Supreme Court denies Certiorari in Quanta v. Ricoh

Does the unconditional sale of a patented item overseas result in a forfeiture of rights to enforce patent rights in the United States? Federal Circuit precedent has answered this question in the negative; see Harold C. Wegner, Post-Quanta, Post-Sale Patentee Controls, 7 J. Marshall Rev. Intell. Prop. L. 682, 698 (2008).

So called "international patent exhaustion" was the focal point of a certiorari petition that was recently denied by the Supreme Court in Quanta v. Ricoh. The Supreme Court's consideration of certiorari petitions is now over until the Court resumes for the October 2009 Term. Would Obama's pick, Judge Sonia Maria Sotomayor, have made a difference in this vote? Probably not. Regardless of this vote, most scholars believe that the Supreme Court will eventually need to take a hard look at this issue. Professor Hal Wegner says that "[t]here has been a wealth of legal writing on the subject since 1974, particularly from Europe, where intra-European exhaustion took root in the European Court of Justice Centrafarm case that year. The topic attracted much attention in Asia in the late 1990's when the Japan Supreme Court issued its blockbuster opinion in the BBS case. Quanta may well be the wakeup call for consideration of this issue in the United States."

Chinese High Court Comments on Patent Law

Supreme People’s Court Justice HE Zhonglin of the People’s Republic of China introduced the draft of Several Provisions of the Supreme People’s Court on Issues Concerning Applicable Laws to the Trial of Patent Infringement Controversies (the “Judicial Interpretations”). The Judicial Interpretations keyed to parallel the implementation of the recent Third Amendment to the Patent Law. Justice He announced that the Court would welcome comments concerning the draft guidance, including comments from interested observers from the United States and other overseas countries.

Read more here:

ZhaoNieTangChinaSupremeCourtGuidance.pdf

Fluke Files Declaratory Judgment Action Against Competitor

Local manufacturer of electronic test tools (among other products in the largely "wired" electronics space reminiscent of last century), Fluke Products, filed suit seeking a declaratory judgment that certain Modular Telephone Plugs do not infringe U.S. Patent No. 5,562,475, allegedly owned by Aines Manufacturing Corp. of Ronkonkoma, NY. Fluke also alleges that the '475 patent is invalid.

As basis for asserting DJ jurisdiction, the complaint asserts that the president of Aines, Joseph Kern, Jr., sent a letter to Fluke in April 2009, threatening infringement and saying that he "will do whatever is necessary to protect the Aines Patent and recover damages." The complaint, filed by Ryan McBrayer at Perkins Coie, is attached below.

FlukeAinesDJComplaint.pdf

Patently Challenging Road for Amazon

By all accounts, Amazon.com is an innovator. It pioneered online commerce in the 1990s and it was an early adopter of aggressive IP strategies, including the much maligned "one-click" patent, which was unsuccessfully enforced against Barnesandnoble.com in 2000 and is still suffering through reexamination at the request of a part time actor from New Zealand.

Recently, Amazon was back on the offensive, asserting several patents against The Discovery Channel's online store. But as the company continues to expand into neighboring areas, including the delivery of online content through its popular Kindle product, it is increasingly finding itself defending patent litigation.

Last month, Amazon was sued twice, once for patent infringement and again for copyright. The patent case was filed by Actus, LLC, a company claiming ownership of U.S. Patent No. 7,328,189 ("the '189 patent") entitled "Method and Apparatus for Conducting Electronic Commerce Transactions Using Electronic Tokens." In this case, Amazon is a co-defendant with its former patent-rival, Barnesandnoble.com. Other defendants include Apple, Ebay, US Bank, and American Express. The '189 patent allegedly covers "a mall service provider server that communicates with [a] first web server and the second web server to facilitate electronic commerce" all using "electronic tokens."

The copyright case was filed pro se, by an individual, Rene Carranza. Ms. Carranza alleges that Amazon infringed copyrighted sound recordings in a song entitled "Turnbando Muros." In this case, Amazon is co-defending with Universal Music Group and Walmart.

Overall, Amazon is defending 13 IP suits filed since January. Eleven out of 13 are for patent infringement. That surpasses the number of patent suits Amazon faced last year (7 cases total), and it is also larger than the number filed in 2006 and 2007 combined (6 in 2007 and 3 in 2006).

These numbers will tend to sharpen Amazon's voice in the current debate over patent reform. But this is really nothing new. Jeff Bezos, while directing a company that accumulated hundreds of software and business method patents in the late 1990s and since 2000, supported patent reform before it was popular.

It will be interesting to see how Amazon navigates the patently challenging road ahead. It will certainly continue to accumulate IP assets as it moves into other spaces. And it will no doubt continue to aggressively protect its core business, as evidenced by the dispute with the Discovery store. Its voice in the debate over patent reform should be informative because out of all of the reformers, it has the longest history in the movement. Moreover, it understands the need for strong patent laws that encourage innovation by providing incentives. At the same time, it is increasingly a target for infringement. Congress and the public will be well-served if they listen closely to what Amazon has to say about patent reform.

Here is a list of Amazon's IP suits filed since January.

May 26, 2009
Actus, LLC v. Amazon.com, Inc. et al, (TX Eastern) Judge Ward Patent

May 20, 2009
Rene Carranza v. Lideres Entertainment Group et al (CA Central) Judge Wu Copyrights

May 15, 2009
Amazon.com Inc v. Discovery Communications Inc (WA Western) Judge Lasnik Patent

May 12, 2009
API Technologies, LLC v. Facebook, Inc. et al (TX Eastern) Judge Ward
Patent

Tune Hunter Inc v. Samsung Telecommunications America LLC et al (TX Eastern) Judge Ward
Patent

April 6, 2009
Parallel Networks, LLC v. Amazon.com, Inc. et al (TX Eastern) Judge Davis Patent

March 25, 2009
TQP Development, LLC v. Barclays PLC et al (TX Eastern) Judge Ward
Patent

March 23, 2009
Video Professor, Inc. v. Amazon.com, Inc. (D. CO) Judge Blackburn

March 20, 2009
YIP (Winnie) v. HALLMARK GIFT LAND et al (D. NJ) Judge Hochberg
Patent

March 17, 2009
Discovery Communications Inc. v. Amazon.com Inc. (D. DE) Judge Robreno
Patent

The Tobin Family Education and Health Foundation et al v Amazon.Com, Inc.
(D. FL Middle) Unassigned Judge
Patent

February 19, 2009
Big Baboon Corporation v. Dell, Inc. (D. CA Central) Judge Wilson
Patent

Shifferaw v. EMSON USA et al (TX Eastern) Judge Ward
Patent

The count

Texas Jury Stings Microsoft for $200M

I guess the third trial's the charm for patent holders looking to collect big money from Microsoft for patent infringement. After winning one case on summary judgment on the eve of trial, and settling another one mid-way through, Microsoft decided to gamble on the jury yesterday and lost. Here is a snippet of today's article from IP 360:

"A federal jury on Wednesday found that Microsoft Corp. willfully infringed i4i Inc.’s patent covering document-formatting software and handed down a verdict awarding the small Canadian company $200 million.

Concluding an eight-day trial in the U.S. District Court for the Eastern District of Texas, a federal jury supported i4i’s claims that Microsoft incorporated its patented technology in a range of operating system products, including Word 2003 and Word 2007

The $200 million award includes compensation for lost profits and royalties.

Microsoft infringed U.S. Patent Number 5,787,499, which covers software controlling document architecture and content and enables individuals to manipulate electronic documents without using manually embedded command codes."

Microsoft had apparently defended the charges on inequitable conduct grounds. Arguing, the plaintiffs were "aware of the structure, storage, manipulation, creation, modification and maintenance of a document in versions of Microsoft Word that existed prior to the filing of the application leading to the ‘499 patent."

Them's fightin' words in Texas. Perhaps a more conciliatory approach would have shaved 8 or even 9 figures off of that damages number?

Amazon.com Strikes Back at Discovery Communications

Amazon.com asserted three patents against Discovery Communications, owner of the well known cable TV brand, the Discovery Channel, as well as other goods and services sold under the Discovery name and mark. The patents-in-suit are U.S. Nos. 6,006,225 ("Refining Search Queries by Suggestion of Correlated Terms from prior Searches"); 6,169,986 ("System and method for Refining Search Queries"); 6,266,649 ("Collaborative Recommendations Using Item-to-Item Similarity Mappings"); and 6,317,722 ("Use of Electronic Shopping Carts to Generate Personal Recommendations") All patents are asserted against Discovery through its use of the Discovery Store website.

In March, Amazon was sued by Discovery Communications in the District of Delaware under U.S. Patent No. 7,298,851 ("Electronic Book Security and Copyright Protection System"), a patent that, according to Discovery, covers Amazon's popular Kindle e-book product.

In a statement, Joseph A. LaSala, Jr., General Counsel of Discovery Communications, said: "The Kindle and Kindle 2 are important and popular content delivery systems. We believe they infringe our intellectual property rights, and that we are entitled to fair compensation. Legal action is not something Discovery takes lightly. Our tradition as an inventive company has produced considerable intellectual property assets for our shareholders, and today's infringement litigation is part of our effort to protect and defend those assets."

Amazon%20Compl%20%28WDWA%20Disc%20Comm%29.pdfAmazon%20%28Disc%20Comm%20Complt%2C%20DE%29.pdf

Claim Construction Sticks in Bamboo Flooring Case

Judge Leighton resolved a motion for reconsideration of an order construing the terms "random orientation" as used in U.S. Patent No. 5,543,197, in an order that was issued over four months ago (previous posts here and here). The primary bone of contention was that the Court had construed these terms to require not only random orientation of the individual bamboo strands, but also random, "not uniform," lengths.

In refusing to reconsider its interpretation of the term "random orientation," Judge Leighton reasoned as follows:

"Teragren argues that the ‘197 patent describes a beam that contains bamboo segments randomly oriented vertically, horizontally, and rotationally, but that are not necessarily lapped or staggered, and are not necessarily of random (or non-uniform) lengths. Teragren effectively argues that the beams described in the patent could be like a box of uncooked spaghetti; the individual segments are randomly placed, but are of uniform length and are not staggered."

Relying primarily on statements in the prosecution history arguing patentability over a specific prior art reference, and arguing "The advantage is that the randomness of this process assures a uniform and length-wise staggered stacking of the bamboo segments, allowing the length of the beams to exceed the length of the bamboo segments themselves and negating any weaknesses of the discontinuity of the annular rings."

That was enough for the Court to conclude that the claims should limit the term "random orientation" to require random, non-uniform lengths.

On another issue, the Court granted reconsideration, clarifying its Markman ruling as follows:

"The Court’s Markman Ruling was not intended to address whether an embodiment which adds a layer or lamination to an otherwise infringing product necessarily is or is not an infringement. Nothing in the Court’s prior Ruling should be construed as a determination of that issue. If and to the extent this clarifies the Court’s prior Ruling, the Motion for reconsideration on this issue is GRANTED."

teragrenMRecon.pdf

Surgical Trainer Patent Case Headed for Trial in October

Simulab Corp. will get a jury this fall to decide claims for infringement of U.S. Patent No. 6,780,016, a patent for a "Human Surgical Trainer and Methods for Training." Infringement claims are being asserted against Synbone AG, a Swiss company. My previous posts here and here, discussed Judge Zilly's summary judgment rulings, expressing skepticism that "Simulab can demonstrate the requisite layer properties and relationships" claimed in the patent.

Simulab was asked to present an offer of proof setting forth how it intended to prove infringement. Simulab's offer of proof was supported by the 15 page declaration of the inventor, Christopher C. Toly (PDF link below). Evaluating Simulab's offer and the declaration of Mr. Toly, Judge Zilly initially ruled as follows:

"The Court is not satisfied that Mr. Toly’s most recent declaration addresses in any meaningful way the fundamental question whether the adhesive layers of Sites 4 and 5 and the film layer of Site 7 are more difficult to dissect that the simulated skin layers at those sites of the SYNMAN. Mr. Toly, however, has provided the relevant density figures, tending to show the density relationships required by Claim 43 of the ’016 Patent, and the Court is persuaded that any further briefing from defendant would simply demonstrate an issue of material fact precluding summary judgment. Thus, the Court will set a trial date concerning the sole remaining allegation that Sites 4, 5, and 7 of the SYNMAN infringe Claim 43 of the ’016 Patent."

Defendants moved to reconsider, citing as error, the Court's conclusion that "further briefing from defendant would simply demonstrate an issue of material fact precluding summary judgment"

After requesting a response to the motion to reconsider, the Court denied the motion, and set trial for October 26, 2009. Judge Zilly's order states as follows:


"Although the Court remains skeptical that plaintiff will be able to establish the relative ease or difficulty of dissection relationships required in connection with Claim 43 of the ’016 Patent, see Minute Order at ¶ 2 (docket no. 43); Order at 12 n.5 (docket no. 40), the Court is reluctant to rule as a matter of law on the merits of plaintiff’s remaining claim of infringement. In its offer of proof, plaintiff presented evidence of density relationships consistent with the language of Claim 43. For pretrial purposes, defendant does not dispute plaintiff’s density figures. See Motion for Reconsideration at 2 (docket no. 44). Instead, in its motion for reconsideration, defendant for the first time asserts that density bears no consistent relationship with the relative ease or difficulty of dissection. Id. Defendant, however, has offered no expert or other testimony to support this proposition, and has not suggested any alternative means of quantifying the relative ease or difficulty of dissection of the materials at issue."

An interesting side comment from the Court in this order says "In reaching its conclusions, the Court has also considered the timing of defendant’s motion for summary judgment, which was filed more than two months before the close of discovery, and which was the basis for the Court’s subsequent stay of discovery."

To me, this is an indication that Defendant should have waited until discovery closed to file its motion, or it should have made a case why early SJ was appropriate.

Waiting is hard (and expensive) for any litigant, but it is especially hard for defendants who think a plaintiff's case lacks merit. One practice tip for SJ motions filed before the close of discovery, especially in Judge Zilly's court and I speak from experience, is to explain (preferably in your opening brief) why further discovery will not lead to a genuine issue of material fact. Arguments as to why early SJ is in the interest of justice and judicial efficiency are also a good thing to include.

In other words, don't just file your motion early because Rule 56 says you can. (saying motions for SJ can be filed "after 20 days have passed from commencement of the action"). Rather, explain why the timing is appropriate. This way, you might have a shot at obtaining an early, more cost-effective victory for your client

simulabtollydeclaration.pdf

Fees Denied to K2 in Short Fat Ski Case

The case is Paul N. Nelson v. K2 Inc., Cause No. C07-1660RSL. My previous posts, explain that plaintiff Nelson lost his priority date claimed in U.S. Patent No. 5,603,522 on written description grounds, and then lost summary judgment on his invalidity defense based on allegedly "experimental sales." K2 moved for attorneys fees. In an order denying fees, Judge Lasnik reasoned as follows:

"Prior to commencing this litigation, plaintiff was under no obligation to accept defendant’s (or Volant’s) opinion regarding the validity of United States Patent No. 5,603,522 (the ‘522 patent). Plaintiff had successfully marketed and licensed the invention to a number of sophisticated entities, including K2, and had always maintained that the ‘522 patent was entitled to its earliest claimed priority date. Determining the correct priority date required the Court to evaluate the range and "blaze mark" cases and to consider the policy implications of requiring too much or too little specificity from an inventor. Plaintiff was entitled to a judicial determination of this important issue and was not required to abandon the ‘522 patent simply because his competitors challenged its validity. Because the lawsuit was not baseless or frivolous at its inception, plaintiff’s prosecution of his claims does not justify an award of attorney’s fees under 35 U.S.C. § 285."

Judge Lasnik went on to explain that "the closer question" was whether the prosecution of the case since the first SJ order on written description grounds, October 15, 2008, should be characterized as "exceptional." This issue arose because at oral argument, plaintiff’s counsel apparently stated "we’re out of here . . . we lose" if the Court granted K2's first SJ motion.

Attempting to explain these statements, plaintiffs presented evidence regarding settlement negotiations between the parties, arguing that the fees defendants incurred after the Court’s priority date ruling resulted from K2's own "strategic choices." This evidence was called into question by declarations submitted by K2.

Explaining that "[f]ee disputes should not devolve into mini-trials," Judge Lasnik denied K2's motion, noting that "[i]t is clear from either version of events that plaintiff took significant, albeit unsuccessful, steps to resolve this case in an appropriate and timely manner."

Indeed, plaintiff offered a "walk-away" settlement within days of receiving the Court’s priority date ruling. This was rejected by K2 because they believed the settlement should come with a payment of attorneys fees.

Noting further that plaintiff's experimental use defense was "not well supported," Judge Lasnik said that the weak defense could not serve as basis for fees where "defendants opted to continue the litigation" following the "walk away" proposal.

This is a reminder that continuing litigation purely for the recovery of attorneys fees is almost always a bad idea. The better route is to simply accept your hard-fought victory and move on. After all, this is America, where the default rule is that each party should bear their own attorneys fees, win, lose, or draw.nelsonK2FeeOrder.pdf

Seattle Patent Litigation Update: May 2009

What recession? Seattle patent cases exploded during the months of February, March and April 2009 (list included in this post). Note that I've done something a little different for this post, I've included the patent number and the name of the plaintiff's lawyer and law firm.

While the number of cases increased over the last few months, most of these cases remain idle, without even an appearance by counsel for the Defendant(s).

One case that you've all no doubt heard about, was Microsoft's filing against TomTom over navigation devices and software. I posted something about that case when it was first filed. That case settled quickly under mostly confidential terms, putting to rest a year's worth of squabbling between the two companies. Both companies had sued the other, claiming patent infringement. Under the terms of a five-year agreement, Microsoft said in a public statement that TomTom will pay it for use of the eight car navigation and file management system patents asserted in its ITC and Seattle case, while Microsoft will be able to use the four patents included in the TomTom countersuit without any payment to TomTom.

Another interesting case on this list, is Ancora Technologies Inc v. Toshiba America Information Systems Inc et al., Cause No., 2:2009cv00270. Pending before Judge Pechman, this case involves claims asserting U.S. Patent No. 6,411,941, for a "method of restricting software operation with a license limitation." Did I hear someone say In re Bilski? We'll be watching this one closely. It was transferred from the Central District of California. Very capable lawyers on both sides, so this will be a fun one to follow.

An interesting side story to this case is that Ancora initially filed against Dell Inc., Hewlett-Packard Co. and Toshiba Corp.’s Toshiba America Information Systems unit, asserting claims that all defendants' use of Microsoft’s technology infringed the '941 patent. Microsoft filed to intervene as a defendant in the case in September. And this started accusations that Ancora's Chief Executive Officer, Miki Mullor, landed a job with Microsoft under false pretenses and gained access to confidential data. Apparently, Mullor applied for a job at Microsoft in October 2005, saying he was a former Ancora employee and that the company had gone out of business, according to a complaint filed Jan. 22 in state court in Seattle. According to Microsoft, Mullor concealed that Sammamish, Washington-based Ancora had accused Microsoft in June of infringing a 2002 patent.

Ancora responded through its attorney, Mark Cantor, saying "[t]his is simply a retaliatory lawsuit by Microsoft to get the patent case transferred to Seattle."

Retaliatory or not, it apparently worked, and the case is now here in Seattle.

Here is the list of cases filed between February 1 and April 30, 2009.

April 17, 2009

Warm Brothers Inc v. North East Hardwood Flooring Inc et al., Cause No. 3:09-cv-05223 (WA Western/Tacoma) Judge Leighton, U.S. Patent No. 6,533,185, hydronic radiant heating devices (Lawyer for patentee, Richard L. Goff)

April 16, 2009

Alpha Technologies Inc v. Ekstrom Industries Inc., Cause No. 2:2009cv00515 (WA Western/Seattle) Judge Pechman, U.S. Patent Nos. 6,428,350 and 6,443,761, (Lawyers for declaratory judgment plaintiff, Jerry Riedinger et. al., Perkins Coie).

April 10, 2009

Direct Route LLC v. Spirevision Inc et al., Cause No. 2:2009cv00486 (WA Western/Seattle) Judge Jones, U.S. Patent No. 7,467,229, method and apparatus for routing of network addresses, (Patentee’s lawyer, Duncan C. Turner, et. al., Badgley Mullins)

Ergo LLC et al v. Pacific Cycle Inc., Cause No. 2:2009cv00488 (WA Western/Seattle) Judge Robart , U.S. Patent No. 6,158,806, bicycle seat (Patentee’s attorney, Lee Burdett)

March 31, 2009

Gamakatsu USA Inc v. Matzuo America Inc., Cause No. 2:2009cv00423 (WA Western/Seattle) Judge Lasnik, U.S. Patent No., 6,691,449, Fishing Hook (Lawyers for declaratory judgment plaintiff, Ross Boundy et al., Davis Wright Tremaine)

March 30, 2009

Broadband Graphics LLC v. TIBCO Software Inc., Cause No. 2:2009cv00418 (WA Western/Seattle) Judge Lasnik, U.S. Patent No. 7,013,432; 7,313,765; 7,013,431, display container cell modification in a cell based EUI (patentee’s lawyer, Paul Beattie, et al. Schwabe)

March 26, 2009

Hicks v. Riddell Inc., Cause No. 2:2009cv00400 (WA Western/Seattle) Judge Tsuchida, U.S. Patent No. 5,661,849, protective face guard for softball (patentee’s lawyers Chase Alvord, Jody Gross)

March 24, 2009

NewTech Touch-Up Systems Inc v. Front Line Ready GA LLC et al., Cause No. 3:2009cv05158 (WA Western/Tacoma) Judge Leighton, U.S Patent No. 7,320,811, method and system for paint matching and re-touching, (patentee’s lawyer, Owen Dukelow, Kolisch Hartwell).

March 23, 2009

G. Vincent Ltd. v. Dux Area Inc., Cause No. 2:2009cv00383, U.S. Patent Nos. 7,004,404, 7,234,649, (WA Western/Seattle) Judge Theiler , spray guns for paint (plaintiff’s lawyer, Amanda Beane, Perkins Coie).

March 19, 2009

Broadband Graphics LLC v. TLM Inc., Cause No. 2:2009cv00355, (WA Western/Seattle) Judge Jones, U.S. Patent No. 7,013,432; 7,313,765, display container cell modification in a cell based EUI (patentee’s lawyer, Paul Beattie, et al. Schwabe).

March 13, 2009

Randy's Ring & Pinion Service Inc v. Regal-Beloit Corporation et al., 2:2009cv00329 (WA Western/Seattle) Judge Jones, U.S. Patent Nos. 5,413,015, differential (declaratory judgment plaintiff’s lawyer, Larry Graham et al., Black Lowe & Graham).

March 11, 2009

Progressive International Corporation v. Jaxco Industries Inc., Cause No. 2:2009cv00317 (WA Western/Seattle) Judge Lasnik, U.S. Patent Nos. D548,022, food chopper blade tray, D548,025, chopper, 7,191,691, food chopper, (patentee’s lawyer, Larry Graham, et al., Black Lowe & Graham).

March 5, 2009

The Active Network Inc v. Arena Group Inc et al., Cause No. 2:2009cv00289, (WA Western/Seattle) Judge Pechman, U.S. Patent No. 6,289,348, electronic processing of membership information in an organization (patentee’s lawyer, Sarah Turner, Gordon & Rees)

February 27, 2009

Ancora Technologies Inc v. Toshiba America Information Systems Inc et al., Cause No., 2:2009cv00270 (WA Western/Seattle) Judge Pechman, U.S. Patent No. 6,411,941, Method of restricting software operation with a license limitation, (transferred from CD of Calif., Patentee’s lawyers, Brooks Kushman)

February 25, 2009

Microsoft Corporation v. TomTom NV et al., 2:2009cv00247, (WA Western/Seattle) Judge Jones, U.S. Patent Nos, 6,175,789; 7,054,745; 6,704,032; 7,117,286; 6,202,008; 5,579,517; 5,758,352; and 6,256,642, portable navigation devices and software (lawyers for patentee Adam Wichman et. al., Klarquist Sparkman and Sidley)

February 24, 2009

Knudtzon et al v. Intuit Inc., Cause No. 2:2009cv00240, (WA Western/Seattle), Judge Martinez, U.S. Patent No. 7,120,597, Computerized Accounting Systems and Methods (Lawyer for patentee, Ed Goldstein, Houston TX, local counsel, James Rogers)

February 17, 2009

Bow Jax Inc v. Sims Vibration Laboratory Inc et al., Cause No., 2:2009cv00047 (WA Eastern/Spokane) Judge Whaley, U.S. Patent No, 5,362,046; 6,684,874, bow limb dampaners (Declaratory judgment plaintiff’s lawyers, John S. Reid).