Posts Tagged: "fees"

A claim is entirely without color when it lacks any legal or factual basis.  Because of the relative paucity of § 101 cases between Alice and AlphaCap’s complaint, the law was unsettled.  The Federal Circuit noted that when the applicable law is unsettled, attorneys may not be sanctioned merely for making reasonable arguments for interpreting the law.  Further, the court found that Gutride presented a colorable argument that the claims were analogous to those in DDR Holdings, LLC v. Hotels.com L.P., and therefore patent eligible under § 101.

You get what you pay for, and C-level executives that play the role of bean-counter and only see that they are saving money today without any consideration of the damage they are doing long-term to their patent portfolios will wind up doing real, lasting and severe damage to their corporations. It is just that simple. The Supreme Court and the Federal Circuit have simply created too many impediments to obtaining and keeping a patent to justify the expense of spending any part of a budget on anything other than a patent that is done properly. So, you might think you are saving money by slashing patent attorneys fees yet again this year, but what you are doing is wasting every dollar you spend.

The American Bar Association filed an amicus brief today with the United States Court of Appeals for the Federal Circuit, arguing that a provision of U.S. patent law does not give the government the right to be reimbursed for its lawyers’ expenses regardless of which side prevails in a court appeal of an administrative patent decision… The Federal Circuit split 2-1 in determining that the language approved by Congress includes lawyer fees for the USPTO win or lose. The ABA’s amicus brief supports the petition by Nantkwest Inc., which owns the cancer treatment patent application in question, and asks the full Federal Circuit to reverse that decision.

In mag Fasteners, Inc. v. Fossil, Inc., Romag sued Fossil for patent and trademark infringement and a violation of the Connecticut Unfair Trade Practices Act (“CUTPA”) after one batch of Fossil’s handbags appeared to have counterfeit magnetic snaps. The jury found Fossil liable for patent and trademark infringement and for violating the CUTPA. The Federal Circuit affirmed the patent and trademark infringement verdicts. After that appeal, Romag sought attorney’s fees under the Patent Act, Lanham Act, and the CUTPA. The district court awarded attorney’s fees under all but the Lanham Act… The Supreme Court’s “objectively unreasonable” standard for attorney’s fees set forth in Octane applies to infringement cases under the Lanham Act and the Patent Act. In attorney’s fee disputes, courts must consider the totality of the circumstances, including the conduct of both parties.

The district court made clearly erroneous factual findings that independently supported reversal. Particularly, the record supported a finding that this case was exceptional given the weakness of AdjustaCam’s litigating position. The evidence offered by AdjustaCam showed that its lawsuit was baseless. However, the district court instead found that AdjustaCam’s litigation position was not exceptional because Newegg’s ball-and-socket products were constrained in such a way that AdjustaCam could reasonably argue that it rotated on a single axis, consistent with the original district judge’s Markman order. But the Court pointed out that AdjustaCam never advanced this argument.

The Federal Circuit heard the case on Univ. of Utah v. Max-Planck-Gesellschaft Zur Foerderung der Wissenschaften e.V. At issue is whether the district court abused its discretion in declining to award attorney fees to Max Planck. The case involved an inventorship dispute over the “Tuschl II patents,” for certain RNAi discoveries, and owned by Max Planck. March 2000, the Max Planck inventors published an article describing certain RNAi discoveries. A month later, Dr. Bass of the University of Utah published a review article discussing the Max Planck article and offering some hypotheses regarding RNAi. The Tuschl II patents were filed on subject matter that was influenced by testing Dr. Bass’ hypotheses. The University of Utah sued Max Planck, alleging that Dr. Bass is either a sole or joint inventor of the Tuschl II patents… The Court will not second-guess a district court’s finding that a case was not “exceptional” so long as the Court reasonably explained why the case does not stand out from other patent cases. A district court is not constrained to a specific or formulaic approach proposed in cases like Octane Fitness.

With a proposed budget of $7.8 billion and $1 billion in cuts to identify, questions arise about where those cuts will come. Is the USPTO budget safe?Will the cuts be across the board cuts with the USPTO being asked to account for 35% of the $1 billion, which would reduce the USPTO budget to $2.967 billion for FY 2018? According to a chart prepared by the Intellectual Property Owners (IPO) Association, the largest single fee diversion came in 2011 when $209 million was diverted from the USPTO. If the USPTO must cut its budget by some $350 million that would far and away be the largest single year fee diversion in the history of the U.S. patent system.

But why is the USPTO in such a fee crisis? Because they have strayed from their mission, which is to issue patents. Far too many Art Units have allowance rates under 5%, and some as low as 1% (and those are in Art Units dominated by Fortune 500 companies). For an agency that derives the majority of its fees from patent owners paying maintenance fees it is downright idiotic for the Office to allow examiners to bury applicants and refuse patents at every turn. Worse, the solution isn’t to ease up and allow patents, instead it is to double and triple down on instituting more post grant challenges and raising fees.

The U.S. Department of Commerce’s United States Patent and Trademark Office (USPTO) today issued a notice of proposed rulemaking (NPRM) proposing to set or adjust certain patent fees, as authorized by the Leahy-Smith America Invents Act (AIA). The proposed fees are projected to recover the aggregate estimated cost of the USPTO’s patent operations, Patent Trial and Appeal Board (PTAB) operations, and administrative services. The Office welcomes comments on both the individual patent fee proposals and the rulemaking goals and objectives. The Office will consider and respond to all comments received, during the public comment period, in the final rule, which the Office expects to publish in 2017.

Justice Kagan stated as one primary factor that a District Court should put substantial weight on the reasonableness of the losing party’s position. The lower courts are in a good position to review and administer this factor, and it encourages parties with meritorious positions to advance them. Justice Kagan quite rightly stated that this was not the only factor, and that other previously articulated factors set forth in Fogerty also need to be evaluated. These include the “frivolousness [of the losing party’s position], [such party’s] motivation, objective unreasonableness, and the need in particular circumstances to advance considerations of compensation and deterrence.” Fogerty at 534, n.19.

The IPO recently filed an amicus brief at the Supreme Court in Kirtsaeng v. John Wiley & Sons, Inc. supporting a flexible approach to awarding attorneys’ fees. Oral argument is currently scheduled for April 25, 2016. This case presents an important opportunity for the Supreme Court—consistent with its holding in Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994)—to resolve a circuit split regarding how to weigh equitable factors in awarding attorneys’ fees in copyright cases. Attorneys’ fees should be based on a review of all equitable factors and not a product of a formulaic approach that disproportionately weighs certain factors more than others.

The United States Supreme Court accepted certiorari in two patent cases, which will require the court to determine whether district court judges should have discretion to award victorious patentees with enhanced damages under 35 U.S.C. § 284. While predicting the outcome of a Supreme Court decision is always speculative, this case should be one of the easiest outcomes to predict ever. Unless the Supreme Court fundamentally alters its statutory interpretation from the Octane Fitness case, arbitrarily creating a distinction without a difference, the Supreme Court will grant district courts the same broad discretion on enhanced damages that they have been given with respect to awarding attorneys fees.

What may be less well known is that Octane was not itself a “patent troll” case. Rather, Octane involved another kind of abusive patent litigation; namely, a large company asserting a patent it pulled “off the shelf” against a small start-up competitor. While patent trolls gain economic advantage through economies of scale, large companies have economic advantages over smaller competitors by virtue of their size and resources, and can similarly abuse the system. They can use the high cost to defend patent litigation as a competitive weapon, either to force the smaller competitor to exit the market, discontinue a product line, or pay an unwarranted royalty (thereby hindering the competitor in the marketplace). On remand, the District Court in the Octane case recognized just this sort of economic coercion, and found the case exceptional warranting a fee award. And last week, the District Court awarded almost $2 million in fees and costs to Octane, the prevailing accused infringer.

Innovation is the lifeblood of a prosperous economy. Sound patent policy, which encourages the nexus between risk and ideas (especially for small entrepreneurs), makes invention profitable. The U.S. patent system enables that dream by protecting the market an invention creates long enough for the inventor to gain a toehold against competition, and by creating a property right capable of attracting critical investment to bring the invention to market and grow the business. Don’t let H.R. 9 or S.1137 kill this can do American spirit of innovation.