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US Supreme Court Allows Recovery Of Lost Foreign Profits

In WesternGeco LLC v. ION Geophysical Corp, decided today, the U.S. Supreme Court held that 35 U.S.C. Sections 271(f)(2) and 284 allow a patent owner to recover damages in the form of a reasonable royalty and lost foreign profits for patent infringement. In this case, the defendant manufactured the components in the United States, but then shipped those components (unassembled) abroad to companies for assembly and subsequent use of the assembled system. At trial, the plaintiff presented evidence that it had lost 10 contracts due to this activity. The jury awarded $12.5 million in royalties and $93.4 million in lost profits. At issue was the extraterritoriality reach of U.S. patent law. Authoring the opinion for the Court, Justice Thomas stated [t]he conduct in this case that is relevant to that focus clearly occurred in the United States, as it was IONs domestic act of supplying the components that infringed?WesternGeco?s?patents.? The Court held that the lost-profits awarded to the patent owner was a domestic application of Section 284: Taken together, [Section] 271(f)(2) and [Section] 284 allow the patent owner to recover for lost foreign profits.

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Pick Your Registered Agent Carefully

Domestic companies incorporated in the state of Texas (and other multi-judicial district states) accused of patent infringement have an additional tool in their venue arsenal. The Federal Circuit ruled last week in In re BigCommerce that a domestic company incorporated in a state having multiple judicial districts (such as Texas) resides for purposes of the patent venue statute only in the single district within that state where it maintains a principal place of business, and if it does not maintain a principal place of business in the state, in the judicial district where its registered agent is located. The decision also provides direction on what constitutes a company’s principal place of business. In this case, the defendant accused of patent infringement maintained its principal place of business in the Western District of Texas. This case originated from litigation filed in the Eastern District of Texas. This is an interesting decision because under the facts of the case it appears the Federal Circuit did not have to include the registered agent aspect in its test. Many companies retain an outside company to act as their registered agent. This part of the Court’s ruling suggests that a company incorporated under Texas law (but not having its principal place of business in Texas) that is concerned about being sued for patent infringement in Texas, such as East Texas, may be able to impact venue through its choice of its registered agent.

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Foreign Companies Are Subject to Patent Infringement Lawsuits In Any Judicial District

Subsequent to the Supreme Court’s ruling in TC Heartland, some foreign corporations were advancing the contention that the venue for patent infringement lawsuits naming them as a defendant was not proper in any court in the United States. Today, the Federal Circuit addressed that contention in In re HTC Corporation, ruling that foreign corporations are subject to suit in any judicial district. This ruling will likely give patent owners more flexibility in deciding where they file patent infringement cases against foreign companies. Whether there is any appreciable increase in patent cases filed in Delaware, the Eastern District of Virginia, the Eastern District of Texas or other particular venues remains to be seen. In the underlying case, HTC Corporation, a Taiwanese corporation, asked the District Court in Delaware to dismiss a patent infringement case filed against it, arguing that the venue was improper in Delaware. The District Court held that HTC Corp, as a foreign corporation, was subject to suit in any judicial district. The Federal Circuit looked at the patent venue statute (28 U.S.C. Sec. 1400), the general venue statute (28 U.S.C. Sec. 1391), legislative histories, and prior Supreme Court decisions, and determined there was no error in the District Court’s analysis.

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How much Detail Is Required from Patent Owners To State A Claim for Patent Infringement?

The Federal Circuit’s opinion in Disc Disease Solutions Inc. v. VGH Solutions, Inc. et. al., handed down on May 1, 2018, may very well change the specificity that patent owners and patent attorneys provide in filing a lawsuit to enforce their intellectual property rights. It suggests that, at least for simple technology, there is not much difference, if any, between the old Form 18 requirements and the Iqbal/Twombly standard. This case was an appeal of a dismissal with prejudice of the plaintiff’s case for patent infringement. The Federal Circuit determined that by specifically identifying the accused products (and attaching pictures of the products) and alleging that the accused products meet each and every element of at least one claim, the patent owner had provided fair notice of the asserted infringement.

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Fact Issues Preclude Dismissal Under Alice

The Federal Circuit recently handed down two decisions that give guidance to patent owners contemplating patent litigation in the post-Alice world. The first was Berkheimer v. HP Inc. which was decided on February 8, 2018. Berkheimer was an appeal from the Northern District of Illinois court granting summary judgment in favor of the accused infringer, in part, that claims were patent-ineligible under 35 U.S.C. Section 101. The Federal Circuit held the claims were directed to an abstract idea, and then moved on to the second part of the Alice analysis. The second part of the Alice analysis requires that patent owners, accused infringers, and courts consider the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into something patent-eligible. Citing precedent, the Berkheimer Court recognized that the second step may be satisfied when the limitations of the claim involve more than the performance of well-understood, routine and conventional activities previously known to the industry. The Court then stated the question of whether a claim element or combination of elements is well-understood, routine, and conventional to a skilled artisan in the relevant field is a question of fact. Any fact, such as this one, that is pertinent to the invalidity question must be proven by clear and convincing evidence. However, the Court then proceeded to acknowledge that whether a claim recites patent-eligible subject matter is a question of law that may contain underlying factual disputes that can be decided on summary judgment. In that case, the Federal Circuit determined that the district court erred in concluding there were no underlying factual questions, stating the mere fact that something is disclosed in a piece of the prior art, for example, does not mean it was well-understood, routine, and conventional. This ruling turned on the improvements in the specification, to the extent they are captured in the claims, create a factual dispute regarding whether the invention describes well-understood, routine, and conventional activities.? On February 14, 2018, the Federal Circuit handed down its decision in Aatrix Software, Inc. v. Green Shades Software, Inc. This was an appeal of Rule 12(b)(6) ruling of the district court, and the district court’s refusal to allow the patent owner to amend its complaint. In this case, the Court stated that although patent eligibility can be determined on a 12(b)(6) motion, this is true only when there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law. In that case, the Court decided the patent ineligibility was not properly decided at Rule 12(b)(6)stage and the district court erred when it denied the patent owner leave to amend the complaint with allegations that, if accepted as true, establish the claimed combination contains inventive components and improves the workings of the computer. The court’s opinion analyzing the proposed amended complaint is an interesting read.

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A Recent Opinion From The Eastern District Of Texas Addresses Numerous Alice/Section 101 Issues

In its September 24, 2018 opinion in Intellectual Ventures v. Sprint, et. al., the Eastern District of Texas Court made several rulings that touch on a number of issues that patent owners and parties defending patent infringement allegations should consider. This opinion was the result of two identical Section 101 Motions to Dismiss filed in two companion cases involving multiple asserted patents. The first issue addressed by the Court was whether the three claims that the defendant’s motion analyzed were in fact representative of all the asserted claims in the six asserted patents. Noting the brevity with which this was addressed by the defendants (in two footnotes of their motions), the Court determined that defendants failed to sufficiently demonstrate that the three claims were representative of the other claims. The Court then turned to its Alice analysis of the three claims addressed in the defendant’s motions. Here, the Court found one claim to be directed to an abstract concept and failed to contain an inventive concept. (The patent owner’s argument that it would prove an inventive concept at trial didn’t seem to gain much traction). Addressing the second claim, the Court found it directed to an abstract idea but that there was a question of fact as to whether the claim contained an inventive concept. And finally, with respect to the third claim, the Eastern District of Texas Court determined the claim was not directed to an abstract concept under Alice.

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Supreme Court Follows ?On Sale? Bar Precedent in America Invents Act Decision

Earlier this year, the Supreme Court addressed the on-sale provision of the AIA, 35 U.S.C. Sec 102(a), in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. In this case, the patent owner, Helsinn, entered into a license agreement and a supply and purchase agreement with a third party. These agreements gave the third party the right to distribute, promote, market, and sell the drug in question. In return, Helsinn received upfront and future royalty payments. The agreements required the third party to keep Helsinn’s proprietary information confidential. The effective filing date of Helsinn’s patent was nearly two years after the two agreements were executed. The District Court held that the on-sale bar did not apply, concluding that under the AIA, an invention is not on sale unless the sale or offer made the claimed invention available to the public. The Federal Circuit reversed, concluding that if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of the sale to fall within the AIA on-sale bar. The Supreme Court affirmed. The issue as phrased by the Court was whether, under the AIA, an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention. The Court concluded such a sale can qualify as prior art. As noted by the Supreme Court in its Pfaff decision over twenty years ago, every patent statute since 1836 included an on-sale bar provision. Under Pfaff, the Court had ruled (pre-AIA) the on-sale bar applies if two conditions are met. First, the product must be the subject of a commercial offer for sale. Second, the invention must be ready for patenting (which can be shown by proof of reduction to practice, or drawings or descriptions of the invention that are sufficiently specific to enable a person of skill in the art to practice the invention). The Court noted it had previously suggested that a sale or offer need not make an invention available to the public. It also noted the Federal Circuit’s decisions had made explicit that secret sales could invalidate a patent. The court’s decision was based on its determination that when Congress reenacted the on-sale bar language in the AIA that was found in the pre-AIA statute, that Congress had adopted the earlier judicial construction of that phrase. The fact that additional language appears in the AIA statute (otherwise available to the public) did not change that body of precedent according to the Court. The Court also noted that Helsinn was not asking the court to re-visit pre-AIA precedent. Since it had concluded that Congress did not alter the meaning of on-sale when the AIA was enacted, the court held an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential can qualify as prior art under Section 102(a).

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Infringement under the Doctrine of Equivalents is Barred by Prosecution History Estoppel

The Federal Circuit recently affirmed the dismissal of the patent owner’s lawsuit brought for patent infringement under the doctrine of equivalents in Amgen Inc. v. Coherus Biosciences Inc., 2018-1993 (Fed. Cir. July 29, 2019). The case illustrates one of the potential difficulties a patent owner may encounter under the doctrine of equivalents. Prosecution history estoppel is a defense to a charge of infringement under the doctrine of equivalents and prevents a patent owner from recapturing subject matter surrendered from the literal scope of a claim during prosecution. It occurs in two ways. First, and most common, is by the patent applicant making a narrowing amendment to the claim commonly referred to as amendment-based estoppel. The second way is by surrendering claim scope through arguments made during prosecution referred to as argument-based estoppel. In order for argument-based estoppel to apply, the prosecution history must evince a clear and unmistakable surrender of the subject matter. In the Amgen case, the Federal Circuit determined that argument-based estoppel did apply. The court’s ruling was based on arguments made by the patent applicant to overcome the cited prior art in which the applicant stated the prior art did not teach or suggest the particular combinations of [chemical materials] recited in the pending claims. Additionally, during prosecution, the applicant submitted a declaration that described the combination of chemical materials as a particular dual salt combination[s]. The court agreed with the District Court of Delaware that the competitor would reasonably believe that the patent owner surrendered unclaimed combinations.? Ultimately the Federal Circuit concluded the disavowal was a clear and unmistakable surrender.

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What Is the Process of Copyright Registration?

From the moment you create an original work, you have an exclusive intellectual property right to make copies of your work. This is known as copyright. This right exists regardless of whether you publish your work or register it with the federal government. However, there are many benefits to registering your copyright with the U.S. Copyright Office, such as: Providing evidence that your copyright is valid; Allowing you to sue for copyright infringement in federal court; Putting others on notice of your copyright; and Allowing you to collect statutory damages for copyright infringement. If you have created a new work, consider consulting an experienced copyright attorney to help you understand what is the process of copyright registration. They can help you prepare your copyright registration, advise you about copyright infringement, and help you with contracts to publish or license your work. Steps in the Copyright Registration Process If you decide to register your copyright, you will need to submit an application to the U.S. Copyright Office. This process involves several steps. Prepare Your Registration Materials Your copyright registration consists of three things: Your registration form, Your registration fee, and Copies of the work you want to register. Generally, you should plan to include one copy of your work if it is unpublished and two copies if it is published. Determine How You Want to Register Your Copyright You can register a copyright either by mail or online. The easiest and quickest way to register your copyright is by submitting your registration online with the U.S. Copyright Office. Online registration also has cheaper filing fees than paper registration. In many cases, you will need to mail the copies of your work separately, even if you complete registration online. However, the following works may be submitted electronically: Works that are published only electronically, Unpublished works, and Architectural works. If you prefer to register your copyright by mail, you need to choose the appropriate form for the type of work you are copyrighting. The Copyright Office has different forms for visual arts, performing arts, literary works, sound recordings, and single serials. You can download the forms online or request to have them sent to you by mail. You can mail your form to: Library of Congress  U.S. Copyright Office-SR 101 Independence Avenue SE Washington, DC 20559-6000 If you complete your registration by mail, you need to include your fee and copies of your work in the same package as your registration form. Follow Up on Your Registration If you register online, you will receive an electronic confirmation. If you register by mail, you should consider using certified mail to confirm receipt. The U.S. Copyright Office will not send you a confirmation. It generally takes about three to nine months for the Copyright Office to process your registration. The length of time depends on whether you submit your registration and copies electronically or by mail and whether further communication is needed before the copyright can be granted.  If you file online, you can check the status of your claim online. If you file a paper application, you can contact the Copyright Office to check your claim?s status after about six weeks. If the Copyright Office has questions or needs more information from you, it will reach out by mail, email, or phone. If the Copyright Office cannot grant your copyright, it will send you a letter explaining why it rejected your registration.  If all goes well and your copyright is registered, the Copyright Office will send you a certificate of registration by mail. How Long Does Copyright Last? The length of time a copyright lasts depends on when it was registered and whether the author is an individual or an institution. For any copyrights registered after January 1, 1978, the following rules apply. Individual Authors If the author of a work is an individual, their copyright will last for the length of their life plus 70 years. If the work has more than one author, then the copyright will last for the length of the last surviving author?s life plus 70 years. Institutional Authors Different rules apply if the author is an institution, such as a corporation or nonprofit organization, or someone they hired to complete work on their behalf. In this circumstance, the copyright lasts either 95 years from the date of publication or 120 years from the date of creation, whichever comes first. This rule also applies to anonymous authors.

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What Does a Patent Lawyer Do?

If you have an idea that requires a patent, you should consider consulting with a patent lawyer.  There are many things a patent lawyer can do, such as advise you on the process for obtaining your patent and help you protect it against infringement. What Is a Patent? Patents can be used to protect any number of ideas and inventions, including: A formula; A process or method; A tool or product; An engineered plant; or A machine. To be patentable, the invention must be original and nonobvious. Patents last from 15 to 20 years, depending on the type of patent. Do You Need a Lawyer to File a Patent Application? You can file a patent application on your own, but it is always a good idea to have a lawyer help you. When you write a patent application, you need to make sure your idea meets all the qualifications for a patent and that you describe it clearly enough to adequately protect it. For example, you need to: Determine which type of patent application to file and whether you need multiple patent applications; Determine whether you need to file a provisional patent application while you prepare your regular application; Explain how the invention works; Demonstrate that the invention is new;  Explain how the invention will be used and why it is useful; and Explain each part of the invention in detail. If you don’t prepare your application correctly, the patent office may reject it. Or even worse, the patent may not adequately protect your idea. Even if you want to do some of the initial draftings on your own, you should have an experienced patent lawyer review your application before you submit it. They can point out anything that might be missing or need more explanation. What Does a Patent Lawyer Do? A patent lawyer can help you with anything related to your patent, including obtaining the patent, licensing your invention, and protecting your patent from infringement. Obtaining a Patent As discussed above, a patent lawyer can draft or review your patent application and help you get your patent approved. Having a lawyer?s assistance as you apply for your patent can help speed along the process and ensure that your patent is adequately protected. Licensing In many cases, the person who creates an invention is not necessarily the person in the best position to manufacture, market, or sell it. Often, you will need to license your patent to actually earn money from it. There are many potential benefits of licensing your patent including: Getting your product to market more quickly; Limiting your liability; Not having to devote your own resources to manufacturing the product; Potentially having a more established name behind your product; and The ability to more easily enter foreign markets. There are many options when it comes to licensing your patent. A patent attorney can advise you on the type of license that makes the most sense for your patent. They can also help you negotiate the license with prospective licensees so you can get more favorable terms. Some things you may discuss with your attorney include: Whether you want to grant someone an exclusive license or license the patent to multiple parties; Whether your licensee will have the right to grant sublicenses to others and under what terms; How you will be paid; How long the license will last; and What actions the licensee needs to take to maintain the license. Patent licenses are complex contracts. They include many detailed provisions that help define and protect your rights and those of the licensee.  You do not want to sign a license agreement without consulting with an attorney. You deserve appropriate compensation for your ingenuity and creativity. An attorney can help protect your interests and see that the agreement appropriately values your patent. Infringement A patent gives you the right to prevent others from using, making, or selling your invention. Nevertheless, there are always those who try to profit from the hard work of other people. If someone else infringes on your patent, it can drastically affect your ability to make money from your invention. However, you have the right to take legal action against patent infringers. If you believe someone has infringed on your patent, you should talk to a patent attorney right away. The longer the infringement continues, the more you stand to lose. Your attorney will likely start by sending a letter to the other party to insist that they stop infringing on your patent. If they refuse, then your attorney will file a complaint in court. They will also likely request a preliminary injunction that will require the other person to stop what they are doing until the matter can be resolved.  Because time is of the essence and there may be a lot of money at stake, it is important to have an experienced patent litigator help you with this process. What Can a Patent Attorney at Polasek Law Do For You? John (Ted) Polasek has been practicing patent law for 25 years. His practice focuses on licensing patents and litigating patent infringement cases. Ted is committed to providing personalized service for each of his clients. This includes flexible fee arrangements that take the needs of individual clients into account. Ted offers a free consultation to discuss your patent-related questions. Call Polasek Law Firm to schedule your consultation today.

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