Archive for the ‘Litigation’ Category

Patent Litigation: Collecting Attorney’s Fees Just Got Easier!

Friday, August 29th, 2014
Supreme Court

Patent infringement litigation usually is high stakes and very expensive.  The cost of the litigation can easily reach seven figures or more.  In the United States, each party to litigation generally bears its own costs, with exceptions.   Section 285 of the patent statute contains the exception for patent litigation.  The statute is short and sweet:

The court in exceptional cases may award reasonable attorney fees to the prevailing party.  (Emphasis supplied).

But what cases are ‘exceptional?’¬† In the past, the Federal Circuit Court of Appeals, which hears patent appeals, only allowed an award of attorneys fees if the claim or defense was ‘objectively baseless’ based on ‘clear and convincing evidence.’¬† This standard favored patent owners seeking to enforce patents and provided a bright-line, predictable result.

Earlier this year the Supreme Court in Icon Health & Fitness rejected the Federal Circuit bright-line standard, and, in keeping with the recent Supreme Court approach to patent cases, adopted a fuzzy-is-better standard:

¬†…an “exceptional” case is simply one that stands out from the others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances…

The Federal Circuit recently considered the Icon Health & Fitness case on remand from the Supreme Court and sent the case back to the lower court for decision on the attorneys fee issues.¬† The Federal Circuit reminded the lower court that the attorneys fee decision does not stop with a determination that a case is ‘exceptional.’¬† The lower court has discretion to deny attorneys fees even in exceptional cases.¬† The decision of the lower court judge will be reviewed on appeal only to determine whether the judge abused his or her discretion, which means the Federal Circuit will defer to the lower court judge in almost all cases.

The effect of the decisions is to transfer power from the Federal Circuit to the district court judges who hear the witnesses, see the evidence, and observe the litigation behavior of the parties.  The effects on the parties are to reduce the predictability of patent litigation, to increase the risk to every patent litigant, and generally to discourage patent litigation.

— Robert Yarbrough, Esq.

Busy, Busy, Busy

Saturday, June 28th, 2014

Supreme CourtThe Supreme Court has had a busy time of it in June stirring the patent pot, with decisions in three cases and arguments in a fourth. The general rule is that whenever the Supreme Court decides a patent case, the law is left in worse shape than it was before. The recent decisions are no exception. This month, we’ll take a look at Limelight v Akamai, decided June 2, 2014.

In Limelight, the Court considered “inducement of infringement.” Inducement of infringement occurs when one person causes, or induces, another person to infringe a patent. Where the patent is to a method of doing something, the inducement rule for many years has been that (a) one person must induce another person to infringe the patent, and (b) the other person must actually perform all of the steps of the method and thus infringe the patent. The person who caused someone else to infringe is liable for infringement, just is the person who actually infringed.

This rule worked fine when things were made from steel and wood, but has been a problem for Internet-implemented inventions that can be performed over a computer network by different people in different locations and even different countries.

The stage is set for Limelight and Akamai.

MIT owned patents relating to storage and retrieval of content over the Internet. MIT licensed the patents to Akamai, which runs a service utilizing the MIT patent to store and retrieve content. The patent (and the Akamai service) involves storing large files on servers located in different locations, and, hopefully, near the user who wants access to the file. Local storage of the large files allowed faster access by the user. One of the steps of the patent is that Akamai ‘tags’ which of a customer’s files are to be stored in the local servers.

Limelight operates a competing service that is just like Akamai’s service, but with one important difference – Limelight does not ‘tag’ the files. Instead, Limelight’s customers tag their own files, using advice and assistance from Limelight. Because Limelight does not tag the files, no one person performs all of the steps of the patent and there is no one that Akamai can sue for direct infringement. Because no one person performs all of the steps of the patent, under the old rule Limelight cannot be liable for inducement of infringement. Akamai has no remedy. Seems unfair, doesn’t it?

The Federal Circuit Court of Appeals thought so. It decided that the old rule did not work in the information age and that Limelight’s actions in copying Akamai’s business but avoiding the patent should not be tolerated and that Limelight should be liable for inducement of infringement.

The Supreme Court reversed and reinstated the old rule, seeing no reason to change. As a result of the Supreme Court’s decision, Akamai is without remedy and Internet copyists are free to cut a step from a method patent, instruct someone else to perform the missing step, and avoid patent infringement altogether. The value of Internet inventions, or in fact any method patent that can be performed by different people, has just dropped.

–Robert Yarbrough, Esq.

What Happened to Google Street View?

Sunday, March 30th, 2014

Street View Google Street View is the popular feature of Google Maps that allows you to see panoramic photographs of, well, pretty much anywhere with different orientations and magnifications.  The photographs are stitched together in software to allow the viewer to navigate through a virtual representation of the real world.  You may have seen the Google photography cars driving around with an array of cameras, taking pictures of your neighborhood.

If you look for Google Street View today, you will not find it.¬† Why?¬† We can’t say for sure, but it may have something to do with a decision by the Federal Circuit Court of Appeals in the case of Vederi v Google.

But we’re getting ahead of ourselves.¬† Back in the year 2000, Enrico Bernado and Luis Goncalves were Ph.D candidates at CalTech.¬† They attached cameras and a GPS device to Mr. Bernado’s car and drove around Pasadena taking photographs.They also developed software to stitch the photographs together, creating panoramic views and allowing a person to navigate through a virtual representation of the real landscape.¬† The results were available through the City of Pasadena’s website.

Drs. Bernado and Goncalves founded Vederi, LLC and were awarded four patents for their work.  Vederi sued Google for patent infringement for its Street View product.  The trial court found no infringement based its interpretation of the claims of the patents, but the Federal Circuit Court reversed and sent the case back to the trial court.  We suspect that Google believes that Street View infringes the patent claims as interpreted by the Federal Circuit and as a result took Street View off line.

Will we see Google Street View again?  Because a patent infringement lawsuit is a license negotiation by another name, we suspect so.

–Robert Yarbrough, Esq.

Ask Dr. Copyright …

Friday, February 28th, 2014

copyright question Dear Doc:

Last month, you promised that you’d continue your explanation of patents and copyrights with a rant about patents and trolls. So…? What, exactly, do you have against trolls, other than the fact that they live under bridges and threaten goats?


Been Waiting a Month

Dear BWaM:

OK. So as not to disappoint, here goes!

The press has been overflowing for the past few years with breathless articles about evil “patent trolls”.¬† You see, back in the late 1990s semiconductor giant Intel was being sued for patent infringement by many patent owners. The company’s lawyer, Peter Detkin, called one of the lawyers representing the patent owners a “patent extortionist” in an article about the company, but others at Intel did not like that term. There was a contest, and Detkin, Anne Gundelfinger and Mark Davis somehow came up with “patent troll” as an alternative.

Remember the story of how the trolls hid under a bridge that they had not built, but demanded a toll from everyone who crossed?¬† Me neither. The original Norwegian folk tale is completely silent on who built the bridge, but it’s pretty clear that the goats had not done so, right? Goats lack opposable thumbs.¬† And as there is no other character in the story…but I digress. The troll term struck a chord, and came to mean a company that asserted patents on technology that they had not invented, seeking royalties. Such companies are clearly evil villains, because they don’t invent anything, and they sue other people using patents that they buy from inventors. Boo! Hiss! The media climbed on board, and there have been thousands of publications decrying the “rent seeking behavior” of the trolls. For a very entertaining overview, click here.

Fast forward to 2014, and you have bills in Congress and the President of these United States promising to do something to stop the trolls because they hurt innovation! But…do they really? Let’s think about this.

Suppose you passed a law that says that anyone who owns a piece of ground¬† and who built a building there could do only one of two things: occupy it himself, or occupy part of it, and rent the other part out. He can sell the building, but only to someone who will only occupy it – and never rent it out, because otherwise, the new owner would not be the one who built the building – he would only be seeking to collect rent.¬† He can’t move out and rent the entire building because then he would not be using what he had built, only seeking to collect rent. Oh, and the original owner would not be allowed to hire a manager by promising to pay a portion of the rent collected, and he can’t buy the building next door, since he didn’t build it. Forget real estate investment trusts that buy properties to build a portfolio – they don’t build things…they must be evil too.

So under this new law, what is a property worth? What incentive does the land-owner have to build his building if he has to live in it until he can sell it to someone who can only live in it? Easy – you’ve just reduced the value of almost every property in America by a huge amount. No one can be a real estate investor in the resale market. Period. So why would our country want to do the same thing to inventors, by limiting their ability to sell their patents? Because big companies that infringe patents are sick and tired of getting caught with their hands in the cookie jar, and can afford to create a fable and lots of press to convince us that their problem is actually our problem. Congress has taken their money that comes wrapped in that same fable, and the President knows a good story when he hears it.

It has been pointed out that it costs millions of dollars to defend against a patent infringement law suit, and that these suits take years to work their way through the courts. True. But the same is true of other high-stakes business litigation in many fields. It’s not only the “trolls” who suffer from our less than efficient court system: Apple and Samsung have been battling for many years, and there is no end in sight. Few call either of these companies patent trolls (some surely do), but that doesn’t stop anyone from complaining that these suits are harmful. It’s just strange that these same complainers seem to be perfectly happy to have and use the innovations that are supposed to be protected by patents, while never bothering to ask what the world would look like if nobody could raise capital by having effective patents in the first place. (For a great explanation, read William Rosen’s The Most Powerful Idea in the World)

As a registered patent attorney who has represented all kinds of inventors for more than thirty years (from garage inventors to the largest multinational corporations) and has been involved in patent licensing and sale for all of that time, the Doc can simply say that there is another, more honest definition of “patent troll” — one given by Professor R. Polk Wagner of the University of Pennsylvania School of Law, who said that a patent troll is simply anyone who would dare to sue ME for patent infringement.

So there you have it. The same old story: don’t believe everything you read on the Internet…World War I started that way.

To get the straight story on intellectual property issues, be sure to ask the attorneys at LW&H. For reasons that nobody can explain, they actually enjoy thinking about this stuff.

Until next month,

The Doc.

— Lawrence Husick, Esq.

Inducing Patent Infringement: New Case May Reach the U.S. Supreme Court

Tuesday, December 31st, 2013

The ‘claims’ of a patent dictate the rights of the patent owner and define the property created by the patent.

Where the invention is something physical, such as a machine or a drug, it is relatively easy to show infringement – the patent owner must show that the infringer made, used, or sold the machine or drug that meets all of the elements of a claim.¬†¬† Alternatively, the infringer is liable if the patent owner can show that the infringer ‘induced;’ that is, caused, someone else to make, use or sell the machine or drug and that other person actually did make, use or sell the machine or drug.¬† The requirement that someone must actually make, use or sell the invention as claimed works well for patents to machines and drugs.

An injustice occurs when the claim addresses a method that can be performed by more than one person.  This situation is common for Internet inventions.  Consider the following (highly hypothetical) claim. A method of distributing content over the Internet comprising:

(a) uploading a video by a content provider to a server;

(b) modifying a website to instruct browsers to access the server to download the video.

In this hypothetical claim, the actions of two different persons can perform the two steps – the content provider and the person who modifies the website.¬†¬† If two different persons perform the two tasks, then the patent owner cannot produce any one person who performed both steps.¬† There is no one person who ‘directly’ infringed the patent claim.¬† As a result, if a copyist can split a patented method into pieces and have someone else perform another piece, then the copyist is not an infringer and the patent is unenforceable.

This situation has been a thorn in the side of Internet inventors.  The Court of Appeals of the Federal Circuit decided to do something about it in the case of Akamai Technologies v Limelight Networks.  In that case, the Federal Circuit concluded that Limelight Networks performed some of the steps of the patent claim and induced someone else to perform the remaining steps.  The Federal Circuit held that Limelight was liable for infringement even if no one person performed all of the steps of the patent claim.

The joy of Internet inventors was short lived.  Limelight asked the Supreme Court to hear an appeal and the Supreme Court asked the Federal government for advice on whether the Court should take the case.  On December 10, 2013 the Federal government filed its brief saying that the Court should hear the case and should overturn the result.  It now is likely that the Supreme Court will hear the appeal.   The Court likely will issue a decision in late 2014 or 2015.

— Robert Yarbrough, Esq.

Beware of the On-Sale Bar

Friday, August 30th, 2013

police If you are a regular reader of this newsletter, then you know that a sale or offer for sale of your invention will terminate your patent rights unless you first file a patent application.   Did you know that the on-sale bar also applies to commercial sales of the invention to you, as from a contract manufacturer or prototype-maker?

Hamilton Beach recently learned to its sorrow that the on-sale bar applies not only to sales by the patent owner but also to purchases by the patent owner.  Hamilton Beach invented an improved slow cooker.  Hamilton Beach did not manufacture the slow cooker itself and instead negotiated with a foreign manufacturer.  The foreign manufacturer offered to sell the improved slow cooker to Hamilton Beach.  Hamilton Beach subsequently filed an application and obtained a patent for the improved slow cooker.  Hamilton Beach later sued Sunbeam for patent infringement.  Sunbeam argued that the Hamilton Beach patent was invalid because of the offer to sell the invention by the manufacturer to Hamilton Beach.

The U.S. Circuit Court for the Federal Circuit ruled that the offer by the manufacturer to sell the slow cookers to Hamilton Beach was an ‘offer of sale’ that tripped the ‘on sale’ bar and invalidated the patent.

Why is this decision important to small businesses and individual inventors?

The hidden risk of the Hamilton Beach decision lies in the production of prototypes.¬† The on-sale bar requires (a) a commercial sale or offer for sale of (b) an invention that is ready for patenting.¬† An estimate from, say, a machine shop to produce a prototype of an invention could be a commercial offer to sell the invention triggering the on-sale bar if the invention is ready for patenting.¬† An invention is ‘ready for patenting’ when (a) the inventor has a working prototype or (b) the invention is described in drawings or in written descriptions sufficient to allow a knowledgeable person to build and use the invention.

The only way sure way to avoid the on-sale bar is to not buy or sell the invention until after you file a patent application.  The Hamilton Beach case is yet another reason to file provisional patent applications early and often.

— Robert Yarbrough, Esq.

The Fable of the Supreme Court and the Beanstalk

Thursday, May 30th, 2013

Once upon a time, a farmer purchased a magic bean.  The farmer planted his magic bean, as farmers do.  The magic bean grew into a magic beanstalk and made more magic beans.  The farmer harvested the magic beans, as farmers do, and saved the new magic beans for the next year.   For eight years, the farmer planted his new magic beans, grew new magic beanstalks and harvested magic beans for re-planting.

Monsanto, which owned a patent on the magic bean, filed suit against the farmer.¬† Monsanto believed that the farmer infringed Monsanto’s patent because the farmer made copies of the magic beans, violating the prohibition on making or using a patented product.¬† Monsanto’s beans were magic because they were genetically modified to survive treatment with glyphosate herbicides.¬† Use of the genetically modified bean allowed the farmer to kill the weeds in the farmer’s fields using herbicides without damaging his crop.

The farmer believed that once Monsanto sold the magic bean, then Monsanto had no further rights to the bean. The farmer’s friends agreed.¬† The farmer argued the doctrine of ‘patent exhaustion,’¬† which means that once a patent owner sells a patented product, the purchaser and any subsequent purchasers can use or sell the product and the patent owner has no further rights to control the patented product.¬† In this case, the genetically modified soybeans were twice-removed from Monsanto – Monsanto sold the patented soybeans to farmers, the farmers planted the beans, raised crops and sold their crops to a grain elevator, and the grain elevator sold soybeans from the crops to Vernon Bowman, the farmer of our fable.

The case of the magic bean went all the way to the Supreme Court.¬† On May 13, 2013 a unanimous Court ruled in favor of Monsanto.¬†¬† The Court concluded that the doctrine of ‘patent exhaustion’ applies only to a particular patented article sold, in this case each genetically-modified soybean sold by Monsanto.¬† The doctrine allows the farmer to plant or eat soybeans purchased from Monsanto, to grow a crop and to sell the crop.¬† For soybeans that had the genetic trait and that Mr. Bowman purchased from the grain elevator, Mr. Bowman could re-sell those soybeans, feed the soybeans to animals or eat the soybeans.¬†¬† However, ‘patent exhaustion’ did not allow Mr. Bowman to make copies of the patented soybeans.¬† Otherwise, a patent for a seed could never be of any value.¬† The patent owner could sell the first seed, which would then be copied by infringers, using the self-replicating nature of the seed.¬† The Court expressly limited the ruling to the facts of the case, recognizing that other situations may arise with other self-replicating inventions, such as computer programs, that might require a different result.

The facts were favorable to Monsanto – Mr. Bowman acted to isolate and duplicate the patented Roundup Ready¬ģ soybeans and to take advantage of the herbicide-resistant genetic trait.¬† He treated his fields with glyphosate herbicide, ensuring that only soybean plants with the Monsanto-owned trait survived.¬† He also was familiar with the Roundup Ready¬ģ beans and used Monsanto-supplied beans for some of his needs.

The Monsanto patents address DNA having specific characteristics and seed and plants containing that DNA.¬† The Monsanto genetic modification now has been part of the environment for years and eventually will find its way as a contaminant into many, if not all, soybean crops.¬† The Court was silent on an issue raised in friend-of-the-court briefs; namely, what happens when an organic farmer who does not use herbicides saves seed contaminated with the Monsanto genetic modification.¬† Isn’t the organic farmer infringing Monsanto’s patent?¬† In a related question, how can any farmer ever grow any soybeans without being forced to buy Monsanto’s seed due to unintentional genetic contamination?¬† Those questions currently are in the courts in Organic Seed Growers & Trade Association v Monsanto.

To Be, or Not To Be..

Thursday, May 30th, 2013

Patent Illustration

Pardon the quote of the Bard, but there is one area of patent law that, indeed, ponders “that is the question.” Bear with us for a moment while we try to set the stage. To qualify for a patent, the patent law statute passed by Congress states that an invention must meet three criteria: it must be new, useful, and non-obvious. For our present purposes, we will set aside the useful and non-obvious qualifications. To be new, in essence an invention must not have been thought of (or at least, disclosed) by anyone else. Simple enough.

But the U.S. Supreme Court, as judge made law, has grafted onto patent law the concepts that one cannot obtain a patent on a law of nature, a natural phenomenon, or an abstract idea. For instance, Einstein’s famous equation E=MC2 is said to represent a law of nature and, therefore, be unpatentable. Devices utilizing the law, like the bomb, are patentable. The idea here is that laws of nature belong to everybody and cannot be the exclusive property of anyone, while new applications of the law are patentable. In concept, a pretty straight forward approach. However, recently in the biotechnology realm, the concept of a law of nature has become twisted, contorted, stretched, strained, and abused – but we’ll talk about that another time.

For today, we weill briefly delve into what is meant by “abstract” although we confess up front, that we cannot give you an unambiguous explanation. The meaning of “abstract” lies hidden under the murky waters of patent law involving much judicial semantic nonsense promulgated in major part by the U.S. Supreme Court. One interpretation is that a basic idea of an invention is abstract if it totally captures all possible uses of an idea. In this guise, patent examiners routinely reject applications that seem to have a mathematical expression at their core, especially computer and software implemented inventions. One court has recently expanded the¬† concept of what may be abstract to the analysis of a method for hedging risk in financial dealings between two parties. Lest you think that we are ducking a good explanation of abstract, another federal appellate court recently decided (CLS Bank Int’l v. Alice Corp.) such a hedging idea was abstract, but could not articulate a consistent interpretation of why. In fact, seven different opinions were filed including at least three different tests for evaluating patent eligibility. Like pornography, the courts seem to know “abstract” when they see it.


Which brings us full circle: To be (abstract) or not to be (abstract), that is the question.

When is a Patent Owner Entitled to a Court Order Stopping Infringement?

Monday, December 31st, 2012

apple v samsung

Consider this scenario: you have gone to all the time and expense to obtain a patent from the U.S. Patent and Trademark Office.   You have launched your product and your sales are good.  Now a pirate is copying your product and stealing your sales.  Are you entitled to a court order stopping infringement of your patent?

Before the U.S. Supreme Court decided the case of eBay v MercExchange in 2006, the answer would have been a resounding ‘yes.’¬† After the eBay case, the patent holder must demonstrate, among other things, ‘irreparable harm’ from the infringement and that an award of money damages to the patent holder is not enough to compensate the patent holder.¬† It is not enough to show harm – the patent holder must show that copying of the features specifically protected by the patent caused the harm.

The most recent application of the eBay decision is the ongoing worldwide Apple v Samsung litigation.¬† Apple recently proved that among other things Samsung copied Apple’s patented designs for the iPhone and iPad.¬† Apple was awarded a money judgment for $1.049 billion (that’s billion, with a ‘b’).¬†¬† The trial judge decided on December 17 that Apple is not entitled to an injunction stopping Samsung from selling the infringing products.¬† The judge concluded that Apple did not show that the harm to Apple resulted from the specific infringement in question.¬† Apple still has the right to appeal the denial of the injunction to the Federal Circuit Court of Appeals.¬† Stay tuned.

— Robert Yarbrough, Esq.

Who Pays For Patent Litigation?

Wednesday, October 31st, 2012

dollar Your company is threatened with a lawsuit for patent infringement.  You are confident that your product does not infringe.  Should you fight or should you surrender?

These are very real questions that businesses face every day.  According to a 2009 survey by the American Intellectual Property Law Association, the average cost for infringement litigation through the end of discovery was $2.5 million where the amount in controversy was between $1 million and $25 million.  These costs do not include the costs of the trial or of any appeals.

In short, your attorneys’ fees may well hit seven figures.¬† Whether you can collect those fees may well determine whether it makes sense for you to fight or to cave.¬† So can you collect your attorneys’ fees from the patent owner when you win the infringement lawsuit?

In the U.S., the answer generally is ‘no.’¬† The patent statute tracks the ‘American Rule’ and allows the prevailing party to collect its attorney’s fees only in ‘exceptional circumstances.’¬† The Federal Circuit has generally held that ‘exceptional circumstances’ occur and an accused infringer is entitled to an award of its attorney’s fees where the litigation is frivolous or the patent owner committed misconduct in obtaining the patent or in the litigation.¬† The Federal Circuit also has held that ‘exceptional circumstances’ occur when the litigation is both (a) brought in subjective bad faith and (b) objectively baseless.

The law elsewhere is different.¬† The ‘British Rule’ allows the prevailing party routinely to collect its attorneys’ fees.

–Robert Yarbrough, Esq.