Take a risk? First litigate, then choose your mate

The Tech Transfer Blog is not a place you'd usually look for a discussion of patent litigation issues but, from that very source, here's an article called "Patent litigation: Sometimes it’s a risk worth taking". This post, in relevant part, reads as follows:

"If there was any doubt about a jury’s willingness to take patent infringement seriously, the record $1.67 billion verdict returned against Abbott Laboratories in early June [noted here by PatLit] should go a long way toward erasing such concerns. ... Abbott has appealed the decision, but legal experts suggest that the huge jury award could make TTOs and other patent holders more inclined to take the offensive when they believe their IP has been infringed. “This demonstrates that juries are not averse to awarding very substantial sums when there is a clear instance of infringement,” stresses Brian O’Shaughnessy, an attorney with Buchanan Ingersoll & Rooney, PC, in Alexandria, VA. “Some people are wondering whether or not patents are coming in disfavor, either from the legislative point of view or the public perception point of view. I think this proves the public recognizes that innovation is important and should be protected. [This looks like a very large conclusion to draw from one jury's award, particularly since we're not told if they were asked whether they thought this was so].”

Still, there is no denying that deciding whether to go forward with infringement litigation should be prefaced by careful review of the case and the potential costs that are likely to be involved. And then the real gut question needs to be answered: Do you and your institution have the resources and the resolve to stay with a case that may well drag on for years? Many legal experts agree that there are times when large research universities, in particular, need to stand their ground. “If a research university believes in amassing a significant patent portfolio, then that university will almost certainly need to establish that it has the staying power to enforce its patents in litigation or it may have difficulty getting fair value for its patents,” [this is a similar principle to "if you can't afford the petrol, don't buy the car" -- but there is a difference. All cars need fuel, but most patents remain uninfringed] according to Edward Poplawski, partner and head of the West Coast intellectual property and technology practice at Sidley Austin, LLP in Los Angeles. Universities are almost always inclined to try to settle a dispute before heading to court, but TTOs engaged in this process need to understand that companies often take advantage of this inclination. “There is no question that sometimes with patent litigation as in war, the war of attrition can be advantageous. And just by running out the clock and running up the costs, [patent litigation] can become very, very unpalatable, particularly for universities,” stresses O’Shaughnessy. “It is not for the faint of heart, and it is not for people who are looking for a quick payoff.” [Fortunately, most lawyers don't fit that description. Unlike many of their clients ...]

Many smaller colleges and universities as well as institutions that are new to the tech transfer arena are more inclined to focus on taking defensive measures on the front end of the patenting process than they are on launching litigation. “We work with patent attorneys and inventors to make sure that the claims we are writing in our patent applications are broad enough so that if we ever do find a competitor who is potentially infringing, we can get to the proof of that,”[That's a tough one to call, though: the broader the claim, the greater the risk of a challenge to the claim itself, putting the university back on the defensive] explains Lisa Goble, acting director of the Office of Technology Transfer at the University of North Carolina-Greensboro. A case of potential infringement has not yet arisen at the school, but Goble suggests that if such a case were to occur she would first look into opportunities for potential partnership with the infringer. “Rather than burning bridges, I’d rather build one. And if there is an opportunity where the infringers could be engaged so that it would be easy for them to continue their work and also benefit the university, that is the path I would try.”[In other words, for non-trading bodies stuffed with academic researchers, the patent infringement suit is just part of the courtship ritual leading to a licence"

The Tech Transfer Blog adds that a detailed article on the pros and cons of infringement litigation appears in the August issue of Technology Transfer Tactics (click here for subscription information).

PatLit logo competition: now's your chance to vote

The following entries have been received for the PatLit logo competition:

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Using the voting keys in the PatLit's right-hand side bar, please indicate which you'd most like to see as the weblog's new logo. The closing date for entries is one minutes past midnight on Monday 7 September.

Components of a patented invention not "methods or processes"

PatLit learned last week that the Court of Appeals for the Federal Circuit held in Cardiac Pacemakers Inc and others v St Jude Medical Inc and another that the use of a device outside the US does not infringe method claims in respect of a US patent. Since patents for "methods or processes" are not subject to Ti 35 U.S.C. § 271(f) [which imposes liability on companies that send “components of a patented invention” abroad for assembly and sale], that provision cannot give rise to patent infringement liability if the products are assembled and sold overseas.

In this dispute Cardiac Pacemakers objected to the sale by St Jude of implantable cardioverter defibrillators which, they claimed, infringed their patent for a “method of heart stimulation” using a programmable implantable heart stimulator. The CAFC, sitting en banc, reversed the decision of the Federal Circuit Court late last year that St Jude was liable.

Shopping for a forum: the RCLIP seminar

The Research Center for the Legal System of Intellectual Property Center of Excellence - Waseda Institute for Corporation Law and Society (RCLIP) is, despite its university base and academic credentials, a practice-focused institution which focuses on many of the most sensitive and important issues in IP today, one of which is patent litigation.

The fifth issue of RCLIP's quarterly newsletter (published in Japanese/English) contains a report on last May's RCLIP International IP Seminar on "Japanese Corporations and Patent Litigations: Offensive Patent Strategies by Forum Shopping”. The first forum-shopping under review, by John Livingstone (Finnegan Henderson, Tokyo Office), was that which takes place within the United States, where the plaintiff can litigate before the Federal District Courts, the US PTO, the US International Trade Commission (ITC) and the Court of Federal Claims -- from all of which an appeal may be made to the Court of Appeals for the Federal Circuit. From the report it appears that, in District Courts, the patentee win rate is high, though fewer than 4% of disputes ever get to trial, the rest being resolved out of court settlement. The ITC, despite the limited range of actions it may hear, offers a patentee win rate of around 50% and a result within the year.

Richard Price (Taylor Wessing, London) then spoke on forum-shopping in England and Germany. He explained that in Germany the most popular locations for patent infringement are the courts in Düsseldorf, Munich and Mannheim, of which Düsseldorf is statistically the least patentee-friendly. The positions in China (Xiaoguang Cui, Sanyou Law Firm, Beijing) and Japan (Professor Toshiko Takenaka, CASRIP) were also reviewed.

PatLit is always pleased to read of events such as these, but hopes that RCLIP will be able in the future to make available the texts of the speakers' presentations, and/or a podcasts of their talks and the question-and-answer session so that a wider audience can study and benefit from the hard work of the speakers.

Patents County Court: Users' Committee final report

The Working Group of the Intellectual Property Court Users' Committee has published its final report on proposals for reform of the Patents County Court (PCC) in England and Wales, two weeks to the day after PatLit published this piece on the Working Group's consultation paper on the same subject.

These proposals have been drawn up in record time so that they can be submitted to the Jackson Review of civil litigation costs (see earlier PatLit article here).

The report reflects some shifts in stance, presumably in the light of comments received (a list of respondents appears at p.18). In brief, recommendations include the following:

* the financial limit to the value of claims made before the court should be £500,000(twice the ceiling originally proposed);
* the maximum costs award should be £50,000 for any type of claim (ie not differentiating between patent litigation and other IP litigation), though a £25,000 cap should be placed on the cost of inquiries into damages and accounts of profits;
* an Intellectual Property County Court Guide should be prepared, making available guidance to the content of statements of case, the sorts of cases which are suitable for the court and the criteria for transfer between the court and its big sister, the High Court;
* Patents Court judges should be able to hear PCC cases;
* The court should sit outside London in appropriate cases.

If you are printing this document and are worried about the world's precious resources, please note: the report is 21 sides long. However, pages 2, 4, 19 and 20 are entirely plain, while p.21 -- which is also blank -- will squander an entire side's worth of red toner cartridge.

Suspended injunctive relief, Texas-style

News of the East Texas Federal Court's injunction against Microsoft, ordering the software giant to cease sales of "any Microsoft Word products that have the capability of opening .XML, .DOCX or DOCM files (XML files) containing custom XML" , has spread fast. Predictably much of the initial reaction has been along the lines of (i) Microsoft must appeal, surely! (ii) can the court really do this to a product which has become a staple? and (iii) well, we always said that East Texas was a patent-friendly place. Less attention has however been paid to the details of the order itself.

The injunction was suspended for a period of 60 days. This was not to enable Microsoft to dispose of infringing stock in the hands of distributors and retailers, but rather to give the Microsoft, together with Toronto-based patentee i4i, a two-month window within which to speak to one another and reach a settlement. The gun pointing at Microsoft's head is the consequence that, if there is no settlement, the order comes into effect. The gun pointing at i4i's head is the risk of further expensive, and possibly protracted and unsuccessful, litigation at the appellate level. A further bit of wriggling may involve Microsoft working around the patented technology: while avoiding future infringement, that would not however rewrite the past.

PatLit wonders how, if this action had been litigated separately in the main jurisdictions in Europe, the national courts would have responded. Even three years after implementing the IP Enforcement Directive 2004/48, it's PatLit's guess that relief from patent infringement on the same facts would be treated very differently. Readers: this is your chance to respond.

Source: CNET news reports here and here

When do you sue a holding company?

Fabio Perini SPA v LPC Group Plc & others [2009] EWHC 1929 (Pat), a Patents Court for England and Wales decision of Mr Justice Floyd, raised -- among other things -- a small question of interest: in what circumstances should one join as a defendant in patent infringement proceedings a company whose only involvement is that it is the holding company for another company which purchased infringing goods from the principal defendant?

In this case, the claimant's patents were for machinery and a method for sealing the tail ends of rolls of paper. Floyd J pointed out that the case against the holding company (LPC Group) was based on the fact that the letter from the patent owner (Perini) before action, addressed to LPC Limited (its subsidiary which purchased the infringing goods from the principal defendant, PCMC) elicited a response on LPC Group's notepaper which affirmed "We purchased the equipment from PCMC". Said Floyd J at para.181:

"I do not think this is enough to cause LPC Group to infringe on any basis. The method is operated by LPC Limited, not the parent holding company, although I can understand why Perini may have been sufficiently uncertain so as to sue. I doubt the point has any real significance".

Exhaustion of patent rights in Switzerland: it's national, regional and global

When pondering your patent litigation policy in Europe, take note -- the mountainous and pharmaceutical patent-rich federation that is Switzerland has switched from national-only exhaustion of rights to European-style regional exhaustion, with effect from 1 July of this year. This unilateral move applies in respect of all patented goods imported into Switzerland from countries within the European Economic Area (i.e. the European Union plus Iceland, Norway and Liechtenstein).

Right: have the Swiss made a mountain out of a molehill with their new exhaustion rules?

This not however the whole story: if the patent in question has only minor significance in relation to the functionality of the imported goods, the old international exhaustion rule still applies; further, patented goods with regulated prices [this looks like a euphemism for 'pharmaceuticals'] continue to be subject to national exhaustion.

The result of this is that Switzerland now appears to have the most complicated set of rules on exhaustion of patent rights of any country in Europe, and very possibly in the world.

Further details are available from PatLit's source: a note by Laurent von Niederhäusern (Froriep Renggli) for International Law Office.

PatLit logo

PatLit is gratified to find that it is increasingly being asked to endorse or sponsor conferences and seminars relating to patent litigation. There is however a problem: one of the first things the PatLit team gets asked is: "do you have a logo which we can put on the cover of our promotional brochure/flyer?" Sadly, the answer is "no".

Although there is never a really quiet time for patent litigators and their clients, August sometimes provides those few precious moments of leisure which can be put to creative uses. If any readers with artistic talents would like to have a go at designing a logo which they'd be willing to let PatLit have (or at least use), the team would be most grateful. An appropriate prize (chocolates, wine, spirits etc) might even be conjured up for the best effort.

Same patent, same allegation, different outcome

Another end-of-term ruling from the Patents Court for England and Wales last week was the decision of Mr Justice Mann in Occlutech GmbH v AGA Medical Corp; Dot Medical Ltd [2009] EWHC 2013 (Ch). Occlutech sought a declaration of non-infringement against AGA, who counterclaimed for infringement, joining Occlutech's importer Dot as a third party.

This is another of those depressing cases (if you're a litigant, that is) which appears mystifyingly to go different ways in different jurisdictions. In Germany the patent was held to have been infringed, but not in the Netherlands. The argument raised in support of infringement, said Mann J, was "... similar to one that succeeded in the German proceedings, ... [but] I find that it fails ...". However, where different issues are raised before courts in different jurisdictions -- as was apparently the case here -- the fact that the patent and the alleged infringing article are the same, as is the submission in support of infringement, does not guarantee the identical result.

Afga/Xingraphics: All Rather Vague in The Hague

Chengdu Xingraphics Co Ltd, a leading Chinese developer and maker of thermal printing plates and related chemistry, announced last week that it had successfully defended itself against patent infringement claims by Belgium-based Agfa Geveart BV. Agfa alleged that Xingraphics' FIT and FIT Xtra thermal plate technology infringed its European patent for a "method for making positive photosensitive lithographic printing plates" which Agfa acquired when it took over Mitsubishi-owned Lastra in October 2004.

Xingraphics argued that its technology not only fell outside the scope of the patent's claims but that it was superior to Agfa's in terms of its characteristics and its performance. Apparently Xingraphics has taken the step of indemnifying all its dealers worldwide against liability for patent infringement, as a demonstration of its confidence that it could resist Agfa's claims.

The Hague District Court has ordered the return of provisionally seized allegedly infringing inventory, plus legal costs.

According to Print Graphic News, the battle is not yet over, though:

"Agfa says, because non-infringement was not proven by Xingraphics either, the court could not grant Xingraphics' request for a declaration of non-infringement.

The court allowed Agfa Graphics to request additional seizures of Xingraphics plates in the future.

Agfa says they will now prepare the necessary additional evidence of the infringement of the Agfa Graphics patent in order to obtain a decision in favour of Agfa".

PatLit hopes for an explanation from some of its Dutch readers as to what is actually happening here. Although statements in the trade press are no more reliable than the press releases on which they are based, it looks as though we have something here which is the continuation of a dispute past the point at which a ruling has been given (and allegedly inventory returned) but which is not actually described as an "appeal". It all seems a little perplexing.

PPDs and piecemeal litigation

PatLit posted an earlier item on the ruling of Mr Justice Floyd in MMI Research Ltd v Cellxion Ltd and others. Well, there has been a short sequel in the form of a further judgment at [2009] EWHC 1938 (Pat).

The relevant history of this piece of litigation, as told by Floyd J, is as follows:

"1. I handed down my judgment in this patent infringement action on 11th March 2009. There was a first hearing on the form of order on 16th March 2009, when all matters relating to the scope of the injunction, and certain other matters were adjourned to come on at a further hearing. That further hearing was held before me on 26th June 2009, and I handed down a further reserved judgment on the 3rd July 2009. In that judgment I dealt with a question of infringement of the patent by the UGX device. The UGX was a device described in a further Product and Process Description [PPD] which had not been considered at the trial and which the first to fourth and sixth defendants contended did not infringe the patent. In the course of that further hearing Mr Wilson QC [for the defendands] raised the question of a yet further variant .... I declined to deal with that variant, as it had not been properly described in the evidence, and Mr Howe for the claimant rightly objected to my hearing it without notice. The parties have, however, agreed that it would be desirable for me to decide the matter now and to do so without a hearing. As the device has apparently been sold, the issue would have to be determined in the enquiry as to damages in any event. Each side has made one set of submissions in writing on this further variant, which I have considered".

So far, so good. The judge then continued:

"2. In my judgment of 3rd July 2009 ... I considered infringement by the UGX device. That device uses a combination of a scanner and an ordinary mobile phone as the “test mobile phone” or TMS of claim 1. I held that the UGX infringed claim 1, because the combination met the requirement for a test mobile phone, as that term would be understood by a person skilled in the art. The proposed device which I now have to consider is a variant of the UGX in which no mobile phone properly so called is included at all. The device therefore has none of the normal mobile phone functions, such as the ability to make and receive calls. My judgment on this point should be read in conjunction with my judgments of March 11th and July 3rd 2009.

3. The principles which apply to the construction of patent specifications are not in dispute ... It would be rare for those principles to justify ignoring a requirement in a claim altogether, simply because it appears to make no difference to the inventive concept ...

4. Mr Howe submits that the need for the normal functions of a mobile phone is not immediately apparent from claim 1 of the patent: everything which is required by claim 1 can be done by the scanner in the modified UGX. It is not until one gets to claim 4 that one requires the mobile phone to have these further functions, which are useful in the context of call interception.

5. The fundamental problem with this approach is that it requires the court to give the term “test mobile phone” a different meaning in claim 1 from that which it possesses in claim 4. Moreover, whilst I have held that the skilled person would understand the patentee to be using the term “test mobile phone” to include a combination of items which together perform the functions of a test mobile phone, I cannot see my way to holding that such a person would regard the term as extending to an item or combination of items which do not perform those functions at all.

6. Mr Howe’s approach regards the term “test mobile phone” as an empty vessel to be filled only by those functions expressly required by the claim. In my judgment that approach is incorrect. The skilled person would understand that the patentee was calling for a device which could operate as a mobile phone. The absence of anything which fits that description takes the device outside the scope of claim 1, and I will declare accordingly.

7. I should only add that I should not be regarded as giving my seal of approval to this piecemeal approach to the consideration of alternative versions of the alleged infringing device. Parties who wish the court to consider such variants should do at the trial of the action, particularly where, as here, they are on the market and being sold. It is obviously in the interests of the efficient management of litigation that, so far as reasonably practical, all the issues between the parties are determined at a single hearing: see CPR Part 2 para. 1.2(i). If parties do not reveal alternative embodiments until after the trial, this objective is frustrated".

This is the second time in a week (this being the first) in which it appears that the PPD, far from enabling the court to reach a more swift and certain resolution of a dispute before it, actually achieves the other aim -- whether, a here, by causing piecemeal litigation or by looking like a fishing trip into the realms of the hypothetical. The letters 'PPD' should truly stand for 'Product and Process Description', not 'Prolongation of Patent Dispute'.