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Archive for November 2009

Citizen Copyright Monitors

A recently-filed copyright case pleads that one of defendant’s employees called and reported that the single-user license for a subscription was being exceeded.  The plaintiff in Energy Intelligence Partners v. Fitch, publishes reports on the oil & gas markets.  Fitch, or someone there, subscribed to the reports.  The complaint, recently filed in Chicago, but earlier-filed in NYC, pleads the following:

…Plaintiff received a telephone call from an individual working in Defendant’s office informing Plaintiff of past, current and ongoing infringement of some of Plaintiff’s publications.

Ouch!  This sort of whistleblowing in copyright cases is not uncommon where single-user software is being used on multiple machines.  Seeing it pleaded in a case involving published and printed material suggests some interesting proof problems.  The complaint attaches specimens and registrations, but not a copy of the alleged single-user license.  Unless the reports were being copied wholesale and re-distributed, then what would prove infringment?  Whatever else is disovered, deposing the mystery telephone reporter should be interesting.

Business Method - Reverse Auction by USPTO.

Your USPTO needs copy paper, and it solicits bids in a notice in FedBizOpps.  But, it is not a lowest, when-opened bid solicitation.  Rather, the Commerce Dept. uses a reverse auction method, as stated in the solicitation:                                            ”United States Patent and Trademark Office intends to conduct an online competitive reverse auction to be facilitated by the third-party reverse auction provider, [which] has developed an online, anonymous, browser based application to conduct the reverse auction. An Offeror may submit a series of pricing bids, which descend in price during the specified period of time for the aforementioned reverse auction. The United States Patent and Trademark Office is taking this action in an effort to improve both vendor access and awareness of requests and the agency’s ability to gather multiple, competed, real-time bids.”                                             With its ‘other hand’ the USPTO has been issuing patents on methods for conducting online competitive reverse auctios, such as USP 7,376,593 or 7,571,131 or 7,412,412.  Perhaps the copy paper is needed for office actions on these sorts of business methods.

Rule 403 Prejudice Comes with the Combo.

As one Delaware jurist used to ask, ‘how many times do you patent lawyers want me to try your case?’  It was a rhetorical inquiry, since the judge had the power to keep it to one, even though the lawyers might prefer 3 trials: claim construction, liability and damages (plus maybe a TRO mini-trial on the front end).

The new school of patentee’s counsel tend to prefer one trial, hit hard and quick on the big issues, then shift the burden to infringer’s counsel to bore the jurors with proving all of the details.

That approach went under reconsideration after reading St. Clair IPC v. Fuji Photo, 1:03-CV-231 (D. Del. 11/19/09).  The jury upheld the patent and awarded damages based on .5% royalty rate.  St. Clair moved for a new trial on damages because evidence of other licenses, obtained under litigation duress, were excluded from evidence.  The judge ruled that the risk of prejudice outweighed the probative value, “particularly in light of the fact that damages and liability were being tried together.”  The obverse of that ‘particular’ may be that had damages be tried separately, then the litigation-induced licenses would have been admitted for the jury to consider.
The ‘whoops’ factor (scarred litigator-speak) was that someone in the courtroom must have thought having two trials was the better option, and it wasn’t St. Clair.  “In this regard, the Court notes that St. Clair opposed the bifurcation of liability and damages.”

There are plenty of cases, pro and con, on admitting evidence of royalty rates in licenses obtained after litigation was threatened or underway.  It can be held out, especially where those are the only licenses.  It can come in with a cautionary instruction to the jury, or it can just come in after cross-exam and closing argument explain the differences between arms-length and arm-twisting.

In that perfect world of the engineering mind, each issue would get full treatment, and if that takes separate trials, then OK.  But, the litigator’s mindset is to get to verdict as soon as possible, without being unduly rushed. For that, one trial plainly is preferable.  If a choice between bifurcation, trifurcation or singularity carries a risk of my evidence being excluded from the single trial, but admitted in one of separate trials, then tell me that - before any trial, and before I decide on bifurcation.

Local Patent Rules Might Have Unintended Impact.

LegalMetric sends out routine emails referring to its statistical analysis of patent litigation. Recently, it reported the most pro-patentee and [allegedly] pro-infringer districts among the federal courts.

In order, the top 10 districts favoring parties accused of infringement are:

1. Northern District of California  *
2. Southern District of California * 
3. Eastern District of Pennsylvania
4. Central District of California * 
5. Southern District of New York 
6. Southern District of Ohio * 
7. Eastern District of Michigan
8. Western District of Washington *
9. Southern District of Florida
10. District of Arizona

The ten districts most favorable to patentees were, in order:

1. District of Delaware
2. Eastern District of Texas *
3. Middle District of Florida
4. District of New Jersey
5. Western District of Wisconsin
6. Eastern District of Virginia
7. District of Massachusetts*
8. Eastern District of Missouri
9. District of Minnesota*
10. Northern District of Ohio

My curiosity was what neutral factor might bear upon whether a district favored infringers over patentees. As listed above, the asterisks indicate those districts that have local rules for patent litigation.

IMO, the rules that allocate to patentees the burden of going forward with a proposed claim construction, identification of alleged infringing subject matter with claim chart details, etc., tend to be more favorable to infringers. The local patent rules, with links to those district’s webpages, are collected nicely on matthewspatentlaw.com/documents/LR-NJ.pdf

Those districts that still practice using the ’sporting’ rules of litigation tend to favor a patentee.

It is fair to conclude that my appraisal is unscientific and/or based on too small a sample to draw conclusions. On the other hand, the rating and report of LegalMetric has indicia of scientific reliability.

Spring IP

As 2009 winds down, I begin preparing to teach in the Spring semester. The greatest number of IP law courses yet are offered in the coming semester. My class on IP Transactions L936 is one among the classes offered in Copyright Law L929, Patent Law L934, and also, the seminars in Advanced Patent Law L 950 and IP Litigation L950. It shows the increased level of student interest in IP law.

Brand Assassins.

Businesses divide large blocks of time between building their brands, and managing risks. Crunch time comes when unforeseen actions give the brand a black-eye. The case is point is the F1 Grand Prix team of Renault, which like most motorsports teams, runs a car that resembles a rocket-shaped billboard. If you had to choose between the engineers and the sponsors, as to which group ‘keeps the wheels turning,’ it’d be hard not to choose the sponsors.

Consider that due to the massive audience for F1 racing, that the new-entrant Brawn team provided its sponsor with the equivalent of over $90M in TV exposure, because Brawn GP ran at the front of most of the early races. But, the sponsors can suffer when bad actors wearing the logos harm the team, and so too, its sponsors. The Renault team was managed by Flavio Briatore and Pat Symonds, and only a few years ago, won back to back championships. This past year, the team was not getting results. Some of the blame was shouldered by a young driver, Nelson Piquet, Jr. Mid-season he was let go, and unpleasantness ensued. Piquet reported to racing authorities that in an earlier race, he had been told to crash on purpose, so as to advantage his teammate. When the charges came out, Briatore went on the offensive with denials and threats of retributive litigation, and even criminal charges against Piquet.Then the FIA found probable cause, scheduled an emergency hearing to show cause why sanctions should not be imposed. Briatore and Symonds promptly resigned, and bans from the sport were imposed.Three brands took hits, Renault certainly, but also its key sponsors, ING, the Dutch banking concern and Mutua Madrilena, a Spanish insurer. As a result, both pulled their sponsorship, and their logos were pasted over on the racing car and equipment.

The difficult thing about brand management is that many risks are not foreseeable. Renault employees [allegedly] caused the debacle, but even if they are fired, the brand still is degraded by the bad publicity. On a more basic level, employees can put up a youtube video, e.g., the pizza workers cheese-up-the-nose video, or might post to Facebook some story that may be untrue but still gets into the news.

Brand assassination can result from negligence, from devious acts, or can be the work of competitors or the displeased public. All the goodwill that is carried by a strong brand can be undercut, quickly. Even after the Renault incident was resolved by the racing authorities, Briatore continues action in court, which extends the negative press against the brands.

Without an risk management plan in place, a company’s trademarks and brands can get lots of unwanted public exposure, and can sustain damage that is hard to repair.

Ariad v. Lilly - amicus diverge.

My initial reading of the amicus briefs to the Federal Circuit, on the two en banc questions about the written description requirement, indicated two clusters of argument.  There are contentions that the requirements “as applied” impact the life sciences harshly.  Others contend that there is, or is not, a description requirement in 112,1 separate from having to enable.

The “as applied” contentions may have merit, or may be anecdotally accurate.  Either way, anecdotes are not a sound basis for precedential rulings.  The statute says what it says.  No one would desire a result that allows a patent to issue, before the invention is to the point of invention.  So sure, there are applications and issued patents that get treated harshly, especially if the final claim set is more a product of negotiation with the examiner than based on a restatement of the specification.

As part of my adjunct professor work, an amicus brief was filed with the assistance of law students in the IP Law Society at the University of Kentucky College of Law.  It now is published on scribd.com, and accessible at:   http://www.scribd.com/doc/22480653/Brief-UKIPLS-11-11-2009

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