On Thursday, September 17, 2015, in the fourth Federal Circuit opinion arising out of the patent skirmishes between global high technology titans Apple and Samsung Electronics, a sharply divided Federal Circuit panel vacated the trial court’s denial of Apple’s post-trial motion for a permanent injunction against Samsung. Apple Inc. v. Samsung Electronics Co., Ltd., No. 14-1804, slip op. (Fed. Cir. Sept. 17, 2015).
At trial, Apple prevailed on its infringement claims in the Northern District of California (and received a jury award of approximately $120M) but failed to persuade District Court Judge Koh to permanently enjoin Samsung from selling software or code capable of implementing the infringing features in smartphones that directly compete with Apple’s ubiquitous iPhone devices.
The decision is an important departure from the weight of precedent following eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 395 (2006) (“eBay”), which has diminished, if not removed altogether, the ability of patent holders to enjoin infringers. As Judge Reyna noted in his emphatic concurring opinion, the remedy of an injunction had for decades been an important aspect of the right to exclude enjoyed by a patent owner. Yet in recent years this remedy seemed increasingly difficult, if not impossible, to obtain.
This opinion teaches that the injunction is still a viable remedy for patent infringement post-eBay. For a more complete discussion of the opinion, please see our client alert.
The International Trade Commission proposed a series of new procedural rules, which were published in the Federal Register on September 24, 2015. The notice of proposed rulemaking can be found HERE. This blog post provides a summary of the more notable proposed changes to the procedural rules.
Severance of Investigations into Multiple Proceedings
Under its current practice, the Commission institutes a single investigation for each complaint received, irrespective of the number of patents, parties, products, or technologies involved. Under the proposed rules, the Commission could institute multiple proceedings “where necessary to limit the number of technologies and/or unrelated patents asserted in a single investigation” based from a single complaint. The Administrative Law Judge (ALJ) would also have authority to sever cases. This severance by the ALJ would be based upon either a motion or the ALJ’s judgment that severance is necessary to allow efficient adjudication, and would be based on the same legal standard as severance by the Commission. Continue Reading
The United States and Australia each offer the option of filing a provisional patent application before filing a national or PCT non-provisional patent application. The U.S. provisional patent system and the Australian provisional patent system each allow applicants to secure a filing (priority) date with the provisional application for non-provisional application(s) to be filed within one year, and each system allows the provisional application to be filed in non-traditional patent form, i.e., without conforming to the claim, organization, and formality requirements of non-provisional applications. There are, however, advantages and disadvantages to filing a provisional application in one country versus the other. Read on for considerations that may help you decide where to file! Continue Reading
On March 31 we posted about the Patent Office rolling out a series of rulemakings for improving post-grant proceedings before the Patent Trial and Appeal Board (PTAB) pursuant to public feedback to a Request for Comments published by the Office last June. The first rules package went into effect this spring on May 19, 2015 and addressed “quick fixes,” such as changes to font requirements and increased page limits for petitioner replies and motions to amend.
This past Wednesday, Under Secretary of Commerce for Intellectual Property and USPTO Director, Michelle Lee, announced that the Office has now published for public comment through October 19, 2015 its second rules package of proposed changes involving more substantive revisions to PTAB trial rules and the Office Patent Trial Practice Guide (Practice Guide). The proposed rule changes seek to address issues and public comments concerning the claim construction standard for PTAB trials, word count for major briefing, new testimonial evidence submitted with a patent owner preliminary response and Rule 11-type certification for all filings. The package also addresses comments relating to various general topics, including additional discovery, live testimony and confidential information, and further requests public feedback concerning future rulemaking relating to whether communications between a patent owner and U.S. patent agents and foreign patent practitioners are privileged.
The rules package contains the following proposals: Continue Reading
Last month, the Ninth Circuit Court of Appeals issued a pivotal decision in Microsoft v. Motorola regarding the licensing of standard essential patents (SEPs) on reasonable and non-discriminatory (RAND) terms. Mintz Levin attorneys Richard G. Gervase, Jr., Bruce D. Sokler, Sandra J. Badin, and Michael T. Renaud critically assess the Ninth Circuit’s decision in Mintz Levin’s Intellectual Property Alert titled Ninth Circuit Upholds Judge Robart’s RAND Determinations in Microsoft v. Motorola. The Court endorsed the lower court’s methodology for determining the RAND rate, including its determination of the relevance of patent pools to SEP licenses. In so doing, the Court discussed the evidence necessary to determine whether particular RAND commitments have been breached and the proper measure of damages of such breaches. Based on its review of the record evidence, the Court upheld the jury’s finding that Motorola breached its duty of good faith and fair dealing when it sought injunctive relief for Microsoft’s alleged infringement of Motorola’s SEPs, as well as the jury’s $14.5 million damages award for that breach. While the decision contributes to the evolving jurisprudence of SEP enforcement, its singular focus on concerns over patent hold-up, to the exclusion of any concern over reverse patent hold-up, will only add to the growing pressure on innovators to opt out standard setting activities. In the long run, such an outcome bodes ill for the health and vigor of the American innovation economy.
In a unanimous full court decision issued yesterday, the Federal Circuit availed itself of “the opportunity to revisit the § 271(a) question” left unanswered by the Supreme Court last year, and outlined “the governing legal framework for direct infringement” of method claims. It held that a party can be liable for direct infringement of method claims under 35 U.S.C. § 271(a) “in two sets of circumstances: (1) where that entity directs or controls others’ performance, and (2) where the actors form a joint enterprise.”
With respect to the “direct or control” prong, the Court said that it “continue[s] to consider general principles of vicarious liability.” Under those principles, “an actor is liable for infringement under § 271(a) if it acts through an agent (applying traditional agency principles) or contracts with another to perform one or more steps of a claimed method.” But in addition to liability based on agency or contract, the Court held that, “on the facts of this case, … liability under § 271(a) can also be found when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.” (emphasis added). In such instances, the Court said, “the third party’s actions are attributed to the alleged infringer such that the alleged infringer becomes the single actor chargeable with direct infringement.” Whether a single actor has directed or controlled the actions of a third party is a question of fact reviewable on appeal for substantial evidence. Continue Reading
On July 29, Representatives Charles Boustany, Jr. (R-La.) and Richard E. Neal (D. Mass.) introduced draft legislation to the House Ways and Means Committee that would provide favorable tax treatment on certain intellectual property as a means of encouraging U.S. companies to bring their intellectual property back into the United States. The full text is available here, and a summary of the proposal is available here.
Under current law, there is no deduction or preferential tax rule for income from intellectual property. The proposal, titled the “Innovation Promotion Act of 2015,” creates a “U.S. innovation box” for qualifying intellectual property which is repatriated to the United States where income from the qualifying intellectual property receives a discounted 10 percent tax rate, and all taxes on the intellectual property are waived until the property is sold. The proposal applies to patents, know-how, processes, inventions, formulas, designs, patterns, and computer software, and products made by these patents, processes, and designs. However, marketing, trademarks, or copyrights do not qualify as eligible intellectual property. For qualifying types of intellectual property, the “innovation box profit” — which is defined as the gross receipts minus the cost of goods and expenses multiplied by the company’s ratio of domestic research and development to costs over the past five years—is eligible for the 10 percent tax rate. These “innovation box profits” include compensation for infringement of the qualifying intellectual property rights. In addition, repatriation of appreciated intellectual property by a foreign subsidiary of a U.S. company would not be taxed. The proposal is expected to most benefit U.S. high tech and pharmaceutical companies, and has a proposed effective date of December 31, 2015.
The “discussion draft” was introduced to the House Ways and Means Committee, and the drafters hope to have a version of this proposal included in the broader international tax legislation that the Ways and Means Committee might address this fall. The Chairman of the Committee, Representative Paul Ryan (R-Wis.), has spoken favorably of the bill, but other members of the Committee have expressed concern that the draft would provide tax relief to certain industries but not others. The Ways and Means Committee is in the process of taking input regarding the proposed legislation from interested parties, and Representatives Boustany and Neal have also requested detailed feedback about specific aspects of the proposal, including what types of intellectual property should be included and whether the proposal helps U.S. companies to remain competitive in the global marketplace.
On Tuesday, August 11, the Federal Circuit heard oral arguments in ClearCorrect v. International Trade Commission, a case that will decide whether the ITC has the power to exclude intangible items that are imported digitally rather than physically. A decision confirming the ITC’s ability to exclude digital imports could strongly impact the ebook, film, entertainment, and software industries by allowing them to use the ITC as a venue to fight piracy or infringement. Questioning was intense of all parties during yesterday’s oral argument, making it hard to determine which side is likely to prevail.
The facts of this case relate to clear dental aligners. In an ITC investigation instituted in April 2012, Align Technology claimed that Respondents ClearCorrect Pakistan and ClearCorrect Operating LLC infringed claims of seven patents relating to a system and methods for repositioning teeth. ClearCorrect made models of the U.S. patients’ teeth which were then scanned and converted into digital data sets, which were then transmitted to Pakistan. In Pakistan the data sets were manipulated, and the adjusted data sets were sent back to ClearCorrect in the United States, where they were used to create the aligners used by the patents. Thus, no physical articles were imported – the only item imported was a digital data set. In April 2014, the ITC found that ClearCorrect infringed the patents, and issued exclusion and cease and desist orders barring ClearCorrect from importing the data sets. The decision was appealed to the Federal Circuit. The importance of this case to the entertainment and software industries is demonstrated by the fact that Google and Apple have filed amicus briefs supporting ClearCorrect and arguing that the ITC decision allows the ITC to regulate all online commerce, and the Motion Picture Association of America and the Recording Industry Association of America have filed amicus briefs supporting Align, as the ITC ruling can help protect against piracy. Continue Reading
Yesterday morning, the full Federal Circuit issued its en banc opinion in Suprema, Inc. v. ITC and reversed the controversial Federal Circuit opinion that had effectively precluded the International Trade Commission from finding induced infringement in most cases involving method claims. No. 12-1170, slip op. at 4 (Fed. Cir. Aug. 10, 2015). In a 6-4 opinion, the en banc Federal Circuit disagreed with the panel opinion and confirmed that the ITC has jurisdiction over allegations of induced infringement of method claims. This decision is particularly important for cases involving the software and high tech industries, which often rely heavily on induced infringement allegations.
The underlying case in this appeal was an investigation before the U.S. International Trade Commission in which Cross Match Technologies, Inc. accused Mentalix, a domestic importer of fingerprint scanners, of infringing its U.S. Patent No. 7,203,344 (“the ’344 patent”). Cross Match also accused Suprema, the Korean developer of the imported scanners, of inducing Mentalix’s infringement. Cross Match contended that its ’344 patent was infringed when Suprema’s scanners were used in combination with Mentalix software after importation into the United States. The Commission agreed, finding that Mentalix’s operation of its software on the scanners after importation directly infringed Cross Match’s patent and that Suprema induced Mentalix’s direct infringement by actively encouraging incorporation of Mentalix’s software with its scanners. Based on this finding, the Commission issued an exclusion order preventing importation of the accused scanners into the United States. Mentalix and Suprema appealed to the Federal Circuit the Commission decision finding them in violation of §337 and the accompanying exclusion order. Continue Reading
The International Trade Commission has recently released the public version of the Administrative Law Judge’s Final Initial Determination in Certain Marine Sonar Imaging Devices, Including Downscan and Sidescan Devices, Products Containing the Same, and Components Thereof, Inv. No. 337-TA-921, Init Det. (July 2, 2015). In the Investigation, complainants Navico, Inc. of Tulsa, Oklahoma and Navico Holding AS of Egersund, Norway, one of the largest manufacturers of marine sonar equipment, alleged that respondent Garmin (comprising Garmin International, Inc. and related entities) imported a series of downscan sonar products that infringe three of Navico’s patents. Id. at 3-5, 9-10. The accused products provide visual representations of underwater objects (such as fish or wreckage) and consist of head units, black boxes, and transducers, though some head units are imported without transducers. Id. at 7.
In his Final Initial Determination, after completing claim construction, ALJ Shaw held that the accused Garmin products did not infringe any of the three asserted patents, either directly, indirectly, literally, or under the doctrine of equivalents. Id. at 89, 94, 114, 121, 177, 179, 223, 242. Regarding indirect infringement, Respondent Garmin argued that because many accused products were without the relevant ‘transducer’ component in the box at the time of importation, under the Suprema decision, Suprema, Inc. v. Int’l Trade Comm’n, 742 F.3d 1350, 1358 (Fed. Cir. 2013), vacated pending reh’g en banc, 2014 U.S. App. LEXIS 10124 (Fed. Cir. May 13, 2014), the Commission lacked the authority to exclude those products, as they infringed only after importation. Id. at 110-11, 238. Continue Reading