Patent Infringement Suit Research Articles

William W. Cooper: Innovator, Fighter, and Scholar

W illiam Wager Cooper was born on July 23, 1914 in Birmingham, Alabama, where his father was a bookkeeper and later a distributor for Anheuser-Busch. Bill’s family moved to Chicago when he was three years old. His father owned a chain of gasoline stations, but lost them during the Great Depression. With his father in ill health and no family revenue, Bill left high school after his sophomore year to work at whatever jobs he could find. These included spotting pins in bowling alleys, caddying at golf courses, and even professional boxing, where his record was 58 wins, 3 losses, and 2 draws. While hitchhiking to the golf course one day, Bill met Eric L. Kohler, a principal with Arthur Andersen & Co., who became his life-long mentor. Kohler loaned him money to enroll as a non-degree student at The University of Chicago. Bill liked the academic atmosphere and took the college entrance examinations, intending to become a physical chemist. During his studies, Kohler asked him to review the mathematics used in a patent infringement suit. After Cooper found errors in the mathematics used by the plaintiff’s engineers, Andersen hired him part time during the school year and full time in the summer. This awakened Cooper’s interest in accounting, and he switched his major to economics. While at Chicago, Bill became good friends with a political science student, Herbert A. Simon. Cooper graduated Phi Beta Kappa with his A.B. in 1938.

An Overview of Famotidine Polymorphs: Solid-State Characteristics, Thermodynamics, Polymorphic Transformation and Quality Control

Crystal polymorphism of pharmaceuticals has well-known profound effects on the physical, chemical, and pharmaceutical properties of drugs, which can result in changes in the solubility, stability, dissolution, bioavailability, and efficacy of drugs. In this review article, famotidine (FAM), which has a well-known trade name of Pepcid®, was selected as a model drug. Although FAM has three polymorphs (forms A, B and C), forms A and B have been commonly discussed. The active pharmaceutical ingredient (API) in the commercial version of FAM is the metastable form B. FAM has been a concern of FDA because of the physical properties, solubilities, bioavailabilities, or bioequivalencies of the different polymorphic forms. In addition, a patent infringement suit of FAM polymorph had been made sound legal arguments in the pharmaceutical market. We review the solid-state characteristics, thermodynamics, polymorphic transformation, and quality control of FAM in drug products. In particular, pharmaceutical processes, such as grinding, compression, and heating temperature have a significant effect on the polymorphic transformation of FAM. Moreover, environmental humidity and residual water content should be well controlled to prevent polymorphic transformation of FAM during pharmaceutical processing. Several thermal and spectroscopic analytical techniques used for qualitative and quantitative determinations of polymorphic transformation of FAM after different treatments or quality control of FAM in the commercial tablets before and after the expiration dates have been discussed.

The Supreme Court in Virgin v Zodiac: whither the fat lady?

Gary Moss is a Solicitor and the Head of EIP Legal, London. In its decision in Virgin Atlantic Airways Limited v Zodiac Seats (UK) Limited the Supreme Court overturned 100 years of jurisprudence and held that an unsuccessful defendant in a patent action could nevertheless raise a subsequent finding of invalidity of the patent in suit as a defence in the inquiry as to damages arising from the first decision. This article examines the possible consequences of this decision and how it might affect the conduct of patent actions going forward, in particular whether the courts will continue to hear patent infringement suits while an opposition is pending in the European Patent Office. The author argues that while the decision has been welcomed in some quarters, potentially the decision raises just as many problems as it solves.

"Patent Litigation as Real Option Exercise in a Highly Competitive, Dynamic Market"

What explains the alarming uptick in the number of patent infringement suits filed by corporate actors? While there may be numerous determinants of patent litigation activity, we propose one possible explanation using two theoretical lenses: real options and competitive dynamics. According to these theoretical frameworks, incumbent firms acquire patents as real options for their potential strategic value under uncertainty, which is the market competitive dynamics. The timing of the option strike depends on the resolution of uncertainty, defined as a competitor's increase in market share. As a reaction to this competitive action, incumbent firms may choose to exercise their options by filing patent infringement suits against their competitors. This phenomenon is observed especially in industry settings with strong appropriability and weak complementary asset value, where firms are more prone to engage in a competitive, rather than cooperative behavior. We empirically test the hypotheses with data from the smartphone industry using panel and rare events logistic regression analysis.

Patent Wars: How the Government Can Best Address Anticompetitive Patent Accumulation by Updating the Horizontal Merger Guidelines

On February 13, 2012, the European Commission approved Google’s acquisition of Motorola Mobility. On the same date, the Department of Justice (DOJ) announced it was closing investigations of Google’s acquisition of Motorola and acquisitions made by Microsoft, Apple and Research in Motion. Many in the press have reported that Google’s acquisition of Motorola is a defensive measure against a wave of attacks against Google’s Android operating system. Google itself has publicly stated that Android was under a systematic legal attack by Microsoft, Apple and other companies and that recent patent acquisitions by these companies posed a continuing threat. Not surprisingly, Google paid a 73% premium for Motorola, even though the average premium for acquisitions in the wireless equipment industry has been 32% in the past five years. Patents are becoming an ever increasing part of the battle for the smartphone and tablet market. A smartphone produced today might involve as many as 250,000 patent claims. Many of these patents can be overlapping and overbroad. Patent infringement suits drive up legal costs for competitors and result in new licensing fees that increase per unit costs. License holders charge different licensing fees to some competitors versus others in order to get a competitive advantage. Patent pools, where competitors pool together patents, can lead to collusive and other anticompetitive behavior. The types of activities that antitrust law is meant to protect against are already happening in today’s patent war. The decision of the DOJ to close its investigations of patent acquisitions postpones the greater issue of how patent law and antitrust law will interact in the future. By not addressing this conflict, the DOJ is allowing patent law to carve out large exceptions to antitrust law that will hurt competition. This note seeks to make the case that the DOJ and FTC should become proactive by addressing patent acquisitions in the Horizontal Merger Guidelines.

The Noerr-Pennington Problem: How Cartels Enforced Through Patent Litigation Can Escape Antitrust Claims

An antitrust exam starts with the following problem: president of A calls the president of B and says, 'Unless you agree to keep prices at $10 a widget we will raise your costs to the point you will no longer be able to stay in business.' If you were a student sitting for the exam you would think this is the easiest question in the world. A is attempting to create a cartel engaging in a conspiracy to restrain trade with an enforcement mechanism. The question goes on: Company B refuses to participate in the price fixing scheme and A makes good on its promise to raise costs. B cannot compete due to its raised costs and subsequently goes out of business. Does B have an antitrust claim against A? Again this sounds simple, B has sustained an injury that antitrust law is meant to protect against. B should have a claim. However, what if the professor adds in one fact: Company A increases the costs of B through patent infringement suits. The Noerr-Pennington Doctrine prevents legal costs from being the basis of an antitrust injury except in certain narrow cases. Without an injury B will even have the standing to make a claim.Unfortunately, this is just a hypo on an antitrust law exam. The above scenario has already happened. In 2007 Steve Jobs, the CEO of Apple, called Ed Colligan, the CEO of Palm, and threatened Palm with patent litigation unless Colligan agreed to make unsolicited calls to Apple employees in order to make job offers. This agreement was an obvious agreement to suppress employee wages. Colligan refused to enter into the agreement in an email to Jobs, citing the fact that the agreement was not only wrong, but likely illegal. In response, Jobs told Colligan I'm sure you realize the asymmetry in the financial resources of our respective companies and to take a look at our patent portfolio before you make a final decision here. This no-poaching agreement was stopped by the FTC and is now the subject of a private antitrust suit by former software engineers who worked at various tech firms that had made this agreement. The question this paper seeks to ask, however, is what legal protections would Palm have had in this situation if Apple (and perhaps other tech companies) made good on its threats. The paper will first examine the current state of the law. Then the paper will analyze how the law applies to the above scenario. Finally the paper will offer potential solutions to Palm's lack of legal protections from Apple.

Anticompetitive Patent Settlements and the Supreme Court's Actavis Decision

In FTC v. Actavis the Supreme Court held that settlement of a patent infringement suit in which the patentee of a branded pharmaceutical drug pays a generic infringer to stay out of the market may be illegal under the antitrust laws. Justice Breyer's majority opinion was surprisingly broad, in two critical senses. First, he spoke with a generality that reached far the pharmaceutical generic drug disputes that have provoked numerous pay-for-delay settlements. Second was the aggressive approach that the Court chose. The obvious alternatives were the rule that prevailed in most Circuits, that any settlement is immune from antitrust attack if it is facially within the of the patent. Under this approach the court may not second guess the settlement by inquiring into the validity of the patent; the settlement itself shields this query from the court. A second alternative concludes that a very large settlement payment is a sign that something is wrong with the patent, inviting the court to look more closely at the underlying patent to determine whether the settlement is really a good faith attempt to manage litigation and business risk. A third approach is that a large settlement exclusion payment disproportionate to litigation risk can be unlawful under antitrust's rule of reason, without inquiry into whether the patent is actually invalid, and even if the settlement agreement does not go beyond the scope of the patent's nominal coverage. Finally, the court might apply a quick look, or truncated, antitrust analysis in which the plaintiff can enjoy presumptions about market power or anticompetitive effect. The Supreme Court chose the third, or rule of reason, option, but it made clear that the plaintiff need not make a long form rule of reason showing and suggested important shortcuts.Also significant is that both sides, without dissent agreed that consumer welfare should be the goal of antitrust law.Payments whose size correlates with risk are essential to entrepreneurial decision making, but entrepreneurial risk is usually private in the sense that the firm risks the resources of its own shareholders. In the pharmaceutical pay-for-delay setting, however, what is being placed at risk is both the investment of the pioneer and the welfare of consumers, interests that pull in opposite directions. Consumers represent an important externality. They are not participants in this dispute, but they stand to lose the benefits of competition that would otherwise have occurred. Traditional settlements reflect the risk of patent invalidity in their terms. For example, as a patent is perceived by the parties to be weaker, settlement royalties rates will be lower. The Hatch Waxman Act uniquely creates an incentive for the parties to take all risk out of the patent because for the life of the settlement no third party may challenge it. Even a very weak patent can obtain both exclusion against third parties and profits equal to the full cartel value of the patented product.While the Court did not discuss private consumer challenges, its substantial revision of the law applies equally to private actions and it is reasonable to expect that several will emerge. Purchasers seeking antitrust overcharge damages from an anticompetitive pay-for-delay settlement should be able to proceed without proving patent invalidity, although they would be subject to the same rule-of-reason constraints that the Court created for the FTC.Finally, the breadth of the Activis opinion makes it relevant for many situations outside of the Hatch-Waxman context. For example, the Court's dicta severely limited its 1926 GE decision permitting price fixing among a patent and its licensees, and implicitly overruled decisions such as Bement, which permitted product price fixing among the members of a patent pool. A central question was whether the Patent Act, either explicitly or by reasonable implication, authorized the challenged conduct. If the answer is no, ordinary antitrust analysis can proceed.

The Need for a Patent-Centric Standard of Antitrust Review to Evaluate Reverse Payment Settlements

Reverse payment settlements have ignited a firestorm debate among all affected parties: consumer groups, brand-name pharmaceutical companies, generic manufacturers, pharmaceutical wholesalers and retailers, lawmakers, executive agencies, and the federal courts. The Federal Trade Commission (“FTC”) has waged a decade-long battle against such private settlements of pharmaceutical patent litigation as illegal market-sharing agreements, with skirmishes among the circuits trending in favor of the settling parties until recently. The Third Circuit’s recent decision in In re K-Dur Antitrust Litigation unsettled this trend, and the Supreme Court granted the FTC’s petition for a writ of certiorari in a separate case on the issue on December 7, 2012.A reverse payment settlement is an agreement ending a pharmaceutical patent infringement suit under which a putative patent holder agrees to compensate an alleged infringer, typically a generic firm, to settle a patent infringement case. In exchange, the alleged infringer agrees not to challenge the patent holder’s patent or sell a generic version of the drug for a stated term. Because the payment flows from the plaintiff to the defendant, it has been called a “reverse” payment.This Note argues that any standard of antitrust review for reverse payment settlements must involve an evaluation of the patent’s strength at the time the patent holder and generic firm enter into a settlement. The Court of Appeals for the Federal Circuit is the court of competent jurisdiction to review a district court’s evaluation of a patent’s strength. Part I reviews reverse payment settlements generally and the statutory schemes that promote their emergence. Part II presents three approaches the circuit courts have adopted to review reverse payment settlements: per se illegality, a rebuttable presumption of illegality, and the scope of the patent test. Part III argues that any standard of antitrust scrutiny must consider the patent’s strength at the time of the settlement — an approach no circuit has yet adopted — and that the Federal Circuit is the proper appellate court to review patent strength.

The Vonage Trilogy: A Case Study in Patent Bullyingg

This Article presents an in-depth case study of a series of infringement suits filed by “patent bullies.” Unlike the oft-discussed “patent trolls” — which typically sell no products or services and perform no R & D — patent bullies are large, established operating companies that threaten or institute costly patent infringement actions of dubious merit against smaller companies, usually in order to suppress competition or garner licensing fees. In an ideal world of high-quality patents and optimal patent licensing and litigation, infringement suits by aggressive incumbents would have a cleansing, almost Darwinian effect. Yet, defects and distortions in patent examination, licensing, and litigation — the very problems that are raised constantly in the context of patent trolls — generally apply with equal and, often, greater force to patent bullies. Nonetheless, patent bullies have scarcely been discussed in the academic literature or popular press, especially in recent years.More specifically, this Article examines three patent infringement suits filed by incumbent telecommunications carriers — Sprint, Verizon, and AT&T — against Vonage, then an early-stage company providing consumer telephone services over the Internet. Based on a detailed analysis of the patents-at-issue, prior art, court documents, and news accounts, it shows that the incumbents were able to exploit defects in the patent system in order to prevent disruptive technologies from competing with their outmoded products and services. Because startups like Vonage typically lack the resources to vigorously defend against even weak patent suits, patent bullying can result in severe anti-competitive effects. The incumbents in the Vonage suits achieved their intended result — drastically reducing Vonage’s stock price, severely weakening its position in the market, and placing it at the brink of insolvency. This case study demonstrates that further theoretical and empirical study is warranted to assess the full extent of the patent bullying problem.

Federal Circuit joins list of appellate courts finding reverse payment patent settlements valid

In the latest decision in a series of antitrust cases challenging reverse payment settlements between brand-name and generic pharmaceutical companies, the Court of Appeals for the Federal Circuit concurred with the Second and Eleventh Circuits, holding that reverse payment settlements do not violate antitrust laws so long as the underlying patent was not procured through fraud, the related patent infringement suit was not a sham, and the anti-competitive effects of the settlement agreements are not outside the exclusionary zone of the patent.

Bad faith and false representation of infringement

The Ninth Circuit now requires that a plaintiff establish bad faith on the part of a patentee or its agents in order to bring Lanham Act or state law claims premised on allegedly false representations of patent infringement made in an earlier unsuccessful patent infringement suit.

Modeling patent legal value by Extension Neural Network

This study aimed at the basis of patent law and proposed a revolutionary valuation model for the monetary legal value of patents. The damage award of a patent infringement lawsuit was deemed to be the legal value of a patent. Sixty-five effective samples were extracted from 4289 patent related lawsuits retrieved in US district courts of Delaware, California and Texas. Seventeen quantitative patent indicators for describing dimensions of patents were summarized. The Extension Neural Network incorporated with the factor analysis was applied to construct the valuation model of patent indicators and damage awards. The proposed valuation model was validated to have the predictive power by error analysis and was accommodated to valuate the possible damage award or to negotiate the settlement fee in disputing patent infringement suits. It also contributed to patent transaction deal, patent licensing, hypothecation of intangible assets, and shareholding by patent-based technologies, etc.

Introduction and overview of the symposium issue: innovations and intellectual property values

The eight papers included in this symposium issue are revised versions of presentations made at the AEA (‘‘Association d’Econometrie Appliquee’’) Conference on ‘‘Innovations and Intellectual Property Values’’ that took place in Paris on October 20–21, 2005. The eight papers have one thing in common. They all use micro data on intangibles or technology indicators, but of a very different kind (licensing-out contracts, royalty payments, innovation activities, patent renewal fees, patent citations, settlements in infringement suits, and R&D spillovers), showing the wide scope of the economics of innovation and intellectual property values and the richness of the data that are used in empirical studies in this area. Five papers deal directly with the evaluation or the effects of intellectual property rights. Two papers, by Sadao Nagaoka and by Ryuhei Wakasugi and Banri Ito, examine whether the strength of intellectual property rights ease technology transfer, in particular from developed to developing countries. Two papers, by Charlotta Gronqvist and by Emanuele Bacchiocchi and Fabio Montobbio, estimate the value of patents. The former estimates the value and the rate of decay in the revenues of patents using patent renewal data. The latter estimates the value of patents using patent citation data. One paper, by Katrin Cremers, examines one aspect of patent infringement suits, namely the determinants of the chances of reaching an early settlement before a final judgement is rendered by the patent courts. Four papers deal with technology transfer in a broad sense. Three papers estimate the extent and the channels of knowledge spillovers across firms (spatial proximity or technological proximity in Luigi Aldieri and Michele Cincera, mobility of inventors in Karin Hoisl, and patent citations in Emanuele Bacchiocchi and Fabio Montobbio). One paper, by Bettina Peters, evaluates the temporal dimension of knowledge transmission, namely the persistence of innovation within a firm. All papers have policy implications. The issue of strength of patent protection is of central importance to the ultimate success of the TRIPS (Trade Related Intellectual Property Rights) agreements in the present free trade negotiations. As Charlotta Gronqvist mentions, her results have at least three implications for policy making. First, because of

Settlement during patent litigation trials. An empirical analysis for Germany

Settlement in patent litigation suits is a frequently observed phenomenon. Even though parties have the opportunity of achieving an agreement at the first negotiation round they often reach one during trial. Game theoretic models suggest that additional or differently evaluated information may trigger settlement after a first bargaining round. This paper investigates settlement decisions in patent infringement suits for Germany. Based on a data set of 824 patents involved in infringement suits in Germany during 1993 and 1995 I find legal differences between the District Courts to have a significant impact on the settlement rates during trial. The results also reveal it is only in later stages of the trial that invalidity suits as a means of defense have a positive impact on the probability of settlement. Prior opposition to the litigated patent, however, always has a negative impact on settlement probability. Contrary to results for the US the adoption of the prevailing or not at the first instance has no effect on the settlement decision at the second instance.

Millipore resolves patent infringement suit

In the USA, Millipore Corporation reports that it has successfully resolved the patent infringement suit against Amesil Inc.

The U.S. patent that reached around the world (patent infringement)

The article presents the case filed before the Court of Appeals for the Federal Circuit (CAFC) in the recent case of Union Carbide v. Shell regarding US patent infringement by activities in a foreign country. The case involved a patented method for making the industrial chemical ethylene oxide using silver-based catalysts. The seven-year patent infringement suit that ensued saw the victory of Union Carbide after two jury trials. However, the trial judge had said that Union Carbide was not entitled to any damages for Shell's sales of catalysts to its foreign customers. Union Carbide felt that such damages were proper because the only use for Shell's catalysts was to practice Union Carbide's patented method. Both at trial and on appeal, Union Carbide based its claim on a section of the Patent Laws [Section 271(f)], which Congress had enacted in 1984 in response to another court fight about offshore infringement. This section, in relevant part, i.e., 271(f)(2), provides that it is an act of infringement to supply "any component of a patented invention" from the United States with the intent that the component will be employed (combined) outside the United States in a manner that would infringe if done in the United States, if the component is 1) especially adapted for use in the invention and 2) not a staple article or commodity of commerce suitable for a substantial noninfringing use. Before the Union Carbide case, Section 271(f)(2) had been limited to apparatus and composition patents. Union Carbide wanted to extend its scope to method patents. The Union Carbide case is another example of the shrinking size of the world. Courts respond to changing realities, and with the global marketplace and outsourcing, one can expect that offshore infringement will become an increasingly common issue faced by patent owners and the infringers they sue.

Amgen v. Hoechst Marion Roussel: The Written Description Standard in Biotechnology Patents

ON JANUARY 6, 2003, the Federal Circuit issued a ruling in Amgen Inc. v. Hoechst Marion Roussel, Inc., a biotechnology patent infringement suit that has been closely watched since it was first filed in 1997 (314 F.3d 1313 (Fed Cir. 2003); see 22 BLR 122 April 2003). Amgen, both the owner of numerous patents directed to the production of erythropoietin (Epo) and the manufacturer of Epogen, a highly successful commercial product covered by those patents, asserted five of its Eporelated patents against Hoechst and Transkaryotic Therapies, Inc. The district court, following a 4month trial, found each of the asserted patents enforceable. On appeal, the Court of Appeals for the Federal Circuit affirmed in part, vacated in part, and remanded the case for further proceedings. In addition to making rulings on issues of claim construction and enablement, the CAFC ruled on the written description requirement under 35 USC §112, ¶1, elaborating on the standards set out in Regents of the University of California v. Eli Lilly and Co., 119 F.3d 1559 (Fed. Cir. 1997) and Enzo Biochem, Inc. v. Gen-Probe, Inc., 296 F.3d 1316 (Fed. Cir. 2002). This article discusses the current written description standard in view of the CAFC’s ruling in Amgen. We first review the standard set forth in Eli Lilly and Enzo. We then take a look at the CAFC’s ruling on the issue in Amgen. Finally, we give some guidelines for drafting patent applications that claim genetic materials. WRITTEN DESCRIPTION REQUIREMENT ARTICULATED IN ELI LILLY AND ENZO

Willful Patent Infringement and the Right to a Jury Trial

Part II of this Comment provides a brief background of jury trials in patent infringement suits. Part III explains why the right to a jury trial on willfulness is important. Part IV shows why the right exists by examining the results of the Seventh Amendment "historical test." Part V discusses the Federal Circuit's implicit recognition of the right to a jury trial on willfulness. Accordingly, Part VI shows why the right to a jury trial on the amount of increased damages does not exist.13 Part VII presents recommendations in light of the existence and nonexistence of these rights, respectively.

Norit wins patent infringement suit against Memcor

Norit wins patent infringement suit against Memcor

Rethinking Patent Damages

Determining the appropriate monetary remedy for patent infringement has always been a complicated and confusing task, for two principal reasons. The first is that the rules courts have developed for estimating patent damages have been, all too often, both complex and contradictory. This observation continues to be true even after the creation of the United States Court of Appeals for the Federal Circuit, which since 1982 has heard all appeals in patent infringement suits. The second reason is that the proper application of even relatively simple rules to real cases can be surprisingly difficult. In recent years, courts have begun to abandon the formalism that once characterized their approach to patent damages in favor of an analysis more solidly grounded in the economics of market structure, but much work remains to be done to set the law of patent damages on a rational footing. Our goal in this article is to provide a comprehensive economic framework for analyzing and estimating patent damages in the form of either lost profits or reasonable royalties. We begin with an overview of the law of patent damages, paying particular attention to the development of legal standards for estimating lost profits and reasonable royalties over the past thirty years. As we show, the courts have been moving by fits and starts toward adopting a general tort-law framework involving the application of cause-in-fact and proximate cause doctrine, though without completely giving up the idea that the law of patent damages should remain materially different from the law of damages as applied to other torts. We then provide a rationale for a general but-for causation standard and demonstrate how this standard might apply to a variety of market arrangements. Finally, we discuss the concept of proximate cause and what it might mean in the context of patent infringement. Although our results are largely supportive of some of the legal standards the Federal Circuit has adopted over the past ten years, we argue that the court has ignored some potent counterarguments, and that these counterarguments must be resolved before one can have any confidence in the standards chosen. In reaching our results, we therefore address, though ultimately reject, arguments that patent owners should systematically recover less than the amount of their but-for loss, in order to encourage efficient infringement or to avoid anticompetitive schemes of preemptive patenting or tying.