2015 could be a pivotal year for U.S. patent reform, with two significant — and very distinct — patent reform bills pending before Congress. This article compares the two bills, the Innovation Act and the STRONG Patents Act, the forces behind the bills, and the next steps in the U.S. patent reform debate.
Introduced in February 2015 by Rep. Bob Goodlatte as a measure to “curb abusive patent litigation,” the Innovation Act picks up where the America Invents Act of 2011 (AIA) left off by proposing additional reforms to patent litigation procedures. The Innovation Act would also streamline some of the AIA’s mechanisms for challenging patents.
In March 2015, Senator Christopher Coons and others introduced the STRONG Patents Act as a way to “reduce abuse while sustaining American leadership in innovation,” The STRONG Patents Act includes some reforms that are similar to those of the Innovation Act, along with several other sections that are designed to protect the positions of patent holders.
Significant provisions of each bill include: Continue reading
Private entities cannot be liable for patent infringement when performing “quasi-governmental actions” with the express or implied consent of the U.S. government, according to a recent decision of the U.S. Court of Appeals in Iris Corporation v. Japan Airlines Corporation (Fed. Cir. 2014).
Iris Corporation’s patent number 6,111,506 covered a method of making an identification document (such as a passport) with a contactless communication unit. The case arose after Iris accused Japan Airlines Corporation (JAL) of infringing Iris’ patent by scanning the electronic passports of its U.S. passengers. Iris argued that by using and scanning passports that contain RFID chips, JAL infringed the patent.
At least two U.S. statutes required JAL to perform the scanning. Because of this, in its defense JAL argued that it could not be liable for infringement because its actions were required by federal law. JAL also noted that 28 U.S.C. §1498(a)) states (with emphasis added):
Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States.
The court agreed with JAL’s argument. The court noted that an activity is “for the United States” if two requirements are met: (1) it is conducted “for the Government,” and (2) it is conducted “with the authorization or consent of the Government.”
The court found the first requirement to be satisfied because the scanning of passports was a “quasi-governmental activity” done for the benefit of the U.S. government. The second requirement was satisfied because “JAL cannot comply with its legal obligations without engaging in the allegedly infringing activities.”
Because of this, the court dismissed the case and held that IRIS’s exclusive remedy is to file suit against the U.S. government, not any private entity.
(Photo credit: <a href=’http://www.123rf.com/profile_kritchanut’>kritchanut / 123RF Stock Photo</a>)
Continuing its string of reversals of Federal Circuit patent decisions, the United States Supreme Court has done it again. In Limelight Technologies, Inc. v. Akamai Technologies, Inc., the Court ruled that a defendant can be liable for induced infringement of a patented method only if a single entity directly infringed the patent by performing all of the method’s steps.
The Federal Circuit decision at issue made it easier for patent holders to sue in a situations where no single entity performed all of the steps of a patented method, but several parties collectively performed all of the steps. In that decision, the Federal Circuit held that a defendant who performed some steps of a method and encouraged others to perform the rest could be liable for inducement of infringement.
In the Limelight decision, the Supreme Court pulled no punches when explaining that the Federal Circuit got it wrong: Continue reading
With the much-publicized issue of vague patent claims square in its sights, the United States Supreme Court has issued a new standard by which courts may find patents invalid for indefiniteness. The new standard may give defendants another tool in their arsenal to challenge the validity of patent claims that are not precise or clear.
In Nautilus, Inc. v. Biosig Instruments, the Court addressed the Patent Act’s definiteness requirement, which requires a patent to conclude with “claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as the invention.” 35 U.S.C. § 112 ¶ 2. Under the prior standard, a claim was indefinite only if it were either “not amenable to construction” or “insolubly ambiguous.” Under the new standard, a patent claim is invalid if it fails to “inform those of skill in the art about the scope of the invention with reasonable certainty.”
In its opinion, the Court also noted that indefiniteness is to be assessed: (i) from the perspective of someone who is skilled in the relevant art; (ii) in light of the patent’s specification and prosecution history; and (iii) as of the time of the patent’s filing.
The definiteness requirement has been part of the Patent Act since 1870, and the text quoted above has remained unchanged since 1957. Nonetheless, the Court’s opinion shows that its meaning has remained open to dispute. As it has done in so many recent patent cases, the Court’s new opinion strikes down a standard set by the Federal Circuit for patents.
The Court found the previous “insolubly ambiguous” standard to be, simply, ambiguous. One part of the Court decision that may be a key to future indefiniteness cases may be the following text:
It cannot be sufficient that a court can ascribe some meaning to a patent’s claims; the definiteness decision trains on the understanding of a skilled artisan at the time of the patent application, not a court viewing matters post hoc. To tolerate imprecision just short of that rendering a claim ‘insolubly ambiguous’ would diminish the definiteness requirement’s public-notice function and foster the innovation discouraging ‘zone of uncertainty’ against which this Court has warned.
Whether the new standard is actually more precise than the previous one remains to be seen as it is applied to specific claims, including the claims in this case on remand.
Patent holders may consider hitting the “pause” button before enforcing their patents, based on a pair of U.S. Supreme Court decisions that relaxed the standard for awarding fees to the prevailing party in patent litigation. While several news outlets are (correctly) reporting that the Supreme Court rulings will make it easier for lower courts to impose financial penalties on so-called “patent trolls,” the facts behind the rulings suggest that the Court’s new standard may have an even broader effect.
The Eastern District of Texas has launched a new case management procedure for patent infringement lawsuits. The new procedures, dubbed “Track B” in the court’s General Order 14-3, are designed to give litigants an option that can help save money and move a case to resolution more quickly.
Key features of the Track B case management procedures are:
- within 14 days after the defendant files an answer or motion, the plaintiff must (i) serve infringement contentions, and (ii) disclose all licenses and settlement agreements involving the patents in suit;
- within 30 days after service of the infringement contentions, all parties must provide initial disclosures, and the defendants must produce summary sales information regarding the sales of accused products and reasonably similar products; and
- within 14 days after the initial disclosures and summary sales information, both parties must file a good faith estimate of damages;
- within 14 days of the good faith estimate, the defendant must serve its invalidity contentions.
After serving invalidity contentions, the case will quickly move to a management conference and discovery plan. Discovery prior to the conference will be limited to 5 interrogatories, 5 requests for production, and 5 requests for admission per side.
The Court’s traditional case management procedures (now called “Track A”) will remain the default. The court will apply Track B if and when the parties request it.
The mere capability of infringement does not necessarily give rise to liability for infringement, according to the Federal Circuit’s opinion in Nazomi Communications v. Nokia Corp. (No. 2013-1165, 1/10/2014).
In the case, non-practicing entity Nazomi held two patents covering hardware-based java virtual machines (JVMs) that can process both programming instructions stored in a stack-based memory and legacy applications that are stored in a register-based memory. The case involved electronic devices sold by Western Digital (specifically, the MyBook) and Sling Media (which sells the SlingBox). Each device contained a processor that was licensed from ARM Continue reading
In what may be the first of several software patent litigation matters that are placed in a holding pattern this year, the District of Delaware has stayed a group of patent infringement cases involving software patents pending the Supreme Court’s decision in CLS Bank Int’l v. Alice Corporation Pty Ltd.
As noted in a previous IP Spotlight post, in Alice the Court will consider the question of whether patent claims covering computer-implemented inventions are directed to patent-eligible subject matter.
In the Delaware cases, collectively captioned The Money Suite Company v. 21st Century Insurance and Financial Services, the plaintiff sued several defendants for infringement of a patent relating to use of a remote computer terminal to search for financial products for quoting. At least one of the defendants argued that the patent was invalid as being directed to ineligible subject matter because using a computer to generate a quote for a financial product was merely an abstract idea.
Noting that the Supreme Court will soon address the question of whether software is patent-eligible, the Delaware court stayed the cases until the Supreme Court issues its decision in Alice.
On June 4, the Executive Office of the President issued a report entitled “Patent Assertion and U.S. Innovation.” The stated purpose of the report is to address challenges posted by “patent assertion entities” (PAEs), which the report defines as entities that”use patents primarily to obtain license fees rather than to support the development or transfer of technology.”
The report estimates that in the past two years, PAEs filed 62% of all patent infringement suits. It also cites to a “range of studies [that] have documented the cost of PAE activity,” but it provides no firm estimates of those costs, and it’s not clear whether those studies include the same definition of “patent assertion entities” that the President’s report uses.
Concurrent with the report, the White House issued a set of legislative recommendations and executive actions to address the costs that PAEs impose on U.S. industry. The legislative recommendations include:
- Legislation to require patent-plaintiffs to disclose the real party in interest in litigation;
- Implementing a “loser pays” program in patent litigation; and
- Expanding the USPTO’s “covered business method patents” program.
As noted in previous IP Spotlight posts, these recommendations are already pending in the SHIELD Act proposal and a bill recently introduced by Senator Charles Schumer.
The report’s executive action proposals include:
- USPTO rulemaking to require patent applicants to keep their ownership information up to date, including the ultimate parent entity of the owner. (As IP Watchdog astutely noted today, this proposal is already underway at the USPTO.)
- Training USPTO examiners to more closely scrutinize “functional claims” in patent applications.
- Expanding informational resources to businesses and patent litigation defendants.
- Reviewing International Trade Commission procedures regarding exclusion orders.
Although the report will get a lot of press, its impact is not at all clear. The legislative recommendations and executive orders descriptions mostly summarize initiatives that are already underway, rather than propose any new actions. In addition, other than the “loser pays” proposal, none of the initiatives propose any changes to actual patent litigation or prosecution practice.
Nonetheless, the report is certainly designed to provoke a conversation. Whether that conversation will lead to any substantive change remains to be seen.
The past few weeks have seen several new ways in which regulators are trying to address patent assertion entities (PAEs) – often referred to in the media as “patent trolls” — through legislation, regulation, and in one case litigation.
In March, Congress began to consider a new bill, know as the SHIELD Act, that proposes to allow defendants who prevail in patent lawsuits to recover costs from the plaintiff in certain situations. As noted in a previous IP Spotlight post, the SHIELD Act has some weaknesses that can hurt both patent holders and defendants, but it may be a first step in broader legislative action.
In April, the U.S. Department of Justice (DOJ) published a set of public comments on a joint DOJ / Federal Trade Commission (FTC) investigation of PAE activities. The comments followed a December 2012 workshop in which the FTC and DOJ explored the impact of PAEs on innovation and competition.
In May, the state of Vermont attacked PAEs on two fronts. First, the state Continue reading