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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.



Patent Glory Days Limited for East Texas

April 1st, 2017 Alexander No comments

East Texas has a long-standing reputation as a “patent hotspot.” Judges in the Eastern District of Texas are familiar with patents as they have ruled over numerous cases. Likewise, many potential jurors also have some type of experience with patents. In 1999, the amount of patent cases in East Texas was less than 100, but by 2007, this number skyrocketed to 369. By 2011, East Texas was recognized as a favorable patent location.

Patent holders favor the Eastern District of Texas because of the benefits and advantages that it offers for plaintiffs. To begin with, the discovery process happens fairly quickly and the judges in the district are less susceptible than judges in other districts to summary judgment motions. In addition, there are methods which permit the first parts of a suit to advance predictably without a lot of court involvement.

A high-profile case is putting East Texas at risk of losing its long-established dominance. This Monday, the Supreme Court will hear oral arguments in a case regarding where patent suits can be filed, specifically Section 1400(b) of the U.S. Code. This statute states that patent suits can be brought “in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”

Kraft Foods Group Brands brought suit against TC Heartland LLC in the District of Delaware, alleging infringement of its concentrated liquid dispenser patents. After TC Heartland unsuccessfully moved the case to the Southern District of Indiana, it filed a petition for a writ of certiorari with the Supreme Court. TC Heartland asserts that this statute is allowing patent holders to forum-shop, leading to inequitable results. TC Heartland contends that patent suits should only be allowed be to be filed where a company is incorporated, citing Fourco Glass Co. v. Transmirra Products Corp.

However, if this were to happen, a large number of patent plaintiffs would be forced out of Texas and into Delaware, where numerous companies are incorporated. While a number of people think that limiting where patent suits can be filed would create impediments for nonpracticing entities and reduce the number of lawsuits, others believe that it would have little impact.

For more information, see Law360.

Categories: Uncategorized


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.



Fed. Circ. Refuses To Restrict Venue In Patent Cases

May 8th, 2016 Alexander No comments

The Federal Circuit recently denied liquid sweetener company TC Heartland LLC’s request for new restrictions on where patent suits can be filed. TC Heartland was sued by Kraft Foods Group Brands LLC in the District of Delaware and was seeking to have the case moved to the Southern District of Indiana, where it is based.

TC Heartland’s petition for a writ of mandamus, which urged the court to cast aside a 1990 ruling that patent suits can be filed in any district where the defendant makes sales, was denied.

TC Heartland argued that the 1990 decision known as VE Holding was overruled by a 2011 federal law, and that under that statute, patent suits can be filed only in places where the defendant is incorporated or has an established place of business and has allegedly infringed. The Federal Circuit rejected that argument, calling it “utterly without merit or logic.”

“The 2011 amendments to the general venue statute relevant to this appeal were minor,” the court wrote, adding that the statute was in fact “a broadening of the applicability of the definition of corporate residence, not a narrowing. This change in no manner supports Heartland’s arguments.”

“Boy, doesn’t this feel like something a legislature should do rather than something we should be asked to do?” U.S. Circuit Judge Kimberly A. Moore said at oral arguments.

Although the case did not actually involve the Eastern District of Texas, where the most patent suits are filed, it has been closely watched because a decision restricting venue in the way TC Heartland requested would have kept most suits out of the district, since few patent defendants are based there.

According to statistics compiled by Law360, there were 2,523 new patent complaints filed in the Eastern District of Texas last year, accounting for 45.5 percent of all cases nationwide. The collection of small cities 100 miles east of Dallas saw nearly 2,000 more new suits than the next-busiest court, the District of Delaware.

For more information, see Law360.



Appeal of $400M Award In Apple-Samsung Patent War

March 28th, 2016 Alexander No comments

The U.S. Supreme Court recently decided to hear Samsung’s appeal of a $400 million judgment that Apple won in a smartphone patent suit.  The Supreme Court agreed to consider Samsung’s argument that the damages test for design patents results in “unjustified windfalls” for patent owners.

The Supreme Court granted Samsung’s petition for a writ of certiorari, which challenged a lower court’s decision that the tech giant must pay Apple its entire profits from smartphones found to infringe Apple’s design patents on the look of the iPhone.

Samsung told the justices that the Federal Circuit misread the law and argued that requiring companies to pay their entire profits when they are found to infringe design patents results in exorbitant awards and gives design patents too much power.

“The decision below is thus an open invitation to litigation abuse, and has already prompted grave concern across a range of U.S. companies about a new flood of extortionate patent litigation, especially in the field of high technology,” Samsung said.

In 2012, a jury found that Samsung infringed Apple’s patents and awarded more than $1 billion in damages, but a damages retrial reduced the award to $548 million. Samsung elected not to appeal the portion of that award dealing with utility patents, and focused its Supreme Court petition on the $399 million in damages related to the jury’s finding of design patent infringement.

Samsung noted that the justices had not heard a case dealing with design patents in more than 120 years. The rule that companies must pay their “total profit” from expensive products like smartphones found to have infringed design patents makes no sense in the modern world, the company argued.

“With the recent explosion of design patents in complex products like smartphones, the time is ripe for this court to again take up the issue,” it said.

Apple told the Supreme Court that the law “could not be clearer” that infringers must pay their total profits for design patent infringement, so there was no need to hear the case.

“Samsung had its day in court — many days, in fact — and the properly instructed jury was well-justified in finding that Samsung copied Apple’s designs and should pay the damages that the statute expressly authorizes,” Apple said.

“We welcome the court’s decision to hear our case. We thank the many large technology companies, 37 intellectual property professors, and several groups representing small business, which have supported our position,” Samsung said. “The court’s review of this case can lead to a fair interpretation of patent law that will support creativity and reward innovation.”

For more information, see Law360.



Fed. Circ.’s Lexmark Ruling Good Sign for Patent Owners

February 23rd, 2016 Alexander No comments

The Federal Circuit’s recently decided to retain limits on patent exhaustion, which is good news for patent owners like Lexmark, allowing them to exert control over products after they’re sold.

The Federal Circuit’s Lexmark opinion sends a mixed message for patent owners.

In the 10-2 en banc decision, the Federal Circuit decided not to disturb two of its longstanding rules: that overseas sales of a product don’t exhaust a patent owner’s right to sue in the U.S. and that patent owners can impose restrictions on the use of patented items after they are sold in order to keep the sale from exhausting their rights.

The court decided to take the case en banc to determine whether those rules remained good law following recent U.S. Supreme Court decisions that printer cartridge reseller Impression Products Inc., which Lexmark International Inc. accused of infringement, cast doubt on the prior holdings. The court found that the rulings don’t require it to change its precedent.

“On its face, this is a win for patent owners because it allows them to maximize their protection through contractual restrictions or where they sell their products geographically,” said Derek Dahlgren of Rothwell Figg Ernst & Manbeck PC.

A decision that either foreign sales or post-sale restrictions exhausted the rights of patent owners would have diminished their ability to use patents to protect their market, he said.

While the Lexmark case involves printer cartridges, the issue of patent exhaustion has broad ramifications across a wide range of industries, including technology, pharmaceuticals and medical devices. Patent owners have relied on the limitations on patent exhaustion to restrict post-sale uses of patented products, a strategy that would have been disrupted had the Federal Circuit overruled its precedent.

“It’s a pro-patent owner decision that reaffirms Federal Circuit precedent,” said Jeffrey Fisher of Farella Braun & Martel LLP. “It’s a less welcome decision for consumers and those who may potentially be accused of infringement down the road.”

The en banc Federal Circuit also gave its blessing to the practice of imposing post-sale restrictions on patented products. It held that as long as those restrictions, such as a requirement that a product can only be used once, are lawful and clearly communicated to buyers, they do not exhaust patent rights.

The issue of post-sale restrictions is particularly important to medical device makers as they use them as a way to protect patient safety, said Joseph Re of Knobbe Martens Olson & Bear LLP, whose firm filed an amicus brief in the case on behalf of the Medical Device Manufacturers Association.

Since reusing medical devices like syringes can lead to the transmission of infection diseases, “single patient use restrictions are critical in a hospital setting,” Re said.

Such restrictions can protect patients, as well as the reputation and sales of device makers. If a product is reused and leads to complications, the original manufacturer will likely be blamed, and “you want people to think highly of your products, and you don’t want them to be the cause of a medical disaster.”

For more information, see Law360.



5 Secrets Of Successful Patent Litigators

December 15th, 2015 Alexander No comments

Here, the pros share five secrets about what it really takes to become patent litigators performing at the top of their game.

Have a Hunger for Learning

Whether the case is about devices that help a smartphone run or active ingredients that make a drug effective, patent litigators have to want to learn as much as they can about the scientific subject matter of the case.

“In many situations, you won’t be able to anticipate until very late in a case what facts will become important, and your ability and willingness to become deeply immersed in the technology are critically important to running a flexible and agile case,” according to Jason Sheasby, a partner at Irell & Manella LLP.

“The judge and jury can sense when someone has a great facility of the technology, and it can give you confidence and credibility,” he said. “Becoming an expert in the technology also allows you to see arguments that you might miss if you have an understanding at a more facile level and adds depth to your litigation strategy.”

Put Yourself in Others’ Shoes

Attorneys are only going to get so far in their case if they only see the dispute from their client’s point of view. A key feature of any successful patent litigator is to have empathy for those around them.

“It’s the ability to figure out what the jury wants to know; it’s the ability to figure out what motivates the opponent, whether that’s the attorney or otherwise; and it’s the ability to write briefs for the judge, not for yourself,” said John Dragseth, a principal at Fish & Richardson PC. “It must be a secret because very few attorneys do it well.”

Lawyers sometimes struggle with stepping outside their own perspective of the case to ask themselves what the judge or jurors care about and how to get them to root for their client. One way to try to resonate with jurors is by drawing an emotional story out of a patent case. While a patent dispute may look like a fight over money between two corporations at first glance, a deeper review may reveal that a more relatable story can be told.

Think Big and Small

If the goal is to win case after case, attorneys must be flexible with their argument style. But being able to shift their arguments from the big-picture level down to the tiniest-of-details level can only be done if lawyers know the facts of their case down cold.

“A lot of good lawyers in our field try to win just at the 30,000-foot level, and it tends to be a winning strategy,” said Gerald Flattmann Jr., a Paul Hastings LLP partner. “But sometimes you need to develop a more complex case of noninfringement or invalidity. And when you need to move to specifics, you need to know the facts.”

“Attorneys need to understand how to adjust so that if a judge initially rules against them at a general stage, they can take a deeper dive and argue at a more specific level,” he said. “This may not be a secret, but it’s something lawyers don’t do.”

Don’t Be Afraid to Go for the Kill Early

Attorneys may think they should hold back from laying into the opposing side’s witnesses until cross-examination, but successful litigators don’t wait for trial. Instead, they try to wring the most of witnesses at the deposition stage.

“I believe cases are won or lost at the expert deposition phase,” Flattmann said. “If you secure enough admissions at deposition, you’ve essentially wired the witness for trial. The cross-exam against the witness’s positions will be concise and effective, and your trial will be a breeze.

However, many attorneys waste precious time at depositions by asking about an expert’s background, rather than drawing out answers on the key issues at stake.

“Attorneys ask about what schools the expert went to and what he did his dissertation on,” Flattmann said. “Who cares? None of that matters. Of course you should know that background, but that’s not where the gold is. Attorneys should be asking the ultimate questions early.”

Adapt

Even when patent lawyers know the facts of a case inside out, they can’t always avoid surprises. Litigators who are able to pivot as new issues come to light are the ones who win cases.

“You never know what witnesses will say, and you may find out during discovery or depositions that the theory you were building your case on turns out not to be true,” Freeman said. “Attorneys have to adjust quickly as new information becomes available. If they get stuck on one theory or are unable to adjust, they could miss out on getting valuable testimony.”

For more information, see Law360.