Posts Tagged: "Patent Litigation"

Earlier today the United States Supreme Court granted certiorari in TC Heartland LLC v. Kraft Food Brands Group LLC. In deciding to hear this patent venue case the Supreme Court has agreed to decide whether 28 U.S.C. § 1400(b) is the sole and exclusive provision governing venue in patent infringement actions… Ultimately, the question that the petitioner really wants the Supreme Court to address is whether the Eastern District of Texas, which is home to 20-25% of all patent litigations because it is perceived to be patent owner friendly, is a proper venue for patent owners to be choosing. If the Supreme Court issues a ruling that strikes down current patent venue rules there would be no need for patent venue reform efforts to continue in Congress. On the other hand, if the Supreme Court were to affirm the Federal Circuit in this case calls for legislative venue reform would likely become deafening.

Patents and the innovators who own them do not “cost” the U.S. economy tens of billions of dollars each year. This claim has been repeatedly and thoroughly debunked… But for a moment let’s buy into the fraud. If you actually do the math, which the Internet Association and infringer lobby obviously has never done, you will be amazed as how inconsequential even their grossly inflated estimates of cost are in terms of the scale of the overall U.S. tech economy… If the problems with patents are so awful because they create such a windfall for patent owners doesn’t that just admit that these companies are misleading their own shareholders and perhaps even not maximizing value?

Olaplex argues that L’Oreal is profiting from technology it first came into contact with in 2015, when L’Oreal discussed a possible takeover with Olaplex. After seeing Olaplex’s proprietary technology, including an unpublished patent application and Olaplex’s marketing strategy, Olaplex alleges that L’Oreal ceased with its acquisition efforts after signing a non-disclosure agreement with Olaplex. About a year later, L’Oreal began selling a series of three hair treatment products infringing upon Olaplex’s intellectual property related to bond builders, according to reports.

After Halo, courts appear to be breathing new life into claims for willful patent infringement and enhanced damages claims. In fact, since Halo’s new standard took effect a few months ago, juries found willful infringement in three out of four cases where they returned a verdict of infringement. However, as discussed below, there are steps a defendant can take to protect itself against a finding of willful infringement.

Digital video recording (DVR) development company TiVo recently settled a patent infringement litigation, which it had filed last year against South Korean electronics giant Samsung. The settlement includes an intellectual property licensing agreement which will be in force for at least five years which will allow Samsung to continue providing DVR technologies in the U.S. market. TiVo first filed suit against Samsung last September in the U.S. District Court for the Eastern District of Texas (E.D. Tex.). The patent infringement complaint alleged that set-top boxes produced and marketed by Samsung to television service providers offered DVR technology which infringed upon a series of four TiVo patents.

The message is being received by patent owners around the world, including those with large U.S. patent portfolios, that China is a reasonable and fair place to resolve patent disputes… Aside from any anecdotal evidence and cultural bias theories, it is also hard to ignore the reality playing out inside the Chinese IP courts. Foreign patent holders have been having a great deal of luck in China’s IP courts, at least at the courthouse situated in Beijing… If these patent granting and litigation trends continue, we could be left with the rather mind-numbing conclusion that China, a country ruled by a communist government, has a more robust innovation protection regime than the United States, an ostensibly capitalist country that doesn’t seem to see the virtue in protecting the rights of innovators.

As more reports come out that patent filings for individuals and small businesses are down and a general recognition that real innovation does not come from large organizations, but rather small ones, it is becoming clearer that changes in our laws have decreased the previous standards that were in place to “promote the progress of science and useful arts.” As such, it seems to this author that our current patent laws are unconstitutional, or at the very least are thoroughly and completely frustrating the constitutional purpose for which they were created since our laws are promoting less and not “securing” our discoveries. We need to strengthen our patent laws to have a system that promotes the progress of science and useful arts by efficiently and affordably securing for inventors the exclusive rights to their discoveries and innovations.

The Norwegian fairy tale “Three Billy Goats Gruff” was far ahead of its time and the moral of that story has a very relevant, modern application. In short, the story introduces three goats that want to cross a river to eat some luscious grass. To do so, however, the goats must first cross a bridge; under which lives a fearsome troll, who is so territorial that he eats anyone who dares to cross it. By working together, the goats are able to plot against the troll, and ultimately knock him off of the bridge. After knocking the troll off the bridge, the three goats lived happily ever after. So, if these goats can figure out how to get rid of trolls, why can’t sophisticated companies do the same?

The stage is now set for the Supreme Court to weigh in on the future of laches in patent litigation. If the Court closely follows its analysis in the Petrella decision, it is fairly likely that the Court will reverse the Federal Circuit and hold that laches cannot bar claims for damages within the six-year period set forth in § 286. Indeed, given the en banc ruling, it is unlikely that the Court would grant certiorari simply to confirm that Aukerman remains good law. There is also the conspicuous absence of the term “laches” (or any other reference to “equitable” defenses) in the Patent Act. While the Federal Circuit found that the doctrine of laches was implied by the language of § 282, the Supreme Court may not be so willing to entertain the same statutory interpretation.

But now, after quickly dispatching with the patent troll meme as much ado about nothing, we can, should and must now unleash a more simplified counter attack by referencing a commonly deployed patent abuse known as “efficient infringement.” This deliberate disdain for patent property is the business model driving mega-tech IT incumbents to continually pressure Congress to enact measure such as HR 9 and S.1137. Efficient infringement is a cold-hearted business calculation whereby businesses decide it will be cheaper to steal patented technology than to license it and pay a fair royalty to the innovator. This cold-hearted business approach to stealing intellectual property resonates when it is conveyed properly. Here is a simple script for research universities to use when they communicate with candidates’ pre-election and Staffers and those who prevail after the election. These arguments are easily adaptable to all pro-patent advocates.

Basing policy recommendations on no evidence, or at best anecdotal evidence, has great potential to do more harm than good…especially when some of the missing evidence is the other side of the equation – the benefits afforded by patent licensing activity… Instead of seizing the opportunity to survey the patent licensing landscape and shed light on behavior that otherwise is invisible to the public, the FTC squandered the chance and instead developed two arbitrary categories of PAEs, determined that one of these categories was not good, and developed a set of policy recommendations because of “nuisance” litigation. By making recommendations without gathering or using the very facts that were supposed to be the public benefit of this PAE study, the FTC’s report is undoubtedly going to do more harm than good.

Despite the headlines, most infringement is small infringement. The FTC report ignores three important sea changes in the patent ecosystem that should, if anything, obliterate the use of settlement demand amounts or final license fees as any touchstone of bad faith. These are (1) the ten-year long movement to “rationalize” (actually, reduce) patent damages, (2) the “thumb on the scales” given to accused infringers in recent court holdings and legislation (primarily Alice invalidation, revitalized obviousness doctrine, and no-upside-but-everything-to-lose PTAB proceedings), and (3) increased infringer opportunities to extract monetary awards from plaintiff-patentees (Octane/Highmark).

Why should the costs of the tortfeasing infringer be relevant in determining whether the extracted value from a settlement is fair? The fact that law firms charge a lot of money to defend patent infringement cases, and don’t particularly have any incentive to settle cases early, somehow translates into certain settlements being for nuisance value without any consideration of whether the settlement is a fair value for the rights trampled upon by the infringer? The FTC has quite a lot of explaining to do, because it seems they picked an arbitrary number that is a function of what attorneys ordinarily charge infringing defendants through discovery. I don’t see how that is a function of the value of the innovation, or how it says anything about the merits of the infringement case, the damages case, or the tactics of the patent owner. In fact, it seems as if the $300,000 figure is completely irrelevant.

The report indicates that IP litigation in U.S. district courts is declining across the board. During 2016’s third quarter, U.S. district courts received a total of 1,127 new patent infringement suits. This was greater than the 960 patent infringement cases filed in the first quarter of this year but it was also the third smallest docket in a single quarter going back to the fourth quarter of 2011, before the terms of the America Invents Act (AIA) of 2011 went into effect. The third quarter of 2015 saw 1,114 patent litigation filed in U.S. courts, so three of the lowest quarters in terms of patent infringement filings since the AIA have come over the past 15 months.

The Supreme Court need not wait for Congress to act. This is a case of first impression in interpreting the provision. Guided by its own law on design patent infringement and legislative history, the Court can reach the common sense result provided by the provision’s wording. Design owners should be made whole, but not unjustly enriched. Awarding the infringer’s total profits regardless of the contribution of the design to the end product’s value subverts patent law’s mandate to promote technological progress.