Patent Cases To Watch In 2015

Posted on 02-18-2015 by
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The article below has been republished in full courtesy of Law360, written by Ryan Davis.

The U.S. Supreme Court will decide three patent cases involving claim construction, induced infringement and patent royalties in 2015, while the Federal Circuit grapples with the fallout from the high court's recent patent-eligibility rulings and the standards for America Invents Act reviews.

Here are the patent cases attorneys will be watching in 2015:

Teva Pharmaceuticals USA Inc. v. Sandoz Inc.

The high court heard oral arguments in October in this case challenging the Federal Circuit's rule that district court claim construction rulings must be reviewed afresh on appeal. If the justices discard that rule, it would mark a profound shift in patent law, attorneys say.

Teva is appealing a Federal Circuit decision invalidating its patents on the multiple sclerosis drug Copaxone after a district court found them valid. The company argues that claim construction, which is often dispositive in patent cases, involves factual findings that should be reviewed with deference on appeal.

The Federal Circuit has long held that claim construction is a question of law that must be reviewed de novo. As a result, it frequently reverses decisions by trial judges, and a Supreme Court decision requiring deference "could be a big, big change," said Mark Scarsi of Milbank Tweed Hadley & McCloy LLP.

"It would really change a lot of the way patent litigation works," he said. "Now at the Federal Circuit, it really can be a do-over."

A new standard that makes it more difficult for the appeals court to reverse claim construction decisions could "change the dynamic of how cases are litigated," said Brian Koide of Crowell & Moring LLP.

"Now if you're on the losing side, you're not happy, but you're thinking you have pretty good chance of reversal on appeal," he said.

During the arguments, several of the justices noted that factual findings in all other areas of litigation are reviewed with deference on appeal under the Federal Rules of Civil Procedure.

"There are several cases that the Supreme Court recently has taken up to consider different issues, but there is a doctrinal undercurrent across these cases as to whether patent law should be treated differently than other areas of civil litigation," said Daniel DeVito ofSkadden Arps Slate Meagher & Flom LLP.

Teva is represented by William M. Jay, William G. James II, David M. Hashmall, Elizabeth J. Holland, Steven J. Bernstein, Daryl L. Wiesen, Henry C. Dinger, John C. Englander, Nicholas K. Mitrokostas, Todd Marabella and Jaime A. Santos of Goodwin Procter LLP, Jay P. Lefkowitz, John C. O'Quinn and Jason M. Wilcox of Kirkland & Ellis LLP, and Harvard Law School professor Alan M. Dershowitz.

Sandoz is represented by Deanne E. Maynard, Brian R. Matsui, Marc A. Hearron, David C. Doyle, Anders T. Aannestad, Brian M. Kramer, Elizabeth Cary Miller and James J. Cekola ofMorrison & Foerster LLPMylan is represented by Carter G. Phillips, Ryan C. Morris, Adam Hallowell and Steven Horowitz of Sidley Austin LLP, Eric D. Miller, Shannon M. Bloodworth, David L. Anstaett and Brandon White of Perkins Coie LLP, and Evan Chesler and Richard Stark of Cravath Swaine & Moore LLP.

The case is Teva Pharmaceuticals USA Inc. et al. v. Sandoz Inc. et al., case number 13-854, in the U.S. Supreme Court.

Commil USA LLC v. Cisco Systems Inc.

The justices agreed in December to review a Federal Circuit decision that a defendant's good faith belief that a patent is invalid can serve as a defense to induced patent infringement, in a case with significant implications for how difficult it is to prove inducement.

The ruling, which wiped out a $74 million damages award after a jury found that Cisco infringed a Commil wireless networking patent, created a defense to induced infringement that had never existed before. The issue sharply divided the Federal Circuit, which voted 6-5not to review the case en banc, with the dissenting judges saying the ruling created an "improper escape hatch from liability."

The defense does not appear to have been used much since it was created, but that could change if it gets the high court's blessing, Koide said. He noted that it is easier for accused infringers to craft a defense that they believed a patent was invalid than to argue that they didn't infringe.

Permitting the defense "would give another defense to inducement and make inducement harder to prove in some respects," he said.

Induced infringement is a critical part of patent cases, as illustrated by the tens of millions of dollars at issue in this case, said Baldassare Vinti of Proskauer Rose LLP.

"This is not just a tack-on. This is a real claim that is really important," he said.

Commil is represented by Mark Werbner, Richard Sayles and Mark Strachan of Sayles Werbner PC and Leslie Payne, Nathan Davis and Miranda Jones of Heim Payne & Chorush LLP.

Cisco is represented by William F. Lee, Mark C. Fleming, Felicia H. Ellsworth, Eric F. Fletcher and William G. McElwain of WilmerHale and Henry G. Gutman, Jeffrey E. Ostrow, Harrison J. Frahn IV, Patrick E. King and Jonathan Sanders of Simpson Thacher & Bartlett LLP.

The cases are Commil USA LLC v. Cisco Systems Inc., case number 13-896, and Cisco Systems Inc. v. Commil USA LLC, case number 13-1044, in the U.S. Supreme Court.

Kimble v. Marvel Enterprises Inc.

Also in December, the high court took on this case, in which it will review its own 50-year-old rule that royalty agreements cannot extend beyond the expiration of a patent, potentially opening the door to much longer licensing agreements.

The high court will consider an appeal by the inventor of a Spider-Man toy whose bid to collect royalties from Marvel Enterprises Inc. after his patent expired was shut down by the Ninth Circuit, which cited the high court's 1964 decision in Brulotte v. Thys.

If the justices overrule that decision and end the ban on royalties for expired patents, "it will definitely make negotiations a bit more complicated and more interesting" by adding an entirely new aspect to licensing talks, Vinti said.

"Patent attorneys have always been trained that you can't exact royalty payments beyond the life of a patent. All attorneys know that," he said. "Now the question is whether the court will follow stare decisis or take a more flexible rule of reason approach."

A win for the inventor, Stephen Kimble, may mean that licensees could conceivably end up paying royalties on patents in perpetuity, for a lower rate than they would currently pay during the limited life of the patent.

"That's the logical consequence of might well happen, depending on the bargaining power of the parties," said Robert Fischer of Fitzpatrick Cella Harper & Scinto LLP, who said the case raises some interesting questions. "Could I still be paying royalties on the Wright Brothers' patents?"

The case involves "a policy decision at the crossroads of antitrust and patent law," DeVito said. "Antitrust cases have actually moved away from per se unenforceable rules, particularly in arms-length agreements where the parties have exercised their freedom to contract . This is a very important decision."

Kimble is represented by Roman Melnik, Kenneth Weatherwax, Nathan N. Lowenstein and Flavio M. Rose of Goldberg Lowenstein & Weatherwax LLP and Antonio R. Durando.

Marvel is represented by Seth P. Waxman of WilmerHale and David Fleischer of Haynes and Boone LLP.

The case is Kimble et al. v. Marvel Enterprises Inc., case number 13-720, in the U.S. Supreme Court.

Fallout from Alice and Myriad

While the justices busy themselves with new areas of patent law, the Federal Circuit, the Patent Trial and Appeal Board and the district courts will continue to deal with the impact of the high court's recent Alice and Myriad decisions on patent eligibility.

Many courts have cited those decisions to invalidate patents they say claim nothing more than abstract ideas or natural material, including several in the past month.

With every patent-eligibility decision this year, attorneys will seek to divine the contours of precisely what can and cannot be patented, particularly in the realm of software, after the justices said in Alice that abstract ideas implemented using a computer cannot be patented.

"I call it the aftermath of Hurricane Alice," Bart Showalter of Baker Botts LLP said. "Folks are very concerned about the scope of Alice. It's a pretty fundamental case, and there is a concern among many companies that Alice has devastated a portion of their patent portfolio."

Until the district courts and the Federal Circuit decide more cases, it is difficult to tell exactly how far the Supreme Court's eligibility decisions will reach, Scarsi said.

"I don't know how much clarity Alice actually created," he said. "Those cases will be closely watched to get more data points about what is really the aftermath of Alice."

In re: Cuozzo Speed Technologies LLC

By December, the Patent Trial and Appeal Board had issued just over 200 final written decisions in challenges to patents filed under America Invents Act proceedings. Although many have been appealed to the Federal Circuit, no appeals have yet been decided, and attorneys will be keeping tabs on how the court handles them and how often it upholds the board's findings.

The court heard its first oral arguments in an AIA case case in November, and the decision in that appeal by Cuozzo could set important precedent on a key issue. Cuozzo argues that the board uses the wrong claim construction standard in reviews and should instead use the same standard as district courts, which makes it more difficult to invalidate patents.

If the court backs Cuozzo, the board would likely have to change the standard it issues in all future reviews. However the court rules, resolving the proper claim construction standard will make the system more stable, Koide said.

"Clarity will be useful on either side," he said. "It will make it more reliable for patentees and accused infringers."

Cuozzo is represented by John Kasha of Kasha Law LLC and New Jersey-based attorney Timothy Salmon.

The U.S. Patent and Trademark Office is represented by its solicitor Nathan Kelley and associate solicitors Scott Weidenfeller and Robert McManus.

The case is In re: Cuozzo Speed Technologies LLC, case number 14-1301, in the U.S. Court of Appeals for the Federal Circuit.

--Editing by Kat Laskowski and Emily Kokoll.

This article has been republished in full and is courtesy of Law360. For the latest breaking news and analysis on energy industry legal issues, visit Law360 today.

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