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Fish & Richardson Litigation Blog

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Supreme Court Will Reconsider Brulotte, May Modify the Rule against Post-Expiration Royalties

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court columnsOn Friday, the Supreme Court granted certiorari to reconsider the fifty-year-old patent licensing rule from Brulotte v. Thys. Co., 379 U.S. 29 (1964), which held that charging post-expiration patent royalties is “unlawful per se.” The rule against post-expiration royalties has been the subject of sharp criticism since its conception, and it played the villain’s role in Kimble v. Marvel Enters., 727 F.3d 856 (9th Cir. 2013), the case of the Spider-Man “Web Blaster” toy that will now be reviewed by the Supreme Court.

The Kimble case, now under review, involves a so-called “hybrid” license agreement, where both patent and non-patent rights are licensed. By its terms, the agreement provides the patentee (Mr. Kimble) a perpetual running royalty on sales of the Spider-Man Web Blaster toy. In analyzing the agreement, the Ninth Circuit explained how courts have come to understand the application of Brulotte to hybrid license agreements:

A license for inseparable patent and non-patent rights involving royalty payments that extends beyond a patent term is unenforceable for the post-expiration period unless the agreement provides a discount for the non-patent rights from the patent-protected rate. This is because – in the absence of a discount or other clear indication that the license was in no way subject to patent leverage – we presume that the post-expiration royalty payments are for the then-current patent use, which is an improper extension of the patent monopoly under Brulotte.

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Mistakenly-Filed Statutory Disclaimer Cannot be Withdrawn Using Certificate of Correction, and PTO Not Required to Exercise Inherent Authority to Withdraw It

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Japanese Foundation for Cancer Research v. Lee, __ F.3d __ (Fed. Cir, Dec. 9, 2014) (PROST, Dyk, Taranto) (E.D. Va.: Trenga) (1 of 5 stars)

Federal Circuit reverses summary judgment directing the PTO to withdraw a terminal disclaimer.  The plaintiff filed the disclaimer on its issued patent, but then petitioned to withdraw it because of a misunderstanding between a foreign paralegal and U.S. counsel.  The PTO denied the petition, precipitating this APA suit, in which the district court found the denial improper and the Federal Circuit found it proper.  Continue Reading »

Would 3D Printing Be A Disruptive Technology Today Without A Strong Patent System?

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3D printerThe simple answer is—unlikely. 3D printing provides one of the latest examples of the continued need for a robust patent system to enable and promote the development of new technologies. Similar to many other technological advancements, it is unlikely that the early 3D printing companies who helped create the 3D printing market would have received the necessary funding or protections to survive and prosper during their early formative years without a strong patent system. Patents enabled these start-up technology companies to receive the funding and protections necessary to spur the growth of their new technology and the creation of a new market.

The fundamental backbone of a patent system is the tradeoff between rewarding innovators with a monopolistic right to motivate them to develop new technologies on the one hand while on the other hand to control the monopoly to a limited period of time. Of course this also requires the inventor to teach others how to use the new technology so the public can take advantage of the invention once the limited period of time expires. Continue Reading »

ITC – Recent Commission Opinion Emphasizes Need To Show A “Nexus” Between Patent Claims and An R&D Based Domestic Industry

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R&D-Blog-ImageSince the 1988 amendments to Section 337, complainants at the ITC have been able to rely on non-manufacturing activities to establish the required domestic industry under subparagraph (a)(3)(C). Those amendments expanded the protections of Section 337 to companies that might not make protected articles in the U.S., but were nonetheless investing in technology development in the U.S. Examples include complainants whose domestic industry is based on research and development of the technology (such as universities or companies that designed products in the U.S. but manufactured them abroad), as well as domestic industries based on licensing patents (such as non-practicing patent assertion entities). Continue Reading »

Parties May Introduce New Evidence in Section 146 Proceedings Not Presented To the PTO During an Interference, Even on Issues Not Raised at the PTO

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Troy v. Samson Manuf. Co., 758 F.3d 1322 (Fed. Cir. July 11, 2014) (Prost, Bryson, MOORE) (D. Mass.: Young) (3 of 5 stars)

Federal Circuit vacates judgment in a section 146 review of an interference. The district court refused to consider the junior party’s new evidence of reduction to practice in July 2004 because the issue was not raised in the PTO—only a different, earlier date had been previously alleged.  Continue Reading »

Summary Judgment of Noninfringement Appropriate Where No One Configuration of the Accused Product Literally Met All Limitations and Prosecution History Estoppel Precluded Reliance on Equivalents

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EMD Millipore Corp. v. Allpure Techs., Inc., 768 F.3d 1196 (Fed. Cir. Sept. 29, 2014) (PROST, O’Malley, Hughes) (D. Mass.: Woodlock) (1 of 5 stars)

Federal Circuit affirms summary judgment of noninfringement. The patent claimed a device for introducing or withdrawing a fluid sample that was construed to require “at least one transfer member that can be removed from the magazine part of the device,” where the transfer member included a seal. The patentee argued there was literal infringement because disassembly of the accused product could qualify as the claimed removal. The Federal Circuit disagreed because the transfer member no longer had a seal after disassembly, as claimed. Moreover, prosecution history estoppel precluded a finding of infringement by equivalents. The patentee had made a narrowing amendment to the “seal” limitation and argued that none of the cited prior art “disclose a seal formed like the present one.” Slip op. at 12. So the presumption of estoppel applied, and the patentee presented nothing to rebut it.

Claims to Guaranteeing a Party’s Performance of an Online Transaction Were Invalid Under Section 101

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buySAFE, Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir. Sept. 5, 2014) (TARANTO and Hughes) (D. Del.: Stark) (3 of 5 stars)

 

Federal Circuit affirms judgment on the pleadings that claims are invalid under section 101.  The claims covered methods and machine-readable media encoded to perform steps for guaranteeing a party’s performance of its online transaction. They were patent-ineligible under the Supreme Court’s two-step inquiry from Mayo and Alice, under which a claim falls outside section 101 if (a) it is “directed to” an abstract idea, and (b) “’the additional elements’ do not supply an ‘inventive concept’ in the physical realm of things and acts—a ‘new and useful application’ of the ineligible matter in the physical realm—that ensures that the patent is on something ‘significantly more than’ the ineligible matter itself.” Slip op. at 6 (quoting Alice, 134 S. Ct. 2347, 2355, 2357 (2014)). Continue Reading »

Narrow Constructions Unwarranted Where Specification Did Not Exclude a Broader Reading; Equivalents Analysis Should Not Be “Shortcut” With Binary Choice

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Epos Techs. Ltd. v. Dane-Elec S.A., 766 F.3d 1338 (Fed. Cir. Sept. 5, 2014) (HUGHES and Bryson) (D.D.C.: Nickerson) (2 of 5 stars)

Federal Circuit reverses construction of four claim terms and vacates judgment of non-infringement.

Claim Construction: Two patents claimed a transmitter device for digitizing strokes of a handheld “drawing implement” with circuitry that operates the transmitter for a “given time interval” after the system senses there is no longer a downward force on the implement. The term “drawing implement” was not limited to a “conventional” writing utensil. Neither the claim language nor specification excluded non-conventional utensils. “Although it is true that the specifications recite embodiments including ‘conventional’ writing implements, there is no clear indication in the intrinsic record suggesting that the claims are limited to ‘conventional’ drawing implements.”  Slip op. at 8.  Moreover, the “given time interval” was not limited to a few seconds or less. The patent described embodiments that “typically” or “preferably” involved shorter time intervals but did not exclude longer ones. Continue Reading »

Reissue Unavailable Where Applicants Failed to Identify an “Error” That Led Them to File a Terminal Disclaimer They Later Sought to Alter

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In re Dinsmore, 757 F.3d 1343 (Fed. Cir. July 11, 2014) (TARANTO, Bryson, Hughes) (PTAB) (2 of 5 stars)

Federal Circuit affirms rejection of reissue application because it wasn’t directed to an “error” correctable under section 251. During the original prosecution, the applicants overcame an obviousness-type double-patenting rejection by submitting a terminal disclaimer that the patent would be enforceable (i) only during the period in which it and the prior patent were commonly owned and (ii) only during the term of the prior patent. They later sought to modify it in reissue to eliminate the first condition because the patents were not commonly owned.  Continue Reading »

SEC Looks to Tackle Insider Trading on its Home Field – Defense Bar Claims Unnecessary Roughness

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iStock_000003229520_LargeIn mid-June – following the third in a trio of high-profile losses by the SEC in insider trading cases tried in federal court – Andrew J. Ceresney, Director of the SEC’s Division of Enforcement, announced that the Commission will adjudicate more insider trading cases in SEC administrative proceedings decided by SEC administrative law judges (“ALJs”), as opposed to litigating such cases in federal court.[i] Although the Dodd-Frank reforms that allow the SEC to use administrative proceedings to seek civil penalties against unregulated persons were enacted four years earlier,[ii] the SEC has largely continued to bring insider trading cases in federal court. Going forward, however, Ceresney explained that the Commission will decide the appropriate fora for its insider trading cases on a “case-by-case” basis, and its use of administrative proceedings will increase.[iii] Ceresney also claimed, incredibly perhaps, that the SEC’s decision to bring more cases on its home turf before its own ALJs was not a reaction to the Commission’s recent defeats in insider trading cases tried in federal court.[iv] Rather, the Commission has touted a host of so-called advantages to the use of administrative proceedings, such as its streamlined process, which allows for an initial decision to be rendered by the ALJ in as few as 120 days, or at most 300 days, from the date that the case was initiated.[v]
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