A recent decision by the International Trade Commission (“ITC” or the “Commission”) improves intellectual property holders’ ability to prove that they have a “domestic industry” and obtain relief for infringement from the Commission. Specifically, the ITC ruled that investments in “non-manufacturing activities,” including engineering and research and development activities related to a domestic industry protected article under section 337(a)(3)(C), can support a finding of domestic industry under sections 337(a)(3)(A) or (B)—the sections traditionally associated with manufacturing. The Commission also ruled that manufacturers could use certain investments in components and contract employees to support a finding of domestic industry. The Commission’s opinion removes uncertainty for companies relying upon research and development activities and expenditures to establish a domestic industry. It also helps parties relying on manufacturing expenses to establish a domestic industry.
A recent opinion from the District of New Jersey is a cautionary tale for patent practitioners regarding conduct during patent prosecution that can be framed as bad faith. This can become an expensive misstep during subsequent litigation. In Howmedica Osteonics Corp. v. Zimmer, Inc. et al., 2-05-cv-00897, the court granted defendant Zimmer, Inc.’s (“Zimmer”) motion for over $13 million in attorney fees and costs under 35 U.S.C. § 285 over plaintiff Howmedica Osteonics Corp.’s (“Howmedica”) argument that its actions did not support a finding of an exceptional case.
A recent order from the Northern District of California provides patent practitioners interesting guidance regarding conduct during licensing discussions—and may be a cautionary tale to potential licensors engaged in efficient infringement. In Finjan, Inc. v. SonicWall, Inc., 5-17-cv-04467, the court denied the defendant SonicWall’s motion to dismiss the plaintiff Finjan, Inc.’s (“Finjan”) willfulness allegations. Finjan alleges both that SonicWall infringes ten of Finjan’s patents covering behavior-based and antimalware security, and also that SonicWall’s infringement was willful because it engaged in insincere licensing discussions in order to intentionally delay the infringement litigation.
A California jury recently awarded Apple $538.6 million in total damages for patent infringement by Samsung. This is the latest development in the patent battle between smartphone industry titans that began in 2011 and took another step towards completion. The verdict arrived after five days of deliberations and seven months after Judge Koh ordered a second trial to determine appropriate damages in light of the U.S. Supreme Court decision in December of 2016. The jury attributed $533.3 million for the infringement of Apple’s design patents and $5.3 million for infringement of Apple’s utility patents.
The Federal Circuit recently overturned a decision estopping the plaintiff from pursuing its infringement claims in the United States District Court for the Eastern District of Arkansas, and clarified the effect of reexamination on equitable estoppel and laches. In John Bean Technologies Corporation v. Morris & Associates, Inc., the Federal Circuit held that District Court abused its discretion applying equitable estoppel to bar John Bean Technologies Corp.’s (“John Bean”) infringement action without considering the impact of an intervening ex parte reexamination on the claims of the asserted patent.
On April 18, 2018, the International Trade Commission (“Commission”) reversed an Administrative Law Judge’s (“ALJ”) finding that a litigation funding agreement destroyed standing for a complainant at the ITC. In Certain Audio Processing Hardware, Software, and Products Containing the Same, Inv. No. 337-TA-1026 (the “1026 investigation”), the ALJ issued an initial determination (“ID”) that found that Complainant Andrea did not have standing to assert the 6,363,345 (“the ’345 patent”) against Respondent Apple without joining litigation funder AND34, with which Andrea entered into a Revenue Sharing and Note Purchase Agreement (the “funding agreement”) to fund Andrea’s enforcement activities. But on review, the Commission concluded that the ALJ was wrong and reversed the portion of the ID that found that the funding agreement between Andrea and AND34 undermined standing.
An introduction to § 271
Section 271 of Title 35 of the United States Code is the statute that codifies unlawful acts of patent infringement. The most commonly asserted provisions are § 271(a) (direct infringement), § 271(b) (induced infringement), and § 271(c) (contributory infringement). However, other less frequently asserted provisions must also be considered when enforcing United States patents. For example, § 271(e) pertains to the infringement of patents on pharmaceuticals, specifically barring certain acts, while explicitly permitting others. Additionally, § 271(f) covers infringement by a party who supplies components of a patented invention to recipients outside of the United States with the knowledge the components will be combined “in a manner that would infringe the patent if such combination occurred within the United States.” And, finally, § 271(g) covers importation infringement, making liable a party that imports into the United States or offers to sell, sell or uses within the United States a product which is made by a patented process during the term of such a patent. While possibly the least often litigated, § 271(f) is now before the Supreme Court, in a case examining the applicability of foreign lost profits damages to § 271(f) infringement.
On March 20, 2018, the public version of Eastern District of Texas Magistrate Judge Roy Payne’s March 7, 2018 order tossing a $75 million jury verdict obtained by Ericsson against TCL Communication was released. Ericsson Inc., et al, v. TCL Communication Technology Holdings, Ltd., et al, Case No. 2:15-cv-00011-RSP, Doc. No. 460 (redacted memorandum opinion and order) (E.D. Tex. March 7, 2018) (“Order”). Judge Payne’s order sheds important light on the damages analysis for infringement of patents covering features of smartphone technology and potentially provides lessons to future litigants seeking damages for smartphone innovations.
After a jury verdict finding infringement, Ericsson also won a damages verdict of $75M due to TCL’s ongoing and willful infringement of U.S. Patent No. 7,149,510 (“the ’510 patent”). Ericsson contended that the ’510 patent covers smartphone functionality that allows a user to grant or deny access to native phone functionality to a third-party application, which is a standard feature in all Android smartphones. After trial, TCL moved for judgment as a matter of law on infringement and damages, or in the alternative new trials. Judge Payne indicated that he was going to uphold the infringement verdict, but ordered a new trial on damages. Order at 1.
In an application of 2017 U.S. Supreme Court precedent in Impressions Products, Inc. v. Lexmark Intern., Inc., the Northern District California in International Fruit Genetics LLC v. Orcharddepot.com, No. 4:17-cv-02905-JSW, recently denied a motion to dismiss a claim of patent infringement by holding that the patent exhaustion doctrine did not apply to a sale of a patented product that was outside the scope of the license granted by the patent owner. This decision helps inform how licenses may be interpreted post-Impression Products.
We thank Gary Gutzler, of AlixPartners, for co-authoring this post.
On January 12, 2018 in Exmark Manufacturing Co. Inc., v. Briggs & Stratton Power Products Group, LLC, the Federal Circuit once again addressed the issue of apportioning damages, an area of the law that continues to evolve. The parties in Exmark are competitors in the commercial lawn mower market. The patent-in-suit related to a lawn mower with an improved “baffle” that more efficiently directed air flow and grass clippings when the mower was operating. At the conclusion of the jury trial, the defendant’s mower was found to infringe and the jury awarded the plaintiff over $24 million in damages. On appeal, the Federal Circuit affirmed the method of apportionment utilized by the Plaintiff’s expert, but rejected the expert’s application of that method.