WHERE DID WE GO WRONG? THE IMPORTANCE OF CONDUCTING PRIOR ART SEARCHES ON A REGULAR BASIS.

By Andrew Reed and James Ortega

Imagine your company has developed a great new product, and you have gone through the steps to protect your intellectual property in the product.  Now, a year down the road you are facing an accusation of infringement of a patent that you were not made aware of during the development of your product, but you would have found through even a short and straightforward prior art search performed by your patent attorney.                  

In the fast-paced development found in industry today, it is not uncommon for products to move from development to production in a matter of days or weeks, and not the months or years of previous generations.  However, this does create some issues in the realm of intellectual property, as many of these products never have even a short and straightforward prior art search conducted to find if there are any patents or patent applications that would be an issue for patentability or possible infringement.  In this article we discuss some of the basics of why companies and individuals should run not only an initial prior art search, but then also do periodic searches on their products, technology fields, and on their competitors.

What are Prior Art Searches?

Prior art searches are searches done on the subject matter (scope or technology area) of your idea or invention to discover “prior art,” that is, published documents involving that subject matter or technology field that predate your patent application.  These searches can give you a general knowledge of what others are doing or have done on the same subject matter or in the same technology area.  A prior art search can range from a patent attorney searching for a couple of hours to determine if there is anything exactly like your idea or invention, to the hiring of a professional search firm to find every relevant patent, patent applications, or publications discussing the subject matter of the idea or invention.  The level of searching is often dictated by the intellectual property strategy of the company or individual, and the cost of prior art searches varies among those levels.  If your patent is meant to be a defensive weapon, protecting against others using your idea or invention, then a short search can yield many of the best prior art references and can be supplemented at many points throughout the patent prosecution process.  However, if your patent is intended to be an offensive weapon, then a comprehensive and in-depth prior art search would likely be your best option. The reasoning behind these two options is discussed below.

The Importance of Prior Art Searches to Your Patents 

Prior art searches can be critical in both the patent preparation and prosecution phases, as well as on granted patents if there may be litigation involving such patents.  During the prosecution of a patent application, the inventors, patent attorney, and anyone involved with the application all have a duty to disclose any known material prior art to the U.S. Patent Office.  In practical terms, this means that if you as an inventor have conducted any searches, reviewed any products, or read any articles or other references that discuss the subject matter of the invention, these should be disclosed to the Patent Office.  These disclosures help to ensure that the invention does not already exist, and allow the examiner a more thorough understanding of the invention.  Additionally, if a patent attorney reviews any patents, applications or other references while preparing and developing the scope of coverage for the patent application on your invention, those references must be disclosed as well.  All of these disclosures are helpful because when your patent issues, these disclosures are printed on the face of the patent to inform any future parties what documents were reviewed during examination of the patent, or helped develop the invention or the scope of the patent claims.

Once you patent issues there comes with it a presumption of its validity.  The presumption of validity makes it more difficult to challenge your patent based on the prior art disclosed previously to the Patent Office during the patent prosecution stage, or even additional prior art that is deemed to be merely duplicative of the prior disclosed to the Patent Office.  Thus, the more relevant prior art that is provided during the patent prosecution stage, the stronger your patent will be.

Avoiding Willful Infringement 

In addition to the presumption of validity, the more material prior art that is provided during the prosecution stage of a patent application, the more likely an assertion of willful infringement can be overcome.  The prevention of a finding of willful infringement can come in two different forms.  First, a prior art search can establish if there are any patents or patent applications that cover your invention.  If any of these prior art references are of great concern, in addition to providing insight in how best to adjust the scope of your patent application to avoid such references, a non-infringement opinion can also be provided by your patent attorney if it is believe that the practice of your invention does not infringe those references.  Second, prior art searches can find patents and patent applications that are close but do not completely disclose or cover your idea.  Even prior art references that do not directly cover your idea or invention can help prevent a finding of willful infringement if your patent is issued after the Patent Office has already determined those prior art references do not cover your invention.

Freedom to Operate Searches

Another advantageous use for prior art searches is to determine the scope of the technical field in which you and your company are operating whether or not you have patents of your own.  Fundamentally, a patent grants one the right to exclude others from practicing the patented invention(s), but it does not necessarily grant one the right to practice their own invention(s).  For example, if your patented invention is an improvement over an existing, patented technology, then you may still require a patent license before conducting business within the coverage of that prior existing patent.  Thus, a prior art search may be used to identify the patented areas in a given technology field so that the risk of infringement may be reduced or eliminated.  Moreover, ongoing periodic prior art searches are also advantageous to determine if any new patent filings or granted patents now exist in areas previously free of patent protection.  By staying informed of any new patent filings in your relevant areas of technology, you can continually operate your business with a reduced risk of infringing any such patents.

Additional Uses for Prior Art Searches

Prior art searches may be conducted not only before or during prosecution of a patent application for the reasons discussed above, but also periodically even after your patent has issued.  In some cases, if prior art found during a prior art search after your patent issues raises a concern of its invalidity, a reissue application can be filed to disclose the newly found references to the Patent Office and allow an examiner to review your patent in light of these new references.  While the negative to this approach is a risk that the examiner may find the previous patent invalid because of the newly disclosed prior art, such a result could also prevent the expense associated with attempting to enforce a patent that would eventually have been found invalid.  However, if the reissue patent is granted after review of the newly discovered references, that reissue patent is now typically stronger than the original patent.

Prior art searches can also be used to identify potential infringers of your issued patent.  For example, prior art searches performed after your patent is issued can find potential infringers of your patent by identifying those trying to patent ideas that are very close to your patented idea.  These infringers or potential infringers can then be informed of your patent, which can give rise to a potential claim of willful patent infringement if they continue infringing your patent after such notification.

Prior art searches can also be utilized to determine the patent strategy of your competitors.  For example, a prior art search may show that a competitor always files patent applications in a certain country before filing international patent applications that are then eventually filed in the United States.  After discovering this strategy, a periodic prior art search of patent applications filed by the competitor in that initial country can give you an upper hand in knowing the focus of your competitor’s technology, as well as their ongoing patent strategy.

For all of the reasons discussed above, there are significant advantages for clients to have prior art searches performed before filing a patent application, during prosecution of patent applications, and even periodically after the issuing of your patent.  Moreover, prior art searches can be advantageously conducted even if you have no granted patents of your own in order to determine the scope of patent coverage in certain technology areas.  If you are interested in discussing the advantages of prior art searches or any of the other topics addressed in this article, please call or email us to see how we may be of assistance.

Cease and Desist Letters After TC Heartland—Best Practices

By Vince Allen

The Supreme Court recently reversed over 20 years of Federal Circuit precedent that allowed patent infringement suits to be filed anywhere that the court could exercise personal jurisdiction over the defendant.  So long as, for example, the infringing product was sold in the district, venue was proper there.  As a result of the liberal interpretation of the venue rules, the Eastern District of Texas became a popular forum for patent infringement cases, with more cases being filed there than any other district in the country.

Subsequently, new decisions regarding the inconvenience of a forum required the trial court to transfer the case if it was found to be clearly more convenient for the parties for the case to be heard elsewhere.  But now, after the Supreme Court’s TC Heartland decision, a patent infringement suit can only be filed against a corporate defendant either 1) where the defendant is incorporated or 2) where the defendant has a regular and established place of business and has committed acts of infringement.

The Supreme Court’s decision has resulted in a decline in filings in the Eastern District of Texas and a rise in filings in the District of Delaware where many companies are incorporated.   Motions filed in numerous cases have resulted in disputes over what is a “regular and established place of business” under the patent venue statute, and it will be some time before the specific parameters of the venue statute are defined.  But in the meantime, we know that the venue in many patent cases will be limited depending on where the defendant is doing business.

Historically, patent owners have been reluctant to send detailed cease and desist letters to alleged infringers in many cases because of fear that the infringer might file a declaratory judgment action in the venue of its choice seeking a finding of non-infringement and/or invalidity of the asserted patent.  However, this may be changing after the TC Heartland decision given that the possibilities for venue are more limited for those infringers who do not have places of business around the country.

Knowing this, the concern of a declaratory judgment action being filed in response to a cease and desist letter will be lessened in many cases, which may lead the patent owner to include more specifics about the infringement in the cease and desist letter.  The patent owner may not even have the option of choosing a forum like the Eastern District of Texas to file suit before sending the letter.  Likewise, the infringer will know this as well and is less likely to incur the expense of filing a declaratory judgment action.

Assuming that the patent owner does send more detailed allegations of infringement in its cease and desist letters, this could help the patent owner support a claim of willful infringement which provides enhanced damages in a patent infringement suit.  So when receiving such a letter, it is prudent to seek advice of counsel regarding the allegations of infringement and secure an opinion of counsel if necessary to help prevent a later finding of willful infringement.  The court in making an willfulness determination will look at the actions taken by the accused infringer to determine the subjective intent of the infringer in a willfulness determination.  By taking prompt measures to determine that the patent is not infringed and/or that it is invalid, the infringer can likely avoid a finding of willful infringement.

Who Carries the Burden in IPR—And, Does it Matter?

By Shaukat Karjeker

The Inter Partes Review (“IPR”) proceeding, part of the America Invents Act, sets up a streamlined procedure for any party (“petitioner”) to challenge the validity of the claims of an issued patent, not in a court, but in the US Patent Office, generally at a much lower cost when compared to federal court. An IPR is based on prior art patents and publications that the petitioner argues show that the claimed invention is not novel or is obvious. At the outset, in order for an IPR to be instituted, the petitioner must show a “reasonable likelihood” that it would prevail on a challenge to the validity of at least one claim of the patent. Once the petitioner meets this initial burden of proof, the inter partes “trial” of the patent claims can proceed before the Board.

During the trial phase, both petitioner and patent owner can take limited depositions and develop evidence in support of its position as to the validity or invalidity of a patent claim at issue. When validity of a patent claim is a close question, as is often the case, the outcome might turn on which party carries the burden of proof on invalidity. (The burden of proof is viewed as having two components: a burden of persuasion, and a burden of production of evidence.) Further, an outcome can also turn on whether at some point the burden shifts to the other party.

So it becomes important to identify who carries the burden as this could be outcome-determinative. How the Patent Office assigns the burdens of proof and of production might have been a significant factor in the high rates of patent claims that have been found invalid to date. The Federal Circuit has recently weighed in on the issue, and the subtle but meaningful ruling could have a significant effect in reducing the number of patent claims ruled invalid. (See In re Magnum Oil Tools Int’l, Ltd., (2016 U.S. App. LEXIS 13461, 119 U.S.P.Q.2D (BNA) 1541 (Fed. Cir. July 25, 2016).

This appeal to the Federal Circuit arose from an IPR that was decided in favor of the petitioner, and the patent owner appealed the invalidity of the claims. When the petitioner then withdrew due to a settlement with the patent owner, the Director of the Patent Office then intervened to defend the Board’s ruling of invalidity in the appeal.

The patent owner did not appeal the Board’s institution of the IPR, but instead attacked the finding of invalidity that was based on a shifting of the burden of proof to the patent owner.   The  Director countered that once an IPR was instituted, the Board was justified in shifting of the burden to the patent owner to produce evidence of patentability of the claims.  Putting aside the complexities of the factual details of the case, the legal issues boil down quite simply to:

  1. In an IPR, who has the burden of persuasion on the invalidity of a patent claim and what is the standard?
  2. In an IPR, does the burden of persuasion of invalidity shift to the patent owner when a petitioner has made a prima facie case of invalidity?
  3. In and IPR, who has the burden of production of evidence, and under what conditions does the burden shift to the other party?

As to points (1) and (2), the court ruled that the petitioner has the burden of persuasion that the patent claim is invalid, by “a preponderance of the evidence.”  Moreover, that burden of persuasion never shifts to the patent owner.  It is interesting that in dicta, the court analogized IPRs to patent litigation, where burden shifting does not take place.  In so doing, it distinguished IPR proceedings from patent application prosecution where burden shifting may take place. The court reasoned that in a prosecution context, once the Examiner had made a prima facie case of unpatentability, it is merely a “procedural device” to shift the “burden of production” of evidence supporting patentability to the applicant.  (The Patent Office conceded these points in its Briefs.)

As to point (3), the court ruled that the Patent Office incorrectly asserted that the burden of production shifted to the patent owner once the Board had determined that an IPR should be instituted.  In other words, the Board’s practice of shifting the burden of production of evidence to support patentability to the patent owner after it had found a “reasonable likelihood of success on the merits” in order to institute the IPR, was error. Instead, the court ruled that, because the petitioner has the burden to prove invalidity, by a “preponderance of the evidence”, it is inappropriate to shift the burden of production at the very outset to the patent owner.  As one might imagine, this reversal of the Board’s practice of shifting the burden to the patent owner at the point of institution of the IPR could have a potentially major impact in reducing the number of patent claims that are invalidated.  To that extent, albeit that the Magnum Oil Tools opinion is “procedural,” it could be outcome-determinative in many cases.  

Finally, the court addressed whether the improper shifting of the burden resulted in reversible error. The court examined the Board’s written decision and found that the decision was “replete” with instances where it was clear the Board inappropriately placed the burden on the patent owner by expecting it to explain, and faulting it for failing to explain, why the claims were not invalid.  The court also found that the petitioner failed to show motivation to combine the cited prior art on which the invalidity argument was based.

Interestingly, and perhaps unusually, the Board substituted a reference for one that had been advanced by the petitioner in the combination used to reject the patent claims.  This led the court to rebuke the Board: it was not empowered to make arguments on its own initiative that the petitioner could have raised, but did not raise.  While the Board has “broad authority” in procedural matters in an IPR, it does not have authority to decide unpatentability on theories not proposed by the petitioner.  In short, the Board cannot help the petitioner in its arguments to invalidate a patent.

© Shaukat Karjeker, 2016         

Delay Might Put Patent Ongoing Royalties and Injunctive Relief at Increased Risk

By Shaukat Karjeker

Plaintiffs in patent cases are entitled to damages stretching back six years from the date of filing the suit for patent infringement under the Patent Statute, 35 USC § 286 — unless these were barred by laches.  This has been the law for over 20 years, since at least Aukerman,[1] which held that the defense of laches is applicable to bar past patent damages, even within the six-year statutory damages limitation period.  Laches arises when it is established that there was (1) an unreasonable delay in bringing the suit, and (2) the defendant suffered material prejudice attributable to the delay.  Aukerman did not allow a court to take into account laches when deciding prospective relief, such as an ongoing royalty or an injunction.  Now, the facts that support laches can be taken into account when a court weighs factors to decide on appropriate prospective relief.

This change is premised in large part on reconsideration based on the Supreme Court’s recent Petrella[2] opinion, which held that a copyright plaintiff was not barred by laches, despite a long delay in filing suit, and that laches could affect prospective relief.  This holding motivated plaintiff SCA Hygiene, whose patent damages had been barred by laches, to seek en banc review of the appropriateness of this ruling in light of Petrella.

The SCA Hygiene[3] Court was presented with two questions to consider.  These questions may be simplified as follows (with answers of the en banc panel majority):

1.       In light of Petrella, should laches be barred as a defense to a claim for damages that is brought within the 6 year damages limitation period of 35 USC 286?  (SCA Hygiene answered: No, it is an available defense in this period.)

2.       In light of there being no statute of limitations in patent cases, and in view of Supreme Court precedent, should the defense of laches be available, under some circumstances, to bar an entire suit for either damages or injunctive relief?  (SCA Hygiene answered: Absent “egregious circumstances,” when injunctive relief is appropriate, so are ongoing royalties.)

Because the petition for en banc rehearing was motivated by Petrella, a brief review of Petrella, as it is explained in the SCA Hygiene opinion, is helpful to understand the rationale of SCA Hygiene. 

Paula Petrella, the daughter of the author of the screen play Raging Bull,” filed suit for copyright infringement about nine years after her last communications with MGM on the issue.  MGM moved for summary judgment based on laches, due to the long delay.  The trial court and the Ninth Circuit Court agreed with MGM, but the Supreme Court reversed.  Relying on the statute of limitations in the Copyright Statute, 17 USC 507 (b),[4] the Court said that the equitable defense of laches could not bar the suit as Congress had set the time limit.  Nonetheless, the Court indicated that if Paula Petrella prevailed on the merits, the court could take into account the delay in assessing the amount of damages and any injunctive relief.  The Court took no position on the applicability of its opinion on patent law, but did note that “the Federal Circuit has held that laches can bar damages incurred prior to the commencement of the suit, but not injunctive relief.  We have not had occasion to review the Federal Circuit’s position.” (emphasis added)  This set the stage for SCA Products to seek en banc review of a summary judgment in the patent suit that applied laches to deny it recovery of damages, to determine whether the Petrella ruling might apply to patents as well.

At the outset, the SCA Hygiene majority points out that the Patent Statute, 35 USC § 286, is a limitation of time within which to recover damages, and is not a statute of limitations which sets the time limit for filing the suit.  Perhaps recognizing that the case was likely to proceed to the S. Court next, the SCA Hygiene majority engaged in an extensive analysis of the defenses to infringement in 35 USC § 282, legislative history, prior case law precedent, treatises, the distinction between equity and law and the 1938 merger, and the distinction between laches and equitable estoppel.  Based on this analysis, the SCA Hygiene majority concludes that laches, albeit an equitable defense, is applicable against legal relief, such as monetary damages, in a patent suit.

In its final “major” distinction between patent and copyright law, the SCA Hygiene majority noted that a copyright infringer must “copy” which means that it is not an “innocent” party, whereas patent law allows no defense of “innocence” of copying.  The majority reasoned that a copyright infringer is “typically aware of a risk that it is infringing and can estimate its exposure when making its initial investment decision.”  However, the majority opines that the patent infringer has a different risk calculus.  Using a medical device example where a company invests millions in development and marketing, only to have a patentee emerge years later to claim damages based on the 6 most profitable years.  Thus, the majority concludes that patent law, where independent invention is no defense, should retain laches as a defense to tardily filed law suits.

The SCA Hygiene majority then proceeded to consider prospective relief, and to re-examine its earlier Aukerman opinion in light of Petrella and the Supreme Court’s eBay[5] opinion (as it relates to injunctive relief).  SCA Hygiene first noted that in Aukerman it had relied in part on the Supreme Court’s Menendez[6] opinion (relating to laches in a trademark context).  In so doing, Aukerman, to preserve a “bright line distinction” between laches and estoppel, held that laches only relates to tardiness and cannot bar prospective relief.  Aukerman therefore allowed that the defense of estoppel, which does not necessarily involve delay, might be available prospectively.[7]  It is this Aukerman “bright line” separation between laches and estoppel in the context of prospective relief that the SCA Hygiene panel now revisits.

Conceding that Menendez allows for the possibility that laches could foreclose injunctive relief, the SCA Hygiene majority rejects Aukerman’s “bright line distinction” between laches and estoppel.  The SCA Hygiene majority, instead, adopts the approach that, insofar as the act of infringement is ongoing, the eBay factors that are used to determine whether or not injunctive relief is appropriate must weigh the facts underlying laches as well.  The former bright line separating laches and estoppel in the injunctive relief context is no more.  The majority said:

[I]n sum, we must recognize the difference between . . . estoppel and laches . . .  Whereas estoppel bars the entire suit, laches does not.  . . . laches in combination with the eBay factors may in some circumstances counsel against an injunction.  However, a patentee guilty of laches typically does not surrender its right to an ongoing royalty.

The SCA Hygiene majority recognized that the test for estoppel is “more exacting” than the test for laches.  Consequently, it could be argued that defendants gain an “edge” now that facts that relate to laches (time delay) must be weighed in deciding injunctive relief in patent cases.  But, the majority also expressed the view that “absent egregious circumstances,” when injunctive relief is appropriate, the patentee remains entitled to ongoing royalties.  An appeal to the Supreme Court is expected.


[1] Ac Aukerman Company v. RI Chaides Construction Co., en banc, 960 F.2d 1020 (Fed. Cir. 1992).

[2] Petrella v. Metro Goldwyn-Meyer, Inc. 134 S. Ct. 1962 (2014); 2014 U.S. Lexis 3311.

[3] SCA Hygiene Products LLC, et al. v. First Quality Baby Products et al., en banc, (slip op. September 18, 2015) ___U. S.____( 2015)

[4] 17 USC 507 (b) No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.

[5] eBay Inc. v. MercExchange LLC., 547 U.S. 388 (2006); 126 S. Ct. 1837; 2006 U.S. LEXIS 3872.

[6] Menendez v. Holt, 128 US 514 (1888).

[7] For estoppel, it must be established that statements or conduct of the plaintiff were misleading so as to give the defendant the impression that plaintiff would not disturb the defendant, and the defendant relied upon this such that it would be materially prejudiced, if the claim proceeded.

Akamai-Redux

By Ted Baroody

On remand from the U.S. Supreme Court, the Federal Circuit – en banc, today held, “on the facts of this case, that liability under § 271(a) can also be found when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.”  (This unanimous opinion en banc,  replaces the May 13, 2015 panel opinion.)  The court articulates a two-part test to determine direct infringement of a method patent in the context of multiple actors:  “(1) where that entity directs or controls others’ performance, and (2) where the actors form a joint enterprise.”  The opinion expressly finds that the foregoing test is not limited solely to principal-agent relationships, contractual arrangements, and joint enterprise, and overrules prior decisions to the contrary.

The Federal Circuit further held that with respect to the specific facts of Akamai, the jury heard substantial evidence from which the jury could have concluded that the alleged infringer, Limelight, controlled its customers “tagging” of web content that would then be provided to users by Limelight.  The court emphasized provisions in Limelight’s contract with its customer that in order to use Limelight’s content delivery service, the customer agreed to be “responsible” for identifying specific content, and provide “cooperation” with Limelight.  Limelight also provided instructions and engineering support to customers.  Such provided the necessary acts of “direct[ion] or control” to support attribution to Limelight of the customer’s tagging activities in performing a step of the Akamai patent.

To the extent that some had argued that the Supreme Court’s opinion in Akamai had created a “hole” in the law of direct of infringement that favored infringers in cases where no one actor performed all the steps of a method patent, any such loophole appears to have been closed absent further action by the U.S. Supreme Court, which is entirely possible.  With respect to further development of the case law on this issue, the Federal Circuit also indicated that, “[i]n the future, other factual scenarios may arise which warrant attributing others’ performance of method steps to a single actor. Going forward, principles of attribution are to be considered in the context of the particular facts presented.”  The new magic word in the law of divided infringement now appears to be “attribution.”