Now you can win without even going to court

The IPKat weblog is currently running a competition to mark this year's CIPA Congress, IP in the New Decade, which takes place in the Lancaster Hotel, London on 30 September and 1 October. The prize for this competition is complimentary registration to this premier event (the full registration fee for non-members of the Institute is £1,075 plus VAT, so this prize is quite worthwhile).

As one might imagine, patent litigation is a topic which features prominently on the programme. Margot Froehlinger (European Commission) and Professor Sir Robin Jacob (Royal Courts of Justice and now University College London) are the speakers on "Towards an Enhanced Patent System in Europe", chaired by CIPA President Alasdair Poore, while topics such as disclosure (a.k.a. discovery) and enforcement in China are also on offer.

Details of the IPKat's competition can be found here.
More information on the CIPA Congress can be found here; full programme details are here.

Should we consider EPO and foreign rulings? The German position

An article for International Law Office, "Patent court required to consider EPO decisions" by Nora Keßler (Klinkert Zindel Partner, Germany), published online last month, comments on a decision of the German Bundesgerichtshof (the civil Supreme Court) that the Bundespatentgericht (the Federal Patent Court, right) is required to consider European Patent Office (EPO) decisions, as well as those of courts of other European Patent Convention member countries if they pertain to similar issues, including whether an invention is novel and inventive.

After explaining this decision in some detail the author comments:

"This decision is remarkable. The Supreme Court could have limited itself to ruling that, in the case before it, the Federal Patent Court should have considered the EPO decision. Instead, the Supreme Court established as a rule that courts must consider EPO decisions. Furthermore, the court also held that the same would apply to decisions issued by the courts of other European Patent Convention member states.

Unfortunately, the effect of the decision is somewhat mitigated by the Supreme Court's holding that, although the courts are required to consider EPO decisions and those rendered in other European Patent Convention member states, the deviation of a national court from such decisions does not constitute grounds to appeal to the Supreme Court. From the perspective of harmonization, such a ruling might have been desirable".

It's interesting to see how the shall-we-or shan't-we debate about referring to decisions of other jurisdictions and of the EPO is conducted in the major European patent-litigating nations. If any reader fancies doing some comparative research on this topic, leading ideally to an article for the Journal of Intellectual Property Law & Practice (JIPLP), I'll be delighted to hear from him or her.

Caution chills interim damages pay-out

Once liability for infringement was established in Alan Nuttall Ltd v Fri-Jado UK Ltd and another (see here for details of earlier litigation), the Patents Court for England and Wales still had to sort out some damages issues. On 30 July 2010, at [2010] EWHC 1966 (Pat), Mr Justice Kitchin gave a ruling which might be said to reflect a degree of conservatism verging on caution.

Nuttall had a patent for a self-service display cabinet, Turboserve, in which food such as roasted chicken might be kept hot. This patent was held valid and infringed and Fri-Jado's appeal was dismissed. In an enquiry as to damages, it was found that Fri-Jado had made 1,104 sales of infringing cabinets, generating sales income of £3,123,738. Nuttall applied to court for interim payment of £1 million under the Civil Procedure Rules 1998, r 25.7(1)(b). Fri-Jado said this was excessive and offered instead to make an interim payment of just £70,000.

According to Kitchin J, on the proper construction of the Rules, an interim payment of more than a reasonable proportion of the likely amount of the final judgment should not be ordered. Usually, interim payment procedures were not suitable where the factual issues were complicated, or where difficult points of law arose -- but that did not prevent the court from making an award made even in respect of part of a complex claim, if that part could be identified as 'an irreducible minimum part' without venturing too far into the disputed area of fact or law.

In this case Nuttall was entitled to a payment on account of damages of £156,000, this being 5% of Fri-Jado's sales price and a sum which, it could safely be assumed, Nuttall would recover in any event.

Problems, solutions, 'tis and 'tisn't: Schlumberger on appeal

The Case of the Appeal-Proof Metaphor has just been the subject of a successful appeal, as can be seen from a perusal of Schlumberger Holdings Ltd v Electromagnetic Geoservices AS [2010] EWCA Civ 819, a decision of the Court of Appeal for England and Wales this Wednesday.

This note does not propose to discuss the merits of the appeal (neatly summarised by the IPKat here), but merely focuses on two issues that emerge from the judgment of the court, delivered by Lord Justice Jacob: (i) the application of the problem-solution approach to the question of inventive step and (ii) the role of expert witnesses who hold divergent opinions. First, obviousness:

"... the correct approach in this case is to start with the real problem faced by exploration geophysicists. Did they appreciate they had a solvable problem? One then asks whether the notional exploration geophysicist who read the cited prior art would see that the answer was to use CSEM [Controlled Source Electromagnetic surveying], or if not that, at least that CSEM had a sufficient prospect of being useful that it was worth asking a CSEM expert.

The problem must also be approached the other way round, from the point of view of the CSEM expert. Would he or she know of the exploration geophysicists' problem and, if so, would he or she appreciate that CSEM had a real prospect of being useful to solve the problem?

In short: was the marriage obvious to either notional partner?

One further approach is not necessary: that is to ask whether the notional team including both types of expert would see that CSEM would solve or stood a very good chance, of solving the problem. ...

There is danger to be avoided. There are cases where, even though you can, in retrospect, clearly see that there was a problem and articulate what it was, workers at the time did not do that. They did not say: "this is our problem. If only we had a solution to it." Instead they simply put up with things as they were. Then the essence of the invention is the insight that there was a solvable problem at all. ..."

Secondly, dealing with experts with conflicting opinions:

"I should also say something about how the court should deal with the conflicting opinions of the experts on obviousness. It is not a matter to be decided by choosing between one expert who says 'tis and one who says 'tisn't. A mere assertion of opinion is of no real value. I put it in this way [in two earlier decisions]

"But just because the opinion is admissible: it by no means follows that the court must follow it. On its own (unless uncontested) it would be "a mere bit of empty rhetoric" ... What really matters in most cases are the reasons given for the opinion. As a practical matter a well-constructed expert's report containing opinion evidence sets out the opinion and the reasons for it. If the reasons stand up the opinion does, if not, not".

I have no hesitation in repeating this. It cannot be emphasised enough. Reasons for the opinion are what really matter. It follows that it is generally not enough for the court to conclude that it accepts the opinion of one expert or the other. It too must descend into the reasons for the opinions."

IP attorney litigators: will they fly or die?

Writing in the current issue of the Journal of Intellectual Property Law & Practice (2010) 5(8):602-607 (JIPLP), British patent attorney David Musker (a partner in Jenkins and blogmeister of the Class 99 weblog), asks some probing questions concerning the viability of patent attorney litigators in the United Kingdom. The abstract of his article reads as follows:

"Legal context: The Courts and Legal Services Act 1990 opened the way for bodies such as the Chartered Institute of Patent Attorneys (CIPA) and the Institute of Trade Mark Attorneys (ITMA) to certify litigators licensed to act in competition with solicitors in England and Wales. There are currently almost 100 such attorney litigators in the UK

Key points: The author makes use of comparative and demographic data to study the profiles of attorney litigators, including routes to certification, seniority by years post-qualification, gender. He explores comparisons with other UK hybrid legal professionals such as licensed conveyancers.

Practical significance: UK solicitors are at no risk from other professions within the UK. Even any competitive price pressure in UK IP litigation is far more likely to be intra-professional, from rival firms, rather than inter-professional. Regardless though of whether the CIPA and ITMA certification schemes ultimately live up to the competitive aims of the 1990 legislation, they are certainly capable of meeting more modest goals of "upskilling" the IP attorney".

If you're not a subscriber to the journal and can't sweet-talk David into giving you a copy, you can still buy online access to David's article by clicking here and scrolling down to "Purchase short-term access".

Interest on damages for infringement not a correctable error

Yesterday's decision of Mr Justice Floyd (Patents Court, England and Wales) in the latest round of Leo Pharma A/S and another v Sandoz Ltd [2010] EWHC 1911 (Pat) (see earlier post here) picks up following the trial of an action in which Leo Pharma's patent infringement claim against Sandoz was upheld. A draft order before the court included a provision that

'The Defendant shall pay to the Claimants any sums found due on the taking of said inquiry into damages or account of profits together with interest at the judgment rate (being 8%) from the date of this Order".

The court decided to stay the final injunction pending Sandoz's appeal, directing the parties to draw up a minute of order. Leo drafted and sent to counsel for Sandoz an order which included the provision as to interest which the court's draft order had contained. Sandoz suggested a different order -- which did not include the paragraph quoted above -- which Leo did not accept. A little later, counsel for Sandoz said that, to avoid unnecessary costs, his client was prepared to agree to Leo's proposed form of order. The minute of order, including the paragraph in question, was then signed by junior counsel for both sides.

Later Sandoz applied under Civil Procedure Rule 40.12 to correct what it said was an accidental slip or omission in the order, seeking deletion of all the words following "account of profits", or at least of the words defining the rate and period of interest, on the basis that they had never been discussed. According to Sandoz, the court intended to make no such order about the rate and period of interest and that there had been a genuine mistake by counsel in agreeing to the terms of the order, since he never intended to agree the rate or period of interest. Leo, none too happy about this, asserted that when the agreed minute of order was placed before the court, the court definitely intended to make the order in those terms, and that even if there had been a mistake it wasn't a correctable one.

Floyd J agreed with Leo and dismissed the application.

* the operation of the slip rule only covered accidental slips or omissions, a far cry from matters deliberately included by the parties in an order drawn up and sealed by the court.

* On the facts, the order as made was not inconsistent with the intention of the court at any stage of the proceedings.

* A court should be most careful before going behind an apparent agreement between counsel, since counsel's signature on a minute of order was relied on as being conclusive of a binding agreement.

The judge said at para.12:

"The rule is described in the White Book notes as "one of the most widely known but misunderstood rules". The notes point out that the rule is essentially there to correct typographical or other careless errors, but goes on to point out that it can be used by the court to make the intention of the court plain".

Abbott v Medinol: full text now available.

A little while back, PatLit noted Abbott Laboratories Ltd v Medinol Ltd, an ex tempore judgment of Mr Justice Kitchin in the Patents Court, England and Wales on relevance and proportionality in an application for disclosure (discovery). The note was prepared on the basis of a LexisNexis legal alert.

A copy of the full text of this decision is now available here.

Patent appeals that you can afford

Oxford University Press is having its Summer Sale of law books -- 134 titles are on offer, at very generous discounts. One of these books is of interest to patent litigators, US ones at any rate. It's Patent Appeals: the Elements of Effective Advocacy in the Federal Circuit by Mark Simon Davies, published a little over two years ago and noted here on PatLit. When launched, its UK price was £60 but you can by it from the publisher now for just £15.

Please note, this offer price only applies to individual customers when ordering direct from Oxford University Press, while stock lasts. No further discounts will apply.

PatLit: tell us what you think

PatLit has been running for a little over two years now. During this time it has focused fairly firmly on patent dispute resolution issues. At the time of writing this article, the weblog has 554 email subscribers, a Google PageRank of 5 and a bank of over 260 searchable articles. Over 35,000 site visits have been made, from readers in more than 90 countries.

Several readers have asked why the blog concentrates specifically on patents. This is historical: the blog was launched as a means of raising awareness of the need for patent litigation reform in the UK and Europe (long-term readers will recall the Burdon Plan), but it has gradually expanded its coverage and happily brings news and developments from anywhere that patent disputes arise.

At the top of the PatLit side bar you will find a poll, through which we seek to obtain readers' views as to what they'd like the blog to contain. Please click your preference: every vote counts!

Suspension of compulsory execution: a shift in German practice?

In a recent article, "Suspension of compulsory execution as relief from patent injunctions", German patent litigation lawyer Philipp Ess explains how, for defendants in most patent infringement proceedings, the threat of an injunction halting production is of greater concern than the patentee's as yet unasserted damages claims.

The position of the alleged defendant in applications for provisional relief is particularly delicate since, while plaintiffs can themselves be held liable for losses incurred by the defendant if thre was no infringement and must post security bonds against this eventuality, the loss of income resulting from the defendant being ordered to cease production pending the full trial can easily exceed the value of the security bond and the solvency of the plaintiff. What's more, being ordered to halt production can seriously damage the defendant's reputation.

It is possible for defendants to seek protection against compulsory execution before the trial court renders a judgment, if they can show that an injunction would lead to severe and irreparable damage. However, this protection comes at a cost: in order to seek it the defendant must disclose business secrets regarding its solvency, sales figures and profit margins to the opposing party -- who in the context of patent infringement proceedings may very well be a competitor. The consequence of this is that, once the trial court has ordered an injunction, a defendant may play safe by accepting an unfavourable licence agreement rather than risking an appeal.

This article then goes on to explain the working of Section 719(1) of the Germany Civil Procedure Code, which empowers an appeal court to suspend the compulsory execution of a trial court injunction until the appeal court has decided on the merits. Courts are reluctant to do this in the context of patent infringement proceedings, given the short life and market sensitivity of a patent -- which tends to encourage courts to prioritise the patentee's interest in the expeditious enforcement of a patent. However some recent decisions have bucked this trend by granting motions for suspension.

To read the full article by Philipp Ess (Klinkert Zindel Partner) in International Law Office click here.

Interview with White House "IP Czar," Victoria Espinel

Following up on our earlier post regarding the Obama administration's recently-announced IP enforcement plan, below is an interview that PatLit conducted via email with Victoria Espinel, the White House's new U.S. Intellectual Property Enforcement Coordinator.

The Joint Strategic Plan on Intellectual Property Enforcement outlines the administration's international, inter-agency initiative to combat IP infringement. After reading the Plan, however, we noted that its language mainly addresses copyright and trademark law. Wanting to know the Plan's implications for patent law, we submitted questions to Ms. Espinel, whose office graciously responded via email. Our questions, and Ms. Espinel's answers, follow:

Q: Ms. Espinel notes in her "Letter to the President of the United States and to Congress" that "the U.S. Copyright Office participated in the development of this Joint Strategic Plan." Did the U.S. Patent and Trademark Office have any similar input, particularly in regard to patent law? Was the USPTO approached in the process of the Plan's development?
A: WE WORKED VERY CLOSELY WITH THE USPTO ON ALL FACETS OF THE PLAN'S DEVELOPMENT. (THE USPTO IS PART OF THE DEPARTMENT OF COMMERCE.)

Q: Was patent law a consideration in the development of this plan? Or does the Administration envision patent enforcement issues as being the province of the courts and Congress?
A: WE HEARD A VARIETY OF CONCERNS ABOUT PATENT ENFORCEMENT FROM THE PUBLIC - MOSTLY WITH RESPECT TO ENFORCEMENT IN INTERNATIONAL MARKETS.

Q: Does the plan include any developments for law enforcement (penal or civil) involving patents, as it does for copyright and trademark?
A: THE ASSESSMENT OF LAWS WILL COVER ALL ASPECTS OF INTELLECTUAL PROPERTY.

Q: The Plan provides for support for victims of IP infringement. Will victims of patent infringement receive similar services?
A: YES, THE STRATEGY EXTENDS TO INFRINGEMENT OF PATENTS AS WELL.

Q: Will the enhanced International Trade Commission (ITC) exclusion order enforcement extend to patented products?
A: YES.

Q: Will the FBI, DOJ, DHS, Secret Service, and/or other relevant agencies play any role in patent enforcement?
A: THE STRATEGY LAYS OUT THE PRIORITIES FOR OUR LAW ENFORCEMENT. THESE APPLY TO ALL TYPES OF INTELLECTUAL PROPERTY.

Q: Will patent enforcement be included in the the training that the Government provides to state and local agencies and prosecutors regarding IP enforcement?
A: AS APPROPRIATE.

Q: Will patent law be considered by the Economic and Statistics Administration and IPEC, in their interagency meeting assessing existing IP laws and potential IP improvements? Will the USPTO be one of the agencies participating in this meeting?
A: THE ESA INTIATIVE IS ABOUT MEASURING THE ECONOMIC CONTRIBUTION OF IP INDUSTRIES, NOT ASSESSMENT OF LAWS. ECONOMIC CONTRIBUTION WILL APPLY TO ALL TYPES OF IP. USPTO WILL PARTICPATE.

Q: Does the Plan include any provisions for patent reform? Does your office have any comment on the patent reform bills currently before Congress, or on patent reform in general?
A: NO COMMENT.

Patent law changes as eminent domain?

For months, arguments have raged about a controversial article published in the February 26 issue of Science magazine. In "Fixing the Legal Framework for Pharmaceutical Research" (available by subscription only), Sherry Knowles contends that recent changes to U.S. patent law have resulted in loss of revenue for brand-name pharmaceutical companies, to the advantage of generic manufacturers. Knowles suggests that this transfer of profits amounts to a "taking" of property -- a form of eminent domain -- in violation of the Fifth Amendment to the U.S. Constitution.

Knowles, who until this year served as Chief Patent Counsel at GlaxoSmithKline, primarily objects to certain changes in statutory law (specifically, the Hatch-Waxman Act) and several Supreme Court decisions (in particular, KSR, Bilksi, and Ariad) that invalidated patents previously thought to be valid. These changes, Knowles claims, have facilitated challenges by generics to the patents of branded manufacturers. This may, in turn, "stop R&D investment decisions that have already been made and could prevent a product from reaching the market because of patentability issues." Suggesting that the branded manufacturers' subsequent loss of revenue constitutes eminent domain, Knowles argues that the branded companies should be "compensated" with appropriate changes to the judicial and statutory regimes.

The Constitution's Framers included the Fifth Amendment's "eminent domain" provision as a protection against government seizures of citizens' real property. Generally, the Amendment is understood to prohibit a taking (1) by the government (2) of privately-owned land (3) for public use (4) without "just compensation." Citing Consolidated Fruit Jar v. Wright and Patlex Corp. v. Mossinghoff, Knowles argues that patents and land carry comparable property rights. In fact, federal statute 28 U.S.C. § 1498 does consider patent infringement by the government to constitute a form of eminent domain requiring compensation to the patent holder:

"Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture."

This statute does not necessarily help Knowles's case. Sec. 1498 applies to situations in which the government has infringed a patent by manufacturing a covered invention. Knowles's argument that patent infringement has resulted from a change in statutory law is tenuous. Also, some have argued that the court rulings have clarified, rather than changed, patent laws; if so, then the patents Knowles characterizes as "invalidated" were never valid to begin with, and the government therefore has not "taken" anything. Moreover, the Takings Clause refers to seizures by the government for public use -- whereas it is private generic manufacturers who tend to benefit from recent changes. Although, as Knowles notes, Kelo v. City of New London (wherein eminent domain for the benefit of Pfizer was ruled legal) "blurred" the line between public and private use, it did not eliminate the distinction completely. Finally, Knowles's equating of loss of corporate profits with a government seizure is an idea that, if acted upon, would likely flood the courts with ridiculous lawsuits.

Perhaps the main difficulty is that Knowles attempts to use a constitutional argument in order to address a market problem. A market-based argument might be more credible and effective.

Discovery of documents: is there a real benefit?

Abbott Laboratories Ltd v Medinol Ltd, an ex tempore judgment of Mr Justice Kitchin in the Patents Court, England and Wales last Thursday, addressed an issue that regularly arises regarding disclosure (discovery): how relevant and worthwhile is the material that the applicant for disclosure seeks?

Medinol, which held a European patent for a flexible expandable stent, sued Abbott for infringement. Abbott sought specific disclosure of documents concerning two witnesses for Medinol in this case (S and R). S was one of Medinol's expert witnesses in this case, while R was the only witness of fact. The documents which Abbott sought included evidence given by both these witnesses in similar patent actions in the United States and elsewhere in Europe.

According to Abbott, all these actions related to patents from the same family as the patents in this case and disclosure was needed here because a number of points of construction arose in these proceedings and there was some inconsistency between the expert evidence in the US and that in the British proceedings. No, said Medinol, the disclosure sought was neither reasonable nor proportionate: according to Medinol, Abbott's lawyers had already said that the specific terms in Abbott's patent claims were agreed by both parties not to be terms of art and that R was only to give evidence of fact in these proceedings on the issue of commercial success. Medinol also maintained that the documents that Abbott wanted could amount to tens of thousands of pages -- some 15 to 20 lever-arch files --- and that the volume and time it would take to consider them would make it an extremely costly process.

Kitchin J refused the application for disclosure. The documents sought here did not satisfy the requirement of relevance, the proper interpretation of patent claims being ultimately a matter for the court and a question of law, and the terms which had to be construed here were not terms of art. The disclosure exercise would in any event be entirely disproportionate to any conceivable benefit that the documents in question might bring to the proceedings. Not only would the disclosure exercise be substantial and costly -- it would probably result in the introduction of considerable complexity which would not ultimately assist the court.

This decision was spotted on a LexisNexis legal alert. The names of the parties have been transposed since the original version of this item was posted.

Contingent invalidity appeal spared by bifurcation

The Court of Appeal for England and Wales today published its decision in Medtronic CoreValve LLC (formerly CoreValve Inc) v Edwards Lifesciences AG and Edwards Lifesciences PVT Inc [2010] EWCA Civ 704 -- another in the popular series on heart-related patents. The decision focused on a fairly simple issue of claim construction relating to the words "cylindrical surface" and "cylindrical support means" in Claim 1 of the patent. More interesting -- for litigants at any rate -- is the manner in which the court and the parties combined to keep the appeal as tightly focused as possible, thereby saving time, effort and money. As Lord Justice Jacob explained:

"1. The patentee (Edwards) appeals the decision, [2009] EWHC 6 (Pat) ... that the claimant’s ... heart valve device did not infringe Edwards’ EP (UK) No. 0592410 but the Patent is valid. CoreValve cross-appealed his decision on validity, but only contingently so: if we decided that its product does not infringe, then it was not concerned with validity.

2. This was not one of those cases where the issue of infringement is interlinked and overlapped with that of validity – the validity and infringement points were independent of each other. So, with the parties’ agreement, we decided to “bifurcate” the appeal by hearing all the argument on the issue of infringement first. Only if we concluded that the product infringed (or were not yet sure one way or the other) would it be necessary to hear the appeal about validity. In the event, following argument, we were able to form a clear conclusion to the effect that the CoreValve product did not infringe. We so informed the parties at the time. They were able to agree the consequential order".

Bilski v. Kappos: Supreme Court says, "No comment"

U.S. Supreme Court Chief Justice John Roberts has famously repeated the aphorism that, if it is not necessary that an issue be decided, it is necessary that it not be decided. Such is the lesson of Bilski v. Kappos. Apparently taking the Chief Justice's counsel to heart, the Supreme Court has issued an undoubtedly wise but nevertheless perplexing decision that is likely to make patent attorneys relieved but confused ... and leave everyone else simply confused.

As every patent law practitioner on earth has no doubt learned by now, the Supreme Court's nine Justices decided that Bilski's claimed invention is an "abstract idea," and therefore not patentable under 35 U. S. C. §101, Gottschalk v. Benson, Parker v. Flook, and Diamond v. Diehr. As to all other questions, however, the Court has delivered a resounding "No comment."

Conventional wisdom had already guessed that the Court would rule Bilski's claimed process not subject to patent. That said, all were waiting to hear whether the Circuit Court's "machine or transformation test" is viable, and whether business methods, software, and biotech inventions may be patented. To which the nine Justices replied, in short: Maybe, maybe not.

Authored by Justice Kennedy, the Court's majority opinion is a lesson in equivocation:

ABSTRACT IDEA: Seemingly the only issue on which the majority does not hesitate is the conclusion that Bilski's claimed process of hedging risk is an unpatentable abstract idea. Not even "limiting an abstract idea to one field of use or adding token postsolution components" can make it patentable. BUT, as Justice Stevens and three other Justices complain in their concurrence, the Court "never provides a satisfying account of what constitutes an unpatentable abstract idea."

BUSINESS METHODS: The majority suggests that certain business methods may be patentable: "[T]he Patent Act leaves open the possibility that there are at least some processes that can be fairly described as business methods that are within patentable subject matter under §101." In fact, under 35 U. S. C. §273(b)(1), "federal law explicitly contemplates the existence of at least some business method patents." BUT: "[W]hile §273 appears to leave open the possibility of some business method patents, it does not suggest broad patentability of such claimed inventions." And "even if a particular business method fits into the statutory definition of a “process,” that does not mean that the application claiming that method should be granted."

MACHINE-OR-TRANSFORMATION: Scolding the Federal Circuit for the narrowness of its machine-or-transformation test, the Court nevertheless admits that this test is helpful: "This Court’s precedents establish that the machine-or-transformation test is a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under §101." BUT: "The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible 'process.'" (emphasis added) The Court reasons that new or unforeseen technologies might require standards of evaluation other than the machine-or-transformation test. Therefore the Court interprets §101 to be a "dynamic provision" that may require "new inquiries." What are these new tests? Who knows? The Court offers no suggestions.

PATENTABLE PROCESSES, SOFTWARE PATENTS, BIOTECH, ETC.: Because of unforeseen consequences, the Court refused to decide any issue other than the case before it or to rule on whether "technologies from the Information Age should or should not receive patent protection." (All those who had feared a broad pronouncement disqualifying software or other new-tech patents can now breathe a sigh of relief.) It's similarly futile to look for specific guidance as to patentable processes: "The Court ... need not define further what constitutes a patentable 'process,' beyond pointing to the definition ... provided in §100(b) and looking to the guideposts in Benson, Flook, and Diehr."

There is, of course, quite a good rationale behind the Court's position; the majority is deferring to Congress's aim of facilitating innovation. According to the Justices, §101's "expansive terms" and "permissive approach to patent eligibility" indicate the legislature's intent to give "a liberal encouragement" to innovation. The Federal Circuit's exclusive and artificial machine-or-transformation standard imposes upon the statute "limitations and conditions which the legislature has not expressed."

Again, almost no one expected the Court to uphold Bilski's patent. The only aspect of this ruling that seems to have surprised anyone is its vagueness. Given that the Court rejects Bilski's business method as an "abstract idea," it would have been helpful if the Court had made more effort to define that term. One can hazard a guess that cases involving claimed business methods will revolve primarily around this question in the near future.

As Tom Goldstein mused diplomatically on the Supreme Court blog, "the breadth of today's ruling is an open question." Thus Bilski v. Kappos, the most anticipated patent law case in recent history went out not with a bang, but with a whimper. No sweeping pronouncements and few definitive declarations were in evidence. In fact, the majority opinion may raise more questions than it answers. This, of course, can only work to the benefit of most patent attorneys, who make a living from the continued raising of such questions.

Obama introduces IP enforcement plan

Signaling how seriously it takes IP issues, on June 22 the Obama administration released the first-ever Joint Strategic Plan for Intellectual Property Enforcement (JSPIP).

Last week Vice President Joe Biden and U.S. Intellectual Property Enforcement Coordinator Victoria Espinel joined Attorney General Eric Holder, Homeland Security (DHS) Secretary Janet Napolitano, and representatives from the Trade and Commerce departments to announce the Plan. A multi-agency effort aimed at stemming intellectual property theft, the JSPIP sets out a scheme for cooperation among the DHS, Federal Bureau of Investigation, Secret Service, Customs and immigration agencies, and other federal entities charged with intellectual property issues and law enforcement.

As Ms. Espinel correctly notes on the White House blog:

"Infringement of intellectual property can hurt our economy and can undermine U.S. jobs. Infringement also reduces our markets overseas and hurts our ability to export our products. Counterfeit products can pose a significant threat to the health and safety of us all."

Citing damage done by software piracy and counterfeit goods, the Plan aims to combat these problems by implementing strategies such as:

• decreasing purchase and use of illegal products;
• increased investigation, transparency, reporting, and communication on IP concerns;
• enhanced coordination and training among domestic federal, state, and municipal agencies, as well as overseas;
• cooperation with trading partners, including increased focus on enforcing IP in China;
• securing the supply chain by monitoring foreign-based websites and other portals for infringement; and
• improved tracking of funds used in IP enforcement.
  

Microsoft has offered to support the Plan by helping to prevent illegal businesses from advertising online sales of counterfeit medicines.

Curiously, the Plan contains few specific provisions addressing patent law; its authors focus mainly on copyright and trademark issues. A White House spokesperson has nevertheless assured PatLit that the USPTO was closely involved in the Plan's development, and that the JSPIP indeed covers patents. We're awaiting further details. Meanwhile, read the Plan here, or view last week's press conference here.

Amici challenge pharma pay-for-delay

Readers may recall our earlier report that, in April, a Second Circuit panel grudgingly ruled for Bayer and Barr pharmaceutical companies in In re Ciprofloxacin Hydrochloride Antitrust Litigation. Bound by Tamoxifen, the panel determined that reverse payment ("pay-for-delay") arrangements between branded and generic pharmaceutical companies did not violate antitrust laws. But, apparently swayed by the plaintiffs' public interest arguments, and moved by the "'exceptional importance" of the antitrust implications," the panel invited the plaintiffs to request an en banc Tamoxifen rehearing.

The wheels have started turning. Last month the U.S. government's Federal Trade Commission (FTC) and a group of 86 professors filed separate amicus curiae briefs asking the court to grant en banc review. Long opposed to reverse payment deals, the FTC argues in its brief that the Tamoxifen decision "protect[s] undeserved patent monopolies" and "improperly undermines the balance ... between the public interest in encouraging innovation and the public interest in competition." The FTC also cites studies indicating that getting rid of pay-for-delay could save consumers roughly $3.5 billion annually, and that "a one-year delay in generic entry represents ... a transfer from consumers to producers of about $14 billion."

For their part, the professors (represented by Stanford law professor and Durie Tangri partner Mark A. Lemley) argue that reverse payment arrangements are per se illegal. They also point out that an issued patent carries only a presumption of validity that does not grant a patentee "an absolute right to enter into a settlement that excludes competitors from the market." Moreover, the professors hint that, in In re Cipro and other reverse payment cases, the patentee's massive payout to the generic may indicate that the patent holder believed its own patent was invalid.

Is it worth bothering, if all you get is Hungary?

Football has been much in everyone's mind over the past few weeks, to PatLit makes no apology for alluding to it here. Thank you, Jelena Jankovic (Petosevic), for this link to your news item, "Adidas Loses Against Hungarian Inventor in Patent Infringement Suit", which reads in relevant part as follows:

"On May 12, 2010, the Hungarian Patent Office (HPO) ruled in favor of the Hungarian soccer gear inventor Laszlo Oroszi in his patent infringement suit against the German sports apparel manufacturer Adidas, concerning Oroszi’s patent known as the ball-directing striped-line zone that Adidas allegedly, without Oroszi’s authorization, incorporated into their Predator Precision range of soccer shoes.

Oroszi told the Budapest Report that he registered the patent in Hungary on October 14, 1996, explaining that the striped zone at the tip of the shoe permits football players to shoot more accurately. Oroszi’s representative presented the patent to Adidas in 1998, but Adidas declined the offer claiming that it does not fit into their concept for the then new Predator Precision soccer shoes. However, Oroszi claims that the Predator Precision soccer shoes with his patented concept were launched just before the Euro 2000 soccer Championship.

In 2006 Adidas initiated a nullity proceeding against Oroszi’s patent in Hungary in response to Oroszi’s patent infringement suit. The German company argued that Oroszi obtained an invalid patent and demanded that the HPO annuls it. As a result, the court suspended the patent infringement proceedings until the patent status became resolved.

Last fall, the patent status was resolved in favor of Oroszi. This was the third time that Adidas appealed and that HPO ruled in favor of Oroszi. Adidas was left with no new grounds to object against Oroszi’s concept, resulting in the patent infringement case coming out of suspension.

Oroszi notes that, although Adidas earned millions by using his concept without his consent, he cannot sue the company outside Hungary, as he has no funds to obtain foreign patent protection.

As stated in the Budapest Report (here), although Adidas negated the accusations and maintained that they used their own ideas, they were not able to provide the patent for the concept that was built into their soccer shoes".

Through lack of funds Oroszi was apparently limited to bringing his action in one small jurisdiction which, presumably, does not award damages in respect of infringement of the same patent by the same defendant outside that jurisdiction. If an inventor can afford to protect his patent in Hungary alone, is it worth bothering to get a patent at all?

STOP PRESS: KCI negative pressure patent valid and infringed

Here's a treat for PatLit readers: today's ruling by Mr Justice Arnold in KCI Licensing Inc and others v Smith & Nephew plc and others [2010] EWHC 1487 (Pat) -- all 214 paragraphs of it --is not yet available on the BAILII website, but you can read the full text here. In short, the judge found KCI's negative pressure wound drainage patents valid and infringed. I've not yet had a chance to read this decision -- but will revert to it once I've done so.

More on negative pressure wound therapy here.

Colleen Chien: Government's brief will dictate Bilski result

If Professor Colleen Chien is correct, the Supreme Court will take the advice of its friend the U.S. government in deciding the outcome of Bilski v. Kappos. Recently Chien, of the Santa Clara University law school, wrote an article examining the influence of amicus briefs in patent law cases. In "Patent Amicus Briefs: What the Courts' Friends Can Teach Us About the Patent System," Chien examines more than 1500 amicus briefs filed in patent cases in the past 20 years.

Chien notes that, although amicus briefs appear in general to have influenced the Supreme Courts' agenda, the briefs of certain amici matter much more than others. Of all the amici, the federal government by far carried the most weight: "[a]micus briefs authored by the United States predicted the winner 90% of the time at the Supreme Court." (Compare this staggering success rate with that of university amici, only 6% of whom argued on the winning side.) Moreover, "In every single Supreme Court patent case ... in which the US government filed an amicus brief except for one, the Court sided with the government." In practical terms, this means that one can predict the outcome of a case just by looking at the government's brief.

The reasons for this? Government briefs not only consider matters of patent law, but may also examine public policy concerns, the market, antitrust and consumer issues, and international agreements and comity. Thus, government briefs are likely to reflect a larger number of interests (as well as privileged access to certain information). What this means for Bilski, Chien claims, is that, "If history is any indication, the Supreme Court will almost certainly follow the US Government's lead and rule that the method is unpatentable and likely adopt some of its reasoning as well."

In Bilski, Elena Kagan -- President Obama's new Supreme Court nominee -- wrote the amicus brief opposing certiorari and the merits brief, arguing that petitioner's business method cannot be patented. Kagan largely relies on a contention that methods of organizing human activity only are unpatentable under 35 U.S.C. 101; and on the point that Bilski's claim is too abstract to be patent-eligible. Perhaps most importantly, Kagan strongly urges the Court to issue a narrow ruling. As she puts it,

"The [Circuit] court’s decision ... properly leaves questions not presented by petitioners’ application, such as the circumstances under which computer software may be patented, for resolution in future cases ... petitioners’ patent application involves none of the frontier technologies on which the petition dwells ... they are essentially irrelevant to the proper disposition of this case ... Further review is not warranted."

In other words, if Chien's prediction holds and the Supreme Court heeds the counsel of their friends in the government, those hoping for a sweeping pronouncement on computer software patentability will likely be disappointed.

However, the federal government is far less categorical on the continued viability of the machine-or-transformation test, the potential patentability of business methods, and the question "how abstract is too abstract?" As to business methods and processes, for instance, the government does not insist strongly that they are inherently either patentable or unpatentable, but states only that they are “subject to the same legal requirements for patentability as applied to any other process or method.” This reticence leaves the Court some room to wrestle with borderline issues. Perhaps these sticking points have caused the Court's delay in issuing a decision, as the Justices formulate language that could provide for a future process patent; revisit the machine-or-transformation test; and perhaps address the limits of abstraction.

Then again, the delay might mean that the Court will hold over the decision until next term ...

Fighting trolls with fire

Faced with mounting costs and headaches stemming from litigation by NPEs (non-practicing entities, or "patent trolls"), more and more operating companies are resorting to a novel means of addressing the problem. As part of their defensive patent strategy, tech giants (and top troll targets) Microsoft, Sony, and Nokia recently joined with startup company RPX.

In business for a little over a year, RPX ranks among the pioneers in the Defensive Patent Aggregation movement. It was created to offer operating companies a solution to the growing problem of lawsuits from NPEs. Until now, most companies have had to go it alone in mounting costly, risky, and unpredictable legal defenses. RPX criticizes the NPE business model for creating inefficiency via high transactions costs. But unlike Microsoft and others who have lobbied the U.S. Congress in the hopes of securing anti-NPE legislation, RPX insists that "[t]the optimal remedy" for NPE patent assertions is a market solution, or "fight[ing] fire with fire."

To that end, RPX strategically buys up patents, thus limiting the number of patents on the market that can be leveraged against operating companies. Unlike the NPEs, however, RPX does not initiate or directly profit from patent assertions; instead, it offers a form of insurance. All patents that RPX purchases into its Defensive Patent Aggregation are licensed in bulk to its members, in exchange for an annual subscription fee. Early this year, RPX reported that it had so far spent $130 million to acquire more than 1,000 tech patents.

Though perhaps the most popular, RPX is not the only company offering defensive aggregation services. Other networks include Allied Security Trust and the Open Invention Network. With the advent of such entities, the trend in patent litigation circles has changed from getting rid of NPEs altogether to managing the costs of NPE patent litigation -- offering yet another indication that the so-called trolls are here to stay.

Reminder: an appeal is not a re-hearing

Mr Justice Floyd (Patents Court, England and Wales) gave judgment this morning in Nampak Cartons Ltd v Rapid Action Packaging Ltd [2010] EWHC 1458 (Pat) , an appeal against the decision of the hearing officer not to revoke Rapid Action's patent for sandwich cartons. It's a fairly low-tech case which doesn't hugely set the pulse racing, but it's worth quoting the judge's direction to himself as to how to address the issues before him (mainly failure to have due regard to expert evidence; failure to apply common knowledge and to construe the claims of an earlier patent when determining whether Rapid Actions' patent was for an invention that lacked inventive step).

"Approach on appeal

11. By CPR [Civil Procedure Rules] 52.11, as applied by CPR 63.17(1), this appeal is limited to a review of the decision below unless the court considers in an individual case that it would be in the interests of justice to hold a rehearing.

12. ... in those circumstances, before this court interferes with the decision of the Hearing Officer, it should be satisfied that he erred in principle or was clearly wrong.

13. Two factors are present in this case which mean that I should be particularly careful to accord respect to the Hearing Officer's Decision. The first is the warning of Lord Hoffmann in Biogen v Medeva [1997] RPC 1 at page 45 concerning findings of obviousness. He concludes that well-known passage by saying:

"Where the application of a legal standard such as negligence or obviousness involves no question of principle but is simply a matter of degree, an appellate court should be very cautious in differing from the judge's evaluation."

14. Secondly, amongst the factors to be taken into account in deciding the degree of reluctance to be exercised in relation to interfering with such a decision on an appeal, are (a) the standing and specialist experience of the court or tribunal appealed and (b) whether the court or tribunal appealed from heard oral evidence. [citation omitted]

15. The facts of the present case are not complicated. That means that there is a temptation to be drawn in to deciding the case afresh oneself. That is a temptation which needs to be resisted".

First the ethics, now the misconduct ...

First it's patent litigation ethics, now it's plain misconduct -- is this the hand of coincidence at work or is there someone at Oxford University Press who is out to stir the consciences of United States patent litigators?

Just published, and the focus of this note, is Patent-Related Misconduct Issues in U.S. Litigation by Joel Davidow (a partner in IP boutique Kile Goekjian Reed and McManus of Washington, DC). The publisher's blurb claims that this is "the first book of its kind to provide a comprehensive review of misconduct claims and defenses, with reference to existing case law and litigation strategies", pointing out that it is "designed to serve as the first comprehensive review of conduct defenses and counterclaims, with a focus on existing case law and litigation strategies". So what's in it for the reader?

"The first section of the book addresses claims involving misuse of the patenting process, with a focus on patents on a product or process the patentee did not invent as claimed and inequitable conduct claims, including intentional failure to cite material references and false or misleading declarations. From here the book turns to claims based on the misuse of the litigation process, including baseless and bad-purpose suits. The third and final section of the book describes claims based on the misuse of the competitive (antitrust) and licensing processes [the author has also served a substantial term with the Antitrust Division of the Department of Justice, so this is obviously a pet topic]. Each section of the book is divided into sections devoted to law and strategy, with practical guidance related to handling document demands and other discovery requests, expert testimony and waiver issues.

This book is designed to provide patent litigators with a double arsenal of unprecedented case-law analysis [personally I prefer it 'precedented' if I'm to cite it in court ..] and litigation strategy related to the "wild cards" of infringement cases: affirmative defenses and counterclaims based on assertions of patent-holder misconduct. ...".

What is fascinating is the thought that United States practice can generate the need for a book like this while in the European Union, a market which is twice the size and has a pretty good slice of patent litigation before it, no book on this topic has ever emerged.

Bibliographic data. xv + 233 pages. Paperback, ISBN 978-0-19-533720-4. Price: £110. Web page here.

Time up for qui tam trolls?

Recent 'false marking' cases in the United States have drawn attention to what seems to be a productive little cottage industry in the field of patent litigation, where anyone -- regardless of their commercial interest -- can go in for a bit of bounty-hunting by initiating actions against anyone who falsely marks a non-patented product as being patented (see, for example, the earlier PatLit post here).

Right: Grandma checks her spindle and distaff for signs of false patent marking

A current bill to curtail the practice, H.R. 4954, is currently under consideration by the House Committee on the Judiciary. This bill would provide recourse for persons who suffer what the ABA's Intellectual Property Law section terms "competitive injury" as a result of false markings; the ABA section recommends a clarifying amendment to assure that such parties are eligible to bring an action against a false marker. In a letter to Representatives John Conyers Jr. and Lamar Smith, chairman and ranking member of the Committee, the ABA writes:

"H.R. 4954 would amend the false marking statute, 35 U.S. C. 292, which provides for both governmental sanctions and private enforcement actions for false patent-related marking of articles in commerce. The statute calls for fines up to $500 per offense, with private party enforcers entitled to half of the applicable fine. The bill would repeal subsection (b) section 292, which provides that any person may bring a “private attorney general” or qui tam enforcement action against false marking, without a showing of economic or competitive injury, and substitute there for authority for private causes of action limited to persons who have suffered a competitive injury. Remedies would be limited to “recovery of damages adequate to compensate for the injury suffered by the plaintiff”, rather than the 50% bounty system now in Section 292(b).

We support changes in the nature of the private actions that may be brought for false markings, and in the recovery allowed. Following the 2009 decision of the Federal Circuit in Forest Group, Inc. v. Bon Tool Co., awards to successful qui tam realtors are based on the number of articles falsely marked, rather than treating each decision to falsely mark as an offense. We believe that there is neither need nor sound policy reason for such an award system, which seems to have inspired a cottage industry of false marking qui tam trolls who have no connection to or injury from the false marking.

We support amendment of Section 292 to assure that private actions may be brought by persons who suffer injury from reliance on false markings even though they may not as a technical matter qualify as competitors. For example, small and medium sized manufacturers may lack the legal sophistication to know that they should verify the listing, or the resources to do so. Relying injuriously on the false marking, they decide not to enter the competition. We recommend a clarifying amendment to H.R. 4954 to assure that such parties are eligible to bring an action against the false marker. This could be accomplished by inserting ‘or who was injured by having detrimentally relied on such violation’ after ‘this section’ in line 8, page 1 of the bill".

Prima facie the case for reform seems so powerful that it is difficult to see the force of logic of any defence of the status quo. PatLit wonders, though, whether the United States is alone in having a bounty-hunting provision such as section 292 on its statute books -- or is this a reflection of a long-lost strand of patent policy which was once prevalent in patent philosophy elsewhere.

Patent Ethics: Litigation

In April PatLit reported on an impending title, Patent Ethics: Litigation, by US scholar and professional discipline expert David Hricik. The book deals with conflicts of interests, malpractice, discovery issues, competence, diligence and dealing with expert witnesses, among other matters.

That book has now been published and is available from the Oxford University Press website here.

Yangaroo can't jump the border

Vancouver-based company Destiny Media Technologies, Inc. last week obtained summary judgment for non-infringement of a US patent claim brought by its Canadian competitor Yangaroo, Inc. The disputed patent covered technology for the secure transmission of music and media files to authorized computers in the US by way of file servers located in Canada. Destiny Media developed its Play MPE system, which the recording industry uses for the secure internet distribution of pre-releases to trusted computers at radio stations and other media outlets. Yangaroo’s patent claimed a “method of distributing content” performed on a server. According to Yangaroo, Destiny’s servers in Canada perform the patented process to “manufacture” the music files that were then transmitted into the US.

The case was heard in the Federal Court, Eastern District of Wisconsin, where Judge William C. Greisbach gave summary judgment on 7 June, saying: "the claimed method of the ‘712 patent does not embrace the method of manufacturing the content prior to distributing it".

Destiny opted for the court's "Fast Track” summary judgment procedure to dispose of the case speedily on the ground that Yangaroo's single patent claim could not be asserted against the activities of Destiny's server computers located in Canada and the UK. Relying on NTP, Inc. v Research in Motion, Ltd, No. 3:01CV767 (E.D. Va. August 5, 2003) the judge held that a patent claim over a method of distributing data does not establish liability under US patent law since transmitted data is not a “product” manufactured by the claimed process.

Source: MarketWatch here. Thanks, Bruce Berman, for drawing this to PatLit's attention.

The New Zealand tortoise: should we nip it in the bud?

In "Has the patent tortoise almost reached the finish line?", New Zealand law firm Simpson Grierson comments on the extremely slow progress of replacing that jurisdiction's ancient Patents Act 1953 with a fresh, new Act. According to this note,

" ... The Patents Bill, which will provide a complete re-write and reform of New Zealand's patent law, has been reported back from Parliament's Commerce Select Committee and is heading for its second reading in Parliament. And in a new twist on the old fable, the Select Committee has added a few hare-like twists to this tortoise of a piece of legislation.

Oppositions are Back

Back at the start of the reform process, the Institute of Patent Attorneys advocated a re-examination system, asserting that the opposition process was inefficient and unpopular. When the draft Patents Bill was circulated (in 2002), the Institute did a u-turn, and advocated for retaining oppositions. It is no wonder the Select Committee was confused.

The result is that the Bill provides for both re-examination and oppositions.

Revocation is of course also available. There are limited restrictions on the number of bites at the cherry a party can take. This proposal is unlikely to achieve efficiency in the system. The dual system instead adopts a "worst of both worlds" approach, and will give determined opponents plenty of opportunities to disrupt, and add to the expense of, patent applications".

Being in the mood for a mixed metaphor, I'd like to ask whether we should nip this tortoise in the bud. Following a recommendation in The British Patent System: report of the committee to examine the patent system and patent law [the Banks Report], Cmnd 4407, 1970, the UK was happy to scrap before-and-after challenges. It seemed quite outrageous that an opponent, having lost in Patent Office proceedings and then failed on appeal to the Patents Appeal Tribunal, the Court of Appeal and the House of Lords, could then wait till the patent was granted and then apply, on the same ground. to revoke the patent and pursue its application for revocation all the way up to the House of Lords again. I don't think this ever actually happened, through the prospect that it might -- though a boon for patent litigators -- was distinctly unattractive to litigants and legislators alike.

The UK, like the European Patent Office, operates a system in which a patent can be challenged only after grant, and this too has its unattractive side. Can any reader think of a better way to do things?

NPEs find a friend in the ITC

It seems to be the topic du jour: NPEs are on their way to becoming downright respectable. In April the United States International Trade Commission (ITC) delivered a boon to these once-scorned entities. The Commission's decision in Certain Coaxial Cable Connectors, Investigation No. 337-TA-650, stated that an NPE's patent enforcement litigation activity can establish a "domestic industry" in a product -- sufficient to prevent the importation of infringing items into the U.S.

To win an exclusion order, an ITC complainant must show that it has established, or is in the process of establishing, a domestic industry in relation to a disputed patent. Under the Tariff Act of 1930, 19 U.S.C. § 1337(a)(2) and (3), this may be accomplished by demonstrating a "substantial investment" in exploiting the patent in the United States, including related licensing activities. In Certain Coaxial Cable Connectors, complainant PPC sought to bar multiple respondents from marketing an item on which PPC owned the patent. PPC did not manufacture the product, own a plant or equipment, or employ workers. Instead the company argued that its legal bills that resulted from enforcing its patent constituted a significant investment in exploiting its patent. Therefore, PPC claimed, it had a domestic industry that deserved protection. The ITC agreed.

For its reasoning the ITC relied largely on the Tariff Act's plain meaning and legislative history. In 1988, the U.S. Congress deliberately added licensing as a qualification for domestic industry, specifically in order to overturn the ITC's previous Gremlins decision. From this the Commission concluded that Congress intended to encourage the practical application and propagation of patents and their protected products. Thus, any licensing-related activity that tends to bring a patented item to use or to the market may pass muster -- even if the activity is intended solely to earn revenue from the item.

The Commission did limit its decision. Patent enforcement litigation in itself may not constitute exploitation, because it does not necessarily involve licensing. But a patent enforcement lawsuit or other activity may qualify, if the documented activity is "related to licensing and pertain[s] to the patent at issue." Merely owning a patent won't meet the domestic industry requirement; a patent owner must actively take steps "leading to the exploitation of the intellectual property." And whether a complainant's investment is "substantial" must be determined according to the facts of each case. But it's notable how broad a reading the ITC gave for licensing activities, which may include, "among other things ... sending cease and desist letters ... conducting a patent infringement litigation, conducting settlement negotiations, and negotiating, drafting, and executing a license."

Unfortunately for NPEs, the ITC cannot order an award for damages. It can, however, issue an injunction barring an infringing product from importation into the United States. In this way an ITC order provides a patentee with a useful bargaining chip to potentially obtain a sizable settlement from an infringer. According to The Prior Art blog, this can matter quite a lot, since

"... only a tiny fraction of district court infringement cases go to trial, with the typical defendant paying an estimated average of $5 million per case. By contrast, 40 percent of ITC cases go to trial and the average defendant there can expect to rack up as much as $10 million in litigation costs over a much shorter period of time."

Low-level protection drives up Russian patent litigation threat

Writing for International Law Office, Eugene A. Arievich (Baker & McKenzie - CIS Limited), in"Patently absurd? Fear of patent trolls drives protective utility model filings" (here), explains how the threat of patent trolls has driven some companies to extremes in their attempts to protect their rights. He teasingly asks:

"How many people would recognize this object?

"The vessel in cross-section features the boundaries of its outer and internal sides. At least on the outer boundary and/or the internal boundary, part of the boundary of at least one of the cross sections is executed as a fragment or a combination of fragments of a slanting conical cut of a right circular cone."

The description, he explains, comes from a patent filing for an ordinary bottle, adding that in Russia commercial parties have taken to patenting the most obvious things in order to protect themselves against patent trolls, whose tactics come close to a form of hostile takeover and redistribution of property. Although such wrongful practices are not new to Russia, Eugene observes that they thrive in the environment created by Russia's legal system.

After describing how patents can be obtained for inventions and utility models, he notes that many well-established law firms, eager to play safe and protect their clients' interests, have started obtaining utility model patents for almost anything imaginable ("Patenting a wooden stick for a lollipop might sound ridiculous, but such decisions simply recognize the precarious reality of patent law. Foreign companies must take patent searches seriously, as things that no one would think of patenting elsewhere in the world may need this form of legal protection in Russia").

The article concludes with a dire warning about the threat of a trip to court:

"Russian trolls pose a greater threat than their overseas equivalents because in addition to pursuing civil lawsuits, they press for criminal proceedings against the target company's management, often using underhand methods. For many years the chief representative of a UK company had to comply with a recognizance not to leave, merely because a group of Russian do-it-yourself enthusiasts had obtained a utility model patent for the suspended floors that the company had long manufactured, and had accused the company's management of wrongfully exploiting the technology in question.

In order for businesses in Russia to enjoy proper protection against patent trolls, a Supreme Arbitrazh Court decision is needed to resolve a particular case or review relevant practices in general. The court's position in previous litigation has been that as long as legal protection remains in force, a rights holder may uphold its rights by any lawful means. However, it makes sense for the courts to consider such cases in the context of the abuse of rights and the principle that a rights holder's goal should be commensurate with its efforts to obtain the patent. In the United States, litigation initiated by patent trolls is considered in light of this principle of proportionality. The approach allows the courts to discourage dishonest approaches and protect companies that invest in innovation".