Posts Tagged ‘U.S. Supreme Court’

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.


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.

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

High Court To Reconsider Ban On Expired-Patent Royalties

December 18th, 2014 Alexander No comments

The U.S. Supreme Court agreed to review a 50-year-old rule barring royalty agreements that extend beyond the expiration of a patent, a standard the inventor of a Spider-Man toy argues is outdated and anti-competitive.

In 1990 Kimble invented a Spider-Man wristband toy that could shoot foam string and got Marvel to agree to compensate him if it used his idea. The company later created the Web Blaster toy, but Kimble never received any payments, and he filed a 1997 patent infringement and breach of contract suit.

Marvel and Kimble settled the suit in 2001 when the company agreed to purchase the patent for about $500,000 and pay Kimble a 3 percent royalty on product sales.

But in 2006, Marvel licensed the right to produce the Web Blaster to Hasbro Inc. A number of disagreements then arose between Marvel and Kimble concerning the royalty payments, resulting in the current breach of contract suit, filed in 2008.

The justices granted a petition for certiorari by inventor Stephen Kimble and the high court will review its own 1964 decision in Brulotte v. Thys, which held that licenses requiring royalty payments for the use of a patent after it expires are per se unlawful. The justices agreed to hear the case even though U.S. Solicitor General Donald Verrilli Jr. told the court in October that Brulotte remains good law and should not be reviewed.

Kimble’s attorney said that he and his client are gratified that the justices took the case and are looking forward to arguing that the Brulotte rule “should be resigned to the dust heap of history.”

“Brulotte’s per se rule has, for 50 years, damaged the American economy by forbidding licensing practices that would provide unique pro-competitive benefits,” Kimble’s attorney said.

The rule has suppressed innovation by hindering the commercialization of life-saving medical treatments by universities and research hospitals, he said.

“And it has been a trap for the unwary and an instrument of injustice when wielded by large, sophisticated licensees to deny small inventors their contractually guaranteed royalties under circumstances where those inventors had no actual market power, and had applied no coercion during contract negotiations,” he said.

According to Marvel, the “core bargain” of the patent system is that inventors must publicly disclose their invention in return for a limited period of exclusivity.

“Brulotte’s conclusion that permitting post-expiration royalties would upset this bargain is justified and is independent of antitrust principles,” Marvel said.

Likewise, Verrilli told the court in October that the Brulotte rule “fits comfortably within a line of precedents establishing that the federal patent laws are not indifferent to what happens when a patent’s prescribed term expires.”

“Rather, those laws reflect an affirmative congressional policy judgment that the patented invention should thereafter be freely available for exploitation by others and for enjoyment by the general public,” he said.

For more information, see Law360.

Categories: Intellectual Property

Justices Threaten To Sanction Foley Partner Over Petition

December 14th, 2014 Alexander No comments

The U.S. Supreme Court made the surprising move of ordering Foley & Lardner LLP partner Howard Shipley to show why he shouldn’t be sanctioned for his conduct stemming from an apparently jumbled petition for a writ of certiorari filed in a suit over a telephone call routing patent.

The order didn’t elaborate on why the high court disapproves of Shipley’s conduct, but a reading of the attorney’s petition raises at least two possibilities. First, the petition uses seemingly random punctuation and format changes, as well as confusing language and sentence structure.

For instance, the petition begins, “This petition is a refinement of SSBG’s preceding petition [121]1), asking this Court to unmistakably clarify, to the whole patent community12), that its Mayo/Biosig/Alice decisions (‘3 decisions’) ended the claim construction anomaly2) hampering especially ET CIs1) – but meet, by their ‘ET proof’ refined claim construction, all ET CI’s needs [sic].”

Additionally, the end of the petition specifies that the patent’s primary inventor, Sigram Schindler, made “significant contributions” to the petition.

Furthermore, the high court also rejected without comment Sigram Schindler’s challenge of an April ruling by the Federal Circuit that U.S. Patent Number 6,954,453 — which covers a method and apparatus for transmitting data in a telecommunications network — was obvious.

The panel’s ruling had affirmed a finding of obviousness by the U.S. Patent and Trademark Office, which reached its decision at the conclusion of a pre-America Invents Act re-examination proceeding performed at the request of Cisco Systems Inc.

For more information, see Law360.

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