Gibbons Law Alert
Much debate has centered on patent reform and efforts to curtail the litigious activities of patent assertion entities (PAEs) also referred to as “patent trolls.” However, and as underscored for example by the number of patent lawsuits filed by Texas-based PAE PanTaurus, LLC this past year, PAEs continue to present a significant patent litigation presence.
We have previously posted on proposed federal and state legislation aimed at addressing the toll of “patent troll” litigation by non-practicing entities (“NPEs”) on the U.S. economy. Additionally, a recent Federal Circuit ruling relaxing the standard for finding “an exceptional case” to justify attorneys’ fees in patent infringement actions also appears to have been motivated by need to address NPE litigation. Now the United States trade commissions want to enter the fray. The U.S. International Trade Commission (ITC), through its recent decision In the matter of Certain Optical Disc Drives, Components Thereof, and Products Containing the Same, limited the ability of licensing entities, whose patent-related activities are purely revenue driven, to bring actions under 19 U.S.C. § 1337(a)(3). Additionally, the U.S. Federal Trade Commission (FTC) has recently been given approval to conduct a study on NPEs to examine how they operate and to what extent they affect competition and innovation.
On August 15, the Federal Circuit, in a nonprecedential opinion, reversed a lower court ruling, denying I/P Engine, Inc., a subsidiary of Vringo, Inc., a $30 million patent infringement jury verdict by invalidating two of its internet search engine patents. I/P Engine brought suit against AOL Inc., Google, Inc., and others in the Eastern District of Virginia for allegedly infringing its patents, U.S. Patent Nos. 6,314,420 and 6,775,664, which relate to systems and methods for filtering internet search results, using both content-based and collaborative filtering. In November 2012, the district court found I/P Engine’s patents valid and that defendants infringed those patents. The jury awarded I/P Engine over $30 million in damages and a 3.5% running royalty.
We have previously posted on proposed federal and state legislation aimed at addressing the toll of patent troll litigation on the U.S. economy. To date, twenty-five states have passed or are considering legislation aimed at curbing bad-faith patent assertion through state law, either based in consumer protection or through laws directed at bad business practices. From Vermont, one of the first states to adopt such legislation, MPHJ Technology Investments LLC (“MPHJ”), an alleged patent troll, seeks the opinion of the Court of Appeals for the Federal Circuit on the issue of federal patent law preemption.
District courts have been abuzz with accused infringers asserting invalidity based on ineligible subject matter under section 101. This is a result of evolving jurisprudence developed by the Federal Circuit and Supreme Court over the last few years. Today, that continued with the Supreme Court unanimously holding in Alice Corp. Pty v. CLS Bank Int’l, 573 U.S. ___ (2014) that, for claims drawn to an abstract idea, “merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.”
We previously reported that New Jersey District Court Judges will limit a patent infringement defendant’s discovery to the claims and defenses identified in its Invalidity Contentions served under Local Patent Rule 3.3. For the same reasons, a defendant may be barred from taking certain positions during claim construction. In an opinion issued last week, Judge Jose L. Linares held in Auxilium Pharmaceuticals, Inc. & FCB I LLC v. Watson Laboratories, Inc., No. 12-3084 (JLL) that a defendant that does “not raise an indefiniteness defense in its invalidity contentions . . . cannot seek a determination that the patents-at-issue are invalid for indefiniteness through claim construction.”
The United Supreme Court has been a “hot bench” for patent cases. On the same day, it issued two unanimous decisions reversing the Federal Circuit relating to claim definiteness and inducement infringement, the former of which we previously discussed. In the latter, Limelight Networks v. Akamai Tech. No. 12-786, 572 U.S. ___ (2014), the U.S. Supreme Court held that a party cannot be liable for inducing infringement under 35 U.S.C. §271(b) unless there is direct infringement in 35 U.S.C. §271(a). The Court in dicta also suggested that the Federal Circuit may wish to reconsider its prior decision, Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (2008), which held that a party–who does not perform all the method steps–cannot be liable for direct infringement in §271(a) unless it controls or directs another party to complete the other steps.
Section 101 challenges continue to be front and center at the district court level, including three recent decisions in the United States District Courts for the Northern District of California and Eastern District of Virginia which reflect holdings falling on opposite sides of 101 patentability. In France Telecom S.A. v. Marvell Semiconductor Inc., the court denied defendant’s summary judgment motion because it failed to meet the “high level of proof” needed to succeed on an eligibility challenge under section 101. There, the patent involved correcting errors in telecommunication and other signals (caused by noise or interference which distorts the data) known as turbo coding. After summarizing relevant jurisprudence, the court identified the abstract ideas relevant to the subject matter of the patent claims at issue as “error-correction coding” or “decoding digital data elements.” The court then analyzed whether the claims contained “additional substantive limitations that narrow, confine, or otherwise tie [them] down.” Specifically, the court found that they provide “unique and detailed [error-detection coding or decoding] methods . . . or inventive concepts that exceed the prior art, namely, coding in parallel and a novel method of iterative coding.” Thus, the claimed inventions “provide the necessary substantive claim limitations beyond the mere recitation” of abstract ideas. The court also gave the claims a passing grade in the machine-or-transformation test: “[c]laim 1 takes digital data elements and turns them into a distinct series of coded data elements, which Claim 10 in turn decodes.” The court further found relevant (similar to the court in TQP Development we previously discussed) that the purpose of the patent was “to disclose a method for more accurate and efficient data transmission.”
In Sanofi-Aventis Deutschland GmbH v. Glenmark Pharms Inc., the Federal Circuit followed previous precedent in holding that the combination of compounds is not “obvious to try” if unexpected properties are supported by evidence. The patent-at-issue was directed to an antihypertension drug, Tarka®, which is the combination of an angiotension-converting enzyme inhibitor (such as trandolapril or quinapril, both double-ring compounds) and a calcium channel blocker. The jury found that the patent had not been proven invalid and defendant, on appeal, argued that “if a combination of classes of components is already known, all selections within such classes are obvious to try . . . .” The Federal Circuit found that there was substantial evidence supporting the jury’s verdict that obviousness had not been proved by clear and convincing evidence because of the unpredicted “longer-lasting effectiveness” achieved with the drug.
On April 30, 2014, the Supreme Court heard oral arguments in Limelight Networks, Inc., v. Akamai Technologies, Inc., et al., No. 12-786. We previously reported on the Federal Circuit’s twin en banc opinions in Akamai Techs., Inc. v. Limelight Networks, Inc., and McKesson Techs. Inc. v. Epic Sys. Corp., 692 F.3d 1301 (Fed. Cir. 2012), finding inducement under 35 U.S.C. § 271(b) even when a single actor was not liable for direct infringement. Both Limelight and Epic petitioned the Supreme Court for review, but the Epic case subsequently settled.