Articles Posted in Patent Legislation

WASHINGTON DC – The House Energy and Commerce Committee recently voted to approve H.R. 2045, the Targeting Rogue and Opaque Letters (TROL) Act, by a vote of 30 to 22. Authored by Commerce, Manufacturing, and Trade Subcommittee Chairman Michael C. Burgess, M.D. (R-TX), the TROL Act was designed to help stop the practice of abusive patent demand letters while protecting the rights of legitimate patent holders to protect their intellectual property.

The TROL Act increases transparency and accountability in patent demand letters so businesses can weed out deceptive letters. The Act also establishes a national standard for the enforcement of abusive patent demand letters and allows the Federal Trade Commission (FTC) and state attorneys general to levy fines on bad actors.

“This legislation takes on a costly scam that, by many accounts, continues to worsen,” said Burgess. “The very real problem of abusive patent demand letters compels us to find a solution expressly designed to enable enforcement that’s free of constitutional setbacks.” To learn more about the TROL Act, click here.

WASHINGTON, D.C.Commerce, Manufacturing, and Trade Subcommittee Chairman Lee Terry (R-NE) (pictured) recently proposed draft text of legislation to address illegitimate patent demand letters. The legislation is designed to protect businesses from abusive patent assertion entities, also known as PAEs or patent trolls, while preserving the ability of LeeTerryPicture.jpglegitimate companies to prosecute their patents.

The draft legislation seeks to increase transparency and accountability to help expose and prevent fraudulent infringement claims. It would require patent demand letters to include certain basic information to help companies determine whether a letter is legitimate. It would also enhance Federal Trade Commission (FTC) authority to levy fines on fraudulent patent demand practices, and provide state Attorney General enforcement of the federal standard.

Terry stated, “Patent trolls cost American companies tens of billions of dollars each year, and are threatening job creation and innovation. We heard from countless small businesses about the destructive consequences of these scams, and after listening to these concerns, it became clear Congress needs to act to stop this growing abuse. But we must also be careful not to reach too broadly and limit legitimate business practices.”

Washington, D.C. – Utah Senator introduces a bill which includes both fee shifting and bonding to stop the drain on the economy caused by patent trolls.

U.S. Senator Orrin Hatch (R-Utah), current member and former Chairman of the Senate orrin-hatch.jpgJudiciary Committee, recently introduced legislation to address the growing threat of so-called “patent trolls.” Patent trolls purchase existing broad patents and then accuse businesses of infringing on those patents, in search of a financial settlement or litigation. Hatch’s legislation, the Patent Litigation Integrity Act (S. 1612), gives judges more opportunity to shift the costs and expenses of litigation, and gives defendants the opportunity to request a bond up front to prove the party seeking to assert a claim on the patent has adequate resources to turn over to the prevailing party if that party is successful in defending its claim.

“Patent trolls are a drain on the innovation in our country and their practices need to end,” Hatch said. “Many small businesses in Utah and throughout the country simply don’t have the resources to fight back against the predators in our patent system, and my bill gives them adequate resources to fight back. Fee shifting without the option to seek a bond is like writing a check on an empty account, and that’s why it’s important to include both in any legislation dealing with patent trolls. It’s my hope the Senate will act soon to put a stop to the patent trolls draining the innovation in our country and weakening our economy.”

Litigation by patent-assertion entities (“PAEs,” commonly known as “patent trolls”) has skyrocketed in the last two years.  A chart released by the White House in a June 2013 report entitled “Patent Assertion and U.S. Innovation” demonstrates that such trolls now file over 60% of all patent-infringement lawsuits.  (The red portion of the bars shows patent lawsuits brought by PAEs.)

Patent-Trolls-Chart.jpgThe patent-trolling business model includes no productive operations.  Instead, investors’ money is used to purchase patents for the sole purpose of alleging infringement and extracting payment under the threat of litigation.  Because litigation can be very costly, the patent trolls’ targets face a difficult decision: settle (typically by buying a license from the troll) or pay significant litigation expenses — and face the potential of losing at trial, which is somewhat unlikely but where damages can be enormous.  In contrast, the trolls often use contingency-fee attorneys and, thus, have little more at stake in any given lawsuit than a few hundred dollars for a court-filing fee.

Many view this type of litigation with suspicion, if not outright derision.  At least four patent-reform bills are pending in Congress and the Obama Administration recently released a harsh indictment detailing the damage to innovation and the economy caused by the “abusive practices in litigation” committed by patent trolls.  Various measures to curb frivolous patent litigation have been suggested, including increasing transparency of patent ownership and establishing a website through the U.S. Patent and Trademark Office to inform patent-troll victims of their rights. 

South Bend, IN – Biomet, Inc. of Warsaw, Indiana has filed a declaratory judgment suit against Bonutti Skeletal Innovations LLC of Frisco, Texas in the Northern District of Indiana, asking the court to enter a judgment of non-infringement and invalidity of fifteen Bonutti patents.

BiometLogo2.JPGBiomet is a privately held company that designs, manufactures and markets products used primarily by musculoskeletal medical specialists in surgical and non-surgical therapy.  Dr. Peter Bonutti is an orthopedic surgeon listed as an inventor or co-inventor on over 150 U.S. patents, including the patents-in-suit.  Biomet entered into a licensing agreement with Dr. Bonutti, via his research and/or patent-holding company MarcTec, LLC, in 2006.

Since September 2012, Bonutti Skeletal has initiated a series of patent-infringement lawsuits against medical-device manufacturers, including Depuy, Inc.; Zimmer, Inc.; Smith & Nephew, Inc.; Wright Medical Group, Inc.; ConforMIS, Inc.; Arthrex, Inc.; Linvatec Corporation and ConMed Corporation.  In each of these suits, Bonutti Skeletal has asserted infringement of Bonutti patents against products similar to those produced by Biomet.

In January 2013, Bonutti informed Biomet that it believed that Biomet was infringing upon Bonutti patents; it demanded a settlement to license these patents shortly thereafter.  On that basis, Biomet seeks a judgment under the Declaratory Judgment Act, stating that an actual and justiciable controversy exists.

Patent attorneys for Biomet listed fifteen Bonutti patents in their complaint.  Biomet asks for declarations that there was no infringement by Biomet of any of the fifteen Bonutti patents and of invalidity of all of the patents, a finding that the case is exceptional and an award of attorneys’ fees and costs pursuant to that finding.

The patents-in-suit, all issued by the U.S. Patent and Trademark Office are:

5,921,986: “Bone suture”

6,638,279: “Method of positioning body tissue relative to a bone”

8,147,514: “Apparatus and method for securing a portion of a body”

7,087,073: “Method of securing body tissue”

6,702,821: “Instrumentation for minimally invasive joint replacement and methods for using same”

7,806,896: “Knee arthroplasty method”

7,708,740: “Method for total knee arthroplasty and resecting bone in situ”

7,806,897: “Knee arthroplasty and preservation of the quadriceps mechanism”

8,133,229: “Knee arthroplasty method”

7,828,852: “Inlaid articular implant”

7,931,690: “Method of resurfacing an articular surface of a bone”

7,070,557: “Tissue graft material and method of making”

6,423,063: “Changing relationship between bones”

6,099,531: “Changing relationship between bones”

7,104,996: “Method of performing surgery”

Practice Tip #1:  It is common for those who consider themselves likely to become defendants in patent-infringement litigation to proactively seek a declaratory judgment of non-infringement.  Such a suit allows the potential defendant not only to choose their own forum, to the extent that it is consistent with jurisdictional restrictions, but also to remove an ever-present cloud of potential litigation and potential damages that may be continuing to accrue. 

Practice Tip #2:  The standard for an actual controversy under the Declaratory Judgment Act was most recently addressed by the Supreme Court in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007).  We blogged recently about another action for declaratory judgment involving Genentech here.

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Washington, DC

On January 18, 2013, the U.S. Patent and Trademark Office on issued final rules setting revised patent fees under Section 10 of the America Invents Act. (78 Fed. Reg. 4211). Section 10 of the AIA permits the USPTO to set or adjust by rule any fee under Title 35 or Title 15 for any services performed by or materials furnished by the Office. According to the statute, the fees may only recover the aggregate estimated uspto.JPGcosts for patent and trademark processing, activities, services, and materials. In its final rule notice, the Office said the fee-setting authority would permit sustainable funding and reduce the patent application backlog. According to the Federal Register notice:
The fee schedule in this final rule will recover the aggregate estimated costs of the Office while achieving strategic and operational goals, such as implementing a sustainable funding model, reducing the current patent application backlog, decreasing patent application pendency, improving patent quality, and upgrading the patent IT business capability and infrastructure.
For the most part, the fees in the final rules are the same as those in the proposal published last September (77 Fed. Reg. 55028, 9/6/2012). Many of the new front-end fees are reduced, such as the basic filing fee for an original patent application (reduced from $380 to $280), and the new fees include the 50% discount for small entities and 75% discount for micro entities. Among the differences between the proposed and final fees, the following are examples for non-small entity applicants:
• Correction of inventorship after first Office action (§1.17(d))
Proposed: $1,000; Final: $600
• Issue fee paid before January 1, 2014 (§1.18(a)(2))
Proposed: $960; Final: $1,780
• Ex parte reexamination fee (§1.20(c)(1)):
Proposed: $15,000; Final: $12,000
• Ex parte reexamination fee after supplemental examination (§1.20(k)(2))
Proposed: $13,600; Final: $12,000
• Notice of appeal to PTAB (§41.20(b)(1))
Proposed: $1,000; Final: $800
The Patent Public Advisory Council reviewed the September 2012 proposed rules and noted the many of the fees were tied to reducing pendency, using a goal of 10 months to the first Office action by 2015, and a goal of 20 months total pendency by 2016. Under the final rules, achievement of those two goals is pushed back to 2016 and 2017 respectively. In addition, the Office anticipates a reduced backlog and inventory of approximately 335,000 patent applications by 2016. For most of the fees, the effective date is March 19. 2013.

Indianapolis, IN — Indiana Intellectual Property Law and News has followed up on patent infringement cases filed in the Northern District of Indiana and the Southern District of Indiana by patent attorneys in 2011. The following updates are now available:

As we blogged in March 2011, the U.S. District Court of South Carolina transferred FC Patents v. Ford Meter Box Company of Wabash, Indiana, a patent infringement case involving fire prevention fixtures, to Northern District Court of Indiana. Following the transfer, plaintiff FC Patents voluntarily dismissed the case. This case was assigned to Judge Theresa Springmann and Magistrate Judge Christopher A. Nuechterlein in the Northern District of Indiana, and assigned case no. 3:11-cv-00116-TLS -CAN.

As we blogged in May 2011,Brandon S. Judkins of Indianapolis, Indiana filed a patent infringement suit alleging Polo Ralph Lauren Corporation of New York, New York infringed Patent No. D591,090, FURNITURE ARTICLE, which has been issued by the US Patent Office. In August 2011, Mr. Judkins voluntarily dismissed the case. This case was assigned to Chief Judge Richard L. Young and Magistrate Judge Debra McVicker Lynch in the Southern District of Indiana, and assigned Case No. 1:11-cv-00661-RLY-DML.

Washington, D.C. – The America Invents Act, also called the Leahy-Smith Patent Reform Act, was passed by the U.S. Senate last week. The bill was sent to President Obama’s desk, Thumbnail image for U S President Seal.jpgready for his signature before it can become law. The President is expected to sign the bill.

President Obama repeatedly has mentioned the patent reform legislation in recent speeches on the economy. The America Invents Act has been touted as a job creating bill and as an economic stimulus. Proponents argue that the reforms will streamline the patent process and allow companies to more quickly realize profits from technology and thereby employ more workers. Senator Leahy, one of the bill’s sponsors, also commented that the reform will improve the quality of patents. He told the New York Times, “For years, low-quality patents have been a drain on our patent system, and in turn our economy, by undermining the value of what it means to hold a patent. Higher-quality patents will infuse greater certainty into the patent system, which will better incentivize investment in American businesses, create jobs and grow our economy.” These claims, however, are complicated and controversial among intellectual property attorney experts on patent policy.

The biggest change brought on by the reform will give patent protection to the “first to file” for the patent, rather than the “first to invent” under the current system. Indiana Intellectual Property Law News blogged on the specifics of the legislation last month.

Washington, DC – A popular topic among patent lawyers across the country is the proposed “patent reform” legislation being debated and considered by members of the House of Representatives and the Senate. Wash DC.pngTitled the “Leahy-Smith America Invents Act,” the pending legislation in the House, H.R. 1249, passed by a 304-117 vote on June 23, 2011. A version in the Senate, S. 23, passed on March 8, 2011, by a vote of 95-5. The bill will go through the reconciliation process after Labor Day, and President Obama has indicated that he will sign the law.

“First-to-File” System

Notably, the proposed legislation would switch the United States from a “first-to-invent” to a “first-to-file” system. What this means is that, in order to gain patent protection for his or her invention, an inventor would have to be the first person to actually file a patent application claiming the invention. Under current law, through the “interference” process, an inventor may challenge an earlier-filed patent application by arguing that he or she had an invention date prior to the applicant’s filing date. Proponents of this change believe it would simplify the application process and bring U.S. patent law into harmony with the laws of all other countries, which already operate on the “first-to-file” system. Critics of the “first-to-file” system say that it disadvantages independent inventors, who often lack the resources to support early-stage patent filings for their inventions.

Post-Grant Review

The legislation would also add a new window for “post-grant review” following the issuance or re-issuance of a given patent. This procedure would allow a third-party to challenge the patent on a broader range of issues than is currently available via reexamination. A post-grant review petitioner would have to show that “it is more likely than not” that at least one of the claims challenged in the petition is unpatentable or establish that the case raises “a novel or unsettled legal question that is important to other patents or patent applications.”
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South Bend, IN – A patent infringement lawsuit that was originally filed in the District Court of Delaware was transferred to the Northern District of Indiana. Patent lawyers for Gian Biologics LLC of Delaware filed a patent infringement suit in the District Court of Delaware alleging Biomet, Inc. of Warsaw, Indiana infringed patent no.6,835,353 Picture from Patent.jpgCENTRIFUGE TUBE ASSEMBLY, which has been issued by the US Patent Office.

The patent at issue is used for holding blood and separating blood product in to discrete components. The complaint alleges that Biomet makes, uses, sells, offers for sale and/or imports infringing products, namely several Biomet product lines including Plasmax Concentrator and Gravitational Platelet Separation Systems. The complaint alleges one count of patent infringement and seeks injunction, damages, attorney’s fees and costs. Gian’s patent attorneys filed the complaint in October 2010.

The case has now been transferred to the Northern District of Indiana by stipulation of the parties. It appears that initially Gian resisted transfer, and the Delaware District Court allowed limited discovery on the issue of transfer. According to the Delaware IP Law Blog, it was revealed that Gian had only been incorporated in Delaware for four months before the lawsuit was filed. The Delaware District Court had then stayed further discovery until the venue issue was resolved and noted it had doubts about whether the case should remain its court. In the parties’ stipulation agreeing to transfer, it was noted that “In order to conserve resources – and in light of the fact that the parties are engaged in a parallel patent infringement case in Germany that is scheduled for a bench trial on November 8, 2011 – Gian has concluded that the most efficient resolution would best be accomplished through a stipulated transfer at this time.”

Practice Tip: 28 U.S.C. 1404 allows transfer of a case from one district court to another by order of the court or by stipulation and consent of the parties.


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