An Intellectual Property Law Update –
Practical Tips for Corporate Counsel
Steve Gardner
Kilpatrick Townsend & Stockton LLP
April 6, 2011
Kilpatrick Townsend & Stockton IP Practice
• Combined firm will have 640 attorneys including 300 intellectual
property attorneys in 17 offices
Atlanta, GA
Oakland, CA
Seattle, WA
Stockholm
Augusta, GA
Palo Alto, CA
Walnut Creek, CA
Taipei
Charlotte, NC
Raleigh, NC
Washington, DC
Tokyo
Denver, CO
San Diego, CA
Winston-Salem, NC
New York, NY
San Francisco, CA
Dubai
• Combined firm will tie for the 4th largest IP practice in the United
States according to December 2009 IP Law 360 survey
• More attorneys listed in Best Lawyers in America® 2011 for IP than
any other firm
Kilpatrick Townsend & Stockton IP Practice
(cont.)
• Expected ranking in the top 5-10 firms nationwide in patent litigation
based on ALM Patent Litigation Survey 2010
• Expected ranking in top 5 in terms of volume of patents prosecuted
based on IP Today Top Patent Firms 2010
• More than 85 trademark and copyright attorneys representing some of
the best known brands throughout the world
• More than 175 attorneys registered to practice before the USPTO
• Scientific and engineering degrees in virtually every discipline
About the Speaker
Steve Gardner is the co-chair of Kilpatrick Townsend & Stockton’s patent litigation
group, which has been recognized as one of the top patent litigation groups in the
country. Steve maintains an active practice in patent litigation, due diligence,
counseling, and prosecution strategy and management. He has represented companies in
patent suits in federal courts in Colorado, Delaware, the District of Columbia, Florida,
Georgia, Illinois, Louisiana, Missouri, North Carolina, Ohio, Oklahoma, and Texas,
including multiple cases in the Eastern District of Texas.
Steve received a BS and MS from the University of North Carolina at Charlotte. He
received a JD, with honors, from the Wake Forest University School of Law, where he
was editor-in-chief of the law review. He clerked for the Hon. Frank W. Bullock, Jr.,
Chief Judge, US District Court for the Middle District of North Carolina, 1994-1995,
and the Hon. Alvin A. Schall, US Court of Appeals for the Federal Circuit, 1995-1996.
For several years, Steve has been elected to Business North Carolina magazine’s Legal
Elite List as one of the top patent attorneys in North Carolina based on a survey of all
members of the North Carolina bar. He is listed in the 2011 edition of The Best Lawyers
in America® for intellectual property law. He currently serves as editor-in-chief of the
American Bar Association’s Intellectual Property Litigation newsletter.
Overview of Presentation
• Trends useful for
– Noticing developments of which you were unaware
– Reinforcing with management the need for attention to
areas of which you are already aware, but have not been
able to cause management to address
– Providing proactive advice to management
• Practical tips
– Mostly reinforcement of good advice, but more weighty
when considering trends
– Perhaps some ideas that will be new to you
– Mostly general, given diversity of your companies, but
please ask questions during the discussion or at the end
Trend #1 – Intellectual Property Suits are Up
 Number of patent infringement suits steady
 Multi-defendant patent suits continue to rise
 Number of trademark infringement suits up
Patent Suits Filed in U.S. District Courts
(FY1993 - FY2010)
3500
3000
2500
2000
1500
1000
500
2010
Fiscal Year is measured from October 1 to September 30.
2009
Source: Judicial Business of the United States Courts Annual Report of the Director, 1997-2009
available via www.uscourts.gov; 2010 (through 09/30/2010) data obtained via Administrative Office
of the US Courts PACER Service Center.
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0
Observations Related to Enforcement of
IP Rights
• In patent cases, non-practicing entities (“NPE”) or trolls remain active
– One estimate suggests that NPEs are responsible for 1/5 of all
patent infringement filings*
• In patent related cases, filings have increased somewhat significantly
with a portion attributable to false marking cases
• Number of defendants in patent infringement suits have continued to
trend upward at a greater rate than increased number of actions
initiated
*Source: http://www.patentlyo.com/patent/2010/10/guest-post-counting-defendants-in-patentlitigation.html)
Patent Suit Filing Trend – Multiple Defendants
400%
% change of cases filed
350%
% change of defendants
300%
250%
200%
150%
100%
50%
Data is based on Fiscal Year filings
Source: PatentlyO.com Column by Kyle Jensen based on PACER data
http://www.patentlyo.com/patent/2010/10/guest-post-counting-defendants-in-patent-litigation.html
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0%
Trademark Suits Filed in U.S. District Courts
(FY1993 - FY2010)
4500
4000
3500
3000
2500
2000
1500
1000
500
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Judicial Business of the United States Courts Annual Report of the Director, 1997-2009 available via www.uscourts.gov; 2010
(through 09/20/2010) data obtained via Administrative Office of the US Courts PACER Service Center.
Fiscal Year is measured from October 1 to September 30.
Trend #2 – False Patent Marking
Suits are Up
 Number of false patent marking suits way up
Points to Note Regarding Patent Suit Filings
• False marking cases have attributed to number of patent
cases increasing
• In the calendar year of 2010, over 585 false patent marking
suits have been filed*
– In 2009, about 25 false patent marking suits were filed
– In 2008, about 12 false patent marking suits were filed
• Most popular district is Eastern District of Texas
*Source: Joint effort with Docket Navigator and patent law blog –
http://www.grayonclaims.com/false-marking-case-information/
Trend #3 – Attention to Copyright Infringement
 More attention to copyright infringement actions
Emergence of Copyright “Troll” Righthaven
• Righthaven searches for reproduced articles or content from various
news agencies then purchases the copyright from the holder
• Righthaven initiates suit against web providers
– Bloggers, website providers
– No warning, take down notices given – customary to do so in news marketplace
– Estimate of over 175 suits filed by Righthaven
• Some recent scrutiny of overreaching by Righthaven
– For example, initiating suit for reproduction of 10 or less words rather than four to
five paragraphs
Damages for Copyright Infringement
• $1.3 billion decision in Oracle and SAP copyright dispute
thought to be largest award for copyright infringement
– SAP estimated $28 to $41 million in damages
– Oracle alleged almost $3 billion in damages
• New benchmark for plaintiff counsel
Practical Tips
After a short-lived downward trend in the number of suits, intellectual
property holders are beginning to more aggressively pursue claims.
Intellectual property holders pursuing less-traditional intellectual property
claims (e.g. false marking suits) or large multi-defendant case
structure.
Be aware of trend and how trend may impact your business.
Trend #4 – Intellectual Property Application
Filings are Up
 Greater increase than expected in United States
patent and trademark applications
United States Patent Applications Filed
(FY1993 – FY2010)
600000
500000
400000
300000
200000
100000
2010
2009
2008
2007
2006
2005
Fiscal Year is measured from October 1 to September 30.
2004
Source: United States Patent and Trademark Office website, Director’s Report
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0
Trademark Registration Applications Filed
(FY1993 – FY2010)
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: United States Patent and Trademark Office website, Director’s Report
Fiscal Year is measured from October 1 to September 30.
Trend #5 – Average Pendency Rates at USPTO
 Unfortunately, average pendency rates of patent
applications remained steady or went up
 Average pendency rates of trademark registrations
have gone down
Average Pendency in Months Between Filing of Patent
Application and First Action (FY2005 – FY2010)
30
25
20
15
10
5
0
2005
2006
2007
2008
Source: United States Patent and Trademark Office website, Director’s Report
Fiscal Year is measured from October 1 to September 30.
2009
2010
Total Average Pendency of Patent Application
(FY2005 – FY2010)
40
35
30
25
20
15
10
5
0
2005
2006
2007
2008
Source: United States Patent and Trademark Office website, Director’s Report
Fiscal Year is measured from October 1 to September 30.
2009
2010
Average Pendency in Months Between Filing of Trademark
Registration and Examiner’s First Action (FY2005 – FY2010)
7
6
5
4
3
2
1
0
2005
2006
2007
2008
Source: United States Patent and Trademark Office website, Director’s Report
Fiscal Year is measured from October 1 to September 30.
2009
2010
Practical Tip
Your business should be aware of short average pendency
times relating to trademark from a budgeting perspective
for new filings as well as for monitoring and analyzing
your competitor’s filings.
Trend #6 – U.S. Supreme Court Activity
Related to Intellectual Property
 U.S. Supreme Court has continued to consider
significant issues in intellectual property law
Supreme Court: Bilski v. Kappos (2010) and
Patent Eligible Subject Matter
• No per se bar of business method and computer technology patents
• “Machine-or-transformation” test is not sole test of patentability under
Section 101 for processes
– Useful test for analysis, particularly by USPTO in its examination
guidelines
– Full version of guidelines available at:
http://www.uspto.gov/patents/law/exam/bilski_guidance_27jul2010.pdf
• Limits of patentability of business methods not defined by the Court
– 4 justice minority prepared to have found the method of doing business
does not qualify as a process under Section 101
Post-Bilski -Treatment of Disputes
Regarding Patent Eligibility Subject Matter
• Board of Patent Appeals and Interferences rejecting claims using
Section 101
• Ultramerical, LLC v. Hulu, LLC, Case No. 09-Cv-069180-RGK (C.D.
Cal. Aug. 13, 2010) granted a motion to dismiss under Section 101
• Prometheus v. Mayo and the Myriad case (Association for Molecular
Pathology, et al. v. USPTO) being briefed at Federal Circuit
– Appeals concerning patent-eligibility of biotechnology related product and
method claims under Section 101
Supreme Court Grant of Cert in
Microsoft v. i4i Limited Partnership
• On November 29, 2010, Court granted certiorari to
consider whether invalidity must be proved by clear and
convincing evidence
– Issues include whether clear and convincing standard applies for
prior art not considered by Examiner
– Petitioner uses rationale of KSR as support of a preponderance of
the evidence standard for invalidity
• Decision expected by late June 2011
Supreme Court Consideration of
Costco Wholesale Corp v. Omega, S.A.
• Case considered question of international exhaustion of
intellectual property rights in context of copyright law
– Does first-sale doctrine apply to imported goods manufactured
abroad?
– Costco wins: undermines whole concept of price discrimination;
companies determine best price for product given what local
market is willing to pay
• Court heard oral arguments on November 8, 2010;
decision expected sometime next year
Trend #7 – Continued Fallout of
post-Medinol era
 Trademark practice continuing to adapt to fallout
associated with the end of the Medinol era
Trademark: Fraud of the USPTO
Fraud on the USPTO after Bose:
– A finding of fraud will lie only if the applicant or registrant
knowingly makes a false, material representation with the intent to
deceive;
– The record evidence and testimony necessary to support a fraudbased challenge must be clear and convincing; and
– If an applicant or registrant does not have use of its mark in
connection with particular goods or services, it should be permitted
to “restrict” its claims to delete those goods and services rather
than risk invalidation of its entire filing.
Trademark: Fraud on the USPTO
Fallout after Bose:
– Allegations must meet Fed. R. Civ. P. 9(b) requirements –
allegations based on “information and belief” do not support claims
of fraud
– Even if some discovery conducted, subjective intent element of
fraud claim difficult to prove
– Advice of counsel can be a defense of a fraud claim
Trend #8 – Stalled Efforts of Congressional
Patent Reform
 Legislative efforts regarding patent reform have
stalled in Congress
Legislative Status of Patent Reform Bill
•
House and Senate bills entitled Patent Reform Act of 2010 pending (S. 515 /
H.R. 1260)
– Very similar to the Reform Acts of ’05, ’07, and ’09
– 2010 version described as a bipartisan effort that is the product of more than five
years of consideration
– Has been recommended to be considered by Senate as a whole, but some
commentators have viewed as losing steam
– No major action since March 2010 when the 2010 version of the bill was
announced
•
Important provisions include:
– First-to-file system
– False marking: propose to eliminate the right of “any person” to file such a claim;
competitive injury
– Damages: some commentators view as no longer as significant as previous
versions, better situation for accused infringers, but it does not necessarily limit
damage awards
– Trial: splitting trial into segments, invalidity, infringement, damages, willfulness
– Willful infringement
– Post-grant review (cancellation-type proceedings)
– Changes to patent venue statute
Trend #9 – Availability of Insurance Coverage
for Certain Acts of Patent Infringement
 Insurance coverage under company’s Comprehensive
General Liability Insurance policy may be available for
certain patent infringement damages
Potential Alternative Method to Cover
Damages Awards
• Hyundai Motor America v. National Union Fire Insurance
Company of Pittsburgh, 600 F.3d 1092 (9th Cir. 2010)
found that third party patent infringement claims
constituted allegations of “misappropriation of advertising
ideas” for purposes of the insurance policy
– Patent owner specifically alleged violation of a method patent
involving advertising ideas
Trend #10 – Reexamination Requests and
Proceedings Continue to Increase
 Reexamination increasingly popular option to
assess patent validity
Reexamination Requests Filed
(FY2000 – FY 2010)
800
700
600
Ex parte
Inter partes
500
400
300
200
100
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: United States Patent and Trademark Office website
Fiscal Year is measured from October 1 to September 30.
Patent Reexamination
• In calendar year of 2009, 31% of requests for
reexamination were filed by patent owners and 69% by
third parties
• One-fourth of the patents for which reexamination was
being requested were known to be involved in litigation
– Does not include reexamined patents involved in threatened
litigation
Patent Reexamination Statistics (FY 2010)
Ex parte
Inter partes
Requests filed
780
281
Requests granted
92%
96%
Average pendency
25.5 months
36.1 months
All claims confirmed*
23%
11%
All claims canceled*
12%
47%
Some claim changes*
65%
42%
Source: United States Patent and Trademark Office website
* Based on the total reexamination certificates issued--for Ex parte: 7782; for Inter partes: 192
Inter Partes Patent Reexamination
• Inter partes reexamination permits a third party requestor
to play a more active role throughout the entire process
• In return, the third party is estopped
• Third party requestor is more motivated than the examiner
Practical Tip
Closely consider inter partes reexamination as a strategy to
determine patent validity.
Questions?
Thank You!
Steve Gardner
sgardner@kilpatricktownsend.com