Challenging a Competitor’s Patent in the Patent Office: Great When it Works, but Failure Increases the Risk of a Court-Issued Injunction

 

 

 

 

 

By Thomas Tuytschaevers. A member of our Patent Practice Group

Recent developments in an infringement dispute in San Francisco yield valuable lessons regarding the hazards that may befall a company that challenges the validity of a rival’s patent in the United States Patent and Trademark Office. If the company loses its challenge, it may be that much more vulnerable to a preliminary injunction in subsequent infringement litigation.

Illumina, Inc. sells gene-sequencing equipment in the clinical laboratory market, where it competes with Qiagen, N.V and its subsidiaries.  In April 2016, Qiagen introduced its new GeneReader NGS system with a vigorous marketing campaign that seemed to be asking for trouble:  It claimed that the new system works in the “same way as Illumina’s machines.”  Illumina sued Qiagen and its subsidiaries for infringing US patent 7,566,537, and took the unusual step of asking the trial court for a preliminary injunction to halt the sale of Qiagen’s new product during the litigation.

As its name implies, a preliminary injunction in a patent case is a pre-trial order prohibiting an accused infringer from selling its product during the infringement trail.  It is a “drastic and extraordinary” remedy because it takes effect before infringement is proven, and before trial has even begun. (Patent suits often take two years or longer to get to trial.)   If granted rashly, a preliminary injunction causes potentially grievous harm to the accused infringer’s business, but if denied, risks irreparable injury to the patent owner.

Consequently, a court will grant a preliminary injunction only if the patent owner can show that (1) it is likely to prove the alleged infringement at trial; (2) it is likely to suffer irreparable harm if the injunction is not granted; (3) in measuring the hardship of an injunction on the accused infringer against the hardship of continuing infringement on the patent owner, the balance of hardships weighs in the patent owner’s favor; and (4) an injunction is in the public interest.  Despite the attractiveness of the preliminary injunction, patent owners rarely seek them, and courts rarely grant them, because the burden of proof is so high.

In Illumina v. Qiagen, however, Illumina was successful thanks in large part to assistance from Qiagen itself.  First, Qiagen chose to mount a difficult defense: It did not deny that Illumina was likely to succeed in showing infringement, so argued instead that Illumina’s patent was invalid in view of certain prior art.  An invalidity defense is difficult because U.S. law presumes a patent to be valid, so while the patent owner needs only to prove infringement by a preponderance of the evidence (i.e., that infringement is more likely than not), the accused infringer must prove invalidity by the higher “clear and convincing evidence” standard. More...

Litigators’ Perspective on the Patent Eligibility of Software: Courts Continue to Refine the Analysis in the Wake of Key Supreme Court Decision

 

 

 

 

 

By Lisa Tittemore and Brandon Scruggs. Ms. Tittemore is Co-Chair of the Litigation Practice Group and Mr. Scruggs is a member of the Litigation Practice Group

Recent precedential opinions from the Federal Circuit Court of Appeals – one of which represented a victory for our client Iatric Systems^[1] – allow some insight regarding the boundary between what is and what is not patent-eligible subject matter in the field of computers and computer software.  In the two cases, FairWarning IP, LLC v. Iatric Systems, Inc. and McRO, Inc. v. Bandai Namco Games America Inc., the Federal Circuit interpreted the Supreme Court’s controversial 2014 decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, which we have previously discussed.

In Alice, the Supreme Court announced the applicability of a two-step framework for determining patent eligibility under Section 101 of the Patent Act in the context of computer-related patents:

• First, courts must determine whether the patent claims at issue are “directed to” a patent-ineligible concept, such as an abstract idea.
• Second, if the claims are directed to patent-ineligible subject matter, courts must ask whether any of the additional limitations in the patent claims transform the claim into a patent-eligible application of a patent-ineligible concept.

Using that framework, which the Supreme Court had earlier articulated in the biotechnology context, the court in Alice invalidated patents that covered mitigating settlement risk in financial transactions using a computer system.  The court cautioned that patent eligibility requires more of a patent claim than simply stating an abstract idea and saying “apply it.”  However, the court also warned against reading its decision broadly, “lest it swallow all of patent law,” acknowledging that at some level all inventions rest upon laws of nature, natural phenomena, or abstract ideas.  Although simply implementing a process on a computer does not impart patent eligibility, patents that “improve an existing technological process” may be patent-eligible.

The analysis in Alice dramatically altered the approach that courts had applied in evaluating patent-eligibility for computer-related inventions.  Trial judges and the Federal Circuit alike have struggled to apply the Alice framework without slipping into an impenetrably vague “I know it when I see it” standard.  The Federal Circuit’s September and October 2016 decisions in McRO and Fairwarning IP provide useful guideposts.

McRO involved patent claims that describe a method for automatically producing lip synchronization and facial expressions in animated characters, a process which was previously done by human animators, using a computer, to manipulate the character model using an intuitive process.  The invention automated the 3D animator’s task, using rules with specific characteristics that require several variables to interact in a certain way.  The federal court in Los Angeles granted the defendant’s motion to throw out the case, finding the asserted claims “too broad” and unpatentable. More...