The Pitfalls of Generalized Evidence on Infringement Claims

Case: L & W, Inc. v. Shertech, Inc>., No. 06-1065, 06-1097 (Fed Cir. December 14, 2006)

The One Sentence Summary: The Federal Circuit rejected the parties' over-generalized analysis and evidence in reviewing an award of summary judgment on infringement.

What They Were Fighting About: L&W had filed a declaratory action seeking judgment that its product did not infringe Shertech’s patent for heat shields composed of metal plates separated by a “standoff.” The district court found infringement on summary judgment; the jury then rendered a special verdict finding all but one of the claims in the patent invalid. A bench trial was held on L&W’s claim for inequitable conduct, which the district court rejected.

Federal Circuit Holdings:

• The Federal Circuit first reviewed the finding that L&W’s product contained "standoffs," as described in Shertech’s patent, a term the district court had construed (without objection by the parties) as “a projection that either separates or has the potential to separate.”
  
• The Federal Circuit rejected the finding that L&W had acknowledged that embossments in its product separated the layers in the heat shields, and thus were "standoffs." That finding was partly based on an L&W patent application, but while the application identified some situations where the limitation might be met, it did not admit that the accused products had those characteristics, or would operate under the conditions discussed in the application. The Federal Circuit was unwilling to rule that this was an admission.
  
• It then reviewed evidence from Shertech's expert witness, who had testified in general terms about heat shields, and also about one L&W product. The court held that evidence did not establish infringement as a matter of law because the testimony did not refer to products with the same characteristics of the accused L&W products.
  
• The expert also analyzed an L&W product he claimed was “typical,” but this evidence was of marginal value at best, in part because he did not explain why it was typical. However, L&W had itself relied on a generalized argument to rebut the expert's argument, which the Federal Circuit found unconvincing. Had the parties not taken an all or nothing position, and instead raised claims going to specific products, the Federal Circuit observed that infringement might have been found, but it was unwilling to rule on an argument the parties themselves had not raised.
  
• Reviewing L&W’s attack on the jury verdict, the Federal Circuit, relying on Sixth Circuit precedent, held objection was waived, notwithstanding they claimed to have had only six minutes from the return of the verdict to the jury’s discharge; it also declined to apply a “plain error” exception to the waiver rule.
  
• The Federal Circuit also rejected an argument that the jury’s special verdicts were “fatally inconsistent” because it reached different conclusions on the validity of two claims that L&W argued were indistinguishable. The Federal Circuit distinguished the claims, because one required the edges of the planar sheets to be fixedly joined at the edges before being subjected to in-plane stress, while the other claim did not specify the sequence of steps. Thus the verdicts were not inconsistent.
  
• The Federal Circuit rejected an anticipation argument raised by L&W that was partly based on a patent for a heat shield in Jeeps that was bent after the sheet edges were hemmed, distinguishing that patent, in part, because it described sheets there were scored, so that the bending did not necessarily cause stress. Shertech's patent required that the metal plates be stressed.
  
• Finally, the Federal Circuit rejected L&W’s inequitable conduct argument, finding no persuasive evidence warranting a finding of error in the district court’s conclusion that there was an absence of intent to deceive, a necessary element of inequitable conduct.
  
  

Click here to read more.

Schizophrenia Drug Patent Held to Be Valid and Infringed

Case: Eli Lilly & Co. v. Zenith Goldline Pharms., Inc. (12/26/06 - Fed. Cir. No. 05-1396, 05-1429, 05-1430)

The One Sentence Summary: A drug patent was not anticipated, obvious or subject to a public use bar and the applicant did not commit inequitable conduct.


What They Were Fighting About: Plaintiff Eli Lilly had a patent for using olanzapine to treat schizophrenia. Plaintiff sold the drug under the trademark Zyprexa. Defendants filed an ANDA to market a generic. After a trial, the district court found the patent valid and infringed.

Federal Circuit Holdings:

• The district court correctly found that the claimed invention was not anticipated by a prior art article that disclosed millions of potential compounds.
• The prior art did not make the substitution of a hydrogen atom for a halogen obvious where the prior art taught away from non-halogens. The structural similarity of substituting hydrogen for fluorine was not sufficient for obviousness where the properties of the halogen were thought to be important in the prior art.
• Plaintiff established secondary considerations of non-obviousness of long-felt need, commercial success, awards for the invention, and unexpected results.
• The clinical trials by plaintiff were not a public use establishing a section 102(b) bar. Plaintiff restricted access to the trials, and had security. Visitors to the volunteers did not make the trials public. Moreover, even public experimentation with an invention does not create a 102(b) bar.
• The district court did not err in finding no inequitable conduct by patentee.
  
  

Click here to read more.

Prosecution History of Related Patents Did Not Disclaim Scope Where Language at Issue Differed

Case: Ventana Med. Sys., Inc. v. Biogenex Labs., Inc., No. 06-1074 (Fed. Cir. 12/29/06)

The One Sentence Summary: The district court erred in claim construction by importing limits from preferred embodiments and by finding prosecution history estoppel from the history of related patents with different claim language.


What They Were Fighting About: Plaintiff held patents for slide staining. After the district court construed the term "dispensing", the parties stipulated to non-infringement, and plaintiff appealed.

Federal Circuit Holdings:

• The district court improperly construed the claim language "dispensing" to mean direct dispensing without intermediate devices.
• The specification did not disclaim "sip and spit" dispensers by including one in the discussion of prior art devices. General statements in the background about the advantages of the invention over the prior art were not a disclaimer of all features of the prior art.
• The claims could not be limited to the preferred embodiments.
• Each claim did not need to include each advantage of the embodiments shown in the specification.
• Prosecution history disclaimer from a predecessor application did not apply to different language used in a subsequent application.
• From the prosecution history, the examiner understood that the term dispensing was more broad than the direct dispensing shown in the specification.
• Prosecution history statements from a continuation application can inform the meaning of an earlier patent, but in this case the language used in the continuation was more limited than the term "dispensing" used in the claims at issue.
• The filing of a terminal disclaimer did not create an estoppel that the scope of the claims was the same as the continuation.
  
  

Click here to read more.

Reasonable Apprehension of Suit for DJ Action Existed Where Patentee Had Sued Before on Related Patents

Case: Plumtree Software, Inc. v. Datamize, LLC, No. 06-1017 (Fed. Cir. 12/18/06)


The One Sentence Summary: Declaratory judgment jurisdiction was proper, but a contract for providing a software system did not establish the presence of an on-sale bar where the contract did not clearly require use of the patented method.


What They Were Fighting About: This declaratory judgment action involved patents for methods of combining computer applications under a common interface. The district court held that it had jurisdiction, and granted summary judgment on the on-sale bar due to the sale of a ski kiosk using the software.

Federal Circuit Holdings:

• Declaratory judgment jurisdiction was proper. The plaintiff had a reasonable apprehension of being sued for patent infringement where it had already been sued for infringement of one of three related patents, and the patentee had shown a willingness to protect its technology.
• Issues of fact prevented summary judgment on the on-sale bar defense of 35 U.S.C. § 102(b) under the test in Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998).
• The panel first considered whether there was a commercial offer to perform the patented method before the critical date. Here, questions of fact existed because the contract was unclear as to whether it bound patentee to perform the contract using the patented software method.
• Questions of fact existed as to whether all of the steps of the patented method were used for a commercial purpose before the critical date.
  
  

Click here to read more.

Model Train Trade Secrets Verdict Falls Because of Improper "Expert" Comparison

Case: Mike's Train House v. Lionel, L.L.C. (12/14/06 - 6th Cir. No. 05-1095)

The One Sentence Summary: An "expert" should not have been allowed to testify about comparisons of trade secrets using a method invented for the litigation.


What They Were Fighting About: The jury awarded trade secret damages for misappropriation of trade secrets regarding model train designs.

Sixth Circuit Holdings:

• District court failed in its duty under Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993), to be a gate-keeper for evidence by allowing expert testimony as to copying where the methodology of comparison was flawed and invented for the litigation.
• An expert should not have been allowed to testify about hearsay opinions of another expert who did not testify at trial.
• Admission of the expert testimony was not harmless error.
• Plaintiff was not required to identify the specific elements of the design drawings at issue that constituted trade secrets because the combination of elements in the drawings were trade secrets under Michigan law.
• The district court properly admitted documents about Korean judgments and investigations under exceptions to the hearsay rules.
• A Michigan law prohibiting joint and several liability for tort actions applied to the award of damages on the trade secret claim.
• The jury should not have been allowed to award unjust enrichment damages that were duplicative of lost profit damages.
  
  

Click here to read more.

Effectiveness Not Required For Anticipation When Prior Art Disclosed Treatment By The Patented Compound

Case: Impax Labs., Inc. v. Aventis Pharm. Inc., No. 05-1313 (Fed. Cir. 11/20/06)

The One Sentence Summary: Anticipation by prior art can occur if the invention is enabled even though the prior art does not disclose the effectiveness of the invention and in fact teaches away from the invention.


What They Were Fighting About: Patentee claimed that the accused infringer infringed a patent for the use of riluzole for treating Lou Gehrig's disease (ALS). After a bench trial the court rejected defenses of inequitable conduct and anticipation.

Federal Circuit Holdings:

• The panel affirmed the district court's holding that there was no inequitable conduct. By presenting evidence that the patented compound was more effective than two other compounds, the applicant did not need to present evidence as to other compounds not discussed. Moreover, as to these other compounds, the district court correctly found that they were not material because even though some of these compounds exhibited one of the two improvements claimed for the patented compound, neither exhibited improvement in all of the areas claimed for the patented compound.
• There was no error by the district court in finding no intent to deceive in its inequitable conduct analysis.
• The district court erred in finding that a prior art patent did not anticipate because the earlier patent had not claimed that the patented compound riluzole was effective in treating ALS. The panel noted that anticipation under 35 U.S.C. § 102(b) requires only that the prior art enable a person of ordinary skill in the art to carry out the invention. There is no requirement that the prior art show the usefulness or effectiveness of the invention. The court remanded for determination as to whether the prior art enabled the invention.
• The panel affirmed the district court in a finding that an earlier application that disclosed hundreds of compounds did not anticipate because it did not allow one of skill in the art to envision all of the members of the class of compounds.
• Prior art can anticipate even if it teaches away from the invention.
  

Click here to read more.

Employer Granted Immunity Under the Communications Decency Act for Claims Arising from an Employee’s Threatening Emails and Postings

Case: Delfino v. Agilent Technologies, Inc., No. 1-03-CV-001573 (Cal. Ct. App. 6th Dist. 12/14/2006)

The One Sentence Summary: Recognizing that the federal Communications Decency Act of 1996, 47 U.S.C. § 230 (“CDA”) provides broad immunity to a “provider...of an interactive computer service,” the appellate court held that an employer was immune from state tort claims arising from the wrongful actions of an employee.

What They Were Fighting About: An employee of Agilent Technologies, Inc. (“Agilent”) pleaded guilty to sending threatening emails over the internet and posting threatening messages on internet bulletin boards. The plaintiffs were the victims of the employee’s internet diatribes. They sued Agilent for infliction of emotional distress, arguing that the employee used the employer’s computers to post his unlawful communications. Agilent moved for summary judgment, arguing that it was immune from state law claims pursuant to section 230 of the CDA, which grants immunity to “interactive computer service” providers or users.

Appellate Court Holdings:

• The court held that Agilent successfully asserted the three elements necessary to claim immunity under section 230 of the CDA. First, the court concluded that an employer “that provides its employees with Internet access through the company’s internal computer system” is a “provider or user of an interactive computer service” within the meaning of the CDA. Second, given that the plaintiffs were suing because of the employee’s cyberthreats it was clear that they sought to treat Agilent “as a publisher or speaker.” Finally, the information at issue was clearly “provided by another information content provider” (i.e., the employee) and not Agilent. Accordingly, Agilent was immune from the plaintiffs’ tort claims.
• Even though the court awarded Agilent immunity, it nonetheless addressed the merits of the plaintiffs’ claim for intentional infliction of emotional distress. As a threshold issue, the court determined that the employee’s conduct was “extreme and outrageous.” Liability, however, did not attach to his employer because (1) the employer did not ratify the employee’s actions, (2) the employee’s actions fell well outside the scope of his employment, and (3) Agilent did not owe a duty to the plaintiffs.
  
  

Click here to read more.

When Is a Cone a Sphere, and Other Applications of the Doctrine of Equivalents

Case: Depuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., No. 05-1311, 05-1335 (Fed. Cir. 11/20/06)

The One Sentence Summary: The Federal Circuit applied the doctrine of equivalents with the "all elements rule," to find, inter alia, that the district court erroneously concluded that there was no question of fact as to whether a cylindrical-conical shape could be equivalent to a spherically-shaped element claimed in a patent for surgical screws, and reversed a grant of summary judgment that had found no infringement.

What They Were Fighting About: At issue were the district court's application of the doctrine of equivalents, and in particular the "all elements rule," in determining whether Medtronic's products infringed Depuy's patent for pedicle screws, used to stabilize spinal column segments during surgery.

Federal Circuit Holdings:

• Summary judgment finding no infringement was reversed as to two groups of Medtronic's screw models, with the Federal Circuit disagreeing with the district court's application of the doctrine of equivalents and the "all elements rule," but sustained as to other models. Medtronic's JMOL was also denied on a jury finding of infringement with respect to one model, and with respect to lost profits.
  
• First, the court agreed there was no literal infringment for two groups of screw models, given that Medtronic's models used a conical, rather than spherical-shape in the receiver member of the device, and in doing so rejected DePuy's argument that because a thin slice of sphere appears conical, the Medtronic product, which used a conical shape, could be viewed as possessing a spherical shape that appeared conical in profile.
  
• The court then re-analyzed the issue using the doctrine of equivalents. The district court, relying on Tronzo v. Biomet, Inc., 156 F.3d. 1154 (Fed. Cir. 1998), had held that under the "all elements rule," it could not find a conical shape equivalent to a spherical shape without reading the limitation out of the claim. The Federal Circuit disagreed. First, the "all elements rule" cannot be read to hold that the doctrine of equivalents is foreclosed whenever a claim limitation does not literally read on an element of the accused device, because that rule would swallow the doctrine of equivalents entirely. Then, observing that in Tronzo, the patentee's theory of equivalence was that any shape would be equivalent to the conical limitation (contrary to clear indications in the written description), the court distinguished DePuy's evidence. Its experts had identified shapes that would not have been equivalent, and presented particularized declarations demonstrating that a specific element of Medtronic's device was insubstantially different from the corresponding limitation. A reasonable jury could therefore find the devices equivalent.
  
• Another issue was a limitation requring that the screw head "pressed against the hollow spherically-shaped portion," and whether it was enough that the head rested against the edge of the equivalent receiver, or whether it must rest against the actual spherically-shaped portion equivalent. Looking to dependant claims in the patent, which specified screw heads that would be substantially equal to the radii of the receiver, the court concluded that the independent claim must be broad enough to read a device with components of unequal radii that pressed against each other. It further noted that there was no stated reason to exclude the edge of the receiver from the limitation, nor was there a stated reason to require a certain amount of contact, and the prosecution history provided no further guidance. Thus it adopted the broader reading of the limitation.
  
• With this broader interpretation of the "pressed against" limitation, the Federal Circuit rejected the district court's application of the function-way-result test, which had led it to find that because the Medtronic screw head merely pressed against the edge of the receiver, it did not do "substantially the same thing" as the patented device and hence the devices were not equivalent. Using the Federal Circuit's reading, the devices could be equivalent.
  
• Summary judgment finding no infringement was affirmed as to another class of screws, where the claim included a functional limitation that required an opening through which a screw could be inserted. Medtronic's product had a bore into which the screw fit, but the screw could not go through the opening; Depuy had argued the opening limitation was met by a snap ring, but the ring was located next to the bore, not opposite it, and therefore did not match the limitation requiring that there be an aperature opposite the bore through which the screw would fit. Thus, the functional restriction of the opening limitation was not met, and as a matter of law this group of screw models did not infringe.
  
• A final argument Medtronic raised was that a claim limitation requiring a "compressed member" should have been construed as a means-plus-function limitation, and under that reading none of its screw models would infringe. The Federal Circuit rejected that argument, first noting that the claim language did not include the term "means," and citing prior caselaw holding that this established a strong, albeit rebuttable, presumption that the limitation is not means-plus-function. Moreover, means-plus-function claims apply only to purely functional limitations, where the structure performing the function is not provided. Given that the limitation at issue did not use the term "means," and the claims and specification unmistakably established a reference to a particular structure, the Federal Circuit found the presumption was not rebutted, rejecting Medtronic's argument.
  
• An argument Medtronic advanced on cross-appeal, related to denial of a JMOL motion that lost profits were not available because the plaintiff was not an exclusive licensee for the entire period at issue, was reviewed by the Federal Circuit as a question of law, contrary to Depuy's assertion that the license rights involved a factual question. In so finding, the Federal Circuit reasoned that the underlying facts were not in dispute. The district court had allowed lost profits prior to the plaintiff becoming an exclusive licensee, because it was "closely tied" via a joint venture to the manufacturer. The Federal Circuit applied state law in reviewing the license agreement, and concluded there was an exclusive license during the relevant time period. It thus affirmed denial of JMOL on this issue.
  
  

Click here to read more.

Silent Patent Holders May Deceive Standard Setting Organizations

Case: In re Rambus, Inc., Federal Trade Commission Docket No. 9302 (August 2, 2006)

The One Sentence Summary: By unanimous vote, the FTC determined that computer technology developer Rambus, Inc. unlawfully monopolized the markets for four computer memory technologies that were incorporated into industry standards for DRAM (dynamic random access memory chips).


FTC Findings:

• Rambus engaged in a course of deceptive conduct through its participation in an industry-wide standard-setting organization, the Joint Electron Device Engineering Council (JEDEC). JEDEC sought to avoid the incorporation of patented technologies into its standards, or, at a minimum, to ensure that any patented technologies that were incorporated would be licensed royalty-free or on reasonable and non-discriminatory terms. Rambus participated in JEDEC's DRAM standard-setting activities for more than four years without disclosing its possession and development of patents and patent applications involving the technologies adopted into the standards.
• Rambus' conduct constituted deception under Section 5 of the FTC Act, exclusionary conduct under Section 2 of the Sherman Act, and contributed significantly to Rambus' acquisition of monopoly power with regard to four DRAM technologies.
• Rambus' claim that the superiority of its patented technologies was responsible for their inclusion in JEDEC's standards was not established by the record.
• The FTC requested additional briefing before exercising its remedial powers.
  
  

Click here to read more.

Misuse of Audi Trademarks Leads To Injunction And Attorneys' Fees Award

Case: Audi AG v. D'Amato (11/27/06 - 6th Cir. No. 05-2359)


The One Sentence Summary: Injunctive relief and attorneys' fees were affirmed against a defendant who used Audi's trademarks on a website at audisport.com.


What They Were Fighting About: The district court granted summary judgment against defendant in favor of Audi on claims of trademark infringement, trademark dilution, false designation of origin and cyber-piracy in connection with defendant's operation of a website called audisport.com.

Sixth Circuit Holdings:

• The district court properly granted summary judgment on the trademark infringement claim due to defendant's use of the Audi mark and Audi logo.
• The fact that Audi had previously stopped using the trademark Audi Sport did not allow defendant to use that as his domain name, particularly where he was using replicas of the Audi trademarks on that site.
• With respect to actual confusion, the court noted that an experienced graphic designer had questioned whether defendant had the right to use the Audi trademarks. This indicated that a consumer could be confused as was the graphic designer.
• Because both plaintiff and defendant used the Internet for marketing goods bearing the Audi trademark, there was more likelihood of confusion.
• Confusion was also likely because consumers on the Internet were unlikely to employ much care in selecting the goods so that they would realize the source of the goods.
• The evidence that defendant had requested permission unsuccessfully from Volkswagen to market Audi merchandise on the website indicated that he intentionally used the plaintiff's trademarks.
• Mass e-mails from Audi of press releases did not constitute a contract allowing defendant to use the Audi marks.
• Defendant did not have the right to use the Audi marks even though an Audi dealer had worked with him in setting up the infringing website. The dealer did not have authority to grant permission to use the Audi marks.
• A disclaimer on the website stating that the page was not associated with Audi was not a defense. There would still be initial interest confusion by a consumer arriving at the site even if he later read the disclaimer. Moreover, the site incorrectly stated that there was a signed agreement with Audi allowing use of the site which negated that statement in the disclaimer.
• The panel rejected the claim that the site was non-commercial because it merely included links to other sites. Because defendant had sold advertising on the site and had provided links to other sites where merchandise could be purchased, there was commercial use of the trademarks.
• Defendant was properly found to have diluted the famous Audi trademark. The use of identical trademarks on the goods and services on the website satisfied the factor of showing dilution of the distinctive quality of the mark.
• The defendant also violated the Anti-Cyber Squatting Consumer Protection Act (ACPA). 15 U.S.C. §1125(d)(1)(A). Defendant did not succeed in showing that he had reasonable grounds to believe that he had authority to use the trademarks. The receipt of the press releases from Audi could not reasonably be interpreted as authority to use the trademarks.
• The district court properly granted injunctive relief against defendant from further use of the plaintiff's trademark.
• The district court properly awarded attorneys' fees to plaintiff under 15 U.S.C. § 1117 (a) upon finding that this was an exceptional case justifying an award of attorneys' fees. There was no need for Audi to show monetary damages. It prevailed by receiving injunctive relief. The infringement was malicious, fraudulent, willful or deliberate because there was a showing that defendant knew that permission was required to use the marks yet he proceeded without that permission. Moreover, defendant's alteration of the websites after receiving cease and desist letters did not absolve him of his wrong doing and prevent an award of attorneys' fees.
  
  

Click here to read more.

Webinar Recording on Tips for Surviving and Winning Complex Litigation

Here is a link to a recording of a December 8, 2006 presentation by Michael F. Kelleher entitled "Sipping From the Fire Hose - Techniques for Surviving and Winning Complex Litigation."

Using examples from a recent patent infringement case successfully defended by Folger Levin & Kahn LLP, the webinar discusses techniques for finding and retrieving critical evidence in litigation using LexisNexis' CaseMap database and other technology tools.


The outline of the presentation is available at this link.

Click here to read more.

No Federal Circuit Jurisdiction over Unjust Enrichment Claim Based on Defense of Patent Preemption

Case: Thompson v. Microsoft Corp., No. 06-1073 (Fed Cir. 12/8/06)

The One Sentence Summary: The Federal Circuit found patent jurisdiction lacking, even though Microsoft raised patent preemption as a defense, because the unjust enrichment claim as pled did not necessarily involve patent law.

What They Were Fighting About: Plaintiff claimed Microsoft used code for programmable folders, which he had developed (and shared with Microsoft), without his consent, and brought suit on a single claim for unjust enrichment; Microsoft claimed the suit was preempted by patent law. The Federal Circuit held it lacked jurisdiction to hear the appeal, after the district court granted summary judgment for Microsoft.

Federal Circuit Holdings:

• The district court had granted summary judgment for Microsoft, finding merit in its claim that Plaintiff's claim for unjust enrichment was preempted by patent law.
  
• On review, the Federal Circuit first addressed whether it even had jurisdiction over the appeal under 28 U.S.C. section 1295(a)(1), which creates jurisdiction over any civil action arising under any Act of Congress relating to patents. On its face, the complaint was merely for unjust enrichment under Michigan law. Therefore, the Court looked to whether patent law was a necessary element of the unjust enrichment claim.
  
• While Microsoft had filed a patent application that plaintiff claimed was based on his invention, the Federal Circuit reasoned that was not a necessary element of the claim, because the unjust enrichment was based on Microsoft's use, not just patenting, of plaintiff's alleged proprietary information. Thus, plaintiff's claim could stand without any patent allegations.
  
• Moreover, because inventorship was not a necessary element of the claim, and because a claim supported by alternative theories does not support patent jurisdiction unless patent law is essential to each theory (which here it was not), jurisdiction did not arise under patent law.
  
• Noting that jurisdiction is not conferred merely because the defendant asserts a defense based on patent law, the Federal Circuit next held that jurisdiction was not created merely because Microsoft claimed the unjust enrichment law was preempted by patent law.
  
• Based on these holdings, the Federal Circuit found it lacked jurisdiction over the appeal, and ordered the case transferred to the Sixth Circuit.
  
  

Click here to read more.

Complex Litigation Webinar Discussing Patent Infringement Case, December 8, 2006 at 11 a.m. PST

On December 8, 2006 at 11:00 a.m. PST, Michael Kelleher of Folger Levin & Kahn will offer a free webinar on "Techniques for Surviving and Winning Complex Litigation."

The webinar will cover techniques used to successfully defend a recent patent infringement case. The webinar is sponsored by LexisNexis. Registration for the webinar is available at this link.

Description of Webinar: You experience too much information coming in too quickly, you want to keep attorneys' fees at a minimum to keep your client happy and you know any system that is too complicated will be ignored and abandoned. Mr. Kelleher will share his techniques for managing complex litigation.

Click here to read more.

Institute for Corporate Counsel Panel Addresses IP Challenges on the Horizon

On December 5, 2006, a panel addressed the topic of “I Will Survive: IP Challenges on the Horizon” at the USC 25th Anniversary Institute for Corporate Counsel. The panelists were David Aronoff (Leopold, Petrich & Smith, PC), James M. Lichtman (Senior Vice President, Litigation, NBC Universal Television Group) and Louise Nemschoff (Nemschoff Law Offices).

After noting that copyright law does not protect ideas, the panel discussed how implied contract theories are often used to litigate about the submission of plot ideas. Lichtman characterized unsolicited idea claims as a major area of litigation for studios, and said that all studios use forms requiring the waiver of claims before an idea may be submitted.

Rap posses who accompany rap artists into the recording studio present another challenge. The panel discussed how everyone who contributes to a recording (including the posse) should be required to sign a work-for-hire agreement to prevent later assertion of copyright ownership on the recording.

The use of trademark law to protect non-traditional marks was another topic addressed by Lichtman. He referenced the protection of sounds such as the NBC chimes and the Aflac duck quack.

On developing technologies, the panel discussed the challenges and opportunities of new media such as You Tube. Nemschoff discussed what she called the "Googlization of Copyright Law" in which Google tries to shift the burden to copyright holders to demand takedown of infringing material. She also discussed the difficult issues for companies considering entering contracts for advertising in the virtual world of Second Life.

Click here to read more.

Boiler Plate Patent Infringement Allegations Are Basis for Rule 11 Sanctions Against Plaintiff

Case: Eon-Net, L.P. v. Flagstar Bancorp, Inc., No. C05-2123MJP (W.D. Wash. 10/04/2006)

The One Sentence Summary: Plaintiff was sanctioned under Rule 11 of the Federal Rules of Civil Procedure for having asserted and maintained frivolous claims of patent infringement in the hopes of a quick settlement.

What They Were Fighting About: Eon-Net sued Flagstar for patent infringement. At issue was an alleged similarity between Eon-Net’s ’697 Patent, which described and claimed an interface between “hard copy” documents and computer applications, and Flagstar’s website, which allowed potential customers to submit loan application documents online. Flagstar maintained that Eon-Net’s action was without merit and sought sanctions pursuant to Rule 11.

District Court Holdings:

• The Court found that Eon-Net failed to perform a reasonable pre-filing inquiry, thus exposing Eon-Net to Rule 11 sanctions. Specifically, Eon-Net failed to identify in its complaint the allegedly infringing technology, failed to investigate Flagstar’s products, and failed to reasonably evaluate the ’697 Patent claims.
  
• The Court granted the following sanctions against Eon-Net’s counsel: (1) reasonable attorneys’ fees and costs; and (2) service of its order on the other defendants that Eon-Net has sued for patent infringement.
  
  

Click here to read more.

Justices Express Hostility Towards Federal Circuit Test For "Obviousness" During Oral Argument

Case: KSR International Co. v. Teleflex, Inc., U.S.S.Ct. Case No. 04-1350

The One Sentence Summary: During oral argument in this dispute over whether a patent claim for a gas-pedal mechanism was invalid as obvious, several justices complained that the Federal Circuit's jurisprudence set forth an incomprehensible jargon-filled test for obviousness which benefits nobody but the patent bar.


What They Were Fighting About: As reported earlier in this Blog (see June 26, 2006 post), the Supreme Court granted certiorari in this case concerning a patent for a gas-pedal mechanism in order to resolve the question of whether the Federal Circuit has erred in holding that a claimed invention cannot be held "obvious", and thus unpatentable under 35 U.S.C. §103(a), in the absence of some proven "teaching, suggestion, or motivation' that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed." The oral argument - widely reported in the press due to Justices Scalia and Roberts' withering remarks about the `teaching, suggestion motivation' test, gives an indication that the Supreme Court may be prepared to hold that the Federal Circuit has been misapplying Section 103(a).


Oral Argument Highlights:
Click here for link to transcript.

• In response to the patent-holder lawyer's argument the Federal Circuit has recently clarified its supposedly, "nonrigid motivation, suggestion, teaching test," and made clear that "a suggestion to combine need not be found in the prior art," Justice Alito commented, "I don't quite understand the difference between that and simply asking whether it's obvious."
• Chief Justice Roberts opined that the test "adds a layer of Federal Circuit jargon that lawyers can then bandy back and forth but . . . it seems to me that it's worse than meaningless because it complicates the inquiry rather than focusing on the statute."
• Justice Scalia also appeared not to like the Federal Circuit's recent attempts to clarify the test: "I agree with the Chief Justice. It is misleading to say that the whole world is embraced within these three nouns, teaching, suggestion, or motivation, and then you define teaching, suggestion, or motivation to mean anything that renders it nonobvious. This is gobbledygook. It really is, it's irrational."
• Justice Breyer, complaining about the Federal Circuit's efforts to clarify what it means by a "motivation," said that, "though I've read it about 15 or 20 times now, I just don't understand what is meant by the term "motivation."
  
  

Click here to read more.

VC Panel Describes Intellectual Property Law As A Knob That Needs To Be Turned Down

On November 30, 2006, the VC Task Force (www.vctaskforce.com) presented a seminar for entrepreneurs in Silicon Valley on the myths and realities of intellectual property law. The panel consisted of two venture capitalists, Bill Reichert of Garage Technologies and Hank Barry of Hummer Winblad, and serial entrepreneur Bob Saul of Polymorphic DNA Technologies. The panel was moderated by David Tollen, an intellectual property lawyer at Tollen Legal. In a two hour presentation, the panel discussed intellectual property law, particularly patents, and the effect on start-up companies and investment in those companies. The general sense of the panel was expressed by Barry when he said that more intellectual property law is not always better, and that intellectual property law is a two way knob that can and should be turned down.

Barry noted two major factors that turned up the dial on intellectual property. The first was the Bayh-Dole Act which provided that universities can own and license their own intellectual property. The second factor was creation of the Federal Circuit which Barry characterized as a pro-patent court. Barry argued that in light of these developments, patents have become a net inhibitor of invention. According to Barry, the attention on patents has created an "economically uninteresting dance of intellectual property, mostly danced in the Eastern District of Texas."

Reichert told a story about a networking company that he had worked with that had spiraled out of control due to a patent dispute. He said that the company had innovative technology using open source technologies in networking. One day, a letter accusing the company of patent infringement was received. This started a chain of competing claims and counter-claims that wasted millions of dollars and froze development of the technology for years.

Saul discussed his experiences in navigating multiple overlapping patents in the area of bio-technology. Saul said that over the years, he has often spent up to 10% to 20% of his time navigating intellectual property rights. He suggested trying to identify the key patents in an area and then trying to negotiate licenses directly with the patent holders. In his experience, the patent holders are often reasonable and may not be interested in blocking the entry of a newcomer in a different niche in the industry.

The panel emphasized the need for start-ups to correctly prioritize intellectual property and to avoid spending too much time on it. A start-up should think early about potential patent rights, but the company must focus on the market and beating competitors in the market rather than in court. The panel noted that few start ups will have the ability to pursue established companies for infringement of their patents.

The panel agreed that in almost any interesting field of technology, it is impossible to get a clearance opinion that a company's technology will not infringe anyone else's patent rights. Even if such a clearance opinion were received, it would need to be updated every three months to take into account new patents. The panel noted that even if there are patents in an area, a company may wish to go forward and continue innovating and trying to patent its own innovations. Then, if a patent suit does arise down the line, there is the possibility of having a cross-licensing deal where the start up company's patents can be leveraged to allow a settlement and allow the business to proceed.

The panel observed that success in the market place will ultimately trump everything. They cited Google as an example of a company that successfully grew despite multiple patents on related technology. A company needs to keep moving and negotiating its way through conflicting patent rights as best as possible without becoming paralyzed by the existence of others’ patents.

Click here to read more.