2014 Patent Litigation Year in Review Litigation ... - Fish & Richardson

January 21, 2015

Litigation Webinar Series: INSIGHTS Our take on litigation and trial developments across the U.S.

2014 Patent Litigation Year in Review

John Dragseth Principal, Twin Cities

Lauren Degnan Principal, DC

Rebecca Charnas Grant Principal, Silicon Valley 

Overview • Monthly •

3rd

Wednesday at 1pm ET

• Key Developments & Trends

• Housekeeping • CLE Contact: [email protected] • Questions

Next in Series Wednesday, February 18th 1:00 p.m. EST | Webinar International Trade Commission

INSIGHTS Litigation Webinar Series

• Materials: fishlitigationblog.com/webinars

• Next webinar – February 18th • #fishwebinar

2

Agenda Patent-Eligibility (Section 101) Update Indefiniteness Claim Construction Post-Grant Appeals Damages Pending Supreme Court and En Banc Cases

3

Patent-Eligibility (Section 101)

4

Mayo/Alice Two-Step Test: • (1) is claim directed to ineligible concept (e.g., natural phenomena/law or abstract idea), and • (2) if so, does the claim recite sufficient additional elements to make the claim one to an application of the concept, rather than to the concept itself?

Applied in Alice • (1) The concept is “intermediated settlement” • (2) The claims “merely require[d] generic computer implementation.”

New PTO Guidelines – Dec. 15, 2014 5

After Alice Federal Circuit • Decisions to kill:

6

• Merciful decisions:

1

Applied in Alice • Decisions to kill:

29

• Merciful decisions:

11

(11 of the 29 in Delaware; 10 of the 29 in N.D. Calif.) (10 of the 29 under Rule 12)

6

After Alice Valid

DDR Holdings, LLC v. Hotels.com, L.P., 2014 WL 6845152 (Fed. Cir. Dec. 5, 2014) – invention solved a problem unique to the Internet.

Invalid Content Extraction v. Wells Fargo, 2014 WL 7272219 (Fed. Cir. Dec. 23, 2014). In re BRCA1- and BRCA2-Based Hereditary Cancer Test Patent Lit., 2014 WL 7156722 (Fed. Cir. Dec. 17, 2014). Ultramercial v. Hulu, 772 F.3d 709 (Fed. Cir. Nov. 14, 2014). buySAFE v. Google, 765 F.3d 1350 (Fed. Cir. 2014) Planet Bingo v. VKGS, 576 Fed. Appx. 1005 (Fed. Cir. Aug. 26, 2014) (nonprec). Digitech Image Techs., LLC v. Electronics for Imaging, Inc., 758 F.3d 1344 (Fed. Cir. July 11, 2014). 7

Indefiniteness

8

Nautilus v. Biosig The Supreme Court’s Holding • Unanimously rejected “insolubly ambiguous” test • The new “reasonable certainty” standard: “[A] patent is invalid for indefiniteness if its claims, read in light of the specification . . . and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.”

• Court described the inquiry as a “‘delicate balance” • “On the one hand, the definiteness requirement must take into account the inherent limitations of language. Some modicum of uncertainty” is necessary • “At the same time, a patent must be precise enough to afford clear notice of what is claimed.” 9

Nautilus v. Biosig The Supreme Court’s Holding • “Insolubly ambiguous” test as not “probative of the essential inquiry.” • Stringency: “To tolerate imprecision just short of that rendering a claim ‘insolubly ambiguous’ would diminish the definiteness requirement’s publicnotice function and foster the innovation-discouraging ‘zone of uncertainty,’ against which this Court has warned.” • Focus: “[T]he definiteness inquiry trains on the understanding of a skilled artisan at the time of the patent application, not that of a court viewing matters post hoc.”

• But Federal Circuit’s “fuller explications” of the term “insolubly ambiguous” may “come close to tracking the statutory prescription.”

10

After Nautilus Federal Circuit • Indefinite:

1

• Not Indefinite:

1

District Courts • Indefinite:

12

• Not Indefinite:

42

11

After Nautilus Federal Circuit • Interval Licensing LLC v. AOL, Inc. (Fed. Cir. 2014) (Claims to displaying image in ‘an unobtrusive manner” were indefinite) • “The claims, when read in light of the specification and the prosecution history, must provide objective boundaries for those of skill in the art”

• DDR Holdings v. Hotels.com (Fed. Cir. 2014) (claims with “look and feel” term not indefinite”) • Nautilus v. Biosig remand--oral argument held in October

12

Claim Construction

13

13

Teva Pharmaceuticals v. Sandoz The Supreme Court’s Holding • 7-2 Decision overturned the Federal Circuit’s approach to applying de novo review to claim constructions by lower tribunals • No exception to “clear error” review of factual findings (FRCP 52(a))

***

14

Teva Pharmaceuticals v. Sandoz The Supreme Court’s Holding • Practical considerations supported the rule

15

Teva Pharmaceuticals v. Sandoz The Supreme Court’s Holding • How to apply the standard – De novo review still has a place • If the parties merely point to the patent itself and its prosecution history (the intrinsic evidence), review will be de novo. • If the parties point to, e.g., expert testimony about the manner in which a skilled artisan would interpret the claim language, a district court’s findings on those particular points will be reviewed for clear error—though its findings on other points may be reviewed de novo.

16

Teva Pharmaceuticals v. Sandoz The Supreme Court’s Holding • J. Thomas and J. Alito Dissent • Consider claim construction like statutory interpretation

17

Teva Pharmaceuticals v. Sandoz Strategy • Use of expert declarations and live testimony • Increase cost of claim construction • Will district courts change their practices?

• Use of dictionaries “Construction of a written instrument often presents a ‘question solely of law,’ at least when the words in those instruments are ‘used in their ordinary meaning.’ But sometimes, say when a written instrument uses ‘technical words or phrases not commonly understood,’ those words may give rise to factual disputes.” (internal citations omitted)

• Pending cases • On appeal, supplement submissions FRAP 28 • At district court, supplement the record pre- and post-ruling • Constructions reversed and remanded to district court 18

Post-Grant Appeals

19

Post-Grant Appeals St. Jude v. Volcano, 749 F.3d 1373 (Fed. Cir. 2014) • Held that petitioner cannot appeal from decision not to institute an IPR because 35 U.S.C. 314(d) says institution decisions are “final and nonappealable.” (though 314 explicitly applies only to appeals “under this section”). • Related decisions held that mandamus was also not available.

ZOLL Lifecor v. Philips, 577 Fed. Appx. 991 (Fed. Cir. Aug. 25, 2014) (non-prec) (cert. petition pending) • Lifecor argued that it was appealed under Sections 312 and 315 (which have no limits on appeal), but Fed Cir held that everything funnels through 314

In re Cuozzo Speed, No. 14-1301 (argued Nov. 3, 2014) • Asks whether a partial refusal to institute an IPR can be challenged after the full IPR ends 20

Damages

21

VirnetX v. Cisco Systems, 767 F.3d 1308 Smallest-saleable unit not enough for apportionment • VirnetX accused Apple of infringing patents based on its “FaceTime” feature in its iPhone and iPad products. Patent’s damages expert used value of entire iPhone as base because it was the “smallest salable unit.” • Federal Circuit vacated damages award • “[T]he requirement that a patentee identify damages associated with the smallest salable patent-practicing unit is simply a step toward meeting the requirement of apportionment. Where the smallest salable unit is, in fact, a multi-component product containing several non-infringing features with no relation to the patented feature . . . the patentee must do more to estimate what portion of the value of that product is attributable to the patented technology.” • “In the end, VirnetX should have identified a patent-practicing feature with a sufficiently close relation to the claimed functionality.” 22

Ericsson, Inc. v. D-Link Sys., __ F.3d __ Georgia-Pacific factors not a “talisman” • Federal Circuit held that in RAND case, district court erred in instructing jury on all 15 Georgia-Pacific Factors, including ones that are not relevant or misleading on the record before it. • “Although we have never described the Georgia–Pacific factors as a talisman for royalty rate calculations, district courts regularly turn to this 15–factor list when fashioning their jury instructions. Indeed, courts often parrot all 15 factors to the jury, even if some of those factors clearly are not relevant to the case at hand. And, often, damages experts resort to the factors to justify urging an increase or a decrease in a royalty calculation, with little explanation as to why they do so, and little reference to the facts of record.”

23

Apple v. Motorola, 757 F.3d 1286 Federal Circuit reverses Judge Posner’s exclusion of all damages evidence • “A judge must be cautious not to overstep its gatekeeping role and weigh facts, evaluate the correctness of conclusions, impose its own preferred methodology, or judge credibility, including the credibility of one expert over another. These tasks are solely reserved for the fact finder.” • “The district court erred by not considering the full scope of infringement. At no point did the court ask or consider whether Napper had used reliable principles and methods, or sufficient data, to value the entire scope of the asserted claims. Consequently, the district court incorrectly focused on individual claim limitations in isolation when evaluating the reliability of Napper's methods.” • “The district court . . . concluded that Apple was not entitled to any measure of damages because Apple had failed to show that its measure of damages was correct. We disagree and hold that a finding that a royalty estimate may suffer from factual flaws does not, by itself, support the legal conclusion that zero is a reasonable royalty”. 24

Pending Supreme Court and En Banc Federal Circuit Cases

25

Supreme Court Commil v. Cisco • Question Presented “Whether the Federal Circuit erred in holding that a defendant’s belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b)”

26

Supreme Court Kimble v. Marvell • Question Presented “Whether the Court should overrule Brulotte v. Thys” (379 U.S. 29 (1964).” • “[A] patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se” because “the free market visualized for the post-expiration period would be subject to monopoly influences that have no proper place there.” • “A patent empowers the owner to exact royalties as high as he can negotiate with the leverage of that monopoly. But to use that leverage to project those royalty payments beyond the life of the patent is analogous to an effort to enlarge the monopoly of the patent by tieing the sale or use of the patented article to the purchase or use of unpatented ones. The exaction of royalties for use of a machine after the patent has expired is an assertion of monopoly power in the post-expiration period when, as we have seen, the patent has entered the public domain.” 27

Federal Circuit Suprema v. ITC • Question presented “Whether the United States International Trade Commission (“ITC”) has authority to find a Section 337 violation—and issue an exclusion or cease and desist order—where it finds that an importer actively induced infringement of a patented invention using its imported articles but the direct infringement occurred post-importation.”

28

Federal Circuit SCA Hygiene Prods. v. First Quality Baby Prods. • Questions presented “(a) In light of the Supreme Court’s decision in Petrella v. MetroGoldwyn-Mayer, 134 S. Ct. 1962 (2014) (and considering any relevant differences between copyright and patent law), should this court’s en banc decision in A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992), be overruled so that the defense of laches is not applicable to bar a claim for damages based on patent infringement occurring within the six-year damages limitations period established by 35 U.S.C. § 286?” “(b) In light of the fact that there is no statute of limitations for claims of patent infringement and in view of Supreme Court precedent, should the defense of laches be available under some circumstances to bar an entire infringement suit for either damages or injunctive relief? See, e.g., Lane & Bodley Co. v. Locke, 150 U.S. 193 (1893).” 29

Questions?

30

INSIGHTS Litigation Webinar Series

Mark your calendar! Wednesday, February 18th International Trade Commission fishlitigationblog.com/webinars

Thank you!

John Dragseth Principal, Twin Cities [email protected] 612-337-2550

Lauren Degnan Principal, DC [email protected] 202-626-6392

Rebecca Charnas Grant Principal, Silicon Valley [email protected] 650-839-5104

Please send your NY CLE forms or questions about the webinar to Ellen at [email protected]. A replay of the webinar will be available for viewing at http://fishlitigationblog.com. 32

© Copyright 2015 Fish & Richardson P.C. These materials may be considered advertising for legal services under the laws and rules of professional conduct of the jurisdictions in which we practice. The material contained in this presentation has been gathered by the lawyers at Fish & Richardson P.C. for informational purposes only, is not intended to be legal advice and does not establish an attorney-client relationship. Legal advice of any nature should be sought from legal counsel. Unsolicited e-mails and information sent to Fish & Richardson P.C. will not be considered confidential and do not create an attorney-client relationship with Fish & Richardson P.C. or any of our attorneys. Furthermore, these communications and materials may be disclosed to others and may not receive a response. If you are not already a client of Fish & Richardson P.C., do not include any confidential information in this message. For more information about Fish & Richardson P.C. and our practices, please visit www.fr.com.

#1 Patent Litigation Firm (Corporate Counsel, 2004–2014) National Law Journal’s (NLJ) “2014 Appellate Hot List” 33