Supreme Court Reduces Risk to Patent Owners Who Are Slow to Bring a Patent Infringement Lawsuit

By Robert Asher. Co-Chair of our Patent Practice Group

Upending long-settled judicial decision-making, the U.S. Supreme Court has struck down the application of laches to patent damages. Under that judge-made doctrine, a patent owner who unreasonably delays in filing suit may be denied a recovery of past damages. As of the March 21 decision in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, that defense against patent damages has been eliminated.

The availability of a laches defense had imposed on patent owners a sense of urgency when they learned of infringement. Waiting longer than six years to sue would have obligated the patent owner to prove that the delay was not unreasonable and did not prejudice the defendant.

If a court found that patent owner’s delay in filing suit was unreasonable and prejudicial, even a delay shorter than six years could have resulted in a dismissal of a claim for damages. Delay might cause prejudice if evidence favorable to the defendant went missing, or if helpful witnesses suffered faded memories or died, or the defendant made economic decisions that it might not have made if litigation had started earlier.

But given the exorbitant cost of patent litigation, to bring a lawsuit when the infringement was just getting started may not have offered a potential reward large enough to justify the cost. A patent owner might have found itself in a bind – file early and face the financial pressures of going after a smaller reward or delay filing and risk the potential defense of laches.

The Supreme Court’s decision removes timing of the lawsuit as a concern for patent owners. The decision reversed over a century of judicial decisions by giving new emphasis to the matter of timing as set out in the patent statute. That statute provides that damages may be awarded only for infringements taking place not more than six years before suing for patent infringement.

Acting in step with its  decision in the Raging Bull copyright case, Petrella v. Metro-Goldwyn-Mayer, Inc., which limited the laches defense in copyright cases, the Court deferred to the congressional judgment as to the limitations on damages. It ruled that Congress allows a patent owner to pursue up to six years of back damages, and the courts should not cite laches to substitute their own judgment as to the effect timing of a lawsuit should have on damages. More...

Expanding the Reach of Pharmaceutical Patents: Generic Manufacturer Held Liable For Inducing Infringement By Physicians and Patients

By W. John Keyes, Ph.D.. A member of our Patent Practice Group

Pioneer pharmaceutical firms are sure to welcome the boost to their patent portfolios resulting from a recent opinion by the Court of Appeals for the Federal Circuit.  In the wake of Eli Lilly v. Teva, infringement may now be found even where the defendant follows none of the steps in a patented method of treatment and no single actor performs all the steps of that method of treatment. Depending on the wording of the patent claims and the content of the prescribing information provided with their products, generic pharmaceutical manufacturers might not escape liability even if some steps of the method are performed by physicians and others by patients.

The claims of Eli Lilly’s patent are directed to methods of administering the chemotherapy drug pemetrexed after pretreating a patient with two common vitamins –folic acid and vitamin B12.  The pretreatment is designed to reduce the toxicity of pemetrexed.  Eli Lilly markets pemetrexed under the brand name ALIMTA®, and the drug is used to treat certain types of lung cancer and mesothelioma.

The patent owner sued a number of generic pharmaceutical manufacturers, including Teva, to prevent their launch of a generic version of ALIMTA® with accompanying product literature that would allegedly infringe methods of treatment claimed by the patent.  The district court found that no single actor performed all the steps of the asserted claims because the actions of both physicians and patients were required.  Nonetheless, by applying the theory of divided infringement, the court attributed direct infringement to physicians and held the generic manufacturers liable for inducing that infringement.

As for the pretreatment of patients with folic acid and vitamin B12, physicians administered the vitamin B12 (and the pemetrexed), while patients self-administered folic acid with guidance from physicians.  The judicial analysis therefore weighed liability under a theory of divided infringement, an area of law which has recently undergone important developments.

Specifically, the Akamai V decision (2015) has broadened the circumstances in which others’ acts may be attributed to a single actor to support direct-infringement liability.  The Federal Circuit held that one person can be deemed accountable for directing or controlling another person’s performance if the first person (1) conditions participation in an activity or receipt of a benefit upon the performance of one or more steps of a patented method, and (2) establishes the manner or timing of that performance.  The question in Eli Lilly v. Teva thus became: Did physicians direct or control patients to self-administer folic acid within the meaning of this two-part test? More...

A State University’s Patents May be Immune From PTAB Review

By Nancy Wilker, Ph.D and W. John Keyes, Ph.D.

Members of our Patent Practice Group

Since its introduction in 2012, inter partes review (IPR) has provided a relatively efficient means of challenging an issued patent on the basis of lack of novelty or obviousness.  Instead of challenging the patent in a court of law, a party can now petition the Patent Trial and Appeal Board (PTAB) to initiate an IPR.

IPR proceedings are heard by a panel of administrative law judges from the PTAB who decide whether to institute a review.  If one is instituted, they eventually issue a final decision on patentability of the challenged patent.

This powerful tool has become so popular that it is almost universally employed by parties defending against patent-based lawsuits. Consumer electronics giants have enthusiastically embraced IPRs as a means for challenging patents. Apple alone has filed more than 200 IPR petitions.  The automotive and pharmaceutical industries also have leveraged this tool extensively.

It appears now there are limits.  In its January decision in Covidien LP v. University of Florida Research Foundation Inc., the PTAB ruled that patents held by certain state-affiliated institutions are immune from challenges in IPR proceedings because of the protection afforded by the Eleventh Amendment of the US Constitution.

That amendment provides that the “Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”

The Eleventh Amendment has been interpreted broadly.  For example, in Federal Maritime Commission v. South Carolina State Ports Authority, the Supreme Court determined that it precludes certain adjudicative administrative agencies organized under Article I of the Constitution, such as the Federal Maritime Commission (“FMC”), from adjudicating complaints filed by a private party against a non-consenting state. More...

Non-Infringing Parties May Be Able to Challenge a Patent in an IPR, but Not Appeal the Result

By Brandon Scruggs. A member of our Litigation Practice Group

A recent court decision leaves some patent challengers using the inter-partes review (IPR) process facing a conundrum: They may be allowed to challenge a patent’s validity in an IPR, but not to appeal an adverse result.

The IPR is a procedure for challenging the validity of a U.S. patent on the basis of it being either anticipated or obvious in light of prior art.  A challenge can be made by any third party who requests the Patent Trial and Appeal Board (PTAB) to initiate an IPR.  The PTAB will initiate the IPR if it believes that there is a reasonable likelihood that the challenger will prevail with respect to at least one challenged claim.

Phigenix, Inc. sought an IPR of a U.S. patent owned by ImmunoGen, Inc. covering methods for treating certain cancers. Phigenix alleged that certain claims were unpatentable as obvious over various prior art references.

The PTAB instituted an IPR and eventually issued a final decision that the claims are valid and non-obvious. When Phigenix appealed, the Federal Circuit dismissed the appeal for lack of standing.

One of the elements of standing, a constitutional requirement for federal court, is “injury in fact.” This means that a party appearing in federal court must point to an injury that exists or is imminent and is particularized (i.e., that it affects that party in an individual way).  By contrast, to appear before an administrative agency like the PTAB, constitutional standing is not necessarily a requirement.

In Phigenix, Inc. v. ImmunoGen, Inc., the Federal Circuit addressed the legal standard for demonstrating standing in an appeal from a final agency action, something the court had not done in the 35 years of its existence.

First, the court decided that where a party seeks review of a final agency action and its standing comes into doubt, the party must supply good evidence of specific facts to support its standing.  Second, a party who appeals an IPR must demonstrate standing at the earliest opportunity, generally in response to a motion to dismiss the appeal or in its opening brief.

A party’s standing can be “self-evident” in some cases, said the court, like when the patent owner has accused the party of infringement. Otherwise the party pursuing an appeal must demonstrate its standing.  To do so, it may proffer arguments, affidavits or other evidence, whether already in the record in the IPR or supplied during the appeal itself.

Did Phigenix have standing to appeal?  Phigenix admitted it did not manufacture any products, so it could not claim that it faced any risk of infringing ImmunoGen’s patent.  Indeed, Phigenix could point to no business plans that would involve the patent. (More...)

A Joke So Funny Louis Vuitton Forgot to Laugh – The Danger of Suing Over a Parody

 

 

 

 

 

By Steven Abreu. A member of our Trademark Practice Group

Louis Vuitton bags symbolize a luxurious lifestyle. At the opposite end of the scale of luxury is the simple utilitarian canvas tote bag. In Louis Vuitton Malletier, S.A. v. My Other Bag, Inc., the Second Circuit reckoned with a canvas tote bag manufacturer making a statement about luxury brands like Louis Vuitton on the side of its canvas bags.  In the process, the court affirmed that parties who demonstrate fair use of another party’s mark by way of a successful parody have a valuable and enduring defense against trademark infringement, trademark dilution and copyright infringement claims.

One side of the tote bags made by My Other Bag, Inc. (“MOB’) displays the words MY OTHER BAG in big fanciful writing; the other side displays a full color depiction of a well-known luxury bag. One of MOB’s line of bags contains a picture of a well-known Louis Vuitton bag design adorned with imitations of Louis Vuitton’s trademarked icons printed directly onto the canvas bag.

According to MOB’s creator, a person carrying a My Other Bag tote is making an ironic statement that his or her “other bag” is an expensive luxury item.  The statement is similar to the well-known “My Other Car is a …” bumper stickers that were popularized in the 80s.

Louis Vuitton cultivates a sense of exclusivity and luxury and routinely protects its exclusivity by asserting its intellectual property rights against others. Unsurprisingly Louis Vuitton brought suit against MOB claiming that its use of lookalike Louis Vuitton designs and insignias were an infringement of, and a dilution of, Louis Vuitton’s trademarks. More....

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...