Litigation 101 for Universities and Research Institutes Moderator: • Chelsea Loughran, Wolf Greenfield Speakers: • Ashley Stevens, Focus IP Group, LLC • Nathan Speed, Wolf Greenfield
The following presentation reflects the personal views and thoughts of Chelsea Loughran, Nathan Speed and Ashley Stevens, and is not to be construed as representing in any way the corporate views or advice of Wolf Greenfield & Sacks, P.C. or Focus IP Group, LLP and their Affiliates, Subsidiaries or Divisions, nor the views or advice of the Association of University Technology Managers (AUTM). The content is solely for purposes of discussion and illustration, and is not to be considered legal advice.
Agenda/Overview • Public perception (overlays all decisions on points below) • Patent litigation value proposition • The lifecycle of a patent litigation • Pre-filing concerns • Discovery • Relief • Contract actions as an alternative to patent litigation
Litigation Value – Recent monetary awards • Carnegie Mellon v. Marvell , Case No. 2:09cv290 (W.D. Pa.) • Technology related to hard disk drives • $750M settlement following >$1B verdict (reversed-in-part by Fed. Cir., No. 14 – 1492) • Wisconsin Alumni Research Foundation v. Apple , Case No. 3:14cv62 (W.D. Wis.) • Technology related to computer processors • $506M judgment (currently on appeal to Fed. Cir., No. 17-2400) • Trustees of Boston University v. Everlight Electronics Co. , Case No. 1:12cv11935 (D. Mass.) • Technology related to light emitting diodes (LEDs) • $17.3M verdict, though remittitur/damages retrial granted (up on appeal to Fed. Cir., lead case No. 16-2577) *** Between 1997-2016, median damages award for university litigation is $16.3M with a success rate of 52%
Litigation Value – Other considerations • Aside from dollar amounts, litigation (and the willingness to litigate) adds value by: • Demonstrating to faculty that the University values and will protect faculty and student creativity and investment in research • Strengthening the University’s position on unrelated licensing efforts
Patent Litigation Life-Cycle
Pre-filing Considerations • Identifying defendants • Funding • Standing • Where to file?
Identification of defendants • The identification of defendants can come about in a variety of different ways, including: • P.I./inventor follows the field and notices infringement • TLO seeks out licensees and licensing efforts fail • Licensee/licensor relationships break down • Internal teams “mine” portfolios and look for infringing entities • Outside firms “mine” portfolios and look for infringing entities (can be part of funding structure)
Funding: Litigation expense Average cost of patent litigation (by amount at stake) $7,000,000 Costs through end of discovery Total costs $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 $10M – $25M >$25M Source: 2015 AIPLA Economic Survey
Funding a Meritorious Patent Litigation • With options available today, funding should not impede a University’s ability to bring a meritorious infringement claim • Some options include: • Contingent fee arrangements • Partial contingent fee arrangements • Variety of other alternative fee arrangements (limited only by the creativity of the parties involved) • Investment/funding entities • In 2016, 36% of U.S. lawyers say their firms have used litigation finance (compared to 7 % in 2013)
Standing Considerations: General Rules • Patentee can sue in its own name • “A patentee shall have remedy by civil action for infringement of his patent” – 35 U.S.C. § 281 • Assignee can sue in its own name • Assignee or party that holds “all rights” or “all substantial rights” has standing to sue in its name alone • Exclusive licensee with “all substantial rights” may be a “virtual assignee” with standing to sue in its own name • Generally must name patent owner in suit where exclusive licensee does not possess “all substantial rights,” which include: • Exclusive rights to make, use, sell, or offer to sell the patented invention; • Unrestricted right to sublicense; and • Right to sue, or decided not to sue, for past, present, and future infringement
Standing Considerations: Specific Issues • An assignment does not convey the right to sue for past infringement without an express provision granting the right • “ The authorities are uniform that [an assignment of a right of action for past infringements] must be express, and can not be inferred from an assignment of the patent itself” • Arachnid, Inc. v. Merit Indus., Inc. , 939 F.2d 1574, 1579 n.7 (Fed. Cir. 1991) • Not an issue where invention is assigned prior to patent issuance, but can arise if university acquires issued patent(s)
Where to File? Popular district court patent litigation venues, 2008-2016 E.D.Tex. 23% Patent owner may sue in: Other Federal court 49% D.Del. ITC (for imported products) 14% C.D.Cal. 8% N.D.Cal. 6% Source: Lex Machina
Where to File? • Depending on target, Universities may not be able to count on filing in their “home court” • 28 U.S.C. § 1400(b ): “Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business” • TC Heartland LLC v. Kraft Foods Group Brands LLC , 137 S. Ct. 1514 (May 22, 2017) • “As applied to domestic corporations, ‘reside[ nce ]’ in § 1400(b) refers only to the State of incorporation” • In re Cray, Inc. , No. 2017-129 (Fed. Cir. Sept. 21, 2017) • “Following … TC Heartland , litigants and courts are raising with increased frequency the question of where a defendant has a ‘regular and established place of business’” • “[T] hree general requirements relevant to the inquiry: (1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant. If any statutory requirement is not satisfied, venue is improper under § 1400(b )” • “[N]o precise rule has been laid down and each case depends on its own facts”
Discovery – Record Keeping Tips • Take inventory of your information systems, including email • Know your systems – universities can be highly decentralized, including with email • Be honest about your record keeping • Have you maintained all pertinent invention disclosure documents and assignment records? • What about licenses and licensing policies? • Consider lab notebook/report standardization • Can your technical documents tell your story – your “invention story”? • Can that puzzle be pieced together, easily and persuasively? • Have a plan for departing employees/students • There should be a plan in place for determining what records should or need to be preserved, and for preserving same
Record Keeping (cont.) • Clearly delineate roles and responsibilities of relevant players • Know who the key custodians are • Know who in your IT staff is best suited to assist with preservation and collection efforts • Identify a University contact who will bear primary responsibility for circulating litigation hold letters/memoranda and for supervising early case discovery • Identify the primary in-house/outside counsel contact for early discovery efforts • Stay involved • Your involvement in early discovery activities (e.g., with custodian interviews, initial document collections) will help litigation counsel avoid missing key custodians and information repositories • Exercise caution with public statements (not just during discovery) • Instruct employees, scientific researchers, PIs, and students to be careful
Relief • Injunctive relief highly unlikely, but has not stopped some University plaintiffs from asking • “A lack of commercial activity in the practicing patents does not by itself establish that the holder would not suffer irreparable harm if a permanent injunction is not issued. And even without practicing the claimed invention, the patentee can suffer irreparable injury. However, Courts have more commonly found irreparable injury warranting an injunction in cases between direct competitors .” • CMU v. Marvell , No. 09cv290, 2014 WL 1320154, at *28 (W.D. Pa. 2014) (citations and quotations omitted) • Consider public perception of University seeking to enjoin production of drug or exclusion of biotherapeutic • Relief ultimately to center on reasonable royalty structure
Breach of Contract • Venues • State Court • Arbitration • AAA • ICC • WIPO • No reliable data on number of lawsuits • Opposite of Infringement
My Personal Experience • Retained 56 times • 19 times infringement • Federal Court • 37 times breach of contract • State court (usually) • Arbitration • University involved 29 times • 8 times infringement • 21 times breach of contract
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