JOLT Digest

Federal Circuit Heightens Standard for Inequitable Conduct
By Marina Shvarts – Edited by Dorothy Du

Therasense, Inc. v. Becton, Dickinson and Co., 2008-1511, -1512, -1513, -1514, -1595 (Fed. Cir. May 25, 2011) (en banc)
Slip Opinion

The Court of Appeals for the Federal Circuit vacated and remanded the decision of the United States District Court for the Northern District of California, which found U.S. Patent No. 5,820,551 (“the ’551 patent”) unenforceable due to inequitable conduct.

The Federal Circuit heightened the standard for proving inequitable conduct with respect to both the intent and materiality elements. The new test requires specific intent to deceive. A finding of materiality must show that “but-for” nondisclosure, the claim would not have been approved. The holding was a response to concerns about overuse of the inequitable conduct defense and the harshness of the remedy, characterized as the “atomic bomb of patent law.” The case was remanded to the district court to determine whether defendants’ conduct was inequitable under the new test.

Patently-O summarizes the opinion. The Patent Law Practice Center discuses reactions in the patent community. Patent Docs discusses the dissent.

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Federal Circuit Provides Guidance for Obviousness Determinations by the PTO and the Board of Patent Appeals and Interferences
By Abby Lauer – Edited by Dorothy Du

In re Kao, 2010-1307 (Fed. Cir. May 13, 2011)
Slip Opinion

The Federal Circuit vacated and remanded a decision of the Board of Patent Appeals and Interferences (“Board”), which had rejected patent application 11/680,432 (“the ‘432 application”) for obviousness. The Federal Circuit also affirmed findings of obviousness by the Board regarding patent applications 12/167,859 (“the ‘859 application”) and11/766,740 (the ‘740 application”). All of the patent applications at issue claimed controlled release drug formulations containing the opioid pain reliever oxymorphone.

In vacating and remanding the Board’s decision regarding the ‘432 application, the Federal Circuit held that the Board lacked “substantial evidence” in its determination that it would have been obvious for someone skilled in the art to combine the claims of a prior art reference with the controlled release oxymorphone formulation. In addition, the Board did not properly analyze the evidence of secondary considerations of nonobviousness that were presented by the patent holder. The Court agreed with the Board that both the ‘859 and the ‘740 applications were obvious in view of certain prior art references.

PatentlyO provides an overview of the case. Patent Docs provides detailed commentary and analysis.

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Federal Circuit Ruling in Favor of TiVo Against EchoStar Changes Test for Reviewing Contempt Orders
By Dorothy Du – Edited by Matt Gelfand

TiVo Inc. v. EchoStar Corp., 2009-1374 (Fed. Cir. April 20, 2011) (en banc)
Slip Opinion

The Court of Appeals for the Federal Circuit affirmed in part and vacated in part the decision of the District Court for the Eastern District of Texas, which had found the appellants (collectively “EchoStar”) in contempt of two provisions of the court’s previous permanent injunction order.

In its en banc decision, the Federal Circuit vacated the district court’s finding that EchoStar was in contempt of the provision of the permanent injunction that forbid it from infringing TiVo’s DVR software patents. The court overruled its two-step KSM inquiry for reviewing post-infringement contempt proceedings and replaced it with a new test that goes straight into the “more than colorable differences test.” The case was remanded to the district court for a factual determination of whether there are more than colorable differences between the prior infringing product and EchoStar’s modified product. However, the court affirmed the district court’s finding of contempt for the disablement provision of the injunction.

Forbes provides a brief overview of the case. Patently-O outlines the new rules for post-infringement contempt proceedings. CNET, which reported on the parties’ views of the outcome, states that EchoStar plans to appeal the case to the Supreme Court, and to seek a stay on the injunction in the meantime.  (more…)

Written by Mehdi Eddebbarh & Jack Burns
Edited by Albert Wang
Editorial Policy

I. Introduction

Patent law strives to stimulate innovation by awarding inventors a temporary monopoly over patented inventions.  Antitrust law seeks to ensure efficient competition, in part by restricting monopolistic behavior.  Perhaps the most scrutinized area of intersection between patent law and antitrust law is the proper treatment of “reverse payments,” also referred to as “pay-for-delay” settlements.  Arkansas Carpenters Health and Welfare Fund v. Bayer AG, 625 F.3d 779, 780 (2d Cir. 2010) (Pooler, J., dissenting).  These are settlement agreements in patent infringement litigation in which a patent holder pays the alleged infringer to concede the validity of the patent and refrain from entering the market.  Henry N. Butler & Jeffrey Paul Jarosch, Policy Reversal on Reverse Payments: Why Courts Should Not Follow the New DOJ Position on Reverse-Payment Settlements of Pharmaceutical Patent Litigation, 96 Iowa L. Rev. 57, 60 (2010).

Senators Chuck Grassley and Herb Kohl recently introduced legislation in Congress that would create a presumption that pay-for-delay deals in the pharmaceutical industry are illegal.  Additionally, there is currently a circuit split over the proper standard for determining whether reverse payment settlements are improper.  The Supreme Court has not spoken on the issue, and recently denied a petition for certiorari by the Plaintiffs-Appellants in Arkansas Carpenters Health and Welfare Fund v. Bayer AG challenging the reverse payment settlement in that case.  Amicus curiae supporting the petitioners included 32 state Attorneys General and the American Antitrust Institute.

This commentary will explain why Congress and the judiciary should continue to allow pioneer patent holders and firms challenging those patents to use reverse payment settlements to settle their disputes.  To that end, this commentary will explain the importance of recognizing the right to exclude granted by patent laws and discuss the judicial policy in favor of settlements.  Some courts have referred to this as the “exclusionary zone of the patent,” and have essentially found that because patents provide a monopoly, any anticompetitive effects stemming from the exclusion of generic manufacturers through settlements should be recognized as a valid outgrowth of rights inherent in the patent grant.

While recognition of those underlying policies provides significant deference to patent holders, it also provides an incentive for patent holders to conduct sham litigation to eliminate threats to the validity of weak patents.  Thus, Congress should amend the current regime to clarify that where a reverse payment is challenged, some scrutiny of the patent’s validity is necessary.  Further, Congress should amend the 180-day exclusivity period, currently granted only to the first generic firm to challenge a pioneer patent, to give a subsequent challenger the same benefit where the first challenger settles.  (more…)

Written by Matt Gelfand
Edited by Harry Zhou
Editorial Policy

A major criticism of the current copyright system is the overbreadth of the protections it affords, in terms of duration, works covered, and uses covered. With the Copyright Act of 1976 and subsequent international treaties and legislation, copyright has become quasi-permanent, and breadth-limiting formalities such as notice and registration requirements have been eliminated.[1] Virtually any use of the creative expressive content in a work is subject to control by a copyright-holder,[2] and attempts to invoke the “Fair Use” exception can result in protracted legal disputes. The result is near-constant technical infringement of copyright, made bearable only by virtue of limited enforcement.

These concerns about breadth highlight the fundamental balance that an intellectual property system must strike between its goals, generally related to a creator or his/her work, and the ways in which it limits use of an idea or expression by the general public or another creator. Debates about copyright law often focus on the success of the copyright system at promoting the goals to which it is directed — incentivizing creation, rewarding creators, protecting artists’ personality interests in their work, and stimulating cultural development — in the context of a modern, networked society. Among these different goals, and among a diverse set of creators, different forms of copyright protection are justified.

Take breadth of protection, for example. A commentator concerned with incentives (the goal) for the creation of high-budget commercial films by movie studios (the users) might argue for a level of protection that is sufficiently strong to provide that incentive, but not so strong as to unnecessarily increase the difficulty of creating films down the line. A commentator concerned with the development of a cultural zeitgeist through the manipulation of popular symbols might argue for weak protections against derivative uses of the work, while at the same time recognizing that protections against verbatim copying provide a useful incentive to create the symbols themselves. The focus of this sort of criticism is on finding an ideal system that does the best job for a commentator’s favored goal or user.

But maybe we should be asking a more fundamental question: should copyright continue to take a one-size-fits-all approach? Perhaps the differently-motivated participants in our modern society would be best served by different copyright systems altogether. For creative professionals and corporations making a substantial investment of time, resources, and/or risk in a creative enterprise, the existing system of economic rights (with exceptions for unprofitable and socially beneficial uses[3]) is at least somewhat appropriate. But for the tortured artist who considers his work to be a reflection of his own personality, a strong system of moral rights may be better. For a fame-obsessed YouTube phenom, a right of attribution alone would suffice; a computer programmer who wants her work to keep serving society, on the other hand, would prefer robust copyleft-style protections to prevent the proprietization of downstream derivative works. A blogger writing purely for the satisfaction of expressing herself might not need any protection at all! The existing copyright system does a bad job serving most of these groups.

This comment begins with a description of the most well-known system of alternative rights designations: the Creative Commons (“CC”) licenses. Different CC licenses will be discussed in the context of the users who are likely to choose them and the real aims of those users. Next, some drawbacks of using the CC license system to carve different rights reservations out of the existing copyright system will be addressed. Finally, this comment will propose two solutions to the homogeneity of the existing system: a radical move to a heterogeneous copyright system, and a more modest change to the copyright registration system.[4] (more…)