From Legal Tech News and ALM comes a good lawyer practice tip report from Federal Judges Sallie Kim and Xavier Rodriguez. Major hint is for lawyers to go back and read the 2015 revisions to the Federal Rules which govern discovery, data collection and electronic productions of documents. Read the article here on ALM/Legal Tech: http://tinyurl.com/yclmj9hv
The US Supreme Court overturned the Federal Circuit’s decision in TC Heartland v. Kraft Foods and its longstanding interpretation of the patent venue statute and has reaffirmed that a corporation is a resident of the state in which it is incorporated. It had decided that question a long time ago, but the Federal Circuit and statutory changes to the general (non-patent) venue statutes had undermined the original decision of the Supreme Court in 1957 in Fourco Glass. The court provided this analysis in TC Heartland:
“The patent venue statute,28 U. S. C. §1400(b), provides that ‘[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.’ In Fourco Glass Co. v. Transmirra Products Corp., 353 U. S. 222, 226 (1957), this Court concluded that for purposes of §1400(b) a domestic corporation “resides” only in its State of incorporation.”
In overturning the Fed. Cir. decision, the Court rejected the argument that 28 U.S.C. §1400 (patent venue statute) incorporates the broader definition of corporate “residence” contained in the general venue statute 28 U.S.C. 1391 as has been allowed by the Federal Circuit for years. This changes the longstanding practice of the Federal Circuit to interpret “residence” as being any state in which a defendant corporation simply conducts business. This interpretation has allowed unfettered forum shopping which generally results in shopping and filing in the Eastern District of Texas.
“We conclude that the amendments to §1391 did not modify the meaning of §1400(b) as interpreted by Fourco. We therefore hold that a domestic corporation “resides” only in its State of incorporation for purposes of the patent venue statute.” Justice Thomas authored the court’s opinion.
The big question is whether this will indeed reduce or eliminate the monopoly held by Texas on patent cases and whether it will simply shift it to Delaware where many corporations are incorporated. The court may take additional action or so too may the US Congress to prevent that simple shifting of venues from Texas to Delaware.
Posted by: DTSALAW.Com and DefendTradeSecretsAct.LawyerHenry M. Sneath, Esq. – Chair of the Intellectual Property Practice Group at Pittsburgh, Pa. law firm Picadio Sneath Miller & Norton, P.C. (PSMN® and PSMNLaw®). Mr. Sneath is also an Adjunct Professor of Law at the Duquesne University School of Law teaching Trade Secret Law, Trademark Law and the Law of Unfair Competition. He may be contacted email@example.com or 412-288-4013. See Websites www.psmn.com or www.DTSALaw.com.
The new DTSA federal civil remedy statute is already generating lawsuits being filed in Federal Courts. Two suits were recently filed in the Southern District of Florida with jurisdiction being claimed pursuant to the Defend Trade Secrets Act 2016 (DTSA). One case was also filed in the Northern District of Texas. See links to the cases below. In each Florida case, the plaintiff not only claimed trade secret misappropriation under the DTSA, but also under the Florida UTSA state statute (FUTSA). The Texas case brings claims under DTSA and the TUTSA along with pendent state law claims. This may become the trend as the DTSA and state statutes modeled after the Uniform Trade Secret Act describe trade secrets and misappropriation somewhat differently and provide, in some cases, different remedies. The differences in “definitions” between DTSA and the UTSA are not major, but they may make a difference if either is left out of a complaint filed in federal court. We will monitor this trend and post in the future on new filings.
Interestingly, while both Florida cases seek injunctive relief in the complaint’s claims for relief, neither docket shows the filing of a separate Motion for TRO, Preliminary Injunction or motion for other injunctive relief. The Dean case brings only trade secret misappropriation claims under the DTSA and the FUTSA state statute. The Bonamar case brings claims under DTSA and FUTSA and a number of pendent State Law claims that you would expect to see in an employment related, non-disclosure, breach of covenants/contract case. In the Texas case, the plaintiff has filed an emergency motion for TRO under both state and federal law and a hearing is set for May 26, 2016. The motion and brief are linked below. Here are links to the cases on our website.
Posted by Henry M. Sneath, Esq. – Chair of the Intellectual Property Group at Picadio Sneath Miller & Norton, P.C. (PSMN® and PSMNLaw®) in Pittsburgh, Pa. He may be contacted at firstname.lastname@example.org or 412-288-4013. Website www.psmn.com or www.psmn.law
From “ars technica“* publication: One of the largest patent verdict cases ever was obtained by Carnegie Mellon University (CMU) in Pittsburgh Federal District Court in 2012 in the courtroom of the Hon. Nora Barry Fischer as presiding judge. CMU won a $1.17 billion jury verdict in 2012 and the court enhanced the verdict to $1.54 Billion. The Federal Circuit cut the win significantly, by reducing the damages and eliminating the enhanced damages award, but kept the main verdict intact. The case was just settled here in Pittsburgh for $750 Million. It will allegedly be the second largest payment ever in a technology patent case. A thorough article on the matter with good links to the case history appears at web publication ars technica*(http://tinyurl.com/zwb26wg ).
Today, the United States Supreme Court unanimously ruled in Association for Molecular Pathology v. Myriad Genetics, Inc.,No. 12-398, that a naturally-occurring DNA segment (or gene) is not patent eligible even if it has been isolated from a genome (reversing the Federal Circuit). The Court also ruled that cDNA (complementary DNA) is patent eligible because it is not naturally occurring (affirming the Federal Circuit). Justice Thomas wrote the opinion for the unanimous Court, and Justice Scalia wrote a short concurrence. We have been following this case for some time (see here, here, and here).
The Court began by restating its position that laws of nature, natural phenomena, and abstract ideas are not patentable subject matter under 35 U.S.C. § 101. The question for the Court was whether Myriad’s patents claimed any new and useful composition of matter.
To answer this question, the Court looked at what Myriad claimed. With respect to the DNA claims, Myriad claimed the DNA segment it found in nature, and it did not change or alter any of the genetic information in that segment. Because it claimed something naturally found in nature, it was not patent eligible subject matter.
With respect to the cDNA claims, the Court reached a different result. The cDNA is not found in nature, but is created in the laboratory. This key difference meant that it was patent eligible subject matter. The Court did not address whether these claims met the other requirements of the patent statute, such as §§ 102, 103, and 112.
The Court was also very clear on what it was not deciding in this case. There were no method claims at issue, such as an innovative method for manipulating genes. Similarly, there were no claims directed to how this new knowledge might be applied to achieve some useful result. The Court suggested (without holding) that those types of claims would be patent eligible. Finally, it noted that the claims were not directed to naturally occurring genetic code that had been altered to create some new and not natural DNA. The Court refused to suggest how it might address claims like those.
In the end, the Court stated that “[w]e merely hold that genes and the information they encode are not patent eligible under § 101 simply because they have been isolated from the surrounding genetic material.”
Yesterday the US Supreme Court heard oral argument in Gunn v. Minton (No. 11-1118, U.S. Sup) where the issue is the long debated question of proper jurisdiction for patent law legal malpractice cases. For more background, please see a December 3, 2012 post by my colleague Kelly Williams in this blog and to read the Amicus brief filed by the AIPLA. Read the transcript of yesterday’s Supreme Court oral argument here:http://www.supremecourt.gov/oral_arguments/argument_transcripts/11-1118.pdfThe central question is whether legal malpractice claims against attorneys representing the inventors, for failing to raise an “experimental use” defense to the “on-sale bar” doctrine, constituted a question of exclusive state law, or one of exclusive federal jurisdiction and law – like traditionally all Patent Law issues. The issue turns on whether such a state court claim can create or affect Federal patent rights. Our friends at Lexis-Nexis have summarized the oral argument and issues at this link: http://t.co/GaRLnbwN
We will follow this case closely: For more information, please contact Henry M. Sneath, Esq. chair of the Intellectual Property Group at Picadio Sneath Miller & Norton, P.C. in Pittsburgh, Pa. 412-288-4013 or email@example.com Firm Website: www.psmn.com Blog at: www.pitiptechblog.com or follow him on Twitter @picadiosneath
By Henry M. Sneath, Esq. – Chair of the Picadio Sneath Miller & Norton, P.C. Intellectual Property Group. Contact him at firstname.lastname@example.org
Last week a Pittsburgh federal court jury found on behalf of local university CMU against hard drive chip maker Marvell (See attached photo) on claims of patent infringement and willfulness. The $1.17 Billion award was huge by any standards and still faces post trial motions which could vacate the verdict or increase it for willfulness, which the jury found. Judge Fischer could grant any number of what will surely be multiple post trial motions including a motion for mistrial, which was made by Marvell counsel during CMU’s closing argument and on which she denied the motion without prejudice to rule on it after the announcement of a verdict. In other words, she could still grant a mistrial and vacate the one month trial and verdict. She could also increase the verdict by as much as threefold based on the willfulness finding. The article attached below indicates that no tech verdict this large has ever stood the test on appeal. Here is one of a number of good descriptions of the case as it has been written about extensively over the last week: http://arstechnica.com/tech-policy/2012/12/jury-slams-marvell-with-mammoth-1-17-billion-patent-verdict/
Here also is an interesting video take on the case. http://www.bloomberg.com/video/david-martin-on-carnegie-mellon-marvell-patent-case-er1U0P~yQXC616MuXqU_Hw.html
When a patent holder sues a potential infringer, the question often comes up about what the patent holder can publicly say about the lawsuit, either to its customers or in press releases. A recent blog post by Scott Daniels in the Reexamination Alert Blog and cross-posted at IPWatchdog shows the problems one company found itself in when it issued press releases that the other side felt went too far.
TASER International (which makes numerous products, such as the famous TASER stun gun) sued Stinger Systems for infringing some of TASER’s patents and for false advertising. While the false advertising claims were resolved by a joint stipulation, the court ultimately found that Stinger infringed one of TASER’s patents.
In response, Stinger filed its own lawsuit against TASER the week before TASER issued its quarterly earnings report, claiming that TASER engaged in false advertising, unfair competition, and injurious falsehood arising out of a study by the National Institute of Justice (“NIJ”) that TASER circulated. Stinger waited until the day of the earnings report to announce the lawsuit in a press release, but never actually served TASER. Later, Stinger voluntarily dismissed the lawsuit after receiving an order to show cause.
Contending that the press release and lawsuit were shams designed to harm TASER’s stock and business, TASER brought another lawsuit against Stinger—Taser International, Inc. v. Stinger Systems, Case No. 2:09-cv-289, in the United States District Court for the District of Nevada—alleging a number of claims, including violations of the Lanham Act. Judge Miranda Du issued an opinion on August 3, 2012 deciding the parties’ partial summary judgment motions on the Lanham Act claims (among other things).
In it, the Court refused to grant summary judgment in favor of Stinger on the claims related to Stinger’s press releases. The Court found that TASER had presented sufficient evidence that the allegations that the press releases were false and misleading could go to the jury.
In particular, the Court noted four issues of fact that prevented granting Stinger’s motion. First, Stinger claimed in its press release that it had served TASER with the lawsuit when it had not. Second, the press release did not adequately explain what the NIJ is and what its report contained. Third, there was evidence that suggested that Stinger “wanted to pursue misleading press releases as an avenue for devaluing TASER.” And, fourth, there were telephone recordings suggesting that the litigation was designed to be vexatious and to drive down TASER’s stock.
While this case is more extreme that most cases, it still serves as an important reminder that the filing of a lawsuit does not give a party a license to say anything it wants. Press releases need to foremost be truthful and provide sufficient context for the statements contained in them, especially those statements that might be viewed as impugning another.
As this case shows, courts will look sometimes look behind the statements to the motivations of the speakers in determining whether the statements are actionable or were intended to mislead others.
As tempting and satisfying as it may be to issue strong press releases, companies and individuals need to take care that the press releases do not themselves become the subject of additional litigation or distract from the legitimate claims an individual is trying to make.
In the CBT Flint Partners, LLC v. Return Path, Inc.decision last week (No. 2010-1202, -1203), the Federal Circuit considered when a court can rewrite a claim during litigation to fix mistakes in drafting. The Court concluded that a district court has the authority to rewrite claims to correct obvious errors even if there are multiple ways to “fix” the claim, as long as all the possible solutions leave the claim with the same scope and meaning.
The Claim at Issue
The patent at issue in CBT Flint involved an e-mail spam filtering system. One of the claim limitations required a computer to detect and analyze an e-mail. The patent drafters forgot the word “and” between these words, which led to problems. The claim at issue (with the problematic term highlighted) read:
13. An apparatus for determining whether a sending party sending an electronic mail communication directed to an intended receiving party is an authorized sending party, the apparatus comprising:
a computer in communication with a network, the computer being programmed to detect analyze the electronic mail communication sent by the sending party to determine whether or not the sending party is an authorized sending party or an unauthorized sending party, and wherein authorized sending parties are parties for whom an agreement to pay an advertising fee in return for allowing an electronic mail communication sent by the sending party to be forwarded over the network to an electronic mail address associated with the in-tended receiving party has been made.
The district court determined that there were three possible ways to fix this problem—(1) remove the word “detect”; (2) remove the word “analyze”; or (3) add the word “and” between the words “detect” and “analyze.” Because it felt that it was debatable which solution should be used, it concluded it lacked the authority to rewrite the claim. Thus, it found the claim indefinite under 35 U.S.C. § 112, ¶ 2 and granted summary judgment in favor of the defendant. The Federal Circuit reversed.
Case Law History for Rewriting Claims
The Federal Circuit noted that courts have long had the power to fix obvious drafting mistakes, citing to the Supreme Court’s decision in I.T.S. Rubber Co. v. Essex Rubber Co., 272 U.S. 429, 442 (1926). The Court further noted that it held in Novo Industries L.P. v. Micro Molds Corp., 350 F.3d 1348, 1357 (Fed. Cir. 2003) that“[a] district court can correct a patent only if (1) the correction is not subject to reasonable debate based on consideration of the claim language and the specification and (2) the prosecution history does not suggest a different interpretation of the claims.”
The Court determined that the district court erred because the three alternative solutions it was considering were not meaningfully different when viewed from the perspective of one skilled in the art. The concepts of “detecting” and “analyzing” were implicit in the rest of the claim, even if one of these terms was explicitly deleted. Thus, the scope and meaning of the claim were the same regardless of which solution the district court could have adopted. In these situations, the district court does have the authority to fix this kind of obvious mistake.
Practice Pointers and Takeaways From This Case
While this case suggests that courts are willing to bail out patentees and fix mistakes in claims during litigation, patentees should not rely on courts fixing their problems for them. In this particular case, the Federal Circuit found that the three possible solutions were all functionally identical. That will not always be the case, and, it is far more likely it will not be the case.
Obviously, the best practice is not to make mistakes in the first place, but that is often easier said than done. Patentees should be especially vigilant about reviewing the claims during prosecution to make sure that there are no mistakes. In addition, patentees should make sure to review the final, published version from the Patent Office, as mistakes sometimes do happen in the printing process. If a mistake happens after issuance, there are mechanisms to correct a patent (e.g., a certificate of correction). Finally, if a patentee is going to sue on a patent, it is especially important to review the patent again to make sure there are no mistakes. Don’t count on the court to bail you out!
The other takeaway from this case from the defense viewpoint is that courts may be more reluctant to find claims indefinite for obvious mistakes or typographic errors. Significant errors are still likely to doom patent claims, but it is not prudent to count on minor errors sinking them, too.
The bottom line with minor mistakes is that neither side should be confident in how a court will react. It may fix them, but it may not. And how a court will act likely depends on some very specific facts.
With the House and Senate passing versions of the America Invents Act that will reform the patent laws as we know them, I thought it would be interesting to look back at how patent false marking litigation burst onto the scene in 2010 and how it appears to be flaming out now in 2011. In the last two years, the patent world has been abuzz with claims of false marking brought by individuals against some of the largest companies in America. There were fears that this litigation would result in monstrous penalties where there was little “wrongful” action. As typically happens, these fears appear to have been overblown. While certainly a headache for those companies that were sued and for those companies that have gone to great lengths to verify compliance with the statute, the result seems to be more of a short-term inconvenience.
History of False Marking Law
False patent marking has been around for a long time, first appearing in the Patent Act of 1842, which prohibited the false marking of products with the intent to deceive the public with a fine of not less than $100. Later, in 1952, Congress changed the statute to impose a penalty of not more than $500 per offense:
(a) Whoever, without the consent of the patentee, marks upon, or affixes to, or uses in advertising in connection with anything made, used, offered for sale, or sold by such person within the United States, or imported by the person into the United States, the name or any imitation of the name of the patentee, the patent number, or the words “patent,” “patentee,” or the like, with the intent of counterfeiting or imitating the mark of the patentee, or of deceiving the public and inducing them to believe that the thing was made, offered for sale, sold, or imported into the United States by or with the consent of the patentee; or Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word “patent” or any word or number importing that the same is patented for the purpose of deceiving the public; or Whoever marks upon, or affixes to, or uses in advertising in connection with any article, the words “patent applied for,” “patent pending,” or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public– Shall be fined not more than $500 for every such offense.
35 U.S.C. § 292(a). Prior to 2009, courts interpreting these statutes held that the penalty should not be imposed for each article falsely marked, but rather should be imposed for the decision to falsely mark a product line. See, e.g., London v. Everett H. Dunbar Corp., 179 F. 506 (1st Cir. 1910). As a result, there was little incentive for a litigant to bring a false marking claim and few cases were filed.
Pequignot v. Solo Cup and Forest Group v. Bon Tool
In 2007, things began to change. Matthew Pequignot, a patent attorney, filed suit against Solo Cup for falsely marking its plastic cup lids with expired patent numbers. Pequignot argued that the prior holdings were incorrect and that penalties should be imposed per article. Because there were potentially over 21 billion cups that were falsely marked, Solo Cup theoretically faced more than $10 trillion in potential penalties under Pequignot’s interpretation.
As the case was winding its way through the courts, the Federal Circuit heard an appeal in an unrelated case Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009) that would ultimately spark a huge new cottage industry. Forest Group had a patent covering stilts commonly used in construction and sued Bon Tool for infringement of its patent. Bon Tool counterclaimed, alleging that Forest Group falsely marked its stilts. The court found that (1) Bon Tool did not infringe; (2) Forest Group had falsely marked some of its stilts and fined it $500 for a single offense of false marking; and (3) the case was not exceptional, so the court did not award attorney fees. Bon Tool appealed the last two findings, and the Federal Circuit determined that the fine under the false marking statute applies to each article falsely marked, not the decision to mark as the district court had held. (The Federal Circuit affirmed the decision not to award attorney fees). On remand, the district court imposed a fine of $180 for each of the 38 stilts that were falsely marked. Thus, the case that lit the false marking industry on fire and resulted in thousands of subsequent lawsuits was ultimately over a $6,840 fine.
Forest Group Launches a Thousand Suits
From 2007 to 2009, only 47 false marking cases had been filed in federal courts, but after the December 28, 2009 decision in Forest Group, patent attorneys and litigants stormed court houses across the country, filing almost 1,500 cases in the next year and a half. Given the potential $500 per article fine, companies that mass produced products were understandably concerned about facing potentially huge liability for wrongly marking their products.
Because false marking is a qui tam action and the statute appeared to authorize anyone to file suit, there was no need for patent attorneys to find clients who had been actually injured by the alleged false marking. Instead, patent attorneys were filing suit on their own or creating their own corporations to file suit against alleged false markers. The lawsuits tended to focus on products that had expired patent numbers, rather than products that were marked with inappropriate, but still valid, patent numbers. The reason was obvious—there was no need to go through the costly exercise of proving that the patent did not cover the product when the patent had expired. One could immediately jump to the question of whether the product was falsely marked with the intent to deceive the public.
Two later decisions by the Federal Circuit only intensified the flames sparked by the Forest Group decision. In Pequignot v. Solo Cup Co., 608 F.3d 1356 (Fed. Cir. 2010), the Court confirmed that marking a product with an expired patent number fell within the scope of the false marking statute (although it affirmed the judgment against Pequignot because he could not prove that Solo Cup acted with an intent to deceive). And, in Stauffer v. Brooks Brothers, Inc., 619 F.3d 1321 (Fed. Cir. 2010), the Court confirmed that anyone had standing to bring suit under the false marking statute, even if they did not suffer any direct personal injury.
The Federal Circuit appeared to be showing no inclination to beat back this fire. All indications were that a new form of patent “trolling” litigation was here to stay.
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Contact our Pittsburgh Intellectual Property, Data Security, Trade Secret, DTSA and Technology Attorneys at Houston Harbaugh, P.C. through IP Section Chair Henry M. Sneath at 412-288-4013 or email@example.com. Some posts herein were published by the law firm Picadio Sneath Miller & Norton, P.C. (PSMN®) which has merged with HoustonHarbaugh, P.C. and are used by permission. DTSALaw® is a federally registered trademark. See Firm Website at: www.hh-law.com