A new report paints Pittsburgh in glowing colors for the availability of high-tech jobs. The Pittsburgh Business Times (Citing a Dice.com study) reports that Pittsburgh saw an increase of 45% in technology jobs over the past year, and that many tech jobs are still to be filled. The top three areas for tech jobs remain Washington DC, New York/New Jersey and Silicon Valley. Seattle, Detroit and Pittsburgh saw some very high growth in 2010 and are moving up on the ladder of total tech jobs. You’ve gotta give the ‘burgh credit for leveling the rusted steel mills, building high-tech centers and incubators on the vacated slabs, and making the most from the tech transfer operations at Pitt, CMU and Duquesne Universities. The Times suggests that the job board at the Pittsburgh Technology Council is brimming with tech jobs. I had business visitors in from out of town today and as usual, the remarks were aimed at how wonderful this city looks. This tech growth is a big factor in the feel of the city. As my teenage son says, “it’s all good.”*
*OK – I confess – like most of what a teenagers says, that probably isn’t all true. However, a lot in the Pittsburgh tech community is “all good”.
With the dawn of the new year, it is time to consider getting your annual checkups. IP assets often form the core assets of a company—enabling the company to provide its goods and services and to prevent others from encroaching on its valuable property. Regardless of the size of your company, maintaining the health of these assets should be a key priority, so a company’s IP portfolio should undergo a routine review to make sure the assets are in top shape and no issues have arisen.
Among the many things that can be done in an IP checkup (or audit) is to determine which assets are currently being used. Are their underutilized assets that should be utilized? Or, can these assets be sold or licensed to someone else? An IP audit can verify that you have the proper title or license to the IP assets you do use and that all maintenance fees have been paid to maintain the enforceability of these assets. An IP audit can not only assess the assets you have, it can serve as preventative medicine to help ward off lawsuits. With the recent plague of false patent marking cases that have been filed throughout the country, verifying that the goods you provide are properly marked and any expired patent numbers have been removed can help avoid needless and expensive litigation.
An IP audit provides the mechanism to obtain a current snapshot of the status of a company’s IP assets. Like any other kind of checkup, an IP audit can range from a broad, general review and inventory of the assets to a detailed analysis of some or all of the assets. Often, the audit begins with the broad review to identify potential problems and then prioritizes which problems to focus on.
2010 gave us a number of important decisions in the intellectual property field. The Bilksi decision regarding the patentability of business methods was eagerly awaited from the Supreme Court. In addition, the Federal Circuit issued a number of key decisions involving false marking, the written description requirement, patent misuse, and patent term extensions.
Bilksi v. Kappos—130 S.Ct. 3218 (2010)
Bilski was one of the most anticipated cases of the year. The Supreme Court considered whether business method patents are patentable subject matter under the Patent Act. As the Court is want to do, it did not substantially clarify the standards. Nonetheless, three key points emerged from this decision.
1. Business method patents are not per se unpatentable subject matter, although they still might be (or should be) difficult to get.
2. The Federal Circuit’s machine or transformation test for patentability under § 101 is not the sole test, although it is still a very useful clue for determining whether a process meets the requirements of § 101. Few processes that do not meet this test would be patentable.
3. The three previous exceptions to the broad standards of patentability under § 101 still exist—laws of nature, physical phenomena, and abstract ideas are not patentable.
American Needle, Inc. v. National Football League—130 S.Ct. 2201 (2010)
American Needle was a non-exclusive National Football League Properties (NFLP) licensee for certain apparel that bore NFL team insignias. In December 2000, the NFL decided to only grant exclusive licenses, and American Needle did not receive one. American Needle sued, claiming that the NFL’s licensing practices violated § 1 of the Sherman Antitrust Act. The Seventh Circuit found no violation, but the Supreme Court reversed.
While not a purely IP case, this case is at the intersection of IP and antitrust laws. The NFL claimed that the NFLP was a joint venture that was formed to develop, license, and market NFL IP rights. Section 1 of the Sherman Act prohibits concerted action that restrains trade. The key inquiry in this case was whether the NFL acts as a single decisionmaker in the IP licensing arena or whether the NFLP brings together independent decisionmakers. The Court concluded that while the NFL may in some areas act like a single decisionmaker (for scheduling, rules, etc.), in the IP arena each team is pursuing its own interests and directly competing against the other teams. Thus, the decision by the NFLP to issue exclusive licenses was concerted action that deprived the marketplace of independent action by each team and thus could state a claim for a violation of § 1 of the Sherman Act. The Court noted that a joint venture could be governed by antitrust laws in some aspects of its business, while not in others. The Court remanded to the lower courts to address the substance of the claims.
Pittsburgh should be a magnet for patent filings given the Federal Local Patent Rules which were promulgated at the request of the Western District Federal bench. These rules give litigants a decent potential for a fairly quick ride through the docket and the judges here are comfortable in presiding over patent litigation and using these rules. Nonetheless, 2010 saw no growth in the number of patent filings in the Western District Court. There were 18 patent cases filed in 2010 and this is right in the range of the number of cases filed in recent years. We seem stuck in the range of 18 – 20 cases per year. There were a few false marking cases filed and some of the 18 cases were disposed of quickly through withdrawal or early settlement. Lucky for someone on those cases that went away quickly. In the days ahead, we will report more on cases filed here in Pittsburgh.
In Costco Wholesale Corp. v. Omega, S.A., the U.S. Supreme Court was asked to decide the following question presented:
Under the Copyright Act’s first-sale doctrine, 17 U.S.C. § l09(a), the owner of any particular copy “lawfully made under this title” may resell that good without the authority of the copyright holder. In Quality King Distribs., Inc. v. L’Anza Research Int’l, Inc., 523 U.S. 135, 138 (1998), this Court posed the question presented as “whether the ‘first sale’ doctrine endorsed in § 109(a) is applicable to imported copies.” In the decision below, the Ninth Circuit held that Quality King (which answered that question affirmatively) is limited to its facts, which involved goods manufactured in the United States, sold abroad, and then re-imported. The question presented here is: Whether the Ninth Circuit correctly held that the first-sale doctrine does not apply to imported goods manufactured abroad.
On December 13, 2010, the U.S. Supreme Court affirmed the judgment of the Ninth Circuit by an equally divided Court. Costco Wholesale Corp. v. Omega, S.A., No. 08-1423, 562 U.S. _____ (Dec. 13, 2010).
Briefly, the evidence below showed that Omega manufactured watches in Switzerland, bearing a design registered in the U.S. Copyright office. Omega first sold the watches to authorized distributors overseas. Unidentified third parties eventually purchased the watches and sold them to a New York company, ENE Limited, which in turn sold them to Costco. Costco then sold the watches to consumers in California. Omega did not authorize the importation of the watches into the U.S. or the sales made by Costco.
Omega filed a lawsuit alleging that Costco’s acquisition and sale constituted copyright infringement under 17 U.S.C. §§ 106(3) and 602(a). Costco defended the suit based upon the “first sale doctrine” which provides that once a copyright owner consents to the sale of particular copies of his work, he may not thereafter exercise the distribution right with respect to those copies. Omega countered that the first sale doctrine did not apply because the watches bearing the copyrighted design were manufactured and first sold oversees. Costco conceded that Omega’s position was consistent with Ninth Circuit precedent but argued that this precedence had been overruled by the U.S. Supreme Court in Quality King Distribs., Inc. v. L’anza Res. Int’l, Inc., 523 U.S. 135, 118 S. Ct. 1125 (1998). The Ninth Circuit disagreed with Costco on the grounds that Quality King was factually distinguishable. Moreover, the Ninth Circuit concluded that to permit the application of the first sale doctrine to foreign manufactured items would result in the extraterritorial application of U.S. laws, which is prohibited unless the contrary is clearly indicated by statute, which it was not here. Further, the extraterritorial application of U.S. laws in the area of intellectual property is especially limited. Consequently, the Ninth Circuit reversed the trial court that had found in favor of Costco on summary judgment and remanded for further proceedings. The Ninth Circuit’s entire opinion can be found at Omega S.A. v. Costco Wholesale Corp., 541 F.3d 982 (9th Cir. Sept. 3, 2008).
Federal court practitioner are now well-familiar with the CM/ECF, which allows parties to file documents in a PDF format on-line rather than hand-filing them with the Clerk of Court. In an effort to improve its archiving and preservation of its records and to address concerns over new features that have been incorporated into the PDF format, federal courts will require filers to submit documents in the PDF/A format. The courts have not all set a timeline for implementing these changes, but the Western District of Pennsylvania will require all uploads to be in this format after January 1, 2012.
PDF/A is an International Standards Organization (ISO) approved version of the popular Adobe PDF format designed for archival purposes. It is a self-contained file, which means that it does not rely on external media players or hyperlinks outside of the documents. In addition, it embeds all of the fonts used in the document inside the file, so the recipient need not have any of the fonts installed on his or her computer. It also prevents security measures of any kind (such as passwords). It appears that the federal courts will be using the minimal PDF/A-1b “flavor” of PDF/A, rather than the full PDF/A-1a “flavor,” which is more exacting.
As the PDF format has evolved, it has incorporated some new features that raised concerns, such as the ability to monitor when a document is read and the ability to incorporate active software inside the file. In theory, by moving to the PDF/A format, electronically-filed documents will be more accessible in the future and less dependent on technologies or features that may become unsupported.
Federal courts currently will accept PDF/A files, but do not yet require them. As practitioners are preparing for the transition to only PDF/A files, they should be aware of a number of changes that will result from this shift:
Because all of the fonts will be embedded into the file, file sizes will be larger. In addition, some specialized fonts will not allow programs to embed them in the PDF/A file or require an additional license to do so. Use of these fonts will be problematic and may have to be avoided.
Hyperlinking to webpages, judicial decisions, and other hypermedia is not possible because the file must be self-contained. Content rich briefs and exhibits will be more difficult to create, and, in particular, one will have to be careful in creating exhibits that contain these items (such as copies of webpages or electronically-downloaded caselaw). While some courts may allow exceptions to this limitation, one should not count on regularly being able to obtain these.
Passwords and other security features are not permitted. The purpose of switching to PDF/A is to make the files as accessible as possible for as long as possible. Passwords and other security measures interfere with that goal.
PDF/A requires the presence of certain meta-data to verify conformance with the standard. For firms with systems that automatically strip meta-data, care will have to be taken so as not to render PDF/A files non-conforming in the process.
In Teva Pharmaceutical Industries Ltd. v. AstraZeneca Pharmaceuticals LP, et al., No. 08cv4786, 2010 U.S. Dist. LEXIS 112597 (E.D. Pa. Oct. 20, 2010) (opinion by J. Yohn), Plaintiff Teva Pharmaceutical Industries Ltd. (“Teva”) filed a patent infringement suit against AstraZeneca Pharmaceuticals LP and IPR Pharmaceuticals, Inc. (collectively “AstraZeneca”), alleging that AstraZeneca’s CRESTOR® prescription drug products infringed certain claims of U.S. Patent No. RE39,502 (“the ‘502 Patent”). AstraZeneca moved for summary judgment on the ground that the ‘502 Patent was invalid due to prior invention pursuant to 35 U.S.C. § 102(g)(2).
CRESTOR® is a prescription drug belonging to a group of drugs called statins that are used to treat high cholesterol. AstraZeneca began selling the drug after the FDA approved a New Drug Application in August 2003. However, in early 1999, the researchers developed the formulations for all dosage strengths of the drug and began development of the commercial products (referred to internally as rosuvastatin sales formulations). In mid 1999, AstraZeneca manufactured numerous batches of 2.5 mg and 5.0 mg sales formulation tablets, which contained the same ingredients as the commercial CRESTOR® tablet cores. In the late summer of 1999, a researcher gave a presentation on the sales formulation tablet cores, which consisted then of the same ingredients and amounts that exist in the current commercial products. In the fall of 1999, AstraZeneca manufactured a batch of coated tablets and later submitted the records from the batch to the FDA as part of the New Drug Application. On January 26, 2000, a patent application was filed in Great Britain on behalf of AstraZeneca, but eventually the application was terminated. On August 4, 2000, AstraZeneca filed a patent application in the United States, which issued as U.S. Patent No. 6,316,460 (“the ‘460 Patent”).
Prior to December 1, 1999, Teva began researching certain stabilizing formulations that contained a certain statin drug called pravastatin. On December 1, 1999, Teva performed stability tests on a pharmaceutical formulation containing pravastatin and confirmed that the formulation was exceptionally stable despite other traditional stabilizers being used in the formulation. On April 10, 2000, Teva filed a provisional patent application disclosing the invention. On April 9, 2001, Teva filed a patent application regarding this invention, which issued as U.S. Patent No. 6,558,659 (“the ‘659 Patent”) on May 6, 2003. Teva filed an application for reissue of the ‘659 Patent on March 17, 2005, which reissued as the ‘502 Patent on March 6, 2007.
Pursuant to 35 U.S.C. § 102(g)(2), a person shall be entitled to a patent unless . . . before such person’s invention thereof, the invention was made in this country by another inventor who had not abandoned, suppressed, or concealed it. In determining priority of invention under this subsection, there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other. The courts have held that conception is the formation, in the mind of the inventor, of a definite and permanent idea of the complete and operative invention and must encompass all limitations of the claimed invention, and is complete only when the idea is so clearly defined in the inventor’s mind that only ordinary skill would be necessary to reduce the invention to practice without extensive research or experimentation. Furthermore, the courts have held that an actual reduction to practice is established when the inventor demonstrates that s/he constructed an embodiment or performed a process that met all the limitations of the allegedly infringed patent, and s/he determined that the invention would work for its intended purpose.
AstraZeneca argued that, if the accused products infringe as alleged by Teva, then the asserted claims of the ‘502 Patent were invalid because AstraZeneca conceived of and reduced to practice the accused products prior to when Teva invented its subject matter covered by the ‘502 Patent. As a threshold matter, the court determined that there was no genuine issue of material fact that AstraZeneca arrived at and manufactured the product formulations before Teva conceived of and reduced to practice the subject matter of the ‘502 Patent. Also, the court agreed that AstraZeneca was able to concede Teva’s allegations of infringement, for purposes of summary judgment, in order to satisfy its burden that its earlier-made CRESTOR® products met all the limitations of the asserted claims of the ‘502 Patent.
Teva challenged AstraZeneca’s argument by claiming that AstraZeneca failed to show prior invention of the subject matter because there was no evidence that AstraZeneca appreciated that a certain compound in CRESTOR® contributed to the overall stability of the formulation. Teva’s expert stated that the use of certain compounds to stabilize the overall formulations was not disclosed in the patent application filed in Great Britain, the ’460 Patent or the New Drug Application; however, he acknowledged that the compounds were disclosed in these documents for uses other than stabilization. AstraZeneca argued that it was not necessary to appreciate how exactly the allegedly infringing formulations achieved stability in order to establish priority of invention under 35 U.S.C. § 102(g)(2) and relied on Federal Circuit cases that have held that a reference may anticipate even when the relevant properties of the thing disclosed were not appreciated at the time. The court concluded that the contribution of the compound to the stability of the formulations as discovered by Teva was an inherent property and that such an appreciation was not required by AstraZeneca.
Finally, the court concluded that AstraZeneca did not abandon, suppress or conceal its earlier-developed CRESTOR® formulations. AstraZeneca avoided the disqualifying effects of § 102(g) by filing the patent applications, submitting the New Drug Application and marketing CRESTOR® commercially in the United States after receiving FDA approval all in a timely manner.
In Wellbutrin SR Antitrust Litigation; Medical Mutual of Ohio, Inc. v. GlaxoSmithKline PLC, et al., Nos. 04-5525, 05-396, 2010 U.S. Dist. LEXIS 90156 (E.D. Pa. Aug. 31, 2010) (opinion by J. Stengel), GlaxoSmithKline PLC, et al. (“GSK”) filed a renewed motion for summary judgment arguing that an entire lawsuit cannot be objectively baseless if a “non-sham” claim is asserted with a “sham” claim together in the same lawsuit. The filing of the renewed motion was prompted by a decision from the court on March 31, 2010, when the court found that GSK had probable cause to file suit alleging infringement of the ‘994 Patent (the “non-sham” claim) but that a genuine issue of material fact precluded a finding that GSK also had probable cause to file suit alleging infringement of the ‘798 Patent (the “sham” claim).
By way of background, the issues relating to this case began in July 2000, when Eon, a generic drug manufacturer, submitted an abbreviated new drug application for generic Wellbutrin SR, and in the application, Eon stated that it had not infringed the ‘798 Patent. On November 29, 2000, GSK filed suit against Eon alleging infringement of the ‘798 and ‘994 Patents, which triggered a 30-month stay precluding Eon from marketing its generic version of Wellbutrin. On January 24, 2002, the FDA granted tentative approval to the generic Wellbutrin, which meant that the FDA would have granted approval for marketing the drug but for the 30-month stay. On August 13, 2002, the court denied Eon’s motion for summary judgment on the ‘798 Patent and granted Eon’s motion for summary judgment on the ‘994 Patent. GSK eventually settled its ‘798 infringement claim against Eon. In November 2003, after the 30-month stay expired, Eon received FDA approval for the generic Wellbutrin; however, GSK obtained a temporary restraining order and preliminary injunction preventing Eon from marketing the drug before the trial on the ‘798 claim. In January 2004, the Federal Circuit stayed the injunction, and Eon began marketing its generic drug.
As part of its argument to support the renewed motion, GSK asserted that, because the court found previously that GSK had a reasonable basis for filing the ‘994 claim and because the ‘994 claim and the ‘798 claim were both included in one lawsuit, the court must find that GSK had a reasonable basis to file the lawsuit. GSK relied on only a few cases in an attempt to support its overall position. GSK then directed the court to its own language in the summary judgment opinion and attempted to craft the issue as whether the facts and the law as they were when GSK filed suit against Eon would have given GSK a reasonable expectation of success. Specifically, GSK argued that because the court already found that GSK had a reasonable expectation of success as to the ‘994 claim at the time the lawsuit was filed, the court must find that any lack of reasonable expectation of success on the ‘798 claims had no bearing on the sham litigation claim.
The court acknowledged that GSK’s argument was novel and creative but ultimately disagreed with GSK. The court concluded that an argument that the language in the opinion indicated that success on one claim would end Plaintiffs’ suit ignored the underlying facts relating to the opinion. The summary judgment opinion included language about the facts and the law that was directed to each patent claim, the court issued two separate judgments and the court analyzed GSK’s reasonable expectations of success on each claim, which resulted in two separate conclusions. In the end, the court agreed with Plaintiffs that a dismissal of the claims would have ignored the fact that the ‘798 claim, in and of itself, was sufficient to cause antitrust damage because that claim resulted in the continuation of GSK’s 30-month protection stay after the ‘994 claim was dismissed on summary judgment.
As an alternative argument, GSK asserted that the damage period should not have included any time prior to the date when the court dismissed the ‘994 Patent claim that was filed against Eon. The court denied GSK’s motion to limit the damages period and agreed with Plaintiffs that the issue was an issue to be submitted to the jury.
In United States of America ex rel. FLFMC, LLC v. T.F.H. Publications, Inc., No. 2:10cv437, 2010 U.S. Dist. LEXIS 111434 (W.D. Pa. Oct. 20, 2010) (opinion by J. Cercone), the court granted Defendant’s motion and transferred a false patent marking lawsuit to the Defendant’s home forum of New Jersey. Plaintiff had alleged that Defendant marked a Frisbee® Flying Disc with expired patent numbers in violation of 35 U.S.C. § 292.
Plaintiff, a Pennsylvania limited liability company with its principal place of business in Pennsylvania, was formed in 2010 for the sole purpose of filing false patent marking lawsuits. It did not manufacture or produce anything. Defendant, a Delaware corporation located in New Jersey, was founded over fifty years ago and manufactured and sold a wide range of pet products.
The court applied Third Circuit law to Defendant’s motion to transfer under 28 U.S.C. § 1404(a). The court considered a number of factors in its analysis, including the convenience of the parties and witnesses, the interests of justice, and a variety of public and private factors. The court found that the public factors, such as the interests of Pennsylvania and New Jersey, the ability to enforce a judgment, court congestion, local policies, and familiarity with the law were balanced and did not weigh in favor of either party. In contrast, the court found that the private factors weighed in favor of transfer because all of the evidence and witnesses were located in New Jersey.
The court gave relatively little weight to Plaintiff’s choice of forum because this was a qui tam action, and therefore, the U.S. government was the real party in interest. The court also found that the convenience of the parties and witnesses favored Defendant’s choice of forum. All of the relevant witnesses were likely located in New Jersey, as were all of the relevant business records. In contrast, Plaintiff, who was only in the business of filing false marking lawsuits, had no witnesses or documents of note in Pennsylvania. Moreover, the court gave little weight to Plaintiff’s argument that it would be more of a burden for it to litigate in New Jersey, reasoning that litigation was what this company was formed to do. Finding that the private interests favored transfer and the public interests did not favor either side, the court granted Defendant’s motion and transferred the action to New Jersey.
Thus, in this case, the court gave little deference to a plaintiff’s choice of forum when that plaintiff was recently formed solely for the purpose of taking advantage of the Federal Circuit’s recent decisions regarding false marking. When no witnesses or documents were located in the chosen forum, and the only connection to the forum is the location of the plaintiff, the court found little reason not to transfer the action.
In Hollander v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., No. 2:10-cv-00836-RB, 2010 U.S. Dist. LEXIS 113005 (E.D. Pa. Oct. 21, 2010) (opinion by J. Buckwalter), Plaintiff sued Defendant for falsely marking 39 prescription drug products with expired patent numbers. Judge Buckwalter denied Defendant’s motion challenging Plaintiff’s standing to bring suit, but granted defendant’s motion to dismiss for failure to meet the heightened pleading standards of Fed. R. Civ. P. 9(b).
Defendant initially challenged Plaintiff’s standing to bring suit, arguing that Plaintiff suffered no concrete injury himself. Citing the recent Federal Circuit decision in Stauffer v. Brooks Brothers, Nos. CIV.A 2009-1428, 2009-1430, 2009-1453, 2010 U.S. App. LEXIS 18144, 2010 WL 3397419 (Fed. Cir. Aug. 31, 2010), the court rejected Defendant’s argument. The Federal Circuit held in Stauffer that any person has standing to bring claims under 35 U.S.C. § 292, because this is a qui tam statute, and the plaintiff acts as the assignee of the government.
Moving to Defendant’s Rule 9(b) challenge, the court stated that under 35 U.S.C. § 292, a plaintiff must show “(1) a marking importing that the article is patented (2) falsely affixed to (3) an unpatented article (4) with the intent to deceive the public.” Courts in the Third Circuit have found that intent to deceive element of § 292 claims must meet the heightened pleading standard of Rule 9(b).
Plaintiff relied on boilerplate allegations based “on information and belief” that Defendant knowingly violated § 292(a) by falsely marking its products with expired patent numbers with the intent to deceive the public. Plaintiff supported this allegation by claiming that Defendant was a “highly sophisticated business entity” with “extensive experience with the application for, procurement of, and publication of its patents.” The court found these allegations insufficient under Rule 9(b) because Plaintiff offered no factual support for his allegations that Defendant knew it had falsely marked its product or that it intended to deceive the public. Thus, In Hollander, the court rejected boilerplate, conclusory allegations of fraud and intent, finding that Rule 9(b) requires specific allegations of at least some facts to support an inference of fraudulent intent.
Contact our Pittsburgh Intellectual Property, Cyber and Data Security, Trade Secret, DTSA and Technology Attorneys at Houston Harbaugh, P.C. through IP and Litigation Sections Chair Henry M. Sneath at 412-288-4013 or firstname.lastname@example.org. While focusing first on health care and prevention issues for family, friends and employees, we are also beginning to examine the overall Covid Law related issues in business litigation, contract force majeure, trusts and estates litigation and insurance coverage issues that will naturally follow the economic disruption of the Covid-19 pandemic.
Some posts herein are from the HH-Law resources of PSMN® and PSMNLaw®. Business Litigation. Pittsburgh Strong® and DTSALaw®, PSMN® and PSMNLaw® are federally registered trademarks of HH-Law. See Firm Website at: https://www.hh-law.com/Professionals/Henry-Sneath.shtml