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An Intellectual Property Law Update – Practical Tips for Corporate Counsel
Steve GardnerKilpatrick Townsend & Stockton LLP
April 6, 2011
Kilpatrick Townsend & Stockton IP Practice
• Combined firm will have 640 attorneys including 300 intellectual property attorneys in 17 offices
• Combined firm will tie for the 4th largest IP practice in the United States according to December 2009 IP Law 360 survey
• More attorneys listed in Best Lawyers in America® 2011 for IP than any other firm
Atlanta, GA Oakland, CA Seattle, WA Stockholm
Augusta, GA Palo Alto, CA Walnut Creek, CA Taipei
Charlotte, NC Raleigh, NC Washington, DC Tokyo
Denver, CO San Diego, CA Winston-Salem, NC
New York, NY San Francisco, CA Dubai
Kilpatrick Townsend & Stockton IP Practice(cont.)
• Expected ranking in the top 5-10 firms nationwide in patent litigation based on ALM Patent Litigation Survey 2010
• Expected ranking in top 5 in terms of volume of patents prosecuted based on IP Today Top Patent Firms 2010
• More than 85 trademark and copyright attorneys representing some of the best known brands throughout the world
• More than 175 attorneys registered to practice before the USPTO
• Scientific and engineering degrees in virtually every discipline
About the Speaker
Steve Gardner is the co-chair of Kilpatrick Townsend & Stockton’s patent litigation group, which has been recognized as one of the top patent litigation groups in the country. Steve maintains an active practice in patent litigation, due diligence, counseling, and prosecution strategy and management. He has represented companies in patent suits in federal courts in Colorado, Delaware, the District of Columbia, Florida, Georgia, Illinois, Louisiana, Missouri, North Carolina, Ohio, Oklahoma, and Texas, including multiple cases in the Eastern District of Texas.
Steve received a BS and MS from the University of North Carolina at Charlotte. He received a JD, with honors, from the Wake Forest University School of Law, where he was editor-in-chief of the law review. He clerked for the Hon. Frank W. Bullock, Jr., Chief Judge, US District Court for the Middle District of North Carolina, 1994-1995, and the Hon. Alvin A. Schall, US Court of Appeals for the Federal Circuit, 1995-1996.
For several years, Steve has been elected to Business North Carolina magazine’s Legal Elite List as one of the top patent attorneys in North Carolina based on a survey of all members of the North Carolina bar. He is listed in the 2011 edition of The Best Lawyers in America® for intellectual property law. He currently serves as editor-in-chief of the American Bar Association’s Intellectual Property Litigation newsletter.
Overview of Presentation
• Trends useful for– Noticing developments of which you were unaware– Reinforcing with management the need for attention to
areas of which you are already aware, but have not been able to cause management to address
– Providing proactive advice to management
• Practical tips– Mostly reinforcement of good advice, but more weighty
when considering trends– Perhaps some ideas that will be new to you– Mostly general, given diversity of your companies, but
please ask questions during the discussion or at the end
Trend #1 – Intellectual Property Suits are Up
Number of patent infringement suits steady
Multi-defendant patent suits continue to rise
Number of trademark infringement suits up
Patent Suits Filed in U.S. District Courts (FY1993 - FY2010)
Source: Judicial Business of the United States Courts Annual Report of the Director, 1997-2009 available via www.uscourts.gov; 2010 (through 09/30/2010) data obtained via Administrative Office of the US Courts PACER Service Center.
Fiscal Year is measured from October 1 to September 30.
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Observations Related to Enforcement of IP Rights
• In patent cases, non-practicing entities (“NPE”) or trolls remain active
– One estimate suggests that NPEs are responsible for 1/5 of all
patent infringement filings*
• In patent related cases, filings have increased somewhat significantly
with a portion attributable to false marking cases
• Number of defendants in patent infringement suits have continued to
trend upward at a greater rate than increased number of actions
initiated
*Source: http://www.patentlyo.com/patent/2010/10/guest-post-counting-defendants-in-patent-litigation.html)
Patent Suit Filing Trend – Multiple Defendants
Data is based on Fiscal Year filings
Source: PatentlyO.com Column by Kyle Jensen based on PACER data
http://www.patentlyo.com/patent/2010/10/guest-post-counting-defendants-in-patent-litigation.html
0%
50%
100%
150%
200%
250%
300%
350%
400%
19
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% change of cases filed
% change of defendants
Trademark Suits Filed in U.S. District Courts (FY1993 - FY2010)
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1000
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4500
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Judicial Business of the United States Courts Annual Report of the Director, 1997-2009 available via www.uscourts.gov; 2010 (through 09/20/2010) data obtained via Administrative Office of the US Courts PACER Service Center.
Fiscal Year is measured from October 1 to September 30.
Trend #2 – False Patent Marking Suits are Up
Number of false patent marking suits way up
Points to Note Regarding Patent Suit Filings
• False marking cases have attributed to number of patent
cases increasing
• In the calendar year of 2010, over 585 false patent marking
suits have been filed*
– In 2009, about 25 false patent marking suits were filed
– In 2008, about 12 false patent marking suits were filed
• Most popular district is Eastern District of Texas
*Source: Joint effort with Docket Navigator and patent law blog –
http://www.grayonclaims.com/false-marking-case-information/
Trend #3 – Attention to Copyright Infringement
More attention to copyright infringement actions
Emergence of Copyright “Troll” Righthaven
• Righthaven searches for reproduced articles or content from various
news agencies then purchases the copyright from the holder
• Righthaven initiates suit against web providers
– Bloggers, website providers
– No warning, take down notices given – customary to do so in news marketplace
– Estimate of over 175 suits filed by Righthaven
• Some recent scrutiny of overreaching by Righthaven
– For example, initiating suit for reproduction of 10 or less words rather than four to
five paragraphs
Damages for Copyright Infringement
• $1.3 billion decision in Oracle and SAP copyright dispute
thought to be largest award for copyright infringement
– SAP estimated $28 to $41 million in damages
– Oracle alleged almost $3 billion in damages
• New benchmark for plaintiff counsel
Practical Tips
After a short-lived downward trend in the number of suits, intellectual
property holders are beginning to more aggressively pursue claims.
Intellectual property holders pursuing less-traditional intellectual property
claims (e.g. false marking suits) or large multi-defendant case
structure.
Be aware of trend and how trend may impact your business.
Trend #4 – Intellectual Property ApplicationFilings are Up
Greater increase than expected in United States
patent and trademark applications
United States Patent Applications Filed (FY1993 – FY2010)
Source: United States Patent and Trademark Office website, Director’s Report
Fiscal Year is measured from October 1 to September 30.
0
100000
200000
300000
400000
500000
600000
19
93
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Trademark Registration Applications Filed(FY1993 – FY2010)
Source: United States Patent and Trademark Office website, Director’s Report
Fiscal Year is measured from October 1 to September 30.
0
50000
100000
150000
200000
250000
300000
350000
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450000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Trend #5 – Average Pendency Rates at USPTO
Unfortunately, average pendency rates of patent
applications remained steady or went up
Average pendency rates of trademark registrations
have gone down
Average Pendency in Months Between Filing of Patent Application and First Action (FY2005 – FY2010)
Source: United States Patent and Trademark Office website, Director’s Report
Fiscal Year is measured from October 1 to September 30.
0
5
10
15
20
25
30
2005 2006 2007 2008 2009 2010
Total Average Pendency of Patent Application (FY2005 – FY2010)
Source: United States Patent and Trademark Office website, Director’s Report
Fiscal Year is measured from October 1 to September 30.
0
5
10
15
20
25
30
35
40
2005 2006 2007 2008 2009 2010
Average Pendency in Months Between Filing of Trademark Registration and Examiner’s First Action (FY2005 – FY2010)
Source: United States Patent and Trademark Office website, Director’s Report
Fiscal Year is measured from October 1 to September 30.
0
1
2
3
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2005 2006 2007 2008 2009 2010
Practical Tip
Your business should be aware of short average pendency
times relating to trademark from a budgeting perspective
for new filings as well as for monitoring and analyzing
your competitor’s filings.
Trend #6 – U.S. Supreme Court Activity Related to Intellectual Property
U.S. Supreme Court has continued to consider
significant issues in intellectual property law
Supreme Court: Bilski v. Kappos (2010) and Patent Eligible Subject Matter
• No per se bar of business method and computer technology patents
• “Machine-or-transformation” test is not sole test of patentability under
Section 101 for processes
– Useful test for analysis, particularly by USPTO in its examination
guidelines
– Full version of guidelines available at:
http://www.uspto.gov/patents/law/exam/bilski_guidance_27jul2010.pdf
• Limits of patentability of business methods not defined by the Court
– 4 justice minority prepared to have found the method of doing business
does not qualify as a process under Section 101
Post-Bilski -Treatment of Disputes Regarding Patent Eligibility Subject Matter
• Board of Patent Appeals and Interferences rejecting claims using
Section 101
• Ultramerical, LLC v. Hulu, LLC, Case No. 09-Cv-069180-RGK (C.D.
Cal. Aug. 13, 2010) granted a motion to dismiss under Section 101
• Prometheus v. Mayo and the Myriad case (Association for Molecular
Pathology, et al. v. USPTO) being briefed at Federal Circuit
– Appeals concerning patent-eligibility of biotechnology related product
and method claims under Section 101
Supreme Court Grant of Cert in Microsoft v. i4i Limited Partnership
• On November 29, 2010, Court granted certiorari to
consider whether invalidity must be proved by clear and
convincing evidence
– Issues include whether clear and convincing standard applies for
prior art not considered by Examiner
– Petitioner uses rationale of KSR as support of a preponderance of
the evidence standard for invalidity
• Decision expected by late June 2011
Supreme Court Consideration ofCostco Wholesale Corp v. Omega, S.A.
• Case considered question of international exhaustion of
intellectual property rights in context of copyright law
– Does first-sale doctrine apply to imported goods manufactured
abroad?
– Costco wins: undermines whole concept of price discrimination;
companies determine best price for product given what local
market is willing to pay
• Court heard oral arguments on November 8, 2010;
decision expected sometime next year
Trend #7 – Continued Fallout ofpost-Medinol era
Trademark practice continuing to adapt to fallout
associated with the end of the Medinol era
Trademark: Fraud of the USPTO
Fraud on the USPTO after Bose:
– A finding of fraud will lie only if the applicant or registrant
knowingly makes a false, material representation with the intent to
deceive;
– The record evidence and testimony necessary to support a fraud-
based challenge must be clear and convincing; and
– If an applicant or registrant does not have use of its mark in
connection with particular goods or services, it should be
permitted to “restrict” its claims to delete those goods and services
rather than risk invalidation of its entire filing.
Trademark: Fraud on the USPTO
Fallout after Bose:
– Allegations must meet Fed. R. Civ. P. 9(b) requirements –
allegations based on “information and belief” do not support claims
of fraud
– Even if some discovery conducted, subjective intent element of
fraud claim difficult to prove
– Advice of counsel can be a defense of a fraud claim
Trend #8 – Stalled Efforts of CongressionalPatent Reform
Legislative efforts regarding patent reform have
stalled in Congress
Legislative Status of Patent Reform Bill
• House and Senate bills entitled Patent Reform Act of 2010 pending (S. 515 / H.R. 1260)
– Very similar to the Reform Acts of ’05, ’07, and ’09– 2010 version described as a bipartisan effort that is the product of more than five years
of consideration– Has been recommended to be considered by Senate as a whole, but some commentators
have viewed as losing steam– No major action since March 2010 when the 2010 version of the bill was announced
• Important provisions include:– First-to-file system– False marking: propose to eliminate the right of “any person” to file such a claim;
competitive injury– Damages: some commentators view as no longer as significant as previous versions,
better situation for accused infringers, but it does not necessarily limit damage awards– Trial: splitting trial into segments, invalidity, infringement, damages, willfulness– Willful infringement– Post-grant review (cancellation-type proceedings)– Changes to patent venue statute
Trend #9 – Availability of Insurance Coverage for Certain Acts of Patent Infringement
Insurance coverage under company’s Comprehensive
General Liability Insurance policy may be available for
certain patent infringement damages
Potential Alternative Method to Cover Damages Awards
• Hyundai Motor America v. National Union Fire Insurance
Company of Pittsburgh, 600 F.3d 1092 (9th Cir. 2010)
found that third party patent infringement claims
constituted allegations of “misappropriation of advertising
ideas” for purposes of the insurance policy
– Patent owner specifically alleged violation of a method patent
involving advertising ideas
Trend #10 – Reexamination Requests and Proceedings Continue to Increase
Reexamination increasingly popular option to
assess patent validity
Reexamination Requests Filed (FY2000 – FY 2010)
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Ex parte
Inter partes
Source: United States Patent and Trademark Office website
Fiscal Year is measured from October 1 to September 30.
Patent Reexamination
• In calendar year of 2009, 31% of requests for
reexamination were filed by patent owners and 69% by
third parties
• One-fourth of the patents for which reexamination was
being requested were known to be involved in litigation
– Does not include reexamined patents involved in threatened
litigation
Patent Reexamination Statistics (FY 2010)
Ex parte Inter partes
Requests filed 780 281
Requests granted 92% 96%
Average pendency 25.5 months 36.1 months
All claims confirmed* 23% 11%
All claims canceled* 12% 47%
Some claim changes* 65% 42%
Source: United States Patent and Trademark Office website
* Based on the total reexamination certificates issued--for Ex parte: 7782; for Inter partes: 192
Inter Partes Patent Reexamination
• Inter partes reexamination permits a third party requestor
to play a more active role throughout the entire process
• In return, the third party is estopped
• Third party requestor is more motivated than the examiner
Practical Tip
Closely consider inter partes reexamination as a strategy to
determine patent validity.
