The statistics are striking. "Patent trolls"
(companies that do not create products or services based on their
patents, but instead use patents to extort license fees) are
continuing to file large numbers of patent infringement lawsuits,
now against advertising agencies, restaurants, retailers, financial
institutions, and other businesses not typically subject to patent
risk. Indeed, more than 4,500 patent infringement actions were
filed in 2016, the fifth straight year with at least that many new
patent infringement suits.
Of particular concern is that patent trolls have begun
collecting "software" or "business method"
patents covering basic digital technologies such as scanning
documents or using online shopping carts on websites. In the past,
however, despite the broad applicability of these patents, the
Supreme Court's 2014 decision in Alice v. CLS Bank
provided defendants some cover, labeling many of these technologies
unpatentable "abstract ideas" and questioning their
Two recent court decisions, however, indicated that the pendulum
may have begun to swing back in favor of patent holders. In one,
the U.S. Court of Appeals for the Federal Circuit noted that
software and business methods were patentable when they improved
how computers operated. In another, it noted that these patents
were valid where they did "significantly more" than
perform an abstract idea on a computer. These cases provide hope to
patent trolls seeking to defend against Alice challenges.
In addition, patent trolls also are finding it easier to recover
damages. For example, in Halo v. Pulse, the Supreme Court
relaxed the standard for proving willful infringement, noting that
a patent owner's reasonable defenses may not be enough to
prevent tripled damages. Moreover, the Supreme Court has heard
arguments in SCA Hygiene v. First Quality Baby, and
expressed skepticism as to whether a long delay in filing suit
could limit recovery. If the court eliminates this defense, it is
likely that patent trolls will delay filing for as long as possible
to maximize damages.
The news for defendants, however, is not all grim. The Supreme
Court will hear TC Heartland v. Kraft Food, where it will
assess whether patent trolls may continue their current practice of
bringing suit wherever allegedly infringing products were sold.
Depending on the court's decision, patent cases may migrate
from plaintiff-friendly Texas, where many patent troll suits are
currently filed, to marginally more defendant-friendly
Patent infringement is a risk for all industries and requires a
comprehensive risk management strategy integrated into every aspect
of a company's business that includes filing for and enforcing
patents, identifying and clearing patent risks, instituting
contractual strategies for risk-shifting and defending allegations
of patent infringement.
Recent court decisions upholding the validity of software and
business method patents and easing restrictions on damages have
favored patent trolls.
Defendants may find relief as the Supreme Court considers rules
that would limit patent troll forum-shopping.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In Wasica Finance GmbH v. Continental Automotive Systems, Inc., No. 15-2078 (Fed. Cir. 2017), the patentee Wasica Finance discovered, among other things, the importance of using consistent terminology in the patent specification and claims.
While under attack for several years now, the patent infringement defense of laches was dealt a serious, and likely final, blow by the recent Supreme Court case of SCA Hygiene Products AB et al. v. First Quality Baby Products LLC et al.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
On April 6, 2017, the Federal Circuit reversed-in-part and affirmed-in-part the district court's judgment of infringement and summary judgment for non-infringement of The Medicines Company's ("MedCo") patents-in-suit.
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