Protecting Intellectual Property in a
Competitive Market
Sabing Lee
Andrew Douglas
Partner
Knobbe Martens
Olsen & Bear
Partner
Knobbe Martens
Olsen & Bear
Presented by:
Protecting Intellectual Property in a Competitive
Market - Recent IP News You Need to Know
Andrew Douglas and Sabing Lee
October 22, 2014
MDIF 2014
Overview
• Medical device patent statistics
• Patentable subject matter
• Non-practicing entity (NPE) litigation
• Challenging patents at the PTO
• Important litigation
– Masimo v. Philips
– Edwards v. Medtronic
• Audience questions
Medical Device Patent Statistics
Applications Filed and Patents Granted Per Year
*data from USPTO website
(as of December 31, 2013)
Medical Device Patents Granted
*data from USPTO website
(as of December 31, 2013)
2013 Medical Device Patent Owners
TOP TEN
(tie)
*data from USPTO website
(as of December 31, 2013)
Patentable Subject Matter
Limits of What Can Be Patented
• §101 – Inventions Patentable
• Whoever invents or discovers any new and useful process, machine,
manufacture, or composition of matter, or any new and useful
improvement thereof, may obtain a patent therefor ...
• In 1980, the Supreme Court said a bacterium capable of breaking down
crude oil could be patented
• Intent of Congress to allow patents be issued to “anything under the
sun that is made by man”
• In 1998, the Federal Circuit said that business methods and software
could be patented
• Must produce a “useful, concrete and tangible result”
Alice v. CLS Bank – The Technology
• Claims to a computerized invention to mitigate “settlement risk”
• Risk that only one party to an agreed-upon financial exchange
will satisfy its obligation.
• Use a third-party intermediary to create “shadow records”
that track and control currency trades between banks.
• CLS is an international bank consortium that clears $5B in
trades every day.
Exceptions to Patentable Subject Matter
• §101 – Inventions Patentable
• Whoever invents or discovers any new and useful process, machine,
manufacture, or composition of matter, or any new and useful improvement
thereof, may obtain a patent therefor .. .
• Implicit exception to§101:
• laws of nature, natural phenomena, and abstract ideas
• Supreme Court explains that it is concerned about pre-emption
• Pre-empting use of abstract idea of hedging risk (Bilski)
• Laws of nature, NPs and AIs are “the basic tools of scientific and technological
work.” (Myriad)
• Don’t want to improperly tie up the future use of these building blocks of
human ingenuity. (Mayo, citing Morse)
What May Now Be Hard To Patent
• Methods that can be :
• Found in the prior art, performed on a computer
• Performed in the mind
• Performed with pencil and paper
• Performed between two individuals [traditional business transactions]
• Methods that recite :
• Laws of nature, with insignificant pre-solution activity [data gathering]
• Natural phenomena, with insignificant post-solution activity [display result]
Non-Practicing Entity (NPE) Litigation
What Rights Does A Utility Patent Confer?
• Confers right to:
• Exclude others from making, using and
selling claimed invention
• For 20 years from earliest claimed filing date
• Does not give patent owner right to make, use or
sell invention
• There is no requirement for the patent owner to
make a commercial product in order to enforce
its patent
What Is A Non-Practicing Entity (NPE)?
•
•
•
•
•
•
Universities
Individual inventors
Research & development firms
Operating companies (OC) that sue
non-competitors
Companies that file for patents but do not sell products
Patent monetization entities (PME) or patent-assertion entities
(PAE)
– Companies that purchase patents to assert them
– Companies that used to produce products
NPE Litigation Statistics
• 3,608 cases filed in 2013
• 67% of all patent litigation cases in 2013 were filed by NPEs
• 91% of all NPE litigations were brought by patent assertion entities
Source: RPX Corp.
• 745 unique operating healthcare/pharma defendants in NPE litigation
Source: PatentFreedom (as of July 14, 2014)
What Happened In Congress?
•
•
•
Innovation Act, H.R. 3309
– Intended to curb abusive litigation practices
– Specific identification of patent claims and
allegedly infringing products
– Limit discovery to reduce litigation cost
– Awarding of attorneys’ fees to the prevailing
party
Passed by House 325-91 in December 2013
Removed from Senate in May 2014
LifePort/LifeScreen Litigation
• September 2012 - Acacia Research (known NPE) enters into settlement
agreement with Boston Scientific
• December 2012/January 2013 - Acacia Research acquires patents from
Boston Scientific relating to vena cava filters and endovascular grafts
• 2012-2014 - LifePort Sciences LLC and LifeScreen Sciences LLC,
affiliated with Acacia, sue Cook, Endologix, Medtronic, C.R. Bard,
Cordis and W.L. Gore asserting infringement of vena cava filter and
endovascular graft patents
Orthophoenix Litigation
• 2007 - Medtronic acquires spinal device maker Kyphon for ~$4 billion
• April 2013 - Medtronic sells over 500 patents to Orthophoenix, LLC, an
entity associated with IP Nav, a known NPE.
• June-October 2013 – Orthophoenix sues 7 companies (Wright Medical,
DFine, Osseon, Ascendx, Sintea Plustek, Soteira/Globus, and Stryker)
Kardiametrics Litigation
• October 2000 – Medtronic acquires PercuSurge, maker of embolic
protection devices for $225 Million
• April 2013 – Kardiametrics acquires patents from Medtronic
• September 20, 2013 – Kardiametrics sues Abbott, Boston Scientific,
Control Medical Technology, Cordis, Covidien, Medrad and Merit
Medical Systems
Bonutti Litigation
• More than 250 patents developed by Dr. Peter Bonutti, an
orthopedic surgeon
• Dr. Bonutti partnered with Acacia
• Lawsuits against MicroPort Orthopedics, Lantz Medical, Zimmer,
Wright Medical, Arthrex, DePuy, ConforMIS, Smith & Nephew,
Linvatec, Biomet
Challenging Patents at the PTO
How Do You Challenge An Issued Patent?
In Court
• Seek declaratory judgment of
invalidity
At the USPTO (after AIA)
• Ex Parte Reexam
• Post-Grant Review (PGR) (for
applications filed after March 16,
2013)
• Inter Partes Review (IPR)
• Covered Business Method (CBM) (for
financial products and services)
• Derivation Proceedings
Summary of Potential Third-Party Involvement
Filing
Issue
9 mo.
Post-grant review (PGR)
($$$)
Inter partes review (IPR)
($$$)
Derivation action/proceeding
($$$)
Pre-issuance
Submission
($)
Ex parte reexamination
($$)
IPR Final Written Decisions
IPR and CBM Filings by Technology
Medical Device IPR Overview
• KnobbeMedical.com identified 70 IPRs relating to
medical devices that had activity between August
2013 & August 2014 (65 in litigation)
• Top filers – Medtronic, Smith & Nephew, Boston
Scientific, Zimmer, Wright Medical
• Top defendants – Acacia (Bonutti Skeletal, Endotach,
LifePort Innovations), NuVasive
NPE/PAEs Involved
Masimo v. Philips
Masimo v. Philips (Delaware)
• Irvine-based Masimo Corporation alleged infringement of a family of
patents directed to “pulse oximetry” technology that can provide
accurate measurements in the presence of patient motion
Monitor
Cable
Sensor
Masimo v. Philips (Delaware) – Trial
• In a first trial, Masimo asserted two patents
• Shortly before trial, Philips admitted infringement. Philips challenged validity and the
amount of damages.
Masimo v. Philips (Delaware) – Trial
• Philips asserted ‘074 Patent directed to “fuzzy logic” in a quality
indicator
Masimo v. Philips (Delaware) –
Verdict
• Jury found Masimo’s patents valid and awarded damages
Masimo v. Philips (Delaware) –
Verdict
• Jury found that Masimo did not infringe Philips’ “fuzzy logic” patent
Edwards v. Medtronic
EW v. MDT/CoreValve – The Products
Medtronic CoreValve
Edwards Sapien
EW v. MDT/CoreValve - World-Wide Fight
Year
Patent
Country
Plaintiff
Defendant
Outcome
2009
Andersen
UK
Edwards
CoreValve
Not Infringed
Affirmed on Appeal
2008
Andersen
Germany
(Infrin’t)
Edwards
CoreValve
Not Infringed
Affirmed on Appeal
2010
Andersen
Germany
(Invalidity)
CoreValve
Edwards
Not Invalid
2010
Andersen
Delaware
Edwards
CoreValve
Infringed - $83M
Affirmed-in-part
2012
Seguin
California
MDT
Edwards
Invalid
2013
Spenser
Germany
(Infrin’t)
Edwards
MDT
Infringed
(injunction)
2014
Spenser
EPO
(Invalidity)
Edwards
MDT
Invalid
2014
Cribier
California
Edwards
MDT
Infringed - $392M
EW v. MDT/CoreValve - World-Wide Fight
Year
Patent
Country
Plaintiff
Defendant
Outcome
2009
Andersen
UK
Edwards
CoreValve
Not Infringed
Affirmed on Appeal
2008
Andersen
Germany
(Infrin’t)
Edwards
CoreValve
Not Infringed
Affirmed on Appeal
2010
Andersen
Germany
(Invalidity)
CoreValve
Edwards
Not Invalid
2010
Andersen
Delaware
Edwards
CoreValve
Infringed - $83M
Affirmed-in-part
2012
Seguin
California
MDT
Edwards
Invalid
2013
Spenser
Germany
(Infrin’t)
Edwards
MDT
Infringed (injunction)
2014
Spenser
EPO
(Invalidity)
Edwards
MDT
Invalid
2014
Cribier
California
Edwards
MDT
Infringed - $392M
2014
Andersen
Delaware
Edwards
CoreValve
Prelim. Injunction
EW (Andersen) v. CoreValve - PI
• Although the court acknowledged that the public interest would be
well served by permitting CoreValve Generation 3 devices to be sold,
the court noted that “[e]nforcing patent rights is especially important
where there is egregious conduct to be addressed and deterred.”
• The court held that the preliminary injunction must be tailored to
permit Medtronic to sell Core Valve Generation 3 devices to patients
that Edwards concedes cannot be served by Edwards' devices.
EW v. MDT/CoreValve - Settlement
MDT will pay EW:
•A one-time payment of $750 million
•Royalties through April 2022, not less than $40 million annually
The parties agreed to:
•Dismiss all of the pending litigation matters and patent office actions
between them
•Grant each other broad releases to patent litigation claims
•Not sue each other “for patent matters anywhere in the world for eight
years in the field of aortic and all other transcatheter heart valves.”
Questions & Answers
Questions
• With all the cyber hacking occurring, what are the risks of
sending IP info to lawyers and others via email, or should we
use some other method?
• What are the main differences with regard to patentable
subject matter for medical devices in the US vs Europe?
Questions
• For a small medical device company in the start-up mode (nor
probably anyone else, for that matter), it is not financially possible to
file patents in every country OUS. What countries would be
recommended for international patent filings?
• For example, following the US, might one consider Europe, Japan,
China, India? What about Canada and Australia or other Englishspeaking countries?
• After the European phase, how do you decide which countries in
Europe to approach?
• How do you develop the right strategy for a small start-up against
large corporations without spending a lot of capital on lawyers?
Thank you!
•
andrew.douglas@knobbe.com
•
(949) 721-7623
sabing.lee@knobbe.com
(949) 721-6360
Thank you