What will happen to biotech’s patent thickets after Myriad and Prometheus?

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Changing patentable subject matter standards have been on the mind of biotech patent holders for the last few years. A wide range of biotech patents that were widely considered valid have been called into question by the decisions in Mayo v. Prometheus and AMP v. Myriad. Even if the number of patents that are actually ruled invalid proves to be low, the uncertainty could still dampen investment in new technologies. This uncertainty has been particularly acute in the area of personalized medicine, where the Myriad ruling left a large number of diagnostic patents in question. Since the ability to diagnose individuals based on genetic and other biological information are key to the idea of personalized medicine, the ability to patent tests for specific indicators is important for its long-term growth. Patent holders aren't giving up without a fight, but the weakening of their patents gives them less leverage in their negotiations. While diagnostics may be struggling to maintain adequate patent protection, some areas of personalized medicine research have more protection than they need. A recent article in Nature Biotechnology explored the patent landscape that is forming around induced pluripotent stem cells (iPSCs). iPSCs were the basis of a Nobel prize in 2012, and are an exciting area with the potential to completely change the way that some areas of medicine are practiced. iPSCs could theoretically give scientists and doctors the ability to take a person's existing cells and grow them into any cell type in the body, like new pancreatic cells for people with diabetes or new heart tissue for heart attack patients. Most of the patents on iPSCs focus on either culturing the iPSCs from other cells or on differentiating the iPSCs into other cell types, raising the question of whether key iPSC technologies may be forming a "patent thicket." This situation is common in computers and electronics, where different entities have patents on overlapping fundamental aspects of a technology. It is much less common in pharmaceuticals and biotechnology where a product is often protected by one or two patents. With Myriad and Prometheus upending the existing body of law about patent-eligible subject matter, the entire landscape around iPSCs is uncertain. Distinctions can be drawn between the underlying iPSC technology and those cases, but challenges to the fundamental patents have at least gotten new traction based on the decisions. iPSCs provide a unique problem for the patent system like many new inventions in biotechnology, but they also provide a challenge to typical conceptions of biological patents. Challenges to the validity of these patents could put some stakeholders in awkward legal positions defending both stronger and weaker patent rights. They could also clear some of the patent thicket around iPSCs. The uncertainty could slow down efforts to bring iPSC technology to market. Or it could prompt patent holders to merge or to work together in pooling their patents for ease of licensing. The conventional wisdom is that weakened patent rights hurt the biotech industry but, in the iPSC area, the effects may be far more complex.

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October 21st, 2014 at 12:55 am

Posted in Commentary

Weighing Patent Versus Trade Secret Protection in the Prior User Rights Era

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As part of the Leahy-Smith America Invents Act (AIA) signed into law on September 16, 2011, Congress expanded the Prior User Rights defense to patent infringement.  Initially only available for business method patents, the AIA expanded Prior User Rights to all classes of inventions, with the goal of harmonizing the US patent system with IP rights in the rest of the world.  Prior User Rights are defined in the Patent Act under 35 USC 273 and provide an affirmative defense to patent infringement.  In order to prevail on the defense, the accused party must prove that they were practicing commercial use of the invention at least one year before the patentee’s effective filing date.  Thus, Prior User Rights are not something that a company can apply for like a patent, but rather they are a defense available to parties who present evidence of prior use in a patent infringement suit.  The defense is generally unnecessary for parties that non-secretively practice an invention, since they may present their prior use as a form of prior art under 35 USC 102 to invalidate the patent.  However, parties that use an invention in secret (e.g., a “trade secreted” process) may not present their use as prior art, but rather under Prior User Rights may present evidence of prior use as an affirmative defense to infringement, thereby making Prior User Rights part of a combined IP strategy with trade secret protection. Many companies in industries and technologies where trade secret protection is a viable strategy must weigh the pros and cons of trade secret versus patent protection.  Patent protection offers the right to exclude others from making, using, and selling a patented invention for twenty years.  The potential to secure a legal monopoly for a valuable technology is naturally very attractive for many companies.  However, securing patent protection is costly and may result in narrow or no protection in crowded technological fields where there is a lot of prior art.  Just as importantly, patents require a detailed disclosure that teaches others how to make and use the invention.  For technologies where detecting patent infringement by competitors is difficult, enforcing a patent will also be difficult.  This lowers the value of the patent and makes the disclosure requirement highly undesirable.  Similarly, trade secrets come with their own set of pros and cons.  They have the advantage of being low-cost.  And their exclusivity will last as long as the technology is kept secret and is not reverse-engineered or independently developed, thereby giving potential exclusivity for longer than the twenty year patent term.   Also, trade secrets do not require disclosure (in fact they require the opposite: secrecy).  But trade secrets also come with the risk that the exclusivity will be lost if the proper protections are not followed or if the technology is reverse-engineered or independently developed.  And worse yet, the technology could be patented by another company resulting in a company being boxed out of its own technology.  This is where Prior User Rights change the equation.  With Prior User Rights, instead of being boxed out, the trade secret holder can continue to practice the invention based on a Prior User Rights theory. Before a company decides to rely on Prior User Rights, it should fully understand the limitations of Prior User Rights and the risks associated with relying on them.  First of all, Prior User Rights are a defense to patent infringement.  As such, companies will need to provide evidence of the prior use that meets legal evidentiary standards.  This requires companies to keep detailed records of the prior use, a process that presents difficult administrative challenges for any company.  Also, because the law is so new, there is a lack of clarity on limitations such as the ability of the prior user to expand the capacity of the use, the ability to implement improvements, the requirements of continuousness of the use, and what constitutes a “commercial use” as required by the statute.  These are questions that will not be answered until a body of case law is built around this new area of law. So how much do Prior User Rights really affect the considerations for a company’s forward-looking approach to pursuing patent versus trade secret protection?  In reality, in most technical fields Prior User Rights do not change the equation enough to make a difference.  But for companies and technologies where the strategic advantages of trade secret protection and patent protection were previously balanced, Prior User Rights may be enough to tip the scales in favor of trade secret protection.  Companies concerned about the cost of patent protection may choose trade secret protection and be satisfied to compete with a later patent-filer as long as they can continue to practice their invention.  Other companies concerned with the difficulty of detecting infringement, such as for a trade secreted manufacturing process, may also be swayed towards trade secret protection.

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October 15th, 2014 at 6:55 pm

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New iOS and Android Encryption Protections Spark Privacy Debate

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On September 17, Apple updated its privacy policy to reflect privacy enhancements added to its most recent iteration of its iPhone mobile operating system, iOS 8. Notably, the update highlighted iOS 8’s new protection for user phone data: out-of-the-box passcode encryption that the company itself cannot bypass. Similarly, Google recently related to the Washington Post that Google’s latest mobile operating system offering, Android L, would also include default user-end passcode encryption that cannot not be circumvented by Google. ALCU technologist Christopher Soghoian and Center for Democracy & Technology technologist Joseph Lorenzo Hall applauded the moves to enhance consumer protections in the wake of increased government surveillance stoked by Edward Snowden’s leaks last summer. But not all are pleased with the announcements. Notably, Ronald H. Hosko, President of the Law Enforcement Legal Defense Fund and former Assistant Director of the FBI Criminal Investigative Division, criticized the moves in a recent op-ed as protecting “those who desperately need to be stopped from lawful, authorized, and entirely necessary safety and security efforts.” Hosko’s point indicates a possible shift in the legal landscape of digital privacy rights. In its recent Riley v. California opinion, the Supreme Court weighed in on the digital privacy debate, holding that authorities generally may not search digital information on a cell phone seized from an individual without a warrant. However, even upon obtaining a warrant for user data, police now face an additional difficulty, as they can no longer can lean on Google or Apple to procure this data. As Apple itself pointed out in its revamped privacy policy, with the addition of these new encryption protections, “…it's not technically feasible for us to respond to government warrants for the extraction of this data from devices in their possession running iOS 8.” The fact that Apple and Google together control about 95% of the U.S. smartphone operating system market only underscores the impact of these new policies. As Google and Apple customers update their devices to the latest versions of the companies’ operating systems, chances will be increasingly high that authorities will only encounter criminals with these new encryption tools enabled on their devices. One Forbes blogger has rightly pointed out that this only recasts the legal issue onto Fifth Amendment self-incrimination grounds. If the contents of a phone cannot be unencrypted by Apple and Google themselves, law enforcement must instead seek to compel defendants themselves to decrypt and hand over their user data. The Electronic Frontier Foundation (EFF), however, maintains that a court order to decrypt personal data for law enforcement violates the Fifth Amendment right protecting against self-incrimination. Specifically, the EFF argues that the act of producing encrypted personal data qualifies as privileged testimony under the Fifth Amendment. Many federal courts agree, with both a Colorado Federal District Court and the Eleventh Circuit having held recently that the act of decryption and production of contents of computers sufficiently implicates Fifth Amendment privilege. The question then turns on the application of the “foregone conclusion” doctrine to this type of user data. The doctrine essentially considers acts of production of decrypted phone contents not subject to Fifth Amendment protection if it can be shown with reasonable particularity that, at the time authorities seek to compel the production, they already know of the incriminating contents of the phone, thereby making any testimonial aspect a foregone conclusion. The trick for authorities, of course, will now be building a case to show with reasonable particularity that they already know of the incriminating contents of an encrypted phone. This may be no easy feat, if the Eleventh Circuit’s application of the doctrine is any indicator — absent an admission by a defendant that a phone contains incriminating data, “[i]t is not enough for the Government to argue that the encrypted drives are capable of storing vast amounts of data, some of which may be incriminating.” As such, only time will tell how Google and Apple’s new encryption policies limit the capacity of law enforcement to conduct investigations.

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October 6th, 2014 at 6:29 pm

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Apple’s Canary Fails to Chirp

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Recently, Apple updated the privacy section on its website. While this was likely part of their response to privacy concerns due to the recent iCloud controversy, and fortuitously timed with the release of the newest batch of phones from the company, it also contains the latest edition of their transparency report. This report is a collection of the requests made by governments around the world for information about Apple device users and account holders. Curiously though, the most controversial aspect of the report may be what is not included. As the Electronic Frontier Foundation reported Apple was one of the first major companies to make use of the device known as a warrant canary. A warrant canary is one of the methods that a company may use to alert the public of otherwise secret demands made by US government. Following the passage of the USA Patriot Act in 2001, the availability of secret subpoenas has been dramatically expanded, and may be used against anyone who may have information which the authorities consider relevant to their intelligence or terrorism investigations. Because of the nature of these subpoenas, criminal penalties may be assessed against individuals who reveal even the existence of the requests for information. To get around this, a company may publish a public statement that they have not received such a request. If that is no longer true, removing the statement, or refusing to make it again, signals the public that the government has asked for data. In the transparency report covering early 2013 Apple stated that it “has never received an order under Section 215 of the USA Patriot Act. We would expect to challenge such an order if served on us.” This language is missing from the more recent reports, instead stating “To date, Apple has not received any orders for bulk data.” This shift in language may be Apple’s signal that it has been forced to comply with an order under the Patriot Act. An alternative view is that Apple is just complying with the latest addition to the government’s scheme of actually reporting on these kinds of requests. Detailed in a January 2014 letter to the general counsel of major tech companies, there are essentially two options available. A company may publish the amount of requests for specific kinds of information in bands of 1000, or may publish total aggregate numbers in bands of 250. Apple’s latest report indicates that it currently sits in the 0-250 band. The major flaw in both of these reporting capabilities is that the starting number is in fact zero, which is where the warrant canary can do its work. The letter indicates that there is to be a significant time delay between the issuing of a request and when a company may report on it, ranging from six months to two years for a new government security product. A timely published warrant canary may also circumvent this requirement. The risk of the canary from the government's standpoint is that it undermines the nature of the secret orders and reduces the effectiveness of a major national security tool. Whether the absence of the canary language indicates Apple’s compliance with the new government reporting scheme or is an admission that Apple has actually received a secret order, the takeaway is clear: The government has an arsenal of methods to acquire information about users of Internet services without their knowledge. The validity of these secret orders is an issue of supreme importance in our increasingly interconnected world. Among the variety of ways for companies to advocate for their users, publishing transparency reports similar to Apple’s is probably one of the simplest, and subtlest, ways to bring the discussion into headline news once again. The warrant canary is a device with perhaps questionable legal heritage, but it promotes a vigilant and informed public discussing a question at the crossroads of national security and personal privacy.

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October 1st, 2014 at 5:58 pm

Posted in Legal/Tech News

Who owns copyright in a selfie when it’s captured with one person’s phone but by another person’s finger? And what if that other person is actually a monkey? Or a Bradley Cooper?

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Earlier this year, Ellen DeGeneres briefly “broke” Twitter after tweeting a selfie full of celebrities, captured while she was hosting the Oscars. In an attempt to beat the record for most re-tweets ever, she enlisted megastars like Meryl Streep, Julia Roberts, Lupita Nyong’o, Kevin Spacey, Brad Pitt, and Jennifer Lawrence. Shortly after, Ellen gave the Associated Press permission to reproduce her selfie in a news article. But some have argued that the reproduction right – a right reserved to the copyright owner of a work – wasn’t necessarily Ellen’s to give. Technically, Bradley Cooper was the one who pressed the shutter button, evidently because he had the longest arms. Copyright ownership vests in the author of a work, and in the case of photography the author is normally the person who literally creates the photograph by pressing the shutter. In some instances, however, the author is defined as the person directing the creative vision of the work, such as choosing the lighting, composition, costumes, and settings, without actually pressing the button. So why does it matter? For the most part, it doesn’t. The selfies that you or I take are probably not going to be published in magazines or newspapers, unless newspapers are suddenly interested in my new haircut or in what you look like in the bathroom mirror. But Ellen’s selfie was the most retweeted picture of all time, and it was certainly newsworthy, at least in the days following the Academy Awards ceremony. Another selfie has recently been the subject of some news as a wildlife photographer is claiming copyright ownership of a photograph technically taken by a monkey. In 2011, David Slater was photographing wildlife in Indonesia when a group of macaque monkeys started monkeying around with his camera and one of them snapped a selfie. After being posted online, the selfie ultimately made it to Wikipedia. When Slater demanded that it be removed from the site, Wikipedia claimed that he didn’t own copyright in the photo because he hadn’t captured it himself and because he hadn’t made any of the artistic choices in its creation. Though copyright lawyers battled over this question, the U.S. Copyright Office confirmed that the selfie would remain in the public domain because only humans can be authors of works, not monkeys. But what if authorship of the selfies can’t be determined as easily? A few weeks ago, nude photographs of celebrities like Jennifer Lawrence, Kate Upton, and Ariana Grande were leaked onto the internet and quickly spread like wildfire. I have not seen the photos – nor do I encourage any sort of invasion of privacy – but apparently some of them were not selfies at all. When Lawrence's lawyers demanded that 4chan – the online bulletin board that the photos were initially posted to – take down the photos, 4chan reportedly fired back that Lawrence herself might not have copyright ownership of the pictures that were physically captured by someone else. Though some of the hacked celebrities have insisted that the photos are fake, if Lawrence were to potentially reveal the name of her photographer, she would effectively be admitting that the photos are authentic. On the other hand, by not divulging, Lawrence loses her copyright ownership claim and would have to pursue other avenues for getting the pics taken down. Most of us are guilty of taking selfies and quick snapshots of sunsets, puppies, and our food (#food #fooddiary #nom) without a moment’s pause. But you should think twice before handing your phone off to the person with the longest arms. If it’s a quick pic of your best duckface, you’re probably fine. But if it happens to be the next Pulitzer-prize winning photo or the most retweeted twitpic of all time, you may have just lost your copyright claim.

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September 28th, 2014 at 12:07 pm

Posted in Commentary

Bullies & Hackers: Cyberbullying lessons for revenge porn statutes

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Another year, another batch of nude celebrity photos flooding headlines and the internet. This month, actress Jennifer Lawrence, model Kate Upton, and a handful of other female celebrities became the latest celebrity hack victims when an anonymous user on the online message board 4chan posted dozens of photos of the women nude. As with past leaks, the reaction has followed a similar pattern: the FBI looks for the poster and the media asks what can be done. Between the Computer Fraud and Abuse Act and the Electronic Communications Privacy Act, the answer is a lot. In 2012, federal prosecutors used both to convict Christopher Chaney after he hacked and posted personal photos of the actress Scarlett Johansson online. Chaney is serving a 10 year prison sentence, but the legislative landscape has changed since his trial, including the criminalization of revenge porn. This blog has covered these laws before, but to recap, revenge porn refers to distribution of sexually explicit media online without the consent of the pictured individual, for the purpose of humiliation. In the wake of this latest leak, there have been calls in the media to crack down on revenge porn posters and websites. To that effect, thirteen states have passed laws that make posting revenge porn a misdemeanor, while 27 more state legislatures have introduced similar bills in 2014. However, those calling for prosecutors to use revenge porn statutes against the celebrity hackers should pause to consider the challenge faced by another recent cyber speech proposal. That proposal involves cyber bullying and a statute criminalizing it in Albany County, New York. This past July the state’s highest court struck down the county’s 2010 statute for defining cyber bullying too broadly and implicating the First Amendment. At issue in People v. Marquan M.[1] was whether the defendant, a 15-year-old boy who had posted sexual information and insults about classmates online, could be prosecuted under the statute. Writing for the majority, Judge Victoria Graffeo acknowledged the county had a compelling interest in punishing those who upload offensive content, especially in an educational or bullying context. However, she continued, the statute went too far by criminalizing mere annoying or embarrassing speech. Returning to the revenge porn context, lawmakers face similar challenges distinguishing posts and photos meant to humiliate from those meant to publicize, especially in cases like the most recent hack where multiple parties re-post and share the photos after the initial hacker’s post. It also suggests revenge porn laws may not help prosecutors looking for the celebrity hackers, as the original posters could have operated out of any jurisdiction, whereas the typical revenge porn poster likely lived with or near the victim. Although it’s clear revenge porn and the culture behind it needs to be addressed, it’s less clear that the recent criminal statutes will be of much help. For now, the impacted celebrities and their attorneys seem to have settled on copyright legal strategies, bringing claims against anyone who posts the photos. But for the not so famous victims of revenge porn, there doesn’t seem to be a good way to regain the privacy taken from them.

[1] People v. Marquan M., No. 139, WL 2014 WL 2931482, at *1 (N.Y. July 1, 2014).

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September 25th, 2014 at 3:43 am

Posted in Commentary

Why Tesla Opened Its Patent Portfolio

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On June 12, 2014, the CEO of Tesla Motors (Tesla), Elon Musk, posted an external memo entitled “All Our Patent Are Belong To You.”  In short, the memo details why Tesla is opening up its patent portfolio to the market.  The primary reason given for this drastic move seems to be a David versus Goliath mentality.  Musk wrote, “[o]ur true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day.” While most people know Tesla as an electric car manufacturer, it is really a successful battery company that has been focusing its efforts on building a market for its battery technology.  As of late June 2014, 120 of Tesla's 172 issued patents related to battery and charging technologies.  While at first glance the decision by Tesla to open its patent portfolio seems altruistic and selfless, it is likely a power play to strengthen the electric vehicle market as a whole and increase Tesla’s potential market for its battery technology.  In 2013, less than 1% of all vehicles sold were electric, and Tesla accounted for approximately 25% of that 1%.   Musk would likely rather see Tesla make up a much smaller percentage of a much larger market. Musk seems eager to inject a bit of competition into the electric vehicle market in order to spur innovation, increase customer adoption, and share the load in convincing the public that electric vehicles are a viable option.  Tesla is at a stage in its life that not many businesses will ever see – Tesla is lobbying for a shift in the way millions of people conduct their daily lives from something that is quick, easy, and convenient to something that is new, lacking infrastructure, and unpredictable from the point of view of the consumer.   Only time will tell if Tesla’s bold move will pay off, but one thing is certain – it is the only chance Tesla has at moving the electric vehicle market forward.

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September 18th, 2014 at 5:08 pm

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Googling “Search Bias”: The Efforts of Antitrust Agencies to Even the Playing Field.

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Google has been a target of antitrust allegations for nearly as long as it has existed. In recent years, agencies domestic and abroad have accused the tech giant of “search bias.” The charge of search bias—levied against Google by competitors and watchdogs—asserts that the company designed search algorithms to promote its own targeted content at the expense of third-party content and advertising. Google is a slippery target: twice now escaping essentially unscathed from investigation by the FTC and European Commission. The latter of these settlements, however, may be altered or even undone in the course of the next few months. In January of 2013, Google satisfied FTC investigations into antitrust violations of search bias because there was no evidence that Google intentionally sought to hurt competition. Admittedly, the FTC conceded, Google’s play-to-win attitude led the company to strive to out-best its competitors.[1] But Beth Wilkinson, FTC’s outside counsel, publicly maintained that “the FTC’s mission is to protect competition, and not individual competitors.”[2] From Google’s side, the company made two concessions in order to avoid fines by the FTC.[3] First, the company agreed to desist from preventing competitors’ access to key technologies by way of patent blocking. In essence, Google has a history of scooping up smaller companies and their valuable patent portfolios. Later, the company files injunctions against competitors seeking to purchase a license to use the patented technologies in their own products. Tech companies generally commit to license appropriate patents under FRAND (“fair, reasonable, and non-discriminatory”) terms. Google, conceding that there might have been some slippage on those promises with the above patents, has re-committed to the FRAND cause. Second, Google promised to remove restrictions preventing advertisers from managing their own ad content on Google’s pages. Critics within the FTC and Congress questioned why the FTC settled for the above “voluntary commitments” from Google, instead of seeking a formal consent order.[4] More recently, Google agreed to a formal settlement with the EU’s European Commission. Facing complaints that it abused its dominant position in European search markets, Google could not rely on its successful American defense of proving that its efforts were all geared towards creating a better product for its customers. For example, Google contended, and continues to contend, that its algorithms aim to provide the most relevant search results to its users, whether such a result is a website, a map, a forecast, or a game score.[5] In the EU, the primary goal of antitrust enforcement in this realm is protecting small businesses and other competition, not to be quashed by the no-holds-barred “best product” decry. As a result, the EU has cowed Google into agreeing to even more substantial commitments in its European search strategies than those promised following the FTC investigation. Most significantly, the company agreed to display the results of at least three competitors every time one of their own directed results from a specific search appeared.[6] But this summer has seen some skepticism surrounding whether the EU settlement will stick. Intense opposition from politicians and affected competitors, as well as studies showing the settlement terms to likely be ineffective, have made some wonder if Joaquín Almunia, the current antitrust chief of the EU, will hold off on finalizing the settlement until a successor takes office in November.[7] A non-public letter from Mr. Almunia indicated that the European Commission planned to investigate many other antitrust allegations cited to Google, seemingly in an attempt to garner the support needed to finalize the current settlement quickly.[8] But, just last week, Google’s critics notched another small victory: the EU rejected Google’s third settlement offer, stating that the corporate giant will have to make more concessions to reach a satisfactory settlement.[9] Both sides continue to insist they are working together in finding a solution that will work. Until the settlement is finalized or revamped, Google supporters and critics wait to see if search bias has finally risen into the effective purview of antitrust enforcement. Furthermore, how would Google and other international tech companies adjust to comply with disparate antitrust regulations in the wake of such a split between the FTC’s American conclusion and the potential European findings?   [1] Chris Crum, WebProNews, “Was FTC Too Easy on Google? Too Hard?.” [2] Id. [3] See FTC press release. [4] Anaut Raut, 12-AUG Antitrust Source 1, “Antitrust in the 113th Congress”. [5] Amit Singhal, Google’s Public Policy Blog, “Setting the Record Straight: Competition in Search.” [6] Claire Cain Miller & Mark Scott, New York Times, “Google Settles Its European Antitrust Case; Critics Remain.” [7] James Kanter, New York Times, “EU Prepares to Step Up Google Investigations; Opposition Grows in Europe to Google Antitrust Proposal.” [8] James Kanter, New York Times, “Google’s European Antitrust Woes are Far From Over.” [9] Geoffrey Smith, Fortune, “E.U. Rejects Google’s Latest Effort to Settle Antitrust Suit.”

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September 15th, 2014 at 10:51 pm

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Appellate Review of Markman Hearings

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In Markman, the Supreme Court declared that determining the meaning of patent claims, i.e. “claim construction,” is a question to be decided by the court; the Seventh Amendment right to a jury trial does not apply. Markman v. Westview Instruments, Inc., 517 U.S. 370, 372 (1996). Shortly thereafter, in Cybor, the Court of Appeals for the Federal Circuit held that de novo review applied when results from these newly-created ‘Markman hearings’ are appealed. Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448, 1451 (Fed. Cir. 1998) (en banc).   Earlier this year, the Federal Circuit granted a rehearing en banc to determine if Cybor should be overruled, and what, if any, deference should be given to a District Court’s claim construction. Lighting Ballast Control LLC v. Philips Electronics N. Am. Corp., ___F.3d___, WL 667499 (Fed. Cir. Feb. 21, 2014) (en banc). The court considered three options: (1) reaffirm Cybor and maintain de novo review, (2) overrule Cybor and declare claim construction a question of fact, or (3) adopt a “hybrid” standard of review that affords deference to the District Court’s factual determinations but preserves de novo review of the “ultimate” conclusion. Amici from industrial and technological companies advocated reaffirming Cybor. Academics and practitioners generally favored either the hybrid approach or the overruling of Cybor. Relying on stare decisis, a 6-4 majority reaffirmed Cybor.   The majority pointed out that since Cybor was decided, Congress has not acted to overturn it while enacting other patent legislation during that time. They further explained that predictability and consistency favor maintaining the status quo. Consistency is a concern particularly relevant in patent law – a concern which led to the creation of the Federal Circuit over thirty years ago. The majority feared a return of “forum shopping” because the same patent could be subject to conflicting interpretations in different District Courts. Parties would be incentivized to choose a forum with judges likely to interpret patent claims in their favor knowing that reversal on appeal is unlikely.   The dissent, appearing to favor the hybrid approach, pointed out that the parties in the present case, almost all amici, and the Supreme Court recognize that claim construction involves some questions of fact. Thus, they vehemently argued that under Rule 52(a)(6), courts of appeal can set aside only those findings of fact that are “clearly erroneous.” Rejecting stare decisis, the dissent argued that “informal deference” is already given to District Courts because they spend “hundreds of hours” learning the relevant technology, so overruling Cybor would “not upset settled expectations.” The dissent also stated that de novo review incentivizes the losing party to appeal, decreases the likelihood of settlement, and increases litigation costs.   But Lighting Ballast may not stand for long. In April, the Supreme Court granted certiorari in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., which presents a nearly identical question as that in Lighting Ballast. In Teva, the District Court held a Markman hearing and construed the claims in Teva’s favor, avoiding invalidity for indefiniteness. The trial judge relied heavily on Teva’s expert witness to determine the level of ordinary skill in the art at the time of invention. Teva Pharm. USA, Inc. v. Sandoz Inc., 810 F. Supp. 2d 578, 596 (S.D.N.Y. 2011). On appeal, the Federal Circuit explicitly applied de novo review, compared the testimony of the competing expert witnesses, reversed the District Court, and held the claims indefinite. Teva Pharm. USA, Inc. v. Sandoz, Inc., 723 F.3d 1363, 1369 (Fed. Cir. 2013), reh’g en banc denied. Similar to the dissent in Lighting Ballast, Teva claims that Rule 52(a)(6) should have governed the Federal Circuit’s standard of review because determining the level of ordinary skill in the art is a question of fact. Unfortunately, Teva will not be heard until the Supreme Court’s October 2014 term. Until then, Lighting Ballast remains good law; de novo review of claim construction still applies.   Guest Post Written by Brian Apel

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July 13th, 2014 at 1:05 pm

Akamai and the Question on Joint Infringement on Method Claims in the Supreme Court

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On April 30, 2014, the Supreme Court of the United States will hear opening arguments [1] for a landmark case found in patent law casebooks, Akamai Technologies, Inc. v. Limelight Networks, Inc., whereby the Federal Circuit, sitting en banc, held in a 6-5 ruling that a defendant may be held liable for inducing patent infringement under 35 U.S.C. § 271(b) when no direct infringement occurred under 35 U.S.C. § 271(a). [2] 35 U.S.C. § 271 states:
  • “(a) … whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.
  • (b) Whoever actively induces infringement of a patent shall be liable as an infringer…”
The Federal Circuit overruled its own precedence set in BMC Resources, Inc. v. Paymentech, L.P., which had previously held that induced infringement requires a single party to commit all steps of a method constituting direct infringement under § 271(a).  In Akamai, neither Limelight nor its customers performed all of the steps, but nevertheless Limelight was found liable because Akamai and its customers jointly performed all steps.  The court reasoned that a party who actually participates in performing the infringing method should be “more culpable than another one who does not perform any steps” but instead induces another to do so. [3] Arguments supporting Judge Newman’s 35-page dissent include imposing an unfair obligation on businesses to speculate on potential future uses by a third-party buyer or user, the increased discovery costs to an already expensive procedure, and the potential for erroneously imposing liability on supplying non-infringing products and services. [4]  This case is of interest for inventions involving multiple steps, in particular the internet software and hardware industry, as demonstrated by the amicus briefs submitted by technological giants, such as Apple, the Google, Oracle, Red Hat, SAP, CISCO, Xilinx, Altera, HTC, SmugMug, weatherford, the CTIA, Facebook, Inc. and LinkedIn Corporation, The Wireless Association, the Consumer Electronics Association, MetroPCS Wireless, and many others.[5] Many people will be listening next Wednesday on how the Supreme Court will interpret the word “whoever” in the statute and balance these important policy goals.

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May 2nd, 2014 at 3:53 pm

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