Iowa Intellectual Property Law Association Annual Conference at the Iowa College of Law

Patent

By Jason Rantanen

Next Friday, October 2, the Iowa Intellectual Property Law Association will hold its annual conference.  This year’s conference is being held at the Boyd Law Building at the University of Iowa, and is being co-sponsored by the Iowa Innovation, Business & Law Center.  We’ve got a great lineup of speakers, including Profs. Dennis Crouch (Missouri) & Herb Hovenkamp (Iowa), Dr. Christal Sheppard (USPTO), Gene Quinn (IPWatchdog), Bernie Knight (McDermott Will & Emery) and David C. Hilliard (Pattishall, McAuliffe, Newbury, Hilliard & Geraldson).

Here’s the registration page.

 

Shire Wins Vyvanse Case, but Supplier Escapes Liability

Patent

Shire LLC v. Amneal Pharma, et al. (Fed. Cir. 2015)

This ANDA patent litigation arose after the defendants filed Abbreviated New Drug Applications (ANDAs) with the FDA requesting permission to make and sell a generic version of Shire’s “safe” amphetamine Vyvanse. According to the unreputable urban dictionary: “Unlike other amphetamine pills like Adderall that have distinct ups and downs, and relatively quick effects, Vyvanse is like a big slow moving amphetamine truck that hits you all day long.”

Under 35 U.S.C. 271(e)(2), the filing of an ANDA with the FDA is a form of patent infringement so long as the original NDA owner has listed covering patents in the FDA’s Orange Book. Shire sued the ANDA filers for infringement under this provision.

The money-ruling: The Federal Circuit affirmed the lower court’s finding that – as a matter of law – the claimed inventions of the asserted patents are not obvious and that the lower court did not abuse its discretion by denying a late-filed on-sale-bar defense. The result is that patents will remain in force until their expiration in 2023 – protecting Shire’s billion dollar market.

Supplier Liability: As part of each case, Shire also sued Johnson Matthey who was partnering with each of the ANDA filers and supplying the drug to those entities. As part of its work, Matthey had (1) filed a drug master file with the FDA (but did not itself file an ANDA) and (2) supplied each of the ANDA filers with product covered by one of the patents. In the appeal, the Federal Circuit ruled that these acts do not constitute infringement – either direct or by inducement.

First, the appellate court found that Matthey’s supply of the infringing product qualified under the research exemption of Section 271(e)(1) –

Johnson Matthey is correct that it cannot be liable for the [active ingredients – API] it sold the ANDA defendants up to this point. Johnson Matthey, as an API supplier, has thus far done nothing more than provide material for use by the ANDA defendants in obtaining FDA approval. As the district court found, these sales, and the ANDA defendants’ use of the API for filing the ANDA, were “reasonably related to the submission of an ANDA.” As such, Johnson Matthey’s activities are protected by the safe harbor of § 271(e)(1), and the district court erred by entering judgment that Johnson Matthey has induced infringement of the compound claims at issue.

Second, the appellate court found that Matthey “cannot be liable for infringement under § 271(e)(2)” because it did not submit an ANDA.

The court here seems to skirt its prior holding in Forest Laboratories, Inc. v. Ivax Pharmaceuticals, Inc., 501 F.3d 1263 (Fed. Cir. 2007). In that case, the Federal Circuit found that a supplier could be held enjoined to prevent it from inducing infringement: “Section 271(e)(2) may support an action for induced infringement. . . . Under the standards for inducement which we apply to 35 U.S.C. § 271(b), [the supplier] has therefore actively induced the acts of [the ANDA filer] that will constitute direct infringement upon approval of the ANDA, and it was thus not inappropriate for the district court to include [the supplier] within the scope of the injunction.”

In Forest, the court explained though that – at the point of an ANDA lawsuit – that the supplier was not infringing (for the two reasons discussed above), but that it would be infringing/inducing if the ANDA was approved. As such, the Forest court found that it was appropriate to preemptively enjoin the suppler from taking that action that would constitute infringement. Coming back to the Shire case, the appellate panel distinguished Shire – finding that “Forest involved the scope of an injunction under § 271(e)(4). No such injunction has been issued against Johnson Matthew here and thus Forest is inapposite. Johnson Matthey is therefore not currently liable for infringement.”

High Priced Generic Drugs

Patent

The news has been abuzz regarding the drug Daraprim and the major price-hike by its US-distributor (Turing Pharma).  According to its website, Turing “acquired” Daraprim in August 2015 from CorePharma who had previously obtained rights in 2010 from GlaxoSmithKline.  When CorePharma bought rights, it increased the price from $1 to $13.50 per pill, Turing’s increase pushed the price up to $750.

My first thought was that the price-hike was likely backed by the exclusivity of patent rights. However, I then read that the drug has been on the market for more than 60 years and any patent rights associated with its sale and distribution have long expired.  Although the deal is not public, the rights purchased by Turing appear to include marketing rights (FDA right to market) along with related trade mark and trade secret rights associated with the manufacture, sale, and testing of the drug.

At this point, it is a straightforward process for a generic competitor to enter the market by filing an Abbreviated New Drug Application (ANDA).  However, that ANDA process is still expensive and was previously not cost effective because of the low number of Daraprim users. Turing is apparently now lowering its price, but if it remains high enough, a competitor will likely enter the market.

Outside of the U.S., the drug is sold generically for $1 per pill or less. However, foreign drugs cannot be directly imported and sold without first seeking and obtaining approval from the FDA through the ANDA process. In the meantime, the company with exclusive marketing rights can demand monopoly rents.

The situation should highlight the fact that patent rights are only a small-bit of the ‘game.’  The barriers to entry are such that – even in the generic market – drug pricing in the US will often have little relation to the marginal cost of production – with the exception being drugs used by millions of Americans.

 

 

 

Said Element

Patent

The tradition in patent law is to begin discussing an element then continue discussing said element. I never liked that particular approach because the word “said” seemed odd to me. Instead, my claim drafting practice was to largely avoid the word “said.” Instead, once a claim element is given antecedent basis, I would then refer to it as “the [element].” It appears that my approach is now the conventional wisdom. The chart below shows the breakdown in patents using “said” in Claim 1 vs those using “the.” You’ll note a sharp decline in the popularity of “said” that appears to have begun around the mid 1990’s.

From Jeff Sheldon:

I am going to claim some credit here. My book “how to write a patent application ” came out in about 1990. I advocated for “the” rather than “said” for readability by judges and juries. The book is widely used and updated twice per year. So a generation of patent practitioners have developed with that recommendation.

Patent Landscape Report

Patent

by Dennis Crouch

I have known Tony Trippe for many years now, and he continues to build his reputation as one of the top patent-information-specialists.  I wanted to highlight his newest guide to patent landscaping:

The basic idea here is to consider ways that aggregate analysis of patent data can help inform business decisions. These approaches include landscape mapping; freedom-to-operate and clearance decisions; patentability and validity maps; competitor monitoring; supporting mergers and acquisitions; data mining, etc.

Patentlyo Bits and Bytes by Anthony McCain

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Get a Job doing Patent Law

Federal Circuit: Damages Expert Credibility is a Question for the Jury

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Summit 6 v. Samsung (Fed. Cir. 2015)

A jury sided with the patentee – finding that Summit 6 had proven infringement and that Samsung had failed to prove invalidity of U.S. Patent No. 7,765,482 (claims 38, 40, 44-46, and 49).  The award – $15 million in damages.  On appeal, the Federal Circuit affirms that judgment.  Here, I’ll focus on the damages issues.

 

Experts: In a Daubert appeal, Samsung asked the Federal Circuit to rule that Summit 6’s damages expert’s testimony was inadmissible.  The general rules for expert testimony are found in Fed. R. Evid. 702 and allows testimony from a qualified expert relating to:

(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the case.

Although a court may exclude testimony based upon unreliable principles or methods, once that threshold has been passed the question of expert credibility goes to the fact finder and may be uncovered by “[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.” Daubert.

Here, the damages expert (Paul Benoit) relied upon an unpublished methodology based upon the premise “that a feature’s use is proportional to its value.”   On appeal, the Federal Circuit indicated that this type of “analytical method” for calculating damages was sufficient to pass as expert testimony and be relied upon by a jury.

[W]here the methodology is reasonable and its data or evidence are sufficiently tied to the facts of the case, the gatekeeping role of the court is satisfied, and the inquiry on the correctness of the methodology and of the results produced thereunder belongs to the factfinder.

The particular invention at issue involves pre-processing of an image on a mobile device before uploading it to a server. In estimating a reasonably royalty, Benoit estimated that 65% of phone users regularly use the cameras to take photos; 77% of those share the photos; and 41% of those share by MMS in a way that infringes the patent. Taking the product of these percentages, Benoit found that 20% of the relevant users regularly infringe.  Taking a step back, Benoit estimated Samsung’s camera-related revenue as $14.15 per phone (calculated based upon proportional production costs) and then took the leap of concluding then that 20% of the $14.15 per phone ($2.93) is attributable to the infringement.  Thinking proportionally again, Benoit then estimated that $0.56 of every $2.93 in revenue was profit for Samsung and that – based upon a Nash Bargaining Solution, that a reasonable royalty would split that profit – or $.28 per phone in license fees. Since Samsung has distributed about 100,000,000 phones, that would add up to $29 million.

Reviewing that methodology, the Federal Circuit found:

Mr. Benoit’s damages methodology was based on reliable principles and was sufficiently tied to the facts of the case. Mr. Benoit first estimated Samsung’s economic benefit from infringement by specifically focusing on the infringing features and by valuing those infringing features based on Samsung’s own data regarding use and on its own financial reports outlining production costs and profits. Mr. Benoit then envisioned a hypothetical negotiation in which the parties would have bargained for respective shares of the economic benefit, given their respective bargaining positions and alternatives to a negotiated agreement. Mr. Benoit’s methodology was structurally sound and tied to the facts of the case.

That Mr. Benoit’s methodology was not peer-reviewed or published does not necessitate its exclusion. We recognize that the fact-based nature of Mr. Benoit’s damages testimony made it impractical, if not impossible, to subject the methods to peer review and publication. . . .  Here, the district court did not abuse its discretion in determining that Mr. Benoit’s methodology, involving the correlation of use with value, was not unreliable.

Verdict affirmed.

 

Can the U.S. Government Infringe a U.S. Patent? (The U.S. Government Says it’s Impossible)

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Astornet Technologies Inc. v. BAE Systems, Inc., — F.3d —- (Fed. Cir. 2015)

Although a patentee can sue the U.S. government for unlicensed use of its invention, Congress requires that those cases be filed in the Court of Federal Claims (CFC) rather than in district court. No jury trial is available, and the only remedy is a reasonable royalty.

The statute also protects companies doing work for the U.S. – providing cover by limiting the cause of action.

Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.

28 U.S.C. § 1498. The common interpretation of this section is – when the U.S. government is using the invention – that the only action is “against the US.” Here, the patentee sued several private companies for inducing the TSA to infringe its airport vehicular gate control patent. US Patent No. 7,639,844. On appeal, the Federal Circuit confirmed that the inducement theory does not avoid the coverture of 1498.

[T]he statute protects government contractors against infringement liability and remedies where it applies. As indicated by the statute’s use of the definite article in providing “the owner’s remedy” and its statement that the remedy is for payment of the owner’s “entire compensation,” the statute, within its ambit, makes the remedy against the United States exclusive. . . .

The claim of use of the patented invention by the United States is squarely within the statutory terms. The language is not limited to claims that are filed against the United States or its government agencies. And it would cut a substantial hole in the provision, and its intended function, to read it to be limited in that way. Doing so would expose a significant range of government contractors to direct liability (and possible injunctive remedies), namely, those accused of indirect infringement of claims directly infringed by the government. There is no justification for departing from the clear meaning of the text to produce a result that runs counter to the evident, established statutory policy.

The government brief on this point is interesting. The government argues that the U.S. government should never be seen as an “infringer” but rather as a sovereign who has agreed to offer compensation for its use of someone else’s patents. The logical result for this case would be that there cannot be any inducement liability because there was no infringement.

Similarly, this Court need not resolve appellees’ argument that because the United States does not “infringe” when it uses a patented invention without authorization, no party can be liable for inducing or contributing to that use. . . . [T]he plain language of Section 1498(a) encompasses use of a patented invention by the United States. Where a patent owner alleges such use, either directly or indirectly, Section 1498(a) applies by its express terms. There is, consequently, no need for the Court to decide whether the unauthorized use of a patented invention by the United States constitutes “direct infringement” in the sense that would be necessary to support liability for induced or contributory infringement in the absence of Section 1498(a).

Government appellate brief.

The outcome here is that the dismissal is affirmed.

USPTO News

Patent
  • USPTO has a new data viewer with direct data access: PatentsView
  • USPTO earlier created a pilot program for streamlining PTAB ex parte appeals.  However, the nature of those appeals limited the process only to entities with multiple appeals pending.  The Office has now launched a second track focused on small and micro entities that only have one appeal pending. LINK.
  • USPTO has created a new tool for scheduling interviews – “USPTO AIR” available here: http://www.uspto.gov/patent/laws-and-regulations/interview-practice

Court Maintains Laches Defense for Back Damages in Patent Cases

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by Dennis Crouch

SCA Hygiene Products v. First Baby Products (Fed. Cir. 2015) (en banc)

On en banc rehearing, the Federal Circuit has ruled that the Supreme Court’s Petrella decision (eliminating the doctrine of laches for back-damages for copyright infringement) does not directly apply in the patent context.

All eleven members of the court agreed that, in the patent context, laches continues to be available in the context blocking equitable relief such as an injunction or ongoing royalties – when warranted by the equities.  However, the court indicated (dicta here) that laches should only apply to ongoing royalties in “extraordinary circumstances.”

The 6-5 split was on whether laches can be used to eliminate back-damages for infringement that occurred within the six-year statutory limit.  Here, the majority found that laches continues to apply.

Although laches is considered a judge-made equitable doctrine, the court smartly looked to the statute in reaching its conclusion. In particular, Section 282(b)(1) of the Patent Act states that “unenforceability” is a defense to allegations of patent infringement and back when the law was passed (1952) was understood to encompass defenses such as “laches, estoppel and unclean hands.”  Taking this together, the court found that Congress meant for the laches defense to continue to work alongside the six-year limit on back-damages.

Congress remained silent on the content of the laches defense. Section 282 therefore retains the substance of the common law as it existed at the time Congress enacted the Patent Act. . . . Upon review, the case law demonstrates that, by 1952, courts consistently applied laches to preclude recovery of legal damages. Nearly every circuit recognized that laches could be a defense to legal relief prior to 1952. . . . Following a review of the relevant common law, that meaning is clear: in 1952, laches operated as a defense to legal relief. Therefore, in § 282, Congress codified a laches defense that barred recovery of legal remedies.

Challenging this point, the Dissent argued that the relevant “common law” for consideration should have come from the Supreme Court which, according to the dissent, indicated that laches was only a defense to equitable actions.

The legal history point of debate seems to be whether we should look at the general common law of laches or instead the common law of laches as applied to patent lawsuits?

Majority: If Congress looked to the common law, it likely looked to the common law of patents rather than to more general principles.”

Dissent: Patent law is governed by the same common-law principles, methods of statutory interpretation, and procedural rules as other areas of civil litigation.

With a one-judge majority, the law remains that laches is “a defense to legal relief in a patent infringement suit.”

= = = = =

The majority here argues correctly that we should look to the statute and see what it tells us. That approach makes sense in all patent cases, regardless of the issue.

What the majority finds is that the statute implicitly binds the court to implement the equitable defenses available in patent cases back in 1952 (when the relevant amendment was passed). At the same time, the majority appears perfectly comfortable with the notion that the scope of the equitable actions will continue to adjust over time and were in no way fixed by their incorporation into the 1952 Act.  Thus, when the court asks – what are the contours of the laches defense – it does not feel constrained to limit itself to 1952 precedent but instead looks directly to the recent Supreme Court decision in Petrella.

Intervening Rights 2015

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R+L Carriers v. Qualcomm (Fed. Cir. 2015)

Here’s the rough timeline:

  • R+L sued Qualcomm for infringement;
  • R+L then petitioned for ex parte reexamination of its asserted patent, and that filing resulted in the asserted claims being amended and then confirmed as patentable;
  • And, before the reexam was completed, Qualcomm stopped its allegedly infringing activity.

The in the case then is whether the amendment during reexamination allows Qualcomm to entirely avoid liability for pre-reexamination acts through a doctrine known as “intervening right.”

Substantially Identical: The Patent Act provides that back-damages for pre-reexamination infringement is only available if the reexamined claims are “substantially identical” to the original claims.  This rule stems from the reissue statute, 35 U.S.C. § 252 (a reissued patent shall have the same effect as the original patent “in so far as the claims of the original and reissued patents are substantially identical”) coupled with the reexamination provision, 35 U.S.C. § 307(b) (“a reexamination proceeding will have the same effect as that specified in section 252 for reissued patents”).

The Substantially Identical test is pretty tough standard. Although it does allow for some amendment, an amended claim will basically fail if the scope of covereage is not identical. As interpreted by the courts, the “substantially identical” standard is judged objectively and it is irrelevant as to whether the patentee thought the change was substantial or not.

The changes: The patent here is directed toward a method of “transferring shipping documentation data … from a transporting vehicle to a remote processing center.”  In the original patent, R+L had failed to include the word “comprising” and instead just put a colon following the method claim preamble. In addition, the original claims included a final step of preparing “a loading manifest . . . for further transport of the package on another transporting vehicle.”  During reexamination, the patentee added the limitations that it is an “advance” loading manifest “document” for “another transport vehicle.”  In issuing the reexamination certificate, the USPTO relied upon this last change because the prior art did not include preparing “an advance loading manifest document for another transporting vehicle.”

The Federal Circuit relied upon the examiner’s statements here to interpret the claims – finding that the amendment did change the claim scope:

The examiner expressly stated he was allowing amended claim 1 because “the manifest discussed by [the prior art] is a manifest for the current shipping vehicle and not an advance loading manifest document for another transporting vehicle.”  In other words, the examiner’s focus in allowing the claims was … on the additional limitation that the advance loading manifest be “for another transporting vehicle.”  … [T]he examiner’s commentary reveals a method that would be covered by original claim 1 but not amended claim 1: the process of preparing a loading manifest “for the current shipping vehicle.”

In its briefing, R+L acknowledges that the claims were allowed over the prior art because it agreed to add the “for another transporting vehicle” limitation. As R+L stated in its interview summary during reexamination, addition of “loading manifest document for another transportation vehicle” resulted in a tentative agreement that the amendment would overcome the rejections over the prior art. … R+L clearly understood that it was limiting the scope of its claims in another way to get around the prior art.

Thus, amended claim 1 is not “substantially identical” to original claim 1 because original claim 1 encompassed scope that amended claim 1 does not. Accordingly, we conclude that amended claim 1 is not “substantially identical” to original claim 1.

As I mentioned earlier, the reasons for the amendment do not directly impact whether the amendment is substantial or not. However, the above quotation from the opinion shows how those reasons do impact the claim construction which will then impact whether the amendment is substantial.

What’s Important about This Case: The intervening rights doctrine discussed here is not new and the results are not surprising once the claims were construed.  The real element of importance of this case seems to be claim construction – and particularly, the heavy reliance placed upon the examiner’s statements during prosecution regarding the claim coverage.

= = = =

Although reexaminations are on the decline, the PTAB trials are on the rise.  Under the AIA, intervening rights will also be generated whenever a patent claim is amended in an inter partes or post grant (including CBM) review. See 35 U.S.C. § 318(c) and 328(c).

 

Federal Circuit Pushes Court to Stop Samsung’s Infringing Sales

Patent

Apple v. Samsung (Fed. Cir. 2015)

This portion of the saga focuses on Judge Koh’s refusal to award a permanent injunction against Samsung to prevent that company from continuing to infringe Apple’s slide-to-unlock patents. See U.S. Patent Nos. 5,946,647; 8,046,721; and 8,074,172.  Judge Koh reasoned that Apple had not shown that it would suffer irreparable harm without injunctive relief.

In a split decision, the Federal Circuit has rejected the lower court’s holding – vacated and remanded.

Apple was able to show lost sales and other market harms due to Samsung’s competing sales – but the core of the fight is whether those harms are being caused by infringement of the patents in question.  I.e., is there a “causal nexus” or proof of “some connection between the patented features and the demand for the infringing products.”  The district court’s error here (according to the panel) was that it required apple to prove that the infringing elements were the sole or primary drivers of the infringing sales.

Thus, in a case involving phones with hundreds of thousands of available features, it was legal error for the district court to effectively require Apple to prove that the infringement was the sole cause of the lost downstream sales. The district court should have determined whether the record established that a smartphone feature impacts customers’ purchasing decisions. Though the fact that the infringing features are not the only cause of the lost sales may well lessen the weight of any alleged irreparable harm, it does not eliminate it entirely. . . .

 

Walking through some of the evidence, the appellate panel found that Samsung’s copying of infringing features was evidence of a causal nexus as was willful infringement.  From the consumer viewpoint, the court identified evidence that consumers preferred infringing setup to non-infringing designs.  And finally, Apple’s internal evidence showed that it saw the infringing features as critical aspects of the iPhone.

Given the strength of the evidence of copying and Samsung’s professed belief in the importance of the patented features as a driver of sales, and the evidence that carriers or users also valued and preferred phones with these features, the district court erred by disregarding this evidence, which further establishes a causal nexus and Apple’s irreparable harm.

Bringing this together, the court writes:

In short, the record establishes that the features claimed in the ’721, ’647, and ’172 patents were important to product sales and that customers sought these features in the phones they purchased. While this evidence of irreparable harm is not as strong as proof that customers buy the infringing products only because of these particular features, it is still evidence of causal nexus for lost sales and thus irreparable harm. Apple loses sales because Samsung products contain Apple’s patented features. The district court therefore erred as a matter of law when it required Apple to show that the infringing features were the reason why consumers purchased the accused products. Apple does not need to establish that these features are the reason customers bought Samsung phones instead of Apple phones—it is enough that Apple has shown that these features were related to infringement and were important to customers when they were examining their phone choices. On this record, applying the correct legal standard for irreparable harm, Apple has established irreparable harm.

On remand, we can expect Judge Koh to issue an injunction to stop Samsung’s ongoing infringement.

The following are a few key excerpts from the three decisions:

Judge Moore (Opinion of the Court): 

The right to exclude competitors from using one’s property rights is important. And the right to maintain exclusivity—a hallmark and crucial guarantee of patent rights deriving from the Constitution itself—is likewise important. “Exclusivity is closely related to the fundamental nature of patents as property rights.” Douglas Dynamics, LLC v. Buyers Prods. Co., 717 F.3d 1336 (Fed. Cir. 2013),. And the need to protect this exclusivity would certainly be at its highest when the infringer is one’s fiercest competitor. Essentially barring entire industries of patentees—like Apple and other innovators of many-featured products—from taking advantage of these fundamental rights is in direct contravention of the Supreme Court’s approach in eBay. (“[E]xpansive principles suggesting that injunctive relief could not issue in a broad swath of cases . . . cannot be squared with the principles of equity adopted by Congress.”). . . .

If an injunction were not to issue in this case, such a decision would virtually foreclose the possibility of injunctive relief in any multifaceted, multifunction technology.

Judge Reyna (Concurring Opinion): Judge Reyna’s opinion is a strong push-back against eBay – arguing that infringement should create a presumption of irreparable harm:

I write to add that I believe Apple satisfied the irreparable injury factor based on Samsung’s infringement on Apple’s right to exclude and based on the injury that the infringement causes Apple’s reputation as an innovator. There is no dispute that Samsung has infringed Apple’s right to exclude and, absent an injunction, it will likely continue to do so. I believe that such a finding satisfies the irreparable harm requirement because the infringement is, in this case, “irreparable.” On reputational injury, the roles are reversed: it is undisputed that such an injury is irreparable; the question is whether this injury will likely occur. As I explain below, I believe that the record here—particularly the toe-to-toe competition between Apple and Samsung, Apple’s reputation as an innovator, and the importance of the patents-in-suit to that reputation—establishes that Apple will likely suffer irreparable harm to its reputation.

Chief Judge Prost in Dissent:

This is not a close case. One of the Apple patents at issue covers a spelling correction feature not used by Apple. Two other patents relate to minor features (two out of many thousands) in Apple’s iPhone—linking a phone number in a document to a dialer, and unlocking the screen. Apple alleged that it would suffer irreparable harm from lost sales because of Samsung’s patent infringement. For support, Apple relied on a consumer survey as direct evidence, and its allegations of “copying” as circumstantial evidence. The district court rejected both evidentiary bases. On the record of this case, showing clear error in the district court’s factual findings is daunting, if not impossible.

If I were you, I’d read this decision: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/14-1802.Opinion.9-15-2015.1.PDF

 

 

Lemley & McKenna on IP Scope

Patent

The following is the abstract from the new article by Professors Mark Lemley & Mark McKenna’s on (The Problem With) Intellectual Property Scope:

Intellectual property (IP) law doctrines fall into three basic categories: validity, infringement and defenses. Virtually every significant legal doctrine in IP is either about whether the plaintiff has a valid IP right that the law will recognize – validity – about whether what the defendant did violates that right – infringement – or about whether the defendant is somehow privileged to violate that right — defenses.

IP regimes tend to enforce a more or less strict separation between these three legal doctrines. They apply different burdens of proof and persuasion to infringement and validity. In many cases they ask different actors to decide one doctrine but not the other. The U.S. Patent and Trademark Office, for example, decides questions of patent and trademark validity but not questions of infringement. Even in court, resolution of one issue is often allocated to a judge while the jury decides a different issue. And even where none of that is true, the nature of IP law is to categorize an argument in order to apply the proper rules for that argument.

The result of this separation is that parties treat IP rights “like a nose of wax, which may be turned and twisted in any direction.” When infringement is at issue, IP owners tout the breadth of their rights, while accused infringers seek to cabin them within narrow bounds. When it comes to validity, however, the parties reverse their position, with IP owners emphasizing the narrowness of their rights in order to avoid having those rights held invalid and accused infringers arguing the reverse.

Because of the separation between validity, infringement, and defenses, it is often possible for a party to successfully argue that an IP right means one thing in one context and something very different in another. And courts won’t necessarily detect the problem because they are thinking of only the precise legal issue before them.

The result is a number of IP doctrines that simply make no sense to an outsider. In patent law, for instance, it is accepted law that there is no “practicing the prior art” defense. In other words, one can be held liable for doing precisely what others had legally done before, even though a patent isn’t supposed to cover things people have already done. In design patent law, one can be held liable for making a design that an “ordinary observer” would find too similar to a patented design, even though the things that make the two look similar – say, the roundness of the wheels on my car – are not things the patentee is entitled to own. In copyright, once a court has concluded that someone has actually copied from the plaintiff, a song will sometimes be deemed infringing because of its similarity to a prior song, even if the similarity is overwhelmingly attributable to unprotectable standard components of the genre. And in trademark, a party can be deemed infringing because its products look to similar to the plaintiffs’ mark and therefore make confusion likely, even if that confusion is likely caused by non-source-designating features of the design.

The culprit is simple, but fundamental: IP regimes largely lack an integrated procedure for deciding the proper extent of an IP right. The proper scope of an IP right is not a matter of natural right or immutable definition. Rather, it is a function of the purposes of the IP regime. But without some way of assessing how broad an IP right is that considers validity, infringement, and defenses together, courts will always be prone to make mistakes in applying any one of the doctrines.

In this article, we suggest that IP regimes need a process for determining the scope of an IP right. Scope is not merely validity, and it is not merely infringement. Rather, it is the range of things the IP right lawfully protects against competition. IP rights that claim too broad a scope tend to be invalid, either because they tread on the rights of those who came before or because they cover things that the law has made a decision not to allow anyone to own. IP rights with narrower scope are valid, but the narrowness of that scope should be reflected in the determination of what actions do and do not infringe that right. And whatever the doctrinal label, we should not allow an IP owner to capture something that is not within the legitimate scope of her right. Nor should it follow from the fact that some uses are outside the lawful scope of an IP owner’s right that the IP right itself is invalid and cannot be asserted against anyone. Only by evaluating scope in a single, integrated proceeding can courts avoid the nose of wax problem that has grown endemic in IP law. Scope is, quite simply, the fundamental question that underlies everything else in IP law, but which courts rarely think about expressly.

 

Recent Developments in Patent Law – 2015

Patent

By Jason Rantanen

On October 24, 2015, I’ll be giving the “Patent Law Year in Review” talk at the American Intellectual Property Law Association’s annual meeting in Washington, D.C.  I hope to see many of you there!

In connection with that talk, I’ve put together an essay with my perspectives on developments in patent law over the past year.  Even if you’re not planning on attending the conference, you can read the essay here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2658737

Question on Quarterly Patent Filings

Patent

by Dennis Crouch

I find the chart below interesting. It reflects the reported number of non-provisional patent applications filed each month at the USPTO. (Here, an RCE does not count as a new filing, but a continuation, CIP, or divisional does).  The data comes directly from the USPTO’s patent dashboard.

I note the high-point in the chart represents March 2013 – a time when applicants were looking to get their applications on-file prior to the AIA-deadline.  The second high point is in March 2014 when the pre-AIA influx of provisionals were set to expire.

Quarterly Filings: What is most notable to me is the quarterly nature of the data.  Year-after-year we see a high number application filings in the end-of-quarter months of March, June, September, and December and lower filing numbers in the other months.  This pattern has held stead for every month of every quarter going back to the beginning of my data-set in 2009.  Is this really being driven by internal corporate pushes to meet quarterly goals? Is it the corporate clients driving this or are law firms also pushing for this outcome?

PatentFilingsByMonth

 

UPDATE: Professor Jeremy Bock (Memphis) sent along his chart showing the phenomenon from a slightly different perspective.

BlockOnTiming

 

In Suprema v. ITC remand, Panel Expands on Inducement

Patent

Suprema v. ITC (Suprema III) (On remand from the en banc decision) (non-precedential)

In August, 2015, the Federal Circuit released an en banc decision in Suprema v. International Trade Commission holding that the USITC has power to stop infringing imports if those imports are being used to induce infringement of a patent method of use.  That holding is a shift from the traditional notion that the USITC only has power over goods that are infringing at the point of importation.  The holding is also interesting in that it was at least partially based upon deference given to the ITC’s interpretation of the scope of its statute – that type of deference is typically not given to the USPTO or district courts when making similar judgments.

The en banc opinion flipped Judge O’Malley’s original panel holding that the statutory “articles that infringe” limitation on ITC power did not extend to post-importation acts of infringement.

Following the en banc decision, original panel took-up the case again and has now affirmed the ITC’s findings of violation.  This time, the panel walked through the challenged findings of infringement and held that the Commission’s findings were supported by ‘substantial evidence.’

Although the decision is non-precedential, it does include a few gems. Notably, the patentee had evidence that the accused-infringer had studied two of the patents-in-suit but not the third.  In the appeal, the panel supported the notion that knowledge of the first two could be used to prove knowledge of the third:

Suprema also admitted to researching and identifying Cross Match’s patents, including the ’993 and ’562 patents. . . .  Following its extensive research, Suprema successfully developed its scanners into the autocapture, image quality checking, and automatic segmentation processes that are covered by claim 19 of the ’344 patent. The Commission noted that, because the ’562 and ’344 patents have overlapping inventors and share the same assignee, Cross Match, “a word search likely would have identified both patents.” . . .

Suprema asserts that during its extensive market research it failed to check to see if the related patent application referenced in the ’562 patent proceeded to mature into an issued patent. The Commission discounted this testimony. The Commission found it notable that the ’344 patent issued in April 2007, six months prior to the October 2007 issue date of the ’562 patent. Thus, had Suprema checked for the issuance of the ’344 patent at the time it was reviewing the ’562 patent, Suprema would have undoubtedly discovered that the ’344 patent had issued.

Suprema and amicus Google, Inc. (“Google”) argue that a requirement to seek out every reference referred to in a competitor’s patent would place too high a burden on manufacturers to avoid a finding of willful blindness. We do not hold that such an exhaustive patent search is required in every instance. Nor do we find that the Commission predicated its willful blindness finding only upon such an obligation. Rather, given the similarities in content, inventorship, and ownership between the ’344 and ’562 patents, and the facts that Suprema studied the ’562 patent during its extensive market analysis, was aware of Cross Match’s activities in the scanner field, and specifically targeted the market Cross Match serviced when developing its own products, we find, based on the totality of the circumstances, that the Commission had adequate evidence upon which to conclude that Suprema’s actions constituted willful blindness.

The Federal Circuit also allowed evidence that the accused did not seek opinion-of-counsel to be used to prove willfulness. In the process, the court noted that the AIA altered the law so that “[t]he failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.” 35 U.S.C. § 298.  The AIA has a host of different effective dates. Because the advice-of-counsel section (AIA Sec. 17) did not include a particular effective date, it falls under the general effective date which states that the “Act shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any patent issued on or after that effective date.”  Here, because the patents-at-issue were issued prior to the 1-year date (Sept 2012), the court did not apply this new statute to the case at hand. [UPDATE] See comments for additional info on the statute of limitations.  

The court also added the following bone to Google who had filed an amicus brief:

In its amicus brief, Google argues that the Commission’s willful blindness ruling imposes too onerous a duty on innovators to ensure that its customers will not potentially infringe a patent. Google asserts that the Commission’s ruling upsets the balance struck in Global-Tech. It is nearly impossible, Google argues, for a technology company to identify “all patents that are potentially implicated” by customers’ potential infringement of patents. While we are not unmindful of these concerns, we do not find them sufficiently implicated in this present controversy to warrant a different outcome. We note, moreover, our deferential standard of review, which requires us to defer to the Commission’s factual findings if supported by substantial evidence. Our holding is limited to the facts in the case before us. None of the facts upon which the Commission relied, in isolation, would support a finding of willful blindness. Yet, while no single factor is dispositive here, we are satisfied that there is substantial evidence on this record to support the Commission’s findings.

Patentlyo Bits and Bytes by Anthony McCain

Patent,

Get a Job doing Patent Law

Property Law: Who owns the Graffiti?

Patent

BanksyPicBy Dennis Crouch

Interesting property/copyright case from the High Court of England & Wales (chancery trial court).  Creative Foundation v. Dreamland Leisure, [2015] EWHC 2556 (Banksy judgment).

Banksy is a pseudonymous British street artist known for satirical and subversive graffiti. In 2014 one of his paintings appeared on the back wall of a game arcade in Folkestone(See image).  The building was owned by Stonefield Estates Ltd but the entire building is subject to a 20-year lease to Dreamland Leisure.  Seeking to capitalize on the work, Dreamland had the section of wall removed and put up for sale. (The Wall Now) Dreamland justified this move based upon the lease, which included a provision that would arguably require the tenant to remove or paint-over the artwork.

The Landlord (Lessor) transferred its rights to the work in quitclaim form to the Creative Foundation – a registered charity seeking to promote the art scene in Folkestone – who then sued Dreamland for possession.

Question: Who owns the artwork?

Holding: The Court (Justice Arnold) held that, although the tenant was justified in removing the graffiti, the landlord still owns the removed wall and image.

  1. [I]t is only necessary for me to reach a conclusion as to what term is to be implied into the Lease with respect to the ownership of a part of the demised premises which is justifiably removed by the Lessee from the premises, and becomes a chattel, in accordance with the Lessee’s obligation … to repair the premises, and which has substantial value. In my judgment the term which is to be implied is that the chattel becomes the property of the Lessor. My reasons are as follows.
  2. First, I consider that the default position is that every part of the property belongs to the Lessor. The Lessee only has a tenancy for a period of time. Thus it is for the Lessee show that it is proper to imply into the Lease a term which leads to a different result.
  3. Secondly, in my view the mere fact that the Lessee is discharging its repairing obligation does not lead to the implication that it acquires ownership of such a chattel. Dreamland’s argument is based upon the Lessee’s need to be able to remove items generated by the act of repair from the premises. But that would only justify the implication of a term dealing with permission to remove (and, where appropriate, dispose of) such items. It does not justify the implication of a term transferring ownership of the items: see Liverpool City Council v Irwin [1977] AC 239 at 245 (Lord Wilberforce) and compare Ray v Classic FM plc [1998] FSR 622 at 642-643 (Lightman J).
  4. Thirdly, even if a term may be implied with respect to the ownership of (i) waste or (ii) chattels with no more than scrap or salvage value, it does not follow that it should be implied with respect to the ownership of a chattel with substantial value. Such a term would not be necessary, would not go without saying and would not be one that would satisfy the officious bystander test.
  5. Fourthly, I do not consider that it makes any difference that the value is attributable to the spontaneous actions of a third party. It is fair to say that, whatever solution is adopted, one party gets a windfall. But who has the better right to that windfall? In my view it is the Lessor. Elwes v Brigg is at least consistent with this assessment.
  6. Accordingly, I conclude that the Foundation is correct that the defence advanced in paragraph 13 of the Defence is unsustainable as a matter of law.

This decision makes sense in general, although I don’t  understand why rights of possession should immediately go back to the Lessor – rather, the lease should seemingly provide possessory rights to the chattel for the next 20 years. (Of course, I have no precedent to cite for this conclusion. DC).

This case makes me think a little about Moore v. Univ. of California where a patient (Moore) sued his doctor who had properly removed Moore’s cancerous spleen but then then made $$$ from the cell line.  There, the court came to the opposite conclusion – that Moore had no right to his excised spleen.

But the Copyright: In dicta, the court also wrote that copyright to the work continues to belong to Banksy, which is somewhat interesting to me as well. Banksy owns the copyright even though his/her process of creating the work required commission of a crime and destruction of property.

 

 

Implementing the AIA: First to File Patents

Patent, , , ,

By Dennis Crouch

It is hard for me to believe that the America Invents Act of 2011 is now four-years old.  Some changes (Joinder, Fees, e.g.) had fairly immediate impact.  Although somewhat slower coming on-line, the new Inter Partes Review and Covered-Business-Method Review systems are now major fixtures in patent enforcement-defense strategies.

The final major element of the AIA is actual implementation of transformation of the prior art rules in 35 U.S.C. 102.  The new first-to-file law applies to patent applications having at least one claim whose earliest effective priority filing date is on or after March 16, 2013.  In the past 30 months since then, hundreds of thousands of AIA patent applications have been filed – and those are beginning to trickle out as issued patents.  I pulled-up the PAIR files for 800+ recently issued patents (from the first two weeks of Sept 2015) and looked at the reported AIA-Status of those patents. (Table 1 below)

 Table 1: All Patents Only Patents Filed Post-AIA
AIA Patents

147

147
Non-AIA Patents

721

262
Total

868

409
Percent AIA

17%

36%
95% CI (+/-)

3%

5%

Of the 868 patents, 147 are “AIA” patents – meaning that none of the claims of the patent (or application) could have effectively an effective filing date before March 16, 2013 (the “AIA-date”). This represents 17% of the total number of patents in my sample and 36% of the number of patents in my sample that were filed after the AIA-date. I also report the 95% confidence interval that is based upon the simple binomial calculation (p(1-p)/n). The chart below considers the same type of data, but uses a time-series stretching back to the beginning of 2015 showing a linear fit to the data.


Where the AIA Status is Defined: My understanding is that the AIA data field in PAIR has been populated as “no” for any application filed prior to the AIA date; populated as “yes” for any application filed after the AIA-date that has no pre-AIA claims for priority or benefit; and finally, for transitional applications filed post-AIA but with a pre-AIA priority claim, populated according to the AIA-question in the Application Data Sheet. [The AIA-status of an application is obviously information material to patentability and so we will likely see some inequitable conduct allegations down the line.]

Not Yet Litigated: Although there are now several thousand AIA patents issued, there have been no court cases yet involving an AIA patent or patent application.  Likewise, we have no Post Grant Review (PGR) final decisions and we have no PTAB decisions from ex parte cases involving AIA applications. Those will come, but meanwhile many patent attorneys will continue to operate with some ambiguity regarding how Section 102 will be interpreted going forward. Important big questions: Do non-enabling commercial uses; confidential sales; and confidential offers-to-sell still qualify as invalidating prior art? What activities will count as “otherwise available to the public?” How narrowly will the narrowed grace period of 102(b)(1) be interpreted? (e.g., does the grace period only apply to pre-filing disclosures of the claimed invention itself as suggested by the text or instead can any pre-filing disclosure by or from the inventor qualify?) What is the impact of elimination of Section 102(f)?