Presenting a live 90-minute webinar with interactive Q&A NPE Patent Litigation: Latest Developments Leveraging Alice, Federal Rules Amendments, and Patent Office Proceedings in Defending Infringement Disputes WEDNESDAY, JANUARY 27, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: R. David Donoghue, Partner, Holland & Knight , Chicago Dana M. Herberholz, Shareholder, Parsons Behle & Latimer , Boise, Idaho The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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NPE Patent Litigation: Latest Developments R. DAVID DONOGHUE DANA M. HERBERHOLZ HOLLAND & KNIGHT LLP PARSONS BEHLE & LATIMER 131 S. Dearborn Street 800 West Main Street, Suite 1300 Chicago, Illinois 60603 Boise, Idaho 83702 Telephone: 312.578.6553 Telephone: 208.562.4906 david.donoghue@hklaw.com dherberholz@parsonsbehle.com
Overview 1. Background and Trends 2. Impact of Alice Corp. v. CLS Bank 3. Patent Office Proceedings 4. Amendments to Federal Rules and Impact on NPE Litigation 5. Strategic Motion Practice 6. NPE-Proofing 5
BACKGROUND AND TRENDS 6
Terminology Non- Practicing Entity (“NPE”) – Derives majority of its revenue from patent licensing or enforcement NPEs exist an a variety of forms ◦ Patent Assertion Entities (PAEs) / “aggregators” / “trolls” ◦ Universities and non-profits ◦ Companies ◦ Individuals and start-ups 7
The NPE Business Model Incorporate (often in ED Tex) Acquire patents Early Settlement ◦ Demand Letter ◦ Litigation (often in ED Tex) Eastern District of Texas, Sam B. Jr. Federal Building and US Courthouse Marshall, Texas 8
Sue first, negotiate later Common NPE Assert patents with broad or abstract claims Litigation Leverage existing licenses and Tactics settlement agreements Build a war chest Leverage disproportionate discovery obligations Play the “shell game” 9
NPEs By The Numbers - Median Damages On average, damage awards to NPEs exceed those to practicing patent owners 10
NPEs By The Numbers - Success Rate Overall Success Rate for NPEs – 26% Success Rate for NPEs at Trial – 65% 11
NPEs By The Numbers – All Patent Cases Filed Source: Docket Navigator 12
NPEs By The Numbers – NPE Filings 63% of patent cases filed in 2014 were filed by NPEs Source: RPX 2014 NPE Litigation Report 13
NPEs By The Numbers – NPE Filings (cont’d) 89% of NPE cases filed by patent assertion entities in 2014 Source: RPX 2014 NPE Litigation Report 14
NPEs By The Numbers – NPE Filings (cont’d) Source: RPX 2014 NPE Litigation Report 15
NPEs By The Numbers – ED Tex Filings 16
NPEs By The Numbers - Who Are These People? Source: RPX 2014 NPE Litigation Report 17
NPEs By The Numbers – PTAB Filings 18
Impact of Alice Corp. v. CLS Bank 19
Alice Motions – Success Rate 20
Alice Motions : The Law 35 USC § 101: Defines the scope of patent eligibility to include “ any new and useful process , machine, manufacture, or composition of matter, or any new and useful improvement thereof” ◦ Exceptions: laws of nature, physical phenomena and abstract ideas ◦ But what is an abstract idea? ◦ “ A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right” 21
Alice Motions : The Law Two-part test: 1. Laws of nature, natural phenomenon or abstract ideas? 2. An “inventive concept” such that the patent is “significantly more” than a claim to the ineligible subject matter. 22
Alice Motions : The Law Alice is not a new test. ◦ DietGoal Innovations LLC v. Bravo Media LLC , 2014 WL 3582914 (S.D.N.Y. 2014). ◦ Led many to say Alice changed nothing. 23
Alice Motions : The Law Alice is not a new test. ◦ District courts (for now at least) feel differently ◦ See, e.g. , AmDocs (Israel) Ltd. V. Openet Telecom, Inc. , __ F.Supp.3d __, 2014 WL 5430956 (E.D. Va.) (Brinkema , J.) (“Alice represents a change, or a significant clarification . . . .”) ( quoting Eclipse IP LLC v. McKinley Equip. Corp. , 2014 WL 4407592, at *3 (C.D. Cal.) (Sep. 4, 2014). 24
Alice Motions : The Law General purpose computer is not enough. ◦ But what is? ◦ Databases – No ◦ Fast computing – Probably No, but sometimes. 25
Alice Motions : The Statistics About 65/35 SJ vs. MTD Claim construction generally not required OVER 50% SUCCESS RATE 26
Alice Motions : The Cases Technologies held unpatentable: ◦ Selecting daily meals to meet dietary goals ◦ Web-updated database with distribution by email ◦ Managing a bingo game and allowing players to repeatedly play the same number 27
Alice Motions : The Cases Technologies held unpatentable: ◦ Conversion of loyalty points from one company’s to another ◦ Monitoring locations, movements, and load status of shipping containers ◦ Claims creating a contractual relationship using computers 28
Alice Motions : The Strategies The devil is in the details Claim drafting requires specifics ◦ Specific computers ◦ Volume/speed/timing of calculations ◦ Details in the specification 29
Alice Motions : The Strategies Avoiding Alice: ◦ Claim construction is critical ◦ Show inventiveness with speed/multi-tasking ◦ Force summary judgment identify complexity 30
Alice Motions : The Strategies Leveraging Alice: ◦ Rule 12 motions avoid claim construction ◦ Throttle back computing/internet power ◦ Perform transactions in serial ◦ Challenge early & often 31
Alice Motions : The Strategies Balance offensive & defensive strategies Reconsider portfolio valuations ◦ Build in cost of Alice challenges ◦ Use reissues to amend and narrow claims 32
Patent Office Proceedings
IPR vs. PGR Ex Parte Reexam. Inter Partes Review Post Grant Review Who The patent owner, Any Party BUT: Any Party BUT: The Director of the The patent owner The patent owner USPTO A party who first files a A party who first files a Third parties, can be declaratory judgment declaratory judgment anonymous suit suit BUT 3 rd party not involved in proceedings Timing Within the term of the 9 months after the Within 9 months of the patent patent issues (if the patent issuing patent is PGR eligible) until 1 year after the party was first sued for alleged infringement of the patent 34
IPR vs. PGR Ex Parte Reexam. Inter Partes Review Post Grant Review Basis Novelty and Anticipation and Patentability, Obviousness using: Obviousness using: Anticipation, Other patents Other patents Obviousness, and Printed publications Printed Publications Indefiniteness using, Affidavits not limited to : Declarations Other patents Printed Publications Affidavits Declarations (Broader) (Broadest) Threshold to Determine Whether “a substantial Whether there is a Whether it is “more Whether to Institute new question of “reasonable likelihood than likely than not that patentability” affecting that the petitioner at least 1 of the claims any claim of the patent would prevail with challenged in the has been raised. respect to at least 1 of petition is the claims challenged in unpatentable.” the petition.” 35
IPR vs. PGR Ex Parte Reexam. Inter Partes Review Post Grant Review Appeal – decision to No No No institute Appeal – Final decision Federal Circuit Federal Circuit Federal Circuit Time to Decision Avg. pendency is 2 years 12-18 months 12-18 months 36
Strategy Impact on litigation? ◦ Managing two proceedings at once Discovery considerations: ◦ Multiple depositions When should proceeding be filed? ◦ Sooner: adds pressure to patent owner, may receive a stay ◦ Later: may be able to use patent owner’s statements in litigation (Markman hearing) against it 37
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