Category: licensing

Patent Month in Review: February 2017

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Supplying a Single Part of Many in an Infringing Device Does not Give Rise to Infringement Liability
The Supreme Court weighed in on whether supplying a single part for export in a multi-part infringing assembly gave rise to liability in Life Technologies Corp. v. Promega Corp. (Supreme Court 2017). In finding no liability, its conclusion was succinct: “supply of a single component of a multicomponent invention for manufacture abroad does not give rise to §271(f)(1) liability.”
Board (and Examiners) Must Sufficiently Identify Elements in Prior Art and Justify Motivation to Combine References
Patent applicants sometimes feel frustrated by loose rejections where examiners don't explicitly point out where each claim element may be found in a reference, or more often, what would motivate a person of ordinary skill in the art to combine references. In PersonalWeb Tech v. Apple (Fed. Cir. 2017), the Federal Circuit gave some support to the frustrated applicant, stating that "[t]he Board did not sufficiently explain and support the conclusions that (1) Woodhill and Stefik disclose all of the elements recited in the challenged claims of the ’310 patent and (2) a relevant skilled artisan would have been motivated to combine Woodhill and Stefik in the way the ’310 patent claims and reasonably expected success."
"Consisting of" Still Sets of a Closed List
Careful claim drafters know that "comprising" and "comprised of" set off open lists that include the elements therein and others unidentified, and "consisting" sets off closed lists that are limited to the elements in the list and no others. Shire Development v. Watson Pharma (Fed. Cir. 2017) confirmed this reading on "consisting of:" "'consisting' creates a very strong presumption that that claim element is ‘closed’ and therefore excludes any elements, steps, or ingredients not specified in the claim."
Sovereign Immunity Protects Public Universities from IPR Challenges
According to the Patent Trial and Appeals Board, the 11th Amendment shields public universities from IPR challenges. The 11th amendment reads, "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." The case has not gone higher than the PTAB at this point but this is good news for public universities with large patent portfolios. It will be interesting to see how this might apply to public university licensees. See Covidien LP v. University of Florida Research Foundation Inc., Case Nos. IPR 2016-01274, 01275, and -01276 (PTAB January 25, 2017).
Who is the Director of the USPTO: Solved
For reasons unknown, the identity of the USPTO director was unclear since President Trump's inauguration. In response to FOIA requests from Patently-O's Dennis Crouch, the USPTO now confirms that Michelle Lee is still Director.

[T]he Agency is responding that Michelle K. Lee is the Director of the United States Patent and Trademark Office and Anthony P. Scardino is the Acting Deputy Director of the United States Patent and Trademark Office.

If you have questions, contact me.
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How To Tell Someone to Stop Infringing Without Getting Sued

By Stephen B. Schott
An Article in Schott, PC's IP Law for Startups Series

dreamstime_xs_4693108Dear Dr. Jones,
It has recently come to my attention that your product, the Gadgetron, may infringe our client’s [patents, trademarks, copyright]. In order to avoid a costly lawsuit, during which you would have to pay large sums of money and which could result in the loss of your business, my client is willing to offer you a nonexclusive license under the attached terms. If you execute the license and send the payment mentioned in section 4, we will consider this matter closed...

No one wants to receive a cease and desist letter like this and few people are all that excited about sending them. But if you send a cease and desist letter, it’s good to know the risks and how to craft one to avoid getting yourself hauled into court before you’re ready.
Sue me? No, I’ll sue you [for punitive damages you’re giving me]
It may seem unfair that someone who is infringing your intellectual property could sue you—but the Declaratory Judgment Act allows a party to bring an action for non-infringement or invalidity when “a case of actual controversy” exists between parties. The rationale is that the accuser should be allowed to clear their name and the declaratory judgment action (or DJ action as they are often called) allows a person accused of infringing to do just that.
The accused infringer has at least two advantages in a DJ action: (1) The DJ action allows the accused infringer to pick the court most convenient or advantageous to it, and (2) The accused infringer is suddenly on the front foot and may take the accuser by surprise.
What can you write in your cease and desist letter to avoid a DJ action?
If you own IP and want to send a cease and desist letter but avoid a DJ action, you must tread carefully: The courts have set a low threshold for what constitutes enough conduct to invite a DJ action. The Supreme Court’s Medimmune DJ test asks whether “the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” That’s a mush-mouth full of dependent clauses but the critical language is whether the accuser’s conduct creates “sufficient immediacy and reality” about a legal controversy. In layman’s terms: Are you afraid that you might get sued?
The courts have left a few breadcrumbs signaling how to avoid writing a letter that gives rise to a DJ action. The Supreme Court left a helpful hint in Medimmune:

[A] communication from a patent owner to another party, merely identifying its patent and the other party’s product line, without more, cannot establish adverse legal interests between the parties.

The Federal Circuit gave another helpful piece of advice when it advised that an accuser may avoid a DJ action if it conducted pre-filing discussions under a confidentiality agreement, since discussions under such an agreement would be inadmissible. (3M Company v Avery Denison Corp.)
Thus, a letter written something like this could well avoid creating a “sufficient immediacy and reality” of a threat:

Dear CEO,
Our client is the owner of US Patent 6,332,840. While reviewing your website, we recently came across your product, the Awesome Toy.
We would like to discuss the patent and this product line and suggest that doing so would be best done under a confidentiality agreement [the confidentiality agreement should include a clause prohibiting either party from filing a lawsuit during some term—see Biomet, Inc. v. Bonutti Skeletal Innovations, LLC.], attached hereto. Please let us know if this is acceptable by returning the signed agreement to us, and we will countersign it and arrange a time to discuss this further.

Even a toothless letter like this might not avoid a DJ action because whether a case or controversy exists is decided on a case-by-case basis. But the above letter follows courts’ specific advice on how to craft a letter to avoid a declaratory judgment lawsuit, namely:

Cease and Desist Letter Ingredients to Avoid a DJ Action
(1) It identifies a patent and a product line, without accusation of infringement.
(2) It includes a nondisclosure agreement, which would mean that any conduct after the nondisclosure agreement’s signing (and during its term), such as a specific allegation of infringement, would not be admissible to support a DJ action.
(3) It might include a provision to specifically not sue for a period of time.

A letter that includes these may be safe to send, although I can’t say it enough: The bar for a DJ action is low and each case is decided on its own set of facts.
How low is the threshold to support a DJ action? Oh, it’s low alright.
dreamstime_xs_51369762Take the case of Hewlett-Packard Company v. Acceleron LLC as a warning when crafting your cease and desist letters.
On September 14, 2007, Acceleron sent a letter to HP identifying its patent and certain products of HP. So far, so good under Medimmune. Acceleron also requested an agreement that “all information exchanged between the parties will not be used for any litigation purposes whatsoever...or [that it] otherwise created any actual case or controversy regarding the enclosed patent.” Acceleron gave a two-week deadline for reply but did not specify what it would do if HP failed to respond.
On October 1, 2007, HP responded and suggested that it would not file a DJ action for 120 days in exchange for Acceleron agreeing not to file any action against HP during the 120 days.
On October 5, 2007, Acceleron responded with its own letter arguing that HP had no basis for a DJ action and again requested that HP respond within 2 weeks—again without threat of what it would do if HP failed to respond. Acceleron appears to be trying hard to avoid the DJ action in these letters, nevertheless, on October 17, 2007 HP filed a declaratory judgment action for non-infringement and invalidity of Acceleron’s patent.
Weighing all the facts, the court held that “it was not unreasonable for HP to interpret Acceleron’s letters as implicitly asserting its rights under [its] patent.” According to the court, Acceleron’s conduct permitted HP’s right to bring the DJ action:

  • Acceleron asserted that a patent is “relevant” to the other party’s specific product line
  • Acceleron imposed a “short deadline" for a response
  • Acceleron insisted that HP not file suit
  • Accelerant ignored HP’s request to not sue for 120 days
  • Acceleron is a licensing entity (i.e., a patent troll)

As was suggested in Medimmune, the Federal Circuit noted that “a communication from a patent owner to another party, merely identifying its patent and the other party’s product line, without more, cannot establish adverse legal interests between the parties,” which supports the guidance that the toothless letter proposed above may avoid a DJ action.
What to do if you don’t want to write the toothless letter
dreamstime_xs_32521830If you don’t want to write the nonthreatening letter above but also don’t want your accuser to choose the forum in which to file a DJ action, you can file your own lawsuit first in the forum of your choosing. You don’t have to serve your complaint immediately, so if the accused infringer files a DJ action after your filing but before your filing expires, you will be in a lawsuit, but at least in a forum of your choosing.
If you have questions, contact me.
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© Davisales | - Indiana Jones Caricature Photo

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For the next Two Weeks, Google is Buying Patents

By Stephen B. Schott
Do you have a patent you want to sell? Want to sell it to one of the biggest companies in the world? You might have a partner in Google.
How to Participate
googThrough May 22, Google is buying patents through an experimental Patent Purchase Promotion. The transaction process is simple. Patent owners go to this site, fill out some forms, name their price, then wait to hear from Google, who will finalize the form assignment agreement and wire the asking price, if it is interested.
The Details
Here's how it works.

  • Google is only buying one patent at a time. If you have more than one patent you want to sell, you need to complete the form multiple times.
  • Google is only interested in US patents for now.
  • Google is not interested in your patent if you/your company share ownership in the patent.
  • Your patent cannot be subject to litigation, encumbrances, etc.
  • You must have the authority to sell the patent.
  • You must provide an asking price.
  • All terms in Google's Patent Purchase Agreement are nonnegotiable.
  • You will retain a license back to your patent. The license is “irrevocable, non­exclusive, non­transferable, non­assignable (including by operation of law or otherwise), non­sublicensable, worldwide, [and] fully paid­ up.”
  • Google will let you know by June 26, 2015 if it tentatively accepts your offer and if it does, it will request more information from you. 
  • Upon finalization of the agreement, Google will wire the asking price amount to you.

Why is Google Doing This?
In its announcement about the Patent Purchase Promotion, Google states that

We view this as an experiment. We are looking for ways to help improve the patent landscape, and we hope that by removing some of the friction that exists in the secondary market for patents, this program might yield better, more immediate results for patent owners versus partnering with non­practicing entities.

dreamstime_xs_34612811Google's employee Code of Conduct and unofficial Mission Statement is "Don't be evil." You have to read between the lines of the announcement and Google's mission statement, and its previous criticism of nonpracticing entities (NPEs, often called patent trolls) to figure out Google's possible motivation.
Google has long been in tension with patent trolls, and is regularly in the top 10 of companies most sued by NPEs. Gene Quinn at IPWatchdog argues that Google promotes the demise of the patent system. I'm fairly certain that Google is not actively promoting the demise of the patent system, but it is almost certainly trying to take on NPEs.
One of the problems with attacking NPEs is that they often buy patents from smaller inventors who don't have resources to sue, license, or transact business around their patents. Thus the NPEs play a critical role in the idea economy--creating a marketplace for ideas.
Google, in buying patents, is entering the NPE arena and hoping to also become a buyer of ideas. In so doing, Google itself is taking on the role of NPE because it states that it "can license [the purchased patents] to others, etc." It's hard to see how this plays out, but I suppose the optimistic among us would hope that Google's "Don't be evil" will prevail over any nefarious use of the purchased patents.
Should you try this?
If you have a patent that is generating no value for you, or that has an upcoming maintenance fee that you don't want to pay, you might want to give this try. Might be like getting money for nothing. You also might sign up to see if Google will give you more money than you think your patent is worth.
If you have questions, contact me.
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