Patent Litigation

On March 26, 2013, the U.S. Department of Justice (DOJ) issued a rare negative business review letter declining to approve a plan by Intellectual Property Exchange International Inc. (IPXI) to offer a financial exchange for licensing and trading intellectual property rights.

On May 10, 2013, the U.S. Court of Appeals for the Federal Circuit released its much-awaited en banc decision in CLS Bank International v. Alice Corp.  A majority of the court affirmed a district court's holding that Alice's claims are not directed to patent-eligible subject matter under 35 USC § 101.

On March 16, 2013, the America Invents Act (AIA) changes U.S. patent law from a first-to-invent system to a first-inventor-to-file system, which moves U.S. patent law into closer harmony with most industrialized nations throughout the world. Among other practical consequences, this change will (1) expand the scope of what constitutes prior art and (2) phase out interference proceedings used to resolve disputes regarding who first invented a technology.

On November 20, 2012, the U.S. Court of Appeals for the Federal Circuit issued a decision in Ritz Camera & Image, LLC v. SanDisk Corp., No. 2012-1183, 2012 WL 5862779 (Fed. Cir. Nov. 20, 2012). They affirmed that direct purchasers of patented products have standing to pursue a Walker Process antitrust claim against the patent holder, even where the direct purchaser cannot be sued for patent infringement and otherwise lacks the ability to bring an action for declaratory judgment.

Patent applicants who are dissatisfied with a rejection by the Board of Patent Appeals and Interferences have two options for review. They can appeal directly to the Federal Circuit, which will review the Board’s decision on the record before the U.S. Patent and Trademark Office. Alternatively, 35 U.S.C. § 145 provides that an applicant may “have remedy by civil action against the Director” of the Patent Office in the United States District Court for the District of Columbia. The primary issue in Kappos v. Hyatt was what limitations, if any, exist on an applicant’s right to submit new evidence that was not before the Patent Office in such a district court action.

In Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S, the Supreme Court has unanimously held that generic drug manufacturers may invoke the counterclaim provision of the Hatch-Waxman Act.

The U.S. Supreme Court unanimously held that claims on methods of determining whether drug dosing levels should be increased or decreased based on levels of a metabolite in a patient’s bloodstream were not patent eligible.

The U.S. Patent and Trademark Office issued proposed rules for the implementation of portions of the America Invents Act relating to the post-grant review and inter partes review of patents and to the conduct of trials before the Patent Trial and Appeal Board regarding such review. Comments on the proposed trial rules are due April 9, 2012, and comments on the proposed rules for post-grant review and inter partes review are due April 10, 2012. If finalized, the proposed rules for post-grant review and inter partes review will take effect on September 16, 2012. The Patent Office also issued proposed rules specifically for the review of business method patents.

Today, after years of contentious debate over what should constitute “patent reform,” President Obama signed into law the America Invents Act, regarded by some to be the most significant change to the U.S. patent system since the Patent Act of 1952.

On June 9, the U.S. Supreme Court issued its decision in Microsoft Corp. v. i4i Limited Partnership, unanimously affirming that “clear and convincing” evidence is required to invalidate a patent in litigation.

On May 31, the U.S. Supreme Court clarified the level of knowledge required to establish inducement of patent infringement under 35 U.S.C. § 271(b), which provides that “[w]hoever actively induces infringement of a patent shall be liable as an infringer.”

On May 25, 2011, the Federal Circuit issued its long-awaited en banc decision in TheraSense Inc. v. Becton, Dickinson & Company  By a 6-4-1 vote, the court significantly narrowed the classes of cases where courts may find a patent unenforceable due to inequitable conduct before the Patent and Trademark Office.

On April 20, the Federal Circuit issued its long-awaited en banc decision in TiVo Inc. v. EchoStar Corp.,[1] vacating one ground for a contempt citation but affirming the other and upholding a $90 million sanction.  Along the way, the court significantly revised its approach to contempt proceedings in ways that may both help and hurt patentees in future cases.

With increased trade and closer relations between Taiwan, Republic of China and the People's Republic of China, patent applicants in Taiwan, as of November 22, 2010, can now claim priority to an earlier-filed Chinese patent application and vice versa.

By a 5-4 vote, the United States Supreme Court has rejected the notion that business methods are categorically unpatentable. By a unanimous vote, however, the Court has affirmed the PTO and Federal Circuit’s rulings rejecting Bilski’s patent claims on methods of hedging commodity risks. The Court also unanimously agreed that while the "machine or transformation" test adopted by the Federal Circuit is a useful indicator of patentability, it is not the sole test for patentability under Section 101 of the Patent Act. Although many had feared--and some had hoped--that all software patents were in jeopardy, the Court’s relatively narrow decision should allay those fears and dash those hopes.

The Federal Circuit held in Pequignot v. Solo Cup Co., No. 2009-1547 (June 10, 2010), that the false marking statute, 35 U.S.C. § 292, applies to products marked with expired patents, although the presumption of intent to deceive the public is weaker in such cases than in cases involving marking with patents that never covered the product.

Beginning June 13, 2009, at 12:01 a.m. EDT (June 12, 2009, at 9:01 p.m. PDT), Facebook will allow current members to select a username that will be associated with their personal profile or their Facebook Page (which is a profile page for business, brands and public figures).

On May 18, 2009, the Federal Circuit issued an opinion in Abbott Labs. v. Sandoz, Inc., 2007-1400, -1445.  One section, decided by the court en banc, addressed the interpretation of product-by-process claims for the purposes of determining infringement.

China's Supreme Court issued Guidelines on Implementing the National Intellectual Property Strategy ("the Guidelines") on March 29, 2009 to require people’s courts of various levels to fully implement the National IP Strategy.  Promulgated by China’s State Council on June 5, 2008, the National IP Strategy is a roadmap to lead China to become one of the world's most innovative countries by 2020.

In Broadcom v. Qualcomm, decided September 24, 2008, the Court of Appeals for the Federal Circuit ruled that a jury can be told that the defendant in a patent infringement action had not obtained an opinion from patent counsel. The Federal Circuit’s decision allows patent plaintiffs to argue that such a failure supports a conclusion that the defendant induced infringement. The decision removes some of the benefits patent defendants obtained from the Federal Circuit’s Seagate decision, which held that potential patent defendants have no obligation to seek or obtain an exculpatory opinion from patent counsel.

The prevalence of–and risks associated with–litigation over intellectual property (IP) rights has escalated tremendously over the past decade.

In Quanta Computer, Inc. v. LG Electronics, Inc., No. 06-937 (decided June 9, 2008), the Supreme Court reaffirmed the broad scope of the doctrine of “patent exhaustion,” holding that (1) both method and apparatus claims can be exhausted, and (2) authorized sales of components can exhaust patent claims on systems if the components embody essential features of the claims and have no substantial use other than to practice the claims.

In an eagerly awaited decision, the U.S. District Court for the Eastern District of Virginia permanently enjoined the U.S. Patent and Trademark Office (USPTO) from implementing proposed rules that would have restricted the ability of patent applicants to file multiple continuation applications and required applicants to provide extensive additional information if they filed more than five independent claims or 25 total claims.

The Federal Trade Commission recently announced a complaint and settlement with Negotiated Data Solutions LLC (N-Data) alleging that N-Data engaged in unfair methods of competition and unfair acts or practices in its enforcement of patents against makers of computer equipment employing Ethernet, the dominant computer networking standard.

After a Federal Circuit decision this week, patent owners will have a harder time proving willful infringement and defendants will be less likely to have to disclose the opinions of their trial counsel regarding the merits of patent cases.

The U.S. Supreme Court issued two important patent decisions this week. In KSR International Co. v. Teleflex, Inc., the Court made it easier to invalidate patents on the basis of obviousness. In a unanimous decision, the Court rejected the United States Court of Appeals for the Federal Circuit's "rigid application" of its "teaching, suggestion, or motivation" test (TSM Test), and reinstated the District Court's summary judgment that the patent-in-suit was invalid for obviousness. The Supreme Court emphasized that the "expansive and flexible" approach to the obviousness question provided by its earlier precedents, including Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966), was inconsistent with the Federal Circuit's application of the TSM Test.

In a separate case, Microsoft Corp. v. AT&T Corp., the U. S. Supreme Court held that Microsoft was not liable for patent infringement for copies of Windows software made outside the United States, even if those copies would infringe if made in the United States, and even if they were copied from a master disk exported from the United States. As discussed in our full update, the decision is arguably limited to patent claims on devices, and appropriate method claims may still create potential liability.

On March 26, 2007, the Court of Appeals for the Federal Circuit dramatically altered the landscape of declaratory judgment lawsuits and ruled that such lawsuits may be appropriate in the context of licensing negotiations even when the patent owner promises not to sue the prospective licensee.

The U.S. Supreme Court yesterday handed down its widely anticipated decision in MedImmune, Inc. v. Genentech, Inc. In an 8-1 ruling, the Supreme Court ruled that a constitutional case or controversy exists when a patent licensee sues for declaratory judgment of noninfringement, invalidity, and unenforceability while continuing to pay royalties under the patent license.

Under current law, the Patent and Trademark Office (PTO) is entitled to increase its fees annually to keep pace with inflation. In May, the PTO published a proposed fee increase to take effect 1 October 2002. Since then, the PTO has sought Congressional approval for a fundamental restructuring of the PTO and its fees. Congress has not reached a final decision, though, and the PTO announced last Friday, 27 September, that the current fee structure will remain unchanged until further notice.

In its widely-anticipated decision in eBay Inc. v. MercExchange, LLC, the Supreme Court unanimously rejected the Federal Circuit's "general rule" that injunctions in patent cases will be denied only in exceptional circumstances. The Supreme Court explained that injunctions are not mandatory and reemphasized the applicability of the traditional four-factor test for exercise of a district court's discretion to grant an injunction.

On March 1, 2006 the U.S. Supreme Court delivered an 8 to 0 decision in Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. __ (2006), rejecting the doctrine that tying a patented product to another product is per se unlawful. The Court held that "in all cases involving a tying arrangement, the plaintiff must prove that the defendant has market power in the tying product."

The many online auction sites have become a forum for parties to buy and sell just about anything imaginable, including software, hardware and other technology products. Typically, parties who purchase technology products through online auction sites are not contractually restricted from reverse engineering the purchased product technology. In light of these realities, savvy companies now routinely monitor the many online auction sites to confirm that their own software, hardware, and other proprietary technology is not being improperly listed for sale. In one recent instance, an overnight delivery company lost a customer's server that was being shipped. After the server was found by the delivery company, the delivery company turned the server over to a liquidator. While monitoring the online auction sites, the company that had shipped the server discovered that the liquidator had listed the server (containing proprietary software) for sale on an online auction site. In another instance, a company lost track of proprietary hardware in the mid-1990s when it was in a rapid growth mode. The hardware eventually turned up almost a decade later for sale on eBay. The company discovered this by routinely monitoring that site for listing of its technology.

The Court of Appeals for the Federal Circuit released its widely anticipated en banc decision on July 12 in Phillips v. AWH Corp., No. 03-1269, -1286, slip op. (Fed. Cir. July 12, 2005). Expected to provide fundamental clarification of the process required for construing patent claims, the decision instead provided a narrow refinement of previous law that focused upon the relative roles of dictionaries and the patent’s specification in construing claim terms.

The Cooperative Research and Technology Enhancement Act, also known as the CREATE Act, was enacted on December 10, 2004. Under the Act, an invention made by parties to a joint research agreement that was in effect before the date of the invention generally cannot be subject to an "obviousness" attack using prior art of one of the parties.

Many companies tend to focus on potential infringement of their patents by competitors but do not spend much time thinking about whether their own products are covered by their patents. Under the patent statutes, however, failure to consider this question and properly mark the products with the appropriate patent numbers can severely limit recovery of damages for patent infringement.

The number of software and business method patents has increased tremendously in recent years. The number of patents issued in software-related areas (USPTO technology classes 700-717) increased from 8,370 in 1997 to 14,050 in 2001. Because of the rapid pace of innovation and the number of patent applications filed in these areas, fertile ground may be forming for patent interferences and validity challenges.

Companies often invite customer feedback as a "relationship" marketing tool to build a loyal customer base. In most cases, the feedback is welcome and even useful - customers feel their opinions are valued and the company learns what will make them willing to spend more money.

On Wednesday, April 2, 2003, Congress introduced a bill (HR 1561) to restructure the fees charged by the Patent and Trademark Office (PTO). The fee increase proposed by the PTO last year was roundly criticized and was never taken up by Congress. The current bill represents a tentative compromise among the PTO, the patent bar, and patent owner organizations and seems likely to pass this year.