Intellectual Property Report: November 2011

11/07/2011 / Intellectual Property Group

IN THIS ISSUE:

  • Update on the America Invents Act: Virtual Marking
  • Notable Supreme Court Cases in 2011 Related to Patents
  • Judge Rader Unveils a New Model E-Discovery Order for Patent Cases
  • Is Your Trademark Being Knocked Off? How online consumer surveys may help your company prove trademark infringement
  • Two Avenues Exist For Recovering Damages for Infringement of Your Design Patents

 

Update on the America Invents Act: Virtual Marking
By Ryan C. Smith and John A. Kvinge

On September 16, 2011, President Obama signed the America Invents Act (“the Act”) into law. Included in the overhaul of Title 35 are significant changes to patent marking. Patent marking is the familiar practice of printing “patent pending” or the applicable patent numbers on the product covered by the patent, and is an important step in providing notice to competitors. The Act changes much of the existing patent marking scheme. Virtual marking, in which a company prints a free-to-access web address on the product instead of patent numbers, is now allowed. The Act also ends private class actions related to false marking. Notwithstanding, the changes in the Act raise almost as many questions about patent marking as they resolve. The following information should be considered before implementing a virtual marking strategy with your organization.




Virtual Marking
Under the new virtual marking provisions, a patent holder can mark covered products with “patent” or “pat.” followed by a free-to-access web address rather than a list of individual patent numbers. For companies that include patent information in product molds, virtual marking provides an avenue of giving notice that does not require expensive retooling associated with adding new patent numbers as they arise or removing those that have expired. Virtual marking may also be attractive where space constraints or aesthetic considerations have limited the number of patents that can be displayed on a product or packaging.

A well-designed and well-maintained website will be an essential component of any virtual marking strategy. Patent publications and patents often change in status while a single product may remain static. Establishing efficient website “updating protocols” will be critical to ensure proper virtual marking. Updating protocols include maintaining accurate updates to the status (i.e. expired, abandoned, etc.) of patents and printed publications. Additionally, updating protocols should include maintaining an accurate list of patents and printed publications that are associated with specific products. Continuous maintenance of updating protocols will provide an organization with the ability to put competitors on notice that the products being sold are associated with particular patents and published applications.

Moreover, the Act does not require products to include published applications within the virtual marking scheme. Thus, deciding whether to include printed publications as part of your virtual marking strategy should also be considered. Timely marking of printed publications allows the applicant to obtain certain rights against infringers that extend back to the date of publication.[1] On the other hand, because a list of patents is provided on the website in conjunction with a particular product, timely marking also provides competitors an easier opportunity to begin working on “design around” options.

Updating a virtual marking site presents several options for adequately giving notice to the public. For example, the use of expiration dates provides a low cost option in updating a product’s virtual marks. A patent’s expiration date may change due to abandonment or findings of invalidity. If a change occurs, a patentee should keep continuous records of the patent’s status to provide the most forthright notice to those viewing the virtual mark.

Federal Circuit precedent requires patent marking to be “substantially consistent and continuous.” In view of this precedent, the components of an effective virtual mark remain uncertain. A physical mark never crashes, never goes offline and cannot be hacked. Not so with a virtual marking site. A robust virtual marking strategy must contemplate the unpredictable nature of the internet and consider alternative mechanisms of providing “consistent and continuous” virtual marking should a web site crash. Many details must be considered and researched in light of the unique qualities of your business and patent portfolio. Examples include planning for backups in the event of a power outage or hacker attack, and determining how your company will document successive updates to the website. The Federal Circuit or Congress may clarify some of these issues related to virtual marking, but companies would be wise to exercise an abundance of caution now to avoid unnecessary litigation in the future.

Finally, the ability to obtain useful information about those who visit your website could be a significant advantage in maintaining a virtual marking strategy. Although the Act requires that companies provide public access to the website “without charge,”[2] some have suggested that this portion of the statute allows companies to require user registration before displaying the applicable patents. A company could easily capture and record visitors’ IP addresses, and trace them back to the company where they originated. Advance warning of which competitors are viewing your products could potentially help direct efforts to detect infringement.

False Marking
For many companies, the advantages and ease of virtual marking will outweigh the uncertainties. Other companies may wish to wait for others to blaze the trail of virtual marking. For those that continue to practice physical marking, the Act reduces the risk of false marking claims by limiting who can pursue those claims. Before the Act, anyone could bring a false marking claim as a class action, with fines of up to $500 per offense. The Federal Circuit held that “per offense” meant per product, and manufacturing runs of only a few thousand products with incorrect information created liabilities of millions of dollars. Now, under the Act, only the United States government or competitors that can prove competitive injury may bring false marking claims. This change is retroactive. Indeed, many false marking suits that existed at the time of the change have been dismissed. Obviously it is still important to keep your marking current, but the end of the ever-looming threat of a multi-million-dollar false marking class action should help patent holders sleep better at night.

For more information on the subject of this article, contact the authors of this article, or the Larkin Hoffman attorney who customarily handles your matters. Larkin Hoffman Daly & Lindgren Ltd. has proudly served the legal and business counseling needs of clients since 1958. The firm includes over 70 attorneys serving clients’ legal needs throughout the state, the country and around the globe. As a full-service law firm, it provides counsel and legal guidance in more than 20 areas of law to clients ranging from individuals to emerging companies and Fortune 500 corporations.

While the information provided in this publication is believed to be accurate, it is general in nature and should not be construed as legal advice. You should consult an attorney for advice regarding your individual situation. 


Notable Supreme Court Cases in 2011 Related to Patents
By Glenna L. Gilbert

The Supreme Court’s 2011 term opened on October 3, 2011, with three notable cases on its docket related to patents. The three cases reflect the recent trend in Supreme Court jurisprudence granting certification on cases affecting rights related to patents. This e-alert highlights the three patent-related cases currently on the High Court’s docket.

Mayo Collaborative Services v. Prometheus Laboratories, Inc.
Like Biliske v. Kappos, the Supreme Court in this case will decide once again what is patentable under 35 U.S.C. § 101. The Court will decide specifically whether § 101 is satisfied by method claims that cover observed correlations between blood test results and patient health.

This case has a long history. The Supreme Court originally granted certiorari to hear the case seven years ago, but then dismissed the writ as improvidently granted in Laboratory Corp. of Am. Holdings v. Metabolit Labs., Inc., 548 U.S. 124, 135 (2006). Last year, the Court again granted certiorari, but subsequently vacated and remanded the case to allow the Federal Circuit to reconsider the question in light of Bilski v. Kappos.

The claims at issue cover methods that seek to optimize the therapeutic efficacy of thiopurine drugs in the treatment of gastrointestinal and non-gastrointestinal autoimmune diseases (e.g., Crohn’s disease and ulcerative colitis) while minimizing the drug’s toxic side effects. The claimed methods typically include one or two lettered steps: (a) administering a drug that provides 6-thioguanine (“6-TG”) (the active metabolite) to a person, and/or (b) determining the levels of the drug’s metabolites, 6-TG and/or 6-MMP, in the person. The measured metabolite levels are then compared to pre-determined metabolite levels, “wherein” the measured metabolite levels “indicate a need” to increase or decrease the level of drug to be administered so as to minimize toxicity and maximize treatment efficacy.

On remand, the Federal Circuit held that the asserted method claims are drawn to statutory subject matter under § 101. Specifically, the Federal Circuit found that Prometheus’s claims recite a patent-eligible application of naturally occurring correlations between metabolite levels and efficacy or toxicity, and thus do not wholly preempt all uses of the recited correlations. According to the Federal Circuit, the claims recite specific treatment steps, not just the correlations themselves. And the steps involve a particular application of the natural correlations – the treatment of a specific disease by administering specific drugs and measuring specific metabolites.

The Federal Circuit also found that the treatment methods claimed in Prometheus’s patents satisfy the transformation prong of the machine-or-transformation test. The Federal Circuit found two transformations – (1) transformation of the human body and of its components following the administration of a specific class of drugs, and (2) transformation of the various chemical and physical changes of the drugs’ metabolites that enable their concentrations to be determined.

On appeal to the Supreme Court, petitioner Mayo Collaborative Services has asked the high Court to decide whether 35 U.S.C. § 101 is satisfied by a patent claim that covers observed correlations between blood test results and patient health simply because well-known methods used to administer prescription drugs and test blood may involve “transformations” of body chemistry.

Oral argument is set for December 7, 2011.

Caraco Pharmaceutical Labs., Ltd. v. Novo Nordisk
In Caraco Pharmaceutical Labs., Ltd. v. Novo Nordisk, the Supreme Court will decide whether the Hatch-Waxman Act counterclaim provision (21 U.S.C. § 355(j)(5)(C)(ii)(I)) applies where (1) there is an approved method of using the drug that the patent does not claim, and (2) the branded manufacturer submits “patent information” to the FDA that misstates the patent’s scope, requiring correction.

The Hatch-Waxman Act enables a generic manufacturer in a Paragraph IV suit to assert a counterclaim challenging the accuracy of the patent information submitted to the FDA by the listed drug manufacturer:

            [The ANDA] applicant may assert a counterclaim seeking an order

            requiring the holder to correct or delete the patent information submitted

            by the holder . . . on the ground that the patent does not claim either –

                        (aa) the drug for which the application was approved; or

                        (bb) an approved method of using the drug.

21 U.S.C. § 355(j)(5)(C)(ii)(I). The interpretation of this counterclaim provision is the central issue in the case.

The Federal Circuit held that the Hatch-Waxman Act authorizes a counterclaim only if the listed patent does not claim any approved methods of using the listed drug. Moreover, according to the Court, the counterclaim provision does not authorize an order compelling a patent holder to change its use code narrative – rather, it only authorizes suits to correct or delete an erroneous patent number or expiration date.

Oral argument is set for December 5, 2011.

Kappos v. Hyatt
The Supreme Court in Kappos v. Hyatt will address evidentiary issues related to § 145 actions. Specifically, the Court will decide: (1) whether the plaintiff in a § 145 action may introduce new evidence that could have been presented to the agency in the first instance, and (2) whether, when new evidence is introduced under § 145, the district court may decide de novo the factual questions to which the evidence pertains, without giving deference to the prior decision of the United States Patent and Trademark Office.

The Federal Circuit considered the issues posed in Kappos v. Hyatt en banc. The Court characterized a § 145 action as a “hybrid” between an appeal and a de novo proceeding. It also held that issues that were not considered by the patent office cannot be raised with the district court in most circumstances. And if no new evidence is introduced, a district court should review the action on the administrative record, subject to the court/agency standard of review. However, once an applicant introduces new evidence on an issue, a district court should review the issue de novo.

The Federal Circuit further held that 35 U.S.C. § 145 imposes no limits on an applicant’s right to introduce new evidence before a district court, apart of course from the limitations for all civil actions contained in the Federal Rules of Evidence and Federal Rules of Civil Procedure. As with any evidence introduced in a civil action, the district court as fact-finder may give less weight to evidence introduced by an applicant in a § 145 action if the district court questions its credibility or reliability.

A date for oral argument in front of the Supreme Court has not yet been set.

For more information on the subject of this article, contact the authors of this article, or the Larkin Hoffman attorney who customarily handles your matters. Larkin Hoffman Daly & Lindgren Ltd. has proudly served the legal and business counseling needs of clients since 1958. The firm includes over 70 attorneys serving clients’ legal needs throughout the state, the country and around the globe. As a full-service law firm, it provides counsel and legal guidance in more than 20 areas of law to clients ranging from individuals to emerging companies and Fortune 500 corporations.

While the information provided in this publication is believed to be accurate, it is general in nature and should not be construed as legal advice. You should consult an attorney for advice regarding your individual situation. 


Judge Rader Unveils a New Model E-Discovery
Order for Patent Cases

By Glenna L. Gilbert

Judge Rader recently unveiled a new model order adopted by the Federal Circuit Advisory Council that seeks to streamline e-discovery in patent cases, particularly email production, and to require parties to focus on the gathering of material information, rather than on so-called “unlimited fishing expeditions.”

The Model Order mandates a discovery process that requires the parties to first exchange key documents concerning the patent, the accused product, prior art, and finances. Only after parties make this exchange (and exchange initial disclosures) can either side request the production of email. Requests for the production of email must be focused on a particular issue of the case, not general discovery of a product or business.

The Model Order also presumptively limits the number of custodians and search terms for email production requests. Each requesting party must limit its requests for the production of email to a total of five custodians, and five search terms per custodian per party. The search terms must be narrowly tailored to particular issues. Blanket terms, like the producing company’s name or product name, are inappropriate unless they are combined with additional search criteria that amply reduce the risk of overproduction.

The parties can of course jointly agree to modify the limits on custodians and search terms without leave of court.

However, if no such agreement is met, a court must consider contested requests for up to five additional custodians or five additional search terms per custodian, provided that the requesting party show a distinct need for the additional discovery based on the size, complexity, and issues of the case. If a party serves requests for the production of emails beyond the limits agreed to by the parties or granted by the Court, the requesting party must bear the costs of the additional discovery.

The Model Order also prohibits a party from requesting metadata as part of its general production requests, absent a showing of good cause. The production of documents under the Model Order nonetheless should include fields showing the date and time that the document was sent and received, and the complete distribution list for the document.

Finally, the Model Order provides certain protections for the pre-production review of documents. To minimize expensive pre-production review, the Model Order contains certain mandates that are meant to address clients’ and lawyers’ concerns regarding the waiver of attorney-client privilege and work product protection:

  • The receiving party must not use electronically stored information that the producing party asserts is attorney-client privileged or work-product protected to challenge the privilege or protection
  • The inadvertent production of privileged or work-product protected electronically stored information is not a waiver in the pending case or in any other federal or state proceeding; and
  • The mere production of electronically stored information in litigation as part of a mass production is not itself a waiver for any purpose.

 

To have any real impact, the Model Order’s suggested changes to e-discovery will need to be implemented by the district courts. Parties involved in patent litigation, or companies or individuals considering filing suit, should therefore watch for new e-discovery rules in district courts in the near future that implement the Model Order’s suggestions (or variations thereof). A copy of the Model Order can be found at the Federal Circuit Advisory Council’s website.

For more information on the subject of this article, contact the authors of this article, or the Larkin Hoffman attorney who customarily handles your matters. Larkin Hoffman Daly & Lindgren Ltd. has proudly served the legal and business counseling needs of clients since 1958. The firm includes over 70 attorneys serving clients’ legal needs throughout the state, the country and around the globe. As a full-service law firm, it provides counsel and legal guidance in more than 20 areas of law to clients ranging from individuals to emerging companies and Fortune 500 corporations.

While the information provided in this publication is believed to be accurate, it is general in nature and should not be construed as legal advice. You should consult an attorney for advice regarding your individual situation. 

Is Your Trademark Being Knocked Off?
How online consumer surveys may help your company
prove trademark infringement

By John A. Kvinge

It is every company’s worst nightmare. After carefully registering a trademark for your flagship product or service, a rival comes along and chooses a dangerously similar name for their competing offering. You may believe that their infringing use of your protected mark is creating confusion in the marketplace and costing you sales, but how do you prove it in a way that will hold up in court? Traditionally, attorneys have turned to consumer surveys to prove consumer confusion caused by infringement. Survey methodology was basically unchanged for decades – your attorneys might hire a company to conduct in-person surveys at malls or randomly select names out of the white pages for a telephone survey. The relatively recent widespread adoption of the internet has created a third option that is rapidly gaining traction in federal courts: online consumer surveys.

In an online consumer survey, participants are invited to complete a questionnaire via email, website pop-ups, or even direct mail with a link to the survey. The questions are generated by a programmed back-end, which randomizes responses, and selects control groups to ensure that the survey design does not influence the results. The programming is not visible to the participants, who answer the questions by using their mouse or keyboard to select or type out their responses to the questions as they appear.

Significant changes in the way we communicate are making online surveys more attractive than ever before. According to the most recent CDC data, 30% of American homes do not have a landline phone at all, relying solely on their cell phones for calls. If you look at young adults between the ages of 25 and 29, that figure goes up to 53%. Traditional surveys that rely on calls to landline telephones miss between a third and one-half of the population, a risk that may raise challenges when the results are offered in court. A popular alternative, mall intercept surveys, raises similar sample population issues, and is relatively expensive, relying on paid survey takers to stand around soliciting volunteers for weeks in order to obtain a sufficient sample size. In contrast, at least 79% of Americans are regular internet users. Online surveys can be active 24/7, and are administered by a computer to ensure consistency. 

Although many marketing departments may have experience with consumer surveys, their methodologies are frequently informal, and may not survive rigorous judicial scrutiny. If crafted with litigation in mind, an online survey provides control groups and relevant population sample sets that improve reliability, accuracy, and objectivity, exactly the criteria the survey will need to demonstrate at trial to be admitted into evidence.

The Federal Court for the District of Minnesota recently accepted online consumer survey data as a measure of trademark confusion in 3M Co. v. Mohan, Civ. No. 09-1413 (D. Minn. 2010). In that case, 3M commissioned an online survey to prove that a stethoscope with a stylized “K” created consumer confusion with their trademark of a stylized “L” on Littmann brand stethoscopes. Noting that the survey took care to only select doctors and nurses that were likely purchasers of the competing products, and that a control group was used to account for “noise” in the sampling data, the court held that the survey results “strongly favor likelihood of confusion.”

In contrast, a poorly designed survey will have methodological holes that allow an experienced attorney to challenge the results. At best, this could cause the jury to doubt the accuracy of the survey findings; at worst, it may allow the court to exclude the results from evidence altogether. For example, in Maker’s Mark Distillery, Inc. v. Diageo North America, Inc., 703 F. Supp. 2d 671 (W.D. Ky. 2010), the court described the defendant’s survey results as “neither useful nor persuasive” because they failed to replicate the real-life environment in which a consumer would encounter the relevant trademarks, structured their questions in a way that was overly suggestive, and failed to utilize an effective control group. In a typical marketing survey, used for internal company research, these criticisms may not have been an issue. At trial, however, they prevented the defendant from establishing a key element of its defense.

For more information on the subject of this article, contact the author of this article, or the Larkin Hoffman attorney who customarily handles your matters. Larkin Hoffman Daly & Lindgren Ltd. has proudly served the legal and business counseling needs of clients since 1958. The firm includes over 70 attorneys serving clients’ legal needs throughout the state, the country and around the globe. As a full-service law firm, it provides counsel and legal guidance in more than 20 areas of law to clients ranging from individuals to emerging companies and Fortune 500 corporations. 

While the information provided in this publication is believed to be accurate, it is general in nature and should not be construed as legal advice. You should consult an attorney for advice regarding your individual situation. 

Two Avenues Exist For Recovering Damages for Infringement of Your Design Patents
By Glenna L. Gilbert

Unlike holders of utility patents, owners of design patents have the option of choosing between two different statutes with respect to the recovery of damages for design patent infringement– 35 U.S.C. §§ 284 and 289. Under § 284, design and utility patent holders alike can seek a reasonable royalty or the patent holder’s lost profits resulting from the alleged infringement. However, unlike a utility patentee, the owner of a design patent possesses an additional remedy under 35 U.S.C. § 289 – the infringer’s total net profits from the sale of the article containing the infringing design, and in no event less than $250. A design patentee cannot however recover both damages under § 284 and the profits of the infringer under § 289.

There are tactical reasons for choosing to pursue one or the other method of recovery. For instance, treble damages are only available under § 284. And in some cases, a patentee’s lost profits under § 284 may be more than the infringer’s net profits under § 289.

On the other hand, under § 289, in establishing the infringer’s net profits, a patent holder is not required to demonstrate that the profits are attributable to the ornamental qualities of the item in the design patent. Rather, a patent holder is entitled to the entire profit obtained by the infringer resulting from the sale of an item containing the infringing design (and in no event less than $250).

Section 289 therefore creates an advantage for design patentees, especially in light of recent Federal Circuit precedent. The Federal Circuit has of late held that in determining a reasonable royalty under § 284, the trial court must carefully tie proof of damages to the claimed invention’s footprint in the marketplace. In addition, under certain circumstances, where a patent covers only one feature of an accused product, a patentee who wishes to present evidence of the entire product’s profitability must show that the patented feature drives consumer demand for the product or components. The Federal Circuit has not placed these evidentiary constraints on a design patentee seeking damages under § 289.

For more information on the subject of this article, contact the authors of this article, or the Larkin Hoffman attorney who customarily handles your matters. Larkin Hoffman Daly & Lindgren Ltd. has proudly served the legal and business counseling needs of clients since 1958. The firm includes over 70 attorneys serving clients’ legal needs throughout the state, the country and around the globe. As a full-service law firm, it provides counsel and legal guidance in more than 20 areas of law to clients ranging from individuals to emerging companies and Fortune 500 corporations.

While the information provided in this publication is believed to be accurate, it is general in nature and should not be construed as legal advice. You should consult an attorney for advice regarding your individual situation. 

Contact Our Intellectual Property Group:

Thomas J. Oppold, Department Chair | 952-896-3397 | toppold@larkinhoffman.com
John A. Cotter | 952-896-3340 | jcotter@larkinhoffman.com
Molly T. Eichten | 952-896-1545 | meichten@larkinhoffman.com
Glenna L. Gilbert | 952-896-3283 | ggilbert@larkinhoffman.com
Jose W. Jimenez | 952-896-3203 | jjimenez@larkinhoffman.com
John A. Kvinge | 952-896-1554 | jkivinge@larkinhoffman.com
Craig J. Lervick | 952-896-3245 | clervick@larkinhoffman.com
Jerry S. Podkopacz | 952-896-3262 | jpodkopacz@larkinhoffman.com
James P. Quinn | 952-896-3309 | jquinn@larkinhoffman.com
Ryan C. Smith | 952-896-6703 | rsmith@larkinhoffman.com

 
[1]Under 35 U.S.C. § 154(d), “a patent shall include the [provisional] right to obtain a reasonable royalty from any person who, during the period beginning on the date of publication of the application …and ending on the date the patent is issued - (A) (i) makes, uses, offers for sale, or sells in the United States the invention as claimed in the published patent application…and (B) had actual notice of the published patent application.”

[2] 35 U.S.C. § 287(a) — “address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent . . . .”