Posts in Litigation

The Federal Circuit recently affirmed a district court’s award of attorney’s fees under 35 U.S.C. § 285. In particular, the Federal Circuit affirmed the lower court’s decision based on the plaintiff’s inadequate pre-suit investigation of infringement in the related cases. See Thermolife Int’l, LLC v. GNC Corp., Nos. 2018-1657, 2018-1666, 2019 U.S. App. LEXIS 13135 (Fed. Cir. May 1, 2019) (Before Taranto, Bryson, and Stoll, J.) (Opinion for the Court, Taranto, J). Leland Stanford Junior University (Stanford) and Thermolife International, LLC (Thermolife) are the owners and exclusive licensee, respectively, of U.S. Patent Nos. 5,891,459, 6,117,872, 6,646,006, and 7,452,916 directed to methods and compositions involving the amino acids arginine and lysine, to be ingested to enhance vascular function and physical performance. Thermolife, later joined by Stanford, brought suit alleging Hi-Tech, Vital, and multiple companies from the GNC family infringed the aforementioned patents. The parties agreed to bifurcate the proceedings: a consolidated trial on invalidity and enforceability would be held; and if necessary, separate proceedings on infringement would follow. The district court found the asserted claims of all four patents invalid as either being anticipated or obvious.

This week in Other Barks & Bites: Chinese state political advisors suggest changes to the country’s copyright law, including stronger punitive measures for infringement; President Donald Trump bans Huawei telecommunications equipment from use on U.S. networks; Korean IP offices get ready to study inter-Korean IP cooperation; Huawei and Samsung reach a conclusion to their worldwide patent litigation; AbbVie okays a generic Humira treatment in 2023; Disney escapes Pirates of the Caribbean copyright suit unscathed; Guns N’ Roses files a trademark suit over a beer; Qualcomm enters into another worldwide patent license for 5G technology; and Procter & Gamble unveils its largest research and development center after $400 million upgrade to Ohio facility.

The Federal Circuit recently affirmed a district court ruling finding patent infringement after holding that Actavis LLC, Actavis South Atlantic LLC, and Teva Pharmaceuticals USA, Inc. (collectively, “Actavis”) failed to prove by clear and convincing evidence that the claims asserted by Endo Pharmaceuticals and Mallinckrodt LLC (collectively, “Endo”) were invalid. See Endo Pharms., Inc. v. Actavis LLC, No. 2018-1054, 2019 U.S. App. LEXIS 13348 (Fed. Cir. May 3, 2019) (Before Wallach, Clevenger, and Stoll J.) (Opinion for the Court, Wallach, J.) (Dissenting opinion, Stoll, J.). However, the decision was not a unanimous one, with Judge Stoll authoring a dissent that would have reversed the district court. The patent at issue, U.S. Patent No 8,871,779 (the “‘779 patent”), is directed generally to compounds known as “morphinan alkaloids,” which are used for pain relief. More specifically, the ‘779 patent concerned processes for making “highly pure” morphinan products in the form of hydrochloride salts. Actavis claimed that the ‘779 patent was invalid, citing three key references as prior art. The first reference was a scientific article from 1957 by Ulrich Weiss (the “Weiss reference”) discussing a method for producing oxymorphone, a compound within the scope of the asserted claims. The second reference was U.S. Patent Application No. 2005/0222188 (the “Chapman reference”), which disclosed a purification process related to the asserted claims. Finally, the third reference was another article from 1967 by Henry Rapoport et al. (the “Rapoport reference”), which disclosed another purification process for oxycodone. The district court found that none of these references rendered the asserted claims obvious, and Actavis appealed.

The U.S. Court of Appeals for the Federal Circuit recently affirmed the Patent Trial and Appeal Board’s (PTAB’s) decision upholding the patentability of Eli Lilly & Co.’s patent claims directed to reducing toxicity of a chemotherapy agent. In so holding, the Federal Circuit cited the Food and Drug Administration’s (FDA’s) skepticism of the efficacy of the methods as evidence supporting non-obviousness. See Neptune Generics, LLC v. Eli Lilly & Co., Nos. 2018-1288, 2018-1290, 2019 U.S. App. LEXIS 12492 (Fed. Cir. Apr. 26, 2019) (Before Moore, Wallach, and Hughes, J.) (Opinion for the Court, Moore, J.) Neptune Generics, LLC, Fresenius Kabi USA, LLC, and Mylan Laboratories Ltd. (collectively, the Petitioners) filed three petitions for inter partes review (IPR) against claims 1-22 of U.S. Patent No. 7,772,209 (the ?209 patent) owned by Eli Lilly & Co. The ?209 patent generally relates to methods of administering folic acid and a methylmalonic acid (MMA) lowering agent, such as vitamin B12, before administering pemetrexed disodium, a chemotherapy agent, to reduce the toxic effects of pemetrexed. The Board found that the ?209 patent was not unpatentable as obvious because it was not known in the art to pretreat pemetrexed with vitamin B12 along with folic acid and the skepticism of others, specifically the FDA, supported a conclusion of non-obviousness. The Federal Circuit found that substantial evidence supported the PTAB’s findings and affirmed.

This week in Other Barks & Bites, IPWatchdog’s IP news roundup: the House of Representatives passes drug patent legislation, while antitrust legislation targeting patent-related activities is introduced into the Senate and the Trump administration mandates pricing information for pharmaceutical ads; the Patent Trial and Appeal Board (PTAB) issues a pair of precedential decisions on cases with multiple petitions; the USPTO issues marijuana-related trademark guidelines and a notice on modifying patent term adjustment practices; Gilead strikes a settlement with Teva to bring generic Truvada to the U.S. market in 2020; a new music licensing entity is created in Canada; Fourth Circuit rules that bankruptcy can eliminate damages for trade secret violations; and several amicus file briefs asking the U.S. Supreme Court to eliminate the Federal Circuit’s “blocking patent” doctrine.

On Wednesday, the USPTO held the first of three scheduled hearings prompted by the Study of Underrepresented Classes Chasing Engineering and Science (SUCCESS) Act, which requires the USPTO Director to provide Congress with a report on publicly available patent data on women, minorities, and veterans, and to provide recommendations on how to promote their participation in the patent system. The hearing featured emotional testimony from five inventors, one of whom has recently joined Debtors Anonymous as a result of her patent being invalidated in the Southern District of New York. The SUCCESS Act was signed into law by President Trump on October 31, 2018 and gave the USPTO a one-year period to study representation of women, minorities, and veterans groups in patents. The Office released a report in February which showed that the number of women named as inventors had not been increasing at the same rate as the number of women who were now in STEM professions. Deputy USPTO Director Laura Peter said at the hearing on Wednesday that the Office is seeking input from industry, lawyers, and academics at the public forums, the next two of which are scheduled in Detroit on May 16 and San Jose on June 3. “We’re looking for concrete ideas and action plans to increase the numbers of these groups applying,” Peter said, before explaining that she would be unable to stay for the remainder of the hearing.

Jenna Close is a freelance commercial photographer and owner of a small business that licenses still images and videos to both domestic and international clients. She and her partner work 60-80 hours a week booking work, shooting, billing, accounting, marketing, and continuing to develop and maintain their skills. Jenna’s images are widely infringed online. She’s found exact reproductions of her work on competitors’ websites, on websites falsely advertising that the photographs are free to use, and she’s even come across instances where companies have photoshopped their own products into her images. Despite the brazen misuse of her images that she frequently encounters, Jenna does not generally pursue claims against her infringers because it is too expensive and time consuming to do so. It’s just not worth the cost—even though she registers at least some of her images for copyright protection, and so would be entitled to statutory damages and attorneys’ fees with respect to those images in case of a court victory. Unfortunately, Jenna’s story is not unique. For countless individual artists and small businesses, combating the unauthorized use of their creative works online is a source of enduring frustration. The frequency and ease with which photographs, sound recordings, videos, and other works of authorship are shared on the Internet leaves those without significant time and resources little recourse when they encounter infringement. But now, after years of advocacy by creators like Jenna, new legislation promises long-overdue support for these marginalized groups in the ongoing fight against overwhelming infringement in the digital age.

On May 1, Representatives Hakeem Jeffries (D-NY) and Doug Collins (R-GA) officially reintroduced H.R. 2426, the Copyright Alternative in Small-Claims Enforcement (CASE) Act, into the U.S House of Representatives. The bill was originally introduced in 2017 during the 115th Congress but expired after committee review. Along with the House bill, S. 1273, the U.S. Senate version of the bill, has been introduced by another bipartisan group including Senators John Kennedy (R-LA), Thom Tillis (R-NC), Dick Durbin (D-IL) and Mazie Hirono (D-HI). The proposed legislation seeks to establish an alternative forum for resolving disputes involving small claims of copyright infringement. If passed, the CASE Act would create the Copyright Claims Board, which is served by three full-time officers and two full-time attorneys who are appointed by the Register of Copyrights. The Board would be able to render determinations on copyright infringement, declarations of non-infringement or claims for misrepresentation in association with claimed infringement, and would also be able to award damages up to $30,000 to aggrieved parties. The bulk of the bill’s language deals mainly with how the Board will operate as an alternative forum to U.S. district court, with final determinations ultimately reviewable by district court.

On June 19, it will be five years since the United States Supreme Court issued a decision in Alice Corp. v. CLS Bank, 134 S.Ct. 2347 (2014), which significantly changed the way courts and patent examiners evaluated patent eligibility of computer implemented innovation in the United States. While the Supreme Court ostensibly extended the patent eligibility analysis applied in the life sciences context that had previously been adopted in Mayo Collaborative v. Prometheus Labs., 132 S.Ct. 1289 (2012), even a cursory review of allowance rates from the USPTO and invalidity rates in federal courts shows that Alice changed the prevailing analysis in profound ways. We will be commemorating this anniversary on June 24-25 in Washington, DC with a dedicated event examining the damage, discussing real solutions, and offering strategies for innovators who need protection in these uncertain times (see below for more detail). Almost immediately after Alice, patent examiners started to issue new subject-matter eligibility rejections for computer implemented innovations using the abstract idea exception to the statutory categories of patent eligibility. “The ubiquity of subject-matter eligibility rejections in office actions exploded, leading many to wonder whether software implemented inventions remained patentable at all,” explained Kate Gaudry and Samuel Hayim, who have done a series of articles on IPWatchdog detailing their statistical analysis. “This effect was largely centered in business method art units of [USPTO technology center] (TC) 3600. For example, the number of allowances issued from business-method art units dropped from 24% in the months before Alice was decided to about 3% in months after.” For months there has been growing hope that a legislative fix spearheaded by a few dedicated Members of Congress would provide a solution. But in recent weeks, that hope is waning as the uncomfortable reality that big tech is dominating the discussions has started to set in.

A 2018 amendment to the Indian Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (“Commercial Courts Act”) makes it mandatory for a party to exhaust the remedy of mediation before initiating court proceedings under the Commercial Courts Act, with the limited exception of cases where urgent relief is being sought. Patent infringement disputes, being disputes of a commercial nature, are governed by the Commercial Courts Act and, therefore, the mandatory pre-institution mediation provision applies to such disputes. The time bound mediation procedure envisaged in this provision allows a patentee to not only bring a possible infringer to the negotiation table under the threat of future litigation but also allow patentees to resolve disputes in a timely manner by avoiding long-drawn litigation in Indian courts. Patentees can now consider a different strategy when considering steps for enforcement of patent rights in India in view of the possible advantages of such mediation proceedings discussed in this article.

This week in IP news: the CASE Act, which would create a small claims system for copyright claims, is reintroduced in both houses of Congress; Qualcomm earns a massive $4.5 billion payment from its settlement with Apple; the U.S. Supreme Court seeks input from the Solicitor General on Oracle v. Google; and China amends its trademark law, increases copyright actions, and earns more than one-third of all 5G SEPs.

In yet another pathetic result of the U.S. government crashing the patent system, Amazon announces it is a patent infringement court. I guess we can call it the District of Amazon Federal Court (DAFC). They claim a cheaper, faster alternative to traditional patent lawsuits. Ring a bell?  The last time I heard that we got the PTAB. This irony is judiciously served. First, Amazon used the patent system to differentiate themselves from their competitors with the one-click patent, thus gaining market share. Then the U.S. government crashed the patent system so that no small inventor or startup could challenge Amazon with improved technologies. With no challengers, Amazon monopolized.  

USPTO Director and Under Secretary of Commerce for Intellectual Property Andrei Iancu believes that “to a large extent … if they want to, the Federal Circuit can fix the problem” with patentable subject matter under Section 101. Speaking at the 27th Intellectual Property Law & Policy Conference at Fordham Law School on April 25, Mr. Iancu said the interpretation of Section 101 is “the most important issue of substantive patent law currently.” He added: “This issue must be addressed now in the United States.” The USPTO Director said there is consensus that the state of the law is unworkable: “Recent case law has created significant confusion in this regard.” But he added: “If you look at the Supreme Court cases by themselves, those cases are not the ones necessarily that have caused the problem. In the way those cases have been interpreted in the lower courts or at the USPTO itself, we have deviated from the core message of the Supreme Court to some extent.”

Now that Apple and Qualcomm have made peace it would be easy to allow the case and the issues to recede into the background. That is likely what Apple would prefer, and almost certainly why Apple made the decision to settle with Qualcomm rather than proceed with trial. The case presented an existential threat for Qualcomm, which would have required the San Diego tech company to fight as if the company depended on victory–because it did.  What is most shocking is how successful Apple was in its coordinated effort to manipulate the licensing market and effectively extinguish any reasonable notion of a fair, reasonable, and non-discriminatory rate (FRAND) in the process. Meanwhile, fabricated licensing rates wholly unrelated to the Qualcomm portfolio were used by Apple to dupe regulators into chasing Qualcomm across the world for committing phantom antitrust violations.

On Monday, the U.S. Supreme Court invited the United States Solicitor General to file a brief expressing its views in the long-running case of Google LLC v. Oracle America Inc. The case highlights the complexities of protecting software via IP rights. As with patents, the courts often struggle to apply copyright concepts to software, leaving companies bleeding time and resources. Determining what can be protected and what can’t be is complex—even for appellate courts.“ These software piracy cases are convoluted because there can be both literal and nonliteral copying, as shown by the Google v. Oracle case,” said Brian Darville, chair of the trademark and copyright practice group at Oblon. “It’s critical for companies to legally safeguard their software and ensure they’re not infringing on their competitors.”