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Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 1 Patent Litigation for Business.

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Presentation on theme: "Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 1 Patent Litigation for Business."— Presentation transcript:

1 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 1 Patent Litigation for Business People Presented by William “Skip” Fisher Christopher J. Lewis Johnathan E. Mansfield Schwabe, Williamson & Wyatt Pacwest Center 1211 SW 5th Avenue Portland, OR September 28, 2006

2 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 2 Intellectual Property Schwabe, Williamson & Wyatt has one of the largest intellectual property practices in the Pacific Northwest. The firm has a long history of assisting large corporations, small and medium-sized businesses, and individuals in securing, protecting, and exploiting their intellectual property rights, both in the U.S. and in other countries. Our intellectual property and patent attorneys – many of whom have years of science and technical education and experience – provide a full range of services in patent, trade secret, trademark, and copyright matters, including counseling, prosecution, litigation, dispute resolution, licensing, and technology transfer. We are one of only a few firms in the region that offers both patent prosecution and patent litigation services. Our lawyers are intellectual property strategists and fully appreciate that intellectual property is often a crucial business asset. We serve in the role of trusted advisor to our clients, from the early planning stages, through development and commercialization, to licensing and sale. We are capable of handling virtually any intellectual property matter that arises in our clients’ business, including enforcing their intellectual property rights through litigation or defending them against infringement claims. Schwabe, Williamson & Wyatt’s Intellectual Property Practice Group serves clients in a wide range of industries, including information, mobile telephony, electronics, software, telecommunications, e-commerce, semiconductor, biotechnology, medical devices, media and entertainment, and consumer products. Schwabe, Williamson & Wyatt’s intellectual property services include: Litigation, Patents, Trademarks and Copyrights and Trade Secrets and Unfair Competition.

3 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 3 William "Skip" Fisher Shareholder, Seattle Office Bill "Skip" Fisher is a member of Schwabe, Williamson & Wyatt's rapidly expanding intellectual property (IP) practice group. Mr. Fisher’s practice focuses on IP counseling and dispute resolution in all areas of IP, including patents, trade secrets, trademarks, copyright, and unfair competition. He has handled high-stakes IP and commercial cases for clients large and small in diverse industries, including complex patent matters involving various hardware, software, and mechanical technologies. Mr. Fisher has a unique focus on China and China IP law, is a frequent speaker on the topic, and is one of the few U.S. lawyers who has spent time in China practicing in this area (e.g., managing the litigation and administrative enforcement of IP rights). He regularly counsels clients on a variety of domestic and international IP matters, including their rights and obligations under U.S. and China IP laws, the procurement of IP rights at home and abroad, IP enforcement and dispute resolution, licensing and technology transfer, and strategic IP risk management. He is proficient in Mandarin Chinese. Prior to joining Schwabe, Mr. Fisher was with the international law firm Lovells in its Shanghai, China office and with Perkins Coie in Seattle, Washington. He was selected as a “Rising Star of Washington Law” by Washington Law & Politics for three consecutive years beginning in You may contact Mr. Fisher at , or

4 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 4 Christopher J. Lewis Shareholder, Portland Office Mr. Lewis’ practice focus is primarily in three areas: 1) patent prosecution, with experience in chemical, mechanical and electrical based patents; 2) intellectual property litigation, with an emphasis on patent litigation; and 3) assisting clients with patent portfolio strategy and management. Prior to joining the firm, Mr. Lewis worked in Intel Corporation's Corporate Licensing Group, where he assisted in value licensing and patent portfolio management. Mr. Lewis was also a law clerk for the Oregon Department of Justice, Civil Recovery Division in Portland, Oregon, and for the Honorable James R. Michaud, Bonner County District Court, Sandpoint, Idaho. In law school, Mr. Lewis served as the Current Materials Editor for the nationally published journal, Environmental Law. You may contact Mr. Lewis at , or

5 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 5 Johnathan E. Mansfield Shareholder, Portland/Seattle Office Mr. Mansfield is a shareholder in the firm’s Intellectual Property and Patent Law practice group, focusing on intellectual property litigation and business, including patent, trade secret, trademark, copyright, and other intellectual property cases. He advises trade associations in technology industries as well as in other business sectors, on issues including formation, governance, and antitrust. Mr. Mansfield also advises companies on food and drug matters, including food and dietary supplement labeling. Mr. Mansfield has had extensive litigation experience involving a variety of hardware and software technologies, and has litigated in numerous federal and state courts, at both the trial and appellate level. He is known for his advocacy skills, in particular, his ability to help judges and juries understand complex technical issues. Before joining Schwabe, Mr. Mansfield practiced intellectual property litigation with Morrison & Foerster in San Francisco. After graduation from Cornell Law School, Mr. Mansfield clerked for the Honorable Conrad K. Cyr, United States Court of Appeals for the First Circuit, in Maine. While at Cornell, he served as the Articles Editor for the Cornell Law Review. You may contact Mr. Mansfield at , or

6 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 6 Patent Litigation Seminar for Business People September 28, 2006 Portland, OR

7 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 7 Program Overview Patent litigation overview Preemptive strategies and alternatives to litigation Demand letters and opinions of counsel Patent litigation costs and budgeting International aspects of patent litigation Current trends and patent reform

8 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 8 Patent Litigation Overview Christopher J. Lewis

9 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 9 Patent Basics Patent Types –Utility: new, useful and non-obvious –Design: ornamental features Parts –Written Description –Claims – deed to property rights Right to exclude others –Making, using, selling/offering to sell, or importing –Patentee does not need to sell Term –20 years from the date of filing –>6/8/95 – option of 17 years from the date of issue

10 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 10 Patent Litigation Statistics < 1% of issued patents get litigated ~7% go to Trial ~17% resolved by the court prior to trial ~76% settle prior to trial ~1.8 year average case pendency ~ % reversal rate of trial court’s claim construction

11 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 11 Potential Parties Plaintiffs –Patentee –Assignee –Exclusive licensee – substantially all rights –Potential infringer (Declaratory Judgment action) Defendants –Anyone who makes, uses, offers and/or sells or imports a patented invention without permission –Anyone who actively induces or contributes to direct infringement –Patentee/assignee

12 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 12 General Requirements –Valid patent –Infringement or threat/apprehension of suit –Rule 11 – good faith belief Constitutional Requirements –Subject matter jurisdiction – exclusive federal jurisdiction for patent infringement suits –Personal jurisdiction – minimum contacts –Venue – convenient forum Pre-litigation Considerations

13 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 13 Pre-litigation (cont.) Recommendations –Know the opponent Who to sue – customer, small infringer, large infringer? Patent portfolio – don’t kick a hive of sleeping bees! Litigation prowess – active litigants? –Know yourself Patent strengths and weaknesses Litigation stamina ROI Selecting where to file the complaint –Home turf –Fast forum –Plaintiff friendly Demand letters  to send or not to send?

14 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 14 The Complaint Identify the parties Jurisdictional statement –Subject matter jurisdiction, Personal jurisdiction, Venue Statement of the claim –Identify the relevant patent(s) –Assert ownership of the patent(s) & right to sue –Identify the accused infringer & alleged infringing act –Assert other claims

15 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 15 The Complaint (cont.) Demand for judgment – Monetary damages – Injunctive relief – Increased damages – Attorneys’ fees Demand for jury –Usually better for plaintiffs (about 70% jury trials) –Waived if not demanded w/in 10 days of the last pleading –Declaratory judgment – no right to a jury

16 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 16 Responding to the Complaint Motions – dismiss, transfer venue Answer – admit or deny allegations –Within 20 days of service –Within 60 days of a request for waiver of service Affirmative defenses –Non infringement, invalidity, laches, estoppel, intervening rights, failure to state a claim, etc. Counterclaims –Declaratory judgment of invalidity/non- infringement, antitrust violations –Assert other patents

17 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 17 Preliminary Injunction Patent holder must prove: –Likelihood of success (infringement and validity) –Irreparable harm (may be presumed) –Balance of hardships in favor of enjoining activity –Favorable impact on public interest Requires a bond - $$ consideration Early claim construction, validity & infringement analysis (good and bad) Motivates early settlement if granted

18 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 18 Discovery Informal discovery –Interviews –Internet –Voluntary exchange Formal discovery –Interrogatories – clarify issues, identify witnesses, uncover opponent’s case –Document requests – include other tangible material –Requests for admission – limit issues for trial, authenticate documents –Depositions – individual or corporation

19 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 19 Discovery Issues Accounts for a large percentage of the litigation costs Often leads to protracted litigation –Increases costs –Sets negative tone with the court Electronic discovery –No hard drive will go unturned Third party discovery Privileged and confidential Information Protective orders – attempt to limit discovery and maintain confidentiality

20 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 20 Claim Construction ( Markman ) Hearing Judge interprets claim terms as a matter of law –Focus on intrinsic evidence Claim language, patent specification and prosecution history –Extrinsic evidence may be considered Dictionaries, expert testimony, treatises Used to inform, but cannot contradict the intrinsic evidence First major milestone in a case –Often dispositive of the infringement and/or invalidity issues

21 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 21 Motions for Summary Judgment Often follows the Markman decision Grounds –Infringement/non-infringement Literal Doctrine of Equivalents (insubstantial differences) Direct and indirect (inducement and contributory) –Invalidity High burden  clear and convincing evidence Not novel (102), obvious (103), inadequate disclosure (112) –Unenforceability Inequitable conduct – failure to disclose material information Patent misuse – using the patent for improper purposes Laches – unreasonable delay + prejudice Equitable estoppel – misleading conduct + reliance + prejudice

22 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 22 Trial and Beyond Determination of liability & damages –Jury determines infringement based on the claim construction provided by the court Pretrial conference – issues for trial, witnesses, exhibits Special verdicts & jury instructions Post-trial motions Appeals

23 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 23 Avoiding Litigation and Alternatives to Litigation Christopher J. Lewis

24 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 24 Avoiding Litigation Patent portfolio strategy/management –Strategic Patenting Core business/products Areas vital to competitors –Quality vs. quantity Licensing –Cross license (win-win?) –Royalty bearing license Design around the patented product –Consult your attorney

25 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 25 Alternatives to Litigation Alternative Dispute Resolution (ADR) –Mediation Non-binding Neutral 3 rd party tries to facilitate settlement –Arbitration Binding, unless otherwise specified Like a trial, but no jury Faster cheaper and more flexible than litigation Reviewable by the District Court –Great deference given to the arbitrator –Very hard to vacate or modify the award

26 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 26 Alternatives to Litigation (cont.) Reexamination –Must show a substantial new question of patentability exists –Two Types Inter-Parte –Allows Requester participation –Decision by PTO is binding on the parties in litigation Ex-Parte –No participation, but anonymous –No estoppel –Pending Litigation will be stayed if requested earlier on in the case ITC § 337 Proceedings

27 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 27 Demand Letters and Opinion Letters Johnathan E. Mansfield

28 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 28 Demand/Cease & Desist/Notice Letters Patent Owner πAccused infringer Δ

29 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 29 First Things First Clarify goals Get your people on board Be sure... ROI

30 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 30 Reasons to Send Demand Letter “Stop infringing” “You might want to take a license” Actual notice per 35 U.S.C. 287 (damages) Start the willfulness clock running

31 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 31 Results of Demand Letter Nothing happens Negotiation and requests for showing of basis for infringement Accused infringer stops infringing Accused infringer negotiates a license Lawsuit(s) ensue

32 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 32 The Hardball Demand Letter Upside –Starts all clocks running Willfulness, damages –Possible In terrorem effect (with newbies) –You will get a reaction

33 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 33 The Hardball Demand Letter Downside –Sets the tone for future relationship –Evidence in lawsuit –Most important: United States Code Title 28, section 2201

34 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 34 What is a Declaratory Judgment? 28 USC §§ Lawsuit filed by Δ –Non-infringement –Invalidity –Unenforceability Actual controversy –“Reasonable apprehension” of imminent lawsuit –Actual infringement or preparation

35 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 35 You Don’t Want a DJ Lawsuit Infringer gets to choose the court Roles reversed: Δ v. π May have precedence over your own lawsuit

36 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 36 When To Use The Hard Ball Letter Never (hardly ever)

37 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 37 A kinder, gentler demand letter

38 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 38 The Softball Letter “We have patents” “Your product/process seems similar” “Let’s talk about a license”

39 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 39 The Softball Letter Upside –No DJ jurisdiction –Notice Downside –May not get (quick) results –May send wrong message

40 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 40 When to Use the Softball Letter Testing the waters/getting information Put on notice/start clocks running

41 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 41 The Medium-speed Pitch Softball with teeth Claim charts Specific deadlines Don’t trigger DJ

42 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 42 The Medium-speed Pitch Upside –Can get good results –More control Downside –Divulges infringement theory –Labor-intensive –Evidence in case

43 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 43 When to Use the Medium-speed Pitch Well-developed infringement position Only want a license Large scale-licensing campaign

44 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 44 A View From the  ’s Side Receiving a Demand Letter How serious is this? Do we infringe? Respond if appropriate Protect yourself ROI

45 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 45 A Digression on Willful Infringement Willful = aware of patent, and had no “reasonable basis” for concluding that patent was not infringed or was invalid Consequences –Up to treble damages –Other side’s attorney’s fees

46 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 46 Set Up A Process Anything that makes a claim about someone else’s IP rights is serious enough to be read By a designated person Determine seriousness Take appropriate action

47 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 47 How Serious is This? Factors –Specific deadlines/demands –What kind of letter, e.g., hardball, slow pitch? –Form letters –Who signed it/sent it? –Is your specific product identified? –Is a specific patent identified? Options –File –Respond & file –Send to patent litigation counsel

48 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 48 Do We Infringe? Patent Miranda Warning: you are creating evidence that will show up in court

49 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 49 Infringement Investigation You need to know: –Likelihood of liability –Extent of liability, i.e., mount of damages or cost of injunction –Product of these will determine how you handle demand letter

50 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 50 Protect Yourself Stop the Willfulness Clock Reasonable investigation Reasonable basis to believe –No infringement –Patent not valid Opinion letter

51 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 51 Opinion Letters Purpose: Establish good faith basis for continuing accused activity

52 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 52 Do We Need An Opinion Letter? Not required: Knorr-Bremse But don’t leave home (for the courthouse) without one

53 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 53 A Good Opinion Letter Timely Independent Credible Read and understood

54 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 54 How comprehensive? ROI –Cost: $3K to $100K; avg. in OR, about $10K –Extent of analysis depends on risk

55 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 55 Patent Litigation Costs and Budgeting Christopher J. Lewis

56 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 56 Patent Litigation Costs

57 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 57 Patent Litigation Costs (cont.) Factors Affecting Costs –PTO routinely issues patents without knowing and/or understanding the most relevant prior art Requires significant effort and cost to locate prior art Can arise late in the suit dramatically changing the playing field May spawn Reexamination –Protracted discovery disputes –Markman proceedings Much legal wrangling over the meaning of simple terms Worth the effort, as it can end the dispute….at least until appeal

58 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 58 Patent Litigation Costs (cont.) –Expert analysis, reports, and testimony Significant portion of overall costs Expert areas –Claim construction –Infringement –Invalidity –Damages –Discovery Can account for nearly 1/3 to ½ of the overall costs Broad net is cast due to uncertainties Many defenses available, which requires thorough investigation Fertile area for protracted litigation

59 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 59 Patent Litigation Costs (cont.) Parties’ emotions Judge and jury do not have a clue –Even with simple technology –Requires education, good experts, and demonstrative exhibits –Requires adaptation if you get a bad decision on claim construction –May use mock trials to identify issues and focus the presentation

60 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 60 Patent Litigation Budgeting: An Oxymoron? NO Steps that can help contain costs and stay on budget –Thoroughly investigate the potential defenses prior to making the first claim –Investigate the opponent’s patent portfolio, otherwise you may be in multiple suits –Understand the real economics of the accused product to help substantiate a budget –Avoid the shotgun approach to claims and defenses, use a rifle.

61 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 61 Containing Costs (cont.) –Consider adopting a focused dispute resolution plan that could limit the issues. –Evaluate reexamination potential –Be open to taking/giving a license… even if you are right. May be better to have a say who is in the market May be cheaper than litigation in the long run –Use in-house experts and resources –Consider designing around the product –Work closely with the attorneys –Establish a budget for discrete litigation tasks

62 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 62 International Aspects Of Patent Litigation William “Skip” Fisher

63 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 63 Why Is This Subject Important?

64 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 64 Why Is This Subject Important? Patent enforcement at home Patent enforcement abroad Patent infringement at home or abroad

65 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 65 What Should You Do?

66 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 66 Think globally & long term Consider patent/IP & business strategies together Obtain like-minded patent counsel Build appropriate patent portfolio Be prepared to enforce/defend What Should You Do?

67 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 67 What Will I Cover? U.S. patent enforcement options Special issues in cross-border litigation ITC § 337 litigation Foreign patent enforcement options Enforcement of foreign patents in U.S.

68 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 68 U.S. Patent Enforcement Options Federal district court litigation ITC § 337 actions Customs enforcement Arbitration & mediation

69 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 69 Issues in Cross-Border Litigation Unfamiliarity with foreign adversary Jurisdiction over foreign defendant Service on foreign defendant Discovery from foreign party or non- party

70 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 70 Discovery in Cross-Border Litigation Tools: –Federal Rules of Civil Procedure –Hague Convention (Evidence) –National laws “Blocking” statutes Confidential information & protective orders Use of discovery from other jurisdictions Translation/interpretation issues

71 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 71 ITC § 337 Litigation – Scope Under § 337 of U.S. Tariff Act, imported products that violate U.S. IP rights may be barred from entry § 337 provides administrative trade remedy for protecting domestic industry Often brought as alternative to or in parallel with court litigation

72 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 72 § 337 Litigation - Elements Infringement of valid U.S. patent Importation in U.S. Domestic industry – patent must be exploited in U.S. –significant investment in plant/equipment –significant employment of labor or capital –substantial investment in exploitation

73 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 73 § 337 Litigation - Jurisdiction § 337 gives ITC in rem jurisdiction Thus, no issues concerning personal jurisdiction or service of process If respondent declines to participate, ITC can still issue exclusion order against products

74 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 74 § 337 Litigation – Pre-filing Preparation Pre-filing efforts –investigation of respondents –evidence of importation –establish domestic industry –infringement analysis (claim charts) Meet with OUII Requires detailed complaint – no notice pleading

75 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 75 § 337 Litigation – Timeline Complaint Filed ITC Decision/Order Investigation Begins ALJ Decision Hearing Presidential Review

76 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 76 § 337 Litigation - Procedure File complaint at ITC ITC must initiate investigation within 30 days (public notice, service by mail) Respondent must answer w/in days Discovery is compressed (approx. 6 mos) Bench trial in front of ALJ (approx. 7-9 mos) Initial determination by ALJ ITC decision by Commissioners Presidential review Appeal to CAFC

77 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 77 § 337 Litigation - Remedies Limited Exclusion Orders – prohibit entry of respondent’s infringing products General Exclusion Orders – prohibit entry of all infringing products, regardless of source Cease & Desist Orders – directed to infringing behavior in U.S. No damages

78 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 78 § 337 Litigation - Comparison ITC Litigation Washington DC In Rem Jurisdiction No jury Specialized ALJ Markman Optional 9-10 Months To Trial No Damages Expenses incurred over short period 60% cases settle Court Litigation Any District Personal Jurisdiction Jury Generalist judge Markman Typical 21 Months To Trial Damages Expenses more easily controlled 95% cases settle

79 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 79 Enforcing Patent Rights in China Administrative actions Civil actions Customs seizures

80 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 80 Administrative Enforcement Prepare administrative enforcement body Appoint Chinese agent Prove patent rights & infringement Submit petition Take raid action Confirm products infringe Obtain decision & penalties Take court action Follow up

81 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt Problems with Administrative Action Local protectionism Weak knowledge of patent law Lack of resources Apathy Lack of follow up Inability to deal with complex cases/tech No damages Appeal

82 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 82 Civil Enforcement Pre-litigation preparation & evidence gathering Deciding who to sue Deciding where to sue Pre-trial injunction and/or preservation of evidence order Filing complaint & other documents Defense Investigation & exchange of evidence Trial, judgment, appeal

83 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 83 Pros and Cons of Court Actions Less local protectionism More chance to present case Foreign companies do win Takes more time and expense Admissible evidence hard to obtain No raid action Damages

84 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 84 Current Trends and Patent Reform Johnathan E. Mansfield

85 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 85 Overview Nanotechnology patents PLECs, a.k.a. trolls Important recent Supreme Court cases –Ebay v. MercExchange (injunctions) –KSR v. Teleflex (obviousness) Proposed legislative reforms

86 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 86 Nanotechnology The Next Big Small Thing Research and technology development at the atomic, molecular or macromolecular levels, in the length scale of approximately nanometer range Creating and using structures, devices and systems that have novel properties and functions because of their small and/or intermediate size Ability to control or manipulate on the atomic scale

87 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 87 The Nano-patent Thicket? > 3000 U.S. patents and published applications have claims that mention “nanotubes.”

88 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 88 Can the PTO Keep Up With Nano? As is often true with early stage technology, some nanotechnology patents have broadly drafted claims that could read on basic compositions of matter or manufacturing or testing processes. No real “nano patent cases” yet.

89 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 89 Nano patents: PTO Response Classification New classification for nanotechnology patents –1) subject matter is in the scale of approximately nanometers in at least one dimension; and –2) that involve materials, structures, devices or systems that have novel properties and functions because of their nanoscale size. But: no definitive plans to form a nano art unit.

90 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 90 Patent Licensing & Enforcement Companies: PLECs Is a troll the scary thing under the bridge or a fishing technique?

91 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 91 One Definition of a PLEC Has no significant assets except patents Produces no products Acquires patents, but does not invent technology itself

92 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 92 Customer Suit Strategy Sue customers for using or selling accused product Refuse to join or threaten maker of accused product –No DJ available Maker is “in the suit” as indemnitor, but not as a party

93 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 93 Ebay v. MercExchange-a Response to PLECs? Should an injunction be automatic once infringement is found at trial? SCOTUS overturned automatic injunction rule. Now successful π must show: –π has suffered an irreparable injury; –a royalty won’t compensate π; –balance of hardships tips in π’s favor rather than the infringer’s; and –public interest supports an injunction.

94 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 94 Ebay v. MercExchange: 2 concurrences CJ Roberts +2: ‘Injunctions still the usual case’ –Reasoning of a long line of cases in which injunctions have been granted should carry great weight in deciding whether to grant one in any particular case. Kennedy +3: ‘Patent system has changed’ –Recent development of firms who use patents primarily to obtain royalties, rather than as a basis for making or selling products. –When patented invention is only small part of the infringing product, a royalty may be adequate and an injunction might not serve the public interest. –Some recent patents, including on “business methods,” are “potentially vague” and of “suspect validity,” which could affect whether an injunction should be granted.

95 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 95 On SCOTUS Docket for Next Term: KSR v. Teleflex Obviousness: primary way to show a patent is invalid Non-obviousness requirement is guard against merely minor improvements over the prior art

96 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 96 What is “Obvious” Anyway? 35 U.S.C. § 103(a): an invention may not be patented if it would have been “obvious at the time the invention was made to a person having ordinary skill in the art” of the field of the intention. Federal Circuit test: when various pieces of prior art each contain elements of an invention, the prior art can be combined together to invalidate a patent on the invention only when there is some motivation, suggestion, or teaching to combine the prior art. Criticism is that FC test is too strict, permitting even trivial improvements to be patented

97 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 97 Predictions…. Likely: SCOTUS will kiss off FC again Who knows? –a combination which only unites old elements with no change in their respective functions is precluded from patentability under 103(a)? –subjective ad hoc test?

98 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 98 Proposed Legislative Reform Patent system is perennial topic for reform Most recent efforts: –Patent Reform Act of 2005, H.R (6/05) –Industry Coalition Redline of H.R (9/05) –Issa Litigation Pilot project, H.R (6/06) –Hatch/Leahy Bill, S (8/06) Nothing is expected to pass in 2006

99 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 99 First to File Changes US to “first-inventor to file” system S.3818 § 3

100 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 100 Definition of “Prior Art” Modifies definition to accommodate first-to-file Establishes “reasonable and effective accessibility” requirement S § 3

101 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 101 Inequitable Conduct Standard Adopts failure to disclose material/intent to mislead standard Can only be pled after determination that patent is not invalid as whole and is infringed No unenforceability if patentee: –Had informed good faith belief that information not material or otherwise established good faith, or –Relied on counsel, had no actual or constructive knowledge of misconduct, & exercised due care in selecting/supervising counsel S § 5

102 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt rd Party Submissions During Application Process 3 rd parties may submit prior art for any pending application within 6 months after publication Showing of relevancy, fee H.R. 2795; S § 7

103 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 103 Claim Construction Interlocutory Appeal Right to interlocutory appeal on claim construction within 10 days after order is entered. D.Ct. proceedings stayed during appeal S. 3818, § 8

104 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 104 Issa Pilot Project in D. Cts. AOUSC designates at least 5 DCs in at least 3 different circuits out of top 15 patent-case- loaded DCs Judges chose whether to opt into hearing patent cases. Random assignment but judge can send to opt-in pool $5MM/year for judicial training, and to compensate law clerks with technical/patent expertise

105 Portland, OR | Bend, OR | Salem, OR | Seattle, WA | Vancouver, WA | Washington, DC © 2006 Schwabe, Williamson & Wyatt 105 Patent Litigation Seminar for Business People


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