Issue 1 – Summer 2014
Apportionment and the Entire Market Value Rule Have Presented Problems in Practice When Determining the Value of a Patented Invention
Citation: 23 Tex. Intell. Prop. L.J. 1 (2014)
Author: Steven M. Amundson
About: Steven M. Amundson is a partner in the New York office of Frommer Lawrence & Haug LLP and head of the firm’s appellate practice group. His cases have involved disputes over patents in a broad range of technologies encompassing business methods, computers, electronic devices, elec-tromagnetic products, semiconductor fabrication, medical devices, chemicals, and pharmaceuticals (including “blockbuster” prescription drugs). Before becoming a lawyer, Mr. Amundson worked as a nuclear propulsion engineer for the Naval Sea Systems Command, which was then headed by Admiral Hyman Rickover. The views expressed in this article do not necessarily reflect those of the firm or its clients.
Abstract: When an accused product includes many features or components, and the pa-tent at issue covers only some of them, determining an invention’s value—and therefore damages for infringement—may prove difficult. This article provides an overview of the legal principles applicable to damages in patent cases and then dis-cusses decisions in cases where patentees have alleged infringement by products with many features or components.
The Uniform Trade Secrets Act Makes Its Way to Texas
Citation: 23 Tex. Intell. Prop. L.J. 25 (2014)
Author: Michelle Evans
About: The author is an Assistant Professor at Texas State University, and she has published articles in American Law Reports and in journals including Texas Tech Law Review and Southern Law Journal.
Abstract: Texas recently adopted a modified version of the Uniform Trade Secrets Act. This statute brings with it a new definition of trade secrets, misappropriation, and damages. However, the statute did not abrogate prior state law. Instead, the statute provides that the prior common law will still be applied to all acts of misappropriation that occurred before the new statute took effect as well as for all continuing acts. As a result, a business owner doing business in Texas should be aware of both the old common law and the new Texas Uniform Trade Secrets Act (TUTSA) in order to protect his or her trade secret interests in Texas. To make matters more difficult, the Texas legislature made several changes within the new TUTSA from that of the Uniform Trade Secrets Act (UTSA), which limits the predictability of the statute in some areas. So not only does the business owner need to be aware of two different laws, details of how the new law will be applied are not yet entirely known. Therefore, this article presents a guide to Texas trade secret law both before and after the TUTSA for business owners doing business in Texas.
Inducement of Patent Infringement After Global-Tech and Akami: A Deadly Weapon Against New Enabling Technologies?
Citation: 23 Tex. Intell. Prop. L.J. 43 (2014)
Author: John David Evered
About: The author practiced as a litigation lawyer in the UK before coming to California in 2000. He is a member of the California Bar and practiced in the field of intellectual property litigation and dis-pute resolution with a West Coast IP boutique until 2012. He is currently an LLM candidate with an IP concentration at the University of San Diego law school. The author resides in Tucson Ari-zona where he is affiliated with Coldwell Banker. He can be contacted at firstname.lastname@example.org.
Abstract: Inducement based patent lawsuits may have become the perfect weapon for suing entities engaged in emerging information and communication technologies, particularly as these technologies invariably involve numerous interoperating providers and users. This paper refers to these technologies as “enabling” technologies. Two developments in the law of inducement of patent infringement have leant potency to the weapon. First, the Supreme Court’s “clarification” of the scienter requirement for inducement in the 2011 Global-Tech decision, that introduced the concept of willful blindness into the analysis. This has prompted courts to allow even more latitude in implying knowledge and intent to induce, lowering the bar for culpability and exposing a wider range of companies to inducement suits, in main part because of the nature of the technology they have developed. Second, the Federal Circuit’s Akamai and McKesson decision in 2012 that established liability for inducement of patent infringement, even where there is no direct infringement (so-called inducement-only liability.) This decision sought in part to address a concern, reiterated in amicus briefs submitted in support of the decision to the Supreme Court of the United States, that it was too easy for parties to collude to circumvent patents and avoid liability by arranging for method steps to be performed by separate entities. Amicus briefs submitted by numerous technology entities voiced grave concerns if the Supreme Court were to uphold the Federal Circuit’s decision. In the event the Supreme Court determined not to uphold inducement-only liability as a new basis for liability in patent law. Inducement suits against new and creative technologies will become increasingly more attractive in light of how courts are applying the factually heavy scienter requirement, and would have been even more so if the Supreme Court had endorsed the radical change in the law of inducement in Akamai. The concern should be that these kinds of suit are ensnaring not only genuine inducers of infringement, but also a new generation of innovative technology companies that are rendered vulnerable to allegations of inducement by the very nature of the enabling technologies that they are developing. Among those benefitting from this vulnerability will be holders of broad based patents rooted in older technology, including non-practicing entities, or patent trolls. The threat now posed by inducement suits carries important negative ramifications for development and investment in the very areas of technology that arguably are most beneficial to today’s society. The inducement of infringement cause of action is a potential weapon that should, this paper suggests, be blunted.
Revising the United States Court of Appeals for the Federal Circuit Part Deux: A Response to the Honorable Diane P. Wood
Citation: 23 Tex. Intell. Prop. L.J. 65 (2014)
Author: Matthew D. Tanner and Wayne A. Kalkwarf
About: Matthew Tanner is an associate at Winston & Strawn LLP in Houston, Texas. B.S., University of Texas, 2009; J.D., University of Texas, 2013. The views and opinions expressed in this article are those of the authors and do not reflect the opinions of Winston & Strawn LLP. Wayne Kalkwarf received his B.S., Indiana University, 1982; J.D., Indiana University, 1985; LL.M., University of Dayton, 2013.
Abstract: In a speech delivered on September 26, 2013, the distinguished jurist, Diane P. Wood, then judge, now Chief Judge, of the United States Court of Appeals for the Seventh Circuit, proposed removing exclusive jurisdiction in patent appeals from the United States Court of Appeals for the Federal Circuit. Judge Wood advocated in her speech that patent appeals should be shared among the other federal circuits. While Judge Wood admitted her proposal undermines the reason Congress created the Federal Circuit, she based her position on the theory that it would be better for the country if a variety of voices could be heard in analyzing issues involving patent appeals.
A variety of opinions in the legal field is always good for the development of the law. However, as proposed, Judge Wood’s position would simply compound the problems facing the field of patent law. The article examines Judge Wood’s theory in light of history and makes some suggestions which advances her position while adhering to Congress’s purpose for creating the Federal Circuit.
Issue 2 – Winter 2015
Coming to Grips with Patents in High Technology Investments: A Case Study Analysis Using the Example of Ambature
Citation: 23 Tex. Intell. Prop. L.J. 83 (2014)
Author: Roya Ghafele and Douglas Graham of Oxfirst, Ltd.
About: Roya Ghafele is the Director of Oxfirst Ltd., a consulting firm specializing in the economics of intellectual property. She was previously an Assistant Professor in International Political Economy with the University of Oxford and an Economist with the United Nations’ specialized agency for intellectual property (WIPO). Author’s email address: email@example.com. Douglas Graham is a senior expert at Oxfirst Ltd. He spent most of his career as a Managing Director with KPMG. He also ran a bank with eight billion U.S. dollars under management and launched a startup seeking to bring innovators together. Oxfirst: Oxford Science Park, John Eccles House, Robert Robinson Avenue, OX44GP Oxford, UK Funding for this research was provided by Ambature.
Abstract: This paper discusses the economic relevance of patents to an early stage firm operating in a nascent technology field. It does so, at the example of Ambature, an Arizona based high technology start-up whose business model consists of licensing high temperature superconductivity. The patent strategy assessment is performed from the perspective of this start-up. In doing so, this study aims to facilitate the task of undertaking a due diligence of the patents of an early-stage technology firm, while at the same time helping patent owners get a better grasp how to put their intellectual property to work. In doing so, the paper contributes to promoting active markets for patented technology.
Inter Partes Review: A New Paradigm in Patent Litigation
Citation: 23 Tex. Intell. Prop. L.J. 113 (2014)
Author: Aashish Kapadia
About: J.D. Candidate, The University of Texas School of Law, 2015; B.S. in Electrical Engineering, The University of Texas at Austin, 2006.
Abstract: In this paper, I describe the changes to inter partes challenges under the AIA. This foundation in Part II includes the key distinctions between the IPR and IPX proceedings. Congress did not simply rewrap the same package and place a new name on it. Instead, the IPR proceeding reflects a balance between the advantages of the old proceeding and the establishment of the PTAB. The result is a more advanced tribunal permitting nearly any party to challenge any patent where results are available as quickly as possible.
In Part III, the implications of the changes become apparent when analyzing the initial IPR statistics. While the previous IPX proceeding took years to develop into a mature forum, the IPR proceeding has rapidly grown into a necessary option for patent owners and challengers alike.
The PTAB is the premier tribunal for patent issues. These statistics suggest that district courts are more likely than before to grant requests to stay litigation pending a USPTO proceeding. In Part IV, I discuss the new alternative to district court litigation and the challenges that parties face. As a result of the changes, par-ties must consider how the proceeding interacts with district court litigation to avoid unnecessary expenses and wasted resources. Moreover, a new type of forum shop-ping has emerged where the power of district judges to manage their dockets results in varied views.
In Part V, I discuss the ability to use the new proceedings to encourage settle-ment. While settlement can be beneficial to parties, IPRs also have many risks, which are explored in Part VI. Finally, in Part VII, I explore the future of IPRs and a few of the additional changes that have been proposed.
What is “Obvious” Is Not at All Obvious: A Call for a More Fundamental Change to U.S. Patent Law
Citation: 23 Tex. Intell. Prop. L.J. 161 (2014)
Author: Douglas A. Sorensen
About: Slater & Matsil LLP © 2015. All opinions expressed in this paper are the author’s alone and may or may not coincide with the opinions of his employer.
Abstract: In this paper, a proposal is made to revise 35 U.S.C. § 103 because of the difficulties in interpreting the ambiguous term “obvious.” The jurisprudence on the interpretation of § 103 is explored. In accordance with jurisprudence on this issue, the following three part test is proposed: i) demonstrate that the prior art shows the elements of the claimed invention in a combined or modified form; ii) demonstrate a reason why one skilled in the art would make the combination or modification; and iii) demonstrate that the combination or modification provides results that one skilled in the art at the time of the invention could have anticipated. It is asserted that this test more directly and clearly reflects the distinction between good engineering and invention. This clarity would be beneficial to the courts, the U.S. Patent and Trademark Office, and, perhaps to foreign jurisdictions.
The U.S. Supreme Court Decides Six Patent Cases in 2014, Culminating in Alice Corp. v. CLS Bank International
Citation: 23 Tex. Intell. Prop. L.J. 183 (2014)
Author: Sue Ann Ganske
About: Clinical Professor of Business Law, School of Accounting, College of Business, Florida International University; J.D., University of Toledo College of Law, Order of the Coif.
The U.S. Supreme Court decided six patent cases in the 2013-14 term, a record, and perhaps even more notably, all decisions were unanimous. Of these six, the Court of Appeals for the Federal Circuit was affirmed only once. The Court in Medtronic, Inc. v. Mirowski Family Ventures, LLC held that when a licensee seeks a declaratory judgment against a patentee that its products do not infringe on the patent’s claims, the patentee bears the burden of persuasion on the infringement issue. Octane Fitness, LLC v. Icon Health and Fitness, Inc., and Highmark Inc. v. Allcare Health Management System, Inc. both involved the award of attorney’s fees to prevailing parties in exceptional cases. Octane Fitness, the Supreme Court held that the prior standard was unduly rigid. In Highmark, citing Octane Fitness, the Court held that the proper standard of review of the award of attorney’s fees is abuse of discretion.
In Limelight Networks, Inc. v. Akamai, the Supreme Court held that a defendant is not liable for inducing infringement when there has been no direct infringement. In Nautilus, Inc. v. Biosig Instruments, Inc., the Court held that a patent is invalid for indefiniteness if its claims, read in the light of its specifications and prosecution history, fail to inform one skilled in the specific art with reasonable certainty. Finally, the Supreme Court decided Alice Corporation Pty. Ltd. v. CLS Bank International, that the patent claims in question were drawn to a patent ineligible abstract idea, and thus were not patentable subject matter; this is the only patent case during this term where the Federal Circuit’s decision was affirmed.
This article reviews the six Supreme Court patent decisions and concludes with implications of this series of important cases.
Issue 3 – Spring 2015
Ongoing Royalties in Patent Cases After eBay: An Empirical Assessment and Proposed Framework
Citation: 23 Tex. Intell. Prop. L.J. 203 (2015)
Author: Christopher B. Seaman
About: Assistant Professor, Washington and Lee University School of Law. I thank the Editorial Board of the Texas Intellectual Property Law Journal for the opportunity to present this Article at the 16th Annual Intellectual Property Symposium: Patent Assertion Entities at the University of Texas School of Law. I also thank Will Hoing and Richard Zhang for their valuable research assistance with the empirical portion of this project. Comments welcome at firstname.lastname@example.org.
Abstract: Since the Supreme Court’s 2006 decision in eBay v. MercExchange, it has become increasingly difficult for patent assertion entities (PAEs)—firms that own, license, and assert patents in litigation, but do not practice the patented inventions themselves—to obtain injunctive relief after a finding of infringement. This is largely because evidence of competition between a patentee and an infringer in a product market has become the single most important consideration in deciding whether to grant a permanent injunction after eBay, which few if any PAEs can establish.
When a permanent injunction is unavailable, the Federal Circuit has approved an alternative equitable remedy for prevailing patentees—a limited, post-judgment license to the infringer called an ongoing royalty. However, courts have not settled on a consistent methodology for determining an appropriate ongoing royalty award, including the related issue of whether enhanced damages should be awarded for post-judgment acts of infringement. This Article addresses the issue of ongoing royalty awards from both an empirical and doctrinal perspective. First, it reports the results of an original empirical study regarding ongoing royalty awards by district courts since eBay. Second, it proposes a new framework for computing an ongoing royalty that requires consideration of actual or anticipated post-verdict changes to the relevant product market and potential future alternatives to the patented technology in order to avoid potential over- or under-compensation of the patentee.
A “Likelihood of Confusion”: Circuit Courts Attempt to Reconcile Sixty Years of SCOTUS Silence Since Bulova
Citation: 23 Tex. Intell. Prop. L.J. 251 (2015)
Author: Greg Rkief. Vetter
About: Law Foundation Professor, Professor of Law, University of Houston Law Center; CoDirector, Institute for Intellectual Property and Information Law; biography available at: www.law.uh.edu/faculty/gvetter. My background includes a Master’s degree in Computer Science and nine years fulltime work experience in the software industry. My thanks to Darren Smith and Sarah Bittner for excellent research assistance and Matthew Mantel and Mon Lin Lung for wonderfully effective library support and research assistance. For helpful comments and discussion, I thank participants at the Drake University Law School 2013 Intellectual Property Scholars Roundtable; participants at PatCon4: The Patent Conference, held at the University of San Diego School of Law; and William Hubbard, Keith Robinson, Paul Janicke and Sapna Kumar.
Under the AIA prior use defense, a qualifying earlier user is not required to cease use due to a later patent by someone else that independently conceived the invention. The AIA prior use defense replaced a narrower “earlier inventor” defense implemented a decade before the AIA but applicable only to a patent for a “method of doing or conducting business.” Congress enacted the AIA’s fullscope prior use defense against a backdrop of influences, including harmonizing U.S. patent law with international norms. The influences included considerations as to whether the defense would help retain manufacturing in the U.S., particularly in light of the availability of prior user rights in other countries. Some have predicted that prior user rights will enhance incentives for actors in a market to choose trade secrecy protection rather than patent protection. Others have predicted that the AIA prior use defense will generate litigation, signaling vigorous use of the defense. Finally, some predict a minimal impact on the U.S. patent system from the prior use defense.
This article, proceeding at two levels, assesses these predictions for software technology in view of the contentious phenomenon that is software patenting. First, the prior use defense in some ways fits poorly and in some ways might fit well with modes of commercializing and deploying software. In that sense, given that a manufacturing motif provides its conceptual framework, the question is whether the defense is “good” for software. These observations lead to some proposed clarifications for the defense to ensure its efficacy for software.
Legislative Response to Patent Assertion Entities
Citation: 23 Tex. Intell. Prop. L.J. 313 (2015)
Author: David O. Taylor
About: Assistant Professor of Law, SMU Dedman School of Law; J.D., 2003, Harvard Law School; B.S., 1999, Texas A&M University. I am grateful for the opportunity to present this Essay at the 16th Annual Intellectual Property Symposium: Patent Assertion Entities at the University of Texas School of Law. Thanks to Angela Oliver for her helpful research assistance. Special thanks to Rachel, Caroline, Emily, and Joshua Taylor. The views expressed in this Essay, as well as any errors, are my own.
Abstract: While the existence of patent assertion entities is not new, in recent years they have proliferated, spawning debate concerning their impact on the patent system and, more broadly, on technological innovation. Despite the fear that they instill in their targets—or perhaps because of it—patent assertion entities arguably serve a beneficial purpose in the patent system. Theoretically they should be able to help individual inventors and small businesses obtain a return on their investment in research and development. To the extent patent assertion entities assert patent claims that are truly valid, infringed, and enforceable, obtain reasonable settlements and judgments, and return a substantial portion of their settlements and judgments to inventors, the patent system is working, as it is designed, to reward invention and disclosure. To the extent patent assertion entities assert patent claims that should be held invalid, not infringed, or unenforceable, obtain unreasonable judgments or settlements, or fail to return a substantial portion of these settlements and judgments to inventors, however, patent assertion entities highlight problems with the patent system. Indeed, there are three primary problems with the patent system that some patent assertion entities exploit: (1) poor patent quality, (2) problems with patent infringement litigation, and (3) various asymmetries. This Essay contributes to the ongoing debate concerning patent assertion entities by analyzing the current state of affairs regarding patent reform legislation. In particular, it analyzes the extent to which legislation addresses these three primary problems and, more broadly, whether legislative reform rather than judicial or agency reform is the best avenue to address these three primary problems.