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1. Patent Law Review Oregon State Bar 2013 Intellectual Property Review Bryan Beel 503.727.2000 BBeel@perkinscoie.com Prepared for Presented by February 14, 2014 2. Topics Patent Legislation ITC Practice PTO Practice Federal Circuit Developments Supreme Court Developments The Changing Federal Circuit 2 3. Patent Legislation 4. Innovation Act (Goodlatte bill/H.R. 3309) 1. Cost shifting 2. Disclosure of real party-in-interest 3. Stay of litigation against end users 4. Heightened infringement pleading standard 5. Post-grant review and inter partes review 6. Expands Covered Business Method patent review 7. Core discovery and discovery fee shifting 8. Bankruptcy protection 9. Double patenting 10. Bad faith demand letters Source: Library of Congress THOMAS 4 5. Other Legislation H.R. 3540 (Polis) focuses on bad-faith demand letters (PTO database, disclosure requirements, detailed infringement allegations, sanctions) S. 1720 (Leahy) Real party, stays, PGR/IPR, bankruptcy, double patenting, demand letters S. 1612 (Hatch) Costs/fees to prevailing party, with exceptions; court may require infringement allegation bond S. 1013 (Cornyn) fees, real party, pleading, discovery S. 866 (Schumer) Eliminates sunset of CBM review More information: THOMAS (http://thomas.loc.gov/home/thomas.php) 5 6. ITC Practice 7. ITC Practice Domestic industry Interdigital Communications v. ITC 8. Interdigital Commcns v. ITC Broad view of when licensing activities can satisfy the domestic industry requirement Section 337 relief requires a domestic industry relating to the articles protected by the patent, but such an industry exists if there is substantial investment in [the patents] exploitation, including engineering, research and development, or licensing ITC held that substantial investment in domestic licensing is sufficient and that actual domestic production of articles practicing the patent is not required Divided Federal Circuit panel agreed InterDigital Commcns, LLC v. USITC, 707 F.3d 1295 (Fed. Cir. 2013); Google Scholar 8 9. Interdigital Commcns v. ITC, cont. Majority opinion of Bryson + Mayer on rehearing: Section 337 relief is available where a party makes a substan- tial investment in exploitation by engineering, R&D, or licensing Here IDC invested substantial $ and that investment was w.r.t. protected articles because both products licensed by the patentee and the accused products practiced the patent No need for the complainant or any other party to manufacture covered articles domestically Newman dissent: Licensing importation of foreign-made product shouldnt be enough 9 10. ITC Practice Direct infringement only Suprema v. ITC 11. Suprema v. ITC Exclusion orders may not be based on inducement theory where direct infringement occurs after import OMalley + Prost: ITC may only bar articles that infringe, and those are articles that infringe at the time of importation Intent of the importer is irrelevant Reyna dissent: Article need not currently infringe as long as importation is part of infringing act of inducement Majoritys rule creates loophole in Section 337 Suprema, Inc. v. USITC, No. 2012-1170, -1026, -1124 (Fed. Cir. Dec. 13, 2013); Google Scholar 11 12. PTO Practice 13. PTO Practice New rules/practices 14. New Patent Office Rules First-inventor-to-file provisions Revised Patent Office fee schedule USPTO Rules of Professional Conduct Patent Law Treaty Changes filing date requirements for a patent application Allows revival of abandoned applications and acceptance of delayed maintenance fee payments Permits restoration of a right of priority to a foreign application, or benefit of a provisional application in a subsequent application filed within two months of the twelve-month deadline 14 15. Accelerated revisions to MPEP For 2014: three editions of the MPEP Incorporate AIA provisions Implementation of Patent Law Treaty Guidance on Hague Agreement concerning industrial designs Source: http://www.uspto.gov/blog/director/entry/uspto_revises_mpep_publication_process 15 16. PTO Practice Inter partes review 17. PTAB: Rate at which IPRs instituted Program began September 2012 as part of AIA 90% of IPR petitions granted (though often a limited number of claims) District Court litigation stayed ~60% of the time Granted on about half the grounds (i.e., Sec. 102/103) Granted on about 85% of claims challenged Source: Patent and Trademark Office data; http://www.docketnavigator.com 17 18. PTAB: Rate at which IPRs instituted, cont. Source: http://www.uspto.gov/aia_implementation/statistics.jsp 18 19. 19 WATCH FOR ROLLING HEADS 20. PTAB: Go to trial, lose your claims Sample size still low, but outcomes bad for owners Repeated invalidations; see, e.g.: IPR2012-00001 (Garmin): 3 claims of 20 invalidated IPR2012-00027 (Idle Free): all claims invalidated (half conceded) IPR2013-00136 (ZTE Corp): owner conceded unpatentability of all challenged claims IPR2013-00278 (Crestron Elecs.): owner requests cancellation of all challenged claims IPR2013-00239 (Taiwan Semiconductor): owner requests cancellation of all challenged claims Source: http://www.docketnavigator.com 20 21. PTAB Trials: Hard Line on Submissions CBS Interactive Inc. v. Helferich Patent Licensing, LLC Parties completed all pre-hearing proceedings and briefing Patent owners counsel initiated call the afternoon before the final oral hearing: What is appropriate content for demonstratives at the oral hearing? Answer: No content. In light of the number of non-compliant slides involved, and the inefficiencies of sorting through all of the slides, one by one, the Board exercised its discretion to not all presentation of [any slides] at final oral hearing. Boards cite: Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48768 (Aug. 14, 2012). 21 22. PTAB: You settled? Thats great, well finish Blackberry Corp. v. MobileMedia Ideas, LLC Parties settled their dispute and filed a joint motion to terminate. Result: terminated as to petitioner, continued as to patent owner. Rationale: Boards institution of proceedings meant there was a reasonable likelihood the claims were invalid, the parties filed all papers, and the Board held an oral hearing; all thats left is to write it up. Boards cites: 35 U.S.C. 317(a), 318(a); 37 C.F.R. 42.74(a) 22 23. Federal Circuit Developments 24. Federal Circuit PTO/district Court interplay 25. Fresenius USA v. Baxter International PTOs cancellation of claims required dismissal of infringement claim even after liability had been affirmed 2009: Federal Circuit affirmed finding of infringement of one patent but remanded for recalculation of damages 2010: PTO reexamined claims at infringers request and declared them invalid While PTO ruling was on appeal to Federal Circuit, district court retried damages and entered judgment for $24 million 2012: Federal Circuit affirmed PTOs ruling canceling the claims Held: PTOs cancellation of claims trumped district courts damages judgment, despite earlier affirmance of liability 25 26. Fresenius USA v. Baxter International (continued) Dyk + Prost majority opinion: Reexamination statute allows patentee to continue to enforce only those claims that survive in identical form Pending cases that are based on extinguished claims fail No difference that infringement had already been found and affirmed on appeal because the judgment on original verdict was vacated and did not have res judicata effect Intervening invalidity determination controlled Newman dissent: PTO shouldnt be able to override a final judgment by the Federal Circuit affirming a no-invalidity finding Result: $24 Million Down the Drain 26 27. Federal Circuit Computer-implemented inventions 28. CLS Bank v. Alice Corp. (en banc) En banc court failed to settle the law Patents claimed a computerized trading platform for commercial transactions in which a third party settles the obligations to eliminate performance risk Included method, system, computer-readable media claims District court held that the claims did not recite patent- eligible subject matter, but a divided panel reversed Federal Circuit took case en banc and split 523 No majority opinion doctrinal disarray 73 vote to invalidate the method and media claims 55 split on the system claims 28 29. CLS Bank v. Alice Corp. (continued) Plurality opinion (Lourie + Dyk, Prost, Reyna, Wallach): Focus on likelihood of preempting a fundamental concept Identify the abstract idea at issue Claim construction may be helpful but is not always required Then see if limitations substantially narrow the scope so that the claim doesnt effectively cover the whole idea Here, the method claims added nothing to the abstract idea of using third-party intermediation to reduce settlement risk Computer implementation requirement not enough Shadow records and end-of-day reconciliation insignificant 29 30. CLS Bank v. Alice Corp. (continued) Plurality opinion (continued): Media claims were equivalent to the method claims System claims also added no inventive concept Same general steps, with computer components recited in generic functional terms Rader + Moore partial concurrence, partial dissent: Improper to go hunting for abstractions by ignoring the concrete, palpable, tangible limitations in the claims Instead should look for meaningful limitations to particular applications of the abstract idea 30 31. CLS Bank v. Alice Corp. (continued) Rader + Moore (continued): In a computer-implemented invention, look for specific way of doing something or a specific type of computer System claims were patent-eligible because they required specifically programmed computer components and didnt cover all escrows or even all computerized escrows But method and media claims were not patent-eligible because the steps were

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