The U.S. International Trade Commission (ITC) recently released the public version of its decision in an investigation of whether Arista infringes Cisco patents, rejecting Arista’s defense and public interest arguments that the patents allegedly cover a de facto standard and are subject to a FRAND obligation. Arista’s defense was based on Cisco’s submission to IETF of a request for comments document (RFC 5517), which stated it was not a standard, along with a commitment by Cisco to license patents on FRAND terms IF (1) RFC 5517 was adopted as a standard AND (2) the patents are essential to practice such standard. The ITC rejected Arista’s de facto standard defense because, among other things, there was no evidence that RFC 5517 was adopted as an industry standard or that the patents-in-suit covered RFC 5517, both of which were preconditions under Cisco’s commitment to IETF before triggering a FRAND obligation. Continue Reading ITC rejects de facto standard defense (337-TA-944, Cisco v. Arista)
Judge Payne recently denied a request to proceed with all of the parties’ alleged FRAND-obligated standard essential patents in the same case, disappointing counterclaimants who had wanted to resolve together the single controversy over each of the parties’ standard essential patents. Huawei brought suit asserting patents alleged to be essential to 3GPP LTE standards and subject to a FRAND obligation. Nokia filed a counterclaim against Huawei on patents that also were alleged to be essential to 3GPP LTE standards and subject to a FRAND obligation. Judge Payne decided that it would be more efficient to proceed with the Huawei and Nokia patents in their own separate cases, rather than together. Continue Reading Judge Payne severs each parties’ SEPs into separate cases (Huawei v. Nokia)
Today, in The Medicines Co. v. Hospira, the Federal Circuit en banc unanimously ruled that “a contract manufacturer’s sale to the inventor of manufacturing services where neither title to the embodiments nor the right to market the same passes to the supplier does not constitute an invalidating sale under § 102(b).”
This case provides a good review of the on-sale bar and circumstances that may or may not constitute a sale that would trigger it. The decision is based on § 102(b) as it existed before amendment in 2011 under the America Invents Act (AIA); but the decision may guide applying the on-sale bar under AIA § 102(a)(1) to patents that are subject to the amended provision–i.e., patents’ whose claims have an effective filing date on or after March 16, 2013. Continue Reading En banc Federal Circuit clarifies what constitutes a “sale” triggering the on-sale bar (MedCo v. Hospira)
Today, the U.S. Supreme Court decided to review the Federal Circuit’s ruling of infringement under 35 U.S § 271(f)(1) based on supplying from the United States a component of a patented invention. This case may provide the Supreme Court’s view of whether and to what extent a single component may be “a substantial portion of the components of a patented invention” under § 271(f)(1). Continue Reading Supreme Court to review § 271(f)(1) liability for exporting a component of a patented invention (Life Tech v. Promega)
Today the Supreme Court issued its awaited Cuozzo decision and gave strong deference to the U.S. Patent & Trademark Office (“Patent Office”) power (1) to make an unappealable determination to institute inter partes review (IPR) of an issued patent and (2) to make both procedural and substantive rules governing the IPR process, including what standard the Patent Office wants to use when construing patent claims in an IPR proceeding. The Court’s ruling on the specific Patent Office IPR regulations at issue here was generally expected. The broader impact of the decision may be the Court’s indication of how much power Congress gave the Patent Office to regulate IPRs. Continue Reading Supreme Court confirms Patent Office’s power to regulate inter partes reviews (Cuozzo v. Lee)
Today, the Supreme Court issued an opinion that replaces the Federal Circuit’s strict Seagate test for enhanced patent damages with a test that is easier for patent owners to meet. Relying extensively on the Court’s recent Octane and Highmark decisions that created an easier standard to receive attorney fees in exceptional patent cases, the Supreme Court ruled as follows:
- Eliminated Seagate’s objective recklessness prong (that avoided an accused infringer’s subjective belief) and focused on a subjective basis for enhancing damages given an infringer’s egregious conduct in the particular circumstances of the case, which behavior goes beyond what is found in a typical patent case.
- Lowered the patent owner’s burden of proof from the “clear and convincing evidence” standard to the lower “preponderance of the evidence” standard generally applied to infringement.
- Adopted a simple “abuse of discretion” standard of review that requires the Federal Circuit to defer more to the district court’s decision whether to enhance damages.
Judge Breyer’s concurring opinion explains his understanding of today’s decision and the limits on enhancing damages. He sought to avoid the perception that the decision reverts back to pre-Seagate law where costly opinions of counsel were sought upon simply receiving notice of a patent and much litigation centered around such opinions and waiving privilege by relying on them. Continue Reading Supreme Court ruling increases patent owners’ ability to get enhanced damages (Halo v. Pulse)
Yesterday, Judge Andrews in the District of Delaware issued an Order that denied InterDigital’s motion to dismiss Microsoft’s Complaint that alleged violation of antitrust laws based on InterDigital’s enforcement of patents alleged to be essential to 3G and 4G cellular ETSI standards and subject to commitments to license on fair, reasonable and non-discriminatory (“FRAND”) terms. At this early procedural stage of the case, the issue was not whether Microsoft would prevail in the case or whether the allegations in the Complaint were true; rather, at this initial case stage Judge Andrews considered whether Microsoft had stated “plausible” claims against InterDigital upon which relief could be granted if what Microsoft alleged in the Complaint was true when viewing the Complaint in a light most favorable to Microsoft. He decided that was the case and is allowing the case to proceed.
This ruling itself is not necessarily important as a precedential matter given the relatively low threshold for surviving a motion to dismiss and inability to challenge the factual assertions, but this will be an interesting case to follow as it matures because it is one of the few contemporary instances of a U.S. court considering the application of competition law to standard essential patents (“SEPs”) with sophisticated parties on both sides of the issue. Continue Reading Judge Andrews permits Microsoft’s SEP-based antitrust claims against InterDigital to proceed (Microsoft v. InterDigital)
You will soon see a new and improved Essential Patent Blog. Let us know if there are features about the blog you would like to see, change or omit. One of the blog features under review is our “Resources” section where we list scholarly papers, articles and other resources dealing with standard essential patents. We want to update that list of resources. So please let us know if you have a paper or other resources that would warrant posting as a “Resource”.
For example, we just added papers submitted for an AIPLA presentation a few weeks ago on litigating standard essential patents at the U.S. International Trade Commission (ITC), where we discussed the ITC as a unique agency and unique procedural issues in litigating SEPs at the ITC.
Last week, the Federal Circuit en banc ruled that the sale of a product abroad by a U.S. patent holder (or others) does not exhaust the patent owner’s U.S. patent rights, such as the right to exclude sale or importation of that product within the United States. Further, the Federal Circuit ruled that, when a U.S. patent holder sells a product with expressed restrictions on resale or reuse of that product, the patent exhaustion doctrine does not preclude the patent owner from exercising its right to exclude resale or reuse of that product. The Federal Circuit summarized its ruling as follows:
We hold that, when a patentee sells a patented article under otherwise-proper restrictions on resale and reuse communicated to the buyer at the time of the sale, the patentee does not confer authority on the buyer to engage in the prohibited resale or reuse. The patentee does not exhaust its § 271 rights to charge the buyer who engages in those acts–or downstream buyers having knowledge of the restrictions–with infringement. We also hold that a foreign sale of a U.S.-patented article, when made by or with the approval of the U.S. patentee, does not exhaust the patentee’s U.S. patent rights in the article sold, even when no reservation of rights accompanies the sale. Loss of U.S. patent rights based on a foreign sale remains a matter of express or implied license.
This is a lengthy decision that provides insight into the Federal Circuit’s view of not only the patent exhaustion doctrine, but the fundamental patent right to exclude and extraterritorial limits that preclude U.S. law from reaching into other countries and, importantly, that precludes laws of other country’s from limiting U.S. patent rights. Continue Reading Federal Circuit rules sale abroad does not exhaust U.S. patent rights (Lexmark v. Impression)
Last week, the Federal Circuit denied en banc review by the entire court of the three-judge panel decision in the Apple v. Samsung case that had revived the ability to obtain injunctive relief against multiple component products, such as smartphones (see our Sep. 17, 2015 post). In doing so, the original three-judge panel (Prost, Moore and Reyna) issued an Order that withdrew their original opinion and issued a revised opinion that focuses on the patented feature being “one of several [features] that cause consumers to make their purchasing decision,” rather than the patented feature having to be “the exclusive or significant driver of customer demand” as prior decisions had intimated.