Patent Law

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The Federal Circuit Court of Appeals recently addressed Audrey-Millemann-03_weban issue of first impression: what is the “actual notice” required under 35 U.S.C. §154(d) for a patent owner to recover damages for a defendant’s infringing conduct that occurred before the patent issued?

Most people assume that a plaintiff cannot recover damages for patent infringement for infringing actions that took place before the patent issued (pre-issuance damages). However, the American Inventors Protection Act of 1999 does for just that. Section §154(d) provides that a patent owner can recover damages from the defendant infringer for infringement that occurred after the patent application was published if the defendant had actual notice of the published patent application and if the invention claimed in the published patent application is substantially identical to the invention claimed in the issued patent. For patent litigators, the situation rarely exists because the published claims are almost always amended during prosecution, resulting in different claims in the issued patent.

Rosebud LMS, Inc. sued Adobe Systems, Inc. for infringement of three different patents, from 2010 through 2014 in the district court of Delaware. The first and second cases were dismissed. The third case, filed in 2014, alleged that Adobe infringed Rosebud’s U.S. patent no. 8,578,280. The ‘280 patent and was a continuation of the second patent, which was a continuation of the first patent. All three of the patents covered methods for allowing collaborative work on a computer network.Continue Reading Pre-Issuance Damages for Patent Infringement – A Very Rare Remedy

In Lexmark International, Inc. v. Impression Products,Jo Dale Carothers 015_web Inc., No. 14-1617 (Fed. Cir. 2016), the U.S. Court of Appeals for the Federal Circuit decided en banc that a U.S. patent owner’s “first sale” of items in a foreign country does not exhaust the patent owner’s right to sue for patent infringement when those items are later imported into the U.S. In contrast, the Supreme Court in Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351 (2013) came to a different conclusion under copyright law, finding that the “first sale,” or exhaustion, doctrine allows the owner of a copy of a copyrighted work, which was lawfully made in a foreign country, to import and sell that copy in the United States without further permission from the copyright owner. But, as the Federal Circuit recognized, patent law and copyright law are not always aligned.

The Lexmark dispute arose in conjunction with Lexmark’s toner cartridges for its printers. Lexmark offers its customers the choice of buying a “Regular Cartridge” at full price with no restrictions on its re-use/resale or a discounted cartridge, subject to a single-use/no-resale restriction. Lexmark sold some of the cartridges in the United States and some abroad. Some of the foreign-sold cartridges and all of the U.S.-sold cartridges at issue were sold subject to an express single-use/no-resale restriction.Continue Reading The Federal Circuit Finds Foreign Sales Do Not Exhaust Patent Rights

Two weeks ago, the Federal Circuit Court of Appeals Audrey-Millemann-03_weblimited the factors a district court may consider in determining the amount of attorneys’ fees to award in an “exceptional” patent infringement case. Lumen View Tech., LLC v. Findthebest.com, Inc. (January 22, 2016) 2016 U.S. App. LEXIS 1087.

Lumen was the exclusive licensee of a patent covering a method for facilitating bilateral and multilateral decisionmaking. The method required analyses of preference data from two groups of people. Findthebest.com (FTB) offered a website with a search feature called “AssistMe” that gave the user information on products and services related to the user’s specific input.

Lumen sued FTB in the Southern District of New York for patent infringement. FTB’s counsel told Lumen on several occasions that FTB’s search method did not use a bilateral or multilateral process. Lumen ignored FTB’s statements, and filed its infringement contentions before obtaining any discovery. FTB then filed a motion for judgment on the pleadings on the grounds that the patent was invalid under 35 U.S.C. §101 as directed to an unpatentable abstract idea. The district court ruled in favor of FTB and dismissed the case. FTB then filed a motion seeking a determination that the case was “exceptional” under 35 U.S.C. §285 and for recovery of its attorneys’ fees on that grounds.

The district court ruled that the case was exceptional and that FTB was entitled to fees. The court awarded FTB the lodestar amount with a multiplier of two, for a total of about $300,000. The court found that the multiplier was justified in order to deter Lumen from filing similar frivolous lawsuits in the future. The court said that the lodestar amount was too small, because the case had been resolved at an early stage, to be an effective deterrent, and so chose to use the multiplier of two.Continue Reading Federal Circuit Limits Attorneys’ Fees in Exceptional Cases

In business, there are numerous Scott-Hervey-10-webopportunities for pitfalls, mistakes and errors and they come up in all different legal areas – from basic formation issues to labor and employment to intellectual property. Mistakes and missteps involving intellectual property can be particularly problematic because IP is a company asset; it constitutes a part of (often a significant part of) a company’s valuation. In my 20 years working with start-up companies – and even fully grown-up companies, I have seen mistakes involving company intellectual property prove to be disastrous. With careful planning and good counsel, these mistakes are completely avoidable.

#1. Failure To Transfer the IP From The Founder Into the Company. It is a foundational item for any company – if the company is being formed around a piece of IP or if a piece of IP is intended for use by a company, the company should make sure the founder that owns the IP must contribute it to the company. While a very basic issue, this problem plagues more start-ups than you can imagine. Most often it happens during the informal, pre-formation time frame when founders are kicking around an idea and developing code and no one has consulted a lawyer. Conflict between the founders develop and there is a divergence of opinion on the value brought to the table by the non-developer founders; the developers decide to split with the IP and form a new company. While this will likely generate lawsuits just as soon as the developer’s company is in a financing round, the non-developer founders will very likely not receive as much as they would have had the IP been properly assigned to the company.Continue Reading Five IP Pitfalls That Start-Up (and Grown Up) Companies Can Easily Avoid

Although the general ruleAudrey-Millemann-03_web (based on 35 USC section 101) is that anything made by humans is patentable, there are exceptions. Laws of nature, physical phenomena, and abstract ideas are not patentable. Inventions that fall in these categories are “patent-ineligible,” that is, directed to subject matter that is not eligible to be patented. After the Supreme Court’s key decisions over the last few years in Bilski v. Kappos, 130 S. Ct. 3218 (2010); Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012), and Alice Corp. Pty. Ltd. V. CLS Bank International, 134 S. Ct. 2347 (2014), the courts have increasingly held computerized methods of doing business unpatentable.

The district court for the Eastern District of Texas, where many patent infringement cases are filed, handled such a case in Kroy IP Holdings, LLC v. Safeway, Inc., 2015 U.S. Dist. LEXIS 69363. In Kroy, the court provides a useful review of the state of the law, starting with the three Supreme Court cases.

In Bilski, supra, decided in 2010, the Supreme Court held that claims to a method for commodities traders to minimize the risk of price fluctuations was an unpatentable abstract idea. The idea of hedging against risks is a common practice in our economy. The Court found that an idea cannot be made patentable by limiting it to a particular field, such as commodities. The Court held that the Federal Circuit Court of Appeals’ previous test for claims that appear directed to abstract ideas, the machine-or-transformation test (which requires a claimed method to be linked to a particular machine or to transform an article into something else in order to be patentable) is one test that can be used, but is not the sole test.Continue Reading Why Business Methods Are Difficult to Patent