MVS Filewrapper® Blog: PTO Interference Decisions do not Preclude Invalidity Defenses in Court

The Federal Circuit has issued a decision in AbbVie v. Janssen Biotech and Centocor Biologics, which relates to patents that broadly cover antibodies which can neutralize activity of human interleukin 12 (IL-12) and have useful application in the treatment of autoimmune disorders. The patent owner, AbbVie, sued Janssen and Centocor for infringement of the patents at issue.  At trial, the jury found that all of the asserted claims were invalid on the grounds of lack of written lack of description, enablement, and obviousness.  AbbVie appealed the district court's decision. 

 

On appeal, AbbVie asserted that the denial of its summary judgment was improper, because the district court erroneously held that Centocor was not collaterally estopped from raising invalidity defenses in the infringement action after the interference proceeding at the Patent and Trademark Office.  Collateral estoppel or issue preclusion can be invoked when the issue sought to be precluded was involved in an earlier matter, has actually been litigated, the issue was determined by final and binding judgment, and the determination of the issue was essential to the judgment. The court here reasoned that the proceedings and judgment from the Patent and Trial Appeal Board was not final as an action for interference was still pending at the district court level. Also, §146 of the Patent statute provides in relevant part that "[a]ny party to an interference dissatisfied with the decision of the [Board] on the interference, may have remedy by civil action, if commenced within such time after decision, not less than sixty days. . . ." Further, there is language in the statute which allows the district court to make a de novo review of findings of fact in situations where new evidence is presented following the Board's review. Because procedures are provided in the patent statute that allows for additional judicial remedies if a party to an interference action is not satisfied, the court held that Centocor was not collaterally estopped in this case from raising invalidity defenses in the infringement action.  However, the Federal Circuit's discussion also left open the possibility that collateral estoppel may have applied had Centocor appealed under §141 instead of bringing a civil action. 

 

The Court also discussed the written description requirement and acknowledged that in light of Ariad this requirement is separate from the concept of enablement. While AbbVie classified its claims as a set of human antibodies, they did not disclose any structural features to indicate a commonality within the genus.  The Federal Circuit found the claims to be invalid in view of Ariad's holding that "merely drawing a fence around a perceived genus is not a description of the genus" and the fact that the jury heard substantial evidence that AbbVie's patents described only one type of structurally similar antibodies which are not representative of the full variety of scope of the genus.  The court also emphasized the inherent vulnerability of patents to invalidity challenges based on lack of written description, where the areas of technology are unpredictable and difficult to prove a correlation between function and structures found within the genus. 

 

The court ultimately affirmed the district court's judgments in both the infringement action and the interference action. 

 

The full opinion can be found here.

MVS Filewrapper® Blog: The Ongoing Battle of Copyright Protection and Pre-1972 Sound Recordings

Federal Copyright Law generally protects works that are fixed in a tangible medium from unauthorized use, including copying, performance, exhibition, and broadcasting.  However, sound recordings from before 1972 are treated uniquely under the law—a situation that has resulted in real legal problems.

 

When enacted, the Federal Copyright Law preempted any state rights relating to copyright protection.  However, because the Copyright Act of 1909 failed to provide protection for sound recordings, and protection for sound recordings was not incorporated into the Federal Copyright Law until 1972, protection for sound recordings prior to 1972 is governed by various state law doctrines. 

 

In particular, the Federal Copyright Law retains several "safe harbors" concerning certain acts relating solely to sound recordings, such as broadcasting pre-1972 sound recordings over the radio. § 114 of the current Copyright Act allows for broadcast transmission of a protected sound recording.  However, some copyright holders are attempting to hold broadcasting companies liable for "unauthorized broadcast transmission" of pre-1972 sound recordings under various state misappropriation laws. A class action suit filed in September, 2013 in the Central District of California alleges that SiriusXM refuses to obtain licenses for transmission of pre-1972 recordings in violation of common law and California law, seeking payment for the use of thousands of songs.  Two additional class action suits have been filed in the Southern District of New York and the Southern District of Florida, alleging violation of New York and Florida law, respectively.  A fourth suit has also been filed in California state court by Capitol Records, Sony Music, UMG Recordings, Warner Music, and ABKCO Music. 


Currently, the federal courts are split on whether a state's misappropriation law establishes a cause of action to a copyright holder with a pre-1972 sound recording.  The outcome of these cases may help to clarify what protection is afforded to pre-1972 sound recordings, and under what law.

MVS Filewrapper® Blog: New and Useful - August 26, 2013

·         In University of Utah v. Max-Planck-Gesellschaft, the Federal Circuit held that a patent lawsuit between a state university and the officers of another state university is not a controversy between two states.  The case began when the University of Utah (“UUtah”) sued the Max Planck Institute and the University of Massachusetts (“UMass”) to correct inventorship of two patents—U.S. Patent Nos. 7,056,704 and 7,078,196.  The basis of UUtah’s claim was that the named inventor of the patents—Dr. Thomas Tuschl, a UMass Professor—incorporated the ideas of a UUtah Professor—Dr. Brenda Bass—and did not name her as an inventor.  UMass argued that the dispute was between two states as both UUtah and UMass are state institutions.  This presents constitutional law questions.  In particular, two provisions of the Constitution are at issue, Article 3, §2, cl.2 and the 11th Amendment.  The 11th Amendment provides sovereign immunity to state governments from any cause of action brought by citizens of another state in Federal Court.  However, Article III of the Constitution provides for state-versus-state lawsuits, for which the United States Supreme Court has original jurisdiction.  Thus, under UMass’s argument, only the United States Supreme Court should have jurisdiction to hear the matter.  In response to UMass’s argument, UUtah amended its complaint and substituted UMass with four UMass officials as defendants.  The district court held that the action was no longer a state-versus-state action and could proceed.  Immediate appeal was heard by the Federal Circuit, which affirmed the district court in a 2-1 decision.  Judge Moore provided a notable dissent arguing that UMass is an indispensable party and should be a named defendant and the case is in fact a controversy between two states.

·         In Skinmedica v. Histogen, the Federal Circuit affirmed summary judgment of non-infringement.  Skinmedica asserted infringement of two of its patents covering methods for producing dermatological products containing “novel cell culture medium compositions.”  The Federal Circuit noted that “[d]uring prosecution of the ’494 patent, the inventors limited their claimed inventions to pharmaceutical compositions comprising cell culture medium conditioned by animal cells only in three-dimensions” in order to overcome an anticipation rejection.  Histogen cultures cells beginning with “one- or two-dimensional growth” on beads that “evolves into a three-dimensional growth phase in which the cells crawl off the beads.”  On appeal Skinmedica argued “that the district court erroneously excluded beads from the definition of ‘culturing . . . cells in three-dimensions.’”  The Federal Circuit, however, found no basis to overturn the district court’s construction of the phrase “culturing . . . cells in three-dimensions.”  This was because the patents-in-suit define “three dimensional culturing” to exclude beads by “expressly confin[ing] culturing with beads to two-dimensional culturing.”  In light of this, the Federal Circuit affirmed the district court’s grant of summary judgment of non-infringement. 

·         In Ex parte Mewherter, the Patent Trial and Appeal Board held that a software composition cannot meet the requirements of patentable subject-matter under § 101 unless the invention excludes transitory media such as signals and carrier waves.  Independent claim 16 was rejected under § 101.  Claim 16 recited in pertinent part, “A machine readable storage medium having stored thereon a computer program for converting a slide show presentation for use within a non-presentation application.”  The Examiner rejected the claim arguing that the phrase “machine-readable storage medium” encompassed transitory media “such as signals, carrier waves, etc.”  The patent Applicant—IBM—countered that the term “storage” differentiates the claimed invention from the non-patentable subject matter “machine-readable medium” because it requires permanent storage.  The Board, however, affirmed the Examiner’s rejection noting that the specification failed to exclude transitory signals from its definition of “machine-readable storage medium.”  As a result, the Board held that one of skill in the art would construe the term to encompass transitory media and not be limited exclusively to permanent storage media.

MVS Filewrapper® Blog: New and Useful - April 23, 2013

·         In K-Tech Telecoms v. Time Warner Cable, the Federal Circuit confirmed that the standard for evaluating the adequacy of complaints alleging direct patent infringement remains Form 18 of the Appendix of Forms to the Federal Rules of Civil Procedure ("Form 18").  K-Tech filed separate complaints against Direct TV and Time Warner Cable (“TWC”) on the same day, alleging infringement of four patents.  Direct TV and TWC each moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), asserting the complaint, as filed, lacked sufficient factual specificity to state a cause of action for direct patent infringement.  K-Tech sought, and was grated, leave to amend the complaints.  After K-Tech filed its amended complaints, TWC and Direct TV again moved to dismiss under 12(b)(6).  The district court granted the motions to dismiss, stating that the amended complaints failed to cure the defects with the original complaint, namely that the complaints did not explain why K-Tech believed the defendants were utilizing the methods and products protected by the asserted patents, rather than using other noninfringing methods and products, and therefore failed to meet the standards articulated in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009).  K-Tech appealed the dismissal two weeks before the Federal Circuit issued its decision in R+L Carriers, Inc. v. DriverTech LLC (In re Bill of Lading Transmission & Processing System Patent Litigation), 681 F.3d 1323 (Fed. Cir. 2012). The Federal Circuit consolidated the appeals.

On appeal, K-Tech argued that the amended complaints complied with Form 18 and that the district court applied the incorrect standard.  The defendants argued that sufficiency with respect to Form 18 must be interpreted in light of Twombly and Iqbal, and Ninth Circuit law, and that the amended complaints failed to meet either the plain language of Form 18 or the requirements of Twombly and Iqbal.  The court relied on its recent decision in R+L Carriers in reasserting the sufficiency of Form 18 for pleading patent infringement, and that to the extent any conflict exists between Form 18 and Twombly/Iqbal, the form controls.  Because Form 18 does not include any indication that a patent holder must explain why it believes that a defendant is utilizing the methods and products protected by the asserted patents, rather than using other noninfringing methods and products, such assertions are not required to survive a motion to dismiss.  Further, the court held that the failure of K-Tech to identify a particular allegedly infringing device or devices—by name, model number, or otherwise—did not bar K-Tech from filing a complaint in accordance with Form 18, stating, “A defendant cannot shield itself from a complaint for direct infringement by operating in such secrecy that the filing of a complaint itself is impossible. Nor is a defendant immune from a direct infringement claim because he does not make a ‘device’ but, rather, infringes through a system or method.” 

·         In Lazare Kaplan Int’l, Inc. v. Photoscribe Techs., Inc., the Federal Circuit reversed a decision by the U.S. District Court for the Southern District of New York granting summary judgment of invalidity of two claims of a patent owned by Lazare Kaplan (“LK”), and asserted against  Photoscribe Technologies, Inc. and the Gemological Institute of America (collectively “Photoscribe”).  The Federal Circuit also reversed the district court’s granting of a motion under Federal Rule of Civil Procedure 60(b) filed by Photoscribe that vacated the district court’s prior judgment finding the same claims not invalid.  LK sued Photoscribe alleging infringement of Lazare Kaplan’s patent covering systems and methods for microinscribing gemstones.  In the ensuing trial, the asserted claims of the LK patent were adjudged not invalid and not infringed, either literally or under the doctrine of equivalents.  LK appealed the judgment of noninfringement, but Photoscribe did not appeal the judgment that the asserted claims were not invalid.  On appeal, the Federal Circuit vacated the judgment as based on erroneous claim construction and remanded the case.  On remand, the district court retried both the invalidity and infringement issues, and granted Photoscribe’s motions for summary judgment of invalidity and for relief from the prior judgment under Rule 60(b) while denying LK’s motion for summary judgment of infringement.  LK again appealed the district court’s ruling.

The Federal Circuit, in the second appeal, reversed the grant of relief under Rule 60(b) and vacated the finding of invalidity, with instructions to the district court to reinstate the original judgment of non-invalidity.  The court concluded that the district court erred by allowing Photoscribe to address validity on remand despite its failure to file a cross-appeal from the adverse final judgment on validity in the original trial.  The court also concluded that under Second Circuit precedent, Rule 60(b) could not provide the relief granted by the district court.  The court then remanded the case again, with instructions for the district court to assess infringement under the construction the Federal Circuit had set forth in the prior appeal. 

 

Judge Dyk dissented in the opinion, arguing that the inconsistency of allowing the patentee to assert infringement based on a broad claim construction while defending against invalidity based on a narrower claim construction should be alleviated by Rule 60(b), notwithstanding the fact that Photoscribe did not appeal the original judgment that the asserted claims were not invalid. 

 

 

·         In Aspex Eyewear, Inc. v. Zenni Optical LLC, the Federal Circuit affirmed a decision by the US District Court for the Southern District of Florida holding that Aspex was collaterally estopped from pursuing the suit against Zenni based on earlier litigation between Aspex and Altair Eyewear, Inc. for infringement of the same patents.  The previous Altair litigation involved the same three patents, U.S. Patents No. 5,737,054 (the ’054 patent), No. 6,012,811 (the ’811 patent), and No. 6,092,896 (the ’896 patent), with many of the same claims asserted.  The district court in the Altair litigation held that the ’811 and ’896 patents were not infringed, and the asserted claim of the ’054 patent was invalid for obviousness.  The district court’s rulings were affirmed by the Federal Circuit. 

The district court applied the Altair rulings to the issues in the suit against Zenni, holding that the accused products were materially indistinguishable and the previous decisions settled the question of whether the accused Zenni product could infringe the asserted patents, and Aspex was therefore collaterally estopped from bringing suit against Zenni.  Aspex appealed the district court’s decision, arguing that the issues at stake were not identical because the claim terms that were construed and applied in the Altair litigation were not the same as the claim terms requiring construction in the Zenni suit. The Federal Circuit concluded that every claim asserted against Zenni contained the same limitation, in the same context, that was previously determined to be dispositive of non-infringement.  As a result, even though some of the claims asserted against Zenni were not construed of applied, this did not create a new issue to defeat preclusion.  The court further determined that Aspex had a full and fair opportunity to litigate the asserted patents, and the selection of additional claims for litigation and additional terms for construction could not override the holding of non-infringement.

MVS Filewrapper® Blog: U.S. Supreme Court Addresses Jurisdiction In Patent Related Case

In an unanimous decision in Gunn v. Minton, the United States Supreme Court clarified:  (1) 28 U.S.C. § 1338(a) does not necessarily deprive state courts of subject matter jurisdiction for cases dealing with patent law, such as a legal malpractice claim asserted against an attorney representing someone in patent litigation; and (2) a state-based malpractice claim asserted a patent attorney does not necessarily evoke federal subject matter jurisdiction. 

Gunn represented Minton in a patent infringement suit.  During that suit Minton’s patent was held invalid as violating the “on sale” bar in 35 U.S.C. § 102(b) for leasing the subject matter of the patent more than one year prior to the date of the patent application.  Minton argued, in a motion for reconsideration, that the lease was part of testing and fit within the experimental use exception to the on sale bar.  The district court denied the motion and the Court of Appeals for the Federal Circuit affirmed the district court’s ruling.  Subsequently, Minton sued his attorneys for legal malpractice claiming that they failed to timely raise the experimental use argument, which resulted in the improper invalidation of his patent and loss of the patent infringement lawsuit.  This malpractice lawsuit was brought in Texas state court.  The attorneys that represented Minton in the patent infringement suit argued that regardless of the timing of the experimental use argument, it would have failed.  The Texas trial court agreed.  Minton appealed the ruling to the Texas Supreme Court.  On appeal Minton argued that the Texas court did not have proper subject matter jurisdiction because this claim properly fits under federal question jurisdiction pursuant to 28 U.S.C. § 1338(a), which provides exclusive federal jurisdiction thereby depriving state courts of jurisdiction.  The Texas Supreme Court ruled in favor of Minton’s argument and Gunn appealed the holding to the United States Supreme Court.

The United States Supreme Court held that § 1338(a) does not deprive state courts of subject matter jurisdiction over the malpractice claim because federal law did not create the cause of action.  Section 1338(a) only deprives state court jurisdiction where the cause of action is created by federal law.  Specifically, § 1338(a) states, “No state Court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents . . . .”  This cause of action, however, does not arise under the Patent Act; rather it is a state legal malpractice claim based on previous litigation arising under the Patent Act.  To determine whether federal jurisdiction would be proper at all the United States Supreme Court relied on its precedent Grable & Sons Metal and Prods., Inc. v. Darue Eng’g & Mfg. to determine whether a federal issue is actually disputed.  Grable provides four prongs that must each be met for federal jurisdiction to be proper over a state law claim.  The federal issue must be:  (1) necessarily raised, (2) actu­ally disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state bal­ance approved by Congress.  Slip. op. at p. 6 (citing Grable, 545 U.S. 308, 314 (2005)).  The Supreme Court held that Minton met the first two prongs, but failed on the third and fourth.  The Supreme Court’s analysis of the third prong determined that it did not matter how the state court handled the hypothetical questions related to the timing of the experimental use argument because either way it would not change the result of the actual patent litigation.  With respect to the fourth prong, the Court held that permitting state courts to engage in “a hypothetical patent issue” for the purpose of resolving a state legal malpractice claim does not disrupt the balance between state and federal responsibilities.  Id. at p. 12.  Moreover, the Court noted that states “have ‘a special responsibility for maintaining standards among members of the licensed professions.’”  Id. (quotation omitted).  The Court's conclusion was that no federal subject matter jurisdiction existed under 28 U.S.C. § 1338(a) and that state jurisdiction would be proper to handle this claim.  Therefore, the Texas Supreme Court's ruling was reversed.

MVS Filewrapper® Blog: Federal Circuit Addresses Subject Matter Jurisdiction in Patent-Related Cases

In Semiconductor Energy Lab. Co., Ltd. v. Yujiro Nagata, the Federal Circuit weighed in on federal subject matter jurisdiction and provided two important reminders:

(1)       Just because a cause of action originates from a patent, standards in the patent statute, or even from other patent litigation, it is the present cause of action and claims that dictate whether subject matter jurisdiction is proper; and

(2)       Subject matter jurisdiction, in this case federal question, must be sufficiently pled.

The background of this case is as follows:  Semiconductor Energy Laboratory (“SEL”) owns U.S. Patent 6,900,463 (“the ’463 patent”).  Dr. Yujiro Nagata (“Dr. Nagata”) is a named co-inventor of the ’463 patent.  Dr. Nagata assigned his rights in any applications and patents related to the ’463 patent to SEL’s founder in 1991.  He later signed a substitute Declaration and Assignment of those applications and patents.  Dr. Nagata assisted SEL in a patent infringement lawsuit during the span of 2002 and 2003. 

SEL sued Samsung for infringement of the ’463 patent in 2009.  Dr. Nagata was contacted by Samsung to serve as a fact witness, which he agreed to do.  Subsequently, SEL contacted Dr. Nagata assuming that he would cooperate with them during the litigation, as he had previously done.   During the litigation, Dr. Nagata testified that he did not sign the 1991 Declarations and Assignments, but that his signature was forged.  Samsung then argued that the ’463 patent was unenforceable because of inequitable conduct.  Due to Dr. Nagata’s testimony the lawsuit was settled for less money than SEL otherwise would have considered.

SEL went on to sue Dr. Nagata in federal court, with five claims:  (1) Declaratory Judgment – Violation of Federal Patent Law; (2) Declaratory Judgment – Anticipatory Breach of Contract; (3) Slander of Title; (4) Quiet Title; and (5) Unjust Enrichment.  SEL asserted that the claim for declaratory judgment of violation of federal patent law was a federal question—one of the two bases for federal subject matter jurisdiction—and sought supplemental jurisdiction for the other causes of action.  Dr. Nagata moved to have the case dismissed for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1).  The district court granted the motion and dismissed the case with prejudice.  SEL appealed. 

In order to invoke federal subject matter jurisdiction under federal question, the “complaint must either plead a federal cause of action or necessarily implicate a substantial issue of federal law.”  SEL v. Nagata, Slip op., at p. 5.  SEL’s argument in support of its “Declaratory Judgment – Violation of Federal Patent Law” claim was based on the doctrine of assignor estoppel.  The Federal Circuit summarized the doctrine of assignor estoppel as, “an equitable doctrine that prohibits an assignor of a patent or patent application, or one in privity with him, from attacking the validity of that patent when he is sued for infringement by the assignee.”  Id. at p. 6.  SEL argued that the doctrine should be extended to apply not only as a defense limiting arguments by assignors, but offensively to estop assignees from undermining the validity of a patent as well.  The Federal Circuit went on to note SEL did not plead or offer any precedent establishing that assignor estoppel is a federal cause of action.  As such, the Court concluded,

SEL thus effectively invites us to create a new federal cause of action recognizing a supposed violation of the assignor estoppel doctrine under the Declaratory Judgment Act. . . .  Despite SEL’s contentions, assignor estoppel is a form of estoppel, and with rare exception, estoppel is a shield; it is an affirmative defense, not a claim for relief on its own.

Id. at p. 7 (citations omitted).  In light of this, the Court held that the doctrine of assignor estoppel as applied to patent law was not at issue in this case, since here it was the assignee, Dr. Nagata, who was undermining the validity of the patent.  The court held that the underlying dispute in this case was an evidentiary one in the original case and the proper remedy were through the laws of evidence that permit impeachment and other methods of countering the credibility of a witness.  Therefore, the district court’s dismissal of the case was affirmed. 

This case raises two important points to consider when contemplating litigation.  The first is that the present cause of action and claims dictate whether subject matter jurisdiction is proper, despite the fact that the dispute may have evolved from the patent statute or even patent litigation.  The second is that the plaintiff’s complaint controls the litigation, or lack thereof when the case is dismissed under FRCP 12(b)(1).  In this case, this meant that although there was arguably a basis to seek extension of a federal law doctrine, the insufficiency of the pleadings precluded the federal court from fully addressing the issue.

MVS Filewrapper® Blog: New and Useful - January 31, 2013

·       In Soverain Software LLC v. Newegg Inc. the Federal Circuit vacated in part and reversed in part an Eastern District of Texas decision finding Newegg Inc. liable for infringement of U.S. Patent Nos. 5,715,314, 5,909,492, and 7,272,639, all relating to electronic commerce.  The Federal Circuit offered clarifying insight on the obviousness doctrine.  The background facts are as follows:  Soverain Software purchased three software patents through bankruptcy proceedings and then proceeded to sue seven different entities for infringing the patents.  Six of the defendants settled and entered paid up license agreements with Soverain.  The seventh defendant, Newegg, refused to settle and argued that the asserted patents are all invalid and even if valid, Newegg’s system is different and non-infringing.  At trial, the district court refused to permit Newegg to present its obviousness argument to the jury and ruled that the patents were valid as a matter of law.  The jury found that Newegg had infringed two of the patents but not the third; the district court, however, entered judgment as a matter of law that Newegg infringed the third patent.  Newegg appealed and the Federal Circuit found all three patents obvious.  The federal circuit had three major discussion points:  (1) each element of the disputed claims was found in the prior art, (2) combining those elements would be obvious to one of skill in the art, and (3) licenses entered in settlement to a lawsuit do not constitute evidence of commercial success. 

 

·       In Rexnord Industries, LLC v. Kappos the Federal Circuit reversed a BPAI decision holding claims for a mechanical conveyor belt patentable.  The patent in question was asserted by Habasit Belting, Inc. against Rexnord Industries in an infringement suit in Delaware district court.  Rexnord filed a request for inter partes reexamination.  The examiner in the reexamination found all of the claims to be unpatentable for anticipation or obviousness. Habasit appealed the examiner’s findings, and the BPAI reversed, concluding that the claims of the patent were not anticipated by any of the references cited in the reexamination, and were unobvious over the cited references.  Rexnord appealed the BPAI decision to the Federal Circuit, arguing that the BPAI erroneously refused to review all of the arguments that Rexnord had presented as grounds for unpatentability.  The PTO countered that the BPAI only needed to consider the issue raised by Habasit on appeal, and had no obligation to consider other grounds that had been presented during reexamination, relying on a BPAI rule that “bars the presentation of new arguments outside appellant’s opening brief.”  The Federal Circuit noted that Rexnord was not the appellant before the BPAI since Habasit appealed the examiner’s decision, and concluded that the alternative bases for obviousness raised in the reexamination were properly raised on appeal to the Federal Circuit because they were fully raised in the reexamination and were not an issue for patentability until after the Board reversed the examiner.  The court then found the claims obvious on these additional grounds.

       

·       In Hall v. Bed Bath & Beyond, the Federal Circuit affirmed a Southern District of New Your district court’s dismissal of counts against Bed Bath & Beyond (BB&B) executives and counterclaims filed by BB&B, but concluded that the district court’s dismissal of Hall’s design patent infringement, unfair competition, and misappropriation claims for failure to state a claim on which relief can be granted under Federal Rule of Civil Procedure 12(b)(6).  BB&B argued in its motion to dismiss, and the district court agreed, that the complaint was insufficient because if failed to include any claim construction, but the Federal Circuit held the complaint met the requirements for pleading design patent infringement previously set out by the court in Phonometrics, Inc. v. Hospitality Franchise Systems, Inc.  Specifically, the court found the complaint (i) alleged ownership of the patent, (ii) named each defendant, (iii) cited the patent that was allegedly infringed, (iv) stated the means by which the defendant allegedly infringed, and (v) pointed to the sections of the patent law invoked, and in doing so met its burden to withstand a motion to dismiss under Rule 12(b)(6), Twombly and Iqbal. 

 

·       In LG Display Co. v. Obayashi Seikou Co., 2013 U.S. Dist. LEXIS 10785 (D.D.C. 2013) The district court for the District of Columbia issued a ruling in a case between LG and Obayashi Seikou Co., LTD that goes back nearly a decade, centering on LG’s allegations that a former employee stole proprietary information and passed it along to Obayashi Seikou Co., who then obtained several patents on the technology.  Prior to the U.S. litigation, the parties had entered into a settlement agreement, and after the settlement failed, litigated the settlement agreement in the Korean courts.  In the Korean litigation LG secured a judgment from Korea’s highest court holding that the settlement agreement was valid, and the defendants were required to transfer their patents to LG, under the terms of the agreement.  LG then filed suit in the District of Columbia seeking recognition of the Korean judgment, as well as claiming misappropriation of trade secrets, conversion, and unjust enrichment.  The district court granted in part LG’s motion for partial summary judgment, recognizing the Korean judgment, but concluded that ownership of two related patents involved factual disputes and was not ready for summary judgment. 

New and Useful - January 23, 2013

·         In Wax v. Amazon Techs., the Federal Circuit upheld the TTAB’s denial of registration of the mark AMAZON VENTURES.  Applicant filed and intent-to-use application to register the mark for “investment management, raising venture capital for others, . . . and capital investment consultation.”  Amazon Technologies, Inc.—online retailer and owner of several AMAZON.COM marks—opposed the registration.  The TTAB concluded that Amazon Technologies, Inc. had priority in the AMAZON.COM marks, and that there was a likelihood of confusion between Amazon Technologies’ marks and those of the applicant.  The Applicant challenged the TTAB’s findings that (1) Amazon Technologies’ marks are famous, (2) the similarity of Amazon Technologies’ mark to AMAZON VENTURES, and (3) the similarity of the parties' services and channels of trade.  The Federal Circuit confirmed the TTAB’s findings, based in part on the wide latitude of protection afforded to Amazon Technologies’ on account of its fame within the buying public.  

·         The Eighth Circuit Court of Appeals affirmed a district court’s judgment and damages for Hallmark Cards, Inc. against a former employee for breach of contract and misappropriation of trade secrets.  The district court entered the jury’s award of damages in the amount of $860,000.  The Eight Circuit affirmed $735,000 of the damages as they related to breach of contract and disclosure of trade secrets, but overturned $125,000 the former employee earned in compensation from a competitor. 

·         The Federal Circuit has dismissed as moot an appeal from a patent infringement suit.  Allflex U.S.A., Inc. sued Avid Identification Systems, Inc. seeking a declaratory judgment that six of Avid’s patents were unenforceable due to inequitable conduct.  The district court granted partial summary judgment in favor of Allflex, at which time the parties entered into a settlement agreement that resolved all of the claims and issues between the parties upon payment of $6.55 million from Avid to Allflex, except for a provision that allowed Avid to appeal three specific issues.  The agreement further provided that Allflex could contest any appeal on the merits, but could not dispute the existence of a live case or controversy, and that if Avid were successful on any issue on appeal, the payment to Allflex would be reduced by $50,000.  The district court accepted the settlement agreement and entered a stipulated order of final judgment that stated the case was dismissed with prejudice with the exception of findings the court considered “final and ripe for appellate review.”  Avid then appealed to the Federal Circuit, but Allflex declined to file a brief defending the judgment of the district court. 

The Federal Circuit concluded that the appeal was moot.  Avid argued that, although the case would be moot if it were not for the $50,000 contingency payment, that payment ensured that there was a real controversy between the parties.  The court dismissed Avid’s argument, concluding that while the district court’s decision was effectively final and therefore appealable, Allflex no longer had a legally cognizable interest in any of the issues in the case, and the payment was insufficient to create any interest

·         The USPTO has announced the new fee schedule.  The changes, initiated under the Leahy-Smith America Invents Act, are set to take effect March 19, 2013.  Among the notable changes are:

o   A 75% reduction in most fees for micro entities, including Universities.

o   Increase in basic filing fee:  $1,600 (large entity); $800 (small entity); $400 (micro entity)

o   Increase in appeal fees, due in large part to a new “Appeal Forwarding Fee for Appeal in Examination or Ex Parte Reexamination Proceeding or Filing a Brief in Support of an Appeal in Inter Partes Reexamination”:  $2,800 (large entity); $1,400 (small entity); $700 (micro entity)

o   Decrease in issue fees:  $960 (large entity); $480 (small entity); $240 (micro entity)

o   Increase in maintenance fees:

§  First (3.5 years):  $1,600 (large entity); $800 (small entity); $400 (micro entity)

§  Second (7.5 years):  $3,600; $1,800; $900

§  Third (11.5 years):  $7,400; $3,700; $1,850

o   Decrease in supplemental examination fees:  $16,500 (large entity); $8,250 (small entity); $4,125 (micro entity)

The complete finalized rules are available here.

New and Useful - Janurary 14, 2013

·         The Supreme Court handed down its decision in Already, LLC v. Nike, Inc.  The Court held that Nike’s covenant not to sue Alreadyfor alleged infringement of Nike’s AIR FORCE 1 trademark—entered into after Nike had filed suit and Already had filed a counterclaim challenging the mark’s validity—rendered both Nike’s claims and Already’s counterclaims moot.  The Court held that because Already failed to show that it engages in or has sufficiently concrete plans to engage in activities that would arguably infringe Nike’s trademark yet not be covered by the covenant not to sue, its claims could not survive Nike’s motion to dismiss. 

 

·        The USPTO has issued a Request for Comments and Notice of Roundtable Events for Partnership for Enhancement of Quality of Software-Related Patents.  The notice provides two separate roundtable events with the same agendas, one occurring in Silicon Valley on Tuesday February 12, 2013, beginning at 9 a.m. and the second occurring in New York City on Wednesday, February 27, 2013 beginning at 9 a.m. (both local time).  Topics on the agenda include: (1) how to improve clarity of claim boundaries that define the scope of patent protection for claims that use functional language; (2) identification of additional topics for future discussion by the Software Partnership; and (3) opportunity for oral presentations on the Request for Comments on Preparation of Patent Applications. Written comments are requested in response to the first two discussion topics. Written comments on the third discussion topic must be submitted as directed in the forthcoming Request for Comments on Preparation of Patent Applications.  Registration for the events is requested by February 4, 2013.  For additional information see the official notice.

·       The USPTO has also extended a pilot program allowing an applicant to request a twelve-month time period to pay the search fee, the examination fee, any excess claim fees, and the surcharge (for the late submission of the search fee and the examination fee) in a nonprovisional application, under specific conditions.  The program has been extended until December 31, 2013, with the possibility of further extension.  To qualify, the applicant must satisfy the following conditions: (1) Applicant must submit a certification and request to participate in the Extended Missing Parts Pilot Program with the nonprovisional application on filing, (2) the application must be a nonprovisional utility or plant application filed within the duration of the pilot program; (3) the nonprovisional application must directly claim the benefit under 35 U.S.C. 119(e) and 37 CFR 1.78 of a prior provisional application filed within the previous twelve months (the specific reference to the provisional application must be in an application data sheet); and (4) applicant must not have filed a nonpublication request. Additional information is available here.

 

·       The Second Circuit Court of Appeals affirmed in part and remanded in part a decision by the Southern District of New York finding willful infringement on the part of a retailer for infringing the Fendi trademark by selling allegedly counterfeit Fendi-branded products.  The district court awarded $12,324,062.66 in trebled damages, prejudgment interest, costs, and attorneys' fees, including disgorgement of Ashley Reed's based on a finding of willful infringement.  The Second Circuit affirmed the district court’s finding of infringement and willfulness, but remanded for clarification of the period of disgorgement. 

 

·        The Federal Circuit has issued a new opinion on determining obviousness.  A more thourough examination of the dicision in The C.W. Zumbiel Company, Inc. v. Kappos will be available soon here at Filewrapper. 

Federal Circuit to consider en banc whether new evidence may be introduced in a section 145 action

In an order yesterday, the Federal Circuit has agreed to consider the scope of evidence to be considered in an action filed under 35 U.S.C. § 145 to obtain review of a decision of the Board of Patent Appeals and Interferences.  The case is Hyatt v. Kappos.  Specifically, the court ordered briefing on the following issues:

(a) Are there any limitations on the admissibility of evidence in section 145 proceedings? In particular—

(i) Does the Administrative Procedure Act require review on the agency record in proceedings pursuant to section 145?
(ii) Does section 145 provide for a de novo proceeding in the district court?
(iii) If section 145 does not provide for a de novo proceeding in the district court, what limitations exist on the presentation of new evidence before the district court?

(b) Did the district court properly exclude the Hyatt declaration?

In the original panel decision, the court affirmed the district court's exclusion of evidence that "should have been" raised before the Board but was not, specifically evidence relating to enablement.  Judge Moore dissented, contending Hyatt was entitled to introduce new evidence in a § 145 proceeding. 

No oral argument date has yet been set.  To read the full order granting en banc review, click here.

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