Posts in Courts

Don Dunner is a partner with Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, and he has argued over 150 cases before the Federal Circuit. Dunner was enormously candid, although many of the things I would have liked to ask him had to be off the table due to ongoing litigation. In fact, Dunner is involved in three exceptionally important cases: TiVo v. Echostar, Microsoft v. i4i and Uniloc v. Microsoft. Thankfully, Dunner did agree to return to talk to us further once these important cases finally resolve without further opportunity for appeal. We did, however, go in depth discussing eBay v. MercExchange, the dynmic between the Supreme Court and the Federal Circuit, how he approaches appeals generally and specifically blow-by-blow and which Federal Circuit Judges ask the toughest questions.

It is impossible to know for sure, but it is reasonable to assume that the 1000+ page IDS Kappos referred to might be in response to what the Supreme Court will likely do. The Supreme Court doesn’t seem to like to apply changes in the law prospectively, even radical changes as this would be. So if they do lower the burden the changes will be applied retroactively and affect (and infect) issued patents and pending patent applications. With that in mind, those with patent applications pending might want to anticipate the worst and file “everything made by man under the sun” information disclosure statements. That way you will be protected if the Supreme Court says there is a reduced standard for invalidating patent claims when prior art was not submitted to the Patent Office.

Today it is quite difficult to demonstrate that a patent claim issued by the United States Patent and Trademark Office is invalid and should not have been issued. Microsoft, along with a great many others, is urging the Supreme Court to change that and make it easier for them to demonstrate that patent claims, and thereby the associated patent rights, are invalid and should not have been issued. A strange association of those who are large patent owners themselves are urging the Microsoft position because they are tired of getting sued on patents that they infringe and having to pay tens of millions or hundreds of millions of dollars because they have trampled on the rights of innovators. So in order to excuse their own infringement they are asking the Supreme Court to throw the entire patent system under the bus, which is sadly more likely to happen than not.

Yesterday the United States Court of Appeals for the Federal Circuit, in a split decision with Judge Lourie writing and Judge Bryson joining, took a step forward in the evolution of the law of obviousness that confirms my worst fears about obviousness in this post-KSR era. It has been argued by many that even after KSR it is not an appropriate rejection, or reason to invalidate an issued claim, that it would be “common sense” to modify elements within the prior art in a wholly new way and then combine the “common sense” modifications. I did agree that was true, at least until yesterday.

If you are anti-patent then you are anti-innovation because those who innovate are not the behemoths of industry, but rather start-up companies that absolutely require patents in order to attract funding, expand and create jobs. Thus, given the hostility toward patents it is entirely accurate to characterize the Roberts Court as anti-innovation. The Roberts Court increasingly puts hurdles in the way of high-tech job growth. You see, it is easy for anyone to characterize the Supreme Court as “pro-business” because selecting a victor in a “business case” almost necessarily means that a business has been victorious. But what business? One that is likely to innovate, expand, create jobs and form new industry? Or one that once innovated and expanded, but now finds themselves stagnant and laying off employees?

One of the most debated issues in patent and antitrust law today involves pharmaceutical patent settlements. Brand-name drug manufacturers pay generic firms to settle patent litigation and delay entering the market. How should the antitrust laws respond? The Cipro case presents an ideal vehicle for Supreme Court review. It involves a simple, undisputed payment from brand to generic to delay entering the market.

The latest edition of Fortune magazine has John Roberts, Chief Justice of the United States Supreme Court, on the cover proclaiming the Roberts Court to be the most pro-business court we have ever seen. So how can it be that the Roberts Court, which has shown hostility toward innovators and contempt for patents that is unusual, is considered pro-business? On top of that, the Roberts Court seems poised to strike at the very heart of the patent right granted by the United States federal government; namely the presumption of validity. That sure doesn’t sound very pro-business to me.

In looking at the cases filed at the Federal Circuit during 2010, 42% of the docket for the CAFC were patent cases. At the moment, the three judges who are patent attorneys on the Federal Circuit are all on active status, and by that I mean are not on senior status. Judges Newman and Lourie, however, currently qualify to move to senior status or retire, and in a matter of a few years Judge Linn could elect senior status, or to retire, as well. Thus, moving forward in the not too distant future there could be a time when none of the judges active on the Federal Circuit would be patent attorneys by training and experience. This, in my opinion, would not be at all wise.

While the Federal Circuit ruled that Microsoft did infringe and the patent claim in question (claim 19 of U.S. Patent No. 5,490,216) was valid, it was Microsoft who was the big winner here. The damages awarded by the jury to Uniloc were $388 million, which was set aside by the district court, a ruling that the Federal Circuit affirmed. The Federal Circuit also agreed there was no willful infringement. So while Uniloc has won at least something from Microsoft as a result of its infringement of a valid patent claim, it seems like it will be far less than the $388 million, particularly given the Federal Circuit threw out the 25 percent rule and said the entire market value rule was not applicable in this case.

At this time of the year all typically sit back and reflect on the year that has been, spend time with family and friends, watch some football and set a course to follow into the new year. So here are the top 10 events that shaped the patent, innovation and intellectual property industry during 2010 — at least according to me, and with a heavy patent emphasis. What did you expect?

United States Court of Appeals for the Federal Circuit issued a decision in one of the patentable subject matter cases that was returned to the Court by the Supreme Court in the wake of the Supreme Court’s decision in Bilski v. Kappos. On remand, once again, the Federal Circuit held (per Judge Lourie with Judge Rader and Judge Bryson) that Prometheus’s asserted method claims are drawn to statutory subject matter, reversing for the second time the district court’s grant of summary judgment of invalidity under § 101.

United States Supreme Court issued a non-decision in the matter of Costco Wholesale Corporation v. Omega, S.A. The Per Curiam decision simply read: “The judgment is affirmed by an equally divided Court. Justice Kagan took no part in the consideration or decision of this case.” Unfortunately, this non-decision could well signal the beginning of the end for the first sale doctrine given that goods manufactured and sold outside the United States can apparently be controlled downstream by the copyright owner without the copyright owner having exhausted rights through the sale.

The Supreme Court agreed to hear the appeal of Stanford University v. Roche Molecular Systems, Inc.; faculty and student inventors, the public, and American industry have an enormous stake in the Court’s decision. The appeal pits university patent administrators against university inventors. If the administrators win, university inventors will have no invention rights—not in the work they do at the university, and not in the work they do in the community. This is a crucial juncture for every researcher who has ever or might someday work in federally funded research. Likewise, it presents a tipping point for innovative industry and anyone with a vested interest in American research.

Earlier today the United States Supreme Court granted certiorari in Microsoft Corporation v. i4i Limited Partnership, with Chief Justice John Roberts taking no part in the decision or petition. This comes only days after the United States Patent and Trademark Office refused to grant reexamination of the patent in question. Given Microsoft doesn’t even have strong enough prior art to provoke a reexamination by the USPTO it seems absurd to think they could have been victorious even if the district court reviewed the patent claims de novo and without any presumption.

Last week, on November 18, 2010, the United States Court of Appeals for the Federal Circuit granted a stay to HemCon, Inc., which will prevent implementation of the injunction issued against it and in favor of Marine Polymer Technologies, Inc. The stay will remain in effect during the pendency of HemCon’s appeal to the Federal Circuit. The stay issued by the Federal Circuit will allow the adjudicated infringing bandages sold by HemCon to continue to be supplied to the United States Military.