Thursday, 28 May 2015

UPC ratifications: now Luxembourg makes seven

PatLit has just learned, via a media release from Rouse, that on 22 May 2015 Luxembourg deposited its ratification instrument for the Unified Patent Court Agreement, thus making Luxembourg the 7th country to ratify the Agreement. Adds Rouse:
As very few patent cases are heard in Luxembourg, it has no current plans to host a Local Division of the UPC. Cases which could otherwise have been filed in that Local Division, will be heard by the Central Division instead.

The UPC Agreement must now be ratified by a further six countries (including the UK and Germany) before the EU can introduce the new unitary patent right and Unified Patent Court. The Netherlands is taking steps towards ratification; it launched a public consultation on ratification of the UPC at the beginning of May 2015. On 13 May 2015, the Italian Ministry of Economic Development issued a press release saying that it is a priority for Italy to join the Unitary Patent. Italy had previously said that it would join the Unified Patent Court but not the Unitary Patent. This change of position comes within weeks of the decision of the Court of Justice of the European Union to reject Spain's second challenge to the legality of the Unitary Patent system.
PatLit is not surprised to learn that Luxembourg has no grand plans for a Local Division, though quite a few patent-related matters of legal principle will be litigated there anyway in the Court of Justice of the European Union.

Tuesday, 26 May 2015

H&M's underwired bras get no support from Court of Appeal

Stretchline Intellectual Properties Ltd v H&M Hennes & Mauritz UK Ltd [2015] EWCA Civ 516 is a 22 May 2015 ruling of the Court of Appeal, England and Wales (Lords Justices Aikens, Kitchin and Briggs).

In short, Stretchline had a patent for a fusible woven barrier in a tubular fabric which prevented the ends of underwires used in brassieres and swimming costumes from penetrating the fabric. After making some test purchases in H&M's stores, Stretchline sued H&M for patent infringement. H&M's defence was that the patent was invalid, so a counterclaim for revocation was launched.

The proceedings were settled after mediation by an agreement which was said to be a full and final settlement of the dispute on a worldwide basis. This was not however the end of the story, since Stretchline later found that H&M had started selling infringing products again. Stretchline brought further proceedings, alleging both breach of the settlement agreement and infringement. H&M issued a defence and counterclaim that it had not acted in breach of the agreement because its brassieres did not fall within the scope of the patent, and further alleging that the patent was invalid. Stretchline applied successfully to strike out the defence and counterclaim as being precluded by the earlier agreement.

On appeal, H&M  submitted that the trial judge -- Mr Justice Sales at [2014] EWHC 3605 (Ch) -- had been wrong to conclude that the settlement agreement prevented it from raising the issue of validity by counterclaim or defence, and that Stretchline had materially altered its position by interpreting the scope of its patent more broadly after the date of the settlement agreement and by using a different test (the 'pin penetration' test) to measure penetration than that mentioned in the patent.

The Court of Appeal, in a judgment delivered for the court by patent specialist Kitchin LJ, dismissed H&M's appeal.

* Looking first at the mediated settlement, its recitals and substantive obligations had been broadly drawn so that any reasonable person would have understood that the parties intended to compromise all the issues in dispute including the validity of the patent. By the same logic, Stretchline was prevented from pursuing an infringement claim in addition to that for breach of contract.

* The patent and the original proceedings had been founded upon the use of "the L+M sewability tester", whereas the new proceedings were based on a pin penetration test, the results of which were not readily comparable. However, there was nothing in the body of the patent to say the sewability test had to be used. The patent's claims were cast in general language and there were powerful grounds for saying that the skilled person would consider that the resistance of the tube could be measured using any conventional test.

* There was no evidence that H&M had entered the settlement agreement on the basis that the sewability test was the only test of penetration, and the parties could reasonably be taken to have intended that the release should apply to claims of the kind in issue,

This decision underlines the principle that, once something appearing to be a final and global settlement of a patent infringement claim is entered into, the courts are most reluctant to depart from the proposition that it is indeed the last word on the subject.

Monday, 25 May 2015

US patent litigation down for 2014 -- but what does this mean?

"New patent lawsuits are down for the first time in five years. Here’s why that’s a huge deal" is an eye-catching blogpost by Brian Fung on the Washington Post's The Switch weblog, here. Based on a recent PricewaterhouseCoopers report, the blogpost reads, in relevant part, as follows:
" ... a new study shows that the pace of litigation has actually slipped — for the first time in five years. This is a big deal for a whole range of industries, not just the tech sector. It's happening at a time when the spotlight on frivolous patent lawsuits has never been brighter. And that makes it a surprising find.

[According to] PricewaterhouseCoopers' latest report on patent litigation ... in 2014, there was a sharp drop in the number of new patent cases. There were about 5,700 filed last year, according to PwC. That might sound like a lot, but it's actually a 13 percent drop from the year before. We haven't seen anything like this since 2009 — which is about when many companies started getting hit with their first demand letters [from patent trolls].

The letters are often vague about which patents have allegedly been infringed, leading to confusion and fear among the victims about what they may have done wrong. They can fight the suit and go to court, but defending a case is costly and unaffordable for many companies. The congressional legislation being debated would try to address some of these issues.

But here's what else could wind up curtailing patent litigation: The Supreme Court. According to PwC, the sharp decline in new patent lawsuits can be traced almost directly to the outcome of a major case last year known as Alice Corp. v CLS Bank. Most analysts at the time said that Alice didn't matter much. The Court ruled that the software patent Alice Corp. used to sue CLS didn't pass the smell test. That much was obvious to many people watching the case; what they really wanted from the Court decision was a more concrete outline as to what kinds of software patent were patentable.

But the fact that Alice put some limits on software patents at all appears to have put major pressure on those who are considering bringing a patent lawsuit, said PwC.

Alice effectively "raised the bar for patentability and enforcement of software patents," PwC's report reads.

This doesn't make the issue of abusive patent litigation go away. Previously, PwC found that patent trolls accounted for 67 percent of all new patent lawsuits. But this year's findings suggest that the increase in patent trolling is not inevitable.
This blogger is not particularly surprised about the outcome of the survey and he doesn't think it is of significance at all.  For one thing, he feels that the high rate of patent litigation in the US may itself be based on the me-too principle: after a couple of speculative patent actions against moneyed defendants secure large damages awards and this is publicised, suing for patent infringement becomes a form of learned profitable behaviour among others, who may persist in pursuing it for a while but will stop when it becomes unprofitable. The analogy is with feeding pigeons in the park: at first, I have plenty of bread and there are only a few pigeons to feed. When I've been throwing crumbs to them for a while, many other pigeons learn to approach me for more crumbs.  Once I have finished dispensing crumbs, the pigeons will still hang around for a short while but will move on once they learn that there is no further pay-out.

The effect of the Alice ruling is also open to further investigation.  For one thing, Alice only relates to one form of patentable subject-matter, while those who abuse (and/or allegedly abuse) hold patents in other fields of technical application too. For another thing, there is some suggestion -- and this can be quantified and may be confirmed -- that there has been a decline in patent infringement litigation in many jurisdictions outside the United States too, something that would be hard to attribute to the Alice effect.

A further point, on which some kindly statistician might care to comment, is that a 13% drop in a year might be an accurate description of filings in that year but need not represent any sort of trend and could be attributable to factors quite outside the patent system such as the weather, the cost of credit, the availability of other ways of monetising assets other than by suing for patent infringement -- or even the willingness of more potential defendants to accept licences.

2015 Patent Litigation Study: A change in patentee fortunes is available here.

Thanks go to Chris Torrero for providing the link.

Friday, 22 May 2015

£27 million award for wrongful interim relief upheld

Recommended reading
for patent trial judges?
AstraZeneca AB & Anither v KRKA dd Novo Mesto & Another [2015] EWCA Civ 484 is a major ruling delivered yesterday on the calculation of damages from the Court of Appeal, England and Wales (Lords Justices Longmore, Kitchin and Floyd). This is an unusual instance of two specialist patent judges sitting together in the three-judge panel: one is usually enough. In the event Kitchin LJ delivered a unanimous judgment, so we weren't treated to display of duelling between the two virtuoso patent judges.

The question before the Court of Appeal was whether, in awarding damages of over £27 million to pharmaceutical companies for their losses resulting from an interim injunction restraining the launch of a non-infringing generic version of esomeprazole for a year, the trial judge -- Mr Justice Sales (not a specialist patent judge), was in error. Sales J's decision is noted on PatLit here. The point of the matter was that, but for the injunction, those companies would have entered the market for esomeprazole with full force and effect, and the sum awarded took account of the success they would have achieved and the profits they would have made, subject to an appropriate 20 per cent discount to reflect the various uncertainties inherent in that assessment. The award of £27 million was the largest ever made by the Patents Court on an enquiry of damages of this kind.

Essentially, said the Court of Appeal, Sales J had got it right and had was entitled to reach the conclusion which he had done, on the basis of the evidence before him. The assessment of damages was compensatory, not punitive, and while some of the reasoning was "concise" it was not (as counsel for the appellants had suggested) "wholly inadequate".

This blogger welcomes more concise reasoning in the decisions of trial judges. They are easier to follow and, in his opinion, less likely to result in an appeal since there's not so much rope with which trial judges can hang themselves.

Wednesday, 20 May 2015

The Unitary Patent and Unified Patent Court: new survey seeks responses

Nick Cunningham (Wragge Lawrence Graham & Co.) has written to tell us that his firm is running a survey to try to find out what patent owners and their advisers are planning to do about the Unified Patent Court, and whether they think it is a worthwhile development (something we've all been speculating about). Adds Nick:
"We would like to get as wide a response as possible, so I was hoping that you might be able to mention it in a posting".
PatLit is always pleased to oblige. Wragge Lawrence Graham & Co's Survey on the Unitary Patent and Unified Patent Court can be accessed at https://www.surveymonkey.com/s/unitarypatentsurvey and it should not take more than 10 minutes of your time. The questions are designed to be answered by respondents from outside as well as inside the UK and, while the organisers expect to be closing the survey in mid-June, there is no formal closing date.

Federal Circuit Again Addresses “Divided Infringement” Scenarios

On May 13, 2015, the U.S. Court of Appeals for the Federal Circuit again considered the circumstances in which a defendant may be liable for direct infringement under 35 U.S.C. § 271(a) when multiple actors carry out the required steps of a patented process. In a sharply divided panel decision, the court ruled that while principles of vicarious liability apply to direct infringement, liability is not available under joint tort concepts, such as “concert in action.” Akamai Technologies Inc. v. Limelight Networks, Inc., Case No. 2009-1372 (Fed. Cir. May 13, 2015). As a result, a defendant may be liable for direct infringement of a method claim only if: (a) the defendant performed every step of the patented method, or (b) if the defendant did not perform every step, the defendant was a “mastermind” that orchestrated the infringement and thus was responsible for the steps performed by others. In order to be a mastermind, a defendant must go beyond merely instructing or encouraging another actor to perform the steps that it did not perform -- a defendant is liable only if it is legally responsible for the missing steps due to a principal-agent relationship, a contractual arrangement, or a joint enterprise.

The latest Akamai decision essentially reaffirms the court’s earlier ruling in Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (2008) that direct infringement liability requires a single entity to perform all the steps of a patented method. This interpretation could have far-reaching implications for patent claim drafting and infringement litigation.

In a 2 to 1 decision written by Circuit Judge Richard Linn, the court ruled that § 271(a) includes a “single entity rule:”

[D]irect infringement liability of a method claim under 35 U.S.C. § 271(a) exists when all of the steps of the claim are performed by or attributed to a single entity—as would be the case, for example, in a principal-agent relationship, in a contractual arrangement, or in a joint enterprise. Because this case involves neither agency nor contract nor joint enterprise, we find that Limelight is not liable for direct infringement.

Slip op. at 6-7. The court ruled that while § 271(a) covers situations in which a defendant is legally responsible for the acts of closely-related third parties (i.e., vicarious liability), direct infringement does not extend to common law tort theories in which multiple persons acting together are jointly liable.

In a vigorous dissent, Circuit Judge Kimberly A. Moore argued that the single entity rule has no basis in the statute or case law, and that limiting the scope of § 271(a) to vicarious liability situations creates a “gaping hole” in liability under the Patent Act, effectively rendering thousands of process claims uninfringeable. She argued that liability under § 271(a) also applies in cases where defendants would be considered jointly liable under some common law tort principles. Due to the pointed dissent, however, it is likely that the Federal Circuit will again review the issue en banc.


The Akamai decision underscores the need for patent applicants to claim their process inventions in a way that can be infringed by a single actor, either through actions by a single competitor or actions attributable to it through contractual relationship or agency principles. This is especially important because liability for active inducement or contributory infringement will not be available in many cases due to the high intent standard required in § 271(b) and (c). See Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011) (active inducement requires actual intent to cause infringement or willful blindness). 

A copy of the decision is available HERE.

Tuesday, 19 May 2015

Adding more infringing products at the stage of assessing financial compensation: can it be done?

AP Racing Ltd v Alcon Components Ltd [2015] EWHC 1371 (IPEC) is a decision of Judge Hacon, sitting in the Intellectual Property Enterprise Court (IPEC), England and Wales, on 15 May, relating to infringement of a patent for calipers. This decision established something that, in theory, we may well have assumed anyway -- but it's good to spell it out to patent litigants. The message? That, as a general rule, in cheap-and-cheerful IPEC proceedings a patentee whose patent has been shown at trial to be infringed will not be entitled to litigate a broader range of infringements in an account of profits, or in an inquiry as to damages, than those included in his original infringement claim. However, as an exception to that general rule, where a patentee has no reason to know of those other infringements until after the case management conference, the most expeditious way forward is for the court to consider further allegations in the inquiry or account -- if this can be done without having to deal with additional evidence.

In making this statement of general principle, Judge Hacon stated that the patentee is under no general duty to exercise reasonable diligence to ascertain whether he has a potential further cause of action against the defendant. However, he added, a lack of diligence where the further claim would have been apparent to a reasonable claimant early in the proceedings, if he had only exercised reasonable diligence, could tip a claimant's attempt to deal with further infringements at the remedy stage into the category of abuse of process -- though it wasn't an abuse of process in this instance.

Monday, 18 May 2015

CIPA initiative to boost 2015 Congress

This blogger has often wondered about the pricing of major conferences. While the main cost to any IP professional is the loss of chargeable time while he attends them, the registration fees can be a significant factor too -- particularly for people who are not partners or owners of their own practices but who work in-house and have little or no control over their budgets.  Accordingly the following news, received via Chartered Institute of Patent Attorneys (CIPA) Chief Executive Lee Davies, is especially welcome. Writing to CIPA members he says:
CIPA’s annual Congress has been a recurring theme during the recent ‘meet-the-members’ tour. It is clear that you value CIPA staging Congress each year as it acts as a showcase for the UK profession and helps your Institute to influence policy formers on your behalf. Many of you have, however, said that you would be more likely to attend if it were not so expensive. I am going to put that to the test.

I have encouraged the Congress Steering Committee to reduce the cost of Congress by up to twenty-five percent for 2015 as an experiment [Bravo! Can this be the beginning of a new trend?]. This is a challenge for us in that we always aim for Congress to achieve a break-even budget and to do so we need more of you to attend, but you have told me that cost is the deciding factor and I hope that at £775 (+VAT) for a two day conference (£685 +VAT if you book early) you will see this to be real value for money.

We are taking a provocative look at the world of intellectual property in 2015, asking the question: The global IP system, is it fit for purpose? A programme full of influential speakers will address themes such as:
  • Do patents block innovation?
  • Harmonisation: holy grail or poisoned chalice?
  • IP crime: a crime without victims?
  • At last, a unified patent system for Europe, but what does this mean for business strategy?
  • Disruptive technologies: the end of IP as we know it or a new beginning?
  • How can business and industry make the best use of the global IP system?
The venue is still the Lancaster London Hotel, and the dates are Thursday 1 and Friday 2 October 2015. This blogger ventures to suggest that the new registration fee arrangements will have an impact, particularly on corporate patent departments, and he expects that the event will be all the better for them [ie the fee reduction should be fit for purpose ...].

This year's CIPA Congress has its own website here, from which all relevant details can be accessed.