Role of Foreign Precedents in deciding the outcome of a Patent Litigation

Ever wondered whether a determination by a foreign court over patent infringement will be considered or admissible in your local court? Does the jury get swayed by the decisions of foreign court in coming to a conclusion?

Patent infringement cases (territorial and extraterritorial) are pretty common nowadays and patent owners as well as product manufactures increasingly find themselves involved in patent litigation in local as well as foreign courts. It wouldn’t be far-fetched to say that patent litigation is slowly going “Global”. Patent owners and product manufactures are often busy pursuing legal battles with each other in many countries at the same time. As a result, patent owners need to be diligent more than ever in deciding which countries to file their patent applications and seek protection for their technology as well as in framing strategies for pursuing a patent litigation battle in local as well as foreign courts.

While the patent laws are jurisdictional, the inventions of today are international and are not bound by any borders. Traditionally, courts in the same country have often relied on issue preclusion (Collateral estoppel) to avoid re-litigation on an issue. The underlying rationale of issue preclusion is to prevent abuse of judiciary and ensuring that the parties involved in litigation are bound by the decisions of lower court. However, no such preclusion are defined when an issue has been resolved by a foreign court. There have been many cases in United States of America and European countries such as Germany, France and United Kingdom where the local courts have overruled the decisions of foreign courts. Thus, it should not come as a shock that courts from different countries have come to different conclusions and decisions in patent litigations that have involved the same product or patent in question. There have been a few cases as well where local courts have decided the outcome of a specific case by relying on rulings of foreign courts where the specific case has been already contested. A few such cases where foreign precedents have been considered and not considered are disclosed below:

Hilton v. Guyot: A landmark case in which the United State Supreme Court described the factors to be used when considering the application of comity and sovereignty. The Supreme Court concluded that if a foreign court has provided a full and fair trial and no evidence of prejudice or bias is present, then merits of such case can be relied upon by US courts.

Medtronic, Inc. v. Daig Corp: In order to prove obviousness, Daig Corp. had urged the court to adopt the conclusion of a German Tribunal that held the German counterpart of the patent obvious. However, the court did not agree with the recommendation and called the argument by Daig Corp as “specious”.

Cuno Inc. v. Pall Corp: This case involved simultaneous patent litigations that were being contested in US and UK court. The UK decided the issue first and ruled that Pall’s patent were valid and being infringed. Pall moved the US court for partial summary judgment and argued that relying on the findings of the UK court would shorten the trial and save valuable cost and money. However, the US court was reluctant to rely on the findings of UK court and stated that it collateral estoppel could not be applied based on foreign precedents as the patent laws and court processed were different.

Ditto, Incorporated v. Minnesota Mining & Mfg. Co: Ditto requested the US court to rely upon a decision of the West German Federal Patent Court which held the German counterpart of the patent as invalid. However, the US court stated that decision of the German patent court was not controlling on its own decision.

There have been many more such cases where some courts have shown the willingness to rely on foreign precedents whereas others have stated that foreign precedents can be relied on a persuasive basis but not as deciding or controlling means. Few such cases are mentioned below:

Vas-Cath v. Mahurkar

Northlake Marketing & Supply Inc

Gordon & Breach v. American Institute of Physics

Computer Associates International, Inc., v. Altai, Inc

Northlake v. Glaverbel

After analyzing the above cases it is clear that there is no definite answer to whether foreign precedents will be considered or admissible in US and European courts. Another important question that comes to my mind is with respect to handling of foreign precedents in countries where the number of patent litigation cases is not as high as it is in US and Europe. US and Europe have a huge number of precedents to rely upon in order to decide the outcome of a patent litigation. Their database is huge enough to cite their own cases to come to a conclusion. Do the courts in other countries such as Australia, India, Japan, Korea, Brazil, etc consider the foreign precedents? I have seen a few cases in India where foreign precedents have been considered during appeal proceedings. However, it was difficult to come to a conclusion whether foreign precedents would be admissible in Indian Courts.

Conclusion

Currently, various measures are being undertaken by patent offices from around the world to harmonize the patent laws and move towards a common set of patent laws to make matters easy for patent owners that are involved in patent litigation in multiple countries. However, the truth is that patent laws will continue to be jurisdictional by nature and each patent office will continue to have its own standards that it would rely on in coming to a conclusion on various aspects of a patent proceeding. Thus, foreign precedents should be considered on persuasive basis rather than on controlling basis.


Further read:
http://www.ipmall.org/hosted_resources/IDEA/39_IDEA/39-1_IDEA_107_McGarrigle.pdf
http://heinonline.org/HOL/LandingPage?collection=journals&handle=hein.journals/nyuilp27&div=20&id=&page=
http://www.kluwerlawonline.com/productinfo.php?pubcode=EFJ

Apple accused of Copyright Infringement

Taea Thale, a photograph has brought a copyright infringement lawsuit against Apple in California Northern District Court on August 1, 2011. The infringement revolves around use of photographs of the band "She and Him" clicked by Taea Thale in iPhone's advertisements without prior approval. "She and Him" is an American indie band that consists of Zooey Deschanel (Vocals) and M.Ward (guitar). The court case number is 5:11-cv-03778-HRL.


Source: http://www.law360.com/cases/4e3842ec9043431ad0000001

Natco Pharma Applies for India's First Compulsory License

Economic times reports that Natco Pharma has applied for a compulsory license to sell a generic version of Bayer’s drug Nexavar. Nexavar is used for treating liver and kidney cancer and costs about Rs 2.85 lakhs (10lakhs = 1 million) for a month's course in India. The high cost of Rs 2.85 lakhs for a month’s course is un-affordable for an average Indian. Natco has claimed that it can sell its generic version of Nexavar, sorafenib tosylate for Rs. 8, 900 for the same course.

Natco had sought a voluntary license from Bayer in December, 2010. However, the request to grant the Voluntary license to Natco was refused by Bayer.  Consequently, Natco went ahead and applied for a compulsory license. The Indian Patent law (Section 89(4)) allows an interested party to apply for a compulsory license when a voluntary license has been refused to the interested party by the company holding the patent. On grant of a compulsory license, the licensee has to pay some royalty (usually 5% of sales) to the patent owner.

Further information about compulsory license in India

Under the provisions of Indian Patent Act, an interested party may apply for a compulsory license after expiry of 3 years from grant of patent. The request for compulsory license can also be made by a party that has availed a license for the patent from the patent owner. The conditions under which a compulsory license is granted by the controller of Indian Patent office is covered under section 84, section 92(1) and 92(3), and section 92(A).  Section 84 is related to preventing the abuse of patent as monopoly and to make way for commercial exploitation. Section 92(1) and 92(3) are related to situations calling for national emergency and section 92(A) is related to export of drugs/medicines to foreign countries with public health problems and lack of resources and infrastructure to produce the necessary drugs required by the public. Article 30 and 31 cover compulsory licensing provisions in TRIPS. The relevant sections have been added at the end of the article from the Indian Patent Act.

This is the first instance of a company applying for compulsory license in India. Till date, no compulsory license has been issued by the controller or the government of India. There have been a few occasions (three) where parties have applied for compulsory license under section 92(A); however, such applications were withdrawn later by the parties themselves.

Section 84

(a) The reasonable requirements of the public with respect to the patented invention have not been satisfied;

(b) The patented invention is not available to the public at a reasonably affordable price.

(c) The patented invention is not worked in the territory of India.

Section 89 further explains the rationale of granting compulsory license under Section 84.

Section 89

(i) That the patented inventions are worked on a commercial scale in the territory of India without undue delay and to the fullest extent that is reasonably practicable;

(ii) That the interests of any person for the time being working or developing an invention in the territory of India under the protection of a patent are not unfairly prejudiced.

Subsection 6 of Section 84 specifies the factors while considering the application under section 84.

(1) The nature of the invention, the time which has elapsed since the sealing of the patent and the measures already taken by the patent or licensee to make full use of the invention;

(2) The ability of the applicant to work the invention to the public advantage;

(3) The capacity of the applicant to undertake the risk in providing capital and working the invention, if the application were granted;

(4) As to whether the applicant has made efforts to obtain a license from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period as the Controller may deem fit.

Sections 92 (1) and 92 (3)

These sections enable the Central Government and the Controller to deal with situations demanding national emergency related to public health crises by granting relevant compulsory licenses.

Section 92 A

Provides for compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems.

Online Retail Companies like Amazon Sued for Patent Infringement by SFA Systems

Update 1: SFA systems has also sued Barnes & Noble,Gander Mountain Company, OverTon's Inc, and Newegg, Inc for the '341 patent.


Update 2: SFA systems has also sued BigMachines, Enterasys Networks, Ricoh Americas Corporation
and CareStream Health for the '341 patent.

August 01, 2011: SFA Systems (plaintiff), a Texas based company, having its principal place of business at 207 C North Washington Avenue, Marshall, Texas 75670, has sued online retail companies for patent infringement in the Texas Eastern District Court. The lawsuit has been filed against Amazon, Buy.com, DSW, Dollar Tree Stores, Meijer, New York & Company, Rite Aid Corporation, Symantec Corporation, Target Corporation, TigerDirect and Zappos.Com (defendants).

The patent-in-suit is US7941341 (the ‘341 patent), entitled “Sales force automation system and method”. The ‘341 patent was filed on March 27, 2009 and issued on May 10, 2011. This is the second lawsuit brought by SFA against the defendants. On Feb. 1, 2011, SFA had filed a complaint against the defendants alleging patent infringement of US6067525 (the ‘525 patent), entitled “Integrated computerized sales force automation system” in the Texas Eastern District Court. SFA has also been involved in two more lawsuits that revolved around the ‘525 patent, details of which are available here and here. Buether Joe & Carpenter LLC, which represented SFA system in the ‘525 patent lawsuit had reported that many parties had reached a settlement with SFA systems. However, the amount involved in the settlement was not disclosed.

The ‘341 patent and the ‘525 patent are from the same patent family. A comparison of independent claims of the ‘341 patent and the ‘525 patent reveals that both the patents have substantially the same claim matter and are similar in scope.

Claim 1 of the ‘341 patent:

“An automated sales system for facilitating a sale of an item or service by intelligently integrating into a single system tools used by a salesperson in a sales process, the automated sales system comprising: a plurality of subsystems of a computer configured to electronically facilitate one or more actions performed during at least one phase of the sales process; and an event manager, electronically coupled to at least one subsystem of the plurality of subsystems, the event manager detecting one or more changes in information regarding an event occurring within the system and automatically initiating an operation in one or more particular subsystems of the computer to facilitate a new action based on the event, wherein at least one subsystem of the plurality of subsystems determines if the event has occurred previously in the sales process and updates another event or task in at least another subsystem of the plurality of subsystems if the operation is automatically initiated.”

Claim 1 of the ‘525 patent:

“A computer implemented sales system used to facilitate a sales process, the system comprising:

a plurality of subsystems configured to facilitate one or more actions performed during at least one phase of the sales process; and

an event manager, coupled to the subsystems, the event manager

detecting one or more changes in state characteristic of an event occurring within the system,

inferring occurrence of the event and a context in which the event occurred based at least in part on the detected changes in state, and

automatically initiating an operation in one or more particular subsystems of the computer to facilitate a new action based on the inferred context.”

Based on the similarity of the claims in the two patents and considering the outcome of the last patent lawsuit, what do you think will be the likely outcome of the present lawsuit? Will the defendants settle for an out of court settlement or will there be any surprises?

Dell, HTC, Lenovo, Motorola Mobility, Philips and others sued for patent infringement

Advanced Display Technologies of Texas has sued Dell, Futurewei Technologies, HTC, Lenovo, Motorola Mobility Holdings, Philips Electronics North America Corporation, Sanyo North America Corporation, Sony Corporation of America and Sony Ericsson Mobile Communications for patent infringement. The patents-in-suit are US5739931 (the ‘931 patent), entitled “Illumination system employing an array of microprisms” and US6261664 (the ‘664 patent), entitled “Optical structures for diffusing light”. The lawsuit was filed on August 01, 2011 in the Texas Eastern District Court.

This is the second instance where Advanced Display Technologies of Texas has sued company's for infringing the '931 and the '664 patents. These patents were also mentioned in the lawsuit filed against Apple, AU Optronics, Vizio, Sharp, Sharp Electronics, Haier America Trading, Research In Motion, ASUSTeK Computer, ASUS Computer International, Haier Group, ViewSonic, AU Optronics Corporation America on January 5, 2011 in the Texas Eastern District Court.

The original assignee of the ‘931 and the ‘664 patent is Alliedsignal Inc, which transferred the assignment to Honeywell International, which in turn sold all the rights to Advanced Display Technologies of Texas. Apart from the ‘931 patent and the ‘664 patent, Advanced Display Technologies of Texas owns the following patents in United States:

US5396350: Backlighting apparatus employing an array of microprisms

US5555109: Illumination system employing an array of microprisms

US6129439: Illumination system employing an array of multi-faceted microprisms

US5428468: Illumination system employing an array of microprisms

US5521725: Illumination system employing an array of microprisms

US6010747: Process for making optical structures for diffusing light

The ‘931 patent is a continuation of US5555109, which is a continuation of US5428468, which is a continuation in part of US5396350. The ‘664 patent is a division of US6010747.

Claim 1 of the ‘931 patent:

“An illumination assembly comprising:

(a) a light transmitting means having at least one light accepting surface;

(b) reflecting means comprising an array of microprisms wherein at least one microprism comprises;

(i) a light input surface optically coupled to said light transmitting means;

(ii) a light output surface distal from said light input surface and having a surface area at least equal to the surface area of said light input surface;

(iii) a first pair of sidewalls disposed between said light input surface and said light output surface and at least one of said sidewalls forms a first tilt angle with respect to the normal of the surface of said light transmitting means; and

(iv) a second pair of sidewalls disposed between said light input surface and said light output surface and at least one of said sidewalls forms a second tilt angle with respect to the normal of the surface of said light transmitting means.”

Claim 1 of the ‘664 patent:

“An optical diffuser comprising a polymerized material layer on a transparent or translucent substrate, which layer has a highly modulated surface having smooth bumps ranging from about 1 micron to about 20 microns in both height and width.”

Image source: Freepatentsonline.com

Source: Priorsmart.com

Internet Threat - Cybersquatting

Today we have a guest post by Mr. Vijit Mishra, who is a "Patent Specialist" from Gurgaon, India. Vijit holds a Masters Degree in Biomedical Engineering and has been involved in the field of patent analytic for more than 4 years now.

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I have been wanting to have my own website where I intended to write about Football and other sporting activities. I had a few names for the website in my mind and cross-checked those names on various domain registration websites. I was surprised to see that most of the names for my website were already taken or registered. In order to satisfy my curiosity, I visited the already registered websites so that I could see what kind of content was uploaded on these websites by, what I assumed to be, people who shared similar interests. To my dismay, a majority of those sites had the following message:

“The domain name is for sale” or “The domain is under construction”. To make matters, worse, many websites were hosting several advertisements on their home page. I did some basic research to determine the rationale of having a website registered and not uploading any content on such websites. I realized that occupying or “sitting” on popular website/domain names is pretty common and is commonly known as “CYBERSQUATTING”. Some more “Googling” and I figured that Cybersquatting is a very serious concern in today’s digital age.

So what exactly is Cybersquatting? Cybersquatting is the act of registering a popular internet address - usually a company name or a person name - with the intent of selling it to its rightful owner. According to the Anticybersquatting Consumer Protection Act in US, Cybersquatting is defined as registering, trafficking in, or using a domain name with bad-faith intent to profit from the goodwill of a trademark belonging to someone else. The term derives from squatting, the practice of inhabiting someone else's property without their permission.

Cybersquatting was made illegal by the passage of the federal law in 1999. The law became necessary because numerous large companies were forced to pay large sums to buy their domain names from third parties.

How to check

As a general rule, first check to see if the domain name takes you to a website. If it does not take you to a functioning website, but instead takes you to a site stating "this domain name is for sale," or "under construction," or "can't find server," the likelihood increases that you are dealing with a cybersquatter, a person who creates such sites. The absence of a real site may indicate that the purpose of the owner of the domain name is to simply buy and sell the domain names to other users at a higher price than usual.

Of course, absence of a website does not always mean the presence of a cybersquatter. There may also be an innocent explanation and the domain name owner may have perfectly legitimate plans to have a website in the future.

If the domain takes you to a functioning website that is comprised primarily of advertisements for products or services related to your trademark, you may also have a case of cybersquatting. For example, if your company is well-known for providing audio-visual services and the website you encounter is packed with ads for other company's audio-visual services, the likelihood is very strong that the site is operated by a cybersquatter who is trading off your company's popularity to sell advertisements to your competitors.

If the domain name takes you to a website that appears to be functional, has a reasonable relation to the domain name, but does not compete with your products or services, you probably aren't looking at a case of cybersquatting.

Forms of cybersquatting

There could be various forms of cybersquatting mainly based on the intent of the cybersquatter

·         Typosquatting: Many Cybersquatters reserve common English words, reasoning that sooner or later someone will want to use one for their websites. Another target is mis-typed spellings of popular web sites. Cybersquatters will also regularly comb lists of recently expired domain names, hoping to sell back the domain name to a registrant who inadvertently let his domain name expire.

·         Identity theft: Internet domain name registrations are for a fixed period of time. If the owner of a domain name doesn't re-register the name with an internet registrar prior to the domain's expiration date, then the domain name can be purchased by anybody else after it expires. At this point the registration is considered lapsed. A cybersquatter may use automated software tools to register the lapsed name the instant it is lapsed.

·         Namejacking: It includes the purchase of a famous individual's name as a top-level domain name. A recent example is when Arun Jaitly tried to get his website from the name of arunjaitly.com; he found out that the site is already registered. The whole story can be read here. Setting up a website allows the purchaser to capitalize on any searches done for that name. As the name-jacked domains are set up using non-trademarked names and they have a purpose other than selling the domain name back to an individual, they circumvent the "Anti-cybersquatting Consumer Protection Act" (ACPA) laws U.S.C. § 1125 and U.S.C. § 1129. Since people frequently search the web to find out information, name jacking provides low-cost web traffic to the name-jacked website. As there is an initial and yearly fee for owning a domain name, some Cybersquatters reserve a long list of names and defer paying for them until forced to - preempting their use by others at no cost to themselves.

·         Brand abuse online: Cybersquatters use variations on trademarked names to draw visitors to their sites. Those sites may contain offensive content or pay-per-click ads, or they may create a false association with the trademark owner or sell competing products. Some may combine offensive content and e-commerce featuring pornographic images or other products.

Protection

Other then moving to the court there are few more policies and law have been established to get protection from the Cybersquatters:

·         Comparing cybersquatting to online extortion, Senator Spencer Abraham, a Michigan Republican, has introduced to Congress the Anti-Cybersquatting Consumer Protection Act (ACPA). This bill, if enacted, would make cybersquatting illegal. Violators would be charged a fine of up to $300,000.

·         The World Intellectual Property Organization (WIPO) has also outlined anti-cybersquatting tactics, which have been endorsed by ICANN (Internet Corporation for Assigned Names and Numbers, which licenses the domain name registrars, is working on a process for resolving domain name disagreements outside of the regular court system. Information about initiating a complaint is provided at the ICANN website.

·         The Uniform Domain Name Dispute Resolution Policy (UDRP) is a policy adopted by ICANN that provides a mechanism for trademark owners to obtain domain names from cyber squatters.  All domain name registrars that have the power to grant “.com”, “.net”, and “.org” generic top-level domains must follow the UDRP.  The UDRP provides that before a domain name registrar will cancel, suspend, or transfer a domain name that is the subject of a trademark-based dispute, it must have an agreement signed by the parties, a court order, or an arbitration award.  The UDRP created a streamlined "cyber arbitration" procedure to quickly resolve domain name ownership disputes that involve trademarks.  All owners/registrants of “.com”, “.net”, and “.org” domain names are subject to the UDRP by virtue of the registration agreements agreed to with their registrars at the time of acquiring their domain names

Both of these systems have their advantages, but they must be used properly in order to achieve the desired result.  The UDRP provides a method for quick resolution of a dispute whereas the ACPA allows for an extended legal battle with the potential of large monetary settlements being awarded.  However, both systems help to provide security and structure to the complicated and widespread problem of cyber squatting.  These acts, along with the legal system, are the only protection available to those who wish to defend themselves from cyber squatters. 

Future

Cyber squatting has been an active threat since the early 1990’s and has increased in severity ever since.  The prevention of cyber squatting revolves mainly around two acts, the UDRP and the ACPA. Since cyber squatting is going to shift from larger businesses to small businesses in the future, modifications to the cyber squatting acts will need to be made in order to   increase protection.  The ACPA will need to be modified to protect individuals who own a site similar to a corporation's trademark because currently the act favors big businesses.  Cyber squatting problems are going to continue to develop because of the rapid growth and expansion of the Internet.  The issue cannot simply be ignored or else it may hurt the economy.  It’s important to learn from the victims of cyber squatting so we can prepare ahead of time for the issues to come.


Follow @vijitmishra on Twitter

References:

http://faculty.ist.psu.edu/bagby/Fall05/346F05T8/conclusion.htm

http://www.itbusiness.ca/it/client/en/home/News.asp?id=53682&PageMem=2

http://en.wikipedia.org/wiki/Cybersquatting

http://www.nolo.com/legal-encyclopedia/cybersquatting-what-what-can-be-29778.html