Today, in the long-awaited case of TC Heartland v. Kraft Foods Group Brands, the US Supreme Court unanimously determined where a domestic corporation “resides” for purposes of establishing proper venue in patent cases. In short, a domestic corporation “resides” only in its State of incorporation.
Why is this relevant? And will this have any effect on patent infringement cases going forward?
For years, if it could be shown that a company was subject to personal jurisdiction in that district, then it “resided” in that district and venue was proper. As such, many plaintiffs brought cases in pro-plaintiff jurisdictions, like Marshall, TX, even though defendants’ principal places of business were elsewhere.
Going forward, in patent infringement lawsuits, there will be two choices to bring cases: (1) where the US defendant is incorporated or (2) where “the [US] defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C.§ 1400(b)(emphasis added). The focus may now shift to where companies have their “regular and established place of business.” States, like Delaware (where many companies are incorporated) or California and New York (where companies have established businesses), could become the new forums of choice.
Technology is becoming more and more integrated into our daily lives and undoubtedly companies are seeking related IP protection. It was recently reported that Coupons.com has released its KitchMe app, which works in conjunction with Google Glass. Now, cooks can be sent shopping lists and recipes with step-by-step instructions by merely looking at available ingredients in their kitchens. Technology is certainly converging with our everyday lives. Here’s another head spinner. Yesterday, it was reported that during a press conference, David Marcus, President of PayPal, discussed the issues associated with trying to pay for things in space. As companies like Virgin and SpaceX are forging ahead to make space tourism a reality, companies are apparently thinking about how to pay for services rendered in space. Indeed, PayPal is allegedly developing “PayPal Galactic” as a vehicle to buy things while in outer space. It will be interesting to see how it tries to implement and protect this technology as there are no IP addresses in space. These advancements are truly amazing.
The America Invents Act significantly expanded the “Prior Use” defense under 35 U.S.C. § 273 to patent infringement. Prior thereto, the defense was limited to use against claims of business method patents. Now, a litigant may assert this affirmative defense if it commercially used, in good faith, a process, machine, manufacture, or composition of matter that is asserted to infringe the patent-at-issue. While this sounds good on paper, there is a catch. If it is shown that a defendant failed to have a “reasonable” basis for asserting this defense, the “court shall find the case exceptional for the purpose of awarding attorneys’ fees under section 285.” 35 U.S.C. § 273(f)(emphasis added). The problem is that the Courts have failed to address what “reasonable” means. Thus, companies facing patent infringement claims must decide whether it’s worth the risk. If they don’t produce enough information to sustain the defense, they might have to pay the patentee’s attorneys’ fees- a remedy generally available only in instances of willful infringement.
Yesterday, it was reported that Congress passed free trade agreements with South Korea, Panama and Columbia. The agreements are suppose to, among other things, significantly remove duties and phase out tariffs on various U.S. exports. However, it has also been reported that there are provisions affecting intellectual property law, which must be ratified by the Korean National Assembly. I agree with Professor’s Crouch’s assessment that this appears to be another step toward harmonizing worldwide patent practice. As there will be more incentives for U.S. companies to send products to South Korea, it will be interesting to see if there will be an increase in South Korean patent filings.
Each time that I traveled to Asia on business over the last seven years, I was asked as to when the world might expect U.S. patent reform. Well, it’s finally here. You cannot look at a paper or a blog without some reference to the America Invents Act being signed into law last Friday. One of the more immediate implications of this law was to give the USPTO fee-setting authority. As such, there will be a 15 percent surcharge on certain patent fees, effective Monday, September 26, 2011. There is also a newly established “micro-entity” rate that should be reviewed. All in all, we haven’t seen a rate hike in about three years from the USPTO so it’s better than most industries.
For years, the U.S. has talked about substantially overhauling U.S. patent law so that it conforms with how most of the rest of the world approaches patent rights. Now, it might become a reality. Yesterday, the Senate overwhelmingly passed patent reform legislation, which if signed, will have the greatest effect on patent law in the last fifty years. See Patently-O’s recent post for a good overview of the legislation. It has been reported that the President is likely to sign the Smith-Leahy America Invents Act into law in the next few days. The most significant change will be to move from a first-to-invent country toward a first-to-file country. This change will greatly affect U.S. practitioners’ patent procurement and litigation strategies. See http://www.patentlyo.com/patentreformbillaspassed.pdf for the language of the Act.
We’ve all heard the phrase, “You can’t judge a book by its cover.” Well, this adage is especially true when looking at an issued patent as there may be valuable information that is not reflected on its face. First, printing errors can occur. Late amendments to the claims of the patent (which define the scope of the protected invention) may not make it into the final version of the patent. Thus, the claims that you are looking at may appear broader than they actually are. This is especially important to know when evaluating potential non-infringement positions. Second, the applicant may have given up significant ground to get its patent granted, which is not necessarily reflected in the patent. For example, the applicant may have distinguished its invention over a prior art system. This could have been done by making claim amendments and arguing their narrow meaning, or by otherwise convincing the U.S. Patent and Trademark Office Examiner that no amendments were necessary because the claims (as written) were sufficiently narrow to get around the prior art. Why is this relevant you ask? Because your company may be practicing a technology that is similar to what the applicant distinguished. In the end, while you should start with the patent, you should read the back and forth correspondence with the U.S. Patent and Trademark Office (known as the “patent prosecution history”) as mistakes can happen and the scope of the patent may not always be as it appears on its face.
This is a common question. Just because your company owns a patent doesn’t necessarily mean that you can practice what is covered by the patent. Sound crazy? It’s true. A patent is a negative right. Generally speaking, a patent gives the owner the right to preclude others from making, using, selling, offering for sale and/or importing what is protected by the patent during the term of the patent. However, a patent does not guarantee that the patent owner can make what is covered by the patent without infringing someone else’s rights. A simple example illustrates this point. Company A invents the first inflatable bicycle tire. Company B comes up with the idea of adding a valve stem to the tire so that the tire is more easily inflated and Company B is awarded a patent on a bicycle tire with a valve stem as it is a new, useful and non-obvious improvement to Company A’s patented tire. Then, Company B makes its first tire with a valve stem and receives a cease and desist letter from Company A alleging infringement of Company A’s broader (or more dominant) patent for just the tire. Company B has a problem as it has manufactured Company A’s patented tire. It doesn’t matter that it added anything to it (i.e., the valve stem) as Company A’s patent broadly covers any inflatable bicycle tire. Company B is not left without some leverage however. Should Company A desire to make a tire with a valve stem (because it is a much more compelling product for consumers), it could not do so without Company B’s permission. In the end, the companies would probably cross-license the use of their respective patents. How could this scenario possibly have been avoided? While many of the more dominant patents would have been uncovered during the patent application process for Company B’s patent, it is advisable to have a “prior art” search of existing patents conducted, especially if your company is thinking about actually manufacturing the product. The breadth of any existing patents can be assessed so that you can ensure that your company is not walking into a landmine. Another option is to commission a “freedom to operate” opinion by a patent attorney. In this context, the patent attorney will scour a sea of patents that are possibly relevant to your idea and will give you an assessment of how crowded the space is before you move forward with manufacturing your invention. This type of a search differs from a “prior art” search in that it is much broader in scope and will entail looking for any patents that might address any aspect of your invention vs. just looking for patents that are essentially for the same invention (e.g., looking for any patents that are for just a valve stem used in any context vs. conducting a prior art search to find patents on a tire with a valve stem). In the end, you just need to remember that a patent does not grant you the right to practice the patented invention. It allows you to prevent others from doing so. If you plan on practicing your invention, you should strongly consider hiring someone to conduct a review of the existing prior art (e.g., patents) so that you don’t run into later problems.
It has been reported that Lodsys has also pursued Android app developers over in app purchase technology. Such technology allows for a wide range of content (e.g., virtual content, such as additional levels, etc.) to be sold within the application.