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Justin E. Gray

IP Litigation Attorney at Foley & Lardner LLP

Former Adjunct Professor at Northwestern University School of Law

Send questions, comments and suggestions to
grayonclaims@gmail.com

Monday
Mar312014

Cybor Watch: Supreme Court to Consider De Novo Appellate Review for Claim Construction

Teva Pharms. USA, Inc. v. Sandoz, Inc. (No. 13-854)

Today, the Supreme Court granted certiorari in this case, where the petitioner has challenged the Federal Circuit's de novo review standard for claim construction.  The question presented by the petition is:

Whether a district court's factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires.

Thursday
Mar062014

Cybor Watch: Two Haikus Summarizing Lighting Ballast v. Universal Lighting Technologies

Lighting Ballast Control LLC v. Philips Electronics North America Corporation (Fed. Cir. Feb. 21, 2014) (en banc)

Markman: Law or fact?

Stare decisis succeeds.

Rule 52(a)?

 

Cybor reaffirmed.

Narrow margin: 6 to 4

SCOTUS review next?

 

More detailed analysis to follow...

Wednesday
Jan222014

Medtronic v. Mirowski – Supreme Court Holds Patentee Bears Burden Of Persuasion In Declaratory Judgment Action Brought By Licensee

In a unanimous decision, the U.S. Supreme Court held in Medtronic, Inc. v. Mirowski Family Ventures, LLC (No. 12-1128) that “[w]hen a licensee seeks a declaratory judgment against a patentee that its products do not infringe the licensed patent, the patentee bears the burden of persuasion on the issue of noninfringement.”  This decision reverses a 2012 decision by the Federal Circuit that in such a case the party seeking the declaratory judgment bears the burden of persuasion of proving non-infringement of the patents at issue.

The parties had entered into a patent licensing agreement in 1991.  As part of the agreement, Mirowski could give notice to Medtronic of Mirowski’s belief that a new Medtronic product infringed a Mirowski patent.  If this happened, Medtronic could either cure the nonpayment of royalties or it could pay royalties but also challenge the assertion of infringement through a declaratory judgment action.  If Medtronic chose to ignore the notice given by Mirowski, Mirowski could then terminate the license and bring an infringement action against Medtronic.  In 2006, the parties modified their agreement providing that if Medtronic chose to pursue a declaratory judgment action, Medtronic could accumulate any disputed royalties in an escrow account, with the prevailing party receiving the escrowed royalties.

In 2007, the parties were at odds over a dispute concerning seven new Medtronic products.  Medtronic then brought a declaratory judgment action in federal district court in Delaware, seeking judgment of non-infringement and invalidity of the patents at issue.  During the litigation, there was a dispute between the parties over which party bore the burden of persuasion concerning the infringement issue:  Medtronic as the plaintiff in the litigation or Mirowski as the patentee.  The district court determined that Mirowski, “[a]s the part[y] asserting infringement,” bore the burden and ultimately held after a bench trial that Mirowski had not proved infringement.

The Federal Circuit reversed, holding that it was Medtronic who bore the burden of persuasion in proving non-infringement.  The court acknowledged that normally it is the patentee, not the accused infringer, that bears the burden of proving infringement, and that this burden will not shift even where the patentee is a counterclaiming defendant in a declaratory judgment action.  But, the court ultimately determined a different rule should apply in a case such as this where the patentee is “foreclosed” from asserting an “infringement counterclaim” by the “continued existence of a license.” The case was then appealed to the U.S. Supreme Court.

Before getting to the merits of the dispute concerning the burden of persuasion, the Supreme Court briefly discussed a jurisdictional matter raised in an amicus brief.  The amicus asserted that the Federal Circuit did not have subject matter jurisdiction over the case because Mirowski’s underlying claim to which the declaratory judgment action related was a breach of contract, not a patent infringement, claim.  The Supreme Court disagreed with this characterization as the license agreement specified that Mirowski could terminate the agreement and bring a claim of patent infringement.  The Supreme Court therefore held there was subject matter jurisdiction.

Turning to the real question presented, the Supreme Court determined that “[s]imple legal logic, resting upon settled case law, strongly supports [the] conclusion” that the patentee bears the burden of persuasion regarding infringement in this type of case.  The Court noted that (1) “[i]t is well established that the burden of proving infringement generally rests upon the patentee,” (2) the Declaratory Judgment Act is only “procedural” and leaves “substantive rights unchanged,” and (3) the burden of proof is a “substantive aspect of a claim,” citing prior Supreme Court precedent.  The Court concluded that “[t]aken together these three legal propositions indicate that, in a licensee’s declaratory judgment action, the burden of proving infringement should remain with the patentee.”

The Court next considered policy considerations that ultimately led the Court to the same conclusion.  The Court determined that shifting the burden depending on the form of the action “could create postlitigation uncertainty about the scope of the patent” as it is possible that a declaratory judgment plaintiff could fail to carry the burden of persuasion of non-infringement and the patentee, in a subsequent case, could also fail to carry its burden of persuasion of infringement. Further, having the licensee bear the burden of persuasion on non-infringement could “create unnecessary complexity by making it difficult for the licensee to understand upon just what theory the patentee’s infringement claim rests.”  Finally, the Court explained that “burden shifting here is difficult to reconcile with a basic purpose of the Declaratory Judgment Act”, namely to “ameliorate the dilemma posed by putting one who challenges a patent’s scope to the choice between abandoning his rights or risking suit” (internal quotations omitted). 

The Supreme Court then discussed the Federal Circuit’s underlying opinion.  The Court disagreed that the Federal Circuit’s reliance on the Supreme Court’s 2005 decision in Schaffer v. Weast (containing language that the “ordinary default rule” is that “plaintiffs” have the “risk of failing to prove their claims”) was applicable as Schaffer was not a declaratory judgment case and that decision also described exceptions to the general rule.  The Court held that a case such as this one is an exception to the Schaffer general rule.  Next, the Court discounted the Federal Circuit’s description of its own holding as a "limited" one, explaining that “the fact that a rule’s scope is limited cannot, by itself, show that the rule is legally justified.” 

Finally, the Court discussed a concern raised in an amicus brief that the Court’s holding would burden patent owners by permitting a licensee to force a patentee into patent infringement litigation.  The Court dismissed this concern as, citing MedImmune, “litigation can occur only in the presence of a genuine dispute, of sufficient immediacy and reality, about the patent’s validity or its application” (internal quotations omitted). 

The Court concluded by noting that “[t]he public interest, of course, favors the maintenance of a well-functioning patent system.  But the ‘public’ also has a ‘paramount interest in seeing that patent monopolies … are kept within their legitimate scope.’  A patentee ‘should not be … allowed to exact royalties for the use of an idea … that is beyond the scope of the patent monopoly granted.’  And ‘[l]icensees may often be the only individuals with enough economic incentive’ to litigate questions of a patent’s scope.  The general public interest considerations are, at most, in balance.  They do not favor a change in the ordinary rule imposing the burden of proving infringement upon the patentee.” (internal citations omitted).

Thursday
Dec122013

Eastern District of Texas Adopts Model Order to Focus Asserted Patent Claims and Prior Art References

Recently, the Eastern District of Texas adopted a "Model Order Focusing Patent Claims and Prior Art to Reduce Costs."  A copy of the Model Order can be found here.  The Model Order provides for two rounds of narrowing both asserted patent claims and prior art references during litigation.

The first round of narrowing is triggered by the close of claim construction discovery.  At that time, the patent holder must narrow its asserted claims to no more than 10 claims from each patent and no more than a total of 32 claims for all patents-in-suit.  If only one patent is asserted, the limit is modified to 15 total claims.  Fourteen days later, the defendant must narrow its asserted prior art references, with limits of 12 references against each patent-in-suit and 40 total references for all patents-in-suit.  If only one patent is asserted, the limit is modified to 18 total references. 

The second round of narrowing is triggered by the deadline to serve opening expert reports.  No later than 28 days prior to that deadline, the patent holder must further narrow its asserted claims to no more than 5 claims per patent (selected from the 10 previously identified claims) and no more than a total of 16 claims.  If only one patent is asserted, this limit is modified to 8 total claims.  Twenty-eight days later, the defendant must further narrow its asserted prior art references, with limits of 6 references against each patent-in-suit (selected from the 12 previously identified references) and 20 total references.  If only one patent is asserted, the limit is modified to 9 total references.  Each obviousness combination counts as a separate prior art reference. 

Modification of these limits is subject to Court approval if either the parties agree or one party demonstrates good cause for the proposed modification.

Wednesday
Nov062013

Do the Joinder Provisions of the AIA Encourage a Race for Early Claim Construction?

After the America Invents Act ("AIA") went into effect, plaintiffs could no longer join multiple unrelated defendants in a single patent litigation on the sole basis that each defendant allegedly infringed in the patent-in-suit.  See 35 U.S.C. 299.  As a result, we now see certain plaintiffs filing scores of lawsuits against individual defendants in a single day in the same district.

In this post-AIA world, it should now be (at least in theory) easier for such defendants to secure transfer of their cases to a different venue.  In the pre-AIA world this was more difficult because a defendant seeking transfer of a multi-defendant litigation would either need to (1) convince all the other defendants that transfer to another venue would be beneficial to all defendants; or (2) ask the Court to sever and transfer the individual defendant.  Now, defendants are not bound to their pre-AIA co-defendants and can more easily seek transfer to their preferred venue.  Given this new world, an interesting question arises:  do the joinder provisions of the AIA encourage defendants to race to a different venue to seek early claim construction?

Many times in the pre-AIA world when multiple unrelated defendants were sued together in a single case, during claim construction the defendants would jointly propose a single construction for a disputed claim term to the court.  Even in the post-AIA world we may still see this happening, especially when cases are consolidated under Rule 42 for pre-trial purposes.  Of course, while there are times when multiple defendants can agree on a single construction, there are also times when a single construction may not be as advantageous for all defendants.  In our post-AIA world, what happens when a defendant successfully gets its case transferred to a forum that conducts early claim construction?  That defendant may now hold a significant advantage against the plaintiff in its litigation as it will be better able to dictate its own proposed construction regardless of whether that proposed construction would have been amenable to the other defendants in their respective cases back in the original forum.  And, whatever the result of claim construction in the transferee forum, the original forum that still contains the vast majority of the filed cases may decide to defer to the claim construction ordered by the transferee forum.  Else the original forum could run into a situation of construing a claim term in a way that conflicts with the order already issued by the transferee forum. 

Thus, the joinder provisions of the AIA may encourage defendants who want to pursue an aggressive defense to have their cases transferred to district courts that hold early claim construction proceedings so those defendants are more in control of their proposed constructions.  Further, if the transferee court does in fact issue a claim construction order prior to the original court doing so, the defendants still sitting in the original court may be put at a disadvantage. 

These issues are even more important given the pending Lighting Ballast case at the en banc Federal Circuit which could change the standard of review for claim construction orders.

Monday
Oct072013

Supreme Court Will Not Review False Marking Provisions of AIA

Public Patent Foundation, Inc. v. McNeil-PPC, Inc.

As previously reported on this blog, Public Patent Foundation asked the U.S. Supreme Court to consider whether the retroactive application of the AIA's changes to the false marking statue violate the Fifth Amendment.

Today, the Supreme Court denied the petition, as can be seen on the Supreme Court's website.

Thursday
Aug082013

Lighting Ballast and Purposive Construction

Lighting Ballast Control LLC v. Philips Electronics North America Corporation

Noticeably absent from the parties' briefs as well as the 20+ amicus briefs is any mention of how claim interpretation is performed in the United Kingdom.  This blog has previously reported on the way this system of "purposive construction" works here and here.  It can be summarized as follows: "The task for the court is to determine what the person skilled in the art would have understood the patentee to have been using the language of the claim to mean."

Monday
Aug052013

Public Patent Foundation Asks Supreme Court to Review False Marking Provisions of AIA

Public Patent Foundation, Inc. v. McNeil-PPC, Inc.

As previously reported on this blog, in May 2013 the Federal Circuit issued an order summarily affirming a district court's decision dismissing a qui tam false marking case pursuant to the retroactive changes to the false marking provisions enacted by the America Invents Act ("AIA").

Last week, Public Patent Foundation filed a Petition for Writ of Certioari with the U.S. Supreme Court regarding the Federal Circuit's decision.  Public Patent Foundation has asked the U.S. Supreme Court "[d]oes the retroactive application of the AIA's changes to the false marking statute to this case violate Petitioner's Due Process under the Fifth Amendment?"

This petition relates to a false marking case filed by Public Patent Foundation in June 2009.  After the AIA was passed in 2011, McNeil moved for judgment on the pleadings as a result of the amendments made to the false marking statute and the retroactive application of those amendments.  The district court granted McNeil's motion in 2012 and the Federal Circuit summarily affirmed the district court's decision in May 2013.

A copy of the petition can be found here.

Thursday
Jul182013

Cybor Watch: Final Set of Briefs Filed in En Banc De Novo Claim Construction Appeal

Lighting Ballast Control LLC v. Philips Electronics North America Corporation

This blog has continued work on collecting all of the briefs filed (both by the parties and amici) in the pending Lighting Ballast appeal regarding de novo review of claim construction.  The Federal Circuit is scheduled to hear the appeal en banc on September 13, 2013.  

The following are the final set set of briefs recently filed with the Court:

Copies of prior briefs filed can be found here and here.

Friday
Jun072013

Cybor Watch: Additional Briefs Filed in En Banc De Novo Claim Construction Appeal

Lighting Ballast Control LLC v. Philips Electronics North America Corporation

This blog is continuing work on collecting all of the briefs filed (both by the parties and amici) in the pending Lighting Ballast appeal regarding de novo review of claim construction.  The Federal Circuit is scheduled to hear the appeal en banc on September 13, 2013.

Below are PDF copies of additional briefs recently filed with the Court:

 As any additional briefs are filed, they will be made available on this blog.

 Copies of prior briefs filed can be found here.