Posts Tagged ‘Supreme Court’

Supreme Court’s Stryker/Halo Decision Makes it Easier for Courts to Award Enhanced Damages In Patent Infringement Cases

Tuesday, June 14th, 2016

The recent Supreme Court decisions in the Stryker and Halo cases just made it easier for courts to award enhanced damages in patent infringement cases, discarding Seagate’s “objective recklessness” test.

The Seagate Test

In 2007, the Federal Circuit announced a test for enhanced damages whereby a plaintiff seeking enhanced damages had to show that the infringement of his patent was “willful.”  In re Seagate Technology, LLC,  497 F. 3d, 1360, 1371.  The Federal Circuit set forth a two-part test to establish such willfulness: First, “a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent,” without regard to “[t]he state of mind of the accused infringer.” Id., at 1371. This objectively defined risk is to be“determined by the record developed in the infringement proceedings.” Ibid. “Objective recklessness will not be found” at this first step if the accused infringer, during the infringement proceedings, “raised a ‘substantial question’ as to the validity or noninfringement of the patent.” That bar applied even if the defendant was unaware of the arguable defense when he acted.

Second, after establishing objective recklessness, a patentee had to show by clear and convincing evidence the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.” Seagate, 497 F. 3d, at 1371. Only when both steps were satisfied could the district court proceed to consider whether to exercise its discretion to award enhanced damages. Ibid. 

Stryker / Halo Decisions Restore Courts’ Discretion to Award Enhanced Damages

The Supreme Court’s recent decision in the Stryker and Halo cases discarded the Seagate test and restored courts’ discretion to award enhanced damages.  The Court held “[t]he Seagate test is not consistent with §284.”  The relevant language of § 284 contains “no explicit limit or condition on when enhanced damages are appropriate, and this Court has emphasized that the “word ‘may’ clearly connotes discretion.”  So the Court found no explicit requirement for Seagate’s “objective recklessness” test.

The Court also found Seagate unnecessarily required a finding of “objective recklessness” even when wrongdoing was demonstrated by the facts of a case.  The Court also disagreed with Seagate’s requirement of a “clear and convincing evidence” standard for showing recklessness, and held that the proper standard for enhanced damages was a “preponderance of the evidence” — the same standard as for patent infringement determinations.

The Court explained that its decision did not contradict § 298, that failure to present advice to the court may not be used to prove willful infringement:

Section 298 provides that “[t]he failure of an infringer to obtain the advice of counsel” or “the failure of the infringer to present such adviceto the court or jury, may not be used to prove that the accused infringer willfully infringed.” 35 U.S.C. § 298. Respondents contend that the reference to willfulness reflects an endorsement of Seagate’s willfulness test. But willfulness has always been a part of patent law, before and after Seagate. Section 298 does not show that Congress ratified Seagate’s particular conception of willfulness. Rather, it simply addressed the fallout from the Federal Circuit’s opinion in Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F. 2d 1380 (1983), which had imposed an “affirmative duty” to obtain advice of counsel prior to initiating any possible infringing activity, id., at 1389–1390. See, e.g., H. R. Rep. No. 112–98, pt. 1, p. 53 (2011).

Consequently, nine years after Seagate, the Supreme Court has made it easier for courts to make a determination of enhanced damages.  Time will tell if this decision will spur additional patent opinion practice, such as prior to the 2007 Seagate decision.

Patent Trends to Watch in 2016

Friday, January 29th, 2016

2016 is starting off with a bang!  A number of interesting new developments have occurred as we enter into this new year:

AIA 2015 Stats

 

So we will monitor practices by the courts, the PTAB, stakeholders, and patent practitioners to observe the effects and interplay of these decisions and actions over the course of the year.  In particular, it will be interesting to see how the Board and the courts handle claim construction issues knowing that BRI may be revised by the Supreme Court.  Also of great interest is how parallel patent infringement trials will be impacted by the PTAB proceedings on the underlying patents.

 

See You at the AIPLA 2014 Spring Meeting!

Wednesday, April 30th, 2014

I am presenting at the AIPLA Spring Meeting on May 15, 2014 in Philadelphia and hope to see you there.  My task is to provide strategies for filing inter partes reviews, covered business method reviews and post-grant reviews.  I hope to see you there!

I just got back from the PLI Post-Grant Conference held in San Francisco.  The new world of patent litigation has only just begun and we are seeing many interesting ways that the AIA post-grant provisions are changing the way we view and value patents.  This year already has brought a lot of patent-related decisions from the PTAB, Federal Circuit, and Supreme Court.  There will be a lot to process in the months to come.  Stay tuned.

Eastern District of Texas Denies SAP’s Motion to Vacate the Judgment in the Versata Patent Infringement Case

Thursday, April 24th, 2014

SAP recently learned that the Eastern District of Texas denied its motion to set aside or stay a district court judgment in favor of Versata for infringement of its U.S. Pat. 6,553,350 (Versata Software, Inc v. SAP America, Inc., No. 2:07-cv-00153 (E.D. Tex)).  On April 20, 2014, Judge Roy S. Payne dismissed SAP’s motion despite its successful patentability challenge of Versata’s ‘350 patent last year in the PTAB.  Could SAP’s win in the first covered business method patent review be too late to rid itself of the judgment?

History of the Patent Infringement Suit and PTAB CBM Proceeding

The patent infringement suit by Versata started when it sued SAP for alleged infringement of its U.S. Patent Nos. 6,553,350 and 5,878,400 in 2007 (Versata Software, Inc v. SAP America, Inc., No. 2:07-cv-00153 (E.D. Tex)).

A first jury trial was held in 2009, and a second jury trial was held in 2011.  In the first trial, the jury found both patents directly infringed and inducement of infringement of one claim of the ’350 patent.  Shortly after the first trial, the Court granted JMOL of noninfringement of the ’400 patent.  A second trial was held on the ’350 patent and a jury found the ’350 patent infringed, resulting in a $392 million judgment and an injunction dated September 9, 2011 (stayed pending appeal).

SAP filed its petition for covered business method patent review on the first day it was available via the AIA:  September 16, 2012.  The petition included grounds for challenging the ’350 patent under 35 USC §§ 101, 112, and 102.  This was the the first covered business method patent review under the America Invents Act (CBM2012-000001).

About a month later, SAP filed a notice of appeal of the district court decision in the Federal Circuit (filed on October 11, 2011).  Briefing was completed some months later, and oral arguments were held on February 4, 2013.  About a month before the oral arguments (January 9, 2013), the PTAB instituted trial on the challenges under 35 USC §§ 101 and 102, but declined review on the challenges under 35 USC § 112.  So as of January, 2013, the dispute was being pursued both in the Federal Circuit and in the PTAB.

Based on a series of communications between the parties and the PTAB, SAP agreed to drop its challenge under 35 USC § 102 in exchange for an expedited trial on its challenges under 35 USC § 101.  The PTAB trial was held on April 17, 2013, where both parties presented their arguments concerning 35 USC § 101.

On May 1, 2013, the Federal Circuit affirmed the lower court jury decision on infringement and damages awards and vacated part of the trial court’s permanent injunction and remanded for further proceedings based on the opinion.

In June of 2013, the Patent Trial and Appeal Board (PTAB) decided that Versata’s U.S. Pat. 6,553,350 was unpatentable under 35 U.S.C. § 101.

After the Patent Office decided that the claims challenged in the related covered business method patent review were unpatentable, SAP motioned for a stay of proceedings in the Federal Circuit.  In a simple, one page document, the Federal Circuit denied that motion for stay on July 5, 2013 without providing further comment or opinion.  The Supreme Court denied certiorari of SAP’s petition on January 21, 2014.

Current Stay Motion

A “Motion of SAP America, Inc. and SAP AG For Relief From Judgment Under Fed. R. Civ. P. 59(e) or 60(b) Or For A Stay” was filed on January 21, 2014, and renewed on March 27, 2014 in the E.D. Tex. action.  Judge Payne’s denial of the stay observed:

The Court finds that all four of these [stay] factors counsel against a stay in this case. There are no remaining issues in this case to simplify. The trial has been held and the appeal is completed. A stay would clearly unduly prejudice the nonmoving party and provide a clear tactical advantage for the moving party. Moreover, a stay would not reduce the burden of litigation on the parties or the Court. Finally, the fact that the Federal Circuit has already denied Defendants’ request for a stay pending completion of the PTAB proceedings weighs heavily against Defendants’ request. Accordingly, the request for a stay is DENIED.

Judge Payne also denied the request to vacate under Rule 60(b):

Defendants have taken advantage of a full and fair opportunity to litigate the validity of the patent before this Court, before the jury, and before the Federal Circuit, even pursuing a writ to the United States Supreme Court. To hold that later proceedings before the PTAB can render nugatory that entire process, and the time and effort of all of the judges and jurors who have evaluated the evidence and arguments would do a great disservice to the Seventh Amendment and the entire procedure put in place under Article III of the Constitution. The proceedings before the PTAB are not even final at this time, but this Court does not believe that later finality will change this calculus. Indeed, it is the finality of the judgments issued by the Federal Courts that is at stake here. Unlike the situation before the Court in Fresenius USA, Inc. v. Baxter Intern., Inc., 721 F.3d 1330 (Fed. Cir. 2013), the judgment in this case is final and there are no further issues to be resolved. That fact also clearly distinguishes this case from that before the Fifth Circuit in Bros. Inc. v. W. E. Grace Mfg. Co., 320 F.2d 594 (5th Cir. 1963).

Thus, Judge Payne distinguished the present matter from the Baxter case at least in part because the Baxter judgment was not final.  Apparently, the court is of the opinion that once certiorari was denied by the Supreme Court the district court judgement became final.  It will be interesting to see SAP’s response to this decision in the upcoming months.

SAP’s Cert Petition Denied by Supreme Court in Versata Patent Infringement Suit

Thursday, January 23rd, 2014

In earlier posts, I described the $391 million patent infringement judgment awarded to Versata for SAP’s alleged infringement of US Pat. 6,553,350.  I also detailed SAP’s attempts to avoid the judgment by challenging the ‘350 patent in the first covered business method patent review conducted by the Patent Office under the America Invents Act.  (SAP v. Versata, CBM2012-00001)  SAP prevailed in the CBM proceeding in June 2013, but that was well after the district court judgment and about a month after a decision by the Federal Circuit upholding the damages portion of the judgment.  About two weeks before the CBM decision, SAP had filed a request for rehearing and a request for rehearing en banc in an effort to have the Federal Circuit reconsider its decision.

In light of the CBM decision finding the ‘350 patent claims unpatentable, SAP motioned the Federal Circuit to stay the litigation pending a final decision in the CBM proceeding.  The Federal Circuit denied SAP’s the rehearing requests.  On December 12, 2013, SAP petitioned for a writ of certiorari to the Supreme Court.  In its petition, SAP argued that the district court judgment action should have been stayed by the Federal Circuit in view of the unpatentability of  Versata’s  patent as determined by the Patent Office in the CBM review.

On Tuesday, January 21, 2014, the Supreme Court denied certiorari of SAP’s petition.  The case will return to the district court for its consideration of the vacation of the injunction by the Federal Circuit.  It remains to be seen how the district court will modify the injunction given the CBM decision and whether Versata will be able to collect its $391 million judgment against SAP in view of the Supreme Court’s refusal to take the matter.

WildTangent Files its Supreme Court Certiorari Petition – Part 1

Saturday, August 31st, 2013

In September of 2009, Ultramercial, Inc. sued WildTangent, Inc., Hulu and YouTube in the Central District of California for alleged patent infringement of U.S. 7,346,545 (the ‘545 patent).  The ‘545 patent claims trading advertisement viewing for access to content over the Internet.  The Abstract of the ‘545 patent reads:

The present invention is directed to a method and system for distributing or obtaining products covered by intellectual property over a telecommunications network whereby a consumer may, rather paying for the products, choose to receive such products after viewing and/or interacting with an interposed sponsor’s or advertiser’s message, wherein the interposed sponsor or advertiser may pay the owner or assignee of the underlying intellectual property associated with the product through an intermediary such as a facilitator.

Claim 1 of the ‘545 patent is more detailed:

1. A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:

a first step of receiving, from a content provider, media products that are covered by intellectual-property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;

a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;

a third step of providing the media product for sale at an Internet website;

a fourth step of restricting general public access to said media product;

a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;

a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;

a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;

an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;

a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query;

a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and

an eleventh step of receiving payment from the sponsor of the sponsor message displayed.

As you can see, there are 11 method steps recited in Claim 1, so it is a very detailed claim and it cannot be summarized in a sentence or two.

The history of the case is not easy to summarize either.  In short, the District Court found that the subject matter of the patent was not patent eligible and dismissed the district court action before interpreting the claims.  In 2011, the Federal Circuit reversed the District Court decision, but the Supreme Court vacated the Federal Circuit’s decision in 2012 based on its recent opinion in Mayo v. Prometheus.  And in June of 2013 the Federal Circuit again reversed the District Court decision, leading to WildTangent’s Petition for Writ of Certiorari filed last week.

WildTangent’s cert petition is attached.  I will be discussing the petition and the ongoing patent eligibility battle in more detail in future posts.

 

Lockwood Cert Petition Seeks Clarification of Redress for Alleged “Sham” Reexamination Request

Saturday, May 7th, 2011

In a Petition for Writ of Certiorari dated April 28, 2011, inventor Lawrence B. Lockwood and his company, PanIP, LLC, requested review of the judgment of the Federal Circuit denying its petition for rehearing and rehearing en banc.  (The underlying order of the Court of Appeals was issued Nov. 15, 2010, and is reprinted at Lockwood v. Sheppard, Mullin, Richter & Hampton, LLC, No. 2010-1189, 2010 WL 4721220 (Fed. Cir. Nov. 15, 2010).)

Mr. Lockwood alleges that the Sheppard, Mullin firm and certain individual attorneys “initiated without a reasonable basis, in a fraudulent and deceptive manner, and with the aim of depriving [Lockwood], the patent holder and an inventor of computerized sales systems, of his right to enjoy the fruits of two of his patents.”  Mr. Lockwood formed PanIP, LLC, and exclusively licensed his patent portfolio to it.  By May 2003, PanIP had entered into “licensing relationships with over twenty-five companies, headquartered in fifteen different states, and was in negotiation with many others.”

(more…)

Federal Circuit Decision in In re Tanaka

Thursday, April 21st, 2011

You might recall that we discussed the BPAI decision in In re Yasuhito Tanaka in an earlier post.  On April 15, the Federal Circuit reversed the BPAI decision and remanded the matter for further proceedings in accordance with the opinion.  The Federal Circuit held  that a patent owner that retains original patent claims and adds new narrower claims in a reissue application does indeed present a type of error correctable by reissue under 35 U.S.C. § 251.   (more…)

Microsoft v. i4i – Part III: Changing the Presumption of Validity: Impact on Reexamination Practice

Tuesday, March 15th, 2011

Posted March 14, 2011

The prior post discussed only some of the many options the Supreme Court has in the Microsoft v. i4i case (i4i).  In summary, the presumption of validity of a patent as we currently know it may be changed and the standard of proof required for an accused infringer to prove invalidity may be lowered from the current “clear and convincing” evidence standard. 

But we have all read that the presumption of validity does not apply in reexamination, right?  And the i4i case turned on evidence of a statutory bar concerning offer of sale evidence that could have been difficult to introduce in a reexamination context because of the limited scope of reexamination.  So how can a change to the presumption of validity affect reexamination?  We have to assume different Supreme Court holding scenarios to answer that question.  Of course, these scenarios are not exhaustive and are used simply to demonstrate the commensurate impact on reexamination practice. (more…)

Microsoft v. i4i – Part II: The Supreme Court’s Many Options

Sunday, March 6th, 2011

Posted March 6, 2011

The previous post included a summary of the facts from the Microsoft petition for certiorari.  The Supreme Court has several options when deciding the outcome of this case.  It can maintain the Federal Circuit’s existing presumption of validity.  On the other hand, it can relieve an accused infringer from having to prove clear and convincing evidence for prior art not before the examiner.  But there are many more options available to the Supreme Court.

The Supreme Court could tailor its holding to the facts at hand.  It could lower the standard of proof necessary to invalidate a patent when a case turns on prior art in the control of the Patent Owner, but use the existing presumption of validity as set forth by the Federal Circuit for all other prior art.  More specifically, the holding could be more narrowly focused to lower the standard of proof where a case turns on prior art in the control of the Patent Owner if the Patent Owner has destroyed and/or withheld the evidence.  Such a holding could be further tailored to situations such as offers of sale.

Additional tools are available to address cases with similar facts.  A rebuttable presumption may be employed to maintain the current presumption of validity absent proof that prior art in the case was not available to the examiner.  “Availability” could be defined narrowly or broadly.  For example, it could be decided that prior art was available if it could have been found in a search, even if it wasn’t found by the examiner.  Or it could be decided that the prior art had to be disclosed in the instant or a related application to be “available.”

The Supreme Court could take a completely different approach and decide that the problem Microsoft complains of is not really a problem at all because:  (1) if i4i is right and there was no prior art offer of sale bar, then Microsoft was not aggrieved; and (2) if i4i withheld and/or destroyed the relevant information, then this matter is already sufficiently addressed with the current laws concerning the duty of candor and inequitable conduct, and Microsoft failed to carry its burden of proof.  Alternatively, perhaps the Supreme Court will decide that the law of inequitable conduct is what needs review (and which might be addressed by the anticipated en banc Federal Circuit decision in Therasense v. Becton Dickinson).

Of course, all of these examples are just some of the options available to the Supreme Court.  Unfortunately, this post cannot favor one approach over the other because many more considerations need to be factored into the ultimate decision of what to do with the presumption of validity.

In my next post, we will discuss some possible changes to reexamination practice should the Supreme Court change the standard of proof.