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Judge Gilstrap’s Four-Factor Test

July 10th, 2017 Alexander No comments

U.S. District Judge, Rodney Gilstrap, the country’s busiest patent judge, took a broad stance on what constitutes a company’s place of business in terms of venue. This is a promising signal for patent owners who want to keep their cases in the Eastern District of Texas after the Supreme Court’s decision in TC Heartland.

Judge Rodney Gilstrap created a four-factor test leading his decisions regarding whether cases will remain in the district. This test takes into consideration whether a business has a retail store in the district in addition to the sales revenue the business has generated in the district. However, no single factor carries more weight than another. The test takes into account all of the circumstances of the case.

Since the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, there has been a new emphasis on the “place of business” requirement of the patent venue statute. In this case, the Supreme Court stated that patent suits can only be filed where the accused patent infringer has an established place of business or where it is incorporated. During the weeks after the TCH Heartland decision, the majority of the district court decisions regarding venue were directed towards whether a defendant waived its arguments by not bringing them up sooner. Judge Gilstrap is the first to create a place-of-business test after the TC Heartland decision.

In developing this test, Judge Gilstrap stated that he gathered factors from other court decisions and modernized them, one of them being a 1985 Federal Circuit case- In re: Cordis Corp. Judge Gilstrap wrote: “Regardless of the area of law, a consistent theme among courts is that the technological advances that foster growth and advancement in today’s business world cannot be ignored.”

The first factor of the test takes into consideration whether a business has a physical presence in the district, such as warehouses and retail stores. If the business has employees or independent contractors there, it will also weigh in favor of the business. The second factor determines the extent to which a business demonstrates that it has a presence in the district. The third factor takes into account the benefits the business receives from its presence in the district, including sales revenue. The fourth and last factor examines a business’s targeted interactions with consumers there, such as localized customer support and marketing techniques.

This test is not binding on other district courts or judges within the district. It has yet to be determined whether other courts will chose to use this test or create a test of their own.

For more information, See Law360.



Do Not Try Attempt to ‘Trademark’ Covfefe

June 12th, 2017 Alexander No comments

On Wednesday, May 31st, at 12:06 a.m., President Donald Trump tweeted the following: “Despite the constant negative press covfefe”- and that was it. However, at 5:50 a.m., the tweet was deleted.

At 8:49 a.m., Kenneth L. Gallman applied at the USPTO to register “Covfefe Coffee” as a federal trademark, stating that he wants to use it to sell coffee.

Eight days after the tweet was posted, twenty-six “Covfefe” trademark applications had been filed. Some of these included clothing, beer, fragrance, and investment advice.

Trademark lawyers expected this to happen. These days, trending words from the news and pop culture are usually superseded by trademark applications. Three days after the Boston Marathon bombing, four applications had been filed for “Boston Strong.” Fifteen applications had been filed for “Nasty Woman”, the phrase Trump used to describe Hilary Clinton during a presidential debate, by the end of last year.

Mark H. Jaffe, a trademark attorney, stated that: “There’s this perception for certain people that this is somehow a money maker, this quote-unquote ‘trademarking it’. But that’s not exactly how it works.” The bulk of the rush-to-register applications are denied by the USPTO, resulting in a waste of time and money.

For more information see Law360.

Joanne Ludovici, a partner at McDermott Will & Emery LLP, said: “These types of trending phrase trademark filings are rarely productive uses of applicant resources because they rarely meet the requirements for federal registration.” In order to obtain a registration, the applicants must demonstrate a bona fide intent to use the term on a specific set of goods and services, which is something the majority of them lack. On top of this, the applicants must demonstrate that the term distinctively distinguishes the applicant as a source of goods.

An examiner stated that: “The public will not perceive the slogan as a trademark that identifies the source of applicant’s goods, but rather only as conveying an informational message: that the consumer or purchaser supports the ideas and messages conveyed by rallies and organizations dedicated to advancing women’s rights.”

For more information, see Law360.



IP Firms Changing Their Methods

June 5th, 2017 Alexander No comments

Intellectual property boutiques have acclimatized to increased prices and a deceleration in patent cases after two IP firms have closed down.

Professional state that several IP boutiques have effectively adjusted to the decrease in patent litigation after the passage of the American Invents Act in 2011. They have done this by instead focusing on USPTO proceedings developed by the government. For firms that specialize in patent prosecution, their method has been to cut rates by offering legal process outsourcing and alternative fee arrangements.

Fish & Richardson PC is the largest intellectual property boutique on the Law360 400. Finnegan Henderson Farabow Garrett & Dunner LLP come in second, and Knobbe Marten Olson & Bear LLP at third. In 2016, Fish & Richardson increased its number of attorneys by more than six percent.

Kenyon & Kenyon was no longer on the list after it merged with Andrews Kurth Kenyon LLP back in August.

While several intellectual property firms have gone out of business, others continue to expand.

PTAB

The 2011 American Invents Act developed new types of post-grant proceedings, offering a low-cost method for accused infringers and third parties to contest the validity of the patent at the USTPO’s Patent Trial and Appeal Board. These reviews have increased up to more than 1,700 petitions a year. This has also caused a decrease in district court patent litigation because the cases are being put on hold for IPRs. Consequently, intellectual property firms have lost their ability to get district court work.

However, creative intellectual property boutiques have offered for IPR actions, placing themselves as go-to Patent Trial and Appeal Board attorneys. Ray, the Stern Kessler lawyer, stated that the enactment of the AIA offered an opportunity for lawyers who had some prior USPTO experience to become experts in the new proceedings.

Dealing with Price Demands

Clients are increasingly seeking to cut down on their intellectual property budget after the economic downturn in 2008. According to Ray, recent case law and legislation have also added to this by decreasing the value of the patent. Accused infringers are not likely to pay for a license or settle because now it is cheaper and easier to invalidate patents through an IPR or other post-grant proceeding at the USPTO. Patent holders view this as being more difficult to realize a profit when litigation is not likely to result in settlement or licensing fees. As a result, favorable prices are crucial for firms because companies are doubting the value of a patent portfolio and hoping to get that portfolio for a lower price. Alternative fee structures in addition to legal process outsourcing assists in increasing efficiency and decreasing costs.

Discovering Different Venues

Intellectual property firms are looking for new industries and venues in which they can develop.

The Supreme Court’s ruling in TC Heartland v. Kraft Foods Brand means that district court patent suits will change geographically very soon. Additionally, the U.S. International Trade Commission has become a more attractive venue for patent owners seeking to stop imports of infringing items. ITC cases are different from district court litigation in that they are not stayed for PTAB proceedings. This essentially means that companies are able to receive an order banning imports faster.

For more information, see Law360.



Courts Restrict Where Patent Suits Can Be Filed

May 29th, 2017 Alexander No comments

Last week, the Supreme Court placed even more limitations on where patent owners can file infringement lawsuits. This decision will drastically change almost 30 years of settled practice, probably pushing numerous lawsuits out of the Eastern District of Texas.

The Supreme Court reversed a ruling that basically permitted patent holders to file suit anywhere a defendant makes sales. Critics stated that this encouraged forum shopping and an aggregation of suits in a few courts.

Justice Clarence Thomas stated in an opinion “We therefore hold that a domestic corporation ‘resides’ only in its state of incorporation for purposes of the patent venue state.”

In Fourco Glass Co. v. Transmirra Products Corp., the Supreme Court ruled that “resides” meant the place of incorporation. However, in 1990, the Federal Circuit implemented a broader rule, permitting patent lawsuits to be filed anywhere that a defendant does business.

After Kraft Foods Group Brands LLC sued TC Heartland for infringement, TC Heartland challenged the statute, encouraging the Supreme Court to overturn the Federal Circuit’s broad interpretation of the law.

A majority of people believed that if the Supreme Court ruled for TC Heartland, a bulk of patent suits would move to Delaware, where a lot of businesses are incorporated, and the Northern District of California, where there are many technology companies.

For more information, see Law360.



Five Important Case Rulings You Should Familiarize Yourself With

April 17th, 2017 Alexander No comments

1. Phigenix Inc. v. ImmunoGen Inc.

Those considering challenging a patent may have to think twice.

In January, the Federal Circuit ruled that a party unsatisfied with a Patent Trial and Appeal Board (PTAB) verdict may appeal; however, the party is still obligated to satisfy the constitutional requirements for instituting a proceeding in an Article III court.

Approximately 80 percent of PTAB cases are regarding infringement litigation. Although the parties challenging patents may bring cases to the board, the ruling essentially implies that the parties may not be able to appeal if they lose.

In addition, this ruling means that it is extremely imperative to obtain evidence of any contention among the parties on the record at the beginning of the case at the PTAB in order to safeguard the right to appeal the board’s verdict.

2. In re: Van Os

In this case, the Federal Circuit held that a pronouncement that a patent is invalid as obvious necessitates additional detail. It is not sufficient to state that it would be sound sense to combine prior art to arrive at a claimed invention. The Court stated that “such a conclusory assertion with no explanation is inadequate to support a finding that there would have been a motivation to combine.”

3. Secure Axcess LLC v. PNC Bank NA

In February, the Federal Circuit’s ruling in this case further restricted the amount of patents subject to review under the AIA’s covered business method (CBM) patent review program. Only patents containing a financial component in the claims are subject to review. The Court held that the Secure Axcess patent on web page authentication contains no financial components in tis claims, and thus the invention can be utilized by any company. It is irrelevant that the patent was generally asserted in opposition to banks. The patent should not have been administered under CBM review and then invalidated by the PTAB.

4. Mentor Graphics Corp. v. EVE_USA Inc.

In March, the Federal Circuit affirmed a $36 million award against Synopsys. This case was brought by Mentor Graphics regarding computer emulator technology. The Court ruled that after the Panduit analysis is done, the ensuing damages does not need to be allocated so that they only include the patented invention.

5. Personal Web Technologies LLC v. Apple Inc.

The Federal Circuit’s ruling in this case disapproved of the PTAB’s actions for insufficient justifications and remanded for further proceedings. The Court stated that subject to the Administrative Procedure Act, government entities must still produce “logical and rational” explanations for its verdicts so that courts can review them.

For more information, see Law360.



Unwired Planet LLC v. Apple Inc.

April 9th, 2017 Alexander No comments

This case, involving two huge tech companies, takes place in the U.S. District Court for the Northern District of California. Unwired Planet is seeking $33 million in damages from Apple for infringement of its wireless, location and voice recognition patents. Unwired Planet asserts that the $33 million is equitable in light of the fact that Apple is seeking $400 from Samsung in a similar proceeding. On the other hand, Apple contends that the damages it was seeking in the Samsung case is irrelevant to the case at bar. Judge Chhabria granted Apple’s motion in limine, agreeing with Apple.

Judge Chhabria ordered Unwired Planet to reveal documents in its infringement case with Samsung and Huawei Technologies Co. Ltd. Upon discovering this, Tracey B. Davies of Gibson Dunn, attorney for Apple, asserted that Unwired Planet’s witnesses were presenting figures “directly contrary” to information they offered during the case. In addition, Davies contended that Apple was not able to depose those involved in the case, thereby substantially prejudicing Apple. Although Judge Chhabria has not seen Apple’s sanction bid, his “preliminary reaction” is to reject it.

Furthermore, Judge Chhabria mentioned that he will not excuse jurors during jury selection just because they are Apple consumers.

For more information, see Law360.



Samsung Says Jury Was Right To Invalidate Imaging Patent

October 21st, 2016 Alexander No comments

Samsung Electronics Co. Ltd. recently argued that intellectual property firm, IP Holdings Ltd., failed to offer relevant expert testimony at trial to prove the patent was not invalid as obvious.

In its brief, Samsung fought Imperium IP Holdings Ltd.’s contention that the patent for an imaging device was not obvious and that jurors should not have found it invalid. That same jury, however, determined that Samsung had infringed two of Imperium’s other imaging patents.  As a result, Samsung has been hit with a nearly $21 million verdict.

U.S. District Judge Amos L. Mazzant III concluded that Samsung’s violation of certain claims in two Imperium patents was deliberate and that the jury’s damages was justified by the fact that Samsung knew of the patents but did not avoid infringement and made multiple misrepresentations under oath.

Judge Mazzant noted that one Samsung expert familiar with its tracking of Imperium’s patent portfolio testified that the smartphone giant did not perform an analysis of Imperium’s patents within the last 5 years and did not monitor Imperium’s previous litigation involving the patents-in-suit.

But this testimony was shown to be demonstratively false by evidence showing that Samsung did track and indeed even attempted to obtain Imperium’s patents for years before the patent holder’s lawsuit.

Samsung also failed to offer any evidence at trial that it had independently developed and/or acquired the camera technologies at issue in this case, and failed to produce other relevant documents as well, which should have been turned over during discovery.

Accordingly, Judge Mazzant wrote, “The court enhances damages to the maximum extent allowable under Section 284 given the totality of the circumstances.”

“Aside from suggesting that such evidence existed in the prior art, Samsung merely offered generalized ‘reasons’ to solve the alleged issues of size, cost, performance, and versatility associated with interfaces and image sensors,” Imperium argued. “These reasons would not have motivated a person of ordinary skill in the art to arrive at the invention claimed in the ’290 patent.”

For more information, see Law360.



Brief Plagiarism Suit Could Inspire Copycat Claims Against Attorneys

September 25th, 2016 Alexander No comments

Newegg Inc. claimed that Ezra Sutton, a New Jersey IP attorney, violated its copyright in an opening appeals brief filed in the Federal Circuit in September 2014.

Newegg was a defendant in a patent case along with Sutton’s client, Sakar International Inc., and the parties had discussed their respective strategies as a filing deadline approached.

After Sutton declined to join Newegg’s brief, Newegg shared a draft with Sutton in order to help him prepare. But a day before the deadline, and before Newegg filed its final version, Sutton filed his own brief, which was nearly identical to Newegg’s draft, including drafting errors. Newegg registered a copyright on the brief and filed suit.

Although this case may seem like an anomaly, experts say that hurling accusations of copied briefs and plagiarism at fellow lawyers may be a new weapon for vexatious attorneys.

U.S. District Judge Terry J. Hatter ruled that Sutton failed to establish a prima facie case that the copying constituted fair use. Further, “Given that Sutton copied most, if not all, of the substantive portions of the draft brief, and that Sutton’s use of the draft brief was not transformative, this factor weighs heavily in favor of Newegg,” the judge said.

While ethics bodies give wide leeway to “borrowing” legal writings, experts said this litigation could inspire other lawyers to register copyrights on their work.

“That is something that concerns me about this, and I think it would be a terrible use of judicial time to have to try to figure out who really wrote what in a brief, and a waste of lawyers’ time,” said one expert.

“A competent lawyer can say, ‘Here’s a perfectly good brief that gets us into court, gets our case started, so let’s use it,’ and that’s just being efficient,” he continued.

However, another expert focused on whether the lawyer who plagiarized had overbilled the client for underlying research, had tried to mislead the judge with overlapping arguments or filings, or failed to diligently represent the client.

Unless there is a serious breach, lawyers typically aren’t hit with disciplinary actions, because legal documents are rarely expected to be fully “original” works. Judges themselves often cut and paste extensively from previous decisions or from previous filings in the same matter.

“Lawyers have always lifted from briefs, but there has to be a line somewhere between a few paragraphs and a wholesale lifting of a brief,” another expert said.

For more information, see Law360.



Apple Hit With $22M Verdict In Acacia Patent Trial

September 18th, 2016 Alexander No comments

A jury recently found that Apple Inc.’s iPhones and iPads infringe a patent on wireless communication technology owned by Cellular Communications Equipment LLC, a subsidiary of major patent licensing firm Acacia Research Corp.  The jury ordered Apple to pay $22.1 million in damages.

That patent was originally issued to a Nokia Corp. engineer and then acquired by Cellular Communications Equipment. It covers technology for managing the resources used to send data over a communications network and increasing the efficiency of communicating.

Apple argued that it does not infringe and that the patents are invalid as obvious or because the applicant omitted inventors from the patent.

In addition to Apple, the suit named as defendants the mobile carriers that resell Apple devices and configure them to make them compatible with their networks: AT&T Mobility LLC, Verizon Wireless, Sprint Solutions Inc., Boost Mobile LLC and T-Mobile USA Inc.

However, U.S. Magistrate Judge K. Nicole Mitchell granted the carrier’s motion to sever the claims against them and stay them until completion of the trial against Apple, finding that the claims are peripheral to the claims against Apple.

The carriers can only be liable for patent infringement if Apple is found to infringe, but if Apple were found liable and ordered to pay damages, Cellular Communications Equipment cannot recover damages from the carriers because it is barred from receiving a double recovery for the same sales.

For more information, see Law360.



The Unleashing Of Twombly

July 10th, 2016 Alexander No comments

In light of the abrogation of Rule 84 and Form 18 as of Dec. 1, 2015, several district courts have been presented with a novel issue as to the proper application of the plausibility requirement of Federal Rule of Civil Procedure 8(a).

Accordingly, patent prosecution counsel are encouraged to take certain steps in drafting their complaints, in order to avoid potential dismissal of their complaints on a motions to dismiss under Federal Rule of Civil Procedure 12(b)(6), alleging improper pleading of plausibility under Rule 8 and according to Twombly and Iqbal.

Similarly, defense counsel are encourage to familiarize themselves with these developments in the law, in order to mount an effective defense against implausible claims and leverage a better settlement for their clients, in cases where the complaint does not adequately comply with the requirements of plausibility as explained in Twombly and Iqbal.

The Specific Requirements the Application of Twombly Pleading Standard Imposes in the Context of a Patent Case

In deciding on the sufficiency of a complaint, in light of a Rule 12(b)(6) motion to dismiss, the court evaluates whether a complaint states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil Procedure 8(a), which requires a “short and plain statement of the claim showing that the pleader is entitled to relief.” Although Rule 8 “does not require ‘detailed factual allegations,’ … it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” In other words, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of a cause of action’s elements will not do.” “Nor does a complaint suffice if it tenders ‘naked assertion[s]‘ devoid of ‘further factual enhancement.’”

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” A claim is facially plausible when the facts pled “allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” That is not to say that the claim must be probable, but there must be “more than a sheer possibility that a defendant has acted unlawfully.” “[F]acts that are ‘merely consistent with’ a defendant’s liability” fall short of a plausible entitlement to relief. Further, the court need not accept as true “legal conclusions” contained in the complaint. This review requires “context-specific” analysis involving the court’s “judicial experience and common sense.” “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not ‘show[n]‘ — ‘that the pleader is entitled to relief.’”

In Atlas IP LLC v. Pac. Gas & Elec. Co.,[21] the Northern District of California applied the Twombly standard of plausibility. Since Atlas involved only one asserted claim, it provided the court with a good opportunity to explain the post-December 2015 standard of pleading for patent infringement cases in a relatively simple context. The asserted claim in Atlas was an “apparatus” (or “device” or “system”) claim.

In Atlas, the court concluded that “the complaint fails to state a plausible claim for direct infringement[]” because “the complaint recites only some of the elements of the sole asserted claim, and provides only a threadbare description of the alleged abilities of the accused device. In reaching this conclusion, the court made use of Elan Microelectronics Corp. v. Apple Inc. to demonstrate the point that “simply reciting some of the elements of a representative claim and then describing generally how an accused product operates, without specifically tying the operation to any asserted claim or addressing all of the claim requirements, is insufficient.” In Elan, the court held that “a bare assertion, made ‘on information and belief’” that defendant “has been and is currently, directly and/or indirectly infringing” the specified patents “through its design, marketing, manufacture and/or sale of touch sensitive input devices or touchpads, including but not limited to the Smart-Pad” was an insufficient recital of elements supported only by conclusory statements.

Furthermore, the Twombly decision and its progeny provide ample language suggesting that a stricter standard of pleading was imposed by Twombly. In Twombly itself, the court retired the lower standard of sufficiency under Rule 8, that it had previously set. As one eminent scholar of federal civil procedure has said of Twombly: “Notice pleading is dead. Say hello to plausibility pleading.” That is because the “liberal pleading standard of Federal Rule of Civil Procedure 8(a)(2) has been decidedly tightened (if not discarded) in favor of a stricter standard requiring the pleading of facts painting a ‘plausible’ picture of liability.” Twombly then made quite clear that:

While, for most types of cases, the Federal Rules eliminated the cumbersome requirement that a claimant “set out in detail the facts upon which he bases his claim,” Rule 8(a)(2) still requires a “showing,” rather than a blanket assertion of entitlement to relief. Without some factual allegation in the complaint, it is hard to see how a complainant could satisfy the requirement of providing not only “fair notice” of the nature of the claim, but also “grounds” upon which the claim rests.Bell Atlantic v. Twombly.

Explaining the relationship between Rule 12(b)(6) and Rule 8(a)(2), the court said that:

The need at the pleadings stage for allegations plausibly suggesting (not merely consistent with) agreement [an element of an antitrust claim] reflects the threshold requirement of Rule 8(a)(2) that the “plain statement” possess enough heft to “show that the pleader is entitled to relief.” Only then, will a complaint be sufficient to withstand attack under Rule 12(b)(6).

The Twombly standard was further underscored two years later when the Supreme Court decided Iqbal, wherein the Supreme Court explained that Rule 8:

[D]oes not require “detailed factual allegations,” but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation… . A pleading that offers “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” Nor does a complaint suffice if it tenders  ”naked assertion[s]” devoid of “further actual enhancement.”

To explain what plausibility means, the court said, as to claims asserted under Rule 8, that “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” In other words, plausibility requires a complaint to place the legal conclusions it makes in context of facts that render the asserted claim plausible. Now, as professor A. Benjamin Spencer has aptly put it: “Only those complaints that plead facts suggestive of liability satisfy the Rule 8(a) obligation to state a claim that shows entitlement to relief.” The legal sufficiency of a complaint presented under Rule 8(a) is tested by a motion made under Rule 12(b)(6). “The question of whether a Rule 12(b)(6) mot[33]ion was properly granted is purely a procedural question not pertaining to patent law to which [courts apply] the rule of the regional … circuit.”

Accordingly, in cases post-Dec. 1, 2015, prosecution counsel are encouraged to allege sufficient facts, specifically tying the operation to any asserted claim or addressing all of the claim requirements. This may require patentees in certain cases to undertake more burdensome presuit investigations to learn sufficient facts to allege sufficient plausibility, as required by Twombly. This requires counsel to know exactly which limitations of the asserted claims of the patent(s)-in-suit are being infringed and how the accused products infringes on these limitations of the asserted claims of the patent(s)-in-suit.

For more information, see Law360.