmaceutical industry depends on patents that may only realistically be enforced against indirect infringers.
  • PhRMA: These new uncertainties may chill research.

One of the more interesting briefs was filed by the Medical University of South Carolina (MUSC).

[T]he Federal Circuit’s new rule directly conflicts with the presumption of validity awarded to patents under 35 U.S.C. § 282 and with this Court’s holding in Microsoft v. i4i (2011) that § 282 requires an invalidity defense to be proven with clear and convincing evidence. Furthermore, the Federal Circuit’s new rule will require courts to develop an expansive new body of case law for induced infringement, contrary to this Court’s guidance in Limelight v. Akamai (2014).

[MUSC Foundation amicus].

[Further reading]

 

 

 

Supreme Court Patent Update: 271(e) Safe Harbor

Patent, , , , , , , , , , , ,

by Dennis Crouch

Look for opinions in Halo/Stryker and Cuozzo by the end June 2016.

Post Grant Admin: While we await Cuozzo, a set of follow-on cases continue to pile-up.  My speculation is that the Supreme Court will delay any decision in those cases until it finalizes the outcome of Cuozzo. With a host of new friend-of-the-court briefs and interesting constitutional questions, MCM v. HP is perhaps best positioned for certiorari.  Additional pending cases include Versata v. SAP (scope of CBM review); Cooper v. Lee (whether IPRs violate Separation of Powers); Click-to-Call Tech, LP v. Oracle Corp., (Same questions as Cuozzo and now-dismissed Achates v. Apple); GEA Process Engineering, Inc. v. Steuben Foods, Inc. (Flip-side of Cuozzo: Appeal when PTAB exceeds its authority by terminating an instituted IPR proceeding?); Interval Licensing LLC v. Lee (Same as Cuozzo); and Stephenson v. Game Show Network, LLC (Same as Cuozzo)

Design Patent Damages: Samsung has filed its opening merits briefs in the design patent damages case against Apple.  Design patent infringement leads to profit disgorgment, but the question is what profits? [More from Patently-O].

Versus Cisco: There are a couple of newly filed petitions. Interestingly, both filed by Michael Heim’s firm with Miranda Jones on both briefs representing plaintiff-petitioners.  In both cases Cisco is respondent.

  • CSIRO v. CISCO (fact-law divide in proving infringement damages under 35 U.S.C. § 284).
  • COMMIL v. CISCO (appellate disregard of factual evidence).

Of course, Commil was the subject to a 2015 Supreme Court decision that rejected the Federal Circuit’s original opinion favoring Cisco.  On remand, the Federal Circuit completely changed its decision but again sided with Cisco and rejected the jury verdict — holding “that substantial evidence does not support the jury’s finding that Cisco’s devices, when used, perform the “running” step of the asserted claims.”

Safe Harbor for Federal Submissions: In the newly filed Amphastar Pharma case, the Supreme Court has already requested a response from Momenta. The question presented focuses on the safe-harbor provision of 35 U.S.C. § 271(e)(1) and asks: Whether the safe harbor protects a generic drug manufacturer’s bioequivalence testing that is performed only as a condition of maintaining FDA approval and is documented in records that must be submitted to the FDA upon request.  The federal circuit held that Amphastar’s activity in this case was not protected by the safe harbor because it involved information “routinely reported” to the FDA post-approval. [Amphastar Petition]

The big list:

(more…)

Oral Arguments in Commil v. Cisco

Patent

by Dennis Crouch

Today, the Supreme Court heard oral arguments in the pending patent dispute Commil v. Cisco, Case No. 13-896.  The Patent Act creates a cause of action for actively inducing infringement of a patent.  Here, the Federal Circuit ruled that a defendant’s belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b).  That decision is being challenged here — The patentee (Commil) argues that the mens rea requirement for inducement focuses on infringement rather than validity.  The transcript is an interesting read.

Of course, invalidity of the patent is always a defense and so the issue is only critical if the defendant had a good faith belief of invalidity but the patent turned out to be valid.

JUSTICE GINSBURG: This question would come up only if the patent had been held valid.

The rule does, however, offer some additional procedural and evidentiary benefits – for example a good faith belief of invalidity should be easier to prove than invalidity itself. By taking the case, the Supreme Court suggests reversal, however, that result is not guaranteed here.

In his questioning, Justice Scalia focused on the idea that aiding and abetting requires wrongful intent, and practicing an invention covered by an invalid patent doesn’t seem wrong.

JUSTICE SCALIA:  It’s a type of aiding and abetting liability and both in tort law and in criminal law.  At the common law, it was clear that you’re not liable as an aider and abetter unless you have a wrongful intent.  . . .   It ­­ it seems to m­e that if you don’t know that you’re infringing or that you’re encouraging somebody to infringe is ­­ is no ­­ no worse than you’re not knowing that the patent is valid. . . . You’re just talking about supplemental liability for somebody who induced that violation. And generally, for that kind of liability, we have required mens rea. We have required knowledge that you’re doing something wrong.

The patentee’s response was threefold:

 MR. WERBNER: Well, under the court’s Aro 2 case that the Court described in Global­Tech’s as a fixture of patent law, the Court specifically there recognized that once an accused infringer received actual notice of the patent and is put on notice of the infringing conduct, that that ­[invalidity belief] that creates no defense to that person. . . .  [Second], there are [now] streamlined procedures available [for invalidating invalid patents]. . . . [Third] textual meaning of 271(b) [focuses on infringement not invalidity and] Congress knows the difference between invalidity and infringement.  Where Congress is addressing both, it says both.

Arguing for Cisco, Seth Waxman’s primary point fell in line with Justice Scalia’s statements:

 MR. WAXMAN:  If you go back to the common law . . . [a] defense was available [for] someone who didn’t have that belief was not culpable and, “morally wrong.”

Justice Sotomayor queried whether infringement and invalidity were really two sides of the same coin since a broadly interpreted patent is likely to be invalid while a narrowly interpreted patent is likely to be not infringed.

A good amount of time was focused on the court considering how to deal with the reality that a large percentage of challenged patents are held invalid.

CHIEF JUSTICE ROBERTS: You mentioned the presumption of validity. What percentage of patents that are challenged are found to be valid.

MR. WERBNER: Well, Your Honor, from the briefing, it appears a high number; 40 percent was an estimate.

CHIEF JUSTICE ROBERTS: Well, 40 percent of the patents are found to be valid?Invalid.

MR. WERBNER: Invalid.

CHIEF JUSTICE ROBERTS: Invalid. So only 60 percent are upheld. That’s not much of a presumption of validity.

MR. WERBNER: Mr. Chief Justice, I would submit that it would be for Congress to change the presumption of validity, if it’s out of line. . . . And it’s more than just a procedural mechanism, it’s a message that patents are presumed valued. They should be respected not just by judges and juries, but by the public who are told that until proven otherwise, patents are presumed valid. And someone who wishes to gamble on their belief that it’s invalid should bear the consequences if they’re wrong. . . .

JUSTICE KAGAN:  You’re quite right in your reply brief when you say that this is a tradition in American law, that we assume that statutes are constitutional, that we assume that contracts are valid, that’s right, but it’s because they really are.  You know, almost all statutes are constitutional.  And here we’re in a different universe entirely, aren’t we?  Where, you know, you could flip a coin as to whether a patent is valid or invalid and be pretty close, right?  It’s about 50/50. . . .

CHIEF JUSTICE ROBERTS:  Is that a ­­ is that an historical development?  Did more of them used to be valid, however many decades ago and, it’s sort of changed recently?

MS. ANDERS (US Gov’t): I think it makes sense to say that a good faith belief in invalidity is not a defense ­­even though 40 percent of patents may be invalid.
. . .
JUSTICE KAGAN: Well, but that might be a very good reason for Congress to take a new look at this presumption of validity. But [Cisco’s] problem is that this presumption of validity exists and that this question of validity functions in a patent suit only as an affirmative defense.

 

Commil v. Cisco: Despite Supreme Court Win, Patentee Still Loses

Patent

Commil USA, LLC v. Cisco Systems, Inc., __ F.3d __ (Fed. Cir. 2015)

On remand from the Supreme Court, the Federal Circuit has again concluded that the jury’s infringement verdict was wrong – but this time altering the grounds for its decision. “We now conclude that substantial evidence does not support the jury’s finding that Cisco’s devices, when used, perform the ‘running‘ step of the asserted claims. The district court’s judgment is therefore reversed.”

In its 2015 decision in the case, the Supreme Court had rejected the prior Chief Judge Prost non-infringement opinion. Under the Supreme Court analysis, the good-faith (but wrongly held) belief that a patent is invalid does not excuse a defendant’s actions to actively induce another party to infringe the patent.

Rather than re-focusing on the legal intricacies of inducement, this time the appellate panel shifted focus to the defendant’s alternative argument — that there was no underlying infringement.  Here, the patent is directed to a wireless communication system with at least two Base Stations that run a “low level” protocol for each connection, but according to the appellate panel, the patentee failed to prove that Cisco (or its customers) used their base stations in that manner. Instead, Cisco’s testimony was that its Base Stations operate a single protocol instance that is used for all connections.

The most interesting element of this decision is that it could have been written back in 2014 when the panel wrote its original decision and the Federal Circuit could have avoided the questionable legal grounds that were later rejected.

 

Commil v. Cisco: Belief-of-Invalidity not a Defense to Inducement

Patent

by Dennis Crouch

In Commil v. Cisco (Supreme Court 2015), the Supreme Court has held:

A defendant’s “belief” that a patent is invalid does not serve as a defense to charges of inducing infringement of the patent.  “The scienter element for induced infringement concerns infringement; that is a different issue than validity.”  Of course, if the patent is proven invalid then no liability attaches.  Thus, the defense here had asked for a holding that a good-faith-but-incorrect-belief of invalidity serve as a defense.

In what appears to me again as dicta (though powerful dicta), the court also indicated its agreement with the Federal Circuit that inducement requires proof that the accused both (1) knows of the patent-in-suit and (2) knows that the actions induced constitute patent infringement.  Although the court initially wrote that this issue “is not in question here,” it then went-on to explain how Global-Tech should be read to require knowledge-of-infringement as a prerequisite to induced infringement liability.  “Global-Tech requires . . . proof the defendant knew the acts were infringing. And the Court’s opinion was clear in rejecting any lesser mental state as the standard.”

The court had been encouraged to allow belief-of-invalidity as a defense in order to help stifle “abusive patent assertion.”  In a several paragraph statement of dicta, the court explained that it understands the potential problem of frivolous actions, but that district courts are have the tools of addressing the problem. One tool, for instance, is that of sanctioning attorneys through Rule 11 and awarding fees under Section 285. “These safeguards, combined with the avenues that accused inducers have to obtain rulings on the validity of patents, militate in favor of maintaining the separation expressed throughout the Patent Act between infringement and validity.”

Read the Opinion.

All members of the court agreed with notion that inducement does require knowledge of the infringing nature of the accused acts.  Justice Scalia joined by Chief Justice Roberts argued in dissent that a would-be defendant who (in good faith but wrongly) figures out that a patent is invalid (though without actually invalidating the patent) should be free to act without concerns regarding inducement.  Interesting, the pair note that the majority opinion “increases the in terrorem power of patent trolls.”

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This is a split decision for patentees.  On the one hand, it pushes away an entire set of defenses to inducement. But, on the other hand, the court solidifies a high wall by requiring proof that an accused inducer have known that the induced acts would constitute infringement of the asserted patent claims.  In my view, this requires at least a limitation-by-limitation claim chart or an admission.

Unwired Planet v. Apple: Fault and Patent Infringement

Patent,

By Jason Rantanen

Unwired Planet, LLC v. Apple Inc. (Fed. Cir. July 22, 2016) Download Unwired Planet
Panel: Moore (author), Bryson, Reyna

Last week, the Federal Circuit issued two opinions, both written by Judge Moore, dealing with what I refer to as “fault” in patent law: the degree of culpability the accused infringer possessed with respect to the issue of patent infringement.*  Although the cases involve different legal doctrines–WBIP v. Kohler involves willful infringement under § 284 and Unwired Planet involves inducement of infringement under § 271(b)–both present that core question of fault.  This post will focus on the issue of fault in the context of Unwired Planet, although its observations about fault are relevant to issues of culpability in the context of enhanced damages determinations.  I’ll focus on the specific issues raised by WBIP in a future post.

*While some folks prefer the terms “scienter,” “mens rea,” or “mental state,” I tend to use  “fault” because patent infringement primarily involves businesses not humans, and businesses don’t really have minds. In addition, the idea of “fault” captures standards (such as strict liability and negligence) that do not really have mental state components.  Terminology matters less than what’s actually going on in the analyses in these opinions, though, so substitute your preferred term as desired.

Unwired Planet v. Apple involved inducement of infringement under 35 U.S.C. § 271(b).  In Global-Tech v. SEB, and reaffirmed in Commil v. Cisco, the Supreme Court held that inducement requires knowledge or willful blindness to the fact that the relevant acts constitute infringement of a patent.  563 U.S. 754, 766 (2011); 135 S.Ct. 1920, 1926 (2015).

Among other subjects raised on appeal, Unwired challenged the district judge’s grant of summary judgment against its § 271(b) inducement of infringement claim.  The district court based its decision on the ground “that no reasonable juror could conclude that Apple was willfully blind because of ‘the strength of Apple’s noninfringement argument.'”  Slip Op. at 18.  On appeal, the Federal Circuit vacated the grant of summary judgment because the “objective strength” of Apple’s position was insufficient to avoid liability for inducement:

Because the district court’s grant of summary judgment was based exclusively on its view of the strength of Apple’s non-infringement argument, we vacate. The Supreme Court’s Global-Tech Appliances and Commil decisions require a showing of the accused infringer’s subjective knowledge as to the underlying direct infringement. The district court’s reliance on the objective strength of Apple’s non-infringement arguments as precluding a finding of induced or contributory infringement was erroneous.

On its face, this statement in Unwired Planet seems inconsistent with the court’s recent holding in Warsaw Orthopedic, an opinion that Dennis wrote about last month.  In Warsaw Orthopedic the Federal Circuit held that the objective unreasonableness of the accused infringer’s position, together with its knowledge of the patents, was a sufficient basis for a jury to conclude that the accused had knowledge of or was willfully blind to the fact that it infringed the patents-in-suit.  See 2016 WL 3124704, *3, *5 (“[H]ere we conclude that there was substantial evidence that MSD’s infringement position was objectively unreasonable and that the jury, based on this evidence, could reasonably have concluded that MSD had knowledge (or was willfully blind to the fact) that it was infringing”).  In other words, while the objective reasonableness of the accused infringer’s position is insufficient to avoid a finding of willful blindness, the objective unreasonableness of the accused infringer’s position is sufficient for a finding of knowledge or willful blindness.

Adding to the potential confusion is an observation that Judge Reyna made in his concurrence in Warsaw Orthopedic: that “the Supreme Court in Commil stated that a defendant lacks the intent for induced infringement where his reading of the claims is both different from the plaintiff’s and reasonable.”  2016 WL 3124704, *6 (the concurrence does not provide a pin cite for this statement, but he’s presumably referencing 135 S.Ct. 1920, 1928 (“In other words, even if the defendant reads the patent’s claims differently from the plaintiff, and that reading is reasonable, he would still be liable because he knew the acts might infringe. Global–Tech requires more.”)).  Although Judge Reyna was making the point that he would resolve the appeal on the ground that the accused infringer had not presented its claim construction to the court, his reading of Commil nevertheless reinforces the idea that a reasonable claim construction would be sufficient to avoid a finding of inducement liability–a conclusion at odds with the Federal Circuit’s statement in Unwired that “the objective strength of Apple’s non-infringement arguments” cannot preclude a finding of induced infringement.

Timing matters: These statements are not as irreconcilable as they seem, however. The critical missing aspect is that of timing.  As the Federal Circuit observed in WBIP, “timing does matter,” Slip Op. at 35 (emphasis in original), a point made in Halo v. Pulse, 136 S.Ct. 1923, 1933, and repeatedly emphasized by Timothy Holbrook in his scholarship and amicus briefing.   Patent infringement almost never consists of just a single act.  Instead, it typically consists of a multitude of acts performed over months or years: the individual acts of making, using, selling, and offering for sale of the patented invention.  Mental states can change and evolve over this time.  Perhaps during early periods, the accused infringer is entirely unaware of the patents-in-suit; later on, it becomes aware and begins to have thoughts about them; still later it is embroiled in litigation and develops sophisticated legal arguments.

Viewed in this light, the court’s holdings in Warsaw and Apple are easily reconciled.  In Warsaw, the court was simply saying that relying on an noninfringement position that is objectively unreasonable allows for a jury to find that the accused possessed the requisite fault.  This makes sense, as a noninfringement position that is objectively unreasonable cannot foreclose a finding of fault regardless of whether that unreasonable position was developed before infringement began or later on during litigation.

On the other hand, the flip is not necessarily true.  Just because an accused infringer develops a reasonable non-infringement position during litigation does not mean that it had a reasonable noninfringement position earlier on.  Logic would indicate, though, that if it had a reasonable noninfringement position earlier on, then it would not possess the requisite degree of fault at that time, given the passage in Commil v. Cisco referenced by Judge Reyna.

The Nature of the Determination of Fault: Wrapped up with the issue of timing is that of the actual determination of knowledge or willful blindness.  It is the patent owner’s burden to prove that the accused infringer possessed the necessary degree of fault, not the accused infringer’s burden to prove that it did not.  “The doctrine of willful blindness requires the patentee to show not only that the accused subjectively believed that there was a high risk of infringement, but also that the accused took deliberate actions to avoid confirming infringement.”  Unwired, Slip Op. at 19.  On this basis, the Federal Circuit observed, Apple might be able to prevail on summary judgment on remand.  When coupled with the reality of temporally evolving mental states, this requirement poses an interesting challenge: the patentee must make out a plausible case for fault at the relevant points in time.  The objective reasonableness of the infringer’s legal position would seem to be relevant to this determination, but the existence of an objectively reasonable legal position at one point in time does not necessarily mean that it applies to other periods of time.  Furthermore, as Prof. Holbrook has observed, the issue of reasonableness falls out once the court issues its ruling on the “correctness” of the position.  If the accused inducer loses on that issue, it can no longer argue that it’s position was “reasonable.”

Thanks to Dennis Crouch, Dmitry Karshtedt, Chris Seaman and Timothy Holbrook for helpful discussions relevant to this post.

Supreme Court: A Good-Faith-But-Incorrect-Belief that the Patent is Invalid

Patent

by Dennis Crouch

Someone who induces infringement is just as liable for infringement as the one who actually commits the underlying act of direct infringement. 35 U.S.C. § 271(b).  However, unlike direct infringement, inducement has a substantial mens rea or scienter requirement that the inducer knew at-the-time that the induced conduct would infringe the particular patent. In Global Tech (2011), the Supreme Court held that the knowledge element can be satisfied by proof that the inducer was willfully blind to the risk of infringement.

In Commil v. Cisco, the Federal Circuit addressed a slightly different question — and that question is now pending before the US Supreme Court:

Does an inducer’s good faith belief that a patent is invalid negate inducement liability?

One way to think about this is to go back to Global Tech and ask what the Supreme Court meant when it said “infringement.”  Was the Court referring only to the elements of proving direct infringement under 271(a) or instead was the Court referring more generally to infringement liability.  While 271(a) is a narrower concept that generally ignores validity issues, the broader concept of infringement liability draws-in defenses that may be available such as invalidity or unenforceability.

An important consideration here is that this good-faith-belief of invalidity is only critical for the discussion if it turns out that the asserted claims are actually valid and enforceable. So, we’re really talking about a good-faith-but-incorrect-belief that the claims are invalid. In this type of situation, I worry about the generation of self serving evidence that fall under the CYA/BS classification.

In any event, the Federal Circuit panel here ruled that “evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement.”  [See Rantanen on Commil]. The patentee (Commil) then petitioned for Supreme Court review and the Court asked for the views of the US Government.

In its newly filed amicus brief, the US Goverment (through the Solicitor General) has agreed with the patentee that the Federal Circuit is wrong and that the accused’s invalidity belief is irrelevant to the question of inducement liability.

This Court should grant Commil’s petition for certiorari (No. 13-896) with respect to the first question presented. The court of appeals erred in holding that a person who knowingly induces another to engage in infringing conduct may avoid liability under Section 271(b) by demonstrating that it had a good-faith belief that the infringed patent was invalid. This Court’s review is warranted to prevent defendants from avoiding inducement liability on a ground that is inconsistent with the text, structure, and purposes of the relevant Patent Act provisions.

In its analysis, the SG basically walks through the statute (that separates the notion of infringement from invalidity defenses) and the key cases of Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964) (Aro II) and Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011).  In particular, with Aro II, the patentee had mailed a pre-suit notice letter to the defendant and the Supreme Court in that case seems to have treated that communication as conclusively satisfying the mens rea requirement.

Commil’s petition included a second question and Cisco also submitted its own question – both of these involved the necessity and propriety of ordering a new trial.  The US Government amicus brief recommend that neither of those questions be reviewed.

Read the USG amicus brief here.

 

Inducing Infringement: Procedural Limits on the Reasonable Non-Infringement Belief

Patent

by Dennis Crouch

On remand from the Supreme Court vacatur, the Federal Circuit has reaffirmed its prior NuVasive decision and – in the process limited the reach of the Supreme Court’s 2015 decision of Commil USA, LLC v. Cisco Systems, Inc., 135 S. Ct. 1920 (2015).

Opinion: Warsaw Orthopedic, Inc. v. NuVasive, Inc. (Fed. Cir. 2016)

The primary holding of Commil is that belief-of-patent-invalidity is not a defense to allegations of inducing infringement.  In Commil, the Supreme Court also indicated that inducement requires proof that the accused inducer knew or was willfully blind to the fact that the actions being induced would constitute patent infringement. (clarifying a potential ambiguity of Global Tech).

Here, the adjudged infringers gave instructions to doctors on how to use its surgical tools in a way infringed NuVasive’s patent.  However, the companies argue that the evidence presented to the jury was insufficient to find that they “it knew (or was willfully blind to the fact) that it was instructing doctors to infringe” the asserted patent (even after being sued for infringement).

Medtronic’s explanation of its ‘belief‘ was that it had constructed a reasonable claim construction argument under which its activities would not infringe.  To resolve this, the Federal Circuit delved deep into the claim construction argument and found “no support in the language of claim 1 of the ’236 patent or its prosecution history to support MSD’s [claim construction] position.”

An oddity of the decision is that the Court suggests (but seemingly does not hold) that Medtronic waived its claim construction argument by failing to seek a revised claim construction.

In any event, MSD’s effort at this late stage amounts to a request for a revised claim construction that it never sought. That is improper, as we previously ruled in our earlier opinion. Warsaw, 778 F.3d at 1373 (citing Hewlett-Packard Co. v. Mustek Sys., Inc., 340 F.3d 1314, 1321 (Fed. Cir. 2003)). Moreover, claim construction is, of course, ultimately a question of law that must be left to the court, not the jury. Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 837 (2015). We have previously held that it is improper for juries to hear conflicting expert testimony on the correctness of a claim construction, given the risk of confusion. CytoLogix Corp. v. Ventana Med. Sys., Inc., 424 F.3d 1168, 1172 (Fed. Cir. 2005).

Thus, it is unclear hear what the outcome would be if Medtronic had presented a reasonable non-infringement argument based upon an alternative claim construction.

The opinion of the court was filed by Judge Dyk.  Judge Reyna also filed a concurring opinion. One aspect of Judge Reyna’s concern is that the lower courts will latch upon the “no support” language of the majority opinion as the test for whether an alternative claim construction is reasonable. Rather, Judge Reyna would propose procedural limits:

While the Supreme Court in Commil stated that a defendant lacks the intent for induced infringement where his reading of the claims is both different from the plaintiff’s and reasonable, I do not believe Commil opens the door for this court to assess the reasonableness of a defendant’s non-infringement position that is based on a claim construction that a defendant failed to raise, or that was not before the jury. In this case, MSD proposed no construction for the “stopping” limitation, arguing that the limitation has a plain meaning to one of ordinary skill in the art. I would resolve this case on this basis. Where a defendant proposes no construction of a claim term, this court is speculating to determine what the defendant’s reading of the claims is. We should not be in the business of creating claim constructions for defendants in induced infringement actions so that we may then assess whether the claim constructions are reasonable.

At the same time, Judge Reyna also faulted the majority for failing to actually consider whether evidence of knowledge was presented.

In Global-Tech, the evidence demonstrated the defendant’s willful blindness. The opinion here cites no similar evidence. The opinion’s analysis suggests that any time a defendant’s products are found to directly infringe, the plaintiff has sufficiently established the defendant’s intent to induce infringement. This proposition conflicts with Global-Tech, Commil, and our caselaw.

Comment: The procedural approach here seems interesting and useful. The suggestion is a rule that an inducement defendant who is arguing that it had a reasonable non-infringement belief must actually present that argument to prove no underlying direct-infringement.  That approach require the judge/jury to first determine the merits of the argument before then determining whether it was at least reasonable.

 

 

Supreme Court Orders FedCir to reconsider Medtronic Lawsuit

Patent

The Supreme Court has issued a GVR order in Medtronic v. NuVasive and ordered the Federal Circuit to consider how Commil impacts the case.

The petition for a writ of certiorari is granted. The judgment is vacated, and the case is remanded to the United States Court of Appeals for the Federal Circuit for further consideration in light of Commil USA, LLC v. Cisco Systems, Inc., 575 U. S. ___ (2015).

In its petition, Medtronic had directly requested for the Supreme Court to issue this GVR – Grant-Vacate-and-Remand order.

The primary holding of Commil is that belief-of-patent-invalidity is not a defense to allegations of inducement.  Relevant for Medtronic, the Supreme Court also indicated in Commil that inducement requires proof that the accused inducer knew that the actions being induced constituted patent infringement.  Those statements from the Supreme Court have been seen as clearing up some uncertainty following Global-Tech.

Although Medtronic did know of the patent at issue, the patentee apparently did not prove that the defendant “knew surgeons using its [accused] NIM-Eclipse medical device during spinal surgery would infringe NuVasive’s patent.”  Rather, Medtronic argues that it “reasonably believed using its NIM-Eclipse device during surgery did not infringe under a proper reading of the patent claims.”

The case will likely serve as a bellwether indication of how the Federal Circuit will work through the mens-rea requirements for inducement post Commil and Global Tech.

 

Commil v. Cisco: Cert Granted as to Invalidity and Inducement Issues

Patent

By Jason Rantanen

Today, the Supreme Court granted certiorari on one of the questions presented in Commil v. Cisco.  (The order).  The question presented:

(1) Whether the Federal Circuit erred in holding that a defendant’s belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b);

Commil’s brief also presented a second question that the Court did not take:

(2) whether the Federal Circuit erred in holding that Global-Tech Appliances, Inc. v. SEB S.A. required retrial on the issue of intent under 35 U.S.C. § 271(b) where the jury (A) found the defendant had actual knowledge of the patent and (B) was instructed that “[i]nducing third-party infringement cannot occur unintentionally.”

Further discussion:

  • My summary of the Federal Circuit opinion is here: LINK
  • Dennis’s commentary on the cert petition is here: LINK

Supreme Court asks for SG’s Views on Hearing Another Inducement Case

Patent

Commil USA v. Cisco Systems (Supreme Court 2014)

In its decision on this case, the Federal Circuit offered three separate opinions, with Judge Prost authoring a majority opinion and Judges Neman and O’Malley each dissenting-in-part (each disagreeing with a different part of the majority opinion). See Jason Rantanen, Commil v. Cisco: Issues of validity “may” negate intent for inducement, Patently-O (2013). Professor Rantanen writes:

The primary issues addressed by the court [involved] a pre-Global-Tech jury instruction [on induced infringement] and the appropriateness of considering validity when determining whether the accused party possessed the requisite state of mind for inducement of infringement.  All three judges on the panel agreed that the jury instruction was both erroneous and prejudicial while Judges Prost and O’Malley agreed that issues of validity may be considered in the intent inquiry.

Both parties petitioned the Supreme Court for review and the high court has now given those petitions a breath of life by requesting that the Solicitor General file an amicus brief providing its views on whether a grant of certiorari is warranted. If certiorari is granted, the case would be heard next term.

Commil (the patentee) asks: 

1. Whether the Federal Circuit erred in holding that a defendant’s belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b).

2. Whether the Federal Circuit erred in holding that Global-Tech v. SEB, 131 S.Ct 2060 (2011) required retrial on the issue of intent under 35 U.S.C. § 271(b) where the jury (1) found the defendant had actual knowledge of the patent and (2) was instructed that “[i]nducing third-party infringement cannot occur unintentionally.”

The appellate panel ordered a partial retrial on the issue of induced infringement.  Cisco (the accused infringer who lost the original trial) asks:

Whether, and in what circumstances, the Seventh Amendment permits a court to order a partial retrial of induced patent infringement without also retrying the related question of patent invalidity.

Petition of the Day: Medtronic v. NuVasive

Patent

by Dennis Crouch

In this pending certiorari petition, Medtronic directly asks for the Supreme Court for a GVR – Grant-Vacate-and-Remand order for the Federal Circuit to reconsider its prior decision in light of Commil USA, LLC v. Cisco Systems, Inc., 135 S. Ct. 1920 (2015). [Read the petition petition.nuvasive.]

The primary holding of Commil is that belief-of-patent-invalidity is not a defense to allegations of infringement.  Relevant for Medtronic, the Supreme Court also indicated in Commil that inducement requires proof that the accused inducer knew that the actions being induced constituted patent infringement.  Those statements from the Supreme Court have been seen as clearing up uncertainty following Global-Tech.

Here, Medtronic argues that it had no knowledge of infringement – even after being sued for infringement. In particular, Medtronic argues that “[t]here is not a shred of evidence that Medtronic knew surgeons using its NIM-Eclipse medical device during spinal surgery would infringe NuVasive’s patent. . . . Since first learning of NuVasive’s patent, Medtronic reasonably believed using its NIM-Eclipse device during surgery did not infringe under a proper reading of the patent claims.”  [query whether someone can “know” something is true while also “believing” that it is false]

Initially, NuVasive did not provide a responsive brief to the petition.  However, the Supreme Court has requested responsive briefing and set an extended deadline of December 9, 2015 for that submission.  In its appellate briefing, NuVasive had explained the following:

Medtronic’s intent is a question of fact, and the jury reasonably found that Medtronic intended to induce infringement. NuVasive notified Medtronic of its likely infringement in a June 2009 letter, and then counterclaimed for infringement in August 2009. Despite these warnings, Medtronic continued to instruct surgeons to use the “Nerve Proximity Mode” of NIM-Eclipse in an infringing manner. The jury was correctly instructed on the law and therefore understood that Medtronic could be liable for inducement only if Medtronic knew that it was both inducing these acts and inducing infringement (or was willfully blind). Substantial evidence supports the jury’s inference that Medtronic had the requisite knowledge and intent based on these facts.

My money is on NuVasive here, but a GVR is so easy for the Supreme Court to issue.

 

Supreme Court Patent Report: End of 2015 Term

Patent, , , , , , , , , , , , ,

by Dennis Crouch

The Supreme Court has completed its patent law business for the 2015 term and will re-open decision making in September 2016.  Briefing and new filings will, however, continue throughout the summer.

Two Decisions: The Supreme Court has decided its two major patent cases – Halo/Stryker and Cuozzo.  In Halo, the court re-opened the door to more treble-damage awards for willful patent infringement.  The decision rejects the objective-recklessness standard of Seagate (Fed. Cir. 2007)(en banc) and instead places substantial discretion in the hands of district court judges for determining the appropriate sactions “egregious infringement behavior.”  In Cuozzo, the court affirmed the Federal Circuit’s pro-PTO decision.  The decisions confirms the PTO’s authority construe claims according to their broadest-reasonable-construction (BRI) even during post-issuance review proceedings and also confirms the Federal Circuit ruling that the PTO’s initiation of an inter partes review (IPR) proceeding is not appealable (even after final decision).  A major caveat of this appealability issue is that the court limited its holding to run-of-the-mill IPR patent issues.  The court did not determine when other issues arising from institution, such as constitutional due process challenges, might be appealable.

Both decisions are important. Halo adds at least a gentle breeze to the would-be patent infringement armada.  I heard many discussions of pendulum’s swinging in the days following the case, although I would not go quite so far.  Cuozzo was a full affirmance of the PTO position and will operate to continue to raise the statute and importance of the agency.

Three Pending Cases Set the Stage for Next Term: With the certiorari writ grant in Life Tech v. Promega, we now have three patent cases set for review and judgment next term.  The issue in Life Tech is fairly narrow and involves export of of a component of a patented invention for combination in a would-be-infringing manner abroad.  The statute requires export of a “substantial portion of the components” and the question in the case is whether export of one component can legally constitute that “substantial portion.”  In the case, the component (Taq) is a commodity but is also an admitted critical aspect of the invention.  Life Tech may be most interesting for those generally interested in international U.S. law (i.e., extraterritorial application of U.S. law).  The other two pending cases are Samsung v. Apple (special damages in design patent cases) and SCA Hygiene (laches defense in patent cases).

None of these three pending cases are overwhelmingly important in the grand scheme of the patent system, although Samsung is fundamental to the sub-genre of design patents.  This week, the Supreme Court denied certiorari in Sequenom v. Ariosa – a case that some thought might serve to rationalize patent eligibility doctrine in a way that favors patentees.  For now, the Mayo, Alice, _____ trilogy remains open-ended. This leaves the Federal Circuit in its nadir.

Following Cuozzo, the only AIA post-issue review cases still ongoing are Cooper and MCM.  These cases raise US Constitutional issues that were expressly not decided in Cuozzo.  Briefing is ongoing in MCM and one scenario is that the court will sit on Cooper and then grant/deny the pair together.  A new petition was filed by Trading Technologies just before Cuozzo was released – the case focuses on a mandamus (rather than appeal) of a CBM institution decision for a patent covering a GUI tool. (Full disclosure – while in practice I represented TT and litigated the patent at issue).  Of minor interest, the court issued a GVR order (Grant-Vacate-Remand) in Click-to-Call Tech. v. Oracle Corp (15-1014) with instructions to the Federal Circuit to reconsider its prior decision in light of the recently decided Cuozzo Speed Technologies, LLC v. Lee, 579 U. S. ___ (2016).  It will be interesting to see whether the patentee can develop a new hook for the Federal Circuit.

The end-of-term clean sweep leaves only two-more briefed-cases with potential for certiorari: Impression Prod. v. Lexmark Int’l. (post-sale restrictions); and Sandoz v. Amgen (BPCIA patent dance).  In both cases the court called for the views of the Solicitor General (CVSG). DOJ briefs should be filed around the end of the year – although the election may shift some of the timing.  SG Donald Verrilli has stepped down with former deputy Ian Gershengorn now serving as Acting SG.

The big list:

(more…)

Joint Infringement Case Moves Toward Supreme Court Review

Patent,

By Dennis Crouch

Limelight Networks, Inc. v. Akamai Technologies, Inc., Docket Nos. 12-786 and 12-960 (Supreme Court 2013)

Limelight and Akamai have proposed dueling questions to the Supreme Court. Limelight, the accused infringer, asks: “Whether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. § 271(b) even though no one has committed direct infringement under § 271(a).” The patentees Akamai and MIT ask: “Whether a party may be liable for infringement under either section of the patent infringement statute, 35 U.S.C. §271(a) or § 271(b), where two or more entities join together to perform all of the steps of a process claim.” These questions involving the fundamental definitions of patent infringement have been stewing for a number of years, and this case stems directly from the Federal Circuit’s fractured en banc decision in 2012.

The Supreme Court today has indicated some interest in the case by calling for the views of the US Solicitor General. The Supreme Court may see the case as an extension of its decision in Global-Tech Appliances, Inc. v. SEB, S.A, 2011 U.S. LEXIS 4022 (U.S. May 31, 2011). That case focused on the intent requirements infringement-by-inducement.

= = = = =

The asserted claim from U.S. Patent No. 6,108,703 is below:

19. A content delivery service, comprising:

replicating a set of page objects across a wide area network of content servers managed by a domain other than a content provider domain;

for a given page normally served from the content provider domain, tagging the embedded objects of the page so that requests for the page objects resolve to the domain instead of the content provider domain;

responsive to a request for the given page received at the content provider domain, serving the given page from the content provider domain; and

serving at least one embedded object of the given page from a given content server in the domain instead of from the content provider domain.

Apparently in practice, the “tagging” step is performed by Limelight’s customers and limelight therefore argues that there cannot be infringement because no single entity practices each and every step of the claimed invention.

Thus, the basic setup is that Limelight performs all-but-one of the elements of the claimed invention and then encourages its customers to perform the missing stem. Limelight wins this case with a holding of non-infringement under the BMC/MuniAuction line of cases because infringement under 271(a) requires a single entity that causes performance of each and every element of the claimed invention and since Limelight did not cause its customers to perform the missing step. Likewise, under those cases inducement under 271(b) fails because the cause-of-action requires proof of underlying direct (271(a)) infringement. On the other hand Akamai argues that the BMC/MuniAuction rules are too restrictive. Rather, Akamai argues that the single-entity requirement of 271(a) direct infringement is too narrow and that inducement under 271(b) should not require underlying direct infringement. For its part, the Federal Circuit took a somewhat middle-ground and only held that inducement does not require underlying direct infringement so long as a single entity induced all of claimed elements.

Race to the Finish: Timing Battles in Parallel IPR and District Court Litigation

Patent

by Dennis Crouch

The new petition for certiorari filed by Liquidia raises some interesting questions about the ongoing race between inter partes review proceedings and district court litigation.  Liquidia Techs v. United Therapeutics Corp., 23-804 (US), on petition for writ of certiorari from United Therapeutics Corp. v. Liquidia Techs., Inc., 74 F.4th 1360 (Fed. Cir. 2023).

UTC won its infringement suit against Liquidia with a holding that its patent covering treprostinil administration by inhalation were valid and infringed. (US10716793).  While the appeal was pending, the PTAB sided against the patentee and found the claims unpatentable as obvious.  In the appeal, however, the Federal Circuit refused to give credence to the PTAB decision – finding that litigation was still “pending” and “non-final.” The claims had not actually been cancelled yet – since the Director only issues the certificate confirming unpatentability after any appeal. Further, the Federal Circuit concluded that IPR decisions do not have issue-preclusive (collateral estoppel) effect until the decision is affirmed on appeal, or the parties waive their right to appeal. Citing XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282, 1294 (Fed. Cir. 2018).

Liquidia’s petition argues that the PTAB’s final-written decision should be given preclusive effect in parallel litigation even if an appeal is pending, just like would be done for a district court opinion. (more…)

3D Printing, Patent Infringement, and the Coronavirus

Patent

Guest post by Prof. Lucas Osborn, Campbell University School of Law.

Never waste an opportunity in a pandemic to incur a PR disaster. That appears to be the mantra – if initial reports are believed – of an Italian company who holds a patent on a valve used in breathing machines that are critical for coronavirus patients. The company could not meet the surging demand for its valves. In response to the shortage, two engineers used 3D printers to make these essential devices locally near Brescia in northern Italy, a region the coronavirus has hit particularly hard. In response, the patent holder allegedly threatened a patent infringement lawsuit against them.

In a remarkable testament to the speed and flexibility of 3D printing technology, on the same day the engineers learned about the shortage of valves, they were able to create a digital version of the valve and 3D print working valves. Within a day they had made over 100. (As an aside, 3D printing is at the core of a rapid move to create an open source ventilator to combat shortages.)

To be fair, the company, and one of the individuals doing the 3D printing, denies a threat was made. Although the company did refuse to share the design file with the individuals, forcing them to create a 3D printable digital file from scratch.

Regardless, this episode represents the first widely publicized instance of 3D printing technology being used to (arguably) infringe a patent on a medical device. Patent infringement and 3D printing involves several interesting patent issues on which I have previously written here (with Professor Tim Holbrook) and here.

The key to appreciating the unique patent infringement issues with 3D printing is to keep in mind the difference between the digital and physical version of the patented device. In just about every case, the patent covers only the tangible object, not the digital version of it. Therefore, merely creating a 3D printable file of the device is not an act of direct infringement.

Direct Infringement

On the other hand, anyone who prints the physical valve commits direct infringement for “making” the patented device. But even the issue of who performs the actual printing will not always be clear. For instance, assume that X makes the digital file, but does not have the appropriate 3D printer. X takes the file to Y, an on-demand 3D print shop, who prints the object on X’s behalf. Did X or Y “make” the invention? In the copyright context, companies like YouTube have avoided liability for direct infringement by arguing they are passive conduits for their users’ actions. Perhaps 3D print shops will be able to make the same argument.

Indirect Infringement

Getting back to the digital file, although the engineers printed lots of valves for local use, they declined to share the file with others out of fear of patent liability. Their fear was not misplaced. A person can be liable for indirect patent infringement for helping or inducing others to commit direct patent infringement. And the person can be potentially liable in any and all countries where the direct infringement occurred or was facilitated (unlike the US, many other countries do not require a specific act of direct infringement as a precursor to indirect liability).

In the US, the relevant indirect liability would be inducement under 35 U.S.C. § 271(b), which states simply that, “Whoever actively induces infringement of a patent shall be liable as an infringer.” Although the statute does not say so, liability for inducement requires that the accused have knowledge of the specific patent and that the induced acts constitute patent infringement. Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 765-68 (2011). If the engineers in Italy were in fact warned of a specific patent, that would likely be enough to meet the knowledge requirement.

Knowledge can be negated by a good faith belief of noninfringement, but it cannot be negated by a good faith belief in the patent’s invalidity. Commil USA, LLC v. Cisco Sys., Inc., 135 S. Ct. 1920, 1928 (2015). Courts have not had an opportunity to explore what is required for an individual, as opposed to a company, to form a good faith belief of noninfringement. Would a layperson’s study of the patent suffice, or must they incur the huge expense of a formal legal opinion?

In most European countries, indirect liability applies where someone

supplies or offers to supply in [the country] . . . with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the [the country].

See, e.g., UK Patent Act § 60(2). (Most European countries have similar provisions because their statutes are all based on the 1975 Community Patent Convention.) Although the statute requires actual or constructive knowledge, the details of that knowledge requirement are unsettled: must the infringer have knowledge of the specific patent or merely knowledge of the acts that the direct infringer will take. If courts only require knowledge of the induced acts, liability would attach regardless of any specific knowledge of the patent.

In short, creators of 3D printable files, especially those with knowledge of a relevant patent, should be wary of making them available for others on the internet.

Love Your Neighbor, or At Least Your Reputation

Although the coronavirus pandemic inflames passions when needed medical equipment is in short supply, it is important to remember that in emergencies Article 31 of TRIPS, the key international patent treaty, provides flexibilities for governments to use – and authorize others to use – patents without the consent of patent holders.

The above analysis focuses only on the legal issues. Even if the patent holder is more interested in making money than saving lives, it may be wise to consider the reputational and other costs associated with denying live saving equipment to hospitals in need. Others, including patent holders relating to vaccine development, have initially threatened patent infringement suits only to backtrack after a storm of public outrage. So even if the patent holder made a threat to someone in Italy (and it is not at all clear that it did), it would be no surprise that it decided to change tactics.

Justice Kennedy Patent Opinions:

Patent
  • Bilski v. Kappos, 561 U.S. 593 (2010) (machine-or-transformation test is not the sole test for determining patent eligibility)
  • KSR Intern. Co. v. Teleflex Inc., 550 U.S. 398 (2007) (common sense allows PHOSITA to combine references in considering an invention’s obviousness)
  • Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 535 U.S. 722 (2002) (narrowing amendment presumptively creates prosecution history estoppel)
  • Commil USA, LLC v. Cisco Sys., Inc., 135 S. Ct. 1920 (2015) (an infringer’s belief that a patent is invalid is not a defense to a claim of induced infringement)
  • TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23 (2001) (utility patent creates strong inference of a design’s functionality)