©2006 Sutherland Asbill & Brennan LLP Looking Both Ways Before You Cross the Street: How to...

©2006 Sutherland Asbill & Brennan LLP

Looking Both Ways Before You Cross the Street: Looking Both Ways Before You Cross the Street: How to Leverage Outside Patent CounselHow to Leverage Outside Patent Counsel

2006 APPA LEGAL SEMINAR

October 9, 2006

Griff Griffin, Partner

[email protected]

Sutherland Asbill & Brennan LLP


What is a Patent Attorney?

– An attorney with a special license to practice before the United States Patent and Trademark Office (“USPTO”)

Prepare and file patent applications Prosecute patent applications Appeal final rejections to the Board of Patent Appeals and Interferences

– Requirements include a science or engineering degree and passing the Patent Bar examination administered by the USPTO

IntroductionIntroduction


Services Provided By Outside Services Provided By Outside Patent CounselPatent Counsel

If you’ve implemented or are planning to implement an on-line

bill payment system, why talk to a patent attorney?

Looking left…Patent protection for innovative features Patentability opinion Patent application Foreign patent protection

Looking right…Clearance opinion to identify potential infringement risk

And in the unfortunate case of an accident…

Counseling and analysis of “offers to license”


Clearance OpinionClearance Opinion

Clearance Opinion Aliases– Freedom to Operate (FTO) Opinion and Freedom to Use Opinion

Purpose– Review of patents and published applications that may be enforceable

against a product or service to identify potential infringement issues

Two Steps– Search issued patents and published applications, and

– Analyze search results to determine if any of the issued patents raise a material risk of infringement


Clearance OpinionClearance Opinion(Cont’d)(Cont’d)

Constraints– Limited to Effectiveness of Search Strategy

Concern over that “needle in the haystack” patent

– Unpublished Applications Requests for non-publication 18 month pendency from earliest priority date

Watch Services for Issued Patent / Published Application

Conflicts of Interest– Counsel cannot opine on the scope of another client’s patent

Distinguish From: – Non-infringement Opinion, Patentability Opinion, and Invalidity Opinion


Clearance OpinionClearance Opinion(Cont’d)(Cont’d)

May Trigger Duty of Due Care by Actual Notice of a Prior Art Patent, Which May Result in a Claim of Willful Infringement– May provide for treble damages and an award of attorney fees in cases of

“willful” patent infringement (35 U.S.C. § § 284-285)

– Duty of care to avoid infringement is triggered upon receiving actual notice of a patentee’s rights (Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp, 343 F.3d 1337 (Fed. Cir. 2004))

Low threshold for actual notice - triggered by knowledge of the patent Knowledge may come from acts of patentee, potential infringer, or a third party

– Clearance Opinion generally not sufficient by itself as a defense to a charge of willful infringement


““Offers to License”Offers to License”

Assessing the Risk of Infringement– Sarbanes-Oxley concerns

Responding to the Patent Owner Mitigating Potential Liability

– Establishing a defense against potential claims of willful infringement Willful infringement requires proof by clear and convincing evidence that the

infringer did not have a reasonable basis for believing that it had a right to engage in the infringing acts (Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp, 343 F.3d 1337 (Fed. Cir. 2004)

Willful Infringement determined by the totality of the circumstances (Read Corp. v. Protec, Inc., 970 F.2d 816 (Fed. Cir. 1992))

Exemplary factors that are considered in a willful infringement analysis (“Read factors”)

– Whether infringer, when he knew of other’s patent, investigated the scope of the patent and formed a good faith belief that it was invalid or not infringed

– Whether infringer deliberately copied ideas or designs– Defendant’s size and financial condition– Remedial action by defendant


““Offers to License” Offers to License” (Cont’d)(Cont’d)

Mitigating Potential Liability (Cont’d)– Exculpatory Opinions

Non-infringement opinion Invalidity opinion based on prior art Requirements for Opinions (Underwater Devices, Inc. v. Morrison-Knudsen Co.,

717 F.2d 1380 (Fed. Cir. 1983))– Timely

– Well-reasoned and accurate

– Written

– Competent outside counsel

– Reasonably relied upon by the potential infringer

Selection of counsel for opinions– Waiver and disqualification issues (litigation counsel v. opinion counsel)


Mitigating Potential Liability (Cont’d)– Design-around

Change system to avoid infringement Liability limited to past infringement up to the point the change is implemented

– License/cross-license May leverage your own patent portfolio, non-infringement position, invalidating

prior art

– Indemnification Option if system is provided by third party or licensed/leased from a third party

– Stop allegedly infringing activity, Liability limited to past infringement up to the point the activity is stopped

““Offers to License” Offers to License” (Cont’d)(Cont’d)


Why all the Fuss?Why all the Fuss?

The Cost of Patent Litigation (Legal Fees Only) ($000’s)

2001 2003 2005

Less than $1 Million at Risk

End of discovery $250 $290 $445

Inclusive, all costs $499 $500 $770

$1-25 Million At Risk

End of Discovery $797 $1,001 $1,495

Inclusive, all costs $1,499 $2,000 $2,637

More Than $25 Million At Risk

End of Discovery $1,508 $2,500 $3,239

Inclusive, all costs $2,992 $3,995 $5,176


Patent Litigation Involves High Stakes

Some sample verdicts: Polaroid v. Eastman Kodak (D. Mass. 1991) -- $873M (instant

cameras) IGEN Int’l v. Roche (D. Md. 2002) -- $505M (pharmaceuticals) Intergraph Corp. v. Intel (E.D. Tex. 2002) -- $150M (microprocessor

technology) Immersion Corporation v. Sony Computer (N.D. Cal. 9/21/04) -- $82M

(video game controllers) Symbol Tech. v. Proxim, Inc. (D. Del. 7/30/04) -- $26M (wireless LAN

technology) NTP, Inc. v. RIM, Inc. (E.D. Va 3/06) -- $612.5M (Blackberry device)



High Stakes of Patent Litigation

In addition to monetary damages, the patent owner can receive injunctive relief, either through a preliminary injunction, a temporary restraining order, and, once a verdict has been reached, a permanent injunction.

The Fed. Cir. has expressed an inclination to granting an automatic permanent injunction whenever a case has been decided for the patent owner.

Ebay v. Mercexchange (2006) changed the Fed. Cir.’s inclination. Now, patentees who get a verdict of infringement against defendant(s) must prove:

– Patentee has suffered an irreparable injury– Monetary damages are insufficient to redress the injury– Considering the balance of hardships between the patentee and the defendant, an

injunction is warranted– The public interest would not be disserved by a permanent injunction.



ConclusionConclusion

Questions?

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