Patent Law Practice Center

Patent Litigation Settlement Suggests Both Parties Just Gave Up

On July 18, 2013, Complete Genomics, Inc., which is a wholly-owned subsidiary of BGI-Shenzhen (“BGI”), announced that it entered into a settlement agreement with Illumina, Inc. under which Illumina will dismiss with prejudice both lawsuits it had brought against Complete:  Illumina, Inc. and Solexa, Inc. v. Complete Genomics, Inc., Case No. 10-cv-05542 EDL (N.D. Cal.); and Illumina, Inc. and Illumina Cambridge Ltd. v. Complete Genomics, Inc., Case No. 12-cv-01465 BEN BGS (S.D. Cal).  The agreement is reciprocal, so Complete will likewise dismiss with prejudice all counterclaims against Illumina.

No payment is being made by either party to the other, which is not particularly unusual. What makes this story interesting is that the parties also announced that no licenses are being granted by either party to the other. Typically, in patent litigation, you will see either a payment going in one direction or some kind of cross-license.  Thus, it would seem that the parties simply decided that they would each be better off simply giving up on the case and moving in separate directions.

It is a bit unusual to see both parties walk away empty-handed, but with the cost of patent litigation and the reality that patent litigation stalls forward movement with respect to research and development, perhaps it is not shocking.

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What is Causing the Rise in Patent Infringement Litigation?

Over the past week or so, there have been a series of articles on IPWatchdog.com that have taken a look at the rise of patent litigation beginning in about 2009, but really with an alarming growth in the number of patent infringement lawsuits brought in 2012. The first article in what is now a trilogy (and likely will be more) is The Rise of Patent Litigation in America: 1980 to 2012. The chart below sets the table.

But why would there be such an enormous growth in patent litigation over the past few years, and a rise of more than 25% between FY 2011 and FY 2012?

The rise in the number of patents issued certainly has something to do with this, but probably less than you might expect. The number of patents issued has been rising for decades, and would likely account for the growth in the number of patent infringement lawsuits between 1980 and 2008, given that the slope of the upward trajectory roughly matches in both the above and below graphs.

Ron Katznelson published his thoughts on the matter, suggesting that the American Invents Act is the major cause for the rise in patent infringement lawsuits. Katznelson cites the fact that, in FY 2009, the typical patent enforced via litigation was between 1 to 5 years old, but in FY 2012, the typical patent enforced was less than 1 year old. First, he points out that the AIA makes it harder to bring lawsuits with multiple defendants (i.e., the joinder provisions). Second, the AIA also provides that, if a patentee files suit for infringement within 3 months of the patent issuance, the court may not stay a motion for preliminary injunction on the basis of a post-grant review.

Additionally, pursuant to 37 CFR 42.101, an inter partes review cannot be filed more than one year after the date on which a defendant is served with a complaint alleging infringement of the patent. So a quick filing starts the 1-year inter partes review countdown. I wonder how much that influences the decision as well?

A new study by Professor Robin Feldman at UC Hastings Law School also finds that 58% of new patent infringement lawsuits are brought by patent monetizers. See Patent Monetization Entities Filed 58% of Lawsuits in 2012.

In his article, Katznelson questions whether the rise of patent litigation can be attributed to patent monetizers, although not directly challenging Professor Feldman. He points out that “NPE’s mostly acquire older patents,” which to me seems true. If Katznelson is correct, and more than 14% of patent litigations filed in FY 2012 related to patents less than 1 year old, the increase in patent litigation doesn’t seem tied to monetizers, who in many cases partner with the original innovators, as does Acacia Research.

What this suggests is that there is still a lot to understand and anyone jumping to the conclusion that the patent system is broken as a result of the rise in patent litigation is doing so without all the information and hardly a sense of the complicated structure of the overall patent system. It seems the incentives Congress has interjected into the Patent Act thanks to the AIA virtually ensured a rise in patent litigation, thus the system is not broken. It is working exactly as it was designed to work.

USPTO Seeks Comments on Patent Small Claims Proceedings

By: Gene Quinn (IPWatchdog.com)

The United States Patent and Trademark Office (USPTO) is seeking comments regarding whether the United States government should develop a small claims mechanism for patent enforcement. The USPTO is interested in receiving comments from the public regarding whether there is both a need and a desire for this type of proceeding, in what circumstances such a small claims proceeding would be needed (if any), and what features any adopted small claims proceeding should include.

The Federal Register Notice explains that the USPTO’s interest in examining the possibility of adopting a patent small claims procedure relates to recent discussions the agency has had with Federal judges, private practitioners and various stakeholder groups and bar associations.

Specifically, the USPTO is interested in receiving comments directed to what should be the core characteristics of a patent small claims proceeding, if any. The USPTO is interested in comments on matters relating to appropriate subject matter jurisdiction, venue, case management, appellate review, and available remedies. Stating what should otherwise be obvious, the Federal Register Notice also explains that if a small claims proceeding is adopted, it must conform to the requirements of the U.S. Constitution. The USPTO specifically cites the Seventh Amendment as an illustrative example. Thus, to be seriously helpful, any comments provided should be mindful of the fact that the Constitution does have provisions relative to trials that cannot be ignored.

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Best of the 6th Annual Patent Law Institute

We here at the Practising Law Institute are pretty excited at how this past week’s 6th Annual Patent Law Institute exceeded expectations in the caliber and frankness of the featured panelists. The panels ranged from patent prosecution and litigation, to strategic and transactional discussions, to the ultimate in panels: the judges’ panel where federal & district court judges discussed the most relevant issues facing their courts along with some of the top patent attorneys in the country. If you missed this amazing institute, you’re not out of luck! The Patent Law Institute will have a second run in San Francisco, California from March 19-20, 2012, and registration is still open. Until then, here is a list of highlights, a best of the best if you will, from select panels throughout the Patent Law Institute. (more…)

America Invents Act: How the New Law Impacts Your Clients and Your Patent Practice, Part 2

On September   26, 2011, I attended PLI’s program on the America Invents Act via webcast.  For those of you who were lucky enough to attend it, I’m sure you would agree  that the panel of experts delivered an extremely informative and concise program.  As I listened to each speaker deliver his/her presentation, it confirmed that the AIA is a major overhaul of the U.S. patent law.  It’s going to take quite some time for the patent community to really get a handle on all the nuances of the legislation.  With that being said, the program’s esteemed panel did an excellent job breaking down the various provisions in AIA and helping to make sense of  how it pertains to your patent practice.  According to Gene Quinn, of IPWatchdog and Patent Center Contributor, PLI is considering reprising the presentation for an audience at PLI’s New York City location. Keep you posted.

In a previous post, I highlighted the key points from Robert A. Armitage’s, of Eli Lilly and Company, presentation entitled ”A New 102: Reform, Not Recodification”.  Here are highlights from Janet Gongola’s, Patent Reform Coordinator at the USPTO, presentation entitled “USPTO Implementation of the America Invents Act”.

Challenges of Implementation:

1. Numerous provisions to implement simultaneously – need to ensure that regulations and/or guidance is complementary and not at odds
2. Short time periods – date of enactment, 12 months, 18 months
3. Cooridantion required among various USPTO business units as well as other governmental entities: Patents, Board of Patent Appeals and Interferences, Finance
4. Operational matters, for example, IT Updates, training, hiring personnel

Group 1 Rulemakings and Other Actions (60-Day and Under Effective Dates) (more…)