Conference Addresses Current Issues For Corporate IP Counsel

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New York – A conference this week aimed at corporate counsel for intellectual property addressed a range of issues of interest to that audience.

The Corporate IP Counsel Forum was held on 20-21 March in New York (IPW, IP-Watch Briefs, 12 March 2013).

Bernard Knight, general counsel at the US Patent and Trademark Office (USPTO), opened the meeting by highlighting the importance of innovation to the US economy, and the importance of IP rights as a “bridge” for innovation to contribute to economic growth. He also provided statistics on the extraordinary contribution to the modern economy from patents.

Knight then discussed the America Invents Act (AIA), the recent major US patent law overhaul. He said key features of the AIA are: first-inventor-to-file, supplemental examination, post-grant review, inter-partes review, prioritised re-examination, and fee setting authority.

But although the new Act is intended to improve the patent system, Conference chairman Charles Macedo, a partner at Amster, Rothstein & Ebenstein, opened the meeting by saying that at least tens of thousands of last-minute patent applications were filed in the days right up to the 16 March 2013 deadline when key provisions of the new Act took effect.

Knight acknowledged that there was a spike in filings before the 16 March deadline, but said the statistics are not available yet, and later downplayed the importance of the need to file before the deadline.

The goals of the AIA are quality, clarity and speed, said Knight. Quality is addressed by provisions on third-party submissions, post-grant review, and inter-partes review, while clarity is addressed by the provisions on first-inventor-to-file, derivation and supplemental examination, he said. On speed, prioritised examination offers three tracks depending on exigency and a 50 percent discount for small entities. Fee setting authority also helps with speed by reducing backlog, reducing pendency, incentivizing behaviours and offering a dual track approach, he said.

Meanwhile, renewal fees are escalating, he said, resulting in more valuable patents being held longer as people are less likely to pay a higher maintenance fee if the invention is not successful in the marketplace.

Knight showed a chart that laid out actions and responsibilities following the initial 16 September 2012 entry in to force date of the AIA. He also mentioned several forward-looking initiatives at the USPTO, such as consideration of how to improve software patent quality, and looking at a patent small claim court.

Separately, in a panel on protecting corporate confidential information and trade secrets, a discussion was held on when it makes sense to “crowdsource” ideas. For instance, when does it make sense to ask consumers for ideas on new flavours or other variations on your products, or more industrially, when should you use open innovation to advance your company ideas. Some participants were wary of sharing information, but it was generally agreed that if the proper contractual language is drawn up from the start, the company should be covered and can benefit. This might include asking any consumer who submits an idea to a website to click agreement that they will not have rights to the idea.

Social Media Issues

Rapidly-growing social media platforms, such as Facebook, Twitter, LinkedIn, Foursquare and Pinterest, are forcing companies and individuals to confront a multitude of issues, particularly intellectual property protection, according to a panel discussion at the conference.

Panellists included: Aja Baxter, senior corporate counsel, LivePerson, Inc.; Brian Chase, general counsel, Foursquare Labs; Barbara Cornicioiu, vice president and senior counsel, American Express; and Brian Miller, general counsel, Education Dynamics.

Businesses are using social media sites to drive sales, build brand loyalty and interact with consumers, but the panel agreed it comes with a price. Companies must manage associated risks such as privacy, data security, intellectual property and personal data rights. Often, these challenges are posed by social media-savvy consumers that have increased expectations of how their data will be used and shared online.

While the process is “difficult,” panellists recommended that companies have explicit terms of service and data security policies in place to protect customer information. More importantly, panel members said, communicating these policies to users in terms they will understand can help diffuse some of the risks.

The panel briefly addressed ownership and use of business-related social media accounts by employees, saying it is essential to build social media competency into corporate culture in addition to providing guidelines and training for all employees.

Dealing with NPEs

A panel addressed concerns of manufacturing companies over the rise in patent lawsuits from non-practising entities (NPEs), or patent trolls. Experts said that while the number of cases is going up, damages and success rates are going down. Panellists were Bryan Butler of IBM and Matthew Kelly of the CME Group.

It was noted that when hitting a company with a patent infringement suit, NPEs typically look at the company’s cost of going to trial in order to come up with terms of a settlement. Therefore, finding ways to reduce those costs, such as joint representation among companies in an industry, can lead to lower settlements, a panellist said.

A patent attorney for IBM said that companies should not sit back and be victimised by NPEs, as the NPEs themselves are vulnerable to counterattack. For example, their patent may be able to be ruled invalid, in which case, he said, “you have helped everyone.”

On vulnerability, he said that in the past, he made patent trolls “go away” by simply showing what a small market share IBM had in the area under debate.

Another weakness of NPEs is that they lack knowledge of the area under dispute, the opposite of those who created the technologies and have the prior art. He also suggested keeping a good database of every patent to which the company is licensed, so it is prepared if a patent is sold to another NPE which tries again to assert it. To limit damages claims by NPEs, he said there is a requirement that it is based on lost profits, but since they do not manufacture anything they cannot show the loss. And he said that there is a case that shows claims must be based on the smallest saleable infringed patent.

A bigger concern is that NPEs have been “flocking” to the ITC since a case involving Coaxial Cable in 2011, but that now that is swinging back the other way, he said.

Finally, panellists said that to help with the company’s defence over time they have collected old textbooks, users’ manuals, dissertations and other documents that can help build their cases.

Top 10 Legal IP Cases

Another panel at the event listed 10 top IP legal cases of the past year. The panellists were: Brian Greenberg of CBS Broadcasting, Michael Springs of Bank of America, and Benjamin Carlsen of Ecolab. Macedo was moderator.

The cases included:

1. Gene patenting cases

Mayo Collaborative Servs. v. Prometheus Labs., 132 S. Ct. 1289 (2012)

WildTangent, Inc. v. Ultramercial, LLC, 132 S. Ct. 2431 (2012) (“Ultramercial”)

Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 132 S. Ct. 1794 (2012) (“Myriad I”)

Ass’n for Molecular Pathology v. United States PTO, 689 F.3d 1303 (Fed. Cir. 2012) (“Myriad II”)

Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 694 (2012) (“Myriad III”)

2. Already, LLC v. Nike, Inc., 184 L. Ed. 2d 553, 2013 U.S. LEXIS 602 (2013) – Trademark case which established that the IP rights holder can end a challenge to the validity of his asserted rights without having to reach an agreement with the alleged infringer.

3. Kirtsaeng v. John Wiley & Sons, Inc., No. 11‐697 (Mar. 19, 2012) – First sale doctrine held this week (IPW, US Policy, 19 March 2013). http://www.ip-watch.org/2013/03/19/us-supreme-court-applies-first-sale-doctrine-worldwide/

4. CLS Bank Int’l v. Alice Corp. Pty. Ltd., 484 Fed. Appx. 559 (Fed. Cir. 2012) (“Alice”) – relates to the patentability of computer-implemented inventions

5. Christian Louboutin S.A. v. Yves Saint Laurent Am., Inc., 2012 U.S. App. LEXIS 18663 (2d Cir. Sept. 5, 2012) – this found that to a limited extent colour can serve as a brand-identifying trademark

6. Akamai Technologies, Inc. v. Limelight Networks, Inc., Nos. 2009‐1372, ‐1380, ‐1416, ‐1417; and McKesson Technologies, Inc. v. Epic Systems Corp., No. 2010‐1291 (Fed. Cir. Aug. 31, 2012) (en banc) (“Akamai”) – court found that there can be induced infringement of a method claim if the steps of the method are performed.

7. Microsoft Corp. v. Motorola, Inc., 696 F. 3d 872 (9th Cir. 2012) – dealt with whether there can be an injunction on patents that were licensed under FRAND terms (fair, reasonable and non-discriminatory). Motorola was prevented from enforcing a German injunction against Microsoft products because the Motorola patents in question were required to be licensed to any third party on a FRAND basis.

8. Belkin International, Inc. v. Kappos, No. 2012‐1090 (Fed. Cir. Oct. 2, 2012) – determined that in an inter partes re-examination, the USPTO cannot consider references to prior art that had been found to not raise a substantial new question of patentability for the challenged claims.

9. In re EMC Corp., 677 F.3d 1351 (Fed. Cir. 2012) (“EMC I”) and In re EMC Corp., No. Misc. No. 13‐142, 2013 U.S. App. LEXIS 1985 (Fed. Cir. January 29, 2013) (“EMC II”) – judicial economy can be a factor to decide against transferring a case, but must be based on time of filing of a lawsuit.

10. InterDigital Communications, LLC v. International Trade Commission, No. 2010‐1093 (Fed. Cir. Jan. 10, 2013) – found that in order to prevail in an International Trade Commission Section 337 investigation for patent infringement, the complainant must establish that a domestic industry exists for “articles protected by the patent,” and that it is being harmed by the alleged infringement. But it decided that the domestic industry requirement can be satisfied by substantial investment that exploited the patent through licensing.

William New may be reached at wnew@ip-watch.ch.

Kelly Burke may be reached at info@ip-watch.ch.

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