Apologies in advance for the self promotion, but we’ve been privileged to have the opportunity to author an amicus curiae brief before the U.S. Supreme Court on two separate occasions in the last month and a half, and can’t resist sharing:
- Limelight Networks v. Akamai Technologies. A case in which the high court will look at the appropriate standard for induced infringement of a patent. Our clients, L. L. Bean and Newegg, argued that the Supreme Court should maintain the traditional legal standard for induced infringement: there can be no induced infringement if there is no single person or entity who directly infringes the patent. The companies expressed their concern that the rule announced by the en banc Federal Circuit Court of Appeals would expose retailers in particular to patent infringement lawsuits by patent assertion entities (a/k/a patent trolls) asserting inducement of computer–implemented patents by anonymous visitors to retail websites over whose conduct the retailers have no control.
- Alice Corp. v. CLS Bank. In Alice, the Supreme Court will decide under what circumstances, if any, computer–implementation of an invention makes that invention eligible to be patented. The issue is one of major concern to retailers because they increasingly face lawsuits charging them with infringement of patents allegedly covering basic features of commercial websites. The 23 leading retailers and industry organizations joining our brief argued that the high court should adopt a clear rule of early applicability: computer–implementation cannot create patentable subject matter.
Two interesting developments for any out–of–state ecommerce company or retailer who has found themselves defending a lawsuit in the Eastern District of Texas based on allegations that the operation of the company’s website infringes a patent.
The (potentially) bad news first. The Eastern District has recently instituted General Order 14–03, which sets up a “Track B” for certain patent cases by providing litigants (and the Court) with a fast–track option to patent resolution.
The General Order is sufficiently new that it is not yet up on the Eastern District’s website—but reports indicate that it would require initial disclosure of relevant licenses by the Plaintiff along with infringement contentions, and initial disclosure of relevant sales information by the Defendant. From there, Plaintiff must circulate a “good faith damages estimate.”
While certainly a useful approach in certain circumstances (and perhaps reflective of the approach already taken in many a behind–the–scenes settlement discussion of patent cases), our concern at IP Wise is with the fact that the Court may order a case to proceed under Track B, without the consent of the parties. As a practical reality, “fast tracks”—and the concomitant front–loading of legal expenses—may drive defendants to settle based not on the merits of the claim, but on the costs of litigation. Particularly when damages–related discovery is due prior to invalidity contentions.
Don’t want to be in Texas? Well, the Supreme Court’s 2014 term has placed new limitations on who may be sued where. The collective effect of Daimler AG v. Bauman and Walden v. Fiore (issued just yesterday), is to make it much tougher to sue a company in a far–off jurisdiction unless (1) the company is incorporated there, (2) the company’s principal place of business is there, or (3) the specific claim asserted against the company occurred there. We may see a raft of new motions to dismiss on personal jurisdiction grounds in the Lone Star State and elsewhere.
When you get a patent assertion letter accusing a technology supplied by someone else, your first call may be to your lawyer, but your second call is likely to your vendor. A recent case highlighted by Docket Navigator may give you pause before you pick up the phone that second time.
In a ruling—albeit tentative—in I-Flow v. Progressive Medical, a federal court in the Central District of California has said that the fact of receiving indemnification by a third party may be relevant to prove willful patent infringement. Noting that infringement liability had already been determined as to one product and remained to be determined as to another, the court concluded that evidence of indemnification “directly shows that Defendant had knowledge of the risk that it infringed the [asserted p]atent.” Thus, the general rule (Federal Rule of Evidence 411) that evidence of insurance (or its absence) is not admissible to prove liability would not apply.
In an eagerly–anticipated opinion (at least in the patent community), the Federal Circuit, sitting en banc, has reconfirmed the so–called “Cybor standard” of de novo review of claim construction, whereby the scope of a patent grant is reviewed as a matter of law.
After struggling your way—at no small expense— to a Markman hearing and a claim construction order from a district court judge interpreting the metes and bounds of the patent, that decision is revisited afresh on appeal. The result is a coin flip, as was pointed out in a concurring opinion in Cybor:
“[O]ne study shows that the plenary standard of review has produced reversal, in whole or in part, of almost 40% of all claim constructions since Markman [v. Westview Instruments, Inc., 52 F.3d 967 (Fed. Cir. 1995) (en banc)]. A reversal rate in this range reverses more than the work of numerous trial courts; it also reverses the benefits of Markman I. In fact, this reversal rate, hovering near 50%, is the worst possible. Even a rate that was much higher would provide greater certainty.”
Nonetheless, it seems the standard is here to stay, and with it, an expose of the vagaries of patent claiming.
In an article worth looking at for the cover art alone, the National Journal somewhat sensationally reports that the White House is rolling out “three new weapons to slay patent trolls.”
Patent reform is a bit of a pet project for President Obama, and the three issued Executive Orders can come as no surprise to those who’ve been aware of the White House’s interest in this particular topic. Reform efforts include:
- A joint initiative between the PTO and private industries aimed at improved accessibility and searchability of “prior art” holdings.
- More technical training to patent examiners and a full–time official at the patent office to provide free assistance to inventors needing legal representation.
We don’t post about copyrights and trademarks as often as we perhaps should, or certainly could. But every so often an article catches one’s eye that is definitely a different use of IP…
A few thoughts on a cold February day:
- Practice What You Plead in the ITC? In a recent opinion, the U.S. International Trade Commission (“ITC”) concluded that a complainant alleging the existence of a domestic industry (a jurisdictional requirement to bring a case in that forum) must show the existence of articles protected by the intellectual property right at issue—even if the domestic industry is “license–based.” This is further evidence that the ITC is taking a hard look at the use of its procedures by non–practicing entities, which are precisely the sort of “license–based” companies that will be affected by this ruling.
- Farewell, Form 18? Comment period is closing (as of February 15, 2014) on the proposed amendments to the Federal Rules of Civil Procedure from the Committee on Rules of Practice and Procedure of the Judicial Conference of the United States. We are particularly interested in the proposed elimination of the outdated and bare–bones Form 18, which sets out a mad–lib style pleading form for a patent infringement case, and does not appear to meet the Supreme Court’s test for an adequate pleading under Bell Atlantic v. Twombly (2007) and Ashcroft v. Iqbal (2009). Indeed, we had urged the reform or elimination of problematic Form 18 in a letter to the Committee sent several years ago. It appears we were not alone in viewing these pre–World War II pleading forms as a hindrance, not an aid, to federal civil litigation.