A Florida jury recently awarded $115 million to former professional wrestler turned reality TV star Hulk Hogan. As you might expect, Gawker immediately announced they would appeal. Unfortunately for Gawker, thanks to Florida law, they could be required to post a bond of up to $50 million for the privilege of appealing this decision. Posting a bond that large, Gawker argues, would imperil their ability to defend themselves and mount an appeal. Indeed, this verdict could destroy Gawker altogether.
Without getting into the substance of the Hogan vs. Gawker lawsuit, the issue of posting bonds to appeal is quite relevant in the ongoing debate over patent reform. While the philosophy behind a bond requirement makes some sense, in practice there are serious issues with prohibiting a party from appealing a decision unless they can post a ridiculously expensive bond.
The issue of bonds has been an important matter for innovators. The bond requirement has been promoted by Senator Orrin Hatch (R-UT), for example, as a way to curb abusive patent litigation by forcing those who have lost to reasonably assure the victorious party that the losing party can cover any resulting losses to the appellee before they can appeal. VCs, universities and others object to the bond requirement and related measures that would enable defendants to get “real parties in interest” to shift fees, arguing that the real motivation is simply to make it financially impossible to ever assert a patent in the first place.
On Monday, March 21, 2016, the United States Supreme Court agreed to hear the matter of Samsung Electronics v. Apple, Inc., a dispute between two giant technology companies that at its core relates to how much Samsung owes Apple for infringing certain design patents.
So far, these two technology giants have shown little interest in playing nice. A jury found that Samsung infringed Apple design patents, Apple utility patents and also diluted Apple’s trade dresses. The infringed design patents are U.S. Design Patent Nos. D618,677 (“D’677 patent”), D593,087 (“D’087 patent”), and D604,305 (“D’305 patent”), which claim certain design elements embodied in Apple’s iPhone. The infringed utility patents are U.S. Patent Nos. 7,469,381 (“’381 patent”), 7,844,915 (“’915 patent”), and 7,864,163 (“’163 patent”), which claim certain features in the iPhone’s user interface. The diluted trade dresses are Trademark Registration No. 3,470,983 (“’983 trade dress”) and an unregistered trade dress defined in terms of certain elements in the configuration of the iPhone.
On January 29, 2016, the United States Court of Appeals issued a decision in AKZO Nobel Coatings, Inc. v. Dow Chemical Company, relating to an appeal from the United States District Court for the District of Delaware.
Akzo appealed from the district court’s granting of summary judgment that Dow did not infringe the claims of U.S. Patent 6,767,956, either literally or under the doctrine of equivalents. Dow cross-appealed from the court’s conclusion that the claims of the ’956 patent are not indefinite.
Claim 1 of the ‘956 patent was deemed representative and reads as follows:
1. A process for producing a dispersion of a polymer in an aqueous medium in which the polymer is dispersed in an aqueous medium in an extruder at a temperature above 100° C. in an extruder having an outlet
wherein the pressure in the extruder is maintained above atmospheric so that the aqueous medium does not boil characterized by maintaining the pressure above atmospheric for the extruder at the outlet with a pressurized collection vessel and
wherein aqueous dispersion from the extruder has at least 25% by weight of the aqueous medium where the aqueous medium has less than 40% by weight of organic solvent and
wherein the aqueous dispersion enters the outlet and pressurized collection vessel at a pressure above atmospheric so that the aqueous medium does not boil and is subjected to the action of a cooling zone to lower the temperature of the aqueous dispersion to below 100° C. to have an aqueous dispersion with a viscosity below 10 Pa.s.
On Tuesday, February 23, 2016, the United States Supreme Court will hear oral arguments in Halo Electronics, Inc. v. Pulse Electronics, Inc. (14-1513) and Stryker Corporation v. Zimmer, Inc. (14-1520), which have been consolidated for appeal. These two cases will force the Court to dive into one of the most thorny patent litigation issues – the issue of enhanced damages for willful patent infringement.
The statute in question says very little that is relevant, merely saying that the district court judge “may increase the damages up to three times the amount found or assessed.” 35 U.S.C. § 284. Simple and straightforward enough, but over the years the United States Court of Appeals for the Federal Circuit has issued rulings that make it virtually impossible for a victorious patent owner to ever receive enhanced damages. The rigid structure of the enhanced damages test has effectively removed the permissive and discretionary language of the statute, which just says that the district court judge “may increase the damages.”
In the Supreme Court’s recent decisions in Highmark Inc. v. Allcare Health Management Systems, Inc., 134 S. Ct. 1744 (2014) and Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) the Court, interpreting 35 U.S.C. § 285, found that there was no textual support in the statute to impose an onerous, rigid test for the awarding of attorneys’ fees to a prevailing party in a patent infringement lawsuit. Most notably, the Supreme Court explained to the Federal Circuit that they misinterpreted a key ruling of the Supreme Court when they created the test that would result in attorneys’ fees never being award. That same exact misinterpretation is at the heart of Federal Circuit case law relating to the awarding of enhanced damages to a victorious patent owner.
A patent is an exclusive right. This means that the owner of a patent can prevent others from engaging in activities that are covered by an issued patent. But as is true with any right, a patent is only worth something if the owner is willing to take action to preserve the rights and litigate against those who are treading on the rights granted. In the United States, that means litigation in federal district court, which can easily cost millions of dollars.
Today, given the climate within the industry, being willing to take action when infringement is suspected is only the first hurdle. Yes, the decision to undertake litigation is a difficult one regardless of whether it is made by a company or an individual. Attention is diverted from other endeavors and opportunities, and there is a very real financial cost associated with litigating a dispute. Litigation is not free.