Patent Infringement MM450 March 30, 2006

What is Patent Infringement? Making, using or selling an invention on which a patent is in force without the inventor’s permission

What are the Remedies for Infringement of a Patent? Injunction Money damages (no less than a reasonably royalty, plus interest and costs) Attorney’s fees to the prevailing party (only in “exceptional” cases

What happens if a patentee fails to “mark” the patented product? Article should bear the label “Patent” or “Pat.” Serves as notice to the public of the patent If patentee fails to mark articles, then no damages unless proof that infringer has been put on notice

Markman v. Westview Holding: interpretation of claim in patent is for judge, not jury Impact of ruling? –Markman Hearings Evidentiary hearings before Judge Make or break patent cases at early stages

State Street Bank v. Signal Plaintiff – Appellee = State Street Bank Defendant – Appellant = Signal Financial Custodians and accountants of mutual fund partnerships Signature = assignee of the ‘056 ‘056 Patent = Hub and Spoke® –System that facilitates a structure whereby mutual funds pool their assets in an investment portfolio organized as a partnership

State Street Bank v. Signal State Street negotiates with Signal for a license to use the patented method Negotiations break down State Street brings “declaratory judgment” action Trial court grants summary judgment in favor of State Street Signal appeals to the Federal Circuit

State Street Bank v. Signal Court of Appeals rules: –Section 101 covers any “process, machine, manufacture, or composition of matter” –To be patentable, a mathematical algorithm must be applied in a “useful” way –The transformation of data, representing discreet dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm

Results of State Street Case –40% increase in patent filings for software/Internet business methods in six months following the ruling ClickReward, No. 5,774,870 Name your price, No. 5, –USPTO added “layer of review” of business method patents and hired technology specialists

eBay v. Merc Exchange (the ‘265 patent) A method and apparatus for creating a computerized market for used and collectible goods by use of a plurality of low cost posting terminals and a market maker computer in a legal framework that establishes a bailee relationship and consignment contract with a purchaser of a good at the market maker computer that allows the purchaser to change the price of the good once the purchaser has purchased the good thereby to allow the purchaser to speculate on the price of collectibles in an electronic market for used goods while assuring the safe and trusted physical possession of a good with a vetted bailee.

eBay v. MercExchange Petitioners = eBay and Half.com Respondent = MercExchange MercExchange asserts that eBay infringed three patents eBay loses (mostly) at trial, but no permanent injunction Federal Circuit reverses – permanent injunction warranted

eBay v. MercExchange U.S. Supreme Court hears oral arguments on March 29, Question: Whether the Federal Circuit erred in ruling that absent exceptional circumstances, a district court must issue a permanent injunction after a finding of infringement.

eBay v. MercExchange What’s the big deal? –Impact of permanent injunction –Balancing the rights of patentees to exclude others from practicing the patent versus extending undue settlement leverage to patentees

Quotes of the Day The only thing that keeps us alive is our brilliance. The only way to protect our brilliance is our patents. Dr. Edwin Land An inventor is a man who looks around upon the world, and is not content with things as they are; he wants to improve whatever he sees; he wants to benefit the world; he is haunted by an idea; the spirit of invention possesses him, seeing materialization. Alexander Graham Bell