Category Archives: Patents

Federal Circuit Confirms Invalidity of Reissue Patent Claims That Violated Original Patent Requirement

by: Robert Wagner, patent attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

If an inventor discovers that he or she has failed to claim all that he or she could have in an issued patent, the patent statute provides a mechanism for going back and adding additional claims during a reissue proceeding. Certain requirements must be met before the patent office will allow such a correction. As the patent holder found out in a recent decision by the Federal Circuit in Antares Pharma, Inc. v. Medac Pharma Inc. (No. 2014-1648), failure to comply with these provisions can render the new claims invalid and unenforceable.

Background

USRE44846The inventor in Antares developed an automatic injection device to self-administer pharmaceuticals that involved using a needle to puncture the skin of a patient before administering a dose of medication. All of the claims in the original patent involved a “jet injection” limitation. Almost two years after the patent issued, Antares realized that it had failed to include claims directed to safety features on the injector. Because two years had not passed yet, Antares initiated a reissue proceeding with the USPTO under 35 U.S.C. § 251, which allows a patent holder to broaden or narrow claims if initiated within two years of the patent being issued. Antares then added a number of claims to cover safety features on general injection devices, and not just jet injection devices (see No. RE 44,846).

Antares filed suit against Medac, alleging that, among other things, it infringed some of the new claims that emerged from the reissue proceeding. Antares sought a preliminary injunction, but the district court denied the request after concluding that the new claims did not satisfy the original patent requirement of the reissue statute. Antares appealed, and the Federal Circuit affirmed.

Reissue Statute Requirements

Under § 251, a patentee that wants to add new claims that broaden the scope of the claims of an already issued patent must satisfy a number of requirements: (1) the reissue application must be filed within two years of the issuance of the patent; (2) the new claims must not violate the recapture rule (i.e., claiming scope that was surrendered during prosecution); (3) the new claims must not violate the original patent requirement; and (4) no new matter may be added to the specification. At issue in this case was the third requirement—the original patent requirement.

The original patent requirement requires that the specification adequately support and fully describe the new claims. It is not sufficient if the new, broader claims are “merely suggested or indicated in the original specification.” So, hints, suggestions, or mere indications are not enough. As with many things relating to the understanding of the scope of a patent, “the essential inquiry under the ‘original patent’ clause of § 251 . . . is whether one skilled in the art, reading the specification, would identify the subject matter of the new claims as invented and disclosed by the patentees.”

The Patent at Issue

Antares’ patent specification only described the safety features being on jet injection devices and repeatedly stated that the invention related to jet injectors. It did not generically describe how to use the safety devices with other types of injectors. Based on the limited nature of the specification, the Federal Circuit agreed that the new claims were invalid because they were directed to safety features on generic injectors that were not explicitly and unequivocally disclosed in the specification.

The Federal Circuit contrasted this result with that of another case, In re Amos, 953 F.2d 613 (Fed. Cir. 1991). In the Amos case, the patentee broadened his claims that were directed towards an invention for holding down work pieces on a moving table using rollers. In the specification, the patentee described how the rollers could be raised via mechanical or electronic means, but only claimed the mechanical version. During reissue, the patentee added claims directed towards the electronic version, which the Court found acceptable because the specification explicitly discussed that embodiment.

Conclusion

The reissue statute is a powerful tool to add new claim scope to issued patents. Care must be taken, however, to file the reissue application within the two-year period and to make sure that the new claims do not add scope that is not well-supported by the specification. This decision is another reason that patent drafters need to be careful when drafting the specification. The patent statute provides some opportunities for fixing claims, but it is difficult to fix a specification if it is lacking and the consequence can be losing claim scope that could have been otherwise available with better drafting.

Federal Circuit Clarifies Limits of US Patent Law

by: Robert Wagner, patent attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

Hong Kong at nightThe United States patent laws have a territorial scope and prohibit individuals from making, using, offering for sale, and selling any patented invention within the United States without authority from the patent owner. 28 U.S.C. § 271(a). The United States is just one part of a much bigger world, and the question sometimes arises as to whether an accused infringer’s foreign activities are within the scope of the U.S. patent laws. In Halo Electronics, Inc. v Pulse Electronics, Inc., (No. 2013-1472 and -1656), the Federal Circuit had to address this issue and concluded that they were not.

Background

Halo is a supplier of electronic components and owned three patents related to surface mount electronic packages containing transformers for mounting on a printed circuit board inside an electronic device. Halo filed suit against Pulse for selling products containing electronic packages that used this technology.

Pulse designed and manufactured the accused products overseas and only sold minority of them in the United States. For its foreign orders, Pulse received purchase orders in its foreign offices and then shipped and delivered them to foreign locations.

One of Pulse’s major customers was Cisco, who incorporated some of Pulse’s products into its internet routers, which were sold all over the world. Pulse employees would sometimes meet with Cisco in the United States to negotiate prices, attend sales meetings with customers, meeting with design engineers, and provide post-sale support.

Pulse obtained summary judgment that it did not directly infringe with respect to products that were made, shipped, and delivered outside of the United States. At trial, the jury determined, among other things, that Pulse directly infringed with respect to products sold in the United States and induced infringement with respect to products that were incorporated into other products that were sold in the United States.

Halo appealed the grant of summary judgment to the Federal Circuit.

The Federal Circuit Affirms

In deciding the appeal, the Federal Circuit had to consider the geographic scope of infringement under § 271(a). The Court first looked at the statutory language and history behind § 271(a). It noted that the concept of a sale has physical and conceptual dimensions—where the buyer and seller are located and where a legally-operative act occurred regarding the sale.

It concluded that when no substantial activities occur within the United States there could be no potential liability under § 271(a):

Consistent with all of our precedent, we conclude that, when substantial activities of a sales transaction, including the final formation of a contract for sale encompassing all essential terms as well as the delivery and performance under that sales contract, occur entirely outside the United States, pricing and contracting negotiations in the United States alone do not constitute or transform those extraterritorial activities into a sale within the United States for purposes of § 271(a).

Thus, it affirmed the district court’s grant of summary judgment of no direct infringement for sales that did not occur within the United States.

It then turned to whether there could be infringement via an offer for sale. It reached the same result, finding that “[a]n offer to sell, in order to be an infringement, must be an offer contemplating sale in the United States.” Because all of these offers involved sales that occurred overseas, there could not be direct infringement.

The Federal Circuit upheld the district court’s summary judgment of no infringement with respect to the foreign sales.

Judge O’Malley’s Concurrence

Judge O’Malley concurred fully with the majority’s decision but wrote about another issue in the case. The district court found that Pulse’s infringement was not willful because it had an objectively reasonable invalidity defense. Therefore, it found that Halo could not satisfy the first prong of the Seagate test—that “a patentee 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.”

It did not matter that the invalidity defense was first developed during litigation. The objection prong of the test requires consideration of the totality of the evidence, including all defenses developed during the litigation and presented at trial, not just those considered by the accused infringer before being sued. The Federal Circuit affirmed this determination.

Judge O’Malley agreed with the decision but felt that it was time for the Federal Circuit to revisit its willful infringement standards in light of the Supreme Court’s decisions in Highmark Inc. v. Allcare Health Management Systems, Inc., 134 S. Ct. 1744 (2014), and Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014). She also questioned whether willful infringement should be an issue for the court or the jury. She recommended that the entire Court take up this issue en banc in order to clarify the law.

Conclusion

United States patents have geographic limitations. Companies, especially those with presences in multiple countries, need to be aware of this scope in order to make sure that they are complying with U.S. patent laws. It will also be interesting to see if the full Court takes up Judge O’Malley’s urging to reconsider the Court’s willfulness jurisprudence.

 

Ripple Effect from Alice and Mayo Cases Being Felt in Patent World

shutterstock_26396608By: Henry Sneath, Chair of the Intellectual Property practice at Picadio Sneath Miller & Norton, P.C. in Pittsburgh, Pa.  hsneath@psmn.com or 412-288-4013

Sharing a great post from Dennis Crouch and his tremendous blog: Patently-O

New Section 101 Decisions: Patents Invalid

The Supreme Court’s decisions from Alice and Mayo are beginning to really have their impact. A few examples:

  • Walker Digital v. Google (D. Del. September 2014) (data processing patent invalid under 101 as an abstract idea) (Judge Stark).
  • Genetic Tech v. LabCorp and 23AndMe (D. Del. September 2014) (method of predicting human performance based upon genetic testing invalid under 101 as a law of nature) (report and recommendation from Magistrate Judge to Judge Stark)
  • Ex parte Cote (P.T.A.B. August 2014) (computer method and hardware for ‘phase shifting’ design data invalid under 101)
  • Ex parte Jung (P.T.A.B. August 2014) (diagnostic method associated with epigenetic risk factors invalid under 101).” Patently-O.

To view the entire post – please visit Patently-O at this link: http://tinyurl.com/otj6v6n

Supreme Court Relaxes Standards for Awarding Attorneys’ Fees in Patent Cases

by: Robert Wagner, patent attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

Law and MoneyAs we noted earlier, the United States Supreme Court has taken a renewed interest in intellectual property and patent cases as of late. In Octane Fitness, LLC v. Icon Health & Fitness, Inc., No. 12-1184, the Supreme Court reversed the Federal Circuit’s long-standing standard for determining whether to award attorneys’ fees to the prevailing party in a patent infringement action. Now, prevailing parties need only show by a preponderance of the evidence that the case was “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.” And, this decision lies in the sound discretion of the trial court.

In Octane Fitness, ICON sued Octane Fitness for infringement of U.S. Patent No. 6,019,710. The district court granted summary judgment in favor of Octane Fitness, but declined to award attorneys’ fees under 35 U.S.C. § 285, finding that the infringement claims were not frivolous, objectively baseless, or brought in bad faith. Octane Fitness appealed, arguing that the Federal Circuit’s standard for awarding fees under § 285 was too restrictive, but the Federal Circuit disagreed. The Supreme Court granted certiorari to clarify the standard.

In a unanimous decision written by Justice Sotomayor, the Supreme Court looked to the statute, which reads in its entirety:

The court in exceptional cases may award reasonable attorney fees to the prevailing party.

Finding that the Patent Act provides no definition or guidance beyond this statement, the Court looked to the common understanding of the term “exceptional” and to when the provision was enacted and the standards that it was meant to codify.

“Exceptional,” the Court found, was meant to encompass things that are out of the ordinary, unusual, or special. The Court further concluded that Congress intended that courts be given discretion to determine when something was exceptional.

Putting these together, the Court held that courts have the discretion to award attorneys’ fees when a case “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.”

The Court rejected the Federal Circuit’s more rigid approach of limiting fee awards only when there has been litigation misconduct or if the party’s position was brought in bad faith and was objectively baseless.  Moreover, the Court found no basis to require the prevailing party to prove its entitlement to fees by clear and convincing evidence.

This decision may have substantial consequences going forward in patent cases, for both plaintiffs and defendants. Because the Court has emphasized that this decision is left to the discretion of the trial court, and the standard is much more flexible, one would expect to see more courts awarding fees. In theory, this will act as a deterrent for bringing frivolous patent claims and may reduce some of the more objectionable patent troll cases. But, it may also put more pressure on defendants with weaker defenses to settle, rather than to litigate at all costs. Only time will tell to see what effects come from this decision.

Court Awards Limited Enhanced Damages in CMU v. Marvell Case

by: Robert Wagner, patent attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

marvell_chipYesterday, Judge Nora Barry Fischer issued her opinion in the Carnegie Mellon University v. Marvell Technology Group, Ltd. patent infringement lawsuit in the United States District Court for the Western District of Pennsylvania (Case No. 2:09-cv-00290-NBF) and awarded an additional 23% in enhanced damages above and beyond the jury’s $1.17 billion award. In total, with all enhancements and interest awards, Marvell is facing at least a $1,535,889,387.60 damage award with an ongoing $0.50/chip royalty for the lifetime of the patent.

The jury returned a $1.17 billion award in December 2012, finding that Marvell willfully infringed two of CMU’s patents (U.S. Patent Nos. 6,201,839 and 6,438,180). It awarded a royalty of $0.50 per chip Marvell sold using the patented technology. In September 2013, the Court denied Marvell’s post-trial motions and determined that Marvell’s infringement was willful. The Court yesterday determined that some enhancement of the damage award was appropriate, although not to the extent requested by CMU (who wanted an additional 200% in damages).

In weighing the parties’ arguments as to whether the damage award should be enhanced, Judge Fischer appeared to focus primarily on three factors. First, she was concerned that a double or triple award of damages could cripple Marvell. Second, she was concerned about CMU’s “inexcusable” delay for almost 6 years after learning of Marvell’s infringement before taking action. Finally, she balanced these factors against Marvell’s willful infringement and its actions before CMU filed suit.

Weighing all of these factors (and the others under the Read test), Judge Fischer concluded that a 23% enhancement properly balanced all of the relevant interests.

In this decision, Judge Fischer also awarded damages on the sales of additional infringing products that were not part of the jury’s verdict but occurred before entry of judgment (this was uncontested), established a post-judgment royalty rate of $0.50 per infringing chip sold, and set a 0.14% post-judgment interest rate. She denied CMU’s motion for a permanent injunction and for prejudgment interest, finding that neither were warranted under the circumstances.

Given the amounts at issue, one expects that these decisions will not be the final word in this case, and that at least the Federal Circuit will be looking at this case on appeal.

What Is the Difference Between a Provisional and Non-Provisional Patent Application?

by: Robert Wagner, patent attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

What is the Difference Between a Provisional and Non-Provisional Patent Application?

PSMN What Is...? SeriesOne of the key decisions that an inventor needs to make in the patenting process is whether to file a provisional or non-provisional patent application, so understanding the difference between these two kinds of applications is important for inventors. Both of these types of applications serve useful roles in the patent process, but they are two very different kinds of patent applications that create very different rights.

Non-Provisional Applications

A non-provisional patent application is an application filed with the United States Patent & Trademark Office that is examined by a patent examiner and can potentially lead to the issuance of a patent. It has a number of formal requirements that must be satisfied in order to be accepted by the Patent Office. For instance, it must contain a written description of the invention with sufficient detail to both demonstrate that the inventor has invented something and to explain it in sufficient detail such that one of ordinary skill in the art could practice the invention without undue experimentation. It generally must contain formal drawings that show various embodiments of the invention. It must be accompanied by an oath or declaration by the inventor or inventors that confirms that they invented the invention described in the application. The inventors must also identify all relevant prior art that they are aware of. Finally, it must contain a series of claims, which are what defines the scope of the patent and the protections it provides.

In general, non-provisional applications are complicated documents that must be prepared with extreme care if an inventor wants a patent that will be enforceable and that will product his or her invention to the broadest extent possible. The precise language of the claims is incredibly important, as is making sure that the written description and drawings adequately explain the invention and enable one to make and use it. As such, it takes time (and money) to draft one correctly.

Provisional Applications

A provisional application, on the other hand, is never examined by a patent examiner and can never lead to the issuance of a patent by itself. Unlike a non-provisional application, there are only two requirements for filing a provisional application—it must contain a written description of the invention and sufficient drawings (which can be informal) to understand the invention. The other formal requirements of a non-provisional application (such as formal drawings, claims, oaths, declarations, and prior art disclosures) are not necessary. A provisional patent application lasts for one year before it expires, and this one-year period cannot be extended.

Because provisional applications are significantly less formal than a non-provisional application, they can be drafted more quickly (and cheaply) and can include more information than is necessary or prudent to include in a non-provisional application. Inventors can literally attach journal articles, PowerPoint slides, photographs, hand-written drawings, etc. to the application, in addition to the narrative that describes the invention.

In order for a provisional application to lead to the issuance of a patent, it must either be converted or it must be appropriately referenced in a non-provisional application that is filed within one year of the filing date of the provisional application (this one-year date cannot be extended).

So, why would one choose to file a provisional application?

So, if a provisional application only lasts for one year and cannot, by itself, ever become a patent, why would anyone want to file one? Under the current patent laws, the public sale or disclosure of an invention before a patent application (either a non-provisional or provisional application) has been filed can act as a bar that prohibits an inventor from being able to obtain a patent on the invention in the future. A provisional application provides a way for an inventor to get an application on file before a key event so as not to prevent him or her from getting a patent later on.

For example, if a company is about to present a new product at a trade show or if an inventor is about to present a paper or give a talk at a conference, the inventor can file a provisional application that contains the materials that will be publicly disclosed, along with a sufficiently detailed write-up of the invention, before that information is disclosed without having to go through the considerable time and effort required to file a non-provisional application.

In addition, in the new first-inventor-to-file regime that exists under the America Invents Act (AIA), it may be prudent for an inventor to file a series of provisional applications as it is refining and developing a new product or invention in order to protect those ideas from another inventor filing in the Patent Office first. A provisional patent application provides a quicker and cheaper means for doing so.

Conclusion

These descriptions give you some idea of the differences between provisional and non-provisional patent applications. Both types of applications serve important roles in the patenting process, and are often utilized in concert—i.e., an inventor files a provisional patent application followed by a non-provisional patent application within a year. As with all the information in our What Is…? series, there is significantly more detail and nuance behind what is described in this article. If you are interested in obtaining a patent, you should consult a patent attorney to help you determine which application is appropriate for the circumstances you find yourself in.

What Is a Patent?

by: Robert Wagner, patent attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

PSMN What Is...? Series

What is a Patent?

At its most basic, a patent is a right granted by the United States government to prevent someone else from making, using, selling, offering for sale, or importing a product in the United States that uses the patented invention or process. It is a right to exclude, and not a right for the inventor to make, use, sell, offer for sale, or import the product himself or herself. This is an important distinction that is often overlooked by inventors who may think that getting a patent entitles them to use their own invention.

The right to a patent is actually enshrined in the Constitution, and is found in Article I, Section 8, Clause 8, which states:

The Congress shall have Power To…promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries….

In order to obtain a patent, an inventor must apply to the United States Patent and Trademark Office (USPTO) in Alexandria, Virginia. The USPTO is responsible for examining all patent applications and determining whether an invention qualifies for a patent. In general, an invention must be new, novel, and useful to potentially qualify. If the USPTO determines that the invention qualifies for a patent, it issues the patent and publishes it in a public registry of all patents. The USPTO has issued more than 9.3 million utility, design, and plant patents since the first utility patent was issued back in 1790.

If you look at a patent (it is a document), you will see that it has a number of major parts. The front page contains information about the patent, including its number, when it was filed and issued, who the inventor is, related patents, what other patents and prior art were looked at before issuing the patent, and what attorney or law firm helped draft the patent, among many other things. There is also a brief summary (the abstract) that describes the invention. The next pages contain drawings that help describe the invention. Later pages include background information about the invention, as well as a detailed description of it. Finally, the patent ends with a series of numbered claims. Each claim is a single sentence that describes the legal boundaries of the invention. The claims are the most important part of the patent.

Patents generally last for 20 years from the date of the earliest non-provisional application filed by the inventor. This duration can be longer or shorter depending on various circumstances, including how long the patent office takes to examine the patent application and whether the inventor has other, related applications.

Once a patent expires, the invention is in the public domain, and anyone can use it without permission from the inventor. This is the tradeoff that comes from being given a period of time in which the inventor can exclude others from using the invention.

Again, this description provides a broad overview of what a patent is, and there is a lot more detail behind each of these concepts. In our upcoming articles in our What Is…? series, we will explore some of the concepts discussed in this post in greater depth, explaining about the different kinds of patents (utility, design, and plant), the different types of applications (non-provisional, provisional, PCT, continuations, continuations in part, and divisionals), the different types of claims (independent and dependent) and what kinds of inventions can be patented, among many other things. We hope you’ll join us.

USPTO Posts Questionable Advice for People Who Receive Demand Letters

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C. ()

Last week, the US Patent and Trademark Office expanded its website to include a section to help individuals and companies to respond when receiving demand letters from patent holders. As one of our colleagues, Gene Quinn, over at IPWatchdog.com notes, this resource (albeit in “Beta” form) is fairly one-sided and offers some problematic advice to those who receive demand letters.USPTO

Much of the advice on the USPTO’s website is fairly generic, but the overall tenor of the advice seems to ignore that legitimate patent owners with legitimate and valid patents often send these demand letters to stop individuals and companies from infringing their patents. Indeed, that is one of the fundamental rights that comes with owning a patent—the ability to stop others from using your invention.

Instead, the fundamental assumption on the USPTO’s website seems to be that only patent trolls send demand letters. For instance, the USPTO suggests that one response is to simply ignore a demand letter because some patent owners send these demand letters to mislead or intimidate the recipients into paying for licenses that they do not need. While the USPTO notes that this approach carries some risk, that advice is buried at the end. Oddly, the USPTO never suggests that one option after receiving a demand letter is to simply stop infringing the patent.

The USPTO also downplays the importance of consulting with an attorney to help understand the risks and to respond to the patent owner in an appropriate manner. Patent law is not a simple subject, and most individuals simply do not have the expertise or knowledge to determine whether they are infringing, whether the patent is valid and enforceable, and what the risks may actually be.

In my years of practice, I have noticed that many individuals do not understand what the scope of a patent is unless they have significant prior experience with patents. They tend to look at the description of the invention in the specification or the drawings, rather than the claims, when trying to assess their exposure. As patent practitioners know, it is the claims that truly matter (although the specification is important to understanding those claims), and those claims are often far broader then the particular embodiments disclosed in the specification. In addition, claims are not written in a format that is simple to understand, or there are statements made during the prosecution of the patent that are important to understanding their scope, which compounds the problem. Thus, there is a very real risk that individuals will drastically underestimate the risk that they infringe unless they receive competent legal advice.

While hiring an attorney may be an expensive proposition, the consequences of not doing so may be far greater. A typical patent infringement lawsuit can easily cost more than $500,000 to defend, even where the amount at issue is small (and can cost tens of millions of dollars when significant amounts are at issue). And, once a lawsuit begins, it can be very hard for a defendant to unilaterally stop it. If an individual is truly infringing, an attorney can help the client understand the risks and suggest ways of resolving the matter before litigation begins, which potentially can save an individual hundreds of thousands of dollars. Simply ignoring a demand letter can be the last thing an accused infringer should do unless there is a very good reason for doing so because ignoring the demand letter starts to lay the groundwork for a finding of willful infringement, which potentially entitles the patent owner to triple damages and an award of its attorneys’ fees and costs.

The problem of extortionate patent trolls is very real, and I have represented numerous companies that have been the targets of these kinds of trolls. It is extremely frustrating to explain to a client the financial costs and distractions that come with defending a meritless lawsuit brought by patent troll and the fact that there often is no simple way to make the lawsuit disappear without paying some amount of money to the troll. That being said, I’ve also represented legitimate companies with patents on innovations they developed that help give them a competitive edge in the marketplace. They have spent significant time and resources in developing these innovations and bringing them to market and understandably want to protect those investments. The USPTO’s blanket advice to individuals and companies that might receive a demand letter is not particularly helpful and understates the real risks and costs that are at issue. It is somewhat disturbing that an office that is charged with issuing valid patents and supporting innovation would put out such incomplete and unbalanced advice. Hopefully, the USPTO will present more balanced and useful advice when this website moves out of its “beta” stage.

Busy IP Docket for US Supreme Court Upcoming

Sneath, Henry 2012 headshotBy: Henry Sneath, Chair of the Intellectual Property practice at Picadio Sneath Miller & Norton, P.C.  hsneath@psmn.com or 412-288-4013

The US Supreme Court has a very busy IP docket in the next few months. Close watchers of the court predict a continuing focus on IP cases. Our friends at AIPLA provide a nice summary of the oral argument schedule of IP cases through April. We will follow these cases and post any important decisions. See AIPLA link below: http://www.aipla.org/resources2/reports/2014/Pages/140214AIPLA-Direct.aspx

Supreme Court Holds That Patentee Bears Burden of Persuasion on Infringement When Licensee Seeks a Declaratory Judgment

By: Joe Carnicella, intellectual property attorney with Picadio Sneath Miller & Norton, P.C.

We posted about this case in May 2013, and on January 22, 2014, the Supreme Court decided this matter.

First, the Supreme Court held that the Federal Circuit did not lack subject-matter jurisdiction.  Because federal courts determining declaratory judgment jurisdiction often look to the “character” of the declaratory judgment defendant’s “threatened action,” which in this case, the threatened hypothetical action would constitute the licensor terminating a license and bringing suit for infringement under federal patent laws, the declaratory judgment action would arise under federal patent laws.

Second, the Supreme Court held that when a licensee seeks a declaratory judgment against a patentee that its products do not infringe the licensed patent, the patentee bears the burden of persuasion on the issue of infringement.  The Supreme Court based this ruling on three settled legal propositions: (1) a patentee ordinarily bears the burden of proving infringement; (2) the operation of the Declaratory Judgment Act is only procedural leaving substantive rights unchanged; and (3) the burden of proof is a substantive aspect of a claim.

By way of background, the United States Supreme Court granted cert. to hear argument on whether, in a declaratory judgment action brought by a licensee, the licensee has the burden to prove that its products do not infringe the patent, or whether the patentee must prove infringement.  Medtronic Inc. (licensee) licensed a patent from Mirowski Family Ventures LLC (patentee / licensor) relating to a device used to stop imminent heart failure.  Medtronic subsequently created new products and then filed a declaratory judgment action claiming that its new products do not infringe the patent.  The Federal Circuit Court of Appeals held that Medtronic bears the burden of proving that its products do not infringe Mirowski’s patent.  Medtronic argued that the U.S. Supreme Court should overturn the Federal Circuit’s ruling, which Medtronic argued is inconsistent with the Supreme Court’s decision in MedImmune, Inc. v. Genetech, Inc., 549 U.S. 118 (2007).  In MedImmune, the Supreme Court ruled that a patent licensee that believes that its products do not infringe the patent is “not required . . . to break or terminate its . . . license agreement before seeking a declaratory judgment in federal court that the underlying patent is . . . not infringed.”  According to Medtronic, the Federal Circuit’s opinion undercut the MedImmune decision because it caused a licensee to take on the significant burden and cost of a presumption that its products infringe.  In turn, Mirowski argued that this case is distinguishable from MedImmune because the licensing agreement at issue specifically required Medtronic to file a declaratory judgment action if a dispute arose.  Mirowski submitted that the Federal Circuit correctly decided that, based specifically on the contract terms between the parties, Medtronic should bear the burden of proving that it should be let out of the contract for the new products.