EDITORIAL NOTE: What follows is the Summary of the Argument from the AIPLA amicus briefin Limelight Networks, Inc. v. Akamai Technologies, Inc. The brief is filed by Wayne P. Sobon, who is the current President of the AIPLA, with Jeffrey I.D. Lewis listed as Counsel of Record. Lewis is himself a former AIPLA President. Also on the brief with Lewis is Scott B. Howard.
The cornerstone of Petitioner’s argument is that it follows from the language and simple structure of Sections 271(a) and 271(b) of Title 35 “that § 271(b) proscribes conduct that induces actionable direct infringement of a patent as described in § 271(a).” Pet. Br. at 1 (emphasis added). In doing so, Petitioner focuses on the elements of a claim for induced infringement under 35 U.S.C. § 271(b), but hides the true issues of this case – what is the meaning of “infringement” and is there patent liability when someone causes all of the steps of a method patent to be performed but no single entity performs all of the steps of the method claim by him or herself?
Recent Federal Circuit law has, without any statutory basis, limited infringement under Section 271(a) to the actions of a single entity, and some amici have even mistakenly characterized the single entity rule as settled law, e.g., Brief of Amici Curiae Cargill, Inc. et al. at 4 (but it is not, as shown below and in district court cases in the accompanying footnote  ). It is that erroneous limitation that leads to confusion over whether or not direct infringement is necessary for a finding of indirect, induced infringement.
Regardless of the number of patent reform bills, IP industry conferences, and risk management business models, the number of patent infringement lawsuits remains exceptionally high. Resolving disputes through the inefficiencies of litigation represents an enormous waste of resources and lost opportunities. And this issue runs beyond the usual suspects—a GAO August 2013 report found that 80 percent of patent litigation is brought by manufacturing companies. Thus, IP games are being played on all sides, resulting in demon dialogues, negative patterns and quick escalations to legal actions. In order to foster productive discussions, both sides need to stop playing games and start being transparent and candid about their intent at each stage of an IP licensing discussion. This is a foundation for building trust, developing cooperative behaviors, and allowing business creativity that is critically needed in our knowledge based economy.
The dialogue begins with a demand letter from a patent rights holder, which can take the form of a soft invitation to enter into mutually beneficial licensing discussions or detailed allegations of patent infringement. Often times, the intent behind this letter is to seek a payment to compensate the patent rights holder for the commercial exploitation of its patented technologies by the receiving side of the letter, not to stop the exploitation. There is nothing condemnable in this intent– trading IP rights offers a way to support the broad dissemination of technological advancements, which in turn create rewards for investments in innovation and job creation. These IP trades are so common that seasoned IP executive speak regularly about “IP monetization” or “IP value creation” in trade associations (e.g., the Licensing Executives Society) and conferences (e.g., the IP Business Congress).
Mylan Inc. (NASDAQ: MYL) recently prevailed in the United States District Court for the Northern District of West Virginia in a patent dispute involving Perforomist® (formoterol fumarate) Inhalation Solution, which has as the active ingredient a bronchodialating compound. The district court confirmed the validity of all patents asserted by Mylan. At issue were U.S. Patent Nos. 6,667,344; 6,814,953; 7,348,362; and 7,462,645, which cover Perforomist through June 2021.
Mylan previously sued Teva alleging that Teva’s Abbreviated New Drug Application (ANDA) for this product infringed four Mylan patents covering Perforomist. After a full trial, the Court entered a judgment finding infringement of the patents-in-suit, rejecting Teva’s defenses, and enjoining Teva from making, using, offering to sell, selling or importing the inhalation product described in Teva’s ANDA. The Court’s decision also prevents Teva’s ANDA, which has yet to receive a tentative approval from the U.S. Food and Drug Administration (FDA), from receiving final approval prior to expiration of the patents in suit.
According to data from Lex Machina, there has been a sharp decline in the number of patent litigation case filings so far in 2014. The obvious question this leads to is whether the patent litigation centric patent reforms presenting pending in the Congress are required if the number of patent infringement cases being brought is declining.
In January 2013, there were 490 new patent complaints filed. The number of new patent cases filed in January 2014 was 322. This represents a 34.3% drop in the number of new patent filings year to year, and represents the lowest number of new patent litigations since October 2011. See Patent Case Filings Drop Sharply in January to 322.
A source familiar with Lex Machina’s data tells me that the number of new patent lawsuits filed in February 2014 was also quite lower than during February 2013. During February 2013, according to Lex Machina data there were 548 new patent cases filed. The number of new patent cases filed during February 2014 was 456, which represents a decline of 16.8% year to year.
During the first two months of 2013 a total of 1,038 patent cases were filed, according to Lex Machina data, while the number of patent cases filed during the first to months of 2014 was just 778. This represents a decline of 25%.
There is a new entry into the patent reform debate. The Main Street Patent Coalition is a national coalition of organizations that says they are dedicated to stopping patent abuse by so-called patent trolls. The Main Street Patent Coalition is encouraging Congress to pass what they call “common sense patent reform legislation.”
The Main Street Patent Coalition members include: the National Restaurant Association, the National Retail Federation, the American Hotel and Lodging Association, the National Grocers Association, the International Franchiser Association, the Application Developers Alliance, the National Association of Realtors, the Retail Industry Leaders Association, the National Council of Chain Restaurants, the American Association of Advertising Agencies and the American Gaming Association. These trade associations say they want Congress to give small businesses a fighting chance against the growing threat of patent trolls.
The Main Street Patent Coalition claims they represent the small business community at large, which has to make you wonder. On their homepage they talk about an innovative, family owned and privately held company named White Castle. According to the LA Time, White Castle has 9,600 employees. How exactly is that a small business? Answer: White Castle is not a small business, at least if you concern yourself with the way the Small Business Administration defines small business. To be a “small business” you have to have no more than 500 employees. Clearly the Main Street Patent Coalition recent press release Small Main Street Businesses Launch Patent Reform Coalitioncarries a misleading, if not false, title.
The Supreme Court on November 5, 2013, heard oral argument on whether the burden of proof in an action for a declaratory judgment of non-infringement falls on the plaintiff licensee or on the defendant patentee. Medtronic Inc. v. Boston Scientific Corp., U.S., No. 12-1128, oral argument 11/5/2013.
The debate centered around whether a patentee/defendant sued for a declaratory judgment of non-infringement is required to prove a case of infringement that was neither alleged nor arguably possible where the DJ plaintiff is a licensee. The Petitioner argued that the burden that would be on the patentee as infringement plaintiff does not change when it is a DJ defendant. The Respondent argued that, because the patentee cannot assert an infringement counterclaim against its licensee in good standing, the normal default rule places the burden on the party that initiates the action.
Patent law places the burden of proving infringement on the patentee, and the procedural device provided by the Declaratory Judgment Act does not shift that burden, according to Seth Waxman of WilmerHale, arguing for Petitioner Medtronic. The Federal Circuit erred in changing the rule where the DJ plaintiff is a licensee.
This paper proposes amending 35 U.S.C. 271 Infringement of Patent with elements drawn from § 2-403 of UCC Article 2, Sale of Goods, and with elements of the Patent Exhaustion Doctrine. This amendment, if enacted, would prevent patent trolls from proceeding against Bona Fide Purchasers for Value with respect to certain specific infringements, in order to strengthen consumer confidence in the marketplace, by ensuring that vendors can deliver the products that they sell, free of threats of patent infringement litigation against such innocent buyers.
EDITOR’S NOTE: What follows is a summary of the Goodlatte patent bill created by American Continental Group, which is a government affairs and strategic consulting firm in Washington, DC. Manus Cooney, a former Chief Counsel of the Senate Judiciary Committee is one of the partners at ACG, and is also frequent guest contributor on IPWatchdog.com. Cooney and his partners and associates worked to prepare this summary, which was described as a team effort. It is republished here with permission.
Manus Cooney, ACG
Sec. 3. Patent Infringement Actions
Pleading Requirements (p.2)
Amends Title 35 to establish heightened pleading requirements for patent infringement actions. A party alleging infringement must include in the pleading, unless the information is not reasonably accessible, the following:
Each patent allegedly infringed and each claim of each patent that is allegedly infringed
For each claim, which product, feature, method or process are allegedly infringed, including the name or model number; where each element of the claim is fount within the accused product/method; and how the terms of the asserted claim correspond to the functionality of the accused product/method.
Whether each element is infringed literally or under the doctrine of equivalents
A description of the direct infringement, the acts of the alleged indirect infringement that contribute to or are inducing direct infringement
A description of the right of the party alleging infringement to assert each patent identified and patent claim identified
A description of the principal business of the party alleging infringement
A list of each complaint filed, of which the party alleging infringement has knowledge, that asserts or asserted any of the patents identified
Whether each patent is subject to any licensing term or pricing commitments through any agency or standard-setting body
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