Patent Troll Update: Law Firm Investigated Over Enforcement Efforts

Law firms beware.  I previously posted about the Vermont Attorney General’s Office taking action against a patent troll based on its enforcement efforts against Vermont-based businesses. Now, an Attorney General’s Office has set its sights on a law firm that allegedly represents patent trolls. Last month, the Nebraska Attorney General’s Office reported in a press release that it is investigating a Texas law firm for possible violations of Nebraska’s Consumer Protection Act and the Uniform Deceptive Trade Practices Act based on the firm’s past enforcement efforts on behalf of various non-practicing entity clients. According to the Chief Deputy AG, his office is investigating infringement assertions by the firm that it claims were unsubstantiated and false, misleading or deceptive. In his cease and desist letter, the Chief Deputy AG noted that this was not first time that the Nebraska AG’s Office had investigated the firm or one of its clients.  It’s unclear as to the nature of the prior inquiry. Of interest, the Nebraska AG’s Office has demanded that the firm identify, among other things, all patents that it has asserted on behalf of its clients against Nebraska consumers since January 1, 2010.  It has also asked for all communications related thereto. In addition, the AG’s Office has demanded that the firm cease and desist from any new patent enforcement actions within the State of Nebraska pending the investigation. Between the uptick of pending legislation and the recent Attorney Generals’ enforcement efforts, there appears to be a groundswell of interest in curbing patent troll activity.  The blanket approach to sending out cease and desist letters on behalf of trolls may not bode well if it involves a substantial number of businesses operating in one state.

Tradeshows and Patents: Like Oil and Water

Your company has just developed a new invention that it intends to unveil at your annual industry trade show. In advance of the show, your marketing department sends out a press release describing your new invention in detail and launches photos of your invention on your website. The problem is that your marketing department is not in sync with your intellectual property strategy and you never filed a patent application prior to these public disclosures. There is a great demand for your product and now your CEO wants you to seek patent protection in the U.S. and China. The problem is China, like many other non-U.S. countries, is an “absolute novelty” country and as such, requires a patent application to be on file before the invention is first publicly disclosed.  While certain countries, like the U.S., have a limited grace period, many do not. Thus, you should always make sure that your global patent strategy tracks your marketing efforts or you may forfeit your ability to seek foreign patent rights.

What’s “Reasonable” Under Section 273?

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.

Submarines On The Horizon?

Patently O has recently reported that there could be over 200 pending patent applications that have filing dates that pre-date June 8, 1995.  See l.  Why should you care? If these patent applications mature into patents, they will have a term of 17 years from issuance.  As Patently O points out, they could be quite valuable because they could be directed at technology dating back over 15 years ago.  Indeed, whole industries might have developed around such technology.  Finding prior art to invalidate these patents could be difficult. There’s no need to believe that the sky is falling. However, if you are licensing technology from someone else, it might be advisable to get strong, uncapped indemnification provisions in case one of these patents emerges.

Intervening Or Disappearing Rights?

Last week, the Federal Circuit, sitting en banc, gave a shot in the arm to patentees with regard to the “intervening rights” doctrine in its Marine Polymer Technologies, Inc. decision.  The Court confirmed that “intervening rights” (which limits a patentee’s ability to recover for past damages) only apply when there are new or amended patent claims as a result of reexamination.  Prior thereto, a three judge panel of the Fed Circuit held that the doctrine had been triggered by the patentee’s arguments made during reexamination even though no amendments had been made.   In light of this decision, patentees will sleep easier, knowing that they can make arguments during reexamination without losing their claims for past damages.

Beware Of The IDS Trap

Sometimes during the patent process, inventors will perform their own searches of non-patent literature (NPL).  While they are just trying to advance their applications, they may have just incurred a large, unexpected cost.   Most inventors understand that they have a duty to provide all known, material, non-cumulative prior art to the USPTO during the patent process. In the past, inventors would merely provide copies of NPLs that they found in their own searches to their patent counsel, which, in turn, would disclose such information to the USPTO.  Now, it is not that simple. There is a wave of concern over the copying and use of such NPLs.  Many firms have adopted policies requiring inventors to have licenses permitting the copying and distribution of such references before they will submit them to the USPTO.  Indeed, just last week, several law firms were sued over this very issue.  While the USPTO has taken the position that copies submitted to the USPTO fall within the “fair use” exception to copyright infringement, it took no position with regard to copies made for clients or a firm’s internal use. Read a recent discussion of the issue. So, inventors are left with a dilemma. If they conduct a search that inadvertently reveals 100 potentially relevant references, then they might be faced with being charged a license fee for each reference before this prior art may be submitted to the USPTO as part of the patent process. What’s the downside if they decide to save some money and don’t disclose these references? They could be charged with inequitable conduct and have their patent deemed unenforceable if it’s later determined that these references should have been disclosed to the USPTO. Here’s the lesson.  Until these lawsuits get cleared up, inventors should be weary of conducting off-the-cuff searches.  If they do, they should be prepared for the additional cost of potential licensing fees.

How Will Free Trade With South Korea Impact IP?

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.    

The Party’s Over: Fee Hike At USPTO

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.

Has The Fat Lady Sung? Is Patent Reform Imminent?

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 for the language of the Act.

You Can’t Judge A Patent By Its Cover….

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.