Maryland Intellectual Property Law Blog

Government Issues More Patent Secrecy Orders

Brian Wm. Higgins — Mon, 30 Apr 2012 20:10:30 -0500

More than 5,200 U.S. patents were subject to at least one Secrecy Order by the end of fiscal year 2011, government statistics obtained through the Freedom of Information Act reveal (source: FAS.org). The U.S. Patent & Trademark Office issues Secrecy Orders upon recommendation by various U.S. governmental departments, part of its implementation of the Patent Secrecy Act, 35 U.S.C. Sec. 181 et seq.

The Act requires that if, in the opinion of a government agency, the disclosure of an invention by the publication of an application or by the granting of a patent therefor would be detrimental to the national security, the government agency notifies the Patent Office and the Commissioner of Patents orders that the invention be kept secret and withholds the publication of the application or the grant of a patent for such period as the national interest requires, and it notifies the patent applicant of the order. Government agencies that review patent applications under the Secrecy Act include DOD, DOE, NSA, DTSA, and NIH.

As shown in the graph below, since 2004 the number of Secrecy Orders in effect has risen 7%, to 5,241, due mostly to a sharp decrease in the number of orders rescinded. Since 2004, 466 existing Secrecy Orders were rescinded, but over 866 new Secrecy Orders were issued by the Patent Office. The total number of orders in effect now is higher than any year since fiscal year 1996.

Current secrecy activity, however, is far from historical highs. By the end of fiscal year 1991, there were 6,193 Secrecy Order is effect (18% more compared to the number at the end of FY11), and 774 new Secrecy Orders were issued, which is more than the total number of new orders issued in the last seven years combined.

Kappos v. Hyatt: Supreme Court Rules That New Evidence May Be Introduced In District Court Suits Brought Against Patent Office in Rejected Patent Application Cases

Brian Wm. Higgins — Wed, 25 Apr 2012 10:10:21 -0500

This article was authored by Jay Lessler, Esq., of Blank Rome LLP

The Supreme Court on April 18, 2012, held in Kappos v. Hyatt, slip no. 10-1219, that new evidence, as permissible under the Federal Rules of Evidence (FRE) and the Federal Rules of Civil Procedure (FRCP), may be introduced in a civil suit challenging the rejection of a patent application by the Patent and Trademark Office (PTO). The Supreme Court further held that “the district court must make a de novo finding when the new evidence is presented on a disputed question of fact.” In the future, more patent applicants may avail themselves of such civil suits in order to have a fresh opportunity to obtain patent coverage following a denial of an application by the PTO.

Pursuant to the Patent Act of 1952, a patent examiner first determines whether a patent application satisfies the requirements for granting a patent. If the examiner denies the application, the applicant may file an appeal to the Board of Patent Appeals and Interferences (Board). If the Board also denies the application, the applicant may choose one of two options for further review.

One option is to appeal the decision to the U.S. Court of Appeals for the Federal Circuit. This appeal is solely based on the administrative record below. No new evidence may be offered.

The other option is to file a civil action in the U.S. District Court for the District of Columbia pursuant to 35 U.S.C. §145. (The America Invents Act, which was enacted on September 16, 2011, changed the venue for §145 proceedings to the U.S. District Court for the Eastern District of Virginia, and changed the name of the Board to the Patent Trial and Appeal Board.)

In the case at hand, Hyatt filed a patent application in 1995. The patent examiner rejected each claim for lack of an adequate written description of Hyatt’s invention. The Board affirmed the rejection of most of Hyatt’s claims. Hyatt then filed a civil suit in district court against the PTO. To refute the Board’s conclusion that his patent application lacked an adequate written description, Hyatt submitted a written declaration to the court. In the declaration, Hyatt identified portions of the patent specification that, in his view, supported the claims. The district court refused to consider the declaration stating that Hyatt was “precluded from presenting new issues, at least in the absence of some reason of justice put forward for failure to present the issue to the [PTO].” Because no other new evidence was provided, the district court reviewed the PTO’s findings under the Administrative Procedure Act’s deferential “substantial evidence” standard and granted summary judgment in favor of the PTO.

On appeal, the Federal Circuit, en banc, reversed the district court and held that new evidence could be introduced during a §145 proceeding, subject only to any limitation under the FRE and FRCP. The Federal Circuit also held that when new, conflicting evidence is introduced in such proceedings, the district court must make de novo findings to take such evidence into account.

The U.S. Supreme Court affirmed the Federal Circuit’s decision. The Court pointed out that the PTO concedes that new evidence may be submitted in §145 proceedings. Because the PTO never saw the new evidence, a de novo finding is required. The Court also rejected the PTO’s contention that patent applicants must present all available evidence to the PTO in the first instance. A district court in a §145 proceeding does not act as a court of appeals, the Court wrote, and is competent to receive new evidence and act as a factfinder. Furthermore, “the district court may, in its discretion, consider the proceedings before and findings of the [PTO] in deciding what weight to afford an applicant’s newly admitted evidence.”

Justice Sotomayor, in a concurring opinion, argued that “there may be situations in which a litigant’s conduct before the PTO calls into question the propriety of admitting evidence presented for the first time in a §145 proceeding.” The district court’s equitable authority to exclude evidence in a §145 proceeding, however, is limited. The failure to present evidence to the PTO due to ordinary negligence, a lack of foresight, or simple attorney error, according to Justice Sotomayor, should not estop the patent applicant from presenting the evidence for the first time in a §145 proceeding.

Caraco Pharmaceutical v. Novo Nordisk: Supreme Court Rules that Generic Pharmaceutical Companies can Counterclaim in Patent Cases to Correct "Use Codes"

Brian Wm. Higgins — Wed, 18 Apr 2012 16:19:45 -0500

This article was principally authored by Jay Lessler, Esq., of Blank Rome LLP

The U.S. Supreme Court ruled on April 17, 2012, in Caraco Pharmaceutical Labs. Ltd. v. Novo Nordisk A/S, slip no.10-844, that a generic pharmaceutical manufacturer can counterclaim in a patent infringement action to have a “use code” for a method of use patent corrected in the FDA Orange Book. Generic manufacturers now have a mechanism for challenging use codes in the Orange Book (and possibly other patent information submitted to FDA by brand companies) which should facilitate faster approval of generic drugs.

The manufacturer of a brand-name drug is required to submit to the Food and Drug Administration (FDA) information about patents covering the drug and its approved uses. This information, which is published in the FDA’s “Orange Book,” includes a description of the scope of the patent known as a “use code.” Where a brand drug has several approved uses, a generic drug applicant can carve-out the patented uses from the label for its generic drug, submit a statement to FDA stating that the label does not include the patented method (referred to as a “section viii” statement), and quickly receive FDA approval for the non-patented uses. If, however, the FDA determines that the proposed label with the carved-out use still overlaps with the brand manufacturer’s use codes, the FDA will not permit the generic manufacturer from employing section viii to bring its generic drug to market. An overly broad use code for a method of use patent may, therefore, substantially delay FDA approval of a generic drug.

Novo markets the drug Prandin (repaglinide) for three approved uses. The Orange Book lists a method of use patent covering one of these uses. The use code provided by Novo for this patent, however, broadly covers all three approved uses. Because the use code covered all approved uses, when Caraco filed a generic drug application for repaglinide, it could not carve-out the patented use from its label and obtain quick approval for its generic drug. Instead, Caraco listed all of the approved uses in its label and advised FDA that the patent was invalid or would not be infringed (commonly referred to as a Paragraph IV certification).

Novo subsequently initiated a patent infringement suit against Caraco. The lawsuit triggered an automatic stay of approval of Caraco’s generic drug application for at least 30 months (or the conclusion of the lawsuit). Caraco counterclaimed to have the use code corrected pursuant to 21 U.S.C. §355(j)(5)(C)(ii)(I). The counterclaim provision authorizes a generic applicant sued for patent infringement to,

“assert a counterclaim seeking an order requiring the [brand] to correct or delete the patent information submitted by the [brand] under subsection (b) or (c) [of 21 U.S.C. §355] on the ground that the patent does not claim either —

(aa) the drug for which the [brand’s new drug application] was approved, or

(bb) an approved method of using the drug.”

The U.S. Court of Appeals for the Federal Circuit earlier held that Caraco lacked a statutory basis to assert a counterclaim against Novo. The Federal Circuit read the phrase “the patent does not claim … an approved method of using the drug” to require Caraco to demonstrate that Novo’s patent does not claim any approved method of use. Because the patent-at-issue claims one approved method of use, the counterclaim was unavailable. The Federal Circuit also ruled that the term “patent information” does not include use codes, but only consists of the patent number and its expiration date.

In reversing the Federal Circuit, the Supreme Court held that “a generic [drug] manufacturer may employ [the counterclaim] provision to force correction of a use code that inaccurately describes the brand’s patent as covering a particular method of using the drug in question.” In doing so, the Supreme Court looked at the statutory context of the counterclaim provision. The provision, the Court found, was enacted to provide a mechanism for generics to challenge inaccurate information in the Orange Book. The Court therefore constructed the phrase “the patent does not claim … an approved method of using the drug” to refer to a patent that does not claim a particular approved method of using the drug, not all approved methods.

[T]he counterclaim naturally functions to challenge the brand’s assertion of rights over whichever discrete use (or uses) the generic company wishes to pursue. That assertion, after all, is the thing blocking the generic drug’s entry on the market. The availability of the counterclaim thus matches the availability of FDA approval under the statute: A company may bring a counterclaim to show that a method of use is unpatented because establishing that fact allows the FDA to authorize a generic drug via section viii.

Moreover, the Court held that the reference to “patent information” in the statute must include use codes.

Justice Sotomayor, in a concurring opinion, argued that the counterclaim provision does not adequately address the problem of overly broad use codes because the counterclaim provision can only be invoked after a generic applicant files a paragraph IV certification for a method of use patent, and a patent infringement lawsuit has been initiated. This is a costly and time consuming procedure. Justice Sotomayor’s concurring opinion suggests that a fix is needed from Congress or FDA, and suggests FDA provide greater clarity as to what is required of brand manufacturers in providing use codes to the agency.

Maryland Court Denies Parties' Motions to Dismiss Expert Testimony

Brian Wm. Higgins — Sun, 08 Apr 2012 11:05:35 -0500

In Pulse Medical Instruments, Inc., v. Drug Impairment Detection Services, LLC, the U.S. District Court for the District of Maryland (J. Chasanow) denied each party's separate motion to exclude the other party's expert's testimony. In doing so, the Court found the following types of evidence to be admissible under Federal Rule of Evidence 702:

(1) An expert's reference to and analysis of the reasonable royalty factors articulated in Georgia-Pacific. Such analysis is "far from being testimony regarding pure questions of law," the Court wrote, and can assist a trier of fact regarding damages issues.

(2) An expert's analysis of a reasonable royalty based on a "hypothetical negotiation." Whether characterized as applying the Georgia-Pacific factors or imagining conducting a hypothetical negotiation, the process, the Court wrote, is one and the same. Courts have accepted this process as falling within the bailiwick of damages experts as a tool of the trade. No separate showing of an expert's expertise in negotiations is needed.

Additionally, the Court noted that Rule 702 allows a witness to be qualified to testify as an expert based on a variety of different methods, but there is no requirement that experts share identical backgrounds to be able to opine about the same subject matter, or to criticize the other expert's opinion.

The Court reached the above conclusions after considering F.R.E. Rule 702. In patent cases, the district court has "a special obligation to 'ensure that any and all scientific testimony. . .is not only relevant, but reliable.'" Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999). The Fourth Circuit Court of Appeals has explained Rule 702 as follows:

The first prong of this inquiry necessitates an examination of whether the reasoning or methodology underlying the expert's proffered opinion is reliable--that is, whether it is suppported by adequate validation to render it trustworthy. See [Daubert, 509 U.S.] at 590 n.9, 113 S.Ct. 2786. The second prong of the inquiry requires an analysis of whether the opinion is relevant to the facts at issue. See id. at 591-92, 113 S.Ct. 2786.

To be considered reliable, the Court wrote, an expert opinion "must be based on scientific, technical, or other specialized knowledge and not on belief or speculation, and inferences must be derived using scientific or other valid methods." In the case at hand, the Court rejected the parties' motions based on the above standard.

Maryland Court Denies Patentee's Use at Trial of Favorable Reexamination Results

Brian Wm. Higgins — Tue, 28 Feb 2012 11:49:08 -0500

In IA Labs v. Nintendo, the U.S. District Court for the District of Maryland granted Nintendo’s motion to exclude evidence at trial pertaining to the outcome of a reexamination proceeding involving one of IA Labs' patents. In doing so, the district court agreed with Nintendo that evidence related to IA Labs’ reexamination proceedings would have little or no probative value and could be prejudicial in front of a jury. Moreover, the district court found that Nintendo was not judicially estopped from arguing that the reexamination determinations were not probative evidence even though Nintendo’s litigation counsel had previously lauded the expertise of the U.S. Patent Office.

IA Labs, LLC, based in Potomac, MD, sued Nintendo in April 2010 in the U.S. District Court for the District of Maryland alleging infringement of U.S. Patent Nos. 7,121,982 and 7,331,226. In its complaint, IA Labs alleged that Nintendo’s “Wii Fit” and related game consoles and other products infringed those patents.

In November 2010, Nintendo initiated an inter partes reexamination of the ‘982 patent, raising 11 alleged substantial new questions of patentability. The Patent Office agreed that there were questions of patentability, and ordered the reexamination. On April 11, 2011, after receiving the patent owner’s and Nintendo’s arguments and evidence, the Patent Office confirmed the patentability of the claims of the ‘982 patent. Nintendo appealed, which is now pending.

On January 9, 2012, Nintendo filed a motion under Local Rule 107.6 to exclude from trial any evidence of the reexamination of the ‘982 patent. Rule 107.6 states that counsel are under an obligation to anticipate evidentiary objections and, whenever possible, bring them to the attention of the Court before they are formally asserted so that they can be resolved when the jurors are not present.

In its motion, Nintendo asserted that IA Labs intends to introduce evidence to the jury regarding the Patent Office’s reexamination determination to support its argument that the ‘982 patent is valid. Nintendo argued that the non-final determination was not probative and would mislead the jury, and that the Examiner’s comments during the reexamination were inadmissible hearsay. In response, IA Labs argued that Nintendo had previously lauded the expertise of the Patent Office and the importance of the reexamination process, and therefore should be estopped from arguing that the evidence lacked “trustworthiness” merely because the reexamination was not final.

The District Court disagreed with IA Labs, noting that judicial estoppel was not appropriate, and finding Nintendo’s position in seeking to exclude the reexamination evidence was not clearly inconsistent with early statements by its counsel touting the experience of the Patent Office. As for the probative value and potential prejudice of such evidence, the District Court followed the majority of courts who have found reexamination evidence to have little relevance to the jury’s independent deliberations on the factual issues underlying the question of obviousness and the risk of jury confusion is high. Presenting the jury with the reexamination document entitled “Action Closing Prosecution” issued by the Patent Office, would, the District Court stated, run an unnecessary risk that jurors would accord undue weight to what appears to be a final documents and might improperly defer to the Patent Office’s initial determination (the District Court did not substantively address the hearsay argument).

The District Court ordered that evidence related to the reexamination of the ‘982 patent be excluded under Fed. Rules Evidence 402 and 403.

Book Review: Why Has America Stopped Inventing?

Brian Wm. Higgins — Sat, 18 Feb 2012 09:25:43 -0500

Why Has America Stopped Inventing? By Darin Gibby, Esq., Morgan James Publishing, New York, 2012

Patents are boring, nobody wants to deal with them, and few people can understand them. Yet we all somehow know that they play a significant role in the nation’s destiny, says historian and patent attorney Darin Gibby in his intriguing and entertaining new book Why Has America Stopped Inventing? We are the country that gave the world the automobile, the airplane, space flight, the computer, and too many medical breakthroughs to count, Gibby says. Early American inventors developed the cotton gin (Whitney), vulcanized rubber (Goodyear), a repeating firearm (Colt), the sewing machine (Howe/Singer), the telegraph (Morse), a wheat reaper (McCormick), and the airplane (Wright). Those individuals often were heralded as celebrities even in their own time, and the lawsuits they brought to enforce their patents, or in some cases defend their knockoffs, caught the attention of notable attorneys like Abraham Lincoln, Edwin Stanton, William Seward, Stephen Douglas, and others.

So why are we unable to continue the tradition of groundbreaking inventions of the kind that made our country great, asks Gibby. Today, the numbers of patents issued to Americans has plunged. Today, Americans on a per capita basis are granted fewer than half the number of patents issued a hundred and fifty years ago. Gibby’s figures are mirrored locally, in Maryland, where innovation activity slipped year over year. Globally, countries like China are expected to surpass the U.S. in the number of patent applications filed, according to Senator Patrick Leahy during debate last year over the America Invents Act (AIA). What caused the innovation decline in this country? Where have all the American inventors gone?

The answers lie, as they often do, in lessons from the past. Gibby’s historical journey takes us back to the enactment of the very first patent act in 1790, and into the office where Thomas Jefferson personally examined every patent submission, an overwhelming task that led Jefferson and others to craft a new law in 1793, one which eliminated substantive examination of patent submissions. The patent law amendments of 1863 reinstated examination, which continues today at the U.S. Patent Office in Alexandria, Virginia. Gibby reveals how the changing patent landscape profoundly impacted industries as well as individuals.

One significant difference between great inventions of the past and those being conceived today, Gibby says, is where they were conceived: the vast majority of inventors during the 19th century were ordinary individuals working alone, often on farms or in shops. A century later, researchers flocked to the safety of corporations. In the past, it cost a few dollars to submit a patent application. Today, high legal fees prevent many individuals from seeking patent protection for their ideas. Moreover, Gibby says today’s patent laws give lip service to helping the little guy, as those in power do not want thousands of individuals getting patents, which would result in courtrooms filled with litigants looking to make money and bring industries to a screeching halt—just as the Wright’s airplane stabilization invention did to the fledgling aircraft industry, Gibby notes. Existing patent laws make obtaining patents harder due to the “obviousness” test, and the Supreme Court makes it easier for courts to invalidate existing patents. It is all but certain, Gibby argues, that America’s most popular inventions of the past would be deemed obvious under today’s onerous rules.

“And so large corporations—those with enough money to fight the battle—manage to get patents while other do not. . . . Congress and the courts have stifled innovation among the very class of inventors that we want to be inventing,” writes Gibby. “Today we award patents to only the wealthiest of corporations with the financial means to battle with the patent office.” And that is why the little guy in America stopped filing patent applications.

Where will innovation activity in this country be a year from now, or a decade later? That depends, Gibby says, on whether we make certain patent reforms to help individual inventors. Gibby advocates for a return of the model requirement, or something similar to it. Inventors of the past had to supply scale models of their inventions to the Patent Office, effectively demonstrating what they had conceived and the metes and bounds of their inventions. The model requirement was abandoned by the Patent Office in 1880. Today, inventors can patent a concept without ever making their invention. If every person seeking a patent had to make a model of their invention, there would be fewer patent applications and better quality patents being issued.

Gibby also advocates for a 10 year patent term, rather than the current 20 years (which is based on the date of filing one’s patent application); requiring patent applications to be examined in less than six months; elimination of the “obviousness” test for patentability, abandonment of the judicial doctrine of equivalence; and limitations on the number of continuation patent applications an inventor can file from an original patent application. With sweeping patent reforms being enacted under the AIA just last year, and most of the AIA’s provisions not even implemented yet, no one knows whether Gibby’s proposals will be considered any time soon. If American innovation continues to slip behind other countries, however, it will not take long for others besides Gibby to stand up and say more needs to be done.

O'Malley, Maryland Lawmakers Introduce Initiative to Spur Innovation in Maryland

Brian Wm. Higgins — Sun, 05 Feb 2012 11:07:42 -0500

Patent Office data show that the number of individuals in Maryland receiving at least one patent in 2010 that was not assigned to a company was at an eight year high. Overall innovation in Maryland, however, has declined, when measured by the number of U.S. patents and patent applications issued to Maryland inventors. On a per capita basis, the numbers look even worse, as patents issued per Maryland resident declined about 3% when comparing 2011 numbers to 2010 levels. Moreover, Maryland ranks a lowly 37th when it comes to commercializing research and development, despite being at the top in terms of research and development spending per capita.

Aiming to reverse those numbers and spur innovation among Maryland researchers, and also facilitate commercialization of inventions made by the state's research universities, Gov. Martin O'Malley and nine Maryland lawmakers recently introduced legislation to create a Maryland Innovation Initiative. Introduced January 20, 2012, as Senate Bill 239, the measure would, among other things, provide funding to help participants in the Initiative assess intellectual property issues.

A hearing on the new bill is scheduled for February 7, 2012, in Annapolis.

The Initiative would promote the commercialization of research conducted by the state's research universities, encourage those universities to partner with each other and with federal research labs in Maryland on commercialization and other activities, and facilitate the transfer of technologies from universities to commercial industries in Maryland. Funding to run the Initiative would come from appropriations from the State's budget, participating universities, grants and funds from federal labs, and private grants, and could be used to support pre-commercial research on intellectual property to increase the likelihood of commercializing the intellectual property. Such research would likely include patent freedom to operate clearances.

Expo To Gather Maryland Entrepreneurs

Brian Wm. Higgins — Fri, 27 Jan 2012 05:44:19 -0500

The Maryland Technology Development Corporation (TEDCO) recently announced the date for the 2012 Entrepreneur Expo, its second year for the event. The BWI Airport Marriott will again provide the location for this year's gathering of over 300 entrepreneur companies and individuals. The event will kick off on Tuesday, November 13, 2012.

While T-Sizzle Takes to Gridiron, His Lawyers Tackle "Ball So Hard University" Trademark, Right of Publicity Dispute

Brian Wm. Higgins — Sat, 14 Jan 2012 10:50:07 -0500

Terrell “T-Sizzle” Suggs roams the gridiron looking to make his presence known to opposing quarterbacks by delivering some of the most devastating sacks in the game of professional football. His lawyers, meanwhile, tackle a different kind of foe off the field: people they say are violating Suggs’ trademark and affecting his right of publicity.

Few know that Suggs, a linebacker for the Baltimore Ravens, uses his fame and talents—and a reported $63 million football contract—off the field to build media and apparel businesses. He’s the current CEO and President of Team Sizzle Worldwide, an independent film company based in Baltimore, and an entrepreneur in the apparel industry, selling t-shirts and other merchandize with his likeness and the catch phrase “Ball So Hard University,” which is at the center of a burgeoning legal dispute.

Suggs used the fictitious university name, according to the Baltimore Sun, rather than his actual alma mater, Arizona State University, when he introduced himself on national television at the start of the November 6, 2011, Steelers vs. Ravens game. He later filed five trademark applications on November 17, 2011, in the U.S. Patent & Trademark Office, to protect the phrase. But he wasn’t the only one who thought the name was catchy, or that it would help sell merchandize.

Within hours of Suggs’ use of the phrase on television, Brian Bussells, Tonyshirt.com, and others reportedly began selling Ball So Hard University products on the Internet. In Mr. Bussells’ case, he also registered the domain name “ballsohardu.com” and filed a trademark application for the phrase, both on November 7, 2011. Bussells operates Busstees LLC, a design company in Maryland.

Suggs' lawyer—Kimberly Grimsley of Bowie & Jensen—responded with cease and desist letters, arguing that the use of BALL SO HARD UNIVERSITY on t-shirts sold by others creates the appearance of a connection with Terrell Suggs, which is false and misleading in violation of the Lanham Act, she says, and would likely create confusion between T-Sizzle’s products and those of others who are selling merchandise without Suggs’ permission. Ms. Grimsley also contends that Suggs’ right of publicity is being violated, and will cause damage to the “commercial value of his persona.”

The outcome of Suggs’ trademark dispute will depend on whether Brian Bussells has superior rights to the BALL SO HARD UNIVERSITY trademark. In the United States, trademark rights are based on the use of a mark in commerce, so if Bussells can establish that his use was legitimate and before Suggs’ (Bussells claims a first use in commerce on November 7, 2011), he may prevail against the linebacker (assuming the catch phrase is even registerable under the trademark laws, which is a different issue altogether).

Suggs’ lawyer’s diminished right of publicity argument may be even more tenuous than his trademark position. The right of publicity is the inherent right of a person to control the commercial use of his or her identity (or that of someone else’s). Based in state law, the ability to control an identity for commercial gain is an intellectual property right that, when infringed and shown to reduce the commercial value of the person’s likeness or persona, can be compensated through damages.

Maryland courts, however, do not explicitly recognize a right of publicity, though they would consider the same relevant facts under a right of privacy action, i.e., misappropriation of likeness for commercial purposes. To establish a case of liability for invasion of privacy through misappropriation, the plaintiff must establish that the defendant, without permission, used some aspect of the plaintiff's identity or persona in such a way that the plaintiff is identifiable from that use. The plaintiff must also establish that his peace of mind and dignity were damaged by the defendant's use of plaintiff’s identify or persona.

AIA: Changing How Non-Practicing Patent Owners Can Assert Their Patents

Brian Wm. Higgins — Wed, 11 Jan 2012 08:59:28 -0500

In an effort to reduce the number of multi-defendant patent infringement lawsuits often brought by non-practicing patent owners, the America Invents Act (AIA) includes a new statutory provision that addresses joinder of accused infringers in patent actions or trials not involving certain drugs and biologics. Under the new law (35 U.S.C 299), parties accused as defendants may be joined in one action in a single judicial district as defendants or counterclaim defendants only if:

(1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process; and

(2) questions of fact common to all defendants or counterclaim defendants will arise in the action.

For purposes of this new provision, accused infringers may not be joined based solely on allegations that they each have infringed the patent or patents in suit. Defendants may waive this provision, which is effective in any civil action commenced on or after the date of enactment of the AIA.

Number of IP Lawsuits in Maryland Increases in 2011

Brian Wm. Higgins — Sun, 01 Jan 2012 14:02:30 -0500

Patent litigation activity in Maryland increased in 2011 compared to the previous four years, as the chart at right shows. According to records available from Justia.com and PACER, plaintiffs filed 35 patent lawsuits in the U.S. District Court for the District of Maryland (Greenbelt and Baltimore divisions combined) last year, compared to just 22 lawsuits in 2010 and 31 in 2009 (59-percent and 13-percent differences, respectively).

Plaintiffs filed 38 copyright lawsuits in the Maryland federal court in 2011, compared to 27 lawsuits in 2010 (a 41-percent difference) and 27 lawsuits in 2009 (a 12-percent difference).

Bucking the upward trend, trademark plaintiffs brought 34 lawsuits in 2011 compared to 40 in 2010 (a 15-percent slide), but matched the number of lawsuits in 2009.

All combined, plaintiffs brought 107 copyright, patent, and trademark lawsuits in Maryland's federal district court in 2011, a 20-percent increase over 2010, reversing a 10-percent drop in filings from 2009 to 2010 (note, these figures and those shown in the charts do not include cases with multiple plaintiffs or cases having multiple nominal counterclaim plaintiffs).

Maryland's neighboring federal district courts saw significantly more IP litigation last year: Delaware, 499 combined cases (compared to 272 in 2010); Virginia, 204 cases (compared to 176 in 2010); Pennsylvania, 265 cases (compared to 255 in 2010).

2011 Top 5 List: Music, Ravens, Jobs, AIA, Handbags

Brian Wm. Higgins — Fri, 30 Dec 2011 15:23:04 -0500

The Top 5 web page views on the Maryland IP Law Blog for 2011 are perennial favorites. The most popular web page for the second year in a row was one touting the "benefits" of downloading music on the Internet, published August 28, 2007. Bouchat's copyright lawsuit against the Baltimore Ravens and the NFL was the second most visited web page. The new IP JOBS Board came in third, followed by a post discussing the new America Invents Act. Rounding out the top 5 was a Fourth Circuit opinion regarding Louis Vuitton's trademark infringement case against Haute Diggity Dog:

Downloading Music Benefits Both Consumers and Artists, Study Finds

Bouchat Sues Ravens, NFL Over "Flying B" Design

Maryland IP Jobs Board

America Invents Act: Redefining What is "Prior Art"

Louis Vuitton Malletier S.A. v. Haute Diggity Dog LLC

Did You Know...

Brian Wm. Higgins — Fri, 30 Dec 2011 06:22:04 -0500

I am a full-time intellectual property law attorney. In case my "About" page was not as clear about that as it could be, I recently added a few "Representative Matters," which I hope will provide further insight into what I do when I'm not publishing this website.

I have a LinkedIn profile. Send me an invitation to connect with you if you're into networking on LinkedIn.

I also Tweet every once in a while. Check out @marylandiplaw on Twitter, and follow me.

The deadline to submit your legal fiction short story to the Southwestern Law School legal fiction contest is March 15, 2012. SEAK is sponsoring another of its annual fiction writing contest for lawyers (and physicians) in conjunction with its Fiction Writing Conference for Physicians and Lawyers; entries due by August 1, 2012.

Court Dismisses Patent Complaint: No Plausible Claim of Indirect Infringement

Brian Wm. Higgins — Sat, 17 Dec 2011 07:53:25 -0500

Wright Mfg., Inc. v. The Toro Co., et al., slip op. (11:-cv-1373) (Md D. Ct., Dec, 13, 2011), J. Garbis

In Wright Mfg., Inc. v. The Toro Co., the U.S. District Court for the District of Maryland dismissed in part a complaint by Wright Manufacturing against competing lawn tractor companies, Toro and Exmark Manufacturing, saying that Frederick, Maryland-based Wright had not met the plausibility standard for pleading induced and contributory patent infringement. The court instructed Wright to follow the court's Local Rule 103.6, should it decide to submit an amended complaint against the Defendants.

Wright filed its complaint on May 20, 2011, alleging Defendants Toro and Exmark were engaged in the manufacture of lawn mowers and other equipment that infringes U.S. Patents 6,438,931 and 6,935,093. Defendants moved to dismiss under rule 12(b)(6) of the Federal Rule of Civil Procedure.

Pleading Standard in Maryland Federal Court

A 12(b)(6) motion to dismiss tests the legal sufficiency of a complaint, the Court said. A complaint need only contain “a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” While allegations need not be exactingly specific, the Court noted, they “must be enough to raise a right to relief above the speculative level.”

In reviewing a 12(b)(6) motion, a court must assume that the facts presented by the plaintiff are true. This assumption, however, excludes “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Consequently, in order to “survive a motion to dismiss, a complaint must contain sufficient factual matter” as to provide the court with enough plausible evidence to “draw the reasonable inference that the defendant is liable for the misconduct alleged.”

The U.S. Court of Appeals for the Fourth Circuit has held that a complaint will survive a
12(b)(6) motion when it states a plausible claim for relief. However, this determination is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.”

Pleading Standard for Direct Patent Infringement in Maryland Federal District Court

The Maryland Federal District Court looks at a complaint for compliance with Form 18 of the Federal Rules of Civil Procedure, which provides a guide for pleading, with sufficient plausibility, a claim for direct, literal patent infringement. Complaints that mirror the Form 18 format in patent cases are sufficient to survive a 12(b)(6) motion to dismiss. A Form 18 claim for direct patent infringement comprises five elements, but the plaintiff is not required to explicitly identify each element in its complaint. Nor is the plaintiff required to provide “notice” of infringement, and intent or knowledge of the infringement is not required to be plead.

In the instant case, the Court found that Wright's complaint specifically alleged all of the required Form 18 elements: jurisdiction, patent ownership, direct infringement, and a demand for injunction and/or damages. Although not particularly specific, the Court also found the allegations clearly identify the lawnmower models that allegedly directly infringed, all of which is adequate to establish a plausible basis for a claim for direct, literal infringement under § 271(a), the Court said.

With regard to the Doctrine of Equivalents, the Court noted an absence of either Federal Circuit precedent and "a fair preponderance of federal district court decisions," and so found Wright's complaint, following Form 18, sufficient to state a plausible claim for infringement by the doctrine of equivalents.

Pleading Standard for Indirect Infringement Patent Infringement in Maryland Federal District Court

To prove induced infringement, a plaintiff must prove direct infringement and that the infringer had knowledge of the existence of the infringed patent and acts of infringement. Global-Tech Appliances, Inc. v. SEB S.A., -- U.S. --, 131 S. Ct. 2060, 2068 (2011) (“We now hold that induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement.”). Thus, inducement requires proof that "an inducer persuade[d] another to engage in conduct that the inducer knows is infringement.” The Court, therefore, concluded that a plaintiff must include factual allegations sufficient to create a plausible claim of intent and knowledge.

Wright’s intent and knowledge allegations, the Court said, were merely conclusory. It found that Wright alleged knowledge only through a broad statement that “Toro has known of [been aware of] [the patent] since at least 2008.” "More is required," said the Court. Wright merely provides “[t]hreadbare recitals of the elements of a cause of action” that are inadequate.

To prove contributory infringement, a plaintiff must prove that the defendant knew that the combination for which his component was especially designed was both patented and infringing. Thus, contributory infringement requires proof that the defendants (1) offered to sell within the United States or imported into the United States a component of the patented
machine; (2) for use in practicing a patented process, constituting a material part of the invention; (3) with knowledge that the invention was patented and that such use was
infringing.

Comparing those requirements against Wright's complaint, the Court found the complaint inadequate, noting that, while “the pleading standard [of the Federal Rules] do not require ‘detailed factual allegations,’ . . . it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Wright's complaint must include, the Court said, at least some factually-supported allegations of knowledge in claims of contributory infringement. Wright provided highly generalized statements concluding that Toro and Exmark are “aiding and causing distributors and/or
dealers to sell and offer to sell mowers, including Grandstand [and Vantage] mowers, within the United States.” This recitation, the Court said, parrots the required elements of the statute without providing any factual setting.

Requirement for Amending Complaints in Maryland Federal District Court: Local Rule 103.6

In Maryland, amending a complaint is not as simple as in other federal districts. Rule 103.6 states that a party must:

(1) File a motion requesting leave to file an amended pleading (assuming the time period for amending has expired).

With the motion, the original of the proposed amended pleading must accompany the motion. The Court will review the sufficiency of the amended complaint before granting the motion. Generally, only newly added exhibits are to be attached to an amended pleading, however, a new party may be added. The party filing an amended pleading shall file and serve (1) a clean copy of the amended pleading and (2) a copy of the amended pleading in which stricken material has been lined through or enclosed in brackets and new material has been underlined or set forth in bold-faced type.

(2) Attempt to obtain consent from other counsel before filing the motion requesting leave to file an amended pleading. Counsel shall state in the motion for leave whether the consent of other counsel has been obtained.

"Madden NFL" Target of Bouchat Copyright Lawsuit

Brian Wm. Higgins — Wed, 07 Dec 2011 10:40:52 -0500

The National Football League (NFL) Properties, Inc. and Electronic Arts (EA), maker of, among other computer video games, "Madden NFL 11," were sued by Frederick Bouchat for allegedly infringing his copyright in his "Flying B" artwork (pictured at right). Filed in the U.S. District Court for the District of Maryland (No. 11-CV-02878, Oct. 7, 2011), Bouchat alleges in his complaint that the NFL licensed the infringing logo to EA and then EA reproduced and displayed it on "retro" uniforms worn by players depicted in its video game.

According to Bouchat, sometime in 1996 the Baltimore Ravens adopted a helmet and uniform design that included his copyrighted artwork. The NFL then licensed the infringing logo to EA in return for royalties. EA then depicted the infringing logo in the Madden NFL 11 game (see screenshot at right, from The Daily Record).

Madden NFL 11 is one of over 20 iterations of the widely popular "Madden NFL" video game, reportedly selling over 85 million copies since its debut in 1988.

Bouchat is seeking actual damages, profits attributed to the alleged infringement, copyright statutory damages, and a permanent injunction.

Howard J. Schulman of Shulman & Kaufman LLC (Baltimore) represents Bouchat in the lawsuit.

At the time of this posting, the NFL and EA had not filed their answers to Bouchat's complaint.

For an interesting history of Baltimore's professional football teams and the various iterations and uses of their logos, click here.

Other litigation involving the copyrighted subject matter of this lawsuit, see Bouchat v. Baltimore Ravens, Inc., 241 F.3d 350 (4th Cir. 2001), Bouchat v. Baltimore Ravens, Inc., 215 F. Supp. 2d 611 (D. Md. 2002), Bouchat v. Baltimore Ravens, Inc., 346 F.3d 514 (4th Cir. 2003), Bouchat v. Champion Products, Inc., et al., 327 F. Supp. 2d 537 (D. Md. 2003), Bouchat v. The Bon-Ton Dept. Stores, Inc. et al., 506 F.3d 315 (4th Cir. 2007).

AIA: Expanding "Prior User" Rights

Brian Wm. Higgins — Mon, 28 Nov 2011 06:11:38 -0500

Under current law, an accused patent infringer may offer a “prior user” defense when the patent in question is related to doing or conducting business (i.e., “business methods”) and the accused infringer used the invention but never filed a patent application for it. If the same invention is later patented by another person, the accused infringer may not be liable for infringement to the new patent holder, although all others may be. In passing the America Invents Act (AIA), Congress found that the prior user provisions of the earlier law were particularly important to high-tech businesses that prefer not to patent every process or method that is part of their commercial operations. When the new law becomes effective, the prior user defense may be asserted in limited situations against any patent, not just method patents.

According to the new law, 35 U.S.C. 273 (Defense to Infringement Based on Prior Commercial Use), the prior user defense may be raised by a defendant who reduced the subject matter of the patent to practice and commercially used the subject matter at least one year before the effective filing date of the patent or the date that the patentee publicly disclosed the invention and invoked the § 102(b) grace period, whichever is earlier.

The law defines a commercial use as either in connection with an internal commercial use or an actual arm’s length sale or other arm’s length commercial transfer of a useful end result of such commercial use.

To prevail, the defendant would have to produce clear and convincing evidence of his or her activities that demonstrate the invention was reduced to practice and was commercially used, which is a relatively high burden and would likely require corroborating evidence, particularly in the case of non-documented evidence of human activities.

Subject matter for which commercial marketing or use is subject to a premarketing
regulatory review period (e.g., pharmaceuticals) during which the safety or efficacy of the subject matter is established, including during any patent term extension period, shall be deemed to be commercially used for purposes of the new law during such regulatory
review period.

A use of subject matter by a nonprofit research laboratory or other nonprofit entity,
such as a university or hospital, for which the public is the intended beneficiary, shall be deemed to be a commercial use for purposes of the new law, except that a prior user defense may be asserted only for continued and noncommercial use by and in the laboratory or other nonprofit entity.

The prior user defense cannot be asserted if the subject matter was derived from the patent holder or persons in privity with the patent holder. Prior user rights may not be assigned, licensed, or transferred to another, except as part of an acquisition of an entire business enterprise (e.g., an asset acquisition, merger, etc.).

Congress stated that the change to the existing law was a “narrow expansion of prior user rights [that] balances the interests of patent holders, including universities, against the legitimate concerns of businesses that want to avoid infringement suits relating to processes that they developed and used prior to another party acquiring related patents.” Notably, the use of the term "processes" in describing the new law appears to relates back to the old law that was limited to method patents.

Maryland Innovator of the Year Announced

Brian Wm. Higgins — Wed, 23 Nov 2011 11:40:55 -0500

The top 2011 Maryland Innovator of the Year award was presented to Jeff Walker of Innovative Mobility Solutions LLC during a presentation ceremony held at Baltimore's American Visionary Art Museum in October. Mr. Walker was recognized as the top innovator among 24 award honorees in recognition of his patent pending motor vehicle device for use by those with physical disabilities.

The award is given annually by The Daily Record. Daily Record Publisher Suzanne Fischer-Huettner, Daily Record Executive Editor Tom Linthicum, and Joe Buchholz, enterprise sales manager of Comcast Business Class, handed out the awards.

The 24 honorees were selected from dozens of nominees by a panel of volunteer judges, including myself and last year's top winner, Yuying Shu, catalyst scientist at Columbia, Maryland's, W.R. Grace.

AIA: Redefining What is "Prior Art"

Brian Wm. Higgins — Mon, 31 Oct 2011 16:39:49 -0500

Under the America Invents Act (AIA), any evidence showing that an invention was "in public use, on sale, or otherwise available to the public" can be used as prior art, even if that evidence relates to events that take place outside the U.S. Thus, companies and inventors who publicly use or offer their inventions for sale outside the U.S. could be barred from obtaining patent protection for those inventions in the U.S., depending on the circumstances. That change in the patent law is intended to harmonizes U.S. law with the patent laws of other countries. As discussed below, the AIA make many other changes to the definition of "prior art."

The AIA also abolishes the 1-year statutory bar under 35 U.S.C. 102(b), making any prior disclosure of an invention, with few exeptions, eligible as prior art. The new law excludes the inventor’s own disclosure of his invention and any subsequent disclosures of the inventor's own invention as prior art. While that may seem to encourage early disclosure by the inventor, any public disclosure of an invention could affect an inventor's ability to obtain protection outside the U.S., since many other countries still require absolute novelty and do not grant a grace period for public disclosure, even by the inventor.

Under the AIA, it is not entirely clear whether the on-sale bar is included in the one year grace period. A colloquy on the floor of the U.S. House of Representatives during debate over the AIA indicates that Congress intended that the grace period also include "on sale" activity.

The AIA expands the prior art common ownership exception under 35 U.S.C. 103(c). Under the current law, a prior published patent application would not be eligible prior art to show a claimed invention is obvious "where the subject matter [of the published application] and the claimed invention were, at the time the claimed invention was made, owned by the same person or subject to an obligation of assignment to the same person." The new law, however, would remove any published patent application or patent as prior art if "the subject matter disclosed [in the published application or patent] and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person." Under those circumstances, the earlier published application, if co-owned, will not be prior art under both an anticipation and obviousness inquiry.

The AIA also prohibits the patenting of any tax preparation invention by deeming those inventions indistinguishable from the prior art. This provision is already effective and applies to all pending U.S. patent applications. The provision excludes, however, computer programs or systems for preparing tax. As such, it may be possible to formulate a tax preparation invention as a computer program or system to avoid the statutory prohibition.

AIA: Post-Grant Review Intended to Curb Litigation

Brian Wm. Higgins — Sat, 29 Oct 2011 15:32:39 -0500

Nearly 30 years ago, Congress created the administrative reexamination process. It was intended to be used by the Patent Office to review the validity of already-issued patents on the request of either the patent holder or a third party challenger. It was expected that reexamination would serve as an effective and efficient alternative to often costly and protracted district court litigation.

The initial reexamination statute had several limitations that later proved to make it a less viable alternative to litigation for evaluating patent validity than Congress intended, and changes to the system did little to put a dent in patent enforcement litigation. Indeed, the reexamination process became another litigation strategy by accused infringers.

Whether the new post-grant review procedure will in fact reduce patent litigation will be measured over time. But what is clear is that the filing or institution of a post-grant review proceeding does not limit a patent owner’s ability to commence litigation to enforce his or her patent rights.

AIA Goal: Reduce Patent Litigation

Brian Wm. Higgins — Sun, 16 Oct 2011 04:59:04 -0500

Designed to limit unnecessary and counterproductive litigation costs, the America Invents Act (AIA) was signed into law by President Obama on September 6, 2011, to the praises of many in industry. The law changes how and where patent lawsuits can be filed, eliminates certain defenses to patent infringement allegations, and effectively eliminates certain private rights of action. Even now, parties whose patent enforcement cases are pending in federal courts around the country or are about to be filed, are having to step back and rethink their litigation strategies. One of the goals of the AIA is to reduce the amount of litigation in the United States.

Reducing Litigation Through Implementation of Post-Grant Review Proceedings

Nearly 30 years ago, Congress created the administrative ‘‘reexamination’’ process. It was intended to be used by the Patent Office to review the validity of already-issued patents upon the request of either the patent holder or a third party challenger. It was expected that reexamination would serve as an effective and efficient alternative to often costly and protracted district court litigation. But the initial reexamination statute had several limitations that later proved to make it a less viable alternative to litigation for evaluating patent validity than Congress intended, and changes to the system did little to put a dent in patent enforcement litigation. Indeed, the reexamination process became another litigation strategy used by accused infringers, often used as a delay tactic.

The AIA amends existing reexamination procedures and establishes a new post-grant review procedure. The new procedures are expected to change the standard for instituting reexaminations and reviews, time limits, burdens of proof, and how discovery is taken. Whether the new post-grant review procedure will in fact reduce patent litigation will be measured over time. But what is clear is that the filing or institution of a post-grant review proceeding does not limit a patent owner’s ability to commence litigation to enforce his or her patent rights.