Most Influential Patent Cases of 2016

Most Influential Patent Cases of 2016 apks.com Arnold & Porter Kaye Scholer LLP All Rights Reserved.

Supreme Court Patent Cases 2016 Halo Electronics v. Pulse Electronics Willfulness Cuozzo Speed Technologies v. Lee IPR Rules Samsung v. Apple Design Patent SCA Hygiene Products v. First Quality Baby Products Laches Life Technologies v. Promega Components Made in U.S. for Assembly Overseas 2

Certiorari Granted 2017 Sandoz v. Amgen Patent Dance Impression Products v. Lexmark International Downstream Restrictions TC Heartland v. Kraft Foods Group Brands Venue 3

2016 Federal Circuit Caseload 4

Life Technologies v. Promega No. 14-1538, 2017 WL 685531 (U.S. Feb. 22, 2017) Facts: Fed. Cir. ruled shipping taq polymerase overseas for DNA profiling kits assembled abroad sufficient to trigger 271(f) Holding: All or a substantial portion of the components of a patented invention not satisfied by a single component Text specifying a substantial portion of components, plural, indicates that multiple components constitute the substantial portion. How many components does it take? 5

Halo Electronics v. Pulse Electronics 136 S. Ct. 1923 (2016) Facts: Pulse infringed Halo s patents for surface mount electronic packages Jury found high likelihood that infringement was willful District court declined to award enhanced damages because Halo failed to show objective recklessness 6

Halo Electronics v. Pulse Electronics 136 S. Ct. 1923 (2016) Supreme Court: Subjective willfulness of the infringer, not objective recklessness, is proper standard Measured from the time of the risky conduct Subjective willfulness is a question of fact for the jury (to be proven by a preponderance of the evidence) District courts have discretion to award enhanced damages (reviewed for abuse of discretion) Enhanced damages reserved for egregious cases of misconduct beyond typical infringement 7

Lexmark International v. Impression Products 816 F.3d 721 (Fed. Cir. 2016) Facts: Lexmark sold toner cartridges domestically (all subject to express singleuse/no-resale restriction) and abroad (some subject to restriction) Impression acquired Lexmark cartridges in order to resell in U.S. after modification by third party to enable re-use Impression sold modified Lexmark cartridges domestically and imported cartridges acquired abroad 8

Lexmark International v. Impression Products 816 F.3d 721 (Fed. Cir. 2016); heard en banc (sua sponte) Post-sale limits on use and resale Patentee allowed to sell a patented article subject to a single-use/no-resale restriction without exhausting patent rights Federal Circuit rejected argument that any sale of patented article exhausts a patentee s rights with respect to that article Foreign Sales Absent patentee s authorization, importation of patented articles sold abroad constitutes infringement Foreign sales do not authorize the buyer to import the article and sell and use it in the United States 9

Medicines Company v. Hospira, Inc. 827 F.3d 1363 (Fed. Cir. 2016) Facts: Medicines Company (pharma company without in-house manufacturing) contracted with Ben Venue Laboratories to manufacture Angiomax MedCo filed 2 patent applications more than one year after Ben Venue produced 3 batches Batches produced placed in quarantine pending FDA approval until 8/07 (after critical date) 10

Medicines Company v. Hospira, Inc. 827 F.3d 1363 (Fed. Cir. 2016) District Court: On-sale bar not triggered by transaction because contract was for sales of manufacturing services, not the drug itself Title to drug always remained with MedCo Federal Circuit (panel): On-sale bar did apply MedCo commercially exploited its invention prior to critical date Fact that title to the drug was not transferred did not preclude onsale bar Federal Circuit (en banc) Activity must constitute a sale under UCC [M]ere sale of manufacturing services by a contract manufacturer to an inventor to create embodiments of a patented product for the inventor does not constitute a commercial sale of the invention Decision is based on pre-aia 102(b), but may guide application of the on-sale bar doctrine under AIA 102(a)(1) 11

In re TC Heartland 821 F.3d 1338 (Fed. Cir. 2016) Facts: TC Heartland sued by Kraft Foods over patents for water flavoring Suit filed in Delaware Sought transfer to Southern District of Indiana (place of incorporation and HQ) 12

In re TC Heartland 821 F.3d 1338 (Fed. Cir. 2016) District of Delaware: Federal Circuit: Federal Courts Jurisdiction and Venue Clarification Act of 2011 broadened corporate residence Former 1391(c) any judicial district in which it is incorporated or licensed to do business or is doing business Amended 1391 (c) any judicial district in which it is subject to personal jurisdiction Denied petition for review Leaves lower court s ruling intact (allows for forum shopping) E.D. Texas will remain hotbed for patent cases Left to Congress or Supreme Court (cert. granted) to put an end to E.D. Texas reign 13

In re Queen s University at Kingston 820 F.3d 1287 (Fed. Cir. 2016) Facts: Queen s University at Kingston (located in Ontario, Canada) accused Samsung smartphones of infringing patents on tech that pauses a video when user looks away Judge from E.D. Texas granted Samsung s motion to compel production of communications between university and patent agents 14

In re Queen s University at Kingston 820 F.3d 1287 (Fed. Cir. 2016) Federal Circuit: Implications: Reversed district court s holding that communications with patent agents are not privileged Privilege extends only to communications necessary for prosecution of patents Any work outside of this limited scope (e.g., validity opinion regarding another party s patent) is not privileged No longer need to include patent attorneys on communications with patent agents simply to preserve attorney-client privilege Will reduce costs of preparing & prosecuting patent applications Must still be careful to not rely on agent-client privilege for communications not related to preparation of application Likely to see disputes in the future over the boundaries of the limited scope of privilege 15

SCA Hygiene v. First Quality Baby Products 807 F.3d 1311 (Fed. Cir. 2015), cert. granted, 136 S. Ct. 1824, 194 L. Ed. 2d 829 (2016) Facts: SCA Hygiene sent notice letter to First Quality on 10/31/2003 explaining alleged infringement of patent covering adult incontinence products First Quality responded with explanation that it believed SCA s patent was invalid due to prior art covering same tech SCA did not respond; had patent reexamined and validated by PTO (3/2007) First Quality did not know of reexamination, so invested heavily in the business SCA filed suit on 8/2/2010 District court granted First Quality s MSJ for laches and equitable estoppel 16

SCA Hygiene v. First Quality Baby Products 807 F.3d 1311 (Fed. Cir. 2015), cert. granted, 136 S. Ct. 1824, 194 L. Ed. 2d 829 (2016) Federal Circuit: Affirmed laches decision; reversed equitable estoppel decision Fed. Cir. precedent had established laches defense in patent cases S. Ct. decision in Petrella (disallowed laches in copyright cases; did not explicitly disallow laches in patent cases) SCA did not have a valid reason for waiting so long First Quality would be prejudiced if lawsuit allowed (would have likely restructured activities to minimize damages if suit brought earlier) Oral argument heard by Supreme Court (11/1/16): 5 of 6 justices from Petrella majority remain on the bench Ginsburg: Nothing wrong with a plaintiff lying in wait to determine whether suit is worth pursuing Kagan: wouldn t we expect that if Congress wanted to make an exception for patent law, or wanted to continue an exception that existed as a result of the preexisting practice, that Congress actually would have said so? Roberts: the cases in which laches was applied at law were insignificant, certainly not enough to support a consensus that Congress could be understood to have adopted. Not looking good for laches 17

Facts: ClearCorrect Operating v. ITC 819 F.3d 1334 (Fed. Cir. 2016) Align Technology sued ClearCorrect before the ITC alleging infringement of patent covering methods for making orthodontic aligners that incrementally reposition teeth CC US creates digital recreation of patient s teeth and electronically transmits to CC Pakistan CC Pakistan creates digital data models of teeth for series of intermediate tooth positions & final tooth arrangement Digital models transmitted electronically to CC US for manufacturing 18

ClearCorrect Operating v. ITC 819 F.3d 1334 (Fed. Cir. 2016) ITC: Federal Circuit: Has jurisdiction to block importation of infringing articles Held that article = an identifiable unit, item or thing that can be sold in commerce Determined that digital data meets definition of article, therefore ITC can bar importation of digital files Reversed ITC Articles can only refer to tangible, physical objects (not digital files) Common sense dictates that there is a fundamental difference between electronic transmissions and material things. Full Federal Circuit rejected ITC s request for en banc review 19

Northern District of California Local Rules: Damages Revised local rules require damages disclosures early and often: Initial case management conference Parties to submit non-binding, good-faith estimate of the damages range If cannot provide estimate, party must explain why it cannot do so and what additional information would enable it to do so Infringement contentions Patentee must identify time period of damages sought Likely to be held to disclosed period unless amendment permitted Does not require patentee to identify event that triggers period 20

Northern District of California Local Rules: Damages Revised local rules require damages disclosures early and often: Automatic document production Patentee and accused infringer must produce [d]ocuments sufficient to show the sales, revenue, cost, and profits for accused instrumentalities for any period of alleged infringement Allows accused infringer to challenge patent owner s standing early Damages contentions (and responses) Patentee must provide damages contentions within 50 days of submitting invalidity contentions Must disclose damages theories and facts in support of each theory Patentee can state that it requires additional information from accused infringer Accused infringer must respond to damages contentions or identify specific information needed from patentee (within 30 days) 21

IPR Estoppel Shaw Indus. Group v. Automated Creel Sys., 817 F.3d 1293 (Fed. Cir.) Facts: Shaw accused of infringing Automated Creel s patent claiming creels for supplying yarn and other stranded materials to a manufacturing process Shaw filed 2 petitions for IPRs consolidated; 1 final decision PTAB instituted IPR on 2 anticipation grounds declined to institute on other grounds presented by Shaw, citing redundancy doctrine Federal Circuit Holding: IPR estoppel provisions do not apply to invalidity grounds that petitioner raised in petition but were not selected as basis for instituting IPR 22

IPR Estoppel Grappling with Shaw The petitioner in an inter partes review of a claim in a patent may not assert in a civil action that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review. IV I v. Toshiba No. CV 13-453-SLR, 2016 WL 7341713 (D. Del. Dec. 19, 2016) Verinata v. Ariosa No. 12-CV-05501-SI, 2017 WL 235048 (N.D. Cal. Jan. 19, 2017) Does estoppel attach to grounds never raised in petition? No, estoppel does not preclude a defendant from arguing invalidity based on prior art references never presented to PTAB Although extending the above logic to prior art references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of this parallel administrative proceeding, the court cannot divine a reasoned way around the Federal Circuit s interpretation in Shaw. N.D. Cal. held that AIA estoppel provision only applies to grounds on which PTAB instituted IPR Invalidity arguments presented to PTAB in petition, but not chosen as grounds for instituting IPR, can be asserted in district court proceedings Limiting IPR estoppel to grounds actually instituted ensures that estoppel applies only to those arguments, or potential arguments, that received (or reasonably could have received) proper judicial attention. 23

Miscellaneous IPR/CBM Cases Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016) Facts: Garmin filed IPR petition challenging Cuozzo s patent related to speed limit indicators and methods for displaying speed/speed limit Holding: PTAB must apply broadest reasonable interpretation standard in IPR PTAB s decision to institute an IPR proceeding is not appealable 24

Miscellaneous IPR/CBM Cases Arendi S.A.R.L. v. Apple Inc., 832 F.3d 1355 (Fed. Cir. 2016) Facts: Petitioners challenged Arendi s patent that enables a user to conduct a search in one program while remaining in another program displaying a document Holding: PTAB must explain obviousness rejections in more detail than merely invoking common sense Common sense may be used to find obviousness but such a finding must still be supported by evidence and a reasoned explanation 25

Miscellaneous IPR/CBM Cases Unwired Planet L.L.C. v. Google, Inc., 660 F. App'x 974 (Fed. Cir. 2016) Facts: PTAB instituted CBM review of Unwired Planet s patent claiming a system and method for restricting access to a wireless device s location information Holding: All patents, at some level, relate to potential sale of a good or service Not the intent of Congress to allow CBM review of any patent CBM review only available for patents that have claims directed to methods and/or apparatuses used in the practice, administration, or management of a financial product or service 26

101 Computer Cases at Federal Circuit Patentable: Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) Information management and database system Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016) Method and system for filtering Internet content by providing customized filters at a remote server McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir. 2016) Method for automating part of a preexisting 3-D animation Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288 (Fed. Cir. 2016) System, method, and computer program for enhancing network usage records (generated/used by network service providers to bill customers) Unpatentable: In re TLI Commc'ns LLC Patent Litig., 823 F.3d 607 (Fed. Cir. 2016) Method and system for taking, transmitting, and organizing digital images Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307 (Fed. Cir. 2016) System for virus screening, filtering out spam emails, and screening/distributing emails FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089 (Fed. Cir. 2016) Methods for detecting fraud and misuse by identifying unusual patterns in users access of sensitive data 27

Thank You Aseem Gupta Senior Corporate Counsel Salesforce Matthew Ahn Senior Corporate Counsel Oracle Mary Fuller General Counsel & Corporate Secretary ASSIA, Inc. 28