Bits & Bytes from Jonathan Hummel

Patent,

RECENTLY

#1. Twitter’s Puny Patent Portfolio May Prove A Positive

Leading up Twitter’s IPO, market analysts are pointing to the relatively small number of patents held by the company as weakness. Jeff John Roberts, writing for GigaOM explains why Twitter’s slim patent portfolio might not be a weakness, but instead a sign of strength.

            -read Bloomberg’s countervailing story here.

 #2. Apple Touchscreen Patent Upheld in Reexamination

Steven Musil, writing for C|Net, reports that “after invalidating US Patent No. 7,479,949 last December, the USPTO issued a re-examination certificate (see article & examination certificate here) reaffirming all 20 claims included in the patent, according to a filing last month spotted by Foss Patents.”

#3. Jorge Contreras on Patent Pledges Outside Standards-Setting Organizations

Dan O'Connor, writing at Patent Progress, interviewed Jorge Contreras to discuss his new paper, “Patent Pledges,” covering FRAND commitments and a call for a new paradigm in standards-setting. Mr. Contreras is a professor at the Washington College of Law at American University and a contributor at Patent Progress. His research focuses primarily on the effects of intellectual property structures on the dissemination and production of technological innovation, with a focus on basic scientific research and technical standards development.

#4. Goodlatte’s Innovation Act

Both Dennis Crouch here at Patently-O, and our friend Andrew Williams  at PatentDocs, wrote about legislation proposed by Rep. Bob Goodlatte (R-Va), namely the “Innovation Act.” The bill is squarely aimed at Patent Trolls and allows for parties to discover who the ultimate owner of the patent or exclusive right actually is, rather than a shell corporation.

            -Read Dennis’ article here.

            -Read Andrew’s article here.

PENDING

#1. Samsung Files Patent on Competitor to Google Glass

Alex Colon, writing at GigaOM, reports that Samsung has filed a design patent in Korea that looks suspiciously similar to Google Glass. Apparently, the Samsung patent focuses more on the “sportiness” of the spectacles. “The patent shows that the glasses could come with built-in earphones, which would allow you to listen to music and answer calls while you’re wearing it.”

 

COOL TECH

#1. Unbreakable Chemical Locks

Lisa Zyga’s story at Phys.org explains how research performed by Professor Abraham Shanzer and his group at the Weizmann Institute of Science in Rehovot, Israel could lead to the first chemical lock that responds to multiple “passwords.”

            -read the article here.

 

UPCOMING

Whittier Law School IP Symposium

  • The Global Medicine Challenge: The Fine Line Between Incentivizing Innovation and Protecting Human Rights
    • The Keynote Speaker will be James Love, director of Knowledge Ecology International, and NGO dealing with issues involving Intellectual Property.
    • This event has been approved for 5.5 hours of CLE
    • View the Program Flyer here.

 

WIPO Events

 

JOBS

#1. Patent Associate – Law Firm – Rockford, Ill.

            –Reinhart Boerner Van Deuren s.c., is a full-service business-oriented law firm with offices in Chicago, Rockford, Denver, Phoenix, Milwaukee, Madison, and Waukesha with a national and international client base.

 

#2. Patent Attorney – Law Firm – Washington, D.C.

            –Morris & Kamlay LLP, an IP specialty firm in DC with a relaxed and flexible work environment, is looking for an experienced patent prosecutor.

 

#3. Patent Attorney – Law Firm – Melbourne, Australia

            –Phillips Ormonde Fitzpatrick is seeking a Patent Attorney to work in its Melbourne, Australia, offices.

Related articles
The Baby Boom of Patent Practitioners
AIA Shifts USPTO Focus from Inventors to Patent Owners
New Patent Legislation: Innovation Act of 2013
Samsung Proposes a Patent Pledge to Settle EC FRAND Investigation
Anti-'Patent Troll' Bill Introduced In Congress
Bits & Bytes from Jonathan Hummel
Patent Practitioners

New Patent Legislation: Innovation Act of 2013

Patent, , , , ,

By Dennis Crouch

Representative Bob Goodlatte (R-VA) with the bipartisan support of ten other members of the House has introduced a new set of proposed patent reforms currently tiled the “Innovation Act.” (H.R. 3309) The proposed bill includes a number of provisions disparate provisions that would have a substantial impact on patent enforcement, procurement, and ownership. Some of the changes include severe increases in the requirements associated with filing a patent infringement complaint; Major statutory limitations on discovery; Elimination of the patent applicant option of filing a civil action to obtain a patent under Section 145; Forcing the USPTO to use standard claim construction (rather than BRI) in post-grant proceedings; Introduction of a new Double-Patenting rule; etc. the 50+ page bill is somewhat complex and, as Hal Wegner wrote, “[e]very organization impacted by patents must carefully study the Goodlatte bill for hidden features or suffer the consequences.” [Text][Sectional-Analysis]

Major Proposed Changes include the Following:

  1. A heightened pleading requirement for filing patent infringement claims, including a particularized statement “with detailed specificity” as to “how the terms in each [asserted] claim … correspond to the functionality of [each] accused instrumentality.” A brand-generic infringement action under § 271(e)(2) need not comply with the heightened pleading requirements. In addition, the Judicial Conference would be ordered to modify the form complaint for patent infringement to reflect the heightened pleading.
  2. An assumption that attorney-fees will be awarded to a prevailing party. The new provision would require an award of fees “unless the court finds that the position of the nonprevailing party . . . was substantially justified or that special circumstances make an award unjust.” On its face the provision is largely party-neutral with two caveats. First, the provision allows prevailing-accused-infringers to collect fees from non-plaintiffs who have a substantial interest in the patent-at-issue in the case. Second, the provision indicates that a patentee who extends a covenant-not-to-sue to the other party will be deemed a non-prevailing party and thus subject to attorney fees.
  3. Discovery will be limited until after a ruling on claim construction. In addition, the US Judicial Conference would be ordered to develop rules “to address the asymmetries in discovery burdens and costs in any civil action [relating to patents].”
  4. Transparency of Ownership. As a new required disclosure, the patentee in an infringement litigation must disclose anyone with a financial interest in either the patents at issue or the patentee and must additionally disclose the “ultimate parent entity” of the patentee. In the appropriate Federal Regulations, an ultimate parent entity is ethereally defined as “entity which is not controlled by any other entity.”
  5. Stay for Customer Suits. When both a manufacturer and its customer are sued for infringing the same patent, customer suit would be stayed so long as the customer agrees to be bound by the results of that case.
  6. IP in Bankruptcy. Under the new law, when a foreign company goes bankrupt, its trustee would no longer have the power to cancel licenses associated with US patent rights.
  7. No Civil Action to Challenge PTO. The new law would eliminated the civil action option found in 35 U.S.C. § 145. Patent applicants refused by the patentee would rather only have the option of appealing directly to the Federal Circuit.
  8. Shrinking Post-Grant-Review Estoppel. Under the current law, a post-grant review proceeding creates an estoppel against the petitioner later arguing in other forums “any ground that the petitioner raised or reasonably could have raised during that post-grant review.” 35 U.S.C. § 325(e). The new law would narrow that estoppel only to grounds actually raised.
  9. Patent Office Claim Construction. During Post-Grant Reviews and Inter Partes Reviews, the new law would require the patent office to use the ordinary “district court claim construction” law, that is, “construing each claim of the patent in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent.”
  10. Double Patenting. There is some potential that the judicially created obviousness-type double patenting doctrine was eliminated by the recently implemented first-to-file regime. The new law would codify that doctrine.
  11. Covered Business Method Patent Review. The AIA creates an option for third parties to attack patents covering non-technological “covered business method” innovations through the use of a new post-grant review proceeding. The new law would somewhat restrict the scope of CBM review to only cover first-to-invent patents (rather than pre-AIA patents) as defined in Section 3(n)(1) of the AIA. The new law would also, inter alia, codify the USPTO’s somewhat broad definition of “financial product or service” described in the Versata case.
  12. Patent Term Adjustment. The new law would eliminate any patent term adjustment for “B delay” occurring after an applicant files a request for continued examination. This change would have a significant impact on the patent term of a large number of issued patents. The amendment proposes to be effective with regards to any “patent application or patent” pending on the Act’s date of enactment. (Note – it is unclear what it means for a “patent” to be “pending” in this context.)
  13. Federal Jurisdiction over Patent Cases. Although not a statutory change, the new law would make the “clarifying” statement that: “The Federal interest in preventing inconsistent final judicial determinations as to the legal force or effect of the claims in a patent presents a substantial Federal issue that is important to the Federal system as a whole.”

Another Means-Plus-Function Patent: Invalid as Indefinite

Indefinite, Patent,

By Dennis Crouch

Ibormeith IP v. Mercedes-Benz (Fed. Cir. 2013)

Ibormeith’s patent covers a “sleepiness monitor” intended to sense when a vehicle driver is getting sleepy. This is obviously an important topic that results in thousands of annual traffic accidents. Ibormeith’s solution is to monitor both the time-of-day (circadian rhythm inputs) and unusual steering movement (vehicle inputs) and then use an algorithm to determine the likelihood of sleepy driving. The result then could be to warn the driver by beeping or perhaps taking more automated control of the vehicle. The patent (No 6,313,749) was issued back in 2001 around the time when attorneys were coming-round to the notion that means-plus-function claims lead to trouble – either comedy or tragedy depending upon your point-of-view.

The patent statute allows for patent claims to be written as a “means for” accomplishing a particular function. 35 U.S.C. § 112(f). When written in claim form, a “means for” claim appears extremely broad because it suggests coverage of all possible means or mechanisms for accomplishing the stated goal. However, the statute says otherwise. Rather than covering all possible mechanisms, Section 112(f) requires that the limitation be construed to only cover the “corresponding structure … described in the specification and equivalents thereof.” Since 1994, the Federal Circuit has supported this narrow construction. See In re Donaldson, 29 USPQ2d 1845 (Fed. Cir.1994). As Judge Taranto writes in this case “The price of using this form of claim … is that the claim be tied to a structure defined with sufficient particularity in the specification.”

Taking all of this a step further, the courts have also repeatedly held that a patent is invalid as indefinite under Section 112(b) if a claimed “means” if no particular corresponding structure is disclosed in the specification. See, e.g., Function Media, LLC v. Google, Inc., 708 F.3d 1310, 1319 (Fed. Cir. 2013); Blackboard, Inc. v. Desire2Learn Inc., 574 F.3d 1371, 1382-83 (Fed. Cir. 2009).

Here, the patent claims at issue all include a “computational means” that figure out whether or not someone is sleepy. And, on summary judgment, the district court found the claims indefinite because the claimed computational means were not supported by structure in the specification. That decision has been affirmed in a unanimous opinion written by Judge Taranto. Oddly, adequate disclosure under § 112(b) is a question of law reviewed de novo on appeal. That lower standard still did not carry the day for the patentee.

As in so many cases, the claimed “means” is really an algorithm being run on a computer to accomplish some particular goal. The court has ruled that the algorithm needs to be one that is “sufficiently defined to render the bounds of the claim . . . understandable to the implementer.” Here, the specification defines a set of input variables and a “sleep propensity algorithm” that is the sum of those variables. The specification also indicates the potential for various warning thresholds associated with the sleep propensity algorithm. However, the specification does not include any real examples for how the algorithm would work.

For Judge Taranto, the decision is largely about litigation strategy. The patentee argued that the algorithm is very broadly defined by the specification. The point of that argument was to ensure broad claim scope. However, the results is a finding that the algorithm is not particularly defined and therefore that the claim is invalid.

With means-plus-function claiming, the narrower the disclosed structure in the specification, the narrower the claim coverage. To succeed in ultimately proving that the “computational means” elements cover the accused Mercedes products … Ibormeith’s [argued that the algorithm of] Table 10 … is broad enough to reach the accused products. With consequences of such importance, Ibormeith’s position as to Table 10’s breadth is fairly treated as a binding admission. . . . That position, however, fails in the necessary attempt to steer a course that permits proof of infringement yet avoids invalidity.

Judge Taranto’s analysis here makes sense within the context of litigation strategy and holding parties to their litigation admissions. The major problem with this approach, however, is that allows patentees to hold-in and maintain ambiguity until the point of litigation.

= = = = =

The patent at issue here is based upon the invention by Dr. Louise Reyner and Dr. Jim Horne who are both sleep researchers at Loughborough University in the UK and who won the Queen’s prize in 2007 for their work on road death reduction through their work on driver sleepiness research. In March 2010, the UK company Astid Ltd. recorded its ownership of the patent and that same day Ibomeith was formed that is one of Michael Connelly‘s companies.

Interpreting the IPR Deadline; Conflicting PTAB Decisions; and Appealing Nonappealable Decisions

Patent, ,

By Dennis Crouch

St. Jude Medical v. Volcano Corp. (PTAB 2013)

This PTAB decision is important for a number of reasons. First, as a rule of substantive law, the decision announces a new interpretation of the statute-of-limitations for filing an IPR under 35 U.S.C. § 315(b). Second, the decision highlights (without directly addressing) the need for a better understanding of the role of precedent within PTAB decisions for cases such as this where a second PTAB panel rejects the legal analysis of a first PTAB panel. Finally, the case is important because it highlights problems with the statutory rule that the PTAB's determination "whether to institute an inter partes review [is] final and nonappealable." 35 U.S.C. § 314(d).

The Patent Trial and Appeal Board (PTAB) continues to see a growing docket of inter partes reviews (IPR) and post-grant reviews of covered-business-method patents (PGR-CBM). Of importance, the PTAB appears to be scrutinizing review requests and has denied several – finding that the requester had failed to meet the "reasonable likelihood" standard of 35 U.S.C. § 315 or the "more likely than not" standard of 35 U.S.C. § 324.

Here, however, an expanded panel of five administrative patent judges has denied St. Jude's IPR petition based upon the one-year statute of limitations triggered by service of "a complaint alleging infringement" under 35 U.S.C. § 315(b). That statute provides:

An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.

This is seemingly a pretty straightforward and easy to adjudicate rule. However, St. Jude raised an interesting question of law because it was never served with a complaint per se.  Rather, St. Jude sued Volcano for infringement and Volcano served an answer and counterclaim of infringement. The counterclaim was served more than one-year before the IPR request. Leaving the legal question of whether the filing of an answer with a counterclaim alleging infringement counts under the statute as a "complaint alleging infringement." There does not appear to be any direct legislative history from the AIA on point other than the general conception that the deadline is intended to prevent repeated "repeated litigation and administrative attacks." H.R. Rep. No. 112-98 at 48 (2011). As is often true of the Congressional record, that statement is general enough to be read in support of either side. And, certainly a counterclaim is often thought of as more of a defensive tact rather than being offensive harassment.

St. Jude's legal argument stems from Rule 7 of the Federal Rules of Civil Procedure that define pleadings in civil cases as follows:

Only these pleadings are allowed:

(1) a complaint;

(2) an answer to a complaint;

(3) an answer to a counterclaim designated as a counterclaim;

(4) an answer to a crossclaim;

(5) a third-party complaint;

(6) an answer to a third-party complaint; and

(7) if the court orders one, a reply to an answer.

You'll notice from the allowed pleadings that a counterclaim (No. 3) is separately defined from a complaint (No. 1). That listing coupled with the statement indicating that these are the "only" pleadings allowed suggests that the differentiation in the list is also important. Similarly, St. Jude points to FRCP R. 3 that states "A civil action is commenced by filing a complaint with the court." Finally, St. Jude highlights that the statute in question (§315) particularly mentions counterclaims in a different section of the provision and that linguistic distinction suggests that Congress thought that a counterclaim was different from a complaint.

The Board rejected St. Jude's argument – finding instead that a counterclaim is the functional and legal equivalent of a complaint and consequently that the request for IPR was untimely. The Board writes:

The Federal Rules of Civil Procedure neither define the term "complaint" in Rule 3 nor use it to refer only to the filing that commences a civil action. Rule 3 states, as amended in 2007: "A civil action is commenced by filing a complaint with the court." The rule specifies merely which filing commences a civil action—a complaint—but does not limit a "complaint" to be that filing and nothing else. Moreover, the term is used elsewhere in the Rules to refer to a pleading that does not commence a civil action. For example, Rule 14(a)(1) states, in pertinent part: "A defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it." A complaint against a third party does not commence a civil action; rather, it joins the third party to an existing civil action. The Rules, therefore, do not define or use the term "complaint" in the exclusive manner St. Jude argues.

We disagree also with St. Jude's contention that Rule 7 distinguishes a counterclaim from a complaint in a way that is meaningful for our determination. Rule 7 lists pleadings allowed in a civil action. The mere listing of items separately, however, does not, by itself, draw distinctions among the items in the list insofar as their legal equivalence. We discern in Rule 7 no such comparison or distinction between a complaint and a counterclaim.

A complaint and a counterclaim instead bear marked similarities. A counterclaim imposes the same burdens on the parties as does a complaint. A counterclaim alleges a cause of action, just like a complaint; confirming that equivalence, Wright and Miller explains that a counterclaim "basically is a defendant's complaint." 5 FED. PRAC. & PROC. CIV. § 1184 (3d ed.). …

St. Jude argues next that a counterclaim should be distinguished from a complaint in § 315(b) because that distinction is made in § 315(a). Pet. 3. St. Jude observes that 35 U.S.C. § 315(a)(3) excludes a counterclaim challenging validity from constituting a complaint challenging validity in § 315(a)(1). This argument is unpersuasive. Section 315(a)(3) states specifically that the exclusion applies to, and is made for purposes of, subsection § 315(a) only. The inapplicability of such an exclusion to § 315(b) indicates, to the contrary of St. Jude's position, that no similar exclusion exists, or was intended, with regard to a complaint and a counterclaim for infringement in respect of § 315(b). . . .

One interesting element of the decision here is that it differs with a prior decision made by the PTAB in Macauto USA v. Bos GmbH, IPR2012-00004. There, a three-member PTAB board found that the statute-of-limitations was tolled in cases where the complainant then voluntarily dismissed its case with prejudice. Citing Wright, Miller, Kane, and Marcus, 9 Federal Prac. & Proc. Civ. § 2367 (3d. ed.) ("[A]s numerous federal courts have made clear, a voluntary dismissal without prejudice under Rule 41(a) leaves the situation as if the action never had been filed.") It is not surprising that there are no overlapping judges between the St. Jude decision and Macauto.

The general standard operating procedure at the PTAB is that a Board decision is binding precedent "only if the opinion has been made Precedential" under the PTAB's operating procedure. See http://www.uspto.gov/ip/boards/bpai/procedures/sop2.pdf. Thus, at this point, neither opinion is precedential and so the next panel is also open to re-decide the case as it sees fit according to the law.

Certainly, the Federal Circuit would ordinarily be ready-willing-and-able to quickly resolve the split of opinion on the meaning of the law here. However, the statute indicates that this particular decision is both final and nonappealable. 35 U.S.C. § 314(d). Of course, the statute does not indicate that the decision cannot be attacked through a mandamus action or through a separate collateral attack on the final judgment, neither of which are ordinarily considered an appeal.

Samsung Proposes a Patent Pledge to Settle EC FRAND Investigation

Patent

Guest post by Jorge L. Contreras.  Prof. Contreras is an Associate Professor of Law at American University Washington College of Law.

As part of the global smartphone litigation between Apple and Samsung, the European Commission has been investigating Samsung’s use of injunctive relief to address infringement of standards-essential patents (SEPs).  Last December, the Commission informed Samsung that its attempts to obtain injunctions against Apple based on SEPs covering the European Telecommunications Standardisation Institute's (ETSI) 3G UMTS mobile wireless standard constituted an abuse of dominant position under EU competition law.  One of the key elements in the claim against Samsung was that it sought injunctions after having committed to license its SEPs to implementers of the UMTS standards on fair, reasonable and non-discriminatory (FRAND) terms, a common requirement within the standards-development world. 

Last week the Commission announced  that it has received a preliminary settlement proposal from Samsung.  Under this proposal, Samsung would commit not to seek injunctions in Europe on the basis of SEPs covering a broad range of wireless telecommunications and networking standards (i.e., well beyond the UMTS standard at issue in the Apple case), so long as the alleged infringers agreed to comply with a specified process for determining appropriate FRAND royalty rates.  This process would include good faith negotiations for at least 12 months, followed by arbitration at the International Chamber of Commerce (ICC) or litigation in the English High Court.  Samsung’s commitment with respect to its SEPs would become the most recent in a growing number of public commitments being made voluntarily by patent holders to limit the enforcement of their patents covering standardized technologies.

For those following the smartphone wars, Samsung’s proposal should sound familiar, as it bears a striking resemblance to the terms on which Google settled an investigation by the U.S. Federal Trade Commission this summer.  The FTC’s investigation of Google’s subsidiary Motorola Mobility also focused on the use of SEPs to seek injunctive relief against implementers of industry standards, and was based on the potential anticompetitive impact of this behavior.  There are, however, several notable differences between the FTC’s Google settlement and what Samsung has proposed.  Some of these are summarized in Table 1 below:

Table 1

Comparison of Google and Samsung (Proposed) Injunction Settlement Terms

 

FTC-Google Order (Jul. 23, 2013)

Samsung Proposal to EC (Oct. 17, 2013)

 

 

 

Scope of Non-injunction commitment

Worldwide

European Economic Area (EEA)

Duration of Commitment

10 years

5 years

Standards covered

Any standard published by a standards-setting organization (SSO)

Mobile Device* standards published by SSOs

Mandatory negotiation period

6 months

12 months

Designated arbitral tribunals

AAA, JAMS, WIPO

ICC

Designated courts

Any tribunal worldwide

English High Court or EU Unified Patent Court

* Mobile devices include smartphones and tablet devices but exclude desktop, notebook, subnotebook and laptop computers.

As Table 1 indicates, Samsung’s proposal is (not surprisingly) a bit less burdensome than the terms that Google agreed with the FTC.  To wit, the proposed geographic coverage is narrower (the EEA rather than the whole world) and the duration is half as long (5 rather than 10 years).  Interestingly, however, Samsung has proposed a mandatory negotiation period, during with it would be required to negotiate FRAND terms with a potential licensee, that is twice as long as the period agreed by Google (12 versus 6 months).  As patent holders typically want to get to court as quickly as possible, it is not clear why Samsung has proposed a longer period, and this may simply be a function of private signaling made by the Commission.  Samsung’s choice of arbitral tribunals is also interesting, inasmuch as it designates the private International Chamber of Commerce (ICC) over the UN-chartered World Intellectual Property Organization (WIPO), which has actively been seeking to get into the SEP arbitration business.

Just as the FTC did prior to finalization of the Google settlement, the EC has solicited public comments on the proposed Samsung settlement.  The FTC received 25 submissions in response to its solicitation, and made several adjustments to the final Google order as a result.  The EC has allowed 30 days for the submission of comments (through Nov. 16, 2013) and it is likely that many of the same issues that were raised in the comments to the FTC will surface again.

For those who are generally interested in voluntary patent pledges like the one proposed by Samsung, the Program on Information Justice and Intellectual Property (PIJIP) at American University’s Washington College of Law has established a new public web resource listing and describing non-SDO patent commitments.  The site, which was launched last week, already includes 63 different non-SDO patent commitments covering thousands of patents.  These pledges have been made by industry leaders such as Google, Microsoft, Apple and Intel, as well as small entities and, should its proposal to the EC be accepted, Samsung.  We hope to continue to add information to this site, and invite the submission of additional non-SDO patent commitments by the public.

Enforcing Injunctions: Perhaps Not so Powerful

Patent, ,

By Dennis Crouch

NCube (ARRIS Gp) v. SeaChange (Fed. Cir. 2013)

Injunctive relief is a powerful mechanism for stopping ongoing patent infringement and for forcing settlement by placing large hold-up costs on adjudged infringers who are locked-into maintaining their technology profile. In the area of multi-component systems, many accused-infringers and academics argue that the hold-up costs of injunctive relief sets-up an imbalance of power that results in a windfall settlement for minor-component patentees. The prototypical case is where an injunction is ordered to stop sales of a complex product based upon the finding that one of the many components infringes a patent.

The decision here offers a counterbalance based upon the recognition that product specifications and production methods are continually updated and modified. Major modifications may result in a new product version, but more minor changes regularly implemented without direct customer notification.

Here, the ARRIS patent covers a system of delivering streamed video that have been purchased online. Patent No. 5,805,804. A jury found that SeaChange’s ITV product was infringing and the district court entered a permanent injunction – enjoining SeaChange from using or selling the ITV product or “any devices not more than colorably different therefrom that clearly infringe the Adjudicated Claims of the ‘804 patent.” Although stated within the same paragraph here, it actually took four years for the court to order the permanent injunction following the jury verdict. The delay took into account post-verdict motions and briefing and then an appeal to the Federal Circuit where the verdict was affirmed.

By the time the injunction order became effective, SeaChange had modified its ITV system in order to avoid infringement. This approach is common. In essence, when an injunction issues regarding a minor component of a product, the outcome is normally not to cease manufacturing and sales but rather to modify or “patch” the product design and thus avoid the injunction. It’s also common that the work-around is – from the patentee’s point of view – still within the coverage of the patent.

After a failed settlement attempt, ARRIS filed a contempt motion asking the district court to stop the sales. However, the district court refused and that refusal has been affirmed on appeal the Federal Circuit. Rather, in order to stop the new product ARRIS would need to file an entirely new federal lawsuit.

Contempt motions are actually difficult to win. The basic rule is that the party seeking to enforce the injunction must provide clear and convincing evidence that the accused activity falls within the injunction. For new product designs, the courts only allow contempt when the new product is “no more than colorably different” than the one found to be infringing. See TiVo v. EchoStar (Fed. Cir. 2011) (en banc).

Here, the modification was to basically take a ClientID out of a particular table stored on the system and instead stored elsewhere on the system. Although the ClientID still performs the same function, the change “is a significant change to the system.”

The result then is that ARRIS only avenue for enforcement is to file a new infringement lawsuit.

Ocean Tomo versus PatentRatings

Patent, ,

Ocean Tomo, LLC v. Jonathan Barney and PatentRatings LLC, Docket No. 12-cv-8450 (N.D. Ill. 2013)

Jonathan Barney is the founder of PatentRatings, the company that holds the patent on rating patents based upon a variety of objective criteria. See U.S. patent No. 6,556,992, 7,657,476, 7,716,226, 7,949,581, 7,962,511, 8,131,701, 8,504,560. In 2005, Barney joined Ocean Tomo and the company licensed use of his patent ratings information. According to the court documents, that agreement ended on a bad note in 2011:

After Barney began to work at Ocean Tomo, he quickly soured on the company as he discovered that "the environment at Ocean Tomo was rife with conflict, back-biting, and shady business and accounting practices." According to Barney, Ocean Tomo attempted to freeze him out, deprive him of the benefits he had been promised, and destroy him and PatentRatings financially so Ocean Tomo could appropriate the PatentRatings system and the associated intellectual property. Barney alleges that by February of 2011, the working environment at Ocean Tomo was so intolerable that he had no choice but to resign. He also alleges that Ocean Tomo used his resignation as an excuse to redeem a portion of his equity units without paying consideration and to reduce his share of profits and equity based on groundless claims of misconduct. . . . Barney also contends that Ocean Tomo wrongfully disclosed PatentRatings' confidential information to third-party software developers so they could reverse engineer the PatentRatings system and develop knock-off products based on PatentRatings' intellectual property. In addition, Barney asserts that Ocean Tomo wrongfully accessed PatentRatings' computer servers in Irvine, California, copied confidential data on the servers, and transferred that data to its own servers so it could attempt to reverse-engineer PatentRatings' product.

Prior to this lawsuit, the parties had actually arbitrated some of their disputes and a three-member panel found largely for Barney in rejecting Ocean Tomo's request for $2.5 million in damages. However, Ocean Tomo then sued in Illinois state court Barney for violation of his employment agreement, violation of the Illinois Trade Secret Act, violation of the Computer Fraud and Abuse Act (CFAA), and conversion. Barney removed the case to Federal Court countersued as noted above.

Although the case is still ongoing, the district court has dismissed several of Barney's claims for failure to state a claim upon which relief can be granted. These include Barney's claims of violation of an implied covenant of good faith and fair dealing; fraud; and the CFAA violation allegation. In particular, under Illionois law there is no independent cause of action for violation of the implied covenant of good faith and fair dealing, but rather that covenant is a part of each contract and thus must instead be alleged as part of a breach of contract claim. Barney's claim that Ocean Tomo committed fraud stemmed from his joining with the firm in 2005 and was thus barred by the Illinois five-year statute of limitations. Finally, the CFAA claim alleges that in September 2012 (long after the break-up) Ocean Tomo accessed PatentRatings' servers without authorization, copied confidential data and thereby caused at least $5,000 in damages. For a CFAA civil action, the damage threshold is a required element of a claim. However, in oral arguments PatentRatings admitted it was in the process of evaluating the damage an/or loss. The court therefore also dismissed the CFAA claim based upon PatentRatings' "tacit concession that its CFAA claim is deficient."

= = = = =

Based upon an ongoing license, In Ocean Tomo continues to use the PatentRatings algorithms to report on patent quality through its Ocean Tomo Ratings.

= = = = =

District Court Decision: Download Gov.uscourts.ilnd.275661.52.0

New Lawsuits: Gillette and P&G

Patent,

By Dennis Crouch

Two interesting consumer products lawsuits filed this week:

  • Gillette Company v. BK Gifts, Docket No. 13-cv-02241 (N.D. Ohio); and
  • Procter & Gamble Company v. Conopco, Inc. and Unilever United States, Inc., Docket No., 13-cv-00732 (S.D. Ohio).

Gillette sued BK Gifts for selling generic knock-off versions of the popular Gillette MACH3 and Proglide razor blades. The defendant has not been selling these as counterfeit goods but rather as goods offering the same functionality at a substantially lower price. Their website stated: “STOP OVERPAYING FOR RAZOR BLADES . . . If you like Gillette® MACH3®, MACH3® SENSITIVE or M3 Power you’ll love our Classic Razor Blades.” Now, the website states “WE No Longer Sell Razors Due to a Pending Lawsuit With Gillette.”

In the lawsuit, Gillette does not suggest that it invented any new technology or useful good but rather asserted six design patents that cover the ornamental design of its razors. US Design Patent Nos. D415315, D422751, D430023, D440874, D531518, and D575454. Of interest, the D’315 should expire on October 12, 2013 and several others will expire in 2014.

P&G’s lawsuit against Unilever involves three shampoo concoctions that are useful for dandruff: US Patent Nos. 6,451,300, 6,649,155, and 6,974,569. Although the patent makes some claims regarding the effective treatment of dandruff, I don’t see any file history information where the PTO asked for any proof to back-up those claims. An interesting aspect of the dispute is that P&G and Unilever have an ongoing contractual process for resolving patent disputes that involve a tiered approach that begins with good faith negotiations, then moves to mediation, and finally to non-binding arbitration. If that process fails, then the case can file in court. The complaint in this case indicates that the process has been successful in that the parties have settled five different patent disputes over the past five years without having to file a civil action. However, P&G alleges that Unilever has refused to arbitrate the case and instead filed inter partes review petitions with the PTO and filed a declaratory judgment action in the UK challenging the patent there. See IPR Nos. 2013-0505, 2013-0509, 2013-0510.

==

The twin patent-term-adjustment cases of Exelixis, Inc. v. Rea and Novartis AG v. Rea are now scheduled for oral arguments at the PTO.

Patent Invalid for Failure to Claim “What the Applicant Regards as His Invention”

Patent,

by DennisCrouch

Juxtacomm-Texas Software v. Tibco Software, et al. (Fed. Cir. 2013)

In this case the Federal Circuit only offered one paragraph of substantive analysis:

The decisions of the district court … , construing the relevant claim language of U.S. Patent No. 6,195,662 and granting the motion for summary judgment of invalidity based on 35 U.S.C. § 112 ¶ 2, are affirmed on the basis of the district court's opinions. The language of the claims controls their construction, and the invention set forth in the claims "is not what the patentee regarded as his invention." Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1349 (Fed. Cir. 2002).

Under Allen Eng'g, section 112 ¶ 2 requires that the patent "set forth what the applicant regards as his invention and … do so with sufficient particularity and distinctness." (Section 112 has now been rewritten and § 112 ¶ 2 is renumbered as § 112(b)). In most cases, 112 ¶ 2 challenges focus on the requirement of "sufficient particularity and distinctness" in the form of a definiteness challenge. However, this case focuses on the first portion of the provision and finds that the patentee failed to claim "what the applicant regards as his invention." And, that failure results in the relevant claims being held invalid. The district court wrote:

Section 112 ¶ 2 contains two requirements: "first, [the claim] must set forth what the applicant regards as his invention and second, it must do so with sufficient particularity and distinctness, i.e., the claim must be sufficiently definite." Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1348 (Fed.Cir.2002) (internal quotes removed) (quoting Solomon v. Kimberly–Clark Corp., 216 F.3d 1372, 1377 (Fed.Cir.2000)). A claim is invalid under the first prong of 35 U.S.C. § 112 ¶ 2, when one of skill in the relevant art, reading the specification would not understand the invention set forth in a claim is what the patentee regarded as his invention.

Juxtacomm's basic problem in this case is that the plain interpretation of its asserted claims result in a system that the patent document itself does not describe.  The patent here is directed to a data transformation system and all asserted claims include some form of a "script processor for utilizing metadata from [a] metadata database to control data transformation within [a] systems interface and [to control] movement of said data into and out of a distribution system." The claim includes a limitation that a "script processor" that is designed "to control data transformation within said system interface." However, Juxtacomm's specification does not describe data transformation within the system interface. Based upon that difference, the court found an "irreconcilable contradiction" between the specification and the claims that renders the claims invalid under § 112 ¶ 2.

= = = = =

A major question left unaddressed by the court here is the overlap between, on the one hand, this § 112(b) issue of "irreconcilable contradiction" when comparing the specification with the patent claim and, on the other hand, the requirement of § 112(a) that the specification set forth a written description of the claimed invention. For its part, the district court here suggested in a footnote that the two doctrines have substantial overlap – writing that "the Court would [also] find it exceedingly difficult to preserve the validity of the ′662 in light of the requirements set forth in 35 U.S.C. § 112 ¶ 1 … [since] the specification simply does not disclose [the claimed] invention."

It appears to me that the overlap is likely complete. However, there is one important procedural distinction – that the inquiry under § 112(a) is generally seen as a question of fact while the inquiry under § 112(b) is a question of law. See Enzo Life Sciences, Inc. v. Digene Corp., 305 F.Supp.2d 406 (Fed. Cir. 2004). All things being equal, questions of law tend to be easier to resolve earlier in the case – such as on summary judgment. However, questions of law are also ordinarily more vigorously reviewed on appeal.

= = = = =

Read the CAFC Opinion and the District Court Opinion.

What is Your Experience with Patent Assertion Entities and Patent Licensing?

Patent

One difficulty with studying patent enforcement is that so much of the action goes on behind closed doors and outside of court filings.

A colleague of mine is looking to interview a number of different participants for a research study on patent assertion entities. Specifically, the colleague is looking to talk to the following types of people:

  • Solo inventors or small firms that have sold their invention rights to a patent assertion entity;
  • Solo inventors or small firms that attempted to sell their invention rights to a manufacturing entity but failed;
  • Entities that previously were engaged in manufacturing but now primarily license their intellectual property portfolios; and
  • Entities that have licensed technology from a patent assertion entity that previously was a manufacturing entity (see #3 above)

If you fit within any of these categories and would be willing to answer a few questions, please e-mail your contact information to patentlawone@yahoo.com.

I have been assured that “interview data will remain confidential” and that “information gathered will be used strictly for academic research.” The researcher here has no affiliation to any party on either side of the current debates on patent assertion entities.

— Dennis

Intellectual Ventures and its 80,000 Patents

Patent

by Dennis Crouch

On Friday, Greg Gorder led a great discussion here at the University of Missouri School of Law as part of our symposium on Resolving IP Disputes. Gorder is a co-founder of the patent-law giant Intellectual Ventures. The focus of Gorder’s talk was on incremental invention and the “invention gap” associated with most products on the market. Intellectual Ventures basically defines this invention gap as the number of patents that a company is infringing when it makes or sells its products. The key figure that I walked away with was 80,000. Intellectual Ventures now owns over 80,000 patents and pending patent applications.

Later this week we should have video of the conference available for viewing.

While Mr. Gorder was speaking here at Mizzou, his company attorneys were busy filing a host of patent infringement lawsuits against the mobile carrier industry, including AT&T, Leap Wireless, Nextel, T-Mobile, and US Cellular. The patents in suit include U.S. Patent Nos. 6,640,248; 5,602,831; 6,023,783; 6,952,408; 6,370,153; 5,963,557; 8,310,993; 7,269,127; 7,848,353; 8,396,079; and 7,787,431. In typical aggregator form, the patents come from a diverse array of sources including Malibu Networks (a failed company with “promising technology” that “entered the market about two years too early”); Seiko (an ongoing company that wanted to monetize its invention surplus); California Institute of Technology (a large non-practicing entity); AirNet Communications; John Eng; IPWireless; Georgia Tech; and Neocific.

Supreme Court Action Today

Patent, , , , ,

By Dennis Crouch

Supreme Court Action on 10/7/2013

Extraterritorial Application of US Patent Law: The Supreme Court has issued an invitation to the Solicitor General to file the Views of the Obama Administration (CVSG) in Maersk Drilling USA, Inc. v. Transocean Offshore Deepwater Drilling, Inc., Sct. No. 13-43 (2013). The focus of the case is location – and, what is meant by an “offer to sell . . . within the United States” under 35 U.S.C. § 271(a). The Federal Circuit held that the actual location of the offer is immaterial so long as the offer contemplated performance within the United States.

Subject Matter Eligibility: The Supreme Court has denied certiorari in the § 101 case challenging PerkinElmer’s patented “method for determining whether a pregnant woman is at an increased risk of having a fetus with Down’s syndrome.” Intema Ltd. v. PerkinElmer, Inc., Supreme Court No. 12-1372. The case with a much greater shot is Alice v. CLS Bank and perhaps its companion WildTangent v. Ultramcercial. Briefing of the petition continues in those cases.

False Marking: The Supreme Court has denied certiorari in PubPat’s False Marking case. PubPat had challenged the AIA’s retroactive rejection of non-competitor qui tam suits for false marking. Public Patent Foundation, Inc. v. McNeil-PPC, Inc., Sct. No. 13-161.

Prior Art Presumed Enabling: The Supreme Court has denied certiorari in the Finjan’s challenge to the PTO’s presumption that prior art is enabling. Finjan, Inc. v. U.S. Patent and Trademark Office, Sct. No. 12-1245.

= = = = =

Patent Cases Where Petition for Certiorari has been Filed:

Limelight v. Akamai, Sct. No. 12-786, is still pending at the Supreme Court and awaiting comments from the US Solicitor General (CVSG) before the court decides whether to grant the petition for writ of certiorari. The question presented in that case is whether indirect infringement (inducement) requires underlying direct infringement by a single actor. The Federal Circuit says “no.”

Hyundai Motor America, Inc. v. Clear with Computers, LLC, Sct. No. 13-296. This pending case is a follow-up to the Supreme Court’s 2011 decision in Microsoft v. i4i where the court held that invalidity defenses must be proven with clear and convincing evidence. That decision included a concurrence by Justice Breyer indicating that questions of law (such as obviousness) need not be proven with clear and convincing evidence. “The question presented is whether, following i4i, a district court may … instruct a jury to apply the heightened ‘clear and convincing’ standard not only to disputed factual aspects of an invalidity claim, but also to the legal aspects of such a claim – including the ultimate question of a patent’s invalidity?”

The petition for writ of certiorari in Sony v. 1st Media, Sct. No. 12-1086, is fully briefed but has not yet been decided. That case involves the extent of district court discretion in evaluating the equitable doctrine of patent unenforceability. The case largely challenges the strict requirements of Therasense.

In Fox Group, Inc. v. Cree, Inc., Sct. No. 12-1378, the asserted patent was found invalid under 35 U.S.C. § 102(g)(2) since the subject matter of the patent had previously been invented. The statute only works if the prior inventor did not abandon, suppress, or conceal the prior invention and here the prior inventor concealed how to make the invention, did not commercialize it, and did not apply for a patent. However, the prior inventor did disclose the fact of the invention and publicly offered some non-enabling clues to the invention. Although briefing is now complete, the Supreme Court took no action in this case yet.

Nautilus v. Biosig is pending at the Supreme Court and awaiting a response from Biosig. The case questions whether the “Insolubly Ambiguous” standard for indefiniteness is overly strict.

Another pending petition is Nokia v. v. International Trade Commission, Sct. No. 12-1352. The case focuses on patent enforcement entities and the “domestic industry” requirement for USITC jurisdiction.

Organic Seed Growers and Trade Ass’n v. Monsanto Co, Sct. No. 13-303, is also pending as a petition for writ of certiorari. The case argues that organic farmers have jurisdiction to challenge Monsanto’s GMO seed patents.

Saffran v. Johnson & Johnson, Sct. No. 13-405. In this case, the patentee essentially asks the Supreme Court to decide the issue before the en banc Federal Circuit in Lighting Ballast Control. I.e., “Whether the Federal Circuit should have given deference to the district court’s factual findings in construing the patent claims.” This petition is something of a place-holder to give the patentee time to see the outcome of Lighting Ballast.

Artesyn Technologies, Inc. v. SynQor, Inc., Sct No. 13-375. In this pending case, the losing defendant has asked that the Supreme Court tell the Federal Circuit to “Follow KSR” and also “Follow Global-Tech” rather than recreating the formal TSM test and allowing recklessness serve as proof of knowledge for induced infringement. In the similar pending petition of Arthrex, Inc. v. Smith & Nephew, Inc., Sct. No. 13-290, the petitioner asks for a further definition of “willful blindness” for inducement.

Power Integrations, Inc. v. Fairchild Semiconductor International, Inc., Sct. No. 13-269. This damages case focuses on when lost-sales outside of the US can be captured under US law. Here, the patentee argues that those sales should be accounted-for when they are “direct and foreseeable result of patent infringement inside the United States.” Briefing is ongoing at the petitions stage.

= = = = =

Patent cases where the Supreme Court has granted certiorari and will be hearing the case this term:

Medtronic Inc. v. Boston Scientific Corp., Sct. No. 12-1128 (Does a Declaratory Judgment plaintiff who is also an ongoing licensee of the patent have the burden of proving non-infringement?).

Highmark Inc. v. Allcare Health Mgmt. Sys., Sct. No. 12-1163 (When must deference be given to a lower court judgment regarding an exceptional case finding under §285?).

Octane Fitness, LLC v. Icon Health and Fitness, Inc., Sct. No. 12-1184 (What is the proper definition of an “exceptional case”?).

= = = = =

Hal Wegner follows these developments closely and his Top-Ten lists are available through the LAIPLA website: http://www.laipla.net/hal-wegners-top-ten-patent-cases/

Patent Law Federalism (Part II): Protecting the Free Speech Interest of Patent Owners to Conduct an Out-of-Court Patent Enforcement Campaign

Patent,

By Dennis Crouch

Activision TV v. Pinnacle Bancorp (D.Neb 2013)

In a second opinion in as many weeks, Federal Judge Bataillon (D.Neb.) has again ruled against the Nebraska State Attorney General and the state’s campaign against patent enforcement activities. [Link to Decision] Activision holds several patents that essentially cover the operation of a digital menu board with photographs. See U.S. Patent Nos. 8,330,613 and 7,369,058. And the company has sued a host of defendants and has sent out cease-and-desist letters to an even larger group, including some in Nebraska.

In response to those enforcement activities, the Nebraska Attorney General sent a letter to Activision’s litigation counsel ordering the firm to “immediately cease and desist the initiation of any and all new patent infringement enforcement efforts within the State of Nebraska pending the outcome of [the Attorney General] office’s investigation.”

In the first opinion, Judge Bataillon held that the firm could continue to represent Activision in Federal Court patent litigation by enjoining enforcement of that aspect of the Attorney General’s order. Following that order, Activision pressed on – asking the court to also enjoin the entire Attorney General order so that the firm could continue to pursue new out-of-court enforcement activities – such as contacting infringers and demanding that they pay for licenses. The Court has now sided with the patentee and against the Attorney General – finding that the restriction on enforcement activities likely operate as a prior-restraint on speech in violation of Activision (and its Attorneys) First Amendment rights of Free Speech and their Due Process rights.

The court finds the cease and desist order in this case is akin to a prior restraint. . . . The court finds Activision is likely to win on the merits as there is no claim or evidence to date of bad faith. Further, as there is no claim of bad faith, federal law governing these patents, including sending initial letters to businesses believed to violate a patent owned by Activision, is preempted by the federal government. Also, Activision has a First Amendment right to associate with counsel of its choosing without interference from the state of Nebraska. In addition, the cease and desist order operates in this case as a prior restraint on Activision’s speech and association rights. For these reasons, the court finds Activision is likely to win on the merits. . . .

The court is deeply concerned about the ability of the Attorney General to issue cease and desist orders, prior to the conclusion of the investigation, prior to any negative findings, prior to any hearings, and prior to permitting submission of documents and evidence by the Farney Daniels law firm. On the contrary, the Attorney General sent a request for information to Farney Daniels the same day it sent the cease and desist order, and gave Farney Daniels until August 18, 2013, to respond. Farney Daniels responded, and no further actions have been taken. The inability of Farney Daniels to submit such letters to businesses in Nebraska clearly infringes on the First Amendment rights of Activision to be represented by the counsel of their choice.

This opinion comes as a result of Activision’s motion for preliminary injunction (that has now been granted). Thus, the court found that the patentee was likely to win its case on the merits and that the Attorney General order was causing immediate irreparable harm. Under the laws of Appellate Procedure, the Attorney General has the right to immediately appeal this decision to the Court of Appeals to the Federal Circuit (where he would lose).

An important aspect of this decision is that it is not limited to patent law issues. Rather, the same First Amendment and Due Process claims here would apply any time the Attorney General issues a cease-and-desist order prior to conducting any investigation.

= = = = =

To be clear, the court did not shut-down the Attorney General’s investigation but instead found that it is improper for the Attorney General to compel silence without even conducting an investigation. “The court notes, there is no doubt the Attorney General generally has the power to investigate activity that it believes violates state law. . . . If … at some point during the investigation evidence supports a claim of bad faith, the Attorney General is free to revisit this preliminary injunction with the court.”

What is an Exceptional Case such that Court Should Award Attorney Fees?

Attorney Fees, Fee Shifting, Patent, , ,

By Dennis Crouch

Earlier this week, I commented on the two attorney-fees cases pending before the US Supreme Court:

  • Octane Fitness, LLC v. ICON Health & Fitness, Inc., Docket No. 12-1184; and
  • Highmark Inc. v. Allcare Health Management Sys., Docket No. 121163.

Both cases stem from the same perspective that the “exceptional case” requirement for attorney fees is too narrowly construed by the courts and especially by the Federal Circuit. See 35 U.S.C. § 285.

I noted in the prior post that the predecessor of Section 285 was first enacted in a 1946 Patent bill. The 1946 law was substantially similar to the current law (enacted in 1952) with the major difference that the 1946 act expressly gave the court “discretion” to award attorney fees to the prevailing party while the 1952 act removed that “discretion” term and instead indicated that the fee may be awarded “in exceptional cases.”

The Senate Report associated with the 1946 statute indicates that the statute is not intended to make fee awards an “ordinary thing in patent suits” but instead to reserve such awards for “gross injustice.”

It is not contemplated that the recovery of attorney’s fees will become an ordinary thing in patent suits, but the discretion given the court in this respect, in addition to the present discretion to award triple damages, will discourage infringement of a patent by anyone thinking that all he would be required to pay if he loses the suit would be a royalty. The provision is also made general so as to enable the court to prevent a gross injustice to an alleged infringer.

S. Rep. No. 1503, 79th Cong., 2d Sess. (1946), reprinted in 1946 U.S. Code Cong. Serv. 1386, 1387.

When the 1952 act was passed, the House Committee Report briefly mentioned the “exceptional case” amendment to the statute – indicating that the phrase “‘in exceptional cases’ has been added as expressing the intention of the present statute as shown by its legislative history and as interpreted by the courts.”

In several cases, the Federal Circuit has considered the standard and, after some debate, decided in Eltech Systems Corp. v. PPG Industries, Inc., 903 F.2d 805 (Fed. Cir. 1990), that the exceptional case standard should be the same for both prevailing plaintiffs and for prevailing defendants – writing: “we now reach the question and determine that there is and should be no difference in the standards applicable to patentees and infringers who engage in bad faith litigation.” The Eltech Systems case was then cited positively by the Supreme Court in Fogerty v. Fantasy, 510 U.S. 517 (1994) as justification for a party-neutral approach to fee shifting in copyright cases.

We note that the federal fee-shifting statutes in the patent and trademark fields, which are more closely related to that of copyright, support a party-neutral approach. Those statutes contain language similar to that of [17 U.S.C.] § 505, with the added proviso that fees are only to be awarded in “exceptional cases.” 35 U.S.C. § 285 (patent) (“The court in exceptional cases may award reasonable attorney fees to the prevailing party”); 15 U.S.C. § 1117 (trademark) (same). Consistent with the party-neutral language, courts have generally awarded attorney’s fees in an evenhanded manner based on the same criteria. For patent, see, e.g., Eltech Systems Corp. v. PPG Industries, Inc., 903 F.2d 805, 811 (Fed. Cir. 1990) (“[T]here is and should be no difference in the standards applicable to patentees and infringers who engage in bad faith litigation”). For trademark, see, e.g., Motown Productions, Inc. v. Cacomm, Inc., 849 F.2d 781, 786 (2nd Cir. 1988) (exceptional circumstances include cases in which losing party prosecuted or defended action in bad faith); but see Scotch Whisky Assn. v. Majestic Distilling Co., 958 F.2d 594 (4th Cir.) (finding in the legislative history that prevailing defendants are to be treated more favorably than prevailing plaintiffs), cert. denied, 506 U.S. 862 (1992).

Fogerty at note 12.

Of course, the problem with a party-neutral approach is that it can only be applied at a certain high level of granularity or abstractness. Since patentees and accused infringers make systematically different argument and have systematically different strategies, the particular causes of exceptional case findings tends to be different. Thus, losing infringers most often pay fees based upon ongoing willful and reckless infringement while losing patentees most often pay fees for suing on patent obtained through inequitable conduct or for bringing baseless lawsuits. At that low level of granularity, the differences are such that it is difficult to compare whether a party-neutral approach is being applied.

Notes:

Thanks to John Pinkerton at Thompson & Knight for providing me with this legislative history from the 1946 Act.

Government Shutdown & Patent Law Practice

Patent
  • Federal Courts (including the Federal Circuit) are continuing to operate on remaining budget surplus;
  • USPTO is continuing to Operate on Remaining Revenues, although the agency is taking cost cutting measures and the 18th Annual Independent Inventors Conference has been cancelled.
  • The FDA is largely closed and is not accepting filings that require FY2014 fees.
  • FTC is closed and has postponed its patent troll investigation until further notice; and
  • USITC has closed and is postponing its patent infringement investigations until further notice (all case deadlines are tolled).

 

Prior Art for Obviousness

Obviousness, Patent

In re Winslow, 365 F.2d 1017 (C.C.P.A. 1966)

In the 1966 decision Judge Rich described the scope of prior art for §103 using the tableau framework:

We think the proper way to apply the 103 obviousness test to a case like this is to first picture the inventor as working in his shop with the prior art references — which he is presumed to know — hanging on the walls around him.

I wonder if today, the proper legal analysis would begin with a Google’s search engine that has indexed the prior art references?

Also, did the AIA eliminate the “pertinent art” requirement?

Supreme Court’s New Patent Cases

Patent, , , , ,

By Dennis Crouch

The Supreme Court today granted writs of certiorari in two patent-related cases appealed from the Court of Appeals for the Federal Circuit and one copyright case out of the Ninth Circuit.

  • Octane Fitness, LLC v. ICON Health & Fitness, Inc., Docket No. 12-1184;
  • Highmark Inc. v. Allcare Health Management Sys., Docket No. 121163; and
  • Petrella v. MGM, Docket No. 12-1315.

The patent cases fit as a pair and both ask questions regarding the award of attorney fees to a prevailing party. In the US, each party to a litigation ordinarily pays its own attorney fees. Thus, although an accused infringer who successfully raises an invalidity defense will not pay damages to the patentee, that prevailing defendant will still need to pay its attorneys and experts for the thousands of hours spent defending the lawsuit. Likewise, a patentee who wins an infringement lawsuit generally takes a substantial portion of any award and turns it over to the attorneys and experts who turned the patent into cash.

Rule 11(c) of the Federal Rules of Civil Procedure offers sanctions for litigation abuses and indicates that reasonable attorney fees can serve as one form of sanctions. In addition, the section 285 of the Patent Act provides that a “court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. The language of Section 285 was first included in the 1946 statutory revision of damage calculations. However, that rather than limiting the award to “exceptional cases” the 1946 statute provided that “[t]he court may in its discretion award reasonable attorney’s fees to the prevailing party.” I have not researched the legislative history behind this particular

In general, accused infringers who win patent cases have three particular complaints regarding the “exceptional case” limitation: (1) that the court has too narrowly interpreted the statute so that attorney fees are rarely awarded; (2) The second complaint is that fees are more likely to be awarded to a prevailing patentee (typically based upon willful infringement) than to a prevailing defendant despite Supreme Court precedent that suggests “prevailing plaintiffs and prevailing defendants are to be treated alike.” (quoting the Supreme Court copyright case of Fogerty v. Fantasy). (3) Finally, the parties complain that the Federal Circuit is too quick to overturn fee-awards rather than providing substantial deference to the district court judgment. I should point out here that – at this point – these arguments do not have strong empirical support.

Over the years, there has been substantial academic debate on the policy potential of a more rigorous loser-pay rule. The primary idea is that the loser-pays rule reduces speculative litigation and would “limit the tactical leverage gained by a party with a weak case threatening a defendant with costly litigation.” At the same time, the created-risk may also over-deter by also discouraging valid claims. As Jay Kesan explains, in general, the outcome of a balanced fee shifting regime is difficult to predict since parties who believe they have a strong case are more likely to sue (with the belief they will both compensatory recover damages and recoup attorney fees). “If both parties are pessimistic, settlement will likely occur under either system. However, if the plaintiff is optimistic, he is more likely to litigate because he will get a judgment without incurring costs.” Jay P. Kesan, Carrots and Sticks to Create a Better Patent System, 17 Berkeley Tech. L.J. 763 (2002). By making more at-stake in the lawsuit, we also likely shift the rate of appeal upward for cases that do not settle.

= = =

In Octane Fitness, the petition challenges the “rigid and exclusive” test that the Federal Circuit uses to determine whether a case is “exceptional.” A common theme of recent Supreme Court patent cases is a holding that challenged Federal Circuit rule is too rigid and should instead be more flexible. The second theme in recent Supreme Court patent cases is a holding that, when appropriate, patent law should fall in step with all other areas of law. The petition latches onto these theme and essential says “the Federal Circuit has done it again…” The particular question raised by Octane Fitness is as follows:

Whether the Federal Circuit’s promulgation of a rigid and exclusive two-part test for determining whether a case is “exceptional” under 35 U.S.C. § 285 improperly appropriates a district court’s discretionary authority to award attorney fees to prevailing accused infringers in contravention of statutory intent and this Court’s precedent, thereby raising the standard for accused infringers (but not patentees) to recoup fees and encouraging patent plaintiffs to bring spurious patent cases to cause competitive harm or coerce unwarranted settlements from defendants.

Icon rephrased as follows:

Patent infringement claims between industry competitors, ICON Health & Fitness, Inc. and Octane Fitness, LLC, were decided below on summary judgment. Both lower courts held that this case was not an “exceptional” patent case that would warrant the award of attorney fees to the prevailing party. Should this Court reverse the lower courts through judicial expansion of the attorney fee-shifting statute found in 35 U.S.C. § 285?

In the particular case, the district court conducted a Markman hearing and, based upon its claim construction, held that Octane’s products did not infringe Icon’s patent covering its elliptical exercise machine.

For its part, Octane writes that the “most compelling reason[] to grant certiorari …. [is that] the Federal Circuit’s current exceptional case standard is squarely in conflict with this Court’s holding in Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) … Fogerty mandates that plaintiffs and defendants be treated alike under an analogous fee-shifting provision in the Copyright Act.” Of course, one problem with the even-handed mandate is that plaintiffs and defendants lose cases for different reasons. Within this framework, a party’s status actually does make some difference for fee-shifting. Findings of willful infringement, for instance, favor only patentees, while findings of inequitable conduct during patent prosecution favor only accused infringers. Either party can be awarded attorney’s fees based on the bad faith assertion of objectively baseless claims or other litigation misconduct.

In the background are a variety statutory proposals that would accomplish much of what Octane seeks. However, a Supreme Court decision in the case is likely to arrive before any Congressional action. See Congressing.

In Highmark, former Acting Solicitor General Neal Katyal (now at Hogan Lovells) has asked the Supreme Court to focus on whether the Federal Circuit must give deference to a lower court award of attorney-fees to a prevailing party.

The petition asks:

The Patent Act provides that A case is “exceptional” if it is objectively baseless and brought in bad faith. After living with this case for more than six years, the District Court found that it was objectively baseless and brought in bad faith, and it awarded fees. Over a strong dissent, a Federal Circuit panel reversed, holding that a district court’s objective baselessness determination is reviewed “without deference.” The Federal Circuit denied rehearing en banc by a vote of six to five. One of the two pointed dissents from that denial accurately observed that the decision below “deviates from precedent *** and establishes a review standard for exceptional case findings in patent cases that is squarely at odds with the highly deferential review adopted by every regional circuit and the Supreme Court in other areas of law.”

The question presented is: Whether a district court’s exceptional-case finding under 35 U.S.C. § 285, based on its judgment that a suit is objectively baseless, is entitled to deference.

Undoubtedly, the Supreme Court will reverse in Highmark and the reasons are well understood by the Federal Circuit judges. In all likelihood, a GVR without opinion would provide sufficient instruction to the Federal Circuit in this case. However, I suspect that we will see these two cases argued and decided in parallel with a roughly identical timeline. One important aspect of the Highmark case is the question of whether attorney fees can be awarded as a deterrent against other parties’ bad behavior.

The copyright case is Petrella v. MGM and focuses on the doctrine of laches as it applies to copyright enforcement – with a particular focus on what might be termed “rolling infringement.” The copyright holder in the case is Paula Petrella whose father Peter Petrella wrote two 1970s screenplays (one titled The Raging Bull) and a book about the life of boxer Jake LaMotta. A few years later(1980), Raging Bull became an Oscar winning movie. In 2009, Petrella sued MGM for copyright infringement. Now, both MGM and Petrella claim ownership over the copyrights being asserted and MGM claims that the movie does not infringe the Petrella copyrights. However, the focus of the case at the Supreme Court is whether the doctrine of laches can block a copyright holder from suing for a new act of infringement (such as distributing another copy of the movie).

Petrella presents the question as follows:

The Copyright Act expressly prescribes a three-year statute of limitations for civil copyright claims. 17 U.S.C. § 507(b). The three-year period accrues separately for each act of infringement, even if it is one of a continuing series of acts of infringement.

The federal courts of appeals have divided 3-2-1 over whether the nonstatutory defense of laches can bar a civil copyright suit brought within the express three-year statute of limitations. Three circuits forbid any application of laches or restrict the remedies to which it can apply. Two other circuits strongly disfavor laches and restrict it to exceptional circumstances. The Ninth Circuit not only does not restrict laches or the remedies to which it can apply, but has also adopted a presumption in favor of applying laches to continuing copyright infringements.

The question presented is: Whether the nonstatutory defense of laches is available without restriction to bar all remedies for civil copyright claims filed within the three-year statute of limitations prescribed by Congress, 17 U.S.C. § 507(b).

The case has obvious implications for patent law since patent law doctrine includes a similar non-statutory laches doctrine and six-year statute of limitations. It is possible that the Supreme Court will essentially eliminate the laches doctrine (but leave a claim of equitable estoppel).

It should be an interesting year in patent law.

Patent

Under the AIA,

A person shall be entitled to a patent unless-(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or (2) the claimed invention was described in a patent … or in [a published] application … [that] names another inventor and was effectively filed before the effective filing date of the claimed invention.

35 U.S.C. 102(a) (2013).

The USPTO is now examining patents under this new standard. I would love to see a real world example of this law being applied in a way shows the difference between our new filing-date focus and the old invention-date focus. crouchdd@missouri.edu

Licensee Underreporting

Patent

By Dennis Crouch

One problem with royalty agreements is the annual fight over whether the licensee is paying full royalties to the licensor. In a recently released report, the technology-license auditors at Invotex say that there is good reason for a fight based upon their finding that "89% of audited licensees underreport and underpay royalties." According to their audits, a full 25% of licensees were paying less than half of what they should.

Now, one potential issue with this report is that Invotex has some amount of bias because the company primarily represents licensors willing to pay for an audit (and who have some suspicion of under-reporting). In addition, Invotex has a financial incentive to make audits appear larger. That said, the results found here are not surprising to me and attorneys should recognize that a licensor's role must be an active one.

Read the report here: http://invotex.com/perspectives/intellectual-property/13th-annual-invotex-royalty-compliance-report-89-audited

Bits & Bytes from Jonathan Hummel

Patent

RECENTLY

#1. Patent Battle over Cash-Cow Cameras in St. Louis

American Traffic Solutions (ATS) is suing B&W Sensors for patent infringement on a patent that covers, “technology using photography to simultaneously clock multiple vehicles on a single roadway.” Largely known for manufacturing controversial red-light cameras (see story in Missouri Appeals Court). ATS says B&W has misrepresented its speed-camera services to potential customers by falsely claiming that ATS could not offer them. ATS also complains that B&W has brought negative local attention to speed cameras, damaging the potential market for ATS in the St. Louis area.

 

#2. Troubled Trolls Pen Letter to Congress Re Covered Business Method Expansion

Matt Levy, writing at Patent Progress, breaks down a letter sent last week by concerned NPEs. Last Friday, BSA (Business Software Alliance) and a number of companies sent a letter to Senate and House Judiciary Committee leadership. BSA puts forth the standard “hamper to innovation” argument against expanding covered from only those business method patents dealing with financial services to all business methods. The letter was delivered to Senate Judiciary Chairman Patrick Leahy (D-Vt.) and Ranking Member Chuck Grassley (R-Iowa), and House Judiciary Chairman Bob Goodlatte (R-Va.) and Ranking Member John Conyers, Jr., (D-Mich.).Read the letter here.

 

#3. Martha Stewart Embroiled in Patent Battle with LodSys

Timothy B. Lee, writing for The Switch, at the Washington Post, reports that NPEs have a new, very formidable enemy: Martha Stewart. In July, Lodsys sent Stewart's media empire letters warning her that four of its iPad apps infringed LodSys's patent. Lodsys demanded $5,000 for each of the four apps to license the patents. Rather than simply pay the fee to make LodSys go away, Martha Stewart Living Omnimedia filed suit in Wisconsin seeking declaration that it had not infringed.

 

#4. Police Intellectual Property Unit Makes First Arrests

The Guardian reports that a new police unit to tackle illegal downloads and counterfeit DVDs and CDs has carried out its first raids and arrested two men. The police intellectual property crime unit (PIPCU), which launched on Friday, is being run by City of London police and has government funding of £2.56m over two years.

 

PENDING

Apple Applies For a Patent on E-Book Signing Technology

Writing for PC Magazine, Stephanie Mlot, explains, "A digital tome would come embedded with a specific autograph page, or a 'hot spot' autograph widget area configured to receive autographs."  Adding, "Don't expect to see this e-autograph system added to iBooks anytime soon. Find the patent here.

 

UPCOMING

#1. Intellectual Property Symposium – 10/4 – University of Misosuri

Join us at the University of Missouri, School of Law for a discussion of the current issues facing Intellectual Property practice. Hosted by the school’s Center for Dispute Resolution, the Symposium will feature Greg Gorder, co-found of Intellectual Ventures giving the Keynote Address.

–http://law.missouri.edu/csdr/symposium/2013/

#2. Antitrust and Intellectual Property Conference  — 10/10 

-ABA Section of Intellectual Property

-Live/In-Person

#3. International Laws Governing Cross Border Discovery, Privilege, Confidentiality and Data — 10/16

-ABA Section of Intellectual Property

-Webinar/Teleconference

 

 

JOBS

IP Attorney – Law Firm – Lansing, Mich.

            –Fraser Trebilcock Davis & Dunlap, P.C., an established Lansing Law Firm, has an opportunity for an experienced IP Attorney.

            -Please send resume with cover letter to Thaddeus E. Morgan, 124 W. Allegan, Suite 1000, Lansing, MI 48933.

 

Technical Writer/Patent Agent – Law Firm – Charlotte, N.C.

            –Additon, Higgins, Pendleton & Ashe, a boutique intellectual property law firm based in Charlotte, North Carolina, is seeking an experienced technical writer or patent agent to immediately join the firm. The candidate should also have a degree in electrical engineering, computer engineering, or computer science. Admission to practice before the USPTO is a plus.

            -Please send your resume, writing samples, and cover letter to jobs@ahpapatent.com.

 

 

Related articles
Patent troll Lodsys demands $5,000 from Martha Stewart. That was a bad idea [GigaOM]
Patent trolls have a new enemy: Martha Stewart
Resolving IP Disputes: Calling for an Alternative Paradigm
FTC on Patent Trolls
Bits & Bytes from Jonathan Hummel