Litigation Practice

Charles Meyer Honored in Benchmark Plaintiff Handbook

August 9, 2013

Woodard Emhardt Moriarty McNett & Henry LLP is pleased to announce that Charlie Meyer has distinguished himself by earning an honored placement in Indiana as a Local Litigation Star in the Benchmark Plaintiff Handbook published by Legal Media Group.  The guide ‘s results are the culmination of research conducted during extensive interviews with litigators and their clients identifying firms and attorneys who have displayed the ability to consistently handle complex, high stakes cases in multiple jurisdictions.

 

 


Cisco Takes Aggressive Stance Against Patent Holder Threatening Its Customers

November 26, 2012

You’ve probably heard this story before.  A little known patent holder begins a licensing campaign sending letters to hundreds of companies letting them know that they need a license to its patent.  The letters continue and offer discounts for early licensees and say that they hope to avoid the need for litigation.  The companies who receive the letters are confused as the product which supports the alleged infringement was purchased from another company.

It’s a common strategy employed by some patent holders, and often those referred to as non-practicing entities (NPEs) or patent trolls.  The goal is to impose uncertainty and the threat of large legal costs upon a large number of established companies and hopefully obtain many small settlements in lieu of litigation as opposed to going after the vendor who provides the product.

Cisco, and more specifically its customers, were recently the target of such an effort by Innovatio IP Ventures, LLC, a company which acquired several wireless networking patents.  However, rather than deal with its own indemnification obligations on a case by case basis, Cisco has chosen to taken an aggressive stance in filing a lawsuit claiming that Innovatio is guilty of racketeering based upon its sending of over 8,000 letters to coffee chains, hotels, and other retailers who use Cisco’s equipment or comparable Wi-Fi equipment.  Cisco claims the letters are nothing more than extortion as Innovatio based many of its claims for infringement upon patents which had already expired as well as upon patents to which Cisco’s products were already licensed.

In order to prevail, Cisco will be forced to prove its allegations and Innovatio’s knowledge of them.  While many commentators believe this will difficult, the fact that Cisco has turned the tide on Innovatio, forcing it to now defend its actions, just as it sought to do to Cisco’s customers, is an interesting development and will no doubt be interesting to observe going forward.


Federal Circuit Affirms Dismissal of Declaratory Judgment Action obtained by Woodard Emhardt

October 1, 2012

Matthews International Corp. manufactures and sells a Bio Cremation™ product that uses a hydrolysis process to accelerate the natural decomposition of the body to cremate human remains.  In 2011, Matthews filed suit against our client, Biosafe Engineering, LLC, seeking a declaratory judgment of non-infringement, invalidity and unenforceability of five method patents related to using alkaline hydrolysis to dispose of hazardous organic materials.  Matthews also asserted state law claims of trade libel, defamation, and tortuous interference with contractual relations alleging that Biosafe had wrongly accused Matthews of patent infringement to Matthew’s customers, potential customers and employees. 

Biosafe moved to dismiss all counts for lack of declaratory judgment jurisdiction and failure to adequately plead state law claims. The United States District Court of Western Pennsylvania granted Biosafe’s motion to dismiss all counts for lack of declaratory judgment jurisdiction and failure to adequately plead state law claims.  Matthews appealed.

 On appeal, the Federal Circuit upheld the district court’s holding that Matthews’ dispute with Biosafe lacked the requisite immediacy and reality to support the existence of declaratory judgment jurisdiction.  The Federal Circuit noted that there was no evidence as to when the Bio Cremation™ equipment might be used in a manner that could infringe Biosafe’s method patents and that the Bio Cremation™ equipment could be operated outside of the parameters specified in Biosafe’s method patents.  In addition, while Matthews sold the cremation equipment, it did not practice any of the claimed methods and could not be liable for direct infringement. 

 Immediacy

“A party may not obtain a declaratory judgment merely because it would like an advisory opinion on whether it would be liable for patent infringement if it were to initiate some merely contemplated activity.”  The Federal Circuit held that it would be premature to determine infringement of Biosafe’s patents at least until there was specific and concrete evidence regarding how Matthews’ customers planned to use the Bio Cremation™ equipment.

The Federal Circuit noted that a showing of actual infringement is not required to support declaratory judgment jurisdiction but the absence of any arguable infringing activity showed the dispute lacked the immediacy necessary to support declaratory judgment jurisdiction.

Reality

“In the context of patent litigation, the reality requirement is often related to the extent to which the technology in question is ‘substantially fixed’ as opposed to ‘fluid and indeterminate’ at the time declaratory relief is sought.” Because the Bio Cremation™ equipment could be operated using process parameters that would not infringe the method patents and because Matthews did not specify any operating parameters, the Court considered it impossible to determine whether the operation of the Bio Cremation™ equipment infringed the method patents. The Federal Circuit affirmed the district court’s characterization of Matthews’ Bio Cremation™ equipment as “fluid and indeterminate.” A party has no right to obtain declaratory relief when it provides insufficient information for a court to assess whether its future activities would be infringing.

Finally, the Federal Circuit affirmed the district court holding that Matthews failed to plead the bad faith element of the state law trade libel, defamation, and tortuous interference claims. The court stated that the state law claims would not be ripe for review even if Matthews had pled the required bad faith element. Until some specific evidence regarding the operating parameters for the Bio Cremation™ equipment is produced, any determination of whether Biosafe acted unreasonably in asserting that Matthews infringed the patents would be premature.

The full decision is hyperlinked Matthews International Corporation v. Biosafe Engineering, LLC, September 25, 2012, Mayer, H.

We congratulate Spiro Bereveskos for his successful argument at the Federal Circuit. We also congratulate Steve Zlatos and William McKenna for writing the successful appeal brief.


Woodard Emhardt Obtains Order Transferring Patent Case out of the ED of Texas

September 28, 2012

Judge Leonard Davis of the Eastern District of Texas recently ordered that a patent infringement lawsuit filed against an Indianapolis based company be transferred to the Southern District of Indiana.  The lawsuit was filed following the effective date of the new joinder provisions of the America Invents Act which prevent Plaintiffs from filing large multi-defendant lawsuits.  The case involved a New York based Plaintiff and Judge Davis found that the Southern District of Indiana was clearly a more appropriate forum.  Woodard Emhardt attorneys Spiro Bereveskos and Bill McKenna are representing the Defendant.


Amazon.com Unable to Push Litigation Out of the Eastern District Of Texas

May 14, 2012

In a recent patent infringement case, Amazon.com asked to have the case transferred from the Eastern District to the Western District of Texas. That motion was denied by the Eastern District federal court judge. Amazon appealed to the Federal Circuit (because the case involved patents) effectively asking the Federal Circuit to force the district court judge to vacate the original order and transfer the case. However, the Federal Circuit denied Amazon’s request and upheld the Eastern District court’s refusal to transfer the case (In re Amazon.com., Misc. No. 115, nonprecedential).

 In denying Amazon’s motion to transfer, the Federal Circuit noted that Amazon.com was seeking “an extraordinary remedy, available to correct a clear abuse of discretion or usurpation of judicial power.” In short, the Federal Circuit found neither in this case. Amazon had argued that access to sources of proof favored transferring the case. However, the Federal Circuit found no clear abuse of discretion in the District Court’s finding that the relative ease of access to evidence in the case did not favor transfer. Even though the district court had relied on the fact that some of the defendants’ likely documentary evidence was outside, but closer to, the Eastern District of Texas, the Federal Circuit relied on the fact that no defendant was headquartered in the Western District of Texas, and that “transfer here would not result in trial of the case where the alleged infringing products were developed and where a significant amount of the defendants’ sources of proof are maintained.”

 Amazon also argued in favor of moving the case based on severance and judicial economy but both of these arguments were also unpersuasive. In conclusion, the Federal Circuit stated that Amazon failed to make “a compelling showing that the Western District is a clearly more convenient venue” and therefore the court could not say that “the District Court’s decision amounted to a clear abuse of discretion.”


Supreme Court Clarifies Patent Ownership Under Bayh-Dole Act

June 16, 2011

As a result of Leland Stanford Junior University  v. Roche Molecular Systems, Inc., No. 09-1159, organizations and universities subject to the Bayh-Dole Act should construct more effective assignment agreements with their employees instead of relying on the Bayh-Dole Act to automatically vest title.  The Supreme Court has held that the Bayh-Dole Act does not automatically vest title of federally-funded inventions to federal contractors or “authorize contractors to unilaterally take title to such inventions.”  Rather, the Court held that the Bayh-Dole Act only allows federal contractors to elect to retain title to federally-funded inventions that the federal contractor already owns typically through the use of an employee assignment.  

In concurring and dissenting opinions by three justices, the Supreme Court signaled it might evaluate in a future case the principles adopted by the Federal Circuit in FilmTec Corp. v. Allied-Signal, Inc., 939 F.2d 1568 (1991), and the application of those principles to agreements that implicate the Bayh-Dole Act.  FilmTec held that “[o]nce the invention is made and [the] application for [a] patent is filed,…legal title to the rights accruing thereunder would be in the assignee…, and the assignor-inventor would have nothing remaining to assign.” 

The present case involved a company, Cetus, that in 1985 began to develop methods for quantifying blood-borne levels of human immunodeficiency virus (HIV), the virus that causes AIDS.  In 1988, Cetus began to collaborate with scientists at Stanford University to test the efficacy of new AIDS drugs.  Dr. Mark Holodniy joined Stanford as a research fellow around that time. When he did, he signed a  copyright and patent agreement (CPA) stating that he “agree[d] to assign” to Stanford his “right, title and interest in” inventions relating from his employment at the university.  Holodniy’s supervisor arranged for him to conduct research at Cetus.  As a condition of gaining access to Cetus, Holodniy signed a visitor’s confidential agreement (VCA).  That agreement stated that Holodniy “will assign and do[es] hereby assign” to Cetus his “right, title and interest in each of the ideas, inventions, and improvements” made “as a consequence of [his] access” to Cetus. Working with Cetus employees, Holodniy devised a procedure for calculating the amount of HIV in a patient’s blood.  That technique allowed doctors to determine whether a patient was benefiting from HIV therapy. 

 Holodniy then returned to Stanford where he and other university employees tested the HIV measurement technique.  Over the next few years, Stanford obtained written assignments of rights from the Stanford employees involved in refinement of the technique, including Holodniy, and filed several patent applications related to the procedure that eventually resulted in three patents.  In 1991, Roche Molecular Systems (“Roche”) acquired Cetus’ assets including all rights Cetus had obtained through agreements like the VCA signed by Holodniy.  After conducting clinical trials on the HIV quantification method developed at Cetus, Roche commercialized the procedure. 

In 1980 Congress passed the Bayh-Dole Act.  The Bayh-Dole Act regulates the ownership rights of federally-funded inventions between the federal government and federal contractors.  The Act applies to federally-funded “subject inventions” and allows contractors to “elect to retain title to any subject invention” by fulfilling several statutorily imposed obligations.  The Bayh-Dole Act applied to the HIV measurement technique developed by Holodniy  because the National Institute of Health (NIH) funded some of Stanford’s research related to the invention. 

 In 2005, Stanford filed suit against Roche, claiming that Roche’s HIV test kits infringed Stanford’s patents.  Roche asserted that Stanford lacked standing to sue for patent infringement because Roche was a co-owner of the HIV measurement technique pursuant to Holodniy’s.  Stanford disagreed, arguing that it had exclusive and superior rights to the invention under the Bayh-Dole Act because the research was federally funded. 

 The District Court held that the “VCA effectively assigned any rights that Holodniy had in the patented invention to Cetus” and thus to Roche.  Because of the operation of the Bayh-Dole Act, “Holodniy had no interest to assign.”  The District Court held that the Bayh-Dole Act “provides that the individual inventor may obtain title” to a federally-funded invention “only after the government and the contracting party have declined to do so.” 

On appeal, the Federal Circuit reversed the District Court and held that Stanford lacked standing because the Bayh-Dole Act did not automatically void Roche’s ownership interest in the patents in the suit.  First, the Court concluded that Holodniy’s initial agreement with Stanford and the CPA constituted a near promise to assign rights in the future, unlike Holodniy’s agreement with Cetus and the VCA which itself assigned Holodniy’s rights in the invention to Cetus.  Therefore, as a matter of contract law, Cetus obtained Holodniy’s rights in the HIV quantification technique through the VCA.  Second, the Court explained that the Bayh-Dole Act does not automatically void ab initio the inventor’s rights in government funded inventions” and that the “statutory scheme did not automatically void the patent rights that Cetus received from Holodniy.” 

In a 7-2 decision, the Supreme Court agreed with the Federal Circuit that the Bayh-Dole Act does not automatically vest title to federally-funded inventions in federal contractors or authorize contractors to unilaterally take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have.  The Act’s disposition of rights—like much of the rest of the Bayh-Dole Act—serves to clarify the order of priority of rights between the federal government and a federal contractor in a federally-funded invention that already belongs to the contractor.  Nothing more.  Only when an invention belongs to the contractor does the Bayh-Dole Act come into play.


USPTO Provides Updated Examination Guidelines In View of KSR Decision

September 3, 2010

The United States Patent and Trademark Office (USPTO) recently published updated examination guidelines regarding obviousness rejections under 35 U.S.C. §103 in light of the United States Supreme Court’s 2007 decision in KSR Int’l Co. v. Teleflex Inc.  The updated examination guidelines provide additional examples to assist in obviousness analyses stemming from post-KSR case law.  The guidelines can be found clicking here.  Comments can be emailed to KSR_Guidance@uspatent.gov


USPTO Provides Interim Guidance for Determining Patent Eligible Subject Matter in View of Bilski Decision

September 2, 2010

The United States Patent and Trademark Office (USPTO) has provided interim guidelines for determining subject matter eligibility under 35 U.S.C. §101 for process claims in view of the United States Supreme Court’s 2010 decision in Bilski v. Kappos.  The guidelines provide additional factors to aid in the determination of whether a method which fails the machine or transformation test is patentable or vice versa.  The guidelines state that §101 outcomes are not likely to change in most cases, and reminded that §101 should not be relied upon to avoid a full examination under other sections.  The guidelines outline specific factors weighing toward and against eligibility under §101.  Click here for more information on the interim guidelines. 


Case Law Update: Inequitable Conduct Law Continues to Evolve

June 30, 2010

In a recent decision, the Federal Circuit ruled a company’s patent unenforceable due to the inequitable conduct committed by the company’s non-inventor president. As background, Avid’s founder and president, Dr. Hannis Stoddard, hired three engineers to develop a product based on his idea of identifying and processing recovered animals. Dr. Stoddard was not an inventor on the patent that ultimately issued, but he did demonstrate an early version of the technology at a trade show more than a year prior to the filing date of the issued patent. This demonstration was not disclosed to the United States Patent and Trademark Office (“USPTO”) during prosecution of the patent, and Dr. Stoddard did not dispute that this information was withheld with specific intent to deceive the USPTO for the purposes of obtaining a patent. He argued that he was neither an inventor nor an attorney and therefore owed no duty of candor to the USPTO; however, the district court disagreed and found Avid’s patent unenforceable for inequitable conduct committed by Dr. Stoddard. 

The regulations governing inequitable conduct are provided by 37 C.F.R. §1.56 (“Rule 56”), which imposes a duty to disclose information to the USPTO when an individual is (1) associated with the filing and prosecution of a patent application, and (2) knows that the information in question is material. For purposes of identifying who owes a duty of candor to the USPTO, Rule 56 defines “individual(s) associated with the filing or prosecution of a patent application” as (1) each named inventor, (2) each attorney or agent that prepares or prosecutes the application, and (3) every other person who is substantively involved in the preparation or prosecution of the application and who is associated with the inventor or assignee. 37 C.F.R §1.56(c). 

Dr. Stoddard is neither an inventor nor an attorney or agent involved in the preparation or prosecution of the patent, so the issue of whether or not he owed a duty to candor to the USPTO involved an analysis of whether or not he was “substantially involved” in the preparation or prosecution of the patent, and whether or not the prior demonstration was material to patentability. 

With respect to “substantially involved,” the Federal Circuit identified a number of factors in affirming the ruling of the district court that Dr. Stoddard met this requirement. Some of these factors included his position and responsibilities in the company, his involvement in hiring the engineers/inventors to develop the product, and his communication with the inventors during prosecution of the patent in Europe. 

With respect to materiality, the Federal Circuit dismissed Avid’s argument that the demonstration was not material to the patentability of the claims even though it would not have lead to a proper §102(b) rejection by the USPTO. Indeed, the demonstration involved a preliminary product that failed to contain all of the elements of the issued patent claims. Moreover, an infringement jury was given information regarding the demonstration and still found the patent valid. However, the court reasoned that the demonstration, while not invalidating, was the closest prior art and was thus material. By doing so, the court relied on the “reasonable examiner” standard, which was written out of the old Rule 56 (i.e., prior to the 1992 amendments). The current Rule 56 is much more objective and likely would have found this demonstration non-material to patentability. 

The Federal Circuit thus affirmed the lower court’s ruling that Avid’s patent was unenforceable for inequitable conduct committed by Dr. Stoddard. This case seems to be a close call, and it certainly didn’t help that Dr. Stoddard purposefully withheld the information knowing that it would likely have some impact during prosecution. If anything, this case serves as a reminder to submit any relevant information to the USPTO even if the person aware of this information is only remotely involved in the preparation and prosecution of a patent application. 

See Avid Identification Sys. v. Crystal Import Corp., No. 09-1216 (Fed. Cir. April 27, 2010).


Case Law Update: Biotech Patents Invalidated for Failing to Disclose the Best Mode

June 30, 2010

The Federal Circuit has affirmed an International Trade Commission (ITC) decision finding two asserted patents invalid because they did not satisfy the best mode requirement of 35 U.S.C. §112.

The two patents relate to improved methods of producing L-lysine using genetically modified E. coli. (L-lysine is a dietary supplement in animal feed and has a multi-billion dollar market worldwide.) The patent disclosed one method of creating the L-lysine producing E. coli. However, before the patent applications were filed, the inventors created another, better strain. (The evidence also established that the better strain was intentionally withheld from the patent applications.)

The best mode requirement comes from 35 U.S.C. §112, which requires that the inventor disclose the preferred embodiment of the invention and any preferences that materially affect the claimed invention, but only to the extent that information is known by the inventor when an application is filed.

The patentee unsuccessfully argued that the improvements in the better E. coli strain related to other, non-patentable, improvements that were not related to the “inventive aspects” of the claimed invention.

Here, the best mode requirement was not met due to the breadth of the claims. The asserted claim recited the step of “cultivating a bacterium belonging to the genus [E. coli] … having mutation to desensitize feedback inhibition of L-lysine.” Because the scope of the claimed invention included “cultivating a bacterium,” the failure to disclose the preferred, and in one case, only bacterial strain used by the patentee to practice the claimed invention the best mode requirement was not met and the asserted patents were held invalid.

See Ajinomoto Co., Inc. v. International Trade Commission (Fed. Cir. 2010).

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