introduction 2017 ip conference 4812-7373-5505 v.1 · the dtsa (defend trade secrets act) trade...

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Forging Ahead: Strategies for the New Unknown


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Trends $2.5B Largest patent infringement award in US history

granted to Idenix (Merck)

40% Despite Idenix mega-award, median damages down 40% relative to last year

9% Fewer patent cases filed in 2016 v 2015

33% Patentee success rate steady

80/20 Jury versus bench proportion continue to rise (up from 75/25)

15x Median jury award over 15x greater than median bench award in last 5 years

52% of appealed decisions were modified in some regard

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Source: PwC 2017 Patent Litigation Study

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Featured Speakers

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Wi-Fi – Network Name: uchicago-guest, Username: IP Conference,Password: Foley

Mobile App – Assistance is available at registration. Panel materials can be found in the app under the Agenda section and can be forwarded via email.

CLE – To receive CLE credit for the conference, you must complete and sign the Attendance Verification Form and return it to the registration desk before you leave today. Be sure to fill in your state bar information!

Evaluation – Your feedback is important to us. Please complete the paper or mobile app evaluation form at the end of the conference. Completed paper forms can be returned to the registration desk.

Questions – We encourage you to ask questions via the mobile app or during the panels. Keep it interactive! Please be sure to state your name and affiliation before asking questions.

No Video or Audio Recording, Please –We want to make sure this is the forum you can exchange your ideas freely.

Housekeeping Items

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Design Rights – What Are They Really Worth?

Foley’s 2017 Annual IP Conference

October 6, 2017 • Chicago, IL


Foley Participants

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Jami GekasPartner

IP LitigationTrademark, Copyright, &

Advertising

Marcus SprowPartner and Chair

Mechanical & Electromechanical

Technology

David RoodAssociate

Mechanical & Electromechanical

Technology

PanelistModerators


Panelists

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Randy K. ChangSenior Patent CounselAcushnet Company

Jason FokensGlobal IP Legal DirectorGOJO Industries, Inc.

Paul HatchCEO

TEAMS Design USA, Inc.


Acushnet Company

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GOJO Industries, Inc.

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TEAMS Design USA, Inc.

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Design Rights Protections

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Design Patents

Trade Dress

Copyrights

Protects: Ornamental, non-functional designs

Requirements:

– Design must be new (novel)

– Cannot be obvious in view of existing designs

Term: 15 years from issuance

Legal Standard: Ordinary observer test



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Design Patents

Trade Dress

Copyrights

US D477,041 US D733,456



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Design Patents

Trade Dress

Copyrights

https://patentlyo.com/patent/2017/10/design-patents-2017.html



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Design Patents

Trade Dress

Copyrights

Protects: Non-functional design feature(s) that identify a brand

Requirements:

– Design is non-functional

– Design has acquired “secondary meaning”

Term: Indefinite

Legal Standard: Likelihood of consumer confusion



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Design Patents

Trade Dress

Copyrights

US2943365


Choosing Where to File

How do you choose where you file?

– Large markets?

– Manufacturing facilities?

– Different strategies in different countries?

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Comparison of Design Rights

Protection Term Cost Ease

Design Patent

15 Years $$

Trade Dress

Indefinite $$$$

Copyright

95 Years from Publication or

120 Years from Creation

$

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Choosing the Right Form of Protection

Matching protection with product lifecycle

– Short time to grant matches short product lifecycle

Layering design patents with utility patents

– Maximizing potential damages

Layering design patents with trade dress

– 15 year term to establish secondary meaning

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Educating Your Employees

How do you capture designs?

How do you teach your designers/engineers about what is protectable?

How does the patent landscape inform your design process?

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Design Patent: Partial Claiming

Using dashed (phantom) lines to disclaim portions of a design

Partial claiming allows for coverage of only claimed portions of a design rather than the whole object

Broadens design patent scope or provides focused coverage on different aspects of a design

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Design Patent: Partial Claiming

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Choosing Where to File

How do you choose where you file?

– Large markets?

– Manufacturing facilities?

– Different strategies in different countries?

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Enforcement

Focusing efforts on preventing blatant knock-offs vs. leveraging for competitive advantage

Different enforcement strategy for counterfeits vs. knock-offs

Utilizing expert witnesses:

– Explaining the state of the art

– Interpreting partial claiming

– Analyzing functional aspects

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Enforcement: Design Patent Damages

Two-part test for multi-component product (Columbia Sportswear v. Seirus)

– (1) Identify if the product is multi-component

– (2) Determine if the “article of manufacture” is the whole product or a sub-component

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Enforcement: Design Patent Damages

Patentee bears burden of identifying the article of manufacture.

Infringer bears the burden of proving that the article of manufacture is something less than the entire product.

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Enforcement in China

Four avenues for enforcement:

– Chinese District Court

– State General Administration of Customs – detention of infringing goods (export)

– US ITC – detention of infringing goods (import)

– US District Court

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Enforcement in China

Anti-counterfeiting working group coming together across the industry to coordinate shutting down blatant knockoffs

Coordinated raid of counterfeiters

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ATTORNEY ADVERTISEMENT. The contents of this document, current at the date of publication, are for reference purposes only and do not constitute legal advice. Where previous cases are included, prior results do not guarantee a similar outcome. Images of people may not be Foley personnel.© 2017 Foley & Lardner LLP

Thank YouMarcus W. Sprow

[email protected] | (313) 234-7150

Jami A. Gekas


David A. Rood


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Balancing IP Strategies Against Real World Issues



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Panel Speakers

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John LaBarre, Head of Patent Transactions, Google Inc.

Chris Verni, Chief IP Counsel,Sarepta Therapeutics Inc.

Phyllis Turner-Brim, VP and Assistant General Counsel, Intellectual Property and Technology, Starbucks Corporation

Mike Henning, Assistant General Counsel of Litigation and Intellectual Property,United Airlines, Inc.

Melissa Harrup, Chief Counsel, Intellectual Property, Mondelēz International, Inc.


Foley Team

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Andy Rawlins, Partner and Department Vice Chair, Intellectual Property

Jim McParland,Associate, Chemical, Biotech & Pharmaceutical

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Balancing IP Strategies Against Real World Issues: Overview

I. Allocating Your Time

II. Managing Human IP Assets

III. Evaluating Performance

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I. Allocating Your Time Where do You Focus Your Time to Add the Most

Value?

– Focus on Strategic Guidance for Specific Initiatives

– Identifying Key IP Issues/Risks for Business

How do You Efficiently Allocate Available Time?

– Scaling Leadership

– Delegation & Monitoring

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II. Managing Human IP Assets

How do You Best Organize Your IP Structure?

– Hierarchical v. Dynamic/Team-Based

– Visibility

Approach to Hiring IP Personnel

The Importance of Diversity

Retention of IP Personnel

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III. Evaluating Performance

Approaches to Evaluating Performance

– Outside Counsel Performance

– In-House Attorney Performance

– Financial Performance

– Justifying ROI & Balancing Risk

– Metrics

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Evaluating Performance: Outside Counsel

How do You Evaluate Outside Counsel Performance?

– OC Scorecard - A Must

– Qualitative & Quantitative Reviews

– Control Charting (when practicable)

– Annual Scorecard Review

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How do You Evaluate In-House Attorney Performance?

– Client Surveys

– Peer Reviews

Address Internal Challenges

– Management of Resources

Financial, Personnel, etc.

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Evaluating Performance: In-House

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How do You Evaluate Financial Performance?

– Use of Long-term Trends for Forecasting Accuracy

3-5 Year ‘Look-Back’

3-5 Year Forecast

– Annual Planning

(i) IP Acquisition; (ii) IP Litigation; (iii) Revenue Generation;(iv) OC Spend; (v) Capital

– Review Budget vs. Actual

Monthly vs. Quarterly

Event-Driven

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Evaluating Performance: Financial


How do You Justify ROI?

– Determined by Highest Value Asset(s)

– Freedom to Action as ROI

“Proving the Negative”

e.g.: Estimated Licensing Savings

– Monetization

e.g.: Synergy of IP

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Evaluating Performance: Justifying ROI& Balancing Risk

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Essentials: Data & Data Tools

– Internal & External Data

– Sample Size

– Data Retention Data Mining

– Guidelines = Metrics Tools

Results:

– Qualitative & Quantitative

– External & Internal Review

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Evaluating Performance: Metrics



Are Trade Secrets The Next Frontier?




Panel Speakers

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Elizabeth Pietrowski, Assistant General Counsel, IPCatalent Pharma Solutions

Matthew Goodwin, Chief IP CounselNewell Brands, Inc.

Neer Gupta, Associate General Counsel, IP Verizon Communications, Inc.

Robert McHenry, Associate General Counsel, Commercial & Litigation, Zynga Inc.


Foley Team

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Cynthia Rigsby Partner, IP Litigation

Eoin Connolly Associate, IP Litigation


TOPICS

How to Identify Trade Secrets

Managing and Protecting Trade Secrets

Trade Secret Training

Trade Secret Enforcement

The DTSA (Defend Trade Secrets Act)

Trade Secret vs. Other IP Protections

Trade Secrets in Due Diligence

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What’s Your Secret?

A trade secret is (1) used in business; (2) provides an advantage over those who do not know it; and (3) is subject to reasonable efforts to keep it confidential.

Trade secrets consist of information and can include a formula, pattern, compilation, program, device, method, technique or process.

To appropriately manage your companies’ trade secrets, you first have to identify them.

This should be an on-going process, but if you need to get a handle on this in your organization, what can you do?

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Protecting Trade Secrets

What are some of the “reasonable efforts” employed to protect your trade secrets?

– Require all employees, contractors, consultants, vendors, and manufacturers to sign confidentiality agreements

– Employee code of conduct explains strict obligations to maintain secrecy of confidential information

– Restrict physical and electronic access to facilities

– Restrict access to trade secret information to only those who “need to know” – secure servers

– Protocols to reduce threat of copying

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Protecting Trade Secrets – Cont.

– Employee devices are encrypted and password protected

– Mark “Confidential”

– Trade secret response plan in place

– Supply chain controls?

Know your partners

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Trade Secret Training

One key to a secure trade secret program is good training.

What issues should be considered when creating a training program?

– Frequency: How often should training programs be conducted?

– Employee Inattention: Supplement online training with in-person training

– Expectations: Practical and realistic – what are various departments capable of doing and what are they willing to do?

– Vendor training?

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Trade Secret Enforcement

As trade secret issues arise in your organization, when do you seek to enforce your trade secrets?

– What factors do you consider?

– What steps do you take before filing suit?

– When you are in litigation (as a plaintiff or defendant) what can you do to maximize your company’s chances of success?

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DTSA: What is it?

The “Defend Trade Secrets Act”

Signed into law May 11, 2016

Creates federal jurisdiction for trade secret theft

Largely mirrors the Uniform Trade Secret Act, which had been adopted by 48 states.

Does not preempt existing state law

Does not include any requirement that a trade secret plaintiff describe its trade secret with particularity (as CA requires)

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DTSA: What is it? Two controversial aspects of the DTSA

– whistleblower immunity

– ex parte seizure

Neither have been employed with much success so far – at least as far as we can tell from reported cases.

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DTSA: Whistleblower Immunity DTSA provides immunity for the disclosure of trade secrets

to the government in order to report a violation of the law

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18 U.S.C. § 1833(b)


EXAMPLE: an employee that steals an employer’s trade secrets and discloses them to the government to report a suspected violation of law is immune from liability under the DTSA.

This provision is largely untested, and no court has found immunity under this provision to date.

In Unum Group v. Loftus, a former employee moved to have a DTSA claim against him dismissed on the basis of whistleblower immunity but the court found that because there had been no discovery, the factual record was not sufficiently developed to determine whether the immunity applied. 220 F. Supp. 3d 143 (D. Mass. 2016)

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DTSA: Whistleblower Immunity


One particularly important aspect of whistleblower immunity is the notice requirement:

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DTSA: Whistleblower Immunity

18 U.S.C. § 1833(b)(3)

In other words:• If an employer does not provide notice of

whistleblower immunity to its employees the employer cannot later seek punitive damages or attorneys’ fees under DTSA


DTSA: Ex Parte Seizure DTSA permits ex parte seizure to prevent the propagation or

dissemination of trade secrets but “only in extraordinary circumstances.”

In only one case has a court found the extraordinary circumstances necessary for ex parte seizure – in that case the defendant had previously violated a temporary restraining order.

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18 U.S.C. § 1836(b)(2)


DTSA: Cases Filed Since Enactment Enacted in May 2016, so we now have over a

year’s worth of data.

– Over 440 cases have been filed in Federal District Courts involving claims under the DTSA between May 2016 and August 2017.

– 322 of these 440 were filed in 2017, versus only 121 in 2016, showing a slow start and rising filings.

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DTSA: Cases Filed Since Enactment

Considerable uptick in cases involving the DTSA since February 2017

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DTSA Claims vs. State Law Claims

Roughly 85% of Complaints including DTSA claims also include state law trade secret claims.*

Over 515 complaints were filed asserting only state law trade secret claims. Approximately 200 in federal court, and 315 in state court.

* Analysis conducted by Munger, Tolles & Olson LLP

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DTSA Claims vs. State Law Claims

Trade Secrets Litigation from approx. May 2016 to July 2017

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54

306

515

All Trade Secrets Litigation

DTSA Only

DTSA & StateLaw

State Law Only

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306

200

Federal Court Trade Secrets Litigation

DTSA Only

DTSA & StateLaw

State Law Only


Pre & Post DTSA Trends in District Court

Significantly more Trade Secret cases being brought in District Courts post-DTSA

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DTSA: Where We Are Now

Other than allowing for federal jurisdiction (and the expected uptick in federal filings), DTSA has not, as yet, had a strong impact on trade secrets litigation.

As expected, Courts have typically relied on prior state court interpretations under the Uniform Trade Secrets Act to interpret and apply the DTSA.

Goal still is to arrive at a more uniform and consistent application of the law, through the federal courts.

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Trade Secret vs. Other IP Protections

An increasing interest in trade secrets following the DTSA has caused companies to consider:

When should we just maintain and protect our invention as a trade secret, rather than seeking some other kind of protection?

Factors to consider?

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Trade Secrets in Due Diligence

Considering IP in due diligence is standard, but what about trade secrets?

What can you ask for (and actually expect to receive)?

What can you reveal?

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Thank You


General Counsel Speak! Managing Risks and Opportunities in the Midst of Turbulence




Panel Speakers

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Larry Samuelson, Senior VP, General Counsel & Corporate Secretary, Cvent, Inc.

Thomas Jackson, Senior VP, General Counsel and Secretary, Knowles Corporation.

Christine Castellano, Senior VP, General Counsel, Corporate Secretary and Chief Compliance Officer, Ingredion Incorporated

Jodi J. Caro, General Counsel, Chief Compliance Officer & Corporate Secretary, Ulta Beauty

April Miller Boise, Senior VP, General Counsel and Corporate Secretary, Meritor Inc.


Foley Team

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Michele Simkin, Partner and Department Chair, Intellectual Property

Kevin Malaney, Senior Counsel, IP Litigation


IntroductionsPanelists:

Larry Samuelson – Senior Vice President, General Counsel and Corporate Secretary, Cvent, Inc.

Christine Castellano – Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer, Ingredion Incorporated

Thomas Jackson – Senior Vice President, General Counsel and Secretary, Knowles Corporation

April Miller Boise – Senior VP, General Counsel and Corporate Secretary, Meritor Inc.

Jodi J. Caro – General Counsel, Chief Compliance Officer and Corporate Secretary, Ulta Beauty

Foley Participants:

Michele Simkin, Partner and Department Chair, Intellectual Property

Kevin Malaney, Senior Counsel, IP Litigation

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“Intellectual Property”

This panel represents an impressive array of companies and industries.

– How do you define “Intellectual Property” at your respective companies?

– Who is responsible for defining the “IP strategy” including goals and objectives and how is that accomplished?

– Who is responsible for carrying out the IP strategy and how is progress towards the defined goals and objectives accomplished?

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Acquisition and Review of Intellectual Property

This panel represents an impressive array of companies and industries that naturally emphasize different IP rights.

– What are the types of IP rights that your companies focus on?

– Is there any periodic review of the IP portfolios done and if so, who is responsible for the review and how is it carried out?

– If a periodic review is done, what is the purpose and end product of that review?

– If the reviews have a qualitative aspect to them, how are assets with varying quality treated differently (i.e., what is done differently regarding crown jewel IP versus IP relating to products in an abandoned product area?)

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Structure of Legal Departments Relating to Intellectual Property at Respective Companies

Practically speaking, how do your departments achieve your Intellectual Property goals and objectives?

– Specifically, what IP projects/tasks do you handle in-house?

– Does your department have head count dedicated solely to IP?

– What IP projects/tasks do you rely on outside counsel for?

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Intellectual Property Budgetary Considerations

Handling Intellectual Property issues – especially unexpected events such as patent/trademark infringement litigation – can prove costly.

– Do you have a dedicated budget in your legal spend to handle IP issues?

– How are unexpected events such as infringement litigation handled in your budgets?

– Has legal spend specifically relating to IP issues increased, decreased, or stayed the same over the last five years and what do you think that is attributed to?

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Highlighted Challenges in Intellectual Property Law

As demonstrated, Intellectual Property considerations are a factor for all of your companies.

– Generally speaking, what are the most prominent IP issues your companies have faced over the last few years?

– What IP issues are you and other business leaders most interested in hearing about?

– Do you expect any additional IP issues to arise in the coming years for your companies?

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Trade Secret / Joint Venture Issues

Trade secrets seem to be growing in prominence as evidenced by the recent high-profile dispute between Google and Uber involving driverless vehicles.

– Do your companies have a formalized approach to protecting trade secrets?

– If so, generally speaking, how is that implemented?

– Are there specific trade secret procedures implemented for hiring/departing employees?

– In a joint venture context, how are trade secrets handled both contractually and practically?

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Recent Intellectual Property Litigation/Enforcement Experience

Intellectual Property risk is a cost of doing business in 2017.

– What has been your experience, if any, with offensive and defensive IP litigation over the last five years?

– How about demand letters?

– Have you noticed any notable increase or decline in either lawsuits or demands over the last five years?

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Thank YouCONTACT US

Michele SimkinPartner, Washington, [email protected]

Kevin J. MalaneySenior Counsel, [email protected]


4813-3264-6225 v.1

Are IP Cases No Longer Special? —Cases to watch at SCOTUS, CAFC, DC, and PTAB




Panel Speakers

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Tonya Combs, Senior Director -General Patent Counsel, Lilly BioMedicines, Eli Lilly and Company

Lauren Schwartz, Senior Counsel litigation, Groupon, Inc..

Carrie Distler, Senior Managing Director, FTI Consulting, Inc.

Erin Greenfield Mehta, Counsel, Litigation and Patents, Hulu

John Mulgrew, Global Head of IP,Uber Technologies, Inc.

Tanuja Garde, VP, Intellectual Property and Licensing,Raytheon Company


Foley Team

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Jeanne Gills, Partner and Department Vice Chair, Intellectual Property

Wendy Cheung,Associate, IP Litigation


Overview

Key Supreme Court and Federal Circuit Patent Decisions

Key PTAB Decisions

Recent Patent Litigation Trends

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Themes Unprecedented number of Supreme Court

decisions

Supreme Court treating IP cases similarly – e.g., looking to copyright decisions to decide patent cases

District Court Judges given more discretion

Cases becoming more fact intensive; expert selection ever more vital or technical; and damages matters

New trends emerging from PTAB cases

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Key Supreme Court and Federal Circuit Patent Decisions

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Patent Venue TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017)

– 7-0 decision (Thomas), (Gorsuch did not take part)

– Question: Whether Congress changed § 1400(b)'s meaning when it amended § 1391?

– Holdings: As applied to domestic corporations, residence in §1400(b) refers only to the State of incorporation. The amendments to § 1391 did not modify the meaning of § 1400(b) as interpreted by Fourco.

– Patent Venue Statute, 28 U.S.C. § 1400(b) (recodified in 1948):

“Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”

– Fourco Glass Co. v. Transmirra Prod. Corp., 353 U.S. 222, 229 (1957)

• Holding: 28 U.S.C. § 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions, and that it is not to be supplemented by the provisions of 28 U.S.C. § 1391(c).

– General Venue Statute, 28 U.S.C. § 1391(c) (amended, 1988 version)

Defined “residence” for corporate defendants

“… a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.”

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Venue Ct’d – Impact of TC Heartland1. How will Courts determine venue, and what will venue

discovery look like? Guidance from In re Cray, D. Delaware enough?

2. What are the long term ramifications of TC Heartland?

a) What are the venues of choice among NPEs and PEs?

b) Impact to court dockets in Texas, Delaware, California, and other courts (N.D. Illinois)?

c) Court congestion (overcrowding)?

d) Other unintended consequences – Will TC Heartland cause a decrease in case filings?

3. Impact of TC Heartland to Hatch-Waxman cases?

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Case Filing Pre- & Post- TC Heartland

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E.D. Texas decreased by 50% - from 34% (542/1582) to 17% (55/320).

DED & N.D. Ca share of cases increased

Source: UnifiedPatents.com


Statistics for Motion to Dismiss Jurisdiction/Venue/Standing

Statistics and chart from Docket Navigator Analytics.


Revisiting Damages in Design Patent Cases Samsung Elecs. Co. v. Apple Inc., 137 S. Ct. 429 (2016)

– 8-0 unanimous decision (Sotomayor)

– § 289 of the Patent Act provides that whoever manufactures or sells an “article of manufacture” that infringes a patented design is liable to the design owner to the extent of his total profit.

– To arrive at a damages award under § 289 involves two steps:

First, identify the “article of manufacture” to which the infringed design has been applied.

Second, calculate the infringer's total profit made on that article of manufacture.

– Question: Whether, in the case of a multicomponent product, the relevant ‘article of manufacture’ must always be the end product sold to the consumer or whether it can also be a component of that product?

– Holding: In a multicomponent product, the relevant “article of manufacture” for damages calculation need not be the end product, but may be only a component of that product.

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Design Patent Damages Ct’d Impact of Samsung Elecs.

– Impacts design patent prosecution strategy

– Impacts damages expert selection and theories

– Because of inadequate briefing by the parties, the Supreme Court declined to “set out a test for identifying the relevant article of manufacture at the first step of the § 289 damages inquiry.” 137 S. Ct. at 436.

– In March 2017, the Federal Circuit remanded both Apple v. Samsung and Nordock, Inc. v. Systems Inc. to the district court to determine:

Scope of the article of manufacture - what constitutes the relevant “article of manufacture”?

Apportionment of damages - The parties will need to determine the plaintiff’s lost profits or reasonable royalty or the infringer’s actual profits on the relevant article of manufacture. See Nordock, Inc. v. Sys. Inc., No. 2014-1762, 2017 WL 1034379, at *2 (Fed. Cir. Mar. 17, 2017).

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Design Patent Damages Ct’d

1. What is or should be the test for identifying the relevant “article of manufacture” for the calculation of damages?

2. Sufficiency of the record – What evidence can be relied on for showing an article of manufacture?

3. What are the strategies to take regarding different embodiments of a design?

4. How does Samsung Elecs. affect medical device design patents?

5. How does a court determine a reasonable royalty for an “article of manufacture”?

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Enhanced Patent Damages Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016)

– 8-0 unanimous decision (Roberts), (Gorsuch did not take part)

– 35 U.S.C. § 284 – “In a case of infringement, “the court may increase the damages up to three times the amount found or assessed.”

– In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007)

The Federal Circuit adopted a two-part test for enhanced damages:

First, a patent owner must “show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” (Objective Recklessness)

Second, the patentee must demonstrate, also by clear and convincing evidence, that the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.” (Subjective Knowledge)

– Question: Whether the Seagate test is consistent with § 284?

– Holding: The Seagate test is not consistent with § 284

The two-part test is “unduly rigid and … impermissibly encumbers the statutory grant of discretion to district courts.

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Enhanced Patent Damages/Attys’ Fees Ct’d Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014)

– 35 U.S.C. § 285 – “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”

– Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc., 393 F.3d 1378 (2005)

“A case may be deemed exceptional” under § 285 only in two limited circumstances: “when there has been some material inappropriate conduct,” or when the litigation is both “brought in subjective bad faith” and “objectively baseless.” Id. at 1381.

– Question: Whether the Brooks Furniture framework is consistent with § 285?

– Holding: The Brooks Furniture framework is not consistent with § 285.

An “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. Id. at 1756.

District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances. Id. at 1756.

– Rationale: Comparable context of the Copyright Act, “ ‘[t]here is no precise rule or formula for making these determinations,’ but instead equitable discretion should be exercised ‘in light of the considerations we have identified.’ ” Id. at 1756; see Fogerty v.

Fantasy, Inc., 510 U.S. 517, 534 (1994).

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Enhanced Patent Damages Ct’d1. Do you see a noticeable shift in cases seeking enhanced

patent damages? Or attorneys’ fees?

2. How have these line of case impacted a patentee’s filing or litigation strategies? Use of 3rd party funders?

3. What are some useful general litigation (and pre-litigation) strategies for addressing enhanced patent damages (as well as attorneys’ fees)?

4. From a conventional patent litigation perspective, what is the best defense against a willful infringement claim?

5. Considerations regarding pursuit of an IPR challenge (or other PTAB proceeding)?

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Statistics for Enhanced Damages

Statistics and chart from Docket Navigator Analytics.

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Patent Licenses for Reasonable Royalty Prism Techs. LLC v. Sprint Spectrum L.P., 849 F.3d 1360 (Fed. Cir. 2017)

– Federal Circuit panel: Taranto, Linn, and Chen.

– Background:

The district court admitted AT&T’s settlement agreement with Prism into evidence despite Sprint’s objection under FRE 403.

The jury found Sprint liable for infringement and awarded Prism $30M in reasonable royalty.

On appeal, Sprint also objected to the settlement agreement under FRE 408, but the argument was forfeited because it was not untimely.

– Holding:

District court did not abuse its discretion in admitting AT&T's settlement agreement to establish proper amount of “reasonable royalty” damages.

There was sufficient evidence to support the damages award.

– Post-Appeal on August 8, 2017:

Sprint’s Rule 60(b) motion was granted and relieved of the $30M judgment after a separate case invalidated the asserted patent claims under Alice.

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Comparable Patent Licenses Ct’d

1. What is a comparable licensing agreement for determination of a reasonable royalty?

2. Should courts differentiate true licensing agreements from settlement agreements for the purpose of determining a reasonable royalty?

3. Would FRE 408 bar evidence of settlement negotiations between Prism and AT&T in Sprint’s case?

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Key PTAB Decisions & Discussion

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PTAB Practice1. Share general experiences with IPRs.

2. What improvements are needed to the IPR process (or other PTAB proceedings)?

a) Given pending Supreme Court case on constitutionality (Oil States), what needs to be fixed regarding the overall process?

b) What PTAB decisions should be appealable to the Federal Circuit? See SAS Institute, Inc. v. Lee, No. 16-969 (Jan. 31, 2017)

c) Should evidentiary or other legal standards in PTAB proceedings be made consistent with those used by the District Courts?

3. Sovereign immunity? Long-term viability of assigning patents to Native American tribe as strategy to immunize patents from PTAB review?

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PTAB Amendment Practice in an IPR Aqua Prods., Inc. v. Matal (CAFC No. 2015-1177, Oct. 4, 2017)

– Q: When the patent owner moves to amend its claims under § 316(d), may the PTO require the patent owner to bear the burden of persuasion regarding patentability of the amended claims as a condition of allowing them?

– A: The IPR petitioner has the burden of showing that proposed amendments are unpatentable.

§ 316(e) unambiguously requires the petitioner to prove all propositions of unpatentability, including for amended claims.

Alternatively, to the extent § 316(e) is ambiguous, the most reasonable reading of the AIA is one that places the burden of persuasion with respect to the patentability of amended claims on the petitioner.

The Board must consider the record before it and justify any conclusions of unpatentability with respect to amended claims based on that record.

– Q: When the petitioner does not challenge the patentability of a proposed amended claim, may the Board sua sponte raise patentability challenges to such a claim?

– A: The court declined to answer and decided to reserve judgment for another day because the record here does not present this precise question.

22


Recent Patent Litigation Trends

23


Litigation Trends: Who’s Filing and Where?

1. What are the emerging trends in patent/IP litigation post-Alice, post-TC Heartland, or flowing from any of the other cases on your radar screen?

2. Have NPEs become a bigger or lesser threat to operating companies?

3. Overall observations from or comments to PwC’s 2017 Litigation Study?

4. Trends in patent damages?

24


Litigation Trends: Case Filings Down

Patent litigation filings has not bounced back in 2017Statistics and chart from Docket Navigator Analytics.

25


Litigation Trends: Who’s Filing and Where?

Patent Assertion Entities brought two-thirds of the High Tech patent litigations in the first half of 2017.

PTAB continued to be a key venue for patent disputes in 2017

26

Statistics and chart from Unifiedpatents.com


Supplemental Slides

[For CLE Purposes]

27


Venue Ct’d – Impact of TC Heartland Retroactivity – Is TC Heartland retroactively applicable to pending cases?

– Supreme Court precedent seems to indicate “yes”; the general retroactivity rule is set forth in Harper v. Virginia Department of Taxation, 509 U.S. 86 (1993); see alsoNeuroRepair, Inc. v. The Nath Law Grp., 781 F.3d 1340, 1344 (Fed. Cir. 2015).

Waiver – Has Defendant waived its venue defense?

– Venue is a waivable defense. See Hoffman v. Blaski, 363 U.S. 335, 343 (1960)

– Courts have discretion. See United States v. Ziegler Bolt & Parts Co., 111 F.3d 878, 882-83 (Fed. Cir. 1997).

– Defendant’s dilatory conduct may waive the defense. See Peterson v. Highland Music, Inc., 140 F.3d 1313, 1318 (9th Cir. 1998).

– Venue not waived if defendant raises the venue defense as soon as possible and there is no undue prejudice to plaintiff. See Westech Aerosol Corp. v. 3M Co., Case: C17-5067-RBL, (W.D. Wash. June 21, 2017).

Exceptions to a Waiver – Is TC Heartland Intervening Law?

– (1) Some saying NO, because Fourco and § 1400(b) have not changed, remain good law. (2) Some saying YES, that many practitioners viewed TC Heartland as a change.

– A per curiam decision from the CAFC appears to agree that TC Heartland is not a change in the law. See In re Sea Ray Boats, Inc., No. 2017-124, 2017 WL 2577399 (Fed. Cir. June 9, 2017).

28


Venue Ct’d – Impact of TC Heartland As to domestic corporation, venue in a patent case is proper:

1. in the state where the company is incorporated; or

2. acts of infringement occurred in the forum and the company has a “regular and established place of business”

What constitutes a “regular and established place of business” under §1400(b)? Look to In re Cray Inc., 2017 WL 4201535 (Fed. Cir. 2017).

– Reversed Raytheon Co. v. Cray, Inc., Case: 2:15-cv-01554-JRG, (E.D. Tex. June 29, 2017) (J. Gilstrap) (finding venue proper).

– Venue under § 1400(b) requires:

1. Must be a physical place in the district – There must be a physical, geographical location in the district from which the business of the defendant is carried out. A virtual space or electronic communications from one person to another” does not satisfy a “place.”

2. Must be a regular and established place of business – The location must be stable and established for a meaningful period. Temporary presence, such as a trade show, does not qualify.

3. Must be the place of the defendant – It must be a place of the defendant, not solely a place of the defendant's employee. The court will consider whether the defendant conditioned employment on an employee's continued residence in the district or the storing of materials at a place in the district so that they can be distributed or sold from that place. An advertised location by itself is not sufficient, defendant must actually engage in business from that location.

29


Enhanced Patent Damages Ct’d Impact of Halo Elecs.

– District Court to consider nonexclusive list of factors, including culpability/subjective willfulness, frivolousness, motivation, objective unreasonableness (both factual and legal) and the need to advance considerations of compensation and deterrence

Post-Halo – Remanded to District Court: Halo Elecs., Inc. v. Pulse Elecs., Inc., 831 F.3d 1369 (Fed. Cir. Aug. 2016); WesternGeco L.L.C. v. ION Geophysical Corp., 837 F.3d 1358 (Fed. Cir. Sep. 2016); Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., 841 F.3d 1334 (Fed. Cir. Nov. 2016)

Apple Inc. v. Samsung Elecs. Co., No. 12-CV-00630-LHK, 2017 WL 2720220 (N.D. Cal. June 23, 2017) (awarded moderate enhanced damages after considering nine factors described in Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992).

– Many courts refused to award enhanced damages in spite of a finding of willful infringement: Convolve, Inc. v. Dell Inc., No. 2:08-CV-244-RSP, 2017 WL 2463398 (E.D. Tex. June 7, 2017); Sprint Commc'ns Co. L.P. v. Time Warner Cable, Inc., 2017 WL 978107, at *12 (D. Kan. Mar. 14, 2017).

30


Patent Exhaustion Impression Prod., Inc. v. Lexmark Int'l, Inc., 137 S. Ct. 1523 (2017)

– 6-1 decision (Roberts), (Ginsburg dissent, Gorsuch did not take part)

– In 2011, Lexmark sued a number of remanufacturers, including Impression Products, based on the resale of two groups of cartridges: (1) Return Program cartridges sold with clearly communicated restrictions prohibiting unauthorized resale within the US, and (2) Toner cartridges sold abroad but that defendants imported into the US.

– Questions:

1. Domestic Exhaustion - Whether a patentee that sells an item under an express restriction on the purchaser's right to reuse or resell the product may enforce that restriction through an infringement lawsuit.

2. International Exhaustion - Whether a patentee exhausts its patent rights by selling its product outside the United States, where American patent laws do not apply.

– Holdings:

1. When a patentee sells an item, that product “is no longer within the limits of the [patent] monopoly” and instead becomes the “private, individual property” of the purchaser. The patentee may negotiate a contract restricting the purchaser’s right to use or resell the item and enforce that restriction as a matter of contract law, but may not do so through a patent infringement lawsuit

2. Patent exhaustion also applies to foreign sales.

31


Patent Exhaustion Ct’d Strategic considerations when trying to limit the resale of

goods in another jurisdiction?

Further questions: What is an authorized sale abroad?

– Will companies be able to structure businesses so that foreign sales are not authorized by the U.S. patent holder? See Boesch v. Graff, 133 U.S. 697 (1890) ( “a sale abroad does not exhaust a patentee’s rights when the patentee had nothing to do with the transaction.”).

With international patent exhaustion, companies will no longer be able to use patent rights, without further strategizing, to engage in geographic price discrimination between U.S. and foreign markets.

How does the patent exhaustion holding in Lexmark affect patent purchase or licensing strategy?

32


Laches: Not a Defense Against Damages for Infringement Within Patent Act’s 6-Year Limitations Period SCA Hygiene Prod. Aktiebolag v. First Quality Baby Prod., LLC, 137 S.

Ct. 954 (2017)

– 7-1 decision (Alito), (Breyer dissent)

– § 286 provides that “no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.”

– In Petrella, the Supreme Court held that laches cannot preclude a claim for damages incurred within the Copyright Act’s 3-year limitations period. See134 S.Ct. 1962 (2014).

– Question: Whether Petrella’s reasoning applies to a similar provision in the Patent Act?

– Holding: Petrella’s reasoning applies. Laches cannot be invoked as a defense against a claim for damages brought within 35 U.S.C. § 286’s 6-year limitations period.

33


Laches Ct’d Impact of SCA Hygiene

– Impacts timing of filing suit

– Defendants can no longer assert laches to bar damages incurred within the statutory period. See Oxbo Int'l Corp. v. H&S Mfg. Co., Inc., No. 15-CV-292-JDP, 2017 WL 2272060, at *8 (W.D. Wis. May 23, 2017).

– The Supreme Court did not review whether laches bars equitable relief, i.e., injunction in patent cases

– Defendants may shift to other defenses, such as equitable estoppel, unclean hands, invalidity, or failure to mark

– Note differences between the patent and copyright limitations period provisions

Patent Act 35 U.S.C § 286 - No recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action

Copyright Act 17 U.S.C. 507 - No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued. Depending on circuit precedent, a claim may accrue when the infringement arises (the injury rule) or when ‘the plaintiff discovers’ or should have discovered (the discovery rule). Petrella did not address when a claim accrues. See Design Basics, LLC v. Windsor Homes, Inc., No. 1:16-CV-51-TLS, 2017 WL 1836893, at *2 (N.D. Ind. May 8, 2017).

34


Infringement Liability Under § 271(f) When Components Manufactured Abroad Life Techs. Corp. v. Promega Corp., 137 S. Ct. 734 (2017)

– 7-0 unanimous decision (Sotomayor), (Roberts did not take part)

– § 271(f)(1) of the Patent Act prohibits the supply from the United States of “all or a substantial portion of the components of a patented invention” for combination abroad.

– Question: Whether supplying a single, commodity component of a multicomponent invention from the United States is an infringing act under 35 U.S.C.A. § 271(f)(1)?

– Holdings:

a. The phrase “substantial portion” in § 271(f)(1) refers to a quantitative measurement.

b. Under a quantitative approach, a single component cannot constitute a “substantial portion” triggering § 271(f)(1) liability.

c. Consistent with Congress’s intent, when a product is made abroad and all components but a single commodity article are supplied from abroad, a supplier supplying a single component from the United States does not come within §271(f)(1).

35


§ 271(f)(1) Liability

Impact of Life Techs.

– This case is important for companies with distributed manufacturing

– Although supplying a single components falls outside 271(f)(1), the conduct may still come within the reach of 271(f)(2) if the component is “especially made or especially adapted for use” in a patented invention

– Future question: How much more than one component — or how close to all the components — is necessary to establish “a substantial portion” of a multicomponent invention.

36


Copyright Protection for Ornamental Designs Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S. Ct. 1002 (2017)

– 6-2 decision (Thomas), (Breyer and Kennedy dissent)

– Protection differs for artistic designs in a useful article vs. original works of art

– 17 U.S.C § 101 provides limited copyright protection in a useful article:

“pictorial, graphic, or sculptural features” of the “design of a useful article” are eligible for copyright protection as artistic works if those features “can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.”

– Question: What are the requirements for separate-identification and independent-existence under § 101?

– Holding: A feature incorporated into the design of a useful article is eligible for copyright protection if the feature is:

1. separately identified – can perceived as a two- or three-dimensional work of art separate from [the utilitarian aspect of] the useful article

2. exist independently – would qualify as a protectable pictorial, graphic, or sculptural work — either on its own or fixed in some other tangible medium of expression — if it were imagined separately from the useful article into which it is incorporated

37


Copyright Protection for Ornamental Designs Ct’d Impact of Star Athletica

– In addition to trademark law, copyright law is another tool to counter knock-offs

– Recent Cases

– Triangl Grp. Ltd. v. Jiangmen City Xinhui Dist. Lingzhi Garment Co., No. 16 CIV. 1498 PGG, 2017 WL 2829752 (S.D.N.Y. June 22, 2017)

Plaintiff “properly alleged that the images of their products at issue are copyrightable works … in light of Star Athletica … it appears the decorative black trim and T-shape are physically separable and demonstrable as works of art” Id. at *8.

– Design Ideas, Ltd. v. Meijer, Inc., No. 15-CV-03093, 2017 WL 2662473 (C.D. Ill. June 20, 2017)

Applying the Star Athletica test here, the Court again finds that the bird portion of the Sparrow Clips —qualifies as a sculptural work on its own – is subject to copyright protection. Id. at *3.

38


Disparaging Trademarks

Matal v. Tam, 137 S. Ct. 1744 (2017)

– 8-0 decision (Alito), (Gorsuch did not take part)

– The Disparagement Clause of Section 2(a) of the Lanham Act – 15 U.S.C. 1052 – provides that

“No trademark … shall be refused registration … unless it (a) consists of … matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute;...”

– Question: Whether the disparagement clause is facially invalid under the Free Speech Clause of the First Amendment?

– Holding: The Supreme Court affirmed the Federal Circuit’s judgement, finding the disparagement clause facially unconstitutional under the First Amendment’s Free Speech Clause.

39


Disparaging Trademarks Ct’d

Impact of Tam

– The PTO will be allowing registration of disparaging marks and will not cancel Registered marks because they are offensive.

– Pro-Football, Inc. v. Amanda Blackhorse, et al, (“the REDSKINS case”) “The five Native Americans fighting the NFL team over its trademark registration [“REDSKINS”] called it quits in federal appeals court.” Washington Post, June 29, 2017.

– The Government may attempt to revise Section 2(a) of the Lanham Act.

– Interesting that Supreme Court focused less on a party’s ability to use mark irrespective of ability to register given First Amendment concerns.

40


Copyright Protection vs. Fair Use Defense Oracle Am., Inc. v. Google Inc., (CAFC Case No. 2016-2369)

– Status: Pending CAFC decision second time (Moore, Schall, O’Malley)

– Background:

In Nov. 2007, Google released the Android software development kit (SDK), noting it incorporated some Java technologies.

In August 2010, Oracle, formerly Sun, sued Google for copyright infringement for incorporating protected elements of Oracle’s Java software language into Android.

In May 2012, the district court ruled that “on the specific facts of this case, the particular elements replicated by Google were free for all to use”

In May 2014, the Federal Circuit ruled “the declaring code and the structure, sequence, and organization of the 37 Java API packages are entitled to copyright protection” and remanded the case to the district court to decide Google’s fair use defense. Oracle Am., Inc. v. Google Inc., 750 F.3d 1339, 1354 (Fed. Cir. 2014).

In May 2016, the jury returned a verdict finding Google had a fair use defense.

In June 2016, the district court denied Oracle’s motion for judgement as a matter of law that no jury could find it was fair use. Oracle Am., Inc. v. Google Inc., No. C 10-03561 WHA, 2016 WL 3181206 (N.D. Cal. June 8, 2016).

41


Copyright Fair Use Defense – Four-Factor Analysis Factor One – The Purpose and Character of the Use

– Google’s commercial use of Android was tempered by a non-commercial purpose –Android is open-source; free for all to use

– Google supplied its own implementation and copied only the “declaring code” for consistency; Google believed this is a recognized, acceptable practice in the industry

– Transformative – Google optimized its Android code for devices with small batteries

Factor Two – The Nature of the Copyrighted Work

– The declaring code is close to informational works than traditional literary works for which fair use is more difficult to establish.

Factor Three – The Amount of the Portion Used in Relation to the Copyrighted Work as a Whole

– Google copied only so much as was reasonably necessary for a transformative use; the copied code constituted a tiny fraction of one percent of the copyrighted works

Factor Four – The Effect of the Use Upon the Potential Market for or Value of the Copyright

– Sun predicted the revenue for Java ME would decline before Android was even released. Therefore, Android did not have any negative impact on Java ME.

42


PTAB Amendment Practice in an IPR Ct’dUSPTO Chart Showing Reasons for Denying Entry of Substitute Claims:

43


PTAB Practice in an IPR Ct’d SAS Institute, Inc. v. Lee, No. 16-969 (Jan. 31, 2017)

– 35 U.S.C. § 318(a) provides that the Patent Trial and Appeal Board in an inter partes review "shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.”

– Question: Does 35 U.S.C. § 318 allow the Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner, as the Federal Circuit held?

– The Supreme Court granted SAS’ petition on May 22, 2017, with oral argument in October 2017.

– Implications:

Who makes the laws for IPR proceedings, the legislature or the PTO? The PTAB practice is in clear violation of section 318.

Estoppel – Adherence to section 318 would allow an IPR to be a complete substitute for a portion of the invalidity determination at the district court. Under section 315, the final written decision of the PTAB will bar the petitioner from raising in a civil litigation any ground that the petitioner raised or could have raised in the IPR.

44


4813-3264-6225 v.1

Views From The Bench - Judges Panel




Judges Panel

1

Honorable Ruben Castillo, Chief Judge, United States District Court for the Northern District of Illinois

Honorable John Z. Lee, Judge, United States District Court for the Northern District of Illinois

Honorable Jeff Kaplan, MagistrateJudge (Retired), United States District Court for the Northern District of Texas


Foley Team

2

Naikang Tsao Partner, IP Litigation

Andrew Gross Senior Counsel, IP Litigation


Venue

Impact of TC Heartland on patent case filings

Transfer motions?

3


Inter Partes Review

How often are defendants filing IPRs in parallel to district court cases?

– Impact on district court cases (e.g., percentage of cases that are stayed)

– Does it make sense to file a motion to stay before an institution decision by the PTAB?

Impact of IPRs on settlement

4


Case Management

Early Technology Tutorial

– On the record vs. off the record

Mandatory Initial Discovery Pilot Project

Customized Game Plans for Case

– Receptiveness to creative ways of cutting through the chaff

– Focus on what can resolve the case most efficiently (e.g., claim terms that really matter; limiting number of asserted claims)

5


Mediation

Timing of Mediation

Obstacles to Settlement

– Not having informed decisionmakers present at mediation

– Perception that mediators simply split the difference

6


Trial Practice

Do you let attorneys participate in voir dire?

Do you let jurors ask questions during trial?

Do you ever ask questions of witnesses at trial?

Practice tips regarding the effective use of technology

What are the most common/frequent errors that attorneys make in your courtroom?

7

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