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
Every month I stumble across a number of items that catch my attention. That is why I started again publishing News & Notes. In order to try and segregate items of interest based on audience, News & Notes will be something of a catch-all column. I am resurrecting Patent Business, which will focus on those litigation, deals and licensing stories of interest. Obviously, this is not intended to be an exhaustive summary, but rather interesting items that might be worth knowing in order to keep your finger on the pulse of the industry.
Without further ado, here is Patent Business: Litigation, Deals & Licenses for September 2013. Please also see News & Notes for September 2013 and Pharma & Biotech News for September 2013.
Universal Electronics sues Peel Technologies over remote control patents
On September 23, 2013, Universal Electronics Inc. (UEI) (NASDAQ: UEIC) announced it has filed a lawsuit in the United States District Court in the state of California against Peel Technologies, Inc. (Peel), based in Mountain View, California, for patent infringement. UEI seeks a permanent injunction in addition to monetary damages against Peel.
The Supreme Court on June 24, 2013, called for the views of the Solicitor General on petitions to review the Federal Circuit’s en banc decision on joint infringement of process patents. That decision held that induced infringement of a process patent claim may be found even though no single entity performed all of the claimed steps as long as claim steps are performed collectively by multiple parties. In Akamai Technologies, Inc v. Limelight Networks, Inc., U.S., No. 12-960, 6/11/2013, the question presented is:
Whether a party may be liable for infringement under either 35 U.S.C. §271(a) or §271(b) where two or more entities join together to perform all of the steps of a process claim?
In Limelight Networks, Inc., v. Akamai Technologies, Inc., U.S., No. 12-786, 6/11/2013, the question presented is:
Whether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. § 271(b) even though no one has committed direct infringement under §271(a).
Flying under the AMP v. Myriad radar was the Federal Circuit’s decision in Organic Seed Growers v. Monsanto. Let’s first recall the story of Bowman v. Monsanto. A small farmer purchased a batch of mixed seeds from an authorized vendor, expecting the batch to contain Monsanto’s patented Roundup Ready® seeds. The farmer then planted the seeds, selected for those with the Roundup Ready® trait, and saved them for future plantings. The Supreme Court unanimously held that the patent exhaustion doctrine does not excuse the small farmer from liability for infringing Monsanto’s patents.
In my commentary on Bowman, a hypothetical scenario was posed where the small farmer was more unwitting and had inadvertently planted Monsanto’s patented Roundup Ready® seeds. In such a scenario, would the unwitting small farmer nevertheless have been liable for infringing Monsato’s patented seed technology? The Supreme Court’s decision in Bowman, which is narrowly tailored to only the case’s specific set of facts, offers no guidance as to how the hypothetical might be resolved. Luckily, the Federal Circuit’s Organic Seed Growers decision might.
In Organic Seed Growers, the Federal Circuit denied declaratory relief to a band of more than 60 farmers, seed vendors, and agricultural organizations from California to Florida (and even Canada) seeking to invalidate 23 of Monsanto’s patents relating to various technologies for genetically modified seeds. The band of agriculturists grows, uses, or sells conventional seeds that do not incorporate Monsanto’s technologies. Many have organic certifications, and generally eschew transgenic seeds and glyphosate-based herbicides such as Monsanto’s Roundup® herbicide.
When it comes to DVR, no one can argue with the convenience of being able to record your favorite shows and watch them later. But when the case of DVR patent infringement came to court, the big lesson was that “later” just isn’t going to work. Earlier this month at the Symposium of SIPO/US Bar Liaison Council with ACPAA held at Cardozo Law School, prominent figures in intellectual property law tackled strategic and ethical issues for patent attorneys in the wake of the TiVo v Echostar case. They came to the conclusion that asserting your rights early and often is the best practice for attorneys faced with injunction cases.
In TiVo v. Echostar, Echostar lost on infringement of TiVo’s patented DVR functionality. Judge Folsom issued an injunction and ordered that Echostar stop offering the service and disable all storage to and playback from the hard disk. Unfortunately for Echostar, they did not appeal the wording of the injunction and took no action against the disablement provision. Instead they designed around it by downloading new code to get the set-top box to operate in a different way, in what appeared to be a pretty clean design-around. TiVo filed a contempt motion. Echostar was sanctioned on the grounds that there were not “colorable differences” and their design-around infringed. The dissent argued that not only were there colorable differences but moreover the differences established non-infringement. After two years of back-and-forth and one too many trips to Judge Folsom, the original 70 million that Echostar had to pay for the initial infringement rose to 300 million because of Echostar doing what they thought would get them out of infringing. (Ultimately, Echostar wound up settling for 500 million.)
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