28th Annual WLF Supreme Court Term Wrap-up Briefing Assesses Justices’ Focus on Free Enterprise

WLF was honored to host its annual end-of-the-term briefing on Tuesday, June 25, moderated by our Legal Policy Advisory Board Chairman, the Honorable Dick Thornburgh (K&L Gates), and featuring commentary from Hogan Lovells’ Neal Katyal, King & Spalding’s Ashley Parrish, and White & Case’s Eric Grannon.

The program focused on Court rulings that will impact America’s free enterprise system, economic liberties, and innovation. The speakers also offered more general observations of the Court, including a discussion by Ashley Parrish regarding tensions between the Court and the Office of the Solicitor General of the United States. Below is a list of the cases our speakers referenced with links to the opinions.

Neal Katyal

Ashley Parrish

Eric Grannon

Federal Circuit: Good Faith Belief Patent Is Invalid Is a Defense to Induced Patent Infringement

bethShaw-0580editConvertedProfile-e1360002102239Featured Expert Column

Beth Z. Shaw, Brake Hughes Bellermann LLP

On June 25, 2013, the U.S. Court of Appeals for the Federal Circuit in Commil USA v. Cisco Systems held that evidence of a good-faith belief of invalidity may negate the requisite intent for induced infringement.

In an opinion filed by Judge Prost and joined in part by Judge Newman and Judge O’Malley, the court restated that induced infringement requires knowledge that the induced acts constitute patent infringement. The knowledge requirement may be satisfied by showing actual knowledge or willful blindness. The court in this case held that the jury instruction was legally erroneous and had a prejudicial effect. The error, the court wrote, was that that the jury was permitted to find induced infringement based on mere negligence where knowledge is required.

Significantly, the court also held that the defendant, Cisco, should have been allowed to present evidence of its good faith belief of invalidity to rebut allegations of induced infringement. The opinion noted that the Federal Circuit appears “to have not previously determined whether a good-faith belief of invalidity may negate the requisite intent for induced infringement. We now hold that it may.” Under the case law, “it is clear that a good-faith belief of non-infringement is relevant evidence that tends to show that an accused inducer lacked the intent required to be held liable for induced infringement.”

Judge Newman dissented in part. She wrote that a good-faith belief of patent invalidity may be raised as a defense to willfulness of the infringement, but it is not a defense to the fact of infringement. Judge O’Malley also dissented in part, agreeing that good faith belief in the invalidity of the patent can be a defense to induced infringement, but Cisco should be allowed a third jury trial.

It remains to be seen what, exactly, is evidence of a good-faith belief of invalidity, and what that evidence might actually look like in practice. It is unclear if a full opinion of counsel would be required, or would be enough, to prove such a belief. The court cites several district court cases, at least one of which mentions an opinion of counsel. Potential patent infringement defendants should therefore take a serious look at getting opinions of counsel regarding invalidity defenses, as they now officially may provide a defense to induced infringement.

Update: Transit Association Suit, FTC Chair’s Speech Highlights “Patent Troll” Developments

NYC SubwayWhile it may not have reached critical mass yet, the momentum towards “doing something” about abusive patent litigation has definitely increased since WLF held its “Patent Assertion Entities” and Antitrust: The FTC/DOJ Inquiry and Underlying Legal Policy Issues program on May 30. Of course, just five days after our program, the President made his big splash about “patent trolls,” so that might have had something to do with the momentum as well.

A Taste of Their Own Medicine? On Tuesday, the American Public Transit Association (APTA) took legal action to protect its members and other government-run transportation entities from patent-assertion entities based in Luxembourg and the British Virgin Islands. APTA v. ArrivalStar and Melvino, filed in the Southern District of New York, seeks a declaratory judgment on the invalidity of the defendants’ patents, which allegedly cover arrival and status messaging systems that transit authorities use, and also claims that the Eleventh Amendment immunizes those transit entities from patent suits.

APTA’s complaint lists ten ArrivalStar lawsuits against transit authorities which led to quick settlements for amounts that were “well below the expected cost of litigation.” It also includes a sample “license our patent or else” letter (marked on each page “FOR SETTLEMENT PURPOSES ONLY” just in case the recipient didn’t get the message), which helpfully lists some of the “over 180” for-profit companies that have taken the licensing route with ArrivalStar.

FTC Chairwoman’s Announcement. At a June 20 program co-sponsored by CCIA and the Antitrust Institute, FTC Chairwoman Ramirez took what Lisa Kimmel discussed at WLF’s May 30 program one step further, announcing that she would encourage the Commission to pursue a formal “Section 6(b)” study of patent-assertion entities. She would need support from a majority of the Commissioners to initiate an investigation, and with the FTC populated by only four Commissioners at the moment, including one (Joshua Wright) who is skeptical of Section 5 enforcement, such a study isn’t a foregone conclusion. Chairwoman Ramirez’s statements garnered quite a bit of coverage and analysis, some of which the Patent Progress blog links to here.

Congressional Letter Writing. On the same day as the aforementioned program, Senate Judiciary Committee Chairman Patrick Leahy (not) coincidentally wrote to Chairwoman Ramirez encouraging her to “use aggressively the consumer protection and competition laws already in place.” Earlier this month, a bipartisan group of House Members led by Representatives Judy Chu and Blake Farenthold wrote to the Chairwoman supporting a deeper patent-assertion entity inquiry. And on June 25, Representative Daniel Lipinski sent a letter to Ramirez which focused on patent suits targeting public agencies. Representative Lipinski included a report, Trolling for a Public Trough: How Patent Assertion Entities Cost Taxpayers, which includes licensing demand letters and copies of complaints as exhibits.

De Facto Covenant Not to Sue Ends Anti-Biotech Activists’ Suit to Invalidate Seed Patent

Genetically-enhanced corn
Genetically-enhanced corn

Guest Commentary

by Stephanie Chipley, a 2013 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

It has been a tough year in court for activists opposed to agriculture biotechnology. Just last month, the United States Supreme Court unanimously held that patent exhaustion does not allow a farmer who buys Monsanto’s patented seeds to reproduce them through planting and harvesting without Monsanto’s permission. See Bowman v. Monsanto Co., 133 S. Ct. 1761, 1765-69 (2013). More recently, on June 13, the U.S. Court of Appeals for the Federal Circuit also ruled in Monsanto’s favor when it concluded that a group of appellants lacked standing to challenge Monsanto’s patents. See Organic Seed Growers & Trade Ass’n v. Monsanto Co., No. 2012-1298, 2013 WL 2460949, at *8 (Fed. Cir. June 10, 2013). Continue reading “De Facto Covenant Not to Sue Ends Anti-Biotech Activists’ Suit to Invalidate Seed Patent”