SoCal IP Law Group

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Monthly Archives: September 2012

SoCal IP Institute :: October 1, 2012 :: Inequitable Conduct and Judgment as a Matter of Law

We will be discussing two Federal Circuit cases during our weekly SoCal IP Institute meeting on Monday, October 1, 2012. Brief synopses are presented below.

Outside the Box Innovations, LLC. v. Travel Caddy, Inc., Case No. 2009-1171 (Fed. Cir. September 21, 2012) (attached).

Travel Caddy brought suit against Outside the Box Innovations claiming infringement of two of their patents, U.S. Pat. No. 6,823,992 and its continuation, U.S. Pat. No. 6,991,104 both directed to tool carrying cases.  The district court held that the patents were unenforceable based on inequitable conduct during the prosecution of the patents.  Travel Caddy had failed to inform the patent examiner of the existence of litigation in the parent patent prior to the issuance of the ‘104 patent.  Travel Caddy also incorrectly claimed small entity status.  Travel Caddy clearly met the small entity status requirements in having fewer than 500 employees, but Travel Caddy had a commercial arrangement with its distributor and seller, The Rooster Group, who was a large entity of over 500 employees.

On appeal, the Federal Circuit reversed the decision of unenforceability for incorrectly claiming small entity status.  The Court reversed not on the ground of materiality, but on the basis of a lack of intent.  The Court held that  the requirements of Therasense were not met because “there was no clear and convincing evidence of intent to deceive the PTO.”

Regarding the holding of unenforceability for not disclosing the litigation in the parent patent, the Federal Circuit reversed the district court’s pre-Therasense finding of both materiality and intent. On materiality, the Federal Circuit ruled that the failure to disclose the existence of a litigation when there was no citation of prior art, nor any pleading of invalidity or unpatentability in the complaint of the litigation as it existed during pendency of the continuation application, did not constitute clear and convincing evidence of materiality.  On intent, the Court held that there is no evidence that the withholding of the information concerning the litigation could have deceived the examiner and no suggestion of deliberate action to withhold it in order to deceive the examiner.

Mirror Worlds, LLC. v. Apple, Inc., Case No. 2011-1392 (Fed. Cir. September 4, 2012) (attached).

Mirror Worlds owns three patents at issue in this case: US Patents 6,006,227; US Patent 6,638,313; and US Patent 6,725,427.   Mirror Worlds brought a patent infringement action in the District Court for the Eastern District of Texas against Apple claiming that Apple’s Spotlight, Time Machine and Cover Flow features in their Mac operating system infringe the patents.  Cover Flow lets users scroll through album cover art when browsing for music in their iTunes libraries. The feature also works for documents, pictures and other material stored in a computer. Spotlight searches the computer’s hard drive while Time Machine automatically saves copies of files.  Mirror Worlds asserted claims of both direct infringement and induced infringement.

The district court granted Apple’s oral motion for judgment as a matter of law that Apple did not induce infringement of any of the patents.  The district court stated that Mirror Worlds failed to introduce substantial evidence to show that defendant itself induced its customers to infringe the disputed patent’s method claims. The issue of direct infringement by Apple was submitted to the jury, wherein the jury found Apple liable for willfully infringing all three asserted patents and awarded $208.5 million in damages. However, the district court granted Apple’s motion for judgment as a matter of law and vacated the jury verdict.

The Federal Circuit affirmed, concluding that Mirror Worlds failed to present substantial evidence of direct infringement and damages.  The district court had concluded that Mirror Worlds did not establish infringement under the doctrine of equivalents because Mirror Worlds did not provide substantial evidence to show that the accused products have an equivalent for the “cursor or pointer” limitation.  The Federal Circuit also agreed that the evidence presented at trial was not sufficient to support the damages awarded by the jury.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, October 1, 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 :: September 24, 2012 :: Induced Infringement and Covenants Not to Compete

We will be discussing one Federal Circuit case and one California Court of Appeal case during our weekly SoCal IP Institute meeting on Monday, September 24, 2012. Brief synopses are presented below.

Akamai Techs., Inc. v. Limelight Networks, Inc., Case Nos. 2009-1372, -1380, -1416, -1417 and McKesson Techs., Inc., v. Epic Systems Corp., Case No. 2010-1291 (Fed. Cir. August 31, 2012) (attached).

This decision involved two cases that were decided together in this en banc rehearing.  In the first case, Akamai Technologies, Inc. owns a patent that covers a method for efficient delivery of web content.  Akamai alleged that Limelight Networks, Inc. directly infringed and induced infringement of their patent. The patent’s method claims required “placing some of a content provider’s content elements on a set of replicated servers and modifying the content provider’s web page to instruct web browsers to retrieve that content from those servers.” Limelight maintained a network of servers and placed some content elements on its servers. However, Limelight did not modify the content providers’ Web pages and instead taught its customers how to modify the pages.

In the other case, McKesson alleged that Epic induced infringement of their patent covering a method of electronic communication between healthcare providers and patients.  Epic licensed its software to healthcare organizations, which allowed healthcare providers to communicate electronically with patients.  Epic did not perform any of the steps of the method patent, rather the infringing steps were performed partially by patients, who initiate communications, and partially by healthcare providers.

The district courts found in both Akamai and McKesson that the defendants did not infringe the asserted patents because they neither performed all of the claimed steps themselves nor exhibited the necessary control over the other parties that did perform the claimed steps.

The Federal Circuit initially upheld the decision.  However, in this en banc rehearing, the Court considered whether a defendant may be held liable for induced infringement if the defendant has performed some of the steps of a claimed method and has induced other parties to commit the remaining steps (as in Akamai), or if the defendant has induced other parties to collectively perform all the steps of the claimed method, but no single party has performed all of the steps itself (as in McKesson).”

In overturning their earlier decision in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), the Court held that a single actor is not required to perform all of the infringing steps. The Court stated that liability for induced infringement exists where the accused infringer knows of the patent and induces performance of the steps of the patented method by causing, urging, encouraging or aiding the performance of such steps.  In order for a party to be liable for induced infringement, it is no longer necessary to show that a single entity performed all the steps of the claimed method.   Furthermore, it is no longer necessary for the accused infringer to “control or direct” the actors who perform the steps of the method.

Fillpoint, LLC. v. Maas, Case No. G045057 (Cal. Ct. App. August 24, 2012) (attached).

Michael Maas was an employee of Crave Entertainment Group, Inc., which was acquired by Handleman Company.  As part of the acquisition, Maas executed a stock purchase agreement selling all of his stock in Crave to Handleman.  The stock purchase agreement contained a three-year non-compete clause.  Maas also entered into a new employment agreement with Crave containing a one-year non-compete, customer non-solicit, and employee non-solicit covenants, all of which would begin to run upon the termination of his employment. The stock purchase agreement included an integration clause referencing the form employment agreement. Additionally, Maas’ employment agreement referred back to the stock purchase agreement and stated that the stock purchase agreement would prevail in the event of any conflict between the agreements.

Maas eventually resigned from Crave three years after the acquisition and about six months later, began working for a competitor of Crave.  Fillpoint, LLC, which had acquired Crave from Handleman, brought suit against Maas for breach of his employment agreement. The Superior Court of Orange County concluded that: (1) the covenants in the stock purchase agreement and the employment agreement were separate; and (2) the covenants not to compete and not to solicit in the employment agreement were unenforceable under California’s general rule against such covenants (Business and Professions Code Section 16600).

On appeal, the Court of Appeal for the Fourth District found that the trial court erred in its conclusion that the covenants in the stock purchase agreement and the employment agreement were separate.  The Court of Appeal held that the agreements must be read together as an integrated agreement because of the cross references between the stock purchase agreement and employment agreement.  Furthermore, the two agreements were part of a single transaction because they were entered into between the same parties and around the same time. The Court then determined that the covenants in the employment agreement were intended to restrict Maas’ right to pursue his profession in the future and, thus, did not meet Section 16601’s limited exception.  For these reasons, the Court held that the covenants in the employment agreement could not “be reconciled with California’s strong public policy permitting employees the right to pursue a lawful occupation of their own choice” and were unenforceable.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, September 24, 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 :: September 17, 2012 :: Latches and Covenants Not to Compete

We will be discussing one Ninth Circuit case and one California Court of Appeal case during our weekly SoCal IP Institute meeting on Monday, September 17, 2012. Brief synopses are presented below.

Petrella v. Metro-Goldwyn-Mayer, Inc., Case Nos. 10-55834 (9th Cir. August 29, 2012) (attached).

Petrella sued Metro-Goldwyn-Mayer and other movie studios for copyright infringement, as well as unjust enrichment and accounting. Petrella alleged that defendants infringed her purported interest in a book and two screenplays that together formed the basis for the 1980 motion picture “Raging Bull.”

The Ninth Circuit held that plaintiff’s copyright infringement claim was barred by laches and therefore the Court did not reach the merit of the claim itself.  The Court also held that, because laches was an equitable defense, the district court was correct in holding that laches also barred plaintiff’s unjust enrichment and accounting claims. The Court further held that the district court did not abuse its discretion in denying defendant’s sanctions and attorney’s fees motions because the denial was based on a lack of evidence of infringement but solely on the ground that plaintiff’s claims were barred by laches

Fillpoint, LLC. v. Maas, Case No. G045057 (Cal. Ct. App. August 24, 2012) (attached).

Michael Maas was an employee of Crave Entertainment Group, Inc., which was acquired by Handleman Company.  As part of the acquisition, Maas executed a stock purchase agreement selling all of his stock in Crave to Handleman.  The stock purchase agreement contained a three-year non-compete clause.  Maas also entered into a new employment agreement with Crave containing a one-year non-compete, customer non-solicit, and employee non-solicit covenants, all of which would begin to run upon the termination of his employment. The stock purchase agreement included an integration clause referencing the form employment agreement. Additionally, Maas’ employment agreement referred back to the stock purchase agreement and stated that the stock purchase agreement would prevail in the event of any conflict between the agreements.

Maas eventually resigned from Crave three years after the acquisition and about six months later, began working for a competitor of Crave.  Fillpoint, LLC, which had acquired Crave from Handleman, brought suit against Maas for breach of his employment agreement. The Superior Court of Orange County concluded that: (1) the covenants in the stock purchase agreement and the employment agreement were separate; and (2) the covenants not to compete and not to solicit in the employment agreement were unenforceable under California’s general rule against such covenants (Business and Professions Code Section 16600).

On appeal, the Court of Appeal for the Fourth District found that the trial court erred in its conclusion that the covenants in the stock purchase agreement and the employment agreement were separate.  The Court of Appeal held that the agreements must be read together as an integrated agreement because of the cross references between the stock purchase agreement and employment agreement.  Furthermore, the two agreements were part of a single transaction because they were entered into between the same parties and around the same time. The Court then determined that the covenants in the employment agreement were intended to restrict Maas’ right to pursue his profession in the future and, thus, did not meet Section 16601’s limited exception.  For these reasons, the Court held that the covenants in the employment agreement could not “be reconciled with California’s strong public policy permitting employees the right to pursue a lawful occupation of their own choice” and were unenforceable.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, September 17, 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 :: September 10, 2012 :: Inside Look at Patent Cases in the Federal Circuit and EDTX

For our weekly SoCal IP Institute meeting on Monday, September 10, 2012, we welcome Timothy Rawson as a guest speaker.  Tim clerked for Judge John Love of the Eastern District of Texas and Judge Jimmie Reyna of the Federal Circuit, both judges who regularly handle patent cases.  Tim will be discussing the general process of how cases are handled in both the Eastern District of Texas and the Federal Circuit.

Tim grew up mostly in the Dallas/Fort Worth area and went to Texas Tech to study mechanical engineering.  He received his BS in 2004 and practiced as an engineer for over six years working in a variety of industries, including designing missile and rocket control systems, aircraft modifications and avionics upgrades, HVAC systems, and water treatment and transmission facilities.  After receiving his professional engineering license in 2010, Tim started considering law school.   In August 2011, he moved to LA and now attends Pepperdine Law school, focusing on intellectual property law.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, September 10, 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.