Source: https://intellectualip.com/page/2/
Timestamp: 2019-04-20 20:58:29+00:00

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Reuters quotes our very own Professor Cotter regarding the novel damages argument being made by Symantec and Trend Micro against Intellectual Ventures (IV). According to the news service, IV seeks more than $300 million from the two companies for infringing a patent purchased for $750,000. Symantec and Trend Micro have told a Delaware Court that such a large licensing fees cannot be reasonable for a patent acquired for so little.
Thomas Cotter, a patent damages expert at the University of Minnesota Law School who is not involved in the case, said he is unaware of any court ruling along the lines being urged by Symantec and Trend Micro. For Intellectual Ventures, which says it has earned about $3 billion to date from licensing its thousands of patents, the stakes could hardly be higher.
1. Heightened pleading requirements. Without limitation, the bill would require Plaintiffs to provide: i) an identification of each patent and each claim allegedly infringed; ii) an explanation as to where each element of each claim is found in each “accused instrumentality”; iii) whether each element is infringed literally or under the doctrine of equivalents; iv) how the terms of each claim correspond to the functionality of the accused instrument; v) for any indirect infringement, a description of the direct infringement and any acts allegedly inducing or contributing thereto; vi) allege indirect infringement; vii) a description of the “right” of the party to assert infringement, viii) a description of the principal business of the party alleging infringement; and ix) a list of all infringement complaints involving the same patent(s).
3. Attorneys Fees to the Prevailing Party. The bill provides that the court “shall” award reasonable fees and other expenses to the prevailing party unless the position of the non-prevailing party was “substantially justified” or “special circumstances make an award unjust.” Of note – the bill expressly allows prevailing defendants to collect fee awards from non-plaintiffs having a substantial interest in the patent-at-issue.
4. Limitations on Discovery. The bill would allow only limited discovery until after claim construction.
The bill also contains substantive changes to the AIA’s new IPR and PGR proceedings. First, the bill seeks to limit PGR estoppel. Under the AIA, PGR creates estoppel for “any ground that the petitioner raised or reasonably could have raised. . .” 35 U.S.C. § 325(e) (italics added.) The bill would narrow such estoppel solely to grounds actually raised. The authors of the bill presumably want to promote use of PGR by limiting estoppel concerns.
Second, the bill seeks to change the PTO’s longstanding practice of applying the broadest possible claim construction in review proceedings. The proposed bill would require the PTO to “constru[e] 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.” To the extent the authors of the bill are seeking to curtail NPE litigation, one wonders why they would propose a narrower claim construction, thereby making it easier for the NPEs’ patents – many of which are perceived to be obvious and overbroad — to survive review.
To see why former USPTO Director Kappos supported and favored continuing application of the broadest possible claim interpretation see http://www.uspto.gov/blog/director/entry/ensuring_quality_inter_partes_and.
This week the Supreme Court granted cert petitions in two patent cases: Octane Fitness v. Icon Health & Fitness and Highmark v. Allcare Health Management. Both cases address 35 U.S.C. § 285, which allows a court to award reasonable attorneys’ fees to the prevailing party in “exceptional cases.” Under Section 285, a case is “exceptional” if the litigation (1) was brought in subjective bad faith; and (2) is objectively baseless. Octane Fitness addresses the propriety of this two-prong test. Highmark addresses the appropriate standard for reviewing a district court’s exceptional case determination under the two-prong test.
In its Supreme Court petition, Octane argued that Section 285, as interpreted by the courts over time, “has strayed from the original intent of preventing ‘gross injustice’ to an accused infringer (the result of a defendant having to spend $1 million plus to defend itself against overreaching and unfounded contentions), to a standard that is near-impossible for an accused infringer to meet no matter the unreasonableness of the litigation, and that consequently serves as no deterrent to the assertion of spurious claims.” Octane noted that a patentee, on the other hand, can establish an exceptional case solely on a finding of willful infringement. Willful infringement requires that a patentee show by clear and convincing evidence that (1) the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent; and (2) the accused infringer knew or should have known about this objectively-defined risk of infringement. According to Octane, a patentee’s ability to rely on a finding of willful infringement results in a lower threshold for prevailing patentees than for prevailing accused infringers seeking to recover their fees under Section 285.
In Highmark, after several years and millions of dollars in legal costs, accused infringer Highmark prevailed on summary judgment. Conducting an extensive analysis, the district court determined the case was exceptional under 35 U.S.C. § 285 on several grounds, including: (1) no pre-filing investigation was performed by an attorney – rather, attorneys relied on an analysis performed by a non-attorney/non-engineer, and claim charts and summary judgment rulings from another case in which Allcare had asserted the same patent (both of which focused on claim construction and not infringement); (2) Allcare asserted meritless defenses, knowing such defenses were not available; (3) Allcare argued in a jurisdictional motion to dismiss that it had no control over a pre-litigation survey of potential infringers, although subsequent Allcare filings contradicted that assertion; (4) Allcare engaged in needless alterations of its claim construction assertions; and (5) Allcare continued to pursue infringement claims as “leverage,” even after its own expert conceded there was no infringement.
The first-in-the-nation settlement between the Minnesota Attorney General and patent litigant MPHJ Technology Investments has been widely reported, including by the Washington Post, Bloomberg, Law360, and Ars Technica. But none of these outlets have posted a copy of the settlement agreement and the resulting court order.
The agreement and order can be found here. Captioned as an “Assurance of Discontinuance” (see Minn. Stat. § 8.31), the agreement and order together function as a consent decree.
MPHJ, including the MPHJ Subsidiaries and affiliates, represents and warrants that it has not received money from any Minnesota resident or entity for a patent license or an alleged infringement of a patent or patent rights. If, contrary to this representation and warranty, the State discovers Minnesota residents or Minnesota entities did pay MPHJ money for a patent license or for an alleged infringement of a patent or patent rights, then as penalty for violation of this Paragraph 4, MPHJ shall pay the State a civil penalty of $50,000 and refund all such money paid by Minnesota residents and entities.
The Assurance thus explains that MPHJ did not make any money from Minnesota residents in response to its demand letters.
Related cases in Vermont and Nebraska continue. Law360 reports that MPHJ removed the Vermont Attorney General’s litigation to federal court, and that the Attorney General is seeking to remand the case to state court. Meanwhile, a federal judge in Nebraska has granted a preliminary injunction for the law firm that represents MPHJ, allowing it to continue litigating patent cases there The Nebraska Attorney General had sent the firm a cease-and-desist letter, demanding that the firm stop its patent-enforcement efforts. Patently O has more details here.
Magistrate Judge Jeffrey Keyes recently issued a Report and Recommendation granting summary judgment of fair use in a case that involves a copyright infringement claim against a patent-prosecution firm. In the process of prosecuting patents for its clients, the firm copied several of the publishers’ copyrighted scientific journal articles from a USPTO database and other sources, and publishers sued for copyright infringement.
U.S. Magistrate Judge Keyes ruled that the firm’s copying constitutes fair use. This is the result urged by the USPTO, which intervened in the case. The court weighed each of the four fair-use factors, of § 107, (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. As to the first factor, the court concluded that the firm did not use the articles for the same purpose as the publishers. Regarding the second factor, the court reasoned that because the articles were primarily technical rather than creative, they were farther from the “core” of copyright protection. The third factor was the most interesting: even though the firm copied the entirety of each article, the court concluded that this factor still favored a finding of fair use because the copying was consistent with the purpose and character of the firm’s new and different use. As to the fourth factor, the court reasoned that publishers failed to show that the firm’s use of the articles to meet their PTO-disclosure obligations affected the traditional target market for the articles.
Finally, Schwegman’s copying of the Articles and its use of those copies for the purpose of supporting its clients’ patent applications also “promote[d] the Progress of Science and useful Arts,” U.S. Const., art. I, § 8, cl. 8, which is the very purpose of the Copyright Act. Uses of copyrighted work that fulfill that purpose include “criticism, comment, news reporting, teaching . . ., scholarship, or research.” 17 U.S.C. § 107. Though they borrow from a copyrighted work, criticism, comment, news reporting, teaching, scholarship, and research all have the potential, under certain circumstances, to benefit the public by furthering the understanding of ideas or discoveries highlighted in a copyrighted work. And like each of these listed uses, Schwegman’s use of the Articles in connection with its clients’ patent applications confers a public benefit as well.
This is a case to watch. Because this ruling is a Report and Recommendation, the publishers have the right to seek review of it by filing an objection with the District Court judge. If the ruling stands, the legal community—not just patent-prosecution firms—will be the among the primary beneficiaries. Lawyers of all stripes have ethical duties that require them to duplicate documents that may be subject to copyright. This ruling provides some relief that these practices will not be necessarily be infringement.
The Federal Circuit has ruled that a patent infringement judgment in excess of fourteen million dollars ($14,000,000.00) was rendered void and moot by a PTO decision invalidating the subject patent despite a prior Federal Circuit decision in the case affirming the validity of the patent. Fresenius USA, Inc. v. Baxter Intern., Inc.— F.3d —-, 2013 WL 3305736 (C.A.Fed., July 2, 2013 (Cal.)) Coupled with the new broader scope and expedited administrative review provided for in the America Invents Act, the decision continues a trend of favoring or promoting administrative review of patents over district court litigation.
The decision will allow defendants to consider administrative challenges to the validity of a patent much further into the district court litigation process. Prior to this ruling, prevailing wisdom was that a re-examination proceeding needed to be completed prior to the conclusion of district court proceedings to be useful. A defendant who uncovers relevant prior art late in a proceeding may now be more likely to commence a re-examination proceeding as long as it can be completed prior to any appeals.
The court today authorizes the Patent and Trademark Office, an administrative agency within the Department of Commerce, to override and void the final judgment of a federal Article III Court of Appeals. The panel majority holds that the entirety of these judicial proceedings can be ignored and superseded by an executive agency’s later ruling.
The panel majority argues that the rules of finality do not apply here because the Federal Circuit, with its final judgment, included a remand to the district court to assess post-judgment damages. The courts of the nation have dealt with a variety of circumstances in which a final judgment included a remand to the district court. Here, all of the issues on appeal were finally adjudicated by the Federal Circuit; the remand authorized the district court to determine only post-judgment royalties. The remand had no relation to any issue in reexamination; validity had been finally resolved in the courts.
. . .The majority proposes that the final adjudication of patent validity can be redecided by the courts and thus by the PTO, because of the remand to assess post-judgment damages. This theory is contrary to the precedent of every circuit. All circuits impose finality and preclusion as to issues that were finally decided in full and fair litigation. . .
The America Invents Act contains certain procedural mechanisms which should prevent this from becoming a recurring concern. Specifically, under the AIA: 1) Post Grant Review and Inter Partes Review will be prohibited if a civil action challenging the validity of the patent has been previously filed; and 2) a civil action challenging validity filed after the filing of either a Post Grant Review or Inter Partes Review petition will automatically be stayed (With the exception of “Covered Business Method Patents” these provisions are applicable only to patents issued from applications filed after March 16, 2013 (patents granted under the new “First Inventor to File” Rules).

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