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Bowman v. Monsanto: Planting of Patented Seeds to Make a Second Generation of Seeds Infringes RoundUp Ready Patents

On Monday, the Supreme Court decided Bowman v. Monsanto and held that a farmer monsanto-logowho purchases patented seeds from a grain elevator and then plants those seeds and harvests the crop, infringes the patent. Previous cases had held farmers liable for holding over a portion of their crop for planting the next year, but those cases involved the violation of the license agreement the farmer must sign when purchasing the licensed seeds. In this case, the farmer purchased the seeds from a grain elevator with no contractual strings attached.

The result shouldn’t be a surprise, and some people even expected a unanimous opinion, which the Supreme Court issued. The issue in the case was “patent exhaustion” and it is the principle that once a patented article is the subject of an authorized sale, the owner of the article is free to use it as they see fit or resell it to another person. Patent exhaustion, however, doesn’t allow the purchaser to make copies of the patented article.

A patent doesn’t give the patent holder the right to do anything themselves (after all, there could be other patents that cover other aspects of the same product). What a patent does give is the right to exclude others from making, using, selling, offering for sale, or importing the patented article. This is much like the deed to real property that gives the owner the right to keep trespassers off, but doesn’t actually allow the owner to do any particular activity on the land (you have to look to zoning laws and permitting agencies for that).

Patent exhaustion applies to only some of that bundle of rights that the patent holder has, namely making, selling, and offering for sale the patented article that was previously bought. A person can’t make copies of the article they bought and claim that the copies don’t infringe because of patent exhaustion. In Monsanto, Bowman claimed that planting the soybeans was really just a normal use of them and their “self reproduction” was the natural result. The Court, however, saw this process of planting and harvesting as the natural way of “making” a second generation of seeds. The beans Bowman bought from the elevator could have been resold, used for animal or human food products, or even used as a feedstock for bio-fuel.

The question that then comes up is how does a farmer ever plant patented seeds without infringing the relevant patents? The answer is actually pretty simple and has been used by Monsanto and other seed companies for decades. When purchasing seeds (which of course comes with the right to resell or use them for feed) farmers must sign a license agreement granting them the right to “make” one descendent generation by planting. That descendent generation may then be sold or used but not planted.

This really is the same outcome that would be expected in other technology areas where a purchaser can freely use or resell the product, but not replicate it. The difference here is the self replicating nature of biological organisms.

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Facebook Sued for Patent Infringement – Will Their Lawyers be Sued for Malpractice Next?

Facebook has been sued by Rembrandt Social Medial, LP for patent infringement. Rembrandt Social Media doesn’t run a social media site, but was created by Rembrandt facebook_logoIP Management, LLC, with the family of the deceased inventor of the patents and the inventor’s company Aduna. According to the complaint Rembrant works “to help inventors and patent owners, who often do not have the requisite capital or expertise, enforce their rights against companies that use their inventions without paying for them.” In other words, Rembrandt is a Non-Practicing Entity – what some people call a patent troll.

Rembrandt alleges infringement of two U.S. patents: the ‘362 Patent and the ‘316 Patent. Both patents have filing dates back to 1998.  The ‘316 Patent discloses a personalized web diary that can be shared with other users. The ‘362 Patent relates to the features such as the “Like” and “Share” buttons.

Beyond the patent infringement allegations, the complaint also alleges a potential conflict of interest for the patent attorneys who prosecuted the cases. According to Rembrandt, the law firm that represented the inventor in prosecuting the patents began prosecuting applications for Facebook in 2008. The law firm then continued to represent both Facebook and Aduna until July of 2012 when the law firm terminated its relationship with Aduna.

The case probably looks worse for the law firm than it really is. The Aduna patents issued in 2003 and the law firm’s involvement was likely limited to the docketing and and paying of maintenance fees. While it can’t be determined from the complaint, the law firm may have only discovered the relationship of the subject matter in June 2012, when Facebook acquired a patent in which the ‘362 Patent was cited as prior art.

There isn’t enough information in the complaint to gauge the severity of the conflict, or if there really is one. It does, however, show the potential for “subject matter conflicts” to develop into direct conflicts among clients.

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SCOTUS will Review Reverse Payment Cases

The Supreme Court has granted Certiorari in FTC v. Watson Pharmaceuticals. In this case, a brand name drug manufacturer paid a generic to stay out of the market in order to settle a patent infringement litigation. The question presented is:

Whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud (as the court below held), or instead are presumptively anticompetitive and unlawful (as the Third Circuit has held).

There has been a lot of buzz over the last few months related to reverse payments used to settle patent litigation. I wrote about the Third Circuit case earlier this year and provide some more detailed background here. These settlements are peculiar to the generic/brand name drug arena and arise from the Hatch/Waxman act.

Until this summer, virtually every appeals court had held that such settlements did not violate anti-trust laws. The courts had tested such agreements with a “scope of the patent” test that looked to see if the agreement impermissibly extended the exclusionary effect of the patent beyond those to which the patent owner is entitled. Under this test, the settlement agreement will only be thrown out if the litigation was a sham, or the patentee obtained the patent by fraud. This is a very high standard to invalidate a settlement agreement and every major case I’ve seen upheld the reverse payments.

However, last summer, the Third Circuit came to a different conclusion. In In Re: K-Dur Antitrust Litigation, the court held that reverse payments are presumptively anti-competitive and the parties must show that either the payment was not for the purpose of delaying market entry by the generic manufacturer or that the agreement offers some pro-competitive benefit. This puts the burden on the drug manufactures and would likely result in more of these agreements being challenged and invalidated.

This decision by the Third Circuit produced the first circuit split on the issue. Oral arguments will likely be held this spring or summer.

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Apple v. Samsung: Claim Construction at the Federal Circuit

Last month, the Court of Appeals for the Federal Circuit dealt a blow to Apple in its battle with Samsung. Procedurally, Judge Koh in the District Court for the Northern District of California had issued a preliminary injunction that blocked sales of Samsung’s Galaxy Nexus smartphone based on likely infringement of an Apple patent. Samsung was appealing that injunction.

U.S. Pat. No. 8,086,604, “Universal Interface for Retrieval of Information in a Computer System”

Preliminary injunctions are issued before the case is ultimately decided, and one requirement of a preliminary injunction is a finding that the patent owner has a likelihood to succeed on the merits of their suit. Part of the analysis required is a construction of the claims that are being asserted. In this case, Judge Koh read the claims in a way that would likely have lead to a finding of infringement by Samsung. The Federal Circuit, however, disagreed and held that a more restrictive claim construction was appropriate. With the narrower construction, Apple was not likely to win so the injunction was vacated.

This happened a month ago so I’m not trying to report a news story. Rather, I want to lay out the claim language at issue and help people understand how the process works. Personally, I agree with the Federal Circuit’s interpretation and I think the case is informative for attorneys who draft claims and clients who review them before filing. I’ve written before on the power of narrow claims, and this case emphasizes the problems associated with ambiguity in claim language.

The claim at issue was to searching on a device, such as a mobile device. The claim requires that the device comprise “a plurality of heuristic modules” that are used in searching. “Comprising” is an open ended transitional phrase in patent claims. That means that additional limitations and features may be present in an infringing device, but if that device includes all the limitations of the claim, it will still infringe.

The claim then goes on to say, “each heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm.” Apple and Samsung had different ideas about what this language should mean. Apple argued that “each heuristic module” refers to the individual modules encompassed by the “plurality of heuristic modules” recited earlier in the claim while Samsung argued that “each heuristic module” refers to each module used by the device.

While that may sound like a small variation, it is the difference between infringing the Apple patent, or not. Under Samsung’s interpretation, each and every heuristic module used by the device must have its own predetermined algorithm that is different from all the others and each one must correspond to a different area of search. Samsung’s search used multiple heuristics, but some used an identical algorithm for different areas of search. Accordingly, the addition of those heuristics would avoid infringement despite the “comprising” transitional phrase used in the claim.

The Federal Circuit agreed with Samsung and went so far as to provide guidance to patent drafters on how to avoid such a construction. The Federal Circuit suggests that changing the language to “each of the plurality of heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm” would have avoided the problem for Apple. In conjunction with the “comprising” transitional phrase, this would have been interpreted as requiring a set of multiple heuristic modules, each of which corresponded to an area of search and each with a predetermined and different algorithm. The addition of heuristic modules that did not meet that requirement would not have mattered.

This whole issue sounds esoteric, but the language used by the Federal Circuit is how I draft claims and it’s because of the ambiguity that would otherwise exist. When you draft a claim, you must look at it from a variety of angles and decided if there are any reasonable interpretations that could be reached that would not be consistent with what the client wants to protect. I learned this practice drafting chemical cases where we wanted to keep a competitor from avoiding infringement by adding another compound to a formulation. It translates to other areas, even simple mechanical devices where I’ve used similar language.

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Patent Litigation Rates: What They Tell Us and What They Don’t

Over the course of the last week, I’ve come across two blog posts, via my twitter feed, that show opposite views on patent litigation. The first takes the position that patent troll litigation is rampant and stifling innovation, especially for startups. The title, “Numbers Don’t Lie: Patent Trolls are a Plague” sums up the author’s position nicely. However, the piece doesn’t paint a very comprehensive picture.

The numbers referred to are those based on a survey by Colleen Chien of Santa Clara University – School of Law. Prof. Chien notes that 40% of respondents stated that troll activities had had a significant impact on the startup’s operations. However, the fact that patents are asserted against emerging businesses more often than others shouldn’t come as a surprise. After all, if a company is arguably infringing a patent as part of its core business, it would be expected that the issue would come up earlier in the company life cycle. These numbers could be skewed relative to the economy as a whole.

The second article takes another tack as you can see from the equally suggestive title, “The ‘Patent Litigation Explosion’ Canard.” As you can guess, the author, Prof. Adam Mossoff, disagrees with the idea that there is a “Patent Litigation Explosion” going on. This piece discusses patent litigation rates (measured as a percentage of issued patents litigated). From 1790 to 1860 the rate averages 1.65%. From 2000-2009, it was 1.5%.

I’m inclined to think the litigation rates over time to be a better indicator of the growth of patent litigation than a survey of startups. To be honest, I was skeptical of the litigation rates, not that they are inaccurate, but they may not be very meaningful if the number of patents issued relative to GDP has gone up. My assumption was that the number of patents issued per billion dollars of GDP would have grown and that the a constant litigation rate would actually mean an overall increase in patent litigation relative to GDP. That assumption was wrong.

First I looked to the USPTO data regarding patents issued. Here is a chart for patents issued each year from 1963 to 2011.

The “ups” and “downs” unsurprisingly correlate to the general state of the economy as fewer patents issue during and after economic downturns. However, I was interested in the number of patents issued per billion dollars in GDP. I used real GDP data (GDP adjusted for inflation) and the number of utility patents issued for each year from 1963 to 2011. So, I simply divided the number of patents issued in a given year by the inflation adjusted GDP that year. The following chart shows what I found:

While there is a lot of variation, the overall trend appears relatively flat. The average number of patents issued per billion dollars of GDP from 1963 to 2011 was 13.00, and a significant portion of the last decade was below that. Accordingly, the litigation rates referenced by Prof. Mossoff are informative and it appears that there has not been a significant increase in patent litigation, relative to GDP.

Of course, this is only part of the story. Calculating litigation rates as a function of the number of patents issued in a particular year doesn’t necessarily correlate to the number of patents in force (i.e. issued and with all relevant maintenance fees paid that have not yet expired) for that year, but it is, perhaps, a leading indicator of the number of patents that will be in-force in years to come. Such a calculation, however, is easier to make and is likely a reasonable starting point.

Another issue is that these numbers doesn’t tell us the economic impact of patent litigation. While the number of cases relative to GDP is steady, the average price tag (damages, attorney’s fees, etc) associated with a patent litigation may have grown relative to GDP, or there may have been a significant increase in licenses entered before a complaint is filed. However, I haven’t seen any data to show that either of those things has happened.

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Apple Scores a Big Jury Verdict Against Samsung, But What About an Injunction?

There are some very good summaries of the Jury verdict, and there is also a lot of speculation about what happens now that the jury found various Samsung patents infringe Apples patents and trade dress. The jury’s verdict form shows how they answered the various IP claims. In summary, all of Apple’s and Samsung’s patents (utility and design) were found valid. However, none of Samsung’s patents were infringed and the vast majority of Apples were. However, the jury form also gives a some indications of what may happen next in this case.

While a lot will be written in the next week on pending appeals and cross appeals, motions for judgement notwithstanding the verdict (JNOV), and other post trial maneuvers, Judge Koh will also have to decide if she will award an injunction preventing future sales and imports of the infringing products. Injunctions are imposed as an equitable remedy by the judge, not the jury. In deciding whether or not to grant an injunction in patent cases, federal judges must apply the eBay factors, named for the 2006 eBay v. MercExchange case in which the Supreme Court clarified the factors that must be weighed. Those factors that a plaintiff must demonstrate include:

(1) that it has suffered an irreparable injury;

(2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury;

(3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and

(4) that the public interest would not be disserved by a permanent injunction.

Since that case, courts have been more reluctant to grant permanent injunctions at the end of a patent trial. One reason cited for the decline in injunctions is that the presumption of irreparable harm is dead. This case is a bit different though.

In addition to the patents infringed, Samsung was found to both infringe and dilute Apples iPhone trade dress (both registered and unregistered). The strength of Apple’s trade dress is in its distinctiveness and Apple’s continued use of it. Trade dress protection is only available so long as the trade dress serves as a source identifier for the product. If another manufacturer can sell goods that infringe or dilute Apple’s trade dress going forward, that would likely do irreparable harm to Apples trade dress rights against other parties.

In this case, there is significant overlap between the design patents and Apple’s trade dress. There is even an arguable overlap between the utility patents and trade dress as the rebounding scroll lists covered by some of the utility patents are part of the look and fee of the various iOS devices. In this unique case, Apple is in a position to argue that failing to provide a permanent injunction would pose an irreparable harm to Apples other intellectual property, namely it’s trade dress.

My personal feeling is that Apple has a better than average chance of obtaining a permanent injunction. Whether the rationale behind it will be based solely on the patents, trade dress, or a combination where the various forms of intellectual property reinforce a showing of irreparable harm will be interesting to see. Keep in mind, that while it isn’t a slam dunk, Judge Koh did show a willingness to impose a preliminary injunction early in the case.

As it stands now, Apple will file its motion and brief on August 29, Samsung will reply on or before September 12 (the rumored launch date of the iPhone 5), and a hearing before Judge Koh will be held on September 20.

UPDATED: Judge Koh, has scheduled the hearing for Decmeber 6.

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A Review of the Legal Claims in Apple v. Samsung: Utility Patent Infringement

Friday was the last day of evidence in the Apple v. Samsung case. Closing arguments will likely be on Tuesday week and then the jury will get the case. I posted earlier on the trade dress and design patent claims Apple has made against Samsung in Apple’s complaint. In this post I’ll focus on Apple’s utility patents.

Unlike design patents and trade dress, utility patents protect useful articles and methods. Here is a list of the patents originally asserted by Apple in its Complaint:

With over a year of pretrial motions, hearings, and orders, the list of asserted patents has been whittled down to three: the ‘163, ‘381, and ‘915 patents. These patents relate to various features of the iOS UI including pinch to zoom, rebounding list scrolling, and rebounding scrolling on the home screen, respectively. These patents are not so broad as to block any competing smartphone. If fact, earlier versions of the Android operating system did not include rebounding scrolling and

In preparation for closing arguments, Apple prepared and filed a chart outlining which Samsung devices were accused of infringing Apples various patents.

Samsung is arguing that the patents are not valid because the features claimed were already known when Apple filed its patent applications.

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A Review of the Legal Claims in Apple v. Samsung: Design Patent Infringement

Today should be the last day of evidence in the Apple v. Samsung case. Closing arguments will likely be on Tuesday next week and then the jury will get the case. I posted earlier on the trade dress claims Apple has against Samsung that are in Apple’s complaint. In this post I’ll focus on Apple’s three asserted design patents related to the iPhone.

Design patents protect the appearance of an article rather than the functional features. Here is a table with the design patents and their titles:

Design Patent Table from Apple’s complaint

When looking at a design patent, the solid lines show what is claimed and protected. Broken lines provide context but don’t limit the patent. So, while the D677 patent shows the iPhone 4, only the front screen area is in solid lines, so the side buttons and other features don’t restrict the scope of the patent. Similarly, the D790 patent claims the GUI. Only the icons and rectangular touch screen limit the scope of the patent. Below is a table comparing the Samsung Galaxy to these three patents:

Apple’s design patent comparison to Samsung’s Galaxy from Apple’s complaint

Samsung is attacking the validity of these design patents by trying to show that phones with the claimed design elements were publicly known prior to the filing of the applications that issued as these patents. Samsung can also avoid liability if they convince the jury that the design features are functional rather than aesthetic.

One thing Samsung won’t be able to rely on is an argument that they independently developed their own design. In copyright cases a defendant can avoid a claim of infringement if they came up with the material without any reference to the copyrighted material. That is because copyright law protects against, as the name suggests, copying. Patent law, however, doesn’t allow for a defense of independent development.

From what I’ve read so far, Samsung isn’t spending much time arguing that their designs are not similar to Apple’s, but are attacking the validity of the design patents. The jury will get to decide that issue.

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A Review of the Legal Claims in Apple v. Samsung: Trade Dress Infringement

Two weeks into the Apple v. Samsung trial, there have been some very interesting stories to come out. From lawyers being scolded for making press releases and not having their court admission ducks in a row to evidentiary rulings on the admissibility of evidence of independent development. These stories are interesting in their own right, but I think it would be helpful to see how they relate to the endgame of the litigation. That endgame is actually spelled out, from Apple’s point of view, in the first document filed in the case: the complaint.

Complaints are the legal pleadings that start the ball rolling in a case and can provide a basis for understanding why the parties do what they do. For example, in an earlier post I wrote why certain evidence of independent development was not admitted, much to the chagrin of some tech bloggers and the general public. Unfortunately, I haven’t see a simple dissection of the claims in the complaint.

With that in mind, I’m going to go through the claims in the complaint that relate to IP issues. I’ll leave the other state claims, like unjust enrichment, aside as the facts needed to prove them are similar to the IP issues, but they are likely being plead to provide different damages theories. In this post, I’ll focus on trade dress infringement.

Trade Dress Infringement

There are two types of protectable trade dress: product configuration (which protects the product itself), and product packaging. Apple describes it’s iPhone product configuration as it’s “distinctive shape and appearance — a flat rectangular shape with rounded corners, a metallic edge, a large display screen bordered at the top and bottom with substantial black segments, and a selection of colorful square icons with rounded corners that mirror the rounded corners of the iPhone itself, and which are the embodiment of Apple’s innovative iPhone user interface.”

Apple also alleges that the product packaging of the Samsung GalaxyS infringes the packaging trade dress of the iPhone. Below are the images provided in the complaint.

Product packaging is generally more susceptible to trade dress protection than product configuration. This is because physical attributes of a product are often functional and functional aspects are not protectable as trade dress. To limit the scope of product configuration trade dress protection, it is only available for product designs that have become become distinctive as a result of an acquired secondary meaning. That is, the design must evoke, in the mind of the consumer, a particular source of the product.

There are also two statutory mechanisms for recover for trade dress infringement. The Lanham act codified common law principles of trademark and unfair competition and allows for federal suits in cases involving unregistered trade dress. The Act also allows for registered trade dress. The legal difference is that a registered trade dress is likely entitled to some presumption of protectability, but the damages and equitable relief available are roughly the same.

However, having a protectable trade dress isn’t enough. Apple will have to show that Samsung’s product configuration and/or packaging are confusingly similar to Apple’s. It’s important to note that the gauge for confusion is the relevant consumer. While tech bloggers may not confuse the two, the question really is if a typical consumer would.

Next up, I will provide a little background for the utility and design patent infringement allegations in Apple’s complaint.

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Legislation Limiting Certain Design Patents Hits the House: The PARTS Act

I recently wrote on the power of design patents but now they are under attack, at least in one industry. Reps. Darrell Issa (R-CA) and Zoe Lofgren (D-CA) introduced a bill to be known as the PARTS Act to the House on February 2, 2012 and it had a subcommittee hearing on August 1. Gene Quinn of ipwatchdog.com does a good job of connecting the dots from the witnesses at the subcommittee hearing to vehicle insurance trade groups. The bill would retroactively remove design patent protection for automotive replacement parts. This isn’t about engine components, but rather body panels and interior components that are designed for not just a function but an aesthetic.

With respect to a design patent that claims a component part of a motor vehicle as originally manufactured —

(A) it shall not be an act of infringement of such design patent to make or offer to sell within the United States, or import into the United States, any article of manufacture that is similar or the same in appearance to the component part that is claimed in such design patent if the purpose of such article of manufacture is for the repair of a motor vehicle so as to restore such vehicle to its appearance as originally manufactured; and

(B) after the expiration of a period of 30 months beginning on the first day on which any such component part is first offered to the public for sale as part of a motor vehicle in any country, it shall not be an act of infringement of such design patent to use or sell within the United States any article of manufacture that is similar or the same in appearance to the component part that is claimed in such design patent if the purpose of such article of manufacture is for the repair of a motor vehicle so as to restore such vehicle to its appearance as originally manufactured.

While these patents can protect the appearance of a particular model, automotive companies and their suppliers also pursue design patents on these components to protect their position in the replacement part market. While they could pursue protection on the entire vehicle appearance, typical body repairs involve only one or two body panels. Accordingly, it’s advantageous to obtain a design patent on each new panel design independent of the others.

Under current law, a design patent may be obtained that will have a 14 year term from the date of issue. That effectively covers the life of many cars. The result of the bill would be a wholesale devaluing (really an elimination of value) for design patents already issued in this area. Replacement parts manufacturers would be able to immediately start producing and marketing exact copies of the OEM panels. Two and a half years after the first offer for sale of a vehicle having the patented part, anyone could sell or use the copies.

While this could conceivably reduce repair costs (a boon to car insurance companies) it will also reduce the return on investments in new vehicle design and body styles. There are pros and cons to the concept of trying to increase competition in a particular market, but immediately devaluing design patents is not the way to promote competition in the area.

Like the SHIELD Act, the PARTS Act targets a specific industry and aims to weaken patents in those industries. It seems that efforts to weaken intellectual property protection in the United States are moving away from comprehensive changes and are instead being applied to specific industries.