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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.



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.



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.



Fed. Circ. Affirms Attys’ $200K Sanction In Patent Case

July 18th, 2015 Alexander No comments

Two law partners were hit with a $200,000 sanction over their client’s deposition testimony in a patent infringement case against Citrix Inc.

In a one-line order, a three-judge panel affirmed the $200,000 in sanctions U.S. District Judge William J. Zloch ordered attorneys David Fink and Timothy Johnson pay Citrix in September. In his ruling, Judge Zloch held that the two law partners and their client, had acted “unreasonably and vexatiously” and multiplied the proceedings.

The issues boiled down to the client’s deposition testimony in 2002, which Citrix alleged Fink and Johnson, of Houston-based Fink & Johnson, knew was false and unnecessarily extended the proceedings. The sanctions award was a “reasonable approximation” of the money Citrix spent as a result of their conduct.

The client initially filed a lawsuit in 2002 accusing various Citrix products of infringing two of his patents.  When he was subsequently deposed, the client testified, that he couldn’t name a single Citrix product and authorized the filing of the lawsuit without knowing whether Citrix had actually infringed his patents.

Citrix said Fink later conceded that the client’s deposition testimony was false and that he had discussed Citrix and a prefiling investigation with the client before filing the complaint.

Citrix attorney Timothy Rousseau of Goodwin Procter LLP stated that if the testimony had been corrected immediately, as opposed to seven months later, the lawsuit would have been in a very different place. At least, he said, the company would have known that a prefiling investigation had been done.

Instead, he said Citrix pursued frivolous discovery and court motions to get to the bottom of a deposition from the client that seemingly offered no reason for the suit.

“This was all part of Citrix trying to find out why the suit was filed,” he said. “We were rebuffed by a false answer and had to pursue further proceedings.”

For more information, see Law360.



Urban Outfitters Wants Firm Sanctioned For Duplicate Suit

February 5th, 2015 Alexander No comments

Urban Outfitters Inc. asked a California federal court to sanction Doniger Burroughs APC for allegedly filing identical suits in the same court accusing Macy’s Inc., Saks Inc. and 63 other retailers of selling a dress, made by Urban subsidiary Free People, that sports a stolen print.

Urban asked the court to toss the suit and fine the Los Angeles law firm $10,000 for bringing the November copyright litigation on behalf of Unicolors Inc. against retailers selling the Free People dress. It says the firm missed a deadline to add the customers to a lawsuit filed in February against Urban Outfitters over the same copyright.

“By filing this action, plaintiff has attempted to make an end-run around its own failure to adequately prosecute its claims in the Unicolors I action,” Urban Outfitters said, referring to the February suit as Unicolors I. “[The suit is an] improper attempt by plaintiff to simultaneously maintain two duplicate actions so that it may avoid the consequences of its own failure to timely amend and/or to conduct discovery.”

The move amounts to claim splitting, which is prohibited by federal rules of procedure. Furthermore, any determination on infringement in one case would have a preclusive effect on claims in the other.

“Prosecution of the instant action, and the corresponding need for two courtrooms to simultaneously adjudicate the exact same claims, would result in a colossal waste of judicial resources,” the retailer said.

The move is an attempt by Doniger Burroughs, which has filed approximately 160 copyright infringement cases in 2014, to needlessly extend and expand the litigation in order to increase its exposure for attorneys’ fees, the retailer said.

Scott Burroughs, lead attorney for Unicolors, thinks that Urban Outfitter’s motion is meritless and “a hollow attempt by Urban Outfitters to evade liability for infringement.”

For more information, see Law360.



Malpractice Suit in Nike Air Jordan Patent Case

January 22nd, 2015 Alexander No comments

A total of eight attorneys face a $8.1 million legal malpractice suit for allegedly mishandling a patent infringement suit against Nike Inc. over its Air Jordan shoes.

Inventor Lyons claims the expert chosen by the team of lawyers on the case ultimately doomed his suit against Nike and if it weren’t for that poor choice, he would have prevailed in his allegations that Nike infringed his 1996 patent for an “athletic shoe with compression indicators and replaceable spring cassette.”

The thrust of the patent holder’s displeasure with the representation stems from the decision to appoint Dr. Duane Priddy as an expert to testify on the alleged infringement. That testimony ultimately led to a dismissal of the case by U.S. Magistrate Judge Acosta, the complaint said.

“Dr. Priddy is not qualified nor skilled in the art with respect to athletic shoes,” counsel for Lyons said. “The court’s final analysis was that the expert was not qualified … so there wasn’t sufficient expert support for Mr. Lyons.”

Another of Lyon’s experts evaluated the damages of the alleged infringement at $8.1 million, hence the dollar figure in the legal malpractice litigation.

Judge Acosta ruled against Lyons in June 2012, granting Nike’s motion for summary judgment as to noninfringement, but denied the motion as to invalidity.

That ruling was reaffirmed in January 2013 when Judge Acosta denied Lyons’ request for reconsideration of the original ruling.

Categories: Intellectual Property


Gore Must Pay $1B In Patent Saga

January 16th, 2015 Alexander No comments

The Federal Circuit affirmed a lower court’s ruling that W. L. Gore & Associates Inc. willfully infringed C.R. Bard Inc.’s blood vessel graft patent, adding $205 million to the $854 million in damages Gore has already been ordered to pay Bard in the long-running case.

The Federal Circuit heard the case once before and used it to set a new standard for proving willfulness. U.S. District Judge Murguia held that Gore’s infringement was willful under the new standard the Federal Circuit agreed.

The court had held since a 2007 en banc decision that there is a two-prong test for establishing willfulness. First, a patentee must show that an accused infringer acted despite an objectively high likelihood that it was infringing and second, the patentee must show that this risk was known to the infringer.

Gore maintained that its infringement was not willful because it had a reasonable argument that one of its employees was a joint inventor of Bard’s patent and that the patent was invalid for failing to name him as a co-inventor.

The Federal Circuit rejected that argument, noting that prior litigation over the patent had “definitively held” that the inventor of Bard’s patent, Goldfarb, had developed the invention on his own, without assistance from Gore’s employee.

“Within the backdrop of the extensive proceedings prior to this litigation, therefore, we agree with the district court that Gore’s position was not susceptible to a reasonable conclusion that the patent was invalid on inventorship grounds,” the appeals court said.

In addition to affirming that Gore’s infringement was willful, the Federal Circuit on Tuesday rejected the argument the company raised at oral arguments in August that Bard did not have standing to bring the suit in the first place.

For more information, see Law360.

Categories: Uncategorized


Inventor Asks High Court To Nix Alice Rulings

January 3rd, 2015 Alexander No comments

An inventor specializing in cybersecurity has started a petition with the U.S. Supreme Court, saying the Federal Circuit misinterpreted the high court’s Alice decision in Digitech Image Technologies v. Electronics for Imaging Inc. and three other published opinions and destabilized industries in the process.

The petitioner filed for writ of mandamus asking the Supreme Court to review a Federal Circuit decision in Digitech Image Technologies, where a digital image processing patent asserted against various companies is a patent-ineligible abstract idea.

The petitioner, who is not personally involved in the Digitech case, called the appeals court’s ruling an “utter and irresponsible misinterpretation” of the high court’s ruling in Alice v. CLS Bank International, which held that abstract ideas implemented using a computer cannot be patented.

“The decision below is misguided and ideologically driven and has spread like a cancer to digital machines and entire industries founded on using digital machines,” the petitioner wrote.

Furthermore, the petitioner stated, the Federal Circuit’s ruling to invalidate claims in the Digitech case has resulted in the destabilization of entire industries vital to the American economy.

“Entire industries are thereby unable to obtain the necessary funding for research and development, are unable to enter into licensing arrangements with existing intellectual property, and are unable to defend against infringers, both domestic and foreign, when it comes to innovations that are almost invariably domestic in origin,” the petition stated.

For more information, see Law360.

Categories: Intellectual Property


The “Abstract Idea” Under Alice

December 22nd, 2014 Alexander No comments

A federal judge recently invalidated a pair of digital file identification patents used to sue Amazon and Barnes & Noble, ruling they described nothing more than an abstract idea under the U.S. Supreme Court’s Alice Corp. decision.

U.S. District Judge Robinson granted Amazon and Barnes & Noble’s joint motion for invalidity in Cloud Satchel’s suits against the retailers. The patents described a way to transfer location information for documents, allowing mobile users to access a host of files without being limited by the memory on their device.

Judge Robinson held the patents essentially described the abstract idea of cataloging documents to aid retrieval efforts, a concept the defendants had called “as old as libraries themselves,” dating back two millennia.

Cloud Satchel launched its suits and said that while the patented ideas do facilitate the identification and retrieval of documents from storage, they do so in a specific way, with portable devices that have less memory than centralized databases.

But those limitations were not an “inventive concept” sufficient to transform that idea into patent-eligible subject matter. It was an inherent limitation to cataloging that the mobile devices would have less memory than the larger database, Judge Robinson said. Other restrictions, including using computers with processors and receivers, were also generic because they applied to virtually every portable computer.

Cloud Satchel commented, “We are hopeful the Federal Circuit will correct this overreaction, which if allowed to stand has the potential to significantly diminish the value of many existing patents – including Amazon’s own ‘One-Click’ technology — and dissuade the research and development efforts of companies both large and small.”

Futhermore, another federal judge also invalidated two content-on-demand technology patents asserted by OpenTV against Netflix saying they claimed nothing more than abstract ideas under the Alice Corp. decision, but refused to nix a third patent.

Judge Seeborg refused to strike down the third OpenTV patent because the patentability of the subject matter described in that patent was still in doubt. The patent describes a system for allowing advertisers to direct customized ads to individuals based on data gathered as to those individual’s specific interests and possible needs. Judge Seeborg found that it was unclear prior to claim construction if the patent describes abstract ideas or if it relates to a technological solution to a problem pertaining to interactive television.

“[T]he mere fact that generic computer processors and internet technology can now be used to implement the basic idea, with certain perceived greater advantages, does not give rise to a patentable method.”

“At least at this juncture in the case, the patent appears to be directed at providing a technological solution to a problem that arises in the computer and interactive television context,” Judge Seeborg said.

For more information, see Law360.

Categories: Litigation