SoCal IP Law Group

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Monthly Archives: July 2012

SoCal IP Institute :: July 30, 2012 :: Monetary Attorney Sanctions and Patentable Subject Matter

We will be discussing two Federal Circuit cases during our weekly SoCal IP Institute meeting on Monday, July 30, 2012. Brief synopses are presented below.

Rates Tech., Inc. v. Mediatrix Telecom, Inc., Case No. 2011-1384 (Fed. Cir. July 26, 2012) (attached).

In a patent infringement suit related to systems for converting existing telephone systems to voice-over-IP systems, the district court dismissed the case and imposed monetary sanctions against the plaintiff and the plaintiff’s counsel for failing to comply with the court’s repeated orders to respond to defendant’s interrogatory.

The plaintiff’s counsel did not appeal the dismissal of the case.  Rather, the plaintiff’s counsel argued that he should not be sanctioned for failing to provide information that he did not have.  The Federal Circuit pointed out that the magistrate judge had determined that the plaintiff and plaintiff’s counsel did have the information sufficient to respond to the interrogatories and that to the extent he lacked information it was because he “failed to take the most basic steps needed to fulfill the plaintiff’s discovery obligations.  Monetary sanctions in the amount of $86,965.81 affirmed.

Bancorp Serv., L.L.C. v. Sun Life Assurance Co. of Canada, Case No. 2011-1467 (Fed. Cir. July 26, 2012) (attached).

This case is a patent infringement suit involving two patents disclosing systems and methods for administering and tracking the value of life insurance policies in separate accounts.  The district court held that the patents failed to meet the “machine-or-transformation” test and found that the recited computer components were not necessary for carrying out the patented process.  “[A]lthough it would be inefficient to do so, the steps for tracking, reconciling and administering a life insurance policy with a stable value component can be completed manually.”

The Federal Circuit affirmed, stating that a computer-implemented abstract process is ineligible for patent protection under 35 U.S.C. § 101 where the computer does not play a significant part in the performance of the claimed invention.  The computer increased efficiency but was not necessary to perform the process.  The Court distinguished this case from its recent CLS Bank v. Alice Corp. case stating that the computer limitations in CLS Bank played a “significant part” in the claimed method.  In this case, however, the computer was just a facilitator to using an abstract concept.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 30, 2012 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Attalla by 9 am Monday morning.

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SoCal IP Institute :: July 23, 2012 :: Scope of Waiver and Attorney Fees

We will be discussing one Federal Circuit case and one California Court of Appeals case during our weekly SoCal IP Institute meeting on Monday, July 23, 2012. Brief synopses are presented below.

Wi-Lan, Inc. v. LG Electronics, Inc., Case No. 2011-1626 (Fed. Cir. July 13, 2012) (attached).

Wi-LAN’s attorneys at Kilpatrick Townsend (formerly Townsend & Townsend) prepared a letter analyzing the scope of LG’s infringement of Wi-LAN’s patent, which allegedly reads on the “V-chip” technology in television sets.  Wi-LAN forwarded the Townsend letter containing the analysis to LG in hopes of convicing LG to pay royalties. When LG refused to pay royalties, Wi-LAN sued for patent infringement.  Once litigation started, LG requested that Kilpatrick disclose documents and testimony relating to the Townsend letter.  Kilpatrick refused based upon its argument that the requested information was protected by attorney-client privilege.  LG argued that any privilege was waived by Wi-LAN’s voluntary disclosure of the letter.  The district court for the Northern District of California sided with LG and held Kilpatrick in contempt-of-court when they failed to produce the information.

On appeal, the Federal Circuit asserted jurisdiction to review the district court’s contempt order in an ancillary proceeding to a patent infringement case.  The Federal Circuit determined that Ninth Circuit law controls in reviewing the district court’s ruling and then tried to predict how the Ninth Circuit would decide the issue.  In vacating the district court’s decision, the Federal Circuit held that the district court applied the wrong standard in determining the scope of waiver and stated that a fairness balancing is required.  The Federal Circuit vacated the district court’s orders and remanded for further proceedings.  The court also vacated the entry of contempt sanctions.

SASCO v. Rosendin Electric, Inc., Case No. G045229 (Cal.App.4th July 11, 2012) (attached).

SASCO sued Rosendin and three of its employees, who were formerly SASCO employees, claiming that the employees had misappropriated trade secrets and used the trade secrets to win a bid for a contract for the Verizon Tustin Project.  During discovery, the two sides had several disputes and the court had to enter at least three orders pertaining to the discovery disputes.  SASCO was unable to find sufficient evidence that the former employees misappropriated any trade secrets and dismissed its claims rather than respond to a motion for summary judgment by defendants.  The defendants then sought attorney fees, claiming that the action had been brought in bad faith.

The trial court found that SASCO had brought the case in bad faith under California’s version of the UTSA. The trial court stated that SASCO only had a suspicion that its former employees had taken other trade secrets, but lacked a sufficient basis for asserting the claim and faulted SASCO for not conducting a thorough investigation before filing the lawsuit.  The trial court granted the defendants’ motion for attorney fees and costs, awarding a total of $484,943.46.

The California Court of Appeals affirmed the award of attorney fees and costs, holding that the trade secret claims were “objectively specious” which it defined as an action that superficially appears to have merit but for which there is a complete lack of evidence to support the claim.  The defendants had submitted declarations by the former employees and the general contractor on the Verizon Tustin Project attesting that they did not provide Rosendin with any trade secrets from SASCO.   The Court stated that the defendants were not required to conclusively prove a negative.  Instead, under the “objectively specious” standard, it was enough for defendants to point to the absence of evidence of misappropriation in the record.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 23, 2012 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Attalla by 9 am Monday morning.

SoCal IP Institute :: July 16, 2012 :: Patentable Subject Matter and Assignments

We will be discussing two Federal Circuit cases during our weekly SoCal IP Institute meeting on Monday, July 16, 2012. Brief synopses are presented below.

CLS Bank Int’l v. Alice Corp. Pty. Ltd., Case No. 2011-1301 (Fed. Cir. July 9, 2012) (attached).

Alice sued CLS for infringement of four patents claiming methods, systems and computer programs for “a computerized trading platform for exchanging obligations in which a trusted third party settles obligations between a first and second party so as to eliminate ‘settlement risk’.  Settlement risk is the risk that only one party’s obligation will be paid, leaving the other party without its principal.”  Slip Op. at 2. The district court granted summary judgment of invalidity based on a failure to claim patent eligible subject matter.

On appeal, the Federal Circuit reversed the district court, looking at notable precedent, such as the machine or transformation test and computer-specific opinions, which the majority summarized into the rule that “a claim that is drawn to a specific way of doing something with a computer is likely to be patent eligible whereas a claim to nothing more than the idea of doing that thing on a computer may not.”  Slip Op. at 18.  The Federal Circuit identified a new rule that minimizes the need to make such a determination and strongly favors a conclusion of patentable subject matter when claims involve anything that might not be characterized as an abstract idea.  Applying this rule, the Federal Circuit concluded that Alice’s claims were directed to patent eligible subject matter. The Court emphasized the need to consider the claim as a whole rather than to generalize the invention as the district court did.

Preston v. Marathon Oil Co., Case No. 2011-1013, 2011-1026 (Fed. Cir. July 10, 2012) (attached).

Marathon hired Preston to work in Marathon’s coal bed methane well operation. After beginning work, Preston signed an Employee Agreement containing an IP assignment clause. Later, Preston developed a baffle system to improve machinery used to extract methane gas from water-saturated coal in a coal bed methane gas well. Marathon installed the system on wells. After Preston’s employment ended, both Marathon and Preston pursued patents. The district court declared Marathon the owner of the patents pursuant to the employment agreement and that Preston breached the agreement for failing to assign his rights. The Federal Circuit affirmed that Preston assigned his rights in two inventions to Marathon pursuant to his employment agreement, but vacated in part as to the judgment that plaintiff is in breach of that agreement because that assignment was automatic.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 16, 2012 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Attalla by 9 am Monday morning.

SoCal IP Institute :: July 9, 2012 :: Summary Judgment and Presumption of Validity

We will be discussing one Ninth Circuit case and one Federal Circuit case during our weekly SoCal IP Institute meeting on Monday, July 9, 2012. Brief synopses are presented below.

Rearden LLC v. Rearden Commerce Inc., Case No. 10-16665 (9th Cir. June 27, 2012) (attached).

Plaintiff Rearden LLC filed suit against Rearden Commerce, asserting numerous claims relating to similarities in the parties’ marks and names. The US District Court for the Northern District of California granted Rearden Commerce’s motion for summary judgment as to plaintiff’s trademark claims.  The district court found Rearden Commerce was entitled to judgment as a matter of law on the claims of false designation of origin under the Lanham Act, the Anticybersquatting Consumer Protection Act (“ACPA”), California’s common law of trademark infringement, and the California Unfair Competition Law (“UCL”).   On appeal, the Ninth Circuit Court of Appeals vacated the district court, holding that genuine issues of material fact existed, which precluded summary judgment in favor of Rearden Commerce. The case was remanded for further proceedings.

Sciele Pharma Inc. v. Lupin Ltd., Case No. 2012-1228 (Fed. Cir. July 2, 2012) (attached).

Lupin filed an Abbreviated New Drug Application (ANDA) with the FDA to market a generic version of Fortamet, an extended-release tablet of metaformin hydrochloride.  In response, the plaintiff filed a lawsuit asserting infringement of their Patent No. 6,866,866.  Before the lawsuit had reached a final judgment, Lupin attempted to launch its generic product.  The plaintiff obtained a preliminary injunction preventing Lupin from selling its product.

On appeal, Lupin argued that the ’866 Patent is obvious based on two prior art references that were before the PTO during prosecution. The Federal Circuit stated that whether or not a reference was previously considered by the PTO, the standard of proof is the same: clear and convincing evidence of invalidity.  However, the fact that references were previously before the PTO could impact the weight the court or jury assigns to the evidence.  The Federal Circuit concluded that the district court’s obviousness analysis was flawed because it incorrectly rejected Lupin’s substantive arguments on disclosure and motivation to combine.  Because the district court incorrectly concluded that defendant failed to raise a substantial question of validity regarding the asserted claims of the patent, the grant of preliminary injunction to stop the sale of the generic was vacated.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 9, 2012 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Attalla by 9 am Monday morning.